Investor Presentaiton
CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | CAPITAL STRUCTURE
5.1 CAPITAL MANAGEMENT
KONE aims to manage its capital in a way that supports the
profitable growth of operations by securing an adequate
liquidity and capitalization of the Group at all times. The target
is to maintain a capital structure that contributes to the
creation of shareholder value.
The assets employed in KONE's business consist
principally of net working capital, fixed assets, and financial
investments which are funded by equity and net debt, as
shown in the adjacent table. Due to the business model and
the business processes of KONE, the level of total assets
employed is relatively low. KONE aims to maintain a negative
net working capital to ensure a healthy cash flow even when
the business is growing and to maintain a high return on
assets employed.
Cash flow from operations is the principal source of
KONE's financing. External funding, as well as cash and
financial investments, are managed centrally by KONE
Treasury according to the KONE Treasury Policy. Financial
investments are made only with counterparties with high
creditworthiness and mainly in short term instruments to
ensure continuous liquidity.
KONE has not defined a specific target for its capital
structure, but the aim is to ensure strong credit quality to
provide for ample access to external funding sources and to
support the growth ambitions of the business. KONE
considers its current capital structure to be a strength, as it
allows for capturing potential value creating business
opportunities, should such opportunities arise. In the event
that significant attractive investment or acquisition
opportunities were available, KONE could also utilize its
borrowing capacity.
In such cases, the level of debt and financial gearing could
be higher for a period of time. At the end of 2022, the funding
of KONE was guaranteed by existing committed credit
facilities, cash and financial investments.
KONE has not defined a specific target for dividends or
share buy-backs. The dividend proposal by the Board of
Directors is determined on the basis of the overall business
outlook, business opportunities, as well as the present capital
structure and the anticipated changes in it. In 2018-2022, the
dividend payout ratio has been 94.2-124.0% for class B
shares (2022 proposal by the Board of Directors of KONE
Corporation). At the end of December 2022, KONE had
12,306,640 class B shares in its possession.
Capital management, MEUR
2022
2021
2020
2019
2018
Assets employed:
Goodwill and shares
Other non-current assets
Net working capital
Total assets employed
Capital:
Equity
Interest-bearing net debt
Total capital
Gearing
Equity ratio
1,536
1,550
1,470
1,506
1,477
)
925
954
933
990
658
-904
-1,468
-1,160
-856
-758
1,557
1,035
1,243
1,640
1,377
1) Tangible assets, acquired maintenance contracts and other intangible assets.
2,867
3,199
3,197
3,193
3,081
-1,309
-2,164
-1,954
-1,553
-1,704
1,557
1,035
1,243
1,640
1,377
-45.7%
-67.6%
-61.1%
-48.6%
-55.3%
40.3%
41.2%
45.5%
46.5%
49.9%
KONE has adopted the IFRS 16 and IFRIC 23 effective January 1, 2019 using the modified retrospective approach and the comparative amounts have not been
restated.
To ensure an efficient internal allocation and utilization of
its capital resources, KONE measures the financial results of
its business activities after a capital allocation charge. The
capital allocation charge is based on the assets employed in
the business activity and the weighted average cost of capital
(WACC).
The WACC is also used as a hurdle rate when evaluating
the shareholder value creation potential of new acquisitions,
major capital expenditure and other investments. The
valuation methods used are payback time, discounted cash
flow as well as earnings and cash flow multipliers.
Non-current assets by country
MEUR
USA
Dec 31, 2022
Dec 31, 2021
477.0
441.8
China
466.4
482.5
Spain
244.1
240.9
Germany
212.8
219.6
France
201.5
206.1
Finland
167.2
146.9
Other
1,012.4
1,060.3
Total
2,781.3
2,798.0
74
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