Alternative Performance Measures (APMs) In the reporting of financial information, the Directors have adopted various Alternative Performance Measures (APMs), also termed non-GAAP measures, of historical or future financial performance, position or cash flows other than those defined or specified under International Financial Reporting Standards (IFRS). These measures are not defined by IFRS and therefore may not be directly comparable with other companies’ APMs, including those used by other retailers. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements. APM Closest equivalent IFRS measure Reconciling to IFRS measure Definition and purpose Adjusted earnings per share Basic earnings per share A reconciliation of adjusted basic earnings per share is included in the Financial Review (Section 4) and note 8 of the condensed financial statements Adjusted basic earnings per share represents profit after tax attributable to the owners of the parent, before the impact of exceptional items, FFVR, related tax items and tax on prior year items, divided by the weighted average number of shares in issue during the period. Adjusted effective tax rate Effective tax rate A reconciliation to the overall tax rate is set out in the Financial Review (Section 4) Adjusted effective tax rate is calculated as continuing income tax expense excluding tax on exceptional items and adjustments in respect of prior years and the impact of changes in tax rates on deferred tax, divided by continuing profit before taxation excluding exceptional items. The exclusion of items relating to prior years and those not in the ordinary course of business helps provide a better indication of the Group's ongoing tax rate. Adjusted profit Profit before taxation A reconciliation of adjusted pre-tax profit is set out in the Financial Review (Section 4) and the consolidated income statement of the condensed financial statements Adjusted pre-tax profit is used to report the performance of the business at a level including both the benefits of our transformation programme and the associated costs. This is stated before exceptional items and FFVR. The exclusion of exceptional items and FFVR helps provide an indication of the Group's ongoing business performance. Constant currency No direct equivalent Not applicable Constant currency changes in total sales, LFL sales, gross margin and retail profit reflect the year on year movements after translating the prior year comparatives at the current year’s average exchange rates. These are presented to eliminate the effects of exchange rate fluctuations on the reported results.
disposals). This provides a measure of how much cash the business generates that can be used for expansion, capital returns and other purposes. Gross margin Profit before taxation Refer to definition Gross margin represents sales from the supply of home improvement products and services (excluding VAT), less the associated cost of those sales. It is a measure of profit margin. Lease adjusted net debt No direct equivalent A reconciliation of lease adjusted net debt is set out in the Financial Review (Section 4) Lease adjusted net debt represents net cash plus capitalised property operating lease rentals. The measure is used in calculating the ratio of lease adjusted net debt to EBITDAR to provide an indication of the Group’s overall leverage. LFL Sales to definition LFL (like-for-like) growth represents the constant currency, year on year sales growth for stores that have been open for more than one year. It is a measure to reflect the Group's performance on a comparable basis. Net cash No direct equivalent A reconciliation of this measure is provided in note 15 of the condensed financial statements Net cash comprises cash and cash equivalents and short term deposits, less borrowings and financing derivatives (excluding accrued interest). Net cash flow No direct equivalent A reconciliation of net cash flow is set out in the Financial Review (Section 4) Net cash flow represents the total movement in the net cash balance during the year excluding foreign exchange and other non-cash movements. Retail profit Profit before taxation A reconciliation to profit before taxation is set out in the Financial Review (Section 4) and note 4 of the condensed financial statements Retail profit is stated before central transformation P&L costs, exceptional items and the Group's share of interest and tax of JVs and associates. This is the Group's operating profit measure used to report the underlying performance of our retail businesses including the sustainable benefits of our transformation plan. Transformation No direct equivalent Not applicable Transformation costs represent the additional costs of the ONE Kingfisher transformation programme launched in 2016/17. They comprise 'transformation exceptional costs', 'transformation P&L costs' (i.e. non-exceptional items) and 'transformation capex' (capital expenditure).