Alternative per­for­mance mea­sures

Swisscom uses key indicators defined in the In­ter­na­tional Financial Reporting Standards (IFRS) through­out its entire financial reporting, as well as selected alternative per­for­mance mea­sures (APMs). These alternative mea­sures provide useful in­for­ma­tion on the Group’s financial situation and are used for financial management and control purposes.

As these mea­sures are not defined under IFRS, the calculation may differ from the published APMs of other com­pa­nies. For this reason, comparability across com­pa­nies may be limited.

The key alternative per­for­mance mea­sures used at Swisscom for the 2019 financial reporting are defined as follows:

Key per­for­mance measure   Swisscom definition
Adjustments   Significant items that, due to their exceptional nature, cannot be considered part of the Swisscom Group’s ongoing per­for­mance, such as termination benefits and significant positions in connection with legal cases or other non-recurring items. In addition, the ap­pli­ca­tion of changes in the IFRS accounting principles and standards can have an impact on comparability with the previous year if these principles are not applied retrospectively.
Adjusted and at constant exchange rates   Key per­for­mance mea­sures considering adjustments and the currency effects (figures for 2019 are translated at the 2018 exchange rate to calculate the currency effect).
Operating income before de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA)   Operating income before de­pre­ci­a­tion of property, plant and equipment, amortization of intangible assets and rights of use, financial expenses and financial income, income from in­vest­ments accounted for using the equity method and income tax expense.
Operating income (EBIT)   Operating income before de­pre­ci­a­tion and amor­ti­sa­tion of property, plant and equipment, intangible assets and right-of-use assets, financial expense and financial income, result of equity-accounted investees and income tax expense.
Capital ex­pen­di­ture   Purchase of property, plant and equipment and intangible assets and payments for indefeasible rights of use (IRU) which are classified as leases under IFRS 16. In general, IRUs are paid in full at the beginning of use.
Operating free cash flow proxy   Operating income before de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA) less purchase of property, plant and equipment and intangible assets and payments for indefeasible rights of use (IRU) and lease expense. Lease expense for 2019 include interest expense on lease liabilities and de­pre­ci­a­tion of right-of-use assets excl. de­pre­ci­a­tion of IRUs. In 2018, lease expense according to IAS 17 is included in operating free cash flow proxy.
Free cash flow   Cash flows from operating and investing activities excl. cash flows from the purchase and sale of sub­sidiaries and purchase of and proceeds from equity-accounted investees and other financial assets. In prior year, dividends received are not included in free cash flow.
Net debt   Financial liabilities less cash and cash equivalents, current financial assets, derivative financial instruments held to hedge financial liabilities and other non-current financial assets directly related to non-current financial liabilities (certificates of deposit and U.S. treasury bond strips). See annual report page 56.
Net debt incl. lease liabilities   Net debt and lease liabilities.