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Group Highlights Group Highlights Group Operational Performance Group Financial Summary (Year ended 31 December 2020) Total recordable injury frequency rate Group revenue(1) Adjusted operating profit from (per 200,000 hours of work)(1) continuing operations 2020 1.03 Strategic Report Strategic 2019 1.06 £20.8bn £447m 2019: £22.7bn ▼8% 2019: £650m ▼31% Internal carbon footprint(1)(3) Group adjusted operating profit(1)(2) Statutory operating loss from (tCO2e) continuing operations 2020 38,368 2019 55,145 £699m £(362)m 2019: £901m ▼22% 2019: £(783)m ▼54% Brand net promoter score (NPS)(1)(4) Group adjusted earnings attributable Statutory profit/(loss) for the year to shareholders(1) attributable to shareholders(1) 2020 +13.8 2019 +15.1 £378m £41m 2019: £419m ▼11% 2019: £(1,023)m Employee engagement(1) Group adjusted basic earnings Statutory basic earnings per share (EPS)(1)(2) per share (EPS)(1) 2020 42% 2019 43% 6.5p 0.7p 2019: 7.3p ▼11% 2019: (17.8)p Total residential customers(5) Group free cash flow(1)(2) Statutory net cashflow from operating activities(1) 2020 9,217k 2019 9,440k £1,061m £1,400m 2019: £966m ▲10% 2019: £1,250m ▲12% Group net debt(1) Net exceptional charge after taxation included in statutory profit/(loss)(1) £2,769m £1,356m 2019: £3,181m ▼13% 2019: £987m ▲37% (1) Includes Direct Energy which is now classified as a discontinued operation. See notes 3 and 12 to the Financial Statements for further information. (2) See notes 2, 4 and 10 to the Financial Statements for definition and reconciliation of these measures. (3) Constitutes a reduction of 58% in 2020 and 39% in 2019 against the 35% reduction target of property, fleet and travel by 2025 (baseline: 2015). (4) Aggregated scores across British Gas Home, British Gas Business, Hive, Bord Gáis Energy, Direct Energy Home and Direct Energy Business, weighted by customer numbers. (5) Total residential customers excludes Direct Energy customers (2020: 2,578k, 2019: 2,782k) to ensure that it remains forward looking, Customers is a driver of long term value. Sustainability Centrica Stories Online Report Find our more about our Read more about our latest Read more about People & Planet Plan at thinking, case studies and our Annual Report centrica.com/sustainability insights on the issues that and Accounts at matter at centrica.com/ar20 centrica.com/stories Explore online: Visit our website to find out more: centrica.com Centrica plc Annual Report and Accounts 2020 1 Strategic Report Chairman’s Statement “ We are clear about the things we need to do to continue the turnaround of our business. We have made good early progress in simplifying our structure, but these are just the first steps in a marathon.” Scott Wheway Chairman Changing Centrica I am proud that our people rose to the challenge. Customer agents It was a great honour and privilege for me when asked by the swapped call centres for their kitchen tables to help our customers, Board to take up the Chairman’s role in April. On accepting this prioritising the vulnerable who needed extra support. Our engineers, responsibility, I had three priorities. Firstly, to ensure we navigated essential workers, played a crucial role in ensuring that our our way through the volatility caused by the impact of COVID-19, customers had heating and hot water, even at times of maximum protecting our employees and customers. This, of course, remains restrictions. Many of our colleagues went the extra mile, shopping critical for us. Secondly, to select and manage the transition to a for vulnerable customers, donating money, and using their skills to new Chief Executive. I am delighted that we secured Chris O’Shea make face masks to give to NHS workers. The crisis also saw the in this role. Thirdly, to face into and turbocharge our actions for launch of our collaboration with The Trussell Trust, to get food to turning around the Centrica business. In a nutshell, we are driving people who needed it most. To date, our engineers have delivered structural simplification to improve our efficiency and, ultimately, the equivalent of four million meals to foodbanks across the UK. deliver growth in our customer-facing businesses. I want to take this opportunity to pay tribute to our colleagues. This has necessitated a year of significant change for Centrica. Like many essential workers, they have been brilliant. Through We have faced and taken ownership of the hard issues that have their dedication, agility and compassion, we have helped caused our business to decline over the past decade. Although it to support customers and communities during these will take time and require further decisive actions, I am confident challenging times. that we can create a sustainable future for colleagues, customers and shareholders. Simplifying the business Beyond the COVID-19 crisis, our business needed to move quickly Our people went the extra mile during COVID-19 to address the fact that our UK energy supply business has been The Board appointed Chris O’Shea as Group Chief Executive in declining for ten years. We have now radically simplified our April. He is the right leader to navigate the Company through the business model. The modernisation of our terms and conditions COVID-19 crisis, ensure the Company’s financial resilience, drive was critical in enabling us to serve customers with the flexibility the recovery as we come out the other end of the pandemic, and they expect in a modern, digital economy. Our workforce has ensure the long-term welfare of colleagues and customers. shown great courage and adaptability in the changes we have needed to make, with over 80% embracing the new ways of COVID-19 is unlike any other global crisis that we have working by year end. I am sad that a small minority has pursued experienced in a generation. For the first time since the Second industrial action, but I am certain that the changes we are making World War, the needs of the communities we serve have rightly are key to our long-term sustainability and the interests of all had to take precedence over the financial performance of our colleagues. businesses, including Centrica. 2 Centrica plc Annual Report and Accounts 2020 The sale of our North American business, Direct Energy, allowed Working with governments and regulators us to realise significant value for our shareholders. As well as The past few years, including the introduction of the UK materially strengthening our balance sheet, the sale will enable energy price cap, have been a very turbulent and challenging us to focus on our core home markets – the UK and Ireland. time for energy suppliers, with most firms unable to make an It remains our intention to exit from our exploration and production economic return. (E&P) business Spirit Energy in a way and with a timing that We believe it is essential to work constructively in partnership with maximises value for our shareholders. As we look to simplify the regulators and with government agencies to create a market that Group further, focus on the customer and transition to a lower works for customers and also allows companies to invest with carbon future, we believe this is still the right strategy. confidence in projects which will deliver appropriate long-term As well as simplifying the structure of our business, some changes returns from the green investments that will be critical enablers were made to the Board. I want to take this opportunity to thank of our net zero carbon future. At Centrica we are dedicated my predecessor, Charles Berry, for his service to Centrica before to doing this. Report Strategic having to step down for health reasons. I would also like to thank Iain Conn for his commitment during his tenure as Chief Executive. Reaching net zero We also saw the departure of Executive Directors Sarwjit Sambhi, The 2021 United Nations Climate Change Conference (COP26) Richard Hookway and Johnathan Ford, and Non-Executive is scheduled to take place in Glasgow in November. This is an Directors Carlos Pascual, Steve Pusey and Joan Gillman. I thank important moment in the global fight against climate change them all for their contribution to the Company. and a significant milestone in the UK’s journey to reach net We welcomed Carol Arrowsmith as a Non-Executive Director and zero. Centrica has a leading role to play. We are committed to as Chair of the Remuneration Committee. Carol brings extensive decarbonising our energy system and supporting our customers FTSE experience, particularly advising boards on executive with a range of services and solutions to help reduce their remuneration across a range of sectors. own emissions. Kate Ringrose was appointed Group Chief Financial Officer We recognise the urgency to make net zero a reality, which is and joined the Board in January 2021. She brings a wealth of why we have enhanced our climate targets in line with science: experience from a wide range of finance roles across Centrica. • Centrica to be net zero by 2045 I am delighted to have both Carol and Kate join the Board. • Help our customers to be net zero by 2050 Difficult decisions In 2020, we were once again identified as a world leader for strategic action on climate change by CDP, an international We have had to make some difficult decisions to underpin the non-governmental organisation reporting to investors. This is the long-term strength of Centrica and to ensure that we emerged second consecutive year that Centrica has achieved a place on from COVID-19 well-positioned for the future. Unfortunately, one CDP’s prestigious ‘A List’ for our action and disclosure on climate of these actions was to cancel the 2019 final dividend.
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