9 9 7 Margin Margin is a non-GAAP ratio which is defined by Franco-Nevada as Adjusted EBITDA divided by revenue. Franco-Nevada uses Margin in its annual incentive compensation process to evaluate management’s performance in increasing revenue and containing costs. Management believes that in addition to measures prepared in accordance with IFRS, our investors and analysts use Margin to evaluate the Corporation’s ability to contain costs relative to revenue. Margin is intended to provide additional information to investors and analysts and should not be considered in isolation or as a substitute for measures of performance prepared in acco rdance with IFRS. It does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. Calculation of Margin For the three For the year months ended ended December 31, December 31, (expressed in millions, except Margin) 2021 2020 2021 2020 Adjusted EBITDA $ 269.8 $ 253.7 $ 1,092.3 $ 839.6 Revenue 327.7 304.5 1,300.0 1,020.2 Margin 82.3 % 83.3 % 84.0 % 82.3 % Adjusted Net Income and Adjusted Net Income per share Adjusted Net Income and Adjusted Net Income per share are non-GAAP financial measures, which is defined by Franco-Nevada by excluding the following from net income (loss) and earnings (loss) per share: • Foreign exchange gains/losses and other income/expenses; • Impairment charges and reversals related to royalty, stream and working interests; • Impairment of investments; • Gains/losses on sale of royalty, stream and working interests; • Gains/losses on investments; • Unusual non-recurring items; and • Impact of income taxes on these items. Management uses Adjusted Net Income and Ad justed Net Income per share to evaluate the underlying operating performance of Franco-Nevada as a whole for the reporting periods presented, to assist with the planning and forecasting of future operating results and to supplement information in its financial statements. Management believes that in addition to measures prepared in accordance with IFRS such as Net Income and EPS, our investors and analysts use Adjusted Net Income and Adjusted Net Income per share to evaluate the results of the underlying business of Franco-Nevada, particularly since the excluded items are typically not included in our guidance. While the adjustments to net income and EPS in these measures include items that are both recurring and non- recurring, management believes that Adjusted Net Income and Adjusted Net Income per share are useful measures of Franco-Nevad a’s performance because they adjust for items which may not relate to or have a disproportionate effect on the period in which