Annual Report 2016

Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

6. Trade accounts receivable

7. Other current assets and current financial assets

8. Inventories

9. Property, plant and equipment

10. Other non-current assets and non-current financial assets

11. Goodwill and intangible assets

12. Short-term debt

13. Other current liabilities and provisions

14. Long-term debt

15. Financial instruments

16. Retirement benefit plans

17. Participation plans

18. Deferred tax assets and liabilities

19. Other non-current liabilities and provisions

20. Contingencies

21. Capital stock and treasury shares

22. Earnings per share

23. Other operating expenses, net

24. Financial result, net

25. Income tax expenses

26. Operating Leasing

27. Research and development cost

28. Cashflow figures

Net cashflow is calculated as follows:

  2016 2015
EBITDA1 785.2 631.7
Financial result, net -9.3 -23.5
Income tax expenses -82.6 -52.4
Changes in deferred taxes2 and current income tax liabilities and provisions -21.4 -19.5
Changes in non-current provisions 32.0 23.9
Non-cash effective depreciation of the Sanitec inventory revaluation 0.0 28.4
Changes in non-current assets and other -4.9 7.7
Net cashflow 699.0 596.3
1 EBIT + Depreciation + Amortisation  
2 Only portion booked to the income statement  

“Changes in non-current provisions” mainly includes the changes in provisions for operating risks, accrued pension obligations and non-cash expenses resulting from share participation and option plans charged or credited to net income.

“Changes in non-current assets and other” mainly includes the changes in prepaid pension assets booked to net income, the reclassification of gains from the disposal of property, plant and equipment and subsidiaries and the amortisation of deferred financing fees.

Free cashflow is calculated as follows:

  2016 2015
Net cashflow 699.0 596.3
Purchase of property, plant and equipment and intangible assets, net -132.9 -141.0
Changes in net working capital 10.1 40.4
Payments charged to non-current provisions -12.3 -11.7
Free cashflow 563.9 484.0

As per the Group definition, the term “Free cashflow” does not include cashflows from divestments or acquisitions of subsidiaries, proceeds or repayments of borrowings, the purchase or sale of treasury shares and dividend payments.

“Changes in net working capital” comprises the changes in the aggregate of trade accounts receivable, inventories and other current assets, less the aggregate of trade accounts payable and other current provisions and liabilities.

“Payments charged to non-current provisions” mainly includes outflows resulting from pension and warranty obligations.

“Net cashflow” and “Free cashflow” are no substitute for figures shown in the consolidated income statements and the consolidated statements of cashflows, but they may give an indication of the Group’s capability to generate cash, to pay back debt, to finance acquisitions, to buy back shares and to pay dividends.

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Group companies as of December 31, 2016