Annual Report (ESEF) • Mar 15, 2022
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Download Source FileUntitled ANNUAL REPORT 2021 CEO LETTER .................................................................................. CORPORATE GOVERNANCE .................................................... AUDITOR’S REPORT ................................................................. CONSOLIDATED KEY FINANCIAL DATA ............................... ALTERNATIVE PERFORMANCE MEASURES (APM) ............ DECLARATION TO THE ANNUAL REPORT 2021 KONGSBERG AUTOMOTIVE AT A GLANCE BOARD OF DIRECTORS’ REPORT BOARD OF DIRECTORS’ REPORT KEY FIGURES FINANCIAL STATEMENTS OF THE GROUP FINANCIAL STATEMENTS OF THE PARENT COMPANY ...... CONTENTS 54 KEY FIGURES 7 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KEY FIGURES 7 KEY FIGURES GROUP 2018 2019 1,000 1,200 20212020 800 600 400 200 0 REVENUES ADJUSTED EBIT AND MARGIN BUSINESS WINS 2018 2019 2020 2021 300 350 250 200 150 100 50 0 2018 Adjusted EBIT (MEUR) Adjusted EBIT (MEUR) Revenues - continuing operations (MEUR) Business wins (annual sales) - continuing operations (MEUR) Revenues - discontinued operation (MEUR) Business wins (annual sales) - discontinued operation (MEUR) * Refer to the Alternative Performance Measures section Adjusted EBIT margin (%) - continuing operations Adjusted EBIT margin (%) - discontinued operation 2019 2020 2021 80 8 60 4 6 7 5 3 1 -1 -3 40 2 0 -2 20 -20 0 1,123 75 364 330 281 332 71 10 44 1,161 1,167 969 687 282 335 831 51 16 -6 79 202 233 99 -7 KEY FIGURES BUSINESS SEGMENTS POWERTRAIN & CHASSIS * Refer to the Alternative Performance Measures section REVENUES MEUR ADJUSTED EBIT AND MARGIN BUSINESS WINS MEUR annual sales adjusted EBIT (MEUR) adjusted EBIT margin (%) 500 2018 2019 2020 2021 400 300 200 100 0 400 2018 2019 2020 2021 300 200 100 0 2018 2019 2020 2021 120 80 100 60 40 20 0 160 2018 2019 2020 2021 120 80 40 0 2018 2019 2020 2021 20 25 30 4 5 6 15 2 3 10 1 5 0 0 -5 -1 2018 2019 2020 2021 80 20 60 10 15 40 20 5 0 0 SPECIALTY PRODUCTS 437 13 127 113 92 94 161 100 110 139 19 -0.6 25.2 66.6 58.8 38.8 48.4 461 373 430 400 396 306 393 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KEY FIGURES 9 10 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CEO LETTERKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CEO LETTER 11 SHIFT GEAR PROGRAM Gear I: Operational Excellence and Performance Gear II: Strategic Shift to Grow in Protable Segments Gear III: Sustainable Transformation GEAR I: OPERATIONAL EXCELLENCE AND PERFORMANCE GEAR II: STRATEGIC SHIFT TO GROW IN PROFITABLE SEGMENTS GEAR III: SUSTAINABLE TRANSFORMATION > > > DEAR KONGSBERG AUTOMOTIVE SHAREHOLDERS It was my pleasure to become Chief Executive Ofcer of Kongsberg Automotive (KA) in May 2021, taking over from the co-CEOs ad interim, Norbert Loers and Robert Pigg. I would like to express my sincere gratitude to both for leading the company jointly prior to my arrival. A TURBULENT YEAR 2021 LAYS BEHIND US. OUR BIGGEST ASSET, OUR COMPANY, HAS DONE AN EXTRAORDINARY JOB ONCE AGAIN TO DELIVER ON OUR PROMISES. 1312 Joerg Buchheim SEGMENT PERFORMANCE NEW BUSINESS WINS OUTLOOK FOR 2022 I AM CONFIDENT THAT WITH OUR TRANSFORMATION AND IMPROVEMENT ROADMAP SUPPORTED BY OUR EXCELLENT WORKFORCE, CUSTOMER TRUST, AND SHAREHOLDER CONFIDENCE, KA IS WELL ON ITS WAY TOWARDS PROVIDING MOBILITY SOLUTIONS FOR THE FUTURE. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CEO LETTERKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CEO LETTER 1514 KONGSBERG AUTOMOTIVE AT A GLANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 17 TAGLINE, VISION, AND MISSION TAGLINE: MOBILITY SOLUTIONS FOR THE FUTURE VISION: WE DRIVE THE GLOBAL TRANSITION TO SUSTAINABLE MOBILITY MISSION: ON OUR PATH TO BECOMING A TRUE GLOBAL LEADER, WE PUT ENGINEERING, SUSTAINABILITY, AND INNOVATION INTO PRACTICE. 16 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE In 2021, Kongsberg Automotive (KA) launched the company’s new tagline, vision, and mission. It is a part of KA’s ambition to be second to none in all we do. Our vision, mission, and tagline place us on our path towards becoming one of the top three providers of mobility solutions by focusing on cutting-edge engineering, sustainability, innovation, and safer and cleaner mobility. We seek to constantly improve our products, leverage our experience in cutting-edge engineering and widen our scope to nd new solutions and tech - nologies that make mobility safer and cleaner. Our ambition is to be second to none in all we do. This is how we unlock growth potential and create substantial value for our customers, our employ - ees, and shareholders. We take responsibility as a strong global team. We are committed to mak - ing a difference by developing our skillset and delivering excellent products. 1918 In 2021, Kongsberg Automotive launched its Shift Gear program, with the aim of unlocking the company’s full potential, sharpening its future competitive edge, and generating maximum value for the company’s employees, customers, and shareholders. This wide-ranging program focuses on three major areas: Gear I: Operational, Gear II: Strategic, and Gear III: Sustainable. SHIFT GEAR > generation and implementation of continued improvement measures. > Commercial improvements through strict claim management and purchasing savings. GEAR I: OPERATIONAL EXCELLENCE AND PERFORMANCE GEAR II: STRATEGIC SHIFT TO GROW IN PROFITABLE SEGMENTS GEAR III: SUSTAINABLE TRANSFORMATION > > > > > > > KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 19KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE A PLACE IN HISTORY 1995 LISTED ON OSLO STOCK EXCHANGE 1957 KONGSBERG VÅPENFABRIKK STARTS PRODUCTION OF BRAKES FOR VOLVO TRUCKS 1987 KONGSBERG AUTOMOTIVE IS ESTABLISHED 2004 ACQUISITION OF COUPLINGS PRODUCER RAUFOSS UNITED 2008 ACQUISITION OF TELEFLEX GMS (SYSTEMS FOR GEAR SHIF T, SEAT C O MF ORT, AND FLUID SYSTEMS) THE STORY OF KONGSBERG AUTOMOTIVE IS OF ORDINARY PEOPLE CREATING AN EXTRAORDINARY COMPANY. 2021 LAUNCH OF SHIFT GEAR TRANSFORMATION PROGRAM KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 2322 FULL-YEAR PERFORMANCE > > > > > > > BUSINESS HIGHLIGHTS POWERTRAIN & CHASSIS > > > SPECIALTY PRODUCTS > > > KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 2524 WORLDWIDE NORTH & SOUTH AMERICA 2,057 EMPLOYEES 5,624 EMPLOYEES IN 18 COUNTRIES WORLDWIDE EUROPE 2,703 EMPLOYEES ASIA 864 EMPLOYEES Kongsberg Automotive (KA) is present in 35 locations around the globe, covering the world’s key automotive markets. KA’s footprint is based largely on its customers: Wherever they are located, KA aims to be there, serving and supporting them in the best possible way. KA is committed to adapting to market conditions: 9% of its total workforce were agency workers in 2021, allowing it to build up or scale down in response to market movements. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 2524 CANADA BRAZIL CHINA FRANCE THE NETHERLANDS USA INDIA JAPAN SOUTH KOREA MEXICO NORWAY POLAND SLOVAKIA SPAIN SWEDEN UK SWITZERLAND GERMANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 2726 Kongsberg Automotive is proud to serve leading OEMs andTier 1 suppliers in automotive, commercial vehicle, and off-highway markets globally. CUSTOMERS DIVESTMENT OF BUSINESS UNITS KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE In October 2021, Kongsberg Automotive committed to divest its Interior Comfort Systems and Light-Duty Cables business units. THE INTERIOR COMFORT SYSTEMS (ICS) BUSINESS UNIT THE LIGHT-DUTY CABLES (LDC) BUSINESS UNIT AND THE CABLE-RELATED PART OF THE OFF-HIGHWAY BUSINESS UNIT KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 29 The Powertrain & Chassis (P&C) segment of Kongsberg Automotive (KA) is a global leader in the design, manufacture, and testing of custom powertrain and chassis solutions that enhance the driving experience. KA engineers and manufactures products for world-leading makers of passenger cars, commercial vehicles, and e-mobility vehicles of all types. Its engineering presence now extends from primary design centers in Europe to the Americas and Asia. > GEAR SHIFTERS FOR AUTOMATIC AND MANUAL TRANSMISSIONS > SHIFT CABLES AND TOWERS > GEAR AND CLUTCH CONTROL SYSTEMS INCLUDING ACTUATORS > VEHICLE DYNAMICS PRODUCTS FOR CABINS AND AXLES CHARGING UP ELECTRIC APPLICATIONS POWERTRAIN & CHASSIS PRODUCT PIPELINE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // KONGSBERG AUTOMOTIVE AT A GLANCE 31 SPECIALTY PRODUCTS Kongsberg Automotive (KA)’s Specialty Products segment consists of three business units: Couplings, Fluid Transfer Systems, and Off-Highway. These niche product business units are driven by an entrepreneurial focus on innovation and growth. In 2021, as a part of the KA-wide Shift Gear transformation program, the business segment focused on continuous improvement activities intended to have an immediate impact to respond to the pandemic-struck market environment. COUPLINGS FLUID TRANSFER SYSTEMS > COMPRESSED AIR COUPLINGS > FLUID TRANSFER SYSTEMS INCLUDING SPECIALIZED HOSES, TUBES, AND ASSEMBLIES > OFF-ROAD PRODUCTS FOR VARIOUS INDUSTRIES, INCLUDING STEERING COLUMNS, DISPLAYS, PEDALS, AND HAND CONTROLS > OTHER NEW INNOVATIVE PRODUCTS UNDER DEVELOPMENT OFF-HIGHWAY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 3332 BOARD OF DIRECTORS’ REPORT KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 3534 The persisting COVID-19 pandemic and its impact on global supply chains have turned the past year into one of the most challenging for the automotive industry. BOARD OF DIRECTORS’ REPORT MARKETS LIGHT VEHICLE PRODUCTION SUSTAINABILITY, MANUFACTURING EFFICIENCY, AND NEW AUTOMOTIVE TECHNOLOGIES ARE OF CENTRAL IMPORTANCE TO KA, PAVING THE WAY FOR KA TO BECOME THE PROVIDER OF ‘MOBILITY SOLUTIONS FOR THE FUTURE’. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 3736 FINANCIAL PERFORMANCE GROUP SEGMENTS TRUCK PRODUCTION DISCONTINUED OPERATION KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 3938 NET FINANCIAL ITEMS NET PROFIT CAPITAL CASH FLOW LIQUIDITY SUBSEQUENT EVENTS BUSINESS WINS FOR CONTINUING OPERATIONS KONGSBERG AUTOMOTIVE ASA – THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 4140 POWERTRAIN & CHASSIS OPERATIONS SPECIALTY PRODUCTS GEAR I ALLOWED KA TO OFFSET MANY OF THE IMPACTS OF THE CONTINUING COVID-19 PANDEMIC AND THE CHALLENGES FACED THROUGHOUT THE AUTOMOTIVE SUPPLY CHAIN. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 4342 ENGINEERING AND DEVELOPMENT The group’s net overall spending on engineering and development totaled 4.7% of sales in 2021. Kongsberg Automotive (KA)’s global engineering workforce consisted of 364 resourceful engineers. POWERTRAIN & CHASSIS OFF-HIGHWAY COUPLINGS AND FLUID TRANSFER SYSTEMS KA’S GLOBAL ENGINEERING WORKFORCE CONSISTED OF 364 RESOURCEFUL ENGINEERS. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 4544 CORPORATE GOVERNANCE GOING CONCERN OPERATIONAL RISK RISK MANAGEMENT FINANCIAL RISK Due to its capital structure and the nature of its operations, the group is exposed to the following nancial risks: Market risk (including foreign exchange rate risk, raw material price risk, and interest rate risk), credit risk, and liquidity and capital management risk. FOREIGN EXCHANGE RATE RISK RAW MATERIAL PRICE AND AVAILABILITY RISK KA HAS INITIATED SEVERAL ACTIONS IN ORDER TO MAINTAIN SUPPLY CHAIN CONTINUITY BY HIRING OF ADDITIONAL CRISIS EXPERTS TO HANDLE THE WAVES OF SUPPLY CRISIS, IMPLEMENTATION OF SECOND SOURCES, PROCUREMENT ON THE SPOT MARKET, SPECIAL FREIGHT COSTS. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 4746 INTEREST RISK CREDIT RISK LIQUIDITY AND CAPITAL RISK RATING RISK PENSION LIABILITY RISKS REGULATORY AND TAX RISKS OTHER RISKS CLIMATE-RELATED RISKS POLITICAL RISKS HEALTH AND SAFETY RISKS STRATEGIC RISKS RISKS RELATED TO PRODUCT DEVELOPMENT RISKS ASSOCIATED WITH PURCHASING AND SUPPLY CHAINS KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 4948 PRODUCTION-RELATED RISKS PROJECT MANAGEMENT-RELATED RISKS LEGAL PROCEEDINGS CYBERCRIME RISK COVID-19-RELATED RISKS THE CYBER SECURITY MEASURES KA IMPLEMENTED COVER THE WHOLE GROUP’S INFORMATION SYSTEMS AND TECHNOLOGIES (IS&T), RANGING FROM MANAGERIAL SYSTEMS AND APPLICATIONS TO KA’S OPERATIONAL ENVIRONMENT SUCH AS MANUFACTURING AND RESEARCH & DEVELOPMENT (R&D). By the end of 2021, Kongsberg Automotive employed 5,624 people in full-time equivalents (FTEs). EMPLOYEES KA CONTINUALLY STRIVES TO IDENTIFY, DEVELOP, AND RETAIN ITS HIGHLY TALENTED EMPLOYEES TO PLAN FOR THE FUTURE OF THE COMPANY. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 5150 COMMITMENT TO EMPLOYEES A VALUED EMPLOYER KA EXPERTFORUM ExpertForum initia ExpertForum ExpertForum sessions ExpertForum MAKING A DIFFERENCE Solutions for the Planet, KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 5352 SUPPLIERS ARE REQUIRED TO ADHERE TO THE SAME HIGH HUMAN RIGHTS STANDARDS AS KONGSBERG AUTOMOTIVE DOES ITSELF. HUMAN RIGHTS IN THE SUPPLY CHAIN Kongsberg Automotive (KA) does all it can to protect human rights and ensure decent working conditions for employees throughout its supply chains. The sustainability team in KA’s Purchasing organization regularly reviews the company’s approach to due diligence and how this approach can be expanded upon. > > > > > > > KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 5554 Kongsberg Automotive (KA) prioritizes the health, safety, and wellbeing of its employees and seeks to minimize environmental impact. KA’s well-established Health & Safety Policy and Environmental Policy articulate the key actions necessary to achieve the highest industry standards in HSE performance and KA’s business objectives. These commitments are communicated throughout the organization. HEALTH, SAFETY, AND ENVIRONMENT ENVIRONMENTAL REPORTING > Energy > > Water > ENERGY SAFEGUARDING EMPLOYEES’ HEALTH SAFETY RECORD IMPROVES > WASTE > WATER in KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 5756 In 2021, Kongsberg Automotive started making sustainability a central element of its business strategy. Gear III of the Shift Gear program is focused on developing the company’s sustainability strategy and designing roadmaps to achieve its long-term goals, and it will continue into 2022. CORPORATE RESPONSIBILITY > > SUSTAINABLE DEVELOPMENT GOALS (SDGS) > > > > > > > > > > KONGSBERG AUTOMOTIVE’S EXPECTATIONS FOR EMPLOYEE CONDUCT SUPPLY CHAIN SUSTAINABILITY A GLOBAL WORKFORCE, COMPRISING MANY DIFFERENT CULTURES, IS A KEY STRENGTH OF KONGSBERG AUTOMOTIVE. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 5958 KONGSBERG AUTOMOTIVE & ITS LOCAL COMMUNITIES DECARBONIZATION > > CLIMATE CHANGE CLIMATE CHANGE GOVERNANCE CARBON DISCLOSURE PROJECT CLIMATE CHANGE REPORT KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 6160 CLIMATE CHANGE RISKS & OPPORTUNITIES > CHANGING MARKET > DISRUPTION TO SUPPLY CHAINS BY EXTREME WEATHER > INCREASED COSTS OF ENERGY AND SUPPLIES > COST OF CARBON > IMPACT OF GREATER CHANGES IN TEMPERATURES AND WEATHER ON MANUFACTURING FACILITIES CLIMATE CHANGE OPPORTUNITIES > DEVELOPMENT OF NEW PRODUCTS OR SERVICES IN RESPONSE TO CHANGES IN CUSTOMER REQUIREMENTS > RESOURCE EFFICIENCY > RECYCLING > USE OF LOWER-EMISSION SOURCES OF ENERGY 2021 CARBON EMISSIONS PERFORMANCE FIVE OF KA’S MANUFACTURING FACILITIES PURCHASE 100% RENEWABLE ELECTRICITY. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORTKONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT 6362 OUTLOOK KONGSBERG AUTOMOTIVE’S BOARD HAS EIGHT DIRECTORS. FIVE ARE ELECTED BY SHAREHOLDERS AND THREE BY EMPLOYEES. Kongsberg, March 14, 2022 The President & CEO and the Board of Directors of Kongsberg Automotive ASA BOARD OF DIRECTORS Emese Weissenbacher Board member Firas Abi-Nassif Chairman Ellen M. Hanetho Board member Gerard Cordonnier Board member Bjørn Ivan Ødegård Employee elected Peter Schmitt Board member Siw Reidun Wærås Employee elected Knut Magne Alfsvåg Employee elected > > > > KA IS COMMITTED TO MAKING SIGNIFICANT INVESTMENTS INTO INNOVATION FOR EXTRAORDINARY AND PROFITABLE GROWTH WITHIN NEW SEGMENTS, REGIONS, AND MARKETS. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 65KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // BOARD OF DIRECTORS' REPORT64 FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 6766 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (RESTATED * ) MEUR NOTE 2021 2020 Operating revenues 7 831.4 686.9 Other income 0.1 0.4 Operating expenses Raw material expenses (404.2) (295.4) Change in inventories 27.6 (16.6) Salaries and social expenses 8 (232.9) (203.3) Other operating expenses 9 (142.5) (126.2) Depreciation 15, 16 (29.4) (27.5) Amortization 14 (2.7) (6.0) Impairment losses 17 0.0 (30.3) Total operating expenses (784.0) (705.3) Operating prot / (loss) 47.5 (18.0) Financial items Financial income 10 12.1 0.1 Financial expenses 10 (21.6) (45.6) Net nancial items (9.5) (45.5) Prot / (loss) before taxes 38.0 (63.5) Income taxes 11 (9.5) 5.0 Net prot / (loss) from continuing operation 28.5 (58.5) Discontinued operation Loss from discontinued operation, net of tax 12 (23.0) (59.5) Net prot / (loss) 5.5 (118.0) Other comprehensive income Items that may be reclassied to prot or loss in subsequent periods: Translation differences on foreign operations (7.5) (2.9) Tax on translation differences 0.0 1.4 Items that will not be reclassied to prot or loss in subsequent periods: Translation differences on non-foreign operations 20.9 (9.4) Remeasurement of net PBO 22 0.2 (0.1) Tax on net PBO remeasurement 0.0 0.0 Other comprehensive income 13.6 (11.0) Total comprehensive income for the year 19.1 (129.0) Net prot / (loss) attributable to Equity holders (parent company) 5.1 (118.4) Non-controlling interests 0.4 0.4 Total 5.5 (118.0) Total comprehensive income attributable to Equity holders (parent company) 18.3 (129.3) Non-controlling interests 0.8 0.3 Total 19.1 (129.0) Earnings per share: Basic earnings per share, Euros 21 0.00 (0.21) Diluted earnings per share, Euros 21 0.00 (0.21) Earnings per share – Continuing operations: Basic earnings per share, Euros 21 0.03 (0.11) Diluted earnings per share, Euros 21 0.03 (0.11) NOTE 1 NOTE 2 NOTE 3 NOTE 4 CRITICAL ACCOUNTING ESTIMATES NOTE 5 NEW STANDARDS NOTE 6 NOTE 7 NOTE 8 NOTE 9 NOTE 10 NOTE 11 NOTE 12 NOTE 13 ASSETS AND LIABILITIES OF DISCONTINUED OPERATION NOTE 14 NOTE 15 PROPERTY, NOTE 16 NOTE 17 NOTE 18 NOTE 19 NOTE 20 NOTE 21 EARNINGS AND DIVIDEND NOTE 22 RETIREMENT NOTE 23 NOTE 24 OTHER NON-CURRENT NOTE 25 NOTE 26 NOTE 27 NOTE 28 REMUNERATION AND FEES FOR MANAGEMENT, BOARD OF NOTE 29 NOTE 30 NOTE 31 NOTE 32 CONTENTS * Restatement relates entirely to the requirement of IFRS 5 to present the discontinued operation separately from the continuing operations in the comparative periods. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 6968 MEUR NOTE 2021 2022 Operating activities Prot / (loss) before taxes 12.6 (123.2) Depreciation 15, 16 43.8 43.7 Amortization 14 2.9 6.2 Impairment losses 17 0.0 82.7 Interest income 10 (0.2) (0.2) Interest and other nancial items 10 24.1 24.2 Taxes paid (8.3) (11.9) (Gain) / loss on sale of non-current assets 0.6 (0.3) Changes in trade receivables 19 (8.0) (21.1) Changes in inventory 18 (41.7) 14.0 Changes in trade payables 26 13.7 7.3 Currency differences 10 (11.4) 23.0 Difference between pension funding contributions paid/pensions paid and the net pension cost 22 (0.3) (1.0) Changes in other items 8.2 30.7 Cash ow from operating activities 36.1 74.1 Investing activities Capital expenditures, including intangible assets 14, 15 (43.7) (60.6) Proceeds from sale of xed assets 0.3 1.8 Interest received 10 0.2 0.2 Cash ow used by investing activities (43.2) (58.6) Financing activities Proceeds from increases in equity 0.0 89.7 Payments for purchase of treasury shares 0.0 (1.3) Net draw down of debt 23 18.1 (9.3) Interest paid and other nancial items (23.4) (24.1) Repayment of lease liabilities (15.0) (13.5) Cash ow used by/from nancing activities (20.3) 41.6 Currency effects on cash 18.3 (14.9) Net change in cash (9.1) 42.2 Net cash as at January 1 67.4 25.2 Net cash as at December 31 58.3 67.4 Of this, restricted cash 0.5 0.4 CONSOLIDATED STATEMENT OF CASH FLOWS * Comprises changes in other receivables and other assets, other short-term liabilities, and provisions. MEUR NOTE 2021 2020 ASSETS Non-current assets Deferred tax assets 11 31.3 28.7 Intangible assets including Goodwill 14, 17 90.0 93.2 Property, plant and equipment 15, 17 140.7 228.8 Right-of-use assets 16, 17 66.6 94.3 Other non-current assets 19 3.5 11.1 Total non-current assets 332.1 456.1 Current assets Inventories 18 94.1 88.9 Trade and other receivables 19 250.0 261.1 Cash and cash equivalents 23 51.3 67.4 Other current assets 19 19.1 24.5 Assets held for sale 13 238.2 0.0 Total current assets 652.7 441.9 Total assets 984.8 898.0 EQUITY AND LIABILITIES Equity Share capital 20 105.6 100.8 Treasury shares 20 (1.3) (1.3) Share premium 219.1 209.1 Other reserves 45.0 44.9 Retained earnings (107.1) (112.2) Attributable to equity holders 261.3 241.4 Non-controlling interests 4.2 4.1 Total equity 265.5 245.5 Non-current liabilities Deferred tax liabilities 11 27.0 14.9 Retirement benet obligations 22 19.0 19.3 Interest-bearing liabilities 23 272.1 273.4 Non-current lease liabilities 16 66.6 89.6 Other non-current interest-free liabilities 24 1.0 2.0 Total non-current liabilities 385.7 399.3 Current liabilities Other current interest-bearing liabilities 27 20.6 0.0 Current lease liabilities 16 8.4 13.8 Current income tax liabilities 11 4.2 1.9 Trade and other payables 26 229.6 237.5 Liabilities directly associated with the assets held for sale 13 70.8 0.0 Total current liabilities 333.6 253.2 Total liabilities 719.3 652.5 Total equity and liabilities 984.8 898.0 CONSOLIDATED STATEMENT OF FINANCIAL POSITION KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 7170 Specication of constituent elements of equity: > Share capital: par value for shares in issue > Treasury shares: par value for own shares and premium over par value for own shares > Share premium: premium over par value for shares in issue > Other reserves: translation differences, premium treasury shares, warrants, share options, and OCI. > Retained earnings: accumulated retained prots and losses. > Non-controlling interests: NCI share in group’s equity. MEUR SHARE CAPITAL TREASURY SHARES SHARE PREMIUM OTHER RESERVES RETAINED EARNINGS EQUITY HOLDERS OF THE PARENT NON- CONTROLLING INTERESTS TOTAL EQUITY Equity as at 01.01.2020 22.8 0.0 207.6 42.5 6.2 279.1 3.8 282.9 Equity increase 77.5 13.2 90.7 90.7 Purchase of treasury shares (1.3) (1.3) (1.3) Share Based Compensation 2.1 2.1 2.1 Total comprehensive income for the year: Loss for the year (118.4) (118.4) 0.4 (118.0) Other comprehensive income: Translation differences on foreign operations 0.6 5.9 (9.3) (2.7) (0.1) (2.9) Tax on translation differences 1.4 1.4 1.4 Translation differences on non-foreign operations (0.1) (17.6) 8.3 (9.4) (9.4) Remeasurement of net dened pension liability (0.1) (0.1) (0.1) Tax on remeasurement of net pension liability 0.0 0.0 0.0 Other comprehensive income 0.5 0.0 (11.7) 0.3 0.0 (10.8) (0.1) (11.0) Total comprehensive income for the year 0.5 0.0 (11.7) 0.3 (118.4) (129.2) 0.3 (129.0) Equity as at 31.12.2020 100.8 (1.3) 209.1 44.9 (112.2) 241.4 4.1 245.5 Share Based Compensation 1.7 1.7 1.7 Dividends allocated or paid 0.0 (0.7) (0.7) Total comprehensive income for the year: Prot for the year 5.1 5.1 0.4 5.5 Other comprehensive income: Translation differences on foreign operations (7.9) (7.9) 0.4 (7.5) Translation differences on non-foreign operations 4.8 10.1 5.9 20.9 20.9 Remeasurement of net dened pension liability 0.2 0.2 0.2 Tax on remeasurement of net pension liability 0.0 0.0 0.0 Other comprehensive income 4.8 0.0 10.1 (1.7) 0.0 13.2 0.4 13.6 Total comprehensive income for the year 4.8 0.0 10.1 (1.7) 5.1 18.3 0.8 19.1 Equity as at 31.12.2021 105.6 (1.3) 219.1 45.0 (107.1) 261.3 4.2 265.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated nancial statements are set out below. These policies have been consistently applied to all the years presented, unless other- wise stated. BASIS OF PREPARATION The consolidated nancial statements have been prepared on the his- torical cost basis except for certain nancial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market partici- pants at the measurement date, regardless of whether that price is di- rectly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability the group considers the characteristics of the asset or liability if market participants would do so. Fair value for measurement and/or disclosure purposes in these consolidated nancial statements is determined on such basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions within the scope of IFRS 16, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value-in-use in IAS 36. In addition, for nancial reporting purposes, fair value measure- ments are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurement are observable and the signif- icance of the inputs to the fair value measurement in its entirety, which are described as follows: > Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the entity can access at the measurement date, > Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly, and > Level 3 inputs are unobservable inputs for the asset or liability. BASIS OF CONSOLIDATION The consolidated nancial statements comprise the nancial state- ments of Kongsberg Automotive ASA and its subsidiaries as of Decem- ber 31 each year. The nancial statements of subsidiaries are prepared for the same reporting periods as the company, using consistent ac- counting principles. The consolidated nancial statements incorporate the nancial statements of the company and entities controlled by the company (its subsidiaries) made up to 31 December each year. Control is achieved when the company: > has the power over the investee, > is exposed, or has rights, to variable returns from its involvement with the investee; and > has the ability to use its power to affects its returns. The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Subsidiaries are fully consolidated from the date of acquisition, be- ing the date on which the parent company obtains control directly or indirectly and continue to be consolidated until the date when such control ceases. All intragroup assets and liabilities, equity, income, ex- penses, and cash ows relating to transactions between members of the group are eliminated in full. Changes in the parent company’s direct or indirect ownership in- terests in subsidiaries that do not result in losing control of the subsidi- aries are accounted for as equity transactions. The carrying amounts of the controlling interests and non-controlling interests are adjusted to reect the changes in their relative interests in the subsidiary. Any dif- ference between the amount by which the non-controlling interest are adjusted and the fair value of the consideration paid or received is rec- ognized directly in equity and attributed to owners of the parent com- pany. If the parent company loses its direct or indirect control of a subsidi- ary, the group should recognize a gain or loss on the loss of control in the income statement, which is calculated as the difference between (i) the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling inter- ests. All components of the other comprehensive income (OCI) that are attributable to the subsidiary are to be reclassied on the loss of control from the equity to the income statement or directly to retained earnings. NOTE 1 REPORTING ENTITY Kongsberg Automotive ASA (‘the company’ or ‘the parent company’) and its subsidiaries (together the ‘group’) develop, manufacture, and sell products to the automotive industry worldwide. The companyis a limited liability company incorporated and domiciled in Norway. The address of its registered ofce is Dyrmyrgata 48, NO-3601 Kongs- berg, Norway. The companyis listed on the Oslo Stock Exchange. The group’s consolidated nancial statements were authorized for issue by the Board of Directors on March 14, 2022. NOTE 2 STATEMENT OF COMPLIANCE The group’s consolidated nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as endorsed by the EU. Kongsberg, March 14, 2022 The President & CEO and the Board of Directors of Kongsberg Automotive ASA Emese Weissenbacher Board member Firas Abi-Nassif Chairman Ellen M. Hanetho Board member Siw Reidun Wærås Employee elected Knut Magne Alfsvåg Employee elected Joerg Buchheim President and CEO Gerard Cordonnier Board member Bjørn Ivan Ødegård Employee elected Peter Schmitt Board member KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 7372 BUSINESS COMBINATIONS Business combinations are accounted for using the acquisition meth- od. The consideration transferred in a business combination is meas- ured at fair value, which is calculated as the sum of the acquisi- tion-date fair values of the assets transferred by the group, liabilities incurred by the group to the former owners of the acquiree and the equity interests issued by the group in exchange for control of the ac- quiree. Acquisition-related costs are recognized in the income state- ment as incurred. At the acquisition date, the identiable assets acquired, and liabilities assumed are recognized at fair value, except as noted below: > Deferred tax assets or liabilities arising from assets acquired and liabilities assumed shall be recognized or measured in accordance with IAS 12, > Liabilities related to the acquiree’s employee benet arrangements shall be recognized and measured in accordance with IAS 19, > Right-of-use assets and lease liabilities shall be recognized and measured in accordance with IFRS 16, > A liability or an equity instrument related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment transactions with share-based payment transactions of the acquirer shall be measured in accordance with IFRS 2, and > Assets classied as held for sale and discounted operations are measured in accordance with IFRS 5. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the ac- quiree, and the fair value of the acquirer’s previously held equity inter- est in the acquiree (if any) over the net of the acquisition date amounts of the identiable assets acquired and the liabilities assumed. Non-controlling interests that are present ownership interests and en- title their holder to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured at fair value or a non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identiable net assets. As of December 31, 2021, there is a non-controlling interest recog- nized only in one subsidiary. The group has chosen to measure at the proportionate share of the recognized amounts of the acquiree’s identi- able net assets. Goodwill Goodwill arising on business acquisitions is carried at cost established at the acquisition date, less accumulated impairment losses (if any). For purposes of impairment testing, goodwill is monitored by the Management at the level of each of the group’s cash-generating units (CGUs) which are part of the respective operating segments identied in note 7. A cash-generating unit to which goodwill has been allocated is test- ed for impairment annually, or more frequently when there is an indi- cation that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated rst to reduce the carrying amount of goodwill allo- cated to the unit and then the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in the income statement and is not re- versed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the income statement on disposal. FUNCTIONAL AND PRESENTATION CURRENCY In preparing the nancial statements of each individual group entity, transactions in currencies other than the entity’s functional currency are recognized using exchange rates at the dates of the transactions. At the end of each reporting period, monetary items denominated in for- eign currencies are translated at the year-end exchange rates. Non-monetary items carried at fair value that are denominated in for- eign currencies are translated using the exchange rates at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re- translated. For presentation purposes, the assets and liabilities of the group’s foreign operations are translated into Euro using the exchange rates at the end of each reporting period. Income and expense items are trans- lated at the average exchange rates for the period. Exchange differenc- es arising are recognized in other comprehensive income, accumulated in equity, and attributed to non-controlling interests as appropriate. On the disposal of a foreign operation, all of the exchange differenc- es accumulated in equity in respect of that operation attributable to the owners of the parent company are reclassied to the income statement. Goodwill and fair value adjustments to identiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated using the exchange rate at the end of each reporting period. Exchange differences arising are recognized in comprehensive income. Exchange differences on monetary items are recognized in the in- come statement (in nancial items) in the period in which they arise except for monetary items receivable from or payable to a foreign oper- ation for which the settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation). These are recognized initially in other comprehensive income and re- classied from equity to the income statement on the repayment day of the monetary items. The group presents its consolidated nancial statements in Euros. The presentation currency of the parent company is Euro, whilst its functional currency is Norwegian Kroner. The reason for the use of Eu- ros is to enable all amounts in the published nancial statements of both the group and the company to be presented in the same currency. All nancial information presented in Euro has been rounded to the nearest thousands, except when otherwise indicated. SEGMENT INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating re- sources and assessing performance of the operating segments, has been identied as the group’s Executive Committee (led by the CEO). INTANGIBLE ASSETS OTHER THAN GOODWILL Internally generated intangible assets – research and development ex- penditure Research expenditures are expensed as incurred. An internally gener- ated intangible asset arising from the development of specic projects is recognized only when all the following criteria can be demonstrated: > the technical feasibility of completing the intangible asset so that it will be available for use or for sale, > the entity’s intention to exercise the right to use or to sell the asset, > the entity’s ability to use or sell the intangible asset, > the entity’s asset will generate probable future economic benets, > the availability of adequate resources to complete the development and to use or sell the asset, > the entity’s ability to reliably measure the expenditure incurred during its development. The amount initially recognized for the internally generated asset is the sum of expenditure incurred from the date when the intangible asset rst meets the recognition criteria listed above. Where no internally generat - ed intangible asset can be recognized, development expenditure is recog- nized in the income statement in the period in which it is incurred. After initial recognition, internally generated intangible assets are re- ported at cost less accumulated amortization and accumulated impair- ment losses. The amortization period is ve years. Software Costs associated with maintaining computer software are expensed as incurred. Development costs that are directly attributable to the de- sign and testing of identiable and unique software products con- trolled by the group are recognized as intangible assets when the abovementioned criteria are demonstrated to be fullled. Development expenses that do not meet these criteria are expensed as incurred and are not recognized as an asset in a subsequent account- ing period. Software costs are amortized over their estimated useful lives, which shall not exceed three years. Other intangible assets – acquired in a business combination Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date, which is regarded as their cost. After initial recognition, intangible assets are reported at cost less ac- cumulated amortization and accumulated impairment losses. The useful life of patents is considered to be up to 21 years, the useful life of customer relationship is estimated to be 10 years. PROPERTY, PLANT & EQUIPMENT (PP&E) PP&E are stated at historical cost less accumulated depreciation and impairment losses. The assets are depreciated over their useful eco- nomic lives using the straight-line method. Historical costs include expenditures that are directly attributable to the acquisition of the asset and to make the non-current asset available for use. Subsequent costs, such as repair and maintenance costs, are ex - pensed when incurred unless increased future economic benets arise as a result of repair and maintenance work. Such costs are recognized in the Statement of Financial Position as additions to non-current assets. Straight-line depreciation is calculated at the following rates: > Land N/A > Buildings 3–4% > Production machinery and tooling 10–25% > Computer equipment 33% RIGHT-OF-USE ASSETS AND LEASE LIABILITIES The group leases various manufacturing facilities, ofces, warehouses, equipment, and vehicles. Rental contracts are typically made for xed periods of 6 months to 10 years but may have extension or termina- tion options. Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract to the lease and non- lease components based on their relative stand-alone prices. Lease terms are negotiated on an individual basis and contain a wide range of differ- ent terms and conditions. The lease agreements do not impose any cove- nants other than the security interests in the leased assets that are held by the lessor. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: > xed payments (including in-substance xed payments), less any lease incentives receivable, > variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date, > amounts expected to be payable by the group under residual value guarantees, > the exercise price of a purchase option if the group is reasonably certain to exercise that option, and > payments of penalties for terminating the lease, if the lease term reects the group exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments should be discounted using: > the interest rate implicit in the lease; or > if the interest rate implicit in the lease cannot be readily deter- mined, the lessee's incremental borrowing rate. The interest rate implicit in the lease is likely to be like the lessee's in- cremental borrowing rate in many cases. This is because both rates, as they are dened in IFRS 16, take into account the credit standing of the lessee, the length of the lease, the nature and quality of the collateral provided and the economic environment in which the transaction oc- curs. Management has assessed that the xed coupon of the bond issued in July 2018, properly reects the incremental borrowing rate on a group level. The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and nance cost. The nance cost is charged to the income statement over the lease peri- od so as to produce a constant periodic rate of interest on the remain- ing balance of the liability for each period. For the classication in the statement of cash ow the interest payments on the lease liabilities fol- low the same principles as other interests. Right-of-use assets are measured at cost comprising the following: > the amount of the initial measurement of lease liability, > any lease payments made at or before the commencement date less any lease incentives received, > any initial direct costs, and > restoration costs. NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 7574 Right-of-use assets are generally depreciated over the shorter of the as- set's useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use as- set is depreciated over the underlying asset’s useful life. The group as- sesses its right-of-use assets for impairment after any signicant changes in operations as well as on an annual basis. This assessment of individual right-of-use assets for impairment is performed in addition to the group’s overall impairment testing. Payments associated with short-term leases of equipment and vehi- cles and all leases of low-value assets are recognized on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. The group uses tooling equipment which are owned by specic cus- tomers to produce parts for the customer. Under the new standard, these contracts do not constitute a lease as the group has no authority to direct the use of the equipment. Taxes on leases In most of the jurisdictions in which the group operates, tax deduc- tions are received for lease payments as they are paid, thus the tax base of the right-of-use asset as well as the lease liability is zero at the incep- tion of the lease. Subsequently, as the straight-line depreciation of the assets exceeds the rate at which the debts reduce, a net liability arises resulting in a deductible temporary difference on which a deferred tax asset is recognized if recoverable. IMPAIRMENT OF PP&E, INTANGIBLE ASSETS (OTHER THAN GOODWILL) AND RIGHT-OF-USE ASSETS The group tests on each reporting date whether these assets have suf- fered any impairment as well as if any indication arises, due to changes in circumstances, that the carrying amount is not fully recoverable. The recoverable amount of the asset is determined in order to assess the extent of the impairment loss (if any). When it is not possible to es- timate the recoverable amount of an individual asset, the group esti- mates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identied, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identied. The recoverable amount of an asset is the greater of its fair value less costs of disposal and its value-in-use. In assessing value-in-use, the estimated future cash ows are discounted to their present value using a post-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset for which the estimates of future cash ows have not been adjusted. If the recoverable amount of an asset or cash-generating unit is esti- mated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in income statement. When an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been de- termined had no impairment loss been recognized for the asset or cash-generating unit in prior years. ASSETS HELD FOR SALE AND DISPOSAL GROUPS HELD FOR SALE Non-current assets, or disposal groups comprising assets and liabili- ties, are classied as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use and they are available for immediate sale in their present condi- tion. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Once classied as held-for-sale, intangible assets and property, plant and equipment are no longer amortized or depreciated. The restatement of prior year’s balances in the statement of nancial position is not required by IFRS 5. DISCONTINUED OPERATION A discontinued operation is a component of the group’s business, that has either been disposed of or is classied as held for sale and: > represents a separate major line of business or geographic area of operations; > is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or > is a subsidiary acquired exclusively with a view to resale. Intercompany transactions between continuing and discontinued op- eration are eliminated against discontinued operation. Classication as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classied as held-for-sale. When an operation is classied as a discontinued operation, the comparative statement of comprehensive income is re-presented as if the operation had been discontinued from the start of the compara- tive year. INVENTORIES Inventories are stated at the lower of cost and net realizable value. Cost of inventories are determined on a rst-in, rst-out (FIFO) basis. Cost of raw materials comprise purchase price, inbound freight, and import duties. Cost of nished and semi-nished goods include variable pro- duction costs and xed costs allocated on normal capacity. Interest costs are not included. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Value adjustments are made for obso- lete materials and excess stock. FINANCIAL INSTRUMENTS Financial assets and nancial liabilities are recognized when a group entity becomes party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or is- sue of nancial assets and nancial liabilities (other than nancial as- sets and nancial liabilities at fair value through prot or loss) are add- ed to or deducted from the fair value of the nancial assets or liabilities, as appropriate, on initial recognition. Transaction costs directly attrib- utable to the acquisition of nancial assets or nancial liabilities at fair value through prot or loss are recognized immediately in the in- come statement. FINANCIAL ASSETS Subsequent measurement All recognized nancial assets are subsequently measured at either amortized cost or fair value based on the business model for managing the nancial assets and the contractual cash ow characteristics of the nancial assets. The group holds loans and receivables (including trade receivables and other receivables, bank balances and cash) within the business model that aims to collect the contractual cash ows. Consequently, these assets are subsequently measured at amortized cost using the ef- fective interest method, less any potential impairments. Amortized cost and effective interest method The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the rel- evant period. Impairment of nancial assets The group assesses on a forward-looking basis the expected credit loss- es associated with its debt instruments carried at amortized cost. For trade receivables the group applies the simplied approach which re- quires expected lifetime losses to be recognized from initial recogni- tion of the receivables. See note 19 for further details. Derecognition The group derecognizes a nancial asset when the contractual rights to the cash ow from the asset expire, or when it transfers the nancial asset and substantially all the risks and rewards of ownership of the asset to another party. FINANCIAL LIABILITIES The group recognizes and measures its nancial liabilities (including borrowings and trade and other payables) at amortized cost using the effective interest method. The effective interest method is a method of calculating the amor- tized cost of a debt instrument and allocating interest income over the relevant period. The effective interest rate is the rate that exactly dis- counts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the ex- pected life of the debt instrument, or, where appropriate, a shorter pe- riod, to the net carrying amount on initial recognition. TAXES PAYABLE AND DEFERRED TAXES The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it re- lates 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 tax payable is based on taxable prot for the year. Taxable prot differs from “prot before tax” because of items of income or ex- pense that are taxable or deductible in other years and items that are nev- er taxable or deductible. The group’s current income tax charge is calcu- lated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries in which the company’s subsidiaries operate. Deferred income tax is recognized, using the liability method, on tem - porary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated nancial statements, us- ing tax rates that have been enacted or substantively enacted by the bal- ance sheet date and are expected to apply when the deferred tax asset is realized or the deferred tax liability settled. Deferred tax assets are recognized only to the extent that it is proba- ble that future taxable prot will be available, against which the tempo- rary differences can be utilized. Deferred tax positions are netted within the same tax entity. EMPLOYEE BENEFITS – RETIREMENT BENEFIT COST AND TERMINATION BENEFITS Payment to dened contribution retirement benet plans are recog- nized as an expense when employees have rendered service entitling them to the contributions. For dened benet retirement plans, the cost of providing benets is determined using the projected unit credit method, with actuarial valua- tions being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable), and the return on plan assets (excluding interest), is reected immediately in the statement of nancial position with a charge or credit recognized in other comprehensive in- come in the period in which they occur. Remeasurement recognized in other comprehensive income is reected immediately in retained earn- ings and will not be reclassied to the income statement. Past service cost is recognized in the income statement when the amendment of a plan oc- curred. Net interest is calculated by applying the discount rate at the be- ginning of the period to the net dened benet liability or asset. Dened benet costs are categorized as follows: > service cost (including current service cost, past service cost, as well as gains and losses on curtailment and settlements), > net interest expense or income on benet obligations and/or plan assets, > remeasurement, and > administration costs. The group presents the rst two components of dened benet cost in the income statement in the line item salaries and social expenses. Curtailment gains and losses are accounted for as past service costs. The retirement benet obligation recognized in the statement of - nancial position represents the actual decit or surplus in the group’s de- ned benet plans. Any surplus resulting from this calculation is limited to the present value of any economic benets available in the form of re- funds from the plans or reductions in future contributions to the plans. A liability for a termination benet is recognized at the earlier of when the entity can no longer withdraw the offer or the termination benet and when the entity recognized any related restructuring costs. Pension plans in the group The company and its Norwegian subsidiary Kongsberg Automotive AS have dened benet and dened contribution pension plans. The plans were changed from dened benet to dened contribution in 2004. The dened benet plan was continued for employees who had already retired. Dened benet pension plans also exist in two subsidiaries in Germany (closed pension plans for both German subsidiaries), one subsidiary in France, and one subsidiary in Switzerland. The other subsidiaries have either no pension plan or dened contribution pension plans for em- ployees. NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 7776 The former early-retirement arrangement in Norway was replaced in 2011. Financing of the early-retirement arrangement is now done by an annual fee, which represents the nal cost for the companies included. The arrangement is dened as a multi-employer plan and is accounting for as a dened contribution pension plan. Norwegian employees are included in this scheme. The dened contribution plans in Norway have legislative limita- tions when it comes to maximum salary as calculation basis for tax de- ductibility. Norwegian employees with salaries that exceed this limit will be granted an addition to the pension that includes the salary above the maximum limit. This obligation will only materialize if the person is employed in the company at the time of retirement. This plan is accounted for as a dened benet pension plan. In the case of dened contribution plans, the contributions are rec- ognized as expense in the period in which they occurred. SHORT-TERM AND OTHER LONG-TERM EMPLOYEE BENEFITS A liability is recognized for benets employees are entitled to in respect of wages and salaries, annual leave, and sick leave for the period the re- lated service is rendered at the undiscounted amount of the benets expected to be paid in exchange for the service. Liabilities recognized in respect of short-term employee benets are measured at the undiscounted amount of the benets expected to be settled before twelve months after the end of the reporting period in exchange for the related service rendered during the nancial report- ing period. Liabilities recognized in respect of other long-term employee bene- ts are measured at the present value of the estimate future cash out- ow expected to be made by the group in respect of services provided by employees up to the reporting date. SHARE-BASED PAYMENTS Equity-settled share-based payments to employees and others provid- ing services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 20. In 2018 a new Long-Term Incentive Plan (LTIP) for management and key employees was implemented. The award consists of two equity in- struments, (i) Stock Options (SO) and (ii) Restricted Stock Units (RSU). Both instruments are based on a service condition to vest. The SO may be exercised at the earliest three years after the grant date. In addition, the SO is based on a performance condition, dened as the company's total shareholder return (TSR) measured relatively to a dened peer group. Regarding the RSU part, all RSU granted in 2021 and thereafter vest at the end of 3 years from grant date. There is no ob- ligation for the employer to settle the RSU in cash. Whereas that performance condition has been reected in the fair value of the SO, the service condition for the RSU must not be consid- ered when determining the fair value of the RSU. Instead, the number of shares expected to vest will be re-estimated on a regular basis. The fair value of the SO as of grant date was determined based on a Mon- te-Carlo-Simulation. The fair value of RSU was the share price at the grant date. As both instruments are based on a service condition to vest, the expense is recorded on a pro rata basis. In 2020 the Long-Term Incentive Plan was suspended. In 2021 the Long-Term Incentive Plan was granted again as per the approved reso- lution of the Annual General Meeting 2021. PROVISIONS Provisions are recognized when the group has a present obligation (le- gal or constructive) because of a past event. Moreover, it is probable that the group will be required to settle the obligation and a reliable es- timate of the amount of the obligation can be made. The amount recognized as a provision is the best estimate of the con- sideration required to settle the present obligation at the end of the re- porting period, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash ows estimated to settle the present obligation, its carrying amount is the present value of those cash ows (when the effect of the time value of money is material). When some or all of the economic benets required to settle a provi- sion are expected to be recovered from a third party, a receivable is recog- nized as an asset if it is virtually certain that reimbursement will be re- ceived, and the amount of the receivable can be measured reliably. Onerous contracts Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic bene- ts expected to be received from the contract. Restructuring provisions A restructuring provision is recognized when the group has developed a detailed formal plan for the restructuring and has raised a valid ex- pectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to thos e affected by it. The measurement of a restructuring provision in- cludes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the re- structuring and not associated with the ongoing activities of the entity. Warranties Provisions for expected cost of warranty obligations under local sale of goods legislation are recognized at the date of the sale of the relevant products, at management’s best estimate of the expenditure required to settle the group’s obligation. GOVERNMENT SUPPORT During the year Kongsberg applied for and received support from gov- ernments in several countries as a direct result of the COVID-19 pan- demic. These government support programs were set up to cover labor and other xed costs of production and were therefore reported direct- ly as a reduction of these expenses. The grants received are further de- tailed in notes 8 and 9. EQUITY INSTRUMENTS An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all its liabilities. Equity in- struments issued by the company are recognized at the proceeds re- ceived, net of direct issue costs. Repurchase of the company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in the in- come statement on the purchase, sale, issue or cancellation of the compa- ny’s own equity instruments. REVENUE RECOGNITION The group is in the business of providing products to the global vehicle industry. In doing so the group provides services covering engineering and tooling, as well as the manufacturing and delivery of automotive parts. Engineering services is development of customized designs in collaboration with the customer. Tooling is the production of equip- ment such as cutting tools and molds needed in manufacturing of parts. Tooling can be highly customized or developed to produce standardized products to a wider range of customers. Product parts are the continuous supply of automotive parts such as seat heaters, cables, driver control systems, and uid transfer systems. Engineering, tooling, and product sales may be contracted in separate agreements (concluded at different points in time) or may be contracted in one agreement. In either case any binding obligation for the customer with respect to parts is created only upon issuance of purchase orders. The group has determined that engineering, tooling, and the delivery of product parts are separate and distinct for the customer and therefore constitute separate performance obligations under IFRS 15, when the control is transferred. As is normal in the automotive industry, the cus - tomer does not guarantee to purchase a minimum quantity of parts. The prices agreed in the contracts for the single performance obligations are considered to be the stand-alone selling prices and are therefore used for recognizing revenue. Engineering Before manufacturing and sale of automotive parts start, the group normally undertakes application engineering to tailor the design of a part to customer needs. Where the control resulting from the engineer- ing is transferred to the customer, the group recognizes any considera- tion received from the customer as revenue. The group has determined that the performance obligation from the engineering is satised at a point in time and upon transfer of control over the results of the engi- neering. Transfer of control normally takes place when engineering is complete, and the tooling phase is initiated. Consideration received from the customer may be agreed as installments following the pro- gress of the engineering, as a lump sum payment upon completion of the engineering phase or may be explicitly included in the piece price over a certain specic sales volume. Consideration received in advance is deferred and recognized as contract liability. Any consideration to be received through the allocation to the piece price is recognized as reve- nue and accrued as receivable upon transfer of control to the customer if the consideration for the engineering is a guaranteed amount. Tooling After the engineering phase, and before manufacturing and sale of au- tomotive parts start, the group manufactures, or has manufactured, the tooling for use in the subsequent production of automotive parts. Where the control of tooling is transferred to the customer, the group recognizes any consideration received from the customer as revenue. The group has determined that the tooling performance obligation is satised at a point in time and upon nal approved transfer of control over the tooling to the customer. Transfer of control normally takes place in connection with start of production of the automotive parts. Consideration from the customer may be agreed as installments fol- lowing the manufacturing progress of the tooling, as a lump sum pay- ment upon nal approval of the tooling by the customer or may explic- itly be included in the piece price. Revenue is recognized at a point in time upon transfer of control and nal approval of the tooling by the customer. Consideration received in advance of transfer is deferred and recognized as contract liability. Any consideration to be received through piece price is recognized as revenue and accrued as receivable upon approval of the tooling by the customer if the consideration for the tooling is a guaranteed amount. Product sales The sale of manufactured automotive products is satised upon trans- fer of control of the automotive products to the customer, which in gen- eral is upon delivery to the customer. Each delivery is considered as a performance obligation that is satised at a point in time. Variable consideration Revenue will be recognized to the extent that it is highly probable that a signicant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable con- sideration is subsequently resolved. A few contracts with customers entitle the customer to price reduc- tions after exceeding dened volume thresholds per year. Such variable considerations are estimated based on continuously updated volume pro- jections. As it is common industry practice, most of the contracts have variable elements in the form of year-on-year price reductions or staggered re- bates. The group has determined that the price reductions reect the competition in the industry and therefore are not to be considered as a loyalty bonus. Revenue recognition is therefore based on the sales price for each delivery to the customer. Warranty obligations The group generally provides for warranties for general repairs and does not provide extended warranties in its contracts with customers. As such, most existing warranties will be assurance-type warranties under IFRS 15, which will continue to be accounted for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, consistent with its current practice. Incremental contract costs Incremental costs are costs that would not have been incurred had that individual contract not been obtained, e.g. nomination fees. These costs are recognized as an asset if they are expected to be recovered from the customer through the awarded contract. An asset recognized as part of the capitalization of contract costs is amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. In case of nomination fees, the recognized amortization for the period shall be pre- sented as a reduction of the external sales and booked on the appropriate income statement account. In application of its accounting policies the group is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities which are not readily available from other sourc- es. The estimates and judgments are based on historical experience and other factors, including expectations of future events that are deemed to be reasonable under the circumstances. Actual results may differ from these estimates. NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 7978 NOTE 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS NOTE 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED) NOTE 5 NEW STANDARDS AND INTERPRETATIONS NEW AND AMENDED STANDARDS AND INTERPRETATIONS The group applied for the rst-time certain amendments to the stand- ards, which are effective for annual periods beginning on or after Jan- uary 1, 2021. The group has not chosen to adopt early any standards, interpretations or amendments that have been issued but are not yet effective. NEW AND AMENDED IFRS STANDARDS THAT ARE EFFECTIVE FOR THE CURRENT YEAR The adoption of the following standards and interpretations has not had any material impact on the disclosures or on the amounts reported in these nancial statements: > Amendment to IFRS 16 concerning COVID-19-Related Rent Concessions beyond 30 June 2021, > Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2, > Amendments to IFRS 4 Insurance contracts – deferral of IFRS 9. NEW AND AMENDED STANDARDS AND INTERPRETATIONS NOT YET ADOPTED At the date of the authorization of these nancial statements, the group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective: > Amendments to IAS 37 – Onerous Contracts – Cost of Fullling a Contract (Effective from 01 January 2022) > Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use (Effective from 01 January 2022) > Annual Improvements to IFRS Standard 2018-2020 (Effective from 01 January 2022) > Amendments to IFRS 3 – Reference to the Conceptual Framework (Effective from 01 January 2022) > IFRS 17 Insurance Contracts and Amendments to IFRS 17 (Effective from 01 January 2023) > Amendments to IAS 1 – Classication of liabilities as current or non-current (Effective from 01 January 2023) > Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies (Effective from 01 January 2023) > Amendment to IAS 8 – Denition of Accounting Estimate (Effective from 01 January 2023) > Amendments to IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction (Effective from 01 January 2023) > Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Optional). The group does not expect that the adoption of the Standards listed above will have a material impact on the nancial statements of the group in future periods. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES The following are the critical judgments that the group has made in the process of applying the group’s accounting policies and that have the most signicant effect on the amounts recognized in the nan- cial statements. Lease extension and termination options The group has a number of leases with options to terminate early or ex- tend the term of the lease. When determining the lease liability of the group, the following principles were applied to options. No leases will be terminated early as the leases are necessary for regular operations of the group unless there are clear indications otherwise. All extension options on buildings and equipment used in production, sales and en- gineering have been included in the lease liability as these are core op- erations which require signicant investment to move and are there- fore reasonably certain to be kept in use for as long as possible under current conditions, unless there are clear indications otherwise. Leases used in administrative and supporting functions were determined to be more exible and were therefore individually assessed by manage- ment to determine if they met the reasonably certain criteria. Incremental borrowing rate used to discount the lease payments More than 95% of the value of right-of-use assets relate to buildings. As any lease building by any subsidiary (lessee) requires a guarantee from the group, the credit standing of any lessee does not exceed the group’s credit standing. In addition, considering the average of the remaining lease term of all leases, the xed coupon of the bond issued in 2018 was assessed to properly reect the incremental borrowing rate at the group level at the date of initial application of the IFRS 16 standard. A sensitivity analysis was performed on the lease portfolio to, and it was found that an increase in the IBR of 0.5% would result in a decrease in the group’s lease liability of approximately MEUR 3.4 with a decrease of 0.5% having an approximately MEUR 3.5 increase in the lease liabili- ty. Consolidation of SPE On 25 September 2020, the company entered into an accounts receiva- ble securitization program (the “Program”) where trade receivables generated by the company’s subsidiaries in the United States, Canada, Slovakia and Poland were sold to Kongsberg Automotive Finance B.V., a special purpose entity domiciled and incorporated in the Netherlands (the “SPE”). As sales of the company’s products to customers occurred, trade receivables were sold to the SPE at an agreed upon purchase price. Part of the consideration was received upfront in cash and part was deferred in the form of senior subordinated and junior subordinat- ed loans notes issued by the SPE to the parent company and Kongsberg Automotive AS. In determining whether to consolidate the SPE, the company has eval- uated whether it has control over the SPE, in particular, whether it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its pow- er over the investee. Receivables are sold to the SPE under a true sale opinion with legal in- terest transferred from the selling subsidiaries to the SPE. While the sale of receivables to the SPE is without credit recourse, the company continues to be exposed to the variable returns from its involvement in the SPE as it is exposed to credit risk as a subordinated lender to the SPE and it earns a variable amount of remuneration as master servicer of the receivables, as well as any excess return from additional service fee, including the loss or gain due to the effect of foreign exchange rates. As master servicer, company is responsible for the cash collection and management of any impaired receivables. Finacity, in addition to being intermediate subordinated lender, is the backup servicer and has the unilateral right to remove the company as master servicer and manage impaired receivables. Considering the risk exposure for each lender, it is not considered that Finacity has a risk exposure such as to be considered substantive. Therefore, the company is considered to have control over the SPE as it is exposed to variable returns and has the ability to affect those returns through its power over the investee. As a result of consolidating the SPE, the trade receivables purchased by the SPE are included in the company’s consolidated statement of - nancial position, along with loans (see Note 23) and cash held by the SPE. KEY SOURCES OF ESTIMATION UNCERTAINTY The following are the key assumptions concerning the future, and oth- er key sources of estimation uncertainty at the end of the reporting pe- riod that may have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nan- cial year. Impairment Determining whether goodwill and other assets are impaired requires an estimation of the value-in-use of the cash-generating units to which these assets have been allocated. The value-in-use calculation requires the group to estimate the future cash ows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash ows are less than expect- ed, a material impairment loss may arise. The cash-generating units in the group are the business units (Inte- rior segment: Light duty cables and Comfort systems; Powertrain and Chassis segment: Driveline and On Highway; Specialty Products seg- ment: Fluid Transfer System, Couplings, and Off-Highway). The fore- casts of future cash ows are based on the group’s best estimates of fu- ture revenues and expenses for the cash-generating units to which these assets have been allocated. A number of assumptions and esti- mates can have signicant effects on these calculations and include pa- rameters such as macroeconomic assumptions, market growth, busi- ness volumes, margins, and cost effectiveness. Changes to any of these parameters, following changes in the market conditions, competition, strategy or other factors, affect the forecasted cash ows and may re- sult in impairment. The carrying amount of goodwill as at December 31, 2021 was MEUR 84.1 (2020: MEUR 85.4). No impairment losses were recognized in 2021. Total impairment losses of MEUR 82.7 were recognized in 2020, out of which MEUR 58.7 was the impairment of the Goodwill. Details of the impairment test are set out in note 17. Recoverability of internally generated intangible assets – research and development expenditure Signicant investments are made towards product improvements and innovation to secure the group’s position in the market. Estimates Recoverability of internally generated intangible assets – research and development expenditure Signicant investments are made towards product improvements and innovation to secure the group’s position in the market. Estimates and judgments used when deciding how the costs should be accounted (charged to the income statement or capitalized as an asset) will have a signicant effect on the statement of comprehensive income and state- ment of nancial position. Internally generated intangible assets are subject to impairment reviews as described in note 3. The carrying amount of internally generated intangible assets for patents and development expenditure at December 31, 2021 was MEUR 7.8 (2020: MEUR 9.2). Refer to notes 3 and 14 for further information. Deferred tax asset Deferred income tax assets are recognized at MEUR 8.0 for tax losses carried forward only to the extent that realization of the related benet is probable. Several subsidiaries have losses carried forward on which they have recognized deferred tax assets. The probability of their realiza- tion is determined by applying a professional judgment to forecast cash ows. These cash ows are based on assumptions and estimates and, ac- cordingly, changes to the forecasts may result in changes to deferred tax assets and tax positions. Refer to note 11 for further information. Discount rate used to determine the carrying amount of the group’s dened benet obligation The Projected Benet Pension Obligation (PBO) for major pension plans is calculated by external actuaries using demographic assumptions based on the current population. A number of actuarial and nancial parameters are used as bases for these calculations. The most impor- tant nancial parameter is the discount rate. Other parameters such as assumptions as to salary increases and ination are determined based on the expected long-term development. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 8180 ENTITY NAME COUNTRY OF INCORPORATION OWNERSHIP OWNED BY PARENT COMPANY Kongsberg Automotive Ltda Brazil 100% x Kongsberg Inc Canada 100% Kongsberg Automotive (Shanghai) Co Ltd China 100% Kongsberg Automotive (Wuxi) Ltd China 100% x Shanghai Kongsberg Automotive Dong Feng Morse Co Ltd China 75% Shanghai Lone Star Cable Co Ltd China 100% Kongsberg Automotive SARL France 100% x Kongsberg Driveline Systems SAS France 100% Kongsberg Raufoss Distribution SAS France 100% SCI Immobilière La Clusienne France 100% Kongsberg 1 GmbH Germany 100% Kongsberg Actuation Systems GmbH Germany 100% Kongsberg Automotive GmbH Germany 100% Kongsberg Driveline Systems GmbH Germany 100% Kongsberg Actuation Systems Ltd Great Britain 100% Kongsberg Automotive Ltd Great Britain 100% CTEX Seat Comfort (Holding) Ltd Great Britain 100% x Kongsberg Power Products Systems Ltd Great Britain 100% Kongsberg Automotive Hong Kong Ltd Hong Kong 100% Kongsberg Interior Systems Kft Hungary 100% Kongsberg Automotive (India) Private Ltd India 100% x Kongsberg Automotive Driveline System India Ltd India 100% x Kongsberg Automotive Technology Center India Private Ltd India 100% Kongsberg Automotive Japan KK Japan 100% x Kongsberg Automotive Ltd Korea 100% x Kongsberg Automotive S. de RL de CV Mexico 100% Kongsberg Driveline Systems S. de RL de CV Mexico 100% Kongsberg Fluid Transfer Systems, S. de R.L. de CV Mexico 100% Kongsberg Interior Systems S. de RL de CV Mexico 100% Kongsberg Actuation Systems BV Netherlands 100% Kongsberg Automotive AS Norway 100% Kongsberg Automotive Holding 2 AS Norway 100% x Kongsberg Automotive Sp. z.o.o Poland 100% Kongsberg Automotive s.r.o Slovakia 100% Kongsberg Actuation Systems SL Spain 100% Kongsberg Automotive AB Sweden 100% Kongsberg Power Products Systems AB Sweden 100% KA Group AG Switzerland 100% Kongsberg Driveline Systems I LLC. US 100% Kongsberg Actuation Systems II LLC. US 100% Kongsberg Holding III Inc. US 100% Kongsberg Interior Systems II LLC. US 100% Kongsberg Automotive Inc. US 100% Kongsberg Power Products Systems I LLC. US 100% Kongsberg Automotive Finance BV Netherlands 100% NOTE 6 SUBSIDIARIES * Non-controlling interest refers to the 25% not owned of Shanghai Kongsberg Automotive Dong Feng Morse Co Ltd ** Special Purpose Entity (the “SPE”) – consolidation is based on the assessment of control according to IFRS 10 (for further information see note 4) NOTE 7 SEGMENT INFORMATION OPERATING SEGMENTS As of December 31, 2021, the group has three reportable segments, which are the strategic business segments: Interior, Powertrain & Chassis and Specialty Products. Following the signing of the Sale and Purchase Agreements in Octo- ber 2021, the Interior segment is classied as held for sale and as a dis- continued operation (see notes 12 and 13). The cable-related part of the Specialty Products segment is also included in the discontinued opera- tion. The comparative consolidated statement of comprehensive in- come has been re-presented to show the discontinued operation sepa- rately from continuing operation. The strategic business areas (segments) offer different products and services and are managed separately because they require different technology and marketing strategies. The group’s risks and rates of re- turn are affected predominantly by differences in the products manu- factured. The segments have different risk proles in the short-term perspective, but over a long-term perspective the proles are consid- ered to be the same. The group’s Executive Committee (led by the CEO) reviews the internal management reports from all strategic business areas on a monthly basis. Information regarding the results of each reportable segment is in- cluded below. Performance is measured by EBITDA and EBIT as includ- ed in the internal management reports issued on a monthly basis. Seg- ment EBIT is used to measure performance as management believes that such information is the most relevant in evaluating the results of the segments (also relative to other entities that operate within these industries). Sales transactions and cost allocations between the business units are based on the arm’s length principle. The results for each segment and the capital allocation elements comprise both items that are directly related to and recorded within the segment, as well as items that are allocated based on reasonable allocation keys. The following summary describes the operations of each of the group’s reportable segments (not classied as Discontinued operation as of December 31, 2021): POWERTRAIN & CHASSIS Powertrain & Chassis is a global Tier 1 supplier of driver control and driveline products to the passenger and commercial vehicle automo- tive markets. The portfolio includes custom-engineered cable controls and complete shift systems, clutch actuation systems, vehicle dynam- ics, shift cables, and shift towers for transmissions. SPECIALTY PRODUCTS The Specialty Products segment designs and manufactures uid han- dling systems for both the automotive and commercial vehicle mar- kets, couplings systems for compressed-air circuits in heavy-duty vehi- cles, operator control systems for power sports construction, agriculture, outdoor power equipment and power electronics products. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 8382 2021 MEUR INTERIOR PRODUCTS POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS TOTAL GROUP Product sales 314.7 414.0 408.1 0.0 1,136.7 Tooling 4.1 11.2 4.5 0.0 19.8 Engineering 3.2 4.0 1.2 0.0 8.4 Other income 1.0 0.7 0.2 0.0 1.9 Operating revenues 323.0 429.9 413.9 0.0 1,166.8 Revenues from discontinued operation 314.7 0.0 20.8 0.0 335.4 Revenues from continuing operation 8.4 429.9 393.2 0.0 831.4 EBITDA (11.4) 42.4 66.1 (25.7) 71.5 Depreciation (14.4) (15.4) (12.4) (1.6) (43.8) Amortization (0.2) (2.2) (0.3) (0.2) (2.9) Operating (loss) / prot (EBIT) (26.0) 24.8 53.4 (27.5) 24.7 Operating (loss) / prot (EBIT) from discontinued operation (27.4) 0.0 5.0 (0.4) (22.8) Operating (loss) / prot (EBIT) from continuing operation 1.4 24.8 48.4 (27.1) 47.5 Timing of revenue recognition Performance obligations satised at a point in time 8.4 429.9 393.2 0.0 831.4 Assets and liabilities Goodwill 0.0 16.9 67.3 0.0 84.2 Other intangible assets 0.0 5.0 0.8 0.1 5.9 Property, plant and equipment 0.7 68.1 70.8 1.1 140.7 Right-of-use assets 0.0 30.0 24.7 11.9 66.6 Inventories 0.8 38.4 55.0 0.0 94.1 Trade receivables 63.1 96.5 71.4 0.0 230.9 Other assets 0.1 2.1 6.6 0.0 8.8 Segment assets 64.6 256.9 296.4 13.1 631.1 Unallocated assets 115.5 115.5 Assets held for sale 223.4 0.0 6.6 8.2 238.2 Total assets 288.0 256.9 303.0 136.9 984.8 Trade payables 42.2 52.3 42.9 6.0 143.5 Non-current lease liabilities 0.0 31.5 24.1 11.1 66.7 Current lease liabilities 0.0 4.4 2.4 1.6 8.4 Segment liabilities 42.2 88.1 69.4 18.7 218.5 Unallocated liabilities 429.9 429.9 Liabilities directly associated with the assets held for sale 70.7 0.0 0.0 0.1 70.8 Total liabilities 112.9 88.1 69.4 448.8 719.3 Total equity 265.6 265.6 Total equity and liabilities 112.9 88.1 69.4 714.4 984.8 Capital expenditure (16.6) (10.3) (16.5) (0.3) (43.7) 2020 MEUR INTERIOR PRODUCTS POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS TOTAL GROUP Product sales 266.4 360.2 320.4 0.0 947.1 Tooling 3.0 6.1 2.3 0.0 11.4 Engineering 1.6 6.0 1.0 0.0 8.6 Other income 1.5 0.2 0.3 0.0 1.9 Operating revenues 272.5 372.5 324.0 0.0 968.9 Revenues from discontinued operation 264.4 0.0 17.6 0.0 282.0 Revenues from continuing operation 8.1 372.5 306.3 0.0 686.9 EBITDA (44.8) (13.0) 54.5 (23.0) (26.3) Depreciation (16.4) (14.6) (11.0) (1.7) (43.7) Amortization (0.3) (5.2) (0.4) (0.3) (6.2) Operating prot / (loss) – EBIT (61.4) (32.7) 43.1 (25.0) (76.2) Operating (loss) / prot (EBIT) from discontinued operation (61.5) 0.0 3.7 (0.4) (58.2) Operating (loss) / prot (EBIT) from continuing operation 0.1 (32.7) 39.4 (24.8) (18.0) Impairment losses, thereof: 0.0 (30.3) 0.0 0.0 (30.3) - allocated to Goodwill 0.0 (6.5) 0.0 0.0 (6.5) - allocated to assets other than Goodwill 0.0 (23.8) 0.0 0.0 (23.8) Timing of revenue recognition Performance obligations satised at a point in time 8.1 372.5 306.3 0.0 686.9 Assets and liabilities Goodwill 3.9 16.2 65.3 0.0 85.4 Other intangible assets 0.6 6.2 0.8 0.3 7.8 Property, plant and equipment 100.4 66.5 60.9 1.0 228.8 Right-of-use assets 32.7 26.7 24.2 10.8 94.3 Inventories 21.7 29.5 37.7 0.0 88.9 Trade receivables 36.0 101.3 47.6 53.0 237.9 Other assets 12.9 6.2 5.2 0.0 24.3 Segment assets 208.1 252.5 241.8 65.1 767.5 Unallocated assets 130.5 130.5 Total assets 208.1 252.5 241.8 195.6 898.0 Trade payables 39.7 55.9 28.5 13.6 137.8 Non-current lease liabilities 29.0 27.4 23.5 9.8 89.6 Current lease liabilities 4.7 5.4 2.1 1.7 13.8 Segment liabilities 73.4 88.7 54.1 25.1 241.2 Unallocated liabilities 411.3 411.3 Total liabilities 73.4 88.7 54.1 436.3 652.5 Total equity 245.5 245.5 Total equity and liabilities 73.4 88.7 54.1 681.9 898.0 Capital expenditure (27.9) (18.3) (14.2) (0.2) (60.6) NOTE 7 SEGMENT INFORMATION (CONTINUED) NOTE 7 SEGMENT INFORMATION (CONTINUED) For segment reporting purposes, the revenues are only external reve- nues; the related expenses are adjusted accordingly. The EBIT thus ex- cludes IC prot. * The column “Others” mainly includes corporate expenses and balance sheet items related to tax, pension, and nancing. See next section for specication of unallocated assets and liabilities. Balances in the Interior segment not classied as Assets held for sale and Discontinued operation relate to the Head- and Armrest business in Sweden as well as account receivables and account payables that were not part of the divestiture transactions. For segment reporting purposes, the revenues are only external reve- nues; the related expenses are adjusted accordingly. The EBIT thus ex- cludes IC prot. * The column “Others” mainly includes corporate expenses and balance sheet items related to tax, pension, and nancing. See next section for specication of unallocated assets and liabilities. Balances in the Interior segment not classied as Discontinued operation relate to the Head- and Armrest business in Sweden that was not part of the divestiture transactions. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 8584 NOTE 7 SEGMENT INFORMATION (CONTINUED) NOTE 7 SEGMENT INFORMATION (CONTINUED) Operating segments – reconciliation to total assets MEUR 2021 2020 Segment assets of reportable segments 618.0 702.4 Assets of segment Other 13.1 65.1 Assets held for sale 238.2 0.0 Unallocated assets include: Deferred tax assets 31.3 28.7 Other non-current assets 1.6 2.3 Cash and cash equivalents 51.3 67.4 Other current receivables 31.3 32.2 Total assets of the group 984.8 898.0 Sales to external customers by geographical location MEUR 2021 % 2020 % Europe 331.9 40% 289.3 42% North America 298.0 36% 250.5 37% South America 26.4 3% 14.4 2% Asia 170.8 20% 129.9 19% Other 4.3 1% 2.8 0% Revenues from continuing operation 831.4 686.9 Revenues from discontinued operation 335.4 282.0 Total operating revenues 1,166.8 968.9 Operating segments – reconciliation to total liabilities MEUR 2021 2020 Trade payables of reportable segments 137.5 124.2 Non-current lease liabilities of reportable segments 55.6 79.8 Current lease liabilities of reportable segments 6.8 12.1 Liabilities of segment Other 18.8 25.1 Liabilities directly associated with the assets held for sale 70.8 0.0 Unallocated liabilities include: Deferred tax liabilities 27.0 14.9 Retirement benet obligations 19.0 19.3 Interest-bearing loans and borrowings 272.1 273.4 Other non-current interest-free liabilities 1.0 2.0 Bank overdrafts 0.6 0.0 Other current interest-bearing liabilities 20.0 0.0 Current income tax liabilities 4.2 1.9 Other short term liabilities 86.0 99.7 Total liabilities of the group 719.3 652.5 Operating segments – geographical areas The following segmentation of the group’s geographical sales to exter- nal customers is based on the geographical locations of the customers. The segmentation of non-current assets is based on the geographical locations of its subsidiaries. Non-current assets comprise intangible assets (including goodwill), right-of-use assets and property, plant, and equipment. NOTE 8 SALARIES AND SOCIAL EXPENSES Specication of salaries and social expenses as recognized in the statement of comprehensive income MEUR 2021 2020 (RESTATED) Wages and salaries 165.6 149.1 Social security tax 27.8 26.5 Pension cost, dened benet plans 0.8 0.3 Pension cost, dened contribution plans 11.8 8.9 Other employee-related expenses 29.3 27.0 Government support – wages and salaries (2.4) (8.5) Total salaries and social expenses 232.9 203.3 Major customers Included are revenues from continuing operations of MEUR 83.2 (2020: MEUR 59.5) in 2021 which arose from sales to the group’s largest cus- tomer. No other single customer contributed 10% or more to the group’s revenues from continuing operations in 2021. In 2020, the group had no customer accounting for more than 10% of total revenues excluding the revenues re-classied as discontinued operation. * Other employee-related expenses include bonus costs. As of December 31, 2021, the group had 11,234 employees, while as of December 31, 2020, the number of employees was 10,908. With em- ployees from discontinued operation being excluded the total number of employees amounted to 5,624 as of December 31, 2021. Intangible assets, PP&E, and RoU by geographical location MEUR 2021 % 2020 % Europe 167.1 56% 250.1 60% North America 93.4 32% 115.1 27% South America 3.0 1% 2.4 1% Asia 33.8 11% 48.7 12% Total Intangible assets, PP&E and RoU – Continuing operation 297.3 416.3 Total Intangible assets, PP&E and RoU – Classied as Assets held for sale 150.3 Total Intangible assets, PP&E and RoU 447.6 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 8786 NOTE 9 OTHER OPERATING EXPENSES Specication of other operating expenses as recognized in the statement of comprehensive income MEUR 2021 2020 (RESTATED) Operating expenses Freight, packaging and customs duties charges 42.3 32.5 Facility costs 9.4 8.1 Consumables 25.1 23.1 Repairs and maintenance 11.9 10.3 Service costs / External services 8.4 8.5 Other costs 11.1 11.6 Government support – rent and other costs 0.0 (0.3) Administrative expenses Utilities 1.3 0.1 Service costs / External services 26.7 19.8 Consumables 5.3 4.6 Travel costs 1.0 1.3 Other costs 0.1 6.7 Total other operating expenses 142.5 126.2 NOTE 10 FINANCIAL ITEMS Specication of nancial items as recognized in the statement of comprehensive income MEUR 2021 2020 (RESTATED) Foreign currency gains * 12.0 0.0 Interest income 0.1 0.1 Total nancial income 12.1 0.1 Interest expense (15.0) (15.6) IFRS 16 interest expense (3.9) (3.7) Foreign currency losses * 0.0 (23.3) Account receivables securitization – expense (1.2) (0.4) Other nancial expenses (1.5) (2.7) Total nancial expenses (21.6) (45.6) Total nancial items (9.5) (45.5) * Includes unrealized currency gain of MEUR 11.5 and realized currency gain of MEUR 0.5 (2020: realized currency loss of MEUR 1.4 and unrealized currency loss of MEUR 21.9). NOTE 11 TAXES Tax recognized in statement of income The major components of income tax expense: MEUR 2021 2020 (RESTATED) Current tax on prots for the year * (11.5) (10.0) Adjustments in respect of prior years – current tax 2.3 3.6 Total current tax (9.2) (6.4) Current year change in deferred tax (3.5) 11.4 Impact of changes in tax rates (1.2) 0.0 Adjustments in respect of prior years – deferred tax 4.4 0.0 Total change in deferred tax (0.3) 11.4 Total income tax (expense) / credit (9.5) 5.0 Tax recognized in other comprehensive income MEUR 2021 2020 Tax on translation differences 0.0 1.4 Tax on pension remeasurement 0.0 0.0 Tax in other comprehensive income 0.0 1.4 Reconciliation of Norwegian nominal statutory tax rate to effective tax rate MEUR 2021 2020 (RESTATED) Prot / (loss) before taxes 38.0 (63.3) Expected tax calculated at Norwegian tax rate (8.2) 13.7 Goodwill impairment 0.0 (1.4) Other permanent differences / currency (0.7) (0.6) Effect of withholding tax (2.5) (0.6) Foreign tax rate differential 0.2 (0.8) Impact of changes in tax rates and legislation (1.2) 0.0 Losses not recognized as deferred tax assets (3.7) (6.0) Write down of deferred tax assets 0.0 (0.9) Adjustments in respect of prior years and other adjustments 6.6 1.6 Income tax (expense) / credit (9.5) 5.0 Average effective tax rate 25% 8% * Includes withholding tax. Further details can be found in table below. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 8988 NOTE 11 TAXES (CONTINUED) NOTE 11 TAXES (CONTINUED) Tax recognized in the Statement of Financial Position Current tax liability MEUR 2021 2020 Current income tax receivables * 2.4 0.4 Current income tax liabilities (4.3) (1.9) Total (1.9) (1.5) Deferred tax MEUR 2021 2020 Deferred tax assets 31.3 28.7 Deferred tax liabilities (27.0) (14.9) Total 4.3 13.8 Specication of deferred tax assets / (liabilities) recognized in the Statement of Financial Position MEUR OPENING BALANCE CHARGED TO INCOME CHANGES IN RATE OCI FX DIFF AND RECLASSIFI- CATION DUE TO GROUP CONTRIBUTION CLOSING BALANCE Property, plant and equipment 1.2 (3.3) (0.1) 0.0 (0.1) (2.3) Intangible assets (2.8) (3.2) 0.0 0.0 (0.3) (6.2) Leases 1.8 0.1 0.0 0.0 0.0 1.9 Retirement benets obligations 3.5 0.0 0.0 0.0 0.0 3.5 Losses carried forward 6.7 3.4 0.0 0.0 (2.1) 8.0 Trade receivables 3.8 0.6 (0.1) 0.0 0.2 4.5 Accrued expenses 2.5 1.3 (0.5) 0.0 0.3 3.6 Accrued interest 1.4 0.0 0.0 0.0 0.1 1.6 Unrealized exchange differences on long-term receivables / payables (19.0) (2.7) 0.0 0.0 (1.0) (22.7) Other temporary differences 8.0 4.6 (0.5) 0.0 0.3 12.4 Net deferred tax assets / (liabilities) 7.2 0.9 (1.2) 0.0 (2.6) 4.3 MEUR OPENING BALANCE CHARGED TO INCOME CHANGES IN RATE OCI FX DIFF AND RECLASSIFI- CATION DUE TO GROUP CONTRIBUTION CLOSING BALANCE Property, plant and equipment (2.2) 3.4 0.0 0.0 0.0 1.2 Intangible assets (4.6) 1.6 0.0 0.0 0.2 (2.8) Leases 0.6 1.2 0.0 0.0 0.0 1.8 Retirement benets obligations 3.5 0.0 0.0 0.0 0.0 3.5 Losses carried forward 5.6 1.4 0.0 0.0 (0.3) 6.7 Trade receivables 2.2 1.8 0.0 0.0 (0.1) 3.8 Accrued expenses 1.6 1.0 0.0 0.0 (0.1) 2.5 Accrued interest 5.4 (3.8) 0.0 0.0 (0.2) 1.4 Unrealized exchange differences on long-term receivables / payables (23.8) 3.3 0.0 0.0 1.5 (19.0) Other temporary differences 5.6 1.2 0.0 1.4 (0.2) 8.0 Net deferred tax assets / (liabilities) (6.1) 11.1 0.0 1.4 0.8 7.2 Measurement of deferred taxes Deferred tax assets and liabilities are measured at the tax rates enacted. Limitation and assumptions for the utilization of losses carried forward and deferred tax assets The carrying amount of deferred tax assets is reviewed at each balance sheet date and recognized for unused tax losses and unused tax credits to the extent that future taxable prot will be available against which the unused tax losses and unused tax credits can be utilized. As part of the review, the group conducts comprehensive analyses of future prof- its within the legal entity as well as considering possibilities for utili- zation within the group. As at the year-end, the estimates indicated that tax losses at MEUR 18.3 will not be deductible within the foresee- able future. Tax positions not recognized MEUR 2021 2020 (RESTATED) Tax positions not recognized 18.3 20.3 Total 18.3 20.3 Remaining lifetime of tax losses (net tax value) MEUR 2021 2020 (RESTATED) Less than ve years 2.5 1.2 5–10 years 4.7 3.6 10–15 years 0.0 0.5 Without time limit 18.4 20.6 Total 25.6 25.9 * Included under “Other current assets”. Balances as of December 31, 2021, do not include tax positions classied as held for sale in contrast to balances as of December 31, 2020. Due to Norwegian group contribution, there is a reclassication between current tax and deferred tax of 2.5 MEUR. Balances as of December 31, 2021, do not include tax positions classied as held for sale in contrast to balances as of December 31, 2020. 2021 2020 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 9190 MEUR INTERIOR COMFORT SYSTEM LIGHT DUTY CABLE 2021 INTERIOR COMFORT SYSTEM LIGHT DUTY CABLE 2020 Operating revenues 259.8 75.6 335.4 213.6 68.4 282.0 Operating expenses Raw material expenses (157.7) (39.2) (196.9) (108.3) (34.0) (142.3) Change in inventories 9.1 5.0 14.1 0.6 2.0 2.6 Salaries and social expenses (72.0) (20.9) (92.9) (61.8) (17.6) (79.5) Other operating expenses (46.0) (21.9) (67.9) (37.3) (14.9) (52.2) Depreciation (12.4) (2.1) (14.5) (13.8) (2.4) (16.2) Amortization (0.2) (0.0) (0.2) (0.2) (0.0) (0.3) Impairment losses 0.0 0.0 0.0 (19.4) (33.0) (52.4) Total operating expenses (279.2) (79.0) (358.2) (240.3) (99.9) (340.3) Operating prot / (loss) (19.4) (3.4) (22.8) (26.7) (31.5) (58.2) Financial items Financial income 0.0 0.1 Financial expenses (2.6) (1.6) Net nancial items (2.6) (1.5) Prot / (loss) before taxes (25.4) (59.7) Income taxes 2.4 0.2 Loss from discontinued operation (23.0) (59.5) Translation differences on foreign discontinued operation 5.6 (12.3) Basic earnings per share, Euros (0.02) (0.11) Diluted earnings per share, Euros (0.02) (0.11) MEUR INTERIOR COMFORT SYSTEM LIGHT DUTY CABLE 2021 INTERIOR COMFORT SYSTEM LIGHT DUTY CABLE 2020 Net cash ow from (used by) operating activities (15.7) (4.9) (20.6) 12.0 4.3 16.3 Net cash ow used by investing activities (14.5) (2.1) (16.6) (26.6) (1.3) (27.9) Net cash ow used by nancing activities (7.2) (1.9) (9.1) (5.9) (1.5) (7.3) Net cash ows for the year (37.4) (8.9) (46.3) (20.5) 1.6 (18.9) NOTE 12 DISCONTINUED OPERATION NOTE 12 DISCONTINUED OPERATION (CONTINUED) Description On October 28, 2021, two separate Sale and Purchase Agreements were signed to sell the Interior segment in its entirety, comprising the Interior Comfort System business and the Light Duty Cable business with the ca- ble-related part of Off-Highway business. As these businesses together represent a separate major line of Kongsberg Automotive group, they are presented as discontinued operation. The loss from the discontinued operation of MEUR 23.0 (2020: loss of MEUR 59.5) is attributable entirely to the owners of the company. Results of discontinued operation Cash ows from (used by) discontinued operation * includes the cable-related part of the Off-Highway business. * includes the cable-related part of the Off-Highway business. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 9392 NOTE 13 ASSETS AND LIABILITIES OF DISCONTINUED OPERATION CLASSIFIED AS HELD FOR SALE NOTE 14 INTANGIBLE ASSETS MEUR GOODWILL CUSTOMER RELATIONSHIPS PATENTS AND DEVELOPMENT SOFTWARE AND OTHER TOTAL Cost 170.7 96.0 52.6 15.2 334.5 Accumulated amortization (21.6) (95.8) (43.9) (13.0) (174.3) Book value at 31.12.2019 149.1 0.2 8.7 2.2 160.2 Cost at 01.01.2020 170.7 96.0 52.6 15.2 334.6 Additions 0.0 0.0 4.0 0.3 4.3 Disposals accumulated cost 0.0 0.0 0.0 (0.1) (0.1) Translation differences on cost (8.6) (5.3) (1.4) (0.7) (16.0) Acquisition costs at 31.12.2020 162.1 90.7 55.2 14.8 322.8 Accumulated amortization at 01.01.2020 (21.6) (95.8) (43.9) (13.0) (174.3) Amortization & Write-off of tangible assets 0.0 (0.1) (4.9) (1.2) (6.2) Impairment loss (58.7) 0.0 (1.3) (0.4) (60.3) Disposals accumulated amortization 0.0 0.0 0.0 0.1 0.1 Translation differences on amortization 3.6 5.3 1.2 1.1 11.2 Accumulated amortization at 31.12.2020 (76.7) (90.6) (48.8) (13.4) (229.6) Cost 162.1 90.7 55.2 14.8 322.8 Accumulated amortization / impairment (76.7) (90.6) (48.8) (13.5) (229.6) Book value at 31.12 2020 85.4 0.1 6.4 1.3 93.2 Cost at 01.01.2021 162.1 90.7 55.2 14.8 322.8 Additions 0.0 0.0 1.0 0.5 1.5 Disposals accumulated cost 0.0 0.0 0.0 (0.4) (0.4) Reclassication to assets held for sale (56.1) (21.6) (6.0) (3.1) (86.8) Translation differences 6.0 4.6 2.0 0.8 13.4 Acquisition costs at 31.12.2021 112.0 73.7 52.2 12.6 250.5 Accumulated amortization at 01.01.2021 (76.7) (90.6) (48.8) (13.4) (229.6) Amortization 0.0 (0.1) (2.2) (0.6) (2.9) Disposals accumulated amortization 0.0 0.0 0.0 0.2 0.2 Reclassication to assets held for sale 51.1 21.6 5.3 2.5 80.5 Translation differences (2.3) (4.5) (1.6) (0.2) (8.6) Accumulated amortization at 31.12.2021 (27.9) (73.6) (47.3) (11.6) (160.5) Cost 112.0 73.7 52.2 12.6 250.5 Accumulated amortization / impairment (27.9) (73.6) (47.3) (11.6) (160.5) Book value at 31.12 2021 84.1 0.1 4.9 1.0 90.0 MEUR INTERIOR COMFORT SYSTEM LIGHT DUTY CABLE 2021 Assets Non-current assets Deferred tax assets 11.8 0.0 11.8 Intangible assets including Goodwill 4.6 1.8 6.4 Property, plant and equipment 97.9 8.9 106.9 Right-of-use assets 32.9 4.1 37.0 Other non-current assets 6.3 0.5 6.8 Total non-current assets 153.5 15.3 168.9 Current assets Inventories 24.3 12.3 36.6 Trade and other receivables 1.1 15.2 16.3 Cash and cash equivalents 0.0 6.9 6.9 Other current assets 7.0 2.5 9.5 Total current assets 32.4 36.9 69.3 Total Assets held for sale 185.9 52.3 238.2 Liabilities Non-current liabilities Non-current lease liabilities 29.2 1.9 31.1 Total non-current liabilities 29.2 1.9 31.1 Current liabilities Current lease liabilities 4.2 1.7 5.9 Current income tax liabilities 0.8 0.0 0.8 Trade and other payables 20.1 12.9 33.0 Total current liabilities 25.1 14.6 39.7 Total Liabilities directly associated with the assets held for sale 54.3 16.5 70.8 Description The assets and liabilities of the Interior Comfort System business, the Light Duty Cable business and the cable-related part of Off-Highway business are available for immediate sale in its present condition sub- ject only to terms that are usual and customary for sales of such trans- actions and their sale is highly probable. Thus, the assets and liabilities are presented as a held for sale. Impairment test The assets and liabilities held for sale are measured at the lower of its carrying amount and fair value less costs to sell. As Interior Comfort Systems and Light Duty Cable businesses are expected to be fully dis- posed of within Q1 2022, the fair value of the assets and liabilities clas- sied as held for sale was determined based on the proceeds to be re- ceived from the disposal as agreed in the Sale and Purchase Agreements signed on October 28, 2021. As the consideration to be received less costs to sell exceeds the carrying value, no impairment is needed. Assets and liabilities held for sale As of December 31, 2021, the discontinued operation comprised the fol- lowing assets and liabilities: * includes the cable-related part of the Off-Highway business. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 9594 Internally developed intangible assets MEUR 2021 2020 Internally developed intangible assets at 01.01.2021 9.2 8.3 Additions during the year 0.2 3.4 Amortization / impairment (2.3) (2.3) Translation differences 0.7 (0.2) Internally developed intangible assets at 31.12.2021 7.8 9.2 Non-capitalised development costs net of customer contribution (45.2) (44.1) Amortization of internally developed intangible assets (2.3) (2.3) Total recognized development cost in the reporting period * (47.5) (46.4) Cash investment in development (45.5) (47.6) The internally developed intangible assets include capitalized costs re- lated to the development of new products. These assets are included in “Patents and Development”. NOTE 14 INTANGIBLE ASSETS (CONTINUED) NOTE 15 PROPERTY, PLANT & EQUIPMENT (PP&E) * Net amount, gross amount MEUR 55.9 in 2021 (2020: MEUR 54.9). MEUR LAND BUILDINGS EQUIPMENT TOTAL Cost 4.5 29.7 596.1 630.3 Accumulated depreciation 0.0 (21.9) (376.3) (398.2) Book Value at 31.12 2019 4.5 7.8 219.8 232.1 Cost at 01.01.2020 4.5 29.7 596.1 630.3 Additions 0.0 0.3 59.4 59.7 Disposals accumulated cost (0.9) (1.1) (7.9) (9.9) Translation differences 0.0 (0.9) (31.5) (32.4) Acquisition costs at 31.12.2021 3.6 28.0 616.1 647.7 Accumulated depreciation at 01.01.2020 0.0 (21.9) (376.3) (398.2) Depreciation 0.0 (1.1) (29.1) (30.2) Impairment loss (1.2) (0.6) (15.1) (16.9) Disposals accumulated depreciation 0.0 0.9 7.2 8.1 Translation differences 0.0 0.7 17.6 18.3 Accumulated depreciation at 31.12.2020 (1.2) (22.0) (395.7) (418.9) Cost 3.6 28.0 616.1 647.7 Accumulated depreciation (1.2) (22.0) (395.7) (418.9) Book Value at 31.12 2020 2.4 6.0 220.4 228.8 Cost at 01.01.2021 3.6 28.0 616.1 647.7 Additions 0.0 0.2 42.0 42.2 Disposals accumulated cost (0.2) (0.1) (10.0) (10.4) Reclassication to assets held for sale (0.3) (0.9) (204.0) (205.2) Translation differences 0.0 0.9 23.9 24.8 Acquisition costs at 31.12.2021 3.1 28.0 468.0 499.1 Accumulated depreciation at 01.01.2021 (1.2) (22.0) (395.7) (418.9) Depreciation 0.0 (0.8) (30.7) (31.5) Disposals accumulated depreciation 0.0 0.2 8.7 8.8 Reclassication to assets held for sale 0.0 0.9 97.5 98.4 Translation differences 0.0 (0.6) (14.6) (15.2) Accumulated depreciation at 31.12.2021 (1.2) (22.3) (334.8) (358.4) Cost 3.1 28.0 468.0 499.1 Accumulated depreciation (1.2) (22.3) (334.8) (358.4) Book Value at 31.12 2021 1.9 5.7 133.1 140.7 Impairment testing See note 17 for information related to impairment testing of intangible assets, PP&E and right-of-use assets. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 9796 Undiscounted lease commitments in 2021 do not relate to RoU assets classied as Assets held for sale as of December 31, 2021. In 2021, the group had total cash outows of approximately MEUR 19.7 for all leases, including non-material leases which are not part of the group’s IFRS 16 reporting. NOTE 16 RIGHT-OF-USE ASSETS NOTE 16 RIGHT-OF-USE ASSETS (CONTINUED) Lease liabilities MEUR 2021 2020 Non-current lease liabilities 66.6 89.6 Current lease liabilities 8.4 13.8 Total lease liabilities 75.0 103.4 Maturity analysis – contractual undiscounted cash ows MEUR 2021 2020 Within one year 12.0 17.9 One to ve years 42.0 54.8 More than ve years 44.4 59.3 Total undiscounted lease commitments 98.4 132.0 Amounts recognized in the statement of comprehensive income relating to leases MEUR 2021 2020 (RESTATED) Interest expense on lease liabilities (included in nancial items) (3.9) (3.7) Depreciation of Right-of-use assets (8.4) (8.7) Expenses relating to low value and short-term leases (0.4) (0.7) Total expenses relating to leases (12.8) (13.1) MEUR BUILDINGS EQUIPMENT TOTAL Cost 113.5 4.4 117.9 Accumulated depreciation (13.2) (0.9) (14.1) Book Value at 31.12 2019 100.3 3.5 103.8 Cost 01.01.2020 113.5 4.4 117.9 Additions 17.3 0.5 17.8 Lease terminations (1.5) (0.8) (2.3) Translation differences (7.8) (0.1) (7.9) Acquisition costs at 31.12.2020 121.5 4.0 125.5 Accumulated depreciation 01.01.2020 (13.2) (0.9) (14.1) Depreciation (12.8) (0.7) (13.5) Impairment loss (4.3) (1.2) (5.6) Lease terminations 1.1 0.0 1.1 Translation differences 0.9 0.0 1.0 Accumulated depreciation 31.12.2020 (28.3) (2.8) (31.2) Cost 121.5 4.0 125.5 Accumulated depreciation (28.3) (2.8) (31.2) Book Value at 31.12 2020 93.2 1.1 94.3 Cost at 01.01.2021 121.5 4.0 125.5 Additions 17.3 2.6 19.8 Lease terminations (3.8) (0.1) (3.8) Reclassication to assets held for sale (47.8) (1.0) (48.8) Translation differences 4.6 0.1 4.7 Acquisition costs at 31.12.2020 91.8 5.6 97.4 Accumulated depreciation at 01.01.2021 (28.3) (2.8) (31.2) Depreciation (11.6) (0.7) (12.3) Disposals accumulated depreciation 2.0 0.0 2.0 Reclassication to assets held for sale 11.4 0.3 11.7 Translation differences (1.1) 0.0 (1.1) Accumulated depreciation at 31.12.2021 (27.6) (3.2) (30.8) Cost 91.8 5.6 97.4 Accumulated depreciation (27.6) (3.2) (30.8) Book Value at 31.12 2020 64.2 2.3 66.6 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 9998 NOTE 18 INVENTORIESNOTE 17 IMPAIRMENT LOSSES The group has performed impairment tests on the carrying values of all intangible assets (including goodwill), property, plant & equipment, and Right-of-use assets in accordance with the requirements of IAS 36. The group used the cash-generating unit’s value-in-use to determine the recoverable amount. Value in use (VIU) was derived as the net pres- ent value (NPV) of projected future cash ows for each of the cash-gen- erating units (CGUs). The business units Interior Comfort Systems, Light Duty Cables, Driveline, On-highway, Couplings, Fluid Transfer Systems and Off-high- way were identied as the respective CGUs. CASH FLOW PROJECTIONS AND ASSUMPTIONS The model was based on a three-year projection of discounted cash ows plus a terminal value (calculated using Gordon’s growth model with the perpetual growth of 2%). The net discounted cash ows were calculated before tax. The projected cash ows were derived from the business plans set up by the management of the business units and reviewed and nally approved by the top management in the course of the budget and stra- tegic planning process covering the period until 2023. The business plans were based on the group’s strategic three-year plan (STP), adjust- ed for relevant recent changes in internal short-term forecasts and market data. Adjustments were made to exclude signicant cash ows related to future restructuring, investments, or enhancements. As- sumptions on labor ination, ranging from 2% to 7% depending on the region, as well as on raw material price development increasing by 3%, were provided centrally. The input data on developments of the rele- vant markets were taken from well-known external sources, such as LMC Automotive, IHS and customers, in addition to all relevant inter- nal information such as change in orders, customer portfolio, tment rate for products, geographical development, market shares, etc. DISCOUNT RATE ASSUMPTIONS The required rate of return was calculated using the WACC method. The input data of the WACC was chosen by an individual assessment of each parameter. Information from representative sources, peer groups was used to determine the best estimate. The WACC was calculated to be 10.5% pre-tax. The same WACC was used for all CGUs, the reason be- ing that the long-term risk proles of the CGUs are not considered to be signicantly different. The key parameters were set to reect the un- derlying long-term period of the assets and time horizon of the forecast period of the business cases. The following parameters were applied: > Risk-free interest rate: 0.87%. Based on 10-year governmental Eurobond rate and US treasury 10-year yield, weighted 50/50. > Beta: 1.91. Based on an estimated unlevered beta for the automotive industry levered to the group’s structure. > Market Risk Premium: 7.40% (post tax). Based on market sources. > Cost of debt: based on the market value of the group’s debt. The discount rate has been adjusted to reect the current market as- sessment of the risks specic to the group’s business activity and was estimated based on the weighted average cost of capital for the group. Further changes to the discount rate may be necessary in the future to reect changing risks for the industry and changes to the weighted av- erage cost of capital. SENSITIVITY ANALYSIS AND ALLOCATION OF IMPAIRMENT AS OF 31.12.2021 The value in use depends on the free cash ow and discount rate. The cash ow will uctuate in relation to changes in price, currency, and volume. Business awards, success of the car model, product tment rates, government regulations, and economic conditions, in turn inu- ence the volume. > On-Highway: The value-in-use is signicantly higher than the carrying value. The sensitivity analysis indicates a negative headroom only if discount rate increased by 4 percentage points and discounted cash ow was reduced by minimum 20%. Hence, no reasonable change in any of the key assumptions would cause the unit’s recoverable amount to be lower than the carrying value. > Driveline: The impairment test showed that the Driveline as a CGU is highly sensitive to any changes in key assumptions, meaning any signicant declines in free cash ow and other key assumptions would trigger a need for an impairment. However, reasonable increase of free cash ow and favorable changes in key assumptions combined with WACC closer to historic levels would lead to partial reversal of impairment of assets other than the Goodwill booked in Q2 2020. Management is condent that DRL’s carrying value is properly supported by the group’s strategic three-year plan (STP) and assumptions used. > Couplings: The value-in-use is signicantly higher than the carrying value. No reasonable change in any of the key assumptions would cause the recoverable amount to be lower than the carrying value. > Fluid Transfer Systems: The value-in-use is considerably higher than the carrying value. No reasonable change in any of the key assumptions would cause the recoverable amount to be lower than the carrying value. > Off-Highway: No reasonable change in any of the key assumptions would cause the recoverable amount to be lower than the carrying value. Specication of inventories MEUR 2021 2020 Raw materials 60.1 55.3 Work in progress 19.0 14.3 Finished goods 14.9 19.3 Total lease liabilities 94.1 88.9 Carrying value of the Goodwill per business unit POWERTRAIN AND CHASSIS SPECIALTY PRODUCTS MEUR ON-HIGHWAY DRIVELINE COUPLINGS FLUID TRANSFER SYSTEMS OFF-HIGHWAY TOTAL - Goodwill Gross book value as at 01.01.2021 16.2 6.4 0.2 50.1 15.1 88.0 Accumulated impairment as of 01.01.2021 0.0 (6.4) 0.0 0.0 (1.2) (7.6) Translation adjustments 0.7 (0.0) 0.0 3.3 (0.2) 3.8 Net book value as at 31.12.2021 16.9 0.0 0.2 53.4 13.7 84.2 Provision for slow-moving and obsolete inventory MEUR 2021 2020 Book value at 01.01. (15.6) (10.3) Reclassication to Assets held for sale 2.7 0.0 Write-down (2.6) (7.2) Products sold (previously written down) 0.7 0.0 Reversal of prior write-downs 2.3 1.3 Foreign currency effects (0.4) 0.5 Book value at 31.12. (12.9) (15.6) Values displayed above are net of provisions for slow-moving and obsolete inventory shown below. Assets as of December 31, 2021 do not include assets classied as held for sale (see Note 13). KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 101100 NOTE 19 TRADE AND OTHER RECEIVABLES NOTE 19 TRADE AND OTHER RECEIVABLES (CONTINUED) NOTE 20 SHARE CAPITAL Other current assets MEUR 2021 2020 Tooling for sale 6.5 11.8 Customer development for sale 0.1 2.3 Prepayments 11.6 9.3 Capitalized nancing costs – current 0.7 0.7 Contract costs – current 0.2 0.5 Total other current assets 19.1 24.5 Receivables by currency MEUR 2021 2020 CNY 72.9 75.4 EUR 70.8 90.4 USD 56.2 62.9 NOK 7.9 10.5 Other 42.2 21.9 Total receivables 250.0 261.1 2021 2020 Number of shares in issue at 01.01. 10,548,606,433 447,991,012 New shares issued 10,100,615,421 Reverse split of shares (9,493,045,790) Total other current assets 1,055,560,643 10,548,606,433 Of these, treasury shares 1,826,902 37,206,972 Specication of trade and other receivables MEUR 2021 2020 Trade receivables 230.9 237.9 Public duties 9.5 11.8 Account receivables 2.5 1.3 Other short-term receivables 7.1 10.1 Total trade and other receivables 250.0 261.1 Other non-current assets MEUR 2021 2020 Long-term receivables 1.1 2.4 Contract costs – non-current 0.8 6.4 Grants and others 1.1 1.1 Capitalized nancing costs – non-current 0.5 1.2 Total other non-current assets 3.5 11.1 Trade receivables maturity The provision for bad debt has increased by MEUR 0.4 compared to 31.12.2020 (excluding the provision reclassied together with the ac- count receivables as held for sale). Trade receivables are subject to con- stant monitoring. The impairment of receivables is reected through provision for bad debt. Monthly assessments of loss risk, including for- ward-looking information, are performed and corresponding provi- sions are made at the entity level. The provision for bad debt reects the total expected loss risk on the group’s trade receivables. The oldest trade receivables, overdue > 100 days, represent the highest risk level. Most of the impaired trade receivables are included in that category. There are no losses expected on trade receivables in 2021 (2020: MEUR 0.2). The risk for losses on receivables other than trade receivables is assessed to be insignicant. For risk management see note 25. Shares The share capital of the company is NOK 1,055,560,643.30 comprising 1,055,560,643 ordinary shares with a par value of NOK 1.00. The com- pany holds 1,826,902 shares as treasury shares. In February 2021 the company consolidated its shares by a consolidation factor of 10:1, increasing par value per share from NOK 0.10 to NOK 1.00. For more in- formation see the Statement of Changes in Equity. The company is list- ed on the Oslo Stock Exchange with the ticker code “KOA”. MEUR 2021 2020 Not overdue 210.4 221.3 Overdue 1-20 days 14.2 11.0 Overdue 21-40 days 4.2 2.1 Overdue 41-80 days 0.5 1.1 Overdue 81-100 days 0.1 0.4 Overdue > 100 days 2.4 2.7 Gross trade receivables 231.7 238.5 Total provision for bad debt (0.9) (0.7) Net trade receivables 230.9 237.9 Assets as of December 31, 2021 do not include assets classied as held for sale (see Note 13). Assets as of December 31, 2021 do not include assets classied as held for sale (see Note 13). Assets as of December 31, 2021 do not include assets classied as held for sale (see Note 13). KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 103102 NOTE 20 SHARE CAPITAL (CONTINUED)NOTE 20 SHARE CAPITAL (CONTINUED) Treasury shares The company holds 1,826,902 treasury shares (2020: 37,206,972). 1,933,334 treasury shares were redeemed in 2021. Restricted Stock Units As a consequence of the share consolidation activity (reverse split), the amount of restricted stock units granted was decreased by a factor of 10 as per the resolution of the Extraordinary General Meeting held on January 29, 2021. Share options Options at NOK 58.00 (grant 2014), NOK 59.00 (grant 2015), and NOK 62.00 (grant 2016) expire after 7 years. Options at NOK 106.00 (grant 2018), NOK 79.00 (grant 2019), and NOK 3.00 (grant 2021) are Perfor- mance Stock Options and expire 10 years after the date of grant. Due to the share consolidation activity (reverse split) in January 2021, in which 10 old shares give 1 new share, as per the approval by the Extraor- dinary General Meeting on January 29th, 2021, the number and the exer- cise price for the options granted before 2021 was adjusted by a factor of 10. The company has no legal or constructive obligation to repurchase or settle the options in cash. Refer to note 3 for further information. SHAREHOLDERS AND NOMINEES NO. OF SHARES % COUNTRY TYPE OF ACCOUNT Morgan Stanley & Co. Int. Plc. 224,477,513 21.3% United Kingdom Nominee Nordnet Bank AB 48,092,662 4.6% Sweden Nominee Teleios Global Opportunities Master 24,963,209 2.4% Cayman Islands Ordinary Danske Bank A/S 18,991,312 1.8% Denmark Nominee Saxo Bank A/S 17,968,920 1.7% Denmark Nominee Verdipapirfondet Nordea Norge Verd 15,338,374 1.5% Norway Ordinary Nordnet Livsforsikring AS 15,207,995 1.4% Norway Ordinary Arild Vigen Christoffersen 12,564,142 1.2% Norway Ordinary Verdipapirfondet KLP Aksjenorge 8,187,844 0.8% Norway Ordinary Verdipapirfondet Nordea Kapital 7,171,377 0.7% Norway Ordinary Commuter 2 AS 6,920,000 0.7% Norway Ordinary Avanza Bank AB 6,595,718 0.6% Sweden Nominee Verdipapirfondet Nordea Avkastning 6,242,639 0.6% Norway Ordinary UBS Switzerland AG 6,218,659 0.6% Switzerland Nominee Nordea Bank Abp 6,041,507 0.6% Denmark Nominee Citibank, N.A. 4,236,079 0.4% Ireland Nominee JPMorgan Chase Bank, N.A., London 4,044,188 0.4% United Kingdom Nominee Kjetil Tvedt 4,000,000 0.4% Norway Ordinary A/S Skarv 4,000,000 0.4% Norway Ordinary The Bank of New York Mellon SA/NV 3,872,277 0.4% Denmark Nominee Total twenty largest shareholders 445,134,415 42.2% Other shareholders 610,426,228 57.8% Number of shares in issue at 31.12.2021 1,055,560,643 100.0% Number of shareholders 31,049 Foreign ownership 41.2% Movements in share options (NOK) 2021 2020 NOK AVERAGE EXERCISE PRICE OPTIONS AVERAGE EXERCISE PRICE OPTIONS Options at 01.01. 8.07 7,002,313 8.08 8,044,663 Granted 3.02 8,518,775 10.64 (28,164) Forfeited 11.10 (334,876) 8.60 (928,852) Expired 74.37 (39,631) 1.50 (85,334) Adjusted (Quantity) 106.40 (152,530) – – Modication/Dividends 81.13 (6,265,053) – – Options at 31.12. 6.81 8,728,998 8.07 7,002,313 Outstanding options at the end of the year (NOK) 2021 2020 EXPIRY DATE EXERCISE PRICE (NOK) OPTIONS EXERCISE PRICE (NOK) OPTIONS 10.04.2021 58.00 – 5.80 226,200 10.04.2022 59.00 45,733 5.90 470,586 10.04.2023 62.00 113,785 6.20 1,152,853 05.06.2028 106.00 – 10.64 1,697,660 15.05.2029 79.00 314,516 7.87 3,455,014 10.06.2031 3.00 8,254,964 – – Options at 31.12. 8,728,998 7,002,313 Movements in restricted stock units (RSU) NOK 2021 2020 RSU at 01.01. 43,845,671 3,270,018 Granted 6,054,705 (19,293) Released (519,676) (22,305,196) Forfeited (1,889,402) (5,286,438) Adjusted (39,500,880) 68,186,580 RSU at 31.12. 7,990,418 43,845,671 The twenty largest shareholders in the company as at 31.12.2021 were as follows: KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 105104 NOTE 21 EARNINGS AND DIVIDEND PER SHARE NOTE 22 RETIREMENT BENEFIT OBLIGATIONS Dividend per share EUR 2021 2020 Dividend per share paid 0.0 0.0 Dividend per share proposed 0.0 0.0 Earnings per share for the continuing operations 2021 2020 (RESTATED) Net (loss) / prot attributable to equity shareholders (MEUR) 5.1 (118.4) Weighted average number of shares in issue 1,058.5 557.8 Weighted average total number of ordinary shares 1,061.2 558.9 Weighted average number of treasury shares held (2.7) (1.1) Basic earnings per share, EUR 0.00 (0.21) Weighted average number of shares in issue (diluted) 1,068.5 560.6 Weighted average number of outstanding options 10.0 2.8 Diluted earnings per share, EUR 0.00 (0.21) Earnings per share for the group 2021 2020 (RESTATED) Net (loss) / prot attributable to equity shareholders from continuing operations (MEUR) 28.1 (58.9) Weighted average number of shares in issue 1,058.5 557.8 Weighted average total number of ordinary shares 1,061.2 558.9 Weighted average number of treasury shares held (2.7) (1.1) Basic earnings per share, EUR 0.03 (0.11) Weighted average number of shares in issue (diluted) 1,068.5 560.6 Weighted average number of outstanding options 10.0 2.8 Diluted earnings per share, EUR 0.03 (0.11) NOTE 20 SHARE CAPITAL (CONTINUED) Outstanding restricted stock units at the end of the year GRANT (VESTING DATE) 2021 2020 Grant 2018 (07.06.2021) – 8,998,210 Grant 2019 (16.05.2022) 2,123,216 34,847,461 Grant 2021 (10.06.2024) 5,867,202 – RSU at 31.12. 7,990,418 43,845,671 Retirement benet obligations recognized in statement of nancial position MEUR 2021 2020 Dened benet pension obligation 18.4 18.8 Top hat, retirement provisions and other employee obligations 0.6 0.5 Retirement benet obligations 19.0 19.3 Dened benet scheme – net periodic pension cost MEUR 2021 2020 Service cost 0.8 0.9 Interest on benet obligations 0.2 0.2 Expected return on pension assets 0.0 0.0 Employee contributions 0.0 0.0 Effect of curtailment (0.2) (0.8) Administration cost 0.0 0.1 Social security taxes 0.0 0.0 Net periodic pension cost 0.8 0.3 Remeasurement of net dened benet liability 0.0 0.1 Actual return on plan assets 0.3% –9.5% Dened benet scheme – net pension liability MEUR 2021 2020 Pension liabilities and assets: Projected benet obligation (PBO) 24.9 23.8 Fair value of pension assets (6.6) (5.0) Unrecognized effects 0.0 0.0 Net pension liability before social security taxes 18.4 18.8 Social security taxes liabilities 0.0 0.0 Net pension liability 18.4 18.8 Dened benet scheme – assumptions 2021 2020 Discount rate 1.0% 0.8% Rate of return on plan assets 0.1% 0.2% Salary increases 1.1% 1.2% Increase in basic government pension amount 0.9% 0.9% Pension increase 0.5% 0.5% No dividend was proposed for 2021. The assumptions for KA group are presented as a weighted average of the assumptions reported from respective subsidiaries. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 107106 NOTE 23 INTEREST-BEARING LIABILITIESNOTE 22 RETIREMENT BENEFIT OBLIGATIONS (CONTINUED) Specication of carrying value of net pension liability (MEUR): MEUR 2021 2020 Retirement benet obligation 24.9 23.8 Retirement benet asset (6.6) (5.0) Net pension liability 18.4 18.8 Interest-bearing liabilities as presented in the statement of nancial position MEUR 2021 2020 Non-current interest-bearing loans and borrowings 276.0 278.4 Capitalized arrangement fees (3.9) (4.9) Interest-bearing lease liabilities 75.0 103.4 Other current interest-bearing liabilities 20.6 0.0 Total interest-bearing liabilities 367.7 376.8 Specication of total interest-bearing liabilities by currency MEUR 2021 2020 EUR 325.9 317.3 USD 12.2 18.8 Other currencies 33.5 45.7 Capitalized arrangement fees (3.9) (4.9) Total interest-bearing liabilities 367.7 376.8 Dened benet scheme change in net pension liability MEUR 2021 2020 Net pension liability 01.01. 18.8 19.8 Pension cost for the year 0.8 0.3 Remeasurement of net dened benet liability 0.0 0.1 Paid pensions (0.6) (0.7) Pension plan contributions (0.7) (0.7) Translation differences 0.1 (0.2) Net pension liability 31.12. 18.3 18.8 Dened benet scheme – sensitivities * MEUR DBO AS AT 31.12.2021 DBO AS AT 31.12.2020 Actual valuation 18.4 18.8 Discount rate + 0.5% 17.2 18.1 Discount rate – 0.5% 19.7 19.8 Expected rate of salary increase + 0.5% 18.5 19.1 Expected rate of salary increase – 0.5% 18.2 18.8 Expected rate of pension increase + 0.5% 19.2 19.7 Expected rate of pension increase – 0.5% 17.6 18.1 * The sensitivity does not include all schemes, however it covers the signicant part of the pension liability. Dened benet scheme – average expected lifetime Average expected lifetime at the balance sheet date for a person retir- ing on reaching age 65: > Male employee 21 years > Female employee 24 years Average expected lifetime 20 years after the balance sheet date for a person retiring on reaching age 65: > Male employee 23 years > Female employee 26 years Expected pension payment: The pension payment for 2022 is expected to be in line with the 2021 payment. On July 23, 2018, the company completed an offering of MEUR 275.0 in aggregate principal amount of 5.000% Senior Notes due 2025 (the “Notes”) pursuant to indentures among the company, the guarantors party thereto, and The Law Debenture Trust Corporation plc, as trus- tee. The group was in compliance with all applicable debt covenants at and for the year ended December 31, 2021. The indentures for our outstanding Senior Notes contain customary terms and conditions, including amongst other things, incur or guar- antee additional indebtedness or issue certain preferred stock, pay div- idends, redeem capital stock and make other distributions, make cer- tain other restricted payments or restricted investments, prepay or redeem subordinated debt or equity, create or permit to exist certain liens, impose restrictions on the ability of the Restricted Subsidiaries to pay dividends, transfer or sell certain assets, merge or consolidate with other entities, engage in certain transactions with afliates and impair the security interests for the benet of the Holders of the Notes. On September 25, 2020, the group entered into an Accounts Receiva- bles Securitization Agreement with NORD/LB and Finacity Corpora- tion (Finacity) to provide Kongsberg Automotive group with a commit- ted MEUR 60 facility at 1.75% interest-rate with a three-year tenure, effective on October 19, 2020. The maximum commitment of MEUR 60.0 of Senior Notes is depending on the size of the Accounts Receiva- ble pool meeting investment grade criteria. Other current interest-bearing liabilities consist of the Revolving Credit Facility (RCF) agreement entered in July 2018. In the rst half of 2021 the Relief Period ended which resulted in the decrease of the available RCF from MEUR 70.0 to MEUR 50.0. In addition, the company must again comply with the covenants from the original RCF agree- ment signed in July 2018 including a “springing covenant” on total net leverage of 3.50:1, tested at the end of each quarter, if cash utilizations exceed 40% of the total commitments under the RCF agreement. Liabilities as of December 31, 2021 do not include liabilities associated with assets held for sale (see Note 13). Liabilities as of December 31, 2021 do not include liabilities associated with assets held for sale (see Note 13). KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 109108 Changes in liabilities arising from nancing activities MEUR 2021 2020 Opening balance at 01.01. 376.8 386.5 Changes arising from cash ows: Draw down of debt 20.0 2.2 Bank overdraft 0.6 0.0 Repayment of lease liabilities (15.0) (13.5) Repayment of debt (2.5) (10.0) Non-cash changes: Additions – Lease liabilities 25.3 17.7 Amortization of capitalized arrangement fees 1.0 0.9 Reclassication to Liabilities directly associated with the assets held for sale (36.9) 0.0 Other: Translation effect (1.6) (7.0) Closing balance at 31.12. 367.7 376.8 Liquidity reserve The liquidity reserve of the group consists of cash and cash equivalents in addition to undrawn credit facilities. MEUR 2021 2020 Cash and cash equivalents 51.3 67.4 Restricted cash (0.5) (0.4) Undrawn Revolving Credit Facility 30.0 70.0 Undrawn Account receivables securitization Facility 60.0 60.0 Liquidity reserve 140.9 197.0 Specication of other non-current interest-free liabilities MEUR 2021 2020 Provision for employee litigations 0.9 0.7 Long-term termination benets for the former CEO 0.0 1.3 Other non-current interest-free liabilities 0.1 0.0 Total other non-current interest-free liabilities 1.0 2.0 NOTE 23 INTEREST-BEARING LIABILITIES (CONTINUED) NOTE 24 OTHER NON-CURRENT INTEREST-FREE LIABILITIES NOTE 25 RISK MANAGEMENT FINANCE RISK MANAGEMENT POLICIES The group’s overall nancial risk management focuses on the unpre- dictability of nancial markets and seeks to minimize potential ad- verse effects on the group’s nancial performance. The group exploits derivative nancial instruments for potential hedging of certain risk exposures; however, the current usage of such instruments is limited. FOREIGN EXCHANGE RISK The group operates internationally in numerous countries and is ex- posed to foreign exchange risk arising from various currency expo- sures. The primary exposures are related to USD. Foreign exchange risk arises from future commercial transactions, recognized assets and lia- bilities and net investments in foreign operations. As the group reports its nancial results in EUR, changes in the relative strength of EUR to the currencies in which the group conducts business can adversely af- fect the group’s nancial development. Historically, changes in curren- cy rates have inuenced the top line development, however it has not had a signicant impact on operating prot since the costs usually off- set the effects from the top line. Hence, the group seeks to align its rev- enue and cost base to reduce the currency exposure on a net cash ow ba- sis. Management is monitoring the currency exposure on the group lev- el. The group treasury uses the debt structure and prole to balance some of the net exposure of the cash ow from operations. The group’s treasury function regularly evaluates the use of hedging instruments but currently has no usage of such instruments. The group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency expo- sure arising from the net assets of the group’s foreign operations is par- tially managed through borrowings denominated in the relevant for- eign currencies. Sensitivity As of 31 December 2021, if the currency USD had weakened/strength- ened by 5% against the EUR with all other variables held constant, rev- enues would vary by -1.4% and 1.6% or MEUR (16.4) and MEUR 18.2. Operating prot would not have been signicantly changed. OPERATIONAL RISKS Operation and investment risks and uncertainties The group is usually contracted as a supplier with a long-term commit- ment. The commitment is usually based on the model platforms, which for passenger cars are typically 3 to 5 years, while on commercial vehi- cles it is typically 5 to 7 years and in some cases even longer. Purchase orders are achieved on a competitive bidding basis for either a specic period or indenite time. Even if present commitments are cost reim- bursable, they can be adversely affected by many factors and short- term variances including shortages of materials, equipment and work force, political risk, customer default, labor conicts, accidents, envi- ronmental pollution, the prices of raw materials, unforeseen problems, changes in circumstances that may lead to cancellations and other fac- tors beyond the control of the group. In addition, some of the group’s customer contracts may be reduced, suspended or terminated by the customer at any time upon the giving of notice. Customer contracts also permit the customer to vary the scope of work under the contract. As a result, the group may be required to renegotiate the terms or scope of such contracts at any time, which may result in the imposition of terms less favorable than the previous terms. Competition The group has signicant competitors in each of its business areas and across the geographical markets in which the group operates. The group believes that competition in the business areas in which it oper- ates will continue in the future. The group continuously monitors its competitive environment as it is constantly exposed to potential stra- tegic M&A activities by the supplier, customers or competitors that may negatively impact the group’s market position. Volatility in prices of input factors The group’s nancial performance is dependent on prices of input fac- tors, i.e. raw materials and different semi-nished components with a varying degree of processing, used in the production of the various au- tomotive parts. Some of the major raw materials are: > Steel including rod and sheet metal, cast iron and machined steel components, > Polymer components of rubber, foam, plastic components and plastic raw materials, > Copper, > Zinc, > Aluminum. The prices can be subject to large uctuations in response to relatively mi- nor changes in supply and demand and a variety of additional factors be- yond the control of the group, including government regulation, capacity, and general economic conditions. A substantial part of the group’s products based on steel and brass (copper and zinc) is sold to truck manufacturers. Business practice in the truck industry allows the group to some extent to pass increases in steel, aluminum, and brass prices over to its customers. However, there is a time lag of three to six months before the group can adjust the price of its prod- ucts to reect uctuations in the mentioned raw material prices, and a sudden change in market conditions c ould therefore impact the group’s - nancial position, revenues, prots, and cash ow. When the market prices go down the adverse effect will occur. For products sold to passenger car applications, the group does not have the same opportunity to pass along increases in raw materials prices. Uninsured losses The group maintains a number of separate insurance policies to protect its core businesses against loss and/or liability to third parties. Risks insured include general liability, business interruption, workers’ com- pensation and employee liability, professional indemnity, and materi- al damage. Supply chain related risks and uncertainties The company’s ability to meet the customers’ needs depends on the ability to maintain key manufacturing and supply arrangements. The loss or disruption of such manufacturing and supply arrangements may be caused by the issues such as labor disputes, inability to procure sufcient raw or input materials, natural disasters, disease outbreaks or other external factors over which the company has no control. In 2021, the company’s business operations were signicantly im- pacted by the disruption of global supply chains and in particular the supply bottlenecks for electronic components in the aftermath of the COVID-19 pandemic. It requires an effective management as this had an adverse impact on business, nancial condition, results of opera- tions and/or cash ows. This has created the need to adapt to new chal- lenges by establishing new programs that allow to mitigate the nega- tive operational and nancial consequences of such disruptions. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 111110 NOTE 25 RISK MANAGEMENT (CONTINUED) NOTE 26 TRADE AND OTHER PAYABLES NOTE 26 TRADE AND OTHER PAYABLES (CONTINUED) MEUR WARRANTY RESERVE RESTRUCTURING AND OTHER PROVISIONS TOTAL 2021 WARRANTY RESERVE RESTRUCTURING AND OTHER PROVISIONS TOTAL 2020 Opening balance 9.8 5.1 14.9 3.2 4.6 7.9 P&L charge 5.4 0.0 5.4 9.7 3.4 13.2 Payments (6.9) (3.0) (9.9) (2.6) (1.4) (3.9) Release (1.7) (0.3) (2.0) 0.0 (1.3) (1.4) Reclassication to Liabilities directly associated with the assets held for sale (0.2) 0.0 (0.2) 0.0 0.0 0.0 Translation effect 0.5 0.1 0.6 (0.6) (0.2) (0.8) Closing balance 6.8 1.9 8.8 9.8 5.1 14.9 MEUR PROVISIONS ACCRUED EXPENSES OTHER SHORT-TERM LIABILITIES TRADE PAYABLES TOTAL 2021 Repayable 0-3 months after year-end * 5.6 20.1 10.4 140.0 176.1 Repayable 3-6 months after year-end 2.0 19.4 3.3 3.4 28.1 Repayable 6-9 months after year-end 0.4 14.2 0.0 0.0 14.6 Repayable 9-12 months after year-end 0.8 9.6 0.3 0.1 10.8 Closing balance 8.8 63.3 14.1 143.5 229.6 Provisions Maturity structure Specication of trade and other payables as presented in the Statement of Financial Position MEUR 2021 2020 Trade payables 143.5 137.8 Accrued expenses 63.3 69.2 Provisions 8.8 14.9 Interest payable 6.3 0.0 Other short-term liabilities 7.7 15.6 Total trade and other payables 229.6 237.5 * All liabilities classied as Liabilities associated with the assets held for sale are to be repaid within 3 months as the sale transaction are expected to be completed in Q1 2022 Liabilities as of December 31, 2021 do not include liabilities associated with assets held for sale (see Note 13). CLIMATE CHANGE RISK Kongsberg Automotive has put in place adequate procedures that ena- ble Management and Board of Directors to regularly review material climate change issues that may have a signicant impact on the com- pany’s operations from the operational and strategic point of view. The company expects and is preparing for regulatory changes and policy measures targeted at reducing carbon emissions, especially as part of the commitments resulting from the Paris Agreement. The company invests in the sources of the renewable energy, such as solar panels, to become more sustainable. Moreover, Kongsberg Automotive actively monitors its supply chains in relation to the potential disruptions caused by extreme weather events. In case of an occurrence of such un- favorable events, the company works on mitigation actions together with its suppliers. In the group’s assessment, there are no material cli- mate risks that the group is expected to face in the foreseeable future. Consequently, the climate change risk is not deemed to have a signi- cant impact on the company’s nancial reporting processes. INTEREST RATE RISK Through its renancing via senior secured notes with a xed coupon, the group is not exposed to interest rate risk for the duration of the notes. CREDIT RISK Credit risk is managed on the group and entity level. Credit risk arises mainly from trade with customers and outstanding receivables. The level of receivables overdue is monitored on a weekly basis. Historically the group have had limited loss on receivables. Applying forward-look- ing information, we do not see any material increase in the credit risk. Refer to note 19. The automotive industry consists of a limited number of vehicle manu- facturers; hence the ve biggest customers will be around 33.0% of to- tal sales. The group has a diversied customer base, where only one in- dividual customer represents more than 10% of the group’s revenues. In addition, the customer base consists of solvent vehicle manufacturers and Tier 1 suppliers. In the group’s opinion there is no concentration risk, however due to the number of vehicle manufacturers and hence customers, concentration risk could be considered to exist. FUNDING AND LIQUIDITY RISK Cash ow forecasting is performed by each operating entity of the group on a weekly basis for the following 15 weeks. The group keeps track of its liquidity requirements and monitors to ensure there is sufcient cash to meet operational needs while always maintaining sufcient headroom on its undrawn committed borrowing facility. Surplus cash held by the operating entities over and above balance re- quired for working capital management are transferred to the group treasury. For unused liquidity reserve, see note 23. CAPITAL RISK MANAGEMENT The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide re- turns for shareholders and benets for other stakeholders and to main- tain an optimal capital structure to reduce the cost of capital and bal- ance the risk prole. The group monitors capital based on the gearing ratio and the level of equity. These ratios are calculated as net debt divided by EBITDA and equity divided by the total balance. The group has a treasury poli- cy regulating the levels on these key ratios. The only remaining provision for restructuring is related to the closure of the plant in Rollag (Norway) and amounts to MEUR 1.4. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 113112 NOTE 27 FINANCIAL INSTRUMENTS NOTE 28 REMUNERATION AND FEES FOR MANAGEMENT, BOARD OF DIRECTORS (BOD) AND AUDITOR MEUR LOANS AND RECEIVABLES AT AMORTIZED COST FINANCIAL LIABILITIES AT AMORTIZED COST TOTAL 2020 Trade and other receivables 261.1 261.1 Cash and cash equivalents 67.4 67.4 Interest-bearing loans and borrowings (273.4) (273.4) Interest-bearing lease liabilities (103.4) (103.4) Other current interest-bearing liabilities 0.0 Trade and other payables (213.3) (213.3) Total 328.5 (590.1) (261.7) Fair value 328.5 (574.8) (246.3) Unrecognized gain/ (loss) * 15.4 15.4 MEUR LOANS AND RECEIVABLES AT AMORTIZED COST FINANCIAL LIABILITIES AT AMORTIZED COST TOTAL 2021 Trade and other receivables 250.0 250.0 Cash and cash equivalents 51.3 51.3 Interest-bearing loans and borrowings (272.1) (272.1) Interest-bearing lease liabilities (75.0) (75.0) Other current interest-bearing liabilities (20.6) (20.6) Trade and other payables (206.8) (206.8) Assets held for sale 23.2 Liabilities directly associated with the assets held for sale (69.3) Total 324.6 (643.8) (319.2) Fair value 324.6 (651.5) (327.0) Unrecognized gain/ (loss) * (7.8) (7.8) 2020 Classication, measurement and fair value of nancial instruments * based on level 1 input. The bond was traded at 101.4% of its par value as at 31.12.2021 (93.4% as at 31.12.2020) Prorated salary for the period from May to December 2021 Long-term incentives plans – share based compensation. The amounts represent the expenses accounted for in 2021 according to IFRS 2. * based on level 1 input Remuneration and fees recognized in the statement of comprehensive income KEUR 2021 2020 Total remuneration of the Board of Directors 365.0 280.7 Gross base salary to the CEO * 450.1 509.9 CEO short-term incentive * 464.3 0.0 CEO's long-term incentive costs ** 129.4 221.0 Pension costs to the CEO * 55.1 99.9 Other remuneration to the CEO * 97.2 122.4 Management salaries other than to the CEO 2,891.5 3,097.5 Bonus, LTI costs and other remuneration of management other than the CEO 1,573.5 1,340.6 Pension costs of management other than the CEO 310.2 283.5 Total – Board of Directors and Senior Management 6,336.4 5,955.5 Remuneration to nomination committee 14.7 10.5 Specication of fees paid to the auditors KEUR 2021 2020 Statutory audit services to the parent company (Deloitte) 189.8 165.9 Statutory audit services to subsidiaries (Deloitte) 485.0 519.4 Statutory audit services to subsidiaries (Other) 69.4 50.8 Non-audit services (Deloitte) 24.1 11.3 Tax services (Deloitte) 498.9 459.5 Total 1,267.2 1,207.0 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE GROUP 115114 NOTE 29 COMMITMENTS AND GUARANTEES COMMITMENTS Due to the implementation of IFRS 16, the group’s operating lease com- mitments are now disclosed in note 16. In relation to low-value and short-term leases that are not presented as lease liabilities, the group is committed to an expected expense of MEUR 0.7 in 2022. GUARANTEES The issued notes are guaranteed on a senior basis by: > Parent Guarantor (Kongsberg Automotive ASA), > Kongsberg Automotive Holding 2 AS, Kongsberg Automotive AS, Kongsberg Automotive AB, Kongsberg Power Products Systems AB, Kongsberg Driveline Systems SAS, Kongsberg Raufoss Distribution SAS, Kongsberg Actuation Systems Ltd, Kongsberg Automotive Slovakia s.r.o., Kongsberg Interior Systems Kft., Kongsberg Automotive Sp. z.o.o., Kongsberg Inc., Kongsberg Holding III, Inc., Kongsberg Actuation Systems II, LLC, Kongsberg Power Products Systems I, LLC, Kongsberg Automotive, Inc., Kongsberg Driveline Systems I, LLC, Kongsberg Interior Systems II, LLC, and KA Group AG. GENERAL INFORMATION In 2021 one parent guarantee in the amount of around MEUR 12.0 was issued for a legal entity in Poland. NOTE 30 CONTINGENT LIABILITIES The following is an overview of current material disputes involving either the company or its subsidiaries. Endeavor group, LLC v Kongsberg Power Products System I, LLC (U.S.) Kongsberg Power Products Systems I, LLC is contesting a claim by a neighboring property owner for compensation for use of a detention pond on the neighboring property in Willis, Texas. Water runoff from the Kongsberg property was diverted to the neighboring property at a time when both parcels were owned by a predecessor of Kongsberg. Kongsberg does not believe that the plaintiff is entitled to signicant compensation. Kongsberg’s main argument for acquittal is that the pond was clearly visible when the property was acquired by the plaintiff. The district court has ruled in our favor and fully acquitted Kongsberg. The plaintiff has however appealed the ruling. The decision of the court of appeals is not expected before 2024. NOTE 31 SUBSEQUENT EVENTS Successful completion of the ICS sale to Lear Corporation On February 28, 2022, Kongsberg Automotive has successfully com- pleted the sale of its Interior Comfort Systems (ICS) business unit to Lear Corporation for an enterprise value of EUR 175.0 million. Kongsberg Automotive received the initial purchase price proceeds of EUR 165.9 million, subject to further adjustments. Based on the initial purchase price proceeds, the gain after tax on the ICS sale transaction amounts to approximately EUR 26.5 million. Costs to sale incurred in 2021 amounted to EUR 7.0 million. Partial redemption of the Bond notes On March 11, 2022, a Notice of Redemption for EUR 75.0 million of the outstanding Senior Secured Notes due 2025 was published. The Notes will be redeemed at 102.5% of the par value, plus accrued interests from January 15, 2022, until the Redemption Date. The Redemption Date is set on March 21, 2022. Following the partial redemption of the bond notes, the outstand- ing amount of the Notes will be EUR 200.0 million. War in Ukraine The war in Ukraine starter in February 2022. Currently, group's man- agement assesses that the group's operations are not directly impacted by the war as none of the group's plants are located in Ukraine or Rus- sia. Most of KA's customers do not have close economic ties with these countries. However, the group's nancials will be impacted by the un- predictable indirect consequences of this war, such as further uncer- tain increases in costs for raw materials, energy, and transportation. NOTE 32 RELATED-PARTY TRANSACTIONS Kongsberg Automotive ASA is listed on the Oslo Stock Exchange and is the group’s ultimate parent. The group has no material transactions with related parties. Key management compensation See note 28 – includes remuneration for Senior Management. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 117116 FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 119118 CONTENTS NOTE 1 NOTE 2 NOTE 3 NOTE 4 NOTE 5 NOTE 6 NOTE 7 NOTE 8 NOTE 9 NOTE 10 PROPERTY, PLANT AND NOTE 11 NOTE 12 NOTE 13 NOTE 14 NOTE 15 NOTE 16 NOTE 17 REMUNERATION AND FEES FOR MANAGEMENT, BOARD OF DIRECTORS, NOTE 18 NOTE 19 STATEMENT OF NOTE 20 NOTE 21 STATEMENT OF COMPREHENSIVE INCOME MEUR NOTE 2021 2020 Operating revenues 21 7.5 2.1 Operating expenses Salaries and social expenses 5 (0.5) (0.2) Other operating expenses 6 (3.7) (3.5) Depreciation and impairment 10, 11 (0.0) (0.0) Amortization and impairment 9 (0.2) (0.3) Total operating expenses (4.4) (4.0) Operating prot / (loss) 3.1 (1.9) Financial items Financial income 7 33.7 18.9 Financial expenses 7 (16.1) (31.2) Net nancial items 17.6 (12.3) Prot / (loss) before taxes 20.6 (14.2) Income taxes 8 (4.3) 3.5 Net prot / (loss) 16.3 (10.7) Other comprehensive income Translation differences 20.9 (19.5) Other comprehensive income 20.9 (19.5) Total comprehensive income for the year 37.2 (30.2) STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CASH FLOWS STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 121120 MEUR NOTE 2021 2020 Operating activities Prot / (loss) before taxes 20.6 (14.2) Depreciation 10, 11 0.0 0.0 Amortization 9 0.2 0.3 Reversal of impairment 0.0 (3.2) Interest income 7 (16.2) (18.7) Interest expenses and other nancial expenses 7 16.1 16.5 Taxes paid (0.1) (0.4) Changes in trade and other receivables 12 105.0 (102.8) Changes in trade and other payables 16 (62.7) (17.1) Currency differences 7 (10.8) 11.1 Dividends received 7 0.0 (0.2) Changes in other items (0.4) (1.8) Cash ow used by / from operating activities 51.8 (130.5) Investing activities Investments in group loans - SPV 0.0 (4.4) Repayment of group loans 15.2 36.1 Investments in subsidiaries (68.7) 0.1 Interest received 7 16.2 18.7 Dividends received 7 0.0 0.2 Cash ow from / used by investing activities (37.3) 50.8 Financing activities Proceeds from increases in equity 0.0 89.7 Payments for purchase of treasury shares 0.0 (1.3) Net draw down of debt 0.6 0.0 Interest paid 7 (14.9) (16.5) Cash ow used by / from nancing activities (14.3) 71.9 Currency effects on cash (0.2) 7.7 Net change in cash 0.0 0.0 Net cash at January 1 0.0 0.0 Net cash as at December 31 0.0 0.0 Of this, restricted cash 0.0 0.0 STATEMENT OF CASH FLOWS * Comprises mainly changes in provisions. MEUR NOTE 2020 2019 ASSETS Non-current assets Intangible assets 9 0.0 0.2 Property, plant and equipment 10 0.0 0.0 Right-of-use assets 11 0.1 0.1 Investments in subsidiaries 4 373.4 289.7 Loans to subsidiaries and other non-current assets 21 358.7 355.8 Other non-current assets 0.4 0.7 Total non-current assets 732.6 646.4 Current assets Trade and other receivables 12, 21 39.5 144.5 Cash and cash equivalents 0.0 0.0 Total current assets 39.5 144.5 Total assets 772.1 790.9 EQUITY AND LIABILITIES Equity Share capital 13 105.6 100.7 Treasury shares 13 (1.3) (1.3) Share premium 219.1 209.1 Other reserves (28.8) (36.6) Retained earnings 171.8 155.5 Total equity 466.4 427.4 Non-current liabilities Deferred tax liabilities 8 18.5 15.2 Retirement benet obligations 0.3 0.3 Interest-bearing liabilities 14 270.1 269.2 Total non-current liabilities 288.9 284.6 Current liabilities Other current interest-bearing liabilities 0.7 0.0 Current income tax liabilities 8 0.0 0.0 Trade and other payables 16, 21 16.1 78.8 Total current liabilities 16.8 78.8 Total liabilities 305.7 363.4 Total equity and liabilities 772.1 790.9 STATEMENT OF FINANCIAL POSITION KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 123122 MEUR SHARE CAPITAL TREASURY SHARES SHARE PREMIUM OTHER RESERVES RETAINED EARNINGS TOTAL EQUITY Equity as at 01.01.2020 22.8 0.0 207.6 (30.4) 166.2 366.1 Equity increase 77.5 13.2 90.7 Sale of treasury shares (1.3) 0.0 (1.3) Share-based compensation 2.1 2.1 Total comprehensive income for the year: Loss for the year (10.7) (10.7) Other comprehensive income: Translation differences 0.5 (11.7) (8.3) (19.5) Total comprehensive income for the year 0.5 0.0 (11.7) (8.3) (10.7) (30.2) Equity as of 31.12.2020 / 01.01.2021 100.8 (1.3) 209.1 (36.6) 155.5 427.4 Share-based compensation 1.7 1.7 Total comprehensive income for the year: Prot for the year 16.3 16.3 Other comprehensive income: Translation differences 4.8 10.0 5.9 20.9 Total comprehensive income for the year 4.8 0.0 10.0 5.9 16.3 37.2 Equity as of 31.12.2021 105.6 (1.3) 219.1 (28.8) 171.8 466.4 STATEMENT OF CHANGES IN EQUITY NOTES NOTE 3 SIGNIFICANT ACCOUNTING POLICIES The company’s signicant accounting principles are consistent with the accounting principles of the group, as described in note 3 of the group’s Consolidated Financial Statement. Where the notes for the company are substantially different from the notes for the group, it is shown accordingly. Otherwise, refer to the notes to the group’s Consol- idated Financial Statements. NOTE 1 REPORTING ENTITY Kongsberg Automotive ASA (‘the company’) is a limited liability company incorporated and domiciled in Norway. The address of its reg- istered ofce is Dyrmyrgata 48, NO-3601 Kongsberg, Norway. The com- pany is listed on the Oslo Stock Exchange. The company is the ultimate parent of the group and serves the purpose of holding company in the group. The information provided in the consolidated nancial statements cov- ers the company to a signicant degree. For a description of the operat- ing activities of the subsidiaries of Kongsberg Automotive ASA, please refer to the consolidated nancial statement of the group. The company nancial statements were authorized for issue by the Board of Direc- tors on March 14, 2022. NOTE 2 STATEMENT OF COMPLIANCE The company’s nancial statements are prepared in accordance with simplied IFRS according to the Norwegian accounting Act § 3 – 9, and regulations regarding simplied application of IFRS issued by the Ministry of Finance on January 21, 2008. Entity name COUNTRY OF INCORPORATION OWNERSHIP 2021 2021 2020 Kongsberg Automotive Holding 2 AS Norway 100% 241.5 226.8 KA Group AG Switzerland 0% 119.2 50.7 Kongsberg Automotive (Wuxi) Ltd China 100% 7.2 6.9 Kongsberg Automotive Ltda Brazil 100% 2.4 2.3 Kongsberg Automotive Ltd Korea 100% 1.7 1.7 Kongsberg Automotive (India) Private Ltd India 100% 0.9 0.8 Kongsberg Automotive Driveline System India Ltd India 100% 0.4 0.4 Kongsberg Automotive Japan KK Japan 100% 0.1 0.1 Kongsberg Automotive SARL France 100% 0.0 0.0 CTEX Seat Comfort (Holding) Ltd Great Britain 100% 0.0 0.0 Total investments in subsidiaries 373.4 289.7 NOTE 4 INVESTMENTS IN SUBSIDIARIES Kongsberg, March 14, 2022 The President & CEO and the Board of Directors of Kongsberg Automotive ASA Emese Weissenbacher Board member Firas Abi-Nassif Chairman Ellen M. Hanetho Board member Siw Reidun Wærås Employee elected Knut Magne Alfsvåg Employee elected Joerg Buchheim President and CEO Gerard Cordonnier Board member Bjørn Ivan Ødegård Employee elected Peter Schmitt Board member KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 125124 NOTE 4 INVESTMENTS IN SUBSIDIARIES (CONTINUED) Investments In June 2021 the company made a capital contribution of MEUR 65.0 to KA Group AG. There were no additional investments made in another subsidiaries. The change in the carrying value of investments other than the above-mentioned capital contribution is fully attributable to the translation differences. Impairment Testing The company has performed impairment tests on all KA companies owned or nanced directly by Kongsberg Automotive ASA. The following assets have been considered for impairment: Share investments; intercompany loans to group companies, IC receivables. The impairment assessment is made on “Net Investment” level (all di- rect loans, receivables and share investments are considered together). Shares are impaired before loans, and loans before receivables. In a rst step, the net investment was compared to the carrying val- ue of the equity of the respective subsidiaries. The equity carrying val- ue is considered as a conservative valuation of the company value. In a second step, the net investment was compared to the enterprise value. The enterprise value has been derived from the net present value of all future cash ows including terminal value. The principal model has been taken into account as well as all assumptions used for the three-year strategic planning in the cash ow estimation of each test- ed subsidiary. DISCOUNT RATE ASSUMPTIONS The required rate of return was calculated using the WACC method. The same WACC was used as calculated for group impairment purpos- es. For details, please refer to group Note 17. IMPAIRMENT TEST RESULTS AND CONCLUSION Based on the results from the impairment test performed, the company concluded that there is no requirement for impairment indicated as at 31.12.2021. NOTE 5 SALARIES AND SOCIAL EXPENSES NOTE 6 OTHER OPERATING EXPENSES MEUR 2021 2020 Wages and salaries 0.5 0.3 Pension cost (dened contribution plans) 0.0 (0.1) Total salaries and social expenses 0.5 0.2 MEUR 2021 2020 Administrative expenses Service costs 3.1 3.5 Other costs 0.6 0.0 Total other operating expenses 3.7 3.5 The company had no employees as of 31.12.2021 and there were no em- ployees as of 31.12.2020 either. Wage and salaries comprise direc- tor’s fees. NOTE 7 FINANCIAL ITEMS NOTE 8 TAXES * Includes withholding tax of MEUR 0.7 2021. Further details can be found in table below. Tax recognized in Statement of Income The major components of income tax expense: MEUR 2021 2020 Current tax on prots for the year (1.7) (1.5) Adjustments in respect of prior years – current tax 0.0 0.0 Total current tax expense (1.7) (1.5) Current year change in deferred tax (2.5) 5.2 Impact of changes in tax rates 0.0 0.0 Adjustments in respect of prior years – deferred tax (0.1) (0.2) Total change in deferred tax (2.6) 4.9 Total income tax expense (4.3) 3.5 MEUR 2021 2020 Dividend and other nancial income 5.6 0.2 Foreign currency gains 11.9 0.0 Account receivables securitization – Income 2.0 0.8 Interest income 14.2 17.9 Total nancial income 33.7 18.9 Interest expense (15.8) (16.4) Foreign currency losses 0.0 (11.1) Account receivables securitization – Expense (0.3) (0.1) Other items (0.0) (3.6) Total nancial expenses (16.1) (31.2) Total nancial items 17.6 (12.3) Includes unrealized currency gain of MEUR 10.8 (2020: unrealized loss of MEUR 12.2) Tax recognized in other comprehensive income No tax was recognized in other comprehensive income in 2021 and 2020 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 127126 NOTE 8 TAXES (CONTINUED) Deferred tax positions are netted within the tax entity. Current tax liability MEUR 2021 2020 Current income tax receivables 0.0 0.0 Current income tax liabilities 0.0 0.0 Total 0.0 0.0 Deferred tax MEUR 2021 2020 Deferred tax liability (18.5) (15.2) Total (18.5) (15.2) Reconciliation of Norwegian nominal statutory tax rate to effective tax rate MEUR 2021 2020 Prot / (loss) before taxes 20.6 (14.2) Expected tax calculated at Norwegian tax rate (4.5) 3.1 Dividends (permanent differences) 1.2 0.2 Other permanent differences (0.3) 2.0 Effect of withholding tax (0.7) 0.4 Adjustments in respect of prior years and other adjustments 0.0 (2.2) Income tax (expense) / credit (4.3) 3.5 Average effective tax rate 21% 31% Specication of deferred tax assets / (liabilities) recognized in the Statement of Financial Position MEUR OPENING BALANCE CHARGED TO INCOME CHANGES IN RATE OCI EXCHANGE DIFFERENCES CLOSING BALANCE Property, plant and equipment 0.1 0.0 0.0 0.0 0.0 0.1 Retirement benets obligations 0.1 0.0 0.0 0.0 0.0 0.1 Losses 0.0 0.0 0.0 0.0 0.0 0.0 Account receivables 3.8 0.1 0.0 0.0 0.2 4.1 Unrealized fx on long-term receivables / payables (19.2) (2.6) 0.0 0.0 (1.0) (22.8) Other temporary differences 0.0 (0.1) 0.0 0.0 (0.0) (0.1) Net deferred tax asset / (liability) (15.2) (2.6) 0.0 0.0 (0.8) (18.5) Tax positions not recognized The company had no unrecognized positions in 2021 and 2020. Remaining lifetime of tax losses (net tax value) The company had no tax loss carry forwards in 2021 and 2020. NOTE 8 TAXES (CONTINUED) MEUR 1.0 income tax credit in relation to the fees in connection with the capital raise was recorded directly to equity. Tax recognized in the statement of nancial position KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 129128 NOTE 9 INTANGIBLE ASSETS MEUR CUSTOMER RELATIONSHIPS SOFTWARE AND OTHER TOTAL Cost at 01.01.2020 0.2 4.5 4.7 Additions 0.0 0.0 0.0 Disposals accumulated cost 0.0 0.0 0.0 Translation differences on cost 0.0 (0.3) (0.3) Acquisition costs at 31.12.2020 0.2 4.2 4.4 Accumulated amortization at 01.01.2020 (0.2) (3.9) (4.1) Amortization/impairment loss 0.0 (0.3) (0.3) Disposals accumulated amortization 0.0 0.0 0.0 Translation differences on amortization 0.0 0.2 0.2 Accumulated amortization at 31.12.2020 (0.2) (4.0) (4.2) Cost 0.2 4.2 4.4 Accumulated amortization (0.2) (4.0) (4.2) Book value at 31.12 2020 0.0 0.2 0.2 Cost at 01.01.2021 0.2 4.2 4.4 Additions 0.0 0.0 0.0 Disposals accumulated cost 0.0 0.0 0.0 Translation differences 0.0 0.2 0.2 Acquisition costs at 31.12.2021 0.2 4.4 4.6 Accumulated amortization at 01.01.2021 (0.2) (4.0) (4.2) Amortization/impairment loss 0.0 (0.2) (0.2) Disposals accumulated amortization 0.0 0.0 0.0 Translation differences (0.0) (0.2) (0.2) Accumulated amortization at 31.12.2021 (0.2) (4.4) (4.6) Cost 0.2 4.4 4.6 Accumulated amortization (0.2) (4.4) (4.6) Book value at 31.12 2021 0.0 0.0 0.0 NOTE 10 PROPERTY, PLANT AND EQUIPMENT (PP&E) MEUR EQUIPMENT Cost 0.8 Accumulated depreciation (0.8) Book value at 31.12 2019 0.0 Cost at 01.01.2020 0.8 Additions 0.0 Disposals accumulated cost 0.0 Translation differences 0.0 Acquisition costs at 31.12.2020 0.8 Accumulated depreciation at 01.01.2020 (0.8) Depreciation/impairment loss 0.0 Disposals accumulated depreciation 0.0 Translation differences 0.0 Accumulated depreciation at 31.12.2020 (0.8) Cost 0.8 Accumulated depreciation (0.8) Book value at 31.12.2020 0.0 Cost at 01.01.2021 0.8 Additions 0.0 Disposals accumulated cost 0.0 Translation differences 0.0 Acquisition costs at 31.12.2021 0.8 Accumulated depreciation at 01.01.2021 (0.8) Depreciation/impairment loss 0.0 Disposals accumulated depreciation 0.0 Translation differences 0.0 Accumulated depreciation at 31.12.2021 (0.8) Cost 0.8 Accumulated depreciation (0.8) Book value at 31.12.2021 0.0 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 131130 NOTE 11 RIGHT-OF-USE ASSETS MEUR BUILDINGS TOTAL Cost 01.01.2020 0.0 0.0 Additions 0.2 0.2 Lease terminations 0.0 0.0 Acquisition costs at 31.12.2020 0.2 0.2 Accumulated depreciation 01.01.2020 0.0 0.0 Depreciation (0.1) (0.1) Lease terminations 0.0 0.0 Accumulated depreciation 31.12.2020 (0.1) (0.1) Cost 0.2 0.2 Accumulated depreciation (0.1) (0.1) Book Value at 31.12 2020 0.1 0.1 Cost at 01.01.2021 0.2 0.2 Additions 0.0 0.0 Lease terminations 0.0 0.0 Acquisition costs at 31.12.2021 0.2 0.2 Accumulated depreciation at 01.01.2021 (0.1) (0.1) Depreciation 0.0 0.0 Lease terminations 0.0 0.0 Accumulated depreciation at 31.12.2021 (0.1) (0.1) Cost 0.2 0.2 Accumulated depreciation (0.1) (0.1) Book Value at 31.12 2021 0.1 0.1 Lease liabilities MEUR 2021 2020 Non-current lease liabilities 0.1 0.1 Current lease liabilities 0.0 0.0 Total lease liabilities 0.1 0.1 Maturity analysis – contractual undiscounted cash ows MEUR 2021 2020 Within one year 0.1 0.1 One to ve years 0.1 0.1 More than ve years 0.0 0.0 Total undiscounted lease liabilities 0.2 0.2 Receivables by currency MEUR 2021 2020 NOK 26.4 125.3 EUR 6.4 19.1 CNY 5.0 0.0 USD 1.5 0.0 Other 0.3 0.1 Total trade and other receivables 39.5 144.5 NOTE 13 SHARE CAPITAL Refer to note 20 in the group’s statements. NOTE 12 TRADE AND OTHER RECEIVABLES Specication of trade and other receivables MEUR 2021 2020 Trade receivables 0.0 0.0 Short-term group loans and receivables 14.7 21.1 In-house bank 24.2 122.7 Other short-term receivables 0.4 0.5 Receivables 39.3 144.3 Prepayments 0.2 0.2 Total trade and other receivables 39.5 144.5 During 2019, the group changed from a notional cash pool under Kongsberg Automotive ASA to a physical cash pool with KA Group AG as the master header for the group and Kongsberg Automotive ASA as a sub header for some of the European entities. Therefore, the company held no cash as at 31 December 2021 and its cash held by KA Group AG was included as In-house bank under trade and other receivables. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 133132 NOTE 14 INTEREST-BEARING LIABILITIES Interest-bearing liabilities as presented in the Statement of Financial Position MEUR 2021 2020 Non-current interest-bearing loan 274.0 274.0 Capitalized arrangement fees (3.9) (4.9) Interest-bearing lease liabilities 0.0 0.1 Total interest-bearing liabilities 270.1 269.2 Specication of total interest-bearing liabilities MEUR 2021 2020 EUR 274.0 274.0 NOK 0.0 0.1 Capitalized arrangement fee (3.9) (4.9) Total interest-bearing liabilities 270.1 269.2 Changes in non-current interest-bearing liabilities MEUR 2021 2020 Opening balance at 01.01. 269.2 268.3 Net cash ows 0.0 0.0 Foreign exchange movement (13.0) 15.5 Translation effect 13.0 (15.5) Other 0.9 0.9 Closing balance at 31.12. 270.1 269.2 NOTE 15 RISK MANAGEMENT The company’s risk management is an integral part of the group’s risk management. Refer to note 25 of the group’s statements for the fur- ther information. CURRENCY EXPOSURE Management is monitoring the currency exposure on a group level. The group treasury uses the debt structure and prole to balance some of the net exposure of the cash ow from operations. The group’s treasury function regularly evaluates the use of hedging instruments but cur- rently has low usage of such instruments. INTEREST RISK The company is exposed to very limited interest risk. * Relates to the loan granted by KA Group AG. ** Relates to the bond fees paid by Kongsberg Automotive ASA on behalf of Kongsberg Actuation Systems BV. NOTE 16 TRADE AND OTHER PAYABLES NOTE 17 REMUNERATION AND FEES FOR MANAGEMENT, BOARD OF DIRECTORS, AND AUDITORS Specication of trade and other payables as presented in the Statement of Financial Position MEUR 2021 2020 Trade payables 0.2 1.0 Short-term group liabilities 15.2 77.4 Accrued expenses 0.7 0.4 Total trade and other payables 16.1 78.8 Refer to note 28 in the group’s consolidated nancial statements. Maturity structure MEUR ACCRUED EXPENSES TRADE PAYABLES TOTAL 2021 Repayable 0-3 months after year end 0.4 0.2 0.6 Repayable 3-6 months after year end 0.1 0.0 0.1 Repayable 6-9 months after year end 0.0 0.0 0.0 Repayable 9-12 months after year end 0.2 0.0 0.2 Total 0.7 0.2 0.9 Provisions The company had no provision as of December 31, 2021 and December 31, 2020. NOTE 18 COMMITMENTS AND GUARANTEES NOTE 19 STATEMENT OF REMUNERATION OF MANAGEMENT NOTE 20 SUBSEQUENT EVENTS Refer to note 30 in the group’s consolidated nancial statements. No signicant subsequent events have been identied. Refer to note 31 in the group’s consolidated nancial statements for the group relevant subsequent events. Guarantees Some subsidiaries require a nancial support guarantee from the Parent to satisfy the going concern assumption. The company has issued guarantees towards suppliers of subsidiaries. The risk exposure is assessed to be immaterial. The total value of guarantees given by the Parent to subsidiaries is at MEUR 44.1 and MUSD 10.0. In relation to the offering of senior secured notes, the company is the parent guarantor. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 135134 NOTE 21 RELATED-PARTY TRANSACTIONS The group's ultimate parent is Kongsberg Automotive ASA. The company has carried out the following transactions with related parties: Specication of revenues – Type of services MEUR 2021 2020 Group benets fees from subsidiaries 2.8 0.0 Service fee from KA Group AG 4.7 2.1 Operating revenues 7.5 2.1 Since 2017, the group benet fee has been replaced by a new service fee from KA Group AG covering KA ASA's services beneting the group. From 2018 onwards, the group benet fee comprises trademark fees from KA Group AG. Specication of revenues – Revenues by geographical location MEUR 2021 2020 Switzerland 7.5 2.1 Operating revenues 7.5 2.1 Outstanding loans to other group companies Loans to other group companies MEUR 2021 2020 Kongsberg Automotive Holding 2 AS 353.9 336.7 Kongsberg Automotive AB 0.0 11.5 Kongsberg Actuation Systems S.L. 0.0 0.0 Kongsberg Automotive Slovakia s.r.o. 0.0 0.0 Kongsberg Automotive Finance BV 4.7 4.4 Other group companies 0.0 3.2 Total outstanding loans with other group companies 358.7 355.8 Most of the company's loans to group companies have due dates exceed- ing one year. The interest rate on loans to group companies consist of the reference rate in the respective currency plus a margin. Margin on new intercompany loans is determined according to Moody's rat- ing methodology. * includes the group contribution to Kongsberg Automotive Holding 2 AS of MEUR 3.7 (2020: MEUR 68.9). Short-term group receivables MEUR 2021 2020 Kongsberg Actuation Systems S.L.U. 0.1 10.1 Kongsberg Driveline Systems GmbH 0.0 5.7 Kongsberg Automotive Hong Kong Ltd 1.5 0.0 Kongsberg Automotive (Wuxi) Ltd. 7.3 2.1 KA Group AG 3.4 0.8 Other group companies 2.5 2.4 Total outstanding receivables to other group companies 14.7 21.1 Outstanding liabilities with other group companies MEUR 2021 2020 Trade and other payable group companies 15.2 77.4 Total 15.2 77.4 Current assets and liabilities have due dates within one year. The out- standing accounts are repayable on demand based on available liquidi- ty in the respective subsidiary. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // FINANCIAL STATEMENTS OF THE PARENT COMPANY 137136 CORPORATE GOVERNANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE 139138 1 IMPLEMENTATION OF THE PRINCIPLES FOR CORPORATE GOVERNANCE 2 DEFINITION OF KA’S BUSINESS The company’s objective is to engage in the engineering industry and other activ - ities naturally related thereto, and the company shall emphasize development, marketing and manufacturing of products to the car industry. The company shall be managed in accordance with general business practice. The company may co-operate with, establish, and participate in other companies. 3 EQUITY AND DIVIDENDS Kongsberg Automotive shall create good value for its share - holders, employees, and society. Returns to shareholders will be a combination of changes in share price and dividends. The Board of Directors’ intention is that dividends will be approximately 30% of the company’s net income, provided that the company has an efcient capital structure. 4 EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH RELATED PARTIES CORPORATE GOVERNANCE 5 SHARES AND NEGOTIABILITY 6 GENERAL MEETINGS KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE 141140 7 NOMINATION COMMITTEE 8 BOARD OF DIRECTORS, COMPOSITION, AND INDEPENDENCE BOARD MEETINGS COMPENSATION COMMITTEE AU DIT COMMITTEE FIRAS ABI-NASSIF 14 5 ELLEN M. HANETHO 14 6 EMESE WEISSENBACHER 12 6 GERARD CORDONNIER 14 5 6 PETER SCHMITT 15 5 BJØRN IVAN ØDEGAARD 15 3 LEIF HÅVARD STRØMHAUG 6 TONJE SIVESINDTAJET 6 2 KNUT MAGNE ALFSVÅG 9 SIW REIDUN WÆRÅS 9 9 WORK OF THE BOARD OF DIRECTORS 10 RISK MANAGEMENT, INTERNAL CONTROL, AND FINANCIAL REPORTING 10.1 RISK MANAGEMENT AND INTERNAL CONTROL KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE 143142 10.2 FINANCIAL REPORTING 11 REMUNERATION TO THE BOARD OF DIRECTORS 12 REMUNERATION TO THE EXECUTIVE MANAGEMENT 13 INFORMATION AND COMMUNICATION 14 TAKEOVERS 15 AUDITOR KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CORPORATE GOVERNANCE 145144 The President & Chief Executive Ofcer and the Board of Directors conrm, to the best of their knowledge, that the nancial state- ments for the period January 1 to December 31, 2021, have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the company’s and the group’s assets, liabilities, nancial position, and prot or loss of the entity and the group taken as a whole. We also conrm that the Board of Directors’ report includes a true and fair view of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncer- tainties the group and the company face. Kongsberg, March 14, 2022 The President & CEO and the Board of Directors of Kongsberg Automotive ASA DECLARATION TO THE ANNUAL REPORT 2021 Emese Weissenbacher Board member Firas Abi-Nassif Chairman Ellen M. Hanetho Board member Siw Reidun Wærås Employee elected Knut Magne Alfsvåg Employee elected Joerg Buchheim President and CEO Gerard Cordonnier Board member Bjørn Ivan Ødegård Employee elected Peter Schmitt Board member KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // AUDITOR’S REPORT KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // AUDITOR’S REPORT 147146 AUDITOR’S REPORT Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL ( also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.no to learn more. © Deloitte AS Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening Organisasjonsnummer: 980 211 282 Deloitte AS Dronning Eufemias gate 14 Postboks 221 Sentrum NO -0103 Oslo Norway Tel: +47 23 27 90 00 www.deloitte.no To the General Meeting of Kongsberg Automotive ASA INDEPENDENT AUDITOR’S REPORT Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Kongsberg Automotive ASA, which comprise: • The financial statements of the parent company Kongsberg Automotive ASA (the Company), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of Kongsberg Automotive ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 12 years from the election by the general meeting of the shareholders on 4 June 2010 for the accounting year 2010. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL ( also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.no to learn more. © Deloitte AS Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening Organisasjonsnummer: 980 211 282 Deloitte AS Dronning Eufemias gate 14 Postboks 221 Sentrum NO -0103 Oslo Norway Tel: +47 23 27 90 00 www.deloitte.no To the General Meeting of Kongsberg Automotive ASA INDEPENDENT AUDITOR’S REPORT Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Kongsberg Automotive ASA, which comprise: • The financial statements of the parent company Kongsberg Automotive ASA (the Company), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of Kongsberg Automotive ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 12 years from the election by the general meeting of the shareholders on 4 June 2010 for the accounting year 2010. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL ( also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.no to learn more. © Deloitte AS Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening Organisasjonsnummer: 980 211 282 Deloitte AS Dronning Eufemias gate 14 Postboks 221 Sentrum NO -0103 Oslo Norway Tel: +47 23 27 90 00 www.deloitte.no To the General Meeting of Kongsberg Automotive ASA INDEPENDENT AUDITOR’S REPORT Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Kongsberg Automotive ASA, which comprise: • The financial statements of the parent company Kongsberg Automotive ASA (the Company), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of Kongsberg Automotive ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2021, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 12 years from the election by the general meeting of the shareholders on 4 June 2010 for the accounting year 2010. side 2 Independent Auditor's Report - Kongsberg Automotive ASA Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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. • Impairment of goodwill and other intangible assets, right of use assets and property, plant and equipment (non- current assets) Impairment of goodwill and other intangible assets, right of use assets and property, plant and equipment (non- current assets) Key audit matter How the matter was addressed in the audit Refer to note 17 to the Group financial statements for description of management’s impairment testing process and key assumptions. As disclosed in note 14, 15 and 16 the carrying value of goodwill and other intangible assets, right of use assets and property, plant and equipment amounted to EUR 297.3 million at 31 December 2021. Management’s annual impairment testing is based on the Group’s strategic three-year plan, adjusted for relevant recent changes in internal short-term forecasts and market data. Changes in these assumptions could have a significant impact on the value of goodwill and non-current assets. Transparent disclosures and clarity about sensitivities to key assumptions used in the valuations are critical to inform readers how management has made their assessments, given the uncertainty associated with the valuation of the recoverable amounts. Due to the inherent uncertainty involved in the forecasting and discounting of future cash flows, which are the basis of the assessment of recoverability of the cash generating units (CGU) and the level of management judgement involved, this has been identified as a key audit matter. We challenged management’s assumptions used in its impairment model for assessing the recoverability of the carrying value of goodwill and non-current assets. We focused on the appropriateness of CGU identification, methodology applied to estimate recoverable values, discount rates and forecasted cash flows. Specifically: • We obtained a detailed understanding of management’s process for performing the CGU impairment assessment. As part of this we assessed the design and implementation of the key controls. • We tested the methodology applied to estimate recoverable values as compared to the requirements of IAS 36, Impairment of assets; • We tested the mathematical accuracy of management’s impairment models; • We obtained an understanding of and assessed the basis for the key assumptions for the Group’s three-year strategic plan; • We evaluated and challenged management’s cash flow forecasting included in the three-year plan and the growth rate beyond with reference to the recent and historical performance of the CGU’s and external market forecasts and by performing sensitivity analysis; • We assessed the discount rate applied by benchmarking against independent data. We used Deloitte valuation specialists in our audit of the carrying value of goodwill and non-current assets. We considered the appropriateness of the related disclosures provided in note 17. Other Information The Board of Directors and the President & CEO (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises side 2 Independent Auditor's Report - Kongsberg Automotive ASA Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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. • Impairment of goodwill and other intangible assets, right of use assets and property, plant and equipment (non- current assets) Impairment of goodwill and other intangible assets, right of use assets and property, plant and equipment (non- current assets) Key audit matter How the matter was addressed in the audit Refer to note 17 to the Group financial statements for description of management’s impairment testing process and key assumptions. As disclosed in note 14, 15 and 16 the carrying value of goodwill and other intangible assets, right of use assets and property, plant and equipment amounted to EUR 297.3 million at 31 December 2021. Management’s annual impairment testing is based on the Group’s strategic three-year plan, adjusted for relevant recent changes in internal short-term forecasts and market data. Changes in these assumptions could have a significant impact on the value of goodwill and non-current assets. Transparent disclosures and clarity about sensitivities to key assumptions used in the valuations are critical to inform readers how management has made their assessments, given the uncertainty associated with the valuation of the recoverable amounts. Due to the inherent uncertainty involved in the forecasting and discounting of future cash flows, which are the basis of the assessment of recoverability of the cash generating units (CGU) and the level of management judgement involved, this has been identified as a key audit matter. We challenged management’s assumptions used in its impairment model for assessing the recoverability of the carrying value of goodwill and non-current assets. We focused on the appropriateness of CGU identification, methodology applied to estimate recoverable values, discount rates and forecasted cash flows. Specifically: • We obtained a detailed understanding of management’s process for performing the CGU impairment assessment. As part of this we assessed the design and implementation of the key controls. • We tested the methodology applied to estimate recoverable values as compared to the requirements of IAS 36, Impairment of assets; • We tested the mathematical accuracy of management’s impairment models; • We obtained an understanding of and assessed the basis for the key assumptions for the Group’s three-year strategic plan; • We evaluated and challenged management’s cash flow forecasting included in the three-year plan and the growth rate beyond with reference to the recent and historical performance of the CGU’s and external market forecasts and by performing sensitivity analysis; • We assessed the discount rate applied by benchmarking against independent data. We used Deloitte valuation specialists in our audit of the carrying value of goodwill and non-current assets. We considered the appropriateness of the related disclosures provided in note 17. Other Information The Board of Directors and the President & CEO (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // AUDITOR’S REPORT KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // AUDITOR’S REPORT 149148 side 3 Independent Auditor's Report - Kongsberg Automotive ASA information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable legal requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, 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. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements 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 will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We 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. • 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 Company's or the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. side 4 Independent Auditor's Report - Kongsberg Automotive ASA • conclude on the appropriateness of 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 Company and the Group'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 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 Company and the Group to cease to continue as a going concern. • 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 achieves 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. We communicate with the Board of Directors 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. We also provide the Audit Committee 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, related safeguards. From the matters communicated with the Board of Directors, 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 or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Report on compliance with Regulation on European Single Electronic Format (ESEF) Opinion We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name “5967007LIEEXZXJDCG21-2021-12-31-en” have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF). In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF. Management’s Responsibilities Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements. Auditor’s Responsibilities Our responsibility is to express an opinion on whether the financial statements have been prepared in accordance with ESEF. We conducted our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial information”. The standard requires us to plan and perform procedures to obtain reasonable assurance that the financial statements have been prepared in accordance with the European Single Electronic Format. KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // ALTERNATIVE PERFORMANCE MEASURES (APM) 151KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // AUDITOR’S REPORT150 ALTERNATIVE PERFORMANCE MEASURES (APM) This section describes the non-GAAP nancial measures that are used in this report and in the quarterly presentation. All gures were adjusted and exclude the gures disclosed as dis- continued operation in 2021 and 2020 (see Note 12) and as assets and liabilities held for sale as of December 31, 2021 (see Note 13). The following measures are not dened nor specied in the applica- ble nancial reporting framework of the IFRS GAAP. They may be con- sidered as non-GAAP nancial measures that may include or exclude amounts that are calculated and presented according to the IFRS GA A P. > Operating prot / (loss) – EBIT / Adjusted EBIT > EBITDA / Adjusted EBITDA > Free Cash Flow > NIBD > Capital Employed > Adjusted ROCE OPERATING PROFIT / (LOSS) – EBIT/ADJUSTED EBIT (CONTINUING OPERATION) EBIT, earnings before interest and tax, is dened as the earnings ex- cluding the effects of how the operations were nanced, taxed and ex- cluding foreign exchange gains & losses. Adjusted EBIT is dened as EBIT excluding unusual or non-recurring items as well as restructuring items. Restructuring items include consultancy fees in relation to the company’s portfolio transformation. EBIT is used as a measure of operational protability. Consequently, the group also reports the adjusted EBIT, which is the EBIT excluding restructuring items and impairment losses. 2021 MEUR INTERIOR POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS GROUP Operating prot / (loss) 1.4 24.8 48.4 (27.1) 47.5 Restructuring costs 0.0 0.1 0.0 0.0 0.1 Additional salaries and social expenses 0.0 0.3 0.0 0.0 0.3 Other additional operating expenses 0.0 0.1 0.0 2.8 2.9 Adjusted EBIT 1.4 25.2 48.4 (24.3) 50.7 Adjusted EBIT margin 17.0% 5.9% 12.3% 6.1% 2020 (RESTATED) MEUR INTERIOR POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS GROUP Operating prot / (loss) 0.1 (32.7) 39.4 (24.8) (18.0) Restructuring costs 0.0 0.0 0.0 0.1 0.2 Additional salaries and social expenses 0.0 1.7 0.5 2.7 4.8 Other additional operating expenses 0.0 0.1 (1.2) (0.3) (1.3) Impairment losses 0.0 30.3 0.0 0.0 30.3 Adjusted EBIT 0.1 (0.6) 38.8 (22.2) 16.0 Adjusted EBIT margin 1.1% –0.2% 12.7% 2.3% side 5 Independent Auditor's Report - Kongsberg Automotive ASA As part of our work, we performed procedures to obtain an understanding of the company’s processes for preparing its financial statements in the European Single Electronic Format. We evaluated the completeness and accuracy of the iXBRL tagging and assessed management’s use of judgement. Our work comprised reconciliation of the financial statements tagged under the European Single Electronic Format with the audited financial statements in human- readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Oslo, 14 March 2022 Deloitte AS E E s s p p e e n n J J o o h h a a n n s s e e n n State Authorised Public Accountant (Sign.) KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // ALTERNATIVE PERFORMANCE MEASURES (APM) KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // ALTERNATIVE PERFORMANCE MEASURES (APM) 153152 EBITDA / ADJUSTED EBITDA (CONTINUING OPERATION) Earnings before interest expenses and interest income, tax, deprecia- tion, amortization and excluding foreign exchange gains and losses. Adjusted EBITDA is dened as EBITDA excluding restructuring items. EBITDA is used as an additional measure of the group’s operational protability, excluding the impact from depreciation and amortization. 2021 MEUR INTERIOR POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS GROUP Operating prot / (loss) 1.4 24.8 48.4 (27.1) 47.5 Depreciation & Write-off of tangible assets 0.0 15.4 12.4 1.6 29.4 Amortization & Write-off of intangible assets 0.0 2.2 0.3 0.2 2.7 EBITDA 1.4 42.4 61.0 (25.3) 79.6 Restructuring items 0.0 0.4 0.0 2.8 3.2 Adjusted EBITDA 1.4 42.8 61.1 (22.5) 82.8 Adjusted EBITDA margin 16.5% 10.0% 15.5% 10.0% 2020 (RESTATED) MEUR INTERIOR POWERTRAIN & CHASSIS SPECIALTY PRODUCTS OTHERS GROUP Operating prot / (loss) 0.1 (32.7) 39.4 (24.8) (18.0) Depreciation 0.0 14.6 11.0 1.7 27.3 Amortization 0.0 5.2 0.4 0.3 6.0 EBITDA 0.1 (13.0) 50.8 (22.8) 15.2 Restructing items 0.0 1.8 (0.7) 2.6 3.7 Restructing items 0.0 30.3 0.0 0.0 30.3 Adjusted EBITDA 0.1 19.2 50.2 (20.2) 49.3 Adjusted EBITDA margin 1.1% 5.2% 16.4% 7.2% FREE CASH FLOW (CONTINUING OPERATION) Free Cash Flow is measured based on sum of cash ow from operating activities, investing activities, nancial activities and currency effects on cash (together described as Change in cash), excluding net draw- down/repayment of debt and proceeds received from capital increase/ purchase of treasury shares. The group considers that this measurement illustrates the amount of cash the group has at its disposal to pursue additional investments or to repay debt. The table below includes only the cash ows from the continuing operation in 2021 and 2020. MEUR 2021 2020 (RESTATED) Cash ow from operating activities 56.7 57.7 Cash ow used by investing activities (26.7) (30.7) Cash ow used by/from nancing activities (11.1) 48.9 Currency effects on cash 18.3 (14.9) Add back / less: Proceeds from capital increase 0.0 (89.7) Purchase of treasury shares 0.0 1.3 Net draw-down/repayment of debt (18.1) 9.3 Free Cash Flow 19.1 (18.1) CAPITAL EMPLOYED Capital Employed is equal to operating assets less operating liabilities. Operating assets and liabilities are items, which are involved in the process of producing and selling goods and services. Long-term nan- cial assets and obligations are excluded, as those are involved in raising cash for operations and disbursing excess cash from operations. Capital Employed is measured to assess how much capital is needed for the operations/business to function and evaluate if the capital em- ployed can be utilized more efciently and/or if operations should be discontinued. Liabilities disclosed in note 13 are excluded in the table. As restatement of the balance sheet for prior year is not required by IFRS 5, thus capital employed as of December 31, 2020 contains assets and lia- bilities of discontinued operation. MEUR 2021 2020 Total assets 980.1 980.7 Deferred tax liabilities (27.0) (14.9) Other long term liabilities (20.0) (21.3) Current liabilities incl. other short-term interest bearing liabilities (262.8) (253.2) Assets held for sale (238.2) 0.0 Long-term interest-bearing liabilities 70.8 0.0 Capital Employed 507.6 691.2 NIBD Net Interest-Bearing Debt (NIBD) consists of interest-bearing liabilities less cash and cash equivalents. The group risk of default and nancial strength is measured by the net interest-bearing debt. It shows the group’s nancial position and leverage. As cash and cash equivalents can be used to repay debt, this measurement shows the net overall nancial position of the group. MEUR 2021 2020 Interest-bearing loans and borrowings 272.1 273.5 Long-term interest-bearing lease liabilities 66.7 89.6 Other short-term liabilities, interest-bearing 28.4 13.8 Bank overdraft 0.6 0.0 Cash and cash equivalents (51.3) (67.4) Net Interesting-Bearing Debt 316.4 309.5 ADJUSTED ROCE Return on Capital Employed (ROCE) is based on EBIT for the last twelve months divided by the average of capital employed at the beginning and end of the period. Return on Capital Employed is used to measure the return on the capi- tal employed without taking into consideration the way the operations and assets are nanced during the period under review. The group con- siders this ratio as appropriate to measure the return of the period. Return on Capital Employed MEUR 2021 2020 Capital Employed beginning (1) 01.01.2021 691.2 01.01.2020 645.6 Capital Employed at end (2) 31.12 2021 507.6 31.12 2020 691.2 Adjusted EBIT last twelve months (3) 50.7 16.4 Adjusted ROCE (3) / ((1)+(2))2 8.5% 2.4% KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // ALTERNATIVE PERFORMANCE MEASURES (APM) 155154 KONGSBERG AUTOMOTIVE ANNUAL REPORT 2021 // CONSOLIDATED KEY FINANCIAL DATA CONSOLIDATED KEY FINANCIAL DATA 2021 2020 (RESTATED) 2019 2018 2017* Operations and prot 1 Operating revenues & Other income (MEUR) 831.5 687.3 1,160.9 1,123.1 1,056.6 2 Depreciation/amortization (MEUR) 32.1 33.4 48.0 35.6 45.4 3 Operating prot / (loss) (MEUR) 47.5 (18.0) 62.4 53.7 23.8 4 Prot / (loss) before taxes (MEUR) 38.0 (63.6) 43.5 38.5 6.4 5 Net prot / (loss) (MEUR) 28.5 (58.5) 28.8 23.8 (8.0) 6 Cash ow from operating activities (MEUR) 56.7 57.7 51.4 43.2 38.3 7 Investment in property, plant and equipment (MEUR) 25.6 31.8 63.5 63.9 47.4 8 Development expenses, gross (MEUR) 55.9 54.9 53.7 63.2 67.4 9 Development expenses, net (MEUR) 47.5 46.4 43.0 46.8 55.0 Protability 10 EBITDA margin % 9.6 2.2 9.5 8.0 6.5 11 Operating margin % 5.7 (2.6) 5.4 4.8 2.3 12 Net prot margin % 3.4 (8.5) 2.5 2.1 (0.8) 13 Return on total assets % 5.8 (2.0) 7.1 7.0 3.4 14 Return on capital employed (ROCE) % 8.5 2.4 11.1 11.1 5.3 15 Return on equity % 11.2 (22.1) 10.7 10.7 (4.0) Capital as at 31.12. 16 Total assets (MEUR) 984.8 898.0 927.0 820.2 721.9 17 Capital employed* (MEUR) 507.6 691.2 645.6 522.9 448.5 18 Total equity (MEUR) 265.6 245.5 282.9 253.5 190.7 19 Equity ratio % 27.0 27.3 30.5 30.9 26.4 20 Liquidity reserve (MEUR) 140.9 197.0 64.4 109.1 105.4 21 Long-term interest-bearing debt (MEUR) 338.7 363.0 362.7 269.4 257.8 22 Interest coverage ratio 2.4 (0.4) 2.8 3.0 1.4 23 Current ratio (Banker’s ratio) 1.6 1.7 1.7 1.7 1.5 Personnel 24 Number of employees as at 31.12. 5,624 11,234 10,908 11,401 10,482 Denitions 5 Prot after tax 9 Gross expenses – Payments from customers 10 (Operating prot / (loss)) + depreciation and amortization) / Operating revenues 11 (Operating prot / (loss)) / Operating revenues 12 (Net prot / (loss)) / Operating revenues 13 (Operating prot / (loss)) / Average total assets 14 Adjusted EBIT / Average capital employed 15 (Net prot / (loss)) / Average equity 17 Operating assets – Operating liabilities 20 Cash + Unutilized credit facilities and loan approvals 22 (Operating prot / (loss)) / Financial expenses 23 Current assets / Current liabilities * Due to the divestment of the Interior segment in 2021, gures in these years are not fully comparable with the gures in 2021 and 2020 which had been restated in the accordance with the requirements of IFRS 5. ** Assets and liabilities classied as held for sale are excluded in 2021 *** Items of the Statement of Comprehensive income and Statement of Cash Flow classied as Discontinued operation are excluded in 2021 and 2020 ** Employees from Discontinued operation are excluded as of December 31, 2021 156 KONGSBERG AUTOMOTIVE ASA DYRMYRGATA 48 3611 KONGSBERG NORWAY T: +47 32 77 05 00 OPERATIONAL HEADQUARTERS KA GROUP AG EUROPAALLEE 39 8004 ZÜRICH SWITZERLAND T: +41 43 508 65 60 WWW.KONGSBERGAUTOMOTIVE.COM 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