At both the level of Demag Cranes AG and at operating segment level, the internal control system used by Demag Cranes AG is based on qualitative and quantitative information from a management information system (MIS). This is updated at frequent intervals and primarily uses financial performance metrics for Group management and as efficiency indicators. The central Group-level measurement and control variable is earnings before interest and tax (EBIT) adjusted to eliminate non-operating income and expenses (operating EBIT). Revenue, operating EBIT – each as related to accountability areas – and operating net income after tax are also used as the basis for analysing target attainment by all parts of the Group, for determining bonuses paid as part of variable compensation and in shared services units, as well as for segment and regional management.

Gross profit is used as an additional measure of the quality of billed orders. Further focuses of attention include active management of net working capital and the generation of cash and cash equivalents. The management of net working capital relates to inventories, trade receivables and payables, as well as advance payments received and made. Other indicators and control parameters used in the Group’s active cash management are free cash flow before financing and net debt (defined in the Notes to the Financial Review). The dividend policy, financing structure and return on capital employed are also appraised and managed on a targeted basis with reference to these indicators. Active management of net working capital, management of cash and cash equivalents and strategic accountability for purchasing are fully centralised under dual control in the responsibility of the finance function. Demag Cranes AG revises its control system and adapts it to changes in global circumstances on an ongoing basis.