‘My key KPI’ is a weekly content series where we ask CFOs and FDs what metrics and measures they use to drive their businesses forward.
The aim is to understand how different finance professionals across a broad array of industries and sectors use data to inform their decision making.
In this week's edition, Colin Stratton of St Austell.
My key KPI: EBITDA real growth
For a brewer, St Austell is pretty sober when it comes to its finances. The brand’s success, according to FD Colin Stratton, is down to a healthy mix of long term and short term investment alongside a focus on forecasting.
St Austell isn’t reinventing the wheel. Stratton’s key KPI is simple: EBITDA real growth. “We set a strategic goal of 3% real growth. That’s a high hurdle but drives some fairly challenging budget setting.
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“We try to maintain a certain level of dividend cover 3.5-5% times. Your dividend per share, you can't influence your key drivers by just uping the dividend unless you have the profits to do it.”
St Austell operates as a retailer, as a wholesaler and as a landlord. Each area has different EBITDA models, said Stratton, but they are managed concurrently. “If one part of the business is stronger than another, that affects our overall growth.
“If one part of the business does better than the other, that will pull on the margin. This year for example the bottled beer market, which is lower margin sector, has had a very strong year. The key is to key driving up the overall growth.”
Stratton noted that St Austell is lucky to not have any onerous banking covenants. But the company still plays it cautiously. St Austell has interest cover and debt to Ebitda covenants, but adheres to its own measurements of those figures.
“Our measurements are half of what the bank covenants are,” said Stratton, so St Austell never veers close to the red line. “We have always been about prudent growth. It’s about long term sustainability.
“Sustainability has become a very over used phrase but I think St Austell knows what sustainability really means, which is about being a business that's been around for 160 years and we intend to be around for another 160 years. We want to generate growth and employment and profitability for the long term. That's what sustainability is about.”
About Francois Badenhorst
Francois is a writer, editor and broadcaster specialising in business.