Centrica’s profits have more than tripled over the last year to hit £3.308 billion amid the energy crisis.
For the year ending 31 December adjusted operating profit surged from £948 million in 2021, amongst other significant growth.
This follows significant growth in the previous year, when its adjusted profit soared by 112%, jumping from £447 million to £948 million due to oil and gas prices.
Throughout 2022, profits remained high with its adjusted operating profit increasing more than five-fold over the first six months of 2022 in comparison with the previous year, it noted in July.
The company – supplier British Gas’ parent company – reported adjusted EBITDA of £3.993 billion, up from £1.850 billion, and adjusted earnings attributable to shareholders of £2.050 billion up from £237 million. This led adjusted earnings per share to jump to 34.9p from 4.1p.
This was driven by gas production volumes from Spirit Energy and higher availability from its nuclear fleet, as well as the “high levels of reliability from the reopened Rough gas storage facility”.
“It is important to recognise that this is not sustainable and the committee is clear that if performance justifies a bonus in the coming year it is our intention to pay that bonus,” noted the company’s report.
Centrica’s statutory loss per share was 13.3p, which includes a £2.4 billion loss on certain re-measurements after taxation it noted. This reflects the revaluation of UK energy supply hedging positions, as the costs of wholesale gas and power prices fell towards the end of 2022.
On the retail side, British Gas’s residential customer numbers grew over the past year by 256,000, or 4%, and have continued to be boosted by taking on many from failed suppliers, as over half the suppliers in the market have shuttered during the last 18 months, impacting 4 million customers.
Through the Supplier of Last Resort (SoLR) regime, the company took on customers from through Together Energy, Simplicity Energy, PfP Energy, MoneyPlus Energy, People’s Energy, Zebra Power, Bluegreen Energy Services, Neon Reef and Social Energy Supply.
In total, British Gas took on over 150,000 customers in 2022 and approximately 550,000 in 2021.
It is able to able to recover relevant costs of taking on customers through the SoLR regime, such as buying energy incurred by suppliers that are not able to recover directly, as part of Ofgem’s regulatory framework.
As such, in December 2021 it claimed for an initial £361 million, and in December 2022 it claimed for £172 million, both of which were accepted by Ofgem. Overall £258 million was paid to Centrica in 2022, with £275 million recognised within its financial statements for last year as remaining recoverable.
Despite growing numbers of customers however, British Gas Energy saw its adjusted operating profit fall to £72 million from £118 million in 2021. It noted that it rolled out a support package totalling £50 million during 2022, helping to support customers struggling amid the energy crisis.
The bulk of its significant profits come from strong gas production and electricity generation against a backdrop of higher commodity prices, it noted.
“Our performance in 2022 demonstrates the benefits of our balanced portfolio and our strong balance sheet,” said Chris O’Shea, group chief executive at Centrica.
“The energy crisis and cost of living pressures have created a challenging environment for customers and communities, but we have been able to provide much needed stability and support. We invested £75m in supporting our energy customers in 2022, which was greater than the £8 post-tax profit per customer earned by British Gas Energy. Whilst customers may see some relief given recent easing of prices, it remains clear that some will continue to need help and we will do what we can to support them in the year ahead.”
O’Shea stated that it was “too early” to discuss his bonus on a call following the release of the financial results. Centrica’s incentive plan could mean he’s in line for a bonus of £1.6 million, although he turned down a bonus last year due to the challenging conditions for customers.
The financial results follow British Gas finding itself thrown into the spotlight in recent weeks, after it emerged they had forcibly installed prepayment meters in the homes of customers struggling to meet surging bills.
Following a national outcry, the company – along with other suppliers – have agreed to halt the installation of prepayment meters while reviews are under taken.
