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 and relevant information enabling reconciliations to IFRS measures can be found in connection with relevant parts of the report. 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 - interest on hybrid bond / Weighted average number of ordinary shares

Alternative performance measures (APMs)
Key figure	Definition and reason for use
Adjusted EBITA and -margin	Adjusted EBITA and -margin, % are used by management to measure business and segment profitability and exclude items affecting comparability. Income statement line items below adjusted EBITA are not allocated to segments. Adjusted EBITA: Operating result before acquisition-related amortizations and items affecting comparability Adjusted EBITA margin, %: Adjusted EBITA / Net sales x 100 Adjusted EBITA and -margin, % for segments represent the sum of segments: Finland, Sweden, Denmark & Germany and Norway.
Items affecting comparability	These include capital gains and/or losses and transaction costs related to divestments and acquisitions, restructuring and resizing expenses and other items that according to Eltel's management's assessment are not related to normal business operations.
EBITDA and adjusted EBITDA	EBITDA is operating result (EBIT) before depreciations and amortizations. Adjusted EBITDA excludes items affecting comparability. Adjusted EBITDA is used in calculating the leverage ratio.
EBIT margin	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 and Return on operative capital employed (ROCE), %	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⁾: Adjusted EBITA / Operative capital employed (average over the reporting period) x 100
Net debt and leverage ratio	Net nebt 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 - cash and cash equivalents Leverage ratio¹⁾: Net debt / Adjusted EBITDA
Net working capital	Net working capital is used to follow the amount of 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 recognized as sales. It does not include frame agreements unless a binding purchase order has been received. It is the best measure of unsatisfied performance obligations according to IFRS 15 Revenue from contracts with customer.