Group Management Report Corporate Governance Environment, Safety, and Corporate Social Responsibility Consolidated Financial Statements 39 Strategy and Control System Strategy Current market requirements, and market demands expected for the future, determine the ALTANA Group’s corporate action. The success of our customers is at the center of our business activities. We can only be successful in the com- petitive environment in the long run if we offer our customers added value. Our top financial priority is to sustainably increase the company’s value. To achieve this aim, we consistently gear ALTANA to profitable growth in future-oriented specialty chemicals markets. At ALTANA, profitable growth is based on several pillars. The primary ones are to expand our operating activities in existing markets and to open up new adjacent sales segments. ALTANA’s four divisions occupy significant competitive positions in their respective sales markets. This positioning is an important prerequisite for our being identified and acknowledged by market participants as a competent supplier of customized solutions. In addition to ALTANA’s comprehensive product portfolio, innovation plays a key role in its high level of problem-solving expertise. To enable customers to create new applications and strengthen their portfolio, ALTANA continually pushes forward its own research and development activities. To this end, our employees’ knowhow and experience are just as important as investments in new technologies. To continually expand our specialized portfolio, we regularly supplement our operating growth by acquiring new companies or business activities. As a result, for example, new value creation steps are integrated into the Group or access to new markets and technologies is granted. In recent decades, the ALTANA Group has increasingly geared its activities to international markets. As a consequence, the Group has been able to benefit from the strong growth rates of emerging countries and to accompany many customers as they build production structures in these regions. In addition, ALTANA’s global orientation enables it to recognize local demand trends quickly and to examine whether the applications developed subsequently have sales potential in other regions too. Control System and Goals ALTANA’s control system is fundamentally oriented to the goal of a sustainable increase in the company’s value. A number of ratios, mainly financial, are derived whose developments are analyzed and for which target values are determined. The most important key performance indicators are ALTANA Value Added (AVA), sales growth, earnings before interest and taxes (EBIT), the EBITDA margin, and capital expenditure. A change in the company’s value in a given period is calculated by using the financial ratio ALTANA Value Added. The absolute AVA is calculated by subtracting the cost of capital employed in the Group from the operating earnings. The relative AVA constitutes this difference in proportion to the capital employed. It is calculated by subtracting the cost of capital from the return on capital employed (ROCE). The calculation of the operating earnings starts with earnings before interest and taxes, which are adjusted for acquisition-related and one-time special effects and from which a calculated tax burden is deducted. The capital employed, in turn, encompasses those components of the assets and liabilities needed to achieve operating earnings. The cost of capital is determined from the weighted aver- age of cost of debt and cost of equity. We regularly examine the weighted average cost of capital but only adjust it for the calculation of the AVA if it exceeds or falls below a certain range. In the last few years, we set our weighted average cost of capital at 8 %. AVA and ROCE are used for measuring the company’s success and for determining variable compensation com- ponents. In addition, they are used as criteria for making stra-
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