Key performance indicators

Alongside absolute profit and debt measures, the group uses several financial key performance indicators (KPIs) to measure progress. 

KPIs for 2007/08, as detailed in the Performance review of the 2007/08 Annual report, are detailed below:

 *  ^{Throughout the full year results statement, an asterisk denotes results for continuing operations (except where otherwise stated) and profit is stated before restructuing items.  'Continuing' operations exclude businesses which were sold ('discontinued') in 2006/07.  'Restructuring items' which relate to significant restructuring events and the impact of the Fletchers fire in the 52 weeks ended 31 March 2007 are presented as a separate 'Restructuring items' column within their relevant Consolidated income statement category.  Presentation of these items in a separate column helps to provide a better indication of the Group's underlying business performance. 'Restructuring items' includes costs or income associated with the restructuring of businesses, gains or losses on the disposal of businesses and assets and financial instrument gains and impairments arising from the Group's restructuring activities.}

^{(1) Underlying revenue excludes the impact of currency rate changes, product categories no longer manufactured and discontinued operations.}

^{(2)  Operating margin is the ratio of profit from operations before restructuring items for continuing businesses to continuing revenue.}

^{(3) RONA is profit from operations* divided by average operating assets* invested in the business.}

^{(4) Free cash flow is net cash from operating activities, adjusted for special pension contributions, less net capital expenditure, plus interest received.  Net capital expenditure is purchase of property, plant & equipment (PPE) less grants received and proceeds from sale of PPE.}

^{(5) Net debt is defined as total borrowings (including short and long term bank loans, bonds, loan notes and finance leases) less cash and cash equivalents and short term investments.  Debt ratio is net debt to EBITDA - calculated under 'frozen' UK GAAP.  EBITDA is earnings before interest, tax, depreciation and amortisation - it is calculated as profit from operations before restructuring items plus depreciation and amortisation.}

^{(6)  ROIC is profit from operations before restructuring items for continuing operations divided by a 13 month average invested capital (net equity adjusted to exclude retirement benefit obligations net of deferred tax, and net debt, together with accumulated goodwill previously written off).}