Annual Report and Accounts 2014

 

Measuring Our Progress - Group Key Performance Indicators

The Group employs financial and non-financial key performance indicators (‘KPIs’) which signify progress towards the achievement of our strategy. Each division has its own KPIs which are in direct alignment with those of the Group and are included in the divisional operating reviews on this page.

FINANCIAL KPIs

Strategic objective

KPI

Definition

FY14 performance

FY14 comment

FY15 outlook

Link to other disclosures

Deliver superior shareholder returns

Return on capital employed (‘ROCE’)

ROCE is defined as the operating profit before amortisation and exceptional items expressed as a percentage of the average capital employed. Capital employed represents total equity adjusted for net cash/debt, goodwill and intangibles previously written off, deferred and contingent consideration and investments in associates.

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The increase in ROCE over the prior year was driven by continued strong working capital management and the increase in the Group’s operating profit of 11.5%.

The achievement of returns on capital employed in excess of the cost of capital will continue to be a key focus.

Chief Executive’s Review. Financial Review.

Drive for enhanced operational performance

Operating profit growth

Measures the change in operating profit before amortisation and exceptional items achieved in the current year compared to operating profit before amortisation and exceptional items reported in the prior year.

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Approximately half of the growth in operating profit was organic, primarily reflecting growth in DCC Technology in Britain and DCC Healthcare’s health and beauty activities. Operating profit growth in DCC Energy of 4.0% reflected the successful integration of acquisitions completed in prior years and cost efficiency initiatives.

The outlook for FY15 is based on the important assumption that there will be normal winter weather conditions. The Group anticipates that operating profit will be approximately 10% ahead of FY14 with this growth being significantly weighted towards the send half.

Chief Executive’s Review. Financial Review.

Deliver superior shareholder returns

Adjusted earnings per share (‘eps’) growth

Measures the change in adjusted eps achieved in the current year compared to adjusted eps reported in the prior year.

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The increase in adjusted eps was primarily driven by the factors mentioned under the operating profit kpi.

The anticipated growth of 10.0% in adjusted eps is based on the same assumptions as the anticipated growth in operating profit mentioned above.

Chief Executive’s Review. Financial Review.

Generate cash flows to fund organic and acquisition growth and dividends

Operating cash flow

Measures cash generated from operations.

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The Group generated excellent operating cash flow of £348.7 million during the year driven by operating profits of £208.4 million and a reduction in working capital of £86.9 million.

Cash generation and working capital management will remain a key focus of the Group.

Chief Executive’s Review. Financial Review.

Extend our business and geographic footprint

Committed acquisition expenditure

Measures cash spent and future deferred and contingent consideration amounts for acquisitions committed to during the year.

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Committed acquisition expenditure during the year principally comprised DCC Energy (£50.5 million) and DCC Healthcare (£25.4 million).

The Group will continue to pursue attractive opportunities in our traditional markets as well as looking to extend our business into new geographic markets.

Chief Executive’s Review.

NON-FINANCIAL KPIs

Strategic objective

KPI

Definition

FY14 performance

FY14 comment

FY15 outlook

Link to other disclosures

Grow a sustainable business

Carbon emissions

Total Scope 1 and 2 carbon emissions expressed in kilotonnes (kts) of CO2e.

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Increase in absolute emissions of 2% over the prior year was driven by acquisitions and organic growth which were partially offset by improvements in operating efficiencies and energy saving initiatives.

The Group anticipates increases in absolute emissions from acquisitions and organic growth. Carbon intensity metrics are expected to decrease in line with targets.

Sustainability Report.

Health and safety

Lost time injury rates

Lost Time Injury Frequency Rate (‘LTIFR’) measures the number of lost time injuries per 200,000 hours worked.

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Reductions of 12% and 14% in LTIFR and LTISR respectively were driven by initiatives on safety culture, awareness and training.

The Group is targeting a continued improvement in both LTI metrics.

Sustainability Report.

 

Lost Time Injury Severity Rate (‘LTISR’) measures the number of calendar days lost per 200,000 hours worked.

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