Strategy and key performance indicators

Our vision is to become the leading global provider
of speciality food ingredients and solutions. Our strategy is to deliver this vision through:

  • A disciplined focus on growing our speciality food ingredients business
    • Deeper customer understanding, continuous innovation and agility
    • Stronger positions in high growth markets
  • Driving our bulk ingredients business for sustained cash generation to fuel this growth

The Board has chosen a number of key performance indicators to measure the Group’s progress. The table below sets out these indicators, explaining how they relate to our strategic priorities, and how we performed against them this year.


Performance

We focus on a number of financial performance measures to ensure that our strategy successfully delivers increased value for our shareholders.

What we measure
  • Sales of speciality food ingredients.
Why we measure it
  • To ensure we are successful in growing the division which is the key area of strategic focus for the business.
How we performed
2011:
  £805m
2010 (restated):
  £788m
Change
(constant currency)+2%
What we measure
  • Adjusted operating profit.
Why we measure it
  • To track the underlying performance of the business and to ensure sales growth translates into increased profits.
How we performed
2011:
  £321m
2010 (restated):
  £268m
Change
(constant currency)+17%
What we measure
  • Return on capital employed: adjusted profit before interest, tax and exceptional items divided by adjusted average net operating assets for continuing operations.
Why we measure it
  • To ensure that we continue to generate a strong rate of return on the assets that we employ and that we have a disciplined approach to capital investment.
How we performed
2011:
  20.6%
2010 (restated):
  13.6%
Change
(constant currency)+700bps3
What we measure
  • Cash conversion cycle: controllable working capital divided by quarterly sales, multiplied by the number of days in quarter.
Why we measure it
  • To track how efficient we are in turning increased sales into cash and to ensure that working capital is managed effectively.
How we performed
2011:
  34 days
2010 (restated):
  45 days
Change
(constant currency)+11 days

Financial strength

We look at measures of financial strength to ensure that we maintain the financial flexibility to grow the business whilst maintaining investment credit ratings.

What we measure
  • Net debt to EBITDA multiple1: the number of times the Group’s net borrowing exceeds its trading cash flow. EBITDA is earnings before exceptional items, interest, tax, depreciation and amortisation.
Why we measure it
  • To ensure that we have the appropriate level of financial gearing and that we generate sufficient profits to service our debt. These measures are a key focus for banks and providers of both debt and equity capital.
How we performed
2011: 1.1x
2010: 1.8x
 
What we measure
  • Interest cover1: the number of times the profit of the Group exceeds interest payments made to service its debt.
Why we measure it
  • To ensure that we have the appropriate level of financial gearing and that we generate sufficient profits to service our debt. These measures are a key focus for banks and providers of both debt and equity capital.
How we performed
2011: 6.9x
2010: 5.8x
 

Corporate responsibility

It is important that we act responsibly and consider carefully the impact our activities have on all stakeholders including employees, customers and the communities in which we operate.

What we measure
  • Recordable incident rate2: the number of injuries per 200,000 employee hours that require more than first aid.
Why we measure it
  • The safety of our employees and contractors is of paramount importance. Ensuring safe and healthy conditions for employees at all our locations is essential to our operation as a successful business.
How we performed
20104: 0.93
20094: 0.89
Change -5%
What we measure
  • Lost-time accident rate2: the number of recordable injuries sufficiently serious to result in lost work days or restricted work activities per 200,000 hours.
Why we measure it
  • The safety of our employees and contractors is of paramount importance. Ensuring safe and healthy conditions for employees at all our locations is essential to our operation as a successful business.
How we performed
20104: 0.58
20094: 0.39
Change -49%

Update on environmental sustainability

We are establishing an index for environmental sustainability which we will report on as a key performance indicator from calendar year 2011. Like safety, we report environmental figures by calendar year because we are required to do so for other regulatory reporting.

  1. 1 Net debt, EBITDA and interest as defined in our banking covenants.
  2. 2 In previous years we measured the safety index, a weighted average of injuries sustained in the workplace. This year we have begun instead to report our recordable incident and lost-time accident rates, because they are recognised industry standards for benchmarking. The rates reported above are combined rates covering both employees and contractors. Further detail on employee and contractor rates is provided in the Corporate responsibility report.
  3. 3 Basis points (one hundred basis points equates to one percentage point).
  4. 4 Unlike our other KPIs, we report safety figures by calendar year because we are required to do so for other regulatory reporting.