Group Management Report Products Safety Environment Human Resources Social Commitment Consolidated Financial Statements 69
Expected Asset and Financial Situation
There should not be any significant shifts in the balance-
sheet structure in 2017. In the next two years, our capital
expenditure for property, plant and equipment and intan-
gible assets should be above our long-term target range of
5 % to 6 % due to strategic growth projects. The development
of the absolute values of net working capital should be
analogous to the general business development, though
we are striving to further improve the ratios.
Based on the anticipated business performance, we
should achieve liquidity surpluses from operating activities
at a level similar to that of 2016. These surpluses will be
used, in particular, to finance investments and for bolt-on
acquisitions. In addition, the promissory note loans will be
repaid on schedule from 2017 through 2020.
We project the value management key figures to decrease
in 2017 due to the expected acquisitions. This
decline
will be a consequence of a disproportionate increase
in operating capital compared to operating earnings.
Risks
Management and control of the ALTANA Group are geared
to the strategy that has been defined and the target levels
derived from it. Due to changes in the economic environment
or internal factors of influence, it might not be possible to
implement the strategy successfully or to achieve target levels
in the planned time frame or to the planned extent. To
be optimally prepared for such situations, ALTANA systematically
identifies, evaluates, and considers risks within the
framework of decision-making processes.
To anchor our risk policy at all decision-making levels,
we established a Group-wide risk management system that
brings together various information, communications, and
monitoring systems. Core elements of our risk management
include strategic corporate planning, internal reporting,
our internal control system, compliance organization, and
risk management in the strict sense, i.e. the identification,
documentation, and evaluation of risks including the derivation
of appropriate precautionary measures and countermeasures.
Our strategic corporate planning is closely tied to our
medium- to long-term financial planning. The extent of the
fulfillment of our targets is examined in monthly reports
on the company’s business performance and in our shortterm
financial planning. Deviations can be recognized and
countermeasures introduced if necessary.
Our internal control system, which is oriented to the
standards of the internationally recognized COSO model,
defines organizational measures for preventing damage
from being done to the company. In connection with our es-
tablished compliance organization, it aims to prevent possi-
ble violations of guidelines and laws on the part of employees.
At ALTANA, risk management in the strict sense is
viewed as the systematic compilation, evaluation, documentation,
and communication of relevant risks. Thus it is an
essential component of the company’s system for early risk
recognition in accordance with section 91 (2) of the German
Stock Corporation Act. This system was voluntarily examined
by the auditor and was deemed capable of recog-
nizing risks that can endanger the existence of the company
at an early stage.
Risks that are identified are evaluated in a uniform way.
The risk is assessed based on the probability of its occur-
ring and the potential damages. Individual risks can be rated
based on this assessment. Risks rated as very high are risks
which could cost the company € 25 million or more in the
next 12 months. Individual risks that could cost the com-
pany between € 12 million and € 25 million are rated as high
risks; risks that would cost between € 5 million and € 12 million
are categorized as medium risks, and risks that would cost
less than € 5 million are deemed low risks. The prioritiza-
tion resulting from the assessment determines focal points