Value-oriented business management


Value-oriented business management

Key performance indicators for planning and managing the operating cash flows are operating income before depreciation and amortisation (EBITDA) and capital expenditure on property, plant and equipment and intangible assets. The enterprise value / EBITDA ratio is also used to compare ­Swisscom with other companies in the sector.

The ratio is primarily driven by revenue and margins as well as the growth expectations of equity investors. The remuneration system for Group Executive Board members contains a variable performance-related component, of which 25% is paid out in ­Swisscom shares subject to a three-year blocking period. Group Executive Board members may opt to receive up to 50% of the performance-related component in the form of shares. The variable performance-related component is based on factors including financial targets such as net revenue, EBITDA margin and operating free cash flow. The financial targets that determine the variable performance-related salary component and the Management Incentive Plan ensure that the interests of management are kept aligned with those of the shareholders.

Enterprise value

In CHF million, except where indicated31.12.201431.12.2013
Enterprise value
Market capitalisation27,06724,394
Net debt8,1207,812
Non-controlling interests in subsidiary companies329
Enterprise value (EV)35,19032,235
Operating income before depreciation and amortisation (EBITDA)4,4134,302
Ratio enterprise value/EBITDA8.07.5

The sum of market capitalisation, net debt and non-controlling interests in subsidiaries is the enterprise value (EV) derived from the share price. Non-controlling interests are stated at carrying amount. For the sake of simplicity, other non-operating assets and liabilities are not included. ­Swisscom’s enterprise value increased year-on-year by CHF 3.0 billion or 9.2% to CHF 35.2 billion. Market capitalisation grew by CHF 2.7 billion, while net debt was CHF 0.3 billion higher. The ratio of enterprise value to EBITDA rose to 8.0 (prior year: 7.5). The increase is largely attributable to the higher relative share price valuation and only to a lesser extent to the higher EBITDA. With a ratio of 8.0, ­Swisscom is well above the average for comparable companies in Europe’s telecoms sector. The higher ratio is supported by the solid market position ­Swisscom has achieved thanks to high-level investment, an attractive dividend policy and the Confederation’s majority share of capital, as well as the general business conditions in Switzerland such as lower interest rates and lower corporate income tax rates.