Movements of Free Cash Flows

(Billions of Yen)

  2015 2016 2017 2018 2019
Operating profit - IFRS basis 86.8 76.9 98.9 124.3 210.6
Depreciation and impairment of property, plant and equipment 14.2 14.8 14.6 14.6 19.0
Depreciation and impairment of right-of-use assets - - - - 6.0
Amortization and impairment of intangible assets 3.5 4.0 5.8 6.8 5.3
Other cash adjustment on operating profit 1.0 2.8 1.7 1.6 4.3
Operating profit, net of operating cash adjustments 105.4 98.5 121.0 147.4 245.2
(Increase) decrease in trade accounts receivable 6.7 (6.4) (7.6) (2.4) 11.1
(Increase) decrease in inventories (23.3) (26.3) 21.1 14.2 (9.0)
Increase (decrease) in trade accounts payable 5.9 1.5 (4.2) (2.4) 11.8
Change in other net working capital etc. (5.2) (5.0) 5.2 (4.8) (7.7)
Total (increase) decrease in net working capital etc. (15.9) (36.2) 14.5 4.5 6.2
Investment in property, plant and equipment (18.4) (30.1) (32.9) (71.8) (53.0)
Lease liabilities paid - - - - (8.9)
Investment in intangible assets (6.5) (6.2) (11.6) (5.9) (8.2)
Operating free cash flows 64.6 26.0 91.0 74.3 181.4
as % of revenues 13.0 5.3 17.0 12.8 26.4
Treasury activities (interest income/expenses, foreign exchange gains/losses etc.) 1.6 3.7 1.6 4.3 (0.9)
Settlement for transfer pricing taxation - - (5.2) (3.2) (3.1)
Tax paid (29.1) (25.3) (22.7) (31.6) (34.8)
Free cash flows 37.0 4.3 64.7 43.7 142.6
Dividends paid (29.4) (32.8) (31.0) (35.8) (56.4)
Transaction in own equity instruments 1.4 0.5 0.9 1.0 0.7
Net effect of currency translation on net cash (3.5) (2.6) 3.2 (2.5) (0.8)
Net change in net cash 5.5 (30.5) 37.9 6.4 83.9

Other cash adjustment on operating profit: adjustments for all non-cash income and expense items other than amortization expenses and impairment included in operating profit (such as loss on inventory differences, reserve for doubtful accounts, stock option expenses, loss on asset retirement, and increase/decrease in reserves) as well as all non-operating income and expense cash flows relating to net operating assets (NOA) (including proceeds from the sales of assets and reserve payments).

Operating free cash flow (Operating FCF): pretax cash flow after adjusting changes in working capital and operating investments in assets (tangible and intangible) to “operating profit, net of operating cash adjustments,” which shows the company’s cash generation ability from operating activities.

Free cash flow (FCF): the ability to generate net cash from a management perspective after deducting tax, dividends, and other payments from operating FCF.
Net change in net cash: dividends paid, increases and decreases in marketable securities and interest-bearing debt, changes in equity are included.
The concepts of operating profit, operating FCF and Net operating assets (NOA) presented in the previous page are mutually consistent.

IFRS16 ‘Leases’
From the first quarter of the fiscal year ended 31 December 2019, the Group has implemented IFRS 16 ‘Leases’.As a result, cash flows in respect of leases previously reported as operating leases are reported as part of cash flows from financing activities.

Free cash flow (FCF):
The consolidated statement of cash flows has been prepared in accordance with International Accounting Standard (IAS) No. 7, “Statement of Cash Flows.” FCF is a reconfiguration of the consolidated statement of cash flows as internal indicators and is identical to the indicators disclosed by Roche. Furthermore, no items from FCF have been excluded, as the Core results concept only applies to the income statement.

Free Cash Flow

Bar graph showing changes in free cash flow
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Financial Results

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