Key performance indicators (KPIs)

We monitor and assess our performance by using stretching financial and non-financial targets that help us deliver value. Our key performance indicators (KPIs) are set by our executive management team.

Revenue chart

Description
Measures the level of operating activity and growth of the business.

Measurement
Revenue for the year as reported in the consolidated income statement.

 

EBITDA chart

Description
EBITDA means earnings before interest, tax, depreciation and amortisation and provides a measure of the operating profitability of the business.

Measurement
Business Performance EBITDA is calculated as profit before tax and net finance costs, but after our share of results of associates (as per the consolidated income statement), adjusted to add back charges for depreciation and amortisation (as per note 3 to the financial statements).

 

Net profit chart

Description
Provides a measure of the net profitability of the business, i.e. profit for the year attributable to Petrofac Limited shareholders.

Measurement
Business performance profit for the year attributable to Petrofac Limited shareholders, as reported in the consolidated income statement.

 

Return on capital employed chart

Description
ROCE is a measure of the efficiency with which the Group is generating operating profits from its capital, per the consolidated statement of financial position adjusted for gross up of finance lease creditors.

Measurement
ROCE is calculated as EBITA (earnings before interest, tax and amortisation, calculated as EBITDA less depreciation per note 3 to the financial statements) divided by average capital employed (being total equity and non-current liabilities per the consolidated statement of financial position adjusted for gross up of finance lease creditors).

 

Diluted earnings per share chart

Description
EPS provides a measure of net profitability of the Group taking into account changes in the capital structure, for example, the issuance of additional share capital.

Measurement
Business Performance EPS as reported in the consolidated income statement and calculated in accordance with note 8 to the financial statements.

 

Backlog chart

Description
The Group uses this KPI as a measure of the visibility of future revenues.

Measurement
Backlog consists of: the estimated revenue attributable to the uncompleted portion of Engineering & Construction division projects; and, for the Engineering & Production Services division, the estimated revenue attributable to the lesser of the remaining term of the contract and five years. The Group no longer recognises backlog in respect of the IES division. Backlog at 31 December 2017 includes US$1.0 billion for Petrofac’s share of the Duqm Refinery project in Oman. The full notice to proceed is expected shortly following formal contract signature on 15 February 2018. The Group uses backlog as a measure of the visibility of future revenue. Backlog is not an audited measure.

 

Cash flow chart

Description
These KPIs measure both the absolute amount of cash generated from operations and the conversion of EBITDA to cash.

Measurement
Free cash flow, as per the Financial review, page 44. Cash conversion is cash generated from operations divided by Business Performance EBITDA.

  

1 Business Performance before exceptional items and certain re-measurements.

Part of 2017 Executive Directors’ remuneration.