Definitions and key ratios

Eltel applies ESMA’s (European Securities and Markets Authority) guidelines for alternative performance measures (APM). In addition to the financial measures defined in IFRS, certain key figures, which qualify as alternative performance measures (APMs) are presented to reflect the underlying business performance, facilitate analysis of the Group’s development as followed by Group Management and enhance comparability from period to period. The definition of these key figures is presented below. These APMs should not be considered as a substitute for measures in accordance with IFRS.

IFRS key ratios

Earnings per share (EPS) Net result attributable to equity holders of the parent / Weighted average number of ordinary shares

Alternative performance measures (APMs)

Key figure Definition and reason for use
Operative EBITA

Operative EBITA and -margin, % are used to measure business and segment profitability. Income statement items below operative EBITA are not allocated to segments.

Operative EBITA:
Operating result before acquisition-related amortisations and items affecting comparability

Operative EBITA margin, %: Operative EBITA x 100 / Net sales

Operative EBITA and -margin, % for segments represent the sum of segments: Finland, Sweden, Norway and Denmark.

Items affecting comparability
Items affecting comparability are items for specific events which management does not consider to form part of the ongoing operative business, typically gain/loss of acquisition and divestment of businesses.
EBITDA EBITDA is operating result (EBIT) before depreciations and amortisations. Used in calculating the leverage ratio.
Operating result (EBIT)

Operating result (EBIT) and -margin% are used to measure profitability before interest and taxes.

EBIT margin, %: EBIT x 100 / Net sales

Return on equity (ROE), %

Return on equity (ROE), % represents the rate of return that shareholders receive on their investments.

Return on equity (ROE), %1): Net result / Total equity (average over the reporting period) x 100

Operative capital employed

Operative capital employed is the amount of net operating assets the business uses in its operations.

Return on operative capital employed (ROCE), % represents how effectively total net operating assets are used in order to generate return in the operating business.

Operative capital employed:
Net working capital + Intangible assets excluding goodwill and acquisition-related allocations + Property, plant and equipment and Right-of-use assets

Return on operative capital employed (ROCE), %1):
EBITA / Operative capital employed (average over the reporting period) x 100

Net debt and leverage ratio

Net debt represents Eltel's indebtedness. It is used to monitor capital structure and financial capacity. It is also used in calculating the leverage ratio. The leverage ratio is defined as covenant in Eltel's financing agreement.

Net debt: Interest-bearing debt (excluding shareholder loans) - cash and cash equivalents

Net debt, 2021 financing agreement:
Interest-bearing debt (excluding shareholder loans) - cash and cash equivalents - IFRS 16 leasing liabilities

Leverage ratio1): Net debt / EBITDA

Net working capital

Net working capital is used to follow the amount of short-term running capital needed for the business to operate. Used also as a factor to calculate operative capital employed.

Net working capital:
Net of inventories, trade and other receivables, provisions, advances received and trade and other payables, excluding items in these balance sheet items that are not considered to form part of operative working capital: derivative valuations and income tax liabilities.

Committed order backlog Committed order backlog is the total value of committed orders received but not yet recognised as sales. It is the (best) measure of unsatisfied performance obligations according to IFRS 15 Revenue from contracts with customer.

1) Calculated on a rolling 12 months basis

Contact Person

Elin Otter, Director, Communications and Investor Relations, Eltel

Elin Otter

Director, Communications and Investor Relations
+46 72 595 46 92 elin.otter@eltelnetworks.com