Key Performance Indicators

To support the Group’s strategy and to monitor performance, the Board of Directors and the Executive Committee use a number of financial and non-financial key performance indicators (KPIs). These KPIs are selected as being important to the success of the Group in delivering its strategic objectives. Progress is assessed by comparison with the Group’s strategy, its budget for the year and against historic performance.

At a business level, a range of further benchmarks and other KPIs are also used as part of the Divisional planning and performance review processes. In order to measure the underlying performance of the business, management further analyse the headline KPIs to exclude the impact of acquisitions and foreign exchange.

As Morgan Crucible's businesses grow and evolve we will review and update the list of KPIs selected to ensure they remain important to the success of the Group.

Financial and non-financial performance is reviewed in more detail in the Divisonal financial and corporate responsibility sections of the Business Review in the 2011 Annual Report.

	Performance
KPI	2011	2010	Relevant strategic objective
Financial KPIs
Revenue growth	8.2%	7.9%	Creating consistent long-term value for shareholders Focus on higher growth markets
Underlying operating profit* growth	39.3%	31.9%	Creating consistent long-term value for shareholders Focus on higher growth markets To be high value-added to our customers To have a culture of operational excellence and cost efficiency
Underlying operating profit* margin	12.9%	10.0%	Creating consistent long-term value for shareholders Focus on higher growth markets To have a culture of operational excellence and cost efficiency
Underlying profit before taxation**	£119.7m	£75.7m	Creating consistent long-term value for shareholders Focus on higher growth markets To have a culture of operational excellence and cost-efficiency
Free cash flow before acquisitions and dividends	£57.8m	£76.5m	Creating consistent long-term value for shareholders
Return on Operating Capital Employed***	33.7%	25.4%	Creating consistent long-term value for shareholders
Underlying earnings per share****	29.9p	18.72p	Creating consistent long-term value for shareholders
Dividend per share	9.25p	7.7p	Creating consistent long-term value for shareholders
Non-financial KPIs^#
Year-on-year pricing change	2.3%	1.1%	To be high value-added to our customers
Total employment costs as % of sales	29.2%	29.5%	To have a culture of operational excellence and cost efficiency
Employee turnover	13.7%	13.7%	To find, keep and develop the right people
Training hours per employee	13.3	12.9	To find, keep and develop the right people
Lost time accident frequency (per 100,000 hours worked)	0.57	0.57	To have a culture of operational excellence and cost efficiency To find, keep and develop the right people
Tonnes CO₂ per £m revenue	394	416	To have a culture of operational excellence and cost efficiency
Tonnes waste per £m revenue	41	44	To have a culture of operational excellence and cost efficiency

* Underlying operating profit is defined as operating profit before amortisation of intangible assests.
Underlying profit before taxation is definited as operating profit before amortisation of intangible assests less net financing costs.
* Return on Operating Capital Employed is defined as Group underlying operating profit* divided by the sum of Working Capital (which excludes pension liability and provisions) and the net book value of tangible assets. Goodwill and other intangible assets are excluded.
**** Underlying earnings per share is defined as basic earnings per share adjusted to exclude amortisation of intangible assets. See note 9 of the Annual Report.
^# Non-financial KPIs are at constant currency and updated to reflect changes in reporting methodology.

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The Morgan Crucible Company plc is registered in England
Registered office at Quadrant, 55-57 High Street, Windsor, Berkshire, SL4 1LP. Company number: 286773.

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