NOVA = (adjusted EBIT x (1 – s)) – (WACC x capital employed)

The cost of capital rate is calculated on the basis of the following assumptions and calculations:

The base interest rate is derived from the interest rate structure data of Deutsche Bundesbank (three-month average: October 1 to December 31, 2023). The market risk premium represents the difference between the expected return on a risky market portfolio and the risk-free interest rate. NORMA Group uses the recommendation of the Institut der Wirtschaftsprüfer in Germany (Institute of Public Auditors in Germany (IDW)) to determine this risk premium. The beta factor represents the individual risk of a share compared to a market index. It is first determined as the average value of the unindebted beta factors of the peer group and subsequently adjusted to NORMA Group’s individual capital structure. The cost of equity is calculated by adding the risk-free interest rate and the weighted country risk of NORMA Group with the product of the market risk premium and the indebted beta factor of the peer group. The credit spread used to calculate the cost of debt was determined on the basis of the terms of the current external financing of NORMA Group. Invested capital is calculated from consolidated equity plus net financial debt as of January 1 of the respective fiscal year.

The financial control parameters are planned and continuously monitored in the Group, but also for the most part at the segment and Group company levels. Deviations between planned and actual figures are tracked in the local companies and aggregated at the regional segment level as part of the monthly analysis. Business development is regularly forecast on the basis of the available monthly and quarterly results and assuming various scenarios.

 

Important non-financial control parameters

Compliance with applicable environmental protection requirements and the avoidance of environmental risks are key priorities for NORMA Group. The Company is guided by international standards and guidelines in this regard.

Since fiscal year 2023, only CO₂ emissions which since 2020 have also been a target figure within Management Board remuneration for determining part of the long-term Management Board remuneration (ESG LTI), have been considered a key non-financial performance indicator.

CO₂ emissions

NORMA Group’s CO₂ emissions are reported in accordance with the GHG Protocol (market-based, Scope 1 and Scope 2). Scope 1 includes only emissions from natural gas and LPG and Scope 2 emissions from purchased electricity and district heating. When recording emissions, only emissions relating to the production sites are taken into account. Further information can be found in the  CR REPORT.

The Group strives to continuously reduce these emissions. NORMA Group's target of reducing CO₂ emissions from its production processes by around 19.5% by 2024 compared to the reference year 2017 was already significantly exceeded in 2022. In fiscal year 2023, CO₂ emissions amounted to 5,064 t CO2e (2022: 4,879 t CO₂e). ¹⁰

 

Other non-financial performance indicators

Other important non-financial indicators include the Group’s innovative capacity, measured by the number of invention applications, the problem-solving behavior of employees, expressed in defective parts per million parts produced (parts per million/PPM), and the accident rate, measured in accidents per 1,000 employees. The detailed set of personnel and environmental key figures as well as key figures on occupational health and safety in the Group can be found in the CR REPORT.

The target figures for the financial and non-financial control parameters for 2023 and the assumptions underlying the forecast are presented in the FORECAST REPORT.

¹⁰ Since January 2022, NORMA Group has purchased electricity from renewable energies at all production sites. NORMA Group purchases “Energy Attribute Certificates” for this purpose. CO₂ emissions are reported in accordance with the GHG Protocol (Scope 1 and Scope 2). Scope 1 includes only emissions from natural gas and LPG and Scope 2 emissions from purchased electricity and district heating. When recording emissions, only emissions relating to the production sites are taken into account. Further information can be found in the CR REPORT.