Origin of key performance measures

Alternative performance measures refer to financial measures used by the company’s management and investors to evaluate the Group’s earnings and financial position, and that cannot be directly read or derived from the financial statements.

These financial measures are intended to facilitate analysis of the Group’s performance. The alternative performance measures should not be considered substitutes, but rather a supplement to, the financial statements prepared in accordance with IFRS. The financial measures recognized in this report may differ from similar measures used by other companies.

The alternative performance measures recognized below have not been calculated in accordance with IFRS but have been presented since Arjo believes that they are important in connection with investors’ assessments of the Company and the Company’s share. The alternative performance measures are also presented in the company’s other financial statements.

Sales measures

SEK M 2019 2018 2017 2016 2015
Mkr 2019 2018 2017 2016 2015
(A) Net sales preceding year (A) Nettoomsättning föregående år 8,217 7,688 7,808 8,115 7,568
Acquired/divested net sales for the period Förvärvad/avvecklad nettoomsättning under perioden -11 -3  40 -46
(B) Organically net sales for the period (B) Organisk nettoomsättning under perioden 320 231 -125 -210 -175
Effect of changes in exchange rates Effekter från förändringar i valutakurser 398 301 5 -137  767
Net sales Nettoomsättning 8,925 8,217 7,688 7,808 8,115
(B/A) Organic growth in sales, % (B/A) Organisk försäljningstillväxt, % 3.9% 3.0% -1.6% -2.6% -2.3%

Expense measures

SEK M 2019 2018 2017 2016 2015
Mkr 2019 2018 2017 2016 2015
(A) Selling expenses (A) Försäljningskostnader 1,797 1,657 1,571 1,392 1,575
(B) Administrative expenses (B) Administrationskostnader 1,223 1,219 1,136 1,016 1,039
(C) Research and development costs, net (C) Forsknings- och utvecklingskostnader, netto 139 141 134  133  118
(D) Net sales (D) Nettoomsättning 8,925 8,217 7,688 7,808 8,115
(A/D) Selling expenses as a % of net sales (A/D) Försäljningskostnader i procent av nettoomsättningen 20.1% 20.2% 20.4% 17.8% 19.4%
(B/D) Administrative expenses as a % of net sales (B/D) Administrationskostnader i procent av nettoomsättningen 13.7% 14.8% 14.8% 13.0% 12.8%
(C/D) Research and development costs net as a % of net sales (C/D) Forsknings- och utvecklingskostnader netto i procent av nettoomsättningen 1.6% 1.7% 1.7% 1.7% 1.5%

Earnings and margin measures

SEK M 2019 2018 2017 2016 2015
Mkr 2019 2018 2017 2016 2015
(A) Operating profit (EBIT) (A) Rörelseresultat (EBIT) 671 493 281  781  540
Add-back of amortization and write-down of intangible assets Återläggning av- och nedskrivningar immateriella tillgångar 292 305 315  366  193
(B) EBITA (B) EBITA 963 798 596  1,147  733
Add-back of depreciation and write-down of tangible assets Återläggning av- och nedskrivningar materiella anläggningstillgångar 712 382 400  389  488
(C) EBITDA (C) EBITDA 1,675 1,180 996  1,536  1,221
Adjustment IFRS 16 Justering IFRS 16 -347
(D) EBITDA, exklusive IFRS 16 (D) EBITDA,

exklusive IFRS 16

1,328 1,180 996  1,536  1,221
Exceptional items Jämförelsestörande poster 53 156 324  162 190
Add-back of write-down of restructuring and integration costs Återläggning av nedskrivningar av omstrukturerings- och integrationskostnader -24 -74 -88  0
(E) Adjusted EBITA (E) Justerad EBITA 1,016 930 846 1,221 923
(F) Adjusted EBITDA (F) Justerad EBITDA 1,728 1,312 1,246 1,610 1,411
Adjustment IFRS 16 Justering IFRS 16 -347
(G) Adjusted EBITDA, excluding IFRS 16 (G) Justerad EBITDA, exklusive IFRS 16 1,381 1,312 1,246 1,610 1,411
(H) Net sales (H) Nettoomsättning 8,925 8,217 7,688 7,808 8,115
(A/H) Operating margin, % (A/H) Rörelsemarginal, % 7.5% 6.0% 3.7% 10.0% 6.7%
(B/H) EBITA margin, % (B/H) EBITA-marginal, % 10.8% 9.7% 7.8% 14.7% 9.0%
(C/H) EBITDA margin, % (C/H) EBITDA-marginal, % 18.8% 14.4% 13.0% 19.7% 15.0%
(D/H) EBITDA margin, %, excluding IFRS 16 (D/H) EBITDA-marginal, %, exklusive IFRS 16 14.9%
(E/H) Adjusted EBITA margin, % (E/H) Justerad EBITA-marginal, % 11.4% 11.3% 11.0% 15.6% 11.4%
(F/H) Adjusted EBITDA margin, % (F/H) Justerad EBITDA-marginal, % 19.4% 16.0% 16.2% 20.6% 17.4%
(G/H) Adjusted EBITDA margin, %, excluding IFRS 16 (G/H) Justerad EBITDA-marginal, %, exklusive IFRS 16 15.5%

Cash flow and return measures

SEK M 2019 2018 2017 2016 2015
Mkr 2019 2018 2017 2016 2015
Calculation of cash conversion Beräkning av cash conversion
(A) Cash flow from operations (A) Kassaflöde från den löpande verksamheten 1,252 991 572  919  811
(B) EBITDA (B) EBITDA 1,675 1,180 996  1,536 1,221
(A/B) Cash conversion, % (A/B) Cash conversion, % 74.7% 84.0% 57.4% 59.8% 66.4%
Calculation of cash conversion, excluding IFRS 16 Beräkning av cash conversion, exklusive IFRS 16
Cash flow from operations Kassaflöde från den löpande verksamheten 1,252 991 572  919  811
Adjustment IFRS 16 Justering IFRS 16 -313
(A) Cash flow from operations, excluding IFRS 16 (A) Kassaflöde från den löpande verksamheten, exklusive IFRS 16 939 991 572  919  811
EBITDA EBITDA 1,675 1,180 996  1,536 1,221
Adjustment IFRS 16 Justering IFRS 16 -347
(B) EBITDA, excluding IFRS 16 (B) EBITDA, exklusive IFRS 16 1,328 1,180 996  1,536 1,221
(A/B) Cash conversion, %, excluding IFRS 16 (A/B) Cash conversion, %, exklusive IFRS 16 70.7% 84.0% 57.4% 59.8% 66.4%
Calculation of return on shareholders’ equity Beräkning av avkastning på eget kapital
(A) Net profit for the year (A) Årets resultat 403 296 118  490  307
Shareholders’ equity at beginning of the period Eget kapital vid periodens början 5,427 5,074 10,658 10,227 10,602
Shareholders’ equity at the end of the period Eget kapital vid periodens slut 5,914 5,427 5,074 10,658 10,227
(B) Average total shareholders’ equity (B) Genomsnittlig totalt eget kapital 5,671 5,251 7,866 10,443 10,415
(A/B) Return on total shareholders’ equity, % (A/B) Avkastning på totalt eget kapital, % 7.1% 5.6% 1.5% 4.7% 2.9%
Calculation of return on operating capital Beräkning av avkastning på arbetande kapital
Total assets opening balance Balansomslutning vid periodens början 13,136 12,210 14,713 14,017 14,822
Total assets closing balance Balansomslutning vid periodens slut 14,422 13,136 12,210 14,713 14,017
Adjustment IFRS 16 Justering IFRS 16 -1,158
Total assets closing balance, excluding IFRS 16 Balansomslutning vid periodens slut, exklusive IFRS 16 13,264 13,136 12,210 14,713 14,017
Average total assets Genomsnittlig balansomslutning 13,779 12,673 13,462 14,365 14,420
Average total assets, excluding IFRS 16 Genomsnittlig balansomslutning, exklusive IFRS 16 13,200 12,673 13,462 14,365 14,420
Excluding average cash and cash equivalents Avgår genomsnittliga likvida medel -812 -817 -1,058 -1,127 -1,089
Excluding average other provisions Avgår genomsnittliga övriga avsättningar -257 -278 -220 -191 -206
Excluding average other non-interest-bearing liabilities Avgår genomsnittliga andra icke räntebärande skulder -1,629 -1,632 -1,867 -1,992 -1,958
(A) Operating capital (A) Arbetande kapital 11,082 9,946 10,317 11,055 11,168
(B) Operating capital, excluding IFRS 16 (B) Arbetande kapital, exklusive IFRS 16 10,503 9,946 10,317 11,055 11,168
Operating profit (EBIT) Rörelseresultat (EBIT) 671 493 281  781  540
Add-back of exceptional items Återläggning av jämförelsestörande poster 53 156 324 162 190
(C) EBIT after add-back of exceptional items (C) EBIT efter återläggning av jämförelsestörande poster 724 649 605  943  730
(C/A) Return on operating capital (C/A) Avkastning på arbetande kapital 6.5% 6.5% 5.9% 8.5% 6.5%
(C/B) Return on operating capital, excluding IFRS 16 (C/B) Avkastning på arbetande kapital, exklusive IFRS 16 6.9% 6.5% 5.9% 8.5% 6.5%

Capital structure

SEK M 2019 2018 2017 2016 2015
Mkr 2019 2018 2017 2016 2015
Calculation of interest-bearing net debt, net debt/equity ratio and interest-bearing net debt / Adjusted EBITDA Beräkning av räntebärande nettoskuld, nettoskuldsättnings- grad och räntebärande nettoskuld / Justerad EBITDA
Financial liabilities Finansiella skulder 5,300 5,671 5,221 1,701 1,643
Lease liabilites Leasing skulder 1,198
Provisions for pensions, interest-bearing Pensionsavsättningar, räntebärande 140 27 61  36  98
Less financial receivables Avgår finansiella fordringar -73 -107 -8 -1,466 -1,512
Less cash and cash equivalents Avgår likvida medel -662 -961 -672 -1,446 -808
(A) Interest-bearing (+) net debt/(-) net receivables (A) Räntebärande (+) nettoskuld/(-) nettofordran 5,903 4,630 4,602 -1,175 -579
Adjustment IFRS 16. lease liabilties Justering IFRS 16. leasing skulder -1,157
(B) Interest-bearing (+) net debt/(-) net receivables, excluding IFRS 16 (B) Räntebärande (+) nettoskuld/(-) nettofordran, exklusive IFRS 16 4,746 4,630 4,602 -1,175 -579
(C) Shareholders’ equity (C) Eget kapital 5,914 5,427 5,074 10,658 10,227
(D) Adjusted EBITDA (D) Justerad EBITDA 1,728 1,312 1,246 1,610 1,411
Adjustment IFRS 16 Justering IFRS 16 -347
(E) Adjusted EBITDA, excluding IFRS 16 (E) Justerad EBITDA, exklusive IFRS 16 1,381 1,312 1,246 1,610 1,411
(A/C) Net debt/equity ratio, multiple (A/C) Nettoskuldsättningsgrad, ggr 1.0x 0.9x 0.9x -0.1x -0.1x
(B/C) Net debt/equity ratio, multiple, excluding IFRS 16 (B/C) Nettoskuldsättningsgrad, ggr, exklusive IFRS 16 0.8x 0.9x 0.9x -0.1x -0.1x
(A/D) Interest-bearing net debt / Adjusted EBITDA, multiple (A/D) Räntebärande nettoskuld / Justerad EBITDA, ggr 3.0x 3.5x 3.7x -0.7x -0.4x
(B/E) Interest-bearing net debt / Adjusted EBITDA, multiple, excluding IFRS 16 (B/E) Räntebärande nettoskuld / Justerad EBITDA, ggr, exklusive IFRS 16 3.4x 3.5x 3.7x -0.7x -0.4x
Calculation of interest-coverage ratio Beräkning av räntetäckningsgrad
Profit after financial items Resultat efter finansiella poster 542 395 179 671 425
(A) Addition of interest expenses (A) Tillägg av räntekostnader 133 105 117 115 117
(B) Addition of interest expenses, excluding IFRS 16 (B) Tillägg av räntekostnader, exklusive IFRS 16 94 105 117 115 117
Add-back of exceptional items Återläggning av jämförelsestörande poster 53 156 324 155 186
(C) Profit after financial items plus interest expenses and add-back of exceptional items (C) Resultat efter finansiella poster med tillägg för räntekostnader och återläggning av jämförelsestörande poster 728 656 620 941 728
Adjustment IFRS 16 Justering IFRS 16 -33
(D) Profit after financial items plus interest expenses and add-back of exceptional items, excluding IFRS 16 (D) Resultat efter finansiella poster med tillägg för räntekostnader och återläggning av jämförelsestörande poster, exklusive IFRS 16 695 656 620 941 728
(C/A) Interest-coverage ratio (C/A) Räntetäckningsgrad 5.5x 6.2x 5.3x 8.2x 6.2x
(D/B) Interest-coverage ratio, excluding IFRS 16 (D/B) Räntetäckningsgrad, exklusive IFRS 16 7.4x 6.2x 5.3x 8.2x 6.2x

Quarterly performance

Quarter 1
*From operations.
Quarter 2
*From operations.
Quarter 3
*From operations.
Quarter 4
*From operations.

The Group’s 20 largest markets

2019 2018 2017 2016 2015
Country SEK M % # SEK M % # SEK M % # SEK M % # SEK M % #
2019 2018 2017 2016 2015
Land Mkr % # Mkr % # Mkr % # Mkr % # Mkr % #
USA USA 2,765 31.0 1 2,390 29.2 1 2,242 29.2 1 2,331 29.9 1 2,377 29.3 1
UK Storbritannien 1,101 12.3 2 1,128 12.9 2 992 12.9 2 1,116 14.3 2 1,263 15.6 2
France Frankrike 828 9.3 3 748 8.8 3 678 8.8 3 645 8.3 3 613 7.6 4
Canada Kanada 703 7.9 4 625 7.5 5 576 7.5 5 574 7.3 5 580 7.1 5
Germany Tyskland 693 7.8 5 651 7.9 4 609 7.9 4 595 7.6 4 614 7.6 3
Australia Australien 428 4.8 6 399 5.9 6 455 5.9 6 428 5.5 6 436 5.4 6
Netherlands Nederländerna 342 3.8 7 323 3.8 7 293 3.8 7 269 3.4 7 282 3.5 7
Italy Italien 258 2.9 8 266 3.2 8 247 3.2 8 238 3.0 8 230 2.8 8
Austria Österrike 200 2.2 9 197 2.8 9 214 2.8 9 200 2.6 9 203 2.5 9
Belgium Belgien 183 2.1 10 186 2.4 10 181 2.4 10 181 2.3 10 193 2.4 10
Ireland Irland 153 1.7 11 146 1.9 11 143 1.9 11 132 1.7 12 127 1.6 13
Switzerland Schweiz 141 1.6 12 123 1.5 12 117 1.5 12 134 1.7 11 134 1.6 12
India Indien 127 1.4 13 113 1.3 13 103 1.3 13 106 1.4 13 106 1.3 14
South Africa Sydafrika 92 1.0 14 98 1.1 14 84 1.1 15 86 1.1 16 99 1.2 15
Sweden Sverige 85 1.0 15 75 0.9 17 78 1.0 16 78 1.0 17 54 0.7 19
Hong Kong Hong Kong 82 0.9 16 87 1.1 15 31 0.4 24 59 0.8 18 79 1.0 17
Denmark Danmark 60 0.7 17 80 1.0 16 89 1.2 14 90 1.2 15 91 1.1 16
New Zealand Nya Zeeland 59 0.7 18 60 0.7 18 56 0.7 19 54 0.7 19 47 0.6 20
Singapore Singapore 55 0.6 19 56 0.7 20 68 0.9 17 51 0.7 20 64 0.8 18
Japan Japan 54 0.6 20 36 0.4 23 38 0.5 20 26 0.3 23 32 0.4 21

Quality and environmental certifications 2019

City Country Production ISO 9001 ISO 13485 SO 14001 CE
Stad Land Produktion ISO 9001 ISO 13485 SO 14001 CE
Suzhou Suzhou China VTE prevention, Pressure Ulcer ­Prevention Kina VTE prevention, Trycksårsbehandling x x x x
Magog Magog Canada Patient handling Kanada Patienthantering x x x x
Poznan Poznan Poland Medical Beds, Patient Handling, Hygiene, Disinfection, VTE prevention Polen Sjukvårdssängar, Patienthantering, Hygien, Desinfektion, VTE prevention x x x x
San Cristobal San Christobal Dominican Republic Patient handling, VTE prevention Dominikanska Republiken Patienthantering VTE prevention x x * x
Cardiff Cardiff UK Assembly and Doppler equipment for diagnostics Storbritannien Monitorerings- och dopplerutrustning för diagnostik x x x x

x = certified plant