History Note 5

Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

The objectives of the Group regarding the management of the capital structure are as follows:

  • ensure sufficient liquidity to cover all liabilities
  • ensure an attractive return on equity (ROE) and return on invested capital (ROIC)
  • ensure a sufficient debt capacity and credit rating
  • ensure an attractive distribution policy

In order to maintain or change the capital structure, the following measures can be taken:

  • adjustment of the distribution policy
  • share buyback programmes
  • capital increases
  • draw or repay debt

Further measures to guarantee an efficient use of the invested capital and therefore also to achieve attractive returns are:

  • active management of net working capital
  • demanding objectives regarding the profitability of investments
  • clearly structured innovation process

The invested capital is composed of net working capital, property, plant and equipment, goodwill, and intangible assets.

The periodic calculation and reporting of the following key figures to the management ensures the necessary measures in connection with the capital structure can be taken in a timely manner.

The relevant values as at 31 December are outlined below:

  2017 2016
Debt 895.2 970.9
Liquid funds and marketable securities 412.7 509.7
Net debt 482.5 461.2
Equity 1,837.2 1,635.2
Net debt/equity 26.3% 28.2%
Return on equity (ROE)    
Equity (rolling) 1,718.7 1,526.3
Net income 527.4 548.2
ROE 30.7% 35.9%
Return on invested capital (ROIC)    
Invested capital (rolling) 2,696.0 2,704.6
Net operating profit after taxes (NOPAT) 526.2 545.8
ROIC 19.5% 20.2%

6. Trade accounts receivable

7. Other current assets and current financial assets

8. Inventories

9. Property, plant and equipment

10. Other non-current assets and non-current financial assets

11. Goodwill and intangible assets

12. Short-term debt

13. Other current liabilities and provisions

14. Long-term debt

15. Financial instruments

16. Retirement benefit plans

17. Participation plans

18. Deferred tax assets and liabilities

19. Other non-current liabilities and provisions

20. Contingencies

21. Capital stock and treasury shares

22. Earnings per share

23. Other operating expenses, net

24. Financial result, net

25. Income tax expenses

26. Operating Leasing

27. Research and development cost

28. Cashflow figures

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Group companies as at 31 December 2017