N O TE 3 Defnitions, calculation o f k ey ratio s and e x change rat e s DEFINITIONS St atement of income accor din g to Securit as ’ fnancial model Production e xpenses 1 W a g es and related cos ts, the cos t of equipment used when per formin g professional duties, and all other cos ts directly related the per formance of ser vices in v oiced. Sellin g and adminis tr ativ e e xpenses 1 All cos ts of sellin g, adminis tr ation and mana g ement includin g br anch ofce e xpenses. The primar y function of the br anch ofces is to pro vide the pro - duction with adminis tr ativ e support as w ell as to ser v e as a sales channel. Gross mar g in Gross income as a percent a g e of tot al sales. Oper atin g income before amortization Oper atin g income before amortization and impairment of acquisition related int an g ible assets, acquisition related cos ts and items afectin g compar abilit y , but includin g amortization and depreciation of other int an g ible assets, buildin g s and land and machiner y and equipment . Oper atin g mar g in Oper atin g income before amortization as a percent a g e of tot al sales. Oper atin g income after amortization Oper atin g income after amortization and impairment of acquisition related int an g ible assets, acquisition related cos ts, items afectin g compar abilit y and includin g amortization and depreciation of other int an g ible assets, buildin g s and land and machiner y and equipment . Adjus ted income Oper atin g income before amortization, adjus ted for fnancial income and e xpenses (e x cludin g re v aluation of fnancial ins truments accor din g to I A S 3 9 ) and current t ax es. Net mar g in Income before t ax es as a percent a g e of tot al sales. R eal chan g e Chan g e adjus ted for chan g es in e x chan g e r ates. St atement of cash fo w accor din g to Securit as ’ fnancial model Cash fo w from oper atin g activities Oper atin g income before amortization adjus ted for depreciation/ amortization less capit al e xpenditures in non-current t an g ible and int an g ible assets (e x cludin g acquisition of subsidiaries), chan g e in accounts receiv able and chan g es in other oper atin g capit al emplo y ed. F ree cash fo w Cash fo w from oper atin g activities adjus ted for fnancial income and e xpenses paid and current t ax es paid. Cash fo w for the y ear 1 F ree cash fo w adjus ted for acquisition of subsidiaries, acquisition related cos ts paid, cash fo w from items afectin g compar abilit y , dividends, new issues and chan g e in interes t -bearin g net debt e x cludin g liquid funds. B alance sheet accor din g to Securit as ’ fnancial model Oper atin g capit al emplo y ed Capit al emplo y ed less g oodwill, acquisition related int an g ible assets and shares in associated companies. Capit al emplo y ed Non interes t -bearin g non-current and current assets less non interes t - bearin g lon g -term and current liabilities. Net debt Interes t -bearin g non-current and current assets less lon g -term and short -term interes t -bearin g loan liabilities. CAL CUL A TION OF K E Y RA TIOS 2012 Acquired sales gro wth: 4% This y ear ’ s sales from acquired business as a percent a g e of the pre vious y ear ’ s tot al sales. Calculation: 2 418.4 / 64 057.1 = 4% Or ganic sales gro wth: 0% T ot al sales for the y ear adjus ted for acquisitions and chan g es in e x chan g e r ates as a percent a g e of the pre vious y ear ’ s tot al sales adjus ted for div es ti - tures. Calculation: ((66 458.2-2 418.4+143.5)/(64 057.1-50.7))-1 = 0% R eal sales gro wth: 4% T ot al sales for the y ear includin g acquisitions and adjus ted for chan g es in e x chan g e r ates as a percent a g e of the pre vious y ear ’ s tot al sales. Calculation: ((66 458.2+143.5) / 64 057.1)-1 = 4% Oper atin g mar g in: 4.6% Oper atin g income before amortization as a percent a g e of tot al sales. Calculation: 3 085.5 / 66 458.2 = 4.6% Earnin g s per share before dilution 2,3 : SEK 3.32 (4.75 and 5.71) Net income for the y ear at tribut able to equit y holder s of the Parent Compan y in relation to the a v er a g e number of shares before dilution. Calculation 2012: ((1 212.0-0.4) / 365 058 897) x 1 000 000 = SEK 3.32 Calculation 2011: ((1 738.6-2.9)/365 058 897) x 1 000 000 = SEK 4.75 Calculation 2010: ((2 080.8+2.3)/365 058 897) x 1 000 000 = SEK 5.71 Earnin g s per share before dilution 2,3 and before items afectin g compar abilit y and impairment losses 4 : SEK 4.21 Net income for the y ear at tribut able to equit y holder s of the Parent Compan y before items afectin g compar abilit y (after t ax) and impairment losses in relation to the a v er a g e number of shares before dilution. Calculation: ((1 212.0-0.4+326.3)/365 058 897) x 1 000 000 = SEK 4.21 Cash fo w from oper atin g activities as % of oper atin g income before amortization: 104% Cash fo w from oper atin g activities as a percent a g e of oper atin g income before amortization. Calculation: 3 200.8 / 3 085.5 = 104% F ree cash fo w as % of adjus ted income: 105% F ree cash fo w as a percent a g e of adjus ted income . Calculation: 2 085.6 / (3 085.5 -574.0-526.4) = 105% 1 The defnition is also v alid for the formal primar y s t atements – the s t atement of income and the s t atement of cash fo w . 2 There are no con v ertible debenture loans. Consequently there is no diference bet w een earnin g s per share before and after dilution. 3 Number of shares includes shares related to the Group ’ s share-based incentiv e scheme that ha v e been hed g ed throug h a s w ap a greement . 4 Impairment losses of g oodwill and other acquisition related int an g ible assets. 82 Annual R eport Notes and comments to the consolidated fnancial s t atements Securit as Annual R eport 2012