New performance metric
We introduced EBIT after asset charge as a new primary performance metric from 1 January 2008 as part of our capital markets programme to focus all divisions on sustained value growth. Managers’ incentives will also be tied to this indicator. Unlike EBIT, the performance indicator used so far, EBIT after asset charge takes into account the cost of tied-up capital. In other words, it reflects profit generated over and above the cost of capital.
The net asset base is defined as operating assets minus operating liabilities plus goodwill.
We anticipate that the new performance metric will enhance the focus on cash generation. This means we can make better use of our strengths and more easily identify scope for improvement to boost the value of the company and returns for shareholders.