NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 122
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 alter-
native 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
GROSS PROFIT MARGIN DEFINITION/CALCULATION
Net sales less goods for resale in percent of net sales. PURPOSE
The measure is used for showing the Group's margins
before the effect of costs such as selling and adminis-
trative costs.
OPERATING MARGIN Operating result as a percentage of the period's net sales. The measure is used to show operating profability
and how the Group meets its targets.
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.
ORGANIC GROWTH 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. The measure is used to show growth in existing busi-
ness since currency effects are beyond the Group's
control and to measure how the Group meets its
targets.
EBITDA Operating result before depreciation, amortization and
write-downs of tangible and intangible fixed assets. The measure is used to show result from operating
activities, regardless of depreciation, amortization
and write-downs.
NET FINANCIAL ITEMS The total of interest income, interest expenses, currency differen-
ces on borrowings and cash equivalents in foreign currencies,
other financial income and other financial expenses. The measure reflects the Group's total costs of the
external financing.
RETURN MEASURES DEFINITION/CALCULATION PURPOSE
RETURN ON
CAPITAL EMPLOYED 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 pe-
riod end and the capital employed 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.
RETURN ON EQUITY 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.
For the Parent company it is calculated as result after tax as a
percentage of average adjusted equity. In adjusted equity, the
equity part of untaxed reserves is included. The measure is used to analyze profitability over time,
given the resources available to the Parent company's
owners.
122 // ANNUAL REPORT