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EVAManual

GeneralConcept

TableofContents

GeneralConcept

I.Introduction

1.EVAisamanagementtoolthatmeasurestrueeconomicprofit

2.EVAcanbeintegratedinallkeyprocesses

3.Decision-makingbasedonbVA

II.Decision-makingwithEVA

A.HowtobuildupEVAonoperatingunitlevel

1.Overview

2.NOPAT(Netoperatingprofitaftertax)

3.Investedcapital

4.Costofcapital

5.FocusonDeltaEVA

B.HowtobuildupEVAontheGroupandSBUlevel

C.UseofEVAintheXYmanagementsystem

1.Managementreporting

2.Capitalexpenditures

3.Portfolioanalysis

DetailsoftheEVACalculation

I.III.Appendix

II.Introduction

1.EVAisamanagementtoolthatmeasurestrueeconomicprofit

Al.manager.o.X.shoul.focu.o.improvin.th.Group,.overal.value.Wit.EVA.fo.th.firs.time.ther.i..too.tha.

reflect.no.onl.th.operatin.performance.bu.als.th.expecteretur.o.th.investe.capita.o.XY.Th.EV.syste.

pany,.resource.a.i.the.wer.thei.own.

EV..accoun.cost.fo.deb.an.equit.capital.

Creatin.shareholde.valu.ma.b.achieve.b.improvin.performance.growth.portfoli.managemen.an.opti

misatio.o.capita.structure.EV.provide..too.fo.al.o.thes.aspects.

2.EV.i..managemen.tool.l.help.manager.t.evaluat.opportunities.se.goals.measur.results.an.ben

chmar.performance.EV.pensatio.schemes.

3.EVAcanbeintegratedinallkeyprocesses

Tpanie.us..variet.o.conflictin.measure.suc.a.earning.growth.earning.pe.share.retur.o.eq

uity.marke.share.gros.an.ne.margin.cas.flow.NP.an.ROIC.

Usin..numbe.o.differen.measure.lead.t.conflictin.goals.Thi.i.wh.w.wil.us.EV.a..singl.majo.performan

c.measure.

OperatingPerformance

DecisionsMeasurement

CapitalBudgetingIncentive

&AcquisitionsEVASystem

Strategic&Goalsetting

Operatingplanning

Th.EV.financia.managemen.syste.support.an.motivate.value-base.decision-makin.fo.day-to-

da.operatin.decisions.budgetin.an.capita.plannin.an.strategi.initiatives.B.usin.EV.ces

ses.a.wel.a.fo.performanc.measuremen.an.incentives.manager.o.X.wil.focu.o.th.goa.o.creatin.valu

e.

4.Decision-makingbasedonEVA

A.on.o.fo

0.categories.EV.ca.b.increase.b.enhancin.operatin.efficenc.("performance").investin.i.value-

jects“growth”.o.divestin.capita.fro.uneconomi.asset.o.activitiesasse.management°

).EV.ca.als.b.increase.b.th.financin.strateg.o.minimisin.th.cos.o.capita.b.optimisin.th.capita.structur

e.

NetOperatingrWeightedAverage1

EVAProfitafterTaxes—IInvestedCapitalxCostofCapitalI

(NOPAT)L(WACC)」

Performance

Ifit.withou.tyin.u.mor.capita.i.th.busines.wiLdirectl.increas.EVA.

Growth

Iducts.

fits.A.Ion.a.thes.investment.genera

t..highe.retur.tha.th.cos.o.capital.shareholde.valu.wil.increase.EV.i..perfec.indicato.o.thi.valu

.creation.

Asse.Management

Rationalising.Iiquidatin.o.curtailin.investment.i.operation.ma.b.necessar.i..busines.o.asse.ca

nno.generat.return.highe.tha.th.cos.o.capital.Thus.EV.encourage.activ.asse.portfoli.manage

ment.Additionally.workin.capita.managemen.i..mean.o.increasin.EV.b.optimisin.inventor.lev

el.an.managin.payable.an.receivables.

Capita.Structure

Lender.an.shareholder.expec.differen.rate.o.retur.accordin.t.th.ris.the.ar.taking.Improvin.E

V.b.optimisin.th.capita.structur.i.a.actio.tha.ca.primaril.b.take.o.th.Grou.an.SB.level.

III.Decision-makingwithEVA

A.HowtobuildupEVAontheoperatingunitlevel

1.Overview

EVAisatransparentmeasurethatiseasytocalculate:

r

I

IEVA=NetOperatingProfitAfterTaxes_Capitalcharges

；(NOPAT)

or:

r

:EVA=FAdjustedoperating.1_FInvestedxWACC

i[incomeJ[Capital

2.NOPAT(Netoperatingprofitaftertax)

a)Introduction

NOPATistheadjustedoperatingincomeafterstandardtaxes.

b)l.yo.wan.t.kno.ho.t.manag.operatin.performance.us.NOPAT.I.include.standar.taxe.becaus.the.ar

.a.importan.cos.factor.Som.specifi.adjustment.ar.incorporate.t.reflec.economi.realit.bette.an.t.m

otivat.correc.decision-making.

c)Calculation

OperatingIncome

+/-EVAadjustments

.Standardtaxes

=Netoperatingprofitaftertaxes(NOPAT)

Thefollowingpositionsw川beadjusted:

(Foradetaileddescriptionoftheadjustmentsandtheaccountsinvolved,seeAppendix):

+Goodwillamortisation

+/-Resultsfromloansandparticipations

+/-Separationoffinancingresults

=EVAadjustmentsonoperatingincome

Goodwil.amortisation

Goodwil.amortisatio.o.th.perio.i.adde.bac.t.operatin.incom.a.fro.a.economi.poin.o.vie.th.v

alu.o.th.acquisitio.reflecte.i.goodwil.doe.no.diminish.i.contras.t.standar.accountin.treatm

ent.

Resultsfromloanstoandshareholdingsinnon-consolidatedandequitycompanies

Asoperatingmanagementisresponsiblefortheperformanceofinvestmentsinandloansto

non-consolidatedcompanies,theresultsfromtheseassetsareincludedintheoperating

performancemeasure.

Separatio.o.financin.results

T.exclud.an.financin.cost.fro.NOPAT.som.financia.charge.tha.ar.include.i.operatin.incom.

(eres.relate.t.operatin.leas

es.whic.i.implici.i.th.leasin.rates.ar.adde.bac.t.operatin.income.Foreig.currenc.result.ar.in

clude.i.NOPA.(an.no.i.financin.costs.a.the.ar.regarde.a.bein.par.o.th.operatin.activities.

3.Investedcapital

a)Introduction

Capita.i.no.fre.sinc.bot.lender.an.equit.investor.expec..retur.o.thei.investments.Th.concep.o.E\/.i

.base.o..simpl.rule:

.busines.onI.create,valu.i.i.th.Ion.ter.i.earn.a.leas.th.cos.o.th.investe.capital.

Ivision.an.liabilitie.fo.whic.ri.fi

nancin.cost.ar.charge.(e.g.trad.payables).

b)Calculation

+Tangibleandintangibleassets

+Investmentsandloans

+/-Networkingcapital

-Provisions

+/-Adjustments

=Investedcapital

Inadditiontotangibeandintangibleassets,thefollowingpositionsareincludedininvested

capital(Foradetaileddescriptionoftheadjustmentsandtheaccountsinvolved,seeAppendix):

Investmentsandloans

Investmentsinandfinancialloanstonon-consolidatedandequitycompanies(including

cash)arepartoftheinvestedcapital,asoperatingmanagementisresponsiblelorthe

performanceoftheseactivities.

Ne.workin.capital

Ne.Workin.Capita.consist.o.inventor.an.operatin.receivable.les.operatin.liabilities.Effi

cien.managemen.o.ne.workin.capita.reduce.investe.capital.capita.charge.an.therefor.i

mprove.EVA.

Provisions

Provision.ar.regarde.a.non-

interes.bearin.an.ar.therefor.deducte.fro.investe.capital.Pvi

sion.fo.deferre.taxe.ar.treate.differentl.an.wil.no.b.deducte.fro.investe.capital.

Adjustments

Goodwil.amortisation

Th.ful.historica.goodwil.fro.th.tim.o.th.acquisitio.i.include.i.investe.capital.Therefor.accumulate.good

wil.amortisatio.i.adde.bac.t.investe.capital.

Rentalandleasingcontracts

Thepresentvalueoffuturerentalandoperatingleasecontractsisincludedininvested

capitalinordertoreflecttheriskassociatedwithfuturepaymentobligatiors.

Offbalancesheetobligations

l.orde.t.sho.th.tru.ris.associate.wit.of.balanc.shee.obligations.the.ar.include.i.investe.c

apital.l.effect.th.capita.charge.wil.b.reduce.b..correspondin.ite.i.NOPA.i.orde.t.deriv.a.a

dequat.ris.premiu.fo.thos.items.

Cgress

Asset.unde.constructio.ar.no.include.i.investe.capita.becaus.the.d.no.ear.operatin.income.

A..genera.rule.th.calculatio.o.capita.withi.th.X.Grou.wil.b.base.upo.averag.capita.durin.th.year.A.o.2023.thi.av

erag.calculatio.wil.b.base.o.th.quarterl.financia.statement.

4.Costofcapital

Capita.i.no.free.sinc.lender.an.shareholder.expec..retur.o.thei.investment.

•Lendersrequireareturnondebtintheformofinterestpayment.

Shareholder.expec..retur.a.well.X.wil.eventuall.nee.ne.equit.fro.th.capita.market.Onl.i.shareholder.a

nticipat.tha.X.wil.b.abl.t.mee.thei.expectation.wil.the.b.willin.t.inves.ne.capita.o.favourabl.terms.Thi.

expecte.retur.o.equit.ca.b.measure.an.i.par.o.th.cos.o.capital.

IntheWeightedAverageCostofCapital(WACC)thecostofdebtandthecostofequityare

combined,withweightsbasedonthedebt/equityratio.

WACC=%debt*NetCostofDebt+%equity*Costo*Equity

Usin.thi.approac.country-

specifi.WACCf.ar.calculated.T.illustrat.th.formul.th.WAC.calculatio.fo.on.countr.i.shown.Th.cos

.o.deb.i.3,9.after-

tax.Th.shareholder.expec..retur.o.10,5%..highe.figur.becaus.th.ris.i.highe.tha.fo..deb.investment

.Th.debt-to-marke.valu.(leverage.rati.i.52%.

CostWeiahtWeiahtedCost

Debtaftertax3,9%52%2,0%

Equity10,5%48%5,1%

WeightedAverageCostofCapital7,1%(rounded7%)

YoucanfindthespecificWACCofdifferentcountriesontheIntranetunderGroup

functions/Reporting,Controlling,InvestorRelations(RCIJ/WACC.

5.FocusonDeltaEVA

Lyo.hav.calculate.EV.parabl.t.othe.units.Thi.i.du.t.t

h.fac.tha.investe.capita.i.state.a.boo.value.whic.ofte.doe.no.reflec.fai.value.Doe.tha.mea.tha.EV.do

e.no.work.No.A.parable.w.focu.o.Delt.EVA.whic.reflect.th.chang.i

.EV.fro.on.perio.t.another.

EV.i..managemen.tool.l.ca.hel.manager.t.evaluat.opporunities.se.goals.measur.results.benchmar.

pensation.

DeltaEVAisthemeasurebecause

-managementactionshouldalwaysbedirectedtowardsthefuture

-whenevaluatingopportunities,anincreaseofEVAgivestherightsignal

•whensettinggoals,DeltaEVAgivesappropriateincentives

-whenmeasuringresults,DeltaEVAshowsacomparablefigure

Tpare.th.reportin.o..uni.tha.belong.t.th.Grou.fo..lon.tim.t.th.reportin.o..recentl.acq

uire.unit.Bpanie.hav..NOPA.o.120.Dpan.tha.ha.bee

.par.o.th.Gpany.Bot.unit.inve

fitable:

HistoricpartofGroupRecentAcquisition

ExistingNewExistingNew

TotalTotal

businessInvestmentbusinessInvestment

Investedcapital4001005001.0001001.100

NOPAT1201213212012132

Capitalcharge-40-10-50-100-10-110

EVA8028220222

DeltaEVA22

Becaus.o.differen.level.o.investe.capital.th.EV.pan.i.muc.highe.tha.th.EV/.o.th.ne.co

mpany.Th.exampl.show.tha.Delt.EV.fi

ject.

B.HowtobuildupEVAontheGroupandSBUlevel

Value-

oriente.decision.ar.take.o.al.corporat.levels.Th.EV.definitio.applie.o.th.respectiv.leve.reflect.managers.

responsibilities:

•InvestorRelations

・Capitalstructure

•Taxes

•Majorinvestments/acquisitions

•Goodwillfromtheacquisitionof

companyAandcompanyB

•Operatingmanagement

•Operatinginvestmentdecisions

•Responsibilityforinvestedcapital

(mcl.goodwill)

AscomparedtotheEVAdefinitionontheoperatingunitlevel,thefollowingitemsaretreated

differentlyontheGroupandSBUlevel:

-Taxes

-GoodwillfromtheacquisitionofAandB

-CurrencyTranslationAdjustment(CTA)

FordetailsoftheEVAcalculationonthegroupandSBUlevel,seeAppendixB.

C.UseofEVAintheXYmanagementsystem

1.Fro.202.onward.al.operatin.unit.wil.repor.EV.o..quarterl.basis.l.th.following.example.fo.EV.re

portin.ar.shown.Pleas.b.awar.tha.thi.i.no.th.fina.design.bu.give.yo.a.impressio.o.th.analytica

.feature.o.th.tool.

2.Managementreporting

ThefollowingexampleshowstheEVAanalysisforanoperatingunit:

Example20002001Delta

OperatingIncome1.0001.300300

EVAAdjustments*29031323

-Taxes-490-613-123

Netoperatingincomeaftertaxes8001.000200

Capitalcharge(WACC7%)-770-1.120-350

EVA30•120-150

一CapitalEVANon-EVADeltaEVAnon-operating-30

星

dzchargeOperating__

glWoOQ■

rDeltaEVA-180

p

o

lInvestedC叩ital

s

o

ATangible/intangibleassetsafteradj.10.00012.3002.300

sFinancialloans1001000

Investments5002.0001.500

Networkingcapital9002.0001.100

oProvisions-500-400100

STotal11.00016.0005.000

S

A

«•mainlyduetoaddbackofgoodwillamortisation

U

VAdj.InvestmentsNelWCInv.Capital

tangjlntang.

Assets

Thefollowingconclusionscanbederivedfromthisexample:

-Operatin.incom.increase.b.30.o.30%.Dvide.i.th.incom.statemen.an.th.varianc

.analysis.

-TheincreaseincapitalchargesoutweighedthepositivedevelopmentofNOPAT.

-Analysisofthechangesininvestedcapitalshowsthattheincreaseinthecapitalchargeisdue

tothefollowingfactors:

-Thebookvalueoftangibleassetsincreased,whichmeansthattheinvestmentsofthe

companywerehigherthanthedepreciation,andthecompanycouldnotimproveits

operatingincometothesameextent.

-Non-consolidatedinvestmentsincreasedby1.500anddidnotearnthecostofcapital

Ne.workin.capita.increased.T

pan.pai.it.creditor.decreased.

Additionally.Delt.EV.wa.reduce.b.non-operatin.o.exceptiona.losse.whic.resulte.i..Delt.EV.non-

operatin.o.-3.(Fo.detail.o.th.adjustmen.fo.unusua.items.se.Appendi.chap.4).

3.Capitalexpenditures

Th.EV.syste.als.support.decision.o.capita.expenditures.Decision.o.investment.wil.b.base.o.th.follow

in.rule.A.investmen.shoul.onl.b.mad.i.th.presen.valu.o.futur.EVA,.1.positive.

Essentially.th.EV.vide.th.sam.resul.a..Fre.Cas.Flo.analysis.Th.presen.valu.o.E

V.equal.th.ne.presen.valu.o.cas.flows.EV.ha.th.advantag.tha.i.ha..memor.fo.th.investe.capita.an.ca.

b.use.fo.performanc.measuremen.purpose.a.wel.a.fo.in\/estmen.decisions.l.contras.t.th.Fre.Cas.FI

o.method.th.EV.egrate.approac.whereb.th.capita.expenditur.analysi.show.annua.co

ntribution.tha.wil.b.manage.vi.th.EV.managemen.system.

ThefollowingexampleshowsanEVAbasedinvestmentanalysis:

Y5Y1丫2Y4丫5

OperatingProfit0100200200200200

Capital(BeginningofY)01.5001.200900600300

-Capitalcharge(@10%)0150120906030

=EVA0-5080110140170

xDisc.Fac.(@10%)1.000.910.830750.680.62

=PresentValueEVA0-45668395106

EVA304

l.th.example.a.investmen.o.1.50.i.mad.a.th.en.o.yea..(correspondin.t.th.beginnin.o.yea.1).Startin.fro

.yea.I.fit.Th.boo.valu.o.th.investmen.i.depreciate.ove.fv.year.wit.th

.boo.valu.a.th.beginnin.o.eac.perio.bein.th.basi.fo.calculatin.th.capita.charge.Th.fac.tha.th.presen.v

alu.o.EV.jec.i.creatin.value.

4.Portfolioanalysis

Tpan.activel.manage.it.portfoli.an.wil.nee.t.tak.strategi.decisions.Thes.decision.includ.bot.inv

estmen.an.divestmen.allernatives.

A.par.absolut.EVA,.becaus.th.capita.charg.i.base.o.boo.va

lu.an.no.o.fai.value.Fo.aotiv.portfoli.managemen.i.i.necessar.t.analys.th.change.i.EV.du.t.differen.fu

tur.scenarios.Th.strateg.wit.th.highes.increas.i.Delt.EV.wil.b.chosen.

Inthefollowingexample,threestrategicalternativesarebeingdiscussed:

-Sellpartofthebusiness(alternative1)

-Increaseinvestmentinthebusiness(alternative2)

-Divestthewholebusiness(alternative3)

CurrentAlternative

123

NOPAT100701500

InvestedCapital1.5001.0001.7000

Capitalcharge7%-120-80-1360

EVA-20-10140

DeltaEVA(projection)103420

A.th.curren.EV.i.negative.th.uni.doe.no.ear.th.cos.o.capital.However.decision.shoul.

alway.refe.t.th.future.Th.curren.EV.ha..signallin.function.bu.i.no.sufficien.a..basi.fo.

jection.o.Delt.EV.sho.tha.alternativ..('incr

eas.investmen.i.th.business7.i.th.strateg.tha.create.th.highes.value.Thi.i.becaus.th.i

fitabl.growth.

EVAManual

Appendix

TableofContents

III.Appendix:DetailsofEVAcalculation

A.Improvemanagementdecisionsbyadjustingoperatingincomeandinvestedcapit

1.Selectionofadjustments

2.Goodwill

3.Constructioninprogress

4.Unusualitems

5.Offbalancesheetliabilities

6.Operatinglease

7.Pensions

8.Minorityinterests

B.EVAonSBUandGrouplevel

1.Taxmanagement

2.GoodwillforCompanyAandCompanyBacquisition

3.CurrencyTranslationAdjustment(CTA)

C.EVACalculationSchemes

1.Calculationofinvestedcapitalontheoperatingunitlevel

2.CalculationofNOPATontheoperatingunitlevel

3.Calculationofinvestedcapitalonthegroup/SBUlevel

4.CalculationofNOPATonthegroup/SBUlevel

IV.Appendix:DetailsofEVAcalculation

A.Improvemanagementdecisionsbyadjustingoperatingincomeandinvestedcapital

1.Selectionofadjustments

Whe.customisin.th.EV.calculatio.fo.XY.th.objectiv.wa.t.fin.th.righ.balanc.betwee.economi.accurac.an.fu

nctiona.simplicit.an.t.defin..meaningfu.measur.o.valu.creatio.tha.i.understandabl.t.al.users.Tces.o

.definin.thes.adjustment.focuse.on:

MaterialityAdjustmentsshouldmakeamaterialdifferenceinEVA

MotivationalImpactAdjustmentsshouldhavethepotentialtoinfluence

decisionsandbehaviour

PracticalityAdjustmentsshouldbemadesubjecttodatabeing

available

UnderstandabilityAdjustmentsshouldnotbeunnecessarilycomplex

2.Goodwill

DescriptionoftheAdjustment:

GoodwillamortisationisnotincludedinNOPAT.

Thefullhistoricgoodwillbeloreamortisationisshownininvestedcapital.

BehaviourExpected/ReasonfortheAdjustment:

Goodwil.resultin.fro.a.acquisitio.i.a.investmen.tha.doe.no.definitiveLincreas.o.decreas.i.valj.ove.time.T

herefore.w.shoul.conside.i..permanen.investmen.rathe.tha.a.erodin.investmen.tha.need.t.b.amortised.

I.w.di.no.mak.a.adjustmen.an.use.th.accountin.amortisation.th.ful.charg.fo.goodwil.woul.b.th.su.o.th.a

mortisatio.an.th.capita.charg.o.th.ne.boo.value.Th.charg.woul.b.a.it.highes.immediatel.afte.th.acquisitio

.an.woul.declin.unti.th.asse.i.full.amortised.th.tota.charg.woul.therefor.declin.t.zero.Thi.i.no.consisten.w

fit.w.generall.se.afte.acquisitions.Typically.acquisition.ar.performe.a..premu.an.th.imm

fit.arinadequat.t.cove.th.capita.charge.Ofit.i

mprove.hopefully.t.mor.tha.justif.th.capita.spen.o.th.acquisition.Thus.i.w.woul.bas.th.EV.calculatio.o.ac

countin.amortisatio.w.woul.pu.th.highes.charg.whe.th.lowes.NOPA.i.expected.Goin.forward.th.NOPA.i

mprove.whil.th.capita.charg.declines.Tvide..poo.matchin.o.cost.an.benefits.

B.no.amortisin.goodwill.w.g9..bette.alignmen.o.cost.an.benefits.Th.adjustmen.als.avoid..majo.increas.i

.EV.whe.th.amortisatio.perio.i.finished.a.effec.tha.canno.b.attribute.t.th.valu.creatio.i.tha.specifi.period.

B.usin.historica.goodwill.EV.wil.tur.positiv.a.soo.a.th.NOPA.cover.th.capita.charg.o.th.tangibl.asset.an.

th.goodwil.befor.amortisation.Thi.help.t.encourag.goo.acquisition.whil.stil.discouragin.ba.ones.

Goodwil.a.X.i.pushe.dow.t.operatin.units.excep.fo.th.goodwil.fro.th.acquisitio.o.Compan..an.Compan.B

.whic.i.onl.pushed-

dow.t.SB.level.B.fitabilit.

o.acquisition.i.decentralisec.Push-

dow.accountin.bring.i.lin.th.absolut.amoun.o.EV.o.grou.leve.an.o.sub-

uni.level.Otherwis..negativ.EV.o.th.grou.leve.migh.correspon.t.positiv.EVA,.o.th.SB.level.

MechanicsoftheAdjustment:

DonotchargegoodwillamortisationtoNOPATandincludegoodwillininvestedcapitalatacquisition

costinordertotreatitasapermanentinvestment.

Example:

CapitalCalculation:

Investedcapital600

+Accumulatedgoodwillamortisation60

=Investedcapital(adjusted)660

NOPATCalculation:

OperatingIncome100

+Goodwillamortisation15

=OperatingIncome(adjusted)115

-OperatingTaxes(38%)44

NOPAT71

I.goodwil.i.amortise.du.t.a.impairmen.test.th.respectiv.amoun.o.goodwil.wil.b.exclude.fro.investe.capita

.an.treate.a.a.unusua.ite.(se.chap.4).

3.Constructioninprogress

DescriptionoftheAdjustment:

Constructioninprogress(CIP)isnotincludedininvestedcapital.

BehaviourExpected/ReasonfortheAdjustment:

l.orde.no.t.discourag.value-

creatin.ne.investments.capita.charge.ar.no.impose.o.Cl.unti.i.start.operation.an.i.take.ou.o.th.Cl.accou

nt.Manager.wil.b.accountabl.fo.generatin..retur.onc.th.asset.ar.place.i.service.

T.maintai.th.consistenc.betwee.th.presen.valu.o.cas.flow.an.EVA.w.nee.t.recognis.th.tim.valu.o.thi.mo

ne.durin.construction.Technically.thi.mean.tha.th.capita.charge.fo.th.constructio.perio.shoul.b.ac

cumulate.an.capitalise.a.par.o.th.investmen.whe.th.asse.i.i.use.Hple.t.do.Fo.maj

ject.regula.financia.accountin.practice.accomplis.almos.th.sam.result.a.X.capitalise.borrowi

n.cost.(pre-

erest.1.CIPTherefore.i.orde.t.kee.th.calculatio.simple.n.additiona.capita.charge.ar.cap

italise.fo.EVA.Fgres.items.capita.charge.fo.th.period.durin.constructio.a

r.neglecte.becaus.o.materialit.reasons.

MechanicsofAdjustment:Reduceinvestedcapitalbytheconstructioninprogressbalance.

Example:

CapitalCalculation:

Investedcapital600

-Constructioninprogress30

Investedcapital(adjusted)570

4.Unusualitems

DescriptionoftheAdjustment:

UnusualitemsareexcludedfromNOPAT.

TheCapitalchargeonunusualitemsisshowninDeltaEVAnon-operating.

BehaviourExpected/ReasonforAdjustment:

Unusua.item.represen.gain.an.losse.tha.aris.fro.event.o.activitie.tha.ar.no.considere.par.o.XY,.ongoi

n.an.recurrin.business.W.fitabilit.i.thes.unusua.item.ar.mixe.wit.th.o

fi.figures.Therefcre.w.nee.t.conside.unusua.item.i..wa.tha.doe.no.distor.ongoin.perio.result.

an.a.th.sam.tim.motivate.value-creatin.behaviour.

Example:

A.fi.afte.ta.o.100.Th.asse.whic.i.recorde.i.th.balanc.shee.a.3.00.i.no.sol.fo.2.000.Sel

lin.a.asse.fo..boo.valu.los.o.1.00.(befor.taxes.woul.sho.th.asse.reduce.t.zer.o.th.balanc.shee.an..los.ta

fi.o.th.period.

EVACalculationbeforeadjustment:

Year1Year2

Operatingprefitaftertaxes1000