Financial Targets
Targets | 2008 | 2007 | |
| Leverage factor: Economic debt / Operating EBITDA*) | < 3,0 | 3,2 | 3,1 |
| Coverage ratio: Operating EBITDA*) / Financial result | > 4,0 | 4,9 | 5,0 |
| Equity ratio: Equity to total assets (in percent) | > 25,0 | 31,0 | 28,2 |
Financial guidelines
The primary objective of Bertelsmann AG’s financial policy is to achieve a balance between financial security, return on equity and growth. Accordingly, the Group’s financing policy is based on the requirements of a “BBB+/Baa1” credit rating, and qualitative/quantitative criteria pertaining thereto. Credit ratings and transparency are of great importance to Bertelsmann’s financial security and independence.
The Bertelsmann Group is centrally financed by Bertelsmann AG and its financing company Bertelsmann U.S. Finance LLC. Bertelsmann AG is thus responsible for providing sufficient liquidity to Group companies. Bertelsmann AG also manages the issuance of guarantees and letters of comfort for Group companies. The Group forms a single financial unit, thereby optimizing capital procurement and investment opportunities.
Bertelsmann utilizes a financial control system employing quantitative financial targets concerning the Group’s economic debt and, to a decreasing extent, its capital structure. Key financial target is a dynamic leverage factor calculated as the ratio of economic debt to operating EBITDA (after modifications), and limited to a maximum of 3.0. Economic debt is defined as net financial debt plus provisions for pensions, profit participation capital and present value of operating leases.
As of December 31, 2008, the Group had a leverage factor of 3.2 (December 31, 2007: 3.1). Net financial debt was reduced by €837 million in the fiscal year and totaled €3,445 million as of December 31, 2008 (December 31, 2007: €4,282 million). Economic debt totaled €6,627 million, down €1,093 on the previous year. The decrease was mainly attributable to proceeds from the sale of the 50 percent stake in the
Sony BMG joint venture. Due to the declining trend in operating result, the reduction in economic debt did not lead to an improvement in the leverage factor compared with fiscal year 2007.
A further key financial target is a coverage ratio of more than 4, which for the year under review was 4.9 (previous year: 5.0). This metric is calculated as the ratio of operating EBITDA to the financial result. The Group’s equity ratio increased year-on-year from 28.2 percent to 31.0 percent.
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News
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