Annual Report and Accounts 2009

Our Group Key Performance Indicators

Given the significant changes in our operating environment during the economic downturn and the changes to our financial covenants, we have reviewed our suite of KPIs during 2009.We believe that the KPIs below are the most appropriate basis on which to measure our current performance.


Adjusted (loss)/
earnings per share
Return on average
capital employed
Operating cash flow
covenant
Employee turnover
       
Objective Objective Objective Objective
We seek to provide growth in earnings per share in light of market conditions. We aim to deliver a return on capital employed above the level of our cost of funding. To deliver operating cash flows in excess of the levels set out within our financial covenants. We endeavour to attract and retain the highest calibre of employees and strive to be a company that people want to work for.
       
Definition Definition Definition Definition
The basic earnings per share from continuing operations based upon the profit attributable to ordinary shareholders before exceptional items divided by the average number of shares in issue during the year. Profit on ordinary activities before finance costs, exceptional items and amortisation of brands but including share of results of joint ventures, divided by the average of opening and closing tangible net worth. The cash generated by operations as reported in the Group’s financial statements, adjusted for pensions, taxes and other items as defined in the Group’s financing documentation. The Canadian business is excluded for covenant purposes. The number of employees leaving the Group (excluding redundancies) expressed as a percentage of the average number of employees across the Group during the year.
       
Why is it key to our strategy? Why is it key to our strategy? Why is it key to our strategy? Why is it key to our strategy?
The generation of earnings is essential to deliver share price growth and dividends to shareholders and to fund future growth in the business. This measure is also commonly used by stock market analysts in assessing the value of companies. Building homes is a capital-intensive business due to the need to fund our landbank, so it is essential to ensure that this capital is used as effectively as possible. The Group must meet its financial covenants in order to retain access to its debt funding. Following the Placing and Open Offer, the operating cash flow covenant is the most onerous of the Group’s three financial covenants. Having high quality teams in place is essential to delivering high quality homes, that our customers want to live in, on time and to budget.
       
2008:7.2
2009:4.3 2008:2.6
2009:1.5 Target:51
2009:457 2008:16
2009:6
(4.3)p
for 2009
(7.2p loss for 2008)
1.5%
for 2009
(2.6% for 2008)
£457m
inflow

for the 12months to
31 December 2009

(Target: £51 million outflow)
6%
for 2009
(16% for 2008)