Objectives and strategy

Safety is paramount.

Our most important goals are: to ensure that members of the public are not injured as a direct result of our operations; to deliver a working environment where there are zero work-related injuries or illnesses; to reduce gas leaks on our distribution networks; and to improve the health of our employees so they are fit for work every day.

Measures we use to monitor our performance against our safety objectives include: members of the public injured as a direct result of our operations; employee lost time injury frequency rate; standards of service for responding to gas escapes; kilometres of gas distribution mains replaced in the UK; and employee sickness absence rate.

Our principal operations are critical to the functioning of the economies we serve. The reliability of our energy networks, and the delivery of energy to our customers, are therefore our next highest priorities after safety.

Our approach to maintaining and improving reliability involves: investing in infrastructure and systems to provide the operational tools and techniques necessary to manage our assets and operations to high standards and investing in the renewal of assets; investing in the skills and capabilities of our people to give them the ability to operate our networks to a high degree of service excellence; and maintaining a constant focus on reliability as one of our principal objectives, ensuring we are proactive about planning to ensure reliability and that we react quickly to factors that could compromise reliability.

We use business-specific reliability performance indicators to measure our reliability performance.

By improving efficiency, we can constrain the cost of our operations borne by customers and improve returns to shareholders. We review our operations continually to identify opportunities to improve the operational productivity of our assets and our people, and to identify areas in which we can reduce costs or restrict cost increases. Planning ahead is essential in our approach to maintaining and improving efficiency.

Our primary method of measuring improvements in efficiency is through our financial performance as described below.

If we achieve our objectives we should be able to deliver continued improvements in financial performance, so that we deliver on our commitment to growing our dividend by 7% per annum until 31 March 2008.

The principal measures we use to monitor financial performance are adjusted operating profit* excluding US stranded cost recoveries, adjusted earnings per share* and operating cash flows.