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.
 

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

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
EBIT 57.2 60.9 15.5 16.2
Depreciation and amortization from PPA 4.0 4.0 1.3 1.2
Restructuring and transaction costs 11.5 5.7 4.0 4.2
Adjusted EBIT 72.7 70.6 20.9 21.6

Adjusted EBIT margin

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
Sales 864.7 789.4 277.1 255.8
Adjusted EBIT 72.7 70.6 20.9 21.6
Adjusted EBIT margin 8.4 8.9 7.5 8.4

Adjusted EPS

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
Adjusted EBITDA 86.9 83.1 25.5 25.8
Depreciation and amortization -14.2 -12.5 -4.6 -4.2
Finance result -12.7 -9.4 -4.5 -2.5
Adjusted result for the period 60.0 61.2 16.4 19.1
Income taxes  -18.1 -18.4 -4.9 -5.7
Adjusted result for the period 41.9 42.8 11.5 13.4
Number of shares 45,361,112 45,361,112 45,361,112 45,361,112
Adjusted basic earnings per share in EUR 0.92 0.94 0.25 0.29

C

Cash conversion rate

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
Cash Flow from operating activities before taxes 38.2 63.1 23.0 27.3
Adjusted EBIT 72.7 70.6 20.9 21.6
Cash conversion rate 52.5 89.4 110.0 126.4

F

Free cash flow

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
Net cash flow from operating activities 23.6 53.9 18.0 24.2
Investments in property, plant and equipment and intangible assets -20.7 -15.4 -7.1 -4.8
Free cash flow 2.9 38.4 10.9 19.4

I

Investment ratio

Mio. Euro Q1-Q3/2017 Q1-Q3/2016 Q3/2017 Q3/2016
Investments in property, plant and equipment and intangible assets 20.7 15.4 7.1 4.8
Sales 864.7 789.4 277.1 255.8
Investment ratio 2.4 2.0 2.6 1.9

N

Net debt

Mio. Euro 30/09/17 31/12/16
Interest bearing loans and bonds 441.8 441.7
Other short-term investments -96.3 0.0
Cash and cash equivalents -217.3 -344.6
Net debt 128.2 97.1

Net working capital

Mio. Euro 30/09/17 31/12/16
Current assets 631.6 608.4
./. Cash and cash equivalents -313.4 -344.6
./. Non-current liabilities -159.4 -135.1
./. Other current and non-current provisions -16.1 -16.8
Net working capital 142.7 111.9

R

R&D ratio

Mio. Euro Q1-Q3/2017 Q1-Q3/2016
R&D costs and capitalized development costs 18.8 17.1
Sales 864.7 789.4
R&D ratio 2.2 2.2

Return on Capital Employed (ROCE)

Mio. Euro 2016
EBIT 78,4
(Balance sheet total - current liabilities) 681,0
Return on Capital Employed (ROCE) 9,1