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

For the year ended 31 December 2010

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:

  2010
£m
2009
£m
2008
£m
Profit before interest and taxation 1,028.2 818.7 922.0
Gains on disposal of investments (4.1) (31.1) (3.4)
Gains on re-measurement of equity on acquisition of controlling interest (13.7)
Goodwill impairment 10.0 44.3 84.1
Goodwill write-down relating to utilisation of pre-acquisition tax losses 1.5
Amortisation and impairment of acquired intangible assets 170.5 172.6 78.4
Share of exceptional losses of associates 0.3 1.6 0.5
Investment write-downs 37.5 11.1 30.5
Cost of changes to corporate structure 4.6
Headline PBIT 1,228.7 1,017.2 1,118.2
Finance income 81.7 150.4 169.6
Finance costs (276.8) (355.4) (319.4)
  (195.1) (205.0) (149.8)
Interest cover on headline PBIT 6.3 times 5.0 times 7.5 times

Reconciliation of profit before taxation to headline PBT and headline earnings:

  2010
£m
2009
£m
2008
£m
Profit before taxation 851.3 662.6 746.8
Gains on disposal of investments (4.1) (31.1) (3.4)
Gains on re-measurement of equity on acquisition of controlling interest (13.7)
Goodwill impairment 10.0 44.3 84.1
Goodwill write-down relating to utilisation of pre-acquisition tax losses 1.5
Investment write-downs 37.5 11.1 30.5
Amortisation and impairment of acquired intangible assets 170.5 172.6 78.4
Costs of changes to corporate structure 4.6
Share of exceptional losses of associates 0.3 1.6 0.5
Revaluation of financial instruments (18.2) (48.9) 25.4
Headline PBT 1,033.6 812.2 968.4
Taxation1 (227.8) (193.0) (245.3)
Non-controlling interests (75.0) (69.2) (74.8)
Headline earnings 730.8 550.0 648.3
Ordinary dividends paid 200.4 189.8 161.8
Dividend cover on headline earnings 3.6 times 2.9 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:

  2010
£m
2009
£m
2008
£m
Headline PBIT (as above) 1,228.7 1,017.2 1,118.2
Depreciation of property, plant and equipment 184.9 195.3 149.6
Amortisation of other intangible assets 25.4 30.5 23.4
Headline EBITDA 1,439.0 1,243.0 1,291.2

Headline PBIT margins before and after share of results of associates:

  Margin
%
2010
£m
Margin
%
2009
£m
Margin
%
2008
£m
Revenue   9,331.0   8,684.3   7,476.9
Headline PBIT 13.2% 1,228.7 11.7% 1,017.2 15.0% 1,118.2
Share of results of associates (excluding exceptional losses)   (55.5)   (58.6)   (46.5)
Headline operating profit 12.6% 1,173.2 11.0% 958.6 14.3% 1,071.7

Calculation of effective tax rate on headline PBT1:

  2010
£m
2009
£m
2008
£m
Taxation (note 7) (190.3) (155.7) (232.9)
Net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items (37.5) (37.3) (12.4)
Taxation1 (227.8) (193.0) (245.3)
Headline PBT 1,033.6 812.2 968.4
Effective tax rate on headline PBT1 22.0% 23.8% 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:

  2010
£m
2009
£m
2008
£m
Headline earnings 730.8 550.0 648.3
Earnings adjustment:      
     Dilutive effect of convertible bonds 28.3 0.8
Weighted average number of ordinary shares 1,339,004,622 1,284,880,193 1,169,602,949
Headline diluted earnings per ordinary share 56.7p 44.4p 55.5p

Reconciliation of free cash flow:

  2010
£m
2009
£m
2008
£m
Cash generated by operations 1,680.1 1,137.6 1,195.0
Plus:      
Interest received 50.7 99.6 133.0
Investment income 4.2 1.4 1.8
Dividends from associates 53.3 45.5 44.6
Issue of shares 42.7 4.1 10.6
Proceeds on disposal of treasury shares 6.9
Proceeds on disposal of property, plant and equipment 7.6 9.2 11.5
Less:      
Interest and similar charges paid (219.7) (248.7) (269.2)
Purchases of property, plant and equipment (190.5) (222.9) (196.8)
Purchases of other intangible assets (including capitalised computer software) (27.0) (30.4) (23.8)
Corporation and overseas tax paid (207.4) (216.6) (182.5)
Dividends paid to non-controlling interests in subsidiary undertakings (66.7) (63.0) (63.5)
Movement in working capital and provisions (225.5) 102.1 109.3
Free cash flow 901.8 617.9 776.9