Control System

Based upon a matrix organisation, KSB determines its key ­financial performance indicators as follows:

Management decisions are made primarily on the basis of key indicators determined for the Pumps, Valves and Service segments: order intake, sales revenue and EBIT. EBIT is defined as earnings before financial income / expense and income tax. The definition of this earnings indicator changed in the 2018 financial year. Until the 2017 year-end, EBIT was defined as the earnings before interest and income tax. In the comments in these consolidated financial statements, the new definition of the key indicator is used; prior-year figures were restated accordingly.

For more information on these key indicators see the Notes to the Consolidated Financial Statements, Section VIII. Segment Reporting.

For the control of the entire Group, the key indicators of order intake, sales revenue, earnings before income tax (EBT), pre-tax return on sales as well as the net financial position are used, and from the 2018 financial year onwards also the EBIT. The pre-tax return on sales describes the ratio between earnings before income tax (EBT) and sales revenue; the net financial position is the balance of interest-bearing financial liabilities and interest-bearing financial assets (current and non-current financial instruments, interest-bearing loans to companies accounted for using the equity method as well as companies that were not consolidated due to there being no material impact, cash and cash equivalents, receivables from deposits). Starting in the 2019 financial year, the key indicators of earnings before income tax (EBT), pre-tax return on sales as well as the net financial position will no longer be used. When specifying and evaluating these key indicators, KSB is guided on the one hand by developments in the market, and on the other by the performance of its key competitors.

No non-financial performance indicators are consulted for controlling the Group and for making decisions regarding management issues.

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