Alternative performance measures

In addition to the ones prescribed by IFRS, Implenia uses other measures to manage its business. The following overview explains the alternative performance measures (APM)used in this report. The aim is to clarify the reasons for using these measures and to improve transparency and comprehensibility.

Definitions of alternative performance measures

Order backlog

The order backlog is defined as services that have been contractually agreed
but not yet performed, valued by contract amount on the balance sheet
date. Approved contractual changes are also included in the backlog.
The order backlog increases when orders are secured, and decreases by the
level of production output during the period. This measure helps predict
the development of Implenia’s construction activity.

Equity ratio

The equity ratio is the ratio of equity to total assets on the balance sheet
date. In addition, the equity ratio takes account of the subordinated
convertible bond. Our equity ratio shows the Implenia Group’s financing
situation.

Income figures
excl. PPA

Income figures excluding PPA show the income situation if depreciation and
amortisation from redetermining the fair value of acquisitions is excluded.

Free cash flow

Free cash flow is defined as cash flow from operating activities minus the
acquisition and sale of fixed assets. The free cash flow figure reflects our
ability to generate cash, repay liabilities, make acquisitions and pay
dividends.

Like-for-like

Implenia shows like-for-like figures (currency-adjusted) in order to measure
changes since the previous reporting period without the distorting effect of
exchange rate fluctuations. The adjustment is made by recalculating balance
sheet items at the closing exchange rate on the last day of the previous year.
Meanwhile, figures for income, expenditure and cash flows at consolidated
companies are recalculated at the average exchange rates for the previous
period converted into CHF. These like-for-like figures allow an assessment
of Implenia’s performance over time without the influence of exchange
rate effects.

Net cash position

The net cash position corresponds to the difference between cash and
cash equivalents on the one hand, and interest-bearing short and long-term
financial liabilities on the other. The net cash position reflects our ability to
settle interest-bearing financial liabilities.

Performance measures
excl. IFRS 16

Performance measures excl. IFRS 16 adjust for the impact of the IFRS 16
leasing standard. Reporting to the Implenia Executive Committee and Board
of Directors contains figures that exclude the impact of IFRS 16.

Production output
(unconsolidated)

Production output is calculated as the IFRS revenue plus the proportionate
revenue from joint ventures valued using the equity method. Production
output is a purely statistical measure that reflects the work actually done
by the Group for its clients.

Return on invested
capital
(ROIC)

This measure is defined as the ratio between operating income and
average capital invested, excl. rights of use from leasing, during the period
under review. It is a measure of profitability and capital efficiency.

Visibility

Visibility is calculated as the order book for the current year divided by planned
production output for the next reporting period. Visibility is an indicator of
future assured capacity utilisation.

Reconciliations

The following reconciliation shows the derivation of the alternative performance measures “production output”, “EBITDA” and “operating income excluding PPA”:

in TCHF

APM

1.1.‑31.12.2019

1.1.‑31.12.2018

Production output (unconsolidated)

X

5,064,184

5,051,627

Proportional revenue and services invoiced to JVs

(86,717)

(88,288)

Intra-Group revenue

(546,634)

(598,866)

Group

revenue

4,430,833

4,364,473

EBITDA

186,768

89,726

Other operating expenses from leases

(55,986)

EBITDA excl. IFRS 16

X

130,782

89,726

Operating income

63,507

12,935

Depreciation and amortisation from PPA

4,053

18,065

Operating income excl. PPA

X

67,560

31,000

The following reconciliation shows the derivation of the alternative performance measure “net cash position”:

in TCHF

APM

31.12.2019

31.12.2018

Cash and cash equivalents

912,317

913,233

Financial liabilities

(639,753)

(516,022)

Net cash position

X

272,564

397,211

Lease liabilities

147,936

8,329

Net cash position excl. lease liabilities

X

420,500

405,540

Implenia defines free cash flow as cash flow from operating activities minus the acquisition and sale of fixed assets. The following table gives an overview of free cash flow:

in TCHF

APM

1.1.‑31.12.2019

1.1.‑31.12.2018

Cash flow from operating activities

143,549

16,052

Investments in non-current assets

(84,282)

(79,773)

Disposal of non-current assets

25,604

11,135

Free cash flow

X

84,871

(52,586)

Impact of IFRS 16 Leases

(51,352)

Free cash flow excl. IFRS 16

X

33,519

(52,586)