Energising
a greener,
fairer future
Centrica plc
Annual Report and Accounts 2024
Strategic Report
1
Group highlights
2
Centrica at a glance
4
Chair’s statement
7
Group Chief Executive’s statement
11
Our Purpose and Values
12
Our stakeholders
14
Business overview
16
Market trends
18
Our strategic value drivers
26
Group Chief Financial Officer’s report
32
Our view on taxation
33
Business review
38
Key performance indicators
40 Our Principal Risks and uncertainties
52
Assessment of viability
54
Group Chief People Officer’s report
58
People and Planet
By delivering the energy our
customers need today, and the
energy security, efficiency, and
decarbonisation solutions needed
for the future, we are perfectly
positioned to grow through the
energy transition.
We have been at the centre of the UK
energy industry for over 200 years,
and our integrated businesses share
a common purpose – energising a
greener, fairer future.
66
Non-Financial and Sustainability
Information Statement
67
Task Force on Climate-related
Financial Disclosures
73
Our updated Climate Transition Plan
2024
Governance
80
Directors’ and Corporate Governance
Report
86
Biographies
94
The Board’s duties under Section 172
100 Audit and Risk Committee
112
Nominations Committee
114
Safety, Environment and
Sustainability Committee
116
Remuneration Report
148 Other statutory information
Financial Statements
154
Independent Auditor’s Report
167
Group Income Statement
168
Group Statement of Comprehensive
Income
169
Group Statement of Changes in Equity
170
Group Balance Sheet
171
Group Cash Flow Statement
172
Notes to the Financial Statements
270 Company Financial Statements
281
Gas and Liquids Reserves (Unaudited)
282 Five Year Summary (Unaudited)
Other Information
283 Shareholder Information
284 Additional Information – Explanatory
Notes (Unaudited)
289 People and Planet – Performance
Measures
292 Glossary
Unless otherwise stated, all references to the Company shall mean Centrica plc (registered in England and Wales No. 3033654); and references to the Group shall mean Centrica plc and
all of its subsidiary undertakings and equity-accounted associate/joint venture undertakings; and references to operating profit or loss, taxation, cash flow, earnings and earnings per share
throughout the Strategic Report are adjusted figures, reconciled to their statutory equivalents in the Group Chief Financial Officer’s Report on pages 26 to 31. See also notes 2, 4 and 10 to
the Financial Statements on pages 174 to 175, 183 to 189 and 200 for further details of these adjusted performance measures. In addition see pages 284 to 288 for an explanation and
reconciliation of other adjusted performance measures used within the document. This Annual Report and Accounts does not offer investment advice, and does contain forward-looking
statements. The Disclaimer relating to this Annual Report and Accounts is included on page 293.
8.1
7.7
1,703
6,512
1,552
2,752
25.7
70.6
19.0
33.4
989
2,207
2,858
2,744
4.5
4.0
+29
+17
1,733,882
1,685,840
0.63
0.84
+73
+71
Group highlights
Centrica plc Annual Report and Accounts 2024
1
1,149
2,752
Group financial metrics (Year ended 31 December 2024)
Group statutory operating
profit/(loss) (£m)
Group adjusted
operating profit (£m)
Group statutory
basic EPS (pence)
Group adjusted
basic EPS (pence)
2024
2024
2024
2024
2023
2023
2023
2023
Group statutory
net cash flow from
operating activities (£m)
Group free cash
flow from continuing
operations (£m)
Adjusted net cash (£m)
Full year dividend
per share (pence)
2024
2024
2024
2024
2023
2023
2023
2023
Group operational metrics
British Gas Energy – Residential
energy Touchpoint Net Promoter
Score (NPS)
(1)
British Gas Services & Solutions –
Services Engineer NPS
(2)
Total recordable injury frequency
rate (per 200,000 hours worked)
2024
2024
2024
2023
2023
2023
Colleague engagement
(3)
Total greenhouse gas emissions
(tCO2e)
(4)
2024
2024
2023
2023
† Included in DNV Business Assurance Services UK Limited (DNV)’s independent limited assurance engagement. See page 289 or centrica.com/assurance for more.
(1) Measured independently, through individual questionnaires, the customer’s willingness to recommend British Gas Energy following contact. (2) Measured independently, through individual
questionnaires, the customer’s willingness to recommend British Gas following a gas engineer visit. (3) Engagement is based on an average score out of 10 and measures how colleagues feel
about the Company. (4) Comprises Scope 1 and 2 emissions as defined by the Greenhouse Gas Protocol. 2023 restated due to availability of improved data.
We reported another strong result in 2024 against a more
normalised market backdrop. Further operational improvements
are resulting in higher levels of customer satisfaction and helping
to underpin delivery of more innovative propositions. Alongside
this, we have continued to invest in assets aligned to the changing
energy system, creating a range of long-term options ensuring we
remain well-positioned to create value today and into the future.
†
Centrica at a glance
Strategic Report Governance Financial Statements Other Information
We are an integrated energy company operating
across the energy value chain through our distinct,
but complementary businesses. Our aim is to create
value for all our stakeholders by delivering the energy
needed today and the energy security, efficiency and
decarbonisation needed for the future.
Key figures
21,000
Colleagues worldwide
6,800
Field service engineers
10m+
Customers
16.7GW
Renewable and flexible assets
under management
9.5m
Gas & power trades in 2024
>50%
Of the UK’s total gas storage
capacity
20%
Share of the UK’s nuclear portfolio
Our Purpose
At Centrica, we are ‘energising a
greener, fairer future’ because we
believe in energy that works for our
customers, communities and
colleagues, today and into the future.
Our People & Planet Plan
Our People & Planet Plan aims to create a more sustainable future – from
being a net zero business by 2040 and helping our customers be net zero
by 2050, to creating the diverse and inclusive team we need to achieve
this, whilst making a big difference in our local communities.
Read more about our People & Planet Plan on pages 58 to 77, with further
information available at centrica.com/peopleandplanet
People
Planet
Supporting communities,
our planet and each other
Our Values
Delivery
Courage
Collaboration
Read more about our Purpose and Values on page 11
Agility
Care
Centrica plc Annual Report and Accounts 2024
3
Each of our businesses
complements, de-risks
and adds value to one
another
Read more on page 14
Business overview
Retail
Through our different
retail brands, we provide
energy supply and
services to households
and businesses across the
UK and Ireland, helping
them to decarbonise
while ensuring reliable and
affordable offerings.
Infrastructure
We produce and store
gas and electricity every
day through our stake in
the UK’s existing nuclear
fleet, our portfolio of
renewable and flexible
assets, Spirit Energy and
the Rough gas storage
facility.
Optimisation
We are moving energy
from source to use,
supporting the
responsible buying and
selling of energy and
managing risk across our
portfolio.
Chair’s statement
It is a privilege to be writing to you for the
first time as Chair of your Company. This is
an exciting and demanding time for the
sector, and for Centrica specifically, as we
look to build on the momentum surrounding
the energy transition. Because of our unique
position in the sector, and our capabilities,
Centrica can play a pivotal role in this
transition while creating value for our
stakeholders. We believe we have the right
strategy to do this. Our integrated model
of market-leading businesses in energy
retail, optimisation and infrastructure,
complement, de-risk, and add value to
one another.
The last year has been a year of change
across the world. We’ve seen elections
in a number of markets including the
UK and Ireland. We look forward to
continuing to advocate for the things
we know matter to our customers and
working with the new governments to
achieve these changes.
Sadly, geopolitical tensions remain high.
We have stood through these crises, and
we have been there for customers.
That will continue, and we will do what
we can to provide energy security in our
key markets.
While being a stabilising force within a
volatile energy landscape we also bring
innovation, boldness and a strong desire
to improve customer service.
Over the last year we’ve continued to
support our colleagues, customers, and
the countries we operate in. I’d like to
touch on some of our achievements
briefly now.
Supporting our customers
A successful energy company has more
capacity to provide additional support for
customers. That is one of the reasons why
our performance matters; a successful
company can be there for customers when
it matters most.
Our Centrica Purpose, energising a greener,
fairer future, puts customers right at the
heart of everything we do. Investing and
making operational improvements to
improve our customer service is a key
focus, and this work is never finished.
While we strive to do more, and be better,
for our customers I’m very happy to see our
actions and investments have a material
impact on customer outcomes.
Over the course of 2024, we’ve seen further
progress in improving customer service in
British Gas Services & Solutions – a key
focus area. We’re also delivering an
improved NPS, a key metric of customer
satisfaction, in British Gas Energy.
We’ve voluntarily committed £140m to
support customers since the start of the
energy crisis. This dedicated support is
especially appreciated by those customers
who we know are going through economic
hardship. This funding has been put to good
use, with a number of schemes and
initiatives being funded. For example, we
donated £20m to the British Gas Energy
Trust in January 2024, giving the Trust a
very necessary funding boost so that it can
support those who need it now, and in the
future. The British Gas Energy Trust is an
independent charitable body that does
fantastic work specialising in the support of
vulnerable people. In 2023-24, their
Strategic Report Governance Financial Statements Other Information
In the days and years ahead, you
will see continued investment,
more innovation, and further
support for customers through
the energy transition.
Kevin O’Byrne, Chair
reporting period, they supported 64,500
people in total, through initiatives such
as energy advice and grants, and by
funding over 40 projects in the heart of
communities. According to new analysis by
Oxford Economics, the Trust has created
£264m in societal impact over the past four
years. Our colleagues and the Board are
really proud that Centrica has been able
to fund this work.
It is clear in 2023 that we got some things
wrong and had some difficult lessons to
learn around the practice of installing
prepayment meters under warrant, a
process which remains paused. This is
clearly a very complex activity for all energy
suppliers to manage and we recognised in
2023, following our own review, that we
would need to make improvements. Since
then, we’ve implemented a number of
changes to our systems, processes, training
oversight arrangements, and we remain
committed to supporting our customers,
particularly those that are vulnerable. This is
important as there remains a material issue
with affordability.
In 2024, hundreds of thousands of
customers had trouble paying their bill in
some way. This is a very serious issue. We
have helped where we can. In addition to
the support we offer through our charity
partners, we launched our innovative and
first-of-its-kind ‘You Pay: We Pay’ scheme.
This scheme 100% matches payments that
eligible British Gas customers who are
struggling make into their account to
reduce their debt. However, the sustainable
solution to this challenge must involve
government, the regulator, energy suppliers
and charities. One such solution which we
have called for might be a social tariff,
underpinned by enhanced data sharing,
that supports the most vulnerable in society.
We must look at this holistically if we are to
find a solution that works for customers.
Supporting our colleagues
Supporting our colleagues is the
cornerstone of our strategy. If our
colleagues are happy and engaged, then
everything else follows. I’m hugely grateful
for everything our colleagues have done
over the course of 2024 to keep safe, look
after our customers, and keep Centrica on
track with our strategy. Thank you.
It makes good business sense then for
Centrica to invest in its people and
improve its leadership capabilities. In
2024 we hired 339 new apprentices, over
100 new interns joined Centrica in the
summer of 2024, and 60 graduates came
into the business in October as part of our
graduate intake. We also increased hiring
in our customer service teams, hiring
hundreds of new agents to support our
customers and bringing our total
Customer Resolution Agents employed
to around 3,500. These colleagues will all
drive improvements in Centrica’s overall
customer service. We work hard to
ensure all of our colleagues are trained
and equipped with what they need in
order to do their jobs well.
Our colleagues also give freely to their
local communities too, and in total,
colleagues have given 10,683
volunteering days to local causes during
2024. This is an increase of 37%
compared to the previous year.
All of this is driving change in how
satisfied our colleagues are to be working
at Centrica. Engagement, a key metric
your Board reviews to see how our
colleagues are feeling, is at 8.1,
compared to 7.7 at the end of 2023. This
improvement is a testament to the work
teams across Centrica are doing to make
this a great place to work.
You will read in the Remuneration Report
that the Remuneration Committee has
recommended changes to the pay of our
Group Chief Executive. This is a result of
an extensive review carried out by the
Committee, which will see Chris O’Shea’s
total remuneration package being
brought into line with the competitive
rates paid to other FTSE 100 chief
executives. When Chris O’Shea was
appointed Group Chief Executive on
14 April 2020, the Company was ranked
154
th in the FTSE with a market
capitalisation of £1.9bn. Since his
appointment, Chris has led the Centrica
Leadership Team to materially strengthen
Centrica and create substantial value for
stakeholders. On 31 December 2024,
Centrica was ranked 62
nd in the FTSE 100
with a market capitalisation of £6.8bn and
we have consistently been a constituent
of the FTSE 100 Index since 2022. It is
important the Committee sets pay at
a level that reflects the individual’s
contribution to the improvement in
business performance, the value created
for stakeholders, the size and complexity
of running a business like Centrica, and
the scale and scope of the opportunities
ahead of us. Carol Arrowsmith, Chair of
Centrica’s Remuneration Committee,
goes into more detail in her statement
in the Remuneration Report.
I believe it is important that we pay all
employees in the Company competitively
based on their role, skills, experience,
and performance. We need to do the
same for the Chief Executive so that we
can attract and retain high-performing
executives with the right skillset to lead
an organisation of 21,000 colleagues. I am
also very clear that we will only pay for
performance, and performance targets
set for our management team will be
demanding to ensure that is the case.
Energy security
Energy security continues to be a vital
consideration in a number of countries,
and Centrica plays a vital role in this space.
Centrica Energy is the conduit for this
work, and you can see that in practice in
the Liquefied Natural Gas supply deal with
Repsol announced in February 2024, and
two natural gas sale and purchase
agreements with Coterra Energy
announced in October 2024. These deals
show the breadth of Centrica Energy’s
capabilities in energy trading.
At the same time as securing this valuable
transition fuel, we’ve made investments in
proven renewable generation technology
through power purchase agreements for
wind farms and long-term solar power
agreements. And we’ve also innovated,
investing in new technologies such as the
completion of the 20MW hydrogen-ready
peaker in Redditch and we’ve showcased
forward-thinking infrastructure
investment such as our £70m investment
in Highview Power’s Liquid Air Energy
Storage in June.
As I note below, we believe that our
Rough asset can play an important role
in increasing the UK’s energy and price
security.
We know this work is valuable not only
for our business, but also on a macro
level. Energy security will continue to
be a focus area for Centrica in 2025
and beyond.
Performance
Centrica performed well in 2024. We
delivered Adjusted Basic EPS of 19.0p
and free cash flow of £989m. We have a
strong balance sheet and a robust asset
base. Throughout this report you will find
a detailed summary of the performance
of the business.
We extended the Company’s share
buyback programme by £200m in
July 2024, by a further £300m
Centrica plc Annual Report and Accounts 2024
5
in December 2024, and by £500m in
February 2025. When this is completed,
it will bring our equity repurchased to
£2bn since November 2022 (representing
approximately 25% of our issued share
capital). Our capital allocation framework
remains unchanged. While we look to
invest shareholder funds in a disciplined
way, when we consider we have surplus
capital we will decide how best to return
that capital to shareholders. Additionally,
we returned capital to shareholders in the
form of dividends, which came to 4.5p at
the end of 2024, inclusive of a 1.5p interim
dividend outlined in July.
As laid out in July 2023, Centrica aims to
invest £600m-£800m a year in projects
across our key priorities up to 2028, and
we’re making progress against this aim.
In 2024 Centrica capital expenditure was
£564m (up from £415m in 2023). This
target is challenging to meet given our
strict investment criteria. The Board
works closely with the executive on the
investment plans so decisions made
result in Centrica being a resilient and
more valuable investment for you well
into the future.
Taken together with the underlying
performance of the business, I believe
the investment case for Centrica is
compelling.
We also make material tax contributions
in the countries in which we operate in. In
total, including the Electricity Generator
Levy, National Insurance and other
similar contributions, we paid £1bn
to governments during 2024.
Delivering net zero
We have a strong commitment to net
zero which we make clear in our Purpose:
energising a greener, fairer future. Your
Board is intimately involved in ensuring
we make meaningful progress and as part
of this, they have been fully involved in
developing and approving our updated
Climate Transition Plan launched in
January 2025.
This builds on our People & Planet Plan
launched in 2021, which includes five
Group-wide goals that accelerate action
on achieving net zero and building a more
inclusive future. It outlines the team we
need to build in order to get to net zero,
the targets we want to meet, and how
we could make a difference in our local
communities on this journey. With the
progress we’ve made and the insights
and experience we’ve gained since then,
we have a better understanding of the
risks and opportunities as well as the
dependencies relating to net zero. This
has enabled us to strengthen our
commitments in our updated Climate
Transition Plan and provide greater
transparency around the dependencies
and challenges, and exactly how Centrica
will drive forward the energy transition.
We are committed to holding ourselves
to account through a new suite of
improved climate ambitions. For example,
all Centrica customers in the UK and
Ireland will be supplied by renewable or
zero carbon power by 2030, and we will
significantly expand our Hive platform to
help customers save money and carbon.
We have also set bold ambitions to
decarbonise our key operations within
the 2030s through our green-focused
investment programme, such as our plan
to transform depleted gas reservoirs in
Spirit Energy’s Morecambe site into one
of the UK’s biggest carbon storage hubs.
I am mindful that we need to balance many
dependencies here; energy security,
employment, pricing for customers,
returns for investors, and, of course, the
environment. There are few easy answers
to this, but the Board and management
team are committed to the goals and will
endeavour to make the best decisions out
of the options available to us.
Future plans
At Centrica we have a strong governance
framework and a strategic focus on key
issues.
I want to offer you my assurance as
your new Chair that Centrica remains
committed to disciplined decision-
making. Our stewardship of your
investment is paramount, and Centrica’s
investment committee is focused on
getting shareholders a suitable return.
While we are confident in the
investments we’ve made in 2024, we’ve
also turned down many opportunities.
We will not invest unless the relevant
criteria are met.
We’ll also continue to make the case
for projects that could benefit
all stakeholders – such as the
redevelopment and expansion of the
Rough gas storage facility. We expect
Rough to make a loss of between £50m
and £100m in 2025. We have completed
all of the preparatory work to enable
a £2bn investment to be taken to
redevelop Rough for gas and hydrogen
storage over the next 45 years, but
without a regulatory model to underpin
the investment, we cannot make this
investment. While the site plays an
important role in the UK’s energy and
price security, and can be a crucial part of
the future hydrogen economy, making
material losses is not sustainable on an
open-ended basis and we will update on
the future of Rough in the coming months.
Board
My transition from Senior Independent
Director to Chair has been
straightforward.
I want to thank Scott Wheway for his
tenure at Centrica and personal guidance.
It was a privilege to work closely with
Scott since I joined the Board. I hope you
will all join me in thanking Scott for his
very valuable contribution to Centrica at a
critical time in the Company’s history.
I am delighted that Jo Harlow has agreed
to become Senior Independent Director.
Jo has extensive board and executive
experience which the Board and I will
benefit from.
I am committed to leading an effective
Board that works in a constructive way
with the executive to build a stronger
Centrica that creates value for our
stakeholders.
This year we performed an independent
external review of the Board’s
effectiveness. I’m pleased that the review
concluded that the Board is operating
effectively. There were a number of
potential actions identified that would
help to further strengthen the Board’s
effectiveness, which we intend to
progress in 2025.
Closing
Finally, I want to say thank you to Centrica’s
customers, colleagues, and stakeholders for
their continued support and trust. I will work
tirelessly to ensure that support and trust is
well placed.
In the days and years ahead, you will see
continued investment, more innovation, and
further support for customers through the
energy transition. While challenges remain,
Centrica’s capabilities, infrastructure, and
dedicated team position it well for
continued growth and success.
Kevin O’Byrne, Chair
19 February 2025
Strategic Report Governance Financial Statements Other Information
Group Chief Executive’s
statement
The main job of a Chief Executive is to
create value for the owners of a
company. I know that may be obvious,
but too many companies can appear to
lose focus on the job at hand with the
ever-increasing environment, social and
governance (ESG) requirements. So, I
wanted to reassure you, our owners, that
I never forget that I work for you, our
shareholders; and I am focused on
creating value every single day of the
year. This means focusing on operational
improvements to our businesses, giving
customers what they want and not what
is easiest for us to offer, and investing in
assets that create value aligned to the
changing energy system.
That’s not to say we don’t take our
broader responsibilities seriously at
Centrica – how we do what we do is as
important as delivering results, because
the way we go about our job will
determine whether what we do is
ultimately sustainable. We are energising
a greener, fairer future every day, but we
never lose sight of the job at hand – value
creation. For Centrica, we don’t see a
conflict between these aims – the energy
transition is a huge opportunity for your
Company.
The opportunities to create value for your
Company are truly huge. Electricity demand
is growing and we’re seeing some of that
growth come from new areas entirely. For
example, around 90% of all data in existence
has been created this decade. That may
tell you that we are poised to unleash
unbelievable advances based on data;
alternatively, it may tell you that we’re
creating a lot of “stuff” that we’ll never use.
As with everything, the truth is probably
somewhere in between. For your Company,
however, what this means is huge growth
opportunities. All of the data being created
needs to be stored, and for it to be useful,
it needs to be processed by ever more
powerful computers. This storage and
processing of data requires energy; lots
and lots of energy.
Energy has driven progress for the past
200+ years; from the energy used to
create the steam which drove the
industrial revolution, to the energy
required today to drive the technology
revolution which is in full swing. And those
companies who can offer the best, most
cost-efficient service to increasingly
energy-intensive customers will benefit
most; companies like Centrica.
That’s not to say it will be easy – whilst
we’ve made huge improvements in our
performance over the past few years,
we can push ourselves to go further. In 2025
we plan to increase the pace of change in
our organisation to become even more
entrepreneurial and less bureaucratic; even
more focused on operations serving the
commercial outcome; even more
purposeful than hesitant; even more
focused on how to make a good decision
rather than how to avoid making a bad
decision; even more focused on what is
good for Centrica as a whole (what I call
“good for the house”) than good for
individual businesses. Whilst we are so
much better than we were, the pleasing
thing is that there is still so much to go for –
despite progress, our opportunities today
are greater than I’ve ever seen them.
Centrica plc Annual Report and Accounts 2024
7
I believe, as I always do, that
Centrica’s most exciting,
impactful, and successful days
lie ahead. Together, we can
energise a greener, fairer future.
Chris O'Shea, Group Chief Executive
We owe it to you, our shareholders;
we owe it to our 21,000 hard-working
colleagues; we owe it to our 10m loyal
customers. We will not stop in our pursuit
of excellence.
Change
Last year I said that change was the only
constant in our sector. Whilst it is an
overused phrase, it is undeniably true.
In 2024 we’ve seen significant change
to the external environment in our core
markets. In particular, the UK, Ireland,
and the USA have all had major elections.
We now know that the UK has a Labour
Government, President Trump is back
in the White House, and Ireland has
continued with a Fianna Fáil and Fine Gael
led coalition. As governments across the
countries we call home focus on their
ambitious targets for growth and net
zero, I want to take this opportunity to
acknowledge those targets. We will do
our utmost to help those countries we
serve achieve their goals. We are ready
for the transition, and we welcome any
ambition to go further, faster. And whilst
we don’t have major operations in the
USA, we buy a lot of gas from the USA
(in the form of Liquefied Natural Gas)
which makes it a key country for us.
Centrica has always been, and will always
be, at the forefront of change. The
Company I am so privileged to lead for
you will play a leading role in the energy
transition, regardless of the technologies
that win out. We are well placed to be there
for our customers, as we were through the
energy crisis of the last few years. We will
rise to the challenge in front of us, all while
we are driven by our Purpose to energise
a greener, fairer future.
Business performance
Our CFO, Russell, has a detailed
commentary on how your Company has
performed in 2024 (see page 26), but I
wanted to touch on the highlights here.
I’m pleased to say your business has
performed very well against a backdrop
of more normalised market conditions.
The Group is working better together,
and that’s making a difference for all of
our customers. Our Group adjusted
operating profit was £1.6bn compared to
£2.8bn at year-end in 2023, with Adjusted
Basic EPS of 19.0p in 2024 compared
to 33.4p in 2023, and free cash flow of
£989m. Our net cash position remains
strong at £2.9bn, much of which we plan
to invest to ensure we can continue to
perform just as strongly in the future.
Given some one-offs in the 2023 results,
we can now see a more ‘normal’ result
from the Group – and it’s a strong result.
The updated strategy we unveiled in
2023 remains sound, and it is bearing
fruit for colleagues, customers and
shareholders. We will continue our
programme to re-invest around £4bn in
the years leading up to 2028, but only for
projects with the right balance between
risk and reward, and only if the regulatory
frameworks support investment. There is
much that is outside of our control, but
when we see an opportunity that works
for Centrica, that delivers value for our
shareholders, we will go for it.
How we do what we do at Centrica
We keep things simple at Centrica. We
have a purpose (energising a greener,
fairer future); we have five core values
(Care, Collaboration, Courage, Agility and
Delivery); and we have a belief in a flat
structure with as little management as
possible (no more than six layers from the
Centrica Leadership Team, essentially
my direct reports, to the front line).
Our culture is what sets us apart.
While we have materially improved our
operational delivery over the past few
years, we must be even more agile and
even more courageous. We have allowed
some of the bureaucracy we eliminated
to come back in, slowing us down by
spending too much time doing business
with ourselves. We will fix this in 2025
by introducing more focus into our
organisation – during COVID-19, we were
very focused and we achieved amazing
things. We need to recreate an
environment where we’re never
comfortable, where we’re willing to try
new things, where we’re positively
dissatisfied; a culture of innovation and
invention. The answers to the issues
facing our Company could come from
any of our colleagues, whether they are
on the phones, in the vans, in the plants,
on the offshore platforms, or the power
stations. Part of my job is to ensure we
Strategic Report Governance Financial Statements Other Information
Our Senior Leadership
Team (SLT) is made up
of my direct reports
and their direct reports
– around 100 people.
We get together each
quarter to ensure
cohesion and
alignment. We have
three key themes to
help drive the cultural
change we need to see
to become more agile,
more courageous,
more collaborative and
to deliver even more:
One team
First and foremost, we work
for Centrica. So, the question
every leader must ask
themselves is ‘is this good for
the house’ when faced with
making a decision.
Ownership
We must own the outcome of
our actions, not assuming that
someone else will fix something
we see which needs fixing, and
asking ourselves whether what
we are doing will improve
things for our customers.
Growth mindset
We must innovate and try new
things; asking ourselves ‘why
not’ rather than ‘why’ when
someone suggests a new idea;
asking ourselves ‘what needs
to be true’ to make something
work rather than state why
something won’t work.
If we can continually live by these three themes and demonstrate our five core
values, we will continue the evolution of our culture, delivering a step change in
our performance and creating material value for you, our shareholders.
get to hear to those views. Whilst we hear
from our colleagues regularly, conducting
colleague engagement surveys four
times a year, I think we can be much
bolder with the actions we take as a result
of hearing those views. And I’m delighted
that despite this being the fourth year of
quarterly engagement surveys, we still
see around 80% of colleagues participate
in every survey – I’m truly grateful to
colleagues for sharing their views, and we
will do better to implement their ideas.
Commitment to our customers
Nobody can deny that the energy
transition is now in full flow. But what the
energy transition will ultimately look like,
nobody can say. We know the destination
(an energy system which has minimal, if
any, carbon emissions) but what we don’t
know is the precise route nor the time of
arrival. Go too fast, and countries could
lose economic competitiveness and
suffer a huge reduction in living
standards; go too slow, and the planet
could be irrevocably damaged. The
stakes are high.
At Centrica, we are agnostic about the
technology that will get us to net zero. We
believe that pragmatism should win out over
ideology, and we are always thinking of how
we navigate the energy transition in a way
which is best for our customers, delivering a
future where energy is affordable, secure
and clean. In some circles this is referred to,
rather grandly, as the ‘energy trilemma’, but
to me this means that we have to be careful
we don’t go down the path of the ideologue,
creating clean but unaffordable energy
which is not available on demand.
Over 2024 we invested significantly in
our customer service and we’re seeing
big improvements as a result. Customers
are happier with our service, and
complaints are falling. This is achieved
by very simple things like answering
customers calls in seconds rather than
minutes and improving the experience
when customers contact us. We have
even further to go, but I’m really happy
to see these improvements.
Beyond investing in our customers, during
2024 we have invested in liquid air energy
storage in our partnership with Highview
Power; we have invested in pursuing the
opportunity to build a new nuclear power
station (Sizewell C) in Suffolk in the UK;
we have invested in batteries and solar;
we have invested in technology which
gives better customer service and helps
customers reduce energy bills and
carbon emissions; we have invested in our
plans to store CO2 in the Morecambe Bay
gas fields; we have invested in plans for
clean hydrogen production and storage.
But we have also invested in gas fired
power stations; we have invested in the
plans to extend the Rough gas storage
facility; we have signed new LNG deals.
We will need a mix of technologies to
deliver net zero and we will need natural
gas as part of the energy mix for decades
to come to enable full use of renewable
power. What drives us is giving our
customers what they want and need,
and generating a good return for our
shareholders whilst doing so.
Commitment to our new Purpose
A little over a year ago we announced
our new Purpose; energising a greener,
fairer future. Everything we do is a step
towards living this Purpose fully for our
customers, for the environment, and the
countries we operate in. This will make
the value we create sustainable in the
truest sense of the word – it will be
repeatable and will deliver consistently
over a long period of time.
To seize this opportunity, we outlined
our green focused investment strategy
in 2023. This will see us ramp up our
total investment into green activities
to more than 50% between 2023-28 in
energy security of supply and flexibility,
renewable and low carbon generation, as
well as customer offerings that advance
the transition to net zero.
We’re making good progress having
reached over 30% green investment
already – a big step up from less than
5% back in 2019. This reflects our
commitment to move at pace in aligning
our business model to net zero. Our in-
house green classification system is built
on the foundations of the EU’s Sustainable
Taxonomy. However, its ‘by-inclusion’
format can today be restrictive, so
we justify our own independent
classifications where appropriate.
We want to be active in shaping official
taxonomies and plan to engage with
both EU and UK policy makers to ensure
they capture all activities in the right way.
We will publish any deviations from
official taxonomy reporting.
One example of our investment that
I’m really proud of is our new Meter
Asset Provider (MAP) business. This
investment, combined with advances
in Demand Side Response (DSR), will
mean that customers reduce their carbon
footprint at the same time as saving
money. In 2024 we installed a million
smart meters for customers, half of
these were through our MAP business,
providing the Group with a steady source
of income for years to come while still
helping customers decarbonise.
Building on all of this work, we published
an updated Climate Transition Plan in
early 2025. This plan is our clear,
actionable roadmap for net zero, and it
outlines the detailed goals we will meet
in order to drive change. We now believe
that committing to faster decarbonisation
is achievable and will drive value creation
in your company as we place Centrica at
the heart of the energy transition. Again,
this is not blind ideology, it is a hard-nosed
business decision – but the fact that it has
positive implications for the environment
is particularly pleasing.
Most notably, we’ve brought forward
our target to become a net zero business
to 2040, five years ahead of the 2045
timeline set by the original plan and
10 years ahead of 2050. We’ve also
maintained our commitment to get
customers to net zero emissions by 2050.
There’s much more detail in the full plan
and I’d encourage you to take some time
to read through it – we’re very proud of it.
And we’re doing this because it’s good
for Centrica and we can create value
from doing it – it’s not an ideologically
driven pursuit, rather it's grounded in
pragmatism.
We will play our part in creating a robust
energy system that meets today’s
demands and anticipates future needs.
Centrica plc Annual Report and Accounts 2024
9
Commitment to our colleagues
Our performance also means we can
support our colleagues. Our innovative
profit share scheme continues, which
means our people share in the success
they’ve helped create – we take 2% of
the Group’s pre-tax profits, divide it by
the number of colleagues we have, and
everyone gets the same allocation of
shares. We started this in 2022 and
someone who has been with us since we
started this will have £5,886 of Profit
Share payments with another £1,400 of
profit share to come for 2024, making
total Profit Share payments so far of
£7,286 - plus any share price growth on
the awards. This allows colleagues to
share directly in the success of the entire
Group and encourages colleagues to
think like shareholders. We’re exploring
additional ways that colleagues can
invest in the value they create at
Centrica, and I hope to be able to share
more information on this in 2025.
We’re also committed to investing in the
next generation of Centrica colleagues.
We want to create one new apprenticeship
for every day of this decade, and in 2024
we hired 339 new apprentices, creating
new skilled green jobs with colleagues
training at our award-winning in-house
academies. Our internship programme saw
unprecedented success this year, with
over 100 interns joining Centrica in the
summer of 2024, and we welcomed 60
new colleagues in October as part of our
graduate intake. We have developed
pathways for ex-military service people
and their spouses, for ex-Olympic and
Paralympic athletes, in an effort to increase
our diversity and change how we think.
I am particularly committed to these early
career initiatives for two reasons: getting
my first trainee job changed my life and I
want to be able to do that for others; and our
new colleagues bring different perspectives
and experiences to our teams, making us
think and act differently, changing our
culture for the better.
Commitment to society
I believe companies have a responsibility
to contribute to the society in which they
operate, and a big part of this is the way
our colleagues interact with the world
around them through volunteering. I’m
always impressed by the dedication
and commitment of our people, but this
year their effort has been astounding,
and as a result we reached our stretch
volunteering target early. Our aim was to
hit 8,000 volunteering days by the end of
2024, but we met that goal in October
and went on to hit 10,683 days for the
year. This allows us to put back into the
community, but it also allows us to build
our team spirit and strengthen our bonds.
Beyond volunteering, we’ve made
£3.6m in charitable donations over the
course of 2024, and contributed £1bn
of corporation tax and other payments
in the year.
The partnerships I outlined last year – with
Team GB, ParalympicsGB, Scottish Rugby,
and the Scottish Football Association – have
all been dialled up in 2024. For example,
our partnership with the Scottish Football
Association saw us launch 120 new week-
long Scottish Gas Football Camps to
provide 6,000 children from all socio-
economic backgrounds the opportunity to
play football during the school holidays –
and we provided hot meals to every child at
those camps, helping alleviate the hunger
which vulnerable children can experience
during school holidays. And alongside Team
GB and ParalympicsGB we launched Get
Set for Positive Energy, our bespoke
schools programme which aims to reach up
to one million families and children. These
partnerships are so much more than simple
brand sponsorship deals.
The future for Centrica
Looking ahead to 2025, I believe we’re
on the right path. We’ll continue to up
the pace and our expectations continue
to rise every single year. We have the
capability, the market positions, and the
drive to deliver material value for all of our
stakeholders.
I would like to take a moment to thank
our former Chair, Scott Wheway, for the
contribution he has made to Centrica,
chairing the Board through a period of
significant volatility and change for the
Company. On a personal level, Scott has
been a huge support to me, and I have
learned a lot from working with him.
Centrica is a very different company to
the one Scott asked me to lead in early
2020, and Scott leaves with the business
in a great position.
And I’d like to welcome Kevin O’Byrne
to the role of Chair, having started at the
end of 2024. Kevin brings a wealth of
experience and a deep familiarity with
Centrica to the role having joined the
Board in May 2019 and assuming the role
of Senior Independent Director in June
2022. Kevin is uniquely equipped to help
Centrica deliver on the work ahead, and
I’m excited to continue to work with
Kevin and the Board to drive your
Company forward.
As always I want to finish by extending
my heartfelt gratitude toward Centrica’s
colleagues, customers, and partners for
their collective efforts in making 2024
another year of progress, and to you, our
shareholders, for placing your trust in me
to lead this great company.
I’m optimistic about the year ahead.
We’re ready to lead our business through
this time of transition, doing the right
thing for all stakeholders. I believe, as I
always do, that Centrica’s most exciting,
impactful, and successful days lie ahead.
Together, we can energise a greener,
fairer future.
Chris O’Shea, Group Chief Executive
19 February 2025
Strategic Report Governance Financial Statements Other Information
Our Climate
Transition Plan
Centrica to be a net
zero business by 2040
Customers to net zero
emissions by 2050
LNG shipping will be
net zero by 2035
Upskill 3,000 engineers
with green skills
by 2030
Gas production and
gas storage to be net
zero by 2035
Zero emissions vehicle
fleet – cars by 2026
and vans by 2030
Read more about our wider
Climate Transition Plan on page 73
Our Purpose and Values
Centrica plc Annual Report and Accounts 2024
11
Our Purpose is ‘energising a greener, fairer future’
because we believe in energy that works for our
customers, colleagues and communities, today and in the
future. As we evolve to meet tomorrow’s challenges and
prepare for a net zero future, we are always guided by our
Values, which remain firmly embedded in our company
culture and honour our proud heritage.
Our Values...
Care: We do the right thing for our customers,
colleagues, communities and planet. We
recognise the impact we can have on others,
do all we can to keep each other safe and
always do the right thing for all our
stakeholders.
Collaboration: We bring in diverse
perspectives to create a better future
together. We trust each other, work across
boundaries and welcome different views and
perspectives.
Courage: We are bold and push ourselves
to find better solutions to every challenge.
We continuously challenge the way we do
things, explore new possibilities and take
responsible risks that help the business
to change and progress.
Agility: We make progress at pace by focusing
on what matters and learning from setbacks.
We continuously improve the way we do
things, prioritise those activities that will deliver
the best results and adapt quickly when things
go wrong.
Delivery: We do what we promise, on time,
every time, to move forward every day. We
ensure we take personal responsibility for
getting things done and delivering great
outcomes that make things better for our
customers and the business.
We provide support to customers who have been
impacted by the cost of living crisis through targeted
and meaningful schemes such as 'You Pay: We Pay'
and the British Gas Energy Trust, which was
established in 2004 to alleviate fuel poverty.
Through our investments in nuclear, battery and solar
assets, we generate zero carbon power and we work
across our business units, with government, with
regulators and with investors to provide green, affordable
energy to our residential and business customers.
Through Spirit Energy, we are aiming to repurpose the
Morecambe gas fields for carbon capture and storage,
leading the way for this technology to be deployed at scale
in the UK. The Morecambe Net Zero Cluster has the potential
to be the UK’s biggest carbon storage hub, able to store the
equivalent of three years’ worth of the UK’s CO₂ emissions.
In December 2023, we installed our first smart meter
through our in-house Meter Asset Provider (MAP). Our
initial pilot installations provided us with key learnings,
allowing us to adapt quickly and refine our approach.
We are continuing to accelerate the MAP business, with
447k Centrica-owned meters installed.
We value delivering great service and customer
outcomes. This year we have invested significantly
in customer service, leading to reduced complaints,
faster call answer speeds and positive improvement in
Net Promoter Scores (NPS) across our retail
businesses.
...in action
Our stakeholders
Strategic Report Governance Financial Statements Other Information
Engaging our key stakeholders enables us to serve
them better, creating stronger outcomes for
people, planet and our business.
Section 172(1) Companies
Act 2006 Statement
The Directors consider that they
have performed their duty as
required under Section 172(1)(a)
to (f) of the Companies Act 2006
by promoting the success of the
Company for the benefit of our
members and stakeholders
through their decision-making.
These pages set out our key
stakeholders. Further detail on
how the Board engaged and
balanced the needs of different
stakeholders during 2024,
together with principal decisions
made as a result, are disclosed
on pages 94 to 97.
Energy is central to everyday life – from
how we run our homes and businesses,
to the way we travel around. Effective
stakeholder engagement is therefore
key because the choices we make and
the action we take, can impact a
diverse range of stakeholders. That’s
why we carefully listen to and consider
stakeholder views so that we can
understand their concerns or needs
and evolve our strategy accordingly.
In doing so, we can drive meaningful
change by tackling challenges and
harnessing opportunities to energise
a greener, fairer future.
Engagement is often led by senior
leaders who regularly update the
Board. This equips the Board with the
knowledge to make informed decisions,
that fully consider the long-term
consequences of its decisions, from
the perspective of our different
stakeholders.
Our key stakeholders
Why they’re important
Our ability to attract and retain customers
is fundamental to our survival as a
company. By actively listening to their
needs and feedback, we can provide
services and solutions that meet their
expectations and earn their trust.
What they care about
Customer service, competitive energy
prices, bill support and affordable energy
management as well as low carbon
services and solutions.
How we engage
We connect with customers through
surveys and focus groups alongside
proposition and usability testing. Using
this output, we can help customers save
time, money and energy. Dedicated
channels are also provided to ensure
support for those who need extra help
with their energy bills.
Outcome example
In response to customer feedback, we
focused on driving strong operational
performance across our customer-
facing teams and customer service
systems. The Directors monitored
performance and continued to invest
in empowering colleagues to deliver a
great service whilst migrating most of
our residential British Gas Energy
customers to the new, flexible customer
platform. As a result of a better service
provided to customers, we experienced
lower complaints and higher Net
Promoter Scores.
Why they’re important
Positive engagement empowers our
team to live by our Purpose and Values,
whilst creating a culture where every
colleague counts. In turn, this helps us
attract, promote and retain the diverse
and talented team we need to deliver
our strategy, leading to better
customer outcomes.
What they care about
Health, safety, wellbeing, reward,
development, inclusion, engagement
and communication.
How we engage
Colleague voices are heard through
a range of channels including our
colleague networks, Shadow Board,
townhalls, focus groups, surveys and
engagement with trade unions. These
interactions help create a safer and
fairer workplace with competitive
rewards, alongside inclusive training and
action plans.
Outcome example
Following feedback from colleagues
which identified an opportunity to
enhance colleague connection with
the Company, a new Purpose was
developed with their help. With Board
consideration, ‘energising a greener,
fairer future’, was launched and every
team had sessions to understand how
they contribute to it. We also introduced
our Employee Value Proposition,
#MoreThanACareer, to reinforce what
it means to work for us. Achieving a
stronger connection to our Company
and its Purpose, helped contribute to
our top quartile engagement score.
Why they’re important
Shareholders and debt holders provide
vital funds that support the running of our
business and long-term growth. With
a shared commitment to our success,
we can focus on delivering sustainable
investments and progress alongside
growth and returns.
What they care about
Financial and operational performance,
shareholder returns and dividend,
strategy and growth, alongside
Environmental, Social and Governance
(ESG) matters including net zero.
How we engage
We primarily utilise post-financial result
investor roadshows, the Annual General
Meeting (AGM) and ad-hoc meetings
to engage investors. We also respond to
information requests and assessments
from ESG ratings agencies. Engagement
helps us consider and reflect the views
of different investors.
Outcome example
We held dedicated meetings, workshops
and webinars with investors to
understand their expectations and secure
their support for our updated Climate
Transition Plan. The Board has been
intimately involved in the development
and approval of the Plan, which took into
account the full range of investor views.
At the AGM in 2025, the Plan goes for a
non-binding shareholder advisory vote.
Why they’re important
Governments and regulators determine
the framework in which we operate.
Working together in a constructive
way helps to create a stable regulatory
environment where policy is developed
in the interests of consumers, whilst
ensuring a sustainable and
investable market.
What they care about
Market design and operation, customer
service, skills, inclusion, net zero, energy
security and affordability.
How we engage
To exchange expertise, we participate in
consultation processes, attend meetings
and host technology teach-ins as well as
roundtables and site visits. This enables
us to inform policy and reforms that
support a more secure, affordable
and investable energy market whilst
advancing the energy transition.
Outcome example
Alongside the British Gas Energy Trust,
we held roundtable events with
stakeholders across the UK to discuss
solutions for alleviating fuel poverty in the
long-term. Clear recommendations arose
from the sessions which were shared
with policymakers and included the
introduction of social tariffs and increased
access to energy efficiency programmes.
The Trust alongside Directors and
members of Public Affairs, are working
with the Government to explore co-
ordinated action.
Why they’re important
Our suppliers are essential partners in
ensuring the reliable supply of services
and solutions for customers and our
operations alike. To reduce supply chain
risk, we engage suppliers to foster a
deeper connection and ensure they
uphold the same high standards as us.
What they care about
Payment practices and long-term
partnerships alongside ESG compliance
and transparency on important matters
like human rights.
How we engage
We engage suppliers through various
methods including tendering, onboarding
surveys, site audits and remote worker
surveys. These interactions ensure
fair payment and enforcement of our
Responsible Sourcing Policy, aligning with
standards that benefit people and planet
including compliance with anti-modern
slavery laws.
Outcome example
Members of the Board reviewed the
effectiveness of our Responsible
Sourcing strategy, focusing on areas that
have a higher risk to human rights such as
the manufacturing of solar panels and
garments. Outcomes of supplier audits
alongside the views of supply chain
experts, were considered by the
Directors when reviewing and approving
action plans. No instances of forced or
compulsory labour were found in our
supply chain but we remain vigilant.
Why they’re important
Charities, non-governmental
organisations (NGOs) and community
groups, help us understand the causes
that local communities care passionately
about. Using our money and expertise,
we work together to build a fairer, more
sustainable future.
What they care about
Tackling social and environmental issues
like fuel poverty and climate change.
How we engage
Through meetings and research, we
understand community issues and
identify the role we can play to make the
greatest difference – from donating to
the British Gas Energy Trust to provide
expert advice and grants alongside
energy efficiency measures that help
reduce energy bills and emissions, to
volunteering, fundraising, and sponsoring
local organisations.
Outcome example
Members of the Board continued to
oversee our local community strategy
to ensure it remains effective in meeting
the diverse needs of our communities.
In 2024, this saw us invest over £2m and
nearly 11,000 volunteering hours to good
causes via The Big Difference, our local
community programme.e
Centrica plc Annual Report and Accounts 2024
13
Business
overview
Strategic Report Governance Financial Statements Other Information
Centrica is an integrated energy company, comprising a
balanced portfolio of market-leading businesses in
energy retail, optimisation and infrastructure that is
positioned to create value for all stakeholders through the
energy transition.
Each of our businesses
complements,
de-risks and adds
value to one another
Optimisation
Our business units
Retail
We are focused on providing a
leading customer experience for
energy supply and services
across the UK and Ireland, helping
customers to decarbonise
through innovative offerings.
British Gas Energy
British Gas has been supplying energy to UK
homes for over 200 years. In British Gas
Energy, we are strengthening our
operations to drive innovation, retention and
better customer outcomes, supporting
long-term profit sustainability. British Gas
Energy also includes our Meter Asset
Provider (MAP) business, which is building a
portfolio of smart meters.
British Gas Services & Solutions
British Gas Services & Solutions provides
customers with repairs, home
improvements, maintenance and heating
installations through our British Gas,
Dyno-Rod, and PH Jones brands. Our
New Business and Net Zero business is
also included under Services & Solutions,
which provides customers with net zero
technology such as Hive smart
thermostats, EV chargers, heat pumps
and rooftop solar.
Bord Gáis Energy
(1)
Bord Gáis provides energy supply,
services and solutions for residential and
business customers in the Republic of
Ireland and also operates and optimises
critical power generation assets. Bord
Gáis is creating value from its integrated
model, investing in the future energy
system to help underpin energy security
and decarbonisation in Ireland.
Key stakeholders
6,800
Field service engineers
10m+
Customers
(1) Within the Group Chief Financial Officer’s Report, Bord
Gáis is included within Retail.
We are investing to build a low
carbon, reliable energy system
including clean power generation,
gas production, flexible peaking
generation and energy storage.
Centrica Nuclear
Centrica Nuclear has a 20% interest in the
UK’s portfolio of existing nuclear power
stations. We extended the lives of existing
nuclear power stations in 2024 and are
exploring further investment in
nuclear generation.
Centrica Energy Storage+ (CES+)
CES+ is the owner and operator of Rough,
the UK's largest gas storage facility, helping
manage seasonal demand and energy
security. CES+ has increased the capacity
at Rough to 54bcf and continues to explore
its role in the future of hydrogen.
Spirit Energy
Spirit Energy is a joint venture with
Stadtwerke München (SWM) focused on oil
and gas production from existing UK assets
to fuel homes and business across the UK
and Europe. Spirit Energy was awarded a
carbon storage licence for Morecambe Bay,
which has the potential to be the UK’s
largest carbon storage hub.
Key stakeholders
54 bcf
Of gas storage capacity at Rough
(equivalent to heating ~2.4m homes
through winter)
20%
Share of the UK’s operating nuclear fleet
(2) Infrastructure is shown as Upstream in Segmental
Reporting in the Financial Statements.
(3) Within the Group Chief Financial Officer’s Report, CBS
is included within Optimisation.
We are moving energy from source
to use and accessing the value from
green generation, while continuing
to build out the flexibility required
for the future energy system.
Centrica Energy
Centrica Energy is our global energy trading
arm, which supports the responsible buying
and selling of energy and provides energy
management and optimisation services to
businesses, while managing commodity risk
and providing wholesale market access for
the Group.
Centrica Business Solutions (CBS)
(3)
CBS includes energy supply and low carbon
solutions for large businesses, and our
portfolio of battery, solar and gas-peaking
assets across the UK and Europe. CBS
is being reorganised, such that energy
supply and low carbon solutions for
business will sit under British Gas Energy
and Services & Solutions, respectively,
while the asset portfolio will sit under the
new Centrica Power, along with our nuclear
interests.
Key stakeholders
28
Trading markets
16.7GW
Renewable and flexible assets under
management
Centrica plc Annual Report and Accounts 2024
15
Infrastructure
(2)
Our stakeholders
Customers
Colleagues
Investors
Government and regulators
Suppliers
Communities and NGOs
Market trends
Strategic Report Governance Financial Statements Other Information
The drive
to net zero
The UK’s commitment to achieving net zero
emissions by 2050 is accelerating investments in
clean energy sources like wind, solar and nuclear,
and increasing policy support for electrified heating
and transport.
A more flexible
energy system
With more unpredictable and intermittent
energy generation coming from renewables,
the energy system of the future needs to become
more dynamic and responsive to balance supply,
demand and storage.
Affordability
and living costs
While inflation has stabilised in recent months,
prices remain elevated, and our customers are still
facing challenges from high costs and a challenging
economic situation, with some customers
struggling to pay bills.
Technological
transformation
Advances in technology, such as artificial intelligence
and machine learning, are revolutionising the energy
sector, unlocking opportunities to improve customer
propositions, reduce costs, and better manage our
energy balance.
Our key market trends
The energy system is undergoing a fundamental
transformation, becoming more electrified, more
intermittent and more decentralised, while consumers
are looking for more bespoke propositions to help
manage their energy needs.
Centrica plc Annual Report and Accounts 2024
17
The drive to net zero
•We are committed to being a net zero
business by 2040 and helping our
customers to be net zero by 2050. Last
year we launched our New Business and
Net Zero business, specifically focused on
helping customers through this transition.
•We are redeveloping Brigg Energy Park
which, once complete, will be home to a
50MW battery and 100MW of hydrogen-
ready gas peaking capacity.
•We manage 16.7 GW of renewable energy
and flexible assets, helping to promote
green infrastructure development and
provide clean power to customers.
Our responses to an evolving market
A more flexible energy system
•In 2024, we committed £120m to battery
and gas peaker developments, which
provide greater system security and meet
near-term system flexibility needs.
•We partnered with Highview Power to
develop a first-of-its-kind liquid air energy
storage project that can store energy for
several weeks, much longer than batteries,
providing additional resiliency to the grid.
•We installed 1.1m smart meters in 2024,
allowing devices like electric vehicles,
home batteries and heat pumps to enable
more flexible energy demand, lowering
customer’s energy bills and placing less
strain on the grid.
Affordability and living costs
•In response to the energy crisis, during
2022-23 we created a voluntary support
package of £140m to support customers
struggling with energy bills. This has
enabled us to continue supporting
customers this year through initiatives
like the ‘You Pay: We Pay’ scheme
launched in March, which supports our
most vulnerable customers by matching
100% of their energy payments.
•We continue to innovate tariff offerings
such as PeakSave Sundays and Green
Flex, to ensure that our customers have
access to the lowest cost energy rates
that meet their needs.
Technological transformation
•In 2024 we acquired ENSEK, a leading
provider of digital transformation services
in the energy sector. The migration of
residential customers to our new
innovative customer account
management platform is nearly complete,
reducing back-office processes and
enabling more innovative, flexible
customer offerings.
•We supported increased customer
engagement in home energy management
through the sale of 348k Hive smart
thermostats.
•Through our Optimisation team, we have
implemented a framework for algorithmic
trading, enabling more systematic and
efficient trading operations.
As the pace of change continues to accelerate, we’re responding by focusing our efforts
on helping to deliver and use energy in a more efficient and sustainable way. We are
continuously improving, adapting and innovating our offerings to help build a greener
and fairer energy system for the future.
Our strategic value drivers
Strategic Report Governance Financial Statements Other Information
We’re adopting a simple, focused approach to capitalise
on the growth opportunities presented by the energy
transition. Our strategy is to create value by delivering
the energy needed today and the energy security,
efficiency and decarbonisation needed for the future.
Investing for value
Investing to make Centrica a more predictable
business with strong returns across the
integrated pillars of our business
Commercial
focus
Innovating to deliver
compelling customer
propositions and building
optimisation optionality
Operational
excellence
Continuously improving to
increase our efficiency,
reduce costs and enhance
customer satisfaction
Positioned for
a changing
energy system
People
Planet
Our People & Planet Plan
Our People & Planet Plan aims to create a more sustainable future – from being a net zero
business by 2040 and helping our customers be net zero by 2050, to creating the diverse and
inclusive team we need to achieve this, whilst making a big difference in our local communities.
Read more on page 22
Read more on page 20
Read more on page 24
Read more on pages 58 to 77
Creating value through the
energy transition
Centrica plc Annual Report and Accounts 2024
19
As we move to the next phase of our strategy, we are
strengthening the foundations for Centrica’s growth by
delivering sustainable earnings and investing for long-
term value.
Positioned for
a changing
energy system
Operational
excellence
Commercial focus
Investing for
value
Electricity demand in our core markets is set
to materially increase by 2050, driven by the
electrification of transport and residential
heating, as well as emerging demand from
areas such as data centres. Meanwhile, power
grids are expected to become more complex,
with an ever-increasing reliance on greener,
but more intermittent, renewable generation
capacity. Customers are also becoming
increasingly engaged in home energy
management, which will drive increased demand
for innovative customer propositions.
With market-leading positions across the energy
value chain, our portfolio is well-positioned to
benefit from these trends, as each of our
businesses de-risks, complements and adds
value to the others. These dynamics also provide
us with significant future opportunities aligned
with our strategy and net zero ambitions.
Since we refreshed our strategy in 2023,
Centrica has been on a journey to enhance the
experience for our customers, by ensuring that
we operate as efficiently as possible, while still
providing high reliability and high-quality
service. We have continued to improve
operational performance in 2024, giving us
confidence that the changes we have made
are being embedded in the business.
Colleague engagement is now in the top quartile
for our industry (8.1/10, 2023: 7.7/10), underpinned
by a continued strong focus on safety, as well as
our redefined Purpose. Our colleagues are helping
to deliver strong operational metrics and better
customer experience, with customer satisfaction
scores improving across our businesses. In British
Gas Energy we improved our Trustpilot score to
4.2 and were awarded ‘Best Overall Improvement’
by Uswitch.
Improved operational performance is feeding
into better customer retention and our focus is
increasingly moving to creating more innovative
offerings to attract new customers. We have
added a new Chief Customer Office with scope
across all our retail brands to create a more
joined up and cohesive approach for customers,
better connecting our talent and capabilities
to power a step-change improvement in our
commercial growth and in the end-to-end
customer experience.
Alongside 'PeakSave', we have increased our
time-based tariffs with propositions such as
British Gas Electric Vehicle and the Bord Gáis
Mighty Weekender Smart Plan. We are
continuing to build the home energy ecosystem
of the future, powered by our Hive Honeycomb
technology platform. We are also building
optimisation optionality in our trading
agreements, creating new offerings and
structures that manage risk and create value.
Our balance sheet strength, investment
grade credit rating and strong operational
capabilities provide the base of our green-
focused investment programme.
We continue to make progress on this
investment programme, investing across
customer technology and flexible and
renewable power assets, although the
investment environment has proved more
challenging recently and the pace of
deployment is slower than we had hoped.
We will remain disciplined with our
investments, focused on delivering
attractive returns. We have a significant
opportunity set under consideration and will
only progress the most attractive projects
through our rigorous investment review
process. We are already demonstrating our
ability to scale up investment over time.
Strategic Report Governance Financial Statements Other Information
Operational
excellence
Continuously improving to
increase our efficiency,
reduce costs and enhance
customer satisfaction
4.2
British Gas Trustpilot rating
(2023: 4.0)
Improving customer
experience
Customers are at the heart of our
business and providing a simple, brilliant
customer experience is a key focus for us.
Customer experience has been improving
across our retail businesses with
increases in our speed to answer rates,
reductions in complaints and NPS
improvements in both UK residential
energy supply and services.
As technology continues to develop, we
continue to modernise our systems to
support a better customer experience.
24%
Reduction in UK residential energy
supply complaints over the past year
Migration to our new customer platform
is nearly complete for residential
customers, enabling more flexible and
innovative propositions and better
customer service. We are committed
to continually improving the experience
of our customers.
Key market trends
A more flexible system
Technological transformation
Centrica plc Annual Report and Accounts 2024
21
10%
Of Ireland’s electricity supplied
from Whitegate power station
Whitegate power
station
Whitegate power station in Cork is vital
to Ireland’s energy security, supplying
10% of the country’s electricity through
its 445MW capacity. As one of Ireland’s
most efficient Combined Cycle Gas
Turbines (CCGT), it plays a key role
in supporting the nation’s energy
transition, while its capability to operate
on natural gas and backup diesel,
ensures a resilient energy supply.
Whitegate underpins Bord Gáis
Energy’s integrated business model,
and the experienced team managing
the asset extract maximum value with
>96% reliability. Bord Gáis Energy
successfully secured a five-year
Intermediate Length Contract in the
recent Single Electricity Market
capacity auction, ensuring Whitegate
is operational until 2033.
Key market trends
Rough gas storage
Our Rough gas storage facility plays a
key role in supporting the UK's energy
security by providing more than 50%
of the UK’s gas storage.
Rough helps the UK both manage
higher heating demand during the
current cold weather and keep prices
down, operating at 95% availability
during 2024.
We believe Rough could play a valuable
role in a decarbonised energy system
and we are prepared to invest £2 billion
in re-developing the site as Europe’s
largest hydrogen storage facility,
subject to agreeing a new regulatory
model with the UK Government.
Key market trends
A more flexible system
The drive to net zero
Affordability and living costs
A more flexible system
Affordability and living costs
95%
Availability at Rough during 2024
Growing LNG
portfolio
This year we executed an agreement
with Coterra Energy to purchase natural
gas for 10 years, This deal will reduce the
market risk in our liquefied natural gas
(LNG) portfolio by buying gas on the
same price indices under which the LNG
is sold. Gas remains an essential transition
fuel and through deals like this we provide
affordable, reliable energy and support
global energy security.
The deal follows similar agreements over
recent years, demonstrating Centrica
Energy’s innovative partnership
approach, one of the key pillars of our
successful and growing LNG business.
Key market trends
Service Promise
launch
This year we launched our Service
Promise campaign, providing a same-day
visit from our boiler service engineers for
customers that call us before 11 am. This
service is available to all UK households,
either through protection cover or one-
off repair, demonstrating our
commitment to provide fast, reliable and
affordable service to all our customers.
This unique offering is unmatched in the
market, driven by our expansive field
engineer network, and is resonating
strongly with customers, leading to
positive protection contract sales (+24%)
and contract customer retention (+4%).
Key market trends
Strategic Report Governance Financial Statements Other Information
Commercial
focus
Innovating to deliver compelling
customer propositions and building
optimisation optionality
252
LNG cargoes traded
globally in 2024
(1)
86%
Protection customer
retention in 2024
+24%
Protection contract sales
in 2024 compared to 2023
A more flexible system
Affordability and living costs
Affordability and living costs
(1) This encompasses all physical LNG
transactions, including those that were sold,
purchased, or involved physical cargo deals
that were either delivered or not
Innovative tariffs
The flexibility needs of our energy system
present opportunities to create value
for both the energy network and for
customers through rebalancing energy
demand. We are committed to ensuring
all our stakeholders see the benefits from
this transition.
Our PeakSave offering is a great example
of this, rewarding customers for shifting
their electricity usage to times when
there is less demand. We also introduced
our integrated Hive Solar and Hive Heat
Pumps offerings to pass the benefits of
installing solar energy and heat pumps on
to our customers through a dedicated
tariff that allows customers to lower
their bills.
Centrica plc Annual Report and Accounts 2024
23
1m
Customers in flexible
energy propositions,
including PeakSave
348k
Hive thermostat sales
in 2024
The drive to net zero
A more flexible system
Affordability and living costs
Key market trends
Clean
energy storage
In 2024 we announced a strategic
partnership and £70m investment in clean
energy storage with Highview Power,
providing stability services to the grid
and enabling the long-term replacement
of fossil fuel-based power plants.
This partnership will develop the first
commercial-scale Liquid Air Energy
Storage plant in the UK, boost the UK’s
energy security and accelerate
the transition to net zero.
In addition, we continue to build our
portfolio of battery storage assets,
committing £79m to developments
in the UK, Belgium and Sweden in 2024.
With our internal optimisation capability,
battery storage assets can be adapted in
real-time, delivering energy storage that
maximises the utilisation of green
electricity available to the grid, whilst
securing stable return on investment.
Strategic Report Governance Financial Statements Other Information
Investing
for value
Investing to make Centrica a more
predictable business with strong returns
across the integrated pillars of our business
We aim to deploy £600-800m per
year to 2028, focusing on assets
that generate attractive returns,
complement our existing
capabilities, provide balance to the
portfolio, and align to the needs of
the energy transition.
Attractive returns
We are focused on delivering
attractive returns of 7-10%+ on
average. In particular, we focus on
assets that benefit from our
integrated business model and
create value across our businesses.
Stable cash flows
We prioritise investments that have
a regulated or contracted revenue
structure and are thus less exposed
to market fluctuations. These assets
provide stable cash flows, keep
the portfolio in balance, and help
to support a strong credit rating.
Green focus
We target over 50% of our capital
expenditure to go into green EU
taxonomy eligible projects, up from
only 5% in 2019. In 2024 we reached
over 30% green investment. This
focus helps us reduce our carbon
emission footprint and supports our
People & Planet Plan targets to
achieve net zero for our business by
2040, and to help our customers
reach net zero by 2050.
Our disciplined
approach to capital
investment
The drive to net zero
A more flexible system
£149m
Investment in clean energy
storage committed during
2024
Key market trends
Key market trends
Accelerating our MAP
We launched our in-house Meter Asset
Provider (MAP) business last year and
we continue to grow this business, with
447k Centrica-owned meters under
management at the end of 2024. The
MAP business generates a low-risk
contracted return for the Group and
supports commercial innovation through
tariff flexibility and data insights.
We have a clear capital deployment
pathway given our residential customer
base and plan to increase investment in
this area up to £200m per year until 2035
with an expected post-tax IRR of 9%+.
Key market trends
Centrica plc Annual Report and Accounts 2024
25
447k
Smart meters managed
through our in-house
MAP business
534MW
Flexible peaking plant capacity
in development to support
energy security in Ireland
Flexible generation
capacity
Bord Gáis Energy secured a 10-year
capacity contract to deliver an Open
Cycle Gas Turbine (OCGT) with
334MW electrical generation capacity
– critical strategic infrastructure for
Ireland. This agile, fast-acting power
unit can be brought into service
rapidly and removed again swiftly,
complementing intermittent
renewable generation. The planned
technology has the capability to run
on 100% biomethane or on a blend of
hydrogen, once it becomes available
on the gas network. This is further to
the investment of around €300m in
two, hydrogen-capable, 100MW
flexible gas peaking plants in Athlone
and Dublin, which will commence
exporting to the grid later this year.
A more flexible system
Technological transformation
Affordability and living costs
Key market trends
The drive to net zero
A more flexible system
Group Chief Financial
Officer’s report
Financial overview
The Group’s adjusted EBITDA, including
Centrica’s share of EBITDA from joint
ventures and associates was £2.3bn
(2023: £3.5bn) against a more normalised
backdrop of lower prices and reduced
volatility. Adjusted operating profit was
£1.6bn (2023: £2.8bn) and after reflecting
net finance income and taxation on
business performance, Group adjusted
earnings attributable to shareholders
were £1.0bn (2023: £1.9bn) and Group
adjusted EPS was 19.0p (2023: 33.4p).
From a statutory perspective, operating
profit was £1.7bn (2023: £6.5bn). This
includes a certain re-measurement gain
during the year of £0.3bn (2023: £4.4bn)
predominantly due to the unwind of 2023
out-of-the-money hedging positions
partially offset by the movement in the
onerous energy supply and LNG contract
provision. In addition an exceptional loss
of £0.1bn (2023: £0.6bn) was recognised
driven predominantly by legacy contract
costs associated with business activity
that ceased a number of years ago and
impairment of Nuclear and CBS assets.
Statutory profit attributable to
shareholders was £1.3bn (2023: £3.9bn)
and statutory EPS was 25.7p (2023:
70.6p). None of the items reported in the
middle column of the Income Statement
are considered to reflect the underlying
performance of the business.
The Group’s total Free Cash Flow (FCF)
reduced to £1.0bn (2023: £2.2bn), with
the impact of lower operating profit and
higher capital expenditure partially offset
by lower cash tax payments. The closing
net cash balance was £2.9bn (2023:
£2.7bn).
Statutory net cash flow from operating
and investing activities was £1.6bn (2023:
£2.9bn). This was higher than the FCF
noted above largely because of the
exclusions from FCF of the sale and
purchase of securities, interest received,
defined benefit pension deficit payments
and movements in variation margin and
collateral, which support our commodity
hedging activity and Centrica Energy
optimisation activity.
The Group’s net assets increased to
£4.8bn (2023: £4.2bn) largely driven by
the statutory profit the Group generated.
This was partially offset by the impact of
items reported in equity, including a
£480m reduction from the share buyback
programme and £219m of dividends paid
to shareholders.
Strategic Report Governance Financial Statements Other Information
I am very pleased with the financial
performance we delivered in 2024
which was supported by stronger
operational performance across the
portfolio. This has been instrumental
in driving our earnings and cash
generation and supports increasing
balance sheet resilience, funding our
investment programme and growing
shareholder returns.
Russell O’Brien, Group Chief Financial Officer
Relentless
focus on value
creation
Maximise
sustainable
earnings
Progressive
dividend
Invest
for value
Return
surplus
capital
Maintain a
strong
balance sheet
Revenue
Total Group revenue decreased by 25% to £19,913m (2023: £26,458m). Total Group revenue included in business performance,
which includes revenue arising on contracts in scope of IFRS 9, decreased by 26% to £24,636m (2023: £33,374m).
Gross segment revenue, which includes revenue generated from the sale of products and services between segments, decreased
by 26% to £26,206m (2023: £35,343m). This was driven largely by the impact of lower commodity prices, lower volatility, and lower
seasonal gas price spreads.
A table reconciling the different revenue measures is included in note 4(b) of the accounts.
Adjusted EBITDA, operating profit, earnings and dividend
Adjusted EBITDA
Year ended 31 December (£m)
2024
2023
Retail
528
930
British Gas Services & Solutions
110
101
British Gas Energy
339
808
Bord Gáis Energy
79
21
Optimisation
443
963
Centrica Business Solutions
97
141
Centrica Energy
346
822
Infrastructure
821
1,155
Nuclear (i)
97
327
Spirit Energy
707
506
Centrica Energy Storage+
17
322
Colleague profit share, consolidation adjustment and other (ii)
–
37
Adjusted EBITDA
1,792
3,085
Share of Nuclear associate’s EBITDA
513
415
Adjusted EBITDA including share of EBITDA from joint ventures and associates
2,305
3,500
(i) Excludes Centrica's share of associate EBITDA of £513m (2023: £415m).
(ii) Includes colleague profit share of £(25)m (2023: £(8)m) and a consolidation adjustment of £(19)m (2023: nil), relating to the MAP.
Adjusted EBITDA including share of EBITDA from joint ventures and associates decreased to £2,305m (2023: £3,500m), largely
reflecting the movement in adjusted operating profit.
Operating profit
Year ended 31 December (£m)
2024
2023
Retail
427
799
British Gas Services & Solutions
67
47
British Gas Energy
297
751
Residential energy supply (i)
269
726
Business energy supply
28
25
Bord Gáis Energy
63
1
Optimisation
380
878
Centrica Business Solutions
73
104
Centrica Energy
307
774
Infrastructure
789
1,083
Nuclear
353
536
Spirit Energy
434
235
Centrica Energy Storage+
2
312
Colleague profit share and MAP consolidation adjustment (ii)
(44)
(8)
Operating profit from business performance (Adjusted operating profit)
1,552
2,752
Exceptional items and certain re-measurements
151
3,760
Group operating profit (Statutory operating profit)
1,703
6,512
(i) Includes the Meter Asset Provider (MAP) business.
(ii) Colleague profit share of £(25)m (2023: £(8)m) and a consolidation adjustment of £(19)m (2023: nil), relating to the MAP.
Adjusted operating profit decreased to £1,552m (2023: £2,752m). More detail on specific business unit adjusted operating profit
performance is provided in the Business Review on pages 33 to 37.
Statutory operating profit was £1,703m (2023: £6,512m), with the difference between the two measures of profit relating to a net
gain on exceptional items and certain re-measurements of £151m (2023: £3,760m).
Centrica plc Annual Report and Accounts 2024
27
Certain re-measurements included within operating profit
Certain re-measurements are the fair value movements on
energy contracts entered into to meet the future needs of our
customers, or to sell the energy produced from our upstream
assets. These contracts are economically related to our
upstream assets, capacity/off-take contracts or downstream
demand, which are typically not fair valued, and are therefore
separately identified in the current period and reflected in
business performance in future periods when the underlying
transaction or asset impacts the Group Income Statement.
If the future costs to fulfil customer supply contracts, including
the mark-to-market reversal of any energy hedging contracts
entered into to meet this demand, exceed the charges
recoverable from customers, an onerous contract provision will
be recognised. Similarly, if the future revenues from LNG
procurement contracts, including the mark-to-market reversals
of hedging contracts entered into related to these purchases,
do not exceed the purchase cost, an onerous contract provision
will be recognised. Because the associated, unrealised hedging
gains or losses will be recognised in certain re-measurements,
the movements in these onerous provisions will also be
recognised in certain re-measurements.
The Group operating profit in the statutory results includes a net
pre-tax profit of £279m (2023: £4,405m) relating to re-
measurements, comprised of:
•A net gain of £421m on the re-measurement of derivative
energy contracts. This predominantly reflects the unwind of
2023 out-of-the-money energy supply contract hedge
purchases, partially offset by an unwind of our infrastructure
businesses and Centrica Energy in-the-money positions from
2023. The net positive impact of these two factors was £377m.
In addition, we saw a net gain of £44m from our wider portfolio,
driven by net changes in commodity prices.ell.]
•A net loss of £142m from the movement in onerous contract
provisions. Included within this is the onerous energy supply
contract provision, which is based on the future costs to fulfil
customer contracts on a current market basis. This provision
had fully unwound by 31 December 2023 and remains at £nil on
31 December 2024. However, the acquisition of AvantiGas ON
Limited in 2022, included an opening balance sheet onerous
contract provision, which is unwound to the business
performance column of the Group Income Statement on a pre-
determined acquisition date basis, to ensure this column
reflects the true profit/loss relative to the acquisition date
values. At each reporting date, the closing balance sheet value
of the onerous contract provision is then updated to reflect
actual market prices, with the required remaining movement in
the provision posted to the certain re-measurements column.
Because commodity prices generally fell after the 2022
acquisition, this meant that the balance sheet onerous contract
provision fell more quickly than originally expected. This led to
a £69m onerous contract provision movement income in
certain re-measurements in 2023. Accordingly, there is a £60m
cost in 2024 in certain re-measurements, as this position has
now mostly unwound. Also included is an £82m cost (2023:
£nil) relating to an onerous LNG contract, however the LNG
portfolio is forecast to remain profitable when taking into
account future hedges and cargoes.
Further details can be found in note 7(a).
Exceptional items included within operating profit
An exceptional pre-tax operating cost of £128m was recognised
within the statutory Group operating profit (2023: £645m)
made up of:
•£53m (2023: £nil) legacy contract costs associated with
business activity that ceased a number of years ago,
predominantly related to construction services, have led to an
increase in provisions during the period.
• A £48m (2023: £549m) impairment of the Nuclear investment
as a result of a reduction in power prices, partially offset by the
life extensions at four stations.
•A £27m (2023: £14m) impairment in Centrica Business
Solutions, predominantly related to battery storage and solar
assets, as a result of lower forecast power price capture,
together with an increase in discount rate and an increase in
operating and capital expenditure forecasts.
• 2023 also included an £82m impairment of the Rough gas
storage asset as a result of a reduction in both forecast gas
prices and forecast summer/winter gas price spreads.
Further details on exceptional items, including on impairment
accounting policy, process and sensitivities, can be found in
notes 7(b) and 7(c).
Group earnings and dividend
2024
2023
Year ended 31 December (£m)
Notes
Business
performance
Exceptional items
and certain
re-measurements
Results for the
year
Business
performance
Exceptional items
and certain
re-measurements
Results for
the year
Group operating profit
4(c)
1,552
151
1,703
2,752
3,760
6,512
Net finance income/(cost)
8
44
(68)
(24)
(39)
–
(39)
Taxation
9
(553)
239
(314)
(838)
(1,595)
(2,433)
Profit from operations
1,043
322
1,365
1,875
2,165
4,040
Less: (Profit)/loss attributable to non-
controlling interests
(59)
26
(33)
(16)
(95)
(111)
Adjusted earnings attributable to
shareholders
984
348
1,332
1,859
2,070
3,929
Basic earnings per share
10
19.0p
6.7p
25.7p
33.4p
37.2p
70.6p
Full year dividend per share
11
4.5p
4.0p
Strategic Report Governance Financial Statements Other Information
Net finance income/cost
Net finance income on business performance was £44m (2023:
£39m net finance cost), largely due to an increase in interest
income on cash balances, reflecting higher UK interest rates, the
higher cash balances we held during the year, and a reduction in
financing costs on bonds and bank loans.
In addition, £68m of exceptional financing costs have been
recognised in relation to debt repurchase and refinancing
exercises. £370m of debt instruments have been repurchased in
advance of their maturity date. Due to the premium paid above
existing carrying value and transaction fees, a one-off Income
Statement cost of £50m has been incurred. Additionally,
refinancing of the 2075 hybrid bond, designated in a fair value
hedge relationship, with a carrying value of £435m and
repayment value of £453m (including fees), has resulted in a
one-off Income Statement financing cost of £18m.
Taxation and adjusted effective tax rate
Business performance taxation on profit decreased to £553m
(2023: £838m). This excludes tax on joint ventures and
associates. After taking account of tax on joint ventures and
associates, the adjusted tax charge was £671m (2023: £912m).
The resultant adjusted effective tax rate for the Group was 39%
(2023: 33%), with a higher proportion of profits coming from
highly taxed Infrastructure activities. The adjusted effective tax
rate calculation is shown below:
Year ended 31 December (£m)
2024
2023
Adjusted operating profit before impacts of
taxation
1,552
2,752
Add: JV/associate taxation included in
adjusted operating profit
118
74
Net finance income/(cost)
44
(39)
Adjusted profit before taxation
1,714
2,787
Taxation on adjusted operating profit
(553)
(838)
Share of JV/associate taxation
(118)
(74)
Adjusted tax charge
(671)
(912)
Adjusted effective tax rate
39%
33%
A charge totalling £166m (2023: £326m) related to the
Electricity Generator Levy is included in the Group’s cost of
sales and in our share of the operating profits of joint venture
and associates. The Levy is not an income tax and is not
deductible for corporation tax purposes. If this had been treated
as a tax, the Group’s adjusted effective tax rate would have
been 45% (2023: 40%).
Total certain re-measurements and exceptional items
generated a taxation credit of £239m (2023: £1,595m charge),
which was larger than the total certain re-measurements and
exceptional items due to the mix of profits from downstream
and losses from the higher tax business, Spirit, together with an
exceptional deferred tax credit in Spirit. When included with
taxation on business performance generated a total taxation
charge of £314m (2023: £2,433m).
See notes 2(b), 3(b), 7(a), 7(b) and 9 for more details.
Group earnings
Profit for the year from business performance after taxation was
£1,043m (2023: £1,875m). After adjusting for non-controlling
interests relating to Spirit Energy, adjusted earnings were
£984m (2023: £1,859m).
Adjusted basic EPS was 19.0p (2023: 33.4p), which also includes
the impact of a lower weighted average number of shares than in
2023, reflecting the ongoing share buyback programme.
After including exceptional items and certain re-measurements,
including those attributable to non-controlling interests, the
statutory profit attributable to shareholders for the period was
£1,332m (2023: £3,929m).
The Group reported a statutory basic EPS of 25.7p (2023: 70.6p).
Dividend
In addition to the interim dividend of 1.5p per share, the
proposed final dividend is 3.0p per share, giving a total full year
dividend of 4.5p per share (2023: 4.0p per share).
The cash paid to Centrica shareholders in dividends in 2024 was
£219m, made up of the 2.67p per share final 2023 dividend and
the 1.5p per share interim 2024 dividend (2023: £186m).
Group cash flow, net cash and balance sheet
Group cash flow
Free cash flow (FCF) is the Group’s primary measure of cash
flow as management believe it provides relevant information to
show the cash generation of the business after taking account
of the need to maintain the Group's capital asset base. FCF was
£989m (2023:£2,207m). See explanatory note 4(f) for further
details and a reconciliation between statutory cash flow from
operating and investing activities and free cash flow.
Year ended 31 December (£m)
2024
2023
Adjusted EBITDA (i)
1,792
3,085
Dividends received
355
220
Adjusted EBITDA and dividends received
2,147
3,305
Tax
(636)
(803)
Working capital
124
244
Decommissioning spend
(80)
(173)
Capital expenditure (ii)
(564)
(415)
Disposals
4
55
Exceptional cash flows
(6)
(6)
Free cash flow
989
2,207
Net interest
34
(19)
Pension deficit payments
(176)
(180)
Movements in margin cash (iii)
131
585
Share buyback programme
(499)
(613)
Dividends – Centrica shareholders
(219)
(186)
Dividends – Spirit Energy minority
shareholder
–
(17)
Other cash flows affecting net debt (iv)
(76)
6
Adjusted cash flow affecting net cash
184
1,783
Opening net cash (as at 1 January)
2,744
1,199
Adjusted cash flow movements
184
1,783
Non-cash movements (v)
(70)
(238)
Closing adjusted net cash
2,858
2,744
(i) Excludes Centrica's share of associate EBITDA of £513m (2023: £415m).
(ii) Capital expenditure (including small acquisitions). See page 30 for more detail.
(iii) As at 31 December 2024, margin cash posted was £105m (2023: £240m).
(iv) 2024 other cash flows affecting net cash includes £(68)m relating to exceptional
financing costs in relation to debt repurchase and refinancing activities.
(v) 2024 non-cash movements includes £(55)m relating to new leases and the re-
measurements of existing leases (2023: £(158)m).
Centrica plc Annual Report and Accounts 2024
29
The net inflow of working capital was £124m (2023: £244m).
Within this, there was a £342m working capital inflow in
Centrica Energy driven by profit on prior year derivative cash
positions settled during 2024, a £148m working capital inflow in
Centrica Energy Storage+ relating to higher withdrawals and a
lower injection price, partially offset by a £456m outflow in
British Gas Energy related to the impact of falling commodity
prices.
The collateral and margin cash inflow was £131m (2023: £585m).
Net investment
The net investment outflow for the period was £560m (2023:
£360m). Within this, capital expenditure (including small
acquisitions) of £564m (2023: £415m) was predominantly
driven by investment in flexible and renewable power
generation assets across Bord Gáis Energy and Centrica
Business Solutions, and the acquisition of ENSEK and
investment in the MAP business in British Gas Energy.
The table below provides a summary of total Group net
investment by business unit, which management uses to
provide a measure of the Group's capital expenditure from a
cash perspective, and a reconciliation of this measure to capital
expenditure disclosed in note 4(e).
Year ended 31 December (£m)
2024
2023
British Gas Services & Solutions
(22)
(50)
British Gas Energy
(187)
–
Bord Gáis Energy
(103)
(72)
Centrica Business Solutions
(160)
(114)
Centrica Energy
(40)
(47)
Nuclear
–
–
Spirit Energy
(31)
(75)
Centrica Energy Storage+
(11)
(26)
Other (i)
(10)
(31)
Capital expenditure (including small
acquisitions)
(564)
(415)
Net disposals
4
55
Total Group net investment
(560)
(360)
Add back:
Capitalised borrowing costs
(11)
(2)
Inception of new leases and
movements in payables and
prepayments related to capital
expenditure
(63)
(85)
Purchases of emissions allowances
and renewable obligation certificates
(856)
(780)
Deduct:
Net disposals
(4)
(55)
Purchase of businesses, net of cash
acquired
92
34
Investment in joint ventures and
associates
–
9
Net purchase of other investments (ii)
56
37
Capital expenditure (per note 4(e))
(1,346)
(1,202)
(i) This includes a consolidation adjustment of £19m (2023: £nil) relating to MAP.
(ii) Includes £27m Centrica Energy investments and £25m Centrica Business Solutions
convertible loan note investment in Highview Enterprises Ltd group.
Group adjusted net cash
Accordingly, the Group’s adjusted net cash position as at 31
December 2024 was £2,858m, compared to £2,744m on 31
December 2023.The breakdown of net cash is shown below:
As at 31 December (£m)
2024
2023
Current and non-current borrowings,
leases and interest accruals
(2,867)
(3,289)
Derivatives
(107)
(119)
Gross debt
(2,974)
(3,408)
Cash and cash equivalents, net of bank
overdrafts
5,693
5,629
Current and non-current securities
139
521
Sub-lease assets
–
2
Adjusted net cash
2,858
2,744
Further details on the Group’s sources of finance and net cash
are included in note 25.
Statutory cash flow
Year ended 31 December (£m)
2024
2023
Statutory cash flow from operating
activities
1,149
2,752
Statutory cash flow from investing
activities
493
115
Statutory cash flow from financing
activities
(1,548)
(1,414)
Net increase in cash and cash
equivalents
94
1,453
Net cash inflow from operating activities decreased to £1,149m
(2023: £2,752m), with the impact of lower adjusted EBITDA.
Net cash inflow from investing activities was £493m (2023:
£115m). Within this, interest received increased to £317m (2023:
£267m) reflecting the higher interest rate environment, while
dividends from our Nuclear associate increased to £355m
(2023: £220m). Capital expenditure (including small
acquisitions) increased to £564m (2023: £415m) as we build
momentum in our green-focused growth and investment
strategy. There was a £400m settlement of securities, relating
to the settlement of previous loans made to the pension
schemes.
Net cash outflow from financing activities was £1,548m (2023:
£1,414m). Within this there was a net outflow on borrowings of
£539m (2023: £318m) driven by the repurchase of debt
instruments, and the refinancing of our hybrid bond. Cash
distributions to equity shareholders were £499m (2023: £613m)
through the Group’s share buyback programme, and £219m
(2023: £186m) related to ordinary dividend payments.There
were no distributions to Spirit Energy’s minority partner in the
year (2023: £17m).
The above resulted in a £94m increase in cash and cash
equivalents over the year. Gross debt reduced by £434m,
reflecting £370m of debt instruments having been repurchased
in advance of their maturity date during the period. When also
including the impact of foreign exchange adjustments on cash,
the Group’s adjusted net cash position at 31 December 2024
was £2,858m, compared to £2,744m on 31 December 2023.
Further details on the Group’s sources of finance and adjusted
net cash are included in note 25.
Strategic Report Governance Financial Statements Other Information
Pension deficit
The Group’s IAS 19 net pension deficit was £21m at the year-
end, compared with a £117m deficit at 31 December 2023, with
the impact of pension deficit contributions during the year partly
offset by a decrease in high-quality corporate bond yields used
to discount the pension liabilities, a lower return on scheme
assets and an actuarial adjustment due to inflation experience.
The technical provisions deficit is based on more conservative
assumptions and is used to determine the agreed level of cash
contributions into the schemes. In February 2025, we reached
agreement with the pension trustees on a March 2024 technical
provisions deficit of £504m, with annual deficit contributions of
around £140m a year to 2027. On a roll-forward basis using the
same methodology, consequent assumptions and contributions
paid, the technical provision deficit would be around £450m at
31 December 2024.
Further details on post-retirement benefits are included
in note 22.
Decommissioning liabilities
The £1,459m (2023:£1,527m) decommissioning provision is
predominantly the estimated pre-tax net present cost of
decommissioning gas production facilities at the end of their
useful lives, based on 2P reserves, price levels, and technology
at the balance sheet date. As at 31 December 2024 the provision
balance is £1,139m for Spirit Energy, £302m in relation to the
Rough field and £18m in the remainder of the business. The
provisions are held gross of tax, with a corresponding deferred
tax asset of £605m (2023: £617m).
Further details on decommissioning provisions are included in
notes 3 and 21.
Balance sheet
Net assets increased to £4,812m (2023: £4,233m),
predominantly driven by the statutory profit the Group
generated. This was partially offset by the impact of items
reported in equity, including a £480m reduction from the share
buyback programme and £219m of dividends paid to
shareholders.
Acquisitions, disposals and other investments
On 11 June 2024 the Group invested £25m in convertible loan
notes and ordinary shares in Highview Enterprises Limited. The
Group also agreed to provide financing to CryoBattery One
Limited, a subsidiary of Highview Enterprises Limited, in the form
of a £45m senior debt facility of which £3m has been drawn
down at 31 December 2024. This entity is developing a new
cryogenic energy storage plant. When built, this will consist of a
long duration storage process using patented Liquid Air Energy
Storage (LAES) technology.
On 29 July 2024 the Group acquired ENSEK and its innovative
customer management platform, Ignition for £91m. The
acquisition completed on 20 September 2024. The acquisition
will deliver strong returns aligned with the Group’s capital
allocation framework and investment thresholds and will
enhance the Group’s ability to offer innovative propositions to
its customers as the energy system evolves.
Further details on assets purchased, acquisitions and disposals
are included in notes 4(e) and 12.
Events after the balance sheet date
Details of events after the balance sheet date are described
in note 27.
Risks and capital management
The nature of the Group’s principal risks and uncertainties are
broadly unchanged from those set out in the 2023 Annual
Report.
There is heightened risk in our UK retail energy supply and
insurance business units arising from ongoing regulatory
scrutiny across our markets. Cost of living challenges continue
to affect our customers’ ability to pay their bill; and with fuel
poverty increasing, bad debt levels remain high.
Market risk has remained stable, with further reductions of
volatility in the EU wholesale power and gas markets, which in
turn has led to a stabilisation of the credit environment. The
Group’s liquidity position continues to improve, with the
extension of £5bn committed credit facilities and maintenance
of the $3bn US Commercial Paper programme, and with the
liability management and refinancing of the hybrid bond in 2024
to strengthen the balance sheet.
External trends influencing our risk landscape include the speed
of the energy transition and technological innovation, as well as
the impact of geopolitical tensions, and the evolving cyber
threat landscape. Centrica’s response includes the
enhancement of our digital services capability through acquiring
ENSEK, investment in customer data and service to accelerate
our adaption to evolving customer needs, investment in supply
chain resilience and supplier risk management, and Strategic
Workforce Planning to ensure fulfilment of our future human
capital needs. Our technology teams also continue to build
security capabilities and improvements in controls to detect and
respond to increasingly sophisticated cyber-attacks.
Management remains focused on mitigating operational and
asset integrity risks through robust controls and fostering a
safety-first culture through a proactive risk management
culture.
Details of how the Group has managed financial risks such
as liquidity and credit risk are set out in note S3. Details of the
Group’s capital management processes are provided under
sources of finance in note 25.
Accounting policies
The Group’s accounting policies and specific accounting
measures, including changes of accounting presentation,
selected key sources of estimation uncertainty and critical
accounting judgements, are explained in notes 1, 2 and 3.
Russell O’Brien, Group Chief Financial Officer
19 February 2025
Centrica plc Annual Report and Accounts 2024
31
Our view on taxation
The Group takes its obligations to pay and collect the correct
amount of tax very seriously.
Responsibility for tax governance and strategy lies with the
Group Chief Financial Officer, overseen by the Board and the
Audit and Risk Committee.
Our approach
Wherever we do business in the world, we take great care to
ensure we fully comply with all our obligations to pay or collect
taxes and to meet local reporting requirements.
We are committed to providing disclosures and information
necessary to assist understanding beyond that required
by law and regulation.
We do not tolerate tax evasion or fraud by our employees or
other parties associated with Centrica. If we become aware
of any such wrongdoing, we take appropriate action.
Our cross-border pricing reflects the underlying commercial
reality of our business.
We ensure that income and costs, including costs of financing
operations, are appropriately recognised on a fair and
sustainable basis across all countries where the Group has
a business presence.
Statutory tax rates on profits
Group activities
UK supply of
energy and
services (1) (2)
UK gas production
Denmark energy
services
Republic of Ireland
supply of energy
and services
(1) From 1 January 2023, revenues from our Nuclear and solar business are subject to
Electricity Generator Levy (EGL) at 45% on wholesale revenues sold at an average price
in excess of £75/MwH, exceeding an annual threshold of £10 million. The EGL is
accounted for as an expense and is included in cost of sales.
(2) With effect from 1 November 2024 the rate of Energy Profits Levy increased from 35%
to 38%. Combined with ring fence corporation tax of 30% and Supplementary Charge
of 10% this gives an average rate for the year of 75.5%
(3) The statutory rate of tax in the Republic of Ireland is 12.5% combined with a top up tax
of 2.5% tax payable to ensure the minimum corporation tax payable is 15%
We understand that this is not an exact science and we engage
openly with tax authorities to explain our approach.
In the UK we maintain a transparent and constructive
relationship with His Majesty’s Revenue & Customs (HMRC).
This includes regular, open dialogue on issues of significance
to HMRC and Centrica. Our relationship with fiscal authorities
in other countries where we do business is conducted on the
same principles.
We carefully manage the tax risks and costs inherent in every
commercial transaction, in the same way as any other cost.
We do not enter into artificial arrangements in order to avoid
taxation nor to defeat the stated purpose of tax legislation.
We seek to actively engage in consultation with governments
on tax policy where we believe we are in a position as a Group
to provide valuable commercial insight.
The Group’s tax charge, taxes paid and the UK tax charge
The Group’s businesses are subject to corporate income tax
rates as set out in the statutory tax rates on profits table.
The overall tax charge is dependent on the mix of profits and the
tax rate to which those profits are subject.
Tax charge compared to cash tax paid
2024
Current tax
charge/(credit)
2024
Cash tax paid/
(received)
UK (including Petroleum Revenue Tax)(i)
458
492
Denmark(i)
28
121
Singapore
1
19
Republic of Ireland(i)
29
4
Rest of world
1
–
517
636
Electricity generator levy(ii)
80
80
Total tax paid
716
Corporation tax is paid in instalments, generally based on estimates; one-off items and
fluctuations in mark to market positions may cause divergence between the charge
for the year and the tax paid.
(i) The UK and Denmark tax payments include amounts of £130m and £80m relating
to 2023, Similarly the Republic Of Ireland payments includes a receipt of £11m relating
to 2022.
(ii) Additional electricity generator levy of £86m is included in our share of the results of
joint venture and associates operating profits making a total charge of £166m.
Further information on the tax charge is set out in note 9.
Our Group tax strategy, a more detailed explanation of the
way the Group’s tax liability is calculated and the timing
of cash payments, is provided on our website at
centrica.com/responsibletax
Strategic Report Governance Financial Statements Other Information
25%
75.5%
22%
15%
Business review
Retail
In Retail, customer service metrics continue to improve aligned
to our focus on operational excellence, including lower
complaints and improving NPS across our businesses. Total
Retail adjusted operating profit decreased to £427m (2023:
£799m) with improved results for both British Gas Services &
Solutions and Bord Gáis Energy, and a strong underlying result in
British Gas Energy, with no repeat of the one-off prior period
cost recoveries during 2023.
British Gas Services & Solutions
Year ended 31 December
2024
2023
Change
Operational
Services & Solutions customers
(‘000) (closing) (i)
2,899
2,950
(2%)
On-demand jobs (‘000) (ii)
304
218
39%
Boiler installs (‘000)
81
95
(15%)
Services complaints per
customer (%) (iii)
5.3%
6.0%
(12%)
Services Engineer NPS (iv)
73
71
2pt
Financial
Adjusted EBITDA (£m)
110
101
9%
Adjusted operating profit (£m)
67
47
43%
Adjusted operating profit margin (%)
4.3%
2.9%
48%
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Services & Solutions customers are defined as single households having a contract or
an on-demand job with British Gas Services & Solutions.
(ii) On-demand jobs are defined as Services & Repair one-off on-demand repairs, home
improvements and maintenance.
(iii) Total complaints, where we identify material distress, inconvenience or financial loss, as
a percentage of average customers over the year.
(iv)Measured independently, through individual questionnaires, the customer’s willingness
to recommend British Gas following a gas engineer visit.
Operational Performance
In British Gas Services & Solutions we have continued to embed
strong operational performance, driving improvements in
customer satisfaction and strengthening our platform for
growth.
Reschedule rates remain low at 4% (2023: 3%), helping to
underpin improvements in customer satisfaction, with engineer
NPS of 73 rising 2pt and complaints per customer falling by 12%
to 5.3%. This has given us the confidence to launch innovative
customer offers, such as our nationwide Service Promise,
offering a same day engineer repair visit for contract and on-
demand customers who contact us by 11am.
Customer numbers were 2% lower in 2024, and remain a key
focus area, although the rate of decline has improved versus
historical trends, with annualised Services contract customer
retention of 86%, up from 82% at the end of 2023. We are
making good progress growing in the on-demand market, which
represents a substantial opportunity, with jobs increasing by
39% year-on-year to 304,000.
Despite maintaining market share, boiler installs fell in what is
currently a challenging market reflecting continuing cost of
living pressures for households.
Financial Performance
Adjusted operating profit was £67m (2023: £47m), reflecting
our focus on increasing customer value, despite slightly lower
customer numbers, with strong operational efficiency and cost
control, alongside growth in on-demand and Smart jobs. This
was partially offset by lower boiler installations and continued
investment in Net Zero. Depreciation and impairments were
£11m lower in 2024, with extensions to the lives of vehicles in Q4
2023 and impairments in 2023 (2024: £nil, 2023: £9m).
British Gas Energy
Year ended 31 December
2024
2023
Change
Operational
Residential energy customers (‘000)
(closing) (i)
7,460
7,529
(1%)
Small business customer sites (‘000)
(closing)
557
552
1%
Residential energy complaints per
customer (%) (ii)
10.1%
13.3%
(24%)
Residential energy touchpoint NPS (iii)
29
17
12pt
Financial
Cost per residential energy customer
(excl. bad debt) (£)
95
91
4%
Adjusted EBITDA (£m)
339
808
(58%)
Adjusted operating profit (£m)
297
751
(60%)
Adjusted operating profit margin (%)
2.5%
4.2%
(40%)
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Residential energy customers are defined as single households buying energy from
British Gas.
(ii) Total complaints, measured as an expression of dissatisfaction in line with submissions
made to Ofgem, as a percentage of average customers over the year.
(iii) Measured independently, through individual questionnaires, the customer’s willingness
to recommend British Gas Energy following contact.
Operational Performance
In British Gas Energy, we continue to invest in strengthening our
operational foundations to drive innovation, retention and better
customer outcomes in order to underpin long-term profitability
in a changing competitor landscape.
Customer migration to our new, more flexible, Ignition platform
is now largely complete. This has helped contribute to materially
higher levels of customer satisfaction. NPS of 29 was a near-
record, 12 points higher compared to 2023 and more than
double the level two years ago, and coupled with a 24%
reduction in complaints per customer to 10.1%. We will complete
our customer migration to the new platform in 2025. Complaints
per 100,000 customers were lower than Ovo, Octopus and EDF
for the latest six month period
(iv).
Residential energy customer numbers declined slightly in 2024.
While price competition has started to increase, customers are also
focused on service quality and product innovation. These are areas
in which we are investing, including our brand perception. Having
been recognised earlier in the year for "Best Overall Improvement"
in the Uswitch Energy Awards, growing external recognition,
backed by delivery, will be crucial in driving improved customer
acquisitions and retention moving forward.
(iv)Latest Ofgem data: Complaints received by large suppliers per 100,000 customer
accounts. As at 19 February 2025.
Centrica plc Annual Report and Accounts 2024
33
Financial Performance
Reflecting our investment in customer service, innovation and
brand, annualised cost per residential energy customer
(excluding bad debt) increased to £95 from £91 in 2023. Within
this, dual running costs from system migration reduced by £2 to
£9.
Adjusted operating profit was £297m (2023: £751m). This
reflects a non-repeat of the cost recoveries seen in 2023 of
approximately £500m, which was largely associated with
unanticipated Standard Variable Tariff demand in 2022,
decreased procurement optimisation opportunities due to lower
commodity prices and associated volatility, and lower unit
margins. This was partially offset by a lower bad debt charge of
£352m (2023: £541m), with bad debt as a percentage of
customer revenue falling to 2.3% (2023: 3.1%) and 6.1% (2023:
8.0%) for residential and small business respectively, supported
by a more stable macroeconomic environment alongside lower
prices, and internal initiatives focusing on bad debt.
The Meter Asset Provider (MAP) business, currently included
within the British Gas Energy segment, was break-even for the
year, as the business continues to build scale, with a portfolio of
smart meters under management of around 450,000 by the end
of 2024. Included within Group adjusted operating profit is a
consolidation adjustment of £(19)m (2023: nil) relating to work
carried out by British Gas Services & Solutions on behalf of the
MAP.
Bord Gáis Energy
Year ended 31 December
2024
2023
Change
Operational
Customers (‘000) (closing)
514
503
2%
Complaints per customer (%) (i)
0.9%
1.7%
(47%)
Journey NPS (ii)
36
18
18pt
Financial
Adjusted EBITDA (£m)
79
21
276%
Adjusted operating profit (£m)
63
1
6,200%
Adjusted operating profit margin (%)
5.0 %
0.1%
4,900%
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Total complaints, measured as any oral or written expression of dissatisfaction, as a
percentage of average customers over the year.
(ii) Weighted NPS for the main customer interaction channels.
Operational Performance
In Bord Gáis Energy we remain focused on creating value from
our integrated model, supporting our customers and investing in
the future energy system to help underpin energy security and
decarbonisation in Ireland.
Our continued focus on customer service delivery helped to
almost halve the number of complaints per customer from 1.7%
in 2023 to 0.9%, and to double our NPS customer satisfaction
score to 36. Customer numbers grew by 2% in 2024 in a highly
competitive market, recovering losses recorded in the second
half of 2023.
In November 2024, Bord Gáis Energy announced the acquisition
of Swyft Energy, with the acquisition completing in January
2025. Swyft Energy is a leading solar PV installer in Ireland and
the acquisition represents an important step in our transition to a
green energy business.
Construction continues on our two hydrogen-ready 100MW
flexible natural gas peaking plants in Athlone and Dublin, with the
projects on-track for commissioning in the second half of 2025.
With a total investment of approximately €350m (Centrica
share ~80%), these plants will help deliver security of supply
while facilitating Ireland's transition to renewable energy.
In January 2025, Bord Gáis Energy secured a 10-year capacity
market contract of €56m p.a., to be fulfilled through an Open
Cycle Gas Turbine with 334MW of electrical generation
capacity. This agile power unit can be brought in and out of
service rapidly, complementing intermittent renewable
generation and further supporting the energy transition. The
technology envisaged will also be able to run on 100%
biomethane or, alternatively, operate on a blend of hydrogen
from the gas network.
In addition, in Ireland’s latest electricity capacity auction, we
were awarded a five-year Intermediate Length Contract for our
445MW Combined Cycle Gas Turbine power station at
Whitegate from October 2028 of €50m per annum. This will
ensure that a reliable efficient plant is available to the market up
to 2033, delivering security of supply for the energy transition
and underpinning our economic return.
Bord Gáis Energy continues to progress opportunities for
decarbonisation, using disruptive innovation, in collaboration
with strategic partners. These include hydrogen storage with
dCarbon X and ESB, ammonia as a renewable fuel source with
Mitsubishi Power Europe and offshore wind with Corio
Generation.
Financial Performance
Adjusted operating profit recovered to £63m (2023: £1m), as
the Irish energy market moved towards a more normalised
operating environment. These conditions allowed us to begin to
return supply margins towards more sustainable levels, while
allowing us to pass on price reductions to customers in a highly
competitive market. In trading and generation, Whitegate
delivered strong reliability and availability, helping to mitigate
reduced optimisation opportunities as a result of lower market
volatility.
Strategic Report Governance Financial Statements Other Information
Optimisation
In Optimisation, we continue to develop and leverage our
international physical positions and world-class capabilities.
Adjusted operating profit remained strong at £380m (2023:
£878m), although was lower compared to 2023 against a
backdrop of lower volatility and prices in commodity markets.
Centrica Business Solutions (CBS)
Year ended 31 December
2024
2023
Change
Operational
Energy supply total gas and
electricity volume (TWh)
16.1
20.7
(22%)
Energy supply complaints per site
(%) (i)
2.4%
3.0%
(20%)
Energy supply Touchpoint NPS (ii)
37
25
12pt
Services order intake (£m) (iii)
231
225
3%
Net investment (£m) (iv)
160
114
40%
Financial
Adjusted EBITDA (£m)
97
141
(31%)
Adjusted operating profit (£m)
73
104
(30%)
Adjusted operating profit margin (%)
2.9%
3.0%
(3%)
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Total complaints, measured as any oral or written expression of dissatisfaction, as a
percentage of total sites over the year. 2023 restated to reflect the change in
methodology to use sites rather than customers.
(ii) Measured independently, through individual questionnaires and the customer’s
willingness to recommend, on a year-to-date basis. 2023 restated to reflect the change
in methodology to using year-to-date data.
(iii) Total lifetime revenue forecasted from customer contracts signed in year.
(iv) Net investment is capital expenditure (including small acquisitions), less inflows from
disposals.
Operational Performance
In CBS we continue to focus on strengthening our customer
service and propositions in business energy supply, while
building a portfolio of flexible, green-focused assets.
We continued our move away from supplying energy to the
lower margin, large-scale Commercial and Industrial sector,
resulting in total volumes falling 22% year-on-year. However,
within this, volumes supplied to medium sized enterprises grew
5% to 12.2TWh (2023: 11.6TWh).
Complaints per site improved significantly in the period, falling
by 20% to 2.4% with commodity prices easing and our
continued focus on customer service delivery. This also
contributed to an improved NPS score of 37, up 12pts.
As expected, Services order intake recovered in the second half
of 2024, with full year Services order intake growing 3%
compared to 2023, and the highest since 2021, with a strong
near-term pipeline of work.
CBS net investment was £160m (2023: £114m) as we continue
to deploy capital for value into a range of solar, battery and gas-
peaking investments. We now have around 480MW of assets in
detailed planning or delivery in the UK and Continental Europe,
with total operational capacity of 194MW. Also included within
net investment is a £28m investment in Highview Power, as part
of a £70m phased investment programme, and the associated
Liquid Air Energy Storage project at Carrington, as part of our
strategic partnership focused on commercialising new long
duration energy storage technology.
Financial Performance
Adjusted operating profit decreased to £73m (2023: £104m),
reflecting no repeat of strong commodity procurement
performance seen in 2023 in more volatile markets partially
offset by additional margin from SME customer growth. Within
this, business energy supply operating profit was £108m (2023:
£159m), while Services and Assets posted a slightly improved
operating loss of £35m (2023: £55m loss).
Centrica Energy
Year ended 31 December
2024
2023
Change
Operational
Renewable and flexible capacity under
management (GW) (i)
16.7
16.3
2%
Financial
Adjusted EBITDA (£m)
346
822
(58%)
Adjusted operating profit (£m)
307
774
(60%)
Adjusted operating profit margin (%)
5.0% 10.0%
(50%)
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Including assets that have signed contracts but are not yet operational.
Operational Performance
Centrica Energy is our world-class asset-backed trading and
logistics business. We continue to build our diverse portfolio of
physical contracted positions, while leveraging our
differentiated risk management and optimisation capabilities to
add further value across the Group.
Renewable and flexible capacity under management was
16.7GW, increasing by 2% year-on-year, driven by the addition
of assets in the Baltics and Italy, where we have signed new
wind and solar assets, partially offset by short-term contracts
rolling off elsewhere.
We have also stepped up the hedging profile of our Sabine Pass
LNG offtake to protect against future declines in gas prices and
create a base margin around which we can optimise. This
includes new long-term natural gas deals, such as our
agreement with Coterra, which is linked to European gas prices
such as TTF and NBP and commences in 2028, and Petrobras.
As a result, we are now almost 100% hedged until the end of
2026, with over 50% through to the end of the decade.
Financial Performance
Centrica Energy delivered a resilient 2024 performance in a
more normalised operating environment. Adjusted operating
profit was £307m (2023: £774m), slightly above the midpoint of
the medium-term operating profit range, but lower than 2023
reflecting reduced market volatility which impacted our gas and
power trading and route-to-market businesses. LNG
profitability remained broadly flat, benefitting from tailwinds
from previous years and the in-built flexibility and optionality in
the portfolio. We also saw benefit in 2024 from the timing of
costs when compared with previous years, and a small £1m
profit from our Sole Pit legacy gas contract (2023: £35m loss)
driven by optimisation of the contract in the second half of 2024.
At current forward prices we expect a loss of around £3m
through to September 2025, when the contracts ends.
Centrica plc Annual Report and Accounts 2024
35
Infrastructure
Our Infrastructure businesses consist of our 20% investment in
the UK’s existing nuclear fleet, our 69% ownership in Spirit
Energy, and Centrica Energy Storage+, the operator of the UK's
largest gas storage facility, Rough. Total Infrastructure adjusted
operating profit fell to £789m (2023: £1,083m).
Nuclear
Year ended 31 December
2024
2023
Change
Operational
Nuclear power generated (TWh)
7.5
7.5
nm
Financial
Nuclear achieved power price (£/MWh)
132
176
(25%)
Nuclear dividend received
355
220
61%
Adjusted EBITDA (£m) (i)
610
742
(18%)
Adjusted operating profit (£m)
353
536
(34%)
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Includes Centrica's share of associate EBITDA of £513m (2023: £415m).
Operational Performance
Centrica's share of Nuclear generation volumes were in-line with
2023 despite extended outages in the first half of 2024 across
Heysham 1 and Hartlepool, due to good reliability across the
second half, and fewer planned outages across the portfolio.
Financial Performance
Nuclear adjusted operating profit was £353m (2023: £536m),
driven predominantly by lower achieved prices net of
associated impacts from the Electricity Generator Levy and tax.
Dividends of £355m (2023: £220m) were received in the year.
Total Electricity Generator Levy included for the year was
£166m (2023: £326m), of which £80m (2023: £285m) is
included in the Group's cost of sales due to our nuclear hedging
activity outside of the associate, with a further £86m (2023:
£41m) included in the Group's associate result.
Details of our forward hedging positions for 2025 and 2026 are
outlined below:
2025
2026
Volume hedged (TWh)
5.5
1.8
Average hedged price (£/MWh)
89
76
Production volume (i) (TWh)
~7.0 to 8.0
(i) 2025 forecasted production volumes.
Spirit Energy
Year ended 31 December
2024
2023
Change
Operational
Gas production volumes (mmth)
747
832
(10%)
Liquids production volumes (mmboe)
1.0
1.0
nm
Total production volumes (mmboe)
13.3
14.8
(10%)
Financial
Average achieved gas sales prices
(p/therm)
132
101
31%
Average achieved liquid sales prices
(£/boe)
58
50
16%
Lifting and other cash production
costs (£/boe) (i)
25.3
25.1
1%
Gas and liquids realisations (£m) (ii)
1,045
900
16%
Unit DDA rate (£/boe)
20.4
17.4
17%
Adjusted EBITDA (£m)
707
506
40%
Adjusted operating profit (£m)
434
235
85%
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Lifting and other cash production costs are total operating costs and cost of sales
excluding depreciation and amortisation, dry hole costs, exploration costs and profit on
disposal.
(ii) Realisations are total revenues from sales of gas and liquids including hedging and are
net of Spirit national transmission system (NTS) costs.
Operational Performance
Total volumes from Spirit Energy were down 10% due to natural
decline in existing fields and production outages at Morecambe
which have subsequently been resolved, partially offset by good
performance at Greater Markham Area.
Financial Performance
Adjusted operating profit was £434m (2023: £235m), with
higher achieved prices, underpinned by our hedging strategy,
more than offsetting lower production volumes. The unit DDA
rate was higher due to production mix, with a greater proportion
of production coming from assets with a higher fixed asset base.
Details of our forward hedging positions for 2025 and 2026 are
outlined below:
2025
2026
Volume hedged (mmths)
513
273
Average hedged price (p/th)
111
89
Production volume (i) (mmths)
~695 to 720
(i) 2025 forecasted production volumes.
Centrica Energy Storage+
Year ended 31 December
2024
2023
Change
Operational
Availability (i)
95%
93%
2%
Total volume in reservoir (bcf) (ii)
40.7
48.2
(16%)
Financial
Adjusted EBITDA (£m)
17
322
(95%)
Adjusted operating profit (£m)
2
312
(99%)
All 2024 metrics and 2023 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Measured as a percentage of demand.
(ii) Includes 14bcf (2023: 15bcf) of indigenous gas.
Strategic Report Governance Financial Statements Other Information
Operational Performance
Centrica Energy Storage+ delivered high operational reliability
from the Rough assets throughout the year. Rough accounts for
approximately half of the UK's gas storage capacity, and we
retain a third-party use exemption until at least 2030.
Centrica Energy Storage+ is expected to be loss making in 2025
(£50m-£100m). We need a regulatory support mechanism to
unlock the £2bn investment to upgrade and redevelop the
Rough assets to increase capacity and, ultimately, convert it into
a hydrogen-ready storage facility. Constructive discussions
with the UK Government are ongoing.
Financial Performance
Centrica Energy Storage+ adjusted operating profit was £2m
(2023: £312m), including a second half loss mainly reflecting
lower seasonal gas price spreads and reduced volatility.
Centrica plc Annual Report and Accounts 2024
37
Strategic Report Governance Financial Statements Other Information
Financial
Group free cash flow from continuing
operations (£m)
Free cash flow from continuing operations is the
Group’s primary measure of cash flow. It reflects
the cash generation of the business after taking
into account the need to continue to invest.
Group adjusted operating profit
from continuing operations (£m)
Group adjusted operating profit from continuing
operations is one of our fundamental financial
measures.
Group adjusted basic earnings per
share from continuing operations (EPS)
EPS is a standard measure of corporate
profitability. Adjusted EPS is used to measure
the Group’s underlying performance against
its strategic financial framework.
Total greenhouse gas (GHG) emissions –
50% reduction by 2032 and net zero by 2040
(Base year 2019)
(1)
Achieving net zero is essential to the future of our
business and our planet, which is why we have
a green-focused investment strategy. This has
contributed to our emissions falling by 18% against
our base year. Although emissions rose from 2023
due to security of supply driving increased gas-fired
power generation alongside gas production and
storage, reductions remain on track with our goal.
Read more about our strategy on pages 14 to 25 and our financial performance on pages 26 to 37
(1) Following an update to our Climate Transition Plan (see page 73),
we accelerated our net zero goal which was previously focused on
achieving a 40% reduction in emissions by the end of 2034 and net
zero by 2045. The goal measures Scope 1 (direct) and 2 (indirect)
GHG emissions based on operator boundary. Comprises
emissions from all operated assets and activities including the
shipping of Liquefied Natural Gas alongside the Spirit Energy
assets in the UK and the Netherlands. Non-operated nuclear
emissions are excluded. Target is normalised to reflect acquisitions
and divestments in line with changes in Group structure against a
2019 base year of 2,120,446mtCO2e. It’s also aligned to the Paris
Agreement and based on science to limit global warming,
corresponding to a well below 2°C pathway initially and 1.5°C by
2040.
24
23
22
2,487
2,207
24
23
22
3,308
2,752
1,552
24
23
22
34.9p
33.4p
19.0p
24
23
22
-18%
-5%
-21%
Key performance
indicators
Our key performance indicators (KPIs) help the
Board and executive management team assess
performance against our refreshed strategy laid
out in July 2023.
989
Centrica plc Annual Report and Accounts 2024
39
Read more about our non-financial performance on pages 58 to 77 and 289 to 291.
(1) Measured independently, through individual questionnaires, the customer’s willingness to recommend British Gas following a gas engineer visit. For wider business
unit NPS, see pages 33 to 35.
(2) Includes British Gas Energy, British Gas Services & Solutions and Bord Gáis Energy households, as well as business customer sites in British Gas Energy and
Centrica Business Solutions. For business unit customer numbers, see pages 33 to 35.
(3) Engagement is based on an average score out of 10 and measures how colleagues feel about the Company.
Non-financial
British Gas Services & Solutions – Services
Engineer Net Promoter Score (NPS)
(1)
Providing a great service is fundamental to our
ability to attract and retain customers. Having
embedded strong operational performance,
reschedule rates remain low which is helping to
underpin improvements in customer satisfaction.
Consequently, NPS improved by 2 points.
Total customers (m)
(2)
Strong customer retention provides a solid
platform for growth. Marked improvements in
customer satisfaction is helping us achieve better
customer retention. Our focus is now on growing
our customer base which remained broadly flat
over the year, having decreased slightly by 1%.
Total recordable injury frequency rate (TRIFR)
Keeping colleagues and customers safe is core to
any responsible business. We focus on preventative
measures and process review, to ensure we
continuously improve performance. As a result, our
TRIFR per 200,000 hours reduced by 25%. Most
incidents related to slips, trips and musculoskeletal
injuries.
Colleague engagement(3)
Having an engaged and motivated team, is intrinsic
to our success. Through continued focus on
creating a more inclusive and supportive place to
work whilst connecting colleagues with our strategy
and new Purpose, engagement improved by
0.4 points. We have now reached top quartile
performance for our sector for the first time.
24
23
22
+64
+71
+73
24
23
22
10,296
10,266
10,183
24
23
22
1.12
0.84
0.63
24
23
22
7.4
7.7
8.1
We manage risks to support
our Group strategy.
Centrica’s Group risk management
framework and internal control
environment are core elements of
the Group’s governance model and
are designed to ensure that risks are
understood and managed in line
with our strategic objectives and
stakeholder expectations.
Oversight of risk management is
embedded at all levels of the
organisation, with the Board maintaining
overall accountability for the Principal
Risks and uncertainties facing the Group.
The Group’s Principal Risks are those
which could potentially impact delivery
of Centrica’s strategic objectives,
as determined through our planning
process, over the medium to long term.
An ERM transformation programme to
review and refresh our risk framework
was initiated during the year. The
refreshed framework includes the setting
of risk appetite, regular risk assessments
against risk appetite, and monitoring
of the internal controls' compliance
and effectiveness.
Our risk framework
The Board has overall responsibility for
ensuring that a sound approach to risk
management and internal control is
maintained across Centrica. The Board
sets the tone and drives the appropriate
risk culture through the Centrica
Leadership Team and through
the Board’s delegated committees.
They set the Group’s risk appetite,
review significant breaches and approve
all risk related disclosures in the Annual
Report and Accounts.
The Board reviews risk as part of its
strategy review process, and during the
year conduct a robust assessment of the
Company’s Principal Risks, in conjunction
with the Audit and Risk Committee,
informed by a programme of strategic
risk workshops. The process included
evaluating the likelihood and potential
impact of identified risks, the
effectiveness of existing controls and
agreeing additional risk mitigation
measures where necessary.
The Board has put in place policies for
identifying, evaluating and managing
the risks faced by the Group, with
responsibility for the oversight of day-to-
day risk management delegated to the
Centrica Leadership Team. The annual
risk management process is summarised
in the diagram below.
In our viability assessment, the potential
impact of ‘severe but plausible’ risks are
considered and linkages to the Group
Principal Risks noted, as described on
pages 52 to 53.
Risk appetite
The Board is responsible for aligning
the Group’s appetite for risk taking with
our long-term objectives, considering
our principal and emerging risk landscape
and the delivery of sustainable value for
our stakeholders. We operate in a
complex and dynamic environment
characterised by geopolitical
uncertainties, a complex cyber threat
landscape, regulatory changes and rapid
technological advancements.
Our risk appetite reflects a balanced
approach to pursuing opportunities while
managing potential adverse impacts.
This is underpinned by our commitment
to maintaining a resilient, safe and
sustainable business, operating
in compliance with relevant laws
and regulations.
Risks are identified and assessed at
a Group and Business Unit (BU) level,
with risk scores (taking into consideration
impact, probability and timescale of
the event occurring) compared to risk
appetite to review the adequacy of
existing mitigating actions and controls,
with further action taken to control and
monitor risks as required.
Internal controls
Our internal control framework aims
to provide reasonable assurance as to
the accuracy, reliability and integrity of
the financial information and non-financial
disclosures in our Annual Report and
Accounts. It further ensures the Group’s
compliance with applicable laws,
regulations and internal policies, as
well as the effectiveness of internal
processes. Further information is included
in the Governance section: Audit and Risk
Committee on pages 100 to 111.
Strategic Report Governance Financial Statements Other Information
*Audit and Risk Committee (ARC). **Safety, Environment and Sustainability Committee (SESC).
Our Principal Risks and uncertainties
Centrica Group's annual risk management process
Assess
Business Unit risk
assessment and
mitigation. Input
from functional
advisory teams
Evaluate
Business Unit Risk
and Controls
Committees
Identify
Business Unit
risk owners
Control & monitor
Quarterly
enterprise risk and
controls review.
Bi-annual review
of Principal Risks
Group enterprise
risk and controls
report
Centrica
Leadership Team
Risk sponsorship
and review
‘Top-down’ strategic
risk workshops.
Risk deep dives
ARC* SESC**
The control environment is subject
to regular monitoring and review such
that control weaknesses and new
or emerging risks are identified early,
and remediated or actively managed,
to reduce the likelihood of any significant
deficiencies arising.
Risk landscape and emerging
matters
The Group’s approach to emerging risks
forms part of the overall risk management
framework, incorporating sector insights,
macroeconomic trends, regulatory
developments, and input from key
stakeholders. Emerging risks are
considered as part of strategic-decision
making, key emerging risk areas shaping
our risk landscape are highlighted below:
Cost of living and fuel poverty
Cost of living challenges and sustained
high energy prices continue to affect our
customers’ ability to pay their bills with
high levels of fuel poverty and bad debt
persisting. Ofgem announced further
price cap rises, applied from 1 January to
31 March 2025 meaning that the price of
energy for a typical household using both
electricity and gas and paying by Direct
Debit has increased by 1.2% to £1,738
per year. This is due to wholesale prices
remaining high with geopolitical factors
continuing to impact energy markets.
We continue to implement measures
to support and work with our customers
to prevent or manage their debt, These
include but are not limited to
implementing the ‘You Pay We Pay’
scheme where BG Energy match
customer payments for a set period of
time. Also advising on the help available
from the British Gas Energy Trust;
and writing to our elderly customers to
inform them of available Government
support such as pension credits, following
changes to the rules for pensioner winter
fuel payments.
Energy market
Exposure to commodity prices and their
volatility is inherent in business
operations. In 2024 European wholesale
power and gas market volatility further
reduced compared to 2023, falling back
in line with levels previously seen prior to
the Ukraine crisis. Nevertheless, prices
have on average increased over the
second half of the year. This increase
has been driven by the threat of Russia
terminating the remaining gas supplies
into Europe via Ukraine by year-end, as
well as increased Liquefied Natural Gas
(LNG) demand from Asia resulting in
cargoes diverting from Europe.
During 2024 the importance of LNG to
global market security continued to be
felt. We concluded two further strategic
LNG deals; in February we announced
a deal with Repsol whereby we
will purchase one million tonnes of LNG
between 2025 and 2027, and in October
we announced two deals with Coterra
providing a further 100,000 MMbtu/day
over 10 years commencing in 2028, which
will reduce the market risk in the LNG
portfolio. Additionally, in December, we
announced the life extension of four
operational Advanced Gas-cooled
Reactor (AGR) nuclear power stations
alongside our partner, EDF. These deals
further bolster our position as a key
market leader providing ongoing energy
security for the UK.
Energy transition and Government
intervention
The Government has committed to
achieving clean power by 2030 and net
zero by 2050. This will require industry
and market re-design including a revised
approach to Gas and Electricity network
planning. The newly formed public body,
the National Energy Systems Operator
(NESO), will perform a wide range of
tasks incorporating connections, system
operation, energy spatial planning and
wider advice to Government on
regulation and market.
In November 2024, NESO advised
Government on how to achieve clean
power by 2030. It will further publish
a series of plans and reports around
achieving net zero by 2050 including the
Strategic Spatial Energy Plan (SSEP).
This will set out a co-ordinated approach
for Britain’s onshore and offshore energy
infrastructure and incorporate the
existing Future Energy Pathways report
advice on how to meet future energy
supply and demand needs.
In the short term, these planning
documents directly impact how NESO
will decide on the connection of
renewables projects with the Grid; with
it currently consulting on processes to
remove unviable projects from the grid
connections queue. NESO’s views on the
future system will impact our ambitions
for future investment such as Rough gas
storage, hydrogen and Carbon Capture,
Utilisation and Storage (CCUS) at
Morecambe. Its views on market design
will have considerable influence although
the final decisions will lie with
Government. We are closely monitoring
the risks and opportunities whilst we
navigate both the pace and change
related to the energy transition to ensure
effective resource allocation which aligns
to our Purpose and delivering returns to
our shareholders.
Centrica has published its refreshed
Climate Transition Plan with more
ambitious targets to move to a low
carbon future, bringing forward our net
zero goal from 2045 to 2040 and
advanced our interim milestone from
reducing our greenhouse gas emissions
by 40% by the end of 2034, to 50% by
the end of 2032.
Regulatory change
The intensity of regulatory interventions
is significant across the Group and
especially in our UK retail energy supply
and insurance business units. In 2025,
Ofgem will run a broad compliance
programme consulting on elements of
the price cap mechanism including the
operational cost allowance review and
warm home schemes. There is also
a continued focus on customer service
standards given the ongoing cost of living
challenge. The Financial Conduct
Authority and Prudential Regulatory
Authority are focusing on operational
resilience and third-party management.
Across the Group, our Legal, Regulatory
and Compliance teams review the
regulatory landscape and work with
regulators and trade bodies: to help
form future regulatory requirements;
build our understanding of stakeholder
expectations; and to effectively respond
to changing requirements.
Our preparations to ensure readiness
under the UK Corporate Governance
Code for Centrica’s material controls
declaration by the Board are underway,
with direct Centrica Leadership Team
oversight of the programme governing
these activities and supervision by
the Audit and Risk Committee. The
programme is designed to align with our
enterprise risk management framework
which is one of the key sources of insight
and context for the effective surfacing of
potential material risk areas and their
related material controls. A key element
of our approach is to pilot the material
controls sign-off process in advance of
the actual sign-off date, enabling us to
refine and test the controls, identify any
gaps, and ensure their effectiveness.
Centrica plc Annual Report and Accounts 2024
41
Technology adoption
The rapid pace of technological
innovation presents both risks and
opportunities for our customers,
communities and our business. Increased
technology adoption and related
increases in the volume of data
processing and storage by companies are
some of the key factors driving electricity
demand. Centrica recognises that
understanding and embracing innovative
technologies, including Artificial
Intelligence (AI), is essential to meeting
our customer needs, maintaining our
competitive edge, driving innovation and
improving operational efficiency. We
have a measured but proactive approach
to technology adoption, driven by our
commitment to operational excellence,
safety, legal and regulatory compliance.
Programmes to upgrade technology
suites across all business units are in
progress. Additionally, we acquired
ENSEK and the Ignition platform in 2024
to enhance our digital services capability
to offer innovative propositions to our
customers. Further, our Group Chief
Customer and Data Office is focused
on improving how customer data is
harmonised and unified across all
business units, enabling use cases such
as hyper-personalisation, advanced
forecasting and AI-enabled customer
interactions, all aimed at delivering
deeper customer insights and more
tailored experiences.
Global supply chain constraints
Evolving geopolitical tensions and the
accelerating energy transition are
reshaping supply chains and increasing
reliance on critical third parties in the
energy sector. Regional conflicts, trade
restrictions and concentrated sourcing
of rare earth elements for new energy
technologies and key components create
vulnerabilities and heighten competition
for resources. These challenges
underscore the need for enhanced
supply chain resilience and robust risk
management.
We recognise that these risks can impact
the availability, cost and delivery timelines
of critical components and materials. We
address these risks through robust due
diligence and diversified sourcing
strategies, strengthening our insight into
and relationships with critical third parties
and adapting our processes to mitigate
potential disruptions and ensure our
operations remain secure and sustainable.
Climate change
We recognise that climate change brings
significant opportunities and risks for
Centrica. As a leader in the energy sector
and energy transition, our Purpose
of ‘energising a greener, fairer future’ lies
at the heart of our organisation. Our
enhanced climate ambitions published
in our updated Climate Transition Plan are
incorporated into budgets, business plans
and accounting assumptions and we will
continue to assess strategic resilience
through our Task Force on Climate-
related Financial Disclosures climate
scenario analysis. To meet the Corporate
Sustainability Reporting Directive
(CSRD), we have established the CSRD
programme enabling us to improve our
assessment of our climate related
vulnerabilities and developed an
Environmental Impact, Risk and
Opportunity IRO framework to be
integrated into regular review of climate
risk scenarios and mitigation strategies.
We also recognise the complex and
evolving nature of climate risks, and
our forward-looking priorities include
regulatory preparedness with a focus on
CSRD; enhanced climate reporting and
strengthened engagement with our
investors and customers, as well as
further investment in analytics and
reporting capabilities.
Strategic Report Governance Financial Statements Other Information
Principal Risks
The following Principal Risks have been identified and are actively monitored and managed to support the delivery of our strategic
objectives. In reviewing the Group’s Principal Risks, consideration is given to the potential risk impact and likelihood, and also how
these evolve over time. This in turn informs decisions as to the effectiveness of existing controls and the need for any further
mitigations. The risk trend indicates whether the level of risk exposure is considered to have improved, deteriorated or remained
stable.
Centrica plc Annual Report and Accounts 2024
43
Risk overview
Our exposure to counterparty/customer/third party default
or a credit event limiting the availability of financial facilities
or unsecured credit lines.
Exposure to events which consume available Group
liquidity resources.
Key drivers:
•Hedging commodity price risk exposes Centrica to (i) credit
risk, which is the risk of a loss if a counterparty fails to perform
on its obligations, or (ii) liquidity risk when trades are executed
on exchange or under margining agreements, which can require
collateral postings.
•Trending directional price moves which can lead to a build-up
of mark to market positions is a key component of credit and
liquidity risk.
•Volatile commodity markets can also lead to an increase
in cash and working capital requirements for both us and
our counterparties, increasing the risk that one of our
counterparties fails to perform and the subsequent increased
risk of contagion.
•Further information is included in note S3: Financial risk
management within the Supplementary Information to the
Financial Statements.
•Sustained high energy prices and cost of living challenges
impacting our customers’ ability to pay for their energy supply.
•High operating costs coupled with the continued effects of high
interest rates creates challenges for our UK third-party
customers, resulting in an increased likelihood of default.
Mitigations
•Financial risks are regularly measured, monitored and reported
against approved risk limits by independent risk functions
and overseen by dedicated Risk Committees.
•The Group Credit Risk Policy is reviewed and approved annually
to ensure credit risk limits reflect Board risk appetite.
•Credit risk teams actively manage and reduce credit exposures,
taking account of liquidity considerations.
•Credit mitigation instruments are negotiated, as needed,
including guarantees, letters of credit, credit insurance, and/or
tenor and volume restrictions are imposed to avoid exposures
building up.
•A liquidity forum including Centrica Energy and Group Treasury
monitor liquidity requirements under normal and stressed
market conditions, with monthly CFO review and approval
of Centrica Energy liquidity limits.
•Risk Capital reporting is distributed to Centrica Leadership
Team members monthly and bi-annually to the Board, who,
subject to risk appetite, may agree a risk capital reserve against
Centrica’s net debt headroom.
•Access to diversified sources of committed and
uncommitted liquidity.
•Monitoring of forecast versus actual customer debt position,
and review of the bad debt provision.
•Additional support processes to help customers to repay
their debt.
Developments
Risk context:
•Market prices persist at levels higher than historical averages,
albeit lower than 2022 record highs.
•Credit risk exposures have been managed within Group Credit
Risk limits and remain broadly stable at an aggregate level.
•The higher interest rate environment adversely affected some
smaller sized, highly leveraged counterparties over the past
two years. These exposures have been actively monitored
and managed through the various credit review forums; with
fewer counterparties on a credit watchlist as at year-end.
•During 2024, Centrica has successfully refinanced the £450m
hybrid bond with a new £405m hybrid bond and bought back
£370m of 2033 senior debt. Both activities have further
strengthened the balance sheet
•In Q4, Centrica successfully extended £2.5bn of committed
credit facilities with relationship banks by a further year
resulting in £1.5bn of facilities with maturity in Q4 2029
and £1bn with a maturity in Q4 2027. In addition, Centrica has
access to c£2.6bn of committed letters of credit with
relationship banks as well as to a portfolio of uncommitted
letters of credit
•Centrica maintains a $3bn US Commercial Paper programme
to support short-term liquidity requirements and periodically
issues into this market to provide confidence in its ability
to access funding.
•The risk to UK third party default is slightly higher than 2023,
but lower than the peak seen in the 2020-21 period.
•British Gas Energy continues to build debt management
capabilities and processes.
Risk trend: Improved
Credit and liquidity risk
Strategic Report Governance Financial Statements Other Information
Market risk
Risk overview
Risk of financial loss, both in terms of short-term profitability
and long-term asset valuations, due to trends and volatilities
in commodity prices.
Key drivers:
•Commodity exposure arises within the trading businesses,
which provide optimisation for Centrica’s upstream and
downstream power and gas positions. We also have
commodity exposures related to proprietary trading
and arising from our long-term Liquefied Natural Gas assets.
•Material movements in commodity prices can impact revenue
on sale of asset production and impact the long-term valuation
of asset portfolios.
•Changes in our customer demand requirements can result
in a commodity exposure as we realign our established hedges
at market prices.
Mitigations
•Business unit hedging policies and trading/optimisation risk
limits are reviewed and approved by the Group Risk Hedging
Policy Committee, bi-annually.
•A monthly Downstream Meeting reviews and oversees
demand forecasting performance and hedge performance.
•Hedging decisions and risk exposures are agenda items at the
monthly Finance Performance Reviews across the Group.
•Market risks are also reviewed regularly in dedicated Risk
Committee forums, with daily reporting against risk limits
in Centrica Energy and Bord Gáis.
Developments
Risk context:
• Prices and volatilities have reduced year on year.
•The financial impact of outage risk associated with upstream
and infrastructure assets remains high due to the higher price
environment and the ageing asset infrastructure.
Risk trend: Improved
Weather risk
Risk overview
Unusually warm or cold conditions could lead to unexpected
changes in energy demand from our customers, which may
reduce our present or future profitability.
Key drivers:
•During warm weather customers consume less energy,
reducing revenue, which can be further compounded by selling
back hedges at a loss if commodity prices have fallen.
•During cold weather customers consume more energy, and to
meet this demand Centrica may need to purchase additional
volumes. If wholesale prices have also risen to above residential
and business customer price levels, Centrica will lose margin on
these incremental volumes as the cost is higher than can be
recharged to the customer.
Risk trend: Stable
Mitigations
•A dynamic hedging strategy is implemented to manage
the exposure to weather risk.
•Options to mitigate extreme weather risk in our downstream
businesses are considered ahead of winter seasons.
•The monthly Downstream Energy Margin Meeting reviews
weather impact analysis, hedging proposals and performance.
Developments
Risk context:
•Higher European gas storage levels have helped to mitigate the
risk of winter supply shocks.
•The risk is skewed to warm weather affecting revenue
generation by the downstream business together with
potential losses from selling back hedges.
Centrica plc Annual Report and Accounts 2024
45
Political, legal, regulatory or ethical intervention/compliance
Risk overview
Political or regulatory intervention, potential changes or failure
to comply with laws and regulations may create a more
uncertain operating environment that may lead to greater
regulatory scrutiny and inhibits our ability to invest in and allocate
resources to markets or activities, impacting our financial
stability and reputation.
Key drivers:
•Continuing high level of regulatory scrutiny in the UK retail
energy supply and insurance business driven by political focus
on the cost of living challenges faced by many consumers.
•Increased focus on ESG requirements and the impact on
investor confidence in our approach to sustainability.
•Any material real or perceived failure to follow Our Code
would undermine trust in our business.
Mitigations
•Articulation of a clear political and regulatory strategy with
key priorities and policy positions.
•Dedicated Corporate Affairs and Regulatory teams which
examine upcoming political and regulatory changes and their
impact, with reporting to the Centrica Leadership Team.
•Monitoring of wider legal and regulatory developments in all
relevant jurisdictions, particularly regarding matters such as
human rights, climate and the environment, health and safety,
cyber security, AI, tax and prevention of financial crime.
•Continuous dialogue with Ofgem, the Commission for
Regulation of Utilities, the FCA, the PRA and consumer
groups to influence the regulatory environment.
•Capability in Energy Assurance to support the business with
meeting complex regulatory requirements.
•Robust customer experience control frameworks, reviewed
by leadership teams.
•The Board sets the tone from the top through Our Code and
leadership behaviours with Our Code annual training
representing our employees, commitment to doing the right
thing and acting with integrity
•The Financial Crime team monitors threats and adequacy
of response to anti money laundering and the threat of bribery
and corruption.
•A global Speak Up helpline exists to provide a consistent
Group-wide approach to reporting unethical behaviour.
Developments
Risk context:
•Keeping pace with the volume, speed of implementation and
complexity of political and regulatory change impacting the
Group continues to be a focus area.
Retail:
•Ofgem will run a broad Compliance programme in 2025 and will
consult on their Consumer confidence work programme which
aims to deliver enhanced customer service standards.
•Ofgem will also review the price cap to reset the level of
allowance that Ofgem considers appropriate for operating
expenditure and levels of consumer debt. There is also the
possible introduction of further capped tariffs with a zero
standing charge.
•The pace of FCA and PRA policy development is significant,
and the FCA Policy for 2025 will focus on operational resilience,
oversight of third parties and treatment of vulnerable
customers. We have been focusing on all these elements
as part of our embedding of the Consumer Duty framework
and will seek to establish best practice as further guidance
is issued.
Risk trend: Stable
Strategic Report Governance Financial Statements Other Information
Climate change
Risk overview
The Company may face potentially unfavourable market,
regulatory and policy changes driven by climate change, which
could affect the ability to execute our strategy effectively.
Key drivers:
•Increased pressure from Government, investors and
customers to commit to meaningful carbon reduction targets.
•Execution of the investment strategy will channel capital
investment to realise investment opportunities from moving
to a low carbon future.
•Timing and execution of British Gas Energy’s pivot to
decarbonise power, heat and transport products and services.
•Timelines in which Centrica, or its subsidiary businesses, will
be legally obligated to comply with UK, EU or international
ESG management and reporting requirements.
•Increased focus on ‘greenwashing’ and greater rigour on how
organisations market low carbon products and propositions.
Mitigations
•We have published our refreshed Climate Transition Plan with
more ambitious targets for 2040 as part of our approach to
moving to a low carbon future.
•Progress against our Climate Transition Plan is incorporated
into executive remuneration.
•The SESC, chaired by an independent Non-Executive
Director, reviews climate change information and climate-
related matters.
•Full compliance in our 2024 Task Force on Climate-related
Financial Disclosures reporting is reflected in pages 67 to 77.
•New Business and Net Zero lines of business launch innovative
and competitive products and propositions to gain a significant
footprint in the growing low carbon market.
•Green Claims Principles have been developed and
implemented to manage ‘greenwashing’ risk across the Group.
Developments
Risk context:
•Continued geopolitical focus on COP29 and on how
corporations respond to climate change.
•The UK Government has committed to Clean Energy by 2030.
•The Government has extended the deadlines for both the
phase-out of gas boilers and the ban on petrol/diesel vehicles
to 2035 and increased the grant for Heat Pump installations
by £2.5k to £7.5k.
•The European Corporate Social Responsibility Directive aims
to create a sustainable economy for the EU. The reporting
requirements are broader in scope, complexity and granularity
and require assurance activity.
Risk trend: Stable
Centrica plc Annual Report and Accounts 2024
47
Customer
Risk overview
Economic pressures, regulatory changes and high levels
of service demand could mean that we are unable to
consistently deliver satisfactory customer service, which
could result in increased complaints or loss of customers.
Key drivers:
•Frequency of price cap changes and increased customer
service demand due to sustained high energy prices impacting
a customer’s ability to pay.
•Regional engineer capacity constraints in British Gas Services &
Solutions with peak demand for services exceeding available
engineer resources.
•In our net zero business, failure to ensure successful
matching of customer demand with fulfilment capabilities,
can negatively impact on customer experience outcomes,
resulting in weakening of brand and reduced
customer volumes.
•Continued competition in our retail markets, including
Bord Gáis Energy where competitive pricing is widespread.
Mitigations
•The Customer Data and Analytics team has been combined into
a Chief Customer Office Function which continues to enhance
comprehensive data capture across all customers and business
units, to connect our customer data and generate insights and
improvements along the customer journey.
•Customer Conduct Boards provide data-led monitoring and
oversight to minimise poor customer outcomes, customer
detriment, complaints and regulatory actions.
•Customer-facing business units focus on reducing complaints
and addressing customer pain points using enhanced tools
and automation, and performing root cause analysis
within a continuous improvement approach.
•British Gas Energy’s ongoing investment in customer service
capability and care for vulnerable customers.
•British Gas Services & Solutions has built stronger operational
resilience, recovery and delivery capacity, enabling the launch
of the same day Service Promise.
•Bord Gáis has implemented tactical pricing strategies
to compete with new entrants, while developing its value
proposition and bundled energy, services and net
zero offerings.
Developments
Risk context:
•Continuing high energy prices and cost of living challenges
keep demand elevated. Customer journey transformation is
increasing customer satisfaction scores and reducing
customer contact levels.
Risk trend: Stable
Strategic Report Governance Financial Statements Other Information
People
Risk overview
The Company faces the risk of failing to attract, develop, engage
and retain key talent, which could impact our ability to achieve
strategic objectives. Ensuring a healthy, capable, inclusive and
resilient workforce is essential for maintaining operational
performance and meeting long-term goals, especially amid
current economic pressures and labour market challenges.
Key drivers:
•Challenges in attracting and retaining critical skills and capabilities,
which are essential to meet our strategic objectives.
•Labour market shortages in key skills and talent, leading to
retention challenges in specific business units or geographies.
•Deterioration in employee physical and mental health, and
wellbeing, affecting productivity and engagement across
the workforce.
•The impact of the cost of living crisis, inflation and geopolitical
tensions on employees' mental health and wellbeing, potentially
affecting morale and retention.
•Challenges in maintaining a competitive reward strategy.
Mitigations
•High level capability analysis underpinned by a Strategic
Workforce planning framework is underway and will support
Centrica businesses in making capability investments and
inform tailored retention and succession planning.
•Quarterly performance conversations and key metric
monitoring, including the quarterly employee engagement
score and participation rate, absence, health and wellbeing
score, Diversity, Equity and Inclusion score and attrition rates
are monitored.
•#MoreThanACareer campaign and a Centrica-wide Brand
Champion Programme connecting current and future talent.
•The Shadow Board provides a platform to a group of colleagues
to engage with the Centrica Leadership Team, and to support
and influence colleague centred decision-making.
•A long-term property strategy review is underway to optimise
our workplace and ensure business continuity and collaboration.
•Holistic approach to wellbeing including the Colleague Support
Foundation and the employee-led community networks, such
as those for working parents, fertility and carers.
•DE&I Action Plans are in place to achieve our ‘Open Letter’
commitments to enhance diversity at senior levels,
improve equity of opportunity and foster continuous
inclusive behaviours.
•Regularly monitor and manage the impact on Centrica of the
Employment Rights Bill and upcoming employment legislation.
•Established Training and Competence Framework and
Academies which build programmes and courses tailored to our
future workforce needs deliver stronger operational metrics
and better customer experience.
•Regular reviews of Centrica’s reward strategy to align with
overall goals and values, through internal feedback and external
benchmarking.
Developments
Risk context:
•Continue to incorporate external insight from government
policy, skills councils and awarding bodies as an input into how
we tailor our academies to close strategic capability gaps as
well as building net zero skills.
Risk trend: Stable
Centrica plc Annual Report and Accounts 2024
49
Safety
Risk overview
The Company faces the risk of occupational, transportation,
customer or third-party fatality or injury due to safety hazards
associated with its operations. Ensuring a safe environment for
employees, contractors and the public is crucial to maintaining
operational integrity and protecting the Company’s reputation.
Key drivers:
•Operational activities, which may expose employees,
customers, or third parties to safety risks.
•Significant safety incidents that could lead to regulatory action,
financial penalties, and reputational damage, affecting some
or all of Centrica’s brands and business units.
Mitigations
•Leadership commitment to driving improvements in Health
Safety and Environment (HSE) maturity and achieving
continuous improvement in key metrics.
•Regular reviews of HSE frameworks and safety risks to ensure
they are reduced to as low as reasonably practicable.
•Governance arrangements and performance monitoring
through Centrica Leadership Team meetings, SESC, the HSE
Executive Committee, legal entity board meetings and the HSE
Director Forum.
•BU HSE Improvement Plans are updated and reported on
monthly to the Centrica Leadership Team.
•HSE Management Systems, including policies, standards and
procedures, are established as well as investment in targeted
training and competency.
•Assurance over our HSE processes and controls is provided
through our in-house HSE teams, with support from external
subject matter experts where necessary.
•The approach to customer visits is continuously reviewed
to ensure that employees and contractors operate in line
with Government guidelines and/or industry best
practices, maintaining the health and safety of both
employees and customers.
•Ongoing engagement with regulatory agencies, such
as the Health and Safety Executive and the Department
for Energy Security and Net Zero.
Developments
Risk context:
•Management monitors a range of leading and lagging
indicators and is committed to fostering a strong safety
culture across Centrica.
•As the Group strategy evolves and we repurpose our existing
assets, developing new low carbon technologies and assets,
the Group will respond to changing HSE risks and implement
appropriate HSE frameworks and technologies.
Risk trend: Improved
Strategic Report Governance Financial Statements Other Information
Cyber
Risk overview
A successful cyber-attack on our systems could present as
follows:
•Confidentiality: leakage of customer or Company confidential
data by threat actor, third party, staff or system error, either
maliciously or by accident.
•Integrity: inaccuracy of Centrica’s data due to malicious
or inadvertent alteration by internal or external parties,
or malicious actors.
•Availability: operational disruption and loss of assets,
including data, due to a cyber compromise.
•Any or all of the above which could lead to a regulatory
compliance impact or fines, including but not limited to,
General Data Protection Regulations (GDPR), Smart Metering
obligations (Ofgem), Security of Network and Information
Systems Regulations 2018 and enhanced NIS2.
Key drivers:
•Escalating complexity and frequency of cyber threats.
•An increased reliance on digital infrastructure within Centrica.
•Expansion into new geographies and markets increasing
cyber regulatory obligations.
•The targeting of supply chains as a mechanism to attack
firms by exploiting the trust between known suppliers.
•Reach of regulations beyond the jurisdictional border
of the legal entity.
Mitigations
•Monitoring and oversight of cyber security via the Cyber
Steering Committee, chaired by the CIO.
•Ongoing threat intelligence gathering, collaboration and
information sharing with industry peers and the National
Cyber Security Centre.
•The Cyber Security Change Programme and cyber-attack
simulations build security capabilities and improvements
in controls that increase the difficulty of targeting Centrica
and being able to exploit weaknesses without detection.
•The Ransomware Programme continues to improve Centrica’s
ability to co-ordinate and recover from a ransomware attack,
with the Board and senior leadership participating
in a ransomware response and recovery exercise.
•Ongoing enhancement of cyber security controls dedicated to
protecting operational technology; the control systems used to
manage domestic, commercial and industrial processes.
•Training and awareness have been developed and delivered
to key groups to equip them with the skills and knowledge
to operate in a more digital world.
Developments
Risk context:
•The current geopolitical situation and regional conflicts have
increased the use of cyber as a weapon to target energy
infrastructure. Our Critical National Infrastructure and the
nature of the industry in which we operate makes us a target
for state actors and state-sponsored attackers.
•The risk of misuse of AI to create complex attacks is expected
to increase rapidly with AI tools becoming cheaper and more
accessible. We recognise the opportunity to adopt AI to better
improve our cyber defences.
•The volume, sophistication and frequency of ransomware
attacks has evolved, with the most catastrophic bringing down
IT systems within very short timeframes, and in some
circumstances leading to publication of exfiltrated data.
•The increased connectivity of operational technology presents
an opportunity for attackers that if exploited could cause major
harm and disruption to industrial processes including processes
in the energy sector.
•Our strategy to expand to low carbon markets and help our
customers toward net zero may increase our regulatory
obligations in maintaining our cyber security posture, requiring
enhanced governance and external regulatory oversight.
Risk trend: Stable
Centrica plc Annual Report and Accounts 2024
51
Operational asset integrity
Risk overview
Impaired structural or asset integrity, resulting from any failure
in design, maintenance, inspection or operation, could lead to
a major accident (such as loss of containment of flammable/
hazardous materials or structural collapse) which may result
in multiple fatalities, major damage to the environment, and/or
significant operational disruption, in addition to revenue losses
and reputational damage.
Key drivers:
•Inadequate investment and operational support for asset
inspection, maintenance and development, increasing the risk
of safety issues, personnel or environmental harm, unplanned
outages, or impaired asset performance, that could result in
regulatory implications and affect asset performance and
reputation.
•As we expand our asset base, it is critical to ensure
standardised, scalable procedures and processes, including
technology, people, contractor and assurance management,
to minimise asset impairment risks throughout their lifecycle
and ensure compliance with relevant regulations.
•Operational issues or early asset closures may prevent
adequate returns on our asset investments, leading
to suppressed earnings and cash flows.
Mitigations
•Group-wide minimum operational and safety standards are
applied to all assets, whether operated or non-operated,
and adherence against them is monitored and reported.
•Inspection activity, maintenance and improvement
programmes are conducted across the asset base to
optimise effectiveness and maximise production levels.
•Centrica’s presence on the Board of EDF Energy Nuclear
Generation Group Limited allows oversight of the operational
performance and strategic decisions related to the
Nuclear fleet.
•The Group Annual Plan includes contingencies to cover
unexpected outages from assets.
•HSE Management Systems are established to include policies,
standards and procedures to protect employees, third parties
and the environment.
•The HSE Function works with the business to ensure effective
HSE resources and competency operate consistently and
effectively across the business.
•Engagement with main regulatory agencies in locations of
operation is consistently maintained, such as the Environment
Agency, Health and Safety Executive, Department for Energy
Security and Net Zero, and North Sea Transition Authority.
•Assurance over our HSE processes and controls provided by
our in-house HSE teams supported by external subject matter
experts, where needed.
•Continued investment in training to ensure maintenance of safe
operating practices.
Developments
Risk context:
•The Whitegate Plant operated with strong availability and
reliability in 2024. As the plant ages and we transition to more
flexible generation, it will be crucial to carefully manage plant
reliability and safety risks.
•The Nuclear fleet has performed well overall in 2024 with
strong reliability metrics, although outage downside risks
are binary and there was a significant unplanned outage
at Heysham 1 and Hartlepool during the first quarter. The
operational lifespans of our four Advanced Gas-cooled Reactor
nuclear power stations were extended in December 2024.
Heysham 1 and Hartlepool received a one-year extension, now
set to operate until 2027, while Heysham 2 and Torness were
granted two-year extensions, continuing until 2030.
•Spirit Energy continues to focus on safely delivering production
from existing late-life assets and de-risking its
decommissioning obligations. During 2024 Spirit Energy
undertook scheduled shutdowns on their assets to perform
maintenance campaigns to support life extension and
continued operations.
•Centrica Energy Storage+ continues to invest in the safe and
reliable operation of Rough and has committed potential
development expenditure to prepare for the redevelopment
of Rough for hydrogen-ready storage.
Risk trend: Stable
Assessment of viability
Viability statement
In accordance with provision 31 of the UK Corporate
Governance Code, the Directors have assessed the long-term
prospects and viability of the Group over a period of three years
to 31 December 2027, considering the business model (as set
out in the Strategic Report on pages 14-15), current position in
the context of liquidity and credit metrics of the Group, and
Principal Risks.
Assessment of prospects
In making this assessment, the Directors have considered the
following factors, both in relation to the Group’s strategic plan
and its current competitive position, and in the longer-term
assessment of the Group’s prospects.
The Principal Risks facing the Group are set out on pages 43-51,
with those believed to cause the most material financial impact
forming the focus of this viability assessment, as detailed in the
four severe but plausible scenarios considered on the following
page.
The Group’s Strategic Purpose is to energise a greener, fairer
future – because we believe in energy that works for colleagues,
customers and communities, today and into the future, as set
out on page 11 of this Annual Report and Accounts. Climate
change is one of the most important drivers guiding Centrica’s
prospects today and is a core part of our purpose. As such
our enhanced climate ambitions, as published in our updated
Climate Transition Plan, are incorporated into budgets
and business plans, underpinning the strategic model used
in this analysis.
We continuously monitor emerging trends to proactively
identify potential risks and opportunities associated with
commodity price volatility, prevailing economic climate,
competitor activity and Government support for net zero.
We put customers’ needs at the centre of everything we do
and this is the core part of our strategy, as set out in pages 12
and 20 of the Strategic Report.
Assessment period
Consistent with the practice of previous years, the Directors
have adopted a three-year time frame for this analysis, covering
the period 2025-27, aligning with the Group’s financial planning
cycle and the period of reasonable visibility in the energy
markets. Furthermore, the Group’s most significant risks
continue to be shorter-term in nature including commodity
prices, trading performance, margin cash requirements,
weather and asset performance.
Key assumptions
The strategic model used as the basis of the assessment
is based on a number of key assumptions including those
detailed below:
•There are no material changes to Group operations, including
no material acquisitions or disposals beyond the capital
framework announced in July 2023 strategy update, assuming
capital deployment of £600-800m per annum;
•Centrica have a long-standing relationship bank group and
successfully refinanced the committed credit facilities in 2024.
As such, the Directors have assumed successful refinancing
of appropriate credit facilities as they expire within the viability
period and;
•The Group makes payments to the pension scheme in line with
the deficit recovery plan.
The Directors have assessed the impact of a stressed high and
low commodity price environment on the Company. Based on
the modelling, the Directors determined that a high commodity
price environment would not have a material impact on Group
headroom based on current positions held.
Low price environment
2025
2026
2027
NBP (p/th)
48
42
37
Baseload Power (£/MWh)
39
36
34
In assessing the impact of a significant low commodity price
environment, a low case reflecting a 50% reduction to
September 2024 forward prices has been adopted as a severe
but plausible forecast. We have continued to monitor price
changes since this assessment and the comparative uplift in
December 2024 forward prices ensures that the low curves
used in this assessment remain appropriate.
Assessment process
The Directors recognise the significance of the Group’s
strong liquidity position and have reviewed analysis to test
the resilience of the Group against a volatile external risk
environment, ensuring Centrica maintains ample headroom
to address reasonably anticipated liquidity needs throughout
the Viability Assessment period.
The Group’s financing profile is managed through accessing
a diverse source of term funding and maintaining access to
carefully assessed levels of standby liquidity. As at 31 December
2024, the Group had total committed credit facilities of £5.0bn
of which £1.0bn expire in 2027, £0.5bn expire in 2028 and £3.5bn
expire in 2029. Of the £5.0bn committed credit facilities, a total
of £3.3bn remained undrawn as at 31 December 2024 in addition
to cash and cash equivalents of £6.3bn.
Centrica maintains robust processes to manage and monitor
liquidity requirements across the entire organisation, with a
focus on trading entities and possible increased margin cash
requirements resulting from stressed market conditions, to ensure
sufficient headroom is retained. This involves ensuring flexibility in
accessing debt capital markets and a range of additional resources
as needed, including committed credit facilities, uncommitted
letters of credit, commercial paper and various other short-term
funding options. Further information on the Group’s strong liquidity
position, including its indebtedness and available committed
facilities, is provided in note 25 of the financial accounts.
The following severe but plausible stress scenarios, combining
a number of the Principal Risks detailed on pages 43-51 of the
Strategic Report, have been overlaid on the three-year business
plan to provide a robust assessment of the Group’s exposure in
each scenario.
Strategic Report Governance Financial Statements Other Information
The Directors considered whether any of the scenarios detailed
above breached the available headroom in the three-year
period. Whilst the most significant impact was realised in the
‘Economic Downturn & Adverse Retail Market’ scenario, it was
concluded that sufficient headroom was available in all four
scenarios, in an addition to an extreme risk scenario which
considers all risks occurring simultaneously.
Whilst mitigations were not required in any of the above
scenarios to ensure the Group remains viable, additional
mitigations could be deployed to increase headroom and reduce
the risk of credit downgrade, including reductions in capital
expenditure and the temporary suspension or reduction of
returns of capital to shareholders.
Reverse Stress Testing identified that there are some extreme
scenarios that could theoretically result in Centrica entering a
position whereby its financial resources were insufficient to
meet its liabilities as they fall due. However, given the current
financial strength of the Company, the combination of events
required to achieve such a scenario is extremely unlikely to
occur. We therefore believe that these risks do not represent
a ‘severe but plausible’ threat to the viability of the Company.
Conclusion
Based on the results of this analysis, the Directors have a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due,
over the period to at least 31 December 2027.
Centrica plc Annual Report and Accounts 2024
53
Multi-risk scenarios modelled
Level of severity reviewed
Links to Principal Risks
Scenario 1
Economic Downturn
& Adverse Retail Market
A significant low commodity price
environment, leading to lower earnings
from asset-based businesses and
increased margin cash requirements,
is exacerbated by warm weather risk
and adverse retail market conditions
•Market Risk
•Credit & Liquidity Risk
•Weather Risk
•Customer
Scenario 2
Asset Performance
Significant disruption to the asset-
based businesses leading to loss of
production and earnings
•Operational Asset
Integrity
•Safety
Scenario 3
Trading & Hedging
Underperformance
Underperformance of trading business
coupled with credit risk associated with
financial loss due to counterparty
default
•Market Risk
•Credit Risk
Scenario 4
Cyber Risk
Risk of a cyber-attack and failure to
prevent denial of service
•Cyber
*Credit rating downgrade
Increased collateral requirement arising
from a single-notch credit rating
downgrade
•Credit & Liquidity Risk
*
Whilst our current credit metrics show no cause for concern with regards to a credit metric downgrade, for each risk scenario considered, an additional impact from a
single-notch credit rating downgrade has been assumed.
Group Chief People
Officer’s report
Empowering business growth
through people
This year, we established two new
business areas: the Power business,
headed by Dave Kirwan, and the Chief
Customer Office, led by Gary Booker.
These developments are pivotal to our
business growth and our People team,
who play a crucial role in supporting and
driving these transformations.
The Power business will invest in low
carbon energy assets to facilitate the
energy transition across the UK and
Europe. In the coming years, they will
enhance the Centrica portfolio by
investing in areas and technologies that
support the energy transition and deliver
strong, sustainable growth. The People
team is integral to this journey, ensuring
we attract, develop and retain the talent
needed to drive innovation and expand
our international presence.
The Chief Customer Office (CCO) is
central to our transformation, placing
customer data and insights at the heart of
our operations. We want to consider how
we think and act differently to deliver on
the ever-changing needs and demands
of our customers – both those we have
today and the new customers we want
to attract in the future. The People team
is key in fostering a culture that embraces
change and innovation, equipping our
teams with the skills and mindset to excel
in this dynamic environment.
A key function in the CCO is our new
Customer Data & Analytics function,
which focuses on maximising our use of
data to provide a comprehensive view
of each customer, thereby enhancing our
customer understanding and experience.
We are leveraging the opportunities that
AI offers, making Centrica an exciting
place for digital talent. The People team
is committed to building a workforce that
is adept at harnessing these technologies,
ensuring we continue to advance in digital
innovation.
Advancing in our talent journey
This year, Centrica has focused on a
future-oriented talent agenda by
implementing our new Talent framework,
which enhances our understanding of
colleagues’ strengths and development
areas. This approach ensures we have
the right people in critical roles, robust
succession plans, and drives intentional
career development across the business.
Strategic Report Governance Financial Statements Other Information
Our People function has made a
significant impact on Centrica
this year. We have successfully
partnered with the business to
drive change, aligning our efforts
with our new Purpose of
energising a greener, fairer
future. Together, we are building
a brighter future for Centrica and
our colleagues.
10,683
Volunteering days this year
Tier 1 Employer
Ranked by the CCLA Corporate
Mental Health Benchmark UK
8.1/10
Engagement score which is top quality
for our sector
2024 has been a remarkable year
for Centrica. I’m proud of our
colleagues’ achievements as we
focused on our customers and
embraced new opportunities.
Our significant focus on talent,
and investment in digital roles
is creating a workforce fit for
the future.
Jill Shedden MBE, Group Chief People Officer
Defining our Purpose
In June 2023, our Centrica Leadership
Team recognised an opportunity for
Centrica to become a more purpose-led
organisation. They embraced the
challenge of creating a unifying purpose
for the Company. We developed a
purpose that truly represents Centrica’s
people, engaging a wide range of
stakeholders and Employee Networks
in the process. This new Purpose,
energising a greener, fairer future, was
officially launched in February 2024 and
was received positively by colleagues.
The new Purpose better reflects our
future direction, and we’ve engaged
in comprehensive communications
to engage our colleagues with it.
Being purpose-led not only aligns our
operations with our core values, but also
fosters greater colleague engagement
and satisfaction. We believe that a
purpose-led approach contributes to
long-term business success by building
trust with customers and stakeholders,
and by creating a positive impact on
society and the environment.
Elevating apprenticeships: a year
of growth and recognition
We have driven a significant rise in our
apprenticeship offering across Centrica
in 2024. Bringing in apprentices helps
nurture fresh talent and ensures our
workforce remains dynamic and
adaptable. Apprentices bring new
perspectives and innovative ideas,
enhancing our customer service
experience. The Company led the
rejuvenation of our traditional engineering
apprenticeships with 112 colleagues
starting their Gas Engineering Operative
apprenticeship and another 100
completing their Dual Fuel Smart
Metering apprenticeship.
In July, we hosted a webinar for potential
candidates interested in our British Gas
Smart Metering Apprenticeship Scheme.
This event was part of our ongoing
collaboration with Holly Hobbs, an
apprenticeship influencer with a
substantial and engaged social media
following. Holly’s three TikTok videos
have collectively garnered over 800,000
views, and we observed a significant
increase in applications coinciding with
the release of her videos. I am proud that
this year we have seen a higher number of
female applicants than ever before,
highlighting the importance of exploring
creative ways of attracting talent.
Apprenticeships
(3,500 by 2030)
As part of our People & Planet Plan and
drive to invest in our people, we have an
ambition to upskill 3,500 colleagues
through apprenticeships by 2030. This is
for our new colleagues and also those
currently with us that want to get
qualified whilst in their role.
We continue to use apprenticeships as
one of the key routes into Customer
Service roles, with 54 apprentices
beginning their programmes in October
and November 2024. We are passionate
about upskilling new and existing
colleagues within the business, ensuring
they have the opportunities to grow and
succeed, with a further 48 colleagues
undertaking apprenticeships from Level 3
to Level 7 programmes this year. Our
increase in apprenticeship offerings is
part of our People & Planet Plan to drive
and invest in our people. For more
information, read our People and Planet
section on pages 58 to 65.
Our apprenticeship programmes
received external recognition in 2024,
being awarded ‘The Best Utilities
Apprenticeship’ by The Apprenticeship
Guide. We were also a finalist in the
Energy & Utility Skills ‘Best Recruitment
Campaign/Initiative’ for our collaboration
with social media influencer Holly Hobbs.
Celebrating early careers
This year marked a record achievement
for our Emerging Talent team, particularly
within the Graduate and Intern sectors.
We were honoured to be ranked 5th
among the top 100 student employers by
Rate My Placement, standing out as the
highest-ranked energy company and
receiving top votes for engineering.
102 Interns
joined Centrica in the summer of 2024.
60 Graduates
joined Centrica in October 2024.
Expanding our talent horizons
In 2023, Centrica launched a new talent
pathway, integrating eight ex-Forces
members into our broader business
operations. We are continually exploring
innovative methods to attract talent
and tap into new recruitment pools.
Furthermore, we were delighted to
have 12 more ex-Forces members joining
us in October.
Our collaboration with Team GB and
ParalympicsGB has enabled us to
welcome an additional seven colleagues
in 2024, ranging from high-performing
athletes to Olympians and Paralympians.
Defining our Employee Value
Proposition (EVP)
Our aspiration is to become energy’s
employer of choice and be widely
recognised as a great place to work. To
make this possible, our EVP needs to be
at the heart of everything we do. An EVP
is a company’s people story; a narrative
and messaging framework that brings to
life its unique culture, purpose and the
reasons why people join and stay there.
It gives us a consistent approach towards
engaging and empowering current and
future colleagues, by amplifying what
it means to be, and what you get as,
a member of the Centrica family.
Developed in collaboration with
colleagues across our businesses,
we understand who we truly are and
what defines us as Centrica. Our EVP
encapsulates these insights and has
been instrumental in shaping our new
People Story. This commitment has
also earned the Danish entity of Centrica
Energy, recognition as one of the best
workplaces in Europe by the Great Place
to Work annual survey.
Our EVP, which launched in November,
provides one consistent approach
to candidates and colleagues, and
demonstrates why they should join
the Centrica family.
Centrica plc Annual Report and Accounts 2024
55
Celebrating Employee Network
successes
I am incredibly proud of our Employee
Networks at Centrica. Our 10+ Networks
play a vital role in partnering with our
organisation to drive change and create a
more inclusive workplace where everyone
can bring their whole selves to work.
Our Carers Network proudly celebrated
its 20th anniversary this year. Since its
inception in 2004, the network has grown
into a robust community, providing
essential support and resources to our
colleagues who are carers. We have
achieved Carer Confident Level 3 status,
the highest-level award from Employers
for Carers, thanks to our market-leading
Carers Leave policy, which offers planned
leave to support our carers. Our Carers
Network continues to be a cornerstone of
our commitment to supporting diverse
talent, advocating for change and making
a significant impact both within Centrica
and beyond.
Our Diverse-ability Network champions
and celebrates the physiological and
neurological diversity of our colleagues.
This community of colleagues and allies
supports one another, raises awareness,
and challenges perceptions about
disability. In July, as part of our Energy
Services partnership, the Diverse-ability
Network collaborated with
ParalympicsGB to host an event featuring
16-time Paralympic medallist Tanni Grey-
Thompson, in celebration of Disability
Pride Month.
Our Fertility Network provides crucial
support for colleagues facing fertility
challenges. They have played a key role
in reviewing our Healthcare Plan and
policies to ensure comprehensive
wellbeing support is available to all
colleagues throughout their journey.
The network was honoured to receive
the Outstanding Wellness Network of
the Year award at the Diversity Network
Awards in July 2024.
Commitment to Real Living Wage
At Centrica, we are dedicated to ensuring
our colleagues have earnings that meet
their everyday needs. As a Real Living
Wage employer, we ensure our wages
meet the standards outlined by the Living
Wage Foundation. This year, our
customer-facing colleague group has
received an average pay deal of 8.1%.
Similarly, our Field population received
a pay deal of at least 5%, dependent on
role, for 2024.
Improving colleague benefits
Centrica is excited to announce the
launch of three new benefits in 2025,
as part of our ongoing commitment to
enhancing rewards and support for
our colleagues. We are dedicated to
continually improving our offerings to
ensure they are in line with our strategy
and values, and colleagues feel valued
and empowered.
These three new benefits align with our
goals to support diversity targets and
promote fair and equitable treatment
for all employees, reinforcing our
commitment to an inclusive and fair
workplace.
We’ve announced:
•Improving our paternity leave from
two weeks to eight weeks fully paid;
•Removal of a pension probation period
of two years that applied to some
groups; and
•Re-introduction of a Sharesave scheme.
We're also excited to announce that our
market-leading fertility programme has
led to the birth of two beautiful babies
this year! Their parents were part of our
supportive programme, and we couldn't
be happier for them.
Sharing in the Company’s success
In 2024, we granted another Global Profit
Share award to all colleagues, based on
our 2023 profits. Additionally, our 2022
profit share will mature in April 2025,
benefitting nearly 14,000 colleagues.
As of February 2025, the original award
of £379 is now worth £627. This increase
in value enables us to share in our success
with colleagues.
Strategic Report Governance Financial Statements Other Information
Valuing our Voices
The Shadow Board, now in its
fourth year, is a Centrica
Leadership Team initiative.
Comprising 10 members from
diverse backgrounds and
various levels across the
Group, the Shadow Board
brings a wealth of knowledge
and experience. It provides a
platform to influence decision-
making, challenge senior
leaders and embed DE&I into
our practices. This year, a key
enhancement is that each
Shadow Board member now
sponsors one of our Employee
Networks, fostering closer
connections with network
activities. The Shadow Board
also met with the Centrica
Board this year to offer
diverse perspectives,
contributing to the Board’s
considerations with a broader
range of viewpoints. Read
more about the engagement
and outcomes on page 98.
Centrica plc Annual Report and Accounts 2024
57
The Centrica Women’s Network is dedicated
to empowering women to reach their highest
potential and realise their ambitions. Through
initiatives like our Mentoring scheme, public
speaking practice sessions, enhancing visibility
and engagement, discussions on women’s
health and wellbeing, and advocating for
positive policy changes, we have supported
nearly 1,700 colleagues this year. These efforts
culminated in the November Centrica Women’s
Network Awards, which honoured and
celebrated both women's achievements
and the support of allies.”
Sue Gregory-Phillips, Co-Chair of the Centrica
Women’s Network
2024 has been an amazing year for the
+ Network and for our colleague networks in
general. I am most proud that this year we
delivered Centrica's largest pride offering ever,
visiting five of our sites across the UK. We also
marched in Edinburgh Pride where we
sponsored their sexual health and wellness
space providing resources, information and
guidance to our queer customers and allies. I am
also really proud that the network’s community
has been focusing on intersectionality and
leveraging our collective strength to drive
meaningful change!”
Steven Waggott, Co-Chair of the + Network
(Centrica's LGBTQ+ Employee Network)
Collaboration was at the forefront for the
VOICE Network this year. The highlight being
the collaborative event with the Centrica
Women's Network in May, as part of Mental
Health Awareness Week. One of our Network's
key pillars is ‘Educating our Colleagues’, so we
held an event with the author, spoken word
artist and educator, Jaspreet Kaur. The
conversation mainly focused on mental health,
gender and race equality. We were extremely
pleased by the responses we received from
colleagues and look forward to collaborating
with other Employee Networks in the future.”
Abdul Kamara, Co-Chair of the VOICE
Network (Centrica’s Ethnicity Employee
Network)
Read more about our non-financial performance on pages 289 to 291 and at
centrica.com/performanceandreports
People and Planet
Supporting communities, our planet and each other.
Our People & Planet Plan was introduced
in 2021 and consists of five Group-wide
goals that accelerate action on issues
that matter deeply to our business and
society – from achieving net zero and
creating the diverse and inclusive team
we need to get there, to making a big
difference in our local communities.
During 2024, we made meaningful progress
against most of our goals but are behind
on others. This is partly because
transformation takes time and partly
because recent years required us to refocus
efforts on helping customers and
communities through the energy crisis.
With the plans we have in place alongside
our proactive approach to stakeholder
engagement, we are confident that we
will achieve our goals in the coming years.
In doing so, we will help progress our
Purpose to energise a greener, fairer
future and contribute positively to the
United Nations Sustainable Development
Goals (SDGs).
Strategic Report Governance Financial Statements Other Information
I’m incredibly proud of all
we’ve achieved through our
People & Planet Plan and
beyond. Not only have we
done more than any other
energy supplier to help
people through the energy
crisis, but we’re accelerating
our pathway to net zero with
our updated Climate
Transition Plan. The road
ahead will undoubtedly have
its challenges, but I’m excited
to be building a fairer future
as we create a greener one.
Chris O’Shea, Group Chief Executive
Our People & Planet Plan
Supporting communities, our planet and each other
People
Planet
Supporting every colleague to be
themselves to better serve our
customers and communities.
Supporting every customer
to live more sustainably.
We want to:
•Create an engaged team that
reflects the full diversity of the
communities we serve by 2030(1)
•Recruit 3,500 apprentices and
provide career development
opportunities for under-
represented groups by 2030
(2,000 apprentices by the end
of 2025)
We want to:
•Help our customers be net zero
by 2050 (28% greenhouse gas
intensity reduction by the end
of 2030)
•Be a net zero business by 2040
(50% greenhouse gas reduction
by the end of 2032)
• Inspire colleagues to give 100,000 days to build inclusive
communities by 2030 (35,000 days by the end of 2025)
Doing business responsibly
Underpinned by strong foundations to ensure we act fairly
and ethically – from customer service to human rights
(1) All company and senior leaders to reflect latest 2021 Census data for working populations. This means 48%
women, 18% ethnically diverse, 20% disability, 3% LGBTQ+ and 4% ex-service by 2030 (40% women,
16% ethnically diverse, 10% disability, 3% LGBTQ+ and 3% ex-service by the end of 2025).
To deliver a greener, fairer future, we
need a diverse mix of people,
perspectives and skills, coupled with a
culture where every colleague feels
valued and able to achieve their full
potential. This allows for different
thoughts and ideas to come together
and drive the energy transition forward
in a way that leaves no one behind.
Towards this in 2021, our leadership team
shared an open letter with colleagues that
set out our plan for attracting, promoting
and retaining more diverse talent. Since
then, we have made steady progress with
improvements across our goals of up to
6% since 2021 and 3% during 2024 (see
page 289).
With better recruitment and retention
practices providing an initial boost to
many of our diversity goals in the early
years, our progress continues to
improve as we shift focus towards
initiatives that build a more inclusive
culture. We recognise that cultural
change does, however, take time and we
will need time to deliver systemic change
across our business, sector, and society.
Boosting the representation of women in
engineering is a particular challenge and
focus area for us, given our large Field
engineering team reflects the existing
male-dominated market. This impacts our
overall gender performance which would
otherwise be on track. Meanwhile,
growing disability representation and
senior ethnic diversity are also areas for
improvement.
We took decisive action in 2024 to grow
a more inclusive team. This included:
•Further embedding tailored Diversity,
Equity and Inclusion (DE&I) Action Plans
and dashboards for each business, with
progress reviewed quarterly to drive
improvement and accountability;
•Launching new and improved campaigns
like #EveryColleagueCounts and
#ThisIsMe, to help every colleague feel
valued, included and able to share who
they are so that we can better support
them and more accurately track
progress towards our goals;
Centrica plc Annual Report and Accounts 2024
59
Goal 1
By 2030, we want to:
Create an engaged team that
reflects the full diversity of
the communities we serve,
with all company and senior
leaders to be 48% women,
18% ethnically diverse,
20% disability, 3% LGBTQ+
and 4% ex-service
(1)
2024
Progress against goals:
On track
Behind
All
company
(2)
Senior
leaders
(2)
Women
31%
34%
– Excluding
Field
engineers
41%
31%
Ethnically
diverse
16%
10%
Disability
6%
5%
LGBTQ+
4%
2%
Ex-service
2%
2%
(1) Aligns with latest 2021 Census data for
working populations. We aim to be 40%
women, 16% ethnically diverse, 10%
disability, 3% LGBTQ+ and 3% ex-
service by the end of 2025.
(2) Beyond gender, data is based on
voluntary disclosure of 94% ethnic
diversity, 51% disability, 59% LGBTQ+
and 4% ex-service. All company relates
to everyone who works for Centrica.
Senior leaders include colleagues above
general management and spans
senior leaders, the Centrica Leadership
Team and the Board.
People
Supporting every colleague
to be themselves to better
serve our customers and
communities.
Wider gender breakdown
(3)
2024
2023
Women
Men
Women
Men
Board
45% (5)
55% (6)
42% (5)
58% (7)
Senior executives
and direct reports
32% (23)
68% (49)
34% (27)
66% (52)
Senior leaders
34% (149)
66% (289)
32% (136)
68% (287)
All company
31% (6,425)
69% (14,613)
30% (6,221)
70% (14,398)
(3) Relates to everyone who works for Centrica. Total headcount differs from elsewhere in the report as Spirit Energy
are not included above. See page 91 for more on Board diversity.
•Enabling opportunities for everyone to
succeed by rolling-out training for all
managers to empower themselves
and their teams, providing targeted
talent development programmes for
colleagues from under-represented
groups, and continuing to embed
succession planning as well as diverse
shortlists for senior leaders;
•Inspiring more women into engineering
through our award-winning
apprenticeship programme (see Goal 2)
whilst cultivating a more supportive
environment through education to
improve workplace behaviour and
strengthening mentoring alongside
networking opportunities; and
•Launching a Great Minds programme
that is helping to normalise and support
neurodiverse colleagues through
enhanced education and tools.
Through these activities and more
(see pages 54 to 57), we’ve received
external recognition. This includes
earning a place in The Times Top 50
Employers for Gender Equality for the
third year running.
In 2024, we’ll continue to embed our
DE&I Action Plans and grow inclusion
and disclosure, with a particular focus
on improving the representation of
colleagues who are women, have a
disability or are ethnically diverse.
To provide the best service for our
customers and achieve net zero, we
need to create thousands of high-quality
jobs. As a next step, we’ve committed
to hire an apprentice every day this
decade across a variety of roles – from
engineering to customer service.
This presents a significant opportunity to
tap into the talent of under-represented
groups to create a future that is greener
and more inclusive.
In 2024, we welcomed 339 apprentices
to our team. Cumulatively since 2021,
this tallies to 1,537 apprentices. Despite
having doubled our annual apprenticeship
intake this year, our decision to slow
recruitment and refocus efforts on
providing operational stability during
the energy crisis in 2023, means that
we remain slightly behind where we
had hoped to be.
2024 did, however, enable us to make
positive progress in getting back on track
with our goal whilst bringing more diverse
talent into our business. Our progress
against our ambition for women to
make up 50% of our Field engineering
apprentices, increased from 14% to 19%
during 2023-24. This is much higher than
the national gas engineer average of 0.3%
women. We also continued to make
steady progress via our Ex-Forces
Pathway Programme. Against our
rolling ambition of hiring 500 veterans,
reservists, spouses and partners, we
have now onboarded 389 people since
it launched in 2022.
Thanks to our partnership with Team GB
and ParalympicsGB, we have now
extended the Pathway programme to
include athletes.
In 2025, we look forward to onboarding
more diverse talent. We will do this by
continuing to break down stereotypes
and promote greater inclusion through
recruitment, marketing and volunteering
campaigns for engineers and wider roles,
as well as build a more inclusive team
(see Goal 1).
We channel the passion of our people to
create inclusive communities, because
this is the foundation for a more
sustainable future. Volunteering not only
strengthens connections with local
communities but enhances skills and
engagement, driving meaningful impact
for everyone.
Since the goal was set, volunteering has
become a big part of our culture with over
a quarter of colleagues now being an
active volunteer. This has helped
volunteering go from strength-to-
strength with colleagues donating 10,683,
days during 2024 which is 37% more
than the previous year. With cumulative
progress reaching 31,639 days since
2019, we are firmly on track with our goal
to give 100,000 days to local
communities by the end of 2030.
One of the ways this has been achieved
is through The Big Difference, our local
community initiative that inspires
colleagues to get involved in local causes
they care deeply about – whether running
energy support sessions at Post Office
Pop-Ups for those struggling with their
energy bills, or inspiring the next
generation to make greener choices via
Strategic Report Governance Financial Statements Other Information
Goal 3
By 2030, we want to:
Give 100,000 days to build
inclusive communities (35,000
days by the end of 2025)(2)
2024
Progress against goals:
Goal 2
By 2030, we want to:
Recruit 3,500 apprentices and
provide career development
opportunities for under-
represented groups (2,000
apprentices by the end of
2025)(1)
2024
Progress against goals:
On track
Behind
Apprentices
1,537
(1) Base year 2021.
I’m so pleased to now be a
fully qualified engineer,
which gives me a solid
trade and security for my
family. I love that British Gas
actively target women to
become engineers and I do
whatever I can to help more
women see it’s a career
they can do too.”
Faye Lackey, Smart Energy Engineer
On track
Behind
Days
31,639
(2) Base year 2019.
our Get Set for Positive Energy schools
programme via partnership with Team GB
and ParalympicsGB.
There is a big step up needed to reach our
2030 goal. We will maintain momentum
by continuing to expand volunteering
opportunities and embed annual targets
in team plans.
Alongside volunteering, we support
communities with donations and
fundraising in three key areas:
•Helping people with their energy today;
•Building a more sustainable energy
future for tomorrow; and
•Making a big difference in our local
communities every day.
Towards these causes, we invested
nearly £602m in community contributions
during 2024(1). A substantial part of this
spend goes towards helping customers
and communities who struggle to pay
their energy bills. With fuel poverty on
the rise as energy and living costs have
increased in recent years, support like
this has never been more important.
That is why during the peak of the energy
crisis in 2022-23, we voluntarily created
our £140m energy support package. This
has enabled us to continue to be there for
the growing number of people who have
needed a helping hand during 2024. The
package of support is mainly distributed
via British Gas for residential and business
customers through initiatives like ‘You
Pay: We Pay’ (see page 17), alongside
dedicated charity partners like the British
Gas Energy Trust in the UK as well as
St. Vincent de Paul and the Money
Advice and Budgeting Service in Ireland.
Collaboration with charities like these, is
key to ensuring support is provided in the
heart of communities and reaches those
with the greatest social need.
Our voluntary energy support package
is on top of the hundreds of millions of
pounds we spend on wider industry
initiatives each year. These include
initiatives to help people with their energy
costs and emissions such as the Warm
Home Discount and Energy Company
Obligation (ECO).
We continue to engage with Ofgem on
the ongoing investigation regarding the
installation of prepayment meters under
warrant.
Read more about our consumer
and community support on pages
4 to 5
Centrica plc Annual Report and Accounts 2024
61
Some of the ways we made
a difference during 2024
9
New community organisations
helped on their journey to net zero
through our Energy for Tomorrow
social impact fund, which has an
annual budget of up to £600,000 and
has supported 44 initiatives to date.
>€550,000
Donated as part of Bord Gáis
Energy’s €4.4m partnership
with Focus Ireland, enabling more
than 8,500 families at risk of
or experiencing homelessness
to be helped since 2015.
20 years
The British Gas Energy Trust marked
its 20
th year – during this time, the
Trust has helped over 700,000
people facing fuel poverty by
providing energy advice and grants
directly and via the funding of more
than 40 organisations like Citizens
Advice and Scope, to ensure support
for those who need it most.
£140m
Our energy support package for
customers and communities,
continues to be the largest voluntary
support package ever provided
by an energy company in the UK
and Ireland, comprising of around
£134m in the UK and €8m in Ireland.
~800
Good causes supported via The Big
Difference, our £2m local community
fund which has helped a range of
organisations – from hospices and
food banks, to schools and
conservation projects.
(1) Comprises £596.8m in mandatory and £1.4m in voluntary contributions to support vulnerable customers and
communities which includes the Warm Home Discount and ECO amongst others, alongside £3.6m in charitable
donations. See more on page 291.
The biggest thing we can do to tackle
climate change, is to help our customers
transition to lower carbon and sustainable
energy use. This is because around 90%
of our total GHG emissions (Scope 1,
2 and 3), arise from the gas and electricity
used by customers (Scope 3).
During 2024, our energy, services and
solutions helped reduce the GHG
intensity of our customers’ energy use by
6% against the 2019 base year.
Savings achieved since 2019 were
predominantly driven by our renewable
and low carbon energy tariffs alongside
energy efficiency and optimisation
solutions like heat pumps and our Hive
smart thermostats. Performance was
down on the 9% reduction achieved last
year
(2). This was largely as a result of the
zero carbon content of our reported
electricity fuel mix having dropped from
80% to 77%, although it remains much
higher than the UK national average of
56%. We are slightly behind our goal
glidepath but remain on track to achieve
our mid and long-term net zero goals.
Customers were helped to decarbonise
their power, heat and transport in many
ways during the year. For example, we:
•Enabled a route-to-market for 16.7GW
of renewable and flexible capacity under
management – of this, around 80% is
renewable and is enough to power
31m electric vehicles (EVs) on the road;
•Evolved market-leading capability to
make low carbon technology more
affordable and accessible having added
solar to the range of solutions that can
be optimised via the Hive home energy
management system, whilst providing
price and performance guarantees for
heat pumps and EV charging. These
initiatives support greater adoption,
demonstrated by our cumulative sales
reaching more than 6,000 heat pumps
across the able to pay market and via
ECO, alongside over 46,000 charging
points sold; and
•
•Empowered more customers to cut
carbon and cost by shifting energy use
away from peak demand to reduce
pressure on the grid – we now have
almost 800,000 customers benefitting
from the PeakSave in the UK.
450k
homes
Equivalent annual emissions saved from
our energy, services and solutions
2019-24.
(2) Restated due to availability of improved data.
Strategic Report Governance Financial Statements Other Information
Goal 4
By 2050, we want to:
Help our customers be net zero
(28% greenhouse gas intensity
reduction by the end of 2030)
(1)
2024
Progress against goals:
Planet
Supporting every customer
to live more sustainably.
On track
Behind
Reduction
6%†
†
Included in DNV’s independent limited
assurance report. See page289 or
centrica.com/assurance for more.
(1) Net zero goal measures the greenhouse
gas (GHG) intensity of our customers’
energy use including electricity and gas
with a 2019 base year of 182gCO2e/kWh.
Target is normalised to reflect
acquisitions and divestments in line
with changes in Group customer base.
It’s also aligned to the Paris Agreement
and based on science to limit global
warming, corresponding to a well
below 2°C pathway initially and 1.5°C
by mid-century.
I’m mindful of the energy I
use and the effect this has
on the planet. This is a great
way to reduce usage and
save money at the same
time. I feel I am doing my
bit for the environment.”
A customer signed up to PeakSave
To support our green and standard tariffs,
we continued to purchase and trade
energy certificates including Renewable
Energy Guarantees of Origin and Nuclear
Declarations. Whilst recent studies
have highlighted the possibility that
certificates do not sufficiently encourage
the development of renewable or zero
carbon power generation that is needed
for net zero, we believe certificates have
been crucial in developing and marketing
new renewable and low carbon energy
tariffs. After consulting with various
stakeholders and evaluating their
feedback, we have decided to maintain
the purchase of certificates. We have
developed an internal framework to
ensure quality and value for customers.
We will keep stakeholders up-to-date on
any changes to our approach.
In the meantime as set out in our Climate
Transition Plan (see page 73), we will
continue to help customers reduce their
emissions through energy efficiency and
optimisation services alongside low
carbon technologies and cleaner energy.
Since we launched this goal in 2021, our
transition plans for major assets have
progressed significantly as we work on
strategies to decarbonise or repurpose
them. Following publication of our
updated Climate Transition Plan at the
start of 2025, we have bought forward
our net zero target from 2045 to 2040 –
a whole decade ahead of the widely
accepted point at which net zero must be
achieved. To help us get there, we have
likewise advanced our interim milestone
to reduce our GHG emissions by 40%
by the end of 2034, to 50% by the end
of 2032.
Towards this in 2024, we achieved an
18% reduction in emissions against our
2019 base year, which is broadly on track
with our goal. This was, however, down
on the 21% reduction achieved in 2023
due to security of supply driving an
increase in gas-fired power generation
at our Whitegate power station and
rapid-response peaking plants, alongside
increased activity across our gas
production and storage assets.
Meanwhile, sustainable savings were
secured via the gradual roll-out of our EV
road fleet and across our property
portfolio where lower occupancy was
driven by FlexFirst. FlexFirst is our flexible
approach to working which enables
colleagues to choose when they want to
work from home or come into the office.
Although we are currently on track with
our glidepath for net zero, our journey
there will not be a linear one. This is
because as a leading supplier of energy
in the UK and Ireland, we have a
responsibility to ensure consumers have
the energy they need. So as we invested
in renewable and low carbon capacity
during 2024, we also continued to invest
in additional LNG and gas supplies,
including the construction at two new
100MW peaking gas-fired power plants
in Ireland alongside a 40MW peaking
plant in Wales – all of which are expected
to come online in 2025. Whilst these
investments play a pivotal role in securing
an affordable supply of energy to
safeguard from geopolitical shocks
and increased intermittency as more
renewables come online, they mean that
our own emissions will likely rise from
2025 before coming back down again
from 2029.
With general consensus being that gas
will be essential during the energy
transition until at least the mid-2030s,
our action is in line with what is needed,
although it does make our pathway to net
zero more complex in the short term.
All of our gas peaking plants are, however,
capable of running with hydrogen when
it is available.
Alongside these activities, we will
continue to drive emissions out of our
wider business and identify opportunities
wherever possible to support the
adoption of lower carbon energy for
customers via our Climate Transition Plan
– from supplying renewable and zero
carbon power in the UK and Ireland by
2030, to exploring the role Rough could
play in becoming the world’s leading
hydrogen storage facility as we aim for
net zero gas storage operations by 2035
(see page 73).
~70%
Our gross GHG emissions reduction over
the last decade
(2) – achieved by gradually
pivoting away from a carbon intensive
asset portfolio, to become an integrated
energy company focused on investing in
low carbon and transition infrastructure
alongside services and solutions that
energise a greener, fairer future.
>50%
Total investment in green activities
planned between 2023-28 via our green-
focused investment strategy – a big step
up from less than 5% back in 2019.
-5 years
Accelerated our plan to be a net zero
business by five years – we now expect
to achieve net zero by the end of 2040
instead of 2045.
(2) Represents our gross reductions. This differs from our
net zero goal which is normalised for acquisitions and
divestments against the base year.
Centrica plc Annual Report and Accounts 2024
63
Goal 5
By 2040, we want to:
Be a net zero business (50%
GHG reduction by the end
of 2032)
(1)
2024
Progress against goals:
On track
Reduction
18%
(1) Net zero goal measures Scope 1 (direct)
and 2 (indirect) GHG emissions based
on operator boundary. Comprises
emissions from all operated assets and
activities including the shipping of
Liquefied Natural Gas (LNG) alongside
the retained Spirit Energy assets in the
UK and the Netherlands. Non-operated
nuclear emissions are excluded. Target
is normalised to reflect acquisitions and
divestments in line with changes in
Group structure against a 2019 base
year of 2,120,446mtCO2e. It’s also
aligned to the Paris Agreement and
based on science to limit global
warming, corresponding to a well below
2°C pathway initially and 1.5°C by 2040.
Behind
Customers
We have made meaningful progress in
providing a stronger customer service.
Continued investment in engineer training
and contact centre roles alongside
customer service systems, resulted in
better customer outcomes compared to
2023. In British Gas Services & Solutions,
improved reschedule rates helped
contribute to Services Engineer Net
Performance Score (NPS) rising by 2 points
to +73 and complaints per customer falling
by 12% to 5.3%. In British Gas Energy, the
majority of residential customers have now
been migrated to the new service platform,
contributing to Residential energy
Touchpoint NPS improving by 12 points to
+29. Residential complaints per customer
also reduced by 24% to 10.1%. Meanwhile in
Bord Gáis Energy, continued focus on
customer service has helped to almost
halve the number of complaints per
customer to 0.9% and double Journey NPS
to +36. Reduced commodity prices and
continued focus on delivering high levels of
customer service in Centrica Business
Solutions, additionally meant that energy
supply complaints per site improved by
20% to 2.4%. This positively influenced our
Energy Supply Touchpoint NPS, which rose
12 points to +37.
See more on pages 33 to 35
In recognition that energy bills remained
a real worry for customers, we prioritised
ongoing support during 2024. This
included launching ‘You Pay: We Pay’
initiative which commits us to match
energy payments from struggling
customers, with funding from our £140m
energy support package created during
2022-23.
See more on page 61
Colleagues
We want colleagues to feel safe, engaged
and rewarded. Towards this in 2024, we
experienced zero fatalities among our
workforce whilst our total recordable injury
frequency rate continued to improve by
25% to 0.63 per 200,000 hours worked
(see page 39). We did, however, have one
Tier 1 process safety event following a
hydrocarbon release at Spirit Energy’s Seven
Seas well which thankfully resulted in no
serious injuries. In 2025, we will continue to
focus on keeping safety front-of-mind by
reinforcing a strong safety culture, with a
particular focus on preventing unplanned
hydrocarbon releases and contractor
management, as well as gas, electrical and
road safety. Alongside physical health, we
provide leading mental health and wellbeing
support for colleagues. We ran all-employee
campaigns that talked about the importance
of mental health and wellbeing whilst
encouraging proactive use of our support
suite – from a company-funded benefit
Strategic Report Governance Financial Statements Other Information
Our foundations
Our People & Planet Plan is
underpinned by strong foundations
to ensure we act fairly and ethically.
healthcare plan for all and a wellbeing app, to
our 120-strong network of mental health first
aiders and a generous Colleague Support
Foundation which provides money advice
and grants to anyone struggling with the cost
of living crisis. The Foundation has so far
distributed around £150,000 to colleagues
since it launched mid-2023. For the third year
running, the investor group CCLA, ranked us
as a UK leader for our approach and
disclosure on mental health.
Focus was also maintained on fair reward
practices – whether that’s paying at least
the Real Living Wage in the UK and
upholding equal pay (see page 57),
or working to reduce pay gaps. Our UK
gender pay gap remains largely driven by
more men working in higher paid jobs like
engineering, and more women working in
valued but lower paid roles like customer
service. Our median gender pay gap
improved by 1% to 13% during 2023-24.
Likewise, our ethnicity pay gap which
we publish voluntarily and is due to similar
factors as the gender pay gap, improved
by 4% to 7% median. We remain
committed to reducing our pay gaps
over time as we work to transform our
business, sector and society (see pages
59 to 60).
Inclusive and proactive action like this,
is important to colleague engagement.
By the end of 2024, our engagement
score improved by 0.4 points to 8.1 out
of 10. Our goal was to achieve top quartile
performance for our sector in 2024,
and we achieved this. Gains were driven
by our recognition and investment in
colleagues as we seek to provide an
inclusive and fulfilling place to work,
alongside galvanising a stronger belief
in our strategy and new Purpose.
With engagement being fundamental
to our productivity and success, we want
to maintain our current high engagement
levels in 2025 by continuing to connect
colleagues with our strategy and Purpose
whilst creating an inspiring and inclusive
workplace that empowers us all to go
further and faster.
Communities and ethics
Our Code and Values set out the
standards we expect for anyone who
works for us or with us. Together, they
enable us to operate with integrity and
in a mutually beneficial way with our
communities.
At the core of Our Code, is our
commitment to uphold and protect
human rights. Consequently, we take
action to ensure colleagues and workers
in our supply chain are safeguarded
through activities like risk-based training
and ongoing due diligence, alongside
monitoring of supplier selection and
renewal. If suppliers receive a high risk
rating relating to the country where they
operate or the products/services
provided, we consider appropriate action
which may involve conducting a third-
party audit to better understand the level
of risk. Where concerns are identified, we
work with suppliers to raise standards. If
suppliers cannot or will not improve, we
may end the relationship and report any
abuse. In 2024, we continued to ramp-up
our audit programme by conducting 27
on-the-ground site inspections alongside
remote worker surveys. The audits
spanned workwear as well as the
manufacturing of solar panels, battery
systems, smart meters and wider
electrical products across Cambodia,
China, Greece, India, Morocco, Poland,
Serbia, Turkey and the UK. Whilst we
have not identified any specific instances
of modern slavery, 191 improvement
opportunities were agreed with suppliers
to raise standards across labour as well as
health and safety practices. The majority
of actions have been completed with the
remainder set to finalise during 2025. As
part of our due diligence and monitoring
across supplier selection and contract
renewal, we also ensured compliance
with sanctions on Russia.
Clear guidance on bribery and corruption
is provided via Our Code. We prohibit any
improper payments, including facilitation
payments regardless of value or
jurisdiction, and exchange gifts and
hospitality responsibly by declaring them
on a register. Anti-bribery training is also
provided for higher risk roles and our
Financial Crime team run third-party risk
management screening. A register is
used to record and manage potential
or actual conflicts of interest.
During 2024, 99% of colleagues
completed annual training on Our Code
and confirmed they would uphold its
principles. If anyone suspects Our Code
is being contravened, a confidential 24/7
Speak Up phone and online helpline is
provided. In 2024, 315 reports were
received via Speak Up alongside 215
grievances raised directly with HR.
This resulted in 2.33 reports of concern
per 100 colleagues which is higher
than the external benchmark of 1.57,
demonstrating that colleagues feel safe
to speak up. As with 2023, reports mainly
related to interpersonal relations. Each
report is investigated, with periodic
monitoring by the Board and its
Committees, including at the Audit and
Risk Committee three times a year.
Read more about our Modern
Slavery Statement at
centrica.com/modernslavery
Environment
Beyond climate change, monitoring and
managing our wider environmental impact is
important. In 2024, our water consumption
increased by 6% to 357,260m3, due mainly
to increased operation of Whitegate power
station. Meanwhile, waste increased by 10%
to 16,651 tonnes. This was largely due to the
repurposing of our site at Brigg as we
progress our plans for net zero (see page
71).
Centrica plc Annual Report and Accounts 2024
65
Non-Financial and Sustainability
Information Statement
In line with the Non-Financial Reporting
Directive and Companies Act 2006, we
have set out where the relevant
information we need to report against can
be located.
This includes an explanation of the
relevant Group policies which relate to
the stated matters below, together with
an overall summary of their effectiveness,
including specific examples of how the
policies are implemented alongside due
diligence processes conducted and
associated outcomes.
Strategic Report Governance Financial Statements Other Information
Reporting requirement
Section
Business model
Business overview and Our strategic value drivers – Pages 14 to
15 and 18 to 25
Reporting requirement and policy position
Our Code sets out our position on key issues by providing a high-
level summary of key policies that form the foundation for how we
do business.
Due diligence and outcome
Read more at centrica.com/ourcode
Colleagues
Our policy states that we work collaboratively to create a
workplace that has a respectful and inclusive culture whilst offering
fair reward and recognition. We’re also committed to working
safely and provide proactive support to ensure colleagues’ health
and wellbeing.
•Chair’s statement – Page 5
•Group Chief Executive’s statement – Pages 8 and 10
•Our stakeholders – Page 12
•Our Principal Risks and uncertainties: Political, legal, regulatory
or ethical intervention/compliance. People, Safety, Cyber and
Operational asset integrity – Pages 45 and 48 to 51
•Group Chief People Officer’s report – Pages 54 to 57
•People and Planet – Pages 59 to 61 and 64 to 65
•Key performance indicators (KPIs) – Pages 39, 59 to 61, 64 to 65
and 289 to 291
Environmental matters
This policy sets out that we endeavour to understand, manage and
reduce our environmental impact. Towards this, we will play our
part in the transition to net zero.
• Chair’s statement – Page 6
• Group Chief Executive’s statement – Page 9
• Our stakeholders – Pages 12 to 13
• Business overview, Market trends and Our strategic value drivers
– Pages 14 to 19, 21 and 23 to 25
• Business review – Pages 33 to 37
• Our Principal Risks and uncertainties: Energy market, Energy
transition and Government intervention, Weather, Political, legal,
regulatory or ethical intervention/compliance, Climate change,
Customer, People and Operational asset integrity – Pages 41 to
42, 44 to 48 and 51
• People and Planet including TCFD – Pages 62 to 63, 65 and 67
to 77
• KPIs – Pages 33 to 38, 62 to 63, 65, 75 to 76, 289 and 291
Social matters
Our policy states that we will treat all of our customers fairly. As
part of this, we strive to provide services and solutions that meet
their needs as well as care for customers who need extra support.
We also want to make a big difference by helping to create more
inclusive and sustainable communities. We partner with community
and charity organisations on key issues and inspire colleagues to
volunteer and fundraise.
• Chair’s statement – Pages 4 to 5
• Group Chief Executive’s statement – Pages 9 and 10
• Our stakeholders – Pages 12 to 13
• Business overview, Market trends and Our strategic value drivers
– Pages 14 to 25
• Business review – Pages 33 to 35
• Our Principal Risks and uncertainties: Cost of living and fuel
poverty, Technology adoption, Political, legal, regulatory or ethical
intervention/compliance, Customer and Cyber – Pages 41 to 42,
45, 47 and 50
• People and Planet – Pages 60 to 65
• KPIs – Pages 33 to 35, 39, 60 to 65 and 289 to 291
Human rights
Our commitment to human rights ensures that wherever we work
in the world, we respect and uphold the fundamental human rights
and freedoms of everyone who works for us or with us.
• Our stakeholders – Page 13
• Our Principal Risks and uncertainties: Political, legal, regulatory
or ethical intervention/compliance and Safety – Pages 45 and 49
• People and Planet – Page 65
• KPIs – Pages 65 and 291
Anti-bribery and corruption
Our policy commits us to working with integrity, within the laws and
regulations of all the countries in which we operate and in accordance
with recognised international standards. This includes not offering or
accepting bribes or other corrupt practices. We will not tolerate any
form of bribery or corruption from suppliers or others.
• Our Principal Risks and uncertainties: Political, legal, regulatory
or ethical intervention/compliance – Page 45
• People and Planet – Page 65
• Based on materiality, KPIs specific to anti-bribery and corruption
are not reported externally
Task Force on Climate-related
Financial Disclosures
As an energy, services and solutions company, we
have a pivotal role in helping our customers, communities
and our business get to net zero.
It is therefore important that we robustly
manage and report on the impacts, risks,
opportunities and plans related to climate
change across our business (see our
Business overview on pages 14 to 15).
That is why since 2020, we have
structured our reporting around the
recommendations set out in the Task
Force on Climate-related Financial
Disclosures (TCFD) (see page 77). We
have achieved full compliance with TCFD
since it was introduced as a reporting
requirement in 2022 and every year
thereafter, we have endeavoured to
improve our disclosure against the
reporting requirements. This ensures we
stay aligned with evolving best practice
and stakeholder expectations. We
believe increased transparency via the
TCFD drives greater insight and action,
which is essential to advance net zero.
Governance
With our Purpose and strategy focused
on energising a greener, fairer future,
climate change is a key issue for the
Board. From the top to the bottom of our
business, governance is embedded
across the full breadth of our activities
with the Board supported in its duty to
oversee climate-related matters via a
series of Board-level and executive-level
committees (see diagram on page 68). In
2024, climate matters were reviewed by
the Board and its Committees at a
number of meetings including at all three
meetings of the Safety, Environment
and Sustainability Committee (SESC)
as well as via the Board Strategy and
Shape Process.
The Board’s effectiveness in overseeing
climate change matters and undertaking
regular related engagement with
stakeholders like investors, government
and regulators, is dependent on having
the collective capability needed. To
assess capability, the Board has ‘climate
change and sustainability’ as one of the
criteria used in the Skills Matrix, spanning
climate science, climate risk and
mitigation, alongside evolving
stakeholder expectations.
Following a review in 2024, 60% of the
Board were identified as having these
competencies, which enables us to
effectively govern climate matters (see
pages 85 to 89). We will aim to build on the
collective expertise of the Board in this area
as the energy transition progresses. To
nurture capability during the year, net zero
was a core theme for the Board training
programme. They underwent deep-dive
sessions run by internal and external
experts on issues including stakeholder
expectations on climate change and
emerging Environment, Social and
Governance (ESG) regulation, as well as
Centrica’s refreshed Climate Transition
Plan. Regular updates from management on
progress against climate targets alongside
related risks and opportunities tabled at
Committee meetings, also helped to upskill
the Board, SESC and wider Centrica
Leadership Team.
Effectiveness in tackling climate change
and furthering our journey to net zero, is
incorporated in our remuneration scheme
for Executive Directors and wider
colleagues (see pages 116 to 147).
Climate change targets and Climate
Ambitions are one of 14 key performance
indicators included, with a combined
weight of 37.5% in determining awards.
Remuneration is managed via two
schemes:
•The Annual Incentive Plan (AIP) which
has targets and weightings allocated
annually by the Remuneration
Committee; and
•The Restricted Share Plan (RSP) which
has a three-year vesting period and
a two-year holding period, with the
Committee making decisions on
targets and performance subject to a
performance underpin. This ensures
consideration of matters such as
sanctions, fines and/or a major incident
alongside the overall progress achieved
against in scope KPIs. The first vesting
period is due at the end of 2024.
Our approach to governance and
disclosure is strongly influenced by
the materiality of ESG matters which
includes climate change. To understand
what’s important and what’s not, we
assess the impact of these issues on
our stakeholders and our business.
This involves undertaking research,
engagement and applying our TCFD
financial materiality thresholds. Through
identification of our material issues in this
way together with associated laws and
regulations, management teams can
ensure the necessary processes are in
place to effectively measure, manage,
mitigate and disclose. We know
stakeholder expectations and
the regulatory landscape continuously
evolves, so we remain agile and adjust
our approach accordingly.
Centrica plc Annual Report and Accounts 2024
67
Listing rule
compliance
We have complied with the
requirements of UKLR 6.6.6R,
by including climate-related
financial disclosures that are
consistent with the four TCFD
pillars and the 11 recommended
disclosures that are set out on
page 77.
Our climate-related financial
disclosures additionally comply
with the requirements of the
Companies Act 2006, as
amended by the Companies
(Strategic Report) (Climate-
related Financial Disclosure)
Regulations 2022.
Strategic Report Governance Financial Statements Other Information
A diagram of our climate governance
The Board
Has ultimate responsibility
for climate change and
delegates authority
to its Committees
• Sets strategy for People and Planet matters
• Reviews strategic and financial planning to
ensure integration of climate considerations in
the transition to net zero
• Oversees progress against climate targets and
ambitions whilst ensuring related risks and
opportunities are effectively managed
• Approves annual reporting
• Chaired by Scott Wheway until Kevin O’Byrne
took on the responsibility in mid-December
2024, with attendance including the Group
Chief Executive who has overall accountability
for climate change and regularly attends
Committee meetings and chairs the Centrica
Leadership Team meetings
Read more on pages 80 to 99
Board Committees
Provide challenge and
reviews updates from
senior leaders, with
outputs shared with the
Board
Audit and Risk Committee
(ARC)
• Meets quarterly
• Reviews mitigations related to
Principal Risks, including those
related to climate change
• Oversees and informs Group
audits, financial statements
and non-financial disclosures
• Chaired by Nathan Bostock,
Independent Non-Executive
Director
Remuneration Committee
• Meets four times a year
• Ensures Executive Directors
are appropriately rewarded,
with progress against the
Climate Transition Plan
considered as part of
remuneration arrangements
• Chaired by Carol Arrowsmith,
Independent Non-Executive
Director
Nominations Committee
• Typically meets three times a
year
• Ensures the Board and its
Committees, have the
appropriate balance of skills,
knowledge and experience
including on climate change, to
effectively lead the Company
• Chaired by Kevin O’Byrne,
Chair of the Company
Centrica Leadership
Team (CLT)
Ensure ongoing oversight
and challenge on climate
strategy
As frequently as needed at the 11 meetings
held each year which are chaired by the
Group Chief Executive, the CLT monitors,
assesses and informs progress and plans
relating to net zero targets and ambitions as
well as Principal Risks and opportunities.
At meetings of the Centrica Investment
Committee, a sub-committee of the CLT,
investment opportunities are reviewed
with regard to the impact they may have
on delivering net zero.
Sub-groups
Support leadership on
integrating climate
change into strategy
TCFD working group
Ongoing engagement led by Group Environment
alongside Strategy, Risk, Finance and Reward,
to fulfil mandated reporting requirements and
embed climate strategy Group-wide
(1)
Group Enterprise Risk and Controls Review
Chaired by the Group Chief Risk Officer with
business unit Managing Directors and Chief
Financial Officers in attendance, they review
Priority Risks and opportunities alongside
controls quarterly
Business units
Follow and provide
feedback on climate
strategy
Managers and teams
Operationalise climate change considerations
in line with Group strategy
Risk owners
Identify, assess and mitigate climate risks
and opportunities
(1) Group Head of Environment develops and socialises climate change strategy and progress, whilst co-ordinating and influencing related activities. Director of Group
Corporate Business Strategy embeds climate change into our strategic planning and investment frameworks. Group Programme Director for Enterprise Risk
Management (ERM) integrates climate risk and opportunities into the ERM Framework. The Head of Accounting, Reporting and Tax supports the business to understand
the financial impacts of net zero. The Director of Reward and Benefits integrates ESG targets into remuneration frameworks.
Challenge
Report
Challenge
Report
Challenge
Report
Challenge
Report
Safety, Environment and
Sustainability Committee
(SESC)
• Meets three times a year and
is primarily responsible for
supporting the Board in
overseeing climate change
• Assesses and approves
proposals relating to net zero
whilst monitoring progress on
net zero targets, ambitions,
risks and opportunities
• Reviews annual reporting and
associated requirements like
TCFD and CSRD
• Monitors stakeholder views
including those on climate
change
• Chaired by Heidi Mottram,
Independent Non-Executive
Director
Read more on pages
100 to 147
Read more on pages 40 to 53
Strategy
In line with best practice, we usually
conduct a full update on our scenario
analysis every three years, unless there
has been a material change to our
business. As no material changes arose
during 2024, our 2022 assessment
remains fit for purpose for another year
until the assessment is re-run in 2025. We
did, however, make some updates to the
assessment in both 2023 and 2024, which
are accordingly outlined in our disclosure.
In our existing assessment, we tested our
strategic resilience to climate change
using ten independent climate scenarios.
The scenarios are most relevant to
national climate targets, as well as our
business and the key markets in which we
operate across the UK and Ireland.
As a next step, we used our in-house
scenario analysis model to assess the
various plausible pathways relating to global
warming ranging from between 1.5°C to
4°C
(1), together with the potential positive
and negative impact of each on our key
areas of business which takes into account
the technological dependencies of each
scenario, together with our organisational
dependencies and our ability to adjust
operations to meet demand. Our model
then projects impact on our services,
solutions and assets based on the relevant
external scenario, whilst maintaining our
market share and unit margin at a consistent
level. This allows for calculation of the
potential growth or shrinkage of gross
margin (GM) at a Group and business level
out to 2050 - the widely accepted date at
which the world should meet net zero.
Acknowledging the passage of time since
our first publication, we updated our
short, medium and long-term time horizon
intervals in 2024. We rolled forward our
short and medium time horizon intervals
by one year to 2029 and 2039, whilst
keeping 2050 static. These time horizons
align better with our latest strategic
business plan, our updated Climate
Transition Plan and our associated net
zero targets, whilst also encompassing
the expected lifetime of the vast majority
of our assets and the materialisation of
key potential transitional risks and
opportunities.
As we continue to shift our reported
timeframes further out whilst keeping our
base year static, our analysis naturally
shows a greater impact as the scenarios
accelerate towards achieving net zero by
2050. For example, as time progresses
we see a more material opportunity for
the growth of renewable energy, with
solar and battery markets expected
to be more established by 2029 in
a 1.5°C world.
We do, however, recognise that scenarios
extending this far out into the future are
subject to significant uncertainties and carry
material dependencies, which should be
considered when reviewing insights. Other
critical assumptions such as policy and
technology pathways, remain aligned
with the independent scenarios used
for the analysis.
The outcome of our scenario analysis
(see page 72), revealed that across the
various scenarios, we are well-placed to
mitigate the risks and seize the
opportunities presented by climate
change. For example, if global
temperature increase is limited to 1.5°C,
we project a net positive financial impact
ranging from 5% to over 10% compared
to our GM. And should temperature rise
be limited to 2°C, our analysis reveals a
net financial gain of more than 10%
against our GM.
This is attributed to our unique position
as an integrated energy company, with
leading roles at every stage of the energy
value chain. As part of this, our business
model has been designed for resilience,
enabling us to adapt to the evolving
demands of the energy transition
regardless of the pace of change.
However, in any given scenario, the
potential for risks to manifest is subject to
uncertainty, as are the opportunities and
our ability to pivot and capitalise on them.
Looking at our findings, we can identify
which parts of our business are
potentially exposed to which types of
risks and opportunities. These risks and
opportunities typically span those that
are transitional or physical. The potential
transitional risks and opportunities facing
our business include those relating to
policy and regulatory changes. These
risks and opportunities vary in impact,
ranging from ‘low’ to ‘high’ in significance
over the longer term.
(1) Climate scenario global warming measured out to 2100.
Centrica plc Annual Report and Accounts 2024
69
Scenarios used:
•Transitional impacts – Assessed using four different scenarios from the
National Grid Future Energy Scenarios, where assumptions on energy
demand, production and use cases are adjusted out to 2050. This enables
more detailed modelling of potential impacts in the UK and Ireland at the
individual product and commodity level, based on the level of demand for
different types of fuel like hydrogen adoption or the scale-up of different
types of technologies like EVs. We adapt the scenarios for the context in
Ireland to reflect key differences like off-grid consumers making up a
bigger proportion of customers.
•Physical impacts – Assessed using three different scenarios based on the
Intergovernmental Panel on Climate Change Representative Concentration
Pathways. The scenarios allow physical climate attributes to be modelled,
such as temperature and sea level rise as well as flooding and extreme
weather, across differing average temperature rises resulting from varying
radiative forces.
•Asset impairment – Assessed using the International Energy Agency Net
Zero Emissions scenario and Aurora Net Zero Mixed & High Renewable
Energy Share scenarios, which model 1.5˚C pathways to net zero for the
energy sector. This allows us to model the potential impact on global and
regional demand for different energy sources in response to different
drivers, including carbon pricing. In turn, this affects commodity prices and
the potential implications for the valuation of gas and power assets.
Net financial
benefit
Our modelling suggests an
overall net financial benefit for
Centrica across all climate
scenarios assessed.
The key transitional risks for British Gas and
Bord Gáis Energy relate to the gradual
phase-out of natural gas in heating.
Although gas remains an essential transition
fuel until the mid-term, its phase-out could
stimulate a shift in the range of energy,
services and solutions offered to
customers. In the short term, however, the
most recent external scenarios suggest a
more gradual phase-out than previously
imagined, which limits risk.
We are confident that we will be able to
pursue the opportunities created by the
energy transition. This is because we
believe we have the necessary systems
and capabilities needed to transition from
the trading and sale of gas and electricity
today, to the trading and sale of
electricity and hydrogen tomorrow.
Towards this, we have already enhanced
our strategic resilience by structurally
altering our business model to establish
leading market positions in low carbon
solutions. This includes launching an
internal business unit in 2023 called New
Business and Net Zero, which is
dedicated to delivering low carbon
offerings to residential customers that
will drive carbon reductions and cost
savings like heat pump price and
performance guarantees, alongside
flexible time-of-use tariffs (see page 62).
In 2024 we also launched a new internal
business unit called Centrica Power,
to develop a comprehensive power
strategy that will support the energy
transition through its heightened focus on
building a portfolio of flexible and low
carbon power solutions. Previously
managed within other business units, this
new structure allows for greater focus
and funding to capitalise on the significant
opportunities within the power sector
which our scenario analysis highlights.
Meanwhile, Centrica Business Solutions
was created several years ago to
specialise in providing bespoke net zero
action plans for large-scale energy users
and encouraging their adoption of low
carbon solutions, whilst offering some
fossil-based solutions at the same time.
We have also started to evolve the skills
of our market-leading engineering team.
Although our engineers are largely
focused on installing gas heating solutions
today, they can be upskilled to deliver
new services and solutions via our award-
winning network of training academies
which have capacity to train over 500
people a day. And by 2030, it’s our
ambition to have 3,000 engineers in the
UK and Ireland equipped with green skills.
This will enable us to meet the expected
rise in demand for low carbon services
and solutions whilst maintaining existing
needs as the transition deepens.
Most of our modelled opportunities are
in areas where we have a strong market
presence and relatively mature
technologies, such as EVs, heat pumps,
solar and battery storage. We are
continuously evolving to ensure we can
capitalise on these opportunities.
Clean hydrogen for heating is the only
high-impact opportunity we have
identified that relies on emerging
technology, and may consequently be
harder to harness. We have therefore
taken proactive action to invest in
hydrogen research and development
opportunities – from securing a 5%
minority stake in HiiROC and working
with them to blend hydrogen at our Brigg
energy park in a first-of-its kind trial in the
UK, to exploring the transformation of
Rough storage facility to become the
biggest hydrogen store in the world
whilst enabling fuel switching to
hydrogen at our Easington Terminal.
Our scenario analysis also reviewed
physical risks. These spanned risks
relating to extreme weather such as
increased wave height or chronic physical
risks like those associated with longer-
term shifts in climate patterns, which
can lead to sea level rise or sustained
heatwaves. Across both types of risk,
focus centred on our energy assets in
Centrica Business Solutions, Centrica
Energy Storage+ and Spirit Energy. This is
because the type of activities undertaken
at assets, are generally more vulnerable
to physical risks. In 2024, we refreshed
our sea level analysis to reflect changes in
the UK Met Office scenarios. We found
minimal changes in the output which
showed that due to the substantial height
of our platforms, the risk remains minimal,
even in the more extreme scenarios. No
new sites or assets were added to our
portfolio in 2024 so the analysis from
prior year remained valid.
Overall, our analysis showed that our
exposure to physical acute risks are ‘low’
in significance in both the near and longer
term. Similar to 2023, our only potential
‘medium’ risk arose from a physical
chronic risk, in which a rise in mean
temperature with an extreme >4°C
warming future by 2050, reduced energy
demand for heating. This risk would,
however, be partially offset by an
increase in cooling demand. In doing so,
many of the transitional risks are
countered to provide a natural hedge
for the Group.
Risk of asset impairment was refreshed
in 2024 with analysis based on average
price forecasts aligned with a 1.5°C
scenario. Our most exposed assets were
our gas production fields as well as our
investment in nuclear. The impact on the
value of our gas assets was relatively
‘low’ due to both existing impairment
headroom and because the majority of
fields are expected to have produced
most of their reserves within the next five
years. Our nuclear investment would be
further impaired by around £97m given
baseload power price scenarios slightly
exceed net zero price forecasts (see note
7 to the financial statements). More detail
on how the Directors considered the
impact of climate risk and opportunities
on the wider financial reporting
judgements and estimates, are in note 3
to the financial statements.
We additionally see our supply chain risk
as ‘low’ and effectively managed through
ongoing dialogue with suppliers, defined
hedging strategies and collaboration with
counterparties. In 2023, we ran a targeted
engagement campaign to better
understand our supply chain risk
exposure
(1). We found that the majority of
our strategic and critical suppliers who
responded, assessed their risk with many
having resilience plans and utilising
sophisticated scenario analysis.
As the energy transition progresses, all
modelled scenarios involve significant
disruption to our markets. We will
therefore need to adapt to changes as
they occur. Our assessment of the capital
expenditure required to manage potential
risks and opportunities, remains in line
with our current plans and balance sheet.
Through the process, numerous
opportunities for capital investment into
new and existing assets and technologies
have been identified. Through our green-
focused investment strategy for
instance, we aim to build investment to
£600-800m per year between 2023-28,
with over 50% of capital expenditure
going into green projects. This is a big
(1) We surveyed our strategic and critical suppliers, who
are long-term providers of essential goods and
services, as well as some core suppliers. We received a
30% response rate. Of those who responded, 80%
assessed their risk exposure with 60% using scenario
analysis. One company reported a risk of disruption due
to climate risk.
Strategic Report Governance Financial Statements Other Information
step up from less than 5% investment
back in 2019, which reflects our
commitment to move at pace in aligning
our business model to net zero.
Action like this is critical to help meet our
net zero targets and climate ambitions,
including exploring longer-term
optionality at assets for hydrogen storage
and carbon capture and storage.
Our assessment of how climate-related
issues may affect our business, is fully
integrated into our annual strategic and
financial planning process at a business unit
and Group level. This process underpins
how we are transitioning the Company
towards a lower carbon future and helps
shape critical decisions on energy, services
and solutions. For example, growth plans for
key opportunities are identified, with
metrics and targets to determine whether
performance is on track.
Furthermore, to deliver on our green
finance climate ambition and ensure our
investments are aligned with our long-
term emissions reduction targets, we
have developed and implemented a net
zero guardrail for investment decisions.
The Group Head of Environment is a
member of the Centrica Investment
Committee, and ahead of any financial
investment decision, the Group
Environment team reviews each proposal
for potential impact. Where needed,
investment propositions are escalated
for a further net zero assessment which
includes reviewing potential GHG
emissions, the contribution of the
investment towards system-wide
decarbonisation, and categorisation
as a ‘green’ investment according to our
company framework.
An internal carbon price is also used to
guide commercial decisions that support
our Climate Transition Plan (see page 73).
Read more about our financial
planning process in our CDP
disclosure at centrica.com/cdp24
and our Climate Transition Plan at
centrica.com/climatetransition
Centrica plc Annual Report and Accounts 2024
71
Examples of how we progressed
opportunities for a greener, fairer
future during 2024
X2
Construction of a hydrogen-ready
gas peaking plant got underway at
Brigg energy park which will double
capacity with fast response power
assets totalling 100MW – capable
of meeting the demand of 200,000
homes when supply from renewable
generation is low. A 50MW battery
store was also commissioned and is
now generating revenue. Our
longer-term ambition is for Brigg to
become a commercial-scale
hydrogen production site using
HiiROC technology.
Swyft Energy
Kick-started the acquisition of
leading solar PV provider to
empower Bord Gáis Energy to
deliver their target of 10,000 solar
installations over the next five years
across residential, commercial and
agricultural sectors – this will enable
customers to cut their electricity
bills by 50-70% on average.
82MW
Delivered two battery energy
storage solution projects in Belgium
and commenced construction of
two more in Sweden. These
investments totalling 82MW
alongside others, provide grid
flexibility and ancillary services
across the electricity market– deals
like this strengthen our position as a
leading provider of flexible energy
solutions across Europe.
£2bn
Reviewed our position on Rough
and we stand ready to invest up to
£2bn to convert it into the world’s
largest storage facility subject to
securing the necessary regulatory
framework – we believe Rough is
key to a sustainable energy
transition and has potential to
reduce energy costs by an
additional £1 bn per year by 2050.
Strategic Report Governance Financial Statements Other Information
Summary of our most material risks and opportunities
(1)
Impact on gross margin (GM)
0-5% (low)
5-10% (medium)
>10% (high)
Climate-related trend
and category
Potential impact
Potential GM impact
in the year
Strategic response
and resilience
2029
2039
2050
Transition away from
fossil fuelled heating
(TCFD category:
Transition – Policy,
Markets and Technology)
Risk: Reduced GM from the sale and
servicing of natural gas residential
boilers and commercial combined
heat and power (CHP) units
>2° C
• Strategic aim to grow market share in heating
installation and remain the market leader in
heating solutions in the UK and Ireland
• Installation of hydrogen-ready boilers and CHP
1.5° C
Growth in low carbon
heating market
(TCFD category:
Transition – Policy,
Markets and Technology)
Opportunity: Increased sales and
servicing of electric and hydrogen
fuelled heating systems, alongside
associated opportunities in fabric
upgrade including insulation
>2° C
• Heat pump business is ring-fenced within the
New Business and Net Zero division, targeting
20,000 sales per year by 2030 with plans for
further expansion
• Insulation and retrofit opportunities pursued
including via ECO
1.5° C
Transition away from
natural gas and energy
efficiency
(TCFD category:
Transition – Policy,
Markets and Technology)
Risk: Reduced GM from the sale of
natural gas and energy efficiency
>2° C
• Strategic aim to grow customer numbers in UK
and Ireland energy supply
• Launch of innovative tariffs and add-ons to
facilitate the transition
1.5° C
Growth in low carbon
heating market
(TCFD category:
Transition – Policy,
Markets and Technology)
Opportunity: Increased sales of
electricity and green or low carbon
hydrogen
>2° C
• Systems and capabilities in place to pivot
towards trading and selling hydrogen
• Partnering in hydrogen production and use trials
to grow capability and adoption
1.5° C
Growth of EV transport
market
(TCFD category:
Transition – Markets)
Opportunity: Access to new and
growing value pools related to EV
charging installations, operation and
maintenance (O&M) alongside
energy supply
>2° C
• EV charger sales and installations are a key
component of the Hive business
• Ambition to connect 5m Hive devices with
solutions including EV charging by 2030
1.5° C
Growth in demand for
renewable energy
(TCFD category:
Transition – Energy
Source)
Opportunity: Strong growth in solar
and battery markets driven by
decarbonisation
>2° C
• Strategy to invest £600-800m per annum out
to 2028, with a pipeline of renewable and
flexible assets
• Introducing services for ‘behind the meter’
solutions, including solar and battery systems
• Power division created to focus on growing the
generation business
• Value derived from install, O&M and asset
ownership
1.5° C
Rising mean temperatures
(TCFD category:
Physical Chronic)
Risk: Reduced sales of natural gas
and electricity for heat
>2° C
• Strategic aim to grow customer numbers in UK
and Ireland energy supply
• Heat pump business launched with material
growth plans – can also provide cooling
1.5° C
Overall net impact
for the Group
Opportunity
>2° C
• Analysis suggests an overall net financial
benefit for the Group across all scenarios,
based on our strategic plans, portfolio and
capabilities
1.5° C
(1) Our financial scenario analysis is conducted every three years unless there is a material change to the business or external scenarios. Materiality above is therefore based on 2021
Group GM due to our last full scenario analysis taking place in 2022 (see page 69). A well-below and well-above 2°C scenario for global warming has been used to best demonstrate
the spectrum of proactive and inactive progress on climate change in our key markets, and the impact this may have on our business. In the analysis which spans over 95% of the
Group, this table includes our most material risks and opportunities together with the inclusion of our most material physical risk because whilst less material than all other key risks in
the long term, we believe it’s important to transparently show the net impact of physical risk on GM. All listed ‘opportunities’ result in a positive impact on GM whilst all listed ‘risks’
correlate to a negative impact on GM. The table concludes by showing an overall positive net financial benefit for the Group across all climate scenarios and time periods assessed.
Centrica plc Annual Report and Accounts 2024
73
Our updated Climate Transition Plan 2024
Three years on from publishing our first
Climate Transition Plan, we have now
updated it to go further and faster than
ever before.
In line with best practice, we provide an update on our
Climate Transition Plan every three years. In our latest Plan,
we have strengthened our net zero commitments and
provided greater transparency around the steps we intend
to take to advance the energy transition. Accordingly, our
net zero targets are now underpinned by a new suite of
climate ambitions to reduce risk and seize opportunities,
with the ultimate aim of driving meaningful progress towards
net zero in the next ten years. From 2025 onwards, these
ambitions will replace our old set of ambitions that were
introduced in 2021 (see page 76).
To help our customers be net zero by 2050 and achieve a
28% GHG intensity reduction in customer energy use by
2030, the following ambitions have been created:
•5m devices connected to the Hive platform by 2030;
•20,000 heat pumps sold per annum by 2030;
•80% of electricity customers in the UK to have access
to smart services;(1)
•33% of customers engaged in green or flexible energy
in the UK by 2030;
•100% renewable and zero carbon power supply in the
UK and Ireland by 2030; and
•3,000 engineers to have green skills in the UK and Ireland
by 2030
We will also focus on our enhanced target to be a net zero
business by 2040 with a 50% reduction in GHG emissions
by 2032
(2). This will be driven by the following ambitions:
•Net zero baseload power generation by 2034-39;
•Net zero gas production by 2035;
•Net zero gas storage by 2035;
•Net zero LNG shipping by 2035;
•Zero emissions vehicle fleet by 2030; and
•Green investment increase to over 50% from 2023-28
As we work towards achieving net zero for our customers
and our business, we will also be a key enabler of a net
zero energy system. From energy storage systems and
optimisation, to power purchase agreements and gas
storage facilities, our activities will positively contribute
to national and international efforts to get to net zero.
There are key dependencies we rely on to achieve our
ambitions including positive policy development as well
as the development and take up of new and existing
technologies. We must therefore engage government,
partners, customers and others, to ensure they play
their part as we play ours to get to net zero. And for the
transition to be a success, we cannot leave anyone behind.
We will therefore champion the needs of customers and
ensure support for those who struggle with their energy
bills, create thousands of high-quality inclusive green jobs,
back sustainable initiatives in communities and work
towards a low carbon supply chain.
Our updated Plan will be put forward for a shareholder
advisory vote at the AGM in 2025. We hope to maintain
or grow the advisory approval rate achieved for our first
Plan which secured 79.96% at the AGM in 2022. We will
engage investors, shareholders and others on our Plan
before and after the vote, to ensure we maintain an open
dialogue on the considerations needed for net zero.
Read more about our plan in detail at
centrica.com/climatetransition
(1) Working electricity smart meter.
(2) In our first Climate Transition Plan published in 2021, our net zero goal was
focused on achieving net zero by 2045 and securing a 40% reduction in
GHG emissions by the end of 2034.
Risk management
Transition and physical climate risks
alongside all wider risks, continue to be
predominantly managed via our ERM
Framework. This ensures consistency in
identification and controls management.
The Framework uses a time horizon of
0–5 years to assess Principal Risks whilst
Emerging Risks are considered as inputs
to the ERM and strategic planning
process. With this approach, climate
change was made a Principal Risk in 2021
and remains as a Principal Risk in 2024.
The risk process starts with our wider
strategic planning process. The Group
Strategy and Environment team run the
climate scenario analysis to identify and
assess risks and opportunities across a
range of plausible future scenarios.
Regular risk meetings with the Group
Enterprise Risk team ensures full
consideration of potential financial
impacts across time horizons and
integration with the ERM Framework,
the Group Principal Risks and business
unit risk registers.
Climate change risks alongside other
business unit risks are then considered at
the quarterly Group Enterprise Risk and
Controls Review. The most material
Principal Risks, which includes Climate
change alongside other risks that may
impact our ability to deliver on our
Climate Transition Plan such as Weather
and Operational asset integrity, are
subsequently reported to the CLT before
going to the Board’s ARC (see page 40).
This is supported by more detailed
reports on climate change strategy,
progress, risk and opportunities
presented to the SESC. The Board
Strategy Review and Shape Process,
further examines the external landscape
and strategic plans which includes risk
relating to market, competition,
technology and policy – all of which are
influenced by climate change. With this
context, the Board is able to review the
robustness of the business’ strategic
proposals and transition plans.
Read more about Risk on pages on
40 to 53
Metrics and targets
We have a robust track record in
adopting best practice GHG emissions
reporting, as well as setting and achieving
climate-related targets.
Having fully considered the TCFD
recommendations on metrics and targets,
we report those that are most relevant
and material to our business and its
stakeholders. This involves effectively
managing and mitigating our impact through
our metrics, targets and ambitions which
are explained in turn below.
Our metrics principally relate to our
energy consumption and global GHG
Scope 1, 2 and 3 emissions (see emissions
table on page 75). The majority of these
metrics have undergone limited external
assurance every year since 2012. During
2023-24, our emissions and carbon
intensity of revenue rose. This was mainly
as a result of security of supply driving an
increase in gas production, generation
and storage, alongside a reduction in
revenue which was impacted by lower
commodity prices, lower volatility and
lower seasonal gas price spreads (see
more on pages 62 to 63).
Our targets in our People & Planet Plan
focus on being a net zero business by
2040 and helping our customers be net
zero by 2050. With our Company targets
aligned to the Paris Agreement and based
on science, they play an important role in
actively contributing to UK and European
targets to achieve net zero by 2050.
Our business target is far ahead of a
well below 2°C pathway initially and
accelerates to exceed the 1.5°C net zero
target year that falls in 2043. Meanwhile
our customer target in the short term is
broadly consistent with a well-below 2°C
glidepath as well as 1.5°C in the long term.
We have needed to reflect the slower
than expected pace of heating
decarbonisation within the trajectory of
our near term customer target. We are,
however, ready to accelerate plans in the
future should the situation change. In the
meantime, we are providing market-
leading price and performance
guarantees for heat pumps to advance
heat decarbonisation (see page 62) whilst
collaborating with government on
positive policy development. Whilst the
delayed growth of the heat pump market
does not impact our scenario analysis, our
Climate Transition Plan takes account of
the rate of take-up and remains on track
to achieve net zero customer emissions
by 2050.
We are unable to progress our validation
by the Science Based Target initiative
(SBTi). This is due to the continued delay
relating to the Oil and Gas guidance,
which the SBTi believe, will apply to us.
Although we expect to have hard-to-
remove residual emissions in the 2040s,
we believe they will be significantly less
than 10% of our emissions. We will use our
in-house carbon trading team to engage
high-quality carbon removal projects like
tree planting, which enables us to achieve
net zero in a credible way. Our targets
receive limited external assurance on a
rotational basis every three years. In 2024
we were on track with both our customer
and business targets (see pages 62 to
63).
Our ambitions set out in our Climate
Transition Plan, help respond to key risks
and opportunities in order to progress our
People & Planet Plan net zero targets.
The ambitions are incorporated into
budgets, business plans and accounting
assumptions, which enables strategic
progress.
As part of our updated Climate Transition
Plan 2024, we now have a new set of
ambitions that we will use to measure our
progress from 2025 onwards (see page
73). They will replace our original
ambitions from our first Climate
Transition Plan published in 2021 (see
page 76). Although we have not reached
the final year of their timeframe, we feel
that the time is appropriate for a reset
given the launch of our updated Climate
Transition Plan. We have published our
performance against these ambitions for
one final time as part of our 2024 annual
reporting.
Good progress has been made against
the majority of the ambitions but we are
behind on others. For example, we have
had to extend our EV van fleet roll-out
from 2025 to 2030 due to deployment
issues as not all engineers have driveways
to easily charge their car – a factor
further complicated by the slower than
anticipated rate at which wider public
charging infrastructure is growing. In
doing so, this gives us the time to invest
in systems, processes and working
practices to manage these EV charging
challenges and achieve our ambition. As a
result of the pace of heat decarbonisation
and heat pump adoption, we have also
subsequently updated our ambition for
20,000 heat pumps to be sold per year
from 2025 to 2030 and are taking action
to improve take-up (see left). See more
Strategic Report Governance Financial Statements Other Information
about our progress set out in our Climate
Transition Dashboard (see page 76), the
performance of which is embedded into
remuneration arrangements (see page
67).
To reduce our emissions and progress
towards net zero, we use an internal
carbon price. This helps guide
commercial decisions in line with our
Climate Transition Plan. In 2024 our
internal carbon price ranged from
£74.8tCO2e to £141.0/tCO2e.
The carbon price is time-sensitive and
rises over time to incentivise future
decisions and predict long-term impact
of regulation on our business.
Our internal carbon price in 2024 was
utilised for hedging to support fuel mix
decarbonisation as well as determine the
price point for bidding in the energy
market auction for potential future
generation assets and power purchase
agreements.
Although the metrics, targets and
ambitions set out on pages 62 to 63 and
75 to 76, relate to our most material
climate-related risks and opportunities,
we also measure and track a wider
number of less material environmental
metrics such as water and waste (see
pages 65 and 291).
Our metrics, targets and ambitions evolve
in line with best practice and the changing
energy landscape.
Our energy use and GHG emissions
2024
2023
Total GHG emissions (Scope 1 and 2)(1)
1,733,882tCO2e(2) †
1,685,840tCO2e(3) (4)
Scope 1 GHG emissions
1,726,177tCO2e(5) †
1,678,457tCO2e(4) (6)
Scope 2 GHG emissions
7,706tCO2e
(7) †
7,383tCO2e
(4)
(8)
Scope 3 GHG emissions
(9)
21,860,510tCO2e
21,180,922tCO2e
Total GHG intensity by revenue
(10)
87tCO2e/£m
(11)
64tCO2e/£m
(12)
Total energy use
7,925,163,679kWh
(13) †
7,437,652,380kWh
(14)
Read more about our performance on pages 62 to 63. Reporting practices for environmental metrics are drawn from the WRI/WBCSD Greenhouse Gas Protocol and Defra’s
Environmental Reporting Guidelines. Reporting is additionally based on operator boundary which is the more commonly used approach for reporting environmental matters, and includes
all emissions from our shipping activities relating to LNG alongside the retained Spirit Energy assets in the UK and Netherlands. Non-operated nuclear emissions are excluded.
† Included in DNV’s independent limited assurance report. See page 289 or centrica.com/assurance for more.
(1)
Comprises Scope 1 and Scope 2 emissions as defined by the Greenhouse Gas Protocol.
(2)
Comprises UK 578,677tCO2e and non-UK 1,55,205tCO2e.
(3)
Comprises UK 547,555tCO2e and non-UK 1,138,285tCO2e.
(4)
Restated due to availability of improved data.
(5)
Comprises UK 572,939tCO2e and non-UK 1,153,238tCO2e.
(6)
Comprises UK 542,244tCO2e and non-UK 1,136,213tCO2e.
(7)
Market-based, comprises UK 5,738tCO2e and non-UK 1,967tCO2e. Sum of constituent parts does not align with total due to rounding. Location-based is 17,361tCO2e.
(8)
Market-based, comprises UK 5,312tCO2e and non-UK 2,071tCO2e. Location-based is 17,041tCO2e.
(9)
Includes emissions from the following Scope 3 categories defined by the Greenhouse Gas Protocol: purchased goods and services, capital goods, fuel and energy related activities,
waste generated in operations, business travel, employee commuting, upstream and downstream transportation and distribution, use of sold product and investments. All emissions
are calculated in line with the methodologies set out by the Greenhouse Gas Protocol’s technical guidance, apart from working from home emissions which are based on
methodology set out in EcoAct’s homeworking emissions whitepaper. Other categories spanning upstream leased assets, processing of sold products, end-of-life treatment of sold
product, downstream leased assets and franchises, are not included because they are not relevant to our business.
(10) Carbon intensity of revenue is employed as our intensity measure because it is the most meaningful intensity measure for our diverse business and is the most widely used and
understood measure for climate-related stakeholders such as CDP. Based on statutory revenue.
(11) Comprises UK 36tCO2e/£m and non-UK 315tCO2e/£m.
(12) Comprises UK 25tCO2e/£m and non-UK 267tCO2e/£m.
(13) Comprises UK & Offshore 1,812,987,689kWh and non-UK energy use 6,112,175,991kWh. Sum of constituent parts does not align with total due to rounding.
(14) Comprises UK & Offshore 1,654,616,311kWh and non-UK energy use 5,783,036,069kWh.
Centrica plc Annual Report and Accounts 2024
75
Our climate transition dashboard – progress against our outgoing Climate Transition Plan 2021
(1)
Includes our net zero targets, supported by our climate transition ambitions
Progress against targets and emissions:
On track Behind
Targets and ambitions
2024 Progress
2023 Progress
Customer GHG emissions – 28% intensity reduction by 2030 and net zero by 2050
(from 2019)
6% reduction†
9% reduction(2)
Hive smart thermostats – 2.5m customers by 2025 (units to date)
2.8m
2.4m
Smart meters – 6m additional installed by 2030 (from 2020)
3.5m
3.0m
EV charging points – 100,000 in year by 2025 (annual units)
9.1k
7.0k
Heat pumps – 20,000 in year by 2025 (annual units)
3.2k
3.0k
Centrica GHG emissions – 50% reduction by 2032 and net zero by 2040 (from 2019)
18% reduction
21% reduction
Low carbon and transition assets – 800MW installed by 2025 (from 2020)
(3)
195MW
132MW
Zero emission vehicle fleet (total to date) – 100% EV van roll-out by 2030
32%
29%
Zero emission vehicle fleet (total to date) – 100% EV car roll-out by 2025
83%
74%
Property – 50% reduction in UK emissions by 2030 (from 2019)
67%
65%
Capex – grow capital allocated to green activities from less than 5% to over 50%
from 2023-28
(4)
37%
31%
† Included in DNV’s independent limited assurance report. See page 289 or centrica.com/assurance for more.
(1) We are expected to publish an update to our Climate Transition Plan every three years in line with best practice. The above ambitions from part of our first Climate Transition Plan
published in 2021, and will now be retired and replaced by our new set of ambitions which form part of our updated Climate Transition Plan that was developed during 2024 and which
we will report progress against from 2025 (see more on pages 73 to 74). We have, however, updated our net zero target to align with our updated net zero target for our business for
consistency, which advances on our previous commitment set in 2021 and focused on being a net zero business by 2045 with a 40% GHG reduction by 2034. In last year’s Annual
Report, we also stated that we would extend the EV van fleet roll-out from 2025 to 2030, as well as our green investment commitment from 2025 to 2028 and report it cumulatively
in order to align with the introduction of our new green-focused investment strategy. The glidepath trajectory for climate ambitions is not linear as they were modelled around the
expectation that demand would increasingly grow, resulting in accelerated delivery against the target as we near the target date.
(2) Restated due to availability of improved data.
(3) A mixed portfolio of solar, battery and gas-fired peaking assets, all enabling the grid to decarbonise.
(4) Categorisation is based on our company assessment framework, which is built on the foundations of the EU Taxonomy for sustainable activities. Judgements are made using the most
reliable information present, without fully evidencing the alignment criteria.
Read more about our wider data and trends in our data centre at centrica.com/datacentre
Strategic Report Governance Financial Statements Other Information
Task Force on Climate-related Financial Disclosures
The table below sets out the 11 TCFD recommendations and where the related information can be found.
Read more about each of these areas in our Climate Transition Plan at centrica.com/climatetransition
Recommendation
Recommended disclosure
Pages
Governance
a) Describe the Board’s oversight of climate-related
risks and opportunities
•Pages 6, 9, 67 to 68 and 80 to 98
b) Describe management’s role in assessing and
managing climate-related risks and opportunities
•Pages 67 to 68, 73 to 75, 96 to 97,
100 to 104 and 114 to 115
Strategy
a) Describe the climate-related risks and
opportunities the organisation has identified over
the short, medium, and long term
•Pages 69 to 73, 176 to 181 and 192
to 196
b) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning
•Pages 69 to 73, 176 to 181 and 192
to 196
•CDP 2024 submission
centrica.com/CDP24
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower
scenario
•Pages 69 to 73
Risk management
a) Describe the organisation’s processes for
identifying and assessing climate-related risks
•Pages 40 to 42, 68 and 74
b) Describe the organisation’s processes for
managing climate-related risks
•Pages 40 to 42, 44 to 48 and 51
c) Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management
•Pages 40 to 42, 44 to 48, 51, 68
and 74
Metrics and targets
a) Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in
line with its strategy and risk management process
•Pages 74 to 76
•Data centre at centrica.com/
datacentre
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 GHG emissions, and the related risks
•Pages 69 to 75
c) Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
•Pages 62 to 63 and 73 to 76
The Strategic Report has been approved by the Board
and signed on its behalf by:
Raj Roy
Group General Counsel
& Company Secretary
19 February 2025
Centrica plc Annual Report and Accounts 2024
77
Strategic Report Governance Financial Statements Other Information
Governance
80
Directors’ and Corporate Governance Report
82
2018 UK Corporate Governance Code compliance
83
Governance framework
84
Board of Directors
86
Biographies
90
Board composition and skills
91
Board and senior leadership diversity
92
Board activities
94
The Board’s duties under Section 172
98
Relations with shareholders and colleagues
100 Audit and Risk Committee
112
Nominations Committee
114
Safety, Environment and Sustainability Committee
116
Remuneration Report
138 Remuneration Policy
148 Other statutory information
Centrica plc Annual Report and Accounts 2024
79
Directors’ and Corporate
Governance Report
Dear Shareholders
I am pleased to present the 2024 Directors’
and Corporate Governance Report. In this
report, we will update you on where the
Board has focused its time during the year
and relevant outcomes, with the strategic
focus continuing to be on delivering long-
term sustainable value and positive
outcomes for our customers, shareholders,
colleagues and society.
We have provided signposts for you to refer to our website
or other pages of this Annual Report and Accounts for more
information on particular topics.
Governance focus
The Board recognises the essential role that good governance
plays in the effective delivery of our strategy and the ongoing
development and sustainability of the Group.
In anticipation of the UK Corporate Governance Code 2024
(2024 Code) taking effect from 1 January 2025, the Board
reviewed the changes that would be relevant for Centrica to
meet the requirements under the 2024 Code. We are working
towards meeting the new requirements, with particular work
at the Audit and Risk Committee towards meeting the new
requirements of Provision 29 for the 2026 financial year.
We remain committed to maintaining the highest standards of
transparency, accountability and integrity in the way we operate
as a Board and as a Company.
The Board
Our Board is composed of talented and dedicated individuals
to enable us to achieve our objectives. The Nominations
Committee keeps the balance of skills, experience and
knowledge of our Board under review. You can find more
information on the Directors and their appointments in the
biographies on pages 86 to 89 and the Nominations Committee
report on pages 112 to 113.
Diversity, equity and inclusion (DE&I) continue to be key
priorities for the Board given the benefits for the success of the
organisation. The Board’s DE&I Policy was a key consideration in
our approach to Board appointments, ensuring that our
selection process reflects our commitment to fostering a
diverse and inclusive leadership team. As at 31 December 2024,
we are in line with the Board diversity targets encapsulated in
the UK Listings Rules with (i) over 40% female representation on
the Board, (ii) at least one senior position on the Board held by a
woman and (iii) at least one Director on the Board from a
minority ethnic background. Numerical data on the ethnic
background and gender identity of Board members and senior
leadership are on page 91.
The Board’s Diversity Policy complies with Disclosure Guidance
and Transparency Rule 7.2.8A, encompassing the FTSE Women
Leaders Review and the Parker Review requirements. For more
detailed information on the Board’s Diversity Policy, please visit
centrica.com.
Centrica is dedicated to fostering an inclusive environment where
all individuals, regardless of their background, can succeed. We are
actively working to ensure that our workforce, including senior
leadership, mirrors the diversity of the communities we serve. Our
Company has implemented policies aimed at enhancing DE&I at
every level. We have made progress in recruiting, promoting and
developing employees from diverse backgrounds, and we are
committed to continuing these efforts.
Board evaluation
An evaluation of the Board and its Committees is carried out
annually and externally facilitated every three years in
accordance with the UK Corporate Governance Code guidance
for a periodic independent board review. In 2024, the Board
underwent its triennial external evaluation process facilitated by
Ffion Hague of Independent Board Evaluation (IBE), an
experienced, accredited independent reviewer specialising in
Board performance evaluations, to assess the performance,
composition, diversity and effectiveness of the Board and its
Committees.
The report from IBE concluded that, overall, the Board has the
necessary mix of skills, knowledge and experience, and was
performing effectively and the Committees were effective in
supporting the Board to deliver its objectives with significant
progress since the last review in 2021, and included
recommendations for continuous improvement.
Strategic Report Governance Financial Statements Other Information
The evaluation process began in May 2024 with a detailed brief
provided by the Chair, the Group Chief Executive, and the
Group General Counsel & Company Secretary. IBE had
previously conducted a review in 2021 consequently building on
that previous work to offer a comprehensive assessment. The
evaluation approach was meticulous, involving an hour and a half
interviews with each Board member, stakeholder input from the
Centrica Leadership Team and advisors, questionnaires, a
review of Board papers, and observation of Board and
Committee meetings in July. Feedback was compiled and a
report prepared, which was discussed with the Chair and the full
Board in November. Performance feedback was provided to
Committee chairs and discussed the Board’s feedback for the
Chair with the Senior Independent Director. The Chair also
received individual performance feedback for Directors to aid in
their annual reviews.
The independent evaluation focused on a broad range of topics
and generated a tailored report which was considered and
discussed by all the Directors. The 2024 findings highlighted the
need to focus on the use of time, review Board objectives, and
create more opportunities for reflection. It also emphasised the
importance of aligning the skills matrix with evolving priorities to
inform succession planning including at the senior executive
level, and maintaining Board visibility to set the tone from the
top. The Board will incorporate these findings into their
programme by revising objectives to align with the Group
strategy, establishing a review cadence for strategy and
performance oversight, and enhancing succession planning at
both Board and executive levels. Additionally, they will review
Committee meeting attendance to improve effectiveness,
enhance ways of working including Board paper content, and
improve overall Board effectiveness by optimising individual
contributions for better collective performance. These topics, in
addition to the strategic and operational priorities already
discussed in other sections of this Annual Report and Accounts,
will be amongst the key priorities for the Board in the year ahead
and have been integrated into the Board’s objectives for 2025.
In response to feedback from the 2023 evaluation which we
reported in the 2023 Annual Report and Accounts, the Board
reviewed its training requirements and evolved the 2024 and
2025 work programmes. Succession planning remained a key
focus throughout 2024 (read more in the Nominations
Committee report on pages 112 to 113). Additionally, the Board
incorporated opportunities to meet with senior management
into its programme, such as meeting with the Centrica Energy
Leadership Team during a site visit to Aalborg, Denmark (read
more on the site visit on pages 92 and 98 to 99).
Organisational culture
Centrica’s values of Care, Delivery, Agility, Courage and
Collaboration form the core of our organisational culture. Our
Values are supported by Our Code that sets out our
fundamental standards for engagement and collaboration. Our
Code guides our decision-making and reflects our commitment
to integrity. All Centrica colleagues, including the Board, carry
out mandatory Our Code training on induction and on an annual
basis. Read more at centrica.com/ourcode.
The Group Chief Executive regularly updates the Board on
issues related to employee engagement, with the quarterly
‘Our Voice’ survey offering the Board crucial insights into the
Company’s culture. This is supplemented with feedback from
a variety of other sources, including dedicated colleague
engagement meetings. I and my fellow Directors find these
meetings to be valuable, and we appreciate the opportunity to
engage directly with colleagues in this way. You can find more
information on the survey and other workforce engagement
practices on pages 9, 12, 92, 98 and 99. The Board maintains a
focus on cultivating the Company’s culture, emphasising
colleague development and digital enablement for Centrica’s
future readiness.
Stakeholder engagement
Engaging with our stakeholders is crucial to our success. We are
committed to open and transparent communication and will
continue to seek feedback to better understand and address
the needs and views of stakeholders.
Stakeholder views are gathered through an extensive network
of strategic engagements to help grow the business and deliver
improvements for our customers, colleagues and society over
the long term.
During 2024, representatives from the Board met with major
shareholders from time to time in order to obtain their
perspectives on a range of matters, including the Company’s
performance, strategy and ESG matters.
The Board maintains collective responsibility for engaging with
employees regularly throughout the year, recognising the
insights and benefits gained by all Board members from regular
interactions with a diverse range of colleagues.
Read more on pages 12 to 13, 94 to 97 and 98 to 99.
Challenges and opportunities
While there are challenges, there are also numerous
opportunities for growth. We are confident in our ability to
navigate these challenges and capitalise on opportunities to
deliver long-term value. We have maintained a strong focus on
advancing the Company’s energy transition journey. Our
progress to date is outlined in our Climate Transition Plan which
can be found at centrica.com/sustainability and in earlier
sections of this Annual Report and Accounts.
Closing
The Board is committed to maintaining its focus on high
standards of corporate governance as it did in 2024, and
ensuring that we give priority to the areas that require our
attention such as focusing on delivering against strategy for our
customers and our stakeholders, succession planning and
ultimately creating long-term sustainable value for members
of the Company.
I am grateful for the support of my fellow Board members, our
colleagues, customers and other stakeholders who have
assisted the Company in delivering against its objectives.
Thank you for your trust in Centrica. I look forward to providing
an update at our Annual General Meeting in May.
Kevin O’Byrne
Chair
19 February 2025
Centrica plc Annual Report and Accounts 2024
81
2018 UK Corporate Governance
Code compliance
The Board is committed to high standards of corporate
governance and supports the revisions to the UK Corporate
Governance Code 2024 as published by the Financial Reporting
Council (FRC) on 22 January 2024 and which take effect from
2025. Centrica is pleased to confirm that throughout the year
ended 31 December 2024, the Company complied with all
relevant provisions of the 2018 UK Corporate Governance Code
(UK Code). Our application of the UK Code is set out below.
The UK Code and associated guidance are available on the
Financial Reporting Council’s website at frc.org.uk. The index on
page 148 sets out where to find each of the required disclosures
in respect of Listing Rule 6.6.4 and Disclosure Guidance and
Transparency Rules 4.1.5R and 7.2.1.
Section 1
Board Leadership and Company Purpose
Principles A,
B, C, D, E
The Corporate Governance statement (CG Statement) on pages 80 to 151 gives information on the Group’s compliance
with the principles relating to the Board’s Leadership and Company Purpose. More detailed information on:
•The Group’s statement of purpose can be found on page 11;
•The Group’s strategy, resources and the indicators it uses to measure performance can be found on pages 16 to
25 and 38 to 39 respectively;
•The Group’s engagement with stakeholders and the Group’s Section 172(1) Statement is set out on pages 12 to 13;
94 to 97 and 98 to 99; and
•The Group’s approach to workforce matters can be found in the Chief People Officer’s report and in ‘Our people’
within our People and Planet section on pages 54 to 57 and 58 to 61.
The Group’s framework of controls is contained in the Audit and Risk Committee report on pages 100 to 104 of the
CG Statement and in the Principal Risk and Viability Disclosure section on pages 40 to 53.
Section 2
Division of Responsibilities
Principles F,
G, H, I
The CG Statement describes the structure and operation of the Board on pages 83 to 84. In the CG Statement, we
describe on pages 80 to 81 the process the Company conducts to evaluate the Board, to ensure that it continues to
operate effectively, that individual Director’s contributions are appropriate and that the oversight of the Chair promotes a
culture of openness and constructive yet challenging debate. The policies and standards which support the Board's
effective and efficient functioning can be found on our website at centrica.com/board.
Section 3
Composition, Succession and Evaluation
Principles J,
K, L
Details of the skills and experience of the existing Board Directors can be found in the Board biographies on pages 86 to
89. Information on the Board’s appointment process and approach to succession planning is contained in the Nominations
Committee report on pages 112 to 113. Information on the Board evaluation process can be found on pages 80 to 81.
Section 4
Audit, Risk and Internal Control
Principles M,
N, O
Information on the policies and procedures the Group has in place to monitor the effectiveness of the Group’s Internal
and External Audit functions, and the integrity of the Group’s financial statements, is contained in the Audit and Risk
Committee report on pages 100 to 104 of the CG Statement, along with an overview of the procedures in place to
manage risk and oversee the internal control framework. Further information on the Group’s approach to risk
management is contained in the Principal Risk and Viability Disclosure section of the Strategic Review on pages 40 to 53.
The Board believes the 2024 Annual Report to be a fair, balanced and understandable assessment of the Company’s
position and prospects. A description of the Audit and Risk Committee’s work to enable the Board to reach this
conclusion is contained in the Audit and Risk Committee report on page 102.
Section 5
Remuneration
Principles P,
Q, R
The Directors’ Remuneration Report section of the CG Statement describes the Group’s approach to Directors’
remuneration, including the procedure for developing policy and the Remuneration Committee’s discretion for
authorising remuneration outcomes. Details of linkage between the Directors’ Remuneration Policy and long-term
strategy are contained on page 139.
Strategic Report Governance Financial Statements Other Information
Governance framework
The Board is responsible for leading the Group in an efficient
manner, establishing the Group’s Purpose, values and strategy,
which drive the Group’s culture, and for ensuring long-term
sustainable value creation for stakeholders.
In order to enable the Board to focus on its priorities, a number
of its oversight responsibilities have been delegated to four
principal Committees. These responsibilities are set out in the
terms of reference for each Committee. The Board regularly
reviews the remit, authority, composition and terms of
reference of each Committee.
The governance framework to enable this is set out below.
There are certain key responsibilities that the Board does
not delegate, and which are reserved for its consideration.
The matters reserved exclusively for the Board include: the
development of strategy; the acquisition and divestment
policy; the approval of major capital expenditure; the Group’s
capital structure; the approval of financial reports; and oversight
and independent assurance of policies and procedures. The full
schedule of matters reserved for the Board is available on the
Governance page of our website at centrica.com.
Centrica plc Annual Report and Accounts 2024
83
Board
The Board focuses on corporate governance, developing strategy and major policies, reviewing management performance, approving financial reports and
providing entrepreneurial leadership to the Company within a framework of prudent and effective controls which enable risk to be assessed and managed.
It is also responsible for setting the Company’s culture, values and the behaviours it wishes to promote in conducting its business. The Board’s role and
responsibilities are reviewed against the UK Code to ensure that it is meeting all of its obligations. In performing its duties, the Board has regard to the
interests of the Group’s key stakeholders and the potential impact of the decisions it makes on the environment and wider society.
Board Committees
The Board oversees the Group’s operations through a unitary Board and four principal Committees.
Centrica Leadership Team (CLT)
The CLT is led by the Group Chief Executive and members include the Group Chief Financial Officer, Group General Counsel & Company
Secretary, Chief People Officer and Business Unit Managing Directors. The CLT is responsible for ensuring the delivery of the Group’s
strategy, business plans and financial performance.
Disclosure Committee
The Disclosure Committee, a committee of the Board, is responsible for overseeing the timely and accurate disclosure of sensitive
information and maintaining procedures and controls to enable compliance with legal and regulatory disclosure obligations. Meetings of
the Disclosure Committee are convened as and when necessary and membership of the Committee comprises the Group Chief
Executive, Group Chief Financial Officer and the Group General Counsel & Company Secretary.
Audit and Risk Committee
Supports the Board in fulfilling
its responsibilities in reviewing
the effectiveness of the
Company’s financial reporting,
internal controls, and risk
management, while also
overseeing the effectiveness of
the internal and external audit
functions.
Nominations Committee
Ensures there is a formal and
appropriate procedure for the
appointment of new Directors
to the Board, while also
reviewing the size, composition,
tenure, and skills of the Board as
well as oversight of ongoing
board education and evaluation.
Remuneration Committee
Determines and makes
recommendations to the Board
on the Company's framework
and policy for the remuneration
of the Chair, Executive
Directors, and other senior
executives, considering pay
across the Group and
stakeholder views.
Safety, Environment and
Sustainability Committee
Supports the Board in fulfilling
its responsibilities in reviewing
health and safety risks and
focus on Environmental, Social
and Governance (ESG) matters
relevant to Centrica including
climate, responsible business
practices and corporate
reputation.
The terms of reference for these Committees can be found on our website, centrica.com, and attendance at meetings of each of these
Committees in 2024 can be found on page 92. Further information on the work of these Committees can be found in later sections of this Annual
Report and Accounts (pages 100 to 147).
Informing
Informing
Informing
Reporting
Reporting
Reporting
Board of Directors
Division of responsibilities
The Board comprises of a Non-Executive Chair (independent on
appointment), two Executive Directors (Group Chief Executive
and Group Chief Financial Officer), and eight Independent Non-
Executive Directors(1). There is a clear division of responsibilities
between the Chair and the Group Chief Executive, reflected in
the schedule of matters reserved for the Board.
(1) As at 31 December 2024.
Director effectiveness
The Board considers that each of the Directors contributes
effectively to the work and deliberations of the Board.
Reasons for the re-election of each of our Directors at the
forthcoming AGM can be found within the Centrica plc
Notice of Annual General Meeting 2025 which will be made
available on our website centrica.com/agm25
Biographies can be found on the following pages and at
centrica.com/board
Read more about the Board evaluation on pages 80 to 81
Strategic Report Governance Financial Statements Other Information
Non-Executive Directors
Chair
Senior Independent Director (SID)
Independent Non-Executive Directors
The Chair is responsible for the leadership of
the Board. In doing so, the Chair is responsible
for promoting high ethical standards, ensuring
the effective contribution of all Directors and,
with support from the Group General Counsel
& Company Secretary, ensuring best practice
in corporate governance and the timely
distribution of accurate and clear information
to Directors to facilitate decision-making.
The Senior Independent Director acts as a
sounding board for the Chair and serves as a
trusted intermediary for the other Directors,
as well as shareholders, as required.
The Independent Non-Executive Directors are
responsible for contributing sound judgement
and objectivity to the Board’s deliberations and
overall decision-making process, providing
constructive challenge, and monitoring the
Executive Directors’ delivery of the strategy
within the Board’s risk and governance
structure. All of the Non-Executive Directors
are considered to be independent.
Executive Directors
Group General Counsel
& Company Secretary
Group Chief Executive
Group Chief Financial Officer
The Group Chief Executive is responsible
for the executive leadership and day-to-day
management of the Company to ensure the
delivery of the strategy agreed by the Board.
The Group Chief Financial Officer is responsible
for providing strategic financial leadership to
the Company and for the day-to-day
management of the finance and risk
management functions.
The Group General Counsel & Company
Secretary advises the Chair and Board on
governance, together with updates on
regulatory and compliance matters; supports
the Board agenda with clear information flow;
and acts as a link between the Board and its
Committees, and between Independent Non-
Executive Directors and senior management.
Board appointments
Although no new Board appointments were made during the
year, the report of the Nominations Committee on pages 112 to
113 describes work done by the Committee in relation to Board
appointments. All Directors are subject to annual nomination for
re-election. The Board sets out in the Notice of Annual General
Meeting the specific reasons why each Director’s skills and
continued contribution are valuable to the Company’s long-term
sustainable success.
The Company’s Articles of Association, available on our website,
provide how Directors are appointed, retire and are replaced.
Directors’ induction
The Board has processes in place for Director induction.
The induction programme is led by the Chair and supported
by the Group General Counsel & Company Secretary and the
Secretariat. Directors are asked to provide input to ensure that
in addition to a general programme, their induction is structured,
in relation to both content and delivery, to meet the individual
Director’s needs. The tailored inductions provide the
information, training and support required to optimise their
effectiveness in role.
The induction programme includes a combination of sessions
with both internal functions and external advisors with the
opportunity for periodic subsequent review of progress with
the Chair. Briefings provide opportunities for Directors to meet
with senior leaders and to participate in site visits, where
relevant, to better understand the different businesses and
working environments.
Induction programmes for Philippe Boisseau, Jo Harlow and
Sue Whalley began in the last quarter of 2023 and continued into
2024. Each induction programme included individual meetings
with the Chair, Group General Counsel & Company Secretary,
Directors, Business Unit MDs, and senior leaders, held at various
business locations; training; and site visits, as well as meetings
with external advisors.
Directors’ independence and conflicts
All our Non-Executive Directors are considered to be
independent against the criteria in the UK Corporate
Governance Code 2018, and free from any business interest
which could materially interfere with the exercise of their
independent judgement. In addition, the Board is satisfied that
each Non-Executive Director is able to dedicate the necessary
amount of time to the Company’s affairs.
The Non-Executive Directors’ Letters of Appointment state
that they must inform the Company of any other businesses,
directorships, appointments, advisory roles, or other relevant
commitments (including any relevant changes, and a broad
indication of the time involved). Directors also confirm that
they will inform the Board of any subsequent changes to their
circumstances which may affect the time they can commit
to their duties. The agreement of the Chair must be obtained
before accepting additional commitments that might affect
the time Non-Executive Directors are able to devote to
their appointment.
In accordance with the Companies Act 2006 and the
Company’s Articles of Association, Directors are required to
report actual or potential conflicts of interest to the Board for
consideration and, if required, authorisation. If such conflicts
exist, Directors recuse themselves from consideration of the
relevant subject matter. The Company maintains a schedule
of authorised conflicts of interest which is regularly reviewed
by the Board.
Training and development for Directors
In addition to providing relevant training on appointment, it is
important to ensure that Directors’ skills and knowledge are
refreshed and updated regularly, given the dynamic business
and regulatory environment in which the Company operates.
The Chair, supported by the Nominations Committee and Group
General Counsel & Company Secretary, is responsible for the
ongoing development of all Directors. There is a programme
of training each year for the Board as a whole and the Chair
discusses any individual training and development needs with
each Director, such as formal and informal briefings, meetings
with management and visits to the Group’s operations.
During 2024, the Directors received several focused sessions
to enhance their understanding of the different businesses,
their key priorities, opportunities and challenges as well as
externalities that may impact delivery of strategy. Some of
the specific areas covered during the year included digital,
data and AI, customers and brand, cyber risk, sustainability, and
geopolitical risk. In addition, the Directors have full access to the
advice and services of the Group General Counsel & Company
Secretary, who is responsible for advising the Board on
corporate governance matters. If necessary, Directors are able
to seek independent professional advice at the Company’s
expense in respect of their duties.
Centrica plc Annual Report and Accounts 2024
85
Biographies
Kevin O’Byrne
Chair
Kevin joined the Board on 13 May 2019. Prior
to his appointment as Chair on 16 December
2024, he was Senior Independent Director
from 1 June 2022. When he assumed the
Chair role, succeeding Scott Wheway,
he became Chair of the Nominations
Committee and stood down as a member
of the Audit and Risk Committee.
Relevant skills and experience
Kevin brings extensive board, retail,
commercial and finance experience, having
occupied senior roles in a number of leading
UK and international retailers. Kevin
possesses current and pertinent experience
in financial matters.
Previous experience
Kevin was chief financial officer of J
Sainsbury plc from January 2017 to March
2023. Prior to that, he was chief executive
officer of Poundland Group plc, and
previously held executive roles at Kingfisher
plc, including divisional director UK, China
and Turkey, chief executive officer of B&Q
UK & Ireland and group finance director.
Prior to that he was finance director of
Dixons Retail plc. From 2008 to 2017 he was
a non-executive director and chairman of
the audit committee of Land Securities
Group PLC where he was also senior
independent director from 2012 to 2016.
Kevin was chair of Centrica plc’s Audit and
Risk Committee from 2019 to 2023.
External appointments
Non-executive director of International
Flavors & Fragrances Inc, and Chair-elect (to
be effective from 1 May 2025) (NYSE listed).
Chris O’Shea
Group Chief Executive
Chris joined Centrica in September 2018
as Group Chief Financial Officer and was
appointed as Group Chief Executive on
17 March 2020. Chris is also Chair of the
Disclosure Committee and was appointed
Chair of Spirit Energy (joint venture) on
2 February 2022.
Relevant skills and experience
Chris has wide-ranging experience across
the entire energy value chain together with
recognised experience in transforming
business and financial performance. He has
considerable knowledge of working in highly
regulated industries and in complex,
multinational organisations, not only in the
energy sector but also in technology-led
engineering and services industries.
Previous experience
Prior to joining Centrica, Chris was group
chief financial officer of UK listed Smiths
Group plc and Vesuvius plc, and a non-
executive director of Foseco India Ltd, (NSE
listed). From 2006 to 2012 Chris held various
senior finance roles with BG Group plc,
including chief financial officer of Africa
Middle East & Asia and Europe & Central
Asia, prior to which he held a number of
senior roles with Shell, (living and working
in the UK, the US and Nigeria), and with
Ernst & Young.
Chris studied Accounting and Finance at the
University of Glasgow and is a Chartered
Accountant. He also holds an MBA from the
Fuqua School of Business at Duke University
and is a Fellow of the Energy Institute.
External appointments
Non-executive Director of ITT Inc.
Russell O’Brien
Group Chief Financial Officer
Russell joined the Centrica plc Board
on 1 March 2023 and is also on the Board
of Spirit Energy (joint venture).
Relevant skills and experience
Russell has broad experience from across
the energy value chain having spent more
than 25 years with Shell plc. He developed
his financial management experience
through work in various business models
from Retail through to upstream
development. Russell has extensive
knowledge of financial management, capital
markets, commercial finance, and mergers
and acquisitions activities.
Previous experience
Prior to joining Centrica, Russell worked for
Shell plc from 1995 to 2021. From 2006 to
2009 Russell was financial controller for
Shell’s upstream operations in the Americas.
Russell was then CFO for Shell’s global retail
business from 2009 to 2013. Following this,
he was CFO for Shell’s Integrated Gas
division. In 2015 he was appointed group
treasurer. During his time as treasurer
Russell was also a board member of Shell
Trading and chairman of Shell Asset
Management Co. Russell has lived and
worked in the USA, Singapore, the
Netherlands and the UK. He was a board
and advisory council member of the FICC
Market Standards Board from 2015 to 2021.
Russell is a Fellow of the Chartered Institute
of Management Accountants and the
Association of Corporate Treasurers.
Russell studied Economics and
Management and graduated from
St. Andrews University in 1995.
External appointments
None.
Strategic Report Governance Financial Statements Other Information
Jo Harlow
Senior Independent Non-Executive Director
Jo joined the Board on 1 December 2023
and became Senior Independent Non-
Executive Director on 16 December 2024.
Relevant skills and experience
Jo has more than 25 years’ experience
working in various senior roles,
predominantly in the branded and
technology sectors.
Previous experience
Prior to her non-executive career, Jo held
the position of corporate vice president of
the phones business unit at Microsoft.
She previously spent 11 years at Nokia
Corporation in a number of senior
management roles, including executive
vice president of smart devices. Jo was also
non-executive director at InterContinental
Hotels Group PLC from 2014 to 2023
(including as remuneration committee chair
from 2017 to 2023) and was a non-executive
director of Ceconomy AG from 2017
to 2021.
Jo attended Duke University in North
Carolina and has a BSc in Psychology.
External appointments
Non-executive director and chair of
remuneration committee at J Sainsbury plc.
Senior independent director and remuneration
committee chair at Halma plc, and non-
executive director at Chapter Zero Ltd.
Carol Arrowsmith
Independent Non-Executive Director
Carol joined the Board on 11 June 2020 and
is Chair of the Remuneration Committee.
Relevant skills and experience
Carol brings extensive advisory experience,
especially of advising boards on executive
remuneration across a range of sectors,
and is a Fellow of the Chartered Institute
of Personnel and Development.
Previous experience
Carol is a former deputy chair and senior
partner of Deloitte LLP. She was a member
of the Advisory Group for Spencer Stuart,
Global Partner of Arthur Andersen,
managing director of New Bridge Street
Consultants and non-executive director of
Compass Group PLC and Vivo Energy plc.
She was also a Director and Trustee of
Northern Ballet Limited.
External appointments
Member of INSEAD’s Corporate
Governance Board Council.
Philippe Boisseau
Independent Non-Executive Director
Philippe joined the Board on 1 September 2023.
Relevant skills and experience
Philippe brings broad experience of the
energy industry, particularly of energy
assets, energy infrastructure, energy
trading and the renewable energy transition.
Previous experience
Philippe was the chief executive officer of
CEPSA (Compañía Española de Petróleos
SA), the Spanish multinational oil and gas,
chemicals and renewable energy business,
from 2019 to 2021. Before joining CEPSA,
he worked at TotalEnergies SA for over two
decades. During his tenure there, Philippe
held president and senior executive roles
across various business divisions and was
instrumental in establishing and leading
Total’s New Energies division from 2007 to
2016. Philippe was a senior advisor to Carlyle
International Energy Partners between 2017
and 2019 and was a board member at I-Pulse
Inc. from 2017 to 2021.
Philippe graduated from Ecole
Polytechnique and has an MSc in Theoretical
Physics.
External appointments
Non-executive Director of Sibanye-
Stillwater Limited, Beamen BV and Exolum
SA. Senior advisor to OMERS Infrastructure
and Ondra Partners.
Centrica plc Annual Report and Accounts 2024
87
Committee membership key
Denotes Committee Chair
Nominations Committee
Chair of the Board
Remuneration Committee
Audit and Risk Committee
Safety, Environment and
Sustainability Committee
Disclosure Committee
Skills and experience key
Consumer Services
Financial Services
Energy Sector
Government/Regulatory
Engineering/Safety
Technology
Finance/M&A
Nathan Bostock
Independent Non-Executive Director
Nathan joined the Board on 9 May 2022 and
is Chair of the Audit and Risk Committee.
Relevant skills and experience
Nathan has worked in financial services
since the mid-1980s and brings a wealth of
financial, commercial, risk and compliance
expertise, particularly in large-scale
customer-facing businesses. Nathan
possesses current and pertinent experience
in financial matters. The Board considers
that Nathan has recent and relevant financial
experience.
Previous experience
Nathan was chief executive officer of
Santander UK from 2014 until early 2022, as
well as global head of investment platforms
of Banco Santander before leaving in late
2023. He joined Santander from the Royal
Bank of Scotland plc (RBS), where he was
an executive director and group finance
director. He previously held the post
of group chief risk officer and head of
restructuring having joined RBS in 2009.
Nathan served on the board of Abbey
National plc (now Santander UK) as an
executive director and chief financial officer
from 2005 until 2009. Prior to this he held
a number of senior positions with Abbey
National, 2001 to 2004, RBS, 1992 to 2001
and Chase Manhattan Bank, 1985 to 1992.
Nathan is a chartered accountant and holds
a BSc (Hons) in Mathematics.
External appointments
Non-Executive Director of Lloyds Banking
Group plc, Chair of Lloyds Bank Corporate
Markets plc and Senior Adviser to McKinsey.
Chanderpreet (CP) Duggal
Independent Non-Executive Director
CP joined the Board on 16 December 2022.
Relevant skills and experience
CP brings valuable expertise of
digital technology and the use of data
and analytics in large customer-
facing businesses.
Previous experience
CP worked for 20 years at American
Express in various senior roles, the last of
which was leading the company-wide digital
and analytics organisation to enable growth,
efficiency, and innovation globally. His
experience includes managing digital/
mobile channels and technology platforms
across the customer lifecycle, applications
of AI and Data Science across wide-ranging
business applications, operational
excellence and managing fraud risk.
In his most recent executive role, CP was
the chief digital and analytics officer for
Burberry plc and a member of its executive
committee. He was responsible for
transforming e-commerce and omni-
channel strategy globally, accelerating
customer relationship management
focus and leveraging analytics across
the company.
External appointments
Chief Business Officer – WNS Next.
Heidi Mottram
Independent Non-Executive Director
Heidi joined the Board on 1 January 2020
and is Chair of the Safety, Environment
and Sustainability Committee.
Relevant skills and experience
Heidi brings considerable relevant strategic
and operational experience acquired in
her current and previous roles. Her deep
understanding of the importance of
customer service, delivered in complex,
multi-stakeholder environments with a high
public profile, is particularly pertinent to the
Group at this time, as it focuses on the
delivery of its customer-centric strategy.
Previous experience
Heidi began her career with British Rail in
the mid-1980s. She held a number of roles
in GNER, before joining Midland Mainline
in 1999 as operations director. She was
managing director of Northern Rail from
2004, and before that she was commercial
director of Arriva Trains Northern and
operations director of Midland Mainline
Limited from 1999 to 2003. Additionally,
Heidi was vice-chair of the North East
Local Enterprise Partnership and Newcastle
University Council and was a member
of the board of The Great British Railways
Transition Team.
External appointments
Chief executive officer of Northumbrian
Water Limited and Northumbrian Water
Group Limited.
Strategic Report Governance Financial Statements Other Information
Rt Hon. Amber Rudd
Independent Non-Executive Director
Amber joined the Board on 10 January 2022.
Relevant skills and experience
Amber brings a wealth of real-world
experience in energy, policy and business.
Previous experience
After around 20 years working in business,
Amber served as a Member of Parliament
between 2010 and 2019. In addition to
holding the roles of Home Secretary,
Secretary of State for Work and Pensions
and Minister for Women and Equalities,
Amber served as Secretary of State for
Energy and Climate Change from 2015 to
2016, having been Parliamentary Under
Secretary of State at the Department of
Energy and Climate Change from July 2014
until May 2015. Amber led the UK team to
the successful completion of the Paris
Climate Change Agreement. This UN
sponsored 2015 Conference of the Parties
(COP21) achieved a landmark global
commitment to reduce national carbon
emissions.
External appointments
Non-executive director of Pinwheel, advisor
to businesses including Equinor, FGS and
Centerview Partners, and a trustee of RUSI.
Sue Whalley
Independent Non-Executive Director
Sue joined the Board on 1 December 2023.
Relevant skills and experience
Sue brings a blend of experience in people
and cultural transformation, and strategic,
technological, and operational evolution in
large, complex organisations, championing
the use of innovation to improve customer
service.
Previous experience
Prior to joining Associated British Foods plc
in 2019, Sue spent 12 years at Royal Mail
where she held several executive roles. She
was chief executive officer of the UK post
and parcels business where she led complex
organisation and digital transformation to
support e-commerce growth in the logistics
and delivery business. Sue has extensive
experience working with complex
stakeholder landscapes including unions
and regulators. She also has experience
leading Health and Safety agendas and
environmental initiatives within operations.
Sue spent nearly 18 years in management
consultancy working in a range of industries
including retail and utilities.
Sue is a graduate of the University of
Cambridge and holds an MBA from Harvard
Business School.
External appointments
Chief people and performance officer at
Associated British Foods plc.
Raj Roy
Group General Counsel & Company Secretary
Raj was appointed Group General Counsel &
Company Secretary on 1 October 2020.
Relevant skills and experience
Raj has overall responsibility for legal,
regulatory, ethics, compliance and
secretariat activities across the Group, the
effective operating of Centrica plc’s Board
and advising on key issues of corporate
governance and compliance. Raj joined
Centrica in 2014 as the Legal Director for
Residential Energy, before becoming
General Counsel for the UK and Ireland
region in 2017. He has led legal, regulatory
and compliance teams at Centrica in various
formations across the UK and Ireland region
and the Consumer division.
Previous experience
Prior to joining Centrica, Raj spent nine years
at Vodafone, holding a number of senior in-
house legal roles in the Group and UK legal
functions. Raj started his career in private
practice, qualifying as a solicitor at Slaughter
and May in London and subsequently
working for Freshfields in Brussels.
External appointments
Member of the Board of Energy UK
(representing Centrica) and the Board of
General Counsel for Diversity and Inclusion
(GCD&I).
Centrica plc Annual Report and Accounts 2024
89
Committee membership key
Denotes Committee Chair
Nominations Committee
Chair of the Board
Remuneration Committee
Audit and Risk Committee
Safety, Environment and
Sustainability Committee
Disclosure Committee
Skills and experience key
Consumer Services
Financial Services
Energy Sector
Government/Regulatory
Engineering/Safety
Technology
Finance/M&A
Board composition and skills
l Male
55% l White British
64.0%
l Female
45% l Asian British/Asian
9.0%
l Other White
27.0%
Strategic Report Governance Financial Statements Other Information
Board tenure distribution (as at 31 December 2024)
Directors
Kevin O'Byrne, Chair
Chris O'Shea, Group Chief
Executive Office
Russell O'Brien, Group Chief
Financial Officer
Jo Harlow, Senior Independent
Non-Executive Director
Carol Arrowsmith,
Non-Executive Director
Philippe Boisseau,
Non-Executive Director
Nathan Bostock,
Non-Executive Director
CP Duggal,
Non-Executive Director
Heidi Mottram,
Non-Executive Director
Amber Rudd,
Non-Executive Director
Sue Whalley,
Non-Executive Director
0 1 2 3 4 5 6 7 8 9
Board composition
by Gender
Board composition
by Ethnicity
Years
Board and senior leadership diversity
Sex/gender representation
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board(1)
Percentage
of senior
positions on
the Board(1)
Number in
executive
management
Percentage
of executive
management
Men
6
55%
3
75%
9
69%
Women
5
45%
1
25%
4
31%
Other categories
—
—
—
—
—
—
Not specified/prefer not to
say
—
—
—
—
—
—
(1) There are four senior positions on the Board (Chair, Group Chief Executive, Group Chief Financial Officer and Senior Independent Director).
Ethnicity representation
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(1)
Percentage
of senior
positions on
the Board
(1)
Number in
executive
management
Percentage
of executive
management
White British
or other White
10
91%
4
100%
11
85%
Mixed/Multiple
Ethnic Groups
—
—
—
—
—
—
Asian/Asian British
1
9%
—
—
2
15%
Black/African/
Caribbean/Black British
—
—
—
—
—
—
Other ethnic group
—
—
—
—
—
—
Not specified/
prefer not to say
—
—
—
—
—
—
(1) There are four senior positions on the Board (Chair, Group Chief Executive, Group Chief Financial Officer and Senior Independent Director).
Read more about Board diversity on page 80.
Explanatory notes
(1) The Information above is stated as at 31 December 2024.
(2) As at 31 December 2024, we met the Board diversity targets set out in Listing Rule 6.6.6R(10). This included (i) at least 40% female representation on the Board (2024: 42%); (ii) at least
one Director being ethnically diverse (2024: 1 person); and (iii) to have at least one senior position held by a woman (met following the appointment of Jo Harlow as SID).
(3) By the end of 2030, it is our goal for our Board, senior executives and senior leaders to be 48% women and 18% ethnically diverse. As part of our commitment to the Parker Review in
setting a senior executives ethnic diversity target by 2027, in 2023 we decided to bring our 18% goal forward by three years.
(4) Our Non-Executive Directors self certified their diversity data. The Directors were asked to confirm their gender and ethnic background based on the categories taken from the UKLR 6
Annex 1. The diversity data for the executives and colleagues are collated through our HR management system. We encourage all colleagues to self-report information such as gender,
gender identity, ethnicity, age, sexual orientation, disability and military background, whilst also including a ‘prefer not to say’ option. We continued to run our #ThisIsMe campaign to
encourage more people to share who they are, which helps us better understand who is working for us and where we need to target action to improve diversity.
Centrica plc Annual Report and Accounts 2024
91
Board activities
Board meetings
The Board is committed to upholding high standards of
corporate governance and compliance, recognising their
importance for the Company’s enduring performance and
value generation. These standards underpin the Company’s
strategic objectives and critical decision-making, crucial for
reinforcing its financial foundation and navigating challenging
market conditions.
The Board held nine formal meetings in 2024, which primarily
occurred face-to-face, and two Board calls which were
supplementary meetings called for specific approvals and/or
focused discussion. If Directors are unable to attend a meeting,
they have the opportunity beforehand to discuss any agenda
items with the Chair. The agendas for Board meetings are
established at the beginning of the year, and then, subject to
changing priorities, are agreed in advance of each meeting by
the Chair, Group Chief Executive and Group General Counsel &
Company Secretary. The agenda typically consists of regular
standing items, such as reports on financial performance, and
review of a particular topic or business area.
During the year, the independent Non-Executive Directors,
including the Chair, met regularly without management present.
Site visits
The Directors recognise the importance of, and benefits gained
by, visiting the Group’s operations and endeavour to visit
Centrica sites each year. The site visits that the Board
undertook in 2024 and the interactions at those visits were
intended to provide the Directors with a deeper understanding
of operational aspects and to provide opportunities to engage
with colleagues directly about their work experiences and other
significant issues.
Date of site visit
Location of site visit
Focus of site visit
(1)
June 2024
Uddingston Office, Glasgow
Board colleague engagement session to hear from colleagues about their
experience of working at Centrica and Scottish Gas.
September 2024
Aalborg, Denmark
The Board met with the Centrica Energy Leadership Team to learn about their
operations, performance and strategy. The Board held an open Q&A session
with Centrica Energy colleagues in a townhall.
(1) Read more on the Board’s engagement with colleagues on pages 98 to 99.
Board and Committee meeting attendance 2024
Name
Role
Board
AC
NC
RC
SC
Kevin O’Byrne (1)
Chair and Non-Executive Director
11/11
4/4
4/5
Chris O’Shea
Group Chief Executive
11/11
Russell O’Brien
Group Chief Financial Officer
11/11
Jo Harlow (2)
Senior Independent Non-Executive Director
10/11
4/5
5/5
Carol Arrowsmith
Independent Non-Executive Director
11/11
4/4
5/5
5/5
Philippe Boisseau
Independent Non-Executive Director
11/11
4/4
5/5
3/3
Nathan Bostock
Independent Non-Executive Director
11/11
4/4
5/5
3/3
CP Duggal
Independent Non-Executive Director
11/11
4/4
5/5
5/5
Heidi Mottram
Independent Non-Executive Director
11/11
5/5
5/5
3/3
Amber Rudd (3)
Independent Non-Executive Director
10/11
5/5
5/5
3/3
Sue Whalley
Independent Non-Executive Director
11/11
5/5
5/5
Scott Wheway (4)
Chair and Non-Executive Director
10/10
5/5
3/3
(1) Kevin O'Byrne did not attend the Nominations Committee meeting in April as he was a potential candidate for Chair succession discussion. Kevin became Chair of the Nominations
Committee on 16 December 2024.
(2) Jo Harlow did not attend meetings in June due to existing commitments that had been notified to the Company prior to joining the Board.
(3) Amber Rudd was unable to attend an ad-hoc meeting set up at short notice due to an existing commitment.
(4) Scott Wheway stepped down as Chair and a Non-Executive Director on 15 December 2024.
Strategic Report Governance Financial Statements Other Information
Board focus during the year
Throughout the year, the Board’s activities have included evaluating regular operational and financial reports, setting and monitoring
strategy, approving various business and governance matters, and detailed presentations on topics.
Stakeholder key
Customers
Colleagues
Investors
Government
and regulators
Suppliers
Communities
and NGOs
Link to
stakeholders
Link to Principal Risks
and Uncertainties
Strategy and business plan
The Board set the delivery of the strategic direction of the Group and oversaw the delivery
of that strategy for the benefit of relevant stakeholders.
•Regular business updates from the Group Chief Executive and heads of Centrica
Group businesses
•Group Annual Plan
•Energy supply and energy transition investment opportunities
•Climate Transition Plan
•Political, Legal,
Regulatory or
Ethical Intervention
and Compliance
•Operational Asset
Integrity
•Climate Change
Performance and risk
Financial performance and risks, as well as risk controls and processes are regularly
reported to the Board, to the Audit and Risk Committee, and the Safety, Environment and
Sustainability Committee. Risks are also brought to the attention of the Board through
reports from the Group Chief Executive, Group Chief Financial Officer, heads of business
and functional subject matter experts.
•2023 Final Dividend
•Group financial performance updates
•Results reporting
•Business units – deep dives
•Health and safety
•Risk and controls
•Cyber security
•ENSEK acquisition
•Cyber
•Safety
•People
Culture and stakeholders
Understanding the views and interests of the Company’s diverse community
of stakeholders, including customers, is important to the Board.
To enable a culture that drives our values, the views and interests of stakeholders are
considered in the development, delivery and oversight of the Group’s business model and
strategy.
•Talent and succession planning
•Directors’ Remuneration Policy
•Responsible sourcing
•Colleague engagement
•Brand and reputation
•People
Political and regulatory environment
During the year, the Board considered a range of political and regulatory matters relevant
to the Group’s activities and strategy.
•Regulatory policy developments in our active markets
•Modern Slavery Act Statement
•UK Corporate Governance Code
•Evolving ESG reporting requirements
•Political, Legal,
Regulatory or
Ethical Intervention
and Compliance
•Climate Change
Governance
The Board receives regular reports from the Group General Counsel & Company Secretary
on governance and regulatory matters, as well as regular updates and insights on market
trends from the Investor Relations function. During the year, the Board took time to consider
or oversee key governance activities.
•Annual Report and Accounts
•Annual General Meeting
•Board evaluation
•Board objectives and training
•Political, Legal,
Regulatory or Ethical
Intervention and
Compliance
Centrica plc Annual Report and Accounts 2024
93
The Board’s duties under Section 172(1)
The Directors are required under Section 172(1) (a)-(f) of the UK Companies Act 2006 to promote the long-term success of the
Company for the benefit of its members and to consider the interests of other stakeholders in their decision making.
The diverse set of skills, knowledge and experience (see pages 86 to 89), our Purpose, Values and strategy (see pages 11 and 18 to
25), stakeholder engagement (see pages 12 to 13 and 98 to 99), and Board activities and discussions (see pages 92 to 93) all support
the Directors in fulfilling their responsibilities.
Alongside the principal decisions described on these pages, the table below provides examples of other activities which also support the
Directors in meeting their obligations under S172(1).
Section 172 factors
Examples of supporting activities
Supporting
information
(a) Decision for the long term
•Agreed refreshed purpose and values;
•Strategy meetings discussing strategic priorities;
•Regular deep dive reviews of business performance, and
aligned risks and control reviews to monitor strategy;
•Agree annual plan, review the allocation of capital and monitor
performance;
•Regular review of sustainability performance ambitions;
•Review risks and opportunities relating to Board reserved matters;
and
•Regular board report on activities supporting the directors’
Section 172 activities.
11
18 to 25 and 93
93
93
114 to 115
93
93 and 94 to 99
(b) Employee interests
•Engaging with our colleagues through a structured engagement plan;
•Established Shadow Board;
•Regular review of the outcomes of the ‘Our Voice’ survey;
•Board focus on executive succession planning; and
•Monitor health and safety performance through the Safety,
Environment and Sustainability Committee (SESC).
12 to 13, 81 and 98
to 99
12, 56 and 98 to 99
12, 65, 81 and 99
112 to 113
64 to 65 and 114
to 115
(c) Relationships with suppliers, customers and
others
•Introduced new Chief Customer Office to drive improved
customer outcomes;
•Regular shareholder engagement, targeted for review of
remuneration policy and Climate Transition Plan; and
•SESC activities monitor outcomes in relation to multiple
stakeholders.
54
13, 81 and 95 to 98
114 to 115
(d) Community and the environment impact
•SESC remit supports activities on community and climate;
•People and Planet scorecard regularly reviewed;
•Revised Climate Transition Plan and targets; and
•Board review of sponsorship and community contribution.
114 to 115
114 to 115
73 to 76
114 to 115
(e) Reputation for high standards of business
conduct
•SESC monitors performance against various stakeholder measures;
•Annual deep dive reputational survey on stakeholder perceptions to
inform activities in relation to stakeholder groups;
•Adoption of ‘Our Code’ reinforcing conduct expectations; and
•Review of principal risks impacting the business.
114 to 115
114 to 115
65 and 81
40 to 51
(f) Fairness between shareholders
•Regular engagement, trading updates and publication of
information available to investors on our website e.g. Teach-in
sessions;
•The Disclosure Committee protects the integrity of price-
sensitive information; and
•Hybrid Annual General Meeting to support broader
participation.
98 to 99
83
98
Strategic Report Governance Financial Statements Other Information
Principal decisions made by the Board in 2024
In line with our Purpose to energise a greener, fairer future, the Board gives careful consideration to the potential impacts of
decisions on stakeholders. Principal decisions made by the Board included those set out below. Refer to the Nominations
Committee report on page 113 on the process for the appointment of the Chair.
Examples of decisions made by the Board in 2024
Remuneration Policy
Context
Our Remuneration Policy is designed to balance the views and experiences of all our stakeholders, while ensuring
we attract and retain high-performing executives capable of leading a complex organisation in a challenging and
competitive global business environment.
Stakeholder
considerations
As part of developing the new Directors’ Remuneration Policy (the Policy), the Company engaged with
stakeholders.
Investors: The Chair of the Remuneration Committee and Company representatives engaged with investors and
proxy advisors to understand their views of the proposed Policy. They engaged with shareholders representing
nearly 50% of our issued share capital. The Company shared its views on required changes to attract and retain
talent and ensure the alignment of remuneration to our business strategy, Purpose and culture. Responses from
investors and our independent Remuneration Committee advisor were discussed by the Board at various points
during 2024 and used to finalise the Remuneration Policy.
Colleagues: The Directors recognise that Centrica employees are core to our business performance and the
delivery of our strategic ambitions. The success of our business depends on attracting, retaining, developing and
motivating talented employees. The Directors consider and assess the implications of the Remuneration Policy
changes on employees and the wider workforce with a goal to ensure alignment with our reward principles,
Purpose and culture.
Outcome
Stakeholder views were shared with the Board and Remuneration Committee alongside information on the
wider workforce remuneration structure, external market practice, corporate governance regulations and
institutional guidelines.
Changes to our Remuneration Policy demonstrate our commitment to setting and implementing a Policy that is
strongly aligned to our strategic objectives and the delivery of long-term value for all stakeholders, while seeking
to avoid creating excessive risks in the achievement of short and long-term performance targets.
During consultation, shareholders requested clarity on the business performance and executive pay decisions
in the context of the wider workforce, as well as competitive market benchmarks, to understand the context
and rationale for the proposed changes. Most shareholders that we consulted indicated that they were
supportive of the proposed changes. The Remuneration Committee Chair has provided this context and
rationale in the Remuneration Committee Chair’s letter. Read our Remuneration Policy on pages 138 to 147.
Centrica plc Annual Report and Accounts 2024
95
Context
Our Climate Transition Plan transparently explains to stakeholders our Plan for tackling climate change and
achieving net zero.
The updated Plan (see pages 73 to 77) primarily outlines Centrica’s commitment and progress on net zero, the
ambitious and tangible steps we intend to take to progress our Plan, as well as the key dependencies and
resources our Plan is reliant on. The Plan closely aligns with best practice such as targets aligned to the Paris
Agreement and the Transition Plan Taskforce’s (TPT) framework.
The Climate Transition Plan demonstrates the important role Centrica plays in the energy transition. It was
published on 21 January 2025. The Plan was shaped through stakeholder engagement and we continue to engage
stakeholders on it in the run-up to the AGM.
Stakeholder
considerations
Centrica has engaged with a variety of stakeholders to develop and implement its Climate Transition Plan.
Those key stakeholders include:
Investors: Centrica conducted workshops and meetings with Climate Action 100+ coalition to share details of
their decarbonisation strategy and assess as well as evolve in line with investor expectations.
Policymakers and regulators: Centrica has actively engaged policymakers to advocate for regulatory changes
and support mechanisms necessary for achieving net zero. This includes advocating for the use of biomethane
for gas peakers, support for hydrogen to power, and the development of hydrogen production and storage
infrastructure.
Customers: Centrica has sought and considered customer expectations and needs, particularly in relation to the
adoption of low carbon technologies as well as energy security and affordability. They have provided insights into
feasible emissions pathways and the necessary conditions to accelerate progress.
Industry partners: Centrica has collaborated with various industry partners on projects such as hydrogen
production and storage, renewable energy generation and energy efficiency initiatives. These partnerships
help to develop innovative solutions and share risks.
Trade associations: Centrica has engaged with trade associations to advocate for policy reforms and share
best practices. This includes memberships in associations focused on heat pumps and hydrogen.
Communities: Centrica engaged wider communities to ensure a just transition. This includes supporting
community initiatives and providing energy efficiency improvements as well as energy bills support to those
who need it.
This engagement highlights Centrica's comprehensive approach to addressing the expectations and concerns
of various stakeholders while advancing its climate transition ambition.
Examples of decisions made by the Board in 2024
Climate Transition Plan
Strategic Report Governance Financial Statements Other Information
Examples of decisions made by the Board in 2024
Climate Transition Plan continued
Outcome
Following Centrica's engagement with stakeholders, several outcomes were achieved that reflect the
Company's commitment to addressing stakeholder concerns and advancing its Climate Transition Plan.
Specific examples include:
Energy certificates:
Centrica advocates for a review of the current regime for energy certificates. After engaging with stakeholders
and evaluating various options, the decision was made to continue purchasing certificates under the existing
system. However, Centrica will develop an internal framework to ensure quality and value for consumers, which
might result in future strategic adjustments, including a reduction in certificate use.
Investor expectations:
Through investor engagement, Centrica improved the scope, quality and transparency of its Climate Transition
Plan. This engagement led to the announcement of bolder commitments to progress emission reductions
including bringing forward Centrica’s commitment to be a net zero business to 2040 from 2045 and setting
a new suite of Climate Ambitions to drive progress (see pages 73 to 75).
Policy and advocacy:
Centrica's engagement with policymakers resulted in advocacy for regulatory changes to enable the use of
biomethane for gas peakers and support for hydrogen to power plants. The Company emphasised the need
for Government support in developing hydrogen production and storage infrastructure.
Stakeholder confidence:
By strengthening its Climate Transition Plan, Centrica aimed to build confidence among stakeholders about its
role and resilience in the energy transition. This was achieved by presenting Centrica as a credible and resilient
player in the energy transition.
Publication and communication plan:
Centrica published the updated Climate Transition Plan in January 2025, supported by a communications plan
for a range of stakeholders in advance of the AGM.
These outcomes demonstrate Centrica's comprehensive approach to addressing stakeholder expectations
and advancing its climate commitments.
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97
Relations with our stakeholders: shareholders
and colleagues
Shareholder engagement
The Board is committed to maintaining open channels of
communication with all of the Company’s stakeholders. An
important part of this is providing a clear explanation of the
Company’s strategy and objectives, and ensuring feedback is
acknowledged, considered and, where appropriate, acted upon.
The Board seeks to ensure open and effective engagement
through the Company’s regular communications, the Annual
General Meeting (AGM) and other investor relations activities.
Meetings, roadshows and conferences
During 2024, the Company undertook an ongoing programme
of meetings with investors (in person and virtually). The majority
of these meetings were led by the Group Chief Executive and
Group Chief Financial Officer. In addition the Chair reaches out
and meets with various investors during the course of the year.
This year, our Remuneration Committee led an extensive
proactive engagement programme with investors in anticipation
of the review of our Remuneration Policy (see page 95 for more
further details on this engagement).
The Company reports its financial results to shareholders twice
a year, with the publication of its annual and half-year results. The
Group Chief Executive and Group Chief Financial Officer typically
meet with our major institutional shareholders on a regular basis
throughout the year, including the scheduled results engagement
sessions following the Company’s preliminary and interim results.
These meetings provide an opportunity for a review of the
Company’s strategy and performance. The results presentations,
webcast and announcements are made available on our website,
centrica.com.
In addition, the Company hosts investor teach-in sessions, with
focus on providing insights into our businesses. Most recently,
in December 2024, this covered Centrica Energy and our new
Meter Asset Provider. Senior Management and/or Investor
Relations also attend a number of investor conferences
throughout the year, giving shareholders further opportunity
to meet and receive updates directly from Company
representatives. Senior management, the Chair, Senior
Independent Director and Remuneration Committee Chair are
also available to meet with major shareholders on an ad-hoc
basis if requested.
Engagement themes with our institutional shareholders
During the year, engagement themes included:
•Centrica’s strategic progress;
•Full year and interim results;
•Dividends and shareholder returns;
•The regulatory and political environment for UK energy;
•UK energy security and the future of the Rough gas storage
facility;
•Energy transition investment opportunities;
•Board succession; and
•ESG matters.
General meetings
The Company holds an AGM each year and holds General
Meetings as required. At the AGM, the Chair gives his thoughts
on governance aspects of the preceding year and the Group
Chief Executive reviews the performance of the Group over
the last year. In advance of each AGM, we write to our largest
shareholders inviting discussion on any questions they might
like to raise with the Chairs of the Board, the Audit and Risk
Committee and the Remuneration Committee being available
to meet shareholders. In addition, the Company engaged with
our largest shareholders and key proxy agencies in 2024 on
resolutions concerning the Directors’ Remuneration Policy
and our Climate Transition Plan. Feedback received from this
dialogue was welcomed and enhanced discussions on these
proposals.
The 2024 AGM was held as a hybrid meeting in Glasgow, giving
shareholders the opportunity to participate, including asking
questions and voting, in person or virtually via the online Lumi
platform. Shareholders were encouraged to exercise their votes
by submitting their proxy forms either electronically or by post.
We also invited shareholders to submit their questions in
advance of the AGM via a dedicated question facility on our
website and, where appropriate, the answers were published
on our website.
Our 2024 AGM was well supported with votes in favour of the
resolutions ranging from 90% to 99% and with 65% of the
issued share capital voted.
Information about the 2025 AGM will be provided in the Notice
of Meeting and will be available in due course at centrica.com/
agm25. Voting on the resolutions will generally be conducted by
a poll and the voting results will be announced through the
Regulatory News Service of the London Stock Exchange and
also made available on the Company’s website.
Centrica.com
Our website, centrica.com, contains up-to-date information
for shareholders and other interested parties including Annual
Report and Accounts, shareholder circulars, share price
information, news releases, presentations to the investment
community and information on shareholder services.
Colleague engagement
The Board of Directors take collective responsibility for
workforce engagement. Ongoing engagement with colleagues
and understanding their perspectives enables the Board to
make more informed decisions which enable better outcomes
for colleagues as well as the Company.
During the year, the Chair and Non-Executive Directors engaged
with members of the workforce in various ways. This included
breakfast engagement sessions with the Non-Executive
Directors, site visits (see page 92) and a meeting with the
Shadow Board to better understand their experiences.
Strategic Report Governance Financial Statements Other Information
Directors met with the heads of our Centrica Colleague
Networks where they had the opportunity to listen and ask
questions about the achievements, goals and growth of these
networks.
Directors also had the opportunity to engage with colleagues
in Glasgow from our Retail business units, including British Gas
Services & Solutions, British Gas Energy, Hive, Dyno, and New
Business and Net Zero, where the Directors heard about their
current roles, past experience and their aspirations. It was also
an opportunity for colleagues to ask the Board questions. This
feedback helped to inform strategic planning, and supported
thinking on cultural measures such as seeing the improved NPS
scores in 2024 for British Gas (see pages 1 and 33).
In Denmark, the Directors attended a colleague town hall Q&A
and joined a number of ‘show and tell’ sessions, hosted by the
Centrica Energy leadership team and colleagues, focusing on
the Centrica Energy story, growth, geographic expansion and
product diversification resulting in the Directors feeling well
informed with a higher level of understanding of the business.
Following discussions with the Shadow Board on workplace
strategy, the importance of an inclusive workplace, encouraging
colleagues to disclose their information, and our Purpose,
the Board noted the significance of promoting continuous
conversations and maintaining a focus on DE&I. Consequently,
there is now a stronger commitment to engage in braver
conversations, actively seek feedback, and address DE&I
challenges head-on. This approach ensures that our efforts
are sustained and embedded into our culture, rather than being
a one-time initiative.
Quarterly engagement surveys, feedback from the Shadow
Board, town halls, meetings with members of the Centrica
Leadership Team, both individually and together, leader-led
listening sessions and colleague-led network sessions provided
additional mechanisms to better understand the views of the
workforce and to foster a more collegial culture.
Ongoing and holistic engagements like these contributed to the
decision-making of the Centrica Leadership Team and informed
the Board’s view on organisational culture throughout the
course of 2024.
Equal opportunities
The Group is committed to equal opportunities. We have an
active equal opportunities policy which includes, but is not
limited to, recruitment and selection, training, career
development, performance reviews, promotion and through
to retirement. Our culture supports the creation of an inclusive
and safe environment free from discrimination, harassment
and victimisation. Our policies ensure everyone receives equal
treatment regardless of gender, identity, race, ethnic or national
origin, disability, age, marital status, sexual orientation or religion
or any other characteristic protected by applicable laws.
We have created channels for colleagues to voice concerns
confidentially, including through a Speak Up online and phone-
based helpline operated by an independent third party.
These practices help to ensure that decisions relating to
employment practices are objective and based upon work
criteria and individual merit. See pages 54 to 57 for more
information.
Colleagues with disabilities
It is our policy that current and prospective colleagues with a
disability have the same right to access and develop their
careers as anyone else, which is why we are actively targeting
to grow disability representation as part of our People & Planet
Plan to ensure we reflect the full diversity of our communities
(see pages 59 to 60). Colleagues with a disability receive full
and fair consideration when applying for all vacancies and we
interview those who meet the minimum criteria required, whilst
making all reasonable adjustments during recruitment or during
their employment with us. To help everyone reach their full
potential, we provide training, career development and
promotion opportunities that are open to anyone who works for
us alongside tailored programmes that specifically support
colleagues with disabilities to achieve the next steps in their
career. We also endeavour to retain colleagues in the workforce
if they become disabled during employment.
Our Diverse-ability Network celebrates and supports
physiological and neurological diversity among colleagues.
Over the years, the network has grown from strength-to-
strength with around 450 members and a family of networks
including the neurodiversity network. They are a vital source of
support and education for colleagues, whilst providing us with
essential feedback to help us evolve our business in a more
inclusive way. As part of our ambition to be a more inclusive
business, we support The Valuable 500 initiative to champion
disability inclusion across the business and beyond. In addition
to this, we are a Level 2 Disability Confident Employer and are
members of the Business Disability Forum, which offers support,
toolkits and advice to businesses around disability matters.
In 2024, we launched our Great Minds programme to help
normalise and better support neurodiversity amongst other
activities. Details of our efforts to grow disability representation
across the Company and at senior leadership level by 2030
can be found in our People & Planet section on pages 59 to 60.
Human rights
We are fully committed to upholding the fundamental human
rights and freedoms of everyone who works for us, with us,
or lives in the communities where we operate. We uphold the
UN Guiding Principles on Business and Human Rights and are
signatories of the United Nations Global Compact. As set out
in Our Code, we take steps to ensure that we never knowingly
cause or contribute to human rights abuses through activities
like employment checks and supplier due diligence. We also aim
to contribute positively to global efforts to ensure human rights
are understood and observed. Further information about our
efforts can be found in our People & Planet Plan on page 66, as
well as in our Modern Slavery Statement and Our Code available
on our website centrica.com.
Centrica plc Annual Report and Accounts 2024
99
Audit and Risk Committee
As the Chair of the Audit and Risk Committee (the Committee),
I am pleased to present our report for the year ended
31 December 2024, which summarises the Committee’s work to
ensure the accuracy and completeness of the Group’s published
financial information and the effectiveness of the Group’s risk
management and internal controls framework. This has been a
year of significant activity and diligent oversight as we have
continued to enhance our governance and risk management
frameworks.
This report should be read in conjunction with the following
sections in the Annual Report and Accounts:
•Principal Risks and Uncertainties, pages 40 to 51;
•Viability Statement, pages 52 to 53; and
•UK Corporate Governance Code (UK Code) application,
page 82.
Changes in membership
Following 5 years and 7 months of service on the Audit and
Risk Committee (including as Chair of the Committee),
Kevin O’Byrne stepped down on 15 December 2024 following
his appointment as Chair of the Board. We thank Kevin for his
valuable contributions to our discussions.
Committee overview
The Committee has an annual agenda which is linked to the
Company’s financial calendar. The agenda is flexible, enabling
in-depth reviews of topics based on prioritisation in addition to a
regularly scheduled programme for the Committee’s attention.
The core responsibilities of the Committee are to:
•Monitor and review the adequacy and effectiveness of the
Company’s internal controls, risk management systems,
and financial reporting processes, including key judgements
and estimates;
•Ensure Information Systems Security and compliance with
legal, regulatory and ethical standards;
•Provide advice and assurance to the Board on whether it has
discharged its duties effectively;
•Assess whether the Annual Report and Accounts, when
considered as a whole, are fair, balanced and understandable,
providing all necessary information for shareholders and
stakeholders to evaluate the Company’s business model,
strategy, position and performance;
•Oversee the Group’s Internal Audit function, ensuring its
independence, strategic focus, activities, plans and resources
are adequate;
•Approve the appointment and, if necessary, dismissal of the
Group Head of Internal Audit;
•Meet regularly with the Group Head of Internal Audit, without
management present, to discuss remit and findings;
•Manage the relationship with the Company’s external auditors
on behalf of the Board, including overseeing their appointment,
independence, effectiveness and remuneration;
•Conduct a tender for the external audit contract at least every
10 years and make recommendations to the Board;
•Meet regularly with external auditors, without management
present, to discuss their remit and findings;
•Oversee arrangements for employees and stakeholders to
confidentially raise concerns about possible improprieties,
including in financial reporting;
•Ensure these arrangements enable proportionate and
independent investigations and appropriate follow-up actions;
•Review the Company’s policies, including ‘Our Code’, and
assess annual compliance;
•Monitor the adequacy of procedures for detecting and
addressing fraud, financial crime, bribery and regulatory risks;
•Review significant regulatory policy developments, material
risks and incidents of non-compliance, receiving quarterly
compliance reports;
•Monitor the Group’s exposure to market risks, including
commodity prices, inflation, interest rates, and currency
fluctuations; and
•Oversee the management of counterparty exposures
and funding uncertainties.
Main activities during 2024
During the year, the Committee met four times and considered
a broad range of topics. Some of the key focus areas for
discussion included the following:
•Viability and Going Concern assessments and related
disclosures;
•Review of the 2023 financial results, the Annual Report and
Accounts, and the 2024 interim financial results, including
any relevant communications from Deloitte;
•Accounting judgements, especially those related to Centrica
Energy, the reversal of the onerous supply contract provision,
the impairment of the Nuclear asset, Nuclear-related life
extensions, impairment, price curves methodology, the
Electricity Generator Levy and the assessment of the
downstream supply bad debt provision;
•Evaluation of the effectiveness of the external audit process
and the Internal Audit function;
•Planning and commencement of the external audit tender
process, scheduled to reach conclusion in 2025 in relation
to the audit of the 2027 accounts and thereafter;
•Continued oversight of the control environment and finance
systems maintenance and development particularly regarding
the migration of British Gas Energy customers to a new
technology platform;
•Review of the Group’s pension schemes, including the triennial
review and the impact of changes in gilt yields (see note 22);
•Monitoring of sanctions compliance, information systems,
cyber security and data security risk management, especially
considering geopolitical developments and updating the Board
accordingly;
•Updates on legal, regulatory and ethical compliance, with a
focus on energy trading, energy supply (including in relation to
prepayment meters installed under warrant) and the sale and
delivery of FCA-regulated products and services, including the
operation of Our Code and the Speak Up helpline;
•Regular updates on the progress of the Enterprise Risk
Management and Internal Controls programmes;
Strategic Report Governance Financial Statements Other Information
•Review of customer ratings and feedback as part of the
broader assessment of the control environment, risk
management, and service quality;
•Assessment and preparation for upcoming legal and regulatory
changes, such as reforms to the UK corporate governance
regime and CSRD;
•Regular reports and recommendations from Internal Audit and
the external auditors on risk, assurance and controls;
•In-depth reviews of the risks and controls environment across
various divisions of the Group; and
•Reviewed the reporting and disclosure related to climate
change in the Annual Report & Accounts alongside the Safety,
Environment and Sustainability Committee, to ensure it
comprehensively outlines the actions taken to effectively
address major climate-related concerns.
Risk management and internal controls
Internal Audit
The Committee oversees the Group’s Internal Audit function,
ensuring its efficiency, independence and alignment with
strategic objectives and the revised Global Institute of Internal
Audit (IIA) standards (Global IIA standards). This includes regular
reviews and approval of the annual Internal Audit plan, which is
developed in response to the Group’s evolving Principal Risks
(details on pages 40 to 51). During the year, assurance is
provided through a mixture of traditional audits and agile
reviews such as real time assurance, programme reviews and
investigations. The Group Head of Internal Audit maintains direct
communication with the Board Chair and the Committee Chair
and is accountable to the Committee. Throughout the year,
the Committee is updated on Internal Audit’s themes and
findings. It also monitors the implementation of follow-up
actions by business units.
The Company continues to conform with the revised Global
Institute of Internal Audit (IIA) standards. The independence,
objectivity and effectiveness of the Internal Audit function was
reviewed by reference to the output from a combination of self-
assessment, independent assessment conducted by interviews
with the Centrica Leadership Team (CLT) and a broader group
of senior managers, as well as assessment by the Committee.
The review concluded that the Internal Audit function operated
in accordance with the Institute of Internal Auditors’
International Professional Practices and continued to be
independent, objective and effective, with the appropriate
resources.
Review of the system of risk management and internal controls
As a business, we place significant emphasis on monitoring the
Company's risk management and internal control framework.
Investment in transformation programmes for both Enterprise
Risk Management and Internal Controls run through 2024 have
enhanced our approach to risk management and internal
controls.
Our risk management and internal controls are assessed through
a self-certification process, a Group Entity Level Controls
assessment programme and internal reviews by Internal Audit
and the Committee. The Committee receives regular updates
on Group Principal Risks and the Group control framework from
the Chief Risk Officer and the Director Group Finance reports
highlights of the key risks the Group faces, the change in risk
climate since the last meeting and any new emerging risks.
The update also details the control environment and any areas
of weakness identified, together with proposed mitigations.
At times, the Committee requests and receives additional
information on areas of concern to obtain a deeper
understanding of the risk and assurance of gap closure through
closer oversight of remediation. The risk management process
and internal controls have been in place throughout the year
and remain effective, with ongoing review and improvement.
The Committee has received regular reports throughout the
year on the billing system, ENSEK, which the Group purchased
in 20 September 2024. We continue to evolve our controls and the
Committee was satisfied with the manual review controls put in
place, which included a significant number of validations, checks
and other broad assurance activities, providing financial integrity
and ensuring we remain comfortable with the financial results. The
business is committed to evolving further the manual and IT controls
in place and the extent of automation, as the platform continues its
development.
The Committee also discussed the challenges relating to
external audit findings across some of the Group’s systems
around user access. The Committee continues to oversee the
remediation plans and monitors this closely at every meeting.
The Committee oversaw the annual testing of Group Level
Controls. The Committee continued to emphasise the
importance of refining risk appetites, ensuring robust metrics
and data quality, and implementing effective mitigation
strategies to support the Group’s governance and risk
management framework. The Committee is overseeing
the development and implementation of a structured plan
to ensure compliance with Provision 29, with a clear roadmap
to assess and enhance the effectiveness of risk management
and internal controls.
Enterprise risk management framework transformation
During the year, the Committee has engaged in the enterprise
risk management transformation programme (the Framework),
which included approval of a refreshed Framework aligned with
international standards, including ISO31000 and COSO ERM
guidance, in order to continue to enhance our risk management
capabilities.
A CLT strategic risk workshop informed this year’s review
and assessment of the principal risks for inclusion, confirming
a shared understanding and alignment with Centrica’s strategic
priorities and the evolving risk landscape. While the overall
Principal Risks remain consistent, an updated understanding
of these risks enabled targeted control improvements and
mitigation strategies.
Strengthening of financial controls
The Committee noted the Framework’s role in strengthening
Centrica’s financial controls environment, with specific
improvements in IT controls and other areas highlighted
by external audits.
The Audit and Risk Committee commended the progress
made in Centrica’s enterprise risk management processes and
further improvements in the overall control landscape, reflecting
a maturing framework aligned with strategic priorities and
regulatory expectations.
Centrica plc Annual Report and Accounts 2024
101
Fair, balanced and understandable
In line with the UK Code, the Committee reviews the Annual
Report and Accounts on behalf of the Board to ensure it is
compliant with applicable laws and regulations and provides
shareholders and stakeholders with the necessary information
to assess the Company’s position, performance, culture,
business model and strategy. The Committee also considers the
processes and controls involved in the production of the Annual
Report and Accounts, the governance framework for review
and the responsibilities of the Directors. There is a robust
governance framework supporting the production of
the Annual Report and Accounts to ensure they have been
critically reviewed and verified by the key teams in the relevant
businesses and functions. This includes review and agreement
by the Fair, Balanced and Understandable Committee
comprising Heads of Function from Finance, Corporate
Communications, Investor Relations, Internal Audit, People
Function, Strategy and Secretariat together with review
and input from other content owners and their managers.
External auditors
External auditors and effectiveness of the external audit
process
The Committee manages the relationship with the Group’s
external auditors on behalf of the Board. The Committee
considers annually the scope, fee, audit plan, performance,
objectivity and independence of the external auditors. To
maintain objectivity, principal members of the external audit
team are rotated off the Company's audit. Additionally,
to protect the independence of the external auditors and the
integrity of the audit process, the Company prohibits hiring
senior staff from its auditors for at least two years after they
stop providing services to the Company. Jane Boardman was
appointed as the lead audit partner after the completion of the
2021 audit and has been serving in this role for three years. The
Company conducted its last audit tender on 4 November 2016,
appointing Deloitte as auditor for the financial period beginning
1 January 2017.
To assess the effectiveness of the external audit process
and independence and objectivity of the external auditors,
the Committee carried out an assessment, as in prior years,
primarily looking at the key areas of:
•Robustness of the audit process;
•Quality of people and service;
•Quality of delivery;
•Independence and objectivity; and
•Value-added advice.
This assessment included an internal questionnaire, which was
completed by the Chair of the Board, Committee members
and senior members of management on their views of Deloitte's
performance. The questionnaire covered a review of the
audit partner and team, the audit scope and approach, audit
plan execution, auditor independence and objectivity, and
robustness of challenge of management. Separately, Deloitte
also provided an assessment, via an internal management
questionnaire, of management's controls, judgements and
engagement throughout the audit process. The feedback
was reviewed by management; it was then reported to and
discussed by the Committee.
Strategic Report Governance Financial Statements Other Information
Fair, balanced and
understandable
To ensure the Annual Report meets the 'fair, balanced
and understandable' (FBU) standard, a thorough
process is undertaken annually to provide assurance
to the Board and the Audit and Risk Committee
(the Committee).
The assurance process for the Annual Report
involved contributions from various internal and
external stakeholders to ensure its accuracy, clarity
and compliance. PwC, as the independent advisor to
the Remuneration Committee, conducted an external
review of the Directors’ Remuneration Report.
Additionally, external legal counsel and proxy
advisors provided feedback on the broader Annual
Report, which was instrumental in enhancing the
quality of disclosures. Key contributors, including
members of the finance leadership teams, verified
the accuracy of the information they supplied.
The FBU Committee, comprising senior business
leaders, played a pivotal role in ensuring the report
was 'fair, balanced and understandable.' This involved
reviewing strategic and operational performance,
risk management, governance narratives and the
alignment between financial statements and narrative
sections. Regulatory and compliance aspects were
also scrutinised by the Committee. Drafts of the
report were shared with both the FBU Committee
and the full Board for thorough review and input,
ensuring robust oversight and alignment with the
Company’s strategic objectives.
This collaborative effort supports accountability
to ensure that the report is clear and transparent.
The Directors consider the work undertaken by the
FBU Committee. This provides robust support for
the Committee’s review for its determination that
on the whole, this Annual Report is fair, balanced
and understandable, providing shareholders with the
information needed to evaluate the Group's position,
performance, business model and strategy.
The Committee was satisfied with the external auditor’s
commitment to audit quality, the robust and professional
working relationship with management and demonstration of
strong technical knowledge and professional scepticism. In
addition, to ensure the independence of the external auditor,
and in accordance with International Standards on Auditing
(UK & Ireland) 260 and Ethical Standard 2019 issued by the
Accounting Practices Board and as a matter of best practice,
Deloitte has confirmed its independence as auditor of the
Company. On the basis of Deloitte's confirmation and report
on their approach to audit quality and transparency, the
Committee concluded that; Deloitte possesses the appropriate
qualifications and expertise; Deloitte remains independent of the
Group; and, coupled with effective management engagement,
the audit process was effective.
The re-appointment of Deloitte as auditor for the 2024 financial
year was approved by shareholders at the AGM in June 2024
and Deloitte has been recommended for re-appointment again
in 2025. The Committee confirms that this recommendation
is free from influence by any third party and no contractual term
of the kind mentioned in Article 16(6) of the Audit Regulation has
been imposed on the Company.
As indicated above, Deloitte has been the Company’s auditor
since 2017 (8 years). As stated in last year’s report, the
Committee has initiated a competitive audit tender process
in accordance with the mandatory ten-year re-tendering
requirement. The process will be completed during the year and
the outcome of the process will be reported in the 2025 Annual
Report. Deloitte has been invited to participate in the tender.
Conducting the audit tender in 2025 is in the best interest of
the Company as it ensures compliance with best corporate
governance practices, promotes auditor independence, and
enhances the effectiveness and quality of the external audit.
The Company has complied with the Statutory Audit Services
for Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 for the financial year under review.
The Committee and the Board confirm that they have taken all
the necessary steps to become aware of any relevant audit
information and to pass that information onto Deloitte.
Auditor independence and remuneration
The Committee is responsible for establishing the Group’s
policies and procedures designed to protect the independence
and objectivity of the external auditor. The policy details
those services that the auditor is permitted to carry out and
pre-approves certain of these services provided the fee is
below a threshold; all other permitted services must be
specifically approved in advance by the Committee. Prior to the
engagement of the auditor for a permitted service, the policy
requires that senior management confirms whether the
Committee has pre-approved the service or specific approval
is required.
The total amount of fees paid to the auditor for both audit and
non-audit related services in 2024 is disclosed in note S9 to the
financial statements.
In November 2024, the Committee reviewed its non-audit
services policy and no substantive changes were made to
the policy. A copy of this policy is available on our website
centrica.com.
There is an annual cap on non-audit work during the ordinary
course of business of £1m, which is assessed each year for
appropriateness in the context of external guidance and
regulation. Overall total non-audit fees incurred in 2024 were
£0.8m (2023: £0.7m). All non-audit fees relate to assurance
services (e.g. Interim review or local regulatory requirements).
In line with the non-audit fees policy, approval for this
expenditure was sought and received from the Committee
in advance of the work commencing if Deloitte was best placed
to provide these services on a timely and cost-efficient basis,
given their position as the external auditor. The amount incurred
in the year is well below the legal cap of 70% of non-audit
fees (for services not required by regulation) compared to the
three-year average of statutory audit fees, amounting to
approximately 10%.
In normal circumstances, all significant non-audit work is put out to
tender and Deloitte is only appointed if their experience and
knowledge makes them the most appropriate supplier and it is clear
another firm could not undertake the work without adversely
impacting the businesses. For further information, see note S9 to the
accounts on page 261.
Corporate Reporting Review
The Audit and Risk Committee assists the Board in fulfilling its
oversight responsibilities by reviewing and monitoring the
integrity of the financial information provided to shareholders
and other stakeholders. The Committee oversees financial
reporting and related risks and internal controls and has a role in
overseeing the internal and external auditors, as well as
interacting with other members of management and external
stakeholders as required.
In advance of the Audit, Reporting and Governance Authority
being created, the Committee during the year complied with
the FRC's Audit Committees and the External Audit: Minimum
Standard.
Going concern basis of accounting & viability
The Committee has provided a robust review of the going
concern assessment and the ongoing adoption of the
going concern basis of accounting for the preparation of
financial statements, identifying any material uncertainties
that could impact the Company’s ability to continue as a
going concern.
Our deliberations during the year have also included
evaluating the Company’s prospects. We recognise the
need to clearly articulate how the Board has assessed
these prospects, the period considered and the rationale
for deeming that period appropriate. This forms part of our
commitment to providing transparent and comprehensive
disclosures.
Centrica plc Annual Report and Accounts 2024
103
UK Corporate Governance Code preparedness
The Board regularly receives updates from the Group General
Counsel & Company Secretary about important developments
and upcoming changes in UK Corporate Governance and
preparedness to comply with the 2024 UK Corporate
Governance Code. During the year, the Committee, aided by
the Group General Counsel & Company Secretary and the
Group Chief Financial Officer, considered the changes to the
UK Corporate Governance Code and considered how these
changes affect the remit of the Board Committees.
Speak Up (the Group’s whistleblowing service)
The Committee received and considered reports from
management on the Group’s whistleblowing arrangements.
The Committee reviewed the reports to ensure there are
arrangements in place which colleagues can use in confidence
and without fear of retaliation. In addition, colleagues are able
to report concerns about inappropriate and unacceptable
practices; these arrangements are well publicised and there
is proportionate and independent investigation of such matters
or appropriate follow-up. The Committee reported on its
consideration of whistleblowing arrangements to the Board.
Committee effectiveness
The Committee reviews its terms of reference annually to
ensure they remain appropriate in light of legal, regulatory and
best practice changes. No material changes were made to the
Committee’s terms of reference in the year under review and
they are available on our website centrica.com.
The effectiveness and performance of the Committee was
evaluated as part of the independent review conducted by
Independent Board Evaluation. The Committee was found to
be performing effectively. The outcome from the evaluation
will be used to improve performance going forward.
Read page 80 to 81 for further information on Board
effectiveness.
Membership, meeting attendance and key focus
Committee members:
•Nathan Bostock (Chair)
•Kevin O’Byrne (member until 15 December 2024)
•Carol Arrowsmith
•Philippe Boisseau
•CP Duggal
Biographical details of the Committee Chair and members can
be found on pages 86 to 89. Meeting attendance can be found
on page 92.
All Committee members are independent Non-Executive
Directors. Nathan Bostock has recent and relevant financial
experience and the Committee has sector relevant
competence, as disclosed on page 88.
Carol Arrowsmith has a historical connection to Deloitte LLP
(Deloitte), having previously served as a partner. However,
she had left Deloitte prior to their appointment as the Group’s
external auditors. Additional, Carol receives a pension annuity
from Deloitte. The Committee deems that this does not affect
the independence and judgement of Deloitte, nor the
Committee’s oversight of Deloitte’s performance.
Meeting attendees by invitation
All other Non-Executive Directors, Group Chief Executive,
Group Chief Financial Officer, Group General Counsel &
Company Secretary, Group Financial Controller, Group Head
of Accounting, Reporting and Tax, Group Head of Treasury,
Pensions and Insurance, Group Chief Risk Officer, Group Head
of Internal Audit and the external auditors.
Focus areas in 2025:
•The Group’s published financial information;
•The effectiveness of the Group’s enterprise risk management
and internal controls framework;
•The enterprise risk and control framework including risks
managed by the other Board committees;
•Oversight of principal risk levels against risk appetite;
•Compliance, ethics, legal and regulatory matters;
•Rotational deep dives on risk and controls management within
each business unit;
•Finalise audit tender process;
•Finance Systems Review and Finance health check;
•Preparedness for 2024 UK Corporate Governance Code
implementation and material control attestation; and
•CSRD/Sustainability Assurance.
Nathan Bostock
Chair of the Audit and Risk Committee
19 February 2025
Strategic Report Governance Financial Statements Other Information
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Electricity Generator Levy
The Electricity Generator Levy (EGL) applies a tax rate of 45%
on revenues from sales exceeding a benchmark price of £75/
MWh (as adjusted for inflation) on electricity generated from
nuclear sources. It applies from 1 January 2023 to 31 March
2028. Because EGL is a tax on revenue and not profits, it falls
under IFRIC 21: Levies and is not in the scope of IAS 12: Income
Taxes. This means that EGL is not recognised in the tax line but
instead reduces the Group’s adjusted operating profit.
EGL is chargeable within the Group’s associate accounted 20%
Nuclear investment for its sale of electricity, as well as on
offtake arrangements with significant minority shareholders in
such generators.
During the year, the Group’s share of its Nuclear associate’s
EGL payments amounted to £86m (2023: £41m) (recorded
within the share of profit after tax from associates). The Group
has also made payments on account to HMRC of £80m (2023:
£285m) in relation to its estimated EGL liabilities for its minority
shareholder Nuclear offtake arrangements during the year and
this expense has been recorded within Cost of Sales.
The EGL legislation is new, and its interpretation and application
is unclear in respect of the Group’s minority shareholder
Nuclear offtake arrangements. As such, the extent of the levy
that will ultimately be due in this regard is not yet certain, and a
different amount (up to £150m lower than the amounts paid to
date in 2023 and 2024) may ultimately be determined. If this
were the case, a tax deposit asset would be recorded on the
Group Balance Sheet, and as a credit within Cost of sales in the
Group Income Statement, when it became probable that the
asset would be recoverable, in accordance with the 2019 IFRIC
Agenda decision on Deposits relating to taxes other than
income taxes. Given the early stage of discussions there is not
yet sufficient evidence to support the probability of recovery
and therefore no asset has been recorded at the balance
sheet date.
The Committee discussed the complexity around the
interpretation of the Electricity Generator Levy legislation
and understood the process the Group had been through to
gain clarity on the matter and the external advice sought.
It also held discussions with the external auditors to confirm
their view and the appropriateness of the accounting treatment
adopted.
The Committee concluded that the judgement reached was
appropriate and concurred with the accounting approach.
The Committee also noted the disclosures included in the
financial statements to highlight the key source of estimation
uncertainty in this area.
Further detail is provided in note 3 on pages 176 to 182.
Centrica plc Annual Report and Accounts 2024
105
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Determination of forecast commodity prices and
their use in valuing long-lived assets and derivative
contracts
Commodity price forecasts are a key assumption in the
valuation of the Group’s long-lived assets and derivative
contracts.
For short-term commodity prices over the next four years,
observable liquid market prices (as at 31 December 2024)
continue to be taken as the best view of expected price. For
the longer-term period thereafter, the Group has refined its
commodity price estimation methodology, following the
announcement of its intention to invest between £600-800m in
capital expenditure annually over the next few years, including
in assets with long-term commodity price exposure. It was
considered important to derive a Centrica view of long-term
prices to help assess both asset values and inform impairment
assessments rather than continue to utilise a ‘P50’ average of
third-party comparator median curves, which was used in the
prior year.
An internal review was conducted to map Centrica’s beliefs
around the evolution of each commodity market to specific,
reputable, third-party curve providers. This review evolved
during the year and resulted in a more refined view using a
balance of curve providers more aligned to our long-term view.
Accordingly these long-term price assumptions are expected
to help facilitate a better estimation of the recoverable amount
of long-lived assets and are deemed to align to pricing that a
reasonable market participant would use. The Group has used
these price curves in its asset impairment testing and contract
valuations.
The year-end price assumptions for NBP and Baseload power
were benchmarked back to those that would have been
calculated under the previous ‘P50’ methodology and were not
significantly different.
The Group has also obtained commodity price forecasts which
are intended to be consistent with net zero by 2050. These are
lower than the curves the Group has adopted for both NBP and
baseload power. The Group has shown the impact of such price
forecasts on the gas assets and Nuclear assets in note 7 of the
financial statements.
The Committee understood and challenged the rationale for
changing the approach to deriving long-term commodity price
assumptions.
The Committee noted the increase in short-term NBP prices during
2024 with a reduction in Baseload power prices and that the longer-
term price forecasts were fairly consistent when compared with
prior year for both commodities. The Committee understood that
these outputs impact many of the other judgements listed below.
Sensitivities of the asset impairment tests to changes in price
forecasts are provided in note 7 on page 192 to 196.
The Committee noted the use of a price curve intended to be
consistent with net zero by 2050 in the impairment sensitivities and
believed the output provided useful information to readers of the
accounts.
The Committee also noted the continued inclusion of a Climate
Change accounting considerations section in note 3.
Strategic Report Governance Financial Statements Other Information
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Energy derivatives – classification and valuation
The Group enters into numerous commodity contracts in its
ordinary course of business. This can be to procure load for
its downstream business, sell output from its upstream/
infrastructure assets, to trade around its other commodity
exposures or to make money from proprietary activities.
On entering into these contracts, the business assesses each
of the individual trades and classifies them as either:
(i) Out of scope of IFRS 9:
For ‘own use’ contracts (i.e. customer contracts, contracts to
take delivery and meet customer demand or sell upstream/
infrastructure output) and contracts that cannot be net settled.
(ii) In scope of IFRS 9:
Contracts for commodities which have the ability to be and
practice of being net settled.
Energy contracts outside the scope of IFRS 9 are accruals
accounted. Those contracts considered to be within the scope
of IFRS 9 are treated as derivatives and are marked-to-market
(fair valued). If the derivatives are for proprietary energy
trading, they are recorded in the business performance column
of the Group Income Statement. If they are entered into to
protect and optimise the value of underlying assets/ contracts
or to meet the future downstream demand needs, they are
recorded as certain re-measurements.
The fair value of derivatives is estimated by reference to
published liquid price quotations for the relevant commodity.
Where the derivative extends into illiquid periods, the valuation
typically uses the new Centrica long-term view price curves
(see ‘Determination of long-term commodity prices and their
use in valuing long-lived assets and derivatives’).
Judgement is required in all aspects of both the classifications
and valuations.
One of the Group’s critical accounting judgements is that its
LNG contracts are outside the scope of IFRS 9 because they
are entered into for its own purchase and sale requirements
(‘own use’).
The Committee noted that the Group’s policy and methodologies
in classifying and valuing energy derivatives were unchanged from
previous periods.
The Committee also reviewed and understood the breakdown by
business of the movement in IFRS 9 energy derivative valuations in
the Group Income Statement.
They reflected on the fact certain re-measurement derivative net
gain of c.£400m was predominantly as a result of the unwinding of
prior year out-of-the money positions and that the net movement
on unrealised trades was small in comparison to the unwind.
The Committee noted that, as expected and referenced in
Committee's prior year report, the 2024 certain re-measurement
unwind amounts were at significantly lower levels than seen in 2022
and 2023 following the extremely volatile prices in 2022.
Further detail is provided in notes 2 and 7 on pages 174 to 175
and 192 to 196.
The Committee noted and reaffirmed its agreement with the
specific judgement regarding LNG contract own-use
classifications.
Centrica plc Annual Report and Accounts 2024
107
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Onerous energy supply and LNG contracts provision
The Group’s residential and business energy supply contracts
and its LNG procurement contracts are accruals accounted.
The Group operates and manages a hedging strategy to
ensure that the future costs of supplying the customer supply
portfolios are appropriately managed and that the value of the
LNG cargoes are protected.
These hedges are generally in the scope of IFRS 9 and are
measured at fair value (see ‘Energy derivatives – classification
and valuation’ above). They are recognised as certain re-
measurements in the Group Income Statement separately
and are subsequently reflected in business performance
when realised, which is generally when the underlying supply
transaction or LNG cargo impacts profit or loss.
At the end of 2024, the hedges associated with the LNG
portfolio were in-the-money. Because of this hedge value
recognition, the assessment of whether the LNG contracts
were onerous had to be calculated based on the cost of
taking delivery of these cargoes and the expected revenues,
including the reversal of previous mark-to-market gains.
Accordingly, the future costs to procure the LNG cargoes
would exceed the revenues derived including mark-to-market
reversals because the associated hedging gains had already
been recorded in the Income Statement. The Group therefore
recognised an onerous LNG contract provision of £82m at the
year-end.
Note that the LNG portfolio is hedged on a portfolio basis and is
forecast to remain economically profitable in 2025 and beyond.
At the end of 2024, no onerous provision was required for the
residential or business supply contracts because although
related hedges were in-the-money, the costs to fulfil the
customer contracts including mark-to-market reversals still did
not exceed the charges expected to be recovered from the
customer. Therefore no onerous supply contract provision was
required.
The movement in these onerous provisions have been reflected
as a certain re-measurement in the Income Statement because
these contracts are economically related to the fair value
movements on the hedges. Cumulatively, over time, these
postings will net to £nil, as the underlying contracts realise
and are reflected in the business performance column.
The Committee reviewed the change in the underlying
derivative hedge values of the different books and considered
the assessment of the onerous contract provisions.
The Committee discussed and understood the rationale
for including the LNG cargo onerous provisions within certain
re-measurements and noted the similarities to the previous
onerous energy supply contract provisions.
The Committee noted that no onerous energy supply contract
was required but observed that it may be required in 2025 if the
related derivative hedges moved further into the money but
this is dependent on energy prices and the hedged position.
The Committee noted the disclosures included in the financial
statements to highlight this area.
The Committee held discussions with the external auditors
to confirm the appropriateness of the accounting treatment
and to understand their views of the assumptions used.
Further detail is provided in notes 2, 3 and 7 on pages 174 to 182
and 192 to 196.
Strategic Report Governance Financial Statements Other Information
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Impairment of long-lived assets
The Group makes judgements and estimates in considering
whether the carrying amounts of its assets are recoverable:
Upstream (Power assets and Gas production assets)
For Upstream/infrastructure assets, discounted cash flows are
prepared from projected production profiles of each field or
power asset, taking into account forecast future commodity
prices, to assess their recoverable amount. When deriving
forecast cash flows, market prices are used for the period when
a commodity is liquid. For the longer-term illiquid period, the
Centrica view of long-term prices is used (see ‘Determination
of forecast commodity prices and their use in valuing long-lived
assets and derivatives’, above).
Judgement is also required around production volumes. For
Nuclear, individual station information and recent availability
data is factored in to the overall asset valuation. The expected
operating life of Sizewell has continued to be reflected to 2055
in the modelling, beyond the original design life. During 2024,
the expected closure dates for Heysham 1 and Hartlepool
stations were extended by one years to March 2027, and for
Heysham 2 and Torness by two years to March 2030. For Gas
production assets, each field has specific reservoir and field
characteristics and is modelled independently.
Consistent with previous years, taxes and levies are also
included in the discounted cash flow modelling. For Nuclear,
the Electricity Generator Levy (see ‘Electricity Generator Levy’
above) applies a tax rate of 45% on revenues exceeding a
benchmark price of £75/MWh (adjusted for inflation) and
applies from 1 January 2023 to 31 March 2028. For Gas assets,
the Energy Profits Levy applies a rate of 38% (bringing the
headline rate on Gas asset profits to 78%) and has a sunset date
of 31 March 2030.
Predominantly as a result of the movement in both actual and
forecast power prices, offset by station life extensions, an
exceptional impairment of £48m has been booked in relation
to the Nuclear investment.
For CBS power assets, an exceptional impairment of £27m
was recorded, predominantly related to battery and solar
assets, following a reduction in forecast commodity prices.
All gas production fields retained impairment headroom.
The Committee challenged management on the key inputs to the
impairment models including price, outage rates, assumed lives,
tax and discount rates, and discussed with the external auditors.
Ultimately, the Committee were comfortable with the conclusions
reached.
The Committee reviewed the Nuclear investment impairment and
noted that the decrease in commodity prices had more than offset
the benefit of life extensions at Heysham 1 & 2, Hartlepool and
Torness.
It also considered the gas production fields and understood why
impairment headroom was maintained following an increase in
near-term NBP prices.
The Committee noted that price sensitivity disclosures have been
included in the financial statements.
Further detail on impairments and the assumptions used in
determining the recoverable amounts is provided in notes 7 and S2
on pages 192 to 196 and 231 to 243.
Centrica plc Annual Report and Accounts 2024
109
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Credit provisions for trade and other receivables
The IFRS 9 impairment model requires credit provisions (‘bad debt’)
for trade and other receivables to be based on an expected credit
loss model, as opposed to an incurred loss basis. The economic
effects of high interest rates and inflationary pressures on
household income, with energy prices increasing in the second half
of the year, will likely impact the ability of the Group’s customers to
pay amounts due. Accordingly, there is significant judgement
around the levels of forecast bad debt and the provisioning
required at the year-end.
The Group’s residential and business energy supply customers
account for the majority of the Group’s credit exposure (with
balances associated with our trading business generally received
within 30 days). Expected default rates in these areas are
calculated initially on a matrix basis by considering recent historical
loss experience, the nature of the customer, payment method
selected and, where relevant, the sector in which they operate.
This model does not always adequately capture scenarios where
there is a delayed impact on customer payments, such as forward-
looking macroeconomic challenges (e.g. higher interest rates).
Accordingly, management includes a macroeconomic provision
adjustment to mitigate this issue and this amounted to £49m
(2023: £175m) at the year-end. The year-on-year reduction in this
adjustment was as a result of the initial matrix model starting to
more accurately reflect some of these forward-looking challenges.
For UK Downstream energy supply, the bad debt charge as a
percentage of revenue decreased to 2.6% (2023: 2.9%). The
closing bad debt provision moved to 38% (2023: 34%) of UK
energy supply gross receivables.
Due to the significant estimation uncertainty in this area,
management continues to provide detailed analysis and
sensitivities in note 17 to the financial statements.
The Committee noted management’s groupings of receivables
by the key factors affecting recoverability (e.g. payment
method, nature of customers) and considered the levels of
provisions booked against each grouping, at the year-end.
The Committee discussed the approach with the external
auditors.
The Committee was comfortable with the provisions booked,
including the reduction in the macroeconomic provisions.
The Committee noted the significant estimation uncertainty in
this area and the continued enhanced disclosures in notes 3 and
17, setting out the judgemental nature of the provisioning and
the sensitivity analysis to allow users of the accounts to model
different outcome scenarios.
Classification and presentation of exceptional items
and certain re-measurements
The Group reflects its underlying financial results in the
business performance column of the Group Income Statement.
To be able to provide this in a clear and consistent presentation,
the effects of certain re-measurements of financial instruments
and onerous supply/LNG contract provisions, and exceptional
items are reported separately in a different column in the Group
Income Statement.
The classification of items as exceptional and specific trades as
certain re-measurements (see ‘Onerous supply and LNG
contracts provision’ and ‘Energy Derivatives – classification and
valuation’ sections above) are subject to defined Group
policies. These policies are reviewed annually by management.
At the year-end, pre-tax exceptional items included the Nuclear
and CBS asset impairments (noted above in ‘Impairment of
long-lived assets’). Also included are legacy contract costs of
£53m associated with business activity that ceased a number
of years ago and debt repurchase costs of £68m.
Certain re-measurements totalled an overall c.£300m gain on a
pre-tax basis – £421m gain from derivatives and £142m loss
from the onerous supply and LNG contracts provision
movement.
The Committee noted the inclusion of onerous LNG contract
provision movements within certain re-measurements and
understood the rationale. They noted that the policy on certain
re-measurements and exceptional items remains broadly
unchanged from the prior year, other than this addition.
The Committee formally reviewed and approved the Group’s
policy on exceptional items during the year and used it to
help inform the appropriateness of the proposed classifications.
It challenged the items classified as exceptional items,
considering their size, nature and incidence and in the context
of the Group policy. The Committee concluded that separate
disclosure of these items as exceptional was appropriate in the
financial statements.
The Committee ultimately agreed that presenting certain
re-measurements and exceptional items separately continues
to allow underlying performance to be reflected on a consistent
and comparable basis through the use of the adjusted
alternative performance measures (e.g. adjusted operating
profit).
Further detail is provided in notes 2, 3 and 7 on pages 174 to 182
and 192 to 196.
Strategic Report Governance Financial Statements Other Information
Key judgements and financial reporting matters in 2024
Audit and Risk Committee reviews and conclusions
Energy supply revenue recognition
The Group’s revenue for energy supply activities includes an
estimate of energy supplied to customers between the date
of the last meter reading and full-year consumption. This is
estimated through the billing systems, using historical
consumption patterns, on a customer-by-customer basis,
taking into account weather patterns, load forecasts and the
differences between actual meter readings being returned and
system estimates. An assessment is also made of any factors
that are likely to materially affect the ultimate economic
benefits which will flow to the Group, including bill cancellation
and re-bill rates. To the extent that the economic benefits are
not expected to flow to the Group, revenue is not recognised.
At the year-end, unread energy income for the continuing
supply businesses was £2.7bn (2023: £3.0bn).
The Committee has reviewed the level of unread revenue and
unbilled accrual made during the year and discussed with
management and the external auditors.
More details on unread energy income are provided in note 3 on
pages 176 to 182 and on unbilled energy income in note 17 on
pages 208 to 214.
Pensions
The assets and liabilities, and the cost associated with providing
benefits under defined benefit schemes is determined
separately for each of the Group’s schemes. Judgement is
required in setting the key assumptions used for the actuarial
valuation which determines the ultimate cost of providing post-
employment benefits, especially given the length of the
Group’s expected liabilities. Judgement is also required in
valuing the unquoted assets in the plan asset portfolio, including
private equity and property interests that are typically subject
to valuation uncertainty. The valuation of these assets is based
on the latest asset manager views and other relevant
benchmarks.
The net Group pension liability position was £21m (2023:
£117m). The UK defined benefit schemes used a nominal
discount rate of 5.4% (2023: 4.6%) and inflation of 3.1%
(2023: 2.9%).
In February 2025, the full actuarial valuation of the UK defined
benefit pension schemes, as at 31 March 2024, was agreed
with the pension Trustees.
The Committee noted the key pension assumptions and
disclosures in the financial statements.
It noted that these assumptions were derived on a consistent
basis to previous periods.
The Committee recognised the role of the independent
actuary, who is consulted on the appropriateness of the
assumptions, and asset managers in the valuation of unquoted
assets. Discussions were also held with the external auditors.
The Committee were pleased that the triennial review had
been agreed with the Pension Trustees.
Further details on pensions are set out in note 22 on pages
218 to 222.
Fair, balanced and understandable
The Board is required to confirm that the Annual Report and
Financial Statements are fair, balanced and understandable. To
enable the Board to make this declaration, there is a year-end
review process to ensure that the Committee and the Board
have access to all relevant information, including management’s
papers on significant issues.
The Committee reviewed the key factors considered in
determining whether the Annual Report is fair, balanced and
understandable. The Committee and all Board members
received a draft of the Annual Report and Financial Statements
in sufficient time to review and challenge the disclosures
therein. In addition, the Committee took into consideration the
external auditors’ reviews of the consistency between the
reporting narrative of the Annual Report and the Financial
Statements.
Centrica plc Annual Report and Accounts 2024
111
Nominations Committee
On behalf of the Board, I am pleased to present the Nominations
Committee (the Committee) report for the year 2024. This
report outlines the key activities and focus areas of the
Committee during the year, reflecting our commitment to
maintaining a robust and effective Board and governance
framework that can lead Centrica plc with integrity and ensure
we are able to fulfil our strategic vision.
Committee overview
The Committee is responsible for oversight of skills composition
and succession planning – both at a Board and key executive
management level – to ensure that the Company is able to
deliver its objectives. To support ongoing improvements in
Board effectiveness, the Committee’s remit also includes
oversight of Board induction, training and the effectiveness
review process.
Main activities during 2024
During the year, we focused on succession planning and
reviewing the skills and expertise of the Board, ensuring a
diverse and highly capable cohort equipped to navigate the
complexities of our industry.
The Committee held four meetings in 2024 which were chaired
by Scott Wheway, with the exception of those sessions
considering Chair succession. The Committee reviewed and
deliberated on critical topics including succession planning,
governance, Director training and Board effectiveness.
Based on the Directors' performance and their ongoing
contributions to the Company's long-term sustainable success,
the Committee recommended the re-election and election
of all the Directors at the 2024 AGM. The specific rationale for
these recommendations was detailed in the Notice of Meeting
for the AGM.
Board skills and training
In 2024, the Committee reviewed the Board’s skills and
expertise in light of the Group’s strategy and the evolving
external landscape. The Committee acknowledged the positive
impact of recent Board appointments. It is committed to
continuously assess the need for additional capabilities to
navigate the complexities of the energy sector and align with
strategic objectives, including the positioning of the Company
for growth.
During the year, with support from the General Counsel &
Company Secretary, the Board received training and updates
on industry-specific regulatory and compliance changes,
governance, diversity, equity and inclusion, and technology
and innovation.
Colleague engagement
The Committee reviewed the Board’s approach to colleague
engagement pursuant to the expectations of Provision 5 of the
UK Corporate Governance Code (UK Code). The Committee
supports the Board’s view that this is a collective responsibility
shared amongst the Directors of the Board and adopts a
collective approach to colleague engagement involving all
Directors and leveraging a combination of different types of
engagement. Read more on pages 81 and 98 to 99.
Succession planning and Board changes
Succession planning is an ongoing process, underscoring its
importance for Board effectiveness, and was a significant focus
for the Committee this year. The process for non-executives
receives ongoing attention to ensure timing and effective
transition strategies, with the view of the Board and its
capability needs requiring regular review.
This structured approach targets seamless leadership
transitions, fosters the development of a diverse succession
pipeline and upholds operational stability while ensuring the
Board is positioned to deliver long-term growth and innovation.
When necessary, external expertise is utilised to introduce
fresh perspectives and ensure a thorough search for potential
successors.
This year, the Committee proactively planned for the
succession of key roles, including the search for a new Chair
and subsequently, a new Senior Independent Director (SID).
My appointment as Chair led to the selection of Jo Harlow as our
new Senior Independent Non-Executive Director (see page 113
for further detail on the process followed).
The Executive Management team plays a key role in Centrica's
strategic planning process, the ongoing development of our
talent pipeline; fostering the culture and values required to
deliver on our strategy and delivery of the strategy itself.
In relation to executive succession planning, high-potential
candidates are identified and offered development
opportunities, including leadership training and mentorship
programmes. Additionally, the Committee supports initiatives
to enhance inclusivity within leadership roles, ensuring a diverse
and well-prepared talent pipeline for the future.
Diversity, Equity and Inclusion
The Committee remains steadfast in its commitment to
promoting Diversity, Equity and Inclusion (DE&I), both within
the Board and across the organisation. As set out in our Board
diversity policy, which can be found on our website at
centrica.com, we know that being inclusive of the diversity
we have in our business will give us a competitive advantage.
The Committee has set clear objectives for DE&I, which are
linked to the Company's overall strategy. These objectives
include representation of women and ethnic minorities on the
Board and in senior management positions, fostering an inclusive
culture in doing so. Read more about our Board and senior
leadership diversity on pages 59 and 91.
This focus ensures that our recruitment processes and
practices reflect these principles, driving positive change
and strengthening our organisational culture.
Strategic Report Governance Financial Statements Other Information
Committee effectiveness
The Committee reviews its terms of reference annually to
ensure they remain appropriate in light of legal, regulatory
and best practice changes. No changes were made to the
Committee’s terms of reference in the year under review
(available on centrica.com).
The effectiveness and performance of the Committee was
evaluated as part of the independent review conducted by
Ffion Hague from Independent Board Evaluation IBE and the
Committee was found to be performing effectively.
Further information on the Board Effectiveness review can
be found on pages 80 to 81.
Membership, meeting attendance and key focus
Committee members:
•Kevin O’Byrne (Chair)
•Carol Arrowsmith
•Philippe Boisseau
•Nathan Bostock
•CP Duggal
•Jo Harlow
•Heidi Mottram
•Amber Rudd
•Sue Whalley
Biographical details of the Committee Chair and members can
be found on pages 86 to 89. Meeting attendance can be found
on page 92.
Meeting attendees by invitation:
Group Chief Executive, Group General Counsel & Company
Secretary, Group Chief People Officer and Group Chief
Financial Officer.
Focus areas in 2024:
•Reviewing Board objectives for the year to ensure alignment
with strategic priorities;
•Board succession planning, particularly for the role of Chair,
and then subsequently, Senior Independent Director;
•Enhancing the diversity, equity and inclusion within the Board;
•Evaluating and improving the Board's effectiveness and
performance;
•Ensuring the Board's skills and expertise align with the
Company's strategic goals; and
•Reviewing and addressing the Board's training requirements.
Kevin O’Byrne
Chair of the Nominations Committee
19 February 2025
Centrica plc Annual Report and Accounts 2024
113
Chair succession
In 2024, the Committee prioritised succession
planning, recognising the termination of Chair, Scott
Wheway’s tenure in June 2025. The search process
for a new Chair was initiated in a timely and
structured manner.
Search process:
Given that the Senior Independent Director was a
candidate, the search was led by Amber Rudd and
supported by the Lygon Group. It involved both
internal and external candidates. The process
adhered to UK Code provisions 17, 20 and 23, which
require open advertising or the use of an external
search consultancy for all appointments. The
Committee ensured that there were no connections
between the candidates and the Company or
individual Directors, promoting transparency and
fairness.
Candidate evaluation:
The Committee evaluated candidates based on key
criteria which included:
•Ability to Navigate Complexity;
•Regulatory and Policy Expertise;
•Role Commitment;
•Board Leadership Experience;
•Industry Knowledge; and
•Commitment to Diversity.
After a comprehensive review, including potential
external candidates, the Company’s needs and
stakeholder interests, Kevin O’Byrne emerged as the
preferred candidate for the Chair role. The
Committee made this recommendation to the Board,
which supported the appointment.
Subsequent appointments:
Following Kevin O’Byrne’s selection, the Committee,
in consultation with the Board, appointed Jo Harlow
as the Senior Independent Director to succeed Kevin
in his previous role. This decision was part of the
Committee’s ongoing succession planning efforts,
ensuring continuity and leveraging Jo’s extensive
experience as a non-executive director in other
listed companies.
Conclusion
The Committee’s structured and transparent
approach to succession planning facilitated the
smooth transition of Board leadership. The Board
was able to appoint both a suitable Chair and Senior
Independent Director from the incumbent Board
colleagues. This highlights the importance of a well
designed Board succession plan and continued focus
on refreshing and ensuring emerging Board talent.
Safety, Environment and
Sustainability Committee
As the Chair of the Safety, Environment and Sustainability
Committee (SESC), I am pleased to present our report for the
year ended 31 December 2024 which describes our challenges
and solutions, such as safety events and complex
environmental, social and governance (ESG) reporting
requirements and the actions taken, our achievements in 2024,
including significant improvements in health and safety, strong
progress and enhanced objectives against our People & Planet
Plan, and renewed strategy for responsible procurement. We
also continued to focus on the key areas of our remit. This
included human rights and modern slavery risks in our
operations, the Group’s community contributions and tracking
the Group’s reputation including how our brands are viewed by
our key stakeholders.
Committee overview
The Committee’s role and responsibilities on behalf of the Board
are to review and monitor the culture, practices, risks and
performance of Centrica with respect to health and safety,
climate, environment and broader responsible business matters.
This is achieved through a rigorous review of performance data,
and the Company’s goals and relevant initiatives in these areas.
As part of its focus, the Committee also provides input to, and
review of, the Company’s current annual climate reporting
disclosure requirements, as well as keeping an eye on
developments to ensure we align with expectations of our
stakeholders in these critical areas.
Main activities during 2024
Health and safety
The Committee’s standing health and safety agenda items
focused on relevant performance metrics, assurance activity,
and the approach to Health, Safety and Environment (HSE) risk
management in specific business unit reviews. During these
discussions, taking into account the needs of customers and
colleagues, the Committee considered risk identification and
appropriate HSE controls and processes. At each meeting, the
Committee invited management to discuss occupational and
process safety reviews, outcomes and improvements derived
from targeted interventions and future action plans.
The Committee focused on unplanned hydrocarbon releases,
gas and electrical safety, contractor management and road
safety and monitored action being taken to address these areas.
The Committee noted significant improvements across the
majority of key Group HSE metrics, attributed to targeted
intervention and safety improvement plans such as ‘Time Out
for Safety’ to reinforce a proactive culture of compliance and
risk management and the engagement of third-party specialists
to drive behavioural change and improve workload
management.
Environment
The Committee provides oversight of the Company’s continued
commitment to, and role in, the drive to net zero. During 2024,
the Committee reviewed progress made against the
Company’s People & Planet Plan and reviewed and
recommended the updated Climate Transition Plan, which will
be put to Shareholders for an advisory vote at the next AGM.
The updated plan includes new bolder targets for Centrica’s
emissions and opportunities for continual improvement. The
Committee considered the implications of recent strategic
investment decisions against Climate Transition Plan targets
and ambitions and the Company’s strategic framework. You can
read more on pages 73 to 76.
Strategic Report Governance Financial Statements Other Information
Spirit Energy business
During the year, Spirit engaged third-party
specialist consultants to focus on behaviours in
driving effective management of HSE risks within
the Company. These specialists were brought in to
help address safety events and improve the overall
safety culture. The specialists focused on several
key areas:
Senior Leadership Visibility
Ensuring that senior leaders were frequently
visible and actively involved in promoting
safety culture.
Setting Measures and Milestones
Establishing agreed-upon measures and
milestones to ensure accountability and track
progress.
Embedding Programmes
Internally embedding programmes designed
by the specialists to reinforce a proactive
culture of compliance and risk management,
as opposed to a reactive one.
Process Safety Barriers
Strengthening and further embedding the
current Process Safety Barriers frameworks.
Workload Management
Improving workload management through
better work planning and execution.
These efforts were part of an overarching
improvement plan aimed at achieving sustainable
incident-free operations and addressing the root
causes of safety incidents.
An additional key focus area for the Committee in 2024 was
reviewing emerging voluntary and mandatory climate reporting
requirements, both in the UK and in the EU, The Committee
considered the application of these requirements to the
Company, taking into account changing stakeholder
expectations, and assessing how the Company would ensure
compliance and governance with impending reporting
requirements of the Corporate Sustainability Reporting
Directive and EU Taxonomy.
Responsible business
Throughout the year, the Committee considered the Company’s
responsible sourcing approach focusing on elements of the supply
chain that carry potentially higher inherent risk of inappropriate
working practices due to the associated jurisdiction and/or nature of
the product, in particular in relation to issues such as the manufacture
of solar panels, batteries or garments. Part of the Committee’s focus
was on establishing the effectiveness of measures to mitigate
this risk.
The Committee reviewed the 2024 strategy for visits to supplier
sites and the results of supplier audits. During discussions, the
Committee regularly assessed human rights and the risk of
modern slavery occurring in Centrica’s operations, taking into
account the increasing expectations of stakeholders and enhanced
modern slavery disclosures. The Committee noted the progress
in implementing the 2024 Responsible Sourcing Audit Plan and
implementing ESG requirements into Responsible Procurement, and
oversaw the Responsible Procurement Ethical Audit Plan for 2025.
The Committee considered the findings of Centrica’s UK & Ireland
reputation survey, which will underpin the 2025 corporate
communications plan and stakeholder engagement strategy. This
annual survey also provides the Committee with invaluable insights
that help to focus management activities.
The Committee supports the Group’s goal to provide support to
customers and communities through charitable partnerships, funds
and support packages, and volunteering opportunities where the
Company outperformed against the targeted days, and continues
to focus on due diligence processes in these areas.
Social and Governance
In addition to the above areas of focus, the Committee ensured
compliance with regulations and governance standards
including reviewing relevant disclosures within the Committee’s
remit reported in the Annual Report and Accounts, such as
the Task Force on Climate-related Financial Disclosures
and Climate-related Financial Disclosure regulations. From a
social perspective in ESG, the Committee also reviewed
disclosures that reflect our commitment to responsible business
practices, including the Modern Slavery Statement, which can
be found on our website. Additionally, the Committee
considered broader workforce and community-related matters,
ensuring alignment with our DE&I strategy, employee well-
being initiatives, and social impact commitments.
Committee effectiveness
The Committee reviews its terms of reference annually to
ensure that they accurately reflect the role carried out by the
Committee, taking into account any new internal and external
developments and responsibilities. The Committee considers
that it has continued to discharge its oversight role effectively
in an area where expectations and requirements are constantly
evolving with insightful and regular engagement and support
from management. In the year under review, no material
changes were made to the Committee’s terms of reference
which are available on our website.
The effectiveness and performance of the Committee was
evaluated as part of the independent review conducted
by Ffion Hague from Independent Board Evaluation.
The Committee was found to be performing effectively.
The outcome from the evaluation will be used to improve
performance going forward.
Further information on the Board Effectiveness review can
be found on pages 80 to 81.
Conclusion
I would like to acknowledge the contributions of our Committee
members and management. Their dedication and support have
been instrumental in our accomplishments and the progress
made this year. In 2025, we will aim to further enhance health
and safety measures, advance our net zero initiatives and
strengthen our responsible sourcing practices.
Thank you for your continued support.
Membership, meeting attendance and key focus
Committee members:
•Heidi Mottram (Chair)
•Philippe Boisseau
•Nathan Bostock
•Amber Rudd
•Scott Wheway (until 15 December 2024)
Biographical details of the Committee Chair and members can
be found on pages 86 to 89. Meeting attendance can be found
on page 92.
Meeting attendees by invitation:
All other Non-Executive Directors, Group Chief Executive,
Group General Counsel & Company Secretary, Group Chief
People Officer, Group HSE Director, Group Head of
Environment, Chief Procurement Officer, Head of Business
Ethics and Compliance and Head of Secretariat.
Focus areas in 2024:
•Health and safety risks;
•Environment;
•Emerging climate reporting requirements and climate matters;
•Responsible sourcing including human rights and modern
slavery risk;
•Societal contribution; and
•Reputation.
Heidi Mottram
Chair of the Safety, Environment and Sustainability Committee
19 February 2025
Centrica plc Annual Report and Accounts 2024
115
Remuneration Report
On behalf of the Board, I am pleased to
present the Remuneration Report for the
year ended 31 December 2024.
Committee Overview
The role of the Committee is to ensure that the Executive
Directors, Centrica Leadership Team and the Chair of the Board
are appropriately rewarded through making recommendations
regarding the Remuneration Policy and framework. The
Committee monitors and reviews the effectiveness of the
Remuneration Policy and considers the impact and compatibility
with remuneration policies across the wider workforce.
Main activities in 2024
During the year, the Committee met five times. Some of the key
focus areas for discussion included the following:
•Remuneration Policy review and shareholder consultations.
•Centrica Leadership Team salary reviews.
•Recruitment of new senior executives.
•Leaving arrangements for former senior executives.
•Gender and ethnicity pay gap report.
•Review of pay and benefits across the wider workforce.
•Review and approve 2024 financial and business targets.
•Review Centrica Leadership Team shareholdings.
•Review and approve Director expenses.
This is a longer letter than I would usually write as there are a
number of important decisions and proposals that need to be
fully explained to our shareholders and other stakeholders.
This letter provides the context that informed the Remuneration
Committee’s decision-making during the year and the
remuneration outcomes in respect of 2024. It also summarises
the changes to remuneration we are proposing to make in 2025.
We will be asking you, our shareholders, to vote on four
remuneration resolutions at the AGM in 2025:
•Our Directors’ Annual Remuneration Report, which sets out
how we implemented our Remuneration Policy in 2024, and the
remuneration paid to Directors.
•A new Remuneration Policy, which we are required to submit
to shareholders at least every three years for approval.
This outlines the remuneration framework that will apply
to Directors from the date of shareholder approval.
•Amendments to the Long Term Incentive Plan Rules, which is
an umbrella plan that governs how we award Restricted Share
Plan (RSP) awards and deferred bonus share awards under
the Annual Incentive Plan (AIP). The amendments reflect the
proposed changes in the Remuneration Policy in 2025 and
changes in corporate governance best practice guidelines
since the rules were last approved by shareholders.
•New all-employee Sharesave Plan rules, which will replace
existing rules that are due to expire in 2025. The Sharesave Plan
is a tax-efficient savings-related share scheme where
employees can save to buy Centrica shares at a fixed price.
I will start by providing a summary of the performance and
remuneration outcomes for 2024 before moving on to talk
about the proposed Remuneration Policy changes for 2025.
Performance and remuneration outcomes for 2024
In deciding the remuneration outcomes for 2024, the Remuneration
Committee tried to balance the views and experiences of all our
stakeholders with our responsibility to attract and retain high-
performing executives to lead a complex organisation like Centrica.
The remuneration principles that we apply to Executive Directors
are also consistent with the remuneration principles we apply to the
wider workforce, see page 132 for further details on how we reward
the wider workforce.
When Chris O’Shea set out Centrica’s new business strategy on
23 July 2023, he indicated to shareholders that our goal is to deliver
sustainable Adjusted Operating Profit (AOP) of between £600m to
£1,000m per annum from 1 January 2026 onwards from our Retail
and Optimisation businesses, with the annual mix dependent on
market conditions. In addition, we expect our existing Infrastructure
assets to continue to contribute material cash flows for much of the
rest of this decade with AOP in the range of £250m to £400m
subject to asset performance and commodity prices. Over time,
the cash flows from our current infrastructure assets will be
replaced by a contribution from assets we are developing as part
of our green-focused growth and investment strategy.
2024 was a strong year and I am delighted to say that the
Company hit this guidance two years earlier than planned and
for the year ended 31 December 2024 we delivered AOP from
the Retail and Optimisation businesses of £808m. This strong
financial performance was achieved in a more normal
energy price trading environment. Financial performance
was also underpinned by improvements in customer service.
The performance of our Infrastructure businesses was more
subdued compared to the previous two years, but this was in
line with our expectations given the normalisation of energy
prices during the year.
Each of our businesses complements, de-risks and adds value
to at least one other business. Our performance in 2024
demonstrates that our business model is resilient in different
market conditions, and we are well placed to benefit from the
transition to net zero.
Strategic Report Governance Financial Statements Other Information
Annual Incentive Plan (AIP)
AIP payments for Executive Directors for 2024 were based on
EPS (37.5%), a balanced scorecard of financial and operational
measures (37.5%), and individual performance against strategic
objectives (25%).
In 2024, the Company delivered strong earnings in a more
normal energy price trading environment, achieving an EPS of
19.0p. This beat the maximum level set at the start of the year.
Group AOP was £1,552m, which was significantly above target.
The Company hit our AOP guidance for Retail and Optimisation
businesses two years earlier than planned with an AOP of
£808m, which is in the middle of the £600m to £1,000m range.
We delivered £989m Free Cash Flow and converted close to
100% of our EBITDA into operating cash flow, demonstrating
strong working capital management. The pace of capital
investment was slower than planned but this reflects our capital
discipline to only invest in the right projects at the right return.
Net cash closed at £2,858m, which flows from the stronger Free
Cash Flow.
Performance against the majority of the customer and
operational measures in the balanced scorecard was at or
slightly below target. We were particularly pleased to see an
improvement in the customer service metrics, including a
reduction in complaints in our Services & Solutions business and
British Gas Energy.
We continued to modernise and roll-out new technology
systems to enable a better customer service at a lower cost,
including the migration of 99% of our credit customer base in
British Gas Residential Energy to our new ENSEK platform.
During the year, British Gas Residential Energy was externally
commended as Best Overall Improvement by Uswitch. We also
achieved a Trustpilot Rating of “Great” with a score of 4.2 out of
a maximum of 5, which is up 0.3 versus last year. Improvements
in our customer measures confirm rising customer confidence in
our brands and services, which we are working hard to build on.
Customer retention in British Gas Residential Energy improved
during 2024 and while we were slightly below the performance
target for the total unique number of customers in the year,
customer numbers were broadly flat compared to the prior year.
The Centrica Leadership Team are confident that the progress
being made on customer service will help drive an increase in
customer numbers and market share in the future.
In the Services & Solutions business, we continue to see
improvements in customer service across many areas.
Customer journey NPS has improved compared to 2023,
and customer complaints are down to 6.6% compared
to 8.5% in 2023.
The order intake in our Business Energy Supply was below
target due to the loss of several large contracts principally due
to the customer’s financial status changing during the year.
However, performance was slightly ahead of the prior year.
We continued to make good progress on our People goals;
colleague engagement increased significantly from 7.7 to 8.1,
which now exceeds the upper quartile benchmark for our
industry. This is a notable achievement given that four years ago
colleague engagement was at an all-time low.
In terms of our Planet goals, Centrica’s carbon emissions were
18% lower than baseline and we are on target to be a net zero
business by 2045. Our customer emissions, the zero-carbon
content of UK electricity sales, decreased by 6% compared to
the baseline, which puts us slightly behind our target of helping
customers be net zero by 2050.
During 2024, the Board approved a new Climate Transition
Plan and Centrica has brought forward its target to become a
net zero business to 2040, five years ahead of the 2045 timeline
set by the original plan and ten years ahead of the widely
accepted point at which global society needs to reach net zero.
In addition to this ambitious corporate target for becoming net
zero, Centrica has maintained its commitment to get customers
to net zero emissions by 2050.
The Remuneration Committee considered performance against
the EPS targets and the balanced scorecard in the round and
determined that 160% of target (or 80% of maximum) for this
part of the AIP had been achieved.
Details on performance against each executive’s individual
objectives can be found on page 129. Chris O’Shea achieved
an individual performance outturn of 170% of target (or 85% of
maximum) and Russell O’Brien achieved 170% of target (or 85%
of maximum) for this element of the AIP.
After combining the outturn for EPS, the balanced scorecard,
and individual performance, the Committee awarded a total AIP
as summarised in the chart below:
Restricted Share Plan (RSP)
Long-term RSP awards were granted on 23 June 2022 to Chris
O’Shea and Kate Ringrose, our former Chief Financial Officer.
The maximum award granted was 150% of salary in Centrica
shares for Chris O’Shea and 125% of salary for Kate Ringrose.
The shares vest on 23 June 2025 and must be held for a further
two years before they can be sold. There are no performance
targets on the RSP awards, but the awards were subject to a
performance underpin, which was assessed over a three-year
performance period from 1 January 2022 to 31 December 2024.
In assessing the performance underpin, the Remuneration
Committee considered the Company’s overall performance,
including financial and non-financial performance as well as any
material risks or regulatory failures. At the time of writing, no
reductions have been applied.
Centrica plc Annual Report and Accounts 2024
117
l AIP earned (% of maximum) l Maximum opportunity
*Half the AIP earned is paid in cash and half is deferred into shares for a further three years.
81% of max
81% of max
CEO
CFO
163% of salary
(£1,389k)
200% of salary
(£1,710k)
122% of salary
(£719k)
150% of salary
(£885k)
The table below shows the value of the RSP awards that will
vest including any share price growth based on the share price
as of 31 December 2024. Approximately 36% of the total value
of the RSP that will vest is due to share price growth. This total
value including share price growth is shown in the single figure
of total remuneration shown on page 126.
Name
Maximum
RSP award
granted
(% salary)
Actual RSP
award vested
(% salary)
Value of RSP
award vesting
excluding share
price growth
Value of RSP
due to share
price growth as
at 31 December
2024(2)
Total value
of the RSP
vesting
including
share price
growth
Chris O’Shea
150%
150%
£1,279,294
£706,261
£1,985,555
Kate Ringrose
(former CFO)(1)
125%
73%
£360,666
£199,113
£559,779
(1) Kate Ringrose’s employment ceased on 1 October 2023. In accordance with her leaving
arrangements, Kate’s RSP award was reduced to reflect time served.
(2) Based on share price of 123.59 pence being the three month average share price up to
31 December 2024.
Remuneration changes in 2025
Our current Remuneration Policy was last approved by
shareholders in 2022. We must submit our Remuneration
Policy to shareholders for approval at least every three years.
Therefore, we will submit a new Remuneration Policy for
approval at the AGM in May 2025.
During the year, the Remuneration Committee conducted a
comprehensive review of the Remuneration Policy and
consulted extensively on changes to the Policy with over
thirty of our largest institutional shareholders representing
approximately 50% of our share register and with the
shareholder proxy voting agencies. The Committee has
concluded the current Policy remains broadly fit for purpose
in that we provide Executive Directors with a base salary,
an annual bonus (part of which is deferred into shares) and
long-term restricted share awards, together with a defined
contribution pension and core benefits including private
healthcare, which are provided to all employees.
The Committee believes our current remuneration structure, in
particular the RSP, remains broadly appropriate because it is
simpler than hybrid long-term incentives (i.e. a combination of
conventional LTIPs and RSPs) and the potential pay-outs from
the RSP are far less variable than conventional LTIPs. We believe
this is more appropriate given the regulatory environment within
which Centrica operates where some stakeholders such as
customers and regulators expect a narrower range of
acceptable performance outcomes than in many other
companies. RSPs also incentivise executives to invest in the
ongoing long-term success of the business, rather than taking
decisions based on a three-year performance target cycles.
As part of the Policy review, the Committee concluded that the
current Policy for Executive Directors continued to adhere to our
reward principles with the exception of market competitiveness.
We were conscious that the decisions the Committee made over
the last four years to limit executive pay increases, and Chris
O’Shea’s personal decision to forgo increases during the COVID-19
and the cost of living crisis, have meant that Executive Director
remuneration has fallen behind competitive market rates.
Our current levels of Executive Director remuneration also do not
fairly reflect the performance of the Company and the executives
since their appointment. In particular, the Group Chief Executive’s
salary and total remuneration has fallen significantly behind the
market over the last four years since he was appointed. Ordinarily,
and in keeping with Centrica’s approach for the wider workforce,
the Remuneration Committee would have improved the
competitiveness of the CEO’s pay through phased increases
following his appointment (subject to performance and
development in the role). However, while the Company’s
performance and value have improved significantly under Chris’
leadership, external events such as the COVID-19 pandemic and the
cost of living crisis, meant that the Committee did not think it was
appropriate to close the competitive gap over this volatile and
uncertain period. Over this period, the Committee also exercised
downward discretion to the formulaic outturns of incentives to
ensure the resulting payouts for executives fairly reflected
Centrica’s overall performance and the prevailing circumstances,
and we increased performance targets when market conditions
were materially more favourable than predicted.
One of the consequences of exercising restraint over this period
is that we have not reduced the gap between Chris O’Shea’s
pay and the competitive market, which we believe does not
align with Centrica’s reward principles and the fact that, under
Chris O’Shea’s leadership, Centrica is a stronger, healthier, and
more valuable business than it was four years ago.
In 2025, it is important that the Committee sets executive pay at a
level that reflects their contribution to the improvement in business
performance, the size and complexity of Centrica and the
executive’s role, and the scale and scope of the opportunities ahead
of us. In addition to retaining our executives, it is also important that
the Committee has a competitive remuneration structure in place
that is capable of attracting candidates in the future.
Changes for Chris O’Shea (Group Chief Executive)
When Chris O’Shea was appointed Group Chief Executive on 14
April 2020, the Company was ranked 154
th in the FTSE with a
market capitalisation of £1.9bn. At the time, Chris’ pay was
benchmarked against the top half of the FTSE 250, but we set
his pay lower to recognise that he was new in the role of Group
Chief Executive. The previous CEO’s salary was £957,500,
which was 24% higher than Chris’ starting salary of £775,000.
Our normal approach is to pay newly promoted executives
below the market median and increase their pay subject to their
development and personal performance in role.
Since his appointment, Chris O’Shea has led the Centrica
Leadership Team to materially strengthen Centrica and create
substantial value for stakeholders. On 31 December 2024,
Centrica was ranked 62nd in the FTSE with a market
capitalisation of £6.8bn and we have been a consistent
constituent of the FTSE 100 Index since 2022. The shareholder
value created since his appointment is made up of an increase
in market capitalisation of £4.9bn, share buybacks of £1bn and
dividends paid of over £0.4bn. In the second half of 2024, we
announced a further £0.5bn in share buy backs and increased
the interim dividend by 13%.
Strategic Report Governance Financial Statements Other Information
Higher and more volatile energy prices over the last couple
of years have benefitted companies in the energy industry.
However, as the share price chart shows, Centrica has
significantly outperformed comparators in the Euro Stoxx
Utilities index and the Euro Stoxx Oil & Gas Index since Chris
O’Shea was appointed CEO on 14 April 2020.
The value created by the Centrica Leadership Team has not
just been from volatile energy prices but from actions taken
to deliver material improvements in operational and financial
performance, combined with responsible risk management and
disciplined capital allocation. As the table below shows, Centrica
has delivered strong earnings since Chris became CEO even
in a more normal energy price environment.
Financial Year ending
31 December
Adjusted Basic EPS (pence)
2017
12.6
2018
11.2
2019
7.3
2020
(Chris O’Shea appointed CEO)
6.5
2021
4.1
2022
34.9
2023
33.4
2024
19.0
The value created has benefitted all stakeholders – our financial
strength has allowed us to support vulnerable customers
through the cost of living crisis by voluntarily committing £140m
to support those customers who most need it, we have
rewarded over 21,000 colleagues with nearly £7,286 per
colleague (excluding share price growth) of profit share
payments over the last three years, and we have taken actions
to improve the energy security of the countries we operate in.
Listed below is some of the key achievements over the last four
years since Chris O’Shea was appointed Group Chief Executive.
Operational performance has been significantly
improved across the group
- In our Retail businesses, customer numbers have been
stabilised, BG Energy Net Promoter Score (NPS) has
improved from 9 in 2020 to 29 in 2024 and Services &
Solutions Engineer NPS has improved from 66 to 73.
- Key technology systems have been replaced or modernised
to enable better customer service at lower cost, with a
simplified platform in Services & Solutions, including a new
planning & dispatch system, and 99% of BG Energy credit
customer base has migrated to our new IT platform.
- Centrica Energy has grown and now operates in over 25
countries, with third party assets under management
increasing from 14GW in 2020 to 17GW in 2024. The Centrica
Energy business delivered £2.2bn of cumulative Adjusted
Operating Profit during the volatile energy market conditions
in 2022-23.
- Overall, the improved operational performance has given us
confidence to lay out a £800m medium term sustainable
operating profit guidance across retail and optimisation.
Centrica plc Annual Report and Accounts 2024
119
ò Centrica
ò Euro Stoxx Utilities
ò Euro Stoxx Oil & Gas
price (rebased to Centrica share price (p))
14/04/2020
304%
52%
22%
31/12/2020
31/12/2021
31/12/2022
31/12/2023
31/12/2024
180
160
140
120
100
80
60
40
20
31/12/2019
31/12/2020
31/12/2021
31/12/2022
31/12/2023
Year-end
Salary (£'000)
TSR growth rebased to 100
1,500
1,000
500
0
l FTSE 100 median l Centrica CEO salary l Centrica TSR
200
150
100
50
0
ë
Ian Conn left
Centrica on
March 2020
í
Chris O'Shea
appointed CEO
14 April 2020
850
958
869
775
921
798
935
815
982
855
Organisational structure has been optimised
- Group reorganisation was completed between 2020-22. 4,000
roles were removed from the organisation, half were
management roles. Organisational layers reduced from 11 to 7.
- Services & Solutions employment contracts were
modernised and standardised to facilitate improved
customer service and long-term growth.
- Colleague engagement has materially improved to the top
quartile for the industry.
The portfolio has been simplified into Retail,
Optimisation and Infrastructure verticals and
a new strategy launched
- Direct Energy was sold for $3.6bn in 2021 vs $2.3bn analyst
consensus valuation.
- Spirit Norway was sold for £0.8bn, with £(0.8)bn
decommissioning also transferred.
- The Rough gas storage facility was re-opened, at a cost of
less than £10m, generating £653m operating profit between
2022 and 2024, and nuclear fleet life extended.
- Investing £600-£800m p.a. to replace Infrastructure
assets and pivot focus to contracted and regulated returns
in green-focused assets.
The financial outcomes have been strong, and
the balance sheet has been transformed
- Adjusted Operating Profit rose from £0.5bn in 2020 to £1.5bn
in 2024 driven by the strong operational performance,
portfolio changes and a supportive macro environment.
- Balance sheet has improved from £3.0bn net debt in 2020
to £2.9bn net cash by end of 2024. This enabled the business
to manage the extraordinary commodity volatility and related
margin calls in 2022/23.
- Extended the Company’s share buyback programme by
£200m in July 2024, and a further £300m in December 2024.
These extensions, once completed, will bring our equity
repurchased to £1.5bn since November 2022 (representing
approximately 20% of our issued share capital).
- Progressive dividend reinstated in 2022, with a total of
£465m of dividends paid & announced as at end of 2024.
- Technical pension deficit reduced from £1.9bn to £450m &
decommissioning liability reduced from £2.4bn to £1.5bn as
of 31 December 2024.
Relaunched purpose of “Energising a greener,
fairer future” has generated engagement and
clear direction across the organisation
- £140m voluntary support package created during 2022-23 to
help customers and communities through the energy crisis,
this is more than any other energy supplier in UK and Ireland.
- Circa 70% reduction in our gross greenhouse gas emissions
across our business over the last decade.
- Brought forward our commitment to be a net zero business
by five years to 2040 and we will continue to help our
customers be net zero by 2050.
- Separate New Business and Net Zero business unit created
to focus on driving innovative energy transition solutions for
our customers.
The chart below shows Chris O’Shea’s salary history since he
was appointed CEO in 2020 compared to the FTSE 100 median
benchmark and Centrica’s Total Shareholder Return (TSR).
Note
The former CEO, Iain Conn, left the Centrica Board on 17 March 2020. At this
time, his salary was £957,500 per annum. Chris O’Shea was appointed interim
CEO on 17 March 2020 on a salary of £620,000 plus £100,000 interim
allowance (pro-rata), which he elected to waive. On 14 April 2020, Chris
O’Shea was appointed permanent CEO on a salary of £775,000 but continued
to waive £100,000 of salary pro-rated until 31 December 2020.
Given the size and complexity of Centrica today, the
Committee believes that Chris O’Shea’s remuneration is no
longer sufficiently aligned with our peers, and his performance
and experience warrants positioning his pay between the
median and upper quartile of the FTSE 100, while noting that
benchmarking is not the sole driver for change. It is also
important that the Committee has a competitive remuneration
structure in place that is capable of attracting candidates in the
future for what is now a much bigger business with attractive
investment opportunities. Succession planning is a key
consideration for the Board, and positioning Chris O’Shea’s
salary between the median and the upper quartile opens up a
wider market in the UK and globally to attract candidates of the
right calibre in the future. With this in mind, the Committee
confirmed an increase to Chris O'Shea’s salary from £855,000
to £1,100,000 per annum, effective 1 April 2025.
The Committee considered whether the increase should be
phased over multiple years. However, considering the CEO’s
track record and experience as well as the current positioning
versus the market, the Committee determined that it would be
inappropriate to continue to pay him below market competitive
rates and therefore decided to implement a one-off adjustment.
This also reflects the prudent decisions taken over the past four
years, which restrained the Committee from applying phased
relative increases up to this point.
In addition, the Committee proposes to increase the CEO’s
maximum RSP award from 150% of salary to 200% of salary to
further support the competitive positioning of the target total
remuneration and further reinforce the common interest with other
shareholders. However, given the CEO’s salary increase in 2025 and,
based on feedback from the shareholders we consulted on the new
Remuneration Policy, the Committee has decided to phase the
introduction of the higher RSP awards and therefore will grant the
2025 RSP award to the CEO at the current maximum of 150% of
salary. The first RSP award at the higher limit of 200% of salary will
be granted from 2026 subject to shareholder approval of the new
Strategic Report Governance Financial Statements Other Information
Policy. Approval of the increase in the RSP award will be
accompanied by an increase in the CEO’s minimum required
shareholding guideline from 300% to 400% of salary.
The Committee believes a combination of a salary increase and
the phased introduction in the increase in the RSP share awards
strikes the right balance between improving competitiveness
and shareholders’ feedback.
The table below summarises Chris O’Shea’s target and
maximum total remuneration package for FY2024 and his new
package for FY2025 compared to other CEOs in the FTSE 100.
The benchmarking data is as publicly reported by companies as
of December 2024 and has not been aged for pay inflation.
Group Chief
Executive (CEO)
Benchmarks
(£000s)
Salary
Target Total Remuneration*
Maximum Total Remuneration*
Lower
Quartile
Median
Upper
Quartile
Lower
Quartile
Median
Upper
Quartile
Lower
Quartile
Median
Upper
Quartile
FTSE 100
£816
£968
£1,211
£2,793
£3,803
£5,469
£4,218
£5,742
£8,548
Centrica (FY2024)
£855
£3,078
£3,933
Centrica (FY2025)
£1,100
£3,960
£5,060
*Target total remuneration includes salary plus target annual bonus plus target long term incentives plus pension but excludes benefits. Maximum total remuneration includes salary plus
maximum annual bonus plus maximum long term incentives plus pension but excludes benefits. Both target and maximum total remuneration exclude share price growth.
We use the FTSE 100 as a comparator group because Centrica
is part of this index. Centrica has over 21,000 colleagues across
various businesses and geographies, and so the FTSE 100
represents a diverse mix of sectors where we compete for
talent and operate including in the energy sector, retail, support
services and other highly regulated companies in the utilities and
financial services sectors.
Changes for Russell O’Brien (Chief Financial Officer)
Russell O’Brien has been Chief Financial Officer for two years.
His recruitment terms were set behind the market median to
recognise that he was new to role and to provide headroom for
future increases as he developed and performed in his role.
His salary and target total remuneration is below the median
benchmark for similar CFO roles in the FTSE 100. The
Committee is pleased with Russell’s progress and has decided
to close the competitive gap in 2025 by bringing his salary in line
with the market median of the FTSE 100.
The Committee has increased the CFO’s salary from £590,000
to £640,000 with effect from 1 April 2025, which positions his
salary around the median of the FTSE100.
The CFO’s total incentives (Annual Incentive Plan plus long-term
Restricted Share Plan) are also currently below the market, so
we have increased the CFO’s maximum Annual Incentive Plan
opportunity from 150% of salary to 175% of salary (this is
permissible with the current Remuneration Policy which permits
a maximum AIP of up to 200% salary for Executive Directors).
This new higher AIP opportunity will apply for the financial year
ending 31 December 2025. In line with our Policy, half of the AIP
earned will be deferred into shares for a further three years.
The table below summarises Russell O’Brien’s target and
maximum total remuneration packages for FY2024 and FY2025
compared to other CFOs in the FTSE 100. The benchmark data
is as publicly reported by companies as of December 2024 and
has not been aged for pay inflation.
Chief Financial
Officer (CFO)
Benchmarks
(£000s)
Salary
Target Total Remuneration*
Maximum Total Remuneration*
Lower
Quartile
Median
Upper
Quartile
Lower
Quartile
Median
Upper
Quartile
Lower
Quartile
Median
Upper
Quartile
FTSE 100
£531
£627
£761
£1,528
£2,028
£2,906
£2,165
£3,075
£4,406
Centrica (FY2024)
£590
£1,829
£2,271
Centrica (FY2025)
£640
£2,064
£2,624
*Target total remuneration includes salary plus target annual plus target long term incentives plus pension but excludes benefits. Maximum total remuneration includes salary plus
maximum annual bonus plus maximum long term incentives plus pension but excludes benefits. Both target and maximum total remuneration exclude share price growth.
Centrica plc Annual Report and Accounts 2024
121
Other AGM resolutions
At the AGM, we are proposing two resolutions relating to our
share plans.
One resolution relates to amending our Long Term Incentive
Plan rules, which is an umbrella plan that outlines how we govern
RSP award and bonus deferred share awards under the AIP.
These rules were originally approved by shareholders on
27 April 2015 and last renewed on 7 June 2022. The
amendments to the rules reflect the proposed changes to the
Remuneration Policy in 2025 and bring the rules in to line with
corporate governance best practice.
The second resolution relates to implementing a new tax-
efficient all-employee Sharesave (or SAYE) plan in the UK and in
Ireland, which allows colleagues to save up to £500 (or €500)
per month over a three or five-year savings period and to use
these savings to purchase Centrica shares at a fixed price at the
start of the savings period. We have previously operated a
Sharesave plan, but it was suspended in 2020 due to the
financial challenges the business faced at the time. I am
delighted that we are now in a position to re-instate Sharesave,
which will operate alongside our existing all-employee Share
Incentive Plan, giving colleagues additional choice and flexibility
on how they save for the future, and giving them a further share
in our success.
The new Sharesave plan rules will be submitted to shareholders
for approval at the AGM in May 2025, with the first colleague
Sharesave offer being launched shortly thereafter.
Appointment of the Chair of the Board
During the year Scott Wheway stepped down as Chair of the Board
on 16 December 2024 and Kevin O’Byrne became the new Chair
of the Board. Scott leaves Centrica in a much stronger position
than the business he inherited in 2020 when he became Chair of the
Board. I would like to take this opportunity to thank Scott for all his
support and wise counsel over the years.
As part of the recruitment process for the Chair of the Board, the
Remuneration Committee determined that Kevin O’Byrne’s fees
should be set at £440,000 per annum with effect from his date of
appointment as Chair of the Board. These fees are the same as his
predecessor but below the market median of the FTSE 100
recognising that Kevin is new in role, and we expect to improve the
competitiveness of these fees over the next two years subject to
Kevin’s performance and development in the role.
Changes to Non-Executive Director Fees
The Chair of the Board, the Executive Directors, and the Chief
People Officer conducted an annual review of the non-
executive director fees and concluded that the current base fee
of £76,000 should be increased by 3.9% to £79,000 with effect
from 1 January 2025.
The review also showed that some of the Chair fees for certain
Committees have fallen behind the market, which reflects the
increasing complexity and time commitment of these roles.
Therefore, we have increased the fees for chairing the Safety,
Environment and Sustainability Committee (SESC), and for
chairing the Remuneration Committee from £20,000 to
£25,000 per annum with effect from 1 January 2025. The new
fees of £25,000 also align to the current rate paid to the Chair of
the Audit & Risk Committee.
Wider Workforce
At Centrica, we believe our financial success should benefit
all stakeholders. This includes our 21,000 colleagues who
work hard every day to serve our ten million customers. Our
colleagues help create the cash we need to invest for growth,
the dividends and share buybacks payable to shareholders, and
the taxes payable to governments. Striking a balance between
how profits are distributed among stakeholders is never easy,
but I am pleased to say that the strong performance of the
Company in 2024 allowed us to continue to invest in the reward
and benefits that we provide to the wider workforce, including
the following:
•Centrica continues to be an accredited member of the Real
Living Wage Foundation, and we pay at least the Real Living
Wage in the UK. Over the last couple of years of the cost of
living crisis, we have focused on improving the pay of our
lowest paid front line colleagues. For example:
-In our customer call centres, we employ approximately 3,500
Customer Resolution Agents (CRA) who help and serve
customers every day. On 1 April 2024, CRAs received a
typical salary increase of 8.1%.
-In our engineering field force, we employ 2,800 colleagues
as Technical Repair Engineers (TRE) who service and fix
customers’ heating systems throughout the year. On 1 April
2024, a TRE received a typical salary increase of 5%.
-In 2025, the salary increase budget for the wider work force
in the UK is 3.5% to 4%. Individual increases can be higher
or lower than this depending on the role.
•We have operated an all-employee Profit Share plan since
2022. Under the Profit Share, we distribute some of our
Adjusted Operating Profits equally across all colleagues in
Centrica shares. Colleagues must hold the shares for at least
three years. This is a great way to share in our success and
helps foster our ownership culture. In respect of the financial
year ending 31 December 2024, we have approved our fourth
Profit Share award of £1,400 per colleague, which will be
granted in 2025. This means we have paid a total of £7,286 in
Profit Share per colleague since the plan was launched
(excluding share price growth). The first Profit Share award
that was granted in April 2022 will be released in April 2025.
•We are implementing a new tax-efficient all-employee
Sharesave (or SAYE) plan in the UK and in Ireland, which allows
colleagues to save up to £500 (or €500) per month over a
three or five-year savings period and to use these savings to
purchase Centrica shares at a fixed price fixed at the start of
the savings period. We have previously operated a Sharesave
plan, but it was suspended in 2020 due to the financial
challenges the business faced at the time. The new Sharesave
will operate alongside our existing all-employee Share
Incentive Plan, giving colleagues additional choice and flexibility
on how they save for the future, and giving them a further share
in our success.
•Our maternity leave policy is market leading and provides up
to 26 weeks maternity leave on full pay plus up to a further 13
weeks at statutory maternity pay. Based on feedback from our
Working Parents Network, we have decided to enhance our
paternity leave, which will increase from two weeks to eight
weeks leave at full pay.
Strategic Report Governance Financial Statements Other Information
•Under our main UK defined contribution pension scheme,
colleagues can pay up to 5% of their salary into the pension and
the Company double matches the employee’s contribution up
to 10% of salary. In the past, some employees had to complete
two-years’ service to be eligible for the double pension match
(during the first two year’s employment for these employees,
the Company equally matched the employee contribution up
to 5% of salary). However, we have decided to remove this
two-year service requirement to ensure we have a simpler and
fairer approach, as well as to encourage new and lower paid
colleagues to save more for the future by benefiting from the
double pension match from the day they join.
•A core component of our total reward package is focused on
colleague health and wellbeing. I am delighted that Centrica
has been externally recognised as a market leader in employee
benefits & wellbeing including receiving the following awards
during the year:
-Great Place To Work – One of the Best Workplaces for
Wellbeing in the Super Large Company Category.
-Personnel Today – Heath & Wellbeing Awards.
-Employee Benefits Awards – Best Benefit to Support
Reproductive Health.
Conclusion
I hope you find the additional information provided in this letter
helpful. The Committee believes the changes to our
Remuneration Policy are in the best interests of our
shareholders. These changes will help us retain and incentivise
executives to execute our business strategy and create value
for shareholders and stakeholders.
On behalf of the Board, I would like to thank shareholders and
the proxy voting agencies for engaging with us on this important
topic and for their open and constructive feedback. Your
continued support of the executive team, the Board, and the
proposed remuneration changes is much appreciated. I look
forward to meeting many of you at the AGM.
Membership and meeting attendance
Committee members
Carol Arrowsmith (Chair)
Chanderpreet Duggal
Heidi Mottram
Amber Rudd
Jo Harlow
Sue Whalley
Biographical details of the Committee Chair and members can
be found on pages 86 to 89. The number of meetings held
during the year and Committee members attendance is
reported on page 92.
Meeting attendees by invitation:
All other Non-Executive Directors, Group Chief Executive,
Group Chief People Officer, and People Director, Reward,
Wellbeing and Benefits.
Carol Arrowsmith
Chair of the Remuneration Committee
19 February 2025
Centrica plc Annual Report and Accounts 2024
123
0
2,500
5,000
7,500
£,000
0
500
1,000
1,500
£,000
Remuneration at a glance
Strategic Report Governance Financial Statements Other Information
How we’ve supported our stakeholders in 2024
Customers
Colleagues
Investors
£140m
Voluntary support package created
2022-23 to help customers and
communities through the energy crisis
700,000
Customers supported through the
British Gas Energy Trust since it was
created 20 years ago
588
Extra colleagues hired across our
customer contact centre
£150,000
Contributions to colleagues
via the Colleague Support
Foundation since launching
254
Professional colleagues joined
our business
10,683
Days volunteering in 2024
4.5p
Full year dividend per share
385.5m
Shares repurchased in 2024
£405m
New hybrid bond launched
Single figure of total remuneration in FY2024
Group Chief Executive
Group Chief Financial Officer
Salary
Pension and Benefits
AIP
LTIP
Further details on page 126
FY2024
FY2023
810
1,426
5,902 8,231
FY2024
FY2023
578
640
1,196
Most Competitive
Provider
Customer
Obsessions
Safety, Compliance and
Conduct Foundation
Cash Flow Growth
Operational Excellence
Empowered
Colleagues
Our Group priorities
2022 RSP outcomes
The 2022 RSP award will vest in full on 23 June 2025. This
was the first award under a Restricted Share Plan (RSP).
The RSP award was subject to a performance underpin
over the three-year performance period from 1 January
2022 to 31 December 2024. At the time of assessment,
the Committee was satisfied the performance underpin
had been met. The vested shares are subject to a further
two-year holding period.
FY2024 AIP performance
The table below sets out details of the relevant measures in the Annual Incentive
Plan and their link to our group priorities, and the resulting outcome.
Measure
Group priorities
Weighting
Outcome
Earnings Per Share
37.5%
100%
BG cost to serve
Customers to ENSEK
BG complaints
BG reschedules
BG complaints
Centrica cost/income
CBS order intake
Bord Gáis cost to serve
Unique customer numbers
37.5%
60%
Colleague engagement
Climate transition plan progress
Adjusted Operating Profit
Free Cash Flow
Net debt/cash
Individual performance
25.0%
Group Chief Executive
85%
Group Chief Financial Officer
85%
Overall outcome (% maximum)
Group Chief Executive
81.25%
Group Chief Financial Officer
81.25 %
845
1,390
1,986
4,332
498
1,372
720
Market competitive benchmarks
When we set the remuneration levels, one of the factors we consider is the competitiveness of the salary and target total remuneration
package for the role in the relevant market. For the Group Chief Executive and Group Chief Financial Officer, we benchmark their roles
against companies in the FTSE 100. The table below shows the competitiveness of salary and total remuneration for target performance
versus the median of the FTSE 100.
Group Chief Executive
Group Chief Financial Officer
Chris
O'Shea
Median FTSE
100 benchmark
Russell
O'Brien
Median FTSE
100 benchmark
Salary
£855,000
£968,000
Salary
£590,000
£627,000
Target Total Remuneration(1)
£3,078,000
£3,803,000
Target Total Remuneration(1)
£1,829,000
£2,028,000
(1) Salary + target annual bonus + target value of long-term incentives + pension but excludes benefits. Excludes share price growth.
2024 Remuneration
The table below sets out a summary of the implementation of the Policy in 2024.
Further information can be found on page 137.
Base Salary
Benefits
Pension
Short-term incentive
Long-term incentive
CEO: £855,000 (+4.9%)
CFO: £590,000 (+9.3%)
The average increases for
the wider workforce in the
UK was 6%.
No change and
remains in line
with the wider
workforce.
10% of salary in line with the
wider workforce
With effect from 31 December
2023, we have closed the
Centrica Unapproved Pension
Scheme Defined Contribution
Section (CUPS DC) to future
contributions. Chris O'Shea will
no longer be eligible contribute
his 10% of salary pension
contribution to CUPS DC.
Instead, he has elected to
receive 10% of salary as a cash
allowance in lieu of pension.
CEO: 200% of salary at max
100% of salary at target
CFO: 150% of salary at max
75% of salary at target
Measured 75% against financial
and business measures and
with 25% against individual
objectives.
50% of any bonus earned is
deferred into shares that vest
after three years.
Restricted Share Plan
award subject to a
performance underpin.
CEO: 150%of salary
CFO: 125% of salary
Awards vest after three
years and plus a two year
additional holding period.
Centrica plc Annual Report and Accounts 2024
125
0%
300%
600%
900%
1,200%
1,500%
Shareholding as % of salary
Executive Director shareholdings % of base salary
The chart below sets out the minimum shareholding requirements and the actual shareholdings of the Executive Directors. The
shareholding requirement must be built up over five years and then subsequently maintained. For unvested shares with no performance
conditions, we have assumed shares net of tax in the calculation.
Further detail regarding the Executive Directors’ outstanding share awards can be found on page 131.
Group Chief Executive
Group Chief Financial Officer
0%
50%
100%
150%
200%
250%
300%
Shareholding as % of salary
Vested and owned shares
Vested and owned shares
Unvested shares with no performance conditions
Unvested shares with no performance conditions
Goal
Actual
31/12/2024
Actual
31/12/2023
Goal
Actual
31/12/2024
Actual
31/12/2023
300
306
858
224
222
200
100
148
1,164
446
248
48
82
130
Directors’ Annual Remuneration Report
Directors’ Remuneration in 2024
This report sets out information on the remuneration of the Directors for the financial year ended 31 December 2024.
Single figure for total remuneration (audited)
Executives
£000
Salary/
fees
Bonus
(cash)
Bonus
(deferred)(1)
Benefits(2)
LTIPs(3)
Pension(4)
Total
Total fixed
remuneration
Total variable
remuneration
2024
Chris O’Shea
845
695
695
16
1,986
85
4,322
946
3,376
Russell O’Brien(5)
578
360
360
16
—
58
1,372
652
720
Total
1,423
1,055
1,055
32
1,986
143
5,694
1,598
4,096
2023
Chris O’Shea
810
713
713
16
5,902
77
8,231
903
7,328
Russell O’Brien(5)
498
320
320
13
—
45
1,196
556
640
Kate Ringrose(6)
77
45
45
3
1,833
—
2,003
80
1,923
Total
1,385
1,078
1,078
32
7,735
122
11,430
1,539
9,891
(1) In accordance with the Remuneration Policy, 50% of the bonus is deferred into shares and will vest after three years.
(2) Taxable benefits include car allowance, health and medical benefits. Non-taxable benefits include matching shares received under the Share Incentive Plan (SIP). Both taxable and
non-taxable benefits are included in the table.
(3) The estimated value of the LTIP award that was granted in respect of the three-year performance period covering 1 January 2022 to 31 December 2024 performance period is included
in the table above, based on a share price of 123.59 pence (the three month average share price for the period ending 31 December 2024). Of the £1.9m for Chris O’Shea, £706K (or
36% of the value) was due to share price growth. The award will vest in June 2025 and the shares will then be subject to an additional two-year holding period. Further details of the
performance outcomes are set out on page 130. Dividend equivalents of £136K have been included.
(4) For 2023 notional contributions to the Centrica Unapproved Pension Scheme defined contribution section (CUPS DC) for Chris O’Shea and Kate Ringrose have been included in this
table as if CUPS DC was a cash balance scheme. This includes a deduction in respect of an allowance for CPI inflation on the opening balance of 11.1% in 2023. CUPS DC was closed on
31 December 2023 and Chris O’Shea has received his pension contribution as cash in lieu for all of 2024.
(5) Russell O’Brien was appointed to the Board on 1 March 2023.
(6) Kate Ringrose stepped down from the Board on 28 February 2023.
Single figure for total remuneration (audited)
Non-Executives
Salary/fees
Total
£000
2024
2023
2024
2023
Scott Wheway(1)
402
418
402
418
Carol Arrowsmith
96
96
96
96
Nathan Bostock
101
97
101
97
CP Duggal
76
76
76
76
Heidi Mottram
96
96
96
96
Kevin O’Byrne(2)
111
100
111
100
Amber Rudd
76
76
76
76
Philippe Boisseau(3)
76
25
76
25
Jo Harlow(4)
77
6
77
6
Sue Whalley(5)
76
6
76
6
Total
1,187
996
1,187
996
(1) Scott Wheway stepped down from the Board on 16 December 2024.
(2) Kevin O’Byrne was appointed Chair on 16 December 2024.
(3) Philippe Boisseau joined the Board on 1 September 2023.
(4) Jo Harlow joined the Board on 1 December 2023.
(5) Sue Whalley joined the Board on 1 December 2023.
Strategic Report Governance Financial Statements Other Information
Base salary/fees
The Committee believes that Chris O’Shea’s remuneration is no longer sufficiently aligned with competitive market rates given the
size and complexity of Centrica today. Chris’ performance and experience over the last four years since his appointment as the
Group Chief Executive warrants positioning his pay between the median and upper quartile of other CEOs in the FTSE 100. It is also
important that the Committee has a competitive remuneration structure in place that is capable of attracting candidates in the
future for what is now a much bigger business with attractive investment opportunities. Succession planning is a key consideration
for the Board, and positioning Chris O’Shea’s salary between the median and the upper quartile opens up a wider market in the UK
and globally to attract candidates of the right calibre in the future. With this in mind, the Committee increased Chris O'Shea’s salary
from £855,000 to £1,100,000 per annum, effective 1 April 2025.
The Committee considered whether the increase should be phased over multiple years. However, considering the CEO’s track
record and experience as well as the current positioning versus the market, the Committee determined that it would be
inappropriate to continue to pay him below market competitive rates and therefore decided to implement a one-off adjustment.
This also reflects the prudent decisions taken over the past four years, which restrained the Committee from applying phased
increases up to this point.
The salary of the Russell O’Brien, Chief Financial Officer, will increase from £590,000 to £640,000 with effect from 1 April 2025.
Russell O’Brien has been Chief Financial Officer for two years. His recruitment terms were set behind the market median to
recognise that he was new to role and to provide headroom for future increases as he developed and performed in his role. His
salary and total remuneration is currently below the median benchmark for similar CFO roles in the FTSE 100. The Committee is
pleased with Russell’s progress and has decided to close the competitive gap in 2025 by bringing his salary in line with the market
median of the FTSE 100.
The Committee is fully aware that the salary increases for Executive Directors in 2025 will exceed the average increases for the
wider workforce in the UK. The salary increase budget in 2025 for the wider workforce in the UK will be 3.5% to 4% and individual
increases can be higher or lower depending on the role. However, the principles we are applying to Executive Directors are
consistent with those we apply to other colleagues in that we typically pay newly promoted colleagues slightly behind the market
and increase their pay based on their performance and development in the role. We have applied this approach to Russell O’Brien
as outlined above. Ordinarily, we would have also applied a similar phased approach to Chris O’Shea over the first few years of his
appointment. However, the Committee believed it was not appropriate to increase Chris’s pay over this period beyond the average
increase for the wider workforce due to the impact of external factors such as the COVID-19 pandemic and cost of living crisis
on our colleagues and customers.
As part of the recruitment process for the Chair of the Board, the Remuneration Committee determined that Kevin O’Byrne’s
fees should be set at £440,000 per annum with effect from his date of appointment. These fees are the same as his predecessor
but below the market median of the FTSE 100 recognising that Kevin is new in role, and we expect to improve the competitiveness
of these fees subject to performance and development in the role.
Non-Executive Director fees were reviewed in 2024 as part of the comprehensive Remuneration Policy review. The Chair of the
Board, the Executive Directors, and the Chief People Officer conducted an annual review of the Non-Executive Director fees
and increased the base fee by 3.9% from £76,000 to £79,000 with effect from 1 January 2025. The review also showed that
some of the Chair fees for certain Committees have fallen behind the market, which reflects the increasing complexity and
time commitment of these roles. Therefore, we have increased the fees for chairing the Safety, Environment and Sustainability
Committee (SESC), and for chairing the Remuneration Committee from £20,000 to £25,000 per annum with effect from
1 January 2025. The new fees of £25,000 also align to the current rate paid to the Chair of the Audit and Risk Committee.
FY2024 Annual Incentive Plan (AIP)
In line with the Remuneration Policy, 75% of the award was based on a mix of financial and business measures based on Centrica’s
priorities for 2024 and 25% was based on individual objectives.
The financial and business performance element for 2024 was split equally between Earnings Per Share (EPS) and the outcome
of a balanced scorecard of financial and operational measures critical to the success of the organisation in 2024.
The EPS measure had defined threshold, target and maximum levels that were set at the start of the financial year as follows:
Threshold
Target
Max
Outcome
Adjusted EPS
11.5p
14.4p
17.3p
19.0p
Centrica achieved strong earnings performance above the maximum, resulting in an outturn of 100% for this part of the AIP.
In addition, the Committee determined a balanced scorecard for the remaining financial and business elements of the AIP. It was
agreed that there would be no formula to translate the scorecard to a bonus outcome and no formal weighting of individual
measures. The Committee monitored performance against the scorecard at regular points during the year. At the end of the year,
the Committee took a holistic assessment of overall performance to determine an outturn. The balanced scorecard of measures,
targets and outcomes are noted below.
Centrica plc Annual Report and Accounts 2024
127
Measure
Target
Outcome
Group
Adjusted Operating Profit
£1,294m
£1,552m
Free Cash Flow
£540m
£989m
Net (debt)/cash
£2,372m
£2,858m
British Gas Energy
Complaints
10.0%
10.1%
British Gas Services & Solutions
Complaints
7.9%
6.6%
British Gas Services & Solutions
Reschedules
4.0%
4.2%
Bord Gáis
Cost to serve
€190 per customer
€192 per customer
British Gas Energy
Cost to serve(1)
£121 per customer
£127 per customer
Centrica Business Solutions
Order intake
£318m
£231m
Centrica Energy
Opex: Gross Margin Ratio
37.0%
44.0%
Customer numbers
10,316,00 unique customers
10,183,000 unique customers
Customers on ENSEK
95%
92%
Colleague engagement
8.0
8.1
Progress towards Climate Transition
Plan – see People & Planet Plan for
further details. See page 58.
Goal 4 – helping our customers be net
zero by 2050
Goal 5 – be a net zero business by 2045
Make good progress against the
interim climate targets including;
Centrica greenhouse gas
emissions
Low carbon and transition assets
Electric vehicles in fleet
Reduction in property emissions
CAPEX allocated to green activities
Hive smart thermostats units sold
SMART meters installed
EV charger points installed
Heat pumps installed
On target for Goal 5 (helping be a
net zero business by 2045) with
Goal 4 slightly behind the glidepath.
See page 62-63 for further details.
The Group’s financial performance against AOP, Free Cash Flow and Net Cash all significantly exceeded target. Performance
against the majority of the customer and operational measures was at or slightly below target. Colleague engagement exceeded
target and the upper quartile benchmark for our industry. We are on track with Goal 4 to be net zero by 2045 but slightly behind
the long-term glide-path to help customers be net zero by 2050. The Committee is satisfied that the current incentive structure
for senior executives does not drive unintended risks or ESG concerns.
The Committee carefully considered the outcomes against the EPS target and the balanced scorecard measures, determining an
outcome of 100% against the EPS target and 60% against the balanced scorecard. Achievement against the overall financial and
business performance element of the AIP was 160% of target (or 80% of maximum).
Individual Objectives
Each Executive Director had a set of stretching individual objectives which included key non-financial and strategic performance
indicators (KPIs) that were important to the success of the business in 2024. The KPIs were cascaded to business and functional
leaders to ensure a strong line of sight to key priorities throughout the organisation. The Committee assessed that the majority
of individual objectives were met in full and good progress was made against others. Based on an assessment of performance
against Chris O’Shea’s individual objectives, the Committee determined an outcome of 170% of target (or 85% of maximum) was
appropriate. The Committee determined for Russell O’Brien an outcome of 170% of target (or 85% of maximum) under the individual
objectives part of the Annual Incentive Plan.
Strategic Report Governance Financial Statements Other Information
The table below summarises the key individual objectives for Executive Directors during the year:
Key objectives
Individual
performance (as %
of maximum)
Chris O’Shea
Capability, culture and operational delivery
•Established our New Business and Net Zero team, created our Chief Customer Office, and consolidated our Power
business. The changes to our operating model help support our strategic plans for commercial and customer growth,
investment in infrastructure and net zero, and a step change in our approach to health & safety.
•Continued to drive improvements in service levels across the Retail businesses and we have launched new greener
and fairer products and tariffs such as Hive Solar, PeakSave, Mixergy, Free Charge, and Hive Heat pump add-ons. Such
initiatives support Centrica and our customers with the transition to net zero.
•The total number of customers fell in the year, which was disappointing, but the rate of decline in customer numbers
has slowed. There were significant improvements in customer service in the year, which will help drive growth in
customer numbers and market share in the future.
•Continued to modernise our technology and data in making value-based decisions based on customer lifetime value.
The successful migration of most of our British Gas Energy customers to a new ENSEK platform, with minimal
disruption, will help optimise customer journeys, reduce back-office processes and improve controls.
Balance sheet, financial framework, and cash
•Delivered upper quartile cash returns to shareholders. Our capital discipline demonstrates that we will only in invest in
the right assets at the right returns.
•Key strategic investments that were made include a £70m investment in Highview Power, which is part of a funding
package and strategic partnership to develop the first Liquid Air Energy Storage Plant. We also purchased Ensek,
a leading digital transformation services business in the energy sector, to support the integration of our technologies
and to improve customer journeys.
•The newly established Meter Asset Provider (MAP) business continues to build at scale, with a portfolio of smart
meters under management of around 450,000 by the end of 2024.
Delivering shareholder value through investment opportunities and portfolio shaping
•In Ireland, secured a capacity contract to extend the life of the Whitegate power plant (450MW) until 2034.
Commissioned construction of two (2 x 100MW) gas Peaker plants, which will enter operation in 2025. Secured a
capacity contract for another 340MW gas Peaker plant for delivery in 2029. This helps provide a robust and balanced
asset portfolio across meters, batteries, Peaker, and solar investments in the UK and Ireland
•Executed three long-term LNG deals in 2024, which will substantially mitigate risks in our LNG portfolio in anticipation
of more flexible LNG markets, which will lead to lower market prices and optimisation opportunities.
85.0%
Russell O’Brien
Capability, culture and operational delivery
•Established and integrated a new function (Procurement and Group Business Solutions) to streamline our
operations, drive efficiencies and reduce our cost to serve.
•Appointed a number of key senior leaders to strengthen functional capability and succession planning.
•Reviewed and implemented a new Enterprise Risk Management framework in consultation with the Audit
& Risk Committee.
•Executive sponsor of the Centrica Working Parents Network and increased paternity leave for non-birth
parents from 2 weeks to 8 weeks full pay.
Balance sheet, financial framework, and cash
•Successfully completed refinancing activity – new hybrid bond of £405m launched and successfully bought
back £370m of our 2033 £770m 7% bond. Completed +1-year extension requests on our Tier 1 revolving credit
facilities and +1-year extension on the Tier 2 committed letter of credit facilities.
•Maintain strong liquidity position, and credit rating agencies re-affirming their ratings and keeping thresholds
unchanged.
Delivering shareholder value through investment opportunities and portfolio shaping
•Established robust and disciplined capital allocation framework when assessing pipeline of investments and
M&A activity.
•Extended the Company’s share buyback programme by £200m in July 2024, and a further £300m in
December 2024. These extensions, once completed, will bring our equity repurchased to £1.5bn since
November 2022 (representing approximately 20% of our issued share capital).
85.0%
Centrica plc Annual Report and Accounts 2024
129
Overall AIP outcome
Overall, after combining the outturn for financial and business performance with the outturn for individual performance, the total AIP
for Chris O’Shea was 81.25% of maximum, which equated to 162.5% of salary or £1,389,375. The table below summarises the
outcomes under the AIP for all Executive Directors:
Measure
Chris O’Shea
Russell O’Brien
EPS
100%
100%
Balanced scorecard
60%
60%
Individual objectives
85%
85%
Total AIP (as % of maximum)
81.25%
81.25%
Total AIP (£)
£1,389,375
£719,063
No discretion was applied to the formulaic outcome. Half of the AIP earned was paid in cash and half of the AIP was deferred into
shares, vesting in three years.
Long-term incentive awards relating to the performance period 2022-24
A Restricted Share Plan award was granted on 23 June 2022 and will vest in full on 23 June 2025. The vested shares are subject to
an additional two-year holding period and will be released on 23 June 2027. The RSP award was subject to a performance underpin,
which was assessed over the three-year performance period from 1 January 2022 to 31 December 2024.
Outcome (% of maximum)
Brief explanation of Committee’s rationale
100%
The Committee considered the performance of the Group in the context of the underpin over the three year
performance period ending 31 December 2024. The Committee concluded that it was appropriate that the RSP
vests in full and the award will vest in June 2025, subject to a further two year holding period. The Committee
noted that there were no windfall gains and therefore no reduction was applied. No reduction was applied to the
vesting outcome.
Award Type
Basis of award
Shares awarded
Value at grant
Vesting
date
Chris O’Shea
RSP share award
150% of salary
1,496,336
£1,191,563
June 2025
Pension
In 2020, it was agreed that the pension contributions for the new and existing Executive Directors would be 10% of base salary
to align them with the wider UK workforce. In 2024 the pension contribution rate across the UK workforce was 10-14%, depending
on the pension scheme.
Chris O’Shea and Kate Ringrose participated in the Centrica Unapproved Pension Scheme Defined Contribution section (CUPS
DC), until 31 December 2023 when we closed the scheme to future contributions. For the period to 31 December 2023, notional
contributions to the CUPS DC scheme have been included in the single figure for total remuneration table as if it was a cash balance
scheme and therefore notional investment returns for the 2023 have also been included. The notional pension fund balances for
each Executive are disclosed below:
CUPS DC Scheme(1)
Total notional
pension fund as at
31 December 2024
£
Total notional
pension fund as at
31 December 2023
£
Chris O’Shea(1)
—
431,775
Kate Ringrose(1)
—
79,500
(1) The retirement age for the CUPS DC scheme is 62.
Following 31 December 2023 when the CUPS DC scheme closed to future contributions Chris O’Shea chose to take his pension
contribution of 10% of salary as cash in lieu of pension. Upon appointment Russell O’Brien similarly received his pension contribution
of 10% of salary as cash in lieu of pension.
% of salary
Chris O’Shea
10% cash in lieu of pension
Russell O’Brien
10% cash in lieu of pension
Taxable benefits
Taxable benefits include car allowance, health and medical benefits. Non-taxable benefits include matching shares received under
the Share Incentive Plan (SIP) on the same terms as all employees. Both taxable and non-taxable benefits are included in the table of
single figure for total remuneration.
Strategic Report Governance Financial Statements Other Information
Directors’ interests in shares (number of shares) (audited)
The table below shows the interests in the ordinary shares of the Company for all Directors who served on the Board during 2024
as at year end.
For the Group Chief Executive the minimum shareholding requirement is 300% of base salary and for the Chief Financial Officer the
minimum shareholding requirement is 200% of base salary. The achievement against the requirement is shown below.
Executive Directors have a period of five years from appointment to the Board, or from any material change in the minimum
shareholding requirement, to build up the required shareholding. All Executive Directors are required to hold 100% of any shares
vesting under the Share Plans until the shareholding requirement has been met. A post-cessation shareholding requirement of
100% of the in-employment shareholding requirement (or full actual holding if lower) is applicable for two years post-cessation
of employment. The Committee continues to keep both the shareholding requirement, and achievement against the shareholding
requirement, under review and will take appropriate action should they feel it necessary.
Beneficially
owned(1)
Shares subject to
performance
conditions
Shares vested but
unexercised
Shares subject to
continued service
only(2)
Shares
exercised
in the year
Shareholding
requirement
(% of salary)
Current
shareholding
(% of salary)(3)
Executives
Chris O’Shea(4)
5,487,926
—
—
3,694,827
—
300
858
Russell O’Brien(4)
439,428
—
—
1,236,629
—
200
100
Non-Executives
Carol Arrowsmith
49,286
—
—
—
—
—
—
Philippe Boisseau
12,425
—
—
—
—
—
—
Nathan Bostock
27,000
—
—
—
—
—
—
CP Duggal
15,000
—
—
—
—
—
—
Jo Harlow
17,600
—
—
—
—
—
—
Heidi Mottram
10,000
—
—
—
—
—
—
Kevin O'Byrne
280,000
—
—
—
—
—
—
Amber Rudd(5)
61,975
—
—
—
—
—
—
Sue Whalley
—
—
—
—
—
—
—
Scott Wheway
110,187
—
—
—
—
—
—
(1) These shares are owned by the Director or a connected person and they are not, save for exceptional circumstances, subject to continued service or the achievement of performance
conditions. They include shares purchased by the Executive Director in March with deferred AIP funds which have mandatory holding periods of three years and which will be subject
to tax at the end of the holding periods.
(2) Shares owned subject to continued service include RSP shares awarded and SIP free and matching shares that have not yet been held for the three-year holding period. The values are
net of tax.
(3) The share price used to calculate the achievement against the guideline was 133.60 pence, the price on 31 December 2024.
(4) During the period 1 January 2024 to 15 February 2025 both Chris O’Shea and Russell O’Brien acquired 263 shares through the SIP.
(5) During the period 1 January 2024 to 15 February 2025 Amber Rudd acquired 1,672 shares through the NED Share Purchase Agreement.
Share awards granted in 2024 (audited)
Set out below are details of share awards granted in 2024 to Executive Directors.
2024 RSP
Plan
Award Type
Number
of shares(1)
Basis of
award
% of salary
Face value
of award
£
Vesting
date
Release
date
Chris O’Shea
RSP
Conditional
share award
1,006,750
150%
1,282,500
March 2027
March 2029
Russell O’Brien
RSP
Conditional
share award
578,930
125%
737,500
March 2027
March 2029
(1) The number of shares awarded under the RSP was calculated by reference to a price of 127.39 pence, being the average of the Company’s share price over the five trading days
immediately preceding the date of grant of 25 March 2024.
The RSP award is subject to an underpin. If the Committee is not satisfied the underpin has been met, the Committee may scale
back the awards (including to zero). In assessing the underpin, the Committee will consider the following:
•a review of overall financial performance over the three-year vesting period;
•whether there have been any sanctions or fines issued by a Regulatory Body (participant responsibility may be allocated
collectively or individually);
•whether a major safety incident has occurred which may or may not have consequences for shareholders;
•whether there has been material damage to the reputation of the Company (participant responsibility may be allocated collectively
or individually);
•whether there has been failure to make appropriate progress against our Climate Transition Plan which sets out our ambition to be
a net zero business by 2045 and help our customers be net zero by 2050;
•return on capital with reference to the cost of capital;
•TSR performance over the vesting period, including with reference to the wider energy sector;
•management of customer numbers over the vesting period; and
•progress against broader ESG commitments.
Centrica plc Annual Report and Accounts 2024
131
2024 deferred AIP
The 2024 AIP award was delivered 50% in cash and 50% in deferred shares, which were awarded on 25 March 2024. The face value
of the award is based on the share price on the date of award, which was 126.86 pence. Deferred shares are not subject to further
performance conditions and vest in three years.
Plan
Award type
Number
of shares
Face value
of award
£000
Vesting
date
Chris O’Shea
AIP Deferred shares
562,135
713,125
March 2027
Russell O’Brien
AIP Deferred shares
252,406
320,203
March 2027
2024 cash flow distribution to stakeholders
The Committee monitors the relationship between the Directors’ total remuneration and cash outflows to other stakeholders.
As demonstrated by the chart, the Directors’ aggregate total remuneration for the year equates to 0.21% (2023: 0.0004%) of the
Group’s operating cash flow.
Reward Across The Wider Workforce
Centrica comprises over 21,000 diverse colleagues with different roles in different business units across different countries. Our
approach to reward aims to unify us as a team working with a common purpose and values. To achieve this, we have established
some key reward principles across the workforce that balance the needs of our colleagues with the needs of the business and
our customers. The same principles apply to Executive Directors and members of the Centrica Leadership Team:
For our colleagues, we aim to provide reward that is:
For our business, we aim to provide reward that is:
Market competitive
Sustainable
Fair and consistent
Agile
Simple
Flexible
Supports wellbeing
Compliant
Total reward at Centrica consists of more than just salary. All colleagues receive fixed pay comprising a salary plus a wide range
of pensions and benefits (see table below for more detail). In addition, all colleagues are eligible to earn variable pay subject to
performance (such as annual bonuses, recognition awards and Profit Share). For front line colleagues in the organisation, they can
expect a higher proportion of their total reward to be fixed pay. The variable pay element is often based on individual performance
and is typically paid in cash, quarterly or annually. At senior executive levels, colleagues have a higher proportion of variable pay
linked to the financial and business performance of the Company. This variable pay is often paid in shares that vest over multiple
years. Therefore, our approach to total reward is to vary the fixed pay and variable pay mix depending on the individual’s role,
responsibilities and performance compared to competitive market practice for comparable roles.
Strategic Report Governance Financial Statements Other Information
ò To staff
27%
ò To staff
20%
ò To Directors
0%
ò To Directors
0%
ò To government
34%
ò To government
32%
ò To shareholders
6%
ò To shareholders
4%
ò Investing activities
33%
ò Investing activities
43%
2024
2023
Performance measures applying to Executive Directors and the Centrica Leadership Team are cascaded through the organisation
to ensure a clear line-of-sight and alignment around performance.
The table below summarises some key highlights of wider workforce reward in the UK. Executive Directors and the Centrica
Leadership Team participate in the same benefits and on the same terms as the wider workforce.
Fair pay
Centrica is an accredited member of the Real Living Wage Foundation, and we pay at least
the Real Living Wage in the UK.
We continue to focus on improving the pay of our lowest paid colleagues, through salary
increases and one-off payments. The salary increase budget in 2025 across the wider
workforce in the UK is 3.5% to 4% and individual increases can be higher or lower
depending on the role.
Salary levels for the wider workforce are negotiated with our recognised trade union
partners to ensure fair living standards. Salary levels for management reflect the individual’s
role, experience and performance compared to competitive market rates.
Looking after colleagues
and their loved ones
All employees in the UK receive comprehensive health and medical cover and can
purchase additional cover for their dependants. This includes 24 hour access to a GP,
eye care; support for parents with fertility, adoption, and surrogacy; company funded
life assurance; and personal accident insurance.
Saving for the future
The Company has various legacy pension arrangements. While our Defined Benefit
Pension is closed to new members it is still open to future accrual for existing members.
Our Defined Contribution Scheme provides a generous employer contribution of 10% of
salary or cash in lieu of pension. Our Lifestyle Savings offer discounts from everyday
shopping to one-off big purchases.
Recognising colleague
contribution
In 2024, we recognised colleagues over 231,868 times through our Recognition platform.
This allows anyone in the Company to recognise the performance or values of a colleague
or team, or simply say “thank you”.
We operate a number of performance-related incentives plans across the Group. 5,500
employees participate in an annual bonus plan aligned to the bonus for Executives and
senior management. All of our field engineers and customer facing teams participate in
incentives aligned to their individual performance.
Sharing in our success
All colleagues are eligible to receive an award of free shares via our Profit Share plan
depending on performance over the prior year. All employees in the UK are eligible to
participate in our Share Incentive Plan (SIP), where they can purchase shares in the
Company and receive free matching shares, provided they hold them for at least three
years. Colleagues in the UK and Ireland are also able to participate in Sharesave. Field and
Customer Support colleagues participate in quarterly and annual incentives linked to their
performance. Senior managers are eligible to receive annual bonuses and long-term
restricted share awards aligned to the performance of the business.
Being an ambassador for
Centrica products and
services
We provide discounts on colleagues’ energy bills if they are a Centrica customer, as well
as discounts on new boilers, HomeCare cover, Hive products, and our new energy efficient
products for example Electric Car charging points, solar and battery storage and home
insulation.
Making a difference
in the world
Colleagues are given time off to volunteer for local communities and causes they are
passionate about. We also operate a Give As Your Earn scheme, where colleagues can
donate in a tax-efficient way. The Colleague Support Foundation aims to provide additional
support for those experiencing extreme financial difficulties, where existing financial
support mechanicians have been explored and exhausted.
Centrica plc Annual Report and Accounts 2024
133
Annual percentage change in remuneration of directors and colleagues
The table below shows the percentage changes (on a full-time equivalent basis) in the Executive and Non-Executive Directors’
remuneration over the last three financial years compared to the amounts for full-time colleagues of the Group for each of the
following elements of pay:
Percentage change from
2019 to 2020
Percentage change from
2020 to 2021
Percentage change from
2021 to 2022
Percentage change from
2022 to 2023
Percentage change from
2023 to 2024
Executive Directors
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
Chris O’Shea(1)
6.3
—
—
—
-28.0
—
2.5
-11.1
100
2.6
—
0.3
4.9
—
-2.5
Russell O’Brien(2)
—
—
—
—
—
—
—
—
—
—
—
—
9.3
23.1
12.5
Kate Ringrose(11)
2.5
6.7
18.7
-83.3
-81.2
-84.4
Non-Executive Directors
Scott Wheway(13)
268.8
—
—
—
—
—
—
—
—
2.6
—
—
-4.3
—
—
Carol Arrowsmith
—
—
—
—
—
—
—
—
—
3.8
—
—
—
—
—
Nathan Bostock(3)
—
—
—
—
—
—
—
—
—
32.9
—
—
—
—
—
CP Duggal(4)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Heidi Mottram
—
—
—
27.8
—
—
—
—
—
3.8
—
—
—
—
—
Kevin O’Byrne(5) (12)
—
—
—
—
—
—
—
—
—
-20.7
—
—
-15.4
—
—
Amber Rudd(6)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Philippe Boisseau(7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Jo Harlow(8) (14)
—
—
—
—
—
—
—
—
—
—
—
—
1.1
—
—
Sue Whalley(9)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Average per
colleague (excluding
Directors)(10)
—
1.1
236.4
1.8
-10.3
16.3
1.9
—
—
4.4
—
42.3
5.11
1.26
-2.46
(1)
Chris O’Shea was appointed to the Centrica Board as Group Chief Financial Officer on 1 November 2018 and became interim Group Chief Executive with effect from 17 March 2020.
He was appointed as Group Chief Executive on 14 April 2020. From 17 March until 31 December 2020, he elected to waive £100,000 of his salary.
(2)
Russell O’Brien was appointed to the Board on 1 March 2023.
(3)
Nathan Bostock was appointed to the Board on 9 May 2022.
(4)
CP Duggal was appointed to the Board on 16 December 2022.
(5)
Kevin O’Byrne took on the role of Senior Independent Director from 1 June 2022.
(6)
Amber Rudd was appointed to the Board on 10 January 2022.
(7)
Philippe Boisseau joined the Board on 1 September 2023.
(8)
Jo Harlow joined the Board on 1 December 2023.
(9)
Sue Whalley joined the Board on 1 December 2023.
(10) The comparator group includes all management and technical or specialist colleagues based in the UK in Level 2 to Level 6 (where Level 1 is the Executive and Non- Executive
Directors). There are insufficient colleagues in the Centrica plc employing entity to provide a meaningful comparison. The colleagues selected have been employed in their role for full
years to give meaningful comparison. This group has been chosen because the colleagues have a remuneration package with a similar structure to the Executive Directors, including
base salary, benefits and annual bonus.
(11) Kate Ringrose stepped down from the Board on 28 February 2023.
(12) Kevin O’Byrne was appointed Chair on 16 December 2024.
(13) Scott Wheway stepped down from the Board on 16 December 2024.
(14) Jo Harlow took on the role of Senior Independent Director from 16 December 2024.
Strategic Report Governance Financial Statements Other Information
The chart below shows the ratio of remuneration of the CEO to
the average UK colleague of the Group.
CEO pay ratio
25th
percentile
50th
percentile
75th
percentile
2024
Option B
129:1
78:1
71:1
2023
Option B
198:1
142:1
120:1
2022
Option B
128:1
77:1
70:1
2021
Option B
29:1
24:1
15:1
2020
Option B
32:1
15:1
14:1
2019
Option B
34:1
29:1
22:1
2018
Option B
72:1
59:1
44:1
For 2020, the CEO total remuneration figure includes the single figure chart combined
earnings of both Iain Conn and Chris O’Shea for the period that they were in the CEO role
during 2020.
2024
Salary
Total pay and benefits
CEO remuneration
845,000
4,322,000
Colleague 25th percentile
26,460
33,500
Colleague 50th percentile
41,925
55,265
Colleague 75th percentile
45,356
61,121
The Company has used its gender pay gap data (Option B in the
Directors’ Reporting Regulations) to determine the colleagues
whose remuneration packages sit at the lower, median and
upper quartile positions across the UK workforce. This is
deemed the most appropriate methodology for Centrica given
the different pension and benefit arrangements across the
diverse UK workforce. To ensure this data accurately reflects
individuals at each quartile position, a sensitivity analysis has
been performed. The approach has been to review the total pay
and benefits for a number of colleagues immediately above and
below the identified employee at each quartile within the gender
pay gap analysis. We have determined our 25th, 50th and 75th
percentile individual using data from our gender pay gap as of
5 April 2024.
The annual remuneration for the three identified colleagues has
been calculated on the same basis as the CEO’s total
remuneration for the same period in the single figure table on
page 126 to produce the ratios.
The ratio of CEO pay compared with the pay for the average
colleague has decreased significantly compared to 2023
because 2023 included the value of the 2021 LTIP award that
vested in 2023 plus exceptional share price growth over the
three-year performance period from 1 January 2021 to 31
December 2023. As a large proportion of CEO remuneration is
delivered through variable pay in shares, the CEO pay ratio will
vary significantly from year to year compared to the pay of an
average employee. In 2024, under the current Remuneration
Policy, long-term incentives are delivered to the CEO through
the Restricted Share Plan (RSP), which has a lower overall
quantum at 50% of the previous level of LTIP awards. The RSP
is less variable than conventional LTIPs, which the Committee
believes is more appropriate given the regulatory environment
within which Centrica operates where some stakeholders such
as customers and regulators expect a narrower range of
acceptable performance outcomes than in many other
companies. RSPs also incentivise executives to invest in the
ongoing long-term success of the business, rather than taking
decisions based on a three-year performance target cycles..
The Company believes the ratios are appropriate given financial
and business performance outcomes in 2024, and the size and
complexity of the business.
Pay for performance
The table below shows the CEO’s total remuneration over the
last 10 years and the achieved annual short-term and long-term
incentive pay awards as a percentage of the plan maximum.
Chief Executive
single figure for
total remuneration
£000
Annual short-term
incentive payout
against max
opportunity
%
Long-term incentive
vesting against max
opportunity
%
Chris O’Shea
2024
4,322
81.25
100
2023
8,231
87.5
85
2022
4,490
89.5
76
2021
875
0
0
2020
765
0
0
Iain Conn
2020
239
0
0
2019
1,186
0
0
2018
2,335
41
18
2017
1,678
0
26
2016
4,040
82
0
2015
3,025
63
0
For 2020 the single figure for total remuneration for both Iain Conn and Chris O’Shea are
shown. The total remuneration figure for Chris O’Shea includes his earnings during 2020
as CFO and CEO.
The performance graph below shows Centrica’s TSR
performance against the performance of the FTSE 100 Index
over the 10-year period to 31 December 2024. The FTSE 100
Index has been chosen as it is an index of similar-sized
companies and Centrica has been a constituent member for the
majority of the period.
Total return indices – Centrica and FTSE 100
Centrica Total Return Index
FTSE 100 Total Return Index
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
0
50
100
150
200
Fees received for external appointments of Executive
Directors
Chris O’Shea was appointed as a Non-Executive Director to
the ITT Inc. Board on 14 May 2024. He received a total fee of
$255,000 per annum which is split as $100,000 cash payment
and the remainder as a share award.
Centrica plc Annual Report and Accounts 2024
135
Relative importance of spend on pay
The table below shows the percentage change in total remuneration paid to all colleagues compared to expenditure on dividends
and share buyback for the years ended 31 December 2023 and 2024.
2024
£m
2023
£m
%
Change
Share repurchase(1)
499
613
(19) %
Dividends
219
186
18 %
Staff and employee costs(2)
1,357
1,400
(3) %
(1) 385,486,775 shares were purchased during 2024 as part of the share buyback arrangement
(2) Staff and employee costs are as per note 5(b) in the notes to the financial statements.
Payments to past Directors (audited)
No payments to past directors in 2024.
Payments for loss of office (audited)
No payments for loss of office were made in 2024.
Advice to the Remuneration Committee
Following a competitive tender process, PwC was appointed as independent external advisor to the Committee in May 2017.
PwC also provided advice to Centrica globally during 2024 in the areas of employment taxes, regulatory risk and compliance issues
and additional consultancy services.
PwC’s fees for advice to the Committee during 2024 amounted to £289,450 which included the preparation for and attendance at
Committee meetings. The fees were charged on a time spent basis in delivering advice that materially assisted the Committee in its
consideration of matters relating to Executive remuneration.
The Committee takes into account the Remuneration Consultants Group’s (RCG) Code of Conduct when dealing with its advisors.
PwC is a member of the RCG, have no connection with the Company or the Directors, and the Committee is satisfied that the
advice it received during the year was objective and independent and that the provision of any other services by PwC in no way
compromises their independence.
Statement of voting
Shareholder voting on the resolutions to approve the Directors’ Remuneration Policy put to the 2022 AGM, and the Directors’
Remuneration Report, put to the 2024 AGM, was as follows:
Resolution
AGM
Votes
for
Votes for
%
Votes
against
Votes against
%
Votes
withheld
Directors’ Remuneration Policy
2022
3,132,342,144
83.48%
619,903,528
16.52%
1,275,033
Directors’ Remuneration Report
2024
3,044,479,915
90.08%
335,135,590
9.92%
1,757,494
Strategic Report Governance Financial Statements Other Information
Implementation in the next financial year
The table below sets out details of how we implemented our remuneration policy in 2024, and how we intend to implement the
policy in 2025.
Remuneration
element
Implementation in 2024
Implementation in 2025
Base salary
With effect from 1 April 2024, salaries for Executive Directors were:
• Group Chief Executive (CEO): £855,000
• Group Chief Financial Officer (CFO): £590,000
With effect from 1 April 2025,
salaries for Executive Directors are:
• CEO: £1,100,000 (+28.7%)
• CFO: £640,000 (+8.5%)
The salary increase budget in 2025
across with wider workforce in the
UK is 3.5% to 4% and individual
increase can be higher or lower
depending on the role.
Annual
Incentive
Plan (AIP)
Maximum opportunity:
• CEO: 200% of salary (100% of salary at target)
• CFO: 150% of salary (75% of salary at target)
The performance measures and their weighting as a percentage of maximum opportunity were:
• EPS: 37.5%
• Balanced Scorecard: 37.5%
• Individual objectives: 25%
EPS payout ranges were as follows (as a percentage of maximum opportunity):
• Threshold performance: 25%
• On-target performance: 50%
• Maximum performance: 100%
Maximum opportunity:
• CEO: No change
• CFO: 175% of salary (87.5% of
salary at target)
Restricted
Share
Plan (RSP)
RSP awards were granted at the following levels:
• Group Chief Executive: 150% of salary
• Group Chief Financial Officer: 125% of salary
RSP awards have no performance conditions but are subject to a performance underpin. In assessing the
underpin, the Committee will consider the Company’s overall performance, including financial and non-financial
performance over the vesting period as well as any material risk or regulatory failures identified. The Committee
may scale back the awards (including to zero) if it is not satisfied the underpin has been met.
No change
Pensions
The maximum benefit for Executives is 10% of base salary earned during the financial year. This compares with
the average pension benefit across the wider UK workforce, currently 10-14% of salary.
No change
Benefits
Benefits to be provided in line with the Policy.
No change
All-employee
share plan
Executives were entitled to participate in all-employee share plans on the same terms as all other eligible
employees.
No change
Shareholding
requirements
CEO: 300% of salary
CFO: 200% of salary
Post-employment, Executive Directors will continue to be expected to retain the lower of the shares held
at cessation of employment and shares to the value of 300% of base salary for the CEO and 200% of base
salary for the CFO for a period of two years.
CEO: 400% of salary
CFO: No change
NED fees
With effect
from 1 January
2024
With effect from
1 January 2025
Chair of the Board
£440,00
No change
Basic fee for Non-Executives
£76,000
£79,000 (+3.9%)
Additional fees
Chair of Audit and Risk Committee
£25,000
No change
Chair of Remuneration Committee
£20,000
£25,000 (+25%)
Chair of Safety, Environment and Sustainability Committee
£20,000
£25,000 (+25%)
Senior Independent Director
£20,000
No change
Employee Champion
£20,000
No change
The Remuneration Report has been approved by the Board of Directors and signed on its behalf by:
Raj Roy, Group General Counsel & Company Secretary
19 February 2025
Centrica plc Annual Report and Accounts 2024
137
Directors’ Remuneration Policy
The Remuneration Policy was last approved by shareholders at the AGM on 7 June 2022.
This section contains the proposed summary of Centrica’s Directors’ Remuneration Policy (Policy) that will govern and guide
the Group’s future remuneration payments. The Policy described in this section is intended to apply for three years subject
to shareholder approval at Centrica’s 2025 Annual General Meeting (AGM).The full version can be found on our website
at centrica.com.
The Policy operated as intended in 2024.
Objectives of The Policy
The Policy aims to deliver remuneration arrangements that:
•Attract and retain high-calibre Executives in a challenging and competitive global business environment;
•Place strong emphasis on both short-term and long-term performance;
•Are strongly aligned to the achievement of strategic objectives and the delivery of sustainable long-term shareholder value
through returns and growth; and
•Seek to avoid creating excessive risks in the achievement of performance targets.
Key changes to the Policy
In reviewing the Policy, the Committee consulted extensively with shareholders and aimed to devise a remuneration structure that
would support our strategic direction, enable us to engage our leadership team in the continuing transformation of Centrica and
support our requirement for a team capable of making those changes, whilst addressing the challenges our company and industry
face going forward.
Further details on the rationale for the proposed changes are described in the Committee Chair’s letter on pages 116 to 123. Details
on how the Policy will be implemented in the coming financial year are provided on pages 139 to 141.
The main change to the Policy is an increase to the maximum RSP from 150% to 200% of salary. In addition the Committee will
increase the shareholding requirement of the CEO to 400% of salary (current policy is 300% of salary) to further increase alignment
between our Executive Directors and shareholders.
Strategic Report Governance Financial Statements Other Information
Summary of Policy design
Fixed remuneration
Annual Incentive Plan (AIP)
Restricted Share Plan (RSP)
Mix of financial, business
and strategic measures
Performance Underpin
50% of award deferred
into shares for three years
Three-year performance
period followed by two-year
holding period
Malus and clawback
Pension
Based pay
Benefits
How the Policy links to our strategy
Our strategy is driven by our Purpose “energising a greener, fairer future”, and our enduring values at Centrica underpin our culture.
Further information on our Purpose and values is set out on page 11. We need to engage our Centrica Leadership Team to fulfil our
Purpose and to ensure Centrica is focused on delivery and positioned for growth.
The AIP focuses the Executives on the delivery of our near-term objectives, with at least 75% of the award based on a mix of
financial and business measures based on Centrica’s priorities for the forthcoming year and up to 25% based on individual strategic
and personal objectives for the year. All targets align with the Group Annual Plan.
At the time of the last Remuneration Policy review, the Remuneration Committee identified the RSP as the appropriate long term
incentive vehicle for our Executive Directors as it reduces the upper limit of payment and is aligned with our goal to simplify all
aspects of our business. Potential payouts from restricted shares are far less variable than conventional long-term incentives.
The RSP has a three-year performance period and is subject to a performance underpin where the Committee will consider the
Company’s overall financial and non-financial performance over the period.
As we continue to grow shareholder value, the RSP will ensure a large proportion of our Executives’ pay is based on direct and
uninhibited share price movement.
We operate an RSP for leaders below the most senior management and this approach therefore creates alignment between
our Executives and our senior colleagues.
Remuneration Policy table for Executive Directors
The following table summarises each element of the Remuneration Policy for the Executive Directors, explaining how each element
operates and the link to the corporate strategy.
Purpose and
link to strategy
Operation and
clawback
Maximum
opportunity
Performance
measures
Changes
Base salary
Reflects the scope
and responsibility of
the role and the skills
and experience of the
individual.
Salaries are set at a
level sufficient for the
Group to compete for
international talent and
to attract and retain
Executives of the
calibre required to
develop and deliver
our strategy.
Base salaries are reviewed
annually taking into account
individual and business
performance, market conditions
and pay in the Group as a whole.
When determining base salary
levels, the Committee will
consider factors including:
•Remuneration practices within
the Group;
•Change in scope, role and
responsibilities;
•The performance of the
Executive Director and the
Group;
•Experience of the Executive
Director;
•The economic environment; and
•When the Committee
determines a benchmarking
exercise is appropriate, salaries
within the ranges paid by the
companies which the
Committee believe are
appropriate comparators for the
Group.
Base salary increases in
percentage terms will
usually be within the range
of increases awarded to
other employees of the
Group.
Increases may be made
above this level to take
account of individual
circumstances such as a
change in responsibility,
progression/development
in the role or a significant
increase in the scale or size
of the role.
Not applicable.
No change to Policy.
Centrica plc Annual Report and Accounts 2024
139
Purpose and
link to strategy
Operation and
clawback
Maximum
opportunity
Performance
measures
Changes
Annual Incentive Plan (AIP)
Designed to
incentivise and reward
the performance of
individuals and teams
in the delivery of short-
term financial and non-
financial metrics.
Performance
measures are linked to
the delivery of the
Group’s long-term
financial goals and key
Group priorities.
In line with the Group’s annual
performance management
process, each Executive has an
agreed set of stretching individual
objectives for each financial year.
Following the end of the financial
year, to the extent that
performance criteria have been
met, up to half of the AIP award is
paid in cash.
To further align the interests of
Executives with the long-term
interests of shareholders, the
remainder is paid in deferred
shares which are held for three
years. No further performance
conditions will apply to the
deferred element of the
AIP award.
Dividend equivalents may be paid
as additional shares or cash.
Malus and clawback apply to the
cash and share awards.
Maximum of 200% of base
salary per annum for
Executive Directors.
For threshold performance,
up to 25% of the maximum
opportunity will pay out. For
on-target performance,
50% of the maximum
opportunity will pay out.
At least 75% based on a
mix of financial
performance and
business measures
aligned to Centrica’s
priorities for the
forthcoming financial
year and up to 25%
based on individual
objectives aligned to the
Group’s priorities and
strategy.
Performance is assessed
over one financial year.
No change to Policy.
Restricted Share Plan (RSP)
Designed to reward
and incentivise the
delivery of long-term
performance and
shareholder value
creation.
RSP awards granted to Executive
Directors will normally vest after
three years. subject to a two-year
post-vesting holding period during
which the Executive Directors may
not normally sell their vested shares
except as is necessary to pay tax
and social security contributions
arising in respect of their RSP
awards.
Dividend equivalents are accrued
during the vesting period and
calculated on vesting on any RSP
share awards. Dividend equivalents
are paid as additional shares or as
cash.
Malus and clawback apply to the
awards.
Maximum of 150% of base
salary per annum for
Executive Directors.
The RSP will be subject to
a underpin. In assessing
the underpin, the
Committee will consider
the Company’s overall
performance, including
financial and non-financial
performance over the
vesting period as well as
any material risk or
regulatory failures
identified.
The Committee may
scale back the awards
(including to zero) if it is
not satisfied the underpin
has been met.
The maximum is
increased to 200% of
salary for Executive
Directors.
Pensions
Positioned to provide a
market competitive
post-retirement
benefit, in a way that
manages the overall
cost to the Company.
Executives are entitled to
participate in a Company defined
contribution pension
arrangement or to take a fixed
salary supplement (calculated
as a percentage of base salary,
which is excluded from any AIP
calculation) in lieu of pension
entitlement.
The Group’s policy is not to offer
defined benefit arrangements to
new employees at any level,
unless this is specifically required
by applicable legislation or an
existing contractual agreement.
The maximum benefit is
10% of base salary per
annum for Executive
Directors. This compares
with the average pension
benefit across the wider UK
workforce, currently
10-14% of salary.
Not applicable.
No changes in Policy.
Strategic Report Governance Financial Statements Other Information
Purpose and
link to strategy
Operation and
clawback
Maximum
opportunity
Performance
measures
Changes
Benefits
Positioned to support
health and wellbeing
and to provide a
competitive package
of benefits that is
aligned with market
practice.
The Group offers Executives
a range of benefits including
(but not limited to):
• A company-provided car and
fuel, or a cash allowance in lieu;
• Life assurance and personal
accident insurance;
• Health and medical insurance
for the Executive and their
dependants; and
• Health screening and wellbeing
services.
Cash allowance in lieu of
company car – currently
£15,120 per annum for
Executive Directors.
The benefit in kind value
of other benefits will not
exceed 5% of base salary.
Not applicable.
No changes to Policy.
All-employee share plans
Provides an
opportunity for
employees to
voluntarily invest in the
Company.
Executives are entitled to
participate in all-employee share
plans on the same terms as all
other eligible employees.
Maximum contribution
limits are set by legislation
or by the rules of each plan.
Levels of participation
apply equally to all
participants.
Not applicable.
No changes to Policy.
Shareholding requirements
To align the interests
of Executive Directors
with shareholders over
a long-term period
including after
departure from the
Group.
In-employment requirement
During employment, the Group
Chief Executive and Group Chief
Financial Officer are required to
build and maintain a minimum
shareholding of 300% and 200%
of their base salary respectively.
Executives must also hold 100%
of vested incentive shares (net of
tax) until the shareholding
requirement is met.
Post-employment
requirement
Executive Directors are required
to hold shares after cessation of
employment to the full value of the
shareholding requirement (or the
existing shareholding if lower at the
time) for a period of two years.
Shares purchased by Executives
with their own monies are excluded
from the post-employment
requirement.
In-employment
requirement
The current shareholding
requirement is maintained
at 300% of base salary for
the Group Chief Executive
and 200% of base salary for
the Group Chief Financial
Officer.
Post-employment
requirement
Executive Directors will be
expected to retain the
lower of the shares held at
cessation of employment
and shares to the value of
300% of base salary for the
Group Chief Executive and
200% of base salary for the
Group Chief Financial
Officer for a period of
two years.
Only shares earned from
vested incentives will be
included within the post-
employment shareholding
requirement.
Not applicable.
Increase shareholding
requirement to 400% of
base salary for the
Group Chief Executive.
Update to the Operation
and clawback wording
to include the following.
In determining an
Executive Director’s
shareholding, unvested
AIP deferred shares, RSP
shares, and any other
share awards that are
not subject to
performance targets
will be included in the
calculation on a net of
tax basis.
Notes to the Remuneration Policy Table
The Committee reserves the right to make any remuneration payments and payments for loss of office, notwithstanding that they
are not in line with the Policy set out above, where the terms of the payment were agreed before the Policy came into effect, at a
time when the relevant individual was not an Executive Director of the Company and, in the opinion of the Committee, the payment
was not in consideration for the individual becoming a Director of the Company. For these purposes payments include the amounts
paid in order to satisfy awards of variable remuneration and, in relation to an award over shares, the terms of the payment are agreed
at the time the award is granted. The Committee may make minor amendments to the Policy (for regulatory, exchange control, tax
or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.
Centrica plc Annual Report and Accounts 2024
141
Statement of consideration of shareholder views
In developing the Policy set out above, the Committee carried out an extensive shareholder consultation exercise, engaging directly
with over 30 of our largest institutional shareholders representing approximately 50% of our share register and with the shareholder
proxy voting agencies. We received direct feedback from a third of our shareholders and after several rounds of consultation, we
carefully considered the feedback received and proposals were refined in response.
Further details on our consultation with shareholders is described in the Chair’s letter on pages 116 to 123.
Performance measures
We continue to be committed to full transparency and disclosure. We will disclose incentive targets as soon as any commercial
sensitivity falls away. Usually in the reporting year following the end of the performance period.
AIP
Performance for the AIP will be measured against financial and non-financial metrics with targets for each measure set by the
Committee each year. The Policy provides the Committee with the flexibility to choose measures each year that are strongly linked
to the specific strategic and financial measures in any given year.
For financial measures, the targets are set with reference to the group annual plan, external forecasts and other circumstances as
appropriate to ensure that targets are suitably stretching and motivational to executives.
Non-financial targets are set each year with reference to the key strategic objectives of the Company that will drive the long term
success of the business.
RSP
The RSP is subject to a performance underpin assessed by the Committee.
In assessing the underpin, the Committee will consider the Company’s overall performance, including financial and non-financial
performance over the vesting period as well as any material risk or regulatory failures identified. The Company may scale back the
awards (including to zero) if it is not satisfied the underpin has been met.
Malus and clawback
In line with UK corporate governance best practice, the Committee can apply malus (that is reduce the number of shares in respect
of which an award vests) or delay the vesting of awards. In addition, where an award has vested, the resulting shares will generally
be held for a period during which they may be subject to clawback. The following provisions apply:
•AIP – cash awards: malus will apply up to the payment of the cash AIP award and clawback will apply for a period of 3 years after
the cash AIP payment.
•AIP – deferred shares: clawback will apply during the period of three years following the payment of the cash AIP award the
deferred share relates to.
•Historic LTIP awards: malus will apply during the vesting period and up to the date of vesting and clawback will apply for a period
of two years post-vesting.
•RSP awards: malus will apply during the vesting period and up to the date of vesting and clawback will apply for a period of two
years post-vesting.
Legacy awards are governed by the malus and clawback provisions within the respective policy and plan rules. For awards granted
under the proposed policy malus and clawback provisions may be applied in the following circumstances:
•Material financial misstatement;
•Where an award was granted, or performance was assessed, based on an error or inaccurate or misleading information;
•Action or conduct of a participant amounts to fraud or gross misconduct;
•Events or the behaviour of a participant have led to censure of the Company or Group by a regulatory authority or cause significant
detrimental reputational damage;
•Material failure of risk management; or
•Corporate failure.
During the year, the Remuneration Committee has not needed to apply clawback or malus to any payments to Executive Directors
or other members of the Centrica Leadership Team.
Pension arrangements applying to Executives
All registered scheme benefits are subject to HMRC guidelines and the Lifetime Allowance.
The Centrica Unapproved Pension Scheme (CUPS) defined contribution (DC) section provides benefits for individuals not eligible
to join the CUPS defined benefit (DB) section and for whom registered scheme benefits are expected to exceed the Lifetime
Allowance. The CUPS DC section is offered as a direct alternative to a cash salary supplement.
CUPS is unfunded but the benefits are secured by a charge over certain Centrica assets. An appropriate provision in respect of the
accrued value of these benefits has been made in the Company’s balance sheet. CUPS was closed to future contributions from
31 December 2023.
Strategic Report Governance Financial Statements Other Information
Discretion and judgement
It is important that the Committee maintains the flexibility to apply discretion and judgement to achieve fair outcomes as no
remuneration policy and framework, however carefully designed and implemented, can pre-empt every possible scenario.
The Committee needs to be able to exercise appropriate discretion to determine whether mechanistic or formulaic outcomes
are fair, in context and can be applied in an upward or downward manner when required.
Judgement is applied appropriately by the Committee, for example when considering the political and social pressures on the
business, the impact of significant movements in external factors such as commodity prices, in setting and evaluating delivery
against individual and non-financial performance targets to ensure they are considered sufficiently stretching and that the maximum
and minimum levels are appropriate and fair.
The Committee has absolute discretion to decide who receives awards, the level of the awards under the incentive plans and the
timing, within the parameters set in the rules and the limits in the Policy table.
Recruitment policy
The Committee will apply the same Remuneration Policy during the policy period as that which applies to existing Executives when
considering the recruitment of a new Executive in respect of all elements of remuneration as set out in the Remuneration Policy
table.
Whilst the maximum level of remuneration which may be granted would be within plan rules and ordinarily subject to the maximum
opportunity set out in the Remuneration Policy table, in certain circumstances, an arrangement may be established specifically to
facilitate recruitment of a particular individual up to 25% above the maximum opportunity, albeit that any such arrangement would
be made within the context of minimising the cost to the Company.
The policy for the recruitment of Executives during the policy period also includes the opportunity to provide a level of
compensation for forfeiture of AIP entitlements and/or unvested long-term incentive awards (at an expected value no greater than
what is forfeit) from an existing employer, if any, and the additional provision of benefits in kind, pensions and other allowances, as
may be required in order to achieve a successful recruitment. The Company has a clear preference to use shares wherever possible
and will apply timescales at least as long as previous awards.
Details of the relocation and expatriate assistance that may be available as part of the recruitment process can be found in the
table below.
Relocation and expatriate assistance
Purpose and link to strategy
Enables the Group to recruit or promote the appropriate individual into a
role, to retain key skills and to provide career opportunities.
Operation and clawback
Assistance may include (but is not limited to) removal and other
relocation costs, housing or temporary accommodation, education,
home leave, repatriation and tax equalisation.
Maximum opportunity
Maximum of 100% of base salary.
Performance measures
Not applicable.
Changes
No changes.
Service contracts
Service contracts provide that either the Executive or the Company may terminate the employment by giving one year’s written
notice. The Committee retains a level of flexibility, as permitted by the UK Corporate Governance Code 2018, in order to attract
and retain suitable candidates. It reserves the right to offer contracts which contain an initial notice period in excess of one year,
provided that at the end of the first such period the notice period reduces to one year. All Executive and Non-Executive Directors
are required to be re-elected at each AGM. Service contracts are available for inspection at the Company’s registered office.
Executive Director
Date of appointment to role
Date of current contract
Notice from the Group
Notice from the individual
Chris O’Shea
1 November 2018
10 December 2020
12 months
12 months
Russell O’Brien
30 January 2023
30 January 2023
12 months
12 months
Centrica plc Annual Report and Accounts 2024
143
£’000s
Minimum
Target
Maximum
Maximum
(with 50%
share price
appreciation)
Minimum
Target
Maximum
Maximum
(with 50%
share price
appreciation)
0
2,000
4,000
6,000
l Fixed remuneration l Short-term incentive l Long-term incentive l Share price growth
CEO – Chris O'Shea
CFO – Russell O'Brien
100%
31%
24%
21%
100%
35%
27%
24%
28%
43%
37%
42%
33%
28%
14%
27%
38%
42%
30%
37%
26%
13%
£1,225
£3,975
£5,075
£719
£2,079
£2,639
£3,039
£5,900
Total remuneration by performance scenario
The charts below provide an illustration of what could be earned by each Executive Director in 2025 under the new Remuneration
Policy. These charts are illustrative as the actual value will depend on business performance and share price performance. The
maximum performance also includes an additional bar which shows the impact of a 50% share price growth on the long-term
Restricted Share Plan outcome over the relevant performance period to show how the package value is aligned to shareholders.
Assumptions made for each scenario are:
•Minimum – Fixed Remuneration only comprising base salary plus pension plus benefits.
•Target – Fixed Remuneration plus Target Annual Incentive Plan plus the value of long-term Restricted Share Plan assuming 100%
of the award vests (but excludes share price growth).
•Maximum – Fixed Remuneration plus maximum Annual Incentive Plan plus the value of long-term Restricted Share Plan assuming
100% of the award vests (but excludes share price growth); and
•Maximum + 50% share price growth – Fixed remuneration plus maximum Annual Incentive Plan plus the value of long-term
Restricted Share Plan assuming 100% of the award vests (and includes 50% share price growth).
Termination policy
The Committee carefully considers compensation commitments in the event of an Executive Director’s termination. The aim
is to avoid rewarding poor performance and to reduce compensation to reflect the departing Executive’s obligations and to
mitigate losses.
Strategic Report Governance Financial Statements Other Information
Remuneration element
Scenario
Payment
Base salary, pension
and other benefits
Dismissal with cause
No further payments made except those that an individual may be contractually entitled to.
All other scenarios
Either continue to provide base salary, pension and other benefits for any unworked
period of notice or, at the option of the Company, to make a payment in lieu of notice
comprising base salary only.
Typically any payment in lieu of notice will be made in monthly instalments and reduce,
or cease completely, in the event.
AIP
Dismissal with cause
AIP award and any deferred awards will be forfeit.
Resignation
Executives leaving as a result of resignation will forfeit any potential AIP award for the
performance year in which the resignation occurs.
Change of control
The AIP award will be prorated for time (based on the proportion of the AIP period
elapsed at the date of change of control).
The Committee has discretion to determine that the AIP does not pay out on change of
control and will continue under the terms of the acquiring entity.
The Committee has discretion to dis-apply prorating in exceptional circumstances.
Deferred awards may vest immediately or be exchanged for new equivalent awards in the
acquirer where appropriate.
Exceptions*
An AIP award for the year in which the termination occurs may be made following the
normal year-end assessment process, subject to achievement of the agreed
performance measures and time apportioned for the period worked.
Any award would normally be payable at the normal time with a 50% deferral vesting in
line with the normal time-frame.
The Committee has discretion to accelerate the vesting of deferred awards.
LTIP and RSP
Dismissal with cause or
resignation
All unvested awards will lapse.
Change of control
Existing awards will be exchanged on similar terms or vest to the extent that the
performance conditions have been met at the date of the event and be time-apportioned
to the date of the event or the vesting date, subject to the overriding discretion of
the Committee.
Exceptions*
Any outstanding awards will normally be prorated for time based on the proportion of the
performance and/or vesting period elapsed.
Performance will be measured at the end of the performance period.
On death in service, awards may vest earlier than the normal date.
The Committee has the discretion to dis-apply prorating or accelerate testing
of performance conditions in exceptional circumstances.
*
“Exceptions” are defined by the plan rules and include those leaving due to the following reasons: ill health, disability, redundancy, retirement (with agreement from the Company),
death, or any other reason that the Committee determines appropriate.
Following termination, awards continue to be subject to malus and clawback provisions in line with those set out in the rules and
the Policy.
Pay fairness across the Group
The Group operates in a number of different environments and has many employees who carry out a range of diverse roles across
a number of countries. In consideration of pay fairness across the Group, the Committee believes that ratios related to market
competitive pay for each role profile in each distinct geography are the most helpful.
The ratios of salary to the relevant market median are compared for all permanent employees across the Group and are updated
using salary survey benchmarking data on an annual basis.
Unlike the significant majority of the workforce who receive largely fixed remuneration, mainly in the form of salary, the most
significant component of Executive compensation is variable and dependent on performance. As such, the Committee reviews
total compensation for Executives against benchmarks rather than salary alone.
A number of performance-related incentive schemes are operated across the Group which differ in terms of structure and metrics
from those applying to Executives.
The Group also offers a number of all-employee share schemes in the UK, Ireland, Europe and North America and Executives
participate on the same basis as other eligible employees.
Performance measures applying to Executives are cascaded down through the organisation and Group employment conditions
include high standards of health and safety and employee wellbeing initiatives.
Centrica plc Annual Report and Accounts 2024
145
External appointments of Executives
It is the Company’s policy to allow each Executive to accept one non-executive directorship of another company, although the
Board retains the discretion to vary this policy. Fees received in respect of external appointments are retained by the individual
Executive and are set out in the Directors’ Annual Remuneration Report each year.
Consideration of the UK Corporate Governance Code
As part of its review of the Policy, the Committee has considered the factors set out in provision 40 and provision 41 of the UK
Corporate Governance Code (the ‘Code’). In the Committee’s view, the proposed Policy addresses those factors as set out below:
Principles of the Code
How the Policy aligns
Clarity
Remuneration arrangements should be transparent and promote effective
engagement with shareholders and the workforce
The Policy is simple and designed to support long-term, sustainable performance.
Shareholders were extensively consulted on the design of the Policy, and the key
rationale for the changes that were made. The Policy received shareholder approval
at the AGM in June 2022. The Committee proactively seeks engagement with
shareholders on remuneration matters on an ongoing basis.
During the year, consultation took place with recognised trade unions on pay
across the wider workforce. It is important that colleagues are able to share views
with the Board on executive pay, wider workforce terms and conditions and other
people-related policies. Colleague engagement on executive remuneration is
facilitated through the Shadow Board, comprising colleagues across the business
and in different locations (read more about the Shadow Board on page 55 and
page 98). During 2024, we met with the Shadow Board to discuss executive
remuneration and support their understanding of how executive remuneration
practices operates. The Shadow Board asked some good questions to aid their
understanding and they provided feedback around some employee reward topics.
We’ve agreed to regular sessions in 2025 to discuss on an ongoing basis how
executive reward is managed and providing feedback from those sessions to the
Committee.
Simplicity
Remuneration structures should avoid complexity and their rationale and operation
should be easy to understand
The latest Policy results in a clear simplification of remuneration arrangements
through the replacement of a performance share plan, with a simpler restricted
share plan.
We further operate an annual incentive (the AIP) with a straightforward deferral
structure to allow it to be easily understood.
The performance conditions for variable elements are clearly communicated to,
and understood by, participants and aligned with the Group strategy.
Risk
Remuneration arrangements should ensure reputational and other risks from
excessive rewards, and behavioural risks that can arise from target-based incentive
plans, are identified and mitigated
The majority of the Executive Directors’ total remuneration is weighted towards
variable pay (and provided in shares).
The changes result in a reduced risk of excessive reward, through lower quantum for
the Executive team alongside an increased discouragement of excessive risk-taking
behaviour through the use of a post-employment shareholding requirement.
The Committee also retains discretion to override formulaic outcomes for incentive
plans. Malus and clawback provisions mitigate behavioural risks by enabling
payments to be reduced or reclaimed in specific circumstances.
Predictability
The range of possible values of rewards to individual Directors and any other limits or
discretions should be identified and explained at the time of approving the Policy
The Policy sets out the maximum potential value for each element of remuneration
subject to the achievement of performance conditions.
The potential total remuneration outcomes are easily quantifiable and are set out in
the illustrations provided in the Policy.
As highlighted in Risk, the Committee has discretion to override formulaic outcomes
if they were deemed to be inappropriate.
Proportionality
The link between individual awards, the delivery of strategy and the long-term
performance of the Group should be clear. Outcomes should not reward poor
performance
Remuneration is appropriately balanced between fixed and variable pay.
Short-term performance targets are linked to the Group’s strategy and the use of
deferral in the AIP ensures a link to long-term performance through this element.
The introduction of an RSP ensures a strong link to long-term performance as
Executive reward is directly linked to the share price of the Company.
Alignment to culture
Incentive schemes should drive behaviours consistent with the Group’s Purpose,
values and strategy
The short-term incentive plans are measured against performance measures which
underpin the Group’s culture and strategy.
The incentive structure is cascaded through the top six levels of the organisation
ensuring that it drives the same behaviours across the Group.
Strategic Report Governance Financial Statements Other Information
Non-Executive Directors’ remuneration
Centrica’s policy on Non-Executive Directors’ (‘Non-Executives’) fees takes into account the need to attract the high-calibre
individuals required to support the delivery of our strategy.
Purpose and
link to strategy
Operation and
clawback
Maximum
opportunity
Performance
measures
Chair and Non-Executive Director Fees
Sufficient level to secure
the services of
individuals possessing
the skills, knowledge and
experience to support
and oversee the
Executive Directors in
their execution of the
Board’s approved
strategies and
operational plans.
Fees reflect market
practice as well as the
responsibilities and time
commitment required by
our Non-Executives.
The fee levels for the Chair are reviewed
by the Remuneration Committee.
The fee levels of the Non-Executives are
reviewed by the Chair of the Board,
Executive Directors and the Chief People
Officer.
Non-Executives are paid a base fee for
their services. Where individuals serve as
Chair of a Committee of the Board,
additional fees are payable. The Senior
Independent Director also receives an
additional fee.
The Company reserves the right to pay
a Committee membership fee in addition
to the base fees.
The maximum level of fees payable to
Non-Executives, in aggregate, is set out
in the Articles of Association.
Not applicable.
Recruitment policy
The policy on the recruitment of new Non-Executives during the policy period would be to apply the same remuneration elements
as for the existing Non-Executives. It is not intended that variable pay, day rates or benefits in kind be offered, although in
exceptional circumstances such remuneration may be required in currently unforeseen circumstances. The Committee will include
in future Remuneration Reports details of the implementation of the policy as utilised during the policy period in respect of any such
recruitment to the Board.
Terms of appointment
Non-Executives, including the Chair, do not have service contracts. Their appointments are subject to Letters of Appointment and
the Articles of Association. All Non-Executives are required to be re-elected at each AGM. The date of appointment and the most
recent re-appointment and the length of service for each NED are shown in the table below:
Non-Executive Director
Date of appointment to role
Date of current contract
Notice from the Group
Notice from the individual
Carol Arrowsmith
11 June 2020
5 June 2024
3 months
3 months
Amber Rudd
10 January 2022
5 June 2024
3 months
3 months
Nathan Bostock
9 May 2022
5 June 2024
3 months
3 months
CP Duggal
16 December 2022
5 June 2024
3 months
3 months
Heidi Mottram
1 January 2020
5 June 2024
3 months
3 months
Kevin O’Byrne
13 May 2019
16 December 2024
6 months
6 months
Philippe Boisseau
1 September 2023
5 June 2024
3 months
3 months
Jo Harlow
1 December 2023
5 June 2024
3 months
3 months
Sue Whalley
1 December 2023
5 June 2024
3 months
3 months
Centrica plc Annual Report and Accounts 2024
147
Other statutory information
Index to Directors’ Report and other disclosures
98
Annual General Meeting (AGM)
148
Articles of Association
154 to 166
Audit Information
86 to 89
Board of Directors
14 to 15
Business Overview
85
Conflicts of Interest
149
Directors’ indemnities and insurance
143 and 147
Directors’ service contracts and letters of
appointment
131
Directors’ share interests
150
Disclosure required under Listing Rule 6.6.1R
59, 80, 91, 99 and 289
Diversity
Note 11
Page 200
Dividends
Note 27
Page 229
Events after the balance sheet date
Note 19 on page 215,
note S2 on pages 231
to 243, and note S6 on
pages 255 to 257
Financial instruments
4 to 77
Future developments
75 and 291
Greenhouse Gas (GHG) Emissions
99
Human rights
101 to 102
Internal control over financial reporting
148
Material shareholdings
54 to 61
People
149
Political donations and expenditure
Note S8
Page 260
Related party transactions
14 to 77
Research and development activities
1 and 26 to 37
Results
40 to 51
Risk management
12 and 94 to 97
Section 172(1) Statement (Director’s Duty)
148
Share capital
65
Speak Up
12 to 13, 18 and 98 to
99
Stakeholder engagement (including
employees, suppliers and customers)
58 to 66 and 114 to 115
Sustainability
67 to 77
TCFD and CFD
12, 54 to 61, 64 to 65,
66, 81, 98 to 99, 127,
132 to 133, 145 and 149
The Company’s approach to investing in and
rewarding its workforce
The Directors submit the Annual Report and Accounts for
Centrica plc, together with the consolidated financial
statements of the Centrica Group of companies, for the year
ended 31 December 2024. The Directors’ Report required under
the Companies Act 2006 (the Act) comprises this Directors’
and Corporate Governance Report (pages 80 to 151) including
the TCFD section for disclosure of our greenhouse gas (GHG)
emissions in the Strategic Report (pages 67 to 77) and note 27
(page 229) to the financial statements. The index on this page
includes matters contained in the Strategic Report that
would otherwise be required in the Directors’ Report. The
management report required under Disclosure Guidance and
Transparency Rule 4.1.5 R comprises the Strategic Report
(pages 2 to 77) (which includes the risks relating to our
business), Shareholder Information (page 283) and details of
acquisitions and disposals made by the Group during the year
in note 12 (page 201). The Strategic Report on pages 2 to 77
fulfils the requirements set out in Section 414 of the Act.
This Directors’ and Corporate Governance Report fulfils the
requirements of the corporate governance statement required
under Disclosure Guidance and Transparency Rule 7.2.1.
Articles of Association (Articles)
The Company’s Articles were adopted at the 2023 Annual
General Meeting (AGM) and may only be amended by a special
resolution of the shareholders. The Articles include various rules
outlining the running and governing of the Company, for
example rules relating to the appointment and removal of the
Directors and how the Directors can use all of the Company’s
powers (except where the Articles or legislation says
otherwise), for example in relation to issuing and buying back
shares. The Articles can be found on our website centrica.com.
Centrica shares
Significant shareholdings
At 31 December 2024, Centrica had received notification of the
following interests in voting rights pursuant to the Disclosure
and Transparency Rules:
Date
notified
% of share
capital(1)
BlackRock, Inc.
08.04.2022
5.25%
Bank of America Corporation
13.09.2024
<5%
(1) Percentages are shown as a percentage of the Company’s issued share capital when
the Company was notified of the change in holding. As at 19 February 2025, the
Company had received no further notifications. Copies of historic notifications and any
notifications received since 19 February 2025, can be found on our website at
centrica.com/rnsannouncements.
Share capital
The Company has a single share class which is divided into
ordinary shares of 6 14/81 pence each. The Company was
authorised at the 2024 AGM to allot up to 1,786,798,353
ordinary shares as permitted by the Act. A renewal of a similar
authority will be proposed at the 2025 AGM. The Company’s
issued share capital as at 31 December 2024, together with
details of shares issued during the year, is set out in note 26
to the financial statements on page 229.
Strategic Report Governance Financial Statements Other Information
Rights attaching to shares
Each ordinary share of the Company carries one vote. Further
information on the voting and other rights of shareholders is set
out in the Articles and in explanatory notes which accompany
notices of general meetings, all of which are available on our
website centrica.com. There are no shareholder agreements
or restrictions in 2024.
Purchase of shares
We regularly review our capital structure and have committed
to returning surplus capital to shareholders. Many shareholders
we consulted expressed a preference for share repurchases as
a way of returning surplus capital. These views are reflected in
our combination of paying dividends and share repurchases.
As permitted by the Articles, the Company obtained
shareholder authority at the 2024 AGM to purchase its own
shares up to a maximum of 536,039,506 ordinary shares of
6 14/81 pence each (shares).
At the start of the year, there were 491,835,133 shares held in
treasury. The total number of shares purchased during the
financial year was 385,486,775, which represents approximately
6.9% of the Company’s issued share capital, at an aggregate
cost of approximately £504m. During the year, 60,804,153
shares were used for share schemes and 339,738,924 shares
were cancelled. The purpose of the buybacks is to reduce the
capital of the Company in order to return surplus capital to
shareholders.
As at 31 December 2024, there were 476,778,831 shares held in
the treasury shares account representing approximately 8.6%
of the Company’s issued share capital. Dividends are waived
in respect of shares held in the treasury share account. Further
details are set out in note S4 to the financial statements on
page 252.
As announced in the Company’s Trading Update on
10 December 2024, the Company intends to repurchase a
further £300m of shares to reduce the capital of the Company.
The 2024-25 Extension commenced on 27 December 2024.
Shares held in employee benefit trusts
The Centrica plc Employee Benefit Trust (EBT) is used to
purchase shares on behalf of the Company for the benefit of
employees, in connection with the Restricted Share Scheme.
The Centrica plc Share Incentive Plan Trust (SIP Trust) is used to
purchase shares on behalf of the Company for the benefit of
employees, in connection with the SIP. Both the Trustees of the
EBT and the SIP Trust, in accordance with best practice, have
agreed not to vote any unallocated shares held in the EBT or SIP
Trust at any general meeting and dividends are waived in
respect of these shares. In respect of allocated shares in both
the EBT and the SIP Trust, the Trustees shall vote in accordance
with participants’ instructions. In the absence of any instruction,
the Trustees shall not vote.
Employee participation in share schemes
The Company’s all-employee share schemes are a long-
established and successful part of our total reward package,
encouraging the involvement of UK employees in the
Company’s performance through employee share ownership.
We offer a Share Incentive Plan (SIP) in the UK, with a take-up
of 31%. In 2024, all eligible employees globally were awarded
a profit share award.
Other information
Directors’ indemnities and insurance
In accordance with the Articles, the Company has granted a
deed of indemnity, to the extent permitted by law, to the
Directors of the Company. Qualifying third-party indemnity
provisions (as defined by Section 234 of the Act) were in force
during the year ended 31 December 2024 and remain in force.
The Company also maintains directors’ and officers’ liability
insurance for its Directors and officers. The Company has
granted qualifying pension scheme indemnities in the form
permitted by the Companies Act 2006 to the Directors of
Centrica Pension Plan Trustees Limited, Centrica Engineers
Pension Trustees Limited and Centrica Pension Trustees
Limited, that act as trustees of the Company’s UK pension
schemes.
Political donations
The Company operates on a politically neutral basis. No political
donations were made by the Group for political purposes during
the year.
Payments policy
We recognise the importance of good supplier relationships to
the overall success of our business. We manage dealings with
suppliers in a fair, consistent and transparent manner.
Significant agreements – change of control
There are a number of agreements to which the Company is
party that take effect, alter or terminate upon a change of
control of the Company following a takeover bid.
The significant agreements of this kind include:
•Those that relate to 2009, when the Company entered
into certain transactions with EDF Group in relation to an
investment in the former British Energy Group, which owned
and operated a fleet of nuclear power stations in the UK.
The transactions include rights for EDF Group and the
Company to offtake power from these nuclear power stations.
As part of the arrangements, on a change of control of the
Company, the Group loses its right to participate on the boards
of the companies in which it has invested. Furthermore, where
the acquirer is not located in certain specified countries,
EDF Group is able to require Centrica to sell out its investments
to EDF Group; and
•Certain long-term, high-value energy contracts and power
purchase agreements, committed facility agreements,
subordinated fixed rate notes and bonds issued under the
Company’s medium-term note programme.
The Remuneration Policy sets out on page 145 details of
the treatment of the Executive Directors’ pay arrangements,
including the treatment of share schemes in the event
of a change of control.
Centrica plc Annual Report and Accounts 2024
149
Disclosures required under Listing Rule 6.6.1 R
The Company is required to disclose certain information under
Listing Rule 6.6.1 R in the Directors’ Report or advise where such
relevant information is contained. All such disclosures are
included in this Directors’ and Corporate Governance Report,
other than the following sections of the 2024 Annual Report and
Accounts:
Information
Location in Annual Report
Page(s)
Capitalised interest
(borrowing costs)
Financial statements
196, note 8
Details of long-term
incentive schemes
Remuneration Report
117 to 118, 130
and 132
Details of arrangements
where shareholders have
waived dividends
Other Statutory Information
149
Directors’ statements
Accounting standards require that Directors satisfy themselves
that it is reasonable for them to conclude whether it is
appropriate to prepare the financial statements on a going
concern basis. The Group’s business activities, together with
factors that are likely to affect its future development and
position, are set out in the Group Chief Executive’s Statement
on pages 7 to 10 and the Business Reviews on pages 33 to 37.
After making enquiries, the Board has a reasonable expectation
that Centrica and the Group as a whole have adequate
resources to continue in operational existence and meet their
liabilities as they fall due, for the foreseeable future.
For this reason, the Board continues to adopt the going concern
basis in preparing the financial statements.
Additionally, the Directors’ Viability Disclosure, which assesses
the prospects for the Group over a longer period than the 12
months required for the going concern assessment, is set out on
pages 52 to 53. Further details of the Group’s liquidity position
are provided in notes 25 and S3 to the financial statements on
pages 225 to 228 and 244 to 250.
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
are required to prepare the Group financial statements in
accordance with international accounting standards, in
conformity with the requirements of the Companies Act 2006.
The Directors have also chosen to prepare the parent company
financial statements in accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period.
In preparing the parent company financial statements,
the Directors are required to:
•Select suitable accounting policies and then apply them
consistently;
•Make judgements and accounting estimates that are
reasonable and prudent;
•State whether Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ has been followed, subject to any
material departures disclosed and explained in the financial
statements; and
•Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
•Properly select and apply accounting policies;
•Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information;
•Provide additional disclosures when compliance with the
specific requirements in IFRS Standards are insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the entity’s
financial position and financial performance; and
•Make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them
to ensure that the financial statements comply with the
Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on
the Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors’ Responsibility Statement
Each of the Directors confirm that to the best of their
knowledge:
•The financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole;
•The Strategic Report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the Principal
Risks and Uncertainties that they face; and
•The Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
The names of the Directors and their functions are listed
on pages 86 to 89.
Strategic Report Governance Financial Statements Other Information
Information to the independent auditors
The Directors who held office at the date of this Report
confirm that:
•There is no relevant audit information of which Deloitte LLP
are unaware; and
•They have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s auditors
are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the
Companies Act 2006.
Deloitte LLP have expressed their willingness to continue in
office as auditors and a resolution to re-appoint them will be
proposed at the forthcoming AGM.
This report, including the Directors’ Responsibility Statement,
was approved by the Board of Directors on 18 February 2025
and is signed on its behalf by:
By order of the Board
Raj Roy, Group General Counsel & Company Secretary
19 February 2025
Centrica plc Annual Report and Accounts 2024
151
154
Independent Auditor’s Report
167
Group Income Statement
168
Group Statement of Comprehensive Income
169
Group Statement of Changes in Equity
170
Group Balance Sheet
171
Group Cash Flow Statement
172
Notes to the Financial Statements
172
1.
Basis of preparation and summary of significant new
accounting policies and reporting changes
174
2.
Centrica specific accounting measure
176
3.
Critical accounting judgements and key sources
of estimation uncertainty
183
4.
Segmental analysis
190
5.
Costs
191
6.
Share of results of joint ventures and associates
192
7.
Exceptional items and certain re-measurements
196
8.
Net finance income/(cost)
197
9.
Taxation
200
10.
Earnings per ordinary share
200
11.
Dividends
201
12.
Acquisitions and disposals
202
13.
Property, plant and equipment
204
14.
Interests in joint ventures and associates
205
15.
Other intangible assets and goodwill
207
16.
Deferred tax liabilities and assets
208
17.
Trade and other receivables and contract-related assets
214
18.
Inventories
215
19.
Derivative financial instruments
216
20. Trade and other payables and contract liabilities
217
21.
Provisions for liabilities and charges
218
22. Post-retirement benefits
223
23. Leases, commitments and contingencies
225
24. Other investments
225
25. Sources of finance
229
26. Share capital
229
27. Events after the balance sheet date
230 Supplementary information
270 Company Statement of Changes in Equity
271
Company Balance Sheet
272
Notes to the Company Financial Statements
281
Gas and Liquids Reserves (Unaudited)
282 Five Year Summary (Unaudited)
283 Shareholder information
284 Additional information – explanatory notes (unaudited)
289 People and Planet – Performance measures
292 Glossary
Strategic Report Governance Financial Statements Other Information
Financial Statements
Centrica plc Annual Report and Accounts 2024
153
Independent Auditor’s Report
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of Centrica plc (the ‘Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of the
Group’s and of the Company’s affairs as at 31 December 2024 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the Group Income Statement;
• the Group Statement of Comprehensive Income;
• the Group Statement of Changes in Equity;
• the Group Balance Sheet;
• the Group Cash Flow Statement;
• the related notes to the Group financial statements 1 to 27;
• the supplementary notes S1 to S11 of the Group financial statements;
• the Company Statement of Changes in Equity;
• the Company Balance Sheet; and
• the notes I to XVII to the Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and United
Kingdom adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the
Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure
Framework’ (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to
the Group for the year are disclosed in note S9 to the financial statements. We confirm that we have not provided any non-audit services
prohibited by the FRC’s Ethical Standard to the Group or the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Strategic Report Governance Financial Statements Other Information
3. Summary of our audit approach
Key audit matters
The key audit matters identified in the current year were:
• the valuation of residential energy supply billed debt provisions within British Gas Energy;
• revenue recognition in British Gas Energy;
• the impairment of long-lived assets and investments, including estimates of future price assumptions;
• accounting for the Electricity Generator Levy (“EGL”);
• the valuation of complex energy derivative contracts; and
• the valuation of the decommissioning provision in Spirit Energy.
The valuation of the decommissioning provision in Spirit Energy is newly identified as a key audit matter in the current year.
Within this report, key audit matters are identified as follows:
! Newly identified
r Increased level of risk
vw Similar level of risk
s Decreased level of risk
Materiality
The materiality used for the audit of the Group financial statements is £79.8m (2023: £135m), determined based on adjusted profit
before tax. Adjusted profit before tax is the pre-tax profit adjusted for the impact of exceptional items and certain
remeasurements as presented in the Group Income Statement. The decrease in materiality in 2024 reflects the reduction in
adjusted profit before tax.
Scoping
Other than the components presented below, all components of the Group were subject to an audit of the component’s financial
information. The following components were subject to an audit of specified account balances:
• Centrica Business Solutions - Power Assets;
• Bord Gáis;
• British Gas Services and Solutions; and
• Centrica Energy Storage+ (within the Upstream segment).
New Energy Services (within the Centrica Business Solutions segment) continues to be subject to specified further audit
procedures by the group engagement team.
Our risk assessment procedures resulted in an increase in the group reporting scope for Centrica Business Solutions Energy
Supply, from an audit of specified account balances in the prior year, to an audit of the component’s financial information in the
current year.
Significant changes
in our approach
Other than the changes in key audit matters and scope discussed above, there were no significant changes in our audit approach
when compared to 2023.
Centrica plc Annual Report and Accounts 2024
155
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to
adopt the going concern basis of accounting included:
• assessing the Group’s future cash flow forecasts, by considering actual cash flow performance in 2024, the current commodity price
environment, historical accuracy of the Group forecasts and key assumptions underpinning the Group’s going concern assessment;
• agreeing the level of committed undrawn facilities of £3.3bn (2023: £3.8bn) to signed facility agreements, the key terms of which have
been reviewed by our treasury specialists;
• obtaining an understanding of the relevant controls over the going concern assessment;
• testing the clerical accuracy of the cash flow forecasts and assessing the appropriateness of the model used to prepare the forecasts;
• assessing whether the cash flow forecast considers the impact of Group’s planned investment strategy announced in July 2023;
• assessing the sensitivities run by the directors and the linkage of these sensitivities to the Group’s principal risks disclosed on pages 40 to
51 of the Annual Report & Accounts. These sensitivities include the impact of margin cash volatility, a reduction in the Group’s credit rating,
a reduction in commodity prices, adverse weather and worsening macroeconomic factors, or a reduction in commodity trading
performance and the resultant impact on cashflows;
• assessing the mitigating actions that could be taken by the directors to maximise liquidity headroom including a reduction in capital
expenditure and a reduction in discretionary spend; and
• assessing the appropriateness of the going concern disclosures in light of the above assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
Strategic Report Governance Financial Statements Other Information
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
5.1 The valuation of residential energy supply billed debt provisions within British Gas Energyvw
Key audit matter
description
The Group supplies gas and power to residential customers in the UK through its British Gas Energy segment. Of the Group total
of £3,270m (2023: £2,991m) billed trade receivables, the British Gas Energy reporting segment contributes £2,768m
(2023: £2,380m), which includes both residential and small business customers.
Cost of living challenges and sustained high energy prices continue to affect customers’ ability to pay their bills with high levels of
fuel poverty and bad debt persisting in 2024. As a result, there continues to be judgement in determining the recoverability of
customer debt, which raises the risk of material misstatement in determining the billed debt provision at 31 December 2024.
Credit losses of £1,309m (2023: £1,077m) have been recognised on British Gas Energy billed trade receivables, of which £891m
(2023: £764m) relates to UK residential customers.
To determine the billed debt provision, certain key assumptions are made. These include the methodology used to assess the
impact of macroeconomic factors on future cash collection. The need to record or release an additional provision (“additional
macroeconomic” provision) beyond the provision that is indicated by past collection performance (“business-as-usual” provision)
increases the level of judgement and accordingly the risk of material misstatement. We have therefore also identified this as a
potential fraud risk area. In the current year the “business-as-usual” provision has increased as a result of declines in actual cash
collection rates during 2024.
Further details on billed debt provisions relating to trade receivables can be found in notes 3(b) and 17. These matters are also
considered by the Audit and Risk Committee in its report on pages 100 to 111.
How the scope of
our audit responded
to the key audit
matter
• We obtained an understanding of the controls relevant to the determination of billed debt provisions.
• With involvement of our IT and data analytics specialists, we tested the completeness and accuracy of the underlying debt
books, including the age of debt, and recalculated management’s provision rates based on historical cash collection.
• We assessed historical debt collection patterns over 2023 and 2024 in order to estimate an expected profile of the recovery of
31 December 2024 balances, on a “business-as-usual” basis. We applied this profile to 31 December 2024 debt and then assessed:
– the impact and sensitivity of this profile based on external forecasts, such as household disposable income and inflation
forecasts, and the impact on billed debt provisions as the economic situation changes; and
– the accounting for the impact of these changes in the billed debt provision estimate.
• We considered the extent to which the provision on a “business-as-usual” basis factors in the current macroeconomic
environment and challenged the methodology over the determination and recording of the “additional macroeconomic”
provision, with reference to available third-party analysis.
• We performed procedures to challenge the completeness and the appropriateness of the “additional macroeconomic” provision
by evaluating the reasonableness of management’s assumptions and economic data (both forecast and historical) used to
derive this.
• We assessed the appropriateness of the disclosures provided relating to this key source of estimation uncertainty, and the
range of sensitivities disclosed.
Key observations
We are satisfied that the billed debt provisions on residential customers, including the additional provision to reflect current
macroeconomic conditions, and the associated methodology to determine this adjustment, are appropriate.
5.2. Revenue recognition in British Gas Energy vw
Key audit matter
description
In 2024, British Gas Energy generated revenues of £12.1bn (2023: £17.7bn) with 6.5m (2023: 5.4m) customers having been
migrated to the new ENSEK billing platform by the year end, as seen on page 128. At 31 December 2024 ENSEK hence formed the
main revenue billing platform, with 92% of British Gas Energy customers being invoiced through it, as seen on page 128.
At the beginning of the year British Gas Energy was in a Software-as-a-Service (“SaaS”) arrangement with ENSEK and the system
was developed and controlled by a third party. British Gas Energy was therefore dependent on the efficacy of the general IT
controls, application controls, and other controls that the third party operated on its behalf. On 29 July 2024 the Group announced
the acquisition of ENSEK and the transaction completed on 20 September 2024. As highlighted in the Audit and Risk Committee’s
report on page 101, ENSEK’s internal controls continue to develop.
We identified a risk of material misstatement, whether due to fraud or error, relating to the completeness and accuracy of the
volume and tariff data used by the system to generate revenue transactions.
How the scope of
our audit responded
to the key audit
matter
• We obtained an understanding of the relevant controls over the recognition of revenue from customers, including those
regarding the completeness and accuracy of consumption data. We did not plan to place reliance on these controls due to the
maturity of the control environment, as detailed by the Audit and Risk Committee in its report on pages 100 to 111.
• We performed tests of detail over the billed energy supply volume and pricing revenue data, agreeing amounts back to
contractual tariffs and actual or estimated meter readings.
• We calculated an expectation of the billed energy supply revenue, comparing differences to predetermined thresholds, and
tested the completeness and accuracy of the key inputs to the expectation.
• We worked with our data analytics specialists to recalculate unbilled revenue and to test the accuracy and completeness of the
source data used in the recalculation, including over data that was migrated to ENSEK from the legacy SAP systems.
Key observations
We are satisfied that the accuracy and completeness of the revenue recognised through the British Gas Energy segment,
including the methodology to generate unbilled revenue, is appropriate.
Centrica plc Annual Report and Accounts 2024
157
5.3. Impairment of long-lived assets and investments, including estimates on future price assumptions vw
Key audit matter
description
The Group makes judgements in considering whether the carrying amounts of its long-lived assets and investments (principally
Upstream gas production assets, Nuclear investment, Batteries, Solar assets and Gas peakers) are recoverable, and applies
estimates and assumptions in determining their recoverable amounts. Key assumptions in the determination of recoverable
amount include: forecast future commodity prices; forecast cashflows including forecast production; and discount rates. During
the year, following an internal review to map Centrica views around the evolution of each commodity market to specific,
reputable, third party curve providers, the Group has refined its estimation methodology applied to forecasting longer-term
commodity prices. We identified a key audit matter around the determination of the recoverable amount of these assets.
The Group’s balance sheet includes a net book value of £465m (2023: £325m) of power generation assets, £789m (2023:
£1,023m) of gas production and storage assets and a £794m (2023: £903m) interest in its Nuclear investment. In the Upstream
segment, an impairment of the Nuclear investment of £48 million (post-tax £48 million) (2023: £549 million (post-tax £549
million)) has been recorded. In the Centrica Business Solutions segment, an impairment of £27 million (post-tax £20 million) (2023:
£14 million (post-tax £11 million)) has been recorded, predominantly related to Battery storage and Solar assets. The impairment
charges have been recorded within the exceptional items and certain re-measurements column of the Group income statement,
in line with the specific accounting measure disclosed in note 2(b).
The details on the key sources of estimation uncertainty underpinning the impairment for these assets can be found in note 3(b).
Details on the sensitivity of the above impairment reviews to changes in key assumptions such as gas and power prices are
disclosed in note 7(c). For the Nuclear investment and Spirit gas assets, this includes sensitivities associated with the Group’s
commodity price curves if these curves were aligned with the Net Zero scenario (‘Net Zero curve’) which assumes governmental
policies are put in place to achieve the temperature and net zero goals by 2050. The matter is also considered by the Audit and
Risk Committee in its report on page 109.
How the scope of
our audit responded
to the key audit
matter
• We understood management’s process for identifying indicators of impairment and impairment costs and for performing their
impairment assessment.
• We obtained an understanding of the relevant controls relating to the asset impairment models, the underlying forecasting
process and the impairment reviews performed.
• We evaluated the forecast future cash flows including key assumptions and inputs into the impairment models, which included
performing sensitivity analysis, to evaluate the impact of selecting alternative assumptions. We also, where relevant, assessed
judgements made in respect of life extensions and production outages.
• We evaluated changes in key assumptions, in particular the refinement of the estimation methodology applied to forecasting
commodity price assumptions. We worked with our commodity pricing specialists to derive an acceptable range against which
we assessed the Group’s refined forecast commodity prices. For Nuclear investment and Spirit gas assets, we performed
sensitivity analysis with alternative future prices. These alternative scenarios included one which assumes governmental policies
are put in place to achieve the temperature and net zero goals by 2050. We recalculated management’s disclosures relating to
the sensitivity of the Group’s impairment tests to reduced commodity prices, including the Net Zero curves.
• With the involvement of our valuation specialists, we evaluated the discount rates, which involved benchmarking against
available market views and analysis.
• We tested the arithmetical accuracy of the impairment models.
• We assessed the appropriateness of disclosures of the key assumptions and sensitivities including the presentation of the
impairment cost within the exceptional items and certain re-measurements column of the Group income statement.
Key observations
We are satisfied that the key assumptions used to determine the recoverable amount of the Group's long-lived assets and
investments, including production and availability forecasts, are within a reasonable range. We are also satisfied that the Group's
discount rate assumptions are appropriate.
The Group's future commodity price estimates fall within the acceptable range. We observed that the baseload and gas price
forecasts from acceptable external sources were generally higher than the assumed prices in the net zero scenario for material
assets. We consider the sensitivity disclosures related to the impact of future commodity price estimates arising from climate
change on the Group's impairment reviews to be appropriate.
We are satisfied that the impairment charge recognised by the Group for the year is appropriate and we found the presentation of
this cost under the exceptional items and certain re-measurements column of the Group income statement to be consistent with
the Group’s exceptional items accounting policy.
Strategic Report Governance Financial Statements Other Information
5.4. Accounting for the Electricity Generator Levy (“EGL”) vw
Key audit matter
description
EGL is a temporary levy applicable to receipts that the Group has realised from electricity generation in the UK from nuclear and
renewable sources in the period from 1 January 2023 to 31 March 2028. The levy applies a 45% charge on receipts generated from
the production of wholesale electricity sold at an average price in excess of £75/Mwh (adjusted for inflation prospectively from
April 2024), exceeding an annual threshold of £10m. It applies to generators whose generation exceeds 50GWh annually, as well
as off-take arrangements with significant minority shareholders in such generators.
The interpretation and application of the EGL legislation remains unclear in respect of the Group’s minority shareholding in its
Nuclear offtake arrangements. There is a key source of estimation uncertainty related to the assessment of the proportion of
generation that can be ascribed to wholesale purchases which could give rise to a tax deposit, in accordance with the 2019 IFRIC
Agenda decision on deposits relating to taxes other than income taxes. The Group has made payments on account to HM
Revenue & Customs (HMRC) totalling £365m (£285m in 2023 and £80m in 2024). However, if it were considered probable that
the payments on account related to the proportion of generation that could be ascribed to wholesale purchases is recoverable,
then management have assessed that up to £150m which has previously been recognised as a cost within the income statement
could be recognised as a tax deposit asset on the balance sheet instead. Given the early stage of discussions there is not yet
sufficient evidence to support the probability of recovery and therefore no asset has been recorded at the balance sheet date.
Given the complexity of the legislation and the impact on the Group, we identified a key audit matter in respect of whether a
tax deposit is probable, and whether the amounts paid should be recorded within the income statement or as a tax deposit on
the balance sheet. The Group has recognised the full charge in the income statement. Further detail can be found in note 3(b).
The Audit & Risk Committee also consider this matter on page 105.
How the scope of
our audit responded
to the key audit
matter
• We gained an understanding of the Group’s process and judgements applied in accounting for and recognising EGL amounts
within the financial statements and evaluated the competence, capability and objectivity of management’s experts and the
appropriateness of the underlying source documents relied upon.
• We gained an understanding of the relevant controls in relation to the directors’ review of the judgements formed.
• We tested EGL payments on account to HMRC during the year to supporting third party evidence.
• We worked with our tax specialists to assess the appropriate interpretation of the EGL legislation in addition to reviewing legal
advice received by the Group and evaluating the opinions of management’s experts. We assessed the accounting for the EGL
with a particular focus on whether any of the £150m should be recorded in the income statement or on the balance sheet as a
tax asset. We then evaluated the appropriateness of management's conclusions, considering the identified sources of
estimation uncertainty, the opinions of management’s experts, and the views of our tax specialists.
• We considered the appropriateness of the disclosures within the financial statements on the accounting position adopted and
the judgements involved, including the disclosure of the range (of up to £150m) of the tax deposits recoverable in respect of
EGL.
• We considered the nature and impact of any contradictory audit evidence on management’s assessment.
Key observations
We are satisfied that the EGL payments have been appropriately presented within the Group income statement, that the non-
recognition of a tax deposit asset at this stage is appropriate, and that the disclosures within the financial statements relating to
EGL are appropriate.
Centrica plc Annual Report and Accounts 2024
159
5.5. The valuation of complex energy derivative contracts vw
Key audit matter
description
Note 7 of the financial statements discloses a re-measurements profit of £421m for the year (2023: £3,573m) on energy derivative
contracts. Details on the Group’s energy contracts can be found in note 19 and note S3(a). The key sources of estimation
uncertainty associated with energy contracts can be found in note 3(b) with further details on the presentation of certain re-
measurement arising on derivatives disclosed in note 2(b). The matter is also considered by the Audit and Risk Committee in its
report on page 107.
The Group undertakes proprietary trading activities and enters into forward commodity contracts to optimise the value of its
production and generation assets, as well as to meet the future needs of its customers. Certain of these arrangements entered
into are accounted for as derivative financial instruments and are recorded at fair value.
We identified a key audit matter related to the valuation of complex derivative trades performed internally by management's
valuation specialists, including new hedging contracts entered into in the year to hedge long-term LNG supply arrangements.
Valuing complex energy derivative contracts requires judgement, particularly where there are bespoke contractual terms,
modelling complexity and significant unobservable inputs that are not corroborated by market data. Management use these with
internally developed methodologies that result in their best estimate of fair value (level 3 in accordance with IFRS 13 'Fair Value
Measurement'). Given the judgement involved and the potential for management bias in the modelling, we identified a potential
risk of fraud.
Level 3 complex energy derivative financial assets of £164m (2023: £156m) were recognised at 31 December 2024 and £131m
(2023: £272m) level 3 complex energy derivative financial liabilities.
How the scope of
our audit responded
to the key audit
matter
• We obtained an understanding of the Group’s processes, including user access and segregation of duties controls, for
authorising and recording commodity trades.
• We obtained an understanding of the relevant controls relating to the valuation of complex energy derivatives within the
Group’s Centrica Energy business.
• We assessed the competence, capability and objectivity of management’s internal valuation specialists.
• We worked with our financial instrument specialists to assess the value of material complex trades, either by creating an
independent valuation or by testing how management developed their estimate. Particular emphasis was made to assess any
new material models and material changes to relevant models and we performed additional procedures to assess the
reasonableness and appropriateness of these.
• We assessed the movement in the fair values based on the change in significant inputs, and tested these inputs, where relevant.
• We considered the appropriateness of the relevant complex derivative energy contracts disclosures, including the key source
of estimation uncertainty disclosures.
Key observations
We are satisfied that the valuation of complex derivative energy contracts is materially appropriate.
Strategic Report Governance Financial Statements Other Information
5.6. The valuation of the decommissioning provision in Spirit Energy !
Key audit matter
description
A provision is recognised for the estimated cost of decommissioning at the end of the producing lives of gas fields in the Spirit
Energy business unit within the Upstream segment. Decommissioning provisions of £1,459m (2023: £1,527m) have been
recognised at 31 December 2024 and of these £1,139m (2023: £1,191m) are related to Spirit Energy. The liability arises in respect of
both assets operated directly by Spirit Energy and assets operated by third-party operators (Spirit Energy non-operated assets).
The decommissioning cost estimates include assumptions related to discount rates, management costs, wells costs, rates and
norms that are sensitive and where a reasonably possible change would lead to a material difference in the provision. Given the
level of management judgement applied throughout the recognition of decommissioning provisions, we have identified this as a
key audit matter and a fraud risk area. Further details on decommissioning provisions can be found in notes 3(b) and 21. These
matters are also considered by the Audit and Risk Committee in its report on pages 100 to 111.
How the scope of
our audit responded
to the key audit
matter
• We obtained an understanding of the controls around the valuation of the decommissioning provision.
• With involvement of our data analytics specialists, we identified the key assumptions to which the decommissioning model is
most sensitive and performed focused audit procedures on the most sensitive inputs including corroborating and benchmarking
those inputs to independent documentation, where available.
• With the involvement of our valuation specialists, we evaluated the discount rates, which involved benchmarking against
available, relevant market data, including US and UK government bond yields and peer data.
• We assessed the objectivity, capability and competence of the experts employed by management to assess and calculate the
decommissioning obligations. For non-operated assets, we assessed the competence of each operator.
• For non-operated assets we agreed the estimated decommissioning liability to the third-party operator estimate and
challenged management where Spirit Energy have not adopted the operator estimate.
• We performed a retrospective review of costs incurred to assess the historical accuracy of decommissioning provision
estimates.
• We assessed the methodology applied in determining the decommissioning cost and the disclosures of the key sources of
estimation uncertainty concerning the decommissioning provision in the group accounts.
Key observations
We are satisfied that decommissioning provisions, key assumptions employed to derive these provisions and the associated
methodology to calculate them, are appropriate.
Centrica plc Annual Report and Accounts 2024
161
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined the materiality of the financial statements as a whole as follows:
Group financial statements
Company financial statements
Materiality
£79.8 million (2023: £135.0 million)
£35.8 million (2023: £54.0 million)
Basis for determining
materiality
We determined materiality on the basis of 5% (2023: 5%) of
adjusted profit before tax. Adjusted profit before tax is the pre-
tax profit adjusted for the impact of exceptional items and
certain remeasurements as presented in the Group Income
Statement.
We determined materiality based on 3.0% (2023: 3.0%) of net
assets but capped materiality at 45% (2023: 40%) of the Group
materiality. Our final materiality constituted 0.5% of net assets
(2023: 0.7% of net assets).
Rationale for the
benchmark applied
We considered adjusted profit before tax to be the most
appropriate benchmark to measure the performance of the
Group. We consider it appropriate to adjust for exceptional
items and remeasurements as these items are volatile and not
reflective of the underlying performance of the Group.
In determining materiality, we also considered a range of
alternative benchmarks. The materiality of £79.8m represents
0.3% (2023: 0.4%) of business performance revenue, 0.4%
(2023: 0.6%) of total assets, and 8.1% (2023: 6.1%) of free cash
flow.
We considered net assets to be the most appropriate
benchmark given the primary purpose of the Company is a
holding company. We increased the cap on Group materiality
percentage in the current year to align to the group audit
strategy.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Company financial statements
Performance
materiality
70% (2023: 70%) of Group materiality
70% (2023: 70%) of Company materiality
Basis and rationale
for determining
performance
materiality
The factors we considered in setting performance materiality at 70% of Group and Company materiality included:
• The overall quality of the control environment and that we were able to rely on controls in certain of the Group’s businesses.
• The nature, size and number of uncorrected misstatements identified in previous audits and management’s willingness to
correct those adjustments.
6.3. Error reporting threshold
The decrease in materiality has led to a decrease in the error reporting threshold, which stands at £3.9m (2023: £6.8m). We have however,
at the Audit and Risk Committee’s request, continued to report individual audit differences in excess of £5.0m (2023: £5.0m), and in
aggregate all audit differences in excess of £3.9m (2023: £5.0m) as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also reported to the Audit and Risk Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
Strategic Report Governance Financial Statements Other Information
7. An overview of the scope of our audit
7.1 Identification and scoping of components
The Group is organised into segments as outlined in note 4. These segments contain a number of individual businesses, and we use these
businesses as the basis for identifying and scoping components. Changes in scoping have been outlined in section 3 above.
Our audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the
risks of material misstatement at the Group level. Having performed this assessment, we established the following audit scope for each of
the Group’s businesses.
Segment
Business
Audit scope
British Gas Energy
British Gas Energy
Audit of the component’s financial information
British Gas Services and Solutions
British Gas Services and Solutions
Audit of specified account balances of the
component
Bord Gáis Energy
Bord Gáis Energy
Audit of specified account balances of the
component
Centrica Energy
Centrica Energy (London)
Audit of the component’s financial information
Centrica Energy (Aalborg)
Audit of the component’s financial information
Centrica Business Solutions
New Energy Services
Specific further audit procedures performed by the
group engagement team
Power –Assets
Audit of specified account balances of the
component
Energy supply
Audit of specified account balances of the
component
Upstream
Nuclear
Audit of the component’s financial information
Spirit Energy
Audit of the component’s financial information
Centrica Energy Storage+
Audit of specified account balances of the
component
Head office
Central functions
Audit of the component’s financial information
This scoping resulted in 98% of Group revenue, 96% of Group adjusted profit before tax and 93% of Group shareholders’ equity being
subject to audit, excluding those where we performed review procedures. The equivalent figures in 2023 were 99% of Group revenue, 98%
of the adjusted profit before tax and 88% of shareholders’ equity.
7.2 Our consideration of the control environment
Our audit strategy is to rely on controls over certain processes within the more established businesses of the Group (such as revenue within
British Gas Services and Solutions and Bord Gáis), and over the Group’s central expenditure processes. We obtained an understanding of
relevant controls in Centrica Energy (London) but chose to adopt a fully substantive approach; this approach used data analytics and enable
us to test close to 100% of all trades.
Given the importance of IT to the recording of financial information and transactions, we tested general IT controls with the involvement of
our IT specialists, and placed reliance on them in certain areas. The key IT systems we included in scope include the Group’s SAP general
ledger and consolidation financial reporting systems, the SAP reporting system in Bord Gáis Energy, the Endur trading system in Centrica
Energy, and Workday which is used to manage the Group’s payroll processes.
We were generally able to place reliance on controls within the more established processes. The control environment for the ENSEK
platform has continued to evolve in 2024, and therefore we did not plan to place reliance on these controls this year.
Across some of Group’s systems, we had interim findings in relation to the Group’s approach to the oversight of user access controls.
Management has implemented remediation activities during the year which improved the related controls as evidenced through our year
end update testing. We have performed testing of Group’s mitigating procedures and were able to rely on controls in planned areas.
As noted in the Audit and Risk Committee report on pages 100 to 111, the Group has been making preparations to ensure readiness to make
an appropriate declaration under provision 29 of the UK Corporate Governance Code.
7.3 Our consideration of climate-related risks
Management performed an assessment of the resilience of their annual strategic and financial planning process in the face of climate-
related issues. This included assessing the potential impact of the material risks and opportunities and its Climate Transition Plan on both the
current balance sheet position and its accounting policies.
Management identified higher risks of material misstatement on the impact of the Net Zero price scenario on the non-current long-life asset
Upstream impairment tests. In response, management performed further sensitivities based on forecast prices aligned to net zero price
curves. The net zero price curves for Exploration and Production (E&P) and Nuclear consider prices from third party experts in forecast
curves.
We reviewed management’s climate change risk assessment and evaluated the completeness of the identified risks and impact on the
financial statements. We also considered climate change within our audit risk assessment process in conjunction with our assessment of
the balances.
Centrica plc Annual Report and Accounts 2024
163
To mitigate the Net Zero price scenario risk for the E&P assets and the Group’s investment in Nuclear, we performed the following
procedures:
• Assessed the reasonableness of management’s net zero prices by comparing these to credible third-party net zero price curves.
• Evaluated the price providers’ data utilised by the Group to assess whether net zero price curves are appropriate.
• Verified the mathematical accuracy of the conversion to Nominal 2024 prices by adjusting the raw external price forecast data for
inflation.
With the involvement of our climate specialists, we:
• evaluated the financial statement disclosures to assess whether climate risk assumptions underpinning specific account balances were
appropriately disclosed as well as climate related disclosures in note 3 (c) Critical accounting judgements and key sources of estimation
uncertainty; and
• read the climate change-related statements (as disclosed in the ‘People and Planet’ section in the Strategic Report on page 58)
and considered whether the information included in the narrative reporting is materially consistent with the financial statements
and our knowledge obtained in the audit.
7.4 Working with other auditors
All components except for Bord Gáis Energy and Aalborg are audited from the UK and we oversee all component audits through regular
meetings and direct supervision. Whilst we visited Aalborg during the year, the direction, supervision and oversight procedures on Bord
Gáis were performed virtually.
The Group audit team was directly involved in overseeing the component audit planning and execution, through frequent conversations,
virtual and in person meetings, debate, challenge and review of reporting and underlying work papers. We held a two-day planning meeting
with all component teams and specialists to discuss audit execution and our risk assessment, including risks of material misstatement due to
fraud. In addition to our direct interactions and detailed instructions to our component audit teams, Jane Boardman, as lead audit partner,
was also the lead audit partner for the British Gas Energy segment. This enabled direct Group supervision on one of the most significant
components of the Group.
We are satisfied that the level of involvement of the lead audit partner and Group audit team in the component audits has been extensive
and has enabled us to conclude that sufficient appropriate audit evidence has been obtained in support of our opinion on the Group financial
statements as a whole.
8. Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report
thereon. This information comprises the Strategic report, the Directors’ and Corporate Governance report, the Committee reports, the
Remuneration Report and the Other Statutory Information. The directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
Strategic Report Governance Financial Statements Other Information
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration
policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error including the Group’s fraud risk
programme;
• results of our enquiries of management, internal audit and the Audit and Risk Committee about their own identification and assessment of
the risks of irregularities, including those that are specific to the group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
• the matters discussed among the audit engagement team including the component audit teams and relevant internal specialists,
including tax, valuations, pensions, climate change, treasury and IT, regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas:
• The valuation of residential energy supply billed debt provisions within British Gas Energy;
• Revenue recognition in British Gas Energy;
• The valuation of complex energy derivative contracts; and
• The valuation of decommissioning provisions in Spirit Energy.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management
override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws
and regulations that:
• had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we
considered in this context included the UK Companies Act, the UK Listing Rules, the Electricity Generator Levy, pensions and tax
legislation; and
• do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group’s ability to
operate or to avoid a material penalty. These included the regulations set by the Office of Gas and Electricity Markets (Ofgem) and
Regulations levied by the UK Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA).
11.2. Audit response to risks identified
As a result of performing the above, we identified the following as key audit matters related to the potential risk of fraud: (1) the valuation of
residential energy supply billed debt provisions within British Gas Energy; (2) revenue recognition in British Gas Energy; (3) the valuation of
decommissioning provisions in Spirit Energy; and (4) the valuation of complex energy derivative contracts. The key audit matters section of
our report explains the matters in more detail and also describes the specific procedures we performed in response to those key audit
matters.
Our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant
laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit and Risk Committee, in-house legal counsel and the Group’s ethics team concerning actual and
potential litigation and claims;
• reviewing the reporting to the Audit and Risk Committee, on matters relating to fraud and potential non-compliance with laws and
regulations including the Group’s whistleblowing programme;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due
to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
HMRC, Ofgem, the FCA and the PRA; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including
internal specialists and component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Centrica plc Annual Report and Accounts 2024
165
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit,
we have not identified any material misstatements in the Strategic Report or the Directors’ Report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 150;
• the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate set out on pages 52 to 53;
• the directors' statement on fair, balanced and understandable set out on page 102;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 40;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 100; and
• the section describing the work of the Audit and Risk Committee set out on pages 100 to 111.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been
made or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit and Risk Committee, we were reappointed by the shareholders on 5 June 2024 to audit
the financial statements for the year ending 31 December 2024 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 8 years, covering the years ending 31 December 2017
to 31 December 2024.
15.2. Consistency of the audit report with the additional report to the Audit & Risk Committee
Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with
ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in
accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format Annual
Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over
whether the annual financial report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Jane Boardman FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 February 2025
Strategic Report Governance Financial Statements Other Information
Group Income Statement
2024
2023
Business
performance
£m
Exceptional items
and certain re-
measurements
£m
Results
for the year
£m
Business
performance
£m
Exceptional items
and certain re-
measurements
£m
Results
for the year
£m
Year ended 31 December
Notes
Group revenue
4,7
23,836
(4,723)
19,113
32,561
(6,916)
25,645
Insurance revenue
4,S7
800
—
800
813
—
813
Total Group revenue
24,636
(4,723)
19,913
33,374
(6,916)
26,458
Cost of sales before insurance service expenses (i)
5,7
(20,368)
9,064
(11,304)
(27,682)
17,497
(10,185)
Insurance service expenses recognised in cost of
sales
5,S7
(460)
—
(460)
(475)
—
(475)
Re-measurement and settlement of derivative
energy contracts
5,7
—
(4,062)
(4,062)
—
(6,175)
(6,175)
Gross profit
4,7
3,808
279
4,087
5,217
4,406
9,623
Operating costs before insurance service
expenses, credit losses on financial assets and
exceptional items
5
(1,833)
—
(1,833)
(1,778)
—
(1,778)
Insurance service expenses recognised in
operating costs
5,S7
(306)
—
(306)
(294)
—
(294)
Credit losses on financial assets
5,17
(373)
—
(373)
(602)
—
(602)
Exceptional items
7
—
(128)
(128)
—
(645)
(645)
Operating costs
5
(2,512)
(128)
(2,640)
(2,674)
(645)
(3,319)
Share of profits/(losses) of joint ventures and
associates, net of interest and taxation
6
256
—
256
209
(1)
208
Group operating profit
4
1,552
151
1,703
2,752
3,760
6,512
Financing costs
7,8
(269)
(68)
(337)
(308)
—
(308)
Investment income
8
313
—
313
269
—
269
Net finance income/(cost)
8
44
(68)
(24)
(39)
—
(39)
Profit before taxation
1,596
83
1,679
2,713
3,760
6,473
Taxation on profit
7,9
(553)
239
(314)
(838)
(1,595)
(2,433)
Profit for the year
1,043
322
1,365
1,875
2,165
4,040
Attributable to:
Owners of the parent
984
348
1,332
1,859
2,070
3,929
Non-controlling interests
59
(26)
33
16
95
111
Earnings per ordinary share
Pence
Pence
Basic
10
25.7
70.6
Diluted
10
25.1
69.4
Interim dividend paid per ordinary share
11
1.50
1.33
Final dividend proposed per ordinary share
11
3.00
2.67
(i)
Cost of sales includes a £142 million debit (2023: £833 million credit) relating to movements in onerous contracts provisions within the certain re-measurements column.
See notes 2 and 7.
The notes on pages 172 to 269 form part of these Financial Statements.
Centrica plc Annual Report and Accounts 2024
167
Group Statement of Comprehensive Income
2024
£m
2023
£m
Year ended 31 December
Notes
Profit for the year
1,365
4,040
Other comprehensive income
Items that will be or have been reclassified to the Group Income Statement:
Impact of cash flow hedging, net of taxation
S4
2
(2)
Exchange differences on translation of foreign operations (i)
S4
(49)
(44)
Items that will not be reclassified to the Group Income Statement:
Net actuarial losses on defined benefit pension schemes, net of taxation
S4
(84)
(288)
(Losses)/gains on revaluation of equity instruments measured at fair value through other comprehensive
income, net of taxation
S4
(27)
3
Share of other comprehensive income/(loss) of associates, net of taxation
14,S4
38
(95)
Other comprehensive loss, net of taxation
(120)
(426)
Total comprehensive income for the year
1,245
3,614
Attributable to:
Owners of the parent
1,211
3,504
Non-controlling interests
S11
34
110
(i)
Exchange differences on translation of foreign operations includes £50 million of losses (2023: £43 million) attributable to the equity holders of the parent, and £1 million
of gains (2023: £1 million of losses) attributable to non-controlling interests.
The notes on pages 172 to 269 form part of these Financial Statements.
Strategic Report Governance Financial Statements Other Information
Group Statement of Changes in Equity
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other
equity
£m
Total
£m
Non-controlling
interests
£m
Total
equity
£m
1 January 2023
365
2,394
(466)
(1,276)
1,017
263
1,280
Profit for the year
—
—
3,929
—
3,929
111
4,040
Other comprehensive loss
—
—
—
(425)
(425)
(1)
(426)
Total comprehensive income/(loss)
—
—
3,929
(425)
3,504
110
3,614
Employee share schemes and other
share transactions
—
—
(3)
45
42
—
42
Share buyback programme (note S4)
—
—
—
(500)
(500)
—
(500)
Dividends paid to equity holders (note 11)
—
—
(186)
—
(186)
—
(186)
Distributions to non-controlling interests
—
—
—
—
—
(17)
(17)
31 December 2023
365
2,394
3,274
(2,156)
3,877
356
4,233
Profit for the year
—
—
1,332
—
1,332
33
1,365
Other comprehensive (loss)/income
—
—
—
(121)
(121)
1
(120)
Total comprehensive income/(loss)
—
—
1,332
(121)
1,211
34
1,245
Employee share schemes and other share
transactions
—
—
(8)
41
33
—
33
Share buyback programme (note S4)
—
—
—
(480)
(480)
—
(480)
Shares cancelled in the year (note 26)
(21)
—
(400)
421
—
—
—
Dividends paid to equity holders (note 11)
—
—
(219)
—
(219)
—
(219)
31 December 2024
344
2,394
3,979
(2,295)
4,422
390
4,812
The notes on pages 172 to 269 form part of these Financial Statements.
Centrica plc Annual Report and Accounts 2024
169
Group Balance Sheet
31 December
2024
£m
31 December
2023
£m
Notes
Non-current assets
Property, plant and equipment
13
1,859
1,846
Interests in joint ventures and associates
14
794
903
Other intangible assets
15
318
340
Goodwill
15
478
405
Deferred tax assets
16
339
456
Trade and other receivables, and contract-related assets
17
179
210
Derivative financial instruments
19
267
899
Retirement benefit assets
22
129
64
Other investments
24
87
61
Securities
25
139
116
4,589
5,300
Current assets
Trade and other receivables, and contract-related assets
17
5,204
5,409
Other intangible assets
15
319
293
Inventories
18
904
1,079
Derivative financial instruments
19
1,309
2,373
Current tax assets
70
64
Securities
25
—
405
Cash and cash equivalents
25
6,338
6,443
14,144
16,066
Total assets
18,733
21,366
Current liabilities
Derivative financial instruments
19
(932)
(2,391)
Trade and other payables, and contract-related liabilities
20
(6,392)
(7,000)
Insurance contract liabilities
S7
(175)
(165)
Current tax liabilities
(181)
(299)
Provisions for other liabilities and charges
21
(368)
(279)
Bank overdrafts, loans and other borrowings
25
(854)
(1,002)
(8,902)
(11,136)
Non-current liabilities
Deferred tax liabilities
16
(88)
(424)
Derivative financial instruments
19
(455)
(615)
Trade and other payables, and contract-related liabilities
20
(175)
(207)
Provisions for other liabilities and charges
21
(1,493)
(1,469)
Retirement benefit obligations
22
(150)
(181)
Bank loans and other borrowings
25
(2,658)
(3,101)
(5,019)
(5,997)
Total liabilities
(13,921)
(17,133)
Net assets
4,812
4,233
Share capital
26
344
365
Share premium
2,394
2,394
Retained earnings
3,979
3,274
Other equity
S4
(2,295)
(2,156)
Total shareholders’ equity
4,422
3,877
Non-controlling interests
S11
390
356
Total shareholders’ equity and non-controlling interests
4,812
4,233
The Financial Statements on pages 167 to 269, of which the notes on pages 172 to 269 form part, were approved and authorised for
issue by the Board of Directors on 19 February 2025 and were signed below on its behalf by:
Chris O’Shea
Russell O’Brien
Group Chief Executive
Group Chief Financial Officer
Centrica plc Registered No: 03033654
Strategic Report Governance Financial Statements Other Information
Group Cash Flow Statement
Year ended 31 December
Notes
2024
£m
2023
£m
Group operating profit including share of results of joint ventures and associates
1,703
6,512
Deduct share of profits of joint ventures and associates, net of interest and taxation
6
(256)
(208)
Group operating profit before share of results of joint ventures and associates
1,447
6,304
Add back/(deduct):
Depreciation and amortisation
13,15
473
518
Impairments
4,7
98
669
Gain on disposals
(4)
—
Increase/(decrease) in provisions
110
(1,021)
Cash contributions to defined benefit schemes in excess of service cost income statement charge
(208)
(215)
Employee share scheme costs
47
31
Unrealised losses/(gains) arising from re-measurement of energy contracts
96
(2,949)
Operating cash flows before movements in working capital relating to business performance and payments
relating to taxes, exceptional charges and operating interest
2,059
3,337
Decrease in inventories
164
186
Decrease in trade and other receivables and contract-related assets relating to business performance
241
2,911
Decrease in trade and other payables and contract-related liabilities relating to business performance
(657)
(2,853)
Operating cash flows before payments relating to taxes, exceptional charges and operating interest
1,807
3,581
Taxes paid
9
(636)
(803)
Operating interest paid
8
(16)
(20)
Payments relating to exceptional charges in operating costs
7
(6)
(6)
Net cash flow from operating activities
1,149
2,752
Purchase of businesses and assets, net of cash acquired
12
(92)
(34)
Sale of businesses, including receipt of deferred consideration
4
55
Purchase of property, plant and equipment and intangible assets
4
(416)
(335)
Investments in joint ventures and associates
14
—
(9)
Dividends received from joint ventures and associates
14
355
220
Interest received
317
267
Net purchase of other investments
24
(56)
(37)
Settlement of securities
25
400
—
Purchase of securities
25
(19)
(12)
Net cash flow from investing activities
493
115
Proceeds from exercise of share options
S4
—
6
Payments for own shares
S4
(8)
—
Share buyback programme
S4
(499)
(613)
Cash inflow from borrowings
25
483
930
Distributions to non-controlling interests
—
(17)
Financing interest paid
25
(283)
(286)
Cash outflow from repayment of borrowings and capital element of leases
25
(1,022)
(1,248)
Equity dividends paid
11
(219)
(186)
Net cash flow from financing activities
(1,548)
(1,414)
Net increase in cash and cash equivalents
94
1,453
Cash and cash equivalents including overdrafts as at 1 January
5,629
4,242
Effect of foreign exchange rate changes
25
(30)
(66)
Cash and cash equivalents including overdrafts at 31 December
25
5,693
5,629
Included in the following line of the Group Balance Sheet:
Cash and cash equivalents
25
6,338
6,443
Overdrafts included within current bank overdrafts, loans and other borrowings
25
(645)
(814)
The notes on pages 172 to 269 form part of these Financial Statements.
Centrica plc Annual Report and Accounts 2024
171
Notes to the Financial Statements
Notes to the Financial Statements provide additional
information required by statute, accounting standards
or Listing Rules to explain a particular feature of the
consolidated Financial Statements.
The notes to these Financial Statements focus on areas that
are key to understanding our business. Additional
information that we are required to disclose by accounting
standards or regulation is disclosed in the Supplementary
Information (notes S1 to S11).
In addition, for clarity, notes begin with a simple
introduction outlining their purpose.
1.
Basis of preparation and summary of significant
new accounting policies and reporting changes
This section details new accounting standards,
amendments to standards and interpretations, whether
these are effective in 2024 or later years, and if and how
these are expected to impact the financial position and
performance of the Group.
The material accounting policies applied in the preparation of
these consolidated Financial Statements are set out below and
in the Supplementary Information (note S2). Unless otherwise
stated, these policies have been consistently applied to the
years presented.
(a)
Basis of preparation
The consolidated Financial Statements have been prepared in
accordance with United Kingdom adopted International Accounting
Standards and in conformity with the requirements of the
Companies Act 2006.
The consolidated Financial Statements have been prepared on the
historical cost basis except for: certain gas inventory, derivative
financial instruments, financial instruments required to be measured
at fair value through profit or loss or other comprehensive income,
and those financial instruments so designated at initial recognition,
and the assets of the Group’s defined benefit pension schemes that
have been measured at fair value; the liabilities of the Group’s
defined benefit pension schemes that have been measured using
the projected unit credit valuation method; and the carrying values
of recognised assets and liabilities qualifying as hedged items in fair
value hedges that have been adjusted from cost by the changes in
the fair values attributable to the risks that are being hedged.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and Group
have adequate resources to continue in operational existence for
the foreseeable future, which reflects a period of twelve months
from the date of approval of the accounts, with modelled analysis
extending to 31 December 2027. The scenarios considered as part
of the going concern assessment are consistent with those used in
the longer-term viability statement. In particular, cash forecasts for
the Group have been stress-tested for different scenarios including
reasonably possible increases/decreases in commodity prices and
the risk scenarios described in the viability statement, assessing
reasonably possible combinations of risks, the largest of which is the
increased margin outflows in our trading and upstream businesses.
Risks considered also include the impact of a low commodity price
environment, significant adverse weather events, increased bad
debt charges, production falls in the Group’s upstream business,
trading and hedging underperformance and cyber risk. The Group’s
strong liquidity position, coupled with its ability to deploy effective
mitigating actions, ensures resilience against a volatile external risk
environment. The Group continues to manage the Group’s financing
profile through accessing a diverse source of term funding and
maintaining access to carefully assessed levels of standby liquidity
which support the Group’s planned financial commitments. The
level of undrawn committed bank facilities and available cash
resources has enabled the Directors to conclude that there are
no material uncertainties relating to going concern. As a result, the
Group continues to adopt the going concern basis of accounting
in preparing the financial statements. Further information on the
Group’s strong liquidity position, including its indebtedness and
available committed facilities, is provided in note 25.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It requires
management to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a higher degree
of judgement or complexity and areas where assumptions and
estimates are significant to the consolidated Financial Statements
are described in notes 2 and 3.
(b)
New accounting policies, standards, amendments and
interpretations effective or adopted in 2024
From 1 January 2024, the following standards and amendments
are effective in the Group’s consolidated Financial Statements:
• Amendments to IAS 1 ‘Presentation of Financial Statements’,
Classification of Liabilities as Current or Non-current, and Non-
current Liabilities with Covenants;
• Amendments to IFRS 16 ‘Leases’, Lease Liability in a Sale and
Leaseback; and
• Amendments to IAS 7 'Statement of Cash Flows' and IFRS 7
'Financial Instruments: Disclosures', Supplier Finance
Arrangements.
There has been no material impact on the consolidated Financial
Statements from any of the above amendments during the year.
(c)
Standards and amendments that are issued but not yet
applied by the Group
At the date of authorisation of these consolidated Financial
Statements, the Group has not applied the following new and
revised standards and amendments that have been issued but are
not yet effective:
• Amendments to IAS 21 ‘The Effects of Changes in Foreign
Exchange Rates' Lack of Exchangeability, effective from 1 January
2025;
• Amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial
Instruments: Disclosures', Amendments to the Classification and
Measurement of Financial Instruments, effective from 1 January
2026;
• Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial
Instruments: Disclosures’, Contracts Referencing Nature-
dependent Electricity, effective from 1 January 2026;
• IFRS 18 'Presentation and Disclosure in Financial Statements',
effective from 1 January 2027; and
• IFRS 19 'Subsidiaries without Public Accountability', effective from
1 January 2027.
The potential impact of IFRS 18 ‘Presentation and Disclosure in
Financial Statements’, and the amendments to IFRS 9 ‘Financial
Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’ in
respect of Nature-dependent Electricity are given below.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
IFRS 18 will replace IAS 1 ‘Presentation of Financial Statements’ and
become effective on 1 January 2027. IFRS 18 will introduce five new
requirements on presentation and disclosure in the financial
statements, with a focus on the income statement and reporting of
Strategic Report Governance Financial Statements Other Information
1.
Basis of preparation and summary of significant
new accounting policies and reporting changes
financial performance. Income and expenses in the income
statement will be classified into five categories – operating,
investing, financing, income taxes and discontinued operations. Two
new subtotals will be presented: ‘Operating profit or loss’ and ‘Profit
or loss before financing and income tax’.
IFRS 18 will also require disclosures about management-defined
performance measures in the financial statements and disclosure
of information based on enhanced general requirements on
aggregation and disaggregation.
The Group is currently assessing the impact of IFRS 18 and
tentatively notes that the presentation of the Group’s share of
profits and losses of joint ventures and associates is expected to be
shown within investing activities, rather than Group operating profit
or loss. The Group’s assessment remains ongoing and further
changes upon the implementation of IFRS 18 may be required.
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7
‘Financial Instruments: Disclosures’, Contracts Referencing
Nature-dependent Electricity
The International Accounting Standards Board (IASB) has
introduced targeted amendments to IFRS 9 and IFRS 7 aimed at
resolving the challenges in accounting for electricity contracts, such
as power purchase agreements, dependent on uncontrollable
natural factors, such as weather conditions. The amendments clarify
how entities should assess whether these contracts qualify for the
‘own-use’ exemption available under IFRS 9. Key considerations
include whether the entity is a net purchaser over a reasonable time
frame, taking into account variability in electricity generation.
Amendments to hedge accounting have also been made to allow
entities to designate a variable nominal volume of forecasted
purchases or sales as the hedged item, provided certain conditions
are met.
The Group is currently assessing the impact of these amendments
which become effective on 1 January 2026.
Management does not currently expect the other issued but not
effective amendments or standards, or standards not discussed
above to have a material impact on the consolidated Financial
Statements.
Centrica plc Annual Report and Accounts 2024
173
2.
Centrica specific accounting measures
This section sets out the Group’s specific accounting
measures applied in the preparation of the consolidated
Financial Statements. These measures enable the users
of the accounts to understand the Group’s underlying
and statutory business performance separately.
(a)
Use of adjusted performance measures
The Directors believe that reporting adjusted measures (revenue,
margin, profit, earnings per share and cash flow) provides additional
useful information on business performance and underlying trends.
These measures are used for internal performance purposes, are
not defined terms under IFRS and may not be comparable with
similarly titled measures reported by other companies.
Management uses adjusted revenue, adjusted gross margin and
adjusted operating profit to evaluate segment performance. They
are defined as revenue/gross margin/operating profit before:
• Exceptional items; and
• Certain re-measurements.
Exceptional items and certain re-measurements are excluded to
enable the Directors to convey to the users an enhanced
understanding of the Group’s business performance. See section
(b) of this note for further details. Segmental adjusted gross margin
and adjusted operating profit exclude the impact of the colleague
profit share because management considers it unrelated to
segmental business performance. Similarly, because Segmental
adjusted gross margin and adjusted operating profit are presented
as managed by the Board (Chief Operating Decision Maker), the
elimination on consolidation of the internal margin and indirect costs
on smart meter installation recognised in British Gas Services &
Solutions and subsequently capitalised in the meter asset provider
business within British Gas Energy is also excluded.
Adjusted earnings is defined as earnings before:
• Exceptional items net of taxation; and
• Certain re-measurements net of taxation.
A reconciliation of adjusted earnings and adjusted earnings per
share is provided in note 10.
Free cash flow is used by management to assess the cash-
generating performance of each segment. Segmental free cash
flow is defined as net cash flow from operating and investing
activities before:
• Deficit reduction payments made to the UK defined benefit
pension schemes;
• Movements in variation margin and collateral;
• Interest received;
• Sale, settlement and purchase of securities; and
• Taxes paid and refunded.
Segmental free cash flow as assessed by management excludes
cash flows relating to tax. This is because the effect of Group
relief and similar reliefs could distort the measure of segment
performance. As a Group-wide measure, free cash flow includes
taxes paid and refunded.
Free cash flow gives a measure of the cash generation performance
of the business after taking account of the need to maintain its
capital asset base. By excluding deficit reduction payments and
movements in variation margin and collateral, which are
predominantly triggered by wider market factors and, in the case
of collateral and margin movements, represent timing differences,
free cash flow gives a measure of the underlying performance of
the Group.
Interest received and cash flows from the sale, settlement and
purchase of securities are excluded from free cash flow as these
items are included in the Group’s adjusted net cash/(debt) measure
and are therefore viewed by the Directors as related to the manner
in which the Group finances its operations.
Adjusted net cash/(debt) is used by management to assess the
underlying indebtedness of the business. Adjusted net cash/(debt)
is defined as cash and cash equivalents, net of bank overdrafts,
borrowings, leases, interest accruals and related derivatives. This
is adjusted for:
• Securities; and
• Sub-lease assets.
(b)
Exceptional items and certain re-measurements
The Group reflects its underlying financial results in the business
performance column of the Group Income Statement. To be able
to provide users with this clear and consistent presentation, the
effects of ‘certain re-measurements’ of financial instruments, and
‘exceptional items’, are reported in a different column in the Group
Income Statement.
The Group is an integrated energy business. This means that it
utilises its knowledge and experience across the gas and power
(and related commodity) value chains to make profits across the
core markets in which it operates. As part of this strategy, the
Group enters into a number of forward energy trades to protect and
optimise the value of its underlying production, generation, storage
and transportation assets and contracts (and similar capacity or
offtake arrangements including Liquefied Natural Gas (LNG)), as
well as to meet the future needs of its customers (downstream
demand). These trades are designed to reduce the risk of holding
such assets, contracts or downstream demand and are subject to
strict risk limits and controls.
Primarily because some of these trades include terms that permit
net settlement, they are prohibited from being designated as ‘own
use’ and so IFRS 9 ‘Financial Instruments’ requires them to be
individually fair valued.
Fair value movements on these commodity derivative trades do not
reflect the underlying performance of the business because they
are economically related to our upstream assets, capacity/offtake
contracts or downstream demand, which are typically not fair
valued. Similarly, where our downstream customer supply contracts
or our LNG procurement contracts have become onerous as a
result of significant market price movements (and the fact any
associated commodity hedges have separately been recognised
at fair value under IFRS 9 and therefore the onerous supply/LNG
contract assessment must reflect the reversal of those gains in
subsequent periods), Movements in the required provision are also
reflected as a certain re-measurement in the ‘Cost of sales’ line item
and separately disclosed in note 7.
Movements in this provision do not reflect the underlying
performance of the business because they are economically related
to both the hedges as well as forecast future profitability of the
portfolio as a whole, in the case of the supply/LNG procurement
contracts. Therefore, these certain re-measurements are reported
separately and are subsequently reflected in business performance
when realised, which is generally when the underlying transaction or
asset impacts profit or loss. This enables the Group to convey the
performance of the business both with and without the impact of
such items.
The effects of these certain re-measurements are presented
within either revenue or cost of sales when recognised in business
performance depending on the nature of the contract. They are
managed separately from proprietary energy trading activities
where trades are entered into speculatively for the purpose of
making profits in their own right. These proprietary trades are
included in revenue in the business performance column of the
Group Income Statement.
Strategic Report Governance Financial Statements Other Information
2.
Centrica specific accounting measures
The Group’s result for the year presents both realised and unrealised
fair value movements on all derivative energy contracts within the
‘Re-measurement and settlement of derivative energy contracts’
line item.
Exceptional items are those items that, in the judgement of the
Directors, need to be disclosed separately by virtue of their nature,
size or incidence. Again, to ensure the business performance
column reflects the underlying results of the Group, these
exceptional items are also reported in the separate column in
the Group Income Statement. Items that may be considered
exceptional in nature include disposals of businesses or significant
assets, business restructuring, debt repurchase/refinancing costs,
legacy contract costs associated with business activities that have
ceased, certain pension past service credits/costs, asset
impairments/write-backs, and the tax effects of these items.
The Group distinguishes between business performance asset
impairments/write-backs and exceptional impairments/write-
backs on the basis of the underlying driver of the impairment, as well
as the magnitude of the impairment. Drivers that are deemed to be
outside of the control of the Group (e.g. commodity price changes)
give rise to exceptional impairments. Additionally, impairment
charges that are of a one-off nature (e.g. reserve downgrades or
one-time change in intended use of an asset) and significant enough
value to distort the underlying results of the business are considered
to be exceptional. Other impairments that would be expected in the
normal course of business are reflected in business performance.
Centrica plc Annual Report and Accounts 2024
175
3.
Critical accounting judgements and key sources
of estimation uncertainty
This section sets out the key areas of judgement
and estimation that have the most significant effect
on the amounts recognised in the consolidated
Financial Statements.
(a)
Critical judgements in applying the Group’s accounting
policies
Management has made the following key judgements in applying
the Group’s accounting policies that have the most significant
effect on the consolidated Group Financial Statements.
Spirit Energy consolidation
The Group judges that through its Board majority, it can control
the relevant activities that most significantly influence the variable
returns of the Spirit Energy business, including Board Reserved
Matters. Consequently, Spirit Energy is fully consolidated. This
assessment was carried out when the Group acquired Bayerngas
Norge’s exploration and production business and combined this
with the Group’s existing exploration and production business
to form the Spirit Energy business in 2017 and is considered annually
to ensure consolidation remains appropriate.
The Group holds a 69% interest in Spirit Energy. The 31% minority
interest shareholder does have some influence over decision-
making activities, but does not possess any controlling rights over
the Spirit Energy business.
Liquefied Natural Gas (LNG) contracts
The Group is active in the LNG market, both procuring long-term
LNG supply arrangements and transacting in shorter-term LNG
cargoes. As part of its operations in the market, the Group optimises
its contractual positions in order to meet customer demand for
physical commodity. In response to the continuing development
of the global LNG market which, consistent with prior years, is not
considered to be active, the Group has reviewed its portfolio of LNG
transactions and contracts. It has judged that its activities are carried
out for the purpose of receipt or delivery of physical commodity
in accordance with its expected purchase and sale requirements.
As a result, the Group’s contracts to buy and sell LNG are outside
the scope of IFRS 9 and are accounted for on an accruals basis. As a
consequence of this judgement, the LNG contracts are also
assessed as to whether they may be onerous.
The Group considers it a critical judgement as to whether any
onerous contract costs arising should be presented as a certain re-
measurement until such time that the physical cargoes are delivered,
or within business performance. The same judgement applies to the
recognition, and timing, of unrealised hedging gains or losses relating
to those contracts.
The onerous contract assessment ignores the portfolio of hedges
associated with the LNG contracts because the hedges are
separately marked to market. See note 2(b) for further details on the
accounting treatment of LNG onerous contracts and hedging
derivatives within certain re-measurements. In some instances,
hedges may realise (with gains/losses recognised in the business
performance column of the Group Income Statement) in advance of
cargo delivery because of the pricing terms within the cargo
contracts. In 2024, hedge gains of £52 million were realised and
recorded within business performance which are notionally
associated with cargo purchases that will be delivered in the first
quarter of 2025. These cargo purchases are expected to result in a
loss of a similar amount in 2025. This forecast loss, whilst included as
part of the onerous contract provision at the balance sheet date, has
not been recognised in business performance, as the LNG contracts
are hedged on a portfolio basis and so the Group does not expect an
unavoidable loss in business performance once future physical
cargoes, and hedging re-measurements, are delivered and realised
respectively. The portfolio is forecast to remain profitable in 2025
and beyond. See note 7.
(b)
Key sources of estimation uncertainty
The sections below detail the assumptions the Group makes
about the future and other major sources of estimation uncertainty
when measuring its assets and liabilities at the reporting date. The
information given relates to the sources of estimation uncertainty
that have a significant risk of resulting in a material adjustment to
those assets and liabilities in the next financial year. In some cases,
the matter involves both a critical judgement as well as a key source
of estimation uncertainty. That is, there is more than one
judgemental aspect related to the matter. In these instances, all
critical judgements and key sources of estimation uncertainty
related to each area are discussed in the same section to provide a
comprehensive understanding of the overall nature of the
uncertainties involved.
Estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, including current and
expected economic conditions, and, in some cases, actuarial
techniques. Although these estimates and associated assumptions
are based on management’s best knowledge of current events and
circumstances, actual results may differ. Revisions to accounting
estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and
future periods.
Electricity Generator Levy
At the end of 2022, the Government announced the implementation
of the Electricity Generator Levy (EGL), a new, temporary levy
applicable to receipts that the Group realises from electricity
generation in the UK from nuclear and renewable sources in the
period from 1 January 2023 to 31 March 2028. It was legislated in the
Finance (No 2) Act 2023. The levy applies a 45% charge on receipts
generated from the production of wholesale electricity sold at an
average price in excess of £75/MWh (adjusted for inflation
prospectively), exceeding an annual threshold of £10 million. The
benchmark rate for 2024 was £77.94/MWh. It applies to generators
whose generation exceeds 50GWh annually, as well as off-take
arrangements with significant minority shareholders in such
generators (e.g. generation within our Nuclear associate and
potentially our off-take from that associate).
During the year, the Group's share of its Nuclear associate's EGL
liabilities amounted to £86 million (31 December 2023: £41 million).
Strategic Report Governance Financial Statements Other Information
3.
Critical accounting judgements and key sources
of estimation uncertainty
This is recorded within the share of profit after tax from associates.
The Group has also made payments on account to HMRC of
£80 million (31 December 2023: £285 million) in relation to its
estimated EGL liabilities for its minority shareholder Nuclear
offtake arrangements during the year ended 31 December 2024
and recognised an expense of £80 million (31 December 2023:
£285 million) within the Group Income Statement, as part of Cost
of sales.
The Group continues to determine that the accounting for the levy
falls within the scope of IAS 37 ‘Provisions, contingent liabilities,
and contingent assets’ and IFRIC 21 ‘Levies’ on the basis that the
levy represents a legislative liability imposed by the Government,
calculated with reference to revenue generated. The Group
recognises the levy progressively over time, as the related
electricity is sold. The Group also considered the applicability of IAS
12 ‘Income Taxes’, however the EGL is based on revenue generated,
and not taxable profit and is therefore outside the scope of IAS 12.
The Group continues to review the EGL legislation and its
application. The EGL legislation is new, and its interpretation and
application is unclear in respect of the Group’s minority shareholder
Nuclear offtake arrangements. As such, the extent of the levy that
will ultimately be due in this regard is not yet certain, and a lower
amount may eventually be determined. If this were the case, a tax
deposit asset would be recorded on the Group Balance Sheet,
and as a credit within Cost of sales in the Group Income Statement,
when it became probable that the asset would be recoverable,
in accordance with the 2019 IFRIC Agenda decision on Deposits
relating to taxes other than income taxes. Given the early stage of
discussions there is not yet sufficient evidence to support the
probability of recovery and therefore no asset has been recorded
at the balance sheet date.
There is a key source of estimation uncertainty in relation to the
amount of levy the Group owes for both 2023 and 2024 of up to
£150 million, related to the assessment of the proportion of
generation that can be ascribed to a wholesale purchase and
therefore whether a related tax deposit asset should be recorded
for the recovery of payments on account made to HMRC of up to
£150 million. Whilst a material change in the accounting could occur
in the next financial period, ultimate resolution of this uncertainty
may take a number of years.
Credit provisions for trade and other receivables
The commodity price environment during the second half of 2024
has trended upwards and macroeconomic conditions including both
higher interest rates and higher inflation remain challenging.
These factors result in the assessment and adequacy of credit
provisions for trade and other receivables to continue to be a key
source of estimation uncertainty given that the current
macroeconomic conditions are expected to increase the probability
of default and the overall loss allowance. See note 17 for further
information.
The Group utilises a range of factors, including both internal and
external, historic and forward-looking, to assess the adequacy
of the Group’s credit provisions. Whilst the Group utilises a matrix
output model to record provision coverage, management
recognises that the model does not always adequately capture
scenarios where there is a delayed impact on customer payments,
such as forward-looking macroeconomic challenges. This was
particularly applicable in the prior year. In the current year, the
Group has continued to assess the model and has recorded a
macroeconomic credit provision of £49 million (31 December 2023:
£175 million) primarily on the basis that the upward trend in the
commodity price environment in the second half of 2024 and
resultant ability of customers to pay may not be fully reflected in the
model. The assumptions included in the macroeconomic provision
include the impact of the increase to Ofgem’s Energy Price Cap,
the continued cost of living challenges, higher level of interest rates
and the fact that certain enforcement activity remains suspended.
This results in a total credit provision for trade and other receivables
at 31 December 2024 of £1,532 million (31 December 2023:
£1,309 million).
Pensions and other post-employment benefits
The cost of providing benefits under defined benefit pension
schemes is determined separately for each of the Group’s schemes
under the projected unit credit actuarial valuation method. Actuarial
gains and losses are recognised in full in the year in which they
occur. The key assumptions used for the actuarial valuation are
based on the Group’s best estimate of the variables that will
determine the ultimate cost of providing post-employment
benefits. Where a net pension scheme asset arises, recognition of
the asset is permitted because the Group has an unconditional right
to a refund on any winding up of the schemes or if gradual
settlement of liabilities over time is assumed.
The Group’s defined benefit schemes hold part of their plan asset
portfolio as unquoted assets. These include private equity and
property interests that are typically subject to valuation uncertainty.
The valuation of these assets is based on the latest asset manager
views and other relevant benchmarks.
The key source of estimation uncertainty is the assessment of
the value of the pension liabilities (under IAS 19) within the scheme
valuations. Key assumptions are the discount rate, inflation and
life expectancy.
Further details, including sensitivities to these assumptions, are
provided in note 22.
Impairment and impairment reversals of long-lived assets
The Group makes judgements in considering whether the carrying
amounts of its long-lived assets (principally Upstream gas
production assets, Nuclear investment (20% economic interest
accounted for as an investment in associate), Batteries, Solar assets,
Gas peakers and Goodwill) or cash-generating units (CGUs) are
recoverable and estimates their recoverable amounts. See note
7(b) for details.
A key assumption in these judgements is forecast future
commodity prices. For the first four years, observable market prices
are used and thereafter an estimation of longer-term prices is
required. During the year, the Group has refined the estimation
methodology applied to forecasting these longer-term commodity
prices. As the Group has announced its intention to invest between
£600-800 million in capital expenditure annually over the next few
years, including in assets with long-term commodity price exposure,
it was considered important to derive a Centrica view of long-term
prices to help assess both asset values and inform impairment
assessments rather than continue to utilise an average of third-party
comparator median curves. An internal review was conducted to
map Centrica’s beliefs around the evolution of each commodity
market to specific, reputable, third party curve providers. This
review evolved during the year and resulted in a more refined view
using a balance of curve providers more aligned to our long-term
view. Accordingly these long-term price assumptions are expected
to help facilitate a better estimation of the recoverable amount of
long-lived assets. The year-end price assumptions were broadly
aligned with those that would have been calculated under the
previous methodology. As a result, the outcome if the prior year
methodology for deriving longer-term commodity prices was
retained, would not be materially different to the new methodology
used in the current year. The overall effect on future periods from
this methodology change cannot be estimated because it will
depend on the relative changes to future price forecasts from the
third-party providers. The assets where the recoverable amount is
determined by forecast future commodity prices and hence whose
recoverable amounts are a key source of estimation uncertainty are:
Centrica plc Annual Report and Accounts 2024
177
3.
Critical accounting judgements and key sources
of estimation uncertainty
Upstream gas assets
Forward prices for gas are a key input in the determination of the
recoverable amount of the Group’s gas production assets. 2024
has seen increases in the prices of this commodity, both in terms of
observable market prices and forecast forward prices. Impairment
headroom remains for the Group’s significant fields at the year-end.
As at 31 December 2024, this remains a key source of estimation
uncertainty due to potential future price decreases. As a sensitivity,
were gas prices in the liquid period (2025-29) to fall by 50%, a post-
tax impairment of £116 million would arise. Potential future price
increases give rise to less estimation uncertainty, as the recoverable
amounts of the Group’s gas assets are capped at depreciated
historic cost.
Further details of the assumptions used in determining the
recoverable amounts and sensitivities to the assumptions are
provided in note 7.
Nuclear investment
The recoverable amount of the Nuclear investment is based on
the value of the existing UK nuclear fleet operated by EDF. The
existing fleet value is calculated by discounting pre-tax cash flows
derived from the stations based on forecast power generation and
power prices, whilst taking account of outages and the likely
operational lives of the stations. During the year, the recoverable
amount has decreased, predominantly due to a fall in power prices
both on a forecast and actuals basis, offset by the impact of life
extensions at four of the stations. This has resulted in an impairment
of £48 million.
The key source of estimation uncertainty is power price forecasts,
other input assumptions include production levels, application of the
Electricity Generator Levy and station lives. Further details of these
uncertainties, together with the methodology, assumptions and
impairment booked during the year are provided in note 7, together
with related sensitivities.
Revenue recognition – unread gas and electricity meters
Revenue for energy supply activities includes an assessment of
energy supplied to customers between the date of the last meter
reading and the year-end (known as unread revenue). Unread gas
and electricity comprises both billed and unbilled revenue. It is
estimated through the billing systems, using historical consumption
patterns, on a customer-by-customer basis, taking into account
weather patterns, load forecasts and the differences between
actual meter readings being returned and system estimates.
Actual meter readings continue to be compared to system
estimates between the balance sheet date and the finalisation
of the accounts.
An assessment is also made of any factors that are likely to
materially affect the ultimate economic benefits that will flow
to the Group, including bill cancellation and re-bill rates. Estimated
revenue is restricted to the amount the Group expects to be
entitled to in exchange for energy supplied. The judgements
applied, and the assumptions underpinning these judgements,
are considered to be appropriate. However, a change in these
assumptions would have an impact on the amount of revenue
recognised. The primary source of estimation uncertainty relating
to unread revenue arises in the respect of gas and electricity sales
to UK downstream customers in British Gas Energy and Centrica
Business Solutions, including where changes in customer behaviour
in response to elevated prices affect estimated consumption. At 31
December 2024 unread revenue arising from these customers
amounted to £2,732 million (2023: £2,992 million). A change in these
assumptions of 2% would impact revenue and profit by £55 million.
Additionally, there is some risk this change could be higher when
considering the assumptions implicit in unread revenue and the
extent to which revenue is constrained through the application of
the IFRS 15 requirements.
Decommissioning costs
The estimated cost of decommissioning at the end of the producing
lives of gas fields is reviewed periodically and is based on reserves,
price levels and technology at the balance sheet date. Provision is
made for the estimated cost of decommissioning at the balance
sheet date. The payment dates of total expected future
decommissioning costs are uncertain and dependent on the lives
of the facilities, but are currently anticipated to be predominantly
incurred by 2035.
The level of provision held is sensitive to both the estimated
decommissioning costs (in particular for the non-operated assets
and non-contracted expenditure) and the discount rate, hence each
input is considered to be a key source of estimation uncertainty.
During the year, there has been an increase in government gilt yields
appropriate to the forecast profile of the decommissioning
expenditure, and therefore the real discount rate used to discount
the decommissioning liabilities at 31 December 2024 increased
to 2% (31 December 2023: 1%). A 1% increase in the discount rate
reduces the decommissioning liability by approximately £70 million
whilst a 1% decrease in the discount rate would increase the
provision by approximately £76 million. A 10% increase in forecast
decommissioning costs would increase the provision by
approximately £146 million.
Gas and liquids reserves
The volume of proven and probable (2P) gas and liquids reserves
is an estimate that affects the unit of production method of
depreciating producing gas and liquids property, plant and
equipment (PP&E) as well as being a significant estimate affecting
decommissioning and impairment calculations.
The impact of a change in estimated 2P reserves is dealt with
prospectively by depreciating the remaining book value of
producing assets over the expected future production. If 2P
reserves estimates are revised downwards, earnings could be
affected by higher depreciation expense or an immediate write-
down (impairment) of the asset’s book value. A change in reserves
estimates could also change the timing of decommissioning
activity, which could change the carrying value of the Group’s
provisions. The complex interaction of field-specific factors means
that it is not possible to give a meaningful sensitivity of the Group’s
financial position or performance to gas and liquids reserves
estimates. The factors impacting gas and liquids estimates, the
process for estimating reserve quantities and reserve recognition
and details of the Group’s 2P reserves are given on page 281. Details
of impairments of exploration and production fields and goodwill,
along with associated sensitivities, are given in note 7.
Determination of fair values – energy derivatives
The fair values of energy derivatives classified as Level 3 in
accordance with IFRS 13 ‘Fair Value Measurement’ are determined
to be a key source of estimation uncertainty as they are not actively
traded and their values are estimated by reference in part to
published price quotations in active markets and in part by using
complex valuation techniques. The key source of estimation
uncertainty is future commodity prices and their inclusion in the
reliable estimation of the unobservable components of the Group’s
Level 3 derivatives in an elevated and volatile commodity price
environment. More detail on the assumptions used in determining
fair valuations of energy derivatives is provided in note S6 and on
the sensitivities to these assumptions in note S3.
Strategic Report Governance Financial Statements Other Information
3.
Critical accounting judgements and key sources
of estimation uncertainty
Climate change
In preparing the financial statements, the Directors have considered
the impact of climate change in the context of the risks and
opportunities identified in the Task Force on Climate-related
Financial Disclosures (TCFD) disclosures on pages 67 to 77. There
has been no material impact identified on the financial reporting
judgements and estimates. The Directors specifically considered
the impact of climate change in the following areas:
• Cash flow forecasts used in the impairment assessment of non-
current assets, including goodwill and the Nuclear investment;
• Carrying value and useful economic lives of property, plant
and equipment;
• Recoverability of deferred tax assets; and
• Going concern and viability of the Group over the next
three years.
Whilst there is no short-term impact expected from climate change,
the Directors are aware of the risks and regularly assess these risks
against judgements and estimates made in preparation of the
Group’s financial statements.
Further detail is provided in the ‘Climate change’ note below.
Centrica plc Annual Report and Accounts 2024
179
3.
Critical accounting judgements and key sources of estimation uncertainty
(c)
Climate change
The Group’s assessment of how climate-related issues might affect the business has been integrated into its annual strategic and financial
planning process. At the same time, the Group reviews the potential impact of the material risks and opportunities and its Climate Transition
Plan on both the current balance sheet position and its accounting policies (including the useful economic lives of its assets).
Summary of our most material risks and opportunities
Climate-related trend
Potential impact
Transition away from fossil fuelled heating
Risk: Reduced GM from the sale and servicing of natural gas residential boilers and
commercial Combined Heat and Power (CHP) units
Growth in low carbon heating market
Opportunity: Increased sales and servicing of electric and hydrogen fuelled heating
systems
Associated opportunities in fabric upgrade including insulation
Transition away from natural gas and energy efficiency
Risk: Reduced GM from the sale of natural gas and energy efficiency
Growth in low carbon heating market
Opportunity: Increased sales of electricity and green or low carbon hydrogen
Growth of EV transport market
Opportunity: Access to new and growing value pools related to EV charging installations,
operation and maintenance (O&M) alongside energy supply
Growth in demand for renewable energy
Opportunity: Strong growth in solar and battery markets driven by decarbonisation
Rising mean temperatures
Risk: Reduced sales of natural gas and electricity for heat
IFRS dictates how each asset or liability should be accounted for (e.g. cost, fair value or other measurement criteria) and accordingly,
there is a fundamental difference between the holistic forward-looking risk and opportunities business analysis (see TCFD disclosure
on pages 67 to 77), and the possible sensitivity of current accounting carrying values to these risks and opportunities.
For example, whilst the activity of supplying gas to customers or servicing/installing gas boilers is clearly subject to climate-related risks
(and opportunities), the balance sheet does not reflect an overall value of those businesses (aside from an element of goodwill). Instead,
accounting balances related to these businesses generally manifest themselves in short-term working capital assets and liabilities
associated with procuring and selling gas or servicing/installing boilers; with those balances generally settled within six months and
so specifically less exposed to climate risks.
In a similar vein, Upstream assets are tested for impairment in accordance with relevant IFRS accounting standards. These generally require
the recoverable amount of the asset to be calculated based on a best estimate of long-term forecast commodity prices, which the Group
estimates based on current market prices and Centrica’s view of long-term prices using a balance of reputable commodity pricing
consultants’ forecasts. However, these estimates are not consistent with net zero scenarios from the consultants (as they do not factor in
any prospective, yet to be announced legislative or market changes that would be required to meet temperature targets) and hence
impairment reviews are not based on net zero scenario forward prices. The Group instead discloses the impact on the carrying value of
Upstream assets by way of sensitivity analysis (see note 7(c)).
Strategic Report Governance Financial Statements Other Information
3.
Critical accounting judgements and key sources of estimation uncertainty
Accordingly, the Group is mindful of these dynamics when it considers which areas of the balance sheet are exposed to key estimation
uncertainty from climate-related issues. The Group considers which assets are most exposed to impairment from climate risks and similarly
whether there are any liabilities that are either currently unrecognised or might increase as a result of those risks.
The Group’s assets/liabilities have been segmented into three tranches, grading each balance’s exposure to climate risks/opportunities:
(i) Higher risk – As the consumption of gas and power is intrinsically linked to carbon emissions, their pricing is consequently exposed to
climate and legislative risk. Accordingly, where assets or contract values have a key dependency on commodity price assumptions,
those assets (or contracts) are deemed higher risk.
(ii) Medium risk – Gross margin energy transition considerations and their potential impact on forward-looking balances (e.g. Supply
and Services and Energy Trading goodwill) and decommissioning balances in E&P.
(iii)Lower risk – No significant risk identified on the basis that positions are short-term in nature or are specifically linked to the energy
transition or are immaterial.
The key non-current asset (and decommissioning provision) balance sheet items have been presented in more granular detail below,
together with the groupings into the above risks and with rationale set out below the table:
As at 31 December 2024 (£m):
Goodwill
Intangibles
Investment
in associates
Property, plant &
equipment
Deferred
tax assets
Decommissioning
provision
Energy Supply
277
Application software
104
Meter assets
112
Energy Services
63
Brand (mainly Dyno-Rod)
57
Application software
114
Battery storage
116
Electric vehicles (vans/cars)
45
Non-electric vehicles (vans/cars)
41
Energy Trading
138
Application software
26
LNG vessel leases
70
Gas Assets (E&P and Storage)
E&P fields (Spirit)
789
142
(1,139)
E&P tax losses (Spirit)
54
Gas storage facility (Rough)
—
149
(302)
Power Assets
Nuclear investment
794
Gas-fired power stations/engines (i)
365
(18)
Combined Heat and Power (CHP)/other power assets
60
Solar
40
Group/Other
Customer relationships
17
Land & buildings (ii)
139
Derivatives deferred tax (ii)
20
Other (ii)
82
(26)
Total (notes 13-16 and 21)
478
318
794
1,859
339
(1,459)
(i)
The Property, plant and equipment balance includes £269 million in Bord Gáis, and £96 million in Centrica Business Solutions.
(ii) Land & buildings, Other Derivatives deferred tax and Other Property, plant & equipment/Deferred tax have not been allocated out across business type, and includes a
£19 million elimination adjustment of internal margin and indirect costs on smart meter installation capitalised in the meter asset provider business within British Gas
Energy. See note 4.
Higher
Medium
Lower
Centrica plc Annual Report and Accounts 2024
181
3.
Critical accounting judgements and key sources of
estimation uncertainty
All items noted above may be impacted by climate-related risks but
are not currently considered to be key areas of judgement or
sources of estimation uncertainty in the current financial year.
Higher risk
E&P field valuations are dependent on forecast commodity prices.
Climate change risk means that there is uncertainty over gas
demand and forecast prices. This climate change risk is not
currently a key source of estimation uncertainty because current
liquid commodity prices mean that there is impairment headroom
over current carrying values. Nonetheless, valuation sensitivity
information based on a net zero price forecast has been provided in
note 7(c) to show field values can move significantly. (Note that the
Group’s intention is to run-off remaining fields with most production
forecast in the next five years. Decommissioning obligations will be
substantively met by the early 2030s, whilst further investment in
exploring for new gas fields has ceased.) Recoverability of E&P
deferred tax assets associated with historic losses is dependent on
future field profitability and so is subject to climate change risk.
The valuation of the investment in Nuclear is also highly dependent
on forecast commodity prices. Climate change risks and
opportunities means there is uncertainty over electricity demand
and forecast prices. The underlying Nuclear stations, which produce
electricity with no carbon emissions, have different useful economic
lives, with the last station forecast to cease operating in 2055.
Valuation sensitivity information based on a net zero price forecast
has been provided in note 7(c).
Medium risk
The Group’s gas-fired power stations and engines (including Gas
peakers) are exposed to climate change risk, with valuations
dependent on forecast gas and electricity prices and electricity
demand. However, they are deemed medium risk as a significant
proportion of the overall carrying value relates to the Irish single
electricity market, where the characteristics of the market and the
capacity arrangements provide additional risk mitigation.
Similarly the Group’s investment in CHP and other power assets are
also exposed to climate risk. They have useful economic lives of up
to 40 years but they do not, individually or in total, have material
carrying values.
The Group's meter assets are exposed to climate change risk
because they record usage of both gas and power. They are
deemed medium risk because they are subject to contractual
arrangements that provide for ongoing revenue security from
suppliers.
LNG Vessels on the balance sheet are exposed to risk from climate
change, but as they are leased assets with the current term
remaining less than five years, this risk is reduced to medium.
The Group is in the process of transitioning to an electrified vehicle
fleet. Non-electric vehicles are deemed medium risk because their
remaining useful economic lives are generally quite short.
Decommissioning provisions are generally longer-term but this
could be brought forward for E&P and Storage assets if the energy
transition accelerates. However, as the decommissioning discount
rate is only 2% (real), the balance sheet and income statement
impact of earlier decommissioning would not be material.
Deferred tax associated with field accelerated capital allowances
and decommissioning in E&P and Storage is not considered high risk
due to the length of carry-back rules for decommissioning and the
mechanical unwind of other temporary differences. Deferred tax
assets associated with derivatives are considered medium risk as
the derivatives generally realise within two years.
Energy Supply, Energy Services and Energy Trading Goodwill
and Application Software are categorised as medium risk because
the businesses are exposed to energy transition risk as a result of
climate change. However, there are also significant opportunities
for these businesses and the carrying values are not material.
Lower risk
All other assets denoted in the table above are considered lower
risk because they are either specifically related to the energy
transition (e.g. electric vehicles, battery storage, solar) or are
immaterial. Note that designation as Lower risk does not mean
these assets are not at risk of impairment (e.g. from reduced
residual values or commodity price movements) but instead is an
assessment of specific exposure to climate change risks.
Other contracts
The Group also has long-term LNG supply contracts with Cheniere,
Delfin, Mozambique and Repsol. These are not reflected on the
balance sheet but the Group has certain purchase commitments.
The Group also has two long-term gas sale and purchase
agreements with Coterra Energy, which similarly has long-term
commitments (see note 23). The contracts currently have
significant value (when considered together) because of gas price
locational spreads but are exposed to climate-change risk and
therefore could ultimately become onerous in net zero scenarios.
The commitments note provides detail of the length of the
contracts and commodity purchase commitments.
Strategic Report Governance Financial Statements Other Information
4.
Segmental analysis
The Group’s reporting segments are those used internally by management to run the business and make decisions. The
Group’s segments are based on products and services as well as the major factors that influence the performance of these
products and services across the geographical locations in which the Group operates.
(a)
Segmental structure
The types of products and services from which each reportable segment derived its income during the year are detailed below.
All reportable segments are operating segments. Income sources are reflected in total Group revenue unless otherwise stated:
Segment
Description
British Gas Services &
Solutions
• The installation, repair and maintenance of domestic central heating and related appliances (including smart
meters), and the provision of fixed-fee maintenance/breakdown service and insurance contracts in the UK; and
• the supply of new technologies and energy efficiency solutions in the UK.
British Gas Energy
• The supply of gas and electricity to residential and small business customers in the UK; and
• the smart meter asset provider business.
Bord Gáis Energy
• The supply of gas and electricity to residential, commercial and industrial customers in the Republic of Ireland;
• the installation, repair and maintenance of domestic central heating and related appliances in the Republic
of Ireland;
• the procurement, trading and optimisation of energy in the Republic of Ireland (i); and
• power generation in the Republic of Ireland.
Centrica Business Solutions
• The supply of gas and electricity to business customers in the UK (i);
• the supply of energy services and solutions to large organisations in the UK, Europe and North America; and
• the development and operation of large-scale power assets in the UK and Europe.
Centrica Energy
• The procurement, trading and optimisation of energy in the UK and Europe (i); and
• the global procurement and sale of LNG.
Upstream
• The production and processing of gas and liquids principally within Spirit Energy (i);
• the sale of power generated from nuclear assets in the UK; and
• gas storage in the UK.
(i)
Where income is generated from contracts in the scope of IFRS 9, this is included in re-measurement and settlement of derivative energy contracts.
Centrica plc Annual Report and Accounts 2024
183
4.
Segmental analysis
(b)
Revenue
Gross segment revenue includes revenue generated from the sale of products and services to other reportable segments
of the Group. Total Group revenue reflects only the sale of products and services to third parties. Sales between
reportable segments are conducted on an arm’s length basis.
2024
2023
Gross
segment
revenue
£m
Less inter-
segment
revenue
£m
Total
Group
revenue
£m
Gross
segment
revenue
£m
Less inter-
segment
revenue
£m
Total
Group
revenue
£m
Year ended 31 December
British Gas Services & Solutions
1,563
(136)
1,427
1,597
(57)
1,540
British Gas Energy
12,065
—
12,065
17,742
—
17,742
Bord Gáis Energy
1,271
—
1,271
1,815
—
1,815
Centrica Business Solutions
2,551
(8)
2,543
3,522
(6)
3,516
Centrica Energy
6,128
(405)
5,723
7,732
(476)
7,256
Upstream
2,628
(1,021)
1,607
2,935
(1,430)
1,505
Total Group revenue included in business
performance
26,206
(1,570)
24,636
35,343
(1,969)
33,374
Less: revenue arising on contracts in scope of IFRS 9
included in business performance
(4,723)
(6,916)
Total Group revenue
19,913
26,458
The table below shows the total Group revenue arising from contracts with customers, and therefore in the scope of IFRS 15, and revenue
arising from contracts in the scope of other standards. The key economic factors impacting the nature, timing and uncertainty of revenue
and cash flows are considered to be driven by the type and broad geographical location of the customer. The analysis of IFRS 15 revenue
below reflects these factors.
2024
Revenue from
contracts with
customers in
scope of IFRS 15 (i)
£m
Revenue from
fixed-fee service
and insurance
contracts in
scope of IFRS
17, and leasing
contracts in
scope of IFRS 16
£m
Total Group
revenue
£m
Revenue
in business
performance
arising from
contracts in
scope of IFRS 9
£m
Total Group
revenue included
in business
performance
£m
Year ended 31 December
Energy services and solutions
627
British Gas Services & Solutions
627
800
1,427
—
1,427
Energy supply – UK
12,065
British Gas Energy
12,065
—
12,065
—
12,065
Energy supply – Republic of Ireland
1,021
Bord Gáis Energy
1,021
—
1,021
250
1,271
Energy supply – UK
1,963
Energy services
182
Centrica Business Solutions
2,145
2
2,147
396
2,543
Energy sales to trading and energy procurement counterparties
3,077
Centrica Energy
3,077
15
3,092
2,631
5,723
Gas and liquid production
161
Upstream
161
—
161
1,446
1,607
19,096
817
19,913
4,723
24,636
(i)
As part of the finalisation process of the government support schemes, revenue of £21 million was reversed during the year in relation to the Energy Price Guarantee
scheme for domestic customers in the British Gas Energy segment. During 2023, revenue of £3,698 million was recognised in relation to this scheme, whilst it was
ongoing. A further £13 million (2023: £448 million) of revenue has been recognised in respect of non-domestic schemes. £8 million (2023: £320 million) of this total
relates to Centrica Business Solutions customers and £5 million (2023: £128 million) relates to non-domestic customers in the British Gas Energy segment.
Strategic Report Governance Financial Statements Other Information
4.
Segmental analysis
2023
Year ended 31 December
Revenue from
contracts with
customers in
scope of IFRS 15
£m
Revenue from
fixed-fee service
and insurance
contracts in
scope of IFRS 17,
and leasing
contracts in
scope of IFRS 16
£m
Total Group
revenue
£m
Revenue in
business
performance
arising from
contracts in
scope of IFRS 9
£m
Total Group
revenue included
in business
performance
£m
Energy services and solutions
727
British Gas Services & Solutions
727
813
1,540
—
1,540
Energy supply – UK
17,742
British Gas Energy
17,742
—
17,742
—
17,742
Energy supply – Republic of Ireland
1,438
Bord Gáis Energy
1,438
—
1,438
377
1,815
Energy supply – UK
2,232
Energy services
208
Centrica Business Solutions
2,440
4
2,444
1,072
3,516
Energy sales to trading and energy procurement counterparties
3,132
Centrica Energy
3,132
29
3,161
4,095
7,256
Gas and liquid production
133
Upstream
133
—
133
1,372
1,505
25,612
846
26,458
6,916
33,374
Geographical analysis of revenue and non-current assets
The Group monitors and manages performance by reference to its operating segments and not solely on a geographical basis. However,
provided below is an analysis of revenue and certain non-current assets by geography.
Total Group revenue
(based on location of customer)
Non-current assets
(based on location of assets) (i)
Year ended 31 December
2024
£m
2023
£m
2024
£m
2023
£m
UK
16,240
22,207
2,860
2,875
Republic of Ireland
1,021
1,438
325
229
Europe (excluding UK and Republic of Ireland)
1,423
1,733
376
484
Rest of the world
1,229
1,080
15
12
19,913
26,458
3,576
3,600
(i)
Non-current assets comprise goodwill, other intangible assets, PP&E, interests in joint ventures and associates and non-financial assets within trade and other
receivables, and contract-related assets.
Centrica plc Annual Report and Accounts 2024
185
4.
Segmental analysis
(c)
Adjusted gross margin and adjusted operating profit
The measure of profit used by the Group is adjusted operating profit. Adjusted operating profit is operating profit before
exceptional items and certain re-measurements. This includes business performance results of equity-accounted interests.
This note also details adjusted gross margin. Both measures are reconciled to their statutory equivalents.
Adjusted gross margin
Adjusted operating profit
Year ended 31 December
2024
£m
2023
£m
2024
£m
2023
£m
British Gas Services & Solutions
633
616
67
47
British Gas Energy
1,521
2,141
297
751
Bord Gáis Energy
207
139
63
1
Centrica Business Solutions
258
309
73
104
Centrica Energy
536
1,016
307
774
Upstream
681
999
789
1,083
Segmental adjusted gross margin/adjusted operating profit
3,836
5,220
1,596
2,760
Reconciling items to Group Income Statement:
Colleague profit share (i)
(9)
(3)
(25)
(8)
Meter asset provider consolidation adjustment (ii)
(19)
—
(19)
—
Total Group adjusted gross margin/adjusted operating profit
3,808
5,217
1,552
2,752
Certain re-measurements (note 7):
Onerous energy supply/LNG contract provision movement
(142)
833
(142)
833
Derivative contracts
421
3,573
421
3,573
Share of re-measurement of certain associates’ energy contracts (net of taxation)
—
—
—
(1)
Gross profit
4,087
9,623
Exceptional items in operating profit
(128)
(645)
Operating profit after exceptional items and certain re-measurements
1,703
6,512
(i)
The impact of the colleague profit share is excluded because management considers it unrelated to segmental business performance.
(ii) In accordance with IFRS 8, Segmental adjusted gross margin and adjusted operating profit are presented as managed by the Board (Chief Operating Decision Maker)
and accordingly the internal margin and indirect costs on smart meter installation recognised by British Gas Services & Solutions and subsequently capitalised in the
meter asset provider business within British Gas Energy, are eliminated on consolidation and reported as a reconciling item to the Group Income Statement.
Strategic Report Governance Financial Statements Other Information
4.
Segmental analysis
(d)
Included within adjusted operating profit
Presented below are certain items included within adjusted operating profit, including a summary of impairments of property,
plant and equipment and intangibles.
Depreciation and impairments
of property, plant and equipment
Amortisation and impairments
of intangibles
Year ended 31 December
2024
£m
2023
£m
2024
£m
2023
£m
British Gas Services & Solutions
(31)
(42)
(12)
(12)
British Gas Energy
(5)
(3)
(37)
(54)
Bord Gáis Energy
(8)
(9)
(8)
(11)
Centrica Business Solutions
(12)
(11)
(12)
(26)
Centrica Energy
(29)
(30)
(10)
(18)
Upstream
(288)
(281)
—
—
Other (i)
(36)
(28)
(8)
(17)
(409)
(404)
(87)
(138)
(i)
The Other segment includes corporate functions, subsequently recharged.
Impairments of property, plant and equipment
During 2024, £22 million of impairments of property, plant and equipment (2023: £9 million) were recognised within business performance.
Impairments of intangible assets
During 2024, £1 million of impairments of other intangible assets (2023: £15 million) were recognised within business performance.
Centrica plc Annual Report and Accounts 2024
187
4.
Segmental analysis
(e)
Capital expenditure
Capital expenditure represents additions, other than assets acquired as part of business combinations or asset purchase
agreements, to property, plant and equipment and intangible assets. Capital expenditure has been reconciled to the related
cash outflow.
Capital expenditure on property,
plant and equipment
Capital expenditure on intangible
assets other than goodwill
Year ended 31 December
2024
£m
2023
£m
2024
£m
2023
£m
British Gas Services & Solutions
11
45
19
32
British Gas Energy
114
—
628
565
Bord Gáis Energy
119
69
3
7
Centrica Business Solutions
133
80
206
193
Centrica Energy
7
5
9
14
Upstream
51
95
28
18
Other
37
79
—
—
Segmental capital expenditure
472
373
893
829
Meter asset provider consolidation adjustment (i)
(19)
—
—
—
Total Group capital expenditure
453
373
893
829
Capitalised borrowing costs (note 8)
(11)
(2)
—
—
Inception of new leases and movements in payables and prepayments related to
capital expenditure
(62)
(89)
(1)
4
Purchases of emissions allowances and renewable obligation certificates (note 15) (ii)
—
—
(856)
(780)
Net cash outflow
380
282
36
53
(i)
In accordance with IFRS 8, Segmental capital expenditure is presented as managed by the Board (Chief Operating Decision Maker) and accordingly the internal margin
and indirect costs on smart meter installation recognised by British Gas Services & Solutions and subsequently capitalised in the meter asset provider business within
British Gas Energy is eliminated on consolidation and reported as a reconciling item to Total Group capital expenditure.
(ii) Purchases of emissions allowances and renewable obligation certificates of £624 million (2023: £565 million) in British Gas Energy, £204 million (2023: £193 million) in
Centrica Business Solutions, £28 million (2023: £18 million) in Upstream, and £nil (2023: £4 million) in Centrica Energy.
Strategic Report Governance Financial Statements Other Information
4.
Segmental analysis
(f)
Free cash flow
Free cash flow is used by management to assess the cash-generating performance of each segment, after taking account
of the need to maintain its capital asset base. By excluding deficit reduction payments and movements in collateral and
margin cash, which are predominantly triggered by wider market factors, and in the case of collateral and margin movements,
represent timing movements, free cash flow is used by management as an adjusted measure of the cash generation of the
business. Free cash flow excludes investing cash flows that are related to adjusted net cash/debt. This measure is reconciled
to the net cash flow from operating and investing activities.
Year ended 31 December
2024
£m
2023
£m
British Gas Services & Solutions
102
64
British Gas Energy (i)
(303)
302
Bord Gáis Energy
(35)
(146)
Centrica Business Solutions
(3)
220
Centrica Energy (ii)
649
1,354
Upstream (iii)
1,215
1,236
Other (iv)
—
(20)
Segmental free cash flow excluding tax
1,625
3,010
Taxes paid
(636)
(803)
Total free cash flow
989
2,207
UK pension deficit payments (note 22)
(176)
(180)
Movements in variation margin and collateral (note 25)
131
585
Interest received
317
267
Settlement of securities (note 25)
400
—
Purchase of securities (note 25)
(19)
(12)
1,642
2,867
Net cash flow from operating activities
1,149
2,752
Net cash flow from investing activities
493
115
Total cash flow from operating and investing activities
1,642
2,867
(i)
British Gas Energy free cash flow in 2024 includes working capital outflows of £533 million driven by settling prior year commodity costs and refunding customer credit
balances, both largely related to the impact of falling commodity prices. British Gas Energy free cash flow in 2023 includes significant working capital outflows of
approximately £500 million largely related to the impact of falling commodity prices.
(ii) Centrica Energy free cash flow in 2024 includes operating cash inflows of £325 million (2023: £580 million) driven by profit on prior year derivative positions cash settling
during the year.
(iii) Upstream free cash flow in 2024 includes inflows of £355 million (2023: £220 million) relating to dividends received from joint ventures and associates.
(iv) The Other segment includes corporate functions.
Centrica plc Annual Report and Accounts 2024
189
5.
Costs
This section details the types of costs the Group incurs and the number of employees in each of our operations.
(a)
Analysis of costs by nature
2024
2023
Year ended 31 December
Cost of sales
and settlement
of certain
energy
contracts
£m
Operating
costs
£m
Total
costs
£m
Cost of sales
and settlement
of certain
energy
contracts
£m
Operating
costs
£m
Total
costs
£m
Transportation, distribution, capacity market and metering
costs
(4,764)
—
(4,764)
(4,813)
—
(4,813)
Commodity costs
(13,109)
—
(13,109)
(20,258)
—
(20,258)
Depreciation, amortisation and impairments
(313)
(183)
(496)
(324)
(218)
(542)
Employee costs
(443)
(867)
(1,310)
(608)
(777)
(1,385)
Other direct costs
(2,199)
(1,089)
(3,288)
(2,154)
(1,077)
(3,231)
Costs included within business performance before
credit losses on financial assets
(20,828)
(2,139)
(22,967)
(28,157)
(2,072)
(30,229)
Credit losses on financial assets (net of recovered amounts)
(note 17)
—
(373)
(373)
—
(602)
(602)
Total costs included within business performance
(20,828)
(2,512)
(23,340)
(28,157)
(2,674)
(30,831)
Adjustment for gross cost of settled energy contracts in the
scope of IFRS 9 and onerous energy supply and LNG
contract provisions (note 7)
9,064
—
9,064
17,497
—
17,497
Exceptional items and re-measurement and settlement of
derivative energy contracts (note 7)
(4,062)
(128)
(4,190)
(6,175)
(645)
(6,820)
Total costs within Group operating profit
(15,826)
(2,640)
(18,466)
(16,835)
(3,319)
(20,154)
(b)
Employee costs
Further information on key management personnel and Directors’ remuneration is disclosed in note S8.
Year ended 31 December
2024
£m
2023
£m
Wages and salaries
(1,050)
(1,105)
Social security costs
(122)
(146)
Pension and other post-employment benefits costs (note 22)
(138)
(118)
Share scheme costs (note S4)
(47)
(31)
(1,357)
(1,400)
Capitalised employee costs
47
15
Employee costs recognised in business performance in the Group Income Statement
(1,310)
(1,385)
Strategic Report Governance Financial Statements Other Information
5.
Costs
(c)
Average number of employees during the year
2024
Number
2023
Number
Year ended 31 December
British Gas Services & Solutions
12,151
12,309
British Gas Energy
4,527
3,979
Bord Gáis Energy
438
395
Centrica Business Solutions
1,334
1,334
Centrica Energy
834
780
Upstream
721
699
Group Functions
1,699
1,518
21,704
21,014
6.
Share of results of joint ventures and associates
Share of results of joint ventures and associates represents the results of businesses where we exercise joint control or
significant influence and generally have an equity holding of up to 50%.
Share of results of joint ventures and associates
The Group’s share of results of joint ventures and associates principally arises from its interest in Nuclear – Lake Acquisitions Limited, an
associate, reported in the Upstream segment.
2024
2023
Year ended 31 December
Share of
business
performance
£m
Share of
exceptional
items and
certain re-
measurements
£m
Share of
results for the
year
£m
Share of
business
performance
£m
Share of
exceptional
items and
certain re-
measurements
£m
Share of
results for the
year
£m
Income
808
—
808
680
—
680
Expenses before depreciation, amortisation, exceptional
items and certain re-measurements
(295)
—
(295)
(265)
—
(265)
Depreciation and amortisation
(139)
—
(139)
(132)
—
(132)
Exceptional items and re-measurement of certain contracts
—
—
—
—
(1)
(1)
Operating profit/(loss)
374
—
374
283
(1)
282
Taxation on profit/(loss)
(118)
—
(118)
(74)
—
(74)
Share of post-taxation results of joint ventures and
associates
256
—
256
209
(1)
208
Further information on the Group’s investments in joint ventures and associates is provided in notes 14 and S10.
Centrica plc Annual Report and Accounts 2024
191
7.
Exceptional items and certain re-measurements
(a)
Certain re-measurements
Certain re-measurements are the fair value movements on energy contracts entered into to meet the future needs of our
customers or to sell the energy produced from our upstream assets. These contracts are economically related to our
upstream assets, capacity/offtake contracts or downstream demand, which are typically not fair valued, and are therefore
separately identified in the current period and reflected in business performance in future periods when the underlying
transaction or asset impacts the Group Income Statement.
If the future costs to fulfil customer supply contracts, including the mark-to-market reversal of any energy hedging
contracts entered into to meet this demand, exceed the charges recoverable from customers, an onerous contract
provision will be recognised. Similarly, if the future revenues from LNG procurement contracts, including the mark-to-
market reversals of hedging contracts entered into related to these purchases, do not exceed the purchase cost, an onerous
contract provision will be recognised. Because the associated, unrealised hedging gains or losses will be recognised in
certain re-measurements, the movements in these onerous provisions will also be recognised in certain re-measurements.
Year ended 31 December
2024
£m
2023
£m
Certain re-measurements recognised in relation to energy contracts:
Net gains arising on delivery of contracts
377
3,529
Net gains arising on market price movements and new contracts
44
44
Net re-measurements included within gross profit before onerous supply contract provision
421
3,573
Onerous energy supply and LNG contracts provision movement (i)(ii)
(142)
833
Net re-measurements included within gross profit
279
4,406
Net loss arising on re-measurement of certain associates’ contracts (net of taxation)
—
(1)
Net re-measurements included within Group operating profit
279
4,405
Taxation on certain re-measurements (note 9) (iii)
161
(1,649)
Certain re-measurements after taxation
440
2,756
(i)
The onerous energy supply contract provision is based on the future costs to fulfil customer contracts on a current market price basis. This provision had fully unwound
by 31 December 2023 and remains at £nil on 31 December 2024. However, the acquisition of AvantiGas ON Limited in 2022, included an opening balance sheet onerous
contract provision, which is unwound to the business performance column of the Group Income Statement on a pre-determined acquisition date basis, to ensure this
column reflects the true profit/loss relative to the acquisition date values. At each reporting date, the closing balance sheet value of the onerous contract provision is
then updated to reflect actual market prices, with the required remaining movement in the provision posted to the certain re-measurements column. Because
commodity prices generally fell after the 2022 acquisition, this meant that balance sheet onerous contract provision fell more quickly than originally expected. This led to
a £69 million onerous contract provision movement credit in certain re-measurements column in 2023. Accordingly, there is a £60 million debit in this column in 2024, as
this position has now mostly unwound. See note 2(b) for further details.
(ii) The onerous LNG contracts provision movement amounted to £82 million debit (2023: £nil). Cumulatively over time the onerous energy supply and LNG contracts
provision movement will net to £nil. See notes 2(b) and 3(a) for further details.
(iii) Taxation on onerous energy supply and LNG contracts provision movement amounted to a £35 million credit (2023: £196 million debit) and taxation on other certain re-
measurements amounted to a £126 million credit (2023: £1,453 million debit).
Year ended 31 December
2024
£m
2023
£m
Total re-measurement and settlement of derivative energy contracts
(4,062)
(6,175)
Excluding:
IFRS 9 business performance revenue
(4,723)
(6,916)
IFRS 9 business performance cost of sales
9,206
16,664
Unrealised certain re-measurements recognised in relation to energy contracts included in gross profit
421
3,573
Onerous contract provision movement (cost of sales)
(142)
833
Total certain re-measurements
279
4,406
The table below reflects the certain re-measurement derivative movements by business segment:
Year ended 31 December
2024
£m
2023
£m
UK Energy Supply (British Gas Energy and Centrica Business Solutions)
1,975
506
Upstream/Centrica Energy/Bord Gáis
(1,554)
3,067
Unrealised certain re-measurements recognised in relation to energy contracts included in gross profit
421
3,573
Strategic Report Governance Financial Statements Other Information
7.
Exceptional items and certain re-measurements
(b)
Exceptional items
Exceptional items are those items that, in the judgement of the Directors, need to be disclosed separately by virtue of their
nature, size or incidence. Items which may be considered exceptional in nature include disposals of businesses or significant
assets, business restructuring, pension change costs or credits, significant debt repurchase costs and asset impairments
and write-backs.
Year ended 31 December
2024
£m
2023
£m
Impairment of power assets (i)
(75)
(563)
Impairment of gas storage asset
—
(82)
Legacy contract costs (ii)
(53)
—
Exceptional items included within Group operating profit (iii)
(128)
(645)
Debt repurchase costs included within financing costs (iv)
(68)
—
Exceptional items included within Group profit before taxation
(196)
(645)
Net exceptional item taxation (note 9) (v)
78
54
Total exceptional items recognised after taxation
(118)
(591)
(i)
In the Upstream segment, an impairment of the Nuclear investment of £48 million (post-tax £48 million) (2023: £549 million (post-tax £549 million)) has been recorded
predominantly as a result of the reduction in both forecast and actual power prices partially offset by life extensions at four stations. In the Centrica Business Solutions
segment, an impairment of £27 million (post-tax £20 million) (2023: £14 million (post-tax £11 million)) has been recorded, predominantly related to Battery storage and
Solar assets, also following lower forecast power price capture, together with an increase in discount rate and an increase to operating and capital expenditure forecasts.
See note 7(c).
(ii) Contracts associated with business activity that ceased a number of years ago, predominantly related to construction services, have led to an increase in provisions of
£53 million (post-tax £45 million) during the period.
(iii) Exceptional items for 2024 included within Group operating profit, are non-cash. The cash flows recorded as payments relating to exceptional charges of £6 million
(2023: £6 million) in the Group Cash Flow Statement relate to previous years’ exceptional restructuring costs.
(iv) Exceptional financing costs have been recognised in relation to debt repurchase and refinancing exercises. £370 million of debt instruments have been repurchased in
advance of their maturity date. Due to the premium paid above existing carrying value, and transaction fees, a one-off cost in the Group Income Statement of £50 million
(post-tax £38 million) has been incurred. Refinancing of the 2075 hybrid bond, designated in a fair value hedge relationship, and with a carrying-value of £435 million, and
repayment value of £453 million (including fees), has resulted in a one-off financing cost in the Group Income Statement of £18 million (post-tax £13 million).
(v) Exceptional item taxation includes a credit of £46 million associated with deferred tax in exploration and production, in the Upstream segment. This predominantly
relates to an increase in the deferred tax asset position related to the recovery of abandonment tax losses, investment allowance and a re-measurement of the energy
profits levy deferred tax liability, as a result of changes in forecast production profiles and commodity prices, and legislative changes. This item is unrelated to the other
exceptional items.
Centrica plc Annual Report and Accounts 2024
193
7.
Exceptional items and certain re-measurements
(c)
Impairment accounting policy, process and sensitivities
The information provided below relates to the assets and CGUs (or groups of CGUs) that have been subject to impairment during the year
and/or whose recoverable amount is a key source of estimation uncertainty. See note 3(b).
Exceptional impairment of assets measured on a value-in-use (VIU) basis
Segment
Asset/CGU
Basis for impairment assessment
Recoverable
amount
£m
Impairment
£m
Upstream
Nuclear (i)
Decrease in forecast and actual baseload power prices partially offset by
the impact of life extensions at Heysham 1 & 2, Torness and Hartlepool
stations.
794
48
(i)
During the year ended 31 December 2023, an impairment of £549 million was booked in relation to the Nuclear investment. The recoverable amount at the end of 2023
was £903 million.
Nuclear
A VIU calculation has been used to determine the recoverable amount of the Group’s investment in Nuclear. The cash flows incorporated
in the valuation are based on detailed business forecasts in the short term, extrapolated to future years to account for the expected
generation profile of the fleet for its remaining life. Assumptions include forward commodity prices, capacity rates, fuel and network costs,
and operating and capital expenditure requirements. Price assumptions are based on liquid market prices for 2025 to 2028 which are then
blended over a one-year period to long-term price forecasts. Long-term price assumptions are based on Centrica’s view of long-term
prices, derived from a third-party market curve.
The Electricity Generator Levy, applying a 45% tax rate to revenues generated over £75/MWh (adjusted for inflation) until 31 March 2028,
based on the above price assumptions, has also been included in the assessment. See note 3.
In December 2024, the Nuclear business announced that estimated operating lifetimes at the Heysham 2 and Torness stations would be
extended by two years to March 2030, and at Heysham 1 and Hartlepool would be extended by one year to March 2027. Based on prices
at 31 December 2024, the lifetime extensions increased the value of the Group’s investment in Nuclear by £138 million.
The VIU calculation assumes that the Sizewell plant operates until 2055, reflecting a 20-year extension beyond its original design life. In the
absence of this extension, the carrying value of the Group’s investment in Nuclear based on cash flows from 2035 to 2055 would be
reduced by £152 million. All other stations’ life assumptions are aligned to lifetime closure dates announced by the operator (being between
March 2027 and March 2030). A further adjustment of one year to the lifetime of two Advanced Gas-Cooled Reactor (AGR) stations would
impact carrying value by £42 million.
The VIU calculation is also sensitive to changes in outage assumptions, and the base level generation volumes assumed for the fleet were
increased during the period based on a review of planned and unplanned outages. An increase or reduction of 3% in the unplanned outage
rate applied to volumes across the Nuclear fleet would lead to an impairment/write-back of £80 million.
The future pre-tax cash flows generated by the investment in the associate are discounted using a pre-tax nominal discount rate of 15.3%
(2023: 17.3%). This equated to a post-tax rate of 8.5% (2023: 8.5%). The post-tax discount rate is initially derived from the Group weighted
average cost of capital as adjusted for the risks associated with the asset and with reference to comparator companies. The pre-tax rate is
then back-calculated by removing tax cash flows and assessing the rate that would give the same result as the post-tax rate. As baseload
power prices for the liquid period remain higher than longer-term forecast prices, the near-term cash flows are elevated, which caused the
pre-tax discount rate to remain high. A 1% increase in the post-tax discount rate would lead to an impairment of £37 million (when compared
with the year-end carrying value). Similarly, a 1% reduction in the post-tax discount rate would lead to a write-back of £43 million.
The asset is particularly sensitive to changes in commodity price and the table below details average prices for the first 5- and 10-year
periods and associated sensitivities. Note that the asset is valued based on cash flows arising over its entire economic life and not just this
15-year period.
Change in pre/post-tax write-back/(impairment) (ii)
Five-year liquid and blended-
period price (i)
Ten-year long-term
average price (i)
+10%
-10%
2025-2029
2024-2028
2030-2039
2029-2038
31 December
2024
31 December
2023
31 December
2024
31 December
2023
31 December
2024
31 December
2023
31 December
2024
31 December
2023
£/MWh
£/MWh
£/MWh
£/MWh
£m
£m
£m
£m
Baseload power
71
77
61
61
190
148
(193)
(191)
+50%
Five-year
liquid and
blended-
period only
-50%
Five-year
liquid and
blended-
period only
436
(632)
(i)
Prices are shown in 2023 real terms.
(ii) A 10% change was historically deemed to represent a reasonably possible variation across the entire period covered by the liquid market and comparator curves used in
the nuclear impairment test. Given the volatility in commodity prices during recent years, a further sensitivity has been included based on a 50% change in liquid and
blend-period commodity prices only. Sensitivities are impacted by the effect of the Electricity Generator Levy threshold of £75/MWh (adjusted for inflation).
Furthermore, there is also uncertainty due to climate change and international governmental intervention to reduce CO2 emissions and the
likely impact this will have on both power demand and forecast prices. As a result, a further sensitivity is disclosed below based on the
average forecast prices aligned to the net zero price curves issued by Aurora and Baringa (power analytics providers), which assumes
governmental policies are put in place to achieve the temperature and net zero goals by 2050. This sensitivity retains the prices for the liquid
period (four years) but replaces the longer term thereafter with the average of Aurora and Baringa’s forecast prices for net zero.
Strategic Report Governance Financial Statements Other Information
7.
Exceptional items and certain re-measurements
Ten-year
long-term
average price (i)
Change in
pre/post-tax
impairment (ii)
2030-2039
2024
£m
Baseload power (£/MWh)
56
(97)
(i)
Prices shown in 2023 real terms.
(ii) Change would lead to a further write-off of the carrying value.
Exceptional impairment of assets measured on a FVLCD basis
Segment
Asset/CGU (or group of CGUs)
Basis for impairment assessment
Recoverable
amount (ii)
£m
FV hierarchy
Impairment
£m
Centrica
Business
Solutions
Batteries, Gas peakers
and Solar assets (i)
The reduction in forecast price capture, together with an
increase in discount rate and forecast capital and
operating expenditure.
252
L3
27
(i)
During the year ended 31 December 2023, an impairment of £14 million was booked in relation to the Centrica Business Solutions Batteries, Gas peakers and Solar assets.
(ii) Recoverable amount is for the portfolio of assets and relates to the Property, Plant and Equipment balance only.
Fair value less costs of disposal (FVLCD) is determined by discounting the post-tax cash flows expected to be generated by the assets
or CGU, net of associated selling costs, taking into account those assumptions that market participants would use in estimating fair value.
Post-tax cash flows used in the FVLCD calculation are based on the Group’s Board-approved business plans and longer-term strategic
plans together with, where relevant, long-term production, asset usage and cash flow forecasts. These calculations are then benchmarked
back to market transactions, where available, to assess alignment with typical market participant views.
Centrica Business Solutions assets
An exceptional impairment has been recorded in 2024 for Centrica Business Solutions assets measured on a FVLCD basis.
For Batteries, post-tax cash flows are derived from projected revenue streams associated with wholesale power, balancing, reserve,
response and capacity markets over the life of the asset. Where forward market prices are not available, prices are determined based
on third-party price forecasts, together with an assessment of extrinsic value capture.
For Gas peakers, post-tax cash flows are derived from an assessment of the clean spark-spread, which is the difference between the
power revenues from generation and the cost of generation (gas and carbon costs), together with other revenue streams associated with
balancing mechanism and capacity and availability markets. Where forward market prices are not available, prices are determined based
on third-party price forecasts.
The future post-tax cash flows for both Batteries and Gas peakers are discounted using a post-tax nominal discount rate of 8.0%
(2023: 7.5%).
For Solar assets, post-tax cash flows are derived from an assessment of expected solar activity and the ability to capture future baseload
power prices. Prices are determined based on a third-party capture price forecast.
The future post-tax cash flows for Solar assets, are discounted using a post-tax nominal discount rate of 6.0% (2023: 6.0%).
For all assets, post-tax cash flows also include an assessment of forecast capital and operating expenditure.
Upstream gas production assets
No Upstream gas production assets have been impaired during the year but they still have a significant carrying value on the balance sheet
(see note 13) and accordingly further sensitivities are provided below.
For Upstream gas production assets post-tax cash flows are derived from projected production profiles of each field, taking into account
forward prices for gas and liquids over the relevant period. Where forward market prices are not available (i.e. outside the active period for
each commodity), prices are determined based on Centrica’s view of long-term prices, derived from a third-party market curve. The date of
cessation of production depends on the interaction of a number of variables, such as the recoverable quantities of hydrocarbons,
production costs, the contractual duration of the licence area and the selling price of the gas and liquids produced. As each field has specific
reservoir characteristics and economic circumstances, the post-tax cash flows for each field are computed using individual economic
models. Price assumptions are critical and use liquid market prices for 2025 to 2028, blended over a one-year period to long-term price
forecasts. Long-term price assumptions are Centrica’s view of long-term prices as derived from a third-party market curve and are deemed
best aligned with pricing that a reasonable market participant would use. Following the implementation of the Energy Profits Levy, the
increased tax rates have been included in the FVLCD calculations until the sunset date of 31 March 2030.
The future post-tax cash flows are discounted using a post-tax nominal discount rate of 11.0% (2023: 11.0%).
As forward commodity prices are a key assumption in these valuations, average prices and associated impairment sensitivities for the
Group’s upstream gas assets are shown below. Note that the fields are valued over their respective economic lives and the 5- and 10-year
pricing information shown below is just to provide context. Note that the asset portfolio reserves are predominantly gas (rather than liquids)
and therefore only NBP gas prices have been shown on the next page.
Centrica plc Annual Report and Accounts 2024
195
7.
Exceptional items and certain re-measurements
Change in post-tax write-back/(impairment) (ii) (iii)
Five-year liquid and blended-
period price (i)
Ten-year long-term
average price (i)
+10%
-10%
2025-2029
2024-2028
2030-2039
2029-2038
31 December
2024
31 December
2023
31 December
2024
31 December
2023
31 December
2024
31 December
2023
31 December
2024
31 December
2023
£m
£m
£m
£m
NBP (p/th)
82
76
70
66
—
6
—
(5)
+50%
Five-year liquid
and blended-
period only
-50%
Five-year liquid
and blended-
period only
—
(116)
(i)
Prices are shown in 2023 real terms.
(ii) Sensitivity relates to Upstream exploration and production assets and CGUs. A 10% change was historically deemed to represent a reasonably possible variation across
the entire period covered by both the liquid market and longer-term forecasts used in upstream gas impairment tests. Given the significant movements in commodity
prices during the last few years, a further sensitivity has been included based on a 50% change in liquid and blend-period commodity prices only. The changes shown
relate to further write-backs or impairments and are restricted because the most material fields have already been written back to their depreciated historic cost and
have excess impairment headroom.
(iii) Whilst no write-back or impairment would be required with a +/-10% price movement, the post-tax recoverable amounts would move by +£62 million/-£64 million.
Furthermore, there is also uncertainty due to climate change and international governmental intervention to reduce CO2 emissions and the
likely impact this will have on gas demand and forecast prices. As a result, a further sensitivity is disclosed below based on forecast prices
aligned to an average of the International Energy Agency’s (IEA), Bloomberg NEF, Aurora and Baringa’s net zero emissions by 2050, which
assumes governmental policies are put in place to achieve the temperature and net zero goals by 2050. This sensitivity retains the prices for
the liquid period (four years) but replaces the longer term thereafter with the average of these forecast prices for net zero emissions by
2050.
Ten-year
long-term
average price (i)
Change in
post-tax
impairment (ii)
2030-2039
2024
£m
NBP (p/th)
61
—
(i)
Prices shown in 2023 real terms.
(ii) Change in impairment is restricted due to the most material fields having already been written back to their depreciated historic cost and having excess impairment
headroom, as well as most hydrocarbon production being in the liquid period and hence unaffected by net zero pricing.
8.
Net finance income/(cost)
Financing costs mainly comprise interest on bonds and bank debt, the results of hedging activities used to manage foreign
exchange and interest rate movements on the Group’s borrowings and notional interest arising from the discounting of
decommissioning provisions and pensions. An element of financing cost is capitalised on qualifying projects.
Investment income predominantly includes interest received from short-term investments in money market funds,
bank deposits and government bonds.
2024
2023
Financing
costs
£m
Investment
income
£m
Total
£m
Financing
costs
£m
Investment
income
£m
Total
£m
Year ended 31 December
Financing (cost)/income from net debt:
Interest income
—
313
313
—
269
269
Interest cost on bonds, bank loans and
overdrafts
(235)
—
(235)
(262)
—
(262)
Interest cost on lease liabilities
(13)
—
(13)
(12)
—
(12)
(248)
313
65
(274)
269
(5)
Net losses on revaluation
—
—
—
(2)
—
(2)
Notional interest arising from discounting
(23)
—
(23)
(14)
—
(14)
(271)
313
42
(290)
269
(21)
Other interest charges (i)
(9)
—
(9)
(20)
—
(20)
Capitalised borrowing costs (ii)
11
—
11
2
—
2
Financing (cost)/income before exceptional
items
(269)
313
44
(308)
269
(39)
Exceptional items (iii)
(68)
—
(68)
—
—
—
Financing (cost)/income
(337)
313
(24)
(308)
269
(39)
(i)
Other interest charges includes interest charged on cash collateral, and fees for letters of credit. The cash flow associated is £16 million (2023: £20 million).
(ii) Borrowing costs have been capitalised using an average rate of 8.54% (2023: 8.39%).
(iii) During the year the Group repurchased £370 million of debt instruments and refinanced a hybrid bond designated in a fair value hedge relationship, resulting in an
exceptional financing cost of £68 million (2023: £nil). See notes 7(b) and 25 for further details.
Strategic Report Governance Financial Statements Other Information
9.
Taxation
The taxation note details the different tax charges and rates, including current and deferred tax arising in the Group. The
current tax charge is the tax payable on this year’s taxable profits together with amendments in respect of tax provisions
made in earlier years. This tax charge excludes the Group’s share of taxation on the results of joint ventures and associates.
Deferred tax represents the tax on differences between the accounting carrying values of assets and liabilities and their tax
bases. These differences are temporary and are expected to unwind in the future.
(a)
Analysis of tax charge
2024
2023
Year ended 31 December
Business
performance
£m
Exceptional
items and
certain re-
measurements
£m
Results
for the year
£m
Business
performance
£m
Exceptional
items and
certain re-
measurements
£m
Results
for the year
£m
Current tax
UK corporation tax
(383)
146
(237)
(535)
105
(430)
UK energy profits levy
(243)
—
(243)
(160)
11
(149)
UK petroleum revenue tax
37
—
37
1
—
1
Non-UK tax
(35)
(17)
(52)
(100)
—
(100)
Adjustments in respect of prior years – UK
(1)
(50)
(51)
3
(26)
(23)
Adjustments in respect of prior years – non-UK
(7)
—
(7)
2
—
2
Total current tax
(632)
79
(553)
(789)
90
(699)
Deferred tax
Origination and reversal of temporary differences – UK
(8)
(22)
(30)
(92)
(1,312)
(1,404)
UK energy profits levy
70
188
258
34
(376)
(342)
Change in UK tax rate
—
—
—
(2)
(3)
(5)
UK petroleum revenue tax
(2)
—
(2)
—
52
52
Origination and reversal of temporary differences – non-UK
2
(9)
(7)
4
(20)
(16)
Adjustments in respect of prior years – UK
14
3
17
7
(26)
(19)
Adjustments in respect of prior years – non-UK
3
—
3
—
—
—
Total deferred tax
79
160
239
(49)
(1,685)
(1,734)
Total UK tax
(516)
265
(251)
(744)
(1,575)
(2,319)
Total non-UK tax
(37)
(26)
(63)
(94)
(20)
(114)
Total taxation on profit for the year (i)
(553)
239
(314)
(838)
(1,595)
(2,433)
(i)
Total taxation on profit excludes taxation on the Group’s share of results of joint ventures and associates.
UK tax rates
Most activities in the UK are subject to the standard rate for UK corporation tax of 25% (2023: 23.5%). Upstream gas production activities
are taxed at a rate of 30% (2023: 30%), a supplementary charge of 10% (2023: 10%), plus the Energy Profits Levy of 35% from 1 January
2024 to 31 October 2024 and 38% from 1 November 2024 to 31 December 2024 (2023: 35%) to give an overall tax rate of 75.5% (2023:
75%). Certain upstream gas production assets in the UK are subject to the UK petroleum revenue tax (PRT) regime at the current tax rate
of 0% (2023: 0%).
Non-UK tax rates
Taxation in non-UK jurisdictions, where the Group has a substantial presence, is calculated at the rate prevailing in those respective
jurisdictions.
The main non-UK rates of corporation tax are 12.5% (2023: 12.5%) plus a top-up tax of 2.5% (2023: 0%) in the Republic of Ireland, 22%
(2023: 22%) in Denmark and 17% (2023: 17%) in Singapore.
Prior year adjustments reflect changes made to estimates or to judgements when further information becomes available.
Movements in deferred tax liabilities and assets are disclosed in note 16. Tax on items taken directly to equity is disclosed in note S4.
Centrica plc Annual Report and Accounts 2024
197
9.
Taxation
(b)
Factors affecting the tax charge
The Group is expected to continue carrying out most of its business activities in the UK and accordingly considers the standard UK rate
to be the appropriate reference rate.
The differences between the total taxation shown above and the amount calculated by applying the standard rate of UK corporation tax
to the profit before taxation are as follows:
2024
2023
Business
performance
£m
Exceptional
items
and certain
re-measurements
£m
Results
for the year
£m
Business
performance
£m
Exceptional
items
and certain
re-measurements
£m
Results
for the year
£m
Year ended 31 December
Profit before taxation
1,596
83
1,679
2,713
3,760
6,473
(Deduct)/add back share of (profits)/losses of joint ventures
and associates, net of interest and taxation
(256)
—
(256)
(209)
1
(208)
1,340
83
1,423
2,504
3,761
6,265
Tax on profit at standard UK corporation tax rate of 25%
(2023: 23.5%)
(335)
(21)
(356)
(588)
(884)
(1,472)
Effects of:
Depreciation/impairment on non-qualifying assets
—
(12)
(12)
(1)
(129)
(130)
Other permanent differences
5
1
6
(16)
1
(15)
Electricity Generator Levy
(20)
—
(20)
(67)
—
(67)
Higher rates applicable to Upstream profits/losses
(61)
121
60
(44)
(180)
(224)
Energy Profits Levy charge for the year
(173)
177
4
(133)
(395)
(528)
Energy Profits Levy re-measurement of deferred tax
balances
—
11
11
7
30
37
Petroleum revenue tax
20
—
20
—
52
52
Non-UK tax rates (excluding Upstream)
10
16
26
6
17
23
Movements in uncertain tax provisions
—
—
—
(1)
—
(1)
Write-back/(impairment) of deferred tax assets relating to
Upstream losses and decommissioning
—
13
13
—
(55)
(55)
Changes in UK tax rate
—
—
—
(2)
(3)
(5)
Prior year adjustment
9
(47)
(38)
12
(52)
(40)
Other (non-tax deductible)/non-taxable items
(8)
(20)
(28)
(11)
3
(8)
Taxation on profit
(553)
239
(314)
(838)
(1,595)
(2,433)
Less: movement in deferred tax
(79)
(160)
(239)
49
1,685
1,734
Total current tax
(632)
79
(553)
(789)
90
(699)
The Group is subject to taxation in a number of jurisdictions. The complexity of applicable rules may result in legitimate differences of
interpretation between the Group and taxing authorities (or between different taxing authorities) especially where an economic judgement
or valuation is involved. Resolution of these differences typically takes many years. The uncertain tax provisions represent multiple layers
of estimation for different time periods and different jurisdictions.
The Group has applied IFRIC 23 ‘Uncertainty over Income Tax Treatments’. The interpretation requires consideration of the likelihood that
the relevant taxing authority will accept an uncertain tax treatment in order to determine the measurement basis. The value is calculated
in accordance with the rules of the relevant tax authority when acceptance is deemed probable.
The Group’s uncertain tax provision relates to differences in the interpretation of tax legislation in the UK and Canada. Due to the uncertainty
associated with such tax items, there is a possibility that, on conclusion of open tax matters at a future date, the final outcome may differ.
The uncertain tax provision represents management’s assessment of the likely outcome of each issue.
At 31 December 2024 the provision for uncertain tax items was £42 million (2023: £43 million). The Group provided an indemnity to Sval
Energi following the sale of Spirit Energy’s Norwegian business and the transfer of the legal liabilities in respect of open tax disputes. Any
movement in the underlying indemnity (excluding movements attributable to foreign exchange rates) will be recorded through the profit
before tax of the Group. As at 31 December 2024 the indemnity in respect of the tax disputes was £100 million (2023: £123 million).
Strategic Report Governance Financial Statements Other Information
9.
Taxation
(c)
Factors that may affect future tax charges
The Group’s effective tax rates are impacted by changes to the mix of activities and profitability across the territories in which it operates.
Effective tax rates may also fluctuate where profits and losses cannot be offset for tax purposes. For example, losses arising in one territory
cannot be offset against profits in another. The Group’s effective tax rate is dependent on the proportion of Group profits and losses arising
from its UK upstream and nuclear activities relative to lower taxed UK and other jurisdictions’ profits and losses. The headline rate of tax on
ring fence profits from gas production in the UK was 75.5% (consisting of ring fence corporation tax of 30%, supplementary charge of 10%,
and the Energy Profits Levy of 35% to 31 October 2024 and 38% thereafter) versus 25% UK statutory corporation tax rate.
The Energy Profits Levy is a temporary measure and will apply to gas production profits until 31 March 2028. The Budget on 30 October
2024 announced that the Government would extend the Energy Profit Levy until 31 March 2030. The Finance Bill 2024 was not
substantively enacted by 31 December 2024 and as a result the Group’s deferred tax balances have not been re-measured to reflect the
extension of the Energy Profit Levy. See note 16 for an estimate of the impact of the re-measurement of the Group’s deferred tax balances
that will arise as a result of the enactment of the Finance Bill 2024.
On 9 June 2023 the UK Government announced the Energy Security Investment Mechanism. As a result, the Energy Profits Levy will cease
to apply if average oil and gas prices fall to historically normal levels for two consecutive quarters. Based on 20-year averages, normal levels
would be achieved where both average oil and gas prices fall to, or below, US$71.40 per barrel for oil and 54 pence per therm for gas. If the
Energy Profits Levy ceases to apply, the headline rate on ring fence profits will reduce to 40%. Based on the independent Office for Budget
Responsibility’s forecast, the Energy Security Investment Mechanism is not expected to be triggered before the planned end date for
Energy Profits Levy of 31 March 2030.
PRT is set at 0% but may still give rise to historical refunds from the carry-back of excess reliefs (for example, from decommissioning).
The Electricity Generator Levy applies from 1 January 2023 to 31 March 2028 at the tax rate of 45% to electricity generation revenues,
which will be determined by reference to revenue from sales exceeding a benchmark price of £77.94/MWh (2023: £75/MWh).
The benchmark price is indexed on 1 April each year by reference to Consumer Price Index for the previous December. The Electricity
Generator Levy is not an income tax for accounting purposes and therefore is included in the Group’s cost of sales and share of the results
of joint ventures’ and associates’ operating profits and is not deductible for the purposes of UK corporation tax. The Electricity Generator
Levy legislation is complex and there remains some uncertainty over how the provisions are to be applied and consequently the amount of
levy payable. See note 3(b) for details of the uncertainties regarding the application of the Electricity Generator Levy to the Group’s
revenues.
The Group monitors income tax developments in all the jurisdictions in which the Group operates, including the OECD Base Erosion
and Profit Shifting (BEPS) initiative (Pillar 2), which may affect the Group’s tax liabilities.
The Governments of the UK, Republic of Ireland, Denmark and Singapore (the main jurisdictions in which the Group operates) have
legislated for a minimum tax rate of 15% to apply with effect from 1 January 2024 (or 1 January 2025 in Singapore).
The Group does not expect its tax liabilities to be materially increased as a result of the implementation of the Pillar 2 rules. The Group
is currently assessing their detailed impact, but the Republic of Ireland is the only jurisdiction that is likely to be affected. The impact
on the Group’s effective tax rate based on 2024 profits is less than 1%.
(d)
Relationship between current tax charge and taxes paid
2024
2023
UK
£m
Non-UK
£m
Total
£m
UK
£m
Non-UK
£m
Total
£m
Year ended 31 December
Current tax charge/(credit):
Corporation tax
531
59
590
602
98
700
Petroleum revenue tax
(37)
—
(37)
(1)
—
(1)
Total tax on results for the year (per note 9(b))
494
59
553
601
98
699
Current tax included in other comprehensive income (i)
(36)
—
(36)
(29)
—
(29)
Total tax charge
458
59
517
572
98
670
Taxes paid/(refunded):
Corporation tax
493
144
637
690
116
806
Petroleum revenue tax
(1)
—
(1)
(3)
—
(3)
492
144
636
687
116
803
Included in the following lines of the Group Cash Flow Statement:
Taxes paid
636
803
Included in Cost of Sales in the Group Income Statement:
Electricity generator levy payable and paid (ii)
80
285
(i)
Current tax movements relating to pension deficit payments are reported in other comprehensive income.
(ii) This excludes £86 million share of Electricity Generator Levy recognised in the Nuclear associate.
Differences between current tax charged and taxes paid arose principally due to the following factors:
• Corporation tax payments are generally made by instalment, based on estimated taxable profits, or the prior period’s profits. Fluctuations
in profits from year to year, one-off items and mark-to-market movements within the year may therefore give rise to divergence between
the charge for the year and the taxes paid. In certain jurisdictions advance tax payments are required (based on estimated tax liabilities)
which can result in overpayments. These are included as tax assets, to be refunded in a subsequent period; and
• PRT refunds are based on results in the preceding six-monthly PRT period, therefore PRT cash movements will reflect refunds
on a six-month delay.
Centrica plc Annual Report and Accounts 2024
199
10.
Earnings per ordinary share
Earnings per share (EPS) is the amount of profit or loss attributable to each share. Basic EPS is the amount of profit or loss
for the year divided by the weighted average number of shares in issue during the year. Diluted EPS includes the impact
of outstanding share options.
Basic earnings per ordinary share has been calculated by dividing the profit attributable to equity holders of the Company for the year of
£1,332 million (2023: £3,929 million) by the weighted average number of ordinary shares in issue during the year of 5,187 million (2023: 5,569
million). The number of shares excludes 573 million ordinary shares (2023: 339 million), being the weighted average number of the
Company’s own shares held in the employee share trust and treasury shares repurchased during the year by the Group as part of the share
buyback programme. These 573 million shares do not include shares expected to be repurchased as part of the Group’s share buyback
programme during 2025. See note S4.
The Directors believe that the presentation of adjusted basic earnings per ordinary share, being the basic earnings per ordinary share
adjusted for certain re-measurements and exceptional items, assists with understanding the underlying performance of the Group,
as explained in note 2.
Information presented for diluted and adjusted diluted earnings per ordinary share uses the weighted average number of ordinary shares
as adjusted for 119 million (2023: 91 million) potentially dilutive ordinary shares as the denominator, unless it has the effect of increasing the
profit or decreasing the loss attributable to each ordinary share.
Basic to adjusted basic earnings per ordinary share reconciliation
2024
2023
Year ended 31 December
£m
Pence per
ordinary share
£m
Pence per
ordinary share
Earnings – basic
1,332
25.7
3,929
70.6
Net exceptional items after taxation (notes 2 and 7) (i)
132
2.5
600
10.8
Certain re-measurement gains after taxation (notes 2 and 7) (i)
(480)
(9.2)
(2,670)
(48.0)
Earnings – adjusted basic
984
19.0
1,859
33.4
Earnings – diluted
1,332
25.1
3,929
69.4
Earnings – adjusted diluted
984
18.5
1,859
32.8
(i)
Net exceptional items after taxation and certain re-measurement gains after taxation are adjusted to reflect the share attributable to non-controlling interests.
11.
Dividends
Dividends represent the return of profits to shareholders. Dividends are paid as an amount per ordinary share held. The Group
retains part of the profits generated to meet future investment plans or to fund share buyback programmes.
2024
2023
£m
Pence per
ordinary share
Date of
payment
£m
Pence per
ordinary share
Date of
payment
Prior year final dividend
141
2.67
11 Jul 2024
113
2.00
20 Jul 2023
Interim dividend
78
1.50 14 Nov 2024
73
1.33 16 Nov 2023
219
186
The Directors propose a final dividend of 3.00 pence per ordinary share for the year ended 31 December 2024 (which would total
£153 million based on shareholding at that date). The dividend will be paid on 5 June 2025 to those shareholders registered on 2 May 2025.
The Company has sufficient distributable reserves to pay dividends to its ultimate shareholders. Distributable reserves are calculated on an
individual legal entity basis and the ultimate parent company, Centrica plc, currently has adequate levels of realised profits within its retained
earnings to support dividend payments. Refer to the Centrica plc Company Balance Sheet on page 271. At 31 December 2024, Centrica
plc’s Company-only distributable reserves were c.£4.0 billion (2023: c.£4.5 billion). On an annual basis, the distributable reserve levels of the
Group’s subsidiary undertakings are reviewed and dividends paid up to Centrica plc as appropriate to replenish its reserves.
Strategic Report Governance Financial Statements Other Information
12.
Acquisitions and disposals
This section details business combinations, asset acquisitions and disposals made by the Group.
(a) Business combinations and asset acquisitions
During the year, Centrica Business Solutions acquired a number of companies with existing grid connections for the purpose of building
power assets in line with the Group’s strategy of being a flexible energy provider. The total consideration was £13 million with the
transactions being accounted for as asset acquisitions.
On 29 July 2024 the Group announced the acquisition of 100% of the issued share capital of Ensek Holdings Limited , a leading provider of
digital transformation services in the energy sector, and its innovative customer account management platform, Ignition, for £91 million in
cash consideration. The transaction completed on 20 September 2024. The acquisition will deliver strong returns aligned with the Group’s
capital allocation framework and investment thresholds and will enhance the Group’s ability to offer innovative propositions to its customers
as the energy system continues to develop.
There have been no material updates to the fair value of assets and liabilities recognised for businesses acquired in 2023.
Provisional fair value of the identifiable assets and liabilities
Ensek Holdings
Limited
£m
Balance Sheet items:
Intangible assets
31
Current assets (including £12 million of cash and cash equivalents)
30
Current liabilities
(51)
Net identifiable assets acquired
10
Goodwill
81
Net assets acquired
91
Consideration comprises:
Cash consideration
91
Income Statement items:
Revenue recognised since the acquisition date in the Group Income Statement (i)
1
Loss since the acquisition date in the Group Income Statement (i)
(17)
(i)
Post-acquisition revenue recognised by Ensek included £11 million of intra-group trading, which has been eliminated on consolidation. The loss since the acquisition date
reported by Ensek, including this internal revenue, totalled £6 million.
The goodwill is attributable to the workforce and the cost savings arising from owning and controlling the Ignition customer account
management platform. It will not be deductible for tax purposes.
Pro forma information
The pro forma consolidated results of the Group, assuming the acquisitions had been made at the beginning of the year, would show
revenue of £19,916 million (compared to reported revenue of £19,913 million) and profit after taxation of £1,327 million (compared to
reported profit after taxation of £1,365 million).
(b) Disposals
During the year there have been no material disposals either individually or in aggregate.
Centrica plc Annual Report and Accounts 2024
201
13.
Property, plant and equipment
PP&E includes significant investment in power generating assets, storage assets and gas and liquid production assets.
Once operational, all assets are depreciated over their useful lives.
(a)
Carrying amounts
2024
2023
Land and
buildings
£m
Plant,
equipment
and
vehicles
£m
Power
generation
£m
Gas
production
and
storage
£m
Total
£m
Land and
buildings
£m
Plant,
equipment
and
vehicles
£m
Power
generation
£m
Gas
production
and
storage
£m
Total
£m
Cost
1 January
294
825
372
11,674
13,165
235
691
199
11,517
12,642
Acquisitions (note 12)
—
12
1
—
13
1
7
70
—
78
Additions and capitalised
borrowing costs
11
203
188
51
453
53
123
108
89
373
Disposals/retirements
(8)
(33)
(9)
—
(50)
(8)
(33)
(3)
—
(44)
Decommissioning liability and
dilapidations revisions and
additions (note 21)
2
1
—
(10)
(7)
4
—
2
92
98
Lease modifications and
re-measurements
18
(9)
—
4
13
12
50
—
8
70
Exchange adjustments
(5)
—
(16)
(68)
(89)
(3)
(13)
(4)
(32)
(52)
31 December
312
999
536
11,651
13,498
294
825
372
11,674
13,165
Accumulated depreciation and
impairment
1 January
149
464
55
10,651
11,319
131
396
45
10,322
10,894
Charge for the year (i)
24
80
13
270
387
24
85
12
274
395
Impairments
8
22
13
6
49
3
18
2
82
105
Disposals/retirements
(8)
(33)
(9)
—
(50)
(8)
(32)
(3)
—
(43)
Exchange adjustments
—
—
(1)
(65)
(66)
(1)
(3)
(1)
(27)
(32)
31 December
173
533
71
10,862
11,639
149
464
55
10,651
11,319
NBV at 31 December
139
466
465
789
1,859
145
361
317
1,023
1,846
(i)
Depreciation of £313 million (2023: £324 million) has been recognised in cost of sales, and £74 million (2023: £71 million) in operating costs before exceptional items.
Strategic Report Governance Financial Statements Other Information
13.
Property, plant and equipment
(b)
Assets in the course of construction included in above carrying amounts
31 December
2024
£m
2023
£m
Plant, equipment and vehicles
150
99
Gas production and storage
11
29
Power generation
295
166
(c)
Additional information relating to right-of-use assets included in the above
2024
2023
Land and
buildings
£m
Plant,
equipment
and
vehicles
£m
Power
generation
£m
Gas
production
and
storage
£m
Total
£m
Land and
buildings
£m
Plant,
equipment
and
vehicles
£m
Power
generation
£m
Gas
production
and
storage
£m
Total
£m
Additions
11
14
—
15
40
47
41
—
—
88
Depreciation charge for the year
(23)
(59)
—
(11)
(93)
(23)
(65)
—
(10)
(98)
NBV at 31 December
122
163
—
22
307
123
223
—
14
360
Further information on the Group’s leasing arrangements is provided in note 23.
Centrica plc Annual Report and Accounts 2024
203
14.
Interests in joint ventures and associates
Investments in joint ventures and associates represent businesses where we exercise joint control or significant influence
and generally have an equity holding of up to 50%. These include the investment in Lake Acquisitions Limited, which owns
the existing UK nuclear power station fleet.
(a)
Interests in joint ventures and associates
2024
2023
Investments in
joint ventures
and associates
£m
Investments in
joint ventures
and associates
£m
1 January
903
1,580
Additions
—
9
Impairments (i)
(48)
(549)
Share of profit for the year
256
208
Share of other comprehensive income/(loss) (ii)
38
(95)
Dividends
(355)
(220)
Disposals
—
(28)
Other movements
—
(2)
31 December
794
903
(i)
The £48 million in 2024 relates to the Nuclear investment impairment (2023: £549 million). See note 7 for further details.
(ii) Share of other comprehensive income/(loss) mainly relates to actuarial changes on pension schemes within the Nuclear investment.
(b)
Share of joint ventures’ and associates’ assets and liabilities
31 December
2024
£m
2023
£m
Share of non-current assets
4,278
3,888
Share of current assets
758
780
5,036
4,668
Share of current liabilities
(305)
(270)
Share of non-current liabilities
(2,843)
(2,449)
(3,148)
(2,719)
Cumulative impairment
(1,094)
(1,046)
Interests in joint ventures and associates
794
903
Net cash included in share of net assets
73
99
Further information on the Group’s investments in joint ventures and associates is provided in notes 6 and S10.
Strategic Report Governance Financial Statements Other Information
15.
Other intangible assets and goodwill
The Group Balance Sheet contains significant intangible assets. Goodwill, customer relationships and brands usually arise
when we acquire a business. Goodwill is attributable to enhanced geographical presence, cost savings, synergies, growth
opportunities, the assembled workforce and also arises from items such as deferred tax. Goodwill is not amortised but
is assessed for recoverability each year.
The Group uses European Union Allowances (EUAs) and Renewable Obligation Certificates/Renewable Energy Certificates
(ROCs/RECs) to satisfy its related obligations.
Upstream exploration and evaluation expenditure is capitalised as an intangible asset until development of the asset
commences, at which point it is transferred to PP&E or is deemed not commercially viable and is written down.
(a)
Carrying amounts
2024
2023
Customer
relationships
and brands
£m
Application
software
(i)(ii)
£m
EUA/
ROC/
REC (iii)
£m
Goodwill
£m
Total
£m
Customer
relationships
and brands
£m
Application
software
(i)(ii)
£m
EUA/
ROC/
REC (iii)
£m
Exploration
and
evaluation
expenditure
£m
Goodwill
£m
Total
£m
Cost
1 January
164
1,515
293
673 2,645
208
1,510
280
121
680 2,799
Acquisitions (note 12)
—
31
—
81
112
4
—
—
—
—
4
Additions and capitalised
borrowing costs
—
37
856
—
893
—
49
780
—
—
829
Disposals/retirements and
surrenders
—
(54)
(830)
— (884)
(46)
(38)
(767)
(121)
—
(972)
Exchange adjustments
(3)
(4)
—
(10)
(17)
(2)
(6)
—
—
(7)
(15)
31 December
161
1,525
319
744 2,749
164
1,515
293
—
673 2,645
Accumulated amortisation and
impairment
1 January
84
1,255
—
268 1,607
111
1,180
—
121
271 1,683
Amortisation (iv)
5
81
—
—
86
16
107
—
—
—
123
Disposals/retirements and
surrenders
—
(54)
—
—
(54)
(46)
(38)
—
(121)
—
(205)
Impairments
—
1
—
—
1
5
10
—
—
—
15
Exchange adjustments
(2)
(2)
—
(2)
(6)
(2)
(4)
—
—
(3)
(9)
31 December
87
1,281
—
266 1,634
84
1,255
—
—
268 1,607
NBV at 31 December
74
244
319
478 1,115
80
260
293
—
405 1,038
(i)
Application software includes assets under construction with a cost of £28 million (2023: £110 million).
(ii) The remaining amortisation period of individually material application software assets, which have a carrying value of £132 million (2023: £65 million), is up to 15 years.
Additionally, there is £13 million (2023: £82 million) of individually material software assets under construction.
(iii) The Group has assessed the expected submission dates of EUA/ROC/RECs currently held and where they are expected to be surrendered within a year of purchase,
they are presented within current assets, otherwise as non-current. At 31 December 2024, £319 million (2023: £293 million) is presented within current assets.
(iv) Amortisation of £86 million (2023: £123 million) has been recognised in operating costs before exceptional items.
Centrica plc Annual Report and Accounts 2024
205
15.
Other intangible assets and goodwill
(b)
Carrying amount of goodwill and intangible assets with indefinite useful lives allocated to CGUs
Goodwill acquired through business combinations, and indefinite-lived intangible assets, have been allocated for impairment testing
purposes to individual CGUs or groups of CGUs, each representing the lowest level within the Group at which the goodwill or indefinite-
lived intangible asset is monitored for internal management purposes. See note S2 for further details on impairment assumptions.
2024
2023
31 December
Principal acquisitions to which
goodwill and intangibles with
indefinite useful lives relate
Carrying
amount of
goodwill
£m
Carrying amount of
indefinite-lived
intangible assets (i)
£m
Total
£m
Carrying
amount of
goodwill
£m
Carrying amount of
indefinite-lived
intangible assets (i)
£m
Total
£m
CGUs
British Gas Services & Solutions
AlertMe/Dyno-Rod
63
57
120
63
57
120
British Gas Energy
Enron Direct/Electricity Direct/
Ensek
202
—
202
121
—
121
Centrica Business Solutions
– Energy supply
Enron Direct/Electricity Direct
60
—
60
60
—
60
Bord Gáis Energy
Bord Gáis Energy
15
—
15
16
—
16
Centrica Energy
Neas Energy
138
—
138
145
—
145
478
57
535
405
57
462
(i)
The indefinite-lived intangible assets relate mainly to the Dyno-Rod brand.
The Group has considered the impact of climate change on the carrying value of goodwill, including the impact of the risks and
opportunities. See note 3(c).
Strategic Report Governance Financial Statements Other Information
16.
Deferred tax liabilities and assets
Deferred tax is an accounting adjustment to provide for tax that is expected to arise in the future as a result of differences
in the accounting and tax bases of assets and liabilities. The principal deferred tax assets and liabilities recognised by the
Group relate to capital investments, decommissioning assets and provisions, tax losses, fair value movements on
derivative financial instruments, petroleum revenue tax (PRT) and pensions.
Accelerated tax
depreciation
(corporation tax)
£m
Net
decommissioning (i)
£m
Losses
carried
forward (ii)
£m
Other timing
differences
£m
Marked-to-
market
positions
£m
Net deferred
PRT (iii)
£m
Retirement
benefit
obligation
£m
Total
£m
1 January 2023
(595)
455
216
4
1,713
29
(121)
1,701
Credit/(charge) to income
115
(13)
(122)
(6)
(1,738)
52
(22)
(1,734)
Credit to equity
—
—
—
6
—
—
64
70
Exchange and other adjustments
—
—
—
(5)
—
—
—
(5)
31 December 2023
(480)
442
94
(1)
(25)
81
(79)
32
Credit/(charge) to income
71
48
(33)
54
110
(2)
(9)
239
Charge to equity
—
—
—
(4)
—
—
(7)
(11)
Exchange and other adjustments
(5)
—
—
(4)
—
—
—
(9)
31 December 2024
(414)
490
61
45
85
79
(95)
251
(i)
Net decommissioning includes deferred tax assets of £605 million (2023: £617 million) in respect of decommissioning provisions.
(ii) The losses arise principally from accelerated allowances for upstream investment expenditure, for which equivalent deferred tax liabilities are included under accelerated
tax depreciation.
(iii) The deferred PRT amounts include the effect of deferred corporation tax as PRT is chargeable to corporation tax.
Certain deferred tax assets and liabilities have been offset where there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
2024
2023
31 December
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Gross deferred tax balances
791
(540)
1,007
(975)
Offsetting deferred tax balances
(452)
452
(551)
551
Net deferred tax balances (after offsetting for financial reporting purposes)
339
(88)
456
(424)
Deferred tax assets arise typically on decommissioning provisions, trading losses carried forward, retirement benefit obligations and
marked-to-market positions. Forecasts indicate that there will be suitable taxable profits to utilise those deferred tax assets not offset
against deferred tax liabilities. Specific legislative provisions applicable to gas production provide assurance that deferred tax assets relating
to decommissioning costs and certain trading losses will be utilised.
The UK upstream deferred tax assets and liabilities were measured at the headline rate of tax of 78% applicable to the UK gas profits,
consisting of 30% ring fence corporation tax, 10% supplementary charge and 38% Energy Profits Levy.
The Budget on 30 October 2024 announced that the Government would extend the Energy Profit Levy until 31 March 2030 from 31 March
2028. The Finance Bill 2024 was not substantively enacted by 31 December 2024 and as a result the Group’s deferred tax balances have not
been re-measured to reflect the extension of the Energy Profit Levy. It is estimated that the Group’s deferred tax liabilities will increase by
£79 million following substantive enactment of Finance Bill 2024.
At the balance sheet date, the Group had £1,295 million (2023 revised: £1,438 million) unrecognised deductible temporary differences
related to carried forward tax losses and other temporary differences available for utilisation against future taxable profits.
At the balance sheet date, no taxable temporary differences existed in respect of the Group’s overseas investments (2023: £nil).
We have applied the mandatory exception to recognising and disclosing information about the deferred tax assets and liabilities related
to Pillar 2 income taxes in accordance with the amendments to IAS 12 adopted by the UK Endorsement Board on 19 July 2023.
Centrica plc Annual Report and Accounts 2024
207
17.
Trade and other receivables and contract-related assets
Trade and other receivables include accrued income, and are amounts owed by our customers for goods we have delivered
or services we have provided. These balances are valued net of expected credit losses. Other receivables include payments
made in advance to our suppliers. Contract-related assets are balances arising as a result of the Group’s contracts with
customers in the scope of IFRS 15.
2024
2023
31 December
Current
£m
Non-current
£m
Current
£m
Non-current
£m
Financial assets:
Trade receivables
3,270
—
2,991
—
Unbilled downstream energy income
968
—
1,065
—
Trading and energy procurement accrued income (i)
1,653
—
1,782
—
Other accrued income
71
—
76
—
Cash collateral posted
191
—
260
—
Other receivables (including contract assets) (ii)
264
52
221
104
6,417
52
6,395
104
Less: provision for credit losses
(1,532)
—
(1,309)
—
4,885
52
5,086
104
Non-financial assets: prepayments, other receivables and costs to obtain a contract with a
customer (iii)
319
127
323
106
5,204
179
5,409
210
(i)
Trading and energy procurement counterparty receivables are typically with customers with external, published credit ratings. Such receivables have typically much
lower credit risk than downstream counterparties, are settled in a short period of time and expected credit losses are not significant.
(ii) Other receivables includes amounts owed to Bord Gáis under public service obligation schemes of £90 million (2023: £97 million).
(iii) Includes costs of £28 million (2023: £10 million) incurred to obtain contracts with customers in the British Gas Energy and British Gas Services & Solutions segments.
Costs are amortised over the expected tenure of the customer contract. See note S2.
The amounts above include gross amounts receivable arising from the Group’s IFRS 15 contracts with customers of £3,195 million
(2023: £2,782 million). Additionally, accrued income of £1,032 million (2023: £1,115 million) arising under IFRS 15 contracts is included.
Trade and other receivables include financial assets representing the contractual right to receive cash or other financial assets from
residential customers, business customers and treasury, trading and energy procurement counterparties as follows:
2024
2023
31 December
Current
£m
Non-current
£m
Current
£m
Non-current
£m
Financial assets by business type:
Residential customers
2,897
—
2,725
3
Business customers
1,517
50
1,516
98
Treasury, trading and energy procurement counterparties
2,003
2
2,154
3
6,417
52
6,395
104
Less: provision for credit losses
(1,532)
—
(1,309)
—
4,885
52
5,086
104
Strategic Report Governance Financial Statements Other Information
17.
Trade and other receivables and contract-related assets
Credit loss charge for trade and other receivables and contract assets
The impairment charge in trade receivables is stated net of credits for the release of specific provisions made in previous years, which are
no longer required. These relate primarily to residential and business customers in the UK. Movements in the provision for credit losses by
business type are as follows:
2024
2023
Residential
customers
£m
Business
customers
£m
Treasury,
trading
and energy
procurement
counterparties
£m
Total
£m
Residential
customers
£m
Business
customers
£m
Treasury,
trading
and energy
procurement
counterparties
£m
Total
£m
1 January
(850)
(443)
(16)
(1,309)
(567)
(305)
—
(872)
Increase in impairment of trade receivables
(predominantly related to credit impaired trade
receivables) (i) (ii) (iii)
(245)
(132)
(6)
(383)
(396)
(198)
(16)
(610)
Receivables written off (iv)
111
46
3
160
113
60
—
173
31 December
(984)
(529)
(19)
(1,532)
(850)
(443)
(16)
(1,309)
(i)
Includes £364 million (2023: £587 million) of credit losses related to trade receivables resulting from contracts in the scope of IFRS 15.
(ii) All loss allowances reflect the lifetime expected credit losses on trade receivables and contract assets.
(iii) Excludes recovery of previously written-off receivables of £10 million (2023: £8 million). Due to the large number of individual receivables and the matrix approach
employed, any reduction in provision is reflected in a reduced charge for the relevant period, rather than in separately identifiable reversals of previous provisions.
(iv) Materially all write-offs relate to trade receivables where enforcement activity is ongoing. The gross carrying value of write-offs related to trade receivables where
enforcement activity is ongoing was £122 million (2023: £142 million).
Year ended 31 December
2024
£m
2023
£m
Increase in impairment provision for trade receivables (per above)
(383)
(610)
Less recovery of previously written-off receivables
10
8
Credit losses on financial assets (per Group Income Statement)
(373)
(602)
Enforcement activity continues in respect of balances that have been written off unless there are specific known circumstances (such as
bankruptcy) that render further action futile.
Centrica plc Annual Report and Accounts 2024
209
17.
Trade and other receivables and contract-related assets
Credit loss charge for trade and other receivables and contract assets
Receivables from residential and business customers are generally considered to be credit impaired when the payment is past the
contractual due date. The Group applies different definitions of default for different groups of customers, ranging from sixty days past
the due date to six to twelve months from the issuance of a final bill. Receivables are generally written off only once a period of time
has elapsed since the final bill. Contractual due dates range from falling due upon receipt to falling due in thirty days from receipt.
The table below shows credit impaired balances in gross receivables (those that are past due) and those that are not yet due and therefore
not considered to be credit impaired.
Gross trade and other receivables
31 December
2024
£m
2023
£m
Balances that are not past due
4,091
4,403
Balances that are past due (i)
2,326
1,992
6,417
6,395
(i)
The majority of balances that are past due relate to residential and business customers, ageing of these receivables is included in the credit risk tables in the
sections below.
The IFRS 9 impairment model is applicable to the Group’s financial assets including trade receivables, contract assets and other financial
assets using the simplified approach as described in note S3. As the majority of the relevant balances are trade receivables and contract
assets to which the simplified model applies, this disclosure focuses on these balances.
The provision for credit losses for trade receivables and contract assets is based on an expected credit loss model that calculates the
expected loss applicable to the receivable balance over its lifetime. Expected credit losses on receivables due from treasury, trading and
energy procurement counterparties are not significant (see note S3 for further analysis of this determination). For residential and business
customers default rates are calculated initially by considering historical loss experience and applied to trade receivables within a provision
matrix. The matrix approach allows application of different default rates to different groups of customers with similar characteristics. These
groups are determined by a number of factors including: the nature of the customer, the payment method selected and, where relevant,
the sector in which they operate. The characteristics used to determine the groupings of receivables are the factors that have the greatest
impact on the likelihood of default. The rate of default increases once the balance is thirty days past due.
Concentration of credit risk in trade and other receivables
Treasury, trading and energy procurement counterparty receivables are typically with customers with external, published credit ratings.
Such receivables have typically much lower credit risk than downstream counterparties, and that risk is assessed primarily by reference
to the credit ratings rather than to the ageing of the relevant balance. Counterparty credit rating information is given in note S3.
The Group’s posted cash collateral balance has decreased to £191 million in 2024 (2023: £260 million). Collateral counterparties typically
have strong credit ratings and accordingly have low credit risk; the Group does not expect credit losses to arise on these balances. See
note S3.
The majority of the Group’s credit exposure arises in the British Gas Energy and Centrica Business Solutions segments and relates to
residential and business energy customers. The credit risk associated with these customers is assessed as described above, using a
combination of the age of the receivable in question, internal ratings based on a customer’s payment history, and external data from credit
rating agencies and wider macroeconomic information. The disclosures below reflect the information that is reported internally for credit
risk management purposes in these segments.
Strategic Report Governance Financial Statements Other Information
17.
Trade and other receivables and contract-related assets
British Gas Energy credit risk
Of the Group total of £3,270 million (2023: £2,991 million) billed trade receivables, the British Gas Energy reporting segment contributes
£2,768 million (2023: £2,380 million). British Gas Energy includes small business customers on the basis that their profile closely matches
those of residential customers. As described above, credit risk is concentrated in receivables from energy customers who pay in arrears.
Gross receivables from British Gas Energy residential customers amount to £1,945 million (2023: £1,651 million) and are analysed below.
Trade receivables due from
British Gas residential
energy customers as at
31 December (i)
2023
2024
Days beyond invoice date (ii)
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
Risk profile
Direct debits (iii)
Gross receivables
303
67
227
597
310
55
171
536
Provision
—
—
(10)
(10)
—
—
(7)
(7)
Net
303
67
217
587
2%
310
55
164
529
1%
Payment on receipt of bill (iii)
Gross receivables
89
56
815
960
114
71
650
835
Provision
(4)
(8)
(445)
(457)
(4)
(9)
(412)
(425)
Net
85
48
370
503
48%
110
62
238
410
51%
Final bills (iv)
Gross receivables
19
22
347
388
21
27
232
280
Provision
(7)
(14)
(311)
(332)
(4)
(12)
(199)
(215)
Net
12
8
36
56
86%
17
15
33
65
77%
Total net British Gas
residential energy
customers trade
receivables
400
123
623
1,146
41%
437
132
435
1,004
39%
(i)
The receivables information presented in this table relates to downstream customers who pay energy bills using the methods presented. It excludes low residual credit
risk amounts, such as balances in the process of recovery through pay-as-you-go energy (PAYGE) arrangements and amounts receivable from PAYGE energy vendors.
Gross amounts in the process of recovery through PAYGE arrangements at 31 December 2024 are £114 million (2023: £154 million), against which a provision of
£92 million is held (2023: £117 million).
(ii) This ageing analysis is presented relative to invoicing date and presents receivables according to the oldest invoice outstanding with the customer. There are a range of
payment terms extended to residential energy customers. Amounts paid on receipt of a bill (PORB), which are settled using bank transfers, cash or cheques are typically
due within fourteen days of invoicing. Direct debit customers typically pay in equal instalments over a twelve-month period.
(iii) Receivables settled by direct debit are deemed to present a lower credit risk than PORB amounts. This is reflected in the relative level of provision held for these types
of receivables.
(iv) Final bill customers are those who are no longer customers of the Group and have switched energy supplier. These balances are deemed to have the highest credit risk.
Centrica plc Annual Report and Accounts 2024
211
17.
Trade and other receivables and contract-related assets
Gross receivables from British Gas Energy small business customers amount to £709 million (2023: £575 million) and are analysed below.
Trade receivables due
from British Gas small
business energy
customers as at
31 December
2024
2023
Days beyond invoice date (i)
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
Risk profile
Small businesses
Gross receivables
116
59
534
709
115
53
407
575
Provision
(3)
(10)
(405)
(418)
(3)
(8)
(302)
(313)
Total net British Gas
small business energy
customers trade
receivables
113
49
129
291
59%
112
45
105
262
54%
(i)
This ageing analysis is presented relative to invoicing date and presents receivables according to the oldest invoice outstanding with the customer. There are a range of
payment terms extended to business energy customers. Standard credit terms for small business customers are ten working days.
Unbilled downstream energy income at 31 December 2024 includes gross balances of £670 million (2023: £693 million) in respect of British
Gas energy customers against which a provision of £56 million (2023: £56 million) is held.
Centrica Business Solutions energy credit risk
Of the Group total of £3,270 million (2023: £2,991 million) billed trade receivables, the Centrica Business Solutions reporting segment
contributes £238 million (2023: £313 million). As described above, credit risk is concentrated in receivables from business energy
customers who pay in arrears, the remaining balances being immaterial in disaggregation. Gross receivables from these customers amount
to £201 million (2023: £269 million) and are analysed below.
Trade receivables due
from Centrica Business
Solutions business energy
customers as at
31 December
2024
2023
Days beyond invoice date (i)
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
<30 days
£m
30-90 days
£m
>90 days
£m
Total
£m
Percentage
of credit risk
Risk profile
Commercial and industrial (ii)
Gross receivables
22
4
15
41
75
9
26
110
Provision
—
—
(10)
(10)
—
—
(13)
(13)
Net
22
4
5
31
24%
75
9
13
97
12%
Medium-sized entities
Gross receivables
41
14
105
160
50
19
90
159
Provision
—
—
(64)
(64)
—
(1)
(57)
(58)
Net
41
14
41
96
40%
50
18
33
101
36%
Total net Centrica
Business Solutions
business energy
customers trade
receivables
63
18
46
127
37%
125
27
46
198
26%
(i)
This ageing analysis is presented relative to invoicing date and presents receivables according to the oldest invoice outstanding with the customer. There are a range of
payment terms extended to business energy customers. Standard credit terms for medium-sized entity customers are ten working days. Credit terms for commercial
and industrial customers are bespoke and are set based on the commercial agreement with each customer.
(ii) This category includes low credit risk receivables, including those from public sector and customers with high turnover (greater than £100 million).
Unbilled downstream energy income at 31 December 2024 includes gross balances of £148 million (2023: £239 million) in respect of
Centrica Business Solutions business energy customers against which a provision of £6 million (2023: £14 million) is held.
The remaining reporting segments which are not shown above are not considered to have material credit risk.
Strategic Report Governance Financial Statements Other Information
17.
Trade and other receivables and contract-related assets
Sensitivity to changes in assumptions
Typically, the most significant assumption included within the expected credit loss provisioning model that gives rise to estimation
uncertainty is that future performance will be reflective of past performance and that there will be no significant change in the payment
profile or recovery rates within each identified group of receivables. To address this risk, the Group reviews and updates default rates,
by group, on a regular basis to ensure they incorporate the most up to date assumptions along with forward-looking information where
available and relevant. The Group also considers regulatory changes and customer segment specific factors that may have an impact,
now or in the future, on the recoverability of the balance.
The specific consideration of forward-looking information in the impairment model does not usually give rise to significant changes
in the levels of credit losses. However, wholesale gas and electricity costs have trended upwards during 2024 and continue to cause
uncertainty in economic outlook; there remains a level of estimation uncertainty inherent in determining credit loss provisions for the
Group’s trade receivables.
Where customers experience difficulties in settling balances, the increased ageing of these amounts results in an increase in provisions held
in respect of them under the provision matrix approach employed. The Group has also considered changes in customer payment patterns,
the specific circumstances of the customers and the economic impacts of the factors identified above, on the sectors in which they
operate. Whilst economic recovery is expected, a level of unpredictability remains apparent.
Customers are facing continued pressures relating to their cost of living, including increased energy bills and higher interest rates.
The Group has considered macroeconomic forecasts and sensitivities, as well as disposable income analysis from a credit rating agency,
to model and determine the level of provisions for credit losses.
During 2024 the Group recognised credit losses of £373 million (2023: £602 million) in respect of financial assets, representing 1.9% of total
Group revenue (2023: 2.3%) and 1.5% (2023: 1.8%) of total Group revenue from business performance. As described above, the majority
of the Group’s credit exposure arises in respect of downstream energy receivables in British Gas Energy and Centrica Business Solutions.
Credit losses in respect of these assets amounted to £359 million (2023: £554 million). This represents 2.5% (2023: 2.6%) of total UK
downstream energy supply revenue from these segments of £14,424 million (2023: £21,046 million). Further details of segmental revenue
are provided in note 4.
Due to the different level of risks presented by billed and unbilled receivables, these asset groups are considered separately in the
analysis below.
Billed trade receivables
31 December
2024
£m
31 December
2023
£m
Trade receivables
3,270
2,991
Provision
(1,471)
(1,240)
Net balance
1,799
1,751
31 December
2024
%
31 December
2023
%
Provision coverage
45
41
Sensitivity
£m
£m
Impact on billed receivables/operating profit from 1 percentage point (increase)/decrease in provision coverage (i)
(33)/33
(30)/30
(i)
Credit risk in the Group is impacted by a large number of interacting factors.
Centrica plc Annual Report and Accounts 2024
213
17.
Trade and other receivables and contract-related assets
The commodity price environment during the second half of 2024 has trended upwards, keeping the operating landscape challenging in line
with wider macroeconomic conditions including higher interest rates and higher than targeted inflation rates. Total provision coverage has
increased during the year primarily due to the continued deterioration in the collection performance of customers who pay on receipt of
their bill. This decline is driven by older aged debt, accrued during the cost of living crisis. Improving the recovery of debt within this cohort of
customers is a key focus for British Gas Energy. As a percentage of debt, the total provision has remained largely consistent compared to
prior year. The increase in the provision coverage is also due to a change in the mix of debt within the portfolio as the proportion of unbilled
debt has decreased due to shorter billing cycles processed by the Group’s newly acquired digital customer management platform, Ensek.
Limited field activity has resumed during the year, although warrant visits remain suspended, with only a minimal level of voluntary credit
to prepayment meter exchanges taking place. This has been partially mitigated by the resumption of litigation activity during the year,
however debt levels relating to distressed customer accounts are continuing to increase. Final billed provision coverage has also increased
during the year due to a decrease in the recovery of debt relating to change of tenancy customers. The increase in provision coverage in the
Group’s business portfolio has been driven primarily due to the change in mix of customers with typically lower-risk large customers making
up a smaller proportion of business credit provisions as a result of management’s strategic decision to exit this market. Similar to the
residential portfolio, the lack of significant warrant activity during the year has an adverse impact on business collection performance,
particularly in relation to older aged debt.
There remains significant uncertainty around the persistent impact of macroeconomic conditions on bad debt. Although leading debt
indicators including the new customers going into debt, insolvency volumes in business and direct debit cancellation rates in residential have
started to level off during 2024, they remain at levels higher than before the cost of living crisis. The delayed impact on customer payments
are now broadly reflected in the underlying matrix output model used to record provision coverage, hence the reduction in the additional
macroeconomic provision to £49 million (2023: £175 million). Management considers the impact of specific cohorts of customers
referenced in the previous tables when making this assessment, recognising the different credit terms and different risk profiles that exist.
This assessment also utilises a range of factors, both internal and external, historic and forward-looking, and considers the sensitivities of
these to help management estimate the likely recovery of debt.
It remains uncertain as to when and how these factors will reduce the collectability of debt and at what scale. Future changes in commodity
prices may also impact this. The table above and the unbilled section below provide details of the sensitivity of moving the debt provision by
a further 1%.
The Group’s services, upstream and trading operations are less susceptible to credit risk. No significant deterioration of credit risk has been
experienced or is expected in the relevant segments in respect of billed trade receivables recognised at 31 December 2024, taking into
account cash collection cycles in those areas of the Group and credit rating information (see note S3).
Unbilled downstream energy income
The table below shows the IFRS 15 unbilled downstream energy income for the Group as a whole.
31 December
2024
£m
31 December
2023
£m
Gross unbilled receivables
968
1,065
Provision
(61)
(69)
Net balance
907
996
31 December
2024
%
31 December
2023
%
Provision coverage
6
6
Sensitivity
£m
£m
Impact on unbilled receivables/operating profit from 1 percentage point (increase)/decrease in provision coverage (i)
(10)/10
(11)/11
(i)
Credit risk in the Group is impacted by a large number of interacting factors.
Unbilled downstream energy income is typically provided at a significantly lower rate than billed debt. This is because a large proportion
of this debt once billed will be subject to the very short cash collection cycles of the Group’s downstream energy supply businesses.
18.
Inventories
Inventories represent assets that we intend to use in future periods, either by selling the asset itself (e.g. gas in storage) or by
using it to provide a service to a customer.
31 December
2024
£m
2023
£m
Gas in storage and transportation (i)
745
824
Other raw materials and consumables
120
120
Finished goods and goods for resale
39
135
904
1,079
(i) Includes gas in storage held at fair value of £364 million (2023: £263 million).
The Group consumed £1,806 million of inventories (2023: £1,912 million) during the year. Write-downs amounting to £14 million
(2023: £5 million) were charged to the Group Income Statement in the year.
Strategic Report Governance Financial Statements Other Information
19.
Derivative financial instruments
The Group generally uses derivative financial instruments to manage the risk arising from fluctuations in the value of certain
assets or liabilities associated with treasury management and energy sales and procurement, and for proprietary energy
trading purposes. The Group also uses derivatives to hedge exchange risk.
For accounting purposes, derivatives are either classified as held for trading, in which case changes in their fair value are
recognised in the Group Income Statement, or they are designated in hedging relationships. Where derivatives are in hedging
relationships, the treatment of changes in their fair value depends on the nature of that relationship, and whether it represents
a fair value hedge or a cash flow hedge. Note S5 provides further detail on the Group’s hedge accounting. The table below
gives a high-level summary of the Group’s accounting for its derivative contracts.
Purpose
Classification
Accounting treatment
Proprietary energy trading and
treasury management.
Held for trading and fair
value hedges.
Changes in fair value recognised in the Group’s business performance results for
the year.
Treasury management.
Cash flow hedges.
Effective portion of hedge initially recognised in the Group Statement of Other
Comprehensive Income. Gains and losses are recycled to the Group Income Statement
when the hedged item impacts profit or loss. Ineffective portions of the hedge are
recognised immediately in the Group’s business performance results for the year.
Energy procurement and
optimisation.
Held for trading.
Changes in fair value recognised in the Group’s exceptional items and certain
re-measurements results for the year.
The carrying values of derivative financial instruments by product type for accounting purposes are as follows:
2024
2023
31 December
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Derivative financial instruments – held for trading under IFRS 9:
Energy derivatives – for procurement/optimisation
530
(251)
1,733
(1,715)
Energy derivatives – for proprietary trading
886
(913)
1,418
(993)
Foreign exchange derivatives
128
(83)
85
(144)
Derivative financial instruments in hedge accounting relationships:
Interest rate derivatives
—
(134)
—
(136)
Foreign exchange derivatives
32
(6)
36
(18)
Total derivative financial instruments
1,576
(1,387)
3,272
(3,006)
Included within:
Derivative financial instruments – current
1,309
(932)
2,373
(2,391)
Derivative financial instruments – non-current
267
(455)
899
(615)
The contracts included within energy derivatives are subject to a wide range of detailed specific terms, but comprise the following general
components, analysed on a net carrying value basis:
31 December
2024
£m
2023
£m
Short-term forward market purchases and sales of gas and electricity:
UK and Europe
125
1,163
Other derivative contracts including structured gas sale and purchase arrangements
127
(720)
Net total
252
443
Net gains/(losses) on derivative financial instruments due to change in fair value
2024
2023
31 December
Income
Statement
£m
Equity
£m
Income
Statement
£m
Equity
£m
Financial assets and liabilities measured at fair value:
Derivative financial instruments – held for trading
20
—
3,024
—
Derivative financial instruments in hedge accounting relationships
(14)
(8)
48
(13)
6
(8)
3,072
(13)
Centrica plc Annual Report and Accounts 2024
215
20. Trade and other payables and contract liabilities
Trade and other payables include accruals and are principally amounts we owe to our suppliers. Financial deferred income
represents monies received from customers in advance of the delivery of goods or services that may be returned to the
customer if future delivery does not occur. For example, downstream customers with a credit balance may request
repayment of the outstanding amount in cash, rather than taking delivery of commodity. By contrast, contract liabilities and
non-financial deferred income arise when the Group receives consideration from a customer in advance of performance,
and has a non-financial liability to deliver future goods or services in return.
2024
2023
31 December
Current
£m
Non-current
£m
Current
£m
Non-current
£m
Financial liabilities:
Trade payables
(363)
(3)
(474)
(4)
Deferred income (i)
(935)
—
(1,178)
—
Capital payables
(137)
—
(152)
—
Cash collateral received
(162)
—
(184)
—
Other payables (ii)
(375)
(91)
(389)
(197)
Accruals:
Commodity costs
(2,272)
—
(2,464)
—
Transportation, distribution and metering costs
(335)
—
(319)
—
Operating and other accruals
(887)
(77)
(942)
—
(3,494)
(77)
(3,725)
—
(5,466)
(171)
(6,102)
(201)
Non-financial liabilities:
Other payables and accruals (iii)
(832)
—
(761)
—
Contract liabilities
(33)
—
(30)
(3)
Deferred income
(61)
(4)
(107)
(3)
(6,392)
(175)
(7,000)
(207)
(i)
Includes downstream customer credit balances for amounts billed in advance of energy supply. The amount naturally peaks over summer as customers consume less
and will unwind as consumption of gas and electricity increases over winter.
(ii) Other payables includes contingent consideration of £100 million (2023: £123 million) and the share buyback liability of £75 million (2023: £94 million). See S4 for further
details on the share buyback programme.
(iii) Other non-financial payables and accruals includes ROCs creditors of £660 million (2023: £600 million).
Maturity profile of financial liabilities within current trade and other payables
31 December
2024
£m
2023
£m
Less than 90 days
(5,090)
(5,653)
90 to 182 days
(128)
(194)
183 to 365 days
(248)
(255)
(5,466)
(6,102)
Strategic Report Governance Financial Statements Other Information
21.
Provisions for liabilities and charges
Provisions are recognised when an obligation exists that can be reliably measured, but where there is uncertainty over the
timing and/or amount of the payment. The main provisions relate to decommissioning costs for upstream assets we own,
or have owned, which require restoration or remediation, along with onerous supply contracts. Further provisions relate to
restructuring costs, and legal and regulatory matters.
1 January 2024
£m
Charged in the
year
£m
Notional
interest
£m
Unused and
reversed in
the year
£m
Utilised
£m
Revisions and
additions
£m
Transfers (iv)
£m
Exchange
adjustments
£m
31 December
2024
£m
Current
Restructuring costs
(11)
(7)
—
5
5
—
—
—
(8)
Decommissioning costs (i) (ii)
(132)
—
—
—
80
—
(51)
—
(103)
Onerous contracts
provision
(30)
(86)
—
14
6
—
(8)
—
(104)
Other (iii)
(106)
(103)
—
31
25
—
—
—
(153)
Total
(279)
(196)
—
50
116
—
(59)
—
(368)
1 January 2024
£m
Charged in the
year
£m
Notional
interest
£m
Unused and
reversed in
the year
£m
Revisions and
additions
£m
Transfers (iv)
£m
Exchange
adjustments
£m
31 December
2024
£m
Non-current
Restructuring costs
(4)
(3)
—
—
—
—
—
(7)
Decommissioning costs (i) (ii)
(1,395)
(21)
(23)
18
9
51
5
(1,356)
Onerous contracts provision
(25)
—
—
2
—
8
—
(15)
Other (iii)
(45)
(71)
—
3
(2)
—
—
(115)
Total
(1,469)
(95)
(23)
23
7
59
5
(1,493)
Included within the above liabilities are the following financial liabilities:
2024
2023
31 December
Current
£m
Non-current
£m
Current
£m
Non-current
£m
Restructuring costs
(8)
(7)
(11)
(4)
Provisions other than restructuring costs
(249)
(113)
(123)
(60)
(257)
(120)
(134)
(64)
Maturity profile of decommissioning provisions
31 December
2024
£m
2025-2029
(642)
2030-2034
(717)
2035-2039
(88)
2040-2044
(9)
2045-2049
(2)
2050-2054
(1)
(1,459)
(i)
Provision has been made for the estimated net present cost of decommissioning gas production facilities at the end of their useful lives. The estimate has been based
on 2P reserves, price levels and technology at the balance sheet date. The payment dates of decommissioning costs are dependent on the lives of the facilities, but
utilisation of the provision is expected to occur until the 2050s. The maturity profile of total decommissioning provisions is analysed above. The rate used to discount
decommissioning provisions is 2% (2023: 1%). See note 3.
(ii) Included in the provision balance as at 31 December 2024 is £1,139 million held in Spirit Energy, £302 million in relation to the Rough field, and £18 million in the remainder
of the business.
(iii) Other provisions have been made for dilapidations, insurance, legal, warranty and various other claims.
(iv) Relates to amounts transferred between current and non-current provisions.
Centrica plc Annual Report and Accounts 2024
217
22. Post-retirement benefits
The Group manages a number of final salary and career average defined benefit pension schemes. It also has defined
contribution schemes. The majority of these schemes are in the UK.
(a)
Summary of main post-retirement benefit schemes
Number
of active
members
as at
31 December
2024
Total
membership
as at
31 December
2024
Name of scheme
Type of benefit
Status
Country
Centrica Engineers Pension
Scheme
Defined benefit final salary pension
Closed to new members in 2006
UK
1,372
8,369
Defined benefit career average pension Closed to new members in 2022
UK
2,522
7,104
Centrica Pension Plan
Defined benefit final salary pension
Closed to new members in 2003
UK
1,323
8,382
Centrica Pension Scheme
Defined benefit final salary pension
Closed to new members in 2003
UK
1
10,037
Defined benefit career average pension Closed to new members in 2008
UK
713
4,143
Centrica Savings Plan (i)
Defined contribution pension
Open to new members
UK
13,103
14,636
Centrica Leavers Savings Plan (i)
Defined contribution pension
Deferred members only
UK
—
9,746
Bord Gáis Energy Company
Defined Benefit Pension Scheme
Defined benefit final salary pension
Closed to new members in 2014
Republic
of Ireland
85
168
Bord Gáis Energy Company
Defined Contribution Pension Plan Defined contribution pension
Open to new members
Republic
of Ireland
335
498
(i)
In March 2024, the Centrica Leavers Savings Plan (CLSP), a defined contribution pension scheme, was established and the deferred membership in the Centrica Savings
Plan at that time was transferred across. Ongoing, there will be a regular process to transfer the deferred membership in the Centrica Savings Plan to the CLSP.
The Centrica Engineers Pension Scheme (CEPS), Centrica Pension Plan (CPP) and Centrica Pension Scheme (CPS) form the
significant majority of the Group’s defined benefit obligation and are referred to below as the ‘Registered Pension Schemes’.
The other schemes are individually, and in aggregate, immaterial.
Independent valuations
The Registered Pension Schemes are subject to independent valuations at least every three years, on the basis of which the qualified
actuary certifies the rate of employer contributions, which together with the specified contributions payable by the employees and
proceeds from the schemes’ assets, are expected to be sufficient to fund the benefits payable under the schemes.
Within the reporting period, the latest full actuarial valuations agreed and finalised with the Pension Trustees were carried out at the
following dates: the Registered Pension Schemes at 31 March 2021 and the Bord Gáis Energy Company Defined Benefit Pension Scheme
at 1 January 2023. These valuations have been updated to 31 December 2024 for the purpose of meeting the requirements of IAS 19.
Investments held in all schemes have been valued for this purpose at market value. In February 2025, full actuarial valuations of the
Registered Pension Schemes at 31 March 2024 were agreed and finalised with the Pension Trustees. The impact on pension scheme
contributions is shown in note 22(g). These valuations will be updated prospectively in future reporting periods for the purpose of meeting
the requirements of IAS 19.
Governance
The Registered Pension Schemes are managed by trustee companies whose boards consist of both company-nominated and member-
nominated Directors. Each scheme holds units in the Centrica Combined Common Investment Fund (CCCIF), which holds the majority
of the combined assets of the Registered Pension Schemes. The board of the CCCIF is currently comprised of seven directors: two
independent directors (including the Chair), two directors appointed by Centrica plc and one director appointed by each of the three
Registered Pension Schemes.
Under the terms of the Pensions Act 2004, Centrica plc and each trustee board must agree the funding rate for its defined benefit
pension scheme and a recovery plan to fund any deficit against the scheme-specific statutory funding objective. This approach was first
adopted for the triennial valuations completed at 31 March 2006, and has been reflected in subsequent valuations, including the 31 March
2024 valuation.
Strategic Report Governance Financial Statements Other Information
22. Post-retirement benefits
(b)
Risks
The Registered Pension Schemes expose the Group to the following risks:
Asset volatility
The pension liabilities are calculated using a discount rate set with reference to AA corporate bond yields. If the growth in plan assets
is lower than this, this will create an actuarial loss within other equity. The CCCIF is responsible for managing the assets of each scheme
in line with the risk tolerances that have been set by the trustees of the schemes, and invests in a diversified portfolio of assets. The
schemes are relatively young in nature (the schemes opened in 1997 on the formation of Centrica plc on demerger from BG plc (formerly
British Gas plc)), and only took on past service liabilities in respect of active employees.
The trustees reduce their tolerance to scheme valuation risk by hedging a significant majority of the long term inflation and interest rate risk.
This de-risking includes the use of physical gilts and collateralised gilt holdings in the schemes’ Liability-Driven Investment (LDI) portfolio
(shown in the Pension scheme asset table in section (f) of this note within Liability matching assets). Since the last quarter of 2022, following
significant volatility in gilt yields, the trustees have significantly reduced the levels of leverage within the LDI portfolio. The schemes also
benefit from further hedging arising from the other long-dated income unquoted asset portfolio.
Interest rate
A decrease in bond interest rates will increase the net present value of the pension liabilities. The relative immaturity of the schemes means
that the duration of the liabilities is longer than average for typical UK pension schemes, resulting in a relatively higher exposure to interest
rate risk. This risk is reduced via the hedging referred to in the Asset volatility section.
Inflation
Pensions in deferment, pensions in payment and pensions accrued under the career average schemes increase in line with the Retail Prices
Index (RPI) and the Consumer Prices Index (CPI). Therefore, scheme liabilities will increase if inflation is higher than assumed, although in
some cases caps are in place to limit the impact of significant movements in inflation. Furthermore, a pension increase exchange (PIE) option
implemented in 2015 is available to future retirees, which gives the choice to receive a higher initial pension in return for giving up certain
future increases linked to RPI, again limiting the impact of significant movements in inflation. Inflation risk is reduced via the hedging referred
to in the Asset volatility section.
Longevity
The majority of the schemes’ obligations are to provide benefits for the life of scheme members and their surviving spouses; therefore
increases in life expectancy will result in an increase in the pension liabilities. The relative immaturity of the schemes means that there is
comparatively little observable mortality data to assess the rates of mortality experienced by the schemes, and means that the schemes’
liabilities will be paid over a long period of time, making it particularly difficult to predict the life expectancy of the current membership.
Furthermore, pension payments are subject to inflationary increases, resulting in a higher sensitivity to changes in life expectancy.
Salary
Pension liabilities are calculated by reference to the future salaries of active members, and hence salary rises in excess of assumed
increases will increase scheme liabilities. During 2011, changes were introduced to the final salary sections of CEPS and CPP such that annual
increases in pensionable pay are capped to 2%, resulting in a reduction in salary risk. During 2016, a salary cap on pensionable pay for the
CPS career average and CPP schemes was implemented, and in 2019 a similar change took place for CEPS. All of the 2011, 2016 and 2019
changes result in a reduction in salary risk.
High Court ruling
In June 2023, the UK High Court issued a ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others relating to
the validity of certain historical pension changes. This case may have implications for other defined benefit schemes in the UK. Based on a
review undertaken and advice obtained by the trustees of the Registered Pension Schemes, the outcome of which they have shared with
the Company and the Company’s own consideration of that outcome, the Group does not believe there will be a material impact on the
schemes as a result of this ruling.
Foreign exchange
Certain assets held by the CCCIF are denominated in foreign currencies, and hence their values are subject to exchange rate risk. The
CCCIF has long-term hedging policies in place to manage interest rate, inflation and foreign exchange risks. The table below analyses
the total liabilities of the Registered Pension Schemes, calculated in accordance with accounting principles, by type of liability, as at
31 December 2024.
Centrica plc Annual Report and Accounts 2024
219
22. Post-retirement benefits
Total liabilities of the Registered Pension Schemes
31 December
2024
%
Actives – final salary – capped
11
Actives – final salary – uncapped and crystallised benefits
5
Actives – career average
4
Deferred pensioners
38
Pensioners
42
100
(c)
Accounting assumptions
The accounting assumptions for the Registered Pension Schemes are given below:
Major assumptions used for the actuarial valuation
31 December
2024
%
2023
%
Rate of increase in employee earnings:
Subject to 2% cap
1.6
1.6
Other not subject to cap
2.8
2.6
Rate of increase in pensions in payment
3.1
3.0
Rate of increase in deferred pensions:
In line with CPI capped at 2.5%
2.5
2.3
In line with RPI
3.1
2.9
Discount rate
5.4
4.6
The assumptions relating to longevity underlying the pension liabilities at the balance sheet date have been based on a combination
of standard actuarial mortality tables, scheme experience and other relevant data, and include an allowance for future improvements
in mortality. The longevity assumptions for members in normal health are as follows:
Life expectancy at age 65 for a member
2024
2023
31 December
Male
Years
Female
Years
Male
Years
Female
Years
Currently aged 65
22.2
23.7
22.0
23.5
Currently aged 45
23.4
24.8
23.2
24.6
The other demographic assumptions have been set having regard to the latest trends in scheme experience and other relevant data.
The assumptions are reviewed and updated as necessary as part of the periodic actuarial valuations of the pension schemes.
For the Registered Pension Schemes, marginal adjustments to the assumptions used to calculate the pension liability, or significant swings
in bond yields or stock markets, can have a large impact in absolute terms on the net assets of the Group. Reasonably possible changes as
at 31 December to one of the actuarial assumptions would have affected the scheme liabilities as set out below:
Impact of changing material assumptions
2024
2023
31 December
Increase/
decrease in
assumption
Indicative
effect on
scheme
liabilities %
Increase/
decrease in
assumption
Indicative
effect on
scheme
liabilities %
Rate of increase in employee earnings subject to 2% cap
1.00%
+/-1
1.00%
+/-1
Rate of increase in pensions in payment and deferred pensions
1.00%
+13/-11
1.00%
+15/-12
Discount rate
1.00%
-14/+18
1.00%
-16/+20
Inflation assumption
1.00%
+14/-12
1.00%
+15/-12
Longevity assumption
1 year
+/-2
1 year
+/-3
The indicative effects on scheme liabilities have been calculated by changing each assumption in isolation and assessing the impact
on the liabilities. For the reasonably possible change in the inflation assumption, it has been assumed that a change to the inflation
assumption would lead to corresponding changes in the assumed rates of increase in uncapped pensionable pay, pensions in payment
and deferred pensions.
The remaining disclosures in this note cover all of the Group’s defined benefit schemes.
Strategic Report Governance Financial Statements Other Information
22. Post-retirement benefits
(d)
Amounts included in the Group Balance Sheet
31 December
2024
£m
2023
£m
Fair value of plan assets
5,563
6,143
Present value of defined benefit obligation
(5,584)
(6,260)
Recognised in the Group Balance Sheet
(21)
(117)
Presented in the Group Balance Sheet as:
Retirement benefit assets
129
64
Retirement benefit liabilities
(150)
(181)
The Trust Deed and Rules for the Registered Pension Schemes provide the Group with a right to a refund of surplus assets assuming the full
settlement of scheme liabilities. The Trustees do not have the unilateral right to wind-up the schemes and cannot unilaterally enhance
member benefits. The Group has not recognised any liability in relation to future contributions under its minimum funding agreement with
the Trustees. No asset ceiling restrictions have been applied in the consolidated Financial Statements.
(e)
Movements in the year
2024
2023
Pension
liabilities
£m
Pension
assets
£m
Pension
liabilities
£m
Pension
assets
£m
1 January
(6,260)
6,143
(6,272)
6,312
Items included in the Group Income Statement:
Current service cost
(18)
—
(22)
—
Contributions by employer in respect of employee salary sacrifice arrangements (i)
(24)
—
(24)
—
Total current service cost
(42)
—
(46)
—
Interest (expense)/income
(282)
283
(291)
300
Termination (cost)/benefit
(1)
—
1
—
Items included in the Group Statement of Comprehensive Income:
Returns on plan assets, excluding interest income
—
(830)
—
(474)
Actuarial (loss)/gain from changes to demographic assumptions
(16)
—
357
—
Actuarial gain/(loss) from changes in financial assumptions
721
—
(49)
—
Actuarial gain/(loss) from experience adjustments
12
—
(215)
—
Items included in the Group Cash Flow Statement:
Employer contributions
—
227
—
236
Contributions by employer in respect of employee salary sacrifice arrangements
—
24
—
24
Other movements:
Benefits paid from schemes
284
(284)
257
(257)
Other
—
—
(2)
2
31 December
(5,584)
5,563
(6,260)
6,143
(i)
A salary sacrifice arrangement was introduced on 1 April 2013 for pension scheme members. The contributions paid via the salary sacrifice arrangement have been
treated as employer contributions and included within the current service cost, with a corresponding reduction in salary costs.
In addition to current service cost on the Group’s defined benefit pension schemes, the Group also charged £95 million (2023: £72 million)
to operating profit in respect of defined contribution pension schemes. This included contributions of £39 million (2023: £25 million) paid via
a salary sacrifice arrangement.
Centrica plc Annual Report and Accounts 2024
221
22. Post-retirement benefits
(f)
Pension scheme assets
The market values of plan assets were:
2024
2023
31 December
Quoted
£m
Unquoted
£m
Total
£m
Quoted
£m
Unquoted
£m
Total
£m
Equities
19
491
510
23
503
526
Corporate bonds
12
—
12
6
—
6
High-yield debt
14
1,063
1,077
18
1,238
1,256
Liability matching assets
2,388
—
2,388
2,860
—
2,860
Other long-dated income assets
—
1,025
1,025
—
1,204
1,204
Property
—
303
303
—
305
305
Cash pending investment
248
—
248
391
—
391
Loan and interest
—
—
—
—
(405)
(405)
2,681
2,882
5,563
3,298
2,845
6,143
Unquoted private equity, other long-dated income assets and debt funds are valued at fair value as calculated by the investment manager
at the latest valuation date in accordance with generally accepted guidelines, adjusted for cash flow in the intervening period. Investment
properties are valued in accordance with guidelines by independent valuers. These valuations are reviewed annually as part of the CCCIF
audit and receive greater scrutiny now that unquoted assets make up a greater proportion of the scheme portfolio. Included within equities
are £nil (2023: £nil) of ordinary shares of Centrica plc via pooled funds that include a benchmark allocation to UK equities. Included within
corporate bonds are £nil (2023: £nil) of bonds issued by Centrica plc, albeit minor exposure may be held within pooled funds over which the
CCCIF has no ability to direct investment decisions. Apart from the investment in the Scottish Limited Partnerships which form part of the
asset-backed contribution arrangements described in section (g) of this note, no direct investments are made in securities issued by
Centrica plc or any of its subsidiaries or property leased to or owned by Centrica plc or any of its subsidiaries. The corporate bond, high-
yield debt and liability matching asset categories headings above have segregated portfolio mandates which include the cash, cash funds
and derivatives associated with the mandates.
The liability matching assets in the table above relate to the quoted LDI and gilts portfolio used to hedge against movements in interest rates
and inflation. The other long-dated income assets are unquoted investments in infrastructure and similar assets.
Included within the Group Balance Sheet within non-current securities are £108 million (2023: £104 million) of investments, held in trust on
behalf of the Group, as security in respect of the Centrica Unapproved Pension Scheme. Of the pension scheme liabilities above, £48 million
(2023: £49 million) relate to this scheme. More information on the Centrica Unapproved Pension Scheme is included in the Remuneration
Report on pages 116 to 147.
(g) Pension scheme contributions
The Group estimates that it will pay £31 million of ordinary employer contributions during 2025 for its defined benefit schemes, together
with £15 million of contributions paid via a salary sacrifice arrangement.
The actuarial valuation as at 31 March 2024 for the Registered Pensions Schemes has been agreed with the Pension Trustees. As at that
date, the technical provisions deficit (funding basis) was £504 million. The Group committed to annual cash contributions to fund this
pension deficit. The overall deficit contributions committed to, including the previously disclosed asset-backed contribution arrangements,
totalled £175 million in 2024 (of which £99 million was after 31 March 2024), £146 million in 2025, £139 million in 2026 and £140 million in
2027; with a balancing payment of £44 million in 2028. Separately, a pension strain payment of £1 million associated with employee
redundancies was also contributed in 2024 (2023: £5 million).
On a pure roll-forward basis, from 31 March 2024, using the same methodology and consequent assumptions, the technical provisions
deficit (funding basis) would be around £450 million on 31 December 2024. Note that the valuation methodology and assumptions used for
future assessments may differ from those previously used.
At the beginning of 2022, the Group had provided security of £745 million of letters of credit and £250 million cash in escrow to the
Registered Pension Schemes. In October 2022, as part of a £400 million loan arrangement from Centrica plc to the Registered Pension
Schemes to support the schemes’ liquidity in the LDI portfolio at that time, this security was reduced by £545 million, so that only £450
million of letters of credit remained. This loan was repaid in October 2024, and replacement security was provided so that £819 million of
letters of credit/surety bonds are in place at the year-end.
Strategic Report Governance Financial Statements Other Information
23. Leases, commitments and contingencies
(a)
Commitments and leases
Commitments are not held on the Group’s Balance Sheet as these are executory arrangements, and relate to amounts that we
are contractually required to pay in the future as long as the other party meets its contractual obligations.
The Group’s commitments in relation to commodity purchase contracts disclosed below are stated net of amounts receivable under
commodity sales contracts where there is a right of offset with the counterparty, and are based on the expected minimum quantities of gas
and other commodities that the Group is contracted to buy at estimated future prices.
The commitments in this note differ in scope and in basis from the maturity analysis of energy derivatives disclosed in note S3, as only
certain procurement and sales contracts are within the scope of IFRS 9 and included in note S3, and the volumes used in calculating the
maturity analysis in note S3 are estimated using valuation techniques, rather than being based on minimum contractual quantities.
The Group’s 20-year agreement with Cheniere to purchase 89bcf per annum of LNG volumes for export from the Sabine Pass liquefaction
plant in the US commits the Group to capacity payments of £3.2 billion (included in ‘LNG capacity’ below) between 2024 and 2039. It also
allows the Group to make up to £4.6 billion of commodity purchases based on market gas prices and foreign exchange rates as at the
reporting date.
During 2019, the Group signed a 20-year agreement to purchase LNG volumes from Mozambique LNG1 Company. The commercial start
date is 2029 and under this agreement the Group is committed to make commodity purchases expected to amount to £7.9 billion based
on market gas and oil prices at the reporting date.
During 2023, the Group signed a 15-year agreement to purchase LNG volumes from Delfin LNG. The provisional commencement date is
2029 and under this agreement the Group is committed to make commodity purchases expected to amount to £4.7 billion based on
market gas prices at the reporting date.
During 2024, the Group signed a 3-year agreement to purchase LNG volumes from Repsol LNG Holding between 2025 and 2027. Under
this agreement the Group is committed to make commodity purchases amounting to £556 million based on market gas prices and foreign
exchange rates at the reporting date. The Group also signed two 10-year natural gas sale and purchase agreements with Coterra Energy
and its subsidiary, Cimarex Energy, commencing in 2028. Under these agreements, the Group is committed to purchase natural gas
amounting to £1.5 billion based on market gas prices and foreign exchange rates at the reporting date.
These LNG contracts are deemed to be own use and therefore are accounted for on an accruals basis. Based on forecast gas spreads, they
are predicted to be profitable but due to their duration are exposed over a long period of time to the impact of governmental policy
decisions in relation to climate change.
The Group has numerous renewable power purchase arrangements where renewable obligation certificates are purchased as power is
produced. This gives rise to the commitments below.
31 December
2024
£m
2023
£m
Commitments in relation to the acquisition of PP&E
72
56
Commitments in relation to the acquisition of intangible assets:
Renewable obligation certificates
2,786
3,369
Other intangible assets
261
323
Other commitments:
Commodity purchase contracts
32,461
40,908
LNG capacity
4,171
4,230
Transportation capacity
187
266
Other long-term commitments (i)
328
414
(i)
Other long-term commitments include amounts in respect of executory contracts and the smart meter roll-out programme.
The maturity analysis for commodity purchase contract commitments at 31 December is given below:
Commodity purchase contract commitments
Fixed price
commodity commitments
Commodity commitments
that float with indices
31 December
2024
£bn
2023
£bn
2024
£bn
2023
£bn
<1 year
5.3
5.9
4.6
6.3
1–2 years
0.9
1.3
1.3
5.0
2–3 years
0.2
0.2
0.9
1.9
3–4 years
—
0.2
0.6
1.6
4–5 years
—
—
1.3
1.2
>5 years
—
0.1
17.4
17.2
6.4
7.7
26.1
33.2
Centrica plc Annual Report and Accounts 2024
223
23. Leases, commitments and contingencies
The Group enters into lease arrangements for assets including property, vehicles, vessels and assets used within the exploration and
production business.
The carrying amount, additions and depreciation charge associated with right-of-use assets is disclosed in note 13 and the interest expense
arising on the Group’s lease liability is disclosed in note 8. The total Group cash outflow in the year for capital and interest from lease
arrangements was £108 million (2023: £105 million), and the maturity analysis of cash flows associated with the Group’s lease liability at the
reporting date is shown in note S3.
The table below provides further information on amounts not included in the lease liability and charged to the Group Income Statement
during the year.
Year ended 31 December
2024
£m
2023
£m
Expense related to short-term leases
37
71
Expense related to variable lease payments
9
9
During the year, the Group’s expense related to short-term lease commitments predominantly related to the hire of LNG vessels and
exploration and production drilling rigs. The commitment at the balance sheet date also relates to assets of a similar nature. The Group has
£4 million of operating sub-lease arrangements mainly for LNG vessels. The Group does not have any material arrangements in which it acts
as a lessor.
(b)
Guarantees and indemnities
This section discloses any guarantees and indemnities that the Group has given, where we may have to provide security in the
future against existing and future obligations that will remain for a specific period.
In connection with the Group’s energy trading, transportation and upstream activities, certain Group companies have entered into
contracts under which they may be required to prepay, provide credit support or provide other collateral in the event of a significant
deterioration in creditworthiness. The extent of credit support is contingent upon the balance owing to the third party at the point of
deterioration.
As at 31 December 2024 £401 million (2023: £279 million) of letters of credit and on-demand payment bonds have been issued in respect
of decommissioning obligations included in the Group Balance Sheet.
(c)
Contingent liabilities
The Group has no material contingent liabilities.
Strategic Report Governance Financial Statements Other Information
24. Other investments
Other investments include equity investments, where we do not have the ability to control or significantly influence the
investment, and debt investments. Minority equity investments are measured at fair value with changes recognised in Other
comprehensive income (FVOCI) or through the Group Income Statement (FVTPL). Convertible debt investments are
measured at fair value with changes recognised through the Group Income Statement. Debt instruments are measured at
amortised cost.
2024
2023
Equity
investments
FVOCI
£m
Equity
investments
FVTPL
£m
Convertible
debt
investments
FVTPL
£m
Debt
instruments
amortised
cost
£m
Total
£m
Equity
investments
FVOCI
£m
Equity
investments
FVTPL
£m
Convertible
debt
investments
FVTPL
£m
Total
£m
1 January
54
6
1
—
61
—
—
—
—
Transfer of other investments
from securities
—
—
—
—
—
20
6
1
27
Interest receivable
—
—
1
—
1
—
—
—
—
Additions (i) (ii)
27
—
26
3
56
35
2
—
37
Revaluation
(30)
—
—
—
(30)
1
—
—
1
Exchange adjustments
—
(1)
—
—
(1)
(2)
(2)
—
(4)
31 December
51
5
28
3
87
54
6
1
61
(i)
Equity investment additions during 2024 of £27 million (2023: £35 million) comprise amounts invested into the Gresham House fund.
(ii) Convertible debt investment additions during 2024 included £25 million in convertible loan notes and ordinary shares which the Group has invested in Highview
Enterprises Limited, which is developing a new cryogenic energy storage plant. The Group also provided financing to CryoBattery One Limited, a subsidiary of Highview
Enterprises Limited, in the form of a £45 million senior debt facility of which £3 million has been drawn down at 31 December 2024 and is measured at amortised cost.
When built, this will consist of a long duration storage process using patented Liquid Air Energy Storage (LAES) technology.
25. Sources of finance
(a)
Capital structure
The Group seeks to maintain an efficient capital structure with a balance of debt and equity as shown in the table below:
31 December
2024
£m
2023
£m
Gross debt
2,974
3,408
Shareholders’ equity
4,422
3,877
Capital
7,396
7,285
Debt levels are restricted to limit the risk of financial distress and, in particular, to maintain a strong credit profile. The Group’s credit standing
is important for several reasons: to maintain a low cost of debt, limit collateral requirements in energy trading, hedging and decommissioning
security arrangements, and to ensure the Group is an attractive counterparty to energy producers and long-term customers.
The Group monitors its current and projected capital position on a regular basis, considering a medium-term view of at least three years,
and different stress case scenarios, including the impact of changes in the Group’s credit ratings and significant movements in commodity
prices. A number of financial ratios are monitored, including those used by the credit rating agencies.
The level of debt that can be raised by the Group is restricted by the Company’s Articles of Association. Borrowing is limited to the higher
of £10 billion and a gearing ratio of three times shareholders’ equity. The Group funds its long-term debt requirements through issuing bonds
in the capital markets and taking bank debt. Short-term debt requirements are met primarily through commercial paper or short-term bank
borrowings. The Group maintains substantial committed facilities and uses these to provide liquidity for general corporate purposes,
including short-term business requirements and back-up for commercial paper.
British Gas Insurance Limited (BGIL) is required to hold a minimum capital amount under PRA regulations and has complied with this
requirement since its inception. BGIL’s capital risk appetite, which is approved by the board, exceeds the PRA capital requirements.
BGIL’s capital management policy and plan are subject to review and approval by the BGIL board. Reporting processes provide relevant
and timely capital information to management and the board. A medium-term capital management plan forms part of BGIL’s planning and
forecasting process, embedded into approved timelines, management reviews and board approvals.
Centrica plc Annual Report and Accounts 2024
225
25. Sources of finance
(b)
Liquidity risk management and going concern
The Group has a number of treasury and risk policies to monitor and manage liquidity risk. Cash forecasts identifying the Group’s liquidity
requirements are produced regularly and are stress-tested for different scenarios, including, but not limited to, reasonably possible
increases or decreases in commodity prices and the potential cash implications of a credit rating downgrade. The Group seeks to ensure
that sufficient financial headroom exists for at least a twelve-month period to safeguard the Group’s ability to continue as a going concern,
and as at the reporting date, the analysis performed by the Group extends to 31 December 2027. It is the Group’s policy to maintain
committed facilities and/or available surplus cash resources of at least £1,500 million, raise at least 75% of its gross debt (excluding
non-recourse debt) in the capital market and to maintain an average term to maturity in the recourse long-term debt portfolio greater than
five years.
At 31 December 2024 the Group had undrawn committed credit facilities of £3,293 million (2023: £3,784 million) and £5,578 million (2023:
£5,525 million) of unrestricted cash and cash equivalents, net of outstanding overdrafts. 77% (2023: 80%) of the Group’s gross debt has
been raised in the long-term debt market and the average term to maturity of the long-term debt portfolio was 9.6 years (2023: 10.5 years).
The Group’s liquidity is impacted by the cash posted or received under margin and collateral agreements. The terms and conditions of these
agreements depend on the counterparty and the specific details of the transaction. Margin/collateral is generally posted or received to
support energy trading and procurement activities. It is posted when contracts with marginable counterparties are out of the money and
received when contracts are in the money. Cash is generally returned to the Group or by the Group within two days of trade settlement.
At 31 December 2024 the collateral position was as follows:
31 December
2024
£m
2023
£m
Collateral (received)/posted included within:
Trade and other payables
(162)
(184)
Trade and other receivables
191
260
Collateral posted extinguishing:
Net derivative liabilities (i)
76
164
Net collateral posted (ii)
105
240
(i)
Variation margin on daily settled derivatives results in the extinguishment of the net derivative asset/liability. These contracts remain outstanding until a future delivery
date, and therefore the cumulative daily settlement is considered collateral until that fulfilment date.
(ii) In-year movements of net collateral posted include a foreign exchange adjustment of £4 million debit (2023: £2 million credit).
The Group utilises initial margin waiver facilities to help manage its liquidity and working capital position in relation to derivative trading. For
certain types of trade, initial margin is a requirement before entering into a transaction, as it provides credit assurance for the exchange. As
initial margin is not a liability of the Group and is refundable, it is reflected as a margin asset on the Group’s balance sheet. Accordingly, where
counterparties waive any requirement to post initial margin, the Group has no liability.
The level of undrawn committed bank facilities and available cash resources has enabled the Directors to conclude that the Group has
sufficient headroom to continue as a going concern. The statement of going concern is included in the Governance section – Other
Statutory Information, on page 150.
Strategic Report Governance Financial Statements Other Information
25. Sources of finance
(c)
Adjusted net cash/(debt) summary
Adjusted net cash/(debt) predominantly includes capital market borrowings offset by cash, securities and certain hedging
financial instruments used to manage interest rate and foreign exchange movements on borrowings. Presented in the
derivatives and current and non-current borrowings, leases and interest accruals columns shown below are the assets and
liabilities that give rise to financing cash flows.
Other assets and liabilities
Current and non-current
borrowings, leases and
interest accruals
Derivatives
Gross debt
Cash and cash
equivalents, net of
bank overdrafts (i)
Current and
non-current
securities (ii)
Sub-lease
assets
Adjusted
net cash/
(debt)
£m
£m
£m
£m
£m
£m
£m
Group adjusted net (debt)/cash at 1 January 2023
(3,417)
(153)
(3,570)
4,242
525
2
1,199
Transfer of other investments from net debt
—
—
—
—
(27)
—
(27)
Acquisition of businesses
(13)
—
(13)
—
—
—
(13)
Cash outflow from net purchase of securities
—
—
—
(12)
12
—
—
Cash outflow for payment of capital element of leases
93
—
93
(93)
—
—
—
Cash outflow for repayment of borrowings
1,155
—
1,155
(1,155)
—
—
—
Cash inflow from borrowings
(930)
—
(930)
930
—
—
—
Net cash flow from operating activities
—
—
—
2,752
—
—
2,752
Net cash flow from other investing activities (iv)
—
—
—
106
—
—
106
Cash outflow for share buyback programme (v)
—
—
—
(613)
—
—
(613)
Net cash flow from other financing activities (v)
—
—
—
(197)
—
—
(197)
Revaluation
(59)
44
(15)
—
9
—
(6)
Interest receivable on securities
—
—
—
—
23
—
23
Interest received on securities
—
—
—
21
(21)
—
—
Financing interest paid
177
41
218
(286)
—
—
(68)
Increase in interest payable and amortisation of
borrowings, and impact of associated interest rate swaps
(186)
(51)
(237)
—
—
—
(237)
New lease agreements and re-measurement of existing
lease liabilities
(158)
—
(158)
—
—
—
(158)
Exchange adjustments
49
—
49
(66)
—
—
(17)
Group adjusted net (debt)/cash at 31 December 2023
(3,289)
(119)
(3,408)
5,629
521
2
2,744
Cash outflow for purchase of securities
—
—
—
(19)
19
—
—
Cash inflow from settlement of securities (ii)
—
—
—
400
(400)
—
—
Cash outflow for payment of capital element of leases
97
—
97
(97)
—
—
—
Cash outflow for repayment of borrowings (iii)
842
15
857
(925)
—
—
(68)
Cash inflow from borrowings (iii)
(483)
—
(483)
483
—
—
—
Net cash flow from operating activities
—
—
—
1,149
—
—
1,149
Net cash flow from other investing activities (iv)
—
—
—
87
—
—
87
Cash outflow for share buyback programme (v)
—
—
—
(499)
—
—
(499)
Net cash flow from other financing activities (v)
—
—
—
(227)
—
—
(227)
Revaluation
13
(22)
(9)
—
5
—
(4)
Interest receivable on securities
—
—
—
—
19
—
19
Interest received on securities
—
—
—
25
(25)
—
—
Financing interest paid
171
76
247
(283)
—
—
(36)
Increase in interest payable and amortisation of
borrowings, and impact of associated interest rate swaps
(168)
(57)
(225)
—
—
—
(225)
New lease agreements and re-measurement of existing
lease liabilities
(53)
—
(53)
—
—
(2)
(55)
Exchange adjustments
3
—
3
(30)
—
—
(27)
Group adjusted net (debt)/cash at 31 December 2024
(2,867)
(107)
(2,974)
5,693
139
—
2,858
(i)
Cash and cash equivalents includes £115 million (2023: £104 million) of restricted cash. This includes cash totalling £3 million (2023: £2 million) within the Spirit Energy
business that is not restricted by regulation but is managed by Spirit Energy’s own treasury department. Cash and cash equivalents are net of £645 million bank
overdrafts (2023: £814 million).
(ii) Settlement of securities in 2024 is in relation to the repayment of £400 million of loans previously made to the pension schemes. At 31 December 2024, the Securities
balance includes £nil (2023: £405 million) of loans to the pension schemes and £31 million (2023: £12 million) of other loans receivable, both measured at amortised cost,
as well as £73 million (2023: £72 million) other debt instruments and £35 million (2023: £32 million) equity instruments, both measured at fair value. See note 22 for further
details on pension loans now settled.
(iii) Repayment of and inflow from borrowings is in relation to debt repurchase, refinance exercises and obtaining/repayment of short-term borrowing. £370 million of debt
instruments have been repurchased in advance of the maturity date. The 2075 hybrid bond designated in a fair value hedge relationship, with a bond carrying value of
£435 million and derivative carrying value of £15 million, has been replaced with a 2055 hybrid bond. The 2055 hybrid bond, with a first call date in 2030, resulted in the
issue of £405 million notional debt, with £2 million of capitalised transaction fees. A one-off financing cost of £68 million was paid in relation to these repurchase and
refinancing exercises. See note 7(b) for further information. Additionally, £37 million of short-term borrowing obtained during December 2023 has been repaid, and £80
million of other borrowings were obtained during the year.
(iv) Cash inflow from other investing activities excludes cash outflow relating to the purchase of securities of £19 million (2023: £12 million), cash inflow from the settlement
of securities of £400 million, and interest received on securities of £25 million (2023: £21 million) during the year.
(v) Cash outflow of £499 million (2023: £613 million) relates to the share buyback programme, for which there is a liability of £75 million (2023: £94 million) recognised at 31
December 2024. See note S4 for further details on the share buyback programme. Cash outflow from other financing activities includes £219 million (2023: £186 million)
payments of equity dividends and £8 million (2023: £nil) payments for own shares. Cashflows from other financing activities in 2023 also include £17 million of
distributions to non-controlling interests and £6 million of proceeds from exercise of share options.
Centrica plc Annual Report and Accounts 2024
227
25. Sources of finance
(d)
Borrowings, leases and interest accruals summary
2024
2023
31 December
Coupon rate
%
Principal
m
Current
£m
Non-current
£m
Total
£m
Current
£m
Non-current
£m
Total
£m
Bank overdrafts
(645)
—
(645)
(814)
—
(814)
Bank loans (> 5-year maturity)
—
(124)
(124)
—
(130)
(130)
Other borrowings
(61)
(39)
(100)
(37)
(20)
(57)
Bonds (by maturity date):
4 September 2026 (i)
6.400
£52
—
(50)
(50)
—
(50)
(50)
16 April 2027
5.900
US$70
—
(56)
(56)
—
(55)
(55)
13 March 2029 (i)
4.375
£552
—
(492)
(492)
—
(497)
(497)
5 January 2032 (ii)
Zero
€50
—
(70)
(70)
—
(71)
(71)
19 September 2033 (i) (iii)
7.000
£400
—
(319)
(319)
—
(703)
(703)
16 October 2043
5.375
US$367
—
(288)
(288)
—
(284)
(284)
12 September 2044
4.250
£550
—
(539)
(539)
—
(539)
(539)
25 September 2045
5.250
US$50
—
(39)
(39)
—
(38)
(38)
21 May 2055 (i) (iv)
6.500
£405
—
(401)
(401)
—
—
—
10 April 2075 (v)
5.250
£450
—
—
—
—
(428)
(428)
—
(2,254)
(2,254)
—
(2,665)
(2,665)
Obligations under lease arrangements
(104)
(241)
(345)
(98)
(286)
(384)
Interest accruals
(44)
—
(44)
(53)
—
(53)
(854)
(2,658)
(3,512)
(1,002)
(3,101)
(4,103)
(i)
Bonds or portions of bonds maturing in 2026, 2029, 2033 and 2055 have been designated in a fair value hedge relationship. See note S5 for details of hedge relationships.
(ii) €50 million of zero coupon notes have an accrual yield of 4.2%, which will result in a €114 million repayment on maturity.
(iii) Before the effect of the debt repurchase exercise during the year, the notional value of the 2033 bond was £770 million.
(iv) The Group has the right to repay at par on 21 May 2030 and every interest payment date thereafter.
(v) The 2075 hybrid bond, with a right to repay at par on 10 April 2025, has been repaid during the year.
Strategic Report Governance Financial Statements Other Information
26. Share capital
Ordinary share capital represents the total number of shares issued which are publicly traded. We also disclose the
number of own and treasury shares the Company holds, which the Company has bought, principally as part of share
buyback programmes.
Allotted and fully paid share capital of the Company
31 December
2024
£m
2023
£m
5,568,107,214 ordinary shares of 614/81 pence each (2023: 5,907,846,138)
344
365
The closing price of one Centrica ordinary share on 31 December 2024 was 133.6 pence (2023: 140.7 pence). Centrica employee share
ownership trusts purchase Centrica ordinary shares from the open market and receive treasury shares to satisfy future obligations of
certain employee share schemes. The movements in own and treasury shares during the year are shown below:
Own shares (i)
Treasury shares (i)
2024
million shares
2023
million shares
2024
million shares
2023
million shares
1 January
46.8
30.4
492.0
45.7
Shares purchased
6.8
1.4
—
—
Shares cancelled (ii)
—
—
(339.7)
—
Shares transferred from treasury and placed into trust
39.7
34.3
(39.7)
(34.3)
Shares released to employees on vesting
(10.0)
(19.3)
(21.2)
(31.7)
Share buyback programme (iii)
—
—
385.4
512.3
31 December (i)
83.3
46.8
476.8
492.0
(i)
Own shares are shares held in trusts to meet employee share awards. Treasury shares are shares that have been purchased from the open market and have not been
cancelled. The closing balance in the treasury and own shares reserves of own shares was £93 million (2023: £44 million) and treasury shares was £642 million (2023:
£606 million), these are both held at weighted average cost.
(ii) During the period, the Group has cancelled 339,738,924 ordinary shares that were being held as treasury shares. Share capital has been reduced by the nominal value of
these shares of £21 million, and a corresponding amount has been credited to the capital redemption reserve. In addition, £400 million has been transferred from treasury
shares to retained earnings to account for the price paid for the shares when they were originally credited to treasury shares. This value has been calculated on a first-in-
first-out basis.
(iii) See note S4 for further details of the share buyback programme.
27. Events after the balance sheet date
The Group updates disclosures in light of new information being received, or a significant event occurring, in the period
between 31 December 2024 and the date of this report.
The Directors propose a final dividend of 3.00 pence per ordinary share for the year ended 31 December 2024 (which would total
£153 million based on shareholding at that date). The dividend will be submitted for formal approval at the Annual General Meeting to be held
on 8 May 2025 and, subject to approval, will be paid on 5 June 2025 to those shareholders registered on 2 May 2025.
The Group also announced an intention to extend the existing share buyback programme of £1.5 billion by an additional £500 million.
In February 2025, the full, triennial actuarial valuations of the UK Registered Pension Schemes, as at 31 March 2024, were agreed and
finalised with the Pension Trustees. See note 22 for further information, including updated prospective contribution details.
Centrica plc Annual Report and Accounts 2024
229
Supplementary information
Supplementary information includes additional information and disclosures we are required to make by accounting
standards or regulation.
S1.
General information
Centrica plc (the Company) is a public company limited by shares, domiciled and incorporated in the UK, and registered in England
and Wales. The address of the registered office is Millstream, Maidenhead Road, Windsor, Berkshire, SL4 5GD. The Company, together with
its subsidiaries, comprise the ‘Group’. The nature of the Group’s operations and principal activities are set out in note 4(a) and on pages 1
to 77.
The consolidated Financial Statements of Centrica plc are presented in pounds sterling. Operations and transactions conducted in
currencies other than pounds sterling are included in the consolidated Financial Statements in accordance with the foreign currencies
accounting policy set out in note S2.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
This section sets out the Group’s material accounting policies in addition to the critical accounting policies applied in the
preparation of these consolidated Financial Statements. Unless otherwise stated, these accounting policies have been
consistently applied to the years presented.
Basis of consolidation
The Group Financial Statements consolidate the Financial Statements of the Company and entities controlled by the Company.
Subsidiaries are all entities (including structured entities) over which the Group has control. Control is exercised over an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. Transactions with non-controlling interests that relate to their ownership interests and do
not result in a loss of control are accounted for as equity transactions.
The results of subsidiaries acquired or disposed of during the year are consolidated from the effective date of acquisition (at which point the
Group gains control over a business as defined by IFRS 3, and applies the acquisition method to account for the transaction as a business
combination) or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of
subsidiaries, associates and joint ventures to align the accounting policies with those used by the Group.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value with the change in carrying amount
recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained
interest as a joint venture, associate or financial asset.
Segmental reporting
The Group’s operating segments are reported in a manner consistent with the internal reporting provided to and regularly reviewed by
the Group’s Executive Committee (which is the Group’s Chief Operating Decision Maker as defined by IFRS 8 ‘Operating segments’) for the
purposes of evaluating segment performance and allocating resources.
Revenue
Energy supply to business and residential customers
The vast majority of contractual energy supply arrangements have no fixed duration, and require no minimum consumption by the
customer. No enforceable rights and obligations exist at inception of the contract and arise only once the cooling off period is complete and
the Group is the legal supplier of energy to the customer. The performance obligation is the supply of energy over the contractual term; the
units of supply represent a series of distinct goods that are substantially the same with the same pattern of transfer to the customer. The
performance obligation is considered to be satisfied as the customer consumes based on the units of energy delivered. This is the point at
which revenue is recognised. In respect of energy supply contracts, the Group considers that it has the right to consideration from the
customer for an amount that corresponds directly with the invoiced value delivered to the customer through their consumption. The
Group’s assessment of the amount that it has a right to invoice includes an assessment of energy supplied to customers between the date
of the last meter reading and the year-end (known as unread revenue). Unread gas and electricity comprises both billed and unbilled
revenue and is estimated through the billing systems, using historical consumption patterns, on a customer-by-customer basis, taking into
account weather patterns, load forecasts and the differences between actual meter readings being returned and system estimates. Actual
meter readings continue to be compared to system estimates between the balance sheet date and the finalisation of the accounts.
The Group holds a number of energy supply contracts that specify a minimum consumption volume over a specified contractual term.
The transaction price for these contracts is the minimum supply volume multiplied by the contractually agreed price per unit of energy.
Revenue from the sale of additional volumes is considered to be variable and not included in the transaction price. Revenue for these
contracts continues to be recognised as invoiced.
In making disclosures under IFRS 15, the Group applies the practical expedient in paragraph 121 of IFRS 15 and therefore does not disclose
information related to the transaction price allocated to remaining performance obligations on the basis that the Group recognises revenue
from the satisfaction of the performance obligations within energy supply contracts in accordance with Paragraph B16.
Centrica plc Annual Report and Accounts 2024
231
S2. Summary of material accounting policies
Energy services provided to business and residential customers
Energy services relate to the installation, repair and maintenance of central heating, ventilation and air conditioning systems.
Delivery of an item is considered a separate performance obligation to the installation of the item, both satisfied at a point in time. Delivery is
the point at which control passes to the customer as the customer takes physical possession of the asset. It is also the point at which the
Group has the right to consideration. Delivery and installation usually occur at the same point in time and consequently revenue is
recognised for both performance obligations simultaneously.
Costs to obtain or fulfil a contract
Under IFRS 15 ‘Revenue from contracts with customers’, the incremental costs of obtaining a contract are recognised as an asset if they are
expected to be recovered. These costs include expenditures that would not have been incurred if the contract had not been secured and
typically relate to sales commissions payable in relation to both Energy supply and Energy service contracts.
Costs to fulfil a contract are recognised as an asset where they are directly related to a contract and where they generate or enhance
resources of the entity that will be used in satisfying the performance obligations. Costs must be expected to be recoverable. Assets
relating to costs to obtain or fulfil a contract are amortised over the period of the contract. See note 17.
Sales of Liquefied Natural Gas (LNG)
Revenue arising from sales of LNG is recognised when control of the commodity passes to the counterparty, with each cargo representing
a separate performance obligation satisfied at a point in time.
Sales of own gas and liquid production
Revenue arising from the sale of produced gas is recognised in a manner consistent with energy supply contracts with the revenue
recognition profile reflecting the supply of gas to the customer.
The rights and obligations identifiable within a contract where the Group holds sellers’ nomination rights are considered to be enforceable
from inception of the contract. The transaction price for the contract will include variable consideration based on forecast production and
market prices. The point at which the performance obligation is satisfied and revenue recognised is the point at which control of the
commodity passes to the customer according to the contractual trading terms, usually on shipment or delivery to a specified location.
Energy sales to trading and energy procurement counterparties
Revenue arising from the sale of energy procured from generation asset owners to trading and energy procurement counterparties is also
recognised in a manner consistent with energy supply contracts. There is a single performance obligation being the supply of energy over
the contractual term at spot prices and revenue is recognised at the point at which energy is supplied to the counterparty in accordance
with the contractual terms.
Revenue arising from contracts outside the scope of IFRS 15
Revenue from sources other than the Group’s contracts with customers is recognised in accordance with the relevant standard, as detailed
below:
Fixed-fee service and insurance contracts: revenue from these contracts is recognised in the Group Income Statement with regard to the
incidence of risk over the life of the contract, reflecting the seasonal propensity of claims to be made under the contracts and the benefits
receivable by the customer, which span the life of the contract as a result of emergency maintenance being available throughout the
contract term.
Power generation: revenue is recognised under IFRS 9 where contracts to supply power are measured at fair value.
Cost of sales
Energy supply includes the cost of gas and electricity produced and purchased during the year for own-use contracts, taking into account
the industry reconciliation process for total gas and total electricity usage by supplier and related transportation, distribution, royalty costs
and bought-in materials and services.
Cost of sales relating to fixed-fee service and insurance contracts includes direct labour and related overheads on installation work, repairs
and service contracts in the year.
Cost of sales relating to gas production includes depreciation of assets used in production of gas, royalty costs and direct labour costs.
Cost of sales within power generation businesses includes the depreciation of assets included in generating power, fuel purchase costs,
direct labour costs, electricity generator levy charges and carbon emissions costs.
Re-measurement and settlement of energy contracts
Re-measurement and settlement of energy contracts includes both realised (settled) commodity sales and purchase contracts in the
scope of IFRS 9, as well as unrealised (fair value changes) on active contracts, as detailed further in note 2.
Financing costs
Financing costs that arise in connection with the acquisition, construction or production of a qualifying asset are capitalised and
subsequently amortised in line with the depreciation of the related asset. Financing costs not arising in connection with the acquisition,
construction or production of a qualifying asset are expensed.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
Foreign currencies
The consolidated Financial Statements are presented in pounds sterling, the functional currency of the Company and the Group’s
presentational currency. Each entity in the Group determines its own functional currency and items included in the financial statements of
each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency of
the entity at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency of the relevant entity at the rate
of exchange ruling at the balance sheet date and exchange movements included in the Group Income Statement for the period.
Non-monetary items that are measured at historical cost in a currency other than the functional currency of the entity concerned are
translated using the exchange rate prevailing at the dates of the initial transaction.
For the purpose of presenting consolidated Financial Statements, the assets and liabilities of the Group’s non-sterling functional currency
subsidiary undertakings, joint ventures and associates are translated into pounds sterling at exchange rates prevailing at the balance sheet
date. The monthly results of these (generally foreign) subsidiary undertakings, joint ventures and associates are translated into pounds
sterling each month at the average rates of exchange for that month. The closing exchange rates, and the average of the rates used to
translate the results of foreign operations to pounds sterling are shown below.
Exchange rate per pounds sterling (£)
Closing rate at
31 December
Average rate for the year ended
31 December
2024
2023
2024
2023
US dollars
1.25
1.27
1.28
1.24
Canadian dollars
1.80
1.68
1.75
1.68
Euro
1.21
1.15
1.18
1.15
Norwegian krone
14.24
12.90
13.75
13.14
Danish krone
9.02
8.59
8.81
8.58
Exchange adjustments arising from the retranslation of the opening net assets and results of non-sterling functional currency
operations are transferred to the Group’s foreign currency translation reserve, a separate component of equity, and are reported in
other comprehensive income. In the event of the disposal of a non-sterling functional currency subsidiary, the cumulative translation
difference arising in the foreign currency translation reserve is charged or credited to the Group Income Statement on disposal.
Where the Group utilises net investment hedging, changes in the fair value of the hedging instrument are recognised in equity and
remain there until the disposal of the specific, related investments, at which point the gains and losses are recycled to profit or loss.
Employee share schemes
The Group operates a number of employee share schemes, detailed in the Remuneration Report on pages 116 to 123, under which it makes
equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of
grant (excluding the effect of non-market-based vesting conditions). The fair value determined at the grant date is expensed on a straight-
line basis together with a corresponding increase in equity over the vesting period, based on the Group’s estimate of the number of awards
that will vest, and adjusted for the effect of non-market-based vesting conditions.
The majority of the share-based payment charge arises from the Annual Incentive Plan. This scheme is applicable to senior executives, and
senior and middle management. Shares issued under the scheme vest subject to continued employment within the Group in two stages
(half after two years and the other half after three years). Employees leaving prior to the vesting date will normally forfeit their rights to
unvested share awards. The fair value of the awards is measured using the market value at the date of grant.
More information is included in the Remuneration Report on pages 116 to 123.
Centrica plc Annual Report and Accounts 2024
233
S2. Summary of material accounting policies
Business combinations and goodwill
The acquisition of subsidiaries is accounted for using the acquisition method (at the point the Group gains control over a business as defined
by IFRS 3). The cost of the acquisition is measured as the cash paid and the aggregate of the fair values, at the date of exchange, of other
assets transferred, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement at the
acquisition date.
Acquisition-related costs are expensed as incurred. The identifiable assets, liabilities and contingent liabilities are recognised at their fair
value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5.
The Group recognises any non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate share
of the recognised amounts of the acquiree’s identifiable net assets.
Goodwill arising on a business combination represents the excess of the consideration transferred, the amount of the non-controlling
interests and the acquisition date fair value of any previously held interest in the acquiree over the Group’s interest in the fair value of the
identifiable net assets acquired. Goodwill arising on the acquisition of a stake in a joint venture or an associate represents the excess of the
consideration transferred over the Group’s interest in the fair value of the identifiable assets and liabilities of the investee at the date of
acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment
losses. The goodwill arising on an investment in a joint venture or in an associate is not recognised separately, but is shown under ‘Interests in
joint ventures and associates’ in the Group Balance Sheet. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in
the Group Income Statement.
Acquisitions of joint operations that meet the definition of a business as defined in IFRS 3 are accounted for as business combinations.
On disposal of a subsidiary, associate or joint venture entity, any amount of goodwill attributed to that entity is included in the determination
of the profit or loss on disposal. A similar accounting treatment is applied on disposal of assets that represent a business.
Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost.
Capitalisation begins when expenditure for the asset is being incurred and activities necessary to prepare the asset for use are in progress
and ceases when substantially all the activities that are necessary to prepare the asset for use are complete. Amortisation commences at
the point of commercial deployment. The cost of intangible assets acquired in a business combination is their fair value as at the date of
acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
Intangible assets with finite lives are amortised over their useful lives and are tested for impairment, as part of the CGU to which they relate
where necessary, annually and whenever there is an indication that the asset could be impaired. The amortisation period and method for an
intangible asset are reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are accounted for on a prospective basis by changing the amortisation period or method,
as appropriate, and treated as changes in accounting estimates.
Intangible assets are derecognised on disposal, or when no future economic benefits are expected from their use.
Intangible assets with indefinite useful lives are not amortised but tested for impairment annually, and whenever there is an indication that
the intangible asset could be impaired, either individually or at the CGU level. The indefinite life assessment is reviewed annually and, if not
supportable, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
The useful economic lives for the material categories of intangible assets are as follows:
Customer relationships and other contractual assets
Up to 20 years
Strategic identifiable acquired brands
Indefinite
Application software
Up to 15 years
Strategic identifiable acquired brands are deemed to have indefinite lives where evidence suggests that the brand will generate net cash
inflows for the Group for an indefinite period.
Cloud computing arrangements
The Group has a number of contracts for Software as a Service (SaaS) and Platform as a Service (PaaS) Cloud Computing Arrangements.
These contracts permit the Group to access vendor-hosted software and platform services over the term of the arrangement. The Group
does not control the underlying assets in these arrangements and costs are expensed as incurred.
The Group also incurs implementation costs in respect of these contracts. Implementation costs are capitalised as intangible assets where
costs meet the definition and recognition criteria of an intangible asset under IAS 38. Such costs typically relate to software coding which is
capable of providing benefit to the Group on a standalone basis. Other implementation costs, primarily relating to the configuration and
customisation of the Cloud software solution, are assessed to determine whether the implementation activity relating to these costs is
distinct from the Cloud Arrangement, in which case costs are expensed as the activity occurs. If the configuration and customisation costs
relate to activity which is integral to the Cloud Arrangement such that the activity is received over the term of the Cloud Arrangement,
costs are recognised as a prepayment and expensed over the term of the Cloud Arrangement.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
UK & EU Emissions Trading Scheme
Purchased carbon dioxide emissions allowances are recognised initially at cost (purchase price) within intangible assets. The liability is
measured at the cost of purchased allowances up to the level of purchased allowances held, and then at the market price of allowances
ruling at the balance sheet date, with movements in the liability recognised in operating profit.
The intangible asset is surrendered and the liability is extinguished at the end of the compliance period. No amortisation is charged up to the
date of surrender as the cost and residual value of the intangible asset are deemed to be the same with no consumption of economic
benefit. Forward contracts for the purchase or sale of carbon dioxide emissions allowances are measured at fair value with gains and losses
arising from changes in fair value recognised in the Group Income Statement.
Renewable certificates
The Group purchases renewable certificates both on a standalone basis, and through Power Purchase Agreements. The main types of
renewable certificates acquired are Renewable Energy Guarantees of Origin (REGOs) which are certificates issued by Ofgem certifying
that electricity has been produced from renewable sources, Renewable Obligation Certificates (ROCs) which are issued to accredited
generators for the eligible renewable electricity they generate and Guarantees of Origin (GoOs) which are the EU equivalent of REGOs.
The Group uses renewable certificates to meet its obligations under a number of Ofgem schemes, namely the Feed-in Tariff (FIT), the
Contracts for Difference (CFD), the Fuel Mix Disclosure (FMD) and the Renewables Obligation (RO) scheme.
Purchased renewable certificates are recognised initially at cost within intangible assets as an indefinite life asset. A liability for the RO is
recognised based on the level of electricity supplied to customers, and is calculated in accordance with percentages set by the UK
Government and the renewable obligation certificate buyout price for that period.
The intangible asset is surrendered and the liability is extinguished at the end of the compliance period to reflect the consumption of
economic benefits. Any recycling benefit related to the submission of renewable obligation certificates is recognised in the Group Income
Statement when received. The Group also recognises supplier obligations for CFD and FIT schemes; renewable certificates are used to
offset these liabilities.
Cash flows relating to renewable obligation certificates and similar schemes are recognised within cash flows from operating activities.
Exploration, evaluation, development and production assets
The Group used the successful efforts method of accounting for exploration and evaluation expenditure. Exploration and evaluation
expenditures associated with an exploration well, including acquisition costs related to exploration and evaluation activities were capitalised
initially as intangible assets. Certain expenditures such as geological and geophysical exploration costs were expensed. If the prospects
were subsequently determined to be successful on completion of evaluation, the relevant expenditure was transferred to PP&E. If the
prospects were subsequently determined to be unsuccessful, the associated costs were expensed in the period in which that
determination was made.
All field development costs are capitalised as PP&E. Such costs relate to the acquisition and installation of production facilities and include
development drilling costs, project-related engineering and other technical services costs. PP&E, including rights and concessions related
to production activities, is depreciated from the commencement of production in the fields concerned, using the unit of production method,
based on all of the 2P reserves of those fields. Changes in these estimates are dealt with prospectively.
The net carrying value of fields in production and development is compared annually on a field-by-field basis with the likely discounted
future net revenues to be derived from the remaining commercial reserves. An impairment loss is recognised where it is considered that
recorded amounts are unlikely to be fully recovered from the net present value of future net revenues. Exploration assets are reviewed
annually for indicators of impairment and production and development assets are tested annually for impairment.
Interests in joint arrangements and associates
The Group’s joint ventures and associates (as defined in note 6) are accounted for using the equity method.
The Group’s interests in joint operations (gas exploration and production licence arrangements) are accounted for by recognising its assets
(including its share of assets held jointly), its liabilities (including its share of liabilities incurred jointly), its revenue from the sale of its share of
the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses
(including its share of any expenses incurred jointly).
Where the Group has an equity stake or a participating interest in operations governed by a joint arrangement for which it is acting as
operator, an assessment is carried out to confirm whether the Group is acting as agent or principal. As the terms and conditions negotiated
between business partners usually provide joint control to the parties over the relevant activities of the gas fields that are governed by joint
arrangements, the Group is usually deemed to be an agent when it is appointed as operator and not as principal as the contracts entered
into presents gross liabilities and gross receivables of joint operations (including amounts due to or from non-operating partners) in the
Group Balance Sheet in accordance with the netting rules of IAS 32 ‘Financial instruments – presentation’.
Property, plant and equipment
PP&E is included in the Group Balance Sheet at cost, less accumulated depreciation and any provisions for impairment.
Subsequent expenditure in respect of items of PP&E, such as the replacement of major parts, major inspections or overhauls, are capitalised
as part of the cost of the related asset where it is probable that future economic benefits will arise as a result of the expenditure and the cost
can be reliably measured. All other subsequent expenditure is expensed as incurred.
Centrica plc Annual Report and Accounts 2024
235
S2. Summary of material accounting policies
Freehold land is not depreciated. Other PP&E, with the exception of upstream production assets (see above), are depreciated on a straight-
line basis at rates sufficient to write off the cost, less estimated residual values, of individual assets over their estimated useful lives. The
depreciation periods for the material categories of assets are as follows:
Freehold and leasehold buildings
Up to 50 years
Plant
5 to 25 years
Equipment and vehicles
3 to 10 years
Power generation assets
Up to 40 years
The carrying values of PP&E are tested annually for impairment and are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable. Residual values and useful lives are reassessed annually and,
if necessary, changes are accounted for prospectively.
Impairment assumptions
The Group tests the carrying amounts of goodwill, PP&E and intangible assets (with the exception of exploration assets) for impairment
at least annually. Interests in joint ventures and associates and exploration assets are reviewed annually for indicators of impairment and
tested for impairment where such an indicator arises. Where an asset does not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the CGU to which the asset belongs. The recoverable amount is the higher of value in use
(VIU) and fair value less costs of disposal (FVLCD).
At inception, goodwill is allocated to each of the Group’s CGUs or groups of CGUs that expect to benefit from the business combination in
which the goodwill arose. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (or CGU) is reduced to its recoverable amount. Any impairment is expensed immediately in the Group Income
Statement. Any CGU impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the
other assets of the CGU pro rata on the basis of the carrying amount of each asset in the CGU.
Further information on the assumptions used in the VIU calculations and FVLCD calculations that resulted in impairments during the year can
be found at note 7.
VIU – Key assumptions used
Pre-tax cash flows used in the VIU calculations are derived from the Group’s Board-approved business plans, and assumptions specific to
the nature and life of the asset. The Group’s business plans and assumptions are based on past experience and adjusted to reflect market
trends, economic conditions and key risks. Commodity prices used in the planning process are based in part on observable market data and
in part on estimates. Note S6 provides additional detail on the active period of each of the commodity markets in which the Group operates.
(a) VIU – Growth rates and discount rates
Unless stated otherwise in the table below, cash flows beyond the planned period have been extrapolated using long-term growth rates in
the market where the CGU operates. Long-term growth rates are determined using a blend of publicly available historical data and long-
term growth rate forecasts published by external analysts. Cash flows are discounted using a discount rate specific to each CGU. Discount
rates reflect the current market assessments of the time value of money and are based on the estimated cost of capital of each CGU.
Additionally, risks specific to the cash flows of the CGUs are reflected within cash flow forecasts. Each CGU’s weighted average cost of
capital is then adjusted to reflect the impact of tax in order to calculate an equivalent pre-tax discount rate.
Long-term growth rates and pre-tax discount rates used in the VIU calculations for each of the Group’s CGUs are shown below.
2024
British Gas
Services &
Solutions
%
British Gas
Energy
%
Centrica
Business
Solutions
Energy
Supply
%
Bord Gáis
Energy
%
Centrica
Energy
%
Nuclear (i)
%
Growth rate to perpetuity (including inflation)
2.0
2.0
2.0
2.1
2.0
N/A
Pre-tax discount rate
10.0
10.7
12.0
9.1
12.0
15.3
2023
British Gas
Services &
Solutions
%
British Gas
Energy
%
Centrica
Business
Solutions
Energy
Supply
%
Bord Gáis
Energy
%
Centrica Energy
%
Nuclear (i)
%
Growth rate to perpetuity (including inflation)
2.1
2.1
2.1
1.6
2.1
N/A
Pre-tax discount rate
10.0
10.7
12.0
10.7
12.0
17.3
(i)
Cash flows arising after the plan period have been derived from forecasts to the end of the asset lives. Due to the nature of these finite-lived assets, this provides a more
appropriate valuation in later years.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
(b) VIU – Inflation rates
Inflation rates used in the business plan were based on a blend of publicly available inflation forecasts and range from 2.0% to 2.1%.
(c) Key operating assumptions by CGUs using VIU
The key operating assumptions across all CGUs are gross margin, revenues and operating costs. These assumptions are tailored to the
specific CGU using management’s knowledge of the environment, as shown in the table below:
CGU
Gross margin
Revenues
Operating costs
All – base
assumptions
Existing customers: based on
contractual terms.
Losses are forecast based on historic
data and future expectations of
the market.
New customers and renewals: based
on gross margins achieved in the
period leading up to the date of the
business plan. Both adjusted for
current market conditions and cost of
goods inflation.
For Services businesses, future sales
and related gross margins are based
on planned future product sales and
contract losses based upon past
performance and future expectations
of the competitive environment.
Existing customers: based on
contractual terms.
Losses are forecast based on historic
data and future expectations of
the market.
Adjusted for: growth forecasts which
are based on sales and marketing
activity, recent customer acquisitions
and the current economic environment
in the relevant geography.
Gas and electricity revenues based
on forward market prices.
Market share: percentage immediately
prior to business plan.
Wages: projected headcount in line
with expected efficiencies. Salary
increases based on inflation
expectations.
Credit losses: historical assumptions
regarding realised cash losses have
been updated to reflect the current
environment.
Centrica Energy
Existing and new markets:
management’s estimate of future
trading performance.
As above.
Future development: increase in costs
to support growth forecasts, adjusted
for planned business process
efficiencies.
Overlift and underlift
Offtake arrangements for gas produced from joint operations are often such that it is not practical for each participant to receive or sell its
precise share of the overall production during the period. This results in short-term imbalances between cumulative production entitlement
and cumulative sales, referred to as overlift and underlift.
An overlift payable, or underlift receivable, is recognised at the balance sheet date within trade and other payables or trade and other
receivables respectively, and is measured at market value, with movements in the period recognised within cost of sales.
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237
S2. Summary of material accounting policies
Leases
The Group assesses its contractual arrangements to determine whether they are or contain leases based on whether they convey the right
to control the use of an identified asset for a period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the
same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The liabilities
for the majority of the Group’s lease portfolio are calculated using the incremental borrowing rate. This rate is calculated on a lease-by-lease
basis, taking into account the credit rating of the Group at the inception of the lease and the lease term. The credit adjustment used in this
calculation is modified to reflect the security implicit in a lease arrangement based on the specific class of asset being leased.
Lease payments included in the measurement of the lease liability comprise: fixed payments (including in-substance fixed payments),
variable lease payments that depend on an index or a rate (initially measured using the index or rate as at the commencement date),
amounts expected to be payable under a residual value guarantee, the exercise price under a purchase option that the Group is reasonably
certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and
penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. When considering whether the Group
is reasonably certain to exercise extension or termination options, various factors are considered, such as the level of lease payments
relative to the market rate, the importance of the specific asset to the Group’s operations and the period remaining until the option
becomes exercisable. Such judgements are reconsidered when there is a significant event or change of circumstances that is within the
control of the Group. Variable lease payments that do not depend on an index or rate are recognised in profit or loss in the period in which
the event or condition that triggers those payments occurs.
The lease liability is subsequently measured at amortised cost using the effective interest method. It is re-measured when there is a change
in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be
payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, lease-term
extension or termination option. Cash flows reflecting payment of capital and interest on leases are shown in cash flows from financing
activities.
When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset
or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group recognises the lease payments associated with short-term leases (leases expiring within twelve months from commencement)
and leases of low value assets (underlying asset value less than £5,000) on a straight-line basis over the lease term.
The Group holds interests in a number of joint operations within its exploration and production business. The Group has applied judgement
in identifying the customer where a lease arrangement is to be used by a jointly controlled operation.
If the leased asset is dedicated to a specific joint operation and its usage is dictated by the joint operating agreement, the joint operation
is deemed the customer. In such instances:
• When the Group signs a lease agreement on behalf of a joint operation and has primary responsibility for payments to the lessor, the
Group recognises 100% of the lease liability and a right-of-use asset on its balance sheet. When the partner is obliged to reimburse the
Group for its share of lease payments, a sub-lease receivable is recognised and an equal adjustment to the right-of-use asset is made; and
• When the partner has the primary responsibility for payments to the lessor and the Group is obliged to reimburse its share of the
lease payments, a lease liability due to the partner and equal right-of-use asset are recognised.
If the leased asset is not dedicated to a specific joint operation or its usage is not dictated by the joint operating agreement of a joint
operation to which it is dedicated, the signatory to the lease agreement is deemed the customer. If this is the Group, the lease liability and
right-of-use asset are recognised in full. If it is the partner, no lease liability or right-of-use asset is recognised.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
Inventories
Inventories of finished goods are valued at the lower of cost (using weighted-average cost) or estimated net realisable value after allowance
for redundant and slow-moving items. The cost of inventories includes the purchase price plus costs of conversion incurred in bringing the
inventories to their present location and condition.
Inventory of gas in storage held for the purpose of the Group’s own use is measured on a weighted-average cost basis, whilst gas used for
trading purposes is measured at fair value less any costs to sell. Changes in fair value less costs to sell are recognised in the Group Income
Statement.
Government grants
Government grants are transfers of resources to the Group in return for past or future compliance with certain conditions relating to the
operating activities of the entity. Government assistance is designed to provide an economic benefit that is specific to an entity qualifying
under certain criteria. The Group recognises government grants only when there is reasonable assurance that the Group will comply with
the conditions attached to them and the grant will be received. Government grants are recognised in profit and loss on a systematic basis
over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.
Government grants related to assets are deducted from the carrying amount of the asset.
Decommissioning costs
A provision is made for the net present value of the estimated cost of decommissioning gas production facilities at the end of the producing
lives of fields and power stations at the end of their useful lives, based on price levels and technology at the balance sheet date.
When this provision relates to an asset with sufficient future economic benefits, a decommissioning asset is recognised and included as part
of the associated PP&E and depreciated accordingly. The asset is subject to impairment review as detailed above. Changes in estimates
and discount rates are dealt with prospectively and reflected as an adjustment to the provision and corresponding decommissioning asset
included within PP&E. The discount rate used to calculate the provision is 2% as discussed in note 3. The unwinding of the discount on the
provision is included in the Group Income Statement within financing costs.
Pensions and other post-employment benefits
The Group operates a number of defined benefit and defined contribution pension schemes. The cost of providing benefits under the
defined benefit schemes is determined separately for each scheme using the projected unit credit actuarial valuation method. Actuarial
gains and losses are recognised in the period in which they occur in other comprehensive income.
The cost of providing retirement pensions and other benefits is charged to the Group Income Statement over the periods benefitting from
employees’ service. Past service cost is recognised immediately. Costs of administering the schemes are charged to the Group Income
Statement. Net interest, being the change in the net defined benefit liability or asset due to the passage of time, is recognised in the Group
Income Statement within net finance cost.
The net defined benefit liability or asset recognised in the Group Balance Sheet represents the present value of the defined benefit
obligation of the schemes and the fair value of the schemes’ assets. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in
which the benefits are paid, and that have terms of maturity approximating to the terms of the related pension liability.
Payments to defined contribution retirement benefit schemes are recognised in the Group Income Statement as they fall due.
In 2022 the Group provided a loan facility to the Group’s three defined benefit pension schemes. The Group recognised the loan as a
financial asset under IFRS 9 ‘Financial instruments’ measured at amortised cost and classified as a receivable within Securities on the
Group’s balance sheet. The loan liability was deducted from plan assets on the basis that the loan did not relate to employee benefits in
accordance with IAS 19 and was fully repaid during 2024.
Centrica plc Annual Report and Accounts 2024
239
S2. Summary of material accounting policies
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, that can be measured
reliably, and it is probable that the Group will be required to settle that obligation. Provisions are discounted to present value where the
effect is material.
Where discounting is used, the increase in the provision due to the passage of time is recognised in the Group Income Statement within
interest expense. Onerous contract provisions are recognised where the unavoidable costs of meeting the obligations under a contract
exceed the economic benefits expected to be received under it. Contracts to purchase or sell energy are reviewed on a portfolio basis
given the fungible nature of energy, whereby it is assumed that the highest priced purchase contract supplies the highest priced sales
contract and the lowest priced sales contract is supplied by the lowest priced purchase contract.
Taxation
Current tax, including UK corporation tax, UK petroleum revenue tax and foreign tax is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. From time to time, the
Group may have open tax issues with a number of revenue authorities. Where an outflow of funds is believed to be probable and a reliable
estimate of the dispute can be made, management provides for its best estimate of the liability. These estimates take into account the
specific circumstances of each dispute and relevant external advice as well as the rules and regulations of the relevant tax authority in the
jurisdiction of the dispute. Often the Group is unable to predict whether an uncertain tax treatment will be accepted by the relevant
authority. In such instances the effects of uncertainty are reflected in management’s assessment of the most likely outcome of each issue,
as reviewed and updated on a regular basis. Each item is considered separately and on a basis that provides the better prediction of the
outcome, unless the Group determines that it is appropriate to group certain items for consideration. See note 9 for further details on
uncertain tax provisions.
Deferred tax is recognised in respect of all temporary differences identified at the balance sheet date, except to the extent that the
deferred tax arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction which is not a
business combination and at the time of the transaction affects neither accounting profit nor taxable profit and loss. Temporary differences
are differences between the carrying amount of the Group’s assets and liabilities and their tax base.
Deferred tax liabilities may be offset against deferred tax assets within the same taxable entity or qualifying local tax group. Any remaining
deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable
taxable profits, within the same jurisdiction, in the foreseeable future, against which the deductible temporary difference can be utilised.
Deferred tax is provided on temporary differences arising on subsidiaries, joint ventures and associates, except where the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the asset is realised or liability settled,
based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Measurement of deferred tax
liabilities and assets reflects the tax consequences expected from the manner in which the asset or liability is recovered or settled.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
Financial instruments
Financial assets and financial liabilities are recognised in the Group Balance Sheet when the Group becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised when the Group no longer has the rights to cash flows, the risks and rewards
of ownership or control of the asset. Financial liabilities are derecognised when the obligation under the liability is discharged, cancelled or
expires.
(a) Trade receivables
Trade receivables are initially recognised at a value based on their transaction price, and are subsequently held at amortised cost using the
effective interest method (taking into account the Group’s business model, which is to collect the contractual cash flows owing) less an
allowance for impairment losses. Balances are written off when recoverability is assessed as being remote. If collection is expected in one
year or less, receivables are classified as current assets. If not, they are presented as non-current assets.
(b) Trade payables
Trade payables are initially recognised at fair value, which is usually the original invoice amount and are subsequently held at amortised cost
using the effective interest method. If payment is due within one year or less, payables are classified as current liabilities. If not, they are
presented as non-current liabilities.
(c) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction
from the proceeds received. Own equity instruments that are reacquired (treasury or own shares) are deducted from equity. No gain or loss
is recognised in the Group Income Statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
(d) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions and money market deposits,
which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and have an original
maturity of three months or less. Money market funds are also included in cash and cash equivalents, and are required to be measured at fair
value through profit or loss under IFRS 9, as noted in section (g) below. Cash and cash equivalents are presented net of outstanding bank
overdrafts where there is a legal right of set off and, for the Group’s cash pooling arrangements, to the extent the Group expects to settle its
subsidiaries’ year-end account balances on a net basis.
For the purpose of the Group Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net
of outstanding bank overdrafts.
(e) Interest-bearing loans and other borrowings
All interest-bearing loans and other borrowings with banks and similar institutions are initially recognised at fair value net of directly
attributable transaction costs. After initial recognition, interest-bearing loans and other borrowings are subsequently measured at
amortised cost using the effective interest method, except when they are hedged items in an effective fair value hedge relationship where
the carrying value is also adjusted to reflect the fair value movements associated with the hedged risks. Such fair value movements are
recognised in the Group Income Statement. Amortised cost is calculated by taking into account any issue costs, discount or premium.
(f) Financial instruments at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income are equity instruments that the Group has elected to recognise the
changes in fair value of in other comprehensive income. They are recognised initially at fair value in the Group Balance Sheet and are re-
measured subsequently at fair value with gains and losses arising from changes in fair value recognised directly in equity and presented in
other comprehensive income. Dividends arising on these financial assets are recognised in the Group Income Statement.
Cumulative gains and losses on equity instruments at fair value through other comprehensive income are not recycled to the Group
Income Statement.
(g) Financial assets at fair value through profit or loss
Money market funds (which are classified as cash equivalents) are required to be measured at fair value through profit or loss under IFRS 9,
as the assets are not held solely for the purpose of collecting contractual cash flows related to principal and interest. Both mandatory and
designated instruments are measured at fair value on initial recognition and are re-measured to fair value in each subsequent reporting
period. Gains and losses arising from changes in fair value are recognised in the Group Income Statement within investment income.
(h) Securities
The Group holds debt and equity securities predominantly in respect of the Centrica Unapproved Pension Scheme (see note 22). Debt
securities are required to be measured at fair value through profit or loss under IFRS 9, as the contractual terms of these assets do not give
rise to cash flows that are solely payments of principal and interest on the principal amounts outstanding. The changes in fair value are
recognised in finance costs. The Group has elected to recognise the changes in fair value of the equity securities in other comprehensive
income.
The Group classified the loan facility provided to the Group’s defined benefit pension schemes within Securities. It was recognised as a
financial asset under IFRS 9 ‘Financial instruments’ and measured at amortised cost. Correspondingly, the loan liability was deducted from
plan assets on the basis the loan did not relate to employee benefits (scheme liabilities) in accordance with IAS 19 and was fully repaid during
2024.
Securities also includes a loan made to a minority shareholder which is similarly recognised as a financial asset under IFRS 9 and measured at
amortised cost.
Centrica plc Annual Report and Accounts 2024
241
S2. Summary of material accounting policies
(i) Other investments
Other investments includes convertible loan notes which are measured at fair value through profit or loss under IFRS 9, as these assets do
not meet the contractual cash flows characteristic test; namely, contractual cash flows are not solely payments of principal and interest on
principal outstanding. Gains or losses arising from changes in fair value are recognised in operating expenses. Financial assets held solely for
the purpose of collecting contractual cash flows related to principal and interest are initially recognised at fair value and then subsequently
measured at amortised cost.
Other investments also include equity investments which the Group accounts for under IFRS 9, because it does not have the ability to
control, or significantly influence the investment. According to the requirements of IFRS 9, the Group may either measure these
investments at fair value with value changes recognised in profit or loss, or it may elect to recognise those value changes in other
comprehensive income. For the majority of the Group’s other investments, fair value movements are recognised in other comprehensive
income; this election is made separately for each investment made.
(j) Derivative financial instruments
The Group routinely enters into sale and purchase transactions for physical delivery of gas and power. A portion of these transactions
take the form of contracts that were entered into and continue to be held for the purpose of receipt or delivery of the physical commodity
in accordance with the Group’s expected sale, purchase or usage requirements (‘own use’), and are not within the scope of IFRS 9. The
assessment of whether a contract is deemed to be ‘own use’ is conducted on a Group basis without reference to underlying book
structures, business units or legal entities.
Certain purchase and sales contracts for the physical delivery of gas and power are within the scope of IFRS 9 due to the fact that they net
settle or contain written options. Such contracts are accounted for as derivatives under IFRS 9 and are recognised in the Group Balance
Sheet at fair value. Gains and losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken
directly to the Group Income Statement for the year.
The Group uses a range of derivatives for both trading and to hedge exposures to financial risks, such as interest rates, foreign exchange
and energy price risks, arising in the normal course of business. Where considered appropriate, the Group may use weather derivatives to
protect against earnings volatility arising from unseasonal weather variations. The use of such derivatives did not have a material financial
statement impact in 2024 or 2023. The use of derivative financial instruments is governed by the Group’s policies which are approved by
the Board of Directors. Further detail on the Group’s risk management policies is included within the Strategic Report – Principal Risks and
Uncertainties on pages 40 to 51 and in note S3.
The accounting treatment of derivatives is dependent on whether they are entered into for trading or hedging purposes. A derivative
instrument is considered to be used for hedging purposes when it alters the risk profile of an underlying exposure of the Group in line with
the Group’s risk management policies and is in accordance with established guidelines. Certain derivative instruments used for hedging
purposes are designated in hedge accounting relationships as described by IAS 39 (the Group has not applied the hedge accounting
requirements of IFRS 9). In order to qualify for hedge accounting, the effectiveness of the hedge must be reliably measurable and
documentation describing the formal hedging relationship must be prepared at the point of designation. The hedge must be highly effective
in achieving its objective. The Group also holds derivatives that are used for hedging purposes which are not designated in hedge
accounting relationships and are held for trading.
All derivatives are recognised at fair value on the date on which the derivative is entered into and are re-measured to fair value at each
reporting date. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative
assets and derivative liabilities are offset and presented on a net basis only when there is a currently enforceable legal right of set-off, and
the intention to net settle the derivative contracts is present. The disclosure of current and non-current derivative assets and liabilities is
determined by the settlement date of the derivative.
The Group enters into certain energy derivative contracts covering periods for which observable market data does not exist. The fair value
of such derivatives is estimated by reference in part to published price quotations from active markets, to the extent that such observable
market data exists, and in part by using valuation techniques, the inputs to which include data that is not based on or derived from
observable markets. Where the fair value at initial recognition for such contracts differs from the transaction price, a fair value gain or fair
value loss will arise. This is referred to as a day-one gain or day-one loss. Such gains and losses are deferred (not recognised) and amortised
to the Group Income Statement based on volumes purchased or delivered over the contractual period until such time as observable market
data becomes available. When observable market data becomes available, any remaining deferred day-one gains or losses are recognised
within the Group Income Statement.
Recognition of the gains or losses resulting from changes in fair value depends on the purpose for issuing or holding the derivative. For
derivatives that do not qualify for cash flow or net investment hedge accounting, any gains or losses arising from changes in fair value are
taken directly to the Group Income Statement and are included within gross profit or investment income and financing costs. Where
derivatives qualify for cash flow or net investment hedging, changes in fair value arising from the effective element of the hedge are
recognised initially in the Group Statement of Comprehensive Income and are recycled to the Group Income Statement when the hedged
item impacts profit or loss. Further details on the treatment of energy derivatives in the Group Income Statement is provided in note 2.
Further detail on the treatment of derivatives in hedging relationships is provided in note S5.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of the host contracts and the host contracts are not carried at fair value, with gains or losses
reported in the Group Income Statement. The closely related nature of embedded derivatives is reassessed when there is a change in the
terms of the contract that significantly modifies the future cash flows under the contract. Where a contract contains one or more
embedded derivatives, and providing that the embedded derivative significantly modifies the cash flows under the contract, the option to
fair value the entire contract may be taken and the contract will be recognised at fair value with changes in fair value recognised in the Group
Income Statement. Gains and losses arising from changes in the fair value of energy derivative contracts are recognised within
‘Re-measurement and settlement of energy contracts’ in the Group’s Results for the period under IFRS.
Strategic Report Governance Financial Statements Other Information
S2. Summary of material accounting policies
(k) Hedge accounting
The Group continues to apply the hedge accounting requirements of IAS 39 and has not adopted IFRS 9 hedge accounting.
For the purposes of hedge accounting, hedges are classified as either fair value hedges or cash flow hedges. Note S5 details the Group’s
accounting policies in relation to derivatives qualifying for hedge accounting under IAS 39.
(l) Financial guarantees
Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because a
specified debtor fails to make payment when due in accordance with the terms of a debt instrument. The Group accounts for financial
guarantee contracts under IFRS 9.
(m) Impairment of financial assets
In accordance with IFRS 9, the Group has applied the expected credit loss model to financial assets measured at amortised cost and to
investments in debt instruments measured at fair value through other comprehensive income.
For trade receivables and contract assets the simplified approach is taken and the lifetime expected credit loss provided for.
For all other in-scope financial assets at the balance sheet date either the lifetime expected credit loss or a 12-month expected credit loss is
provided for, depending on the Group’s assessment of whether the credit risk associated with the specific asset has increased significantly
since initial recognition. As the Group’s financial assets are predominantly short-term (less than twelve months), the impairment loss
recognised is not materially different using either approach. Further details of the assumptions and inputs used to calculate expected credit
losses are shown in note 17.
Nuclear activity
The Group’s investment in Lake Acquisitions Limited (‘Nuclear’) is accounted for as an associate. The following accounting policies are
specific to this nuclear activity.
(a) Fuel costs – nuclear front end
Front-end fuel costs consist of the costs of procurement of uranium, conversion and enrichment services, and fuel element fabrication.
All costs are capitalised into inventory and charged to the Group Income Statement in proportion to the amount of fuel burnt.
(b) Fuel costs – nuclear back end
Advanced gas-cooled reactors (AGR)
Spent fuel extracted from the reactors is sent for reprocessing and/or long-term storage and eventual disposal of resulting waste products.
Back-end fuel costs comprise of a loading-related cost per tonne of uranium and a rebate/surcharge to this cost which is dependent on the
out-turn market electricity price and the amount of electricity generated from AGR stations in the year. These costs are capitalised into
inventory and charged to the Group Income Statement in proportion to the amount of fuel burnt.
Pressurised water reactor (PWR)
Back-end fuel costs are based on wet storage in station ponds followed by dry storage and subsequent direct disposal of fuel. Back-end
fuel costs are capitalised into inventory on loading and are charged to the Group Income Statement in proportion to the amount of fuel
burnt.
(c) Nuclear PP&E – depreciation
The majority of the cost of the nuclear fleet is depreciated from the date of the Group acquiring its share of the fleet on a straight-line basis,
with remaining depreciable periods currently of up to 31 years.
Other expenditure including amounts spent on major inspections and overhauls of production plant is depreciated over the period until the
next outage which for AGR power stations is 2 to 3 years and for the PWR power station is 18 months.
(d) Nuclear Liabilities Fund (NLF) funding arrangements
Under the arrangements in place with the Secretary of State, the NLF will fund, subject to certain exceptions, qualifying uncontracted
nuclear liabilities and qualifying decommissioning costs.
In part consideration for the assumption of these liabilities by the Secretary of State and the NLF, the former British Energy Group agreed to
pay fixed decommissioning contributions each year and £150,000 (indexed to RPI) for every tonne of uranium in PWR fuel loaded into the
Sizewell B reactor after the date of these arrangements.
(e) NLF and nuclear liabilities receivables
The UK Government indemnity is provided to indemnify any future shortfall on NLF funding of qualifying uncontracted nuclear liabilities
(including PWR back-end fuel services) and qualifying nuclear decommissioning costs such that the receivable equals the present value of
the associated qualifying nuclear liabilities (apart from a small timing difference due to timing of receipts from NLF).
(f) Nuclear liabilities
Nuclear liabilities represent provision for liabilities in respect of the costs of waste management of spent fuel and nuclear decommissioning.
(g) Unburnt fuels at shutdown
Due to the nature of the nuclear fuel process there will be quantities of unburnt fuel in the reactors at station closure. The costs relating to
this unburnt fuel (final core) are fully provided for at the balance sheet date. The provision is based on a projected value per tonne of fuel
remaining at closure, discounted back to the balance sheet date and recorded as a long-term liability.
Centrica plc Annual Report and Accounts 2024
243
S3. Financial risk management
The Group’s normal operating, investing and financing activities expose it to a variety of financial risks: market risk (including
commodity price risk, currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall financial risk
management processes are designed to identify, manage and mitigate these risks.
Further detail on the Group’s overall risk management processes is included within the Strategic Report – Principal Risks and Uncertainties
on pages 40 to 51.
Commodity price risk management is carried out in accordance with individual business unit policies and directives including appropriate
escalation routes.
Treasury risk management, including management of currency risk, interest rate risk and liquidity risk is carried out by a central Group
Treasury function in accordance with the Group’s financing and treasury policy, as approved by the Board.
The wholesale credit risks associated with commodity trading and treasury positions are managed in accordance with the Group’s credit
risk policy. Downstream customer credit risk management is carried out in accordance with appropriate Group-wide and individual
business unit credit policies.
Market risk management
Market risk is the risk of loss that results from changes in market prices (commodity prices, foreign exchange rates and interest rates). The
level of market risk to which the Group is exposed at a point in time varies depending on market conditions, expectations of future price or
market rate movements and the composition of the Group’s physical asset and contract portfolios.
(a) Commodity price risk management
The Group is exposed to commodity price risk in its energy procurement and supply activities, production, generation and trading
operations and uses specific limits to manage the exposure to commodity prices associated with the Group’s activities to an acceptable
level. The Group has a risk capital limit approved by the Board to manage the commodity price risk that the Group is exposed to. These are
complemented by other limits including Value at Risk (VaR), volumetric or stop-loss limits to control risk around trading activities.
(i) Energy price exposed business activities
The Group’s price exposed business activities consist of equity gas and liquids production, equity power generation, bilateral procurement
and sales contracts, market-traded purchase and sales contracts and derivative positions primarily transacted with the intent of securing
gas and power for the Group’s supply customers, from a variety of sources at an optimal cost. The Group actively manages commodity
price risk by optimising its asset and contract portfolios and making use of volume flexibility.
The Group’s commodity price risk exposure within its business activities is driven by the cost of procuring gas and electricity to serve its
supply customers and selling gas and electricity from its upstream production and generation, which varies with wholesale commodity
prices. The primary risk is that market prices for commodities will fluctuate between the time that sales prices are fixed or tariffs are set and
the time at which the corresponding procurement cost is fixed, thereby potentially reducing expected margins or making sales
unprofitable.
The Group’s supply activities are also exposed to volumetric risk in the form of an uncertain consumption profile arising from a range of
factors, including the weather, energy consumption changes, customer attrition and the economic climate. There is also risk associated
with ensuring that there is sufficient commodity available to secure supply to customers. The Group’s production and generation activities
are also exposed to volumetric risk in the form of uncertain production profiles.
In order to manage the exposure to market prices associated with the Group’s business operations the Group is delegated a risk capital
limit, established by the Board and sub-delegated to the commercial leaders.
Risk capital is used to bring together the different individual market and credit risks from across the business in order to understand the
diversified risk that the Group is exposed to. This is complemented by the PaR, VaR and credit limits that are then sub-delegated to the
business to operate efficiently. PaR measures the estimated potential loss in a position or portfolio of positions associated with the
movement of a commodity price for a given confidence level, over the remaining term of the position or contract. VaR measures the
estimated potential loss for a given confidence level over a predetermined holding period. The standard confidence level used is 95%. In
addition, regular stress and scenario tests are performed to evaluate the impact on the portfolio of possible substantial movements in
commodity prices.
The Group measures and manages the commodity price risk associated with the Group’s entire energy price exposed business portfolio.
Only certain of the Group’s energy contracts constitute financial instruments under IFRS 9 (see note S6).
As a result, while the Group manages the commodity price risk associated with both financial and non-financial energy procurement and
sales contracts, it is the notional value of energy contracts being carried at fair value that represents the exposure of the Group’s energy
price exposed business activities to commodity price risk according to IFRS 7 ‘Financial Instruments: Disclosures’. This is because energy
contracts that are financial instruments under IFRS 9 are accounted for on a fair value basis and changes in fair value immediately impact
profit. Conversely, energy contracts that are not financial instruments under IFRS 9 are accounted for as executory contracts and changes
in fair value do not immediately impact profit and, as such, are not exposed to commodity price risk as defined by IFRS 7. So, whilst VaR
associated with energy procurement and supply contracts that are outside the scope of IFRS 9 are monitored for internal risk management
purposes, only those energy contracts within the scope of IFRS 9 are within the scope of the IFRS 7 disclosure requirements.
Strategic Report Governance Financial Statements Other Information
S3. Financial risk management
(ii) Proprietary energy trading
The Group’s proprietary energy trading activities consist of physical and financial commodity purchases and sales contracts taken on with
the intent of benefitting from changes in market prices or differences between buying and selling prices. The Group conducts its trading
activities in the over-the-counter market and through exchanges in the UK and continental Europe. The Group is exposed to commodity
price risk as a result of its proprietary energy trading activities because the value of its trading assets and liabilities will fluctuate with
changes in market prices for commodities.
The Group sets volumetric and VaR limits to manage the commodity price risk exposure associated with the Group’s proprietary energy
trading activities. VaR measures the estimated potential loss at a 95% confidence level over a one-day holding period. The carrying value of
energy contracts used in proprietary energy trading activities at 31 December 2024 is disclosed in note 19.
As with any modelled risk measure, there are certain limitations that arise from the assumptions used in the VaR calculation. VaR assumes
that historical price behaviours will continue in the future and that the Group’s trading positions can be unwound or hedged within the
predetermined holding period. Furthermore, the use of a 95% confidence level, by definition, does not take into account changes in value
that might occur beyond this confidence level.
(b) Currency risk management
The Group is exposed to currency risk on foreign currency denominated forecast transactions, firm commitments, monetary assets and
liabilities (transactional exposure) and on its net investments in foreign operations (translational exposure). IFRS 7 only requires disclosure of
currency risk arising on financial instruments denominated in a currency other than the functional currency of the commercial operation
transacting. As a result, for the purposes of IFRS 7, currency risk excludes items that are not financial instruments, such as the Group’s net
investments in international operations as well as foreign currency denominated forecast transactions and firm commitments.
(i) Transactional currency risk
The Group is exposed to transactional currency risk on transactions denominated in currencies other than the underlying functional
currency of the commercial operation transacting. The primary functional currencies remain pounds sterling in the UK, Danish krone in
Denmark, euros in the Netherlands and the Republic of Ireland and US dollars in the Group’s LNG business. The risk is that the functional
currency value of cash flows will vary as a result of movements in exchange rates. Transactional exposure arises from the Group’s energy
procurement, production and generation activities, where many transactions are denominated in foreign currencies. In addition, in order to
optimise the cost of funding, the Group has, in certain cases, issued foreign currency denominated debt or entered into foreign currency
loans, primarily in US dollars, euros and Japanese yen.
It is the Group’s policy to hedge material transactional exposures using derivatives (either applying formal hedge accounting or economic
hedge relationships) to fix the functional currency value of non-functional currency cash flows, except where there is an economic hedge
inherent in the transaction. At 31 December 2024, there were no material unhedged non-functional currency monetary assets or liabilities,
firm commitments or probable forecast transactions (2023: £nil), other than transactions which have an inherent economic hedge and
foreign currency borrowings used to hedge translational exposures.
(ii) Translational currency risk
The Group is exposed to translational currency risk as a result of its net investments in Europe. The risk is that the pounds sterling value of
the net assets of foreign operations will decrease with changes in foreign exchange rates. The Group’s policy is to protect the pounds
sterling book value of its net investments in foreign operations where appropriate, subject to certain parameters, by holding foreign
currency debt, entering into foreign currency derivatives, or a mixture of both.
The Group manages translational currency risk taking into consideration the cash impact of any hedging activity as well as the risk to the net
asset carrying values in the Group’s Financial Statements. The translation hedging programme including the potential cash impact is
managed by the Group Treasury function and monitored by the Chief Financial Officer.
(c) Interest rate risk management
In the normal course of business the Group borrows to finance its operations. The Group is exposed to interest rate risk because the fair
value of fixed-rate borrowings and the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates. The
Group’s policy is to manage the interest rate risk on long-term borrowings by ensuring the exposure to floating interest rates remains within
a 30% to 70% range, including the impact of interest rate derivatives.
The return generated on the Group’s cash balance is also exposed to movements in short-term interest rates. The Group manages cash
balances to protect against adverse changes in rates whilst retaining liquidity.
Centrica plc Annual Report and Accounts 2024
245
S3. Financial risk management
(d) Sensitivity analysis
IFRS 7 requires disclosure of a sensitivity analysis that is intended to illustrate the sensitivity of the Group’s financial position and
performance to changes in market variables (commodity prices, foreign exchange rates and interest rates) as a result of changes in the fair
value or cash flows associated with the Group’s financial instruments. The sensitivity analysis provided discloses the effect on profit or loss
and equity at 31 December 2024, assuming that a reasonably possible change in the relevant risk variable had occurred at 31 December
2024, and has been applied to the risk exposures in existence at that date to show the effects of reasonably possible changes in price on
profit or loss and equity. Reasonably possible changes in market variables used in the sensitivity analysis are based on implied volatilities,
where available, or historical data for energy prices and foreign exchange rates. Reasonably possible changes in interest rates are based on
management judgement and historical experience.
The sensitivity analysis has been prepared based on 31 December 2024 balances and on the basis that the balances, the ratio of fixed to
floating rates of debt and derivatives, the proportion of energy contracts that are financial instruments, the proportion of financial
instruments in foreign currencies and the hedge designations in place at 31 December 2024 are all constant. Excluded from this analysis are
all non-financial assets and liabilities and energy contracts that are not financial instruments under IFRS 9. The sensitivity to foreign exchange
rates relates only to monetary assets and liabilities denominated in a currency other than the functional currency of the commercial
operation transacting, and excludes the translation of the net assets of foreign operations to pounds sterling.
The sensitivity analysis provided is hypothetical only and should be used with caution as the impacts provided are not necessarily indicative
of the actual impacts that would be experienced. This is because the Group’s actual exposure to market rates is changing constantly as the
Group’s portfolio of commodity, debt and foreign currency contracts changes. Changes in fair values or cash flows based on a variation in a
market variable cannot be extrapolated because the relationship between the change in market variable and the change in fair value or cash
flows may not be linear. In addition, the effect of a change in a particular market variable on fair values or cash flows is calculated without
considering interrelationships between the various market rates or mitigating actions that would be taken by the Group.
(i) Transactional currency risk
The Group has performed an analysis of the sensitivity of the Group’s financial position and performance to changes in foreign exchange
rates. The sensitivity analysis is performed upon the Group’s foreign currency denominated monetary assets and monetary liabilities. At the
reporting date, the exposure is driven primarily by the portfolio of foreign currency exchange derivatives held for trading under IFRS 9,
which are hedging material transactional exposures as explained above in S3(b)(i). The Group deems 10% movements to US dollar and euro
currency rates relative to pounds sterling to be reasonably possible.
The material impact of such movements on profit and equity, both after taxation, are as follows:
Incremental profit/(loss)
2024
Impact on
profit
£m
2023
Impact
on profit
£m
US dollar – increase/(decrease)
192/(212)
102/(54)
Euro – increase/(decrease)
(59)/59
(56)/128
All other currency sensitivities are not material.
(ii) Interest rate risk
The Group has performed an analysis of the sensitivity of the Group’s financial position and performance to changes in interest rates. The
Group deems a one percentage point move in UK, US and Euro interest rates to be reasonably possible. The impact of such movements on
profit and equity, both after taxation, is immaterial.
(iii) Commodity price risk
The Group has performed a sensitivity analysis of the Group’s commodity price risk. The financial assets and financial liabilities which are
exposed to this risk are energy derivatives which are either for procurement/optimisation or proprietary trading. As explained above in
S3(a)(i), the procurement/optimisation or 'non-proprietary' trades are hedging material commodity price exposures, whilst proprietary
energy trading is explained in S3(a)(ii).
2024
2023
Energy prices
Active market
base price (i)
Inactive
market base
price (ii)
Reasonably
possible
change in
variable (iii)
%
Active market
base price (i)
Inactive market
base price (ii)
Reasonably
possible
change in
variable (iii)
%
UK gas (p/therm)
98
85
+/-32
86
n/a
+/-54
European gas (€/MWh)
39
33
+/-32
33
26
+/-54
UK power (£/MWh)
80
74
+/-39
85
76
+/-13
UK emissions (€/tonne)
66
n/a
+/-7
80
n/a
+/-7
UK oil (US$/bbl)
71
n/a
+/-46
73
n/a
+/-10
North American gas (US cents/therm)
38
38
+/-42
34
37
+/-11
Japan Korea Marker (JKM) gas price (US$/MMBtu)
12
n/a
+/-26
12
n/a
+/-9
(i)
The active market base price represents the average forward market price over the duration of the active market curve used in the sensitivity analysis provided.
(ii) The inactive market base price represents the average forward market price over the duration of the inactive market curve used in the sensitivity analysis provided.
Inactive market base prices are not presented where there are no contracts in the illiquid period.
(iii) The reasonably possible change in variable is calculated using both the active and inactive market curves for energy prices.
Strategic Report Governance Financial Statements Other Information
S3. Financial risk management
The impacts of reasonably possible changes in commodity prices on profit applied to non-proprietary trades, both after taxation, based on
the assumptions set out above are as follows:
Incremental profit/(loss)
2024
Impact on
profit (i)
£m
2023
Impact on
profit (i)
£m
UK gas price – increase/(decrease)
258/(265)
218/(218)
UK power price – increase/(decrease)
406/(411)
84/(83)
European gas price – (decrease)/increase
(146)/144
(167)/167
Other UK energy prices (oil and emissions) – (decrease)/increase
(49)/49
(2)/2
UK and European energy prices (combined) – increase/(decrease)
469/(483)
133/(132)
North American gas price – increase/(decrease)
44/(52)
35/(35)
JKM gas price – (decrease)/increase
(2)/2
60/(60)
(i)
The impact on profit is calculated using both the active and inactive market curves for energy prices.
The impact on other comprehensive income of such price changes is immaterial.
(iv) Commodity price risk – proprietary trades
As at 31 December 2024 the VaR associated with proprietary trading was £6 million (2023: £4 million). This represents the statistical
downside risk associated with the proprietary trade and associated hedging positions. The changes in the year only relate to changes in
commodity prices. Intra-day trading positions are monitored using a live time risk management system. Proprietary trades are included in
revenue in the business performance column of the Group Income Statement.
The impacts of reasonably possible changes using probability-based high and low gas and power price curves applied to level 3 proprietary
trades are as follows:
Incremental profit/(loss)
2024
Impact on
profit (i)
£m
2023
Impact on
profit (i)
£m
Level 3 proprietary trades – increase/(decrease) (ii)
72/(62)
24/(24)
(i)
The reasonably possible change in variable and the impact on profit are calculated using both the active and inactive market curves for energy prices, see note 7(c) for
detail on market curves.
(ii) The level 3 proprietary financial instruments’ sensitivity has been valued using one of the Group’s valuation models, and excludes associated hedges which would
mitigate this impact.
(v) Commodity price risk – other non-proprietary level 3 trades
Unrealised non-proprietary level 3 trades are reported within certain re-measurements and are subsequently reflected in business
performance when realised, which is generally when the underlying transaction or asset impacts profit or loss. These derivatives are in
respect of underlying contracts to purchase large volumes of commodity and are highly sensitive to changes in commodity prices. The
impacts of reasonably possible changes using probability-based high and low gas and power price curves applied to other level 3 non-
proprietary trades (including the newly signed Coterra contracts) are as follows:
Incremental profit/(loss)
2024
Impact on
profit (i)
£m
2023
Impact on
profit (i)
£m
Level 3 non-proprietary trades – increase/(decrease) (ii)
(182)/152
37/(37)
(i)
The reasonably possible change in variable and the impact on profit are calculated using both the active and inactive market curves for energy prices.
(ii) The level 3 non-proprietary financial instruments’ sensitivity has been valued using one of the Group’s valuation models, and excludes associated hedges or the
underlying hedged transaction/asset which would offset this impact.
Centrica plc Annual Report and Accounts 2024
247
S3. Financial risk management
Credit risk management
Credit risk is the risk of loss associated with a counterparty’s inability or failure to discharge its obligations under a contract.
The Group continually reviews its rating thresholds for relevant counterparty credit limits and updates these as necessary, based on a
consistent set of principles. It continues to operate within its limits. In respect of trading activities for both the US and Europe, there is an
effort to maintain a balance between exchange-based trading and bilateral transactions. This allows for a reasonable balance between
counterparty credit risk and potential liquidity requirements. In addition, the Group actively manages the trade-off between credit and
liquidity risks by optimising the use of contracts with collateral obligations and physically settled contracts without collateral obligations.
The Group is exposed to credit risk in its treasury, trading, energy procurement and downstream activities. The maximum exposure to
credit risk for financial instruments at fair value is equal to their carrying value. Gross amounts are shown by counterparty credit rating in the
table below. Further details of other collateral and credit security not offset against these amounts is shown in note S6.
2024
Financial assets at
amortised cost
Financial assets at fair value
31 December
Receivables
including
treasury, trading
and energy
procurement
counterparties (i)
£m
Securities (ii)
£m
Other
investments
£m
Cash and cash
equivalents
£m
Cash and cash
equivalents
£m
Derivative
financial
instruments with
positive
fair values
£m
Securities
£m
Other
investments
£m
AAA to AA
—
—
—
—
5,002
—
108
—
AA- to A-
734
—
—
1,276
7
436
—
—
BBB+ to BBB-
819
—
—
9
—
580
—
—
BB+ to BB-
228
—
—
37
—
439
—
—
B+ or lower
83
—
—
1
—
65
—
—
Unrated (iii)
4,605
31
3
6
—
56
—
84
6,469
31
3
1,329
5,009
1,576
108
84
2023
Financial assets at
amortised cost
Financial assets at fair value
31 December
Receivables
including
treasury,
trading and
energy
procurement
counterparties (i)
£m
Securities (ii)
£m
Cash and cash
equivalents
£m
Cash and cash
equivalents
£m
Derivative
financial
instruments
with positive
fair values
£m
Securities
£m
Other
investments
£m
AAA to AA
65
—
—
4,859
—
104
—
AA- to A-
605
—
1,459
—
819
—
—
BBB+ to BBB-
1,054
—
41
—
1,646
—
—
BB+ to BB-
164
—
5
—
438
—
—
B+ or lower
58
—
8
—
45
—
—
Unrated (iii)
4,553
417
71
—
324
—
61
6,499
417
1,584
4,859
3,272
104
61
(i)
The Group holds a provision of £1,532 million (2023: £1,309 million) against receivables. The significant majority of this provision is held against amounts due from unrated
counterparties. Further analysis of past due trade receivables may be found at note 17.
(ii) Securities held at amortised cost consist of loans to the pension schemes of £nil (2023: £405 million) and other loans receivable of £31 million (2023: £12 million) – see
note 25.
(iii) The unrated counterparty receivables primarily comprise amounts due from downstream customers, subsidiaries of rated entities, exchanges or clearing houses.
Strategic Report Governance Financial Statements Other Information
S3. Financial risk management
Details of how credit risk is managed across the asset categories are provided below:
(a) Treasury, trading and energy procurement activities
Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating, and are subject to
approved limits. The Group uses master netting agreements to reduce credit risk and net settles payments with counterparties where net
settlement provisions exist (see note S6 for details of amounts offset). In addition, the Group employs a variety of other methods to
mitigate credit risk: margining, various forms of bank and parent company guarantees and letters of credit.
The vast majority of Group credit risk associated with its treasury, trading and energy procurement activities is with counterparties in
related energy industries or financial institutions together with smaller exposures to commodity traders and small independent renewable
producers. The impairment considerations of IFRS 9 are applicable to financial assets arising from treasury, trading and energy procurement
activities that are carried at amortised cost and debt instruments that are carried at fair value through other comprehensive income
(FVOCI). Debt instruments measured at FVOCI are not material for further disclosure.
Included in the table above within receivables including treasury, trading and energy procurement counterparties is £2,005 million (2023:
£2,157 million) of treasury, trading and energy procurement assets. The Group’s risk assessment procedures and counterparty selection
process ensure that the credit risk on this type of financial asset is always low at initial recognition.
Included within the table above is information about the exposure to credit risk arising from only certain of the Group’s energy procurement
contracts – those in the scope of IFRS 9. Whilst the Group manages the credit risk associated with both financial and non-financial energy
procurement contracts, it is the carrying value of financial assets within the scope of IFRS 9 that represents the maximum exposure
to credit risk in accordance with IFRS 7.
(b) Trade receivables and contract assets
The simplified approach of measuring lifetime expected credit losses has been applied to trade receivables and contract asset balances,
which are the focus of this disclosure. Therefore, consideration of the significance of any change in credit risk since initial recognition for the
purpose of applying this model is not required for any material component of the receivables balance.
In the case of business customers, credit risk is managed by checking a company’s creditworthiness and financial strength both before
commencing trade and during the business relationship. For residential customers, creditworthiness is ascertained normally before
commencing trade to determine the payment mechanism required to reduce credit risk to an acceptable level. Certain customers will only
be accepted on a prepayment basis or with a security deposit. In some cases, an ageing of receivables is monitored and used to manage the
exposure to credit risk associated with both business and residential customers. In other cases, credit risk is monitored and managed by
grouping customers according to method of payment or profile.
Liquidity risk management and going concern
Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due. The Group experiences significant
movements in its liquidity position due primarily to the seasonal nature of its business and margin cash arrangements associated with certain
wholesale commodity contracts. To mitigate this risk the Group maintains significant committed facilities and holds cash on deposit to
ensure that there is sufficient liquidity headroom at all points in the seasonal trading cycle of the business. See note 25 for further
information.
Centrica plc Annual Report and Accounts 2024
249
S3. Financial risk management
Maturity profiles
Maturities of derivative financial instruments, provisions, borrowings and leases are provided in the following tables (all amounts are
remaining contractual undiscounted cash flows):
Due for payment 2024
<1
year
£m
1 to 2
years
£m
2 to 3
years
£m
3 to 4
years
£m
4 to 5
years
£m
>5
years
£m
Total
£m
Energy and interest derivatives in a loss position
that will be settled on a net basis (i)
(126)
(31)
(20)
(17)
(17)
(30)
(241)
Gross energy procurement contracts and other
derivative buy trades carried at fair value
(3,169)
(168)
(74)
(29)
(101)
(1,487)
(5,028)
Foreign exchange derivatives that will be settled
on a gross basis:
Outflow
(4,992)
(1,234)
(701)
—
—
—
(6,927)
Inflow
5,007
1,256
730
—
—
—
6,993
Trade and other payables
(5,466)
(142)
(25)
(6)
—
—
(5,639)
Borrowings (bank loans, bonds, overdrafts and
interest)
(878)
(184)
(183)
(126)
(678)
(2,654)
(4,703)
(9,624)
(503)
(273)
(178)
(796)
(4,171)
(15,545)
Leases: (ii)
Minimum lease payments
(106)
(89)
(55)
(29)
(25)
(90)
(394)
Capital elements of leases
(104)
(78)
(48)
(24)
(21)
(70)
(345)
Due for payment 2023
<1
year
£m
1 to 2
years
£m
2 to 3
years
£m
3 to 4
years
£m
4 to 5
years
£m
>5
years
£m
Total
£m
Energy and interest derivatives in a loss position
that will be settled on a net basis (i)
(300)
(80)
(30)
(21)
(17)
(47)
(495)
Gross energy procurement contracts and other
derivative buy trades carried at fair value
(4,541)
(2,423)
(78)
(35)
(32)
(82)
(7,191)
Foreign exchange derivatives that will be settled
on a gross basis:
Outflow
(7,783)
(1,367)
(570)
(298)
—
—
(10,018)
Inflow
7,732
1,360
570
296
—
—
9,958
Trade and other payables
(6,267)
(130)
(41)
(20)
(2)
(8)
(6,468)
Borrowings (bank loans, bonds, overdrafts and
interest)
(924)
(593)
(183)
(182)
(125)
(3,397)
(5,404)
(12,083)
(3,233)
(332)
(260)
(176)
(3,534)
(19,618)
Leases: (ii)
Minimum lease payments
(99)
(91)
(78)
(44)
(25)
(99)
(436)
Capital elements of leases
(98)
(80)
(68)
(38)
(21)
(79)
(384)
(i)
Proprietary energy trades are excluded from this maturity analysis as the Group does not take physical delivery of volumes traded under these contracts. The associated
cash flows are expected to be equal to the contract fair value at the balance sheet date. See note 19 for further details.
(ii) The difference between the total minimum lease payments and the total capital elements of leases is due to future finance charges.
Strategic Report Governance Financial Statements Other Information
S4. Other equity
This section summarises the Group’s other equity reserve movements.
Cash flow
hedging
reserve
£m
Foreign
currency
translation
reserve
£m
Actuarial
gains and
losses
reserve
£m
Financial
asset at
FVOCI
reserve
£m
Treasury
and own
shares
reserve
£m
Share-
based
payments
reserve
£m
Merger,
capital
redemption
and other
reserves
£m
Total
£m
1 January 2023
(10)
(127)
(1,429)
3
(63)
30
320
(1,276)
Actuarial losses on defined benefit pension schemes
—
—
(381)
—
—
—
—
(381)
Employee share schemes:
Exercise of awards
—
—
—
—
22
(20)
—
2
Value of services provided
—
—
—
—
—
31
—
31
Proceeds from exercise of share options
—
—
—
—
6
—
—
6
Share buyback programme:
Purchase of Treasury shares
—
—
—
—
(615)
—
—
(615)
Movement on accrual for committed share
purchases
—
—
—
—
—
—
115
115
Impact of cash flow hedging
(3)
—
—
—
—
—
—
(3)
Share of other comprehensive loss of joint ventures
and associates, net of taxation
—
—
(95)
—
—
—
—
(95)
Exchange differences on translation of foreign
operations
—
(43)
—
—
—
—
—
(43)
Revaluation of FVOCI securities
—
—
—
4
—
—
—
4
Taxation on above items
1
—
93
(1)
—
6
—
99
31 December 2023
(12)
(170)
(1,812)
6
(650)
47
435
(2,156)
Actuarial losses on defined benefit pension schemes
—
—
(113)
—
—
—
—
(113)
Employee share schemes:
Exercise of awards
—
—
—
—
27
(21)
—
6
Value of services provided
—
—
—
—
—
47
—
47
Purchase of own shares
—
—
—
—
(8)
—
—
(8)
Share buyback programme:
Purchase of Treasury shares
—
—
—
—
(504)
—
—
(504)
Movement on accrual for committed share
purchases
—
—
—
—
—
—
24
24
Shares cancelled in the year (note 26)
—
—
—
—
400
—
21
421
Impact of cash flow hedging
2
—
—
—
—
—
—
2
Share of other comprehensive gain of joint ventures
and associates, net of taxation
—
—
38
—
—
—
—
38
Exchange differences on translation of foreign
operations
—
(50)
—
—
—
—
—
(50)
Revaluation of other investments and securities
measured at FVOCI
—
—
—
(27)
—
—
—
(27)
Taxation on above items
—
—
29
—
—
(4)
—
25
31 December 2024
(10)
(220)
(1,858)
(21)
(735)
69
480
(2,295)
Merger, capital redemption and other reserves
During February 1997, BG plc (formerly British Gas plc) demerged certain businesses (grouped together under GB Gas Holdings Limited
(GBGH)) to form Centrica plc. Upon demerger, the share capital of GBGH was transferred to Centrica plc and was recorded at the nominal
value of shares issued to BG plc shareholders. In accordance with the Companies Act 1985, no premium was recorded on the shares issued.
On consolidation, the difference between the nominal value of the Company’s shares issued and the amount of share capital and share
premium of GBGH at the date of demerger was credited to a merger reserve.
On 8 December 2017, the Group’s existing exploration and production business was combined with that of Bayerngas Norge AS to form the
Spirit Energy business. The Group acquired 69% of the Spirit Energy business and Bayerngas Norge’s former shareholders acquired 31%.
The non-controlling interest established on acquisition has been based on its share of the carrying value of the combined business, with the
other reserve representing the difference between the fair value and this carrying value.
In accordance with the Companies Act, the Company has transferred to the capital redemption reserve an amount equal to the nominal
value of shares repurchased and subsequently cancelled. As at 31 December 2024 the cumulative nominal value of shares repurchased and
subsequently cancelled was £49 million (2023: £28 million).
At the year-end, the Group has recognised a financial liability of £75 million (2023: £94 million) relating to the share buyback programme.
See Treasury and own shares reserve section for more details.
Centrica plc Annual Report and Accounts 2024
251
S4. Other equity
Treasury and own shares reserve
The own shares reserve reflects the cost of shares in the Group held in the Centrica employee share ownership trusts to meet the future
requirements of the Group’s share-based payment plans.
Treasury shares are acquired equity instruments of the Company.
The Group has continued with its share buyback programme during 2024. The £200 million tranche which was underway at the 2023 year-
end concluded in March 2024, and a subsequent £250 million tranche, announced in 2023 and signed in March 2024, commenced and was
concluded at the end of July.
Subsequently, in July 2024, the Group announced a further £200 million extension to the share buyback programme and as a result, the
Group signed an agreement in August 2024 with a third party to undertake the repurchase of £200 million of shares which is expected to
complete by February 2025.
In December 2024, the Group announced a further extension of £300 million to its share repurchase programme of which £30 million is an
extension of the contract signed in August 2024 (taking it to a total of £230 million), and an additional tranche of £270 million was signed,
and is expected to commence in March 2025. Once complete, this will take the total value of shares repurchased under the current
programme to £1 .5 billion.
During the year ended 31 December 2024, the Group purchased 385 million ordinary shares, representing approximately 6.9% of the issued
ordinary share capital at 31 December 2024, at an average price of 130.8 pence per share, and an aggregate cost of £504 million under the
share buyback programme. Of this £504 million, £497 million has been paid and £7 million relates to shares committed to being purchased
at 31 December 2024 but not yet settled. £2 million has been paid in respect of shares committed to being purchased at 31 December 2023.
The Group has determined that the terms and conditions of the contract signed in August, and extended by £30 million in December, mean
that, at 31 December 2024, it was unable to cancel the obligation arising under the contract signed. Accordingly, a financial liability of £75
million was recognised at 31 December 2024, representing the difference between purchases paid for to date under the current tranche,
and the maximum potential repurchase under the contract of £230 million.
The £270 million tranche commencing in March 2025 has not been recognised as a financial liability on the basis that, under the terms of the
contract, the obligation arising remains cancellable at 31 December 2024.
The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the financial liability
of £92 million recognised at 31 December 2023 were as follows:
Period
Number
of shares
purchased under
share buyback
programme
Average price paid
Pence
Total cost
£m
Authorised
purchases
unutilised at
month end
£m
January 2024
32,745,328
145.7
48
44
February 2024
32,398,499
132.0
43
1
March 2024
793,553
128.0
1
—
Total
65,937,380
138.8
92
—
The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the additional £250
million programme which began in March 2024 were as follows.
Period
Number
of shares
purchased under
share buyback
programme
Average price paid
Pence
Total cost
£m
Authorised
purchases
unutilised at
month end
£m
March 2024
33,868,000
128.8
44
206
April 2024
38,573,000
129.8
50
156
May 2024
26,371,824
139.1
37
119
June 2024
41,019,288
135.3
55
64
July 2024
46,557,864
137.7
64
—
Total
186,389,976
134.1
250
—
The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the further £230
million programme for the year ended 31 December 2024 were as follows. This includes £7 million relating to shares committed to being
purchased at 31 December 2024 but not yet settled.
Period
Number
of shares
purchased under
share buyback
programme
Average price paid
Pence
Total cost
£m
Authorised
purchases
unutilised at
month end
£m
August 2024
8,870,552
127.2
11
219
September 2024
11,678,819
121.0
14
205
October 2024
71,936,724
120.0
86
119
November 2024
19,636,324
120.3
24
95
December 2024
21,037,000
129.8
27
68
Total
133,159,419
122.0
162
68
Strategic Report Governance Financial Statements Other Information
S5. Hedge accounting
The Group primarily applies hedge accounting to address interest rate and foreign currency risk on borrowings.
For the purposes of hedge accounting, hedges are classified either as fair value hedges, cash flow hedges or hedges of net
investments in foreign operations.
The fair values of derivatives and primary financial instruments in hedge accounting relationships at 31 December were as follows:
2024
2023
31 December
Hedge
Assets
£m
Liabilities
£m
Change in
fair value
£m
Assets
£m
Liabilities
£m
Change in
fair value
£m
Interest rate risk
Fair value
—
(134)
(14)
—
(136)
48
Foreign exchange risk
Cash flow hedge
32
(6)
(8)
36
(18)
(13)
2024
Hedge
Timing of
nominal
amount
Average rate
Nominal value
Hedged item
Change in
fair value
of hedged item
in year
£m
Cumulative
amount of
fair value
hedge
adjustments
on hedged
item
£m
Accumulated
gains/(losses)
in equity (i)
£m
Interest rate risk
Fair value
2026-2033
Fixed to
floating
at Fallback
LIBOR/SONIA
+ 2%-5%
£50 million-
£550 million
Bonds (ii)
13
136
N/A
Foreign exchange risk
Cash flow hedge
2032
GBP to euro
at 1.171
€50 million
Euro bonds
3
N/A
5
Cash flow hedge
2036-2038
GBP to yen
at 192.81
¥20 billion
Yen bank
loans
7
N/A
(20)
2023
Hedge
Timing of
nominal
amount
Average rate
Nominal value
Hedged item
Change in
fair value
of hedged item
in year
£m
Cumulative
amount of fair
value hedge
adjustments on
hedged item
£m
Accumulated
gains/(losses) in
equity (i)
£m
Interest rate risk
Fair value
2025-2033
Fixed to floating
at Fallback
LIBOR +
2%-5%
£50 million-
£550 million
Bonds (ii)
(59)
138
N/A
Foreign exchange risk
Cash flow hedge
2032
GBP to euro
at 1.171
€50 million
Euro bonds
(1)
N/A
3
Cash flow hedge
2036-2038
GBP to yen
at 158.87
¥20 billion
Yen bank
loans
7
N/A
(21)
(i)
In the years presented all amounts related to continuing cash flow hedge relationships.
(ii) The carrying amount of bonds designated as hedged items in hedging relationships is disclosed in note 25.
The Group’s accounting policies in relation to derivatives qualifying for hedge accounting under IAS 39 are described below.
Fair value hedges
A derivative is designated as a hedging instrument and its relationship to a recognised asset or liability is classified as a fair value hedge when
it hedges the exposure to changes in the fair value of that recognised asset or liability. The Group’s fair value hedges consist of interest rate
swaps used to protect against changes in the fair value of fixed-rate, long-term debt due to movements in market interest rates. Any gain or
loss from re-measuring the hedging instrument to fair value is recognised immediately in the Group Income Statement in net finance cost.
Any gain or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and
recognised in the Group Income Statement within net finance cost. The Group discontinues fair value hedge accounting if the hedging
instrument expires or is sold, terminated or exercised, the hedge no longer qualifies for hedge accounting or the Group revokes the
designation. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is
amortised to the Group Income Statement. Amortisation may begin as soon as an adjustment exists and begins no later than when the
hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
Centrica plc Annual Report and Accounts 2024
253
S5. Hedge accounting
Cash flow hedges
A derivative is classified as a cash flow hedge when it hedges exposure to variability in cash flows that is attributable to a particular risk
associated with a recognised asset, liability or a highly probable forecast transaction. The Group’s cash flow hedges consist primarily of:
• Forward foreign exchange contracts used to protect against the variability of functional currency denominated cash flows associated
with non-functional currency denominated highly probable forecast transactions; and
• Cross-currency interest rate swaps and forward foreign exchange contracts used to protect against the variability in cash flows
associated with borrowings denominated in non-functional currencies.
The portion of the gain or loss on the hedging instrument which is effective is recognised directly in equity while any ineffectiveness is
recognised in the Group Income Statement. The Group does not have any material sources of ineffectiveness. The gains or losses that are
initially recognised in the cash flow hedging reserve through other comprehensive income are transferred to the Group Income Statement
in the period in which the hedged item affects profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is
sold, terminated or exercised without replacement or rollover, no longer qualifies for hedge accounting or the Group revokes the
designation. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity remains in equity until the
hedged transaction occurs. If the transaction is no longer expected to occur, the cumulative gain or loss recognised in equity is recognised
in the Group Income Statement. Note S4 details movements in the cash flow hedging reserve.
Strategic Report Governance Financial Statements Other Information
S6. Fair value of financial instruments
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The Group has documented internal policies for
determining fair value, including methodologies used to establish valuation adjustments required for credit risk.
(a)
Fair value hierarchy
Financial assets and financial liabilities measured and held at fair value are classified into one of three categories, known as hierarchy levels,
which are defined according to the inputs used to measure fair value as follows:
• Level 1: fair value is determined using observable inputs that reflect unadjusted quoted market prices for identical assets and liabilities;
• Level 2: fair value is determined using significant inputs that may be directly observable inputs or unobservable inputs that are
corroborated by market data; and
• Level 3: fair value is determined using significant unobservable inputs that are not corroborated by market data and may be used with
internally developed methodologies that result in management’s best estimate of fair value.
2024
2023
31 December
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets
Derivative financial instruments:
Energy derivatives
—
1,252
164
1,416
—
2,995
156
3,151
Foreign exchange derivatives
—
160
—
160
—
121
—
121
Debt instruments
73
—
28
101
72
—
1
73
Equity instruments
35
—
56
91
32
—
60
92
Cash and cash equivalents
—
5,009
—
5,009
—
4,859
—
4,859
Total financial assets at fair value
108
6,421
248
6,777
104
7,975
217
8,296
Financial liabilities
Derivative financial instruments:
Energy derivatives
—
(1,033)
(131)
(1,164)
—
(2,436)
(272)
(2,708)
Interest rate derivatives
—
(134)
—
(134)
—
(136)
—
(136)
Foreign exchange derivatives
—
(89)
—
(89)
—
(162)
—
(162)
Contingent consideration payable
—
—
(100)
(100)
—
—
(123)
(123)
Total financial liabilities at fair value
—
(1,256)
(231)
(1,487)
—
(2,734)
(395)
(3,129)
The reconciliation of the Level 3 fair value measurements during the year is as follows:
2024
2023
Financial
assets
£m
Financial
liabilities
£m
Financial
assets
£m
Financial
liabilities
£m
Level 3 financial instruments
1 January
217
(395)
610
(946)
Total realised and unrealised gains/(losses):
Recognised in Group Income Statement
95
45
(297)
252
Recognised in Other Comprehensive Income
(30)
—
(1)
—
Net movement in contingent consideration liability
—
23
—
(27)
Purchase of other investments (note 24)
53
—
37
—
Settlements
(72)
100
(35)
194
Transfers between Level 3 and Level 2 (i)
(15)
(3)
(96)
131
Foreign exchange movements
—
(1)
(1)
1
31 December
248
(231)
217
(395)
Total gains/(losses) for the period for Level 3 financial instruments
held at the end of the reporting period
95
45
(297)
252
(i)
Transfers between levels are deemed to occur at the beginning of the reporting year.
Centrica plc Annual Report and Accounts 2024
255
S6. Fair value of financial instruments
(b)
Valuation techniques used to derive Level 2 and Level 3 fair values and Group valuation process
Level 2 interest rate derivatives and foreign exchange derivatives comprise interest rate swaps and forward foreign exchange contracts.
Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. Forward foreign exchange
contracts are fair valued using forward exchange rates that are quoted in an active market, with the resulting market value discounted back
to present value using observable yield curves.
Level 2 energy derivatives are fair valued by comparing and discounting the difference between the expected contractual cash flows for
the relevant commodities and the quoted prices for those commodities in an active market. The average discount rate applied to value this
type of contract during the year was 5% per annum (2023: average discount rate of 5% per annum).
For Level 3 energy derivatives, the main input used by the Group pertains to deriving expected future commodity prices in markets that are
not active as far into the future as some of our contractual terms. This applies to certain contracts within Europe and North America. Fair
values are then calculated by comparing and discounting the difference between the expected contractual cash flows and these derived
future prices using an average discount rate of 5% (Europe) and 5% (North America) per annum (2023: average discount rate of 5%
(Europe) and 5% (North America) per annum).
Active period of markets
Gas
Power
Coal
Emissions
Oil
UK (years)
4
4
3
3
4
Because the Level 3 energy derivative valuations involve the prediction of future commodity market prices, sometimes a long way into the
future, reasonably possible alternative assumptions for gas, power, coal, emissions or oil prices may result in a higher or lower fair value for
Level 3 financial instruments. The impact of reasonably possible changes in commodity prices on profit and loss are included in note S3.
Other than commodity prices, there are no other unobservable inputs which would have a material impact.
It should be noted that the fair values disclosed in the tables above only concern those contracts entered into that are within the scope of
IFRS 9. The Group has numerous other commodity contracts that are outside of the scope of IFRS 9 and are not fair valued. The Group’s
actual exposure to market rates is constantly changing as the Group’s portfolio of energy contracts changes.
The Group’s valuation process includes specific teams of individuals that perform valuations of the Group’s derivatives for financial reporting
purposes, including Level 3 valuations. The Group has an independent team that derives future commodity price curves based on available
external data and these prices feed into the energy derivative valuations, subject to adjustments, to ensure they are compliant with IFRS 13
‘Fair Value Measurement’. The price curves are subject to review and approval by the Group’s Executive Committee and valuations of all
derivatives, together with other contracts that are not within the scope of IFRS 9, are also reviewed regularly as part of the overall risk
management process. The Group adjusts the market value of derivative instruments to account for counterparty credit risk and
corresponding possibility of a counterparty default preventing full realisation of the risk-free market value of the derivative. The Group
estimates Credit Valuation Adjustments by computing an expected evolution of the market value of a counterpart’s derivatives portfolio
over the life of the contracts weighted by the probability of a default and an assumption of the market value recoverable in the event of
a default. The default probability is calibrated to the price of Credit Default Swaps – a debt instrument reflecting the insurance premium
payable to protect against a debtor’s default. Debit valuation adjustments are the amount added back to the derivative value to account for
the expected gain from the Group’s own default and are calculated using a similar methodology with reference to the Group’s own
probability of default.
Where the fair value at initial recognition for contracts which have significant unobservable inputs and the fair value differs from the
transaction price, a day-one gain or loss will arise. These deferred gains are presented net against respective derivative assets and
derivative liabilities. Such gains and losses are deferred and amortised to the Group Income Statement based on volumes purchased or
delivered over the contractual period until such time as observable market data becomes available (see note S2 for further detail). The
amount that has yet to be recognised in the Group Income Statement relating to the differences between the transaction prices and the
amounts that would have arisen had valuation techniques used for subsequent measurement been applied at initial recognition, less
subsequent releases, is as follows:
Day-one gains deferred
2024
£m
2023
£m
1 January
142
304
Net gains deferred on transactions in the period
10
98
Net amounts recognised in Group Income Statement
(37)
(254)
Exchange differences
(5)
(6)
31 December
110
142
Level 3 debt and equity financial instruments are measured at fair value in accordance with IFRS 13. These fair value measurements
reflect the assumptions that market participants would use when pricing the asset based on an exit price concept. The fair value
of investments in debt securities is determined using discounted cash flow techniques. The discount rates are derived from market
observable interest rates adjusted by a credit spread applicable to the particular instrument. Unlisted equity instruments are valued using
an income approach. The estimated future cash flows, usually based on management forecasts of future economic benefits to be derived
from the ownership of these investees, are discounted using rates appropriate to the specific investment, business sector or recent
economic rates of return. Recent transactions involving the sale of similar businesses may sometimes be used as a frame of reference
in deriving an appropriate multiple.
Strategic Report Governance Financial Statements Other Information
S6. Fair value of financial instruments
(c)
Fair value of financial assets and liabilities held at amortised cost
The carrying value of the Group’s financial assets and liabilities measured at amortised cost are approximately equal to their fair value except
as listed below:
2024
2023
31 December
Notes
Carrying value
£m
Fair value
£m
Fair value
hierarchy
Carrying value
£m
Fair value
£m
Fair value
hierarchy
Bonds
Level 1
25
(2,184)
(2,229)
Level 1
(2,594)
(2,769)
Level 1
Level 2
25
(70)
(81)
Level 2
(71)
(79)
Level 2
Bank borrowings
The fair values of bonds classified as Level 1 within the fair value hierarchy are calculated using quoted market prices. The fair values of Level
2 bonds have been determined by discounting cash flows with reference to relevant market rates of interest. The fair values of overdrafts
and bank loans are assumed to materially approximate their carrying values.
Other financial instruments
Due to their nature and/or short-term maturity, the fair values of trade and other receivables, cash and cash equivalents, trade and other
payables, other borrowings and securities held at amortised cost are estimated to approximate their carrying values.
(d)
Financial assets and liabilities subject to offsetting, master netting arrangements and similar arrangements
Related amounts not offset in
the Group Balance Sheet (i)
31 December 2024
Gross
amounts
of recognised
financial
instruments
£m
Gross amounts of
recognised financial
instruments offset
in the Group
Balance Sheet
£m
Net amounts
presented
in the Group
Balance Sheet
£m
Financial
instruments
£m
Collateral
£m
Net amount
£m
Derivative financial assets
4,543
(2,967)
1,576
(38)
(162)
1,376
Derivative financial liabilities
(4,354)
2,967
(1,387)
38
191
(1,158)
189
218
Balances arising from commodity contracts:
Accrued trading and energy procurement income and
unbilled downstream energy income
5,450
(2,829)
2,621
(1)
—
2,620
Accruals for commodity costs
(5,101)
2,829
(2,272)
1
—
(2,271)
Cash and financing arrangements:
Cash and cash equivalents
6,338
—
6,338
(645)
—
5,693
Bank loans and overdrafts
(769)
—
(769)
645
—
(124)
Related amounts not offset in
the Group Balance Sheet (i)
31 December 2023
Gross amounts
of recognised
financial
instruments
£m
Gross amounts of
recognised financial
instruments offset
in the Group
Balance Sheet
£m
Net amounts
presented
in the Group
Balance Sheet
£m
Financial
instruments
£m
Collateral
£m
Net amount
£m
Derivative financial assets
9,883
(6,611)
3,272
(77)
(184)
3,011
Derivative financial liabilities
(9,617)
6,611
(3,006)
77
260
(2,669)
266
342
Balances arising from commodity contracts:
Accrued trading and energy procurement income and
unbilled downstream energy income
7,067
(4,220)
2,847
(2)
—
2,845
Accruals for commodity costs
(6,684)
4,220
(2,464)
2
—
(2,462)
Cash and financing arrangements:
Cash and cash equivalents
6,443
—
6,443
(814)
—
5,629
Bank loans and overdrafts
(944)
—
(944)
814
—
(130)
(i)
The Group has arrangements in place with various counterparties in respect of commodity trades which provide for a single net settlement of all financial instruments
covered by the arrangement in the event of default or termination, or other circumstances arising whereby either party is unable to meet its obligations. The above table
shows the potential impact of these arrangements being enforced by offsetting the relevant amounts within each Group Balance Sheet class of asset or liability, but
does not show the impact of offsetting across Group Balance Sheet classes where the offsetting Group Balance Sheet class is not included within the above table.
Centrica plc Annual Report and Accounts 2024
257
S7. Fixed-fee service and insurance contracts
This section includes fixed-fee service (FFS) and insurance contract disclosures for services related to British Gas.
FFS non-insurance contracts in the UK are entered into with home services customers by British Gas Services Limited. FFS insurance
contracts in the UK are entered into with home services customers by British Gas Insurance Limited, authorised by the PRA and regulated
by the FCA and the PRA.
Product offerings include central heating, boiler and controls, plumbing and drains and electrical appliance insurance cover. Insurance
contracts normally provide cover for twelve months with the option of renewal.
The contracts that protect policyholders against the risk of breakdowns result in risk transfer to the contract provider. Benefits provided to
customers vary in accordance with terms and conditions of the contracts entered into. However, they generally include maintenance, repair
and/or replacement of the items affected.
IFRS 17 ‘Insurance contracts’ became effective on 1 January 2023 and replaced the existing insurance standard, IFRS 4. FFS insurance
contracts fall within the scope of IFRS 17 where the Group reflects an assessment of the risk associated with an individual customer in
setting the price of the contract, this captures materially all the Group’s insurance contracts. The Group applies the simplified ‘Premium
Allocation Approach’ to its contracts on the basis that the coverage period of the Group’s insurance contracts is not greater than one year.
The levels of risk exposure and service provision to customers under the contract terms depend on the occurrence of uncertain future
events, particularly the nature and frequency of faults, and the cost of repair or replacement of the items affected. Accordingly, the
timing and the amount of future cash outflows associated with the contracts is uncertain. As the Group’s insurance contract portfolio
is comprised of a large number of contracts with small individual values, a high volume of claims with relatively low unit cost results.
The characteristics of the business mean that material concentrations or aggregations of risk are relatively remote. The key terms and
conditions that affect future cash flows are as follows:
• Provision of labour and parts for repairs, dependent on the agreement and associated level of service;
• A specified number of safety and maintenance inspections are carried out as set out in the agreement (usually once a year);
• No limit to the number of call-outs to carry out repair work; and
• Limits on certain maintenance and repair costs.
The most significant insurance risk is an extreme weather event for an extended period, which has the propensity to increase claim
frequencies. The Group regularly assesses insurance risk sensitivities, the most significant relating to increases in breakdown frequency and
increases in the average cost of repair. A reasonably possible increase in either would not have a material impact on the results of the Group.
Revenue is recognised over the life of contracts (usually a twelve-month period) regarding the incidence of risk, in particular the seasonal
propensity of claims that span the life of the contract as a result of emergency maintenance being available throughout the contract term.
Costs incurred to settle claims represent principally the engineer workforce employed by the Group within home services and the cost
of parts utilised in repair or maintenance. Revenue is accounted for over a twelve-month period in accordance with the premium allocation
approach required by IFRS 17, with adjustments made to reflect the seasonality of workload over a given year. Claims frequency is sensitive
to the reliability of appliances as well as the impact of weather conditions. The contracts are not exposed to any interest rate risk or
significant credit risk and do not contain any embedded derivatives.
Weather conditions and the seasonality of repairs both affect the profile of the workload and associated costs incurred across the year.
The risk exposure of these uncertain events is actively managed by undertaking the following risk mitigation activities:
• An initial service visit is provided to customers taking up most central heating contracts and in some instances pre-existing faults may lead
to the contract being cancelled and no further cover being provided;
• An annual maintenance inspection is performed as part of most central heating contracts to help identify and prevent issues developing
into significant maintenance or breakdown claims; and
• Contract limits are applied to certain types of maintenance and repair work considered to be higher risk in terms of frequency
and cost.
Insurance service expenses recognised in cost of sales primarily relate to servicing claims including materials, labour and other costs
required to fulfil the claim. Insurance service expenses recognised in operating costs largely relate to overhead expenses including non-
engineer labour costs. These expenses are split for compatibility with the broader accounting policy of the Centrica group.
Strategic Report Governance Financial Statements Other Information
S7. Fixed-fee service and insurance contracts
The following table shows the reconciliation from the opening to the closing balances of the liability for the remaining coverage and the
liability for incurred claims for insurance contracts measured under the Premium Allocation Approach.
2024
2023
Year ended 31 December
Liability for
remaining
coverage
£m
Liability of
incurred
claims
£m
Total
£m
Liability for
remaining
coverage
£m
Liability of
incurred
claims
£m
Total
£m
1 January
(39)
(126)
(165)
(36)
(124)
(160)
Changes in the Group Income Statement:
Insurance revenue:
Contracts under the modified retrospective approach
800
—
800
813
—
813
Insurance service expenses:
Incurred claim and other insurance service expenses
recognised in cost of sales
—
(460)
(460)
—
(475)
(475)
Incurred claim and other insurance service expenses
recognised in operating costs
—
(306)
(306)
—
(294)
(294)
Total insurance service expenses
—
(766)
(766)
—
(769)
(769)
Total changes in the Group Income Statement and
insurance service result
800
(766)
34
813
(769)
44
Cash flows:
Premiums received
(796)
—
(796)
(816)
—
(816)
Claims and other service expenses paid
—
752
752
—
767
767
Total cash flows
(796)
752
(44)
(816)
767
(49)
31 December
(35)
(140)
(175)
(39)
(126)
(165)
Centrica plc Annual Report and Accounts 2024
259
S8. Related party transactions
The Group’s principal related party is its investment in Lake Acquisitions Limited, which owns the existing UK nuclear fleet.
The disclosures below, including comparatives, only refer to related parties that were related in the current reporting period.
During the year, the Group entered into the following arm’s length transactions with related parties who are not members of the Group, and
had the following associated balances:
2024
2023
31 December
Purchase of
goods and
services
£m
Amounts
owed to
£m
Purchase of
goods and
services
£m
Amounts
owed to
£m
Associates:
Nuclear
(772)
(52)
(655)
(94)
Joint ventures
—
—
(1)
—
(772)
(52)
(656)
(94)
During the year, there were no material changes to commitments in relation to joint ventures and associates.
At the balance sheet date, the Group had committed facilities to the Lake Acquisition Group totalling £40 million (2023: £120 million),
although nothing has been drawn at 31 December 2024.
Remuneration of key management personnel
Year ended 31 December
2024
£m
2023
£m
Short-term benefits
5.3
5.0
Post-employment benefits
0.2
0.2
Share-based payments
4.0
4.6
9.5
9.8
Key management personnel comprise members of the Board and Executive Committee, a total of 13 individuals at 31 December 2024
(2023: 14).
Remuneration of the Directors of Centrica plc
Year ended 31 December
2024
£m
2023
£m
Total emoluments (i)
4.8
4.6
Amounts receivable under long-term incentive schemes
2.0
7.7
Contributions into pension schemes
0.1
0.1
6.9
12.4
(i)
These emoluments were paid for services performed on behalf of the Group. No emoluments related specifically to services performed for the Company.
Directors’ interests in shares are given in the Remuneration Report on pages 116 to 147.
Strategic Report Governance Financial Statements Other Information
S9. Auditors’ remuneration
Year ended 31 December
2024
£m
2023
£m
Fees payable to the Company’s auditors for:
Audit of the Company's individual and consolidated Financial Statements
5.5
5.8
Audit of the Company’s subsidiaries
2.4
2.0
Total fees related to the audit of the parent and subsidiary entities
7.9
7.8
Fees payable to the Company’s auditors and its associates for other services:
Audit-related assurance services (i)
0.8
0.7
Total fees
8.7
8.5
Fees in respect of pension scheme audits (ii)
0.2
0.1
(i)
Predominantly relates to the review of the condensed interim Financial Statements.
(ii) The pension scheme audit continues to be performed by PricewaterhouseCoopers LLP.
Centrica plc Annual Report and Accounts 2024
261
S10. Related undertakings
The Group has a large number of related undertakings principally in the UK, US, Canada, and EU. These are listed below.
(a)
Subsidiary undertakings
Investments held directly by Centrica plc with 100% voting rights
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
Centrica Beta Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Ireland Holdings Limited
Holding company
Republic of Ireland
B
Ordinary shares
Investments held indirectly by Centrica plc with 100% voting rights
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
Alertme.com GmbH
In liquidation
Germany
C
Ordinary shares
Astrum Solar, Inc.
Home and/or commercial services
United States
D
Ordinary shares
Bord Gáis Energy Limited
Energy supply and power generation
Republic of Ireland
B
Ordinary shares
Bord Gáis Energy Trustees DAC
Pension trustee company
Republic of Ireland
B
Ordinary shares
British Gas Finance Limited
Vehicle leasing
United Kingdom
A
Ordinary shares
British Gas Insurance Limited
Insurance provision
United Kingdom
A
Ordinary shares
British Gas Limited
Energy supply
United Kingdom
A
Ordinary shares
British Gas New Heating Limited
Electrical and gas installations
United Kingdom
A
Ordinary shares
British Gas Services (Commercial) Limited
Non-trading
United Kingdom
A
Ordinary shares
British Gas Services Limited
Home services
United Kingdom
A
Ordinary shares
British Gas Social Housing Limited
Servicing and installation of heating systems
United Kingdom
A
Ordinary shares
British Gas Trading Limited
Energy supply
United Kingdom
A
Ordinary shares
British Gas X Limited (ii)
Dormant
United Kingdom
A
Ordinary shares
Caythorpe Gas Storage Limited
Gas storage
United Kingdom
E
Ordinary shares
CBS Energy Assets Belgium B.V.
Construction and operation of battery storage
Belgium
F
Ordinary shares
CBS Energy Storage Assets UK Limited
Construction and operation of battery storage
United Kingdom
A
Ordinary shares
CBS Services Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
CBS Solar Assets UK Limited
Power generation
United Kingdom
A
Ordinary shares
Centrica (Lincs) Wind Farm Limited (iii)
Dormant
United Kingdom
A
Ordinary shares
Centrica Barry Limited
Power generation
United Kingdom
A
Ordinary shares
Centrica Business Holdings Inc.
Holding company
United States
D
Ordinary shares
Centrica Business Solutions (Generation) Limited
Power generation
United Kingdom
A
Ordinary shares
Centrica Business Solutions B.V.
Energy management products and services
Netherlands
G
Ordinary shares
Centrica Business Solutions Belgium NV
Demand response aggregation
Belgium
F
Ordinary shares
Centrica Business Solutions Canada Inc.
Holding company
Canada
H
Ordinary shares
Centrica Business Solutions Deutschland GmbH
Demand response aggregation
Germany
I
Ordinary shares
Centrica Business Solutions France SAS
Demand response aggregation
France
J
Ordinary shares
Centrica Business Solutions International Limited (iii)
Dormant
United Kingdom
A
Ordinary shares
Centrica Business Solutions Ireland Limited
Energy management products and services
Republic of Ireland
B
Ordinary shares
Centrica Business Solutions Italia Srl
Energy management products and services
Italy
K
Ordinary shares
Centrica Business Solutions Management Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Business Solutions Romania Srl
Energy management products and services
Romania
L
Ordinary shares
Centrica Business Solutions Services, Inc.
Energy management products and services
United States
D
Ordinary shares
Centrica Business Solutions UK Limited
Energy management products and services
United Kingdom
A
Ordinary shares
Strategic Report Governance Financial Statements Other Information
S10. Related undertakings
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
Centrica Business Solutions UK Optimisation Limited
Demand response aggregation
United Kingdom
A
Ordinary shares
Centrica Business Solutions US, Inc.
Energy management products and services
United States
D
Ordinary shares
Centrica Business Solutions Zrt
Energy management products and services
Hungary
M
Ordinary shares
Centrica Combined Common Investment Fund Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Directors Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Distributed Generation Limited
Power generation
United Kingdom
A
Ordinary shares
Centrica Energy Assets Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Energy Limited
Wholesale energy trading
United Kingdom
A
Ordinary shares
Centrica Energy, LLC (iv)
Energy services and wholesale energy trading
United States
N
Membership interest
Centrica Energy Marketing Limited
Wholesale energy trading
United Kingdom
A
Ordinary shares
Centrica Energy Storage Limited
Gas production and processing
United Kingdom
E
Ordinary shares
Centrica Energy Trading A/S
Energy services and wholesale energy trading
Denmark
O
Ordinary shares
Centrica Energy Trading GmbH
Energy services and wholesale energy trading
Germany
P
Ordinary shares
Centrica Energy Trading, LLC (iv)
Energy services and wholesale energy trading
United States
N
Membership interest
Centrica Energy Trading Pte. Ltd
Energy services and wholesale energy trading
Singapore
Q
Ordinary shares
Centrica Engineers Pension Trustees Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Finance (Scotland) Limited
Holding company
United Kingdom
R
Ordinary shares
Centrica Finance Norway Limited
Dormant
Jersey
S
Ordinary shares
Centrica Gamma Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Hive Limited
Energy management products and services
United Kingdom
A
Ordinary shares
Centrica Hive Srl
In liquidation
Italy
T
Ordinary shares
Centrica Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Hydrogen Innovations Limited (v)
Holding company
United Kingdom
A
Ordinary shares
Centrica India Offshore Private Limited
Business services
India
U
Ordinary shares
Centrica Innovations UK Limited
Investment company
United Kingdom
A
Ordinary shares
Centrica Innovations US, Inc.
Investment company
United States
D
Ordinary shares
Centrica Insurance Company Limited
Insurance provision
Isle of Man
V
Ordinary and
preference shares
Centrica Lake Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica LNG Company Limited
LNG trading
United Kingdom
A
Ordinary shares
Centrica LNG UK Limited
LNG trading
United Kingdom
A
Ordinary shares
Centrica Nederland B.V.
Holding company
Netherlands
G
Ordinary shares
Centrica Nigeria Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Offshore Investments Limited (iv)
Non-trading
United Kingdom
E
Ordinary shares
Centrica Offshore UK Limited
Gas and/or liquid exploration and production
United Kingdom
E
Ordinary shares
Centrica Overseas Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Centrica Pension Plan Trustees Limited
Dormant
United Kingdom
A
Limited by guarantee
Centrica Pension Trustees Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Production Limited
Dormant
United Kingdom
R
Ordinary shares
Centrica Resources (Nigeria) Limited
Non-trading
Nigeria
W
Ordinary shares
Centrica Secretaries Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Services Limited
Business services
United Kingdom
A
Ordinary shares
Centrica Smart Meter Assets Limited
Metering assets and services
United Kingdom
A
Ordinary shares
Centrica Storage Holdings Limited
Holding company
United Kingdom
E
Ordinary shares
Centrica Supply Chain Limited (v)
Non-trading
United Kingdom
A
Ordinary shares
Centrica Trading Limited
Dormant
United Kingdom
A
Ordinary shares
Centrica Trinidad and Tobago Limited
Business services
Trinidad and
Tobago
X
Ordinary shares
Centrica Trust (No.1) Limited
Healthcare trust
United Kingdom
A
Ordinary shares
Centrica plc Annual Report and Accounts 2024
263
S10. Related undertakings
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
CP Energy Storage Assets Sweden 1 AB (iv)
Construction of battery storage
Sweden
Y
Ordinary shares
CP Energy Storage Assets Sweden 2 AB (iv)
Construction of battery storage
Sweden
Y
Ordinary shares
DEML Investments Limited
Holding company
Canada
H
Ordinary shares
DER Development No. 10 Ltd.
Holding company
Canada
H
Ordinary shares
Distributed Energy Customer Solutions Limited
Energy management products and services
United Kingdom
A
Ordinary shares
Dyno-Rod Limited
Operation of a franchise network
United Kingdom
A
Ordinary shares
ECL Contracts Limited
Dormant
United Kingdom
A
Ordinary shares
ECL Investments Limited
Dormant
United Kingdom
A
Ordinary shares
ENER-G Nagykanizsa Kft
Energy management products and services
Hungary
M
Ordinary shares
ENER-G Rudox, LLC
Energy management products and services
United States
D
Membership interest
Energy For Tomorrow
Not-for-profit energy services
United Kingdom
A
Limited by guarantee
Ensek Australia Pty Ltd (iv)
Dormant
Australia
Z
Ordinary shares
Ensek Holdings Limited (iv)
Holding company
United Kingdom
AA
Ordinary shares
Ensek Limited (iv)
Information technology consultancy activities
United Kingdom
AA
Ordinary shares
GB Gas Holdings Limited
Holding company
United Kingdom
A
Ordinary shares
Generation Green Solar Limited
Dormant community benefit society
United Kingdom
A
Ordinary shares
Gerard Hall Energy Limited (iv)
Construction of battery storage
United Kingdom
A
Ordinary shares
GF One Limited (vi)
In liquidation
United Kingdom
AB
Ordinary shares
GF Two Limited (vi)
In liquidation
United Kingdom
AB
Ordinary shares
Greener Ideas Limited (vii)
Development of flexible power generation
it
Republic of Ireland
B
Ordinary shares
Inteligen Limited (iv)
Dormant
United Kingdom
AA
Ordinary shares
Leicestershire Solar 1 Limited
Construction of solar asset
United Kingdom
A
Ordinary shares
Neas Energy Limited
Energy services and wholesale energy trading
United Kingdom
A
Ordinary shares
Neas Invest A/S
Dormant
Denmark
O
Ordinary shares
P.H Jones Group Limited
Holding company
United Kingdom
A
Ordinary shares
Panoramic Power Ltd.
Energy management products and services
Israel
AC
Ordinary shares
Pioneer Shipping Limited
LNG vessel chartering
United Kingdom
A
Ordinary shares
Rolleston 2 Solar Farm Limited (iv)
Construction of solar asset
United Kingdom
A
Ordinary shares
SN12 6EF Limited
Power generation
United Kingdom
A
Ordinary shares
South Energy Investments, LLC
Power generation
United States
D
Membership interest
Vista Solar, Inc.
Energy management products and services
United States
D
Ordinary shares
Strategic Report Governance Financial Statements Other Information
S10. Related undertakings
Investments held indirectly by Centrica plc with 69% voting rights
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
Bowland Resources Limited
Decommissioning of exploration and production
assets
United Kingdom
A
Ordinary shares
Bowland Resources (No.2) Limited
Decommissioning of exploration and production
assets
United Kingdom
A
Ordinary shares
Elswick Energy Limited
Decommissioning of exploration and production
assets
United Kingdom
A
Ordinary shares
Spirit Energy Limited
Holding company
United Kingdom
A
Ordinary and
deferred shares
Spirit Energy Nederland B.V.
Gas and/or liquid exploration and production
Netherlands
AD
Ordinary Shares
Spirit Energy North Sea Limited
Gas and/or liquid exploration and production
United Kingdom
A
Ordinary shares
Spirit Energy North Sea Oil Limited
Gas and/or liquid exploration and production
United Kingdom
AE
Ordinary shares
Spirit Energy Norway AS
Non-trading
Norway
AF
Ordinary shares
Spirit Energy Production UK Limited
Gas and/or liquid exploration and production
United Kingdom
A
Ordinary shares
Spirit Energy Resources Limited
Gas and/or liquid exploration and production
United Kingdom
A
Ordinary shares
Spirit Energy Southern North Sea Limited
Gas and/or liquid exploration and production
United Kingdom
A
Ordinary shares
Spirit Energy Treasury Limited
Finance company
United Kingdom
A
Ordinary shares
Spirit Europe Limited
Holding company
United Kingdom
A
Ordinary shares
Spirit Infrastructure B.V.
Decommissioning of exploration and production
assets
Netherlands
AD
Ordinary shares
Spirit North Sea Gas Limited
Gas and/or liquid exploration and production
United Kingdom
AE
Ordinary shares
Spirit Norway Holdings AS
Holding company
Norway
AF
Ordinary shares
Spirit Norway Limited
Holding company
United Kingdom
A
Ordinary shares
Spirit Production (Services) Limited
Business services
United Kingdom
AE
Ordinary shares
Spirit Resources (Armada) Limited
Decommissioning of exploration and production
assets
United Kingdom
A
Ordinary shares
(i)
For list of registered addresses, refer to note S10(d).
(ii)
Dissolved in January 2025.
(iii)
Active proposal to strike off.
(iv)
Incorporated or acquired in 2024.
(v)
The following name changes were made during the year:
– Centrica Finance Investments Limited to Centrica Hydrogen Innovations Limited
– Centrica Titan Limited to Centrica Supply Chain Limited
(vi)
GF One Limited and GF Two Limited are 75% indirectly owned by Centrica plc.
(vii)
Greener Ideas Limited is 80% indirectly owned by Centrica plc.
Centrica plc Annual Report and Accounts 2024
265
S10. Related undertakings
(b)
Subsidiary undertakings – partnerships held indirectly by Centrica plc with 100% voting rights
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
CF 2016 LLP
Group financing
United Kingdom
A
Membership interest
CFCEPS LLP
Group financing
United Kingdom
A
Membership interest
Direct Energy Resources Partnership
Holding entity
Canada
H
Membership interest
Finance Scotland 2016 Limited Partnership
Group financing
United Kingdom
R
Membership interest
Finance Scotland CEPS Limited Partnership
Group financing
United Kingdom
R
Membership interest
(i)
For list of registered addresses, refer to note S10(d).
The following partnerships are fully consolidated into the Group Financial Statements and the Group has taken advantage of the exemption
(as confirmed by regulation 7 of the Partnerships (Accounts) Regulations 2008) not to prepare or file separate accounts for these entities:
• Finance Scotland 2016 Limited Partnership; and
• Finance Scotland CEPS Limited Partnership.
(c)
Joint arrangements and associates
31 December 2024
Principal activity
Country of incorporation/
registered address key (i)
Class of shares held
Indirect
interest
and voting
rights
Joint ventures (ii)
Allegheny Solar 1, LLC
Energy supply and/or services
United States
AG
Membership interest
40.0%
C2 Centrica MT, LLC
Energy supply and/or services
United States
AH
Membership interest
50.0%
Eurowind Polska VI Sp z.o.o.
Operation of an onshore windfarm
Poland
AI
Ordinary shares
50.0%
Three Rivers Solar 1, LLC
Energy supply and/or services
United States
AG
Membership interest
40.0%
Three Rivers Solar 2, LLC
Energy supply and/or services
United States
AG
Membership interest
40.0%
Three Rivers Solar 3, LLC
Energy supply and/or services
United States
AG
Membership interest
40.0%
Vindpark Keblowo ApS
Holding company
Denmark
AJ
Ordinary shares
50.0%
Associates (ii)
Fuinneamh ÓG Teoranta (iii)
Offshore windfarm development
Republic of Ireland
AK
Ordinary shares
30.0%
Kestrel Energy Storage DAC (iii)
Offshore gas storage development
Republic of Ireland
AL
Ordinary shares
33.3%
Lake Acquisitions Limited
Holding company
United Kingdom
AM
Ordinary shares
20.0%
Tickd Limited (iii)
Trade of electricity
United Kingdom
AN
Ordinary shares
20.0%
Young Energy Holding Company
Limited (iii)
Offshore windfarm development
Republic of Ireland
AK
Ordinary shares
30.0%
(i)
For list of registered addresses, refer to note S10(d).
(ii) Further information on the principal joint ventures and associate investments held by the Group is disclosed in notes 6 and 14.
(iii) Acquired in 2024.
All Group companies principally operate within their country of incorporation unless noted otherwise.
Strategic Report Governance Financial Statements Other Information
S10. Related undertakings
(d)
List of registered addresses
Registered address key
Address
A
Millstream, Maidenhead Road, Windsor, SL4 5GD, United Kingdom
B
1 Warrington Place, Dublin 2, Republic of Ireland
C
Thomas-Wimmer-Ring 1-3, 80539, Munich, Germany
D
2111 Ellsworth Boulevard, Malta NY 12020, United States (i)(ii)(iii)(iv)(v)
E
Woodland House, Woodland Park, Hessle, HU13 0FA, United Kingdom
F
Roderveldlaan 2 bus 2, 2600 Antwerp, Belgium
G
Wiegerbruinlaan 2A, 1422 CB Uithoorn, Netherlands
H
Suite 2400, 745 Thurlow Street, Vancouver BC V6E 0C5, Canada (vi)(vii)
I
Neuer Wall 10, 20354 Hamburg, Germany
J
60 Avenue Charles de Gaulle, Cs 60016, 92573, Neuilly sur Seine Cedex, France
K
Milan (MI), Via Emilio Cornalia 26, Italy
L
Strada Martir Colonel loan Uţă nr.28 camera 1, Municipiul Timisoara judet Timis, Romania
M
H-1106 Budapest Jászberényi út 24-36, Hungary
N
c/o Corporate Creations Network Inc., 1521 Concord Pike Suite 201, Wilmington, DE19803, United States
O
Skelagervej 1, 9000 Aalborg, Denmark
P
Esplanade 40, 20354 Hamburg, Germany
Q
220 Orchard Road, #05-01 Midpoint Orchard, Singapore 238852, Republic of Singapore
R
1 Waterfront Avenue, Edinburgh, Scotland EH5 1SG, United Kingdom
S
47 Esplanade, St Helier, JE1 0BD, Jersey, Channel Islands
T
Via Paleocapa Pietro 4, 20121, Milano, Italy
U
G-74, LGF, Kalkaji, New Delhi, South Delhi, 110019, India
V
3rd floor, St George's Court, Upper Church Street, Douglas, IM1 1EE, Isle of Man
W
Sterling Towers, 20 Marina, Lagos, Nigeria
X
48-50 Sackville Street, Port of Spain, Trinidad and Tobago
Y
Box 16285, 103 25 Stockholm, Sweden (viii)
Z
c/o Grant Thornton Australia Limited, Collins Square Tower Five, Level 22, 727 Collins Street, Docklands VIC 3008, Australia
AA
Hounds Gate, 30-34 Hounds Gate, Nottingham, NG1 7AB, United Kingdom
AB
1 More London Place, London, SE1 2AF, United Kingdom
AC
15 Atir Yeda Street, Kfar Saba, 44643, Israel
AD
Transpolis Building, Polarisavenue 39, 2132 JH Hoofddorp, Netherlands
AE
5th floor, IQ Building, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, United Kingdom
AF
c/o Advokatfirmaet Schjødt AS Kongsgärdbakken 3, Stavanger, Rogaland 4005, Norway (ix)(x)
AG
1209 Orange Street, Wilmington, New Castle County, DE 19801, United States
AH
Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808, United States (xi)
AI
Ul. Wysogotowska 23, 62-081 Przezmierowo, Wielkpolskie, Poland
AJ
Mariagervej 58B, DK 9500 Hobro, Denmark
AK
Block 1, Harcourt Centre, Harcourt Street, Dublin 2, DO2 YA40, Republic of Ireland
AL
1 Stokes Place, St Stephen's Green, Dublin, Republic of Ireland
AM
90 Whitfield Street, London, W1T 4EZ, United Kingdom
AN
4th Floor, Regent House, 50 Frederick Street, Birmingham, B1 3HR, United Kingdom
(i)
Astrum Solar, Inc changed its registered address during the year from 2 Wisconsin Circle #700, Chevy Chase, MD 20815, United States to the address listed above.
(ii)
Centrica Business Holdings Inc changed its registered address during the year from 3411 Silverside Road, Rodney Building #104, Wilmington, DE 19810, United States to the
address listed above.
(iii)
The following entities changed their registered address during the year from 3411 Silverside Road, Suite 104, Tatnall Building. Wilmington, DE 19810, United States to the address
listed above: Centrica Business Holdings Inc., Centrica Business Solutions Services Inc., Centrica Business Solutions US Inc., and ENER-G Rudox LLC.
(iv)
South Energy Investments LLC changed its registered address during the year from 6 Landmark Square, 4th floor, Stamford CT 06901, United States to the address listed
above.
(v)
Vista Solar Inc changed its registered address during the year from 4640 Admiralty Way, 5th floor, Marina del Rey, California 90292, United States to the address listed above.
(vi)
The following entities changed their registered address during the year from 550 Burrard Street, Suite 2900, Vancouver BC V6C 0A3, Canada to the address listed above:
Centrica Business Solutions Canada Inc., DEML Investments Limited, and DER Development No. 10 Ltd.
(vii)
Direct Energy Resources Partnership changed its registered address during the year from 350 7th Avenue SW, Suite 3400, Calgary AB T2P 3N9, Canada to the address listed
above.
(viii)
The following entities changed their registered address in 2025 from c/o Mannheimer Swartling Advokatbyrå, Box 2235, 403 14 Göteborg, Sweden to the address listed above:
CP Energy Storage Assets Sweden 1 AB and CP Energy Storage Assets Sweden 2 AB.
(ix)
Spirit Energy Norway AS changed its registered address during the year from Veritasvien 29, 4007 Stavanger, Norway to the address listed above.
(x)
Spirit Energy Norway Holdings AS changed its registered address during the year from Lilleakerveien 8, 0283 Oslo, Norway to the address listed above.
(xi)
C2 Centrica MT, LLC changed its registered address during the year from 850 New Burton Road, Suite 201, Dover, DE 19904, United States to the address listed above.
Centrica plc Annual Report and Accounts 2024
267
S10. Related Undertakings
(e)
Summarised financial information
Management has determined that the investment in Lake Acquisitions Limited is sufficiently material to warrant further disclosure on an
individual basis. Accordingly, the Group presents summarised financial information, along with reconciliations to the amounts included in the
consolidated Group Financial Statements, for this investee.
Lake Acquisitions Limited
Summarised statement of total comprehensive income
2024
2023
Year ended 31 December
Associate
information
reported to
Group
£m
Unadjusted
20% share
£m
Fair value
and other
adjustments
£m
Group
share
£m
Associate
information
reported to
Group
£m
Unadjusted
20% share
£m
Fair value
and other
adjustments
£m
Group
share
£m
Revenue
4,040
808
—
808
3,398
680
—
680
Operating profit/(loss) before
interest and tax
2,148
430
(56)
374
1,671
334
(52)
282
Profit/(loss) for the year
1,494
299
(43)
256
1,242
248
(40)
208
Other comprehensive income/(loss)
189
38
—
38
(477)
(95)
—
(95)
Total comprehensive income/(loss)
1,683
337
(43)
294
765
153
(40)
113
Summarised balance sheet
2024
2023
31 December
Associate
information
reported to
Group
£m
Unadjusted
20% share
£m
Fair value
and other
adjustments (i)
£m
Group
share
£m
Associate
information
reported to
Group
£m
Unadjusted
20% share
£m
Fair value
and other
adjustments (i)
£m
Group
share
£m
Non-current assets
18,201
3,640
638
4,278
15,970
3,194
694
3,888
Current assets
3,791
758
—
758
3,901
780
—
780
Current liabilities
(1,526)
(305)
—
(305)
(1,350)
(270)
—
(270)
Non-current liabilities
(13,710)
(2,742)
(101)
(2,843)
(11,675)
(2,335)
(114)
(2,449)
Net assets
6,756
1,351
537
1,888
6,846
1,369
580
1,949
(i)
Before cumulative impairments of £1,094 million (2023: £1,046 million) of the Group’s associate investment.
During the year, dividends of £355 million (2023: £220 million) were paid by the associate to the Group.
Joint operations - fields/assets
31 December 2024
Location
Percentage holding
Cygnus
UK North Sea
61%
Strategic Report Governance Financial Statements Other Information
S11. Non-controlling interests
The Group has one subsidiary undertaking with a material non-controlling interest: Spirit Energy Limited, through which the Group carries
out the majority of its exploration and production activities.
2024
2023
Year ended 31 December
Non-
controlling
interests
%
Profit for
the year
£m
Total
comprehensive
income
£m
Total
equity
£m
Distributions
to non-
controlling
interests
£m
Non-
controlling
interests
%
Profit for
the year
£m
Total
comprehensive
income
£m
Total
equity
£m
Distributions
to non-
controlling
interests
£m
Spirit Energy Limited
31
33
34
390
—
31
111
110
356
(17)
Summarised financial information
The summarised financial information disclosed is shown on a 100% basis. It represents the consolidated position of Spirit Energy Limited
and its subsidiaries that would be shown in its consolidated financial statements prepared in accordance with IFRS under Group accounting
policies before intercompany eliminations.
Summarised statement of total comprehensive income
Year ended 31 December
2024
£m
2023
£m
Revenue
1,140
974
Profit for the year
106
357
Other comprehensive income/(loss)
3
(1)
Total comprehensive income
109
356
Summarised balance sheet
31 December
2024
£m
2023
£m
Non-current assets
992
1,028
Current assets
1,980
2,099
Current liabilities
(557)
(481)
Non-current liabilities
(1,158)
(1,498)
Net assets
1,257
1,148
Summarised cash flow
Year ended 31 December
2024
£m
2023
£m
Net increase/(decrease) in cash and cash equivalents
5
(13)
Centrica plc Annual Report and Accounts 2024
269
Company Statement of Changes in Equity
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Other
equity
(note II)
£m
Total
equity
£m
1 January 2023
365
2,394
3,248
(334)
5,673
Profit for the year (i)
—
—
2,258
—
2,258
Other comprehensive loss
—
—
—
(35)
(35)
Total comprehensive income/(loss)
—
—
2,258
(35)
2,223
Employee share schemes and other share transactions (ii)
—
—
(3)
39
36
Share buyback programme (iii)
—
—
—
(500)
(500)
Dividends paid to equity holders
—
—
(186)
—
(186)
31 December 2023
365
2,394
5,317
(830)
7,246
Profit for the year (i)
—
—
185
—
185
Other comprehensive income
—
—
—
5
5
Total comprehensive income
—
—
185
5
190
Employee share schemes and other share transactions (ii)
—
—
(8)
43
35
Share buyback programme (iii)
—
—
—
(480)
(480)
Shares cancelled in the period (iii)
(21)
—
(400)
421
—
Dividends paid to equity holders
—
—
(219)
—
(219)
31 December 2024
344
2,394
4,875
(841)
6,772
(i)
Includes intercompany dividend income of £nil (2023: £2,635 million).
(ii) Includes taxation on employee share schemes and other share transactions attributable to the Company only.
(iii) See notes 26 and S4 of the Group consolidated Financial Statements for further details of the share buyback programme and share cancellation.
As permitted by Section 408(3) of the Companies Act 2006 no Income Statement or Statement of Comprehensive Income is presented.
Details of the interim and final dividends are provided in notes 11 and 27 to the Group consolidated Financial Statements.
Details of the Company’s share capital are provided in the Group Statement of Changes in Equity and note 26 to the Group consolidated
Financial Statements.
The notes on pages 272 to 280 form part of these Financial Statements, along with note 26 to the Group consolidated Financial Statements.
Strategic Report Governance Financial Statements Other Information
Company Balance Sheet
2024
£m
2023
£m
31 December
Notes
Non-current assets
Property, plant and equipment
IV
9
11
Investments
V
121
94
Deferred tax assets
XII
—
11
Trade and other receivables
VI
15,288
14,274
Derivative financial instruments
VII
103
39
Retirement benefit assets
XIV
42
28
Securities
IX
108
104
15,671
14,561
Current assets
Trade and other receivables
VI
483
590
Derivative financial instruments
VII
140
66
Securities
IX
—
405
Cash and cash equivalents
5,498
5,482
6,121
6,543
Total assets
21,792
21,104
Current liabilities
Derivative financial instruments
VII
(147)
(116)
Trade and other payables
XI
(11,543)
(9,925)
Provisions for other liabilities and charges
—
(2)
Bank overdrafts, loans and other borrowings
XIII
(694)
(789)
(12,384)
(10,832)
Non-current liabilities
Deferred tax liabilities
XII
(1)
(3)
Derivative financial instruments
VII
(204)
(170)
Trade and other payables
XI
—
(3)
Provisions for other liabilities and charges
(1)
(1)
Retirement benefit obligations
XIV
(48)
(49)
Bank loans and other borrowings
XIII
(2,382)
(2,800)
(2,636)
(3,026)
Total liabilities
(15,020)
(13,858)
Net assets
6,772
7,246
Share capital
344
365
Share premium
2,394
2,394
Retained earnings (i)
4,875
5,317
Other equity
II
(841)
(830)
Total shareholders’ equity
6,772
7,246
(i)
Retained earnings includes a net profit after taxation of £185 million (2023: £2,258 million) which includes intercompany dividend income of £nil (2023: £2,635 million).
The Financial Statements on pages 270 to 280, of which the notes on pages 272 to 280 form part, along with note 26 to the Group
consolidated Financial Statements, were approved and authorised for issue by the Board of Directors on 19 February 2025 and were signed
on its behalf by:
Chris O’Shea
Russell O’Brien
Group Chief Executive
Group Chief Financial Officer
Centrica plc Registered No: 03033654
Centrica plc Annual Report and Accounts 2024
271
Notes to the Company Financial Statements
I. GENERAL INFORMATION AND MATERIAL ACCOUNTING POLICIES OF THE COMPANY
General information
The Company is a public company limited by shares, incorporated and domiciled in the UK, and registered in England and Wales.
The registered office is Millstream, Maidenhead Road, Windsor, Berkshire, SL4 5GD.
The Company’s principal activity is to act as an investment holding company that provides both management and treasury services to its
subsidiaries.
(a) Basis of preparation
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under FRS 100 ‘Application of Financial Reporting Requirements’ issued by the FRC. Accordingly, these
financial statements are prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’.
The Company Financial Statements are presented in pounds sterling which is the functional currency of the Company.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-
based payment, financial instruments, capital management, presentation of comparative information in respect of certain assets,
presentation of a cash flow statement, disclosure requirements relating to compensation of key management personnel, disclosure relating
to prior year share capital reconciliation, standards not yet effective, statement of compliance with Adopted IFRSs and certain related party
transactions. Where required, equivalent disclosures are given in the Group consolidated Financial Statements. The principal accounting
policies adopted are the same as those set out in note S2 to the Group consolidated Financial Statements except as noted below.
Investments in subsidiaries, are stated at cost less, where appropriate, provisions for impairment. The Company receives income from its
subsidiaries in the form of interest and dividends. In the current year, the Company has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting
period that begins on or after 1 January 2024. Their adoption has not had any material impact on the disclosures or on the amounts reported
in these financial statements.
Measurement convention
The Company Financial Statements have been prepared on the historical cost basis except for: investments in subsidiaries that have been
recognised at deemed cost on transition to FRS 101; derivative financial instruments, financial instruments required to be measured at fair
value through profit or loss or other comprehensive income, and those financial assets so designated at initial recognition, and the assets
of the defined benefit pension schemes that have been measured at fair value; the liabilities of the defined benefit pension schemes that
have been measured using the projected unit credit valuation method; and the carrying values of recognised assets and liabilities qualifying
as hedged items in fair value hedges that have been adjusted from cost by the changes in the fair values attributable to the risks that are
being hedged.
Going concern
The accounts have been prepared on a going concern basis, as described in the Directors’ Report and note 25(b) of the Group consolidated
Financial Statements.
Strategic Report Governance Financial Statements Other Information
I. GENERAL INFORMATION AND MATERIAL ACCOUNTING POLICIES OF THE COMPANY
Critical accounting judgements and key sources of estimation uncertainty.
There were no critical judgements that would have a significant effect on the amounts recognised in the Company Financial Statements.
The key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
Impairment of other financial assets and credit losses for financial guarantee contracts
There is estimation uncertainty involved in determining expected credited losses for certain intercompany receivable balances where the
ability of the counterparty to repay is based on the valuation of the underlying business. The Company’s impairment policies in relation to
financial assets are consistent with those of the Group, with additional consideration given to amounts owed by Group undertakings.
All outstanding receivable balances are repayable on demand and arise from funding provided by the Company to its subsidiaries. A detailed
review of the amounts owed by Group undertakings for the expected credit loss provision is carried out on an annual basis. The model
considers whether the receivable is repayable on demand within a 12-month period and the probability of default by the counterparty,
considering the financial position of that entity, and the effect of wider macroeconomic conditions on the business performance of the
counterparty, which in turn have direct impact on both the amount that could be recovered from Group undertakings through generated
future cash flows and on the timing of the recovery. The level of provision is sensitive to the assessment of credit worthiness of specific
legal entities as a result. In the current year, the Company holds an expected credit loss provision for amounts owed by Group undertakings
of £692 million on a gross balance of £16,444 million. This represents 4.2% of the gross amounts owed by Group undertakings balance.
Given the impact of expected business performance of Group undertakings on the determination of the level of provision for expected
credit losses, it is reasonably possible that changes to wider macroeconomic conditions impacting the credit worthiness of Group
undertakings could result in a material adjustment to the intercompany receivable carrying amount within the next financial year. Whilst
impracticable to determine the full extent of the possible effects of these changes, based on historic analysis, such a reasonably possible
change could lead to an increase or decrease in the provision of £82 million.
The company has provided financial guarantees relating to its subsidiaries’ trading activities and decommissioning obligations. At 31
December 2024, the Group has derivative liabilities of £1,387 million (2023: £3,006 million), and decommissioning liabilities of £1,459 million
(2023: £1,527 million). See notes 19 and 21 of the Group consolidated Financial Statements. In the current year, the Company holds an
expected credit loss provision of £21 million (2023: £33 million) on these financial guarantee contracts. This represents 0.7% of the gross
balances. A 0.5% change in the provision would lead to an increase or decrease of £14 million. As a result for current year, we do not
consider expected credit losses on financial guarantee contracts to be a key source of estimation uncertainty.
Summary of material accounting policies
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Company
Financial Statements.
Pensions and other post-employment benefits
The Company’s employees participate in a number of the Group’s defined benefit pension schemes. The total Group cost of providing
benefits under defined benefit schemes is determined separately for each of the Group’s schemes under the projected unit credit actuarial
valuation method. Actuarial gains and losses are recognised in full in the period in which they occur. The key assumptions used for the
actuarial valuation are based on the Group’s best estimate of the variables that will determine the ultimate cost of providing post-
employment benefits, on which further detail is provided in notes 3(b) and 22 to the Group consolidated Financial Statements. Asset-
backed contribution assets are included within Company Financial Statements.
Investments
Fixed asset investments in subsidiaries’ shares are held at deemed cost on transition to FRS 101 and at cost in accordance with IAS 27
‘Separate Financial Statements’, less any provision for impairment as necessary. The carrying values of investments in subsidiary
undertakings are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated.
Financial guarantees
The company has issued financial guarantees to its subsidiary undertakings, which it accounts for under IFRS 9. The Company has applied
the impairment requirements of IFRS 9 to these financial guarantees. A financial guarantee contract is measured at fair value at the reporting
date and where the expected credit loss is higher than calculated on recognition, an additional liability is recognised. Expected credit losses
which arise on such arrangements have been calculated according to the nature of the guarantee and the Company’s estimate of potential
exposure at the balance sheet date.
Amounts owed by Group undertakings
Interest bearing amounts owed by Group undertakings are initially recognised at a value based on their transaction price, and are
subsequently held at amortised cost using the effective interest method (taking into account the Group’s business model, which is to
collect the contractual cash flows owing) less an allowance for impairment losses. Balances are written off when recoverability is assessed
as being remote. If collection is expected in one year or less, receivables are classified as current assets. If not, they are presented as non-
current assets.
Amounts due to Group undertakings
Interest bearing amounts due to Group undertakings are initially recognised at fair value, which is usually the original invoice amount and are
subsequently held at amortised cost using the effective interest method. If payment is due within one year or less, payables are classified as
current liabilities. If not, they are presented as non-current liabilities.
Centrica plc Annual Report and Accounts 2024
273
II. OTHER EQUITY
Cash flow
hedging
reserve
£m
Actuarial gains
and losses
reserve
£m
Financial asset
at FVOCI
reserve
£m
Treasury and
own shares
reserve
£m
Share-based
payments
reserve
£m
Capital
redemption
reserve
£m
Total
£m
1 January 2023
(13)
(120)
11
(63)
30
(179)
(334)
Revaluation of FVOCI securities
—
—
3
—
—
—
3
Actuarial losses on defined benefit pension schemes
—
(48)
—
—
—
—
(48)
Employee Share Schemes:
Exercise of awards
—
—
—
22
(20)
—
2
Value of services provided
—
—
—
—
31
—
31
Net proceeds from exercise of share options
—
—
—
6
—
—
6
Share buyback programme: (i)
Purchase of Treasury shares
—
—
—
(615)
—
—
(615)
Movement on accrual for committed share
purchases
—
—
—
—
—
115
115
Impact of cash flow hedging
(3)
—
—
—
—
—
(3)
Taxation on above items (ii)
1
12
(1)
—
1
—
13
31 December 2023
(15)
(156)
13
(650)
42
(64)
(830)
Revaluation of FVOCI securities
—
—
4
—
—
—
4
Actuarial gain on defined benefit pension schemes
—
1
—
—
—
—
1
Employee Share Schemes:
Exercise of awards
—
—
—
27
(21)
—
6
Value of services provided
—
—
—
—
47
—
47
Purchase of own shares
—
—
—
(8)
—
—
(8)
Share buyback programme: (i)
Purchase of Treasury shares
—
—
—
(504)
—
—
(504)
Movement on accrual for committed share
purchases
—
—
—
—
—
24
24
Shares cancelled in the year (i)
—
—
—
400
—
21
421
Impact of cash flow hedging
2
—
—
—
—
—
2
Taxation on above items (ii)
(1)
—
(1)
—
(2)
—
(4)
31 December 2024
(14)
(155)
16
(735)
66
(19)
(841)
(i)
See notes 26 and S4 of the Group consolidated Financial Statements for further details of the share buyback programme and share cancellation.
(ii) Includes current and deferred taxation on above items attributable to the Company only.
III. DIRECTORS AND EMPLOYEES
(a) Employee costs
Year ended 31 December
2024
£m
2023
£m
Wages and salaries
(11)
(12)
Other
(9)
(8)
(20)
(20)
(b) Average number of employees during the year
Year ended 31 December
2024
Number
2023
Number
Administration
229
171
Power
4
11
233
182
Strategic Report Governance Financial Statements Other Information
IV. PROPERTY, PLANT AND EQUIPMENT
Plant,
equipment &
vehicles
2024
£m
Cost
1 January
16
Additions
5
Lease modifications and re-measurements
(1)
31 December
20
Accumulated depreciation
1 January
(5)
Charge for the year
(6)
31 December
(11)
NBV at 31 December (i)
9
(i)
Included within the above are right-of-use assets relating to £7 million of staff salary sacrifice electric vehicles (2023: £5 million) and £2 million of infrastructure services
(2023: £6 million),
V. INVESTMENTS IN SUBSIDIARIES
2024 (i)
£m
2023 (i)
£m
Cost
1 January
94
2,262
Write-downs (ii)
—
(863)
Disposals (iii)
—
(1,313)
Employee share scheme net capital movement (iv)
27
8
31 December
121
94
Provision
1 January
—
(1,313)
Disposals (iii)
—
1,313
31 December
—
—
NBV at 31 December
121
94
(i)
Direct investments are held in Centrica Beta Holdings Limited, which is incorporated in England, and Centrica Ireland Holdings Limited, which is incorporated in Ireland.
The prior year direct investments also included CH4 Energy Limited and Rhodes Holdings HK Limited, which were incorporated in England and Hong Kong respectively,
and have been dissolved in 2024, Related undertakings are listed in note S10 to the Group consolidated Financial Statements.
(ii) In prior year, the Investments in CH4 Energy Limited, and Centrica Beta Holdings Limited were largely written down as deemed irrecoverable at the reporting date.
(iii) In prior year, the disposals predominantly related to Centrica Holdings Limited, following a share for share exchange transaction, swapping the previous investment in
Centrica Holdings Limited for shares in Centrica Ireland Holdings Limited.
(iv) Employee share scheme movement is the net change in shares to be awarded under employee share schemes to employees of Group undertakings.
The Directors believe that the carrying value of the investments is supported by their recoverable value.
VI. TRADE AND OTHER RECEIVABLES
2024
2023
31 December
Current (i)
£m
Non-current (ii)
£m
Current (i)
£m
Non-current (ii)
£m
Amounts owed by Group undertakings
475
15,277
582
14,262
Prepayments and other receivables
8
11
8
12
483
15,288
590
14,274
(i)
The amounts receivable by the Company include a gross balance of £290 million (2023: £480 million) that bears interest at a quarterly rate determined by Group treasury
and linked to the Group cost of funds. The quarterly rates ranged between 3.6% and 5.5% per annum during 2024 (2023: 2.1% and 5.7%). The other amounts receivable
from Group undertakings are interest free. All amounts receivable from Group undertakings are unsecured and repayable on demand. Amounts receivable by the
Company are stated net of credit loss provision of £nil (2023: £nil). During the year, the Company recognised £nil (2023: £15 million release) of expected credit loss
provision on amounts owed by Group undertakings.
(ii) The amounts receivable by the Company include a gross balance of £15,910 million (2023: £15,082 million) due after more than one year that bears interest at a quarterly
rate determined by Group treasury and linked to the Group cost of funds. The quarterly rates ranged between 3.6% and 5.5% per annum during 2024 (2023: 2.1% and
5.7%). The other amounts receivable from Group undertakings are interest-free. All amounts receivable from Group undertakings are unsecured and not expected to be
settled within 12 months from the reporting date. Amounts receivable by the Company are stated net of credit loss provisions of £692 million (2023: £655 million). During
the year, the Company recognised £37 million (2023: £217 million release) of expected credit loss provision on amounts owed by Group undertakings.
Centrica plc Annual Report and Accounts 2024
275
VII. DERIVATIVE FINANCIAL INSTRUMENTS
2024
2023
31 December
Current
£m
Non-current
£m
Total
£m
Current
£m
Non-current
£m
Total
£m
Derivative financial assets
140
103
243
66
39
105
Derivative financial liabilities
(147)
(204)
(351)
(116)
(170)
(286)
All derivatives are recognised at fair value on the date on which the derivative is entered into and are re-measured to fair value at each
reporting date. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative
assets and derivative liabilities are offset and presented on a net basis only when there is a currently enforceable legal right of set-off and the
intention to net settle the derivative contracts is present. The disclosure of current and non-current derivative assets and liabilities is
determined by the settlement date of the derivative.
Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest
rates matching maturities of the contracts. Interest rate swaps are measured at the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from quoted interest rates. The details of external instruments, and the disclosures
in respect of hedging, are presented in note 19 and note S5 to the Group consolidated Financial Statements.
Intercompany derivatives have equal and opposite terms to the external derivatives, therefore the impact on the Company’s profit or loss is
£nil. These instruments are used by the subsidiaries of the Company to economically hedge transactional currency risk of purchases and
sales in foreign currencies.
VIII. FINANCIAL INSTRUMENTS
(a) Determination of fair values
The Company’s policies for the classification and valuation of financial instruments carried at fair value are consistent with those of the
Group, as detailed in note S6 to the Group consolidated Financial Statements.
(b) Financial instruments carried at fair value
2024
2023
31 December
Level 1
£m
Level 2
£m
Total
£m
Level 1
£m
Level 2
£m
Total
£m
Financial assets
Derivative financial assets held for trading:
Foreign exchange derivatives - External
—
128
128
—
69
69
Foreign exchange derivatives - Internal (i)
—
83
83
—
—
—
Derivative financial assets in hedge accounting relationships:
Foreign exchange derivatives
—
32
32
—
36
36
Debt instruments
73
—
73
72
—
72
Equity instruments
35
—
35
32
—
32
Cash and cash equivalents (ii)
—
4,825
4,825
—
4,673
4,673
Total financial assets at fair value
108
5,068
5,176
104
4,778
4,882
Financial liabilities
Derivative financial liabilities held for trading:
Foreign exchange derivatives - External
—
(83)
(83)
—
(134)
(134)
Foreign exchange derivatives - Internal (i)
—
(128)
(128)
—
—
—
Derivative financial liabilities in hedge accounting relationships:
Interest rate derivatives
—
(134)
(134)
—
(136)
(136)
Foreign exchange derivatives
—
(6)
(6)
—
(16)
(16)
Total financial liabilities at fair value
—
(351)
(351)
—
(286)
(286)
(i)
In 2024, all internal derivative financial assets and liabilities held for trading are included in the table above whereas in 2023, £133 million of internal derivatives assets were
included within Trade receivables in note VI, and internal derivative liabilities with a fair value of £66 million were included within Trade payables in note XI.
(ii) The cash and cash equivalents of £4,825 million (2023: £4,673 million) at Level 2 relates to money market funds.
Strategic Report Governance Financial Statements Other Information
IX. SECURITIES
2024
2023
Current
Non-current
Current
Non-current
31 December
£m
£m
£m
£m
Debt instruments
—
73
—
72
Equity instruments
—
35
—
32
Other
—
—
405
—
—
108
405
104
Within Non-current securities, £108 million (2023: £104 million) of investments were held in trust, on behalf of the Company, as security
in respect of the Centrica Unapproved Pension Scheme (refer to note XIV(c)). Other Current securities represents the pension scheme loan
arrangement (including interest) of £nil (2023: £405 million) as disclosed in note XIV(e) of Company Financial Statements and in note 22
to the Group consolidated Financial Statements.
X. LEASE LIABILITIES MATURITY ANALYSIS
A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:
2024
2023
£m
£m
Less than one year
5
5
1-2 years
3
4
2-3 years
1
1
Total lease liabilities (undiscounted)
9
10
Future finance charges are expected to be £0.5 million (2023: £1 million).
2024
2023
Analysed as:
£m
£m
Non-current
4
5
Current
5
5
9
10
Centrica plc Annual Report and Accounts 2024
277
XI. TRADE AND OTHER PAYABLES
2024
2023
31 December
Current (i)
£m
Non-current (ii)
£m
Current (i)
£m
Non-current (ii)
£m
Amounts owed to Group undertakings
(11,430)
—
(9,749)
(3)
Payable on financial guarantee contracts (iii)
(21)
—
(33)
—
Accruals and other creditors (iv)
(91)
—
(107)
—
Taxation and social security (v)
(1)
—
(36)
—
(11,543)
—
(9,925)
(3)
(i)
The current amounts payable by the Company include £10,667 million (2023: £9,582 million) that bears interest at a quarterly rate determined by Group treasury and
linked to the Group cost of funds. The quarterly rates ranged between 3.6% and 5.5% per annum during 2024 (2023: 2.1% and 5.7%). Other amounts payable by the
Company include group relief of £105 million (2023: £nil) and are interest free, unsecured and repayable on demand.
(ii) These other non-current amounts payable by the Company are interest free and unsecured.
(iii) During the year, the Company has released £12 million (2023: £126 million) of expected credit loss provision on financial guarantee contracts. See note XV for further
details.
(iv) During the year, the Company recognised a financial liability of £75 million (2023: £94 million) relating to the share buyback programme. See ‘Own and treasury shares
reserve’ section in note S4 of the Group consolidated Financial Statements for more details.
(v) Includes group relief creditor of £nil (2023: £36 million). This was the amount payable by the Group undertaking and therefore, was regrouped within XI(i) above in 2024.
XII. DEFERRED TAX LIABILITIES AND ASSETS
Retirement
benefit
obligation
£m
Other
£m
Total
£m
1 January 2023
3
(2)
1
(Charge)/credit to income
(5)
2
(3)
Credit to equity
9
1
10
Deferred tax assets at 31 December 2023
7
1
8
Charge to income
(3)
—
(3)
Charge to equity
(3)
(3)
(6)
Deferred tax assets/(liabilities) at 31 December 2024
1
(2)
(1)
Other deferred tax liabilities primarily relate to other temporary differences. All deferred tax crystallises in over one year.
XIII. BANK OVERDRAFTS, LOANS AND OTHER BORROWINGS
2024
2023
31 December
Current
£m
Non-current
£m
Current
£m
Non-current
£m
Bank loans and overdrafts
(645)
(124)
(731)
(130)
Bonds
—
(2,254)
—
(2,665)
Interest accruals
(44)
—
(53)
—
Lease obligations
(5)
(4)
(5)
(5)
(694)
(2,382)
(789)
(2,800)
Disclosures in respect of the Group’s financial liabilities are provided in notes 25 and S3 to the Group consolidated Financial
Statements. With the exception of leases and overdrafts, materially all of the Group’s financing activity is carried out through the
Company.
Strategic Report Governance Financial Statements Other Information
XIV. PENSIONS
(a)
Summary of main schemes
The Company’s employees participate in the following Group defined benefit pension schemes: Centrica Pension Plan (CPP), Centrica
Pension Scheme (CPS) and Centrica Unapproved Pension Scheme. Its employees also participate in the defined contribution Centrica
Savings Plan. Information on these schemes is provided in note 22 to the Group consolidated Financial Statements.
Together with the Centrica Engineers Pensions Scheme (CEPS), CPP and CPS form the significant majority of the Group’s and Company’s
defined benefit obligation and are referred to below and in the Group consolidated Financial Statements as the ‘Registered Pension
Schemes’.
(b)
Accounting assumptions, risks and sensitivity analysis
The accounting assumptions, risks and sensitivity analysis for the Registered Pension Schemes are provided in note 22 to the Group
consolidated Financial Statements.
(c)
Movements in the year
2024
2023
Pension
liabilities
£m
Pension
assets
£m
Pension
liabilities
£m
Pension
assets
£m
1 January
(929)
908
(731)
738
Items included in the Company Income Statement:
Current service cost
(1)
—
(2)
—
Contributions by employer in respect of employee salary sacrifice arrangements (i)
(2)
—
(2)
—
Total current service cost
(3)
—
(4)
—
Interest (expense)/income
(42)
41
(40)
41
Items included in the Company Statement of Comprehensive Income:
Returns on plan assets, excluding interest income
—
(119)
—
144
Actuarial loss from changes to demographic assumptions
(2)
—
(97)
—
Actuarial gain/(loss) from changes in financial assumptions
122
—
(60)
—
Actuarial loss from experience adjustments
—
—
(35)
—
Other movements:
Employer contributions
—
16
—
21
Contributions by employer in respect of employee salary sacrifice arrangements
—
2
—
2
Benefits paid from schemes
44
(44)
38
(38)
31 December
(810)
804
(929)
908
(i)
A salary sacrifice arrangement was introduced on 1 April 2013 for pension scheme members. The contributions paid via the salary sacrifice arrangement have been
treated as employer contributions and included within the current service cost, with a corresponding reduction in salary costs.
Presented in the Company Balance Sheet as:
31 December
2024
£m
2023
£m
Retirement benefit pension assets
42
28
Retirement benefit pension liabilities
(48)
(49)
The pension scheme liabilities relate to the Centrica Unapproved Pension Scheme.
Centrica plc Annual Report and Accounts 2024
279
XIV. PENSIONS
(d)
Defined benefit pension scheme contributions
Note 22 to the Group consolidated Financial Statements provides details of the triennial review carried out at 31 March 2021 in respect
of the UK Registered Pension Schemes and the future pension scheme contributions, including asset-backed arrangements, agreed
as part of this review. Under IAS 19, the Company’s contribution and trustee interest in the Scottish Limited Partnerships are recognised
as scheme assets.
Independent valuations
The Registered Pension Schemes are subject to independent valuations at least every three years, on the basis of which the qualified
actuary certifies the rate of employer contributions, which together with the specified contributions payable by the employees and
proceeds from the schemes’ assets, are expected to be sufficient to fund the benefits payable under the schemes.
Within the reporting period, the latest full actuarial valuations agreed and finalised with the Pension Trustees were carried out at 31 March
2021 in respect of the UK Registered Pension Schemes. These valuations have been updated to 31 December 2024 for the purpose of
meeting the requirements of IAS 19. Investments held in all schemes have been valued for this purpose at market value. In February 2025, full
actuarial valuations of the Registered Pension Schemes at 31 March 2024 were agreed and finalised with the Pension Trustees. The impact
on pension scheme contributions is shown in note 22(g) of the Group consolidated Financial Statements. These valuations will be updated
prospectively in future reporting periods for the purpose of meeting the requirements of IAS 19.
The Company estimates that it will pay £2 million of ordinary employer contributions during 2025 for its defined benefit schemes, together
with £1 million of contributions paid via the salary sacrifice arrangement.
For details of the weighted average duration of the liabilities of the Registered Pension Schemes, see note 22 of the Group consolidated
Financial Statements.
(e)
Pension scheme assets
The market values of plan assets were:
2024
2023
31 December
Quoted
£m
Unquoted
£m
Total
£m
Quoted
£m
Unquoted
£m
Total
£m
Equities
19
491
510
23
503
526
Corporate bonds
12
—
12
6
—
6
High-yield debt
14
1,063
1,077
18
1,238
1,256
Liability matching assets
2,388
—
2,388
2,860
—
2,860
Other long-dated income assets
—
1,025
1,025
—
1,204
1,204
Property
—
303
303
—
305
305
Cash pending investment
248
—
248
391
—
391
Loan and interest
—
—
—
—
(405)
(405)
Asset-backed contribution assets
—
408
408
—
469
469
Group pension scheme assets (i)
2,681
3,290
5,971
3,298
3,314
6,612
2024
£m
2023
£m
Company share of the above
804
908
(i) Total pension scheme assets, including asset-backed contribution assets not recognised in the Group consolidated Financial Statements.
XV. COMMITMENTS AND FINANCIAL GUARANTEES
At 31 December 2024, the Company had commitments of £37 million (2023: £93 million) relating to contracts for outsourced services,
£162 million (2023: £129 million) relating to other contracts and £6 million (2023: £5 million) relating to contracts for property services.
The Company has provided guarantees and letters of credit relating to its subsidiaries’ trading activities and decommissioning obligations.
At 31 December 2024, the Group has derivative liabilities of £1,387 million (2023: £3,006 million), and decommissioning liabilities of
£1,459 million (2023: £1,527 million). See notes 19 and 21 to the Group consolidated Financial Statements for further information on
these balances.
XVI. RELATED PARTIES
During the year the Company accepted cash deposits on behalf of the Spirit Energy group of companies giving rise to a Trade and other
payables balance of £1,621 million (2023: £1,356 million). Spirit Energy Limited is a subsidiary of the Company, held indirectly, that is not
wholly owned.
XVII. POST BALANCE SHEET EVENTS
The post balance sheet events disclosed by the Group are also applicable to the Company. See note 27 to the Group consolidated Financial
Statements for further information.
Strategic Report Governance Financial Statements Other Information
Gas and Liquids Reserves (Unaudited)
The Group’s estimates of reserves of gas and liquids are reviewed as part of the full year reporting process and updated accordingly.
A number of factors affect the volumes of gas and liquids reserves, including the available reservoir data, commodity prices and future
costs. Due to the inherent uncertainties and the limited nature of reservoir data, estimates of reserves are subject to change as additional
information becomes available.
The Group discloses 2P gas and liquids reserves, representing the central estimate of future hydrocarbon recovery. Reserves for Centrica
operated fields are estimated by in-house technical teams composed of geoscientists and reservoir engineers. Reserves for non-operated
fields are estimated by the operator but are subject to internal review and challenge.
As part of the internal control process related to reserves estimation, an assessment of the reserves, including the application of the
reserves definitions, is undertaken by an independent technical auditor. An annual reserves assessment has been carried out by RISC
Advisory for the Group’s global reserves. Reserves are estimated in accordance with a formal policy and procedure standard.
The Group has estimated 2P gas and liquids reserves in Europe.
The principal retained fields in Spirit Energy are Cygnus, Morecambe Hub, Rhyl and Chiswick. The principal non-Spirit Energy field is Rough.
The European reserves estimates are consistent with the guidelines and definitions of the Society of Petroleum Engineers, the Society of
Petroleum Evaluation Engineers and the World Petroleum Council’s Petroleum Resources Management System using accepted principles.
Estimated net 2P reserves of gas
(billion cubic feet)
Spirit Energy (i)
Rough
Total
1 January 2024
242
15
257
Revisions of previous estimates (ii)
(16)
—
(16)
Production (iii)
(51)
(1)
(52)
31 December 2024
175
14
189
Estimated net 2P reserves of liquids
(million barrels)
Spirit Energy (i)
Rough
Total
1 January 2024
1
—
1
Revisions of previous estimates (ii)
1
—
1
Production (iii)
(1)
—
(1)
31 December 2024
1
—
1
Estimated net 2P reserves
(million barrels of oil equivalent)
Spirit Energy (i)
Rough
Total
31 December 2024 (iv)
30
3
33
(i)
The movements represent Centrica’s 69% interest in Spirit Energy.
(ii) Revision of previous estimates include those associated with Morecambe Hub, Chiswick and Cygnus.
(iii) Represents total sales volumes of gas and liquids produced from the Group’s reserves.
(iv) Includes the total of estimated gas and liquids reserves at 31 December 2024 in million barrels of oil equivalent.
Liquids reserves include oil, condensate and natural gas liquids.
Centrica plc Annual Report and Accounts 2024
281
Five Year Summary (Unaudited)
Year ended 31 December
2020 (restated) (i)
£m
2021
£m
2022
£m
2023
£m
2024
£m
Total Group revenue from continuing operations included in business
performance
14,949
18,300
33,637
33,374
24,636
Operating profit/(loss) from continuing operations before exceptional items
and certain re-measurements:
British Gas Services & Solutions (i)
191
121
(9)
47
67
British Gas Energy (i)
82
118
72
751
297
Bord Gáis Energy (i)
42
28
31
1
63
Centrica Business Solutions (i)
(132)
(52)
44
104
73
Centrica Energy (i)
174
70
1,400
774
307
Upstream (i)
90
663
1,793
1,083
789
Colleague profit share
—
—
(23)
(8)
(25)
Meter asset provider consolidation adjustment
—
—
—
—
(19)
447
948
3,308
2,752
1,552
Operating profit from discontinued operations before exceptional items and
certain re-measurements (i)
252
—
—
—
—
Exceptional items and certain re-measurements after taxation
(520)
866
(2,755)
2,165
322
Profit/(loss) attributable to equity holders of the parent
41
1,210
(782)
3,929
1,332
Pence
Pence
Pence
Pence
Pence
Earnings per ordinary share
0.7
20.7
(13.3)
70.6
25.7
Adjusted earnings per ordinary share
6.5
4.1
34.9
33.4
19.0
Dividend per ordinary share in respect of the year
—
—
3.0
4.0
4.5
ASSETS AND LIABILITIES
31 December (restated) (ii)
2020
£m
2021
£m
2022
£m
2023
£m
2024
£m
Goodwill and other non-current intangible assets
1,940
1,161
1,116
745
796
Other non-current assets
4,767
6,040
7,234
4,555
3,793
Net current assets/(liabilities)
622
1,465
(1,023)
4,930
5,242
Non-current liabilities
(8,072)
(6,360)
(6,047)
(5,997)
(5,019)
Net assets of disposal groups held for sale
2,125
444
—
—
—
Net assets
1,382
2,750
1,280
4,233
4,812
Adjusted net (debt)/cash (note 25) (ii)
(2,998)
680
1,199
2,744
2,858
CASH FLOWS
Year ended 31 December (restated) (ii)
2020
£m
2021
£m
2022
£m
2023
£m
2024
£m
Net cash flow from operating activities before exceptional payments
1,532
1,687
1,338
2,758
1,155
Payments relating to exceptional charges in operating costs
(132)
(76)
(24)
(6)
(6)
Net cash flow from investing activities
(285)
2,263
(566)
115
493
Net cash flow before cash flow from financing activities
1,115
3,874
748
2,867
1,642
(i)
Results have been restated to reflect the new operating structure of the Group, effective during 2021.
(ii) Results have been restated to reflect the change in definition of adjusted net cash/debt in 2021.
Strategic Report Governance Financial Statements
Shareholder information
General enquiries
Centrica’s share register is administered and maintained by Equiniti,
our Registrar, whom you can contact directly if you have any
questions about your shareholding which are not answered here or
on our website. You can contact Equiniti using the following details:
Address: Equiniti, Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA, UK
Telephone: +44 (0)371 384 2985*
Contact: help.shareview.co.uk
Website: equiniti.com
You can also contact Equiniti using the Relay UK website
at relayuk.bt.com
* Calls to an 03 number cost no more than a national rate call to an 01 or 02 number.
Lines open 8.30am to 5.30pm, Monday to Friday (UK time), excluding public
holidays in England and Wales.
When contacting Equiniti or registering via shareview.co.uk, you
should have your shareholder reference number to hand. This can
be found on your share certificate, dividend confirmation or any
other correspondence you have received from Equiniti.
Together with Equiniti, we have introduced an electronic queries
service to enable our shareholders to manage their investment at
a convenient time. Details of this service can be found at
shareview.co.uk.
Dividend
As communicated previously, dividends are now paid only by direct
transfer to your bank or building society account, rather than by
cheque. This is faster, more secure and better for the environment.
If you have not already done so, please therefore provide Equiniti
with your bank or building society account details. You can do
this online at shareview.co.uk or by telephoning Equiniti on +44
(0)371 384 2985.
American Depositary Receipt (ADR)
We have an ADR programme, trading under the symbol CPYYY.
Centrica’s ratio is one ADR being equivalent to four ordinary shares.
Further information is available on our website or please contact:
Regular mail delivery address: BNY Mellon Shareowner Services,
PO Box 43006, Providence, RI 02940-3006, USA
Overnight, certified, registered delivery address: BNY Mellon
Shareowner Services, 150 Royall Street, Suite 101, Canton, MA
02021, USA
Email: shrrelations@cpshareownerservices.com
Website: mybnymdr.com
Telephone: +1 888 269 2377 (toll-free in the US)
Outside the US: +1 201 680 6825
Manage your shares online
We actively encourage our shareholders to receive
communications via email and view documents electronically via our
website, centrica.com. Receiving communications and documents
electronically saves your Company money and reduces our
environmental impact. If you sign up for electronic communications,
you will receive an email to notify you that new shareholder
documents are available to view online, including the Annual Report
and Accounts, on the day it is published.
You will also receive alerts to let you know that you can cast your
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shareholding online by registering at shareview.co.uk, a free online
platform provided by Equiniti, which allows you to:
• View information about your shareholding;
• Update your personal details and your bank account details; and
• Appoint a proxy for the AGM.
Centrica FlexiShare
FlexiShare is an easy way to hold Centrica shares without a share
certificate. Your shares are held by a nominee company, Equiniti
Financial Services Limited. However, you are able to attend and vote
at general meetings as if the shares were held in your own name.
Holding your shares in this way is free and gives you:
• Low cost share dealing rates (full details of which are available
on centrica.com, together with dealing charges);
• Quicker settlement periods for buying and selling shares; and
• No paper share certificates to lose.
centrica.com
The Shareholder Centre on our website contains a wide range of
information including a dedicated investors section where you can
find further details about shareholder services including:
• Share price information;
• Dividend history;
• Telephone and internet share dealing;
• Downloadable shareholder forms; and
• Taxation.
This Annual Report and Accounts can also be viewed online by
visiting centrica.com/ar24.
ShareGift
If you have a small number of shares and the dealing costs or the
minimum fee make it uneconomical to sell them, it is possible to
donate them to ShareGift, a registered charity, which provides a
free service to enable you to dispose charitably of such shares.
More information on this service can be found at sharegift.org or by
calling +44 (0)20 7930 3737.
Financial calendar
Ex-dividend date for 2024 final dividend
1 May 2025
Record date for 2024 final dividend
2 May 2025
Annual General Meeting (AGM)
8 May 2025
Payment of 2024 final dividend
5 June 2025
For more information on Centrica’s financial calendar, please
visit centrica.com/investors/financial-calendar.
Centrica plc Annual Report and Accounts 2024
283
Additional information – explanatory notes (unaudited)
Definitions and reconciliation of adjusted performance measures
Centrica’s 2024 consolidated Financial Statements include a number of non-GAAP measures. These measures are chosen as they provide
additional useful information on business performance and underlying trends. They are also used to measure the Group’s performance
against its strategic financial framework. They are not however, defined terms under IFRS and may not be comparable with similarly titled
measures reported by other companies. Where possible they have been reconciled to the statutory equivalents from the primary
statements (Group Income Statement (I/S), Group Balance Sheet (B/S), Group Cash Flow Statement (C/F)) or the notes to the Financial
Statements.
Adjusted revenue, adjusted gross margin, adjusted operating profit, adjusted earnings and free cash flow have been defined and reconciled
separately in notes 2, 4 and 10 to the Financial Statements where further explanation of the measures is given. Additional performance
measures are used within these Financial Statements to help explain the performance of the Group and these are defined and reconciled
below. Further information has been provided to help readers when reconciling between different parts of the consolidated Group Financial
Statements, and when reconciling cash flow measures to the Group Cash Flow Statement.
Adjusted EBITDA
Adjusted EBITDA is a business performance measure of operating profit, after adjusting for depreciation and amortisation. It provides
a performance measure in its own right, and provides a bridge between the Income Statement and the Group’s key cash metrics.
Year ended 31 December
Notes
2024
£m
2023
£m
Change
Group operating profit
I/S
1,703
6,512
Exceptional items included within Group operating profit and certain re-measurements
before taxation
7
128
645
Certain re-measurements before taxation
7
(279)
(4,405)
Share of taxation, depreciation and amortisation of joint ventures and associates
6
257
206
Depreciation and impairments of PP&E (i)
4
409
404
Amortisation and impairments of intangibles (i)
4
87
138
Group total adjusted EBITDA including share of EBITDA from joint ventures and
associates
2,305
3,500
(34) %
Less: share of EBITDA from joint ventures and associates
6
(513)
(415)
Group total adjusted EBITDA
1,792
3,085
(42) %
(i)
These line items relate to business performance only.
Strategic Report Governance Financial Statements Other Information
The below table shows how adjusted EBITDA reconciles to free cash flow:
Year ended 31 December
Notes
2024
£m
2023
£m
Adjusted EBITDA
1,792
3,085
Group operating profit, including share of losses of joint ventures and associates, from exceptional items and
certain re-measurements
I/S
151
3,760
Share of losses of joint ventures and associates, net of interest and taxation, from exceptional items and certain
re-measurements
I/S
—
1
Depreciation, amortisation and impairments, from exceptional items and certain re-measurements
I/S
75
645
Gain on disposals
C/F
(4)
—
Increase/(decrease) in provisions
C/F
110
(1,021)
Cash contributions to defined benefit schemes in excess of service cost income statement charge
C/F
(208)
(215)
Employee share scheme costs
C/F
47
31
Unrealised losses/(gains) arising from re-measurement of energy contracts
C/F
96
(2,949)
Net movement in working capital
C/F
(252)
244
Taxes paid
C/F
(636)
(803)
Operating interest paid
C/F
(16)
(20)
Payments relating to exceptional charges in operating profit
C/F
(6)
(6)
Net cash flow from operating activities
1,149
2,752
Purchase of businesses and assets, net of cash acquired
C/F
(92)
(34)
Sale of businesses, including receipt of deferred consideration
C/F
4
55
Purchase of property, plant and equipment and intangible assets
C/F
(416)
(335)
Investments in joint ventures and associates
C/F
—
(9)
Dividends received from joint ventures and associates
C/F
355
220
Net purchase of other investments
C/F
(56)
(37)
UK pension deficit payments
4
176
180
Movements in variation margin and collateral
4
(131)
(585)
Group total free cash flow
4
989
2,207
The below table shows the reconciliation from net movement in working capital to adjusted net movement in working capital:
Year ended 31 December
Notes
2024
£m
2023
£m
Decrease in inventories
C/F
164
186
Decrease in trade and other receivables and contract-related assets relating to business performance
C/F
241
2,911
Decrease in trade and other payables and contract-related liabilities relating to business performance
C/F
(657)
(2,853)
Net movement in working capital
(252)
244
Less: Movements in collateral included within working capital
25
(47)
(477)
Other reconciling items:
Decrease in provisions related to business performance, excluding payments related to decommissioning
provisions (i)
(5)
(15)
Unrealised gains arising from re-measurement of energy contracts relating to business performance
429
518
Operating interest paid
C/F
(16)
(20)
Other
15
(6)
Adjusted net movement in working capital
124
244
(i)
Decrease in provisions related to business performance excludes payments related to decommissioning provisions of £80 million (2023: £173 million).
Centrica plc Annual Report and Accounts 2024
285
Definitions and reconciliation of adjusted performance measures
Group net investment
With an increased focus on cash generation, capital discipline and managing adjusted net cash/debt, Group net investment provides a
measure of the Group’s capital expenditure from a cash perspective and allows the Group’s capital discipline to be assessed.
Year ended 31 December
Notes
2024
£m
2023
£m
Change
Capital expenditure (including small acquisitions) (i)
564
415
Net disposals (ii)
(4)
(55)
Group net investment
560
360
56%
Dividends received from joint ventures and associates
C/F
(355)
(220)
Interest received
C/F
(317)
(267)
Settlement of securities
C/F
(400)
—
Purchase of securities
C/F
19
12
Net cash inflow from investing activities
C/F
(493)
(115)
329%
(i)
Capital expenditure is the net cash flow on capital expenditure, purchases of businesses, assets and other investments, and investments in joint ventures and associates
(less than £100 million). See table (a).
(ii) Net disposals is the net cash flow from sales of businesses, and property, plant and equipment and intangible assets. See table (b).
Group net investment is capital expenditure including acquisitions less net disposals. It excludes cash flows from investing activities not
associated with capital expenditure as detailed in the table above.
(a) Capital expenditure (including small acquisitions)
Year ended 31 December
Notes
2024
£m
2023
£m
Change
Purchase of property, plant and equipment and intangible assets
C/F
416
335
Purchase of businesses and assets, net of cash acquired
C/F
92
34
Investment in joint ventures and associates
C/F
—
9
Net purchase of other investments
C/F
56
37
Capital expenditure (including small acquisitions)
564
415
36%
(b) Net disposals
Year ended 31 December
Notes
2024
£m
2023
£m
Change
Sale of businesses, including receipt of deferred consideration
C/F
(4)
(55)
Net disposals
(4)
(55)
(93) %
Strategic Report Governance Financial Statements Other Information
Definitions and reconciliation of adjusted performance measures
The following tables provide additional information to help readers when reconciling between different parts of the consolidated Group
Financial Statements, and the Group Cash Flow Statement.
Reconciliation from free cash flow to change in adjusted net cash
Year ended 31 December
Notes
2024
£m
2023
£m
Group total free cash flow
4
989
2,207
Financing interest paid
C/F
(283)
(286)
Interest received
C/F
317
267
Premium paid on debt repurchase
7
(68)
—
UK pension deficit payments
4
(176)
(180)
Proceeds from exercise of share options
C/F
—
6
Payments for own shares
C/F
(8)
—
Share buyback programme
C/F
(499)
(613)
Distributions to non-controlling interests
C/F
—
(17)
Equity dividends paid
C/F
(219)
(186)
Movements in variation margin and collateral
4
131
585
Cash flows affecting adjusted net cash
184
1,783
Non-cash movements in adjusted net cash
(70)
(238)
Change in adjusted net cash
114
1,545
Opening adjusted net cash
25
2,744
1,199
Closing adjusted net cash
25
2,858
2,744
Reconciliation of adjusted net cash to unadjusted net cash
Adjusted net cash is a business performance measure used by management to assess the underlying indebtedness of the business.
Year ended 31 December
Notes
2024
£m
2023
£m
Adjusted net cash
25
2,858
2,744
Less: current and non-current securities
25
(139)
(521)
Less: sub-lease assets
25
—
(2)
Unadjusted net cash
2,719
2,221
Centrica plc Annual Report and Accounts 2024
287
Definitions and reconciliation of adjusted performance measures
Depreciation, amortisation and impairments
Year ended 31 December
Notes
2024
£m
2023
£m
Movement from depreciation, amortisation and impairments, from exceptional
items included in the Group Cash Flow Statement
7
75
645
Comprised of:
Impairment of power assets
7
75
563
Impairment of gas storage asset
7
—
82
Movement from depreciation, amortisation and impairments, from business performance included in the
Group Cash Flow Statement
496
542
Comprised of:
Business performance PP&E depreciation
4
387
395
Business performance PP&E impairments
4
22
9
Business performance intangibles amortisation
4
86
123
Business performance intangibles impairments
4
1
15
Movement from depreciation, amortisation and impairments included in the Group Cash Flow Statement
571
1,187
Reconciliation of receivables and payables to the Group Cash Flow Statement
Year ended 31 December
Notes
2024
£m
2023
£m
Receivables opening balance
B/S
5,619
8,579
Less: receivables closing balance
B/S
(5,383)
(5,619)
Payables (incl. insurance contract liabilities) opening balance
B/S
(7,372)
(10,341)
Less: payables (incl. insurance contract liabilities) closing balance
B/S
6,742
7,372
Net movement in receivables and payables
(394)
(9)
Non-cash changes, and other reconciling items:
Movement in share buyback liability
19
113
Business acquisitions and disposals
(28)
(55)
Movement in capital creditors
(20)
8
Movement in ROCs and emission certificate intangible assets
(26)
(13)
Other movements (including foreign exchange movements)
33
14
Non-cash changes, and other reconciling items
(22)
67
Movement in trade and other receivables, trade and other payables and contract-related assets/liabilities relating
to business performance
C/F
(416)
58
Pensions
Year ended 31 December
Notes
2024
£m
2023
£m
Cash contributions to defined benefit schemes in excess of service cost income statement charge
C/F
(208)
(215)
Ordinary employer contributions
22
(51)
(56)
UK pension deficit payments
22
(176)
(180)
Contributions by employer in respect of employee salary sacrifice arrangements
22
(24)
(24)
Total current service cost, including salary sacrifice
22
42
46
Termination cost/(benefit)
22
1
(1)
Strategic Report Governance Financial Statements Other Information
People and Planet – Performance measures
In 2024, we engaged DNV Business Assurance Services UK Limited (DNV) to conduct an independent limited assurance engagement using
the International Standard on Assurance Engagements (ISAE) 3000 (Revised): ‘Assurance Engagements Other Than Audits or Reviews of
Historical Financial Information’. DNV has provided an unqualified opinion in relation to five KPIs that are identified with the symbol ‘†’ and
feature on pages 1, 62, 75 to 76, 289 and 291. It is important to read the responsible business information in the Annual Report and Accounts
2024 in the context of DNV’s full limited assurance statement and Centrica’s Basis of Reporting, which are available at
centrica.com/assurance
Read more about our People & Planet Plan on pages 58 to 77
Read more about our wider non-financial performance at centrica.com/datacentre
Progress against our People & Planet Plan
Key | Progress against goals:
On track
Behind
Goal
Milestone
2024 Progress
2023 Progress
Create an engaged team that reflects the full
diversity of the communities we serve by 2030 –
this means all company and senior leaders
to be (i):
• 48% women
• 18% ethnically diverse
• 20% disability
• 3% LGBTQ+
• 4% ex-service
By the end of 2025:
• 40% women
• 16% ethnically diverse
• 10% disability
• 3% LGBTQ+
• 3% ex-service
All company: (ii)
Senior leaders: (ii)
• 31% women
• 30% women
– 41% excluding
Field engineers
– 41% excluding
Field engineers
• 16% ethnically diverse
• 15% ethnically diverse
• 6% disability
• 3% disability
• 4% LGBTQ+
• 3% LGBTQ+
• 2% ex-service
• 2% ex-service
Senior leaders: (ii)
Senior leaders: (ii)
• 34% women
• 32% women
– 31% excluding
Field engineers
– 32% excluding
Field engineers
• 10% ethnically diverse
• 9% ethnically diverse
• 5% disability
• 2% disability
• 2% LGBTQ+
• 2% LGBTQ+
• 2% ex-service
• 2% ex-service
Recruit 3,500 apprentices and provide career
development opportunities for under-
represented groups by 2030
(base year 2021)
2,000 apprentices by the
end of 2025
1,537 apprentices
1,198 apprentices
Inspire colleagues to give 100,000 days
to build inclusive communities by 2030
(base year 2019)
35,000 days by the end of
2025
31,639 days
20,956 days (iii)
Help our customers be net zero by 2050 (iv)
(base year 2019)
28% greenhouse gas
(GHG) intensity reduction
by the end of 2030
6% reduction †
9% reduction (iii)
Be a net zero business by 2040 (v)
(base year 2019)
50% GHG reduction by the
end of 2032
18% reduction
21% reduction
† Included in DNV’s independent limited assurance report. See page 289 or centrica.com/assurance for more.
(i)
Aligns with latest 2021 Census data for working populations.
(ii) Beyond gender, Centrica’s 2024 performance is based on colleague voluntary disclosure of 94% ethnic diversity, 51% disability, 59% LGBTQ+ and 4% ex-service. For
2023, this was 74% ethnic diversity, 45% disability, 51% LGBTQ+ and 3% ex-service. All company relates to everyone who works for Centrica. Senior leaders include
colleagues above general management and spans senior leaders, the Centrica Leadership Team and the Board.
(iii) Restated due to availability of improved data.
(iv) Net zero goal measures the GHG intensity of our customers’ energy use including electricity and gas with a 2019 base year of 182gCO2e/kWh. Target is normalised to
reflect acquisitions and divestments in line with changes in Group customer base. It’s also aligned to the Paris Agreement and based on science to limit global warming,
corresponding to a well below 2°C pathway initially and 1.5°C by mid-century.
(v) Following an update to our Climate Transition Plan (see page 73), we accelerated our net zero goal which was previously focused on achieving a 40% reduction in
emissions by the end of 2034 and net zero by 2045. Net zero goal measures Scope 1 (direct) and 2 (indirect) GHG emissions based on operator boundary. Comprises
emissions from all operated assets and activities including the shipping of Liquefied Natural Gas (LNG) alongside the retained Spirit Energy assets in the UK and the
Netherlands. Non-operated nuclear emissions are excluded. Target is normalised to reflect acquisitions and divestments in line with changes in Group structure against a
2019 base year of 2,120,446mtCO2e. It’s also aligned to the Paris Agreement and based on science to limit global warming, corresponding to a well below 2°C pathway
initially and 1.5°C by 2040.
Centrica plc Annual Report and Accounts 2024
289
Progress against our Foundations
People
Metric
2024
2023
What’s next
Customers
British Gas Services & Solutions –
Services Engineer Net Promoter
Score (NPS) (i)
+73
+71
Deliver energy, services and solutions that energise a greener, fairer
future for all
British Gas Energy – Residential
energy Touchpoint NPS (ii)
+29
+17
Bord Gáis Energy – Journey NPS (iii)
+36
+18
Centrica Business Solutions – Energy
supply Touchpoint NPS (iv)
+37
+25
British Gas Services & Solutions –
Services complaints per customer (vi)
5.3%
6.0%
Maintain focus on driving down complaints by improving customer
experience
British Gas Energy – Residential
energy complaints per customer (vii)
10.1%
13.3%
Bord Gáis Energy – Complaints per
customer (viii)
0.9%
1.7%
Centrica Business Solutions – Energy
supply complaints per site (ix)
2.4%
3%
Customer safety incident frequency
rate per 1,000,000 jobs completed
1.15
2.82
Keep customers safe by following controls and encouraging customers
to maintain distance from work areas
(i)
Measured independently, through individual questionnaires, the customer’s willingness to recommend British Gas following a gas engineer visit.
(ii)
Measured independently, through individual questionnaires, the customer’s willingness to recommend British Gas Energy following contact.
(iii)
Weighted NPS for the main customer interaction channels.
(iv) Measured independently, through individual questionnaires and the customer’s willingness to recommend, on a year-to-date basis.
(v)
Restated to reflect changes in methodology. NPS now uses year-to-date data whilst complaints uses sites rather than customer numbers.
(vi) Total complaints, where we identify material distress, inconvenience or financial loss, as a percentage of average customers over the year.
(vii) Total complaints, measured as an expression of dissatisfaction in line with submissions made to Ofgem, as a percentage of average customers over the year.
(viii) Total complaints, measured as any oral or written expression of dissatisfaction, as a percentage of average customers over the year.
(ix) Total complaints, measured as any oral or written expression of dissatisfaction, as a percentage of total sites over the year.
Metric
2024
2023
What’s next
Colleagues
Colleague engagement (i)
8.1
7.7
Strive to maintain current high engagement levels by continuing to
connect colleagues with our Purpose and strategy whilst creating an
inspiring and inclusive workplace, that motivates colleagues and
empowers us all to go further and faster
Gender pay gap (ii)
13% median
14% median
Reduce our pay gaps by building a diverse and inclusive team through
our People & Planet Plan and associated Diversity, Equity and Inclusion
Action Plans
13% mean
15% mean
Gender bonus gap (iii)
20% median
14% median
48% mean
36% mean
Ethnicity pay gap (ii) (iv)
7% median
11% median
10% mean
2% mean
Ethnicity bonus gap (iii) (iv)
21% median
25% median
–12% mean
4% mean
Retention
91%
90%
Improve retention through our focus on talent development whilst
providing a supportive and inclusive culture
Absence (v)
12 days
10 days
Reduce absence through good management practices alongside
proactive support and education via our health and wellbeing suite
of support
Total recordable injury frequency rate
(TRIFR) per 200,000 hours worked
0.63
0.84
Drive down TRIFR and LTIFR by keeping safety front-of-mind
and reinforcing a strong safety culture whilst advancing controls
and monitoring
Lost time incident frequency rate
(LTIFR) per 200,000 hours worked
0.38
0.44
Process safety incident frequency
rate (Tier 1 and 2) per 200,000 hours
worked
0.10
0.09
Continue to ensure robust operational controls and operator
competencies, timely safety-critical maintenance programmes
and effective performance management
Significant process safety events (Tier 1)
1
1
Fatalities
0
1 (vi)
Maintain zero fatalities
(i)
Based on an average score out of 10, measuring how colleagues feel about the Company.
(ii) Based on hourly rates of pay for all employees at full pay (including bonus and allowances) at the snapshot dates of 5 April 2023 and 2024. Read our Gender and Ethnicity
Pay Statement to find out more at centrica.com/pay.
(iii) Includes anyone receiving a bonus during the 12-month period leading up to the pay gap snapshot date and who are still employed on the snapshot date.
(iv) Based on 77% of colleagues in 2024 and 74% of colleagues in 2023, who confirmed whether they are from a Black, Asian or Mixed/Other ethnic group.
(v) Relates to absence from sickness rather than wider forms of absence such as bereavement. Scope based on UK where the majority of our team are located due to
absence being tracked differently across geographies.
(vi) A road traffic collision involving a Dyno Franchisee, resulted in a member of the public sadly losing their life.
Strategic Report Governance Financial Statements Other Information
(v)
(v)
Metric
2024
2023
What’s next
Communities
Total community
contributions
£601.8m (i)
£501.4m (ii)
Continue to make a big difference across our local
communities – from helping people with their energy bills and
emissions, to volunteering and fundraising for local causes
that colleagues care passionately about
On the ground site audits
completed
27
20
Continue to monitor and raise standards across our supply
chain to reduce risk and guard against modern slavery,
focusing on enhancing engagement and controls
Sites completing remote
worker surveys
7
13
Colleagues committed to
Our Code
99%
96%
Ensure all colleagues uphold Our Code as part of our
commitment to doing the right thing and acting with integrity
(i)
Comprises £596.8m in mandatory and £1.4m in voluntary contributions to support vulnerable customers and communities, alongside £3.6m in charitable donations
which includes £0.2m in contributions from third parties such as colleague payroll giving.
(ii) Comprises £409.4m in mandatory and £88.1m in voluntary contributions to support vulnerable customers, communities and colleagues, alongside £3.8m in charitable
donations which includes £0.2m in contributions from third parties such as colleague payroll giving. Sum of constituent parts does not align with total due to rounding.
Restated due to availability of improved data.
Planet
Metric
2024
2023
What’s next
Greenhouse gas (GHG)
and energy
Total GHG emissions
(Scope 1 and 2) (i)
1,733,882tCO2e (ii) †
1,685,840tCO2e (iii) (iv)
Measure and reduce emissions to achieve our People &
Planet Plan goals of being a net zero business by 2040 and
helping our customers be net zero by 2050, enabled through
the delivery of our Climate Transition Plan
Scope 1 emissions
1,726,177tCO2e (v) †
1,678,457tCO2e (iv) (vi)
Scope 2 emissions
7,706tCO2e (vii) †
7,383tCO2e (iv) (viii)
Scope 3 emissions (ix)
21,860,510tCO2e
21,180,922tCO2e
Total GHG intensity
by revenue (x)
87tCO2e/£m (xi)
64tCO2e/£m (xii)
Analyse the impact of our strategy on decoupling GHG
emissions from value creation
Total energy use
7,925,163,679kWh (xiii) †
7,437,652,380kWh (iv) (xiv)
Remain focused on energy efficiency as we strive to be a net
zero business by 2040
Water, waste and
non-compliance
Total water use
357,260m3
335,512m3
Effectively monitor, manage and reduce our water use and
waste production, as well as our incidence of environmental
non-compliance
Total waste generated
16,651 tonnes
15,161 tonnes
Environmental
non-compliance (xv)
2
12
Reporting is based on operator boundary which is the more commonly used approach for reporting environmental matters, and includes all emissions from our shipping
activities relating to LNG alongside the retained Spirit Energy assets in the UK and Netherlands. Non-operated nuclear emissions are excluded.
†
Included in DNV’s independent limited assurance report. See page 289 or centrica.com/assurance for more.
(i)
Comprises Scope 1 and Scope 2 emissions as defined by the Greenhouse Gas Protocol.
(ii)
Comprises UK 578,677tCO2e and non-UK 1,155,205tCO2e.
(iii)
Comprises UK 547,555tCO2e and non-UK 1,138,285tCO2e.
(iv) Included in DNV’s limited assurance scope for the Annual Report 2023. See centrica.com/performanceandreporting for our 2023 Basis of Reporting and DNV’s 2023
Assurance Statement. Previous figures included in DNV’s limited assurance scope which have subsequently been restated due to availability of improved data are Total
GHG emissions (Scope 1 and 2): 1,681,475tCO2e, Scope 1: 1,674,829tCO2e and Scope 2: 6,647tCO2e.
(v)
Comprises UK 572,939tCO2e and non-UK 1,153,238tCO2e.
(vi) Comprises UK 542,244tCO2e and non-UK 1,136,213tCO2e.
(vii) Market-based, comprises UK 5,738tCO2e and non-UK 1,967tCO2e. Sum of constituent parts does not align with total due to rounding. Location-based is 17,361tCO2e.
(viii) Market-based, comprises UK 5,312tCO2e and non-UK 2,071tCO2e. Location-based is 17,041tCO2e.
(ix) Includes emissions from the following Scope 3 categories defined by the Greenhouse Gas Protocol: purchased goods and services, capital goods, fuel and energy-
related activities, waste generated in operations, business travel, employee commuting, upstream and downstream transportation and distribution, use of sold
product and investments. All emissions are calculated in line with the methodologies set out by the Greenhouse Gas Protocol’s technical guidance, apart from
working from home emissions which are based on methodology set out in EcoAct’s homeworking emissions whitepaper. Other categories spanning upstream leased
assets, processing of sold products, end-of-life treatment of sold product, downstream leased assets and franchises, are not included because they are not relevant
to our business.
(x)
Carbon intensity of revenue is employed as our intensity measure because it is the most meaningful intensity measure for our diverse business and is the most widely
used and understood measure for climate-related stakeholders such as CDP. Based on statutory revenue.
(xi) Comprises UK 36tCO2e/£m and non-UK 315tCO2e/£m.
(xii) Comprises UK 25tCO2e/£m and non-UK267tCO2e/£m.
(xiii) Comprises UK & Offshore 1,812,987,689kWh and non-UK energy use 6,112,175,991kWh. Sum of constituent parts does not align with total due to rounding.
(xiv) Comprises UK & Offshore 1,654,616,311kWh and non-UK energy use 5,783,036,069kWh.
(xv) Includes breaches of environmental authorisation including permit, licence and consent coupled with wider environmental legislation where we are either required
to notify the regulator or where an authority or regulator is involved. The majority of incidents relate to offshore activities.
Centrica plc Annual Report and Accounts 2024
291
Glossary
$
Refers to US dollars unless specified otherwise
2P reserves
Proven and probable reserves
Acas
The Advisory, Conciliation and Arbitration Service is an
independent public body that receives funding from the UK
Government to provide employees and employers with free
impartial advice on workplace rights and to help resolve
disputes
AGM
Annual General Meeting
AIP
Annual Incentive Plan
bcf
Billion cubic feet
CFD
Climate-related Financial Disclosure
CHP
Combined Heat and Power
CO2e
Universal unit of measurement of the global warming potential
(GWP) of greenhouse gases (GHG) expressed in terms of the
GWP of one unit of CO2e (carbon dioxide equivalent)
CPI
Consumer Price Index
CSS
Consolidated Segmental Statement
CUPS DB
Centrica Unapproved Pension Scheme defined benefit
CUPS DC
Centrica Unapproved Pension Scheme defined contribution
Data analytics
The process of examining data sets to draw conclusions and
insights about the information they contain
EBITDA
Earnings before interest, tax, depreciation and amortisation
EBT
Employee Benefit Trust
EP
Economic profit
EPS
Earnings per share
ESG
Environmental, Social & Governance
Ethnically
diverse
Colleagues from a Black, Asian, Mixed or other ethnic
background
EV
Electric vehicle
EU
European Union
FCA
Financial Conduct Authority
FCF
Free cash flow
FRS
Financial Reporting Standards
GDPR
General Data Protection Regulation
GHG
Greenhouse gas emissions
GM
Gross margin
GMB
Trade union
Green jobs
Jobs that have a direct positive impact on the planet
GW
Gigawatt
GWh
Gigawatt hour
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
KPI
Key performance indicators
kWh
Kilowatt hour
LGBTQ+
Lesbian, Gay, Bisexual, Trans and Queer/Questioning plus. The
‘plus’ is inclusive of other groups such as asexual, intersex and
questioning
LNG
Liquefied natural gas
LTIFR
Lost time injury frequency rate
mmboe
Million barrels of oil equivalent
MThms
Million therms
MWh
Megawatt hour
Net zero
The point at which there is a balance between human-related
carbon dioxide (CO2) being emitted into the atmosphere and
the CO2 taken out
NGO
Non-governmental organisation
NPS
Net Promoter Score
Ofgem
The government regulator for gas and electricity markets
in Great Britain
Paris
Agreement
A global agreement to keep temperature rise well below 2°C
above pre-industrial levels, and pursue efforts to limit the
increase to 1.5°C
PP&E
Property, Plant and Equipment
ppt
Percentage point
Process safety
Process safety is concerned with the prevention of harm
to people and the environment, or asset damage from major
incidents such as fires, explosions and accidental releases
of hazardous substances
PRA
Prudential Regulatory Authority
PRT
Petroleum Revenue Tax
PWR
Pressurised water reactor
RBD
Reconciliation by difference
ROC
Renewable Obligation Certificate
RPI
Retail Price Index
SAYE
Save As You Earn
SESC
Safety, Environment and Sustainability Committee
SIP
Share Incentive Plan
tCO2e
Tonnes of carbon dioxide equivalent
T&Cs
Terms and Conditions
TCFD
Task Force on Climate-related Financial Disclosures
The Company
Centrica plc
The Group
Centrica plc and all of its subsidiary entities
TRIFR
Total recordable injury frequency rate
TSR
Total shareholder return
TWh
Terawatt hour
UAOCF
Underlying adjusted operating cash flow
Under-
represented
groups
A person or group of people who are insufficiently or
inadequately represented in society such as women
apprentices or those who are ethnically diverse, have
a disability, are LGBTQ+ or carers
VIU
Value in use
WBCSD
World Business Council for Sustainable Development
WRI
World Resources Institute
Strategic Report Governance Financial Statements Other Information
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Disclaimer
This Annual Report and Accounts does not constitute an invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any Centrica shares or other securities.
This Annual Report and Accounts contains certain forward-looking statements, forecasts
and projections that reflect the current intentions, beliefs or expectations of Centrica’s
Management with respect to, the Group’s financial condition, goals and commitments,
prospects, growth, strategies, results, operations and businesses of Centrica.
These statements only take into account information that was available up to and
including the date that this Annual Report and Accounts was approved and can be
identified by the use of terms such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’,
‘believe’, ‘expect’, ‘forecasts’, ‘may’, ‘could’, ‘should’, ‘will’, ‘continue’ and other similar
expressions of future performance and results including any of their negatives.
Although we make such statements based on assumptions that we believe to be
reasonable, by their nature, readers are cautioned that these forward-looking statements
are not guarantees or predictions of the Group’s future performance and undue reliance
should not be placed on them when making investment decisions. Any reliance placed on
this Annual Report and Accounts or past performance is not indicative of future results
and is done entirely at the risk of the person placing such reliance.
There can be no assurance that the Group’s actual future results, financial condition,
performance, operations and businesses will not differ materially from those expressed or
implied in the forward-looking statements due to a variety of factors that are beyond the
control of the Group and therefore cannot be precisely predicted. Such factors include,
but not limited to, those set out in the Principal Risks and Uncertainties section of the
Strategic Report in this Annual Report and Accounts. Other factors could also have an
adverse effect on our business performance and results.
At any time subsequent to the approval of this Annual Report and Accounts, neither
Centrica nor any other person assumes responsibility for the accuracy and completeness
or undertakes any obligation, to update or revise any of these forward-looking
statements to reflect any new information or any changes in events, conditions or
circumstances on which any such forward-looking statement is based save in respect of
any requirement under applicable law or regulation.
Further when considering the information contained in, or referred to in this Annual Report
and Accounts, please note that profit and inventory from Rough operations are reported
under Centrica Energy Storage Limited, also referred to as Centrica Energy Storage+, for
presentational purposes only. Centrica Energy Storage Limited does not produce, supply
or trade gas, except to the extent necessary for the efficient operation of the storage
facility. In accordance with the Gas Act 1986, such production, supply and trading of gas
is carried out wholly independently of Centrica Energy Storage Limited by other Centrica
group companies.
Certain figures shown in this announcement were rounded in accordance with standard
business rounding principles and therefore there may be discrepancies.
Centrica plc
Registered office:
Millstream
Maidenhead Road
Windsor
Berkshire
SL4 5GD
Company registered
in England and Wales
No. 3033654
centrica.com