Annual Report • Mar 19, 2018
Annual Report
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| 3 | Introduction |
|---|---|
| 4 | Letter from the CEO |
| 6 | Report from the Board of Directors |
| 11 | Financial Statements |
| 45 | Declaration to the Annual Report |
| 47 | Standards of Corporate Governance |
| 51 | Auditor Opinion Letter |
| 55 | Board of Directors |
| 59 | Executive Management |
| 61 | Alternative Performance Measures (APM) |
More than 600 employees are working for Nordic
Nordic Semiconductor (Nordic or the Group) is a leading provider of IC solutions for wireless connectivity and IoT. It is a market leader in short range wireless with over 40% market share in Bluetooth Low Energy and is ready to take the next big step into cellular IoT. Headquartered in Norway, Nordic is a tech success story with operations and presence across the globe.
A key enabler technology of the Internet of Things (or 'IoT' for short) is Bluetooth® Low Energy (Bluetooth LE): The fastest growing wireless technology of all time and on-trend to break all previous adoption rate records. Bluetooth LE leverages the ubiquity, computing power, and ease-of-use of modern smartphones and apps, and the on-going growth of the Internet generally.
Nordic Semiconductor pioneered the development of ultra-low power wireless (a category defined by the ability to operate from small batteries for years, and includes Bluetooth LE) during the early 2000s. Nordic has been a key contributor in the creation and evolution of Bluetooth LE as a wireless standard within every version of Bluetooth, since Bluetooth v4.0 and all the way up to the latest Bluetooth 5. These efforts culminated in Nordic's latest nRF52 Series that redefine what's possible on a Bluetooth LE single chip.
But the IoT will require more than just Bluetooth Low Energy to operate. To enable reliable, any 'thing' anywhere global wireless connectivity to the cloud and connected services, the IoT will require a range of other complimentary wireless technologies.
At short to medium range distances these required technologies include Wi-Fi and other wireless technologies. Nordic has included support for these technologies, including amongst others IEEE 802.15.4 (used by such wireless technologies as ZigBee and Thread) in its latest System-on-Chip (SoC).
At long-range, the IoT will need to leverage the ubiquity and geographical reach of the world's cellular (3G, 4G, 4G LTE, 5G) networks. Just as cellular networks provided the IT infrastructure that made billions of modern smartphones and apps technologically and commercially feasible for end users, it will now do the same for the IoT to form what is being called 'cellular IoT'.
During 2017, Nordic Semiconductor continued the development of a low power LTE technology for cellular IoT. This development leverages Nordic Semiconductor's more than 10 years of leadership in ultra-low power wireless that includes Bluetooth LE. Towards the end of 2017, Nordic demonstrated a chip and System-in-Package module that are able to connect to cellular base stations and ready to be sampled to key customers.
2017 saw significant improvements for Nordic Semiconductor compared to 2016. During 2017, we have seen an opportunity for the Group that is much larger than we had previously anticipated.
Svenn-Tore Larsen, Chief Executive Officer
To ensure that Nordic is well positioned to address the significant opportunities before us, we have continued to invest in both short range and long range technologies during the year. We are confident that the Nordic technology platform, and our human and intellectual capital, will be ready to meet the growth and revenue opportunities that are developing in our markets.
In the short to mid-term, Bluetooth LE will remain the growth driver for the Group's revenue. Nordic is continuously expanding its product offering to capture new opportunities: both customer-specific and new markets. Our portfolio includes the industry's broadest range of Bluetooth 5 chips to cater for the widest range of product and service applications.
We continue to focus on meeting our customers' needs for technology excellence and collaboration to design complex solutions for our existing customers, because this is what we in Nordic pride ourselves on. My confidence in making this statement is supported by the fact that 2017 was another record year for Nordic design wins in Bluetooth, according to Bluetooth LE and FCC certification data from DNB Markets. The investments Nordic made in 2016 are the main contributors to the enviable position we have achieved in Bluetooth LE. Nordic has continued to invest in 2017 in order to retain and gain further presence in this space for the years to come.
The underlying strategic technological product platform Nordic built for its nRF51 and nRF52 Series Bluetooth LE chips is now being leveraged by our forthcoming nRF91 Series of cellular IoT solutions. By building on the same platform, we have achieved significant cost savings, and accelerated time-to-market. We intend to continue these efficiencies in future product development strategies.
Another trend Nordic has recognized and is keen to encourage is our widening customer base. In the past, our business has been meaningfully affected by our customers' consumer product cycles. We are now seeing the benefits of our focus on widening and diversifying our customer mix, decreasing our dependence on consumer product cycles. These additional customers – comprising professional, industrial, and B2B markets such as Medical, Enterprise Automation, and Building & Retail – tend to be more stable and have significantly longer product cycles than traditional consumer electronics. Exposure to a broader and more diversified set of customers and industries is expected to diminish revenue volatility for Nordic.
In terms of our focus across industries and technologies, Nordic has focused on device security and protection. Device security is increasingly becoming one of the main concerns surrounding the IoT. All of Nordic's solutions in both Bluetooth and cellular IoT, are underpinned by market-leading security features that allow customers to address most of the security concerns posed by the IoT. Ultimately, IoT device security is the responsibility of each IoT device manufacturer, but Nordic's solutions provide manufacturers with the root-level ability to protect and secure their devices in a way that we feel is difficult for our competition to match.
We recognize that beyond technological and commercial excellence, Nordic's success is due in large part to the development of a thriving and motivated team. This is reflected in low staff turnover and the long-standing commitment of our senior managers, many of whom have been promoted from within Nordic's ranks. The Group also benefits from the diversity of our employees, who represent 39 nationalities. We believe that our human capital is unparalleled in its skill and its commitment to our corporate goals.
Nordic continues to play an important role in the development and commercialization of technologies that revolutionize entire industries and sectors. The capabilities of our team, and the relationships with our customers, existing and new, give me confidence that we are excellently positioned to address the significant growth opportunities that are still before us.
2017 was a year of record Bluetooth sales growth and continued customer diversification for Nordic Semiconductor Group. 40% growth in Bluetooth related revenues was a result of investments made during 2016 into Nordic's product offering in this area. Nordic is now investing further to strengthen its position within the fast growing Bluetooth Low Energy segment, as well as ramping up for the market opportunities presented by longer-range wireless and cellular IoT.
Net profit after tax for Nordic Semiconductor Group was MUSD 6.8 in 2017, an increase of 5.3% from 2016. Revenue increased 19.4% to MUSD 236.0 in 2017 from MUSD 197.7 in 2016. Gross margins improved 0.1 percentage points to 47.2% in 2017 from 47.1% in 2016. Yield issues in the end of 2016 and beginning of 2017 have been resolved and Nordic is closing in on the 50% target for gross margin.
Nordic has been investing for future growth by increasing number of employees, both within R&D and sales. New offices have been established in both Asia and Europe in addition to scaling up operations to meet customer requirements. The result of these investments is that EBITDA margins decreased to 10% in 2017 from 11% in 2016. Continued investment both in existing Bluetooth technologies as well as wireless and cellular platform development resulted in an EBITDA of MUSD 23.3 in 2017, a. 10.1% increase from MUSD 21.2 in 2016. For a definition of Alternative Performance Measures (APM), including EBITDA, see page 61.
For example, during 2017, Nordic expanded the nRF52 Series and launched the nRF52840 multiprotocol System-on-Chip (SoC), which is the most advanced chip yet. Nordic has a Thread certified solution that enables simultaneous Thread and Bluetooth 5 connectivity for the first time on this chip. Nordic also launched the nRF52810 SoC offering advanced features such as Bluetooth 5 and an Arm® Cortex®-M4 CPU at a price point that is compelling for even the lowest-cost Bluetooth LE applications.
Nordic announced in December 2017 that it had begun lead customer sampling of its nRF91 Series LTE-M/NB-IoT low-power cellular IoT solution. As part of the lead customer-sampling program, Nordic has achieved its first approval for operation in live networks of cellular operators. We consider this to be a testament to the continued innovation capability and technological leadership of the Nordic team.
Nordic's vision is to be a world-leading supplier of low-power connectivity. This includes both short-range and long-range capabilities, which we believe makes Nordic unique in the industry. The Group has significantly strengthened its sales and marketing effort throughout 2017, both within key accounts and the technical teams supporting existing and new customers. In close cooperation with distribution partners, these investments form a strong foundation for future revenue growth. It is expected that Nordic's operational leverage will also increase over time, positively affecting EBITDA margins.
Nordic's continued efforts to increase customer and segment diversification had good results in 2017. This strategy will continue in 2018. For the Bluetooth LE technology, the objective is continued strengthening of Nordic's position through customer diversification and an expanding product offering.
Another important objective for 2018 is to build a position in low power cellular IoT, leveraging the existing customer base and market reach. Securing the first design wins in 2018 and ramping up production with lead customers are critical milestones in meeting this objective.
Nordic Semiconductor is a "fabless" semiconductor group, which designs, sells and delivers integrated circuits and related intellectual property for use in short and also long-range wireless applications. The Group specializes in ultra-low power wireless solutions, based on its proprietary 2.4GHz RF and Bluetooth Low Energy technologies. Nordic Semiconductor is a pioneer in ultra-low power wireless technology, and with more than 300 million units sold last year, the Group can claim a strong position in this sector. Nordic is also developing its long-range low-power cellular chipset, providing customers with a broad portfolio of low-power connectivity solutions across the spectrum of distances from near-field to long-range.
Nordic Semiconductor's components are manufactured by world-class subcontractors and sold through electronics distributors to manufacturers of branded electronics across a wide range of markets. These markets include Consumer Electronics, Wearables, Building and Retail, Healthcare, and Other Applications.
The Group is headquartered in Trondheim, Norway, and has offices in Norway, USA, China, Korea, Japan, Taiwan, Poland, Finland and the Philippines.
In accordance with the provisions of the Norwegian Accounting Act, the Board of Directors confirms that the accounts have been prepared on a going concern basis and that the going concern assumption applies. Pursuant to Section 3-9 of the Norwegian Accounting Act, Nordic prepares consolidated annual accounts in accordance with IFRS, International Financial Reporting Standards, approved by the EU. The statutory accounts of Nordic Semiconductor ASA have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), relevant interpretations, and the Norwegian Accounting Act. A summary of internal controls related to the accounting process can be found in the Corporate Governance section of this annual report.
| Amounts in USD thousand |
2017 | 2016 | Change % |
|---|---|---|---|
| Proprietary wireless | 77.428 | 82.358 | -6,0% |
| Bluetooth | 150.126 | 107.165 | 40,1% |
| ASIC Components | 7.916 | 6.990 | 13,2% |
| Consulting services | 533 | 1.185 | -55,4% |
| Total | 236.003 | 197.698 | 19,4% |
Total revenue increased 19.4% to MUSD 236.0 in 2017 from MUSD 197.7 in 2016. The increase is mainly attributable to a 40.1% Bluetooth LE sales increase to MUSD 150.1 from MUSD 107.2 in 2016. Bluetooth revenue represented 63.6 % of Nordic's total revenue in 2017 compared to 54.2% in 2016. Nordic had a large number of design wins in the end of 2016 and 2017, which positively affected revenue in 2017. There has been a significant growth especially within the Building and Retail market. Revenue from this market has increased by 111.4 % or MUSD 30 to MUSD 56.9 in 2017. The growth is a result of a successful diversification strategy that Nordic started in 2016.
Revenue from proprietary products declined 6.0% to MUSD 77.4 in 2017 from MUSD 82.4 in 2016. Sales of Proprietary are impacted by change in product mix and a transition to Bluetooth Low Energy.
Sales of ASIC products showed strength during 2017 with a 13.2% growth to MUSD 7.9. No new designs are being developed within ASICS and the revenue each year will therefore depend on demand from existing customers and applications.
| Amounts in USD thousand | 2017 | 2016 |
|---|---|---|
| Gross Profit | 111.487 | 93.044 |
| Gross Margin | 47.2% | 47.1% |
Gross profit was MUSD 111.5, or 47.2% of revenue, compared with MUSD 93.0, or 47.1% of revenue in 2016. Gross margins in 2H 2016 and 1H 2017 where negatively affected by yield issues in connection with the rampup of the nRF52 Series product line. Gross margin improvements in the second half of 2017 were the result of improving yields on the nRF52 Series and fewer proprietary sales, offset by a shift in customer and product mix.
| Amounts in USD thousand | 2017 | 2016 |
|---|---|---|
| Payroll expenses | 60.517 | 49.185 |
| Other operating expenses | 27.657 | 22.677 |
| Depreciation | 12.863 | 11.473 |
| Total operating expenses | 101.037 | 83.336 |
Total operating expenses totaled MUSD 101.0, an increase of 21.2% from MUSD 83.3 in 2016. This increase comprises an increase in the number of employees, higher activity related to release of new products and scaling operations to future growth expectations.
Total cash operating expenses (excluding depreciation and amortization) before options, write-down of receivables and net capitalized R&D expenses were MUSD 94.6 in 2017, compared with MUSD 75.8 in 2016. This represents an increase of 24.9% in absolute terms, and an increase of 1% as a percent of revenue, to 40% in 2017 compared to 39% in 2016.
The main driver for the increased cash operating expenses is the headcount growth from 533 at the end of 2016 to 601 at the end of 2017, representing a 12.8% growth in headcount. The headcount growth comes as a result of more resources devoted to both short-range and long-range R&D. The number of total employees within R&D has increased from 409 in December 2016 to 457 in December 2017. Nordic has also strengthened the sales and supply chain organization to be able to handle an increase in volumes that is expected by management. Other operating expenses related to R&D, software, IP and test manufacturing have increased with the higher activity level due to the product launch phase Nordic currently is in. As a result of the strong 2017 revenue, cash operating expenses also includes performance based bonuses to employees and management.
Development of new wireless components is essential to the Group's continued competitiveness in a rapidly evolving market. At the end of 2017, R&D personnel represented 76% of the Group's employees (77% in 2016). During 2017, total R&D spending including capitalized items amounted to 26.8% of revenues compared with 23.5% in 2016. Nordic has in 2017 capitalized MUSD 8.6 compared to MUSD 5.3 in 2016 related to R&D projects that are in the commercialization phase of the development. The number of employees related to the cellular investment increased to 154 in 2017 from 132 in 2016, and operating expenses from these activities increased to MUSD 20.0 in 2017 from MUSD 16.2 in 2016.
The commitments which Nordic has made through investments are intended to secure market shares within Bluetooth LE and secure a leading position within the emerging low power cellular IoT market.
The tax expense for the Group for the financial year 2017 was MUSD 3.0, representing 30.9 % of profit before tax. The Group's effective tax rate was up 4.2 percentage points from 2016. This is mainly impacted by reversal of previously recognized tax benefit related to the expired 2014 option program.
The Group has had a positive net cash flow from operating activities in 2017 of MUSD 35.0 (MUSD 0.3 in 2016). The positive contribution comes from the profit, lower inventory levels as well as reduced accounts receivable from improved cash collection. Cash flow from operations have been used to finance the investing activities of MUSD 19.4 (MUSD 15.1 in 2016). Cash at the end of the year was MUSD 36.7.
Nordic has successfully managed to decrease inventory levels by MUSD 8.3 to MUSD 43.8 at year-end 2017 from MUSD 52.0 year-end 2016. Accounts receivable have also been reduced in 2017 to MUSD 48.6 at year-end 2017 from MUSD 54.8 at year-end 2016. The Group has focus on cash management and cash generation, and carefully monitors working capital levels and changes thereto. Total assets increased by MUSD 10.4 to MUSD 185.1 at year-end 2017.
Demand for Nordic Semiconductor's products is tied to the larger semiconductor and electronics markets and is sensitive to fluctuations in global economic conditions. Long term, the market is expected to grow significantly as wireless solutions are embedded into a growing range of new products. Shorter term, global market conditions may however have certain negative or cyclical impacts on the industry and corresponding growth. As demand increases, new competitors are likely to enter the market and/or different trends may increase volatility of both revenues and earnings for Nordic.
Nordic Semiconductor's success depends on its ability to anticipate customer needs and address these with competitive technical solutions and outstanding customer support. Furthermore, the Group's outsourcing of manufacturing and direct distribution requires close collaboration with third-party subcontractors and distributors.
Nordic has a MUSD 40 Revolving Credit Facility ("RCF") agreement that expires in 2019, of which MUSD 20 has been utilized. The group entered into a 5-year MUSD 25 RCF in December 2017. In total, Nordic may borrow up to MUSD 65 at any time with a rate of LIBOR + margin. In addition, the Group has a MEUR 10 overdraft facility to be used to finance short term working capital requirements. Available cash on December 31, 2017 including credit facilities is close to MUSD 94 compared to MUSD 52, 31 December 2016. The Group has a healthy equity ratio of 67.5 % at year-end 2017 compared to 67.0% year-end 2016. Financial covenant on the RCFs are limited to a required Equity ratio above 40%. As the Group holds little interest-bearing debt, the exposure to risk associated with interest rate fluctuations is limited.
The Group is exposed to foreign exchange risk in its ordinary business, which can impact profit margins. Nordic's operating expenses are primarily in Norwegian kroner and Euro and its sales and direct production costs are nearly entirely in US dollars. The Group does not use financial instruments to hedge this risk.
Finally, the Group is exposed to credit risk, although this has historically not resulted in significant losses. Nordic Semiconductor sells its components to leading international distributors of electronics components, primarily based in Asia. The Group's receivables are not credit insured, but credit monitoring routines are in place for setting up credit lines, providing security (payment guarantees) and demanding advance payments when required. Nordic Semiconductor reported a loss of MUSD 1 related to a bankrupt distributor during 2017.
At the end of 2017, Nordic Semiconductor had 601 employees compared to 533 in 2016, of whom 270 (225) were employed outside of Norway. A well-functioning cooperation between management and the employee representatives contributes to open lines of communication and addressing any challenges at an early stage.
There were 77 (68) female employees at the end of 2017, corresponding to 13% (13%) of total number of employees. The Group had 328 full-time employees in Norway, including 48 female employees. There were 269 full-time employees in Finland, China, Hong Kong, South Korea, Japan, the Philippines, Taiwan, Switzerland, Poland, UK, the Netherlands and the US, including 29 females. The average salary for female employees was 82% (79%) of the average salary for male employees excluding executive management. Gender differences in salary levels are driven by both the location and function of the employees, with a larger proportion of female employees in administrative functions and based in the Philippines, where the average salary level is below the average Group level. A comparison of the R&D functions in Norway shows an average salary for females at 95% of the average salary for males, this is mainly due to differences in seniority.
Gender equality is a fundamental principle for the Group, and efforts are being made to ensure that there is no gender imbalance when recruiting for positions within Nordic Semiconductor. Nordic's experience is that there are fewer female applicants to open engineering positions than there are male applicants, which may be a result of the proportion of female to male engineering students in Norway and other primary recruiting markets for Nordic. Nordic participates in the ADA project, initiated by Norwegian University of Science and Technology. The project aims to recruit, motivate and educate females within the IT industry in Norway.
Executive management consists of seven men, and in the Board of Directors there are three female shareholderelected members. Absence due to illness was 2.2% in 2017, compared with 2.4% in 2016. No occupational illnesses or injuries were reported in 2017.
Nordic Semiconductor does not own or operate manufacturing facilities. Manufacturing is outsourced to leading third-party providers which comply with the ISO 14001 environmental standards, among other certifications and qualifications. Consequently, there is limited pollution associated with the Group's operations. Nordic Semiconductor seeks to limit resource consumption, prevent unnecessary environmental pollution and manage waste in an environment-friendly and resourceefficient manner. The Group has established routines to monitor these conditions under its ISO9001, ISO14001 and OHSAS18001 certified management system.
Nordic Semiconductor complies with all current applicable laws and regulations, and all products comply fully with the REACH and RoHS hazardous substance directives. This enables the Group to market itself as a "green" supplier, which also is an advantage towards major customers who have their own stringent environmental standards.
Nordic Semiconductor's guidelines and practice for Corporate Governance are in accordance with the Norwegian Code of Practice for Corporate Governance, dated 30 October 2014 as required for all listed companies on the Oslo Stock Exchange. Furthermore, the guidelines meet the disclosure requirements of the Norwegian Accounting Act and Securities Trading Act.
The guidelines are included separately in the annual report.
Nordic Semiconductor aims to distribute an annual dividend to shareholders. However, in order to pursue required investments in the Group's longer-term growth strategy in a highly cyclical business environment, the Board recommends that Nordic preserve a high proportion of equity and liquidity.
The net profit of the parent company of the Group totaled MUSD 4.7 in 2017 and Board of Directors proposes that the net profit to be transferred to other equity.
In accordance with the Group's dividend policy and taking into consideration the cash position and funding requirements to pursue Nordic Semiconductor's growth strategy in the coming years, the Board is not proposing any dividend distribution for 2017 at its Annual General Meeting in April.
Bluetooth Low Energy is established as a core technology within the IoT space, a market that is expected to grow significantly and become nearly ubiquitous in its application. The Bluetooth LE market, in terms of Integrated Circuit (IC) shipments and according to IHS Research, is expected to grow at 30-40% CAGR from 2017 to 2020.
Nordic reported a strong 19.4% overall revenue growth rate for 2017, driven by a 40.1% growth in Bluetooth. Based on a solid backlog and pipeline of new designs going into production, management estimates continued strong growth in Bluetooth Low Energy sales for the coming periods.
Nordic's proprietary business will continue to contribute significantly to Nordic's financial results, although it is expected that more designs will be transferred to the Group's Bluetooth LE solutions over time.
Nordic has proven its technology leadership with the introduction of the nRF52 Series on top of its existing technology platform. The Group expects to maintain its enviable market position in Bluetooth Low Energy into the future, including its higher value stateof-the-art nRF52 Series SoCs as well as variations at diff erent price points. Nordic Semiconductor will continue to target the most cost-optimized, high-volume applications.
Bluetooth Low Energy is expected to continue to be the main revenue driver for the next years. In terms of emerging technological development, the Group expects to see growth from its investments in low power cellular technology, where Nordic's technology architecture is being integrated with wireless technology. Nordic sampled the fi rst lead customers late 2017 to encouraging results and will continue to engage in lead-customer sampling during 1H 2018 and general sampling later in 2018.
Nordic Semiconductor continues to be an important player in a rapidly evolving and complex industry. We have every confi dence that the signifi cant capabilities and sound fi nancial position of the Group will enable it to address the opportunities as well as the challenges that it will inevitably face in the coming years.
Terje Rogne Chairman
Beatriz Malo de Molina Board member
Inger Berg Ørstavik Board member
Asbjørn Sæbø Board member, employee
Oslo, 16 March 2018
Anne-Cecilie Fagerlie Board member
Tore Valderhaug Board member
Joakim Ferm Board member, employee
Svenn-Tore Larsen Cheif Executive Offi cer
Craig Ochikubo Board member
Birger Steen Board member
Jon Helge Nistad Board member, employee
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | Amount in USD 1000 | Note | 2017 | 2016 |
| 236 003 | 197 698 | Total Revenue | 3 | 236 809 | 197 944 |
| -123 645 -872 |
-104 046 -608 |
Cost of materials Direct project costs |
4 | -123 645 -872 |
-104 046 -608 |
| 111 487 | 93 044 | Gross profit | 112 293 | 93 290 | |
| -60 517 -27 657 -12 863 |
-49 185 -22 677 -11 473 |
Payroll expenses Other operating expenses Depreciation |
9/10/12/18 5/21 11/12 |
-38 788 -55 147 -10 571 |
-32 458 -42 208 -9 946 |
| 10 450 | 9 708 | Operating profit | 7 787 | 8 677 | |
| 275 -622 -322 9 780 |
257 -295 -911 8 758 |
Financial income Financial expenses Net foreign exchange gains (losses) Profit before tax |
6/22 6/22 6/22 |
274 -622 -352 7 087 |
257 -295 -911 7 727 |
| -3 017 6 763 |
-2 334 6 424 |
Income tax expense Net profit after tax |
7 | -2 393 4 693 |
-2 015 5 713 |
| 6 763 0,04 0,04 |
6 424 0,04 0,04 |
Attributable to Equity holders of the parent Earnings per share Ordinary earnings per share (USD) Fully diluted earnings per share (USD) |
8 8 |
0,04 0,04 |
0,04 0,04 |
| 2017 | 2016 | Statement of comprehensive income |
2017 | 2016 | |
| 6 763 | 6 424 | Net profit after tax | 4 693 | 5 713 | |
| Other comprehensive income not to be reclassified to profit or loss in subsequent periods: |
|||||
| -25 | -28 | Actuarial gains (losses) on defined benefit plans (before tax) |
-25 | -28 | |
| 6 134 |
7 56 |
Income tax effect Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Currency translation differences |
7 | 6 | 7 |
| 6 878 | 26 083 | Total Comprehensive Income | 4 674 | 24 843 |
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | Amount in USD 1000 | Note | 2017 | 2016 |
| ASSETS | |||||
| Non-current assets | |||||
| 18 925 | 14 395 | Capitalized development expenses | 12 | 18 925 | 14 395 |
| 15 509 | 12 054 | Software and other intangible assets | 12 | 15 300 | 12 060 |
| 1 516 | 1 973 | Deferred tax assets | 7 | 1 341 | 1 946 |
| 12 258 | 13 367 | Fixed assets | 11/22 | 7 999 | 10 048 |
| Shares in subsidiaries | 1/13 | 15 | 10 | ||
| 0 | 2 | Other long term assets | 0 | 2 | |
| 48 209 | 41 792 | Total non-current assets | 43 580 | 38 462 | |
| Current assets | |||||
| 43 789 | 52 044 | Inventory | 4 | 43 789 | 52 044 |
| 48 582 | 54 772 | Accounts receivable | 14/22 | 48 582 | 54 772 |
| 7 844 | 4 941 | Other short-term receivables | 15 | 16 576 | 10 681 |
| 36 695 | 21 135 | Cash and cash equivalents | 16/22 | 35 020 | 20 432 |
| 136 910 | 132 892 | Total current assets | 143 967 | 137 929 | |
| 185 119 | 174 684 | TOTAL ASSETS | 187 548 | 176 391 | |
| EQUITY | |||||
| 283 | 283 | Share capital | 17 | 283 | 283 |
| -2 | -2 | Treasury shares | 17 | -2 | -2 |
| 14 436 | 14 436 | Share Premium | 17 | 14 436 | 14 436 |
| 110 306 | 102 232 | Other equity | 105 541 | 99 958 | |
| 124 953 | 116 949 | TOTAL EQUITY | 120 258 | 114 676 | |
| LIABILITIES | |||||
| Non-current assets | |||||
| 293 | 293 | Pension liability | 18 | 293 | 293 |
| 20 000 | 20 000 | Other long-term loan facility | 22 | 20 000 | 20 000 |
| 20 293 | 20 293 | Total non-current liabilities | 20 293 | 20 293 | |
| Current liabilities | |||||
| 13 075 | 15 295 | Accounts payable | 20/22 | 12 337 | 14 887 |
| 3 069 | 2 786 | Income taxes payable | 7 | 2 508 | 2 609 |
| 2 774 | 2 260 | Public duties | 20 | 2 388 | 1 990 |
| 20 955 | 17 100 | Other short-term debt | 15/20 | 29 765 | 21 937 |
| 39 873 | 37 442 | Total current liabilities | 46 997 | 41 423 | |
| 60 166 | 57 734 | TOTAL LIABILITIES | 67 290 | 61 715 | |
| 185 119 | 174 684 | TOTAL EQUITY AND LIABILITY | 187 548 | 176 391 | |
Terje Rogne Chairman
Beatriz Malo de Molina Board member
Inger Berg Ørstavik Board member
Asbjørn Sæbø Board member, employee
Oslo, 16 March 2018
Anne-Cecilie Fagerlie Board member
Tore Valderhaug Board member
Joakim Ferm Board member, employee
Svenn-Tore Larsen Cheif Executive Offi cer
Craig Ochikubo Board member
Birger Steen Board member
Jon Helge Nistad Board member, employee
for the year ended 31 December
| Amount in USD 1000 | Share capital |
Treasury shares |
Share premium |
Other paid in capital |
Currency translation reserve |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|---|
| RTRTRTRT | |||||||
| Equity as of 01.01.16 | 283 | (1) | 14 253 | 406 | 97 465 | 112 406 | |
| Net profit for the period | 6 424 | 6 424 | |||||
| Purchase of treasury shares | (1) | (2 660) | (2 661) | ||||
| Sale of treasury shares, option excercise | (37) | (37) | |||||
| Share based compensation | 599 | 599 | |||||
| Issue of share capital | 183 | 183 | |||||
| Other comprehensive income | 35 | 35 | |||||
| Equity as of 31.12.16 | 283 | (2) | 14 436 | 968 | - | 101 264 | 116 949 |
| Net profit for the period | 6 763 | 6 763 | |||||
| Share based compensation | 1 126 | 1 126 | |||||
| Other comprehensive income | 134 | (19) | 115 | ||||
| Equity as of 31.12.17 | 283 | (2) | 14 436 | 2 094 | 134 | 108 008 | 124 953 |
for the year ended 31 December
| Amount in USD 1000 | Share capital |
Treasury shares |
Share premium |
Other paid in capital |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|
| Equity as of 01.01.16 | 283 | (1) | 14 253 | (807) | 97 257 | 110 986 |
| Net profit for the period | 5 713 | 5 713 | ||||
| Purchase of treasury shares | (1) | (2 660) | (2 661) | |||
| Sale of treasury shares, option excercise | (37) | (37) | ||||
| Share based compensation | 478 | 478 | ||||
| Issue of share capital | 183 | 183 | ||||
| Other comprehensive income | 14 | 14 | ||||
| Equity as of 31.12.16 | 283 | (2) | 14 436 | (366) | 100 324 | 114 676 |
| Net profit for the period | 4 693 | 4 693 | ||||
| Share based compensation | 907 | 907 | ||||
| Other comprehensive income | (19) | (19) | ||||
| Equity as of 31.12.17 | 283 | (2) | 14 436 | 541 | 104 999 | 120 258 |
for the year ended 31 December
| GROUP | PARENT | |||||
|---|---|---|---|---|---|---|
| 2017 | 2016 | Amount in USD 1000 | Note | 2017 | 2016 | |
| Cash flows from operating activities | ||||||
| 9 780 | 8 758 | Profit before tax | 7 087 | 7 727 | ||
| -1 600 | -10 198 | Taxes paid for the period | 7 | -1 382 | -10 198 | |
| 12 863 | 11 473 | Depreciation | 11/12 | 10 571 | 9 944 | |
| 12 152 | -7 871 | Change in inventories, trade receivables and payables | 4/14/20/22 | 11 895 | -8 280 | |
| 1 126 | 599 | Share-based compensation | 907 | 478 | ||
| -19 | -414 | Movement in pensions | -19 | -414 | ||
| 743 | -2 039 | Other operations related adjustments | 1 819 | -2 657 | ||
| 35 049 | 307 | Net cash flows from operating activities | 30 880 | -3 400 | ||
| Cash flows used in investing activities | ||||||
| -10 832 | -9 824 | Capital expenditures (including software) | 11/12 | -7 720 | -6 392 | |
| -8 572 | -5 304 | Capitalized development expenses | 12 | -8 572 | -5 304 | |
| -19 404 | -15 128 | Net cash flows used in investing activities | -16 292 | -11 696 | ||
| Cash flows from financing activities | ||||||
| 0 | -2 660 | Purchase of treasury shares | 17 | 0 | -2 660 | |
| 0 | 146 | |||||
| Cash settlemet of options contract and issue of share capital | 0 | 146 | ||||
| 0 | 10 000 | Interest bearing debt | 0 | 10 000 | ||
| 0 | 7 486 | Net cash flows from financing activities | 0 | 7 486 | ||
| -86 | -457 | Effects of exchange rate changes on cash and cash equivalents | 0 | 659 | ||
| 15 560 | -8 158 | Net change in cash and cash equivalents | 14 588 | -7 317 | ||
| 21 135 | 29 293 | Cash and cash equivalents as of 1.1. | 20 432 | 27 749 | ||
| 36 695 | 21 135 | Cash and cash equivalents as of 31.12. | 16/22 | 35 020 | 20 432 | |
| 1 452 | 1 183 | Restricted cash included in the cash and cash equivalents as of 31.12. | 16 | 1 452 | 1 183 |
Nordic Semiconductor ASA is a public limited company whose shares are listed on the Oslo Stock Exchange. The Group's head office is located at Otto Nielsens vei 12, 7052 Trondheim, Norway. The Group includes the parent company Nordic Semiconductor ASA and four wholly-owned subsidiaries, Nordic Semiconductor Inc., Nordic Semiconductor Poland Sp. z o.o, Nordic Semiconductor Finland OY and Nordic Semiconductor Japan KK.
Nordic Semiconductor develops and sells integrated circuits and related solutions for short-range. wireless communication. The Group specializes in ultra-low power (ULP) components, based on its proprietary 2.4GHz RF and Bluetooth Low Energy. In addition Nordic Semiconductor develops long range cellular technology.
The financial accounts were approved for publication by the Board of Directors on March 16, 2018, and will be presented for approval at the Annual General Meeting on April 17, 2018.
The financial accounts for Nordic Semiconductor ASA "the Parent Company" and its wholly-owned and controlled subsidiaries, together called "the Group", have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), relevant interpretations, and the Norwegian Accounting Act.
As the Parent company has USD as its functional currency, the financial accounts are presented in USD, rounded off to the nearest thousand, if nothing else is noted. As a result of rounding differences, it is possible that amounts and percentages do not add up to the total.
Gross profit is revenue less cost of materials and direct project costs. Cost of materials include direct and indirect cost of production. Nordic Semiconductor uses gross profit for internal reporting and has therefore chosen to include it in the external financial reporting as well.
Subsidiaries are entities controlled by the Parent Company. The Parent Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returnsthrough its power over the investee. Subsidiaries are consolidated from the date control is obtained until the date that control ceases.
All subsidiaries are owned 100 percent and there are no non-controlling interests. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated.
The consolidated financial statements have been prepared on a historical cost basis.
The preparation of financial statement in accordance with IFRS requires that management use judgement, estimates and assumptions that influence the amount reported in the financial statements and notes. Management bases its estimates and judgement on previous experience and on various other factors deemed to be reasonable and sensible given the specific circumstances. The main areas of uncertainty for assessments and estimates on the balance sheet date, which represent a risk of creating significant changes to the value of assets and liabilities, are discussed below.
Estimates are continually reassessed based on changes in the underlying assumptions. Changes in accounting estimates are recognized in the period in which such changes occur. If such changes also apply to future periods, the effect is distributed between current and future periods.
Revenue recognition principles are described in note 2.11.
Nordic Semiconductor predominantly sells to electronic distributors under a distribution agreement. The distributors will hold a given level of Nordic Semiconductors inventory that is subsequently shipped to an end customer. Nordic Semiconductor uses a "sell in" model in connection with revenue recognition to distribution customers. Under a "sell in" model, management needs to make judgements and estimates the amount that can affect the reported amounts of revenues and expenses. The main judgments are described below.
When a distributor sells components to specified customer accounts, the distributor will receive an additional discount after the sale is made, commonly known as a "Ship and Debit" discount. An estimate for this discount is provided in the accounts, reducing the revenue and increasing current liabilities. The Ship and Debit provision is primarily determined by assessing historical discounts to each distributor, the distributors' inventory level as of 31 December 2017 and expected sales mix.
If the distributor's pricing to specific end customer accounts changes according to a previous agreement with Nordic Semiconductor, the distributor will receive a price protection credit based on the difference between the old and new price. The credit only applies to inventory that is yet to be sold by the distributor. If a price reduction has been confirmed, a provision for price protection credit will be made in the financial statement.
In certain cases, distributors have the right to exchange inventory with Nordic Semiconductor with the same value in other products. Stock rotation provisions are made for this if necessary.
Development costs are capitalized in accordance with the principles in Note 2.9. In order to determine the amount to be capitalized, it is necessary for management to make assumptions regarding expected future cash flow, and the expected period of benefits. Capitalized development costs are subject to amortization on a straight-line basis over the period of expected future benefits, normally 3-5 years. Uncertainty exists with respect to the estimated period of expected future benefit, as this depends on the future technological development in the market. During 2017, MUSD 8.6 was capitalized, mainly related to new versions of the nRF52. The carrying amount of capitalized development costs as of December 31, 2017 and 2016 was MUSD 19.0 and MUSD 14.4 respectively.
Certain new standards, amendment to standards, and annual improvements to standards and interpretations are effective for annual periods beginning January 1. 2017, and have been applied in preparing these consolidated financial statements. None of these have a significant effect on the consolidated financial statements of the Group.
The Group presents its financial statements in USD. Transactions in currencies other than USD, are converted into USD at the exchange rate at the date of the transaction. Any exchange gains or losses arising as a result of changes in the exchange rate between the time of the transaction and the time of payment are recognized in the income statement.
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and shortterm deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.
Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less impairment. An impairment is recognized when there is objective evidence that the Group will not be able to collect all amounts. Balances are written off when collection efforts have been exhausted and the probability of recovery is unlikely.
Inventory is valued at the lower of cost and net realizable value after deduction for obsolescence. Net realizable value is estimated as the selling price less cost of completion and the cost necessary to make the sale. Costs are determined by using the FIFO method. Work in progress includes variable cost and non-variable cost which can be allocated to items based on normal capacity. Obsolete inventory is written down completely.
Non-current assets are valued at the lower of cost net of accumulated depreciation and net realizable value. When an asset is sold or discontinued, the gain or loss from the transaction is recognized in the income statement.
Cost of non-current assets includes fees/taxes and direct costs associated with commissioning the non-current asset for use. Repair and maintenance costs are expensed when incurred. If repair and maintenance increase the value of the non-current asset, the cost will be added to the asset on the balance sheet.
Depreciation is calculated on a straight-line basis over the following periods of time:
| Office and lab equipment | 3-5 years |
|---|---|
| Computer equipment | 3-4 years |
| Installations in buildings | 5 years |
The assets' residual value, useful lives and methods of depreciation are reviewed on an ongoing basis and adjusted prospectively, if necessary.
The Group does not have any significant financial leases.
Leases where the most significant risk rests with the lessor are classified as operational leases. Lease payments are classified as operating costs and are expensed over the contract period.
Research costs are expensed as incurred. Costs associated with development are capitalized if the following criteria are met in full:
Costs expensed in prior accounting periods will not be capitalized.
Depreciation begins when the product is transferred from development to production. Uncertainty exists with respect to the expected period of benefits, as this depends on the future technological development in the market.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed each balance sheet date and the level reflects the best estimate of the obligation. When the time value is insignificant, the amount of the provision will be equal to the estimated expenditure required to settle the obligation. When the time effect is significant, the amount of the provision will be equal to the present value of future estimated expenditures to settle the obligation.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.
Revenue from sales of components is recognized at the time of delivery to the distributor. The time of delivery is usually the time when the goods are transferred to the transport carrier. Certain provisions have been made for credits to distributors based on the estimates described in note 2.2.
Revenue from services is recognized as the services are rendered/delivered. The service consists of working hours, and invoicing of other costs, such as work done by subcontractors. Interest earned is recognized as it is generated.
The Group had a defined benefit pension plan for its employees who were hired before December 31, 2007. The group has also established a similar plan for employees in the Philippines. This plan is still open. Pension plan assets are valued at fair value.
The defined benefit scheme in Norway was converted to a defined contribution scheme. In connection with the transfer, the employees received a "Paid up benefit" for all earned benefits in the defined benefit plan. As there exist certain obligations related to retirees and employees on sick leave, an actuarial calculation is performed and a liability for these employees is included as of December 31, 2017.
Employees hired after January 1, 2008 have a defined contribution pension plan described in Note 18.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 19. That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other paid in capital), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). See Note 19
Grants received are tax refunds and are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover. Tax refunds are accounted for as a cost reduction. See Note 5 and 9.
Income tax expenses consist of taxes due and changes to the deferred tax. Deferred tax and tax assets are calculated based on all differences between the financial accounts and the value for tax purposes of assets and liabilities.
Deferred tax assets are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax asset.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. The Parent Company pays its tax obligation in NOK and the fluctuations between the NOK and the USD impact the financial items. The Group's legal entities that do not have their tax base in USD are exposed to changes in the USD/tax base currency rates. Effects within the current year are classified as tax expense.
The Group has only one operating segment. The group does not report or monitor profitability on a lower level, but breaks down its revenue into the following end product markets: Consumer Electronics, Wearables, Healthcare, Building and Retail, Others, ASIC components and Consulting Services. The Group also breaks down its revenues in the geographical areas in which its distributors are located. See Note 3.
Information available after the balance sheet date and applicable to conditions existing at the balance sheet date is included in the preparation of the financial statements. Events after the balance sheet date that do not affect the Group's financial position as of the balance sheet date, but that will affect the Group's financial position in the future, are disclosed if they are significant. See Note 23.
The cash flow statement is prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments.
When treasury shares are purchased, the purchase price, including directly attributable costs are recognized as changes in equity. Treasury shares are presented as a reduction of equity. Gains or losses on transactions in treasury shares are not recognized in the income statement.
New standards, amendments to standards, and interpretations have been published, but are not effective at December 31, 2017 and have not been applied in preparing these financial statements. The Group intends to adopt these standards, if applicable, when they become effective.
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory.
The Group plans to adopt the new standard on the required effective date and will not restate comparative information. During 2017, the Group has performed a detailed impact assessment of all three aspects of IFRS 9. Overall, the Group expects no significant impact on its statement of financial position and equity.
The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of IFRS 9.
Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. The Group analyzed the contractual cash flow characteristics of those instruments and concluded that they meet the criteria for amortized cost measurement under IFRS 9. Therefore, reclassification for these instruments is not required.
IFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group will apply the simplified approach and record lifetime expected losses on all trade receivables. The Group has determined that, due to long term relationships with all current customers and no indications of change in these relationships, the loss allowance will still be zero after implementing IFRS 9.
IFRS 15 was issued in May 2014, and amended in April 2016, and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Nordic Semiconductor will adopt the standard using the modified retrospective approach.
For contracts with customers in which the sale of chips is expected to be the only performance obligation, adoption of IFRS 15 is not expected to have any impact on the Group's revenue and profit or loss. There will be no impact on the equity on the date of implementation.
The Group expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.
In preparing to adopt IFRS 15, the Group is considering the following:
Some contracts with customers provide a right of return or rebates. Currently, the Group recognizes revenue from the sale of goods measured at fair value, which includes a provision of allowances for trade discounts. Such provisions give rise to variable consideration under IFRS 15, and will be required to be estimated at contract inception and updated thereafter. IFRS 15 requires the estimated variable consideration to be constrained to prevent overrecognition of revenue. The Group expects that application of the constraint will result in the same treatment as under the current IFRS.
The contract with a customer provides no right to return the good, it can only be exchanged into a similar good of the same value. Under the current accounting policy there are no provision for rights of return and we do not expect that any adjustments will be done when adopting IFRS 15.
The Group provides retrospective rebates to its customers on products purchased by the customer which are resold to certain customer accounts. Under its existing accounting policy, the Group estimates the expected rebates using the expected value and includes them in Other short term liabilities. These amounts may subsequently be repaid in cash to the customer or are offset against amounts payable by customer. Under IFRS 15, retrospective rebates give rise to variable consideration. To estimate the variable consideration to which it will be entitled, the Group considered the expected value method to be the best method to predict the amount of variable consideration for the contract. The Group applied the requirements in IFRS 15 on constraining estimates of variable consideration and concluded that no revenue reduction is needed in 2017. The provision that has been included in Other short term liabilities will be presented under IFRS 15 under Contract liabilities.
The presentation and disclosure requirements in IFRS 15 are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in the Group's financial statements. Many of the disclosure requirements in IFRS 15 are new and the Group has assessed that the impact of some of these disclosures requirements will be significant. In particular, the Group expects that the notes to the financial statements will be expanded because of the disclosure of significant judgements made: when determining the transaction price of those contracts that include variable consideration, how the transaction price has been allocated to the performance obligations, and the assumptions made to estimate the stand-alone selling prices of each performance obligation.
IFRS 16, issued in January 2016, establishes a balance sheet lease accounting model that will increase transparency and comparability beginning in 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of 'low-value' assets (e.g., personal computers) and shortterm leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset
The group is in the process of assessing the impact of the standard. Significant changes are expected to be made in the statement of financial position and cash flows as a result of removing the distinction between operating and finance leases.
The main leases that will be recognized in the balance sheet are the different office leases. The group intends to apply the modified retrospective approach and will not restate comparative amounts for the year prior to first adoption. Nordic Semiconductor will give an estimate of the effects on the Group's financial statements in the second half of 2018.
All figures in USD 1000
The Group has only one segment which is the semiconductor business. The Group classifies its revenues based on the end product markets in which its products are used.
The Group focuses on the sale of standard components for wireless communication. These wireless components are broken into the following end product areas: Consumer Electronics, Wearables, Building and Retail, Healthcare and Others. In 2017, wireless components accounted for 96.4% of sales versus 95.9% in 2016. In addition to standard components, the Group sells customer-specific ASIC components (Application Specific Integrated Circuits) and related Consulting Services.
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Revenue | ||||
| 98 691 | 96 976 | Consumer Electronics | 98 691 | 96 976 |
| 37 355 | 40 738 | Wearables | 37 355 | 40 738 |
| 56 912 | 26 921 | Building/Retail | 56 912 | 26 921 |
| 14 231 | 11 620 | Healthcare | 14 231 | 11 620 |
| 20 365 | 13 268 | Others | 20 365 | 13 267 |
| 227 554 | 189 523 | Wireless components | 227 554 | 189 523 |
| 7 916 | 6 990 | ASIC components | 7 916 | 6 990 |
| 533 | 1 185 | Consulting services | 533 | 1 185 |
| 0 | 0 | Management fee | 806 | 246 |
| 236 003 | 197 698 | Total revenues | 236 809 | 197 944 |
The Group also classifies its revenues on a geographical basis according to its customers' location.
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 21 072 | 19 671 | Europe | 21 714 | 19 834 |
| 22 824 | 19 869 | Americas | 22 978 | 19 951 |
| 192 107 | 158 159 | Asia/Pacific | 192 117 | 158 160 |
| 236 003 | 197 698 | Total revenues | 236 809 | 197 944 |
The Group sells its components to distributors, which then sell components onward to electronics manufacturers which build end products and sell them to customers across the world. Three distributors represented more than 10% of the Group's total revenues in 2017 (in total 47%). These three distributors represented 21%, 16% and 10% of the Group's total revenues respectively. In comparison, 3 distributors represented more than 10% of the Group's total revenues in 2016 (in total 50%), with 26%, 13% and 11% of revenues respectively. These distributors are based in Asia.
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 131 900 | 114 990 | Cost of goods, gross | 131 900 | 114 990 |
| -8 255 | -10 944 | Changes in inventory | - 8 255 | -10 944 |
| 123 645 | 104 046 | Cost of goods, net | 123 645 | 104 046 |
| 21 932 | 27 931 | Raw material | 21 932 | 27 931 |
| 9 381 | 10 138 | Work in Progress | 9 381 | 10 138 |
| 12 476 | 13 976 | Finished Goods | 12 476 | 13 976 |
| 43 789 | 52 044 | Total inventory (net) | 43 789 | 52 044 |
| 1 239 | 1 006 | Amount written down | 1 239 | 1 006 |
As Nordic Semiconductor is a fabless manufacturerer, all inventories, including raw materials and finished goods, are located at sub-contractors.
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 6 987 | 6 367 | Service and maintenance | 6 794 | 6 207 |
| 6 109 | 4 047 | Other consultancy fees | 4 495 | 3 117 |
| 4 512 | 3 585 | Office rental expenses | 3 570 | 2 734 |
| 1 140 | 926 | Office equipment | 975 | 797 |
| 4 080 | 2 744 | Material and components | 3 815 | 2 530 |
| -27 | -2 | Tax grant | -27 | -2 |
| -3 046 | -936 | Capitalized development expenses | -3 046 | -936 |
| 3 107 | 2 263 | Travel and meeting expenses | 2 317 | 1 657 |
| 4 795 | 3 683 | Other operating expenses | 4 535 | 3 494 |
| 0 | 0 | Other operating expenses intercompany | 31 719 | 22 610 |
| 27 657 | 22 677 | Total other operating expenses | 55 147 | 42 208 |
Fees to the auditor are included in consultancy fees above.
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 75 | 96 | Statutory audit servces | 60 | 80 |
| 27 | 13 | Tax advisory services | 23 | 10 |
| 25 | 60 | Other audit related services | 21 | 60 |
| 127 | 169 | Total | 104 | 150 |
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 244 | 118 | Interest income | 243 | 118 |
| 31 | 139 | Other financial income | 31 | 139 |
| 275 | 257 | Financial income | 274 | 257 |
| 622 | 295 | Financial Expense | 622 | 295 |
| 322 | 911 | Foreign exchange loss (net) | 352 | 911 |
| 944 | 1 206 | Financial expenses | 974 | 1 206 |
All figures in USD 1000
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | Tax expense consists of | 2017 | 2016 | |
| -2 451 | -3 023 | Tax payable | -1 684 | -2 677 | |
| -567 | 689 | Change in deferred tax / tax benefit | -709 | 662 | |
| -3 017 | -2 334 | Tax expense | -2 393 | -2 015 |
-3 017 -2 334 Tax expense -2 393 -2 015
| Temporary differences: | Balance Sheet | Income Statement | Other Comp. income | ||||
|---|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||
| Deferred tax benefit | |||||||
| Inventory | 236 | 90 | 146 | -158 | 0 | 0 | |
| Fixed Assets | 957 | 1 219 | -262 | 803 | 0 | 0 | |
| Options (share based payments) | 323 | 730 | -407 | -30 | 0 | 0 | |
| Pension obligation | 67 | 70 | -3 | -28 | 0 | 0 | |
| Accruals | 23 | 0 | 23 | 0 | 6 | 7 | |
| Deferred tax benefit - gross | 1 607 | 2 110 | -503 | 587 | 6 | 7 | |
| Deferred tax obligation | 0 | 0 | 0 | 0 | 0 | 0 | |
| Intangible assets | 0 | 0 | 0 | 0 | 0 | 0 | |
| Gain and loss account | 91 | 115 | -25 | -41 | 0 | 0 | |
| Accounts receivable | 0 | 0 | 0 | 0 | 0 | 0 | |
| Deferred tax obligation - gross | 91 | 115 | -25 | -41 | 0 | 0 | |
| Currency effect of translation to USD | 0 | -22 | -88 | 61 | 0 | 0 | |
| Net deferred tax benefit (obligation) | 1 516 | 1 973 | 0 | 0 | 0 | 0 | |
| Deferred tax expense | 0 | 0 | -567 | 689 | 6 | 7 |
| Temporary differences: | Balance Sheet | Income Statement | Other Comp. income | |||
|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| Deferred tax benefit | ||||||
| Inventory | 236 | 90 | 146 | -158 | 0 | 0 |
| Fixed Assets | 782 | 1 219 | -437 | 803 | 0 | 0 |
| Options (share based payments) | 323 | 730 | -407 | -30 | 0 | 0 |
| Pension obligation | 67 | 70 | -9 | -28 | 6 | 7 |
| Accruals | 23 | 0 | 23 | 0 | 0 | 0 |
| Deferred tax benefit - gross | 1 432 | 2 110 | -685 | 587 | 6 | 7 |
| Deferred tax obligation | 0 | 0 | 0 | 0 | 0 | 0 |
| Intangible assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Gain and loss account | 91 | 115 | -25 | -41 | 0 | 0 |
| Accounts receivable | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred tax obligation - gross | 91 | 115 | -25 | -41 | 0 | 0 |
| Currency effect of translation to USD | 0 | -49 | -49 | 34 | 0 | 0 |
| Net deferred tax benefit (obligation) | 1 341 | 1 946 | 0 | 0 | 0 | 0 |
| Deferred tax expense | 0 | 0 | -709 | 662 | 6 | 7 |
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | Reconciliation of net deferred tax benefit: | 2017 | 2016 |
| 1 973 | 1 250 | Opening balance as of 1.1 | 1 946 | 1 250 |
| -567 | 689 | Tax expense/income recognized in profit and loss | -709 | 662 |
| 6 | 7 | Tax expense/income recognized in other comprehensive income | 6 | 7 |
| 104 | 27 | Currency effect from translation to USD | 98 | 27 |
| 1 516 | 1 973 | Net deferred tax benefit 31.12 | 1 341 | 1 946 |
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | Net deferred tax recognized in OCI as of 31.12: | 2017 | 2016 |
| 6 | 7 | Net gain/(loss) on actuarial gains and losses | 6 | 7 |
| 6 | 7 | Total tax other comprehensive income | 6 | 7 |
| 2017 | 2016 | |
|---|---|---|
| Basis for calculation of basic earnings per share | ||
| Earnings for the year (USD '000) | 6 763 | 6 424 |
| Weighted average number of outstanding shares ('000) | 161 796 | 162 385 |
| Earnings per share (USD) | 0,04 | 0.04 |
| Basis for calculation of fully diluted earnings per share | ||
| Earnings for the year (USD '000) | 6 763 | 6 424 |
| Weighted average number of outstanding shares ('000) | 161 926 | 163 317 |
| Earnings per share (USD) | 0,04 | 0.04 |
| Date | Number of shares issued | Shares outstanding | |
|---|---|---|---|
| 2017-01-01 | Balance at beginning of period | 163 481 600 | 161 795 781 |
| 2017-12-31 | Balance at end of period | 163 481 600 | 161 795 781 |
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | Combined expenses for salary and other compensation are distributed as follows: |
2017 | 2016 |
| 47 068 | 38 284 | Salary and vacation pay | 30 408 | 26 134 |
| 9 928 | 7 985 | Other compensation | 7 350 | 5 452 |
| 4 932 | 3 822 | Payroll tax | 4 759 | 3 709 |
| 0 -31 |
Defined benefit pension | - | -31 | |
| -521 | -382 | Tax grant | -521 | -382 |
| 4 636 | 3 874 | Defined contribution pension | 2 317 | 1 942 |
| -5 526 | -4 367 | Capitalized development expenses (hourly costs) | -5 526 | -4 367 |
| 60 517 | 49 185 | Total | 38 788 | 32 458 |
| 566 | 497 | Weighted average number of full time employees | 371 | 338 |
| GROUP | PARENT | ||||||
|---|---|---|---|---|---|---|---|
| 2017 | 2016 | Company's employees as of December 31, are distributed as follows: |
2017 | 2016 | |||
| 331 | 308 | Norway | 331 | 308 | |||
| 26 | 19 | China | 26 | 19 | |||
| 4 | 3 | South Korea | 4 | 3 | |||
| 24 | 21 | USA | 1 | 1 | |||
| 11 | 10 | Taiwan | 11 | 10 | |||
| 3 | 3 | Japan | 0 | 3 | |||
| 15 | 15 | Philippines | 15 | 15 | |||
| 1 | 1 | Switzerland | 1 | 1 | |||
| 30 | 20 | Poland | 0 | 0 | |||
| 154 | 132 | Finland | 0 | 0 | |||
| 1 | 0 | UK | 1 | 0 | |||
| 1 | 0 | The Netherlands | 1 | 0 | |||
| 601 | 532 | Total | 391 | 360 |
All figures in USD 1000
| Total compensation expensed for Board members | 2017 | 2016 |
|---|---|---|
| Terje Rogne, Chairman of the Board | 60 | 58 |
| Anne-Cecilie Fagerlie, Board member | 40 | 38 |
| Tore Valderhaug, Board Member | 44 | 39 |
| Birger Steen, Board Member | 39 | 0 |
| Beatriz Malo de Molina, Board Member | 37 | 24 |
| Craig Ochikubo, Board Member | 56 | 55 |
| Inger Berg Ørstavik, Board Menber | 22 | 0 |
| Arnhild Schia, Board member | 0 | 11 |
| Lasse Olsen, employee representative (Board remuneration only) | 2 | 7 |
| Jon Helge Nistad, employee representative (Board remuneration only) | 5 | 0 |
| Asbjørn Sæbø, employee representative (Board remuneration only) | 7 | 5 |
| Anne Strand, former employee representative (Board remuneration only) | 0 | 2 |
| Joakim Ferm, employee representative (Board remuneration only) | 7 | 7 |
| Total | 320 | 246 |
| Other | Pension | |||||
|---|---|---|---|---|---|---|
| 2017 | Salary | Bonus | Options* | compensation | expenses | Total |
| Svenn-Tore Larsen, CEO | 374 | 99 | 144 | 2 | 16 | 635 |
| Pål Elstad, CFO | 214 | 60 | 96 | 1 | 16 | 388 |
| Svein-Egil Nielsen, CTO | 201 | 60 | 96 | 1 | 16 | 375 |
| Geir Langeland, Sales & Marketing Director | 208 | 60 | 96 | 1 | 16 | 381 |
| Ebbe Rømcke, Quality Director | 149 | 30 | 48 | 1 | 16 | 244 |
| Ole Fredrik Morken, Supply Chain Director | 310 | 60 | 96 | 1 | 16 | 484 |
| Thomas Embla Bonnerud, Director of Strategy and IR | 163 | 60 | 49 | 1 | 16 | 290 |
| Total | 1 619 | 432 | 625 | 10 | 111 | 2 797 |
| 2016 | Salary | Bonus | Options* | Other compensation |
Pension expenses |
Total |
| Svenn-Tore Larsen, CEO | 351 | 9 | 76 | 5 | 16 | 457 |
| Pål Elstad, CFO | 204 | 9 | 51 | 1 | 15 | 280 |
| Svein-Egil Nielsen, CTO | 190 | 9 | 51 | 1 | 16 | 267 |
| Geir Langeland, Sales & Marketing Director | 197 | 9 | 51 | 1 | 15 | 273 |
| Ebbe Rømcke, Quality Director | 141 | 9 | 25 | 1 | 15 | 192 |
| Ole Fredrik Morken, Supply Chain Director | 245 | 9 | 51 | 1 | 15 | 321 |
| Thomas Embla Bonnerud, Director of Strategy and IR | 133 | 4 | 9 | 1 | 14 | 162 |
*Salary expenses are in NOK. Exchange rate for 2016 was 8,40 and for 2017 it was 8,27
*Option cost is the expense of fair value of options based on Black Scholes calculation.
The Board has appointed a remuneration committee under management of a board member.
The remuneration committee monitors decisions regarding remuneration and other terms for the executive management. The CEO's total compensation, and any adjustments, is first reviewed by the remuneration committee and then approved by the Board. The Board considers CEO compensation each year. The compensation of the other members of the executive management, including adjustments of these, are agreed between the CEO and the respective manager.
The Board proposes the following Declaration of the Principles for Compensation of the CEO and other members of the Executive Management according to the Norwegian Public Limited Liability Companies Act § 6-16a:
The main principle in the Company's policy for remuneration and compensation is that the members of the executive management team shall be offered competitive terms, so as to achieve the desired competence and incentives in the Company's executive management team.
The Company has established an annual performance bonus program for the executive management team, in which the manager must remain within his position (not resigned) until the start of the following year in order to be eligible. The bonuses may be awarded as a direct cash payment or as equity in the Company. Performance-based compensation will be subject to an absolute limit and fulfilment of performance criteria, both decided by the Board at its discretion.
On the extraordinary general meeting on 8 December 2015 the meeting approved a 4 year stock option program for all employees with an annual maximum dilutive effect of 1% of the total of issued shares. The Company is operating in an increasingly competitive international technology market. In this market, equity based compensation is widely used to attract and retain key talent. In addition, the number of employees has increased 32% from 2015 when the option program was initiated. Therefore, in the last year of the 2016 program, the Board proposes to allocate up to up to 2.7 million shares, equivalent to approximately 1.7% of the total number of issued shares. The Board also proposes, at its discretion, to replace stock options with other equity based compensations, as long as the total dilutive effect does not exceed 1.7% of the total number of issued shares.
The Company offers pensions plans to all employees, managers included. In addition, the Company provides managers with other limited benefits in kind such as a company telephone.
The Company's Chief Executive Officer has agreed to a 6-month mutual resignation period, except that the resignation period increases to 12 months in the event that the Company is acquired or merged with another company.
The guidelines for determination of salary and other compensation for leading employees as outlined for the Annual General Meeting in 2017 have been complied with for in 2017.
Additional detailed information regarding compensation for the executive management team is provided in Note 10 to the consolidated Group accounts for 2017.
| Options granted 2017* | Options granted 2016* | |
|---|---|---|
| Svenn-Tore Larsen, CEO | 65 575 stock options | 65 575 stock options |
| Pål Elstad, CFO | 43 804 stock options | 43 804 stock options |
| Geir Langeland, Sales Director | 43 804 stock options | 43 804 stock options |
| Svein-Egil Nielsen, CTO | 43 804 stock options | 43 804 stock options |
| Ebbe Rømcke, Quality Director | 21 771 stock options | 21 771 stock options |
| Ole Fredrik Morken, Supply Chain Director | 43 804 stock options | 43 804 stock options |
| Thomas Embla Bonnerud, Director of Strategy and IR | 43 804 stock options | 8 000 stock options |
| Lasse Haugnes Olsen, Employee Board member | 3 501 stock options | 3 500 stock options |
| Jon Helge Nistad, employee Board Member | 3 501 stock options | 3 500 stock options |
| Joakim Ferm, Employee Board member | 5 952 stock options | 3 500 stock options |
| Asbjørn Sæbø, Employee Board member | 0 stock options | 5 600 stock options |
*No options were exercised in 2017.
| GROUP | |||||
|---|---|---|---|---|---|
| Office | Computer | Fixture | |||
| 2017 | and lab equipment |
equipment and machinery |
and fittings |
Property | Total |
| Acquisition cost | |||||
| Opening balance | 6 638 | 29 358 | 2 075 | 333 | 38 403 |
| Additions | 3 756 | 1 688 | 182 | 5 626 | |
| Acquisition cost as of 31.12 | 10 394 | 31 046 | 2 257 | 333 | 44 030 |
| Accumulated depreciation | |||||
| Opening balance | 3 944 | 20 002 | 1 091 | 25 037 | |
| Depreciation expenses | 1 945 | 4 433 | 356 | 6 734 | |
| Accumulated depreciation as of 31.12 | 5 889 | 24 435 | 1 447 | 31 771 | |
| Net carrying value as of 31.12 | 4 505 | 6 612 | 809 | 333 | 12 259 |
| Office and lab |
Computer equipment |
Fixture and |
|||
|---|---|---|---|---|---|
| 2017 | equipment | and machinery | fittings | Property | Total |
| Acquisition cost | |||||
| Opening balance | 5 422 | 27 312 | 1 899 | 333 | 34 966 |
| Additions | 1 176 | 1 084 | 144 | 2 404 | |
| Acquisition cost as of 31.12 | 6 598 | 28 396 | 2 043 | 333 | 37 370 |
| Accumulated depreciation | |||||
| Opening balance | 3 919 | 19 913 | 1 086 | 24 918 | |
| Depreciation expenses | 829 | 3 312 | 312 | 4 453 | |
| Accumulated depreciation as of 31.12 | 4 748 | 23 225 | 1 398 | 29 371 | |
| Net carrying value as of 31.12 | 1 850 | 5 171 | 645 | 333 | 7 999 |
The Group has testers located in the Philippines and Taiwan with net carrying value of MUSD 2.7 as of 31.12.2017.
| Office | Computer | Fixture | |||
|---|---|---|---|---|---|
| and lab | equipment | and | |||
| 2016 | equipment | and machinery | fittings | Property | Total |
| Acquisition cost | |||||
| Opening balance | 5 048 | 26 840 | 1 731 | 333 | 33 951 |
| Additions | 1 591 | 2 518 | 345 | 4 453 | |
| Acquisition cost as of 31.12 | 6 638 | 29 358 | 2 075 | 333 | 38 404 |
| Accumulated depreciation | |||||
| Opening balance | 3 274 | 16 866 | 758 | 20 898 | |
| Depreciation expenses | 670 | 3 136 | 333 | 4 140 | |
| Accumulated depreciation as of 31.12 | 3 944 | 20 002 | 1 091 | 25 037 | |
| Net carrying value as of 31.12 | 2 694 | 9 355 | 984 | 333 | 13 367 |
| PARENT | Office and lab |
Computer equipment |
Fixture and |
||
|---|---|---|---|---|---|
| 2016 | equipment | and machinery | fittings | Property | Total |
| Acquisition cost | |||||
| Opening balance | 4 743 | 24 066 | 1 731 | 333 | 30 872 |
| Additions | 680 | 3 246 | 168 | 4 094 | |
| Acquisition cost as of 31.12 | 5 422 | 27 312 | 1 899 | 333 | 34 966 |
| Accumulated depreciation | |||||
| Opening balance | 3 203 | 16 810 | 758 | 20 770 | |
| Depreciation expenses | 716 | 3 103 | 328 | 4 147 | |
| Accumulated depreciation as of 31.12 | 3 919 | 19 913 | 1 086 | 24 918 | |
| Net carrying value as of 31.12 | 1 504 | 7 399 | 813 | 333 | 10 049 |
| Estimated useful life | 3 – 5 years | 3 - 4 years | 5 years | Not |
|---|---|---|---|---|
| Depreciation method | Straight-line | Straight-line | Straight-line | depreciated |
Total depreciation expenses consist of depreciation of fixed assets and depreciation of intangible assets (note 12).
The Parent company has an apartment in Trondheim for use by employees in the Oslo office while in Trondheim. The apartment is assessed at acquisition cost. The residual value is expected to be at least equal to the book value.
All capital assets that are ready to be scrapped have been fully depreciated and have no residual book value.
The Group has no capital assets that are temporary out of operation.
The Group leases meeting room equiptment, coffee machines and printers.
There are no indicators that assets need to be written off.
There has been no basis for changing depreciation periods on fixed assets.
| Purchased | Capitalized | ||
|---|---|---|---|
| 2017 | Software | Development costs | Total |
| Acquisition cost | |||
| Opening balance | 21 754 | 33 139 | 54 893 |
| Additions | 5 542 | 8 572 | 14 114 |
| Accumulated cost as of 31.12 | 27 296 | 41 711 | 69 007 |
| Accumulated depreciation | |||
| Opening balance | 9 699 | 18 744 | 28 443 |
| Depreciation expenses | 2 088 | 4 042 | 6 129 |
| Total accumulated depreciation as of 31.12 | 11 787 | 22 786 | 34 572 |
| Net carrying amount | 15 509 | 18 925 | 34 434 |
| Purchased | Capitalized | ||
|---|---|---|---|
| 2017 | Software | Development costs | Total |
| Acquisition cost | |||
| Opening balance | 21 760 | 33 139 | 54 899 |
| Additions | 5 315 | 8 572 | 13 887 |
| Accumulated cost as of 31.12 | 27 075 | 41 711 | 68 786 |
| Accumulated depreciation | |||
| Opening balance | 9 699 | 18 744 | 28 443 |
| Depreciation expenses | 2 076 | 4 042 | 6 118 |
| Total accumulated depreciation as of 31.12 | 11 775 | 22 786 | 34 561 |
| Net carrying amount | 15 300 | 18 925 | 34 225 |
| GROUP | Non-capitalized R&D expenses: | PARENT |
|---|---|---|
| 38 596 | Personnel expenses | 21 442 |
| 15 100 | Other operating expenses | 11 169 |
| 53 696 | Total cost recognized in income statement | 32 610 |
| 62 268 | Total cost for R&D (incl. capitalized development cost) | 41 182 |
| Purchased | Capitalized | ||
|---|---|---|---|
| 2016 | Software | Development costs | Total |
| Acquisition cost | |||
| Opening balance | 16 436 | 27 835 | 44 271 |
| Additions | 5 318 | 5 304 | 10 622 |
| Accumulated cost as of 31.12 | 21 754 | 33 139 | 54 893 |
| Accumulated depreciation | |||
| Opening balance | 7 354 | 15 294 | 22 647 |
| Depreciation expenses | 2 345 | 3 451 | 5 796 |
| Total accumulated depreciation as of 31.12 | 9 699 | 18 744 | 28 444 |
| Net carrying amount | 12 054 | 14 394 | 26 449 |
| Purchased | Capitalized | ||
|---|---|---|---|
| 2016 | Software | Development costs | Total |
| Acquisition cost | |||
| Opening balance | 16 441 | 27 835 | 44 277 |
| Additions | 5 318 | 5 304 | 10 622 |
| Accumulated cost as of 31.12 | 21 760 | 33 139 | 54 899 |
| Accumulated depreciation | |||
| Opening balance | 7 354 | 15 294 | 22 647 |
| Depreciation expenses | 2 345 | 3 451 | 5 796 |
| Total accumulated depreciation as of 31.12 | 9 699 | 18 744 | 28 444 |
| Net carrying amount | 12 060 | 14 394 | 26 455 |
| GROUP | Non-capitalized R&D expenses: | PARENT |
|---|---|---|
| 23 843 | Personnel expenses | 19 206 |
| 18 395 | Other operating expenses | 14 110 |
| 42 238 | Total cost recognized in income statement | 33 316 |
| 47 542 | Total cost for R&D (incl. capitalized development cost) | 38 634 |
Total depreciation expenses consist of depreciation of intangible assets and depreciation of fixed assets (note 11).
| Economic lifetime | 10 years | 1 - 5 years |
|---|---|---|
| Depreciation plan | Straight-line | Straight-line |
Expensed research and development activities relate to new technologies and new services and products.
The folowing subsidiaries have been included in the financial statements
| Subsidiaries consolidated in | Established | Share | ||
|---|---|---|---|---|
| the group accounts company | Year | Location | Ownership | Voting Rights |
| Nordic Semiconductor Inc | 2006 | USA | 100% | 100% |
| Nordic Semiconductor Poland S.P z o.o. | 2013 | Poland | 100% | 100% |
| Nordic Semiconductor Finland OY | 2014 | Finland | 100% | 100% |
| Nordic Semiconductor Japan KK | 2017 | Japan | 100% | 100% |
| Share of | Net profit | Equity | ||
| Subsidiaries as of 31 December 2017 | Ownership | votes | 2017 | 31. Dec 2017 |
| Nordic Semiconductor Inc, USA | 100% | 100% | 163 | 1 081 |
| Nordic Semiconductor Poland S.p Z o.o. | 100% | 100% | 66 | 232 |
| Nordic Semiconductor Finland OY | 100% | 100% | 1 720 | 3 409 |
All intellectual property (IP) is owned by Nordic Semiconductor ASA. All subsidiaries operate as contract research and development centers and invoice Nordic Semiconductor ASA according to the Group's transfer pricing policy.
Nordic Semiconductor Inc is manly a sales company, but in 2016 a small R&D department was also started. All sales conducted is on behalf of the parent company.
Nordic Semiconductor Poland Sp. z.o.o. is an extension of the software development team in the parent company.
Nordic Semiconductor Finland OY is a development company. This R&D team works closely alongside the rest of the R&D teams in the Group.
Nordic Semiconductor Japan KK is a sales company. All sales conducted is on behalf of the parent company.
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 48 582 | 54 772 | Gross receivables | 48 582 | 54 772 |
| 0 | 0 | Provision for doubtful accounts | 0 | 0 |
| 48 582 | 54 772 | Accounts Receivable, net | 48 582 | 54 772 |
PARENT
| Receivables | 2017 | 2016 |
|---|---|---|
| Loan to group Companies | 3 150 | 6 094 |
| Trade receivables towards group companies | 7 081 | 16 |
| Total | 10 231 | 6 110 |
| Payables | 2017 | 2016 |
| Trade creditors towards group companies | 12 048 | 6 695 |
| Total | 12 048 | 6 695 |
All figures in USD 1000
| GROUP Cash and cash equivalents as of the balance sheet |
PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | date were as follows: | 2017 | 2016 |
| 35 243 | 19 952 | Cash holdings | 33 568 | 19 249 |
| 1 452 | 1 183 | Tax deduction account (restricted funds) | 1 452 | 1 183 |
| 36 695 | 21 135 | Cash and cash equivalents in statement of financial position |
35 020 | 20 432 |
The share capital in Nordic Semiconductor as of December 31, 2017 consists of one share class with a total of 163,481,600 shares with a face value of NOK 0.01, with a total share capital of NOK 1,634,816. Each share grants the same rights in the company, and in the event of any increase in capital, existing shareholders have pre-emptive rights for any new shares. There has been no changes to the number of shares, share capital and share premium during 2017:
| GROUP | Number of shares | Share capital (USD 1000) |
Treasury shares (USD 1000) |
Share premium (USD 1000) |
||||
|---|---|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| Ordinary shares, issued and paid | ||||||||
| Holdings as of 1.1 | 163 481 600 | 163 440 600 | 283 | 283 | -2 | -1 | 14 436 | 14 253 |
| Issue of share capital | 41 000 | 183 | ||||||
| Purchase of treasury shares | -1 | |||||||
| Holdings as of 31.12 | 163 481 600 | 163 481 600 | 283 | 283 | -2 | -2 | 14 436 | 14 436 |
No dividend was paid during 2017.
The Board of the Parent company, based on a resolution from the annual general meeting on April 24, 2017, has the authority to increase the Parent company's share capital by issuing up to 16,300,000 shares with a par value of NOK 163,000. The shareholders' pre-emptive right may be waived according to the Norwegian Private Limited Companies Act §10-4. This authority is valid until the annual general meeting in 2018, and by June 30, 2018 the latest. The resolution covers both cash and non-cash contributions and the issue of shares in connection with a merger.
The Parent company owned 1,685,819 treasury shares on December 31, 2017. At January 1, 2017, the Parent company owned 1,685,819 treasury shares. Based on a resolution of the annual general meeting of April 24, 2017, the Board has authority to purchase the Parent company's own shares with a limit of a face value of NOK 163,000 through one or more transactions. This authority is limited to 9.97% of the Parent company's share capital, and the price per share that the Nordic may pay for shares shall not be lower than the face value and not higher than NOK 200. This authority applies until the regular general meeting in 2018, and by June 30, 2018 the latest.
On February 18, 2014, the Board approved a grant of 5,843,712 share options to employees. The options expired after three years. The options were granted at a strike price of NOK 38.43. On February 18, 2017 3,730,702 remaining options expired.
With reference to the Extraordinary General Meeting ("EGM"), on December 8 2015, Nordic Semiconductor granted on February 26, 2016, 1,590,000 share options to employees and primary insiders. On the EGM in 2015 the Parent company was given the approval to issue up to 1% of the outstanding share capital in options to all employees.
According to the approval, the option scheme has a longterm element as options are exercisable over a three-year period and expire after five years. The options in 2016 were granted at a strike price of NOK 47,72 (10% above volume weighted average share price the week following Q4 2015 results). If the Parent company's share price exceeds a cap of NOK 143.16, Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price. None of the options were exercised in 2017. As of December 31, 2017 there are 1,520,013 options remaining from the 2016 grant.
With reference to the Annual General Meeting on April 19, 2016 ("AGM"), Nordic Semiconductor granted on February 22, 2017, 1,625,412 share options to employees and primary insiders.
On the AGM the Parent company was authorized to issue up to 1.7 million options in 2017, equivalent to approximately 1% of the outstanding share capital in options to all employees The option scheme is the same as in 2016. The options are exercisable over a three-year period and expire after five years. They were granted at a strike price of NOK 35.77 (10% above volume weighted average share price the week following Q4 2016 results). If the Parent company's share price exceeds a cap of NOK 107.31, Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price. As of December 31, 2017 there are 1,607,650 options remaining from the 2017 grant.
The largest shareholders in Nordic Semiconductor ASA were as follows as of December 31, 2017:
| Shareholder | Shares | Percentage |
|---|---|---|
| FOLKETRYGDFONDET | 19 864 847 | 12,15 % |
| ACCELERATOR LTD | 16 482 950 | 10,08 % |
| VERDIPAPIRFONDET DNB NORGE (IV) | 7 886 294 | 4,82 % |
| KLP AKSJENORGE | 5 046 666 | 3,09 % |
| ALDEN AS | 4 430 602 | 2,71 % |
| PASSESTA AS | 3 860 000 | 2,36 % |
| KOMMUNAL LANDSPENSJONSKASSE | 3 438 036 | 2,10 % |
| CITIBANK, N.A. | 3 000 000 | 1,84 % |
| DANSKE INVEST NORSKE INSTIT. II. | 2 857 900 | 1,75 % |
| VERDIPAPIRFONDET DNB NORGE SELEKTI | 2 692 908 | 1,65 % |
| VERDIPAPIRFONDET PARETO INVESTMENT | 2 580 000 | 1,58 % |
| DNB NOR MARKETS, AKSJEHAND/ANALYSE | 2 560 246 | 1,57 % |
| MP PENSJON PK | 2 517 434 | 1,54 % |
| FOUGNER INVEST AS | 2 350 000 | 1,44 % |
| SONGA TRADING INC | 2 200 000 | 1,35 % |
| SKØIEN AS | 2 005 000 | 1,23 % |
| SONGA AS | 2 000 000 | 1,22 % |
| TTC INVEST AS | 2 000 000 | 1,22 % |
| STATOIL PENSJON | 1 919 370 | 1,17 % |
| JPMORGAN CHASE BANK, N.A., LONDON | 1 874 206 | 1,15 % |
| Total for the 20 largest shareholders | 91 566 459 | 56,01 % |
| Other shareholders | 71 915 141 | 43,99 % |
| Total shares outstanding | 163 481 600 | 100 % |
Shares held by the Board of directors and Executive management were as follows as of December 31, 2017.
| Name | Shares |
|---|---|
| Board of directors | |
| Terje Rogne | 1 080 000 |
| Anne-Cecilie Fagerlie | 0 |
| Craig Ochikubo | 13 500 |
| Beatriz Malo de Molina | 0 |
| Tore Valderhaug | 5 769 |
| Joakim Ferm | 0 |
| Asbjørn Sæbø | 10 000 |
| Birger Steen | 2 460 |
| Inger Berg Ørstavik | 0 |
| Jon Helge Nistad | 0 |
| Executive Management | |
| Svenn-Tore Larsen* | 1 890 400 |
| Pål Elstad | 3 846 |
| Geir Langeland | 177 700 |
| Svein-Egil Nielsen | 15 000 |
| Ebbe Rømcke | 68 900 |
| Ole Fredrik Morken | 160 000 |
| Thomas Embla Bonnerud | 7 420 |
| Total | 3 429 995 |
*Svenn-Tore Larsen holds shares personally and through a limited liability company
The pension liability for the group consists of liabilities in Norway and The Philippines.
Nordic has set up a pension plan for the Philippine office as of January 2014. The retirement plan is unfunded and of the defined benefit type which provides a retirement benefit calculated based on number of years of credited service. At the end of 2017 the pension liability was USD 26 000.
For the Company in Finland pensions are financed by employer and employee contributions. The Norwegian company in the Group is required to have mandatory employment pension for employees in Norway, according to the Mandatory Employment Pension Act.
The Board of Nordic Semiconductor ASA decided in December 2015 to change the pension plan for all employees currently on a defined benefit plan effective January 1, 2016. Up until December 31, 2015 Nordic Semiconductor ASA (Norwegian employees) had both a defined benefit plan and a defined contribution plan. The defined benefit plan was closed for new members effective January 1, 2008 and from this point a new defined contribution plan was established. The two different types of pensions are described below:
| Defined Pension Plan: | 2017 | 2016 |
|---|---|---|
| Current service cost | 0 | 0 |
| Interest expense | 33 | 34 |
| Expected return on plan assets | -27 | -28 |
| Administration fee | 4 | 1 |
| Total pension expense excl. social security tax | 10 | 7 |
| Social security tax | 1 | 1 |
| Total pension expense incl. social security tax | 11 | 8 |
| Net pension obligation for the year was calculated as follows: | 2016 | |
|---|---|---|
| Pension obligations | 1 135 | 1 014 |
| Plan assets | 901 | 828 |
| Estimated net pension obligations | 234 | 186 |
| Social security tax | 33 | 23 |
| Total actual net obligation incl. social security tax 267 |
209 |
| Total pension liability for the Group | 2017 | 2016 |
|---|---|---|
| Employees in Norway | 267 | 209 |
| Employees in Philippines | 26 | 84 |
| Total | 293 | 293 |
All employees in Norway have a defined contribution pension plan from 01.01.2016. The main benefit is a contribution of 7% of salary up to 7.1 basis points (G) and 18% of salary between 7.1 and 12 basis points. Along with this the company has a disability pension of approximately 66% of salary including estimated social security based on 40 years of full employment. In 2017, the cost of the defined contribution pension was USD 2 317 000, and the plan had 335 members. The contribution is expensed when accrued.
| GROUP | Total pension cost | PARENT |
|---|---|---|
| 11 | Defined Benefit plan | 11 |
| 4 636 | Defined Contribution plan | 2 317 |
On February 18, 2014, Nordic Semiconductor granted 5,843,712 share options to 177 employees. The options are exercisable after one year, and expire after three years. The options were granted at a strike price of NOK 38.43. The options expired in February 2017.
On February 26, 2016, Nordic Semiconductor granted 1,590,000 share options to 320 employees. The options were granted at a strike price of NOK 47.72 (10% above volume weighted average share price the week following Q4 2015 results). If the Parent company's share price exceeds a cap of NOK 143.16, Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price.
On February 22, 2017, Nordic Semiconductor granted 1,625,412 share options to 307 employees. The options were granted at a strike price of NOK 35.77 (10% above volume weighted average share price the week following Q4 2016 results). If the Parent company's share price exceeds a cap of NOK 107.31, the Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price.
A summary of share option transactions during 2017 and 2016 is below:
| 2017 | 2016 | |
|---|---|---|
| Outstanding options 1.1 | 5.287.714 | 3 844 970 |
| Options granted | 1.625.412 | 1 579 712 |
| Options forfeited | 54.761 | 57 501 |
| Options exercised | 0 | 79 467 |
| Options expired | 3.730.702 | 0 |
| Outstanding options 31.12 | 3.127.663 | 5 287 714 |
| Of which exercisable | 506.671 | 3 730 702 |
The fair value of the options is set on the grant date and expensed over the vesting period. USD 1.129.576 was expensed during 2017 and USD 605.028 in 2016.
The fair value of options granted in 2017 was NOK 8.40 per option. The value has been estimated using the Black & Scholes model, subject to the following assumptions:
The share price is set to the value weighted average price of shares traded on the grant date, which was USD NOK 32.52 on the date of grant in 2017.
The strike price is the share price on the grant date +10%.
The cap price on the options granted is NOK 107.31. At this price, Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price. When calculating the value of the stock option, the value of the cap is calculated through the Black Scholes model, and deducted from the uncapped value of the option to the employee.
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equaled 39.40% on the date of grant in 2017.
The options are expected to have an average term of 4 years (between the minimum vesting period of one year and the maximum exercise period of five years).
Nordic does not forecast a dividend payout in the Black-Scholes model.
The risk-free interest rate is set equal to the relevant interest rate on government bonds on the date of grant in 2017, i.e. 1.07%.
All figures in USD 1000
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 13 075 | 15 295 | Accounts payable | 12 337 | 14 887 |
| 3 069 | 2 786 | Taxes payable | 2 508 | 2 609 |
| 2 774 | 2 260 | Social security tax and payroll tax | 2 388 | 1 990 |
| 5 160 | 4 169 | Holiday pay | 3 538 | 3 035 |
| 8 102 | 9 125 | Provision of Ship and Debit | 8 102 | 9 125 |
| 7 693 | 3 806 | Accrued expenses | 18 124 | 9 777 |
| 39 873 | 37 442 | Total Current liabilities | 46 997 | 41 423 |
All figures in USD 1000.
The Group has several operating leases for machinery and office space. The lease expense consists of minimum lease only.
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 3 536 | 2 591 | Office lease | 2 709 | 1 880 |
| 80 | 42 | Lease of machinery | 71 | 19 |
| 3 616 | 2 633 | Total lease expense | 2 780 | 1 899 |
As of December 31, 2017, the Group leased offices in Trondheim, Oslo, Dahle, Oulu, Turku, Espoo, Krakow, Portland, Hong Kong, Shenzhen, Bejing, Shanghai, Seoul, Tokyo, Manila and Taiwan. The lease amounts are fixed exept for the Norwegian leases that are regulated annualy based on Norway's consumer price index.
| GROUP | PARENT | |
|---|---|---|
| 3 406 | Within 1 year | 2 927 |
| 10 471 | 1 to 5 years | 10 251 |
| 10 993 | After 5 years | 10 993 |
| 24 870 | Total non-cancellable leases | 24 170 |
All figures in USD 1000.
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group's requirements for ongoing operations and for new investments. Management believes that it is especially important to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, Nordic may purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares. No changes were made in procedures or processes in the course of 2017.
Nordic Semiconductor targets to have an equity ratio above 50% at all times, measured as total equity divided by total assets.
| GROUP | PARENT | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| 124 953 | 116 949 | Total equity | 120 258 | 114 676 |
| 185 119 | 174 684 | Total assets | 187 548 | 176 391 |
| 67% | 67% | Equity share | 64% | 65% |
The Group has long-term revolving credit facilities ("RCF"), which enables it to borrow up to MUSD 40 and MUSD 25 at any time with an interest rate equal to LIBOR + margin. The line of credit agreement of MUSD 40 expires in September 2019, while the other MUSD 25 expires in November 2022. As of December 31, 2017, Nordic has drawn MUSD 20 on the MUSD 40 line of credit. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories MUSD 44, accounts receivable MUSD 49 and operating equipment MUSD 16. The following financial covenants are included for the revolving credit facilities:
-Equity ratio shall not be lower than 40 %.
In addition to the two RCFs, the Group has a MEUR 10 bank overdraft facility with its main bank. This overdraft is not utilized at the end of December. The remainder of the Group's financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others.
Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for 40MNOK. The warranty is given to sequre payments of upto 24 months of rent for the office in Trondheim.
| GROUP | Amortized cost Receivables and loans |
Other financial obligations |
Total |
|---|---|---|---|
| Cash and cash equivalents | 36 695 | 0 | 36 695 |
| Receivables and other short-term receivables | 56 426 | 0 | 56 426 |
| Total financial assets | 93 121 | 0 | 93 121 |
| Accounts payable and other short-term debt | 0 | 39 873 | 39 873 |
| Other long term liabilities | 20 000 | 0 | 20 000 |
| Total financial liabilities | 20 000 | 39 873 | 59 873 |
| PARENT | Amortized cost Receivables and loans |
Other financial obligations |
Total |
|---|---|---|---|
| Cash and cash equivalents | 35 020 | 0 | 35 020 |
| Receivables and other short-term receivables | 65 158 | 0 | 65 158 |
| Total financial assets | 100 178 | 0 | 100 178 |
| Accounts payable and other short-term debt | 0 | 46 997 | 46 997 |
| Other long term liabilities | 20 000 | 0 | 20 000 |
| Total financial liabilities | 20 000 | 46 997 | 66 997 |
| GROUP | Amortized cost Receivables and loans |
Other financial obligations |
Total |
|---|---|---|---|
| Cash and cash equivalents | 21 135 | 0 | 21 135 |
| Receivables and other short-term receivables | 59 713 | 0 | 59 713 |
| Long-term receivables | 2 | 0 | 2 |
| Total financial assets | 80 850 | 0 | 80 850 |
| Accounts payable and other short-term debt | 0 | 38 121 | 38 121 |
| Other long term liabilities | 20 000 | 0 | 0 |
| Total financial liabilities | 20 000 | 38 121 | 68 121 |
| PARENT | Amortized cost Receivables and loans |
Other financial obligations |
Total |
|---|---|---|---|
| Cash and cash equivalents | 20 432 | 0 | 20 432 |
| Receivables and other short-term receivables | 65 453 | 0 | 65 453 |
| Long-term receivables | 2 | 0 | 2 |
| Total financial assets | 85 887 | 0 | 85 887 |
| Accounts payable and other short-term debt | 0 | 41 423 | 41 423 |
| Other long term liabilities | 20 000 | 0 | 20 000 |
| Total financial liabilities | 20 000 | 41 423 | 61 423 |
Cash equivalents at fair value are assets held as short-term deposits in interest-bearing funds invested within high-quality issuers, with floating earnings and no set maturity date (Valuation category 1, prices in active markets for identical assets or liabilities).
As Nordic Semiconductor manages an international operation, the Group is subject to financial risk, primarily credit risk and foreign currency risk. Procedures for control
The Group's sale of components takes place through its distribution partners within defined geographic regions. The Group therefore depends on a relatively small number of customers. In order to manage credit risk, Nordic has established guidelines to ensure that each customer's outstanding receivables do not exceed established credit limits.
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| 2016 | |||||
| 50 162 | Not due | 45 510 | 50 162 | ||
| 3 632 | Past due 0-30 days | 2 388 | 3 632 | ||
| 258 | |||||
| 720 | Over 120 days | 356 | 720 | ||
| 54 772 | Total | 48 582 | 54 772 | ||
| 2016 258 |
Gross total Past due 31-120 days |
2017 329 |
Based on its experience, it is not deemed necessary for the Group to make a provision for accounts receivable. (94% of receivables are within terms). The book value of financial assets represents the maximum credit exposure. The maximum exposure to credit risk on the balance sheet date was:
| 2016 | 2017 | 2016 | |
|---|---|---|---|
| 59 714 | Accounts receivable and other short-term receivables | 65 158 | 65 453 |
| 21 135 | Cash and cash equivalents | 35 020 | 20 432 |
| 80 849 | Total | 89 947 | 85 885 |
Overall, the Group seeks to minimize risk when investing its cash balance. Investments can only be made in securities which have been approved by the Board.
Nordic has no externally imposed capital requirements or agreements, and has no contracts or legal requirements which are not being upheld. Nordic has the following due dates with regard to contracts for financial obligations as of December 31, 2017:
| GROUP | Entered | Contractual | 0-3 | 3-6 | 6-12 | 1-2 | 2-5 | 5-10 |
|---|---|---|---|---|---|---|---|---|
| amount | cash flow | months | months | months | years | years | years | |
| Supplier and other short-term debt | 39 873 | 39 873 | 31 645 | 4 723 | 3 505 | |||
| Other contractual obligations | 0 | 24 870 | 925 | 925 | 1 557 | 3 049 | 7 421 | 10 993 |
| Loan facility | 20 000 | 20 000 | 20 000 |
| PARENT | Entered amount |
Contractual cash flow |
0-3 months |
3-6 months |
6-12 months |
1-2 years |
2-5 years |
5-10 years |
|---|---|---|---|---|---|---|---|---|
| Supplier and other short-term debt | 46 997 | 46 997 | 40 952 | 3 101 | 2 944 | |||
| Other contractual obligations | 0 | 24 170 | 732 | 732 | 1 463 | 2 927 | 7 324 | 10 993 |
| Loan facility | 20 000 | 20 000 | 20 000 |
*Other contractual obligations is mainly office facility rent in Oslo and Trondheim
The Group's liquidity requirements and risk assessment determine its investment strategy and interest rate exposure. The Group's policy is to maintain a short term investment horizon for its surplus cash. The investment portfolio should not have an average duration longer than six (6) months.
The Group has long-term revolving credit facilities, which allows it to borrow up to a total of MUSD 65 at an interest rate of LIBOR + margin. The line of credit agreement of MUSD 40 expires in September 2019, while the other MUSD 25 expires in November 2022.
If interest rates increase 1 basis point, the negative effect on profit before tax given current utilization of the RCF is MUSD 0.2 per year
The Group is subject to foreign currency risk as it has its development and commercial activities in different countries. Nearly all revenues and cost of goods are in USD, while approximately 60% and 20% of the Group's operating expenses excluding depreciation are in NOK and EUR. Nordic does not hedge its exposure to foreign currency risk.
The table below shows sales in the most significant currencies:
| GROUP | 2017 | 2016 | |||||
|---|---|---|---|---|---|---|---|
| Local currency |
USD (1000) | Share of total revenues in % |
Local currency |
USD (1000) | Share of total revenues in % |
||
| USD | 234 231 | 234 231 | 99.2% | 196 167 | 196 186 | 99.2% | |
| EUR | 1 560 | 1 772 | 0.8% | 1 360 | 1 511 | 0.8% | |
| Total | 236 003 | 100.0% | 197 697 | 100.0% |
| PARENT | 2017 | 2016 | ||||
|---|---|---|---|---|---|---|
| Local currency |
USD (1000) | Share of total revenues in % |
Local currency |
USD (1000) | Share of total revenues in % |
|
| USD | 234 489 | 234 489 | 99.0% | 196 351 | 196 351 | 99.2% |
| EUR | 2 010 | 2 310 | 1.0% | 1 437 | 1 593 | 0.8% |
| Other | 10 | 0.0% | ||||
| Total | 236 809 | 100.0% | 197 944 | 100.0% |
Below is a sensitivity analysis of changes in the NOK exchange rate on balance sheet items, and their impact on Profit before tax:
| Profit before tax | |
|---|---|
| NOK exchange rate +/- 10% | +/- 536 |
As of December 31, 2017 the Group had no financial assets or financial liabilities where there is considered to be a difference between book value and fair value.
| GROUP | 2017 | 2016 | ||
|---|---|---|---|---|
| Book value | Fair market value | Book value | Fair market value | |
| Financial assets | ||||
| Cash and bank deposits | 36 695 | 36 695 | 21 135 | 21 135 |
| Accounts receivable | 48 582 | 48 582 | 54 772 | 54 772 |
| Financial liabilities | ||||
| Other long-term liabilities | 20 000 | 20 000 | 20 000 | 20 000 |
| Accounts payable | 13 075 | 13 075 | 15 295 | 15 295 |
| PARENT | 2017 | 2016 | ||
|---|---|---|---|---|
| Book value | Fair market value | Book value | Fair market value | |
| Financial assets | ||||
| Cash and bank deposits | 35 020 | 35 020 | 20 432 | 20 432 |
| Accounts receivable | 48 582 | 48 582 | 54 772 | 54 772 |
| Financial liabilities | ||||
| Other long-term liabilities | 20 000 | 20 000 | 20 000 | 20 000 |
| Accounts payable | 12 337 | 12 337 | 14 887 | 14 887 |
Book value is a reasonable estimate of fair value in cases where these numbers are identical.
With reference to the Annual General Meeting ("AGM") on April 24, 2017, Nordic Semiconductor has on February 27, 2018, granted 1,447,400 share options to employees and primary insiders. On the AGM the Parent company was given the approval to issue up to 1.7 million options in 2018, equivalent to approximately 1% of the outstanding share capital in options to all employees.
According to the approval, the option scheme has a long-term element as options are exercisable over a three-year period and expire after five years. The options were granted at a strike price of NOK 47,27 (10% above volume weighted average share price the week following Q4 2017 results). If the Parent company's share price exceeds a cap of NOK 141.81, Nordic may settle the option grant by compensating the employee the difference between the cap and the strike price.
Otherwise, no events have occurred since the end of the fiscal year, which are expected to materially affect the financial statements.
Nordic Semiconductor ASA, the Parent company of the Group, is listed on Oslo Stock exchange. The Group has no material transactions with related parties.
Terje Rogne Chairman
Beatriz Malo de Molina Board member
Inger Berg Ørstavik Board member
Asbjørn Sæbø Board member, employee
Oslo, 16 March 2018
Anne-Cecilie Fagerlie Board member
Tore Valderhaug Board member
Joakim Ferm Board member, employee
Svenn-Tore Larsen Cheif Executive Offi cer
Craig Ochikubo Board member
Birger Steen Board member
Jon Helge Nistad Board member, employee
The Board of Directors and management of Nordic Semiconductor (the "company") aim to execute their respective tasks in accordance with the highest standards for corporate governance.
Nordic Semiconductor's standards for corporate governance provide a critical foundation for the company's management. These principles must be viewed in conjun-ction with the company's efforts to constantly promote a sound corporate culture throughout the organization. The company's core values of respect, trust, accountability and equal treatment are central to the Board's and management's efforts to build confidence in the company, both internally and externally. Nordic Semiconductor is a UN Global Compact (UNGC) signatory and is committed to the Ten Principles as set forth by the UNGC in the areas of Human Rights, Labor, Environment and Anti-corruption. Nordic Semiconductor has adopted the Electronics Industry Citizenship Coalition (EICC) Code of Conduct, which specifically focuses on topics relevant for the electronics industry, and promotes this to ensure sustainable business operations and supply chain. Additional information on this work can be read in the annual Corporate Social Responsibility report, as published on Nordic Semiconductor's website.
Nordic Semiconductor's principles for corporate governance are based on Norwegian law, regulations by the Oslo Stock Exchange and the Norwegian Code of Practice for corporate governance published on October 30, 2014. The company's policy on corporate governance are published each year in the annual report, and described in detail below.
Nordic Semiconductor's Articles of Association states, "The object for which the company is established is the development and sale of electronic components, integrated circuits, design tools and related solutions."
Nordic Semiconductor designs, sells and delivers integrated circuits and related intellectual property for use in short and long-range wireless applications. The company specializes in ultra-low power components, based on its proprietary 2.4 GHz RF and Bluetooth low energy. All manufacturing and direct distribution of components are outsourced to specialist subcontractors. The company is headquartered in Trondheim and Oslo, Norway, and has offices in Finland, USA, Poland, Hong Kong, China, Korea, Japan, Taiwan and the Philippines.
The company's growth philosophy, as well as the cyclicality of its business, means that the company will undertake to maintain a high equity ratio and considerable liquidity. The company aims primarily to provide shareholders with returns in the form of appreciation of the shares and has a long term goal to pay dividends based on surplus cash generated by the company. This assumes that the company's needs for financial strength relative to operational requirements and new investments are addressed. The company's dividend policy is reviewed each year by the Board of Directors. The Annual General Meeting can mandate the Board the authorization to pay dividends based on the latest approved Annual Report. The justification for this authorization needs to be explained and should reflect the company's dividend policy.
The Board of Directors, in accordance with the resolution of the Annual General Meeting held April 24. 2017, has been authorized to buy back up to 16,300,000 own shares for a total par value of NOK 163,000.00 in one or more transactions. The authorization is limited to 10 percent of the company's share capital, and the price per share which the company may pay for shares acquired in this manner shall not be less than the par value nor greater than NOK 200. This power of attorney will remain in effect until the company's ordinary annual general meeting in 2018.
In accordance with the decision passed at the general meeting held April 17. 2017, the Board of Directors has the authority to increase the company's share capital by issuing up to 16,300,000 shares with a total par value of NOK 163,000. The authority is to be used for purposes defined in the Notice of the Annual General Meeting, including strengthening the company's shareholder's equity, to execute share capital increases with one or more strategic partners, or to complete a merger or acquisition using shares or cash. This power of attorney will remain in effect until the company's annual general meeting in 2018, and can be implemented through a private placement, rights issue or public offering.
Nordic Semiconductor has one class of shares, where each share has one vote at the company's shareholders' meeting. Nordic Semiconductor strictly adheres to the principle of equal treatment of all shareholders. The company's transactions in its own shares are conducted in accordance with good stock exchange practice in Norway.
If the Board wishes to quickly raise capital, the Board has been authorized to direct a share capital increase to selected investors chosen by the Board, up to the limits quantified above. In this event, the company will notify the stock exchange of its reasons for implementing a directed share placement. Existing shareholders' pre-emptive subscription rights under §10-4 in the Norwegian Companies Act can be waived under these circumstances.
Such capital increases shall be executed at or near the current stock price listed on the Oslo Stock Exchange. This authorization remains valid until the company's ordinary annual general meeting in 2018.
The company is generally cautious in regards to transactions with shareholders, members of the Board of Directors, senior employees or related parties to the above. To ensure that the best code of conduct applies, the company requires notification and review of any process or transaction in which both the company and a senior employee or member of the Board of Directors may have interests.
Nordic Semiconductor will seek to comply to the principles of equal treatment of related parties and possible transactions with related parties that are laid down in the Norwegian Code of Practice for Corporate Governance.
Nordic Semiconductor's shares are freely tradable and there are no restrictions on the sale and purchase of the company's shares beyond those pursuant to Norwegian law.
The Annual General Meeting is the company's highest body and the shareholders exert their authority in the company through the Annual General Meeting. Nordic Semiconductor encourages all shareholders to participate and exercise their rights at the Annual General Meeting.
Nordic Semiconductor has an ambition to hold the Annual General Meeting in accordance with the Norwegian Code of Practice for Corporate Governance. The notice of the Annual General Meeting, including relevant information shall be announced and distributed at least 21 days in advance of the Annual General Meeting, and the final date for notification of attendance is three working days prior to the Annual General Meeting.
Shareholders who are unable to attend may vote by proxy. Members of the Board of Directors and the auditor attend the Annual General Meeting. The Annual General Meeting is chaired by a person independent of the company's Board of Directors and management.
Pursuant to the Articles of Association the following issues shall be discussed and decided at the Annual General Meeting
Nordic Semiconductor has a Nomination Committee which is elected with a defined mandate during the Annual General Meeting. The Nomination Committee's duties are to represent the interests of the shareholders in general, and to propose qualified candidates for the Annual General Meeting's election of the Board of Directors as well as to propose the remuneration to the Board of Directors. The Nomination Committee will provide reasons for its recommendation in the notice for the AGM, including information on the candidates' competence, capacity and independence. The nomination committee holds regular meetings with major shareholders as well as management and the individual shareholder elected Board member. In addition, all shareholders can submit suggestions to the nomination committee through a link on Nordic's webpage.
The Nomination Committee consists of three members who are shareholders or who represent the shareholders. The company's executive personnel are not represented on the Nomination Committee. The deadline for submitting proposals to the Nomination Committee is one month before the Annual General Meeting
The members of the Nomination Committee are:
The Board of Directors and the Chairman of the Board of Directors are elected by the shareholders at the Annual General Meeting on the basis of proposals from the Election Committee.
Both the Chairman and the shareholder-elected members of the Board of Directors are elected for a term of up to two years. A more detailed description of the background, qualifications, and term of service of each member of the Board of Directors and the number of Nordic Semiconductor shares they own are provided in the annual report. Members of the Board are encouraged to hold shares in the company.
The composition of the Board of Directors meets the requirements of the Norwegian Code of Practice for Corporate Governance with respect to members' independence of the executive management and with respect to important business relationships. The independence of the members of the Board of Directors is also evident in the fact that there are few instances of disqualification in connection with matters dealt with at Board meetings. Representatives of the executive personnel are not members of the Board of Directors.
The conduct of the Board of Directors is in accordance with the Board instructions of Nordic Semiconductor ASA. In accordance with the said instructions, the Board is responsible, to the degree necessary, for approving business strategies and budgets for the company. The Board is also responsible for ensuring that the company has a competent management with clear internal distribution of responsibility and work.
Each year, the Board of Directors adopts a specific meeting and activity plan for the following year. This plan covers strategic planning, monitoring of the business, and other relevant business issues. The Board's activity plan for 2018 stipulates eight meetings, two of which are scheduled for all day meetings to discuss and explore strategy and technology-specific issues.
The Board of Directors carries out an evaluation of its activities each year and on this basis discusses improvements in the organization and implementation of its work.
The Board has established a Compensation Committee to discuss and decide the remuneration principles for the CEO and executive management.
In 2014, the Board established an Audit Committee. The Audit Committee consists of two members of the Board both of which are independent of Group Management. The Committee has collectively the competence required in the Public Limited Liability Companies Act § 6-42. Both members are independent according to § 6-42 Public Limited Liability Companies Act, and both members have the required qualifications within accounting or auditing.
The Committee supports the Board with respect to the assessment and control of financial risk, financial reporting, auditing, control, and prepares discussions and resolutions for Board meetings. It has no decisionmaking authority.
The Audit Committee held 6 meetings in 2017 and has been in regular contact with the Company's auditor regarding audits of the statutory accounts and it also assesses and monitors the auditor's independence, including non-audit services provided by the auditor.
The Board and management are committed to ensuring that the company maintains sound and effective internal controls to safeguard the value of the enterprise, as well as its principles of ethical conduct and corporate social responsibility. Nordic Semiconductor's risk management system is fundamental to the achievement of its financial goals.
The company's primary internal control routines related to financial reporting are as follows: The finance team prepares a monthly financial report which is distributed to and reviewed by CEO and the Board of Directors. In preparing the monthly financial report, the accounting team conducts reconciliations of all major balance sheet items, which are independently reviewed by a second member of the team. Balance sheet items subject to accounting estimates are regularly analyzed to ensure that all assumptions relating to the accounting estimate remain valid. As part of the monthly financial report, the financial results are compared with the company's budget and prior forecast to analyze variances and ensure that they are not the result of incorrect reporting.
Each year, the external auditor performs tests of the company's internal control routines. The quarterly and annual financial reports are also subject to review and approval by the Board. In addition, the Board of Directors performs biannual reviews of the company's business strategy focusing on market development, technology updates, competitive positioning and risk factors.
The Board presents an in depth description and analysis of the company's financial status in the Report of the Board of Directors in the company's annual report. The report also describes the main drivers and risks related to the operation of the business.
All remuneration to the Board of Directors is disclosed in Note 10 of the Nordic Semiconductor Group annual accounts.
Members of the Board of Directors receives remuneration for work related to Board committees. The remuneration to Board members is not performance based, and the company does not provide share options to Board members.
The Board of Directors discusses and approves the terms and conditions for the CEO once a year and monitors the general terms and conditions for other senior employees of the group.
The main principle in the Company's policy for remuneration and compensation is that the leading employees shall be offered competitive terms, so as to ensure the desired competence and incentives. Salary and other benefits for executive management will in the current year be established in accordance with the abovementioned main principle.
The Company has established an annual performance bonus for the executive management team, in which the employee must remain within his position until the start of the following year in order to be eligible. The bonuses are awarded through a direct cash payment. Performance-based compensation will be subject to an absolute limit and fulfillment of performance criteria, both decided by the Board at its discretion.
Nordic Semiconductor strives to communicate actively and openly with the financial market. Nordic Semiconductor's accounting procedures are highly transparent and its financial statements are prepared and presented in accordance with the International Financial Reporting Standards (IFRS). The Board of Directors monitors the company's reporting.
Nordic Semiconductor's financial reporting calendar for 2018 has been announced to the Oslo Stock Exchange and can be found on the company's website. The company's annual and quarterly reports contain extensive information about the various aspects of the company's activities. The company's quarterly presentations are transmitted directly on the internet and may be found on Nordic Semiconductor's websites together with the quarterly and annual reports. A comprehensive and detailed presentation of other information, reports and documents may also be found on Nordic Semiconductor's websites. The company always ensures that all shareholders are treated equally as regards access to financial information.
Nordic Semiconductor's Chief Financial Officer is responsible for contact with shareholders apart from the General Meeting. The Chief Financial Officer reports regularly to the Board about the company's investor relations activities.
The Board of Directors will not seek to hinder or obstruct any takeover bid for the company's activities or shares. In the event of a takeover bid, as discussed in item 14 of the Norwegian Code of Practice for Corporate Governance, the Board of Directors will seek to comply with the recommendations therein as well as complying with relevant legislation and regulations.
If the Company is acquired, the CEO's resignation period extends to 12 months, and any remaining retention bonus to the CEO will be paid in its entirety following the closing of the acquisition, as described in Note 10 of the Group financial statements. There are otherwise no material obligations expected by the company as a result of an acquisition, aside from normal legal and advisory fees.
EY has been elected by the Annual General Meeting to act as auditor to confirm to the Annual General Meeting that Nordic Semiconductor's annual accounts have been prepared and presented in accordance with current laws and regulations. Fees paid to the auditor are approved at the Annual General Meeting.
In the fall, the external auditor presents to the Audit Committee an evaluation of risk, internal control and the quality of reporting at Nordic Semiconductor, and the audit plan for the current year. The external auditor also takes part in the Board's discussions on the annual financial statements. On both occasions, the Board of Directors ensures that the Board and the external auditor are able to discuss relevant matters at a meeting at which the executive management is not present.
The auditor shall be independent of the company. As a consequence, Nordic Semiconductor does not engage the elected auditor for tasks other than the financial audit required by law. Nevertheless, the auditor is used for tasks that are naturally related to the audit, such as technical assistance with tax returns, annual accounts, understanding of accounting and tax rules and confirmation of financial information in various contexts.
Terje Rogne is currently Chairman of Nokas AS and a Board member of Apptix ASA. From 1994 until 2004, Rogne was Chief Financial Officer of Tandberg ASA. Afterward, he then served as the Head of Operations and Investor Relations for Tandberg until 2008. Before his career in Tandberg, Rogne was Finance Director in Kværner AS. He has an MBA from the University of San Diego and a Bachelor of Business degree from the Oslo School of Business Administration. Holdings in the company: 1 080 000 shares.
Craig Ochikubo has a Master of Science degree in Electrical Engineering from the University of Southern California in Los Angeles and has more than 30 years experience in the wireless semiconductor and electronics industries at both start-up and Fortune 500 companies including, Broadcom Corporation, Innovent Systems, RF-Link Technology, Cadence, and TRW. He has led global engineering and business teams in Europe, Asia, and North America and successfully drove long-term business at top-tier consumer electronics companies. He spent 14 years at Broadcom where he held senior executive positions running their global wireless personal area networking business unit, and LTE cellular development teams. Holdings in the company: 13 500 shares.
Tore Valderhaug is a Norwegian State Authorized Public Accountant with ten years of audit experience mainly from Arthur Andersen & Co. He has held positions as finance director and CFO in several publicly listed companies, including Cermaq ASA, EDB Business Partner, ASK Proxima/InFocus, Ocean Rig and Unitor. Mr. Valderhaug has also worked within corporate finance and private equity firms. Tore Valderhaug is currently working as a consultant and is also a board member of the publicly listed companies XXL ASA, Q-Free ASA and Salmones Camanchaca SA as well as the non-listed companies inApril AS and Remøy Group. Holdings in the company: 5 769 shares.
Anne-Cecilie Fagerlie is Vice President Global Infrastructure Services at CGI. She has a Master degree in Computer Science from NTH (now NTNU). Afterward, she began working at Arthur Andersen/Andersen Consulting/ Accenture where she became partner in 1993. In 2002, Fagerlie joined Aker Kværner as Senior Vice President of Group IT. From 2006 to 2012 she was General Manager of Nordics in Avanade, an international consultancy owned by Accenture and Microsoft. Recently she was Executive Vice President in Evry.
Beatriz Malo de Molina holds a Bachelor of Science degree in Languages and International Business from Georgetown University and a Master of Philosophy degree from the University of Oslo. Professional experience includes: Head of Mergers & Acquisitions at Orkla ASA, Investment Director at Kistefos AS, Associate Principal at McKinsey & Company, and Executive Director in the Investment Banking Division of Goldman Sachs & Co. where she spent 10 years focused on corporate finance, M&A, and equity capital markets. She began her career in New York in 1994, and has since worked in Mexico City, Frankfurt, London. Beatriz is also a member of the board of Norway's early-stage fund, Investinor, of the publicly listed company Nel Hydrogen, and of Energy Nest.
Inger Berg Ørstavik is an associate professor at the Department of Private Law, University of Oslo. She has previously been a partner with Advokatfirmaet Schjødt AS and a lawyer at the office of the Attorney General for Civil Affairs. Mrs. Ørstavik has a law degree from the University of Oslo, a Ll.M. from Ruprecht-Karls-Universität in Heidelberg, Germany, and a Ph.D. from the University of Oslo in the areas of intellectual property law and competition law. She has taught international human rights law at Fudan University in Shanghai, China where she resided from 2005 to 2009. Mrs. Ørstavik is member of the BoD in REC Silicon ASA, and she chairs the Food and Drink Industry Professional Practices Committee (MFU).
Birger Steen (born 1966) is based in Seattle. From 2010 to 2017, he was the CEO of Parallels, Inc. He previously served as Vice President of Worldwide SMB and Distribution at Microsoft and as General Manager of Microsoft Russia and Microsoft Norway. Prior to joining Microsoft in 2002, Mr. Steen was CEO of Scandinavia Online and Vice President of Business Development in Schibsted ASA. He worked for McKinsey & Company as a consultant and engagement manager from 1993 to 1996. Mr. Steen received his MSc in Computer Science and Industrial Engineering from the Norwegian Institute of Technology in Trondheim. He also holds a degree in Russian language from the Defense School of Intelligence and Security in Oslo and received his MBA from INSEAD in France. Mr. Steen has served as a Non-Executive Director of Schibsted ASA since 2014 and at Nordea Bank AB since 2015. Holdings in the company: 2 460 shares.
Asbjørn Sæbø has a Ph.D. degree in Telecommunications from NTNU in Trondheim. He has been with Nordic since 2006, working with development of firmware for Bluetooth Low Energy in various roles, including as project leader responsible for the Bluetooth Low Energy protocol stack firmware. Previously, he has worked as a development engineer in a startup company on active noise control and as a Post.Doc. at the Centre for Quantifiable Quality of Service in Communication Systems (a Centre of Excellence at NTNU). Mr. Sæbø is also a board member of the non-listed company DAAL Noise Control Systems AS. Holdings in the company: 10 000 shares and 5 600 share options.
Joakim Ferm has a Master of Science degree in Electrical engineering from Chalmers, Gothenburg. Joakim has been employed at Nordic Semiconductor in Trondheim since 2008, he is a Senior Project Manager with experience from application design and digital design. Holdings in the company: 9 452 share options.
Jon Helge Nistad has a Master of Science degree in Electrical Engineering from NTNU in Trondheim. Jon Helge has been employed in Nordic Semiconductor since 2006, where he has gained experience in application development, embedded software design and project management. He is currently working as a Senior R&D engineer in Nordic Semiconductor. Holdings in the company: 7 001 share options.
Svenn-Tore Larsen is an Electronic Engineer from the University of Strathclyde, UK. He was appointed Chief Executive Officer of Nordic Semiconductor in February 2002. Mr. Larsen has broad international experience in the semiconductor business, previously as Director for the Nordic region for Xilinx Inc. He has also been working at Philips Semiconductor. Larsen was member of the Board of Nordic Semiconductor from 2000–2002. Holdings in the company: 1 890 400 shares and 131 150 share options.
Pål Elstad has held several senior financial positions, most recently as investor relations responsible for REC Silicon ASA and Head of Finance for REC Solar in Singapore. In addition, he has extensive manufacturing and supply-chain experience from General Electric Healthcare. Mr. Elstad holds a Bachelor of Economics degree from the Norwegian Business School (BI) and is a State Authorized Public Accountant (CPA). Holdings in the company: 3 846 shares and 87 608 share options.
Geir Langeland has a B.eng Honours degree in Electronics from University of Manchester Institute of Science and Technology (UMIST). He was appointed Product Manager Standard Components at Nordic Semiconductor in October 1999, before being appointed to Director Sales and Marketing September 2005. Before joining Nordic, Mr. Langeland worked as Field Sales/Applications Engineer in Memec Norway, a leading global electronic components distribution company. Holdings in the company: 177 700 shares and 87 608 share options.
Svein-Egil Nielsen holds an MBA from the Haas School of Business at the University of California, Berkeley and Bachelor of Engineering honors degree in Computer and Electronics Systems from University of Stathclyde. He joined Nordic in 2001 as Director of Sales and Marketing. He also held a position as R&D director from 2005 to 2006 and Director of Emerging Technologies and Strategic Partnerships from 2010 to 2012. Additionally, he served Innovation Norway as their Director of San Francisco and Houston offices where he was in charge of promoting Norwegian technology from 2007 to 2010. Prior to Nordic, he worked for Boston Consulting Group as a consultant. Holdings in the company: 15 000 shares and 87 608 share options.
Ebbe Rømcke has an M.Sc. degree in Electronics Engineering from Norwegian University of Science and Technology (NTNU). He was appointed Quality Director of Nordic Semiconductor in 2002. Prior to this Mr. Rømcke worked eight years in the company as Digital Designer, Project Manager and Group Manager. He also has experience from Digital Design and Project Management in Normarc AS (now Indra Navia), a leading manufacturer of aviation systems. Holdings in the company: 68 900 shares and 43 542 share options.
Ole Fredrik Morken joined the company as an Analog IC designer in 1994 and has since held numerous positions related to Project- and Supply Chain Management, including a brief employment for SensoNor ASA in 1999. He was appointed Supply Chain Director in 2010 and is currently based in Taipei. Mr. Morken holds a Master's degree in Electronics Engineering from the Norwegian University of Science and Technology (NTNU). Holdings in the company: 160 000 shares and 87 608 share options.
Thomas Bonnerud has an M.Sc. degree in Electrical Engineering from the Norwegian University of Science and Technology (NTNU). He joined Nordic in 2001 as a High-Speed Data Converter Design Engineer, and has since held various positions within Product Management. He is currently responsible for Nordic's overall product roadmap. Holdings in the company: 7 420 shares and 51 804 share options.
The financial information is prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by EU. Additionally, it is management's intent to provide alternative performance measures (APM) that are regularly reviewed by management to enhance the understanding of the Group's performance. An Alternative Performance Measure is a measure of historical or future financial performance, financial position, or cash flows other than a financial measure defined or specified in the applicable financial reporting framework.
Gross Margin. Gross Profit divided by Total Revenue. Gross margin is presented as it is the main financial KPI to measure the Group's operations performance.
| GROUP | 2017 | 2016 |
|---|---|---|
| Gross profit | 111.487 | 93.044 |
| Total revenue | 236.003 | 197.698 |
| Gross Margin | 47.2% | 47.1% |
EBIT and EBITDA terms are presented as they are commonly used by investors and financial analysts.
| GROUP | 2017 | 2016 |
|---|---|---|
| Operating profit | 10.450 | 9 708 |
| Depreciation | 12.863 | 11 473 |
| EBITDA | 23.313 | 21.181 |
EBITDA Margin. EBITDA divided by Total Revenue.
| GROUP | 2017 | 2016 |
|---|---|---|
| EBITDA | 23.313 | 21.181 |
| Total revenue | 236.003 | 197.698 |
| EBITDA Margin | 10% | 11% |
Total Operating Expenses. Sum of payroll expenses, other operating expenses, depreciation and amortization.
| GROUP | 2017 | 2016 |
|---|---|---|
| Payroll expenses | 60 517 | 49 185 |
| Other Opex | 27 657 | 22 677 |
| Depreciation | 12 863 | 11 473 |
| Total Operating Expenses | 101 037 | 83 335 |
Cash Operating Expenses. Total payroll and other operating expenses adjusted for non-cash related items including option expenses, receivable writeoff and capitalization of development expenses. Cash operating expenses intends to show operating expenses, excluding items with no cash effect and items affecting comparability.
| GROUP | 2017 | 2016 |
|---|---|---|
| Total operating expenses | 101.037 | 83.335 |
| Depreciation | -12.863 | -11.473 |
| Option expense | -1.127 | -313 |
| Receivable write-off | -1.000 | 0 |
| Capitalized expenses | 8.572 | 5.304 |
| Cash Operating Expenses | 94.618 | 76.854 |
Nordic Semiconductor ASA
Otto Nielsens veg 12 7004 Trondheim, Norway Phone: +47 72 89 89 00
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Nordic Semiconductor Finland OY
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