Unilever 2004 Annual Report Download - page 152

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Unilever Annual Report and Accounts 2004 149
Five-year record
Unilever Group
The following are definitions of measures used within the five-year record and elsewhere within this report:
Return on invested capital Profit after tax but excluding net interest on net debt (excluding joint ventures and
associates interest) and amortisation or impairment of goodwill and intangible assets
(excluding joint ventures and associates amortisation and write-downs of goodwill and
intangible assets taken in connection with business disposals) both net of tax, divided by
average invested capital for the year, all expressed at current exchange rates. Invested
capital is the sum of tangible fixed assets and fixed investments, working capital (stocks,
debtors and trade and other creditors due within one year), goodwill and intangible assets
at gross book value and cumulative goodwill written off directly to reserves under an
earlier accounting policy. The average of five quarter-end positions is taken.
Ungeared free cash flow Cash flow from group operating activities, less capital expenditure and financial investment
and less a tax charge adjusted to reflect an ungeared position, all expressed at current
exchange rates.
Net profit margin Net profit expressed as a percentage of group turnover.
Net interest cover Profit on ordinary activities excluding associates before net interest on net debt and
taxation divided by net interest on net debt excluding associates.
Adjusted net interest cover based on Earnings on ordinary activities excluding associates and non-cash share option costs before
adjusted EBITDA net interest on net debt, taxation, depreciation, amortisation and impairment divided by
net interest on net debt excluding associates.
Net operating assets The total of:
• goodwill and intangible assets of subsidiaries, joint ventures and associates purchased
after 1 January 1998
• tangible fixed assets
• stocks
• debtors (excluding deferred taxation)
less:
• trade and other creditors (excluding taxation and dividend creditors)
• provisions for liabilities and charges (excluding deferred taxation, pensions balances
and deferred purchase consideration).
Ratio of earnings to fixed charges Earnings consist of net profit excluding joint ventures and associates increased
by fixed charges and income taxes. Fixed charges consist of interest payable on debt
and a portion of lease costs determined to be representative of interest. This ratio takes
no account of interest receivable although Unilever’s treasury operations involve both
borrowing and depositing funds.
Funds from operations after interest and Cash from operating activities including dividends from joint ventures after net interest
tax over lease-adjusted net debt paid and tax paid, expressed as a percentage of the lease-adjusted net debt. Lease-adjusted
net debt is calculated by adding to the net debt five times the operating lease costs.
Weighted average cost of capital The cost of equity multiplied by the market capitalisation, plus the after taxation interest
cost of debt multiplied by the market value of the net debt, divided by the sum of the
market values of debt and equity.