Non-IFRS alternative performance indicators

Ansaldo STS’s management assesses the group’s financial performance using certain non-IFRS indicators.

As required by CESR communication 05-178b, the components of each of these indicators are described below:

  • Operating profit (EBIT): the unadjusted profit before income taxes and financial income and expense. It does not include income and expense on non-consolidated equity investments and securities or the gains (losses) on the disposal of consolidated equity investments, classified in “Financial income and expense” in the financial statements or, for equity-accounted investees, in the caption “Share of profit or loss of equity-accounted investees”.
  • Adjusted gross operating profit (EBIT): the operating profit, as described earlier, net of:
    • any impairment losses on goodwill;
    • amortisation of the portion of purchase price allocated to intangible assets acquired as part of business combinations, pursuant to IFRS 3;
    • restructuring costs in relation to defined and significant plans;
    • other income or expense not of an ordinary nature, i.e., related to particularly significant events unrelated to ordinary activities.

A reconciliation of EBIT and Adjusted EBIT for the reporting period and corresponding period of the previous year is set out below:

  First half of
(€’000) 2014 2013 restated
EBIT 51,971 51,988
Restructuring costs 2,900 401
Adjusted EBIT 54,871 52,389
  • Free operating cash-flow (FOCF): the sum of cash flows generated by (used in) operating activities and cash flows generated by (used in) investments in and disinvestments of property, plant and equipment, intangible assets and equity investments, net of cash flows for acquisitions or disposals of equity investments which qualify as “strategic transactions” given their nature or materiality. The method used to calculate the FOCF for 2013 and 2012 is shown in the reclassified statement of cash flows in the previous section.
  • Funds from operations (FFO): the cash flows generated by (used in) operating activities, net of changes in working capital. The method used to calculate the FFO for 2013 and 2012 is shown in the reclassified statement of cash flows in the previous section.
  • Economic value added (EVA): the difference between adjusted gross operating profit net of income taxes and the cost of the average invested capital of the two periods under comparison, calculated using the weighted average cost of capital (WACC).
  • Working capital: includes inventories, trade receivables and payables, work in progress and progress payments and advances from customers.
  • Net working capital: working capital net of the current portion of provisions for risks and other current assets and liabilities.
  • Net invested capital: the sum of non-current assets, non-current liabilities and net working capital.
  • Net financial position or debt: the calculation method used complies with paragraph 127 of CESR recommendation 05-054b, implementing EC regulation 809/2004.
  • New orders: the sum of the contracts agreed with customers during the period that meet the contractual requirements to be recorded in the orders book.
  • Order backlog: the difference between new orders and revenue for the period (less the change in contract work in progress). This difference is added to the backlog for the previous period.
  • Headcount: the number of employees recorded in the relevant register on the reporting date.
  • Return on Sales (ROS): the ratio of adjusted gross operating profit to revenue.
  • Return on Equity (ROE): the ratio of profit or loss for the year to the average amount of equity at the reporting date and the previous period reporting date.
  • Research and development expense: total expense incurred for research and development, both expensed and sold. Research expense taken to profit or loss usually relates to “general technology”, i.e., aimed at gaining scientific knowledge and/or techniques applicable to various new products and/or services. Sold research expense represents that commissioned by customers and for which there is a specific sales order and it is treated exactly like an ordinary order (sales contract, profitability, invoicing, advances, etc.) in accounting and management terms.

 

 

 

 

 

 

 

 

 

 

 

 

Registered Office: 16151 Genoa Via Paolo Mantovani, 3 - 5
Paid-in Share Capital EUR 100,000,000 R.E.A. n. 421689 Register of Enterprises of Genoa Tax Code 01371160662
A Finmeccanica Company