Centrica plc Centrica plc Company registered in England and Wales No. 3033654 Registered office: Millstream, Maidenhead Road, Windsor, Accounts and Annual Report Berkshire SL4 5GD www.centrica.com 2009 Annual Report and Accounts 2009 Centrica plc Centrica plc Company registered in England and Wales No. 3033654 Registered office: Millstream, Maidenhead Road, Windsor, Accounts and Annual Report Berkshire SL4 5GD www.centrica.com 2009 Annual Report and Accounts 2009 Financial Index Highlights Accounting policies 28, 68-82, 153-154 Financial instruments UK: British Gas, Centrica Energy and Centrica Storage Acquisitions, business combinations 2, 4, 11, 12, 14, 28, 70-71, 74, 139-142 derivative 78, 111-114 Directors’ Report – Business Review The new Alternative Formats 164 fair value 78, 119-123 Our Performance North America: Direct Energy Assets and liabilities 27, 64, 160 hedge accounting 78, 114 shape of Auditors Financial Review IFC, 27-28 Revenue‡ Operating Profit* ‡ Employees‡ re-appointment 44 Five-year record 160 Centrica: remuneration 97 Fixed fee service contracts 148 Centrica’s main operations are in the UK report to the members of Centrica plc 60, 151 FSA (Financial Services Authority) 12, 24, 71 We’re restructuring 8% 1% 15% Awards 5, 12, 25, 26 Fuel poverty 12, 24, 30 9% Balance Sheet Gas and liquids reserves 81, 159 and North America. We have two types of the business to meet 28% 4% Company, notes 152-158 Gas Balancing Alerts 6, 17 57% 55% Group 64 Gas exploration 6, 14-15 the modern demands 28% business – downstream and upstream. 1% 80% 14% Board of Directors 2-3, 36-37 Gas production 6, 14-15, 20 for energy Borrowings, bank overdrafts, loans and others 116 Generation Green 12 British Gas 2, 4-6, 9, 10-13, 22, 24-25, 26, 29, 31 Goodwill and other intangible assets 74, 76, 81, 100-105 ^ ‡ Ω Business principles 3, 22, 26, 32 Green Streets 12, 24 Earnings Group revenue Dividend per share Capital Management 28, 87 Group Financial Statements 62-67 £m £m pence Downstream UK Upstream UK Storage UK North America Carbon intensity, emissions, low 2, 4-7, 9, 10, 13, 15, 21-25, Health, safety and environment (HS&E) 3, 25, 32 30, 31, 75, 80 Income Statement 62 Operating Directors’ Report – Governance ‡ * ‡ Cash and cash equivalents 115 Interest 95 Revenue profit 1,122 Cash Flow Statement 27, 67, 127-128, 160 International Financial Reporting Standards 68-69 1,111 12.80 £m £m 21,963 12.20 CCGT (combined cycle gas turbine) 5, 15 Inventories 109 20,872 11.57 911 Centrica Energy 2, 5, 14-16, 23 Joint ventures and associates 107-109 9.92 Centrica Storage 5, 6, 17, 23 Key performance indicators (KPIs) 8-9, 22-26 9.35 Downstream UK 16,065 15,893 CERT (Carbon Emissions Reduction Target scheme) 22, 73 Liquefied natural gas (LNG) 6, 15-16, 23 707 672 Chairman’s Statement 2-3 Low carbon 2-3, 4-7, 10, 13, 21-25, 30, 13,274 Residential energy supply We are the biggest energy supplier in Britain’s domestic market. 7,843 595 Charitable and political donations 26, 44 Mature and orphaned assets 6, 14, 33 Chief Executive’s Review 4-7 Microgeneration 6, 22, 29 We are Britain’s largest operator in the installation and maintenance of domestic Climate change 4, 9, 22-23, 29, 30 Minority interests 126 Residential services central heating and gas appliances. 1,406 233 Combined code on corporate governance 38-43 Nuclear 3, 4-7, 9, 15, 23, 25, 30, 32, 79 Commitments, contingencies and indemnities 145-147 Outsourcing and offshoring 26, 34 Committees 21-22, 36-37, 40-42 Pensions 33, 136-139 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Business energy supply and services We are Britain’s leading supplier of energy and related services to businesses. 3,316 183 Communities 3, 21, 24, 26 Prices, wholesale and retail 2, 4-7, 13-16, 18, 20, 23-24, 27-28, 30, 31, 33 Competition Principal undertakings 150 Financial highlights 2009 2008¥ North America 18, 19 Procurement 26 Statements Financial Upstream UK UK 2, 5, 30 Property, plant and equipment 106 Revenue ‡ £21.96bn £20.87bn Continuing operations 93 Provisions 118 With assets primarily in the UK and Norwegian continental shelf, our activities ‡ Corporate governance 36-43 Related party transactions 44 Adjusted operating profit* £1,857m £2,003m Upstream gas and oil include gas and oil production, development and exploration. 551 444 Corporate responsibility 21-26, 32 Renewables Obligation Certificate (ROC) 15 Effective tax rate ^‡ 33% 52% Cost of sales 72 Renewables 9, 15-16, 30 We own and operate eight gas-fired power stations, have a leading position Creditor payment policy 44 Reserves 2, 5, 6, 14, 20 Earnings ^ £1,111m £911m Power generation in offshore wind and a 20% stake in British Energy’s nuclear fleet. 1,150 147 Customers Rights Issue 27 NPS (net promoter score) 9, 12, 24 Risk Management 29-34, 82-86 Adjusted basic earnings per share ^ 21.7p 21.7p We have a growing LNG business and also manage a number of legacy gas numbers 10-13, 18-19 Segmental analysis 87-93 Industrial and commercial supply contracts. 1,352 (93) service 10-13, 23-24, 30, 32, 34 Shareholder information 162 Full-year dividend per share 12.8p 12.2p Deferred corporation tax liabilities and assets 117 Shares Information Shareholder Direct Energy 2, 5, 18-20, 22, 24-25, 33 analysis of shareholders 164 Statutory results Proprietary energy trading We procure gas and power for British Gas and other Centrica businesses. 41 27 Directors called up share capital 123-124 biographies 36-37, funds 158 ‡ Operating profit £1,175m £661m directors’ indemnities 39, material shareholdings 44 Storage UK disclosure of information to auditors 43 prices 163 Earnings/(loss) £856m £(136m) emoluments 53, 95 TSR (total shareholder return) 8 Basic earnings/(loss) per share 16.5p (3.3)p pensions 58 EPS (adjusted earnings per share) 8, 27, 98-99 We are the owner and operator of Rough, the UK’s largest gas storage facility. 196 168 re-election 38-39 Shares schemes Operating profit ‡ includes net exceptional charges of £568m (2008: £nil) remuneration policy 47-54 employee 73, 129-134 responsibility statement 43 Executive 129-130, A definition of the profit measures used throughout these results is provided in the Chief Executive’s Review on page 7. North America service contracts 52 share-based payments 129-135 A reconciliation between operating profit and adjusted operating profit is provided in note 6(b) and a reconciliation share interests 47-51, 54-58 Smart meters 5-6, 12, 22, 29, 31 between the earnings measures is provided in note 14. We supply gas and power to residential and small business customers in chosen training 39 Statement of Changes in Equity 66 * including joint ventures and associates stated gross of interest and taxation, and before other costs and Residential energy supply deregulated states and provinces in North America. 2,644 94 Dividends IFC, 2, 8, 97 Strategic Priorities 3, 5-7 depreciation of fair value uplifts to property, plant and equipment from Strategic Investments and exceptional items Electricity generation 4, 5-6, 9, 15-16, 20, 21-23, 27, 29-34 Supply chain 26 and certain re-measurements We supply gas and power to commercial and industrial customers in chosen Electronic communications IFC, 162-163 Tangible fixed assets 155 ^ as above, except after other costs and joint ventures and associates stated net of interest and taxation Business energy supply deregulated markets across North America. 2,491 34 Employees 3, 9, 10-12, 21, 24-26, 32 Taxation 96-97 ‡ from continuing operations costs 95 Trade payables 115 Residential and engagement 9, 10, 12, 25-26 Trade receivables 110-111 ¥ restated to capitalise borrowing costs on adoption of IAS 23 (Amendment) and change in British Gas Services business services We provide energy related services across North America. 406 18 Limited’s revenue recognition policy, as explained in note 2 and to present the European Energy segment, with number IFC, 13, 25, 95, Vulnerable customers 12, 23-26, 30 pensions 76 the exception of the Group’s operations in Germany, as a discontinued operation, as explained in note 38 Upstream and We own and operate gas-fired power stations in Texas and gas and oil assets Ω restated to reflect the bonus element of the Rights Issue in 2008 policies 25-26 wholesale energy in Alberta. We also have a wholesale energy trading business. 567 7 Energy Value Chain IFC This report has been printed on Greencoat 80 Velvet, which is made from Energy efficiency 4-5, 12-13, 20, 22, 24, 26, 29-31 80% recycled post-consumer fibre, 10% Total Chlorine Free virgin fibre and Energy Ombudsman 11, 24 10% Elemental Chlorine Free fibre. This paper has been independently Europe 4-5, 29, 30, 143-144 certified according to the rules of the Forest Stewardship Council (FSC). Events after the Balance Sheet date 28, 149 Designed and produced by 35 Communications. Exceptional items and certain re-measurements 27, 94 Photography by Charlie Fawell and Andy Wilson. Executive team 37 Printed by St Ives Westerham Press Ltd, ISO14001, FSC certified Financial calendar 164 and CarbonNeutral®. Financial Index Highlights Accounting policies 28, 68-82, 153-154 Financial instruments UK: British Gas, Centrica Energy and Centrica Storage Acquisitions, business combinations 2, 4, 11, 12, 14, 28, 70-71, 74, 139-142 derivative 78, 111-114 Directors’ Report – Business Review The new Alternative Formats 164 fair value 78, 119-123 Our Performance North America: Direct Energy Assets and liabilities 27, 64, 160 hedge accounting 78, 114 shape of Auditors Financial Review IFC, 27-28 Revenue‡ Operating Profit* ‡ Employees‡ re-appointment 44 Five-year record 160 Centrica: remuneration 97 Fixed fee service contracts 148 Centrica’s main operations are in the UK report to the members of Centrica plc 60, 151 FSA (Financial Services Authority) 12, 24, 71 We’re restructuring 8% 1% 15% Awards 5, 12, 25, 26 Fuel poverty 12, 24, 30 9% Balance Sheet Gas and liquids reserves 81, 159 and North America.