Based upon our matrix organisation, we determine our key financial performance indicators as follows:
Management decisions are taken primarily on the basis of the key indicators that are determined for the Pumps, Valves and Service segments: order intake, sales revenue and earnings before interest and taxes (EBIT). In 2016, instead of the latter control parameter, the operating earnings (EBIT excluding the effects from measuring construction contracts in accordance with IAS 11) were relevant. Following a change in internal reporting, the sales revenue and effects on earnings from construction contracts under IAS 11 have been reported at segment level since January 2017. As a result, sales revenue and EBIT including these effects were reported to Management and decisions taken on this basis in the reporting year under review.
For further information on these key indicators see the Notes to the Consolidated Financial Statements, section VIII. Segment Reporting.
For the control of the entire Group, we use the key indicators of order intake, sales revenue, earnings before income taxes (EBT), pre-tax return on sales as well as the net financial position, and from the 2018 financial year onwards also the earnings before interest and taxes (EBIT). The pre-tax return on sales describes the ratio between the earnings before income taxes (EBT) and the sales revenue; net financial position is the balance of financial liabilities and interest-bearing financial assets (current and non-current financial instruments, interest-bearing loans, cash and cash equivalents, and receivables from cash deposits). When specifying and evaluating these key indicators, we are guided on the one hand by developments in the market, and on the other by the performance of our key competitors.
We do not consult any non-financial performance indicators for controlling the Group and for making decisions regarding management issues.