LensCrafters 2015 Annual Report Download - page 36

Management Report as of December 31, 2015 Page 32 of 35
Adjusted EBITDA margin (=) 21.3% 20.3%
The adjusted figures :
(1) include the EyeMed adjustment. Starting from July 1, 2014 following the modification of an EyeMed reinsurance agreement with an
existing underwriter, the Group assumes less reinsurance revenues and less claims expense. The impact of the new contract was Euro
174.3 million and Euro 46.6 million, for the twelve month period ended December 31, 2015 and 2014 respectively;
(2) exclude accrual for the tax audit relating to Luxottica S.r.l. (fiscal years from 2008 to 2011) of approximately Euro 30.3 million in
2014;
(3) exclude non-recurring costs of Euro 20.0 million, Euro 14.5 million net of tax in 2014, related to the termination of the former
Group’s CEOs;
(4) exclude the costs related to the integration of Oakley and other minor projects with an impact on operating income of Euro 66.4
million and an impact on net income of Euro 49.8 million for the twelve-month period ended December 31, 2015.
Free Cash Flow
Free cash flow represents EBITDA, as defined above, plus or minus the decrease/(increase) in working capital over the
period, less capital expenditures, plus or minus interest income/(expense) and extraordinary items, minus taxes paid. Our
calculation of free cash flow provides a clearer picture of our ability to generate net cash from operations, which is used for
mandatory debt service requirements, to fund discretionary investments, pay dividends or pursue other strategic
opportunities. For additional information on Group’s non-IFRS measures used in this report, see “NON-IFRS MEASURES
– Adjusted Measures” set forth above.
Free cash flow is not meant to be considered in isolation or as a substitute for items appearing on our financial statements
prepared in accordance with IFRS. Rather, this non-IFRS measure should be used as a supplement to IFRS results to assist
the reader in better understanding the operational performance of the Group.
The Group cautions that this measure is not a defined term under IFRS and its definition should be carefully reviewed and
understood by investors.
Investors should be aware that our method of calculation of free cash flow may differ from methods used by other
companies. We recognize that the usefulness of free cash flow as an evaluative tool may have certain limitations, including:
1 The manner in which we calculate free cash flow may differ from that of other companies, which limits its
usefulness as a comparative measure;
1 Free cash flow does not represent the total increase or decrease in the net debt balance for the period since it
excludes, among other things, cash used for funding discretionary investments and to pursue strategic
opportunities during the period and any impact of the exchange rate changes; and
1 Free cash flow can be subject to adjustment at our discretion if we take steps or adopt policies that increase or
diminish our current liabilities and/or changes to working capital.
We compensate for the foregoing limitations by using free cash flow as one of several comparative tools, together with
IFRS measurements, to assist in the evaluation of our operating performance.
The following table provides a reconciliation of free cash flow to EBITDA and the table above provides a reconciliation of
EBITDA to net income, which is the most directly comparable IFRS financial measure:
Non-IFRS Measure: Free cash flow
(in millions of Euro) 2015
EBITDA
(1)
1,920