Non-IFRS alternative performance indicators

Ansaldo STS’s management also assesses the performance of the group and the business units using certain indicators that are not defined by the IFRS.
The components of each indicator are described below as required by CESR/05 - 178b Communication:

  • EBIT: earnings before interest and taxes, before any adjustment. EBIT excludes gains or losses on unconsolidated equity investments and securities, as well as any gains or losses on sales of consolidated equity investments, which are classified under “financial income and expense” or “share of profits (losses) of equity-accounted investees” if related to equity-accounted investments.
  • Adjusted EBIT (Adj): is the EBIT as described above, net of:
    • any impairment of 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:

(€’000) For the first six months of
 20132012
EBIT   52,591 50,584
Restructuring costs   401 2,919
Adjusted EBIT   52,992 53,503

Adjusted EBIT is slightly down (€511 thousand) on the same period of the previous year.

  • Free operating cash flow (FOCF): this indicator is the sum of cash flows generated by (used in) operating activities and cash flows generated by (used in) investing and disinvesting in property, plant and equipment, intangible assets and equity investments, net of cash flows from acquisitions and sales of equity investments which are deemed “strategic” due to their nature or importance.
    The reclassified statement of cash flows set out in paragraph 2.3 shows how FOCF is arrived at for the current reporting period and corresponding period of the previous year.
  • Funds from operations (FFO): this indicator is the cash flows generated by (used in) operating activities, net of changes in working capital. The reclassified statement of cash flows set out in paragraph 2.3 shows how FFO is arrived at for the current reporting period and the corresponding period of the previous year.
  • Economic value added (EVA): the difference between EBIT net of income taxes and the cost of the average invested capital of the current reporting period and the corresponding period of the previous year measured on the basis of the weighted average cost of capital (WACC).
  • Working capital: comprises trade receivables and payables, work in progress and progress payments and advances from customers.
  • Operating working capital: comprises trade receivables and payables, inventories, work in progress, progress payments and advances from customers and provisions for risks and charges.
  • Net working capital: working capital less provisions for current 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 the CESR/05-054b recommendations implementing Regulation (EC) no. 809/2004.
  • New orders: the sum of the contracts agreed with customers during the reporting 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 (including the change in contract work in progress). This difference is added to the backlog for the previous year.
  • Headcount: the number of employees recorded in the relevant register on the reporting date.
  • Return on Sales (ROS): the ratio of EBIT to revenue.
  • Return on Equity (ROE): the ratio of the profit or loss for the twelve months to the average amount of equity at the reporting date and the corresponding 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 70,000,000 R.E.A. n. 421689 Register of Enterprises of Genoa Tax Code 01371160662
A Finmeccanica Company