Unilever 2003 Annual Report Download - page 129

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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 borrowings (excluding joint ventures and
associates interest) and amortisation of goodwill and intangible assets (excluding joint
ventures and associates amortisation) both net of tax, divided by average invested capital
for the year. 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.
Ungeared free cash flow Ungeared free cash flow is 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 borrowings and
taxation divided by net interest on net borrowings excluding associates.
Net interest cover based on EBITDA Earnings on ordinary activities excluding associates and non-cash share option costs before
net interest on net borrowings, taxation, depreciation and amortisation divided by
net interest on net borrowings 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 tax Cash from operating activities including dividends from joint ventures after net interest
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 lease costs.
Weighted average cost of capital The real (ie. excluding inflation) cost of equity multiplied by the market capitalisation, plus
the real 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.
Following the introduction of new rules regarding the use of non-GAAP measures, adjusted net gearing is no longer presented as a measure in
the five-year record.
126 Unilever Annual Report & Accounts and Form 20-F 2003