Interim results for the period ended 30 June 2020

Chris O'Shea, Group Chief Executive

“Centrica delivered a resilient performance against the unprecedented backdrop of the Covid-19 crisis during the first half of the year. That is due to the response of colleagues across the Group to keep our customers warm, safe and supplied with energy and services during the pandemic. I am truly grateful for their efforts. Our mission now is to turn around the Company by putting customers at the heart of everything we do and creating a simpler, leaner, more modern and more sustainable company. The sale of Direct Energy is a fundamental step towards this, and although we have a lot more to do, we have the people, the brands and the market positions to deliver a successful turnaround.”

Financial summary

Six months ended 30 June 

2020 

2019

Change

EBITDA

£869m

£1,075m

(19%)

Adjusted operating profit

£343m

£399m

(14%)

Adjusted basic earnings per share (EPS)

2.5p

2.4p

4%

Interim dividend per share

–

1.5p

nm

Free cash flow

£750m

£430m

74%

Group net debt

£2,779m

£3,376m

(18%)

Statutory operating loss

(£135m)

(£446m)

70%

Net exceptional items included in statutory operating loss

(£1,036m)

(£346m)

(199%)

Basic earnings per share

(3.3p)

(9.6p)

66%

Statutory net cash flow from operating activities

£903m

£177m

410%

See notes 2, 5 and 10 to the Financial Statements and pages 56 to 57 for an explanation of the use of adjusted performance measures.

Resilient first half performance

  • Resilient performance overall against the backdrop of Covid-19. Focus has been on protecting the business and keeping customers warm, safe and supplied with energy.
  • Good customer service levels maintained and continued high customer retention. Total customers down 0.8% since the start of the year with a number of sales channels unavailable in Q2.
  • Adjusted operating profit down 14% or £56m compared to H1 2019. Negative impacts of Covid-19, low commodity prices and warm weather largely offset by mitigating actions and improved underlying performance.
  • Adjusted EPS up slightly to 2.5p, reflecting a reduction in the Group adjusted effective tax rate from 47% to 35% with a shift in profit mix away from highly taxed E&P activities.
  • Net exceptional charge of £1,036m, including restructuring costs of £251m, and impairments of E&P and power assets totalling £785m which reflect a reduction in commodity price forecasts and nuclear plant availability issues. Statutory operating loss of £135m.
  • Robust cash flows and liquidity. Net debt down £0.4bn since the start of the year to £2.8bn, reflecting working capital inflows and prompt actions taken to reduce cash expenditure in response to Covid-19.
  • No interim dividend declared.
  • No specific full year guidance provided given continuing Covid-19 related uncertainties.
  • Prompt actions already taken and the Group’s cash flow flexibility leave us well positioned to navigate current and future uncertainties.

Focus on balance sheet and quality of earnings 

  • Centrica remains a customer-focused energy services and solutions company, helping customers transition to a low carbon future.
  • Accelerated focus on simplifying and modernising the Group, to become more sustainable.
  • Agreement to sell Direct Energy to NRG Energy for $3.625bn (£2.85bn) further simplifies the Group, allows increased focus on core UK and Ireland activities and strengthens the Group’s balance sheet.
  • Significant restructure underway, putting the customer at the heart of everything we do and accelerating planned cost savings.
  • Spirit Energy E&P divestment process to restart once commodity and financial markets have settled.
  • Nuclear divestment process currently paused.

Performance metrics

Six months ended 30 June 

2020 

2019

Change

 

Total recordable injury frequency rate (per 200,000 hours worked)

0.98

0.97

1%

 

Brand NPS

 

 

 

 

British Gas Home

8

10

(2pt)

 

British Gas Business

(1)

(3)

2pt

 

Hive

42

42

0pt

 

Bord Gáis Energy

(2)

nm

nm

 

Direct Energy Home

30

32

(2pt)

 

Direct Energy Business

40

38

2pt

 

Centrica Business Solutions

29

29

0pt

 

Total customers (‘000)

 

 

 

 

UK Home energy only

5,167

5,432

(5%)

 

UK Home services only

1,833

1,876

(2%)

 

UK Home energy and services

1,754

1,742

1%

 

UK Business

371

326

14%

 

Home Solutions (active customers not taking energy or services)

420

231

82%

 

Total UK

9,545

9,607

(1%)

 

Ireland

491

513

(4%)

 

North America Home

2,726

2,762

(1%)

 

North America Business

160

176

(9%)

 

Total customers (‘000)

12,922

13,058

(1%)

 

Account holdings per customer

2.00

1.98

1%

 

Total customer energy consumption (TWh)

259

274

(5%)

 

Group direct headcount

25,835

29,378

(12%)

 

E&P total production volumes (mmboe)

25.4

29.7

(14%)

 

Nuclear power generated (GWh)

4,537

4,900

(7%)

 

 

A pre-recorded results presentation will be available on Centrica.com at 8am BST on 24 July 2020 and Centrica will host a conference call for institutional investors and analysts at 9am BST on 24 July 2020. To register for the conference call please visit https://webcasts.centrica.com/centrica109/vip_connect. If you would like to join in listen only mode, please register at https://webcasts.centrica.com/centrica109.

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