Alternative performance measures: Archive
Discover the definitions of the measures used in our financial results reports and media releases.
Non-GAAP Measures - from full year 2018 onwards
Factors out changes in the scope of consolidation (such as divestments and acquisitions occurring in 2018 and 2017) and currency translation effects (2018 figures are converted with 2017 exchange rates in order to calculate the currency effects).
Fixed Costs related to Administrative, Marketing & Sales, Corporate Manufacturing and Corporate Logistics costs included in Recurring EBITDA
Significant items that, because of their exceptional nature, cannot be viewed as inherent to the Group's ongoing performance, such as strategic restructuring, major items relating to antitrust fines and other business related litigation cases. In 2017, they also included costs directly related to the merger such as legal, banking fees and advisory costs, employee costs related to redundancy plans and IT implementation costs.
Comprises capital gains or losses on the sale of Group companies and of property, plant and equipment and other non-operating items that are not directly related to the Group's normal operating activities such as revaluation gains or losses on previously held equity interests, disputes with non-controlling interests and other major lawsuits.
Previously Operating EBITDA Adjusted, defined as:
+/– Operating profit
- depreciation, amortization and impairment of operating assets
- restructuring, litigation, implementation and other non-recurring costs
Recurring EBITDA divided by Net Sales
+/- Operating profit (loss)
- impairment of goodwill and assets
+/- Net income (loss)
- capital gains or losses on the sale of Group companies
- impairment of goodwill and assets
Net income before impairment and divestments attributable to the shareholders of LafargeHolcim divided by the weighted average number of shares outstanding.
+ Expenditure to increase existing or create additional capacity to produce, distribute or provide services for existing products (expansion) or to diversify into new products or markets (diversification)
+ Expenditure to sustain the functional capacity of a particular component, assembly, equipment, production line or the whole plant, which may or may not generate a change of the resulting cash flow
– Proceeds from sale of property, plant and equipment
+/– Cash flow from operating activities
– Net Maintenance and expansion Capex
+ Financial liabilities (Long Term & Short Term) including derivative liabilities
– Cash and cash equivalents
– Derivative assets (Long Term & Short Term)
The Invested Capital is an indicator that measures total funds invested by shareholders, lenders and any other financing sources. It is defined as:
+ Total shareholders’ equity
+ Net financial debt
– Assets classified as held for sale
+ Liabilities classified as held for sale;
– Current financial receivables; and
– Long-term financial investments and other long-term assets.
+/– Net Operating Profit (being the Recurring EBITDA, adjusted for depreciation and amortization of operating assets but excluding impairment of operating assets)
– Standard Taxes (being the taxes applying the Group's tax rate to the Net Operating Profit as defined above)
Net Operating Profit After Tax (NOPAT) divided by the average Invested Capital. The average is calculated by adding the Invested Capital at the beginning of the period to that at the end of the period and dividing the sum by 2 (based on a rolling 12 month calculation)
Free Cash Flow divided by Recurring EBITDA
Non-GAAP Measures glossary - from half year 2018 onwards
Profit/Loss on disposals and non-operating items comprise capital gains or losses on the sale of Group companies and of property, plant and equipment and other non-operating items that are not directly related to the Group’s normal operating activities such as revaluation gains or losses on previously held equity interests, disputes with non-controlling interests.
Like-for-like information is information factoring out changes in the scope of consolidation (such as divestments and acquisitions occurring in 2018 and 2017) and currency translation effects (2018 figures are converted with 2017 exchange rates in order to calculate the currency effects).
Restructuring, litigation, implementation and other non-recurring costs comprise significant items that, because of their exceptional nature, cannot be viewed as inherent to the Group’s ongoing performance, such as strategic restructuring, major items relating to antitrust fines and other business related litigation cases. In the comparative periods, they also included costs directly related to the merger such as legal, banking fees and advisory costs, employee costs related to redundancy plans and IT implementation costs.
Non-GAAP measures glossary - from full year 2017 onwards
Factors out changes in the scope of consolidation (such as divestments and acquisitions occurring in 2017 and 2016) and currency translation effects (2017 figures are converted with 2016 exchange rates in order to calculate the currency effects).
Significant items that, because of their exceptional nature, cannot be viewed as inherent to the Group's ongoing performance, such as strategic restructuring, major items relating to antitrust fines and other business related litigation cases. In 2017 and 2016, they also included costs directly related to the merger such as legal, banking fees and advisory costs, employee costs related to redundancy plans and IT implementation costs.
Comprises capital gains or losses on the sale of Group companies and of property, plant and equipment and other non-operating items that are not directly related to the Group's normal operating activities such as revaluation gains or losses on previously held equity interests, disputes with non-controlling interests and other major lawsuits.
Previously Operating EBITDA Adjusted, defined as:
+/– Operating profit - depreciation, amortization and impairment of operating assets
- restructuring, litigation, implementation and other non-recurring costs
Recurring EBITDA divided by Net Sales
+/- Net income (loss)
- capital gains or losses on the sale of Group companies
- impairment of goodwill and assets
Net income before impairment and divestments attributable to the shareholders of LafargeHolcim divided by the weighted average number of shares outstanding.
+ Expenditure to increase existing or create additional capacity to produce, distribute or provide services for existing products (expansion) or to diversify into new products or markets (diversification)
+ Expenditure to sustain the functional capacity of a particular component, assembly, equipment, production line or the whole plant, which may or may not generate a change of the resulting cash flow
– Proceeds from sale of property, plant and equipment
Previously “Operating Free Cash Flow”, defined as:
+/– Cash flow from operating activities
– Net Maintenance and expansion Capex
+ Financial liabilities (Long Term & Short Term) including derivative liabilities
– Cash and cash equivalents
– Derivative assets
+ Net working capital
+ Investments in associates and joint ventures
+ Property, plant and equipment
+ Goodwill
+ Intangible assets
+ Deferred tax assets
+ Pension assets
– Short-term provisions
– Defined benefit obligations
– Deferred tax liabilities
– Long-term provisions
+/– Net Operating Profit (being the Recurring EBITDA, adjusted for depreciation and amortization of operating assets but excluding impairment of operating assets)
– Standard Taxes (being the taxes applying the Group's tax rate to the Net Operating Profit as defined above)
Net Operating Profit After Tax (NOPAT) divided by the average Invested Capital. The average is calculated by adding the Invested Capital at the beginning of the period to that at the end of the period and dividing the sum by 2 (based on a rolling 12 month calculation)
Free Cash Flow divided by Recurring EBITDA
Non-GAAP measures glossary - previous quarters
The Pro Forma Financial Information for the period ended December 31, 2015 reflects the merger of Holcim and Lafarge as if the Merger had occurred on January 1, 2015.
The Pro Forma Financial Information is derived from:
– the audited financial information of LafargeHolcim for the period ended December 31, 2015; and
– Lafarge interim financial information for the six month period ended June 30, 2015 translated into Swiss Francs. The Pro Forma Financial Information also reflects the following effects:
– the financial impact corresponding to the 10 days between July 1 and July 10, 2015 (Merger date);
– the impacts of the fair value adjustments for the six month period ended June 30, 2015. They mainly relate to long-term financial debt and depreciation and amortization of property, plant and equipment;
– the change of scope resulting from the Merger (mainly the full consolidation of operations in China and Nigeria); and
– the divestments carried out as part of a rebalancing of the Group global portfolio and completed in the second semester of 2015 mainly to CRH for operations in Europe, North America, Brazil and the Philippines. The Pro Forma Financial Information does not take into consideration any purchase price accounting impact on operating EBITDA which mainly relates to inventory valuation.
The Pro Forma Financial Information for the period ended September 30, 2015 reflects the merger of Holcim and Lafarge as if the Merger had occurred on January 1, 2015. The Pro Forma Financial Information is derived from:
– the unaudited financial information of Holcim for the period ended June 30, 2015;
– Lafarge interim financial information for the six month period ended June 30, 2015 translated into Swiss Francs; and The Pro Forma Financial Information also reflects the following effects:
– the financial impact corresponding to the 10 days between July 1 and July 10, 2015 (Merger date);
– the impacts of the fair value adjustments for the six month period ended June 30, 2015. They mainly relate to long-term financial debt and depreciation and amortization of property, plant and equipment;
– the change of scope resulting from the Merger (mainly the full consolidation of operations in China and Nigeria); and
– the divestments carried out as part of a rebalancing of the Group global portfolio and completed in the second semester of 2015 mainly to CRH for operations in Europe, North America, Brazil and the Philippines.
The Pro Forma Financial Information for the period ended June 30, 2015 reflects the merger of Holcim and Lafarge as if the Merger had occurred on January 1, 2015.
The Pro Forma Financial Information is derived from:
– the unaudited financial information of Holcim for the period ended June 30, 2015;
– Lafarge interim financial information for the six month period ended June 30, 2015 translated into Swiss Francs; and
The Pro Forma Financial Information also reflects the following effects:
– the impacts of the fair value adjustments for the six month period ended June 30, 2015. They mainly relate to long-term financial debt and depreciation and amortization of property, plant and equipment;
– the change of scope resulting from the Merger (mainly the full consolidation of operations in China and Nigeria); and
– the divestments carried out as part of a rebalancing of the Group global portfolio and completed in the second semester of 2015 mainly to CRH for operations in Europe, North America, Brazil and the Philippines.
Like-for-like information is information factoring out changes in the scope of consolidation occurring in 2016 (such as divestments occurring in 2016) and currency translation effects (2016 figures are converted with 2015 exchange rates in order to calculate the currency effects). The changes in scope in connection with the merger with Lafarge were already taken into account in the Pro Forma Financial Information.
Like-for-like information is information factoring out changes in the scope of consolidation occurring in 2016 (such as divestments occurring in 2016) and currency translation effects (2016 figures are converted with 2015 exchange rates in order to calculate the currency effects). The changes in scope in connection with the merger with Lafarge were already taken into account in the Pro Forma Financial Information.
Like-for-like, i.e. factoring out changes in the scope of consolidation occurring in 2016 (such as South Korea divestment occurring end of April 2016) and currency translation effects (2016 figures are converted with 2015 exchange rates in order to calculate the currency effects). The changes in scope in connection with the merger with Lafarge were already taken into account in the Pro Forma information.
The Operating EBITDA is an indicator to measure the performance of the Group. It is defined as:
- Operating profit before depreciation, amortization and impairment of operating assets
The Operating EBITDA Adjusted is an indicator to measure the performance of the Group excluding the impacts of non recurring items such as merger costs and other. It is defined as:
- Operating EBITDA excluding merger, restructuring and other one-offs
The Operating EBITDA Margin Adjusted is an indicator to measure the profitability of the Group excluding the impacts of non recurring items such as merger costs and other. It is defined as:
- Operating EBITDA margin excluding merger, restructuring and other one-offs
The Merger, restructuring and other one-offs are an indicator to identify the impacts of the merger and other non recurring effects. It is defined as:
- Costs directly related to the merger such as legal, banking fees and advisory costs related to the merger, employee costs related to redundancy plans directly related to the merger; and
- Restructuring costs and other non recurring costs such as employee costs related to other redundancy plans.
The Free cash flow is an indicator to measure the cash generated by the Group, before considering dividends (including minorities), movements in financial liabilities and share capital. It is defined as:
+/- Cash flow from operating activities
+/- Cash flow from investing activities
+/- Movement of LafargeHolcim treasury shares
+/- De(in)crease in participation in existing Group companies
The Operating Free Cash Flow is an indicator to measure the level of cash generated by the Group after spending cash to maintain or expand its asset base. It is defined as:
+/- Cash flow from operating activities
- Net Maintenance and expansion Capex
The Net Maintenance and Expansion Capex ("Capex" or "Capex Net") is an indicator to measure the cash spent to maintain or expand its asset base. It is defined as:
+ Expenditure to increase existing or create additional capacity to produce, distribute or provide services for existing products (expansion) or to diversify into new products or markets (diversification)
+ Expenditure to sustain the functional capacity of a particular component, assembly, equipment, production line or the whole plant, which may or may not generate a change of the resulting cash flow
- Proceeds from sale of property, plant and equipment.
The Capex is an indicator to measure the expenditure that increases the fixed asset base of a company with the purpose of replacing part or all of the equipment of the production process, increasing the productivity of existing equipment, expanding the production capacity, allowing the diversification into a new range of products or complying with internal or external safety, security or environmental regulations. It is defined as:
+ Purchase of property, plant and equipment
+ Acquisition of participation in Group companies
+ Purchase of financial assets, intangible and other assets
+ Increase in participation in existing Group companies
- Capitalized merger and implementation costs
The Capitalized merger & implementation costs is an indicator to measure the merger and implementation costs that were capitalized in application of the IFRS rule allowing it. It is defined as:
- Capitalized costs directly related to the merger.
The Net financial debt ("Net debt") is an indicator to measure the financial debt of the Group after deduction of the cash. It is defined as:
+ Financial liabilities (long term & short term) including derivative liabilities
- Cash and cash equivalents
- Derivative assets
The Recurring Net Income is an indicator to measure the net income excluding any non recurring transactions. It is defined as:
+/- Net income (loss);
- merger-related one-off costs;
- other one-off costs above CHF 50 million on an individual basis;
- costs of early bond repayments; and
- gains/losses on disposals and impairments.
The Recurring Earnings Per Share (EPS) is an indicator that measures the theoretical profitability per share of stock outstanding based on a Recurring Net Income. It is defined as:
- Recurring Net Income attributable to the shareholders of LafargeHolcim Ltd divided by the weighted average number of shares outstanding.
The Invested Capital is an indicator that measures total funds invested by shareholders, lenders and any other financing sources. It is defined as:
+ Accounts receivable;
+ Inventories;
+ Prepaid and other current assets (excluding current income tax receivable);
+ Long-term financial assets;
+ Investments in associates and joint ventures;
+ Property, plant and equipment;
+ Goodwill;
+ Intangible assets;
+ Other long-term assets;
- Trade accounts payable;
- Other current liabilities;
- Short-term provisions;
- Defined benefit obligations; and
- Long-term provisions.
The Net Operating Profit After Tax ("NOPAT") is an indicator that measures the Group’s potential earnings if it had no debt. It is defined as:
+/- Net Operating Profit (being the net income before taxes, adjusted for the net financial expenses but including the interest earned on cash and cash equivalents and marketable securities); and
- Standard Taxes (being the taxes applying the country tax rate to the Net Operating Profit (as defined above) after deduction of interest expenses).
The ROIC (Return On Invested Capital) measures the Group’s ability to use invested capital increasingly efficiently. It is defined as Net Operating Profit After Tax (NOPAT) divided by the average Invested Capital. The average is calculated by adding the Invested Capital at the beginning of the period to that at the end of the period and dividing the sum by 2 (based on a rolling 12 month calculation).
The net working capital is an indicator that indicates whether the Group has enough short-term assets to cover its short-term liabilities. It is defined as:
+ Trade accounts receivables;
+ Inventories;
+ Prepaid expenses and other current assets;
- Trade accounts payable;
- Current income tax liabilities; and
- Other current liabilities.
The operating net working capital is an indicator that measures the amount of liquid assets that the Group has on hand for its day-to-day operations. It is defined as:
+ Trade accounts receivables;
+ Inventories; and
- Trade accounts payable.
Synergies are an indicator that measures the value creation driven directly or indirectly by the merger of Lafarge and Holcim. They are presented excluding any impact of implementation costs.
