Centrica Plc · LSE:CNA
Centrica — H1 2023 Earnings Presentation
44 slides from Centrica's earnings presentation, Jul 27, 2023
Slide 1: Creating Value Through the Energy Transition
Creating Value Through the Energy Transition 27th July 2023
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Centrica shares or other securities. This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and busi
Slide 3: Creating Value Through the Energy Transition
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 01 Creating Value Through the Energy Transition Chris O’Shea Group Chief Executive Codford Solar Farm 3
Slide 4: Centrica's Leadership Team
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Centrica's Leadership Team Dave Kirwan Catherine O’Kelly Cassim Mangerah Jana Siber Greg McKenna MD, Bord Gáis Energy MD, British Gas
Slide 5: Creating Value Through the Energy Transition
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Creating Value Through the Energy Transition 01 02 03 An Integrated Leading Businesses Relentless Focus on Energy Strategy Focused on
Slide 6: We have materially progressed the turnaround of Centrica
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth We have materially progressed the turnaround of Centrica… Simplify and de-risk the Stabilise the business portfolio and strengthen and
Slide 7: …and delivered strong H1 performance
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …and delivered strong H1 performance… Good operational performance across the Group Improved customer delivery in Retail Strong Opti
Slide 8: …with our focus now on phase 3
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …with our focus now on phase 3 Phase 3 Sustainable profitability & investing for value and growth 8
Slide 9: Creating value through the Energy Transition
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Creating value through the Energy Transition A uniquely integrated Growing electricity demand A green-focused energy company & system
Slide 10: Centrica is a uniquely integrated energy company
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Centrica is a uniquely integrated energy company… 10m+ Retail customers Power & Gas Infrastructure Maintaining a balanced portfolio th
Slide 11: Each element of our balanced portfolio complements, de-risks and adds value
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …where each element of our balanced portfolio complements, de-risks and adds value to others Optimisation We purchase ~30TWh of electr
Slide 12: Strong tailwinds from supportive market dynamics
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Strong tailwinds from supportive market dynamics… Electricity demand in the UK The UK Grid will become more The residential technology
Slide 13: …offering a broad range of opportunities to add value
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …offering a broad range of opportunities to add value Customers Renewables Flexibility Further Opportunities Opportunities Energy Cust
Slide 14: Enabling a net zero future for our customers, company and markets
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Enabling a net zero future for our customers, our company and our core markets Net zero solutions Green-focused growth & Driving a sus
Slide 15: A compelling investment case creating value through the energy transition
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth A compelling investment Sustainable A green-focused growth Balance sheet case creating profitability ~£800m of sustainable operating p
Slide 16: Retail
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 03 Retail 16
Slide 17: The world of energy retail is changing
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth The world of energy retail is changing We are well positioned to help our customers on their journey to net zero Significant market op
Slide 18: Leading market positions and growth potential in Retail
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth We have leading market positions and growth potential in Retail We are the largest UK residential energy supplier, We have a significa
Slide 19: Enviable capabilities and improved operations in British Gas Services & Solutions
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth We have enviable capabilities and improved operations in British Gas Services & Solutions… Unique workforce of Servicing and installin
Slide 20: …providing us with the platform to return to growth
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …providing us with the platform to return to growth ~28 20 Simplifying protection and providing value for With ~28 million UK homes we
Slide 21: Consistent financial performance in British Gas Energy
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Our superior capabilities have enabled consistent financial performance in British Gas Energy… Cost per residential customer1 (£) 97 8
Slide 22: …and we are strengthening our foundations further
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …and we are strengthening our foundations further Building a better customer experience… …enabled by our new platform… …driving better
Slide 23: Optimisation
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 03 Optimisation LNG carrier, GasLog Westminster 23
Slide 24: EM&T is a world-class asset-backed trading and logistics business
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth EM&T is a world-class asset-backed trading and logistics business The glue that binds our Group together Optimisation Asset Markets En
Slide 25: Sustainable EM&T profit with growth potential
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Sustainable EM&T profit with growth potential Growth focus EM&T adjusted operating profit1 (£m) Gas & Power • Deep knowledge of Europe
Slide 26: EM&T is adding value across the integrated Group
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth EM&T is adding value across the integrated Group Gresham House Secure Income Leveraging Rough storage to Adding value through energy R
Slide 27: Infrastructure
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 03 Infrastructure Rough 47/3 Bravo platform 27
Slide 28: Infrastructure will continue to deliver significant cash flows
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Infrastructure will continue to deliver significant cash flows… Last …we were preparing for …Morecambe expected to stop …Heysham 1 & H
Slide 29: Retaining net zero optionality with unique positioning across clusters
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …while retaining net zero optionality with unique positioning across clusters Strategic energy transition opportunities with advantage
Slide 30: A material pipeline of flexible and renewable projects
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth We have a material pipeline of flexible and renewable projects Aim to maintain continuous volume of early phase projects for evaluatio
Slide 31: Deploying capital into a diverse range of opportunities
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth We’re deploying capital into a diverse range of opportunities 18MW Codford solar farm 50MW 2 hour duration battery 2x 100MW flexible g
Slide 32: Relentless Focus on Value Creation
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 04 Relentless Focus on Value Creation Russell O’Brien Group Chief Financial Officer Roosecote Battery 32
Slide 33: Relentless Focus on Value Creation
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Relentless Focus on Value Creation 01 02 03 04 05 Sustainable Maintain a strong Progressive Investing Returning earnings balance sheet
Slide 34: Delivering sustainable operating profit & cash flow
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Delivering sustainable operating profit & cash flow Sustainable operating profit from Retail and Material medium-term Optimisation gro
Slide 35: We have a robust approach to balance sheet
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth • Responsible commodity risk • De-risked liabilities; net debt improved by ~£6bn since 2020 management • Financing and liquidity • Str
Slide 36: Delivering sustainable cash returns to shareholders
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Delivering sustainable cash returns to shareholders Progressive …with a track dividend policy, record of returning underpinned by 3p f
Slide 37: Investments are assessed on a broad set of criteria
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Investments are assessed on a broad set of criteria… In addition to investing to improve our existing We have a clear framework busine
Slide 38: …including a robust risk assessment
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …including a robust risk assessment… Assessment framework Macroeconomic Industry / asset class Project risk risk risk Risk profile 38
Slide 39: …and a stringent investment management process
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …and a stringent investment management process… 39
Slide 40: Capital discipline with attractive returns reflecting the risk profile
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth …which ensures we maintain capital discipline with attractive returns reflecting the risk profile of investments Customers Renewables
Slide 41: Investing for growth and creating value from our strong capabilities
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth Investing for growth and creating value from our strong capabilities • Capex building to £600m-£800m p.a. to 2028 • Includes £100m-£20
Slide 42: A disciplined capital allocation approach
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth A disciplined capital allocation approach • Strong investment grade credit ratings • Value accretive portfolio returns of 7-10%+ with
Slide 43: Close
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth SECTION 05 Close Chris O’Shea Group Chief Executive Brigg Energy Park 43
Slide 44: A compelling investment case creating value through the energy transition
Creating Value Leading Businesses An Integrated Relentless Focus on Through the Focused on Delivery Close Energy Strategy Value Creation Energy Transition and Growth A compelling investment Sustainable A green-focused growth Balance sheet case creating profitability ~£800m of sustainable operating p