In order to optimise the gearing ratio and thus decrease WACC, two factors must be weighed against each other:

1. Since equity investors expect higher yields than debt investors, WACC declines as the gearing ratio increases (leverage effect).
2. If the gearing ratio is high, the company’s credit rating has a tendency to decrease and borrowing costs to increase – and negate the positive effects of the decline in WACC.

Since 2008, a WACC of 8.5% has been considered the minimum target level for projects and investments in the Group.

EAC amounted to €–959 million in 2009 (previous year: €–2,484 million). In both financial years 2008 and 2009, profit from operating activities was depressed by non-recurring items.

A.10 EBIT after asset charge (EAC)
€m
	2008 adjusted	2009	+/– %
Reported EBIT	–966	231	123.9
Asset charge	–1,518	–1,190	–21.6
EAC	–2,484	–959	61.4

In terms of EAC, we reduced the asset charge by €328 million to €1,190 million across all segments, in part thanks to improved net working capital management.