Merck 2014 Annual Report Download - page 61

56 GROUP MANAGEMENT REPORT → FUNDAMENTAL INFORMATION ABOUT THE GROUP → Internal management system of the Group
KEY PERFORMANCE INDICATORS OF THE
GROUP AND ITS BUSINESSES
The three key performance indicators sales, EBITDA pre one-time
items1, and business free cash flow1
are the most important factors
for assessing operational performance. Reference to these KPIs
can therefore be
found in the Report on Economic Position, the
Report on Risks and Opportunities, and in the Report on Expected
Developments.
As the most important ind icators of the Group’s
financial business performance, the KPIs are key elements of the
company’s performance management system.
Sales
Sales are defined as the revenues from the sale of goods and
services rendered to external customers net of value added tax
and after sales deductions such as rebates or discounts. Sales are
the main indicator of business growth in the Group and therefore
an important parameter of external as well as internal perfor-
mance measurement.
GROUP →
SALES
€ million / change in % 2014 2013 Change
Sales 11,291.5 10,700.1 5.5
EBITDA pre one-time items
EBITDA pre one-time items is the main performance indicator
measuring ongoing operational profitability and is used internally
and externally. To allow for a better understanding of the under-
lying operational performance, it excludes from the operating
result depreciation and amortization as well as one-time items.
One-time items are restricted to the following categories: impair-
ments, integration costs / IT costs, restructuring costs, gains / losses
on the divestment of businesses, acquisition costs, and other one-
time items. The classification of specific income and expenses as
one-time items follows clear definitions and underlies strict gov-
ernance at Group level. Within the scope of internal performance
management,
EBITDA pre allows for the necessary changes or
restructuring without penalizing the performance of the operating
business.
GROUP →
RECONCILIATION EBIT TO EBITDA PRE ONE-TIME ITEMS
€ million / change in % 2014 2013 Change
Operating result (EBIT) 1,762.0 1,610.8 9.4
Depreciation and amortization 1,261.6 1,237.9 1.9
Impairment losses / Reversals of impairment losses 99.3 220.5 – 55.0
EBITDA 3,122.9 3,069.2 1.7
Restructuring costs 83.9 130.5 – 35.7
Integration costs / IT costs 87.2 49.0 78.0
Gains / losses on the divesment of businesses –1.9 2.3 –182.6
Acquisition-related one-time items 85.0 0.0 –
Other one-time items 10.6 2.3 365.2
EBITDA pre one-time items 3,387.7 3,253.3 4.1
1 Financial indicators not defined by International Financial Reporting Standards.