Annual Report 2016
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VIII. Segment REPORTING

Segment reporting is prepared in accordance with IFRS 8 based on the management approach and corresponds to our internal organisational and management structure as well as the reporting lines to the Board of Management as the chief operating decision maker. In our matrix organisation, management decisions are primarily taken on the basis of the key performance indicators – order intake, external sales revenue and earnings before interest and taxes (EBIT) – determined for the Pumps, Valves and Service segments, excluding the effects from measuring construction contracts under IAS 11. Reporting the relevant assets, number of employees and inter-segment sales revenue for these segments is not part of our internal reporting. The managers in charge of the segments, which are geared to product groups, have profit and loss responsibility. They identify business opportunities across markets and industries and assess our options based on current and future market requirements. They also proactively encourage the development of new products and improvements to the available range of products. In this context, they work closely with our Sales organisation and Operations.

The Pumps segment includes single- and multistage pumps, submersible pumps and associated control and drive systems. Applications include process engineering, building services, water and waste water transport, energy conversion and solids transport.

The Valves segment covers butterfly, globe, gate, control, diaphragm and ball valves, as well as associated actuators and control systems. Applications primarily include process engineering, building services, energy conversion and solids transport.

The Service segment covers the installation, commissioning, start-up, inspection, servicing, maintenance and repair of pumps, related systems and valves for all applications; as well as modular service concepts and system analyses for complete systems.

Our companies can be allocated to one or more segments based on their business activities.

The amounts disclosed for the individual segments have been established in compliance with the accounting policies of the underlying consolidated financial statements.

Transfer prices for intercompany sales are determined on an arm’s length basis.

There were no discontinued operations in the period under review, as in the comparative period of the previous year.

The order intake by segment presents order intake generated with third parties and non-consolidated Group companies.

The external sales revenue by segment presents sales revenue generated with third parties and non-consolidated Group companies. The effects from measuring construction contracts in accordance with IAS 11 are presented separately as reconciliation effects.

The table shows earnings before interest and taxes (EBIT) and consolidated earnings before income taxes (EBT) including non-controlling interests. The effects from measuring construction contracts in accordance with IAS 11 are presented separately as reconciliation effects.

Order intake External sales revenue EBIT
(€ thousands) 2016 2015 2016 2015 2016 2015
Pumps segment 1,386,617 1,452,431 1,428,491 1,513,977 60,876 55,389
Valves segment 331,182 367,965 360,794 384,570 8,794 10,340
Service segment 438,756 440,783 416,521 413,618 33,279 36,157
Reconciliation – 40,154 22,666 – 14,780 3,285
Total 2,156,555 2,261,179 2,165,652 2,334,831 88,169 105,171
Financial income – Interest and similar income 6,357 7,635
Financial expense – Interest and similar expenses – 19,885 – 19,414
Earnings before income taxes (EBT) 74,641 93,392

The EBIT of the Pumps segment includes depreciation and amortisation expense of € 49.2 million (previous year: € 50.9 million), the EBIT of the Valves segment includes depreciation and amortisation expense of € 11.1 million (previous year: € 12.6 million) and the EBIT of the Service segment includes depreciation and amortisation expense of € 12.3 million (previous year: € 12.0 million).

€ 552,538 thousand (previous year: € 620,238 thousand) of the sales revenue presented was generated by the companies based in Germany, € 262,601 thousand (previous year: € 261,769 thousand) was generated by the companies based in France, € 200,779 thousand (previous year: € 209,959 thousand) by the companies based in the USA, and € 1,149,734 thousand (previous year: € 1,242,865 thousand) by the other Group companies.

There were no relationships with individual customers that accounted for a material proportion of Group sales revenue.

At the reporting date, the total non-current assets of the KSB Group amounted to € 555,699 thousand (year-end figure in 2015: € 542,292 thousand), with € 192,139 thousand (year-end figure in 2015: € 196,625 thousand) being attributable to the companies based in Germany and € 363,560 thousand (year-end figure in 2015: € 345,667 thousand) being attributable to the other Group companies. They include intangible assets, property, plant and equipment and investments accounted for using the equity method; non-current financial instruments and deferred tax assets are not included.

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