iso4217:GBP iso4217:GBP xbrli:shares E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 cna:BusinessPerformanceMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 cna:ExceptionalItemsAndCertainReMeasurementsMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 cna:ResultsForTheYearMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 cna:BusinessPerformanceMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 cna:ExceptionalItemsAndCertainReMeasurementsMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 cna:ResultsForTheYearMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:IssuedCapitalMember E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:SharePremiumMember E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:RetainedEarningsMember E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:OtherReservesMember E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember E26EDV109X6EEPBKVH76 2023-12-31 ifrs-full:NoncontrollingInterestsMember E26EDV109X6EEPBKVH76 2023-12-31 E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:IssuedCapitalMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:SharePremiumMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:OtherReservesMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember E26EDV109X6EEPBKVH76 2024-01-01 2024-12-31 ifrs-full:NoncontrollingInterestsMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:IssuedCapitalMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:SharePremiumMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:RetainedEarningsMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:OtherReservesMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember E26EDV109X6EEPBKVH76 2024-12-31 ifrs-full:NoncontrollingInterestsMember E26EDV109X6EEPBKVH76 2024-12-31 E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:IssuedCapitalMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:SharePremiumMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:RetainedEarningsMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:OtherReservesMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember E26EDV109X6EEPBKVH76 2025-01-01 2025-12-31 ifrs-full:NoncontrollingInterestsMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:IssuedCapitalMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:SharePremiumMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:RetainedEarningsMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:OtherReservesMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember E26EDV109X6EEPBKVH76 2025-12-31 ifrs-full:NoncontrollingInterestsMember E26EDV109X6EEPBKVH76 2025-12-31
Energising a
greener, fairer future
Centrica plc | Annual Report and Accounts 2025

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

We’re focused on providing the
energy, services and solutions
our customers need t oday, whil e
investing in a more sustainable
and secure energy future.
For over 200 years, we’ve remained
at the heart of the UK energy
sector, with our business now
united around a single purpose –
e nergising a g reener, fairer future.

Contents

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 | Our business model
16 | Our market trends
17 | Our strategic drivers
18 | Group Chief Financial Officer’s report
23 | Our view on taxation
24 | Business review
30 | Key performance indicators
32 | Our Principal Risks and uncertainties
40 | Assessment of viability
42 | People and Planet
48 | Non-Financial and Sustainability Information Statement
49 | Task Force on Climate-related Financial Disclosures

Governance
59 | Directors’ and Corporate Governance Report
61 | Governance framework
62 | Biographies
65 | Board of Directors
67 | Board activities
70 | The Board’s duties under Section 172
72 | Audit and Risk Committee
81 | Nominations Committee
84 | Safety, Environment and Sustainability Committee
86 | Remuneration Report
108 | Remuneration Policy
116 | Other statutory information

Financial Statements
121 | Independent Auditor’s Report
134 | Group Income Statement
135 | Group Statement of Comprehensive Income
136 | Group Statement of Changes in Equity
137 | Group Balance Sheet
138 | Group Cash Flow Statement
139 | Notes to the Financial Statements
235 | Company Financial Statements
245 | Gas and Liquids Reserves (Unaudited)
246 | Five Year Summary (Unaudited)
Other Information
247 | Shareholder Information
248 | Additional Information – Explanatory Notes (Unaudited)
253 | People and Planet – Performance Measures
256 | Glossary

| 1

Centrica plc Annual Report and Accounts 2025

Group highlights
We reported lower earnings in 2025, primarily driven by market
challenges in Centrica Energy and outages and lower prices in
Infrastructure, however, our performance was resilient in the context
of the external backdrop. It was also a year of strong strategic
progress for the Group as we lay the foundation for the next phase of
growth. Supported by continued operational improvements and
greater levels of customer satisfaction, we grew customers across
Retail. Alongside this, we delivered a step-change in our investment
programme, investing in crucial strategic assets for the UK energy
system such as the Sizewell C new nuclear power station and the
Grain LNG terminal, as we continue to pivot our Infrastructure portfolio
to help create a fundamentally stronger and higher quality Centrica.

Group operational metrics
Home Energy Supply UK Touchpoint Net Promoter Score (NPS) (1,2) |  | Home Services UK Engineer NPS(1,2) |  |  | Total recordable injury frequency rate (per 200,000 hours worked)
2025 |  |  | +33 |  | 2025 |  |  | +76 |  | 2025 |  |  | 0.61
2024 |  |  | +29 |  | 2024 |  |  | +73 |  | 2024 |  |  | 0.63
Colleague engagement (3) |  | Total greenhouse gas emissions (tCO 2 e) (4) |  |  |  |  |
2025 |  |  | 7.9 |  | 2025 |  |  | 1,580,933 |  |  |
2024 |  |  | 8.1 |  | 2024 |  |  | 1,732,328 |  |  |

†

Group financial metrics (Year ended 31 December 2025)
Group statutory operating profit (£m) |  | Group adjusted operating profit (£m) |  | Group statutory basic EPS (pence) |  | Group adjusted basic EPS (pence)
2025 |  |  | 106 |  | 2025 |  |  | 814 |  | 2025 |  |  | (1.5) |  | 2025 |  |  | 11.2
2024 |  |  | 1,703 | 2024 |  |  | 1,552 | 2024 |  |  | 25.7 |  | 2024 |  |  | 19.0
Group statutory net cash flow from operating activities (£m) |  | Group free cash flow (£m) |  | Adjusted net cash (£m) |  | Full year dividend per share (pence)
2025 |  |  | 695 |  | 2025 |  |  | (167) |  | 2025 |  |  | 1,487 |  | 2025 |  |  | 5.5
2024 |  |  | 1,149 | 2024 |  |  | 989 |  | 2024 |  |  | 2,858 | 2024 |  |  | 4.5

† Included in DNV Business Assurance Services UK Limited (DNV)’s independent limited assurance engagement. See page 253 or centrica.com/assurance for more.
(1) Measured independently, through individual questionnaires, the customer’s willingness to recommend British Gas following contact or a Home Services gas engineer visit.
(2) The Group has redefined its operating and reportable segments during the year to reflect a change in the way the business is organised. Reportable and operating segments are now
defined as Retail, Optimisation and Infrastructure. Home Energy Supply UK and Home Services UK are both part of the Retail segment.
(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. 2024 restated due to availability of improved data.
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 18 to 22. See also notes 2, 4 and 10 to
the Financial Statements on pages 141, 149 to 152 and 164 for further details of these adjusted performance measures. In addition see pages 248 to 252 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 257.

2 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Centrica at a glance
Centrica is an integ rated energy company, connecting
customers to secure, efficient and low carbon energy
solutions. Across the energy system, we create value for
all our stakeholders by producing, optimising and delivering
the energy needed today, while supporting the transition to a
greener, fairer future.

Our business model

We provide a leading customer experience for
energy supply and services across the UK and
Ireland, helping customers decarbonise
through reliable, affordable and
innovative offerings.
We move energy from source to use,
connecting producers and suppliers
with offtakers while continuing to
support the flexibility required for
the future energy system.
Energising a
greener, fairer,
future
We are investing to build a low carbon, reliable
energy system from upstream generation
and storage assets to smart technology
enabling flexibility for consumers.
― Read more about our business model on page 14

| 3

Centrica plc Annual Report and Accounts 2025

Our values

Key figures
22,000
Colleagues worldwide
7,000+
Field service engineers
10m+
Customers
19.5GW
Renewable and flexible
capacity under management
>50%
Of the UK’s total gas storage capacity
20%
Share of the UK’s nuclear power
generation
10%
Of Ireland’s power demand
Collaboration
Care
Courage
Delivery
Agility
― Read more about our Purpose and values on page 11

Our People & Planet Plan

Supporting
communities,
our planet and
each other
People
Planet
Our People & Planet Plan is creating a more sustainable future – from
becoming a net zero business by 2040 and helping customers be net
zero by 2050, to building the diverse and inclusive team we need to
succeed whilst making a big difference in our local communities.
― Read more about our People & Planet Plan on page 42, with further
information available at centrica.com/peopleandplanet

4 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Chair’s statement
Kevin O’Byrne
Chair
The past 12 months were marked by
significant challenges and opportunities.
Throughout, Centrica has remained
steadfast in its commitment to supporting
customers and colleagues, delivering resilient
performance in a challenging environment,
executing our strategy and delivering for
shareholders. This Annual Report sets out
how we are building a strong, responsible
business, one that is well positioned to lead in
a rapidly changing world.
Supporting our customers
Despite some of the pressures easing on
energy bills, your Board remains committed
to supporting customers through
challenging times. The cost of living
pressures and concerns around energy
In a fast-changing
environment, we remain
focused on delivering
for our customers and
colleagues, creating
sustainable value for
our shareholders while
contributing to a fair UK
energy transition.
security continue to test households and
businesses alike.
I’m proud of how we’ve supported those
who need it most, especially through our
£140m energy support package, which we
launched in 2022, and is the UK and Ireland’s
largest voluntary energy sector initiative.
We continue to find innovative ways to
support our customers, including our
pioneering ‘You Pay: We Pay’ programme,
which matches payments made by
customers in or at risk of fuel poverty.
Through our energy support package
alongside our wider support, we also
strengthened our partnership with the
British Gas Energy Trust, enabling it to
expand grants and provide accessible
community‑based energy advice. Over
2024–25, the Trust helped 72,000 people
and distributed £14.3m in grants to help
households and organisations across Britain
tackle energy debt, receive guidance and
restore financial stability.
These actions provide vital support to
those most in need and demonstrate our
commitment to fairness and responsibility,
strengthening the trust placed in us across
our customer base.
Unsurprisingly, trust is one of the key factors
in why consumers choose their energy
supplier, and I am pleased that our customer
trust and satisfaction scores have shown
marked improvement, reflecting the
positive impact of our efforts across all
our brands. Our British Gas Trustpilot score
is at its highest level at 4.4, reflecting
increased investment in customer service
training, the rollout of digital tools that make
energy management easier, and our single-
minded brand positioning around reliability.
This will remain an area of continued focus
for your Board.
A more coordinated approach to
managing customer debt is needed
While our internal initiatives have
strengthened our approach to managing
debt, retail bad debt remains a significant
focus, increasing to £418m this year from
£369m in 2024. More broadly, managing
consumer debt across the wider energy
sector demands a more coordinated and
pragmatic approach that reflects the scale
and complexity of the challenge. Rising
arrears, now exceeding £4bn industrywide,
underscores the need for solutions that go
beyond short-term relief and tackle
structural issues such as affordability,
data-sharing and support for vulnerable
households. A coherent strategy should
unite government, suppliers, regulators
and stakeholders around interventions that
prevent debt accumulation, enable data
sharing to facilitate fair recovery and
protect those most at risk. This is not simply
about balancing books; it is about sustaining
financial stability across the market while
ensuring households can meet essential
energy needs without falling into a cycle
of unmanageable debt.

| 5

Centrica plc Annual Report and Accounts 2025

Creating the best environment
for colleagues
Ensuring our colleagues are supported and
engaged remains a strategic priority for the
Company and your Board. Over the past
year, we have continued to invest in our
award-winning wellbeing, training and skills
development programmes. We are proud of
the continued focus on colleague
engagement and for the fourth consecutive
year, Centrica has been named in The Times
Top 50 Employers for Gender Equality
ranking us highly for our focus on creating an
environment where colleagues can thrive.
This has helped us attract and retain
talented people, while fostering a culture of
inclusion and continuous improvement.
I am always impressed by the lengths our
colleagues go to help our customers and
help deliver great performance, and for this
I am hugely grateful.
Board changes and governance
The Centrica Board is here to serve you,
our shareholders, and is committed to
robust oversight and governance, providing
strategic direction and accountability.
It is an honour to lead a dedicated and
effective Board that collaborates
constructively with the executive team.
The Board’s aim is simple: to strengthen
Centrica and consistently deliver value for
our shareholders. In the fast-moving world
in which we operate, ensuring our Board
has the breadth of experience required is
critical. I am delighted that Alessandra
Pasini joined the Board this year; with a
background in investment banking,
Alessandra brings a wealth of international
experience in renewable energy, battery
storage solutions and green hydrogen. We
also welcomed Frank Mastiaux, an energy
industry veteran whose international
leadership roles in some of the world’s
largest energy companies brings invaluable
insight and experience to our team.
I would like to extend my sincere
appreciation to colleagues departing
from the Board. Heidi Mottram, who
joined in 2020 and served as Chair of the
Safety, Environment and Sustainability
Committee (SESC), stepped down at the
end of 2025. Carol Arrowsmith, who has
served on the Board since 2020 and as
Chair of the Remuneration Committee,
will step down at the conclusion of our
AGM in May 2026. I am very pleased
that Amber Rudd has taken on the role
of Chair of the SESC and Sue Whalley
will become Chair of the Remuneration
Committee from May. Nathan Bostock,
a Board member since 2022 and Chair of
the Audit and Risk Committee, will leave
in the summer of 2026 and his successor
will be announced in due course.
The effectiveness of the Board is
underpinned by Centrica’s culture, a
foundation that drives performance,
supports our strategy and ensures robust
governance. We foster collaboration,
innovation and integrity at every level,
empowering colleagues to deliver their best
and contribute to our shared purpose. Our
Purpose and Values guide every decision.
Performance overview
Despite 2025 being a challenging year,
Centrica still delivered resilient financial and
operational results. Our Retail and
Infrastructure businesses performed
broadly in line with expectations, though
Centrica Energy’s optimisation activities
delivered weaker than planned results amid
particularly difficult market conditions.
Group a djusted EBITDA for the year was
£1,417m and operating profit was £814m,
down from £2,305m and £1,552m
respectively in 2024, with adjusted EPS just
over 11 p. The Group generated over
£900 m of adjusted operating cash flow,
while free cash flow moved into a modest
almost £200m outflow, driven primarily
by a deliberate and accelerated step‑up
in strategic investment to £1.2bn.
Your Board is mindful of our responsibility to
carefully manage our free cash flow. Over
the past year, we have made significant
investment decisions, and we’ve focused on
maximising sustainable profitability across
our range of businesses. It has been one of
our most active periods for investment in
recent years, and Chris will provide further
detail in his statement.
Looking ahead, we anticipate that cash flow
from our existing infrastructure assets will
gradually be supplemented by contributions
from new investments. These new assets
are expected to deliver stable and
predictable earnings, ensuring a reliable
income stream over time. Our investment
in a 15% equity stake in Sizewell C is a very
good example of our strategy to deliver
long-term, stable earnings. We also
announced a 50% investment into the Isle of
Grain L iquefied Natural Gas (LNG)
terminal in partnership with Energy Capital
Partners LLP. Grain LNG delivers vital
energy security for the UK an d is aligned
with the strategy of investing in regulated
and contracted assets supporting the
energy transition. At the same time, when
we hold surplus capital, we carefully
consider the best way to return value to our
shareholders. In 2025, we increased our
share buyback programme by an additional
£500m, which was largely completed
during the year, bringing the total equity
repurchased since 2022 to £2bn, or around
a quarter of the Company’s shares.
Alongside this, we returned further value to
shareholders through a full-year dividend of
5.5p, which included the interim dividend of
1.83p announced in July.
Progress towards net zero
Looking forward, your Board will remain
focused on energy security, a fair transition
and delivering our net zero ambitions. Our
updated Climate Transition Plan, launched
in January 2025 with strong shareholder
support, sets out how we will balance these
priorities. Your Board actively oversees this
plan to ensure Centrica continues to lead
the energy transition responsibly.
I’m pleased to say we have made good
progress, achieving key emissions
reduction milestones. We are on track or
ahead of all customer climate goals, from
installing smart low carbon technologies
like Hive thermostats to expanding green
tariffs and growing the green skills of
1,900 engineers toward our 2030
ambition of 3,000.
Meanwhile, we continued to decarbonise
operations and grow sustainable energy
supply through renewable and zero carbon
investment, new technologies and strategic
partnerships aimed at reducing emissions
across power generation, gas storage, LNG
shipping and our van fleet.
Our commitment to a fair transition helps
ensures no customer or community is left
behind.
We measure and report progress through
rigorous KPIs and benchmarks and remain
committed to addressing performance
gaps and acting on stakeholder feedback
to refine our strategy and deliver on our
promises.
Outlook for the next year and the
evolving landscape
Turning to 2026, the energy landscape
remains dynamic, shaped by geopolitical
developments, regulatory shifts,
technological advancements and changing
customer expectations. The Government’s
decision to remove some levies from
consumer energy bills from April this year
is a welcome step for households. This has
been an issue we have lobbied on for over

6 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

five years and will put money in the pockets
of consumers; however as noted earlier, we
remain highly concerned about the growing
level of bad debt in the energy industry,
which has now reached levels the sector
has never experienced before. This is
unsustainable and represents a structural
risk to the sector’s stability.
We have been clear about our concerns and
will continue urging Ofgem to work with
government and industry on a solution that
helps distinguish customers who genuinely
cannot pay from those who can but choose
not to.
We appreciate this is a complex area, but it
requires urgent attention. Equally, we must
remain vigilant in how we support our most
vulnerable customers. We continue to
engage with our regulator regarding past
issues in the installation of prepayment
meters. Whilst we have not resumed this
practice, it is clear this issue remains a
sector‑wide challenge. In that respect, we
have taken decisive steps to address areas
where we fell short.
We will continue to assess the
opportunities for Centrica including
innovation in energy solutions, expansion
into new and existing markets, and
leveraging our expertise in trading and
optimisation. At the same time, we are
alert to risks such as price volatility,
supply chain disruptions and geopolitical
uncertainty. Against this evolving
landscape, our strategy continues to
evolve, particularly in Power generation,
ensuring we remain agile and responsive
to market shifts as the world becomes
increasingly electrified and dependent on
data centres.
Our resilience and adaptability are core
strengths, enabling us to navigate
uncertainty and seize opportunities for
growth. As always, your Board will consider
the barriers to delivering our strategy and
remain alert to emerging risks. We prepare
for these changes by continuing to invest
in digital transformation and harnessing
the power of AI, enhancing our risk
management capabilities and deepening
our engagement with regulators and
policymakers. Our commitment is to
safeguard the interests of our customers,
colleagues and shareholders as we navigate
these challenges and opportunities.
In a fast-changing environment, we remain
focused on delivering for our customers and
colleagues, creating sustainable value for
our shareholders while contributing to a fair
UK energy transition.
In closing, I would like to thank our
colleagues, customers and stakeholders
for their ongoing support and trust. Centrica
is well positioned to deliver sustainable value
for shareholders and society, and I am
confident in our direction and ability to lead
in a rapidly changing and complex world.
Together, we will continue to build a
resilient, responsible business that makes
a positive difference for all of us.
Kevin O’Byrne, Chair
18 February 2026

| 7

Centrica plc Annual Report and Accounts 2025

Group Chief Executive’s
statement
Chris O’Shea
Group Chief Executive
A year of strategic progress
and investment
I never forget who I work for, I work for
you, our shareholders, the owners of our
Company. And my job is to create value
for shareholders, which includes every
single Centrica colleague. We do this by
doing three things: delivering great
customer service for our 10m plus
customers; investing your money wisely;
and helping our nearly 22,000 colleagues
to be at their best as they energise a
greener, fairer future.
2025 has been a big year for us – lots of
progress and lots of bold moves. I’m really
proud of how far your Company has
come, not just making the energy supply
I am confident that the
future’s looking good
for Centrica. The
world’s changing fast,
with technology and AI
driving up electricity
demand like never
before. That means
more complexity,
more need for reliable,
sustainable energy.
more secure where we operate but also
putting ourselves right at the heart of the
energy transition whilst growing our
businesses.
Delivering great customer service
For years we’ve been improving our
customer service, although the results
can take quite a while to feed through. So,
I’m delighted that for the first time in a
number of years we have grown
customer numbers in all of our
businesses. And our customer
satisfaction measure (Net Promoter
Score) is the highest it’s ever been in the
UK energy business. The investment
we’ve made in improving our service is
really starting to show. The Institute for
Customer Service’s latest UK Customer
Satisfaction Index ranked British Gas
among the top 20 most improved
organisations over the past year and
Uswitch has awarded British Gas most
improved energy company for the
second consecutive year. I’m delighted
for our colleagues who’ve worked so hard
to make this happen.
Now this doesn’t mean the journey is over
– we are continuously looking at ways to
better serve our customers. And we must
always remain vigilant in how we treat our
vulnerable customers. More than three
years ago we discovered that we had
fallen short of our own high standards in
how we installed prepayment meters for
certain customers. This issue is subject to
an ongoing Ofgem investigation, and I
said at the time how gutted I was, and I
know it was a difficult moment for many
colleagues who work so hard to do the
right thing. It’s strengthened our resolve
to learn and keep improving. Whilst
subsequent events have shown this to be
a wider energy sector issue, we can
never forget how we let some of our
customers down and we’ve taken
substantial steps to improve our
processes and to help prevent these
issues from happening again. We know
how challenging it is for customers who
are struggling to pay their bills and we’re
acting where it matters most and
partnering with The British Gas Energy
Trust and leading advice organisations
such as StepChange, to deliver rapid,
targeted support for customers in serious
financial difficulty. Through frontline
training, trusted community partners and
high‑impact national outreach initiatives,
we’re making it easier for vulnerable
customers to access grants, guidance
and practical help that genuinely cuts
the pressure. We have made huge
improvements, and your company is
now very different from the one it was
just three years ago.
This year, we’ve continued to raise our
game – using technology and AI to
make things simpler and smoother for
our customers. We’ve cut out
unnecessary steps, sped up decision-
making and freed up more time to deliver
for our customers. These small changes
add up: reduced call volumes, problems
sorted faster, happier customers, and
better retention. That means tighter cost
control and stronger revenue and profit
growth.

8 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

And we want to make sure that our
customers have the energy they need,
when they need it. A report at the end of
last year from NESO, the UK’s national
energy system operator, which has
warned of the risk of gas shortages as
Britain gets into the 2030s, underscores
how gas will remain important over the
course of the transition. This is why we
bought Grain LNG, why we want to
redevelop Rough, and why we signed a
£20bn deal with Equinor, securing 5bn
cubic metres of gas a year until 2035.
That’s a ten-year partnership with
Norway that helps keep the UK’s energy
secure and prices steady.
Investing your money wisely
Putting £1.3bn into Sizewell C isn’t just a
great investment; it’s about making sure
the UK has reliable, low carbon power for
years to come. Building nuclear plants is
tough work, and credit where it’s due –
this Government (and the last one) saw
the need and backed it. That’s what doing
the right thing for the country looks like.
By creating a proper regulatory
framework, they’ve made it possible for
us to invest, and that’s good news for
everyone: colleagues, customers and
shareholders.
Energy transitions aren’t just about tech
or ambition – they’re about balancing
what’s possible with what’s needed.
You’ve got to juggle global markets,
budgets, and what customers want. It’s
about finding the sweet spot between
ambition and security, innovation and
reliability, renewables and, yes, natural
gas. Our investment in Europe’s largest
LNG terminal – Grain LNG – with Energy
Capital Partners is a further proof point of
our strategy to pivot towards
stable, predictable infrastructure returns.
These investments aren’t just one-offs –
they’re part of our plan to keep building
real, long-term value for you. This year has
also seen us working in partnership with
the impressive US company, X-energy, to
bring up to 6GW of advanced modular
power stations to the UK. Whilst it’s early
days in the development of the next
generation of small nuclear assets, it feels
like there is now genuine momentum
around this technology here and
elsewhere in the world.
Our valued colleagues
I know I say this a lot, but having a great
Our Senior Leadership Team
(SLT) is made up of my direct
reports and their direct reports,
around 100 people. We get
together regularly to ensure
cohesion and alignment. We
continue to commit to three
core principles that shape our
culture and the way we work,
individually and as a team:
team is why we have happy customers.
Every day, 22,000 people roll up their
sleeves and make a difference for our
customers, our business and our
communities. I’m proud of the way our
teams have stepped up this year –
embracing new technology, driving
operational improvements and always
putting customers first.
I know organisational change to simplify
our business and deliver better outcomes
for customers hasn’t been easy for
colleagues, but I am pleased to say that
we have supported colleagues through
change and managed to maintain a strong
engagement score of 7.9 out of 10. This
gives us a good foundation to build on in
2026 and really focus on continuing to
create the culture we want. We’re
One team
First and foremost, we work
for Centrica. So, when faced with
making a decision, the question every
leader must ask themselves is ‘is this
good for the Company?’.
breaking down silos, encouraging
collaboration and making sure every
voice is heard. Whether people are on the
phones, in British Gas, Bord Gáis, Hive or
PH Jones vans, at our energy assets, or
working behind the scenes, colleagues’
ideas and energy are what will drive
Centrica forward.
We never stop investing in our people –
they’re the heartbeat of this Company
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.
and the reason we keep delivering.
Opening our new facility at Lutterworth in
2026 will be a big moment for us. This
£35m green campus brings together a
national distribution centre, advanced
technology labs and a new green skills
academy. It strengthens our operational
capability and the infrastructure we need
for the energy transition. By investing in
large-scale apprenticeship programmes
and new research and training facilities,
we’re thinking about the long term,
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.
helping to build the skilled workforce
needed for the UK’s energy transition. It’s
another example of how we’re preparing
our colleagues – and our business – for a
cleaner, more secure energy system in
the years ahead.
Transformation isn’t just something we’re
talking about – it’s something we’re

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.

delivering. And our People team has played
a vital role in making that happen. Over the
past year, they’ve supported significant
restructuring and helped embed new
operating models that are essential for our
long‑term growth. None of this work is easy,
but we’ve approached every step with care,
integrity and a focus on doing the right thing.

| 9

Centrica plc Annual Report and Accounts 2025

A big part of this has been equipping our
managers to lead through change in the
right way. We’ve invested in targeted
training, effective communication skills
and one‑to‑one support so leaders can
handle difficult situations with clarity and
compassion. And where change has directly
affected colleagues, we’ve prioritised
wellbeing and career continuity – offering
career development tools, wellbeing
initiatives and redeployment support to
protect as many roles as possible. That
matters, because while transformation is
strategic, it must also be deeply human.
At the same time, we’re rewiring how
we work through a technology‑led
transformation that strengthens
accountability, builds new skills and helps
us serve customers better. Our People
team has been at the centre of this shift,
helping us move faster and operate with
greater agility, while making sure
colleagues stay supported and informed.
Throughout all of this, our colleagues have
stayed focused on what really matters.
Their resilience and commitment have
enabled us to make real progress at pace.
Because ultimately, transformation isn’t
about systems or structures – it’s about
people and our colleagues continue to be
the driving force behind Centrica’s
success.
I want to thank every colleague for their
hard work, commitment and passion.
Together, we’re not just delivering for
today – we’re building a greener, fairer
future for everyone.
Business performance
We made good progress in key areas, but
tough trading conditions elsewhere held
us back. Global market uncertainty hit
Centrica Energy harder than expected,
and unseasonably warm weather plus
higher bad debt put pressure on our
supply business. None of this changes the
direction of travel – it just shows the
importance of staying focused, adapting
quickly and dealing with issues head‑on.
Our Group adjusted operating profit was
£814m compared to £1.6bn at year-end in
2024, with adjusted Basic EPS of 11.2p in
2025 compared to 19.0p in 2024, and free
cash flow of £167m. P erformance has
been resilient, given the market, and gives
us the confidence to invest further and
ensure strong performance in the future.
Customer satisfaction levels continue to
improve across all our customer-facing
brands, with a British Gas Trustpilot score
of 4.4 (Excellent) and we have grown
customer numbers in all our customer
facing businesses; this is the first time this
has happened and shows we have
momentum. I am particularly pleased to
see good progress in our Services
business supported by strong boiler
installations in 2025, meaning we hit our
profit target one year ahead of schedule.
More detail on our business performance
can be found in Russell’s report on pages
18 to 22.
Future prospects: building a
sustainable and resilient business
I am confident that the future’s looking
good for Centrica. The world’s changing
fast, with technology and AI driving up
electricity demand like never before. That
means more complexity and more need
for reliable, sustainable energy – exactly
what Sizewell C will deliver.
We’re grabbing future opportunities with
both hands. We’re investing in new
technology, sharpening up how we work
and getting ready for the next stage of
our transformation in 2026 and beyond.
The goal? Make Centrica leaner, quicker
on its feet and always focused on giving
customers what they want while chasing
new growth across the energy sector to
deliver value for our shareholders.
We’ve set ourselves a big target to grow
profits and value, and with expected
extensions to our existing nuclear power
stations, we expect to deliver £1.7bn
EBITDA by 2028, rising to £2bn in 2030.
Underpinning this will be a cost base which
stays flat for the coming 5 years.
Our leaders are now more focused on
what’s best for Centrica as a whole, not
just their own businesses. By breaking
down silos and working together, we’re
rolling out the joined-up products and
services that only we can offer. There is
still much to be done in making these
important changes but I can already see
results where our focus on simplification
is driving a quicker, leaner and more
efficient business. By reducing
bureaucracy and embracing technology,
we are creating the right environment for
our colleagues to ensure we remain
competitive in a rapidly evolving market.
This transformation is not just about cost
savings; it is about creating a culture of
agility and innovation that will underpin
our future success.
The regulatory environment
We’ve achieved a lot this year, but there
are still concerns with how our market
is regulated. If we want to attract
investment and keep the energy
transition moving, we need high-quality
economic regulation and clear rules
applied consistently that give investors’
confidence to deploy capital. When we
look at the retail market in particular,
whilst we welcome the capital adequacy
rules that have been introduced for the
energy supply sector, implementation
has been slow and inconsistent over the
past few years. We’ve seen a couple of
suppliers go bust this year and I am
worried about a return to the period when
half the energy market went out of
business, costing consumers billions of
pounds. And right now, there’s billions of
debt building up across the sector. We
need our regulator to work with the
sector to stop the burden of n on-
payment falling on the shoulders of those
customers who do pay. The strain of
growing bad debts, coupled with the
large suppliers who do not hold the
capital required under Ofgem’s rules,
presents a systemic risk to the energy
retail market and we are at real risk of
seeing more suppliers go under, which
creates confusion and risk for customers,
in turn damaging the investment case for
the sector. Ofgem has said that the
industry holds more capital today than it
did three years ago, and that is great. But
what counts is what each individual
supplier holds in capital, and it remains
worrying that a number of the UK’s
biggest energy suppliers still don’t hold
the capital Ofgem requires under its rules.

10 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Conclusion: delivering for the future
The strategy we set out in 2023 is
delivering for colleagues, customers and
shareholders; this is reflected in a share
price which has outperformed the
FTSE 100 by 12.5% and we remain
committed to investing around £4bn as
part of our investment programme
leading up to 2028, focusing only on
projects with the right balance between
risk and reward.
2025 has been a year of delivery. Our
investments in Sizewell C, Isle of Grain,
and other strategic assets have
strengthened our operational foundation
and demonstrated our leadership in a
rapidly changing energy landscape. We
are driving transformational operational
improvements, building a quicker and
leaner business, and preparing for a future
defined by innovation and sustainability.
However, we remain clear-eyed about
the challenges ahead, particularly in
relation to the regulatory environment.
We will continue to advocate for the
changes needed to unlock further
investment and deliver for our customers,
colleagues and shareholders.
I am proud of what our amazing
colleagues have achieved, and we are
excited about the opportunities that
lie ahead. Together, we will continue
to build a business that is resilient,
sustainable and fit for the future.
One which delivers for our colleagues, for
our customers and for the people we all
work for, our shareholders.
Chris O’Shea, Group Chief Executive
18 February 2026

| 11

Centrica plc Annual Report and Accounts 2025

Our Purpose
From supplying the gas and coal that powered the industrial
revolution, to becoming the global integrated energy company
we are today, we've been providing energy for over 200 years.
Our Purpose is ‘energising a greener, fairer future’ because we
believe in energy that works for customers, colleagues and
communities today and in the future.

Our values... |  |  | ...in action
Care We do the right thing for our customers, colleagues, communities and planet. |  |  | Through organisations such as the British Gas Energy Trust and local charities, we provide meaningful support to our customers and communities. Since 2004 the Trust has provided over £230m to help households struggling to pay their energy bills.
Collaboration We bring in diverse perspectives to create a better future together. |  |  | Our investment in Sizewell C this year, was the result of strong relationships with government, developers and investors to establish a framework that benefitted all parties and supported low carbon generation, new jobs across the country and energy independence for the UK.
Courage We are bold and push ourselves to find better solutions to every challenge. |  |  | In 2025 we signed a partnership agreement with X- energy to deploy advanced modular reactors in the UK, developing technology that is not only scalable and secure, but also supports national security, affordability, sustainability and resiliency in our energy system.
Agility We make progress at pace by focusing on what matters and learning from setbacks. |  |  | Since 2024 we have installed smart meters 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 over 1.6m Centrica-owned meters installed.
Delivery We do what we promise, on time, every time, to move forward every day. |  |  | In 2024, British Gas 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, demonstrating our dedication to provide fast, reliable and affordable service across the country.

12 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our stakeholders
Engaging our key stakeholders enables
better outcomes for people and plane t.
Energy is central to everyday life. So the choices we make and
the action we take can impact a diverse range of stakeholders.
That’s why we listen to and consider stakeholder views to
ensure we understand their needs and concerns. As we evolve
our strategy, stakeholder input enables us to reduce risk and
harness opportunities to energise a greener, fairer future.
Engagement is led by senior leaders who regularly update the
Board. This equips the Board with the knowledge to make
informed decisions that considers the long-term consequences
of our actions from the perspective of different stakeholders.
We recognise that outcomes of Board decisions may not
materialise as anticipated or may change, and that not all
decisions will have immediately observable outcomes.

Our key stakeholders

Customers
Colleagues
By understanding our customers’
needs, we can provide services and
solutions that meet or exceed their
expectations, which drives the
success of our business.
What they care about
Customer service, competitive energy
prices, affordable energy management
and bill support alongside low carbon
services and solutions.
How we engage
Surveys, focus groups, proposition and
usability testing, alongside dedicated
channels to help people with their
energy bills.
Outcome example
In response to customer service
feedback, Directors monitored service
performance and invested in technology
and capability to improve it. This led to
Home Energy Supply completing a
system migration in the UK that enhanced
customer interaction and contributed
to lower complaints as well as a higher
Net Promoter Score. British Gas
consequently received Uswitch’s Energy
Award for ‘Best Overall Improvement’
for the second consecutive year.
― Read more on pages 4, 7 to 8, 25, 37
and 44 to 45
We want every colleague to feel
they count and can succeed at
Centrica. This is key to attract and
retain a diverse and talented team
who can deliver our strategy.
What they care about
Engagement, inclusion, wellbeing, safety,
development, reward and company
performance.
How we engage
Engagement surveys, colleague diversity
networks, focus groups, the Shadow
Board, site visits, townhalls, internal
communications and trade unions.
Outcome example
Our parent and LGBTQ+ networks told
us we could do more to support them.
By collaborating with networks and trade
unions in the UK, we extended paid
paternity leave and launched our sector’s
first Transgender Inclusion Policy for
those undergoing gender-affirming
treatment. Inclusive practices like these
influenced our positive engagement
score and position in leading benchmarks
like The Times Top 50 Employers for
Gender Equality and the Glassdoor Top
50 Best Places to Work in the UK.
― Read mo r e on pages 8 to 9, 38, 43 to
47, 59 and 67
Investors
Shareholders and debt holders
provide funds that help run and
grow our business. With a shared
commitment to our success,
collaboration can stimulate
sustainable progress and returns.
What they care about
Financial and operational performance,
sustainability performance including net
zero progress, strategy and growth as
well as shareholder returns and dividends.
How we engage
Investor roadshows, the Annual General
Meeting (AGM), ad-hoc meetings and
responses to information requests and
assessments from sustainability ratings
agencies.
Outcome example
Meetings and webinars were held with
investors to discuss the energy transition.
Through engagement, we were able to
align on expectations as we updated and
published our Climate Transition Plan.
The Board were involved in the Plan’s
development and approval, incorporating
the full range of investor feedback. At the
AGM, the Plan achieved a 93.44%
favourable shareholder advisory vote.
― Read more on p ages 11, 38, 45, 55
and 67

| 13

Centrica plc Annual Report and Accounts 2025

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 stakeholders through their
decision-making.
Governments
and R egulators
Maintaining constructive relations
is key to ensuring a stable
regulatory environment where
policy is developed in the interests
of consumers, whilst enabling a
sustainable and investable market.
What they care about
Market design and operation, economic
growth, net zero, energy security,
affordability, customer service, skills
and inclusion.
How we engage
Consultation processes, meetings and
policy briefings, technology teach-ins,
roundtables and site visits.
Outcome example
Through sustained engagement with
policymakers, we successfully influenced
the progressive decision to move policy
costs relating to energy efficiency
schemes from the energy bill to general
taxation. This was announced in the
UK November 2025 Budget and will
importantly ease pressure on bills for
those least able to pay.
― Read more on pages 9, 37 to 39,
69 and 71
These pages set out our key stakeholders and an outcome
example. Further detail on how the Board engaged and
balanced the needs of different stakeholders to make
principal decisions during 2025, are disclosed on
pages 70 to 71.
Suppliers
Partnering with like-minded
suppliers enables high standards
and reliability across the supply
of services and solutions for
customers as well as our
operations.
What they care about
Payment practices and long-term
partnerships together with compliance
and transparency across sustainability
matters like human rights.
How we engage
Tendering, onboarding surveys, site
audits and remote worker surveys.
Outcome example
Members of the Board reviewed our
Responsible Sourcing strategy to
mitigate human rights risks, considering
supplier audits and external expert input,
before approving the annual strategy.
This enabled continued compliance with
the UK Modern Slavery Act 2015, with
zero cases of forced or compulsory
labour identified.
― Read more on pages 47 and 85
Communities
and NGOs
Charities, non-governmental
organisations (NGOs) and
community groups, help us
understand how to collaborate
with local communities to build
a fairer, more sustainable future.
What they care about
Tackling social and environmental issues
such as fuel poverty and climate change.
How we engage
Partnerships, meetings and research
alongside support initiatives – from
advice, grants and energy efficiency
measures to reduce energy bills and
emissions, to volunteering, fundraising,
and sponsoring local organisations.
Outcome example
Members of the Board maintained
oversight of our local community strategy
to ensure effectiveness in supporting
diverse needs. With a consideration of
these needs, the Directors enabled the
continued support of local good causes
during the year which included £3m in
donations and 10,500 volunteering days.
― Read more on pages 44, 71 and 85

14 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our business model
Centrica is an integrated energy company, comprising a
balanced portfolio of leading businesses in energy retail,
optimisation and infrastructure. Our strategy is to create value
by producing, optimising and delivering the energy needed to
support a secure, efficient and decarbonised energy system
today and in the future.
7,000+
Field service engineers
19.5GW
Renewable and flexible
capacity under management
10m+
Customers
271
LNG cargoes
traded in 2025
An integrated energy
company with a
balanced portfolio
across the energy
value chain
54bcf
Of gas storage capacity at
Rough (equivalent to heating
~2.4m homes through winter)
20%
Share of the UK’s
operating nuclear fleet

| 15

Centrica plc Annual Report and Accounts 2025

Our business structure
Optimisation
Retail
We provide a leading customer
experience for energy supply and
services across the UK and Ireland,
helping customers decarbonise
through reliable, affordable and
innovative offerings.
Home
Energy Supply
Through our British Gas and Bord G áis
brands we supply electricity and gas to
homes across the UK and Ireland. We are
continuously strengthening our operations
to drive better customer outcomes and
innovative offers to help customers reduce
their bills, while decarbonising their homes.
Our energy supply business is powered by
ENSEK, an in-house digital platform for
seamless customer account management
and billing.
Services
Our home services division provides
customers with installation, repair and
maintenance of heating, plumbing and
electrical appliances through our British
Gas, Bord G áis and Dyno-Rod brands. We
also offer customers decarbonisation and
energy efficiency solutions such as Hive
smart thermostats, electric vehicle (EV)
chargers, heat pumps and rooftop solar,
which together with our energy offers,
helps customers on their net zero journey.
Business
We provide energy supply and low carbon
solutions for businesses across the UK and
Ireland. Our broad suite of offerings enables
us to deliver tailored solutions such as
energy management or on-site generation
to help businesses cut costs and emissions.
We move energy from source
to use, connecting producers
and suppliers with offtakers,
while continuing to support the
flexibility required for the future
energy system.
Centrica Energy
Gas and Power Trading
Our gas and power traders operate in 29
power markets and 19 gas hubs across
Europe and the United States, managing
physical and financial flows across borders,
leveraging real-time analytics, storage
flexibility and transport capacity to balance
portfolios, capture market value and ensure
security of supply.
Bord Gáis Trading merged with Centrica
Energy this year, strengthening our
capabilities and enabling greater integration
across the UK and Ireland.
Liquefied Natural Gas (LNG) Trading
Our global LNG business delivers cargoes
anywhere in the world managing flexible
purchase contracts, long-term ship
charters, re-gas capacity, and financial
and physical trading.
Renewable Energy Trading & Optimisation
We support renewable energy sourcing
and long-term investment certainty
through structuring power purchase
agreements with suppliers and offtakers.
We also optimise flexible assets, including
batteries and combined heat and power
plants, and manage one of Europe’s
largest biomethane portfolios with our
advanced trading and balancing services.
Infrastructure
We are investing to build a low
carbon, reliable energy system
from upstream generation
and storage assets to smart
technology enabling flexibility
for downstream customers.
Power
Our power division owns and operates
utility-scale plants that generate and store
electricity, including our shares in the UK’s
existing nuclear fleet, Whitegate power
station and our portfolio of batteries,
renewables and gas peakers, with two
100MW peakers in Ireland to be
commissioned during 2026.
This year, Centrica has also committed
investment into the Sizewell C nuclear
power station, reinforcing our long-term
support for the UK’s low carbon future.
Gas
Centrica’s gas infrastructure division
produces, stores and transports natural
gas and is exploring carbon storage and
hydrogen for the future. Our portfolio
includes the Rough gas storage facility,
gas production from existing fields in the
Morecambe Hub through our Spirit Energy
joint venture, and the Grain LNG
regasification terminal, which we acquired
from National Grid this year.
Future developments include the
Morecambe Net Zero carbon storage
project, which has the potential to be
the UK’s largest carbon storage hub,
and hydrogen production and storage
opportunities in the Humber region.
Customer Assets
Customer assets includes our in-house
smart meter business which installs, owns
and manages smart meters across the
UK, helping to deliver the advanced net
zero goals for the country.

16 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our m arket 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.
Key market trends
Growing electrification
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.
In 2025 we committed £1.3bn for a 15% equity stake
in Sizewell C nuclear power station, investing in reliable,
low carbon power for millions of homes, while creating
thousands of high-quality jobs across the country.
Growing affordability concerns
Inflation remains elevated across the UK and Ireland,
and our customers continue to face challenges from
high costs and sluggish economic growth, with some
customers struggling to pay bills.
We know that rising household bills are a real worry
for many people across the UK. Tackling energy
debt and fuel poverty is a priority for us and we’ve
voluntarily committed £140m since 2022 to ensure no
one faces these challenges alone.
Growing intermittency
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.
This year we acquired the Grain LNG terminal from
National Grid. Grain LNG delivers vital energy
security for the UK, providing critical LNG
regasification and rapid response storage capacity
to balance the energy system.
Growing consumer engagement
Advances in technology, such as artificial intelligence
and machine learning, are revolutionising the energy
sector, unlocking opportunities to improve customer
offers, reduce costs and better manage our energy.
Earlier this year, British Gas completed the migration
of all residential customers to our ENSEK platform.
The platform enables better customer service and
new innovative offerings, such as PeakSave, which
helps customers lower their bills and manage their
energy use more dynamically.

| 17

Centrica plc Annual Report and Accounts 2025

Our strategic drivers
Our company plays an integral role in shaping a greener, more
flexible and fairer energy system. We’re adopting a simple,
focused approach to capitalise on the current market trends
and growth opportunities to create value for all our
stakeholders.
Operational
excellence
Continuously improving to
increase our efficiency, reduce
costs and enhance customer
satisfaction
Commercial
innovation
Innovating to deliver
compelling customer
propositions and building
optimisation optionality
Positioned for an
evolving energy
system
Investing for value
Investing to make Centrica a more predictable
business with strong returns across the
integrated pillars of our business
People & Planet
Our People & Planet Plan is creating a more sustainable future – from becoming a net zero business by
2040 and helping our customers be net zero by 2050, to building the diverse and inclusive team we need
to succeed whilst making a big difference in our local communities
— Read more on page 42
Supporting communities,
our planet and each other
People
Planet

18 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Group Chief Financial Officer’s report
Russell O'Brien
Group Chief Financial Officer
Financial overview
The Group's adjusted EBITDA was £1,417m in 2025 (2024:
£2,305m), adjusted operating profit was £814m (2024:
£1,552m), and statutory operating profit was £106m (2024:
£1,703m).
For more information on business unit performance, see pages
24 to 29.
Adjusted basic EPS of 11.2p (2024: 19.0p) also includes lower net
interest income as we invested and returned capital to
shareholders, although benefitted from a lower share count.
Statutory basic EPS was a 1.5p loss (2024: 25.7p profit) and
includes a £708m loss on exceptional items and certain re-
measurements (2024: £151m profit), with £508m of
impairments largely across our late-life gas field assets and
investment in Nuclear (excluding Sizewell C).
Free cash flow (FCF) was a £167m outflow (2024: £989m
inflow), which includes the impact of a significant increase in
c apital expenditure to £1,227m (2024: £564m).
The Group returned £1,064m (2024: £718m) to shareholders in
the year, £827m through share buybacks and £237m through
dividend payments (2024: £499m and £219m respectively), and
ended the year with closing adjusted net cash of £1,487m
(2024: £2,858m).
The reconciliation between statutory gross debt and adjusted
net cash is shown in note 25.
Adjusted EBITDA, operating profit, earnings and dividend

|  | 2025 | 2024
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
Adjusted EBITDA |  | 1,417 |  |  | 2,305 |  |
Group operating profit/(loss) | 4(c) | 814 | (708) | 106 | 1,552 | 151 | 1,703
Net finance income/(cost) | 8 | 6 | — | 6 | 44 | (68) | (24)
Taxation on profit/(loss) | 9 | (265) | 102 | (163) | (553) | 239 | (314)
Profit/(loss) for the year |  | 555 | (606) | (51) | 1,043 | 322 | 1,365
Less: (Profit)/loss attributable to non-controlling interests |  | (21) | — | (21) | (59) | 26 | (33)
Earnings attributable to shareholders |  | 534 | (606) | (72) | 984 | 348 | 1,332
Basic earnings per share | 10 | 11.2p | (12.7p) | (1.5p) | 19.0p | 6.7p | 25.7p
Full year dividend per share | 11 |  |  | 5.5p |  |  | 4.5p

| 19

Centrica plc Annual Report and Accounts 2025

Revenue
Total Group revenue included in business performance, which
includes revenue arising on contracts in scope of IFRS 9,
decreased by 9% to £22,365m (2024: £24,636m). This was
largely driven by the impact of lower commodity prices, and
lower seasonal gas price spreads.
Gross segment revenue, which includes revenue generated
from the sale of products and services between segments,
decreased by 8% to £24,563m (2024: £26,573m). Total
statutory Group revenue decreased by 2% to £19,492m (2024:
£19,913m).
A table reconciling the different revenue measures is included in
note 4(b) of the accounts.
Exceptional items and certain re-measurements included within
operating profit

Year ended 31 December (£m) | 2025 | 2024
Certain re-measurements | (303) | 279
Exceptional items | (405) | (128)
Exceptional items and certain re- measurements | (708) | 151

The Group operating profit in the statutory results includes a net
pre-tax loss of £303m (2024: £279m gain) relating to re-
measurements, comprising of:
• A net loss of £345m on the re-measurement of derivative
energy contracts predominantly due to a loss on delivery of
contracts of £299m, together with net unrealised mark-to-
market derivative losses of £46m from market price
movements on existing and new contracts; and l
• A net gain of £42m relating to a credit from the movement in
the onerous LNG contracts position, partially offset by a debit
relating to the movement in the onerous energy supply
contract provision associated with the acquisition of AvantiGas
ON Limited in 2022.
Further details can be found in note 7(a) to the accounts.
An exceptional pre-tax cost of £405m was recognised within
the statutory Group operating profit in 2025 (2024: £128m)
made up of:
• A £264m impairment of our power assets (2024: £75m),
predominantly driven by a £251m impairment of our Nuclear
investment (excluding Sizewell C) as a result of the reduction in
both forecast and actual power prices, along with an increase
to operating and capital expenditure assumptions, partially
offset by life extensions at two stations;
• A £244m impairment of our gas field assets (2024: £nil) as a
result of an update to the cessation of production date
associated with the Morecambe field, together with changes
to the discount rate assumptions used in the valuation model,
along with an impairment of gas field assets included in the
disposal group being sold to Serica Energy plc;
• An £80m gain on the disposal of our interest in the Cygnus gas
field to Ithaca Energy; and
• A £23m credit (2024: £53m charge) relating to a decrease in
legacy contract cost provisions for business activity that
ceased a number of years ago, predominantly related to
construction services.
Further details on exceptional items, including on impairment
accounting policy, process and sensitivities, can be found in
note s 7(b) and 7(c) t o the accounts.
Net finance income
Net finance income on business performance was £6m (2024:
£44m), reflecting a decrease in interest income from lower cash
balances held during the year alongside lower UK interest rates,
partially offset by a reduction in financing costs on bonds and
bank loans. There were no exceptional financing items in the
period (2024: £68 m cost).
Taxation and adjusted effective tax rate
Business performance taxation on profit decreased to £265m
(2024: £553m), reflecting lower Group operating profit. This
excludes tax on joint ventures and associates. After taking
account of our share of tax on joint ventures and associates, the
adjusted tax charge was £322m (2024: £671m).
The resultant adjusted effective tax rate for the Group was 37%
(2024: 39%), with a lower proportion of profits coming from
highly taxed Infrastructure activities. The adjusted effective tax
rate calculation is shown below:

Year ended 31 December (£m) | 2025 | 2024
Adjusted operating profit | 814 | 1,552
Add: JV/associate taxation included in adjusted operating profit | 57 | 118
Net finance income | 6 | 44
Adjusted profit before taxation | 877 | 1,714
Taxation on profit | (265) | (553)
Share of JV/associate taxation | (57) | (118)
Adjusted tax charge | (322) | (671)
Adjusted effective tax rate (including JV/associate) | 37% | 39%

A charge totalling £19m (2024: £166m) 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 38%
(2024: 45%). To the end of 2025, since coming into effect on 1
January 2023, a total charge of £511m has been recognised in
the Group’s cost of sales and in our share of the operating
profits of joint venture and associates relating to the Electricity
Generator Levy. Please see note 3(b) for more details.
Total certain re-measurements and exceptional items
generated a taxation credit of £102m (2024: £239m), which
when included with taxation on business performance
generated a total taxation charge of £163m (2024: £314m).
Se e notes 3(b), 7(a), 7(b) and 9 for mo re details.
Group earnings
Profit for the year from business performance after taxation was
£555m (2024: £1,043m) driven by the movements outlined
above. After adjusting for non-controlling interests relating to
Spirit Energy, adjusted earnings were £534m (2024: £984m).
Adjusted basic EPS was 11.2p (2024: 19.0p), which also includes
the impact of a lower weighted average number of shares than in
2024, as a result of the share buyback programme.

20 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

After including exceptional items and certain re-measurements,
including those attributable to non-controlling interests, the
statutory loss attributable to shareholders for the period was
£72m (2024: £1,332m profit).
The Group reported a statutory basic EPS loss of 1.5p (2024: 25.7p
profit).
Dividend
In addition to the interim dividend of 1.83p per share, the
proposed final dividend is 3.67p per share, giving a total full year
dividend of 5.5p per share (2024: 4.5p per share).
The cash paid to Centrica shareholders in dividends in 2025 was
£237m (2024: £219m), made up of the 3.0p per share final 2024
dividend and the 1.83p per share interim 2025 dividend.
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 after taking account of the need to
maintain the Group's capital asset base. FCF was an outflow of
£167m (2024: £989m inflow). See explanatory notes on page
249 for further details and a reconciliation between statutory
cash flow from operating and investing activities to FCF.

Year ended 31 December (£m) | 2025 | 2024
Adjusted EBITDA excluding share of EBITDA from joint ventures and associates (i) | 1,095 | 1,792
Dividends received | 135 | 355
Tax paid | (375) | (636)
Working capital | 183 | 124
Decommissioning spend | (71) | (80)
Capital expenditure (ii) | (1,227) | (564)
Disposals | 131 | 4
Exceptional cash flows | (38) | (6)
Free cash flow | (167) | 989
Net interest | 46 | 34
Pension deficit payments | (150) | (176)
Movements in margin cash (iii) | 51 | 131
Share buyback programme | (827) | (499)
Dividends – Centrica shareholders | (237) | (219)
Other cash flows affecting net debt (iv) | (9) | (76)
Adjusted cash flow affecting net cash | (1,293) | 184
Opening net cash (as at 1 January) | 2,858 | 2,744
Adjusted cash flow movements | (1,293) | 184
Non-cash movements (v) | (78) | (70)
Closing adjusted net cash | 1,487 | 2,858

(i) Excludes Centrica's share of JV and associate EBITDA of £322m (2024: £513m).
(ii) Capital expenditure is the net cash flow on capital expenditure, purchases of
businesses, assets and other investments, and investments in joint ventures and
associates. See page 250 for more information.
(iii) Net margin cash posted as at 31 December 2025 was £61m (31 December 2024:
£105m).
(iv) 2024 includes £(68)m relating to exceptional financing costs in relation to debt
repurchase and refinancing activities.
(v) 2025 non-cash movements includes £(100)m relating to new leases and the re-
measurements of existing leases (2024: £(53)m) and £19m of leases transferred to held for
sale relating to Spirit Energy.
The net inflow of working capital was £183m (2024:£124m)
mainly driven by inflows in Infrastructure of £361m
predominately relating to the release of working capital
following the pausing of storage activities at Rough, and inflows
in Optimisation of £194m driven by lower storage activity. This
was partially offset by an outflow in Retail of £451m driven
largely by Home Energy Supply as a result of lower commodity
prices leading to a reassessment of direct debits and utilisation
of credit balances by customers.
The collateral and margin cash inflow was £51m (2024: £131m).
Net investment
The net investment outflow for the period was £1,096m (2024:
£560m). Within this, capital expenditure of £1,227m (2024:
£564m) was predominantly driven by investments in
Infrastructure, principally Sizewell C and flexible and renewable
generation assets in Power, Grain LNG in Gas and the MAP in
Customer Assets.
Net disposals of £131m (2024: £4m) related predominantly to
the sale of a 46.25% Spirit Energy interest in the Cygnus gas
field which completed in October 2025.
The table below provides a summary of total Group net
investment by operating segment, 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) | 2025 | 2024
Retail | (68) | (126)
Optimisation | (28) | (39)
Infrastructure | (1,134) | (388)
Of which: Sizewell C | (387) | –
Of which: Grain LNG | (208) | –
Of which: MAP | (271) | (104)
MAP consolidation adjustment (i) | 47 | 19
Other | (44) | (30)
Capital expenditure | (1,227) | (564)
Net disposals | 131 | 4
Total Group net investment | (1,096) | (560)
Add back: |  |
Capitalised borrowing costs | (17) | (11)
Inception of new leases and movements in payables and prepayments related to capital expenditure | (97) | (63)
Purchases of emissions allowances and renewable obligation certificates | (890) | (856)
Capital expenditure cash outflow subsequent to transfer to held for sale | 15 | –
Deduct: |  |
Net disposals | (131) | (4)
Purchase of businesses and assets, net of cash acquired | 22 | 92
Investment in joint ventures and associates | 609 | –
Net purchase of other investments | 42 | 56
Total Group capital expenditure (per note 4(e)) | (1,543) | (1,346)

(i) The MAP consolidation adjustment reduces the capital expenditure recognised in the
MAP for the internal margin and indirect costs on smart meter installation across the
Group.

| 21

Centrica plc Annual Report and Accounts 2025

Group adjusted net cash
Accordingly, the Group’s adjusted net cash position as at 31
December 2025 was £1,487m, compared to £2,858m on 31
December 2024. The breakdown of adjusted net cash is shown
below:

Year ended 31 December (£m) | 2025 | 2024
Current and non-current borrowings, leases and interest accruals | (2,821) | (2,867)
Derivatives | (71) | (107)
Gross debt | (2,892) | (2,974)
Cash and cash equivalents, net of bank overdrafts | 4,272 | 5,693
Current and non-current securities | 107 | 139
Adjusted net cash | 1,487 | 2,858

Further details on the Group’s sources of finance and net cash
are included in no te 25.
Statutory cash flow

Year ended 31 December (£m) | 2025 | 2024
Statutory cash flow from operating activities | 695 | 1,149
Statutory cash flow from investing activities | (690) | 493
Statutory cash flow from financing activities | (1,397) | (1,548)
Movement in cash and cash equivalents | (1,392) | 94

Net cash inflow from operating activities decreased to £695m
(2024: £1,149m), reflecting the impact of lower adjusted EBITDA
partially offset by lower tax paid.
Net cash outflow from investing activities was £690m (2024:
£493m inflow). Within this, interest received decreased to
£227m (2024: £317m) reflecting the lower interest rate
environment and lower average cash balances, while dividends
from our Nuclear associate decreased to £135m (2024: £355m).
Capital expenditure increased to £1,227m (2024: £564m) as
outlined above. This was partially offset by inflows from net
disposals of £131m (2024: £4m).
Net cash outflow from financing activities was £1,397m (2024:
£1,548m). Within this there was a net outflow on borrowings of
£143m (2024: £539m) while financing interest paid reduced to
£181m (2024: £283m) given lower interest rates. Cash
distributions to equity shareholders were £827m (2024:
£499m) through the Group’s share buyback programme, and
£237m (2024: £219m) related to ordinary dividend payments.
Pension deficit
The Group’s IAS 19 net pension deficit was £295m at the year-
end, compared with a £21m deficit at 31 December 2024, driven
by lower than projected returns on the schemes' growth assets,
and updates to member experiences and liability profile
calculations following completion of the triennial review, which
is usual practice. Partially offsetting these impacts was the net
impact of changes in market rates and deficit payments.
The technical provisions deficit 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 £150m in 2026 and £140m in 2027. On a
roll-forward basis using the same methodology, consequent
assumptions and contributions paid, the technical provision
deficit would be around £300m at 31 December 2025 (31
December 2024: £450m). Further details on post-retirement
benefits are included in n ote 22.
Decommissioning liabilities
The decommissioning provision of £1,302m (2024: £1,459m) 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 2025 the provision balance
was £961m for Spirit Energy, £321m in relation to the Rough field
and £20m in the remainder of the business. Included within this is a
reduction of £85m relating to the completed Spirit Energy disposal
of a 46.25% interest in the Cygnus gas field, alongside a further
£44m relating to the subsequent disposal agreed in December
2025 which remained held for sale at the year-end date. See note 12
for further details. The provisions are held gross of tax, with a
corresponding deferred tax asset of £536m (2024: £605m).
Further details on decommissioning provisions are included in notes
3 and 21.
Balance sheet
Net assets decreased to £3,496m (2024: £4,812m),
predominantly driven by the impact of items reported in equity,
including a £770m reduction from the share buyback
programme and £237m of dividends paid to shareholders, as
well as an other comprehensive loss of £312m (2024: £120m)
largely driven by an actuarial loss on pensions predominantly as
a result of the experience loss in the IAS 19 position on fully
reconciling to triennial review data.
Acquisitions, disposals and disposal groups classified as held
for sale
During 2025 investments have been made in the Isle of Grain
LNG terminal and the Sizewell C nuclear plant. These have not
been accounted for as business combinations on the basis that
the Group does not have the power to control these entities.
On 20 May 2025 the Group announced that it had agreed to sell
part of Spirit Energy’s interest in the Cygnus gas field, reducing
its interest from 61.25% to 15%, to a subsidiary of Ithaca Energy
plc for a headline consideration of £116m, alongside the transfer
of £85m decommissioning liabilities. The sale has a commercial
effective date of 1 January 2025 and the headline consideration
has been increased by the net cash flows generated by the
disposal group since this date. The sale completed and control
passed on 1 October 2025 for a final consideration of £123m.
On 16 December 2025 the Group announced that it had agreed
to sell the remaining 15% of Spirit Energy’s interest in the
Cygnus gas field and all other producing assets in the Greater
Markham Area and Southern North Sea to Serica Energy plc.
The sale had a commercial effective date of 1 January 2025 with
a headline consideration of £57m and the transfer of £44m of
decommissioning liabilities. The Group retains £159m of
decommissioning liabilities in relation to the disposal group at
the year-end date. The sale is expected to complete in the
second half of 2026.
On 23 December 2025 the Group signed a sale and purchase
agreement to dispose of Centrica Business Solutions Italia Srl
and Centrica Business Solutions B.V. to Joulz B.V. for a headline
consideration of €90m, with completion occurring in early
February 2026. Further details on assets purchased, acquisitions
and disposals are included in note 12.

22 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Events after the balance sheet date
Details of events after the balance sheet date are described in
note 27.
Risks and capital management
The Group maintains a stable overall risk profile, underpinned by
a robust risk management framework, including the monitoring
of key risk indicators and risk evolution against risk appetites.
The Group undertakes an annual review of its principal risks to
ensure continued strategic alignment and relevance. While
areas of focus have evolved, the overall nature of the Group’s
principal risks remain broadly stable and consistent with prior
disclosures.
The external environment remains complex and volatile with
geopolitical tensions, state-affiliated cyber-threats, and ongoing
policy uncertainty influencing supply chain and operational
resilience risks. In response, the Group is intensifying supplier
oversight, cyber resilience, and pursuing diversification
strategies to mitigate concentration and dependency risks.
We continue to have a strong liquidity position, underpinned by
~£5bn of committed liquidity from relationship banks, with us
having successfully exercised extension options in our
committed liquidity facilities during the year.
Strategic capital deployment has accelerated, reflecting good
progress on our long-term growth initiatives. Major investments
include Sizewell C, a partnership stake in the Isle of Grain LNG
terminal, and a new partnership with X-energy to deliver the
UK’s first advanced modular nuclear reactors; investments
which enhance UK energy security. However, CES+ and Spirit
continue to navigate complex strategic transitions, with
dependencies on government support mechanisms to underpin
future investment in the energy transition. Further, whilst
inherent exposure to commodity price fluctuations and changes
in demand continue to be effectively managed, the
unpredictable regulatory and political outlook, including debate
over net zero policy and targets, is impacting trading dynamics.
The Group is actively monitoring these changes while advancing
geographic diversification, including Centrica Energy’s
expansion into North America.
Economic headwinds and competitive pressures continue to
challenge customer retention, however renewed customer
focus is being driven by Centrica’s new Home and Business
organisational units. The Group is enhancing mitigation
strategies to support vulnerable customers and ensure
regulatory compliance, while accelerating technology
transformation. Investments in AI and a Single Customer View
platform aim to improve customer experience, maintain stable
asset and health and safety risk profiles, and strengthen cyber
resilience amid increasingly sophisticated threats.
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
18 February 2026

| 23

Centrica plc Annual Report and Accounts 2025

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

78%
25%
22%
12.5%

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 (adjusted for inflation), exceeding an annual threshold of £10
million. The EGL is accounted for as an expense and is included in cost of sales.
(2) The rate applicable to UK gas production is 78% comprising corporation tax of 30%,
supplementary charge of 10% and Energy Profits Levy of 38%.
(3) The statutory rate of tax in the Republic of Ireland is 12.5%. Where th e rate of
corporation tax is below a minimum rate of 15% an additional rate of 2.5% applies.
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

| 2025 Current tax charge/(credit) | 2025 Cash tax paid/ (received)
UK (including Petroleum Revenue Tax) (i) | 296 | 337
Denmark(i) | 9 | 19
Singapore | — | —
Republic of Ireland(i) | 3 | 19
Rest of world | 2 | –
| 310 | 375
Electricity generator levy(ii) | 10 | 10
Total tax paid |  | 385

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 payment in 2025 i ncludes an amount relating to 2024 final instalment in our gas
production business. Payments in Ireland and Denmark include amounts relating to 2024
when profits were higher.
(ii) Additional electricity generator levy of £9m is included in our share of the results of joint
venture and associates operating profits making a total charge of £19 m.
― 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

24 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Business review
Segmentation Update
As part of our focus to drive faster and more impactful decision
making, enhanced delivery for customers and cost efficiencies,
we have streamlined management structures to simplify the
Group. Reflecting the reorganisation, our Retail, Optimisation
and Infrastructure portfolio will become our three reportable
segments:
• Within Retail we have created two separate divisions, Home
and Business.
- Home includes all residential retail activities across the UK and
Ireland, covering home energy supply and services.
- Business brings together all business energy supply and
services activities across the UK and Ireland. These were
previously split across British Gas Energy, Bord Gáis Energy
and Centrica Business Solutions.
• Optimisation comprises the activities previously reported as
Centrica Energy, and the equivalent activities formerly
reported as part of Bord Gáis Energy.
• Infrastructure includes Power, Gas and Customer Assets.
- Power includes all power generation assets - our 20% stake in
the UK's operating nuclear fleet, our investment in Sizewell C,
and other power assets, principally our Irish assets and flexible
and renewable assets previously reported within Centrica
Business Solutions.
- Gas includes our investment in Grain LNG, Spirit Energy and
Centrica Energy Storage+ (Rough).
- Customer Assets includes the MAP, previously reported
within British Gas Energy.
Business Performance Summary
Adjusted EBITDA was £1.4bn (2024: £2.3bn). Adjusted operating profit was £0.8bn (2024: £1.6bn), while statutory operating profit was
£0.1bn (2024: £1.7bn). For more information on Group financial performance please see pages 18 to 22 in the Group CFO report.
The breakdown of EBITDA and operating profit is shown below:

| Adjusted EBITDA |  | Adjusted operating profit
Year ended 31 December (£m) | 2025 | 2024 |  | 2025 | 2024
Retail | 574 | 611 |  | 424 | 458
Optimisation | 196 | 381 |  | 155 | 339
Infrastructure | 728 | 1,357 |  | 314 | 799
Colleague profit share (i) | (34) | (25) |  | (34) | (25)
MAP adjustment (i) | (47) | (19) |  | (45) | (19)
Adjusted EBITDA / Adjusted Operating profit | 1,417 | 2,305 |  | 814 | 1,552
Less: Share of joint venture and associate’s EBITDA | (322) | (513) |  |  |
Adjusted EBITDA excluding share of EBITDA from joint ventures and associates | 1,095 | 1,792 |  |  |
Exceptional items and certain re-measurements |  |  |  | (708) | 151
Group operating profit (Statutory) |  |  |  | 106 | 1,703

(i) Reconciling items to Group Income statement.

| 25

Centrica plc Annual Report and Accounts 2025

Retail
Retail consists of our leading brands serving customers across
the UK and Ireland in Home and Business, including British Gas,
Bord Gáis Energy and Hive.

Year ended 31 December | 2025 | 2024 | Change
Operational |  |  |
Home Energy Supply customers (‘000) (closing) (i) | 7,956 | 7,907 | 1%
Home Services customers (‘000) (closing) (i) | 2,939 | 2,929 | 0%
Business customer sites (‘000) (closing) (i) | 742 | 735 | 1%
Home Energy Supply UK Touchpoint NPS (ii) | 33 | 29 | 4pt
Home services UK Engineer NPS (ii) | 76 | 73 | 3pt
Business UK Touchpoint NPS (ii) | 37 | 28 | 9pt
Home energy supply complaints per UK customer (%) (iii) | 8.1% | 10.1% | (2.0)ppt
Home Services complaints per UK customer (%) (iii) | 4.8% | 5.3% | (0.5)ppt
Business complaints per UK site (%) (iii) | 5.2% | 5.8% | (0.6)ppt
Financial |  |  |
Adjusted EBITDA (£m) | 574 | 611 | (6)%
Adjusted operating profit (£m) | 424 | 458 | (7)%
Adjusted operating profit margin (%) | 2.6% | 2.7% | (0.1)ppt

All 2025 metrics and 2024 comparators are for the 12 months ended 31 December unless
otherwise stated.
(i) Customers defined as:
Home Energy Supply - single households buying energy from British Gas and Bord Gáis
Energy.
Home Services - single households having a contract or an on-demand job with British
Gas Services, or Bord Gáis Energy, including warranty partnerships.
Business - British Gas Business and Bord Gáis Energy business customer sites.
(ii) Measured independently, through individual questionnaires, the customer’s willingness
to recommend British Gas following contact or a Home Services gas engineer visit.
(iii) Measured as a percentage of average customers over the year, UK only.
Operational Performance
We have continued to build on the strong 2024 operational
performance across Retail. Complaints fell across all businesses,
while NPS increased, including a record high in UK Home Energy
Supply of 33, supported by the completion of customer
migration onto our more flexible Ignition platform. We are
progressing the migration of our SME business customers onto
Ignition, with 44% now migrated, while we continue to review
plans for our Irish customers. Once completed we expect this
will help unlock further operational and financial efficiencies
across the Retail portfolio.
We continue to address the root causes of customer contact by
investing in, and simplifying, customer journeys, while further
operational improvements supported continued low reschedule
rates in Home Services of 4% (2024: 4%). The Trustpilot score
for British Gas reflects these improvements, increasing to 4.4
stars, while we were awarded the Uswitch Energy Awards Best
Overall Improvement winner for the second consecutive year.
Home Energy Supply customer numbers grew 1% to 7.96m, in
the year, with 7.50m UK energy customers (2024: 7.46m) and
0.46m customers in Ireland (2024: 0.45m). We welcomed
91,000 UK customers through the Supplier of Last Resort
("SoLR") process following the failures of Rebel Energy in April
and Tomato Energy in November, with 64,000 remaining on
supply at the end of the year. These gains offset a small
decrease in underlying customers. We saw increased levels of
customer switching during the year, with more customers
opting to move onto fixed priced tariffs. 32% of our UK
customer base is now on a fixed price product, compared with
25% at the end of 2024. This trend is expected to continue, and
we will remain focused on pricing efficiently and sustainably,
with long-term value our key priority.
In Home Services, we are starting to see the benefit of better
commercial innovation. Total customer numbers grew by
10,000 over 2025, as we began taking steps to transform our
commercial offerings and diversify our customer portfolio,
including offering our unique field force as a service in new
partnerships with original equipment manufacturers, which
added 71,000 customers.
Our traditional protection portfolio declined by 3%, although
retention rates improved to 87% (2024: 86%). We continue to
build new channels to support contract growth, with on-demand
volumes increasing 28% compared to 2024, while we also
increased boiler installs by 5% in the year, supported by new
sales channels and optimising the end-to-end sales journey.
Our British Gas membership scheme is also growing quickly,
with almost 600,000 members, helping to build stronger
customer engagement to support further commercial growth,
with conversion of around 7% to a paid protection contract.
In Business, customer sites increased by 1%, as we continue to
focus on growing our SME portfolio.
Financial Performance
Retail delivered adjusted EBITDA of £574m and adjusted operating
profit of £424m (2024: £611m and £458m respectively).
UK Home Energy Supply adjusted EBITDA was £224m and
adjusted operating profit was £163m (2024: £331m and £269m
respectively), with performance impacted by several factors.
Warmer than normal weather was an £80m headwind, while the
shape of the commodity curve also negatively impacted
profitability. These headwinds were broadly offset by several
regulatory reconciliations and other cost phasing items,
including £42m from the final reconciliation of revenues under
the Energy Price Guarantee scheme and a £41m benefit from
lower Feed-in-Tariff costs than previously recognised.

26 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Additionally, customers moving to fixed price products, typically
at a discount to the standard variable tariff, reduced profitability
compared to 2024.
In UK Home Services, strong efficient operations supported an
improved result, with adjusted EBITDA of £169m and adjusted
operating profit of £114m (2024: £114m and £67m respectively).
Building on the momentum from the first half of 2025, top-line
revenue grew 7% for the year, supported by our improved
customer offerings and improving sales journeys, alongside
increased smart installation volumes.
Operating margin improved 2.5ppts to 6.8%, with a sharp focus
on efficiency, including improved engineer productivity and
management of material and contractor spend. This more than
offset the impact of increases in labour costs driven by the rise
in employer National Insurance contributions.
Business Energy Supply in the UK delivered another strong
performance in 2025, with adjusted EBITDA of £150m and
adjusted operating profit of £138m (2024: £163m and £136m
respectively). This was supported by growing customer sites
and strong commercial performance in the optimisation of
commodity costs and risk management of pricing in the year.
Additionally, we made strong progress in embedding cost
efficiencies through the streamlining of our organisational
structure and reducing the use of third-party data and sales
teams.
Reflecting good progress on cost efficiency driven by the
transformation programme, Retail operating costs excluding
bad debt and depreciation were 5% lower at £1,474m (2024:
£1,559m).
Bad debt remains a focus, with the charge increasing in the year
to £418m (2024: £369m), despite good progress on control
initiatives. Within this UK Home Energy Supply bad debt
increased to £277m (2024: £237m) and UK Business Energy
Supply bad debt increased to £132m (2024: £120m) reflecting
continued industry-wide challenges in both sectors, with the
value of domestic debt owed to energy suppliers increasing to
£4.5bn (page 10 of Ofgem's January 2026 State of the Market
Report).
Optimisation
Centrica Energy

Year ended 31 December | 2025 | 2024 | Change
Operational |  |  |
Renewable and flexible capacity under management (GW) (i) | 19.5 | 16.7 | 17%
Financial |  |  |
Adjusted EBITDA (£m) | 196 | 381 | (49)%
Adjusted operating profit (£m) | 155 | 339 | (54)%
Adjusted operating profit margin (%) | 2.6% | 5.2% | (2.6)ppt

All 2025 metrics and 2024 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, which now includes the optimisation activities
previously reported within Bord Gáis Energy, continues to build
its diverse portfolio of contracted physical positions, while
leveraging its risk management and optimisation capabilities to
add further value across the Group.
In our Renewable Energy Trading and Optimisation ("RETO")
business, managed renewable and flexible capacity increased
17% to 19.5GW across the Nordics, Central and Southern
Europe, the Baltics, and the UK. This growth reflects Centrica
Energy’s ongoing investment in skills and technology, which
enables partners to access otherwise unavailable ancillary
service markets. In-line with typical tendering and renewals
activity, we expect assets under management to decline in the
first half of 2026, before growing again in the second half of the
year.
Our LNG business continued to perform well in 2025,
proactively hedging our Sabine Pass offtake while continuing to
expand the global portfolio. As such, we are well-positioned for
an expected period of gas oversupply, with the portfolio now
fully hedged to 2028 and over 80% hedged to the end of the
decade through a range of physical LNG, pipeline gas and
financial deals. Centrica Energy retains physical optionality in the
event of market volatility.

| 27

Centrica plc Annual Report and Accounts 2025

Leveraging the knowledge built up from our North American
LNG and pipeline gas deals, we opened our first North American
office in New York during the year. Initially focusing on building a
physical gas business, we see the potential to build an
integrated optimisation business in North America over time, in-
line with our incremental approach to expansion. Centrica
Energy also continues to explore other geographical markets
where the business model can be implemented.
Our Gas and Power Trading business, which typically benefits
from price dislocations based on market fundamentals, faced
gas markets driven by short-term geopolitical news flow and
speculative capital disrupting fundamentals. European gas
storage economics were also impacted by mandatory volume
targets imposed by the EU to ensure sufficient gas in store
ahead of winter. This reduced the storage capacity we chose to
contract at the start of the year and our opportunity to optimise
energy flows based on fundamentally driven price dislocations.
Financial Performance
Adjusted EBITDA was £196m and adjusted operating profit was
£155m (2024: £381m and £339m respectively). Geopolitical
uncertainty and EU storage targets heavily impacted the Gas
and Power Trading result for the year, as we proactively
reduced our activity levels, focusing on capital preservation and
remaining disciplined rather than pursuing high-risk strategies.
Performance improved in the second half of the year, with
European summer/winter gas price spreads widening, however,
they remain below longer-term averages, and structural
changes in European gas storage regulation, despite now being
more flexible, will continue into 2026.
The LNG and RETO businesses performed well, with LNG
benefitting from hedged exposure in advance of delivery
through a combination of physical and financial deals protecting
the business from the emergent lower European-North
American price spread.
Infrastructure
Infrastructure consists of our Power, Gas and Customer Asset
businesses. This includes our investments in the UK's current
operational nuclear fleet and Sizewell C, our Irish power assets
and other flexible and renewable assets, alongside our 69%
ownership in Spirit Energy, Centrica Energy Storage+ (“CES+”)
which is the operator of Rough, our 50% ownership of Grain
LNG and our Meter Asset Provider (“MAP”).

Year ended 31 December | 2025 | 2024 | Change
Operational |  |  |
Power |  |  |
Nuclear generation (TWh) | 6.6 | 7.5 | (12)%
Nuclear achieved power price (£/MWh) | 90 | 132 | (32)%
Whitegate power generation (TWh) | 2.1 | 2.3 | (9)%
UK Asset availability (%) | 93% | 93% | nm
Spirit Energy |  |  |
Total production volumes (mmboe) | 10.5 | 13.3 | (21)%
Of which: Retained production volumes (mmboe) | 3.3 | 3.7 | (11)%
Average achieved gas sales prices (p/ therm) | 107 | 132 | (19)%
Lifting and other cash production costs (£/ boe) (i) | 28.4 | 25.3 | 12%
Centrica Energy Storage+ (“CES+”) |  |  |
Volume in Rough reservoir (bcf) (ii) | 8 | 41 | (80)%
Customer Assets |  |  |
Centrica smart meters under management (‘000) | 1,620 | 446 | 263%
Financial |  |  |
Sizewell C equity investment (£m) (iii) | (376) | - | nm
Adjusted EBITDA (£m) | 728 | 1,357 | (46)%
Adjusted operating profit (£m) | 314 | 799 | (61)%
Capital expenditure (£m) | (1,134) | (388) | 192%

All 2025 metrics and 2024 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. Unit DDA rate is £18.5/boe (2024: £20.4/boe).
(ii) As at year end. 2025 closing volume consists of 8bcf of indigenous gas only (2024:
14bcf indigenous gas).
(iii) £376m equity investment into Sizewell C for 15% ownership. Regulatory asset base for
Sizewell C funded with 35% equity and 65% debt. Group capital expenditure
recognised in relation to Sizewell C of £387m includes transaction fees.

28 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Operational Performance
Power
Nuclear output was 6.6TWh (2024: 7.5TWh), driven by
unplanned outages, largely at Hartlepool, which was offline for
the second half of 2025, with one reactor at the station returning
to service at the start of February 2026, and the second reactor
due to return to service by early March (as at 17th February
2026).
In Ireland, our 445MW combined cycle gas turbine (CCGT)
Whitegate power station performed in line with expectations
generating 2.1TWh in the year based on availability of 90%. Our
two 100MW flexible natural gas peaking plants under
construction in Athlone and Dublin experienced delays relating
to gas and grid connections. With commissioning now expected
to complete by around the middle of 2026, we have secured an
extension to the start date of the 10-year capacity market
contracts to mitigate potential associated losses on these
projects against the ~€380m total investment (unchanged;
Centrica share ~80%). We have also secured a 10-year capacity
market contract of €56m p.a., to be fulfilled through a 334MW
Open Cycle Gas Turbine (OCGT) at Cashla in Galway, Ireland.
Planning is currently underway for the project with FID expected
to be taken in early 2027. Once approved, this will take our
power generation capacity in Ireland to ~1GW.
Gas
We disposed of Spirit Energy's remaining production assets in
the Southern North Sea and the Netherlands through two
transactions announced during 2025, generating expected cash
proceeds of £180m, and transferring £129m of gross
decommissioning liabilities. In October, we completed the sale
of a 46.25% interest in the Cygnus gas field for a final
consideration of £123m and the transfer of £85m of
decommissioning liabilities. This was followed in December by
the announced sale of the remaining 15% interest in Cygnus, and
all other producing assets in the Greater Markham Area and
Southern North Sea. Completion is expected in the second half
of 2026, subject to regulatory approvals, for a headline
consideration of £57m and the transfer of £44m of
decommissioning liabilities. Following completion, the
Morecambe Hub will become Spirit's principal producing asset,
with retained reserves of 9mmboe. The decommissioning
provision balance for Spirit Energy was £961m as at the 31
December 2025, reflecting the impact of disposals, and includes
£159m of decommissioning retained relating to the disposal
group at the year-end date. For more information on the
disposals see note 12.
Going forward, Spirit Energy's focus will be on producing its
remaining reserves safely and efficiently, and on
decommissioning post-production facilities and wells while
minimising the environmental impact. We have completed a
series of activities at the Morecambe Hub to boost gas
production and maximise economic recovery from the fields,
which are expected to continue production through to around
the end of the decade. Longer-term, the focus is on progressing
the exciting opportunity to transform Morecambe into a carbon
storage facility through the Morecambe Net Zero project, with
the UK government identifying the project as a priority to reach
FID during this parliament.
Total Spirit Energy production volumes were 21% lower in 2025
compared to 2024, with disposals accounting for half of the
decline, alongside outages at Morecambe.
At Rough, having paused gas storage operations in 2025 owing
to uneconomic seasonal gas price spreads, we await the
conclusion of the UK Government’s consultation on the future
security of gas supply, which was published in November 2025
and closed on 18 February 2026. The consultation seeks to
directly address the future role of gas storage, the resilience of
supply infrastructure, and the commercial models needed to
support assets such as Rough. A decision from the Government
is expected in the first half of 2026.
In November, we completed the acquisition of the Isle of Grain
LNG terminal for an enterprise value of £1.5bn, with our equity
investment being approximately £200m for a 50% share. Since
the acquisition completed we have been working closely with
our partners ECP and the management team to set up Grain
LNG as an efficient standalone business, while continuing to
deliver best-in-class safety, reliability and efficiency for capacity
holders. In collaboration with ECP, we have established strategic
priorities and business goals for Grain LNG, focused on
operational excellence, accelerating growth potential and
creating long-term value for shareholders as we support the
UK's energy transition. The terminal is 100% contracted until
2029, over 70% contracted until 2039 and over 50% contracted
to 2045, resulting in highly visible, long-term earnings and cash
flow. This supports an expected unlevered, post-tax nominal IRR
of ~9% and an equity IRR of ~14%+.
Customer Assets
The MAP financed a further 1.2m smart meters in 2025,
maximising our strong capital deployment and installation
capabilities through British Gas. We now have over 1.6m smart
meters under management, an increase of 263% from 2024,
having only installed our first meter ~24 months ago. Using our
experience of financing smart meters we have developed
capabilities in small asset tracking and financing and we continue
to explore adjacent market opportunities for further growth.
Financial Performance
Total Infrastructure adjusted EBITDA fell to £728m with
adjusted operating profit of £314m (2024: £1,357m and £799m
respectively), reflecting lower commodity prices and the
pausing of storage operations, as well as outages in gas and
power assets.
Within this, Nuclear adjusted EBITDA fell to £337m (2024:
£610m), with adjusted operating profit of £180m (2024: £353m),
predominantly driven by lower achieved prices and output, net
of associated impacts from associate tax and the Electricity
Generator Levy.
Spirit Energy adjusted EBITDA was £380m (2024: £707m) and
adjusted operating profit of £166m (2024: £434m), with the
decline year on year driven predominantly by lower achieved
prices and production as outlined above.
Rough delivered a better than expected EBITDA loss of £45m
and an adjusted operating loss of £45m (2024: £17m EBITDA
profit and £2m adjusted operating profit) with strong
operational reliability through the year supporting indigenous
gas production, optimisation of commercial contracts and a
range of cost efficiency measures which helped to offset the
impact of uneconomic spreads and the pausing of gas storage
operations.
Grain LNG adjusted EBITDA loss of £8m and adjusted operating
loss of £15m for the period following transaction completion in

| 29

Centrica plc Annual Report and Accounts 2025

November reflected transaction and financing fees, with
adjusted EBITDA moving forwards from 2026 expected to be
around £100m per annum (Centrica share).
Our MAP saw adjusted EBITDA grow to £25m with adjusted
operating profit of £8m (2024: £2m and £nil respectively) as the
business continues to scale rapidly. We deployed £224m of
capex in the year, performing strongly and exceeding our target
of £200m investment for the year. This is after the MAP
consolidation adjustment of £47m (2024: £19m) which reduces
the capital expenditure recognised in Group reporting for the
internal margin and indirect costs on smart meter installations
across the Group.
Details of our forward hedging positions for 2026 and 2027 are
outlined below:

Nuclear | 2026 | 2027
Volume hedged (TWh) | 4.8 | 1.8
Average hedged price (£/MWh) | 76 | 73
Production volume (i) (TWh) | 6.5-7.5 |

(i) 2026 forecast generation volume.

Spirit Energy | 2026 | 2027
Volume hedged (mmths) | 137 | 83
Average hedged price (p/th) | 120 | 86
Production volume (i) (mmths) | 405-430 |

(i) 2026 forecast production volume includes ~170-180mmths relating to assets held for
sale

30 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Key performance indicators
Our key performance indicators (KPIs) help the
Board and executive management team assess
performance against our strategy.

Financial |  |  |  |  |  |  |  |  |  |  |  |
Group adjusted EBITDA (£m) |  | 1,417 £m |  | Group adjusted operating profit (£m) |  | 814 £m
2025 |  |  |  | 1,417 |  |  | 2025 |  |  |  | 814 |
2024 |  |  |  | 2,305 |  |  |  | 2024 |  |  |  | 1,552 |  |
2023 |  |  |  | 3,500 |  |  |  | 2023 |  |  |  | 2,752 |  |
Group adjusted EBITDA reflects earnings before interest, tax, depreciation and amortisation and includes the Group’s share of EBITDA from joint ventures and associates. |  |  |  | Group adjusted operating profit is one of our fundamental financial measures. |  |  |  |

|  |  |  | 11.2p |  |  |  |  |  |  |  |
Group adjusted basic earnings per share (EPS) (pence) |  |  | Group free cash flow (£m) |  | (167) £m
2025 |  |  |  | 11.2p |  |  |  | 2025 |  |  |  | (167) |  |
2024 |  |  |  | 19.0p |  |  |  | 2024 |  |  |  | 989 |  |
2023 |  |  |  | 33.4p |  |  |  | 2023 |  |  |  | 2,207 |  |
EPS is a standard measure of corporate profitability. Adjusted EPS is used to measure the Group’s underlying performance against its strategic financial framework. |  |  |  | Free cash flow 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. |  |

― Read more about our strategy on pages 14 to 17 and our financial performance on pages 18 to 29
― Read more about our non-financial performance on pages 42 to 57 and 253 to 255

| 31

Centrica plc Annual Report and Accounts 2025

Non-financial |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home Services UK Engineer Net Promoter Score (NPS)(1) |  | Total Retail customers (m)(2) |  | Total recordable injury frequency rate (TRIFR)
2025 |  |  |  | +76 |  | 2025 |  |  |  | 10,373 |  | 2025 |  |  |  | 0.61
2024 |  |  |  | +73 |  | 2024 |  |  |  | 10,239 |  | 2024 |  |  |  | 0.63
2023 |  |  |  | +71 |  |  |  |  |  |  |  | 2023 |  |  |  | 0.84
Providing a great customer service builds trust and lasting relationships. With operational improvements and low reschedule rates, customer satisfaction continued to rise. Accordingly, NPS increased by 3 points. |  | Our ability to attract and retain customers underpins growth. Strong operational performance, greater levels of customer satisfaction and the Supplier of Last Resort process, led to customer numbers growing across our retail businesses by 1%. |  | Safety is a top priority. We focused on preventative measures and process reviews, which drove a 3% improvement in TRIFR per 200,000 hours worked. Most incidents related to minor slips, trips and musculoskeletal injuries.

† Included in DNV’s independent limited
assurance report. See page 253 or
centrica.com/assurance for more.
(1) Measured independently, through
individual questionnaires, the customer’s
willingness to recommend British Gas
following a Home Services gas engineer
visit. For wider Retail NPS, see page 25.
(2) Includes Home Energy Supply and Home
Services households and Business
customer sites. 2024 restated to align
with scope. Comparable 2023 data is not
available. For a wider breakdown,
see page 25.
(3) Engagement is based on an average
score out of 10 and measures how
colleagues feel about the Company.
(4) The goal measures Scope 1 (direct)
and 2 (indirect) GHG emissions based
on operator boundary and is normalised
to reflect acquisitions and divestments
in line with changes in Group
structure against a 2019 base year of
2,120,446tCO 2 e. See more on pa ge 45.

Colleague engagement (3) |  |  |  | Total greenhouse gas (GHG) emissions – 50% reduction by 2032 and net zero by 2040 (Base year 2019)(4)
2025 |  |  |  | 7.9 |  | 2025 |  |  |  | -25%
2024 |  |  |  | 8.1 |  | 2024 |  |  |  | -18%
2023 |  |  |  | 7.7 |  | 2023 |  |  |  | -21%
An engaged team drives business success. Although top quartile performance was maintained for most of the year, uncertainty arising from organisational changes contributed to engagement landing at 0.1 points below the top quartile for our sector and 0.2 points lower than last year. |  | Net zero is key to the future of our business and planet. Reductions in GHG emissions are on track and grew from 18% to 25%. This followed a decrease in emissions from Liquefied Natural Gas shipping, power generation and gas production including an unplanned outage at Barrow Terminal.

†

32 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our Principal Risks and Uncertainties
Effective risk management safeguards Centrica by helping to maintain a resilient,
sustainable and well-governed business. It also provides insight into Principal Risks
and uncertainties, strengthening strategic decision-making as we pursue our strategy,
and supporting long-term value creation for our stakeholders.
Risk management and internal
control framework
Centrica’s Group risk management and
internal control framework is designed to
ensure that risks are identified, assessed,
monitored and managed in line with our
strategic objectives and stakeholder
expectations, enabling informed
decision-making and effective oversight
of risk and control effectiveness. The
Board retains ultimate responsibility for
determining the Group’s risk appetite,
overseeing the effectiveness of
Centrica’s risk management framework
and ensuring the ongoing alignment
between our risk profile and strategic
priorities.
Risk governance framework
Our risk governance framework defines
the roles, responsibilities and purpose of
risk management across the Group. Our
Approach to Enterprise Risk Management
Policy clearly articulates the role of the
Board and its Committees. The following
governance bodies operate within a
structured monitoring and escalation
framework:
• The Audit and Risk Committee (ARC);
• The Safety Environment and
Sustainability Committee (SESC);
• The Centrica Leadership Team (CLT);
and
• The Group Risk, Control and Compliance
Forum (GRCCF).
These bodies receive regular reports
to evaluate Principal Risks, determine
alignment with risk appetite, review the
effectiveness of mitigation strategies
and track the progress of any
improvement actions.
The Board is responsible for setting the
tone from the top and aligning the
Group’s appetite with our long-term
objectives, balancing our approach to
pursuing opportunities while managing
potential adverse impacts. Centrica
operates in a complex and dynamic
environment characterised by
geopolitical uncertainties, a challenging
cyber threat landscape, regulatory
changes and rapid technological
advancements. Understanding the nature
of the risks and their potential to impact
the sustainability of the Group enables us
to develop a proportionate and resilient
response. Our risk appetite reflects a
balanced approach to risk and reward,
guided by our commitment to maintaining
a resilient, safe and sustainable business,
operating in compliance with applicable
laws, regulations and internal policies.
The Board has overall responsibility for
ensuring that a sound approach to risk
management and internal controls is
maintained across Centrica. The Board
reviews Principal Risks: those which could
potentially threaten Centrica’s business
model, future performance and
reputation, as part of its annual strategy
and business planning process, thereby
ensuring that our risk profile remains
aligned with the Group’s objectives and
with the expectations of stakeholders.
Bi-annually, the Board, in conjunction
with the ARC, assesses the Company’s
Principal and E merging Risks, their
alignment with the Group’s risk appetite,
and the Board annually approves all risk-
related disclosures in the Annual Report
and Accounts. Significant risk exposures
or breaches of risk appetite are escalated
and reviewed by the ARC and Board as
required.
The ARC reviews the evolution of the
Principal Risks on a quarterly basis,
supplemented with quarterly ’deep
dive’ risk and control reviews of business
units and functions on a rotational basis.
The enterprise risk management process
that underpins these responsibilities
is reviewed annually by the ARC.
Management is responsible for
monitoring adherence to risk appetite
and ensuring appropriate mitigation
strategies are in place, supported by
action plans, monitoring, reporting and
escalation to the relevant Governance
forums.
Outcome for 2025:
Our Principal Risks and Risk Appetite
Statements were reviewed and updated
during 2025 to reflect the changing
nature of our business and external
environment. Refer to the Principal Risks
section below.
A standardised methodology is in place
to identify, assess, treat, monitor,
escalate and report on risks across the
Group in a consistent manner. A risk
toolkit including guidance documents,
templates, a risk glossary, as well as
tools and training, support the application
of risk management.
Our risk management process is set out
in the diagram on page 33.

| 33

Centrica plc Annual Report and Accounts 2025

Group risk governance and oversight framework
The Board
• Overall responsibility for the Group’s strategy and risk management
• Approves risk appetite in line with Group strategy and sets the tone from the top
• Approves the Group’s Risk Management Framework
Safety, Environment and Sustainability Committee
• Oversees and monitors significant safety,
health, environmental and other sustainable development risks
• Reviews climate-change-related reporting and disclosures
Centrica Audit and Risk Committee
• Oversees the overall effectiveness of the Group’s risk
management and internal controls framework
• Reviews quarterly risk and control reporting
(including deep dives and significant escalations)
• Approves the annual Internal Audit Plan
Centrica Leadership Team (CLT)
• Owns management of the Group’s Principal Risks and recommends Risk Appetite Statements for Board approval
• Embeds risk-informed decision-making and culture
• Reviews and challenges business unit and functional risk profiles
• Decides management actions and escalates significant appetite breaches to the ARC/Board
Structured risk
review and
escalation
_
Independent Enterprise
Risk team advise,
challenge and report
_
Escalation of significant
and emerging risks,
appetite breaches,
control failures
_
Internal Audit
coverage
_
Quarterly Group Risk,
Control and
Compliance Forum
(GRCCF) chaired by
General Counsel and
attended by CFO, CRO
and representatives
from across
the lines
of defence
Risk appetite and
forward-looking
risk insight
_
Board-approved Risk
Appetite Statements
and management of
associated tolerances
_
Trend analysis and
forward-looking risk
measures and key risk
indicators (KRIs) with
defined triggers
_
Stress testing and
scenario analysis to
assess resilience
Business units
• Ownership and accountability for assessing and managing risks
within approved tolerance s
• Quarterly business unit Risk and Control Committees review
risk and control performance
• Escalation of significant and emerging risks, appetite
and control failures
Group functions
• Set and maintain policies and procedures for Group functions
that benefit from central policy oversight
• Monitor adherence and support business units, providing
subject matter expertise functional risk insight and challenge
• Communicate significant risk and control themes
and emerging risks to CLT, SESC and ARC

34 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

A top-down and bottom-up approach
is followed for risk identification.
A programme of strategic risk workshops
informs our top-down risks which are
supplemented by bottom-up risks.
These are discussed at Risk and Control
Committees (RACCs) which are held within
each business unit and key function. These
committees form an essential governance
layer, providing structured oversight of risk
profiles, including the completeness of risk
identification, evaluating the likelihood and
potential impact of risks. The Committees
also review the status and effectiveness
of controls and mitigation plans, as well as
any incidents, near misses or compliance
breaches.
The Group’s approach to identifying
emerging risks forms part of the
overall risk management framework,
incorporating both external and internal
factors such as, continuing geopolitical
volatility, sector insights, macroeconomic
trends, regulatory developments and
inputs from key stakeholders. Emerging
risks are considered as part of both the
executive level strategic planning
process and the risk identification
process at the operational level.
In our viability assessment we evaluate a
range of ‘severe but plausible’ scenarios
linked to the Group Principal Risks.
This includes assessing the potential
operational, financial and reputational
impacts and the effectiveness of the
mitigating actions available to the
Group. The outputs of this analysis inform
both our going concern and viability
conclusions. For further information
regarding the Group’s resilience to
Principal Risks please see the viability
statement on page 40.
Internal controls
Our internal control framework is
designed to anticipate, evaluate and
mitigate risks within the Group’s
established risk appetite, supporting
delivery of our strategic priorities. The
framework is built on a comprehensive
set of policies, principles and processes
that guide business conduct and
reinforce operational discipline. It
provides a high degree of confidence in
the accuracy, reliability and integrity of
both financial and non-financial reporting,
while ensuring adherence to applicable
laws, regulations and internal
requirements.
These controls are operated by skilled
and experienced teams, enabled
by our technology platforms, and
strengthened through ongoing review
and enhancement. This approach fosters
informed decision-making, protects
resources and sustains confidence
among stakeholders.
The framework incorporates Entity-Level
Controls (ELCs), which provide consistent
governance, form the foundation for all
controls and promote a strong control
culture across the Group. They include
a range of activity not limited to:
• Board and Management Committee
oversight;
• Group-wide policies and standards;
• Delegation of authority framework; and
• Training and awareness programmes
for relevant teams.
The internal control framework also
includes specific measures for financial
reporting and other key financial
processes, with fundamental controls
including:
• Monitoring new accounting standards
and assessing their impact;
• Review of Group accounting
judgements periodically;
• Monthly consolidation and balance sheet
reconciliations;
• Monthly performance reviews
comparing against forecasts and prior
periods;
• Regular monitoring and sensitivity
analysis of forecasted performance
against budgets and thresholds;
• Review of IT general controls (user
access, change management,
segregation of duties); and
• Review and approval of external financial
disclosures.
Confidence over the effectiveness of the
internal control framework is obtained
through the following regular internal
activities:
• First-line control self-attestation: All
key financial controls are periodically
self-attested in our Governance, Risk
and Compliance (GRC) tool by control
owners. In addition, an annual attestation
is obtained from management
confirming the adequacy of their control
environment and compliance with key
controls.
• Second-line assurance: Independent
testing of ELCs and significant financial
controls by the Group controls function
on a cyclical basis, with reporting on
results and remediation plans.
• Third-line Audit outcomes: Reviews
of selected financial and non-financial
processes, with reporting on findings
and actions. As needed, these are
supplemented with external views,
such as ISO certifications.
Principal Risks
The Group undertakes an annual review
to ensure its Principal Risks remain
strategically aligned, reflect shifts in the
operating environment and capture
emerging threats and opportunities.
During 2025, the Group completed a
comprehensive refresh of its Principal
Risks to ensure they provide a clear
and forward-looking view of the most
significant risks to Centrica’s successful
delivery of its strategy. This has helped to
strengthen the foundations for enhanced
internal control oversight, assurance and
disclosure in anticipation of the
forthcoming material control declaration
requirements.

| 35

Centrica plc Annual Report and Accounts 2025

Notable changes that followed from the Principal Risk refresh are summarised below.

| Updated Principal Risk |  | Comments
| New Strategic resource allocation and deployment |  | Focuses on governance and delivery of the Group’s strategic transformation and investments
| Refined Customer |  | Reflects how evolving customer needs and priorities are supported through innovation, new technologies and ways of delivering value
| Refined Safety and asset integrity |  | Blends safety and operational asset integrity
| Refined Cyber, technology and resilience |  | Highlights broader technology and resilience perspective
| New Third-party and supply chain resilience |  | Combining third-party/supply chain risk factors and considers resilience to operational disruption

In parallel, the Group’s qualitative Risk
Appetite Statements were updated to
reflect the Board’s expectations
regarding acceptable levels of risk-taking
in line with our Principal Risks and the
areas most critical to our strategy,
including strategic resource allocation,
innovation, operational excellence,
customer outcomes and financial
discipline. This supports a balanced
approach to risk and opportunity as we
progress towards achieving the strategic
ambitions set out in our strategy.
Throughout the following Principal Risk
disclosure the stated risk trend indicates
whether the level of risk exposure is
considered to have improved,
deteriorated or remained stable.
Strategic resource
allocation and
deployment

Risk trend | Improved

Risk description
Centrica’s ability to deliver its strategy
depends on the timely, well-governed
allocation of capital, talent and capabilities
to the right opportunities. Ineffective
allocation and/or deployment of capital,
resources or transformational change
initiatives may mean that capital is not
employed in the planned timeframe or
against strategic priorities, which could
lead to increased costs, delayed delivery
or reduced returns for shareholders.
Key drivers
• To differentiate Centrica from its
competitors by investing in
opportunities that are closely aligned
with our strategic priorities, deliver
attractive returns for shareholders and
maintain an appropriate balance of risk.
• To ensure that all investment
opportunities are evaluated within
the context of our balance sheet and
established investment guardrails,
safeguarding Centrica’s strong
financial position.
• Rapid innovation within the energy
sector necessitates acting on timely
insight into market trends and emerging
opportunities to drive strategic
advantage.
Mitigations
Policies and frameworks
• The Centrica Investment Framework
(CIF) sets clear guardrails on return
expectations, financial impact and net zero
alignment, with the strategic planning
process governing capital allocation and
transformation investment.
Governance and monitoring
• The Centrica Investment Committee
(CIC) ensures that investment decisions
align with the Board-approved risk
appetite and the CIF.
• A monthly Enterprise Portfolio Board
(EPB) ensures the delivery of the
transformation programme is in line
with Centrica’s strategic goals, with
significant opportunities escalated
to CIC where appropriate.
Processes and controls
• The CIC oversees post-investment
evaluations and reviews learnings.
• The CIC reviews and approves Group
level assumptions that impact
investment appraisals and capital
allocation, including the central view of
economic and fundamental assumptions
(the ‘Centrica House View’) and Group
and asset-specific Weighted Average
Cost of Capital (WACC).
External relationship management
• Stakeholder engagement, market
monitoring and active management of
investor relations to ensure capital
allocation is aligned to strategy and
externally communicated commitments.
Credit and
liquidity risk

Risk trend | Stable

Risk description
Potential loss arising from a counterparty
failing to meet its obligations in accordance
with the agreed terms, and the risk of
increased liquidity requirements affecting
Group as well as counterparty performance.
Key drivers
• Commodity price risk exposes Centrica
to both counterparty credit risk and
liquidity risk, as well as customer
debt risks.

36 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

• Commodity market volatility and high
energy prices can increase cash and
working capital requirements for both
Centrica and our counterparties,
increasing the risk of counterparty
default and further contagion. This can
also result in an increased likelihood of
non-payment by both residential and
business retail customers.
Mitigations
Policies and frameworks
• The Group Credit Risk Policy and
Financing and Treasury Policy are
reviewed and approved annually to
ensure risk limits and guidelines reflect
Board risk appetite.
Governance and monitoring
• The credit and liquidity risk appetite is
approved by Centrica’s Board,
monitored monthly by the Centrica
Leadership Team (CLT) via Group
Finance reporting and managed by the
monthly Financial Risk, Controls and
Compliance forum (FRCC).
• The Board may request a risk capital
reserve against Centrica’s debt
headroom, based on forecast balance
sheet trajectories and informed by
monthly risk capital reporting.
• Monthly Financial Performance Reviews
monitor the forecast versus actual
customer debt position, and the bad
debt provision.
Processes and controls
• Daily monitoring of credit risk versus
established limits, including credit
exposures per counterparty and
portfolio level reporting of Credit Value
at Risk (CVaR), and defined escalation
processes.
• Monitoring of liquidity risk versus
established limits with defined
escalation criteria alongside review of
Group liquidity position, liquidity stress
testing and committed liquidity.
Customer relationship management
• Active engagement to manage
exposures and support customers with
debt repayment, including tailored
assistance for vulnerable customers,
alongside continuing development and
enhancement of customer debt
management capabilities.
Sources of liquidity
• Access to diversified sources of
committed and uncommitted liquidity,
with Group liquidity underpinned by
£5bn of committed liquidity from
relationship banks.
M arket risk
W eather risk

Risk trend | Stable

Risk description
Potential for financial loss due to factors that
affect the overall performance of financial
markets, such as shifts in energy prices and
volatilities, interest rate changes and foreign
exchange fluctuations.
Key drivers
• Commodity exposures arise from
Centrica’s Retail, Infrastructure and
Optimisation businesses, across power,
gas and Liquefied Natural Gas (LNG)
positions.
• Movements in commodity prices can
impact reve nue on sale of asset
production, valuation of asset portfolios
as well as revenue from the optimisation
business.
• Short-term commodity exposures can
arise when realigning established
hedges to account for either changes in
customer demand or unplanned supply
outages from ageing infrastructure.
Mitigations
Policies and frameworks
• Hedging policies and trading risk limits
are approved by the Group Risk Hedging
Policy Committee.
Governance and monitoring
• Annual reviews and limit calibrations
by the Group Risk Hedging Policy
Committee.
• Monthly Finance Performance Review
meetings monitor hedge decisions and
risk exposures.
• Demand forecasting performance
and hedge performance is monitored
monthly by the Dow nstream Energy
Margin Meeting.
• Centrica Energy’s monthly Operational
Performance and Oversight Committee
(OPOC) reviews the end-to-end trading
lifecycle.
Processes and controls
• Daily monitoring of trading risk versus
established limits, including Value at Risk
(VaR), position limits, and profit and loss
drawdowns, and defined escalation
processes.

Risk trend | Stable

Risk description
Variations in weather patterns influence
customer demand, generation supply and
commodity prices, creating volatility in
weather-related earnings and operational
asset performance. Unseasonal
temperatures or adverse weather events
can result in lost sales margin, higher
balancing costs (selling back excess
commodity at a lower price or buying at
a higher price) or impact asset availability.
Key drivers
• During periods of warm weather
customers often consume less energy,
thus reducing revenue. The financial
impact can be compounded by selling
back excess hedges at a loss, especially
if commodity prices have fallen.
• In adverse cold weather scenarios,
customers consume more energy,
increasing costs and driving the need to
procure additional volumes to meet the
higher demand. If wholesale prices have
risen to above residential and business
customer price levels, Centrica will lose
margin on these incremental volumes as
the cost is higher than that charged to
customers.
Mitigations
Governance and monitoring
• The monthly Downstream Energy
Margin Meeting reviews weather
impact analysis, hedging proposals and
performance. This takes into account
the dynamic hedging strategy
implemented to manage the exposure
to weather risk.
Processes and controls
• Forecasting of weather and the
associated impact on demand with
consideration given to historical
norms, data provided by external
meteorological services and elasticity
of demand. These forecasts inform
expected demand profiles with a
feedback mechanism in place to adjust
hedging positions and strategies.
• Options to mitigate extreme weather
risk in our downstream businesses,
including the consideration and decision
on use of financial instruments.

| 37

Centrica plc Annual Report and Accounts 2025

E xternal, regulatory,
geopolitical
and conduct

Risk trend | Deteriorated

Risk description
Centrica’s ability to operate and compete
effectively is influenced by external political,
regulatory and geopolitical conditions, as well
as our own standards of conduct. Escalating
geopolitical tensions, conflict and
protectionist policies may disrupt global
energy markets and supply chains, heighten
compliance exposure and constrain the
Group’s agility to enter or exit key markets.
R egulatory and policy changes can alter the
attractiveness and our ability to participate in
markets, affect financial returns or impose
new compliance burdens that weaken
investment confidence. In parallel, material
breaches of law, regulation or Centrica’s
Code of Conduct could undermine trust,
damage reputation and lead to legal or
financial consequences. Together, these
factors could constrain growth, increase
costs and affect Centrica’s ability to deliver its
strategic objectives and serve customers
reliably.
Key drivers
• Heightened scrutiny in UK retail energy
and insurance sectors.
• Geopolitical instability and trade barriers
complicate international operations.
• International climate policy shifts heighten
strategic uncertainty.
• Growing unpredictability from affordability
pressures and shrinking public finances.
• Any material failure to follow Centrica’s
standards of conduct or address Speak
Up issues would undermine trust in our
business.
• British Gas remains under investigation
by Ofgem in relation to its legacy
arrangements for the installation of
prepayment meters under warrant. The
investigation is ongoing and British Gas
continues to engage extensively with
the regulator with a view to securing a
conclusion to this issue.
Mitigations
Policies and frameworks
• Centrica’s Code of Conduct which
emphasises commitment to integrity
and compliance.
• Global Speak Up helpline for reporting
C ustomer
misconduct, malpractice or broader
unethical behaviour where employees
and business partners can raise
concerns without fear of retaliation.
Governance and monitoring
• Board oversight of the political and
regulatory strategy and ARC oversight
of standard of conduct.
• Disclosure Committee, which meets
as is deemed necessary, to ensure full
compliance with the requirements to
make timely and accurate disclosure of
information externally which includes,
but is not limited to, identifying insider
information.
• The quarterly GRCCF reviews
regulatory, conduct and geopolitical
matters including but not limited to
those escalated from the bottom-up
RACCs and the Centrica Energy
Compliance and Regulatory Committee.
• Monitoring and oversight provided
by the Legal, Regulatory, Ethics,
Compliance and Secretariat (LRECS)
leadership team.
• Compliance Assurance provides
independent oversight of compliance
and conduct risks through risk‑based
reviews, issue escalation and delivery
of the annual assurance plan.
Processes and controls
• Corporate Affairs and Regulatory
teams monitor legal and regulatory
developments across jurisdictions and
maintain an active dialogue with all
regulators including with Ofgem, the
Financial Conduct Authority and the
Prudential Regulation Authority.
• Increased horizon scanning on emerging
regulations and energy transition policies.
• Enhanced understanding of country
risks, policy frameworks and
opportunities to support geographic
diversification.
• Define and maintain adequate regulatory
frameworks to support investments in
energy security.
• Integration of policy and regulatory affairs
insights into the strategy definition and
investment assessment process.
• The Financial Crime team monitors
threats and adequacy of response to
anti-money laundering and the threat
of bribery and corruption.

Risk trend | Stable

Risk description
Failure to understand and respond to
changing customer needs may constrain
Centrica’s ability to deliver differentiated,
value-adding products and services that
are competitive and responsive to
customer demands. This could lead to
customer attrition, reputational damage,
regulatory scrutiny and reduced
operational and strategic agility.
Key drivers
• Customer expectations continue to
evolve, driven by the energy transition,
increased cost sensitivity, heightened
service and reliability expectations, and the
influence of digital-first experiences.
• Complexity of adopting and integrating
innovative enabling technologies (including
AI), management of legacy systems and
effective use of data impact
responsiveness to customer demands.
• Skilled engineer availability and ability
to match net zero demand with delivery
combine to influence customer
experience and brand perception.
• Energy prices, price cap changes and
retail competition challenge customer
retention.
Mitigations
Governance and monitoring
• Management focus on customer
experience and outcomes with robust
oversight and governance at all levels of
the organisation through to the Energy
and Services Subsidiary Boards.
Processes and controls
• Significant ongoing transformational
investments in customer relationship
management, billing and supply chain
systems and processes via internal
transformation programmes. A Single
Customer View has been developed
in 2025 with further developments
underway across all retail businesses
to optimise benefit.
• Enhancements to our customer
interaction are being made through
Gen AI.
• Ongoing implementation of the
strategic labour strategy ensuring
availability of skills to service developing
propositions and markets.

38 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

External relationship management
C limate change
• Centrica Home remains highly engaged
with Ofgem and government agencies
to seek to address the cost of living crisis
and to better support customers who are
vulnerable and/or in significant debt.
P eople culture
and workforce

Risk trend | Stable

Risk description
Failure to align workforce planning with
commercial growth, ensuring the right people
are in the right roles at the right time, combined
with an inability to consistently foster a culture
of ownership, one team and a growth mindset,
may lead to challenges in attracting,
developing and retaining the talent and
leadership required to deliver our Purpose and
strategic objectives. This misalignment could
constrain competitiveness, limit growth
opportunities and erode investor confidence.
Key drivers
• A competitive labour market, especially
for emerging skills, creates challenges
in attracting, developing and retaining
critical capabilities for future needs.
• Workforce wellbeing issues – physical
and mental – can impact productivity
and engagement.
• Maintaining a competitive support
package with salary, bonuses, pensions,
health benefits, flexible working and
development opportunities.
Mitigations
Governance and monitoring
• Key metrics on absence, health,
wellbeing, attrition, diversity and
inclusion are monitored and inform
our response to any deterioration
in workforce wellbeing.
Processes and controls
• Strategic Workforce Planning and
capability analysis guides investments,
retention and succession decisions.
• Regular performance reviews and
Centrica’s Talent Framework ensure
critical roles are filled, succession plans
are robust and career development
is intentional.
• Wellbeing is supported through health
initiatives and colleague-led networks.
• A colleague-centric property portfolio
fosters productivity, collaboration and
future-ready workspaces in sustainable,
accessible locations.

Risk trend | Stable

Risk description
I nadequate governance or ineffective
implementation of Centrica’s Climate
Transition Plan, including its published
commitments, targets and supporting
processes, may impair the Group’s ability
to respond to regulatory or market changes,
and misleading disclosures, resulting in
commercial and reputational damage,
stakeholder distrust and potential
regulatory or legal consequences.
Key drivers
• Sustained pressure from government,
investors and customers to commit to
meaningful carbon reduction targets
set against recognition of the need for
continued use of fossil fuels, due to
slower than anticipated transition
to low carbon alternatives.
• Market and affordability pressures
may constrain the pace of low carbon
investment.
• Emerging regulations in which Centrica,
and its subsidiary businesses, will be legally
obligated to comply with UK, European
Union or international sustainability
management and reporting requirements.
• Increased focus on ‘greenwashing’
and greater rigour on how organisations
market low carbon products and
propositions.
Mitigations
Policies and frameworks
• Our Climate Transition Plan includes
targets and ambitions out to 2050 which
guide our approach to achieving a low
carbon future.
• CIF contains a net zero guardrail to
ensure alignment with our Climate
Transition Plan, including our green-
focused investment commitment
(see page 54).
• Centrica businesses are required
to comply with Group climate and
sustainability reporting standards.
• Green Claims Principles provide
guidance to manage and avoid
‘greenwashing’ risk across the Group.
Governance and monitoring
• SESC, chaired by an independent Non-
Executive Director, reviews climate
change information and monitors progress
in the implementation of Centrica’s
Climate Transition Plan.
• Progress against the Climate Transition
Plan is incorporated into executive
remuneration.
• Climate-related disclosures are
prepared in line with the international
Greenhouse Gas (GHG) Protocol and
UK Transition Plan Taskforce (TPT)
requirements, with reporting subject to
internal review and external assurance
to ensure accuracy and completeness.
Processes and controls
• Regular engagement with stakeholders
including investors, governments,
regulators and others, to evolve insight
and inform approach.
• Ongoing monitoring, modelling and
scenario analysis, ensures progress
and that plans remain appropriate
and effective.
• External disclosures subject to policies,
standards, review and approval.
S afety and asset
integrity

Risk trend | Stable

Risk description
Centrica’s diverse and asset-intensive
operations carry varying health, safety and
environmental (HSE) risk profiles. Failure to
maintain effective asset integrity and HSE
management through robust design,
maintenance, inspection and operational
safety standards and associated controls
across the Group’s operations could lead
to serious injury, environmental harm,
regulatory sanctions, asset impairment or
prolonged downtime, impacting financial
performance and stakeholder trust. As
Centrica expands and introduces new
green technologies, assets and operational
models, the complexity of the risk
landscape continues to increase.
Maintaining scalable, integrated frameworks
and governance arrangements for asset
integrity, process safety and assurance is
essential to protect people, the
environment and business value.
Key drivers
• Management and operation of an ageing
asset base increases the focus required
on HSE and asset integrity to ensure
safety issues, environmental harm,
outages and impaired performance
do not materialise.
• Changes, upgrades and additions to
Centrica’s asset base that may require
new skills or safety protocols.

| 39

Centrica plc Annual Report and Accounts 2025

Mitigations
Policies and frameworks
• A mature HSE framework supported by
robust management systems, training
and assurance.
• Group-wide policies and standards,
periodically reviewed and updated by
a safety working group, set out the
minimum HSE requirements which all
business units are required to adhere to.
Governance and monitoring
• SESC provides Board oversight of relevant
performance metrics, assurance activity
and the approach to HSE risk management
across business units.
• Performance monitoring and regular
reviews of HSE frameworks and safety
risks through CLT meetings.
• Regular review of our HSE risks by the
HSE RACC.
• 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.
Processes and controls
• Regular inspection and maintenance
programmes, contingency planning for
outages, and oversight of operations to
ensure asset reliability and compliance
throughout the asset lifecycle.
• Standardising and scaling best practice
processes across assets and
undertaking regular assurance to
maximise reliability and availability.
• Ongoing collaboration with key
regulators including the Health and
Safety Executive and Environment
Agency to ensure legal compliance
for all Centrica operations.
C yber, technology
and resilience

Risk trend | Stable

Risk description
Insufficient cyber defences and response
capabilities, inadequate user access
management or weaknesses in
technology change control, could expose
Centrica to cyber threats, data breaches
or prolonged system outages. Increased
digital dependency within Centrica,
combined with escalating complexity and
the frequency of cyber threats, may lead
to a breach of critical systems, resulting in
loss of service, theft of confidential data,
customer detriment, brand damage,
financial loss, fines and regulatory
intervention.
Key drivers
• Increase in the frequency and
complexity of cyber-attacks targeting
critical energy infrastructure.
• Rising ransomware sophistication and
potential for misuse of AI for complex
attacks.
• Increased digital connectivity and use
of operational technology across
Cent r ica can increase supply chain
and operational vulnerabilities.
• Evolving nature and reach of regulations
beyond the jurisdictional border of the
legal entity.
Mitigations
Policies and frameworks
• Business continuity plans have been
developed and implemented.
• Business units adhere to a suite of
cyber and technology standards
and frameworks.
Governance and monitoring
• Monitoring and oversight by the
Cyber Steering Committee, and
the Technology Risk and Control
Committee.
• Procurement Resilience Governance
Forums review controls for supplier
continuity and resilience.
Processes and controls
• Ongoing threat intelligence gathering,
collaboration and information sharing
with industry peers and the National
Cyber Security Centre.
• Cyber-attack simulations build security
capabilities and improvements in
controls.
• Cyber-awareness and training
programmes, which strengthen the
operating effectiveness of access
and change management controls.
T hird-party and
supply chain
resilience

Risk trend | Stable

Risk description
Centrica’s ability to deliver its strategy
and maintain reliable operations depends
on the resilience, performance and
integrity of its supply chain and critical
third-party partners. Reliance on
outsourced delivery models, specialist
contractors and global suppliers
heightens exposure to disruption,
cost escalation and compliance risks.
Weaknesses in supplier resilience,
assurance or oversight could lead
to operational disruption, financial loss
or reputational harm.
Key drivers
• Increasing supply chain complexity.
• Reliance on outsourced delivery
models, specialist contractors and
global suppliers heigh tens exposure
to disruption, cost escalation and
compliance risks.
• Third-party weaknesses introduce risks
to business continuity, operational
reliability (including cyber compromise)
and to Centrica’s reputation.
Mitigations
Policies and frameworks
• The Procurement Policy and standards
provide a consistent framework for
procurement of goods and services
that encourages competition while
maintaining a strong focus on risk
management.
• The Procurement Controls Framework
sets out the key control practices that
manage procurement-related risks,
underpin the delivery of business
objectives a nd establish minimum
control requirements. It provides
structured controls that span all
principal and operational risk areas.
• Operational resilience, contingency,
crisis and continuity readiness is
maintained across Group operations
and third parties.
Governance and monitoring
• Group Procurement Risk and Control
Committee is held quarterly to review
risks and controls.
• Resilience Governance Forums review
business unit controls for business
continuity and resilience including
supplier resilience and continuity of
supply.
Processes and controls
• Key process controls from within the
Procurement Controls Framework
monitored by management.
• Tender exception monitoring ensures
contracts are tendered competitively
to increase confidence in supplier
capability and deliver value for money.

40 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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
the three-year period to 31 December
2028. In forming this assessment, the
Board have considered the Group’s
business model (as set out in the
Strategic Report on pages 14 to 15),
liquidity and credit metric projections, and
the Principal Risks (pages 32 to 39).
The Board and its Committees review
the viability assessment methodology,
key assumptions, scenario analysis and
results on a bi-annual basis. The Financial
Risk, Controls and Compliance Forum
(FRCCF) provided challenge on the
‘severe but plausible’ thresholds, scenario
design and liquidity outcomes, ensuring
the assessment reflects a realistic and
appropriately stretching set of
conditions.
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 (set out on pages 32
to 39) which are believed to cause the
most material financial impact and hence
form the basis of the scenarios modelled
on the following page
• Our purpose and strategic ambition
to energise a greener, fairer future
• Climate-related risks, which underpin
our enhanced climate commitments as
outlined in our Climate Transition Plan
(page 55). These are incorporated in
the strategic plan and are reflected
in long-term investment allocations
and operational assumptions
• Market trends, including commodity
price volatility, customer behaviour,
the macroeconomic environment,
competitive pressures and the wider
political and regulatory landscape.
Assessment period
The Directors continue to monitor the
viability of the Group over a three-year
period, aligned with the Group’s financial
planning cycle. This period represents the
time horizon over which the Board has
reasonable operational and market
visibility. 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 model used for this assessment
incorporates the following assumptions:
• No material acquisitions or disposals
beyond those already announced
• Continued access to diversified funding
sources and successful refinancing of
facilities maturing within the period,
reflecting the Group’s strong
relationships with its banking group
• Pension scheme payments remain in line
with the agreed deficit recovery plan.
The Directors have assessed the impact
of a stressed high and low commodity
price environment on the Company.
Based on current positions held, the
Directors determined that a pr olonged
low-price environment has a more
material impact on Group headroom than
a high-price environment. In assessing the
impact of a significant low commodity
price environment, the following
assumptions have been adopted as a
severe but plausible forecast.

Low price environment | 2026 | 2027 | 2028
NBP Gas (p/th) | 40 | 39 | 36
Baseload Power (£/MWh) | 38 | 37 | 36

Assessment process
The Directors reviewed analysis
assessing the Group’s resilience to a
range of external shocks by evaluating
the liquidity headroom under a range
of stressed conditions.
The Group maintains a strong liquidity
position supported by a well-diversified
financing profile and access to multiple
sources of term funding. As at 31 December
2025, the Group has total committed credit
facilities of £5.0bn (£3.1bn undrawn), of
which £1.5bn reach maturity within the
viability period in 2028, in addition to cash
and cash equivalents of £4.3bn.
Centrica’s liquidity management
framework is designed to ensure resilience
under a range of operating and market
conditions. Robust processes exist to
manage and monitor liquidity requirements,
with a focus on trading entities and the
possible impacts of stressed market
conditions. This involves ensuring flexibility
in accessing a broad suite of funding
sources, including committed credit
facilities, uncommitted letters of credit,
commercial paper programmes and other
short-term funding options. Further detail
on the Group’s liquidity position, including
its indebtedness and available committed
facilities, is provided in note 25 of the
financial statements.
Three ‘severe but plausible’ stress
scenarios, outlined on the following page,
have been applied to the underlying
business plan, each combining multiple
Principal Risks. An additional ‘extreme
case’, combining all risks occurring
simultaneously, was also reviewed.
For each scenario, the Directors
evaluated the projected impact on
headroom in the three-year period. Whilst
the ‘Economic Downturn and Adverse
Retail Market’ scenario saw the greatest
impact, the Group maintained sufficient
headroom in all scenarios without the
need for mitigations. However,
mitigations could be deployed to
accelerate headroom recovery and
reduce the risk of credit downgrade.
Suitable actions could include reductions
in operating or capital expenditure and
the temporary suspension or reduction
of returns of capital to shareholders.
Reverse Stress Testing identified
theoretical extreme conditions that could
exhaust the Group’s financial resources.
The combination of events required to
reach this point is considered highly
implausible given the Group’s current
financial strength and diversified risk
portfolio. As such, we believe that these
conditions do not constitute a ‘severe but
plausible’ threat to the Group’s viability.
Conclusion
Based on the results of this analysis, the
Directors have a reasonable expectation
that the Company will be able to continue
to operate and meet its liabilities as they
fall due, throughout the period to at least
31 December 2028.

| 41

Centrica plc Annual Report and Accounts 2025

Multi-risk scenarios modelled |  |  | Level of severity reviewed |  |  | Links to Principal Risks |
| Scenario 1 Economic Downturn and Adverse Retail Market |  |  |  | A prolonged low commodity price environment, reducing Infrastructure asset profitability and increasing margin cash requirements, is compounded by warm weather risk and broader retail market challenges |  |  |  | • Market risk • Credit and liquidity risk • Weather risk • Customer • External, regulatory, geopolitical and conduct |
| Scenario 2 Operational Disruption |  |  |  | Extended operational downtime driven by cyber threats, supply chain failures, unexpected asset outages or industrial action |  |  |  | • Safety and asset integrity • Cyber, technology and resilience • Third-party and supply chain resilience • People culture and workforce |
| Scenario 3 Trading and Hedging Underperformance |  |  |  | Underperformance of Optimisation business coupled with credit risk associated with financial loss due to counterparty default |  |  |  | • Market risk • Credit and liquidity risk |
| *Credit rating downgrade (applied across all scenarios) |  |  |  | Increased collateral requirement arising from a single-notch credit rating downgrade |  |  |  | • Credit and liquidity risk |
| Transformation delivery (applied across all scenarios) |  |  |  | Risks to delivery of strategic transformation benefits embedded in the baseline financials used for this assessment |  |  |  | • Strategic resource allocation and deployment |

* Whilst our current credit metrics show no cause for concern with regards to a credit rating downgrade, for each risk scenario considered, an additional impact
from a single-notch credit rating downgrade has been assumed.

42 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

People and Planet
Supporting communities, our planet and each other.
Launched in 2021, our People & Planet
Plan consists of five Group-wide goals
that support the United Nations
Our People & Planet Plan
Supporting communities,
our planet and each other
Sustainable Development Goals and
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.
Planet
People
In 2025, we continued to make steady
progress against most of our goals but
are behind on others. This reflects the
reality that transformation takes time and
that we have had to adapt plans in line
Supporting every colleague to be
themselves to better serve our
customers and communities.
Supporting every customer
to live more sustainably.
with the changing needs of customers
during the energy crisis alongside
evolving business priorities.
Looking ahead, we remain confident
We want to:
We want to:
that we will achieve our goals. We look
• GOAL 1 – Create an engaged
team that reflects the full
diversity of the communities
we serve by 2030 (1)
• GOAL 2 – Recruit 3,500
apprentices and provide career
development opportunities for
under-represented groups by
2030 (2,000 apprentices by
the end of 2025)
• GOAL 4 – Help our
customers be net zero by
2050 (28% greenhouse gas
intensity reduction by
the end of 2030)
• GOAL 5 – Be a net zero
business by 2040
(50% greenhouse gas
reduction by the end of
2032)
forward to working with our stakeholders
to energise a greener, fairer future.
― Read more about our non-financial
performance on pages 253 to 255
― Read more in our wider reports at
centrica.com/performanceandreports
GOAL 3 – 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).

| 43

Centrica plc Annual Report and Accounts 2025

Peopl e

| Supporting every colleague to be themselves to better serve our customers and communities.

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
(40% women, 16% ethnically diverse,
10% disability, 3% LGBTQ+ and
3% ex-service by the end of 2025)(1)

2025 Progress against goal:
| On track |  | Behind

| All company(2) | Senior leaders(2)
Women | 30% | 34%
– Excluding Field engineers | 43% | 34%
Ethnically diverse | 16% | 10%
Disability | 6% | 6%
LGBTQ+ | 4% | 2%
Ex-service | 2% | 3%

(1) Aligns with latest 2021 Census data for working
populations.
(2) Beyond gender, data is based on voluntary disclosure
of 94% ethnically diverse, 53% disability, 61% 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.
To get to net zero, we need the best team
– a diverse mix of people and skills, where
everyone feels welcome and able to
succeed. Following the launch of our goals in
2021, leadership shared an open letter with
colleagues outlining plans to attract,
promote and retain more diverse talent.
Progress has followed, with improvements
of up to 6ppts since 2021 and 1ppt during
2025 (see page 253). Initial gains were
driven by stronger recruitment and
retention practices, whilst recent efforts
have centred on building a more inclusive
culture and strengthening succession
planning –initiatives that take longer to
show measurable impact. Like many in our
sector, increasing women in engineering
remains a focus given our team reflects the
male-dominated market, which impacts our
overall gender representation that is
otherwise on track. Diversifying senior
levels and growing disability representation
are also key areas we continue to work on.
In 2025, we strengthened inclusion by:
• Embedding our Every Colleague Counts
Action Plan and associated inclusion
campaign to drive progress and
accountability;
• Running targeted campaigns to attract
more women into engineering via our
award-winning apprenticeship
programme (see Goal 2), including
a collaboration with social media
influencer Holly Hobbs to break down
barriers to entry;
• Creating an environment where
colleagues can thrive – from expanding
learning and development opportunities
and introducing new preventative sexual
harassment training, to launching more
inclusive policies that support wellbeing
and were enabled through collaboration
with our diversity networks and trade
unions. This includes in the UK,
extending paternity leave from two to
eight weeks fully paid and developing a
sector-first Transgender Inclusion Policy
for colleagues undergoing gender-
affirming treatment.
In 2026, we will continue to embed our
Action Plan to help every colleague feel
they belong, are counted and included.
We also hope to encourage more
colleagues to disclose their diversity
information so that we can better support
our people and track progress more
effectively. To grow momentum, 2025
milestones will be superseded with 2028
milestones for our team to be 45%
women, 17% ethnically diverse, 15%
disability, 3% LGBTQ+ and 3% ex-service.

Top 50 Ranked in The Times Top 50 Employers for Gender Equality for the fourth consecutive year and the Glassdoor Top 50 Best Places to Work in the UK for the first time since 2017

Wider gender breakdown(3) |  |  |
| 2025 | 2024
| Women | Men | Women | Men
Board | 46% (6) | 54% (7) | 45% (5) | 55% (6)
Senior executives and direct reports | 29% (28) | 71% (67) | 32% (23) | 68% (49)
Senior leaders | 34% (142) | 66% (277) | 34% (149) | 66% (289)
All company | 30% (6,110) | 70% (14,463) | 31% (6,425) | 69% (14,613)

(3) Relates to direct Centrica employees. Total headcount differs from elsewhere as Spirit Energy, Centrica Business Solutions Services International, ENSEK and Swyft Energy
employees and contractors are not included above. See pages 82 to 83 for Board diversity.

44 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Goal 2
Goal 3
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)

2025 Progress against goal:
| On track |  | Behind

Apprentices | 1,947

(1) Base year 2021.
We want to harness talent from under-
represented groups to build a future that
is greener and fairer. That’s why we will
hire the equivalent of one apprentice
every day over the course of this decade
to achieve our 2030 goal.
In 2025, we welcomed 410 apprentices
to our team which brings our total to
1,947 apprentices since 2021. Although
intake increased by 21% during 2024–25,
changes in business requirements and
phasing alongside the need to provide
operational stability during the energy
crisis, reduced hiring opportunity in
recent years and meant we fell slightly
short of our 2025 milestone. Likewise,
this affected the number of women in our
Field-based engineering apprenticeships,
with representation dipping from 19% to
15%. Performance remains, however,
significantly better than the 0.3% national
average for trained female gas engineers,
demonstrating the positive progress
being made to diversify engineering
through our ambition for women to make
up 50% of our engineering apprentices
by 2030. Meanwhile, we continued
to provide career development
opportunities for wider under-
represented groups (see Goal 1),
alongside dedicated pathways for
ex-forces personnel and athletes.
We expect to get back on track with our
forward-facing plans, supported by
targeted recruitment and marketing
campaigns. As our 2025 milestone retires,
we will now set our sights on achieving
our new milestone of 3,000 apprentices
by the end of 2028.
By 2030, we want to:
Give 100,000 days to build
inclusive communities
(35,000 volunteering days
by the end of 2025)(2)

2025 Progress against goal:
| On track |  | Behind

Days | 42,104

(2) Base year 2019.
We channel the power of our people to
create inclusive communities because
stronger communities, are key to a more
sustainable future.
In 2025, colleagues donated 10,465 days
which was broadly similar to 2024. With
cumulative progress totalling 42,104 days
since 2019, we have surpassed our 2025
milestone and are on track to deliver
our 2030 goal. Gains have been made
possible by making volunteering a big
part of our culture. This was achieved
through The Big Difference, our local
community programme that inspires
colleagues to get involved in local causes
they care passionately about – whether
that’s running energy support pop-ups
with partners like the British Gas Energy
Trust, or inspiring the next generation to
be greener via the Get Set for Positive
Energy schools programme delivered
in partnership with Team GB and
ParalympicsGB.
To deliver the step up needed out to
2030, our 2025 milestone will be replaced
with a new 2028 milestone of 75,000
volunteering days. We will endeavour
to achieve this by continuing to expand
volunteering opportunities and embed
annual targets in team plans to drive
take-up.
In addition to volunteering in 2025, we
supported communities with donations,
fundraising and wider contributions
totalling around £500m(3). A substantial
part of this spend goes towards helping
customers and communities with their
energy bills through industry initiatives.
Alongside the hundreds of millions of
pounds spent each year on industry
initiatives like the Warm Home Discount,
our £140m voluntary energy support
package established during the peak of
the energy crisis in 2022–23, continued to
be utilised. This is the largest voluntary
support package provided by an energy
company in the UK and Ireland, and is
mainly distributed via British Gas for
households and businesses through
initiatives including ‘You Pay: We
Pay’ (see page 46), alongside dedicated
funds via charity partners like the British
Gas Energy Trust in the UK as well as
Focus Ireland and the Money Advice and
Budgeting Service in Ireland.
Organisations like these are at the heart
of our communities and are effective in
reaching people with the greatest social
need. We therefore maintained our wider
investment in the British Gas Energy
Trust to ensure customers and non-
customers alike could receive extra help
with their energy bills. This allowed the
Trust to not only provide direct energy
advice and grants, but enabled dedicated
support at over 40 funded community
projects including via Citizens Advice.
(3) Comprise s £505.4m in mandatory and £42.8k
in voluntary contributions to support vulnerable
customers and communities with their energy through
schemes like the Warm Home Discount and Energy
Company Obligation, alongside £4.8m in charitable
contributions. See more on page 255.

>400 Apprentices welcomed to our team during the year

30% Proportion of colleagues who volunteered

>£230m Cumulative invested in the British Gas Energy Trust, helping over 830,000 people with their energy bills since 2004

| 45

Centrica plc Annual Report and Accounts 2025

Planet

| Supporting every customer to live more sustainably.

Goal 4
By 2050, we want to:
Help our customers be net zero
(28% greenhouse gas intensity
reduction by the end of 2030)(1)

2025 Progress against goal:
| On track |  | Behind

Reduction | 18%

(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 182gCO 2 e/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.
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) comes from gas and electricity
consumed by customers (Scope 3).
Towards this in 2025, our energy,
services and solutions helped reduce the
GHG intensity of our customers’ energy
use by 18% against the 2019 base year –
equivalent to the annual emissions of 1.5m
Goal 5
homes. Savings since 2019 have
predominantly been driven by the
continued decarbonisation of the energy
we sell alongside energy efficiency and
optimisation solutions like Hive smart
thermostats and electric vehicle (EV)
chargers. Savings were up from the
10%(2) reduction achieved in 2024, mainly
as a result of the zero carbon content
of our reported electricity fuel mix
increasing from 77% to 90% against
the UK national average of 58%. We are
currently ahead of our goal glidepath and
remain on track to achieve our mid-and
long-term goals.
(2) Restated due to availability of improved data.
During the year, we helped customers
decarbonise power, heat and transport by:
• Enabling a route-to-market for
renewable and flexible capacity under
management which totalled 19.5GW
(81% renewable);
• Expanding market-leading capability
to make low carbon technology more
affordable and accessible – whether
through initiatives like heat pump
performance guarantees that supported
the sale of 2,400 heat pumps last year,
or enabling third-party eco-tech to be
managed alongside our own solutions
which resulted in 3m devices being
connected via the Hive app; and
• Empowering over 1.3m customers to
shift energy use away from peak
demand with PeakSave, helping cut
carbon, costs and pressure on the grid.
As set out in our Climate Transition Plan
(see page 55), we remain committed
to helping customers reduce emissions,
including via 2030 climate ambitions to
connect 5m devices to the Hive platform
and supply 100% renewable or zero
carbon power in the UK and Ireland.
By 2040, we want to:
Be a net zero business (50% GHG
reduction by the end of 2032)(3)

2025 Progress against goal:
| On track |  | Behind

Reduction | 25%†

† Included in DNV’s independent limited assurance report.
See page 253 or centrica.com/assurance for more.
(3) The 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
2,120,446tCO 2 e. 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.
In early 2025, we published our updated
Climate Transition Plan which
accelerated our net zero target from
2045 to 2040 — putting us a decade
ahead of global expectations for
delivering net zero. Good progress
has been made with a 25% emissions
reduction against our 2019 base year. This
was up on the 18% reduction achieved in
2024 following lower emissions from LNG
shipping, power generation and gas
production including an unplanned outage
at Barrow Terminal. Sustainable savings
were also delivered from rolling out EVs
across our road fleet and optimising
property energy use, supported by our
flexible approach to working which lets
colleagues work from home or the office.
Although we are ahead of our glidepath
and broadly on track to meet our mid- and
long-term goals, our path to net zero
won’t be linear. This is because we must
balance reducing emissions with ensuring
a reliable and affordable energy supply
to guard against geopolitical risk and
intermittency as renewables scale.
In 2025, we therefore continued to invest
in renewable and low carbon capacity
alongside gas and LNG supplies whilst
constructing four peaking power plants
that will initially run on gas until hydrogen
is ready. With gas expected to remain a
key part of the energy transition in the
near-to-mid-term, these actions are
necessary but mean our emissions are
likely to rise from 2026 before falling
again from 2029.
Further emission reductions will be driven
by climate ambitions in our Climate
Transition Plan (see page 55) – from net
zero gas production by 2035, to net zero
baseload power generation by 2034–39.

46 |

| 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.
Customers
Positive progress has been made in
delivering stronger customer service.
Continued investment in training for
engineers and contact centre colleagues
alongside customer service systems,
resulted in lower complaints and higher
Net Promoter Scores across our Retail
businesses (see pages 25 and 31). In
recognition that energy bills remained
a real worry for customers, we prioritised
ongoing support during 2025. This
included ‘You Pay: We Pay’, a first-of-its-
kind initiative which commits us to match
energy payments from struggling
customers and is funded by our £140m
energy support package created during
2022–23 (see page 44). In just over a year
since launching ‘You Pay: We Pay’, over
16,000 customers are benefitting from
the initiative with a commitment of nearly
£13m to be matched in payments.
Colleagues
We want every colleague to feel safe,
valued and engaged. In 2025 we kept
safety front of mind, achieving zero
workforce fatalities alongside
improvements in our total recordable
injury frequency rate which fell by 3% to
0.61 per 200,000 hours worked (see page
31). We did, however, experience a Tier 1
process safety event at the
Rivers Terminal operated by Spirit
Energy. The event related to hydrocarbon
containment loss and fortunately resulted
in no injuries. In 2026, we will continue
to strengthen safety culture among
colleagues and contractors by focusing
on preventing containment losses,
mitigating gas and electrical risks, as well
as enhancing contractor management
and road safety practices.
Alongside physical health, we prioritised
mental health and wellbeing. Throughout
2025, we encouraged colleagues to speak
openly about how they were feeling and
promoted both proactive and reactive
support – from our company-funded
healthcare plan and 24/7 emotional helpline
and GP access, to our wellbeing app and
180-strong network of colleague Mental
Health First Aiders (see page 102). This
commitment to accessible and in-the-
moment support, led to over 100,000
mental health and wellbeing interactions
during the year.
Focus was maintained on fair reward
practices – whether that’s paying at
least the Real Living Wage in the UK or
upholding equal pay and reducing pay
gaps (see page s 102 to 103). O ur 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
increased slightly from 13% to 16% during
2024–25. Our ethnicity pay gap which
we publish voluntarily remained at 7%
median, and is due to similar factors as the
gender pay gap. We remain committed to
reducing our pay gaps over time as we
work to transform our business, sector
and society to make it more inclusive (see
pages 43 to 44 and 47).
Proactive action like this is crucial for
positive colleague engagement and
productivity. We are encouraged that
despite significant organisational changes
underway to simplify our business and
improve customer outcomes, we saw only
minor changes in colleague engagement.
We maintained our top quartile
performance for the majority of the year,
with our year-end position landing at 7.9
out of 10. This is 0.1 points below top quartile
for our sector and 0.2 points lower than
our 2024 score. In 2026, we will continue
to support our colleagues as we focus on
delivering our strategy whilst ensuring
everyone feels valued, included and
motivated to energise a greener, fairer
future. Understanding Company
performance is a key element of this, so we
will share our financial results and strategic
updates with colleagues throughout the
year at townhalls and via other channels,
just as we did in 2025.
Mental health leader
Investor group CCLA, ranked
us as a UK leader for our
approach and disclosure on
mental health for the fourth
year running

| 47

Centrica plc Annual Report and Accounts 2025

Underpinning our approach to colleagues,
is our commitment to equality. Our
policies lay the foundation in helping us
uphold equal opportunities across the full
employment cycle – from recruitment
and development, to performance
reviews and career progression. These
policies and associated processes and
training, enable us to strive towards the
elimination of discrimination, harassment
and victimisation, whilst promoting fair
and objective decision‑making based on
work‑related criteria and individual merit.
As part of our commitment to equality,
we recognise the particular need for
greater national and global progress to
ensure equal access to employment,
development and progression for people
with disabilities. That is why our People &
Planet Plan (see page 42), is actively
focused on increasing disability
representation across the Company.
Positive progress has been made to
support people with disabilities. This
includes providing inclusive recruitment,
reasonable adjustments and access to
wider support and wellbeing initiatives –
all whilst building a more inclusive culture
across the Company to ensure every
colleague feels counted and included. Our
approach is continually strengthened
through active engagement. For example,
we engage forums such as our 10+
colleague networks and specifically our
Neurodiversity and Diverse‑ability
networks who support and celebrate the
physiological and neurological diversity
of colleagues, alongside our external
membership with the Business Disability
Forum. Although there is more progress
to be made, these activities have helped
us maintain our Level 2 Disability
Confident Employer status and increased
disability representation by 5ppts at an all
company and senior leadership level
since our People & Planet Plan was
launched in 2021.
Ethics
Our Code and Values set out the
standards we expect for anyone who
works for us or with us. This enables us
to operate in a mutually beneficial way
for colleagues and our communities.
At the heart of Our Code, is our
commitment to uphold and contribute
positively to advancing internationally
recognised human rights standards,
which include but are not limited to the
United Nations (UN) Global Compact and
UN Guiding Principles on Business and
Human Rights. Consequently, we take
action to ensure colleagues and supply
chain workers never knowingly cause or
contribute to human rights abuses and
are protected themselves through
activities such as employment checks,
risk-based training, ongoing due
diligence, and monitoring of supplier
selection and renewal.
Like many other companies, our greatest
risk to human rights is within our supply
chain. If suppliers receive a high-risk
rating relating to the country where they
operate and/or the products or services
provided via our due diligence checks,
we consider appropriate action which
may include undertaking a third-party
audit to better understand the level of
risk and collaborating to raise standards.
If suppliers cannot or will not improve,
we reserve the right to report the abuse
and end the relationship.
In 2025, we conducted 35 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, India, Malaysia, Thailand, Tunisia,
Turkey and the UK. We did not identify
instances of human rights abuses such
as modern slavery but found 249
non-compliances across labour as well
as health and safety practices. None of
the non-compliances were ‘business
critical’. Improvement plans have been
agreed with suppliers and remediation
activity identified for 72% of non-
compliances, with the remainder subject
to ongoing monitoring to ensure
remediation during 2026.
Due diligence and monitoring across
supplier selection and contract renewal,
also ensured compliance with sanctions
on Russia during 2025.
Clear guidance on bribery and corruption is
additionally provided via Our Code as well
as our Anti-Fraud and Anti-Bribery and
Corruption (ABC) Statement. As part of
our approach, we prohibit any improper
payments such as facilitation payments,
regardless of value or jurisdiction, and
exchange gifts and hospitality responsibly
which includes declaring them on a register.
Following the introduction of the Economic
Crime and Corporate Transparency Act
2023, we also delivered briefings on
beneficiary fraud and associated mitigation
responsibilities for senior managers during
the year, which complemented wider ABC
training. A register is additionally used to
help record and manage potential or actual
conflicts of interest.
In 2025, 97% of colleagues completed
annual training on Our Code and
confirmed they would uphold its
principles. If anyone suspects
contravention across matters such as
safety, equality, human rights or ABC, an
independent and confidential 24/7 Speak
Up phone and online helpline is available.
During 2025, 236 reports were received
via Speak Up which is in line with the
external benchmark for a company our
size. An additional 226 grievances were
raised directly with HR which likewise
reflects a culture where colleagues feel
able to raise concerns without fear of
retaliation. The majority of reports raised
across Speak Up and grievance channels,
related to interpersonal relations, with
each report thoroughly investigated.
Periodic monitoring is undertaken
quarterly by the Board’s Audit and Risk
Committee to ensure process and
controls remain effective.
Environment
Alongside GHG emissions, we monitor
and manage our wider environmental
impact (see page 255). During 2025, our
water consumption remained relatively
consistent with 2024, decreasing by
2% to 348,958m 3. Meanwhile, our waste
increased by 39% to 23,109 tonnes.
The rise was mainly due to construction
of the 30MW Dyce battery storage plant
in Aberdeen which is due to be fully
operational in 2026.
― Read more about our Modern Slavery
Statement at centrica.com/
modernslavery
― Read more in our wider reports at
centrica.com/performanceandreports

48 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Non-Financial and Sustainability
Information Statement
In line with the Non-Financial Reporting
Directive and Section 414CB of the
Companies Act 2006, as amended by the
Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations
2022 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.

| Reporting requirement | Section |
| Business model | • Business overview and Our strategic drivers – Pages 14 to 17 |
| 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. ― Read more at centrica.com/ourcode | Due diligence and outcome |
| 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 to 9 • Our stakeholders – Page 12 • Our Principal Risks and uncertainties: External, regulatory, geopolitical and conduct, People culture and workforce, Safety and asset integrity, and Cyber, technology and resilience – Pages 37 to 39 • People and Planet – Pages 43 to 44, 46 to 47 and 51 to 52 • Key performance indicators (KPIs) – Pages 31, 43 to 44, 46 to 47, 56 and 253 to 255 |
| 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 5 • Group Chief Executive’s statement – Pages 8 and 10 • Our stakeholders – Pages 12 to 13 • Our business structure, Our market trends and Our strategic drivers – Pages 15 to 17 • Business review – Pages 26 to 28 • Our Principal Risks and uncertainties: Weather risk, External, regulatory, geopolitical and conduct, Customer, People culture and workforce, Climate change, and Safety and asset integrity – Pages 36 to 39 • People and Planet including TCFD – Pages 45, 47 and 49 to 57 • KPIs – Pages 26 to 28, 31, 45, 47, 54 to 56, 253 and 255 |
| 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 and 6 • Group Chief Executive’s statement – Pages 7 and 9 to 10 • Our stakeholders – Pages 12 to 13 • Our business overview, Our market trends and Our value drivers – Pages 15 to 17 • Business review – Page 25 • Our Principal Risks and uncertainties: External, regulatory, geopolitical and conduct, Customer, Safety and asset integrity, Cyber, technology and resilience and Third-party and supply chain resilience – Pages 37 to 39 • People and Planet – Pages 44 to 47 • KPIs – Pages 25, 31, 44 to 47, 56 and 253 to 255 |
| 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, or is a customer of ours. | • Our stakeholders – Pages 12 and 13 • Our Principal Risks and uncertainties: External, regulatory, geopolitical and conduct, People culture and workforce, Safety and asset integrity, Cyber, technology and resilience, and Third party and supply chain resilience – Pages 37 to 39 • People and Planet – Pages 43 and 46 to 47 • KPIs – Pages 43, 46 to 47 and 254 to 255 |
| 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: External, regulatory, geopolitical and conduct – Page 37 • People and Planet – Page 47 • Based on materiality, KPIs specific to anti-bribery and corruption are not reported externally |

| 49

Centrica plc Annual Report and Accounts 2025

Task Force on Climate-related
Financial Disclosures
Our strategy drives the energy transition forward,
helping our customers, communities and our
business journey to net zero.
We play a key role in tackling climate
change by focusing on providing lower
carbon energy, services and solutions.
This transition alongside physical climate
change, brings risks and opportunities for
our business. We follow the Task Force
on Climate-related Financial Disclosures
(TCFD) framework (see page 57)
to effectively disclose our approach to
governance, risk management and strategy
alongside metrics and targets, in relation
to our business’ climate-related risks and
opportunities. We have achieved full
compliance with TCFD since mandatory
reporting was introduced in 2022.
Governance
Tackling climate change is core to our
Purpose and strategy, which is why
governance over climate matters is fully
embedded across the business. The
Board is supported in its duty to oversee
climate-related matters via a series of
Board-level and executive-level
committees (see page 50). In 2025,
climate matters were reviewed by the
Board and its Committees at a number
of meetings, including all three meetings
of the Safety, Environment and
Sustainability Committee (SESC), as well
as via the Board Strategy Review and
Strategic Financial Plan process.
The Board’s ability to oversee climate
matters relies on strong collective
capability. Capability is reviewed annually
by the Nominations Committee and
supported by an annual Board
performance review process to identify
strengths alongside improvement areas
(see pages 81 to 82). ‘Climate change and
sustainability’ is a key criterion in the Skills
Matrix employed, covering climate
science, risk, mitigation and stakeholder
expectations.
In 2025, over 60% of the Board had
climate-related competencies, enabling
effective governance (see pages 62
to 66).
To build expertise, climate change
continued to be integrated into Board
training with deep dives run on the impact
of US politics on sustainability, progress
of key net zero policies and emerging
sustainability regulation. Regular
management updates on performance,
risks and opportunities, supplemented
training for the Board and wider
leadership team. As the transition
deepens, climate expertise will continue
to be strengthened.
Effectiveness in tackling climate change
is embedded in remuneration for
Executive Directors and colleagues
(see pages 86 to 115). We assess
performance in tackling climate change
or issues arising via two reward schemes:
• T he Annual Incentive Plan has targets
and weightings set annually by the
Remuneration Committee and considers
progress against our Climate Transition
Plan which forms one of 18 metrics, with a
total combined weighting of 37.5%; and
• The Restricted Share Plan has a three-
year vesting and two-year holding
period, with the Committee making
decisions on targets and performance
subject to a performance underpin for
the consideration of sanctions, fines,
major incidents, poor financial
performance, and lack of progress
against our Climate Transition Plan or
wider sustainability performance.
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 57. 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.
Our governance and disclosure approach
is guided by our materiality assessment
over sustainability topics and the impact
this has on our business and stakeholders.
The assessment identifies material issues
and relevant regulations, enabling
management to measure, manage and
disclose effectively.

50 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our climate governance framework
―
The Board
Has ultimate responsibility for
climate change and delegates
authority to its Committees
Sets People and Planet strategy and integrates climate considerations into
business planning whilst overseeing progress on climate targets and risk
management. Approves annual reporting. Chaired by Kevin O’Byrne,
Company Chair, with attendance including the Group Chief Executive who has
overall accountability for climate change (see pages 59 to 71).

Challenge |  |  |  | Report

Board Committe es
Provides challenge and reviews
updates from senior leaders, with
outputs shared with the Board
Audit and Risk Committee (ARC)
Meets quarterly to review mitigations for Principal Risks like climate change.
Oversees process of audits as well as financial statements and non-financial
disclosures. Chaired by Nathan Bostock, Independent Non-Executive Director
(INED), with a successor to be announced durin g 202 6 (see pages 72 to 80).
Nominations Committee
Meets three times a year to ensure the Board and its Committees maintain the
right balance of skills, knowledge and experience including climate-related
expertise. Chaired by Kevin O’Byrne (see pages 81 to 82).
Safety, Environment and Sustainability Committee (SESC)
Meets three times a year to support the Board on climate oversight.
Responsibilities include approving net zero proposals, monitoring progress,
risks and opportunities, reviewing climate-related reporting such as TCFD
whilst considering stakeholder views. Chaired by Heidi Mottram, INED, who
will be succeeded in 2026 by Amber Rudd, INED (see pages 84 to 85).
Remuneration Committee
Meets four times a year to ensure Executive Directors are appropriately rewarded,
factoring progress against the Climate Transition Plan. Chaired by Carol
Arrowsmith, INED, and is due to be succeeded by Sue Whalley, INED, in May
2026 (see pages 86 to 115).

Challenge |  |  |  | Report

Centrica Leadership Team (CLT)
Ensures ongoing oversight and
challenge on climate strategy
Meets as needed across 11 annual meetings chaired by the Group Chief
Executive. Monitors progress on net zero targets, ambitions and Principal
Risks. Its sub-committee, the Centrica Investment Committee, reviews
investment opportunities for their impact on delivering net zero.

Challenge |  |  |  | Report

Sub-groups
Supports leadership on integrating
climate change into strategy
TCFD working group(1)
Ongoing engagement led by Group Sustainability with engagement across
Group Strategy, Risk, Finance and Reward, to ensure reporting requirements
and climate strategy is embedded Group-wide.
Group Risk, Control and Compliance Forum (GRCCF)
Meets quarterly to monitor Group risks, including Principal Risks and controls.
Chaired by the Group General Counsel with the Group Chief Financial
Officer, Group Chief Risk Officer and business representatives in attendance
(see page 33).
(1) Group Head of Sustainability develops and socialises the Company’s Climate Transition Plan and related progress, whilst co-ordinating and influencing related activities.
Director of Corporate Business Strategy embeds climate change into our strategic planning and investment frameworks. Group Head of Enterprise Risk Management
(ERM) integrates climate risk into the ERM Framework. The Group Head of Accounting, Reporting and Tax supports the business to understand the financial impacts
of net zero. The Group Head of Reward integrates sustainability targets into remuneration frameworks.

| 51

Centrica plc Annual Report and Accounts 2025

Risk management
Climate change became a Principal Risk
in 2021 and remained so in 2025. Climate
and other risks are managed through
our Enterprise Risk Management (ERM)
Framework, ensuring consistent
identification, assessment and response.
Principal Risks are assessed over
0-5 years, with Emerging Risks feeding
into the operational risk identification
process and Board strategic planning.
A double materiality assessment is
undertaken by the Group Sustainability
team to help establish what impacts, risks
and opportunities (IROs) to test. Key
functions across the business input into
this process to inform IRO identification,
including Group Enterprise Risk to
integrate financial impacts.
Climate-related risks are discussed within
business unit risk and control meetings,
with risks formally considered at the
quarterly GRCCF, before being reported
up to the CLT and the Board’s ARC.
This is supported by more detailed
climate reports spanning strategy and
performance alongside risks and
opportunities, shared with the SESC.
The Board Strategy Review and Strategic
Financial Plan process, further examines
external factors such as market,
competition, technology and policy
alongside strategic plans, enabling the
Board to review robustness of strategic
proposals and transition plans.
― Read more about Risk on pages
32 to 39 and 50
Strategy
Following the initial scenario analysis
conducted in 2022, we refreshed our
assessment during 2025 in line with best
practice to undertake a full update every
three years.
The 2025 disclosure is categorised by risk
and opportunity type: transition and
physical. Given the Group’s diversified
nature and the resulting uniqueness of
transition risks, we have aligned the
transition section with our business
model, encompassing Retail,
Optimisation and Infrastructure, including
assets such as Rough which is now in
scope due to its potential life extension.
Findings indicate that whilst Centrica
faces both transition and physical
climate-related risks and opportunities
across the Group, we remain well-
positioned to manage the transition to a
low carbon economy, with an overall net
positive outlook across all material risks
and opportunities across assessed
scenarios (see pages 53 to 54). The
outcome is contingent on the successful
execution of our strategic plans alongside
broader global progress towards net
zero.
Net financial benefit
Our modelling suggests an
overall net financial benefit for
Centrica across material risks
and opportunities
Transition risks and opportunities
Retail
To evaluate risks and opportunities for
our Retail business, we applied our
established in-house model to assess
potential positive and negative impacts
across key areas. The analysis uses the
National Energy System Operator’s
(NESO’s) 2025 Future Energy Scenarios
(FES), which contain pathways both
above and below 2°C of global warming
(‘Falling Behind’ and ‘Holistic Transition’
pathways), allowing us to test the
resilience of the business under differing
rates of decarbonisation. FES provide
key assumptions on energy demand,
production and use cases, which vary
by scenario and timeframe. This allows
detailed modelling of potential impacts
in the UK and Ireland at the product and
commodity level, considering factors
such as hydrogen adoption and
technology scale-up like EVs. For Ireland,
we adapt scenarios to reflect differences
– such as a higher proportion of off-grid
consumers – whilst keeping the pace of
decarbonisation to align with national
ambition.
The model covers core business activities
included in five-year financial plans,
maintaining constant market share
and unit margins beyond our plans.
This approach enables us to estimate
potential gross margin (GM) growth or
decline through to 2050, based on the
assumption that we deliver our plans
and sustain performance levels.
The outcome of our scenario analysis
(see page 53) shows an overall net
financial benefit across all scenarios
assessed, meaning we are well-
positioned to respond to transition risks
and opportunities as well as physical
ones. If warming is limited to 1.5°C, we
project a net positive financial impact of
5–10% by 2050 compared to our 2024
Group GM. Meanwhile, in a scenario
which leads to 2°C warming, potential
gains exceed 10% by 2050. This is
because as an integrated energy
company, resilience is built into our
business model which enables us to
adapt to the energy transition at any
pace. 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.
The key transition risks and opportunities
for Retail remain broadly consistent with
our 2022 assessment, although there
is some variation in scale. The primary
transition risk continues to be the gradual
phase-out of natural gas for heating
which will remain essential until the
mid-2030s with an accelerated decline
thereafter, affecting British Gas and Bord
Gáis Energy. Current scenarios indicate
a slower phase-out than previously
modelled, which reduces short-term risk.
Since the last analysis, the opportunity from
electrification has grown significantly, driven
by sectors such as transport and heating.
We are confident in our ability to harness
these opportunities, supported by systems
and capabilities that enable us to transition
towards supplying energy, services and
solutions for a cleaner future.
For example, we have:
• Restructured around the customer to
ensure we deliver tailored and innovative
offerings – from our Hive smart
thermostat and competitive heat pump
performance guarantees to help
residential customers save time and
money, to our bespoke multi-
technology packages that empower
commercial customers be more
competitive, resilient and advance their
net zero ambitions; and
• Equipped our engineers with green
skills to meet growing demand for low
carbon services and solutions. Against
our ambition for 3,000 engineers in the
UK and Ireland to have green skills by
2030, we have already cross-skilled
1,900 engineers to deploy technologies
like EVs, heat pumps and smart meters
via our award-winning training
academies.

52 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

£35m
Investment in our new state-of-the-art
academy and energy transition research
lab in Leicestershire – due to open in
2026, the site will strengthen productivity
as well as our operational capability and
infrastructure needed for net zero
Optimisation
We used our ERM methodology to assess
the materiality of risks and opportunities
identified through the double materiality
process, validating results with high-level
quantitative modelling based on NESO’s
FES view of UK and European markets.
Assumptions include delivering our
five-year financial plans and maintaining
market share.
The analysis indicated that our gas
trading and LNG business in aggregate,
are inherently resilient across
all scenarios, with no material risks
identified. Whilst a risk of gas market
contraction exists, it is immaterial at the
Group level given the relatively limited
exposure of our activities in the
Optimisation business. The analysis did,
however, reveal a material opportunity
both in the medium and longer term
related to our investment in enabling
services such as Power Purchase
Agreements (PPAs) alongside energy
balancing and storage services as
renewable and low carbon generation
and production technologies scale-up.
In particular, our trading business is
well-placed to capitalise on Europe’s
expanding renewables and storage
market, especially under a 1.5°C scenario
with projected gains exceeding 10%
of GM by 2040. For example, we have
19.5GW of renewable and flexible
capacity under management and want
to increase this to 30GW by 2030.
Infrastructure
Our Power business strategy is to build a
diversified portfolio of power generation,
flexibility and storage assets, focusing on
contracted and regulated revenues which
provide significant resilience to climate-
related transition risks and opportunities.
We conducted price curve analysis using
Aurora’s latest 2025 net zero scenario,
incorporating commodity and carbon
prices across assets with merchant
revenue exposure. We reviewed our
current portfolio and our future strategy
for our power business. The assessment
included our battery energy storage
systems, gas peakers, Whitegate power
station and Nuclear interests, as well
as wind and solar beyond contracted
periods, which identified no material risks.
Within our Centrica Energy Storage+
(CES+) portfolio, such as the Rough gas
storage facility, Easington Gas Terminal
and the Isle of Grain LNG Terminal
acquired in partnership with Energy
Capital Partners during 2025, we
assessed potential risks and
opportunities through the ERM process
whilst working with subject matter
experts to determine potential scale.
Given the early-stage nature of some
technologies and regulatory frameworks,
we mapped internal scenarios to
temperature pathways, supported by
NESO’s assumptions. In a <2°C scenario
(High Hydrogen), we identified a
significant long-term opportunity to
convert Rough and Easington for large-
scale hydrogen storage and production,
with a positive impact of 5–10% in
operating profit by 2050 compared to a
baseline natural gas storage extension
scenario. This redevelopment depends
on government support, without which
this opportunity would not transpire, but
we remain ready to invest and enhance
the UK’s low carbon energy security.
Additional opportunities exist within
our Infrastructure business, such as
converting Morecambe gas fields into
a world-class carbon storage facility.
As this is contingent on government
decisions regarding carbon capture and
storage development in the UK, current
uncertainty means it is too early to model.
We have taken steps to safeguard our
infrastructure business from transition
risks. This includes streamlining the
portfolio in recent years and divesting
Spirit Energy’s interests in the Cygnus
gas field and other producing assets in
the Greater Markham Area and Southern
North Sea, which is expected to
complete in 2026. These actions reduce
potential transition risks for the Group
and allow us to focus on opportunities.
Physical risks and opportunities
Across the Group, physical risks and
opportunities were assessed and largely
considered ‘low’ in impact over the near
and long term. We reviewed acute risks
related to short-term events such as
wave height and flooding, as well as
chronic risks arising from long-term
climate shifts like sea level rise or
sustained heatwaves. These
assessments utilised recognised external
tools, like the WRI Aqueduct platform,
to model different timeframes and
temperature scenarios. Assessment
focused on assets more exposed to
physical risks across Infrastructure,
spanning CES+, Spirit Energy and Power.
Low risk was confirmed using UK Met
Office scenarios from 2024 which predict
minimal sea level rise where we operate,
reducing the likelihood of production
disruption at our offshore and coastal
assets, even under extreme conditions.
The Isle of Grain LNG Terminal was found
to be exposed to flooding although its
comprehensive flood defences are
designed to offer resilience until at least
2070. As with our previous assessment,
the only potential material risk identified
was reduced heating demand under an
extreme >4°C warming scenario by 2050.
This is, however, partly offset by higher
cooling demand which creates a natural
hedge against many transition risks.
Supply chain risk was reassessed and
remained ‘low’ in significance, effectively
managed through supplier engagement,
hedging strategies and collaboration.
In 2025, 47% of our strategic suppliers
completed our assessment. As with
our previous analysis, over 90% of
responders had resilience plans in place
to mitigate risk, reporting storms and
extreme weather as the most likely
disruptive events. Additional analysis was
undertaken to confirm the resilience of
our Services business against severe
climate-related disruption events that
could delay the supply of critical product
components, concluding that the overall
risk to the Group remains low.
Our asset impairment analysis was
refreshed using price forecasts aligned
to a <2°C scenario. Some assets were
identified as exposed and therefore
subject to testing. The Nuclear analysis
(excluding Sizewell C) indicated a
possible positive impact with an
impairment write-back of £157m as net
zero forecasts exceeded the impairment
base-case baseload power prices. For
gas peaking power stations, solar and
battery assets, impact was considered
relatively low, with potential impairment
to rise by £50m due to lower forecast
profit capture in the net zero forecasts.
With announced Spirit Energy Exploration
& Production gas field disposal, the
assets are no longer materially sensitive
to net zero scenarios. See Notes 3 and 7
for climate-related impacts on financial
reporting judgements.

| 53

Centrica plc Annual Report and Accounts 2025

Summary of our most material risks and opportunities
Materiality l 0-5% (low) | l 5-10% (medium) | l >10% (high) |
Potential positive financial impact | Potential negative financial impact |  |  |  |  |  |
In the analysis which spans over 95% of the Group, the following Retail, Optimisation and Infrastructure tables include our most material risks and opportunities. Whilst less material than all other key risks in the long term, we have also included our material Physical risk which is in our Retail business as it’s important to transparently show the impact of Physical risk on GM. Materiality is based on Group GM which has been used for the analysis of all opportunities and risks, aside from the opportunity to convert Rough which uses operating profit to better reflect the nature of the asset (see page 54). 2024 values have been employed for both GM and operating profit, given this was the most recent period available when undertaking the assessment in 2025. Both well-below and well-above 2°C scenarios for global warming have been used to demonstrate the spectrum of rapid and slow progress on climate change in our key markets, and the impact this may have on our business. All listed ‘opportunities’ result in a potential positive impact on our financials whilst all listed ‘risks’ correlate to a potential negative impact on the Group. For example, Retail concludes with an overall positive net financial benefit for that part of the Group across all climate scenarios and time periods assessed, whilst significant positive financial impacts are also reported via opportunities in both Optimisation and Infrastructure.
Climate-related trend | Potential impact |  | Materiality (versus 2024 GM) |  | Strategic response
|  |  | 2030 |  | 2040 |  | 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 |  |  |  |  |  |  | Strengthen market share in heating installations and sustain our position as the leading provider of heating solutions across the UK and Ireland.
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 |  |  |  |  |  |  | Continue to focus on delivering our ambition for 20,000 heat pump sales per year by 2030, whilst building bespoke propositions for electric heating.
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 growth in energy efficiency | >2°C |  |  |  |  |  |  | Aim to grow customer numbers in the UK and Ireland energy supply by introducing innovative tariffs and add-ons that enable the transition to low carbon energy.
1.5°C |  |  |  |  |  |
Growth in low carbon heating market (TCFD category: Transition – Policy, Markets and Technology) | Opportunity: Increased sales of electricity and clean gas for heating | >2°C |  |  |  |  |  |  | Positioned with systems and capabilities to capture rising demand and deliver tailored energy propositions, with ambition to have 33% of customers engaged in green or flexible energy in the UK by 2030.
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, as well as energy supply | >2°C |  |  |  |  |  |  | Strategy to capture growing electricity demand from EVs, offer bespoke solutions including demand-side response via Hive, and achieve our ambition to connect 5m devices to the Hive platform by 2030.
1.5°C |  |  |  |  |  |
Growth in demand for renewable energy (TCFD category: Transition – Energy Source) | Opportunity: Growth in behind- the-meter solar and battery markets, driven by decarbonisation and flexible services | >2°C |  |  |  |  |  |  | Positioned to support home generation solutions like solar and battery storage via the Hive platform and Bord Gáis Energy in Ireland, whilst serving the commercial sector with multi-tech solutions to help reduce energy costs and achieve energy independence.
1.5°C |  |  |  |  |  |
| Retail net position across material risks and opportunities | >2°C |  |  |  |  |  |  | Analysis indicates a net financial benefit for the Group across all scenarios, supported by our strategic plans, portfolio and capabilities.
1.5°C |  |  |  |  |  |
Rising mean temperatures (TCFD category: Physical Chronic) | Risk: Reduced sales of natural gas and electricity for heat (less material than all other key risks but included for transparency as our only material Physical risk) | >4°C |  |  |  |  |  |  | Strategic aim to grow UK and Ireland energy supply and home services, including selling cooling technology.
<2°C |  |  |  |  |  |

Retail

54 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Materiality l 0-5% (low) | l 5-10% (medium) | l >10% (high) |  |  |  |  |  |  |
Potential positive financial impact | Potential negative financial impact |  |  |  |  |  |
Climate-related trend | Potential impact |  | Materiality (versus 2024 GM) |  | Strategic response
|  |  | 2030 |  | 2040 |  | 2050 |  |
Growth in demand for renewable energy (TCFD category: Transition – Energy Source) | Opportunity: Growth in renewable and low carbon generation and production technologies, alongside the need for enabling services such as PPAs, balancing services and battery storage | >2°C |  |  |  |  |  |  | Established renewable energy trading and optimisation capability with PPAs across Europe, managing 15.7GW of renewables and 3.8GW of flexible assets across 13 markets, with the ambition for 30GW of third-party assets under management by 2030.
1.5°C |  |  |  |  |  |

Optimisation

Climate-related trend | Potential impact |  | Materiality (indexed against 2024 operating profit) |  | Strategic response
|  |  | 2030 |  | 2040 |  | 2050 |  |
Growth in demand for renewable energy (TCFD category: Transition – Energy Source) | Opportuni ty: To convert Rough gas storage facility to store hydrogen and produce hydrogen at scale(1) | <2°C |  |  |  |  |  |  | Depending on government support, we are ready to invest in transforming Rough to store hydrogen and advancing plans to deliver 3GW of hydrogen production capacity at Easington Terminal, enabled via Humber Hydrogen Hub partnerships.

Infrastructure
(1) An operated joint venture structure has been assumed for the conversion of Rough. Materiality is indexed against operating profit instead of GM to better reflect investment levels
required for redevelopment and depreciation over the asset’s lifetime. Materiality illustrates the within year difference between a natural gas storage scenario which serves as the
baseline, with a hydrogen storage scenario which represents the <2°C scenario.
All scenarios showed significant market
disruption as the energy transition
progresses, requiring adaptability. We
note, however, that long-term scenarios
involve significant uncertainties and
dependencies, particularly relating to the
development of supportive government
policy as well as the development and
take-up of new and existing technologies,
which should be considered when
reviewing insights from the analysis.
To seize the opportunities presented by
the energy transition, our investment
strategy is targeting £4bn in total from
2023–28, with over 50% for green
projects. This is a big rise from less than
9% in 2022. To align investment with
our net zero targets, we have a net
zero guardrail in our Board-approved
investment framework. This involves the
Group Head of Sustainability being a
member of the Centrica Investment
Committee, and the Group Sustainability
team reviewing all investment proposals
for impact as well as attributing ‘green’
classification.
Meanwhile, our internal carbon price is
used as relevant, to guide commercial
decisions aligned with our Climate
Transition Plan (see page 55) – from
bidding in the energy market auction for
new assets and PPAs, to hedging in a way
that supports fuel mix decarbonisation.
Metrics and targets
We have a best practice approach to
GHG reporting and setting climate
targets. In line with TCFD, we disclose
metrics, targets and ambitions relevant to
our business and stakeholders, enabling
effective management and mitigation.
Our metrics cover global GHG Scope 1, 2
and 3 emissions alongside energy
consumption (see page 55). Following a
decrease in emissions from LNG shipping,
power generation and gas production in
2025, our Scope 1 and GHG intensity
reduced. Scope 2 emissions rose mainly
as a result of higher electricity demand
from new battery storage systems
becoming operational and increased EV
fleet activity. Scope 3 emissions reduced
largely due to the zero carbon content
of our electricity fuel mix increasing. Total
GHG emissions and energy use KPIs have
undergone annual limited external
assurance since 2012.
Our targets introduced in our People &
Planet Plan are focused on being a net
zero business by 2040 and helping our
customers be net zero by 2050 (see page
45). Based on science(1) and aligned with
the Paris Agreement, they support UK
and EU net zero targets. Our business
target achieves net zero ahead of a 1.5°C
pathway whilst our customer target
aligns with a well-below 2°C pathway in
the short term and 1.5°C in the long term.
Within the trajectory of our customer
target, we have needed to reflect the
slower than expected pace of heating
decarbonisation. Across our targets,
we will responsibly manage hard-to-
remove residual emissions which are
expected to be significantly less than 10%
of our emissions in the 2040s, with our
carbon trading team executing high-
quality removal projects like tree planting.
(1) We cannot progress Science Based Target initiative
(SBTi) validation due to ongoing delays in Oil and Gas
guidance, which the SBTi believes applies to us.

| 55

Centrica plc Annual Report and Accounts 2025

Our targets receive limited external
assurance on a rotational basis every
three years and in 2025, we remained
on track with both our customer and
b usiness net zero targets (see page 45).
Our ambitions set out in our Climate
Transition Plan (see right) advance
progress towards our People & Planet net
zero targets, addressing key risks and
opportunities. They are embedded into
budgets, business plans and accounting
assumptions. Most of our climate
ambitions are on track (see page 56). We
have, however, revised our ambition for a
zero emission van fleet by 2030 due to
continued slow growth in public EV rapid
charging infrastructure and the risk
charging delays pose to customer
service. From 2026, we will instead work
towards a zero emission van order book
by 2030 which remains aligned with best
practice and national targets.
Although our metrics, targets and
ambitions relate to our most material
climate-related risks and opportunities,
we also track less material environmental
metrics such as water and waste (see
pages 47 and 255). Our reporting will
evolve in line with best practice.
Climate Transition Plan
We published our updated Climate Transition Plan at the start of 2025 to go
further and faster towards net zero, whilst increasing transparency around
the steps we intend to take.
In line with best practice, we provide a full update on our Climate Transition Plan
every three years. In our latest Plan, we accelerated our target to be a net zero
business by 2040 (five years earlier than planned) and maintained our target
to help our customers be net zero by 2050. We also created a new suite of
expanded climate ambitions to drive meaningful progress towards our targets
over the next five-to-ten years – from connecting 5m devices to the Hive
platform by 2030, to supplying 100% renewable or zero carbon power in the
UK and Ireland by 2030 (see page 56 for a full list of our ambitions).
We continue to engage government, partners, investors, customers and others,
to ensure we maintain an open dialogue on the considerations needed for net
zero. This approach will ensure we don’t leave anyone behind as we journey
to net zero.
93.44%
S hareholder advisory approval rate achieved at the Annual General Meeting in 2025
― Read more about our Plan at centrica.com/climatetransition

Our energy use and GHG emissions | 2025 | 2024
Total GHG emissions (Scope 1 and 2)(1) | 1,580,933tCO 2 e (2) † | 1,732,328tCO 2 e(3), (4)
Scope 1 GHG emissions | 1,571,517tCO 2 e (5) † | 1,725,987tCO 2 e(3), (6)
Scope 2 GHG emissions | 9,415tCO 2 e (7) † | 6,341tCO 2 e(3), (8)
Scope 3 GHG emissions (9) | 18,294,835tCO 2 e | 21,860,510tCO 2 e
Total GHG intensity by revenue(10) | 81tCO 2 e/£m (11) | 87tCO 2 e/£m(12)
Total energy use | 7,177,638,803kWh(13) † | 7,925,163,679kWh(14)

Read more about our performance on pages 45 and 54. 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 253 or centrica.com/assurance for more.
(1) Comprises Scope 1 and Scope 2 emissions as defined by the Greenhouse Gas Protocol.
(2) Comprises UK 604,640tCO 2 e and non-UK 976,293tCO 2 e.
(3) Restated due to availability of improved data.
(4) Comprises UK 579,094tCO 2 e and non-UK 1,153,234tCO 2 e.
(5) Comprises UK 595,709tCO 2 e and non-UK 975,808tCO 2 e.
(6) Comprises UK 572,985tCO 2 e and non-UK 1,153,002tCO 2 e.
(7) Market-based, comprises UK 8,931tCO 2 e and non-UK 485tCO 2 e. Sum of constituent parts does not align with total due to rounding. Location-based is 16,492tCO 2 e.
(8) Market-based, comprises 6,109tCO 2 e and non-UK 232tCO 2 e. Location-based is 17,347tCO 2 e.
(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 38tCO 2 e/£m and non-UK 266tCO 2 e/£m.
(12) Comprises UK 36tCO 2 e/£m and non-UK 314tCO 2 e/£m. Non-UK value has been restated due to availability of improved data.
(13) Comprises UK & Offshore 2,006,825,467kWh and non-UK energy use 5,170,813,337kWh.
(14) 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.

56 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Our climate transition dashboard – progress against our
Climate Transition Plan

Includes our net zero targets, supported by our climate ambitions |  |
2025 Progress against targets and ambitions: |  |
l On track | l Behind |  |
| Targets and ambitions (1) | 2025 Progress |
| Help our customers be net zero by 2050 (28% GHG intensity reduction by 2030) | 18% reduction |
| 5m devices connected to the Hive platform by 2030 | 3.0m |
| 20,000 heat pumps sold to customers per annum by 2030 | 2.4k |
| 80% of electricity customers with access to smart services in the UK by 2030(2) | 69% |
| 33% of customers engaged in green or flexible energy in the UK by 2030 | 19% |
| 100% supply of renewable or zero carbon power in the UK and Ireland by 2030 | 90% |
| 3,000 engineers with green skills in the UK and Ireland by 2030 | 1.9k |
| Be a net zero business by 2040 (50% GHG reduction by 2032) | 25% reduction† |
| Net zero baseload power generation by 2034–39 | –(3) |
| Net zero gas production by 2035 |
| Net zero gas storage by 2035 |
| Net zero LNG shipping by 2035 |
| Zero emissions vehicle fleet – Cars: 100% by 2026 | 91% |
| Zero emissions vehicle fleet – Vans: 100% by 2030(4) | 33% |
| Over 50% green investment from 2023-28 | 49% |

† Included in DNV’s independent limited assurance report. See page 253 or centrica.com/assurance for more.
(1) Climate ambitions listed were introduced via our updated Climate Transition Plan published in 2025 (see page 55). They replace the previously reported ambitions set out in our first
Climate Transition Plan published in 2021, which were reported against for the last time in our Annual Report and Accounts 2024. As this is the first year of reporting against our new
ambitions, prior year 2024 performance is not available across the full suite. 2024 performance where available and where previously reported includes: Customer net zero target GHG
intensity: 10% reduction, heat pumps sold: 3.2k, business net zero target GHG reduction: 18%, zero emission car fleet: 83%, zero emission van fleet: 32%, and green investment: 37%.
With the introduction of our new ambitions, it’s worth noting that our previous heat pump ambition has been extended from 2025 to 2030 - this better reflects the pace of heat
decarbonisation and heat pump adoption as we seek to grow our share of the addressable heat pump market whilst building in appropriate stretch. The glidepath trajectory for
ambitions is not linear as they were modelled around the expectation that demand would increasingly grow, resulting in accelerated delivery as we near the target date.
(2) Working electricity smart meter.
(3) Progress is not measured quantitatively. Progress is instead measured through a range of factors including operational efficiencies as well as the development of policies, permits,
licences, technology and partnerships needed to achieve net zero by the ambition date. A summary of 2025 progress is as follows. Power generation ambition: We are evaluating
emerging decarbonisation technologies at Whitegate power station including the role of ammonia and hydrogen production. Gas production ambition: Spirit Energy has met milestones
for emissions reduction. Gas storage ambition: Engagement with government on Rough redevelopment for hydrogen storage and production continues. LNG shipping ambition:
Efficiency upgrades of long-term chartered vessels has resulted in exceeding the efficiency improvement milestone for 2025.
(4) The ambition for our van fleet will be revised in 2026 to focus on having a zero emission van order book by 2030. Progress will be reported against the revised ambition in our Annual
Report and Accounts 2026 (see page 55).

| 57

Centrica plc Annual Report and Accounts 2025

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 5, 8, 12, 49 to 50 and 59 to 71 |
|  |  |  | b) Describe management’s role in assessing and managing climate-related risks and opportunities |  | • Pages 49 to 51, 54 to 55, 71 to 82 and 84 to 107 |
| Risk management |  | a) Describe the organisation’s processes for identifying and assessing climate-related risks |  | • Pages 32 to 34 and 50 to 54 |
|  |  |  | b) Describe the organisation’s processes for managing climate-related risks |  | • Pages 32 to 34, 36 to 39 and 51 |
|  |  |  | c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management |  | • Pages 32 to 34, 36 to 39 and 51 |
| Strategy |  | a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term |  | • Pages 51 to 55, 144 to 148 and 155 to 159 |
|  |  |  | b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning |  | • Pages 51 to 55, 144 to 148 and 155 to 159 • CDP 2025 submission centrica.com/CDP25 |
|  |  |  | c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario |  | • Pages 51 to 55 |
| 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 51 to 56 • Data centre at centrica.com/ datacentre |
|  |  |  | b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks |  | • Pages 51 to 55 |
|  |  |  | c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets |  | • Pages 45 and 54 to 56 |

The Strategic Report has been approved by the Board and signed on its behalf by: | Raj Roy Group General Counsel & Company Secretary 18 February 2026 |

58 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Governance

59 | Directors’ and Corporate Governance Report
61 | Governance framework
62 | Biographies
65 | Board of Directors
67 | Board activities
70 | The Board’s duties under Section 172
72 | Audit and Risk Committee
81 | Nominations Committee
84 | Safety, Environment and Sustainability Committee
86 | Remuneration Report
108 | Remuneration Policy
116 | Other statutory information

| 59

Centrica plc Annual Report and Accounts 2025

Directors’ and Corporate
Governance Report
Building on the priorities set out in my Chair’s statement on
pages 4 to 6– supporting customers, creating the best
environment for colleagues, disciplined capital allocation and
progress towards a fair energy transition – this Governance
section sets out how the Board’s oversight and the work
undertaken by our Committees has underpinned those
outcomes in 2025. Strong governance remains the foundation
for sustainable value and stakeholder trust. Our Purpose and
values continue to guide the Board’s decisions and behaviours,
ensuring integrity and accountability across the Group. This
section also highlights the Board’s engagement activities,
including site visits, the Annual General Meeting, dialogue with
colleagues, leadership teams and shareholders, and explains
how the Board discharged its duties in relation to our strategic
investments in Sizewell C and Isle of Grain, which represent
significant and positive steps for the Group’s long-term growth
and resilience.
Governance activities and effectiveness
We are committed to applying the principles of the 2024 UK
Corporate Governance Code, with our full compliance
statement and supporting disclosures available on page 60.
The Board delegates certain responsibilities to its Committees
to support effective governance and oversight, with each
Committee operating within a clearly defined remit; further
detail on our Board and Committee framework is provided on
page 61.
Central to our governance approach is maintaining a strong and
effective system of risk management and internal controls,
which is overseen on behalf of the Board by the Audit and Risk
Committee. The Board also sets clear expectations for the
ethical and responsible use of Artificial Intelligence (AI) across
the Group, with detailed oversight of AI‑related risks and
controls delegated to the Audit and Risk Committee.
A summary of Board activities and priorities in 2025, including
strategic resilience, operational performance and stakeholder
engagement, is provided on pages 67 to 71.
The annual Board performance review, overseen by the
Nominations Committee, was conducted internally using a
structured questionnaire and follow-up discussions with each
Director. The review focused on Board dynamics, quality of
debate, clarity of strategic oversight and Committee
effectiveness. It also assessed progress against actions
identified in the previous year, including strengthening
succession planning and enhancing ESG oversight. Feedback
confirmed that the Board operates effectively, with strong
engagement and constructive challenge, and continues to
evolve to meet future challenges. Further information on the
Board performance review, including developments identified
for 2026, is provided in the Nominations Committee Report.
Culture
Centrica’s values, Care, Delivery, Agility, Courage and
Collaboration, continue to underpin the way we work and shape
the culture we aspire to. These values are reinforced through
Our Code, which sets out the standards expected of everyone
at Centrica and supports consistent, responsible decision‑making
across the Group. All colleagues, including the Board, complete
mandatory Our Code training on joining and annually thereafter.
Further information is available at centrica.com/ourcode.
Throughout the year, the Board has continued to focus on
understanding and nurturing the Company’s culture. The Board
considered specific decisions and actions that directly influenced
or reflected cultural priorities, including initiatives that support
modern ways of working, enhance colleague wellbeing, reinforce
leadership expectations and progress our digital capabilities.
These discussions enabled the Board to form a clearer view of how
cultural ambitions are being translated into behaviours, systems and
processes across the organisation, and how effectively these are
embedded.
The Group Chief Executive and Chief People Officer provide
regular updates on colleague sentiment, with insights from the
quarterly Our Voice survey forming an important part of the
Board’s visibility of the workforce experience. These insights are
complemented by a range of other engagement channels,
including dedicated colleague engagement sessions, which my
fellow Directors and I continue to find constructive and
informative. Additional details on Our Voice and our wider
workforce engagement approach can be found on pages 12, 46,
and 67.
The Board remains committed to supporting a culture that enables
colleagues to thrive and equips the organisation for the future. This
includes an ongoing focus on colleague development, modern ways
of working and progressing our digital capabilities to strengthen
Centrica’s long‑term readiness.
Board composition and succession
Our Board comprises diverse and experienced individuals who
bring a breadth of skills and perspectives. Biographies, including
d etails of Committee membership, and roles and responsibilities
are set out in the Governance Report on pages 62 to 65.
Effective succession planning has been a key focus, with the
changes to the Board’s composition during the year – including
appointments and Committee Chair transitions – demonstrating
the strength of our forward-looking approach to ensuring
continuity and capability.
In 2025 we welcomed two new Non-Executive Directors to the
Board, Alessandra Pasini and Frank Mastiaux. We announced
that N athan Bostock will step down from the Board no later than
the end of July 2026, to take up the role of Chair in another FTSE
listed business. A further update on Nathan’s successor will be
provided in due course. Heidi Mottram stepped down from the
Board with effect from 31 December 2025, with Amber Rudd
becoming Chair of the Safety, Environment and Sustainability
Committee with effect from 1 January 2026.

60 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Carol Arrowsmith has informed the Board of her intention to
step down at the conclusion of the Company’s 2026 Annual
2024 UK Corporate Governance Code
compliance
The Board is committed to high standards of corporate
governance (CG) and Centrica is pleased to confirm
that throughout the year ended 31 December 2025, the
Company complied with all relevant provisions of the
2024 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 116 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.
General Meeting, at which point Sue Whalley will become Chair
of the Remuneration Committee.
Nathan has served on the Board for over three years, providing
valuable insight and leadership, particularly in his role as Chair of
the Audit and Risk Committee. Heidi, who joined the Board in
January 2020, brought meaningful oversight, including as Chair
of the Safety, Environment and Sustainability Committee, and
Carol, who joined in June 2020, has contributed extensively,
including as Chair of the Remuneration Committee.
Further information on succession planning is set out in the
Nominations Committee Report on pages 81 to 82.
I am confident that the refreshed Board is well-positioned to deliver
on our strategic priorities and uphold the highest standards of
governance.
Diversity, equity, and inclusion remain priorities, and we continue

Section 1 | Board Leadership and Company Purpose
Principles A, B, C, D, E | • Corporate Governance Statement (CG Statement) (pp. 59 to 119): Compliance with principles on Board Leadership and Company Purpose • Purpose: Group statement of purpose (p. 11) • Strategy (pp. 14 to 17) • Resources (pp. 24 to 29) • Performance indicators (pp. 30 to 31) • Stakeholder engagement and Section 172(1) Statement (pp. 12 to 13; 46 to 47; and 70 to 71) • Workforce matters (pp. 38 and 46 to 47) and within this CG Statement (p. 67) • Framework of controls: Audit and Risk Committee Report within the CG Statement (pp. 72 to 75) and Principal Risk and Viability Disclosure (pp. 32 to 41)
Section 2 | Division of Responsibilities
Principles F, G, H, I | • Board structure and operation: described in the CG Statement (pp. 61 to 65) • Supporting policies and standards: available at centrica.com/board
Section 3 | Composition, Succession and Evaluation
J, K, L | • Directors’ skills and experience: Board biographies (pp. 62 to 64) • Appointments and succession planning: Nominations Committee Report (pp. 81 to 82) • Board performance review process: (pp. 81 to 82)
Section 4 | Audit, Risk and Internal Control
Principles M, N, O | • Audit and assurance oversight (pp. 72 to 75) • Risk management and internal controls (pp. 32 to 39) • Approach to risk management: Principal Risks and Viability Disclosure (pp. 32 to 41)
Section 5 | Remuneration
Principles P, Q, R | • Directors’ remuneration approach (p.90) • Directors’ Remuneration Policy (p. 108)

to meet the targets set out in the UK Listing Rules, the FTSE
Women Leaders Review, and the Parker Review. Female
representation on the Board at the date of signing this report
sta nds at 42%, with ethnic minority representation at 8%, and Jo
Harlow holdin g the position of Senior Independent Director.
Further details are provided on page 82.
Performance & future outlook
The Group’s performance in 2025 reflects the effectiveness of
our governance framework in enabling disciplined execution and
strategic decision-making. Through robust oversight and clear
accountability, we delivered against our strategy and purpose,
achieving outcomes such as strengthened organisational
resilience (see pages 32 to 39 and 72 to 75), enhanced
stakeholder trust (see pages 70 to 71), and progress on our
sustainability commitments (see pages 42 to 57).
Directors discharged their duties under S172 Companies Act
2006 through targeted engagement with investors, colleagues,
customers and communities. Further information is set out in the
Stakeholder Engagement section on pages 12 to 13 and detailed
in the Board’s duties under S172 on pages 70 to 71.
Looking ahead to 2026, the Board will continue to focus on
sustainable growth, the energy transition and building
organisational resilience in a dynamic market environment,
while enhancing stakeholder engagement to support long-term
value creation.
Conclusion
On behalf of the Board, I would like to thank our colleagues
for their dedication and our shareholders for their continued
support. We look forward to welcoming you to the Annual
General Meeting and to updating you on our progress in the year
ahead.
Kevin O’Byrne
Chair
18 February 2026

| 61

Centrica plc Annual Report and Accounts 2025

Governance framework
The Board is responsible for leading the Group, establishing the
Group’s P urpose, 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; approval of material acquisitions
and divestments; 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.
Board
The Board provides entrepreneurial leadership and ensures prudent and effective controls by maintaining a robust risk
management and internal control framework, while overseeing governance, strategy, major policies, financial reporting and
management performance. It sets the Company’s culture, values and behaviours, and reviews its role and responsibilities against
the UK Code. In making decisions, the Board considers the interests of key stakeholders and the impact on the environment and
wider society.
Informing
Reporting
Board Committees
The Board oversees the Group’s operations through a unitary Board and four principal Committees.

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 appointing new Directors, oversees Board size, composition, tenure and skills, and leads succession planning alongside 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 reviewing health and safety risks and overseeing ESG matters, 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 in 2025 can be found on page 64. Further information on the work of these Committees can be found on pages 81 to 89.

Informing
Reporting
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.
Informing
Reporting
Disclosure Committee
The Disclosure Committee 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.

62 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Biographies(1)

|  | Kevin O’Byrne Chair

Kevin joined the Board on 13 May 2019 and became
Chair on 16 December 2024. He was previously
Senior Independent Director from 1 June 2022
and is Chair of the Nominations 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. The Board considers that 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
Chair of International Flavors & Fragrances Inc.
(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 in 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. (NYSE listed).

|  | 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.

|  | Jo Harlow Senior Independent Non-Executive Director

Jo joined the Board on 1 December 2023 and
became Senior Independent 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.
(1) As at 18 February 2026.

Committee membership key |  |  |  |
| Denotes Committee Chair |  | Chair of the Board |  | Audit and Risk Committee |  | Nominations Committee
| Disclosure Committee |  | Remuneration Committee |  | Safety, Environment and Sustainability Committee

| 63

Centrica plc Annual Report and Accounts 2025

|  | P hilippe 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.

|  | 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,
Chair of Lloyds Bank GmbH and Senior Adviser
to McKinsey. Chair designate of Jupiter Fund
Management plc (effective from 1 March 2026).

|  | 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.
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, NEXT – WNS, part of
Capgemini.

|  | Frank Mastiaux Independent Non-Executive Director

Frank joined the Board on 22 September 2025.
Relevant skills and experience
Frank is an experienced executive and board
member with over three decades in the energy
industry.
He brings extensive leadership experience in
the energy sector, with expertise in strategic
transformation, sustainability and renewable
energy. His background includes overseeing major
organisational change and innovation in clean
technology and guiding companies through
complex regulatory and market environments.
Previous experience
Frank served as CEO of Energie Baden-Württemberg
AG (EnBW) from 2012 to 2022, where he led a
strategic transformation that significantly increased
the company’s market capitalisation and positioned it
as a leader in renewable energy. Prior to that, he held
senior roles at BP and E.ON, including CEO of E.ON
Climate & Renewables and CEO of BP’s global LPG
business.
Frank currently serves as Chair of Sunfire SE, a
hydrogen technology company, and is an advisory
board member at Boehringer Ingelheim. He was
previously a Supervisory Board member at Alstom
Group. He holds a PhD in Analytical Chemistry
from the University of Duisburg.
External appointments
Chair of Sunfire SE. Advisory board member
at Boehringer Ingelheim.

|  | Alessandra Pasini Independent Non-Executive Director

Alessandra joined the Board on 8 July 2025.
Relevant skills and experience
Alessandra brings deep expertise in corporate
finance, strategic planning and ESG-driven
investment. Her international perspective
and entrepreneurial background complement
Centrica’s strategic focus on sustainability
and innovation.
Previous experience
Alessandra is a co-founder and executive at Zhero,
a company focused on accelerating the energy
transition through large-scale renewable, battery
storage and clean energy infrastructures. She
previously held senior leadership roles at Snam
S.p.A., including Chief Financial Officer and Chief
International and Business Development Officer,
where she played a pivotal role in the company’s
strategic transformation and international
expansion.
External appointments
Group President Zhero and Chief Executive
Officer, Zhero Europe.

|  | Rt Hon. Amber Rudd Independent Non-Executive Director

Amber joined the Board on 10 January 2022 and
is the Chair of the Safety, Environment and
Sustainability Committee.
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 Ryanair Holdings plc and
Pinwheel, advisor to businesses including Equinor,
FGS Global and Centerview Partners, and a
trustee of RUSI.

64 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

|  | 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 where
she has accountability for Reward, Talent,
Procurement, Health, Safety and Environment and
Security agendas, 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.
Raj is a graduate of Exeter University, holds a
Masters in History from the College of William and
Mary and a PhD in Political Science from the
London School of Economics and Political Science.
External appointments
Member of the Board of Energy UK (representing
Centrica) and the Board of General Counsel for
Diversity and Inclusion (GCD&I).

Board and Committee meeting attendance 2025 (1)
Name |  | Role | Board | AC | NC(6) | RC | SC
Kevin O’Byrne |  | Chair and Non-Executive Director | 8/8 | 4/4 | 3/3 |  |
Chris O’Shea |  | Group Chief Executive | 8/8 |  |  |  |
Russell O’Brien |  | Group Chief Financial Officer | 8/8 |  |  |  |
Jo Harlow |  | Senior Independent Non-Executive Director | 8/8 |  | 3/3 | 4/4 |
Carol Arrowsmith |  | Independent Non-Executive Director | 8/8 | 4/4 | 3/3 | 4/4 |
Philippe Boisseau (2) |  | Independent Non-Executive Director | 8/8 | 4/4 | 1/2 |  | 3/3
Nathan Bostock |  | Independent Non-Executive Director | 8/8 | 4/4 | 3/3 |  | 3/3
CP Duggal |  | Independent Non-Executive Director | 8/8 | 4/4 | 2/2 | 4/4 |
Heidi Mottram (3) |  | Independent Non-Executive Director | 8/8 |  | 3/3 | 3/4 | 3/3
Amber Rudd |  | Independent Non-Executive Director | 8/8 |  | 2/2 | 4/4 | 3/3
Sue Whalley |  | Independent Non-Executive Director | 8/8 |  | 2/2 | 4/4 |
Alessandra Pasini (4) |  | Independent Non-Executive Director | 4/4 |  | 1/1 | 2/2 |
Frank Mastiaux (5) |  | Independent Non-Executive Director | 3/3 |  |  |  | 1/1

(1) Attendance reflects meetings available during each Director’s tenure; absences due to illness or other agreed reasons are noted separately.
(2) Philippe Boisseau was unable to attend the Nominations Committee meeting in February due to a diary conflict.
(3) Heidi Mottram was unable to attend the Remuneration Committee meeting in January due to other commitments.
(4) Alessandra Pasini was appointed to the Board on 8 July 2025. From that point, four Board meetings remained in the year, and all were attended.
(5) Frank Mastiaux was appointed to the Board on 22 September 2025. From that point, three Board meetings remained in the year, and all were attended.
(6) In September 2025, the Nominations Committee membership was revised to comprise only the Committee Chairs, the Senior Independent Director and the Board Chair. Attendance
from all other Independent Non-Executive Directors is no longer required. Alessandra Pasini attended a Nominations Committee meeting prior to this revision.

Committee membership key |  |  |  |
| Denotes Committee Chair |  | Chair of the Board |  | Audit and Risk Committee |  | Nominations Committee
| Disclosure Committee |  | Remuneration Committee |  | Safety, Environment and Sustainability Committee

| 65

Centrica plc Annual Report and Accounts 2025

Board of Directors
Division of responsibilities
The Board comprises a Non-Executive Chair (independent on
appointment), two Executive Directors (Group Chief Executive
and Group Chief Financial Officer), and ten 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) Including Heidi Mottram as at 31 December 2025.
Director effectiveness
The Board considers that each of the Directors contributes
effectively to the work and deliberations of the Board.
― Reasons for the election and re-election of each of our
Directors at the forthcoming Annual General Meeting can
be found within the Centrica plc Notice of Annual General
Meeting 2026 which will be made available on our website
at centrica.com/agm26
― Biographies can be found on pages 62 to 64 and at
centrica.com/board
― Read more about the Board performance review on pages 81
to 82
Non-Executive Directors
Chair
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.
Senior Independent Director
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.
Independent Non-Executive Directors
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 Chief Executive
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.
Group Chief Financial Officer
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.
Group General Counsel & Company Secretary
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
During the year, the Board was pleased to welcome two new
Directors. Alessandra Pasini in July 2025, followed by Frank
Mastiaux in September 2025. Both bring extensive experience
and valuable perspectives and strengthen our collective
expertise in areas such as renewable energy and energy
transition, financing, and industry operation which will enhance
the Board’s ability to support the Company’s strategy.
Further details on the work undertaken by the Nominations
Committee in relation to Board appointments can be found on
pages 81 to 82. Relevant Directors are subject to an annual
election or re-election by shareholders. 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 information on how Directors are appointed, retire and
are succeeded.
Oversight of Director external appointments
To ensure that Directors continue to have sufficient time to
commit to their Centrica responsibilities, any additional external
appointments taken up require advance consultation with the
Chair and, where appropriate, approval by the full Board.
Tenure
Board tenure distribution(2) as at 31 December 2025.

0 – 3 years | Russell O’Brien, Group Chief Financial Officer
| Jo Harlow, Senior Independent Non-Executive Director
| Philippe Boisseau, Non-Executive Director
| Frank Mastiaux, Non-Executive Director
| Alessandra Pasini, Non-Executive Director
| Sue Whalley, Non-Executive Director
>3 – 6 years | Carol Arrowsmith, Non-Executive Director
| Nathan Bostock, Non-Executive Director
| CP Duggal, Non-Executive Director
| Amber Rudd, Non-Executive Director
>6 – 9 years | Kevin O’Byrne, Chair
| Chris O’Shea, Group Chief Executive

(2) Tenure distribution excludes Heidi Mottram.

66 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Directors’ induction
The induction programme is led by the Chair and supported
by the Group General Counsel & Company Secretary.
Inductions are tailored to the individual needs of the Director
and 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 Alessandra Pasini and Frank Mastiaux
are underway. Both have participated in tailored sessions with
senior leaders and site visits, with further meetings and external
briefings scheduled over the coming months to deepen their
understanding of the Group and support their contribution to
Board discussions.
Directors’ independence and conflicts
All our Non-Executive Directors are considered to be
independent against the criteria in the 2024 UK Corporate
Governance Code, 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 Board 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
The Board places strong emphasis on maintaining an
appropriate balance of skills, experience and knowledge,
supported by a structured approach to ongoing development.
In addition to tailored induction programmes on appointment,
Directors receive regular updates to ensure they remain
informed about the evolving business, regulatory and
geopolitical landscape. The Chair, supported by the
Nominations Committee and the Group General Counsel &
Company Secretary, oversees the continued professional
development of each Director. This is delivered through an
annual programme of briefings, management engagement,
topic‑specific training sessions and site visits, supplemented
by individual development discussions.
During 2025, the Board’s programme included:
• Offshore safety: Jo Harlow and Sue Whalley completed Basic
Offshore Safety Induction and Emergency Training (BOSIET)
enhancing the Board’s practical understanding of offshore
operational safety.
• Artificial intelligence: A dedicated session exploring AI
fundamentals, strategic applications, emerging regulatory
considerations and implications for the workforce.
• Irish energy market: A briefing providing insight into market
structure, policy developments, key stakeholders and
investment d ynamics relevant to Centrica’s operations.
• Nuclear energy: Updates on Small Modular and Advanced
Modular Reactor technologies, alongside briefings on
Centrica’s partnership with X‑energy.
Directors have full access to advice from the Group General
Counsel & Company Secretary and may seek independent
professional advice at the Company’s expense where required.

| 67

Centrica plc Annual Report and Accounts 2025

Board activities
Board meetings
The Board remains committed to upholding high standards of
corporate governance and compliance, recognising their
importance for the Company’s enduring performance and
value generation. These standards guide the Board’s oversight
of strategy, financial discipline and risk management, particularly
in a year of evolving market conditions.
The Board held eight formal meetings in 2025, which primarily
occurred face to face, and one additional Board call. 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,
in line with good governance practice.
Site visits
The Board recognises the importance of direct engagement
with the Group’s operations, and Directors undertake site visits
each year to broaden their insight into operational activities,
culture and safety practices.
In April 2025, Amber Rudd and Sue Whalley visited Centrica
Energy sites at Humberside, Morecambe and the Barrow
Terminal, with a focus on reviewing Rough gas storage and
processing operations and associated safety measures. In
September 2025, the Board visited the Whitegate Power
Asset in Cork and the Profile Park Power Asset in Dublin,
followed by a ‘show and tell’ session at the Dublin office
and a townhall, providing an opportunity for open dialogue
with colleagues.
Board engagement
In line with Provision 5 of the UK Corporate Governance Code,
the Board ensures meaningful engagement with the Company’s
key stakeholders and demonstrates how their views inform
decision‑making, as evidenced throughout this Annual Report
(further information can be found at Our Stakeholders, pages 12
to 13, Board Focus, page 68, and Section 172 Principal Decisions,
page 71).
Board engagement with colleagues
The Board maintained a collective approach to workforce
engagement in 2025, reflecting its commitment to meaningful,
two‑way dialogue with colleagues across the Group. These
interactions support informed decision‑making and contribute
to the Board’s understanding of organisational culture.
Engagement during the year included four breakfast sessions
which explored the expansion of the Centrica Pathways
programme, the creation of the Chief Customer Office to drive
customer‑experience improvements across our Retail Business
Units and the transformation agenda at Bord Gáis Energy.
As part of the Board’s commitment to engaging directly with
colleagues, Kevin O'Byrne visited our Aalborg office to deepen
his understanding of Centrica Energy’s operations and meet
teams across trading and asset functions. His visit included
a hybrid townhall and open Q&A, where colleagues asked
questions on strategy, market dynamics and potential
geographic expansion.
Additional insight was gained through quarterly surveys,
Shadow Board feedback, townhalls, leadership meetings,
listening sessions and colleague‑led network events. These
channels provided valuable perspectives that helped shape
leadership discussions throughout the year.
Board engagement with shareholders
The Board is committed to transparent and effective
communication with shareholders, ensuring they have a clear
understanding of the Company’s strategy, performance and
long‑term priorities. Engagement is maintained through regular
reporting, investor relations activity and direct dialogue with
major shareholders.
Throughout 2025, the Group Chief Executive and Group Chief
Financial Officer led an extensive programme of investor
meetings, roadshows and conference participation, with
the Chair also engaging with shareholders during the year.
Discussions typically focused on strategy, capital allocation,
major investments, regulatory developments, climate transition
and wider ESG matters. Investor teach‑ins, including a
dedicated session on the Sizewell C investment in July 2025,
provided further opportunities for detailed engagement.
General meetings remain a key forum for shareholder
interaction. The 2025 Annual General Meeting, held as a hybrid
event in Manchester, enabled participation either in person or
virtually. Ahead of the meeting, the Company conducted
targeted engagement with major shareholders and proxy
advisors on key proposals, with feedback informing the
Company’s approach to the Directors’ Remuneration Policy
and Climate Transition Plan. Voting outcomes were closely
monitored, and follow‑up engagement was undertaken
where concerns were raised.
Information about future meetings and shareholder materials
is available on centrica.com.

68 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Board focus du ring 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.

| Customers | Colleagues | Investors | Suppliers
| Government and regulators | Communities and NGOs

Stakeholder key

|  |  | Link to stakeholders |  | Link to Principal Risks and Uncertainties |
| Strategy and business plan The Board sets 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 business unit leaders • Group Annual Plan and Strategic Financial Plan • Deep dives on Group, Retail and Business Unit strategies • Major transformation programmes and operating model changes • Investment and M&A opportunities and portfolio reviews (e.g. Sizewell C) • Technology transformation and digital roadmap (e.g. ENSEK Ignition) • Progress against strategic objectives and effectiveness reviews |  |  |  | • Climate change • Strategic resource allocation and deployment • External, regulatory, geopolitical and conduct • Customer • People culture and workforce |
| Board outcomes/decisions During the year, the Board made a series of decisions to set and oversee delivery of the Group’s strategic direction, ensuring alignment with long-term priorities and stakeholder interests. It approved the Group Annual Plan and Strategic Financial Plan, providing the framework for delivery and performance management across the Group. To inform strategic choices, the Board received regular updates from the Group Chief Executive and business unit leaders and held deep dives into the Group and Business Unit strategies. Following these sessions, it agreed priorities and actions to support execution and monitor progress. The Board also reviewed progress on major transformation programmes, including restructuring and operating model changes, and endorsed the technology transformation roadmap, including ENSEK Ignition, to support delivery capability. It considered investment opportunities and M&A activity and portfolio decisions, including Sizewell C, and approved related decisions to ensure capital deployment remained consistent with strategic objectives and risk appetite. The Board continued to ensure disciplined and transparent capital deployment aligned to strategy, risk appetite and long‑term shareholder value. |
| 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, business unit leaders and functional subject matter experts. • Group financial performance updates and results reporting (including Interims and Prelims) • Dividend recommendations and financial statements • Performance deep dives by business unit and function • Risk appetite statements and Principal Risks • Audit and Risk Committee reports and annual risk reviews • Litigation, treasury, tax and insurance updates • Oversight of capital programme funding • Cyber security and regulatory compliance updates |  |  |  | • Strategic resource allocation and deployment • Credit and Liquidity Risk • Market risk • External, regulatory, geopolitical and conduct • Customer • People culture and workforce • Third-party and supply chain resilience |
| Board outcomes/decisions During the year, the Board maintained effective oversight of financial performance and the Group’s risk management framework by reviewing regular reports from the Group Chief Executive, Chief Financial Officer and relevant subject matter experts, and agreeing actions to address variances and emerging risks. The Board reviewed and approved the interim and preliminary results, the financial statements and the related dividend recommendations. It also considered business unit performance deep dives and agreed areas of management focus to support delivery of strategic priorities. Following review by the Audit and Risk Committee, the Board endorsed updated risk appetite statements and approved the refreshed Principal Risks. It reviewed the outcomes of the annual risk assessment and considered updates on litigation, treasury, tax and insurance, agreeing any required mitigations and oversight priorities. The Board also approved funding decisions in respect of capital programmes, ensuring capital allocation remained aligned with strategy and value creation. In addition, the Board agreed actions where necessary to reinforce resilience and maintain robust governance. |

| 69

Centrica plc Annual Report and Accounts 2025

|  |  | Link to stakeholders |  | Link to Principal Risks and Uncertainties |
| 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 pipeline, succession planning and leadership development • Board effectiveness reviews and private sessions on succession • Training and development for Board members (e.g. artificial intelligence) • Diversity, equity and inclusion (DEI) and S172 stakeholder duties • Customer and brand strategy sessions, including communications and cultural change • Board objectives and stakeholder engagement activities • Regulatory and customer updates |  |  |  | • People culture and workforce • Customer • External, regulatory, geopolitical and conduct |
| Board outcomes/decisions The Board took a number of decisions to strengthen stakeholder engagement and support a culture aligned with the Group’s values. It considered stakeholder feedback and agreed priorities for how these perspectives would be reflected in strategic oversight and decision-making. The Board reviewed the strength of the talent pipeline and approved actions to enhance succession planning and leadership development, including holding sessions to assess CEO and executive succession. The Directors also completed the formal Board effectiveness review and, as a Board, agreed improvement actions, alongside approving targeted training for Directors, including on Artificial Intelligence. In addition, the Board reviewed progress against DEI initiatives and monitored compliance with its Section 172 stakeholder duties, agreeing areas of continued focus. It held customer and brand strategy sessions and endorsed initiatives intended to support cultural change. The Board also considered regulatory and customer matters, including approach to related stakeholder engagement to ensure alignment with strategic objectives and governance standards. |
| 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. • Updates on regulatory discussions and processes • General Counsel reports on policy and compliance matters • Approval of Modern Slavery Statement and other statutory disclosures • Monitoring of external governance developments and AGM insights • Consideration of regulatory impacts on investment and strategy (e.g. CSRD) • Engagement with government and regulatory stakeholders |  |  |  | • External, regulatory, geopolitical and conduct • Climate change |
| Board outcomes/decisions The Board made a number of decisions to respond to political and regulatory developments affecting the Group’s strategy and operations. It considered regular updates on regulatory discussions and processes, together with reports from the Group General Counsel & Company Secretary, and agreed the actions required to manage emerging policy, legal and compliance risks. The Board approved key statutory disclosures, including the Modern Slavery Act statement, and took account of external governance developments and AGM insights in shaping its governance approach. It also assessed the regulatory implications of strategic initiatives, including the Group’s preparations for the Corporate Sustainability Reporting Directive (CSRD), and endorsed the Group’s engagement plan with government and regulatory stakeholders to support compliance, alignment with evolving requirements and constructive external relationships. |
| 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 performance review • Board objectives and training |  |  |  | • External, regulatory, geopolitical and conduct |
| Board outcomes/decisions The Board maintained strong governance oversight and took a number of decisions to support compliance, transparency and the integrity of corporate reporting. It reviewed and approved the Annual Report and Accounts, confirming that disclosures were fair, balanced and understandable, and addressed the information needs of stakeholders. The Board approved the approach to the Annual General Meeting, including the programme of shareholder engagement and governance updates to be communicated. It also completed a formal performance review of Board effectiveness, as described on page 81, and agreed a set of actions and objectives to strengthen performance, oversight and accountability. In addition, the Board endorsed targeted training for Directors to enhance skills and knowledge, supporting continuous improvement in governance practices. |

70 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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
62 to 64), our Purpose, values and strategy (see pages 11 and 14
to 17), stakeholder engagement (see pages 12 to 13, 67 and 71),
and Board activities and discussions (see pages 68-69 and 71) 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 |  |  |  | • 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. |  |  |  | Page 11 Pages 68 to 69 Pages 71 Pages 18 to 22 Pages 55 to 56 Page 71 Pages 68 to 69 |  |
|  | (b) Employee interests |  |  |  | • Engaging with our colleagues through a structured engagement plan; • E stablished 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). |  |  |  | Pages 12, 31, 43 to 47 and 67 Pages 12 and 67 Page 59 Pages 43, 69 and 81 to 82 Page 84 |  |
|  | (c) Relationships with suppliers, customers and others |  |  |  | • Regular shareholder engagement, targeted for review of Remuneration Policy and Climate Transition Plan; and • SESC activities monitor outcomes in relation to multiple stakeholders. |  |  |  | Page 67 Pages 84 to 85 |  |
|  | (d) Community and the environment impact |  |  |  | • SESC remit supports activities on community and climate; • People & Planet scorecard regularly reviewed; • Climate Transition Plan and targets; and • Board review of sponsorship and community contribution. |  |  |  | Pages 84 to 85 Pages 84 to 85 Pages 43 to 45 Pages 71 and 85 |  |
|  | (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. |  |  |  | Pages 84 to 85 Pages 84 Page 47 Pages 32 to 39 |  |
|  | (f) Fairness between shareholders |  |  |  | • Regular engagement, trading updates and publication of information available to investors on our website; • The Disclosure Committee protects the integrity of price-sensitive information; and • Hybrid Annual General Meeting to enable broader shareholder participation. |  |  |  | Pages 67, 90 Pages 37, 61 Page 67 |  |

| 71

Centrica plc Annual Report and Accounts 2025

Principal decisions made by the Board in 2025
In line with our Purpose to energise a greener, fairer future, the Board gives careful consideration to the potential impacts of
decisions on stakeholders. Examples of principal decisions made by the Board are set out below.
Sizewell C – Investing in Britain’s Energy Future
The Board approved Centrica’s £1.3bn investment in Sizewell C
in line with its S 172 duty to promote the long‑term success of
the Company. In reaching its decision, the Board considered the
long‑term benefits of securing reliable, zero carbon generation,
strengthening UK energy security, supporting net zero
ambitions, and ensuring fairness for shareholders through a
capped investment structure. The Board also recognised the
wider economic benefits associated with creating thousands
of high‑quality jobs across the UK supply chain.
Key decisions and impact
Acquiring a 15% equity stake supports the d elivery of affordable,
low carbon power and aligns with the Group’s Climate Transition
Plan. The structure of the investment provides predictable,
regulated returns that enhance long‑term cash‑flow stability for
shareholders, including members of Centrica’s pension
schemes. The investment also reinforces Centrica’s strategic
positioning in the UK’s future energy system.
Stakeholders identified and why
The Board considered the interests of a broad range of
stakeholders, including:
• Government and regulators: to ensure alignment with energy
security policy, nuclear regulation and funding model
requirements.
• Local communities: to promote trust, support socio‑economic
development and ensure community benefits are appropriately
considered.
• Financial partners: to maintain confidence in capital allocation,
financing arrangements and the long‑term viability of the
project.
• People: to build capability and create career opportunities
within the organisation.
• Environmental groups: to understand perspectives on climate
impact and responsible development.
Engagement methods and outcomes
Engagement activities included regulatory consultations,
investor updates, community forums and sustainability‑focused
communications, ensuring transparency and alignment with
national energy objectives and stakeholder expectations.
The feedback received informed the funding structure and
timing of the investment, strengthened commitments to
skills and community benefits, and resulted in enhanced
environmental mitigation measures within project planning.
Board oversight
The Board received regular updates, reviewed risks, assessed
compliance and ensured the investment remained aligned
with strategic objectives, governance expectations and
stakeholder needs.
Grain LNG – Expanding Energy Security and Resilience
Grain LNG, located on the Isle of Grain in Kent, is the UK’s largest
LNG importation terminal, Europe’s largest regasification facility,
and one of the world’s largest by storage capacity. It plays a central
role in national energy security, enabling LNG import, storage and
regasification for delivery into the National Transmission System.
The Board approved the acquisition of Grain LNG, in a 50/50
partnership with E nergy Capital Partners LLP, for an enterprise
value of £1.5bn. In doing so, it fulfilled its duty to promote long‑term
success, considering the need to strengthen UK energy resilience,
maintain safety and develop skills, support the energy transition
with future hydrogen and ammonia flexibility, safeguard
Centrica’s reputation as a critical infrastructure operator, support
affordability through supply diversification and ensure equitable
shareholder returns.
Key decisions and impact
The investment enhances UK energy resilience by diversifying
supply sources and reducing reliance on single markets.
Long‑term capacity agreements provide stable, predictable
revenues under multi‑year contracts, supporting Centrica’s
strategic objectives and strengthening long‑term cash flow
stability for shareholders including members of Centrica’s
pension schemes.
Stakeholders identified and why
The Board considered the interests of a broad range
of stakeholders, including:
• National Grid: to manage the transaction, transfer of ownership
and ongoing commercial arrangements.
• Government and regulators: to ensure alignment with national
energy security priorities, policy objectives and regulatory
approvals.
• Industrial customers: to ensure supply continuity and meeting
long‑term contractual commitments.
• Local communities: to promote employment opportunities,
skills development and responsible environmental stewardship.
• Investors and financial partners: to maintain confidence in
capital allocation discipline, financial performance and risk
management.
Engagement methods and outcomes
Engagement included regulatory consultations, customer and
community discussions, and stakeholder workshops.
Stakeholder insight strengthened the overall investment
approach by refining timelines, reinforcing commitments to
local employment and skills, and shaping environmental and
biodiversity considerations within project planning
expectations.
Board oversight
T he Board maintained oversight through regular milestone
reviews, stakeholder en gagement reports and ESG compliance
monitoring. This ensured the investment remained aligned with
Centrica’s strategic objectives, regulatory expectations and
long‑term sustainability commitments.

72 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Audit and Risk Committee
As Chair of the Audit and Risk Committee, I am pleased to
present this report for the year ended 31 December 2025.
Readers may also wish to refer to the Principal Risks and
Uncertainties section; the Viability Statement; and our
application of the UK Corporate Governance Code, alongside
this report.
Committee overview
Over the past year, the Committee has maintained robust
oversight of the Group’s financial reporting, risk management
and internal control frameworks. Our work followed a
comprehensive annual schedule with regular reviews of
significant accounting judgements, updates on enterprise
risks and deep dives into Internal Audit, compliance and evolving
regulatory requirements.
During 2025, the Committee focused on readiness for the new
material controls declaration, strengthening the Enterprise
Risk Managemen t (ERM) and Controls frameworks. In doing so,
the Committee also enhanced oversight of the Company’s
Principal Risks through the ERM Framework, alongside
continued focus on IT and data security and the effectiveness of
the Internal Audit function.
Committee membership and meeting attendance
Membership and independence
All Committee members are independent Non‑Executive
Directors. The Committee Chair has recent and relevant
financial experience and the Committee has sector‑relevant
competence for the purposes of the 2024 UK Corporate
Governance Code.
Committee members
• Nathan Bostock (Chair)
• Carol Arrowsmith
• Philippe Boisseau
• CP Duggal
• Alessandra Pasini (with effect from 8 July 2025)
Biographical details of the Committee Chair and members can
be found on pages 62 to 64. Meeting attendance can be found
on page 64.
Meeting attendees by invitation:
Regular meeting attendees include, the Chair of the Board,
Group Chief Executive, Group Chief Financial Officer, Group
General Counsel & Company Secretary, Group Finance
Director, Group Head of Accounting and Reporting, Group Head
of Treasury, Pensions and Insurance, Group Chief Risk Officer,
Group Head of Internal Audit and the external auditors.
Committee governance and main activities during 2025
How the Committee operates
Committee meetings normally take place the day before Board
meetings. The Chair reports to the Board on Committee activity
as a standing agenda item and the Board has access to
Committee papers and minutes. The Committee also holds
separate meetings with the Gr oup Chief Financial Office r, the
Group Head of Internal Audit and the Group Chief Risk Officer.
The Chair also meets the external lead audit partner outside
the formal meeting cycle.
The Committee operates an annual agenda aligned to the
financial reporting calendar, with flexibility to allocate time to
priority areas. Its responsibilities cover financial reporting and
controls, risk, compliance and audit. The Committee assesses
whether the Annual Report and Accounts, taken as a whole,
are fair, balanced and understandable. It also oversees
information systems security and the Group’s compliance with
legal, regulatory and ethical requirements, including Our Code
and the Speak Up arrangements.
The Committee oversees the Internal Audit function, including
the appointment and dismissal of the Group Head of Internal
Audit and manages the relationship with the external auditors,
covering their appointment, independence, effectiveness
and remuneration.
The Committee also monitors exposure to key markets
and financial risks.
Summary of main activities during 2025
During the year, the Committee considered a wide range of
matters across financial reporting, risk, controls, compliance,
external audit, Internal Audit and other assurance activity.
Key areas of focus included:
• Financial reporting oversight, including review of annual and
interim results, significant accounting judgements and key
balance sheet valuations.
• Enterprise risk management, including updates on Principal and
Emerging Risks and business deep dives into key operational,
financial, credit, market and compliance‑related risks and
controls.
• Internal controls oversight, including monitoring of the Group’s
control environment, remediation progress and preparations
for the material controls declaration.
• External audit oversight, covering audit planning,
independence, audit quality, audit tender and related
governance matters.
• Compliance oversight, including updates on legal, regulatory
and ethical matters, second‑line assurance reviews and the
operation of the Code of Conduct and Speak Up
arrangements.
• Information systems and cyber security, including oversight
of data security, cyber‑risk management and enhancements
to IT controls.
• Governance and regulatory developments, including UK
Corporate Governance Code changes, CSRD readiness
and other evolving reporting requirements.
The Committee had regular engagements between
Non-Executive Directors and key management, as well
as meetings with the external auditors and Internal Audit
without management present.

| 73

Centrica plc Annual Report and Accounts 2025

Risk management, internal controls and Internal Audit
Internal Audit
The Committee maintained oversight of the Group’s Internal
Audit function, focusing on its independence, effectiveness and
alignment with Centrica’s strategic objectives and the revised
Global Institute of Internal Audit (IIA) standards.
During the year, the Committee approved the annual Internal
Audit Plan, which is closely aligned to the Group’s evolving
Principal Risks, and received updates on delivery, audit
outcomes and key thematic findings. Focus areas included
governance clarity, clear ownership of controls and
strengthening the control environment through reduced
reliance on manual processes. The Committee also monitored
the timely completion of Internal Audit actions and
management’s response to audit findings.
The Group Head of Internal Audit maintained direct access to
both the Board Chair and the Committee Chair, supporting
open communication, transparency and accountability. The
Committee reviewed and confirmed the ongoing adequacy
of the Internal Audit Charter, the function’s compliance with
professional standards and the sufficiency of resources,
quality assurance and independent evaluation arrangements.
Review of the system of risk management and internal controls
The Committee supported the Board in its review of the
effectiveness of the Group’s risk management system and
internal control framework through a structured programme
of reporting and assurance. This included the annual self-
certification process, the Entity-Level Controls assessment
programme, regular updates on Principal and Emerging Risks,
and second-line assurance activities, including remediation
programmes.
The Committee considered perspectives from Internal Audit
and the external auditors on the control environment, with
particular attention on opportunities to increase automation in
key business processes (including Ensek and Spirit). The
Committee continued to monitor management’s remediation of
control weaknesses and progress in strengthening the overall
control framework, supporting effective oversight of the
adequacy and resilience of internal controls across the Group.
In addition, it also maintained focused oversight of
enhancements to the Group’s IT control environment, including
ongoing work to strengthen identity and access management
controls and embed a more standardised framework. The
Committee noted that, notwithstanding progress to date, IT
issues continued to persist in certain areas, and that further
upgrade will be required in FY2026.
Oversight of Artificial Intelligence (AI) remained an integral part
of the Committee’s remit.
Corporate governance
In anticipation of developments under the UK Corporate
Governance Code relating to Board assurances on internal
controls, the Committee reviewed the work underway to
support future readiness.
The new requirement for the Board to provide a declaration on
the effectiveness of the Company’s material controls (Provision
29) applies to accounting periods beginning on or after 1 January
2026, with the first such declaration required to be included in
Centrica’s 2026 Annual Report.
To oversee the preparatory activities relating to the controls
declaration, the Committee reviewed Centrica’s material risk
areas, the associated material controls and the assurance
framework supporting those controls. This focused on the
activities and frameworks that most significantly mitigate the
Group’s principal risks. The Committee held a deep-dive session
on the approach and progress made which had been
complemented by regular updates at each meeting from
management. Preparations for compliance are progressing
in line with expectations.
The Committee also considered management’s revised plans
to comply with the EU Corporate Sustainability Reporting
Directive (CSRD), following the postponement to the timeline
for mandatory reporting. CSRD will require Centrica to disclose
the impacts, risks and opportunities arising from its activities
on the environment and people, and how these sustainability
matters affect the Group’s financial performance.
Notwithstanding the delay, additional governance and control
enhancements continue to be implemented to support robust
assessments and ensure the availability of high‑quality
sustainability information.
Speak Up (the Group’s whistleblowing service)
The Committee received reports from management on the
Group’s whistleblowing arrangements. It satisfied itself that
colleagues have access to well-publicised channels to raise
concerns in confidence and without fear of retaliation, including
concerns about inappropriate or unacceptable practices. The
Committee also ensured that such concerns are subject to
proportionate and independent investigation with appropriate
follow-up action. The Committee reported its assessment of
the whistleblowing arrangements to the Board.
External audit and audit tender process
External auditors’ effectiveness, independence and quality
The Committee assessed the external audit scope, fees, Audit
Plan, performance, objectivity and independence. Key team
rotation and post‑employment hiring restrictions safeguard
independence. Jane Boardman has served as lead audit partner
since completion of the 2021 audit; Deloitte has been Group
auditor since 2017. Our formal assessment, drawing on
questionnaires from Committee members, senior management
and Deloitte’s internal management questionnaire, concluded
that the audit process was effective, objective and
independence was maintained, professional scepticism was
evident and audit quality was strong. Deloitte provided its
independence confirmation in line with ISA (UK & Ireland)
260 and the Ethical Standard 2019. 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.
Deloitte’s re‑appointment was approved at the Annual General
Meeting (AGM) in May 2025 and the Committee recommends
Deloitte’s re‑appointment at the AGM in May 2026. 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.

74 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Auditor independence and non‑audit services
The Committee monitored compliance with the Non‑Audit
Services Policy, which sets out permitted services and
pre‑approved thresholds; other services require Committee
approval. The policy includes an annual £2m cap for ordinary
course non‑audit work (kept under review). 2025 non‑audit fees
(for services not required by regulation) were well below the
legal 70% cap (approx. 10%) and related to assurance services.
Consistent with the policy, Committee approval was obtained in
advance where Deloitte was best placed to deliver these
services on a timely and cost-efficient basis given their role as
external auditors. The Committee also complied with the CMA
Order (2014).
Details of fees paid to the auditor for audit and non-audit
services in 2025 are provided in note S9 to the financial
statements on page 225. In November 2025, the Committee
reviewed the Non-Audit Services Policy and confirmed that no
substantive changes were required. The policy is available on
our website at centrica.com.
In normal circumstances, all significant non-audit engagements
are subject to tender, and Deloitte is appointed only where its
expertise and knowledge make it the most appropriate provider
and where appointing another firm could adversely impact the
business. For further information, see note S9 to the financial
statements on page 225.
Audit tender process
During the year in review, t he Committee conducted a
comprehensive, competitive tender for the audit from the year
ending 31 December 2027 onwards. The process was led by a
steering group comprising the Committee Chair, the Group
Chief Financial Officer, the Group Finance Director, an additional
Committee member and senior finance personnel, with the full
Committee providing approval at each key stage. The tender
concluded with the Committee selecting Deloitte and intending
to recommend their appointment as the Group’s external
auditors for the financial year ending 31 December 2027, subject
to shareholder approval at the 2027 AGM. This proactive
approach supports effective long‑term planning for audit quality
and continuity.
Six firms were initially invited to tender, including four top-tier
(the Big Four) and two mid‑tier firms with existing knowledge of
the business. Three firms accepted the invitation. Following an
assessment of their submissions and further discussions, two
firms, Deloitte (the incumbent) and one challenger firm,
progressed to the full tender.
Prospective audit partners from both firms met the steering
group, after which formal Requests for Proposal were issued.
To support the challenger firm, targeted business learning
sessions were provided. A virtual data room was established,
and management met each firm, with managers asked to
provide feedback.
Both firms demonstrated their technology and data analytics
capabilities to the steering group and subsequently submitted
tender documents, which were reviewed by the steering group,
the wider Committee and senior finance leaders. The Chair
of the Board and the Chief Executive Officer also met each
prospective partner. Final presentations were then made
to the steering group and the full Committee.
Management conducted a final grading of both firms and
provided a preferred recommendation. The Committee
considered this alongside its own assessment and, after
debating the merits of each firm, recommended both firms to
the Board, expressing a preference for Deloitte. The Board
approved this recommendation in July 2025.
Corporate reporting integrity and key financial
judgements
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 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 on to Deloitte.
D uring the year, the Committee als o complied with the FRC's
Audit Committees and the External Audit: Minimum Standard. In
line with the Standard, the Committee oversaw the external
audit process, ensured appropriate challenge between
management and the auditor, monitored auditor independence,
conducted and oversaw a full competitive audit tender during
the year (including setting the scope of the tender, meeting
prospective firms, evaluating proposals, and making a formal
recommendation to the Board) and engaged with shareholders
on material audit matters where appropriate.
Going concern basis of accounting and viability
Throughout the year, the Committee undertook a thorough
review of the Group’s going concern basis of accounting and
viability. The Committee assessed management’s analysis,
including stress testing and scenario planning, to ensure
the Group’s ability to continue as a going concern for the
foreseeable future. This included reviewing liquidity forecasts,
key risks and mitigating actions under severe but plausible
scenarios, as the Committee recognises the need to clearly
articulate how the Board has assessed these prospects, the
period considered and the rationale for deeming that period
appropriate.
The Committee also considered the Viability Statement,
evaluating the Group’s long-term prospects and resilience
over the assessment period. Regular updates from management
and external auditors were received, and the Committee was
satisfied that the disclosures in the Annual Report and Accounts
were appropriate and that the going concern and viability
assessments remained robust and well supported.
Fair, balanced and understandable
In line with the UK Corporate Governance Code, the Committee
carefully reviewed the Annual Report and Accounts on behalf of
the Board to ensure it is in compliance with all relevant laws and
regulations, and that shareholders and stakeholders receive
clear and comprehensive information about the Company’s
position, performance, culture, business model and strategy.
The Committee also oversaw the processes and controls
involved in preparing the Annual Report and Accounts,
supported by a robust governance framework. This includes

| 75

Centrica plc Annual Report and Accounts 2025

rigorous review and verification by key teams across the
business, and final sign-off by the Fair, Balanced and
Understandable Committee, which brings together senior
Electricity Generator Levy
leaders from Finance, Corporate Communications, Investor
Relations, Internal Audit, People, Strategy and Secretariat.
Committee effectiveness and focus areas for 2026
Committee effectiveness
The Committee reviews its terms of reference annually to
ensure they remain appropriate in light of legal, regulatory and
best practice developments. Minor changes were made during
the year, and the terms of reference are available on our website
at centrica.com.
The effectiveness and performance of the Committee were
assessed as part of the internal Board performance review.
The Committee considers that it has continued to discharge
its oversight responsibilities effectively amid a rapidly
evolving macroeconomic environment and shifting
stakeholder expectations, supported by regular and
constructive engagement with management. The findings of
the review will be used to support continuous improvement.
The Committee was found to be operating effectively.
Further information on Board effectiveness can be found on
pages 81 to 82.
Focus areas in 2026:
In addition to the Committee’s usual areas of work (consistent
with 2025), the Committee will be focusing on:
• Material controls in light of Provision 29 and readiness for the
annual controls declaration;
• Further emphasis on IT controls, including emerging
considerations relating to Responsible AI; and
• Increased attention to CSRD readiness and the developing
approach to sustainability assurance.
Nathan Bostock
Chair of the Audit and Risk Committee
18 February 2026

Key judgements and financial reporting matters in 2025

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 £9m (2024: £86m) (recorded within the
share of profit after tax from associates). The Group has also
made payments on account to HMRC of £10m (2024: £80m)
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 interpretation and application of the EGL legislation 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 £155m lower than the amounts paid to date in
2023 to 2025) 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 current 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.

Audit and Risk Committee reviews and conclusions

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 142 to 148.

76 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Key judgements and financial reporting matters in 2025

Energy derivatives – classification and valuation
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 2025)
continue to be taken as the best view of expected price. For the
longer-term period thereafter, median third-party price curves
are used which most closely align to Centrica’s view of long-
term prices. This approach remains broadly unchanged from the
prior year.
The year-end price assumptions for NBP gas and Baseload
power were benchmarked back to those that would have been
calculated under a ‘P50’ average of a number of third-party
comparator median curves 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
higher than the curves the Group has adopted for baseload
power but vary for other commodities and markets. The Group
has shown the impact of such net zero price forecasts on the
Nuclear and other Power assets in note 7 of the financial
statements. Note that following the Group’s announced gas
field asset disposals (including held for sale classification – see
note 12), the gas asset portfolio valuation is no longer materially
sensitive to future NBP gas price movements.

Audit and Risk Committee reviews and conclusions

The Committee noted the consistent year-on-year approach for
deriving future commodity price assumptions. It reviewed and
acknowledged that the long-term NBP and Baseload forecasts
were broadly aligned with the ‘P50’ comparator averages.
The Committee noted the decrease in short-term NBP gas and
Baseload power prices during 2025 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 pages 155 to 159.
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.

Key judgements and financial reporting matters in 2025

The Group enters into numerous commodity contracts in its
ordinary course of business. This can be to procure load for
its Retail business, sell output from its Infrastructure assets,
to trade around its other Optimisation 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 retail 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 forecast commodity prices and their use
in valuing long-lived assets and derivative contracts’).
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’).

Audit and Risk Committee reviews and conclusions

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 loss of £345m was predominantly as a result of the
unwinding of prior year in-the-money positions and that the net
movement on unrealised trades was small in comparison to the
unwind.
Further detail is provided in notes 2 and 7 on pages 141 and 155
to 159.

| 77

Centrica plc Annual Report and Accounts 2025

The Committee noted and reaffirmed its agreement with the
specific judgement regarding LNG contract own-use
classifications.

Key judgements and financial reporting matters in 2025

Onerous energy supply
and LNG contracts provision
The Group’s residential and business energy supply contracts
within Retail and its LNG procurement contracts within
Optimisation are accruals accounted. The Group operates and
Impairment of long-lived assets
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 2025, 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, for certain contracts, 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 £32m at the year-end (2024: £82m).
Note that the LNG portfolio is hedged on a portfolio basis and is
forecast to remain economically profitable in 2026 and beyond.
At the end of 2025, no onerous provision was required for the
residential or business supply contracts within Retail because
related hedges were out-of-the-money.
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.

Audit and Risk Committee reviews and conclusions

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 noted the consistent year-on-year approach
and the rationale for including the LNG cargo, and supply
onerous contract provision movements within certain
re-measurements.
The Committee noted that no onerous energy supply contract
was required but observed that it may be required in 2026 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 141 to 148
and 155 to 159.

Key judgements and financial reporting matters in 2025

The Group makes judgements and estimates in considering
whether the carrying amounts of its assets are recoverable:
Infrastructure (Power assets and gas field assets)
For retained 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 derivative contracts’, above). For gas field assets, the
cash flows associated with decommissioning are included in the
valuation models.
Judgement is also required around production volumes. For
Nuclear (excluding Sizewell C), individual station information
and recent availability data is factored in to the overall asset
valuation. The expected operating life of Sizewell B has
continued to be reflected to 2055 in the modelling, beyond the
original design life. During 2025, the expected closure dates for
Heysham 1 and Hartlepool stations were extended by one year
to March 2028. For retained gas field assets, each field has
specific reservoir 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 retained
gas field assets, the Energy Profit Levy applies a rate of 38%
(bringing the headline rate on gas field 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 together with an increase in operating
and capital cost assumptions, partially offset by station life
extensions, an exceptional impairment of £251m has been
booked in relation to the Nuclear investment.
For Solar assets, an exceptional impairment of £13m
was recorded, following a reduction in both the forecast
commodity prices and the discount rate used in the valuation.

78 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

For gas assets, an impairment of £77m was booked in relation to
fields being transferred to disposal groups held for sale, based
on specific valuations from the disposal process. See note 12.
For retained gas assets, an impairment of £167m was recorded
following the reduction in forecast NBP gas prices and a change
to the discount rate used for decommissioning cash flows for
end-of-life fields, to better reflect how a typical market
participant would value these types of asset. See note 7.

Audit and Risk Committee reviews and conclusions

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. They specifically noted the updated discount rate
for decommissioning cash flows of end-of-life gas fields used in
the impairment tests and observed this was now more
consistent with the approach for recording the
decommissioning provision. Ultimately, the Committee was
comfortable with the conclusions reached.
The Committee reviewed the Nuclear investment impairment
and noted that the decrease in commodity prices and cost
assumption increases had more than offset the benefit of life
extensions at Heysham 1 & Hartlepool.
The Committee noted that price sensitivity disclosures have
been included in the financial statements.
Further detail on impairments and the assumptions used in
Classification and presentation of exceptional
items and certain re-measurements, disposal
groups held for sale and discontinued operations
determining the recoverable amounts is provided in notes 7
and S2 on pages 155 to 159 and 194 to 207.

Key judgements and financial reporting matters in 2025

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. Typical household
energy costs have increased during 2025 due to high wholesale
commodity costs and increased network and levy charges.
Macroeconomic conditions are mixed with interest rates and
inflation having fallen during the year, but unemployment figures
rising. 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
within Retail 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. The delayed impact on customer
payments is now broadly reflected in the underlying matrix output
model used to record provision coverage, hence the reduction in
the additional macroeconomic provision to £11m (2024: £49m). For
Retail, the bad debt charge as a percentage of revenue increased to
2.6% (2024: 2.2%). The closing bad debt provision moved to 38%
(2024: 36%) of Retail 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.

Audit and Risk Committee reviews and conclusions

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.

Key judgements and financial reporting matters in 2025

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 energy 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 power
asset and gas field asset impairments (noted above in
‘Impairment of long-lived assets’). Also included are legacy
contract costs reversals of £23m associated with business
activity that ceased a number of years ago and a gain on
disposal of an interest in the Cygnus gas field of £80m.
Certain re-measurements totalled an overall c.£300m loss on a
pre-tax basis – £345m loss from derivatives and £42m gain
from the onerous supply and LNG contracts provision
movement.
During the year, the Group’s disposal of an interest in the
Cygnus gas field and the further intended disposal of other gas
assets to Serica Energy plc led to their initial classification as
disposal groups held for sale on signing of the sale and purchase
agreements (see note 12). The Group judged that the disposal
groups did not represent a separate major line of business or

| 79

Centrica plc Annual Report and Accounts 2025

geographical operation, because the Infrastructure segment
retains other producing fields in the United Kingdom.
Accordingly, they were not classified as a discontinued
operation.

Audit and Risk Committee reviews and conclusions

The Committee noted that the policy on certain
re-measurements and exceptional items remains unchanged
from the prior year.
The Committee used the Group’s approved policy on
exceptional items 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).
The Committee also considered the presentation of the gas
field assets disposals as disposal groups held for sale. They
noted and understood the rationale for not treating them as
discontinued operations.
Further detail is provided in notes 2, 3 and 7 on pages 141 to 148
and 155 to 159.

Key judgements and financial reporting matters in 2025

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 (2024: £2.7bn).

Audit and Risk Committee reviews and conclusions

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 142 to 148 and on unbilled energy income in note 17 on
pages 172 to 177.

Key judgements and financial reporting matters in 2025

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 £295m (2024:
£21m). The UK defined benefit schemes used a nominal discount
rate of 5.5% (2024: 5.4%) and inflation of 2.8% (2024: 3.1%).
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.

Audit and Risk Committee reviews and conclusions

The Committee noted the key pension assumptions and
disclosures in the financial statements, including the IAS 19
experience loss following the finalisation of the triennial review.
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 181 to
185.

Key judgements and financial reporting matters in 2025

Accounting for the Sizewell C and Isle of Grain
investments
During the year the Group acquired a 15% equity stake in the
Sizewell C nuclear power station and committed to providing
construction funding of £1.3 bn primarily through a shareholder
loan agreement, funded over the construction phase of the
project. The Group has determined it has significant influence
over this investment, demonstrated by its ability to participate in
the financial and operating policy decisions of the investee.

80 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Accordingly, the investment is equity accounted as an associate
and the loan receivable is presented within investments in joint
ventures and associates on the Group’s Statement of Financial
Position , with the share of profit after tax presented within the
results of joint ventures and associates line item in the Group’s
Income Statement.
The Group also acquired a 50% equity stake in the Isle of Grain
Liquefied Natural Gas terminal, during the year. It has
determined that this investment is jointly controlled by the
Group and its co-investor, E nergy Capital Partners LLP (ECP) on
the basis decisions affecting the returns of the investment are
taken on a unanimous basis and that both investors participate
fully in the decisions affecting the operational decisions.
Accordingly, this investment is equity accounted as a joint
venture.

Audit and Risk Committee reviews and conclusions

The Committee understood the critical accounting judgements
reached in relation to these investments.
They noted that Group holds a Board seat on Sizewell C and
Fair, balanced and understandable
also possesses specialised industry knowledge, as well as
benefitting from the right to enter an offtake agreement once
the nuclear plant is operational; with these points supporting
significant influence. They also noted the rationale for the joint
control assessment over the Isle of Grain.
The Committee discussed the treatment with the auditors and
ultimately concurred with the accounting conclusions reached.
Further details are set out in notes 3, 6 and 14 on pages 142 to
148, 154, and 168.

Key judgements and financial reporting matters in 2025

Regulatory Scheme Accounting
The Group is required to comply with all regulatory schemes
mandated by Ofgem’s gas and electricity supplier licence
conditions. The Group incurs material costs under a number of
active schemes, for example: Energy Company Obligation
(ECO), Great British Insulation Scheme (GBIS), Energy Intensive
Industries Support Levy (EII), Warm Home Discount (WHD),
Feed-in Tariff (FIT), Fuel Mix Disclosure (FMD), Renewables
Obligation (ROCS), Capacity Market Levy, Smart Metering
Transition, Supplier of Last Resort (SOLR) and Contracts for
Difference (CFD). Certain of the schemes above also include
provisions for mutualisation charges which require separate
accounting analysis. The accounting for regulatory schemes is
an area of critical accounting judgement because determining
whether there is a present obligation may be judgemental. The
Group assesses a range of information when determining the
point at which a present obligation exists and estimates costs
using both external and internal data sources.
Costs incurred under industry regulatory schemes are typically
calculated with reference to the Group’s market share at a point
in time and recovered in the future through the Ofgem price cap.
Recovery is generally based on revenue earned through future
energy supply, meaning a timing difference may arise between
the recognition of costs incurred, and the future recovery
through charges applied to end consumers. The Group does not
have an entitlement to recover costs incurred at the point of
recognition and consequently does not recognise an asset in
relation to future recoveries

Audit and Risk Committee reviews and conclusions

The Committee understood the complexity of assessing when a
present obligation exists for a number of the regulatory
schemes.
They discussed the accounting treatment for the schemes with
the auditors and ultimately concurred with the conclusions.

Key judgements and financial reporting matters in 2025

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.

Audit and Risk Committee reviews and conclusions

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,
including the balance of narratives around performance. 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.

| 81

Centrica plc Annual Report and Accounts 2025

Nominations Committee
On behalf of the Board, I am pleased to present the Nominations
Committee (the Committee) report for the year 2025. The report
outlines the key activities and focus areas of the Committee during
the year, reflecting the commitment to maintaining a robust and
effective Board and governance framework a nd to ensu re 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.
Committee membership and meeting attendance
Committee members:
At the beginning of the year, the Committee comprised the
Chair and the rest of the Board. During the year, its composition
evolved to consist of the Chair, the Senior Independent Director
and the Committee Chairs in alignment with best practice.
• Kevin O’Byrne (Chair)
• Carol Arrowsmith
• Nathan Bostock
• Jo Harlow
• Heidi Mottram (until 31 December 2025)
• Amber Rudd (with effect from 1 January 2026)
Biographical details of the Committee Chair and members can
be found on pages 62 to 64. Meeting attendance can be found
on page 64.
Meeting attendees by invitation:
Group Chief Executive, Group General Counsel & Company
Secretary and Group Chief People Officer.
Main activities during 2025
During the year, the Nominations Committee continued to focus
on ensuring that the Board and Senior Leadership Team have
the right balance of skills, experience and diversity to oversee
Centrica’s strategy and culture effectively. The Committee
met three times, in February, July and November 2025,
and considered a broad range of matters relating to Board
composition, succession planning, Board effectiveness and
governance. Key areas of activity during the year included:
Succession planning, composition and training
The Committee continued to oversee Board and non-executive
succession, recognising its importance to Board effectiveness
and ensuring well-timed transitions aligned to the Board’s
evolving capability needs, supported by a diverse and
sustainable pipeline.
During 2025, the Committee identified an opportunity to
strengthen expertise in energy infrastructure and finance and
appointed Egon Zehnder to support targeted searches. Egon
Zehnder has no existing or prior relationship with the Company
that would compromise its independence. Following the search
process, the Committee recommended the appointment of two
new Non-Executive directors: Alessandra Pasini (appointed 8
July 2025) and Frank Mastiaux (appointed 22 September 2025).
Alessandra brings significant experience in international finance,
energy transition and infrastructure investment, while Frank
adds extensive operational leadership expertise across the
European energy sector and large-scale transformation.
As the Board undergoes a period of refresh and evolution, the
Committee focused on the resulting transitions in Committee
Chair roles to reflect these changes and ensure continued
robust oversight. On 19 November 2025, we announced that
Nathan Bostock, who has served as Chair of the Audit and Risk
Committee, will be stepping down from the Board no later than
the end of July 2026 (subject to re-election at Centrica's 2026
Annual General Meeting). A further update on Nathan’s
successor will be announced in due course. We announced on 19
December 2025 that Heidi Mottram would step down from the
Board on 31 December 2025. Amber Rudd became Chair of the
Safety, Environment and Sustainability Committee with effect
from 1 January 2026. Carol Arrowsmith will step down from the
Board at the 2026 AGM and will not seek re‑election, with Sue
Whalley assuming the role of Chair of the Remuneration
Committee.
The Committee is satisfied that the Board maintains an
appropriate balance and diversity of skills and experience.
The Committee also maintained a strong focus on executive
succession, including for the Group Chief Executive role, and
continued to assess the depth of the Centrica Leadership Team
(CLT) pipeline. High-potential individuals were identified and
supported through development opportunities, including
leadership training and mentorship programmes.
During the year, the Committee reviewed Board training
and reinforced the importance of continuing to deepen
Board knowledge in relevant areas, including through site visits
to key infrastructure assets. Further information can be found
on pages 66 to 67.
Board effectiveness and development
The Committee considered progress against actions arising
from the 2024 external Board performance review (conducted
by Independent Board Evaluation (IBE)). The review highlighted
the need to further strengthen the Board’s strategic focus and
succession planning at both Board and senior executive levels,
alongside maintaining strong Board visibility to reinforce tone
from the top. The actions arising from the review have now been
implemented.
The 2025 internal Board performance review was undertaken
using BoardOutlook and was overseen by the Chair and drew
on both quantitative and qualitative insights, incorporating
feedback from all Directors, the Group General Counsel &
Company Secretary and the Chief People Officer. As part of the
review of the Chair, the Senior Independent Director, Jo Harlow,
met individually with each Non‑Executive Director to gather
their views and provided consolidated feedback to the Chair.
The 2025 evaluation concluded that the Board continued to
operate effectively, with strong governance and strategic

82 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

oversight, and remained focused on long-term value creation,
robust risk management and the continued delivery of the
Company’s transformation agenda. The Committee considered
the findings as part of its ongoing succession planning and Board
development work, ensuring the Board remains equipped to
support the execution of the Company’s strategy.
Board dynamics and behaviour
The outcome from the evaluation noted that the Board benefits
from a diversity of interpersonal styles, supporting rich discussion
and thorough testing of issues. The Chair’s role in guiding
conversations and maintaining a constructive tone is key to
sustaining effectiveness. The overall tone was reflective and
measured, supporting calm, well-reasoned dialogue.
Key achievements and strengths
• Strategic Delivery against 2025 objectives
• Strengthened Risk Governance
• Energetic, responsive and collaborative Board Culture and
Composition with high ethical standards and mutual respect
• Clear Remuneration framework
Looking ahead
The Board is committed to continuous improvement, with a
focus on:
• Deepening succession planning and talent development.
• Enhancing strategic coherence and capital allocation.
• Strengthening risk management and oversight.
• Ens uring effective Board processes, education and support.
Director elections and re-elections
Having considered the performance, contribution and time
commitment of each Director, the Committee recommended
t he election and re-election of all Directors at the 2026 AGM,
with the exception of Carol Arrowsmith. The rationale for each
individual recommendation will be set out in the 2026 Notice of
Meeting.
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 Centrica’s
Board D iversity Policy, which can be found at centrica.com.
Further initiatives on diversity and inclusion can be found on
page 43.
Centrica’s Board Diversity Policy applies to the Board and its
Committees and defines diversity broadly to include skills and
abilities, age, gender, ethnicity, sexual orientation, disability, and
educational, professional and socio-economic backgrounds. The
policy’s objectives are to strengthen the effectiveness of the
Board and its Committees by ensuring a fair, merit-based
approach to appointments and committee membership,
supported by inclusive recruitment practices that broaden
perspectives, encourage constructive challenge and enhance
decision-making. During the year, the Nominations Committee
continued to embed the policy within Board succession planning
and selection processes, with appointments and committee
composition considered against the policy and the Group’s
wider Diversity, Respect and Inclusion commitments, alongside
ongoing monitoring of Board composition and disclosure. As at
31 December 2025, Centrica met the UK Listing Rules Board
diversity targets (40% women on the Board, at least one woman
in a senior Board role and the Parker Review target of at least
one Director from a minority ethnic background), and we
continue to track progress against longer-term diversity
ambitions.
The Committee has set clear objectives for DE&I, including
maintaining gender balance, 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 Centrica’s Board and senior leadership
diversity on pages 43 and 83.
This focus ensures that Centrica’s recruitment processes and
practices reflect these principles, driving positive change
and strengthening the organisational culture.
Committee effectiveness and Focus Areas for 2026
The Committee reviews its terms of reference annually to
ensure they remain appropriate in light of legal, regulatory
and best practice changes. Minor 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
also evaluated as part of the internal review. The Committee
considers that it has continued to discharge its responsibilities
effectively amid evolving stakeholder expectations and
governance requirements for companies and boards, supported
by regular and constructive engagement with management.
The Committee was found to be operating effectively.
Focus areas in 2026:
• Overseeing Board succession, including regular review of Board
skills, and the composition of the Board and its Committees.
• Overseeing the process to appoint a new Audit and Risk
Committee Chair.
• Overseeing executive succession planning, with particular
focus on the CLT and other key senior leadership roles.
• Monitoring progress against the recommendations from the
2025 Board performance review and agreeing plans for the
2026 internal Board evaluation.
• Reviewing and addressing the Board’s forward agenda and
2027 training requirements to ensure ongoing alignment with
strategic priorities.
• Conducting the annual review of the Committee’s terms of
reference and agreeing the 2027 Nominations Committee
programme.
Kevin O’Byrne
Chair of the Nominations Committee
18 February 2026

| 83

Centrica plc Annual Report and Accounts 2025

Board and senior leadership diversity
Data reported as at 31 December 2025

| Sex/gender representation |
|  |  | Number of Board members | Percentage of the Board (1) | Number of senior positions on the Board(2) | Percentage of senior positions on the Board(2) | Number in executive management | Percentage of executive management |
| Men |  | 7 | 54% | 3 | 75% | 9 | 90% |
| Women |  | 6 | 46% | 1 | 25% | 1 | 10% |
| Other categories |  | — | — | — | — | — | — |
| Not specified/prefer not to say |  | — | — | — | — | — | — |

(1) Following Heidi Mottram’s departure from the Board on 31 December 2025, the percentage of women on the Board is now 42%.
(2) 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 |  | 12 | 92% | 4 | 100% | 8 | 80% |
| Mixed/Multiple Ethnic Groups |  | — | — | — | — | — | — |
| Asian/Asian British |  | 1 | 8% | — | — | 2 | 20% |
| 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 43.
Explanatory notes
(1) The Information above is stated as at 31 December 2025.
(2) As at 31 December 2025, 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 (2025: 45%); (ii) at least
one Director being ethnically diverse (2025: 1 person); and (iii) to have at least one senior position held by a woman (2025: 1 person) .
(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. Whilst we are not where we want to want to be on our
diversity targets, we are taking steps to address gaps and continue working towards our goal.
(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 and
#EveryColleagueCounts 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.

84 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2025. I would also like to express my
gratitude to Heidi for her leadership and dedication during her
tenure as Chair to this Committee.
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 includes oversight of the Company’s progress against its
People & Planet Plan and Climate Transition Plan, alongside
monitoring compliance with existing and emerging UK and EU
sustainability reporting requirements.
The Committee achieves this through rigorous review of
performance data, strategic goals and initiatives, and by providing
input into the Company’s annual sustainability disclosures. It also
considers developments in regulatory frameworks and stakeholder
expectations to ensure alignment with best practice. In addition, the
Committee oversees responsible procurement and human rights
risk management, including modern slavery, and reviews
governance structures supporting ESG commitments.
Committee membership and meeting attendance
Committee members:
• Amber Rudd (Chair) (with effect from 1 January 2026)
• Heidi Mottram (until 31 December 2025)
• Philippe Boisseau
• Nathan Bostock
• Frank Mastiaux (with effect from 22 September 2025)
Biographical details of the Committee Chair and members can
be found on pages 62 to 64. Meeting attendance can be found
on page 64.
Meeting attendees by invitation:
The Chair of the Board, Group Chief Executive, Group General
Counsel & Company Secretary, Group Chief People Officer,
Group HSE Director, Group Head of Sustainability, Chief
Procurement Officer, and Head of Business Ethics and
Compliance.
Main activities during 2025
This year, we navigated complex challenges, including evolving
Environment, Social and Governance (ESG) reporting
requirements, while maintaining our commitment to safety
and sustainability.
Our work also spanned wider areas, including strengthening
our approach to responsible procurement to maintain ongoing
mitigation of human rights and modern slavery risks across our
operations and supply chain, while reviewing our charitable
contributions to ensure effective ongoing support for
customers and communities.
Additionally, we continued to monitor the Group’s reputation
and stakeholder perceptions as well as emerging regulatory
and investor expectations. This ensures our governance and
practices remain robust and forward-looking.
Health and safety
In 2025, the Committee maintained its core focus on health
and safety performance, assurance activities and Health, Safety
& Environment (HSE) risk management across the Group. It
reviewed occupational and process safety outcomes, targeted
interventions and forward‑looking actions to strengthen safety
culture. At Spirit Energy, the Committee monitored delivery of
the HSE improvement plan and culture programme, including
several significant process‑safety events in H2, regulatory
actions and accelerated assurance activity.
Management provided regular updates on the Group HSE
strategy and the 2025 HSE Assurance Plan, which introduced
enhanced second‑line defence and technical assurance
measures. The Committee oversaw targeted risk mitigation
programmes on electrical safety and cable strike reduction,
resulting in improved detection, revised methods and early
signs of incident reduction.
The Committee kept particular focus on preventing
hydrocarbon releases, alongside gas and electrical safety,
and monitored actions to strengthen controls in these areas.
It also reviewed a material contractor case in metering services,
involving temporary suspension, independent audit, a phased
return under enhanced oversight and learnings applied across
the Group. With improvements noted across most HSE metrics,
the Committee welcomed progress on the Group‑wide HSE
strategy plan to embed cultural change and strengthen
process‑safety barriers.
Sustainability
The Committee continued to oversee the Company’s
commitment to achieving net zero and delivering against its
climate ambitions. It reviewed progress on the People & Planet
Plan and monitored implementation of our updated Climate
Transition Plan, which was approved by shareholders following
the advisory vote at the Annual General Meeting. The updated
plan includes strengthened targets underpinned by a new suite
of climate ambitions to help our customers and business get
to net zero. The Committee assessed the prevailing policy
environment and implications of strategic investment decisions
against the Climate Transition Plan and the Company’s broader
strategic framework.
It also maintained oversight of emerging sustainability reporting
requirements, including mandatory disclosures under the
Corporate Sustainability Reporting Directive (CSRD) and EU
Sustainability Taxonomy, as well as evolving UK frameworks.
Following EU developments, the first formal CSRD report is
now expected for FY2027 in 2028. In 2026, the Committee is
overseeing key initiatives such as controls enhancement and
reporting tool implementation. It also ensured

| 85

Centrica plc Annual Report and Accounts 2025

governance structures and stakeholder expectations were
addressed to support compliance and transparency. Further
details can be found on pages 42 to 48.
Responsible business
In 2025, the Committee continued to oversee the Company’s
responsible procurement approach, with a particular focus on supply
chain elements that present higher inherent risks to human rights due
to jurisdictional factors and/or the nature of products or services
provided, such as solar panels, batteries, smart products and
garments. The Committee assessed the effectiveness of measures
designed to mitigate these risks and monitored progress against the
Responsible Procurement Ethical Audit Plan for the year.
The Committee reviewed the outcomes of supplier audits and site
visits, ensuring that sustainability requirements were embedded
within procurement processes. It maintained regular oversight of
human rights considerations and modern slavery risks within
Centrica’s operations and supply chain, reflecting heightened
stakeholder expectations and enhanced disclosure requirements.
Progress on implementing the Audit Plan was noted, alongside
improvements in due diligence processes.
The Committee also considered insights from Centrica’s UK &
Ireland reputation survey, which informed the 2025 corporate
communications plan and stakeholder engagement strategy. These
insights continue to guide management activities and strengthen
the Group’s approach to reputation management.
In addition, the Committee supported the Group’s commitment
to contribute positively to wider society through charitable
partnerships, community funds and customer support packages
as well as volunteering initiatives.
Social and governance
In addition to the above areas of focus, the Committee ensured
compliance with relevant regulations and governance standards
within its remit. This included reviewing disclosures reported in
the Annual Report and Accounts, such as those required under
the Task Force on Climate-related Financial Disclosures and the
Climate-related Financial Disclosure regulations, to maintain
transparency and accountability.
The Committee also oversaw wider annual social disclosures
that demonstrate the Company’s commitment to responsible
business practices, including the Modern Slavery Statement
published on our website. The Committee also considered
broader workforce and community-related matters, ensuring
alignment with the Group’s Diversity, Equity and Inclusion (DE&I)
strategy, employee wellbeing initiatives and social impact
commitments. These efforts reflect our ongoing focus on
creating a safe, inclusive and sustainable workplace while
delivering positive outcomes for the communities we serve.
Committee effectiveness and Focus Areas for 2026
Committee effectiveness
The Committee reviews its terms of reference annually to
ensure they accurately reflect its responsibilities, taking into
account evolving internal and external developments. Minor
changes were made to the Committee’s terms of reference
during the year, and these remain available on our website.
The effectiveness and performance of the Committee was
evaluated as part of an internal review. The Committee
considers that it has continued to discharge its oversight role
effectively in an environment where expectations and
requirements are constantly changing, supported by regular and
constructive engagement with management. The Committee
was found to be performing effectively. Further details on the
Board effectiveness review can be found on pages 81 to 82.
Focus areas in 2026:
• Health and safety risks;
• Environment and climate;
• Emerging sustainability reporting requirements;
• Responsible sourcing including human rights and modern
slavery risk;
• Societal contribution; and
• Reputation.
Amber Rudd
Chair of the Safety, Environment and Sustainability Committee
18 February 2026

86 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Remuneration Report
On behalf of the Board, I am pleased to
present the Directors’ Remuneration Report
for the year ended 31 December 2025.
Committee role
The role of the Committee is to ensure that our Executive
Directors, the Centrica Leadership Team (CLT) and the Chair of
the Board are each appropriately rewarded taking account of
the scale of their role, the performance of the business and the
progress and contribution of each individual to our strategic and
financial performance.
Main activities in 2025
In our four meetings held during 2025 our focus was:
• Finalising the Remuneration Policy for 2025-28. This is a legally
binding approval by shareholders under which the Committee
sets remuneration during the three-year period following the
AGM.
• Approving the Remuneration Report. This vote is an advisory
vote whereby shareholders indicate their views on the
decisions we have made.
• Setting the targets for the annual bonuses for the executives
and assessing performance against those targets.
• Evaluating performance measures to ensure they are effective
in supporting our strategy.
Since Chris O’Shea was appointed in 2020, the Company has seen
enormous change both within the Company and in the wider
energy world. He led the financial turnaround which restored
Centrica to financial health and allowed him to create our current
strategy to build a stronger, better-balanced business.
Under this strategy we have made significant progress in
modernising our customer-facing businesses; secured
sustainable energy supplies through our Optimisation business;
and are making very material contributions to the longer-term
availability and stability of UK energy markets through major
investments in our Power business.
In the wider world, we and our customers have been affected
by ongoing pressures on prices and affordability, more recently
the reactions of various governments to the risks around price
uncertainties have been influenced more by political changes
than the normal dynamics of trading.
These external factors have naturally influenced our decisions
surrounding pay and most particularly for our CEO. Over the
very difficult early years the CEO waived salary and either
declined or was not awarded annual bonuses. As the business
has strengthened and our performance on many dimensions has
improved, larger bonuses have been earned. However, for a
number of years the CEO’s fixed and total pay fell well short of
the market rate for an increasingly complex role. Under Chris’s
leadership, Centrica re‑entered the FTSE 100, rose into the top
50, and the share price has risen to c.170p by the end of 2025.
For interest, I have set out some key metrics of progress since
his appointment in 2020:

| 410% Share price |  |  | 72% EPS
| 19% NPS* |  |  | 83% Dividend per share**
| 41% Total recordable injury frequency rate |  |  | 7% Colleague engagement

* Measured from 2022
** Measured from 2022 given no dividends were paid in 2020 and 2021
As set out in last year’s Remuneration Report we consulted our
shareholders regarding a one-off salary adjustment for the CEO
and we are grateful to our shareholders for their time and
engagement in the lead up to, and following, our AGM in May.
Whilst the Committee was pleased that the legally binding
Remuneration Policy for 2025-28 received 93% support at the
2025 AGM, we acknowledge that the Remuneration Report
received 60% support. I have been focused on maintaining an
open and transparent dialogue with our shareholders so that all
views are considered in how we implement any part of our
remuneration arrangements. I am personally grateful for the
constructive and supportive way our shareholders have
engaged in this lengthy series of consultations. This
engagement led us to defer the increase in the Restricted Share
Award for the CEO until 2026. Further details on our
engagement with shareholders can be found in this letter, on
page 90. Our aim during the policy review was to set the pay of
our Executive Directors at a level that reflects their role
contribution to the improvement in business performance, the
size and complexity of Centrica and the scale and scope of the
opportunities ahead of us. We firmly believe that the changes to
remuneration will play a crucial role in enabling Centrica to
remain competitive within a dynamic and challenging market
environment, and that the retention of high-calibre talent has
provided Centrica with a platform to continue progressing
towards our full potential. We have also made changes in the pay
and benefits for colleagues as set out below.
Business context for 2025
Following strong performance in 2024, Centrica has continued
to make good strategic progress in 2025, demonstrating a
resilient performance against a challenging backdrop. The Board
believes the key strategic investment decisions made in 2025
will set the Group up for decades to come.

| 87

Centrica plc Annual Report and Accounts 2025

The year has seen a normalisation of energy prices following
the volatility of prior years, and while market conditions included
warm weather and challenging trading conditions, Centrica has
maintained its focus on financial discipline, customer service
improvement, and investment in the energy transition.
This includes growing customer numbers in energy supply,
enhancing the quality and reliability of our services and
completing our system migration in British Gas Residential
Energy.
Centrica continues to play a key role in the UK’s energy sector.
Alongside life extensions at the Hartlepool and Heysham 1
nuclear power stations, the Company made strategically
significant investments into assets that reinforce the nation’s
energy resilience, such as in the Sizewell C nuclear power
station, with a phased, capped investment of £1.3bn.
Additionally, the acquisition of Europe’s largest LNG terminal,
Grain LNG, strengthens the UK’s energy security. Our
partnership with X-energy also marks bold steps forward in
delivering scalable and secure advanced nuclear technology.
These strategic moves not only strengthen Centrica’s
operational position but also lay the foundations for a more
secure, diversified, and sustainable energy portfolio. They
reflect the leadership team’s long ‑term commitment to building
an energy business equipped to meet the challenges and
opportunities of a rapidly evolving world.
Alongside this, Centrica continues to focus on customer growth
and improved customer service. The migration of British Gas
Residential customers to the new Ignition platform has enabled
simpler, faster service customer interactions which are reflected in
higher satisfaction and our highest ever Trustpilot rating of 4.4 stars.
In recent years we strengthened how we identify and support
customers in vulnerable circumstances, including with our
first‑of‑its‑kind ‘You Pay: We Pay’ scheme, where we matched
energy payments made by customers in or at risk of fuel
poverty. In just over a year since launching, the Scheme is
supporting over 16,000 customers with a commitment of nearly
£13m to be matched in payment assistance.
The Group also introduced new propositions such as ‘Customer
Promise’ same day service and British Gas Membership, which
allows our customers to integrate benefits across energy, services,
and Hive. British Gas membership provides customers an integrated
experience with access to bundles and partner perks, and
strengthens engagement and retention.
For our investors, we remained committed to a balanced capital
framework that rewards shareholders while funding sustainable
growth. The interim dividend was increased by 22% to 1.83p per
share, with the full-year dividend to rise to 5.5p.
In 2025, we increased our share buyback programme by an
additional £827m, which was largely completed during the year,
bringing the total equity repurchased since 2022 to £2bn, or around
a quarter of the Company’s shares.
Centrica’s people remain central to the delivery of its transformation
agenda. Engagement remained strong at 7.9 out of 10, supported by
continued investment in skills, technology and wellbeing. The Group
is creating a leaner, more agile organisation, equipping colleagues to
work more effectively and to deliver excellent customer outcomes.
Centrica announced the development of a new £35m state-of-the-
art training academy and energy transition research laboratory in
Lutterworth, Leicestershire, which will open in May 2026. The new
‘Centrica Energy Park’ will see thousands of engineers trained in the
skills necessary to drive the energy transition including heat pumps,
EV chargers, solar panels and battery storage.
Pay principles
We believe that all our people should be paid competitively and
fairly. In addition to regularly reviewing pay and conditions to
ensure fair pay, we are proud of our inclusive benefits including
our Profit Sharing Scheme under which every employee
receives an annual profit share (typically paid in Centrica shares)
and at the AGM we introduced the Centrica ShareSave scheme
so our employees can save to buy additional Centrica shares on
favourable terms. We continue to ensure our benefits offering
provides comprehensive support for our people’s wellbeing,
financial security, and professional development. 2025 saw
the implementation of a number of new benefits, including the
enhancement of paternity leave and removal of the pension
probation period for new joiners.
Remuneration outcomes for 2025
When determining executive remuneration outcomes for
2025, the Committee has focused on balancing the views
and experiences of all our stakeholders, with our responsibility
to attract and retain high-performing executives to lead a highly
complex organisation.
Annual Incentive Plan (AIP)
Bonus outcomes for Executive Directors for 2025 were based on
EPS (37.5%), a balanced scorecard of financial and operational
measures (37.5%), and individual performance against strategic
objectives (25%).
The Company delivered solid financial and operational results
against a difficult market backdrop for the Centrica Energy
optimisation business, achieving an EPS of 11.2 p against the target
of 11.5p.
We also achieved improvements across many of the financial
and operational measures in the balanced scorecard. We were
particularly pleased to see an improvement in customer numbers,
cost per customer and customer Net Promoter Scores. These
improvements demonstrate our focus on customer journeys and
show rising customer confidence and trust in our brands and services.
Our Services & Solutions business delivered above plan through
margin growth and Smart volumes. Our infrastructure assets
also performed well operationally in the CES+ Rough facility and
Centrica Power assets. The business significantly outperformed
its Meter Asset Provision targets, underpinned by strong capital
deployment, delivering well ahead of plan on meter installations.
Our colleague engagement was marginally below target at the
year-end with 7.9 vs 8.1. The business is committed to regaining
high levels of engagement but recognises that internal restructuring
has a negative effect. We aim to restore it to a high level in time.
In terms of our Planet goals, Centrica’s positive progress against our
net zero targets is demonstrated in achieving key annual milestones
in emissions reduction across both our business and our customers.
In particular, we are on track with the majority of our climate
ambitions including the installation and connection of smart low
carbon technologies to our Hive platform as well as the supply of
zero carbon and renewable energy. In addition, we have already
grown the green skills of 1,900 of our engineers as we pursue our
ambition to reach 3,000 by 2030.

88 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Due to continued slow growth in public electric vehicle rapid
charging infrastructure and the risk charging delays pose to
customer service, we have however revised our ambition for a zero
emission van fleet by 2030 and from 2026 onwards, we will instead
work towards having a zero emission van order book by 2030 which
remains aligned with evolving best practice and national targets.
The Committee considered performance against the EPS targets
and the balanced scorecard in the round and determined that 105%
of target (or 52.5% of maximum) for this part of the AIP had been
achieved.
Further detail on performance against each executive’s
individual objectives can be found on page 97.
Chris O’Shea achieved an individual performance outturn of
180% of target (or 90% of maximum) and Russell O’Brien
achieved 150% of target (or 75% of maximum) for this element
of the AIP. The outcomes for Chris reflect the CEO’s individual
performance in driving a number of the year’s most material
value‑creating initiatives. Half of this payment is paid in cash, and
the other half is in Centrica shares deferred for three years.
After combining the outturn for EPS, the balanced scorecard,
and individual performance, the Committee awarded a total AIP
as summarised in the chart below:
123.76% of salary
(£1,361k)
200% of salary
(£2,200k)
61.88% of max
CEO
58.05%
of max
CFO
101.72% of salary
(£651k)
175% of salary
(£1,120k)

l | AIP earned (% of maximum) | l | Maximum opportunity |

Restricted Share Plan (RSP)
Long-term RSP awards were granted on 21 March 2023 to Chris
O’Shea and Russell O’Brien. This was the first year of grant for
the new Chief Financial Officer. The maximum award granted
was 150% of salary in Centrica shares for Chris O’Shea and 125%
of salary for Russell O’Brien. The shares are scheduled to vest
on 21 March 2026, 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 an assessment
that underpins the delivery of the shares. This was assessed
over a three-year performance period from 1 January 2023 to
31 December 2025. At the time of introducing this plan the
RSP awards were set at 50% of the preceding plan and so the
principal alignment with shareholders is the longer-term share
price growth of 65.72% and so any adjustment on the outturn
would only be operated in extremis.
In assessing whether there was any case to modify vesting,
the Committee considers a broad spectrum including conduct,
reputation, performance in the round over the three-year period
as measured by poor financial performance, lack of progress
against the Climate Transition Plan or other ESG commitments,
major failures including safety management, regulatory
sanctions, customer management and delivery. No reductions
have been applied. The total value, including share price growth,
is shown in the single figure of total remuneration shown on
page 94.The RSP continues to align executives’ interests
with long-term shareholder value creation and the delivery
of Centrica’s strategic goals. The increase to the Group CEO
shareholding requirement from 300% to 400% further
strengthens this alignment. RSP awards remain subject to a
two-year post-vesting holding period.
Remuneration changes in 2026
In determining salary increases for the Executive Directors for
2026, the Committee considered various factors, including both
the average salary increases awarded to the wider workforce,
and the performance and development of the executives in their
roles throughout the year. We were also mindful of the changes
to executive salaries that were made last year.
In this context, with effect from 1 April 2026, Chris O’Shea’s
salary wi ll increase by 3% to £1,133,000. Russell O’Brien’s salary
will also increase by 3% to £659,200.
As part of the 2025 Remuneration Policy review, which received
the support of 93% of shareholders at the 2025 AGM,
shareholders approved the Committee’s proposal to increase
the CEO RSP maximum to 200% of salary; ensuring long-term
incentives remain appropriately structured and competitive.
Reflecting the feedback received during the consultation
process, the Committee determined that the increase should
not be implemented immediately, so the CEO’s 2025 RSP grant
was held at 150% of salary. Per the Remuneration Policy
approved at the 2025 AGM, the CEO’s RSP opportunity will
move to 200% of salary in 2026. This phased approach
recognises and respects shareholder expectations and the
enhanced award further reinforces the long-term focus
embedded within our remuneration framework. It positions the
CEO’s remuneration package competitively against the market.
No changes were made to the Group Chief Executive AIP for
2025, the maximum AIP will continue to be 200% of salary.
The increase to maximum of 175% of salary has been applied
for the Chief Financial Officer following the Remuneration
Policy change.
Non-Executive Director fees
The Chair of the Board, the Executive Directors, and the Chief
People Officer conducted their annual review of the fees
payable to Non-Executive Directors. The Board continues to
recognise that the role of a Non-Executive Director has become
more demanding, particularly in areas such as sustainability, risk
oversight, and stakeholder engagement. They concluded that
the current base fee of £79,000 should be increased to £81,000
with effect from 1 January 2026. The 2.5% increase reflects NED
fee changes in our benchmarking peer groups.
The Chair of the Board fee was also reviewed by the
Remuneration Committee, and the fee will increased by 3%
from April 2026 to reflect external pay movement for this role.
The fee movements are within the wider workforce increase
range of 3%-4%.
Further commentary on the 2025 AGM vote
As I mentioned at the start of my letter, whilst we were
delighted that the Remuneration Policy received 93% support
at the 2025 AGM, we acknowledge that the Remuneration
Report received 60% support. I spoke with many of our largest
shareholders before this vote as part of this process, and while

| 89

Centrica plc Annual Report and Accounts 2025

some of our shareholders were supportive of our proposals,
others expressed a preference for a phased approach to the
salary increase. Following careful consideration, we determined
that a one-off adjustment would achieve alignment to the
market, also taking into account the Group Chief Executive’s
experience in role, and performance. We feel that the
support received on the Policy indicates that the majority
of shareholders are generally supportive of the go-forward
approach to executive pay at Centrica, but we remain mindful
of the mixed shareholder feedback received and will continue
to engage regularly with all of our large shareholders on
executive pay decisions. Following the Remuneration Report
vote at the 2025 AGM, we actively engaged with shareholders
to understand their concerns and gather constructive feedback.
The overall engagement with shareholders has been invaluable
in shaping our ongoing consideration of how best to balance
reward, performance, and accountability. We are grateful to
shareholders for their time and continued support and believe
we have in place a remuneration framework that reflects
stakeholder expectations and rewards the long-term success of
the Group. Further details of our engagement with shareholders
can be found on page 90.
Conclusion
As Centrica continues to deliver its strategy of energising a
greener, fairer future, the Committee will work to ensure that
remuneration outcomes remain aligned with the long-term
interests of shareholders, customers, colleagues, and the
communities we serve.
We remain committed to open dialogue and transparent
reporting. The Committee believes that the remuneration
outcomes for 2025 appropriately reflect performance and are
consistent with the objectives of our Policy – to attract, retain,
and motivate high-performing executives in a highly complex
and regulated environment, while ensuring strong alignment
with stakeholder outcomes.
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 62 to 64. The number of meetings held
during the year and Committee members attendance is
reported on page 64.
Meeting attendees by invitation:
All other Non-Executive Directors, Group Chief Executive,
Group Chief People Officer, and Director, Reward, Wellbeing
and Benefits.
Carol Arrowsmith
On behalf of the Remuneration Committee
18 February 2026

90 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Summary of approach to shareholder engagement on our remuneration approach
As a Remuneration Committee, we are grateful to our shareholders for their time and engagement in the lead up to, and
following our AGM in May. We acknowledge that the Remuneration Report received 60% support, and we have been focused
on maintaining an open and transparent dialogue with our shareholders so that all views are considered as we implement
our remuneration arrangements. Our engagement timeline and the impact of our engagement can be seen below.
Our engagement timeline

Engagement event | Dates
Pre-AGM |
Consultation with key internal stakeholders to understand internal views and determine the proposal for the future reward remuneration. | March – August 2024
Consultation letter sent to 33 institutional investors, representing 48% of Centrica’s share register, to seek feedback on the proposal. | August 2024
Letter sent to proxy agencies (Glass Lewis, the Investment Association and Institutional Shareholder Services). | August 2024
Follow up calls with individual investors to discuss proposal in detail. | August – October 2024
Follow up letter sent to shareholders explaining how feedback was considered in determining the final proposal. | October 2024
Dialogue with investors maintained up until the AGM. | October 2024 – May 2025
AGM | May 2025
Post-AGM |
Letter to shareholders to request additional feedback on votes, including additional calls to gain more detail. | May 2025
Feedback form provided to shareholders to gain insights on voting outcomes. | May 2025
Update statement published, acknowledging the vote and outlining our ongoing intentions to continue to engage with shareholders. | November 2025

| 91

Centrica plc Annual Report and Accounts 2025

Impact of engagement on our proposals

Pay elements | Adjustments/additional rationale provided
Salary | • Whilst the suggestions of a phased increase were considered, overall considerations of the CEO’s performance and experience as well as the current competitive position versus the market, meant the Remuneration Committee felt a need to meet market competitive rates. A one-off adjustment to the CEO salary was therefore implemented. • No significant concerns were highlighted for the CFO’s increase.
Annual bonus quantum | • No significant concerns were highlighted for the CFO’s bonus opportunity increase.
RSP quantum | • Recognising points raised by some shareholders to phase the CEO’s increase in pay, the RSP increase was implemented on a phased basis, with the increase to 200% of salary being implemented a year later than originally planned, in 2026.
Share ownership guidelines | • Increase to the CEO’s minimum shareholding guideline was welcomed.

We are grateful to shareholders for their time and continued support and believe we have in place a remuneration framework that
reflects stakeholder expectations and rewards the long-term success of the Group.

92 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Remuneration at a glance
How we’ve supported our stakeholders in 2025
£140m
Voluntary energy support package
created in 2022-2023 to help
customers and communities
>830,000
Customers and non-customers
received energy bill support through
the British Gas Energy Trust since
2004
Top 50
Ranked in The Times Top 50
Employers for Gender Equality
410
Apprentices joined our business
10,465
Days volunteering
5.5p
Full year dividend per share
520.4m
Shares repurchased in 2025
Customers
Colleagues
Investors
Single figure of total remuneration in FY2025
Group Chief Executive
Group Chief Financial Officer

0 |  | 2,000 |  | 4,000
|  |  |  | £,000 |  |

0 | 1,000 | 2,000
|  |  | £,000

1,039
1,361
2,186
4,731
2,579
628
651
1,220
5,082
845
1,390
2,746
578
720
1,372

Salary | Pension and Benefits |  | AIP | LTIP

― Further details on page 94

| FY2025 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 |  | Business Area | Weighting | Outcome |
| Earnings Per Share |  |  | 37.5% | 45.0% |
| Group Free Cash Flow |  |  |  |  |
| Colleague Engagement |  |  |  |  |
| Climate transition plan progress |  |  |  |  |
| Bord Gáis cost to serve |  |  |  |  |
| BG Residential Energy cost to serve |  |  |  |  |
| BG Service and Solutions gross margin |  |  |  |  |
| Unique customer numbers |  |  |  |  |
| Customer NPS |  |  |  |  |
| CE RAROC |  |  | 37.5% | 60.0% |
| CE cost/income ratio |  |  |  |  |
| CE GW portfolio under management |  |  |  |  |
| CE international expansion |  |  |  |  |
| BG Business Supply – Gross Margin |  |  |  |  |
| CES+ Rough availability |  |  |  |  |
| Spirit Production volume |  |  |  |  |
| Nuclear volumes |  |  |  |  |
| Power assets (excluding nuclear) availability |  |  |  |  |
| MAP portfolio size |  |  |  |  |
| Individual performance |  |  | 25.0% |  |
| Group Chief Executive |  |  |  | 90% |
| Group Chief Financial Officer |  |  |  | 75% |
| Overall outcome (% maximum) |  |  |  |  |
| Group Chief Executive |  |  |  | 61.9% |
| Group Chief Financial Officer |  |  |  | 58.1 % |

| 2023 RSP outcomes
| The 2023 RSP award will vest in full on 21 March 2026. The RSP award was subject to a performance underpin over the three-year performance period from 1 January 2023 to 31 December 2025. 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.

Business Areas

| Group |  | Retail
| Optimisation |  | Infrastructure

| 93

Centrica plc Annual Report and Accounts 2025

| 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 | £1,100,000 | £1,009,000 |  | Salary | £640,000 | £646,000 |
| Target Total Remuneration(1) | £4,510,000 | £4,450,000 |  | Target Total Remuneration(1) | £2,064,000 | £2,378,000 |
| (1) Salary + target annual bonus + target value of long-term incentives + pension but excludes benefits. Excludes share price growth. |

| 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 99. |
| Group Chief Executive |  | Group Chief Financial Officer |

0% | 300% | 600% | 900% | 1,200% | 1,500%
Shareholding as % of salary

0% | 100% | 200% | 300% | 400% | 500%
Shareholding as % of salary

Goal
Goal
400
200
403
Actual
31/12/2025
241
1,293
Actual
31/12/2025
181
222
1,052
Actual
31/12/2024
Actual
31/12/2024
100
148
248
858
306
1,164

| Vested and owned shares |  |  | Vested and owned shares
| Unvested shares with no performance conditions |  |  | Unvested shares with no performance conditions

| 2025 Remuneration |
| The table below sets out a summary of the implementation of the Policy in 2025. |
| ― | Further information can be found on page 107. |  |  |
| Base Salary | Benefits | Pension | Short-term incentive | Long-term incentive |
| CEO: £1.100,000 (+28.7%) CFO: £640,000 (+8.5%) The average increase for the wider workforce in the UK was 3.5%-4.0%. | No change and remains in line with the wider workforce. | 10% of salary in line with the wider workforce. | CEO: 200% of salary at max 100% of salary at target CFO: 175% of salary at max 87.5% 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. |

94 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Directors’ Annual Remuneration Report
Directors’ Remuneration in 2025
This report sets out information on the remuneration of the Directors for the financial year ended 31 December 2025.
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
2025 |  |  |  |  |  |  |  |  |
Chris O’Shea | 1,039 | 681 | 681 | 16 | 2,210 | 104 | 4,731 | 1,159 | 3,572
Russell O’Brien | 628 | 326 | 326 | 16 | 1,220 | 63 | 2,579 | 707 | 1,872
Total | 1,667 | 1,007 | 1,007 | 32 | 3,430 | 167 | 7,310 | 1,866 | 5,444
2024 |  |  |  |  |  |  |  |  |
Chris O’Shea | 845 | 695 | 695 | 16 | 2,746 | 85 | 5,082 | 946 | 4,136
Russell O’Brien | 578 | 360 | 360 | 16 | — | 58 | 1,372 | 652 | 720
Total | 1,423 | 1,055 | 1,055 | 32 | 1,986 | 143 | 6,454 | 1,598 | 4,856

(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 2023 to 31 December 2025 performance period is included
in the table above, based on a share price of 170,74 pence (the three month average share price for the period ending 31 December 2025). Of the £2.2m for Chris O’Shea, £803K
(or 40% of the value) was due to share price growth Of the £1.2m for Russell O’Brien, £444K (or 40% of the value) was due to share price growth. The award will vest in March 2026
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 £184K and
101K for Chris O’Shea and Russell O’Brien have been included respectively. The 2024 figure has been restated based on the share price of 167.73p at the time of the RSP vesting.
(4) Pension allowance is paid in cash, Please see details on page 98.
Single figure for total remuneration (audited)

Non-Executives |  |  |  |  |
| Salary/fees |  | Total
£000 | 2025 | 2024 |  | 2025 | 2024
Kevin O’Byrne(1) | 440 | 111 |  | 440 | 111
Carol Arrowsmith | 104 | 96 |  | 104 | 96
Philippe Boisseau | 79 | 76 |  | 79 | 76
Nathan Bostock | 104 | 101 |  | 104 | 101
CP Duggal | 79 | 76 |  | 79 | 76
Jo Harlow | 99 | 77 |  | 99 | 77
Frank Mastiaux(2) | 22 | 0 |  | 22 | 0
Heidi Mottram(3) | 104 | 96 |  | 104 | 96
Alessandra Pasini(4) | 38 | – |  | 38 | 0
Amber Rudd | 79 | 76 |  | 79 | 76
Sue Whalley | 79 | 76 |  | 79 | 76
Total | 1,227 | 785 |  | 1,227 | 785

(1) Kevin O’Byrne was appointed Chair on 16 December 2024.
(2) Frank Mastiaux joined the Board on 22 September 2025.
(3) Heidi Mottram stepped down from the Board 31 December 2025.
(4) Alessandra Pasini joined the Board on 8 July 2025.

| 95

Centrica plc Annual Report and Accounts 2025

Base salary/fees
The Committee believes that the adjustments to Chris O’Shea’s remuneration in 2025 aligned with competitive market rates given
the size and complexity of Centrica. Chris’ performance and experience over the last five 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.
Following the changes made in 2025, the Committee will increase Chris O'Shea’s salary from £1,100,000 to £1,133,000 per annum,
effective 1 April 2026. This 3% award remains in line with the wider workforce and maintains positioning against the external market.
The salary of Russell O’Brien, Chief Financial Officer, will increase from £640,000 to £659,200 with effect from 1 April 2026.
Russell O’Brien has been Chief Financial Officer for three years and the Committee is pleased with his growth into the role. His salary
and total remuneration is now marginally above the median benchmark for similar CFO roles in the FTSE 100. This 3% award remains
in line with the wider workforce and maintains positioning against the external market.
The Committee is pleased to award salary increases for Executive Directors in 2026 in line with the average increases for the wider
Centrica workforce in the UK. The salary increase budget in 2026 for the wider workforce in the UK will be 3% to 4% and individual
increases can be higher or lower depending on the role. 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.
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. Based on external benchmarking and
salary increases across the UK workforce, the Committee supported an increase of 3% to £453,000 effective 1 April 2026.
This increase reduces the competitive gap to the market and moves the Chair towards median.
Non-Executive Director fees were reviewed in 2025 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 2.5% from £79,000 to £81,000 with effect from 1 January 2026. This change maintains
our competitive position against the median FTSE NED increase, and remains within the UK wider workforce figures.
FY2025 Annual Incentive Plan (AIP) (audited)
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 2025 and 25% was based on individual objectives.
The financial and business performance element for 2025 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 2025.
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 | 10.0p | 11.5p | 13.0p | 11.2p

Centrica achieved solid earnings performance within the target range, resulting in an outturn of 45.0% of maximum 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.

96 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

| Measure | Target | Outcome
Group | Group Free Cash Flow | £(136)m | £(167)m
Group | Colleague engagement | 8.1 | 7.9
Group | Progress towards our Climate Transition Plan – see our People & Planet Plan for further details (see pages 45 and 55 to 56) Targets: Help our customers be net zero by 2050 Be a net zero business by 2040 | Make good progress against the interim climate targets including: Heat pumps sold Hive platform connection and access to smart services Green/flexible energy engagement Engineer green skills Zero carbon power supply Net zero power, gas production and storage assets Liquefied Natural Gas shipping transition Electric vehicle fleet Green investment | On target
Retail | Bord Gáis Cost to serve | €170 per customer | €174 per customer
Retail | British Gas Residential Energy Cost to serve(1) | £120 per customer | £129 per customer
Retail | British Gas Services & Solutions gross margin £m | £653m | £662m
Retail | Unique Customer numbers | 10,399,000 | 10,322,000
Retail | Customer NPS | 34 | 36
Optimisation | Centrica Energy Exceed return on capital employed target (RAROC) | 20.0% | 7.0%
Optimisation | Centrica Energy Cost/Income ratio | 39.0% | 59.0%
Optimisation | Centrica Energy GW portfolio under management | 17.10 | 19.50
Optimisation | Centrica Energy total value created – International Expansion | 3 international hubs | 2 international hubs
Optimisation | British Gas Business Supply – Gross Margin £m | £360m | £432m
Infrastructure | CES+ Rough availability vs demand % | 90.0 | 90.0
Infrastructure | Spirit production volumes (2) | 11.4 mmboe | 10.5 mmboe
Infrastructure | Nuclear volumes | 7,530 GWh | 6,584 GWh
Infrastructure | Centrica Power Assets (excluding nuclear) availability | 93.5% | 93.2%
Infrastructure | MAP portfolio size (‘k meters) | 1,402 | 1,620

(1) Excluding bad debt cost per customer is in line with target
(2) Spirit production volumes are post Cygnus sale
The Group delivered strong financial performance against AOP and Free Cash Flow, despite the challenges in the external
environment and the strategic investment choices made during the year. Performance against the majority of the customer and
operational measures were at target and the Committee noted above target performance across gross margin, customer Net
Promoter Scores, portfolio management and MAP portfolio size. Colleague engagement remained strong for the majority of the
year, and dipped in the last quarter as a result of restructuring impacts. 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 achievement against the financial and business performance element of the AIP at 105% of target (or 52.5% 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 2025. 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 180% of target (or 90% of maximum) was
appropriate. The Committee determined for Russell O’Brien an outcome of 150% of target (or 75% of maximum) under the individual
objectives part of the Annual Incentive Plan.

| 97

Centrica plc Annual Report and Accounts 2025

The table below summarises the key individual objectives for Executive Directors during the year:

| Key objectives performance | Individual performance (as % of maximum)
Chris O’Shea | Capability, Culture and Operational Delivery • Delivered significant organisational change while sustaining employee engagement scores, delivering a revised approach to DEI and demonstrating a ‘One Team’ approach through launching cross business propositions. • Materially advanced the digital agenda for customer channels and internal business operations. This reduced costs, improved resilience, and laid foundations for scaled AI deployment in 2026 • Leadership strength grew through promotions and capability programmes, internal mobility increased, and critical technical skills in net zero, digital and metering were advanced with future ready talent pipelines established. Balance Sheet, Financial Framework and Cash • Centrica deployed capital into major long-term assets (Sizewell C, Isle of Grain) with efficient financing, improved investor sentiment, and strengthened the strategic investment case. • Transformation accelerated with notable savings delivered and further savings identified. Procurement initiatives improved spend discipline and Finance and People partnered with Technology, automating and improving efficiency across the enterprise Shareholder Value, Investment and Portfolio Shaping • Centrica advanced major hydrogen, storage, and grid stability projects across the UK and Ireland, with Sizewell C anchoring long term low carbon value and strengthening system resilience. • Broadened partnerships across hydrogen, storage, nuclear, EV charging and industrial power systems, expanding Centrica’s innovation ecosystem and investment optionality • Advanced key transition projects with major milestones in Rough, Sizewell C, and nuclear exp ansion, ensuring long term contracted returns and system critical infrastructure alignment. • Completed Grain LNG acquisition and Cygnus disposal, while assessing multiple hydrogen and power M&A opportunities aligned with strategic priorities and earnings sustainability | 90.0%
Russell O’Brien | Capability, Culture and Operational Delivery • Defined and commenced implementation of a more efficient & effective operating model, with spend reduction, disciplined investment and progress on transformation • Progress made on delivery of the strategic technology roadmap focused on automation and simplification • Refreshed procurement strategy has embedded stronger discipline and transparency across the organisation, and delivered performance against all KPIs ahead of expectations Balance Sheet, Financial Framework and Cash • Significant advancement of Enterprise Risk Management and the Risk & Control Update Programme across the enterprise to strengthen governance, strategic alignment & value of our risk management processes • Liquidity remained strong, supported by further extensions of our committed credit facilities, a diversified funding toolkit and improved working capital income Shareholder Value, Investment and Portfolio Shaping • Major strategic investments – Sizewell C and Grain LNG – successfully closed under favourable financing structures, demonstrating commitment to disciplined capital deployment and delivering strong returns • Investo r engagement significantly expanded, reaching more than 140 institutions across key regions, sharpening our capital allocation narrative and strengthening shareholder confidence | 75.0%

98 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 61.9% of maximum, which equated to 123.8% of salary or £1,361,250. The table below summarises the
outcomes under the AIP for all Executive Directors:

Measure | Chris O’Shea | Russell O’Brien
EPS | 45.0% | 45.0%
Balanced scorecard | 60.0% | 60.0%
Individual objectives | 90% | 75%
Total AIP (as % of maximum) | 61.9% | 58.1%
Total AIP (£) | £1,361,250 | £651,000

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 2023-25 (audited)
A Restricted Share Plan award was granted on 21 March 2023 and will vest in full on 21 March 2026. The vested shares are subject to
an additional two-year holding period and will be released on 21 March 2028. The RSP award was subject to a performance underpin,
which was assessed over the three-year performance period from 1 January 2023 to 31 December 2025.

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 2025. The Committee concluded that it was appropriate that the RSP vests in full and the award will vest in March 2026, 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 | 1,186,547 | £1,222,500 | March 2026
Russell O’Brien | RSP share award | 125% of salary | 655,148 | £675,000 | March 2026

Pension (audited)
Executive Directors receive a cash allowance, which can be put towards the provision of retirement benefits. Both Executive
Directors received an annual cash allowance of 10% of salary. This is aligned with the maximum employer contribution rate available
to the majority of our UK employees.
We also provide a death in service cover consisting of a lump sum equal to four times salary.

| % 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.

| 99

Centrica plc Annual Report and Accounts 2025

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 2025
as at year-end.
For the Group Chief Executive the minimum shareholding requirement is 400% 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) | 6,525,401 | — | — | 3,325,484 | — | 400 | 1,293
Russell O’Brien (4) | 682,781 | — | — | 1,784,027 | — | 200 | 403
Non-Executives |  |  |  |  |  |  |
Carol Arrowsmith | 49,286 | — | — | — | — | — | —
Philippe Boisseau | 23,382 | — | — | — | — | — | —
Nathan Bostock | 27,000 | — | — | — | — | — | —
CP Duggal | 15,000 | — | — | — | — | — | —
Jo Harlow | 17,600 | — | — | — | — | — | —
Frank Mastiaux | — | — | — | — | — | — | —
Heidi Mottram | 10,000 | — | — | — | — | — | —
Alessandra Pasini | — | — | — | — | — | — | —
Kevin O'Byrne | 280,000 | — | — | — | — | — | —
Amber Rudd(5) | 66,650 | — | — | — | — | — | —
Sue Whalley | 12,314 | — | — | — | — | — | —

(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 169.55 pence, the price on 31 December 2025.
(4) During the period 1 January 2025 to 15 February 2026 both Chris O’Shea and Russell O’Brien acquired 206 shares through the SIP.
(5) During the period 1 January 2025 to 15 February 2026 Philippe Boisseau 1,021 shares through the NED Share Purchase Agreement.
(6) Alessandra Pasini was appointed to the Board on 8 July 2025.
(7) Frank Mastiaux was appointed to the Board on 22 September 2025.
.

100 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Share awards granted in 2025 (audited)
Set out below are details of share awards granted in 2025 to Executive Directors.
2025 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 | 1,126,510 | 150% | 1,650,000 | March 2028 | March 2030
Russell O’Brien | RSP | Conditional share award | 546,186 | 125% | 800,000 | March 2028 | March 2030

(1) The number of shares awarded under the RSP was calculated by reference to a price of 146.47p, being the average of the Company’s share price over the five trading days immediately
preceding the date of grant of 27 March 2025.
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 revie w of overall financial performance over the three-year performance period.
• Whether there have been any sanctions or fines issued by a Regulatory Body (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 (responsibility may be allocated collectively
or individually).
• Whether there has been failure to make appropriate progress against our Climate Transition Plan.
• Return on capital with reference to the cost of capital.
• Total Shareholder Return (TSR) performance over the vesting period, including with reference to the wider energy sector.
• Management of customer numbers over the vesting period.
• Progress against broader ESG commitments.
2025 deferred AIP
The 2025 AIP award was delivered 50% in cash and 50% in deferred shares, which were awarded on 27 March 2025. The face value
of the award is based on the share price on the date of award, which was 148.57p. 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 | 467,574 | 694,687 | March 2028
Russell O’Brien | AIP | Deferred shares | 241,990 | 359,531 | March 2028

| 101

Centrica plc Annual Report and Accounts 2025

2025 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 0.15% (2024: 0.21%)
of the Group’s operating cash flow.
2025
2024

ò | To staff |  | 43% |  | ò | To staff |  | 27%
ò | To Directors |  | 0% |  | ò | To Directors |  | 0%
ò | To government |  | 35% |  | ò | To government |  | 34%
ò | To shareholders |  | 10% |  | ò | To shareholders |  | 6%
ò | Investing activities | 13% |  | ò | Investing activities | 33%

Reward for everyone at Centrica
Centrica’s workforce of over 22,000 colleagues spans many roles, business areas and geographies. Despite this diversity, our
reward approach is designed to unite colleagues behind a shared purpose and values. We aim to ensure every colleague
experiences a reward offering that reflects both their contribution and the needs of the business. These principles apply
consistently across the organisation, including for 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 extends beyond base salary. All colleagues receive fixed pay comprising salary and a broad package
of benefits, including pension arrangements. Many also have the opportunity to earn variable pay – such as annual bonuses,
recognition awards and profit‑sharing schemes.
For customer‑facing and operational roles, variable pay typically represents a smaller proportion of total reward, reflecting the
nature of those roles. For senior positions, a greater share of reward is performance‑based and may be partly delivered in shares
vesting over several years, reinforcing alignment with long‑term shareholder value.
Overall, our reward structure balances fixed and variable pay appropriately for each role, recognising responsibilities, performance and
market benchmarks. This ensures our approach remains fair, competitive and aligned with the long‑term success of the business.

102 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

The chart and details below summarise key aspects of wider workforce reward in the UK. Executive Directors and Centrica
Leadership Team members receive the same core benefits as the wider workforce and on the same terms, reinforcing fairness,
consistency and a shared employee experience.
Fair pay: At Centrica, we remain dedicated to ensuring colleagues earn wages that meet their everyday needs. As an accredited
Real Living Wage employer, we align our pay practices with the standards set by the Living Wage Foundation to ensure fair and
responsible reward for all UK colleagues.
We have continued to prioritise fair and competitive merit increases across the organisation. In 2025, the average merit increase
for our UK workforce was 3.5%, with many colleagues receiving higher adjustments based on role requirements, performance
and capability.
This year, our customer‑facing colleagues received an average pay increase of 4.2%, reflecting our commitment to ensuring our
frontline workforce remains competitively rewarded. For our Field population, we agreed a two‑year pay deal guaranteeing a 4.0%
increase in both 2025 and 2026. These pay outcomes underline our long‑term commitment to providing sustainable, equitable
compensation across the organisation.
Pay for our wider workforce continues to be informed by collective bargaining with recognised trade unions and robust market
benchmarking to ensure fairness, alignment with living standards and competitive positioning. Pay for management roles is set
by reference to individual capability, responsibilities and experience, in comparison to external industry benchmarks.
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 98. During 2025, we met with the
Shadow Board to discuss executive remuneration and continue to support their understanding of how executive remuneration
practices operate.
Looking after colleagues and their loved ones: All UK colleagues have access to comprehensive medical and health support, with
the option to purchase additional cover for their dependents. This includes 24‑hour access to a GP, support for parents, fertility and
adoption pathways, and company‑funded life assurance and personal accident insurance. Our aim is to ensure colleagues and their
families receive timely and meaningful support when they need it most.

| 103

Centrica plc Annual Report and Accounts 2025

Saving for the Future: Centrica provides a range of savings and retirement benefits to help colleagues plan confidently for the long
term. Our Defined Benefit Pension remains fully supported for existing members, while newer colleagues can tailor contributions
through our Defined Contribution Scheme, benefitting from matched contributions and, for many, employer contributions of over
10% of salary. Alongside this, our Lifestyle Savings platform offers retail discounts that help colleagues make their money go further
on everyday purchases.
Recognising that long‑term financial wellbeing extends beyond pensions, we re‑launched our ShareSave scheme in July, giving
colleagues an accessible way to invest in Centrica at a discounted rate. As a key long‑term savings option, Sharesave supports
financial resilience while allowing colleagues to share in Company success. Participation reached 42% of eligible colleagues - well
above national averages - and the supporting financial education sessions were well received. Together, our pension schemes,
savings tools and share plans demonstrate our ongoing commitment to helping colleagues build a secure financial future.
Recognising colleague contribution: In 2025, colleagues received more than 203,000 recognition moments through our digital
platform, celebrating successes, living our values and recognising outstanding contributions across the business. Recognition
remains central to our culture, with colleagues able to be acknowledged by managers or peers at any time, and nominations linked
to meaningful rewards. Our annual bonus scheme also rewards performance across the organisation, with over 5,400 colleagues
participating in frontline schemes and an annual bonus plan in place for Executives and Leadership Team members.
This year we also introduced Total Reward Statements, enhancing transparency around reward. These personalised statements
bring together pay, benefits, incentives and long‑term savings in one place, giving colleagues a clear view of the value they receive
in return for their contribution to Centrica. By making reward easier to understand, we aim to build trust, support informed
decision‑making and help colleagues see how their efforts are recognised through their overall reward package.
Sharing in our successes: All colleagues have the opportunity to share in Centrica’s success through a range of share and incentive
plans. This includes eligibility for our Profit Share Plan, under which free shares are awarded depending on Company performance,
and participation in our Share Incentive Plan (SIP), where colleague contributions are matched by the Company up to a set limit.
In 2025, colleagues also benefitted from a further Global Profit Share award, recognising the Company’s strong performance in
2024 and ensuring colleagues directly share in the value they help create. As of February 2026, the original award of £1,400 is now
worth £1,800, demonstrating the long‑term financial benefit these plans can generate for participants.
Many colleagues, including those in Customer Support and field‑based roles, also take part in quarterly or annual incentive schemes
linked to business performance, while long‑term incentives for senior colleagues reinforce accountability for delivering sustained
value creation over time.
Being an ambassador for Centrica products and services: We encourage colleagues to champion our products and services by
offering discounted energy bills for those who are Centrica customers, alongside preferential rates on services such as homecare
cover, boilers, electric vehicle charging products and smart energy solutions. These benefits help colleagues experience our
products first‑hand and support our ambition to create cleaner, more efficient homes and businesses.
Making a Difference in the World: Colleagues are encouraged to contribute to local communities and causes they care about.
Each year, we provide two paid volunteering days per colleague for community and charity activity. Our Give As You Earn scheme
enables tax‑efficient donations, and the Centrica Colleague Support Fund offers financial assistance to colleagues facing
unexpected hardship once all other avenues of support have been explored.

104 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2020 to 2021 |  | Percentage change from 2021 to 2022 |  | Percentage change from 2022 to 2023 |  | Percentage change from 2023 to 2024 |  | Percentage change from 2024 to 2025
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) | — | -28.0 | — |  | 2.5 | -11.1 | 100 |  | 2.6 | — | 0.3 |  | 4.9 | — | -2.5 |  | 28.65 | — | -2.07
Russell O’Brien (2) | — | — | — |  | — | — | — |  | — | — | — |  | 9.3 | 23.1 | 12.5 |  | 8.47 | — | 12.5
Kate Ringrose(11) |  |  |  |  | 2.5 | 6.7 | 18.7 |  | -83.3 | -81.2 | -84.4 |  |  |  |  |  |  |  |
Non-Executive Directors |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Scott Wheway (13) | — | — | — |  | — | — | — |  | 2.6 | — | — |  | -4.3 | — | — |  | — | — | —
Carol Arrowsmith | — | — | — |  | — | — | — |  | 3.8 | — | — |  | — | — | — |  | 8.33 | — | —
Nathan Bostock(3) | — | — | — |  | — | — | — |  | 32.9 | — | — |  | — | — | — |  | 2.97 | — | —
CP Duggal(4) | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | 3.95 | — | —
Heidi Mottram | 27.8 | — | — |  | — | — | — |  | 3.8 | — | — |  | — | — | — |  | 8.33 | — | —
Kevin O’Byrne(5) (12) | — | — | — |  | — | — | — |  | -20.7 | — | — |  | -15.4 | — | — |  | 297.1 | — | —
Amber Rudd(6) | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | 3.95 | — | —
Philippe Boisseau(7) | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | 3.95 | — | —
Jo Harlow(8) (14) | — | — | — |  | — | — | — |  | — | — | — |  | 1.1 | — | — |  | 28.91 | — | —
Sue Whalley(9) | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | 3.95 | — | —
Alessandra Pasini | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | — | — | —
Frank Mastiaux | — | — | — |  | — | — | — |  | — | — | — |  | — | — | — |  | — | — | —
Average per colleague (excluding Directors) (10) | 1.8 | -10.3 | 16.3 |  | 1.9 | — | — |  | 4.4 | — | 42.3 |  | 5.11 | 1.26 | -2.46 |  | 3.54 | 2.15 | -14.37

(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.
(15) Alessandra Pasini was appointed to the Board on 8 July 2025
(16) Frank Mastiaux was appointed to the Board on 22 September 2025

| 105

Centrica plc Annual Report and Accounts 2025

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
2025 | Option B | 105:1 | 71:1 | 64:1
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 20 20.

2025 | Salary | Total pay and benefits
CEO remuneration | 1,038,750 | 4,731,000
Colleague 25th percentile | 31,604 | 45,058
Colleague 50th percentile | 39,771 | 66,465
Colleague 75th percentile | 56,018 | 74,133

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 2025.
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 94 to produce the ratios.
The ratio of CEO pay compared with the pay for the average
colleague has decreased compared to 2024. This is due to an
increase in the median colleague total pay from 2024. 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. 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 2025, 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
2025 | 4,731 | 61.9 | 100
2024 | 5,082 | 81.3 | 100
2023 | 8,231 | 87.5 | 85
2022 | 4,490 | 89.5 | 76
2021 | 875 | 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

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 2025. 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
Fees received for external appointments of Executive
Directors
Chris O’Shea was appointed as a Non-Executive Director to
the ITT Inc. Board in May 2024. He receives a total fee of
$255,000 per annum which is split as $100,000 cash payment
and the remainder as a share award.

106 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2024 and 2025.

| 2025 £m | 2024 £m | % Change
Share repurchase(1) | 827 | 499 | 66%
Dividends | 237 | 219 | 8%
Staff and employee costs(2) | 1,550 | 1,357 | 13%

(1) 520,443,773 shares were purchased during 2025 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 2025.
Payments for loss of office (audited)
No payments for loss of office were made in 2025.
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 2025 in the areas of employment taxes, regulatory risk and compliance issues
and additional consultancy services.
PwC’s fees for advice to the Committee during 2025 amounted to £137,250 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 2025 AGM, and the Directors’
Remuneration Report, put to the 2025 AGM, was as follows:

Resolution | AGM | Votes for | Votes for % | Votes against | Votes against % | Votes withheld
Directors’ Remuneration Policy | 2025 | 2,934,839,023 | 93.31% | 210,539,977 | 6.69% | 18,933,784
Directors’ Remuneration Report | 2025 | 1,896,022,967 | 60.02% | 1,264,509,543 | 39.98% | 1,781,437

| 107

Centrica plc Annual Report and Accounts 2025

Implementation in the next financial year
The table below sets out details of how we implemented our remuneration policy in 2025, and how we intend to implement the
policy in 2026.

Remuneration element | Implementation in 2025 |  | Implementation in 2026
Base salary | With effect from 1 April 2025, salaries for Executive Directors were: • Group Chief Executive (CEO): £1,100,000 • Group Chief Financial Officer (CFO): £640,000 |  | With effect from 1 April 2026, salaries for Executive Directors are: • CEO: £1,133,000 (+3.0%) • CFO: £659,200 (+3.0%) The salary increase budget in 2026 across with wider workforce in the UK is 3% 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: 175% of salary (87.5% 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: No change
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. | CEO: 200% CFO: 125%
Pensions | The maximum benefit for Executives is 10% of base salary earned during the financial year. This is aligned with the maximum employer contribution rate available to the majority of our UK employees | 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: 400% 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 400% of base salary for the CEO and 200% of base salary for the CFO for a period of two years. | CEO: No change CFO: No change
NED fees |  | With effect from 1 January 2025 | With effect from 1 January 2026
| Chair of the Board | £440,000 | £453,000 (+3.0%)
| Basic fee for Non-Executives | £79,000 | £81,000 (+2.5%)
| Additional fees |  |
| Chair of Audit and Risk Committee | £25,000 | No change
| Chair of Remuneration Committee | £25,000 | No change
| Chair of Safety, Environment and Sustainability Committee | £25,000 | No change
| 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
18 February 2026

108 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Directors’ Remuneration Policy
The Remuneration Policy was last approved by shareholders at the AGM on 8 May 2025.
This section contains a summary of Centrica’s Directors’ Remuneration Policy (Policy) that will govern and guide the Group’s future
remuneration payments. The full version can be found on our website at centrica.com.
The Policy operated as intended in 2025.
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.

| 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.
RSP is an 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.

| 109

Centrica plc Annual Report and Accounts 2025

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
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: • Rem uneration 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 Co mmittee 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.
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.

110 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Purpose and link to strategy |  |  | Operation and clawback |  |  | Maximum opportunity |  |  | Performance measures
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 200% 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.
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 aligned with the maximum employer contribution rate available to the majority of our UK employees. |  |  | Not applicable.
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 compan y-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.

| 111

Centrica plc Annual Report and Accounts 2025

Purpose and link to strategy |  |  | Operation and clawback |  |  | Maximum opportunity |  |  | Performance measures
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.
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 400% and 200% of their base salary respectively. 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. 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 400% 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 400% 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.

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.
Statement of consideration of shareholder views
The Remuneration Committee is committed to open and transparent dialogue with shareholders on remuneration matters.
We believe it is important to maintain good relationships with our shareholders and to understand their views on our remuneration
arrangements. Further details on our engagement with shareholders is described on page 90.

112 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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. These provisions are set to reflect the timeframe in which the
company's financial reporting, audit and risk processes would typically identify one of the malus and clawback trigger events. 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 current 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.
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.

| 113

Centrica plc Annual Report and Accounts 2025

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 2024, 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

114 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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.

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.

100%
31%
24%
21%
100%
35%
27%
24%
* ‘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.

| 115

Centrica plc Annual Report and Accounts 2025

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.
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.
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 Non Executive Director 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 | 8 May 2025 | 3 months | 3 months
Amber Rudd | 10 January 2022 | 8 May 2025 | 3 months | 3 months
Nathan Bostock | 9 May 2022 | 8 May 2025 | 3 months | 3 months
CP Duggal | 16 December 2022 | 8 May 2025 | 3 months | 3 months
Heidi Mottram | 1 January 2020 | 8 May 2025 | 3 months | 3 months
Kevin O’Byrne | 13 May 2019 | 8 May 2025 | 6 months | 6 months
Philippe Boisseau | 1 September 2023 | 8 May 2025 | 3 months | 3 months
Jo Harlow | 1 December 2023 | 8 May 2025 | 3 months | 3 months
Sue Whalley | 1 December 2023 | 8 May 2025 | 3 months | 3 months
Alessandra Pasini | 8 July 2025 | 8 July 2025 | 3 months | 3 months
Frank Mastiaux | 22 September 2025 | 22 September 2025 | 3 months | 3 months

116 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Other statutory information

| Index to Directors’ Report and other disclosures |
| 67 | Annual General Meeting (AGM) |
| 116 | Articles of Association |
| 121 to 133 | Audit Information |
| 62 to 64 | Board of Directors |
| 14 to 15 | Business Overview |
| 66 | Conflicts of Interest |
| 117 | Directors’ indemnities and insurance |
| 113 and 115 | Directors’ service contracts and letters of appointment |
| 99 | Directors’ share interests |
| 118 | Disclosure required under Listing Rule 6.6.1R |
| 43, 60 and 82 to 83 | Diversity |
| Note 11 Page 164 | Dividends |
| Note 27 Page 192 | Events after the balance sheet date |
| Note 19 on page 178, note S2 on pages 194 to 207, and note S6 on pages 220 to 222 | Financial instruments |
| 4 to 57 | Future developments |
| 55 and 255 | Greenhouse Gas (GHG) Emissions |
| 48 and 84 to 85 | Human rights |
| 73 | Internal control over financial reporting |
| 116 | Material shareholdings |
| 42 to 44 | People |
| 117 | Political donations and expenditure |
| Note S8 Page 225 | Related party transactions |
| 14 to 57 | Research and development activities |
| 1 and 18 to 29 | Results |
| 32 to 39 | Risk management |
| 13 and 70 to 71 | Section 172(1) Statement (Director’s Duty) |
| 116 | Share capital |
| 73 | Speak Up |
| 12 to 13, 17 and 67 to 69 | Stakeholder engagement (including employees, suppliers and customers) |
| 42 to 48 and 84 to 85 | Sustainability |
| 49 to 57 | TCFD |
| 12, 42 to 44, 46 to 47, 48, 59, 67 to 69, 95, 101 to 103, 114 and 117 | 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
2025. The Directors’ Report required under the Companies Act
2006 (the Act) comprises this Directors’ and Corporate
Governance Report (pages 59 to 119) including the TCFD section
for disclosure of our greenhouse gas (GHG) emissions in the
Strategic Report (pages 49 to 57) and note 27 (page 192) 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 1 to 57) (which includes the risks
relating to our business), Shareholder Information (page 247) and
details of acquisitions and disposals made by the Group during the
year in note 12 (page 165). The Strategic Report on pages 1 to 57
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 at
centrica.com. The Company proposes to put amended Articles
to its shareholders at the 2026 AGM. Further information on the
changes will be published in the 2026 Notice of Meeting.
Centrica shares
Significant shareholdings
At 31 December 2025, 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 | 25.04.2025 | 2.97688%
JPMorgan Chase & Co. | 25.03.2025 | <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 18 February 2026, the
Company had received no further notifications. Copies of historic notifications and any
notifications received since 18 February 2026, 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 2025 AGM to allot up to 1,676,987,206
ordinary shares as permitted by the Act. A renewal of a similar
authority will be proposed at the 2026 AGM. The Company’s

| 117

Centrica plc Annual Report and Accounts 2025

issued share capital as at 31 December 2025, together with
details of shares issued during the year, is set out in note 26
to the financial statements on page 192.
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 at centrica.com. There are no shareholder agreements
or restrictions in 2025.
Purchase of shares
We regularly review our capital structure and have committed
to returning surplus capital to shareholders, reflecting their
preference through a combination of dividends and share
repurchases.
As permitted by the Articles, the Company obtained shareholder
authority at the 2024 and 2025 AGMs to purchase its own shares up
to a maximum of 536,039,506 and 503,096,162 ordinary shares of
6 14/81 pence each (shares) respectively. A total of 512,388,755
shares were purchased under the 2024 authority and 147,027,443
under the 2025 authority.
At the start of the year, there were 476,778,831 shares held
in treasury. The total number of shares purchased during the
financial year was 520,443,773, which represents approximately
10.3% of the Company’s issued share capital, at an aggregate
cost of approximately £827m. During the year, 39,703,351
shares were used for share schemes and 503,204,250 shares
were cancelled. The purpose of the buybacks was to reduce
the capital of the Company in order to return surplus capital
to shareholders.
As at 31 December 2025, there were 454,315,003 shares held in
the treasury shares account representing approximately 9.0%
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
pages 215 to 217.
The second tranche of the 2025 Extension concluded on
12 January 2026.
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 operate tax-advantaged
Sharesave (SAYE) schemes in the UK and Ireland, and a Share
Incentive Plan (SIP) in the UK. In 2025, 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 2025 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 committed
facility agreements, subordinated fixed notes (including notes
issued under the Company’s medium-term note programme),
bonds and certain long-term, high-value energy contracts and
power purchase agreements and corporate joint venture
agreements.
Under the terms of the committed facility agreements,
subordinated fixed rate notes and bonds, if the acquirer fails
to meet the relevant financial standing requirements, the
counterparties may exercise rights to demand repayment,
require additional security or terminate the relevant
arrangement. Similarly, under the terms of certain power
purchase agreements, if the acquirer is a competitor or does
not meet the required financial criteria, the counterparty may
terminate those agreements.
Additionally, following a change of control of the Company,
certain provisions of the corporate joint venture arrangements
may be impacted. For instance:
• Under the agreements governing the Spirit Energy joint
venture, the Group’s pre-emption rights on any share
transfer by the joint venture partner will be suspended for a
period of 24 months if the acquirer does not meet the specified
requirements under the terms of the shareholders’ agreement;
• Under the agreements governing the Group's investment in
Greener Ideas Limited (GIL), a change of control of the Group
may require regulatory approval, with such approval conditional
upon the acquirer satisfying certain requirements including
financial standing and technical capability. If such requirements
are not met, the export of power generated from GIL’s assets
may be restricted;

118 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

• Under the agreements governing the Group's investment in
EDF Nuclear Generation, on a change of control the Group
loses certain rights including its right to participate on the
boards of the companies in which it has invested, and if the
acquirer is located outside certain specified countries, EDF
Group may require Centrica to sell its investments to EDF
Group at a discounted price; and
• Under the agreements governing the Group’s investment in
Sizewell C, the acquirer will need to provide an ultimate
controller undertaking in favour of Sizewell C. There is a special
share regime enshrined in Sizewell C (Holding) Limited’s
articles of association which could, if the identity of the
acquirer gives rise to any national security and/or public policy
concerns, result in the Group being required to dispose of
certain of its interests in Sizewell C and the rights attaching to
those interests being suspended pending any such disposal.
The Remuneration Policy sets out on page 114 details of
the treatment of the Executive Directors’ pay arrangements,
including the treatment of share schemes in the event
of a change of control.
Branches outside the United Kingdom
The Company and its subsidiaries have established branches in
several countries outside the United Kingdom. The activities of
these branches are incorporated into the financial results of the
Group, although their individual results are not considered
material to the Group’s overall performance.
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 2025 Annual Report and
Accounts:

Information | Location in Annual Report | Page(s)
Capitalised interest (borrowing costs) | Financial statements | 160, note 8
Details of long-term incentive schemes | Remuneration Report | 87 to 88, 98 and 100
Details of arrangements where shareholders have waived dividends | Other Statutory Information | 117

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 24 to 29. 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 40 to 41. Further details of the Group’s liquidity position
are provided in notes 25 and S3 to the financial statements on
pages 188 to 191 and 208 to 214.
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.

| 119

Centrica plc Annual Report and Accounts 2025

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
t he 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 62 to 64.
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 2026
and is signed on its behalf by:
By order of the Board
Raj Roy, Group General Counsel & Company Secretary
18 February 2026

120 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Financial Statements

121 | Independent Auditor’s Report
134 | Group Income Statement
135 | Group Statement of Comprehensive Income
136 | Group Statement of Changes in Equity
137 | Group Balance Sheet
138 | Group Cash Flow Statement
139 | Notes to the Financial Statements
| 139 | 1. | Basis of preparation and summary of significant new accounting policies and reporting changes
| 141 | 2. | Centrica specific accounting measure
| 142 | 3. | Critical accounting judgements and key sources of estimation uncertainty
| 149 | 4. | Segmental analysis
| 153 | 5. | Costs
| 154 | 6. | Results relating to joint ventures and associates
| 155 | 7. | Exceptional items and certain re-measurements
| 160 | 8. | Net finance income/(cost)
| 161 | 9. | Taxation
| 164 | 10. | Earnings per ordinary share
| 164 | 11. | Dividends
| 165 | 12. | Disposals, disposal groups classified as held for sale and acquisitions
| 167 | 13. | Property, plant and equipment
| 168 | 14. | Interests in joint ventures and associates
| 169 | 15. | Other intangible assets and goodwill
| 171 | 16. | Deferred tax assets and liabilities
| 172 | 17. | Trade and other receivables and contract-related assets
| 177 | 18. | Inventories
| 178 | 19. | Derivative financial instruments
| 179 | 20. | Trade and other payables and contract liabilities
| 180 | 21. | Provisions for other liabilities
| 181 | 22. | Post-retirement benefits
| 186 | 23. | Leases, commitments and contingencies
| 188 | 24. | Other investments
| 188 | 25. | Sources of finance
| 192 | 26. | Share capital
| 192 | 27. | Events after the balance sheet date
193 | Supplementary information
235 | Company Statement of Changes in Equity
236 | Company Balance Sheet
237 | Notes to the Company Financial Statements
245 | Gas and Liquids Reserves (unaudited)
246 | Five Year Summary (unaudited)
247 | Shareholder information
248 | Additional information – explanatory notes (unaudited)
253 | People and Planet – Performance measures
256 | Glossary

| 121

Centrica plc Annual Report and Accounts 2025

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 2025 and of the Group’s loss 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 and Company 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.

122 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

3. Summary of our audit approach
Key audit matters | The key audit matters that we identified in the current year were: • valuation of energy supply billed debt provision within British Gas Energy; • revenue recognition in British Gas Energy and CBS Energy Supply; • impairment of the Group’s investment in Nuclear (excluding Sizewell C), including estimates of future price assumptions; • the valuation of complex energy derivative contracts; and • the valuation of the decommissioning provision in Spirit Energy. The interpretation and application of the Electricity Generator Levy (EGL) remains a key source of estimation uncertainty, as disclosed by management in note 3 of the financial statements. However, the absence of any significant change in the underlying estimate in the current year meant this is no longer considered a key audit matter. 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 that we used for the Group financial statements was £68.0m (2024: £79.8m), determined using a blend of adjusted profit before tax and total assets, rather than determined solely based on adjusted profit before tax as in previous years. Adjusted profit before tax is the pre-tax profit adjusted for the impact of exceptional items and certain re-measurements as presented in the Group Income Statement. The blend of this measure with the total assets measure reflects a more stable base which is aligned to the interests of stakeholders and to the business strategy and consistent with the level of business activity.
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: • British Gas Services and Solutions; • Centrica Business Solutions – Assets; • Bord Gáis; and • Centrica Energy Storage+. Centrica Business Solutions – New Energy Services continues to be subject of further audit procedures at the Group level.
Significant changes in our approach | Other than the change in key audit matters discussed above. There were no significant changes in our audit approach when compared to 2024.

| 123

Centrica plc Annual Report and Accounts 2025

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 2025, 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 £3.1bn (2024: £3.3bn) 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 the sensitivities run by the directors and the linkage of these sensitivities to the Group’s principal risks disclosed on pages 32
to 39 of the Group’s annual report and accounts. These sensitivities include the impact of increased margin outflows , a reduction in the
Group’s credit rating, a continuing impact of a low commodity price environment, adverse weather and worsening macroeconomic
factors, a reduction in commodity trading performance, operational disruption such as cyber risk 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.

124 |

| 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 Valuation of energy supply billed debt provisions within British Gas Energy vw
Key audit matter description | The Group supplies gas and power to residential customers in the UK through its British Gas Energy business. Of the Group total of £4,008m (2024: £3,270m) billed trade receivables, UK residential energy customers make up £1,443m (2024: £1,146m). Cost of living challenges, including increased energy bills and mixed macroeconomic conditions, continue to affect customers’ ability to pay their bills. This, coupled with the continued suspension of prepayment meter fitting activity, has led to an increased level of overdue debt. As a result, there continues to be significant judgement in determining the recoverability of customer debt, which raises the risk of material misstatement in determining the billed debt provision at 31 December 2025. Credit losses of £1,038m (2024: £799m) have been recognised on UK residential billed trade receivables, of which £812m (2024: £609m) relate to customer balances in excess of 360 days old. During the course of 2025, migration of UK residential customers from the historic SAP billing system to the new Ensek system continued, with all such customers migrated by year end. To determine the billed debt provision, certain key assumptions and judgements are made. These include: – the appropriateness of historical cash collection data in the new Ensek billing system as a basis for a key provision input, given that historical data in the Ensek system for the most recently migrated customer cohorts is limited; and – the accuracy of the mechanics of the bad debt provision model, which is an Ensek model being applied for the first time rather than the previous, well established, SAP model. Further details on billed debt provisions relating to trade receivables can be found in notes 3 and 17. These matters are also considered by the Audit and Risk Committee in its report on pages 72 to 80.
How the scope of our audit responded to the key audit matter | • We obtained an understanding of the controls relevant to the estimation and determination of bad debt provision model assumptions and inputs. With involvement of our data analytics specialists, we tested the completeness and accuracy of the underlying debt books, including the recalculation of management’s provision rates based on historical cash collection. This involved validation of key metrics such as debt ageing and historical recovery rates by customer class, and independent recalculation of provision rates. • We assessed historical debt collection patterns over 2024 and 2025 in order to estimate an expected profile of the recovery of 31 December 2025 balances. We then applied this profile to 31 December 2025 debt and assessed the impact of these changes on the billed debt provision estimate. • We considered the extent to which the final provision determined by management adequately factored in the current macroeconomic environment and its likely impact on future cash collection. 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 in relation to British Gas Energy receivables, and the disclosures in relation to the provisions as a key source of estimation uncertainty, are appropriate.

| 125

Centrica plc Annual Report and Accounts 2025

5.2 Revenue recognition in British Gas Energy and CBS Energy Supply vw
Key audit matter description | UK energy supply revenue of £15,261m (2024: £15,823m) is a matter of significant audit focus due to its materiality to the Group’s financial statements. Following the migration of all British Gas Energy customers from the legacy SAP system to the Ensek platform during the year, all UK residential revenue and a portion of UK small business revenue is now processed through the Ensek platform. As highlighted in the Audit and Risk Committee’s report at page 73, the Ensek control environment has continued to develop during the year. ISA(UK) 240: “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements”, requires us to presume a risk of fraud within revenue recognition. We have pinpointed this risk to the accuracy and completeness of unread revenue processed through Ensek, given the evolving nature of the controls over this new system and the consumption estimations required to be made in respect of unread meters. Unread revenue comprises both billed and unbilled revenue. In addition, given the ongoing enhancement of general IT controls, as highlighted in section 7.2 of this report, we performed additional audit tests to respond to the general IT control findings in the legacy SAP billing environment, where CBS Energy Supply customers continue to be housed. Given the above factors we have determined British Gas Energy unread revenue (Ensek) and CBS Energy supply revenue (SAP) to be a key audit matter. Further details on revenue recognition relating to unread revenue can be found in notes 3 and 4. These matters are also considered by the Audit and Risk Committee in its report on page 79.
How the scope of our audit responded to the key audit matter | • We obtained an understanding of the relevant Ensek controls, including those regarding the completeness and accuracy of estimated consumption data. We did not plan to place reliance on these controls due to the developing maturity of the control environment. • For the legacy SAP application, our procedures included obtaining an understanding of and testing the underlying revenue controls. Having identified user access security control deficiencies in the Group’s SAP estate, we performed a combination of additional procedures, including but not limited to testing of compensating manual controls to gain comfort over the accuracy and completeness of revenue. • We performed tests of detail over the Ensek unread energy (billed) supply volume and pricing revenue data, agreeing amounts back to contractual tariffs and recalculating estimated volume using industry data. • We evaluated an expectation of the British Gas Energy and CBS 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 tested the completeness and accuracy of the underlying data used in management’s calculation. • We performed a historical accuracy assessment by comparing prior period unbilled revenue estimates to subsequent billed activity to evaluate the accuracy of management’s prior period estimation.
Key observations | We are satisfied that unread revenue recognised through British Gas Energy, and revenue recognised through CBS Energy Supply, including the methodology to generate the unbilled revenue estimate, is appropriate.

126 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

5.3 Impairment of the Group’s investment in Nuclear (excluding Sizewell C), including estimates of future price assumptions vw
Key audit matter description | The Group makes judgements in considering whether the carrying amount of its investment in Nuclear (excluding Sizewell C) is recoverable, and applies estimates and assumptions in determining its recoverable amount. Key assumptions in the determination of recoverable amount include: forecast future commodity prices; forecast cashflows including forecast production and capital expenditure; life extensions and discount rates. We identified a key audit matter around the determination of the recoverable amount of this investment. The Group’s balance sheet includes a net book value of £578m (2024: £794m) interest in its Nuclear investment. In the Infrastructure segment, an impairment of the Nuclear investment of £251m (2024: £48 million) has been recorded within the Exceptional items and certain re-measurements column of the Group Income Statement. The details on the key sources of estimation uncertainty underpinning the impairment for this investment can be found in note 3. Details on the sensitivity of the above impairment assessment to changes in key assumptions such as commodity prices are disclosed in note 7. This includes sensitivities associated with the Group’s commodity price curves if these curves were aligned with a 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 pages 77 to 78.
How the scope of our audit responded to the key audit matter | • We understood management’s process for identifying indicators of impairment and for performing their impairment assessment. • We obtained an understanding of the relevant controls relating to the investment impairment model, the underlying forecasting process and the impairment reviews performed. • We evaluated the forecast future cash flows including key assumptions and inputs into the impairment model, 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, capital expenditure 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 forecast commodity prices. We also 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 assessed management’s disclosures relating to the sensitivity of the Group’s impairment tests to reduced commodity prices, including the Net Zero scenarios. • 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 model. • 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, and consistency with the Group’s accounting policy.
Key observations | We are satisfied that the key assumptions used to determine the recoverable amount of the Group's investment, including forecast future commodity prices, forecast cashflows including forecast production and capital expenditure, life extensions and discount rates, are within a reasonable range. The Group's future commodity price estimates generally fall within the acceptable range. We consider the sensitivity disclosures related to the impact of future commodity price estimates arising from climate change on the Group's impairment assessment 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.

5.4 The valuation of complex energy derivative contracts vw
Key audit matter description | Note 7 of the financial statements discloses a re-measurements loss of £345m for the year (2024: profit of £421m) on energy derivative contracts. Details on the Group’s energy contracts can be found in note 19 and note S3. The key sources of estimation uncertainty associated with energy contracts can be found in note 3 with further details on the presentation of certain re-measurement arising on derivatives disclosed in note 2. The matter is also considered by the Audit and Risk Committee in its report on page 76. 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 £80m (2024: £164m) were recognised at 31 December 2025 and £140m (2024: £131m) 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 and tested the relevant controls relating to the valuation of complex energy derivatives within the Group’s Centrica Energy business. As a result of the user access security deficiencies identified in the valuation system, we performed additional substantive procedures to mitigate the risks presented by the deficiencies. • We assessed the competence, capability and objectivity of management’s internal valuation specialists. • With the involvement of our financial instrument specialists, we assessed 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 energy derivative contracts is materially appropriate.

| 127

Centrica plc Annual Report and Accounts 2025

5.5 The valuation of the decommissioning provision in Spirit Energy vw
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 Infrastructure segment. During the year there were disposals of Spirit Energy’s interest in various gas fields (as explained in note 12 of the Group’s financial statements) however, the Group has continued to hold decommissioning provisions of £1,302m (2024: £1,459m) as at 31 December 2025 and of these £961m (2024: £1,139m) 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. Management has involved specialists to assess and calculate the decommissioning obligations. Given the level of management judgement applied throughout the recognition of decommissioning provisions, we have identified this as a key audit matter and an area of fraud risk. Further details on decommissioning provisions can be found in notes 3 and 21. These matters are also considered by the Audit and Risk Committee in its report on pages 72 to 80.
How the scope of our audit responded to the key audit matter | • We obtained an understanding of the relevant controls around the valuation of the decommissioning provision. • With the 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. • We evaluated the discount rates used by management, 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. Where management has not adopted the operator estimate, they produce their own estimate, and we have assessed the appropriateness of management‘s estimates. • 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 assess them, are appropriate.

128 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 materiality for the financial statements as a whole as follows:

| Group financial statements | Company financial statements
Materiality | £68.0m (2024: £79.8m) | £30.6m (2024: £35.8m)
Basis for determining materiality | We determined materiality using a blend of adjusted profit before tax and total assets, rather than solely based on adjusted profit before tax as in previous years. Adjusted profit before tax is the pre-tax profit adjusted for the impact of exceptional items and certain re-measurements as presented in the Group Income Statement. The blend of this measure with the total assets measure reflects a more stable base which is aligned to the interests of stakeholders and to the business strategy and consistent with the level of business activity. The determined materiality figure is 8.3% of adjusted profit before tax (2024: 5.0%) and 0.4% of total assets (2024: represented 0.4%). | We determined materiality based on 3.0% (2024: 3.0%) of net assets but capped materiality at 45% (2024: 45%) of the Group materiality. Our final materiality constituted 0.4% of net assets (2024: 0.5% of net assets).
Rationale for the benchmark applied | We considered the blended basis for materiality to be the most appropriate benchmark to measure the performance of the Group. This blended basis reflects a more stable base which is aligned to the interest of the stakeholders and to the business strategy. | We considered net assets to be the most appropriate benchmark given the primary purpose of the Company is a holding company.

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% (2024: 70%) of Group materiality | 70% (2024: 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
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £3.4m
(2024: £3.9m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to
the Audit and Risk Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

| 129

Centrica plc Annual Report and Accounts 2025

7. An overview of the scope of our audit
7.1 Identification and scoping of components
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. Our assessment of components is driven by the underlying profit centre structure through
which the management accounts are reported, rather than the segments disclosed in the Group’s annual report and accounts. The
component performance materiality levels that were used ranged from £21.4m to £26.1m (2024: £24.5m to £35.4m). Having performed
this assessment, we established the following audit scope for each of the Group’s businesses.

Components | Audit scope
British Gas Energy | Audit of the component’s financial information
British Gas Services and Solutions | Audit of specified account balances of the component
CBS Energy Supply | Audit of the component’s financial information
Centrica Business Solutions – Assets | Audit of specified account balances of the component
Centrica Business Solutions – New Energy Services | Further audit procedures performed at the Group level
Bord Gáis | Audit of specified account balances of the component
Centrica Energy (London) | Audit of the component’s financial information
Centrica Energy (Aalborg) | Audit of the component’s financial information
Nuclear | Audit of the component’s financial information
Centrica Energy Storage+ | Audit of specified account balances of the component
Spirit Energy | Audit of the component’s financial information

This scoping resulted in 97% of Group revenue, 95% of Group adjusted profit before tax and 88% of Group shareholders’ equity being
subject to audit, excluding those where the G roup engagement team performed specific further audit procedures. The equivalent figures
in 2024 were 98% of Group revenue, 96% of the adjusted profit before tax and 93% of shareholders’ equity.
The design of our audit approach reflects the G roup structure, utilising data extracted from the Group’s systems, to effectively address
risks of material misstatement. We have deployed and utilised data analytics across the Group, providing a more detailed understanding of
the flow of transactions, enabling us to focus our risk assessment and design targeted audit testing procedures. We embed technology
throughout our audit to improve quality and effectiveness, including in the areas of planning, project management, risks and controls
assessment, substantive testing and reporting insights to management and the Audit & Risk Committee.
To support our iterative risk assessment process, across significant account balances, we have used our data analytical tools to scrutinise
large transactional data sets for unusual trends, characteristics, outliers or transaction flows to support our identification of audit risks.
Across the Group we have used our process analytics to automate audit testing in order to enhance both the quality and effectiveness of
the audit. For example:
• In British Gas Energy we substantively recalculate the unbilled revenue estimate, comparing to management’s system estimate (refer to
5.2). In respect of the billed debt provision for residential customers, we also use analytics to independently recalculate management’s
provision (refer to 5.1).
• In Centrica Energy (London), we use data analytics to substantively test gas and power trades from trade confirmations through to cash
settl ement, providing close to 100% coverage in evidencing the trading results.
• In the Spirit Energy business, we use modelling analytics to recalculate the decommissioning provision and to identify the key
assumptions to which the decommissioning model is most sensitive. This enables the audit team to focus on corroborating and
benchmarking the most material assumptions to audit evidence (refer to 5.5).
Across the whole Group, we continued to use profiling technology to identify journal entries that exhibit potential fraud characteristics in
testing the appropriateness of journal entries and other adjustments as part of our response to the risk of management override of controls.
7.2 Our consideration of the control environment
Our audit strategy was designed such that general IT controls reliance is placed 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, with a non-controls reliance approach assumed in less-established areas of the business (for instance, the control
environment around the Ensek platform).
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. The key IT systems we included in scope include the Group’s SAP estate, including the billing platform within British Gas
Energy, general ledger, and consolidation financial reporting systems, the SAP reporting system in Bord Gáis, the Endur trading system in
Centrica Energy (London and Aalborg), and Workday which is used to manage the Group’s payroll processes. As noted by the Audit and
Risk Committee on page 73, there is an ongoing enhancement of general IT controls including in areas such as access management and
segregation of duties. As a result of the status of this upgrade, we were able to place reliance on general IT controls over certain systems
but not others. Where we did not obtain control reliance we revisited our risk assessment, and planned and performed additional audit tests
to respond to the general IT control findings.
In Centrica Energy (London) we obtained an understanding of relevant controls over financial reporting and tested controls over Complex
Level 3 valuations. We adopted a fully substantive approach using our data analytics technology which enables us to test close to 100% of all
Level 2 trades. For Complex Level 3 valuations we followed a controls reliance approach.
As noted in the Audit and Risk Committee report on pa ge 73, t he Group continues to prepare to make an appropriate declaration under
provision 29 of the UK Corporate Governance Code.

130 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 Nuclear investment
(excluding Sizewell C) and Power asset impairment tests. In response, management performed further sensitivities based on forecast
prices aligned to net zero price curves. The net zero price curves for Nuclear (excluding Sizewell C) and Power assets, 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.
To mitigate the Net Zero price scenario risk for the Group’s investment in Nuclear and Power Assets, 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.
• Evalu ated 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 2025 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 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 42
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 and Centrica Energy – Aalborg (“Aalborg”) are audited from the UK and we oversee all component
audits through regular meetings and direct supervision. We visited both Bord Gáis and Aalborg during the year to support our overarching
direction, supervision and oversight procedures. 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 component. 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. 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.

| 131

Centrica plc Annual Report and Accounts 2025

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.
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, the directors 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 havi ng obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– id entifying, 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 con trols 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, treasury, data analytics, commodity pricing, financial instrument 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:
• v aluation of energy supply billed debt provision within British Gas Energy;
• revenue recognition in British Gas Energy and CBS Energy Supply;
• the valuation of complex energy derivative contracts; and
• the valuation of the decommissioning provision 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 by the UK Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA).

132 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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) valuation of
energy supply billed debt provision within British Gas Energy; (2) revenue recognition in British Gas Energy and CBS Energy Supply; (3) the
valuation of complex energy derivative contracts; and (4) the valuation of the decommissioning provision in Spirit Energy. 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.
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 118;
• 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 page 40;
• the directors' statement on fair, balanced and understandable set out on page 119;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 32;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 72; and
• the section desc ribing the work of the Audit & Risk Committee set out on pages 72 to 80.

| 133

Centrica plc Annual Report and Accounts 2025

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 28 July 2025 to audit the
financial statements for the year ending 31 December 2025 and subsequent financial periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm is 9 years, covering the years ending 31 December 2017 to 31 December 2025.
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 & 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 will 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.
Jane Boardman FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
18 February 2026

134 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Group Income Statement

|  | 2025 |  | 2024
|  | 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 | 21,566 | (2,873) | 18,693 |  | 23,836 | (4,723) | 19,113
Insurance revenue | 4,S7 | 799 | — | 799 |  | 800 | — | 800
Total Group revenue |  | 22,365 | (2,873) | 19,492 |  | 24,636 | (4,723) | 19,913
Cost of sales before insurance service expenses (i) | 5,7 | (18,757) | 7,318 | (11,439) |  | (20,368) | 9,064 | (11,304)
Insurance service expenses recognised in cost of sales | 5,S7 | (474) | — | (474) |  | (460) | — | (460)
Re-measurement and settlement of derivative energy contracts | 5,7 | — | (4,748) | (4,748) |  | — | (4,062) | (4,062)
Gross profit/(loss) | 4,7 | 3,134 | (303) | 2,831 |  | 3,808 | 279 | 4,087
Operating costs before insurance service expenses, credit losses on financial assets and exceptional items | 5 | (1,772) | — | (1,772) |  | (1,833) | — | (1,833)
Insurance service expenses recognised in operating costs | 5,S7 | (288) | — | (288) |  | (306) | — | (306)
Credit losses on financial assets | 5,17 | (418) | — | (418) |  | (373) | — | (373)
Exceptional items | 7 | — | (405) | (405) |  | — | (128) | (128)
Operating costs | 5 | (2,478) | (405) | (2,883) |  | (2,512) | (128) | (2,640)
Results relating to joint ventures and associates, net of interest and taxation | 6 | 158 | — | 158 |  | 256 | — | 256
Group operating profit/(loss) | 4 | 814 | (708) | 106 |  | 1,552 | 151 | 1,703
Financing costs | 7,8 | (237) | — | (237) |  | (269) | (68) | (337)
Investment income | 8 | 243 | — | 243 |  | 313 | — | 313
Net finance income/(cost) | 8 | 6 | — | 6 |  | 44 | (68) | (24)
Profit/(loss) before taxation |  | 820 | (708) | 112 |  | 1,596 | 83 | 1,679
Taxation on profit/(loss) | 7,9 | (265) | 102 | (163) |  | (553) | 239 | (314)
Profit/(loss) for the year |  | 555 | (606) | (51) |  | 1,043 | 322 | 1,365
Attributable to: |  |  |  |  |  |  |  |
Owners of the parent |  | 534 | (606) | (72) |  | 984 | 348 | 1,332
Non-controlling interests |  | 21 | — | 21 |  | 59 | (26) | 33

Earnings per ordinary share |  |  |  | Pence |  |  |  | Pence
Basic | 10 |  |  | (1.5) |  |  |  | 25.7
Diluted | 10 |  |  | (1.5) |  |  |  | 25.1
Interim dividend paid per ordinary share | 11 |  |  | 1.83 |  |  |  | 1.50
Final dividend proposed per ordinary share | 11 |  |  | 3.67 |  |  |  | 3.00

(i) Cost of sales includes a £42 million credit (2024: £142 million debit) relating to movements in onerous contracts provisions within the certain re-measurements column.
See note s 2 a nd 7.
The notes on pag es 139 to 234 for m part of these Financial Statements.

| 135

Centrica plc Annual Report and Accounts 2025

Group Statement of Comprehensive Income

|  | 2025 £m |  | 2024 £m
Year ended 31 December | Notes |
(Loss)/profit for the year |  | (51) |  | 1,365
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 | (5) |  | 2
Exchange differences on translation of foreign operations (i) | S4 | 24 |  | (49)
Exchange differences reclassified to the Group Income Statement on disposal | S4 | 2 |  | —
Share of other comprehensive loss of joint ventures related to cash flow hedging, net of taxation | 14,S4 | (8) |  | —
Items that will not be reclassified to the Group Income Statement: |  |  |  |
Net actuarial losses on defined benefit pension schemes, net of taxation | S4 | (324) |  | (84)
Losses on revaluation of equity instruments measured at fair value through other comprehensive income, net of taxation | S4 | (5) |  | (27)
Share of other comprehensive income of associates relating to defined benefit pension schemes, net of taxation | 14,S4 | 4 |  | 38
Other comprehensive loss, net of taxation |  | (312) |  | (120)
Total comprehensive (loss)/income for the year |  | (363) |  | 1,245
Attributable to: |  |  |  |
Owners of the parent |  | (384) |  | 1,211
Non-controlling interests | S11 | 21 |  | 34

(i) Exchange differences on translation of foreign operations includes £24 million of gains (2024: £50 million of losses) attributable to the equity holders of the parent, and
£nil (2024: £1 million of gains) attributable to non-controlling interests.
The notes on page s 139 to 234 f orm part of these Financial Statements.

136 |

| 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 2024 | 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
(Loss)/profit for the year | — | — | (72) | — | (72) | 21 | (51)
Other comprehensive loss | — | — | — | (312) | (312) | — | (312)
Total comprehensive (loss)/income | — | — | (72) | (312) | (384) | 21 | (363)
Employee share schemes and other share transactions | — | — | (12) | 66 | 54 | — | 54
Share buyback programme (note S4) | — | — | — | (770) | (770) | — | (770)
Shares cancelled in the year (note 26) | (31) | — | (681) | 712 | — | — | —
Dividends paid to equity holders (note 11) | — | — | (237) | — | (237) | — | (237)
31 December 2025 | 313 | 2,394 | 2,977 | (2,599) | 3,085 | 411 | 3,496

The notes on page s 139 to 234 f orm part of these Financial Statements.

| 137

Centrica plc Annual Report and Accounts 2025

Group Balance Sheet

|  | 31 December 2025 £m | 31 December 2024 £m
| Notes
Non-current assets |  |  |
Property, plant and equipment | 13 | 1,488 | 1,859
Interests in joint ventures and associates | 14 | 1,171 | 794
Other intangible assets | 15 | 318 | 318
Goodwill | 15 | 504 | 478
Deferred tax assets | 16 | 659 | 339
Trade and other receivables, and contract-related assets | 17 | 254 | 179
Derivative financial instruments | 19 | 276 | 267
Retirement benefit assets | 22 | 12 | 129
Other investments | 24 | 121 | 87
Securities | 25 | 105 | 139
|  | 4,908 | 4,589
Current assets |  |  |
Trade and other receivables, and contract-related assets | 17 | 4,675 | 5,204
Other intangible assets | 15 | 256 | 319
Inventories | 18 | 339 | 904
Derivative financial instruments | 19 | 600 | 1,309
Current tax assets |  | 90 | 70
Securities | 25 | 2 | —
Cash and cash equivalents | 25 | 4,307 | 6,338
|  | 10,269 | 14,144
Assets of disposal groups classified as held for sale | 12 | 238 | —
|  | 10,507 | 14,144
Total assets |  | 15,415 | 18,733
Current liabilities |  |  |
Derivative financial instruments | 19 | (693) | (932)
Trade and other payables, and contract-related liabilities | 20 | (5,581) | (6,392)
Insurance contract liabilities | S7 | (122) | (175)
Current tax liabilities |  | (113) | (181)
Provisions for other liabilities | 21 | (318) | (368)
Bank overdrafts, loans and other borrowings | 25 | (232) | (854)
|  | (7,059) | (8,902)
Liabilities of disposal groups classified as held for sale | 12 | (175) | —
|  | (7,234) | (8,902)
Non-current liabilities |  |  |
Deferred tax liabilities | 16 | (2) | (88)
Derivative financial instruments | 19 | (343) | (455)
Trade and other payables, and contract-related liabilities | 20 | (138) | (175)
Provisions for other liabilities | 21 | (1,271) | (1,493)
Retirement benefit obligations | 22 | (307) | (150)
Bank loans and other borrowings | 25 | (2,624) | (2,658)
|  | (4,685) | (5,019)
Total liabilities |  | (11,919) | (13,921)
Net assets |  | 3,496 | 4,812
Share capital | 26 | 313 | 344
Share premium |  | 2,394 | 2,394
Retained earnings |  | 2,977 | 3,979
Other equity | S4 | (2,599) | (2,295)
Total shareholders’ equity |  | 3,085 | 4,422
Non-controlling interests | S11 | 411 | 390
Total shareholders’ equity and non-controlling interests |  | 3,496 | 4,812

The Financial Statements on pages 134 to 234, of which the notes on pages 139 to 234 form part, were approved and authorised for
issue by the Board of Directors on 18 February 2026 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

138 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Group Cash Flow Statement

Year ended 31 December | Notes | 2025 £m | 2024 £m |
Group operating profit including results relating to joint ventures and associates |  | 106 | 1,703 |
Deduct results relating to joint ventures and associates, net of interest and taxation | 6 | (158) | (256) |
Group operating (loss)/profit before results relating to joint ventures and associates |  | (52) | 1,447 |
Add back/(deduct): |  |  |  |
Depreciation and amortisation | 13,15 | 428 | 473 |
Impairments | 4,7 | 519 | 98 |
Gain on disposals | 12 | (74) | (4) |
(Decrease)/increase in provisions |  | (129) | 110 |
Cash contributions to defined benefit schemes in excess of service cost income statement charge |  | (150) | (208) |
Employee share scheme costs |  | 56 | 47 |
Unrealised losses arising from re-measurement of energy contracts |  | 362 | 96 |
Operating cash flows before movements in working capital relating to business performance and payments relating to taxes, exceptional charges and operating interest |  | 960 | 2,059 |
Decrease in inventories |  | 546 | 164 |
Decrease in trade and other receivables and contract-related assets relating to business performance |  | 413 | 241 |
Decrease in trade and other payables and contract-related liabilities relating to business performance |  | (795) | (657) |
Operating cash flows before payments relating to taxes, exceptional charges and operating interest |  | 1,124 | 1,807 |
Taxes paid | 9 | (375) | (636) |
Operating interest paid | 8 | (16) | (16) |
Payments relating to exceptional charges in operating costs | 7 | (38) | (6) |
Net cash flow from operating activities |  | 695 | 1,149 |
Purchase of businesses and assets, net of cash acquired | 12 | (22) | (92) |
Sale of businesses and interests in joint operations, including receipt of deferred consideration | 12 | 119 | 4 |
Purchase of property, plant and equipment and intangible assets | 4 | (554) | (416) |
Sale of property, plant and equipment and intangible assets |  | 12 | — |
Investments in joint ventures and associates | 14 | (609) | — |
Dividends received from joint ventures and associates | 14 | 135 | 355 |
Interest received |  | 227 | 317 |
Net purchase of other investments | 24 | (42) | (56) |
Settlement of securities | 25 | 57 | 400 |
Purchase of securities | 25 | (13) | (19) |
Net cash flow from investing activities |  | (690) | 493 |
Payments for own shares | S4 | (9) | (8) |
Share buyback programme | S4 | (827) | (499) |
Cash inflow from borrowings | 25 | 13 | 483 |
Financing interest paid | 25 | (181) | (283) |
Cash outflow from repayment of borrowings and capital element of leases | 25 | (156) | (1,022) |
Equity dividends paid | 11 | (237) | (219) |
Net cash flow from financing activities |  | (1,397) | (1,548) |
Net (decrease)/increase in cash and cash equivalents |  | (1,392) | 94 |
Cash and cash equivalents including overdrafts as at 1 January |  | 5,693 | 5,629 |
Effect of foreign exchange rate changes | 25 | (29) | (30) |
Cash and cash equivalents including overdrafts at 31 December | 25 | 4,272 | 5,693 |
Included in the following line of the Group Balance Sheet: |  |  |  |
Cash and cash equivalents | 25 | 4,307 | 6,338 |
Overdrafts included within current bank overdrafts, loans and other borrowings | 25 | (35) | (645) |

The note s on page s 139 to 234 fo rm part of these Financial Statements.

| 139

Centrica plc Annual Report and Accounts 2025

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 2025 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 2 028. 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 bu sinesses. Risks
considered also include the continuing impact of a low commodity
price environment and resultant profitability of the Group’s
Infrastructure business, significant adverse weather events,
increased bad debt charges, trading and hedging
underperformance and operational disruption including cyber risk,
supply chain failures, asset outages or industrial action. 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. T he
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 2025
From 1 January 2025, the following standards and amendments
are e ffective in the Group’s consolidated Financial Statements:
• Amendments to IAS 21 ‘The Effects of Changes in Foreign
Exchange Rates' Lack of Exchangeability, effective from 1 January
2025.
This amend ment has not had a material impact on the consolidated
Financial Statements 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 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;
• Annual improvements to IFRS: Amendments to IFRS 1 'First-time
Adoption of IFRS', IFRS 7, IFRS 9, IFRS 10 'Consolidated Financial
Statements' and IAS 7 'Statement of Cash Flows', 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.

140 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

1. Basis of preparation and summary of significant
new accounting policies and reporting changes
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 new
requirements on presentation and disclosure in the financial
statements, with a focus on the income statement and reporting of
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 will apply the new
standard from its mandatory effective date of 1 January 2027.
Retrospective application is required, and so the comparative
information for the financial year ending 31 December 2026 will be
restated in accordance with IFRS 18.
T he Group has assessed the impact of IFRS 18 and 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. Additionally, the
Group’s investment income is expected to also be shown within
investing activities, rather than Group net finance income/cost. The
Group currently intends to present foreign exchange differences on
intercompany balances within operating activities; clarification is
expected from IFRIC on this matter. Certain other reclassifications
have been identified; these are not expected to be material to the
Group’s financial statements.
The Group has considered the IFRS 18 guidance on aggregated and
disaggregated information and is not anticipating any changes to
the Group Balance Sheet other than separate presentation of
goodwill as a line item. The Group is also evaluating its use of existing
non-GAAP measures and their presentation within the income
statement to ensure compliance with the requirements of IFRS 18.
The Group’s assessment is not yet final 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.
Management’s initial assessment of the Group’s own use purchase
price electricity agreements is that there is sufficient downstream
demand to ensure that the Group remains a net purchaser over a
reasonable period of time with sales of unused electricity being
incidental. The Group does not designate these contracts as the
hedging instrument in a hedge of forecast electricity transactions.
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 other than IFRS 18.
(d) Restatements
The Group has re-evaluated its operating and reportable segments
during the year following a change in the way the business is
organised and financial information is reported. Reportable and
operating segments are now defined as:
• Retail;
• Optimisation; and
• Infrastructure
T hese revised segments reflect the way the Group’s operating
results are reported to, and regularly reviewed by, th e Board to
make decisions about resources to be allocated to the segments
and assess thei r performance. Further information on the reportable
segments of the G roup is shown in note 4.

| 141

Centrica plc Annual Report and Accounts 2025

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 before interest, taxation, depreciation and
amortisation, earnings per share and net cash/(debt)) 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, the elimination on consolidation of the
internal margin and indirect costs on smart meter installation
recognised in Retail and subsequently capitalised in the meter asset
provider business within Infrastructure i s 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.
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 the Group’s Infrastructure assets,
capacity/offtake contracts or downstream demand, which are
typically not fair valued. Similarly, wh ere do wnstream customer
supply contracts or 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 period s). M ovements 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.
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. Also
tax impacts associated with legislative changes or as a result of
commodity price movements may be considered as exceptional.
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 influence the understanding of 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.

142 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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.
Sales of Cygnus, Greater Markham Area and Southern North
Sea interests
On 20 May 2025 the Group announced that it had agreed to sell part
of Spirit Energy’s interest in the Cygnus gas field, reducing its interest
from 61.25% to 15%, t o a subsidiary of Ithaca Energy plc fo r
consideration of £123 mi llion. The sale had a commercial effective
date of 1 January 2025 and completed on 1 October 2025.
On 16 December 2025, the Group further announ ced that it ha d
agreed to dispose of Spirit Energy’s remaining 15% interest in the
Cygnus gas field, together with all other gas producing assets in the
Greater Markham Area and Southern North Sea to Serica Energy p l c
f or a total value of £101 milli on. The Group has classified this as a
disposal group held for sale at the reporting date with completion
expected in the second half of 2026. See note 12 for further details.
The disposal groups did not represent a separate major line of
business or geographical operation, because the Infrastructure
segment retains other producing fields in the United Kingdom, and
hence the Group concluded the disposal group did not constitute a
discontinued operation.
I nvestment in Sizewell C nuclear plant
On 22 July 2025, the Group announced its acquisition of a 15% equity
stake in the Sizewell C nuclear power station for committed
consideration of £1.3 billion, funded primarily through a shareholder
loan agreement provided over the construction phase of the
contract. During 2025, £338 million was provided through the
shareholder loan agreement, together with a £38 million equity
contribution. The transaction completed on 4 November 2025. T he
loan receivable is presented within investments in joint ventures and
associates on the Group Balance Sheet, with the interest thereon
presented within adjusted operating profit in the Group Income
Statement as it reflects part of the return from this investment.
Although the 15% equity ownership interest in the investee is below
the typical threshold of 20% for presumed significant influence under
IAS 28 ‘Investment in Associates and Joint Ventures’, the Group has
determined that it does have significant influence. Accordingly, the
investment is classified as an associate and the Group is applying the
equity method of accounting, presenting the investment within the
same line items as the shareholder loan above . This judgement is
based on qualitative factors demonstrating the Group’s ability to
participate in the financial and operating policy decisions of the
investee. In particular, the Group holds a Board seat and also
possesses specialised industry knowledge that influences strategic
and operational matters and it also benefits from the right to enter an
offtake agreement once the nuclear plant is operational.
The G roup accounts for the shareholder loan agreement under IFRS
9, and presents it as part of the total investment in Sizewell C, with
interest received presented w ithin adjusted group operating profit.
See notes 6 and 14 for details.
Investment in the Isle of Grain LNG terminal
On 14 August 2025 the Group announced its 50% equity investme nt
in the Isle of Grain liquefied natural gas terminal (through Garden
Topco Limited). The transaction completed on 28 N ovember 2025.
The Group has determined that the investment is jointly controlled
by the Group and its co-investor, Energy Capital Partners LLP (ECP).
This critical judgement is based on a control assessment which
determined that decisions affecting the returns of the investment
are taken on a unanimous basis. The control assessment determined
that both investors participate fully in the decisions affecting the
operational decisions of the joint venture which is also governed on a
day-to-day basis by its own independent executive management
committee. The Group has not acquired additional rights to the LNG
terminal services; these are subject to regulatory measure s. As a
result, the investment is presented as a joint venture and accounted
for using the equity accounting method. The inv estment is pres ented
as an investment in joint ventures and associates within the Group
Balance Sheet, with t he results of the joint venture presented within
the Results relating to joint ventures and associates line item in the
Group Income Statement. Were a different judgement reached, that
the Group fully controlled the substantive activities of the business
(as opposed to joint control), full consolidation of the Garden Topco
Limited group would have been required, together with recognition
of ECP’s 50% no n-c ontrolling interest. See note S10(e) for
summarised balance sheet and income statement information.
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 meet the ‘own-use’
exemption and are hence outside the scope of IFRS 9 and accounted
for on an accruals basis. Purchase contracts are accounted for as
executory contracts under IAS 37 and sales contracts are accounted
for under IFRS 15. 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 notes 2(b) and 7(a) for further
details on the accounting treatment of LNG onerous contracts and
hedging derivatives within certain re-measurements. During the year,
an additional £49 million was recognised in respect of onerous LNG
contract provisions (2024: £82 million) an d a total of £99 million was
utilised during the year. Se e note 7 for details.

| 143

Centrica plc Annual Report and Accounts 2025

3. C ritical accounting judgements and key sources
of estimation uncertainty
Regulatory scheme accounting
As a UK energy supplier, the Group is required to comply with all
regulatory schemes mandated by Ofgem’s gas and electricity
supplier licence conditions. The Group incurs material costs under a
number of active schemes, for example: Energy Company
Obligation (ECO), Great British Insulation Scheme (GBIS), Energy
Intensive Industries Support Levy (EII), Warm Home Discount (WHD),
Feed-in Tariff (FIT), Fuel Mix Disclosure (FMD), Renewables
Obligation (ROCS), Capacity Market Levy, Smart Metering
Transition, Supplier of Last Resort (SOLR) and Contracts for
Difference (CFD). Certain of the schemes above also include
provisions for mutualisation charges which require separate
accounting analysis.
Under the requirements of IAS 37 ‘Provisions, Contingent Liabilities
and Contingent Assets’ the Group recognises a liability when there is
a present obligation resulting from a past event and where economic
outflow is probable. The Group determines the existence of a
present obligation on a scheme-by-scheme and the accounting
treatment differs accordingly.
The Group determines that the accounting for regulatory schemes is
an area of critical accounting judgement because determining
whether there is a present obligation may be judgemental.
The Group assesses a range of information when determining the
point at which a present obligation exists. This includes statutory
legislation, communication from Ofgem and the Department of
Energy Security and Net Zero and the treatment of similar issues and
schemes, both past and present. The Group estimates costs using
both external and internal data sources.
Typically, costs incurred under industry regulatory schemes are
calculated with reference to the Group’s market share at a point in
time and recovered in the future through the Ofgem price cap.
Recovery is generally based on revenue earned through future
energy supply, meaning a timing difference may arise between the
recognition of costs incurred, and the future recovery through
charges applied to end consumers. The Group does not have an
entitlement to recover costs incurred at the point of recognition and
consequently does not recognise an asset in relation to future
recoveries.
(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 the 12 months to 31 March 2026 is £79.95/MWh.
It applies to generators whose generation exceeds 50GWh annually,
as well as off-take arrangements with significant minority
shareholders in such generators.
As at 31 December 2025, the Group's share of its Nuclear (excluding
Sizewell C) associate's E GL liabilities amounted to £9 million (31
December 2024: £86 million). This is re corded within the share of
profit after tax from associates. The Group has also made payments
on account to HMRC of £10 million and recognised an expense in the
Group Income Statement, within cost of sales, of £10 million (31
December 2024: £80 million) in relation to its estimated EGL liabilities
for its minority shareholder Nuclear (excluding Sizewell C)
offtake arrangements during the year ended 31 December 2025.
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 interpretation and application of the EGL legislation is unclear in
respect of the Group’s minority shareholding i n the Nuclear
(excluding Sizewell C) 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 c ost 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 current 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 across 2023 to 2025 of up to £155
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 £155 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. (Note that since its inception Centrica has paid over £500
million of EGL either directly or through its share of the Nuclear
(excluding Sizewell C) associate’s payments.)

144 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

3. Critical accounting judgements and key sources
of estimation uncertainty
Credit provisions for trade and other receivables
Typical household energy costs have increased during 2025 due to
high wholesale commodity costs and increased network and levy
charges. Macroeconomic conditions are mixed, interest rates and
inflation have fallen, but unemployment figures have risen. Provisions
relating to customers who pay on receipt of their bill and aged final
debt have increased although cash collection performance has
stabilised in respect of these customers.
These factors result in the assessment and adequacy of credit
provisions for trade and other receivables continuing to be a key
source of estimation uncertainty given the heightened risk of the
probability of default and the increase in the overall loss allowance.
See note 17 for further information.
T he Group utilises a range of factors, including both internal and
external, historic and forward-looking, to assess the adequacy of its
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 changes. In the current year, the Group has
continued to assess the model and has recorded a m acroeconomic
credit provision of £11 millio n (31 December 2024: £49 milli on)
primarily on the basis that the upward trend in typical household
energy bills during 2025 and resultant ability of customers to pay
may not be fully reflected in the model. The assumptions included in
the overall provision include the impact of the increase to Ofgem’s
Energy Price Cap, the continued cost of living challenges and the
resumption of litigation activities which have uplifted the cash
collection on older aged debt. The total credit provision for trade and
other receivables at 31 December 2025 remains high at £1,818 mi llion
(31 December 2024: £1,532 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 of long-lived assets
The Group makes judgements in considering whether the carrying
amounts of its long-lived assets (principally gas field production
assets, Nuclear (excluding Sizewell C) investment (20% economic
interest accounted for as an investment in associate), Sizewell C
investment (15% economic interest accounted for as an investment
in associate), Isle of Grain investment (50% economic interest
accounted for as an investment in joint venture), 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 a number of 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 and is based on third-party median price curves most
closely aligned to our long-term view. The Nuclear investment
(excluding Sizewell C) is the main asset where the recoverable
amount, predominantly determined by forecast future commodity
prices, is a key source of estimation uncertainty.
The recoverable amount of the Nuclear investment (excluding
Sizewell C) 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, together
with an increase in operating and capital expenditure assumptions,
offset by the impact of life extensions at two of the stations. This has
resulted in an impairment of £251 million. Note that baseload power
prices are currently backwardated and so the annual roll-forward
reduction in the net present value (recoverable amount) exceeds the
related annual b ook value r eduction (prior to impairment).
The key sources of estimation uncertainty are power price forecasts,
station lives, outage assumptions and the discount rate. Other input
assumptions include production levels, application of the EGL and
capital and operating expenditure assumptions. 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 recog nition – 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 material source of
estimation uncertainty relating to unread revenue arises in the
respect of gas and electricity sales to UK customers within the Retail
segment, including where changes in customer behaviour in
response to elevated prices affect estimated consumption. At 31
December 2025 unread revenue arising from these customers
amounted to £2,687 million (2024: £2,732 million). A change in these
assumptions of 2% would impact revenue and profit by £54 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.

| 145

Centrica plc Annual Report and Accounts 2025

3. Critical accounting judgements and key sources
of estimation uncertainty
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, government gilt yields appropriate to the forecast
profile of the decommissioning expenditure have remained broadly
unchanged, and therefore the real discount rate used to discount the
decommissioning liabilities at 31 December 2025 has remained at 2%
(31 December 2024: 2%). A 1% increase in the discount rate reduces
the decommissioning liability by approximately £5 3 million (2024:
£70 million) whilst a 1% decrease in the discount rate would increase
the provision by approximately £56 m illion (2 024: £76 million). A 10%
increase in forecast decommissioning costs would increase the
provision by approximately £130 mill ion (2024: £146 million).
Determination of fair values – energy derivatives
The fair values of energy derivatives classified as Level 3 i n
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.
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 p ages 49 to 57. Th ere
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 the Nuclear investmen t (excluding
Sizewell C), battery storage assets, solar assets, and gas peakers/
power stations/engines;
• 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 note 3(c).

146 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 | Segment | Potential impact
Transition away from fossil fuelled heating | Retail | Risk: Reduced gross margin from the sale and servicing of natural gas residential boilers and commercial combined heat and power (CHP) units
Growth in low carbon heating market | Retail | Opportunity: Increased sales and servicing of electric and hydrogen fuelled heating systems, alongside associated opportunities in fabric upgrade including insulation
Transition away from natural gas and energy efficiency | Retail | Risk: Reduced gross margin from the sale of natural gas and growth in energy efficiency
Growth in low carbon heating market | Retail | Opportunity: Increased sales of electricity and clean gas for heating
Growth of EV transport market | Retail | Opportunity: Access to new and growing value pools related to EV charging installations, operation and maintenance, as well as energy supply
Growth in demand for renewable energy | Retail | Opportunity: Growth in behind-the-meter solar and battery markets, driven by decarbonisation and flexible services
Optimisation | Opportunity: Growth in renewable and low carbon generation and production technologies, alongside the need for enabling services such as PPAs, balancing services and battery storage
Infrastructure | Opportunity: To convert Rough gas storage facility to store hydrogen and produce hydrogen at scale
Rising mean temperatures | Retail | 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 the TCFD disclosures
on pa ges 49 to 57), 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, Infrastructure 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 Infrastructure assets by way of sensitivity analysis (see note 7(c)).

| 147

Centrica plc Annual Report and Accounts 2025

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 (or write-backs) 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 and
their carrying value is material, those assets (or contracts) are deemed higher risk.
(ii) Medium risk – Infrastructure assets with reduced exposure to commodity prices or lower carrying values, together with
decommissioning balances, and gross margin energy transition considerations and their potential impact on forward-looking balances
(e.g. Retail and Optimisation goodwill).
(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 2025 (£m): | Goodwill | Intangibles | Investment in joint ventures & associates | Property, plant & equipment | Deferred tax assets/ (liabilities) | Decommissioning provision
Retail | 357 |  |  |  |  |
Brand (mainly Dyno-Rod) |  | 57 |  |  |  |
Application software |  | 181 |  |  |  |
Electric vehicles (vans/cars) |  |  |  | 37 |  |
Non-electric vehicles (vans/cars) |  |  |  | 37 |  |
Optimisation | 147 |  |  |  |  |
Application software |  | 30 |  |  |  |
LNG vessel leases |  |  |  | 39 |  |
Infrastructure - Gas Assets |  |  |  |  |  |
Isle of Grain investment |  |  | 185 |  |  |
Gas fields (Spirit) |  |  |  | 76 | 455 | (961)
Gas storage facility (Rough) |  |  |  |  | 141 | (321)
Infrastructure - Power Assets |  |  |  |  |  |
Nuclear investment (excluding Sizewell C) |  |  | 578 |  |  |
Sizewell C investment |  |  | 392 |  |  |
Battery storage |  |  |  | 140 |  | (4)
Gas peakers/power stations/engines |  |  |  | 485 |  | (16)
Combined Heat and Power (CHP)/other power assets |  |  |  | 27 |  |
Solar |  |  |  | 35 |  |
Infrastructure - Meter Assets |  |  |  | 368 |  |
Group/Other (i) |  |  |  |  |  |
Customer relationships |  | 19 |  |  |  |
Emission certificates |  | 31 |  |  |  |
Land & buildings |  |  |  | 168 |  |
Derivatives deferred tax |  |  |  |  | 100 |
Other (ii) |  |  | 16 | 76 | (37) |
Total (notes 13-16 and 21) | 504 | 318 | 1,171 | 1,488 | 659 | (1,302)

(i) Items included within Group/Other have not been allocated out across business type.
(ii) Other property, plant & equipment includes a cumulative £64 million elim ination adjustment of internal margin and indirect costs on smart meter installation capitalised in
the meter asset provider business within Infrastructure.

|  | Higher
|  | Medium
|  | Lower

Physical Risk Assessment
During the year, the Group reassessed physical climate risks using UK Met Office climate projections and the World Resources Institute
(WRI) Aqueduct platform. Across our portfolio, including offshore assets and the Isle of Grain LNG terminal, no material short‑ or long‑term
financial statement impacts were identified due to existing mitigations and asset resilience, including flood defences at the Isle of Grain LNG
terminal designed to provide protection to at least 2070. Any potential reduction in heat demand under extreme warming scenarios is
considered within revenue estimation processes and does not change the conclusions of our impairment or going‑concern assessments.

148 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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
The valuation of the Nuclear investment (excluding Sizewell C) is
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.
The Group’s gas peakers/power stations/engines are similarly
exposed to climate change risk, with valuations dependent on
forecast gas and electricity prices and electricity demand. During
the year, this asset class has become material to the Group with the
continued construction of two Irish gas peaker assets. The
associated decommissioning obligations are deemed medium risk
as the value is not significant in the context of the Group.
Valuation sensitivity information based on a net zero price forecast
has been provided in note 7(c) for these assets.
Medium risk
The investment in the Sizewell C nuclear new-build power station
has some exposure to physical climate change risk during the build
and operation phases. However, due to the regulated asset base
funding model, the asset valuation itself is less exposed to
commodity prices. Accordingly it is deemed medium risk.
The investment in the Isle of Grain LNG terminal has exposure to
climate change risk both from a physical asset perspective and from
the impact of locational gas price spreads. However, it is deemed
medium risk because the investment carrying value is not significant
in the context of the Group.
Gas field valuations are dependent on forecast commodity prices.
Climate change risk means that there is uncertainty over gas
demand and forecast prices. During the year, the announced
disposals of a large proportion of the Gas field portfolio mean that
the remaining property, plant and equipment carrying value is much
smaller than before and therefore is also deemed medium risk. Note
further investment in exploring for new gas fields has ceased with
the portfolio’s decommissioning obligations expected to be
substantively met by the early 2030s (including the Rough storage
facility).
Deferred tax assets associated with gas fields and the Rough
storage facility are predominantly related to decommissioning cost
recovery and are not considered high risk due to the length of carry-
back rules. Deferred tax assets associated with derivatives are
considered medium risk as the derivatives generally realise within
two years.
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 continues to transition to an electrified vehicle fleet. Non-
electric vehicles are deemed medium risk because their remaining
useful economic lives are generally short.
Retail and Optimisation 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 and associated
decommissioning, solar) or are immaterial. Note that designation as
l ower 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, Repsol and PTT. These are not reflected on the
balance sheet but the Group has certain purchase commitments.
The Group also has long-term gas sale and purchase agreements,
which similarly have long-term commitments (s ee note 23). The
contracts currently have significant value (when considered
together) because of gas price locational spreads but are exposed
to climat e c hange 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.
Governance over climate-related judgements
Climate‑related financial reporting judgements including impairment
assumptions, decommissioning estimates and going concern/
viability considerations are reviewed through the governance
structure describe d in the TCFD disclosures on pages 49 to 57 (th e
Board, Audit & Risk Committee, and Safety, Environment and
Sustainability Committee), with management oversight via the
Centrica Leadership Team and the Group’s risk processes
summarised in the Strategic Report - Principal Risks and
Uncertainties on pa ges 32 to 39.
Interaction with the Climate Transition Plan
The Group’s Climate Transition Plan informs strategic planning,
capital allocation and certain long‑term business assumptions (e.g.
electrification uptake, flexibility needs and hydrogen readiness).
These planning assumptions are considered in viability and useful life
assessments but do not override the market‑based inputs required
for IFRS measurement.

| 149

Centrica plc Annual Report and Accounts 2025

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
During the year the Group’s reportable operating segments have been redefined to reflect the way the Board makes decisions about
resources to be allocated to the segments and assess their performance. See note 1(d) for further details.
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
Retail | • The supply of gas and electricity to residential and business customers in the UK and the Republic of Ireland (i); • the installation, repair and maintenance of central heating and related appliances (including smart meters), to residential and business customers in the UK, and the Republic of Ireland; • the supply of energy services and solutions to large organisations in the UK, Europe and North America; • the provision of fixed-fee maintenance/breakdown services and insurance contracts in the UK; and • the supply of new technologies and energy efficiency solutions in the UK.
Optimisation | • The procurement, trading and optimisation of energy predominantly in the UK and Europe (i); and • the global procurement and sale of LNG.
Infrastructure | • The production and processing of gas and liquids principally within Spirit Energy (i); • the development and operation of power assets, and sale of power generated (including from nuclear assets), in the UK and Europe; • gas and LNG storage in the UK; and • the smart meter asset provider business 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.

150 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

4. Segmental analysis
(b) R evenue

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.

| 2025 |  | 2024 (restated) (i)
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 |
Retail | 16,507 | (207) | 16,300 |  | 17,124 | (79) | 17,045
Optimisation | 6,052 | (776) | 5,276 |  | 6,537 | (560) | 5,977
Infrastructure | 2,004 | (1,215) | 789 |  | 2,912 | (1,298) | 1,614
Total Group revenue included in business performance | 24,563 | (2,198) | 22,365 |  | 26,573 | (1,937) | 24,636
Less: revenue arising on contracts in scope of IFRS 9 included in business performance |  |  | (2,873) |  |  |  | (4,723)
Total Group revenue |  |  | 19,492 |  |  |  | 19,913

(i) Segmental r evenues have been restated to reflect the new operating structure of the Group. See note 1(d) for further details.
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.

| 2025
| 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 supply and services | 15,261 |  |  |  |
Retail | 15,261 | 799 | 16,060 | 240 | 16,300
Energy sales to trading and energy procurement counterparties | 3,259 |  |  |  |
Optimisation | 3,259 | 5 | 3,264 | 2,012 | 5,276
Gas and liquid production | 168 |  |  |  |
Infrastructure | 168 | — | 168 | 621 | 789
| 18,688 | 804 | 19,492 | 2,873 | 22,365

(i) As part of the finalisation process of the government support schemes, revenue of £42 million was recognised (2024: £21 million reversal) during the year in relation
to the Energy Price Guarantee scheme for domestic customers in the Retail segment. In additio n, revenue of £2 million was reversed (2024: £13 million recognised) in
respect of non-domestic schemes, also in the Retail segment.

| 2024 (restated) (i)
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 supply and services | 15,823 |  |  |  |
Retail | 15,823 | 802 | 16,625 | 420 | 17,045
Energy sales to trading and energy procurement counterparties | 3,105 |  |  |  |
Optimisation | 3,105 | 15 | 3,120 | 2,857 | 5,977
Gas and liquid production | 168 |  |  |  |
Infrastructure | 168 | — | 168 | 1,446 | 1,614
| 19,096 | 817 | 19,913 | 4,723 | 24,636

(i) Segmental revenues have been restated to reflect the new operating structure of the Group. See note 1(d) for further details.

| 151

Centrica plc Annual Report and Accounts 2025

4. Segmental analysis
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, h owever
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 | 2025 £m | 2024 £m |  | 2025 £m | 2024 £m
UK | 15,820 | 16,240 |  | 2,913 | 2,860
Republic of Ireland | 1,022 | 1,021 |  | 441 | 325
Europe (excluding UK and Republic of Ireland) | 1,640 | 1,423 |  | 232 | 376
Rest of the world | 1,010 | 1,229 |  | 30 | 15
| 19,492 | 19,913 |  | 3,616 | 3,576

(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.
(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 | 2025 £m | 2024 (restated) (i) £m |  | 2025 £m | 2024 (restated) (i) £m
Retail | 2,441 | 2,518 |  | 424 | 458
Optimisation | 434 | 583 |  | 155 | 339
Infrastructure | 332 | 735 |  | 314 | 799
Segmental adjusted gross margin/adjusted operating profit | 3,207 | 3,836 |  | 893 | 1,596
Reconciling items to Group Income Statement: |  |  |  |  |
Colleague profit share (ii) | (12) | (9) |  | (34) | (25)
Meter asset provider consolidation adjustment (iii) | (61) | (19) |  | (45) | (19)
Total Group adjusted gross margin/adjusted operating profit | 3,134 | 3,808 |  | 814 | 1,552
Certain re-measurements (note 7): |  |  |  |  |
Onerous energy supply/LNG contract provision movement | 42 | (142) |  | 42 | (142)
Derivative contracts | (345) | 421 |  | (345) | 421
Gross profit | 2,831 | 4,087 |  |  |
Exceptional items |  |  |  | (405) | (128)
Operating profit after exceptional items and certain re-measurements |  |  |  | 106 | 1,703

(i) Segmental results have been restated to reflect the new operating structure of the Group. See note 1(d) f or further details.
(ii) The impact of the colleague profit share is excluded because management considers it unrelated to segmental business performance.
(iii) In accordance with IFRS 8, Segmental adjusted gross margin and adjusted operating profit are presented as managed by the Board and accordingly the internal margin
and indirect costs on smart meter installation recognised by Retail and subsequently capitalised in the meter asset provider business within Infrastructure, are eliminated
on consolidation and reported as a reconciling item to the Group Income Statement. The Group Income Statement reflects the capitalisation of costs based on their
nature as incurred by Retail.

152 |

| 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 | 2025 £m | 2024 (restated) (i) £m |  | 2025 £m | 2024 (restated) (i) £m
Retail | (48) | (44) |  | (81) | (68)
Optimisation | (25) | (29) |  | (9) | (11)
Infrastructure | (249) | (300) |  | — | —
Other (ii) | (26) | (36) |  | (1) | (8)
| (348) | (409) |  | (91) | (87)

(i) Segmental results have been restated to reflect the new operating structure of the Group. See note 1(d) for further details.
(ii) Other include s corporate functions, subsequently recharged.
Impairments of property, plant and equipment
During 2025, £5 milli on of net impairments of property, plant and equipment (2024: £22 mill ion) we re recognised within business
performance.
Impairments of intangible assets
During 2025, £6 mill ion of impairments of other intangible assets (2024: £1 million) were recognised within business performance.
(e) C apital 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 | 2025 £m | 2024 (restated) (i) £m |  | 2025 £m | 2024 (restated) (i) £m
Retail | 28 | 30 |  | 885 | 853
Optimisation | 6 | 7 |  | 13 | 9
Infrastructure | 522 | 398 |  | 38 | 31
Other (ii) | 97 | 37 |  | 1 | —
Segmental capital expenditure | 653 | 472 |  | 937 | 893
Meter asset provider consolidation adjustment (iii) | (47) | (19) |  | — | —
Total Group capital expenditure | 606 | 453 |  | 937 | 893
Capitalised borrowing costs (note 8) | (17) | (11) |  | — | —
Inception of new leases and movements in payables and prepayments related to capital expenditure | (97) | (62) |  | — | (1)
Capital expenditure cash outflow subsequent to transfer to held for sale | 15 | — |  | — | —
Purchases of emissions allowances and renewable obligation certificates (note 15) (iv) | — | — |  | (890) | (856)
Net cash outflow | 507 | 380 |  | 47 | 36

(i) Segmental results have been restated to reflect the new operating structure of the Group. See note 1(d) for further details.
(ii) Other includes corporate functions.
(iii) In accordance with IFRS 8, Segmental capital expenditure is presented as managed by the Board and accordingly the internal margin and indirect costs on smart meter
installation recognised by Retail and subse quently capitalised in the meter asset provider business within Infrastructure, is eliminated on consolidation and reported as a
reconciling item to Total Group capital expenditure.
(iv) Purchases of emissions allowances and renewable obligation certificates of £854 million (2024: £828 million) in Retail and £36 million (2024: £28 million) in Infrastructure.

| 153

Centrica plc Annual Report and Accounts 2025

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

| 2025 |  | 2024
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 | (4,899) | — | (4,899) |  | (4,764) | — | (4,764)
Commodity costs | (11,826) | — | (11,826) |  | (13,109) | — | (13,109)
Depreciation, amortisation and impairments | (267) | (172) | (439) |  | (313) | (183) | (496)
Employee costs | (448) | (931) | (1,379) |  | (443) | (867) | (1,310)
Other direct costs | (1,791) | (957) | (2,748) |  | (2,199) | (1,089) | (3,288)
Costs included within business performance before credit losses on financial assets | (19,231) | (2,060) | (21,291) |  | (20,828) | (2,139) | (22,967)
Credit losses on financial assets (net of recovered amounts) (note 17) | — | (418) | (418) |  | — | (373) | (373)
Total costs included within business performance | (19,231) | (2,478) | (21,709) |  | (20,828) | (2,512) | (23,340)
Adjustment for gross cost of settled energy contracts in the scope of IFRS 9 and onerous energy supply and LNG contract provisions (note 7) | 7,318 | — | 7,318 |  | 9,064 | — | 9,064
Exceptional items and re-measurement and settlement of derivative energy contracts (note 7) | (4,748) | (405) | (5,153) |  | (4,062) | (128) | (4,190)
Total costs within Group operating profit | (16,661) | (2,883) | (19,544) |  | (15,826) | (2,640) | (18,466)

(b) Employee costs
Further information on key management personnel and Directors’ remuneration is disclosed in note S8.

Year ended 31 December | 2025 £m |  | 2024 £m
Wages and salaries | (1,163) |  | (1,050)
Social security costs | (150) |  | (122)
Pension and other post-employment benefits costs (note 22) | (159) |  | (138)
Share scheme costs (note S4) | (56) |  | (47)
| (1,528) |  | (1,357)
Capitalised employee costs | 149 |  | 47
Employee costs recognised in business performance in the Group Income Statement | (1,379) |  | (1,310)

(c) Average number of employees during the year

| 2025 Number | 2024 Number
Year ended 31 December
Retail | 18,504 | 18,224
Optimisation | 864 | 885
Infrastructure | 902 | 896
Group Functions | 1,796 | 1,699
| 22,066 | 21,704

154 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

6. Results relating to joint ventures and associates

Results relating to joint ventures and associates represent the results of businesses where we exercise joint control or significant influence and generally have an equity holding of up to 50%.

T he Group’s results relating to joint ventures and associates for the year ended 31 Decem ber 2025 principally arise from its interests in the
following entities, all of which are reported within the Infrastructure segment:
• Garden Topco Limited (‘Isle of Grain’) - joint venture
• Lake Acquisitions Limited (‘Lake’) - associate
• Sizewell C (Holding) Limited (‘Sizewell C’) - associate

| 2025 | 2024 (i) |
Year ended 31 December | Isle of Grain £m | Lake £m | Sizewell C £m | Total £m |  | Total £m
Income | 11 | 583 | — | 594 |  | 808
Expenses before depreciation, amortisation, exceptional items and certain re- measurements | (19) | (258) | — | (277) |  | (295)
Depreciation and amortisation | (4) | (95) | — | (99) |  | (139)
Operating (loss)/profit | (12) | 230 | — | 218 |  | 374
Interest cost | (3) | (5) | — | (8) |  | —
Taxation excluding taxation on exceptional items and certain re-measurements | — | (57) | — | (57) |  | (118)
Share of post-taxation results of joint ventures and associates | (15) | 168 | — | 153 |  | 256
Interest income on shareholder loans (ii) | — | — | 5 | 5 |  | —
Results relating to joint ventures and associates | (15) | 168 | 5 | 158 |  | 256

(i) 2024 results relating to joint ventures and associates pertain solely to Lake.
(ii) Interest income on shareholder loans relates to interest accrued on loans provided to Sizewell C. See note S8 for further information on shareholder loans and other
related parties transactions.
Further information on the Group’s investments in joint ventures and associates is provided in notes 14 and S10.

| 155

Centrica plc Annual Report and Accounts 2025

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 Infrastructure assets. These contracts are economically related to our Infrastructure 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 | 2025 £m | 2024 £m
Certain re-measurements recognised in relation to energy contracts: |  |
Net (losses)/gains arising on delivery of contracts | (299) | 377
Net (losses)/gains arising on market price movements and new contracts | (46) | 44
Net re-measurements included within gross profit before onerous supply contract provision | (345) | 421
Onerous energy supply and LNG contracts provision movement (i) | 42 | (142)
Net re-measurements included within Group operating profit | (303) | 279
Taxation on certain re-measurements (note 9) (ii) | (22) | 161
Certain re-measurements after taxation | (325) | 440

(i) The onerous LNG contracts provision movement amounted to £50 million credit (2024: £82 million debit) and the onerous energy supply contract entry is £8 million
debit (2024: £60 million debit). 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.
(ii) Taxation on onerous energy supply and LNG contracts provision movement amounted to £11 million debit ( 2024: £35 million credit) and taxation on other certain re-
measurements amounted to £11 million debit (2024: £126 million credit).

Year ended 31 December | 2025 £m | 2024 £m
Total re-measurement and settlement of derivative energy contracts | (4,748) | (4,062)
Excluding: |  |
IFRS 9 business performance revenue | (2,873) | (4,723)
IFRS 9 business performance cost of sales | 7,276 | 9,206
Unrealised certain re-measurements recognised in relation to energy contracts included in gross profit | (345) | 421
Onerous contract provision movement (cost of sales) | 42 | (142)
Total certain re-measurements | (303) | 279

The table below reflects the certain re-measurement derivative movements by operating segment:

Year ended 31 December | 2025 £m | 2024 (restated) (i) £m
Retail (Energy Supply) | (755) | 2,151
Infrastructure and Optimisation | 410 | (1,730)
Unrealised certain re-measurements recognised in relation to energy contracts included in gross profit | (345) | 421

(i) 2024 has been restated to reflect the new operating structure of the Group. See note 1(d) for further details.

156 |

| 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 | 2025 £m | 2024 £m
Gain on disposal of interest in the Cygnus gas field (i) | 80 | —
Impairment of power assets (ii) | (264) | (75)
Impairment of gas field assets (iii) | (244) | —
Legacy contract cost provision movement (iv) | 23 | (53)
Exceptional items included within Group operating profit (v) | (405) | (128)
Debt repurchase costs included within financing costs | — | (68)
Exceptional items included within Group profit before taxation | (405) | (196)
Net exceptional item taxation (note 9) (vi) | 124 | 78
Total exceptional items recognised after taxation | (281) | (118)

(i) The disposal of part of Spirit Energy’s interest in the Cygnus gas field to a subsidiary of Ithaca Ene rgy plc completed on 1 October 2025 (post-tax £80 million). See note
12 for further details.
(ii) In the Infrastructure segment, an impairment of the Nuclear investment (excluding Sizewell C) of £251 million (post-tax £251 million) (2024: £48 million (post-tax £48
million)) has been recorded predominantly as a result of the reduction in both forecast and actual power prices, together with an increase to operating and capital
expenditure assumptions, partially offset by life extensions at two stations. Also in the Infrastructure segment, an impairment of £13 million (post-tax £10 million) (2024:
£27 million (post-tax £20 million)) has been recorded related to Solar assets, following lower forecast power price capture, together with an increase in discount rate.
See note 7(c).
(iii) In the Infrastructure segme nt, an impairment of the retained gas field assets of £167 million (post-tax £37 million) has been recorded as a result of an update to the
cessation of production date associated with the Morecambe field, as gas prices fell and the economic cut-off date changed, together with changes to the discount rate
assumptions used in the valuation mode l. A further impairment of gas field assets, included in the disposal group being sold to Serica Energy plc (see note 12), of £77
million (post-tax £18 million) has also been recorded on their transfer to assets held for sale, based on the expected disposal value following falls in forecast gas prices.
See note 7(c).
(iv) Contracts associated with business activity that ceased a number of years ago, predominantly related to construction services, have led t o a decrease in p rovisions of
£23 million (post-tax £19 million) (2024: increase of £53 million (post-tax £45 million)) during t he year. The cash flow associated is £34 million.
(v) 2025 e xceptional items included within Group operating profit are non-cash, with the exception of consideration received for the disposal of the interest in the Cygnus
gas field and legacy contract cost provisions. The consideration received on the disposal of interest in the Cygnus gas field is reflected in the Sale of business line item in
the Group Cash Flow Statement. The cash flows recorded as payments relating to exceptional charges of £38 million (2024: £6 million) in the Group Cash Flow
Statement relate to utilisation of legacy contract cost provisions, together with cash flows associated with previous years’ exceptional restructuring costs.
(vi) Exceptional item taxation includes a debit of £64 million (2024: credit of £46 million) associated with deferred tax related to the gas field assets, in the Infrastructure
segment. This predominantly relates to a re-measurement of the energy profits levy deferred tax liability and a decrease in the deferred tax asset position related to the
recovery of abandonment tax losses, as a result of changes in forecast production profiles and commodity prices, and legislative changes. This item is unrelated to the
other exceptional items.

| 157

Centrica plc Annual Report and Accounts 2025

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
Infrastructure | Power - Nuclear (i) | Decrease in both forecast and actual power prices, together with an update to capital and operating expenditure assumptions, partially offset by the impact of life extensions at Heysham 1 and Hartlepool stations. | 578 | 251

(i) The Nuclear CGU relates to the investment in the Lake Acquisitions Limited group (which holds the existing UK Nuclear fleet) and therefore excludes the recent
investment in Sizewell C.
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 (including capacity rates), station lives,
outage assumptions, discount rate, production levels, the application of the Electricity Generator Levy (EGL) and operating and capital
expenditure requirements. Price assumptions are based on liquid market prices for 2026 to 2029 which are then blended over a one-year
period to long-term price forecasts. The methodology for deriving long-term price assumptions remains consistent with the prior year-end,
using a single third-party curve provider which most aligns to Centrica's beliefs around the evolution of commodity markets, as a basis for
the longer-term commodity price forecasts.
T he EGL, 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 September 2025, the Nuclear business announced that estimated operating lifetimes at Heysham 1 and Hartlepool would be extended by
a further year to March 2028. Based on prices at 31 December 2025, the lifetime extensions increased the value of the Group’s investment
in Nuclear by £36 million.
The VIU calculation assumes that the Sizewell B plant oper ates 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 £153 million. All other stations’ life assumptions are aligned to lifetime closure dates announced by the operator (being between
March 2028 and March 2030).
The VIU calculation is also sensitive to changes in outage assumptions, and the base level generation volumes assumed for the fleet were
decreased 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 £70 million.
The future pre-tax cash flows generated by the investment in the associate are discounted using a pre-tax nominal discount rate of 13.6%
(2024: 15.3%). This equated to a post-tax rate of 8.5% (2024: 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 £32 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 £37 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%
| 2026-2030 | 2025-2029 |  | 2031-2040 | 2030-2039 |  |
| 31 December 2025 | 31 December 2024 |  | 31 December 2025 | 31 December 2024 | 31 December 2025 | 31 December 2024 | 31 December 2025 | 31 December 2024
| £/MWh | £/MWh |  | £/MWh | £/MWh | £m | £m | £m | £m
Baseload power | 65 | 72 |  | 61 | 63 | 196 | 190 | (194) | (193)

(i) Prices are shown in 2024 real terms.
(ii) A 10% change in baseload power prices is 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. Sensitivities are impacted by the effect of the EGL threshold of £75/MWh (adjusted for inflation).
Furthermore, there is also uncertainty due to climate change and international governmental intervention to reduce CO 2 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
forecast prices aligned to the net zero price curve issued by Aurora (a power analytics providers), which assumes governmental policies are
put in place to achieve the temperature and net zero goals by 2050. This net zero forecast currently shows an increase in baseload power
prices when compared with the base case impairment test price assumptions.

158 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

7. Exceptional items and certain re-measurements

| Five-year average price (i) | Ten-year long-term average price (i) | Reversal of pre/post-tax impairment (ii)
| 2026-2030 | 2031-2040 |
| 2025 | 2025 | £m
Baseload power (£/MWh) | 72 | 62 | 157

(i) Prices shown in 2024 real terms.
(ii) Change would lead to a write-back of the carrying value.
While the TCFD analysis identifies Nuclear as strategically exposed to climate transition, under the net zero sensitivity used for IFRS
disclosure, structurally higher long‑term decarbonised power prices result in a potential write‑back of £157 million. This illustrates that
strategic exposure can co‑exist with higher IFRS valuation outcomes where long‑term prices under net zero pathways exceed the
base‑case market‑aligned curves.
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 | Pre-tax Impairment £m
Infrastructure | Gas fields - transferred to disposal group held for sale (i) | Field valuations from the disposal process | (1) | L3 | 77
Infrastructure | Gas fields - retained | A reduction in forecast gas prices, together with a change in the discount rate used in the valuation | (229) | L3 | 167
Infrastructure | Power - Solar assets | A reduction in forecast price capture, together with an increase in discount rate | 35 | L3 | 13

(i) Gas fields - transferre d to disposal groups held for sale rel ates to fields being sold to Serica Energy plc (see note 12) and were individually tested for impairment
immediately prior to their balance sheet reclas sification.
(ii) Recoverable amount for Gas fields relates only to the impaired fields and includes their decommissioning costs, together with related tax impacts. Recoverable amount
for Power - Solar assets relates to the property, plant and equipment balance for the portfolio of assets.
For Gas fields - transferred to asset held for sale, fair value less costs of disposal (FVLCD) is calculated with reference to the expected
disposal process field valuations. For all other assets, 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.
Gas field assets - retained
For gas field 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 (including decommissioning) are computed using
individual economic models. Price assumptions are critical and use liquid market prices for 2026 to 2029, 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.
During the period, the methodology to assess the discount rate to be used on these cash flows was refined, following significant disposal
activity (see note 12). For gas fields reaching the end of their producing life, it was deemed appropriate to discount decommissioning cash
outflows using a post-tax risk-free based nominal rate of 4.9%, consistent with the approach to balance sheet provisioning. The future post-
tax production cash flows continue to be discounted using a post-tax nominal discount rate, derived from the Group’s weighted average
cost of capital and compared with other market participants. At the year-end this rate was 10.0% (2024: 11.0% for all cash flows). This
approach is considered to align with how a typical market participant would value these types of asset.
Once the disposals of the gas field assets transferred to disposal groups held for sale (s ee note 12) have completed, the Group’s interests in
producing gas fields will be substantially reduced. As a result, the retained gas field valuations are no longer materially sensitive to
movement in future gas prices, and therefore no sensitivities for reasonably possible changes in prices or for net zero scenarios have been
provided. This aligns with the Group’s TCFD narrative on portfolio streamlining to reduce transition risk.
Power - Batteries, Gas peakers/power stations and Solar assets
An exceptional impairment of £13 million ha s been recorded in 2025 for Solar assets measured on a FVLCD basis.
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. Post-tax cash flows also include an assessment of
forecast capital and operating expenditure.
The future post-tax cash flows for Solar assets, are discounted using a post-tax nominal discount rate of 7.0% (2024: 6.0%).
The Solar asset valuations are sensitive to commodity price forecasts. A 10% increase in forecast Solar power price capture would lead to
an impairment write-back of £8 million. A 10% reduction would lead to a further impairment of £4 million.

| 159

Centrica plc Annual Report and Accounts 2025

7. Exceptional items and certain re-measurements
A non-exceptional impairment of £6 million has been recorded in 2025 for Batteries measured on a FVLCD basis. The recoverable amount
for the portfolio is £140 million.
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
o n thi rd-party price forecasts, together with an assessment of extrinsic value capture. Post-tax cash flows also include an assessment of
forecast capital and operating expenditure.
The future post-tax cash flows for Batteries are discounted using a post-tax nominal discount rate of 8.5% (2024: 8.0%).
The Battery asset valuations are sensitive to commodity price forecasts. A 10% increase in forecast Battery revenue capture would lead to
an impairment write-back of £12 million (capped at historic cost). A 10% reduction would lead to a further impairment of £32 million.
For Gas peakers/power stations, 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. Post-tax cash flows also include an assessment of forecast capital and operating
expenditure.
The future post-tax cash flows for Gas peakers/power stations are discounted using a post-tax nominal discount rate of 8.0% (2024: 8.0%).
No net impairment or write-back has been required in 2025 for Gas peakers/power stations. Nonetheless, the Gas peaker/power station
asset valuations are sensitive to commodity price forecasts. The portfolio carrying value is £485 million. A 10% increase in forecast Gas
peaker/power station revenue would lead to an impairment write-back of £48 million (capped at historic cost). A 10% reduction would lead
to an impairment of £55 million.
Furthermore, there is also uncertainty due to climate change and international governmental intervention to reduce CO 2 emissions and the
likely impact this will have on both power demand and forecast price capture. As a result, a further sensitivity based on the forecast prices
aligned to the net zero price curves issued by Aurora (a power analytics providers), which assumes governmental policies are put in place to
achieve the temperature and net zero goals by 2050 has been calculated for these assets. Across the Batteries, Gas peakers/power
stations and Solar assets, an additional impairment of c.£50 million would be required, under a forecast net zero scenario which is derived
from Aurora price curves with certain in-house assumptions.
The combined additional impairment under the net zero sensitivities is primarily due to capture-rate assumptions and merchant revenue
volatility. These outcomes are consistent with the TCFD characterisation of flexible assets as having low‑to‑moderate valuation impact and
do not change the conclusions of the base‑case impairment tests.

160 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

8. Net finan ce 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.

| 2025 |  | 2024
| 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 | — |  | 243 |  | 243 |  | — |  | 313 |  | 313
Interest cost on bonds, bank loans and overdrafts | (189) |  | — |  | (189) |  | (235) |  | — |  | (235)
Interest cost on lease liabilities | (13) |  | — |  | (13) |  | (13) |  | — |  | (13)
| (202) |  | 243 |  | 41 |  | (248) |  | 313 |  | 65
Net gain on revaluation | 6 |  | — |  | 6 |  | — |  | — |  | —
Notional interest arising from discounting | (23) |  | — |  | (23) |  | (23) |  | — |  | (23)
| (219) |  | 243 |  | 24 |  | (271) |  | 313 |  | 42
Other interest charges (i) | (35) |  | — |  | (35) |  | (9) |  | — |  | (9)
Capitalised borrowing costs (ii) | 17 |  | — |  | 17 |  | 11 |  | — |  | 11
Financing (cost)/income before exceptional items | (237) |  | 243 |  | 6 |  | (269) |  | 313 |  | 44
Exceptional items (iii) | — |  | — |  | — |  | (68) |  | — |  | (68)
Financing (cost)/income | (237) |  | 243 |  | 6 |  | (337) |  | 313 |  | (24)

(i) Other interest charges includes interest charged on cash collateral, and fees for letters of credit. The cash flow assoc iated is £16 million (2024: £16 million).
(ii) Borrowing costs have been capitalised using an average rate of 7.34% ( 2024: 8.54%).
(iii) During 2024 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.

| 161

Centrica plc Annual Report and Accounts 2025

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

| 2025 |  | 2024
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 | (126) | (65) | (191) |  | (383) | 146 | (237)
UK energy profits levy | (131) | (18) | (149) |  | (243) | — | (243)
UK petroleum revenue tax | 7 | — | 7 |  | 37 | — | 37
Non-UK tax | (19) | 11 | (8) |  | (35) | (17) | (52)
Adjustments in respect of prior years – UK | 10 | 45 | 55 |  | (1) | (50) | (51)
Adjustments in respect of prior years – non-UK | (6) | — | (6) |  | (7) | — | (7)
Total current tax | (265) | (27) | (292) |  | (632) | 79 | (553)
Deferred tax |  |  |  |  |  |  |
Origination and reversal of temporary differences – UK | (21) | 169 | 148 |  | (8) | (22) | (30)
UK energy profits levy | 28 | (5) | 23 |  | 70 | 188 | 258
UK petroleum revenue tax | (5) | — | (5) |  | (2) | — | (2)
Origination and reversal of temporary differences – non-UK | 1 | — | 1 |  | 2 | (9) | (7)
Adjustments in respect of prior years – UK | (8) | (35) | (43) |  | 14 | 3 | 17
Adjustments in respect of prior years – non-UK | 5 | — | 5 |  | 3 | — | 3
Total deferred tax | — | 129 | 129 |  | 79 | 160 | 239
Total UK tax | (246) | 91 | (155) |  | (516) | 265 | (251)
Total non-UK tax | (19) | 11 | (8) |  | (37) | (26) | (63)
Taxation on profit/(loss) (i) | (265) | 102 | (163) |  | (553) | 239 | (314)

(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% (2024: 25%). Gas production activities are taxed at a
rate of 30% ( 2024: 30%), a supplementary charge of 10% (2024: 10%), plus the Energy Profits Levy of 38% (2024: 35.5%) to give an overall
tax rate of 78% (2024: 75.5%). Certain gas production assets in the UK are subject to the UK petroleum revenue tax (PRT) regime at the
current tax rate of 0% (2024: 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% (2024: 12.5%) in the Republic of Ireland, 22% (2024: 22%) in Denmark and
17% (2024: 17%) in Singapore.
The Group is subject to a minimum corporation tax rate of 15% in all jurisdictions as a result of the implementation of the OECD’s Base
Erosion and Profit Shifting (BEPS) initiative. Where the effective tax rate falls below 15% in a particular jurisdicti on, a to p up tax is payable.
Prior year adjustments occur when new information leads to changes in estimates or judgements made in 2024 and earlier years.
Movements in deferred tax liabilities and assets are disclosed in note 16. Tax on items taken directly to equity is disclosed in note S4.

162 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 p rofit/(loss) bef ore taxation are as follows:

| 2025 |  | 2024
| 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/(loss) before taxation | 820 | (708) | 112 |  | 1,596 | 83 | 1,679
Deduct results relating to joint ventures and associates, net of interest and taxation | (158) | — | (158) |  | (256) | — | (256)
| 662 | (708) | (46) |  | 1,340 | 83 | 1,423
Tax on profit/(loss) at standard UK corporation tax rate of 25% (2024: 25%) | (166) | 177 | 11 |  | (335) | (21) | (356)
Effects of: |  |  |  |  |  |  |
Impairment on non-qualifying assets | — | (64) | (64) |  | — | (12) | (12)
Other permanent differences | — | — | — |  | 5 | 1 | 6
Electricity Generator Levy | (2) | — | (2) |  | (20) | — | (20)
Higher rates applicable to gas production activities profits/ (losses) | 13 | 3 | 16 |  | (61) | 121 | 60
Energy Profits Levy (charge)/credit for the year | (103) | 34 | (69) |  | (173) | 177 | 4
Energy Profits Levy re-measurement of deferred tax balances | — | (57) | (57) |  | — | 11 | 11
Petroleum revenue tax | (15) | — | (15) |  | 20 | — | 20
Non-UK tax rates (excluding gas production activities) | 12 | (11) | 1 |  | 10 | 16 | 26
Movements in uncertain tax provisions | (15) | — | (15) |  | — | — | —
Write-back of deferred tax assets | 7 | — | 7 |  | — | 13 | 13
Disposal of business | — | 20 | 20 |  | — | — | —
Prior year adjustment | 1 | 10 | 11 |  | 9 | (47) | (38)
Other tax deductible/(non-tax deductible) items | 3 | (10) | (7) |  | (8) | (20) | (28)
Taxation on profit/(loss) | (265) | 102 | (163) |  | (553) | 239 | (314)
Less: movement in deferred tax | — | (129) | (129) |  | (79) | (160) | (239)
Total current tax | (265) | (27) | (292) |  | (632) | 79 | (553)

The Group is subject to taxation in several 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 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 2025 the provision for uncertain tax items was £57 million (2024: £42 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 rat es) will be record ed through the profit
before tax of the Group. As at 31 December 2025 the indemnity in respect of the tax disputes was £10 9 mi llion (2024: £100 million).

| 163

Centrica plc Annual Report and Accounts 2025

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 gas production 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 78% (consisting of ring fence corporation tax of 30%, supplementary charge of 10%, and the Energy Profits Levy
(EPL) of 38%) versus the 25% UK statutory corporation tax rate.
The Energy Security Investment Mechanism (ESIM) applies as a way of curtailing the application of EPL in certain circumstances.
Accordingly, the EPL 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 below the 2025-2026 threshold of US$74.21
per barrel for oil and 57 pence per therm for gas (uprated each year). If the EPL ceases to apply, the headline rate on ring fence profits will
reduce to 40%.
Based on the independent Office for Budget Responsibility’s forecast, w hile oil prices are currently forecast to be below the ESIM threshold,
gas prices are above the threshold in this forecast, though only by around 0.04 pence per ther m i n the third quarter of 2028.
As part of the Autumn Budget delivered on 26 Novem ber 2025, the government has announced a permanent successor to EPL, t he Oil and
Gas Price Mechanism (OGPM), which will apply once EPL ends (either from 1 April 2030 or earlier if the ESIM is triggered). The OGPM, when
enacted, will apply at a rate of 35% to revenues generated from oil and gas sales above price thresho lds for each financial year on a
transaction by transaction basis. The rates announced for 2026 to 2027 are US$9 0/barrel for oil and 90 pence per therm for gas should the
OGPM be enacted and the ESIM is triggered.
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 (EGL) 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 £79.95/MWh (2024: £77.94/
MWh). The benchmark price is indexed on 1 April each year by reference to the Consumer Price Index for the previous December. The EGL
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 EGL 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 EGL 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).
The Governments of the UK, Republic of Ireland, Denmark and Singapor e (the main jurisdictions in which the Group operates) legislated for
a minimum tax rate of 15% to apply under Pillar 2.
The Group does not expect its tax liabilities to be materially increased as a result of the implementation of the Pillar 2 rules. The Republic of
Ireland is the only jurisdiction that is likely to give rise to additional tax payable by the Group. The impact on the Group’s effective tax rate
based on 2025 profits is less than 1%.
(d) Relationship between current tax charge and taxes paid

| 2025 |  | 2024
| UK £m | Non-UK £m | Total £m |  | UK £m | Non-UK £m | Total £m
Year ended 31 December |
Current tax charge/(credit): |  |  |  |  |  |  |
Corporation tax | 285 | 14 | 299 |  | 531 | 59 | 590
Petroleum revenue tax | (7) | — | (7) |  | (37) | — | (37)
Total current tax on results for the year (per note 9(b)) | 278 | 14 | 292 |  | 494 | 59 | 553
Current tax included in other comprehensive income (i) | 18 | — | 18 |  | (36) | — | (36)
Total current tax charge | 296 | 14 | 310 |  | 458 | 59 | 517
Taxes paid/(refunded): |  |  |  |  |  |  |
Corporation tax | 339 | 38 | 377 |  | 493 | 144 | 637
Petroleum revenue tax | (2) | — | (2) |  | (1) | — | (1)
| 337 | 38 | 375 |  | 492 | 144 | 636
Included in the following lines of the Group Cash Flow Statement: |  |  |  |  |  |  |
Taxes paid |  |  | 375 |  |  |  | 636
Included in cost of sales in the Group Income Statement: |  |  |  |  |  |  |
Electricity Generator Levy payable and paid (ii) |  |  | 10 |  |  |  | 80

(i) Current tax movements relating to pension deficit payments are reported in other comprehensive income.
(ii) This excludes the share of Electricity Generator Levy recognised in the Nuclear (excluding Sizewell C) a ssociate.
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 pri or year’s p rofits. 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.

164 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 loss attributable to equity holders of the Company for the year of £72
million (2024: £1,332 mil lion profit) b y the weighted average number of ordinary shares in issue during the year of 4,785 million (2024: 5,187
million). The number of shares excludes 563 million ordinary shares (2024: 573 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 563 million shares do not include shares expected to be repurchased as part of the Group’s share buyback
programme during 20 26. 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 134 million (2024: 119 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

| 2025 |  | 2024
Year ended 31 December | £m | Pence per ordinary share |  | £m | Pence per ordinary share
Earnings – basic | (72) | (1.5) |  | 1,332 | 25.7
Net exceptional items after taxation (notes 2 and 7) (i) | 269 | 5.6 |  | 132 | 2.5
Certain re-measurement losses/(gains) after taxation (notes 2 and 7) (i) | 337 | 7.1 |  | (480) | (9.2)
Earnings – adjusted basic | 534 | 11.2 |  | 984 | 19.0
Earnings – diluted (ii) | (72) | (1.5) |  | 1,332 | 25.1
Earnings – adjusted diluted | 534 | 10.9 |  | 984 | 18.5

(i) Net exceptional items after taxation and certain re-measurement losses/(gains) after taxation are adjusted to reflect the share attributable to non-controlling interests.
(ii) Potential ordinary shares are not treated as dilutive when they would decrease a loss per share.
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.

| 2025 |  | 2024
| £m | Pence per ordinary share | Date of payment |  | £m | Pence per ordinary share | Date of payment
Prior year final dividend | 150 | 3.00 | 5 Jun 2025 |  | 141 | 2.67 | 11 Jul 2024
Interim dividend | 87 | 1.83 | 30 Oct 2025 |  | 78 | 1.50 | 14 Nov 2024
| 237 |  |  |  | 219 |  |

The Directors propose a final dividend of 3.67 pence per ordinary share for the year ended 31 December 2025 (which would total
£169 million based on shareholding at that date). The dividend will be paid on 14 May 2026 to those shareholders registered on 10 April 2026.
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 She et on pag e 236. At 31 December 2025, Centrica
plc’s Company-only distributable reserves were c.£5.4 billio n (2024: c.£4.0 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.

| 165

Centrica plc Annual Report and Accounts 2025

12. D isposals, disposal groups classified as held for sale and acquisitions

This section details disposals, business combinations and asset acquisitions made by the Group.

(a) Disposals
On 20 May 2025 the Group announced that it had agreed to sell part of Spirit Energy’s interest in the Cygnus gas field, reducing its interest
from 61.25% to 15%, to a subsidiary of Ithaca Energy plc. The headline consideration of £116 million was increased by the cash flows
generated by the disposal group from the c ommercial effective date of 1 January 2025 up to the legal completion date of 1 October 2025
(at which point control passed), resulting in a final consideration of £123 million.
I n applying IFRS 5 ‘N on-current assets held for sale and discontinued operations’, the Group has judged that there is one disposal group
relating to the above interest in the Cygnus gas field, which was classified as held for sale as at 20 May 2025. The disposal group, which is
included in the Infrastructure segment, did not represent a separate major line of business or geographical operation and hence the Group
has concluded that it did not constitute a discontinued operation. A separate disposal group was held for sale at 31 December 2025 - see
note 12(c).
Details of the assets and liabilities of the disposal group at completion of 1 October 2025 are shown below.

| Cygnus £m
Non-current assets |
Property, plant and equipment | 234
Current assets |
Inventories | 12
Assets disposed | 246
Current liabilities |
Trade and other payables, and contract-related liabilities | (14)
Non-current liabilities |
Deferred tax liabilities | (99)
Provisions for other liabilities | (91)
| (190)
Liabilities disposed | (204)
Net assets disposed | 42
Consideration received (net of transaction costs of £1 million) | 122
Gain on disposal before and after taxation (note 7(b)) | 80

The results of the disposal group during 2025 reported in business performance are as follows:

| Cygnus £m
Operating profit | 96
Taxation on profit | (75)
Profit after taxation | 21

All other disposals undertaken by the Group were immaterial, both individually and in aggregate. These amounted to a loss on disposal of £6
million and net cash outflow of £3 million.

166 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

12. Disposals, disposal groups classified as held for sale and acquisitions
(b) Assets and liabilities of disposal groups held for sale
On 16 December 2025 the Group announced that it had agreed to sell the remaining 15% of Spirit Energy’s interest in the Cygnus gas field
and all other gas producing assets in the Greater Markham Area and Southern North Sea to Serica Energy p lc. The sale has a commercial
effective date of 1 January 2025 with a headline consideration of £57 million and the transfer of £44 million of decommissioning liabilities.
The Group has retained £159 million of decommissioning liabilities in relation to the disposal group at the year-end date. The sale is expected
to complete in the second half of 2026.
In applying IFRS 5 ‘N on-current assets held for sale and discontinued operations’, the Group has judged that there is one disposal group
classified as held for sale. The assets and liabilities comprising the disposal group were classified as held for sale as at 16 December 2025.
This is on the basis that at that point, the disposal group was available for immediate sale, subject only to terms that are customary for sales
of such assets, and the sale was highly probable. The disposal group, which is included in the Infrastructure segment, did not represent a
separate major line of business or geographical operation and hence the Group has concluded that it did not constitute a discontinued
operation.
On 23 December 2025 the Group signed a sale and purchase agreement to dispose of Centrica Business Solutions Italia Srl and Centrica
Business Solutions B.V. to Joulz B.V. for a headline consideration o f €90 million. Legal completion occurred on 6 February 2026.
In applyin g IFRS 5 ‘No n-current assets held for sale and discontinued operations’, the Group has judged that there is one disposal group as
both subsidiaries are being disposed of in a single transaction. The assets and liabilities comprising the disposal group were classified as held
for sale as at 23 December 2025. This is on the basis that at that point, the disposal group was available for immediate sale, subject only to
terms that are customary for sales of such assets, and the sale was highly probable. The disposal group, which is included in the Retail
segment, did not represent a separate major line of business or geographical operations and hence the Group has concluded that it did not
constitute a discontinued operation.
Details of the assets and liabilities of the disposal groups at 31 December 2025 are shown below.

| Italy and Netherlands solutions businesses - Retail | Spirit fields - Infrastructure | Total
| £m | £m | £m
Non-current assets |  |  |
Property, plant and equipment | 34 | 141 | 175
Trade and other receivables, and contract-related assets | — | 2 | 2
Other investments | — | 1 | 1
Deferred tax assets | — | 19 | 19
Current assets |  |  |
Other intangible assets | — | 1 | 1
Inventories | 6 | 4 | 10
Trade and other receivables, and contract-related assets | 26 | 4 | 30
Assets of disposal groups classified as held for sale | 66 | 172 | 238
Current liabilities |  |  |
Trade and other payables, and contract-related liabilities | (16) | (19) | (35)
Lease liabilities | — | (4) | (4)
Non-current liabilities |  |  |
Trade and other payables, and contract-related liabilities | (2) | — | (2)
Deferred tax liabilities | — | (75) | (75)
Lease liabilities | — | (15) | (15)
Provisions for other liabilities | — | (44) | (44)
Liabilities of disposal groups classified as held for sale | (18) | (157) | (175)
Net assets of disposal groups classified as held for sale | 48 | 15 | 63

(c) Business combinations and asset acquisitions
During the year, the Group has been appointed by Ofgem as the Supplier of Last Resort to Rebel Energy Supply Limited and Tomato
Energy Limit e d, bot h of whom cease d trading. A customer intangible asset of £11 millio n has been recognised in 2025 in respect of certain
customer credit balances acquired.
During the year, the Group completed the acquisition of Swyft Energy (Ardrar Holdings Limited), a leading solar PV provider in the Republic
of Ireland, for total consideration of £9 million, of which £1 million is deferred. This has been accounted for as a business combination and
goodwill of £8 million has arisen on the transaction.
During 2025 investments have been made in the Isle of Grain LNG terminal and the Sizewell C nuclear plant. These have not been
accounted for as business combinations on the basis that the Group does not have the power to control these entities, see notes 3 and 14.
There were no other material acquisitions during the year. N o material adjustments have been made to acquisitions completed in 2024,
although there was a cash outflow of £3 million in respect of deferred consideration on previous acquisitions.

| 167

Centrica plc Annual Report and Accounts 2025

13. Property, plant and equipment

PP&E includes significant investment in power generating assets, storage assets and gas field/liquid production assets. Once operational, all assets are depreciated over their useful lives.

(a) | Carrying amounts

| 2025 |  | 2024
| 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 | 312 | 999 | 536 | 11,651 | 13,498 |  | 294 | 825 | 372 | 11,674 | 13,165
Acquisitions | — | — | — | — | — |  | — | 12 | 1 | — | 13
Additions and capitalised borrowing costs | 52 | 337 | 129 | 88 | 606 |  | 11 | 203 | 188 | 51 | 453
Disposals/retirements | (24) | (87) | (3) | (37) | (151) |  | (8) | (33) | (9) | — | (50)
Transfers to disposal groups held for sale (i) | (3) | (4) | (46) | (3,656) | (3,709) |  | — | — | — | — | —
Decommissioning liability and dilapidations revisions and additions (note 21) | 7 | — | 1 | (17) | (9) |  | 2 | 1 | — | (10) | (7)
Lease modifications and re-measurements | — | — | — | 12 | 12 |  | 18 | (9) | — | 4 | 13
Exchange adjustments | 4 | (10) | 18 | 86 | 98 |  | (5) | — | (16) | (68) | (89)
31 December | 348 | 1,235 | 635 | 8,127 | 10,345 |  | 312 | 999 | 536 | 11,651 | 13,498
Accumulated depreciation and impairment |  |  |  |  |  |  |  |  |  |  |
1 January | 173 | 533 | 71 | 10,862 | 11,639 |  | 149 | 464 | 55 | 10,651 | 11,319
Charge for the year (ii) | 26 | 96 | 15 | 206 | 343 |  | 24 | 80 | 13 | 270 | 387
(Write-backs)/impairments (iii) | (5) | 4 | 15 | 248 | 262 |  | 8 | 22 | 13 | 6 | 49
Disposals/retirements | (12) | (83) | (3) | (37) | (135) |  | (8) | (33) | (9) | — | (50)
Transfers to disposal groups held for sale (i) | (3) | (2) | (14) | (3,310) | (3,329) |  | — | — | — | — | —
Exchange adjustments | 1 | (8) | 2 | 82 | 77 |  | — | — | (1) | (65) | (66)
31 December | 180 | 540 | 86 | 8,051 | 8,857 |  | 173 | 533 | 71 | 10,862 | 11,639
NBV at 31 December | 168 | 695 | 549 | 76 | 1,488 |  | 139 | 466 | 465 | 789 | 1,859

(i) Within transfers to disposal groups held for sale, £1,374 million of cost and £1,169 million of accumulated depreciation relate to the Cygnus disposal which completed in
October 2025. The remaining £2,335 million of cost and £2,160 million of accumulated depreciation relate to disposal groups which remained held for sale at the year end
date. See note 12 for further details.
(ii) Depreciation of £267 million ( 2024: £313 million) has been recognised in cost of sales, and £76 million (2024: £74 million) in operating costs before exceptional items.
(iii) (Write-backs)/i mpairments in 202 5 include £257 million of impairments related to exceptional items (see note 7 for further details) and a £5 million net impairment
related to business performance (see note 4(d)).

(b) | Assets in the course of construction included in above carrying amounts

31 December | 2025 £m | 2024 £m
Plant, equipment and vehicles | 157 | 150
Gas production and storage | — | 11
Power generation | 368 | 295

(c) | Additional information relating to right-of-use assets included in the above

| 2025 |  | 2024
| 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 | 51 | 20 | — | 17 | 88 |  | 11 | 14 | — | 15 | 40
Depreciation charge for the year | (25) | (57) | — | (14) | (96) |  | (23) | (59) | — | (11) | (93)
NBV at 31 December | 163 | 124 | — | 22 | 309 |  | 122 | 163 | — | 22 | 307

Further information on the Group’s leasing arrangements is provided in note 23.

168 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

14. Interests in joint ventures and associates

Interests 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%.

(a) | Interests in joint ventures and associates

The Group’s interests in joint ventures and associates for the year ended 31 December 2025 principally arise from its interests in the
following entities, all of which are reported within the Infrastructure segment:
• Garden Topco Limited (‘Isle of Grain’) - joint venture
• Lake Acquisitions Limited (‘Lake’) - associate
• Sizewell C (Holding) Limited (‘Sizewell C’) - associate

| 2025 |  | 2024
| Investments in joint ventures and associates £m | Shareholder loans £m | Total £m |  | Investments in joint ventures and associates £m | Shareholder loans £m | Total £m
1 January | 794 | — | 794 |  | 903 | — | 903
Additions | 271 | 338 | 609 |  | — | — | —
Interest accrued on shareholder loans | — | 5 | 5 |  | — | — | —
Impairments (i) | (251) | — | (251) |  | (48) | — | (48)
Share of profits for the year | 153 | — | 153 |  | 256 | — | 256
Share of other comprehensive (loss)/income | (4) | — | (4) |  | 38 | — | 38
Dividends | (135) | — | (135) |  | (355) | — | (355)
31 December (ii) | 828 | 343 | 1,171 |  | 794 | — | 794

(i) Th e £251 m illion in 2025 relates to the Lake investment impairment (2024: £48 million). See note 7 for further details.
(ii) Inte rests in joint ventu res and associates closing balance at 31 December 2025 included £185 million (2024: £nil) relating to Isle of Grain, £578 million (2024: £794 million)
relating to Lake and £392 million (2024: £nil) relating to Sizewell C, of which £343 million (2024: £nil) related to shareholder loans. See note S8 for further details on
related party transactions, including shareholder loans made in relation to Sizewell C.

(b) | Share of joint ventures’ and associates’ assets and liabilities

| 2025 |  | 2024
31 December | Isle of Grain £m | Lake £m | Sizewell C £m | Other £m | Total £m |  | Total £m
Share of non-current assets | 863 | 4,121 | 1,104 | 12 | 6,100 |  | 4,278
Share of current assets | 111 | 728 | 266 | 5 | 1,110 |  | 758
| 974 | 4,849 | 1,370 | 17 | 7,210 |  | 5,036
Share of current liabilities | (144) | (480) | (113) | (1) | (738) |  | (305)
Share of non-current liabilities | (645) | (2,446) | (1,208) | — | (4,299) |  | (2,843)
| (789) | (2,926) | (1,321) | (1) | (5,037) |  | (3,148)
Cumulative impairment | — | (1,345) | — | — | (1,345) |  | (1,094)
Share of net assets of joint ventures and associates | 185 | 578 | 49 | 16 | 828 |  | 794
Shareholder loans | — | — | 343 | — | 343 |  | —
Interests in joint ventures and associates | 185 | 578 | 392 | 16 | 1,171 |  | 794
Net (debt)/cash included in share of net assets | (568) | 83 | (675) | 2 | (1,158) |  | 73

Further information on the Group’s investments in joint ventures and associates is provided in notes 6 and S10.

| 169

Centrica plc Annual Report and Accounts 2025

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), UK Allowances (UKAs) and Renewable Obligation Certificates/ Renewable Energy Certificates (ROCs/RECs) to satisfy its related obligations.

(a) | Carrying amounts

| 2025 |  | 2024
| Customer relationships and brands £m | Application software (i)(ii) £m | EUA/UKA/ ROC/REC (iii) £m | Goodwill £m | Total £m |  | Customer relationships and brands £m | Application software (i)(ii) £m | EUA/UKA/ ROC/REC (iii) £m | Goodwill £m | Total £m
Cost |  |  |  |  |  |  |  |  |  |  |
1 January | 161 | 1,525 | 319 | 744 | 2,749 |  | 164 | 1,515 | 293 | 673 | 2,645
Acquisitions (note 12) | 11 | 1 | — | 17 | 29 |  | — | 31 | — | 81 | 112
Additions and capitalised borrowing costs | — | 47 | 890 | — | 937 |  | — | 37 | 856 | — | 893
Disposals/retirements and surrenders (iv) | (1) | (610) | (921) | (31) | (1,563) |  | — | (54) | (830) | — | (884)
Transfers to disposal groups held for sale | — | — | (1) | — | (1) |  | — | — | — | — | —
Exchange adjustments | 2 | 4 | — | 9 | 15 |  | (3) | (4) | — | (10) | (17)
31 December | 173 | 967 | 287 | 739 | 2,166 |  | 161 | 1,525 | 319 | 744 | 2,749
Accumulated amortisation and impairment |  |  |  |  |  |  |  |  |  |  |
1 January | 87 | 1,281 | — | 266 | 1,634 |  | 84 | 1,255 | — | 268 | 1,607
Amortisation (v) | 9 | 76 | — | — | 85 |  | 5 | 81 | — | — | 86
Disposals/retirements and surrenders (iv) | (1) | (610) | — | (31) | (642) |  | — | (54) | — | — | (54)
Impairments | — | 6 | — | — | 6 |  | — | 1 | — | — | 1
Exchange adjustments | 2 | 3 | — | — | 5 |  | (2) | (2) | — | (2) | (6)
31 December | 97 | 756 | — | 235 | 1,088 |  | 87 | 1,281 | — | 266 | 1,634
NBV at 31 December | 76 | 211 | 287 | 504 | 1,078 |  | 74 | 244 | 319 | 478 | 1,115

(i) Application software includes assets under construction with a cost of £43 million (2024: £28 million).
(ii) The remaining amortisation period of individually material application software as sets, which have a carrying value o f £109 mi llion (2024: £132 million), is u p to 15 ye ars.
Addi tionally, there are £16 million (2024: £13 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 2025, £256 mil lion (2024: £319 million) is presented within current assets.
(iv) Application software retirements relate to fully amortised software assets no longer in operational use, mainly in the Retail segment.
(v) Amortisation of £85 million (2024: £86 million) has been recognised in operating costs before exceptional items.

170 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

15. Other intangible assets and goodwill

(b) | Carrying amount of goodwill and intangible assets with indefinite useful lives allocated to CGUs

Goo dwill 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. Goodwill impairment testing resulted in no impairments being
recorded for the year ended 31 December 2025 (31 December 2024: £nil). See note S2 for further details on impairment assumptions.

|  | 2025 | 2024 (restated) (i)
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 (ii) £m | Total £m | Carrying amount of goodwill £m | Carrying amount of indefinite-lived intangible assets (ii) £m | Total £m
Retail | AlertMe/Dyno-Rod/Ensek/ Enron Direct/Electricity Direct/ Bord Gáis Energy/Swyft | 357 | 57 | 414 | 340 | 57 | 397
Optimisation | Neas Energy | 147 | — | 147 | 138 | — | 138
|  | 504 | 57 | 561 | 478 | 57 | 535

(i) Comparatives have been restated to reflect the new operating structure of the Group. See note 1(d) for further details.
(ii) 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).

| 171

Centrica plc Annual Report and Accounts 2025

16. Deferred tax assets and liabilities

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 2024 | (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
Credit/(charge) to income | 153 | 42 | (57) | 19 | (20) | (5) | (3) | 129
(Charge)/credit to equity | — | — | — | (2) | 1 | — | 124 | 123
Transferred to held for sale (iv) | 185 | (30) | (1) | 1 | — | — | — | 155
Reallocation of losses (v) | — | — | 81 | — | (45) | — | (36) | —
Exchange and other adjustments | — | — | 1 | (3) | 1 | — | — | (1)
31 December 2025 | (76) | 502 | 85 | 60 | 22 | 74 | (10) | 657

(i) Net decommissioning includes deferred tax assets of £536 million ( 2024 : £605 million) in respect of decommissioning provisions.
(ii) The losses arose principally in the UK downstream business from marked-to-market positions and retirement benefit obligations.
(iii) The deferred PRT amounts include the effect of deferred corporation tax as PRT is chargeable to corporation tax.
(iv) Sale of the Cygnus field and producing assets in the South Markham area and Southern North Sea by Spirit and the sale of Centrica Business Solutions businesses in Italy
and the Netherlands. See note 12.
(v) Reallocation of losses is a presentational reclassification moving deferred tax balances into the losses carried forward category, with no impact on the total deferred tax
pos ition.
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.

| 2025 |  | 2024
31 December | Assets £m | Liabilities £m |  | Assets £m | Liabilities £m
Gross deferred tax balances | 828 | (171) |  | 791 | (540)
Offsetting deferred tax balances | (169) | 169 |  | (452) | 452
Net deferred tax balances (after offsetting for financial reporting purposes) | 659 | (2) |  | 339 | (88)

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 gas production 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 (EPL).
The enactment of the Finance Act 2025 on 20 March 2025 extended the EPL until 31 March 2030 from 31 March 2028. The Group’s
deferred tax assets and liabilities were remeasured resulting in an increase of £57 million in its deferred tax liabilities.
At the balance sheet date, the Group had £1,182 million (2024: £1,295 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 (2 024: £nil).
The Group has 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.

172 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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.

| 2025 |  | 2024
31 December | Current £m | Non-current £m |  | Current £m | Non-current £m
Financial assets: |  |  |  |  |
Trade receivables | 3,951 | 57 |  | 3,270 | —
Unbilled downstream energy income | 870 | — |  | 968 | —
Trading and energy procurement accrued income (i) | 855 | — |  | 1,653 | —
Other accrued income | 83 | — |  | 71 | —
Cash collateral posted | 203 | — |  | 191 | —
Other receivables (including contract assets) (ii) | 149 | 62 |  | 264 | 52
| 6,111 | 119 |  | 6,417 | 52
Less: provision for credit losses | (1,818) | — |  | (1,532) | —
| 4,293 | 119 |  | 4,885 | 52
Non-financial assets: prepayments, other receivables and costs to obtain a contract with a customer (iii) | 382 | 135 |  | 319 | 127
| 4,675 | 254 |  | 5,204 | 179

(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 under public service obligation schemes in Ireland of £27 million (2024: £90 million).
(iii) Includes costs of £49 million (2024: £28 million) incurred to obtain contracts with customers in the Retail segment. 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 £3,899 million
(2024 : £3,195 million). Additionally, accrued income of £960 million (2024: £1,032 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:

| 2025 |  | 2024
31 December | Current £m | Non-current £m |  | Current £m | Non-current £m
Financial assets by business type: |  |  |  |  |
Residential customers | 3,363 | 64 |  | 2,897 | —
Business customers | 1,474 | 55 |  | 1,517 | 50
Treasury, trading and energy procurement counterparties | 1,274 | — |  | 2,003 | 2
| 6,111 | 119 |  | 6,417 | 52
Less: provision for credit losses | (1,818) | — |  | (1,532) | —
| 4,293 | 119 |  | 4,885 | 52

| 173

Centrica plc Annual Report and Accounts 2025

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:

| 2025 |  | 2024
| 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 | (984) | (529) | (19) | (1,532) |  | (850) | (443) | (16) | (1,309)
Increase in impairment of trade receivables (predominantly related to credit impaired trade receivables) (i) (ii) (iii) | (285) | (135) | (1) | (421) |  | (245) | (132) | (6) | (383)
Receivables written off (iv) | 74 | 60 | 1 | 135 |  | 111 | 46 | 3 | 160
31 December | (1,195) | (604) | (19) | (1,818) |  | (984) | (529) | (19) | (1,532)

(i) Includes £410 million (2024: £364 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 £3 million (2024: £10 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 £105 million (2024: £122 million).

Year ended 31 December | 2025 £m | 2024 £m
Increase in impairment provision for trade receivables (per above) | (421) | (383)
Less recovery of previously written-off receivables | 3 | 10
Credit losses on financial assets (per Group Income Statement) | (418) | (373)

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.

174 |

| 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
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 | 2025 £m | 2024 £m
Balances that are not past due | 3,420 | 4,143
Balances that are past due (i) | 2,810 | 2,326
| 6,230 | 6,469

(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 Grou p’s posted cash collateral balance has increased to £203 million in 2025 (2024: £191 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 ari ses in the Retail segm ent 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.

| 175

Centrica plc Annual Report and Accounts 2025

17. Trade and other receivables and contract-related assets
Retail energy customer credit risk
Of the Group total of £4,008 million (2024: £3,270 million) billed trade receivables, energy customers in the Retail reporting segment
contribute £3,699 million (2024: £3,075 million). The Retail segment includes residentia l and business e nergy customers. As described
above, credit risk is concentrated in receivables from energy customers who pay in arrears. Gross receivables from residential energy
customers in the UK amount to £2,481 million (2024: £1,945 million) and from business energy customers in the UK amount to £990 million
(2024: £910 million) and are analysed below. The Retail segment also includes residential and business energy customers in Ireland of £125
million (2024: £93 million), but these are not included in the analysis below.

Trade receivables due from residential energy customers as at 31 December (i) |  |  |  |  |  |  |  |  |  |  |
2025 |  | 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 | 358 | 73 | 243 | 674 |  |  | 303 | 67 | 227 | 597 |
Provision | — | (1) | (18) | (19) |  |  | — | — | (10) | (10) |
Net | 358 | 72 | 225 | 655 | 3% |  | 303 | 67 | 217 | 587 | 2%
Payment on receipt of bill (iii) |  |  |  |  |  |  |  |  |  |  |
Gross receivables | 89 | 86 | 1,095 | 1,270 |  |  | 89 | 56 | 815 | 960 |
Provision | (4) | (13) | (551) | (568) |  |  | (4) | (8) | (445) | (457) |
Net | 85 | 73 | 544 | 702 | 45% |  | 85 | 48 | 370 | 503 | 48%
Final bills (iv) |  |  |  |  |  |  |  |  |  |  |
Gross receivables | 19 | 33 | 485 | 537 |  |  | 19 | 22 | 347 | 388 |
Provision | (6) | (19) | (426) | (451) |  |  | (7) | (14) | (311) | (332) |
Net | 13 | 14 | 59 | 86 | 84% |  | 12 | 8 | 36 | 56 | 86%
Total net residential energy customers trade receivables | 456 | 159 | 828 | 1,443 | 42% |  | 400 | 123 | 623 | 1,146 | 41%
Trade receivables due from business customers as at 31 December |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial (v) |  |  |  |  |  |  |  |  |  |  |
Gross receivables | 21 | 6 | 19 | 46 |  |  | 22 | 4 | 15 | 41 |
Provision | — | — | (10) | (10) |  |  | — | — | (10) | (10) |
Net | 21 | 6 | 9 | 36 | 22% |  | 22 | 4 | 5 | 31 | 24%
Medium-sized entities |  |  |  |  |  |  |  |  |  |  |
Gross receivables | 40 | 9 | 123 | 172 |  |  | 41 | 14 | 105 | 160 |
Provision | — | — | (78) | (78) |  |  | — | — | (64) | (64) |
Net | 40 | 9 | 45 | 94 | 45% |  | 41 | 14 | 41 | 96 | 40%
Small businesses |  |  |  |  |  |  |  |  |  |  |
Gross receivables | 95 | 46 | 631 | 772 |  |  | 116 | 59 | 534 | 709 |
Provision | (2) | (8) | (470) | (480) |  |  | (3) | (10) | (405) | (418) |
Net | 93 | 38 | 161 | 292 | 62% |  | 113 | 49 | 129 | 291 | 59%
Total net business energy customers trade receivables | 154 | 53 | 215 | 422 | 57% |  | 176 | 67 | 175 | 418 | 54%
Total retail energy customers trade receivables | 610 | 212 | 1,043 | 1,865 | 46% |  | 576 | 190 | 798 | 1,564 | 45%

(i) The receivables information presented in this table relates to downstream customers who pay energy bills using the methods presented. For residential energy
customers, 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 2025 are £103 million (2024: £114
million), against which a provision of £65 million is held (2024: £92 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. For business energy customers, t here are a
range of payment terms extended to business energy customers. Standard credit terms for small business customers are ten working days. 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.
(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.
(v) This category includes low credit risk receivables, including those from public sector and customers with high turnover (greater than £100 million).

176 |

| 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, t ypical household energy costs have trended upwards during 2025 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. 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 2025 the Group recognised credit losses net of recoveries of £418 million (2024: £373 million) in respect of financial assets,
representing 2.1% of t otal Group revenue (2024: 1.9%) and 1.9% (2024: 1.5%) of total Group revenue from business performance. As
described above, the majority of the Group’s credit exposure arises in respect of receivables from energy customers in the Retail segment.
Credit losses in respect of these assets amounted to £410 million (2024: £361 million). This represents 2.7% (2024: 2.3%) of total Retail
revenue within the scope of IFRS 15 from these segments o f £15,261 million (2024: £15,823 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 2025 £m | 31 December 2024 £m
Trade receivables | 4,008 | 3,270
Provision | (1,759) | (1,471)
Net balance | 2,249 | 1,799

| 31 December 2025 % | 31 December 2024 %
Provision coverage | 44 | 45
Sensitivity | £m | £m
Impact on billed receivables/operating profit from 1 percentage point (increase)/decrease in provision coverage (i) | (40)/40 | (33)/33

(i) Credit risk in the Group is impacted by a large number of interacting factors.
Typical household energy bills have trended upwards during 2025 as wholesale prices remain high and network costs and policy levies have
increased. The operating landscape within the Retail residentia l portfolio remains difficult, with mixed macroeconomic conditions. Although
interest rates and inflation have fallen, unemployment has increased. Challenges relating to the performance of older aged debt persist due
to the lasting impact of both the energy crisis and warrant suspension. Both gross receivables, and the total value of the credit loss provision
have increased in value during the year. In November, the government announced an estimated £150 a year reduction in residential energy
bills by removing certain green levies from April 2026. Whilst this does not impact the gross receivable value at 31 December 2025, it may
improve cash collections, and hence reduce provisioning, on a forward-looking basis.
Within the residential customer base, management have identified billed customers who pay on receipt of their bills as being the highest
risk. Credit loss provision coverage for this cohort of customers has in fact decreased, primarily because the forward-looking expectations
of debt performance, covered by the Group’s macroeconomic provision in the prior year, were more conservative than actual collections.
A lthough collections performance has improved slightly over the year as a result of litigation activities, this cohort of customers is a key
focus for the Retail business.
Debt recovery relating to residential energy customers remains challenging. Limited field activity continues, although warrant visits remain
suspended, with only a minimal level of voluntary credit to prepayment meter exchanges taking place. It is unlikely to return to previous
volumes due to a stricter Code of Practice, creating uncertainty in relation to future debt recovery. This is partially mitigated by litigation
activity, however debt levels relating to distressed customer accounts are continuing to increas e.

| 177

Centrica plc Annual Report and Accounts 2025

17. T rade and other receivables and contract-related assets
Gross receivables relating to business customers in the Retail segment have slightly decreased, although the provision coverage has
increased. As well as the mixed macroeconomic factors affecting residential customers above, business customers also face increased
employer National Insurance payments, as well as a rise in the National Minimum Wage. Latest figures also indicate that company
insolvencies have slightly increased during the year, suggesting that cost pressures remain. The mix between live and final debt in the
business portfolio has also changed during the year, driven by a greater volume of field activities. This has resulted in more amounts due
being classified as final, attracting a higher resultant provision rate.
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 £11 million (2024: £49 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, infrastructure 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 2025, 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 2025 £m | 31 December 2024 £m
Gross unbilled receivables | 870 | 968
Provision | (59) | (61)
Net balance | 811 | 907

| 31 December 2025 % | 31 December 2024 %
Provision coverage | 7 | 6
Sensitivity | £m | £m
Impact on unbilled receivables/operating profit from 1 percentage point (increase)/decrease in provision coverage (i) | (9)/9 | (10)/10

(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 | 2025 £m | 2024 £m
Gas in storage and transportation (i) | 212 | 745
Other raw materials and consumables | 96 | 120
Finished goods and goods for resale | 31 | 39
| 339 | 904

(i) Includ es gas in storage held at fair value of £193 million ( 2024: £364 million).
The Group consume d £1,294 million of inventories (2024 : £1,806 million) during the year. Write-downs amounting to £8 million
(2024: £14 million) were charged to the Group Income Statement in the year.

178 |

| 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:

| 2025 |  | 2024
31 December | Assets £m | Liabilities £m |  | Assets £m | Liabilities £m
Derivative financial instruments – held for trading under IFRS 9: |  |  |  |  |
Energy derivatives – for procurement/optimisation | 513 | (426) |  | 530 | (251)
Energy derivatives – for proprietary trading | 285 | (393) |  | 886 | (913)
Foreign exchange derivatives | 40 | (106) |  | 128 | (83)
Derivative financial instruments in hedge accounting relationships: |  |  |  |  |
Interest rate derivatives | — | (95) |  | — | (134)
Foreign exchange derivatives | 38 | (16) |  | 32 | (6)
Total derivative financial instruments | 876 | (1,036) |  | 1,576 | (1,387)
Included within: |  |  |  |  |
Derivative financial instruments – current | 600 | (693) |  | 1,309 | (932)
Derivative financial instruments – non-current | 276 | (343) |  | 267 | (455)

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 | 2025 £m | 2024 £m
Short-term forward market purchases and sales of gas and electricity: |  |
UK and Europe | 122 | 125
Other derivative contracts including structured gas sale and purchase arrangements | (144) | 127
Net total | (22) | 252

Net (losses)/gains on derivative financial instruments due to change in fair value |  |  |  |  |
| 2025 |  | 2024
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 | (458) | — |  | 20 | —
Derivative financial instruments in hedge accounting relationships | 40 | (5) |  | (14) | (8)
| (418) | (5) |  | 6 | (8)

| 179

Centrica plc Annual Report and Accounts 2025

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.

| 2025 |  | 2024
31 December | Current £m |  | Non-current £m |  | Current £m |  | Non-current £m
Financial liabilities: |  |  |  |  |  |  |
Trade payables | (379) |  | (3) |  | (363) |  | (3)
Deferred income (i) | (923) |  | — |  | (935) |  | —
Capital payables | (92) |  | — |  | (137) |  | —
Cash collateral received | (81) |  | — |  | (162) |  | —
Other payables (ii) | (340) |  | (71) |  | (375) |  | (91)
Accruals: |  |  |  |  |  |  |
Commodity costs | (1,588) |  | — |  | (2,272) |  | —
Transportation, distribution and metering costs | (411) |  | — |  | (335) |  | —
Operating and other accruals | (714) |  | (54) |  | (887) |  | (77)
| (2,713) |  | (54) |  | (3,494) |  | (77)
| (4,528) |  | (128) |  | (5,466) |  | (171)
Non-financial liabilities: |  |  |  |  |  |  |
Other payables and accruals (iii) | (993) |  | — |  | (832) |  | —
Contract liabilities | (16) |  | (3) |  | (33) |  | —
Deferred income | (44) |  | (7) |  | (61) |  | (4)
| (5,581) |  | (138) |  | (6,392) |  | (175)

(i) Deferred income i ncludes downstre am 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 £109 million (2024: £100 million) and the share buyback liability of £14 million (2024: £75 million). See note S4 for
further details on the share buyback programm e.
(iii) Other non-financial payables and accruals includes ROCs creditors of £689 million (2024: £660 million).

Maturity profile of financial liabilities within current trade and other payables |  |
31 December | 2025 £m | 2024 £m
Less than 90 days | (4,183) | (5,090)
90 to 182 days | (117) | (128)
183 to 365 days | (228) | (248)
| (4,528) | (5,466)

180 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

21. Provisions for other liabilities

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 Infrastructure 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 2025 £m | Charged in the year £m | Unused and reversed in the year £m | Utilised £m | Transfers (v) £m | Exchange adjustments £m | 31 December 2025 £m
Current |  |  |  |  |  |  |
Restructuring costs | (8) | (18) | 8 | 7 | (5) | — | (16)
Decommissioning costs (i) (ii) | (103) | — | — | 71 | (125) | — | (157)
Onerous contracts provision (iii) | (104) | (40) | 1 | 109 | (2) | 2 | (34)
Other (iv) | (153) | (46) | 32 | 70 | (13) | (1) | (111)
Total | (368) | (104) | 41 | 257 | (145) | 1 | (318)

| 1 January 2025 £m | Charged in the year £m | Notional interest £m | Unused and reversed in the year £m | Revisions and additions £m | Transfers (v) £m | Transfers to disposal groups held for sale (vi) £m | Exchange adjustments £m | 31 December 2025 £m
Non-current |  |  |  |  |  |  |  |  |
Restructuring costs | (7) | — | — | — | — | 5 | — | — | (2)
Decommissioning costs (i) (ii) | (1,356) | (47) | (26) | 22 | 16 | 125 | 129 | (8) | (1,145)
Onerous contracts provision (iii) | (15) | (28) | — | — | — | 2 | — | — | (41)
Other (iv) | (115) | (13) | — | 39 | (7) | 13 | — | — | (83)
Total | (1,493) | (88) | (26) | 61 | 9 | 145 | 129 | (8) | (1,271)

Included within the above liabilities are the following financial liabilities:

| 2025 |  | 2024
31 December | Current £m | Non-current £m |  | Current £m | Non-current £m
Restructuring costs | (16) | (2) |  | (8) | (7)
Provisions other than restructuring costs | (134) | (104) |  | (249) | (113)
| (150) | (106) |  | (257) | (120)

Maturity profile of decommissioning provisions |
31 December | 2025 £m
2026-2030 | (734)
2031-2035 | (549)
2036-2040 | (13)
2041-2045 | (1)
2046-2050 | (1)
2051-2055 | (2)
2056-2060 | (1)
2061 or later | (1)
| (1,302)

(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 2060s. The maturity profile of total decommissioning provisions is analysed above. The rate used to discount
decommissioning provisions is 2% (2024 : 2%). See note 3.
(ii) Included in the provision balance as at 31 December 2025 is £961 million (2024: £1,139 million) held in Spirit Energy, £321 million (2024: £302 million) in relation to the
R ough field, and £20 million (2024: £18 million) in the remainder of the business.
(iii) The onerous contracts provision includes a charge of £(49) million (2024: £(82) million) and utilisation of £99 million (2024: £nil) related to movements in onerous LNG
contract provisions. See note 7.
(iv) Other provisions have been made for dilapidations, insurance, legal, warranty, regulatory and various other claims, including in relation to Ofgem’s ongoing investigation
into British Gas’s legacy arrangements for the installation of prepayment meters under warrant. Utilisation of the non-current other provision balance is expected to
occur by the early 2030s.
(v) Transfers relate to amounts transferred between current and non-current provisions.
(vi) Transfers to disposal groups held for sale relate to the sales of the Cygnus fields in the Infrastructure segment. £85 million relates to the disposal that completed in
October 2025. The remaining £44 million r elates to the subsequent disposal agreed in December 2025 which remained held for sale at the year end date. See note 12 for
further details.

| 181

Centrica plc Annual Report and Accounts 2025

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 2025 | Total membership as at 31 December 2025
Name of scheme | Type of benefit | Status | Country
Centrica Engineers Pension Scheme | Defined benefit final salary pension | Closed to new members in 2006 | UK | 1,303 | 8,341
Defined benefit career average pension | Closed to new members in 2022 | UK | 2,333 | 7,067
Centrica Pension Plan | Defined benefit final salary pension | Closed to new members in 2003 | UK | 1,225 | 8,328
Centrica Pension Scheme | Defined benefit final salary pension | Closed to new members in 2003 | UK | 1 | 9,934
| Defined benefit career average pension | Closed to new members in 2008 | UK | 664 | 4,124
Centrica Savings Plan | Defined contribution pension | Open to new members | UK | 13,345 | 14,871
Centrica Leavers Savings Plan | Defined contribution pension | Deferred members only | UK | — | 10,351
Bord Gáis Energy Company Defined Benefit Pension Scheme | Defined benefit final salary pension | Closed to new members in 2014 | Republic of Ireland | 80 | 168
Bord Gáis Energy Company Defined Contribution Pension Plan | Defined contribution pension | Open to new members | Republic of Ireland | 433 | 634

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.
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 2024 and the Bord Gáis Energy Company Defined Benefit Pension Scheme at 1 January 2023. These
valuations have been updated to 31 December 2025 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.

182 |

| 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 T ru stees 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.
I nterest 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 expectan cy.
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.
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 following table analyses
the total liabilities of the Registered Pension Schemes, calculated in accordance with accounting principles, by type of liability, as at
31 December 2025.

| 183

Centrica plc Annual Report and Accounts 2025

22. Post-retirement benefits

Total liabilities of the Registered Pension Schemes |
31 December | 2025 %
Actives – final salary – capped | 8
Actives – final salary – uncapped and crystallised benefits | 1
Actives – career average | 3
Deferred pensioners | 33
Pensioners | 55
| 100

The weighted average duration of the Registered Pension Schemes as at 31 December 2025 was approximately 16 years (31 December
2024: 17 years).

(c) | Accounting assumptions

The accounting assumptions for the Registered Pension Schemes are given below:

Major assumptions used for the actuarial valuation |  |
31 December | 2025 % | 2024 %
Rate of increase in employee earnings: |  |
Subject to 2% cap | 1.5 | 1.6
Other not subject to cap | 2.6 | 2.8
Rate of increase in pensions in payment | 2.9 | 3.1
Rate of increase in deferred pensions: |  |
In line with CPI capped at 2.5% | 2.3 | 2.5
In line with RPI | 2.8 | 3.1
Discount rate | 5.5 | 5.4

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 | 2025 |  | 2024
31 December | Male Years | Female Years |  | Male Years | Female Years
Currently aged 65 | 21.8 | 23.6 |  | 22.2 | 23.7
Currently aged 45 | 23.1 | 24.7 |  | 23.4 | 24.8

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 | 2025 |  | 2024
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 | 0.25% | +/-0 |  | 0.25% | +/-0
Rate of increase in pensions in payment and deferred pensions | 0.25% | +/-3 |  | 0.25% | +/-3
Discount rate | 0.25% | -/+4 |  | 0.25% | -/+4
Inflation assumption | 0.25% | +/-3 |  | 0.25% | +/-3
Longevity assumption | 1 year | +/-2 |  | 1 year | +/-2

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.

184 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

22. Post-retirement benefits

(d) | Amounts included in the Group Balance Sheet

31 December | 2025 £m | 2024 £m
Fair value of plan assets | 5,606 | 5,563
Present value of defined benefit obligation | (5,901) | (5,584)
Recognised in the Group Balance Sheet | (295) | (21)
Presented in the Group Balance Sheet as: |  |
Retirement benefit assets | 12 | 129
Retirement benefit liabilities | (307) | (150)

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

| 2025 |  | 2024
| Pension liabilities £m |  | Pension assets £m |  | Pension liabilities £m |  | Pension assets £m
1 January | (5,584) |  | 5,563 |  | (6,260) |  | 6,143
Items included in the Group Income Statement: |  |  |  |  |  |  |
Current service cost | (18) |  | — |  | (18) |  | —
Contributions by employer in respect of employee salary sacrifice arrangements (i) | (17) |  | — |  | (24) |  | —
Total current service cost | (35) |  | — |  | (42) |  | —
Past service cost | (3) |  | — |  | — |  | —
Interest (expense)/income | (296) |  | 301 |  | (282) |  | 283
Termination cost | (8) |  | — |  | (1) |  | —
Items included in the Group Statement of Comprehensive Income: |  |  |  |  |  |  |
Returns on plan assets, excluding interest income | — |  | (168) |  | — |  | (830)
Actuarial loss from changes to demographic assumptions | (14) |  | — |  | (16) |  | —
Actuarial gain from changes in financial assumptions | 247 |  | — |  | 721 |  | —
Actuarial (loss)/gain from experience adjustments | (494) |  | — |  | 12 |  | —
Items included in the Group Cash Flow Statement: |  |  |  |  |  |  |
Employer contributions | — |  | 179 |  | — |  | 227
Contributions by employer in respect of employee salary sacrifice arrangements | — |  | 17 |  | — |  | 24
Other movements: |  |  |  |  |  |  |
Benefits paid from schemes | 287 |  | (287) |  | 284 |  | (284)
Other | (1) |  | 1 |  | — |  | —
31 December | (5,901) |  | 5,606 |  | (5,584) |  | 5,563

(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 £113 million (2024: £95 million)
to operating profit in respect of defined contribution pension schemes. This included contributions of £43 million (2024: £39 million) paid via
a salary sacrifice arrangement.
The 2024 triennial actuarial valuation was completed during the period and the use of updated data from the valuation had the dual impact of
capturing experience up to 31 March 2024 not already quantified within previous IAS 19 accounting figures and also allowing for any
difference in the roll-forward and assumption changes of the liability after allowing for the updated underlying liability profile and cash flows.
This led to an adverse experience adjustment. The adjustment is purely for accounting purposes and has no impact on the technical
provisions (funding basis) val uatio ns.

| 185

Centrica plc Annual Report and Accounts 2025

22. Post-retirement benefits

(f) | Pension scheme assets

The market values of plan assets were:

| 2025 |  | 2024
31 December | Quoted £m | Unquoted £m | Total £m |  | Quoted £m | Unquoted £m | Total £m
Equities | 55 | 416 | 471 |  | 19 | 491 | 510
Corporate bonds (i) | 435 | — | 435 |  | 12 | — | 12
High-yield debt | 15 | 945 | 960 |  | 14 | 1,063 | 1,077
Liability matching assets | 2,430 | — | 2,430 |  | 2,388 | — | 2,388
Other long-dated income assets | — | 913 | 913 |  | — | 1,025 | 1,025
Property | — | 287 | 287 |  | — | 303 | 303
Cash pending investment | 110 | — | 110 |  | 248 | — | 248
| 3,045 | 2,561 | 5,606 |  | 2,681 | 2,882 | 5,563

(i) Corporate bonds includes investment grade asset-backed securities.
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 (2024: £nil) of ordinary shares of Centrica plc via pooled funds that include a benchmark allocation to UK equities. Included within
corporate bonds are £nil (2024: £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 £59 million (2024: £108 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, £46 million
(2024: £48 million) relate to this scheme. More information on the Centrica Unapproved Pension Scheme is included in the Remuneration
Report on pages 86 to 107.

(g) | Pension scheme contributions

The Group estimates that it will pay £18 million of ordinary employer contributions during 2026 for its defined benefit schemes, together
with £12 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 £4 million associated with employee
redundancies was also contributed in 2025 (2024: £1 million). Outside of the above recovery plan, asset-backed contribution arrangements
remain where additional cash contributions are contingent on whether individual schemes remain in deficit on a technical provision basis.
The contingent payment for 2026 is £14 million. At the year-end, the Group continues to provide security of £798 million of letters of credit/
surety bonds to the Trustees enforceable in the unlikely event the Group is unable to meet its obligations.
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 £300 million on 31 December 2025. Note that the valuation methodology and assumptions used for
future assessments may differ from those previously used.

186 |

| 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 £3.0 billion (included in ‘LNG capacity’ below) between 2024 and 2039. It also
allows the Group to make up to £4.7 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 allowed to make commodity purchases expected to amount to £5.7 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 £281 million based on market gas prices and foreign
exchange rates at the reporting date.
During 2025, the Group signed a 10-year agreement to purchase LNG volumes from PTT International Trading Pte Ltd. The provisional
commencement date is 2028 and under this agreement the Group is allowed to make commodity purchases expected to amount to £1.2
billion based on market gas prices at the reporting date. The Group also signed a 10-year agreement to purchase natural gas volumes from
Equinor. Under this agreement the Group is committed to make commodity purchases expected to amount to £11.2 billion based on market
gas prices at the reporting date.
In 2024 and 2025 the Group signed a total of five natural gas sale and purchase agreements with US counterparties. These contracts are
provisionally expected to commence in 2028 and 2029, each for a duration of 10 years. Under these agreements, the Group is committed to
purchase natural gas amounting to £3.7 billion based on market gas prices and foreign exchange rates at the reporting date. These
contracts are measured at fair value under IFRS 9 and presented as derivative financial instruments on the Group’s Balance Sheet, and are
also presented in notes 19 and S3. Due to the material nature of these long-term contracts, the cash outflow in respect of these purchase
commitments is included below.
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 | 2025 £m | 2024 £m
Commitments in relation to the acquisition of property, plant and equipment | 65 | 72
Commitments in relation to the acquisition of intangible assets: |  |
Renewable obligation certificates | 2,109 | 2,786
Other intangible assets | 335 | 261
Other commitments: |  |
Commodity purchase contracts | 36,364 | 32,461
LNG capacity (i) | 5,445 | 4,171
Transportation capacity | 182 | 187
Other long-term commitments (ii) (iii) | 1,288 | 328

(i) LNG capacity commitments include £243 million of commitments to Grain LNG Limited, a subsidiary of Garden Topco Limited. See note S8 for further details on related
party transactions, and S10 for further details on joint ventures and associates.
(ii) Other long-term commitments incl ude £902 million of commitments to invest in Sizewell C (Holding) Limited, comprising £812 million of shareholder loans and £90
million of equity injections. See note S8 for further details on related party transactions, and S10 for further details on joint ventures and associates.
(iii) Other long-term commitments include amounts related to executory contracts and the smart meter roll-out programme.

| 187

Centrica plc Annual Report and Accounts 2025

23. Leases, commitments and contingencies
T he 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 | 2025 £bn | 2024 £bn |  | 2025 £bn | 2024 £bn
<1 year | 4.7 | 5.3 |  | 2.1 | 4.6
1–2 years | 1.2 | 0.9 |  | 1.9 | 1.3
2–3 years | 0.2 | 0.2 |  | 1.7 | 0.9
3–4 years | 0.1 | — |  | 2.0 | 0.6
4–5 years | — | — |  | 2.1 | 1.3
>5 years | — | — |  | 20.4 | 17.4
| 6.2 | 6.4 |  | 30.2 | 26.1

The Group enters into lease arrangements for assets including property, vehicles, vessels and assets used within the Infrastructure
b usiness.
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 £104 million (2024: £108 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 | 2025 £m | 2024 £m
Expense related to short-term leases | 7 | 37
Expense related to variable lease payments | 8 | 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
£5 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 infrastructure 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 2025 £406 million (2024: £401 million) of letters of credit and on-demand payment bonds have been issued in respect
of decommissioning obligations included in the Group Balance Sheet. Additionally, £902 million (2 024: £nil) of letters of credit have been
issued in respect of commitments to invest in Sizewell C (Holding) Limited. See note 23(a) for further details on commitments.
(c) Contingent liabilities
The Group has no material contingent liabilities.

188 |

| 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.

| 2025 |  | 2024
| 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 | Debt instruments at amortised cost £m | Total £m
1 January | 51 | 5 | 28 | 3 | 87 |  | 54 | 6 | 1 | — | 61
Conversion of debt to equity shares | — | 2 | (2) | — | — |  | — | — | — | — | —
Interest receivable | — | — | 2 | 1 | 3 |  | — | — | 1 | — | 1
Additions (i) (ii) | 5 | — | 15 | 25 | 45 |  | 27 | — | 26 | 3 | 56
Disposals | — | (3) | — | — | (3) |  | — | — | — | — | —
Transfers to disposal groups held for sale | — | (1) | — | — | (1) |  | — | — | — | — | —
Revaluation | (9) | — | — | — | (9) |  | (30) | — | — | — | (30)
Exchange adjustments | (1) | — | — | — | (1) |  | — | (1) | — | — | (1)
31 December | 46 | 3 | 43 | 29 | 121 |  | 51 | 5 | 28 | 3 | 87

(i) Equity investment additions during 2025 of £5 million (2024: £27 million) comprise amounts invested into the Gresham House fund.
(ii) Convertible debt investment additions during 2025 included £15 million (2024: £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 £28 million has been drawn down at 31 December 2025 (2024: £3 million) 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 | 2025 £m | 2024 £m
Gross debt | 2,892 | 2,974
Shareholders’ equity | 3,085 | 4,422
Capital | 5,977 | 7,396

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.

| 189

Centrica plc Annual Report and Accounts 2025

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 2028. 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 50% 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 2025 the Group had undrawn committed credit facilities of £3,066 million (2024: £3,293 million) and £4,161 million (2024:
£5,578 million) of unrestricted cash and cash equivalents, net of outstanding overdrafts. 80% (2024: 77%) 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 9.8 years (2024: 9.6 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 2025 the collateral position was as follows:

31 December | 2025 £m | 2024 £m
Collateral (received)/posted included within: |  |
Trade and other payables | (81) | (162)
Trade and other receivables | 203 | 191
Collateral (received)/posted extinguishing: |  |
Net derivative (assets)/liabilities (i) | (61) | 76
Net collateral posted (ii) | 61 | 105

(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 £7 million credit (2024: £4 million debit).
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 p age 118.

190 |

| 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 2024 | (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 | — | — | — | 400 | (400) | — | —
Cash outflow for payment of capital element of leases | 97 | — | 97 | (97) | — | — | —
Cash outflow for repayment of borrowings | 842 | 15 | 857 | (925) | — | — | (68)
Cash inflow from borrowings | (483) | — | (483) | 483 | — | — | —
Net cash flow from operating activities | — | — | — | 1,149 | — | — | 1,149
Net cash flow from other investing activities (iii) | — | — | — | 87 | — | — | 87
Cash outflow for share buyback programme (iv) | — | — | — | (499) | — | — | (499)
Net cash flow from other financing activities (iv) | — | — | — | (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
Transfers to disposal groups held for sale | 19 | — | 19 | — | — | — | 19
Cash inflow from settlement of securities | — | — | — | 57 | (57) | — | —
Cash outflow for purchase of securities | — | — | — | (13) | 13 | — | —
Cash outflow for payment of capital element of leases | 95 | — | 95 | (95) | — | — | —
Cash outflow for repayment of borrowings | 61 | — | 61 | (61) | — | — | —
Cash inflow from borrowings | (13) | — | (13) | 13 | — | — | —
Net cash flow from operating activities | — | — | — | 695 | — | — | 695
Net cash flow from other investing activities (iii) | — | — | — | (734) | — | — | (734)
Cash outflow for share buyback programme (iv) | — | — | — | (827) | — | — | (827)
Cash outflow from other financing activities (iv) | — | — | — | (246) | — | — | (246)
Revaluation | (37) | 35 | (2) | — | 8 | — | 6
Interest receivable on securities | — | — | — | — | 2 | — | 2
Financing interest paid | 141 | 39 | 180 | (181) | — | — | (1)
Increase in interest payable and amortisation of borrowings, and impact of associated interest rate swaps | (153) | (38) | (191) | — | — | — | (191)
New lease agreements and re-measurement of existing lease liabilities | (100) | — | (100) | — | — | — | (100)
Exchange adjustments | 33 | — | 33 | (29) | 2 | — | 6
Group adjusted net (debt)/cash at 31 December 2025 | (2,821) | (71) | (2,892) | 4,272 | 107 | — | 1,487

(i) Cash and cash equivalents includes £ 111 million (2024: £115 million) of restricted cash. This in cludes cash totalling £nil (2024: £3 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 £35 million bank overdrafts (2024:
£645 million).
(ii) S ecurities includes £48 million (2024: £31 million) of other loans receivable measured at amorti sed cost, as well as £49 million (2024: £73 million) of other debt
instruments, and £10 million (2024: £35 million) of equity instruments, both measured at fair value.
(iii) Net cash flow from other investing activities excludes cash outflow relating to the purchase of securities of £13 million (2024: £19 million), cash inflow from the
settlement of securities of £57 million (2024: £400 million), and interest received on securities of £nil (2024: £25 million) during the year.
(iv) Cash outflow of £827 million (2024: £499 million) relates to the share buyback programme, for which there is a liability of £14 million (2024: £75 million) recognised at 31
December 2025. See note S4 for further details on the share buyback programme. Cash outflow from other financing activities includes £237 million (2024: £219 million)
payments of equity dividends and £9 million (2024: £8 million) payments for own shares.

| 191

Centrica plc Annual Report and Accounts 2025

25. Sources of finance

(d) | Borrowings, leases and interest accruals summary

|  |  | 2025 |  | 2024
31 December | Coupon rate % | Principal m | Current £m | Non-current £m | Total £m |  | Current £m | Non-current £m | Total £m
Bank overdrafts |  |  | (35) | — | (35) |  | (645) | — | (645)
Bank loans (> 5 year maturity) |  |  | — | (114) | (114) |  | — | (124) | (124)
Other borrowings |  |  | (2) | (55) | (57) |  | (61) | (39) | (100)
Bonds (by maturity date): |  |  |  |  |  |  |  |  |
4 September 2026 (i) | 6.400 | £52 | (51) | — | (51) |  | — | (50) | (50)
16 April 2027 | 5.900 | US$70 | — | (52) | (52) |  | — | (56) | (56)
13 March 2029 (i) | 4.375 | £552 | — | (515) | (515) |  | — | (492) | (492)
5 January 2032 (ii) | Zero | €50 | — | (77) | (77) |  | — | (70) | (70)
19 September 2033 (i) | 7.000 | £400 | — | (328) | (328) |  | — | (319) | (319)
16 October 2043 | 5.375 | US$367 | — | (269) | (269) |  | — | (288) | (288)
12 September 2044 (i) | 4.250 | £550 | — | (538) | (538) |  | — | (539) | (539)
25 September 2045 | 5.250 | US$50 | — | (37) | (37) |  | — | (39) | (39)
21 May 2055 (i) (iii) | 6.500 | £405 | — | (407) | (407) |  | — | (401) | (401)
|  |  | (51) | (2,223) | (2,274) |  | — | (2,254) | (2,254)
Obligations under lease arrangements |  |  | (99) | (232) | (331) |  | (104) | (241) | (345)
Interest accruals |  |  | (45) | — | (45) |  | (44) | — | (44)
|  |  | (232) | (2,624) | (2,856) |  | (854) | (2,658) | (3,512)

(i) Bonds or portions of bonds maturing in 2026, 2029, 2033, 2044 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) The Group has the right to repay at par on 21 May 2030 and every interest payment date thereafter.

192 |

| 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 | 2025 £m | 2024 £m
5,064,902,964 ordinary shares of 6 14/81 pence each (2024: 5,568,107,214) | 313 | 344

The closing price of one Centrica ordinary share on 31 December 2025 was 169.55 pence ( 2024: 133.60 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)
| 2025 million shares | 2024 million shares |  | 2025 million shares | 2024 million shares
1 January | 83.3 | 46.8 |  | 476.8 | 492.0
Shares purchased | 4.8 | 6.8 |  | — | —
Shares cancelled (ii) | — | — |  | (503.2) | (339.7)
Shares transferred from treasury and placed into trust | 18.4 | 39.7 |  | (18.4) | (39.7)
Shares released to employees on vesting | (16.1) | (10.0) |  | (21.3) | (21.2)
Share buyback programme (iii) | — | — |  | 520.4 | 385.4
31 December (i) | 90.4 | 83.3 |  | 454.3 | 476.8

(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 £112 million (2024: £93 million) and treasury shares was £733 million (2024:
£642 million), these are both held at weighted average cost.
(ii) During the period, the Group has cancelled 503,204,250 (2024: 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 £31 million (2024: £21 million), and a corresponding amount has been credited to the capital redemption reserve. In addition, £681
million (2024: £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 2025 and the date of this report.

The Directors propose a final dividend of 3.67 pence per ordinary share for the year ended 31 December 2025 (which would total
£169 million based on shareholding at that date). The dividend will be submitted for formal approval at the Annual General Meeting to be held
on 7 May 2026 and, subject to approval, will be paid on 14 May 2026 to those shareholders registered on 10 April 2026.
The disposal of the Group’s energy solutions businesses in Italy and the Netherlands to Joulz B.V. completed on 6 February 2026. See note
12(b) for further details.

| 193

Centrica plc Annual Report and Accounts 2025

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 pag es 1
to 57.
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.

194 |

| 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 and reportable segments are reported in a manner consistent with the internal reporting provided to and regularly
reviewed by the Group’s Board for the purposes of evaluating segment performance and allocating resources (in accordance with IFRS 8
‘Operating segments’).
D uring the year the Group’s reportable operating segments have been redefined to reflect the way the Board makes decisions about
resources to be allocated to the segments and assess their performance. Information relating to the prior year has be e n restated in lin e with
the new segmental structure.
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 over time as the customer consumes based on the units of energy delivered. 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 custome r-by-c ustomer 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 accordance with the disclosure requirements of IFRS 15, the Group applies the practical expedient available and therefore does not
disclose information about the transaction price allocated to remaining performance obligations. This is on the basis that revenue for energy
supply contracts is recognised based on the amount the Group has the right to invoice, which corresponds directly with the value of the
Group’s performance completed to date. The performance obligations to which this practical expedient applies primarily relate to usage-
based contracts, under which the Group invoices customers at rates that reflect the value of energy transferred to date.

| 195

Centrica plc Annual Report and Accounts 2025

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. Repair and maintenance revenue is recognised at the point in time when the
repair is complete.
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. Variable consideration is recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative recognised revenue will not occur. Th e 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.

196 |

| 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
2025 | 2024 |  | 2025 | 2024
US dollars | 1.34 | 1.25 |  | 1.32 | 1.28
Euro | 1.15 | 1.21 |  | 1.17 | 1.18
Norwegian krone | 13.56 | 14.24 |  | 13.71 | 13.75
Danish krone | 8.56 | 9.02 |  | 8.73 | 8.81

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 pag es 86 to 107, 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 pa g es 86 to 107.

| 197

Centrica plc Annual Report and Accounts 2025

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.

198 |

| 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. Intangible assets expected to be
surrendered within one year are shown as current assets and those expected to be surrendered after one year as non-current assets. 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.
D evelopment and production assets
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 development and production 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. Development and production assets
are tested annually for impairment.
Interests in joint arrangements and associates
T he Group’s joint ventures and associates (as defined in note 6) are accounted for using the equity method.
The Group’s investment in Sizewell C (Holding) Limited includes an interest held through ordinary shares and a shareholder loan advanced to
the associate. Management considers the shareholder loan to form part of the Group’s net investment in the associate, as settlement of the
loan is not likely to occur in the foreseeable future. Accordingly, the shareholder loan is presented within investments in joint ventures and
associates on the Group Balance Sheet, with the interest thereon presented within adjusted operating profit in the Group Income
Statement as it reflects part of the return from this investment.
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.

| 199

Centrica plc Annual Report and Accounts 2025

S2. Summary of material accounting policies
Freehold land is not depreciated. Other PP&E, with the exception of infrastructure production assets, 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 for impairment at least annually. Interests in joint ventures
and associates 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 in 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.

2025 | Retail (supply and services) % | Optimisation % | MAP % | Gas generation % | Nuclear (excluding Sizewell C) (i) %
Growth rate to perpetuity (including inflation) | 2.0 | 2.0 | 2.0 | 2.0 | N/A
Pre-tax discount rate | 12.0 | 12.7 | 8.7 | 10.7 | 13.6
2024 | Retail (supply and services) % | Optimisation % | MAP % | Gas generation % | Nuclear (i) %
Growth rate to perpetuity (including inflation) | 2.0 | 2.0 | n/a | 2.0 | N/A
Pre-tax discount rate | 10.7 | 12.0 | n/a | 10.7 | 15.3

(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.

200 |

| 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. |
Optimisation | 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. |

| 201

Centrica plc Annual Report and Accounts 2025

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.

202 |

| 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, battery storage assets 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.

| 203

Centrica plc Annual Report and Accounts 2025

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.

204 |

| 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.
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.

| 205

Centrica plc Annual Report and Accounts 2025

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 2025 or 2024. 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 page s 32 to 39 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 r esults for the period under IFRS.

206 |

| 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 da te, eit her 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 has inves tments in Lake Acquisitions Limited (‘Lake’) and Sizewell C (Holding) Limited (‘Sizewell C’). Both are accounted for a s
asso ciates.
Sizewell C
The Group holds both a 15% equity interest in Sizewell C and is providing a shareholder loan to the investee, funded over the construction
period. These are both classified within investments on the Group’s balance sheet. See notes 3 and 14. The loan commitment is at a market
rate of interest and cannot be net cash-settled, and hence is outside the scope of IFRS 9 with the exception of impairment requirements.
Any expected credit loss, being the present value of the difference between the contractual cash flows due after draw down and the cash
flows the Group expects to receive, will not be material.
Sizewell C itself is financed under the Nuclear Regulated Asset Base (RAB) financing model underpinned by the Nuclear Energy (Financing)
Act 2022, whereby the project is subject to an economic regulatory framework that allows certain construction and financing costs to be
recovered from consumers through regulated charges both prior to the commencement of operations, and during the generation phase. It
is funded through the Nuclear RAB levy, charged to energy suppliers from 1 November 2025.
During the construction phase, Sizewell C expects to capitalise the cost of construction in accordance with IAS 16 ‘Property, Plant and
Equipment’. The accounting RAB is initially measured at historic cost, including direct construction costs, capitalised borrowing costs and
directly attributable development and project costs. It will subsequently be measured at amortised cost and depreciation will commence
once the asset is operational. Therefore, the accounting RAB reflects actual incurred expenditure, not the value of future recoveries
permitted by the regulator.
Conversely, the regulatory RAB is calculated under the regulated asset financing model and its purpose is to determine future permitted
recoveries, rather than reflecting historical cost. The regulatory RAB is typically higher because it includes items such as capitalised
financing returns, indexation and broader cost allowances including certain operating costs, regulatory adjustments and incentive
mechanisms.
Under current IFRS, Sizewell C is expected to generate revenue, calculated with reference to the regulatory financing model, once
operational and the Group will recognise its share of the investee’s results at that time. Interest is earned on the shareholder loan at a rate of
9% over the course of the investment. Under the requirements of IAS 28 ‘Investments in Joint Ventures and Associates’ the Group
eliminates its 15% equity share of the gains realised on the shareholder loan, being the 9% interest earned, less the cost of providing the
funding to the investee.
Lake
The following accounting policies are specific to the Lake associate:
(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.

| 207

Centrica plc Annual Report and Accounts 2025

S2. Summary of material accounting policies
(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 30 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.

208 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 page s 32 to 39.
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 infrastructure 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 Profit at Ris k (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.

| 209

Centrica plc Annual Report and Accounts 2025

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 2025 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 Irelan d a nd 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 2025, there were no material unhedged non-functional currency monetary assets or liabilities,
firm commitments or probable forecast transactions (2024: £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 overseas investments. 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.

210 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2025 , assuming that a reasonably possible change in the relevant risk variable had occurred at 31 December
2025, 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 2025 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 2025 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) | 2025 Impact on profit £m | 2024 Impact on profit £m
US dollar – increase/(decrease) | 174/(189) | 192/(212)
Euro – increase/(decrease) | (78)/81 | (59)/59

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).

| 2025 |  | 2024
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) | 66 | 89 | +/-25 |  | 98 | 85 | +/-32
European gas (€/MWh) | 26 | 32 | +/-31 |  | 39 | 33 | +/-32
UK power (£/MWh) | 72 | 78 | +/-34 |  | 80 | 74 | +/-39
UK emissions (€/tonne) | 85 | n/a | +/-7 |  | 66 | n/a | +/-7
UK oil (US$/bbl) | 61 | 66 | +/-55 |  | 71 | n/a | +/-46
North American gas (US cents/therm) | 38 | 46 | +/-44 |  | 38 | 38 | +/-42
Japan Korea Marker (JKM) gas price (US$/MMBtu) | 9 | 11 | +/-28 |  | 12 | n/a | +/-26

(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.

| 211

Centrica plc Annual Report and Accounts 2025

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) | 2025 Impact on profit (i) £m | 2024 Impact on profit (i) £m
UK gas price – increase/(decrease) | 109/(119) | 258/(265)
UK power price – increase/(decrease) | 201/(201) | 406/(411)
European gas price – (decrease)/increase | (183)/184 | (146)/144
Other UK energy prices (oil and emissions) – increase/(decrease) | 94/(94) | (49)/49
UK and European energy prices (combined) – increase/(decrease) | 221/(230) | 469/(483)
North American gas price – increase/(decrease) | 78/(77) | 44/(52)
JKM gas price – (decrease)/increase | (30)/30 | (2)/2

(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 2025 the VaR associated with proprietary trading was £3 million (2024: £6 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) | 2025 Impact on profit (i) £m | 2024 Impact on profit (i) £m
Level 3 proprietary trades – increase/(decrease) (ii) | 1/(1) | 72/(62)

(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 are as follows:

Incremental profit/(loss) | 2025 Impact on profit (i) £m | 2024 Impact on profit (i) £m
Level 3 non-proprietary trades – increase/(decrease) (ii) | (219)/208 | (182)/152

(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.

212 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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.

| 2025
| 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 | Investments in joint ventures and associates (iii) £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 | 14 | — | — | — | 5 |  | 3,515 | — | 59 | —
AA- to A- | 506 | — | — | — | 710 |  | — | 337 | — | —
BBB+ to BBB- | 506 | — | — | — | 24 |  | — | 433 | — | —
BB+ to BB- | 93 | — | — | — | 23 |  | — | 58 | — | —
B+ or lower | 80 | — | — | — | — |  | — | 27 | — | —
Unrated (iv) | 5,031 | 48 | 29 | 343 | 30 |  | — | 21 | — | 92
| 6,230 | 48 | 29 | 343 | 792 |  | 3,515 | 876 | 59 | 92

| 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 | Investments in joint ventures and associates (iii) £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 (iv) | 4,605 | 31 | 3 | — | 6 |  | — | 56 | — | 84
| 6,469 | 31 | 3 | — | 1,329 |  | 5,009 | 1,576 | 108 | 84

(i) The Group holds a provision of £1,818 million (2024: £1,532 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 other loans receivable of £48 million (2024: £31 million) – see note 25.
(iii) Investments in joint ventures and associates relates to the unrated shareholder loan of £343 million to Sizewell C (see note 14(a)). Sizewell C itse lf is financed under the
Nuclear Regulated Asset Base (RAB) financing model underpinned by the Nuclear Energy (Financing) Act 2022, whereby the project is subject to an economic regulatory
framework that allows certain construction and financing costs to be recovered from consumers through regulated charges both prior to the commencement of
operations, and during the generation phase.
(iv) The unrated counterparty receivables primarily comprise amounts in respect of downstream customers, subsidiaries of rated entities, exchanges or clearing houses.

| 213

Centrica plc Annual Report and Accounts 2025

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 £1,274 million (2024:
£2,005 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.

214 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2025 | <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) | (149) | (49) | (33) | (12) | (9) | 76 | (176)
Gross energy procurement contracts and other derivative buy trades carried at fair value | (1,513) | (1,057) | (868) | (656) | (771) | (3,192) | (8,057)
Foreign exchange derivatives that will be settled on a gross basis: |  |  |  |  |  |  |
Outflow | (8,971) | (1,156) | (775) | (129) | (7) | — | (11,038)
Inflow | 9,017 | 1,179 | 775 | 125 | 7 | — | 11,103
Trade and other payables | (4,528) | (116) | (10) | (4) | — | — | (4,658)
Borrowings (bank loans, bonds, overdrafts and interest) | (264) | (183) | (129) | (681) | (497) | (2,157) | (3,911)
| (6,408) | (1,382) | (1,040) | (1,357) | (1,277) | (5,273) | (16,737)
Leases: (ii) |  |  |  |  |  |  |
Minimum lease payments | (101) | (69) | (45) | (35) | (28) | (105) | (383)
Capital elements of leases | (99) | (57) | (38) | (29) | (23) | (85) | (331)

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)

(i) Proprietary energy trades are excluded from this maturity analysis because these contracts are held for trading purposes and often net settled. 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.

| 215

Centrica plc Annual Report and Accounts 2025

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 2024 | (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)
Actuarial losses on defined benefit pension schemes | — | — | (429) | — | — | — | — | (429)
Employee share schemes: |  |  |  |  |  |  |  |
Exercise of awards | — | — | — | — | 48 | (29) | — | 19
Value of services provided | — | — | — | — | — | 56 | — | 56
Purchase of own shares | — | — | — | — | (9) | — | — | (9)
Share buyback programme: |  |  |  |  |  |  |  |
Purchase of Treasury shares | — | — | — | — | (827) | — | — | (827)
Movement on accrual for committed share purchases | — | — | — | — | — | — | 57 | 57
Shares cancelled in the year (note 26) | — | — | — | — | 681 | — | 31 | 712
Impact of cash flow hedging | (6) | — | — | — | — | — | — | (6)
Share of other comprehensive gain of joint ventures and associates, net of taxation | (8) | — | 4 | — | — | — | — | (4)
Exchange differences on translation of foreign operations | — | 24 | — | — | — | — | — | 24
Exchange differences reclassified to Group Income Statement on disposal | — | 2 | — | — | — | — | — | 2
Revaluation of other investments and securities measured at FVOCI | — | — | — | (4) | — | — | — | (4)
Taxation on above items | 1 | — | 105 | (1) | — | — | — | 105
31 December 2025 | (23) | (194) | (2,178) | (26) | (842) | 96 | 568 | (2,599)

216 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

S4. Other equity
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 2025 the cumulative nominal value of shares repurchased and
subsequently cancelled was £80 million (2024: £49 million).
At the year-end, the Group has recognised a financial liability of £14 million (2024: £75 million) relating to the share buyback programme. See
Treasury and own shares reserve section for more details.
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 2025. The £230 million tranche which was underway at the 2024 year-
end concluded in February 2025. Once this completed, a further tranche of £270 million, announced in December 2024, began in March
2025 and completed in June 2025.
In February 2025, a further £500 million extension was announced, split into two tranches of £250 million each. The first of these tranches
began in June 2025 and was completed in September 2025. The second tranche began in September 2025 and was underway at the year
end date.
Once complete, this will take the total value of shares repurchased under the current programme to £2 billion.
During the year ended 31 December 2025, the Group purchased 520 million ordinary shares, representing approximately 10.3% of the
issued ordinary share capital at 31 December 2025, at an average price of 159.0 pence per share, and an aggregate cost of £827 million
under the share buyback programme. The associated cash outflow is £827 million.
The Group has determined that the terms and conditions of the tranche ongoing at the year end date, mean that, at 31 December 2025, it
was unable to cancel the obligation arising under the contract signed. Accordingly, a financial liability of £14 million was recognised at 31
December 2025 representing the difference between purchases paid for to date under the current tranche, and the maximum potential
repurchase under the contract of £250 million.
The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the financial liability
of £68 million recognised at 31 December 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
January 2025 | 26,826,326 | 137.9 | 37 | 31
February 2025 | 21,544,046 | 143.9 | 31 | —
Total | 48,370,372 | 140.6 | 68 | —

The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the £270 million
programme which ran from March 2025 to June 2025 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 2025 | 29,062,088 | 148.0 | 43 | 227
April 2025 | 24,639,633 | 150.2 | 37 | 190
May 2025 | 78,712,497 | 153.7 | 121 | 69
June 2025 | 43,054,114 | 160.3 | 69 | —
Total | 175,468,332 | 153.9 | 270 | —

| 217

Centrica plc Annual Report and Accounts 2025

S4. Other equity
The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the £250 million
programme which ran from June 2025 to September 2025 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
June 2025 | 27,827,440 | 165.3 | 46 | 204
July 2025 | 49,444,362 | 158.2 | 78 | 126
August 2025 | 32,482,724 | 164.7 | 54 | 72
September 2025 | 45,636,106 | 158.4 | 72 | —
Total | 155,390,632 | 160.9 | 250 | —

The monthly breakdown of all shares purchased and the average price paid per share (excluding expenses) in relation to the further £250
million programme for the year ended 31 December 2025 were as follows. This includes £3 million relating to shares committed to being
purchased at 31 December 2025 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
September 2025 | 13,785,920 | 166.8 | 23 | 227
October 2025 | 39,497,073 | 173.0 | 67 | 160
November 2025 | 49,899,005 | 169.8 | 85 | 75
December 2025 | 38,032,439 | 167.6 | 64 | 11
Total | 141,214,437 | 169.2 | 239 | 11

218 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

S5. Hedg e 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 or cash flow hedges.

The fair values of derivatives and primary financial instruments in hedge accounting relationships at 31 December were as follows:

|  | 2025 |  | 2024
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 | — | (95) | 40 |  | — | (134) | (14)
Foreign exchange risk | Cash flow hedge | 38 | (16) | (5) |  | 32 | (6) | (8)

2025 | 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) | (37) | 100 | N/A
Foreign exchange risk | Cash flow hedge | 2032 | GBP to euro at 1.171 | €50 million | Euro bonds | (4) | N/A | 5
| Cash flow hedge | 2036-2038 | GBP to yen at 198.86 | ¥20 billion | Yen bank loans | 6 | N/A | (22)

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)

(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.

| 219

Centrica plc Annual Report and Accounts 2025

S5. Hedge accounting
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.
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.

220 |

| 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 mark et 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.

| 2025 |  | 2024
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 | — | 718 | 80 | 798 |  | — | 1,252 | 164 | 1,416
Foreign exchange derivatives | — | 78 | — | 78 |  | — | 160 | — | 160
Debt instruments | 49 | — | 43 | 92 |  | 73 | — | 28 | 101
Equity instruments | 10 | — | 49 | 59 |  | 35 | — | 56 | 91
Cash and cash equivalents | — | 3,515 | — | 3,515 |  | — | 5,009 | — | 5,009
Total financial assets at fair value | 59 | 4,311 | 172 | 4,542 |  | 108 | 6,421 | 248 | 6,777
Financial liabilities |  |  |  |  |  |  |  |  |
Derivative financial instruments: |  |  |  |  |  |  |  |  |
Energy derivatives | — | (679) | (140) | (819) |  | — | (1,033) | (131) | (1,164)
Interest rate derivatives | — | (95) | — | (95) |  | — | (134) | — | (134)
Foreign exchange derivatives | — | (122) | — | (122) |  | — | (89) | — | (89)
Contingent consideration payable | — | — | (109) | (109) |  | — | — | (100) | (100)
Total financial liabilities at fair value | — | (896) | (249) | (1,145) |  | — | (1,256) | (231) | (1,487)

The reconciliation of the Level 3 fair value measurements during the year is as follows:

| 2025 |  | 2024
| Financial assets £m | Financial liabilities £m |  | Financial assets £m | Financial liabilities £m
Level 3 financial instruments |  |  |  |  |
1 January | 248 | (231) |  | 217 | (395)
Total realised and unrealised (losses)/gains: |  |  |  |  |
Recognised in Group Income Statement | (26) | (60) |  | 95 | 45
Recognised in Other Comprehensive Income | (9) | — |  | (30) | —
Net movement in contingent consideration liability | — | (9) |  | — | 23
Purchase of other investments (note 24) | 20 | — |  | 53 | —
Settlements | (64) | 54 |  | (72) | 100
Transfers between Level 3 and Level 2 (i) | 3 | (2) |  | (15) | (3)
Foreign exchange movements | — | (1) |  | — | (1)
31 December | 172 | (249) |  | 248 | (231)
Total (losses)/gains for the period for Level 3 financial instruments held at the end of the reporting period | (26) | (60) |  | 95 | 45

(i) Transfers between levels are deemed to occur at the beginning of the reporting year.

| 221

Centrica plc Annual Report and Accounts 2025

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 4% per annum (2024: 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 4% (Europe) and 3% (North America) per annum (2024: 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 | 2025 £m | 2024 £m
1 January | 110 | 142
Net (losses)/gains deferred on transactions in the period | (10) | 10
Net amounts recognised in Group Income Statement | (45) | (37)
Exchange differences | 3 | (5)
31 December | 58 | 110

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.

222 |

| 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:

|  |  | 2025 |  | 2024
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 | (2,197) | (2,240) | Level 1 |  | (2,184) | (2,229) | Level 1
| Level 2 | 25 | (77) | (86) | Level 2 |  | (70) | (81) | 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 2025 | 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 | 2,726 | (1,850) | 876 | (39) | (81) | 756
Derivative financial liabilities | (2,886) | 1,850 | (1,036) | 39 | 203 | (794)
|  |  | (160) |  |  | (38)
Balances arising from commodity contracts: |  |  |  |  |  |
Accrued trading and energy procurement income and unbilled downstream energy income | 4,030 | (2,305) | 1,725 | — | — | 1,725
Accruals for commodity costs | (3,893) | 2,305 | (1,588) | — | — | (1,588)
Cash and financing arrangements: |  |  |  |  |  |
Cash and cash equivalents | 4,307 | — | 4,307 | (35) | — | 4,272
Bank loans and overdrafts | (149) | — | (149) | 35 | — | (114)

|  |  |  | 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)

(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.

| 223

Centrica plc Annual Report and Accounts 2025

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. T he Group’s insurance contract portfolio
is comprised of a large number of contracts with small individual values, and so results in a high volume of claims with relatively low unit cost.
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 labo ur 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 nu mber 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 initi al 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 signi ficant 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 G roup.

224 |

| 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.

| 2025 |  | 2024
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 | (35) | (140) | (175) |  | (39) | (126) | (165)
Changes in the Group Income Statement: |  |  |  |  |  |  |
Insurance revenue: |  |  |  |  |  |  |
Contracts measured under the Premium Allocation Approach | 799 | — | 799 |  | 800 | — | 800
Insurance service expenses: |  |  |  |  |  |  |
Incurred claim and other insurance service expenses recognised in cost of sales | — | (474) | (474) |  | — | (460) | (460)
Incurred claim and other insurance service expenses recognised in operating costs | — | (288) | (288) |  | — | (306) | (306)
Total insurance service expenses | — | (762) | (762) |  | — | (766) | (766)
Total changes in the Group Income Statement and insurance service result | 799 | (762) | 37 |  | 800 | (766) | 34
Cash flows: |  |  |  |  |  |  |
Premiums received | (798) | — | (798) |  | (796) | — | (796)
Claims and other service expenses paid | — | 814 | 814 |  | — | 752 | 752
Total cash flows | (798) | 814 | 16 |  | (796) | 752 | (44)
31 December | (34) | (88) | (122) |  | (35) | (140) | (175)

| 225

Centrica plc Annual Report and Accounts 2025

S8. Related party transactions

The Group’s principal related parties mainly arise from its investments in joint ventures and associates, and other related entities. The disclosures below, including comparatives, only refer to related parties that were related in the current reporting period, and from the date the party was deemed to be related.

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:

| 2025 |  | 2024
31 December | Purchase of goods and services £m | Sale of goods and services £m | Amounts owed to £m | Amounts owed by £m |  | Purchase of goods and services £m | Sale of goods and services £m | Amounts owed to £m | Amounts owed by £m
Associates: |  |  |  |  |  |  |  |  |
Lake Acquisitions Limited Group (i) | (549) | — | (46) | — |  | (772) | — | (52) | —
Sizewell C (ii) | — | — | — | 343 |  | — | — | — | —
Other | — | 6 | — | — |  | — | — | — | —
Joint ventures: |  |  |  |  |  |  |  |  |
Isle of Grain (iii) | (5) | — | (3) | — |  | — | — | — | —
| (554) | 6 | (49) | 343 |  | (772) | — | (52) | —

(i) Purchase of goods and services, and amounts owed to, relate to power purchase agreements with EDF Energy Nuclear Generation Limited, a subsidiary of Lake
Acquisitions Limited. The Group had also committed facilities to the Lake Acquisitions Limited Group totalling £40 million (2024: £40 million), although nothing has been
drawn at 31 December 2025.
(ii) Amounts owed by Sizewell C (Holding) Limited relate to shareholder loans outstanding at the balance sheet date, including £5 million of interest accrue d. T he Group has
committed to invest a further £902 million, comprising £812 million of shareholder loans and £90 million of equity injections. These amounts are disclosed as
commitments, see note 23. Loans made to Sizew ell C (Holding) Limited bear interest at 9% and are treated as part of the Group’s investment in the associate.
(iii) Purchase of goods and services, and amounts owed to, relate to payments for LNG capacity at the Isle of Grain LNG terminal. These transactions are conducted on an
arm’s length basis with a subsidiary of Garden Topco L imited, Grain LNG Limited, which became a related party during the year. At the balance sheet date the Group has
£243 million of contracted LNG capacity commitments to Grain LNG Limited, see note 23.

Remuneration of key management personnel |  |
Year ended 31 December | 2025 £m | 2024 £m
Short-term benefits | 5.4 | 5.3
Post-employment benefits | 0.3 | 0.2
Share-based payments | 4.0 | 4.0
| 9.7 | 9.5

Key management personnel comprise members of the Board and Executive Committee, a total of 15 individuals at 31 December 2025
(2024: 13).

Remuneration of the Directors of Centrica plc |  |
Year ended 31 December | 2025 £m | 2024 £m
Total emoluments (i) | 4.9 | 4.8
Amounts receivable under long-term incentive schemes | 3.4 | 2.0
Contributions into pension schemes | 0.2 | 0.1
| 8.5 | 6.9

(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 Repo rt on pages 86 to 107.
S9. Auditor’s remuneration

Year ended 31 December | 2025 £m | 2024 £m
Fees payable to the Company’s auditor for: |  |
Audit of the Company's individual and consolidated Financial Statements | 5.8 | 5.5
Audit of the Company’s subsidiaries | 2.2 | 2.4
Total fees related to the audit of the parent and subsidiary entities | 8.0 | 7.9
Fees payable to the Company’s auditor and its associates for other services: |  |
Audit-related assurance services (i) | 0.9 | 0.8
Total fees | 8.9 | 8.7
Fees in respect of pension scheme audits (ii) | 0.2 | 0.2

(i) Predominantly relates to the review of the condensed interim Financial Statements.
(ii) The pension scheme audit continues to be performed by PricewaterhouseCoopers LLP.

226 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2025 | Principal activity | Country of incorporation/ registered address key (i) | Class of shares held
Centrica Beta Holdings Limited (ii) | 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 2025 | Principal activity | Country of incorporation/ registered address key (i) | Class of shares held
Accord Energy Ukraine Holdings ApS (iii) | Holding company | Denmark | L | Ordinary shares
Accord Energy Ukraine LLC (iii) | Energy services and wholesale energy trading | Ukraine | AJ | Ordinary shares
Ardrar Holdings Limited (iii) | Holding company | Republic of Ireland | B | Ordinary shares
Ardrar Limited (iii) | Professional referrals and scheduling | Republic of Ireland | B | Ordinary shares
Ardrar Technology Limited (iii) | Intellectual property company | Republic of Ireland | B | Ordinary shares
Astrum Solar, Inc. | Home and/or commercial services | United States | C | 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 (ii) | 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
Caythorpe Gas Storage Limited | Non-trading | United Kingdom | D | Ordinary shares
CBS Energy Assets Belgium B.V. | Construction and operation of battery storage | Belgium | E | Ordinary shares
CBS Energy Storage Assets UK Limited | Construction and operation of battery storage | United Kingdom | A | Ordinary shares
CBS Services Holdings Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
CBS Solar Assets UK Limited | Power generation | United Kingdom | A | Ordinary shares
Centrica Barry Limited | Power generation | United Kingdom | A | Ordinary shares
Centrica Business Holdings Inc. | Holding company | United States | C | Ordinary shares
Centrica Business Solutions (Generation) Limited | Power generation | United Kingdom | A | Ordinary shares
Centrica Business Solutions B.V. (iv) | Energy management products and services | Netherlands | F | Ordinary shares
Centrica Business Solutions Belgium NV | Demand response aggregation | Belgium | E | Ordinary shares
Centrica Business Solutions Canada Inc. | Holding company | Canada | G | Ordinary shares
Centrica Business Solutions Deutschland GmbH | Demand response aggregation | Germany | H | Ordinary shares
Centrica Business Solutions France SAS | Demand response aggregation | France | I | Ordinary shares
Centrica Business Solutions Ireland Limited | Energy management products and services | Republic of Ireland | B | Ordinary shares
Centrica Business Solutions Italia Srl (iv) | Energy management products and services | Italy | J | Ordinary shares
Centrica Business Solutions Management Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
Centrica Business Solutions Services, Inc. | Energy management products and services | United States | C | Ordinary shares
Centrica Business Solutions UK Limited | Energy management products and services | United Kingdom | A | Ordinary shares

| 227

Centrica plc Annual Report and Accounts 2025

S10. Related undertakings |  |  |  |
31 December 2025 | 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 | C | 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 Investments Limited (ii) (v) | Holding company | United Kingdom | A | Ordinary shares
Centrica Energy Limited | Wholesale energy trading | United Kingdom | A | Ordinary shares
Centrica Energy, LLC | Energy services and wholesale energy trading | United States | K | Membership interest
Centrica Energy Marketing Limited | Wholesale energy trading | United Kingdom | A | Ordinary shares
Centrica Energy Pty Ltd (iii) | Business services | Australia | AK | Ordinary shares
Centrica Energy Storage Limited | Gas production and processing | United Kingdom | D | Ordinary shares
Centrica Energy Trading A/S | Energy services and wholesale energy trading | Denmark | L | Ordinary shares
Centrica Energy Trading GmbH | Energy services and wholesale energy trading | Germany | M | Ordinary shares
Centrica Energy Trading, LLC | Energy services and wholesale energy trading | United States | K | Membership interest
Centrica Energy Trading Pte. Ltd | Energy services and wholesale energy trading | Singapore | N | Ordinary shares
Centrica Energy Trading Srl (iii) | Business services | Italy | AL | Ordinary shares
Centrica Engineers Pension Trustees Limited | Dormant | United Kingdom | A | Ordinary shares
Centrica Finance (Scotland) Limited (ii) | Holding company | United Kingdom | O | Ordinary shares
Centrica Finance Norway Limited | Dormant | Jersey | P | Ordinary shares
Centrica Gamma Holdings Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
Centrica Hive Limited | Energy management products and services | United Kingdom | A | Ordinary shares
Centrica Holdings Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
Centrica India Offshore Private Limited | Business services | India | Q | Ordinary shares
Centrica Innovations UK Limited (ii) | Investment company | United Kingdom | A | Ordinary shares
Centrica Innovations US, Inc. | Investment company | United States | C | Ordinary shares
Centrica Insurance Company Limited | Insurance provision | Isle of Man | R | Ordinary and preference shares
Centrica Lake Limited (ii) | 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 | F | Ordinary shares
Centrica Nigeria Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
Centrica Offshore Investments Limited (ii) | Non-trading | United Kingdom | D | Ordinary shares
Centrica Offshore UK Limited | Gas production | United Kingdom | D | Ordinary shares
Centrica Overseas Holdings Limited (ii) | 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 | In liquidation | United Kingdom | O | Ordinary shares
Centrica Resources (Nigeria) Limited | Non-trading | Nigeria | S | Ordinary shares
Centrica River Limited (ii) (iii) | Holding company | United Kingdom | A | 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 (ii) | Holding company | United Kingdom | D | Ordinary shares
Centrica Supply Chain Limited | 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 | T | Ordinary shares

228 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

S10. Related undertakings |  |  |  |
31 December 2025 | Principal activity | Country of incorporation/ registered address key (i) | Class of shares held
Centrica Trust (No.1) Limited (ii) | Healthcare trust | United Kingdom | A | Ordinary shares
CP Energy Storage Assets Sweden 1 AB | Construction of battery storage | Sweden | U | Ordinary shares
CP Energy Storage Assets Sweden 2 AB | Construction of battery storage | Sweden | U | Ordinary shares
DEML Investments Limited | Holding company | Canada | G | Ordinary shares
DER Development No. 10 Ltd. | Holding company | Canada | G | 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 Rudox, LLC | Energy management products and services | United States | C | Membership interest
Energy For Tomorrow (ii) | Not-for-profit energy services | United Kingdom | A | Limited by guarantee
Ensek Holdings Limited (ii) | Holding company | United Kingdom | V | Ordinary shares
Ensek Limited | Information technology consultancy activities | United Kingdom | V | 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
GF One Limited (vi) | In liquidation | United Kingdom | W | Ordinary shares
GF Two Limited (vi) | In liquidation | United Kingdom | W | Ordinary shares
Greener Ideas Limited (vii) | Development of flexible power generation sites | Republic of Ireland | B | Ordinary shares
Inteligen Limited | Dormant | United Kingdom | V | 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 | L | Ordinary shares
P.H Jones Group Limited (ii) | Holding company | United Kingdom | A | Ordinary shares
Pioneer Shipping Limited | LNG vessel chartering | United Kingdom | A | Ordinary shares
Rolleston 2 Solar Farm Limited | 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 | C | Membership interest
Vista Solar, Inc. | Energy management products and services | United States | C | Ordinary shares

| 229

Centrica plc Annual Report and Accounts 2025

S10. Related undertakings
Investments held indirectly by Centrica plc with 69% voting rights

31 December 2025 | Principal activity | Country of incorporation/ registered address key (i) | Class of shares held
Bowland Resources (No.2) Limited | Decommissioning of exploration and production assets | United Kingdom | A | Ordinary shares
Bowland Resources 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 | X | 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 | Y | Ordinary shares
Spirit Energy Norway AS | Non-trading | Norway | Z | 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. | Non-trading | Netherlands | X | Ordinary shares
Spirit North Sea Gas Limited | Gas and/or liquid exploration and production | United Kingdom | Y | Ordinary shares
Spirit Norway Holdings AS | Holding company | Norway | Z | Ordinary shares
Spirit Norway Limited | Holding company | United Kingdom | A | Ordinary shares
Spirit Production (Services) Limited | Business services | United Kingdom | Y | 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) Companies where Centrica plc has provided guarantees under section 479C of the Companies Act 2006 over the liabilities of these entities. T hey are, therefore,
exempt from audit under the requirements of sections 479A-C of the Companies Act 2006.
(iii) Incorporated or acquired in 2025.
(iv) Sold in February 2026.
(v) Entity changed its name during the year from Centrica Hydrogen Innovations Limited to Centrica Energy Investments 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.

230 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

S10. Related undertakings

(b) | Subsidiary undertakings – partnerships held indirectly by Centrica plc with 100% voting rights

31 December 2025 | Principal activity | Country of incorporation/ registered address key (i) | Class of shares held
CF 2016 LLP (ii) | Group financing | United Kingdom | A | Membership interest
CFCEPS LLP (ii) | Group financing | United Kingdom | A | Membership interest
Direct Energy Resources Partnership | Holding entity | Canada | G | Membership interest
Finance Scotland 2016 Limited Partnership | Group financing | United Kingdom | O | Membership interest
Finance Scotland CEPS Limited Partnership | Group financing | United Kingdom | O | Membership interest

(i) For list of registered addresses, refer to note S10(d).
(ii) Companies where Centrica plc has provided guarantees under section 479C of the Companies Act 2006 over the liabilities of these entities. Th ey are, therefore, exempt
from audit under the r equirements of sections 479A-C of the Companies Act 2006.
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 2025 | 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 | AA | Membership interest | 40.0%
EDPRNA DG Centrica MT, LLC (iii) | Energy supply and/or services | United States | AB | Membership interest | 50.0%
Eurowind Polska VI Sp z.o.o. | Operation of an onshore windfarm | Poland | AC | Ordinary shares | 50.0%
Garden Topco Limited (iv) | Holding company | United Kingdom | AI | Ordinary shares | 50.0%
Three Rivers Solar 1, LLC | Energy supply and/or services | United States | AA | Membership interest | 40.0%
Three Rivers Solar 2, LLC | Energy supply and/or services | United States | AA | Membership interest | 40.0%
Three Rivers Solar 3, LLC | Energy supply and/or services | United States | AA | Membership interest | 40.0%
Vindpark Keblowo ApS | Holding company | Denmark | AD | Ordinary shares | 50.0%
Associates (ii) |  |  |  |  |
Gasrec Limited (iv) | Manufacture of gas | United Kingdom | AO | Ordinary shares | 16.4%
Grid Edge Limited (iv) | Business and domestic software development | United Kingdom | AM | Ordinary shares | 37.8%
Kestrel Energy Storage DAC | Offshore gas storage development | Republic of Ireland | AF | Ordinary shares | 33.3%
Lake Acquisitions Limited | Holding company | United Kingdom | AG | Ordinary shares | 20.0%
Sizewell C (Holding) Limited (iv) | Holding company | United Kingdom | AN | Ordinary shares | 15.0%
Tickd Limited | Trade of electricity | United Kingdom | AH | Ordinary shares | 20.0%
Young Energy Holding Company Limited | Offshore windfarm development | Republic of Ireland | AE | 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) Entity changed its name during the year from C2 Centrica MT, LLC to EDPRNA DG Centrica MT, LLC.
(iv) Incorp or ated or acquired in 2025.
All Group companies principally operate within their country of incorporation unless noted otherwise.

| 231

Centrica plc Annual Report and Accounts 2025

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 | 2111 Ellsworth Boulevard, Malta NY 12020, United States
D | Woodland House, Woodland Park, Hessle, HU13 0FA, United Kingdom
E | Roderveldlaan 2 bus 2, 2600 Antwerp, Belgium
F | Wiegerbruinlaan 2A, 1422 CB Uithoorn, Netherlands
G | Suite 2400, 745 Thurlow Street, Vancouver BC V6E 0C5, Canada
H | Neuer Wall 10, 20354 Hamburg, Germany
I | 60 Avenue Charles de Gaulle, Cs 60016, 92573, Neuilly sur Seine Cedex, France
J | Milan (MI), Via Emilio Cornalia 26, Italy
K | c/o Corporate Creations Network Inc., 1521 Concord Pike Suite 201, Wilmington, DE19803, United States
L | Skelagervej 1, 9000 Aalborg, Denmark
M | Esplanade 40, 20354 Hamburg, Germany
N | 220 Orchard Road, #05-01 Midpoint Orchard, Singapore 238852, Republic of Singapore
O | 1 Waterfront Avenue, Edinburgh, Scotland EH5 1SG, United Kingdom
P | 47 Esplanade, St Helier, JE1 0BD, Jersey, Channel Islands
Q | G-74, LGF, Kalkaji, New Delhi, South Delhi, 110019, India
R | 3rd floor, St George's Court, Upper Church Street, Douglas, IM1 1EE, Isle of Man
S | Sterling Towers, 20 Marina, Lagos, Nigeria
T | 48-50 Sackville Street, Port of Spain, Trinidad and Tobago
U | Box 16285, 103 25 Stockholm, Sweden
V | Hounds Gate, 30-34 Hounds Gate, Nottingham, NG1 7AB, United Kingdom
W | 1 More London Place, London, SE1 2AF, United Kingdom
X | Transpolis Building, Polarisavenue 39, 2132 JH Hoofddorp, Netherlands
Y | 5th floor, IQ Building, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, United Kingdom
Z | c/o Advokatfirmaet Schjødt AS Kongsgärdbakken 3, Stavanger, Rogaland 4005, Norway
AA | 1209 Orange Street, Wilmington, New Castle County, DE 19801, United States
AB | Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808, United States
AC | Ul. Wysogotowska 23, 62-081 Przezmierowo, Wielkpolskie, Poland
AD | Mariagervej 58B, DK 9500 Hobro, Denmark
AE | Block 1, Harcourt Centre, Harcourt Street, Dublin 2, DO2 YA40, Republic of Ireland
AF | 1 Stokes Place, St Stephen's Green, Dublin, Republic of Ireland
AG | Nova North, 11 Bressenden Place, London, SW1E 5BY, United Kingdom (i)
AH | 4th Floor, Regent House, 50 Frederick Street, Birmingham, B1 3HR, United Kingdom
AI | Grain Road, Rochester, Kent, ME3 0AB, United Kingdom
AJ | Lavrska Street 20, 01601 Kyiv, Ukraine
AK | Level 5, 60 Martin Place, 2000 Sydney NSW, Australia
AL | Viale Monte Santo 1/3, 20124 Milano, Italy
AM | 3 Waterfront Business Park, Dudley Road, Brierley Hill, West Midlands, DY5 1LX, United Kingdom
AN | 25 Copthall Avenue, London, EC2R 7BP, United Kingdom
AO | C/O Ampa Holdings LLP Level 19, The Shard, 32 London Bridge Street, London, SE1 9SG, United Kingdom

(i) Lake Acquisitions Limited changed its registered address during the year from 90 Whitfield Street, London, W1T 4EZ, United Kingdom to the address listed above.

232 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

S10. Related undertakings

(e) | Summarised financial information

Management has determined that the investments in Lake Acquisitions Limited, Garden Topco Limited and Sizewell C (Holding) Limited
are 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 t hese investees.
Lake Acquisitions Limited
Summarised statement of total comprehensive income

| 2025 |  | 2024
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 | 2,913 | 583 | — | 583 |  | 4,040 | 808 | — | 808
Operating profit/(loss) before interest and tax | 1,237 | 247 | (17) | 230 |  | 2,148 | 430 | (56) | 374
Profit/(loss) for the year | 896 | 179 | (11) | 168 |  | 1,494 | 299 | (43) | 256
Other comprehensive income | 20 | 4 | — | 4 |  | 189 | 38 | — | 38
Total comprehensive income/(loss) | 916 | 183 | (11) | 172 |  | 1,683 | 337 | (43) | 294

Summarised balance sheet

| 2025 |  | 2024
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 | 17,793 | 3,559 | 562 | 4,121 |  | 18,201 | 3,640 | 638 | 4,278
Current assets | 3,642 | 728 | — | 728 |  | 3,791 | 758 | — | 758
Current liabilities | (2,399) | (480) | — | (480) |  | (1,526) | (305) | — | (305)
Non-current liabilities | (12,036) | (2,407) | (39) | (2,446) |  | (13,710) | (2,742) | (101) | (2,843)
Net assets | 7,000 | 1,400 | 523 | 1,923 |  | 6,756 | 1,351 | 537 | 1,888

(i) Before cumulative impairments of £1,345 million (2024: £1,094 million) of the Group’s associate investment.
During the year, dividends of £135 million (2024: £355 million) were paid by the associate to the Group.
Garden Topco Limited
Summarised statement of total comprehensive income

| 2025 |  | 2024
Year ended 31 December | Joint venture information reported to Group £m | Unadjusted 50% share £m | Fair value and other adjustments £m | Group share £m |  | Joint venture information reported to Group £m | Unadjusted 50% share £m | Fair value and other adjustments £m | Group share £m
Revenue | 23 | 11 | — | 11 |  | — | — | — | —
Operating loss before interest and tax | (21) | (10) | (2) | (12) |  | — | — | — | —
Loss for the year | (27) | (13) | (2) | (15) |  | — | — | — | —
Other comprehensive income | — | — | (8) | (8) |  | — | — | — | —
Total comprehensive loss | (27) | (13) | (10) | (23) |  | — | — | — | —

Summarised balance sheet

| 2025 |  | 2024
31 December | Joint venture information reported to Group £m | Unadjusted 50% share £m | Fair value and other adjustments £m | Group share £m |  | Joint venture information reported to Group £m | Unadjusted 50% share £m | Fair value and other adjustments £m | Group share £m
Non-current assets | 1,730 | 865 | (2) | 863 |  | — | — | — | —
Current assets | 223 | 111 | — | 111 |  | — | — | — | —
Current liabilities | (288) | (144) | — | (144) |  | — | — | — | —
Non-current liabilities | (1,275) | (637) | (8) | (645) |  | — | — | — | —
Net assets/(liabilities) | 390 | 195 | (10) | 185 |  | — | — | — | —

| 233

Centrica plc Annual Report and Accounts 2025

S10. Related undertakings
Sizewell C (Holding) Limited
Summarised statement of total comprehensive income

| 2025 |  | 2024
Year ended 31 December | Associate information reported to Group £m | Unadjusted 15% share £m | Fair value and other adjustments £m | Group share £m |  | Associate information reported to Group £m | Unadjusted 15% share £m | Fair value and other adjustments £m | Group share £m
Revenue | — | — | — | — |  | — | — | — | —
Operating loss before interest and tax | (1) | — | — | — |  | — | — | — | —
Loss for the year | (3) | — | — | — |  | — | — | — | —
Other comprehensive income | — | — | — | — |  | — | — | — | —
Total comprehensive loss | (3) | — | — | — |  | — | — | — | —

Summarised balance sheet

| 2025 |  | 2024
31 December | Associate information reported to Group £m | Unadjusted 15% share £m | Fair value and other adjustments £m | Group share £m |  | Associate information reported to Group £m | Unadjusted 15% share £m | Fair value and other adjustments £m | Group share £m
Non-current assets | 7,357 | 1,104 | — | 1,104 |  | — | — | — | —
Current assets | 1,699 | 255 | 11 | 266 |  | — | — | — | —
Current liabilities | (752) | (113) | — | (113) |  | — | — | — | —
Non-current liabilities | (8,054) | (1,208) | — | (1,208) |  | — | — | — | —
Net assets | 250 | 38 | 11 | 49 |  | — | — | — | —

Joint operations - fields/assets

31 December 2025 | Location | Percentage holding
Cygnus (i) | UK North Sea | 15%

(i) During the year, the holding in Cygnus was reduced from 61.25% to 15%. The remaining 15% was classified as held for sale at the year end date. See notes 3 and 12 for
more information.

234 |

| 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.

| 2025 |  | 2024
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 | 21 | 21 | 411 | — |  | 31 | 33 | 34 | 390 | —

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 | 2025 £m |  | 2024 £m
Revenue | 763 |  | 1,140
Profit for the year | 67 |  | 106
Other comprehensive income | 2 |  | 3
Total comprehensive income | 69 |  | 109

Summarised balance sheet

31 December | 2025 £m |  | 2024 £m
Non-current assets | 584 |  | 992
Current assets | 2,022 |  | 1,980
Assets of disposal groups classified as held for sale | 172 |  | —
Current liabilities | (376) |  | (557)
Liabilities of disposal groups classified as held for sale | (157) |  | —
Non-current liabilities | (920) |  | (1,158)
Net assets | 1,325 |  | 1,257

Summarised cash flow

Year ended 31 December | 2025 £m |  | 2024 £m
Net (decrease)/increase in cash and cash equivalents | (8) |  | 5

| 235

Centrica plc Annual Report and Accounts 2025

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 2024 | 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
Profit for the year (i) | — | — | 2,346 | — | 2,346
Other comprehensive loss | — | — | — | (33) | (33)
Total comprehensive income/(loss) | — | — | 2,346 | (33) | 2,313
Employee share schemes and other share transactions (ii) | — | — | (12) | 66 | 54
Share buyback programme (iii) | — | — | — | (770) | (770)
Shares cancelled in the period (iii) | (31) | — | (681) | 712 | —
Dividends paid to equity holders | — | — | (237) | — | (237)
31 December 2025 | 313 | 2,394 | 6,291 | (866) | 8,132

(i) Includes intercompany dividend income of £ 2,236 million (2024: £nil).
(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 cancellations.
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 pa ges 237 to 244 for m part of these Financial Statements, along with note 26 to the Group consolidated Financial Statements.

236 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Company Balance Sheet

|  | 2025 £m | 2024 £m
31 December | Notes
Non-current assets |  |  |
Property, plant and equipment | IV | 12 | 9
Investments | V | 150 | 121
Deferred tax assets | XII | 11 | —
Trade and other receivables | VI | 14,381 | 15,288
Derivative financial instruments | VII | 52 | 103
Retirement benefit assets | XIV | 16 | 42
Securities | IX | 59 | 108
|  | 14,681 | 15,671
Current assets |  |  |
Trade and other receivables | VI | 166 | 483
Derivative financial instruments | VII | 132 | 140
Cash and cash equivalents |  | 3,975 | 5,498
|  | 4,273 | 6,121
Total assets |  | 18,954 | 21,792
Current liabilities |  |  |
Derivative financial instruments | VII | (130) | (147)
Trade and other payables | XI | (8,041) | (11,543)
Provisions for other liabilities |  | (2) | —
Bank overdrafts, loans and other borrowings | XIII | (122) | (694)
|  | (8,295) | (12,384)
Non-current liabilities |  |  |
Deferred tax liabilities | XII | (3) | (1)
Derivative financial instruments | VII | (127) | (204)
Provisions for other liabilities |  | (1) | (1)
Retirement benefit obligations | XIV | (53) | (48)
Bank loans and other borrowings | XIII | (2,343) | (2,382)
|  | (2,527) | (2,636)
Total liabilities |  | (10,822) | (15,020)
Net assets |  | 8,132 | 6,772
Share capital |  | 313 | 344
Share premium |  | 2,394 | 2,394
Retained earnings (i) |  | 6,291 | 4,875
Other equity | II | (866) | (841)
Total shareholders’ equity |  | 8,132 | 6,772

(i) Retained earnings includes a net profit after taxation of £2,346 million (2024: £185 million) which includes intercompany dividend income of £2,236 million (2024: £ nil).
The Financial Statements on pa ges 235 to 244, of which the notes on pages 237 to 244 fo rm part, along with note 26 to the Group
consolidated Financial Statements, were approved and authorised for issue by the Board of Directors on 18 February 2026 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

| 237

Centrica plc Annual Report and Accounts 2025

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, 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 subsidiarie s 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 an amendment to IFRS Accounting Standards issued by the International Accounting
Standards Board (IASB) which became mandatorily effective for an accounting period that begins on or after 1 January 2025. The adoption
of this amendment has not had any material impact on the disclosures or on the amounts reported in these financial statements. See note 1
of the Group consolidated Financial Statements for further details.
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.

238 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

I. GENERAL INFORMATION AND MATERIAL ACCOUNTING POLICIES OF THE COMPANY
(b) Critical accounting judgements and key sources of estimation uncertain ty
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 £126 million (2024: £692 million) on a gross balance of £14,640 million ( 2024: £16,444 million). This represen ts 0.9% (2024: 4.2%) of the
gross amounts owed by Group undertakings balance. See note VI(ii) for further details on the expected credit loss provision movement
during the year.
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 £84 million (2024: £82 million).
The Company has provided financial guarantees relating to its subsidiaries’ trading activities and decommissioning obligations.
At 31 December 2025, the Group has derivative liabilities of £1,036 million (2024: £1,387 million), and decommissioning liabilities of
£1,302 million (2024: £1,459 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 £16 million (2024: £21 million) on these financial guarantee contracts. This represents 0.7% (2024:
0.7%) of the gross balances. A 0.5% change in the provision would lead to an increase or decrease of £11 million (2024: £14 million). As a
result, we do not consider expected credit losses on financial guarantee contracts to be a key source of estimation uncertainty.
(c) Summary of material accounting policie s
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
T he 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.

| 239

Centrica plc Annual Report and Accounts 2025

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 2024 | (15) | (156) | 13 | (650) | 42 | (64) | (830)
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
Revaluation of securities measured at FVOCI | — | — | 4 | — | — | — | 4
Taxation on above items (ii) | (1) | — | (1) | — | (2) | — | (4)
31 December 2024 | (14) | (155) | 16 | (735) | 66 | (19) | (841)
Actuarial losses on defined benefit pension schemes | — | (44) | — | — | — | — | (44)
Employee Share Schemes: |  |  |  |  |  |  |
Exercise of awards | — | — | — | 48 | (29) | — | 19
Value of services provided | — | — | — | — | 56 | — | 56
Purchase of own shares | — | — | — | (9) | — | — | (9)
Share buyback programme: (i) |  |  |  |  |  |  |
Purchase of Treasury shares | — | — | — | (827) | — | — | (827)
Movement on accrual for committed share purchases | — | — | — | — | — | 57 | 57
Shares cancelled in the year (i) | — | — | — | 681 | — | 31 | 712
Impact of cash flow hedging | (4) | — | — | — | — | — | (4)
Revaluation of securities measured at FVOCI | — | — | 4 | — | — | — | 4
Taxation on above items (ii) | 1 | 11 | (1) | — | — | — | 11
31 December 2025 | (17) | (188) | 19 | (842) | 93 | 69 | (866)

(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 | 2025 £m | 2024 £m
Wages and salaries | (12) | (11)
Other | (11) | (9)
| (23) | (20)

(b) Average number of employees during the year

Year ended 31 December | 2025 Number | 2024 Number
Group Functions (i) | 219 | 229
Infrastructure (i) | — | 4
| 219 | 233

(i) Segmental description have been restated to reflect the new and relevant operating structure of the Group. See note 1(d) of the Group consolidated Financial Statements
for further details.

240 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

IV. PROPERTY, PLANT AND EQUIPMENT

| Plant, equipment & vehicles
| 2025 £m
Cost |
1 January | 20
Additions | 5
Disposals/retirements | (1)
Lease modifications and re-measurements | 4
31 December | 28
Accumulated depreciation |
1 January | (11)
Charge for the year | (6)
Disposals/retirements | 1
31 December | (16)
NBV at 31 December (i) | 12

(i) Included within the above are right-of-use assets relating to £8 million of staff salary sacrifice electric vehicles (2024: £7 million) and £4 million of infrastructure services
(2024: £2 million),
V. INVESTMENTS IN SUBSIDIARIES

| 2025 (i) £m | 2024 (i) £m
Cost |  |
1 January | 121 | 94
Employee share scheme net capital movement (ii) | 29 | 27
31 December | 150 | 121
Provision |  |
1 January | — | —
31 December | — | —
NBV at 31 December | 150 | 121

(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.
Related undertakings are listed in note S10 to the Group consolidated Financial Statements.
(ii) 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

| 2025 |  | 2024
31 December | Current (i) £m | Non-current (ii) £m |  | Current (i) £m | Non-current (ii) £m
Amounts owed by Group undertakings | 144 | 14,373 |  | 475 | 15,277
Prepayments and other receivables | 22 | 8 |  | 8 | 11
| 166 | 14,381 |  | 483 | 15,288

(i) The amounts receivable by the Company include a gross balance of £113 million (2024: £290 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 2.0% and 4.8% per annum during 2025 (2024: 3.6% and 5.5%). The other amounts receivable
from Group undertakings are interest free. All amounts receivable from Group undertakings are unsecured and repayable on demand. Amounts receivable from Group
undertakings are presented net of expected credit loss provisions, which were £nil as at 31 December 2025 (2024: £nil). No additional expected credit loss provision was
recognised during the year (2024: £nil).
(ii) The amounts receivable by the Company include a gross balance of £12,968 million (2024: £15,910 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 2.0% and 4.8% per annum during 2025 (2024: 3.6% and 5.5%). The other amounts
receivable from Group undertakings are interest-free. All amounts receivable from Group undertakings are unsecured, repayable on demand, and are 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 £126 million (2024: £692 million). During
the year, the Company recognised an expected credit loss provision of £58 million (2024: £37 million) on amounts owed by Group undertakings. A £624 million reduction
in expected credit loss was recognised during the year, primarily due to the settlement of an intercompany loan that had been previously fully impaired. This amount
represents the reversal of the expected credit loss previously charged.

| 241

Centrica plc Annual Report and Accounts 2025

VII. DERIVATIVE FINANCIAL INSTRUMENTS

| 2025 |  | 2024
31 December | Current £m | Non-current £m | Total £m |  | Current £m | Non-current £m | Total £m
Derivative financial assets | 132 | 52 | 184 |  | 140 | 103 | 243
Derivative financial liabilities | (130) | (127) | (257) |  | (147) | (204) | (351)

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

|  |  | 2025 |  |  | 2024
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 | — | 40 | 40 | — | 128 | 128
Foreign exchange derivatives - Internal | — | 106 | 106 | — | 83 | 83
Derivative financial assets in hedge accounting relationships: |  |  |  |  |  |
Foreign exchange derivatives | — | 38 | 38 | — | 32 | 32
Debt instruments | 49 | — | 49 | 73 | — | 73
Equity instruments | 10 | — | 10 | 35 | — | 35
Cash and cash equivalents (i) | — | 3,333 | 3,333 | — | 4,825 | 4,825
Total financial assets at fair value | 59 | 3,517 | 3,576 | 108 | 5,068 | 5,176
Financial liabilities |  |  |  |  |  |
Derivative financial liabilities held for trading: |  |  |  |  |  |
Foreign exchange derivatives - External | — | (106) | (106) | — | (83) | (83)
Foreign exchange derivatives - Internal | — | (40) | (40) | — | (128) | (128)
Derivative financial liabilities in hedge accounting relationships: |  |  |  |  |  |
Interest rate derivatives | — | (95) | (95) | — | (134) | (134)
Foreign exchange derivatives | — | (16) | (16) | — | (6) | (6)
Total financial liabilities at fair value | — | (257) | (257) | — | (351) | (351)

(i) The cash and cash equivalents of £3,333 million (2024: £4,825 million) at Level 2 relates to money market funds.
IX. SECURITIES

| 2025 |  | 2024
| Non-current |  | Non-current
31 December | £m |  | £m
Debt instruments | 49 |  | 73
Equity instruments | 10 |  | 35
| 59 |  | 108

Withi n n on-current securities, £59 million (2024: £108 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)).

242 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

X. LEASE LIABILITIES MATURITY ANALYSIS
A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:

| 2025 | 2024
| £m | £m
Less than one year | 6 | 5
1-2 years | 4 | 3
2-3 years | 2 | 1
Total lease liabilities (undiscounted) | 12 | 9

| 2025 | 2024
Analysed as: | £m | £m
Non-current | 6 | 4
Current | 6 | 5
| 12 | 9

Future finance charges are expected to be £0.5 million (2024: £0.5 million).
XI. TRADE AND OTHER PAYABLES

| 2025 |  | 2024
31 December | Current £m |  | Current £m
Amounts owed to Group undertakings (i) | (7,962) |  | (11,430)
Payable on financial guarantee contracts (ii) | (15) |  | (21)
Accruals and other creditors (iii) | (63) |  | (91)
Taxation and social security | (1) |  | (1)
| (8,041) |  | (11,543)

(i) The current amounts payable by the Company include £7,655 million (2024: £10,667 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 2.0% and 4.8% per annum during 2025 (2024: 3.6% and 5.5%). The o ther amounts payable to the
Group undertakings, are interest free. All amounts payable to the Group undertakings are unsecured and repayable on demand.
(ii) During the year, the Company has released £6 million (2024: £12 million) of expected credit loss provision on financial guarantee contracts. See note XV for further
details.
(iii) During the year, the Company recognised a financial liability of £14 millio n (2024: £75 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.
XII. DEFERRED TAX ASSETS AND LIABILITIES

| Retirement benefit obligation £m | Other £m | Total £m
1 January 2024 | 7 | 1 | 8
Charge to income | (3) | — | (3)
Charge to equity | (3) | (3) | (6)
Net deferred tax assets/(liabilities) at 31 December 2024 | 1 | (2) | (1)
(Charge)/credit to income | (2) | 1 | (1)
Credit to equity | 10 | — | 10
Net deferred tax assets/(liabilities) at 31 December 2025 | 9 | (1) | 8

Other net deferred tax liabilities primarily relate to other temporary differences. All deferred tax crystallises in over one year.
XIII. BANK OVERDRAFTS, LOANS AND OTHER BORROWINGS

| 2025 |  | 2024
31 December | Current £m | Non-current £m |  | Current £m | Non-current £m
Bank loans and overdrafts | (20) | (114) |  | (645) | (124)
Bonds | (51) | (2,223) |  | — | (2,254)
Interest accruals | (45) | — |  | (44) | —
Lease obligations | (6) | (6) |  | (5) | (4)
| (122) | (2,343) |  | (694) | (2,382)

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.

| 243

Centrica plc Annual Report and Accounts 2025

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

| 2025 |  | 2024
| Pension liabilities £m | Pension assets £m |  | Pension liabilities £m | Pension assets £m
1 January | (810) | 804 |  | (929) | 908
Items included in the Company Income Statement: |  |  |  |  |
Current service cost | (1) | — |  | (1) | —
Contributions by employer in respect of employee salary sacrifice arrangements (i) | (1) | — |  | (2) | —
Total current service cost | (2) | — |  | (3) | —
Past service cost | (1) | — |  | — | —
Interest (expense)/income | (43) | 42 |  | (42) | 41
Termination cost | (2) | — |  | — | —
Items included in the Company Statement of Comprehensive Income: |  |  |  |  |
Returns on plan assets, excluding interest income | — | (23) |  | — | (119)
Actuarial gain/(loss) from changes to demographic assumptions | 9 | — |  | (2) | —
Actuarial gain from changes in financial assumptions | 37 | — |  | 122 | —
Actuarial loss from experience adjustments | (67) | — |  | — | —
Other movements: |  |  |  |  |
Employer contributions | — | 18 |  | — | 16
Contributions by employer in respect of employee salary sacrifice arrangements | — | 1 |  | — | 2
Benefits paid from schemes | 44 | (44) |  | 44 | (44)
31 December | (835) | 798 |  | (810) | 804

(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 | 2025 £m | 2024 £m
Retirement benefit pension assets | 16 | 42
Retirement benefit pension liabilities | (53) | (48)

The pension scheme liabil ities include £46 million (2024: £48 million) relating to the Centrica Unapproved Pension Scheme and £7 million
(2024: £nil) relating to the Centrica Pension Plan (CPP).

244 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

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 2024 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.
The latest full actuarial valuations agreed and finalised with the Pension Trustees were carried out at 31 March 2024 in respect of the UK
Registered Pension Schemes. These valuations have been updated to 31 December 2025 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 £1 million of ordinary employer contributions during 2026 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:

| 2025 |  | 2024
31 December | Quoted £m | Unquoted £m | Total £m |  | Quoted £m | Unquoted £m | Total £m
Equities | 55 | 416 | 471 |  | 19 | 491 | 510
Corporate bonds (i) | 435 | — | 435 |  | 12 | — | 12
High-yield debt | 15 | 945 | 960 |  | 14 | 1,063 | 1,077
Liability matching assets | 2,430 | — | 2,430 |  | 2,388 | — | 2,388
Other long-dated income assets | — | 913 | 913 |  | — | 1,025 | 1,025
Property | — | 287 | 287 |  | — | 303 | 303
Cash pending investment | 110 | — | 110 |  | 248 | — | 248
Asset-backed contribution assets | — | 344 | 344 |  | — | 408 | 408
Group pension scheme assets (ii) | 3,045 | 2,905 | 5,950 |  | 2,681 | 3,290 | 5,971

|  |  | 2025 £m |  |  | 2024 £m
Company share of the above |  |  | 798 |  |  | 804

(i) Corporate bonds includes investment grade asset-backed securities.
(ii) 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 2025, the Company had commitments of £22 million (2024: £37 million) relating to contracts for outsourced services,
£221 million (2024: £162 million) relating to other contracts and £7 million (2024: £6 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 2025, the Group has derivative liabilities of £1,036 million (2024: £1,387 million), and decommissioning liabilities of
£1,302 million (2024: £1,459 million). See notes 19 and 21 to the Group consolidated Financial Statements for further information on
these balances.
As at 31 December 2025, £902 million (2024: nil) of letters of credit have been issued in respect of commitments to invest in Sizewell C
(Holding) Limited by the Company. See note 23(a) to the Group consolidated Financial Statements for further details on commitments.
XVI. RELATED PARTIES
During the year the Company accepted cash deposits on behalf of the Spirit Energy group of companies giving rise to a t rade and other
payables balance of £1,754 million (2024: £1,621 million) at 31 December 2025. This balance is unsecured and repayable on demand. The
Company also recognised an interest cost of £72 million (2024: £78 millio n) i n its Income Statement in respect of this balance. Spirit Energy
Limited is a subsidiary of the Company, held indirectly, that is not wholly owned.
XVII. EVENTS AFTER THE BALANCE SHEET DATE
The events after the balance sheet date disclosed by the Group are also applicable to the Company. See note 27 to the Group consolidated
Financial Statements for further information.

| 245

Centrica plc Annual Report and Accounts 2025

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 Morecambe Hub, Clipper South, Galleon and Eris & Cere s. 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 2025 | 175 | 14 | 189
Revisions of previous estimates (ii) | 24 | — | 24
Disposals (iii) | (79) | — | (79)
Production (iv) | (28) | (6) | (34)
31 December 2025 | 92 | 8 | 100

Estimated net 2P reserves of liquids (million barrels) | Spirit Energy (i) | Rough | Total
1 January 2025 | 1 | — | 1
Production (iv) | (1) | — | (1)
31 December 2025 | — | — | —

Estimated net 2P reserves (million barrels of oil equivalent) | Spirit Energy (i) | Rough | Total
31 December 2025 (v) | 16 | 1 | 17

(i) The movements represent Centrica’s 69% interest in Spirit Energy.
(ii) Revision of previous estimates include those associated with Morecambe Hub and Cygnus.
(iii) Disposals relate to the dispo sal of part of Spirit Energy’s interest in the Cygnus gas field t o Ithaca. Reserves relating to the Spirit Energy disposal group held for sale are
included in the closing balance as at 31 December 2025. See note 12.
(iv) Represents total sales volumes of gas and liquids produced from the Group’s reserves.
(v) Includes the total of estimated gas and liquids reserves at 31 December 2025 in million barrels of oil equivalent.
Liquids reserves include oil, propane, butane, condensate and natural gas liquids.

246 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Five Year Summary (unaudited)

Year ended 31 December | 2021 (restated) (i) | 2022 (restated) (i) | 2023 (restated) (i) | 2024 (restated) (i) | 2025 £m
Total Group revenue included in business performance | 18,300 | 33,637 | 33,374 | 24,636 | 22,365
Operating profit before exceptional items and certain re-measurements: |  |  |  |  |
Retail (i) | 206 | 34 | 808 | 458 | 424
Optimisation (i) | 66 | 1,481 | 831 | 339 | 155
Infrastructure (i) | 676 | 1,816 | 1,121 | 799 | 314
Colleague profit share | — | (23) | (8) | (25) | (34)
Meter asset provider consolidation adjustment | — | — | — | (19) | (45)
| 948 | 3,308 | 2,752 | 1,552 | 814
Exceptional items and certain re-measurements after taxation | 866 | (2,755) | 2,165 | 322 | (606)
Profit/(loss) attributable to equity holders of the parent | 1,210 | (782) | 3,929 | 1,332 | (72)

| Pence | Pence | Pence | Pence | Pence
Earnings per ordinary share | 20.7 | (13.3) | 70.6 | 25.7 | (1.5)
Adjusted earnings per ordinary share | 4.1 | 34.9 | 33.4 | 19.0 | 11.2
Dividend per ordinary share in respect of the year | — | 3.0 | 4.0 | 4.5 | 5.5

ASSETS AND LIABILITIES

31 December | 2021 £m | 2022 £m | 2023 £m | 2024 £m | 2025 £m
Goodwill and other non-current intangible assets | 1,161 | 1,116 | 745 | 796 | 822
Other non-current assets | 6,040 | 7,234 | 4,555 | 3,793 | 4,086
Net current assets/(liabilities) | 1,465 | (1,023) | 4,930 | 5,242 | 3,210
Non-current liabilities | (6,360) | (6,047) | (5,997) | (5,019) | (4,685)
Net assets of disposal groups held for sale | 444 | — | — | — | 63
Net assets | 2,750 | 1,280 | 4,233 | 4,812 | 3,496
Adjusted net cash (note 25) | 680 | 1,199 | 2,744 | 2,858 | 1,487

CASH FLOWS

Year ended 31 December | 2021 £m | 2022 £m | 2023 £m | 2024 £m | 2025 £m
Net cash flow from operating activities before exceptional payments | 1,687 | 1,338 | 2,758 | 1,155 | 733
Payments relating to exceptional charges in operating costs | (76) | (24) | (6) | (6) | (38)
Net cash flow from investing activities | 2,263 | (566) | 115 | 493 | (690)
Net cash flow before cash flow from financing activities | 3,874 | 748 | 2,867 | 1,642 | 5

(i) Results have been restated to reflect the new operating structure of the Group, effective during 2025, See note 1(d) for further details.

| 247

Centrica plc Annual Report and Accounts 2025

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
*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 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 reduces our environmental impact and saves your
Company money. 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
Annual General Meeting (AGM) vote online. You can manage your
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. Whilst your shares are held by a nominee company,
Equiniti Financial Services Limited, 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 store.
Centrica website
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/ar25.
ShareGift
If you have a small number of shares and the dealing costs or the
minimum fee make it uneconomical to sell, 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 2025 final dividend | 9 April 2026
Record date for 2025 final dividend | 10 April 2026
Annual General Meeting (AGM) | 7 May 2026
Payment of 2025 final dividend | 14 May 2026

For more information on Centrica’s financial calendar, please
visit centrica.com/investors/financial-calendar.

248 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Additional information – explanatory notes (unaudited)
Definitions and reconciliation of adjusted performance measures
Centrica’s 2025 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 and adjusted earnings 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 clear
view of operating performance before accounting adjustments, such as depreciation, and is a more relevant performance metric as the
Group continues to invest in growing its portfolio.

Year ended 31 December | Notes | 2025 £m | 2024 £m | Change
Group operating profit | I/S | 106 | 1,703 |
Exceptional items before taxation | 7 | 405 | 128 |
Certain re-measurements before taxation | 7 | 303 | (279) |
Share of interest, taxation, depreciation and amortisation of joint ventures and associates | 6 | 164 | 257 |
Depreciation and impairments of property, plant and equipment (i) | 4 | 348 | 409 |
Amortisation and impairments of intangibles (i) | 4 | 91 | 87 |
Group total adjusted EBITDA |  | 1,417 | 2,305 | (39)%
Less: share of EBITDA relating to joint ventures and associates | 6 | (322) | (513) |
Group total adjusted EBITDA excluding share of EBITDA from joint ventures and associates |  | 1,095 | 1,792 | (39)%

(i) These line items relate to business performance only.

| 249

Centrica plc Annual Report and Accounts 2025

Definitions and reconciliation of adjusted performance measures
Free cash flow
Free cash flow is used by management to assess the cash-generating performance of the business after taking account of the need to
maintain its capital asset base. Free cash flow is defined as net cash flow from operating and investing activities before:
• D eficit reduction payments made to the UK defined benefit pension schemes;
• Movements in variation margin and collateral;
• Interest received; and
• Sale, settlement and purchase of securities.
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.
T he below table shows the reconciliation between net cash flow from operating and investing activities to Group total free cas h flow:

Year ended 31 December | Notes | 2025 £m | 2024 £m |
Net cash flow from operating activities | C/F | 695 | 1,149 |
Net cash flow from investing activities | C/F | (690) | 493 |
Total cash flow from operating and investing activities |  | 5 | 1,642 |
Reconciling items: |  |  |  |
UK pension deficit payments | 22 | 150 | 176 |
Movements in variation margin and collateral | 25 | (51) | (131) |
Interest received | C/F | (227) | (317) |
Settlement of securities | C/F | (57) | (400) |
Purchase of securities | C/F | 13 | 19 |
Group total free cash flow |  | (167) | 989 |

The below table shows how adjusted EBITDA reconciles to net cash flow from operating activities, adjusted operating cash flow, and free
cash flow:

Year ended 31 December | Notes | 2025 £m | 2024 £m
Group total adjusted EBITDA excluding share of EBITDA from joint ventures and associates |  | 1,095 | 1,792
Group operating (loss)/profit, including results relating to joint ventures and associates, from exceptional items and certain re-measurements | I/S | (708) | 151
Impairments included in exceptional items | 7 | 508 | 75
Gain on disposals | C/F | (74) | (4)
(Decrease)/increase in provisions | C/F | (129) | 110
Cash contributions to defined benefit schemes in excess of service cost income statement charge | C/F | (150) | (208)
Employee share scheme costs | C/F | 56 | 47
Unrealised losses arising from re-measurement of energy contracts | C/F | 362 | 96
Net movement in working capital | C/F | 164 | (252)
Taxes paid | C/F | (375) | (636)
Operating interest paid | C/F | (16) | (16)
Payments relating to exceptional charges in operating profit | C/F | (38) | (6)
Net cash flow from operating activities |  | 695 | 1,149
Dividends received from joint ventures and associates | C/F | 135 | 355
UK pension deficit payments | 22 | 150 | 176
Movements in variation margin and collateral | 25 | (51) | (131)
Group total adjusted operating cash flow |  | 929 | 1,549
Purchase of businesses and assets, net of cash acquired | C/F | (22) | (92)
Sale of businesses and interests in joint operations, including receipt of deferred consideration | C/F | 119 | 4
Purchase of property, plant and equipment and intangible assets | C/F | (554) | (416)
Sale of property, plant and equipment and intangible assets | C/F | 12 | —
Investments in joint ventures and associates | C/F | (609) | —
Net purchase of other investments | C/F | (42) | (56)
Group total free cash flow |  | (167) | 989

250 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Definitions and reconciliation of adjusted performance measures
The below table shows the reconciliation from net movement in working capital to adjusted net movement in working capital:

Year ended 31 December | Notes | 2025 £m | 2024 £m
Decrease in inventories | C/F | 546 | 164
Decrease in trade and other receivables and contract-related assets relating to business performance | C/F | 413 | 241
Decrease in trade and other payables and contract-related liabilities relating to business performance | C/F | (795) | (657)
Net movement in working capital |  | 164 | (252)
Add back/(deduct) movements in collateral included within working capital | 25 | 93 | (47)
Other reconciling items: |  |  |
Increase/(decrease) in provisions related to business performance, excluding payments related to decommissioning provisions (i) |  | 7 | (5)
Unrealised (gains)/losses arising from re-measurement of energy contracts relating to business performance |  | (120) | 429
Operating interest paid | C/F | (16) | (16)
Other (ii) |  | 55 | 15
Adjusted net movement in working capital |  | 183 | 124

(i) Increase/(decrease) in provisions related to business performance excludes payments related to decommissioning provisions of £71 million (2024: £80 million).
(ii) Other includes employee share scheme costs of £56 million (2024: £47 million) and cash contributions to defined benefit schemes in excess of service cost income
statemen t charge of £(150) million (2 024: £(208) mill ion), excluding the impact of pension benefit payments o f £150 million (2024: £176 mi llion).
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 | 2025 £m | 2024 £m | Change
Capital expenditure (i) |  | 1,227 | 564 |
Net disposals (ii) |  | (131) | (4) |
Group net investment |  | 1,096 | 560 | 96%
Dividends received from joint ventures and associates | C/F | (135) | (355) |
Interest received | C/F | (227) | (317) |
Settlement of securities | C/F | (57) | (400) |
Purchase of securities | C/F | 13 | 19 |
Net cash flow from investing activities | C/F | 690 | (493) | (240)%

(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.
See table (a).
(ii) Net disposals is the net cash flow from sales of businesses and interests in joint operations, 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

Year ended 31 December | Notes | 2025 £m | 2024 £m | Change
Purchase of property, plant and equipment and intangible assets | C/F | 554 | 416 |
Purchase of businesses and assets, net of cash acquired | C/F | 22 | 92 |
Investments in joint ventures and associates | C/F | 609 | — |
Net purchase of other investments | C/F | 42 | 56 |
Capital expenditure |  | 1,227 | 564 | 118%

(b) Net disposals

Year ended 31 December | Notes | 2025 £m | 2024 £m | Change
Sale of businesses and interests in joint operations, including receipt of deferred consideration | C/F | (119) | (4) |
Sale of property, plant and equipment and intangible assets | C/F | (12) | — |
Net disposals |  | (131) | (4) | 3,175%

| 251

Centrica plc Annual Report and Accounts 2025

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 | 2025 £m | 2024 £m
Group total free cash flow |  | (167) | 989
Financing interest paid | C/F | (181) | (283)
Interest received | C/F | 227 | 317
Premium paid on debt repurchase | 8 | — | (68)
UK pension deficit payments | 22 | (150) | (176)
Payments for own shares | C/F | (9) | (8)
Share buyback programme | C/F | (827) | (499)
Equity dividends paid | C/F | (237) | (219)
Movements in variation margin and collateral | 25 | 51 | 131
Cash flows affecting adjusted net cash |  | (1,293) | 184
Non-cash movements in adjusted net cash |  | (78) | (70)
Change in adjusted net cash |  | (1,371) | 114
Opening adjusted net cash | 25 | 2,858 | 2,744
Closing adjusted net cash | 25 | 1,487 | 2,858

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 | 2025 £m | 2024 £m
Adjusted net cash | 25 | 1,487 | 2,858
Less: current and non-current securities | 25 | (107) | (139)
Unadjusted net cash |  | 1,380 | 2,719

Depreciation, amortisation and impair ments

Year ended 31 December | Notes | 2025 £m | 2024 £m
Movement from depreciation, amortisation and impairments, from exceptional items included in the Group Cash Flow Statement |  | 508 | 75
Comprised of: |  |  |
Impairment of power assets | 7 | 264 | 75
Impairment of gas field assets | 7 | 244 | —
Movement from depreciation and amortisation, from business performance included in the Group Cash Flow Statement |  | 439 | 496
Comprised of: |  |  |
Business performance property, plant and equipment depreciation | 4 | 343 | 387
Business performance property, plant and equipment impairments | 4 | 5 | 22
Business performance intangibles amortisation | 4 | 85 | 86
Business performance intangibles impairments | 4 | 6 | 1
Movement from depreciation, amortisation and impairments included in the Group Cash Flow Statement |  | 947 | 571

252 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Definitions and reconciliation of adjusted performance measures
Reconciliation of receivables and payables to the Group Cash Flow Statement

Year ended 31 December | Notes | 2025 £m | 2024 £m
Receivables opening balance | B/S | 5,383 | 5,619
Less: receivables closing balance | B/S | (4,929) | (5,383)
Payables (including insurance contract liabilities) opening balance | B/S | (6,742) | (7,372)
Less: payables (including insurance contract liabilities) closing balance | B/S | 5,841 | 6,742
Net movement in receivables and payables |  | (447) | (394)
Non-cash changes, and other reconciling items: |  |  |
Movement in share buyback liability |  | 61 | 19
Business acquisitions and disposals (including transfers to disposal groups held for sale) |  | 14 | (28)
Movement in capital creditors |  | (10) | (20)
Movement in ROCs and emission certificate intangible assets |  | 31 | (26)
Other movements (including foreign exchange movements) |  | (31) | 33
Non-cash changes, and other reconciling items |  | 65 | (22)
Movement in trade and other receivables, trade and other payables and contract-related assets/liabilities relating to business performance | C/F | (382) | (416)

Pensions

Year ended 31 December | Notes | 2025 £m | 2024 £m
Cash contributions to defined benefit schemes in excess of service cost income statement charge | C/F | (150) | (208)
Ordinary employer contributions | 22 | (29) | (51)
UK pension deficit payments | 22 | (150) | (176)
Contributions by employer in respect of employee salary sacrifice arrangements | 22 | (17) | (24)
Total current service cost, including salary sacrifice | 22 | 35 | 42
Past service cost | 22 | 3 | —
Termination cost | 22 | 8 | 1

| 253

Centrica plc Annual Report and Accounts 2025

People and Planet – Performance measures
In 2025, 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, 31, 45, 55, 56, 253 and 255. It is important to read the responsible business information in the Annual Report and
Accounts 2025 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 42 to 57
― Read more about our wider non-financial performance at centrica.com/performanceandreports

Progress against our People & Planet Plan |  |  |  |  |
Key | Progress against goals: On track Behind |  |  |  |  |
Goal | Milestone | 2025 Progress |  |  | 2024 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) |  |  | All company: (ii) |
• 30% women |  |  | • 31% women |
– 43% excluding Field engineers |  |  | – 41% excluding Field engineers |
• 16% ethnically diverse |  |  | • 16% ethnically diverse |
• 6% disability |  |  | • 6% disability |
• 4% LGBTQ+ |  |  | • 4% LGBTQ+ |
• 2% ex-service |  |  | • 2% ex-service |
Senior leaders: (ii) |  |  | Senior leaders: (ii) |
• 34% women |  |  | • 34% women |
– 34% excluding Field engineers |  |  | – 31% excluding Field engineers |
• 10% ethnically diverse |  |  | • 10% ethnically diverse |
• 6% disability |  |  | • 5% disability |
• 2% LGBTQ+ |  |  | • 2% LGBTQ+ |
• 3% 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 | 1,947 apprentices |  |  | 1,537 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 | 42,104 days |  |  | 31,639 days |
Help our customers be net zero by 2050 (iii) (base year 2019) | 28% greenhouse gas (GHG) intensity reduction by the end of 2030 | 18% reduction |  |  | 10% reduction (iv) |
Be a net zero business by 2040 (v) (base year 2019) | 50% GHG reduction by the end of 2032 | 25% reduction † |  |  | 18% reduction |

† Included in DNV’s independent limited assurance report. See above or centrica.com/assurance for more.
(i) Aligns with latest 2021 Census data for working populations.
(ii) Beyond gender, 2025 data is based on colleague voluntary disclosure of 94% ethnically diverse, 53% disability, 61% LGBTQ+ and 4% ex-service. For 2024, this was 94%
ethnically diverse, 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.
(iii) Net zero goal measures the GHG intensity of our customers’ energy use including electricity and gas with a 2019 base year of 182 gCO 2 e/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.
(iv) Restated due to availability of improved data.
(v) Our updated Climate Transition Plan published at the start of 2025, accelerated and replaced our outgoing goal to be net zero by 2045 (40% reduction in GHG emissions
by the end of 2034). 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 (LNG) 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 2,120,446tCO 2 e. 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.

254 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Progress against our Foundations
People

Metric | 2025 |  | 2024 |  | What’s next
Customers |  |  |  |  |
Home Energy Supply UK Touchpoint Net Promoter Score (NPS) (i) | +33 |  | +29 |  | Continue to invest in customer service and deliver energy, services and solutions that energise a greener, fairer future for all
Home Services UK Engineer NPS (i) | +76 |  | +73 |
Business UK Touchpoint NPS (i) | +37 |  | +28 |
Home Energy Supply complaints per UK customer (ii) | 8.1% |  | 10.1% |  | Maintain focus on driving down complaints by acting on customer feedback to improve experience
Home Services complaints per UK customer (ii) | 4.8% |  | 5.3% |
Business complaints per UK site (ii) | 5.2% |  | 5.8% |
Customer safety incident frequency rate per 1m jobs completed | 1.18 |  | 1.15 |  | 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 contact or a Home Services gas engineer
visit.
(ii) Measured as a percentage of average customers over the year, UK only.

Metric | 2025 |  | 2024 |  | What’s next
Colleagues |  |  |  |  |
Colleague engagement (i) | 7.9 |  | 8.1 |  | Work to strengthen colleague engagement by helping individuals feel connected to our Purpose and strategy whilst cultivating a supportive and inclusive workplace, that empowers everyone to deliver for our customers
Gender pay gap (ii) | 16% median |  | 13% median |  | Reduce our pay gaps by building a diverse and inclusive team through our People & Planet Plan and associated Diversity, Equity and Inclusion open letter commitments
| 13% mean |  | 13% mean |
Gender bonus gap (iii) | 28% median |  | 20% median |
| 43% mean |  | 48% mean |
Ethnicity pay gap (ii) (iv) | 7% median |  | 7% median |
| 10% mean |  | 10% mean |
Ethnicity bonus gap (iii) (iv) | 28% median |  | 21% median |
| 23% mean |  | −12% mean |
Retention | 89% |  | 91% |  | Improve retention through our focus on talent development and targeted action plans whilst continuing to build a supportive and inclusive culture
Absence (v) | 13 days |  | 12 days |  | Reduce absence through effective management practices alongside proactive support and education via our comprehensive health and wellbeing suite of support
Total recordable injury frequency rate (TRIFR) per 200,000 hours worked | 0.61 |  | 0.63 |  | Reduce TRIFR and LTIFR by reinforcing a strong safety culture among colleagues and contractors, with a focus on strengthening preventative behaviours and following procedures, controls and monitoring
Lost time incident frequency rate (LTIFR) per 200,000 hours worked | 0.37 |  | 0.38 |
Process safety incident frequency rate (Tier 1 and 2) per 200,000 process safety hours worked | 0.12 |  | 0.21 (vi) |  | Maintain robust operational controls and operator competencies, safety-critical maintenance programmes and management of contractors working with process safety risk
Significant process safety events (Tier 1) | 1 |  | 1 |
Fatalities | 0 |  | 0 |  | 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 2024 and 2025. 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 2024-25 who confirmed whether they are from a Black, Asian or Mixed/Other ethnic group. A negative number indicates the bonus gap is
in favour of ethnically diverse colleagues.
(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) Restated due to availability of improved data.

| 255

Centrica plc Annual Report and Accounts 2025

Metric | 2025 |  | 2024 |  | What’s next
Communities |  |  |  |  |
Total community contributions | £510.2m (i) |  | £603.3m (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 | 35 |  | 27 |  | 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 | 5 |  | 7 |
Colleagues committed to Our Code | 97% |  | 99% |  | Ensure all colleagues uphold Our Code as part of our commitment to doing the right thing and acting with integrity

(i) Comprises £505.4m in mandatory and £42.8k in voluntary contributions to support vulnerable customers and communities, alongside £4.8m in charitable donations
which includes £3.1m in corporate donations, £1.3m in time to volunteer during work and £0.3m in third party contributions such as fundraising and payroll giving. Sum of
constituent parts does not align with total due to rounding.
(ii) Comprises £596.8m in mandatory and £1.4m in voluntary contributions to support vulnerable customers and communities, alongside £5.1m in charitable donations
which includes £3.4m in corporate donations, £1.3m in time to volunteer during work and £0.3m in third party contributions such as fundraising and payroll giving.
Restated due to availability of improved data and changes in methodology to align with best practice, incorporating cost of during work time volunteering and core
fundraising. Sum of constituent parts does not align with total due to rounding.
Planet

Metric | 2025 |  | 2024 |  | What’s next
Greenhouse gas (GHG) and energy use |  |  |  |  |
Total GHG emissions (Scope 1 and 2) (i) | 1,580,933tCO 2 e (ii) † |  | 1,732,328tCO 2 e (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 and associated climate ambitions
Scope 1 emissions | 1,571,517tCO 2 e (v) † |  | 1,725,987tCO 2 e (iii) (vi) |
Scope 2 emissions | 9,415tCO 2 e (vii) † |  | 6,341 t CO 2 e (iii) (viii) |
Scope 3 emissions (ix) | 18,294,835tCO 2 e |  | 21,860,510tCO 2 e |
Total GHG intensity by revenue (x) | 81tCO 2 e/£m (xi) |  | 87tCO 2 e/£m (xii) |  | Analyse the impact of our strategy on decoupling GHG emissions from value creation
Total energy use | 7,177,638,803kWh (xiii) † |  | 7,925,163,679kWh (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 | 348,958m 3 |  | 357,260m 3 |  | Effectively monitor, manage and reduce our water use and waste production, as well as our incidence of environmental non-compliance
Total waste generated | 23,109 tonnes |  | 16,651 tonnes |
Environmental non-compliance (xv) | 12 |  | 2 |

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 253 or centrica.com/assurance for more.
(i) Comprises Scope 1 and Scope 2 emissions as defined by the Greenhouse Gas Protocol.
(ii) Comprises UK 604,640tCO 2 e and non-UK 976,293tCO 2 e.
(iii) Included in DNV’s limited assurance scope for the Annual Report 2024. See centrica.com/performanceandreports for our 2024 Basis of Reporting and DNV’s 2024
Assurance Statement. Although there were no material changes to reported data, previous figures included in DNV’s limited assurance scope have subsequently been
restated due to availability of improved data and were as follows: Total GHG emissions (Scope 1 and 2): 1,733,882tCO 2 e, Scope 1: 1,726,177tCO 2 e and Scope 2:
7,706tCO 2 e.
(iv) Comprises UK 579,094tCO 2 e and non-UK 1,153,234tCO 2 e.
(v) Comprises UK 595,709tCO 2 e and non-UK 975,808tCO 2 e.
(vi) Comprises UK 572,985tCO 2 e and non-UK 1,153,002tCO 2 e.
(vii) Market-based, comprises UK 8,931tCO 2 e and non-UK 485tCO 2 e. Sum of constituent parts does not align with total due to rounding. Location-based is 16,492tCO 2 e.
(viii) Market-based, comprises UK 6,109tCO 2 e and non-UK 232tCO 2 e. Location-based is 17,347tCO 2 e.
(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. 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 38tCO 2 e/£m and non-UK 266tCO 2 e/£m.
(xii) Comprises UK 36tCO 2 e/£m and non-UK 314tCO 2 e/£m. Non-UK value has been restated due to availability of improved data.
(xiii) Comprises UK & Offshore 2,006,825,467kWh and non-UK energy use 5,170,813,337kWh. Sum of constituent parts does not align with total due to rounding.
(xiv) Included in DNV’s limited assurance scope for the Annual Report 2024. See centrica.com/performanceandreports for our 2024 Basis of Reporting and DNV’s 2024
Assurance Statement. 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.
(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 and did not result in legal action.

256 |

| Strategic Report |  | Governance |  | Financial Statements |  | Other Information

Glossary

$ | Refers to US dollars unless specified otherwise
2P reserves | Proven and probable reserves
AGM | Annual General Meeting
AI | Artificial Intelligence
AIP | Annual Incentive Plan
bcf | Billion cubic feet
CHP | Combined Heat and Power
CLT | Centrica Leadership Team
CO 2 e | Universal unit of measurement of the global warming potential (GWP) of greenhouse gases (GHG) expressed in terms of the GWP of one unit of CO 2 e (carbon dioxide equivalent)
CPI | Consumer Price Index
CSRD | Corporate Sustainability Reporting Directive
Data analytics | The process of examining data sets to draw conclusions and insights about the information they contain
DE&I | Diversity, Equity and Inclusion
EBITDA | Earnings before interest, tax, depreciation and amortisation
EBT | Employee Benefit Trust
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
FRC | Financial Reporting Council
FRS | Financial Reporting Standards
GAAP | Generally Accepted Accounting Practice
GHG | Greenhouse gas emissions
GM | Gross margin
GMB | Trade union
GRCCF | Group Risk, Control and Compliance Forum
Green jobs | Jobs that have a direct positive impact on the planet
Green skills | Ability to install, repair or maintain products such as heat pumps, EV chargers and smart meters
GW | Gigawatt
GWh | Gigawatt hour
IAS | International Accounting Standards
IFRS | International Financial Reporting Standards
KPIs | 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

LTIP | Long-Term Incentive Plan
Malus & Clawback | Malus and clawback are contractual mechanisms allowing companies to reduce or recover executive compensation (bonuses/incentives) following misconduct or poor performance. Malus reduces unvested, unpaid rewards, while clawback recovers cash or shares already paid. Both aim to align pay with long-term risk and prevent unfair rewards.
mmboe | Million barrels of oil equivalent
Mmths | Million therms
MWh | Megawatt hour
Net zero | The point at which there is a balance between human-related carbon dioxide (CO 2) being emitted into the atmosphere and the CO 2 taken out
NGOs | Non-governmental organisations
NPS | Net Promoter Score
OECD | Organisation for Economic Co-operation and Development
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
PPAs | Power Purchase Agreements
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
ROC | Renewable Obligation Certificate
RPI | Retail Price Index
RSP | Restricted Share Plan
SAYE | Save As You Earn
SESC | Safety, Environment and Sustainability Committee
SIP | Share Incentive Plan
tCO 2 e | Tonnes of carbon dioxide equivalent
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
Under- represented groups | A person/group who are insufficiently or inadequately represented in society such as those who are women, ethnically diverse, have a disability or are LGBTQ+
VIU | Value in use
WBCSD | World Business Council for Sustainable Development
WRI | World Resources Institute

Designed and produced by
www.salterbaxter.com
This report is printed on recycled silk papers made from 100%
pre and post-consumer waste. The paper mills are based in
the European Union and manufacture papers independently
audited and certified by the Forest Stewardship Council® (FSC®)
and accredited to the Environmental Management System 14001.
The paper is carbon balanced. Balancing is delivered by World Land
Trust, an international conservation charity, who offset carbon
emissions through the purchase and preservation of high
conservation value land.
Through protecting standing forests, under threat of clearance,
carbon is locked in that would otherwise be released. These
protected forests are then able to continue absorbing carbon from
the atmosphere, referred to as REDD (Reduced Emissions from
Deforestation and forest Degradation). This is now recognised as
one of the most cost-effective and swiftest ways to arrest the rise
in atmospheric CO 2 and global warming effects. Additional to the
carbon benefits is the flora and fauna this land preserves, including a
number of species identified at risk of extinction on the IUCN Red
List of Threatened Species.
Printed by Pureprint Group ISO14001, FSC® certified
and CarbonNeutral®.
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