An overview of our financial year performance and the key performance indicators we use to measure the progress we’re making in delivering our strategy.
TOBACCO & NGP NET REVENUE*
ASSET BRAND NET REVENUE*
ADJUSTED EARNINGS PER SHARE*
REPORTED EARNINGS PER SHARE
DIVIDEND PER SHARE
* movement on a constant currency basis
We use these key performance indicators and the metrics in the Operating Review to assess the progress we are making in delivering our strategy. As the business continues to grow, these measures are likely to change to reflect our evolving strategic priorities.
TOBACCO & NGP NET REVENUE1 (£BN)
Tobacco & NGP net revenue was up 2.2 per cent on a constant currency basis. Tobacco net revenue increased by 1.1 per cent and NGP revenue was up by 48.0 per cent.
Tobacco & NGP net revenue comprises tobacco and NGP revenue less duty and similar items, excluding peripheral products.
ADJUSTED EARNINGS PER SHARE1 (PENCE)
Adjusted earnings per share was down 1.6 per cent on a constant currency basis. Reported earnings per share declined by 26.2 per cent. This is explained in the Financial Review.
Adjusted earnings per share represents adjusted profit after tax attributable to the equity holders of the Company divided by the weighted average number of shares in issue during the period, excluding shares held to satisfy employee share plans and shares purchased by the Company and held as treasury shares.
ASSET BRANDS NET REVENUE (£BN)
Asset Brands net revenue increased by 4.4 per cent on a constant currency basis. Asset Brands account for 65.9 per cent of our total revenue, up 120 basis points on last year.
Asset Brands net revenue is revenue from our most important tobacco brands and blu less duty and similar items, excluding peripheral products.
TOTAL SHAREHOLDER RETURN1
This was a challenging year for the Company in which we underperformed the FTSE 100 by 24 per cent.
Total shareholder return is the total investment gain to shareholders resulting from the movement in the share price and assuming dividends are immediately reinvested in shares.
TOBACCO & NGP OPERATING MARGIN (%)
We have delivered consistently high operating margins despite increasing investment in the business. Excluding our NGP operations, our tobacco operating margin increased by 60 basis points.
Tobacco & NGP operating margin is adjusted operating profit divided by tobacco and NGP net revenue expressed as a percentage.
DIVIDEND PER SHARE (PENCE)
Dividend per share grew by 10 per cent. From next year dividend growth will be progressive, increasing annually from its current level taking into account underlying business performance.
Dividend per share represents the total annual dividends, being the sum of the paid interim dividend and the proposed final dividend for the financial year.
RETURN ON INVESTED CAPITAL (%)
Return on invested capital remained strong, underlining our continued focus on capital discipline and our capital-light approach to NGP.
Return on invested capital measures the effectiveness of capital allocation and is calculated by dividing adjusted net operating profit after tax by invested capital. Invested capital is adjusted total equity and reported net debt.
CASH CONVERSION RATE1 (%)
Strong cash generation and effective working capital management delivered cash conversion of 95 per cent.
Cash conversion is calculated as cash flow from operations pre-restructuring and before interest and tax payments less net capital expenditure relating to property, plant and equipment, software and intellectual property rights as a percentage of adjusted operating profit.
1 KPIs used as bonus and LTIP performance criteria for Executive Directors.