The ESMA Guidelines require that we explain any indicators we use in evaluating the company’s financial or non-financial results, if this indicator is not found in the IFRS or XBRL standards published by ESEF. In the case of our financial statements, we use the following indicators:
|Indicator||Definition / Calculation method||Why is relevant|
|It is about the profit of the basic activity, the activity of assisting our customers.
It considers all the revenues and expenses associated with the current activity and ignores the financial income and expenses, or those related to the holding activity (of the group, our existence as a listed company).
It is obtained by eliminating from the results of each business line the elements of revenues and expenses (cash or non-cash) that have nothing to do with the current activity.
The most significant adjustments (differences between gross profit and operational profit) are:
1. Elimination of the financial result (addition to gross profit of expenses and decrease of financial income)
2. Elimination of non-cash IFRS adjustments related to the Stock Option Plan in case of presentation on business segments
|The operational activity (also called ‘current’ or ‘basic’) represents the company’s business.
This measures the performance and activity of the business versus the competition, regardless of the taxation environment, the accounting reporting framework or the financing method of the company (mix between equity and borrowed capital, costs of maintaining the stock market share, etc.).
In other words, this is the result that the company (or each business segment) would have if it operated as a company financed entirely from its own sources (from “equity” – shareholders’ capital).
|„Gross margin”, or
„GM” or ”margin”
|The calculation formula of this indicator is Revenue minus COGS (cost of goods sold)”.
Thus, from the invoices issued to customers, the value of expenses directly associated with those projects (obtaining those revenues) is deducted. In the case of software license resale projects, we buy a license for 90 lei and sell it to the customer for 100 lei. The difference is “Gross Margin”.
If we bill a customer for cloud project deployment services, the gross margin is the difference between the revenue billed to the customer and the cost per man-hours required for deployment, regardless of whether the deployment engineer is employed or a subcontractor.
|This indicator is the “GDP” of the company, it is the “added value” that we produce for our partners.
This indicator not only reflects the value we bring to customers, but, looking back at the company, it reflects the amount of money we have available to cover fixed expenses.