Final Results

Centrica PLC
13 February 2003

                                  Centrica plc

            Preliminary Results for the year ended 31 December 2002

                                  (unaudited)

For the year ended 31 December (£m)                                    2002        2001           ^ %
Turnover (including Accord trading)                                   14,315      12,611         +14%
Turnover (excluding Accord trading)                                   10,011       9,041         +11%
Operating profit (including joint ventures & associates)*               932         679          +37%
Operating profit (after exceptionals and goodwill)                      809         511          +58%
Earnings (before exceptionals and goodwill)                             636         482          +32%
Earnings (after exceptionals and goodwill)                              478         323          +48%
Earnings per share (adjusted basic)* (pence)                           15.2        12.1          +26%
Earnings per share (basic) (pence)                                     11.4         8.1          +41%
Dividend per ordinary share (final/total) (pence)                     2.6/4.0     1.9/3.1      +37%/+29%



'Our concentration on what customers want has enabled us to succeed in highly
competitive markets.'

-- Sir Michael Perry GBE, Chairman

Overview:

  • Group operating profit*: up 37%
  • Earnings*: up 32% (48% after exceptionals and goodwill)
  • British Gas Residential: improved gas margins and growth in electricity
    and services
  • Centrica Business Services: profit* up 48% with organic growth supported
    by acquisitions
  • AA: core business growth in roadside and personal finance
  • Telecoms: losses reduced by two thirds and improving sector outlook
  • Goldfish: credit card growth from renewed brand building
  • North America: acquisitions of incumbent positions but slower organic
    growth
  • Dividend: final dividend up 37%; up 29% for the year

'We have a strong core business with leading market positions and I am confident
that our strategy will continue to deliver value for our shareholders.'

-- Sir Roy Gardner, Chief Executive

* stated before exceptionals and goodwill amortisation



CHAIRMAN'S STATEMENT

During 2002, Centrica continued to make progress towards our vision of 'taking
care of the essentials' for customers in our chosen markets. We have done this
by concentrating on what our customers want. This has led to top-line growth
across our business units and helped drive adjusted earnings per share up 26%
(before exceptional items and goodwill amortisation).

We took significant steps to ensure that British Gas remains the market leader
in residential energy and continues to improve its performance in other home
services. The AA had a year of solid performance as we repositioned the AA brand
to increase awareness of the wide range of products and services available to
motorists. Our North American business has made progress despite a challenging
regulatory environment.

In the UK, the measures to underpin a competitive energy market enable us to
continue to deliver benefits to customers. In the wider European context, good
progress was made agreeing a framework for introducing competition to the entire
energy market. In addition a number of important improvements were made to the
competitive conditions in the UK telecoms market but there is still further work
to be done.

Dividend

The board of directors is proposing a final ordinary dividend of 2.6 pence per
share to be paid in June 2003. When combined with the interim dividend of 1.4
pence per share paid in November 2002, the total ordinary dividend for 2002
would be 4.0 pence per share. This represents an increase of 29% on the previous
year and reflects our positive medium term outlook for both earnings and cash
flow.

The board of directors

We announced a number of changes to the board during the year. Sir Sydney
Lipworth retired at the annual general meeting in May and we are most grateful
for the significant contribution he made to the development of Centrica. In
September we announced the appointment of Helen Alexander and in October the
appointment of Robert Tobin as non-executive directors with effect from the 1st
January 2003. I am delighted that Helen and Robert have joined us. Their
considerable experience will further strengthen the board.

Corporate responsibility

We recognise that creating sustainable shareholder value depends on a full
understanding of our impact on society and the responsible management of our
business in a manner consistent with our values and principles. To this end, we
established a corporate responsibility committee which sets the framework for
developing and reporting our efforts in this area. Our approach was recognised
by our inclusion in the FTSE4Good and Dow Jones Sustainability Indices.

The future

Centrica remains well placed to compete in an increasingly international energy
market place where we expect further consolidation. Our strong brands, enhanced
customer insight and asset management expertise, combined with our financial and
operational scale, will continue to enable us to create value for customers and
shareholders alike.

Sir Michael Perry GBE, Chairman

13th February 2003



CHIEF EXECUTIVE'S REVIEW

In 2002 the group continued its strong overall financial performance, in
particular from our leading UK energy operations, where improvement in margins
and growth were accompanied by new momentum in our services to business
customers and expansion of our upstream energy asset portfolio.

Our AA roadside and personal finance operations continue to deliver solid
underlying profit growth. Despite slow regulatory progress in our UK telecoms
and North American energy markets, we are expanding in both businesses. Goldfish
brand development continues with a more focused product line. Our reinvestment
in growth areas is proceeding selectively, with a constant focus on economic
value creation.

Turnover and profitability

Group turnover (excluding Accord trading revenue) was £10 billion in 2002, up
11% from the prior year period. Higher sales to our business customers - through
Centrica Business Services - were complemented by growth in North America and an
increase in residential electricity sales and growth in the AA's roadside and
personal finance units and across home services and One.Tel. UK gas sales
volumes were lower, largely due to unusually warm weather in the first and
fourth quarters of the year.

Group operating profit (including joint ventures and associates, before
exceptionals and goodwill amortisation) of £932 million was up 37% from £679
million in 2001, with improved performance across most brand units, particularly
British Gas. Aggregate group gross and operating margins (excluding Accord) were
30% and 9%, up from 26% and 7% respectively in 2001.

Cash flow, capital expenditure and acquisitions

Group operating cash flow (from continuing operations, including dividends from
joint ventures and associates, before exceptional payments) was £790 million for
2002 compared with £885 million in 2001. An increase of £299 million to £1,329
million in operating profit before depreciation and amortisation of investments
(including joint ventures and associates, before exceptionals and goodwill
amortisation) was more than offset by changes in working capital and provisions
caused largely by accelerated gas transportation prepayments of £168 million and
year-on-year increases in petroleum revenue tax (PRT) and gas production
royalties of £117 million and £52 million respectively.

Total capital expenditure was £449 million this year, up from £312 million in
2001. This was due primarily to an increase of £120 million in respect of our
new customer relationship management (CRM) infrastructure. Acquisition
expenditures (net of cash and overdrafts acquired) were £989 million in 2002
(2001: £1,204 million), consisting primarily of our purchases of the Brigg power
plant and Rough gas storage facilities in the UK, Enbridge Services (in Canada)
and Central Power & Light and West Texas Utilities in Texas. The group's net
cash outflow before management of liquid resources and financing was £918
million, against a net outflow of £342 million in 2001.

Net interest, net debt and net assets

Net interest payable was £62 million (2001: £43 million) and was covered 15
times by operating profit (including joint ventures and associates) before
exceptionals and goodwill amortisation compared with 16 times a year earlier.
Higher net interest was due to higher average indebtedness compared with 2001.

Net debt (excluding the Goldfish facility and new non-recourse debt of £196
million in respect of water heaters) increased to £529 million at 31 December
2002 from £433 million at 31 December 2001. The increase was the result of
higher operating profit and an equity placement of £426 million being more than
offset by increases in working capital, capital expenditure and acquisition
payments. Net assets grew by 56% over 2001, from £1.54 billion to £2.40 billion,
reflecting retained earnings and the equity placement during the period. Our
resulting ratio of net debt (excluding Goldfish Bank facilities and water heater
debt) to book capitalisation was 19% at 31 December 2002 (December 2001: 22%).

Customer service

We maintained our focus on improving customer service levels across all of our
brands. We are now placing greater importance on qualitative and value-based
measures of customer service which are built into a scorecard evaluation and
reflected in the remuneration of staff at all levels.

As testament to our focus on these areas, we continue to be highly rated by
external agencies. In particular, the AA won the JD Power award for customer
satisfaction for the third time in five years. Further accolades include Which?
Magazine naming the AA as the UK's best motoring organisation, and house.co.uk
winning the 2002 Customer Management National E-commerce Customer Service Award.

Outlook

Whilst the economic outlook remains uncertain, we are moving from a period of
considerable investment in growth opportunities and strategic market entries to
a period of delivery from these investments, underpinned by new CRM platforms
and common competencies in securing value from deeper customer relationships.

For British Gas, we expect continuing recovery in residential gas gross margins
and further electricity growth to generate further profit improvement, partially
offset by the higher costs of the government's Energy Efficiency Commitment and
peak CRM system implementation expenses through to 2004. Annual CRM cost
synergies will drive further medium term growth in British Gas operating
margins.

In the UK retail energy sector competition remains tough, although we believe
that the transaction prices paid recently by acquirers should result in retail
pricing consistent with positive supply margins. In addition, reduced doorstep
selling in the industry appears to be leading to lower churn rates. While we
expect the result of this reduced industry churn to be slower growth in our
residential electricity customer base than we had previously anticipated,
reduced customer acquisition expenses should contribute to better electricity
profits.

We expect to increase market share and profitability in the UK commercial energy
sector. The launch of Centrica Business Services has resulted in increased
management focus and growing product portfolios in this unit.

It is anticipated that output volumes from our Morecambe Bay gas production
facilities will decrease by around 10% per year, offset over time by greater
output from other currently held gas assets and future acquisitions. We expect
our cash PRT payments to decline significantly over the next few years.

Profitability of the AA is expected to continue to improve, and expenditure in
information technology will peak in 2003. For One.Tel, we expect that regulatory
improvements will warrant renewed organic investment in brand and product
marketing at the same time as developing our growing mobile and internet
businesses. For Goldfish, significant improvement to credit card and loans
contributions are expected in 2003 and with a more focused roll-out of new
products, breakeven will occur towards the end of the year.

North America continues to offer a significant value creation opportunity, given
our focus on the marketing and service elements of deregulated energy supply. We
continue to lobby regulators to maintain legal frameworks and incumbent pricing
levels which allow sufficient and stable gross margin headroom to attract new
market entrants. Without this regulatory commitment to proper competitive
markets, current organic growth prospects and customer renewals are being
negatively affected. In this environment, we expect to focus in 2003 primarily
on the integration of our existing customer bases and on profitability. We will
maintain a flexible approach to customer acquisition, seeking to acquire
incumbent supplier customer bases and playing a key role in markets at early
stages of deregulation. Our organic growth will be focused in a few larger state
and provincial markets which offer sufficient scale for successfully marketing
our energy and related services. As a result of this industry environment and
our strategic focus, the timing for achievement of our broader ambition in North
America will depend upon the availability and pace of key acquisition
opportunities.

Our strategy in continental Europe is to build a significant customer base in
the medium term. Although the pace of deregulation varies across the individual
markets there are now clear timetables for commercial and residential market
openings. The whole of the European Union household energy market is expected to
be liberalised by mid 2007. We are focusing on those countries where the speed
of market opening and legal and political conditions, including unbundling and
independent regulation, are more advanced.

To sum up, we have a strong business with leading market positions. Our core
businesses are growing and are strongly cash generative and our investment in
new businesses is proceeding as market opportunities emerge. I am therefore
confident that our strategy will continue to deliver value for shareholders.

Sir Roy Gardner,Chief Executive

13th February 2003



SEGMENTAL BUSINESS COMMENTARY

British Gas Residential

2002 has seen a progression in the performance of British Gas residential,
driven by improved gas margins, continuing growth in electricity and home
services and reduced losses in communications. Aggregate turnover was up 2.3% in
2002 at £6 billion with operating profit at £244 million (2001: loss of £46
million), despite warmer weather.

At 40%, British Gas's share of the aggregate residential energy customer base in
Great Britain remained steady against the same time last year. Net losses in gas
customers were in line with 2001 but reflect a longer-term trend of stabilising
market share with losses occurring primarily during the few months following
retail price increases. Second half losses were 186,000 compared with 426,000 in
the first half. Electricity sales growth was reduced by the withdrawal of
commission-only sales agents. Churn rates declined in the second half of the
year, with the market showing signs of lower switching rates overall.

Increases in residential energy gross profits were partially offset by the £26
million expensed investment in CRM infrastructure (2001: £9 million). We expect
this will begin to improve our operating profit by reducing the costs to acquire
and serve our customers from 2004. We also capitalised £154 million of CRM
expenditure during the year (2001: £60 million). General and administrative
expenses were higher as a result of higher manpower costs (largely to support a
growing home services engineering workforce), higher debtor provisions (£20
million) and increased spending (£25 million) to meet our obligations under the
government's Energy Efficiency Commitment.

                                                  2002     2001         ^ %     H2 2002   H2 2001      ^ %


Customer numbers (period end) (000):
Residential gas                                   12,839    13,451     (4.5%)    12,839    13,451     (4.5%)
Residential electricity                            5,795     5,374         8%     5,795     5,374         8%
Estimated market share (%):
Residential gas                                       64        67   (3 ppts)        64        67   (3 ppts)
Residential electricity (*)                           22        21      1 ppt        22        21      1 ppt
Average consumption:
Residential gas (therms)                             607       661       (8%)       261       267     (2.2%)
Residential electricity (kWh)                      4,132     4,098       0.8%     2,083     2,100     (0.8%)
Weighted average sales price:
Residential gas (p/therm)                          47.12     43.80         8%     47.75     45.68       4.5%
Residential electricity (p/kWh)                     6.06      5.99       1.2%      6.07      5.95         2%
Weighted average unit costs:
Residential gas (WACOG, p/therm)                   21.96     21.90       0.3%     21.49     22.70       (5%)
Residential electricity (WACOE, p/kWh)              2.47      2.55     (3.1%)      2.46      2.55     (3.5%)
Transportation & metering charges (£m):
Residential gas                                    1,256     1,508      (17%)       592       635       (7%)
Residential electricity                              444       342        30%       213       177        20%
Total                                              1,700     1,850       (8%)       805       812     (0.9%)
Sales and marketing expenses (% of turnover):        4.2       4.3 (0.1 ppts)         5         6    (1 ppt)
Average products per customer (**)(period end):     1.53      1.50         2%      1.53      1.50         2%
Turnover (£m):
Residential gas                                    3,805     4,029       (6%)     1,629     1,659     (1.8%)
Residential electricity                            1,380     1,121        23%       706       630        12%
Total                                              5,185     5,150       0.7%     2,335     2,289         2%
Gross profit margin (%)
Residential gas                                       20        12     8 ppts        18        11     7 ppts
Residential electricity                               26        27    (1 ppt)        28        30   (2 ppts)
Total                                                 22        15     7 ppts        21        16     5 ppts
Operating profit (£m):
Residential energy                                   218        19        N/m        21      (50)          -
Operating margin (%):
Residential energy                                   4.2       0.4   3.8 ppts       0.9     (2.2)   3.1 ppts

* 2001 restated to reflect Ofgem market resizing during 2002

** British Gas Residential brand

All operating profit numbers are stated, throughout the commentary, before
exceptionals and goodwill amortisation unless otherwise stated. The Directors
believe this measure assists with understanding the underlying performance of
the group. The equivalent amounts after exceptionals and goodwill amortisation
are reflected in Note 1 and are reconciled at group level in Note 6 with
descriptions of the exceptional items in Note 3.



Residential gas

Turnover decreased by 6% to £3.81 billion. Higher average selling prices were
offset by a reduction in sales volumes, reflecting warmer UK weather (operating
profit impact £42 million) and the net loss of around 600,000 customer accounts.
We believe that our brand and the scale of service we provide support our
average revenue per customer being above the average of the competition.

Gross margins recovered to 20% (2001: 12%). The recovery was driven by the
increase in average selling prices and a reduction in transportation and
metering costs of £252 million compared with 2001, due to lower volume and
timing differences. A large portion of the lower costs arose in the early part
of the year and reflects a reversal of the over-recovery by Transco in 2001 of
National Transmission System (NTS) entry fees (£98 million).

Residential electricity

Turnover increased by 23% to £1.38 billion. Our weighted average retail price
was slightly higher, as the full year effect of a reduction in prices in 2001
was offset by a shift in our customer mix following growth in the prepayment
segment, which operates on higher tariffs given related administrative costs.
Average consumption was broadly flat year on year. We believe that our average
retail pricing is approximately 8% below the average of the incumbent suppliers,
and we estimate our market share at year end was 22% (2001: 21%).

Gross profit grew by 21% due to higher volumes, while our gross margin fell 1
percentage point to 26% due to increased transportation and metering costs being
only partially offset by lower commodity costs.

Home services

British Gas home services continued to report strong growth in the year.
Turnover increased by 12% to £810 million. Higher central heating volumes,
augmented by the impact of our Trolhurst acquisition in late 2001, were
complemented by good contributions from our newer products, in particular home
electrical care. We are the only major retail supplier providing bundled service
products under our own brand, using our own people. This integrated offering
gives competitive advantage over outsourced products and services marketed by
other suppliers and is a strong tool for the retention of energy customers.

                                                        2002        2001         ^ %      H2 2002       H2 2001    ^ %
                                                                                                                   

Customer relationships (period end) (000):
Central heating service contracts                      3,482       3,314          5%       3,482         3,314        5%
Kitchen appliances care (no. of appliances)              871         562         55%         871           562       55%
Plumbing & drains care                                   905         743         22%         905           743       22%
Electrical care                                          367         143        157%         367           143      157%
Home security                                             28          28           -          28            28         -
Total relationships                                    5,653       4,790         18%       5,653         4,790       18%
Central heating installations                            102         109        (6%)          53            58      (9%)
Turnover (£m)
Central heating service contracts                        398         371          7%         204           192        6%
Central heating installations                            260         255          2%         141           143    (2.1%)
Other                                                    152          96         58%          77            48       60%
Total                                                    810         722         12%         422           383       10%
Engineering staff employed                             6,036       5,356         13%       6,036         5,356       13%
Sales and marketing expenses (% of turnover)               6           5       1 ppt           6             6         -
Gross Margin (%)                                          46          42      4 ppts          47            43    4 ppts
Total operating profit (£m)                               61          36         69%          39            25       56%
Operating margin (%)                                       8           5      3 ppts           9             7    2 ppts

A £64 million improvement in gross profit resulted from an increase in volume
and average order value along with a higher gross margin due to product mix,
increased productivity and the lower price of materials. This was partly offset
by increased operating costs, mainly due to higher manpower and home services
marketing expenses. The resulting growth of 69% in operating profit illustrated
the continuing scalability of our home services business model as we increased
both customer numbers and product penetration.

Our engineering staff numbers (including installation engineers) grew by 13%.
Securing access to skilled engineering staff is a key challenge and during the
first half of the year we announced our intention to recruit and train
approximately 5,000 engineers over the next five years: this is already well
underway.

British Gas Communications

Turnover in 2002 was up 41% at £52 million (2001: £37 million), due primarily to
a higher average number of customers over the 12 month period. Our gross margin
increased to 28% (2001: 26%) as call traffic was transferred to the group's
switches, managed by One.Tel.

The business continues to operate at a loss, mainly due to underlying
infrastructure costs and the cost of customer acquisition in an environment of
continuing high churn rates. Since the implementation of enhanced carrier
pre-selection (CPS) processes in July, all new customer connections are
fulfilled using this method. Initial results support our expectation that the
average revenue per customer (ARPU) will increase and the rate of churn for
customers using CPS will reduce. We are continuing to lobby for a converged
process for both CPS and wholesale line rental (WLR) in order to make it simpler
for customers to switch suppliers but we remain of the view that considerable
work needs to be done before a fit-for-purpose product can be launched.

Significant reductions have been made to operating costs as synergies with
One.Tel have been realised. Cancellation and churn rates have improved in the
second half through better customer targeting and quality of service. Customer
care and billing were transferred onto One.Tel's system in June, reducing
information systems spending by approximately £1 million per month.

                                                         2002      2001        ^ %     H2 2002     H2 2001        ^ %


Customer numbers (fixed line) (period end) (000)          367       400        (8%)         367         400        (8%)
Average minutes use per month (fixed line)                340       347        (2%)         336         341      (1.5%)
ARPU (fixed line) (£)                                   10.52     10.87      (3.2%)       10.55       10.71      (1.5%)
Variable gross margin (%)                                  28        26      2 ppts          30          26      4 ppts
Sales and marketing expenses (% as of turnover)             7        22   (15 ppts)           6          23   (17 ppts)
Turnover (£m)                                              52        37         41%          26          23         13%
Operating loss (£m)                                      (35)     (101)         65%         (9)        (49)         82%



Centrica Business Services

Centrica Business Services established itself as the number one supplier of
energy to the commercial sector in the UK by maintaining its position in the gas
market and by achieving strong organic growth in the electricity sector,
supplemented by the acquisition of Electricity Direct. The organic growth
accounted for almost half of the 53% growth in the electricity customer base
since the beginning of the year.

Turnover has increased by 67% to £971 million as a result of organic growth as
well as a full year's results from Enron Direct and five months contribution
from Electricity Direct. Overall gross margin increased by 3 percentage points
to 17% following price rises in gas.

Centrica Business Services has increased its UK commercial energy market share
to 27% (2001: 22%, measured by share of supply points), comprising 51% of the
gas market and 20% of the electricity market. In gas we seek to defend our
market position through focusing on customer service and a value proposition
rather than acquiring market share. In electricity, due to the acquisition
activity and better targeted organic growth, average consumption per customer
has increased by 39%. We believe our pricing is approximately in line with other
major branded suppliers.

                                                          2002      2001        ^ %     H2 2002     H2 2001        ^ %


Customer supply points (period end) (000):
Gas                                                        383       389      (1.6%)         383         389      (1.6%)
Electricity                                                516       337         53%         516         337         53%
Total                                                      899       726         24%         899         726         24%
Average consumption:
Gas (therms)                                             3,276     3,878       (16%)       1,402       1,534        (9%)
Electricity (kWh)                                       22,398    16,115         39%      12,893       8,845         46%
Weighted average sales price:
Gas (p/therm)                                            36.72     34.04          8%       36.22       35.74          1%
Electricity (p/kWh)                                       4.79      5.49       (13%)        4.74        5.45       (13%)
Weighted average unit costs:
Gas (WACOG, p/therm)                                     20.71     20.46        1.2%       19.47       19.01        2.4%
Electricity (WACOE, p/kWh)                                2.25      2.44        (8%)        2.20        2.34        (6%)
Transportation & metering charge (£m):
Gas                                                        126       130        (3%)          62          60          3%
Electricity                                                170        40        325%          99          29        241%
Total                                                      296       170         74%         161          89         81%
Sales & marketing expenses (% of turnover)                2.9%      2.1%    0.8 ppts        3.1%        2.3%    0.8 ppts
Turnover (£m):
Gas                                                        457       460      (0.6%)         191         197        (3%)
Electricity                                                514       121        324%         306          84        264%
Total                                                      971       581         67%         497         281         77%
Gross margin (%)
Gas                                                         16        12      4 ppts          14          15     (1 ppt)
Electricity                                                 18        22    (4 ppts)          19          19           -

Total                                                       17        14      3 ppts          17          16       1 ppt
Operating profit (£m)
Commercial energy                                           65        44         48%          25          25           -
Operating margin (%)
Commercial energy                                            7         8     (1 ppt)           5           9    (4 ppts)



CEMG

The Centrica energy management group (CEMG) consists of gas production
operations, the newly acquired Rough gas storage facility, electricity
generation (managed for British Gas residential and Centrica Business Services),
large volume industrial and wholesale gas sales, and our energy procurement,
optimisation and scheduling operations. This unit is fundamental - through its
provision of competitively priced energy supplies - to the success of the
customer-facing operations that are at the core of Centrica's consumer marketing
business model.

Gas production

Upstream gas profits were adversely affected by the reduction in wholesale
prices compared with last year, reducing the average unit sales price (which is
linked to market) by 5% in 2002. Production volumes, which represented 27% of
our downstream demand, were 5% lower than last year due in part to warm weather
in the first and last quarter. Unit production costs increased as a percentage
of turnover given the higher volume taken from those fields which attract higher
unit depreciation charges and the overall reduction in turnover to cover our
fixed cost base.

During the year, a number of upstream gas transactions were concluded in line
with our strategy of increasing gas equity ownership beyond the Morecambe
fields. In total an estimated 130 billion cubic feet (bcf) (1.3 billion therms)
of gas was acquired.

Storage

In November Centrica acquired the Rough gas storage facility in the North Sea.
During the period of Centrica's ownership, turnover was £9 million with an
operating profit of £1 million.


For the year 2002                                        2002        2001         ^ %    H2 2002     H2 2001      ^ %
                                                                                                                   
Gas production and storage:
Production volumes (m therms)
Morecambe                                               3,659       3,892         (6%)       1,529       1,467        4%
Other                                                     397         395           1%         183         187      (2)%
Total                                                   4,056       4,287         (5%)       1,712       1,654        4%
Average sales price (p/therm)                            21.5        22.5         (5%)        19.9        22.2     (10%)
Turnover (£m) (*)                                         932       1,033        (10%)         367         400      (8%)
Turnover (external) £m                                     83          80         3.8%          42          38       11%
Operating costs (% of turnover):
Royalties                                                   7           7            -           6           6         -
Petroleum revenue tax                                       8           8            -           8           6    2 ppts
Volume related production costs                            25          23       2 ppts          29          23    6 ppts
Other production costs                                     12          10       2 ppts          15          13    2 ppts
Total                                                      52          47       5 ppts          58          48   10 ppts
Rough operating profit (£m)                                 1         n/a          n/a           1         n/a       n/a
Operating profit (£m)                                     448         552        (19%)         158         216     (27%)
Industrial & wholesale:
Sales volumes (m therms)                                5,694       6,215         (8%)       2,970       2,991      (1%)
Average sales price (p/therm)                            19.8        19.5           2%        19.4        19.0        2%
Turnover (£m)                                             784         921        (15%)         383         424     (10%)
Operating profit (£m)                                      72           5          n/m          41           0         -
Accord
Traded volumes (physical)
Gas (million therms)                                   20,399      18,512          10%      10,686       8,927       20%
Electricity (GWh)                                      95,329      29,446         224%      58,151      22,228      162%
Turnover (£m)                                           4,304       3,570          21%       2,353       1,634       44%
Operating profit (£m)                                       0          16       (100%)        (15)           6         -
CEMG Operating profit (£m)                                520         573         (9%)         184         222     (17%)

* 91% was to group companies in 2002



Industrial sales and wholesaling

Sales volumes were down by 8% against 2001 due to reduced takes under long term
interruptible contracts with power stations, and the termination of one European
contract. However, better gross margins, a profit of £9 million recognised in
the first half of 2002 in connection with the early termination of an
in-the-money gas supply contract, and one-off losses on the termination of some
out-of-the-money contracts in 2001 contributed to increased profits relative to
last year.

Accord Energy

Accord broke even on the year, a drop of £16 million on 2001. After a positive
first half, we experienced gas trading losses during the unplanned shutdown of
the continental European interconnector. Accord's performance also suffered in
the power markets through the highly publicised problems of TXU and British
Energy, which contributed to high volatility. Accord also provided for a one-off
loss of £6 million when TXU went into administration late in 2002. Physical
volumes traded during 2002 were equal to 1.4 times the gas and 2.2 times the
electricity volumes supplied to our downstream customers.

The AA

2002 saw further progress in the development of the underlying profitability of
the AA's core roadside and personal finance operations. Key to the AA's future
growth is the ongoing investment in brand re-positioning which was launched in
May. The 'JustAAsk' message focuses consumer attention on the product range
offered by the AA and has increased product awareness, beyond roadside
assistance, from 33% to 43%. Turnover grew 10% to £760 million. Operating profit
increased by 1.4% to £73 million with increases in roadside services and
personal finance offset by start-up losses for the AA Service Centres.

In addition, the AA is investing in a major CRM infrastructure programme over
three years. In 2002, £30 million of expenditure was incurred (of which £26
million was capitalised). This investment is central to developing the AA's
cross-selling potential and at the same time achieving cost efficiencies across
the business.

AA Roadside Services

Turnover increased by 5% to £476 million, driven primarily by membership growth,
and whilst our overall share of the personal and business market marginally
increased to 31%, the average price per customer fell by 0.6% due to a change in
product mix.

Operating profits increased by 23% to £54 million, as higher turnover was
accompanied by tight management controls and initiatives to contain the roadside
breakdown costs and increase patrol utilisation.

AA Personal Finance

Turnover in personal finance grew by 11% to £172 million. Supported by the '
JustAAsk' campaign, over 70,000 car and personal loans were taken out during the
year which, after renewals, left a year end portfolio of approximately 117,000
fixed-term personal loans (2001: 77,000) provided through the AA joint venture.
At the year end, the fixed-term loan book had increased by 54% to stand at £661
million (2001: £428 million) with provision levels decreasing by 1% to below 3%.

Motor and home insurance commissions grew by 9% on higher policy volume (up to
£93 million), with customer renewal rates rising to 78% (2001: 74%). The average
annual premium rose by 2% to £261, reflecting general pricing conditions in the
industry.

Operating profits increased by 17% to £47 million. Turnover growth of 11% was
augmented by close control of support costs with increased efficiency improving
the ratio of employees to insurance policy levels.


For the year 2002                                        2002        2001       ^ %     H2 2002     H2 2001        ^ %
Roadside Services:
Customer numbers (period end) (000)                    12,975      12,194         6%      12,975      12,194         6%
Customer renewal rate (%)                                  85          85          -          85          85          -
Average transaction value (£)                              34          35       (1%)          34          35       (1%)
Roadside patrols employed                               3,651       3,592         2%       3,651       3,592       1.6%
Personal Finance:
Insurance customers (000):
Motor                                                     959         906         6%         959         906         6%
Home                                                      664         618         7%         664         618         7%
Overall renewal rate (%)                                   78          74     4 ppts          77          76      1 ppt
Average annual premium (£)                                261         257         2%         259         258       0.4%
Motor and home insurance commissions (£m)                  93          86         9%          49          45         9%
Loans (fixed term) book size (£m)                         661         428        54%         661         428        54%
Loans (fixed term) operating profit (£m)                   20          17        18%          10           8        25%
No. of fixed term personal loans (000)                    117          77        52%         117          77        52%
AA Service Centres:
Site numbers                                              129         129          -         129         129          -
Average turnover per site (£000)                          320         n/a          -         156         n/a          -
Turnover (£m):
AA Roadside Services                                      476         452         5%         243         220        10%
AA Personal Finance                                       172         155        11%          89          86         3%
Other AA Services                                         112          82        37%          59          53        11%
Total                                                     760         689        10%         391         359         9%
Sales and marketing expenses (% of turnover)               10           9      1 ppt           9           9          -
Operating profit (£m):
AA Roadside Services                                       54          44        23%          30          23        30%
AA Personal Finance                                        47          40        17%          24          23         4%
Other AA Services                                        (28)        (12)     (133%)        (17)         (9)      (89%)
Total                                                      73          72         1%          37          37          -
Operating margin (%)                                       10          10          -           9          10    (1 ppt)



Other AA Services

Turnover is up 37% at £112 million, including a full year of turnover from the
AA's network of 129 garages acquired from Halfords in Sept 2001.

Other AA services incurred operating losses of £28 million. £4.5 million of this
came from the closure of AA workshops, with the service centres producing an
operating loss of £15 million. £7 million of investment in infrastructure and
rebranding of the service centres was expensed. We are carrying out various
initiatives such as a cost reduction programme, advertising campaigns and offers
to the current membership base to increase utilisation and rapidly reduce the
ongoing loss.

AA Exceptional Item

The group has decided to reduce the operations of Golf England Limited, a
subsidiary undertaking, and has recognised a £14m provision in respect of losses
on the expected disposal of fixed assets.



One.Tel

In the second half of the year turnover grew by 20% over the second half of 2001
to £78 million, as a result of further growth in the customer base. Our variable
gross margin increased by 5% to 52% as we took advantage of opportunities to
negotiate improved transmission charges with our carriers. Operating profit for
the year was £2.1 million reflecting the investment in new products,
particularly mobile; and a £2 million marketing campaign undertaken in the
fourth quarter to raise awareness of One.Tel's transition from a discounted
international calls provider to a full communications provider offering
landline, mobile and narrow and broadband internet services.

Customer acquisition costs increased to £14 million in the second half (full
year £22 million) supporting full year growth in the customer base of 23% from
2001. ARPU increased by 1% against the second half of 2001. With the
implementation of the revised industry process for CPS in July, the level of our
new landline sales using this connection method increased to 37% in December.

Mobile sales have been very encouraging with more than 35,000 contracts sold
since the launch in July, supported by attractive pricing and expanded retail
distribution. The migration of our broadband customers onto the One.Tel customer
care and billing system is due for completion in the first quarter of 2003
enabling us to offer a complete customer experience with all our telecoms
services charged on a single bill.


For the year 2002                                        2002     2001          ^ %     H2 2002     H2 2001        ^ %
Customer numbers (period end) ('000):
Fixed line                                                746      668           12%         746         668         12%
Other services                                            216      117           85%         216         117         85%
Total (*)                                                 962      785           23%         962         785         23%
Average minutes used per month (fixed line)               284      277          2.5%         286         277        3.2%
ARPU (fixed line) (£)                                   16.20    15.85          2.2%       16.01       15.85          1%
Variable gross margin (fixed line) (%)                     51       47        4 ppts          52          47      5 ppts
Sales and marketing expenses (% of turnover)               14        8        6 ppts          16           8      8 ppts
Turnover (£m) **                                          153       65          135%          78          65         20%
Operating profit (£m)                                     2.1        4         (48%)       (2.7)           4           -
Operating margin (%)                                      1.4        6    (4.6 ppts)       (3.5)           6  (9.5 ppts)

* 30 day tolling

** 2001 turnover is from date of acquisition (3 July 2001)


Goldfish Bank

Goldfish Bank has continued to make progress. Following a review of product
strategy by the Goldfish management team, we are focusing increasingly on brand
performance through a smaller range of more capital-efficient products.

Total card net interest income was up 9% at £36 million despite lower margins
prevailing within the industry and higher utilisation of interest free
promotional balance transfers. Fee income rose 6% to £54 million, primarily due
to higher levels of customer spend. Credit losses remained low at 3% of
outstanding balances. The number of cards in force has increased by 6% to 1.08
million (2001: 1.02 million). During the year 77,000 new accounts were opened
(2001: 27,600), with attrition low at 4.5%. The average monthly spend on the
Goldfish card increased by 14% against 2001, making it among the highest in the
UK market. The credit card profit contribution of £9 million was £3 million
lower than 2001 due to a £4.5 million increase in customer acquisition costs and
a £3 million cost relating to the migration to Goldfish's new infrastructure in
November.

In the autumn Goldfish entered the personal loan market, focusing initially on
generating a high quality applicant pool. At the year end approximately 1,800
personal loans had been drawn down with total outstanding balances of £14
million. Goldfish customers purchased 104,000 additional Goldfish-branded
products including travel insurance, home insurance and personal accident
insurance. This is 69% up on 2001 and is an encouraging indicator of future
cross-sales potential. The profit contribution from all non-credit card products
was negative: a net loss of £2 million due to the investment of £5 million in
customer acquisition during the period.

Goldfish successfully launched its internet based savings account and began
active marketing in the autumn. This has proved to have strong appeal with £286
million in deposits and over 11,000 accounts opened of which approximately 50%
were customers new to Goldfish Bank. Savings will continue to form part of a
diversified funding strategy.

The overall operating loss was £40 million with operating expenses at Goldfish
Bank, consisting of brand marketing, banking systems and product development, up
7% at £47 million. A further £46 million investment was capitalised in the
development of the IT systems platform. As this nears completion, we expect
significantly lower investment in 2003.


For the year 2002                                      2002       2001         ^ %    H2 2002     H2 2001           ^ %
Credit cards in force (000)                           1,082      1,025           6%       1,082       1,025           6%
Average monthly spend per active card (£)               541        476          14%         570         499          14%
Gross card receivables                                  773        677          14%         773         677          14%
Net interest margin (%)                                 5.2        5.1     0.1 ppts         4.9         5.9      (1 ppt)
Credit card income (£m):
Net interest income                                      36         33           9%          18          19         (5%)
Fee revenue and other income                             54         51           6%          29          26          12%
Total (before deduction of loyalty costs)                90         84           7%          47          45         4.4%

Loyalty scheme costs (% of income)                       33         31       2 ppts          33          30       3 ppts

Credit losses (% of receivables)                          3        3.2   (0.2 ppts)         3.2         2.8     0.4 ppts
Credit card profit contribution (£m)                      9         12        (25%)           2          10        (80%)
Goldfish non-credit card product contribution (£m)    (2.4)        n/a          n/a         (4)         n/a          n/a
Sales and marketing expenses (% of income)                6          5       1 ppts           7           7            -
Goldfish operating (loss), before minority             (40)       (32)        (25%)        (23)        (10)       (130%)
interest (£m)



Centrica North America

Total North American turnover was £1,118 million in 2002, an increase of 46%
over 2001 driven largely by our entry into the Ontario and Texas electricity
markets, our entry into the Ontario services market through the acquisition of
Enbridge Services Inc and the addition of over 300,000 gas customers through the
acquisitions of Enbridge Services and parts of NewPower Company's customer base.

Operating profit fell by 7%, as profits from our home services businesses (£23
million) and reduced losses in our electricity business (by £5 million) were
offset by lower profits (by £4 million) in our gas business. Included within the
retail energy results are the increase in the cost base (£10 million) due to the
development of the infrastructure to support future growth and £21 million of
expensed costs incurred in acquiring customers organically. Upstream profits
were lower as wholesale prices fell and favourable forward contract prices
expired. These results include the adverse currency movements (£4 million), with
a 6% decline in the average Canadian dollar exchange rate during the year.

The pace of organic growth slowed in 2002 owing to a combination of slow
emergence of competitive markets, restrictive legislative and political
developments affecting sales activities, and large fluctuations in wholesale
natural gas prices. We are continuing our efforts with governments and
regulators at state, provincial and federal levels in support of market
liberalisation. We remain of the view that momentum will be regained in the
regions that are important to our future, but the timing remains uncertain.

Retail energy

Turnover for the residential gas supply business increased by 12%, driven
primarily by higher selling prices and acquisitions. Our Ontario residential gas
market share was approximately 26% at year end. In our US gas markets, slower
growth caused by high rates of customer churn was offset by the acquisition in
August of 212,000 customers in Michigan, Ohio and Pennsylvania from the NewPower
Company.

In our first year of operating in the electricity business in Ontario (from May)
and Texas, turnover was £189 million with an operating loss of £10 million.
Based on operating experience this year, we estimate that average annual
consumption for our residential electricity customers would be 11,000 kWh,
broadly in line with our expectations and more than twice our UK customer
average. The Texas residential electricity market continues to support a
positive competitive environment, with the presence of a pricing regime that
affords reasonable, sustainable gross margin prospects to both incumbents and
new market entrants. Following our entry into this market in January, we now
serve 890,000 retail energy customers, consisting of both acquired positions
(810,000 customers) in southern and western Texas (for which our transaction
closed in late December 2002) and organic programmes mainly in the Houston and
Dallas/Fort Worth regions.

Our retail energy supply gross profit grew by 14% to £95 million. Our gross
margin decreased to 14%. Our current gross margins (other than for our acquired
incumbent positions) are largely driven by our historic hedging activities in
each local market, through which we have procured the energy commodity at a
fixed forward cost, achieving a margin on the quantities supplied to our
fixed-price retail customers over a contracted period. There are risks to these
margins from the complexities involved in accurately forecasting total commodity
requirement, linked to rates of consumption, customer acquisition and retention.

Volatility in wholesale gas spot prices remained high, as benchmark gas contract
prices moved between $US10/mmbtu and US$2/mmbtu. In markets where we compete
against utilities flowing through gas or electricity to customers at wholesale
spot cost, this made winning new forward curve-based business extremely
challenging and also led to high levels of churn amongst customers signed up on
what became relatively high priced programs. This cyclical pattern will continue
to be a feature of our organic growth. In the latter part of the year, prices
returned to levels that we believe are more sustainable in the long term (US$4-5
/mmbtu) and conducive to the development of our customer base.

On 11 November, the Ontario government announced that it would cap residential
and small business electricity prices at below-market rates, to be subsidised by
government, effectively suspending competition until 2006. Under this
legislation, Centrica remains entitled to receive the market pricing mitigation
agreement payment, amounting to £16 million in 2002. Margins on residential
retail contracts already written are protected, at least to 2006. The
regulations regarding business customers are still formative. This electricity
customer base of over 500,000 will continue to retain value and be used for
cross-selling gas and home services products, but further organic electricity
growth is unlikely to be possible until this new legislation expires in 2006.

We continue to seek opportunities to acquire incumbent customer positions from
utilities seeking to exit the retail function. Our agreement in December to
purchase the incumbent retail energy business of ATCO Inc in Alberta - which
currently consists of approximately 820,000 gas and 160,000 electricity
customers - will maintain growth momentum into 2003 as we migrate customers to
unregulated energy and services packages.

Home and business services

As part of our strategy to gain competitive advantage and operating leverage
from an energy and home services cross-selling platform, the acquisition of
Enbridge Services Inc. for C$1 billion (£438 million) was completed in May 2002.
ESI made an operating profit of £23 million during the year. We subsequently
raised some C$744 million (£303 million) through selling down 58% of our
interest in the water heater assets acquired as part of the transaction by way
of the launch of The Consumer's Waterheater Income Fund. Our remaining 42%
retained interest had a value of C$218 million (£89 million) at December 31,
which we intend to continue to sell down in 2003. Centrica remains the exclusive
installer and provider of maintenance and repair services for our customers'
water heaters and, accordingly, without legal ownership of these assets, retains
relationships with approximately 1.3 million households.

In the group's balance sheet the water heaters are included in fixed assets and
the debt financing raised (C$500 million), for which there is no recourse to
Centrica, is included in loans, net of expenses. The profit and loss account
includes the entire rental income and related costs, including depreciation and
interest on the income fund's debt financing from the date of launch of the fund
in December. The income fund unit holders' share of profit is reflected in a
non-equity minority interest in the profit and loss account. The balance sheet
non-equity minority interest includes amounts raised from the sale of units.

Upstream gas

Development of our gas fields in Alberta continues. We drilled, completed and
began production at 218 wells during 2002, compared with 307 in 2001. Production
volumes were up slightly at 356 million therms, representing 24% of our North
American downstream gas sales. Operating profit fell by 47%, primarily as a
result of a lower wholesale market which led to a 23% decline in our average
sales price and the expiry of higher-priced forward sales contracts.


For the year 2002                                          2002       2001        ^ %   H2 2002    H2 2001          ^ %
Customer numbers (period end):
Residential and small commercial gas (000)                1,339      1,230          9%      1,339      1,230          9%
Residential and small commercial electricity (000)        1,416        n/a         n/a      1,416        n/a         n/a
Home & business services (000)                            1,627        n/a         n/a      1,627        n/a         n/a
Industrial & commercial energy (sites served)                61         49         24%         61         49         24%
Average consumption:
Residential and small commercial gas (therms)             1,138      1,154        (1%)        537        572        (6%)
Residential and small commercial electricity (kWh)       10,666        n/a         n/a      8,579        n/a         n/a
Industrial and commercial energy (m therms)                  19         23       (18%)          9         11       (18%)
Gas production and energy trading:
Gas production volumes (m therms)                           356        344          3%        172        180        (4%)
Average sales price (p/therm)                              21.4       27.9       (23%)       20.2       23.4       (14%)
Turnover (£m):
Residential and small commercial gas                        486        433         12%        189        201        (6%)
Residential and small commercial electricity                189        n/a         n/a        158        n/a         n/a
Home & business services                                    159        n/a         n/a        120        n/a         n/a
Gas production & energy trading                             124        105         18%         59         44         34%
Industrial & commercial energy                              160        230       (30%)         93         91          2%
Total                                                     1,118        768         46%        619        336         84%
Sales and marketing expenses (% of turnover)               1.7%       3.7%    (2 ppts)       2.2%       3.9%  (1.7 ppts)
Gross margin (%)
Residential and small commercial gas                         13         19    (6 ppts)         13         23   (10 ppts)
Residential and small commercial electricity                 16        n/a         n/a         16        n/a         n/a
Operating profit (£m):
Residential and small commercial gas                         16         20       (20%)        (5)         15           -
Residential and small commercial electricity               (10)       (15)         33%         10        (6)           -
Home & business services                                     23          -         n/a         17        n/a         n/a
Gas production & energy trading                              33         62       (47%)         16         31       (48%)
Industrial & commercial energy                                1          1           -          -        (1)         n/a
Total                                                        63         68        (7%)         38         39        (3%)
Operating margin (%)                                         6%         9%    (3 ppts)         6%        12%    (6 ppts)



Europe

The operating loss in 2002 in Belgium and Spain was £7 million, reflecting start
up costs in these markets. We now have approximately 18% of the electricity
market above 1 GWh in Flanders through our Luminus joint venture.





Note: All current financial results listed are for the year ended 31 December
2002. All references to 'the prior-year period', '2001' and 'last year' mean the
year ended 31 December 2001 unless otherwise specified.





Summary Group Profit and Loss Account

Year ended 31 December
                                                                 Before                            Before    
                                                            exceptional                       exceptional       
                                                            charges and                       charges and
                                                               goodwill        Results for        goodwill   Results for
                                                           amortisation           the year    amortisation      the year
                                                                   2002              2002            2001           2001
                                              Notes                  £m                £m              £m             £m
Turnover:
Continuing operations before acquisitions
(excluding Accord energy trading)                                 9,699             9,699           9,041          9,041

Acquisitions                                                        312               312
Continuing operations (excluding Accord
energy trading)                                                  10,011            10,011           9,041          9,041

Accord energy trading                                             4,304             4,304           3,570          3,570
Continuing operations                           1                14,315            14,315          12,611         12,611
Cost of sales                                   2              (11,328)          (11,328)        (10,224)       (10,224)
Gross profit                                                      2,987             2,987           2,387          2,387

Operating costs before exceptional charges      2               (2,108)           (2,108)         (1,755)        (1,755)
and goodwill amortisation
Exceptional charges and goodwill                3                     -             (116)               -          (166)
amortisation
Group operating profit                                              879               763             632            466

Share of profits less losses in joint                                53                46              47             45
ventures and associates - continuing
operations
Operating profit including joint ventures
and associates:
Continuing operations before acquisitions                           910               799             679            511
Acquisitions                                                         22                10
Continuing operations                           1                   932               809             679            511

Loss on disposal of business                    3                     -              (14)               -              -
Loss on disposal of fixed assets                3                     -              (14)               -              -
Net interest payable                                               (62)              (62)            (43)           (43)
Profit before taxation                                              870               719             636            468
Taxation                                        4                 (243)             (250)           (164)          (155)
Profit after taxation                                               627               469             472            313

Minority interest (equity and non-equity)                             9                 9              10             10
Profit after taxation and minority interest                         636               478             482            323

Dividends                                       5                                   (172)                          (124)
Retained profit for the financial period                                              306                            199
Dividend per ordinary share                     5                                    4.0p                           3.1p
Earnings per ordinary share:
Basic                                           6                                   11.4p                           8.1p
Diluted                                         6                                   11.3p                           8.0p
Adjusted Basic                                  6                 15.2p                             12.1p





Summary Group Balance Sheet

31 December
                                                                                                  2002             2001
                                                                              Notes                 £m               £m
Fixed assets
Intangible assets                                                                                1,813            1,524
Tangible assets                                                                                  2,763            2,058
Investments (including joint ventures)                                          7                  102              167
                                                                                                 4,678            3,749
Stocks                                                                                             180              193
Goldfish Bank debtors (amounts falling due within one year)                                        781              673
Goldfish Bank debtors (amounts falling due after more than one year)                                11                -
Other debtors (amounts falling due within one year)                                              2,598            1,923
Other debtors (amounts falling due after more than one year)                                       134              130
Cash and current asset investments                                                                 348              526
Goldfish Bank borrowings (amounts falling due within one year)                                   (430)            (610)
Other borrowings (amounts falling due within one year)                                           (289)            (361)
Goldfish Bank customer deposits (amounts falling due within one year)                            (286)                -
Other creditors (amounts falling due within one year)                                          (3,155)          (2,871)
Net current liabilities                                                                          (108)            (397)
Total assets less current liabilities                                                            4,570            3,352
Borrowings due after more than one year                                                          (784)            (598)
Creditors due after more than one year                                                           (122)             (34)
Provisions for liabilities and charges                                                         (1,262)          (1,184)
Total assets less liabilities                                                                    2,402            1,536

Shareholders' funds                                                                              2,248            1,502
Minority interests (equity and non-equity)                                                         154               34
Capital and reserves                                                                             2,402            1,536
Movements in Shareholders' Funds
Shareholders' funds at 1 January                                                                 1,502            1,298
Profit for the financial year                                                                      478              323
Dividends                                                                                        (172)            (124)
Shares issued                                                                                      488               17
Reserves movements on employee share schemes                                                      (40)             (10)
Loss on foreign exchange                                                                           (8)                -
Goodwill adjustment                                                                                  -              (2)
Shareholders' funds at 31 December                                                               2,248            1,502



Statement of Total Recognised Gains and Losses

Year ended 31 December
                                                                                                  2002             2001
                                                                                                    £m               £m
Profit for the financial year                                                                      478              323
Exchange translation differences                                                                   (8)                -
Total gains and losses recognised for the financial year                                           470              323



Summary Group Cash Flow Statement

Year ended 31 December
                                                                                                  2002             2001
                                                                              Notes                 £m               £m
Cash inflow from operating activities                                           8                  717              825
Dividends received from joint ventures and associates                                               57               16
Returns on investments and servicing of finance                                 9                 (25)             (15)
Taxation paid                                                                                    (192)            (109)
Capital expenditure and financial investment                                   10                (402)            (337)
Acquisitions and disposals                                                     11                (935)            (607)
Equity dividends paid                                                                            (138)            (115)
Cash outflow before use of liquid resources and financing                                        (918)            (342)
Management of liquid resources                                                                     134            (257)
Financing                                                                      12                  747              686
Net (decrease)/increase in cash                                                                   (37)               87



Reconciliation of debt,

net of cash and investments
                                                                                                  2002             2001
                                                                                                    £m               £m
Debt, net of cash and investments at 1 January                                                 (1,043)            (117)
Drawdown from Goldfish working capital facility                                                    180            (610)
Debt acquired                                                                                        -             (37)
Net (decrease)/ increase in current asset investments (i)                                        (134)              257
Net (decrease)/ increase in net cash for the period                                               (37)               87
Net increase in other debt                                                                       (117)            (635)
Exchange adjustments                                                                               (4)               12
Debt, net of cash and investments at 31 December (ii)                                          (1,155)          (1,043)
Of which:
Goldfish Bank                                                                                    (430)            (610)
Other businesses - recourse debt                                                                 (529)            (433)
Other businesses - non-recourse debt                                                             (196)                -
                                                                                               (1,155)          (1,043)




        (i) Cash and investments included £159 million (2001: £142 million) held
        by the Group's insurance subsidiary undertakings and £10 million (2001:
        £9 million) held by the Law Debenture Trust, on behalf of the Company,
        as security to cover unfunded pension liabilities. These amounts were
        not readily available to be used for other purposes within the Group.

        (ii) Debt, net of cash and investments, comprised cash and current asset
        investments of £348 million (2001: £526 million), less borrowings, bank
        loans and overdrafts of £1,397 million (2001: £1,431 million) and
        finance lease obligations of £106 million (2001: £138 million).

Notes


        1 Segmental analysis including share of profits and losses of joint
        ventures and associates

        Year ended 31 December


                                           Turnover              Operating profit/(loss)         Operating profit/(loss)
                                                               before exceptional charges      after exceptional charges
                                                                and goodwill amortisation      and goodwill amortisation
                                           2002          2001           2002           2001          2002           2001
                                             £m            £m             £m             £m            £m             £m
British Gas: residential energy           5,185         5,150            218             19           218              5
Home services                               810           722             61             36            60             30
British Gas Communications                   52            37           (35)          (101)          (35)          (116)
British Gas residential                   6,047         5,909            244           (46)           243           (81)
Centrica Business Services                  971           581             65             44            59             37
Industrial sales and wholesaling (i)        784           921             72              5            72              5
Gas production                               83            80            448            552           448            552
Accord energy trading                     4,304         3,570              -             16             -           (14)
Centrica energy management group          5,171         4,571            520            573           520            543
The AA                                      760           689             73             72            23              8
Goldfish Bank                                93            22           (40)           (32)          (54)           (37)
One.Tel                                     153            65              2              4           (4)              5
Centrica North America                    1,118           768             63             68            24             39
Other operations (ii)                         2             6              5            (4)           (2)            (3)
Total from operations                    14,315        12,611            932            679           809            511




                (i) The Group recognised a profit of £9 million in connection
                with the early termination of an in-the-money gas supply
                contract.

                (ii) Other operations include the Group's European activities,
                and a profit of £12 million which was recognised in the year in
                respect of the sale of the Group's interest in Spalding Energy
                Company Limited, the value of which had been impaired in prior
                years.


2 Costs (before exceptional charges and goodwill amortisation)

Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Cost of sales:
Continuing operations before acquisitions                                                   11,141            10,224
Acquisitions                                                                                   187
Continuing operations                                                                       11,328            10,224
Operating costs:
Continuing operations before acquisitions                                                    2,005             1,755
Acquisitions                                                                                   103
Continuing operations                                                                        2,108             1,755



 3. Exceptional charges and goodwill amortisation


        Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Exceptional operating costs:
Business integration costs                                                                       -                35
Energy trading costs                                                                             -                37
Other                                                                                            -                 8
                                                                                                 -                80
Goodwill amortisation:
Continuing operations                                                                          104                86
Acquisitions                                                                                    12
                                                                                               116                86
                                                                                               116               166
Goodwill amortisation within joint ventures and associates                                       7                 2
                                                                                               123               168
Non-operating exceptional charges:
Loss on disposal of business (i)                                                                14                 -
Loss on disposal of fixed assets (ii)                                                           14                 -
                                                                                                28                 -




                (i) During the year the Group recognised a £14 million loss on
                disposal of the LPG business. The loss includes £11 million
                relating to the write-off of unamortised goodwill.

                (ii) The Group has decided to reduce the operations of Golf
                England Limited, a subsidiary undertaking, and has recognised a
                £14 million provision in respect of losses on disposal of fixed
                assets.

        4 Taxation


                                                                                              2002              2001
                                                                                                £m                £m
Current year taxation charge                                                                   243               164
Tax on exceptional items                                                                       (2)               (9)
Exceptional deferred tax charge                                                                  9                 -
                                                                                               250               155


        The charge comprised mainly corporation tax on 'ring-fenced' offshore
        gas production. The charge incorporates the increase in corporation tax
        from 30% to 40% on profits from offshore production. This has increased
        the tax charge for the year by £12 million. In addition, the restatement
        of deferred tax liabilities to reflect the change in rates has resulted
        in an exceptional charge of £9 million.

        5 Dividends

        A final dividend of 2.6p per share is proposed, which together with the
        interim dividend of 1.4p per share, will bring the total dividend for
        the year to 4.0p per share. The dividend will be paid on 18 June 2003 to
        shareholders on the register at the close of business on 2 May 2003.



        6 Earnings per share

        Year ended 31 December




                                                                                    2002                         2001
                                                                  Earnings           EPS       Earnings           EPS
                                                                        £m         pence             £m         pence
Profit for the financial year                                          478          11.4            323           8.1
Add back exceptional charges and goodwill amortisation                 158           3.8            159           4.0
Earnings before exceptional charges and goodwill                       636          15.2            482          12.1
amortisation
Diluted EPS                                                            478          11.3            323           8.0
Average number of shares (million) used in the calculation                         4,181                        3,984
of basic and adjusted basic EPS
Average number of shares (million) used in the calculation                         4,227                        4,062
of diluted EPS




        7 Fixed assets investments

        31 December


                                                                                                2002              2001
                                                                                                  £m                £m
Joint ventures:
Share of gross assets                                                                            810               709
Share of gross liabilities                                                                     (736)             (597)
Other investments                                                                                 28                55
                                                                                                 102               167




        The Group's share of joint ventures' gross assets and gross liabilities
        principally comprised its interests in Humber Power Limited (a power
        station), Centrica Personal Finance Limited (AA and British Gas personal
        loans activities), AA Financial Services (AA credit card activities) and
        Luminus NV (energy supply).



        Share of joint ventures' assets and liabilities

        31 December 2002


                          Humber Power         Centrica    AA Financial      Luminus NV          Other          Total
                               Limited         Personal        Services
                                        Finance Limited
                                    £m              £m              £m              £m             £m             £m
Share of gross assets              346             349              45              62              8            810
Share of gross                   (327)           (345)            (45)            (13)            (6)          (736)
liabilities
                                    19               4               -              49              2             74

Net (debt)/cash                  (251)           (333)            (43)               2            (2)          (627)
included in above




        8 Reconciliation of operating profit to operating cash flow

        Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m

Group operating profit                                                                         763               466
Add back:
Profit on sale of fixed assets                                                                (18)              (13)
Operating exceptional charges and goodwill amortisation                                        116               166
Depreciation and impairment                                                                    390               337
Amortisation of investments                                                                      7                14
(Increase)/decrease in working capital                                                       (364)                72
Decrease in provisions                                                                       (161)             (173)
Operating cash flow before exceptionals:
Continuing operations before acquisitions                                                      712               773
Acquisitions                                                                                    21                96
Continuing operations                                                                          733               869
Payments relating to exceptional charges                                                      (16)              (44)
Cash inflow from operating activities after exceptional payments                               717               825




        9 Returns on investments and servicing of finance

        Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Interest received                                                                               29                27
Interest paid                                                                                 (42)              (28)
Interest element of finance lease rental payments                                             (12)              (14)
                                                                                              (25)              (15)




        10 Capital expenditure and financial investment

        Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Purchase of tangible fixed assets                                                            (449)             (312)
Sale of tangible fixed assets                                                                   28                11
Purchase of own shares                                                                           -              (14)
Loans to joint ventures repaid/(made)                                                           19              (22)
                                                                                             (402)             (337)




        11 Acquisition and disposals

        Year ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m

Goldfish Bank                                                                                    -             (710)
Other businesses                                                                           (1,107)             (402)
Joint ventures and associates                                                                  (4)              (80)
Deferred consideration                                                                        (70)              (17)
Total cash payments                                                                        (1,181)           (1,209)
Cash acquired                                                                                  222                17
Overdraft acquired                                                                            (30)              (12)
Drawdown from Goldfish working capital facility                                                  -               590
Proceeds from disposals                                                                         54                 7
                                                                                             (935)             (607)




        12 Financing

        Year ended 31 December


                                                                                               2002              2001
                                                                                                 £m                £m

Net increase in short-term borrowings                                                           309               196
Repayment of loans                                                                            (381)              (22)
Capital element of finance rentals                                                             (32)              (32)
Bonds issued                                                                                    221               493
Realised net foreign exchange gain                                                               57                 -
Investment by equity and non-equity minority shareholders                                       129                44
Issue of ordinary share capital                                                                 444                 7
                                                                                                747               686




        13 Pensions

        These statements have been prepared under SSAP 24. The total pension and
        other retirement benefits costs arising and the reconciliation to the
        balance sheet provision were as follows:


                                                                                               2002              2001
                                                                                                 £m                £m
Pension and other retirement benefits provision at 1 January                                    116                89
Profit and loss charge                                                                           68                54
Acquisition of surplus in year                                                                  (2)                 -
Employer contributions paid                                                                   (107)              (27)
Pension and other retirement benefits provision at 31 December                                   75               116


        Set out below is indicative information on changes in net assets which
        would arise from valuation of the pension scheme assets and liabilities
        in accordance with FRS 17 principles at 31 December 2002.

        The major assumptions used for the actuarial valuation were (31
        December):


                                                                                              2002              2001
                                                                                                 %                 %

Rate of increase in employee earnings                                                          4.3               4.5
Rate of increase in pensions in payment                                                        2.3               2.5
Discount rate                                                                                 5.75               5.8
Inflation                                                                                      2.3               2.5


        On this basis, the market value of the assets in the schemes and the
        present value of the liabilities in the schemes were:


                                                                                              2002              2001
                                                                                                £m                £m

Total of fair value of assets                                                                1,882             2,193
Present value of schemes' liabilities                                                      (2,713)           (2,526)
Deficit in the schemes                                                                       (831)             (333)
Related deferred tax asset                                                                     249               100
Net pension liability                                                                        (582)             (233)




        Under SSAP 24 the Group balance sheet includes a provision of £75
        million at 31 December 2002 (2001: £116 million). Had FRS 17 been
        implemented in full at that date the net assets of the Group would have
        been reduced by £507 million (2001: £117 million), and the net charge
        for pension costs in the profit and loss account would have increased by
        £47 million (2001: £16 million) compared with that under SSAP 24, as set
        out below:


                                                                           FRS 17           SSAP 24         Increase/
                                                                                                           (decrease)

Amount charged to operating profit                                            133                68                65
Amount credited to net finance income                                        (18)                 -              (18)
Net charge to profit and loss account                                         115                68                47




        14 Basis of preparation

        The preliminary results for the year ended 31 December 2002 are
        unaudited. The financial information set out in this announcement does
        not constitute the Company's statutory accounts for the year ended 31
        December 2002 or 31 December 2001. The financial information for the
        year ended 31 December 2001 is derived from the statutory accounts for
        that year which have been delivered to the Registrar of Companies. The
        auditors reported on those accounts; their report was unqualified and
        did not contain a statement under either Section 237 (2) or Section 237
        (3) of the Companies Act 1985. The audit report on the statutory
        accounts for the year ended 31 December 2002 has not yet been signed.
        These accounts will be finalised and delivered to the Registrar of
        Companies in due course.

        All operating profit numbers are stated, throughout the commentary,
        before exceptionals and goodwill amortisation unless otherwise stated.
        The Directors believe this measure assists with understanding the
        underlying performance of the group. The equivalent amounts after
        exceptionals and goodwill amortisation are reflected in Note 1 and are
        reconciled at group level in Note 6 with descriptions of the exceptional
        items in Note 3.



Summary Group Profit and Loss Account

Six months ended 31 December
                                                                   Before    Results for           Before    Results for
                                                              exceptional     the period      exceptional     the period
                                                              charges and                     charges and
                                                                 goodwill                        goodwill
                                                             amortisation                    amortisation
                                                                     2002           2002             2001           2001
                                                 Notes                 £m             £m               £m             £m
Turnover:
Continuing operations before acquisitions:
(excluding Accord energy trading)                                   4,583          4,583            4,224          4,224

Acquisitions                                                          272            272

Continuing operations (excluding Accord energy                      4,855          4,855            4,224          4,224
trading)                                                            
Accord energy trading                                               2,353          2,353            1,634          1,634
Continuing operations                              a                7,208          7,208            5,858          5,858
Cost of sales                                      b              (5,813)        (5,813)          (4,700)        (4,700)
Gross profit                                                        1,395          1,395            1,158          1,158

Operating costs before exceptional charges and     b              (1,115)        (1,115)            (950)          (950)
goodwill amortisation
Exceptional charges and goodwill amortisation      c                    -           (63)                -          (113)
Group operating profit                                                280            217              208             95

Share of profits less losses in joint ventures                         25             21               34             32
and associates - continuing operations
Operating profit including joint ventures and
associates:
Continuing operations before acquisitions                             286            231              242            127
Acquisitions                                                           19              7
Continuing operations                              a                  305            238              242            127

Loss on disposal of business                       c                    -           (14)                -              -
Loss on disposal of fixed assets                   c                    -           (14)                -              -
Net interest payable                                                 (33)           (33)             (23)           (23)
Profit before taxation                                                272            177              219            104
Taxation                                                             (75)           (57)             (73)           (64)
Exceptional tax charges and tax on exceptional                          -             18                -              9
items
Profit after taxation                                                 197            120              146             40

Minority interests                                                      8              8                4              4
Profit after taxation and minority interest                           205            128              150             44

Dividends                                                                          (110)                            (76)
Retained profit/(loss) for the financial period                                       18                            (32)
Earnings per ordinary share:
Basic                                              d                                3.0p                            1.1p
Diluted                                            d                                3.0p                            1.1p
Adjusted Basic                                     d                 4.8p                            3.8p

Statement of Total Recognised Gains and Losses

Six months ended 31 December
                                                                                                  2002             2001
                                                                                                    £m               £m
Profit for the period                                                                              128               44
Exchange translation differences                                                                   (8)                -
Total gains and losses recognised for the period                                                   120               44



Summary Group Cash Flow Statement

Six months ended 31 December
                                                                                                  2002             2001
                                                                              Notes                 £m               £m
Cash inflow from operating activities                                           e                  387              488
Dividends received from joint ventures and associates                                               44                3
Returns on investments and servicing of finance                                 f                 (16)                -
Taxation paid                                                                                    (134)             (77)
Capital expenditure and financial investment                                    g                (248)            (258)
Acquisitions and disposals                                                      h                (424)            (504)
Equity dividends paid                                                                             (59)             (47)
Cash outflow before use of liquid resources and financing                                        (450)            (395)
Management of liquid resources                                                                      65            (220)
Financing                                                                                          465              671
Net increase in cash                                                                                80               56



Reconciliation of debt, net of cash and investments
                                                                                                  2002             2001
                                                                                                    £m               £m
Debt, net of cash and investments at 1 July                                                    (1,081)             (87)
Repayment / (drawdown) from Goldfish Bank working capital facility
                                                                                                   186            (610)
                                                                                                   
Debt acquired                                                                                      (1)              (9)
Net (decrease)/increase in current asset investments                                              (65)              220
Net increase in cash for the period                                                                 80               56
Net decrease in other debt                                                                       (279)            (642)
Exchange adjustments                                                                                 5               29
Debt, net of cash and investments at 31 December                                               (1,155)          (1,043)

Notes


        a) Segmental analysis including share of profits and losses of joint
        ventures and associates

        Six months ended 31 December


                                           Turnover              Operating profit/(loss)      Operating profit/(loss)
                                                               before exceptional charges    after exceptional charges
                                                                and goodwill amortisation    and goodwill amortisation
                                           2002          2001           2002           2001          2002           2001
                                             £m            £m             £m             £m            £m             £m
British Gas: residential energy           2,335         2,289             21           (50)            21           (62)
Home services                               422           383             39             25            39             22
British Gas Communications                   26            23            (9)           (49)           (9)           (64)
British Gas residential                   2,783         2,695             51           (74)            51          (104)
Centrica Business Services                  497           281             25             25            20             18
Industrial sales and wholesaling            383           424             41              -            41              -
Gas production                               42            38            158            216           158            216
Accord energy trading                     2,353         1,634           (15)              6          (15)           (24)
Centrica energy management group          2,778         2,096            184            222           184            192
The AA                                      391           359             37             37            13              6
Goldfish Bank                                62            22           (23)           (10)          (30)           (15)
One.Tel                                      78            65            (3)              4           (7)              5
Centrica North America                      619           336             38             39            15             25
Other operations                              -             4            (4)            (1)           (8)              -
Total from operations                     7,208         5,858            305            242           238            127






b) Costs (before exceptional charges and goodwill amortisation)

Six months ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Cost of sales:
Continuing operations before acquisitions                                                    5,644             4,700
Acquisitions                                                                                   169
Continuing operations                                                                        5,813             4,700
Operating costs:
Continuing operations before acquisitions                                                    1,029               950
Acquisitions                                                                                    86
Continuing operations                                                                        1,115               950




        c) Exceptional charges and goodwill amortisation

        Six months ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Exceptional operating costs:
Continuing operations                                                                            -                67
Goodwill amortisation:
Continuing operations                                                                           53                46
Acquisitions                                                                                    10
Continuing operations                                                                           63                46
                                                                                                63               113
Goodwill amortisation within joint ventures and associates                                       4                 2
                                                                                                67               115


Non-operating exceptional charges:
Loss on disposal of business (i)                                                                 14                 -
Loss on disposal of fixed assets (ii)                                                            14                 -
                                                                                                 28                 -




                (i) During the year the Group recognised a £14 million loss on
                disposal of the LPG business. The loss includes £11 million
                relating to the write-off of unamortised goodwill.

                (ii) The Group has decided to reduce the operations of Golf
                England Limited, a subsidiary undertaking, and has recognised a
                £14 million provision in respect of losses on disposal of fixed
                assets.

d) Earnings per share

Six months ended 31 December


                                                                                     2002                           2001
                                                                  Earnings            EPS       Earnings             EPS
                                                                        £m          pence             £m           pence
Profit for the financial period                                        128            3.0             44             1.1
Add back exceptional charges and goodwill amortisation                  77            1.8            106             2.7
Earnings before exceptional charges and goodwill                       205            4.8            150             3.8
amortisation
Diluted EPS                                                            128            3.0             44             1.1



e) Reconciliation of operating profit to operating cash flow

Six months ended 31 December


                                                                                               2002              2001
                                                                                                 £m                £m
Group operating profit                                                                          217                95
Add back:
Profit on sale of fixed assets                                                                  (5)              (13)
Operating exceptional charges and goodwill amortisation                                          63               113
Depreciation, impairment and amortisation of investment                                         194               162
(Increase)/decrease in working capital                                                        (136)                84
Increase in provisions                                                                           54                61
Operating cash flow before exceptionals:
Continuing operations before acquisitions                                                       372               502
Acquisitions                                                                                     15                 -
Continuing operations                                                                           387               502
Payments relating to exceptional charges                                                          -              (14)
Cash inflow from operating activities after exceptional payments                                387               488



f) Returns on investments and servicing of finance

Six months ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Interest received                                                                               19                11
Interest paid                                                                                 (28)               (5)
Interest element of finance lease rental payments                                              (7)               (6)
                                                                                              (16)                 -



g) Capital expenditure and financial investment

Six months ended 31 December


                                                                                              2002              2001
                                                                                                £m                £m
Purchase of tangible fixed assets                                                            (290)             (234)
Sale of tangible fixed assets                                                                   27                10
Purchase of own shares                                                                           -              (14)
Loans to joint ventures repaid/(made)                                                           15              (20)
                                                                                             (248)             (258)



h) Acquisition and disposals

Six months ended 31 December
                                                                                              2002               2001
                                                                                                £m                 £m

Goldfish Bank                                                                                    -              (710)
Other businesses                                                                             (617)              (361)
Joint ventures and associates                                                                  (4)               (43)
Deferred consideration                                                                        (37)                (8)
Total cash payments                                                                          (658)            (1,122)
Cash acquired                                                                                  222                 17
Cash/(overdraft) acquired                                                                     (30)                  4
Drawdown from Goldfish Bank working capital facility                                             -                590
Proceeds from disposal                                                                          42                  7
                                                                                             (424)              (504)

Enquiries

For further information please contact:

Charles Naylor, Director of Corporate Affairs

Gary Leibowitz, Director, Investor Relations

Telephone:

01753 494 085 (Media)

01753 494 900 (Investors and Analysts)

Facsimile:

01753 494 090 (Media)

01753 494 909 (Investors and Analysts)



Financial Calendar

2002 annual report and accounts published                                              End of March 2003

Ex-dividend date for 2002 proposed final dividend                                          30 April 2003

Record date for 2002 proposed final dividend                                                  2 May 2003

Annual general meeting                                                                       12 May 2003

Proposed 2002 final dividend payment date                                                   18 June 2003

2003 Interim results announcement                                                           31 July 2003

Interim dividend payment date                                                           12 November 2003



Websites

www.centrica.com
www.theaa.com
www.britishgasbusiness.co.uk
www.directenergy.com
www.energyamerica.com
www.goldfish.com
www.house.co.uk
www.luminus.be
www.onetel.co.uk

Registered Office

Millstream

Maidenhead Road
Windsor
Berkshire
SL4 5GD




                      This information is provided by RNS
            The company news service from the London Stock Exchange