Annual report 2023

Alternative performance measures (APM)

The financial information included in this report includes certain alternative performance measures (APMs), which are not accounting measures as defined by IFRS Accounting Standards. These APMs should not be used instead of, or considered as alternatives to, the group’s financial results based on IFRS Accounting Standards. These APMs may not be comparable to similarly titled measures disclosed by other companies. All APMs presented relate to the performance of the current reporting period and comparative periods.

The group believes that disclosing these performance measures enhances investors' ability to evaluate and assess the underlying performance of the group's operations and the related key business drivers. These APMs are also aligned to measures used internally to assess business performance.

Definition of alternative performance measures (APM)

Business area cost of goods sold

Business area cost of goods sold is the part of cost of goods sold that is assigned to a business area. The calculation excludes the part of cost of goods sold that is shared between business areas or cannot reasonably be allocated to any business area. Business area cost of goods sold is used to monitor the costs of a business area.

Business area gross profit

Business area gross profit is the part of gross profit that is assigned to a business area. The calculation excludes the part of cost of goods sold that is shared between business areas or cannot reasonably be allocated to any business area. Business area gross profit is used to monitor the gross profit of a business area.

Business area gross profit margin

Business area gross profit margin is the part of the gross profit margin that is assigned to a business area. Business area gross profit margin is used to monitor the margin of a business area.

Gross profit margin

The gross profit margin is calculated by dividing gross profit by revenue. The gross profit margin measures how the group turns revenue into gross profit.

Other cost of goods sold

Other cost of goods sold is the part of cost of goods sold that is not assigned to a business area. Other cost of goods sold is used to reconcile the business area gross profit to the gross profit of the group.

EBITDA (earnings before interest, taxes, depreciation and amortization)

EBITDA is defined as net income before income tax expenses, other financial income and expenses, net, interest expenses, interest and securities income, depreciation, amortization and impairments on tangible and intangible assets. In other words, EBITDA is defined as EBIT before depreciation, amortization and impairments on tangible and intangible assets. EBITDA is used to determine the net debt/EBITDA ratio.

Adjusted EBITDA

Adjusted EBITDA is defined as net income before income tax expenses, other financial income and expenses, net, interest expenses, interest and securities income, depreciation, amortization, impairments on tangible and intangible assets, restructuring expenses and other non-operational items, which include significant acquisition-related expenses, gains and losses from the sale of businesses or real estate, and certain non-operational items that are non-recurring or do not occur in similar magnitude. Adjusted EBITDA is used to determine the profitability of the business and to determine the net debt/adjusted EBITDA ratio. Further, the group uses the APM adjusted EBITDA, which is a measure that the group considers to be relevant for investors who want to understand the profit generation excluding items affecting comparability.

Adjusted EBITDA margin

The adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue. The adjusted EBITDA margin measures how the group turns revenue into adjusted EBITDA.

Adjusted net income

Adjusted net income is defined as net income attributable to shareholders of medmix Ltd before tax-adjusted effects on restructuring, amortization, impairments and non-operational items. The group uses adjusted net income, which is a measure that the group considers to be relevant for investors who want to understand the net income excluding items affecting comparability.

Adjusted diluted earnings per share, attributable to a shareholder of medmix Ltd (adjusted diluted EPS)

Adjusted diluted EPS is defined as adjusted net income attributable to shareholders of medmix Ltd divided by the average number of shares used for calculating diluted earnings per share (see to note 22 for the calculation of the average number of shares used for calculating diluted earnings per share).

Free cash flow (FCF)

FCF is used to assess the group’s ability to generate the cash required to conduct and maintain its operations. It also indicates the group’s ability to generate cash to finance dividend payments, repay debt and to undertake merger and acquisition activities. FCF is calculated based on the cash flow from operating activities and adjusted for paid capital expenditures (net investments in property, plant and equipment and intangible assets).

Adjusted operating net cash flow (adjusted ONCF)

Adjusted ONCF is calculated based on FCF adjusted for financial income and expenses, taxes, other items and cash impacts on other non-operational items. Adjusted ONCF is used as a financial objective for the short-term variable compensation for the members of the Executive Committee (further details are provided in chapter Compensation architecture for the Executive Committee) and other employees of the group.

Capital expenditure, gross (capex, gross)

Capex, gross, is the sum of additions to intangible assets and additions to property, plant and equipment.

Capital expenditure, net (capex, net)

Capex, net, is calculated based on capex, gross, adjusted for the net book value of disposed intangible assets and property, plant and equipment.

Net debt

Net debt is used to monitor the group’s overall short- and long-term liquidity. Net debt is calculated as the sum of total current and non-current borrowings and lease liabilities less cash and cash equivalents and current financial assets.

Net debt/adjusted EBITDA ratio

Net debt/adjusted EBITDA is a ratio measuring the amount of income generated and available to pay down debt before covering interest, taxes, depreciations and amortization expenses without considering impairments, restructuring expenses and other non-operational items. The net debt/adjusted EBITDA ratio is used as a measurement of adjusted leverage. It is calculated as net debt divided by adjusted EBITDA.

Currency-adjusted growth

Certain percentage changes in the financial review and the business review divisions have been calculated using constant exchange rates, which allow for an assessment of the group’s financial performance with the effects of exchange rate fluctuations eliminated. The currency-adjusted growth is calculated by applying the previous year’s exchange rates for the current year and calculating the growth without currency effects.

Organic growth

Organic growth measures changes with the same period in the previous year after adjusting for effects arising from acquisitions, divestments and foreign exchange differences.

The impact of the organic growth is determined as follows:

Reconciliation statements for alternative performance measures (APM)

For the reconciliation statements of business area gross profit, business area gross profit margin, EBITDA, adjusted EBITDA and adjusted EBITDA margin, please refer to note 3, for net debt and net debt/adjusted EBITDA ratio to note 6, and for adjusted net income, adjusted diluted EPS, free cash flow, adjusted ONCF, capital expenditure, gross, and capital expenditure, net, to the section financial review.