The key indicator for the performance of the Instone Group is adjusted revenue. Thanks to the application of period-based revenue recognition in almost all project developments in the Instone Group, adjusted revenues represent a key indicator for assessing the performance of the Company which is sufficient in our view. The adjusted revenue recognition similarly includes share deals and asset deals in analogous application of IFRS 15 in the determination, regardless of the decision of IFRS IC to exclude share deals from the revenue recognition relating to the period according to IFRS 15. In addition, adjusted revenue recognition is calculated without the effects of purchase price allocations.
Adjusted gross profit margin
Adjusted gross profit is determined from the adjusted revenue less material expenditure, changes in inventories, other material expenditure related operating income, indirect sales costs and capitalised interest, but without considering the effects from purchase price allocations and share deals. The adjusted gross profit margin as a ratio of adjusted gross profit to adjusted revenues reflects the operating result after deducting all external costs that can be directly attributed to the project and places the focus on the projects’ profitability.
Adjusted earnings after tax
Adjusted earnings after tax is calculated on the basis of adjusted gross profit less platform costs, consisting of staff costs, other operating income and expenses, depreciation and amortisation, income from investments and other earnings, financial result and income taxes, but is also adjusted for the effects from purchase price allocations and share deals, as well as any non-recurring effects, where applicable. From the 2020 financial year onwards, the results of associated companies are included in adjusted earnings before interest and taxes, as future results of project companies to be recorded under this item are to be allocated to operating earnings. In particular, the following significant expenses are adjusted for disposal losses from sales of tangible or financial assets or securities, unscheduled depreciation of tangible and financial assets, costs for acquisitions, merger losses, contractual penalties, demands for additional taxes from previous years based on audits, severance payments to the Management Board, and personnel reductions and restructuring to a greater extent, if these do not meet the strict criteria set out in IAS 37. The adjustment of significant income includes, in particular, income from capital gains from sales of non-current assets, compensation for damages, write-downs on non-current assets, reimbursements of taxes from previous years based on audits, reversals of provisions for extraordinary events and merger gains.
Volume of sales contracts
The volume of sales contracts includes all sales-related transactions, such as notarised real estate purchase agreements, individual orders from customers and rental income.