Tax efficient benefits and the green agenda

1
Tax efficient benefits and the green agenda
Employee Benefits Conference 3rd October 2007
Andrew Bridges Centrica
2
Agenda

• An overview of Centrica
• Introducing new benefits to support the company's
  brand and engaging the workforce in energy
  efficiency
• Maximising value to employees and Centrica
  through the use of tax efficient schemes
• Cost effective benefits delivery through the
  corporate intranet
• Questions

3
Centrica brands

• UK
• Energy (Gas and Electricity)
• Home services (installation, servicing, plumbing
  (Dyno) etc)
• Centrica Energy (source the gas and electricity
  we need to supply our residential and industrial
  customers)

• North America
• Energy Supply
• Home Services

• Europe
• Luminus Belgium - Energy Supply
• Luseo Spain - established in 2002
• Oxxio Netherlands purchased in 2005

4
Centrica context

• UKs biggest supplier of domestic gas
  electricity
• 16m accounts
• 52 market share
• 30k employees
• 21k front line staff (call centre engineers)
• 1.7k front line managers
• Many collective agreements in place with unions
  such as GMB Unison
• Reward context is moderately complex

5
The Green Agenda and Centrica

• Reducing our carbon footprint
• Our operations have a significant impact on the
  environment. We are committed to reducing the
  impact of our activities and helping our
  customers use our products and services in an
  environmentally responsible manner.
• Long history of environmentally beneficial
  influence
• More recently
• 750 million investment in renewable energy
  (500m spent to date)
• We have 3 operational wind farms in the UK
• We are building the UKs largest offshore wind
  farm in Lincolnshire
• Purchasing agreements with 3 wind farms in Texas,
  USA.
• New highly efficient gas power station being
  built in Devon.
• Involved in development of clean coal power
  station with carbon capture and storage
• Our power portfolio has the lowest emissions
  compared to our competitors.

6
The Green Agenda The Customer Proposition

• Customer Propositions
• Energy Experts
• More efficient gas powered domestic boilers
• Trialling a solar power installation and service
  offering
• Recent launch of green energy tariff
• Undertake loft insulation will complete 1.5m in
  next 3 years
• 1.5 million Energy Savings Reports complete a
  further 5 million by 2009
• Sales and promotion of energy efficient light
  bulbs

7
The Green Agenda The Employee Proposition

• Carbon offsetting through the voluntary benefits
  scheme and Flexible Benefits
• Voluntary Benefits Perkz
• Green Page
• Calculate individual carbon impact
• Green Retailers
• Environmental Information
• Employee Transport Study
• An emissions capped company car list
• Employee parking dedicated green spaces for low
  emission vehicles and car sharing arrangements
• Cycle to work scheme in feasibility phase
• Employee transport between sites

8
(No Transcript)
9
Carbon emission offsetting

• Staff can calculate their carbon footprint online
  and compensate the environment for the pollution
  they create by 'giving as they earn' through the
  flexible benefits programme.
• The charity PURE have worked with our Flexible
  Benefits provider Vebnet to create a carbon
  offset offering through the employee scheme
• The charity estimates that, at today's prices, 5
  per month from every employee would eliminate
  more than one million tonnes of emissions a year.
  The average car emits about four tonnes of carbon
  dioxide every year.
• PURE uses the donations to buy carbon credits and
  'retire' them so they cannot be bought or sold by
  organisations that are heavy polluters in the
  future.

10
Tax efficient schemes

• PC Leasing now discontinued
• Salary sacrifice childcare vouchers in use
• Cycle to work scheme in feasibility phase
• Mobile worker meal allowance salary sacrifice
  under review for field based employees
• Centrica product salary sacrifice
• Salary sacrifice for flexible benefits planned
  for 2008
• Give As You Earn

11
Employee Benefits Take up rates

• PC Leasing 3,000 employees

12
Employee Benefits Take up rates

• PC Leasing 3,000 employees
• Give As You Earn 2,150 employees

13
Employee Benefits Take up rates

• PC Leasing 3,000 employees
• Give As You Earn 2,150 employees
• Childcare Salary Sacrifice 360 employees

14
Employee Benefits Take up rates

• PC Leasing 3,000 employees (10)
• Give As You Earn 2,150 employees (7.2)
• Childcare Salary Sacrifice 360 employees (1.2)
• Carbon Offset through Flex 24 employees (lt0.1)
• Available to 10,000 through flexible benefits

15
Employee Benefits Take up rates

• PC Leasing 3,000 employees (10)
• Give As You Earn 2,150 employees (7.2)
• Childcare Salary Sacrifice 360 employees (1.2)
• Carbon Offset through Flex 24 employees (lt0.1)
• Available to 10,000 through flexible benefits
• Explaining the variations
• Communications penetration
• Mixed press on carbon offset schemes

16
Employee Benefits Value proposition

• Tax and NI Savings for employees
• NI contribution savings for employees
• PC Leasing 1,230k sacrificed per year
• Childcare Vouchers 1,000k sacrificed per year
• Approx 750k combined saving on employee tax and
  NI contributions
• Approx 200k combined saving on employer NI
  contributions
• However these savings spread very thinly across
  profit centres!

17
Intranet delivery
 
18
Intranet delivery

• My Employment website
• My HR portal incorporating My Reward
• Flexible Benefits managed online
• Houses benefits policies and forms for
  application eg co. car, childcare vouchers
• Perkz.com link to retailer discounts for all
  employees
• Separate website dedicated to pensions
• On line total reward statements planned for 2008
• Circa 10,000 engineers dont have Intranet
  access
• Some paper based processes replace on-line
• Telephone support required
• Content uploaded to engineer laptops (eg Perkz)

19
Any questions?