Annual Report • Mar 8, 2023
Preview not available for this file type.
Download Source FileASETEK - 2022 Asetek A/SAssensvej29220Aalborg Eastinfo@asetek.comwww.asetek.com34880522213800ATZVDWWKJ8NI472022-01-012022-12-312021-01-012021-12-31140Regnskabsklasse DAarhus2023-03-08Aalborg2023-03-08https://ir.asetek.com/Sustainability-Report-2022https://ir.asetek.com/Sustainability-Report-2022https://ir.asetek.com/Diversity-Policy-2021https://ir.asetek.com/Corporate-Governance-Statement-2022Årsrapport34880522Asetek A/SAssensvej 29220 Aalborg ØstxWizard version 1.1.1179.2, by EasyX Aps. www.easyx.euRevisionspåtegningGrundlag for konklusionKonklusionAndré S. EriksenCEOPeter Dam MadsenCFOJukka PertolaChairmanErik DamsgaardVice chairmanMaria HjorthMemberJørgen SmidtMemberMaja Frølunde Sand-GrimnitzMemberhttps://ir.asetek.com/Sustainability-Report-2022PricewaterhouseCoopers Statsautoriseret RevisionspartnerselskabPricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab33771231Mads MelgaardState Authorised Public Accountantmne34354Henrik Berring RasmussenState Authorised Public Accountantmne3415733771231PricewaterhouseCoopers Statsautoriseret RevisionspartnerselskabPricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab213800ATZVDWWKJ8NI472022-01-012022-12-31213800ATZVDWWKJ8NI472021-01-012021-12-31213800ATZVDWWKJ8NI472022-12-31213800ATZVDWWKJ8NI472021-12-31213800ATZVDWWKJ8NI472020-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472020-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472020-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472020-12-31213800ATZVDWWKJ8NI472021-01-012021-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472021-01-012021-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472021-01-012021-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472021-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472021-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472021-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472022-01-012022-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472022-01-012022-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472022-01-01213800ATZVDWWKJ8NI472021-01-01213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember1213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember1213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember2213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember3213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember4213800ATZVDWWKJ8NI472022-12-31cmn:ConsolidatedMember213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472022-01-012022-12-31cmn:ConsolidatedMember1iso4217:USDiso4217:USDxbrli:sharesxbrli:pure AASSEETTEEKK AANNNNUUAALL RREEPPOORRTT 22002222 Asetek A/S Assensvej 2 DK-9220 Aalborg East Denmark Phone: Fax: +45 9645 0047 +45 9645 0048 Web: Mail: www.asetek.com [email protected] CVR-number: 3488 0522 ISIN-number: DK0060477263 LEI: 213800ATZVDWWKJ8NI47 BOARD OF DIRECTORS Jukka Pertola, Chairman Erik Damsgaard, Vice Chairman Jørgen Smidt COMPENSATION COMMITTEE Jukka Pertola, Chairman Jørgen Smidt Maria Hjorth EXECUTIVE MANAGEMENT André Sloth Eriksen, CEO Peter Dam Madsen, CFO Maja Frølunde Sand-Grimnitz NOMINATION COMMITTEE Ib Sønderby, Chairman Claus Berner Møller Jukka Pertola AUDITOR PwC, State Authorized Public Accountants Nobelparken, Jens Chr. Skous Vej 1 DK-8000 Aarhus C AUDIT COMMITTEE Maria Hjorth, Chairman Erik Damsgaard Phone: +45 8932 0000 CVR-no 33 77 12 31 This annual report is approved by the Board of Directors as of March 8, 2023. The Board will submit this report for approval at the Annual General Meeꢀng on April 28, 2023. 2 P E R FO R M A N C E - P R EC I S I O N - PA S S I O N A S E T E K A N N UA L R E P O RT 2022 ASETEK AT A GLANCE Asetek designs, manufactures and sells gaming hardware for next-level immersive gaming experiences. Since 2013, Asetek’s liquid cooling products have enabled increased performance and provide lower acousꢀc noise, power savings and improved efficiency when compared with air cooling. In 2021, Asetek expanded its offering of gaming hardware soluꢀons with the introducꢀon of its line of products for immersive SimSports gaming experiences. The sales and markeꢀng team for liquid cooling, based principally in USA and Taiwan, oversees the customer re- laꢀonships to facilitate communicaꢀon and development, ensuring the developed liquid cooling product meets or exceeds customer demands. Sales and markeꢀng teams based in Denmark lead branding, markeꢀng design and customer engagement, and specialize in the markeꢀng of SimSports products. Asetek’s liquid cooling products are all-in-one coolers that provide reliable, maintenance-free liquid cooling to gaming and high-performance PC customers. In 2022, Asetek began delivering its iniꢀal SimSports products to the gaming market, providing sim racers full immersion and the feel of a real racecar. The flow of physical liquid cooling product generally com- mences in Asia. Asetek’s manufacturing and logisꢀcs team in Xiamen, China select components and suppliers for the finished product to be assembled by the Company’s principal contract manufacturer based in Xiamen. Finished liquid coolers are delivered directly to customer hubs in China, with smaller quanꢀꢀes shipped to Europe and USA. SimSports products are manufactured in Asetek faciliꢀes in Aalborg and delivered directly to end customers and resellers. With over ten million liquid cooling units deployed, Asetek’s patented technology is being adopted by a growing porꢁolio of OEMs and channel partners. Founded in 2000, Asetek is headquartered in Demark and has oper- aꢀons in California, Texas, China and Taiwan. Asetek’s business model begins with its research and development team based in Aalborg, Denmark, which manages collaboraꢀon with the Company’s global custom- er base to define requirements and develop cuꢂng edge technology. The Aalborg team works with the R&D team in Xiamen, China to idenꢀfy the opꢀmal sources for the necessary liquid cooling components to fulfill customer requirements. 8 P E R FO R M A N C E - P R EC I S I O N - PA S S I O N FINANCIAL STATEMENTS – PROFIT AND LOSS ASETEK A/S CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the years ended December 31, 2022 and 2021 (USD 000's) Revenue Cost of sales GROSS PROFIT Note 2022 50,650 (29,885) 20,765 2021 79,803 (46,430) 33,373 4 8 Research and development Selling, general and administrative Special items (5,163) (20,884) - (7,092) (24,503) (1,713) 714 8 8 Other income (119) TOTAL OPERATING EXPENSES (26,166) (32,594) OPERATING INCOME Foreign exchange gain (loss) Finance income Finance costs TOTAL FINANCIAL INCOME (5,401) (344) 45 (178) (477) 779 832 2 (216) 618 9 9 9 INCOME BEFORE TAX Income tax (expense) benefit INCOME FOR THE YEAR (5,878) 1,553 (4,325) 1,397 (60) 1,337 10, 11 Other comprehensive income items that may be reclassified to profit or loss in subsequent periods: Foreign currency translation adjustments (1,971) (1,709) TOTAL COMPREHENSIVE INCOME (6,296) (372) INCOME PER SHARE: (IN USD) Basic Diluted 12 12 (0.17) (0.17) 0.05 0.05 26 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENTS – BALANCE SHEET ASETEK A/S CONSOLIDATED BALANCE SHEET As of December 31, 2022 and 2021 (USD 000's) Note 2022 2021 ASSETS NON-CURRENT ASSETS Intangible assets 14 15 11 12,014 31,084 7,366 335 10,938 11,732 6,293 362 Property, plant and equipment Deferred income tax assets Other assets TOTAL NON-CURRENT ASSETS 50,799 29,325 CURRENT ASSETS Inventory 17 16 6,973 13,432 7,411 5,532 17,201 23,296 46,029 Trade and other receivables Cash and cash equivalents TOTAL CURRENT ASSETS 27,816 TOTAL ASSETS 78,615 75,354 EQUITY AND LIABILITIES EQUITY Share capital 18 444 54,406 (12,102) 42,748 442 58,077 (10,131) 48,388 Retained earnings Translation and other reserves TOTAL EQUITY NON-CURRENT LIABILITIES Long-term debt TOTAL NON-CURRENT LIABILITIES 19 20 1,739 1,739 1,540 1,540 CURRENT LIABILITIES Short-term debt Accrued liabilities 19,950 1,896 1,703 3,157 Accrued compensation and employee benefits Trade payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES 1,454 2,074 10,828 34,128 35,867 18,492 25,426 26,966 TOTAL EQUITY AND LIABILITIES 78,615 75,354 27 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENTS – EQUITY ASETEK A/S CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the years ended December 31, 2022 and 2021 (USD 000's) Share capital 433 Translation Treasury share Retained earnings 50,681 reserves 2,784 reserves (6,373) Total 47,525 EQUITY AT DECEMBER 31, 2020 Total comprehensive income for 2021 Income for the year Foreign currency translation adjustments Total comprehensive income for 2021 Transactions with owners in 2021 Shares issued for purchase of assets Shares issued for exercise of options Shares repurchased Share-based payment expense Transactions with owners in 2021 EQUITY AT DECEMBER 31, 2021 Total comprehensive income for 2022 Income for the year Foreign currency translation adjustments Total comprehensive income for 2022 Transactions with owners in 2022 Shares issued upon exercise of options Share-based payment expense Transactions with owners in 2022 EQUITY AT DECEMBER 31, 2022 - - - - - - - 1,337 - 1,337 1,337 (1,709) (372) (1,709) (1,709) 6 3 - - - - 4,216 862 - 981 6,059 58,077 4,222 865 (4,833) 981 1,235 48,388 - - - - (4,833) - 9 442 - (4,833) (11,206) 1,075 - - - - - - - (4,325) - (4,325) (4,325) (1,971) (6,296) (1,971) (1,971) 2 2 - - 214 440 654 216 440 656 - - - - - 444 (896) (11,206) 54,406 42,748 28 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENTS – CASH FLOW ASETEK A/S CONSOLIDATED CASH FLOW STATEMENT For the years ended December 31, 2022 and 2021 (USD 000's) Note 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) for the year (4,325) 4,170 (53) 111 - 1,337 3,750 (688) - 1,713 (2) Depreciation and amortization Gain on sale of property, plant and equipment Impairment of intangible assets Special items 14,15 14 8 9 Finance income recognized (45) Finance costs incurred 9 663 216 Finance income, cash received Finance costs, cash paid Income tax expense (income) 45 2 (609) (1,553) (461) 440 1,891 (8,628) (8,354) (141) 60 (446) 981 2,957 4,578 14,317 10,11 7 Cash receipt (payment) for income tax Share-based payments expense Changes in trade receivables, inventories, other assets Changes in trade payables and accrued liabilities NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Additions to intangible assets 14 15 15 (3,405) (22,215) 225 (5,974) (8,322) 1,092 Purchase of property, plant and equipment Disposal of long-term assets NET CASH USED IN INVESTING ACTIVITIES (25,395) (13,204) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on line of credit for building construction Borrowings (repayment) on line of credit Repurchase of common shares 19 19 18 18 19 19 20 18,582 (690) - 216 1,129 (75) (835) 18,327 (463) (15,885) 23,296 7,411 - 260 (4,833) 865 Proceeds from issuance of share capital Financing of previously purchased equipment Principal payments on equipment financing Principal payments on leases - - (928) (4,636) (280) (3,803) 27,099 23,296 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES Effect of exchange rate changes on cash and equivalents NET CHANGES IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD SUPPLEMENTAL DISCLOSURE - NON-CASH ITEMS Assets acquired under leases 95 - 108 4,222 Shares issued for purchase of assets 29 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES NOTES report. However, such plans relate to future events and the fulfillment of such are by nature subject to uncertainty. If actual results in 2023 differ from expectations, or sufficient funding is not established through the equity offering or otherwise, the Board of Directors and Management will need to take mitigating actions, such as reduce costs and pursue sale of certain Group assets. Although the Board of Directors and Management based on this assessment considers that Asetek will have adequate liquidity resources available to finance the operations of the Group for the coming year, the above indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. 1.GENERAL INFORMATION Asetek A/S (‘the Company’), and its subsidiaries (together, ‘Asetek Group’, ‘the Group’ or ‘Asetek’) designs, develops and markets liquid cooling solutions used in personal computers, servers and data centers. The Group’s core products utilize liquid cooling technology to provide improved performance, acoustics and energy efficiency. The Company is based in Aalborg, Denmark with offices in USA, China and Taiwan. The Company’s shares trade on the Oslo Stock Exchange under the symbol ‘ASTK’. 1.1. Liquidity and going concern in 2023 In 2022, the Company incurred operating loss of $5.4 million and as of December 31, 2022, has working capital of negative $6.3 million and non-current liabilities of $1.7 million. The Company believes that its cash position and the liquidity available from its operations, external borrowings and other sources currently available is sufficient to satisfy its working capital requirements until around mid-May, 2023. From then on the Company expects a cash shortfall, mainly as a result of cash balances (including cash inflows from operations) being allocated to capital expenditures related to the construction of a new headquarter facility. As a result, the Company plans to raise gross proceeds of approximately DKK 140 million (USD 20 million), with expected net proceeds of DKK 115 million (USD 16 million), in a public equity offering. The equity offering is expected to occur in May 2023 and the net proceeds are expected to be available May 15, 2023. The offering is fully underwritten as of March 7, 2023 subject to conditions not met at the time of the release of the financial statements. In addition, Management has discussed short-term debt financing with a bank to secure financing if a shortfall occurs before the funding is received from the planned equity offering. The bank has indicated willingness to provide bridge financing for the shortfall period. If the offering is completed with net proceeds of DKK 115 million, the Company considers, based on given current knowledge, that the Company’s cash position will be sufficient to meet the Company’s requirements for the year 2023. The Company’s budgets and plans are based on best estimates of the future at the time of issuing this annual 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. In 2021, the Company adopted a new accounting policy of identifying special items for separate disclosure. Refer to Note 2.23. 2.1. Basis of preparation The consolidated financial statements have been pre- pared on a historical cost convention, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the supplementary Danish information requirements for class D publicly listed companies. 2.2. Consolidation The consolidated financial statements comprise the Company and its consolidated subsidiaries. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from the intercompany transactions that are recognized in assets are also eliminated. Accounting policies of subsidiaries are consistent with the policies adopted by the Group. 30 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition- related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the total consideration transferred, value of non-controlling interests and the fair value of any equity investments previously held in the acquiree over the total identifiable net assets measured at fair value are recognized as goodwill. // All resulting exchange differences are recognized in other comprehensive income 2.4. Property and equipment Property and equipment are stated at historical cost less accumulated depreciation. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is provided over the estimated useful lives of the depreciable assets, generally three to five years, using the straight-line method. The assets’ useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized as other income or expense in the consolidated income statement. Property, plant and equipment is grouped as follows: Group Estimated Useful Life Buildings 30 - 50 years Leasehold improvements Lesser of 5 yrs or lease term Plant and machinery 5 years Tools and fixtures 3 to 5 years 2.3. Foreign currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The functional currency of the Company’s operations in the United States of America, Denmark and China are the U.S. dollar, Danish kroner, and Chinese Yuan Renminbi, respectively. The consolidated financial statements are presented in U.S. dollars, which is the Group’s presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized as operating expense in the income statement in foreign exchange (loss)/gain. Group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows: // Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; // Income and expenses for each income statement are translated at average exchange rates; 2.5. Research and development Research costs are expensed as incurred. Costs directly attributable to the design and testing of new or improved products to be held for sale by the Group are recognized as intangible assets within development projects when all of the following criteria are met: // it is technically feasible to complete the product so that it will be available for sale; // management intends to complete the product and use or sell it; // there is an ability to use or sell the product; // it can be demonstrated how the product will generate probable future economic benefits; 31 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES // adequate technical, financial and other resources to complete the development and to use or sell the product are available; and // the expenditures attributable to the product during its development can be reliably measured. cash flows solely represent payment of principal and interest. // ‘Fair value’. All other financial assets, representing other debt and equity instruments that do not meet the ‘amortized cost’ criteria, are recognized at fair value. All fair value movements on financial assets are taken through the income statement, or for certain debt instruments that qualify, through other comprehensive income. For all years presented, the Group’s financial assets are all classified as ‘amortized cost’. Directly attributable costs that are capitalized as part of the product include the employee costs associated with development. Other development expenditures that do not meet these criteria are recognized as expense when incurred. Development costs previously recognized as expense are not recognized as an asset in a subsequent period. Development costs recognized as assets are amortized on a straight-line basis over their estimated useful lives, which generally range between three and forty-eight months. Amortization expense related to capitalized development costs is included in research and development expense. Impairment of financial assets. For financial assets carried at amortized cost, the Group measures at the end of each reporting period the expected credit losses to be incurred for a financial asset or group of financial assets. The Company utilizes historical experience, evaluation of possible outcomes, current conditions and forecasts of future economic conditions to determine expected credit losses. Evidence may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. 2.6. Impairment of non-financial assets Assets that are subject to amortization are reviewed for impairment annually, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of 1) an asset’s fair value less costs to sell or 2) its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non- financial assets other than goodwill that previously suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. If an impairment loss on goodwill is identified, it is recognized as an expense and is not reversed in a subsequent period. 2.8. Financial assets Recognition and measurement. Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss, or other liabilities. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognized initially at fair value less, in the case of other liabilities, directly attributable transaction costs. The measurement of financial liabilities depends on their classification as follows: // ‘Financial liabilities at fair value through profit or loss’ are liabilities entered into that do not meet the hedge accounting criteria as defined by IFRS 9. Gains or losses on liabilities held for trading are recognized in profit and loss. At December 31, 2022, the Company has no liabilities measured at fair value through profit and loss. 2.7. Financial assets Recognition and Measurement. The Group determines the classification of its financial assets at initial recognition. Financial assets within the scope of IFRS 9 Financial Instruments are classified as follows: // ‘Amortized cost’ are financial assets representing contractual cash flows held for collection, where such 32 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES // ‘Other liabilities’ – After initial recognition, interest bearing debt is subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. shares or options are shown in equity as a deduction, net of tax, from the proceeds. 2.13. Share-based payments The Company issues options (or warrants) that allow management and key personnel to acquire shares in the Company. Through equity-settled, share-based compensation plans, the Company receives services from employees as consideration for the granting of equity options to purchase shares in the Company at a fixed exercise price. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The grant date fair value of options granted is recognized as an employee expense with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options (vesting period). The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms and conditions as set forth in the share option program. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk- free interest rate. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. At each reporting date, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. The impact of the revision to original estimates, if any, is recognized in the Statement of Comprehensive Income, with a corresponding adjustment to equity. Offsetting of financial instruments. Financial assets and financial liabilities are offset, and the net amount reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. 2.9. Inventories Inventories are stated at the lower of actual cost or net realizable value. Cost is determined using the first- in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence, or impaired balances. 2.10. Trade receivables Trade receivables are amounts due from customers for product sold in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for expected credit losses. If collection is expected in one year or less, trade receivables are classified as current assets. Expected credit losses are determined utilizing the simplified approach allowed under IFRS 9 Financial Instruments. 2.14. Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted 2.11. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits with banks, overdrafts and other short-term highly liquid investments with original maturities of three months or less. 2.12. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary 33 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Management establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. purchase orders. As such, the Company recognizes revenue when a valid contract is in place and control of the goods have transferred to the customer. Customer purchase orders and/or contracts are used as evidence of an arrangement. Delivery occurs and control of the goods is deemed to transfer when products are shipped to the specified location and the risks of obsolescence and loss have been transferred to the customer. For certain customers with vendor- managed inventory, delivery does not occur until product is acquired by the customer from the vendor- managed inventory location. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by credit checks and customer payment history. Customers do not generally have a right of return. Income received as a result of patent litigation settlement is recorded as other income as an offset to operating expense in the period the award is granted. Estimated costs for future product returns under warranty are charged to cost of sales and included in accrued liabilities. 2.16. Borrowings and related costs Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs. 2.15. Revenue recognition and other income Revenue represents sale of the Group’s products to customers which are principally resellers and original equipment manufacturers. Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, sales tax, returns and after eliminating sales within the Group. The Group’s revenue is predominantly comprised of shipment of Asetek products in fulfillment of customer 34 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred. pricing of the present value of money and, if relevant, risks specifically associated with the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.19. Contingent liabilities Contingent liabilities are not recognized in the financial statements. Significant contingent liabilities are disclosed, with the exception of contingent liabilities where the probability of the liability occurring is remote. 2.20. Segment reporting Business segmentation. The Group is reporting on three segments, Liquid cooling, Data center and SimSports. The three segments are identified by their specific sets of products and specific sets of customers. The splitting of operating expenses between segments is based on the Company’s best judgment and done by using the Company’s employee/project time tracking system to capture total hours charged by project code. Operating expenses that are not divisible by nature (rent, telecommunication expenses, etc.) have been split according to actual time spent on the three businesses, and the Company’s best estimate for attribution. Costs incurred for intellectual property defense and headquarters administration have been classified separately as headquarters costs and excluded from segment operating expenses. The CEO is the Group’s chief operating decision maker. The CEO assesses the performance of the Group principally on measures of revenue and adjusted EBITDA. Geographical segmentation. Each of the Group’s offices in its three principal geographies fulfills a particular function that serves the Asetek Group as a whole. The majority of costs incurred in each of the geographies are generally incurred for the benefit of the entire Group and not to generate revenue in the respective geography. As a result, the financial results of the Group are not divided between multiple geographical segments for key operating decision- making. Revenue and assets by geography is measured and reported in Note 4, Geographical information. 2.17. Leases Lease liabilities are accounted for under IFRS 16 Leases and measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate. Lease liabilities include the net present value of: fixed lease payments, amounts expected to be payable under residual value guarantees, any purchase options that are reasonably expected to be exercised, and any penalties for termination reflected in the lease term. The corresponding rental obligations, net of finance charges, are included in other long-term debt. Amounts due within one year are included in short- term debt. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period to reflect a constant periodic rate of interest on the remaining balance of the liability for each period. Leased assets are recognized as a right-of-use asset at the date at which the leased asset is available for use by the Group, initially measured at the present value of the lease liability and included in Property and equipment on the balance sheet. 2.18. Provisions A provision is recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. If the impact of time value is significant, the provision is calculated by discounting anticipated future cash flow using a discount rate before tax that reflects the market’s 2.21. Cash flow statement The cash flow statement is prepared using the indirect method. 35 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 2.22. Critical accounting estimates and judgments The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Areas where significant judgment has been applied are: // Valuation of deferred tax assets: deferred income tax assets are recognized to the extent that the realization of the tax benefit to offset future tax liabilities is considered to be probable. The Company has recorded deferred tax assets representing the estimated amount of net operating losses that will be utilized to offset future taxable income, based on income projections for the next five years. In future periods, management will continue to assess the probability of realization of the assets’ value and adjust the valuation in accordance with IAS 12. // Capitalization of development costs: the Group’s business includes a significant element of research and development activity. Under IAS 38, there is a require- ment to capitalize and amortize development spend to match costs to expected benefits from projects deemed to be commercially viable. The application of this policy involves the ongoing consideration by management of the forecasted economic benefit from such projects compared to the level of capitalized costs, together with the selection of amortization periods appropriate to the life of the associated revenue from the product. If customer demand for products or the useful lives of products vary from management estimates, impairment charges on intangibles could increase. 2.24 Special items The Company may identify special items that are significant non-recurring items that management does not consider to be part of the Group’s ordinary activities. Such special items may include one-time impairment costs, restructuring, and strategic considerations regarding the future of the business, and are presented separately in the Consolidated Statement of Comprehensive Income to provide a more comparable basis for the Company’s operations. Management assesses which items are to be identified as special items and shown separately, in order to give a correct presentation of the statement of profit or loss and other comprehensive income. 2.25 ESEF Regulation The Company's Annual Report is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the Annual Report in XHTML format and iXBRL tagging of the Consolidated Financial Statements. 2.26. Changes in accounting policy and disclosures - Applied new standards and amendments included in Annual Report for 2022. Certain new standards, amendments to standards, and annual improvements to standards and interpretations are effective for annual periods beginning after January 1, 2022 and have been applied in preparing these consolidated financial statements. These applications did not materially impact the Group’s consolidated financial statements. 2.23. Defined contribution plan In 2008, the Company established a defined contribution savings plan (the “Plan”) in the U.S. that meets the requirements under Section 401(k) of the U.S. Internal Revenue Code. This Plan covers substantially all U.S. employees who meet the minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the Plan may be made at the discretion of the board of directors. In the year ended December 31, 2022, the Company made matching contributions totaling $39,000 ($59,000 in 2021). 36 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES New standards and amendments not applied in the Annual Report for 2022. There are some new standards and amendments to standards and interpretations that have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group: Standard Content Effective date EU endorsed as of December 31, 2022 Amendments to IAS 1 Presentation of Amendments to IAS 1 require companies to disclose their material accounting policy 1-Jan-23 Financial Statements and IFRS information rather than their significant accounting policies. Amendments to IFRS Practice Statement 2: Disclosure of Practice Statement 2 provide guidance on how to apply the concept of materiality to Accounting Policies accounting policy disclosures. Amendments to IAS 8 Accounting Accounting estimates defined as "monetary amounts in financial statements that are 1-Jan-23 Policies, Changes in Accounting subject to uncertainty". Amendment clarifies what changes in accounting estimates are Estimates and Errors: Definition of and how these differ from changes in accounting policies and corrections of errors. Accounting Estimates Amendments to IAS 12 Income Taxes: Amends IAS 12 such that the initial recognition exemption no longer applies to 1-Jan-23 Deferred Tax related to Assets and transactions that give rise to equal taxable and deductible temporary differences. Liabilities arising from a single transaction Not endorsed by EU as of December 31, 2022 Amendments to IAS 1 Presentation of The amendments specify that the conditions which exist at the end of the reporting period 1-Jan-24 Financial Statements: Classification are those which will be used to determine if a right to defer settlement of a liability exists. of Liabilities as Current or Non- Management expectations about events after the balance sheet date are not relevant to current and Classification of the determination. In addition, amendments specify that covenants to be complied with Liabilities as Current or Non-current - after the reporting date do not affect the classification of debt as current or non-current Deferral of effective date; and Non at the reporting date. Covenant details should be disclosed in notes to financial current Liabilities with Covenants statements. Amendments to IFRS 16 Leases: Lease Specifies how a sale and leaseback is accounted for when reporting after the date of the 1-Jan-24 Liability in a Sale and Leaseback transaction. 37 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 3. RISK MANAGEMENT AND DEBT The Group’s activities expose it to a variety of risks: liquidity risk, market risk (including foreign exchange risk and interest rate risk) and credit risk. The primary responsibility for Asetek’s risk management and internal controls in relation to the financial reporting process rests with executive management. Asetek’s internal control procedures are integrated in the accounting and reporting systems and include procedures with respect to review, authorization, approval and reconciliation. All entities in the Asetek Group report financial and operational data to the executive office on a monthly basis, including commentary regarding financial and business development. Based on this reporting, the Group’s financial statements are consolidated and reported to executive management. Management is in charge of ongoing efficient risk management, including the identification of material risks, the development of systems for risk management, and that significant risks are routinely reported to the board of directors. time of the release of the financial statements. In addition, Management has discussed short-term debt financing with a bank to secure financing if a shortfall occurs before the funding is received from the planned equity offering. The bank has indicated willingness to provide bridge financing for the shortfall period. If the offering is completed with net proceeds of DKK 115 million, the Company considers, based on given current knowledge, that the Company’s cash position will be sufficient to meet the Company’s requirements for the year 2023. The Company’s budgets and plans are based on best estimates of the future at the time of issuing this annual report. However, such plans relate to future events and the fulfillment of such are by nature subject to uncertainty. If actual results in 2023 differ from expectations, or sufficient funding is not established through the equity offering or otherwise, the Board of Directors and Management will need to take mitigating actions, such as reduce costs and pursue sale of certain Group assets. Although the Board of Directors and Management based on this assessment considers that Asetek will have adequate liquidity resources available to finance the operations of the Group for the coming year, the above indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Refer to Note 1.1. The Group’s corporate finance team monitors risk of a shortage of funds through regular updates and analysis of cash flow projections and maturities of financial assets and liabilities. The finance teams also review liquidity, balance sheet ratios (such as days’ sales outstanding, inventory turns) and other metrics on a regular basis to ensure compliance both on a short- and long-term basis. Asetek will continue to invest its capital principally in the development and marketing of its products. In 2016, the Board of Directors implemented a policy under which it may declare and distribute dividends to shareholders. At the Annual General Meetings in April 2022 and 2021, the Board was authorized to acquire the Company’s own shares and subsequently initiated a share buyback program. In 2022, the Company did not repurchase shares. In 2021, the Company repurchased a total of 400 thousand common shares Liquidity risk. The Group incurred losses from operations and negative cash flows from operations from inception through 2015; positive operating cash flows and operating income were first generated in 2016 and continued through 2021. In 2022, the Company incurred operating loss of $5.4 million and had operating cash flows of ($8.4 million). As of December 31, 2022, the Company has working capital of negative $6.3 million and non-current liabilities of $1.7 million. The Company believes that its cash position and the liquidity available from its operations, external borrowings and other sources currently available is sufficient to satisfy its working capital requirements until around mid-May, 2023. From then on the Company expects a cash shortfall, mainly as a result of cash balances (including cash inflows from operations) being allocated to capital expenditures related to the construction of a new headquarter facility. As a result, the Company plans to raise gross proceeds of approximately DKK 140 million (USD 20 million), with expected net proceeds of DKK 115 million (USD 16 million), in a public equity offering. The equity offering is expected to occur in May 2023 and the net proceeds are expected to be available May 15, 2023. The offering is fully underwritten as of March 7, 2023 subject to conditions not met at the PERFORMANCE - PRECISION - PASSION 38 FINANCIAL STATEMENT – NOTES on the open market for a total cost of $4.8 million. When considering payment of dividends or Asetek share purchases, the Board takes into consideration the Company’s growth plans, international tax implications, liquidity requirements and necessary financial flexibility. The following are contractual maturities of financial liabilities, including estimated interest payments on an undiscounted basis: AS OF DECEMBER 31, 2022 On Less than 3 3 to 12 1 to 5 (USD 000's) Demand months months years Total Construction commitments - (6,873) (14,622) (2,828) (24,323) Lines of credit (18,971) - - - (18,971) Leases - (270) (832) (1,806) (2,908) Payables and accrued liabilities - (13,589) (589) - (14,178) (18,971) (20,732) (16,043) (4,634) (60,380) AS OF DECEMBER 31, 2021 On Less than 3 3 to 12 1 to 5 (USD 000's) Demand months months years Total Line of credit (743) - - - (743) Leases - (238) (787) (1,888) (2,912) Payables and accrued liabilities - (22,943) (780) - (23,723) (743) (23,180) (1,567) (1,888) (27,378) 39 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES Market risk factors. The Group’s current principal financial liabilities consist of short-term and long-term debt on lines of credit and amounts owed on facilities and equipment leases. The Group’s financial assets mainly comprise trade receivables, cash and deposits. The Group’s operations are exposed to market risks, principally foreign exchange risk and interest rate risk. 1.95 percentage points, which in total was 4.28% at December 31, 2022, and is payment in full is due December 2, 2024. This credit line is subject to renegotiation on September 30, 2023. // Asetek A/S, the Parent company, has a line of credit with Sydbank for DKK 100 million (USD 14.2 million), for which the total $14.2 million was utilized at December 31, 2022. This line carries interest at Danish CIBOR 3 rate plus 1.25 percentage points which in total was 3.58% at December 31, 2022, and payment in full is due December 2, 2024. This credit line is subject to renegotiation on September 30, 2023. The variable nature of the Danish CIBOR 3 rate results in risk of increased interest cost due to potential changes in rates. At the level of borrowings as of December 31, 2022, the effect of a 50% increase in the Danish CIBOR 3 rate would result in increased annual interest cost of $221,000. (a) Foreign exchange risk. With few exceptions, the Group’s inventory purchase and sale transactions are denominated in U.S. dollars. The Group operates inter- nationally and is exposed to foreign exchange risk arising from currency exposures, principally with respect to the Danish kroner. Foreign exchange risk arises from operating results and net assets associated with Denmark-based operations where the Danish krone is the functional currency. Translation of the Denmark entity balance sheet accounts from Danish kroner to U.S. dollars affect the equity balances of the Group. The Group has two lines of credit available totaling 205 million Danish krone, of which DKK 132 million (USD 19.0 million) is outstanding at December 31, 2022 (the lines of credit are further described in “(b) Interest rate risk” below). The Group does not enter into derivatives or other hedging transactions to manage foreign exchange risk. Management mitigates this exposure through timely settlement of intercompany operating liabilities. The ending exchange rate at December 31, 2022 was 6.97 Danish kroner to one U.S. dollar (6.56 to the U.S. dollar at December 31, 2021). The effect of a 10% strengthening (weakening) of the Danish kroner against the U.S. dollar for the reporting period would have resulted in an increase (decrease) in pre-tax income for fiscal year 2022 of ($95,000) (in 2021, increase of the pre-tax income of $729,000). Capital and debt management. To date the Company’s primary focus has been to support its product development initiatives, maintain liquidity through use of financing alternatives, and maximize shareholder value. The Group manages its capital and debt structure with consideration of economic conditions. In 2013 and 2015, the Company raised capital through the offering of its common stock on the Oslo Stock Exchange. The Company repurchased its common shares in 2021 and 2020 to fulfill exercises of employee stock options and issued common shares in 2021 for the purchase of assets. In 2023, the Company plans to raise gross proceeds of approximately DKK 140 million (USD 20 million) through a public equity offering. Refer to Note 1.1. Credit risk factors. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is exposed to credit risk primarily through trade receivables and cash deposits. Management mitigates credit risk through standard review of customer credit- worthiness and maintaining its liquid assets primarily with Wells Fargo Bank in the U.S. and Sydbank in Denmark. The carrying amount of the financial assets represents the maximum credit exposure. (b) Interest rate risk. The Group’s interest rate risk consists of the following credit lines. As of December 31, 2022, Asetek has two lines of credit with Sydbank totaling 205 million Danish krone (USD 29.3 million), of which USD 19.0 million has been utilized, principally to finance construction of a new headquarters facility. //Asetek Danmark A/S has a revolving line of credit with Sydbank for DKK 105 million. The value of line in U.S. dollars is approximately $15.1 million, of which $4.7 million was utilized at December 31, 2022. The line carries interest at the Danish CIBOR 3 rate plus Trade receivables that are deemed uncollectible are charged to expense with an offsetting allowance recorded against the trade receivable. Historically, bad 40 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES debt expense has not been significant. Certain customers have accounted for a significant portion of the Company’s revenue in the years presented, as follows. In 2022, the Company’s three largest customers, all in the liquid cooling segment, accounted for 32%, 22% and 18% of revenue (three customers accounted for 37%, 18% and 11% of revenue in 2021), respectively. The Company mitigates risk with its largest customer by requiring two remittances per month as well as frequent monitoring and communicating regarding invoices coming due. At December 31, 2022 three customers, all in the liquid cooling segment, represented 38%, 24% and 10% of outstanding trade receivables (two represented 37% and 19% at December 31, 2021), respectively. The reserve for uncollectible trade accounts was $41,000 at December 31, 2022 and $33,000 at December 31, 2021. The aged trade receivables and bad debt reserve balances for all years presented are provided in Note 16. The maximum exposure to credit risk at the reporting dates was: For the purpose of the above presentation, the information pertaining to revenue and current assets is calculated based on the location of the customers, whereas information pertaining to non-current assets is based on the physical location of the assets. The information pertaining to current assets is calculated as a summation of assets such as trade receivables and finished goods inventories reasonably attributable to the specific geographical area. (USD 000's) Non-current assets 2022 2021 Denmark 48,766 27,235 USA 1,866 1,970 China 167 120 TOTAL 50,799 29,325 Revenue (USD 000's) 2022 2021 Denmark 250 313 China 6,665 6,206 Singapore 7,177 1,089 Taiwan 24,215 52,813 USA 5,621 3,531 Japan 1,381 5,319 All others 5,341 10,532 TOTAL 50,650 79,803 (USD 000's) 2022 2021 Cash and cash equivalents 7,411 23,296 Trade receivables and other 13,432 17,201 Other assets 335 362 MAXIMUM CREDIT EXPOSURE 21,178 40,859 4. GEOGRAPHICAL INFORMATION The Group operates internationally in several geographical areas, principally in Asia, Europe and the Americas. The following table presents the Group’s revenue and assets in each of the principal geographical areas: (USD 000's) 2022 Current Non-current Revenue assets assets Asia 40,216 10,041 167 Americas 6,017 2,849 1,866 Europe 4,417 14,926 48,766 TOTAL 50,650 27,816 50,799 (USD 000's) 2021 Current Non-current Revenue assets assets Asia 70,108 17,858 120 Americas 8,475 13,076 1,970 Europe 1,220 15,095 27,235 TOTAL 79,803 46,029 29,325 41 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 5. SEGMENT INFORMATION In 2022, the Company reports on three segments, Liquid cooling, Data center and SimSports. Costs incurred in 2021 associated with SimSports were included in the Gaming & Enthusiast segment in the 2021 annual report and have been reclassified and identified as SimSports costs in this report. The three segments are identified by their specific sets of products and customers. The CEO is the Group’s chief operating decision-maker. The CEO assesses the performance of each segment principally on measures of revenue and adjusted EBITDA. The following tables represent the results by operating segment in 2022 and 2021. Disaggregation of revenue is also presented for the major markets within each segment. Reconciliation of Adjusted EBITDA to Income before tax (USD 000's) 2022 2021 EBITDA adjusted - Liquid Cooling 11,230 22,228 EBITDA adjusted - Data center 706 (4,374) Special items - Data center - (1,713) EBITDA adjusted - SimSports (6,618) (5,594) Headquarters costs, net (6,109) (5,037) Share-based compensation (440) (981) Depreciation and amortization (4,170) (3,750) Total financial income (expenses) (477) 618 Consolidated income before tax (5,878) 1,397 Disaggregation of revenue (USD 000's) 2022 2021 OEM and System Integrators 48,934 79,803 Retailers 893 - Online webstore 823 - TOTAL 50,650 79,803 Segment operating results - years ended December 31, 2022 2021 Not Not Liquid allocable to Liquid allocable to (USD 000's) Cooling Data center SimSports divisions Total Cooling Data center SimSports divisions Total Revenue 44,798 4,028 1,824 - 50,650 72,938 6,865 - - 79,803 Adjusted EBITDA 11,230 706 (6,618) (6,109) (791) 22,228 (4,374) (5,594) (5,037) 7,223 6. SALARY COSTS AND REMUNERATIONS Salary Costs and Remunerations (USD 000's) 2022 2021 Salaries 11,943 14,107 Retirement fund payments to defined contribution plan 584 665 Social cost 1,658 1,798 Share-based payment 440 981 Other expenses 719 1,242 TOTAL PERSONNEL COSTS 15,344 18,793 Less: Costs applied to inventory production (1,127) (1,114) Less: Capitalized as development cost (1,648) (1,758) TOTAL PERSONNEL EXPENSES IN OPERATING EXPENSE 12,569 15,921 AVERAGE NUMBER OF EMPLOYEES 140 151 The Company’s CEO has an agreement of twelve months’ severance pay in case of termination or termination in connection with change of control. The Company’s CFO has an agreement of seven months’ severance pay in case of termination or termination in connection with change of control. Except for the Company’s CEO and CFO and other members of the executive group, no member of the administrative, management or supervisory bodies has contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. Share Ownership of Officers at December 31, 2022: André S. Peter D. Eriksen Madsen Common shares 346,221 157,594 Options at NOK 15.04 151,900 50,975 Options at NOK 24.70 106,800 61,750 Options at NOK 38.33 68,500 42,075 Options at NOK 46.30 53,300 26,500 Options at NOK 100.15 57,200 17,700 Warrants at: NOK 19.50 - 49,837 NOK 76.25 132,981 44,215 Total shares controlled 916,902 450,646 (USD 000's) 2022 2021 Research and development 4,121 5,243 Selling, general and administrative 11,223 13,550 TOTAL PERSONNEL EXPENSES COSTS 15,344 18,793 Options Granted 2022 2021 Board of directors - - Officers 202,175 74,900 Other executives 50,975 40,216 Other employees 123,350 101,184 TOTAL 376,500 216,300 42 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES Compensation to Board of Directors, Officers and Other Executives 2022 2021 Other Other (USD 000's) Directors Officers Executives Total Directors Officers Executives Total Salary - 954 858 1,812 - 974 975 1,949 Bonus - 223 369 592 - 231 366 597 Share-based - 230 112 342 - 336 202 538 Other 236 193 64 493 225 102 441 768 TOTAL 236 1,600 1,403 3,239 225 1,643 1,984 3,852 Other executives include the Chief Operating Officer and other members of the executive team who are leaders of the key functions (Engineering, Sales, Marketing, Operations). 7. SHARE BASED PAYMENT Asetek’s Equity Incentive Program is a share compensation program where the employees and other parties that deliver services to the Group have been granted share options (or warrants). The options, if vested and executed, will be settled in common shares of the Company. The options are granted at the time of employment and, under other circumstances, at the discretion of the Board of Directors. The options are granted with exercise prices equaling the fair market value of the underlying security. The exercise prices of option grants are determined based on the closing market price of the shares on the day of the grant. Share- based compensation expense was $440,000 and $981,000 for the years ended December 31, 2022 and 2021, respectively. The program was adopted by the Board of Directors in 2018 and has the following purpose: // To attract and retain the best available personnel for positions of substantial responsibility; // To provide additional incentive to employees, directors and consultants, and // To promote the success of the Company’s business. As of December 31, 2022, there is a total of 2,576,000 common shares authorized under the Plan. The Company’s shares trade on the Oslo Stock Exchange at prices denominated in Norwegian krone (NOK). The exchange rate at December 31, 2022 of NOK to USD was 9.86. In September 2022, the Company granted 376,500 options with exercise prices of NOK15.04 per share. In April 2021, the Company granted 216,300 options with exercise prices of NOK100.15 per share. Movements in the number of share options outstanding and their related weighted average exercise price are specified on the following table. 43 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES Activity for exercise prices of NOK 10.60 to NOK 24.70 Weighted Weighted Average Average Exercise price Exercise price 2022 (NOK) 2021 (NOK) Outstanding on January 1 822,371 14.79 988,622 19.60 Options/warrants granted 376,500 15.04 - - Options/warrants exercised (183,091) 11.06 (152,690) 15.42 Options/warrants forfeited (23,320) 24.24 (13,561) 24.70 OUTSTANDING ON DECEMBER 31 992,460 19.91 822,371 14.79 EXERCISABLE ON DECEMBER 31 595,917 22.14 639,042 19.03 The weighted average market price per share on the date of exercise for the above shares was NOK 27.47 in 2022 and NOK 69.25 in 2021. Activity for exercise prices of NOK 38.33 to NOK 113.00 Weighted Weighted Average Average Exercise price Exercise price 2022 (NOK) 2021 (NOK) Outstanding on January 1 1,290,144 49.22 1,208,540 59.49 Options/warrants granted - - 216,300 100.15 Options/warrants exercised - - (105,531) 47.24 Options/warrants forfeited (63,725) 63.42 (29,165) 65.61 OUTSTANDING ON DECEMBER 31 1,226,419 67.53 1,290,144 49.22 EXERCISABLE ON DECEMBER 31 1,079,800 67.42 935,519 67.88 The weighted average market price per share on the date of exercise for the above shares was NOK 94.35 in 2021. The Company calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing model, which requires subjective assumptions, including future stock price volatility and expected time to exercise. The expected volatility was based on the historical volatility of the Company’s stock price. The weighted average remaining contractual term of options outstanding is 3.4 years. The options granted in September 2022 have an estimated total value of $0.3 million. The options granted in April 2021 have an estimated total value of $1.0 million. The following weighted average assumptions were used for the period indicated. Valuation assumptions 2022 2021 Risk-free interest rate 3.34% - 3.41% 0.23% - 0.56% Dividend yield 0.0% 0.0% Expected life of options (years) 2.5 - 3.96 2.5 - 4.0 Expected volatility 75% - 82% 64% - 69% The composition of options and warrants outstanding at December 31 is as follows: Options and Warrants Outstanding at December 31, Exercise price per share 2022 2021 NOK 10.60 - 177,168 NOK 15.04 375,500 - NOK 19.50 216,418 216,418 NOK 24.70 400,542 428,785 NOK 38.33 264,687 292,598 NOK 46.30 287,853 297,815 NOK 76.25 392,747 396,047 NOK 100.15 184,133 206,685 NOK 113.00 96,999 96,999 TOTAL 2,218,879 2,112,515 Total outstanding options and warrants represents 8.2% of total common shares issued at December 31, 2022 (7.8% in 2021). 44 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 8. EXPENSES BY NATURE Expenses by Nature (USD 000's) Note 2022 2021 Inventories recognized as cost of sales 18 29,885 46,430 Personnel expenses 6 15,344 18,793 Depreciation and amortization 14,15 4,171 3,750 Legal, patent, consultants and auditor 5,202 7,152 Facilities and infrastructure 1,079 1,136 Special item - impairment charge - 1,713 Other expenses 3,656 3,206 TOTAL OPERATING EXPENSES BEFORE CAPITALIZATION 59,337 82,180 Less: capitalized costs for development projects 14 (3,405) (2,442) TOTAL EXPENSES 55,932 79,738 Depreciation and amortization expense classfication (USD 000's) 2022 2021 Depreciation and amortization expense included in: Research and development 2,117 1,170 Selling, general and administrative 2,053 2,580 TOTAL 4,170 3,750 Special item. In September 2021, in order to maximize future profitability of its Data center business, the Company announced that it is exiting the High- Performance Computing (HPC) niche. Asetek recorded total cost of $1.7 million in 2021 representing impairment of inventory, intangible assets, machinery, and losses on purchase commitments relating to this strategic change. The total charge is presented separately as a special item in operating expense on the Consolidated Statement of Comprehensive Income. In October 2022, Asetek announced a settlement of the pending patent infringement lawsuit with CoolIT Systems and Corsair Gaming. Total costs incurred including legal fees and settlement associated with this lawsuit was $3.4 million in 2022 and is included in selling, general and administrative expense. Total operating expense in the consolidated statement of comprehensive income includes a separate component of other income (expense) totaling $0.1 million expense in 2022 and $0.7 million income for 2021. 9. FINANCE COSTS AND INCOME (USD 000's) 2022 2021 FOREIGN EXCHANGE GAIN (LOSS) (344) 832 FINANCE INCOME 45 2 Interest cost on line of credit (506) (21) Interest cost on leases (77) (92) Other banking and finance fees (80) (102) Subtotal (663) (216) Less: amount capitalized 485 - FINANCE COST (178) (216) 45 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 10. INCOME TAXES Asetek A/S, the Group's parent company, moved from U.S. to Denmark in 2013 and is currently subject to income tax in both U.S. and Denmark. The Company is working with the U.S. and Danish tax authorities to negotiate a resolution in accordance with international double taxation treaties. The tax expense on the group’s income before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: In accordance with IAS 12, the Company recognizes deferred tax assets arising from unused tax losses or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized by the Company. The estimated tax benefit is calculated considering historical levels of income, expectations and risks associated with estimates of future taxable income. Revenue is expected to increase in 2023 compared to 2022 due to an increase in demand for Liquid cooling products and also from continued ramp up in the SimSports segment. Operating profit is expected to improve due to increased revenue, lower level of legal costs and lower level of operating costs. The calculation utilizes the statutory tax rates that are expected to apply to taxable income for the years in which the asset is expected to be realized. (USD 000's) 2022 2021 INCOME (LOSS) BEFORE TAX (5,878) 1,397 Tax calculated at domestic rates applicable to profits/losses in respective countries 1,222 (342) Tax effects of: R&D credit 292 467 Net benefit of tax losses recognized 57 - Timing differences between book and tax, not previously recognized 295 - Other permanent differences between book and tax (313) (185) TAX (EXPENSE) BENEFIT 1,553 (60) Losses of the U.S. parent company and U.S. subsidiary will begin to expire in 2028 for carryforward purposes. Losses of the Denmark subsidiary do not expire. Expiration of the carryforward of losses is summarized as follows: 11. DEFERRED INCOME TAX (USD 000's) 2022 2021 Potential tax assets from net losses 7,740 7,297 Potential tax assets resulting from timing differences between book and tax 585 36 Tax assets not recognized (959) (1,040) DEFERRED INCOME TAX ASSETS 7,366 6,293 At December 31, 2022, potential income tax assets totaled $7.7 million (2021: $7.3 million) in respect of timing differences and losses to be carried forward amounting to $29.2 million that should be applied to different tax rates. The losses can be carried forward against future taxable income. In 2022, the Group recorded deferred tax assets totaling $7.4 million ($6.3 million in 2021), which represents the net tax benefit that the Company considers probable to be realized in the future, based on Company budget for the following year and estimates for the subsequent years. (USD 000's) Tax effected loss Expire in years 2028 to 2034 1,645 Do not expire 5,136 TOTAL 6,781 12. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by adjusting the number of common shares outstanding used in the Basic calculation for the effect of dilutive equity instruments, which include options and warrants to the extent their inclusion in the calculation would be dilutive. 46 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 2022 2021 Income attributable to equity holders of the Company (USD 000's) (4,325) 1,337 Weighted average number of common shares outstanding (000's) 25,833 25,731 BASIC EARNINGS PER SHARE $ (0.17) $ 0.05 Weighted average number of common shares outstanding (000's) 25,833 25,731 Instruments with potentially dilutive effect: Warrants and options (000's) - 245 Weighted average number of common shares outstanding, diluted (000's) 25,833 25,976 DILUTED EARNINGS PER SHARE $ (0.17) $ 0.05 // Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2) // Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). All of the Company’s financial assets as of December 31, 2022 are classified as “amortized cost” having fixed or determinable payments that are not quoted in an active market (Level 3). As of December 31, 2022, all of the Company’s financial liabilities are carried at amortized cost. The Company believes that book value approximates fair value for all financial instruments as of December 31, 2022. The values of the Group’s assets and liabilities are as follows: 13. FINANCIAL INSTRUMENTS CATEGORY AND FAIR VALUE ESTIMATION The Company uses the following valuation methods for fair value estimation of financial instruments: // Quoted prices (unadjusted) in active markets (Level 1). At December 31, 2022 (USD 000's) Amortized cost Assets as per balance sheet: Trade receivables and other 13,432 Cash and cash equivalents 7,411 20,843 At December 31, 2022 Liabilities at fair value Other Financial Liabilities (USD 000's) through profit and loss at amortized cost Total Liabilities as per balance sheet: Long-term debt - 1,739 1,739 Short-term debt - 19,950 19,950 Trade payables and accrued liabilities - 14,178 14,178 - 35,867 35,867 At December 31, 2021 (USD 000's) Amortized cost Assets as per balance sheet: Trade receivables and other 17,201 Cash and cash equivalents 23,296 40,497 At December 31, 2021 Liabilities at fair value Other Financial Liabilities (USD 000's) through profit and loss at amortized cost Total Liabilities as per balance sheet: Long-term debt - 1,540 1,540 Short-term debt - 1,703 1,703 Trade payables and accrued liabilities - 23,723 23,723 - 26,966 26,966 47 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 14. INTANGIBLE ASSETS In January 2021, the Company purchased intellectual property and other assets from Granite Devices Inc. for a total of $8.3 million. Asetek paid $4.1 million in cash and the remainder in 348,003 newly issued shares of common stock. The shares issued had an estimated fair value of $4.2 million on the Oslo Børs exchange at the transaction date. The transaction was accounted for under IFRS 2 Share-based payments. The assets purchased included intangible assets with an estimated fair value of $7.8 million, the majority of which were in development. As the assets are placed in service, they are being amortized over their estimated useful lives ranging from 6 to 10 years. Goodwill. Goodwill of $0.5 million originated from an acquisition by the Company in 2020. Goodwill is not amortized but reviewed for impairment once a year and also if events or changes in circumstances indicate the carrying value may be impaired. If impairment is established, goodwill is written down to its lower recoverable amount. The goodwill recorded is denominated in Danish krone and is subject to fluctuation in the consolidated financial statements due to changes in foreign exchange rates. Impairment tests are performed annually on developed assets and assets under construction. Impairment tests are also performed on completed assets whenever there are indications of a need for write-offs and for assets still in development regardless of whether there have been indications for write downs. If the value of expected future free cash flow of the specific development project is lower than the carrying value, the asset is written down to the lower value. The booked value includes capitalized salary and related expenses for the cash flow producing project. Expected future free cash flow is based on budgets and anticipations prepared by management. The main parameters are the development in revenue, EBIT and working capital. Impairment losses represent principally assets which are no longer associated with a future income stream. In 2022, the Company recognized impairment of $0.5 million on capitalized development costs as a result of updated prioritization of future commercial projects. In 2021, the Company recognized as part of special items, impairment of $0.7 million associated with the planned exit of its HPC data center niche. Refer to Note 8. The following table presents a summary of the Company’s development projects. Capitalized development costs (USD 000's) 2022 2021 COST: Balance at January 1 5,956 10,343 Additions 3,405 2,442 Deletions - completion of useful life (1,367) (5,819) Impairment loss (507) (1,010) BALANCE AT DECEMBER 31 7,487 5,956 ACCUMULATED AMORTIZATION AND IMPAIRMENT LOSSES: Balance at January 1 (2,724) (7,987) Amortization for year (1,763) (915) Amortization associated with deletions 1,367 5,819 Amortization associated with impairment losses 396 359 BALANCE AT DECEMBER 31 (2,724) (2,724) CARRYING AMOUNT 4,763 3,232 The Company’s intangible assets are pledged as security for lines of credit outstanding as per Note 19. Intangible assets as of December 31 are as follows: (USD 000's) 2022 2021 Goodwill 526 559 Capitalized development costs 4,763 3,232 Other assets 6,725 7,147 TOTAL INTANGIBLE ASSETS 12,014 10,938 Capitalized development costs. The Group routinely incurs costs directly attributable to the design and testing of new or improved products to be held for sale. These costs are capitalized as intangible assets and amortized over the estimated useful lives of the products, typically three to forty-eight months. 48 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES Other intangible assets (USD 000's) 2022 2021 COST: Balance at January 1 7,394 278 Additions - 7,754 Exchange rate differences (436) (638) BALANCE AT DECEMBER 31 6,958 7,394 ACCUMULATED AMORTIZATION AND IMPAIRMENT LOSSES: Balance at January 1 (247) (22) Amortization for year - (236) Exchange rate differences 14 11 BALANCE AT DECEMBER 31 (233) (247) CARRYING AMOUNT 6,725 7,147 // Key assumptions. In preparing the assessment, management used a five-year projection for the liquid cooling segment, assuming stable gross margins and revenue growth rates that are generally representative of the long-term results of the business. For SimSports, because it is a business in its early stages, projections covering a ten-year period were used. Significant revenue growth rates (150%+) are expected for SimSports in the first two years as a result of its early stage and the high rate of new product introductions planned into the forseeable future. The present value of expected cash flows of each segment is determined by applying a suitable discount rate. The discount rate of 11.5% was derived based on a weighted-average cost of capital (WACC) for comparable entities in the industry, based on market data. For the calculation of the net present value (NPV), Asetek’s WACC is applied, which is based on the current borrowing rate and its expected development as well as the return on equity requirement, which is determined based on the risk profile. The following is a summary of the key assumptions used in the impairment assessment: Impairment assessment. For purposes of assessing impairment of all intangible assets, the Company’s assets are grouped and reviewed for impairment at the cash-generating unit (CGU) level, determined by management as equivalent to Asetek’s operating segments. The Group has identified two principal businesses as its operating segments – Liquid Cooling and SimSports. Intangible assets pertaining to the Company’s third segment, Data center, are not significant. The Group considers both qualitative and quantitative factors when determining whether an asset or CGU may be impaired. Internal management reporting is in place to monitor revenues and cash flows at an operating segment-level basis to enable management to properly assess impairment. Refer to Note 5 for segment information. // Approach to assessment. Management grouped the respective intangible assets by CGU and measured the book value against the net present value of future projected cash flows for the respective CGU. In doing so, management incorporated the Company’s fiscal 2023 budget and subsequent year projections by management utilizing market data and assistance from external advisors. // Allocation of assets to CGU. The Company’s goodwill originates from a business acquisition in the SimSports market. Capitalized development costs are accounted for and specifically identified by CGU as either Liquid Cooling or SimSports products under development. Other intangible assets represents acquired intellectual property rights acquired in 2021 associated with SimSports. Liquid Key Assumption: Cooling SimSports Projection time period analyzed 5 years 10 years Average annual revenue growth rate 8.6% 54.3% Discount rate 11.5% 11.5% Terminal growth rate 4.1% 4.1% Income tax rate 22.0% 22.0% // Conclusion. The Company’s assessment concluded that the net present value of projected future cash flows is sufficient to support the valuation of intangible assets at December 31, 2022. 49 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 15. PROPERTY, PLANT AND EQUIPMENT In 2022, the Company capitalized $19.7 million of expenses associated with the construction of a new headquarters facility, including $0.5 million of borrowing costs. Reference Note 19. At December 31, 2022, the Company had outstanding commitments for additional construction costs totalling DKK 170 million ($24.3 million). The following table presents total property, plant and equipment. Other fixtures, Leasehold fittings, tools, Building under (USD 000's) Improvements Machinery equipment Properties construction Total COST: Balance at January 1, 2021 1,850 6,213 3,559 3,720 31 15,373 Additions 31 831 462 2,922 4,076 8,322 Disposals - (333) (307) (246) - (886) Exchange rate differences (122) (455) (239) (248) - (1,065) BALANCE AT DECEMBER 31, 2021 1,759 6,256 3,475 6,148 4,107 21,744 Balance at January 1, 2022 1,759 6,256 3,475 6,148 4,107 21,744 Additions - 1,338 1,038 92 19,747 22,215 Disposals - (232) (745) (98) - (1,075) Exchange rate differences (102) (319) (195) (173) - (789) BALANCE AT DECEMBER 31, 2022 1,657 7,043 3,573 5,969 23,854 42,095 ACCUMULATED DEPRECIATION: Balance at January 1, 2021 (961) (4,314) (2,003) (1,046) - (8,324) Disposals - 306 75 9 - 390 Impairment (Refer to Note 8) - (112) - - - (112) Depreciation for the year (347) (935) (691) (626) - (2,599) Exchange rate differences 72 316 157 87 - 632 BALANCE AT DECEMBER 31, 2021 (1,236) (4,739) (2,462) (1,576) - (10,013) Balance at January 1, 2022 (1,236) (4,739) (2,462) (1,576) - (10,013) Disposals - 232 771 (100) - 903 Depreciation for the year (300) (902) (629) (576) - (2,407) Exchange rate differences 67 236 135 68 - 506 BALANCE AT DECEMBER 31, 2022 (1,469) (5,173) (2,185) (2,184) - (11,011) CARRYING AMOUNT AT DECEMBER 31, 2021 523 1,517 1,013 4,572 4,107 11,732 CARRYING AMOUNT AT DECEMBER 31, 2022 188 1,870 1,388 3,785 23,854 31,084 16. TRADE RECEIVABLES AND OTHER Trade receivables are non-interest bearing and are generally on payment terms of Net 30 days. The trade receivables of Asetek Danmark A/S carry a general lien of 6 million Danish krone ($0.9 million), representing collateral on Sydbank’s engagement with the Company. The carrying amount of trade receivables is approximately equal to fair value due to the short term to maturity. Regarding credit risks, refer to Note 3. (USD 000's) 2022 2021 Gross trade receivables 8,792 15,260 Provision for uncollectible accounts (41) (33) NET TRADE RECEIVABLES 8,751 15,227 Other receivables 3,514 1,134 Prepaid assets 1,167 840 TOTAL TRADE RECEIVABLES AND OTHER 13,432 17,201 Provision for uncollectible accounts (USD 000's) 2022 2021 Balance at January 1 (33) (23) Additions (41) (33) Reversals 33 23 BALANCE AT DECEMBER 31 (41) (33) 50 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES The aging of trade receivables and credit loss provision by age is as follows: Past due: (USD 000's) Total Not yet due 1 to 30 days 31 to 60 days Over 60 days December 31, 2022 8,792 5,797 1,821 410 764 December 31, 2021 15,260 14,135 908 151 66 Credit Loss Provision Matrix 2022 Past due: (USD 000's) Total Not yet due 1 to 30 days 31 to 60 days Over 60 days Gross carrying amount 8,792 5,797 1,821 410 764 Expected credit loss rate 0.1% 0.5% 5.4% 0.4% Lifetime expected credit loss (41) (6) (10) (22) (3) Credit Loss Provision Matrix 2021 Past due: (USD 000's) Total Not yet due 1 to 30 days 31 to 60 days Over 60 days Gross carrying amount 15,260 14,135 908 151 66 Expected credit loss rate 0.1% 1.4% 0.7% 8.4% Lifetime expected credit loss (33) (14) (13) (1) (6) 17. INVENTORIES The Company’s inventories are pledged as security for lines of credit outstanding as per Note 19. Inventories at December 31 are as follows: (USD 000's) 2022 2021 Raw materials and work-in-process 4,234 1,434 Finished goods 3,520 4,729 Total gross inventories 7,754 6,163 Less provision for inventory reserves (781) (631) TOTAL NET INVENTORIES 6,973 5,532 (USD 000's) 2022 2021 Inventories recognized as cost of sales during period (29,885) (46,430) Write-down of inventories to net realizable value (781) (631) In 2021, the Company recorded $543 thousand of inventory reserves associated with the Company’s exit of the HPC data center business. Refer to Note 8. A summary of the activity in the provision for inventory reserves is as follows: (USD 000's) 2022 2021 Balance at January 1 (631) (437) Additions (781) (631) Write-offs 631 437 BALANCE AT DECEMBER 31 (781) (631) 51 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 18. SHARE CAPITAL In 2022, a total of 183 thousand options (0.6% of total shares, nominal value DKK 18.3 thousand) were exercised resulting in $216,000 received by the Company. In 2021, a total of 258 thousand options (1.0% of total shares, nominal value DKK 25.8 thousand) were exercised resulting in $865,000 received by the Company. In January 2021, the Company issued 348,003 of new common shares for purchase of intellectual property and other assets. Refer to Note 14. During 2021, the Company repurchased 400 thousand of its common shares on the open market for a total cost of $4.8 million. Shares purchased under the program are used to fulfill obligations under Asetek’s employee stock option plan. There were no shares repurchased by the Company in 2022. As of December 31, 2022, there are 25,891 thousand common shares outstanding with a nominal value of 0.10 DKK per share and 1,256 thousand shares (4.9% of total shares, nominal value DKK 125.6 thousand) held in treasury. Included in equity is a reserve for treasury shares of approximately $11,206 thousand at December 31, 2022. All common shares outstanding are fully paid and carry no special rights. The Company does not cancel shares that are repurchased but maintains them in treasury to fulfill option exercises. Refer to ‘Shareholder information’ in this report for information regarding the composition of Asetek shareholders. The following table summarizes the common share activity in the years presented: (000's) 2022 2021 Common shares outstanding - January 1 25,708 25,502 Common shares repurchased, net - (400) Shares issued for purchase of assets - 348 Options and warrants exercised and shares issued 183 258 COMMON SHARES OUTSTANDING - DECEMBER 31 25,891 25,708 19. NET DEBT In 2022, the Company entered into two lines of credit in order to finance construction of a new headquarters facility. The line of credit outstanding at December 31, 2021 was paid in full during 2022. The Company’s debt at December 31, 2022 consists of the following: // Asetek Danmark A/S has a revolving line of credit with Sydbank for DKK 105 million (USD $15.1 million), of which $4.7 million was utilized at December 31, 2022. The line is secured by the assets of Asetek Danmark A/S and carries interest at the Danish CIBOR 3 rate plus 1.95 percentage points, which in total was 4.28% at December 31, 2022. Payment in full is due December 2, 2024; however, this credit line is subject to renegotiation on September 30, 2023. // Asetek A/S, the Parent company, has a line of credit with Sydbank for DKK 100 million (USD 14.2 million), of which $14.2 million was utilized at December 31, 2022. This line is secured by the land and building under construction and carries interest at Danish CIBOR 3 rate plus 1.25 percentage points which in total was 3.58% at December 31, 2022. Payment in full is due December 2, 2024; however, this credit line is subject to renegotiation on September 30, 2023. The capitalization rate for borrowing costs on lines of credit was 100% in 2022, as all funds drawn were utilized for additions to the qualifying asset. In September 2022, the Company entered into an agreement to finance $1.1 million of previously purchased equipment at an interest rate of 3.5%. The amortized cost of the equipment at transaction date was used as the estimate of fair value and the liability is accounted for at amortized cost using the effective interest rate method. The following is a summary of the Company’s net debt and reconciliation of the lines of credit: 52 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES Reconciliation of lines of credit (USD 000's) 2022 2021 Beginning balance (743) (536) Net paid (drawn) on line of credit (17,892) (260) Foreign exchange impact (336) 53 ENDING BALANCE (18,971) (743) 53 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 20. LEASES Asetek leases certain equipment, its principal office facilities and certain motor vehicles. Contracts are typically for fixed periods of five years or more for office facilities, five years for equipment, and two years or less for motor vehicles. The leased asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. The Company’s office space in Aalborg, Denmark is under lease through July 2025. The Company’s office in San Jose, California is under lease through September 2023. The Company's office space in Taipei, Taiwan is under lease until August 2025. Reconciliation of lease liability: (000's) 2022 2021 Beginning balance 2,500 3,593 Additions to lease liabilities 95 108 Payments of lease liabilities (835) (928) Adjustments/reductions to leases (33) (92) Foreign exchange impact (63) (181) ENDING BALANCE 1,664 2,500 Total cash payments for leases was $826,000 and $1,037,000 in 2022 and 2021, respectively. Future minimum lease payments are as follows as of the balance sheet date: (USD 000's) 2022 2021 Minimum lease payments at December 31 1,687 2,880 Asset residual at end of lease 51 32 Less: amount representing interest (74) (412) TOTAL OBLIGATIONS UNDER LEASES 1,664 2,500 Obligations under leases due within one year 751 960 Obligations under leases due after one year 913 1,540 TOTAL OBLIGATIONS UNDER LEASES 1,664 2,500 Right-of-use Assets. The following table presents a summary of the Right-of-use assets under lease, which is a subset of the property, plant and equipment presented in Note 15: Other fixtures, fittings, tools, (USD 000's) Machinery equipment Properties Total COST: Balance at December 31, 2021 1,402 106 3,612 5,120 Additions - 95 - 95 Disposals and transfers - (55) - (55) Exchange rate differences - (3) (173) (176) BALANCE AT DECEMBER 31, 2022 1,402 143 3,439 4,984 ACCUMULATED DEPRECIATION: Balance at December 31, 2021 (1,098) (7) (1,643) (2,748) Disposals and transfers - 22 - 22 Depreciation for the year - (47) (582) (629) Exchange rate differences - - 67 67 BALANCE AT DECEMBER 31, 2022 (1,098) (32) (2,158) (3,288) CARRYING AMOUNT AT DECEMBER 31, 2021 304 99 1,969 2,372 CARRYING AMOUNT AT DECEMBER 31, 2022 304 111 1,281 1,696 54 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 21. TRANSACTIONS WITH RELATED PARTIES The Company’s CEO serves as Chairman of the Board for a vendor that supplies information technology services to the Company. In 2022, the Company purchased services totaling $0.7 million ($0.8 million in 2021) from this vendor. At December 31, 2022 and 2021, the Company had outstanding payables to this vendor of $51,000 and $59,000, respectively. The Company sponsors and occasionally purchases equipment and other services from Valdemar Eriksen Racing A/S, an organization partially owned by the Company’s CEO. In the years ended December 31, 2022 and 2021, the Company paid $147,000 and $102,000 to VER, including purchases of equipment, etc. for $0 and $20,000, respectively. 22. SUBSIDIARIES The following entities are included in the consolidated accounts: Company Domicile Stake Voting Share Activity Asetek A/S Denmark 100% 100% Trading Asetek Holdings, Inc. USA 100% 100% Inactive Asetek USA, Inc. USA 100% 100% Trading Asetek Danmark A/S Denmark 100% 100% Trading Xiamen Asetek Computer Industry Co., Ltd. China 100% 100% Trading JMH Gallows Pound Technologies Limited United Kingdom 100% 100% Inactive 23. AUDIT FEES The Group’s principal auditors perform audits for all of Asetek’s entities except for the Xiamen, China subsidiary, which is audited by a local firm. The Group’s principal auditors received a total fee of $240,000 and $270,000 in 2022 and 2021, respectively. Fees for services other than statutory audits provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the group amount to $54,000 ($65,000 in 2021) and consists of tax advice related to transfer pricing, tax audit, research and development, maturity assessment on cybersecurity as well as miscellaneous other services. The fee is distributed between these services: (USD 000's) 2022 2021 Audit 130 162 Other assurance services 6 - Tax services 88 87 Other services 16 21 TOTAL 240 270 55 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – NOTES 24. BOARD OF DIRECTORS The members of the Board of Directors have reported the information below as of the date of this filing. For the year 2022, the board members have been compensated as listed below. BOARD OF DIRECTORS Age and Date appointed to Independence Executive and other positions held gender Qualifications end of current term status Former executive at Siemens A/S JUKKA PERTOLA, CHAIRMAN 63, April 10, 2019 to Independent for 25+ years; Technology, Tryg A/S and Tryg Forsikring A/S - Chairman of the Board Male April 28, 2023 Finance, Corporate governance, COWI Holding A/S - Chairman of the Board Risk management. Extensive Siemens Gamesa Renewable Energy A/S – Chairman of the Board board experience with multiple GN Store Nord A/S, GN Hearing A/S, GN Audio A/S- Deputy Chairman Chairman roles for 10+ years GomSpace Group AB and GomSpace A/S - Deputy Chairman Committee participation: Compensation (chair); Nomination Asetek equity holdings: 22,500 owned shares 2022 cash compensation: $65,000 20+ years of senior positions in ERIK DAMSGAARD, VICE CHAIRMAN 58, April 10, 2019 to Independent electronics & electrical OJ Group of companies - Managing director Male April 28, 2023 manufacturing, business Masentia Group of companies - Chairman of the Board development Tentoma A/S - Member of the Board ED Management Holding ApS - Owner and Managing director ED Management ApS - Owner and Managing director CRD Invest ApS - Managing director TRD Invest ApS - Managing director Committee participation: Audit Asetek equity holdings: 22,461 owned shares 2022 cash compensation: $55,000 Former VP at Nokia; 25+ years of JØRGEN SMIDT, BOARD MEMBER 66, January 31, 2012 to Independent senior management, business TrusTrace (Swin Technologies AB) - Chairman of the Board Male April 28, 2023 development, product Heartcore Capital - Venture Partner management, operations. InRiver AB - Chairman of the Board Partner, Sunstone Capital. Onomondo ApS- Chairman of the Board Freespee AB - Chairman of the Board FlatFrog AB - Board Member Committee participation: Compensation Asetek equity holdings: 59,200 owned shares 2022 cash compensation: $45,000 Board professional, General MARIA HJORTH, BOARD MEMBER 50, January 14, 2019 to Independent Partner & Co-founder Vår Thylander Gruppen A/S - Chairman of the Board Female April 28, 2023 Ventures; Former CEO VP Maj Invest Holding A/S - Board Member Securities and Mercer Denmark, Trifork Holding AG - Board Member 20+ years in the financial sector Topdanmark A/S - Board Member covering business development, Adform A/S - Board Member M&A, investor relations. Nolu Holding ApS - Managing director Committee participation: Audit (chair) Asetek equity holdings: 6,357 owned shares 2022 cash compensation: $45,000 Experienced marketing MAJA FRØLUNDE SAND-GRIMNITZ, BOARD MEMBER 42, June 15, 2022 to Independent leadership in sports & EPOS Group - Director, Brand Management & Global Gaming Marketing Female April 28, 2023 entertainment and technology. Expertise in brand growth, Committee participation: none strategy, process development Asetek equity holdings: none and implementation. 2022 cash compensation: $24,375 56 PERFORMANCE - PRECISION - PASSION 25. POST BALANCE SHEET EVENTS The Company has evaluated the period after December 31, 2022 up through the date of the Management Statement and determined that there were no transactions that required recognition in the Company’s financial statements. In March 2023, the Company has entered into a rights offering that is fully underwritten to provide the liquidity necessary during 2023. The offering is subject to conditions not met at the time of the release of the financial statements. Please refer to note 1.1 for a further description. In May 2021, Asetek filed a patent infringement lawsuit against Shenzen Apaltek Co. Ltd. and Apalcool (Guangdong Ang Pai Liquid Cooling Technology Co., Ltd.) in the Western District of Texas (WDTX) seeking judgment that Apaltek and Apalcool infringe Asetek’s U.S. Patent Nos. 8,240,362 (“the ’362 patent”) and 8,245,764 (“the ’764 patent”). The case was transferred from the WDTX to the Northern District of California (NDCA). No trial date has been set. Apaltek filed review petitions in the U.S. Patent and Trademark Office (USPTO) to challenge the validity of the ’362 and ’764 patents, as well as Asetek’s 10,078,355 (“the ’355 patent”). The matter is not expected to result in a significant expense to the Company. In June 2021, Cooler Master Co., Ltd. and CMI USA, Inc. filed in the NDCA an action requesting declaratory judgment that certain Cooler Master products do not infringe Asetek’s ‘362, ‘764 and ’355 patents, or Asetek’s U.S. Patent Nos. 10,078,354 (“the ’354 patent”), 10,599,196 (“the ’196 patent), and 10,613,601 (“the ’601 patent”). Asetek filed counterclaims that Cooler Master products infringe the ’362 and ’764 patents and contends that the Court lacks subject matter jurisdiction to adjudicate Cooler Master’s claims regarding the other patents. The court granted Asetek’s motion to stay this case in view of other ongoing proceedings summarized herein. In January 2019, Asetek filed a patent infringement lawsuit against CoolIT in the NDCA seeking judgment that CoolIT infringed Asetek’s ‘362, ‘764, ’354, ‘355, and ‘681 patents. CoolIT filed counterclaims asserting infringement of four CoolIT patents. Asetek also filed a related patent infringement lawsuit against Corsair in the same court seeking judgment that Corsair infringes Asetek’s ‘354, ‘355, ‘196, and ’601 patents. In October 2022, the parties resolved their disputes relating to the CoolIT Patents and the Asetek Patents pursuant to a confidential settlement agreement, and the court dismissed Asetek’s and CoolIT’s claims of patent infringement with prejudice pursuant to stipulation. In 2017, Coolergiant GmbH filed suit against Asetek Danmark A/S in Mannheim District Court requesting declaration of non-infringement in Germany of an Asetek patent. The Company disputed the allegations and filed counterclaim motions. In the nullity proceedings, the German Patent Court revoked the German part of Asetek’s patent in February 2020, and upon Asetek appeal, the German Supreme Court confirmed revocation in final judgment in May 2022. 26. CONTINGENT LIABILITIES Debt collateral. In conjunction with the debt referenced in Note 19, Sydbank has secured the following as collateral for the credit provided: // Asetek Danmark A/S revolving line of credit with Sydbank of DKK 105 million (USD $15.1 million) is secured by the following values of the Company’s assets: trade receivables $7.7 million, Inventory $5.2 million, property plant and equipment $14.4 million and intangible assets $6.7 million. // Asetek A/S, line of credit with Sydbank of DKK 100 million (USD 14.2 million), is secured by the Company’s property and building under construction at Skjoldet 20, 9230 Svenstrup, Denmark. Legal proceedings. In the ordinary course of conducting business, the Company is involved in various intellectual property proceedings, including those in which it is a plaintiff that are complex in nature and have outcomes that are difficult to predict. Asetek records accruals for such contingencies to the extent that it is probable that a liability will be incurred, and the amount of the related loss can be reasonably estimated. The Company’s assessment of each matter may change based on future unexpected events. An unexpected adverse judgment in any pending litigation could cause a material impact on the Group’s business operations, intellectual property, results of operations or financial position. In addition to the above, Asetek Group is engaged in various other ongoing cases. In the opinion of Management, neither settlement nor continuation of such proceedings are expected to have a material effect on Asetek's financial position, operating profit or cash flow. 57 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – MANAGEMENT STATEMENT MANAGEMENT STATEMENT The Board of Directors and Executive Board have today considered and adopted the Annual Report of Asetek A/S for the financial year January 1 – December 31, 2022. The Annual Report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. In our opinion, Management’s Report includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Parent company. In our opinion, the annual report of Asetek A/S for the financial year 1 January to 31 December 2022 with the file name asetek-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. In our opinion, the Consolidated Financial Statements and Parent Company Financial Statements give a true and fair view of the financial position at December 31, 2022 of the Group and the Parent company and of the results of the Group and Parent company operations and cash flows for 2022. Aalborg, Denmark March 8, 2023 Management: André S. Eriksen CEO Peter Dam Madsen CFO Board of Directors: Jukka Pertola Chairman Erik Damsgaard Vice chairman Maria Hjorth Member Jørgen Smidt Member Maja Frølunde Sand-Grimnitz Member 67 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – STOCK EXCHANGE RELEASES INDEPENDENT AUDITOR’S REPORTS To the shareholders of Asetek A/S Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Report on the audit of the Financial Statements Our opinion In our opinion, the Consolidated Financial To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2022 and of the results of the Group’s and the Parent Company’s operations and cash flows for the financial year 1 January to 31 December 2022 in accordance with International Financial Reporting Standards as adopted by the EU and further Appointment Following the admission of the shares of Asetek A/S for listing on Oslo Stock Exchange, we were first appointed auditors of Asetek A/S on 24 April 2014. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 9 years including the financial year 2022. requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors. Material uncertainty related to Going Concern What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of Asetek A/S for the financial year 1 January to 31 December 2022 comprise statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including summary of significant accounting policies for the Group as well as for the Parent Company. Collectively referred to as the “Financial Statements”. We draw attention to Note 1.1 in the consolidated financial statements, which describe that the budgeted liquidity may be insufficient during 2023 and is dependent on the current level of forecasted cash flow until the planned capital increase later in 2023 and the completion and the amount of cash from the planned capital increase. This indicates that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue going concern. Basis for opinion Our opinion is not modified in respect of this matter. We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2022. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for 68 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – STOCK EXCHANGE RELEASES Key audit matter How our audit addressed the key audit matter Capitalisation of development costs The Group capitalises development costs when certain criteria according to IFRS are met. The criteria for We assessed whether the Group’s accounting policies are in accordance with IFRS. recognition and measurement of development costs are We selected a sample of in-progress development projects subject to Management’s judgment and assumptions, and considered whether all criteria described in IFRS were which is uncertain by nature. Completed development met as basis for capitalisation. We carried out risk projects are assessed for impairment indications. For in- assessment procedures in order to obtain an understanding progress development projects impairment tests are performed at least annually. The impairment tests are based on the strategy plan approved by Management and value-in-use calculations based on expected future cash flows. We focused on this area because the criteria for recognition and measurement of development projects are subject to Management judgments and assumptions. of IT systems, business processes and relevant controls regarding capitalised development costs. For the controls, we assessed whether they were designed and implemented to effectively address the risk of material misstatement. We evaluated and challenged Management’s assessment of impairment indicators of completed development projects based on the commercial prospects of the projects. For in- progress development projects and projects with impairment indicators, we challenged the key assumptions applied in the value-in-use calculations. Our work was based on our understanding of the business cases and significant assumptions applied. Refer to note 15 in the Consolidated Financial Statements. We challenged whether the intent to finalise the projects remain and whether the projects are expected to generate future economic benefits exceeding the carrying values. Statement on Management’s Review Management’s responsibilities for the Financial Statements Management is responsible for Management’s Review. Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Moreover, we considered whether Management’s Review includes the disclosures required by the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. 69 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – STOCK EXCHANGE RELEASES Auditor’s responsibilities for the audit of the Financial Statements disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. ● ● Evaluate the overall presentation, structure, and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. ● Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. ● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. ● ● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Report on compliance with the ESEF Regulation Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of Asetek A/S for the financial year 1 January to 31 December 2022 with the file name asetek-2022-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to 70 PERFORMANCE - PRECISION - PASSION FINANCIAL STATEMENT – STOCK EXCHANGE RELEASES the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: ● ● Testing whether the annual report is prepared in XHTML format; ● The preparing of the annual report in XHTML format; Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; ● The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; ● ● Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; ● ● Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human-readable format; and For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. ● ● Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of In our opinion, the annual report of Asetek A/S for the financial year 1 January to 31 December 2022 with the file name asetek-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. procedures selected depend on the auditor’s Aarhus, March 8, 2023 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231 Mads Melgaard Henrik Berring Rasmussen State Authorised Public Accountant mne34354 State Authorised Public Accountant mne34157 71 PERFORMANCE - PRECISION - PASSION
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.