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
Notes 26-31
For the year ended 31 December 2010
- 26. Authorised and issued share capital
- 27. Other reserves
- 28. Acquisitions
- 29. Principal subsidiary undertakings
- 30. Related party transactions
- 31. Reconciliation to non-GAAP measures of performance
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 |