Measuring our performance
Measuring our performance is integral to the next phase of our strategic growth. We have carefully selected the following Key Performance Indicators (KPIs) to benchmark our progress. In 2009, the global recession has impacted progress against the KPIs.
Financial KPIs
Organic revenue growth
Definition
Organic revenue growth measures the change in revenue in the current year compared with the prior year, from continuing Group operations. The effect of currency movements and acquisitions made during the current or prior financial period have been removed.
We have chosen this specific KPI because our strategy is to participate in markets which have the ability to provide us with growth opportunities.
Performance
Organic revenue growth was adversely impacted by the downturn in the global economy during 2009.
Operating profit margin
Definition
Operating profit margin is defined as operating profit before exceptional items from continuing operations expressed as a percentage of revenue from continuing operations.
This KPI is appropriate because we are focused on increasing the proportion of revenue from those markets where we can make higher returns, in addition to delivering an improvement in operational efficiency.
Performance
Profitability was impacted in all divisions by a reduction in revenue during the year.
Operating cash conversion
Definition
Operating cash conversion is defined as cash generated from continuing operations after capital and development expenditure expressed as a percentage of operating profit before exceptional items from continuing operations. Cash conversion is an important metric to track the management of our working capital and capital expenditure programme.
Performance
Good cash flow was delivered in 2009 due to actions taken to reduce working capital across all divisions in response to the decline in revenues, together with a lower level of capital expenditure.
Earnings Per Share (EPS) growth
Definition
EPS growth is calculated as profit before exceptional items attributable to the shareholders divided by the weighted average number of shares in issue during the year.
We have chosen EPS growth as a KPI as it is a standard metric to determine corporate profitability for shareholders. In addition, it is a measure used as one of the performance conditions in the Group’s Long Term Incentive Plan.
Performance
EPS was negative during the year due to the impact of the global economic downturn on the Group’s results.
Relative Total Shareholder Return (TSR)
Definition
TSR is defined as capital growth plus dividends paid, assuming dividends are re-invested over the period using a three-month opening and closing average.
We believe that TSR is an important measure of the delivery of shareholder value as well as relative performance. In addition, it is a measure used as one of the performance conditions in the Group’s Long Term Incentive Plan.
Performance
There was a strong improvement in the Group’s share price during 2009 resulting in a TSR of 62.7 per cent compared to the median of the comparator group of 39.4 per cent.
