Definitions

DEFINITIONS OF KEY RATIOS

The Annual Report refers to a number of non-IFRS measures that are used to provide investors and company management with additional information to assess the company’s operations. The various non-IFRS measures used to complement the IFRS financial statements are described below.

Non-IFRS measures

Return on equity Definition

Profit after tax, as a percentage of average equity Reason for using the measure

Shows the return generated on the owners’ invested capital from a shareholder perspective

Return on capital employed Operating profit plus financial income, as a percentage of average total assets excluding non-interest-bearing liabilities

Gross profit Net sales minus cost of goods sold A central measure for measuring the return on all tied-up working capital Gross profit is used to measure the margin before sales, research, development and administrative expenses

EBITDA

Equity per share Profit before depreciation/amortization and impairment

Relevant as a measure of the company’s ability to generate cash flow before capital tied up in operations and financial flows Equity divided by number of shares outstanding at the end of the period Shows the return generated on the owners’ invested capital per share from a shareholder perspective

Cash flow from ongoing operations per share Net margin

Net sales/ Order intake Cash flow from operating activities divided by the average number of shares during the period Profit after tax, as a percentage of net sales

Recognized net sales in relation to total order intake during the corresponding period Shows the cash flow generated by operating activities per share

The net margin shows the percentage of net sales remaining after the company’s expenses have been deducted The measurement is used to monitor the recognized revenue in relation to sales, which is part of the reason for the change in order backlog.

Net debt

Net debt/EBITDA

Sales growth

Order intake Interest-bearing liabilities less cash and cash equivalents and interestbearing current and long-term receivables This measure shows the Group’s total indebtedness

Net debt in relation to operating profit before depreciation and amortization A relevant measure from a credit perspective that shows the company’s ability to handle its debt

The change in net sales compared with the year-earlier period expressed as a percentage The value of all orders received and changes to existing orders (performance obligations) in the order backlog that the company has not delivered during the period The measure is used to track the performance of the company’s operations between periods Order intake is an indicator of future revenue and thus a key figure for the management of RaySearch’s operations

Organic sales growth Sales growth adjusted for currency effects

P/E ratio Share price at year-end divided by earnings per share This measure is used to monitor underlying sales growth driven by changes in volume, pricing and mix for comparable units between different periods Shows how the market values the share from a shareholder perspective in relation to the company’s recognized profit after tax

Interest-bearing liabilities Liabilities requiring the payment of interest Working capital Working capital comprises inventories, operating receivables and operating liabilities, and is obtained from the statement of financial position. Operating receivables comprise accounts receivable, other current/long-term receivables and non-interest bearing prepaid expenses and accrued income. Operating liabilities include other non-interest bearing long-term liabilities, advance payments from customers, accounts payable, other current liabilities and non-interest bearing accrued expenses and deferred income. Shows the actual interest-bearing debt burden This measure shows how much working capital is tied up in operations and can be shown in relation to net sales to demonstrate the efficiency with which working capital has been used

Operating margin Operating profit expressed as a percentage of net sales

Operating profit/loss Operating profit/loss before financial items and tax

Debt/equity ratio Net debt in relation to equity Together with sales growth, the operating margin is a key element for monitoring value creation Operating profit/loss provides an overall picture of the total generation of earnings in operating activities The measure shows financial risk and is used by management to monitor the Group’s indebtedness

Equity/assets ratio

Equity/assets ratio and net debt (without IFRS 16) Capital employed Equity expressed as a percentage of total assets at the end of the period This is a standard measure to show financial risk, and is expressed as the percentage of the total restricted equity financed by the owners

Equity/assets ratio and net debt adjusted for right-of-use assets and lease liabilities

Shows measurements made according to IAS 17 instead of IFRS 16 for comparability with earlier periods. Total assets less non-interest-bearing liabilities and deferred tax liabilities This measure shows how much capital is used in the business and is therefore one of two components for measuring return from the operations

Rolling 12 months’ sales, operating profit or other results Dividend per share Sales, operating profit or other results measured over the past 12-month period

Dividend divided by number of shares outstanding at year-end

This measure is used to more clearly illustrate the trends for sales, operating profit and other results, which is relevant because RaySearch’s revenue is subject to monthly variations Shows the direct return generated from a shareholder perspective

CALCULATION OF NON-IFRS FINANCIAL MEASURES, AMOUNTS IN SEK 000S

Working capital Accounts receivable (current billed customer receivables) Current unbilled customer receivables Long-term unbilled customer receivables Inventories Other current receivables (excl. tax) Accounts payable Other current liabilities (excl. tax) Working capital

Capital employed Total assets Current interest-bearing liabilities Deferred tax liabilities Capital employed

Net debt Current interest-bearing liabilities Long-term interest-bearing liabilities Cash and cash equivalents Net debt Dec 31, 2021 Dec 31, 2020

170,591 156,811 146,771 143,941 10,204 26,928 29,991 9,110 63,702 74,980 –48,774 –19,864 –367,212 –312,791 5,273 79,115

Dec 31, 2021 Dec 31, 2020 1,739,038 1,284,904 –419,699 –335,497 –107,784 –108,749 1,211,555 840,658

Dec 31, 2021 Dec 31, 2020 70,381 92,519 491,017 53,788 –102,535 –168,746 458,863 –22,439 Equity/assets ratio (without IFRS 16) Equity Total assets Equity/assets ratio

EBITDA Operating loss Amortization and depreciation EBITDA

Change in organic sales Net sales for the year Currency adjustment Adjusted net sales Net sales, preceding year Change in organic sales, %

IFRS 16 compliance.

Net debt (without IFRS 16) Net debt Less: Lease liabilities Net debt Dec 31, 2021 Dec 31, 2020 458,863 –22,439 –540,130 –95,779 –81,267 –118,218 Dec 31, 2021 Dec 31, 2020 651,664 691,339 1,215,747 1,191,640 53.6 58.0

2021 2020 –53,341 –3,466 250,184 213,799 196,843 210,333

2021 2020 641,673 651,612 20,868 13,805 662,541 665,417 651,612 741,584 1.7 –10.3