Non-GAAP performance indicators

Ansaldo STS’ management assesses the Group’s earnings and fi nancial 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/05-178b, below is a description of the components of each of these indicators:

  • EBIT: the aggregate signifi es earnings before interest and taxes, 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 classifi ed on the fi nancial statements either as “fi nancial income (costs)” or, for the results of equity investments accounted for with the equity method, under “effects of the valuation of equity investments accounted for using equity method”.
  • Adjusted EBITA: it is arrived at by eliminating from EBIT (as defi ned 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 signifi cant, defi ned plans;
    • other exceptional costs or income, i.e. connected to particularly signifi cant 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:

 (EUR 000’s)    2008   2007 
Earnings before income taxes, net financial income and costs and share of results of equity accounted investments (EBIT)  117,562  100,294
Impairment of goodwill    -   - 
Amortisation of intangible assets acquired through a business combination   -   - 
Restructuring costs    (1,635)    - 
Total exceptional costs (income)    -   - 
Adjusted EBITA    119,197    100,294  

Free Operating Cash Flow (FOCF): This is the sum of the cash fl ow generated by (used in) operating activities and the cash flow generated by (used in) investment and divestment of intangible assets, property, plant and equipment, and equity investments, net of cash fl ows 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 the previous section 2.3.

  • Funds From Operations (FFO): This is cash fl ow generated by (used in) operating activities, net of changes in working capital. The calculation of FFO for the periods concerned is presented in the reclassifi ed statement of cash fl ows shown in the previous 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.
  • 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 production 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.
  • 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 profi t and the average value of shareholders’ equity for the two periods concerned.
  • Research and development (R&D) spending: This is the sum of costs sustained for R&D expensed and sold. The costs for research expensed are normally referable to so-called “basic technology”, i.e. rights to the attainment of new scientifi c 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 specifi c sale order exists and which have accounting and operational treatment identical to ordinary supply (sale contract, profi tability, 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.
  • Workforce: This is the number of employees reported on the last day of the period.