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The proforma consolidated income statement has been provided as additional information to the 9 month statutory reported requirements to illustrate the performance of the business on an annualised basis given the importance of the fourth calendar quarter. This information is unaudited and does not form part of the audited annual financial statements.
Selected income statement information has been extracted from the Group’s management accounts for the two comparative years. Further notes to show the segmental analysis and certain assumptions used to calculate the proforma income statement are outlined in the below notes section.
The following notes provide detail on further assumptions applied in deriving the financial information presented in the proforma consolidated income statement:
The accounting policies of the Group, as outlined in the Annual Reports & Accounts 2018 , are applied to the statutory period as presented within the financial statements and accompanying notes. The financial information provided for the proforma 12 month period has been derived from this information by extracting selected information from the Group’s quarterly consolidated management accounts for the quarters ended December 2016 and December 2017.
Revenue: proforma revenue has been extracted from source accounting records without adjustment. A certain degree of estimation is applied in determining volume rebate deductions from revenue. These estimates are revised each month such that no further adjustment to revenue is necessary for the purposes of the proforma revenue. Revenue rebate adjustments were reviewed, to the extent significant, at both the December 2017 and December 2016 year-ends and no further adjustment to revenue was necessary for the purposes of proforma revenue figures.
In the context of the Group’s critical accounting judgments and key sources of estimation uncertainty, described in note 4 to the financial statements, the following considerations were made:
There are a number of other estimates and judgements made on a routine basis that are not considered significant for the financial statements taken as a whole. No adjustments have been made to September 2016 and September 2017 balances to reflect these.
In the year to 31 December 2017, two exceptional non-recurring items (see page 127 in ARA) were expensed. As they are non-recurring in nature, they have been excluded in the proforma income statement to illustrate underlying comparative performance.
On 17 July 2017, as per the note on page 142 in the ARA, Stock invested in a 25% shareholding of Quintessential Brands Ireland Whiskey Limited (QBIWL). Information has been gathered from the management accounts of QBIWL for the year to date September 2017 since acquisition to provide information for the proforma year September 2017. No indicators of impairment were identified during the period since acquisition, and therefore the balances recognised in the proforma periods represented only the share of loss for the relevant period. No adjustments were recorded to the fair value of contingent consideration during the period since investment.
As the effective tax rates for the Group do not materially change year-on-year, for the period of October to December 2017, the effective tax rate (excluding exceptional tax expenses) has been assumed to be the same as for the reported rate for the year to December 2017, 26.7%. For the period of October to December 2016, the effective tax rate for the year to December 2016 has been assumed, 27.4%.
The Group defines adjusted EBITDA as operating profit before depreciation and amortisation, exceptional items and the share of results of equity-accounted investees. A reconciliation from profit before tax per the proforma consolidated income statement to adjusted EBITDA is as follows:
The Group defines free cashflow as cash generated from operating activities (excluding income tax paid), plus the proceeds from the sale of property, plant and equipment and proceeds from the disposal of intangible assets less cash used for the acquisition of property, plant or equipment and for the acquisition of intangible assets. Adjusted free cashflow conversion is free cashflow as a percentage of Adjusted EBITDA.
The proforma earnings per share has been calculated for the basic and diluted measures using the weighted average number of ordinary shares in issue as follows:
Net debt is defined as the net of balances reported as cash and cash equivalents, loans and borrowings and finance leases. Refer to note 30 in the financial statements for a calculation of net debt as at 30 September 2018.
Leverage, being net debt divided by 12 months adjusted EBITDA, is an important measure for the efficient capital structure of the Group at a point in time, to support organic and inorganic growth. This is also an important measure for both our banks and shareholders. Leverage at 30 September 2018 has therefore been calculated using the net debt value (€31,583,000) divided by proforma adjusted EBITDA 2018 (€59,363,000) = 0.53.
As leverage has been reported as at 31 December 2017 (0.94, see note 30 in the financial statements), there is felt to be no need for a comparative calculation as at 30 September 2017.