NWG // FINANCIAL INFORMATION
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 . A reconciliation of alternative performance measures is available on www . nwg . se / en / investor-relations / financial-reports / key-numbers .
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 Group ' 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 show operating profability |
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and how the Group meets its profitability target . |
PROFIT MARGIN |
Result before tax as a percentage of the period ' s net sales . |
The measure enables the profitability to be compared |
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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 |
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to income . |
NET SALES GROWTH |
Sales growth including currency effects . |
The measure is used to show growth in the Group and |
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to measure how the Group meets its growth target . |
ORGANIC GROWTH
OPERATING MARGIN BEFORE DEPRECIATIONS
NET FINANCIAL ITEMS
Organic growth refers to sales growth from existing operations cleared from currency effects . The currency effect is calculated by recalculating this year ' s sales in local currencies to last year ' s rates and compared to previous year ' s sales .
Operating result before depreciation as a percentage of the period ' s net sales .
The total of interest income , interest expenses , currency differences on borrowings and cash equivalents in foreign currencies , other financial income and other financial expenses .
The measure is used to show growth in existing business since currency effects are beyond the Group ' s control and to measure how the Group meets its growth target .
The measure is used to show result from operating activities , regardless of depreciation , amortization and write-downs .
The measure reflects the Group ' s total costs of the external financing .
RETURN MEASURES DEFINITION / CALCULATION PURPOSE
RETURN ON CAPITAL EMPLOYED
RETURN ON EQUITY
Rolling 12 month ' s result before tax plus financial expenses as a percentage of average capital employed . The average capital employed is calculated by taking the capital employed per period end and the capital employed at year-end for the previous year divided by two .
Rolling 12 month ' s result for the period according to the income statement as a percentage of average equity . The average equity is calculated by taking the equity per period end and the equity at year-end for the previous year divided by two .
The measure is used to analyze profitability by putting result in relation to the capital needed to operate the business .
The measure is used to analyze profitability over time , given the resources available to the Parent company ' s owners .
124 // ANNUAL REPORT