Merck 2014 Annual Report Download - page 63

58 GROUP MANAGEMENT REPORT → FUNDAMENTAL INFORMATION ABOUT THE GROUP → Internal management system of the Group
CAPITAL MARKET-RELATED PARAMETERS
Net income and earnings per share (EPS)
Earnings per share are calculated by dividing profit after tax at-
tributable to the shareholders of Merck KGaA, Darmstadt, Germany,
(net income) by the weighted average number of theoretical shares
outstanding. The use of a theoretical number of shares takes into
account the fact that the general partner’s capital is not represented
by shares. To provide a more comparable view, the company also
publishes EPS pre, which excludes one-time items and amortiza-
tion of intangible assets and is based on the company’s underlying
tax ratio.
Credit rating
The rating of the credit worthiness of Merck KGaA, Darmstadt,
Germany, by external agencies is an important indicator with
respect to the company’s ability to raise debt capital at attractive
market conditions. The capital market makes use of the assess-
ments published by independent rating agencies in order to assist
debt providers in estimating the risks associated with a financial
instrument. The company is currently assessed by Moody’s and
Standard & Poor’s (S&P). The most important factor for the credit
rating is the ability to repay debt, which is determined in particu-
lar by the ratio of operating cash flow to (net) financial debt.
Dividend ratio
With the aim of ensuring an attractive return to shareholders,
Merck KGaA, Darmstadt, Germany, pursues a reliable dividend
policy with a target payout ratio based on EPS pre one-time items
(see definition above).
OTHER RELEVANT/NON-FINANCIAL
PERFORMANCE MEASURES
Apart from the indicators of the financial performance of the
businesses, non-financial measures also play an important role in
furthering the success of the company. From a Group perspective,
specifically innovations in the businesses as well as the attraction
and retention of highly qualified employees are of central impor-
tance.
Innovation
Innovation is the foundation of the business and will also be the
prerequisite for future success in changing markets. Merck KGaA,
Darmstadt, Germany, is continuously working to develop new
products and service inno vations for patients and customers.
Indicators for the degree of innovation are defined individually
depending on the specifics of the respective businesses.
Talent retention
Employing a highly qualified and motivated workforce is the basis
for achieving the Group’s ambitious business goals. Therefore, the
company puts a strong focus on establishing the processes and the
environment needed to attract and retain the right talent with the
right capabilities at the right time. To measure the success of the
related measures, the Group has implemented talent retention as
an important non-financial indicator.