The consistent focus of all business activities on the central Group objectives is reflected in our internal control system, which relies on both financial and non-financial control parameters.
Financial Control Parameters
|Group sales (in EUR million)
|Adjusted EBITA margin (in %)
|Net operating cash flow (in EUR million)
The most important financial control parameters for NORMA Group include the following value-oriented indicators that are directly related to value creation at NORMA Group: Group sales, profitability (adjusted EBITA margin) and net operating cash flow.
As a growth-focused company, we ascribe the increase of sales in each segment and in both distribution channels a key role. Therefore we strive to achieve a short and medium term growth in sales that exceeds the market average. All measures that contribute to sales growth, are valued regarding their potential to optimize the adjusted EBITA and the adjusted EBITA margin (EBITA related to sales).
Adjusted EBITA and adjusted EBITA-margin
The EBITA before one-off effects is our most important internal and external financial figure for the operating business activities. For a long-term comparison and in order to gain a deeper understanding of the business development, we adjust the operating result by certain one-off expenses.
The adjusted EBITA margin – EBITA related to sales – shows the profitability of our business activities and is one of our central financial control parameters. In order to maintain the adjusted EBITA margin and thus the Group’s profitability at its usual high level, we constantly work on optimizing our purchasing and production processes with the objective to limit the increase of the relation of operating expenses to sales to a disproportionately low rate.
Net operating cash flow
In order to maintain financial independence and constant financial solvency of the Group, we also focus on the net operating cash flow. This includes the most important cash-effective items that can be influenced by the individual business units and provides information on whether we can finance our operating business out of our cash flow.
The net operating cash flow is calculated on the basis of the adjusted EBITDA plus changes in working capital minus capital expenditures. The key approaches to improving net operating cash flow are therefore to increase sales, engage in sustained value-enhancing investment activity and to improve the operating result adjusted for special effects (EBITDA). In addition, consistent management of working capital also has a positive effect on net operating cash flow.
Non-financial Control Parameters
The most important non-financial control parameters for NORMA Group include the extent of market penetration, the Group’s power of innovation, the problem-solving behavior of our employees and the sustainable overall development of NORMA Group as a whole.
|Number of new patent applications
|Defective parts per million (PMP)
|Quality-related customer complaints per month
We always pursue the objective to sustainably expand our business. Measures to achieve this objective are the development of technological innovations, the identification of new application areas for existing products and the expansion of our product portfolio through selected acquisitions. The additional value generated by these measures is reflected in our organic growth which serves as indirect control parameter for our market penetration.
Power of innovation
Sustainably securing our innovation capability is a key driver for the future growth of NORMA Group. We use patents as a way of protecting our innovations. Until 2016, the number of patent applications per year was therefore part of our internal control system and an important indicator of our innovation power.
From reporting year 2017 onwards, we will optimize our control system by introducing the number of invention applications as new indicator for measuring and managing the Company’s innovative strength. An invention application is made within the framework of an internal, formalized process, which is preceded by the external process of a new patent application. Since inventions can be specifically promoted by internal incentive systems and their number is not dependent on the patent registration strategy, this figure is even better suited for the future measurement of innovative power than the number of new patent applications. The Group-wide annual number of invention applications will therefore replace the number of new patent applications as a non-financial control indicator as of the 2017 reporting year.
Problem solving behavior of employees
NORMA Group stands for the highest possible reliability and quality of service. The reputation of our brands and reliability of our products are key factors in our success. In developing and manufacturing products, we therefore rely on the highest quality standards. In order to minimize production losses and maximize customer satisfaction, we measure and manage the problem solving behavior of our employees by using two performance indicators:
- the average number of customer complaints per month and
- defective parts per million of manufactured parts (parts per million/PPM).
Sustainable overall development
We consider it to be our main responsibility to bring the effects of our business activities into balance with the expectations and needs of society. For this reason, operational decisions are based on the principles of responsible company management and sustainable actions. Our strategy and goals are influenced by our corporate responsibility (CR) policies and described in detail on our Corporate Responsibility website and anchored in our CR roadmap 2018.