Capital management

Capital management practices are based on the Repower Group's overall strategic goals. The most important goals of capital management are:

• Optimised use of capital, taking returns and risk into account
• Timely availability of sufficient liquidity

Strategic parameters (total operating revenue, return on equity and the equity ratio) are calculated and monitored for the purpose of measuring these goals. Targets for the strategic parameters are determined by the Board of Directors. The Board of Directors also specifies the risk targets to be monitored by the Executive Board. Only minor changes have been made to Repower's strategic direction since the previous year.

Repower's capital is managed while taking the Group's financial development and risk structure into account. To manage this capital, the Group can, for instance, borrow or repay capital, carry out capital increases or reductions, or change its dividend policy. Repower Group is not subject to any prescribed regulatory minimum capital requirements.

The most important key figures for capital management are return on equity and the equity ratio. When calculating return on equity (excluding minority interests), Group profit excluding minority interests is measured against equity without minority interests. The equity ratio (including minority interests) describes the relationship between equity including minority interests and total assets.

The target figure for return on equity (without minority interests) is ≥ 10 per cent and the equity ratio must be kept within the 35-45 per cent range. In principle, these key figures also have an impact on Repower's credit rating and thus its borrowing costs.

►Return on equity / Equity ratio table on page 64.

Returns on equity and equity ratios at 31 December 2010 and 31 December 2011 were calculated as follows:

The target figure for the equity ratio was met, while the strategic parameter, return on equity, fell short of target in the year under review and the previous year.