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Annual Report and Accounts 2011 / Strategy / Key performance indicators 

Key performance indicators

NWR uses a range of financial and operational key performance indicators (‘KPIs’) to help measure and manage its performance. These KPIs reflect the Company’s continuous focus on efficiency, cost control and safety across all its operations. However, this list is not exhaustive and we also use a range of additional detailed performance measures internally to monitor our performance.

 

Financial

 Financial

DEFINITION: Earnings before interest, tax, depreciation and amortisation from continuing operations and beforeexceptional items.
RELEVANCE: EBITDA predominately reflects the sales volumes and realised prices during the year, and is a key metric of performance.
PERFORMANCE: EBITDA was 1 per cent lower than in 2010 excluding FX fluctuations. Despite the increase in revenues in 2011, this was more than offset by an increase in the operating expenses net of changes in inventories.

 Financial

DEFINITION: The EBITDA margin shows earnings before interest, tax, depreciation and amortisation from continuing operations and before exceptional items as a percentage of revenue.
RELEVANCE: EBITDA margin measures how efficiently revenue is converted into EBITDA from continuing operations.
PERFORMANCE: EBITDA margin was at 28 per cent in 2011 thanks to improved pricing for coking coal and thermal coal coupled with good containment of input cost inflation.

 Financial

DEFINITION: Free cash flow is calculated as net operating cash flow minus capital expenditure.
RELEVANCE: Free cash flow represents the cash that a company is able to generate after investing to maintain or expand its asset base. It allows a company to enhance shareholder value through paying dividends, reducing debt or making acquisitions.
PERFORMANCE: Lower 2011 free cash reflects a decrease in net operating cash flow due to higher corporate tax and bond interest payments, partly offset by lower CAPEX.

 Financial

DEFINITION: Mining costs per tonne reflect the operating costs incurred in mining both coking coal and thermal coal. It includes consumption of material and energy, services (excluding transportation), personnel and other operating expenses. It does not include depreciation and amortisation.
RELEVANCE: Unit costs are a basic measure of a company’s effectiveness.
PERFORMANCE: Mining costs per tonne rose by 12 per cent compared to 2010 excluding FX fluctuations, mainly due to the cash cost inflation, as well as 2 per cent decrease in production.

 Financial

DEFINITION: Coke conversion costs per tonne reflect the operating costs incurred in converting coking coal into coke. It does not include the cost of coking coal charge. It includes consumption of material and energy, services (excluding transportation), personnel and other operating expenses. It does not include depreciation and amortisation.
RELEVANCE: Unit costs are a basic measure of a company’s effectiveness.
PERFORMANCE: Despite the 23 per cent decrease in production, coke conversion costs per tonne decreased by 17 per cent excluding the impact of currency movements, driven by the modernisation and consolidation of our coke production facilities at a single plant.

 

Operational

 Operational

DEFINITION: The total production volumes of thermal and coking coal.
RELEVANCE: Total coal production is a key indicator of the Company’s operating performance.
PERFORMANCE: With total coal production at 11.2 million tonnes, NWR has slightly exceeded its full year 2011 coal production target of 11 million tonnes. 

 Operational

DEFINITION: Total coal production per mining employee including mining contractors.
RELEVANCE: It is a measure of the efficiency of the Company’s mining operations.
PERFORMANCE: NWR maintained its level of total coal production per mining employee at efficient level, largely as a result of early investment in our mining equipment (POP 2010) that allowed us to decrease the total number of operating long walls.

 Operational

DEFINITION: Lost Time Injury Frequency Rate (‘LTIFR’) represents the number of reportable injuries causing at least three days of absence per million hours worked. Includes contractors.
RELEVANCE: LTIFR is an industry wide measure of overall safety performance.
PERFORMANCE: Mining LTIFR improved by 8 per cent in 2011 compared to 2010. Over the last four years mining LTIFR has fallen substantially by 37 per cent.

 Operational

DEFINITION: Employee turnover rate is calculated using the end of year total number of employees who have left the organisation voluntarily (adjusted for employees having left due to dismissal, retirement or for health reasons).
RELEVANCE: High employee turnover results in changes to the human and intellectual capital of the organisation and can impact productivity. Our aim is to maintain low voluntary employee turnover rates.
PERFORMANCE: Employee turnover rate improved by 5 per cent in 2011 compared to 2010. Over the last four years employee turnover has fallen by 20 per cent.