FINANCIAL KPIs

Adjusted basic earnings per share (EPS)

Adjusted basic earnings per share pence*

Graph showing Adjusted basic earnings per share (pence)

This measure of performance is calculated as profit before exceptional items and certain re-measurements for the year, attributable to equity shareholders of the parent company, divided by the weighted average number of shares in issue during the year.

Source: The measure of adjusted EPS is reported on the Group Income Statement, part of the audited Financial Statements.

Analysis/comment

EPS is an industry standard determining corporate profitability for shareholders. 2007 was an exceptional year as a result of favourable commodity prices experienced in the first half of 2007 which drove profitability in the residential supply business.

Target/commitment

To deliver growth in adjusted EPS over a three-year period. This measure is used as one of the performance conditions in the Long Term Incentive Scheme.

Total shareholder return (TSR)

Total shareholder return indices – Centrica and FTSE 100 Index for the five years ended 31 December 2008

Graph showing Total shareholder return indices (Centrica and FTSE 100 Index for the five years ended 31 December 2008)

Total shareholder return measures the return to shareholders in terms of the growth of a £100 investment in the Company’s shares, assuming that dividends and returns of capital are reinvested. We compare our TSR with those of the other 99 members of the FTSE 100 at the start of each performance period.

Source: Alithos Limited

Analysis/comment

The Board continues to believe that to realise the Company’s long-term strategic goals, TSR is a valuable key performance indicator to assess the Company’s performance in the delivery of shareholder value.

Centrica has outperformed the FTSE 100 Index by 43% over a five-year period.

Target/commitment

TSR is utilised as a measure of performance in the Company’s Long Term Incentive Scheme.

Dividends per share

Ordinary dividend pence*

Graph showing Ordinary dividend (pence)

This is the total dividend per share (excluding special dividends) paid in respect of each financial year.

Source: The dividend is reported as part of the audited Financial Statements.

Analysis/comment

Dividends per share indicate the level of earnings distributed to Company shareholders.

The 2008 dividend shows an increase of 5.4% on the 2007 dividend.

Target/commitment

To deliver real growth per annum.

* Earnings per share and dividend per share figures have been restated to reflect the bonus element of the Rights Issue. Details of the Rights Issue are provided in notes 5, 29 and 30.

NON-FINANCIAL KPIs

Customer satisfaction

Net promoter score 2008

British Gas: -0.8% (2007: 3.1%), Direct Energy: 6.9% (2007: 5.1%)

The net promoter score (NPS) measures customers’ responses to the question ‘How likely would you be to recommend us as an energy supplier to a friend or relative (0-10)?’ The score is calculated by the percentage of customers defined as promoters (scoring 9-10) minus the percentage defined as detractors (scoring 0-6).

Source: Internal calculations combining figures for residential, business and services divisions. Net promoter scores are collected through customer feedback forms and telephone interviews conducted by a third party supplier.

Analysis/comment

Being responsible and responsive to the needs of our millions of customers is central to our business strategy. Once again British Gas Services enjoyed strong net promoter scores (NPS) and in 2008, Direct Energy increased its NPS score to 6.9% as a result of a range of front-line improvements. British Gas’ retail energy score reduced in common with the rest of the industry, despite significant improvements to customer service. This is likely to be a result of two price rises in 2008.

Target

Continued focus on improving customer service and building our brand reputation remains a priority. We will look to continue improving on our Direct Energy score and to reverse the trend in British Gas customer satisfaction.

* In 2008 we aligned Direct Energy’s NPS calculation with the UK’s. We have recalculated Direct Energy’s NPS for 2007 using this methodology.

Carbon intensity

Carbon intensity g CO2/kWh

Graph showing Carbon intensity (g CO2/kWh)

Carbon intensity measures the volume of carbon dioxide (CO2) emitted per unit of electricity generated. Investing in low-carbon generation, such as high-efficiency gas-fired power stations and offshore wind farms, is a key part of our business strategy.

Source: Based on verified emissions data under the requirements of the EU Emissions Trading Scheme.

Analysis/comment

Centrica’s power generation fleet has the lowest carbon intensity of any major energy supplier in Britain. We maintained this leadership position in 2008 when 377 grammes* of carbon dioxide were emitted for every kilowatt hour of power we produced.

Our 2008 performance exceeded the 2012 target and we are now focusing on the more challenging 2020 target.

Target

To reduce our UK power generation carbon intensity to 350g CO2/kWh by 2020.

* Carbon intensity figures are based on the average annual emissions from all wholly owned UK power generation assets and all other power generation assets from which Centrica is entitled to output under site-specific contracts in the UK.
^ 2008 data subject to final verification.
† Verified 2007 figure restated.

Employee engagement

Engagement score %

Graph showing Engagement score (%)

The Centrica employee survey measures how people, from every team at all levels across the Group, feel about working for us. Questions include: Would you tell others this is a great place to work? Do you ever think about leaving? Does the Company inspire you to do your best?

Source: The survey is managed by an external supplier.

Analysis/comment

We need the commitment of our employees to succeed. Measuring commitment and the factors that drive it are now the main focus of our employee engagement process, as this enables us to benchmark results more robustly. In 2008, there was a 94% response rate to our employee engagement survey. Commitment scores reached 57% Group-wide. This was well above the European average (48%). Engagement scores (reported in previous years) also rose to 4.11 in 2008 compared to 3.96 in 2007.

Target

The next full survey is in 2010 with a target commitment score of 62%. An interim survey will be run in 2009 with a target of 60%.