KPIs

Adjusted operating profit margin (%)

Adjusted operating profit* expressed as a percentage of net revenue.
* Adjusted operating profit excludes exceptional items, acquisition-related expenses and amortisation of intangible assets previously unrecognised by an acquired entity.

Relevance

  • Places focus on increasing the proportion of revenue from those markets where higher returns can be made.
  • Measures ongoing performance in managing the efficiency and cost effectiveness of the business.

Economic Profit (£m)

Adjusted operating profit less a tax charge at the Group’s effective tax rate, less a charge for invested capital.
 

Relevance

  • Measures the value generated for shareholders.
  • Performance condition of the Group’s long-term Incentive Plan in 2013.

Return on invested capital (%)

Adjusted operating profit less a tax charge at the Group’s effective rate, divided by invested capital.
 

Relevance

  • Measures the efficiency of the use of the Group’s assets.
  • Measures shareholder value over the long-term.

Equity free cash flow (£m)

Operating cash flow* less interest and tax.
* Operating cash flow is calculated as cash generated from operations less net capital
expenditure (including pre-contract costs) and dividends to non-controlling interests.
 

Relevance

  • Provides an assessment of how much cash is generated by the Group, which is available to invest in acquisitions, return to shareholders and pay down outstanding debt.
  • Indicates cash available to the Group’s shareholders, which includes movements on customer cash accounts held by Fondsdepot Bank.

Adjusted cash conversion (%)

Percentage of adjusted operating profit converted to adjusted operating cash flow.*

*Adjusted operating cash flow is defined as operating cash flow after adding back the cash impact of exceptional items, acquisition-related expenses and movements on customer cash accounts held by Fondsdepot Bank. See above for definition of adjusted operating profit

Relevance

  • Ensures the Group has the financial strength to reinvest in the development of the business.
  • Effective measure of the quality of earnings.

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