This excerpt taken from the ICI 6-K filed Mar 21, 2007.
Definitions
Definitions
Adjusted earnings per share
Net profit before special items attributable to
the equity holders of the parent, divided by weighted average number of
shares in issue (less weighted average number of shares held by the Group’s employee share plans) during the period.
Adjusted net profit
Net profit before special items attributable to equity holders of the parent.
Adjusted profit before taxation
Profit of continuing operations before taxation and special items.
Cash flow before acquisitions and divestments*
Cash flow from operating activities after capital
expenditure and proceeds from sale of property, plant and equipment
less payments made in respect of disposals prior to 2004.
Comparable*
Results excluding the effects of currency translation
differences and the impact of acquisitions and divestments. At a Group
level this refers to continuing operations only. Comparable profits and losses are quoted before accounting for special items.
Continuing
ICI’s continuing operations comprise the
Paints, Adhesives, Specialty Starches, Specialty Polymers, Electronic Materials,
and Regional and Industrial businesses, Corporate and other.
Earnings before interest, tax,
depreciation and amortisation (EBITDA)*
Profit before interest, taxation, depreciation, amortisation of intangibles and before special items.
Earnings per share
Net profit after special items attributable to
the equity holders of the parent, divided by the weighted average number of
shares in issue (less the weighted average number of shares held by the Group’s employee share plans) during the period.
Gross margin*
Sales value less the variable and fixed costs directly associated with the manufacture and distribution of the goods sold.
IAS/IASB
International Accounting Standard/International Accounting Standards Board.
IFRS
International Financial Reporting Standards.
Interest cover*
Calculations of interest cover are based on the
sum of the Group’s operating profit before special items from continuing
and discontinued operations, post-retirement benefit
finance charges, the Group’s share of net associated company income
(associates’ trading profit less taxation
and net finance expense of associates) divided by the net of interest expense
and
income of the Group (excluding share of net finance expense of associates and post-retirement benefit finance expense).
Net debt
The borrowings of ICI – comprising loans
and short-term borrowings other than overdrafts together with related derivatives,
obligations under finance leases and the liabilities
associated with the forward contracts for the acquisition of own shares
(the extent that the contracts are “out of
the money”) – less cash (including overdrafts), cash equivalents and
current
asset investments.
Return on capital employed (ROCE)
Trading profit after amortisation of intangibles,
before special items, after restructuring amortisation* and after a tax
charge† for
the last 12 months divided by the average of capital employed for this current
period end and that of
the
12 months previously, expressed as a percentage.
Notes:
*
Cash expenditure on restructuring is capitalised
in each year that expenditure occurs and is then amortised over three
years starting on 1 January following the year of the expenditure.
†
A tax charge is applied to the trading profit
(before amortisation of intangibles and after restructuring amortisation).
In view of the potential for volatility in the Group’s adjusted tax rate, a rate of 20% has been used in 2006 (2005 21%).
Capital employed:
Net operating assets plus net operating special items.
Net operating assets: Property, plant and equipment plus goodwill on acquisitionsø plus operating working
capital.
ø
Goodwill on acquisitions relates to goodwill capitalised
on the balance sheet and, therefore, excludes goodwill arising
prior to 31 December 1997 (largely that arising
on the acquisition of the Unilever Speciality Chemical businesses) which
has been charged directly to reserves.
Net operating special items: For financial ratio calculation purposes only, this is defined as:
Asset write downs arising on restructuring plus
cash cost of restructuring before tax and after amortisation: for financial
ratio purposes only, cash expenditure is capitalised
in each year that expenditure occurs and is then amortised over three
years starting on 1 January following the year of expenditure.
Special items
Special items are those items of financial performance
that should be separately disclosed to assist in the understanding
of the financial performance achieved by the Group
and in making projections of future results, as explained in IAS 1
Presentation of Financial Statements. Special items include items relating to both continuing and discontinued businesses.
Trading margin*
Trading profit expressed as a percentage of sales.
Trading profit
Operating profit before special items. At a Group level, this refers to continuing operations only.
*
Management believes these measures are
important financial indicators, however, they should not be considered
in isolation or as an alternative to operating profit or net profit or
cash flow from operating activities, in each case determined in accordance
with IFRS.
Words within single quotation marks, the
letters ICI, the Roundel Device, National Starch, Quest and Uniqema are
all trademarks of the ICI Group of companies.
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