Centrica Stock

As usual, I'm joined by our CFO, Russell O'Brien, and we've got a leadership team and our Chairman sitting in the front row. So if you get any really difficult questions, they would be delighted to take them at the end of this.

So we set out several years ago to make Centrica a higher quality, more predictable business, and that journey continues. And in the face of sustained volatility around the world, we've made more progress in the first half of 2026. Investing to support huge growth in power demand, pivoting the portfolio towards more stable earnings and improving our commercial performance across retail. And not everything has gone our way. The Middle East war has weighed on Centrica Energy. And some of the delivery has been slower than I would like.

right across our portfolio, the job is far from done. You can see that in the numbers. Retail has not yet grown as we want it to, and EPS is a little bit lower year-on-year. But that comes as we ramp up our transformation program. We're investing in changes that will set Centrica up for the future. We invested GBP 90 million in the first half, which is over GBP 0.01 a share. If you strip that out, EPS would have grown 8% year-on-year.

Our operational foundations are strong. Our product range is expanding. Our growth pipeline remains rich even after the significant investment over the past couple of years. Now our targets are ambitious, GBP 2 billion of EBITDA and doubling EPS by 2030. But by remaining nimble, driving transformation and keeping a clear eye on what we want Centrica to look like in the long term, I'm really confident that we can deliver these targets and grow further into the next decade.

Unprecedented growth in power demand is a defining theme for the world over the coming years. It's a once-in-a-lifetime opportunity, driven by electrification and the growth of AI. The investment required to meet that growth is truly huge. It's over GBP 3,000 billion over the next decade just in Europe. And that's a huge opportunity for us. It's an opportunity to harness AI to become much more efficient. And there's an opportunity to grow by delivering the energy our customers need to power more data centers, more advanced manufacturing, more economic growth.

But it's not just about building new capacity. It's about linking up generation with bespoke tariffs and services that give consumers what they want. It's about managing energy flows to optimize the system. It's about assuring that energy is affordable, the energy is secure and energy is sustainable to drive that economic growth. The companies that do that will be the real winners. And at Centrica, we're uniquely positioned for that future.

Think about what we can see. A generator can see wholesale prices. A retailer can see demand, a trader can see market flows. We see all of this at once updated in real time by millions of connected devices, millions of smart meters and a global trading operation. And that means that we generate more data and more insight than our competitors. That sharper insight means better decisions and better decisions win us more customers and more assets. That's the flywheel and we see that playing out every single day.

And by combining our customer relationships, our trading expertise and our infrastructure capabilities, we can offer things that customers want, our partners value and crucially that our competitors are unable to match. That's how we turn our strategy into earnings growth. That's how we create value for our shareholders.

So enough for me at the start. Our very capable CFO, Russell is going to take us through the numbers, and then I'll come back to you and talk a bit more about the strategy. Russell, over to you.

Thank you, Chris, and good morning, everyone. Let me start with the headlines from the first half. We've delivered solid numbers in a volatile market, demonstrating the resilience of our business. And we continue to deploy our balance sheet and strong financial platform to execute our strategy.

So to the numbers, adjusted EBITDA was GBP 737 million, down versus last year, and adjusted earnings per share was 6.8p. After factoring in a step-up in investment, we had free cash outflow of almost GBP 600 million, which led to a net cash at the end of the period of just over GBP 700 million. And with the balance sheet remaining strong and confidence in our underlying earnings trajectory, we continue to progress our shareholder returns, raising the interim dividend by 9% to 2p.

Now let me just unpack some of those numbers in a bit more detail. Retail EBITDA of GBP 346 million was slightly higher than last year, and optimization generated GBP 87 million, and I'll come back to both of those in a second.

Infrastructure EBITDA of GBP 355 million was down by GBP 150 million versus last year. Over GBP 100 million of that, though, was driven by the Spirit Energy disposal, while production outages and lower nuclear realized prices were also headwinds. At the same time, we saw strong year-on-year gains across the MAP, Grain, LNG and Sizewell C and those areas will continue to build predictably over time, having generated almost GBP 90 million of EBITDA in the first half.

Lastly, Rough contributed EBITDA of almost GBP 60 million as we kept our focus on costs and produced unhedged indigenous gas, which captured higher prices in recent months. We won't see a repeat of the performance in the second half as lower reservoir pressure naturally reduces production.

As always, you'll find more detail on business performance in this morning's release.

In retail, EBITDA was marginally higher than last year, reflecting stronger operational performance and favorable price effects, offsetting a step up in transformation investment, higher bad debt in a more normalized result in business. And while the weather was significantly warmer than normal, it was only a small headwind compared to last year. And in the end, this was offset by selling excess commodity back into a higher-priced market. Given the shape of the commodity curve, however, we expect a negative earnings impact in the second half of the year, and therefore, more of our retail profits than normal falling into the first half. Bad debt remains an industry-wide challenge, and our charge of just over 4% of revenue is still elevated. We're not happy with that.

So while we expect this cost to be socialized and recovered over time, we're laser focused on improving our performance. And as you would expect, we continue to press Ofgem for more proactive steps on the nonpayment of bills. And the movements we've seen in the first half speak to the essence of home energy supply, short-term mismatches between revenue and costs, offset by through-the-cycle predictability with a regulated underpin. And you can see that in our margins in the slide, which are broadly in line with the price cap since it began. Our focus here is firmly on value over volume, and I'm pleased we're moving in the right direction with customer satisfaction up and greater engineer productivity.

Moving to Centrica Energy, which remains on track to deliver its full year guidance. Gas and Power Trading had a good first half, capturing value from structural volatility across asset-backed and algorithmic strategies. Although pricing driven by nonmarket fundamentals still proved challenging.

Our renewables route-to-market business, retail also delivered a solid result. But LNG is a more complex story. Profitability was lower in half 1, partly reflecting normalized commodity prices and partly reflecting a conscious decision to delay cargoes into the second half to maximize value. Although disruption costs for the Middle East crisis created price dislocations and volatility, it also led to Asia temporarily buying less LNG and disruption to shipping and insurance markets. So combined with our fully hedged physical portfolio, this meant our ability to capture additional value was limited.

So for the remainder of the year, we already have good visibility on LNG shipments and in retail, which is a more ratable profile. And alongside what we're seeing in gas and power markets, we remain confident in our guidance of around GBP 250 million of EBITDA for 2026.

Looking further out, the conflict does have implications for '27. Centrica Energy's portfolio was positioned for higher global LNG supply and weaker gas prices, a gas glut. The conflict in the Middle East changed the market significantly. As the risk/reward balance evolved, the team reacted and repositioned our portfolio, exactly what a prudent approach to risk management looks like. But the same actions that protect the downside mean we've reduced our exposure to upside opportunities across the portfolio. Combined with continued volatility driven by news flows rather than fundamentals, that means we currently expect our value at risk to remain muted for next year.

Now while there's a wide range of outcomes, that means we currently think EBITDA is likely to be around the level we delivered in 2025 and expect to deliver this year. That's Frustrating, but if conditions change, we're ready to react, and we continue to develop our underlying capabilities driving long-term value.

Expanding our reach in gas and power, further asset growth in retail and new long-term LNG deals in Mozambique, and at Delfin later this decade. And that's why we remain confident in the longer-term outlook and earnings growing to GBP 300 million to GBP 400 million by the end of 2028.

Our transformation program is now well underway and underpins our outlook. As promised, we wanted to give you the tools to assess our performance and be transparent about the associated costs. We don't treat this as exceptional. And by doing it that way, our teams remain focused on maximizing value from every pound spend. Although that, of course, means that today's results reflect the costs that will support growth for many years to come.

So how are we doing? In the first half, we've invested just over GBP 90 million, including GBP 20 million of CapEx, a significant step-up from our normal run rate. We got several programs on the go. And most of those are multiyear journeys with benefits building over time. But some such as the 1,300 role reductions we've announced across the group are more immediate. Operating costs were down 3% year-on-year in nominal terms, giving us confidence that the targets we laid out in February are on track.

GBP 500 million of underlying savings with flat nominal cost to 2030, and we're doing everything we can to accelerate delivery. The first half highlights the importance of a resilient balance sheet that allows us to absorb market shocks and take advantage of opportunities. Working capital is an outflow, largely driven by retail with no offsetting release from gas storage inventories that we'd normally see. We already run an efficient working capital position, but we see a number of opportunities to improve further, and we've got several projects in the works for the second half of the year. Investment tripled year-on-year, including the GBP 370 million on Severn and further investment to Sizewell C in the MAP. Three great examples of more predictable contracted infrastructure portfolio. Alongside the other movements you can see, this led to a free cash outflow of GBP 570 million and a closing net cash position of GBP 709 million.

Now to the full year outlook. 2026 expectations are largely unchanged from the AGM statement in May. So I'll be very brief here. No change to either retail or optimization. For infrastructure, performance is expected to be above our previous range given higher prices. So we've updated that for you here. With the phasing I've mentioned in retail and optimization, we expect group earnings to be weighted to the first half. And following the acquisition of Severn, we now expect investment to be around GBP 1.1 billion this year.

So to summarize, our performance in the first half was solid. There are still plenty of areas we need to improve, and we remain focused on the areas we can control to maximize long-term value. Our transformation program is moving at pace, and we're continuing to invest into assets that will be the new bedrock for the group. We are putting the building blocks in place to deliver on our targets, support a progressive dividend and to create long-term value for shareholders.

With that, let me hand back to Chris.

Thanks, Russell. So the trend shaping the energy system remain clear. Number one, greater electrification; number two, more intermittent generation; and number three, growing customer engagement. There is no economy without energy. It's the foundation that everything is built on. And as we speak, this foundation has been rebuilt, bringing with a once-in-a-lifetime investment opportunity. The demand growth is coming is clearly huge. U.K. electricity demand is set to grow for the third straight year, and it's forecast to increase by 40% by the middle of the next decade. And yet despite all the investment being announced, dispatchable generation capacity is expected to stay flat and perhaps even decline by 2050 as existing generating plants reached the end of their lives, increasing system risk and constraining economic growth. So this isn't about choosing between nuclear and renewables or batteries and gas. The need is so much greater. It calls for an everything everywhere all at once approach if we're serious about making energy affordable and secure.

And no one can be certain about the exact path, but my job, our job at Centrica is to make sure that whatever route we end up taking and at whatever pace we end up going, we're setting the company up to deliver for our customers, for our colleagues and for our shareholders. That means building a portfolio that's resilient and adaptable with the people and the capabilities to navigate a fast-changing environment. It's about remaining disciplined and laser focus on value in every single thing that we do.

We've taken some important steps this year that fundamentally strengthened our group for the future. The acquisition of Severn brings another large, high-quality dispatchable CCGT into the portfolio, the type of asset that will allow renewables penetration to increase by providing a reliable safety net.

In return, we get earnings with a contracted underpin and upside optionality as volatility grows. And those are exactly the traits that we look for when we invest. And since we got the keys, very, very tight market conditions, I mean the performance has been much better than we expected. Underlying the value of combining the right asset with our operating and trading capabilities in a fast-changing market.

We've also been working hard to reposition our existing assets, and I'm delighted that many months, in fact, many years of hard work have paid off recently at Sizewell B. The contract for difference turns merchant exposure into predictable regulated earnings for decades to come, and that starts in 2035. It delivers attractive value for us, and it guarantees much-needed baseload power for the grid well into the 2050s. And we're delighted that we've also been able to announce yesterday the extension of the lives of Heysham 1 and Hartlepool again by another 2 years, and now they're aligned with the rest of the advanced gas-cooled reactor fleet.

I'd hope to be able to talk to you today about redevelopment of Rough. It had a good first half. But the position cannot be sustained, and we're at the limit now of what this asset can deliver. Without a support framework in place, we've not injected any gas into the reservoir this summer. The reservoir pressure continues to drop. And by this winter, Rough will be close to empty, almost exhausted, producing less than 2% of what it could deliver if it was redeveloped. If redeveloped, it could do 50x more than it will do this winter. We continue to discuss Rough's future with the government. To me, it remains a compelling opportunity for the country, and it would deliver significant investment and thousands of skilled jobs during the construction phase in the east of the U.K., but the window is narrowing. Our current production consent expires in April next year, and we do not currently intend to ask for an extension. That doesn't close off redevelopment. But it does underline the need for a prompt decision.

Our position is consistent, and we will be guided by value. I truly hope that we can reach a positive outcome later this year. Rough is the U.K.'s largest gas storage asset. It provides half of the U.K.'s current gas storage capacity, and it's the U.K.'s biggest hydrogen storage opportunity. But it's not simply a commercial decision for Centrica. And losing it would not only be a bad outcome for us, it would be a strategic and major loss for the U.

K. We continue to make good progress on our organic projects, we've now invested more than GBP 400 million into Sizewell C and our meter asset provider continues to beat our expectations with an unrivaled growth pipeline. It's clearly the best growth pipeline in the U.K.

Recent comparable transactions tell you this business is already worth well over GBP 1 billion. That's on the back of us investing around GBP 0.5 billion to get here. That's real value creation in assets that will underpin our business and our cash flow for years to come. These aren't one-offs. They're deliberate pattern.

Looking back to where we were in 2023, you can see how far we've come. We've recycled capital out of legacy merchant assets into critical infrastructure with far more predictable earnings, pivoting North Sea merchant gas exposure into highly contracted assets like Grain LNG and building a power portfolio heading towards 4 gigawatts, underpinned by capacity market contracts by CFDs and by the RAB, we've got the Sizewell C.

Our Irish peaker will begin running shortly and they'll be fully commissioned later this year. But they are late, and that shows that we still got work to do as we rebuild our delivery capabilities, and we've been working hard to ensure that we do better in the future, including the planned station Cashla in Galway.

We continue to grow our longer-term options as the grid gets more constrained. Our customers are more willing to consider a much broader range of options than they ever have been before to secure the energy that they need. Waiting patiently for a good connection is no longer the only choice they have, and that's creating very exciting opportunities for us. We're building on several fronts, the leading U.K. nuclear pipeline through Sizewell C and our X-Energy partnership.

Private wire and data center colocation opportunities and our fuel cell partnerships to support behind the meter power generation, opportunities for us to deliver practical solutions for our customers, faster connections, secure long-term supply, decarbonized industrial heat and at the same time, generating attractive returns for our shareholders by prioritizing only the best projects from a deep, deep pipeline of options.

Now a great physical portfolio gives you the right to participate in the market, but the value that you create depends on how you operate that portfolio. And although we're facing some headwinds in Centrica Energy right now, the foundation we've built and that we continue to improve gives us confidence in the long-term outlook. The standard approach in energy trading is to buy technology, pay a vendor, get a platform. Then you've got exactly what your competitors have got.

We took a different decision. Over the years, Cassim and his team have built our own in-house platform, bringing together data and insight from across the group to automate back office tasks to improve controls and to give our team faster, more consistent insight, that is a massive, massive efficiency gain. But even greater value comes from what we can do with that foundation by building our own proprietary tools. We're now a more innovative responsive partner to our customers, and it allows us to better optimize our own positions. That's a key driver of the growth in retail, and it's the basis of what we're doing in algorithmic trading, building our existing capabilities to optimize physical positions in real time, adding another layer of return to the underlying trades.

That is super hard to replicate, and it's a core part of the flywheel that I was talking about earlier. Our retail businesses where much of our transformation will show up, and there's real value to unlock there. More commercial innovation backed by exceptional service and more efficient operations.

There's much, much more to do, but we're starting to see this coming through. Take our core business. In February, we told you how we turned boiler installs from loss-making to profitable. With the foundations fix, we've pushed harder commercially, and we're driving even better performance. And the changes are not complicated. We'd always accepted that boiler installs are a seasonal business, demand is lower in the summer. So we advertise in the winter. But with modest marketing investment, we grew sales 20% in the warmest June since records began. And over the first half as a whole, sales were up 11% against the market that's down.

More sales, more efficient use of our engineers. That's the impact of thinking differently and it's a model for expanding into markets built on emerging demand. In April, we launched nationwide air conditioning installs alongside an in-store partnership with Currys. Early demand is very encouraging. And with warmer summers now seemingly the norm, being able to offer both heating and cooling will be a growing competitive advantage for us. Partnerships like that and with other OEMs for warranty servicing, for example, have a key avenue of growth for us. Adjacent markets with a strong outlook and very, very attractive margins.

Our digital first British Gas membership has now passed 1 million members with around 15%, 1 in 7 already converting to paid products, and that's in just a year. It's a strong conversion rate today, but the bigger prize is reach. As we roll this out across our customer base and beyond, we can speak directly to millions more people. Every single one of them are route to cross-sell every single one of them are route to grow.

Now is this delivering transformative value today? Not yet. But you can see the shape of a deeper, more personal relationship with customers and their homes, the hive device, the boiler, the heat pump, the battery of the air conditioning and the data that connects it all.

Now to get there, we have to deliver as efficiently as possible. We have to get it right first time. We have to reduce the need for the customer to contact us. Most of our customers now self-serve mainly through the app and contact per customer is down 20% year-on-year. That's allowing us to reshape our business. Fewer roles overall, as Russell mentioned, but the right skills for the future and lower costs, all of this whilst delivering record customer satisfaction.

So we continue to make progress in building a fundamentally stronger, higher quality, more durable, more valuable Centrica. Our operations remain strong. The transformation program is well underway, and we're already making headway in repositioning the group thus building a very healthy portfolio of very tangible long-term options.

The path to GBP 2 billion of EBITDA by 2030 and doubling our EPS against 2025 is clearly ambitious, and we've got to remain nimble and bold to deliver it. It's not in the bag, but we are super confident that we've got all of the pieces in place to deliver that.

Now I'm going to stop talking. I'm going to thank you for listening, and Russell and I would be delighted to take your questions.

I've got to remind you there's a microphone -- there are microphones I think somewhere in the seats. So if you can go for that and then every will go to Fraser, who is monitoring the online. I think people have to ask a question through you, Fraser, I think people want to be able to get the time to hear your voice. Is that right?

Excellent. Mark will go here first. We'll come to Jenny and we'll come here.

It's Mark Freshney from UBS. Just a question on the bad debt. I mean I know we -- you and I disagree about price caps. I think you've argued for support for consumers. I would argue it distorts the market. But clearly, it's over GBP 2 billion of receivables, massively provided. It's becoming a strain on your balance sheet, which I think we can start to see today. Clearly, there's -- you've litigated against Ofgem before to prove that the price cap should allow recoverability. What is your plan to get some of that cash flow back or at the very least ensure that it ceases to be a problem in future years because it is a problem for the industry, right?

I mean, let me touch the first bit, and Russell can give you the details. So any kind of market intervention will give you distortion. So in the price caps you have to say, there's no point in arguing against that. I don't think anybody is going to lift price controls on energy anytime soon. I haven't met a politician yet who feels brave enough to do that.

I think that, you're right, this is an industry issue. So industry debt is forecast to go to GBP 7 billion at the end of the year. That's up from GBP 1.8 billion 3 or 4 years ago. So it's clearly a massive industry issue. And we are looking for some leadership from our regulator. So we had a debt release scheme that was supposed to be in place earlier this year. We all signed up to. We all say what we're going to do, still not there. For a regulator that has doubled its budget and its head count over the last 5 years, that is quite troubling.

So we've got to see results in the regulator because we can't fix this ourselves, but we can do better. And I think that our relative performance in bad debts, and Russell will come on to that, our relative performance in bad debt has deteriorated. So we used to lead the industry in bad debt and now we're at least the best we're in the pack. And if not, we're a bit or slightly worse. But so we need leadership from a regulator.

The long-term solution for this is a social tariff. And we worked with the new Energy Secretary when she was a consumer Minister on this. And she was quite enthusiastic. Now she's now in charge of the whole thing. So we've got to let it settle in and find out what she thinks. But a social tariff, whereby you use DWP and HMRC data to determine who can pay and who can't. And at the extreme of those that can't afford to pay anything get a bill for 0. So you don't go through all of the stress, you don't bill them and then provide and then pursue them and then realize that they can't pay. And those of us that can afford more, get a double bill if you assume the same usage.

So that's the extreme case if you just get 2 people in the market. That's a solution to this. Because the issue at the moment is we cannot differentiate between people who choose not to pay and people who are unable to pay. And when you can't do that, then you have to treat everybody the same. And that means that you have to curtail your pursuit of those people who don't pay you. If we could isolate those people who choose not to pay, then we can pursue them a lot harder because I have very little sympathy for people who choose not to pay. I have huge sympathy for people who can't afford to pay their heating, can't afford the food, can't afford the rent, can't afford the basic essentials in life. And so that's the long-term solution for a market like this one.

But Russell, we've got every -- what we're going to do here.

Yes. So just starting with the numbers because there has been quite a movement year-on-year, so GBP 216 million charge, which is 4% of revenue in the first half of the year for the U.K. energy supply business. Last year, that was GBP 159 million or 3%. So you can see it's quite a stark change.

And you can look at Note 14 in the accounts, if you want all the details, we can see the aging buckets, but it's the older greater than 360 days that's dragging in particular. And that includes billed and unbilled, which is now GBP 2 billion, as you say, Mark, outstanding on the balance sheet after the provisions were made.

There's various levers we're pulling. Gary is in the front row here and his team have redoubled their efforts in terms of the processes systems, the chasing that we can do to make sure that we collect this money as quickly as we can. But as Chris summarized, there's only so much we can do in our processes, there's a broader challenge that the regulator will have to face into.

Jenny.

Jenny Ping from Citi. Three questions, please. Firstly, just on the optimization business. I understand there are things outside of your control going on here. But to get to the GBP 300 million to GBP 400 million longer term, what do you need to see happening in the market, the wider market for you to get there? Give us some clues on the direction of travel of what we should be looking out for? So that's my first.

Secondly, you talked about Rough and continuing dialogue with the government. Can you just give us a bit more in terms of where we are and when we expected to hear on that? And then lastly, just on share buybacks, noting where your share price is today versus the last tranche of shares you bought back, which is a 181p. Can you just talk us through how you see the opportunities between the sort of investment for growth route versus share buyback and value creation that way?

So let me take the last 2 then that's what we need to see in optimization. Look, on share buybacks, we have a huge pipeline of very attractive opportunities. And I think we can create more value by working through that pipeline. If the opportunities are as good as we think they are, then investing in those will create more value for shareholders than the share buyback. But we're very disciplined. And so if we get to the point where we recognize that these investment opportunities are not as good as we think they are, then shareholders' money, we have been very clear about this, and we are very comfortable returning money to shareholders, but we've got a lot of opportunities just now. And so I don't anticipate that being we have to work through imminently.

On Rough, look, everything takes longer than you would expect. So I was -- I've had some discussions with the previous Prime Minister about a short-term deal for Rough over this coming winter, and he displayed some interest. So we have written to the government, the previous government, to outline what that would look like. And what we proposed was we would use our working capital to fill the reservoir. We would get a return on that and the government would take the risk. So if prices went down, they would take the loss, prices went up, they would take the profit.

Just to bridge us through this winter because I think the if I was in the government, I'd very, very worried that we go into this winter with less than 4 days of gas -- peak gas demand available. Now we've not filled up our storage. I doubt very much whether others have filled up the storage because you'd be buying at a price in the summer higher than you could sell in the winter. So there's one thing about capacity, there's nothing about actual storage.

Andy Burnham has been Prime Minister since Monday, so we've got to give him a little bit of time to get his seat under the table. Miatta Fahnbulleh has been Energy Secretary, I think, since Tuesday or late Monday night, maybe midnight or something. So I've already spoken to Miatta. We spoke yesterday, she wanted an introductory call. We need to give a little bit of time to get her feet under the table. But we're getting close to this asset simply disappearing.

And when that -- when it closed the storage operations in 2017, there was a conservative government in place. The Labor opposition were incandescent with rage about how we let that close, including some recently departed members of the cabinet, some current members of the cabinet. I'd be amazed if they changed the position in the last 9 years. And so I'm hopeful that we'll get something I think it would be extremely foolish to allow this asset to close, but I'm not the Prime Minister. I'm not the Energy Secretary. And if they allow it to close, I think it's a shame. I think we've got a brilliant team, really brilliant team there. But they will find jobs elsewhere because they're really good, and that will be a loss in some ways to the U.K. because some of them will find jobs overseas doing what they do.

And that's the biggest risk. The biggest risk to this dragging on is not that the reservoir becomes unusable. The reservoir has been there for hundreds of millions of years, and it will remain usable. The biggest risk is that we lose the crew. And it's not easy to rebuild. So let's see. Our offer stands. And we also said the government, if you don't like us using our working capital, we can use the treasury cash. We don't mind. Let's just fill this thing up for the winter. But the government has to take the risk on the price of insurance policy for the government, but they will take the upside.

So this is not a head, I win, tail you lose type of thing. So if the gas price doubles, they made a lot of money. If half, they've lost a bit of money. But this is really -- we keep hearing from Energy Security Department and the media get in touch, this is a commercial decision from Centrica. That is absolutely not the case. And we've been very clear with them that that's not the case. This is a commercial decision for Centrica, the decisions made that will close. This is a decision for the government as to whether they want adequate gas storage.

Optimization Russell, how we going to make GBP 300 million to GBP 400 million? Maybe we should get Cassim to answer that.

Thanks to the question, Jenny. Actually, there's quite a few moving parts in optimization. So it's probably useful just to unpick it a little bit to answer your question about what that market backdrop needs to look like as we go through the next couple of years.

If we start with 2026 and look at the 3 different elements of that business, so retail, LNG and gas and power. Retail had a really strong first half, and it grew again versus half 1 last year. And that business has proven to be quite resilient, is a different risk categorization versus the other parts of the trading business, and we expect that to continue to grow year-on-year. So assets under management now at 19 gigawatts. So that's a very solid part of the portfolio.

Gas and Power trading in the first half of this year was actually stronger than it was last year. Remember, last year, we were talking about the storage markets in Europe being quite difficult. There are still some challenges on economic storage gas spreads in Europe, but it was beginning to pick up and be a bit more normal, but then the Middle East crisis came, and that, of course, resulted in further unpredictable behavior.

But actually, overall, we were quite happy with gas and power trading in the first half of this year. And then LNG was softer, but you've got to remember, some of that was because last year, we were still seeing the contracts deliver that were priced at the time of the Russia-Ukraine crisis, so that's part of the decline as we moved into this year.

We were fully hedged on '26 in LNG and in the coming years, as we said in February. And we proactively manage the risk on that portfolio and overall those portfolios. And one of the things that we're able to do is while managing the LNG in 2026 was to move some cargoes from the first half to the second half at a profit. So that underpins what we're going to see in the second half of this year.

And as I said earlier, the GBP 250 million worth of EBITDA. But it's in the future years where there's been a bit of a change in the update today. And just to repeat, that was because we were thinking as a whole industry was that the new LNG supplies from the U.S. and Qatar would come into the market. There'll be a bit of a gas glut. And we positioned the portfolio to both to protect and take advantage of that. And of course, when the Middle East crisis happened, we had to step back from that. And we now see the gas glut later in the decade. So we've repositioned the portfolio for the next couple of years. We've got very tight risk management controls. When we saw the markets moving, they were enacted, but that just meant we've taken money off the table for the next couple of years in terms of position.

So that's really the core of the update today. And as we sit today, the news flows, the way that the markets are pricing, certainly the back end of this year into next year, it's hard to see that that's driven by fundamentals. A lot of it is driven by news flow, and it's very hard for Cassim and his team to take positions in that backdrop. So for now, we thought the prudent thing was just to wait and that naturally just brings the profitability down for the next couple of -- for the next year 2027.

But your question was what does it need to look like to get back to that GBP 300 million to GBP 400 million, and we're very confident that we can get back up to that GBP 300 million to GBP 400 million because of the 3 core parts of the portfolio I just described.

For LNG, as we move towards the end of the decade, we've got the Mozambique, Delfin and several gas producer deals already locked in. So we're very confident that's going to underpin the LNG business.

Retail, as I said, continues to grow. The renewable market across Europe will continue to diversify. It will give opportunities for us to step in as we've done successfully over the past couple of years.

And gas and power, yes, it does require a degree of normalization in the markets from what we see today. But if you look over the past 4 or 5 years, when the markets have been right, we've definitely been able to capitalize on that. And you've got to remember, this portfolio is skewed to the upside. When things are -- where we've taken positions in the move away from us, the risk controls lock it in, and we make sure that we don't have a negative impact.

But of course, if it's going in our favor, we've got the risk capital to ride that wave and capture value and we've done that successfully in the past.

So overall, I think we need to get through this current period, but the underlying business remains strong, and we're confident in GBP 300 million to GBP 400 million in the medium to long term.

And if anybody wondered how it works, you could see when Russell said we've got really tight risk controls . So we just reinforce the message.

Pavan over here, and then Fraser will come to you.

Pavan Mahbubani from JPMorgan. I have a couple of questions, please. Firstly, on the transformation costs. So you talked about expensing around GBP 75 million in H1. Is that the sort of run rate we should expect as the program goes on? And then at the full year results, you had mentioned that there was some cost but they were offset by benefits. Can you talk a bit more about whether we've seen some of those benefits in H1 or the phasing of how those benefits should be coming through to the extent you can provide color there?

And then a couple of other small questions. On retail, Chris, you just mentioned that your performance relative to peers on bad debt collections has deteriorated somewhat? And you have said in the past, it's a bit more of a relative game than an absolute game. Can you talk a bit about what's driving that? Are your peers doing better? Is it operational? Is it customer behavior and maybe your mix. It would be good to hear what's driving that change in performance that's new today?

And then, Russell, I don't know if you can give -- you talked about how you were positioned next year for a gas glut. Can you give a bit more color on what that actually looked like? Was it trading positions? How you sold forward LNG? It would be good to get some color as to that sort of positioning and how that changed?

Thanks, Pavan. So look, on the bad debt, it's inescapable. When you look at -- we look at the chart of absolute bad debts and the chart of our share of bad debts.

And at the point, other suppliers started -- restarted the involuntary installation of prepayment meters, our share went from 23% to 34% of bad debts. And that might be coincidence, but I doubt it very much. And so I think that I think what it shows is that for a bunch of consumers across the industry, there has to be a proper sanction before they pay the debt. The vast majority of consumers want to pay their bills and they pay their bills.

And so we've got to be kind of clear eyed about that. We've got to really think about what we do to collect our debts. Like if there's no sanction, then why do you do anything? So I think we've just got to make sure that we -- it's part of the price cap you've got to make sure -- and this sounds really, really unambitious. You've got to make sure you're in the pack. And we're not in the pack just now on debt collection. I think we can do more without restarting involuntary installation prepayment meters. But I do think we can't discount that.

Russell, what needs to happen in gas and how much transformation benefit?

Let's do transformation first. So just to remind the number, so GBP 90 million spent in the first half of the year. If I were to compare that to last year, maybe the last year on a comparative basis, be GBP 30 million or GBP 40 million. So it's a relatively big step up.

If you look at that GBP 90 million, GBP 70 million is OpEx, probably 1/3 of that would be redundancy costs and efficiencies that we've gone through there probably, another 1/3 might be tech spend. We're pushing quite a few initiatives to try and harness technology to make us more efficient and then the remainder of various initiatives across the piece.

Some of this will be short term in terms of where we get the benefit. Some will take a couple of years to come through. So if you think about the tech in particular.

Now what are we seeing in the results? So customer contact has fallen. So average contact per customer has fallen 20% year-on-year. So a just less interactions. That means there's less people that need to serve our customers. We can see that already. 1,300 colleagues leaving the group and that takes cost out naturally and just makes the whole machine more efficient. OpEx is down 3% year-on-year. So there's various moving parts inside OpEx. But you can see that the combination of -- and that includes the transformation investment. So you can see that some of this is beginning to come through.

So overall, I think we'll keep you updated as we go. It's not early days. I think some of this is moving at pace. But I would expect in the second half of the year to see both the ramp-up in that transformation spend from projects that I can already see and Rob's already pushing ahead and also beginning to see the compounding benefit of those efficiencies coming through.

So that's one part of it. And then Centrica Energy. The question was 2027 positioning, how do we get into that? So I'll just go back, it's no different to what I said in February, actually. We -- for the LNG portfolio, we hedged all the physical cargoes we had. We were fully hedged to 2028, and I think 80% hedged towards the end of the decade. So that just means that your base is solid. And then naturally, the traders will have looked at the expected market outcomes, expected movements as we moved into the gas glut and some of that have taken positions on. When that started to move against us, those positions were locked right down. We did not make a loss on shutting down those positions, overall, which we're happy, but that was good execution from the team.

But it just means now that you're looking at a market without money at work, you've not taken longer-term positions, and we're just going to step back a little bit until things flush through. Does that make sense?

Fraser, any questions from the online audience? These have got to be online questions now, Fraser.

I promise there are online questions. We've got a couple from Ajay at Goldmans. Firstly, we -- Centrica have now executed a sizable part of the GBP 4 billion CapEx plan. If we move to 2030, can you explain how the portfolio fits together rather than just a set of attractive individual assets? And can you highlight the improvement in returns the portfolio effect gives? That's question number one.

Question two, it's clear that Centrica is in transition. Can you detail how much earnings volatility will reduce by the end of the plan? What benefit do you expect to get from the credit rating agencies from the transformation?

Okay. Perfect. So the second question is clearly one for Russell. Look, the first one, I mean, how does the portfolio fit and portfolio effect? I think the best example of that is the Severn acquisition, whereby we bought a power station, which was incredibly -- I mean, I didn't expect this power station to be as well maintained as it was. It was a financial buyer [yield] bank that they had repossessed, I think, 4 years ago. And I was a little bit nervous because in a repossession, you tend not to expect to find something very well kept. This has been unbelievably well maintained. And I think credit to the previous owner, they've invested an awful lot of money. You can see I went there with Russell on the day that the acquisition closed. And they had a new DCS, distributed control system, in the control room. And you very rarely see that in assets that are owned by long-term strategic owners, but they've been put in, I think, at the cost of $2.5 million this year. And so very, very well maintained, but run very, very conservatively.

So only one unit on, really not looking to be up and down. But as we have been figuring out with the trading team and the power team how to optimize this. We've been testing lots of different markets, testing lots of different start-up regimes. And I don't know the number, but I mean, this thing is probably starting 20x as much as it was starting under the old ownership. And we're beating our expectations in terms of the ownership. Now very, very tight market. But that's the way that this portfolio fits together. So we buy this asset, which has got nice capacity market contracts. It's got very good long-term possibilities. So as you have more wind build-out, more solar build-out in the U.K., the need for better price capacity market contracts is going to increase because these things are going to run less. And therefore, long term, the outlook for this asset is to reduce earnings volatility.

That said, we're going to have an asset that when it's needed to start. So Dave's going to have to make sure the maintenance regime is absolutely perfect because when we're called on to start this thing better bloody start. Otherwise, under the capacity contracts, you're going to have a hellish time with penalty payments. But when it does start, then we've got Cassim and the team figuring out what market we put this into, what price that we charge. So we've got something which is the kind of asset that we love, which is what we're looking for in the portfolio, which is a downside, which is very much acceptable to our shareholders. very predictable, and there's only a skew to the upside because we can make sure that this thing is maintained very well and we will start.

So therefore, we don't have that downside risk. And then the upside, we've got the team in Cassim to capture that additional value. So that's the portfolio effect, and that's really what we're looking for as we move towards the end of the decade.

Russell, how will the rating agencies reduce our FFO to net debt from 45% to 10%?

So I think -- and you can see, if you read the S&P or the Moody's report on Centrica, the strategy that we outlined in 2023 to rebalance the infrastructure side of the portfolio into more ratable cash flows has not just been seen as a benefit in the earnings generation we're seeing so far, but they can see that, that stable part of the portfolio is credit positive. That's the MAP, Sizewell C, Isle of Grain, everything that we've been putting thing has a favorable element to the business risk profile, which is one of the big determinants of the FFO to net debt at and therefore, the credit rating thresholds.

And last year, we had a movement from 50% to 45%. We've had discussions with S&P and Moody's over the past couple of months, and I think in those sessions, they're giving us confidence, and you can see it in the reports that if we continue our investments over the next couple of years, we will continue to get more flexibility. Now we have to deliver and we have to put that capital to work and we have to get the earnings come through. But you can see that happening already. So in the first half of this year, we had earnings of GBP 80 million from Sizewell C, the MAP, Grain, really solid long-term cash flows. That will be about GBP 175 million by the time you get to the full year this year.

And so if you move that forward, you can see how we're growing very, very well towards that GBP 700 million worth of infrastructure cash flow as we expect by into 2028. The nuclear extensions are positive. The Sizewell B, CFD is very positive as well. So I'm confident in that dynamic. We're moving in the right direction.

And then just to link back to your other question about earnings volatility and how we see that moving. Well, earnings volatility is reducing for the group. For retail, there will always be some volatility, but that's partly to do with the recognition of revenue costs between periods. That sort of settles down over time. But in the past couple of years, we've significantly reduced the merchant exposure in the group. The Spirit assets with the second divestment happening at the end of the third quarter this year will underpin that trajectory. The effective tax rate of the group has gone down from 40% to 35%. That will continue to go down as we move out of those higher tax regime. And more and more of the EBITDA will be coming from contracted and regulated cash flows as we move into the next couple of years. So it's both credit positive and more easy to understand.

Harry. And then we'll come back. Harry, Dominic and then will come back to you, Fraser.

All right. It's Harry Wyburd from BNP Paribas. So we've covered a lot of ground, but a lot of it has been quite negative, so I'm going to try and be a little bit positive. So if we think about earnings next year, depending on which consensus you used, we're probably around something like 14.5p for EPS. I think we, this morning, on Centrica Energy have all mentally taken about GBP 0.01 off. But what's happening that's positive that could offset that? Obviously, you've done your CCGT deal and you just said it's performing very well. You said the cost saving execution has been very good. You're seeing more opportunities to cut OpEx. So should we take that as a 1p hit on the chin for next year? Or is there actually stuff that we haven't asked you about that's going better? So that would be the first part.

You're asking for a forecast disguised as an option.

Yes, yes. That's my job.

And my job is to see.

And then the second one is also positive. So I mean it's a hard one for you because you've got to lock everything up presumably a week or 2 ahead of this event. But obviously, forwards have just really spiked in power across Europe. Could you -- so I won't ask you this time to try and give me a number, but could you maybe just help us understand how unhedged you are? What kind of level of open position. I know we've got your disclosure from this morning, but it's done based on balance of year. How are you feeling about your ability to capture the higher power and gas prices that we're seeing over the winter? And would I be right in saying that there's probably some upside there if prices hold that you haven't included in your ranges this morning because simply the price spike happened after you would have locked them?

So look, on the -- I give you go and Russell will probably want to comment on both of these things. We can't -- I'm not going to give you a forecast for next year. That's your job to figure that out. There's a whole bunch of things that could go better than expected. Power prices being one. Bad debt recovery being another. So those are 2 big things, more investment. depending on when you make the investment, we'll invest in towards the end of this year, then you see that coming through in 2027.

If we make in 2027, you got the cost of acquisition, et cetera. So -- and so there's a whole bunch of things there, but you have to figure out yourself as to where we think things will be. We don't really know. In terms of how hedged we are, I don't have that. Dan, I don't know if we give that in terms of power?

But higher -- we've got merchant exposure. So all 4 of the AGRs have merchant exposure. I think we -- because of operational risks and because we don't want to be caught on the wrong side, we don't want to be caught on operational issues being down and being hedged and overhedged in a rising market. I think we hedge 50% of that. So you can assume I think that half of the existing nuclear fleet is unhedged at any one point.

You've also got the PWR at Sizewell B. So remember that, that CFD doesn't kick in for another 9 years. So that's merchant exposed. So you've got about 1.2 gig. So you've got probably 7 terawatt hours or so in 2027.

Russell will tell you but around half of that is probably unhedged. You've then got Severn. I think that's probably mostly unhedged because we don't know when that thing is going to run. We don't know when it's going to be called on. We know that the nuclear is baseload. So there should be quite some exposure there, but it works both ways.

And the question we see these spikes is do you go and lock things in, but we've had some real problems at Hartlepool this year. And we -- if you cast back -- when I joined Centrica in 2018, I think we made GBP 18 million from our nuclear fleet. because we had -- we saw GBP 55 a megawatt hour. I would hasten to add before I joined, and we locked it in. We had 8 reactors at that point, I think. So with 8 reactors, including Dungeness and Hunterston, I think we made GBP 18 million, and most of that was the extreme pain we had of being overhedged in a rising market.

So we saw GBP 55. Brilliant which it was. I would have done the same probably if I've been in a position, locked it in and then all of a sudden, these things fell over. And that was quite painful. So we probably wouldn't look and say, okay, let's take the hedge in nuclear from 50% to 80% because we've still got operational. These are old assets. I mean these -- Heysham 1 and Hartlepool must have been going to like 81 or 82 or something like that. I mean they're bloody old things. So Russell, how much nonsense I've been talking, how hedged are we?

I think you covered most of the portfolio there, so I'm struggling to find what to add on. So I think Spirit, just to note, and we've covered it on Slide 30 in the pack that we've got the divestment happening at the end of the third quarter. So we separated out here the element of that production. We then move into really Morecambe, the only producing asset for Spirit thereafter, and we're not going to be hedging that as far as in advance because it's a single asset. So we'll have merchant exposure there going forward.

On nuclear, indeed, we were, I think, 11% down versus the first half last year. That was mainly the Hartlepool challenges. But one of the benefits of having had those nuclear assets down for planned and unplanned downtime in the first half of the year, of course, as you're able to get through quite a lot of maintenance that gives you support into the second half and into next year. So there might be a little bit of upside in production which could capture the higher prices we're seeing today. So I think that's it.

It's Dominic Nash from Barclays. Sort of 3 questions. The first 1 is quite a bit of a narrative, I think, which is at the full year results, I think it was fair to say that you talked up quite a bit about the role of gas in the future energy mix. And that basically is going to be longer, higher for longer. And indeed, subsequent to that, you all bought Severn CCGT. We've now got a new energy minister who I think you said that you know earlier, Fahnbulleh. I'd be interested in your view because the press reports that are coming out on her view on sort of gas and electricity, I'd be interested in whether you think it's that this government can distinguish between electricity and energy and what they think is the role of gas in the long duration of the transition and whether we're going to need it and whether we should have indigenous gas.

And then coming on to your sort of 2 sort of gas assets, you clearly talked well about Rough, so we'll ignore that one as a point taken. But Severn and LNG. Severn, you've got a potential single asset risk there. Is this a strategy that you're potentially going to be looking at sort of building more to protect that asset value?

Are you going to scale into more gas from here? And looking at your release this morning, you're talking about potential behind the meter data centers for both LNG and for Severn. What licenses and permissions and permits do you need from government to have an extension of gas particularly in light of this current government is clearly more uncertain on that one.

And just on very quick 1 here. I think following up from comments on the optimization. What's your invested capital that you've got in optimization at the moment, including the leases on the vessels and your trading position. And as we edge up towards that GBP 300 million to GBP 400 million sort of target, how has your invested capital going, please?

The last one for, let me try and deal with the first piece. So look, so I know Miatta from her time as Consumer Minister and I spoke to yesterday for 10 minutes. So I mean, I wouldn't overplay my little chat. I don't know her deepest thoughts. But I think what's happened is that because she's been elevated really quite quickly, people are going through her past. And they're saying like in 2017, she running some think tank and she said this. Well, I did something in 2017, which probably completely inconsistent with positions that I've got today.

So I think we should wait and see. I find her very pragmatic, and I find her -- in the first meeting, we had if I was looking at what went on with previous ministers in that role, she's calling in on the energy company CEOs, should wag our fingers and suddenly would come in and say, oh, the TV cameras are outside. So they've been tipped off and we've been called in for a slap. And as we go out, the minister has been really quite tough. And it wasn't like that at all.

She called us in and she wanted to hear what we thought about the issues and consumer affordability. And there was no TV cameras outside. It was really quite different. I just assumed it was the usual thing, telephone directly in the front and back in the throw get a bit of kick in. And it was quite different. And so I find a very pragmatic. How she perform in this role? Who knows. But you can all have your own personal views on carbon emissions. And I think people are trying to position Miatta to be more extreme than Ed Miliband. Ed and private was very pragmatic. So Ed would rather there was no fossil fuels done at all. But it would tell he recognizes the need for it, especially gas.

If you look at the Chris Stark, he used to lead the Climate Change Committee, now the government's mission Controls czar or something in clean power 2030. Chris will tell you that we probably need to rebuild the entire U.K. CCGT fleet and have them standby. So these people are very pragmatic. And I would expect Miatta to be in that same place because our role is to make sure that we have secure and affordable energy. And it's clean. And the guidance I gave -- I mentioned to Edwin when he Energy Secretary and other people in the government is in the U.K., we lead on -- it has to be clean and secure and affordable. Texas has got more wind power and more solar power than the U.K. It's also got more oil and gas than we've got probably, but they lead in the fact it's affordable. So a lot of the stuff that we're doing in clean power will help stabilize energy prices. But the government didn't do itself anything else because it was all about -- you have all these people trying to beat the cap out.

So I think we've got to wait and see what Miatta do. I would hope that she is very pragmatic. I think on gas, I'd like to do more. If there was more CCGTs of the quality and scale of Severn in the U.K., I'd like to buy them. But what we won't do is we won't go out and say we just want to buy more CCGTs because all of a sudden, you then lose your price discipline. So it's all about value. So if we could find more of these things at the same type of price, with the same type of returns, I'd be delighted to put it.

in. I mean I think you know this that Severn is 2 separate units. So although you've got single asset location risk, you've got effectively two 410, 420-megawatt CCGTs in there.

And then on data centers, look, I think that we I think this is going to be an issue for the government as we think about this, which -- so we've got 2 very attractive units at Severn. People come and say, would you give us the output from one of the units to power the data center. And the question is what kind of price certainty, what kind of risk can be taken on the counterpart. But if you step back from it, if you look at it from the government's point of view, taking one of the units out from Severn takes 1% of the U.K. electricity demand from the market.

And I think we've really got to think about how -- so behind the meter generation is a huge opportunity for us. So our forecast is that fixed system costs are going to grow to about 2/3 of the bill by the end of this decade. If you want to then decide that you're going to go behind the wire, behind the meter private wire networks, well, you're going to not pay that network charge. So you can afford to pay a lot more for the power. You can have more redundancy in there because to get the reliability data centers require, you've got to have redundancy. But then you spread the system costs across a lower base.

And so I think we're going to have to work really closely with the government with the system operator to say, okay, exactly what does this mean? I think that what we'll find is that you'll build behind-the-meter solutions for data centers to get around these grid constraints, but you'll then connect them subsequently to the grid. And so I think it can only be a temporary solution because otherwise, we're going to have a real problem, I think, in electricity bills. But I think the government has got to engage with us because it's like anything. And I think we'll find this as the government goes into. I remember when Obama became President, he was campaign and he was saying this Guantanamo Bay, he would shut it down 8 years later when he was leaving office and said, you said you shut Guantanamo Bay and he said, "Yes, no, who knew how difficult it was. You learn a lot when you get into office. And I think that the current government will get into office and think, okay, you've got these competing things. We want more data centers. We want to continue.

The U.K. is the third nation globally in AI. And if you think about that, you've got the U.S., you've got China, you've got the U.K. we're punching well above our weight. The government wants to keep that. We want it. We've got a lot of well-paid jobs. We want more data centers because they bring good jobs as well. We want affordable electricity. So I think what the government will find is they sit down and think, I've got all of these competing things, how do we work? And that's where Centrica is unbelievably well placed because we are the company that can help unlock all of this.

And we've got a huge -- I think we've got a huge opportunity in front of us. And what that allows us to do is to be very disciplined in the capital deployment because we've got all of these opportunities, we don't need to take them off. We never are dependent upon a single investment opportunity. If you take Severn Power, we love that asset. It's absolutely fantastic. Had it not been right the day before we signed, we would have walked away from it because we've got a bunch of other things to look at. And so we'll always -- Rob leads our strategy and business development. We will always have far more opportunities than we have enough money. And then what's the worst-case scenario, the worst-case scenario is that we see the Russell, you have to find some more cash because of these brilliant opportunities. So I think we'll wait and see. But I do think that there's going to be a lot of discussion about this private wire network type thing.

I think we've got to help the government understand exactly how we work the system on that. Russell, do you want to disclose the invested capital in Centrica Energy? Remember, part of our model is that we get 3 returns from one bit of capital. So we invest in assets, we get an asset return there. We get a trading return, we reduce the return of that and that underpins the retail market.

And it also underpins the credit rating, which is, of course, the sort of main cornerstone when we think about how strong this group has to be, to be able to do all the businesses that we have retail infrastructure, but also the optimization business. So when we think about how we manage that business, there's a couple of different tools that we have. First of all, we want to maintain that BBB investment-grade credit rating because that allows us to have efficient contracts. We have to margin less. We can be on the exchange in an efficient way that serves as well. That allows us to manage also the liquidity draws naturally of that business. Interestingly, over the past couple of months, I think quite a few other counterparts. So big cash flows moving in and out as the Middle East crisis came through. We'd actually learned quite a lot from the Russian Ukraine crisis, and we're much better prepared for that.

And actually, if you look in the first half of this year, we had a GBP 126 million inflow just from margin stabilizing in that period. In terms of how we manage capital day-to-day for Cassim and his team, we do that through risk capital, value at risk, profit drawdowns, all the normal things you would expect. We have shorter-term limits for each of the books and longer term are things like LNG, we manage in a slightly different way. The dynamic is not just about sort of capital as in like capital on the balance sheet. Of course, we're managing credit risk, market risk and liquidity risk. And each of those have effectively different capital requirements. Some you would have to post cash to mitigate that risk. Others, you have limits for individual counterparts. But I think we've got a relatively sophisticated operation, very tight risk limits that's served us well in the past couple of months.

And of course, the balance sheet overall is in a strong position. So when Cassim and his team come forward with good ideas, we can grab them. And then on your leasing question, we probably got about GBP 100-odd million on the balance sheet at the moment. We've got a recycling of vessels coming in the next couple of years just as we look at that growing LNG book that I mentioned before, but we are still to decide what's the best way to contract them. So hopefully, that helps.

Fraser, we'll come to you. It's funny cause we've got a screen here, it says questions from webcast. And there's no questions on it. So I'm going to check this later.

There's e-mailed question.

Yes, of course.

I'm going to combine a couple. One from Bartek who was also asking about behind the meter growth. I think we've answered that one. His second question is with regards to the optimization EBITDA outlook, given how you're hedged and your growth in the LNG book towards the end of the decade, are we talking about the lower end of the EBITDA guidance range for 2028 around, i.e., around the GBP 300 million level? Or are you confident that you can hit somewhere else in that range?

And then a second, a follow-up from Ajay around the transformation plan. How much of the cost has been incurred of the total? How much of the benefit have we received? And what is the shape of the net benefit out to 2030?

Listen, both -- they're both questions Russell. I mean I would say Russell answers on the transformation. It is still evolving. So we are still in transformation. We're still identifying more opportunities and we're still refining the cost. So we could see a certain proportion at the moment, but I would expect that this program will continue to grow and we'll refine the cost. And sometimes these things prove to be a little bit less expensive than we first feared. But Russell, two for you.

I mean it's inherently difficult to put guidance ranges on a trading and optimization business. But what we can see at the moment is that 2027, we've just got less opportunities open to us. So we've just been transparent with less capital at work that the range -- the number will be lower next year. But 2028 is a long way away. And our teams have got lots of ideas and plenty of opportunity and risk capital behind them if the market stabilize to try and capture value.

So for 2028, we're not providing any additional guidance. Really just to focus today is on 2027.

Excellent. Any last questions in the room or any last questions online, Fraser?

There's one more.

One more? Are you sure?

Yes. How much of the EPS for 2030 is already under today and how much is reliant on future developments?

That's a good question. I mean I would say that most of it is underpinned in that we know what we need to do, but it's not underpinned as it's in the bag. So we have clear line of sight to that. But the use of the word underpinned, I would just hesitate a little bit on that because it suggests that it's already. We have a ton of a heavy lifting to do to get there. And we're also talking about a market that's 4 years out. And the only thing I can tell you just now is the mix will be different in 2030 that we think it will be today. And the margins in different businesses will be different. We're looking to expand in the U.S.. With Cassim's. business, we're looking at a couple of other markets. But we have no idea what that market is going to look like next year alone 2030.

So I feel confident enough to say we can do this, but we're also realistic enough to say that there's a lot of wood to chop before we get there. So I don't know if you put [indiscernible]. And it's not a limit of our ambition. We don't sit and say, okay, if we can really lock in 22p EPS by 2030, okay, that's it, done. We keep -- I mean I'm totally impatient and never satisfied, so we would keep going.

Maybe just to reinforce to the building blocks of moving up to the GBP 1.7 billion worth of EBITDA at the end of 2028 and then the GBP 2 billion by the end of 2030, which is driving that EPS overall. For the retail and optimization businesses to the end of 2028, that's just middle of the guidance ranges we've given already. And what we're expecting is, by the end of the decade, which is 4 or 5 years away, we've got the opportunity to be able to just get to the top of the ranges that we've been working to for the past couple of years. And with all the work on transformation, I think we should be able to get there.

The other side of the mathematics is, of course, the infrastructure business. And what we need to do there is just continue to deliver the investments that we are planning for the next couple of years. And it's not like we need to find many new investments because we've got a very clear trajectory for Sizewell C and that's a very stable return. The MAP is 1 million-plus meters a year with very good contracted returns. The Irish peakers come online in the second half of this year. We've got the potential for the Galway, which is plant, which has also got a large capacity market underpinned. Actually, the infrastructure side of it is actually quite easy to see how we get there. And as I mentioned earlier, if you just roll that through, you have a much lower effective tax rate in this business as you go forward, which is another amplification to get you to higher EPS.

Look, if there are no other questions, thank you very much for your time, for your patience, and I will see you, I don't know, third week in February, on February 21, 22 or something next year, to do the full year results. Thank you very much, everyone.

Thank you.

Good morning, everybody. It's brilliant to be here today. And as usual, I'm joined on the stage by our CFO and the new YouTube sensation, Russell O'Brien, for those of you that watch this video, no doubt, our leadership team here in the front row and our Chairman, here as well of other Centrica people.

So 2025 is a year of significant progress, building further on our journey to make Centrica a stronger, higher-quality business, building on the foundations that we've been laying for growth. We're recycling capital from noncore assets, investing in assets like Sizewell C, Grain LNG and the meter asset provider, assets that will both grow and stabilize our earnings profile, eliminating downside risks. We're adding long-term value, and we're building future optionality. 2025 showed our resilience and our further improved operational performance but it also had its challenges. Conditions remain difficult for Centrica Energy throughout the year as it did for many, many commodity traders.

But I'm delighted with what the team delivered in 2025. But as always, I'm looking for more. And it's a mark of how far we've come that collectively, we are not satisfied with GBP 200 million of EBITDA from optimization. And collectively, we're not satisfied with more than 11p EPS in a difficult year because our expectations of what Centrica can deliver have fundamentally changed. Over the last 5 years, we've invested GBP 3 billion, and we've returned around the same amount to shareholders, including increasing the dividend by 22% this year. Balanced capital allocation, reflecting our commitment to growing the business and to rewarding our owners, our shareholders.

We've now bought back 1/4 of the company since 2022 at an average price, which is well below where we are today, in the low GBP 1.30s. That's real value delivered. And we've decided to pause the buyback for now as we see incredible value creation opportunities for our shareholders from investing the capital that we've got. Our pipeline is so much richer now than when we started buying back shares in 2022, and some of those opportunities could come through quite soon. Our financial framework hasn't changed and neither has our discipline. If the projects don't stack up, we won't invest and surplus capital will always come back to shareholders, always.

We expect to invest at least another GBP 700 million this year, maybe more, mainly in assets that fundamentally strengthen our portfolio. And we expect to continue investing at about the same rate right through to the end of this decade. And that's what underpins our confidence in delivering GBP 1.7 billion of EBITDA or better by the end of 2028. And it's why we can tell you that we'll continue to grow that beyond 2028 to GBP 2 billion by 2030. Now both of these numbers include the impact of expected but not yet confirmed extensions to the 4 existing advanced gas cooled nuclear power stations into the early 2030s.

GBP 2 billion of EBITDA in 2030 would see our EPS more than double over the next 5 years. But I'm never satisfied. So rest assured that my aim is to do even better than that. By focusing on value, we've made Centrica a much stronger business than it was 6 years ago. We're running the business as well as we possibly can. We're investing in a disciplined way, and it's the same approach that will deliver the next phase of our growth.

We spoke in July about how we saw opportunities to transform Centrica. Our transformation program is going well. It's a key part of delivering our full potential. We've made progress anchored on 3 simple principles, all underpinned by technology. Number one, improving customer experience further; number two, driving more commercial growth; and number three, continuing to deliver on cost efficiencies. A lot of this benefit will be in the retail business, but there's huge potential across the entire group.

Last year, we delivered net benefit -- net benefits of GBP 100 million. And unlike other companies, we're not recording transformation costs in exceptionals. If we had done that, 2025 EPS would have been 2p higher. So another company, it would have been 13.2, not 11.2. The program will ramp up this year, and we expect to take another GBP 0.5 billion out of the cost base by the end of the decade over and above what we've already done, underpinning earnings growth and helping to create new opportunities.

Now AI is a part of that, and it's a huge opportunity for us. We're working with world-class partners to explore how we can further deploy technology, including AI but not only AI to transform our customer service and to reduce costs. And I'm going to lay out some of the specific examples of that later.

So with that, with the opening, I'm going to pass you over now to YouTuber and CFO, Russell O'Brien, who's going to take you through the numbers.

Thank you. Okay. Thanks, Chris, and good morning, everybody. So over the past years, we have reshaped the way we run Centrica with a focus on 3 business units: retail, optimization and infrastructure. And we've taken this opportunity to simplify our reporting, aligning the segments to the way we now run the business. And we've also shifted to EBITDA as our main performance and guidance metric, which is a better measure for the business as we invest in the portfolio and grow.

Now I recognize there are a few moving pieces. So I put a very funny video explainer on the website, as Chris is mentioning, and some other materials just so that no one is confused by the re-segmentation and it unpacks everything in a little bit more detail. The main change is splitting Bord Gais and Centrica Business Solutions into the component parts. So Irish retail, for example, is now reported alongside the same U.K. activities, Irish optimization within Centrica Energy. And we've also moved our Irish power assets and our growing Meter Asset Provider into their natural home and infrastructure.

So now to the numbers. I'd like to highlight 3 key points. First, we've reported solid numbers overall in the context of external challenges, demonstrating the resilience of our business. Second, our progress on investing and transformation program gives us more confidence in our medium-term earnings outlook. And third, our balance sheet remains strong, giving us the financial platform to execute. Adjusted EBITDA for the year was GBP 1.4 billion, and adjusted earnings per share was just over 11p. We delivered operating cash flow of over GBP 900 million, while we had a free cash outflow of GBP 200 million after doubling investment to GBP 1.2 billion.

And after returning over GBP 1 billion to shareholders through the dividends and the buyback, adjusted net cash closed at GBP 1.5 billion. Retail & Optimisation delivered almost GBP 800 million of EBITDA, with Retail contributing GBP 574 million, broadly flat year-on-year. Within that, U.K. Home Services delivered almost GBP 170 million of EBITDA, and the 7% top line growth reflected improvements to our commercial propositions and pricing and was supported by a razor-sharp focus on costs. Margins expanded from 4.3% to 6.8%, and we're pleased to have moved out into the profit range we outlined ahead of schedule, and there is still much more to come.

Business supply also delivered a strong result. U.K. home energy supply and Optimisation both faced external headwinds and saw EBITDA decline, and I'll come back to both of those areas in a moment. And finally, Infrastructure of GBP 728 million of EBITDA was lower due to a combination of asset sales, realized prices and outages in Q4, offset by a lower-than-expected loss at Rough. As usual, you can find more detail on the business performance in this morning's release. As consumer demands change, competing effectively in the retail market requires efficiency, innovation and resilience, and we were behind the curve in many of those areas. But the evidence is clear, we are moving in the right direction.

For the first time in over a decade, we grew customer numbers across all of our retail businesses simultaneously, underpinned by the simplification and the use of technology. This includes the migration to ignition and modernized planning systems and services, unlocking commercial flexibility, deeper customer insights and cost efficiencies. Those dynamics were key to the improvements in services. Retention is improving. We're building new growth channels, and we're managing margins effectively.

But as ever, we are not satisfied. We are still losing customers we shouldn't be losing, and there's more we can do commercially. We want to continue growing our retail customer base, but we won't adopt the pricing behavior we're seeing from some of our competitors. We believe it is unsustainable. We'll remain nimble, of course, and compete hard, but our primary focus is on delivering value over volume. And with more insight, we're able to identify and focus on those customers who really want our products and services, helping them get better solutions for them and creating more value for Centrica.

Home Energy Supply delivered a resilient performance in 2025. As expected, the market continued to pivot towards fixed price tariffs, which had a dampening effect on margins and weather was an GBP 80 million headwind through the year in the U.K. Now on the other side, the energy price guarantee scheme reconciliation saw us record a gain of GBP 42 million related to revenue from prior periods that was not recorded at the time. And the results, as you've seen, benefited from our cost and revenue phasing from earlier periods.

Bad debt remains a challenge with the latest figures showing over GBP 4 billion of debt past due across the industry. And our bad debt charge in U.K. Home Energy Supply increased to around 3% of revenue. Now we continue to advocate for Ofgem to take more proactive steps. to help those who genuinely can't pay and address those who can but choose not to. But in the meantime, we do not expect -- we do expect those additional costs we face this year to be recovered in future periods. And the ups and downs reflect the essence of the U.K. home energy supply business, short-term volatility, offset by through-the-cycle predictability. And since the price cap began in 2019, as you can see, our average margin is 2.3%. That's above the 1.9% allowed during the first 4 years of the cap and broadly in line with the allowance since then. Supported by the price cap mechanism, this is a business that generates solid through-the-cycle regulated earnings and cash flows.

Centrica Energy posted a softer result, primarily driven by gas and power trading. Against that backdrop, we've remained focused and driving long-term value. And GBP 200 million of EBITDA in a tough year is a big step forward from where the business was a few years ago. RETO, our renewable route-to-market business again performed well. Assets under management grew by 17% to over 19 gigawatts. Centrica Energy is now consistently one of the most innovative, responsive and commercial partners to asset owners across Europe, strengthening our ability to grow more in this area.

In LNG, the teams have fundamentally transformed the portfolio over the past couple of years. We are now 100% hedged until 2028 and over 80% until 2030. So we've protected any downside and retained valuable physical optionality. Now we're not satisfied with the absolute performance in gas and power trading but we do take comfort in strong relative performance. In really difficult markets, the team generated a positive margin and remained consistently disciplined through the year. Consciously reducing risk rather than chasing aggressive positions is a core principle of how we operate. This limits downside with returns skewed to the upside when markets allow.

In the short term, more rational behavior is returning with gas trading recovering a little bit in the second half. But events, as we've all seen in the past week, demonstrate the market remains very volatile, and it looks like it will take some time for them to stabilize. So given all that, we expect Centrica Energy to be below its sustainable EBITDA range for this year. We remain confident, though, in the longer-term outlook with earnings supported by expanding our geographic footprint and capabilities, adding further diversification and growth options to the portfolio.

So of course, the challenges we saw last year demonstrate why it's so important to continue building a predictable contracted infrastructure portfolio. And 2025 saw us more than double investment year-on-year, spending almost GBP 400 million at Sizewell C, GBP 200 million in Grain and GBP 225 million in the MAP, which was higher than our target. After other movements, including decommissioning and disposals, we saw a free cash outflow of GBP 167 million. We returned GBP 1.1 billion to shareholders in '25, which means we've invested and returned GBP 3.6 billion over the last 2 years. The balance sheet remains strong, and we expect surplus capital to emerge over time as the business continues to perform. But as we've demonstrated, we keep the balance sheet under close review and our commitment to maintaining that discipline is unchanged.

Now to the outlook this year. Alongside streamlining our segments, we've simplified our guidance ranges but there's no change to the underlying numbers. All we've done is restate on an EBITDA basis. In 2026, we expect Retail to be in its EBITDA range of GBP 500 million to GBP 800 million, and that's after the transformation spend in the year. We currently expect optimization EBITDA to improve somewhat relative to '25, but remain below the medium-term sustainable range at around GBP 250 million.

And assuming the second Spirit Energy disposal completes around the middle of the year, we see GBP 500 million to GBP 650 million as a sensible range for Infrastructure, including importantly, about GBP 175 million from the key regulated and contracted assets. As a reminder, earnings from the Spirit disposal assets will continue to be recorded through the P&L until the transaction completes later this year.

We also assume Rough will be around breakeven, driven by a continued focus on optimizing indigenous gas sales and cost discipline. We expect investment of at least GBP 700 million. This includes transformation, further investment into the MAP and our power assets, including Sizewell C. Today, we've also laid out guidance on interest and tax to help with your modeling, including a structural decline in the effective tax rate as we pivot the portfolio away from highly taxed Spirit Energy earnings.

So we're all excited about our transformation program, which has accelerated over recent months and underpins our plan to deliver top line growth while driving underlying efficiencies through the organization. Our operating cost base is just under GBP 2 billion, including bad debt and depreciation. 3% annual inflation on that is a GBP 300 million earnings headwind by 2030. So driving cost efficiency is both opportunity -- is a huge opportunity and a necessity. And we're ramping up multiple work streams, and we're already taking actions that are making a real difference, which Chris will talk about shortly.

In 2025, we reduced OpEx by 3%, net of inflation and cost to achieve of GBP 100 million. Looking forward, we aim to deliver a further GBP 0.5 billion reduction by the end of the decade. And we have around half of those savings identified already and are working hard to lock in the remainder. That means we expect our nominal cost base to remain broadly flat by 2030 with efficiencies fully absorbing inflation and the cost of supporting growth. And from what I can see today, there are probably around GBP 600 million of cost to deliver those benefits, around GBP 400 million of OpEx and a further GBP 200 million of CapEx. And we will be as disciplined in our OpEx investment as we are deploying capital generally.

The earnings benefit will come through over time. As Chris says, we'll be transparent about the costs, and we don't expect exceptional charges. We want to give you the tools to assess our performance. And more importantly, we want to ensure our colleagues are fully focused on delivering value. So to summarize, Centrica's performance in '25 was resilient in the face of some external challenges. The assets we brought into the portfolio over the past year mean we are increasingly confident of being able to maximize sustainable earnings, the foundation of our financial framework. And we're successfully balancing rewarding our shareholders with retaining the strength to support our growth ambitions.

And with that, let me hand back to Chris.

Thanks, Russell. The trends shaping the energy system became ever clearer in 2025. U.K. electricity demand grew for the second year in a row following many years of decline and intermittent generation rose to over 1/3 of total supply. Now looking forward, demand growth will accelerate and renewables penetration will continue to grow. So will the need for zero carbon baseload electricity, dispatchable backup electricity generation and electricity storage to keep energy secure and affordable for the households and the businesses that will drive the economic growth the U.K. needs.

There's a once-in-a-generation investment cycle underway to meet these growing needs. The challenges of delivering new projects are real. Planning, grid connections, supply chains. None of this is easy. Like a couple of years ago, you could pretty much pick up a gas turbine off the shelf. Today, there's a 5-year waiting list. So existing capacity will also be needed for much, much longer.

And as you can see, the expected proportion of gas-fired electricity generation in the mix in 2040 has almost doubled. That creates huge opportunity for us, and it's why we believe our strategy is the right strategy, focused on the assets that will be needed to support a fair and affordable energy transition. Whilst remaining pragmatic and retaining the flexibility to adapt however the transition progresses. The right strategy is one thing but it must be coupled with the ability to deliver. And that's way more than about reshaping the portfolio. It's about way more than that. It's about rebuilding a platform that allows us to compete in a rapidly evolving retail market and about building the capability to identify, develop and operate the infrastructure assets that will define our future.

And we've now got the foundation and the transformation program that will help us deliver this next phase, focused on the core areas that I mentioned earlier, customer service, commercial growth, cost efficiency. Transforming customer service is critical to our success. We've made progress improving our digital contact channels but we're consistently identifying more areas for improvement. Our aim is to reduce contact by at least 30%. Now it's not that we don't like speaking to our customers. We really do. It's that we want to give them fewer reasons that they have to contact us. We want to use technology to help us make their lives easier and to offer more relevant products and more relevant services. And if we achieve that, that will be a significant efficiency gain, but we want even more. We're also aiming for a further 40% of customer contact being handled through enhanced digital channels, including far more use of AI to support our colleagues.

By ramping up the use of technology, we're freeing up time to solve the thorny issues, really difficult issues for customers and to drive commercial performance, creating the right jobs in the right places as we grow our business. We're investing in the skills and the capabilities that we need for this future, rewiring how we work to sharpen accountability to grow expertise and to help us serve customers far more efficiently. That extends to our central functions. We've reduced headcount there already by around 5%, mainly by eliminating duplicated roles following the restructure of the business. And by embedding new, more agile ways of working, we can make our core processes much, much more efficient. The savings potential from this area alone is well over GBP 100 million a year.

Improving commercial performance is still the biggest opportunity that we've got to grow the business. Russell mentioned the success we've seen in retail. There's no magic behind the improvements. They've been driven by focusing on the details of our processes, getting to the root cause of poor performance and identifying the solutions. And take boiler installations as an example. We've seen decline in profitability there for years, which was a bit of an issue. But by working to improve each individual step in the process, for example, job pricing, scheduling, we were able to unlock a GBP 20 million profit improvement. That was a key contributor to the better performance in services last year, and we're already moving on to the next target areas.

We're implementing a combined customer lifetime value model across retail so that we can identify opportunities to maximize value across the group. Now that might mean that we trade off value in one part of the business to secure more value elsewhere. We're happy to do that. The overall group benefit is what matters. This is only possible by having the right people in the right structures with the right data, the same capabilities that are supporting our investment program.

Disciplined investment is central to our progress and it's central to our future growth, driven by the stronger capabilities we've built across our infrastructure businesses, Power under Dave Kirwan, Gas under Martin Scargill and Spirit Energy focused now on Morecambe Net Zero. Teams with deep technical expertise, proven operational discipline and a value-focused mindset that creates broader growth options for the company. In Sizewell C in Grain LNG and in the MAP, we're investing in high-quality, long-duration regulated and contracted assets that will fundamentally reshape Centrica and deliver critical national infrastructure for the U.K. We're doing a similar thing in Ireland with our peakers. And we made our initial contribution to Sizewell C in November. We've got earnings in 2025 relating to Sizewell C and earnings will grow in a predictable way for the next 15 years. We expect our share of the RAB to grow to around GBP 8 billion by commissioning. That will be against a net equity investment of around GBP 500 million and project financing of GBP 5 billion.

Real value creation with very, very low risk. The MAP is also a real success story. It's hugely outperforming our expectations, the expectations we had when we set the business up. We installed over 1 million meters last year, which makes us the fastest-growing MAP in the U.K., and we've now got more than 1.6 million meters on the wall just around 2 years after we set this business up. The capabilities that we've built are unlocking future growth opportunities, both in the U.K. and overseas. Dan, Gareth and the team deserve huge credit for what they've achieved but they don't get any special treatment. Now we've seen what they can deliver in '25, I expect even more this year.

We're still early in the ownership journey, for example, at Grain but the value of the asset is clear. Earnings are highly contracted. The importance of the terminal will only increase as the U.K. becomes ever more reliant on imported gas. And I've been delighted to see the strong alignment we've got with ECP, our partners on the key priorities for the asset. And I'm confident we've got the right team in place to deliver on the full potential of this absolutely critical business.

Now we've got to acknowledge that not everything has gone completely to plan. Commissioning, for example, of our Irish peakers has been delayed and are now due around about the middle of this year. And that's partly due to grid connection delays. And we secured a modification to the capacity market contract to compensate for that, mitigating the value impact but it also reflects missteps that we've made as we build back our construction capability. We're not happy about that but we have learned valuable lessons, and we're confident that will be applied to future projects. We've not really built big infrastructure for over a decade. And we've also been proactive in managing our portfolio, recycling capital from noncore assets. You saw a recent disposal last month. Portfolio simplification has allowed us to accelerate value, sharpen our strategic focus and reduce our exposure to commodity price volatility.

Collectively, the actions we've taken are fundamentally reshaping our company, steadily shifting our portfolio towards more regulated, more contracted earnings. As Russell laid out, Home Energy Supply has a regulated underpin while services and B2B both generate more stable cash flows from contracted activities. The trajectory in the existing infrastructure portfolio is very, very clear, and we've got several opportunities that could even accelerate that pivot. The government consultation, which will decide the path forward at Rough closed yesterday, and we expect a public update hopefully later in the first half.

We're optimistic about the outcome given the critical importance of gas storage to U.K.'s energy security, which was acknowledged both in the consultation document and by NESO recently. But we remain super focused on the value proposition. And we won't keep Rough open speculatively. We need clarity to justify redevelopment. The government is also due to publish a decision on financial support for nuclear life extensions over the next few months, including the potential for a CfD at Sizewell B to underpin a 20-year asset life extension. These are 2 very clear opportunities to pivot merchant-exposed assets to regulated exposure and to substantially extend asset lives. Even Centrica Energy has got an element of predictable fee-based earnings and has materially reduced the downside risk in the LNG business way beyond, I think, what people appreciate. If you look further ahead, the steps we've taken to expand our organic growth pipeline, for example, our partnership with X-energy and further development opportunities at Grain allow us to be disciplined to focus on the most valuable opportunities and to adapt as the energy transition develops.

Our investment focus remains the same, assets that support security of supply, assets with a regulated and contracted underpin where we can add value through optimization, assets where we can bring our incredible capabilities and our extensive experience to bear. Now we will remain predominantly a U.K. and Irish business for the foreseeable future but we don't restrict ourselves by geography. We're focusing on areas where we have or can build a durable competitive advantage that will allow us to create more upside than if we just focus exclusively in 1 or 2 countries. So I would hope that in 5 years, Centrica will be more geographically diverse but it will be in targeted places where we have deep market experience and insight primarily from our trading activities in Centrica Energy. That's what supported us investing in batteries in both Belgium and Sweden, and it's how we can deliver future value from future opportunities.

We told you in July that we're targeting above GBP 1.6 billion of EBITDA by the end of 2028, underpinned by the transformation program. That's unchanged. Within that, retail and optimization will deliver growth whilst infrastructure pivots from merchant to regulated exposure. By 2030, we expect retail to reach around GBP 800 million. As Russell explained, we can keep OpEx flat in nominal terms with top line growth flowing through to higher margins and higher earnings. And that's after a couple of hundred million pounds of additional OpEx that we put in to support the growth that we see.

Expanding our capabilities means that optimization can move back towards the top of its existing range of about GBP 400 million of EBITDA with opportunities to do much, much better in the right conditions. So that's GBP 1.2 billion of EBITDA in total. We expect Infrastructure to grow to about GBP 800 million of EBITDA by 2030, and that assumes further nuclear life extensions and almost 2/3 of earnings from regulated and contracted sources from Infrastructure by that point. That's up from less than 5% today, far higher quality earnings.

If you bring that all together, we've got good visibility of reaching GBP 1.7 billion of EBITDA by the end of 2028 as underpinned by the GBP 4 billion investment program we've already told you about. And depending on the opportunity, we may spend even more than that as long as the value is there. Beyond 2028, we expect to continue investing at the same rate, around GBP 600 million to GBP 800 million a year until the end of the decade but only if we see the value. By 2030, we're aiming for EBITDA of around GBP 2 billion, with around 2/3 of that EBITDA coming from businesses to regulated and contracted earnings.

Now of course, there's going to be a range around those numbers to reflect the year performance. There always will be. But that range will tighten as we grow the share of lower volatility, more predictable, more contracted, more regulated earnings. And given the structurally lower tax rate of the new infrastructure we're building, post-tax earnings will accelerate faster than EBITDA. We're aiming to more than double our EPS in the next 5 years by 2030.

So the picture is clear. We're building a fundamentally stronger, higher quality, more predictable Centrica, a Centrica, which continues to morph from a gas company with a shrinking asset base heavily exposed to merchant prices into a power company with a growing asset base underpinned by a substantial proportion of contracted and regulated returns. Our operations remain resilient even in a year marked by external challenges. We've made real progress reshaping this business, more regulated, more contracted earnings, reducing downside risks, creating upside opportunities, delivering against our investment program and recycling capital from noncore assets into higher quality growth opportunities. At the same time, the transformation program is taking hold. It's supporting earnings today, GBP 100 million of benefit in 2025 and it's laying the foundations for the future.

Now GBP 2 billion of EBITDA by 2030 and more than doubling the EPS is ambitious but it is very achievable. I am very confident of that. To do that, we'll continue investing. There are fantastic opportunities for us to deliver value by doing that, super opportunities. Centrica is a far, far stronger company than it was 5, 6 years ago. So even a far stronger company than it was just a year ago. We've built resilience. We've diversified our earnings, and we've created huge optionality for the decade ahead. We're really looking forward to delivering on that opportunity for our colleagues, for our customers, for our shareholders to creating real value.

So with that, I'm going to stop talking with an aim of making 30 minutes, probably going slightly over, so I apologize for that. Russell and I will be delighted to take -- my God, a hand up already. We'll be delighted to take your questions. And I'm sure a lot of them are going to be number of questions or questions on videos that we put on this morning. So with that, happy to take all your questions.

There's no questions on the phone from online. But if you're online, you can type your question and I think Fraser is going to have a speaking part later to relay those questions. And we trust Fraser that they're not his questions that they're actually coming from online.

So Ajay, you hand up first and then we'll come to you. Ajay?

Ajay Patel from Goldman Sachs. Two questions, if I might. Just one on the 22p of earnings. So your CapEx beyond '28 runs at GBP 600 million to GBP 800 million. If you look at that and you think towards the end of the plan, you should be around still net cash or broadly breakeven. What assumptions have you made about buybacks in that 22p? Or alternatively, is there balance sheet headroom here to further invest or return to investors when the right opportunity arises?

And how does -- I heard really good comments around risk mitigation, the hedging that you've done on the LNG, the investments you're making to make a higher-quality business but your credit metrics don't change over the last 3 or 4 years. I imagine that should start to bear some fruit, which should only accelerate the opportunity you have for growth and value creation.

And then the last one, I'm being a bit greedy here, so apologies. Just on the assumptions, what do you assume in the numbers for 2030 for commodity prices, obviously, quite a lot of volatility. So just to help us understand what are you sort of holding yourselves? Like for example, are you making any assumptions around Rough gas storage size will be? What gas price assumptions, what power price, anything you can give us on here just to help us really believe in that achievable 2p that you talked about?

So most of those, I think, of Russell. Let me touch on briefly you mentioned about the hedging in LNG, just to explain what we've done there. I don't think the doubling of the share price is dependent upon us having lots more buybacks. So there's potentially capacity in there. But on LNG, those of you that have covered the company for quite some time will remember when we had just the Sabine Pass contract, we basically bought U.S. LNG and a Henry Hub index and the sink market was NBP or TTF in Europe. And the closing cost was $300 million. So if we didn't lift any LNG with a $300 million liquefaction fee to be. Now if Henry Hub is low and European gas prices are high, happy days. But if that's not the case, then it could be slightly more stressful.

What the team have done, I think, unbelievably well, and it highlights one of the benefits we've got in Centrica is over the last couple of years, we've entered into deals with U.S. domestic gas producers effectively to buy gas off them at a European gas index. So we went to producers and said, look, would you like to diversify your range of income, those that don't sell LNG. So you can have some Henry Hub exposure, you can some TTF exposure. And they said, yes. Ultimately, what's happened with a number of deals is we now effectively have taken out the basis differential risk. So we now effectively buy Cheniere on a U.S. Henry Hub index -- sorry, on our European gas price index. So we've matched that. So the sink sale market and the purchase of the index risk has been taken out, which is absolutely huge, massive derisking of the portfolio.

What that's then done is it's given us a position in physical pipeline gas in the U.S. And that's given us the encouragement to open -- we're going to open an office in the U.S. now. So those deals make sense just to derisk a huge risk of the portfolio. But what we like to do in Centrica is to look for optionality. So by doing that, we've now got a team in the U.S. that are managing our domestic gas position, and they will deliver value out of that. When we went into powertrain in the U.S., we did that from -- you can do that financially, we did that from Denmark mainly.

But now we've got a team and we intend to grow that business. And the reason I wanted to kind of pause on that is I'm not sure people realize we've taken that risk of the Cheniere contract but it highlights what we like to do in the company. Let's do something that makes perfect sense but it's got potential upside. So now with that, there's lots of difficult questions on our assumptions. And if I got that wrong on assuming buybacks, Russell, please tell.

So let me just sort of walk you through the spreadsheet a little bit of how we got to those numbers, which might help everybody. So of course, the GBP 2 billion worth of EBITDA at the end of 2030. So CapEx-wise, we assume we complete the GBP 4 billion program by the end of 2028. And as a proxy for now, we've assumed that we have GBP 600 million to GBP 800 million worth of CapEx in the years thereafter, which will begin to generate a little bit of additional earnings. There's no assumption for additional buybacks in the share count number. That's not because we're not going to do buybacks. It's just to keep your modeling very simple. So as surplus capital emerges and buybacks become an opportunity, that's definitely something we're looking at.

You remember last year, I took you through a waterfall of how the balance sheet will evolve in the coming years to end of 2028. Nothing really has changed there. So we see that we will invest in the next couple of years but also begin to build up positive cash flows, rebuild our balance sheet strength, and that gives us optionality either for more investments or returning surplus capital. So you can use that as a proxy, I think, for modeling still.

The other thing that's important, I think, on the modeling is when you look at that headline EBITDA and try and work out how that goes down to EPS, you got to remember that the tax rate of Centrica will be going down in the coming years. That has a sort of implication effect on the EPS. We've got the second big Spirit divestment this year. Once we've cleared that out, you can see the tax rate will be getting a lot closer to the sort of 25%.

Risk mitigation you asked about and credit metrics and those types of things. So you said it's been the same for the past couple of years, which is actually not correct. So if you go back to the summer and you read the S&P review of Centrica, we were very happy to see that they have started to give us credit for the investments we've been making in the past couple of years. So the FFO to net debt metric of 50%, which has been there in the past has now been adjusted to 45%. But more importantly, if you read the schedules and the outlooks that they're guiding for Centrica. They say, if you continue to invest in ratable regulated contracted assets, we do expect that those metrics will be further loosened.

Now we haven't got that yet, and we've got some adjustments we've got to make through the Grain LNG deal, for example, but we're definitely going in the right direction in terms of credit metrics. And as you look through that period to 2028 and 2030, the proportion of cash flows, as Chris just laid out, going from 45% regulated up to 70% should help the metrics in a good way.

Assumptions, we don't do anything too clever. We just look at forward curves in terms of commodity prices, gas prices, power prices. Gas prices will have a very limited effect on the group by the time you get to the end of this decade. And for Rough and those numbers, we're basically assuming 0 given the uncertainty there. Size will be will be on a merchant basis. But of course, as we've outlined, there are discussions of potentially getting a CfD for that asset but that would probably be a longer time frame than the one that you're looking at. And if we continue with the nuclear reactors, we're just using for the 4 AGRs forward power prices. So that's how the model works.

Ahmed, to Mark, then go to Jenny and then go to Dominic.

Ahmed from Jefferies. Chris, I wanted to start with your comments around the pipeline for future investments when you referenced pausing the buyback. Is that a topic that we are going to see material clarity over the course of this year? And I just want to -- obviously, we understand sort of the Rough discussion that you referenced earlier but what else is in that pipeline. So interested to sort of get more on it.

I also wanted to ask you about sort of the nuclear life extension. So you sort of referenced size will be. But is there an opportunity to get meaningful nuclear life extensions on the rest of the fleet as well? And is that sort of reflected in the doubling of the EPS by 2030? Or is that sort of just based on as you sort of see things today?

And then maybe a question for Russell. Russell, I'm trying to just sort of understand a little bit better your guidance for 2026 and where that may differ from consensus. So if I add the various divisional data points that you have given us on EBITDA and then adjust for consolidation for sort of last year, it feels like almost GBP 1.4 billion group EBITDA, which is not very dissimilar from where consensus is. So is that sort of a fair interpretation. So -- and then it just seems to me sort of the big difference really versus where consensus expectations is on the interest cost. Again, please tell me if you disagree. And I'm just trying to understand why is the interest cost that variation, if you can give us some color on that. Bill...

Okay. There's quite a lot in there. So I would hope we get material clarity through this year. So the government's gas consultation closed yesterday. We made a submission under that. I thought that was -- I was really pleased to see it. I wish it come out a bit earlier but very pleased to see how it was written, and it certainly recognized the importance of gas storage as did NESO recent report. And as the U.K.'s largest gas storage facility, I think Rough is very well placed. So I feel more confident about Rough but I'm also very clear eyed about it. So either we get something that makes sense for us to unlock the GBP 2 billion, create over just under 5,000 jobs in the construction phase or we don't. This is why we keep a huge pipeline of opportunities so that -- and there have been things that we've had in the pipeline that we've walked away from days before signing. And we can do that because we know we've got other stuff there.

So Rough would be one, I would hope. We have been discussing more about X-energy. So the government's recent publication of how they'll support small and advanced modular reactors is asking for submissions by the -- or sorry, starting on the 4th of March. Clay Sell, the Chief Executive of X-energy and I were in seeing government last week talking about this. And we expect to submit something hopefully on the 4 but sometime around then. And what that will do is lay out what we would be looking for to advance probably what is maybe a GBP 10 billion investment or so GBP 9 billion or GBP 10 billion for Hartlepool -- for 1 gigawatt in Hartlepool. But what it will lay out is we actually see this as being a GBP 50 billion or GBP 60 billion program. So about 5 or 6 gigawatts of these reactors across sites in the U.K.

And again, a lot of these things are kind of binary because you either get the support framework you're looking for or you don't. But the government are super keen on nuclear. There's cross-party consensus on that between the 2 main parties because size we'll see was started by the previous government finished by this one. So it's an area where they all seem to agree. We think X-energy is some of the best technology out there. We're still looking at Rolls-Royce SMR technology as well, and we see a huge opportunity. So that's something that we could see now.

I don't think you're not going to see massive CapEx on that in 2026 because you've probably got several hundred million pounds of pre-FID expenditure on that to make sure that the sites are right. But I hope we'd get some acceleration there. Morecambe Net zero is progressing quite well also. And so we see -- we saw the National Wealth Fund coming in to take a proportion of the costs in the feasibility study for the pipeline from the Peak district cement producers over to the West Coast. I would [indiscernible] East Irish but the West Coast of the U.K. and it specifically recognized the role of Morecambe.

So those are opportunities that we see quite substantial upside. And hopefully, we get some clarity. We expect to take final investment decision on the [ Cashleen peak Galway ] in Ireland. That's probably what 340 megs. So that's probably EUR 400 million to EUR 500 million, I think. We're looking at a slightly lower number but I think you're looking at over GBP 1 million a megawatt, I think, for construction. So that's probably -- I would estimate I don't know if Dave listened if he is, I still expect a low price but I would estimate about EUR 500 million on that I'd hope to take investment decision this year.

Again, if we get to the point where we say the numbers don't add up, we wouldn't do it. So there's quite a lot in there. There's also some stuff we're looking at. We have been very open that we're looking both at organic and inorganic options. The inorganic options are more likely to have more of a skew towards contracted and some merchant exposure a bit like Isle of Grain. And the reason for that is we don't have the cost of capital to compete with others to buy existing regulated asset-based businesses. That's why we're creating them. That's why we help to create Sizewell C. We want to create that in Rough. We want to create that in Morecambe because we just -- it wouldn't make sense for us to compete against people with a cost of capital of 200 or 300 bps below others. So we hope we'd get something there.

On the nuclear extensions, to be super clear, the GPB 1.7 billion of EBITDA was GBP 1.6 billion. the difference between those 2 numbers is we expect extensions. So 2 of the plants -- 2 of the advanced gas cold reactors are due to go out in at the end of March, I think, '28. We expect those to be extended. If they're not extended, the guidance is GPB 1.6 billion. So there's just under GBP 100 million in there. The other 2 are due to go to service, I think, in March 2030. And so there's probably 10% of the GBP 2 billion EBITDA, which relates to having the 4 advanced gas cold reactors working all through 2030. So it's not purely dependent upon that. The numbers are in there.

Now I don't think these things will be going by 2040. I don't even think they'll be going by 2035. I think we will -- we have to watch the degradation in piping in the boiler work and in the graphite core. And I think we will get a series of 1- or 2-year extensions. But at some point, it will be a case we'll say we have to shut these things down because the nuclear, they have to be safe. So I'm increasingly confident we can get them going to 2030. Hartlepool has been out for quite a while, which is frustrating. But effectively, that's less wear and tear, so you end up on to the end. So I think we'll get those extensions. I think I said before, if we were offered the chance to sign up just now to these things running until and shut down in 2035, I'd sign on the dotted line because I don't think they've got much life beyond that.

Russell, 2026 guidance.

Let me talk everybody through that. So it was on the slide, but let me just go into a little bit more detail. So retail, previously, we had guidance ranges for the individual businesses. We've simplified that and tidied that up. So a range of GBP 500 million to GBP 800 million for all those businesses. You can choose your midpoint maybe as a way to get started there. But I think as we sit today, we're quite comfortable with how retail is looking for the year. Optimisation, I was clear about that in the speech, below the GBP 300 million to GBP 400 million range, so GBP 250 million as we sit today for that business. Infrastructure, again, a little bit dependent on prices, although we've hedged a lot of the nuclear production and the Spirit production this year. So we've guided GBP 500 million to GBP 650 million. Some of that's also dependent when the Spirit Energy second divestment closes, we're thinking around midyear. So perhaps you could take the midpoint of both of those.

You mentioned you'll use the console adjustment that we had this year. I think that's a good proxy. So I would pencil that in, that's fine. And then there was the interest expense where we noticed that some people modeling Centrica just hadn't quite got that correct. So we wanted to just flesh that out today. So GBP 100 million cost for 2026 is our current expectation. Let me just give you the math behind that because it's quite important. So Centrica, of course, has some debt from quite a few years ago at relatively high interest rates and a large cash balance, which is all floating. And what's happening is as interest rates are going down and half of your debt stack is fixed, the amplification on the reduction in your interest is more pronounced.

So just for example, the rate that we paid on the bonds in '24 was just over 7%, reduced to 6.6% in '25. But on the cash, a steeper drop because it's all floating from [ 5.1 ] to [ 4.36. ] So you've got both higher fixed rate debt and it's not all floating. So that's part of the dynamic. The other thing you have to take into account is there's a difference between P&L interest charge and cash paid on interest. That's things like decommissioning and other things that move through the P&L but not through the cash flow statement. Let's call that around GBP 40 million, GBP 50 million, which you probably want to adjust as well. So the IR team will be very happy to walk you through the intricacies of our debt stack but I think that's probably the best explanation I can give you from here.

With Mark, have Jenny and then Dominic.

Mark Freshney from UBS. I have 3 questions. Firstly, on the LNG hedge position, which I think is 100% out until 2028, is that to use your parlance written in black ink or red ink?

Just secondly, regarding the Rough storage facility, which you now expect to break even. Is that all because you're extracting the cushion gas?

And I guess the third question is more philosophical about the efficiency plans. I mean businesses continually need to do efficiency plans and the ones done by your predecessor and your predecessor before that, the benefits seem to go back to customers.

And when I look at -- Chris, when you mentioned your transformation plan, I think it was 6 months ago, and you said there would be upside to the GBP 1.6 billion or the range, GBP 1.3 billion to GBP 1.9 billion. Here today, we find that the only upside is the GBP 100 million from nuclear life extensions. So should we be conceptualizing the efficiency plan as business as usual and something that protects existing efficiencies or the existing businesses and profitability? Or will this be the one plan, apart from the one you did a few years ago that did show through but is this going to be one that does actually bring shareholders any benefit?

Let me take the last one first. I hope so. So the GBP 100 million benefit in 2025, but we booked the costs in core earnings. So most companies. And what we used to do, when I joined, I was talking to the Chairman this morning, I think we've only 2 left in the board from that point. When I joined, we had this massive cost efficiency program, and we were spending hundreds of millions of pounds a year in the middle column. And everybody says what's in the middle columns, please. [ I think we've let ] the cash out of the door.

And actually, I would argue rather than that going back to customers, our costs didn't actually go down, they went up. And so we had lots of -- I wouldn't say [indiscernible], but we had lots of ways of explaining why we've done a really great job of taking out cost, but we put cost back in. So with the first presentation I did as CEO was to show that we've taken out 15,000 people and the wage bill have gone up. So I don't care how many people work for us. I care what we pay. And so I actually don't think that delivered much in the way of benefit. And I had to present every 6 months somewhat convoluted story about cost benefits and OpEx.

But I just -- I think we're kidding ourselves on. Now looking to say, I don't know, our OpEx is GBP 65 million lower in '25 or thereabouts than it was in '24. Now the reason that you'll see some going back, if you take, for example, energy, I'm probably going to get kick for saying this number, but we would anticipate for that project, the first project for a gigawatt of advanced modular reactors, the pre-FID spend will probably be about GBP 600 million. You can't capitalize that and that's expense.

Now we wouldn't expect to pick up all GBP 600 million. But that's why when Russell said, we expect -- we expect to keep costs flat over 5 years, offsetting inflation, but also offsetting the fact that we expect to have a couple of hundred million of growth-related expense. Some of that will be as we go in more to building some things ourselves, you've got your pre-FID spend. You've got your front-end engineering and design, civil engineering works, all of that kind of stuff. I think you should be able to capitalize that on a successful project investment decision and don't set the accounting standards.

So you'll see some of that in there. We would expect to spend more. Again, only if the value is going to be, but we're going to have to be slightly more speculative, I think, in some of that. So I think the efficiency program will deliver. Rough storage is absolutely because we're taking out the gas. We're not injecting. However, we reserve the right. Cassim's team worked very closely with Martin Scargill's team. If today, for example, we see the chance to inject at 10p and sell at 50p, we can inject. We can change the flow in rough 3 times a day. The nominations, you make 3 different nominations, I think.

But our modeling is simply that we're going to take the indigenous gas out. And at some point, the pressure drops to such an extent that you can't get any more. And then on the LNG hedge, I would just say nice try, that would be commercially sensitive. I would say that we expect to -- I think, to be moderately flat, but it's not so much of a hedge difference and then it's all flat. There's still work with the traders. The traders are very, very busy it seems. I don't know, Russell, if you want to give any more from that LNG.

Just to remind everybody that the LNG business is much broader than just the Sabine contract into the U.K., which is where it all started. So 25 cargoes a year from Sabine hedged, 250 cargoes traded last year. So the LNG business is much broader than that one contract. And our traders have demonstrated over the past couple of years how they're able to get into positions in a really creative way to create value. So I'd take that into consideration as well.

Pavan Mahbubani from JPMorgan. I'll ask you 2 questions, please. Firstly, Chris, I want to follow up on Mark's question on the transformation program and the retention of those benefits. So if we exclude the pre-FID expenditure and everything else, how are you comfortable that you can retain any proportion or a good proportion of that relative to your competition? I guess the question I'm asking is what's different about Centrica versus what some of your peers will be doing in the businesses where you're driving these efficiencies?

And then the second question I have is, can you unpack a bit more the drivers of the lower optimization trading profits this year. And my question is, how do you expect those factors to evolve, i.e., when we're thinking about 2027, 2028? Should we assume you're back to the midpoint? Or is it a gradual ramp-up based on market conditions as you see them today?

Let me take the first one and maybe Russell can take the second one. So you're talking about in the retail business effectively. So if you look -- most of our competitors are losing money in the retail business. And Russell mentioned about unsustainable pricing that we're seeing. We're just not going to play that game. I've always been dubious from being very open of a value over volume explanation when it happens after the fact.

And Gary who runs B2C retail, and Dan who run B2B, we were quite clear when we spoke at the start of the year saying, if we think that it's value over volume, we say at the start of the year. So it's not an explanation for losing customers. And I think if we end the year with flat customer numbers, I'd be delighted. I think customer numbers probably will be a bit down because we're not going to chase unsustainable pricing.

But in the regulated -- in the price cap part of the business, what you really want to do, and it sounds very uninspiring is to be better than average. And so if we run better cost saving programs than our competitors, we put them under more pressure. If they're making losses, they're under even more pressure, and you cannot resist gravity in perpetuity.

So if we look at our biggest competitor, Octopus, I think their last account showed that they doubled their OpEx and they doubled their headcount. And we've always thought that when you get to a point where you have a broad range of customers in the B2C retail book, your costs are going to go up because some customers are dead easy to serve and some customers are slightly more difficult to serve. We have always had a very broad range of customers. We value every one of them.

So we have efficiencies. We know how to deal with all the range of customers. We have efficiencies that we can put in place. Some of these companies are learning how to deal with customers with more complex needs, and you see that their costs are growing. Our cost to serve is lower than Octopus' cost to serve today. We already have a cost advantage. The cost advantage that is portrayed through a different system, the numbers don't -- you can see this in the consolidated segmental statement, the numbers don't make that out. So we have a cost advantage today.

Now is it possible that we put through lots of cost savings and the regulator absorbs that into the price gap? It's entirely possible. But by doing so, they put other people out of business. And if they do that, then it's an uninvestable market, they want an investable market. We pick up other customers. But at some point, you have -- this market has to have enough profit in order to attract the investment that's required.

We're not perfect and we've got loads of opportunity. It's funny, every year we make -- like our customer service, our customer satisfaction numbers, they're as high as they've ever been. But the opportunities I see today are more than I saw 5 or 6 years ago when it was pretty low. So like every time you improve, you just see more opportunities. And I think that's what great companies do. You just continue to improve. So if you're behind somebody, you catch them up more quickly. If you're ahead of them, you just increase the gap.

And so we're going to continue to invest in that. We're going to continue to invest in customer service. We're going to continue to invest in delivering efficiencies. And I'm as confident as I can because not only will we deliver the benefits and retain some of that, but that we will deliver the GBP 1.7 billion and the GBP 2 billion of EBITDA in 2028 and 2030. It's going to be difficult. It's going to be hard work, but it's entirely possible.

So I think we'll be able to retain some of that. But if we don't and the regulator takes it all, that still for us competitively is not a bad position. It might mean we make a little bit less, but the market has got to be normal. And the 2.4% margin today that we've got, which is causing a lot of financial distress. There's 5 companies now, I believe, that don't meet Ofgem's own financial resilience rules. So it's getting worse. That means they're eating into capital that they've got in order to stay in the business. That's not sustainable.

What we could have done was -- and I've always said this, we could have sat for 4 or 5 years and said, you know what, the market is going to come back to us, but we haven't. We have invested heavily in improving our customer service over the last 4, 5 years, but I still believe the market is going to come back to us. But we're going to continue to invest constantly. We're not going to sit and wait. Cassim often talks about complacency being a word that where we're not complacent at all.

So we'll keep pushing. We're going to deliver these efficiencies. Maybe we're going to deliver more. If the regulator takes them, that's fine for us. We're always looking for something whereby whether you're left or right, you win. And whether the regulator allows us to keep them or whether the regulator takes them back in the long term, that's not bad for us in this market. But I do think we have to keep it, the proof is going to be where the OpEx is.

And I think that we thought long and hard about this. I didn't like when I was CFO putting restructuring costs through exceptional items because the organization thinks it's free money. And so whilst it's slightly painful, we would otherwise be talking about 13p EPS, and we'll be talking about we're going to invest even more in 2026 in transformation. But we want to make sure that everyone understands that when you spend GBP 1 of transformation, you have to get more than GBP 1 benefit. Otherwise, let's not spend the GBP 1.

So -- but we'll separately identify that, I think, each time we do the results, but they'll be in the core results. Lower optimization. When is it going to change? When is the market going to change? What date?

So the disappointment in the second half of the year and where we thought we might have ended up in Centrica Energy versus what I told you at the midyear. I mean, if you sort of stand back, I mean, commodity markets, as we know, are inherently volatile, and we saw that through the energy crisis and a sort of different type of volatility and movements in the past couple of years. And so you had that exceptional dislocations in '22, '23. And then you moved into a period of elevated geopolitical concerns, risk, high volatility, but hard to read volatility.

And then at the end of 2025, we did see the beginning of a broad-based normalization across the global gas hubs, but it didn't really go back to where it was before. And so that meant that in the second half of the year, our gas and power trading business continued to face challenging conditions, and we didn't see an improvement perhaps we thought we might have. What -- just to remind you of the sort of core of that business, when we see seasonal and locational spreads, our core strategy, our fundamental-based strategies are to take gas storage positions, power positions, interconnects and all the rest. And then through analysis of supply and demand put positions on.

And although there was an improvement in the second half of the year, there were a couple of factors that made it more challenging. The level of the summer/winter spreads was still too risky. The margins were not quite there. So we didn't put that much risk capital to work. And also the movement back into more normal market conditions happened really quite deep into the injection season. So Centrica had not taken as much capacity and therefore, has less optionality as moved through the current period. So that just meant that we've got a bit of a -- we're starting in the backfill a little bit for 2026, hence, the main reason for moving the guidance down for this year.

And you've seen in recent days, there continues to be regulatory news flow changes in the market that just make it more difficult for us to step in at the moment. But does that mean that we feel that there's a change to our longer-term outlook for that business? Absolutely not. We've got a great team. We trade across 28 countries in Europe. The gas and power markets, when they do stabilize, we'll have -- we will be there with the risk capital ready to get back to work.

Our renewable route-to-market business continues to grow, now at 19 gigawatts under management. That's got a stable cash flow base to some extent in the contracts we write and optionality around that. LNG, we've just discussed a lot of optionality there. We're growing our business in gas and power trading into the U.S. We now have an office there. We're beginning to trade both physically as well as on the exchange. That helps us underpin our natural gas supply into Sabine, but it also gives us more optionality as well.

And if you take all of that together and a broad assumption that markets will normalize, we're comfortable we'll get that business back into the GBP 300 million to GBP 400 million worth of EBITDA that we've seen before.

Jenny, let's go for you.

Jenny Ping from Citi. A couple of interrelated questions, please. Just firstly, I was very intrigued to see your slide on CCGT. And obviously, you guys have been linked to potential merchant capacity and interested in your comments around the cost of capital. So when we look into the 2030 numbers in terms of that predictable earnings stream that you talk to, how do you plan to deal with this merchant capacity if you were to go down that route, especially in the context of some of the changes in the commodity markets we've seen recently, the Italian decree, the merit order comments from the European Commission and a more headroom coming through in the capacity auctions. So I would be interested in that as a first.

And then secondly, just on, I guess, affordability and bad debt. Obviously, bad debt continues to go up. You commented that the expectation is to see that to be recovered. What I can see is the government is only talking about 10% of the overall GBP 5 billion as a first tranche. What gives you that confidence to see some of your bad debt on your balance sheet to be recovered and that continues to go up?

Look, on the CCGTs, the -- so we've always been clear that we look at regulated and contracted. And so how I think the market is going to evolve. And if you -- and the government will see this, Chris Stark, who's the -- he's got a great job title like he is head Emission Control or something for Clean Power. And Chris will tell you this that he expects we'll have to rebuild the entire U.K. CCGT fleet.

But we're going to have far more renewables. And so ultimately, CCGTs, which might provide baseload just now will provide backup generation going forward. So CCGTs will just be like [ Picos ]. And so what you're going to have to have -- the way the market has to evolve in order for this to happen is you have to get capacity market payments, which are attractive enough for you to keep the asset open. And it will have to cover basic maintenance, et cetera, and a return on capital. And then you'll get the positive spark spread when you have to run. And if you have to run in the spark spreads negative, you won't run. Because you need electricity, at the point you need to run, the spark spread has to be positive.

So it's -- like if you take it from a macro level, if the rent doesn't exist for CCGTs, CCGTs won't be there. So when we look and say, I don't think -- you might get to like RAB models, I'm not -- I don't think so. I think it will be more the capacity markets kind of tried and tested people feel quite comfortable. And I've been quite open, like I would love if we had a bigger position in thermal power generation because I think that what will happen is that you'll see this morph into more capacity market contracts. But we're finding in the [ RHP ] because things always go wrong when you do a project, always.

There's no -- very few -- I think Heathrow Terminal 5 is the last big project I saw that actually went incredibly well. Everything goes wrong, is late it cost too much money. And so the build-out of renewables, which is very, very ambitious, will not happen in the time frame that we think. It would have happened, but not necessarily bang on budget, bang on schedule. So the gas-fired generation, you've got will have to run. So you have the capacity market payments and you have the positive spark spread.

And it's really quite typical of the asset classes that we're looking for in Centrica, which is something that makes sense in the base case and you make a [indiscernible] and has a skew to the upside because the downside in these assets will be if your maintenance isn't good and you get called in a whole new world. We know how to run CCGTs. We're pretty good at it. We've got a big one in Whitegate in Ireland. And so we know how to do that.

So the downside is in your own hands and the upside is probably going to come from the market. Those are exactly the kind of assets that we would look for, but they're not regulated, but they are heavily contracted. If you look at [ Island ] Green, it's mainly contracted rather than regulated. Now, why did we feel that we had a unique bidding position in that? Well, we know that asset because of 1/4 of the capacity. But our capacity is up in 2029.

And so we know today, so Cassim's team figured out what we would bid in 2029 for that capacity. And so when you look at it on a stand-alone basis, that sets a floor because we will either bid and get that capacity and we know the return on the asset or we'll bid and we won't get the capacity. And the only reason we won't is because somebody bid more. So we're always looking to see how do we establish the floor. And we will have quite a high risk tolerance, I am always looking at the floor, how solid is the floor and then how can you build on top of that.

So for CCGTs, I would love to be there. The trick is to be in the right place in the meta order. You then touch on what happened in Italy about the carbon pricing. Unless you had a rock solid -- so it's quite clear there's going to be some movement in terms of whether -- where carbon pricing is going to go. So unless you have something that's rock solid, irrevocable in terms of spending money and lots of carbon capture, you're probably not doing that at the moment. And the news from Italy the other day probably undermines that.

But we are not looking at that just now. So if we were to look at a power station with CCUS carbon capture utilization and storage, we'd have to make sure that, that was irrevocable, that, that was absolutely cast iron. Russell will be looking at. Raj, our General Counsel, will be looking at that. And if it wasn't, we probably wouldn't do that because that is too much of a risk.

And some people will have woken up on Tuesday morning to the news from Italy, they can ship our business models under threat. We will never be in that position. We're always looking to see how do we spread the risk, how do we garden the downside? How do we make sure the contracts are with the right counterparts? How do we make sure that the regulation is absolutely cast iron? So you can look and then say, well, what if the future government changed the law. Well, the government has changed the law and undermine contract rights, then countries become uninvestable. That's what you see in some developing countries. I don't think the U.K. will get to that point because if it did, the capital outflow would be absolutely huge.

So some of the stuff we look at a very detailed micro level, how tight is our contract and some of the stuff is at a very high-level macro level, which is, okay, if the worst happens, what does that mean for the country? Because we're kind of tied into -- we need things that are good for the country, we take a view as to whether something is likely or not. But it's also why we look, for example, at spreading our geographic risk. I think we've fixed our operations we started to invest, but we look and say, well, there's more that we can do.

The office in the U.S. is one thing I would expect us to enter 1 or 2 new countries outside Europe in the trading business this year. And we're in very small positions in Belgium and in Sweden, but I'd be quite happy to grow into -- and I don't think in 5 years, we're going to be in 20 countries. I don't think that we're going to physically be in 2 or 3 or 4 countries. I think you're going to have something that's less than 10 but more than 5. I mean that also helps you with the risk.

Yes. Bad debt, you want me to -- I mean, I'm happy to have a go and get it wrong. I think at the high level in the bad debt, bad debts are recovered through the price cap. That's why I think people don't appreciate how regulated the earnings are in British Gas Residential energy. So you recover it through the price cap. If you're better than average, it's a profit center. And if you're worse than average, it's a cost center. And debts are -- I think they've gone up fourfold or something.

So the debt on our balance sheet at GBP 1.2 billion or so. It's absolutely huge. The thing I worry about more is that means that there's a bunch of people that can't pay. So something's got to happen in order to fix that, but the regulator has got to come up with the right answer. So we call for a social tariff, we've been calling for that for quite some time. We can't differentiate between those who choose not to pay and those who really can't pay. We wish we could. And if we get social tariff, then those who can't pay will be treated as compassionate.

And at the extreme of social tariff would mean some people will get energy for free. Those of us that can afford to pay more will see prices go up, and that's right. And those that can't afford at all could ultimately see free energy. And those who choose not to pay, well, then you'll be able to take action against them. And because at the moment, because of the way that the price cap works and the cost being socialized, those who simply choose not to pay have been subsidized by those who do pay, and that's wrong because there's a lot of very poor people that are paying their energy bills. They shouldn't be subsidizing people that can afford to pay.

So it's high, it's a concern. It's a working capital issue. This is why we campaign for financial resilience because we've got the working capital. We've got a very good CFO who manages the balance sheet to make sure that when Gary's business needs a flow GBP 100 million, GBP 200 million, GBP 300 million, GBP 400 million, GBP 500 million working capital, we have the cash, we have the liquidity. We campaign for financial resilience because those companies that run a very, very tight in the balance sheet, I don't know how they're coping with this at the moment. And we don't think that systemic risk should be left with consumers, which it is just now because if they go under, consumers ultimately pay the cost. Did I get my numbers right or wrong?

So actually, you're broadly correct. So it's actually GBP 1.9 billion worth of net debt on the balance sheet including both billed and unbilled. So that's a challenge. And if you look at Note 16 in the accounts we published this morning, what you'll see is that's predominantly in that greater than 360-day category. So that's the same trend that British Gas is seeing as the rest of the industry is seeing.

Our bad debt charge as a percentage of revenue went from 2.3% to 2.8% in the year. So about a GBP 40 million increased charge. So it's a weigh on the P&L. But as Chris says over time, we're expecting to get a recovery for that. But it's that all the debt that's the real challenge.

It's Dominic Nash from Barclays. A couple of questions from me, please. The first one, I think it is to you, Russell. I think you mentioned before that you previously published a waterfall chart. And on the waterfall chart, you came up with your EBITDAs, your CapEx, your requirements.

And then you also said that you had a net debt EBITDA sort of target or goal of between 0 and 1x, I think it was for one sort of like a limit and one sort of like a target, I think. But on our numbers, I think that gets you about GBP 1 billion of sort of headroom which I think quite a few of us in this room probably earmarked as buyback rather than anything else.

Can I just confirm that, that sort of headroom still remains and it's basically just now either going to be option on CapEx and less likely to be buyback, but whether the headroom is still about the GBP 1 billion.

And the second question is to you, Chris. Actually, it's kind of half following up from Jenny's one on gas. Sort of double one here is that the government clearly has a policy to decarbonize completely.

And you are bringing up the doubling of CCGT output and so one of my first question is why are you doing that when you can't build this side of 2031 and you don't have any CCGTs.

So what are you sort of message are you trying to tell us about that? And secondly, clearly, under the current government, I think there is no doubling of gas expected. And in fact, gases continue to go down. So do you have like a road map to whether or not we could see the gas strategy change this side of 2029?

Or do we think we're going to need a sort of change in government before we end up with a more sort of gas as a transition fuel sort of narrative?

Good question. Let me take the one on gas. So the numbers that we showed were from Aurora. So they're external numbers. So that's not our internal forecast. That's an Aurora forecast. And the doubling of CCGT is in the mix rather than our position. I think it depends on what you think is going to be the builder.

But the more intermittent electricity we've got, the more gas-fired generation we're going to need. And then the question comes in terms of how much economic growth do you think there's going to be, how much increase in electricity demand do you think there's going to be.

Now there's a huge notional increase in demand from data centers. I think when you look at the physical requirements of building, everyone talks about a gigawatt data center. I think that's half a square mile.

Apparently, it's $5 billion worth of chips in the plant. We would build the power station for $1.5 billion or so, and you might build it co-located and not connected to the network. It takes you 5 years to get a turbine. So you say that to 2030.

How do you do all of this kind of stuff? The numbers we've seen in the -- I think in the -- by 2040. So there's a whole bunch of stuff in there that Aurora might have got right, might have got wrong. My belief is that we will see growth in electricity demand. We will see economic growth in the U.K., and we will see growth in CCGT as a share.

Now we've got a big biomass plant in the U.K. Will biomass survive or not because we've been talking about biomass BECCS with carbon capture and storage. So you might see a change in that mix. So gas might replace because the lower emissions from gas than there is from biomass, whether you buy the argument that it's renewable and biomass is a political question, I don't want to get into, but you could see a change there.

That's about 3 gigs or something that's on the system just now it's about 8% of U.K. demand. Obviously, you'll see the reduction in the -- by 2040, to the 4th advanced gas coal reactors will be off as 4.8 gigs. Hinkley C should be on. Size will see definitely won't be on by that point -- sorry, definitely, I'd be amazed if it was on by that point. I'd be delighted, but I would be amazed, I think roughly around there.

So there's a whole bunch of assumptions. What we know is the assumptions will be wrong, but you will need more gas-fired generation. The question about how much electricity will be generated, I think that's open to debate because we don't know what the weather patterns are going to be like in 2040. But we can't take the risk that intermittency increases because weather patterns become more changeable.

So you're going to have to have the capacity, which is why you're going to have to have the capacity market payments, which is why they're an asset class that we like. Whether they will generate 300 days a year or 3 days a year, I have no idea. But I like the course for 3 days a year. We're capital goes to 300, then we're making a lot more money and bringing down costs for customers.

So there's a long time between now and 2040. But I think the current government recognizes gas as a transition fuel. I think the question on some gas -- I was in Qatar in November and one of the senior Qatari Energy Ministry people said that they don't think gas is a transition fuel. They think it's a destination fuel, and they said, can you deliver that message in the U.K.? I'd rather not get involved in that stuff that's for you guys to deliver.

But I think what that signified is they no longer see like blind decarbonization as being an issue. And therefore, they've probably got more discipline in terms of how they're going to get their gas out of the ground. And I think we're seeing a lot of pragmatism in the U.K. as well. I think if you look at that gas consultation, that's not the consultation of somebody who's pursuing blind decarbonization.

It was a very measured, very sensible consultation. NISO who come out recognizing for gas storage as a government body now. And so I think we're seeing a lot more pragmatism.

And what we're trying to do is to just steer away from all of the kind of politics and all the headlines and stuff about net zero. The reality is what we're trying to do is to decarbonize, have secure energy and have it that's affordable. And we think CCGTs are going to be right in there.

I would love to have more CCGTs, but only at the right price. If somebody else has a lower cost of capital and they'll pay more, then fine. I think at the moment, people are struggling to value these asset classes. I don't think they're attracting -- like you've got a really low cost of capital, you want to buy a network or you want to buy -- you want to be in the CFD or wind or something that's where the lower cost of capital is going. If that allows us a chance to get in and build a CCGT position, I would be delighted.

Great. And then just moving on to the waterfall chart from last year on the financial framework for the coming years to come. So no change to the expectations of the overall framework. And just to remind everybody because we don't have it on the screen today, what we were looking at there was the evolution of the balance sheet where on one hand, you had the completion of the GBP 4 billion investment program. You had the continued progressive dividend.

You had the other liabilities, pensions decommissioning. But you also had alongside the cash generation from our existing assets and our new assets. And we sort of pushed that all forward to the end of 2028.

And what we could show by then is that we would be able to move the balance sheet up to approximately a 1x net debt-to-EBITDA level. We would have a bit of a buffer and reserve just because of the volatility of the business. And over time, we would expect that some additional financial flexibility could come to bear.

And that's right, that was about GBP 1 billion. And I think roughly ups and downs, that's probably the same proxy that I would look at today. But it's not there today because, of course, what we've got to do at the moment is move through the next couple of years, continue to generate from our existing assets.

We've only spent GBP 2 billion of the GBP 4 billion of the capital program. So that needs to come out of the balance sheet into new assets. And we paused the buyback because we think there's more value at the moment for us to continue that investment program and then make sure we've got a really strong set of cash flows in the future, which gives us much more optionality and whether it's buybacks or other sources or use of capital.

We've got to add that back to the AGM. I'm conscious people's time come through if there's any questions online. The one thing I would say is that there's -- I always -- when I was a CFO, I always used to run a slightly what people call a slightly flatter or conservative balance sheet.

It seems like there's always a point in the cycle where you think thank God, we've got a balance sheet like that, either because you go into a bit of a downturn and you need to float working capital or because your competitors are highly leveraged and you get the chance to pick assets up at a low price. So there is a benefit in us having a slightly more conservative approach to our balance sheet.

But hopefully, people see the fact that we've bought back over 1/4 of the company over the last 3 and a bit years. They see that we're super committed. I mean we know who we work for. We work for the shareholders. We get excess capital, we give it back.

But we think it's in shareholders' interest for us to have the optionality to act and to pick up assets or to not worry because you find out, for example, that Ofgem's next quarter's bad debt recovery charge is not as high as you would like.

There are some of our competitors who I think it's an existential issue for them as to what the next price cap, but it's not existential for us at all in the short term. Harry and Ajay then we'll go to Fraser. And I'm just conscious of everybody's time and over kind of drag.

Yes. I'll make a quick I appreciate we've gone through a lot of stuff already. It's Harry from BNPP Exane. So hasn't been asked yet. The buyback, what's your threshold for reintroducing it? I guess in the past, you've been willing to be quite flexible. Last time that your shares fell a little bit after pausing buybacks, you resume them in quick order.

Is there a share price threshold below which you'd be interested in restarting buybacks? Is there an opportunity cost threshold? What would cause you to resume the buyback? I guess another observation is that your opportunity cost on cash, right?

Because your cash treasury rates have gone down, you have less to lose in terms of interest income if you spend it on buybacks instead. So that's the first one. And then the other one is on the capacity payments. I wholeheartedly agree with you on capacity payments. I think this is something that everyone's -- not everyone, but a lot of people are missing right now.

I think gas is going to become a regulated asset in Europe, and there are still countries which don't have capacity markets, which are going to need them. Would you look in Europe for orphaned gas plants? Look at the Netherlands, for instance, where there's no capacity payment, there's no spark spreads, but those plants could become very profitable if you did get a capacity payment.

You've expanded internationally with your trading business. So why not become an aggregator for orphan CCGTs in Europe and then clean up when capacity payments massively rise at the end of the decade? Loaded question.

Yes, you're not selling CCGTs in the Netherlands, are you by any chance, no?

Sadly not.

Look, I think that -- I mean, Russell and I both used to work for the same Dutch company or company that was Dutch at the time, I think Russell spent quite a number of years living the. I like the Netherlands as a place to do business. However, there was quite a big court case in the Netherlands about decarbonization targets. So maybe there's some assets there for a reason.

But the Netherlands will be exactly the kind of market that we would quite like it's good rule of law, et cetera. And if there's value there, and we know the market and Cassim's team know the market well, then why not. But we are -- we don't look and say that's the kind of place we want to go. We want to create value. And if you take, for example, the market, we say, well, there's no capacity market at the moment. There's no spark spread there.

That's a bit more of a punt, I think, than saying, okay, we can see a market where there is a capacity market already. There's a good liquid market. We can see the assets. There's less of a punt in that. And I -- our whole thing and whatever it is, whether it's technology, whether it's in buying assets, is not to take the risk of being the first mover, but being able to move when somebody establishes something is possible, being able to move quicker than the competition. And something has even been able to move quicker than the first mover in taking advantage of that.

So don't hold your breath for us to be coming back and talking Dutch when we're there. But I'd love to build our position there. Look, buyback, you know why we're not going to give you an answer.

I think our share price today is undervalued not because it's down. I think it was undervalued when we started the date or when we closed yesterday. But we'll always look at where the value is. And we're delighted to have bought back, I don't know, well over 1 billion shares at [ GBP .30. ] [indiscernible] whatever the number is, and created quite a bit of value there in the capital appreciation, but also in terms of the dividend stream that we would otherwise have been paying.

The first point we look at a buyback is to say, do we have surplus capital that we're not confident that we can deploy? Or do we have I don't know the right word, but unexpected gain. So I can't remember when it was, there was a couple of years ago where we upped the buyback by GBP 500 million at the last part of the year.

That's because our performance in trading was beyond anything that we expected. And we looked and said, okay, we've got a bunch of ideas. We've got a bunch of capital, but we really didn't expect that. It must have been in 2023 or something. And so we just stuck that into the buyback. So if we have surplus capital, then we'll look in there. And I think of it first and foremost as being a way, an efficient way to return capital to shareholders.

It's not to say we ignore the share price. But I think if we had surplus capital, and I went to the Chairman and said, I think our share price is a bit overvalued. Like if I was the Chairman, I think I might need a different Chief Executive. Because if I look into the share price is overvalued, like on a structural basis, that means that I run out of ideas.

And so I think that -- I think we're materially undervalued today based on what I can see. But I also think that the capital we've got on the balance sheet today can be invested to create more value for shareholders by delivering that value than it will be by buying back shares. If a number of these things that we've spoken about don't materialize, then the capital we've got the balance sheet today, we might not have as many ideas.

Therefore, we might say, you know what we're going to return some of that to the shareholders. But what we're not going to do on a daily basis to take a view on the price. And I'm not going to tell you where I think the trigger price is. I will tell you, I think we're undervalued today.

Excellent.

Ajay, you don't have another 4 questions, do you?

Ajay at Goldman Sachs. So it was more just thinking about those nuclear sites. And it's a little bit far along the line, but at some point, there is a point where these assets close. And I just wondered what the development options are outside of being nuclear stations.

And I know you've got the SMR opportunity, but you have connection, it's secure. There's a lot of opportunity for repurposing in some way, and that was very much a debate over the last quarter. So yes, anything you could give us there would be helpful.

So the first -- it's no coincidence that the first anticipated deployment of AMR technology is at Hartlepool, where we've got a 1.2 gigawatt power station at the moment is due to close in 2028. I think it will go into the early 2030s.

So you've got a good connection, you've got highly skilled workforce. And therefore, you've got the conditions to build a power station. I think if you look at nuclear, the energy stuff we're looking at is 80-megawatt reactors. They're quite small, you can deploy them.

Really, their optimal deployment is now 4 pads, so a pad of 420 gig -- 320 meg, sorry. And so theoretically, you could put them anywhere. The reality is I think that you find -- I think the U.K. is quite neutral on nuclear.

And I think if you live in a community that has nuclear power and like if you live in nearshore where Hunterson is, they would love, I think, nuclear power stations down there because they've been there for 50 years. They know it's safe, well-paid jobs, et cetera. But I think if you go to a greenfield site and say, you know what, I'm going to build a nuclear power station here, you're probably going to have some problems with the local communities.

And so I think the natural use for existing nuclear sites is to deploy nuclear technology. But if you can, then -- so the question is, could you build a CCGT at Hartlepool and use a 1.2 gig connection? Absolutely. You just have to make sure that -- because there's a lot of work that goes -- I mean, when you get to the point of decommission nuclear power station, like Hunterson is still taken on apprentices. There are people that will work for their entire working life on decommissioning that power station. So you just got to make sure you've got enough room enough land around it. But yes, these are valuable connections.

Existing grid connections in the system when you've got a number of years of, they're certainly valuable. The question when you come and look at the project management is what's in the critical path. So if you can't get a turbine for 5 years, you kind of have to order things in advance, but they certainly have value, 100%.

And this one was just for Russell. So sort of expanding on Dominic's point. The EUR 1 billion of headroom that we were talking about by '28. So if you have a target of GBP 2 billion by 2030, and we're expecting the mix of the business to improve and 1x was the number at 2028. then could we be talking an additional GBP 1 billion, GBP 1.5 billion by 2030 of extra headroom?

Just thinking how we should be thinking about that risk profile and how it affects those numbers.

So I think that for now, we stick to the waterfall chart I gave you last year for the journey to 2028. But rest assured, Chris is pushing us all hard to do better than that. And if that happens, there'll be more flexibility all around for everything that's on that chart. 2030, a combination of the transformation program, the continued growth of the assets that we're investing in as well as new investments that might come through at that time.

Of course, it's going to give us more flexibility, and that can either be for new investments or greater returns. So that's one of the reasons today we wanted to give everybody comfort that there's a journey beyond 2028, and that's a positive journey.

Fraser, any questions online?

Yes. We've got a few. I will -- there's a couple we won't get to. So the IR team will come back on those ones. But if we can start, I'll combine a couple of different questions on retail. So we've seen retail customers growing over the course of the last few years, but then down in the second half of the year.

You made some comments about the strategy there. Could you just elaborate on what the go-forward strategy is around the retail, particularly energy supply customer base? Are we trying to grow customer numbers shrink customer numbers? What's the story there?

And then the second piece is just around the sort of economics of different tariffs, probably a question for Russell. What assumptions do we have around the share of regulated retail tariffs versus fixed rate? And how do the economics compare there?

And then the increasing demand from B2B customers, the growth in the B2B business, what are the underlying drivers there? And how does that impact unit margins?

So look, customer numbers, it's clear the strategy is to maximize the value from that business. We pulled back on some of the customer acquisition costs or activity last year. And in part, that was because we didn't see the value. And we have reduced our spend at the moment we're not going to chase per business. So the strategy customer numbers used to be a great proxy for value. I'm not sure that as good a proxy now.

And so we're just taking a pause and looking with our new customer lifetime value model, how do we determine how active we want to be in the market. We're not going to chase numbers so we can see we grew customers. I wanted us to show that we could grow customers in all of our businesses before we said, okay, now we're going to maximize the value because if we hadn't, I think there would have been a credibility issue.

It would have looked like we were saying, you know what, we can't grow customer numbers. Therefore, we're going to pretend we've got a different strategy. So it's all about maximizing the value. Russell obviously answered the economics in the tariff.

And the B2B growth, I think that's something that maybe a little bit underappreciated. [ Matt Wood, ] who runs that business is sitting in the front row just now. When I joined the company, that was a GBP 2 billion revenue business with GBP 40 million of profit. It's now a GBP 4 billion revenue business, GBP 100 million of profit.

The growth in that has been quite substantial. And we think that we can continue to do our position. And we take -- again, that's where we take value over volume. because we did large I&C customers. The margin on large I&C customers can be 1% of the gross margin. You don't need to do much to lose your gross margin and end up losing costs.

We don't really do large I&C customers anymore. We do smaller customers where the margin is higher. There are the odd I&C customers that have actually done through Cassim's business because if you're a large I&C customer and energy is 10%, 20%, 30%, 40% of your cost base, you are very sophisticated when you're buying. And so if they want to buy from us, then they'll deal with our energy traders who are also quite sophisticated.

That's not say not sophisticated. But if you're dealing with somebody calling up from the local corner shop or somebody calling up that spending -- we had a contract in Ireland with an aluminum smelter. They were spending EUR 350 million a year on electricity. And I think our gross margin was less than EUR 1 million, and we just stopped it. It just made no sense for us to take that risk.

And so on the B2B side, we are -- we have been pursuing value over volume, and that has doubled the revenue and doubled the profit or more than doubled the profit. And that's similar to what we're going to do, I think, in the B2C space.

But we would expect to see continued growth there, but we're not going to grow in -- we're not going to go after the revenue we're going after -- we will see turnover for vanity and profit for sanity, I would follow that logic. Russell, what we do in fixed price tariffs?

Yes. So just -- I mean, when we were in the energy crisis a few years ago, nearly all of our customers in the retail supply book in the U.K. were on the standard variable tariff. The dynamic has changed as we expected in the past couple of years. So we were 25% on fixed rate tariffs in 2024. That moved to 32% in 2025. So that does have a dampening effect somewhat on margins.

We'd included that in our guidance and our expectations for the business. It's a competitive business. And as Chris said, we will not be chasing unprofitable tariffs or customers.

Any last questions? I'm just conscious that it's 10 past 11.

I think...

Questions have not been asked already.

There's a question around -- well, 2 questions. One around guidance for 2026. 2025 consensus came down to an extent through the course of the year. 2026 guidance is -- we've obviously pointed out a couple of areas where people need to adjust. What confidence can we give that the numbers are not going to drop further through the course of this year, particularly around the optimization outlook, what gives us confidence in 250 million versus about 200 million last year.

Well, look, we give guidance on what's in front of our face and the analysis we can do today. Centrica Energy, we can see the positions we have. We can see the capital we've got placed and we can look at the markets.

And I think that 250 number is a good guidance for today, and that's the same as the rest of the businesses. There could be some volatility in the infrastructure businesses or in the retail businesses. That's why we have ranges.

But I think the Slide 14 that I gave you today, I think, is a good proxy for 2026 as far as I can see it.

And like every good sell-side analyst, I will -- I'll try to squeeze in a third one, which is -- taking my inspiration. Performance in services was very strong during the year. Can we elaborate on the progress that's been made and what gives us confidence in getting that business back into kind of teens, low teens EBIT multiples margins?

Yes. Look, so I think a lot of it as we described about boiler service, boiler installation, for example, is looking at our processes and saying what is it that's working, what do we need? So example, in boilers, we had a rule if you had a boiler that was installed that required -- that was above the ground floor, we put a scaffold up.

Now you got a Sky TV dish installed, very rarely did put a scaffold up. We put a ladder up, but they drill a hole in your wall and attach ladder to the wall so it' still safe. If you say you can't drill a hole the wall, you can't have a satellite dish. And so we were putting up scaffold, which is expensive.

We were then leaving it up, which I thought was a security risk rather than putting a ladder up. So we changed that. We will put up scaffold where we have to, but it's not a hard and fast rule. And it's these really small things. Gary has got the team looking at this, and we've got some internal people that are probably the bane of Gary's life because they're fiddling about trying to find all these different things. And these things all make a big difference.

We're looking more at things like, for example, if you think about our installations team, we do boilers. We do heat pumps, they are the biggest installer heat pumps in the U.K. But we do rewires. Now many people would think I need a house rewire, I'm going to call British Gas. They probably don't.

So there's some more marketing for us to do to tell people, we've got a bunch of electricians that are doing rewires, rewire a reasonable size house is best part of [ 10,000 ] or something. So there's a lot of -- there's -- when we tell people what we do, we get -- the demand is there because our competition is somebody in a white van. And some of these people are absolutely brilliant, but everyone's got a story about like a bad builder or a bad contractor or something. You know where we are.

You don't have to worry about whether you're going to be able to find us. You know where British Gas is. So the opportunity is huge. I mean I think the growth opportunity for us in this business is absolutely gigantic. We wanted, however, to get our operations in the right place.

We were letting our customers down. And the reschedule rate has gone down massively like 20-odd percent a few years ago, it's 4% now, and we're meeting the customer promise. 80% of customers that call us by 11:00 on the -- you call it by 11:00 with no heating or no hot water will be there same day. So 80% of our customers we're meeting that for.

Now what we did when we brought it in was we said you don't have to be a British Gas contract customer. You just have to call us. So it was an operational-led decision. Now it's kind of more commercial because if you don't have to be a British gas customer, but we'll go out the same day, well, why would you be a British Gas customer? So those customers that are contracted with us will get preference.

Those customers have got subscription, I think I don't know, Gary, 100,000 subscriptions or something now or more, they will get preference. So we've got the operational discipline. We've got the operational performance. We've got the brand. We've now got more commercial now.

And this is, we announced last week, 500 new apprenticeships. The question I'm looking at is to say, well, we've got a few hundred electricians, do we just go out and hire a few thousand electricians on spec? Probably a bit too much, but it's certainly not that we just hire another 5 or 10 or 15.

And again, this is where -- going back to the question on how much of the cost savings will come into the -- we'll go to the shareholders. There will be things that we have to lay out cost in advance. And it might be this to, we're going to go and hire 500, 600, 700 electricians because we know the demand is there, but the demand is not going to come on day 1. We're going to have to do the marketing.

We've got to spend more on the marketing. So I'm very confident about that business because the operations are now very strong, and there's a very good Chief Operating Officer in there, and she's making improvements every single day. I mean you were with the team yesterday in Calvert. I think Gary, you're seeing some of the making improvements every single day. So we know the demand is there. We've just not been able to satisfy it.

Now we can satisfy it, and we just got to see some more money in there. So I'm very confident that we'll see growth. I'm very confident I can say as we close off because I'm assuming you don't have any more questions and you as your sell-side analyst persona on. But very confident in our ability to deliver what we said we're going to deliver in 2020, what we said we're going to deliver in 2030.

If you look at what we were doing, we said a while ago, we're going to sell out of the North Sea, and we're going to put that money into electricity assets. We just sold the last North Sea asset. So we do what we say we're going to do. We are investing in contracted and regulated assets. I think some people probably at some point, thought the Sizewell C thing is never going to happen. I thought that on occasion as well, some things in the meetings. But it took us probably the best part of 3 years. We've now got, I think, a phenomenal investment opportunity.

We have earnings in 2025 relating to Sizewell C much be putting GBP 400 million, GBP 450 million or something in November?

GBP 380 million.

GBP 380 million that means we didn't disclose that number. I'm in trouble now. But the best part of GBP 400 million could in there. And we're making a return on that. That will be -- we'll get a full year return in 2026. Some of these investment opportunities are huge. We've worked very hard with the government, and we saw the consultation on gas come out, which you could argue has got parts of it written with rough in mind.

And so some of the stuff that we've got does take years to develop and some of it is binary. The government says, yes, the government says, no you get planning permission, you don't. You get a regulatory model or you don't. That's why the discipline is so important for us, but it has to come with patience on our side so that we don't do anything that. But what we lay out, the GBP 1.7 billion in 2028 the GBP 2 billion in 2030, the fact we think we're going to double our EPS or better by 2030 is something that we are confident and it's not easy.

And we've got a leadership team here and a lot of our colleagues who I think are both invigorated by it and sometimes exhausted by it because it's hard work. It's hard work every single day. But we absolutely have the opportunities.

We've got the people, we've got the market positions. We've got the brands. We've got the finances, we've got the balance sheet, and we've got confidence. So sorry for keeping you because that's been -- mind the old centric of things but we would present and previously we present for about 15 minutes and you only get about half an hour for questions the other way around. So thank you very much for coming, and we'll see you again in July when we present our first half results. Thank you.