New Wave Group AB Q1_2018_EN | Page 27

DEFINITIONS OF ALTERNATIVE PERFORMANCE MEASURES Guidelines concerning non-IFRS performance measures for companies with securities listed on a regulated market in the EU have been issued by ESMA (The European Securities and Markets Authority). These guidelines are to be applied to alternative performance measures (APM) applied as of July 3, 2016. The Annual Report refers to a number of non-IFRS performance measures used to assist investors and company management to analyze the company’s operations. Because not all companies calculate the financial measures in the same way, these are not always comparable to measures used by other companies. These financial measures should not be seen as a substitute for measures defined under IFRS. A description of the various non-IFRS performance measures used as a complement to the financial information reported according to IFRS and how they are used, is presented below. PERFORMANCE MEASURES DEFINITION/CALCULATION PURPOSE GROSS PROFIT MARGIN Net sales less goods for resale in percent of net sales. The measure is used for showing the company's margins before the effect of costs such as selling and administrative costs. OPERATING MARGIN Operating result as a percentage of the period's net sales. The measure is used to estimate operating profability. PROFIT MARGIN Result before tax as a percentage of the period's net sales. The measure enables the profitability to be compared across locations where corporate taxes differ. NET MARGIN Result after tax as a percentage of the period's net sales. The measure is used to show net earnings in relation to income EBITDA Operating result before depreciation/amortization and impairment of non-current assets. The measure is used to show profit (loss) from operating activities, regardless of depreciation/ amortization. NET FINANCIAL ITEMS The total of interest incomes, interest expenses, exchange differences on borrowings and cash equivalents in foreign currencies, other financial income and other financial expences. The measure reflects the company's total costs of the external financing. RETURN MEASURES DEFINITION/CALCULATION PURPOSE RETURN ON CAPITAL EMPLOYED Operating result plus finacial income as a percentage of average capital employed. The measure is used to analyze profitability by putting result in relation to the capital needed to operate the business. The average capital employed is calculated by taking the capital employed per period end and the capital employed by period end of the Comparative period in the previous year divided by two. RETURN ON EQUITY Result for the period according to the income statement as a percentage of average equity. For the parent company it is calculated as result after tax as a percentage of average adjusted equity. In adjusted equity, 78 % of untaxed reserves are included. 27 The measure is used to analyze profitability over time, given the resources available to the parent company's owners.