The consolidated Financial Statements include APMs as well as statutory measures. These APMs used by the Group are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, Generally Accepted Accounting Practice (GAAP) measures. All APMs relate to the current year results and comparative periods where provided.

See note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items. See note 3 for a reconciliation to statutory information.

This presentation is also consistent with the way that financial performance is measured by management, reported to the Board, the basis of financial measures for senior management's compensation schemes and provides supplementary information that assists the user in understanding the financial performance, position and trends of the Group. At all times the Group aims to ensure that the Annual Report and Accounts give a fair, balanced and understandable view of the Group's performance, cash flows and financial position. IAS 1 'Presentation of Financial Statements', requires the separate presentation of items that are material in nature or scale in order to allow the user of the accounts to understand underlying business performance.

The APMs were the same as those that applied to the audited consolidated Financial Statements for the year ended 31 May 2018 and the unaudited interim Financial Statements for the period ended 30 November 2018. See below for reconciliation of adjusted information to statutory information and refer to the Glossary for comprehensive descriptions of all APMs, including their relevance in providing supplementary information that assists the user to understand better the financial performance, position and trends of the Group.

Performance is based on adjusted operating profit², defined as operating profit or loss before adjusting items, as presented to the CODM.

Adjusting items are:

  • Individually Significant Items;
  • Share-based payments;
  • Amortisation of acquired intangibles;
  • Profit on disposal of investment;
  • Unwind on discount on acquisition consideration; and
  • Historic R&D prior year tax credits.

Reconciliation of adjusted information to Statutory information

The following table includes details of adjusting items and reconciles adjusted information to Statutory information for continuing operations:

Year ended
31 May 2019 – continuing operations
Revenue
£m
Gross profit
£m
EBITDA
£m
Depreciation and amortisation
£m
Operating
profit
£m
Profit
before taxation
£m
Taxation
£m
Profit from continuing operations
£m
Adjusted250.7101.843.7(10.0)33.732.0(6.5)25.5
Individually Significant Items (note 6)(3.6)(3.6)(3.6)0.5(3.1)
Share-based payments (note 25)(1.7)(1.7)(1.7)(0.1)(1.8)
Amortisation of acquired intangibles(9.0)(9.0)(9.0)1.8(7.2)
Profit on disposal of investment (note 15)0.10.10.10.1
Statutory250.7101.838.5(19.0)19.517.8(4.3)13.5
Year ended
31 May 2018 – continuing operations (restated1)
Revenue
£m
Gross
profit
£m
EBITDA
£m
Depreciation and amortisation
£m
Operating
profit
£m
Profit
before taxation
£m
Taxation
£m
Profit from continuing operations
£m
Adjusted233.095.942.9(12.1)30.829.3(6.6)22.7
Individually Significant Items (note 6)(7.6)(7.6)(7.6)1.5(6.1)
Share-based payments (note 25)(0.3)(0.3)(0.3)0.40.1
Amortisation of acquired intangibles(9.4)(9.4)(9.4)3.8(5.6)
Unwind of discount on acquisition consideration (note 9)(0.3)(0.3)
R&D prior-year tax credits1.41.4
Statutory233.095.935.0(21.5)13.511.70.512.2

Amortisation of acquired intangibles represents amortisation of customer contracts and relationships arising from acquisitions as disclosed in note 13 to the consolidated Financial Statements.

R&D prior-year tax credits relate to a significant historic R&D tax claim in North America which was recognised in 2018.

During the year ended 31 May 2019, cash adjusting items were £nil (2018: £1.8m).

  1. See note 1 for further details on the restatement of comparative information due to the retrospective application of IFRS 15.
  2. See note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items. See note 3 for a reconciliation to statutory information.

Net debt²

Net debt2 is set out below:

2019
£m
2018
£m
Cash and cash equivalents (note 23)34.921.2
Borrowings (note 23)(55.1)(49.0)
Net debt2(20.2)(27.8)

Cash conversion ratio²

The calculation of the cash conversion ratio² is set out below:

Continuing and discontinued2019
£m
2018
£m
Cash generated from operating activities before interest and taxation (A)47.939.5
Adjusted EBITDA2 (B)43.743.8
Cash conversion ratio² (%) (A)/(B)109.6%90.2%