Alternative non-GAAP performance indicators

Ansaldo STS' management assesses the Group's earnings and financial performance and that of its business segments based on a number of indicators that are not envisaged by the IFRSs.
As required by Communication CESR/05-178 b, below is a description of the components of each of these indicators:

  • EBIT: the aggregate signifies earnings before taxes and finance income and costs, with no adjustments. Ebit also does not include costs and income resulting from the management of unconsolidated equity investments and other securities, nor the results of any sales of consolidated shareholdings, which are classified on the financial statements either as “finance income (costs)” or, for the results of equity investments accounted for with the equity method, under “share of profit (loss) of equity accounted investments”.
  • Adjusted EBIT: It is arrived at by eliminating from EBIT (as defined above) the following items:
    • any impairment in goodwill;
    • amortisation of the portion of the purchase price allocated to intangible assets in relation to business combinations, as required by IFRS 3;
    • restructuring costs that are a part of significant, defined plans;
    • other exceptional costs or income, i.e. connected to particularly significant events that are not related to the ordinary performance of the business.

The reconciliation between EBIT and Adjusted EBITA for the periods compared is presented hereunder:

  For the 6 months ended 30 June
(EUR thousand)
 52,175  57,675
Restructuring costs
 1,419 706
Adjusted EBIT
 53,594  58,381
  • Free Operating Cash-Flow (FOCF): This is the sum of the cash flow generated by (used in) operating activities and the cash flow generated by (used in) investment and divestment of intangible assets, tangible assets, and equity investments, net of cash flows from the purchase or sale of equity investments that, due to their nature or significance, are considered “strategic investments”. The calculation of FOCF for the periods concerned is presented in the reclassified statement of cash flows shown in section 2.3.
  • Funds From Operations (FFO): This is cash flow generated by (used in) operating activities, net of changes in working capital. The calculation of FFO for the periods concerned is presented in the reclassified statement of cash flows shown in section 2.3.
  • Economic Value Added (EVA): This is calculated as EBIT net of taxes and the cost of the average value of invested capital for the two periods concerned and measured on a weighted-average cost of capital (WACC) basis.
  • Working Capital: includes trade receivables and payables, work in progress and advances from customers.
  • Operating Working Capital: includes trade receivables and payables, work in progress, advances from customers and provisions for risks and charges.
  • Net Working Capital: this is represented by working capital less the provision for current risks and other current assets and liabilities.
  • Net Invested Capital: this is the algebraic sum of non-current assets, non-current liabilities and Net Working Capital.
  • Net financial debt (liquidity) or Net financial position: the template for calculation is consistent with the one in section 127 of the CESR/05-054b recommendations implementing EC Regulation 809/2004.
  • Orders: This is the sum of the contracts executed with contractors during the year which have the contractual characteristics for being booked to the order book.
  • Order backlog: This is the difference between the orders acquired and revenues for the period of reference, net of the change in contract work in progress. This difference is added to the portfolio of the prior period.
  • Workforce: This is the number of employees reported on the last day of the period concerned.
  • Return on Sales (ROS): This is the ratio between EBIT and revenues.
  • Return on Equity (ROE): this is calculated as the ratio between the net profit and the average value of shareholders' equity for the two periods concerned.
  • Research and development costs: this is the sum of costs sustained for R&D expensed and sold. The costs for research expenses are normally referable to the so-called “basic technology”, i.e. rights to the attainment of new scientific knowledge and/or techniques applicable to different new products and/or services. The costs of research sold are those commissioned by the customer against which a specific sale order exists and which have accounting and operational treatment identical to ordinary supply (sale contract, profitability, invoicing, advances, etc.). In consideration of the rapid development within the productive sector in which the Ansaldo STS Group operates, this type of costs is generally not capitalised.