Centrica: Interim results for the period ended 30 June 2021

CHRIS O’SHEA, GROUP CHIEF EXECUTIVE
“Our first half financial performance was broadly as we expected overall, and we continue to make good progress towards the simplification of our company. Although there is still a lot to achieve, our turnaround remains on track, our balance sheet has been significantly strengthened and the recent changes in colleague terms and conditions will enable us to better serve the needs of our customers. We will continue to strengthen our foundations, as we help our customers on the path to net zero.”

FIRST HALF FINANCIAL PERFORMANCE BROADLY AS EXPECTED
Adjusted operating profit from continuing operations (excluding Direct Energy) broadly flat at £262m (2020: £264m) and adjusted basic EPS from continuing operations of 1.7p (2020: 1.6p).
Reflects efficiencies across the Group and higher consumption due to colder weather in the energy supply businesses. Higher commodity prices starting to benefit Upstream.
Offset by impacts of Covid-19 across the Group and industrial action in British Gas Services, and a loss in Energy Marketing & Trading with increased losses from the legacy gas contract.
Total Group free cash flow from continuing operations up 4% to £524m, with lower capital expenditure reflecting ongoing capital discipline.
Net debt down to £0.1bn from £3.0bn over H1 2021, including the impact of proceeds received from the sale of Direct Energy in January 2021.
£608m post-tax exceptional profit on disposal of Direct Energy. Total post-tax exceptional profit from continuing operations of £248m (2020: loss of £897m) largely due to the write back of E&P assets.
From continuing operations, statutory operating profit of £1,003m (2020: loss of £338m) and basic EPS of 12.8p (2020: loss of 5.9p) including a profit on certain remeasurements due to rising commodity prices. Statutory net cash flow from operating activities down 12% to £558m.
SIMPLIFYING THE PORTFOLIO AND STRENGTHENING THE BALANCE SHEET
Sale of Direct Energy improves the long term strength of the Group’s balance sheet and allows an increased focus on core UK and Ireland activities.
Making progress towards pursuing alternative Spirit Energy sale options which will simplify the sale structure to maximise value of assets and de-risk liabilities.
Triennial pensions valuation process underway. Technical pension deficit on a roll-forward basis in the region of £1.5bn at 30 June 2021, reduced from £1.9bn at 31 December 2020.
CREATING A MORE SUSTAINABLE AND PROFITABLE COMPANY
Focus remains on improving the long-term quality, sustainability and level of earnings and cash flow.
Significant Group organisational restructure on track and expected to be completed in 2021.
New terms and conditions in place for UK colleagues, enabling more modern and flexible approach to serving the needs of our customers.
Over 250,000 British Gas Energy customers now on more flexible, lower cost, ‘software as a service’ IT platform.
H2 priorities remain on ‘fixing the basics’, including improving employee engagement, increasing customer satisfaction, and driving better commercial, operational and financial performance.
Capital Markets Event to be held on 16 November 2021 to provide more detail on our longer term strategy and financial framework.