Alternative Performance Measures

In addition to the key figures defined or specified in the applicable IFRS financial reporting framework, SAF-HOLLAND also provides key financial ratios derived from or based on the prepared financial statements. These are known as Alternative Performance Measures (APM).

SAF-HOLLAND considers these key financial ratios to be important supplemental information for investors and other readers of the financial reports and press releases. The key financial ratios should therefore be seen as an addition to and not a replacement of the information prepared in accordance with IFRS.

With regard to the requirements of the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures, SAF-HOLLAND provides an overview of the Alternative Performance Measures used, their definition and their compilation.

Definitions

A

Adjusted EBIT


Earnings before interest and taxes is adjusted for special items, such as depreciation and amortization from purchase price allocations, impairment of goodwill and intangible assets, reversal of impairment of intangible assets as well as restructuring and transaction costs.


SAF-HOLLAND considers Adjusted EBIT as a useful measure to show true operational performance in internal performance reportings and for discussion with the investment analyst community and debt rating agencies.


 

Adjusted EBIT margin


The adjusted EBIT margin is the adjusted EBIT (operating profit) divided by net sales.


SAF-HOLLAND recognizes Adjusted EBIT margin as one of the key operational management metrics as it provides an indication of the profitability of the business underwritten. This measure is used in setting director and management renumeration.

 

Adjusted EBITDA


Earnings before amortization and depreciation and interest and taxes is adjusted for special items, such as depreciation and amortization from purchase price allocations, impairment of goodwill and intangible assets, reversal of impairment of intangible assets as well as restructuring and transaction costs.


SAF-HOLLAND rates Adjusted EBITDA as an essential measure of our operating performance because it approximates the underlying operating cash flow by eliminating depreciation and amortization, impairment of goodwill and intangible assets, reversal of impairment of intangible assets as well as restructuring and transaction costs.
 

Adjusted EPS


Earnings per share (EPS), excluding depreciation and amortization from purchase price allocations, impairment of goodwill and intangible assets, reversal of impairment of intangible assets as well as restructuring and transaction costs.


SAF-HOLLAND favors Adjusted EPS as a good measure for investors to give an indication of the performance without restructuring and transaction costs and without the impact of depreciation and amortization from purchase price allocations, impairment of goodwill and intangible assets as well as reversal of impairment of intangible assets.
 

C

Cash conversion rate


Cash flow from operating activities before income taxes divided by adjusted EBIT, expressed as percent.


SAF-HOLLAND regards Cash conversion rate as a good measure for the proportion of profits that are converted to cash flow.
 

F

Free cash flow


Operating cash flow including changes in working capital, minus capital expenditure, pre-acquisition, pre-divident and pre-M&A


SAF-HOLLAND considers Free cash flow as an essential measure for evaluating the funds available for investing, distributions to shareholders and reducing debt.
 

I

Investment ratio


Investments in property, plant and equipment and intangible assets divided by sales, expressed as percent.


SAF-HOLLAND sees the Investment ratio as a relevant measure for investors to be able to understand the Group's investment intensity.
 

N

Net debt


The sum of current and non-current liabilities from interest-bearing loans and bonds less cash and cash equivalents and short-term investments.


SAF-HOLLAND considers Net debt as the main APM to measure the Company's level of debt.
 

Net working capital


R&D cost and capitalized development cost divided by sales, expressed as percent.


SAF-HOLLAND rates Net working capital as an important measure of both the Company's efficiency and its short-term financial health.
 

R

R&D ratio


R&D cost and capitalized development cost divided by sales, expressed as percent.


SAF-HOLLAND considers the R&D ratio as a relevant measure for investors to be able to understand the Group's research and development intensity.
 

Restructuring and transaction expenses


Restructuring and transaction expenses are defined as expenses that have occurred outside the normal course of the business. These expenses include – besides other – expenses associated with the purchase of entities, restructuring measures within the group and severance payments for executives. The definition of restructuring and transaction expenses used differs from the one defined in IAS 37.
 

ROCE


The total of operating income plus financial income as a percentage of average capital employed.


SAF-HOLLAND regards ROCE as a good measure to show how efficiently the Group generates revenues with the capital employed.
 

Reconciliations

A

Adjusted EBIT

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
EBIT 36.8 41.6 19.6 20.6
Depreciation and amortization from PPA 3.8 2.7 2.6 1.3
Restructuring and integration costs 3.5 7.4 1.6 4.8
Adjusted EBIT 44.1 51.8 23.8 26.7

 

EUR million FY 2017 FY 2016
EBIT 72.7 78.4
Depreciation and amortization from PPA 5.3 5.3
Restructuring and integration costs 13.2 6.6
Adjusted EBIT 91.2 90.4

Adjusted EBIT margin

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Sales 640.3 587.6 345.4 300.3
Adjusted EBIT 44.1 51.8 23.8 26.7
Adjusted EBIT Margin 6.9 8.8 6.9 8.9

 

EUR million FY 2017 FY 2016
Sales 1.138,9 1.042,0
Adjusted EBIT 91.2 90.4
Adjusted EBIT Margin 8.0 8.7

Adjusted EBITDA

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Adjusted EBIT 44.1 51.8 23.8 26.7
Depreciation and amortization 10.2 9.6 5.4 4.8
Adjusted EBITDA 54.3 61.4 29.2 31.5

 

EUR million FY 2017 FY 2016
Adjusted EBIT 91,2 90,4
Depreciation and amortization 19,3 17,3
Adjusted EBITDA 110,5 107,7

Adjusted EPS

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Adjusted EBITDA 54.3 61.4 29.2 31.5
Depreciation and amortization -10.2 -9.6 -5.7 -4.8
Finance result -6.2 -8.2 -2.3 -3.9
Adjusted result before taxes 37.9 43.6 21.2 22.8
Income taxes -9.7 -13.1 -5.4 -6.9
Adjusted result for the period 28.2 30.4 15.8 15.9
Number of shares 45.394.302 45.361.112 45.394.302 45.361.112
Adjusted basic earnings per share in EUR 0.62 0.67 0.35 0.35

 

EUR million FY 2017 FY 2016
Adjusted EBITDA 110.5 107.7
Depreciation and amortization -19.3 -17.3
Finance result -16.5 -13.5
Adjusted result before taxes 74.7 76.9
Income taxes -22.0 -23.2
Adjusted result for the period 52.7 53.7
Number of shares 45.361.385 45.361.112
Adjusted basic earnings per share in EUR 1.16 1.18

C

Cash conversion rate

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Cash Flow from operating activities before taxes -17.0 15.2 -4.7 20.4
Adjusted EBIT 44.1 51.8 23.8 26.7
Cash Conversion Rate -38.5 -29.3 -19.7 76.4

 

EUR million FY 2017 FY 2016
Cash Flow from operating activities before taxes 74.1 106.4
Adjusted EBIT 91.2 90.4
Cash Conversion Rate 81.3 117.7

F

Free cash flow

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Net cash flow from operating activities -30.9 5.5 -8.4 15.3
Purchase of property, plant and equipment and intangible assets 15.2 -13.6 8.2 -7.8
Free cash flow -46.1 -8.0 -16.6 7.5

 

EUR million FY 2017 FY 2016
Net cash flow from operating activities 56.8 92.7
Purchase of property, plant and equipment and intangible assets -27.1 -25.0
Free cash flow 29.7 67.7

I

Investment ratio

EUR million Q1-Q2/2018 Q1-Q2/2017 Q2/2018 Q2/2017
Purchase of property, plant and equipment and intangible assets -15.2 13.6 8.2 7.8
Sales 640.3 587.6 345.4 300.3
Investment Ratio -2.4 2.3 2.4 2.6

 

EUR million FY 2017 FY 2016
Purchase of property, plant and equipment and intangible assets 27.1 25.0
Sales 1.138,9 1.042,0
Investment Ratio 2.4 2.4

N

Net debt

EUR million 30.06.18 31.12.17
Interest bearing loans and bonds 368.9 442.6
Other short-term investments 0.0 -58.3
Cash and cash equivalents -116.9 -278.8
Net Debt 252.0 105.5

 

EUR million FY 2017 FY 2016
Interest bearing loans and bonds 442.6 441.7
Other short-term investments -58.3 0.0
Cash and cash equivalents -278.8 -344.6
Net Debt 105.5 97.1

Net working capital

EUR million 30.06.18 31.12.17
Current assets 550.7 620.3
./. Cash and cash equivalents -116.9 -337.1
./. Trade payables -207.7 -145.0
./. Current and non-current other provisions -15.5 -17.5
./. Acquisitions -6.2 -
Net working capital 204.4 120.6

 

EUR million 12/31/17 12/31/16
Current assets 620.3 606.8
./. Cash and cash equivalents -337.1 -344.6
./. Trade payables -145.0 -135.1
./. Current and non-current other provisions -17.5 -16.8
Net working capital 120.6 110.3

R

R&D ratio

EUR million Q1-Q2/2018 Q1-Q2/2017
R&D expenses including capitalized development costs 12.6 13.0
Sales 640.3 587.6
R&D Ratio 2.0 2.2

 

EUR million Q1-Q4/2017 Q1-Q4/2016
R&D expenses including capitalized development costs 24.6 23.4
Sales 1.138,9 1.042,0
R&D Ratio 2.2 2.2

Return on Capital Employed (ROCE)

EUR million 30.06.18 31.12.17 Q2/2018 Q2/2017
EBIT 36.8 72.7 19.6 20.6
Total assets - current liabilities 787.0 762.9 787.0 768.2
ROCE 4.7 9.5 2.5 2.7

 

EUR million FY 2016
EBIT 78.4
Total assets - current liabilities 861.0
ROCE 9.1