“Alternative Performance Measurements” on alternative key performance indicators

The ESMA guidelines require us to explain any indicator we have used in assessing the financial or non-financial results of the company, if that indicator is not found in the IFRS or XBRL standards, published by ESEF. In our financial statements, we used the following indicators:

Indicator Definition/Calculation method Why is it relevant?
Operating profit It is about the core business profit, i.e. the business of serving our clients.

It takes into consideration all the incomes and expenses related to the current business and does not take into consideration the financial incomes and expenses, or those related to the holding-type business (of the group, i.e. us as a listed company).

It is calculated by taking out of each business line results the income and expenses items (cash or non-cash) that are not related to the current business.

The most significant adjustments (differences between gross profit and operating profit) are:

1.        Financial result elimination (expenses addition to the gross profit, and financial-type incomes subtraction)

2.        Non-cash IFRS adjustment elimination, related to the Stock Option Plan

Operational business (also known as ‘current’ or ‘core’) means the company businesses.

This measures the performance and the business activity in relation to the competition, regardless of the taxation environment, the reporting accounting framework or the company financing method (the mix of equity and loans, the costs of maintaining the stock exchange rate, etc.).

That is to say, this is the result the company (or each business line) would have if it operated as a company fully financed by its own resources (by ‘equity’ – shareholders’ equity).


‘Gross Margin’, or

‘gross margin’, or

‘GM’, or ‘margin’

The calculation formula for this indicator is the ‘revenue MINUS COGS (cost of goods sold)’.

Thus, the expenses directly related to those projects (obtaining those revenues) is subtracted from the invoices issued to clients. For the software license resale projects, we buy a license for RON 90 and resell it to the client for RON 100. The difference is the “gross margin”.

If we invoice a client for a cloud project implementation services, the gross margin is the difference between the revenues invoiced to the client and the man-hour cost required for implementation, regardless if the implementing engineer is our employee or a subcontractor.

This indicator is the company’s “GDP”, it is the “added value” that we generated for our partners.

This indicator reflects not only the value we bring to our clients, but also, by inward looking at the company, it reflects the amounts of money we have at our disposal to cover the fixed expenses.