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Key Performance Indicators

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Financial KPIs

The Group uses a set of headline Key Performance Indicators (‘KPIs’) to measure the performance of its operations and of the Group as a whole.

The Group has identified these financial KPIs to measure progress of our strategic priorities in delivering profitability, returns and cashflow generation. Following the disposal of our US business the majority of these KPI’s are shown on a continuing basis except for Adjusted EPS and Free Cash Flow which are shown as total measures. Although the measures are separate, the relationship between them is also monitored. All these KPIs are non-IFRS measures or Alternative Performance Measures (‘APMs’). The definitions, calculations and reconciliations of all APMs (including these KPIs) to IFRS are set out within the APMs section on pages 158 to 162 of our 2018 Annual Report.

Profitability

Returns

RETURN ON INVESTED CAPITAL (‘ROIC’)

The Group uses ROIC as a key measure to determine returns from each business unit and of the Group as a whole, and as a key measure to determine potential new investments.

The Group’s ROIC in FY18 was 15.6% on a continuing basis. FY18 ROIC was negatively impacted by an increase in the effective tax rate.

ROIC (%)
(continuing operations)

FY18
15.6
FY17
16.0

Cash Flow

FREE CASH FLOW

This is a new KPI and replaces Operating Cash Flow which continues to be an APM. The Group uses Free Cash Flow to measure the amount of cash available for distribution and allocation.

Free Cash Flow was £92.4m compared to £78.0m in FY17, an increase of £14.4m reflecting increased EBITDA, reduced cash exceptionals and reduced maintenance capital expenditure in the period partly offset by a working capital outflow and increased pension payments.

Free Cash Flow (£m)

FY18
92.4
FY17
78.0

Non-financial KPIs

The Group measures progress against a number of non-financial Key Performance Indicators (‘KPIs’).

In all instances, the non-financial KPIs shown are for the continuing business. Further details on our measurement and improvement actions, including certain details for our discontinued US business, can be found in our Stakeholder Report on pages 36 to 45 of our 2018 annual report.

 

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