Book Value per Share
Book Value per Share = Equity / Total number of shares as of Dec. 31
Knowledge
Financial Glossary
Definition of key financial indicators
B
C
Cash flow
Net balance of incoming and outgoing payments during a reporting period. The cash flow provides information about the earning and financial power of a company.
Compliance
Compliance (conforming with regulations) denotes adherence to mandatory laws, internal regulations, and regulatory standards recognized by the company. A compliance management system is intended to ensure compliance and avoid penalties and fines resulting from breaches of compliance and claims for damages as well as other direct or indirect negative influences (caused particularly as a result of damage to image), by identifying and evaluating compliance risks promptly and taking steps to reduce the likelihood of materialization and their loss potential. Moreover, structured internal compliance reporting should be ensured.
Cost of Capital
Also WACC (weighted average cost of capital); denotes the opportunity costs arising for equity providers and/or lenders through capital made available to the company. The weighted average cost of capital rate is calculated from the aggregate of the expected returns of equity providers in terms of their equity share as well as the interest on debt in respect of the share of interest-bearing debt in total capital. As this is considered from an after-tax perspective, the average interest on debt is reduced by the corporate tax rate.
D
DEBT I
DEBT I = Bank loans and overdrafts / Equity
DEBT II
DEBT II = Net debt / Equity
E
Earnings before operating hedges
Earnings before operating hedging transactions comprise the operating result, including the result from realized operating hedges, adjusted for market value fluctuations of hedges that have not yet matured. Market value fluctuations of hedging transactions that have not yet matured are thus eliminated.
Earnings after operating hedges (EBIT - Earnings before interest and taxes)
Earnings after operating hedging transactions include all results from operating hedging transactions, i.e. both valuation effects as of the balance sheet date and results from realized operating hedging derivatives.
EBITDA (Earnings before interest, taxes, depreciation and amortization)
Is intended to enable comparisons of operational earnings power between companies and describes the profitability of companies. K+S calculates EBITDA based on earnings before operating hedges plus depreciation and amortization of property, plant and equipment and intangible assets; EBITDA is adjusted by the depreciation and amortization amount not recognized in profit and loss in the context of own work capitalized, earnings arising from changes in the fair market value of outstanding operating anticipatory hedges, changes in the fair value of operating anticipatory hedges recognized in prior periods, and in the prior year profit/loss from currency hedging for capital expenditure in Canada.
EBITDA Margin
EBITDA Margin = EBITDA / Revenues
Enterprise Value
Enterprise value is an indicator frequently used to determine the value of a company. It is often related to other indicators (for example, revenues, EBIT).
Enterprise Value = Market capitalization + net debt
F
Free Float
The number of shares not held by major shareholders owning more than 5% of the shares of a company (with the exception of shares held by investment companies and asset managers).
G
Greenhouse Gas (GHG) Protocol
The Greenhouse Gas Protocol is a tool for calculating and managing the greenhouse gas emissions of companies and organizations. It includes direct emissions from core corporate areas (Scope 1), indirect emissions from the use of purchased electricity, heat, and steam (Scope 2), and indirect emissions, which are upstream or downstream of corporate activities (Scope 3). To compare the global warming potential of different greenhouse gases, each greenhouse gas is converted in CO2 equivalents. A CO2 equivalent has the same global warming potential as one unit of CO2.
GRI - Global Reporting Initiative
The Global Reporting Initiative is an independent ¬international multi-stakeholder organization that develops cooperatively a framework for global sustainability reporting. The GRI reporting guideline specifies principles and indicators for organizations to measure their economic, environmental, and social performance. The purpose is to promote transparency and comparability for sustainability reports.
Gross Cash Flow
Gross Cash Flow = Earnings before operating hedges + write-downs/- write-ups on intangible assets, property, plant and equipment and financial assets + increase/- decrease in non-current provisions (without interest rate effects) + interests and dividends received and similar income + gains/- losses from the realization of financial assets/liabilities - interest paid – income taxes paid + other non cash expenses - other non cash income
I
Integrated Reporting
Integrated reporting is a standard concept that combines traditional financial reporting with non-financial reporting elements. The focus should be the company’s business model and its strategy. The aim is reporting which considers all the stakeholders’ interests. The goal is to reflect the interdependencies between environmental, social, governance, and financial factors of decisions, which influence a company’s long-term financial performance and position, by clarifying the connection between sustainability and economic values.
N
Net Financial Liabilitites
Financial liabilities - cash on hand and balances with banks - securities and other financial investments
Net Debt
Net Debt = Financial liabilities + provisions for pension and similar obligations + non-current provisions for mining obligations - cash on hand, and balances with banks - securities and other financial investments
O
OECD Guidelines for multinational companies
The OECD guidelines for multinational companies are government recommendations for the multinational companies that operate in or from the member states. They contain non-legally binding principles and benchmarks in the areas of basic obligations, information policy, human rights, employment policy, environmental protection, anti-corruption, consumer interests, science and technology, competition, and taxation.
Operating Assets
Operating Assets = Intangible assets4 + property, plant and equipment + shares in affiliated companies + participating interests
Operating forecast hedges
To hedge future currency positions (mainly in US dollars), we use operating derivatives in the form of options and futures (see also transaction risks).
R
Rating
Rating agencies award ratings on a company’s ability to meet its future interest and repayment obligations in a timely manner in the form of standard categories.
Return on Capital Employed (ROCE)
Return on capital employed (ROCE) is a financial ratio that measures a company’s profitability and the efficiency with which its capital is employed.
Return on Capital Employed (ROCE) = Earnings before operating hedges / (Operating assets + working capital2, 4)
Retrun on Equity
Retrun on Equity = Adjusted Group earnings after tax1 /
Adjusted equity1, 2
Return on Revenues
Return on Revenues = Adjusted Group earnings after tax1 / Revenues
Return on Total Assets
Return on Total Investment = (Adjusted earnings before tax1 + interest expenses) / Adjusted balance sheet total1, 2, 3
S
Stakeholder
Stakeholders are interest groups in the working environment or in an organization who are directly or indirectly affected by corporate activities, currently or in the future, and are thus in an interdependent relationship. They include employees, customers, investors, suppliers, local residents, and policymakers.
T
Transaction risk
A transaction risk is a currency risk that may arise in connection with existing receivables or liabilities in a foreign currency if a transaction in a foreign currency is to be converted to the Group currency, and thus represents a risk in terms of payment.
Translation risk
A translation risk is a currency risk, which may arise as a result of translating profit, cash flow, or balance sheet items to other periods or reporting dates, which are accrued in a currency other than the Group currency. This is therefore a non cash risk.
U
United Nations Global Compact
The United Nations Global Compact is a voluntary strategic initiative for companies designed to promote sustainable development and social commitment. The participating companies acknowledge the ten principles of the Global Compact in the areas of human rights, working standards, environmental protection, and anti-corruption.
V
Value Added
This key figure is based on the assumption that a company creates added value for the investor when the return on the average capital employed exceeds the underlying cost of capital. This excess return is multiplied by the average capital employed (annual average for operating assets and working capital) to give the company’s added value for the year under review.
Value Added = (ROCE - weighted average cost of capital before taxes) ×
(operating assets2 + working capital2, 4)
W
Working Capital
Working Capital = Inventories + accounts receivable trade + other assets5 -
current provisions - accounts payable trade – other payables5
1 Adjusted for the effects of market value changes of operating forecast hedges; for adjusted Group earnings,
the related effects on deferred and cash taxes are also eliminated.
2 Annual average.
3 Adjusted for reimbursement claims and corresponding obligations.
4 Adjusted by deferred tax influencing goodwill from initial consolidation.
5 Without the market value of operating forecast hedges still outstanding as well as derivatives no longer
in operation, but including premiums paid for derivatives used for operating purposes; without receivables
and liabilities from financial investments; adjusted for reimbursement claims as well as the surplus of the CTA plan assets.
