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Guide To Key Performance Indicators: Communicating The Measures That Matter
Guide To Key Performance Indicators: Communicating The Measures That Matter
Guide To Key Performance Indicators: Communicating The Measures That Matter
performance
indicators
Communicating the
measures that matter*
*connectedthinking
pwc
Introduction
Narrative reporting - whether in the form of an Operating and
Financial Review (OFR), Management Discussion and Analysis
(MD&A), a Business Review or other management commentary - is
vital to corporate transparency. Key performance indicators (KPIs),
both financial and non-financial, are an important component of the
information needed to explain a companys progress towards its
stated goals, for all of these types of narrative reporting.
But despite this fact, KPIs are not well understood. What makes a
performance indicator key? What type of information should be
provided for each indicator? And how can it best be presented to
provide effective narrative business reporting?
This publication contains certain text and information extracted from third party documentation and so being out of context from the original third party documents;
readers should bear this in mind when looking at this publication. The copyright in such third party text and information remains owned by the third parties concerned, and
PricewaterhouseCoopers expresses its sincere appreciation to these companies for having allowed it to feature their information. For a more comprehensive view on each
companys communication, please read the entire document from which the extracts have been taken. Please note that the inclusion of a company in this publication does not
imply any endorsement of that company by PricewaterhouseCoopers nor any verification of the accuracy of the information contained in any of the examples.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information
contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of
the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and
disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision
based on it.
2007 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United
Kingdom) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
Contents
Page
Narrative reporting
KPIs a critical component
10
Narrative reporting
KPIs a critical component
Regulatory environment
Source:
The rest of this guide will look at existing guidance on KPI reporting,
show what these requirements mean in practice and provide examples
from companies corporate reporting, illustrating both the content and
presentation styles being used in effective KPI reporting.
be a balanced and
comprehensive analysis
be a fair review of the business
What is key?
Banking
Petroleum
Retail
Customer retention
Capital expenditure
Capital expenditure
Customer penetration
Asset quality
Refinery utilisation
Capital adequacy
Refinery capacity
Customer satisfaction
Loan loss
More information on the Corporate Reporting Framework and our supporting industry-specific frameworks is available at
www.corporatereporting.com.
Segmental or
group KPIs?
Does reliability
matter?
Other performance
indicators
Link to strategy
Definition and
calculation (1)
Purpose
Source, assumptions
and limitations
Future targets
Reconciliation to GAAP
Measurement of performance in
isolation over a single period does
not provide the reader with very
useful information. An indication of
how performance has improved or
worsened over time is much more
valuable in assessing the success of
managements strategies.
Segmental
Changes in KPIs
Benchmarking
Note: (1)
According to the ASBs Reporting Statement, this information is also recommended disclosure for performance indicators other than KPIs.
Bankinter
Centrica
10
Benchmarking
Changes
Segmental
Trend data
HBOS
TELUS
Reconciliation to
GAAP
Future targets
Source and
assumptions
Purpose
Company
Definition and
calculation
9
9
Benchmarking
HBOS plc
Our
Strategy
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
2006
13%
2005
2006
14%
KPIs discussed
directly linked to
strategic priorities.
1,894m
2005
1,977m
Sales
2006
2005
9%
10%
2006
2006
2005
Colleague development
Capital
discipline
Driving customer
satisfaction
2005
5%
5%
1,817m
1,473m
2006
97%
2006
2005
97%
2005
Key Performance
Indicators
UK market shares
21%
Savings
16%
Banking
13%
Credit Cards
9%
9%
Personal Loans
7%
Household Insurance
Business Banking
5%
Investment
Motor Insurance
5%
3%
3 Star
Mortgages
15%-20%
Target
2 Star
International
Cost leadership
We seek to maximise efciency in our new business processing,
existing business administration, claims handling and
customer service, with investment in supporting technology
and process improvements.
14%
2006
12%
6%
2006
2005
Cost:income ratio
Cost leadership
Cost leadership provides the strategic exibility to deliver further
revenue growth ahead of the competition.
581m
2006
40.9%
2005
Trend data
Underlying prot
before tax up 19%
42.2%
Leadership index
Colleague development
Our ability to execute our strategy relies very clearly on the
capability, motivation and performance of our colleagues. To
achieve this, we aim to have the best leadership teams in the
industry and will offer all our colleagues the necessary training
and personal development they need to do their jobs well.
76%
2006
2005
72%
Tier 1 ratio
Capital discipline
47
8.1%
2006
8.1%
2005
8% Target
Key Performance
Indicators
UK market shares
21%
Savings
16%
Banking
13%
Credit Cards
9%
9%
Personal Loans
Household Insurance
7%
5%
Business Banking
5%
Investment
15%-20%
Target
3%
Motor Insurance
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
Cost leadership
We seek to maximise efciency in our new business processing,
existing business administration, claims handling and
customer service, with investment in supporting technology
and process improvements.
2006
Mortgages
13%
2005
14%
2006
1,894m
2005
1,977m
Sales
2006
2005
9%
10%
2006
2005
2006
2005
5%
5%
1,817m
1,473m
2006
97%
2006
2005
97%
2005
3 Star
2 Star
6%
581m
Underlying prot
before tax up 19%
Our
Strategy
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
2006
2005
13%
14%
2006
2005
Purpose
47
Source and
assumptions/limitations
Future targets
Our
Strategy
Reconciliation
to GAAP
Our
Strategy
1,894m
1,977m
19
Denition and
calculation
Our
Strategy
Segmental
Extracts selected
to illustrate features
of content and
presentation style,
supported by specific
commentary drawing
out these features
Changes
PwCs commentary
on the extracts
presented. The
comments indicate
how each example
demonstrates the
characteristics of good
practice KPI reporting
11
Benchmarking
Changes
Bankinter
Spanish financial services group Bankinter provides detailed information on
a set of KPIs based around each of their strategic pillars, including the pillar
of service quality. Not only do they provide segmental data and benchmark
information on customer satisfaction: the Groups measure of service quality
they also suppport the disclosures by explaining the process and statistical
validity of the customer surveys.
2006
365
3,981
originators of ideas
Segmental
Business Report
4/5/07
08:20
Pgina 19
19
ers
satisfaction survey, and this enables us to carry out actions for continuing
y the
provide
s but also
Once again we reiterate our thanks to all our customers for the care, time
they
and effort they take to respond to our surveys. Their opinions enable us to
develop the aspects and adjust the services that give them most satisfaction.
.2
2005
Branch network
Telephone network
77.83
75.26
2006
77.55
83
73.49
Internet network
77.85
77.42
Virtual branches
81.26
79.27
Agents network
79.8
78.80
ationals
81
79
77
75
73
Trend data
2004
Branch network
2005
Telephone network
2006
Internet network
Agents network
2006
76.90
77.55
2006
77.19
Telephone Banking
79.20
79.39
87
78.67
80.55
80.33
83.21
the
nthly.
e ISN score
more than
2005
85
Broker Bankinter
79.09
79.23
Bankinter Businesses
79.97
79.88
83
Cell phones
86.50
86.69
81
79
77
Our value proposal, based on service quality, innovation and multi-channel banking,
which is endorsed on a daily basis by the thousands of customers who choose to bank
with us, continues to be relevant. Rather than observing any signs of weakness in it,
our perception is that, if anything, it should be reinforced.
That is why - because our value proposal continues to be valid in attracting and
retaining customers and providing them with quality service - we at Bankinter
continue to think that our future should be based on organic growth and in order to
achieve this we must continue to strengthen our proposal, endeavouring to
differentiate it clearly from that presented by the other banks.
75
2004
Telephone banking
2005
Bankinter Private
Individuals
Broker
2006
Bankinter Businesses
Cell phones
This recipe for success, which has led us to where we are today, remains, in our
opinion, a perfectly valid strategy with which to face the future and we are sure it will
continue to give us excellent results.
Reconciliation
to GAAP
Service quality is
clearly identified as a core
strategic priority.
Future targets
01
Quality
Provides headline
disclosures on the KPI used
to measure progress.
Source and
assumptions/limitations
individuals) are with the service they receive from their banks or savings banks.
+6.4
80
78
76
74
72
70
individuals.
68
6.35
Purpose
2004
Bankinter
Definition and
calculation
12
2005
Market
2005
2006
Bankinter
77.76
76.81
Market
71.31
70.46
6.45
6.35
Gap
2006
Private banking
SMEs
Corporate banking
Foreign nationals
2005
2006
Private individuals
78.11
76.90
77.55
Private banking
77.27
> 85
Very satisfied/excellent.
SMEs
77.53
77.19
75-85
Corporate banking
79.06
78.67
60-75
Needs improvement.
Foreign Nationals
< 60
Needs action.
83.21
against the different product indicators, the market research and the internal
satisfaction survey, and this enables us to carry out actions for continuing
improvement focused on customer relations and so to develop product solutions
and enhanced procedures.
Once again we reiterate our thanks to all our customers for the care, time
and effort they take to respond to our surveys. Their opinions enable us to
develop the aspects and adjust the services that give them most satisfaction.
Branch network
2005
2006
77.83
77.55
83
Telephone network
75.26
73.49
Internet network
77.85
77.42
Virtual branches
81.26
79.27
Agents network
79.8
78.80
81
79
77
75
73
2004
Branch network
2005
Telephone network
2006
Internet network
2005
2006
Telephone Banking
79.20
79.39
87
80.55
80.33
Broker Bankinter
79.09
79.23
Bankinter Businesses
79.97
79.88
83
Cell phones
86.50
86.69
81
Agents network
85
79
77
75
2004
Telephone banking
2005
Bankinter Private
Individuals
Broker
2006
Bankinter Businesses
Cell phones
13
Benchmarking
Changes
Segmental
OUR
and Analysis
MD&A
Total Shareholder R
BMOs average annual fiv
19.1
13.8
2005
2006
11.2
5.2
2005
2006
ROE (%)
18.8
19.2
2005
2006
(15.2)
2002
91.8
58.4
10.3
Trend data
0.1
2003
2004
2005
2006
Revenue Growth
4.7
3.7
5.0
1.5
(0.1)
Further details are provided on page 36.
2002
*Revenue and income taxes are reported in the MD&A on a taxable equivalent basis.
See pages 34, 36 and 41.
2004
2005
2006
69.0
2003
66.5
65.0
2003
2004
63.6
62.8
2002
2005
2006
Future targets
Reconciliation
to GAAP
Source and
assumptions/limitations
BMO
CIBC
Scotia
TD
National
2006 Financial
Targets
2006 Financial
Performance
Target
Met
ROE of 17%
ROE of 19.2%
to 19%
Purpose
Definition and
calculation
RBC
Recognise the
importance of good
disclosure.
Average annual
total shareholder return
(five-year)
19.1
EPS growth
11.2
39.7
1715
12.7
Return on equity
19.2
23.5
27.9
10.3
79.8
Revenue growth1,2
1.5
24.1
Specific provision
Specific provision
for credit losses
of $211 million
98.1
4.7
22.1
25.5
20.1
340.6
18.1
23.3
(0.5)
10.0
(8.7)
8.6
23.9
5.0
62.4
62.3
64.4
55.0
54.3
64.0
0.09
0.16
0.33
0.10
0.21
0.14
19.8
16.2
14
21.2
16.1
2007 Financial
Targets
ROE of 18%
to 20%
Specific provision
58.4
2003
2004
2006
Our Performance
19.1
18.9
Our Performance
Credit Losses
13.8
12.9
7.9
2002
2003
2004
2005
2006
Provisions for credit losses were low and stable, at $176 million.
Specific provisions were $211 million and there was a $35 million
reduction in the general allowance, both comparable to
a year ago.
Impaired Loans
0.8
28.4
27.9
11.2
5.2
2002
2003
2004
2005
2006
19.4
18.8
19.2
ROE of 19.2% was up from 18.8% in 2005 and was the second
highest in the past 20 years, and above our 2006 target of 17%
to 19%. In 2007, we are targeting ROE of 18% to 20%.
We increased our medium-term target to 18% to 20% ROE from
18% to 19% ROE at the end of 2006.
13.4
2003
2004
2005
2006
Capital Adequacy
The Tier 1 Capital Ratio was 10.22%, down slightly from 10.30%
last year but above our minimum target of 8.0%.
The Total Capital Ratio was 11.76%, down slightly from 11.82%
in 2005.
91.8
(15.2)
58.4
10.3
0.1
2002
2003
2004
2005
2006
Revenue Growth
4.7
3.7
5.0
1.5
2002
0.09
2003
2004
2005
2006
13.9
7.5
2002
17.4
4.9
3.8
2006
2003
2004
2005
29.1
26.0
26.5
0.11
0.30
2002
ROE (%)
16.4
0.56
(0.07)
Further details are provided on pages 39 and 68.
MD&A
MD&A
Provides detailed
explanation of non-GAAP
measures, including a
reconciliation to financial
statements.
2005
Consistently reports on
12 KPIs against peer group
averages, as shown in detail
here for NEP Growth.
10.3
0.1
2002
91.8
(15.2)
24.9
2002
27.2
2003
2004
2005
2006
10.30
10.22
9.84
9.55
8.80
2002
2003
2004
2005
2006
AA
AA
AA
AA
AA
A+
A+
A+
2002
2003
2004
2005
2006
Aa3
Aa3
Aa3
Aa3
Aa3
Aa2
Aa2
2005
2006
(0.1)
Further details are provided on page 36.
2002
2003
2004
66.5
65.0
2005
2006
69.0
63.6
62.8
2002
2003
2004
2005
2006
2002
2003
2004
Non-GAAP Measures
BMO uses both GAAP and non-GAAP measures to assess performance. Securities regulators require that companies caution
readers that earnings and other measures adjusted to a basis
other than generally accepted accounting principles (GAAP) do
not have standardized meanings under GAAP and are unlikely
to be comparable to similar measures used by other companies.
Net economic profit is another non-GAAP measure. It represents cash earnings available to common shareholders less
a charge for capital, and is considered an effective measure of
added economic value.
The Canadian peer group averages are based on the performance of Canadas six largest banks:
BMO Financial Group, Canadian Imperial Bank of Commerce, National Bank of Canada, RBC Financial
Group, Scotiabank and TD Bank Financial Group. The North American peer group averages are based on
the performance of North Americas largest banks, consisting of 15 banks in North America having
shareholders equity that is at least 75% as large as BMOs. It includes the Canadian peer group, except
National Bank of Canada, as well as Bank of America Corporation, Citigroup Inc., J.P. Morgan Chase &
Co., KeyCorp, National City Corporation, The PNC Financial Services Group Inc., SunTrust Banks Inc., U.S.
Bancorp, Wachovia Corporation, and Wells Fargo & Company.
Net income
Amortization of intangible assets (net of income tax)
Cash net income (1)
Preferred share dividends
Charge for capital (1)
Net economic profit (1)
2006
2005
2004
2,663
36
2,396
74
2,295
78
2,699
(30)
(1,439)
2,470
(30)
(1,324)
2,373
(31)
(1,230)
1,230
1,116
1,112
15
Benchmarking
Changes
Segmental
Business review
19
Governance
Accounts
Capital expenditure
Trend data
11.6
2001
3.6
3.7
3.6
securing long term, recurring revenues from new and existing clients
acquiring small to medium sized businesses that expand our existing capability and take us into new areas.
14.6
Provides an overview
of the four core elements
of the groups strategy,
expanding on each one in
a separate section.
8.5
8.5
8.2
8.4
2002
2003
2004
2005
2006
6.3
5.0
13.2
9.1
Capex as % turnover
2006
PBIT (normalised) 225
Avg capital (m) 880
Tax (%)
27.7
2005
183
776
27.7
2004 2003
156*
131
696
645
28.1
28.1
2002 2001
107*
77
575
464
29.1
29.8
maintaining a robust management and operating structure, led by a stable, inspiring team
working to clear financial objectives with strong financial controls and effective governance.
2002
2003
2004
2005
2006
seeking the best opportunities across both the public and private sectors
Reconciliation
to GAAP
by consistently delivering service excellence and sharing Group resources and scale benefits
aligning each business within our divisions with the Groups overall objectives and strategy
maintaining a simple, pragmatic divisional structure to ensure the best resources are deployed Group-wide.
Our goal remains straightforward, to continue to develop Capita as a long term, sustainable business which
can deliver value to all our stakeholders:
Future targets
Source and
assumptions/limitations
Clearly
identifies the
groups six
financial KPIs.
Aim
Progress
Definition and
calculation
Purpose
12.9%
12.8%
154m
127m
Capital expenditure
Economic profit
Source: The Capital Group Plc Annual Report and Accounts 2006
16
3.6%
3.7%
18.5%
17.1%
9x
13x
89m
68m
Identifies,
for each of the
groups financial
KPIs, the
groups aim and
performance
year-on-year.
Capital expenditure
Capex as % turnover
c) Resource and
operational controls
Our continued growth and financial performance
depends on having the right resources in place.
To sustain our high contract win and retention rates,
we have to satisfy clients that we have the
operational scale and capability to deliver our
promises whether on relatively simple contracts or
large scale, multi-service packages. Through the MOB
process we continuously assess the needs of each
business unit to ensure that we have the necessary
people, infrastructure and resources for current and
future development.
Each month, we monitor and review comprehensive
operational management information enabling us
to manage the business in a way that delivers our
key financial aims.
Expands on the
importance of resource
and operational controls,
specifically identifying
people as a critical
resource.
Priorities
Aim
6.3
Expands on each
financial KPI, including
the provision of trend
analysis.
5.0
3.6
3.7
3.6
2004
2005
2006
3.4
2001
2002
2003
outsourcing contracts
p Employee transfers as a result of acquisitions.
91%
92%
82%
81%
17
Benchmarking
Segmental
Centrica, the UK utilities company, provides a clear set of financial and nonfinancial KPIs in an easy to read summary. The Group supports each KPI with a
brief description of how the KPI is measured, its source, target and performance
during the year.
Changes
Centrica
report
Financial
Dividends per share
Adjusted basic
earnings per share
(EPS)
Total shareholder
return (TSR)
Adjusted basic
earnings per share pence
06
18.2
18.1
06
200
19.4
05
04
05
175
10.5
04
150
125
02
01
02
03
04
05
06
4.0
FTSE 100
Description
Target
Analysis/comment
Source/verification
Alithos Ltd.
10
Financial
Total shareholder
return (TSR)
Lost-time injuries
(LTI)
Employee
engagement
Adjusted basic
earnings per share pence
Lost-time injuries
per 100,000 hours worked
Engagement score
06
18.2
04
18.1
175
05
150
04
125
03
100
02
01
02
Future targets
06
19.4
05
18.2
04
18.1
Target
Analysis/comment
Purpose
Source and
assumptions/limitations
Source/verification
18
04
05
06
4.0
06
05
0.8
06
1.1
3.78
04
1
8.6m
3.84
05
0.73
04
3.73
2
Description
Target
Analysis/comment
Source/verification
tonnes of CO2/
CO2 equivalent**
**data tolerance level of 10%
A further 8.3 million tonnes of
CO2 emissions comes from UK
purchased power.
10
Description
03
10.5
8.6
5.4
FTSE 100
To improve employee
engagement as part of
improving business
performance.
Measured internally.
Alithos Ltd.
Non-financial
Lost-time injuries
(LTI)
Lost-time injuries
per 100,000 hours worked
06
05
04
0.8
0.73
Customer satisfaction
In 2006, we used a variety of
measures across our business
units to measure levels of customer
satisfaction. During 2007, a Group
customer KPI will be developed
that recognises our position as
a provider of energy and related
services to both domestic and
commercial markets. This
information will be included
in our 2007 Annual Report.
1.1
11
Adjusted basic
earnings per share pence
11.15
06
200
19.4
05
Group carbon
footprint
Reconciliation
to GAAP
Non-financial
Adjusted basic
earnings per share
(EPS)
Financial
Centrica
Adjusted basic
earnings per share
(EPS)
Definition and
calculation
Clearly identifies
the groups KPIs over a
two page spread.
8.6
5.4
03
100
Years ended 31 December
Centrica
Trend data
Securing our
customers
energy needs
Clearly explains
that a new non-financial
KPI will be introduced
during the year.
Customer satisfaction
In 2006, we used a variety of
measures across our business
units to measure levels of customer
satisfaction. During 2007, a Group
customer KPI will be developed
that recognises our position as
a provider of energy and related
services to both domestic and
commercial markets. This
information will be included
in our 2007 Annual Report.
Measured internally.
Benchmarking
HBOS
Changes
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
2006
13%
2005
2006
14%
KPI is directly
linked to a
strategic priority.
1,894m
2005
1,977m
2006
2005
9%
10%
2006
2006
2005
Colleague development
Capital
discipline
Driving customer
satisfaction
2005
5%
5%
Key Performance
Indicators
UK market shares
21%
Savings
16%
13%
Banking
Credit Cards
9%
9%
Personal Loans
Household Insurance
7%
Business Banking
5%
Investment
5%
15%-20%
Target
Motor Insurance
3%
Sales
Our
Strategy
1,817m
1,473m
2006
97%
2006
2005
97%
2005
3 Star
Mortgages
2 Star
Segmental
Our
Strategy
International
Cost leadership
We seek to maximise efciency in our new business processing,
existing business administration, claims handling and
customer service, with investment in supporting technology
and process improvements.
14%
12%
6%
2006
2006
2005
Cost:income ratio
Cost leadership
Cost leadership provides the strategic exibility to deliver further
revenue growth ahead of the competition.
581m
2006
40.9%
2005
Trend data
Underlying prot
before tax up 19%
42.2%
Leadership index
Colleague development
Our ability to execute our strategy relies very clearly on the
capability, motivation and performance of our colleagues. To
achieve this, we aim to have the best leadership teams in the
industry and will offer all our colleagues the necessary training
and personal development they need to do their jobs well.
2006
76%
2005
72%
Tier 1 ratio
Capital discipline
47
8.1%
2006
8.1%
2005
8% Target
Key Performance
Indicators
UK market shares
21%
Savings
16%
13%
Banking
Credit Cards
9%
9%
Personal Loans
7%
Household Insurance
5%
Business Banking
5%
Investment
15%-20%
Target
3%
Motor Insurance
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
Cost leadership
We seek to maximise efciency in our new business processing,
existing business administration, claims handling and
customer service, with investment in supporting technology
and process improvements.
2006
13%
2005
14%
2006
1,894m
2005
Mortgages
Source and
assumptions/limitations
Future targets
Our
Strategy
Reconciliation
to GAAP
Our
Strategy
1,977m
Sales
2006
2005
9%
10%
2006
2005
2006
2005
5%
5%
1,817m
1,473m
2006
97%
2006
2005
97%
2005
3 Star
2 Star
6%
581m
Underlying prot
before tax up 19%
Key Performance
Indicators
% of Group Mortgage
customers who have our
Household Insurance
2006
2005
13%
14%
2006
2005
Purpose
47
Our
Strategy
1,894m
1,977m
19
Definition and
calculation
Benchmarking
Changes
TELUS
TELUS, the Canadian telecommunications company provides detailed information
on its performance scorecard. Not only does the Group set out its performance
against targets for a series of KPIs at group and business unit level, it also sets out
the key assumptions that underpin both the 2006 and 2007 targets.
Demand and Pay Per View); data (IP networks, private line, switched
web and video) and human resource and health and safety
outsourcing solutions.
wireline EBITDA*
($ millions)
4,850 to
4,769 4,847 4,823 4,900
($ millions)
wireline capital
expenditures
($ millions)
Segmental
growing
together
1,191 ~ 1,200
1,775 to
1,852 1,839 1,825
135+
128
964
914
73
06
05
07
target
04
05
06
07
target
04
05
06
07
target
04
05
06
07
target
TELUS Mobile Music, TELUS Mobile Radio and TELUS Mobile TV,
PCS Pay & Talk prepaid, Mike all-in-one (iDEN) and Push To Talk
1,948
Wireline external revenue was just under the bottom of the target
range; and
to 73% in 2005.
wireless EBITDA*
($ millions)
($ millions)
wireless capital
expenditures
($ millions)
~ 550
1,950 to
2,000
4,325 to
4,375
584
1,751
405
Trend data
3,858
512
535
550+
06
07
target
The following table summarizes TELUS 2006 performance against its original targets and compares 2007 targets to 2006 results. For further detail
355
1,443
3,296
2,812
427
1,142
05
06
07
target
04
05
06
07
target
04
05
06
07
target
04
05
17
Reconciliation
to GAAP
Consolidated
Revenues
Capital expenditures
Free cash flow (4)
Wireline segment
Revenue (external)
Non-ILEC(5) revenue
Capital expenditures
High-speed Internet subscriber
net additions
Future targets
Summarises
performance against
targets for its KPIs at a
group and segmental level.
2006 results
Original targets
for 2006
$8.681 billion
$1.618 billion
$1.600 billion
$4.823 billion
$657 million
$1.191 billion
153,700
Source and
assumptions/limitations
Purpose
Definition and
calculation
04
05
20
550+
06
07
target
6 to 7%
8%
1 to 2%
Unchanged
(12)% or better
$3.858 billion
12 to 13%
$427 million
535,200
29%
3% or more
535
Capital expenditures
Wireless subscriber net additions
584
Wireless segment
Revenue (external)
512
Result
The following key assumptions were made at the time the original targets for 2006 were announced on December 16, 2005.
Key assumption for 2006 targets
2.7% (estimate). Canadian real GDP growth was lower than originally expected, although
recent estimates showed very high growth rates in Alberta and B.C. The modestly lower
national growth rate did not affect results significantly.
Estimated at 4.6 percentage points. Market growth was at the low end of expectations and
contributed to achieving 3% fewer net additions of wireless subscribers than original targets.
$67.8 million. A lower charge was recorded primarily as a result of the restructuring initiatives
being implemented more efficiently than expected with a greater number of staff being
redeployed to growth areas of the business and therefore not requiring severance costs.
Approximately 24%. The tax rate was reduced by the revaluation of the future tax liability
from the enactment of lower federal and provincial tax rates, elimination of the federal large
corporations tax and reassessments relating to prior years.
Confirmed.
Confirmed. Moodys Investors Service placed its Baa2 rating for TELUS under review
for possible upgrade.
.
.
.
.
.
.
.
.
21
Preparers Guide
Operating
and Financial
Review
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