Preliminary results for the year ended 31 December 2021

24 February 2022

Investor and Analysts

Media Relations

Chris O'Shea, Group Chief Executive

"Our strong balance sheet and responsible business model has allowed us to ensure continued supply for customers whose suppliers have ceased trading and offer additional help to those most vulnerable through the ongoing energy crisis. 2021 financial performance was resilient, and we continue to make good progress towards the turnaround of Centrica, having materially completed our portfolio simplification. Our focus for 2022 is on building on the progress we have already made to drive improvements in colleague engagement and in particular customer service, while continuing to build our capabilities to help our customers on their path to net zero."

Delivering the transformation and turnaround of Centrica

Portfolio simplification materially complete with sale of Direct Energy and agreed sale of Spirit Norway.
Strengthened and de-risked the balance sheet. Closing net cash of £0.7bn compared to net debt of £3.0bn at the start of 2021.
Significant Group organisational restructure largely complete and new terms and conditions in place for UK colleagues, enabling a more modern and flexible approach to serving our customers.

Good 2021 Financial Performance

Adjusted basic EPS from continuing operations up 46% to 4.1p (2020: 2.8p).
- Positive impact from efficiencies, reduced impacts of Covid-19 across the Group and higher commodity prices in Upstream.
- Partially offset by impacts of disappointing performance in British Gas Services, Whitegate CCGT outage in Bord Gáis and lower Energy Marketing & Trading profit.
- Volatile wholesale commodity markets handled well, with additional resulting costs in energy supply businesses broadly offset by the positive impacts of weather.
Higher wholesale commodity prices resulted in a £1.6bn exceptional net pre-tax write-back of Upstream assets and a £1.2bn pre-tax loss on net certain re-measurements. Statutory basic EPS from continuing operations of 10.0p (2020: loss of 4.7p).
Total Group free cash flow from continuing operations up 71% to £1,174m. Statutory net cash flow from continuing operating activities up 68% to £1,611m.

Well positioned for the future

2022 outlook broadly positive. Strong balance sheet and leading energy procurement and risk management capabilities leave us well placed to handle the energy market crisis.
High and volatile wholesale commodity prices and a changing regulatory environment create a wider range of outcomes than normal for 2022.
Focus remains on improving operational performance, in particular customer service levels.
Continuing to build capabilities and launch new propositions to position ourselves for the significant opportunities created by net zero.
Triennial pensions valuation process due to complete in H1 2022.
Clear path to restart paying a dividend.

Acting responsibly through the energy crisis

Ensured continued supply of energy for around 700,000 UK customers since the start of 2021 through the Supplier of Last Resort process.
Additional help for vulnerable customers through new Winter Fund and British Gas Energy Trust.
Repaying £27m received in 2020 through the UK Government’s Coronavirus Job Retention Scheme.
Over 600 apprentices recruited in the UK during 2021, creating new, highly skilled and well-paid jobs.

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Financial summary

Year ended 31 December	2021	2020	Change
From continuing operations ¹
EBITDA	£1,850m	£1,336m	38%
Adjusted operating profit	£948m	£447m	112%
Adjusted effective tax rate	59%	26%	33ppt
Adjusted earnings attributable to shareholders	£237m	£165m	44%
Adjusted basic earnings per share (EPS)	4.1p	2.8p	46%
Full year dividend per share (DPS)	0.0p	0.0p	nm
Group free cash flow	£1,174m	£685m	71%
Group net (cash) / debt	(£680m)	£2,998m	nm
Statutory operating profit / (loss)	£954m	(£362m)	nm
Statutory earnings attributable to shareholders	£586m	(£274m)	nm
Statutory basic earnings per share	10.0p	(4.7p)	nm
Statutory net cash flow from operating activities	£1,611m	£957m	68%
From continuing and discontinued operations
Statutory earnings attributable to shareholders	£1,210m	£41m	nm
Statutory basic earnings per share	20.7p	0.7p	nm
^{See notes 2, 3 and 10 to the Financial Statements and pages 84 to 87 for an explanation of the use of adjusted performance measures.} ^{1. Inludes Direct Energy which is classified in discontinued operations. See note 5 for more information on segmental operating profit and free cash flow.} ^{2. Net debt has been restated to remove collateral posted/(received). See note 11 for more information.}

Group performance indicators

Year ended 31 December	2020	2019	Change
Total recordable injury frequency rate (per 200,000 hours worked)	1.07	1.03	4%
Total customers (‘000) ^{1, 2}	10,067	9,794	3%
Group direct headcount ¹	19,783	20,381	(3%)
Group colleague engagement (%)	55%	42%	13ppt
^{1. 2020 excludes Direct Energy.} ^{2. Includes British Gas Energy, British Gas Services and Bord Gáis Energy households and small and medium business customer sites in British Gas Energy and Centrica Business Solutions. 2020 restated to include business sites.}

NOTES

Investor Presentation

A pre-recorded results presentation will be available on Centrica.com at 8am UK time on 24 February 2022 and Centrica will host a conference call for institutional investors and analysts at 9.15am UK time on 24 February 2022. To register for the call please visit:

https://webcasts.centrica.com/centrica117/vip_connect

If you would like to join in listen only mode, please visit:
https://Centrica.com/investors