The Group delivers its strategy against the objectives set out in our strategy. It also uses a range of performance indicators to measure the growth and performance of the Group over time.
Measuring our progress through KPIs
Cash costs of copper after by-product credits (USc/lb)
72
Relevance to our strategy
Measures the performance of the Group in maintaining its low-cost base whilst maximising revenues through the sale of by-products.
How we measure it
The total of cash operating costs excluding purchased concentrate less by-product revenues, divided by the volume of copper cathode equivalent sales.
Performance in 2009
In 2009 gross costs benefited from lower input costs, currency changes and cost actions taken by management. By-product credits were helped by higher prices and production from stockpiled inventories.
Earnings per share based on Underlying Profit ($)
1.13
Relevance to our strategy
EPS tells how much net profit we have generated and measures the return to our equity shareholders.
How we measure it
Profit before special items and other non-recurring or variable non-trading items, and their resulting taxation and minority interest impact, divided by the weighted average number of ordinary shares in issue during the period.
Performance in 2009
EPS was affected by lower commodity prices, a relatively high tax rate in 2009 and an increased number of shares in issue. This was partially offset by lower costs.
Free Cash Flow ($ million)
579
Relevance to our strategy
We monitor the Group’s cash flows which can be used to fund returns to shareholders and invest in the future growth and development of the business.
How we measure it
Net cash flow from operating activities less sustaining capital expenditure on tangible and intangible assets.
Performance in 2009
Similar to EBITDA, Free Cash Flow was impacted by lower commodity prices, offset by lower levels of capital expenditure and taxation during the year.
Group EBITDA (excluding special items) ($ million)
1,634
Relevance to our strategy
We regard this as a measure of the underlying profitability of the Group.
How we measure it
EBITDA is earnings before interest, taxation, depreciation, depletion, amortisation and mineral extraction tax as adjusted for special items and including the share of EBITDA of the associate.
Performance in 2009
EBITDA was dominated by lower commodity prices, partially offset by a reduction in costs and an increased share of earnings from ENRC.
Copper cathode equivalent production from own material (kt)
320
Relevance to our strategy
We consider this measure as the main operational indicator as copper is a homogeneous product with a worldwide market.
How we measure it
Copper cathode equivalent produced from own ore either as refined copper cathodes or as recoverable copper in concentrate or residues.
Performance in 2009
Suspension of high cost mines reduced output, but this was partly offset by increased production from operating mines and production from stockpiled materials.
Return on capital employed (ROCE) (%)
11
Relevance to our strategy
We monitor how efficiently we use our capital with the objective of delivering ROCE in excess of our weighted average cost of capital.
How we measure it
Profit before taxation and finance items, excluding special items, as a percentage of the average of opening and closing capital employed.
Performance in 2009
ROCE has decreased primarily due to lower earnings from managed businesses and the impact of equity accounting for ENRC.