Unilever 2006 Annual Report Download - page 30

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Unilever Annual Report and Accounts 2006 27
Report of the Directors (continued)
Financial review (continued)
Net debt
Net debt is defined as the excess of total borrowings, bank
overdrafts, relevant derivatives and finance leases over cash, cash
equivalents and financial assets, excluding amounts held for sale.
It is a measure that provides valuable additional information
on the summary presentation of the Group’s net financial
liabilities and is a measure in common use elsewhere.
The reconciliation of net debt to the GAAP measure total
borrowings is as follows:
€million €million
2006 2005
Total borrowings (8 601) (12 399)
Borrowings due within one year (4 362) (5 942)
Borrowings due after one year (4 239) (6 457)
Cash and cash equivalents as per balance sheet 1039 1529
Cash and cash equivalents as per
cash flow statement 710 1265
Add bank overdrafts deducted therein 329 265
Less cash and cash equivalents in
assets/liabilities held for sale –(1)
Other financial assets 237 335
Derivatives and finance leases included
in other receivables and other liabilities (198) 33
Net debt (7 523) (10 502)
Total Shareholder Return
Total Shareholder Return (TSR) measures the returns received by
ashareholder, capturing both the increase in share price and the
value of dividend income (assuming dividends are re-invested).
Unilever’s TSR performance is compared with a peer group of
competitors over a three-year rolling performance period. This
period is sensitive enough to reflect changes but long enough
to smooth out short-term volatility. The return is expressed in
US dollars, based on the equivalent US dollar share price for
NV and PLC. US dollars were chosen to facilitate comparison with
companies in Unilever’s chosen reference group. The choice of
currency affects the absolute TSR but not the relative ranking.
Unilever’s TSR target is to be in the top third of a reference group
including 20 other international consumer goods companies on a
three-year rolling basis. At the end of 2005 we were positioned
14th, and at the end of 2006 the ranking was 13th. In 2006,
the following companies formed the peer group of comparative
companies:
Avon Kraft
Beiersdorf Lion
Cadbury Schweppes L’Oréal
Clorox Nestlé
Coca-Cola Orkla
Colgate Pepsico
Danone Procter & Gamble
Heinz Reckitt Benckiser
Kao Sara Lee
Kimberly-Clark Shiseido
Unilever’s position relative to the TSR reference group
200620052002 2003 2004
7
14
21
The reference group, including Unilever, consists of 21 companies. Unilever’s position is
based on TSR over a three-year rolling period.