22. Capital management

The Board of Directors is responsible for monitoring and managing the Group’s capital structure, which comprises equity (share capital and additional paid-in capital) as well as loans and borrowings.

The policy of the Board of Directors is to maintain an acceptable capital base to give confidence to the Group’s shareholders and debtholders, and to sustain the future development of the business. The Board of Directors monitors the Group’s financial position to ensure that it complies at all times with its financial and other covenants as set out in the indenture governing the senior unsecured bonds, two unsecured Schuldscheindarlehen (“SSD”, a private German debt placement) agreements and the other credit agreements, as well as to ensure the payment of an appropriate level of dividends to the shareholders.

The Company purchases its own shares on the market. The repurchased shares are intended to be used to settle obligations under the Group’s equity-settled share-based payment plans and arrangements (see also notes 25 and 30).

In order to maintain or adjust the capital structure, the Board of Directors may elect to take a number of measures, for example disposing of assets of the business, altering its short- to medium-term plans with respect to capital projects and working capital levels, or rebalancing the level of equity and debt in place.

As part of monitoring the Group’s financial position, the Board of Directors evaluates the Group’s net debt and development of its net leverage ratio. See “Net debt and net leverage” in note 23 for additional details about the loan covenants relating to the Group’s loans and borrowings.