V. INCOME STATEMENT DISCLOSURES

(€ thousands)	2016	2015
Revenue from the sale of goods and goods purchased and held for resale	1,915,739	2,086,660
Services sales revenue	249,913	248,171
	2,165,652	2,334,831

The impact of the percentage of completion method pursuant to IAS 11 and the breakdown of sales revenue by segment (Pumps, Valves and Service) is presented in the segment reporting.

(€ thousands)	2016	2015
Income from disposal of assets	1,478	2,769
Reversal of impairment losses on receivables	9,277	10,032
Currency translation gains	3,629	2,450
Income from the reversal of provisions	8,400	14,222
Miscellaneous other income	24,443	20,479
	47,227	49,952

Miscellaneous other income relates primarily to commission income, rental and lease income, insurance compensation, grants and subsidies. Income from government grants for individual projects (for example, for research activities) amounted to € 2,564 thousand (previous year: € 2,846 thousand).

(€ thousands)	2016	2015
Cost of raw materials and production supplies consumed and of goods purchased and held for resale	789,298	888,152
Cost of purchased services	84,858	91,379
	874,156	979,531

(€ thousands)	2016	2015
Wages and salaries	641,451	661,374
Social security contributions and employee assistance costs	129,574	126,876
Pension costs	27,725	31,000
	798,750	819,250

Pension costs are reduced by the interest component of provisions for pensions and similar obligations, which is reported as an interest cost in financial income / expense.

EMPLOYEES

	Average for the year		At reporting date
	2016	2015	31 Dec. 2016	31 Dec. 2015
Wage earners	7,311	7,512	7,091	7,351
Salaried employees	8,125	8,364	8,015	8,415
	15,436	15,876	15,106	15,766
Apprentices	477	438	466	430
	15,913	16,314	15,572	16,196

The first-time inclusion of fully consolidated companies in Slovenia and Finland led to an increase of 21 in the average number of employees over the year and in the total number at the reporting date.

(€ thousands)	2016	2015
Losses from asset disposals	1,270	3,258
Losses from current assets (primarily impairment losses on receivables)	12,744	12,798
Currency translation losses	2,222	2,778
Other staff costs	31,157	28,253
Repairs, maintenance, third-party services	85,816	95,546
Selling expenses	73,835	90,658
Administrative expenses	83,657	94,038
Rents and leases	26,898	28,923
Miscellaneous other expenses	54,842	55,215
	372,441	411,467

Miscellaneous other expenses relate primarily to warranties, contractual penalties and additions to provisions.

(€ thousands)	2016	2015
Financial income	6,612	7,682
Income from equity investments	147	–
thereof from other investments	(147)	(–)
Interest and similar income	6,357	7,635
thereof from other investments	(37)	(76)
thereof from investments accounted for using the equity method	(20)	(12)
Other financial income	108	47
Financial expense	– 20,672	– 22,360
Interest and similar expenses	– 19,885	– 19,414
thereof to other investments	(1)	(–)
Write-downs on other investments	–	– 2
Write-downs on investments accounted for using the equity method	–	– 2,700
Expenses from the remeasurement of financial instruments	– 62	– 178
Other financial expense	– 725	– 66
Income / expense from / to investments accounted for using the equity method	– 1,342	4,373
Financial income / expense	– 15,402	– 10,305

Interest and similar expenses include the interest cost on pension provisions amounting to € 11,940 thousand (previous year: € 11,577 thousand). The change in the financial income / expense is mainly due to the negative result from investments accounted for using the equity method. Write-downs on investments accounted for using the equity method in the previous year were attributable to a German joint venture that faced ongoing economic difficulties.

All income-related taxes of the consolidated companies and deferred taxes are reported in this item. Other taxes are reported in the income statement after other expenses.

(€ thousands)	2016	2015
Effective taxes	41,160	43,538
Deferred taxes	– 14,296	– 2,316
	26,864	41,222

€ 875 thousand (previous year: € 85 thousand) of the effective taxes in the year under review related to prior-period tax refunds and € 2,923 thousand (previous year: € 2,912 thousand) to tax arrears.

RECONCILIATION OF DEFERRED TAXES

(€ thousands)	2016	2015
Change in deferred tax assets	– 27,806	2,493
Change in deferred tax liabilities	– 664	1,015
Change in deferred taxes recognised in balance sheet	– 28,470	3,508
Change in deferred taxes taken directly to equity	13,999	– 5,983
Changes in consolidated Group / CTA* / Other	175	159
Deferred taxes recognised in income statement	– 14,296	– 2,316
* CTA = Currency translation adjustments

ALLOCATION OF DEFERRED TAXES

	Deferred tax assets		Deferred tax liabilities
(€ thousands)	2016	2015	2016	2015
Non-current assets	1,828	1,619	31,309	33,543
Intangible assets	1,152	1,019	279	484
Property, plant and equipment	612	479	30,964	32,932
Non-current financial assets	64	121	66	127
Current assets	57,152	59,132	45,621	54,236
Inventories	48,516	52,413	1,924	94
Receivables and other current assets	7,096	6,719	43,554	54,142
Assets held for sale	1,540	–	143	–
Non-current liabilities	96,462	82,244	25	222
Provisions	96,305	82,055	–	183
Other liabilities	157	189	25	39
Current liabilities	20,949	17,789	8,573	8,765
Provisions	11,248	7,929	1,201	719
Other liabilities	9,701	9,860	7,372	8,046
Tax loss carryforwards	8,928	7,303	–	–
Gross deferred taxes – before offsetting	185,319	168,087	85,528	96,766
Offset under IAS 12.74	– 73,153	– 83,727	– 73,153	– 83,727
Net deferred taxes – after offsetting	112,166	84,360	12,375	13,039

As at the reporting date, deferred tax assets of € 97,825 thousand (previous year: € 66,867 thousand) were recognised, arising from companies posting a loss in the financial year or previous year, whose realisation exclusively depends on the creation of future profit. Based on the planning figures available, we expect realisation to take place.

The taxes included under equity can be broken down as follows:

INCOME TAXES INCLUDED UNDER EQUITY

(€ thousands)	2016	2015
Remeasurement of defined benefit plans	– 47,278	18,087
Taxes on income	13,546	– 5,454
Currency translation differences	20,223	1,158
Taxes on income	–	–
Changes in the fair value of financial instruments	– 1,622	3,077
Taxes on income	453	– 529
Other comprehensive income	– 14,678	16,339

As in the previous year, the introduction of new local taxes had no effects in the year under review. Changes in foreign tax rates led to a reduction in the total tax expense of € 664 thousand (previous year: reduction of € 591 thousand).

As far as net income from affiliates and other equity investments is concerned, withholding taxes incurred in connection with distributions and German taxes incurred are recognised as deferred taxes if these gains are expected to be subject to corresponding taxation, or there is no intention of reinvesting them in the long term. No deferred tax liabilities were recognised for temporary differences of € 6,529 thousand (previous year: € 7,205 thousand) in relation to affiliates and associates as it is unlikely that these temporary differences will be reversed in the foreseeable future.

We did not recognise deferred tax assets from loss carryforwards amounting to € 41,720 thousand (previous year: € 49,641 thousand) because it is unlikely that there will be sufficient taxable profit available in the near future against which these deferred tax assets can be utilised. They are largely available for an indefinite period.

Deductible temporary differences for which no deferred tax assets had to be set up amounted to € 9,145 thousand (previous year: € 9,736 thousand).

RECONCILIATION OF INCOME TAXES

(€ thousands)	2016	2015
Earnings before income taxes (EBT)	74,641	93,392
Calculated income taxes on the basis of the applicable tax rate (30 % as in the previous year)	22,392	28,018
Differences in tax rates	– 793	– 331
Change in write-downs on deferred taxes on loss carryforwards and unused tax loss carryforwards	– 108	2,357
Tax-exempt income	– 1,184	– 4,071
Non-deductible expenses	1,231	2,211
Impairment loss on goodwill	1,542	3,535
Prior-period taxes	2,048	2,827
Non-deductible foreign income tax	3,396	2,851
Investments accounted for using the equity method	662	– 306
Deferred taxes not recognised	– 273	2,181
Other	– 2,049	1,950
Current taxes on income	26,864	41,222
Current tax rate	36 %	44 %

The unchanged applicable tax rate of 30 % is a composite rate resulting from the current German corporation tax, solidarity surcharge and trade tax rates.

The net profit attributable to non-controlling interests amounts to € 15,190 thousand (previous year: € 13,259 thousand) and the net loss attributable to non-controlling interests amounts to € 356 thousand (previous year: € 374 thousand). They relate primarily to PAB GmbH, Frankenthal, Germany, and the interests it holds, as well as to our companies in India.

		2016	2015
Earnings after income taxes attributable to KSB AG shareholders	€ thousands	32,943	39,285
Additional dividend attributable to preference shareholders (€ 0.26 per preference share)	€ thousands	– 225	– 225
	€ thousands	32,718	39,060
Number of ordinary shares		886,615	886,615
Number of preference shares		864,712	864,712
Total number of shares		1,751,327	1,751,327
Diluted and basic earnings per ordinary share	€	18.68	22.30
Diluted and basic earnings per preference share	€	18.94	22.56