Automatic translation: Originally published in Finnish 27/09/2026, 06:00 GMT. Give feedback here.

This blog series reflects on life on the stock exchange from a company's perspective

Adjustments in earnings reporting are a form of financial art where the stakes can be high.

When I was following the IT company Tieto as a young analyst in the 2010s, it was impossible not to notice the recurring tens of millions of euros in adjustments to earnings every year. The company's management stated that non-recurring items were, in a way, a continuous part of their business model. Some part of the business always had to be reorganized. The market and we analysts were even told that these expenses amount to around 1-2% of revenue annually. I began to wonder why these expenses are adjusted from the earnings reported to investors at all if they are a continuous part of normal business operations..? Of course, the reporting was transparent to investors, and management's credibility held up, even though the practice caught the attention of other analysts as well.

After Inderes' listing, I thought we wouldn't become a company known among investors as a so-called non-recurring item aristocrat. For three years, we only reported raw numbers, and our earnings guidance was tied to reported EBITA.

Then came the year 2025. Members of the Board with strong listed company backgrounds had for some time been pushing for a revision where we would move to guiding EBITA excluding non-recurring items and add this metric to our continuous reporting. The CFO supported the change. As a former analyst, I opposed it. I lost the argument, and the new model was adopted. However, the Board members once again demonstrated the kind of wisdom seen from the corporate side of the table that proved to be useful.

Figure: Key figure table from Inderes' H1'26 half-year report. EBITA and earnings per share are presented on separate lines. *Serving suggestion

Non-recurring items can be divided into two categories:

-              Items paid from owners' pockets, such as restructuring costs

-              Purely accounting items with no cash flow impact, such as goodwill amortization or write-downs

Adjusting for purely accounting items in earnings is always justified so that the company's reporting gives a true and fair view of the state of the company's business. Many First North companies, such as Inderes, use FAS accounting, where acquisition-related goodwill amortization is a purely accounting item. Adjusting for these makes companies more comparable to listed companies applying IFRS. At Inderes, we have adjusted for these FAS items in the calculation of earnings per share from the very beginning. This makes it easier for investors to calculate basic valuation metrics like the P/E ratio and to track EPS growth. In addition, we report EBITA as our primary metric. In EBITA, the final letter "A" stands for amortizations, meaning operating profit before the amortization of intangible balance sheet items generated in acquisitions.

One-off expenses paid from owners' pockets are a trickier challenge. Adjusting for them is justified and increases transparency when the expenses are genuinely one-off and relevant in scale. The purpose of the adjustment is to shed light on the health of the company's operational business for investors and provide a more truthful picture. However, they carry the constant risk of slipping into manipulation that breeds mistrust. What if we push a little more expenses into the "one-offs" bucket, will that make the adjusted result look better? I remember one high-profile case in Finland where a company commented that "one-off trade fair expenses" had burdened the quarter's earnings. When sales expenses become one-off, revenue could also start being reported as one-off using the exact same logic.

The United States knows best how to tell a story. When the co-working space provider WeWork felt that investors did not understand the company's excellence and the massive hidden value lurking in its community, it began reporting a "Community Adjusted EBITDA" figure to its financiers. This figure adjusted earnings for marketing, administrative, and development expenses, among other things. Because what company wouldn't run without those functions. A loss of a billion turned into a profit. At this point, investors rightfully asked: do you take us for idiots?

WeWork's extreme reporting holds an important lesson. It turned back hard against the company itself when investors and the financial media seized on the issue, viewing it as blatant gimmickry and an underestimation of investors. The erosion of investors' trust contributed in part to the collapse of the company's value, the cancellation of the IPO, and WeWork's financial crisis.

Let's return to Inderes' situation. We won't be turned into WeWork either, even though the Inderes community is genuinely valuable.

In the second quarter of 2025, we had to reorganize the previously acquired events business in Sweden because we decided to transition to a new operating model. In addition, as part of the acquisition, we had entered into a partnership agreement that did not deliver targeted results and had to be terminated. This difficult but necessary operation ultimately resulted in cash flow-impacted expenses of 0.6 MEUR. On Inderes' scale, this was a palpable earnings burden and genuinely non-recurring. Without the revision to the guidance model pushed by the Board, we would have painted ourselves into a corner: either carry out the necessary measures and issue a very severe profit warning to the market, or leave the measures undone and hope for the best.

Expanding the company's reporting to include adjusted operating profit and presenting earnings guidance in the form of adjusted earnings gives management the leeway to occasionally make difficult decisions without having to start by printing a profit warning to the market. For instance, when a challenging restructuring of operations lies ahead, no CEO wants additional public fuss and pressure on top of that. This is where the wisdom of the Board members lay, which analyst-Mikael, thinking in black and white, did not possess. And every company encounters these situations at some point. Things are fine as long as the company does not spiral into a cycle of recurring "one-off" items and restructurings every year. If the adjusted result is systematically and clearly at a higher level than the company's reported earnings or cash flow, it is not a one-off item. In that case, the adjusted figures lose their credibility in the eyes of investors.

Thank you to the blog readers for the feedback and discussions so far! If you want to follow Inderes' life on the stock exchange even more closely, tickets for the journey are available from the First North marketplace at the day's price. You can find previous episodes here:

Life on the stock exchange – Part 1 | What does it cost to be listed? I calculated down to the exact euro

Life on the stock exchange – Part 2 | Does guidance make any sense? Profit warning over EUR 50,000

Life on the stock exchange – Part 3 | I was wrong! Share sales in an IPO are not a sin after all

Life on the stock exchange – Part 4 | We started reporting revenue monthly. Then something unexpected happened.