REG-Centrica PLC Final Results

Wed Feb 27, 2013 2:00am EST

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LONDON--(Business Wire)--


CENTRICA PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012

OPERATING AND FINANCIAL OVERVIEW

STRONG PERFORMANCE ALLOWS US TO CONTRIBUTE OUR FAIR SHARE

* Adjusted earnings up 5% to £1,406 million; 27.1 pence adjusted basic earnings
per share 
* After a warm 2011, cooler weather saw average domestic gas consumption
increase by 12% 
* Centrica Energy and Direct Energy benefiting from enhanced scale; adjusted
operating profit in the UK up by 2%, adjusted operating profit from non-UK
operations up by 78% 
* Adjusted Group tax charge of £1.1 billion, £773 million relating to the UK;
44% Group effective tax rate 
* Share repurchase of £500 million announced and full year dividend up 6% to
16.4 pence per share, benefiting over 700,000 individual shareholders and
pension funds

REFRESHED STRATEGIC PRIORITIES TO REFLECT CHANGING MARKET CONDITIONS

* Vision to be the leading integrated energy company, with customers at our core

* New leadership structure, to implement our refreshed strategic priorities:

* Innovate to drive growth and service excellence 
* Integrate our natural gas business, linked to our core markets 
* Increase our returns through efficiency and continued capital discipline

* Build on our distinctive capabilities downstream, with North America a more
material part of the Group 
* Optimise and develop our upstream gas portfolio, investing where we see
attractive value

HELPING OUR CUSTOMERS IN DIFFICULT TIMES

* Clear and simple bill design and tariffs; helping customers to understand why
external costs are rising and how to find the best tariff for them, with our
personalised tariff checker product 
* 5 star customer service rating from Consumer Focus 
* 400,000 customers to receive £130 Warm Home Discount 
* British Gas residential energy returned to customer account growth in the
early weeks of 2013, following 1% decline in 2012 
* Added over 200,000 residential customer accounts in Direct Energy; innovative
offerings and high levels of customer service

SECURING SUSTAINABLE AND AFFORDABLE ENERGY SUPPLIES

* £2.7 billion invested in 2012 
* Construction of £1.4 billion North Sea Cygnus gas field started, creating
4,000 UK jobs and producing gas for 1.5 million UK homes 
* First power from Lincs offshore wind farm, will supply electricity for 200,000
UK homes; first production from three gas fields in last 12 months; York and
Rhyl first gas expected in coming weeks 
* Positive results from exploration drilling at Rodriguez and Whitehaven in
early 2013, following lower levels of drilling success in 2012 
* Commitments to secure gas and power for the UK totalling more than £50
billion

"We have taken the lead during 2012 in helping more households save energy and
supporting the people who need the most help. It`s important that Centrica makes
a fair and reasonable return so that we can continue to make our contribution to
society and to invest. Last year we incurred a tax charge of over £1 billion and
invested over £2 billion to secure new sources of energy for the UK, well in
excess of our profits."

 Sam Laidlaw      
 Chief Executive  
                  


Unless otherwise stated, all references to operating profit or loss, taxation
and earnings numbers throughout the announcement are adjusted figures, as
reconciled to their statutory equivalents in the Group Financial Review on pages
9 and 10. Statutory earnings for the year are £1,273 million.

                                                                                                    
 FINANCIAL PERFORMANCE                                                                              
 For the year ended 31 December                         2012             2011                 ∆     
 Revenue from continuing operations                     £23.9bn          £22.8bn              5%    
                                                                                                    
 Adjusted operating profit                                                                          
 British Gas                                                                                        
 Residential energy supply                              £606m            £544m                11%   
 Residential services                                   £312m            £269m                16%   
 Business energy supply and services                    £175m            £192m                (9%)  
 Total British Gas                                      £1,093m          £1,005m              9%    
 Centrica Energy                                                                                    
 Gas                                                    £919m            £769m                20%   
 Power                                                  £311m            £254m                22%   
 Total Centrica Energy                                  £1,230m          £1,023m              20%   
 Centrica Storage                                       £89m             £75m                 19%   
 Direct Energy                                          £331m            £312m                6%    
 Total adjusted operating profit                        £2,743m          £2,415m              14%   
                                                                                                    
 Total adjusted taxation charge                         £1,110m          £891m                25%   
 Total adjusted effective tax rate                      44%              40%                  4ppt  
                                                                                                    
 Adjusted earnings                                      £1,406m          £1,333m              5%    
 Adjusted basic earnings per share                      27.1p            25.8p                5%    
                                                                                                    
 Full year dividend per share                           16.4p            15.4p                6%    
                                                                                                    
 Group capital and acquisition expenditure              £2,727m          £1,601m              70%   


 To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy     
 businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services   
 and Residential services segments respectively. The 2011 comparatives have been restated accordingly.                    
                                                                                                                          


 KEY OPERATIONAL PERFORMANCE INDICATORS                                                                         
 For the year ended 31 December                                                2012        2011          ∆      
 UK residential energy customer accounts (period end, `000)                    15,656      15,881        (1%)   
 UK residential services product holdings (period end, `000)                   8,402       8,484         (1%)   
 UK business energy supply points (period end, `000)                           924         999           (8%)   
                                                                                                                
 Centrica Energy gas production (mmth)                                         2,441       2,160         13%    
 Centrica Energy liquids production (mmboe)                                    16.3        12.5          30%    
 Centrica Energy total gas and liquids production (mmboe)                      56.7        48.2          18%    
 Centrica Energy total proven and probable gas and liquids reserves (mmboe)    525         410           28%    
 Centrica Energy power generated (TWh)                                         21.5        26.7          (20%)  
                                                                                                                
 Direct Energy residential energy and services accounts (period end, `000)     5,856       5,647         4%     
 Direct Energy business energy supply electricity volumes (TWh)                51.4        46.4          11%    
 North America total proven and probable gas and liquids reserves (mmboe)      108         109           (1%)   
                                                                                                                
 Lost time injury frequency rate (per 100,000 hours worked)                    0.20        0.25          20%    


 UK residential services product holdings have been restated to exclude the water supply pipe product,  
 which has been incorporated into the plumbing and drains product.                                      
                                                                                                        


STATUTORY RESULTS

For the year ended 31 December 2012

* Operating profit from continuing operations: £2,625m (2011: £1,414m) 
* Profit from continuing operations before taxation: £2,442m (2011: £1,268m) 
* Earnings: £1,273m (2011: £421m) 
* Basic earnings per ordinary share: 24.6p (2011: 8.2p) 
* Earnings include £481m of exceptional charges relating to provisions for North
American wind power purchase agreements, restructuring charges, an impairment
relating to our decision not to proceed with nuclear new build and a restriction
on the rate of tax relief on UK oil and gas decommissioning costs.

CHAIRMAN`S STATEMENT

REVIEW OF THE YEAR

It is now three years since we defined our strategic objectives to build a more
sustainable, vertically integrated, cost effective and customer focused
business, with meaningful geographic diversity. We were clear that to achieve
this objective we would need to grow British Gas, acquire upstream assets on
value creative terms and expand the scale of our North American activity. 

I am pleased to confirm that in 2012 we demonstrated, through strong operational
performance and acquisition, our considerable progress in achieving these
strategic goals. 

In the UK the year brought many challenges, with periods of colder weather
compared to the very mild conditions of 2011 contributing to higher energy
bills, and with material changes in the regulatory environment. The management
team dealt with all of the turbulence with great professionalism and commitment.


British Gas took the lead in simplifying tariffs and implemented changes
consistent with Ofgem`s proposals for retail market reform. In parallel we
continued to innovate with smart metering, to help consumers manage their energy
usage, and to support customers with free insulation to reduce their
consumption. 

A relentless focus on cost management helped British Gas implement the lowest
tariff increase of all the major energy suppliers, necessitated by higher
wholesale energy costs, Government driven green energy costs and the imposition
of additional infrastructure charges. Nevertheless, the very real concerns of
hard pressed consumers, fuelled by external commentary, has impacted public
trust in the industry and in British Gas as the nation`s largest energy supplier
in particular. 

Centrica is one of the UK`s most important companies, employing around 40,000
people, keeping homes warm and well lit, securing future energy supplies,
innovating and investing and paying substantial amounts of tax to the Treasury
each year. We also have over 700,000 individual shareholders, all of whom
benefit from the dividends the Company pays. Through our larger shareholders,
many of them pension funds, our dividends also feed into the retirement savings
of millions of people. It is important therefore that the Group continues to
grow and invest. The 5% increase in adjusted earnings we achieved in 2012
enabled us to invest more and to continue to grow our dividend in real terms.
The importance of winning recognition for our contribution to the UK economy and
building public trust continue to be priority items on our agenda. 

Upstream we invested around £2 billion in helping secure gas supplies for the
UK. In parallel we achieved first power from our Lincs offshore wind farm and
worked with our partners in extending the life of our existing nuclear fleet. We
took the decision not to participate in new nuclear construction with EDF due to
higher anticipated costs and a lengthened construction schedule. This will
enable us to return some of the capital we had raised for this purpose through a
£500 million share repurchase programme. 

In North America, a carefully executed strategy of operational efficiencies,
organic growth and customer acquisition helped us to further expand our business
- and we are well on the way to doubling profitability since 2009. With a change
in the centre of gravity in our North American activities we moved the corporate
headquarters from Toronto to Houston and our ambition to further extend our role
in this market remains a strategic priority. The impact of shale gas in North
America cannot be overstated and whilst its immediate effect has been to lower
wholesale gas prices in the US market, there is no doubt it will influence
global energy markets over time. 

Our strategic vision is to be the leading integrated energy company, with
customers at our core. The way in which we achieve this must reflect the changes
in markets and sources of supply together with a constant assessment of costs
and return for shareholders. 

Our aim in 2013 and beyond will be to focus on three strategic priorities -
innovate to drive growth and service excellence, integrate our natural gas
business, linked to our core markets, and increase our returns through
efficiency and continued capital discipline. 

We will achieve these goals by differentiating our UK business through our
systems and innovation to provide a competitive edge and investing upstream for
value, while maintaining our structural hedge. In North America we will grow our
customer base and service business and seek to enhance our midstream and
upstream position by acquisition, when strategic fit and returns are attractive.


We believe that under the leadership of Sam Laidlaw we have developed a strong
platform on which we can build a rewarding future for both customers and
shareholders. This has been achieved with the considerable commitment of the
management team and the skills and enthusiastic support of colleagues on both
sides of the Atlantic. 

The period ahead will bring new challenges. In order to ensure the organisation
of our management team is appropriate for the task ahead, with effect from 1
July 2013 the Group will migrate from a regional structure to an international
functional structure. Chris Weston will assume responsibility for downstream
operations and Mark Hanafin will assume responsibility for upstream operations
across the Group. 

After a successful career spanning 12 years with Centrica, Phil Bentley will be
stepping down from his role as Managing Director of British Gas, and Board
member of Centrica, on 30 June 2013 and will leave the Company by 31 December
2013. 

Phil Bentley has made a substantial contribution to the development of the
business, initially as Finance Director and for the last six years as Managing
Director of British Gas. 

In his most recent role he has been instrumental in restructuring,
reinvigorating and materially improving the performance of the business by
raising customer service, lowering costs and increasing productivity. As
Chairman, and on behalf of the Board, I thank him for all that he has achieved
and wish him every success for the future. 

I am confident that the bench strength we enjoy, the mindset we have, the new
management structure and business model we have created will continue to deliver
strong cashflows, enabling us to invest in customer service, supply security and
shareholder reward.

 Sir Roger Carr    
 Chairman          
 27 February 2013  
                   


CHIEF EXECUTIVE`S REVIEW

STRONG PERFORMANCE IN 2012 ALLOWS US TO CONTRIBUTE OUR FAIR SHARE

Centrica performed well in 2012 in a challenging environment, delivering
year-on-year adjusted earnings growth of 5%. This reflects a combination of
organic growth and enhanced scale from recent acquisitions and investments, in
the UK, Norway and North America, as well as a continued focus on cost
efficiency across the Group. As a result we have been able to grow the full year
dividend by more than the rate of inflation for the 13th year in succession, in
addition to launching a £500 million share repurchase programme in early 2013. 

Downstream at British Gas, we are facing increased costs in supplying energy,
most of which are external to the Group. In this tough economic climate, we are
committed to doing everything we can to help our customers. We have made sure
that energy choices are simple and transparent, and we lead the way in standards
of customer service, innovation, help for the vulnerable and energy efficiency.
The weak economy continues to have an adverse impact on British Gas Business.
However we were able to deliver strong double-digit profit growth in British Gas
Services, largely through tight cost control coupled with continuing high
standards of service. 

Upstream at Centrica Energy, we continue to invest to secure energy supplies for
the UK. We completed three acquisitions of gas and oil assets, delivering a step
change in annual production and strengthening the geographic spread of our
portfolio. In power, our Lincs offshore wind farm has generated first power and
will be fully operational later in 2013. While market conditions remain
challenging for gas-fired plants, the nuclear fleet performed well, with
increased output and seven year life extensions for Hinkley Point B and
Hunterston B. In nuclear new build, while significant progress has been made,
there remains uncertainty about overall project costs and the construction
schedule. These factors, in particular the lengthening time frame for a return
on the capital invested in a project of this scale, has led us to conclude that
participation is not right for Centrica and in February 2013 we announced our
decision not to participate. 

In Centrica Storage, we delivered an increase in profit through strong
operational and commercial performance. And in North America, at Direct Energy
we delivered further profit and customer growth in an environment of low gas
prices and we have successfully integrated recent acquisitions into the
business. We continue to see North America as an attractive market to deploy
capital, both upstream and downstream, for growth and for value. 

We remain on track to deliver our Group-wide £500 million cost reduction
programme, sharpening the business and maintaining our competitive edge. At the
same time we have retained our absolute focus on safety which continues to be a
core priority across all our activities. Our downstream businesses have
continued their significant reduction in accident rates, while our upstream
operations have been implementing more rigorous process safety management
systems. At a Group level we have developed a more comprehensive process to
provide greater assurance of HSE compliance to the Board and Executive. This
strong safety culture is reflected in our performance, with the Lost Time Injury
Frequency Rate (LTIFR) falling by 20%. 

Overall, Centrica is delivering consistent earnings growth and it is this which
allows us to make our fair contribution to the economy and society through
investment, employment, tax payments and dividends. 

HELPING OUR CUSTOMERS IN DIFFICULT TIMES

Taking the lead in making energy choices simple and transparent

In February 2013, Ofgem announced that it was preparing for final proposals and
a statutory consultation to be published around the end of March 2013 on its
reforms to make the household energy market simpler, clearer and fairer for
consumers. These follow on from initial findings published in March 2011 and
updated proposals announced in October 2012. The headline proposals are a
welcome step forward for the industry and will help to improve customer trust,
engagement and understanding. However, it is important that these positive
developments do not have the unintended consequence of restricting choice and
innovation. We have already implemented a number of changes consistent with the
headline proposals, including simplifying our tariff structures and publishing
price comparison information to make it easy for customers to ensure they are on
the most appropriate British Gas tariff for them. 

Customer service, cost efficiency and innovation remain at the heart of
everything we do. British Gas operating costs fell year-on-year, but not at the
expense of service, as our Net Promoter Score (NPS) increased once again, to
+30, and we were awarded the top 5 star rating for customer service from
Consumer Focus. Our improved online platform handled 13% more transactions than
in 2011, achieving a better customer experience and lower costs. Our new `Remote
Heating Control` product allows customers to monitor and control their energy
use when they are away from the home, and we have now installed over 800,000
smart meters for homes and businesses - substantially more than any other UK
energy supplier. 

We also spend more than any other energy supplier on those who are most in need
of support. In 2012, 400,000 of our most vulnerable customers received the Warm
Home Discount, now worth £130 off their annual bill. We are also at the
forefront of measures to help people use less energy, installing insulation for
nearly 700,000 customers during the year. 

Despite the squeeze on household budgets, British Gas Services performed well.
We improved retention rates across our product range, demonstrating the value
which customers place on our services. However, in current economic conditions
it is difficult to attract new customers and we also saw a reduction in boiler
installation volumes, down 10% from last year. The economic impact was seen more
clearly in British Gas Business, leading to lower profitability and a reduction
in the number of accounts served in a highly competitive market. We are
therefore taking steps to put this business on a stronger footing for long-term
growth, including introducing new systems to improve levels of customer service,
at lower cost. Over time, we also expect to achieve growth in business services,
particularly through Energy Performance Contracts. 

Innovation in North America

In North America, greater competition has been welcomed by regulators and
customers in our core markets, Texas and the US North East. Acquisitions and
organic growth have increased the size of our business and we now have 3.5
million residential energy customer accounts and around 6 million residential
energy and services accounts in total. 

We continue to focus on providing attractive and innovative products to our
residential and business customers, building on our Group-wide expertise in
competitive markets. Our prepaid `Power to Go` product in Texas continues to
grow, while in the US North East the introduction of `Free Power Saturdays` has
encouraged customers to rephase their electricity use to off-peak times. We are
specifically tailoring offers for small business customers while continuing to
deliver high levels of service. And our energy services business gives us the
ability to differentiate ourselves from our competitors with additional higher
margin propositions. 

In Ontario, restrictions on competition continue to make it difficult for us
both to retain customers and attract new ones. We no longer view this business
as core and are managing costs to continue serving our existing customers as
efficiently as possible. 

SECURING SUSTAINABLE AND AFFORDABLE ENERGY SUPPLIES

The Group invested £2.7 billion of capital in 2012, helping to secure supplies
for the UK. Around £2 billion of that was invested in North Sea gas and oil
assets, including the completion of three acquisitions. This materially
increased the scale and geographic diversity of the business and Norway is now a
core part of our portfolio, with a number of attractive producing, development
and exploration assets. Over the past three years we have developed significant
capabilities in upstream and midstream, leaving us well placed for future
growth. 

We achieved first gas from our Ensign, Seven Seas and Atla development projects
during the year, with first gas expected from York and Rhyl in the coming weeks.
In early 2013, we had positive results from exploration drilling at Rodriguez
and Whitehaven. However we recorded a lower level of drilling success in 2012
than in previous years, including a development well failure at Ensign which
resulted in a pre-tax write-off of £73 million. Construction has now begun at
the £1.4 billion Cygnus project. Cygnus is the largest gas discovery in the
Southern North Sea in the last 25 years and will create 4,000 jobs during the
construction phase, predominantly in the UK. At peak production it will be able
to meet the demand of nearly 1.5 million UK homes. 

We achieved first power from our 270MW Lincs offshore wind farm in the year.
When fully operational by the second half of 2013 it will be able to meet the
annual demand of more than 200,000 homes. We were also granted planning consent
for 580MW at the Race Bank offshore wind farm project. We are willing to commit
£200 million for the project, and are in discussion with a financial partner and
the Government concerning the economic framework. Investment in the existing
nuclear fleet is ongoing, with the expectation for nuclear plant life extensions
for the AGR fleet now seven years on average, compared to the five previously
assumed. In gas-fired generation, we have recently sanctioned a turbine blade
upgrade at our 1.2GW South Humber power station. We also have strong
capabilities in gas storage, and two potentially attractive projects, Baird and
Caythorpe. However the market remains challenging for new gas storage projects
and we will only invest if the returns are appropriate for the level of risk
undertaken. 

However, as with all our investment options, we will only deploy capital where
we see attractive value, aligned to our core competencies. In this context, we
announced in October that we would not proceed with plans to build two dedicated
biomass plants, following recent clarification on the regulatory framework
indicating a Government preference for coal conversion. Earlier this month, we
also announced that we would not participate in the construction of up to four
new nuclear reactors in the UK. While we believe that nuclear power has an
important role to play in the UK`s energy mix, the likely cost and timescale of
this project led us to conclude that it was not in the best interests of
Centrica shareholders for us to participate. 

NEW STRATEGIC PRIORITIES TO REFLECT CHANGING MARKET CONDITIONS

World gas markets are evolving and we have to evolve with them. Shale gas in
North America and LNG globally have transformed the landscape. Gas will continue
to play a major role in the UK, both in heating the overwhelming majority of
homes and businesses and as part of a diverse fuel mix for power generation,
with the UK Government`s Electricity Market Reform and Gas Strategy both
indicating a long-term role for gas-fired generation. However, the sources of UK
gas are changing, with North Sea reserves declining and becoming more expensive
to develop. This places more reliance on imported pipeline gas and particularly
LNG, and leaves the UK increasingly exposed to global gas prices. 

At the same time, the nature of low carbon power investments in the UK is
changing, with affordability for consumers increasingly the focus of attention.
Projects are becoming larger in scale, with higher capital costs and longer
construction times, while the fixed price nature of the Contract for Difference
mechanism means that output will no longer act as a hedge against downstream
price volatility. 

Against this backdrop, our vision is to be the leading integrated energy
company, with customers at our core. We have refreshed our strategic priorities
to position Centrica to best advantage in this demanding but exciting new
world:

* Innovate to drive growth and service excellence

* Lead with great service and efficient operations 
* Enable our customers to control their energy use in a simpler, smarter, more
efficient way 
* Grow in selected markets, building on our leading capabilities

* Integrate our natural gas business, linked to our core markets

* Grow and diversify our E&P portfolio for value 
* Develop our midstream business to integrate along the gas value chain 
* Maintain a low carbon power hedge and invest where we see value

* Increase our returns through efficiency and continued capital discipline

* Further develop organisational capability 
* Continuously focus on safety 
* Deliver value to shareholders

These strategic priorities apply across our businesses in the UK, North America
and internationally. In order to reinforce delivery of the priorities we are
moving to an international functional organisation with a new management
structure, aligned to our core competencies downstream and upstream. And we will
do all this with the clear objective of increasing our returns, through
efficiency and continued capital discipline. Chris Weston will lead the
international downstream business, as we build on our distinctive capabilities
in service, systems, energy services and efficiency, in the UK and North
America. Mark Hanafin will lead the international upstream business as we
continue to develop opportunities along the gas value chain and invest where we
see attractive value. Both Chris and Mark have extensive experience in the UK
and North America, and are therefore well placed to take on the task ahead. 

Innovate to drive growth and service excellence

Underlying household energy consumption in the UK will continue to fall as
appliances and homes become more efficient. However with the UK increasingly
exposed to global gas prices, and non-commodity costs expected to rise
year-on-year, affordability will remain an important issue. By contrast, the low
gas price environment in North America makes affordability less of an issue, and
favourable market conditions in the United States offer a good opportunity for
growth. On both sides of the Atlantic, the roll-out of smart meters will give
customers a new level of control over their energy use and we need to be
innovative in the way we help them meet their evolving energy needs. 

In the UK, we have developed a leading online platform and leading customer
systems. We will also take advantage of our strong positions in energy services
and smart meters to develop exciting new propositions, with offerings
increasingly tailored to the needs of individual customers. Through relentless
focus on service excellence, innovation and cost efficiency, we aim to maintain
stable margins in residential energy supply, and target continued expansion in
residential services. In business energy we have laid the groundwork for future
growth, although in the near term market conditions remain challenging. 

In North America too, service, innovation and cost efficiency will remain a core
focus. But the continued liberalisation of markets in the United States, and the
undeveloped nature of energy services provision, offer an opportunity to grow
our customer base, both organically and through acquisition. We will continue to
evaluate both bolt-on and larger acquisitions but remain focused on returns and
will only transact where we see value. We will use our UK expertise and
experience to develop our protection plan offerings in North America and we will
increase the level of energy and services bundling over time. Over the next 3-5
years we are targeting a doubling of profitability in the North America
downstream business, through a combination of organic growth and acquisitions,
with Direct Energy downstream becoming a more material part of the Group. 

Integrate our natural gas business, linked to our core markets

In an increasingly global market, we must secure gas from a wider range of
sources and will consider at which stages of the supply chain we can add value,
expanding the scope of our activities where appropriate. The aim is to connect
sources of energy to our customers, building an integrated international
business focused on the Atlantic basin. 

The UK and Norway will remain an important part of our upstream investment and
activity, as we look to maintain an appropriate energy hedge. We will invest in
assets with a link to existing hubs while looking to divest non-core assets.
However, with the development of North Sea fields becoming increasingly
expensive, particularly in the UK, we will refresh our focus on value. In North
America we will consider both conventional and unconventional assets, and there
is also potential for gas exports later in the decade. Overall, we will invest
where we see value across our international portfolio, delivering annual
production in the range 75mmboe to 100mmboe. In addition, we will look to build
on our existing midstream capabilities and positions along the gas value chain,
focusing on asset optimisation and gas contracting with an emerging LNG
presence, provided we can do so in a capital efficient manner. 

Our focus in UK power generation will be to preserve our existing power hedge,
investing where we have a competitive advantage and see attractive returns. We
retain a number of offshore wind opportunities, at Race Bank and in the Irish
Sea. However we will only invest for value and will seek to reduce our equity
ownership through partnering where appropriate. We also retain options to build
new CCGTs. However spark spreads remain at historically low levels and much will
depend on the final outcome of Electricity Market Reform and the implementation
of a capacity market in the UK. 

Increase our returns through efficiency and continued capital discipline

In 2013, Centrica faces new challenges, including the loss of free carbon
allowances. But we will continue to benefit from our cost reduction programme,
from organic growth and also from the full year impact of acquisitions, both
upstream in gas and oil production and in North America. In this context, it is
vital that we continue to focus on operational efficiency, reducing costs
wherever possible for the benefit of customers and shareholders. All this must
be done without in any way compromising our strong focus on health and safety. 

Centrica has a robust balance sheet and generates strong cash flows and we
retain a number of investment opportunities across the Group. This combination,
allied to our expertise and experience both upstream and downstream, defines
Centrica`s core capabilities. However we will maintain capital discipline, as
evidenced by our recently announced £500 million share repurchase programme,
only investing where we see value. Our aim now is to use those strengths to
innovate and grow while adapting to a rapidly evolving energy world, serving our
customers and delivering value to shareholders.

 Sam Laidlaw       
 Chief Executive   
 27 February 2013  
                   


GROUP FINANCIAL REVIEW

Group revenue from continuing operations was up 5% to £23.9 billion (2011: £22.8
billion). Revenue increased in British Gas due to higher gas consumption as a
result of colder weather and higher retail gas and electricity prices. Revenue
decreased in Centrica Energy, with the impact of lower gas-fired power
generation volumes and reduced midstream activity following the closure of our
German wholesale business in 2011, more than offsetting the impact of higher gas
and liquid volumes. Revenue in Direct Energy was broadly flat, reflecting higher
average customer numbers and increased business energy consumption, offset by
lower wholesale energy prices. 

Throughout the Operating Review and Group Financial Review, reference is made to
a number of different profit measures, which are shown in the table below:

                                                                                                  2012                                             2011         
                                                                             Exceptional                                      Exceptional                       
                                                              Business       items and certain    Statutory    Business       items and certain    Statutory    
                                                              performance    re-measurements      result       performance    re-measurements      result       
 Year ended 31 December                              Notes    £m             £m                   £m           £m             £m                   £m           
 Adjusted operating profit:                                                                                                                                     
 British Gas                                                  1,093                                            1,005                                            
 Centrica Energy                                              1,230                                            1,023                                            
 Centrica Storage                                             89                                               75                                               
 Direct Energy                                                331                                              312                                              
 Total adjusted operating profit                     5b       2,743                                            2,415                                            
 Depreciation of fair value uplifts from             10       (96)                                             (105)                                            
 Strategic Investments, before tax                                                                                                                              
 Interest and taxation on joint ventures             5b       (85)                                             (102)                                            
 and associates                                                                                                                                                 
 Group operating profit                              6        2,562          63                   2,625        2,208          (794)                1,414        
 Net interest expense                                         (183)          -                    (183)        (146)          -                    (146)        
 Taxation                                            6,7,8    (1,029)        (140)                (1,169)      (810)          (16)                 (826)        
 Profit from continuing operations after taxation             1,350          (77)                 1,273        1,252          (810)                442          
 Discontinued operations                                      -              -                    -            13             (34)                 (21)         
 Profit for the year                                          1,350          (77)                 1,273        1,265          (844)                421          
 Depreciation of fair value uplifts from             10a      56                                               68                                               
 Strategic Investments, after taxation                                                                                                                          
 Adjusted earnings                                            1,406                                            1,333                                            
                                                                                                                                                                


Total adjusted operating profit was up 14% to £2,743 million (2011: £2,415
million). In British Gas, profitability increased, with the impact of higher gas
consumption and unit prices more than offsetting increased wholesale commodity,
transportation and environmental costs in residential energy supply, and cost
efficiency measures driving growth in residential services. In Centrica Energy,
higher gas and liquids production resulting from acquisitions and higher
achieved prices led to increased profitability in the gas segment, while higher
nuclear power generation more than offset the impact of reduced gas-fired power
generation volumes in the power segment. In Centrica Storage, improved seasonal
price differentials during the final quarter of 2011 and first quarter of 2012
led to higher profitability. In Direct Energy, profitability increased, with
growth in services and business energy supply more than offsetting slightly
lower profitability in residential energy supply, driven by less favourable
market conditions in Ontario partially offset by the impact of recent
acquisitions. 

Net interest expense was £183 million (2011: £146 million), reflecting £1,196
million net issuance of debt during the year. The tax on adjusted profit from
continuing operations was £1,029 million (2011: £810 million), reflecting a
higher level of operating profit and an increased mix of more heavily taxed
upstream operating profit. After adjusting for the tax impact of depreciation on
the Venture fair value uplift and our share of taxation on joint ventures and
associates, the adjusted tax charge from continuing operations was £1,110
million (2011: £891 million) and the resultant adjusted effective tax rate for
the Group was 44% (2011: 40%). An effective tax rate calculation, split UK and
non-UK, is shown in the table below:

                                                                                                  2012                                      2011   
                                                                       UK           Non-UK        Total          UK           Non-UK        Total  
                                                                       £m           £m            £m             £m           £m            £m     
 Adjusted operating profit                                             2,079        664           2,743          2,042        373           2,415  
 Share of joint ventures / associates interest                         (44)         -             (44)           (58)         -             (58)   
 Net interest expense                                                  (79)         (104)         (183)          (71)         (75)          (146)  
 Adjusted profit from continuing operations before taxation            1,956        560           2,516          1,913        298           2,211  
 Tax on adjusted profit from continuing operations                     692          337           1,029          682          128           810    
 Tax impact of depreciation on Venture fair value uplift               40           -             40             37           -             37     
 Share of taxation on joint ventures / associates                      41           -             41             44           -             44     
 Adjusted tax charge from continuing operations                        773          337           1,110          763          128           891    
 Adjusted effective tax rate                                           40%          60%           44%            40%          43%           40%    
                                                                                                                                                   


Reflecting all of the above, profit from continuing operations after taxation
was up 8% to £1,350 million (2011: £1,252 million) and after adjusting for fair
value uplifts, adjusted earnings increased by 5% to £1,406 million (2011: £1,333
million). Adjusted basic earnings per share (EPS) increased to 27.1 pence (2011:
25.8 pence). 

The statutory profit for the year was £1,273 million (2011: £421 million). The
reconciling items between profit from business performance and the statutory
profit are related to exceptional items, certain re-measurements and
discontinued operations. The increase compared with 2011 was principally due to
a net gain on certain re-measurements of £404 million (2011: net loss of £322
million). The Group reported a statutory basic EPS of 24.6 pence (2011: 8.2
pence). 

In addition to the interim dividend of 4.62 pence per share, we propose a final
dividend of 11.78 pence, giving a total ordinary dividend of 16.4 pence for the
year (2011: 15.4 pence), an increase of 6%. 

Group operating cash flow from continuing operations before movements in working
capital was higher at £3,542 million (2011: £3,065 million), reflecting the
contribution from Centrica Energy acquisitions. After working capital
adjustments, tax, operational interest, and cash flows associated with
exceptional charges and discontinued operations, this stood at £2,820 million
(2011: £2,337 million). 

The net cash outflow from investing activities was £2,558 million (2011: £1,400
million), as described in the business combinations and capital expenditure
section on page 11. The increased outflow reflects the acquisitions of North Sea
gas and oil assets. 

The net cash inflow from financing activities was £190 million (2011: outflow of
£907 million). The inflow reflects the net issuance of borrowings during the
year exceeding dividends paid. 

Reflecting all of the above, the Group`s net debt at 31 December 2012 was £4,047
million (2011: £3,292 million). To align with management reporting, net debt has
been restated to include mark-to-market values on derivative financial
instruments used to hedge offsetting changes in borrowings. 

During the year net assets increased to £5,927 million (31 December 2011: £5,600
million), reflecting the impact of statutory profit for the year exceeding
dividends paid. 

EXCEPTIONAL ITEMS

Exceptional charges from continuing operations of £534 million were included
within Group operating profit during the year (2011: £331 million). 

Following a decrease in North American power prices, a charge of £89 million has
been made to reflect the fair value of the obligation to purchase power above
its net realisable value through onerous wind farm power purchase agreements. 

On 4 February 2013, Centrica announced its decision not to proceed with nuclear
new build investment. Accordingly, the Group has recorded an impairment of £231
million. This amount includes the carrying value of its investment in NNB
Holding Company Limited as well as value attributed to nuclear new build in the
British Energy acquisition. 

An exceptional restructuring charge of £214 million was recorded, mainly
relating to staff reductions following the Group-wide cost reduction programme
announced in 2012. 

Taxation on the total of these charges generated a credit of £93 million (2011:
£69 million). On 3 July 2012, the UK government substantively enacted the
restriction on the rate of tax relief on oil and gas decommissioning costs from
the current 62% to 50%. An exceptional tax charge of £40 million has been
recognised from revaluing the related deferred tax provisions. 

CERTAIN RE-MEASUREMENTS

In our business we enter into a portfolio of forward energy contracts which
include buying substantial quantities of commodity to meet the future needs of
our customers. Primarily because these contracts include terms that permit net
settlement, the rules within IAS39 require the contracts to be fair valued. In
addition, the Group also enters into a range of commodity contracts designed to
secure the value of its underlying production, generation, storage and
transportation assets consistent with an integrated energy business in the UK
and North America. Fair value movements on these commodity derivative contracts
do not reflect the underlying performance of the business because the contracts
are economically related to our upstream assets or downstream demand in our
chosen markets, which are not typically fair valued. Therefore, these certain
re-measurements are reported separately and are subsequently reflected in
business performance when the underlying transaction or asset impacts profit or
loss. The operating profit in the statutory results includes net gains of £597
million (2011: losses of £463 million) relating to these re-measurements, of
which there are a number of elements. The profits arising from the physical
purchase and sale of commodities during the year, which reflect the prices in
the underlying contracts, are not impacted by these re-measurements. See note 3
for further details. 

BUSINESS COMBINATIONS AND CAPITAL EXPENDITURE

On 30 April 2012, the Group completed the acquisitions of certain oil and gas
production and development assets from Statoil and ConocoPhillips for a combined
total cash consideration of £911 million. In addition, total tax liabilities of
£169 million were assumed on completion of the acquisitions. During the year the
Group also completed the acquisition of a portfolio of producing oil and gas
assets from Total for total cash consideration of £133 million. These three
acquisitions are included within the Centrica Energy gas segment. 

On 22 August 2012, the Group acquired 100% of the shares of New York based
energy retailers Energetix Inc. and NYSEG Solutions Inc. for total cash
consideration of $121 million (£77 million) including $5 million (£3 million) of
deferred consideration. Goodwill of $43 million (£27 million) arose on the
acquisition. The acquisition is included in the Direct Energy residential energy
supply and business energy supply segments. 

Further details on capital expenditure and business combinations are included in
notes 5(e) and 16 respectively. 

EVENTS AFTER THE BALANCE SHEET DATE

On 4 February 2013, Centrica announced its decision not to proceed with nuclear
new build investment. Accordingly, the Group has recorded an impairment of £231
million. The Group also announced on 4 February 2013 its intention to launch a
£500 million share repurchase programme to return surplus capital to
shareholders, which will be conducted over the next 12 months. 

Further details on events after the balance sheet are described in note 19. 

RISKS AND CAPITAL MANAGEMENT

The Group`s risk management processes are largely unchanged from 31 December
2011. Details of how the Group has managed financial risks such as liquidity and
credit risk are set out in note 4. 

Details on the Group`s capital management processes are provided under sources
of finance in note 11. 

ACCOUNTING POLICIES

UK listed companies are required to comply with the European regulation to
report consolidated financial statements in conformity with International
Financial Reporting Standards (IFRS) as adopted by the European Union. The
Group`s specific accounting measures, including changes of accounting
presentation and selected key sources of estimation uncertainty, are explained
in note 3. 

OPERATING REVIEW

BRITISH GAS

Good performance against a challenging economic backdrop

British Gas performed well in 2012, in a weak economy and with continuing
increases to the cost of supplying energy. This is having a real impact for both
residential and business customers and, against this backdrop, it is important
that we continue to focus on improving customer service and reducing costs. We
also continue to lead the industry in smart metering, energy efficiency, help
for the vulnerable, and in ensuring that our energy proposition is simple, fair
and transparent. 

In residential energy supply, we delivered margins in line with our
through-cycle expectations, in a period where all suppliers were faced with
higher wholesale gas prices and higher non-commodity costs, including the cost
of upgrading the UK`s gas and electricity grids and meeting carbon reduction
targets. Weather conditions were cooler than usual, following unusually mild
temperatures in 2011. Average gas consumption was therefore higher compared to
the prior year, partially offset by efficiency measures taken by our customers,
including the take-up of our free insulation offers and the installation of more
efficient central heating systems. As a result of higher consumption and costs,
the average gas and electricity bill increased year-on-year and was made up as
follows:

 For a 2012 average gas and electricity bill of £1,188* the costs are:          
 External Costs                                                                 
 Wholesale energy costs                                                   £568  
 Delivery to your home                                                    £283  
 Environmental and social policies                                        £112  
 Taxes                                                                    £72   
 Our costs                                                                      
 Operating costs                                                          £104  
 Our profit                                                               £49   


* Based on British Gas 2012 financial results and consumption and is an average
of all payment types/tarriffs/regions. 

In residential services, we again delivered double digit profit growth despite
the challenging economic climate, primarily driven by cost efficiencies, while
continued high service levels resulted in strong customer retention. The weak
economy and competitive pressures continue to have an adverse impact on our
business energy supply division, and we are investing in back office systems to
reduce cost and enhance customer service. 

The health and safety of our employees and customers remains a core priority.
Our lost time injury frequency rate (LTIFR) was 0.23 per 100,000 hours worked
(2011: 0.29), a 21% reduction over the past year. We are also focused on
maintaining high levels of employee engagement and recognising the commitment
our people make to delivering excellent customer service. This was reflected in
British Gas being nominated in the Sunday Times "Best Big Companies to Work For"
for the fourth year in a row. 

Helping our customers in difficult times

In February 2013, Ofgem announced that it was preparing for final proposals and
a statutory consultation to be published around the end of March 2013 on its
reforms to make the household energy market simpler, clearer and fairer for
consumers. These follow on from initial findings published in March 2011 and
updated proposals announced in October 2012. The headline proposals are a
welcome step forward for the industry. However it is important that the
proposals on product range, restricting each supplier to four tariff types, do
not restrict customer choice or market innovation. British Gas has already
implemented changes consistent with many of the headline proposals. We have
simplified our tariffs, including a new standing charge and single rate
structure as part of a commitment to phase out two-tier tariffs. We have also
been publishing price comparison information on our annual statements since
March, allowing customers to check whether they are on the most appropriate
British Gas tariff, while we were awarded five stars by Which? in July for
clarity of billing and account management. More recently, we have built the
capability to provide a personalised price comparison on each customer`s bill,
based on their actual consumption. 

We continued to deliver high levels of customer service in 2012. In residential
energy, our average call answering and handling times were lower than in 2011
while the volume of calls received fell and in October, Consumer Focus awarded
us their top 5 star customer service rating. In residential services, our
customer service metrics remained strong, despite higher call volumes as a
result of the colder weather. Meanwhile complaints fell, and customer churn was
at its lowest ever level. The overall British Gas Net Promoter Score (NPS)
increased from +26 to +30. 

During 2012 we further developed our online platform. We now have 3.4 million
online registered customers, a 20% increase since last year, and over a third of
all energy bills are now sent electronically. Seven out of ten customer own
meter reads are submitted online and we have over one million accounts on
EnergySmart which helps customers monitor and manage their energy usage. We have
launched leading applications for both Apple and Android smart phones and have
seen more than 650,000 downloads to date. Around a quarter of all website
contacts are now made through mobile devices. 

We continue to help our most vulnerable customers and maintain the widest
eligibility criteria among all energy suppliers for the Warm Home Discount,
which helped 400,000 customers during the year. In October, we announced "Better
Homes for Britain", a five year partnership with Shelter to help one million
British households living in private rental property improve the standard of
their homes. We also lead the industry in energy efficiency. Since 2008, British
Gas has installed 1.7 million insulation measures to homes across the UK through
the CERT and CESP programmes. Under these schemes, British Gas was required to
meet a variety of carbon emissions reduction targets by 31 December 2012.
Overall we expect to fulfil our total carbon saving targets in the first quarter
of 2013, although finding customers who qualify as being in the `Super Priority
Group` has proved challenging and this particular sub-target will not be fully
met. However, Ofgem has indicated that mitigating actions undertaken after 31
December will also be taken into account when assessing delivery. 

Customer accounts stabilised despite competitive market conditions

A slight fall in wholesale electricity prices at the end of 2011 allowed us to
implement a 5% reduction in our standard domestic electricity tariff in January,
re-establishing British Gas as the cheapest major electricity supplier on
average in Britain. However, like the rest of the industry, we are facing higher
external costs. Wholesale gas prices are 13% higher for winter 2012/13 than for
winter 2011/12, while the cost of upgrading the UK`s gas and electricity grids
and meeting carbon reduction targets increased by £50 per customer in 2012. As a
result, in October we announced a rise in domestic gas and electricity prices by
an average of 6%, which was implemented in November. 

The number of residential energy customer accounts on supply reduced by 1%
during the year, to 15.7 million (2011: 15.9 million). This reflected a short
term increase in customer churn following the implementation of the price rise,
although churn of 9% over the year was at its lowest ever level reflecting good
customer service. Our competitive pricing position has now improved following
the implementation of price rises by all major suppliers and we have seen a
return to growth in the early weeks of 2013. We have 5 million customers
enrolled in the Nectar loyalty programme, which reduces our cost to serve and
improves the customer experience by incentivising the use of our online
platform, including the submission of meter reads and payment by direct debit. 

The number of residential services product holdings fell slightly to 8.4 million
(2011: 8.5 million), with weak economic conditions making sales of new contracts
challenging. Retention rates improved however, with strong levels of customer
service supporting attractive customer propositions. We decided in the second
half of the year to strengthen our Plumbing and Drains product by expanding the
cover to include the water supply pipe. As a result we are no longer selling a
separate water supply pipe product and our product holdings have been restated
accordingly. The economic environment continued to impact boiler installation
volumes, which fell 10% to 94,000 (2011: 105,000), although operating profit
increased as we focused on reducing our cost base. We continue to develop new
affinity relationships to enable us to offer energy and services products to a
wider customer base. In July, we signed a broad strategic partnership with the
RAC covering a number of areas, including roadside breakdown, joint procurement
and affinity marketing, and the first sales were made in November. In electric
vehicles, we are the preferred supplier of home charging solutions for five
major car manufacturers. 

The number of business energy supply points fell by 8% over the year, to 924,000
(2011: 999,000) due to the challenging economic and competitive environment
which is putting pressure on contract renewal rates and margins. However, we
have recently received the letter of intent to award the renewal of a
significant electricity contract from the Government Procurement Service
comprising 70,000 sites for a term of four years. A new management team is in
place and we continue to invest in our back office systems to reduce costs,
sharpen our competitive position and enhance our customer service. In business
services we have made good progress. We have now been selected as preferred
contractor on seven multi-year energy performance contracts with public sector
organisations and have a strong pipeline for the year ahead. 

More normal weather and cost reduction programme driving profit growth

After an unseasonally warm 2011, total British Gas gross revenue increased to
£13,857 million (2011: £12,403 million) reflecting higher gas sales volumes.
Total British Gas operating profit increased to £1,093 million (2011: £1,005
million). We continue to make good progress on our cost reduction programme, and
are on track to deliver £300 million of cost savings across British Gas by the
end of 2013. We are seeing the benefit of previous investment in
industry-leading IT systems and have achieved savings through a range of
initiatives, including a pay freeze for employees and changes to the defined
benefit pension schemes. During 2012, we closed our Southampton call centre,
outsourced a number of roles in British Gas Services and British Gas Business,
reduced IT costs through new working practices, offshored and transitioned to
new data centres and agreed improved commercial terms with suppliers. As a
result, including the impact of investment in growth areas, operating costs were
1% lower in 2012 than in the prior period, and despite the weak economy the bad
debt charge as a proportion of revenue fell as the benefits of improved systems
and processes were realised. 

In residential energy, gross revenue increased to £9,121 million (2011: £7,930
million) reflecting higher consumption and retail tariffs. Average gas
consumption increased by 12%, as the impact of cooler weather conditions than in
an unusually warm 2011 more than offset underlying energy efficiency reductions.
Average electricity consumption was broadly flat compared to 2011. Residential
energy operating profit increased to £606 million (2011: £544 million).
Commodity and transportation and distribution costs both increased, while
environmental costs rose by 22% to £732 million (2011: £599 million). The
residential energy operating margin was 6.6% (2011: 6.9%), in line with our
through-cycle expectations. 

In residential services, gross revenue increased slightly to £1,674 million
(2011: £1,644 million) with a rise in revenue from insulation jobs more than
offsetting a decline in installations revenue. Operating profit increased by 16%
to £312 million (2011: £269 million), while the operating margin increased to
18.6% (2011: 16.4%) driven by cost efficiencies and an improved contribution
from our new markets activity. 

In business energy supply and services, gross revenue increased to £3,062
million (2011: £2,829 million) with operating profit falling by 9% to £175
million (2011: £192 million), reflecting the challenging external environment.
Business services revenue increased by 12% compared to 2011. 

Leading the transition to smart connected homes and businesses

We continue to lead the industry in smart metering and have now installed over
800,000 smart meters in homes and businesses. We welcomed the Government`s
confirmation of the standards for the smart meter roll-out and we are the only
supplier currently installing fully compliant Phase 3 meters in customers`
homes. Smart meters are a key enabler for a range of technologies and by going
early on the roll-out we have gained invaluable experience. We are also starting
to see the benefit of smart meters delivering an enhanced customer experience,
including significantly lower contact rates, fewer complaints and higher
retention. We have made a number of investments in smart technology companies,
including AlertMe, which enables a range of home automation applications and
Power Plus Communications, which specialises in smart applications in complex
buildings. During the year we launched our award winning `Remote Heating
Control` product which allows customers to monitor and control their central
heating system via the internet or a smart phone. Around 15,000 customers are
now using the product and, as part of a bundle, it is also driving higher sales
conversion of central heating systems. For our smart meter customers, we also
launched the `Smart Energy Report` to provide visibility of how their energy is
being used and to help them reduce their consumption. 

We will continue to lead the transition to smart connected homes and businesses,
offering attractive propositions, which will improve customer engagement and
deliver lower costs for the business. 

Innovate to drive growth and service excellence

Performance in 2012 in a challenging economic and competitive environment has
demonstrated that our business model remains sound. In residential energy supply
it will be increasingly important to differentiate our offering through service
excellence and innovation. Our scale and leadership in customer service, cost
efficiency and systems leave us well placed to continue to deliver a fair level
of margin in this business. In residential services, our focus remains on
offering attractive customer propositions and delivering service excellence,
while also working to reduce costs further during 2013. We expect to deliver
continued profit growth in services, although not at the high levels achieved in
2012. In business energy supply, the environment remains challenging. We are
investing in our back office systems to reduce costs and improve service and,
over time, we expect business services to make a more material contribution.
Looking to the future, smart meters are a key enabler in the trend towards the
`smart connected home`. British Gas` leadership in smart metering and technology
will enable us to capitalise on this trend, deepening customer relationships and
differentiating our energy and services offer to drive long-term growth.

 British Gas                                                                                                                                                     
                                                                                                                                                                 
 Total British Gas                                                                                                                                               
 For the year ended 31 December                                 FY 2012           FY 2011           Δ%              H2 2012           H2 2011           Δ%       
 Total customer accounts (period end) ('000)                    24,982            25,364            (1.5)           24,982            25,364            (1.5)    
 Total customer households (period end) ('000)                  11,745            11,997            (2.1)           11,745            11,997            (2.1)    
 Joint product households (period end) ('000)                   2,149             2,207             (2.6)           2,149             2,207             (2.6)    
 Gross Revenue (£m):                                            13,857            12,403            12              6,650             6,049             10       
 Operating cost (excluding bad debt) (£m)                       1,418             1,425             (0.5)           707               678               4.3      
 Operating profit (£m)                                          1,093             1,005             9               530               487               9        


 2011 gross revenue has been restated to reflect the reclassification of the British Gas New Energy business from Residential energy supply to Residential services and the reclassification of the British Gas Community Energy business from Residential energy supply to Business energy supply and services.  
 Total customer accounts has been restated to exclude the water supply pipe product, which has been incorporated into the plumbing and drains product.                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                  


 Residential energy supply                                                                                                                       
 For the year ended 31 December                          FY 2012        FY 2011      Δ%                H2 2012        H2 2011      Δ%            
 Customer accounts (period end):                                                                                                                 
                               Gas (`000)                8,905          9,139        (2.6)             8,905          9,139        (2.6)         
                               Electricity (`000)        6,751          6,742        0.1               6,751          6,742        0.1           
                               Total (`000)              15,656         15,881       (1.4)             15,656         15,881       (1.4)         
 Estimated market share (%):                                                                                                                     
                               Gas                       39.9           41.2         (1.3) ppts        39.9           41.2         (1.3) ppts    
                               Electricity               25.1           25.2         (0.1) ppts        25.1           25.2         (0.1) ppts    
 Average consumption:                                                                                                                            
                               Gas (therms)              494            443          12                218            181          20            
                               Electricity (kWh)         3,794          3,805        (0.3)             1,875          1,858        0.9           
 Total consumption:                                                                                                                              
                               Gas (mmth)                4,460          4,099        9                 1,945          1,669        17            
                               Electricity (GWh)         25,683         25,602       0.3               12,696         12,600       0.8           
 Gross Revenue (£m):                                                                                                                             
                               Gas                       5,884          4,903        20                2,668          2,248        19            
                               Electricity               3,237          3,027        7                 1,646          1,580        4.2           
                               Total                     9,121          7,930        15                4,314          3,828        13            
 Transmission and metering costs (£m):                                                                                                           
                               Gas                       1,327          1,212        9                 676            611          11            
                               Electricity               915            782          17                477            401          19            
                               Total                     2,242          1,994        12                1,153          1,012        14            
 Total environmental costs (£m)                          732            599          22                347            347          0.0           
 Total social costs (£m)                                 89             78           14                29             40           (28)          
 Operating profit (£m)                                   606            544          11                261            263          (0.8)         
 Operating margin (%)                                    6.6            6.9          (0.3) ppts        6.1            6.9          (0.8) ppts    


 2011 gross revenue and operating profit have been restated to reflect the reclassification of the British Gas New Energy business from Residential energy supply to Residential services and the reclassification of the British Gas Community Energy business from Residential energy supply to Business energy supply and services.  
 The definition of total environmental costs has been restated and includes CERT, CESP, ROCs, carbon and FIT costs.                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                        


 Residential services                                                                                                                                                               
 For the year ended 31 December                                                                       FY 2012      FY 2011      Δ%            H2 2012      H2 2011      Δ%          
 Customer product holdings (period end):                                                                                                                                            
                                                 Central heating service contracts ('000)             4,663        4,696        (0.7)         4,663        4,696        (0.7)       
                                                 Kitchen appliances care (no. of customers) ('000)    465          476          (2.3)         465          476          (2.3)       
                                                 Plumbing and drains care ('000)                      1,714        1,728        (0.8)         1,714        1,728        (0.8)       
                                                 Home electrical care ('000)                          1,444        1,462        (1.2)         1,444        1,462        (1.2)       
                                                 Other contracts ('000)                               116          122          (4.9)         116          122          (4.9)       
                                                 Total holdings ('000)                                8,402        8,484        (1.0)         8,402        8,484        (1.0)       
 Domestic central heating installations ('000)                                                        94           105          (10)          50           51           (2.0)       
 Gross Revenue (£m):                                                                                                                                                                
                                                 Central heating service contracts                    839          807          4.0           435          411          6           
                                                 Central heating installations                        258          295          (13)          137          144          (4.9)       
                                                 Other                                                577          542          6             291          278          5           
                                                 Total                                                1,674        1,644        1.8           863          833          3.6         
 Operating profit (£m)                                                                                312          269          16            187          159          18          
 Operating margin (%)                                                                                 18.6         16.4         2.2 ppts      21.7         19.1         2.6 ppts    


 2011 gross revenue and operating profit have been restated to reflect the reclassification of the British Gas New Energy business from Residential energy supply to Residential services.  
 UK residential product holdings have been restated to exclude the water supply pipe product, which has been incorporated into the plumbing and drains product.                             
                                                                                                                                                                                            


 Business energy supply and services                                                                                                             
 For the year ended 31 December                              FY 2012        FY 2011      Δ%                H2 2012        H2 2011      Δ%        
 Customer supply points (period end):                                                                                                            
                               Gas (`000)                    322            363          (11)              322            363          (11)      
                               Electricity (`000)            602            636          (5)               602            636          (5)       
                               Total (`000)                  924            999          (8)               924            999          (8)       
 Average consumption:                                                                                                                            
                               Gas (therms)                  2,737          2,629        4.1               1,156          1,130        2.3       
                               Electricity (kWh)             27,521         25,732       7                 14,014         12,895       9         
 Total consumption:                                                                                                                              
                               Gas (mmth)                    940            986          (4.7)             399            413          (3.4)     
                               Electricity (GWh)             17,110         16,731       2.3               8,581          8,320        3.1       
 Gross Revenue (£m):                                                                                                                             
                               Gas                           1,014          931          9                 443            416          6         
                               Electricity                   1,841          1,713        7                 929            866          7         
                               Business services             207            185          12                101            106          (5)       
                               Total                         3,062          2,829        8                 1,473          1,388        6         
 Transmission and metering costs (£m):                                                                                                           
                               Gas                           178            188          (5)               85             94           (10)      
                               Electricity                   409            372          10                212            188          13        
                               Total                         587            560          5                 297            282          5         
 Operating profit (£m)                                       175            192          (9)               82             65           26        
 Operating margin (%)                                        5.7            6.8          (1.1) ppts        5.6            4.7          0.9 ppts  


 2011 gross revenue and operating profit have been restated to reflect the reclassification of the British Gas Community Energy business from Residential energy supply to Business energy supply and services.  
                                                                                                                                                                                                                 


CENTRICA ENERGY

A more balanced upstream business

Centrica Energy made significant progress during 2012 on its strategy to deliver
value and growth. In upstream gas and oil, we integrated three North Sea
acquisitions in 2012. This delivered a step change for the business, increasing
production and significantly enhancing the scale and balance of our portfolio.
In power, although the operating environment for gas-fired generation remains
challenging, the business benefitted from strong nuclear operational
performance. 

We have achieved a number of key project milestones, bringing reserves into
production and generating first power from our 270MW Lincs offshore wind
project. We have also made important steps to develop future cornerstone assets,
with good progress at the Valemon gas field and the sanctioning of the £1.4
billion Cygnus gas field, one of the largest remaining development opportunities
in the UK North Sea. 

Total Centrica Energy operating profit increased by 20% to £1,230 million (2011:
£1,023 million) with increased profit in both gas and power. This increase in
profit was in part helped by the delivery of a series of cost initiatives in
2012 and the business is on track to deliver its contribution of cost savings to
Group targets. These savings have not compromised on our continued focus on
health, safety and environmental practices. Centrica Energy continues to
progress its process safety programme, which focuses on the integrity of
operating systems and processes that handle hazardous substances. We had no
significant process safety events in 2012. In terms of environmental practices,
we are committed to operating responsibly and will continue to engage with
stakeholders, to understand and manage the environmental and social issues
associated with new and existing investments. 

Increased gas and oil reserves and production

Between November 2011 and February 2012 we announced three North Sea
acquisitions, all of which completed during 2012, for a total of £1.2 billion.
Overall, we added 170 million barrels of oil equivalent (mmboe) of 2P reserves
in the year, as a result of acquisitions, upgrades of existing hubs such as Rhyl
and bringing new projects such as Maria into the development pipeline. After
taking production into account, we ended the year at 525mmboe of 2P reserves
(2011: 410mmboe). Our Norwegian business now forms a significant part of the
portfolio following the acquisitions, accounting for 41% of our upstream gas and
oil reserves, compared to 18% at the end of 2011. 

Total production of gas and liquids increased by 18% to 56.7mmboe (2011:
48.2mmboe). Total gas production volumes increased by 13% to 2,441 million
therms (mmth) (2011: 2,160mmth) and total liquids volumes increased by 30% to
16.3mmboe (2011: 12.5mmboe), reflecting the benefit of recent acquisitions. We
now have less reliance on production from Morecambe, which in 2012 contributed
23% of total production (2011: 29%) primarily due to increases from the rest of
the portfolio. Performance from South Morecambe improved in the second half of
the year, after we took action to stabilise the quality of gas delivered to the
grid during the field`s maintenance shut-down in the summer. Gas production
volumes from Norway more than trebled to 557mmth (2011: 164mmth) while liquids
volumes increased to 8.9mmboe (2011: 4.7mmboe), reflecting acquisitions during
the year. 

In 2013 we will benefit from a full year of production from the acquisitions
made during 2012, and with new fields coming into production offsetting the
natural decline from our existing fields, total production volumes are expected
to increase by a further 15%. 

Adding value through gas and oil development, appraisal and exploration

We achieved first gas at Seven Seas and Atla in the second half of the year,
following on from Ensign having delivered first gas in May. At Ensign we have
now also delivered production from the second well, however due to mechanical
issues the initial production rate is below our original expectations. First gas
is expected from York and Rhyl in the coming weeks, with first gas from Kew
scheduled for the fourth quarter of 2013. Good progress continues to be made on
the Statoil-operated Valemon project with the detailed design having been agreed
towards the end of 2012 and fabrication having started early in 2013. The field
is on track to produce first gas in the fourth quarter of 2014. 

In August we announced that the £1.4 billion Cygnus project, in which we own a
48.75% interest, had been sanctioned. Key contracts have now been placed and the
fabrication of the jacket and platform deck started ahead of schedule. The
development will create around 4,000 jobs, mostly in the UK, and bring 53mmboe
of our reserves into production from late 2015, providing enough gas at peak
production to supply 1.5 million homes. 

In Trinidad and Tobago, we made further progress on the Block 22 project with
the award of front end engineering design contracts for upstream and subsea
facilities as well as the contracting of a rig to drill two appraisal wells to
prove up our resource base. We continue to explore development and partnership
options for gas export. 

Our appraisal drilling at Rhyl North towards the end of 2012 was successful, and
led to our 2P reserves being revised upwards by 7mmboe to 14mmboe. In early
2013, exploration drilling at Whitehaven confirmed that the Rhyl reservoir
extends further than originally anticipated, potentially leading to additional
reserve upgrades. Rhyl and Whitehaven will both utilise our existing Morecambe
infrastructure. Appraisal drilling at the non-operated Maria North well, in
which we own a 20% interest, showed potential gross recoverable reserves of the
Maria field towards the upper end of the 70-150mmboe range published following
the discovery in 2010. Accordingly we have revised our 2P reserves up by 10mmboe
to 25mmboe. Appraisal drilling at Bligh and exploration drilling at Cooper both
encountered hydrocarbons, but tight reservoirs meant that commercial flow rates
were not achieved. We also experienced non-operated exploration failures in
Trinidad and Tobago. However in early 2013 drilling at the Rodriguez prospect in
Norway was successful, confirming the presence of gas condensate. 

In June, we extended our Memorandum of Understanding (MoU) with Statoil to
collaborate on gas-focused exploration opportunities in Norway and the UK. In
October, the UKCS 27th Round awarded Centrica six licenses covering 13 blocks
and part-blocks. Three of the blocks will be Centrica-operated, two of which are
in the West of Shetland, a new area for the company. Early in 2013 we were
awarded nine blocks in the latest round of licences announced by Norway`s Energy
Ministry. We will be the operator of three of these blocks, which are close to
some of our existing assets. Our exploration record over the last three years
has been good, with a success rate of 40% and a net finding cost of £3.5 per
barrel of oil equivalent (boe). 

Higher gas and oil volumes and achieved prices with reduced unit costs

Upstream gas and oil profitability increased by 20% to £919 million (2011: £769
million), reflecting higher production volumes and higher achieved prices. The
average achieved gas sales price increased by 6% to 54.7 pence per therm (p/th)
(2011: 51.6p/th) while the average achieved oil and condensate price increased
by 10% to £62.8 per boe (2011: £57.2/boe). On a per unit of production basis,
depletion, depreciation and amortisation (DDA) costs and lifting costs both
decreased slightly, to £9.8/boe (2011: £10.1/boe) and £9.7/boe (2011: £9.9/boe)
respectively, with recent acquisitions incurring lower unit lifting costs.
Overall production and overhead costs increased by 22% to £1,374 million (2011:
£1,127 million) due to the impact of the North Sea acquisitions, new gas and oil
fields coming into production, the expensing of a £73 million cost relating to
the failure of a third development well at Ensign and inflationary cost
increases. In addition we incurred exploration and appraisal costs of £139
million (2011: £97 million), reflecting a lower level of drilling success. 

Continued strong performance from nuclear; challenging market conditions for
CCGTs

The nuclear fleet recorded strong performance during the year, with our 20%
share of output increasing by 8% to 12.0 terawatt hours (TWh) (2011: 11.2TWh).
This reflects continued investment in the fleet, with no large unplanned outages
during the year, underlining the quality of our original investment in the
nuclear fleet. In addition, plant life extensions to the Hinkley Point B and
Hunterston B nuclear power stations were announced in December, extending the
life of these stations by seven years from 2016 to 2023. The expectation for
nuclear plant life extensions for the AGR fleet in the UK is now for seven years
on average, compared to the five years previously assumed, and this will deliver
additional long-term value. 

The market environment remains challenging for gas-fired plant with continued
low market clean spark spreads. Reliability remained high at 97% (2011: 98%),
however generation volumes fell by 40% to 9.0TWh (2011: 15.0TWh), with an
average load factor of 26% (2011: 35%). The market conditions led to the
mothballing of our 325MW Kings Lynn power plant at the beginning of the year and
we have now also withdrawn our 229MW Roosecote power station from service. Our
plants at Barry and Brigg continue to operate in the STOR market, with contracts
in place until the end of the first quarter of 2013 while our Peterborough plant
has a contract which will commence in April 2013. Against this difficult market
environment, we have been successful in minimising our costs and running the
plants as efficiently as possible, with high levels of availability enabling
running at peak times. In February 2013, we sanctioned a turbine blade upgrade
at our 1.2GW South Humber power station, which will improve the efficiency of
the plant. 

Availability in our wind assets was 88% (2011: 92%), reflecting an outage at
Inner Dowsing in the first quarter, with generated volumes down 11% to 533
gigawatt hours (GWh) (2011: 596 GWh). The load factor was 32% (2011: 36%). 

Power profitability increased by 22% to £311 million (2011: £254 million).
Nuclear profitability increased, benefiting from a higher achieved average price
of £49.6/MWh (2011: £48.5/MWh), reflecting some benefit from forward hedging, as
well as the strong operational performance. Wind profitability also increased,
with the sale of 50% of our Round 3 wind farm interest to Dong, in line with our
established business model to partner on offshore wind, resulting in a net
profit of £32 million after taking into account a charge relating to the refusal
of consent at our Docking Shoal project. Our CCGT fleet made a small loss in
2012, the last year of free carbon allowances, reflecting the weak market
conditions. 

Investing for value in power

In offshore wind, our 270MW Lincs project has now generated first power and is
expected to be fully operational in the second half of 2013. We have invested
over £3 million in a new operations base at Grimsby docks to serve Lincs and
other potential Centrica Energy wind farm developments, a substantial investment
in the local area. 

We continue to progress towards a final investment decision on the Race Bank
project, which is consented for 580MW. We are willing to commit £200 million for
the project, and are in discussion with a financial partner and the Government
concerning the economic framework. During 2012 we also established a joint
venture with Dong Energy to co-develop the Round 3 Irish Sea wind farm zone.
Formal consultation and a programme of stakeholder engagement was undertaken
throughout the year. A final investment decision is expected on the first
project in 2016, subject to returns being suitably attractive. 

In February 2013 we announced that we would not be exercising our option to
participate in UK nuclear new build, taking into account the lengthening time
frame for a return on capital invested in a project of this scale. The decision
follows detailed appraisal of the project, with pre-development expenditure
approaching the agreed £1 billion cap; accordingly Centrica`s share of project
costs have been written off, with the Group recording a total impairment of £231
million. 

We have also decided not to proceed with planning applications to develop
dedicated biomass power stations at Roosecote and Brigg, with recent
clarification on the regulatory framework indicating a preference for co-firing
and coal conversion. As the market becomes increasingly dependent on fixed price
support mechanisms, we will leverage our competencies, investing only where we
see value. 

Integrate our natural gas business, linked to our core markets

The gas market is becoming increasingly global. We have made progress in
diversifying our sources of gas, including agreements to import pipeline gas
from Norway and LNG from Qatar through our regasification capacity at the Isle
of Grain. We are looking to secure gas increasingly from a wider range of
sources, expanding the scope of our activities where appropriate. Our aim is to
connect sources of energy to our customers, building an integrated international
business focused on the Atlantic basin. 

The UK and Norway will remain an important part of our investment and activity,
as we look to maintain an appropriate energy hedge. We have a number of large
scale projects ongoing, including Cygnus and Valemon, and we retain a number of
attractive potential development opportunities, particularly in Norway,
including at Butch where appraisal drilling is planned in late 2013. Decisions
are targeted during 2013 on further infill drilling opportunities in the East
Irish Sea and North Sea. However, with UK North Sea developments becoming
smaller in scale and relatively more expensive, we will increasingly look to
diversify our production portfolio, linked to our core markets. This is likely
to include further investment in North America, possibly in shale gas, and there
is also the potential for gas exports later in the decade. We will invest where
we see value across our international portfolio, delivering annual production in
the range 75mmboe to 100mmboe. In midstream, we have significant capabilities
and presence in European and North American gas markets where we have important
strategic participation in pipeline capacity, regasification capacity and gas
storage. We will also look to develop our asset-based midstream trading and
optimisation business over time, with an emerging presence in LNG. However we
will invest only where we see value, with rewards commensurate with the scale of
investment and associated risks.

 Centrica Energy                                                                                                                                 
                                                                                                                                                 
 Total Centrica Energy                                                                                                                           
 For the year ended 31 December                                        FY 2012      FY 2011        Δ%         H2 2012      H2 2011        Δ%     
 Operating profit (£m)                                                 1,230        1,023          20         548          492            11     
                                                                                                                                                 
 Gas                                                                                                                                             
 For the year ended 31 December                                        FY 2012      FY 2011        Δ%         H2 2012      H2 2011        Δ%     
 Gas production volumes (mmth)                                                                                                                   
                                  Morecambe                            740          817            (9)        378          418            (10)   
                                  Other UK and Netherlands             883          933            (5)        403          419            (3.8)  
                                  Norway                               557          164            240        381          82             365    
                                  Trinidad & Tobago                    261          246            6          131          162            (19)   
                                  Total                                2,441        2,160          13         1,293        1,081          20     
 Oil and condensate production volumes (mmboe)                                                                                                   
                                  UK and Netherlands                   7.4          7.8            (5)        3.5          3.5            0.0    
                                  Norway                               8.9          4.7            89         5.9          2.1            181    
                                  Total                                16.3         12.5           30         9.4          5.6            68     
 Total production volumes (mmboe)                                      56.7         48.2           18         31.0         23.2           34     
 Average gas sales price (p/therm)                                     54.7         51.6           6          56.7         52.5           8      
 Average oil and condensate sales price (£/boe)                        62.8         57.2           10         63.4         56.9           11     
 DDA costs (£/boe)                                                     9.8          10.1           (3.0)      10.1         9.5            6      
 Lifting costs (£/boe)                                                 9.7          9.9            (2.0)      10.1         10.1           0.0    
 Total production and overhead costs (£m)                              1,374        1,127          22         803          544            48     
 Exploration and appraisal costs (£m)                                  139          97             43         108          51             112    
 Operating profit (£m)                                                 919          769            20         411          355            16     
 Estimated net proven and probable reserves of gas (BCF)               2,376        2,019          18         nm           nm             nm     
 Estimated net proven and probable reserves of liquids (mmboe)         129          73             77         nm           nm             nm     
 Total net proven and probable reserves (mmboe)                        525          410            28         nm           nm             nm     
                                                                                                                                                 
 Power                                                                                                                                           
 For the year ended 31 December                                        FY 2012      FY 2011        Δ%         H2 2012      H2 2011        Δ%     
 Power generated (GWh)                                                                                                                           
                                  Gas-fired                            8,952        14,973         (40)       4,046        7,542          (46)   
                                  Renewables                           533          596            (11)       287          321            (11)   
                                  Nuclear                              12,004       11,157         8          6,050        4,966          22     
                                  Total                                21,489       26,726         (20)       10,383       12,829         (19)   
 Achieved Clean Spark Spread (£/MWh)                                   10.7         10.1           6          11.2         9.3            20     
 Achieved power price (including ROCs) (£/MWh) - renewables            105.7        111.2          (4.9)      111.3        124.7          (11)   
 Achieved power price (£/MWh) - nuclear                                49.6         48.5           2.3        49.8         50.4           (1.2)  
 Operating profit (£m)                                                 311          254            22         137          137            0.0    
                                                                                                                                                 


CENTRICA STORAGE

Strong performance in a challenging market environment

Centrica Storage performed well in 2012, with strong commercial performance
securing the benefits of higher summer/winter price differentials seen in the
first half of the 2012/13 storage year. The Rough asset achieved reliability of
92% in the year (2011: 96%), with performance in the first half similar to that
experienced in the first half of 2011 but with the second half impacted by a
small number of production outages. These outages had limited commercial impact
and across the year asset availability was good when required to meet customer
demand. 

The high level of stock carry-over into 2012 combined with modest withdrawal in
the first quarter of the year meant that the Net Reservoir Volume (NRV) was at
relatively high levels again going into the 2012 injection season. A strong
injection season over the summer was followed by the final quarter of 2012
experiencing withdrawals more in line with seasonal normal levels. As a result
the NRV level carried into 2013 was above the five year average level but below
the level at the start of 2012. 

Health and safety remains one of our core priorities; this relentless focus has
enabled the business to continue its strong record through 2012, with no Lost
Time Incidents recorded for more than three years, corresponding to over five
million man hours of work without an incident. 

Forward seasonal spreads have narrowed since the first quarter

The business saw higher summer/winter price differentials in the final quarter
of 2011 and the first quarter of 2012 compared to the first quarter of 2011,
which resulted in an achieved 2012/13 storage year Standard Bundled Unit (SBU)
price of 33.9p (2011/12: 25.2p). However, price differentials subsequently
narrowed, reflecting colder than normal weather in the summer months and an
expectation of LNG availability for the winter. Forward spreads remain
relatively narrow for the 2013/14 storage year, with price volatility remaining
at subdued levels. 

Improved operating profit

Gross revenue increased by 10% in 2012 to £202 million (2011: £184 million).
This reflects the higher summer/winter price differentials and benefits from the
high NRV carried into 2012. SBU revenue was 4% higher in 2012 with the calendar
year SBU price increasing to 31.0p (2011: 30.0p). Operating profit increased by
19% to £89 million (2011: £75 million) benefiting from higher revenue and strong
cost control, partially offset by inflationary pressures and additional
depreciation resulting from previous investment in Rough. From 2013 the business
will benefit from additional revenue streams associated with gas processing and
condensate sales at the newly constructed York processing plant. 

Challenging economics for new projects

We retain the option to invest in our Baird and Caythorpe gas storage projects.
However, the continuing relatively low levels of summer/winter price
differentials and reduced price volatility, combined with an uncertain longer
term outlook, mean that market conditions remain challenging for these
opportunities. With the country becoming increasingly dependent on imported gas
we believe that more seasonal storage is required in the UK. However we will
only invest in new projects if the returns are appropriate for the level of risk
undertaken. We may require a support mechanism to underpin the investment and
welcomed the announcement by the Department of Energy & Climate Change (DECC) in
December that it is planning to carry out further investigation into possible
intervention mechanisms to encourage new storage investment. We look forward to
the outcome of this review, with initial findings expected in the spring of
2013.

 Centrica Storage                                                                                                               
 For the year ended 31 December                      FY 2012        FY 2011        Δ%         H2 2012        H2 2011        Δ%  
 Average SBU price (in period) (pence)               31.0           30.0           3.3        33.9           25.2           35  
 Gross Revenue (£m)                                                                                                             
                      Standard SBUs                  141            136            3.7        77             58             33  
                      Other                          61             48             27         34             29             17  
                      Total                          202            184            10         111            87             28  
 Operating profit (£m)                               89             75             19         53             36             47  
                                                                                                                                


DIRECT ENERGY

Further profit growth in a low gas price environment

Direct Energy delivered another strong performance in 2012, in a low gas price
environment. Gross revenue decreased by 2% to £6,015 million (2011: £6,117
million) but operating profit increased by 6% to £331 million (2011: £312
million). There was no material impact resulting from currency movements during
the year. 

The business has benefited from organic customer growth in the US North East and
the small business customer segment, and from the successful integration of
recent acquisitions. We also continue to drive operational efficiencies
throughout the business, and the move of our North American headquarters to
Houston, combined with overall headcount reductions, has delivered significant
benefits. We will continue to drive efficiencies, with further rationalisation
of IT resources due to be undertaken in 2013. The health and safety of our
employees and customers continues to be our core priority and the LTIFR reduced
by 45%, to 0.11 per 100,000 hours worked (2011: 0.20) and we had no significant
process safety events in 2012. 

Benefiting from enhanced scale in residential energy supply

Direct Energy Residential made good progress during the year, with organic
customer growth in the US North East, the successful integration of recent
acquisitions and strong increased customer satisfaction levels across the
business. Overall customer accounts increased to 3.5 million (2011: 3.4 million)
despite incurring further customer losses as a result of the regulatory
environment in Ontario. Gross revenue decreased by 2% to £2,357 million (2011:
£2,416 million), while operating profit was broadly flat at £156 million (2011:
£161 million) reflecting the decline in the Ontario business, offset by the
positive impacts of customer growth and acquisitions in the US. We are also
seeing the benefits from operational efficiencies and billing system
rationalisation, with increased scale in the US North East. 

In the US North East, our business is materially larger following the
integration of Gateway and Vectren Source, both acquired in 2011, and the
acquisition of a further 207,000 residential and 38,000 small business accounts
from New York based energy retailers Energetix and NYSEG Solutions from
Iberdrola USA, completed in August. The business also experienced organic growth
in 2012 due to strong sales performance, despite the expected roll-off of low
margin aggregation customers acquired as part of the Vectren Source acquisition.
We now have 1.4 million customers in the region, up from 1.1 million at the end
of 2011. 

Our Texas residential business is also benefiting from increased scale,
following the First Choice Power acquisition in 2011. Our prepaid `Power to Go`
product continues to attract customers, as well as being viewed positively by
regulators, who welcome the expansion of choice for all customer groups. In
October, we launched a 100% renewable tariff, providing environmentally
conscious customers with wind power from Texas. 

We delivered good sales performance in the US during the year, underpinned by a
continued focus on channel efficiency, while our consolidated billing platform
has helped reduce costs and bad debt. Churn reduction continues to remain a
focus both in Texas and the US North East. 

We no longer view our residential energy supply business in Ontario as core,
following the implementation of the Energy Consumer Protection Act (ECPA), which
makes it difficult to sell to new customers or retain existing ones. We continue
to actively manage the decline of our customer base and have more than halved
operating costs since 2010 through aggressive cost management. In total we lost
95,000 customer accounts in Ontario during 2012 and now have just over 200,000
customers in the region, around half the amount we had at the end of 2010. In
2012, Ontario contributed less than 20% of our residential energy operating
profit and this is expected to fall to around 5% in 2013. In Alberta,
profitability rose, with increases in regulated rates leading to higher churn
levels in the low margin regulated business and growth in the higher margin
competitive customer base. 

Focus on small businesses leading to volume growth in business energy supply

Direct Energy Business again delivered strong growth in the year, in a highly
competitive market. Electricity volumes rose 11% to 51.4TWh (2011: 46.4TWh),
while gas volumes increased by 11% to 793mmth (2011: 714mmth). Higher volumes in
the small commercial business sector are driving much of the growth, and profit
in this sector nearly doubled in 2012, reflecting strong sales and scale
benefits resulting from recent acquisitions. The larger commercial segment is
increasingly competitive, however our retention rates remain high in this
sector. 

Gross revenue in business energy supply decreased by 2% to £2,690 million (2011:
£2,748 million), with the impact of lower commodity prices more than offsetting
volume growth. Operating profit increased to £129 million (2011: £110 million)
while operating margin increased to 4.8% (2011: 4.0%), reflecting the positive
impact of operational efficiencies and a higher proportion of small business
customers. 

Strengthening the services platform

Direct Energy Services is performing well, gaining market share in a challenging
economic environment, with many of our competitors experiencing losses or credit
downgrades. Our nationwide on-demand franchise has provided scale advantages,
while the acquisition of Home Warranty of America (HWA), completed in March,
provides the necessary licences to offer protection plan products across the
United States. The number of contract relationships increased by 5% during 2012,
mainly reflecting the HWA acquisition. 

Our Canadian business was impacted by warmer than normal weather and industrial
action by a number of our unionised technicians in the first half of the year.
The labour issues have now been resolved, resulting in a significant improvement
to our cost base and more flexible working arrangements, improving our service
to customers. 

Continued weak economic conditions, low consumer confidence and a slow housing
market have impacted underlying growth in the US services business, leading to
less lead generation and reduced demand for home services products. However we
continue to focus on delivering high levels of customer satisfaction and our
services Net Promoter Score increased to +61 (2011: +58), helping strong
customer retention. 

Gross revenue increased by 2% to £532 million (2011: £520 million) and operating
profit increased to £33 million (2011: £28 million), with operational
efficiencies and cost control driving much of this growth. 

Solid upstream and wholesale performance in a low price environment

Direct Energy Upstream continues to face a low wholesale price environment,
although the Henry Hub natural gas price recovered slightly during the second
half of the year from the record low levels seen in the first half. Alberta gas
production volumes fell by 3% to 549mmth (2011: 567mmth), with the achieved gas
price falling to C$3.8/MCF (2011: C$4.6/MCF). The price of liquids remains
relatively high however, and the acquisition of the Carrot Creek assets,
completed in January, meant that oil and liquids production volumes nearly
doubled to 1.1mmboe (2011: 0.7mmboe). We added 10mmboe of reserves in North
America over the year meaning that after taking account of production, 2P
reserves remained broadly flat at 108mmboe (2011: 109mmboe). 

Texas power generation volumes increased by 21% to 6,336GWh (2011: 5,247GWh),
with good asset availability and optimisation performance. Texas experienced
more normal weather conditions during the summer months, meaning that spikes in
power prices were less extreme than in the exceptional conditions in 2011. 

Overall, upstream and wholesale gross revenue was £436 million (2011: £433
million) while operating profit was flat at £13 million (2011: £13 million). 

Well placed to further grow and develop our North American business

We have built a good platform for growth in North America, with strong
capabilities in energy sourcing and supply, risk management, energy services and
upstream gas and power. In 2013 we should continue to benefit from recent
residential acquisitions, with integration now mostly complete, while we have
created a more efficient operating base in both energy and services. Upstream,
natural gas prices continue to be constrained by the impact of shale but
production expansion opportunities are available and we will pursue them if
value can be created. 

We continue to look for opportunities to grow our business across North America.
Downstream, we will continue to focus on growing organically, through churn
reduction and differentiation. We will also continue with our successful bolt-on
acquisition strategy, delivering scale and synergies, and will consider larger
opportunities where appropriate. Over the next 3 to 5 years we are targeting a
doubling in profitability of our North America downstream business through
organic growth and acquisition, with Direct Energy downstream becoming a more
material part of the Group. We will also look for opportunities upstream, with
the potential for exports over time. In each case, we will only invest where we
see value and a good fit with our Group-wide capabilities.

 Direct Energy                                                                                                                                   
                                                                                                                                                 
 Total Direct Energy                                                                                                                             
 For the year ended 31 December                                            FY 2012    FY 2011    Δ%            H2 2012    H2 2011    Δ%          
 Total residential energy and services accounts (period end) ('000)        5,856      5,647      3.7           5,856      5,647      3.7         
 Gross revenue (£m)                                                        6,015      6,117      (1.7)         3,096      3,021      2.5         
 Operating profit (£m)                                                     331        312        6             165        138        20          
                                                                                                                                                 
 Residential energy supply                                                                                                                       
 For the year ended 31 December                                            FY 2012    FY 2011    Δ%            H2 2012    H2 2011    Δ%          
 Customer accounts (period end) ('000)                                     3,455      3,364      2.7           3,455      3,364      2.7         
 Gross revenue (£m)                                                        2,357      2,416      (2.4)         1,147      1,126      1.9         
 Operating profit (£m)                                                     156        161        (3.1)         55         56         (1.8)       
 Operating margin (%)                                                      6.6        6.7        (0.1) ppts    4.8        5.0        (0.2) ppts  
                                                                                                                                                 
 Business energy supply                                                                                                                          
 For the year ended 31 December                                            FY 2012    FY 2011    Δ%            H2 2012    H2 2011    Δ%          
 Gas sales (mmth)                                                          793        714        11            372        297        25          
 Electricity sales (GWh)                                                   51,378     46,350     11            27,443     24,159     14          
 Gross revenue (£m)                                                        2,690      2,748      (2.1)         1,394      1,372      1.6         
 Operating profit (£m)                                                     129        110        17            69         52         33          
 Operating margin (%)                                                      4.8        4.0        0.8 ppts      4.9        3.8        1.1 ppts    
                                                                                                                                                 
 Residential and business services                                                                                                               
 For the year ended 31 December                                            FY 2012    FY 2011    Δ%            H2 2012    H2 2011    Δ%          
 Contract relationships (period end) ('000)                                2,401      2,283      5             2,401      2,283      5           
 On demand and installation jobs ('000)                                    670        703        (5)           316        372        (15)        
 Gross revenue (£m)                                                        532        520        2.3           279        271        3.0         
 Operating profit (£m)                                                     33         28         18            22         19         16          
 Operating margin (%)                                                      6.2        5.4        0.8 ppts      7.9        7.0        0.9 ppts    
 On demand and installation jobs has been restated to reflect management reporting.                                                              
                                                                                                                                                 
 Upstream and wholesale energy                                                                                                                   
 For the year ended 31 December                                            FY 2012    FY 2011    Δ%            H2 2012    H2 2011    Δ%          
 Gas production volumes (mmth)                                             549        567        (3.2)         270        287        (6)         
 Oil and liquids production volumes (mmboe)                                1.1        0.7        57            0.5        0.4        25          
 Total production volumes (mmboe)                                          10.1       10.0       1.0           4.9        5.1        (3.9)       
 Power generated (GWh)                                                     6,336      5,247      21            3,016      2,924      3.1         
 Gross Revenue (£m)                                                        436        433        0.7           276        252        10          
 Operating profit (£m)                                                     13         13         0.0           19         11         73          
 Estimated net proven and probable reserves of gas (BCF)                   581        603        (3.6)         nm         nm         nm          
 Estimated net proven and probable reserves of liquids (mmboe)             11         8          38            nm         nm         nm          
 Total net proven and probable reserves (mmboe)                            108        109        (0.9)         nm         nm         nm          
                                                                                                                                                 


 Direct Energy with comparator year of 2011 restated to remove effect of foreign exchange movements                                                                            
 For the year ended 31 December                                                 FY 2012           FY 2011           Δ%              H2 2012           H2 2011           Δ%     
 Revenue (£m)                                                                                                                                                                  
                                  Residential energy supply                     2,357             2,425             (2.8)           1,147             1,128             1.7    
                                  Business energy supply                        2,690             2,782             (3.3)           1,394             1,378             1.2    
                                  Residential and business services             532               523               1.7             279               272               2.6    
                                  Upstream and wholesale energy                 436               437               (0.2)           276               252               10     
 Direct Energy revenue                                                          6,015             6,167             (2.5)           3,096             3,030             2.2    
 Operating profit (£m)                                                                                                                                                         
                                  Residential energy supply                     156               163               (4.3)           55                56                (1.8)  
                                  Business energy supply                        129               111               16              69                52                33     
                                  Residential and business services             33                28                18              22                19                16     
                                  Upstream and wholesale energy                 13                13                0.0             19                11                73     
 Direct Energy operating profit                                                 331               315               5               165               138               20     
 2011 figures restated at 2012 weighted average exchange rate.                                                                                                                 
                                                                                                                                                                               
                                                                                                                                                                               


Unless otherwise stated, all references to operating profit or loss, taxation
and earnings numbers throughout the announcement are adjusted figures, as
reconciled in the Group Financial Review on page 9 and 10. 

STATEMENT OF DIRECTORS` RESPONSIBILITIES

The Directors are responsible for preparing the Group Financial Statements in
accordance with applicable law, regulations and accounting standards. In
preparing the Group 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 IFRSs as adopted by the European Union have been followed,
subject to any material departures disclosed and explained in the Group
Financial Statements; and 
* prepare the Group Financial Statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.

Each of the Directors confirm that, to the best of their knowledge:

* the Group Financial Statements, which have been prepared in accordance with
IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group; and 
* the Directors` Report - Business Review contained in the Annual Report and
Accounts, from which this narrative is extracted, includes a fair review of the
development and performance of the business and the position of the Group,
together with a description of the principal risks and uncertainties that it
faces.

 By order of the Board                                
                                                      
 Sam Laidlaw                  Nick Luff               
 27 February 2013             27 February 2013        
 Chief Executive              Group Finance Director  
                                                      


                                                                                                                                                               
 GROUP INCOME STATEMENT                                                                                                                                        
 Year ended 31 December                              2012                                                                       2011                           
                                                                               Exceptional                                      Exceptional                    
                                                                               items and                                        items and                      
                                                               Business        certain re-       Results for     Business       certainre-        Results for  
                                                               performance     measurements      the year        performance    measurements      the year     
                                                     Notes     £m              £m                £m              £m             £m                £m           
                                                                                                                                                               
 Group revenue                                       5(a)      23,942          -                 23,942          22,824         -                 22,824       
 Cost of sales before exceptional items and                                                                                                                    
 certain re-measurements                                       (18,676)        -                 (18,676)        (17,959)       -                 (17,959)     
 Exceptional items                                   6         -               (89)              (89)            -              (221)             (221)        
 Re-measurement of energy contracts                  6         -               603               603             -              (437)             (437)        
 Cost of sales                                                 (18,676)        514               (18,162)        (17,959)       (658)             (18,617)     
 Gross profit                                                  5,266           514               5,780           4,865          (658)             4,207        
 Operating costs before exceptional items                      (2,844)         -                 (2,844)         (2,750)        -                 (2,750)      
 Exceptional items                                   6         -               (445)             (445)           -              (110)             (110)        
 Operating costs                                               (2,844)         (445)             (3,289)         (2,750)        (110)             (2,860)      
 Share of profits/(losses) in joint ventures                                                                                                                   
 and associates, net of interest and                                                                                                                           
 taxation                                            6,13      140             (6)               134             93             (26)              67           
 Group operating profit                              5(b)      2,562           63                2,625           2,208          (794)             1,414        
 Interest income                                     7         254             -                 254             212            -                 212          
 Interest expense                                    7         (437)           -                 (437)           (358)          -                 (358)        
 Net interest expense                                          (183)           -                 (183)           (146)          -                 (146)        
 Profit from continuing operations before                                                                                                                      
 taxation                                                      2,379           63                2,442           2,062          (794)             1,268        
 Taxation on profit from continuing                                                                                                                            
 operations                                          8         (1,029)         (140)             (1,169)         (810)          (16)              (826)        
 Profit from continuing operations after taxation              1,350           (77)              1,273           1,252          (810)             442          
 Profit from discontinued operations                 6         -               -                 -               13             22                35           
 Loss on disposal of discontinued operations         6,17      -               -                 -               -              (56)              (56)         
 Discontinued operations                                       -               -                 -               13             (34)              (21)         
 Profit for the year                                           1,350           (77)              1,273           1,265          (844)             421          
                                                                                                                                                               
 Earnings per ordinary share                                                                     Pence                                            Pence        
 From continuing and discontinued operations:                                                                                                                  
 Basic                                               10                        24.6                                                               8.2          
 Diluted                                             10                        24.4                                                               8.1          
 From continuing operations:                                                                                                                                   
 Basic                                               10                        24.6                                                               8.6          
 Diluted                                             10                        24.4                                                               8.5          
 Interim dividend paid per ordinary share            9                         4.62                                                               4.29         
 Final dividend proposed per ordinary share          9                         11.78                                                              11.11        
                                                                                                                                                               


The notes on pages 30 to 57 form part of these Financial Statements.

 GROUP STATEMENT OF COMPREHENSIVE INCOME                                                                                 
                                                                                                    2012           2011  
 Year ended 31 December                                                                             £m             £m    
 Profit for the year                                                                                1,273          421   
 Other comprehensive income/(loss):                                                                                      
 Transfer of available-for-sale reserve to Income Statement                                         -              23    
 Gains/(losses) on revaluation of available-for-sale securities                                     7              (4)   
 Taxation on revaluation of available-for-sale securities                                           (2)            (2)   
                                                                                                    5              17    
 Net losses on cash flow hedges                                                                     (27)           (99)  
 Transferred to income and expense on cash flow hedges                                              108            42    
 Transferred to assets and liabilities on cash flow hedges                                          (1)            2     
 Exchange differences on translation of cash flow hedges in foreign operations                      1              (3)   
 Taxation on cash flow hedges                                                                       (20)           23    
                                                                                                    61             (35)  
 Exchange differences on translation of foreign operations                                          (44)           (12)  
 Recycling of foreign exchange loss on disposal of business                                         -              (3)   
                                                                                                    (44)           (15)  
 Net actuarial (losses)/gains on defined benefit pension schemes                                    (319)          198   
 Taxation on net actuarial (losses)/gains on defined benefit pension schemes                        69             (59)  
                                                                                                    (250)          139   
 Share of other comprehensive income of joint ventures and associates, net of taxation              32             (25)  
 Other comprehensive (loss)/income net of taxation                                                  (196)          81    
 Total comprehensive income for the year                                                            1,077          502   
                                                                                                                         


 GROUP STATEMENT OF CHANGES IN EQUITY                                                                                   
                                                                               Accumulated                              
                                                                               other                                    
                                         Share        Share        Retained    comprehensive      Other         Total   
                                         capital      premium      earnings    income/(loss)      equity        equity  
                                         £m           £m           £m          £m                 £m            £m      
 1 January 2011                          318          833          4,386       (319)              601           5,819   
 Total comprehensive income              -            -            421         81                 -             502     
 Employee share schemes                  1            41           5           -                  10            57      
 Dividends                               -            -            (762)       -                  -             (762)   
 Purchase of non-controlling interest    -            -            (7)         -                  -             (7)     
 Taxation                                -            -            -           -                  (8)           (8)     
 Exchange adjustments                    -            -            -           -                  (1)           (1)     
 31 December 2011                        319          874          4,043       (238)              602           5,600   
 Total comprehensive income              -            -            1,273       (196)              -             1,077   
 Employee share schemes                  2            55           11          -                  (2)           66      
 Dividends                               -            -            (816)       -                  -             (816)   
 Taxation                                -            -            -           -                  (1)           (1)     
 Exchange adjustments                    -            -            -           -                  1             1       
 31 December 2012                        321          929          4,511       (434)              600           5,927   
                                                                                                                        


The notes on pages 30 to 57 form part of these Financial Statements.

 GROUP BALANCE SHEET                                                                                
 31 December                                               Notes          2012             2011     
                                                                          £m               £m       
 Non-current assets                                                                                 
 Goodwill                                                                 2,543            2,518    
 Other intangible assets                                                  1,579            1,221    
 Property, plant and equipment                                            7,965            6,412    
 Interests in joint ventures and associates                13             2,721            2,620    
 Deferred tax assets                                                      183              235      
 Trade and other receivables                                              55               74       
 Derivative financial instruments                          14             313              290      
 Securities                                                11             199              190      
 Retirement benefit assets                                 15             254              413      
                                                                          15,812           13,973   
 Current assets                                                                                     
 Inventories                                                              545              442      
 Current tax assets                                                       54               81       
 Trade and other receivables                                              4,335            4,212    
 Derivative financial instruments                          14             268              315      
 Securities                                                11             7                28       
 Cash and cash equivalents                                 11             931              518      
                                                                          6,140            5,596    
 Total assets                                                             21,952           19,569   
 Current liabilities                                                                                
 Trade and other payables                                                 (4,545)          (4,094)  
 Current tax liabilities                                                  (594)            (226)    
 Bank overdrafts, loans and other borrowings               11             (472)            (502)    
 Derivative financial instruments                          14             (615)            (1,140)  
 Provisions for other liabilities and charges                             (266)            (308)    
                                                                          (6,492)          (6,270)  
 Net current liabilities                                                  (352)            (674)    
 Non-current liabilities                                                                            
 Trade and other payables                                                 (26)             (33)     
 Bank overdrafts, loans and other borrowings               11             (4,856)          (3,669)  
 Derivative financial instruments                          14             (327)            (505)    
 Deferred tax liabilities                                                 (1,678)          (1,506)  
 Provisions for other liabilities and charges                             (2,480)          (1,903)  
 Retirement benefit obligations                            15             (166)            (83)     
                                                                          (9,533)          (7,699)  
 Net assets                                                               5,927            5,600    
 Equity                                                                                             
 Share capital                                                            321              319      
 Share premium                                                            929              874      
 Retained earnings                                                        4,511            4,043    
 Accumulated other comprehensive loss                                     (434)            (238)    
 Other equity                                                             600              602      
 Total equity                                                             5,927            5,600    
                                                                                                    


The notes on pages 30 to 57 form part of these Financial Statements.

 GROUP CASH FLOW STATEMENT                                                                                               
 Year ended 31 December                                                                            2012         2011     
                                                                                          Notes    £m           £m       
 Cash generated from continuing operations                                                12(a)    3,605        3,229    
 Income taxes paid                                                                                 (332)        (430)    
 Petroleum revenue tax paid                                                                        (192)        (262)    
 Interest received                                                                                 6            20       
 Interest paid                                                                                     (1)          (3)      
 Payments relating to exceptional charges                                                          (266)        (194)    
 Net cash flow from continuing operating activities                                                2,820        2,360    
 Net cash flow from discontinued operating activities                                              -            (23)     
 Net cash flow from operating activities                                                           2,820        2,337    
 Purchase of businesses net of cash and cash equivalents acquired                                  (155)        (394)    
 Sale of businesses net of cash and cash equivalents disposed of                                   30           78       
 Purchase of intangible assets                                                            5(e)     (572)        (299)    
 Purchase of property, plant and equipment                                                5(e)     (1,795)      (765)    
 Disposal of property, plant and equipment and intangible assets                                   14           6        
 Investments in joint ventures and associates                                                      (291)        (236)    
 Dividends received from joint ventures and associates                                    13(a)    110          147      
 Repayments of loans to, and disposal of investments in, joint ventures and associates    13(a)    42           10       
 Interest received                                                                                 33           6        
 Sale of securities                                                                       12(b)    26           48       
 Net cash flow from continuing investing activities                                                (2,558)      (1,399)  
 Net cash flow from discontinued investing activities                                              -            (1)      
 Net cash flow from investing activities                                                           (2,558)      (1,400)  
 Issue of ordinary share capital                                                                   33           23       
 Purchase of own shares                                                                            (9)          (6)      
 Financing interest received                                                                       46           9        
 Financing interest paid                                                                           (256)        (202)    
 Cash inflow from additional debt                                                                  1,712        114      
 Cash outflow from payment of capital element of finance leases                                    (31)         (25)     
 Cash outflow from repayment of other debt                                                         (471)        (30)     
 Cash outflow from settlement of derivative contracts related to borrowings                        (14)         -        
 Net cash flow from increase in debt                                                      12(b)    1,196        59       
 Realised net foreign exchange loss on cash settlement of derivative contracts                     (5)          (28)     
 Equity dividends paid                                                                             (815)        (762)    
 Net cash flow from continuing financing activities                                                190          (907)    
 Net increase in cash and cash equivalents                                                         452          30       
 Cash and cash equivalents at 1 January                                                            479          451      
 Effect of foreign exchange rate changes                                                           -            (2)      
 Cash and cash equivalents at 31 December                                                          931          479      
 Included in the following lines of the Balance Sheet:                                                                   
 Cash and cash equivalents                                                                11(b)    931          518      
 Bank overdrafts, loans and other borrowings                                                       -            (39)     
                                                                                                   931          479      
                                                                                                                         


The notes on pages 30 to 57 form part of these Financial Statements. 

NOTES TO THE FINANCIAL STATEMENTS

1. General information and basis of preparation

Centrica plc is a Company domiciled and incorporated in the UK. The address of
the registered office is Millstream, Maidenhead Road, Windsor, Berkshire, SL4
5GD. The Company has its listing on the London Stock Exchange. 

The Financial Statements for the year ended 31 December 2012 included in this
announcement were authorised for issue in accordance with a resolution of the
Board of Directors on 27 February 2013. 

The preliminary results of the year ended 31 December 2012 have been extracted
from audited accounts (with the exception of notes 21 to 26 which have not been
audited) which have not yet been delivered to the Registrar of Companies. The
Financial Statements set out in this announcement do not constitute statutory
accounts for the year ended 31 December 2012 or 31 December 2011. The financial
information for the year ended 31 December 2011 is derived from the statutory
accounts for that year. The report of the auditors on the statutory accounts for
the year ended 31 December 2012 was unqualified and did not contain a statement
under Section 498 of the Companies Act 2006. 

2. Summary of significant new accounting policies and reporting changes

The accounting policies applied in these condensed Financial Statements for the
year ended 31 December 2012 are consistent with those of the annual Financial
Statements for the year ended 31 December 2011, as described in those Financial
Statements, with the exception of standards, amendments and interpretations
effective in 2012. 

(a) Standards, amendments and interpretations effective in 2012

There are no International Financial Reporting Standards (IFRSs) or IFRIC
interpretations that are effective for the first time for the current financial
year that have had a material impact on the Group. 

(b) Standards, amendments and interpretations that are issued but not yet
applied by the Group

The standards and amendments to standards that are issued but not yet applied
which could have an impact on the Group`s future Financial Statements are: IFRS
9, 10, 11, 12, 13 and amendments to IAS 19. These standards and amendments to
standards have an effective date after the date of these Financial Statements
and the Group has not early adopted them. IAS 19 (revised 2011) will apply for
the year ended 31 December 2013 and will change the way interest is calculated
on pension scheme assets and liabilities. If this standard had been applied to
the year ended 31 December 2012, it is estimated that interest income would have
been reduced by approximately £26 million. The Group is continuing to assess the
impact that the other standards and amendments to standards may have. 

3. Centrica specific accounting measures, selected key sources of estimation
uncertainty and critical accounting judgements

Use of adjusted profit measures

The Directors believe that reporting adjusted profit and adjusted earnings per
share measures provides additional useful information on business performance
and underlying trends. These measures are used for internal performance
purposes. The adjusted measures in this report are not defined terms under IFRS
and may not be comparable with similarly titled measures reported by other
companies. 

The measure of operating profit used by management to evaluate segment
performance is adjusted operating profit. Adjusted operating profit is defined
as operating profit before:

* exceptional items; 
* certain re-measurements; 
* depreciation resulting from fair value uplifts to property, plant and
equipment (PP&E) on the acquisition of Strategic Investments;

but including:

* the Group`s share of the results from joint ventures and associates before
interest and taxation.

Note 5 contains an analysis of adjusted operating profit by segment and a
reconciliation of adjusted operating profit to operating profit after
exceptional items and certain re-measurements. 

Adjusted earnings is defined as earnings before:

* exceptional items net of taxation; 
* certain re-measurements net of taxation; and 
* depreciation of fair value uplifts to PP&E on the acquisition of Strategic
Investments, net of taxation.

A reconciliation of earnings is provided in note 10. 

The Directors have determined that for Strategic Investments it is important to
separately identify the earnings impact of increased depreciation arising from
the acquisition-date fair value uplifts made to PP&E over their useful economic
lives. As a result of the nature of fair value assessments in the energy
industry the value attributed to strategic assets is a subjective judgement
based on a wide range of complex variables at a point in time. The subsequent
depreciation of the fair value uplifts bears little relationship to current
market conditions, operational performance or underlying cash generation.
Management therefore reports and monitors the operational performance of
Strategic Investments before the impact of depreciation on fair value uplifts to
PP&E and the segmental results are presented on a consistent basis. 

The Group has two Strategic Investments for which reported profits have been
adjusted due to the impact of fair value uplifts. These Strategic Investments
relate to the 2009 acquisitions of Venture Production plc (`Venture`) the
operating results of which are included within the Centrica Energy - Gas segment
and the acquisition of the 20% interest in Lake Acquisitions Limited (`British
Energy`), which owned the British Energy Group, the results of which are
included within the Centrica Energy - Power segment. 

(i) Venture

Significant adjustments have been made to the acquired PP&E to report the
acquired oil and gas field interests at their acquisition-date fair values which
are subsequently depreciated through the Group Income Statement over their
respective useful economic lives using the unit of production method. 

Whilst the impact of unwinding the PP&E at their acquisition-date fair values is
included in overall reported profit for the year, the Directors have reversed
the earnings impact of the increased depreciation and related taxation resulting
from fair value uplifts to the acquired oil and gas interests in order to arrive
at adjusted profit from continuing operations after taxation. 

(ii) British Energy

The 20% interest in British Energy is accounted for as an investment in an
associate using the equity method. The Group reports its share of the
associate`s profit or loss, which is net of interest and taxation, within the
Group Income Statement. 

The most significant fair value adjustments arising on the acquisition of the
20% investment in British Energy relate to the fair value uplifts made to the
British Energy nuclear power stations to report the PP&E at their
acquisition-date fair values and fair value uplifts made to British Energy`s
energy procurement contracts and energy sales contracts to report these at their
acquisition-date fair values. 

Whilst the impact of increased depreciation and related taxation through
unwinding the fair value uplifts to the nuclear power stations is included in
the share of associate`s post-acquisition result included in overall reported
Group profit for the year, the Directors have reversed these impacts in arriving
at adjusted profit from continuing operations for the year. The impact of
unwinding the acquisition-date fair values attributable to the acquired energy
procurement and energy sales contracts is included within certain
re-measurements. 

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 readers
with this clear and consistent presentation, the effects of `certain
re-measurements` of financial instruments, and `exceptional items`, are reported
separately in a different column in the Group Income Statement. 

In our business we enter into a portfolio of forward energy contracts which
include buying substantial quantities of commodity to meet the future needs of
our customers. Primarily because these contracts include terms that permit net
settlement, the rules within IAS 39 require the contracts to be individually
fair valued. In addition, the Group also enters into a range of commodity
contracts designed to secure the value of its underlying production, generation,
storage and transportation assets consistent with an integrated energy business
in the UK and North America. Fair value movements on these commodity derivative
contracts do not reflect the underlying performance of the business because the
contracts are economically related to our upstream assets or downstream demand
in our chosen markets, which are typically not fair valued. Therefore, these
certain re-measurements are reported separately and are subsequently reflected
in business performance when the underlying transaction or asset impacts profit
or loss. 

Exceptional items are those items which are of a non-recurring nature and, 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 a separate column in the Group Income Statement. Items which
may be considered exceptional in nature include disposals of businesses,
business restructurings, significant onerous contract charges and asset
write-downs. 

Selected key sources of estimation uncertainty and critical accounting
judgements

Impairment of long-lived assets

The Group has several material long-lived assets that are assessed or tested for
impairment at each reporting date in accordance with the Group`s accounting
policy. The Group makes judgements and estimates in considering whether the
carrying amounts of these assets or cash generating units (CGUs) are
recoverable. The key assets that are subjected to impairment tests are upstream
gas and oil assets, power generation assets, storage facility assets, nuclear
investment (investment in associate) and goodwill. 

Upstream gas and oil assets

The recoverable amount of the Group`s gas and oil assets is determined by
discounting the post-tax cash flows expected to be generated by the assets over
their lives. The cash flows are derived from projected production profiles of
each field, based predominantly on expected 2P reserves and take into account
forward prices for gas and liquids over the relevant period. Where forward
market prices are not available, prices are determined based on internal model
inputs. The recoverable amount also takes into account assumptions market
participants would use in estimating fair value. 

Power generation assets

The recoverable amount of the Group`s power generation assets is calculated by
discounting the pre-tax cash flows expected to be generated by the assets and is
dependent on views of forecast power generation and forecast power, gas, carbon
and capacity prices (where applicable) and the timing and extent of capital
expenditure. Where forward market prices are not available, prices are
determined based on internal model inputs. The prior year impairment charge in
relation to UK gas-fired power stations assumed overcapacity in the UK power
generation market post-2018 will diminish and normal returns will be achievable
on our most efficient assets. 

Storage facility assets

The recoverable amount of our planned storage facilities is calculated by
discounting the post-tax cash flows expected to be generated by the assets based
on predictions of seasonal gas price differentials and shorter term price
volatilities less any related capital and operating expenditure. Should the
business cases not support the planned investments, this risks a loss of
pre-development costs incurred to date. 

Nuclear investment

The recoverable amount of the nuclear investment is based on the value of the
existing British Energy nuclear fleet. The existing fleet value is calculated by
discounting post-tax cash flows derived from the stations based on forecast
power generation and power prices, whilst taking account of planned outages and
the possibility of life extensions. 

Goodwill

Goodwill does not generate independent cash flows and accordingly is allocated
at inception to specific CGUs or groups of CGUs for impairment testing purposes.
The recoverable amounts of these CGUs are derived from estimates of future cash
flows (as described in the asset classes above). The goodwill impairment tests
are also subject to these key estimates. 

Pensions and other post-employment benefits

The 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. 

Provisions for onerous contracts

The Group has entered into a number of commodity procurement and capacity
contracts related to specific assets in the ordinary course of its business.
Where the unavoidable costs of meeting the obligations under these contracts
exceed the associated, expected future net benefits, an onerous contract
provision is recognised. The calculation of these provisions will involve the
use of estimates. The key onerous provisions are as follows: 

Rijnmond power station operating lease

The onerous provision is calculated using net revenue estimates related to
power, gas, and carbon forward prices less the tolling costs. 

The contract runs until 2030 and there is currently no liquid market for these
commodities for much of this period. 

European gas transportation capacity contracts

The onerous provision is calculated using capacity costs incurred under the
contracts, less any predicted income. The provision assumes that all contracts
are onerous for the period to 2018 but that post-2018 the remaining capacities
could still be necessary to secure supplies of gas into the UK. Therefore no
provision has been recognised relating to this latter period. 

Direct Energy wind farm power purchase agreements

The onerous nature of the power purchase agreements is measured using estimates
relating to wind forecasts, forward curves for energy prices, balancing costs
and renewable energy certificates for which there is not a liquid market for the
full term of all the contracts. 

Energy Company Obligation

The Energy Company Obligation (`ECO`) order came into force on 5 December 2012.
The order requires UK-licensed energy suppliers to improve the energy efficiency
of domestic households from 1 January 2013. Targets are set in proportion to the
size of historic customer bases and must be delivered by 31 March 2015. The
Group judges that although targets are based on historic share of supply, it is
not obligated by ECO in 2012. Accordingly, no provision has been recognised in
the current year. 

Metering contracts

The Department of Energy and Climate Change (`DECC`) has modified the UK gas and
electricity supply licences requiring all domestic premises to be fitted with
compliant smart meters for measuring energy consumption by 31 December 2019. The
Group has a number of existing rental contracts for non-compliant meters that
include penalty charges if these meters are removed from use before the end of
their deemed useful lives. The Group considers that these contracts are not
onerous until the meters have been physically removed from use and therefore
only recognises a provision at this point. 

4. Risk management

The Group`s normal operating, investing and financing activities expose it to a
variety of risks. The processes for managing these risks are set out in the 2011
Annual Report and Accounts. The Group took the following steps to improve the
risk reporting process in 2012:

* aligned a number of our risk, controls and audit functions to help facilitate
a more integrated approach to our risk and assurance activities; 
* developed and rolled out a risk universe, allowing for a more structured
approach to risk identification; 
* we focused on High Impact Low Probability (HILP) risk identification; 
* published a risk newsletter to identify emerging trends and to stimulate
debate on changing or emerging risks; 
* introduced a risk maturity model to assess the effectiveness of our risk
processes across the different business units to enhance the sharing of best
practice and focus on mutual areas for improvement; and 
* undertook a number of internal and external audits to assess the effectiveness
of our risk management processes and identify areas where we can further enhance
our risk management activities. The Group believes that these steps will help
maintain good governance for the business going forward.

During 2012 financial risk management was overseen by the Group Financial Risk
Management Committee (GFRMC) according to objectives, targets and policies set
by the Board. Commodity price risk management is carried out in accordance with
individual business unit Financial Risk Management Committees and their
respective financial risk management policies, as approved by the GFRMC under
delegated authority of the Board. Treasury risk management, including management
of currency risk, interest rate risk, equity price risk and liquidity risk is
approved by the Board. The wholesale credit risk associated with commodity
trading and treasury positions is managed in accordance with the Group`s credit
risk policy. Downstream credit risk management is carried out in accordance with
individual business unit credit policies. 

Credit risk for financial assets

Credit risk from financial asset transactions is generated by the potential for
the counterparty to default on its contractual obligations. Counterparty credit
exposure issues remained a focal point within Centrica throughout 2012 and the
Group continues to be vigilant in managing counterparty risks in accordance with
its financial risk management policies. The period has seen a large number of
credit rating downgrades for both financial institutions and European energy
majors. In spite of this, the Group has not altered its rating thresholds for
counterparty credit limits and continues to operate within its limits. In the US
and Europe, on-going regulatory changes are resulting in an increase in trading
over exchanges or via zero threshold margined contracts. This helps to reduce
counterparty credit risk, but carries increased liquidity requirements. 

Liquidity risk

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
12-month period to safeguard the Group`s ability to continue as a going concern.
It is the Group's policy to maintain committed facilities and/or available
surplus cash resources of at least £1,200 million, raise at least 75% of its net
debt (excluding non-recourse debt) in the long-term debt market and to maintain
an average term to maturity in the recourse long-term debt portfolio greater
than five years. 

At 31 December 2012, the Group`s long-term credit rating was A3 stable outlook
for Moody`s Investors Service Limited and A- stable outlook for Standard &
Poor`s Credit Market Services Europe Limited. These ratings did not change
during 2012. 

At 31 December 2012, the Group had undrawn committed credit facilities of £3,029
million (2011: £3,254 million) and £931 million (2011: £518 million) of cash and
cash equivalents. 130% (2011: 115%) of the Group`s net debt has been raised in
the long-term debt market and the average term to maturity of the long-term debt
portfolio was 12.6 years (2011: 9.6 years). 

5. Segmental analysis

During the year the Group renamed its external segments. Downstream UK has been
renamed as British Gas, Upstream UK as Centrica Energy, Storage UK as Centrica
Storage, and North America as Direct Energy.

 (a) Revenue                                                                                                                            
 Year ended 31 December                                                    2012                                       2011              
                                                                                                                      (restated) (ii)   
                                             Gross        Less inter-                   Gross        Less inter-                        
                                             segment      segment          Group        segment      segment          Group             
                                             revenue      revenue (i)      revenue      revenue      revenue (i)      revenue           
                                             £m           £m               £m           £m           £m               £m                
 Continuing operations:                                                                                                                 
 Residential energy supply (ii)              9,121        -                9,121        7,930        -                7,930             
 Residential services (ii)                   1,674        (131)            1,543        1,644        (81)             1,563             
 Business energy supply and services (ii)    3,062        (10)             3,052        2,829        (7)              2,822             
 British Gas                                 13,857       (141)            13,716       12,403       (88)             12,315            
                                                                                                                                        
 Gas                                         3,712        (353)            3,359        3,571        (521)            3,050             
 Power                                       1,237        (275)            962          1,588        (179)            1,409             
 Centrica Energy                             4,949        (628)            4,321        5,159        (700)            4,459             
                                                                                                                                        
 Centrica Storage                            202          (38)             164          184          (20)             164               
                                                                                                                                        
 Residential energy supply                   2,357        -                2,357        2,416        -                2,416             
 Business energy supply                      2,690        -                2,690        2,748        -                2,748             
 Residential and business services           532          -                532          520          -                520               
 Upstream and wholesale energy               436          (274)            162          433          (231)            202               
 Direct Energy                               6,015        (274)            5,741        6,117        (231)            5,886             
                                             25,023       (1,081)          23,942       23,863       (1,039)          22,824            
 Discontinued operations:                                                                                                               
 European Energy                             -            -                -            167          -                167               


 (i) Inter-segment revenue is subject to year-on-year fluctuations principally due to the change in the mix of internal and external energy sales.                                                                                                                                                                                                       
 (ii) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
                                                                                                                                                                                                                                                                                                                                                         


 (b) Operating profit                                                                                                          
 Year ended 31 December                                                                            2012         2011           
                                                                                                                (restated)(i)  
                                                                                                   £m           £m             
 Continuing operations:                                                                                                        
 Residential energy supply (i)                                                                     606          544            
 Residential services (i)                                                                          312          269            
 Business energy supply and services (i)                                                           175          192            
 British Gas                                                                                       1,093        1,005          
                                                                                                                               
 Gas (ii)                                                                                          919          769            
 Power (ii)                                                                                        311          254            
 Centrica Energy                                                                                   1,230        1,023          
                                                                                                                               
 Centrica Storage                                                                                  89           75             
                                                                                                                               
 Residential energy supply                                                                         156          161            
 Business energy supply                                                                            129          110            
 Residential and business services                                                                 33           28             
 Upstream and wholesale energy                                                                     13           13             
 Direct Energy                                                                                     331          312            
 Adjusted operating profit - segment operating profit before exceptional items, certain                                        
 re-measurements and impact of fair value uplifts from Strategic Investments (iii)                 2,743        2,415          
 Share of joint ventures/associates` interest and taxation                                         (85)         (102)          
 Depreciation of fair value uplifts to property, plant and equipment - Venture (ii)                (67)         (64)           
 Depreciation of fair value uplifts to property, plant and equipment (net of taxation)                                         
 associates - British Energy (ii)                                                                  (29)         (41)           
                                                                                                   2,562        2,208          
 Exceptional items (note 6)                                                                        (534)        (331)          
 Certain re-measurements included within gross profit (note 6)                                     603          (437)          
 Certain re-measurements of associates` energy contracts (net of taxation) (note 6)                (6)          (26)           
 Operating profit after exceptional items and certain re-measurements                              2,625        1,414          
 Discontinued operations:                                                                                                      
 European Energy (iv)                                                                              -            13             


 (i) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
 (ii) See note 3 and note 10 for an explanation of the depreciation on fair value uplifts to PP&E on acquiring Strategic Investments.                                                                                                                                                                                                                   
 (iii) Includes results of equity-accounted interests before interest and taxation.                                                                                                                                                                                                                                                                     
 (iv) Represents profit after taxation and before exceptional items and certain re-measurements of Oxxio B.V. up to the date of disposal. This is the measure of results of discontinued operations that is reported regularly to the Group`s Executive Committee.                                                                                      
                                                                                                                                                                                                                                                                                                                                                        


 (c) Included within adjusted operating profit                                                                                                                  
                                        Share of results of joint                    Depreciation and                       Amortisation,                       
                                        ventures and associates                      impairments of property,               write-downs and impairments         
                                        before interest and taxation (i)             plant and equipment (iii)              of intangibles                      
 Year ended 31 December                 2012                      2011               2012                  2011             2012                    2011        
                                        £m                        £m                 £m                    £m               £m                      £m          
 Continuing operations:                                                                                                                                         
 Residential energy supply              -                         -                  8                     8                34                      23          
 Residential services                   -                         -                  20                    18               8                       6           
 Business energy supply and services    -                         -                  2                     2                6                       7           
 British Gas                            -                         -                  30                    28               48                      36          
                                                                                                                                                                
 Gas (i) (ii) (iii)                     -                         (1)                637                   503              131                     52          
 Power (i) (iii)                        254                       237                106                   112              5                       4           
 Centrica Energy                        254                       236                743                   615              136                     56          
                                                                                                                                                                
 Centrica Storage                       -                         -                  30                    30               -                       -           
                                                                                                                                                                
 Residential energy supply              -                         -                  2                     1                22                      9           
 Business energy supply                 -                         -                  2                     1                7                       4           
 Residential and business services      -                         -                  3                     3                7                       6           
 Upstream and wholesale energy (ii)     -                         -                  84                    89               6                       4           
 Direct Energy                          -                         -                  91                    94               42                      23          
                                                                                                                                                                
 Other (iv)                             -                         -                  22                    19               19                      25          
                                        254                       236                916                   786              245                     140         


 (i) Share of results of joint ventures and associates is before interest, certain re-measurements, depreciation of fair value uplifts to PP&E on Strategic Investments and taxation.                                                                      
 (ii) During 2012, £118 million of write downs relating to exploration and evaluation assets were incurred in Centrica Energy - Gas (2011: £44 million) and £4 million were incurred in Direct Energy - Upstream and wholesale energy (2011: £2 million).  
 (iii) Depreciation of PP&E is stated before depreciation of fair value uplifts for Strategic Investments.                                                                                                                                                 
 (iv) Other comprises Corporate Centre assets which are charged out to other Group segments.                                                                                                                                                               
                                                                                                                                                                                                                                                           


 The Group operates in the following geographical areas:                                 
 Revenue (based on location of customer)                                                 
 Year ended 31 December                                            2012          2011    
                                                                   £m            £m      
 Continuing operations:                                                                  
 UK                                                                16,991        15,760  
 North America                                                     5,741         5,886   
 Rest of the world                                                 1,210         1,178   
                                                                   23,942        22,824  
                                                                                         
 Non-current assets (based on location of assets) (i)                                    
 31 December                                                       2012          2011    
                                                                   £m            £m      
 UK                                                                9,788         9,146   
 North America                                                     2,458         2,413   
 Norway                                                            2,113         745     
 Rest of the world                                                 449           467     
                                                                   14,808        12,771  
 (i) Non-current assets include goodwill, other intangible assets, PP&E and interest in joint ventures and associates 
                                                                                         


 (d) Assets and liabilities                                                                                                                                
                                                                   Net segment                                     Average capital employed                
                                                                   assets/(liabilities)                            Year ended 31 December                  
 31 December                                                                     2012            2011                            2012          2011        
                                                                                                 (restated) (i)                                (restated)  
                                                                                                                                               (i) (ii)    
                                                                                 £m              £m                              £m            £m          
                                                                                                                                                           
 Residential energy supply (i) (ii)                                              (118)           28                              212           325         
 Residential services (i) (ii)                                                   349             264                             289           247         
 Business energy supply and services (i) (ii)                                    645             645                             714           645         
 British Gas                                                                     876             937                             1,215         1,217       
                                                                                                                                                           
 Gas                                                                             3,447           2,427                           1,868         1,500       
 Power                                                                           3,671           3,534                           2,995         3,335       
 Centrica Energy                                                                 7,118           5,961                           4,863         4,835       
                                                                                                                                                           
 Centrica Storage                                                                510             517                             301           221         
                                                                                                                                                           
 Residential energy supply (ii)                                                  800             925                             840           716         
 Business energy supply (ii)                                                     534             459                             413           316         
 Residential and business services (ii)                                          393             377                             371           367         
 Upstream and wholesale energy (ii)                                              720             733                             743           736         
 Direct Energy                                                                   2,447           2,494                           2,367         2,135       
                                                                                 10,951          9,909                           8,746         8,408       
                                                                                                                                                           
 Unallocated current and deferred tax balances                                   (7)             186                                                       
 Certain derivative financial instruments (iii)                                  (553)           (1,214)                                                   
 Bank overdrafts and loans, securities and treasury derivatives                  (5,054)         (3,868)                                                   
 Net retirement benefit asset                                                    88              330                                                       
 Corporate centre assets and discontinued operations                             502             257                                                       
 Non-operating liabilities                                                       (5,024)         (4,309)                                                   
 Net assets                                                                      5,927           5,600                                                     


 (i) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
 (ii) To align with management reporting, capital employed in British Gas and Direct Energy has been adjusted to include assets under construction. The 2011 comparatives have been restated accordingly.                                                                                                                                               
 (iii) Includes balances held by joint ventures/associates.                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                        


Capital employed represents the investment required to operate each of the
Group`s segments. Capital employed is used by the Group to calculate the return
on capital employed for each of the Group`s segments as part of the Group`s
`managing for value` concept. Additional value is created when the return on
capital employed exceeds the cost of capital. Net segment assets of the Group
can be reconciled to the Group`s capital employed as follows:

                                                                                                                       
 Year ended 31 December                                                                      2012             2011     
                                                                                             £m               £m       
 Net segment assets at 31 December                                                           10,951           9,909    
 Effect of averaging net segment assets                                                      177              475      
 Deduct:                                                                                                               
 Average intra-group balances                                                                55               49       
 Average pre-productive assets                                                               (1,987)          (1,592)  
 Average margin call debtor                                                                  (114)            (73)     
 Average cash at bank, in transit and in hand excluding certain restricted cash              (336)            (360)    
 Average capital employed                                                                    8,746            8,408    
                                                                                                                       


 (e) Capital expenditure                                                                                                                                  
                                                                             Capital expenditure on                         Capital expenditure on        
                                                                             property, plant and                            intangible assets other       
                                                                                           equipment                        than goodwill                 
 Year ended 31 December                                                                    2012          2011               2012                2011      
                                                                                                         (restated)(i)                                    
                                                                                           £m            £m                 £m                  £m        
 Continuing operations:                                                                                                                                   
 Residential energy supply (i)                                                             7             28                 230                 240       
 Residential services (i)                                                                  44            26                 9                   22        
 Business energy supply and services (i)                                                   9             3                  91                  75        
 British Gas                                                                               60            57                 330                 337       
                                                                                                                                                          
 Gas (ii)                                                                                  1,733         488                380                 97        
 Power                                                                                     76            89                 8                   6         
 Centrica Energy                                                                           1,809         577                388                 103       
                                                                                                                                                          
 Centrica Storage                                                                          42            59                 1                   -         
                                                                                                                                                          
 Residential energy supply                                                                 -             -                  3                   4         
 Business energy supply                                                                    -             1                  27                  18        
 Residential and business services                                                         3             2                  2                   1         
 Upstream and wholesale energy                                                             79            36                 14                  8         
 Direct Energy                                                                             82            39                 46                  31        
 Other                                                                                     17            26                 64                  49        
 Capital expenditure on continuing operations                                              2,010         758                829                 520       
 Decrease in prepayments related to capital expenditure                                    (4)           (15)               -                   -         
 Capitalised borrowing costs                                                               (53)          (46)               (7)                 -         
 (Increase)/decrease in payables related to capital expenditure                            (158)         68                 -                   (5)       
 Purchases of emissions allowances and renewable obligations certificates                  -             -                  (250)               (216)     
 Net cash outflow                                                                          1,795         765                572                 299       


 (i) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
 (ii) During the period, £1,175 million of assets were acquired from Statoil, ConocoPhillips and Total. See note 16.                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                        


6. Exceptional items and certain re-measurements

 (a) Exceptional items                                                                                                       
 Year ended 31 December                                                                                  2012         2011   
                                                                                                         £m           £m     
 Continuing operations:                                                                                                      
 Provision for Direct Energy wind power purchase agreements (i)                                          (89)         -      
 Provision for European onerous capacity contracts                                                       -            (221)  
 Exceptional items from continuing operations included within gross profit                               (89)         (221)  
 Impairment of UK generation assets                                                                      -            (226)  
 British Gas contract migration                                                                          -            (63)   
 Restructuring charges (ii)                                                                              (214)        (154)  
 Pension curtailment (note 15)                                                                           -            333    
 Impairment of investment in nuclear new build (notes 13 and 19)                                         (231)        -      
                                                                                                         (445)        (110)  
 Exceptional items from continuing operations included within Group operating profit                     (534)        (331)  
 Taxation on exceptional items (note 8)                                                                  93           69     
 Effect of change in upstream UK tax rates (note 8)                                                      (40)         (204)  
 Net exceptional items from continuing operations after taxation                                         (481)        (466)  
 Discontinued operations:                                                                                                    
 Loss on disposal of Oxxio B.V. after taxation (note 17)                                                 -            (56)   
 Total exceptional items after taxation                                                                  (481)        (522)  
                                                                                                                             
 (b) Certain re-measurements                                                                                                 
 Year ended 31 December                                                                                  2012         2011   
                                                                                                         £m           £m     
 Continuing operations:                                                                                                      
 Certain re-measurements recognised in relation to energy contracts:                                                         
 Net gains arising on delivery of contracts (iii)                                                        745          200    
 Net losses arising on market price movements and new contracts (iv)                                     (135)        (632)  
 Net losses arising on positions in relation to cross-border transportation or capacity contracts        (7)          (5)    
 Net re-measurements from continuing operations included within gross profit                             603          (437)  
 Net losses arising on re-measurement of associates` energy contracts (net of taxation) (v)              (6)          (26)   
 Net re-measurements included within Group operating profit                                              597          (463)  
 Taxation on certain re-measurements (note 8)                                                            (193)        119    
 Net re-measurements from continuing operations after taxation                                           404          (344)  
 Discontinued operations:                                                                                                    
 Net re-measurements on energy contracts of discontinued operations after taxation                       -            22     
 Total re-measurements after taxation                                                                    404          (322)  


 (i) An exceptional charge has been recognised in relation to wind power purchase agreements in Direct Energy to reflect the fair value of the obligation to purchase power above its net realisable value.                                                                                                                                              
 (ii) As a result of a Group-wide cost reduction programme, restructuring charges have been recorded including staff redundancies, onerous lease charges and £48 million of asset impairments. See Business Review for more details.                                                                                                                     
 (iii) As energy is delivered or consumed from previously contracted positions the related fair value recognised in the opening Balance Sheet (representing the discounted difference between forward energy prices at the opening balance sheet date and the contract price of energy to be delivered) is charged or credited to the Income Statement.  
 (iv) Represents fair value losses arising from the change in fair value of future contracted sales and purchase contracts as a result of changes in forward energy prices between reporting dates (or date of inception and the reporting date, where later).                                                                                           
 (v) Includes fair value unwinds relating to the recognition of energy procurement contracts and energy sales contracts at their acquisition-date fair values.                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                         


 7. Net interest                                                                                                                         
 Year ended 31 December                                                                        2012                 2011                 
                                                                       Interest    Interest             Interest    Interest             
                                                                       expense     income      Total    expense     income        Total  
                                                                       £m          £m          £m       £m          £m            £m     
 Continuing operations:                                                                                                                  
 Cost of servicing net debt:                                                                                                             
 Interest income                                                       -           39          39       -           37            37     
 Interest expense on bonds, bank loans and overdrafts (i)              (232)       -           (232)    (176)       -             (176)  
 Interest expense on finance leases                                    (18)        -           (18)     (19)        -             (19)   
                                                                       (250)       39          (211)    (195)       37            (158)  
 (Losses)/gains on revaluation:                                                                                                          
 (Losses)/gains on fair value hedges                                   (22)        31          9        (83)        72            (11)   
 Fair value (losses)/gains on other derivatives (ii)                   (155)       132         (23)     (71)        35            (36)   
 Fair value gains on other securities measured at fair value           -           3           3        -           14            14     
 Net foreign exchange translation of monetary assets and                                                                                 
 liabilities ((iii))                                                   (10)        -           (10)     -           19            19     
                                                                       (187)       166         (21)     (154)       140           (14)   
 Notional interest arising from discounting and other interest (iv)    (60)        49          (11)     (55)        35            (20)   
                                                                       (497)       254         (243)    (404)       212           (192)  
 Capitalised borrowing costs (v)                                       60          -           60       46          -             46     
 Interest (expense)/income                                             (437)       254         (183)    (358)       212           (146)  


 (i) During 2012 the Group increased its outstanding bond debt principal by £1,250 million, €150 million and HK$450 million, and decreased it by £284 million. See note 11(c).        
 (ii) Primarily reflects changes in the fair value of derivatives used to hedge the foreign exchange exposure associated with inter-company loans denominated in foreign currencies.  
 (iii) Primarily reflects foreign exchange (losses)/gains on loans denominated in foreign currencies.                                                                                 
 (iv) Other includes interest received for cash collateral balances, supplier early payment arrangements and a net £45 million (2011: £27 million) for pension schemes.               
 (v) Borrowing costs have been capitalised using an average rate of 4.70% (2011: 4.94%).                                                                                              
                                                                                                                                                                                      


8. Taxation

 Analysis of tax charge                                                                                                                                      
 Year ended 31 December                                                                    2012                                               2011           
                                                                      Exceptional items                                  Exceptional items                   
                                                       Business       and certain          Results for    Business       and certain          Results for    
                                                       performance    re-measurements      the year       performance    re-measurements      the year       
                                                       £m             £m                   £m             £m             £m                   £m             
 Current tax                                                                                                                                                 
 UK corporation tax                                    (376)          14                   (362)          (529)          69                   (460)          
 UK petroleum revenue tax                              (208)          -                    (208)          (220)          -                    (220)          
 Foreign tax                                           (285)          (7)                  (292)          (107)          10                   (97)           
 Adjustments in respect of prior years                 (53)           -                    (53)           23             -                    23             
 Total current tax                                     (922)          7                    (915)          (833)          79                   (754)          
 Deferred tax                                                                                                                                                
 Current year                                          (143)          (86)                 (229)          (40)           90                   50             
 UK petroleum revenue tax                              13             -                    13             46             -                    46             
 Foreign deferred tax                                  (70)           (11)                 (81)           (24)           17                   (7)            
 Change in tax rates                                   40             (50)                 (10)           30             (201)                (171)          
 Adjustments in respect of prior years                 53             -                    53             11             (1)                  10             
 Total deferred tax                                    (107)          (147)                (254)          23             (95)                 (72)           
 Total tax on profit from continuing operations (i)    (1,029)        (140)                (1,169)        (810)          (16)                 (826)          


 (i) Total tax on profit from operations excludes taxation on the Group`s share of profits in joint ventures and associates.  
                                                                                                                              


The Group earns its profits primarily in the UK, therefore the tax rate used for
tax on profit from ordinary activities is the standard rate for UK corporation
tax, which from 1 April 2012 was 24% (2011: 26%), with the exception of upstream
profits, which were taxed at a UK corporation tax rate of 30% (2011: 30%) plus a
supplementary charge of 32% (2011: 32%). On 3 July 2012, the UK government
substantively enacted the restriction on the rate of tax relief on oil and gas
decommissioning costs from the current 62% to 50%. A one off exceptional charge
of £40 million has been recognised from revaluing the related deferred tax
provisions. 

Certain upstream assets also bear petroleum revenue tax at 50% (2011: 50%).
Norwegian upstream profits are taxed at the standard rate of 28% (2011: 28%)
plus a special tax of 50% (2011: 50%) resulting in an aggregate tax rate of 78%.
Taxation for other jurisdictions is calculated at the rates prevailing in those
respective jurisdictions. 

The UK Government has announced its intention to propose that Parliament reduce
the main rate of UK corporation tax to 21% by 1 April 2014. At 31 December 2012
a reduction in the rate to 23% had been substantively enacted so the relevant UK
deferred tax assets and liabilities included in these Financial Statements have
been based on that rate. The effect of the additional proposed reduction in the
UK corporation tax rate by 2014 would be to decrease the net deferred tax
liability by £18 million.

 9. Dividends                                                                                                           
                                         Pence          2012                            Pence          2011             
                                £m       per share      Date of payment        £m       per share      Date of payment  
 Prior year final dividend      576      11.11          13 Jun 2012            540      10.46          15 Jun 2011      
 Interim dividend               240      4.62           14 Nov 2012            222      4.29           16 Nov 2011      
                                816                                            762                                      
                                                                                                                        


The Directors propose a final dividend of 11.78 pence per ordinary share
(totalling £602 million) for the year ended 31 December 2012. The dividend will
be submitted for formal approval at the Annual General Meeting to be held on 13
May 2013 and, subject to approval, will be paid on 12 June 2013 to those
shareholders registered on 26 April 2013. 

10. Earnings per ordinary share

Basic earnings per ordinary share has been calculated by dividing the earnings
attributable to equity holders of the Company for the year of £1,273 million
(2011: £421 million) by the weighted average number of ordinary shares in issue
during the year of 5,183 million (2011: 5,159 million). The number of shares
excludes six million ordinary shares (2011: seven million), being the weighted
average number of the Company`s own shares held in the employee share trust. 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, exceptional items and the impact of Strategic Investments,
assists with understanding the underlying performance of the Group, as explained
in note 3. 

The reconciliation of basic to adjusted basic earnings per ordinary share is as
follows:

 (a) Continuing and discontinued operations                                                                                      
 Year ended 31 December                                                                   2012                        2011       
                                                                                          Pence per                   Pence per  
                                                                                          ordinary                    ordinary   
                                                                               £m         share            £m         share      
 Earnings - basic                                                              1,273      24.6             421        8.2        
 Net exceptional items after taxation (note 6)                                 481        9.2              522        10.1       
 Certain re-measurement (gains)/losses after taxation (note 6)                 (404)      (7.8)            322        6.2        
 Depreciation of fair value uplifts to property, plant and equipment from      56         1.1              68         1.3        
 Strategic Investments, after taxation                                                                                           
 Earnings - adjusted basic                                                     1,406      27.1             1,333      25.8       
                                                                                                                                 
 Earnings - diluted                                                            1,273      24.4             421        8.1        
                                                                                                                                 
 Earnings - adjusted diluted                                                   1,406      27.0             1,333      25.6       
                                                                                                                                 


Strategic Investments

During 2009, the Group acquired a 20% interest in British Energy and the entire
share capital of Venture. As explained in note 3, the depreciation relating to
fair value uplifts of the acquired Venture PP&E and associated taxation is
excluded in arriving at adjusted earnings for the year, which amounted to £67
million (2011: £64 million) depreciation and a taxation credit of £40 million
(2011: £37 million) in the period. Additionally, the impact of depreciation
arising on fair value uplifts attributed to the British Energy nuclear power
stations and related taxation included within the Group`s share of the
post-taxation results of the associate is excluded in arriving at adjusted
earnings for the period, which amounted to £29 million (2011: £41 million) net
of taxation.

 (b) Continuing operations                                                                                                         
 Year ended 31 December                                                                   2012                        2011         
                                                                                          Pence per                   Pence per    
                                                                                          ordinary                    ordinary     
                                                                               £m         share            £m         share        
 Earnings - basic                                                              1,273      24.6             442        8.6          
 Net exceptional items after taxation (note 6)                                 481        9.2              466        9.0          
 Certain re-measurement (gains)/losses after taxation (note 6)                 (404)      (7.8)            344        6.7          
 Depreciation of fair value uplifts to property, plant and equipment from                                                          
 Strategic Investments, after taxation                                         56         1.1              68         1.3          
 Earnings - adjusted basic                                                     1,406      27.1             1,320      25.6         
 Earnings - diluted                                                            1,273      24.4             442        8.5          
 Earnings - adjusted diluted                                                   1,406      27.0             1,320      25.4         
                                                                                                                                   
                                                                                                                                   
 (c) Discontinued operations                                                                                                       
 Year ended 31 December                                                                   2012                        2011         
                                                                                          Pence per                   Pence per    
                                                                                          ordinary                    ordinary     
                                                                               £m         share            £m         share        
 Loss - basic and diluted                                                      -          -                (21)       (0.4)        
                                                                                                                                   


Certain re-measurements (note 6) included within operating profit and
discontinued operations comprise certain re-measurements arising on energy
procurement activities and re-measurements of proprietary trades in relation to
cross-border transportation or capacity contracts. All other re-measurements are
included within results before exceptional items and certain re-measurements. 

In addition to basic and adjusted basic earnings per ordinary share, information
is presented for diluted and adjusted diluted earnings per ordinary share. Under
this presentation, no adjustments are made to the reported earnings for either
2012 or 2011, however the weighted average number of shares used as the
denominator is adjusted for potentially dilutive ordinary shares.

 (d) Weighted average number of shares                                                                                       
                                                                                                   2012           2011       
                                                                                                   Million        Million    
                                                                                                   shares         shares     
 Weighted average number of shares used in the calculation of basic earnings per ordinary share    5,183          5,159      
 Dilutive impact of share-based payment schemes                                                    33             44         
 Weighted average number of shares used in the calculation of diluted earnings per                                           
 ordinary share                                                                                    5,216          5,203      
                                                                                                                             


11. Sources of finance

The Group funds its business using a combination of debt and equity.

 (a) Group funding                                                      
 31 December                        2012           2011 (restated) (i)  
                                    £m             £m                   
 Net debt                           4,047          3,292                
 Equity                             5,927          5,600                
 Capital                            9,974          8,892                


 (i) To align with management reporting, net debt has been restated to include mark-to-market values on derivative financial instruments used to hedge offsetting changes in borrowings.  
                                                                                                                                                                                          


The Group seeks to maintain an efficient capital structure with a balance of
debt and equity. Debt levels are restricted to limit the risk of financial
distress and, in particular, to maintain strong credit ratings. The Group`s
credit ratings are important in keeping the cost of debt down, in limiting
collateral requirements in energy trading, hedging and decommissioning security
arrangements, and ensuring 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 three to five 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, such
as debt to cash flow ratios and adjusted EBITDA to gross interest expense. At 31
December 2012, the ratio of the Group`s net debt to adjusted EBITDA was 1.1
(2011: 1.1). Adjusted EBITDA to gross interest expense for the year ended 31
December 2012 was 8.4 (2011: 8.7). 

British Gas Insurance Limited (BGIL) is required under FSA regulations to hold a
minimum capital amount and has complied with this requirement in 2012 (and
2011). For the remainder of the Group, the level of debt that can be raised is
restricted by the Company`s Articles of Association. Net debt is limited to the
greater of £5.0 billion and a gearing ratio of three times adjusted capital and
reserves. Based on adjusted capital and reserves as at 31 December 2012 of £5.9
billion, the limit for net debt was £17.8 billion. The Group funds its debt
principally through issuing bonds. In addition the Group also maintains
substantial committed facilities from banks (see note 4), but generally uses
these to provide backup liquidity and does not typically draw on them.

 (b) Net debt summary                                                                
 31 December                                       2012         2011 (restated) (i)  
                                                   £m           £m                   
 Cash at bank, in transit and in hand              201          94                   
 Short-term deposits                               730          424                  
 Cash and cash equivalents (ii)                    931          518                  
 Securities - current (iii)                        7            28                   
 Securities - non-current (iii) (iv)               199          190                  
 Current and non-current borrowings                (5,328)      (4,171)              
 Derivatives                                       144          143                  
 Net debt                                          (4,047)      (3,292)              


 (i) To align with management reporting, net debt has been restated to include mark-to-market values on derivative financial instruments used to hedge offsetting changes in borrowings.                                       
 (ii) Cash and cash equivalents includes £241 million (2011: £262 million) of restricted cash mostly held by the Group`s insurance undertakings that is not readily available to be used for other purposes within the Group.  
 (iii) Securities balances include £76 million of available for sale financial assets (2011: £90 million).                                                                                                                     
 (iv) Non-current securities include £130 million (2011: £128 million) of index-linked gilts which management use for short term liquidity management purposes.                                                                
                                                                                                                                                                                                                               


 (c) Borrowings summary                                                                                                          
 31 December                                                                Non-       2012                  Non-       2011     
                                     Coupon rate    Principal    Current    current    Total      Current    current    Total    
                                     %              m            £m         £m         £m         £m         £m         £m       
 Bank overdrafts and loans (i)                                   33         336        369        69         198        267      
 Bonds (by maturity date):                                                                                                       
 2 November 2012                     5.875          £284         -          -          -          291        -          291      
 27 February 2013                    1.045          ¥3,000       22         -          22         -          26         26       
 9 December 2013                     7.125          €367         305        -          305        -          317        317      
 4 November 2014                     Floating       $100         -          62         62         -          64         64       
 10 December 2014                    5.125          £315         -          332        332        -          335        335      
 31 March 2015                       Floating       $70          -          44         44         -          45         45       
 24 October 2016                     5.500          £300         -          338        338        -          336        336      
 19 September 2018                   7.000          £400         -          479        479        -          473        473      
 1 February 2019                     3.213          €100         -          83         83         -          -          -        
 22 February 2022                    3.680          HK$450       -          36         36         -          -          -        
 10 March 2022                       6.375          £500         -          527        527        -          527        527      
 4 September 2026                    6.400          £200         -          228        228        -          224        224      
 16 April 2027                       5.900          $70          -          43         43         -          45         45       
 13 March 2029                       4.375          £750         -          766        766        -          -          -        
 5 January 2032 (ii)                 Zero           €50          -          41         41         -          -          -        
 19 September 2033                   7.000          £770         -          777        777        -          777        777      
 12 September 2044                   4.250          £500         -          495        495        -          -          -        
                                                                 327        4,251      4,578      291        3,169      3,460    
 Commercial paper                                                82         -          82         114        -          114      
 Obligations under finance leases                                30         269        299        28         302        330      
                                                                 472        4,856      5,328      502        3,669      4,171    


 (i) At 31 December the maturity analysis for non-current bank loans was: 1-2 years £15 million, 2-5 years nil and >5 years £321 million (2011: 1-2 years £34 million, 2-5 years £18 million, and >5 years £146 million).  
 (ii) During the period, the Group issued €50 million of zero coupon notes with an accrual yield of 4.200%, which will result in a €114 million repayment on maturity.                                                     
                                                                                                                                                                                                                           


12. Notes to the Group Cash Flow Statement

 (a) Reconciliation of Group operating profit to cash generated from continuing operations                             
 Year ended 31 December                                                                              2012       2011   
                                                                                                     £m         £m     
 Group operating profit including share of result of joint ventures and associates                   2,625      1,414  
 Less share of profit of joint ventures and associates                                               (134)      (67)   
 Group operating profit before share of results of joint ventures and associates                     2,491      1,347  
 Add back/(deduct):                                                                                                    
 Amortisation, write-down and impairment of intangible assets                                        289        140    
 Depreciation, write-down and impairment of property, plant and equipment                            987        1,055  
 Impairment of associate                                                                             231        -      
 Recycling of write-down of available-for-sale financial assets                                      -          23     
 (Profit)/loss on sale of businesses, property, plant and equipment and other intangible assets      (38)       5      
 Increase in provisions                                                                              201        395    
 Defined benefit pension curtailment gain                                                            (3)        (332)  
 Defined benefit pension service cost                                                                87         118    
 Defined benefit pension contributions                                                               (136)      (130)  
 Employee share scheme costs                                                                         43         40     
 Re-measurement of energy contracts (i)                                                              (610)      404    
 Operating cash flows before movements in working capital                                            3,542      3,065  
 Increase in inventories                                                                             (88)       (79)   
 (Increase)/decrease in trade and other receivables (ii)                                             (210)      201    
 Increase in trade and other payables (ii)                                                           361        42     
 Cash generated from continuing operations                                                           3,605      3,229  


 (i) Adds back unrealised (gains)/losses arising from re-measurement of energy contracts.                 
 (ii) Includes net inflow of £114 million of cash collateral in 2012 (2011: net outflow of £26 million).  
                                                                                                          


 (b) Reconciliation of net increase in cash and cash equivalents to movement in net debt                                 
                                                                                              2012         2011          
                                                                                                           restated (i)  
                                                                                              £m           £m            
 Net increase in cash and cash equivalents                                                    452          30            
 Add back/(deduct):                                                                                                      
 Net sale of securities                                                                       (26)         (48)          
 Cash inflow from additional debt                                                             (1,712)      (114)         
 Cash outflow from payment of capital element of finance leases                               31           25            
 Cash outflow from repayment of other debt                                                    471          30            
 Cash outflow from settlement of derivative contracts related to borrowings                   14           -             
                                                                                              (770)        (77)          
 Revaluation of:                                                                                                         
 Securities                                                                                   10           10            
 Loans and other borrowings                                                                   2            (59)          
 Derivative contracts related to borrowings                                                   (12)         26            
                                                                                              (770)        (100)         
 Increase in interest payable on loans and other borrowings                                   (41)         (2)           
 Acquisitions                                                                                 5            (3)           
 Exchange adjustments                                                                         46           8             
 Other non-cash movements                                                                     5            -             
 Movement in net debt                                                                         (755)        (97)          
 Net debt at 1 January                                                                        (3,292)      (3,195)       
 Net debt at 31 December                                                                      (4,047)      (3,292)       


 (i) To align with management reporting, net debt has been restated to include mark-to-market values on derivative financial instruments used to hedge offsetting changes in borrowings. See note 11(b).  
                                                                                                                                                                                                          


13. Interests in joint ventures and associates

 (a) Interest in joint ventures and associates                                                                                                                                    
                                                Investments in joint                                                    Investments in                                            
                                                ventures and                    Shareholder            2012             joint ventures            Shareholder            2011     
                                                associates (i)                  loans                  Total            and associates            loans                  Total    
                                                £m                              £m                     £m               £m                        £m                     £m       
 1 January                                      2,351                           269                    2,620            2,343                     164                    2,507    
 Additions (i)                                  140                             178                    318              113                       115                    228      
 Decrease in shareholder loans                  -                               (42)                   (42)             -                         (10)                   (10)     
 Share of profits for the year                  134                             -                      134              67                        -                      67       
 Share of other comprehensive income            32                              -                      32               (25)                      -                      (25)     
 Impairment (ii)                                (231)                           -                      (231)            -                         -                      -        
 Dividends                                      (110)                           -                      (110)            (147)                     -                      (147)    
 31 December                                    2,316                           405                    2,721            2,351                     269                    2,620    


 (i) Additions include £30 million in relation to the Group`s retained 50% interest in Celtic Array Limited (`Round 3`). See note 17.                                                                                                                                                                                                                                                      
 (ii) On 4 February 2013, the Group announced its decision not to proceed with the nuclear new build investment. Accordingly, the Group has recorded an exceptional impairment of £231 million. This amount includes the carrying value of its investment in NNB Holding Company Limited as well as value attributed to nuclear new build in the British Energy acquisition. See note 19.  
                                                                                                                                                                                                                                                                                                                                                                                           


(b) Share of joint ventures` and associates` assets and liabilities

The Group`s share of joint ventures` and associates` gross assets and gross
liabilities at 31 December 2012 principally comprised of its interests in the
following entities (all reported in the Centrica Energy - Power segment):

* Wind farms - Braes of Doune Wind Farm (Scotland) Limited, Barrow Offshore Wind
Limited, GLID Wind Farms TopCo Limited (i), Lincs Wind Farm Limited (i) and
Celtic Array Limited (`Round 3`); and 
* Nuclear - Lake Acquisitions Limited (`British Energy`) and NNB Holding Company
Limited (`Nuclear New Build`).

                                                                                                                                     
 31 December                                                                                                   2012         2011     
                                                           Joint ventures      Associates                                            
                                                           Wind farms          Nuclear         Other (ii)      Total        Total    
                                                           £m                  £m              £m              £m           £m       
 Share of non-current assets                               842                 3,420           57              4,319        4,384    
 Share of current assets                                   128                 634             3               765          676      
                                                           970                 4,054           60              5,084        5,060    
 Share of current liabilities                              (286)               (187)           -               (473)        (315)    
 Share of non-current liabilities                          (523)               (1,744)         (16)            (2,283)      (2,385)  
                                                           (809)               (1,931)         (16)            (2,756)      (2,700)  
 Restricted interest on shareholder loan (iii)             (12)                -               -               (12)         (9)      
 Share of net assets of joint ventures and associates      149                 2,123           44              2,316        2,351    
 Shareholder loans                                         384                 -               21              405          269      
 Interests in joint ventures and associates                533                 2,123           65              2,721        2,620    
                                                                                                                                     
 Net (debt)/cash included in share of net assets           (395)               128             (12)            (279)        (283)    


 (i) As part of the finance arrangements entered into by GLID Wind Farms TopCo Limited and Lincs Wind Farm Limited, the Group`s shares in GLID Wind Farms TopCo Limited and Lincs Wind Farm Limited are secured in favour of third parties. The securities would only be enforced in the event that GLID Wind Farms TopCo Limited or Lincs Wind Farm Limited default on any of their obligations under their respective finance arrangements.  
 (ii) Other includes joint ventures of North Sea Infrastructure Partners Limited and Bacton Storage Company Limited.                                                                                                                                                                                                                                                                                                                           
 (iii) The Group restricts an element of interest receivable on the shareholder loan to Lincs Wind Farm Limited.                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                               


 (c) Share of profits in joint ventures and associates                                                                          
 Year ended 31 December                                                                                       2012       2011   
                                                                          Joint ventures      Associates                        
                                                                          Wind farms          Nuclear         Total      Total  
                                                                          £m                  £m              £m         £m     
 Income                                                                   49                  592             641        594    
 Expenses excluding certain re-measurements (i)                           (33)                (420)           (453)      (444)  
 Certain re-measurements                                                  -                   (8)             (8)        (33)   
                                                                          16                  164             180        117    
 Interest paid                                                            (17)                (27)            (44)       (58)   
 Taxation excluding certain re-measurements (i)                           1                   (5)             (4)        1      
 Taxation on certain re-measurements                                      -                   2               2          7      
 Share of post-taxation results of joint ventures and associates (i)      -                   134             134        67     


 (i) Includes £66 million (2011: £86 million) relating to depreciation of fair value uplifts to PP&E on acquiring the British Energy investments. The associated tax impact is £37 million credit (2011: £45 million credit).  
                                                                                                                                                                                                                               


British Energy

During November 2009 the Group acquired a 20% interest in British Energy for
£2,255 million and NNB Holding Company Limited (`Nuclear New Build`) for £32
million. The Group`s share of profit arising from its investment in British
Energy for the year to 31 December 2012 as set out in table (c) includes the
effect of unwinding the fair value adjustments. As explained in note 3 the
depreciation, net of taxation, arising on fair value uplifts attributed to the
nuclear power stations is reversed in arriving at adjusted profit for the period
as shown in the reconciliation table below and as set out in note 5(b).

 (d) Reconciliation of share of profits in joint ventures and associates to share of adjusted profits in joint ventures and associates 
 Year ended 31 December                                                                                          2012     2011   
                                                                                 Joint ventures    Associates                    
                                                                                 Wind farms        Nuclear       Total    Total  
                                                                                 £m                £m            £m       £m     
 Share of post-taxation results of joint ventures and associates                 -                 134           134      67     
 Certain re-measurements (net of taxation)                                       -                 6             6        26     
 Depreciation - British Energy (net of taxation) (i)                             -                 29            29       41     
 Interest paid                                                                   17                27            44       58     
 Taxation (excluding certain re-measurements and British Energy depreciation)    (1)               42            41       44     
 Share of adjusted results of joint ventures and associates                      16                238           254      236    


 (i) Relates to depreciation of fair value uplifts to PP&E on acquiring the British Energy investments.  
                                                                                                         


14. Derivative financial instruments

Derivative financial instruments are held for the following purposes and
accounted for accordingly:

                                                                                                                                                                                         
 Purpose                       Accounting treatment                                                                                                                                      
 Proprietary energy trading    Carried at fair value with changes in fair value recognised in the Group`s results for the year before exceptional items and certain re-measurements (i)  
 and treasury management                                                                                                                                                                 
 Energy procurement            Carried at fair value, with changes in the fair value reflected in certain re-measurements (ii)                                                           


 (i) With the exception of certain energy derivatives related to cross-border transportation and capacity contracts.                                                                                                                                                                                                                        
 (ii) Energy contracts designated at fair value through profit or loss include certain energy contracts that the Group has, at its option, designated at fair value through profit or loss under IAS 39 because the energy contract contains one or more embedded derivatives that significantly modify the cash flows under the contract.  
                                                                                                                                                                                                                                                                                                                                            


In cases where a derivative qualifies for hedge accounting, derivatives are
classified as fair value hedges or cash flow hedges. 

The carrying values of derivative financial instruments by product type for
accounting purposes are as follows:

                                                                                                                                
 31 December                                                                              2012                     2011         
                                                                                Assets    Liabilities    Assets    Liabilities  
                                                                                £m        £m             £m        £m           
 Derivative financial instruments - held for trading under IAS 39:                                                              
 Energy derivatives - for procurement                                           229       (772)          332       (1,390)      
 Energy derivatives - for proprietary trading                                   69        -              61        (14)         
 Interest rate derivatives                                                      13        (86)           22        (79)         
 Foreign exchange derivatives                                                   33        (42)           23        (37)         
 Energy derivative contracts designated at fair value through profit or loss    65        -              7         (46)         
 Derivative financial instruments in hedge accounting relationships:                                                            
 Energy derivatives                                                             -         (14)           -         (65)         
 Interest rate derivatives                                                      172       (2)            157       (7)          
 Foreign exchange derivatives                                                   -         (26)           3         (7)          
 Total derivative financial instruments                                         581       (942)          605       (1,645)      
 Included within:                                                                                                               
 Derivative financial instruments - current                                     268       (615)          315       (1,140)      
 Derivative financial instruments - non-current                                 313       (327)          290       (505)        


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                                                                      2012         2011     
                                                                                  £m           £m       
 Short-term forward market purchases and sales of gas and electricity:                                  
 UK and Europe                                                                    (163)        (458)    
 North America                                                                    (209)        (406)    
 Structured gas purchase contracts                                                (36)         (91)     
 Structured gas sales contracts                                                   (78)         (120)    
 Structured power purchase contracts                                              54           (27)     
 Other                                                                            9            (13)     
 Net total                                                                        (423)        (1,115)  
                                                                                                        


15. Pensions

 (a) Summary of main defined benefit schemes                                                                                                                                       
 Name of scheme                                            Section                              Status                              Funding/tax status                  Country    
 Centrica Engineers Pension Scheme                         Final salary section                 Closed to new members               Funded/tax-registered               UK         
                                                           Career average section               Open to new members                 Funded/tax-registered               UK         
 Centrica Pension Plan                                     Management section                   Closed to new members               Funded/tax-registered               UK         
                                                           2008 section                         Closed to new members               Funded/tax-registered               UK         
 Centrica Pension Scheme                                   Final salary section                 Closed to new members               Funded/tax-registered               UK         
                                                           Career average section               Closed to new members               Funded/tax-registered               UK         
 Direct Energy Marketing Limited Pension Plan                                                   Closed to new members               Funded/tax-registered               Canada     
                                                                                                                                                                                   


The Centrica Pension Scheme also has a defined contribution section which is
open to new members. 

The Centrica Engineers Pension Scheme (CEPS), Centrica Pension Plan (CPP) and
Centrica Pension Scheme form the majority of the Group`s defined benefit
obligation and are referred to below as the `Registered Pension Schemes`. 

(b) 2011 curtailment gain

During 2011, the Company announced changes to the terms of the final salary
sections of the CEPS and the CPP with the changes taking effect from 1 January
2012 and 1 March 2012 respectively. Employees` annual increases in pensionable
pay will be capped to 2% and annual increases in respect of future years`
service for pensions in deferment will be the lower of CPI and 2.5%. Following
agreement of the changes in October 2011 (for CEPS) and December 2011 (for CPP)
with the trade unions and the trustees, the Company recognised exceptional
curtailment gains of £333 million, as disclosed in note 6. 

The final salary section of the Centrica Pension Scheme has an active membership
of approximately 50 employees. 

(c) Accounting assumptions

 The accounting assumptions for the Registered Pension Schemes have been given below. 
 Major assumptions used for the actuarial valuation                              
 31 December                                                   2012        2011  
                                                               %           %     
 Rate of increase in employee earnings:                                          
 Subject to cap                                                1.7         2.0   
 Other                                                         3.2         4.3   
 Rate of increase in pensions in payment                       3.2         3.3   
 Rate of increase in deferred pensions:                                          
 In line with CPI capped at 2.5%                               2.5         2.3   
 In line with RPI                                              3.2         3.3   
 Discount rate                                                 4.8         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:

                                                                                                       
                                               2012                          2011                      
                                               Male            Female        Male            Female    
 Life expectancy at age 65 for a member        Years           Years         Years           Years     
 Currently aged 65                             22.8            25.2          22.7            24.0      
 Currently aged 45                             24.6            27.2          24.5            25.4      
                                                                                                       


At 31 March 2012, the date of the most recent actuarial review, the schemes had
approximately 40,200 members and beneficiaries, of which approximately 4,000
were members of the defined contribution section of the Centrica Pension Scheme.
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 valuation of
the pension schemes.

                                                                                                                                
                                                                  2012                            2011                          
                                                                                   Indicative                      Indicative   
                                                                                   effect                          effect       
                                                                  Increase/        on scheme      Increase/        on scheme    
                                                                  decrease in      liabilities    decrease in      liabilities  
 Impact of changing material assumptions                          assumption       %              assumption       %            
 Rate of increase in employee earnings subject to cap             0.25%            +/-1           0.25%            +0/-1        
 Rate of increase in pensions in payment and deferred pensions    0.25%            +/-4           0.25%            +/-5         
 Discount rate                                                    0.25%            -/+5           0.25%            -/+6         
 Inflation assumption                                             0.25%            +/-4           0.25%            +/-5         
 Longevity assumption                                             1 year           +/-2           1 year           +/-2         
                                                                                                                                


The remaining disclosures in this note cover all of the Group`s defined benefit
schemes.

 (d) Amounts included in the Balance Sheet                                                              
 31 December                                                                  2012           2011       
                                                                              £m             £m         
 Fair value of plan assets                                                    5,133          4,670      
 Present value of defined benefit obligation                                  (5,045)        (4,340)    
 Net asset recognised in the Balance Sheet                                    88             330        
 Associated deferred tax liability recognised in the Balance Sheet            (19)           (81)       
 Net pension asset after deferred tax                                         69             249        
 Pension asset presented in the Balance Sheet as:                                                       
 Retirement benefit assets                                                    254            413        
 Retirement benefit liabilities                                               (166)          (83)       
 Net pension asset                                                            88             330        
                                                                                                        


 (e) Movement in the year                                                                                                       
                                                                  2012                            2011                          
                                                                  Pension              Pension       Pension           Pension  
                                                                  liabliities          assets        liabilties        assets   
                                                                  £m                   £m            £m                £m       
 1 January                                                        (4,340)              4,670         (4,574)           4,335    
 Items included in the Income Statement:                                                                                        
 Current service cost                                             (87)                 -             (118)             -        
 Gain/(loss) on curtailment                                       3                    -             (1)               -        
 Exceptional gains on curtailment                                 -                    -             333               -        
 Interest on scheme liabilities                                   (235)                -             (258)             -        
 Expected return on scheme assets                                 -                    280           -                 285      
 Items included in Other Comprehensive Income:                                                                                  
 Actuarial (loss)/gain                                            (449)                130           198               -        
 Exchange adjustments                                             2                    (2)           1                 (1)      
 Items included in the Cash Flow Statement:                                                                                     
 Employer contributions                                           -                    187           -                 130      
 Other movements:                                                                                                               
 Plan participants` contributions                                 (27)                 27            (29)              29       
 Benefits paid from schemes                                       159                  (159)         108               (108)    
 Transfers from provisions for other liabilities and charges      (71)                 -             -                 -        
 31 December                                                      (5,045)              5,133         (4,340)           4,670    
                                                                                                                                


In addition to current service cost on the Group`s defined benefit pension
schemes, the Group also charged £13 million (2011: £10 million) to operating
profit in respect of defined contribution pension schemes. 

(f) Pension schemes assets

The expected long-term rate of return and the market value of plan assets were:

                                                                                                                               
 31 December                                                      2012                                           2011          
                                                                  Expected                                       Expected      
                                                                  long-term                                      long-term     
                                                  Proportion      rate of                        Proportion      rate of       
                                                  of total        return                         of total        return per    
                                  Fair value      fair value      per annum      Fair value      fair value      annum         
                                  £m              %               %              £m              %               %             
 UK equities                      322             6.3             6.8            400             8.6             7.5           
 Non-UK equities                  1,580           30.8            7.3            1,337           28.6            7.7           
 Fixed-interest bonds             1,412           27.5            4.4            1,370           29.3            5.3           
 Inflation-linked assets (i)      1,027           20.0            4.1            1,067           22.8            3.9           
 High-yield debt                  324             6.3             5.3            292             6.3             6.3           
 Diversified asset funds          246             4.8             6.8            -               -               -             
 Property                         210             4.1             6.8            168             3.6             6.8           
 Cash pending investment          12              0.2             5.9            36              0.8             4.6           
                                  5,133           100.0           5.7            4,670           100.0           6.0           
                                                                                                                               


 (i) Consists of government bonds and other assets providing inflation-linked revenue.  
                                                                                        


(g) Pension scheme contributions

The UK Registered Pension Schemes were subject to their triennial valuation
carried out by Towers Watson, the schemes` independent actuaries, at 31 March
2012. The results of this valuation were approved by the trustees of the schemes
on 11 December 2012. Based on the valuation, the Group and the trustees agreed a
revised schedule for deficit payments consisting of an amount of £37 million
paid in the year to 31 December 2012 and £77 million per annum from 2013 to
2016. This payment profile replaces the deficit payments as agreed to in the
2009 triennial valuation. A continuing charge over the Humber power station
provides additional security for the trustees. 

On 31 December 2012 the Group and the trustees also agreed to partially fund the
deficit payments using an asset-backed contribution arrangement. Under the
arrangement, certain loans to UK Group companies were transferred to a Scottish
Limited Partnership established by the Group. The Group made a special
contribution to the UK Registered Pension Schemes of £84 million; on the same
date the schemes used this contribution to acquire an interest in the
partnership for its fair value of £84 million. The schemes` partnership
interests entitle them to a distribution from the income of the partnership of
£22 million per annum for 4 years. The partnership is controlled by Centrica and
its results are consolidated by the Group. As the trustees` interest in the
partnership does not meet the definition of a plan asset under IAS 19, it is not
reflected in the Balance Sheet. Distributions from the partnership to the
schemes will be recognised as scheme assets in the future as they occur. 

16. Business combinations and asset purchases

Principal acquisitions made during the year are described below. 

Business combinations

The business combinations are immaterial in aggregate to the Group`s
consolidated Financial Statements. The fair values are provisional unless stated
otherwise. 

Carrot Creek

On 10 January 2012, the Group acquired control of a business comprising a
portfolio of interests in a number of gas assets located in west central
Alberta, Canada from Encana Corporation for CA$59 million (£37 million) in cash
and Direct Energy`s existing Entice asset with a fair value of CA$48 million
(£30 million). No goodwill arose on the acquisition. The acquisition allows the
Group to grow its North American Upstream gas business. The acquisition is
included in the Direct Energy - Upstream and wholesale energy segment. 

Home Warranty of America

On 1 March 2012, the Group acquired 100% of the shares of Home Warranty Holding
Corporation as well as the assets of HWOA LLC (`HWA`) for total cash
consideration of $52 million (£32 million) including $10 million (£6 million) of
deferred consideration. Goodwill of $47 million (£29 million) arose on the
acquisition, of which 40% is expected to be deductible for tax purposes. HWA is
a US home warranty protection plan company. The acquisition allows Direct Energy
to sell home protection plans nationwide and provides further growth and
integration opportunities. The acquisition is included in the Direct Energy -
Residential and business services segment. 

Energetix Inc and NYSEG Solutions Inc

On 22 August 2012, the Group acquired 100% of the shares of New York based
energy retailers Energetix Inc. and NYSEG Solutions Inc. for total cash
consideration of $121 million (£77 million) including $5 million (£3 million) of
deferred consideration. Goodwill of $43 million (£27 million) arose on the
acquisition, of which 100% is expected to be deductible for tax purposes. This
acquisition will further strengthen Direct Energy`s position as a leading
competitive energy retailer in the US Northeast, increasing the number of
residential and small commercial customer accounts by approximately 245,000. The
acquisition is included in the Direct Energy - Residential energy supply and
Business energy supply segments. 

Goodwill recognised on the above acquisitions is attributable to enhanced
geographical presence, cost savings, synergies and growth opportunities. 

2011 Business Combinations - fair value updates

During the year, there have been no significant updates to the fair value
entries posted in relation to acquisitions which occurred in 2011. 

The net impact of fair value updates on goodwill is an increase of £18 million. 

Asset purchases

Statoil asset acquisition

On 30 April 2012, the Group completed its acquisition of certain oil and gas
production and development assets in the Norwegian North Sea from Statoil for
total cash consideration of £770 million with an additional payment of up to
$100 million (£62 million) contingent on future production performance. In
addition, a tax liability of £144 million was assumed which is included in the
purchase cost. 

ConocoPhillips asset acquisition

On 30 April 2012, the Group completed its acquisition of certain non-operated
interests in the gas and oil producing Statfjord field and associated satellite
fields from ConocoPhillips for total cash consideration of £141 million. As part
of this transaction, a pre-existing contract with ConocoPhillips with a fair
value of £20 million (asset) was novated so that it is now entirely between
Group companies. Accordingly, the value of this contract forms part of the asset
acquisition cost. In addition, a tax liability of £25 million was assumed which
is included in the purchase cost. 

Total asset acquisition

During the year, the Group completed its acquisition of a portfolio of
non-operated interests in producing oil and gas assets in the UK North Sea from
Total for total cash consideration of £133 million. The acquisition of the
interests was executed through separate purchase agreements which completed on
11 May, 1 August and 23 August 2012. Certain assets in the original portfolio,
when the deal was announced in February 2012, were not acquired since
pre-emption rights in the respective fields were exercised. 

These asset purchases will help to deliver UK energy security and further expand
the Group`s upstream business. The acquisitions are included within the Centrica
Energy - Gas segment. 

17. Disposals, discontinued operations and disposal groups held for sale

On 30 April 2012, the Group disposed of a 50% interest in its Round 3 wind farm,
which resulted in a profit on disposal of £43 million. 

On 1 June 2011, the Group completed its planned disposal of its European segment
with the sale of the trade and assets of Oxxio B.V. for a total consideration of
£111 million, which resulted in a loss on disposal of £56 million. 

18. Commitments and contingencies

(a) Commitments

The Group procures commodities through a mixture of production from gas fields,
power stations, wind farms and procurement contracts. Procurement contracts
include short-term forward market purchases of gas and electricity at fixed and
floating prices. They also include gas and electricity contracts indexed to
market prices and long-term gas contracts with non-gas indexation. The
commitments in relation to commodity purchase contracts disclosed overleaf are
stated net of amounts receivable under commodity sales contracts, where there is
a right of set-off with the counterparty. 

The total volume of gas to be taken under certain long-term structured contracts
depends on a number of factors, including the actual reserves of gas that are
eventually determined to be extractable on an economic basis. The commitments
disclosed overleaf are based on the minimum quantities of gas that the Group is
contracted to buy at estimated future prices.

                                                                                                           
 31 December                                                                         2012          2011    
                                                                                     £m            £m      
 Commitments in relation to the acquisition of property, plant and equipment:                              
 Acquisition of Statoil oil and gas assets                                           -             983     
 Development of Norwegian oil and gas assets                                         283           -       
 Development of Cygnus gas field                                                     88            -       
 Development of York gas field                                                       -             82      
 Other capital expenditure                                                           21            87      
 Commitments in relation to the acquisition of intangible assets:                                          
 Renewable obligation certificates to be purchased from joint ventures (i)           1,376         1,377   
 Renewable obligation certificates to be purchased from other parties                784           774     
 EUAs and CERs                                                                       42            44      
 Other intangible assets (iv)                                                        105           193     
 Other commitments:                                                                                        
 Commodity purchase contracts (ii)                                                   51,933        58,311  
 LNG capacity                                                                        844           844     
 Transportation capacity                                                             936           969     
 Outsourcing of services                                                             277           348     
 Commitments to invest in joint ventures                                             174           234     
 Other long term commitments                                                         562           777     
 Operating lease commitments:                                                                              
 Future minimum lease payments under non-cancellable operating leases (iii)          974           950     
           (iv)                                                                                            


 (i) Renewable obligation certificates are purchased from several joint ventures which produce power from wind energy under long term offtake agreements (up to 15 years). The commitments disclosed above are the gross contractual commitments and do not take into account the Group`s economic interest in the joint venture.                                                                                             
 (ii) At 31 December the maturity analysis for commodity purchase contracts was: <1 year £9.2 billion, 1-2 years £7.2 billion, 2-3 years £5.9 billion, 3-4 years £5.1 billion, 4-5 years £3.0 billion and >5 years £21.5 billion (2011: <1 year £10.3 billion, 1-2 years £8.0 billion, 2-3 years £6.3 billion, 3-4 years £5.6 billion, 4-5 years £4.7 billion and >5 years £23.4 billion).                                    
 (iii) At 31 December the maturity analysis for the total minimum lease payments under non-cancellable operating leases was: <1 year £222 million, 1-2 years £98 million, 2-3 years £82 million, 3-4 years £64 million, 4-5 years £54 million and >5 years £454 million (2011: <1 year £157 million, 1-2 years £130 million, 2-3 years £88 million, 3-4 years £65 million, 4-5 years £54 million and >5 years £456 million).  
 (iv) Included within future minimum lease payments and other intangible assets are commitments of £67 million (2011: £122 million) relating to exploration activity.                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                              


 Lease payments recognised as an expense in the year were as follows:                            
 Year ended 31 December                                                      2012        2011    
                                                                             £m          £m      
 Minimum lease payments (net of sub-lease receipts)                          125         126     
 Contingent rents - renewables (i)                                           130         132     


 (i) The Group has entered into long-term arrangements with renewable providers to purchase physical power, renewable obligation certificates and levy exemption certificates from renewable sources. Payments made under these contracts are contingent upon actual production and so there is no commitment to a minimum lease payment (2011: nil). Payments made for physical power are charged to the Income Statement as incurred and disclosed as contingent rents.  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                           


(b) Contingent liabilities

Under the Carbon Emissions Reduction Target (`CERT`) scheme, British Gas was
required to meet a variety of carbon emissions reduction targets by 31 December
2012. Ofgem has indicated that mitigating actions undertaken after this date
will also be taken into account when assessing delivery. Accordingly the Group
believes it will have fulfilled the CERT requirements. Ofgem is still to
formally conclude on the Group`s compliance and has the option of enforcement
action if they consider the targets have not been met. As the outcome of the
Ofgem review cannot be predicted with any degree of certainty, it is not
possible to accurately assess the impact of enforcement action (if any). 

There are no other material contingent liabilities. 

19. Events after the balance sheet date

Dividends

The Directors propose a final dividend of 11.78 pence per ordinary share
(totalling £602 million) for the year ended 31 December 2012. 

The dividend will be submitted for formal approval at the Annual General Meeting
to be held on 13 May 2013 and, subject to approval, will be paid on 12 June 2013
to those shareholders registered on 26 April 2013. 

Nuclear new build and share repurchase programme

As part of the 2009 transaction to acquire a 20% interest in British Energy, EDF
Energy and the Group formed an 80/20 arrangement to undertake pre-development
activities for a nuclear new build programme, with the intention of
constructing, operating and decommissioning four European Pressurised Nuclear
Reactors. On 4 February 2013, the Group announced its decision not to proceed
with this nuclear new build investment. Accordingly, the Group has recorded an
impairment of £231 million at the year end. This amount includes the carrying
value of its investment in NNB Holding Company Limited as well as value
attributed to nuclear new build in the British Energy acquisition. 

No further impairments are expected as a result of this decision and the Group`s
20% interest in the existing nuclear power stations in the UK remains
unaffected. 

As a result of this decision, the Group also announced on 4 February 2013 its
intention to launch a £500 million share repurchase programme to return surplus
capital to shareholders, to be conducted over 12 months. 

20. Seasonality of operations

Certain activities of the Group are affected by weather and temperature
conditions. As a result of this, amounts reported for the six months ended 31
December 2012 may not be indicative of the amounts that would be reported for a
full year due to seasonal fluctuations in customer demand for gas, electricity
and services, the impact of weather on demand and commodity prices, market
changes in commodity prices and changes in retail tariffs. 

Customer demand for gas in the UK and North America is driven primarily by
heating load and is generally higher in the winter than in the summer, and
higher from January to June than from July to December. Customer demand for
electricity in the UK generally follows a similar pattern to gas, but is more
stable. Customer demand for electricity in North America is also more stable
than gas but is driven by heating load in the winter and cooling load in the
summer. Generally demand for electricity in North America is higher in the
winter and summer than it is in the spring and autumn, and higher from July to
December than it is from January to June. 

Customer demand for home services in the UK is generally higher in the winter
than it is in the summer, and higher in the earlier part of the winter as that
is typically when heating systems tend to break down most, so that customer
demand from July to December is higher than from January to June. Customer
demand for home services in North America follows a similar pattern, but is also
higher in the summer as a result of residential new construction in the US and
the servicing of cooling systems. 

Gas production volumes in the UK are generally higher in the winter when gas
prices are higher. Gas production volumes are generally higher from January to
June than they are from July to December as outages are generally planned for
the summer months when gas demand and prices are lowest. Gas production volumes
in North America are generally not seasonal. 

Power generation volumes are dependent on spark spread prices, which is the
difference between the price of electricity and the price of gas multiplied by a
conversion rate and, as a result, are not as seasonal as gas production volumes
in the UK, as wholesale prices for both gas and electricity are generally higher
in the winter than they are in the summer. Power generation volumes in North
America are generally higher in the summer than in the winter and can be higher
or lower from January to June compared to July to December. 

The impact of seasonality on customer demand and wholesale prices has a direct
effect on the Group`s financial performance and cash flows.

 21. Group Income Statement for the six months ended 31 December                                                                                                                                         
                                                                                                                        2012                                    2011                                     
                                                                                              Exceptional                                                       Exceptional                              
                                                                          Business            items and certain         Results for         Business            items and certain         Results for    
                                                                          performance         re-measurements           the period          performance         re-measurements           the period     
                                                            Notes         £m                  £m                        £m                  £m                  £m                        £m             
                                                                                                                                                                                                         
 Group revenue                                              23(a)         11,965              -                         11,965              11,315              -                         11,315         
 Cost of sales before exceptional items                                                                                                                                                                  
 and certain re-measurements                                              (9,313)             -                         (9,313)             (8,944)             -                         (8,944)        
 Exceptional items                                          24(a)         -                   (89)                      (89)                -                   (221)                     (221)          
 Re-measurement of energy contracts                         24(b)         -                   90                        90                  -                   (598)                     (598)          
 Cost of sales                                                            (9,313)             1                         (9,312)             (8,944)             (819)                     (9,763)        
 Gross profit                                                             2,652               1                         2,653               2,371               (819)                     1,552          
 Operating costs before exceptional items                                 (1,518)             -                         (1,518)             (1,353)             -                         (1,353)        
 Exceptional items                                          24(a)         -                   (355)                     (355)               -                   (110)                     (110)          
 Operating costs                                                          (1,518)             (355)                     (1,873)             (1,353)             (110)                     (1,463)        
 Share of profits in joint ventures and associates,                                                                                                                                                      
 net of interest and taxation                                             82                  (4)                       78                  46                  25                        71             
 Group operating profit                                     23(b)         1,216               (358)                     858                 1,064               (904)                     160            
 Interest income                                                          120                 -                         120                 127                 -                         127            
 Interest expense                                                         (215)               -                         (215)               (195)               -                         (195)          
 Net interest expense                                                     (95)                -                         (95)                (68)                -                         (68)           
 Profit before taxation                                                   1,121               (358)                     763                 996                 (904)                     92             
 Taxation on profit                                                       (508)               28                        (480)               (369)               230                       (139)          
 Profit/(loss) for the period                                             613                 (330)                     283                 627                 (674)                     (47)           
 Earnings/(loss) per ordinary share                         Notes                                                                                                                                        
 Basic                                                      25                                                          5.5                                                               (0.9)          
 Diluted                                                    25                                                          5.4                                                               (0.9)          
                                                                                                                                                                                                         


 22. Group Cash Flow Statement for the six months ended 31 December                                                   
                                                                                              2012           2011     
                                                                                              £m             £m       
 Cash generated from operations (note 26)                                                     2,125          1,767    
 Income taxes paid                                                                            (151)          (329)    
 Petroleum revenue tax paid                                                                   (90)           (110)    
 Interest received                                                                            4              7        
 Interest paid                                                                                (1)            (3)      
 Payments relating to exceptional charges                                                     (99)           (63)     
 Net cash flow from operating activities                                                      1,788          1,269    
 Purchase of businesses net of cash and cash equivalents acquired                             (81)           (280)    
 Sale of businesses net of cash and cash equivalents disposed of                              3              -        
 Purchase of intangible assets                                                                (281)          (175)    
 Purchase of property, plant and equipment                                                    (686)          (463)    
 Disposal of property, plant and equipment and intangible assets                              9              3        
 Investments in joint ventures and associates                                                 (171)          (191)    
 Dividends received from joint ventures and associates                                        74             84       
 Repayments of loans to, and disposal of investments in, joint ventures and associates        5              3        
 Interest received                                                                            12             3        
 Net sale of securities                                                                       1              74       
 Net cash flow from investing activities                                                      (1,115)        (942)    
 Issue of ordinary share capital                                                              10             6        
 Purchase of own shares                                                                       (2)            (2)      
 Financing interest received                                                                  46             9        
 Financing interest paid                                                                      (182)          (120)    
 Cash inflow from additional debt                                                             179            114      
 Cash outflow from payment of capital element of finance leases                               (17)           (12)     
 Cash outflow from repayment of other debt                                                    (456)          (11)     
 Cash outflow from settlement of derivative contracts related to borrowings                   (14)           -        
 Net cash flow from (reduction)/increase in debt                                              (308)          91       
 Realised net foreign exchange loss on cash settlement of derivative contracts                (18)           (23)     
 Equity dividends paid                                                                        (244)          (222)    
 Net cash flow from financing activities                                                      (698)          (261)    
 Net (decrease)/increase in cash and cash equivalents                                         (25)           66       
 Cash and cash equivalents at beginning of period                                             954            418      
 Effect of foreign exchange rate changes                                                      2              (5)      
 Cash and cash equivalents at 31 December                                                     931            479      
 Included in the following lines of the Balance Sheet:                                                                
 Cash and cash equivalents                                                                    931            518      
 Bank overdrafts, loans and other borrowings                                                  -              (39)     
                                                                                              931            479      
                                                                                                                      


23. Segmental analysis for the six months ended 31 December

The Group`s results are discussed in the Operating Review (page 12 to 24). The
Group`s segmental results are as follows:

 (a) Revenue                                                                                                                    
                                                                       2012                                   2011              
                                                                                                              (restated)(ii)    
                                             Gross      Less inter-                 Gross      Less inter-                      
                                             segment    segment        Group        segment    segment        Group             
                                             revenue    revenue (i)    revenue      revenue    revenue (i)    revenue           
                                             £m         £m             £m           £m         £m             £m                
                                                                                                                                
 Residential energy supply (ii)              4,314      -              4,314        3,828      -              3,828             
 Residential services (ii)                   863        (75)           788          833        (52)           781               
 Business energy supply and services (ii)    1,473      (5)            1,468        1,388      (4)            1,384             
 British Gas                                 6,650      (80)           6,570        6,049      (56)           5,993             
                                                                                                                                
 Gas                                         1,979      (104)          1,875        1,814      (187)          1,627             
 Power                                       597        (104)          493          822        (93)           729               
 Centrica Energy                             2,576      (208)          2,368        2,636      (280)          2,356             
                                                                                                                                
 Centrica Storage                            111        (23)           88           87         (11)           76                
                                                                                                                                
 Residential energy supply                   1,147      -              1,147        1,126      -              1,126             
 Business energy supply                      1,394      -              1,394        1,372      -              1,372             
 Residential and business services           279        -              279          271        -              271               
 Upstream and wholesale energy               276        (157)          119          252        (131)          121               
 Direct Energy                               3,096      (157)          2,939        3,021      (131)          2,890             
                                             12,433     (468)          11,965       11,793     (478)          11,315            


 (i) Inter-segment revenue is subject to period on period fluctuations principally due to the change in the mix of internal and external energy sales.                                                                                                                                                                                                   
 (ii) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
                                                                                                                                                                                                                                                                                                                                                         


 (b) Operating profit                                                                                                     
                                                                                                  2012     2011           
                                                                                                           (restated)(i)  
                                                                                                  £m       £m             
                                                                                                                          
 Residential energy supply (i)                                                                    261      263            
 Residential services (i)                                                                         187      159            
 Business energy supply and services (i)                                                          82       65             
 British Gas                                                                                      530      487            
                                                                                                                          
 Gas (ii)                                                                                         411      355            
 Power (ii)                                                                                       137      137            
 Centrica Energy                                                                                  548      492            
                                                                                                                          
 Centrica Storage                                                                                 53       36             
                                                                                                                          
 Residential energy supply                                                                        55       56             
 Business energy supply                                                                           69       52             
 Residential and business services                                                                22       19             
 Upstream and wholesale energy                                                                    19       11             
 Direct Energy                                                                                    165      138            
 Adjusted operating profit - segment operating profit before exceptional items, certain           1,296    1,153          
 re-measurements and impact of fair value uplifts from Strategic Investments (iii)                                        
 Share of joint ventures/associates` interest and taxation                                        (36)     (41)           
 Depreciation of fair value uplifts to property, plant and equipment - Venture (ii)               (30)     (27)           
 Depreciation of fair value uplifts to property, plant and equipment (net of taxation) -          (14)     (21)           
 associates - British Energy (ii)                                                                                         
                                                                                                  1,216    1,064          
 Exceptional items (note 24)                                                                      (444)    (331)          
 Certain re-measurements included within gross profit (note 24)                                   90       (598)          
 Certain re-measurements of associates` energy contracts (net of taxation) (note 24)              (4)      25             
 Operating profit after exceptional items and certain re-measurements                             858      160            


 (i) To align with management responsibilities and reporting, the British Gas Community Energy and British Gas New Energy businesses have been reallocated from the Residential energy supply segment to the Business energy supply and services and Residential services segments respectively. The 2011 comparatives have been restated accordingly.  
 (ii) See note 3 and 10 for an explanation of the depreciation on fair value uplifts to PP&E on acquiring Strategic Investments.                                                                                                                                                                                                                        
 (iii) Includes results of equity-accounted interests before interest and taxation.                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                        


24. Exceptional items and certain re-measurements for the six months ended 31
December

 (a) Exceptional items                                                                                                         
                                                                                                           2012         2011   
                                                                                                           £m           £m     
 Provision for Direct Energy wind power purchase agreements (i)                                            (89)         -      
 Provision for European onerous capacity contracts                                                         -            (221)  
 Exceptional items included within gross profit                                                            (89)         (221)  
 Impairment of UK generation assets                                                                        -            (226)  
 British Gas contract migration                                                                            -            (63)   
 Restructuring charges (ii)                                                                                (124)        (154)  
 Pension curtailment (note 15(b))                                                                          -            333    
 Impairment of investment in nuclear new build (notes 13 and 19)                                           (231)        -      
                                                                                                           (355)        (110)  
 Exceptional items included within Group operating profit                                                  (444)        (331)  
 Taxation on exceptional items                                                                             69           69     
 Effect of change in upstream UK tax rates (note 8)                                                        (40)         -      
 Total exceptional items after taxation                                                                    (415)        (262)  
                                                                                                                               
 (b) Certain re-measurements                                                                                                   
                                                                                                           2012         2011   
                                                                                                           £m           £m     
 Certain re-measurements recognised in relation to energy contracts:                                                           
 Net gains arising on delivery of contracts (iii)                                                          254          90     
 Net losses arising on market price movements and new contracts (iv)                                       (142)        (685)  
 Net losses arising on positions in relation to cross-border transportation or capacity contracts          (22)         (3)    
 Net re-measurements included within gross profit                                                          90           (598)  
 Net (losses)/gains arising on re-measurement of associates` energy contracts (net of taxation) (v)        (4)          25     
 Net re-measurements included within Group operating profit                                                86           (573)  
 Taxation on certain re-measurements                                                                       (1)          161    
 Total re-measurements after taxation                                                                      85           (412)  


 (i) An exceptional charge has been recognised in relation to wind power purchase agreements in Direct Energy to reflect the fair value of the obligation to purchase power above its net realisable value.                                                                                                                                              
 (ii) As a result of a Group-wide cost reduction programme, restructuring charges have been recorded including staff redundancies, asset impairments and onerous lease charges. See Business Review for more details.                                                                                                                                    
 (iii) As energy is delivered or consumed from previously contracted positions the related fair value recognised in the opening Balance Sheet (representing the discounted difference between forward energy prices at the opening balance sheet date and the contract price of energy to be delivered) is charged or credited to the Income Statement.  
 (iv) Represents fair value losses arising from the change in fair value of future contracted sales and purchase contracts as a result of changes in forward energy prices between reporting dates (or date of inception and the reporting date, where later).                                                                                           
 (v) Includes fair value unwinds relating to the recognition of energy procurement contracts and energy sales contracts at their acquisition-date fair values.                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                         


25. Earnings per ordinary share for the six months ended 31 December

                                                                                                                               
                                                                                         2012                     2011         
                                                                                         Pence per                Pence per    
                                                                                         ordinary                 ordinary     
                                                                               £m        share          £m        share        
 Earnings/(loss) - basic                                                       283       5.5            (47)      (0.9)        
 Net exceptional items after taxation (note 24)                                415       7.9            262       5.1          
 Certain re-measurement (gains)/losses after taxation (note 24)                (85)      (1.6)          412       8.0          
 Depreciation of fair value uplifts to property, plant and equipment from                                                      
 Strategic Investments, after taxation                                         26        0.5            33        0.6          
 Earnings - adjusted basic                                                     639       12.3           660       12.8         
                                                                                                                               
 Earnings/(loss) - diluted                                                     283       5.4            (47)      (0.9)        
                                                                                                                               
 Earnings - adjusted diluted                                                   639       12.3           660       12.7         
                                                                                                                               


26. Notes to the Group Cash Flow Statement for the six months ended 31 December

 Reconciliation of Group operating profit to cash generated                                                         
                                                                                              2012         2011     
                                                                                              £m           £m       
 Group operating profit including share of result of joint ventures and associates            858          160      
 Less share of profit of joint ventures and associates                                        (78)         (71)     
 Group operating profit before share of results of joint ventures and associates              780          89       
 Add back/(deduct):                                                                                                 
 Amortisation, write-down and impairment of intangible assets                                 225          68       
 Depreciation, write-down and impairment of property, plant and equipment                     564          611      
 Impairment of associate                                                                      231          -        
 Recycling of write-down of available-for-sale financial assets                               -            23       
 Loss on sale of businesses, property, plant and equipment and other intangible assets        5            8        
 Increase in provisions                                                                       153          401      
 Defined benefit pension curtailment gain                                                     (3)          (332)    
 Defined benefit pension service cost                                                         42           56       
 Defined benefit pension contributions                                                        (84)         (70)     
 Employee share scheme costs                                                                  20           16       
 Re-measurement of energy contracts (i)                                                       (72)         539      
 Operating cash flows before movements in working capital                                     1,861        1,409    
 (Increase)/decrease in inventories                                                           (31)         58       
 Increase in trade and other receivables (ii)                                                 (337)        (138)    
 Increase in trade and other payables (ii)                                                    632          438      
 Cash generated from operations                                                               2,125        1,767    


 (i) Adds back unrealised losses arising from re-measurement of energy contracts.                      
 (ii) Includes net outflow of £18 million of cash collateral in 2012 (2011: outflow of £149 million).  
                                                                                                       


GAS AND LIQUIDS RESERVES (UNAUDITED)

The Group`s estimates of reserves of gas and liquids are reviewed as part of the
half-year and 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 DeGoyler and MacNaughton 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, North America and
Trinidad and Tobago. 

The principal fields in Centrica Energy are the Kvitebjorn, South Morecambe,
Cygnus, Statfjord, Valemon, Chiswick, NCMA Poinsettia, York, Maria, Rhyl and
Grove fields. The principal field in Centrica Storage is the Rough field. The
European and Trinidad and Tobago 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. 

The principal fields in Direct Energy are the Foothills, Medicine Hat, Carrot
Creek and Central Alberta fields located in the province of Alberta, Canada. The
Direct Energy reserves estimates have been evaluated in accordance with the
Canadian Oil and Gas Evaluation Handbook (COGEH) reserves definitions and are
consistent with the guidelines and definitions of the Society of Petroleum
Engineers and the World Petroleum Council.

                                                                                                                                       
                                                                        Trinidad            Centrica    Centrica    Direct             
 Estimated net 2P reserves of gas (billion cubic feet)        Europe    and Tobago (iii)    Energy      Storage     Energy    Total    
 1 January 2012                                               1,858     161                 2,019       182         603       2,804    
 Revisions of previous estimates                              (73)      (2)                 (75)        -           (10)      (85)     
 Purchases/(disposals) of reserves in place (i)               632       -                   632         -           37        669      
 Extensions, discoveries and other additions (ii)             39        -                   39          -           5         44       
 Production (iv)                                              (220)     (19)                (239)       -           (54)      (293)    
 31 December 2012                                             2,236     140                 2,376       182         581       3,139    


                                                                                                                                        
                                                                         Trinidad            Centrica    Centrica    Direct             
 Estimated net 2P reserves of liquids (million barrels)        Europe    and Tobago (iii)    Energy      Storage     Energy    Total    
 1 January 2012                                                73        -                   73          -           8         81       
 Revisions of previous estimates                               6         -                   6           -           2         8        
 Purchases/(disposals) of reserves in place (i)                55        -                   55          -           2         57       
 Extensions, discoveries and other additions (ii)              10        -                   10          -           -         10       
 Production (iv)                                               (15)      -                   (15)        -           (1)       (16)     
 31 December 2012                                              129       -                   129         -           11        140      


                                                                                                                                           
                                                                            Trinidad            Centrica    Centrica    Direct             
 Estimated net 2P reserves (million barrels of oil equivalent)    Europe    and Tobago (iii)    Energy      Storage     Energy    Total    
 31 December 2012 (v)                                             502       23                  525         30          108       663      


 (i) Reflects the acquisition of additional equity in the Statfjord, Seymour, Armada, Skirne, Vale, Heimdal and Maria fields and the acquisition of equity in the Alba, Kvitebjorn, and Valemon fields in Centrica Energy and the Carrot Creek field in Direct Energy.  
 (ii) Recognition of reserves associated with the Rhyl and Maria fields in Centrica Energy.                                                                                                                                                                             
 (iii) The Trinidad and Tobago reserves are subject to a production sharing contract and accordingly have been stated on an entitlement basis (including tax barrels).                                                                                                  
 (iv) Represents total gas and oil produced from the Group`s reserves.                                                                                                                                                                                                  
 (v) Includes the total of estimated gas and liquid reserves at 31 December 2012 in million barrels of oil equivalent.                                                                                                                                                  
                                                                                                                                                                                                                                                                        


Liquids reserves include oil, condensate and natural gas liquids. 

DISCLAIMERS

This announcement does not constitute an invitation to underwrite, subscribe
for, or otherwise acquire or dispose of any Centrica shares or other securities.


This announcement contains certain forward-looking statements with respect to
the financial condition, results, operations and businesses of Centrica plc.
These statements and forecasts involve risk and uncertainty because they relate
to events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking statements
and forecasts. 

Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser. 

FOR FURTHER INFORMATION

Centrica will hold its 2012 Preliminary Results presentation for analysts and
institutional investors at 9.30am followed by a strategic update presentation at
11am on Wednesday 27 February 2013. There will be a live audio webcast of the
presentation and slides from 9.30am at www.centrica.com/investors. All times UK
(GMT). 

A live audio broadcast of the presentation will be available by dialling in
using the following number: + 44 20 3059 8125

The call title is "Centrica plc Preliminary Results 2012 announcement and
strategic update". 

An archived webcast and full transcript of the presentation and the question and
answer session will be available on the website on Friday 1 March.

 ENQUIRIES                                                                                                                                                   
 Investors and Analysts:                                              Andrew Page                                          Director of Investor Relations    
                                                                      Telephone:                                           01753 494 900                     
                                                                      email:                                               ir@centrica.com                   
                                                                                                                                                             
 Media:                                                               Centrica Media Relations                                                               
                                                                      Telephone:                                           0800 107 7014                     
                                                                      email:                                               media@centrica.com                
                                                                                                                                                             
                                                                                                                                                             
 FINANCIAL CALENDAR                                                                                                                                          
 Ex-dividend date for 2012 final dividend                             24 April 2013                                                                          
 Record date for 2012 final dividend                                  26 April 2013                                                                          
 2012 final dividend payment date                                     12 June 2013                                                                           
 Interim Management Statement                                         13 May 2013                                                                            
 Annual General Meeting                                               13 May 2013                                                                            
 2013 Interim results announcement                                    31 July 2013                                                                           
                                                                                                                                                             
                                                                                                                                                             
 REGISTERED OFFICE                                                                                                                                           
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Centrica PLC 

Copyright Business Wire 2013

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