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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Centrica Plc | LSE:CNA | London | Ordinary Share | GB00B033F229 | ORD 6 14/81P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.55 | 1.22% | 128.55 | 129.00 | 129.10 | 131.00 | 126.90 | 127.90 | 13,734,430 | 16:35:21 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Electric Services | 26.46B | 3.93B | 0.7326 | 152.13 | 597.72B |
TIDMCNA
RNS Number : 9317J
Centrica PLC
05 April 2018
5 April 2018
Centrica plc (the Company)
Annual Report and Accounts 2017
Further to the release of the Company's preliminary results announcement on 22 February 2018, the Company announces that it has today published its Annual Report and Accounts 2017 (Annual Report 2017).
The Company also announces that today, 5 April 2018, it posted to shareholders the Notice of Annual General Meeting to be held at 2.00pm on Monday 14 May 2018 at the QEII Centre, Broad Sanctuary, Westminster, London SW1P 3EE.
In accordance with Listing Rule 9.6.1, copies of the following documents have been submitted to the UK Listing Authority and will shortly be available for inspection from the National Storage Mechanism at www.morningstar.co.uk/uk/NSM:
- Annual Report 2017; - Annual Review 2017; - Notice of Annual General Meeting 2018; and - Proxy Form for the 2018 Annual General Meeting.
The above documents are also available at www.centrica.com/ar17 and www.centrica.com/agm18
This information should be read in conjunction with the Company's preliminary results announcement. A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements, were included in the preliminary results announcement released on 22 February 2018. That information, together with the information set out below, which is extracted from the Annual Report 2017, is provided in accordance with the Disclosure and Transparency Rule (DTR) 6.3.5R, which requires it to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report 2017. Page and note references in the text below refer to page numbers and note numbers in the Annual Report 2017.
Our Principal Risks and Uncertainties
Understanding those Risks that impact our Strategy
The fundamental trends outlined in our strategy on pages 10 and 11, including the decentralisation of energy systems, shift of power to consumers and increasing digitisation, present both opportunities and threats. Identifying and managing these risks is critical to delivering our strategy. The Group Priorities, as laid out below, are the lens through which we assess our risks and drive discussions around the level of risk we need to take and the requirements of our System of Risk Management and Internal Control.
Strengthening our System of Risk Management and Internal Control
Following our Strategic Review in 2015, we refreshed our approach to risk
management. In 2017 we focused on embedding this improved process aligned with the new operating model to ensure it makes a positive contribution to effective decision-making and business growth, while ensuring we successfully manage risks. In particular, as we have moved into new geographies, we have sought to ensure we are addressing risks associated with operating in those jurisdictions.
Each business unit and Group function is responsible for identifying and assessing its significant risks within the context of our Principal Risks. For each risk, they consider both the potential impact to the Group and the likelihood of occurrence on an inherent and residual basis. The Executive Committee then considers these perspectives alongside broader external and internal factors to create a Group-wide set of prioritised risks.
-- We categorise our risks as: - Risk Requiring Standards (RRS):
Risk with negative impacts that we control through Standards and Management Systems, for example process safety or data security.
- Risk Requiring Judgement (RRJ): Risk that we choose to take in order to execute our business strategy, for example new products or business improvement opportunities.
- External Risk: Risk that requires a focus on scenario and contingency planning with little or no ability to reduce likelihood, for example extreme weather or geopolitical turbulence.
On an annual basis, we evaluate our System of Risk Management and Internal Control, learning from any control incidents that have arisen, to ensure we are mitigating risks in line with our risk appetite.
Determining the risk we would like to take
The Board approves statements of risk appetite associated with each Group Priority. These statements provide a framework to guide our risk mitigation activities and to drive the appropriate level of risk taking:
-- Safety, compliance and conduct: Our appetite for taking risk in this area is as low as reasonably practicable in relation to: ensuring the safety of our people, customers and communities; conducting our business operations in compliance with laws and regulations; and managing our financial reporting risks.
-- Customer satisfaction and operational excellence: We have a moderate risk appetite to allow us to pursue innovative opportunities. We are driven to satisfy the changing needs of our customers.
-- Cash flow growth and strategic momentum: We have a moderate to high risk appetite for seeking opportunities to deliver cash flow growth and our target return on capital.
-- Cost efficiency and simplification: We have a low risk appetite for failing to implement and manage improvements sustainably and in a rigorous and systematic way.
-- People and building capability: We accept a moderate level of risk in finding ways to attract, develop and reward people with the diverse capabilities needed to deliver our ambitions. However, we have a low risk appetite for rewarding and retaining people who fail to demonstrate our Values.
Evaluating Risks through our Enterprise Risk Framework
Our Enterprise Risk Framework is designed to enable us to identify, evaluate and mitigate our risks appropriately. It comprises of six steps:
1. Identify -- Identify significant risks to achieving business unit and/or function objectives 2. Assess & Analyse -- Assess inherent impact and likelihood using Centrica risk assessment matrix -- Identify risk type (RRS, RRJ or External Risk) and determine target risk rating -- Identify mitigating activity and key risk indicators and assess current risk exposure 3. Design & Implement Controls
-- Design and implement controls and actions to mitigate the potential impact and likelihood of risks
4. Manage & Monitor -- Management of risks and controls to deliver target risk level -- Monitor through inspection, performance reviews and regular reporting -- Identify and implement specific remediation actions 5. Calibrate & Assure
-- Group Functions calibrate submitted risks to ensure consistency and prioritise their responses
-- Functional assurance and internal audit activity -- Assess impact of assurance findings 6. Report, Evaluate & Improve
-- Report consolidated risk, assurance and control position to the Group Risk, Assurance and Control Committee, Audit Committee and Safety, Health, Environment, Security and Ethics Committee
-- Evaluate priority risks within the Group risk profile to identify any corrective actions -- Evaluate Group-wide severe, but plausible risks and implications -- Drive continuous improvement through reviewing the Risk Universe and Group risk appetite
Mitigating risks through the System of Risk Management and Internal Control
Risk management is a key pillar of the overall governance and management framework for the Group. Our system of Risk Management and Internal Control comprises the following elements that are assessed annually for effectiveness:
-- What we stand for:
- Our Purpose: We are an energy and services company. Everything we do is focused on satisfying the changing needs of our customers.
- Our Values: The new values were rolled out globally in September 2017 to underpin our strategy and Priorities.
- Our Code: This was launched in early 2018 to replace our Business Principles and provides the foundation for how we operate.
-- Our strategic framework:
- Strategy: Set out in July 2015 and aligned throughout the organization by the five Group Priorities.
- Financial framework: Sets out parameters and targets within which we operate to guide our strategic planning and financial decision making.
- Enterprise risk framework: Incorporates the Principal Risks within the Group Risk Universe, as outlined on pages 55 to 60.
-- Our governance:
- Board and committees: Structured to effectively dispense with required duties and through which our Principal Risks are monitored.
- Legal entities: Subsidiary company legal entities with Boards of Directors required to meet legal and regulatory obligations.
- Delegations of authority: Accountability is delegated through the organisation to individuals in accordance with risk appetite.
- Executive and committees: Oversight to ensure appropriate planning and performance management.
-- How we are organised and managed:
- Management systems: The detailed policies, standards and processes establishing the mandatory requirements and which are required for the systematic management of related risks.
-- How we provide assurance:
- Functional assurance: Ensuring policies and standards are complied with through monitoring and testing activities performed by individuals who are not directly responsible for the operation of the controls.
- Internal Audit: Providing confidence to the Board, via the Audit Committee, that Centrica has appropriate risk management procedures and effective controls in place.
- External assurance: Auditing of the Group's Annual Report and Accounts prior to reporting, which includes assessment of internal controls relevant to financial reporting.
Principal Risks
The Group Risk Universe is made up of a holistic framework of Principal Risks, laid out below. The Board makes a robust assessment of these Principal Risks, considering future performance and our ability to deliver the strategy, including solvency and liquidity risks. For each Principal Risk, we discuss the nature of the risk, the risk climate and the impact on our Group Priorities. Each Principal Risk is overseen directly by the Board or one of its Committees, with the Board retaining overall responsibility for risk across the Group.
Description Potential Mitigation impacts --- ---------------------- ---------------------- ----------------------------------------------------------------- 1 Political Changes in and Regulatory government * We are active in contributing our views on the Intervention and regulatory development of the markets in which we operate and in Risk of political oversight, discussions with political parties, regulatory or regulatory specifically authorities and other influencers. intervention relating to such as the the Consumer adoption Divisions * We are committed to an open, transparent and of blanket markets in competitive UK energy market that provides choice for price caps the UK and consumers. In November, we announced seven unilateral in the UK North America, steps we would take and recommended a series of energy supply such as the broader market reforms (as detailed on page 18). market, changes developments to the political in UK market or regulatory regulation * The UK is due to exit the European Union within two landscape, during 2017, years of Article 50 being triggered in March 2017. We or failure could erode have a dedicated Brexit project group which is to influence our profit working to understand and assess the many that change. margins through Brexit-related issues which could impact the Group External price caps, and our customers. Risk or through Governance additional oversight: obligations * We accept that we may be the subject of regulatory Board that increase scrutiny that could result in stakeholder concerns. Risk Climate: operating We co-operate fully with any enquiry or investigation Increased costs. The and take measures to react as quickly as possible. Priority: UK's decision Cash flow to exit the growth and European Union strategic and wider momentum political changes in the markets we operate in present risks relating to changing policies in relation to the energy market change and carbon emissions. --- ---------------------- ---------------------- ----------------------------------------------------------------- 2 Financial Our exposure Market to adverse * We have hedging strategies in place to mitigate Risk of financial price movements exposure to loss due in commodity to our exposure markets, due to market to our large commodity and financial movements, upstream and market volatility. including downstream * Financial risk is reviewed regularly by the Group commodity positions, Finance Function and the Group Risk Assurance and prices and could impact Control volumes, profitability inflation, and cash flow interest generation Committee to assess rates and across the financial exposures currency business. and compliance with fluctuations. Financial risk limits. Regular External market risk review is also undertaken Risk with is taken on by the Audit Committee. elements by Energy * As we move into new trading arrangements, including that are Marketing the continued expansion of our LNG business, we are Risks Requiring & Trading focused on ensuring that our financial risk policies Judgement (EM&T) as remain appropriate to the risks we face. Governance part of the oversight: proprietary Board and trading business. * Our business units have risk measures, policies and Audit Committee Increased monitoring commensurate with the activities and risks Risk climate: volatility that they manage, and we invest in our systems to at a similar in commodity further automate our control environment. level prices could Priority: provide more Cash flow opportunities growth and but also give strategic rise to higher momentum collateral costs and/or additional credit risk for both EM&T and North America Business. --- ---------------------- ---------------------- ----------------------------------------------------------------- 3 Health, Safety, Our operations Environment have the potential * We undertake regular reviews and have assurance and Security to result processes in place with reporting to the HSES (HSES) in personal Subcommittee on a quarterly basis and full discussion Risk of failure or environmental of all issues arising. to protect harm, or operational the health, loss. Significant safety and HSES events * The HSES management system is used to manage our security could also controls, focusing on areas of concern including of customers, have regulatory, process safety, driving and working at heights. employees legal, financial and third and reputational parties or impacts that * We continue to invest in training to ensure we to take appropriate would adversely maintain safe operating practices. During 2017 all measures affect some senior leaders took part in a HSES leadership event. to protect or all of our environment our brands and in response and businesses. * Security intelligence and operating procedures, as to climate well as crisis management and business continuity change. plans, are regularly evaluated and tested. Risk Requiring Standards Governance * Significant Centrica representation on Board oversight: Committees and establishment of a Shareholder Office Board and to ensure that mitigation of HSES risks remains a Safety, Health priority within the new joint venture organisation, Environment, Spirit Energy. Security and Ethics Committee * We actively engage with climate change bodies and Risk climate: NGOs to offer our perspective, understand the at a similar direction of potential future actions, and assess our level readiness to manage through change. Priority: Safety, compliance
and conduct * A description of how we manage our environmental risk is described on page 36. --- ---------------------- ---------------------- ----------------------------------------------------------------- 4 Strategy Successful Delivery delivery of * The Board sets and approves the Group's strategy, Risk that our strategy setting the strategic direction and confirming the we do not requires delivering strategic choices made by the business. Regular deliver our the energy reviews are conducted on changes in market trends and strategy and services the competitive environment, and the business due to insufficient our customers response. capability desire in to execute a way that it in line satisfies * We have a clear financial framework to ensure capital with plan their needs is allocated in line with the strategy and that or failure in a competitive balance sheet strength and return on capital boundary to adapt market place. conditions are met. quickly enough Failure to to respond identify changing to changes trends in * The Board and Executive Committee regularly review in the external customers' the capabilities required to deliver on the strategy environment. needs, adapt and address gaps as they arise. In our bottom-up to process of changing market risk reporting, and competitive this is a environments, key area deliver major of focus transformation for our business programmes units and to be an efficient functions. supplier, Risk Requiring and build Judgement the necessary Governance capabilities oversight: to compete, Board have the potential Risk climate: to impact increased our cash flow Priority: growth and Cash flow value creation growth and goals. strategic momentum --- ---------------------- ---------------------- ----------------------------------------------------------------- 5 External We operate Market Environment in highly * We focus on understanding customer segments and their Risk that competitive needs, aiming to design products and offerings that events in and changing are attractive and competitive. the external markets, where market or customer behaviour, environment needs and * We are increasing our investment in areas like could affect demands are Connected Home and Distributed Energy & Power that the delivery evolving due represent emerging customer needs and reinforce our of our to digitisation, existing energy supply and services offerings, strategy. energy efficiency, putting customers more in control of their energy use External climate change, as described on page 33. Risk government Governance initiatives, oversight: and the general * Regular analysis is undertaken of commodity price Board economic outlook. fundamentals and their potential impact on our Risk Climate: In addition, business plans and forecasts. at a similar we are subject level to global Priority: market Cash flow volatility growth and in our upstream strategic businesses momentum in commodity markets. --- ---------------------- ---------------------- ----------------------------------------------------------------- 6 Brand, Trust Failure to and Reputation appropriately * We regularly monitor and review our level of customer Risk that manage brand service, aiming to deliver a fair, simplified and our competitive perception, transparent offering to all of our consumers. position media attention Operational processes are in place to address failure is compromised and campaign in service and customer complaints. by poor standards or pressure of fairness groups could and transparency have a negative * We engage with NGOs, consumer and customer groups, and by failing impact on political parties, regulators, charities and other to protect consumer sentiment stakeholders to identify solutions to help reduce our brands. and contribute bills and improve trust in the industry. Risk Requiring to a fall Judgement in overall Governance customer numbers. * We review and monitor changes in our customer brand oversight: Failure to position through net promoter score (NPS) and other Board be fair and metrics as described on page 31. Risk climate: transparent increased in all our Priority: operations * We consider our impact on society as part of being a Customer could cause good corporate citizen. This is set out in the satisfaction reputational Building strong communities section on pages 37 to and operational damage and 38. excellence if standards are particularly low, lead to legal action. --- ---------------------- ---------------------- ----------------------------------------------------------------- 7 Change Management If change Risk of failure projects are * Significant change management programmes are reviewed in the not aligned as a regular aspect of Group and business unit identification, to strategic performance reviews, and are regular agenda items of alignment objectives Executive Committee meetings. and execution or not implemented of change appropriately, programmes the expected * Change activity is managed through a network of and business benefits may programme offices providing oversight and governance restructuring. not be realised. at the appropriate level. Risk Requiring If acquisitions Judgement are not integrated Governance effectively * We have dedicated change capability at Group and oversight: the business business unit level to monitor the realisation of Board benefits may benefits, the prioritisation of efforts and to share Risk climate: not be realised. best practice. at a similar level Priority: * Our people capability is continually reviewed and Cost efficiency developed to ensure we have the right skills to and simplification deliver our plans. * We have post-merger integration guidelines in place to integrate acquired businesses. --- ---------------------- ---------------------- ----------------------------------------------------------------- 8 Legal, Regulatory Our operations and Ethical are the subject * Regulatory compliance monitoring activities are Standards of intense performed by a single Group-wide function to drive Compliance regulatory consistency and quality. Risk of failure focus and to comply we seek to with laws deliver the * Control frameworks are in place in the UK and in
and regulations highest standards development in other markets to ensure that the and behave in compliance. customer experience is delivered in line with our ethically We recognise Customer Conduct guidelines. This is managed through in line with any real or a Group-wide practice group. Our Code, perceived resulting failure to in reputational follow Our * The Market Conduct practice group shares best or financial Code or comply practice with standardised controls and processes and damage. This with legal aligns mitigation activities where possible. includes or regulatory market conduct, obligations customer would undermine * Data is a strategic asset and its protection is a conduct, trust in our priority under a Steering Group led by the Executive data protection business. Director, Centrica Consumer. and financial Non-compliance crime risk. could also Risk Requiring result in * Our Code was launched globally in January 2018 to Standards fines, penalties underpin the new values introduced in 2017. This sets Governance or other the standard for behaviour across the Group. oversight: interventions. Board and Safety, Health, * Where we enter new territories via acquisition or Environment, organic growth we ensure country risks are identified Security and managed appropriately, including anti-bribery and and Ethics corruption risk and compliance with local Committee legislation. Risk climate: at a similar level Priority: Safety, compliance and conduct --- ---------------------- ---------------------- ----------------------------------------------------------------- 9 Asset Development, Failure to Availability invest in * Capital allocation and investment decisions are and Performance the maintenance governed through the Investment Committee, the final Risk that and development decision resting with the Group Chief Executive failures of our assets Officer and/or Board of Directors. in the development could result or integrity in significant of our investments safety issues * Group-wide minimum standards are applied to all in operated or asset assets, whether operated or non-operated to give and non-operated underperformance. confidence in their integrity. assets could Operational compromise integrity performance is critical * Maintenance activity and improvement programmes are delivery. to our ability conducted in all asset-based businesses to maximise Risk Requiring to deliver effectiveness and production levels. Judgement performance Governance in line with oversight: the strategic Board objectives. Risk climate: decreased Priority: Customer satisfaction and operational excellence --- ---------------------- ---------------------- ----------------------------------------------------------------- 10 Information Our substantial Systems and customer base * Our information security strategy seeks to integrate Security and strategic information systems, personnel and physical aspects Risk of reduced requirement in order to prevent, detect and investigate threats effectiveness, to be at the and incidents. availability, forefront integrity of technology or security development, * We engage with key technology partners and suppliers, of IT systems means that to ensure potentially vulnerable systems are and data it is critical identified. essential our technology for Centrica's is robust, operations. our systems * Regular controls testing and security patching around Risk Requiring are secure our core systems is undertaken and our controls are Standards and our data further tested periodically by outside experts. with elements protected. that are Sensitive Risks Requiring data faces * Strengthening of the Chief Information Security Judgement the threat Officer (CISO) role to oversee the development of Governance of misappropriation, standards, controls and assurance across the Centrica oversight: leading to estate. Board and potential Safety, Health, financial Environment, loss and/or * We regularly evaluate the adequacy of our Security reputational infrastructure and IT security controls, undertake and Ethics damage to employee awareness and training and test our Committee the Group. contingency and recovery processes, recognising the Risk climate: Failure to evolving nature and pace of the threat landscape. at a similar deliver IT level solutions Priority: in support * Established governance bodies to oversee plans to Safety, compliance of the prioritised comply with new requirements including the European and conduct objectives General Data Protection Regulation (GDPR). and change programmes in the business would have consequences both for our organisational transformation and in some cases, our compliance obligations. --- ---------------------- ---------------------- ----------------------------------------------------------------- 11 Financial The increasingly Processing complex financial * Our financial control framework incorporates our and Reporting accounting financial controls and management self-assessment Risk of errors landscape, compliance, with progress being made to improve the or losses including use of systems and reduce the reliance on manual arising from new financial controls. the processing reporting and reporting standards, of financial increases * We have implemented a revised balance sheet review transactions the likelihood and reconciliation procedure to target minimising for internal of errors control gaps arising in our underlying systems and and external being made ensure that issues are detected on a timely basis. purposes. in the application This includes of accounting potential judgements. * We undertake detailed testing and evaluation of the errors such The potential effectiveness of our controls in response to critical as the reassessment for failures financial risks and report to the Financial Risk, of unbilled in core controls Assurance and Controls Committee quarterly. power revenues around critical in our North processes America Business increases * Controls improvement is a key objective of the Unit of GBP46m, in a period Finance transformation programme, with oversight of reported of significant delivery of this objective provided by the Audit in our November change. As Committee. 2017 trading Finance continues
update. to implement Risk Requiring the functional Standards transformation Governance programme, oversight: the risk of Board control degradation Risk climate: could increase increased and this is Priority: an area of Safety, compliance significant and conduct focus. --- ---------------------- ---------------------- ----------------------------------------------------------------- 12 Business We prioritise Planning, how we use * Annual planning processes are subject to scrutiny and Forecasting our resources challenge with respect to underlying market trends, and Performance based on our competitive threats and organisational capability and Management business plans delivery from the Executive Committee and the Board. Risk that and forecasts. plans and Failure to forecasts accurately * Group Functions have adopted standardised planning may not be plan and forecast, processes in support of the business priorities, deliverable taking into driving improved integration of plans. or may fail account the to drive changing business efficient environment, * Quarterly performance review meetings involving the and effective could result Executive Committee enable the review of performance performance in sub-optimal against forecasts, ensuring that mitigating actions and the risk decisions or revisions are developed and implemented. of failures and failure in performance to realise reporting. anticipated This includes benefits. the risk that we do not quickly respond to and reflect performance management issues in any of the Business Units as and when they arise. Risk Requiring Judgement with elements that are Risks Requiring Standards Governance oversight: Board Risk climate: at a similar level Priority: Cash flow growth and strategic momentum --- ---------------------- ---------------------- ----------------------------------------------------------------- 13 People In challenging Risk that conditions, * We continue to evolve a clearly defined people we cannot it is critical strategy based on culture and engagement, equality attract or that we attract and wellbeing, talent development, training and retain employees and retain reward and recognition. to ensure key capabilities we have the across the appropriate business. * We regularly review organisational capability in capabilities The consequence critical business areas, reward strategies for key to deliver of not being skills, talent management and learning and our strategy. able to fulfil development programmes through external benchmarking. There is key roles also the could have potential a detrimental * We conduct an annual survey of employee engagement risk of industrial impact on and take seriously the messages arising with a plan action in our ability of actions. our Consumer to meet our businesses. strategic Risk Requiring objectives. * The Executive Committee has clear oversight through Judgement The risk of regular discussions of the people related challenges with elements industrial inherent in our transformation programme. that are action in Risks Requiring our businesses Standards. would have * We engage with trade unions on restructuring and Governance a potential issues that could impact terms and conditions with oversight: impact on clear and open processes to promote an environment of Board customer service trust and honesty. Risk climate: levels and increased retention. Priority: We require * Our Code was launched in early 2018. This sets the People and the right expectations for all employees, replacing the building behaviours Business Principles. capability from our leaders and employees to deliver our business strategy in accordance with our Values and Our Code. --- ---------------------- ---------------------- ----------------------------------------------------------------- 14 Customer The delivery Service of high quality * Customer and Field Operations teams monitor customer Risk of failure customer service service levels, ensuring enquiries are answered in a to consistently is central timescale and manner acceptable to the customer, meet the to our business complaint levels are minimised, and that customer expectations strategy. satisfaction is reviewed at all stages of the of our customers With the entry customer journey. through the of new competitors customer to the market, lifecycle. customers * Leadership teams in our front-line businesses Risk Requiring are increasingly establish accountability for specific aspects of the Judgement likely to customer journey and assess performance against Governance switch if agreed metrics weekly. oversight: they face Board an unacceptable Risk climate: customer experience. * Performance parameters are monitored on a weekly at a similar Remaining basis for all third-party service providers involved level at the forefront in the front-line and back office customer service Priority: of digital process. Customer developments satisfaction and innovating and operational to provide * Customer service agents are quality assessed for excellence choice and consistency with a rigorous training and performance control for management programme, and a structured performance our customers management process is in place for field teams. is critical. This risk faces increased * We operate an environment of continuous improvement, scrutiny as incorporating an accredited programme (STAR), and use political root cause analysis of complaint and NPS insight to and regulatory continuously improve our service delivery. attention focuses on introducing competition by applying pressure over pricing strategies. --- ---------------------- ---------------------- ----------------------------------------------------------------- 15 Balance Sheet Failure to Strength operate within * We assess available resources on a regular basis and and Credit the Group's this analysis underpins our going concern assumption Position financial and viability analysis as described on pages 61 and Risk that framework 62. the balance resulting sheet may in risk to
not be resilient maintaining * Significant committed facilities are maintained with with implications our target sufficient cash held on deposit to meet working for our credit credit rating, capital fluctuations as they arise. rating, liquidity impacting risk and our access long-term to cost effective * Counterparty exposures are restricted through a Group financial capital and Credit Limit policy which is regularly reviewed and obligations. trading arrangements. adjusted as necessary. Risk Requiring Long term Judgement financial Governance obligations * Wholesale credit risks associated with commodity oversight: may increase trading and treasury positions are managed in Board and in value due accordance with Group policy. Audit Committee to factors Risk climate: both inside at a similar and outside * We consider accounting assumptions impacting on our level of our control, balance sheet carefully, including decommissioning Priority: for example and impairment, as described as part of the Group Cash flow pension schemes, Financial Review on pages 48 to 51 and in note 3(b) growth and resulting to the Financial Statements. strategic in additional momentum funding required to meet our obligations. --- ---------------------- ---------------------- ----------------------------------------------------------------- 16 Procurement Our business and Supplier operations * All suppliers are required to sign up to our 'Ethical Management rely on products Procurement' policies and procedures. Risk of failure and services to source provided through responsibly third parties, * Financial health, risk and anti-bribery and and to co-ordinate including corruption due diligence and monitoring is and collaborate outsourced implemented in supplier selection and contract with supply activities, renewal processes. chain partners infrastructure to ensure and operating value delivery responsibility * Audits are conducted in relation to third-party and continuity. for some assets. operation of jointly operated Exploration & Risk Requiring We rely on Production assets. Judgement these parties with elements to comply that are not only with * We review the ethical conduct of our suppliers Risks Requiring contractual including a programme of supplier visits to provide Standards terms, but additional assurance over practices employed, Governance also legal, including respect for human rights, as part of being oversight: regulatory a good corporate citizen as laid out on page 38. Board and ethical Risk climate: business at a similar requirements. * Procurement practices have been reviewed across the level Group and a global Procurement Policy and Standard Priority: was implemented from 1 January 2018. Customer satisfaction and operational excellence --- ---------------------- ---------------------- -----------------------------------------------------------------
Related Party Transactions
The Group's principal related party is its investment in Lake Acquisitions Limited, which owns the existing EDF UK nuclear fleet. The disclosures below, including comparatives, only refer to related parties that were related in the current reporting period.
During the year, the Group entered into the following arm's length transactions with related parties who are not members of the Group, and had the following associated balances:
2017 2016 Sale Purchase Sale Purchase Amounts of goods of goods Amounts Amounts of goods of goods owed Amounts and and owed owed and and from owed services services from to services services (i) to GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm ----------------- --------- --------- ------- ------- --------- --------- ------- ------- Joint ventures: Wind farms (i) 1 (10) - - 7 (80) 120 (43) Associates: Nuclear - (527) - (40) - (617) - (57) Other - - - - 4 (5) - - ----------------- --------- --------- ------- ------- --------- --------- ------- ------- 1 (537) - (40) 11 (702) 120 (100) ----------------- --------- --------- ------- ------- --------- --------- ------- -------
(i) Disposed on 17 February 2017. See note 12(d) for further details. Transactions have only been included above up to this disposal date.
During the year, there were no material changes to commitments in relation to joint ventures and associates. During the year a provision against a receivable from one of the Group's joint ventures was charged to the Group Income Statement amounting to GBP1 million. No other provision for bad or doubtful debts relating to amounts owed from related parties was recognised during the year through the Group Income Statement (2016: nil). The balance of the provision at 31 December 2017 was nil (2016: nil)
At the balance sheet date, the Group committed facilities to the Lake Acquisition Group totalling GBP120 million, although nothing has been drawn at 31 December 2017.
Key management personnel comprise members of the Board and Executive Committee, a total of 18 individuals at 31 December 2017 (2016: 18).
Remuneration of key management personnel 2017 2016 Year ended 31 December GBPm GBPm ----------------------------------------- ----- ----- Short-term benefits 9.8 15.8 Post employment benefits 1.3 1.1 Share-based payments 4.8 7.8 ----------------------------------------- ----- ----- 15.9 24.7 ----------------------------------------- ----- ----- Remuneration of the Directors of Centrica plc 2017 2016 Year ended 31 December GBPm GBPm --------------------------------------------- ----- ----- Total emoluments (i) 4.0 9.8 Amounts receivable under long-term incentive schemes 1.9 - Contributions into pension schemes 0.8 0.8 --------------------------------------------- ----- -----
(ii) These emoluments were paid for services performed on behalf of the Group. No emoluments related specifically to services performed for the Company. 2016 comparatives have been restated. Further detail is provided in the Remuneration Report on pages 78 to 89.
Directors' responsibilities statement
In compliance with DTR 4.1.12R, the Annual Report 2017 contains a Directors' responsibilities statement. This is reproduced below, in line with DTR 6.3.5R. The statement relates to and is extracted from the Annual Report 2017 and does not attach to the extracted information presented in this announcement or the preliminary results announcement released on 22 February 2018.
The Directors, who are named on pages 64 and 65, are responsible for preparing the Annual Report, the Remuneration Report, the Strategic Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Accordingly, the Directors have prepared the Group Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and have elected to prepare the Company Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice including FRS 101 'Reduced Disclosure Framework' (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these 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 IFRS as adopted by the EU and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and Company Financial Statements respectively; and
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Financial Statements and the Remuneration Report comply with the Act and, as regards the Group Financial Statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Furthermore, the Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts 2017, when taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.
Each of the Directors confirm that to the best of their knowledge:
-- the Group Financial Statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;
-- the Strategic Report contained on pages 2 to 62 together with the Directors' and Corporate Governance Report on pages 63 to 100, 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;
-- as outlined on page 73, there is no relevant audit information of which Deloitte LLP are unaware; and
-- they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
ENDS
Enquiries:
Investors and Analysts:
Tel: +44 (0)1753 494900
Email: ir@centrica.com
Media:
Tel: +44 (0)1784 843000
Email: media@centrica.com
Centrica plc is listed on the London Stock Exchange (CNA)
Registered Office: Millstream, Maidenhead Road, Windsor, Berkshire SL4 5GD
Registered in England & Wales number: 3033654
Legal Entity Identifier number: E26EDV109X6EEPBKVH76
ISIN number: GB00B033F229
This information is provided by RNS
The company news service from the London Stock Exchange
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(END) Dow Jones Newswires
April 05, 2018 06:00 ET (10:00 GMT)
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