Annual Report - SABMiller

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158 Definitions SABMiller plc Annual Report 2010DefinitionsFinancial definitionsAdjusted earningsAdjusted earnings are calculated by adjusting headline earnings(as defined below) for the amortisation of intangible assets (excludingsoftware), integration and restructuring costs, the fair value movementsin relation to capital items for which hedge accounting cannot beapplied and other items which have been treated as exceptional butnot included above or as headline earnings adjustments together withthe group’s share of joint ventures’ and associates’ adjustments forsimilar items. The tax and minority interests in respect of these itemsare also adjusted.Adjusted net finance costsThis comprises net finance costs excluding fair value movementsin relation to capital items for which hedge accounting cannot beapplied and any exceptional finance charges or income.Adjusted profit before taxThis comprises EBITA less adjusted net finance costs and less thegroup’s share of associates’ and joint ventures’ net finance costson a similar basis.Constant currencyConstant currency results have been determined by translating thelocal currency denominated results for the year ended 31 March atthe exchange rates for the prior year.EBITAThis comprises operating profit before exceptional items, amortisationof intangible assets (excluding software) and includes the group’s shareof associates’ and joint ventures’ operating profit on a similar basis.EBITA margin (%)This is calculated by expressing EBITA as a percentage of group revenue.EBITDAThis comprises the net cash generated from operations before workingcapital movements. This includes cash flows relating to exceptionalitems.EBITDA margin (%)This is calculated by expressing EBITDA as a percentage of revenue.Effective tax rate (%)The effective tax rate is calculated by expressing tax before tax onexceptional items and on amortisation of intangible assets (excludingsoftware), including the group’s share of associates’ and joint ventures’tax on the same basis, as a percentage of adjusted profit before tax.Free cash flowThis comprises net cash generated from operating activities less cashpaid for the purchase of property, plant and equipment, intangibleassets and shares from minorities, net investments in associatesand joint ventures and dividends paid to minority interests plus cashreceived from the sale of property, plant and equipment and intangibleassets and dividends received.Group revenueThis comprises revenue together with the group’s share of revenuefrom associates and joint ventures.Headline earningsHeadline earnings are calculated by adjusting profit for the financialperiod attributable to equity holders of the parent for items inaccordance with the South African Circular 8/2007 entitled ‘HeadlineEarnings’. Such items include impairments of non-current assets andprofits or losses on disposals of non-current assets and their relatedtax and minority interests. This also includes the group’s share ofassociates’ and joint ventures’ adjustments on the same basis.Interest coverThis is the ratio of normalised EBITDA to adjusted net finance costs.Net debtThis comprises gross debt (including borrowings, borrowings-relatedderivative financial instruments, overdrafts and finance leases) net ofcash and cash equivalents (excluding overdrafts).Normalised EBITDAThis comprises EBITDA together with dividends received fromMillerCoors.Normalised EBITDA marginThis is calculated by expressing normalised EBITDA as a percentageof revenue plus the group’s share of MillerCoors’ revenue.Organic informationOrganic results and volumes exclude the first 12 months’ results andvolumes relating to acquisitions and the last 12 months’ results andvolumes relating to disposals.Total Shareholder Return (TSR)TSR is the measure of the returns that a company has provided forits shareholders, reflecting share price movements and assumingreinvestment of dividends.Sales volumesIn the determination and disclosure of sales volumes, the groupaggregates 100% of the volumes of all consolidated subsidiariesand its equity accounted percentage of all associates’ and jointventures’ volumes. Contract brewing volumes are excluded fromvolumes although revenue from contract brewing is included withingroup revenue. Volumes exclude intra-group sales volumes. Thismeasure of volumes is used for lager volumes, soft drinks volumes,other alcoholic beverage volumes and beverage volumes and isused in the segmental analyses as it more closely aligns with theconsolidated group revenue and EBITA disclosures.In the determination and disclosure of aggregated sales volumes, thegroup aggregates 100% of the volumes of all consolidated subsidiaries,associated companies and joint ventures. Contract brewing volumesare excluded from aggregated volumes although revenue from contractbrewing is included within group revenue. Aggregated volumes excludeintra-group sales volumes. This measure is used for aggregatedbeverage volumes and for aggregated lager volumes.
SABMiller plc Annual Report 2010 Definitions 159KPI definitions – How we measureTotal Shareholder Return (TSR) versus median of peer groupover three-year periodsTSR performance is measured by taking the percentage growthin our TSR over the three-year period to the date aligned with therelated vesting date of performance share awards for the excom,and deducting the percentage growth in the TSR of the medianof our peer group over the same period.Growth in adjusted earnings per share (EPS)Growth in adjusted EPS is measured by comparing the adjustedEPS for the current year with that of the prior year. Adjusted EPS ismeasured using adjusted earnings divided by the basic number ofshares in issue. Adjusted earnings are measured using the definitionon page 158.Free cash flowFree cash flow is measured using the definition on page 158.Proportion of our total lager volume from markets in which wehave No.1 or No.2 national market share positionsLager volumes generated in markets where we have a number oneor number two national beer market share position divided by totallager volumes. Lager volumes are measured as defined on page 158.Proportion of group EBITA from developing and emergingeconomiesEBITA generated in developing and emerging economies divided bygroup EBITA before corporate costs. EBITA is defined on page 158.Developing and emerging economies are as defined by the InternationalMonetary Fund (IMF).Organic growth in lager volumesOrganic growth in lager volumes is measured by comparing lagervolumes in the year with those in the prior year excluding the effectsof acquisitions and disposals (organic information is defined on page158). Lager volumes are measured as defined on page 158.Group revenue growth (organic, constant currency)Growth in group revenue compared to the prior year is measured ona constant currency basis (as defined on page 158) and excluding theeffects of acquisitions and disposals (organic information is defined onpage 158). Group revenue is defined on page 158.EBITA growth (organic, constant currency)EBITA growth compared to the prior year is measured on a constantcurrency basis (as defined on page 158) and excluding the effects ofacquisitions and disposals (organic information is defined on page158). EBITA is defined on page 158.EBITA marginEBITA margin is defined on page 158.Hectolitres of water used at our breweries per hectolitreof lager producedWater used at our breweries divided by the volume of lager produced.All consolidated subsidiaries are included on a 100% basis together withthe equity accounted percentage share of the MillerCoors joint venture.Fossil fuel emissions from energy used at our breweriesper hectolitre of lager producedFossil fuel emissions are measured by the total amount of carbondioxide (CO 2 ) in kilogrammes generated by our breweries dividedby the volume of lager produced. The total amount of CO 2 is thesum of direct emissions produced by the combustion of fuel (e.g.coal, oil, gas) and indirect emissions from the use of electricity andsteam. Emissions are calculated using the internationally recognisedWRI/WBCSD Greenhouse Gas Protocol. All consolidated subsidiariesare included on a 100% basis together with the equity accountedpercentage share of the MillerCoors joint venture.Cumulative financial benefits from our businesscapability programmeIncremental cash flows generated as a result of the adoption of newprocesses and systems including incremental revenues, reduced costof goods sold and overheads, reduced investment in working capitaland lower cost of capital investments.KPI explanation of changesThe group has reviewed its key performance indicators duringthe year. As a consequence, a number of new KPIs have beenintroduced and are presented in this Annual Report. The changesreflect an increased focus on cash generation and total shareholderreturn; the implementation of the business capability programme;and the group’s new target for reduction in fossil fuel emissions.They also recognise the importance attached to the group’s positionin developing and emerging markets and to leading market sharepositions in individual country markets. As the reporting of premiumand international premium brand performance is currently underreview, no group KPI has been presented in this Annual Report.Overview Business review Governance Financial statements Shareholder information
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Page 126 and 127: 124 Notes to the consolidated finan
Page 146 and 147: 144 Independent auditors’ report
Page 148 and 149: 146 Notes to the company financial
Page 158 and 159: 156 Five-year financial review SABM
Page 162 and 163: 160 Definitions SABMiller plc Annua
Page 164 and 165: 162 Shareholders’ diary SABMiller
Page 166 and 167: 164 Cautionary statement SABMiller
Page 168: Annual Report 2010This report is al
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Annual Report - SABMiller

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