Key performance indicators

At Group level, we measure the performance of the business using a number of key performance indicators (‘KPIs’). These help to ensure that we are delivering against our strategic priorities. Several of these KPIs (underlying EPS, return on investment and leverage) influence the remuneration of our executive team. Certain KPIs are more appropriately measured for each of our two operating businesses, whereas other KPIs are best measured for the Group as a whole.

Link to strategic priority

KPI key

UNDERLYING EPS (P) Calculation Underlying Group profit after taxation divided by the weighted average number of shares in issue (excluding shares held by the Company and the ESOT). Target As a cyclical business, underlying EPS varies substantially through the cycle. 2019 performance Underlying EPS improved to 174.2p per share in 2018/19. Strategic priority
RETURN ON INVESTMENT (‘RoI’) (%) Calculation Underlying operating profit divided by the sum of net tangible and intangible fixed assets, plus net working capital but excluding net debt and tax. Target Averaged across the economic cycle we look to deliver RoI well ahead of our cost of capital, as discussed in our strategic review. 2019 performance Our RoI was 18% for the year ended 30 April 2019. Strategic priority
NET DEBT AND LEVERAGE AT CONSTANT EXCHANGE RATES Calculation Net debt is total debt less cash balances, as reported, and leverage is net debt divided by underlying EBITDA, calculated at constant exchange rates (balance sheet rate). Target We seek to maintain a conservative balance sheet structure with a target for net debt to underlying EBITDA of 1.5 to 2 times (excluding IFRS 16). 2019 performance Net debt at 30 April 2019 was £3,745m and leverage was 1.8 times. Strategic priority
PHYSICAL UTILISATION (%) Calculation Physical utilisation is measured as the daily average of the amount of itemised fleet at cost on rent as a percentage of the total fleet at cost and for Sunbelt US is measured only for equipment whose cost is over $7,500 (which comprised 88% of its itemised fleet at 30 April 2019). Target It is important to sustain annual average physical utilisation at between 60% and 70% through the cycle. If utilisation falls below 60%, yield will tend to suffer, whilst above 70% we may not have enough fleet in certain stores to meet our customers’ needs. 2019 performance¹ Sunbelt US utilisation was 71% (2017/18: 72%), while A-Plant utilisation was 69% (2017/18: 68%) and Sunbelt Canada was 61%. Strategic priority
FLEET ON RENT ($m/£m/C$m) Calculation Fleet on rent is measured as the daily average of the original cost of our itemised equipment on rent. Target To achieve growth rates in Sunbelt and A-Plant in excess of the growth in our markets and that of our competitors. 2019 performance¹ In Sunbelt US, fleet on rent grew 20% in 2018/19, whilst in A-Plant it grew 3%. The US market grew 7% and the UK market by 2%. Strategic priority
DOLLAR UTILISATION (%) Calculation Dollar utilisation is rental revenue divided by average fleet at original (or ‘first’) cost measured over a 12-month period. Target Improve dollar utilisation to drive improving returns in the business. 2019 performance Dollar utilisation was 55% in Sunbelt US, in line with what it was a year ago. In Sunbelt Canada, it was 49%, reflecting the mix of business with a full year of CRS and the impact of lower dollar utilisation Voisin’s business. In A-Plant it decreased to 47%, principally due to pricing pressure. Strategic priority
UNDERLYING EBITDA MARGINS (%) Calculation Underlying EBITDA as a percentage of total revenue. Target To improve margins and achieve peak EBITDA margins of 45-50% in Sunbelt US during this cycle, 40-45% in Sunbelt Canada and 35-40% in A-Plant. 2019 performance EBITDA margins in 2018/19 were 49% in Sunbelt US, 35% in A-Plant and 36% in Sunbelt Canada. Strategic priority
STAFF TURNOVER (%) Calculation Staff turnover is calculated as the number of leavers in a year (excluding redundancies) divided by the average headcount during the year. Target Our aim is to keep employee turnover below historical levels to enable us to build on the skill base we have established. 2019 performance¹ Turnover levels have remained relatively constant for Sunbelt US and A-Plant. Our well-trained, knowledgeable staff remain targets for our competitors. Voluntary employee turnover is lower and discussed in our annual report. Strategic priority
SAFETY Calculation The RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) reportable rate is the number of major injuries or over seven-day injuries per 100,000 hours worked. Target Continued reduction in accident rates. 2019 performance The RIDDOR reportable rates of 0.34 in Sunbelt US and 0.22 in A-Plant were similar to the prior year. For Sunbelt Canada, the RIDDOR reportable rate was 0.28. More detail is included in our Responsible business report. Strategic priority