Free cash flow is an indicator used internally by Merck to measure the contribution of the divisions to liquidity. Free cash flow includes all net cash flows from operating activities as well as investing activities performed in connection with operating business. Not included in free cash flow are pure financial investments and similar monetary deposits of more than three months, which are also to be reported as net cash flows from investing activities under IFRS.
Free cash flow was calculated as follows:
| XLS |
|
|
|
|
|
€ million |
2012 |
2011 |
|
Net cash flows from operating activities |
2,472.2 |
1,271.2 |
|
Investments in intangible assets |
–144.2 |
–79.7 |
|
Investments in property, plant and equipment |
–329.1 |
–366.3 |
|
Acquisitions |
–20.6 |
–161.0 |
|
Investments in non-current financial assets |
–42.4 |
–10.5 |
|
Disposal of non-current assets |
93.6 |
787.4 |
|
Purchase / sale of marketable securities |
10.4 |
–4.7 |
|
Free cash flow |
2,039.9 |
1,436.4 |
In addition, business free cash flow is an important indicator used to agree internal targets for steering liquidity. It comprises the major payment-relevant items that the individual businesses can influence.
The composition of business free cash flow was as follows:
| XLS |
|
|
|
|
|
€ million |
2012 |
2011 |
|
EBITDA pre one-time items |
2,964.9 |
2,723.8 |
|
less investments in property, plant and equipment, software as well as advance payments for intangible assets |
–366.5 |
–412.3 |
|
Changes in inventories as reported in the balance sheet |
157.2 |
–17.6 |
|
Changes in trade accounts receivable as reported in the balance sheet |
213.7 |
–32.0 |
|
Business free cash flow |
2,969.3 |
2,261.9 |
Both indicators are presented in the Segment Reporting (see Note [53]).
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