Centrica as an Investment

Our purpose

Our business is founded on a 200-year heritage of serving people. Our ongoing purpose is to provide energy services and solutions to satisfy the changing needs of our customers, enabling the transition to a lower carbon future. We aim to deliver long-term value to our shareholders through returns and growth.

EV Charging
  • Market and Strategy

    Centrica’s focus is on its strengths of energy supply and optimisation, and on services and solutions centred around energy, with an emphasis on helping Consumer and Business customers transition to a lower carbon future. These are areas in which we have strong market positions and distinctive capabilities.

    This focus is aligned to three fundamental trends, which are changing the global energy landscape today:

    1. The energy system is becoming more decentralised as new renewable technologies are deployed on a smaller scale and nearer to the point of use.
    2. Customers have more choice about how they obtain their energy and the services they want. This means power and influence is shifting to the consumer.
    3. The digital revolution and technological advancements are accelerating this process, giving customers more control over their energy and services.

    Our strategy is founded on an analysis of these trends, sources of growth and the capabilities and efficiency necessary to pursue them profitably.

    Our Centrica Consumer division is focused on three strategic pillars:

    • Energy Supply
    • In-Home Servicing
    • Home Solutions

    The anchor of our Centrica Consumer division has always been energy supply and in-home installations and servicing. In energy supply we are the largest supplier in the UK residential market, and are in the top three for competitive energy supply in each of our chosen geographies of Texas, the US North East and Canada. In in-home servicing, we are the largest provider of contract energy services and the largest installer of central heating boilers in the UK, with a workforce of 8,000 engineers. We have also diversified our range of propositions, providing on-demand services through our Local Heroes platform while our Home Solutions business has the best-selling smart thermostat in the UK and offers other technologies and energy efficiency solutions for our customers under the Hive brand.

    Our Centrica Business division is also focused on three strategic pillars:

    • Energy Supply
    • Energy Optimisation
    • Business Services and Solutions

    Centrica Business has significant capabilities in distributed energy technologies, route-to-market services and energy optimisation including demand response. As a result, we can offer business customers a full range of energy solutions – from energy supply, to on-site power generation, to data-driven insight – which today’s businesses and public sector bodies demand. We are the largest energy supplier to SME customers in the UK and the second largest competitive retailer in North America, where we also have significant wholesale and optimisation positions. We also have nearly 24GW of route-to-market capacity under management across the UK, North America and Continental Europe and significant demand response positions.

    Under the Centrica Business Solutions brand we use our expertise and a range of solutions to help businesses increase operational efficiency, enhance business resilience, manage costs and reduce CO2 emissions, with a number of case studies available here.

    Find out more about our strategy and our 2019 strategy update.

  • Unlocking significant further cost efficiency potential

    Our strategy is underpinned by a cost efficiency programme, which is targeted at Centrica becoming the lowest cost provider in all its markets, consistent with our chosen brand positioning and propositions. Having delivered around £1bn of annualised cost efficiency savings between 2015 and 2018, we expect to deliver a further £1bn of annual cost savings by 2022.

  • Exploration & Production and Nuclear power generation

    To complete the transition to becoming a highly competitive, future-facing Energy Services and Solutions company, we have announced our intention to exit oil and gas production in addition to Nuclear power generation. We expect to dispose of our 69% interest in Spirit Energy, the North West European E&P company, and our interest in the UK’s Nuclear power generation fleet by the end of 2020.

  • Group Financial Framework and Targets

    The Group operates under a financial framework which links cash flow generation and disciplined reinvestment in the business with the desired outputs of a progressive dividend and a strong investment grade credit rating. The parameters of the framework are:

    Target Metrics

    Adjusted operating cash flow

    • Growth over the medium term

    Dividend

    • Progressive dividend from 2019 rebased level linked to growth in earnings and operating cash flow
    • Dividend cover from earnings of 1.5-2.0

    Controllable costs

    • £1bn of cost efficiency delivery over 2019-22

    Capital re-investment

    • Annual capital expenditure of around £500m post Spirit Energy and Nuclear disposals

    Credit rating

    • Strong investment grade ratings

    ROACE

    • At least 10 to 12%

    In the medium term, to 2021, the Group’s adjusted operating cash flow funds dividends, capital investment, pension deficit payments and financing costs.

    Proceeds from the targeted Spirit Energy and Nuclear divestments will be used to fund the cost of delivering the efficiency programmes and to reduce net debt to help underpin the balance sheet to help ensure strong investment grade credit ratings.

    Visit our Results centre for further financial information

Centrica’s purpose is to provide energy and services to satisfy the changing needs of our customers, enabling the transition to a lower carbon future.

The world of energy is changing rapidly. However the market positions that Centrica has developed means we are well placed, as we focus on being a leading energy services and solutions provider and on delivering long-term shareholder value through returns and cash flow growth.