Glossary

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A

Adjusted attributable earnings

Adjusted profit after tax attributable to the equity holders of the company.

Adjusted distribution margin

The adjusted profit from operations for the Logistics segment divided by distribution fees for the Logistics segment.

Adjusted Earnings per share

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 schemes and shares purchased by the Company and held as Treasury shares.

Adjusted measures

Management believes that reporting adjusted measures provides a useful comparison of business performance and reflects the way in which the business is controlled. Accordingly, adjusted measures of profit from operations, net finance costs, profit before tax, taxation, attributable earnings and earnings per share exclude, where applicable, amortisation of acquired intangibles, restructuring costs, retirement benefits net financing income, fair value gains and losses on derivative financial instruments in respect of commercially effective hedges, one-off acquisition accounting adjustments, brand divestment gains and related taxation effects. The adjusted measures in this report are not defined terms under International Financial Reporting Standards and may not be comparable with similarly titled measures reported by other companies.

Adjusted net debt

Management monitors the Group’s borrowing levels using adjusted net debt which excludes interest accruals, the fair value of derivative financial instruments providing commercial cash flow hedges and finance lease liabilities.

Adjusted operating margin

The adjusted profit from operations for the Tobacco business divided by net revenue for the Tobacco segment.

Adjusted profit from operations

Profit from operations adjusted for amortisation of acquired intangibles, restructuring costs, one-off acquisition accounting adjustments and brand divestment gains.

Amortisation

A systematic charge to the income statement to write off the value of intangible assets with finite lives over their useful lives.

Attributable earnings

Profit after tax attributable to the equity holders of the company.

C

Cash conversion rate

Cash conversion is calculated as cash flow from operations before tax payments less net capital expenditure relating to property, plant and equipment and software as a percentage of adjusted profit from operations.

D

Distribution fees

Distribution fees comprises the Logistics segment revenue excluding the cost of distributed products. Management considers this an important measure in assessing the profitability of Logistics operations.

E

Earnings per share – adjusted

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.

Earnings per share – basic

Profit after tax attributable to 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.

Earnings per share – diluted

As for basic earnings per share except that the weighted average number of shares includes the weighted average number of shares that would be issued on conversion of all the dilutive potential ordinary shares arising from rights under the employee share plans.

Effective tax rate

The tax charge in the income statement as a percentage of profit before taxation.

Enterprise value (EV)

Market capitalisation plus net debt.

Ex-dividend date

The date from which shares are traded without the right to the most recently declared dividend payment.

F

Five-for-Five

Our five key areas of focus for the five years up to 2012 that commit us to better carbon management; product portfolio balance; supplier sustainability; empowering our local management to better address issues of corporate responsibility; and further increasing our transparency in how we adhere to Group policies.

Fine cut tobacco

Loose tobacco which is used with rolling papers or filter tubes (including make-your-own and roll-your-own).

FMC

Factory-made cigarettes.

Framework Convention on Tobacco Control

The World Health Organisation’s Framework Convention on Tobacco Control (FCTC) is the global tobacco treaty that seeks to regulate tobacco products.

I

ISO

The International Organisation for Standardisation, widely known as ISO, is an international standard-setting body comprised of representatives from various national standards organisations. It promulgates world wide industrial and commercial standards.

M

Market capitalisation

The market price of a share multiplied by the number of shares in issue.

Market share

Market share represents our best estimate of the volumes of our brands sold as a percentage of total market volumes during the reporting period, including the most appropriate independent data available. We use latest monthly data only where the moving annual total would be misleading – for example, if market entry or a significant product launch has taken place part way through the reporting period. Market share represents our best estimate of the volumes of our brands sold as a percentage of total market volumes during the reporting period. We use latest monthly data only where the share or the average would be misleading – for example if market entry or a significant product launch has taken place part way through the reporting period.

MYO

Make your own: tobacco which is made into a cigarette using a tube machine and filter tubes.

N

Net Revenue

Net revenue comprises the Tobacco segment revenue less duty and similar items. Management considers this an important measure in assessing the profitability of Tobacco operations.

O

Other tobacco products (OTP)

Tobacco products other than cigarettes i.e. fine cut tobacco, cigars, pipe tobacco, snuff and snus.

P

Private label

An exclusive retailer or distributor brand usually in the low-price segment.

Productivity

Productivity is measured as factory output divided by paid hours.

R

Roll your own (RYO)

Tobacco which is used with rolling papers to hand make cigarettes.

S

Singles Make Your Own

Pre-rolled cartridges of tobacco that are inserted into separately sold cigarette paper tubes with filters using a special device resembling a pen.

Snus

Snus is a moist oral tobacco product. It is manufactured and consumed primarily in Sweden and Norway.

T

Total shareholder return

The total investment gain to shareholders, resulting from the movement in the share price and assuming dividends are immediately reinvested in shares.

Travel Retail

Products made available in a market principally for travelling consumers.

V

Volumes

Our volume KPI represents the number of units sold in the period.

W

Weighted average cost of capital

The weighted average of the costs of various types of capital that finance a company or a project. Capital would generally include a mix of debt and equity.