Alternative performance measures
Management uses a number of measures to assess the performance of the Group that are not defined in IFRS including, but not limited to, core revenue, adjusted EBITDA, adjusted net income, adjusted earnings per share, net capital expenditure, free cash flow and net leverage.
These alternative non-IFRS performance measures are presented as management believes that they are important supplemental measures of the Group’s performance. Management believes that they are useful and widely used in the markets in which the Group operates as a means of evaluating performance. In certain cases, these alternative performance measures are also used to determine compliance with covenants in the Group’s credit agreement and compensation of certain members of management. However, these alternative performance measures should not be considered as substitutes for the Group’s consolidated results based on IFRS.
Core revenue is defined by the Group as revenue generated from the Group’s core activities and excludes revenue from sales of folding box board.
Core revenue from transactions with external customers
Core revenue from transactions with external customers (used in the context of the Group’s segments) is defined by the Group as revenue from external customers, excluding revenue from sales of folding box board to third parties.
EBITDA is defined by the Group as profit or loss before net finance expense, income tax expense, depreciation of property, plant and equipment and right-of-use assets, and amortisation of intangible assets.
Adjusted EBITDA is defined by the Group as EBITDA, adjusted to exclude certain non-cash transactions and items of a significant or unusual nature including, but not limited to, transaction- and acquisition-related costs, restructuring costs, unrealised gains or losses on derivatives, gains or losses on the sale of non-strategic assets, asset impairments and write-downs and share of profit or loss of joint ventures, and to include the cash impact of dividends received from joint ventures.
Adjusted EBITDA margin
Adjusted EBITDA margin is defined by the Group as adjusted EBITDA as a percentage of revenue.
Adjusted net income
Adjusted net income is defined by the Group as profit or loss adjusted to exclude certain items of significant or unusual nature including, but not limited to, the non-cash foreign exchange impact of non-functional currency loans, amortisation of transaction costs, the net change in fair value of financing-related derivatives, purchase price allocation (“PPA”) depreciation and amortisation, adjustments made to reconcile EBITDA to adjusted EBITDA and the estimated tax impact of the foregoing adjustments. The PPA depreciation and amortisation arose due to the acquisition accounting that was performed when the SIG Group was acquired by Onex in 2015. No adjustments are made for PPA depreciation and amortisation other than in connection with the Onex acquisition.
Adjusted earnings per share
Adjusted earnings per share is defined by the Group as adjusted net income divided by the weighted average number of shares.
Net capital expenditure
Net capital expenditure (“net capex”) is defined by the Group as capital expenditure less upfront cash. Upfront cash is defined by the Group as consideration received as an upfront payment for filling machines from customers.
Adjusted EBITDA less net capex margin
Adjusted EBITDA less net capex margin is defined by the Group as adjusted EBITDA less net capex as a percentage of total revenue.
Free cash flow
Free cash flow is defined by the Group as net cash from operating activities plus dividends received from the joint ventures less capital expenditure and payments of lease liabilities.
Free cash flow per share
Free cash flow per share is defined by the Group as free cash flow divided by the weighted average number of shares.
Adjusted free cash flow
Adjusted free cash flow is defined by the Group as free cash flow plus interest paid, payment of transaction and other costs relating to financing (e.g. original issue discount) and other payments relating refinancing.
Cash conversion is defined by the Group as adjusted EBITDA less net capital expenditure divided by adjusted EBITDA.
Return of capital employed (“ROCE”)
Return of capital employed (“ROCE”) is defined by the Group as ROCE EBITA divided by capital employed. ROCE EBITA is defined by the Group as adjusted EBITDA less dividends received from joint ventures and depreciation of property, plant and equipment (“PP&E”). Capital employed is defined as net working capital (“NWC”) plus PP&E. NWC comprises current assets (excluding cash and cash equivalents) less current liabilities (excluding interest-bearing liabilities).
Post-tax ROCE is defined by the Group as ROCE computed at a reference tax rate of 30%.
Net leverage is defined by the Group as net debt divided by adjusted EBITDA. Net debt comprises the Group’s current and non-current loan and borrowings (including lease liabilities, and with notes and credit facilities at principal amounts) less cash and cash equivalents (including any restricted cash).
When discussing our performance, and when relevant for comparative purposes, we state the percentage change between two periods on a constant currency basis. For this purpose, up until 31 December 2020, the previous period amount was translated at the foreign currency exchange rate of the current period in order to calculate the percentage change from a more comparable base.
From Q1 2021, we have amended our definition of constant currency to enable investors to see the underlying performance of the Group without the foreign currency distortions generated when Group subsidiaries invoice customers in a currency other than their functional currency (e.g. the Group’s Thai legal entity, which is Thai Baht denominated, may invoice customers in USD).
From Q1 2021, the conversion of the previous period amount at the foreign currency exchange rate of the current period will also be applied to transactions that are not in the functional currency of a Group subsidiary.
Had this revised approach been applied for the year ended 31 December 2020, the core revenue and revenue growth for the year ended 31 December 2020 would have been approximately 10 basis points lower.
Like for like change, including MEA
We acquired the remaining 50% of our joint ventures in the Middle East at the end of February 2021. When discussing our performance, and when relevant for comparative purposes, we have presented our growth rates of core revenue considering;
- For the year ended 31 December 2020: from the end of February 2020, ten months of the joint ventures’ revenue from external customers
- From the end of February 2020: the revenue recognised by the Group from sales to the joint ventures, previously presented as Group core revenue, has been eliminated as if the joint ventures were part of the Group in 2020 and the revenue from the sales to the joint ventures had been eliminated in the consolidation as an intra-group transaction.
For reconciliations of alternative performance measures to measures defined in IFRS, refer to section “Financial reconciliations”.