Slide 1: Centrica plc Preliminary Results for the year ended 31 December 2021
centrica Centrica plc Preliminary Results for the year ended 31 December 2021
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: Chris O'Shea, Group Chief Executive
Chris O’Shea Group Chief Executive 3 Centrica plc Preliminary Results 2021
Slide 4: Setting the context
Setting the context External environment Learning to live with Covid-19 Unprecedented wholesale gas and power price levels and volatility Changing UK regulatory environment 2021 delivery Further progress in focusing and de-risking the portfolio Resilient financial results in a volatile mar
Slide 5: The turnaround of Centrica
The turnaround of Centrica Simplify and de-risk the Stabilise the business Deliver growth portfolio and strengthen and improve operational and position ourselves the balance sheet performance for net zero Portfolio simplification and Significant Group restructure Building capability and de-risking m
Slide 6: Kate Ringrose, Chief Financial Officer
Kate Ringrose Chief Financial Officer 6 Centrica plc Preliminary Results 2021
Slide 7: Robust financial performance in 2021
Robust financial performance in 2021 Year ended 31 December (£m) 2020 2021 ∆ From continuing operations: Adjusted revenue 14,949 18,300 22% Adjusted gross margin 2,333 2,870 23% Adjusted operating costs (1,909) (1,819) (5%) Adjusted operating profit 1 447 948 112% Net finance cost (215) (187) (13%)
Slide 8: Growth in operating profit after tax
Growth in operating profit after tax Operating profit Tax Operating profit after tax Year ended 31 December (£m) 2020 2021 ∆ 2020 2021 ∆ 2020 2021 ∆ British Gas Services & Solutions 191 121 (70) (59) (23) 36 132 98 (34) British Gas Energy 82 118 36 (23) (15) 8 59 103 44 Centrica Business Solutions (
Slide 9: Robust cash flow generation and a stronger balance sheet
Robust cash flow generation and a stronger balance sheet Year ended 31 December (£m) 2020 2021 ∆ Year ended 31 December (£m) 2020 2021 EBITDA from continuing operations 1,336 1,850 38% Free cash flow from continuing operations 685 1,174 Tax (2) (140) Interest (195) (231) Dividends received 62 2 Pens
Slide 10: A strong balance sheet key to growing shareholder value
A strong balance sheet key to growing shareholder value Robust balance sheet and strong investment grade credit ratings Pension deficit (£bn) Triennial pensions review expected to conclude in H1 2022 3.0 IAS 19 Seeking to grow operating cash flows over time Technical deficit1 2.5 Focused cos
Slide 11: 2022 outlook broadly positive
2022 outlook broadly positive Higher commodity prices positive for Upstream Higher DDA rates Remain exposed to outage risk Spirit Energy UK production down ~10% EM&T legacy gas contract losses ~£50m; LNG profitable Wide range of outcomes for British Gas Energy No immediate bounce-back in Bri
Slide 12: Chris O'Shea, Group Chief Executive
Chris O’Shea Group Chief Executive 12 Centrica plc Preliminary Results 2021
Slide 13: Looking to the future
Looking to the future 01 Re-engaging our colleagues and growing our customer base Starting to see some signs of progress 02 UK energy retail market What’s happened and how will it be fixed? 03 British Gas Energy Migrating our systems to capture future opportunities 04 British Gas Services Fixing our
Slide 14: Re-engaging our colleagues and growing our customer base
Re-engaging our colleagues and growing our customer base Employee engagement (%) 60 55% 40 43% 42% 39% 20 0 2019 2020 Q1 2021 2021 Total customers (‘000) Adjusted operating costs (£m) 12,000 2,500 2,000 9,000 9,910 9,964 2,172 9,697 1,909 1,500 1,819 6,000 1,000 3,000 500 - - 2019 2020 2021 2019 202
Slide 15: Looking to the future
Looking to the future 01 Re-engaging our colleagues and growing our customer base Starting to see some signs of progress 02 UK energy retail market What’s happened and how will it be fixed? 03 British Gas Energy Migrating our systems to capture future opportunities 04 British Gas Services Fixing our
Slide 16: UK energy market severely impacted by high wholesale prices
UK energy market severely impacted by high wholesale prices NBP gas prices (p/th) UK residential energy suppliers 300 70 250 60 February 2022 50 200 40 150 30 100 July 2021 20 50 10 - 0 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 2011 2013 2015 2017 2019 2021 Price cap differential to cheapest tariff
Slide 17: How will the UK energy supply retail market be fixed?
How will the UK energy supply retail market be fixed? We have played a significant part in stabilising the market SOLR customers by supplier Responsible business model August 2021 to January 2022 Disciplined approach to hedging and risk management MILLION 1.0 EM&T plays a valuable role 0.8 Ensured
Slide 18: Looking to the future
Looking to the future 01 Re-engaging our colleagues and growing our customer base Starting to see some signs of progress 02 UK energy retail market What’s happened and how will it be fixed? 03 British Gas Energy Migrating our systems to capture future opportunities 04 British Gas Services Fixing our
Slide 19: UK energy supply market going through rapid change
UK energy supply market going through rapid change Substantial increase in electrification Increased numbers of electric vehicles Growth in electricity use for heating Need to ensure we give our customers what they want Flexibility in electricity use and billing Dynamic time of use tariffs Mig
Slide 20: Looking to the future
Looking to the future 01 Re-engaging our colleagues and growing our customer base Starting to see some signs of progress 02 UK energy retail market What’s happened and how will it be fixed? 03 British Gas Energy Migrating our systems to capture future opportunities 04 British Gas Services Fixing our
Slide 21: Preparing to capture future opportunities
Preparing to capture future opportunities Energy transition opportunities We are the largest installer and servicer of heating systems Electrification as much of an opportunity as hydrogen We are the biggest installer of smart meters Needed to deliver the flexibility our network will require We ne
Slide 22: Driving change in British Gas Services & Solutions
Driving change in British Gas Services & Solutions Disappointing 2021 performance primarily Engineer absence rates Rescheduled appointments driven by: 12% Furlough Covid -19 50% Covid-19 10% 40% 2020 Industrial action 8% 30% Supply chain issues 20% 6% 2021 10% 4% Temporary market issues 2% 0% Ja
Slide 23: Building the workforce of the future
Building the workforce of the future Need to rebuild direct labour workforce after years of decline Largest services field force in the UK British Gas with ~7,000 engineers training academies Recruitment and attrition Reduced materially over recent years Engineers 2,000 Terms and conditions chan
Slide 24: Looking to the future
Looking to the future 01 Re-engaging our colleagues and growing our customer base Starting to see some signs of progress 02 UK energy retail market What’s happened and how will it be fixed? 03 British Gas Energy Migrating our systems to capture future opportunities 04 British Gas Services Fixing our
Slide 25: Selective asset ownership de-risks the Group and creates potential for growth
Selective asset ownership de-risks the Group and creates potential for growth Portfolio simplification and de-risking materially completed Spirit Energy focused on UK and Netherlands Cash generated retained for decommissioning No investment in new exploration Retaining optionality for net zero
Slide 26: Creating a more sustainable and profitable company
Creating a more sustainable and profitable company Turnaround of Centrica progressing Portfolio simplified and de-risked Major restructuring materially completed Balance sheet strengthened Well placed to handle the energy market crisis Leading capabilities in energy procurement and risk manageme
Slide 27: Appendix
Appendix 27 Centrica plc Preliminary Results 2021
Slide 28: 2020 adjusted operating profit re-segmentation
2020 adjusted operating profit re-segmentation Year ended 31 December (£m) 2020 as Small Business 2020 Previous segments reported Energy Metering restated British Gas Services & Solutions 201 (10) 191 British Gas Energy 80 (8) 10 82 Centrica Business Solutions (140) 8 (132) Energy Supply (55) 8 (47)
Slide 29: Remeasurements and exceptional items
Remeasurements and exceptional items EXCEPTIONAL ITEMS AND STATUTORY PROFIT Year ended 31 December (£m) 2021 Adjusted operating profit from cont. ops 948 Re-measurements - Energy supply 3,917 Onerous energy supply contract provision (2,530) Re-measurements - Upstream and EM&T (2,628) E&P asset write
Slide 30: Disclaimer: Rules of thumb
Disclaimer: Rules of thumb The rules of thumb were provided in February 2022 based on the then current prevailing range of gas and power prices. They are illustrative and are intended as directional only and exclude any potential impairment or impairment write-back. The actual impact of price change
Slide 31: Rules of thumb: E&P and Nuclear
Rules of thumb: E&P and Nuclear Please refer to disclaimer on slide 30 of this presentation before using this information. The table shows Centrica’s earnings and free cash flow (FCF) sensitivity to changes in commodity prices on a hedged basis for 2022 as at 1 February 2022 2022 Earnings 2022 FCF M
Slide 32: Revenue
Revenue Year ended 31 December (£m) 20201 2021 ∆ Continuing operations British Gas Services & Solutions 1,547 1,513 (2%) British Gas Energy 7,007 7,513 7% Centrica Business Solutions 1,526 1,981 30% Bord Gáis Energy 820 1,111 35% Energy Marketing & Trading 2,917 6,082 109% Upstream 1,918 2,282 19% G
Slide 33: Adjusted gross margin
Adjusted gross margin Year ended 31 December (£m) 20201 2021 ∆ Continuing operations British Gas Services & Solutions 664 574 (14%) British Gas Energy 890 849 (5%) Centrica Business Solutions 100 143 43% Bord Gáis Energy 154 136 (12%) Energy Marketing & Trading 281 242 (14%) Upstream 244 926 280% Ad
Slide 34: EBITDA
EBITDA Year ended 31 December (£m) 20201 2021 ∆ Continuing operations British Gas Services & Solutions 263 164 (38%) British Gas Energy 181 214 18% Centrica Business Solutions (79) (4) (95%) Bord Gáis Energy 59 46 (22%) Energy Marketing & Trading 216 119 (45%) Upstream 612 1,252 105% Other 84 59 (30
Slide 35: Adjusted operating profit
Adjusted operating profit Year ended 31 December (£m) 20201 2021 ∆ Continuing operations British Gas Services & Solutions 191 121 (37%) British Gas Energy 82 118 44% Residential energy supply 101 115 14% Business energy supply (19) 3 Nm Centrica Business Solutions (132) (52) (61%) Energy supply (47)
Slide 36: Net investment
Net investment Year ended 31 December (£m) 20201 2021 Continuing operations British Gas Services & Solutions (22) (29) British Gas Energy (47) (15) Centrica Business Solutions (29) (33) Bord Gáis Energy (14) (36) Energy Marketing & Trading (7) (7) Upstream (430) (290) Other 2 (29) (24) Net investmen
Slide 37: Free cash flow
Free cash flow Year ended 31 December (£m) 20201 2021 ∆ Continuing operations British Gas Services & Solutions 260 170 (35%) British Gas Energy (29) 16 Nm Centrica Business Solutions (50) 22 Nm Bord Gáis Energy 35 3 (91%) Energy Marketing & Trading 241 206 (15%) Upstream 193 835 333% Other 37 62 68%
Slide 38: Upstream – Exploration & Production
Upstream – Exploration & Production E&P Upstream production Year ended 31 December (£m) 20201 2021 ∆ (mmboe) Gas and liquids realisations 1,297 1,737 34% Adjusted operating profit 107 701 555% 2020 44.9 3.9 Free cash flow 1 170 786 362% 2021 36.8 2.9 Spirit Energy CSL Achieved gas sales price Achiev
Slide 39: Spirit Energy – P&L and KPIs
Spirit Energy – P&L and KPIs 2020 vs 2021 2021 KPIs 2020 2021 ∆ Retained Disposed Total Production Gas (mmboe) 27.9 23.7 (4.2) 15.8 7.9 23.7 Production Oil (mmboe) 17.0 13.1 (3.9) 2.1 11.1 13.1 Achieved gas price (p/th) 35.4 70.3 34.9 53.8 100.7 70.3 Achieved liquids price (£/boe) 34.2 43.7 10.5 41.
Slide 40: Illustrative Spirit Energy disposal businesses cash flow phasing
Illustrative Spirit Energy disposal businesses cash flow phasing Disposal cash flows £m 2021 2022 Total Operating profit 647 647 Table illustrative of 1 January 2022 Hedges (91) (106) (197) completion date Add: non-cash costs 247 247 EBITDA 803 (106) 697 Actual completion expected in Q2 2022 Cas
Slide 41: Upstream – Nuclear
Upstream – Nuclear NUCLEAR Year ended 31 December (£m) 2020 2021 ∆ Adjusted operating profit (£m) (17) (38) 124% Nuclear power generated (GWh) 9,134 8,342 (9%) Achieved power price (£/MWh) 51.3 46.6 (9%) Achieved power price Power generated (£/MWh) Total (GWh) 2020 51.3 2021 46.6 The above adjusted
Slide 42: Market commodity prices
Market commodity prices Average Brent oil prices Average UK NBP gas prices Average UK baseload ($/bbl) (p/th) power prices (£/MWh) 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 as at as at as at as at as at as at 23 Feb 22 23 Feb 22 23 Feb 22 23 Feb 22 23 Feb 22 23 Feb 22 2020 and 2021
Slide 43: UK weather chart vs seasonal norms
UK weather chart vs seasonal norms 25 20 15 10 5 0 -5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 43 Centrica plc Preliminary Results 2021
Slide 44: CDP and TCFD
CDP and TCFD CDP is a global non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. It was voted the number one climate research provider by investors. CDP’s annual environmental disclosure and scoring process is