REG - Vesuvius plc - Final Results <Origin Href="QuoteRef">VSVS.L</Origin> - Part 3

VesuviusAnnouncement

02/03/2017 07:06

- Part 3: For the preceding part double click  ID:nRSB2923Yb 

Performance Measures (APMs) in
addition to those reported in accordance with IFRS. The Directors believe that
these APMs, listed below, are important when assessing the underlying
financial and operating performance of the Group and its divisions. The
following APMs do not have standardised meaning prescribed by IFRS and
therefore may not be directly comparable to similar measures presented by
other companies. 
 
17.1         Headline 
 
Headline performance, reported separately on the face of the Group Income
Statement, is from continuing operations and before items reported separately
on the face of the income statement. 
 
17.2         Underlying revenue, underlying trading profit and underlying
return on sales 
 
Underlying revenue, underlying trading profit and underlying return on sales
are the headline equivalents of these measures after adjustments to exclude
the effects of changes in exchange rates, business acquisitions and disposals.
Reconciliations of underlying revenue and underlying trading profit can be
found in the Financial Summary. Underlying revenue growth is one of the
Group's key performance indicators and provides an important measure of
organic growth of Group businesses between reporting periods, by eliminating
the impact of exchange rates, acquisitions, disposals and significant business
closures. 
 
17.3         Return on sales (ROS) 
 
ROS is calculated as trading profit divided by revenue. It is one of the
Group's key performance indicators and is used to assess the trading
performance of Group businesses. 
 
17.4         Trading profit 
 
Trading profit is defined as operating profit before separately reported
items. It is one of the Group's key performance indicators and is used to
assess the trading performance of Group businesses. It is also used as one of
the targets against which the annual bonuses of certain employees are
measured. 
 
17.5         Headline profit before tax 
 
Headline profit before tax is calculated as the net total of trading profit,
plus the Group's share of post-tax profit of joint ventures and total net
finance costs associated with headline performance. It is one of the Group's
key performance indicators and is used to assess the financial performance of
the Group as a whole. 
 
17.6         Effective tax rate (ETR) 
 
The Group's ETR is calculated on the income tax costs associated with headline
performance, divided by headline profit before tax and before the Group's
share of post-tax profit of joint ventures. 
 
17.7         Headline earnings per share 
 
Headline earnings per share is calculated by dividing headline profit before
tax less associated income tax costs, attributable to owners of the parent by
the weighted average number of ordinary shares in issue during the year. It is
one of the Group's key performance indicators and is used to assess the
underlying earnings performance of the Group as a whole. It is also used as
one of the targets against which the annual bonuses of certain employees are
measured. 
 
17.8         Operating cash flow 
 
Operating cash flow is cash generated from continuing operations before
restructuring and additional pension funding contributions but after deducting
capital expenditure net of asset disposals. It is used in calculating the
Group's cash conversion. 
 
17.9         Cash conversion 
 
Cash conversion is calculated as operating cash flow divided by trading
profit. It is useful for measuring the rate at which cash is generated from
trading profit. 
 
17.10      Free cash flow 
 
Free cash flow is defined as net cash flow from operating activities after net
outlays for the purchase and sale of property, plant and equipment, dividends
from joint ventures and dividends paid to non-controlling shareholders, but
before additional funding contributions to Group pension plans. It is one of
the Group's key performance indicators and is used to assess the underlying
cash generation of the Group and is one of the measures used in monitoring the
Group's capital. 
 
17.11      Average trade working capital to sales ratio 
 
The average trade working capital to sales ratio is calculated as the
percentage of average trade working capital balances to the total revenue for
the year, at constant currency. Average trade working capital (comprising
inventories, trade receivables and trade payables) is calculated as the
average of the 12 previous month-end balances. It is one of the Group's key
performance indicators and is useful for measuring the level of working
capital used in the business and is one of the measures used in monitoring the
Group's capital. 
 
17.12      Earnings before interest, tax, depreciation and amortisation
('EBITDA') 
 
EBITDA is calculated as the total of trading profit before depreciation and
amortisation of non-acquired intangibles charges. It is used in the
calculation of the Group's interest cover and net debt to EBITDA ratios. 
 
17.13      Net interest 
 
Net interest is calculated as interest payable on borrowings less interest
receivable, excluding any item separately reported. It is used in the
calculation of the Group's interest cover ratio. 
 
17.14      Interest cover 
 
Interest cover is the ratio of EBITDA to net interest. It is one of the
Group's key performance indicators and is used to assess the financial
position of the Group and its ability to fund future growth. 
 
17.15      Net debt 
 
Net debt comprises the net total of current and non-current interest-bearing
borrowings and cash and short-term deposits. Net debt is a measure of the
Group's net indebtedness to banks and other external financial institutions. 
 
17.16      Net debt to EBITDA 
 
Net debt to EBITDA is the ratio of net debt at the year-end to EBITDA for that
year. It is one of the Group's key performance indicators and is used to
assess the financial position of the Group and its ability to fund future
growth and is one of the measures used in monitoring the Group's capital. 
 
17.17      Return on net assets ('RONA') 
 
RONA is calculated as trading profit plus share of post-tax profit of joint
ventures, divided by average net operating assets, at constant currency (being
the average over the previous 12 months of property, plant and equipment,
trade working capital and other operating receivables and payables). It is one
of the Group's key performance indicators and is used to assess the financial
performance and asset management of the Group and is one of the measures used
in monitoring the Group's capital. 
 
17.18      Constant currency 
 
Figures presented at constant currency represent December 2015 numbers
retranslated to average 2016 exchange rates. 
 
18      Exchange rates 
 
The Group reports its results in pounds sterling. A substantial portion of the
Group's revenue and profits are denominated in currencies other than pounds
sterling. It is the Group's policy to translate the income statements and cash
flow statements of its overseas operations into pounds sterling using average
exchange rates for the year reported (except when the use of average rates
does not approximate the exchange rate at the date of the transaction, in
which case the transaction rate is used) and to translate balance sheets using
year-end rates. The principal exchange rates used were as follows: 
 
                     Income and expenseAverage rates                  Assets and liabilitiesYear End rates         
                     Change                                  Change   
                     2016                             2015                                                  2016   2015            
                                                                                                                                   
 US Dollar           1.4                              1.5    (11.2%)                                        1.2    1.5    (16.3%)  
 Euro                1.2                              1.4    (11.1%)                                        1.2    1.4    (13.5%)  
 Chinese Renminbi    9.0                              9.6    (6.3%)                                         8.6    9.6    (10.5%)  
 Japanese Yen        147.6                            185.1  (20.2%)                                        144.2  177.3  (18.7%)  
 Brazilian Real      4.7                              5.1    (6.7%)                                         4.0    5.8    (31.2%)  
 Indian Rupee        91.1                             98.0   (7.0%)                                         83.8   97.6   (14.1%)  
 South African Rand  20.0                             19.5   2.7%                                           16.9   22.8   (25.7%)  
 
 
Alternative performance measures - supplementary information 
 
5 year history at constant currency 
 
                          2012     2013     2014     2015     2016     
 Revenue (£m)             1,529.8  1,502.1  1,547.2  1,452.9  1,401.4  
 Steel                    1,021.2  1,024.4  1,059.8  981.9    942.0    
 Foundry                  508.6    477.6    487.3    471.0    459.4    
 Trading Profit (£m)      125.1    140.8    157.6    137.1    133.3    
 Steel                    82.9     91.9     108.0    86.7     79.2     
 Foundry                  42.1     48.8     49.6     50.4     54.1     
 Return on Sales          8.2%     9.4%     10.2%    9.4%     9.5%     
 Steel                    8.1%     9.0%     10.2%    8.8%     8.4%     
 Foundry                  8.3%     10.2%    10.2%    10.7%    11.8%    
 
 
This information is provided by RNS
The company news service from the London Stock Exchange