BP 2012 Annual Report Download - page 30

We track our performance against key financial
and non-financial indicators.
Replacement cost profit (loss)
per ordinary sharea (cents)
Operating cash flow
($ billion)
Gearing (net debt ratio)a
(%)
Our board assesses the group’s
performance according to a wide
range of measures and indicators.
The 13 key performance indicators
on these pages help us measure
performance against our strategic
priorities – safety, trust and value
– and our business plans. We keep
these metrics under periodic review
and test their relevance to our
strategy regularly. We believe
non-financial measures – such as
safety and an engaged and diverse
workforce – have a useful role to
play as leading indicators of future
performance.
Changes to KPIs
We have changed our employee
engagement key performance
indicator from a satisfaction measure
to one that measures engagement
with our strategic priorities of safety,
trust and long-term value, as we
believe this measure is more closely
aligned with our longer-term
objectives. Details of our employee
engagement are on page 56.
Remuneration
To help ensure that the focus of our
board and management is aligned
with the interests of our shareholders,
certain of these measures are
reflected in the annual bonus element
of executive remuneration.
Overall annual bonuses are
based on performance relative to
measures and targets linked to the
annual group plan.
The measures used to
determine 2012 and 2013
remuneration are identified
with this symbol.
Remuneration
For details of our policy
see pages 127-145.
Replacement cost profit (loss) reflects the
replacement cost of supplies. It is arrived
at by excluding from profit inventory
holding gains and losses and their
associated tax effect. Replacement cost
profit for the group is a profitability
measure used by management. It is a
non-GAAP measure. See page 34 for
the equivalent measure on an IFRS basis.
2012 performance Our results were
impacted by the cost of the legal settle-
ment agreed with the US government
following the Gulf of Mexico oil spill, as
well as by lower results in our operating
segments.
Operating cash flow is net cash flow
provided by operating activities, from
the group cash flow statement.
Operating activities are the principal
revenue-generating activities of the group
and other activities that are not investing
or financing activities.
2012 performance Lower operating
cash flow in 2012 reflected the cash flow
impact of lower profits, which was partly
mitigated by a lower cash outflow relating
to the Gulf of Mexico oil spill.
Gearing enables investors to see how
significant net debt is relative to equity
from shareholders. Net debt is equal to
gross finance debt, plus associated
derivatives, less cash and cash equivalents.
Net debt and net debt ratio are non-GAAP
measures. See Financial statements –
Note 35 on page 234 for the nearest
equivalent measure on an IFRS basis and
for further information.
2012 performance We ended the year
with gearing within our desired 10-20%
range and we will continue to target this
range while uncertainties remain.
160
120
80
40
2008 2009 2010 2011 2012
136.20
74.49
(26.17)
126.41
63.02
50
40
30
20
10
2008 2009 2010 2011 2012
38.1
27.7
13.6
22.2
20.4
25
20
15
10
5
2008 2009 2010 2011 2012
21.4 20.4 21.2 20.5 18.7
Our key performance indicators
Reported recordable injury frequency
(RIF) measures the number of reported
work-related incidents that result in a
fatality or injury (apart from minor first aid
cases) per 200,000 hours worked.
2012 performance Our workforce
RIF, which includes employees and
contractors combined, was 0.35,
compared with 0.36 in 2011 and 0.61 in
2010. The 2010 group RIF was affected
by the Gulf Coast response efforts and we
continue to focus on improving personal
safety.
Loss of primary containment is the
number of unplanned or uncontrolled
releases of material, excluding
non-hazardous releases, such as water
from a tank, vessel, pipe, railcar or other
equipment used for containment or
transfer.
2012 performance There was a 19%
reduction in loss of primary containment
compared to 2011, which continues a year
on year improvement. Tracking losses of
integrity is a way of measuring safety
performance and helping drive
improvements.
We report the number of spills of
hydrocarbons greater than or equal to
one barrel (159 litres, 42 US gallons).
We include spills that were contained, as
well as those that reached land or water.
2012 performance We continue to take
measures to strengthen mandatory
safety-related standards and processes,
including operational risk and integrity
management.
Employees Contractors
1.25
1.00
0.75
0.50
0.25
2008 2009 2010 2011 2012
0.50
0.23
0.25
0.31
0.35
0.43
0.41
0.26
0.43
0.84
875
700
525
350
175
2008 2009 2010 2011 2012
658
537
418 361 292
500
400
300
200
100
2008 2009 2010 2011 2012
335
234 261 228 204
Reported recordable
injury frequencyb
Loss of primary
containmenta
Oil spillsb
Business review: Group overview
BP Annual Report and Form 20-F 2012
28
Not all financial KPIs are recognized
GAAP measures, but are provided for
investors because they are closely
tracked by management to evaluate
BP’s operating performance and to
make financial, strategic and
operating decisions.