Centrica : Annual Report and Accounts 2023 Annual Report

INSIDE THIS REPORT

Strategic Report

• 1 Group Highlights

• 2 Centrica At A Glance

• 4 Chair's Statement

• 6 Group Chief Executive's Statement

• 9 Our Purpose, Culture and Values

• 10 Business Model and Strategic Framework

• 12 Market Trends

• 13 Macro Trends

• 14 Our Stakeholders and s172 statement

• 18 Group Chief Financial Officer's Report

• 22 Our View on Taxation

• 23 Business Review

• 26 Key Performance Indicators

• 28 Our Principal Risks and Uncertainties

• 35 Assessment of Viability

• 38 Group Chief People Officer's Report

• 41 People and Planet

• 46 - Non-Financial and Sustainability

  Information Statement

• 47 - Task Force on Climate-Related Financial

  Disclosures

READ MORE ABOUTOUR COMPANY

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PAGES 4 to 5

WWW.CENTRICA.COM

Governance

• 57 Directors' and Corporate Governance Report

• 59 Board of Directors

• 64 Corporate Governance Statement

• 72 - Audit and Risk Committee

• 79 - Nominations Committee

• 82 - Safety, Environment and Sustainability

  Committee

• 84 - Remuneration Report

• 110 Other Statutory Information

OUR PROGRESS IN 2023

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PAGES 6 to 8

OUR FINANCIAL PERFORMANCE

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PAGES 18 to 21

Financial Statements

• 114 Independent Auditor's Report

• 127 Group Income Statement

• 128 Group Statement of Comprehensive Income

• 129 Group Statement of Changes in Equity

• 130 Group Balance Sheet

• 131 Group Cash Flow Statement

• 132 Notes to the Financial Statements

• 229 Company Financial Statements

• 241 Gas and Liquids Reserves (Unaudited)

• 242 Five Year Summary (Unaudited)

Other Information

• 243 Shareholder Information

• 244 Additional Information - Explanatory Notes (Unaudited)

• 249 People and Planet - Performance Measures

• 252 Glossary

OUR PEOPLE

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PAGES 38 to 40

OUR GOVERNANCE

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PAGES 57 to 58

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 21. See also notes 2, 4 and 10 to the Financial Statements on pages 134 to 135, 143 to 149 and 160 for further details of these adjusted performance measures. In addition see pages 244 to 248 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 253.

GROUP HIGHLIGHTS

We reported another strong financial result in 2023, against a backdrop of continued elevated commodity prices and volatility for much of the year. We've also been focused on improving colleague engagement and operational performance, resulting in improved customer outcomes as we look to underpin customer retention, growth and long-term profit sustainability.

GROUP OPERATIONAL METRICS

GROUP FINANCIAL METRICS (YEAR ENDED 31 DECEMBER 2023)

British Gas Services & Solutions - Services Engineer Net Promoter Score (NPS)(1)

£6,512m £2,752m

2022 £(240)m

2022 £3,308m(5)Group statutory operating profit/(loss)

Group adjusted operating profitTotal recordable injury frequency rate (per 200,000 hours worked)

70.6p

2022 (13.3)p

33.4p

2022 34.9p(5)

0.84 1.12

Group statutory basic EPS

Group adjusted basic EPS

2022

Colleague engagement(2)

£2,752m £2,207m

£1,314m

2022 £2,487mGroup statutory net cash flow from operating activities

Group free cash flow from continuing operations

2022

Total greenhouse gas emissions (tCO2e)(3)

£2,744m 4.0p

£1,199m

2022 3.0p

1,681,475 †

Adjusted net cash

Full year dividend per share

2,009,885 (4)

† Included in DNV Business Assurance Services UK Limited (DNV)'s independent limited assurance engagement. See page 249 or centrica.com/assurance for more.

• (1) Measured independently, through individual questionnaires, the customer's willingness to recommend British Gas following a gas engineer visit.

• (2) Colleague engagement methodology has changed from percentage favourable to an average score out of 10, measuring how colleagues feel about the Company.

• (3) Comprises scope 1 and 2 emissions as defined by the Greenhouse Gas Protocol.

• (4) Restated due to availability of improved data.

• (5) 2022 comparator as reported. Excluding disposed Spirit Energy Norway assets 2022, adjusted operating profit was £2,823m and adjusted EPS was 34.2p.

Strategic report | Centrica plc Annual Report and Accounts 2023

1

CENTRICA AT A GLANCE

We are unique amongst energy companies in the UK and Ireland, operating across the energy value chain through our distinct, but complementary businesses. Our Purpose is to energise a greener, fairer future as we journey towards net zero for our customers and Centrica.

OUR PURPOSE, CULTURE AND VALUES

Our Purpose is - 'energising a greener, fairer future'. Our culture and values remain firmly embedded in who we are and guide everything we do.

READ MORE ON PAGE 9

Governance | Centrica plc Annual Report and Accounts 2023

OUR STRATEGY AND BUSINESS MODEL

RETAIL

Focused on providing leading customer service and experience, helping customers to save money and decarbonise through innovative offerings.

OPTIMISATION Supporting the responsible buying and selling of energy, managing risk across our business and accessing value from green generation in our trading business while continuing to build out the flexibility required for the future energy system.

INFRASTRUCTURE Investing to build a low carbon, reliable energy system including power generating renewables, flexible peaking generation and energy storage through batteries and geological storage.

READ MORE ON PAGE 10

WHAT SETS CENTRICA APART AS AN INVESTMENT OPPORTUNITY?

Centrica is a uniquely integrated energy company operating primarily in the UK and Ireland. We aim to deliver long-term value for investors by driving and leading the energy transition through our distinct, but complementary businesses.

RETAIL

British Gas has been supplying energy to British homes and businesses for over 200 years.

In British Gas Energy, we are strengthening our operations to drive innovation, retention and better customer outcomes, to underpin long-term profit sustainability.

OPTIMISATION

A global energy trading company which helps move energy from source to use, and managing energy procurement & risk.

Centrica Energy strengthened its portfolio in 2023, delivering a 3% increase in renewable assets under management to 13.0GW.

(1)

Energy supply, services and solutions for residential and business customers in the Republic of Ireland. Bord Gáis Energy is creating value from its integrated model, investing in the future energy system to help underpin energy security and decarbonisation in Ireland.

Our team of around 7,000 engineers provide customers with repairs, home improvements, maintenance and heating installations. British Gas Services & Solutions has significantly improved operations in service and repair, whilst driving growth in on-demand and heating installs.

INFRASTRUCTURE

(1)

Energy supply and low carbon solutions for businesses, building and operating a portfolio of flexible assets.

Centrica Business Solutions is focused on customer service and delivering improved margins in energy supply while building out its asset portfolio.

Oil and gas production from existing UK assets fuelling homes and business across the UK and Europe.

Spirit Energy was awarded a carbon storage licence for Morecambe Bay, which has the potential to be one of the UK's largest carbon storage hubs.

A 20% interest in the UK's portfolio of existing nuclear power stations.

In Centrica Nuclear, we extended the lives of existing nuclear power stations in 2022 and are exploring further investment in Nuclear generation.

The owner and operator of Rough, the UK's largest gas storage facility, helping manage seasonal demand and energy security.

Centrica Energy Storage+ has increased the capacity at Rough to 54bcf and continues to explore its role in the future of hydrogen.

(1) Included within Retail and Infrastructure. Read more on page 10.

SUPPORTING COMMUNITIES, OUR PLANET AND EACH OTHER

Our People & Planet Plan aims to create a more inclusive and sustainable future - from being a net zero business by 2045 and helping our customers be net zero by 2050, to creating the diverse and inclusive team we need to get there and contributing to the communities we're all part of.

READ MORE ABOUT OUR PEOPLE & PLANET PLAN ON PAGE 41

READ MORE ABOUT OUR APPROACH AND OUR JOURNEY TO NET ZERO AT CENTRICA.COM/PEOPLEANDPLANET

This instability in energy markets has largely been caused by global conflicts, and these conflicts look set to continue. Whilst we cannot control this, we are acutely aware of the impact that price fluctuations have on all our customers.

While other suppliers in the UK have collapsed due to the volatility and uncertainty in the market, we have not only stepped in to support their customers but actually improved our resilience and business model to ensure we can be there for all of our customers, old and new. You can read more about this in the 'Business Model' section on page 10.

It is this resilience that means we can add value across the entire energy value chain. We are integrated in a way that differentiates us from our competitors. This is important in itself; our business model is built on each part of Centrica supporting the others, but it has also been important for ensuring we cansupport those who are struggling most during the crisis. I am very pleased with what we have achieved in 2023.

OUR PERFORMANCE

When I became Chair of the Board in 2020 the business was in a very different position. Over the last few years, we have been going through a turnaround process and can now say the vast majority of that is complete. We can see the impact of the turnaround in the strong performance of the business.

I believe people have started to appreciate the quality of the Company we have here. We have a resilient balance sheet, good or improving returns across business units, and we have a clear plan for the future. We have shown that the way our business fits together really compounds the overall value of it.

A strong Centrica is vital for the customers who rely on us every day and is good for ourshareholders. Our performance has allowed us to resume and grow our dividend, whilst remaining prudent, and we have also returned capital to shareholders through our share repurchases. These actions reflect the Board's confidence in the strength of Centrica and its ability to deliver.

OUR SUPPORT FOR CUSTOMERS Our performance matters to our shareholders - including those thousands of private retail shareholders of whom many were the original 'Sids' who bought shares during the privatisation of British Gas in the 1980s. It also matters to our customers. It is only because we are in such a strong, resilient position that we can go above and beyond for our customers.

In 2023 we brought our total commitment to helping customers since the start of 2022 to £140 million, we hired 700 more UK-based colleagues to support customers over winter and into the future, and net promoter scores in our Retail businesses have been improving.

The way the price cap is structured means that if customers don't pay their bills, costs are added to the bills of all other customers. We will continue to strive to find the right balance between supporting those in difficulty whilst keeping bills as low as possible for all our customers.

This work shows leadership and it is something we can be proud of. Leadership also means responding responsibly when something goes wrong.

Early in 2023 it was brought to our attention that the supplier we worked with to install prepayment meters under warrant had, in some instances, not been showing our customers empathy and respect. This is a complex area, and the business took swift action to investigate and report publicly on the findings.

Our in-depth investigation highlighted some issues in the installation of prepayment meters. However, whilst these were not systemic, we take the view that even one failure, is one too many. Chris O'Shea and his team showed leadership and humility in investigating the issues and putting them right. Centrica takes pride in the fact that we do more to support customers that are in financial difficulties than anyone else in the markets we serve and we will always strive to do the right thing by our customers.

OUR CONTRIBUTION TO ENERGY SECURITY

Security of supply has climbed in importance over the last two years and is likely to remain important as long as global conflicts continue. Our performance has meant we could take a leading role in this area. I know the team at Centrica are hugely proud of the contribution we've made to energy security in the UK and Ireland.

Over 2023 we've expanded the capacity of the Rough storage field, improving the UK's gas storage levels. However, the capacity of the storage field at Rough is unlikely to be expanded further without the certainty of a regulatory model that would underpin a very significant investment for the future. Our colleagues in Centrica Energy have also played a pivotal role in securing Liquified Natural Gas (LNG) through multi-billion-dollar deals, including a new deal with Delfin Midstream in the US that will enhance energy security for the customers we serve.

OUR FUTURE

Alongside our Interim Results in July 2023, Chris and the Centrica Leadership Team presented our new, Green Focused Investment Strategy. We announced that Centrica intends to invest between £600m and £800m a year over the next five years primarily in security of supply and flexibility, renewable generation, and our customers. We also gave guidance on our expected range of annual operating profit in our Retail and Optimisation businesses and provided clarity on a new financial framework, including our progressive dividend policy.

Centrica's direction was already clear to our investors and our wider stakeholders, but the July update provided a clear overview of the approach Centrica will take in the future. I'm glad the update was received positively by the market.

I am excited to see what Centrica can accomplish in the coming years and I want to take this opportunity to assure our shareholders that your Board will be prudent custodians of your money.

OUR SUPPORT FOR NET ZERO

Our Green Focused Investment Strategy will also mean that Centrica is playing its part to underpin the energy transition.

We are unequivocal in our support for net zero. We believe it is an opportunity for the UK and Ireland and we will continue to feed into live discussions with our valuable experience of energy markets. Gas is likely to continue to be a transition fuel for some time, and your Board is acutely aware that we have a responsibility to ensure that energy is affordable for everyone through the transition.

Last year I said that to meet net zero a combination of technologies will be required, and that these technologies would create opportunities for companies with strong balance sheets, flexible business models and detailed knowledge of markets. This year, it is my belief that we have cemented our position as one of those companies.

We are one of the largest heat pump installers in the UK's emerging heat pump market, we are leading on hydrogen innovation across the UK and Ireland, and our strategy shows the scale of our ambitions in renewables. Our commitment is not merely words, it can be seen in our actions.

OUR COLLEAGUES

None of this would be possible without the fantastic work of our colleagues. It is a great source of pride for me that Centrica continues to grow and that we continue to show leadership in the areas people care about, such as our Carers Leave Policy.

Over the course of 2023 we have seen the engagement of our colleagues increase, no doubt due to the supportive culture that Chris and Centrica's Leadership Team have nurtured in the business. I was also very happy to see the continuation of our Shadow Board initiative. It is absolutely right that a representative group of our colleagues should have the opportunity to share their views on the management decisions that impact them.

Of course, we have also welcomed new employees to the business this year and I welcome all of them, not least the 700 permanent employees that were hired in time to support our customers over the winter. I am also delighted to welcome Russell O'Brien to Centrica on his appointment as Group Chief Financial Officer and Executive Director in March 2023, and Philippe Boisseau who was appointed to the Board as a Non-Executive Director in September 2023.

Towards the end of the year, we were also very pleased to announce the appointments of Jo Harlow and Sue Whalley as Non-Executive Directors. They bring an exciting mix of experience to our Board, and I know their contribution to the Remuneration Committee and Nominations Committee will be highly valued.

Thank you to all colleagues across Centrica for your contribution in 2023.

SUMMARY

This year Centrica has taken significant steps forward on performance, on delivering the things that people care about and on showing where our future lies. We are never satisfied and there is still work to do, but I hope our stakeholders across society can see a company that cares about what it does and makes a significant contribution to the UK's energy system.

I am confident that our capabilities, our resilience, and our determination will deliver great things in 2024, and I look forward to reporting on our progress next year.

Scott Wheway, Chair

14 February 2024

GROUP CHIEF EXECUTIVE'S STATEMENT

Chris O'Shea | Group Chief Executive

I am increasingly coming to the conclusion that the speed with which things seem to change is now simply indicative of the world we live in. The news cycle has shortened, the urgency with which things need to happen has increased, and the pace at which we are moving in our quest to make your Company the best is as fast as I've seen it in my five and a half years at Centrica.

Despite that pace of change, I stand by the statement I made in last year's report. I said:

" My belief is that climate change is the biggest single threat facing civilisation today, and net zero is the biggest single opportunity we have at Centrica. Climate change is real, it's here, and it's impacting lives across the planet. Transforming how we generate, store and use energy can make a huge difference to reducing the warming of our planet. Longer term, if the net zero transition is thoughtful and targeted, it can keep prices stable for customers and drive economic growth, especially for those companies and countries at the forefront of the transition."

As I write at the end of 2023, I am even more convinced that this is the case. Your Company is incredibly well placed to both drive forward, and benefit from, the energy transition. This will require a relentless focus on performance and continuous improvement, and disciplined but bold capital allocation to ensure we have a portfolio of investments across a mix of technologies. We have a lot to play for.

I believe we get more right than we get wrong, but the real test of character is how you respond when things go wrong. It's my view that we need to put things right when this happens, and we need to learn from our experience.

Sadly, we saw an example of getting it wrong early in 2023 when a report highlighted some of our contractors were not treating our customers with the respect they deservedwhen installing prepayment meters under warrant. We immediately apologised, we suspended the installation of prepayment meters under warrant, and we launched an investigation overseen by an independent third party. Whilst our investigation found no wide-ranging problems with our systems and processes, it did highlight some isolated instances that fell short of the high standards of behaviour that we expect when engaging with customers. As a result, we have brought all such activity 'in house' (as opposed to using contractors) and have spent the past year ensuring our policies, procedures and practices are updated and that our colleagues are fully trained in these areas. We also contributed to the development of new industry rules to protect vulnerable customers. At the time of writing, we have not yet restarted the installation of prepayment meters under warrant. However, we may choose to do so in the future, as, done properly, they are an effective tool both in helping customers manage their costs and in helping energy companies manage bad debts, which is even more important as people struggle with the cost of living. This is important because under the price cap, those who pay for their energy ultimately end up paying for those who choose not to pay, and we don't think that's right.

However, we are not sitting on our hands waiting for others to solve the problem of people who can't pay for their energy. We have taken decisive steps to support consumers who are facing hardship and we've done more than any other UK energy company. Since 2022, we have committed £140 million to support customers struggling with their energy bills in the UK and Ireland, which is on top of around £400 million of contributions we are required to make each year. It is a huge amount of money but our customers are at the heart of everything we do, and we must support them when they're in need. Unfortunately it cannot address all of the issues our customers face today because these are not limited to energy costs - people are struggling to pay their mortgage or rent, their council tax, their food costs, and so much more. This is a societal issue which requires a societal response.

We have been vocal in our calls for regulatory reform, both in terms of how energy companies are made more robust to avoid failures in the future, and in terms of how we can have a system which is fairer for consumers.

For consumers, we believe that the standing charge for gas and electricity where people pay a fixed fee to cover things like network costs (roughly £300 each year) should be eliminated. Those costs should be recovered through the unit rate for gas and electricity so that those who consume less pay less and those who consume more pay more. We also believe a social tariff should be introduced where those who are the most vulnerable pay less for energy. We believe that this, along with all policy costs, should be funded from general taxation but that is not something which has universal support.

For energy companies, we believe that they should be made to hold sufficient capital to ensure that if more companies go bust, their shareholders pick up the costs rather than the unacceptable situation in recent years where the costs were picked up by consumers. We have seen some progress on this, with Ofgem requiring energy companies to hold £115 of capital for each customer by March 2025. This is welcome but it is our view that this does not go far enough, nor fast enough. We believe that all companies should be required to hold in the region of three times this amount and that they should not be able to take on additional customers until they can demonstrate they are financially sound. As of now, a number of energy companies effectively have a free bet, using customer deposits to fund their businesses. If their bet comes good, their owners get all of the rewards; and if it doesn't, consumers bear all of the cost. This cannot be right, and we urge Ofgem to be more focused on establishing a fairer market for consumers and to ensure energy companies who are not yet financially resilient enough are forced to meet proper capital adequacy requirements.

2023 PROGRESS AND PERFORMANCE We can support customers and credibly make the case for market reform only because we are a very resilient company. That resilience comes from our uniquely integrated business model and strong balance sheet.

We have a well-balanced portfolio with market-leading positions across the entire energy value chain. In our Retail business we are the largest supplier of energy to residential customers in the UK through British Gas Energy and the second largest in Ireland through Bord Gáis Energy, and we have a strong and growing B2B energy supply position. Our Infrastructure business brings electricity and gas to the market every single day. Then at the heart of these energy flows sits the Optimisation business, the glue that binds our group together.

As I look at our portfolio, I see a number of high performing businesses. But the real value-add that makes us unique at Centrica comes at the portfolio level as we integrate our businesses with each other. I believe this model means we are well-positioned to adapt to any future changes in the energy landscape.

You can see just how this integration works in practice in our performance and achievements over the last year. At a Group level, our performance in 2023 was very strong. Our Group adjusted operating profit was £2.8bn compared to £3.3bn at year end in 2022. Our adjusted basic EPS was 33.4p in 2023 compared to 34.9p in 2022, 4.1p in 2021, and 2.8p in 2020, and our free cash flow was £2.2bn. We ended the year with £2.7bn of net cash - just three years ago we had £2.8bn in net debt. In short, your Company has been transformed. There is still so much more that we can go for, but as Russell points out in his CFO report, there were some large one-off benefits in the 2023 results which we don't expect to repeat in future years.

RETAIL

British Gas Energy performed well in the year and benefitted in 2023 from the recovery of costs incurred in previous years under Ofgem's price cap adjustments. By the end of the year, we had migrated around two thirds of our customers on to our new software platform and we should complete the transfer in the next 12 months or so. This allows us to develop our new energy offering, which will help give our customers insight into the best time to use their energy, putting more power in their hands. Our PeakSave Sundays product already has half a million customers and we are learning every day how our customers vary their energy use depending on costs changing during the day.

Bord Gáis was quite a mixed picture in 2023. We continued to see pressure in the retail market in Ireland and had another year of making losses in that market, all of which were offset by profits made in our infrastructure (the Whitegate power station in Cork) and optimisation activities. We believe that the issues in the Irish retail market are temporary and we hope to see a return to normality in 2024.

It is very pleasing to see the continued recovery in British Gas Services and Solutions with the operational foundations of the business as strong as they've been for many years. Our customer service has improved materially and we're seeing the benefits in improved customer satisfaction and higher customer retention rates. This allows us to focus on increasing customer numbers whilst maintaining the improved operational delivery and getting into a positive cycle of growing the business. Our growth opportunities in this business are not only in our traditional contract market but in the 'on demand' market. There are 20 million households in the UK who pay tradespeople to fix things as and when they break down, a market we have not traditionally served. In 2023 we delivered 218,000 'on demand' jobs to 201,000 'on demand' customers (2022: 122,000 jobs to 114,000 customers) and we expect to continue to grow this area in 2024 and for many years to come.

OPTIMISATION

Centrica Energy had another strong performance and continues to ensure we make the most of all our business areas. This year we saw a range of corporate power deals with partners such as Deutsche Bahn and Vodafone, among others, and were delighted to improve energy security with our deal with Delfin Midstream to buy LNG.

INFRASTRUCTURE

We made good progress across our entire infrastructure business in 2023, building and advancing our portfolio of investment opportunities in clean electricity generation and storage whilst focusing on maximising the value of our existing assets. We were very pleased to see Centrica Business Solutions deliver a range of projects including Centrica's first major solar asset in the Codford solar farm earlier this year, and committing to a range of other projects for the future including a 65MW battery storage plant in Perthshire.

In Spirit Energy we extended the life of our Morecambe Bay gas field in the East Irish Sea into the 2030s and we were awarded a carbon storage licence allowing us to further our plans to invest around £1bn in developing one of the largest carbon storage facilities in the world. In Centrica Energy Storage+ we doubled the capacity of our Rough storage facility, now providing half of the UK's entire gas storage capacity and we continued to advance our plans to invest up to £2bn to convert this to become the world's largest hydrogen storage facility which we believe is necessary to unlock the UK's decarbonisation.

WE MAKE IT - we produce gas at Spirit Energy, and we generate electricity through our green-focused investments and our nuclear stake.

WE STORE IT - we can store gas through Centrica Energy Storage+, and electricity through our battery projects in Centrica Business Solutions.

WE MOVE IT - Centrica Energy is one of Europe's largest wholesalers of gas and electricity.

WE SELL IT - millions of homes across the UK and Ireland are supplied with gas and electricity through British Gas and Bord Gáis.

WE MEND IT - we install, maintain, and fix, heating systems in millions of homes.

CENTRICA'S CONTRIBUTION TO SOCIETY IN 2023

It is because our business performs so strongly that we can contribute more to society than the jobs and essential services we provide to our 21,000 colleagues and our 10 million customers. Our profits have a purpose. We have continued to encourage colleagues to volunteer in their local communities with over 7,200 days donated to the communities we operate in throughout 2023.

We've also fundraised and donated £4m to charitable causes we all care about in our local communities; we've paid over £1bn in tax across all of the countries we operate in; and as I mentioned earlier, we've committed £140m to supporting customers since the start of the energy crisis.

This year we've signed major new partnerships with Team GB, ParalympicsGB, Scottish Rugby, and the Scottish Football Association, all of which will have significant and lasting impacts on grassroots sport across the UK and demonstrate how net zero can be an opportunity for clubhouses and sports facilities across the country.

WHAT DOES THE FUTURE HOLD FOR YOUR COMPANY?

I am particularly proud of my colleagues because in 2023, not only did we achieve all of the things we set out, but we also gave direction on Centrica's future. In July we outlined our new Green Focused Investment Strategy, which will see Centrica invest up to £4bn over the next five years in security of supply and flexibility, renewable generation, and our customers. We expect to invest across three pillars:

• ¢ Customer solutions. We will help customers better understand their energy usage and fully grasp their energy spending through innovation in smart metering and other flexibility tools and services that give customers the information to make better decisions about their energy costs.

• ¢ Security of supply and flexibility. You can already see our experience in batteries and other flexible assets - over the next five years we will accelerate this. You can expect to see more from Centrica on how this investment will support the roll out of more intermittent power generation such as wind and solar by balancing the grid when the wind doesn't blow, and the sun doesn't shine.

• ¢ Green electricity generation. We will look to increase our investment in clean energy with a focus on the areas we are strong in, looking at wind in Ireland, green hydrogen production and a continuation of our investment in solar, having opened our first solar farm during the year.

In addition to this investment programme, we will continue to progress our plans for hydrogen storage at Rough, carbon storage at Morecambe, and we will continue to evaluate the potential to bring further low carbon energy to our customers through investments in new nuclear generation. We have a rich set of investment opportunities, but we are also disciplined in our deployment of capital, and we will only invest where the returns are acceptable, the risks are manageable, and the balance sheet sustainable.

Notably, our business model and our investment plans are robust regardless of the pace at which net zero is delivered.

I would argue that Centrica is well placed to provide stability, remain sustainable, and deliver value across all our stakeholder groups irrespective of changes to the pace of net zero.

SUPPORTING OUR COLLEAGUES AND ENHANCING OUR CAPABILITIES

We have supported our colleagues on their own professional journeys in 2023 and I am pleased to see that our colleague engagement score improved to almost 7.7 by the end of the year, which is approaching top quartile performance for our sector. We will continue to provide training for growth, space for our employee-led networks to flourish, and opportunities to nurture wellbeing into 2024.

The next phase of our journey is focused on driving growth in all of our businesses. To this end we have refreshed our Purpose. Colleagues across Centrica will work to energise a greener, fairer future as we journey towards net zero for our customers and Centrica.

In addition, we're looking at how we can improve our capabilities in a number of areas. In Infrastructure, we have demonstrated that we have a team who knows how to deliver growth over a number of years. There is more to do in both our Retail and Infrastructure businesses and I am delighted that our new Chief Customer Officer will join on 1 May 2024 with a remit to drive relentless improvements in customer experience and help our retail businesses access the growth that we all know is there.

CONCLUSION 2023 has been a strong year for Centrica. We have not got everything right, but where we get things wrong, we put them right. Our business is on an incredibly strong footing, our future is laid out ahead of us and we are firmly on the path to continue the growth we've seen in recent years.

Going into 2024 I want to take this moment to thank all our customers, colleagues and shareholders for their support this year, and I want to take this opportunity to assure you that our progress will continue. We will continue to support our customers, we will continue to improve energy security, and we will continue to provide the sensible, expert-based input into the net zero discussion.

It is always invigorating and a privilege to be your Chief Executive. I look forward to seeing what we can achieve in the year ahead.

Chris O'Shea, Group Chief Executive 14 February 2024

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Centrica plc published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 16:33:03 UTC.