Slide 1: Centrica plc Preliminary Results
centrica Centrica plc Preliminary Results
Slide 2: Disclaimer
centrica 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
Slide 3: Chris O'Shea, Group Chief Executive
en dee ek a eee * centrica~ Chris O'Shea Group Chief Executive
Slide 4: Turnaround of Centrica started
Turnaround of Centrica started * Major transformation of Centrica underway * Remained focused on protecting the business and keeping customers warm, safe and supplied with energy during ongoing Covid-19 pandemic * Increased focus on ‘fixing the basics’ — Customer service levels broadly maintained ov
Slide 5: Helping colleagues, customers and communities through COVID-19
centrica Helping colleagues, customers and communities through COVI A os Colleagues * Appropriate safeguards and PPE in place for field and office-based colleagues * 15,000 colleagues shifted to working from home * Supported colleagues with flexible working hours for parents and carers * Variety of
Slide 6: Continued focus on simplifying and modernising Centrica
centrica Continued focus on simplifying and modernising Centrica * Creating a more sustainable and profitable company * Significant Group restructure on track — Puts the customer at the heart of everything we do — Accelerates planned cost savings * Direct Energy sale simplifies the Group — Strengthe
Slide 7: Kate Ringrose, Chief Financial Officer
Kate Ringrose Chief Financial Officer
Slide 8: Group earnings
Group earnings Year ended 31 December (£m) 2019 2020 ~=Variance From continuing operations: Adjusted revenue 15,958 14,949 (1,009) Adjusted gross margin 2,834 2,333 (501) Adjusted operating profit 650 447 (203) Net finance cost (251) (215) 36 Group effective tax rate 35% 26% (9ppt) Adjusted earnings
Slide 9: Operating profit
centrica Operating profit ADJUSTED OPERATING PROFIT EXCEPTIONAL ITEMS AND STATUTORY PROFIT Year ended 31 December (£m) 2019! 2020 A Year ended 31 December 2020 (£m) H1 H2 2020 British Gas Energy 124 80 (35%) Adjusted operating profit from 271 «+176 447 British Gas Services & Solutions 180 201 12% co
Slide 10: Adjusted operating profit drivers — continuing operations
centrica Adjusted operating profit drivers — continuing operations Covid-19 Customer- impacts and Weather facing Upstream mitigations UK default Legacy gas tariff cap contract performance = a Impact: ean (£41m) (£88m) £447m Mitigations: Includes: £145m BG Energy: Commodity: £(68m) (£270m) 2020 BG S&
Slide 11: Covid-19 impacts on continuing operations operating profit
centrica Covid-19 impacts on continuing operations operating profit Business energy demand Sales of services and solutions Cash collection and bad debt * UK Business electricity demand * UK boiler installs down ~25% * Cash collection broadly in line with : ee : impacted by ~15% * CBS sales opportuni
Slide 12: Robust cash flow and net debt performance
Robust cash flow and net debt performance centrica Year ended 31 December (£m) 2019 2020 A Year ended 31 December (£m) 2019 2020 EBITDA from continuing operations 1,778 1,336 (25%) Free cash flow from continuing operations 472 685 Tax (80) (2) Interest (227) (195) Dividends received 1 62 Dividends —
Slide 13: Balance sheet restructuring underway
centrica Balance sheet restructuring underway * Net debt down £0.4bn vs end 2019 to £2.8bn * Direct Energy proceeds of £2.7bn received in Jan 2021 — Proceeds to be used to reduce net debt and make a contribution to the defined benefit pension schemes * Strong balance sheet and liquidity — £1.1bn of
Slide 14: Focus on pension deficit continues
centrica Focus on pension deficit continues Pension deficit (fbn) * IAS 19 net pension deficit of £601m vs £163m in 2019 25 IAS 19 deficit * Further asset vs liability de-risking carried out in 2020 20 | @ Technical deficit! 15 * Assets performed well in 2020 despite market volatility 10 * Triennial
Slide 15: Maintaining a focus on free cash flow against uncertain 21 backdrop
centrica Maintaining a focus on free cash flow against uncertain 2021 backdrop * Continuing uncertainties from Covid-19 and industrial action * No 2021 earnings or cash flow guidance * Year-on-year modelling assumptions — Whitegate CCGT outage (~-£25m to -£40m) — Higher ECO costs (~-£80m) — Restruct
Slide 16: Chris O'Shea, Group Chief Executive
centrica Chris O’Shea Group Chief Executive
Slide 17: We have a clear vision for Centrica
We have a clear vision for Centrica * An energy services and solutions company ¢ Simpler, leaner, customer-focused business model * Engaged and empowered colleagues * Improved quality, sustainability and level of profits and cash flow * Reduced risk and a strong balance sheet centrica 17 Preliminary
Slide 18: We have a clear view on how to deliver the turnaround
centrica We have a clear view on how to deliver the turnaround * We are prioritising and focusing on the areas where we can win * We are moving our focus from unsustainable tactical cost cutting — Building a foundation for growth — Focus on strategic commercial growth opportunities * We are reducing
Slide 19: Restructure to simplify and modernise the Group on track
centrica Restructure to simplify and modernise the Group on track Layers in the organisation reduced from 11 to 7 Roles at the three most senior layers halved since June * Proportion of colleagues in customer facing roles now substantially higher New business unit structure in place Modernising work
Slide 20: What is different to previous restructures?
What is different to previous restructures? Average headcount Total wage bill (£m) 5 year CAGR 5 year CAGR 4.9% +0.5% 40,000 2,500 a 30,000 ue 1,500 20,000 1,000 10,000 500 0 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Cost per head (£) centrica 5 year CAGR +5.8% 2014 2015
Slide 21: Centrica well positioned for the future
Centrica well positioned for the future * Leading market positions and capabilities * Strengthening the business to add value for all stakeholders — Investing in customer service and customer retention — Reducing overhead costs Net Zero a significant opportunity — Centrica is technology agnostic Cre
Slide 22: centrica
centrica
Slide 23: 2019 adjusted operating profit
2019 adjusted operating profit centrica Business Re-allocated Year ended 31 December (£m) 2019 as CHS NAas Services into Solar corporate 2019 Previous segments reported discontinued British Gas Provision costs restated | New segments UK Home - energy 137 (12) 124 British Gas Energy UK Home ~ service
Slide 24: Disclaimer: Rules of thumb
centrica Disclaimer: Rules of thumb The rules of thumb were provided in February 2021 based on the then current prevailing range of oil, 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 o
Slide 25: Rules of thumb: E&P and Nuclear
centrica Rules of thumb: E&P and Nuclear Please refer to disclaimer on slide 24 of this presentation before using this information. The table shows Centrica’s profit after tax (PAT) and free cash flow (FCF) sensitivity to changes in commodity prices on a hedged basis for 2021 as at 8 February 2021 0
Slide 26: Pension valuation approaches
Pension valuation approaches Main purpose Group's balance sheet Assumptions used Determined by Centrica Overall basis Best-estimate Discount rate AA corporate bonds Scheme Funding Determines cash funding to schemes Pensions legislation At least every three years Centrica and Trustees agree Prudent a
Slide 27: Revenue
Revenue Year ended 31 December (£m) 2019! 2020 A Continuing Operations British Gas 8,327 7,887 6,809 6,518 Servic Solutior 1,518 1,369 Bord Gais Energy 897 820 Energy Marketing & Trading 3,357 2,917 Centrica Business Solutions 2,331 2,131 Upstream 2,290 1,918 Group Revenue included in business perfo
Slide 28: Adjusted gross margin
Adjusted gross margin Year ended 31 December (£m) 2019! 2020 A Continuing Operations British Gas 1,591 a (A713 920 824 Servic Solutior 671 649 BordGaisEnergy 149 154 Energy Marketing & Trading 305 281 Centrica Business Solutions 282 181 (36%) Upstream 507 244 (52%) Adjusted gross margin from 2,834 2
Slide 29: Adjusted operating profit
centrica Adjusted operating profit Year ended 31 December (£m) 2019! 2020 A Continuing Operations British Gas 304 Energysuppyss—~—CSsSSSSSSSSSSSSS Services 252 Solutions 7) Bord Gais Energy 50 Energy Marketing & Trading 138 Core EM&q activities 135 72% Centrica Business Solutions (20) nm Energy supp
Slide 30: EBITDA
EBITDA Year ended 31 December (£m) 2019! 2020 A Continuing Operations British Gas Ar 223 Servic Solutior 248 273 BordGéis Energy 18. 89 Energy Marketing & Trading 196 216 Centrica Business Solutions 25 (89) nm Upstream 941 612 (35%) Other 77 83 8% EBITDA 1,778 1,336 (25%) Discontinued Operations Dir
Slide 31: Figures may not add down due to rounding.
Figures may not add down due to rounding.
Slide 32: Free cash flow
Free cash flow Year ended 31 December (£m) 2019' 2020 A Continuing Operations British Gas 177 271 53% Energy supply 62 12 (81%) Services and Solutions 115 259 125% Bord Gais Energy 60 a5 (42%) Energy Marketing & Trading 41 241 488% Centrica Business Solutions (74) (90) 22% Upstream 329 193 (41%) Oth
Slide 33: Upstream — Exploration & Production
centrica Upstream — Exploration & Production E&P Upstream producti Year ended 31 December (£m) 2019 2020 A mmboe) Gas and liquids realisations 1,610 1,297 (19%) 2019 45.8 Ce Adjusted operating profit 159 107 (33%) Free cash flow!.2 301 170 (44%) 2020 44.9 3.9 @@ Spirit Energy CSLO@ Achieved gas sale
Slide 34: Upstream — Nuclear
centrica Upstream — Nuclear NUCLEAR Year ended 31 December (£m) 2019 2020 A Adjusted operating profit (£) 19 (17) nm Nuclear power generated (GWh) 10,199 9,134 (10%) Achieved power price (£/MWh) 49.2 $1.3 4% Achieved power price Power Generated (£/MWh) Total (GWh) 2019 49.2 2019 10,199 2020 51.3 202
Slide 35: Market commodity prices
centrica Market commodity prices Average Brent oil prices Average UK NBP gas prices ($/bbl) (p/th) $64 $62 £46 $42 39 2019 2020 2021 2019 2020 2021 2019 2020 2021 as at as at as at 23 Feb 21 23 Feb 21 23 Feb 21 Average UK baseload power prices (£/MWh) Brent oil, UK NBP gas and UK baseload power pric
Slide 36: CDP and TCFD
centrica 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 proc