The management approach is based on six key performance indicators: order intake, revenue, adjusted EBIT, adjusted EBITDA, net bank debt and free cash flow before tax. These key figures are used for the KION Group as a whole and at segment level. They form the basis for the performance targets for both the KION Group and its segments as well as determining a significant proportion of senior managers' performance-related remuneration. The key performance indicators are determined once a month and submitted to the Executive Board as part of a comprehensive reporting package. Net bank debt is only relevant at Group level. The table below shows the key performance indicators used in the KION Group's internal financial reporting.
|
Key performance indicators |
|
€ million |
Order intake |
Revenue |
Adjusted EBIT1 |
Adjusted EBITDA1 |
Net financial debt |
Free cashflow before tax |
|
|
|
|
|
|
|
|
|
|
|
2010 |
3,860 |
3,534 |
139 |
462 |
2,641 |
83 |
|
2009 |
3,028 |
3,084 |
-29 |
311 |
2,484 |
34 |
|
2008 |
4,399 |
4,554 |
358 |
709 |
2,303 |
292 |
Order intake and revenue
Order intake and revenue are broken down by region, product segment and product group in the KION Group's management reporting so that revenue growth drivers and pertinent trends can be identified and analysed in a timely fashion.
Adjusted EBIT
The key figure used for the operational management and analysis of the KION Group's financial performance is adjusted earnings before interest and tax (EBIT). The EBIT figure is shown net of depreciation for property, plant and equipment and leased assets and of amortisation for intangible assets. One-off items are not included for the purposes of performance measurement; these items include the effect of purchase price allocation in connection with the KION acquisition, costs incurred in connection with the KIARA performance enhancement programme, redundancy schemes and severance pay. The EBIT margin is also used to measure the KION Group's operational efficiency. The EBIT margin is the ratio of adjusted EBIT to revenue.
For internal management reporting purposes, the adjusted EBIT figure does not include other net financial income/finance cost or net investment income.
Adjusted EBITDA
Unlike EBIT, the EBITDA figure is shown before deduction of depreciation for property, plant and equipment and leased assets and of amortisation for intangible assets. As with adjusted EBIT, the effects of the KION acquisition purchase price allocation and one-off items are not included for the purposes of performance measurement. Adjusted EBITDA constitutes an approximation of the cash flow KPI and provides information on the Company's long-term financial performance.
Net financial debt
Net financial debt – defined as the difference between financial debt and cash and cash equivalents – is the key performance measure used in liquidity planning at Group level. Lease liabilities and other financial liabilities are excluded from this figure.
Free cash flow before tax
Future free cash flows have a direct impact on the value of the Company. They are determined solely by the KION Group's operating activities and investing activities. Free cash flow before tax does not include tax payments or interest arising from financing activities, interest expense and similar charges from leases, or interest and similar income from leases. The performance measurement of free cash flow before tax is supported by the carefully targeted management of working capital and by detailed planning of capital expenditure.
