Section image

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Notes 26 - 31

31. Reconciliation to non-GAAP measures of performance

The non-GAAP measures of performance shown below have been included to provide the users of the financial statements with a better understanding of the key performance indicators of the business.

Reconciliation of profit before interest and taxation to headline PBIT:
  2009
£m
2008
£m
2007
£m
Profit before interest and taxation 818.7 922.0 846.1
Gains on disposal of investments (31.1) (3.4) (3.4)
Goodwill impairment 44.3 84.1 44.1
Goodwill write-down relating to utilisation of pre-acquisition tax losses 1.5 1.7
Amortisation and impairment of acquired intangible assets 172.6 78.4 40.3
Share of exceptional losses/(gains) of associates 1.6 0.5 (0.8)
Investment write-downs 11.1 30.5
Cost of changes to corporate structure 4.6
Headline PBIT 1,017.2 1,118.2 928.0
Finance income 150.4 169.6 139.4
Finance costs (355.4) (319.4) (250.1)
  (205.0) (149.8) (110.7)
Interest cover on headline PBIT 5.0 times 7.5 times 8.4 times
Reconciliation of profit before taxation to headline PBT and headline earnings:
  2009
£m
2008
£m
2007
£m
Profit before taxation 662.6 746.8 719.4
Gains on disposal of investments (31.1) (3.4) (3.4)
Goodwill impairment 44.3 84.1 44.1
Goodwill write-down relating to utilisation of pre-acquisition tax losses 1.5 1.7
Investment write-downs 11.1 30.5
Amortisation and impairment of acquired intangible assets 172.6 78.4 40.3
Costs of changes to corporate structure 4.6
Share of exceptional losses/(gains) of associates 1.6 0.5 (0.8)
Revaluation of financial instruments (48.9) 25.4 16.0
Headline PBT 812.2 968.4 817.3
Taxation1 (193.0) (245.3) (207.1)
Minority interests (69.2) (74.8) (49.2)
Headline earnings 550.0 648.3 561.0
Ordinary dividends paid 189.8 161.8 138.9
Dividend cover on headline earnings 2.9 times 4.0 times 4.0 times
Note
1
Excluding net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items.
Calculation of headline EBITDA:
  2009
£m
2008
£m
2007
£m
Headline PBIT (as above) 1,017.2 1,118.2 928.0
Depreciation of property, plant and equipment 195.3 149.6 126.3
Amortisation of other intangible assets 30.5 23.4 18.1
Headline EBITDA 1,243.0 1,291.2 1,072.4
Headline PBIT margins before and after share of results of associates:
  Margin
%
2009
£m
Margin
%
2008
£m
Margin
%
2007
£m
Revenue   8,684.3   7,476.9   6,185.9
Headline PBIT 11.7% 1,017.2 15.0% 1,118.2 15.0% 928.0
Share of results of associates (excluding exceptional losses/gains)   (58.6)   (46.5)   (40.6)
Headline operating profit 11.0% 958.6 14.3% 1,071.7 14.3% 887.4
Calculation of effective tax rate on headline PBT1:
  2009
£m
2008
£m
2007
£m
Taxation (note 7) (155.7) (232.9) (204.3)
Net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items (37.3) (12.4) (2.8)
Taxation1 (193.0) (245.3) (207.1)
Headline PBT 812.2 968.4 817.3
Effective tax rate on headline PBT1 23.8% 25.3% 25.3%
Note
1
Excluding net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items.
Headline diluted earnings per ordinary share:
  2009
£m
2008
£m
2007
£m
Headline earnings 550.0 648.3 561.0
Earnings adjustment:      
Dilutive effect of convertible bonds 0.8 0.9
Weighted average number of ordinary shares 1,284,880,193 1,169,602,949 1,227,016,974
Headline diluted earnings per ordinary share 44.4p 55.5p 45.8p
Reconciliation of free cash flow:
  2009
£m
2008
£m
2007
£m
Cash generated by operations 1,137.6 1,195.0 1,120.6
Plus:      
Interest received 99.6 133.0 102.6
Investment income 1.4 1.8 3.1
Movement in working capital and provisions 102.1 109.3 (25.4)
Dividends from associates 45.5 44.6 28.0
Issue of shares 4.1 10.6 34.8
Proceeds on disposal of treasury shares 6.9
Proceeds on disposal of property, plant and equipment 9.2 11.5 8.3
Less:      
Interest and similar charges paid (248.7) (269.2) (212.0)
Purchases of property, plant and equipment (222.9) (196.8) (151.1)
Purchases of other intangible assets (including capitalised computer software) (30.4) (23.8) (19.7)
Corporation and overseas tax paid (216.6) (182.5) (151.0)
Dividends paid to minority shareholders in subsidiary undertakings (63.0) (63.5) (38.9)
Free cash flow 617.9 776.9 699.3

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