Asetek A/S

ASETEK - 2024 Asetek A/SAssensvej29220Aalborg Eastinfo@asetek.comwww.asetek.com34880522213800ATZVDWWKJ8NI472024-01-012024-12-312023-01-012023-12-31Regnskabsklasse DAalborg2025-03-07https://ir.asetek.com/ESG-Report-2024https://ir.asetek.com/ESG-Report-2024https://ir.asetek.com/Corporate-Governance-Statement-2024/Årsrapport34880522Asetek A/SAssensvej 29220 Aalborg EastxWizard version 1.1.1332.0, by EasyX Aps. www.easyx.euRevisionspåtegningGrundlag for konklusionKonklusionAndré S. EriksenAndré S. EriksenAndré S. EriksenCEOPeter Dam MadsenPeter Dam MadsenPeter Dam MadsenCFORené Svendsen-TuneRené Svendsen-TuneRené Svendsen-TuneRené Svendsen-TuneRené Svendsen-TuneChairmanErik DamsgaardErik DamsgaardErik DamsgaardErik DamsgaardErik DamsgaardVice chairmanAnja MonradAnja MonradAnja MonradAnja MonradAnja MonradMemberJukka PertolaJukka PertolaJukka PertolaJukka PertolaJukka PertolaMemberhttps://ir.asetek.com/ESG-Report-2024129134213800ATZVDWWKJ8NI472024-01-012024-12-31213800ATZVDWWKJ8NI472023-01-012023-12-31213800ATZVDWWKJ8NI472024-12-31213800ATZVDWWKJ8NI472023-12-31213800ATZVDWWKJ8NI472022-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472022-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472022-12-31213800ATZVDWWKJ8NI472023-01-012023-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472023-01-012023-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472023-01-012023-12-31ifrs-full:SharePremiumMember213800ATZVDWWKJ8NI472023-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472023-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472023-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472024-01-012024-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472024-12-31ifrs-full:IssuedCapitalMember213800ATZVDWWKJ8NI472024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800ATZVDWWKJ8NI472024-12-31ifrs-full:TreasurySharesMember213800ATZVDWWKJ8NI472024-12-31ifrs-full:RetainedEarningsMember213800ATZVDWWKJ8NI472023-12-31213800ATZVDWWKJ8NI472022-12-31213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember213800ATZVDWWKJ8NI472023-01-012023-12-31cmn:ConsolidatedMember213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember1213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember1213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember2213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember3213800ATZVDWWKJ8NI472024-12-31cmn:ConsolidatedMember213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember0213800ATZVDWWKJ8NI472024-01-012024-12-31cmn:ConsolidatedMember1iso4217:USDiso4217:USDxbrli:sharesxbrli:pure XXXXX ANNUAL REPORT 2023 / Page 1 ANNUAL REPORT 2024 XXXXX ANNUAL REPORT 2023 / Page 2 Asetek is a developer and manufacturer of high-quality gaming hardware. Founded in 2000, Asetek established its innovaꢀve posiꢀon as the leading OEM developer and producer of the all- in-one liquid cooler for major PC & Enthusiast gaming brands. In 2021, Asetek introduced its line of products for next level immersive SimSports gaming experiences. Asetek is headquar- tered in Denmark and has operaꢀons in China and Malaysia with a total of 114 employees. In 2024 Asetek recorded revenue of $52.5 million. Asetek A/S Visiꢀng address: Skjoldet 20 DK-9230 Svenstrup J Denmark Email: investor.relaꢀ[email protected] www.asetek.com CVR number: 3488 0522 Annual report for the ﬁnancial year 1 January to 31 December 2024. This annual report is approved by the Board of Directors as of March 7, 2025. The Board will submit this report for approval at the Annual General Meeꢀng on April 28, 2025. This annual report contains prospecꢀve informaꢀon based on Asetek’s current expectaꢀons. This informaꢀon is by nature uncertain and associated with risk. Even if company management considers expectaꢀons based on such prospecꢀve informaꢀon to be reasonable, no guarantee can be given that these expectaꢀons will prove to be cor- rect. Consequently, actual future results may vary signiﬁcantly compared with what is set out in the prospecꢀve informaꢀon, for reasons including changed condiꢀons in respect of the economy, market and compeꢀꢀon, changes in legal requirements and other poliꢀcal measures, exchange rate variaꢀons and other factors. Read more about the risks in the chapter on ‘Risk management’ on pages 30–33 and in note 3 on page 46 ‘Risk management and debt’ in the ﬁnancial statements. XXXXX ANNUAL REPORT 2023 / Page 3 CONTENT Asetek in brief 4 6 Consolidated statement of comprehensive income Consolidated balance sheet 36 37 38 39 40 63 64 65 66 67 72 73 79 2024 in brief Comments from CEO Asetek as an investment Strategic framework Business model 7 Consolidated statement of changes in equity Consolidated cash ﬂow statement Notes 9 10 11 13 14 16 19 23 25 30 33 34 Comprehensive income statement, parent company Balance sheet, parent company Statement of changes in equity, parent company Statement of cash ﬂows, parent company Notes, parent company Business segments Liquid cooling SimSports Share and shareholders Management report Corporate governance Risk management Corporate social responsibility Five year summary Management statement Independent auditor’s reports Deﬁniꢀons of raꢀos and metrics ASETEK IN BRIEF ANNUAL REPORT 2024 / Page 4 FOUNDED ON INNOVATION. DRIVEN BY EXCELLENCE Asetek has been an innovaꢀve force in the global liquid cooling manufacturing industry for more than 25 years. In 2021 we introduced products for SimSports gaming. Asetek is headquartered in Denmark and has operaꢀons in China and Taiwan with a total of 114 employees. The Asetek share is listed on Nasdaq Copenhagen. In 2024 the company recorded revenue of 52.5 million USD. Why we do it With our market-leading and high-quality product oﬀering our goal is to meet our clients´ requirements for performance, design and longer product lifecycles. Our product development centers around our customers’ needs and reﬂect an innovaꢀve engineering approach combined with superior performance. The Asetek brand name has become synonymous with high product quality in all categories, which is conﬁrmed by great reviews and feedback from gamers and hardware enthusiasts around the world. We are in business to push limits and redeﬁne what’s possible. Who we are We are a high-tech company with a long history in mechatronic innovaꢀon, focusing on gaming hardware. Since our foundaꢀon we have disrupted the PC cooling market, seꢁng new standards for performance and eﬃciency. In 2021, we conꢀnued to leverage our extensive capabiliꢀes with soﬅware, hardware and mechanics and entered into the world of sim racing as Asetek SimSports®. We are a diverse and agile organizaꢀon located close to some key electronic manufacturing hubs in South-East Asia. Asetek is a high-tech company with a long history in mechatronic innovaꢀon, focusing on gaming hardware “ What we do Asetek is a developer and manufacturer of high-quality gaming hardware. Since 2000, we design, manufac- ture, and sell high-quality liquid cooling soluꢀons to most major PC and Enthusiast gaming brands. In 2021, we introduced our line of products for next-level immersive SimSports gaming experiences, oﬀering every sim racer in the world the possibility to push limits and redeﬁne what’s possible. Revenue per year, $ million REVENUE 2024 GROSS PROFIT 2024 79.8 76.3 15.8% 52.5 50.6 of revenue invested in research and development in 2024 $52.5 $21.9 million million 2021 2022 2023 2024 ASETEK IN BRIEF ANNUAL REPORT 2024 / Page 5 KEY CONCEPTS FOR UNDERSTANDING ASETEK CUSTOMERS – a global customer base INNOVATION – we are a high-tech company Asetek is a developer and manufacturer of We design, manufacture, and sell high-performance gaming hardware that delivers next-level immersive gaming experiences. Our products power some of the world’s leading PC and enthusiast gaming brands, including three of the ﬁve largest PC man- ufacturers. Since 2021, we have been pushing the boundaries of sim racing, oﬀering every sim racer the opportunity to redeﬁne what’s possible with our cuꢁng-edge SimSports product lines. high-quality gaming hardware. Our journey began almost 25 years ago when we disrupted the PC cool- ing market with our groundbreaking all-in-one liquid cooler, seꢁng new standards for performance and eﬃciency. In 2021, we conꢀnued to leverage our extensive capabiliꢀes with soﬅware, hardware and mechanics and entered into the world of sim racing as Asetek SimSports®. Our goal is to transform the sim racing scene, pushing limits and redeﬁning what’s possible. REACH – well-balanced and global We have a longstanding local presence in some key electronic manufacturing hubs in South-East Asia and our headquarter is in Aalborg, north Jutland, Denmark. We have a global plaꢂorm with a solid supply chain creaꢀng long-term value for all stake- holders. HISTORY – founded on innovaꢀon Our history is rooted in innovaꢀon that solved a key challenge of performance limitaꢀons caused by computer processors running hot. This innovaꢀon is the foundaꢀon that took Asetek to a world-leading market posiꢀon within liquid cooling. Since 2021 we are on a mission to become market-leader in the rapidly growing market for sim hardware. PEOPLE – an internaꢀonal organizaꢀon We believe that a diverse workforce and an inclusive workplace is a prerequisite for staying compeꢀꢀve, now and in the future. Our highly skilled employees are all sharing the common purpose of challenging industry standards driven by innovaꢀon and opera- ꢀonal excellence. 2024 IN BRIEF ANNUAL REPORT 2024 / Page 6 KEY MILESTONES AND EVENTS 2024 Despite strong growth in the SimSports segment, the relaꢀvely larger Liquid Cooling segment experienced declining revenue in 2024. During the year, Asetek also delisted its shares from the Oslo Stock Exchange and is now solely listed on Nasdaq Copenhagen. The year concluded with a decision of a capital increase, enabling conꢀnued expan- sion in the SimSports segment. In March, Asetek’s share was delisted from the Oslo Stock Exchange and has since been listed exclusively on Nasdaq Copenhagen. In September, the new headquarters and R&D center in Svenstrup, near Aalborg, were completed. 45 New Liquid Cooling products launched during 2024 21 New SimSports products launched during 2024 In October, Asetek entered into a license agreement with Xbox. The Designed for Xbox license agreement enables Asetek to expand into the global console market with existing and future sim racing products, making the company’s acclaimed sim racing products available to millions of gamers worldwide. Adjusted EBITDA per quarter, $ million Revenue per quarter, $ million In October, Asetek appointed Maja Sand-Grimnitz as VP Brand and Digital and Henrik Lindskou-Mour- itsen as VP Global Sales, with the aim of strength- ening the company’s commercial focus within its leadership team. 15.4 0,4 0.2 0.0 12.7 12.2 Q1 12,2 Q3 -0.5 In December, it was announced that 219,925,366 new shares were subscribed for in the rights issue at a subscripꢀon price of DKK 0.40 per share, corre- sponding to gross proceeds of DKK 88 million. Q1 Q2 Q3 Q4 Q2 Q4 COMMENTS FROM CEO ANNUAL REPORT 2024 / Page 7 A TURNAROUND YEAR Looking back, 2024 was a year of signiﬁcant change – challenging at ꢀmes, but ulꢀmately neces- sary to strengthen our foundaꢀon for the future. We took decisive steps to secure the long-term growth and development of our business. Just a few weeks into the new year, Asetek celebrat- ed its 25-year anniversary. It is remarkable to think that an idea conceived in a university dorm room and a prototype built in a garage has led to where we are today. Summing it all up, it comes down to conꢀnuous innovaꢀon and a team of talented, dedicated individuals working together to deliver products that make a diﬀerence by enabling beꢃer gaming experiences. “We took decisive steps to secure the long-term growth and development of our business.” While Asetek have delivered material growth Plaꢁorm for proﬁtable growth and value creaꢀon since incepꢀon, the past 25 years have included both ups and downs. There is no denying that 2024 also was a mixed bag, with an unexpected and rapid contracꢀon in our Liquid Cooling segment, but also strong growth for the SimSports business. Against the challenging Liquid Cooling backdrop, management and the board took decisive acꢀons to cut costs, strengthen commercial management and ulꢀmately raise capital to maintain a strong foundaꢀon for delivering future value creaꢀon through our market leading liquid cooling and sim racing products. Following the turnaround measures, 2025 will likely be a transiꢀonal year before growth resumes in earnest in 2026. This is supported by ongoing customer dialogues and our plan to expand the ad- dressable markets across both business segments, including the launch of a high-quality sim racing product line for the console-based mass market. In late 2024, Asetek executed a rights issue to en- sure the conꢀnued SimSports scale-up as cash ﬂow from the proﬁtable Liquid Cooling business fell short of expectaꢀons. While we did not raise the full tar- get amount, the new liquidity provides ﬂexibility to adjust and opꢀmize investments. We are conﬁdent in our ability to grow the sim racing business. Asking shareholders for capital aﬅer a challenging year was far from ideal, and trust shown by both exisꢀng and new shareholders is highly appreciated. Liquid cooling – transiꢀon, then proﬁtable growth We recognize that increased global geopoliꢀcal ten- sions are creaꢀng uncertainꢀes regarding new tariﬀs and potenꢀal global supply chain disturbances. We are monitoring the situaꢀon and are prepared to address any future challenges with a combinaꢀon of measures. In September 2024, the new headquarters and R&D center was completed aﬅer a four-year process. With a new base of operaꢀons, stronger balance sheet and leaner organizaꢀon, we have established a strong plaꢂorm from which to execute our long-term growth strategy. For Liquid Cooling, our largest segment, we have always emphasized the challenges of predicꢀng revenue. In 2024, this was especially evident as we faced a rapid and unexpected decrease in revenue. This was due to a combinaꢀon of high customer in- ventories and two of our largest customers moving to dual sourcing to strengthen their supply chains. While this is a logical step – just as we maintain dual sourcing in our own supply chain – it nonetheless has a signiﬁcant short-term negaꢀve impact. During the year, we also reduced our workforce, primarily in Denmark, and closed the U.S. operaꢀon. It is always sad to part ways with colleagues, some of whom have been with us for many years. Howev- er, the cost-savings were necessary to create a more eﬃcient organizaꢀon and structure. The U.S. closure also reﬂects that a local presence has become less relevant as our customers’ key decision-makers now primarily based in Asia. COMMENTS FROM CEO ANNUAL REPORT 2024 / Page 8 However, there were also posiꢀve developments. When excluding the two above-menꢀoned custom- ers, all our other customers grew year-over-year. Also, at the end of 2024, Asetek secured a new customer – one of the world’s largest PC manu- facturers – which also required a second source, this ꢀme to our beneﬁt. Out of the ﬁve biggest PC manufacturers globally, three are now using Asetek Liquid Cooling products. In 2024, Asetek introduced the strategy of com- plemenꢀng our high-end products with a value-ori- ented oﬀering to expand our addressable liquid cooling market. This iniꢀaꢀve will gradually gain tracꢀon from 2026. Furthermore, we are enhancing the commercial capabiliꢀes of the organizaꢀon, ap- plying a sharper commercial focus in all aspects of decision-making and integraꢀng even deeper with our customers. As part of this, in 2024, the com- mercial experꢀse within the execuꢀve management team was strengthened. is expected to remain largely at the same level as in 2024. The business will remain proﬁtable, as it has been for many years. Asetek has a track record of quickly adapꢀng to changing market condiꢀons and will do so again this ꢀme. We are the technol- ogy leader with a strong posiꢀon in the premium segment, and as long as we conꢀnue to innovate, Asetek’s products and services will conꢀnue to be in demand by both new and exisꢀng customers. Next for us, is the compleꢀon and launch of a prod- uct line targeꢀng the mass gaming market, followed by Asetek products with Xbox support. Both are set to launch in the second half of 2025, signiﬁcantly expanding the addressable market and are expected to drive strong revenue growth in the coming years. Having the best products is not enough. Beyond delivering on the product roadmap, our focus in 2025 will be on aꢃracꢀng top talent to strengthen sales channels as well as building up the SimSports brand. A strategic priority is to ensure our products are readily available in all relevant channels, wheth- er it is our own web shop, resellers or on plaꢂorms like Amazon. As we stated in December, we expect EBITDA improvement compared to 2024, but we do not anꢀcipate the SimSports segment reaching proﬁt- ability in 2025. This is according to plan as Asetek purposefully move in the right direcꢀon by opꢀmiz- ing SimSports investments and creaꢀng a strong plaꢂorm for a growing proﬁtable business. 25 years of innovaꢀon – with more to come We are conﬁdent that Asetek is going into 2025 with a stronger foundaꢀon, and we have, over ꢀme, delivered strong growth and built a sizeable global business. We also know that it does not always move in straight line. As result of our innovaꢀon drive and focus on ex- cellence, far more than 10 million end users world- wide have bought and used our products which we have conceptualized, designed, manufactured and sold. Our innovaꢀve products, both in liquid cooling and sim racing, have won several global awards. With that in mind, I would like to extend a spe- cial thank you to all my colleagues, our customers, our shareholders, our partners and suppliers. It has been a challenging year, but we now look forward with conﬁdence to the next 25 years. SimSports – expanding our sim racing universe For our SimSports business, 2024 was another posiꢀve year with mulꢀple product launches and strong revenue growth. In less than three years, Asetek has become a premium player in the growing sim racing market, going from zero to $10 million of annual revenue. We now oﬀer several product lines designed as an open ecosystem, which have re- ceived highly posiꢀve feedback from end-users and reviewers. Addiꢀonally, during the year, we entered into an agreement with Xbox to launch products with console support. André S. Eriksen, Founder and CEO We have a clear plan for resuming growth in Liquid Cooling from 2026, as communicated in connecꢀon with the rights issue. For 2025, revenue ASETEK AS AN INVESTMENT ANNUAL REPORT 2024 / Page 9 FIVE REASONS TO INVEST IN ASETEK Asetek is well posiꢀoned to capitalize on the its compeꢀꢀve strengths through innovaꢀon, operaꢀonal excellence and a leading posiꢀon as a premium supplier of high-quality gaming hardware. 1. 2. 3. 4. 5. Large and growing addressable market Leveraging a leading premium segment posiꢀon Strong innovaꢀon capability supporꢀng future growth Proﬁtable Liquid Cooling business provides a foundaꢀon for SimSports growth strategy Strong SimSports growth potenꢀal Asetek is strategically posiꢀoned in the expanding gaming market. The rising interest in gaming is driving the liquid cooling market, as high-performance PC hardware demands eﬃcient cooling soluꢀons. Simultaneously, the growing demand for high-performance gaming setups is boosꢀng the simulaꢀon hard- ware market, as consumers seek more realisꢀc and compeꢀꢀve gameplay. The demand for liquid cooling soluꢀons is to a large extent linked to the growth of the overall PC gaming hardware market (which, however, includes gaming lap- tops, which do not need liquid cooling). The overall PC gaming hardware market is expected to show an annual growth rate of approximately 5.2%, reaching $69.0 billion by 2027. 1 Asetek has a leading posiꢀon in the premium segment of the gaming hard- ware market. Since 2000, we design, manufacture, and sell high-quality liquid cooling soluꢀons to most major PC and Enthusiast gaming brands. In 2021, Asetek expanded its business into the rapidly growing SimSports market for racing simulator gear. Asetek has earned a leading posiꢀon in the premium seg- ment of both the Liquid Cooling as well as SimSports market. The leading market posiꢀon combined with our strong brand name and high-quality products can be leveraged into increasing the address- able market. This is accomplished by targeꢀng the Liquid Cooling mid-market segment and launching a new SimSports product line with strong value oﬀering towards entry-level end-users, including products with console compaꢀbility. Conꢀnuous product development is crucial for maintaining and strength- ening compeꢀꢀveness in an industry that is characterized by compeꢀꢀon and technological progress. Asetek is renowned for being an innovaꢀve, high- tech and entrepreneurial company that provides products with very high quality. At Asetek, product development centers around customers’ needs and reﬂects an innovaꢀve engineering approach combined with superior performance. The company has two R&D centers – one in Denmark and one in China. In 2024, Asetek spent 15.8% of total revenue, or USD 8.3 million on R&D, securing conꢀnued compeꢀꢀveness trough future launches of world-class products. Asetek invented the all-in-one liquid cooler and has been solving thermal challenges for 25 years. Our business segment Liquid Cooling has over the last 10 years generated total revenues exceeding $540 million with an average adjusted EBITDA margin of 29%. The proﬁtable Liquid Cooling operaꢀon provides a ﬁnancial foundaꢀon for the growth strategy of the SimSports business. The strategic ﬁt and synergies between the two segments are visible and will act as a driver for future value creaꢀon. In 2024, revenue in the SimSports segment increased by 24% compared with 2023. Growth in 2024 was mainly driven by a combinaꢀon of mulꢀple new products and a strong increase in new end-users and resellers globally. Gaming simulaꢀon is a rapidly expand- ing segment of the gaming hardware market, and the demand for gaming simulaꢀon is linked to the growth of the overall hardware accessories market. For the coming three years, this market is projected to show an annual growth rate of approximately 13.7%, reaching USD 115.3 billion by 2027. 1 1 Staꢀsta (2024), Gaming Hardware, Gaming Acces- sories – Worldwide 1 Staꢀsta (2024), Gaming Hardware, Gaming PCs and Laptops – Worldwide/ OUR STRATEGIC FRAMEWORK ANNUAL REPORT 2024 / Page 10 ASETEK´S APPROACH TO VALUE CREATION Asetek’s strategy is based on operaꢀonal excellence, innovaꢀve product development, superior customer service and expansion of the addressable market. In that way we will secure long-term sustainable organic growth. The goal is to be the leading brand in the markets in which we operate. The strategic framework at Asetek consists of core values, goals, strategic focus areas and operaꢀonal prioriꢀes. By adhering to our strategic framework, Asetek secures a strong plaꢂorm for long-term sustainable growth. Strategic focus areas Asetek will conꢀnue to do what we are best at – developing and launching high-quality gaming hardware products as well as conꢀnue to develop our customer service. At the same ꢀme, we plan to expand our addressable market and increase our markeꢀng and brand building eﬀorts. Addiꢀonally, we will expand the number of SimSports resellers and sales channels and compete for new OEM Liq- uid Cooling customers. All of these acꢀons will drive organic growth going forward. STRATEGIC FRAMEWORK AT ASETEK CORE VALUES Innovaꢀon GOALS STRATEGIC FOCUS AREAS OPERATIONAL PRIORITIES Core values The core values at Asetek – innovaꢀon and excel- lence – are rooted in our DNA and have been our guidelines from the start. Asetek was founded 25 years ago with the intenꢀon of solving problems for our customers. Since then, we believe staying close to our customers’ problems also means being closer to the soluꢀon. Liquid Cooling Broadening addressable market Medium-term growth ambiꢀon Strengthen Asetek’s market posiꢀon SimSports Introducing new produts Operaꢀonal excellence Customer centricity Short-term ﬁnancial goals Sustainability goals Establish new sales channels Operaꢀonal prioriꢀes Asetek is a well-established brand name in the pre- mium market segment. We are guided by a strong belief that there are very good opportuniꢀes for growth by leveraging our current market posiꢀon and strong brand name. Strengthening our brand name Goals Looking ahead, Asetek has set both a medium-term growth ambiꢀon and short term ﬁnancial goals. Asetek has also commiꢃed to set sustainability goals, which provides a pathway to reduce emis- sions in the future. At group level, the ambiꢀon is to achieve annual revenue exceeding $50 million in both our Liquid Cooling and SimSports segments by the end of the medium-term period. Our market in the Liquid Cooling segment is characterized by low visibility and volaꢀle market dynamics meaning that the growth between diﬀerent years can vary substanꢀally. That is why we also publish annual ﬁnancial goals expressed as our guidance. In the short to medium term, our operaꢀonal prioriꢀes are to focus on expanding our potenꢀal market and revenues both within our Liquid cooling business unit as well as within SimSports. This will be accomplished by new product launches and by updaꢀng the exisꢀng product range, targeꢀng the low-end of the premium market. Doing this, we will strengthen Asetek’s market posiꢀon in all product categories and market segments we focus on. OUR BUSINESS MODEL EXPLAINED ANNUAL REPORT 2024 / Page 11 A GLOBAL PLATFORM SUPPORTING GROWTH Asetek’s leading posiꢀon is based mainly on the compeꢀꢀve strength that originates from the company’s operaꢀonal excellence in oﬀering high-quality gaming hardware products. During 25 years, Asetek has built up a wealth of experience that is unique among companies in our industry and is recognized for premium quality. having contractual relaꢀonship with ꢀer-1 contract manufacturers. Innovaꢀon and product development Product development is and always has been the main focus for Asetek. Since its incepꢀon, the com- pany has successfully launched innovaꢀve products with high quality. Asetek’s R&D team and technolo- gy lab are based in Aalborg, Denmark. These teams are responsible for innovaꢀon, concept and design of our products and also manage collaboraꢀon with Asetek’s global customer base to deﬁne require- ments and develop cuꢁng edge technology. We conꢀnuously try to keep our R&D teams close to the customers, which encourages faster, more respon- sive and eﬀecꢀve feedback for improvements to our exisꢀng product range as well as new developments. The Aalborg team works closely with the R&D team in Xiamen, China, to idenꢀfy the opꢀmal sources for the necessary components to fulﬁll speciﬁc custom- er requirements. A quality team is divided in two groups: one in Denmark and one in Xiamen. Their main focus is to conduct ongoing inspecꢀons to ensure control over all aspects of quality and compliance with a growing number of regulated parameters. Logisꢀcs and sales Finished products are primarily delivered directly to customer hubs in China, with smaller quanꢀꢀes shipped directly to Europe and USA. Logisꢀcs are oﬅen outsourced, and except our own webshop for SimSports products, our partners handle deliveries to end-users themselves. Liquid coolers are sold through two channels. The main sales channel is a white-label approach, meaning products are sold as a standalone product to partners who are in turn selling it under their la- bel. Asetek’s liquid coolers are also sold to partners using it as a component to build a complete PC, which is then sold to end-users. SimSports products are sold either directly to end-users through our webshop or via resellers, who distribute them both online and in physical stores. Sourcing and producꢀon Asetek’s manufacturing and logisꢀcs teams in Xiamen, China and Malaysia, evaluates and sources components and suppliers for the ﬁnished product to be assembled, allowing us greater control over prod- uct quality. Our cooling soluꢀons are assembled by the Company’s principal contract manufacturer based in Xiamen and Malaysia and since 2023, a likewise contract manufacturer has been producing many of our SimSports products in Xiamen and Malaysia. Asetek’s business model concentrates primarily on OUR BUSINESS MODEL EXPLAINED ANNUAL REPORT 2024 / Page 12 quence, our markeꢀng eﬀorts mainly focus on leveraging this posiꢀon and building the Asetek SimSports brand name. The overall markeꢀng strat- egy will beneﬁt both SimSports sales channels – cur- rently done through online reviews using inﬂuencers and strategic partnerships as well as presence on tradeshows and other key events. we know that they happily share their experience and trust in us. Our dedicated markeꢀng and sales teams are responsible for providing customer ser- vice and support, making it easier to establish closer relaꢀons to them. In the end, it is our customers that can tell us how we can provide a premium customer- centric experience. Markeꢀng and customer service The sales, markeꢀng and product management teams, based principally in Denmark and Taiwan, oversee customer relaꢀonships to facilitate commu- nicaꢀon and development, ensuring that the devel- oped product meets or exceeds customer demands. Considering our history and DNA, Asetek is Delighted customers are our best ambassadors, and in many ways synonymous with innovaꢀve and high-quality liquid cooling soluꢀons. As a conse- Xiamen • Product management • R&D • Sourcing • Outsourced manufacturing • Quality Aalborg • E-commerce • Product management • R&D and prototyping • Sourcing • Order management • In-house manufacturing • Quality • Order management Taipei • Branding and outbound • Sales • Product management markeꢀng • Finance • Management Malaysia • Outsourced manufacturing • Quality Asetek oﬃces Asetek representaꢀon OEM HQ SimSports resellers A LEADING GAMING HARDWARE OFFERING ANNUAL REPORT 2024 / Page 13 LIQUID COOLING AND SIMSPORTS – AN ATTRACTIVE COMBINATION Our Liquid Cooling business has over the last 10 years generated total revenues exceeding USD 540 million with an average annual adjusted EBITDA margin of 29%. This proﬁtable business unit provides a ﬁnancial foundaꢀon for the growth strategy of our other key business unit, SimSports. Liquid cooling and SimSports sales channels The proﬁtable Liquid Cooling busniss enables us to execute on the growth opportuniꢀes in SimSports. It also oﬀers a strong strategic ﬁt, enabling synergies between the two business segments and driving future value creaꢀon. Clear and aꢂracꢀve synergies Asetek fosters collaboraꢀon and integraꢀon between the Liquid Cooling segment and SimSports segment to drive synergies and enhance overall performance. Essenꢀally, three key areas have been idenꢀﬁed where clear synergies create long-term value. 1) Asetek beneﬁts from the ﬂexibility and experꢀse of its engineering teams, who frequently work across both segments. This cross-funcꢀonal approach enables Asetek to eﬃciently develop high-quality Liquid cooling and SimSports products, acceleraꢀng innovaꢀon and product development. White-label and own webshop main sales channels Liquid coolers are sold through two channels. The main sales channel is a white-label approach, where OEM partners purchase and resell as standalone products under their own label. We also sell liquid coolers to partners who incorporate them as a key component to build a complete PC, which is then sold to end-users. Our Simsports products are sold via a selec- ꢀve distribuꢀon network with our primary sales channels being our own webshop where products are sold globally, directly to end-users (DtC), and resellers (B2B2C) oﬀering our products to end-users through online stores and select physical stores. Products are also sold via select distribuꢀon part- ners operaꢀng speciﬁc geographies. LIQUID ASETEK SIMSPORTS COOLING 2) By sharing sourcing and manufacturing resources across both segments, Asetek is able to streamline operaꢀons, enhancing cost eﬃciency and product quality. 3) By leveraging cross-selling opportuniꢀes, Asetek can introduce SimSports Products to exisꢀng Liquid Cooling customers, and vice versa, expanding the customer base and increasing market reach. Synergies include the potenꢀal to increase sales in the liquid cooler segment through new sales channels opened by SimSports, as well as bundle SimSports products with liquid coolers to resellers. Direct-to-consumer (DtC) B2B2C White-label OEM partners • Own webshop •Amazon US • Resellers • Distributors approach to partners End-users End-users LIQUID COOLING ANNUAL REPORT 2024 / Page 14 MARKET LEADER WITHIN PREMIUM LIQUID COOLING SOLUTIONS Asetek invented the all-in-one liquid cooler and has been solving thermal challenges ever since. Since the beginning, liquid coolers from Asetek have delivered high performance while providing superior reliability. which can signiﬁcantly improve the performance of the computer. However, it also generates addiꢀonal heat, making an eﬀecꢀve cooling system essenꢀal. Components like CPUs, GPUs, memory modules, chipsets and hard drives are parꢀcularly vulnerable to overheaꢀng, which can lead to temporary mal- funcꢀons or permanent failure. Liquid cooling systems, which use a closed loop of ﬂuid to transfer heat away from the CPU, can ef- fecꢀvely dissipate this heat and allow for sustained overclocking without the risk of overheaꢀng or damaging the hardware. Asetek is one of the global leaders in premium liquid cooling soluꢀons for computer hardware enthusi- asts and gamers. Asetek’s Gaming and Enthusiast products are all-in-one coolers that provide reliable, maintenance-free liquid cooling to gaming and high-performance PC customers as well as eSports athletes to enjoy top-ꢀer performance from their equipment. Why is liquid cooling beꢂer than air cooling? LIQUID COOLING REVENUE 2024 Air cooling systems use a fan and heat sink to move heat away from the CPU. A liquid cool- ing system uses a water pump and radiator to move heat away from the CPU. The main advantages of liquid cooling compared to air cooling are: $42.8 The two most common cooling methods to million cool computer hardware are air cooling and liquid cooling. Air cooling is the most widespread, though it typically oﬀers lower performance. Liquid cooling, on the other hand, provides superior cooling eﬃ- ciency, especially for high-performance hardware, but it tends to be more expensive than air cooling. Beyond funcꢀonality, liquid coolers have evolved into branding and design tools, incorporaꢀng features like LED lighꢀng and customisable displays, appealing to enthusiasts and gamers who value aestheꢀcs as part of their setup. One of the key factors in the performance of a gaming computer is the cooling system, which helps prevent overheaꢀng and maintain opꢀmal perfor- mance. Liquid cooling systems have gained popular- ity among gamers due to their ability to eﬀecꢀvely dissipate heat and allow for overclocking of the CPU. Overclocking refers to the process of increasing the clock speed of the CPU beyond its factory-set limits, 1. Liquid cooling is more eﬃcient at removing heat from components than air cooling 2. Liquid cooling is not aﬀected by dust build- up or other air ﬂow obstrucꢀons 3. Liquid cooling is typically quieter than the fans used for air cooling LIQUID COOLING AVERAGE ANNUAL ADJUSTED EBITDA MARGIN, LAST 10 YEARS What is liquid cooling? Liquid cooling is a system used to lower the temperature of a computer or other elec- tronic device by circulaꢀng a coolant through its internal components. The coolant, which is usually water or a water-based soluꢀon, absorbs heat from the PC and carries it away, keeping the PC cooler than if it were relying on air cooling alone. 29% LIQUID COOLING ANNUAL REPORT 2024 / Page 15 MATURE MARKET WITH STABLE GROWTH The liquid cooling market is relaꢀvely mature and stable, extending to the broader computer hardware ecosystem, where both manufacturers and consumers beneﬁt from the reliability and consistent performance of the current technology. As a result, the risk of sudden techno- logical shiﬅs aﬀecꢀng the market is low. Historically, the compeꢀꢀve landscape has been divided between low-end, low-quality players and high-end, premium brands. Consumers who preferred premium products did not typically consider low-end alternaꢀves, resulꢀng in limited compeꢀꢀon within the high-end segment. Demand for high-quality products has been solid, and the compeꢀꢀve environment has remained stable. In response, Asetek is expanding its LIquid Cooling product range to include products for the mid-range market, aiming to capture a broader consumer base in an increasingly compeꢀꢀve environment. This shiﬅ posiꢀons Asetek to meet the evolving needs of both premium and mid-market consumers. The long-term growth prospects are solid and demand for high-performance hardware like liquid cooling soluꢀons is fuelled by the increasing global demand for gaming-related products, advance- ments in gaming technology, and the rise of com- peꢀꢀve gaming (eSports). Another factor expected to contribute to the demand for liquid cooling soluꢀons is PC upgrade cycles. The advancement of chip technology, including the introducꢀon of new CPUs and GPUs, oﬅen occurs in cycles and creates a demand for PC upgrades. As such, the demand for liquid cooling soluꢀons is to a large extent linked to the growth of the overall PC gaming hardware market (which, however, includes gaming laptops, which do not need liquid cooling). The overall PC gaming hardware market is expected to show an annual growth rate of approximately 5.2%, reaching USD 69.0 billion by 2027. 1 Changing market dynamics Based on market observaꢀons and customer dialogue in 2024, it has become evident that the market dy- namics have shiﬅed. The quality of lower-end market products has been more sought aﬅer as consumer preferences have shiﬅed towards more aﬀordable gaming PCs, which in turn increases the demand for somewhat cheaper liquid cooling opꢀons. As a result, end-users are now prioriꢀsing value in the mid-end segment over paying premium prices for high-end models. This shiﬅ has made cost-eﬀecꢀveness and value become criꢀcal success factors. 1) Staꢀsta (2024), Gaming Hardware, Gaming PCs and Laptops – Worldwide SIMSPORTS ANNUAL REPORT 2024 / Page 16 ASETEK SIMSPORTS – PRODUCTS FOR EVERY TYPE OF SIM RACER IIn 2021, Asetek introduced its ﬁrst sim racing products. Since then, over the past three years, Asetek SimSports has established itself in the market with three fully launched product lines, reaching an annual revenue of $10 million in 2024 and showing strong potenꢀal for conꢀnued growth in both revenue and proﬁts. From the start in 2021, Asetek has posiꢀoned the SimSports product oﬀering in the high-end of the market, targeꢀng compeꢀꢀve and commiꢃed gam- ers as well as racing and automobile enthusiasts. Asetek’s mission is to make high-quality sim racing products available for everyone, which is why we have three diﬀerent product lines in the premi- um segment, giving end-users the opportunity to assemble the preferred sim racing setup. The La Prima product line is suited for end-users en- tering the high-end simracing space seeking to take their racing to the next level, oﬀering the possibility to upgrade and adjust to ﬁt all needs. The Forte product Line is the mid-ꢀer oﬀering, for end-users that want to maintain high quality in build and design combined with sublime performance and user experience. Invicta is our premium product line, oﬀering an immersive and authenꢀc sim racing experience. Asetek’s product strategy is to expand its oﬀering to cover mulꢀple price ranges, including introducing mid-segment console products, reaching a broader segment of the sim-racing market. The compeꢀꢀve landscape for simracing is characterised by brands that oﬅen look and claim the same. As part of its markeꢀng, Asetek is focusing on its combinaꢀon of having a real racing background and a strong legacy in gaming, which diﬀerenꢀates it from compeꢀtors by providing authenꢀcity, driving technological inno- vaꢀon, enhancing brand credibility, and leveraging cross-industry synergies. Through this approach, Asetek aims to establish itself as a key player in the market, leveraging its experꢀse in both realms to oﬀer a more integrated and authenꢀc simracing experience. acꢀve users (MAUs) over the past twelve months from May 2023 to April 2024, reﬂecꢀng strong community commitment.2 broader audience. In the past three years, the trend in the major racing gaming segment has generally shown growth in monthly acꢀve users, and the mar- ket has further generated spikes in the segment’s performance when new gaming ꢀtles are released.1 The gaming simulaꢀon market encompasses major racing games like Gran Turismo, F1, BeamNG. drive and Forza Motorsport. Looking at the top 25 major racing games, the market boasts 60.4 million lifeꢀme players as of April 2024, with a robust engagement and an average of 5.3 million monthly SIMSPORTS REVENUE 2024 Strong growth opportunity The gaming simulaꢀon market is a growing industry. The market is driven by the increasing demand for high-quality, immersive gaming experiences that allow gamers to feel as though they are parꢀcipaꢀng in real-life events, and the improvements in graphics and processing power have enhanced the realism and immersion of simulaꢀon games, aꢃracꢀng a Increased interest in racing The signiﬁcant growth in demand for simracing soluꢀons is also driven by the increasing popularity of real-life motorsports. Events like Formula 1 have expanded into a mass market audience, further fue- led by the inﬂuence of media such as Neꢂlix series and the release of new racing ꢀtles. $9.6 million 1) Newzoo- Sim Racing TAM Analysis Report. (a report commissioned by Asetek). Market scope includes 37 markets (excluding China and India) and lifeꢀme players are measured across PS4, PS5, Xbox One, Xbox Series, and Steam. SIMSPORTS ANNUAL REPORT 2024 / Page 17 HIGH QUALITY SIM RACING GEAR Asetek oﬀers pedals, wheelbases, and steering wheels across three product lines, each oﬀering the user disꢀnct categories of hardware with varying features, authenꢀcity, and price. Pedals Wheelbase Steering wheel Invicta is the premium product line, oﬀering an immersive and authenꢀc sim racing experience. The Forte product Line is a high-quality mid-ꢀer oﬀering, for end-users that want to maintain high quality in build and design combined with sublime performance and user experience. The La Prima product line is suited for end-users en- tering the high-end simracing space seeking to take their racing to the next level, oﬀering the possibility to upgrade and adjust to ﬁt all needs. SIMSPORTS ANNUAL REPORT 2024 / Page 18 THIS IS SIMULATION RACING What is sim racing? Learn all sim racing terms Simulator games enable players to experi- ence situaꢀons and scenarios in great details and recreate real-world situaꢀons. Sim racing (simulaꢀon racing) is basically motorsport in a virtual environment. This means that sim racers are driving virtual cars on comput- er-generated tracks. The sim racing games are designed to mimic the feeling of driving a real car as closely as possible, and the racing is done using specialized soﬅware and hardware. The hardware sim racers use plays a crucial role to enhance the realism and overall driving experience. There are a lot of technical terms in sim rac- ing, and motorsports in general. At Asetek’s webpage, you will ﬁnd a glossary where you are introduced to the most important racing terms, in order to beꢃer understand both sim racing and motorsports. hꢃps://www.asetek.com/blogs/glossa- ry-sim-racing-and-motorsports-terms/ PC Rig and seat Pedals Wheelbase Steering wheel Displays Accessories A high-performance PC operates the sim- ulaꢀon soﬅware and interfaces with all the simulator’s devices Provides a solid and stable plaꢂorm for all the devices – wheel- base, pedals, display – as well as the driver Allow for precise and realisꢀc braking, acceleraꢀon and clutch control A direct drive motor delivers strong and re- alisꢀc force feedback, allowing the driver to feel the road and the car’s behavior Operate the car using but- tons, switches, and rotary controls while receiving visual feedback through LEDs and a screen. Easily swappable with a Quick Release (QR) connecꢀon Provides an immer- sive and realisꢀc ﬁeld of view Buꢃon boxes and other accessories enhance realism and immersion, oﬀering addiꢀonal funcꢀonal- ity and customizaꢀon opꢀons ASETEK SHARE AND INVESTOR RELATIONS ANNUAL REPORT 2024 / Page 19 PRIMARY LISTING ON NASDAQ COPENHAGEN AND COMPLETED RIGHTS ISSUE In 2024, Asetek’s shares were delisted from the Oslo Stock Exchange (Oslo Børs) and primarily listed on Nasdaq Copenhagen. At the end of the year, a rights issue with preferenꢀal rights for exisꢀng sharehold- ers was iniꢀated, which was completed on January 6, 2025. The rights issue raised gross proceeds of DKK 88 million for Asetek. and execuꢀve management held a total of 3.2 percent of the capital and votes. Other members of management held an addiꢀonal 0.83 percent of the capital and votes. The total number of shareholders in Asetek was 7,240 at January 6, 2025. reports and meeꢀngs with analysts, investors and the media at various events, seminars, one-on-one meeꢀngs and during visits to Asetek oﬃces. Inter- ested parꢀes can download presentaꢀon materials and listen to audio recordings from presentaꢀons of quarterly reports on Asetek’s website. Financial informaꢀon regarding Asetek is avail- able to download from hꢃps://ir.asetek.com/over- view/default.aspx. This includes ﬁnancial reports, press releases and other presentaꢀons. The compa- ny’s press releases are distributed via Cision and are also available on the company’s website. Primary lisꢀng on Nasdaq Copenhagen Since the company’s IPO on February 11, 2013, the Asetek share had been listed on the Oslo Stock Exchange. On May 17, 2023, the share was dual-listed on Nasdaq and Asetek announced the intenꢀon to delist its shares from Oslo Stock Exchange. In December 2023, an extraordinary general meeꢀng approved the de-lisꢀng of Asetek’s shares, followed by an approval from Oslo Stock Exchange in the same month. As a result of both approvals, Asetek’s shares were de-listed from the Oslo Stock Exchange eﬀecꢀve March 26, 2024, and have since had a primary lisꢀng solely on Nasdaq Copenhagen. Share price development and turnover The Asetek share trades under the symbol ASTK on Nasdaq Copenhagen and the share’s ISIN code is DK0060477263 (Technology: Computer Hardware), segment Small Cap. At the close of 2024, Asetek’s share price was DKK 0.479. This is equivalent to a market capitalizaꢀon of DKK 47.1 million. The highest price quoted during the ﬁnancial year of 2024 was DKK 3.68 (March 1) and the lowest price was DKK 0.45 (December 27). In 2024, the total turnover of Asetek shares traded on all marketplac- es amounted to 131.2 million shares, correspond- ing to 133 percent of the total number of shares at December 31, 2024. Concentraꢀon (Jan 6, 2025) Capital and votes Shares 144,176,879 165,351,405 177,318,367 The 10 largest owners 45.31% 51.99% 55.72% The 20 largest owners The 30 largest owners Financial calendar 2025 April 28, 2025 April 28, 2025 August 19, 2025 Q1 2025 ﬁnancial report Annual General Meeꢀng Q2 2025 ﬁnancial report Rights issue Share capital Share repurschases On November 7, 2024, Asetek announced its intenꢀon to carry out a rights issue with preempꢀve rights for exisꢀng shareholders. The purpose was to increase ﬁnancial ﬂexibility and enable conꢀnued investments in the SimSports segment to capitalize on future growth opportuniꢀes. Each shareholder could subscribe for three new shares for every share they held on the record date, at a price of DKK 0.40 per share. The rights issue was completed on January 6, 2025, and raised gross proceeds of DKK 88 million for Asetek. Aﬅer registraꢀon of the share capital increase following the rights issue, the share capital in Asetek amounted to DKK 31,823,925.80 divided into 318,239,258 shares with a nominal value of DKK 0.10. All shares are of the same class and the same share of capital and earnings. Each share enꢀtles the holder to one vote at the General Meeꢀng and each shareholder is enꢀtled to vote for all shares held by the shareholder. In 2024, no shares were repurchased. As of December 31, 2024, Asetek holds a total of 1,256,115 treasury shares. November 04, 2025 Q3 2025 ﬁnancial report March 16, 2026 Q4 and annual 2025 ﬁnancial report Investor Relaꢀons (IR) at Asetek Aseteks’ goal is that the company should be valued on the basis of relevant, correct and current informaꢀon. This involves a clear ﬁnancial commu- nicaꢀon strategy, reliable informaꢀon and regular contact with various stakeholders in the ﬁnancial markets. The management and Board of Directors of Asetek have a clear ambiꢀon to keep an ongoing dialog with the media and the capital market. This takes place through presentaꢀons of quarterly Shareholder contact Per Anders Nyman, Head of Investor Relaꢀons Mobile: +45 2566 6869 investor.relaꢀ[email protected] Ownership structure Aﬅer the rights issue was registered on January 6, 2025, the ten largest shareholders controlled 41.9 percent of the capital and votes. Board members ASETEK SHARE AND SHAREHOLDERS ANNUAL REPORT 2024 / Page 20 Shareholding distribuꢀon Holding size Owner type distribuꢀon Shares 966,168 Capital and votes 0.3% Private Individuals 32.3% 1 –1,000 Fund and insurance companies 17.9% Private investment companies 15.3% State pension fund 13.4% 1,001–5,000 4,079,933 1.3% 5,001–10,000 4,361,448 1.4% Unknown owner type 21.1% 10,001–100,000 100,001–500,000 500,001–1,000,000 1,000,001–5,000,000 5,000,001–10,000,000 10,000,001– 33,634,422 39,128,145 18,617,328 53,405,172 40,977,763 89,354,632 33,714,247 318,239,258 10.6% 12.3% Source: Q4 Inc. Data as of January 6, 2025 5.8% 16.8% 12.9% Geographic distribuꢀon 28.0% Unknown holding size Total 10.6% Denmark 85.2% Other countries 7.2% United Kingdom 3.0% Sweden 2.6% 100.0% Source: Q4 Inc. Data as of January 6, 2025 Germany 1.1% Switzerland 0.9% Source: Q4 Inc. Data as of January 6, 2025 Share price development 2024 DKK 4,0 Volume per market 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Nasdaq Copenhagen 96.5% Oslo Stock Exchange 3.2% Deutsche Boerse AG 0.1% Boerse-Stuꢀgart 0.1% London Stock Exchange 0.1% Source: Q4 Inc. Data as of January 6, 2025 Jan 24 Feb24 Mar24 Apr24 May24 Jun24 Jul24 Aug24 Sep24 Oct24 Nov24 Dec24 Source: Q4 Inc. XXXXX ANNUAL REPORT 2024 / Page 22 MANAGEMENT REPORT Management report Corporate Governance Risk management 23 25 30 33 34 Corporate Social Responsibility Five year summary MANAGEMENT REPORT ASETEK Annual report 2024 / Page 23 MANAGEMENT REPORT ucts. Average Selling Prices (ASP) for liquid coolers in associated with investment in the SimSports busi- ness. plus depreciation of $5.4 million, plus share-based compensation of $0.3 million, plus the special item non-cash impairment charge of $13.8 million. Foreign currency transactions in 2024 resulted in a $1.4 million gain ($1.0 million loss in 2023). Income tax expense was $5.7 million in 2024, principally due to impairment charges of $4.2 million to deferred tax assets related to uncertainty regarding their future recoverability. Income tax expense was $2.5 million in 2023. Income tax ex- pense in 2024 includes $0.9 million associated with the U.S. Global Intangible Low-Taxed Income (GILTI) inclusion, which requires U.S. companies to report PERFORMANCE IN 2024 2024 decreased to $55.76 from $59.29 in 2023. Gross margin was 41.8% in 2024 compared with 45.5% in 2023. The change reflects a change in product mix and the recent price sensitivity in the gaming hardware market. In 2024, total operating expense increased to $41.2 million, from $25.3 million in 2023. Operating expense in 2024 included a required non-cash impairment charge of $13.8 million as a consequence of an assessed impairment within the cash generating units. Excluding this one- time charge, operating expense in 2024 increased 8% mainly due to marketing and operations costs Personnel expense increased 2% in 2024 com- pared with 2023. Legal cost incurred associated with intellectual property settlements, defense of existing IP and securing new IP was $0.2 million, level with 2023. Share-based compensation cost associated with warrants and options issued to employees was $0.3 million in 2024 ($0.5 million in 2023). Profit and loss Total revenue for 2024 was $52.5 million, represent- ing a decrease of 31% from 2023 ($76.3 million). Sealed loop cooling unit shipments for 2024 totaled 0.8 million compared with 1.17 million in 2023. Revenue and unit shipment changes reflect fewer shipments of liquid cooling products which were negatively impacted by a decrease in the macro level market for gaming hardware and a shift toward cheaper alternatives. These effects were partly off- set by an increase in shipments of SimSports prod- Adjusted EBITDA was $0.3 million in 2024, com- pared with $15.9 million in 2023. Adjusted EBITDA in 2024 represents operating loss of $19.2 million, MANAGEMENT REPORT ASETEK Annual report 2024 / Page 24 foreign corporation intangible income that exceeds 10% return on foreign invested assets ($0.8 million effect in 2023). Asetek had a total comprehensive loss of $25.3 million for 2024, compared with total comprehen- sive income of $6.7 million in 2023. Comprehensive loss included a negative $1.3 million translation adjustment in 2024 (positive $0.7 million in 2023). management initiate fund-raising with the launch of an equity rights offering in November 2024. As of December 31, 2024, the Company had working capital of $4.4 million and long-term debt of $19.2 million. Upon subsequent completion of a rights of- fering on January 6, 2025, the Company generated net proceeds of $10.5 million through the issuance of 219.9 million new common shares of stock. In May 2023, the Company issued 71.2 million new common shares in an equity rights offering, raising net proceeds of $16.1 million. While there is no assurance that the Company will generate sufficient revenue or operating prof- its in the future, Asetek’s management estimate that the Company’s cash position and the liquidity available from its operations, external borrowings and other sources available, after the results of the rights offering on January 6, 2025, is sufficient to satisfy its working capital requirements for the foreseeable future, based on financial forecasts. To the extent necessary to fund expansion or other liquidity needs, management will consider offerings of debt, equity, or a combination thereof, depending on the cost of capital and the status of financial markets at that time. 1 to reflect Group full year revenue expected in the range of $52 to $55 million, with an adjusted EBITDA margin of 1% to 4%. The Company’s actual results for 2024 were total revenue of $52.5 million and adjusted EBITDA margin of 1%. The results did not meet management’s expectations at the beginning of the year. Revenue and adjusted EBITDA achievement for the year was within the range of the revised expectations communicated on July 1, 2024. 2024 (negative $3.2 million in 2023). The change principally reflects the refinancing of short-term debt in 2024. Statement of cash flows Net cash provided by operating activities was $1.2 million in 2024 ($16.3 million provided in 2023). The change was principally due to operating loss generated in 2024 compared with operating income in 2023. Cash used by investing activities was $10.1 million compared with $27.4 million used in 2023. The construction of Asetek’s headquarters facility was completed in Q3 2024, with property, plant and equipment additions totaling $7.8 million ($24.9 million in 2023). Additions to capitalized assets under development associated with future products was $2.3 million, a decrease of $0.2 million from 2023. Cash provided by financing activities was $5.0 million in 2024 compared with $12.3 million provid- ed in 2023. $5.7 million was drawn on credit facili- ties in 2024 to finance completion of the Company’s headquarters building. Funds provided by financing in 2023 included a rights offering which generated net proceeds of $16.1 million. Net decrease in cash and cash equivalents was $5.8 million in 2024, compared with an increase of $1.7 million in 2023. Cash and cash equivalents at December 31, 2024 was $3.3 million ($9.1 million in 2023). Balance sheet Asetek’s total assets at December 31, 2024 were $79.4 million, compared with $102.7 million at the end of 2023. The principal factors affecting the change were as follows: Property, plant and equipment decreased by $8.9 million, principally as a result of a required non-cash impairment charge of $13.8 million as a consequence of an assessed impairment within the cash generating units. Deferred tax assets decreased by $5.7 million due to uncertainties regarding their future recoverability. Cash and equivalents decreased by $5.8 million due to cash requirements of the business. Inventories decreased by $2.4 million associated with the reduced operating volumes. Total liabilities increased by $1.6 million in 2024, due to offsetting factors. Short-term debt decreased by $12.9 million and long-term debt increased by $16.6 million principally as a result of net $5.7 million in funds drawn to complete construction of a new headquarters building. Upon completion of construction in 2024, $19.3 million of debt was refinanced to a longer term structure, maturing in March 2028. This increase in liabilities was offset by exchange rate effects of a stronger U.S. dollar, lower accrued employee compensation associated with fewer employees, and reduced transaction volumes in accounts payable. EXPECTATIONS FOR 2025 Recently there has been a shift in the liquid cooling market toward more affordable gaming PC’s, which in turn increases the demand for cheaper liquid cooling options. This shift has impeded revenue growth in the Liquid Cooling segment, as Asetek has historically focused on the premium market. In 2025, the Company is expanding its product range to include products for the mid-range market, aiming to capture a broader consumer base in an increasingly competitive environment. As a result of these market dynamics, the Company expects revenue for 2025 at the Group level to be in the range of $52-58 million, with an adjusted EBITDA margin of 3–5%. The Group revenue outlook is derived from expected revenue in the Liquid Cooling segment in the range of $40 to $43 million, and in the SimSports segment $12 to $15 million. For the full fiscal year 2025, the Liquid Cooling segment is expected to achieve a gross margin in the range of 40-45%, while the SimSports segment is expected to reach a gross margin of 30–35%. 2024 RESULTS vs. EXPECTATIONS In the 2023 report, the Company communicated expectations of revenue growth between -5% to 5% for 2024 (equivalent to estimated total revenue of $72.5 to $81.1 million), with expected adjusted EBITDA margin to be in the range of 12% to 17%. In June 2024, the Company received updated rev- enue forecasts from its OEM partners indicating a potentially weak second half of 2024 and therefore temporarily suspended its revenue guidance. After a detailed customer review which revealed that the liquid cooling market rebound would be weaker than anticipated, Asetek reduced guidance on July Liquidity and financing The potential impact of the geopolitical situation and U.S. import tariffs remains uncertain and will depend on various factors beyond the Company’s control, as well as the Company’s ability to mitigate any potential effects. In mid-2024, the Company experienced a decline in revenue resulting from a weakened gaming hardware market while it continued to invest in the growing SimSports business as well as finish construction of its new headquarters. As a result, a projected near-term cash shortfall required that Working capital (current assets minus current liabilities) totaled $4.4 million at December 31, CORPORATE GOVERNANCE ASETEK Annual report 2024 / Page 25 CORPORATE GOVERNANCE The objective of corporate governance is to ensure that Asetek is managed as efficiently as possible in order to create shareholder value. This is achieved through a clear division of responsibilities be- tween the Annual General Meeting, the Board and the executive management, as well as through clear regulations and transparent processes. The general meeting Financial reporting Ordinarily, the Chairman of the Board proposes the agenda for each Board meeting. Besides the Board Members, Board meetings are attended by the Executive Board. Other participants are summoned as needed. The Board approves decisions of particular impor- tance to the Company including the strategies and strategic plans, the approval of significant invest- ments, and the approval of business acquisitions and disposals. The General Meeting has the final authority over the Company. The Board of Directors emphasize that shareholders are given detailed information and an adequate basis for the decisions to be made by the General Meeting. The General Meeting elects the Board of Direc- tors, which currently consists of five members. The board members are elected for one year at a time with the option for re-election. The Board of Directors receives regular financial reports on the Company’s business and financial status. Notification of meetings and discussion of items The Board schedules regular meetings each year. Ordinarily, the Board meets eight to ten times a year, of which four are quarterly update telecon- ferences. The meetings are typically conducted at either the facility in Aalborg, Denmark or via web based conferencing. Additional meetings may be convened on an ad hoc basis. All Board members receive regular information about the Company’s operational and financial pro- gress in advance of the scheduled Board meetings. The Board members also regularly receive oper- ations reports and participate in strategy reviews. The Company’s business plan, strategy and risks are regularly reviewed and evaluated by the Board. The Board Members are free to consult the Company’s senior executives as needed. Framework for corporate governance In this process, Asetek uses the corporate gov- ernance recommendations from Nasdaq Copen- hagen as an important source of inspiration. The recommendations can be found at: https://www. nasdaqcom/market-regulation/nordic/copenhagen The Board of Directors is fundamentally in full agreement with Danish Committee on Corporate Governance recommendations for good company governance. Asetek endeavors to follow the relevant recommendations for the Company, which support the business and ensure value for the Company’s stakeholders. The statutory report on Corporate Governance, cf. section 107b of the Danish Financial Statements Act, is available on the Company’s website: https://ir.asetek.com/Corporate- Amendment of Articles of Association Conflicts of interest Unless otherwise required by the Danish Companies Act, resolutions to amend the Articles of Association must be approved by at least 2/3 of the votes cast as well as at least 2/3 of the voting share capital rep- resented at the General Meeting. In a situation involving a member of the Board personally, this member will exclude him or herself from the discussions and voting on the issue. Use of Committees Currently, the Company has a Nomination Committee, an Audit Committee and a Compensation Committee. Board responsibilities The Board of Directors’ main tasks include partici- pating in, developing, and adopting the Company’s strategy, performing the relevant control functions and serving as an advisory body for the executive management. The Board reviews and adopts the Company’s plans and budgets. Items of major strategic or financial importance for the Company are items processed by the Board. The Board is responsible for hiring the CEO and defining his or her work instructions as well as setting of his or her compensation. The Board periodically reviews the Company’s policies and procedures to ensure that the Group is managed in accordance with good cor- porate governance principles, upholding high ethics. // The Nomination Committee is elected directly by the General Meeting. The Committee consists of three members and must be independent from the Board of Directors and the management, however, it Governance-Statement-2024/ Danish Recommendation for Corporate Governance 2024 2023 Communication between the Company and its shareholders Participation: The communication between Asetek and sharehold- ers primarily takes place at the Company’s Annual General Meeting and via company announcements. Asetek shareholders are encouraged to subscribe to the e-mail service to receive company announce- ments, interim management statements, interim reports and annual reports as well as other news via e-mail. Complies with recommendations 38 2 38 2 Explanation provided CORPORATE GOVERNANCE ASETEK Annual report 2024 / Page 26 is recommended that the chairman of the Board of Directors is a member. The tasks include proposing candidates for the Board of Directors, propose remuneration for the Board of Directors as well as perform the annual assessment of the Board of Directors. Members: Ib Sønderby (chairman), Claus Berner Møller and René Svendsen-Tune. BOARD OF DIRECTORS Name Compensation Elected 2023 2019 2019 2024 Independent Share holdings 241,842 145,267 164,171 50,000 Board meetings 17/17 committee Audit committee René Svendsen-Tune Erik Damsgaard Jukka Pertola Yes Yes Yes Yes 5/5 – – 4/4 – 16/17 15/17 5/5 – Anja Monrad1 12/13 2/2 Nomination committee meetings Meetings held during the year: 3 Participation: 1) Joined board April 30, 2024 The Board’s self-evaluation Internal audit Ownership structure Ib Sønderby (chair) (independent) Claus Berner Møller (independent) René Svendsen-Tune 100% 100% 100% The Board’s composition, competencies, work- ing methods and interaction are discussed on an ongoing basis and evaluated formally on an annual basis. In this connection, the Board also evaluates its efforts in terms of corporate governance. The composition of the Board is considered appropriate in terms of professional experience and relevant special competences to perform the tasks of the Board of Directors. The Board of Directors continuously assesses whether the competencies and expertise of members need to be updated. All of the members are independent persons, and none of the Board members participates in the day-to-day operation of the Company. At the 2023 Ordinary General Meeting on April 30, 2024, Mr. René Svend- sen-Tune was re-elected to the Board, receiving 66% of the votes cast. Mr. Svendsen-Tune was re-elected Chairman of the Board by the Board of Directors on April 30, 2024. The need for an internal audit function is considered regularly by the Audit Committee. However, due to the size of the Company and the established control activities, the Audit Committee so far considers it unnecessary to establish an independent internal executive audit board. As part of risk management, Asetek has a whis- tle-blower function for expedient and confidential notification of possible or suspected wrongdoing. At the end of 2024, the ten largest shareholders controlled 38.35 percent of the capital and votes. Board members and executive management held a total of 2.6 percent of the capital and votes. Other members of management held an additional 0.10 percent of the capital and votes. The total number of shareholders in Asetek was 6,584 at December 31, 2024. As of December 31, 2024, Asetek A/S had two major shareholders, each holding more than 5% of the voting rights and share capital. These two shareholders are: // The Audit Committee is elected among the mem- bers of the Board of Directors and has responsibili- ties related to financial reporting, the independent auditor, internal reporting and risk management, in- cluding cybersecurity risks. The Committee consists of at least two shareholder elected Board members. Members: Anja Monrad (chair), Erik Damsgaard. Share capital On December 31, 2024, the share capital in Asetek amounted to DKK 9,831,389.20 divided into 98,313,892 shares with a nominal value of DKK 0.10. All shares are of the same class and hold the same share of capital and earnings. Each share entitles the holder to one vote at the General Meeting and each shareholder is entitled to vote for all shares held by the shareholder. // The Compensation Committee has responsibil- ities related to developing proposals for the appli- cable remuneration policy and remuneration of the Management Board. Members: Jukka Pertola (chair) and René Svendsen-Tune. Nordic Compound Invest A/S Annexstræde 6, 2500 Valby, Denmark Arbejdsmarkedets Tillægspension (ATP) Kongens Vænge 8, 3400 Hillerød, Denmark Share repurchases In 2024, no shares were repurchased. As of December 31, 2024, Asetek holds a total of 1,256,115 treasury shares. Risk management Refer to the Risk Management section of the Man- agement Report as well as Note 3 of the consolidat- ed financial statements. CORPORATE GOVERNANCE ASETEK Annual report 2024 / Page 27 BOARD OF DIRECTORS SHARE AUTHORIZATION Meeꢀng Date April 23, 2014 August 12, 2014 August 11, 2015 April 29, 2016 April 25, 2017 July 7, 2017 Meeꢀng Type Board Acꢀon Shares 118,210 32,970 Nominal Value Price NOK40.10 NOK33.90 NOK10.50 NOK19.50 NOK76.25 NOK113.00 Board issues warrants to employees and Board members Board issues warrants to employees and Board members Board issues warrants to employees and Board members Board issues warrants to employees and Board members Board issues warrants to employees and Board members Board issues warrants to employees DKK 0.10/share DKK 0.10/share DKK 0.10/share DKK 0.10/share DKK 0.10/share DKK 0.10/share Board Board 700,000 600,000 509,687 106,999 Board Board Board April 25, 2018 October 31, 2018 General Board Board authorized to acquire the Company's own shares Board introduces employee stock opꢀon program to replace warrant program and issues opꢀons to employees 378,500 494,900 DKK 0.10/share DKK 0.10/share NOK46.30 NOK24.70 April 10, 2019 September 8, 2019 April 22, 2020 April 23, 2020 April 21, 2021 April 22, 2021 April 28, 2022 September 7, 2022 March 8, 2023 General Board Board authorized to acquire the Company's own shares Board issues opꢀons to employees General Board Board authorized to acquire the Company's own shares Board issues opꢀons to employees 320,300 216,300 DKK 0.10/share DKK 0.10/share NOK38.33 Board Board issues opꢀons to employees NOK100.15 General General Board Board authorized to acquire the Company's own shares Board authorized to acquire the Company's own shares Board issues opꢀons to employees 376,500 DKK 0.10/share DKK 0.10/share NOK15.04 NOK3.00 Board Board authorized capital increase to raise DKK140 million in fully underwritten rights issue 71,166,167 May 9, 2023 General Board Board authorized to acquire the Company's own shares Board issues options to employees December 12, 2023 April 30, 2024 2,956,850 DKK 0.10/share DKK4.07 General Board authorized to acquire the Company's own shares November 29, 2024 Extraordinary General Board authorized to to increase Asetek’s share capital and issue new shares with pre-emptive rights for the existing shareholders CORPORATE GOVERNANCE ASETEK Annual report 2024 / Page 28 BOARD OF DIRECTORS Date appointed to Execuꢀve and other posiꢀons held Age and gender Qualiﬁcaꢀons end of current term Independence status RENÉ SVENDSEN-TUNE, CHAIRMAN Nilfisk A/S- Deputy Chairman NKT A/S- Deputy Chairman 69 Male CEO at GN Store Nord A/S for 8 years (2015-2023); May 9, 2023 to Independent Prior to this long, exec level career in tech sector. April 28, 2025 Committee participation: Compensation; Nomination Asetek equity holdings: 241,842 owned shares 2024 cash compensation: $64,940 ERIK DAMSGAARD, VICE CHAIRMAN Masentia Group of companies - Chairman of the Board Tentoma A/S - Member of the Board 60 Male 20+ years of senior positions in electronics & electrical manufacturing, business development. April 10, 2019 to April 28, 2025 Independent Damm Cellular Systems ApS, Member of the Board ED Management Holding ApS- Owner and Managing director ED Management ApS- Owner and Managing director CRD Invest ApS- Managing director TRD Invest ApS- Managing director Committee participation: Audit Asetek equity holdings: 145,267 owned shares 2024 cash compensation: $54,942 JUKKA PERTOLA, BOARD MEMBER Tryg A/S and Tryg Forsikring A/S- Chairman of the Board COWI Holding A/S- Chairman of the Board Siemens Gamesa Renewable Energy A/S – Chairman of the Board GN Store Nord A/S- Chairman of the Board 65 Male Former executive at Siemens A/S for 25+ years; Technology, Finance, Corporate governance, Risk management. Extensive board experience with multiple Chairman roles for 10+ years. April 10, 2019 to April 28, 2025 Independent Committee participation: Compensation (chair) Asetek equity holdings: 164,171 owned shares 2024 cash compensation: $44,955 CORPORATE GOVERNANCE ASETEK Annual report 2024 / Page 29 BOARD OF DIRECTORS Date appointed to Execuꢀve and other posiꢀons held Age and gender Qualiﬁcaꢀons end of current term Independence status ANJA MONRAD, BOARD MEMBER 58 Former executive at Dell Technologies for 23 years April 30, 2024 to Independent Bunker Holding A/S - Member of the Board ATP- Long-term Danish Capital- Member of Advisory Board DTU Entrepreneurship- Member of Advisory Board VL- The Danish Management Society - Vice Chair Jamii Invest ApS- Owner and Managing director Anmoda ApS- Owner and Managing director Anmoda Holding ApS- Managing director 0-Mission Invest ApS- Managing director KogelMogel I/S- Owner Female where she led the Western Europe region for several years and previously headed up 32 coun- tries for Dell in Europe. Prior sales and marketing leadership roles at Unisys, Compaq and Digital. April 28, 2025 Committee participation: Audit (chair) Asetek equity holdings: 50,000 owned shares 2024 cash compensation: $40,144 EXECUTIVE MANAGEMENT Other positions held: André Sloth Eriksen, Chief Executive Officer Valdemar Eriksen Racing A/S - Owner and Chairman of the Board It’s IT A/S - Chairman of the Board Peter Dam Madsen, Chief Financial Officer iFEED Aps - Board of Directors RISK MANAGEMENT ASETEK Annual report 2024 / Page 30 RISK MANAGEMENT Credit risk Asetek’s potential to realize the Company’s stra- tegic and operational objectives are subject to a number of commercial and financial risks. Asetek is continuously working to identify risks that can negatively impact the Company’s future growth, activities, financial position and results as well as CSR-related risks. Asetek conducts its business with significant focus on continuous risk monitor- ing and management. The following are some of the risk factors manage- ment considers as being of special importance to the Group, described in no specific order. ty may also lead to increased credit and collectibil- ity risks, reduced availability of capital and credit markets, reduced profits, liquidity and potentially adverse impacts on Asetek’s suppliers. Credit risk is the risk of a counterpart neglecting to fulfill its contractual obligations and in so doing imposing a loss on Asetek. The Group’s credit risk originates mainly from receivables from the sale of products as well as deposits in financial institutions. Receivables from the sale of products are split be- tween many customers and geographic areas. Three customers represented 31%, 12% and 10% of trade receivables at December 31, 2024. A systematic credit evaluation of all customers is conducted, and the rating forms the basis for the payment terms offered to the individual customer. Credit risk is monitored centrally. CSR-related risks Please see the separate Asetek Sustainability Report 2024 for identified risks and remedies. Investment in SimSports In 2020 and 2021, Asetek acquired technology and intellectual property in support of the Company’s entrance into the fast-growing SimSports gaming market. In March 2022, the Company shipped the first of its SimSports products and has released several new products through 2024. Revenue gen- erated from SimSports products totaled $9.6 million in 2024, approximately 18% of the Group’s total revenue for the year. The SimSports segment is not yet profitable, generating adjusted EBITDA losses of $8.9 million in 2024 and $6.7 million in 2023. There is no assurance that the SimSports segment will generate operating profits in the future. Capital resources and indebtedness In recent years, the Company has been dependent on third party debt and equity financing. In the fourth quarter of 2024, a decline in revenue resulted in a projected near-term cash shortfall requiring the Company to initiate an equity rights offering which raised net $10.5 million in January 2025. The Company had previously raised $16.1 million in an equity rights offering in May 2023. As of December 31, 2024 the Company has long-term debt of $19.2 million, principally incurred for construction of a new headquarters facility, which was completed in 2024 and is now occupied by the Company. The Company’s principal debt is based on a variable interest rate (Danish CIBOR 3) and matures in March 2028. For a comprehensive discussion of risk factors, refer to the Company’s 2024 Prospectus here: https://ir.asetek.com/share-info/prospectus/ Asetek-2024-Prospectus/ Intellectual property defense The overall goal of risk management is to ensure that the Company is run with a level of risk, which is in a sensible ratio to the activity level, the nature of the business, and the Company’s expected earnings and equity. To the largest extent possible, Asetek tries to accommodate and limit the risks which the Company can affect through its own actions. Asetek has filed and defended lawsuits against competitors for patent infringement. While some of the cases have been settled or dismissed, some may continue, and new cases may be initiated. Such cases may proceed for an extended period and could potentially lead to an unfavorable outcome to Asetek. Asetek has historically incurred significant legal costs associated with litigation and may con- tinue to do so in the future to the extent manage- ment believes it is necessary to protect intellectual property. Customer concentration In 2024, three customers accounted for 34%, 18% and 9% of total revenue. In the event of a decline or loss of any of these customers, replacement of the revenue stream would be difficult for Asetek to achieve in the short term. The Company is actively working with its other customers to grow their respective market shares and order volumes. Insurance It is the Company’s policy to mitigate significant risk areas with commercially available insurance prod- ucts. This currently includes insurance for product liability, operating material and inventory as well as compulsory coverage, which varies from country to country. Management assessments indicate that the necessary and relevant precautions have been taken to thoroughly cover insurance issues. Asetek’s insurance policies and overall coverage approach are reviewed at least annually. Economic recession A general slowdown in the global economy, includ- ing a recession, inflation or a tightening of the credit markets could negatively impact Asetek’s business, financial condition and liquidity. Adverse global economic conditions have caused or exacerbated significant slowdowns in the markets in which the Company operates, which have adversely affected Asetek’s results of operations recently and in the past. Macroeconomic weakness and uncertainty also make it more difficult for management to accu- rately forecast revenue, gross margin, and expenses. Further economic downturn or increased uncertain- New chip releases Asetek’s liquid cooling revenue is dependent upon timely releases by major suppliers of new GPU’s and CPU’s. In recent years, the global economy was subject to an unprecedented shortage of semi- conductor chips due to production constraints and increased demand brought on by accelerated digital Competition The markets in which the Company operates are competitive, the technological development is rapid, and the Company may in the future also be exposed to increased competition from current market players or new entrants. RISK MANAGEMENT ASETEK Annual report 2024 / Page 31 transformation. This shortage negatively impacted demand. The global chip shortage eased in 2023; however, the Company’s revenue continues to be dependent upon timely releases of GPU’s and CPU’s, and future shortages could negatively impact customer demand. historically assembled in Xiamen, China by a single contract manufacturer which may be difficult to substitute in the short term if the need should arise. Suppliers are proactively managed by the Compa- ny’s operations teams based in Xiamen and Aalborg. In 2023, the Company began outsourced manufac- turing of certain products in Malaysia, and contin- ues to increase production volumes at that site. U.S. from China. The existence of the tariffs has con- tributed to market uncertainties, particularly in the liquid cooling segment. The Company continues to work to minimize the impact of the tariffs on Asetek and its customers. that about one third of its sold products ultimately are delivered in Europe or Japan, which are the two geographical areas which could have the largest potential impact due to USD fluctuation. Asetek believes that other factors in the end users’ buying decision play a larger role than price fluctuation on the liquid cooling component. During 2024, the USD strengthened against both the DKK and EUR by 6% to 7% and strengthened against the Japanese Yen by 11%. Foreign exchange rates Manufacturing supply Substantially all of Asetek’s revenue is billed in USD. However, many customers resell Asetek products to end users in countries where USD is not the transactional currency. As a result, there is a risk that fluctuations in currency will affect the cost of product to the end user and negatively impact mar- ket demand for Asetek products. Asetek estimates Asetek relies upon suppliers and partners to supply products and services at competitive prices. Supply constraints and disruptions in the global supply chain may increase component costs and limit the Company’s ability to fulfill customer demand. Asetek’s liquid cooling products have been U.S. import tariffs Asetek’s raw materials are predominantly pur- chased with USD, from vendors whose underlying currency is CNY. The USD strengthened against the CNY by 2% in 2024. In 2018, the U.S. imposed a 25% tariff on imports of certain goods manufactured in China, which include Asetek products. In February 2025, an additional tariff of 10% was added to all goods imported to the RISK MANAGEMENT ASETEK Annual report 2024 / Page 32 Asetek recognizes that USD appreciation can result in sales price pressure for its suppliers. Historically, the Company has not seen significant reaction from its markets. In addition, Asetek believes that com- peting products are prone to the same exchange rate scenarios as Asetek. A significant portion of Asetek’s overhead costs are incurred in DKK. As a result, fluctuations in USD vs. DKK will continue to have an influence on results of operations and financial position. The Group has not entered into any forward exchange instruments. However, USA – in a unilateral tax treaty override – still considers Asetek A/S a U.S. tax subject, resulting in double taxation of Parent company earnings. Asetek has approached both countries’ tax author- ities with the aim of resolving the situation as per the double taxation treaty. However, a determina- tion may take several years, and the authorities are not obligated to resolve the problem. The Company continues to make progress in working with the tax authorities of Denmark and U.S. to possibly resolve this issue. In June 2019, the U.S. released regulation for its Global Intangible Low-Taxed Income (GILTI) inclusion for U.S. taxation, effective beginning with tax year 2018. The GILTI regulation requires U.S. companies to report foreign corporation intangible income that exceeds 10% return on foreign invested assets. Under prior law, U.S. owners of foreign corporations were able to defer recognizing taxable income until there was a distribution of earnings back to U.S. owners. In 2024, The GILTI regulation caused net incremental tax liability of $0.9 million ($0.9 million in 2023), which was partly offset by utilization of available deferred tax assets. Because of Asetek’s U.S. tax status as described above, management believes that the impact of the GILTI regulation as it applies to the Company could be reformed in the future; however, such reform is not certain. The Company continues to work with its tax advisors to clarify and address these matters. Knowledge resources Asetek is a knowledge-intensive company and in or- der to continue to develop innovative products and attain satisfactory financial results, it is necessary to attract and develop the right employees. Asetek has the goal of maintaining an attractive workplace and achieves this through various programs including a stock option incentive program and attractive working conditions. The Company seeks to support a company culture founded on individual responsi- bility and performance as well as team accomplish- ment. Research and development, product innovation, market development IT security Asetek continuously implements measures to moni- tor and respond to data breaches and cyberattacks. Management ensures that security assessments, including vulnerability assessments and assumed breach tests are performed on a regular basis. Additional security measures to mitigate phishing and spam mails are delivered to employees and password policies are maintained to mitigate the risk of password dictionary attacks or other forms of brute force hacking of individuals. The Company maintains ongoing efforts with external special- ists to continuously improve and strengthen the IT Infrastructure security. Mandatory training in cybersecurity is carried out for all employees, and the knowledge level of cybersecurity is thus being changed from awareness-based to training- and compliance-based. The Company’s future success, including the oppor- tunities to ensure growth, depends on the ability to continue developing new solutions and products adapted to the latest technology and the clients’ needs as well as improving existing solutions and market position. As such, the Company develops new releases on a regular basis, with emphasis on higher performance, improved efficiency and noise-reduction. Providing new and innovative applications for Asetek’s cooling technology is also a focus, as evidenced by the new SimSports products released during 2024. Projects and contracts It is important to Asetek’s overall success that development projects are executed at high quality and at predetermined timeframes and cost prices. Risks are attached to the sale, analysis and design, development and initial manufacturing phases. Asetek has carefully defined the individual phases and the activities contained therein, with a view to active risk management and efficient implementa- tion. Through project reviews and ongoing analyses before, during, and after initiation, Asetek works to ensure that agreements are adhered to and that revenue and margins are as planned. The Company has entered into an information security risk insurance policy. This area is actively monitored by the Board of Directors’ Audit Com- mittee. Taxation The tax situation of the Company is complex. In connection with its initial public offering in 2013, Asetek moved its Parent company from the U.S. to Denmark. CORPORATE SOCIAL RESPONSIBILITY ASETEK Annual report 2024 / Page 33 CORPORATE SOCIAL RESPONSIBILITY Asetek seeks to be a good corporate citizen in everything that it does, and therefore has com- bined its operating principles into one framework policy. Historically, Asetek has been a diverse workplace, where employees have very different backgrounds, competencies and living conditions. Not only in relation to gender, age and origin, but equally in relation to education, experience and personality. It is therefore Asetek’s goal that the management should equally reflect the diversity among our employees. In order to promote diversity among the company’s management and Board of Directors, there is a focus on this in recruiting new managers. In 2024, Asetek has therefore sought to ensure broad diversity among applicants when recruiting and promoting. As of December 31, 2024, the Board of Directors consists of 4 individuals, of which 75% are men and 25% are women. In terms of nationality composi- tion, 25% of the Executive Board and Board of Direc- tors are of a nationality other than Danish. In terms of age composition, 0% of management is under 40 years old, 50% are between 40 and 60 years old, and 50% of management is over 60. The Asetek Sustainability Report 2024 is the Com- pany’s Report on Corporate Social Responsibility, c.f. Section 99a of the Danish Financial Statements Act. Please refer to the Report here: https://ir.asetek.com/reports-and-presentations/ annual-reports/default.aspx The Asetek Sustainability Report 2024 is the Company’s Report on Data Ethics, c.f. Section 99d of the Danish Financial Statements Act. Please refer to the Report here: https://ir.asetek.com/reports-and-presentations/ annual-reports/default.aspx Pursuant to section 107d of the Danish Financial Statements Act, the Company is reporting on its di- versity policy in the following sections. Furthermore, Asetek’s diversity policy is available here: https://ir.asetek.com/Diversity-Policy. This statement of Asetek’s diversity policy is a component of the Management’s Report in the An- nual Report for 2024 and covers the financial period 1 January –31 December 2024: Asetek believes that diversity among employees and management, including an even distribution of age, nationality and educational background, contributes positively to the work environment and strengthens the company’s competitiveness and performance. The board members of Asetek cover a wide range of experiences from both the Danish and international business community and the high-tech industry. This composition is considered appro- priate, as it ensures a breadth in the members’ approach to the tasks, and thus helps to ensure qualified considerations and decisions. FIVE-YEAR SUMMARY ASETEK Annual report 2024 / Page 34 FIVE-YEAR SUMMARY FINANCIALS RATIOS & METRICS FISCAL YEAR 2024 2023 2022 2021 2020 FISCAL YEAR 2024 2023 2022 2021 2020 COMPREHENSIVE INCOME ($000’S) Revenue PROFIT & LOSS 52,502 21,945 76,332 34,708 9,403 (905) 50,650 20,765 (5,401) (477) 79,803 33,373 779 72,750 34,194 10,928 (1,502) 9,426 Gross margin 41.8% –36.7% –20.7% –31.2% 45.5% 12.3% 5.3% 41.0% –10.7% –4.4% 41.8% 1.0% 1.7% 9.7% 47.0% 15.0% 11.2% 33.9% Gross profit Operating margin Return on invested capital (ROIC) Organic growth Operaꢀng income Financial items, net Income before tax Income for the year Comprehensive income (19,248) 1,031 618 50.7% –36.5% (18,217) (23,936) (25,273) 8,498 6,001 6,722 (5,878) (4,325) (6,296) 1,397 1,337 (372) 9,195 BALANCE SHEET Quick ratio 11,587 0.9 1.2 0.6 0.9 0.6 0.8 1.6 1.8 2.4 2.5 Operaꢀng income before amorꢀzaꢀon, depreciaꢀon and ꢁnancial items (EBITDA), unaudited Current ratio Days sales outstanding Inventory turns per year Days payable outstanding Debt to equity 78.7 3.9 50.6 5.2 63.1 4.8 69.6 11.5 145.4 6.7% 116.1 18.4 (13,802) 271 14,503 15,864 (1,231) (791) 4,529 7,223 14,681 15,600 Adjusted EBITDA 146.6 53.6% 129.0 27.8% 132.2 50.7% 133.6 8.7% BALANCE SHEET ($000’S) Total assets 79,363 41,135 22,061 4,362 102,739 66,126 18,378 (3,232) 112,177 78,615 42,748 21,689 (6,312) 99,346 75,354 48,388 3,243 71,393 47,525 4,129 STOCK MARKET Total equity Earnings per share, basic (USD) Earnings per share, diluted (USD) Shares issued (000's) (0.25) (0.25) 98,314 1,256 0.48 0.07 0.07 (0.08) (0.08) 27,147 1,256 8.46 0.03 0.03 0.18 0.17 Interest-bearing debt Working capital Invested capital 20,603 80,900 32,837 81,786 98,314 1,256 3.90 26,970 1,262 26,433 931 115,860 Treasury shares (000's) Share price (DKK) Investment in property, plant and equipment 30.58 76.74 35.98 323,054 7,823 2,320 24,902 2,561 22,215 3,405 8,322 2,597 2,876 Share price to earnings Market capitalization ($000's) – 7.87 – 90.56 Investment in intangible assets 10,196 6,509 56,122 31,413 119,825 CASH FLOW ($000’S) BUSINESS DRIVERS Sealed loop units shipped (000's) 768 1,165 797 1,386 1,201 Operaꢀng acꢀviꢀes Invesꢀng acꢀviꢀes Financing acꢀviꢀes Total cash flow 1,213 (10,096) 4,959 16,280 (27,373) 11,836 1,710 (8,354) (25,395) 18,327 14,317 (13,204) (4,636) (3,803) 11,430 (4,816) (5,088) 2,594 Average selling price per unit, liquid coolers (USD) 55.7 407 129 59.3 570 134 56.2 362 140 52.6 528 151 53.9 661 110 Revenue per employee ($000's) Average number of employees (5,828) (15,885) Refer to the Definitions of Ratios and Metrics on page 79 of this report. XXXXX ANNUAL REPORT 2024 / Page 35 FINANCIAL STATEMENTS Consolidated statement of comprehensive income 36 37 38 39 40 Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash ﬂows Notes FINANCIAL STATEMENTS ASETEK Annual Report 2024 / Page 36 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD 000’s) Note 2024 52,502 2023 76,332 Revenue 4 8 Cost of sales GROSS PROFIT (30,557) 21,945 (41,624) 34,708 Research and development Selling, general and administraꢀve Special items (8,295) (19,107) (13,791) (41,193) (7,379) (17,079) (847) 2, 8 TOTAL OPERATING EXPENSES (25,305) OPERATING INCOME (19,248) 9,403 Foreign exchange gain (loss) Finance income 9 9 9 1,444 99 (1,015) 265 Finance costs (512) 1,031 (155) (905) TOTAL FINANCIAL INCOME INCOME BEFORE TAX (18,217) (5,719) 8,498 (2,497) 6,001 Income tax (expense) beneꢁt INCOME FOR THE YEAR 10, 11 (23,936) Other comprehensive income items that may be reclassiꢁed to proꢁt or loss in subsequent periods: Foreign currency translaꢀon adjustments (1,337) 721 TOTAL COMPREHENSIVE INCOME (25,273) 6,722 INCOME PER SHARE: (IN USD) Basic 12 12 (0.25) (0.25) 0.07 0.07 Diluted FINANCIAL STATEMENTS ASETEK Annual Report 2024 / Page 37 CONSOLIDATED BALANCE SHEET (USD 000’s) (USD 000’s) Note 2024 2023 Note 2024 2023 ASSETS EQUITY AND LIABILITIES EQUITY NON-CURRENT ASSETS Intangible assets 14 15 11 10,943 44,992 – 12,050 53,897 5,689 318 Share capital 18 1,478 52,375 1,478 76,029 Property, plant and equipment Deferred income tax assets Other assets Retained earnings Translation and other reserves TOTAL EQUITY (12,718) 41,135 (11,381) 66,126 39 TOTAL NON-CURRENT ASSETS 55,974 71,954 NON-CURRENT LIABILITIES Long-term debt CURRENT ASSETS 19 19,201 2,596 Inventory 17 16 6,604 13,492 3,293 9,053 12,611 9,121 TOTAL NON-CURRENT LIABILITIES 19,201 2,596 Trade and other receivables Cash and cash equivalents TOTAL CURRENT ASSETS CURRENT LIABILITIES Short-term debt 23,389 30,785 19, 20 2,860 2,646 15,782 1,790 Accrued liabilities Accrued compensation and employee benefits Trade payables 1,250 1,733 TOTAL ASSETS 79,363 102,739 12,271 19,027 38,228 14,712 34,017 36,613 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 79,363 102,739 FINANCIAL STATEMENTS ASETEK Annual Report 2024 / Page 38 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Share premium Translaꢀon Treasury Retained earnings (USD 000’s) reserves share reserves Total EQUITY AT DECEMBER 31, 2022 Total comprehensive income for 2023 Income for the year 444 – (896) (11,206) 54,406 42,748 – – – – – – – 721 721 – – – 6,001 – 6,001 721 Foreign currency translation adjustments Total comprehensive income for 2023 Transactions with owners in 2023 Shares issued in rights offering, net of issuance costs Transfer 6,001 6,722 1,034 – 15,108 – – – 15,108 514 16,142 – (15,108) – – – Share-based payment expense Transactions with owners in 2023 EQUITY AT DECEMBER 31, 2023 Total comprehensive income for 2024 Income for the year – – – – – – 514 1,034 1,478 – 15,622 76,029 16,656 66,126 (175) (11,206) – – – – – – – (1,337) (1,337) – – – (23,936) – (23,936) (1,337) Foreign currency translation adjustments Total comprehensive income for 2024 Transactions with owners in 2024 Share-based payment expense Transactions with owners in 2024 EQUITY AT DECEMBER 31, 2024 (23,936) (25,273) – – – – – – – – – 282 282 282 282 1,478 (1,512) (11,206) 52,375 41,135 FINANCIAL STATEMENTS ASETEK Annual Report 2024 / Page 39 CONSOLIDATED STATEMENT OF CASH FLOWS (USD 000’s) (USD 000’s) Note 2024 2023 Note 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) for the year CASH FLOWS FROM FINANCING ACTIVITIES Borrowings (repayment) on line of credit Proceeds from issuance of share capital Costs incurred for issuance of share capital Financing of equipment (23,936) 5,446 13,791 211 6,001 5,100 – 19 18 18 19 19 20 5,759 – (3,354) 17,020 (878) Depreciation and amortization 14,15 14 14 9 Impairment of property, plant and equipment Impairment of intangible assets Finance income recognized – 60 171 (262) (709) 4,959 181 (99) (265) 1,284 265 Principal payments on equipment financing Principal payments on leases (293) Finance costs incurred 9 1,494 99 (840) Finance income, cash received NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 11,836 Finance costs, cash paid (1,471) 4,209 1,510 (1,480) 282 (1,243) – Effect of exchange rate changes on cash and equivalents (1,904) 967 Impairment of deferred tax assets Income tax expense (income) 11 NET CHANGES IN CASH AND CASH EQUIVALENTS (5,828) 1,710 10, 11 2,497 543 Cash receipt (payment) for income tax Share-based payments expense Changes in receivables, prepaid assets, inventories Changes in trade payables and accrued liabilities NET CASH PROVIDED BY OPERATING ACTIVITIES Cash and cash equivalents at beginning of period 9,121 7,411 7 514 CASH AND CASH EQUIVALENTS AT END OF PERIOD 3,293 9,121 1,836 (678) 1,213 (847) 2,371 16,280 SUPPLEMENTAL DISCLOSURE – NON-CASH ITEMS Assets acquired under leases 20 152 273 CASH FLOWS FROM INVESTING ACTIVITIES Additions to intangible assets 14 15 15 (2,320) (7,823) 47 (2,561) (24,902) 90 Purchase of property, plant and equipment Disposal of long-term assets NET CASH USED IN INVESTING ACTIVITIES FREE CASH FLOW (10,096) (8,883) (27,373) (11,093) NOTES ASETEK Annual report 2024 / Page 40 NOTES 2.3. Foreign currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The function- al currency of the Company’s operations in the United States of America, Denmark and China are the U.S. dollar, Danish kroner, and Chinese Yuan Renminbi, respectively. The consolidated financial statements are presented in U.S. dollars, which is the Group’s presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevail- ing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denomi- nated in foreign currencies are recognized as operating expense in the income statement in foreign exchange (loss)/gain. Group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows: // Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; // Income and expenses for each income statement are translated at average exchange rates; // All resulting exchange differences are recognized in other comprehensive income 1. GENERAL INFORMATION Asetek A/S (‘ the Company’), and its subsidiaries (together, ‘Asetek Group’, ‘the Group’ or ‘Asetek’) designs, develops and markets gaming hardware for computers. The Group’s core products utilize liquid cooling tech- nology to provide improved performance, acoustics and energy efficiency. The Company is based in Aalborg, Denmark with personnel in USA, China and Taiwan. The Company’s shares trade on the Nasdaq Copenhagen under the symbol ‘ASTK’. 1.1. Liquidity from rights offerings Subsequent to the balance sheet date, on January 6, 2025, the Company issued 219,925,366 new common shares of stock in a rights offering, raising net proceeds of $10.5 million. Refer to Note 24. On May 17, 2023, the Company issued 71,166,167 new common shares of stock in a rights offering, raising net proceeds of $16.1 million after deduction of total issuance costs of $3.7 million. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.4. Property and equipment Property and equipment are stated at historical cost less accumulated depreciation. For assets constructed, borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the historical cost (Note 2.16). Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is provided over the estimated useful lives of the depreciable assets, generally three to five years, using the straight-line method. The assets’ useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized as other income or expense in the consolidated income state- ment. Property, plant and equipment is grouped as follows: 2.1. Basis of preparation The consolidated financial statements have been prepared on a historical cost convention, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the sup- plementary Danish information requirements for class D publicly listed companies. 2.2. Consolidation The consolidated financial statements comprise the Company and its consolidated subsidiaries. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances, income and expenses on transactions between Group compa- nies are eliminated. Profits and losses resulting from the intercompany transactions that are recognized in assets are also eliminated. Accounting policies of subsidiaries are consistent with the policies adopted by the Group. NOTES ASETEK Annual report 2024 / Page 41 2.7. Financial assets Recognition and Measurement The Group determines the classification of its financial assets at initial recognition. Financial assets within the scope of IFRS 9 Financial Instruments are classified as follows: // ‘Amortized cost’ are financial assets representing contractual cash flows held for collection, where such cash flows solely represent payment of principal and interest. // ‘Fair value’. All other financial assets, representing other debt and equity instruments that do not meet the ‘amortized cost’ criteria, are recognized at fair value. All fair value movements on financial assets are taken through the income statement, or for certain debt instruments that qualify, through other compre- hensive income. For all years presented, the Group’s financial assets are all classified as ‘amortized cost’. Group Esꢀmated Useful Life Buildings 30–50 years Leasehold improvements Lesser of 5 years or lease term Plant and machinery 5 years Tools and fixtures 3 to 5 years 2.5. Research and development Research costs are expensed as incurred. Costs directly attributable to the design and testing of new or improved products to be held for sale by the Group are recognized as intangible assets within development projects when all of the following criteria are met: // it is technically feasible to complete the product so that it will be available for sale; // management intends to complete the product and use or sell it; // there is an ability to use or sell the product; // it can be demonstrated how the product will generate probable future economic benefits; // adequate technical, financial and other resources to complete the development and to use or sell the product are available; and // the expenditures attributable to the product during its development can be reliably measured. Impairment of financial assets For financial assets carried at amortized cost, the Group measures at the end of each reporting period the expected credit losses to be incurred for a financial asset or group of financial assets. The Company utilizes historical experience, evaluation of possible outcomes, current conditions and forecasts of future economic conditions to determine expected credit losses. Evidence may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal pay- ments, the probability that they will enter bankruptcy or other financial reorganization, and where observa- ble data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Directly attributable costs that are capitalized as part of the product include the employee costs associated with development. Other development expenditures that do not meet these criteria are recognized as expense when incurred. Development costs previously recognized as expense are not recognized as an asset in a subsequent period. Development costs recognized as assets are amortized on a straight-line basis over their estimated useful lives, which generally range between three and sixty months. Amortization expense related to capitalized development costs is included in research and development expense. 2.8. Financial liabilities Recognition and measurement. Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss, or other liabilities. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognized initially at fair value less, in the case of other liabilities, directly attributable transaction costs. The measurement of financial liabilities depends on their classification as follows: // ‘Financial liabilities at fair value through profit or loss’ are derivatives entered into that do not meet the hedge accounting criteria as defined by IFRS 9. Gains or losses on liabilities held for trading are recognized in profit and loss. At December 31, 2024, the Company has no liabilities measured at fair value through profit and loss. // ‘Other liabilities’ – After initial recognition, interest bearing debt is subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. 2.6. Impairment of non-financial assets Assets that are subject to amortization are reviewed for impairment annually, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recov- erable amount is the higher of 1) an asset’s fair value less costs to sell or 2) its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that previously suffered an im- pairment are reviewed for possible reversal of the impairment at each reporting date. Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. If an impairment loss on goodwill is identified, it is recognized as an expense and is not reversed in a subsequent period. NOTES ASETEK Annual report 2024 / Page 42 Offsetting of financial instruments. Financial assets and financial liabilities are offset, and the net amount reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. 2.11. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits with banks, overdrafts and other short-term highly liquid investments with original maturities of three months or less. 2.12. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are recorded against equity in the period the equity transaction closes, as a deduction net of tax, from the proceeds. 2.9. Inventories Inventories are stated at the lower of actual cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realiz- able value, if required, are made for estimated excess, obsolescence, or impaired balances. 2.13. Share-based payments The Company issues options (or warrants) that allow management and key personnel to acquire shares in the Company. Through equity-settled, share-based compensation plans, the Company receives services from employees as consideration for the granting of equity options to purchase shares in the Company at a fixed exercise price. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The grant date fair value of options granted is recognized as an employee expense with a corresponding in- 2.10. Trade receivables Trade receivables are amounts due from customers for product sold in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for expected credit losses. If collection is expected in one year or less, trade receivables are classified as current assets. Expected credit losses are determined utilizing the simplified approach allowed under IFRS 9 Financial Instruments. NOTES ASETEK Annual report 2024 / Page 43 crease in equity, over the period that the employees become unconditionally entitled to the options (vesting period). The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms and conditions as set forth in the share option program. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk- free interest rate. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. At each reporting date, the Company revises its esti- mates of the number of options that are expected to vest based on the non-market vesting conditions. The impact of the revision to original estimates, if any, is recognized in the Statement of Comprehensive Income, with a corresponding adjustment to equity. The Group’s revenue is predominantly comprised of shipment of Asetek products in fulfillment of customer purchase orders. As such, the Company recognizes revenue when a valid contract is in place and control of the goods have transferred to the customer. Customer purchase orders and/or contracts are used as evi- dence of an arrangement. Delivery occurs and control of the goods is deemed to transfer when products are shipped to the specified location and the risks of obsolescence and loss have been transferred to the custom- er. For certain customers with vendor-managed inventory, delivery does not occur until product is acquired by the customer from the vendor-managed inventory location. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by credit checks and customer payment history. Customers do not generally have a right of return. Income received as a result of patent litigation settlement is recorded as other income as an offset to operating expense in the period the award is granted. Estimated costs for future product returns under war- ranty are charged to cost of sales and included in accrued liabilities. 2.14. Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enact- ed at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Management establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a trans- action other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 2.16. Borrowings and related costs Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subse- quently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is dis- charged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs. General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substan- tial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred. 2.17. Leases Lease liabilities are accounted for under IFRS 16 Leases and measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate. Lease liabilities include the net present value of: fixed lease payments, amounts expected to be payable under residual value guarantees, any purchase options that are reasonably expected to be exercised, and any penalties for termination re- flected in the lease term. The corresponding rental obligations, net of finance charges, are included in other long-term debt. Amounts due within one year are included in short-term debt. 2.15. Revenue recognition and other income Revenue represents sale of the Group’s products to customers which are principally resellers and original equipment manufacturers. Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, sales tax, returns and after eliminating sales within the Group. NOTES ASETEK Annual report 2024 / Page 44 Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period to reflect a constant periodic rate of interest on the remaining balance of the liability for each period. Leased assets are recognized as a right-of-use asset at the date at which the leased asset is available for use by the Group, initially measured at the present value of the lease liability and included in Property and equipment on the balance sheet. 2.22. Critical accounting estimates and judgments The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Areas where significant judgment has been applied are: // Impairment of non-current assets: In October 2024, management identified external indicators of im- pairment to the Company’s net asset book value, including a significant decrease in the Group’s market capitalization as reflected on Nasdaq Copenhagen compared with the equity value as of mid-2024. In performing an impairment test, management measured the net book value of equity for the Group against the net present value of future prospective cash flows. The impairment test was performed using the same approach as the test described in Note 14, using the same key assumptions for cash-generat- ing units (CGUs), periods analyzed, revenue growth, discount rate, terminal growth and tax rates. As a result of the test, management estimated impairment to the Group’s equity value of approximately $18 million to be applied to long-term assets. Current assets were not impaired because they are stated at net realizable value. Intangible assets were assessed separately for impairment and deemed fairly valued as described in Note 14. Deferred tax assets were determined to be impaired as specified in the following paragraph. In property, plant and equipment, the Group’s headquarters building had shown signs of impairment during a recent assessment of its alternative uses. As a result, management used judgment to apply $13.8 million impairment to the headquarters building. This impairment charge is classified as a special item within operating expense in the consolidated income statement. 2.18. Provisions A provision is recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. If the impact of time value is significant, the provision is calculated by discount- ing anticipated future cash flow using a discount rate before tax that reflects the market’s pricing of the pres- ent value of money and, if relevant, risks specifically associated with the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.19. Contingent liabilities Contingent liabilities are not recognized in the financial statements. Significant contingent liabilities are dis- closed, with the exception of contingent liabilities where the probability of the liability occurring is remote. 2.20. Segment reporting Business segmentation. The Group is reporting on three segments, Liquid cooling, SimSports and Data center. The three segments are identified by their specific sets of products and specific sets of customers. The splitting of operating expenses between segments is based on the Company’s best judgment and done by using the Company’s employee/project time tracking system to capture total hours charged by project code. Operating expenses that are not divisible by nature (rent, telecommunication expenses, etc.) have been split according to actual time spent on the three businesses, and the Company’s best estimate for attri- bution. Costs incurred for intellectual property defense and headquarters administration have been classified separately as headquarters costs and excluded from segment operating expenses. The CEO is the Group’s chief operating decision maker. The CEO assesses the performance of the Group principally on measures of revenue and adjusted EBITDA. Geographical segmentation. Each of the Group’s offices in its three principal geographies fulfills a particu- lar function that serves the Asetek Group as a whole. The majority of costs incurred in each of the geogra- phies are generally incurred for the benefit of the entire Group and not to generate revenue in the respective geography. As a result, the financial results of the Group are not divided between multiple geographical segments for key operating decision-making. Revenue and assets by geography is measured and reported in Note 4, Geographical information. // Valuation of deferred tax assets: Deferred income tax assets are recognized to the extent that the realiza- tion of the tax benefit to offset future tax liabilities is considered to be probable. In prior years, the Com- pany has recorded deferred tax assets representing the estimated amount of net operating losses that will be utilized to offset future taxable income for the next five years. In 2024, management determined that it is not probable that the tax assets available to the Company would be utilized within five years, and therefore recorded impairment of $4.2 million in the third quarter of 2024 and valued the assets at zero on the balance sheet at December 31, 2024. The deferred tax asset impairment charge is included in income tax expense in the consolidated income statement. Refer to the previous paragraph regarding the impairment of other non-current assets. In future periods, management will continue to assess the probability of realization of the assets’ value and adjust the valuation in accordance with IAS 12. // Capitalization of development costs: the Group’s business includes a significant element of research and development activity. Under IAS 38, there is a requirement to capitalize and amortize development spend to match costs to expected benefits from projects deemed to be commercially viable. The application of this policy involves the ongoing consideration by management of the forecasted economic benefit from such projects compared to the level of capitalized costs, together with the selection of amortization peri- ods appropriate to the life of the associated revenue from the product. If customer demand for products or the useful lives of products vary from estimates, impairment charges on intangibles could occur. 2.21. Cash flow statement The cash flow statement is prepared using the indirect method. NOTES ASETEK Annual report 2024 / Page 45 2.23. Defined contribution plan In 2008, the Company established a defined contribution savings plan (the “Plan”) in the U.S. that meets the requirements under Section 401(k) of the U.S. Internal Revenue Code. This Plan covers U.S. employees who meet the minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the Plan may be made at the discretion of the Board of Directors. For the year ended December 31, 2024, the Company’s matching contributions total $15,000 ($17,000 in 2023). 2.27. New standards and amendments not applied in the Annual Report for 2024 There are some new standards and amendments to standards and interpretations that have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group: Eﬀecꢀve Standard Content date EU endorsed as of December 31, 2024 Amendments to IAS 21 The Effects of Amends IAS 21 to 1) specify when a currency is 1-Jan-25 Changes in Foreign Exchange Rates: exchangeable to another currency and when it is Lack of Exchangeability not; 2) specify how to determine the exchange rate to apply when a currency is not exchangea- ble; 3) require disclosure of additional informa- tion when a currency is not exchangeable. Not endorsed by EU as of December 31, 2024 IFRS 18 Presentation and Disclosure New standard issued to replace IAS 1, focusing 1-Jan-27 in Financial Statements principally on the statement of profit and loss, requiring management-defined performance measures and enhanced principles on aggrega- tion and disaggregation in reporting. Amendments to the Classification May permit discharge of financial liabilities before 1-Jan-26 and Measurement of Financial settlement when paid by electronic transfer; Instruments (Amendments to IFRS 9 amends classification of certain financial assets; and IFRS 7) requires additional disclosures for investments in equity instruments and disclosure of contractual terms that could change the timing or amount of contractual cash flows. 2.24. Special items The Company may identify special items that are significant non-recurring items that management does not consider to be part of the Group’s ordinary activities. Such special items may include one-time impairment costs, restructuring, and strategic considerations regarding the future of the business, and are presented separately in the Consolidated Statement of Comprehensive Income to provide a more comparable basis for the Company’s operations. Management assesses which items are to be identified as special items and shown separately, in order to give a correct presentation of the statement of profit or loss and other compre- hensive income. 2.25. ESEF Regulation The Company’s Annual Report is prepared, in all material respects, in compliance with the Commission Dele- gated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the Annual Report in XHTML format and iXBRL tagging of the Consolidated Financial Statements. 2.26. Changes in accounting policy and disclosures - New standards and amendments included in Annual Report for 2024 Certain new standards, amendments to standards, and annual improvements to standards and interpreta- tions are effective for annual periods beginning after January 1, 2024 and have been applied in preparing these consolidated financial statements. These applications did not materially impact the Group’s consolidat- ed financial statements. NOTES ASETEK Annual report 2024 / Page 46 3. RISK MANAGEMENT AND DEBT The Group’s activities expose it to a variety of risks: liquidity risk, market risk (including foreign exchange risk and interest rate risk) and credit risk. The primary responsibility for Asetek’s risk management and internal controls in relation to the financial reporting process rests with executive management. Asetek’s internal control procedures are integrated in the accounting and reporting systems and include procedures with respect to review, authorization, approval and reconciliation. All entities in the Asetek Group report financial and operational data to the executive office on a monthly basis, including commentary regarding financial and business development. Based on this reporting, the Group’s financial statements are consolidated and reported to executive management. Management is in charge of ongoing efficient risk management, including the identification of material risks, the development of systems for risk management, and that significant risks are routinely reported to the Board of Directors. payment of dividends or Asetek share purchases, the Board takes into consideration the Company’s growth plans, international tax implications, liquidity requirements and necessary financial flexibility. Debt covenants. Under lines of credit terms with Jyske Bank, the Company is required to comply with the following financial covenants at each quarter-end: // Group solvency of at least 40% // Segment reporting of EBITDA at Group level // Minimum liquidity reserve of USD 2.5 million, with the exception that a minimum liquidity reserve of USD 1.5 million will be accepted for 2026 The Company complies with these covenants at December 31, 2024 and there are no indications that the Company will not comply with these covenants in the next reporting period (Q1 2025). The following are contractual maturities of financial liabilities, including lease and other financing payments on an undiscounted basis: Liquidity risk. The Group incurred losses from operations and negative cash flows from operations from inception through 2015. Positive operating cash flows and operating income were first generated in 2016 and continued through 2021. In 2022, the Company incurred operating losses and began facilities construc- tion which required new capital. In 2023, the Company issued 71.2 new common shares of stock in a rights offering, raising net proceeds of $16.1 million (refer to Note 18) and generated $9.4 million of operating in- come and $16.3 million of operating cash flows. In mid-2024, the Company experienced a decline in revenue resulting from a weakened gaming hardware market while it continued to invest in the growing SimSports business and finish construction of its new headquarters. As a result, a projected near-term cash shortfall required that management initiate fund-raising with the launch of an equity rights offering in November 2024. Upon subsequent completion of a rights offering on January 6, 2025, the Company generated net proceeds of $10.5 million through the issuance of 219.9 million new common shares of stock. The Company believes that its cash position and the liquidity available from its operations, external borrowings and other sources after the recent offering completion on January 6, 2025 is sufficient to satisfy its working capital requirements for the foreseeable future. The Group’s corporate finance team monitors risk of a shortage of funds through regular updates and analysis of cash flow projections and maturities of financial assets and liabilities. The finance teams also review liquidity, balance sheet ratios (such as days’ sales outstanding, inventory turns) and other metrics on a regular basis to ensure compliance both on a short- and long-term basis. Asetek will continue to invest its capital principally in the development and marketing of its products. In 2016, the Board of Directors implemented a policy under which it may declare and distribute dividends to shareholders. At the Annual General Meetings in 2024 and 2023, the Board was authorized to acquire the Company’s own shares. In 2024 and 2023, the Company did not repurchase shares. When considering AS OF DECEMBER 31, 2024 On Less than 3 to 12 1 to 5 (USD 000’s) Demand 3 months months years Total Lines of credit – (1,226) (987) (18,634) (20,847) Leases and equipment financing – (274) (461) (598) (1,333) Payables and accrued liabilities – (15,622) (545) – (16,167) – (17,122) (1,993) (19,232) (38,347) AS OF DECEMBER 31, 2023 On Less than 3 to 12 1 to 5 (USD 000’s) Demand 3 months months years Total Construction commitments – (1,689) (2,213) – (3,902) Lines of credit – – (14,700) (1,489) (16,189) Leases and equipment financing – (256) (910) (1,180) (2,346) Payables and accrued liabilities – (17,447) (788) – (18,235) – (19,392) (18,611) (2,669) (40,672) NOTES ASETEK Annual report 2024 / Page 47 Market risk factors. The Group’s current principal financial liabilities consist of principally long-term lines of credit and amounts owed on equipment financing and leases. The Group’s financial assets mainly comprise trade receivables, cash and deposits. The Group’s operations are exposed to market risks, principally foreign exchange risk and interest rate risk. (a) Foreign exchange risk. With few exceptions, the Group’s inventory purchase and sale transactions are denominated in U.S. dollars. The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures, principally with respect to the Danish kroner. Foreign exchange risk arises from operating results and net assets associated with Denmark-based operations where the Danish krone is the functional currency. Translation of the Denmark entity balance sheet accounts from Danish kroner to U.S. dollars affect the equity balances of the Group. The Group has available lines of credit totaling 153 million Danish krone, of which DKK 149 million (USD 20.8 million) is outstanding at December 31, 2024 (further described in “(b) Interest rate risk” below). The lines of credit are revalued at the year-end exchange rate with the offset recognized as foreign exchange gain or loss in the consolidated income statement. In 2024, the strengthening of the U.S. dollar versus the Danish kroner resulted in a gain of $1.1 million related to revaluation of the lines of credit. The Group does not enter into derivatives or other hedging transactions to manage foreign exchange risk. Management mitigates this exposure through timely settlement of intercompany operating liabilities. The ending exchange rate at December 31, 2024 was 7.14 Danish kroner to one U.S. dollar (6.74 to the U.S. dollar at December 31, 2023). The effect of a 10% strengthening of the Danish kroner against the U.S. dollar for the reporting period would have resulted in a decrease in pre-tax income for fiscal year 2024 of $2.5 million (in 2023, decrease of the pre-tax income of $1.6 million). (b) Interest rate risk. The Group’s interest rate risk consists of the following credit lines. As of December 31, 2024, Asetek has two lines of credit totaling 153.8 million Danish krone (USD 21.5 million), of which USD 20.8 million has been utilized, principally to finance a new headquarters facility. // Asetek A/S, the Parent company, has a line of credit with Jyske Bank for DKK 138.75 million (USD 19.4 million), of which USD 19.25 million was utilized at December 31, 2024. This line is secured by the Group’s land and building and carries interest at Danish CIBOR 3 rate plus 2.45 percentage points which in total was 5.2% at December 31, 2024. The line specifies quarterly payments of DKK 2.35 million (USD 329,000) and matures on March 31, 2028. // Asetek Danmark A/S has a revolving line of credit with Jyske Bank for DKK 5 million (USD $0.7 million), with a temporary increase to DKK 15 million (USD 2.1 million) until January 2, 2025, of which DKK 9.8 million (USD 1.37 million) was utilized at December 31, 2024. The line is secured by the assets of Asetek Danmark A/S and carries interest at the Danish CIBOR 3 rate plus 4.25 percentage points, which in total was 7.0% at December 31, 2024. The line matures on March 31, 2028. Amounts outstanding in excess of DKK 5 million are payable on January 2, 2025. The variable nature of the Danish CIBOR 3 rate results in risk of increased interest cost due to potential changes in rates. At the level of borrowings as of December 31, 2024, the effect of a 50% relative increase in the Danish CIBOR 3 rate would result in increased annual interest cost of $0.3 million ($0.3 million in 2023). Capital and debt management. To date the Company’s primary focus has been to support its product de- velopment initiatives, maintain liquidity through use of financing alternatives, and maximize shareholder val- NOTES ASETEK Annual report 2024 / Page 48 ue. The Group manages its capital and debt structure with consideration of the liquidity needs of the Compa- ny and existing economic conditions. In mid-2024, the Company experienced a decline in revenue resulting from a weakened gaming hardware market while it continued to invest in the growing SimSports business as well as finish construction of its new headquarters. As a result, a projected near-term cash shortfall required that management initiate fund-raising with the launch of an equity rights offering in November 2024. Upon subsequent completion of a rights offering on January 6, 2025, the Company generated net proceeds of $10.5 million through the issuance of 219.9 million new common shares of stock. In May 2023, to bridge a short-term working capital deficit associated with its facility construction, the Company issued 71,166,167 new common shares of stock in a rights offering, raising net proceeds of $16.1 million. Credit risk factors. Credit risk refers to the risk that a counterparty will default on its contractual obli- gations resulting in financial loss to the Group. The Group is exposed to credit risk primarily through trade receivables and cash deposits. Management mitigates credit risk through standard review of customer credit-worthiness and maintaining its liquid assets primarily with banks with credit ratings of A or higher, such as Wells Fargo Bank in the U.S. and Jyske Bank in Denmark. The carrying amount of the financial assets represents the maximum credit exposure. Trade receivables that are deemed uncollectible are charged to expense with an offsetting allowance recorded against the trade receivable. Historically, bad debt expense has not been significant. Certain cus- tomers have accounted for a significant portion of the Company’s revenue in the years presented, as follows. In 2024, the Company’s three largest customers, all in the liquid cooling segment, accounted for 34%, 18% and 9% of revenue (three customers accounted for 38%, 24% and 13% of revenue in 2023), respectively. The Company mitigates risk with its largest customer by requiring two remittances per month as well as frequent monitoring and communicating regarding invoices coming due. At December 31, 2024 three customers, all in the liquid cooling segment, represented 31%, 12% and 10% of outstanding trade receivables (three represented 35%, 16% and 12% at December 31, 2023), respectively. The reserve for uncollectible trade accounts was $32,000 at December 31, 2024 and $59,000 at December 31, 2023. The aged trade receivables and bad debt reserve balances for all years presented are provided in Note 16. 4. GEOGRAPHICAL INFORMATION The Group operates internationally in several geographical areas, principally in Asia, Europe and the Americas. The following table presents the Group’s revenue and assets in each of the principal geographical areas: 2024 2023 Non- Non- Current current Current current (USD 000’s) Revenue assets assets Revenue assets assets Asia 40,132 10,316 130 65,252 11,045 119 Americas 6,420 5,029 49 5,130 5,369 1,099 Europe 5,950 8,044 55,795 5,950 14,371 70,736 TOTAL 52,502 23,389 55,974 76,332 30,785 71,954 For the purpose of the above presentation, the information pertaining to revenue and current assets is calculated based on the location of the customers, whereas information pertaining to non-current assets is based on the physical location of the assets. The information pertaining to current assets is calculated as a summation of assets such as trade receivables and finished goods inventories reasonably attributable to the specific geographical area. Non-current assets (USD 000’s) 2024 2023 Denmark 55,795 70,736 USA 49 1,099 China 130 119 TOTAL 55,974 71,954 The maximum exposure to credit risk at the reporting dates was: (USD 000’s) 2024 2023 Cash and cash equivalents 3,293 9,121 Trade receivables and other 13,492 12,611 Other assets 39 318 MAXIMUM CREDIT EXPOSURE 16,824 22,050 Revenue (USD 000’s) 2024 2023 Denmark 609 525 China 5,631 8,576 Singapore 6,808 6,756 Taiwan 22,570 46,737 USA 6,240 4,917 Japan 4,034 2,667 All others 6,610 6,154 TOTAL 52,502 76,332 NOTES ASETEK Annual report 2024 / Page 49 5. SEGMENT INFORMATION In 2024, the Company reports on three segments, Liquid cooling, Data center and SimSports. The three seg- ments are identified by their specific sets of products and customers. The CEO is the Group’s chief operating decision-maker. The CEO assesses the performance of each segment principally on measures of revenue, gross margin and adjusted EBITDA. Refer to page 79 for definition of adjusted EBITDA. The following tables repre- sent the results by operating segment in 2024 and 2023. Disaggregation of revenue by sales channel is also presented for the major markets within each segment. Revenue generated from retailers and online webstore is principally from the sale of SimSports products. Reconciliation of Adjusted EBITDA to Income before tax (USD 000’s) 2024 2023 EBITDA adjusted- Liquid Cooling 12,495 25,861 EBITDA adjusted- Data center – 192 EBITDA adjusted- SimSports (8,897) (6,688) Special items (13,791) (847) Headquarters costs, net (3,327) (3,501) Share-based compensation (282) (514) Depreciation and amortization (5,446) (5,100) Total financial income (expenses) 1,031 (905) CONSOLIDATED INCOME BEFORE TAX (18,217) 8,498 Disaggregation of revenue (USD 000’s) 2024 2023 OEM and System Integrators 42,803 69,153 Retailers 5,265 4,289 Online webstore 4,329 2,890 Office lease 105 – TOTAL 52,502 76,332 Segment operating results – years ended December 31 2024 2023 Liquid Not allocable Liquid Not allocable (USD 000's) Cooling Data center SimSports to divisions Total Cooling Data center SimSports to divisions Total Revenue 42,803 – 9,594 105 52,502 69,052 102 7,178 – 76,332 Gross margin 45% – 25% – 42% 47% – 28% – 45% Personnel expense 5,476 – 6,286 112 11,874 5,259 71 5,508 451 11,289 Adjusted EBITDA 12,495 – (8,897) (3,327) 271 25,861 192 (6,688) (3,501) 15,864 NOTES ASETEK Annual report 2024 / Page 50 6. SALARY COSTS AND REMUNERATIONS (USD 000’s) 2024 2023 Salaries 11,460 11,382 Retirement fund payments to defined contribution plan 629 578 Social cost 1,492 1,541 Share-based payment 282 514 Other expenses 1,186 806 TOTAL PERSONNEL COSTS 15,049 14,821 Less: Costs applied to inventory production (1,065) (1,592) Less: Capitalized as development cost (2,110) (1,940) TOTAL PERSONNEL COSTS IN OPERATING EXPENSE 11,874 11,289 AVERAGE NUMBER OF EMPLOYEES 129 134 The Company’s CEO has an agreement of twelve months’ severance pay in case of termination or ter- mination in connection with change of control. The Company’s CFO has an agreement of seven months’ severance pay in case of termination or termination in connection with change of control. Except for the Company’s CEO and CFO and other members of the executive group, no member of the administrative, management or supervisory bodies has contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. Total compensation to Other Executives for the year ending December 31, 2024 includes a one-time severance payment of $161,000 representing six months salary to the Chief Operating Officer (COO), as per the terms of his separation agreement and is included in ‘Other’ compensation to ‘Other Executives’ in the compensation table below. Total compensation to the Board of Directors and Officers was $2,167,000 and $2,299,000 in 2024 and 2023, respectively. Share ownership of officers, including immediate family members, at December 31, 2024: André S. Peter D. Eriksen Madsen Common shares 1,391,128 467,594 Options at DKK 4.07 1,150,000 393,400 Options at DKK 4.49 151,900 50,975 Options at DKK 7.37 106,800 61,750 Options at DKK 11.44 68,500 42,075 Options at DKK 13.82 53,300 26,500 Options at DKK 29.89 57,200 17,700 TOTAL SHARES CONTROLLED 2,978,828 1,059,994 (USD 000’s) 2024 2023 Research and development 4,688 4,517 Selling, general and administrative 10,361 10,304 TOTAL PERSONNEL COSTS 15,049 14,821 Options Granted 2024 2023 Board of Directors – – Officers – 1,543,400 Other executives – 646,900 Other employees – 766,550 TOTAL – 2,956,850 Compensation to Board of Directors, Officers and Other Executives 2024 2023 Other Other (USD 000’s) Directors Oﬃcers Execuꢀves Total Directors Oﬃcers Execuꢀves Total Salary – 1,147 1,003 2,150 – 1,047 887 1,934 Bonus – 287 311 598 – 520 637 1,157 Share-based – 210 68 278 – 258 117 375 Other 255 268 233 756 255 219 65 539 TOTAL 255 1,912 1,615 3,782 255 2,044 1,706 4,005 * Other executives include the Chief Operating Officer and other members of the executive team who are leaders of the key functions (Engineering, Sales and Operations). NOTES ASETEK Annual report 2024 / Page 51 7. SHARE BASED PAYMENT Activity for exercise prices of DKK 4.07 to DKK 7.37 Weighted Weighted Average Average Exercise price Exercise price 2024 (DKK) 2023 (DKK) Outstanding on January 1 3,721,003 4.46 992,460 5.94 Options/warrants granted – – 2,956,850 4.07 Options/warrants exercised – – – – Options/warrants forfeited (255,157) 4.31 (228,307) 5.84 OUTSTANDING ON DECEMBER 31 3,465,846 4.47 3,721,003 4.46 EXERCISABLE ON DECEMBER 31 659,145 6.14 558,766 6.52 No exercise for the above shares in 2024 & 2023. Activity for exercise prices of DKK 11.44 to DKK 33.72 Weighted Weighted Average Average Exercise price Exercise price 2024 (DKK) 2023 (DKK) Outstanding on January 1 1,198,476 20.20 1,226,419 20.15 Options/warrants granted – – – – Options/warrants exercised – – – – Options/warrants forfeited (518,148) 24.29 (27,943) 18.32 OUTSTANDING ON DECEMBER 31 680,328 17.08 1,198,476 20.20 EXERCISABLE ON DECEMBER 31 680,328 17.08 1,170,239 20.19 No exercise for the above shares in 2024 & 2023. Asetek’s Equity Incentive Program is a share compensation program where the employees that deliver servic- es to the Group have been granted share options (or warrants). The options, if vested and executed, will be settled in common shares of the Company. The options are granted at the time of employment and, under other circumstances, at the discretion of the Board of Directors. The options are granted with exercise prices equaling the fair market value of the underlying security. The exercise prices of option grants are determined based on the closing market price of the shares for the five most recent trading days prior to the grant date. Share-based compensation expense was $282,000 and $514,000 for the years ended December 31, 2024 and 2023, respectively. The goals of the equity incentive program are as follows: // To attract and retain the best available personnel for positions of substantial responsibility; // To provide additional incentive to employees, directors and consultants, and // To promote the success of the Company’s business. In July 2023, in consideration of the dilution effect of the Company’s May 2023 rights offering (Note 18), and transition of listing to the Nasdaq Copenhagen, the Board of Directors reduced the exercise prices of out- standing share options by 45% and converted the currency denomination to Danish krone. Stock compensa- tion expense in 2023 associated with the exercise price adjustments was $142,000. The repricing of options is summarized as follows: Original Revised Grant year Exercise Price Exercise Price 2022 NOK 15.04 DKK 4.49 2021 NOK 100.15 DKK 29.89 2020 NOK 38.33 DKK 11.44 2019 NOK 24.70 DKK 7.37 2018 NOK 46.30 DKK 13.82 2017 NOK 76.25 DKK 22.76 2017 NOK 113.00 DKK 33.72 2016 NOK 19.50 DKK 5.82 The Company’s shares trade on the Nasdaq Copenhagen at prices denominated in Danish krone (DKK). The exchange rate at December 31, 2024 of DKK to USD was 7.14. The Company did not grant any options in 2024. In December 2023, the Company granted 2,956,850 options with exercise prices of DKK 4.07 per share. Movements in the number of share options outstanding and their related weighted average exercise price are specified on the following table. NOTES ASETEK Annual report 2024 / Page 52 The composition of options and warrants outstanding at December 31 is as follows: Options and Warrants Outstanding at December 31 2024 2023 DKK 4.07 2,733,300 2,956,850 DKK 4.49 355,580 370,381 DKK 7.37 376,966 393,772 DKK 11.44 249,867 258,427 DKK 13.82 255,442 278,791 DKK 22.76 – 384,054 DKK 29.89 175,019 180,205 DKK 33.72 – 96,999 TOTAL 4,146,174 4,919,479 8. EXPENSES BY NATURE Expenses by Nature (USD 000’s) Note 2024 2023 Inventories recognized as cost of sales 17 30,557 41,624 Personnel expenses 6 15,049 14,821 Depreciation and amortization 14,15 5,446 5,100 Legal, patent, consultants and auditor 2,430 2,269 Facilities and infrastructure 1,720 1,192 Special items 13,791 847 Other expenses 4,867 3,637 TOTAL OPERATING EXPENSES BEFORE CAPITALIZATION 73,860 69,490 Less: capitalized costs for development projects 14 (2,110) (2,561) TOTAL EXPENSES 71,750 66,929 Total outstanding options and warrants represents 4.3% of total common shares issued at December 31, 2024 (5.0% in 2023). The Company calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing model, which requires subjective assumptions, including future stock price volatility and ex- pected time to exercise. The Company sets the exercise price of shares granted as the average closing price of the Company’s shares for the five most recent trading days prior to the grant date. The expected volatility was based on the historical volatility of the Company’s stock price. The weighted average remaining contrac- tual term of options outstanding is 3.23 years. The options granted in December 2023 have an estimated total value of $1.2 million. Expected volatility is calculated based on the actual volatility experienced during the three-year period prior to each option’s grant date. The following weighted average assumptions were used for the period indicated. Depreciation and amortization expense classfication (USD 000’s) 2024 2023 Depreciation and amortization expense included in: Research and development 2,866 2,560 Selling, general and administrative 2,580 2,540 TOTAL 5,446 5,100 Special items. In 2024, the Company recorded a non-cash impairment charge of $13.8 million as a conse- quence of an assessed impairment within the cash generating units. This one-time charge is classifed as a special item in operating expense on the income statement and was recorded as impairment of the Compa- ny’s headquarters facility included in property, plant and equipment. Refer to Note 2.22 in the consolidated financial statements. In May 2023, in conjunction with the rights offering described in Note 18, the Company began transi- tion of its shares for trading from Oslo Stock Exchange to Nasdaq Copenhagen. Operating expense in 2023 includes $0.8 million of non-recurring costs associated with this listing change, classified as a special item in operating expense on the income statement. Valuation assumptions for options granted 2024 2023 Risk-free interest rate NA 4.33%–4.58% Dividend yield NA 0.0% Expected life of options (years) NA 2.5–3.96 Expected volatility NA 114% NOTES ASETEK Annual report 2024 / Page 53 9. FINANCE COSTS AND INCOME 11. DEFERRED INCOME TAX (USD 000’s) 2024 2023 FOREIGN EXCHANGE GAIN (LOSS) 1,444 (1,015) FINANCE INCOME 99 265 Interest cost on line of credit (1,105) (1,009) Interest cost on leases and equipment financing (83) (109) Other banking and finance fees (306) (166) Subtotal (1,494) (1,284) Less: amount capitalized 982 1,129 FINANCE COST (512) (155) (USD 000’s) 2024 2023 Potential tax assets from net losses 5,227 6,064 Potential tax assets resulting from timing differences between book and tax 6,799 618 Tax assets not recognized (12,026) (993) DEFERRED INCOME TAX ASSETS – 5,689 At December 31, 2024, potential income tax assets totaled $12.0 million (2023: $6.7 million) in respect of timing differences and losses to be carried forward amounting to $19.4 million applied to different tax rates. The losses can be carried forward against future taxable income but may be limited in use according to local jurisdictions. The potential tax assets resulting from timing differences include the effect of dual taxation of the Parent company, by both U.S. and Denmark. In 2024, due to uncertainty of the realizability of deferred tax assets, the Group fully reserved the value of potential assets, resulting in zero value on the balance sheet at December 31, 2024 ($5.7 million in 2023). Refer to the Group impairment assessment in Note 2.22. In accordance with IAS 12, the Company recognizes deferred tax assets arising from unused tax loss- es or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized by the Company. The estimated tax benefit is calculated considering historical levels of income, expectations and risks associated with estimates of future taxable income. The calculation utilizes the statutory tax rates that are expected to apply to taxable income for the years in which the asset is expected to be realized. Losses of the U.S. parent company and U.S. subsidiary will begin to expire in 2029 for carryforward pur- poses. Losses of the Denmark subsidiary do not expire. 10. INCOME TAXES Asetek A/S, the Group’s parent company, moved from U.S. to Denmark in 2013 and is currently subject to income tax in both U.S. and Denmark. The Company is working with the U.S. and Danish tax authorities to negotiate a resolution in accordance with international double taxation treaties. The tax expense on the group’s income before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: (USD 000’s) 2024 2023 INCOME (LOSS) BEFORE TAX (18,217) 8,498 Tax calculated at domestic rates applicable to profits/losses in respective countries 3,991 (1,902) Tax effects of: R&D credit 61 50 Timing differences between book and tax, recognized – 70 Timing differences between book and tax not recognized, principally due to book impairment charge on property plant and equipment (3,206) – Impairment of deferred tax assets (4,209) – Deferred tax value of current year losses, net unrecognized (1,491) – Effect of U.S. GILTI regulation applied to foreign corporation income pertaining to fiscal 2023 (867) (766) Other permanent differences between book and tax 2 51 TAX (EXPENSE) BENEFIT (5,719) (2,497) (USD 000’s) Tax eﬀected loss Expire in years 2029 to 2044 965 Expire in year 2033 59 Do not expire 4,203 TOTAL 5,227 NOTES ASETEK Annual report 2024 / Page 54 Based on current interest rates and its recent bank financing negotiations, the Company believes that book value approximates fair value for all financial instruments as of December 31, 2024 and 2023. The values of the Group’s assets and liabilities are as follows: 12. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Com- pany by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by adjusting the number of common shares outstanding used in the Basic calculation for the effect of dilutive equity instruments, which include options and warrants to the extent their inclusion in the calculation would be dilutive. In a rights offering in May 2023, the Company issued new shares to existing shareholders at a discounted price from fair market value. IAS 33 requires that the price discount be recognized as a bonus element, with retrospective adjustment to the denominators for both basic and diluted earnings per share amounts for all periods before the rights issue. In accordance with IAS 33, the Company calculated and applied a bonus factor of 2.05 to the weighted average shares outstanding for all prior periods. At December 31, 2024 (USD 000’s) Amorꢀzed cost Assets as per balance sheet: Trade receivables and other 13,492 Cash and cash equivalents 3,293 16,785 At December 31, 2023 (USD 000’s) Amorꢀzed cost Assets as per balance sheet: Trade receivables and other 12,611 Cash and cash equivalents 9,121 21,732 2024 2023 Income attributable to equity holders of the Company (USD 000's) (23,936) 6,001 Weighted average number of common shares outstanding (000's) 97,058 81,642 BASIC EARNINGS PER SHARE ($0.25) $0.07 Weighted average number of common shares outstanding (000's) 97,058 81,642 Instruments with potentially dilutive effect: Warrants and options (000's) – – Weighted average number of common shares outstanding, diluted (000's) 97,058 81,642 DILUTED EARNINGS PER SHARE ($0.25) $0.07 At December 31, 2024 Liabiliꢀes at fair Other Financial value through Liabiliꢀes at (USD 000’s) proﬁt and loss amorꢀzed cost Total Liabilities as per balance sheet: Long-term debt – 19,201 19,201 Short-term debt – 2,860 2,860 Trade payables and accrued liabilities – 16,167 16,167 – 38,228 38,228 As described in Note 24, on January 6, 2025, the Company issued 219,925 thousand shares in a rights offering. If these shares had been outstanding from January 1, 2024, the weighted average number of shares outstanding used for both basic and diluted earnings per share calculations would have been 316,983 thou- sand shares in 2024. 13. FINANCIAL INSTRUMENTS CATEGORY AND FAIR VALUE ESTIMATION The Company uses the following valuation methods for fair value estimation of financial instruments: // Quoted prices (unadjusted) in active markets (Level 1). // Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2) // Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). At December 31, 2023 Liabiliꢀes at fair Other Financial value through Liabiliꢀes at (USD 000’s) proﬁt and loss amorꢀzed cost Total Liabilities as per balance sheet: Long-term debt – 2,596 2,596 Short-term debt – 15,782 15,782 Trade payables and accrued liabilities – 18,235 18,235 – 36,613 36,613 All of the Company’s financial assets as of December 31, 2024 are classified as “amortized cost” having fixed or determinable payments that are not quoted in an active market (Level 3). As of December 31, 2024, all of the Company’s financial liabilities are carried at amortized cost having fixed or determinable payments that are not quoted in an active market (Level 3). NOTES ASETEK Annual report 2024 / Page 55 14. INTANGIBLE ASSETS In 2021, the Company purchased intellectual property and other assets from a third party which included intangible assets with an estimated fair value of $7.8 million, the majority of which were in development. As the assets are placed in service, they are being amortized over their estimated useful lives ranging from 6 to 10 years. Goodwill. Goodwill of $0.5 million originated from an acquisition by the Company in 2020. Goodwill is not amortized but reviewed for impairment once a year and also if events or changes in circumstances indi- cate the carrying value may be impaired. If impairment is established, goodwill is written down to its lower recoverable amount. The goodwill recorded is denominated in Danish krone and is subject to fluctuation in the consolidated financial statements due to changes in foreign exchange rates. Intangible assets as of December 31 are as follows: Capitalized development costs (USD 000’s) 2024 2023 COST: Balance at January 1 9,850 7,487 Additions 2,320 2,561 Deletions- completion of useful life - (61) Impairment loss (2,029) (137) BALANCE AT DECEMBER 31 10,141 9,850 ACCUMULATED AMORTIZATION AND IMPAIRMENT LOSSES: Balance at January 1 (4,639) (2,724) Amortization for year (2,158) (2,053) Amortization associated with deletions - 61 Amortization associated with impairment losses 1,818 77 BALANCE AT DECEMBER 31 (4,979) (4,639) CARRYING AMOUNT 5,162 5,211 (USD 000’s) 2024 2023 Goodwill 513 543 Capitalized development costs 5,162 5,211 Other assets 5,268 6,296 TOTAL INTANGIBLE ASSETS 10,943 12,050 Capitalized development costs. The Group routinely incurs costs directly attributable to the design and testing of new or improved products to be held for sale. These costs are capitalized as intangible assets and amortized over the estimated useful lives of the products, typically three to sixty months. Impairment tests are performed annually on developed assets and assets under construction. Impairment tests are also performed on completed assets whenever there are indications of a need for write-offs and for assets still in development regardless of whether there have been indications for write downs. If the value of expected future free cash flow of the specific development project is lower than the carrying value, the asset is written down to the lower value. The booked value includes capitalized salary and related expenses for the cash flow producing project. Expected future free cash flow is based on budgets and anticipations prepared by management. The main parameters are the development in revenue, EBIT and working capital. Impair- ment losses represent principally assets which are no longer associated with a future income stream. Refer to the end of this Note for the Company’s approach, assumptions and conclusion regarding impairment test of carrying values in 2024. In 2024 and 2023, the Company recognized impairment of $2.0 million and $0.1 million, respectively, on capitalized development costs associated with Liquid Cooling as a result of updated prioritization of future commercial projects. The following table presents a summary of the Company’s development projects. Other intangible assets (USD 000’s) 2024 2023 COST: Balance at January 1 7,195 6,958 Additions - - Exchange rate differences (401) 237 BALANCE AT DECEMBER 31 6,794 7,195 ACCUMULATED AMORTIZATION AND IMPAIRMENT LOSSES: Balance at January 1 (899) (233) Amortization for year (704) (637) Exchange rate differences 77 (29) BALANCE AT DECEMBER 31 (1,526) (899) CARRYING AMOUNT 5,268 6,296 NOTES ASETEK Annual report 2024 / Page 56 14. INTANGIBLE ASSETS, continued Impairment assessment. In compliance with IAS 36 Impairment of Assets, the Company assessed impair- ment of intangible assets as follows. // Identify Cash-Generating Units (CGUs). The Group has identified two principal businesses as its operating segments and CGUs – Liquid Cooling and SimSports. Assets pertaining to the Company’s third segment, Data center, are not significant. Refer to Note 5 for segment information. // Approach to assessment. The Group considers both qualitative and quantitative factors when determining whether an asset or CGU may be impaired. Management measured the book value of intangible assets against the net present value of future projected cash flows for the respective CGU. In doing so, manage- ment incorporated the Company’s fiscal 2025 budget and subsequent year projections by management utilizing market data and assistance from external advisors. Internal management reporting is in place to monitor revenues and cash flows at an operating segment-level basis to enable management to properly assess impairment. // Allocation of assets to CGU. Capitalized development costs are accounted for and specifically identified by CGU as either Liquid Cooling or SimSports products under development. Other intangible assets and goodwill represents assets acquired in prior years associated with SimSports. // Key assumptions. In preparing the assessment, management used a five-year projection for Liquid Cool- ing and ten-year projection for SimSports. Liquid cooling revenue is projected to decrease by 6% in 2025 and return to 14% growth in 2026 and 2027, and 10% growth thereafter. For SimSports, because it is in a higher growth stage and currently at a lower base level of revenue, annual growth rates averaging 75% are expected over the first three years, leveling off to 15% by 2029. SimSports’ anticipated growth rate is reflective of the high rate of new product introductions planned into the foreseeable future. The following table summarizes the key assumptions used in the impairment assessment: Liquid Key Assumption Cooling Simsports Projection time period analyzed 5 years 10 years Compound annual growth rate of revenue 8.0% 29.0% EBITDA margin in year 5 25.3% 9.4% Discount rate 14.0% 14.0% Terminal growth rate 4.1% 4.1% Income tax rate 22.0% 22.0% // Conclusion. The Company’s assessment concluded that the net present value of projected future cash flows is sufficient to support the valuation of intangible assets at December 31, 2024. As part of this test, management identified external indicators of impairment to the Company’s net asset book value, includ- ing a significant decrease in the Group’s market-based valuation. Refer to Note 2.22. The present value of expected cash flows is determined by applying a suitable discount rate. The discount rate of 14% was derived based on a weighted-average cost of capital (WACC) for comparable entities in the industry, based on market data. For the calculation of the net present value (NPV), Asetek’s WACC is applied, which is based on the current borrowing rate and its expected development as well as the return on equity requirement, which is determined based on the risk profile. NOTES ASETEK Annual report 2024 / Page 57 15. PROPERTY, PLANT AND EQUIPMENT The Company is leasing sections of the building that are not occupied by Asetek and plans to continue to do this for three to five years and to subsequently occupy the entire facility thereafter. The sections leased are contiguous with the premises occupied by Asetek and cannot be feasibly separated. As a result, the asset is accounted for as a domicile property, recorded at cost and depreciated over its estimated useful life of 50 years. In 2024, the Company recognized $0.1 million of rental income associated with this lease. The following table presents total property, plant and equipment: In 2024, the Company capitalized $6.1 million of costs associated with the construction of a new headquar- ters facility, including $1.0 million of borrowing costs ($22.8 million and $1.1 million, respectively in 2023). Refer to Notes 19 and 25. The building was completed in September 2024 and occupied by the Company. Asetek recorded an impairment charge of $13.8 million against this asset in 2024. Refer to Note 2.22. Other ﬁxtures, Leasehold ﬁꢁngs, tools, Building under (USD 000’s) Improvements Machinery equipment Properꢀes construcꢀon Total COST: Balance at January 1, 2023 1,657 7,043 3,573 5,969 23,854 42,095 Additions 20 1,517 843 29 22,766 25,175 Disposals (141) (852) (788) (654) – (2,435) Exchange rate differences (34) 246 92 98 – 402 BALANCE AT DECEMBER 31, 2023 1,502 7,954 3,720 5,442 46,620 65,237 Balance at January 1, 2024 1,502 7,954 3,720 5,442 46,620 65,237 Additions 43 580 1,274 – 6,078 7,975 Transfer – – – 52,698 (52,698) – Disposals (1,383) (601) (764) (130) – (2,878) Exchange rate differences (40) (442) (159) (163) – (804) BALANCE AT DECEMBER 31, 2024 122 7,491 4,071 57,847 – 69,531 ACCUMULATED DEPRECIATION: Balance at January 1, 2023 (1,469) (5,173) (2,185) (2,184) – (11,011) Disposals 141 849 701 654 – 2,345 Depreciation for the year (151) (1,058) (611) (590) – (2,410) Exchange rate differences 38 (173) (61) (68) – (264) BALANCE AT DECEMBER 31, 2023 (1,441) (5,555) (2,156) (2,188) – (11,340) Balance at January 1, 2024 (1,441) (5,555) (2,156) (2,188) – (11,340) Disposals 1,382 600 586 – – 2,568 Impairment – – – (13,791) – (13,791) Depreciation for the year (40) (1,154) (654) (740) – (2,588) Exchange rate differences 37 327 109 139 – 612 BALANCE AT DECEMBER 31, 2024 (62) (5,782) (2,115) (16,580) – (24,539) CARRYING AMOUNT AT DECEMBER 31, 2023 61 2,399 1,564 3,254 46,620 53,897 CARRYING AMOUNT AT DECEMBER 31, 2024 60 1,709 1,956 41,267 – 44,992 NOTES ASETEK Annual report 2024 / Page 58 16. TRADE RECEIVABLES AND OTHER Trade receivables are non-interest bearing and are generally on payment terms of Net 30 days. The trade receivables of Asetek Danmark A/S carry a general lien on the business of Asetek Danmark A/S (refer to Note 25). The carrying amount of trade receivables is approximately equal to fair value due to the short term to maturity. Regarding credit risks, refer to Note 3. Credit Loss Provision Matrix 2023 Past due: 31 to 60 Over 60 (USD 000’s) Total Not yet due 1 to 30 days days days Gross carrying amount 10,641 9,355 1,142 71 73 Expected credit loss rate 0.1% 0.4% 4.2% 58.9% Lifetime expected credit loss (59) (8) (5) (3) (43) (USD 000’s) 2024 2023 Gross trade receivables 11,349 10,641 Provision for uncollectible accounts (32) (59) NET TRADE RECEIVABLES 11,317 10,582 Other receivables 1,236 1,153 Prepaid assets 939 876 TOTAL TRADE RECEIVABLES AND OTHER 13,492 12,611 Provision for uncollecꢀble accounts (USD 000’s) 2024 2023 Balance at January 1 (59) (41) Additions (32) (59) Reversals 59 41 BALANCE AT DECEMBER 31 (32) (59) 17. INVENTORIES The Company’s inventories are pledged as security for lines of credit outstanding as per Note 19. Inventories at December 31 are as follows: (USD 000’s) 2024 2023 Raw materials and work-in-process 3,197 5,320 Finished goods 4,390 4,995 Total gross inventories 7,587 10,315 Less provision for inventory reserves (983) (1,262) TOTAL NET INVENTORIES 6,604 9,053 (USD 000’s) 2024 2023 Inventories recognized as cost of sales during period (30,557) (41,624) Write-down of inventories to net realizable value (983) (1,262) The aging of trade receivables as of reporting date is as follows: Past due: 31 to 60 Over 60 (USD 000’s) Total Not yet due 1 to 30 days days days December 31, 2024 11,349 9,225 1,400 517 207 December 31, 2023 10,641 9,355 1,142 71 73 Credit Loss Provision Matrix 2024 Past due: 31 to 60 Over 60 (USD 000’s) Total Not yet due 1 to 30 days days days Gross carrying amount 11,349 9,225 1,400 517 207 Expected credit loss rate 0.1% 0.5% 1.9% 2.9% Lifetime expected credit loss (32) (9) (7) (10) (6) A summary of the activity in the provision for inventory reserves is as follows: Provision for inventory reserves (USD 000’s) 2024 2023 Balance at January 1 (1,262) (781) Additions (983) (1,262) Write-offs 1,262 781 BALANCE AT DECEMBER 31 (983) (1,262) NOTES ASETEK Annual report 2024 / Page 59 // Asetek Danmark A/S has a revolving line of credit with Jyske Bank for DKK 5 million (USD $0.7 million), with a temporary increase to DKK 15 million (USD 2.1 million) until January 2, 2025. This line is secured by the mortgage deed for the Group’s land and building and carries interest at the Danish CIBOR 3 rate plus 4.25 percentage points, which in total was 7.0% at December 31, 2024. The line matures on March 31, 2028. Amounts outstanding in excess of DKK 5 million are payable on January 2, 2025. 18. SHARE CAPITAL Subsequent to 2024 year-end, on January 6, 2025, the Company issued 219,925,366 new common shares of stock in a rights offering, raising net proceeds of $10.5 million after deduction of total issuance costs of $1.8 million. Refer to Note 24. In May 2023, the Company issued 71,166,167 new common shares of stock in a rights offering, raising net proceeds of $16.1 million after deduction of total issuance costs of $3.7 million. The shares were issued through an offering to then-existing shareholders to purchase 2.62 common shares for each share held at a price of NOK3.00 per share, representing a 64% discount on fair market value. The transaction meets the requirements for exemption from accounting for derivative financial instruments per IAS 32 Financial Instru- ments Presentation. In conjunction with the 2023 rights offering, the Company established a dual listing of its shares for trad- ing on Nasdaq Copenhagen, in addition to its existing listing on Oslo Børs Stock Exchange. The Company del- isted from Oslo Børs in March 2024. Operating expense in 2023 includes $0.8 million of non-recurring costs associated with the dual listing, classified as a special item in operating expense on the income statement. In 2024 and 2023, there were no stock options exercised. As of December 31, 2024, there are 97,058 thousand common shares outstanding with a nominal value of 0.10 DKK per share and 1,256 thousand shares (1.3% of total shares, nominal value DKK 125.6 thousand) held in treasury. Included in equity is a reserve for treasury shares of approximately $11,206 thousand at December 31, 2024. All common shares outstanding are fully paid and carry no special rights. The Company does not cancel shares that are repurchased but maintains them in treasury to fulfill option exercises. Refer to ‘Shareholder information’ in this report for information regarding the composition of Asetek shareholders. Debt covenants. Under the terms of the lines of credit, the Company is required to comply with certain financial covenants as described in Note 3. As of December 31, 2024, the Company is in compliance with all covenants. The capitalization rate for borrowing costs on lines of credit was 100% up through September 30, 2024, as all funds drawn to that point were utilized for additions to the qualifying asset. The Company has entered into agreements to finance previously purchased equipment. The amortized cost of the equipment at transaction date was used as the estimate on fair value and the liability is account- ed for at amortized cost using the effective interest rate method. The financing agreements carry interest at the Danish CIBOR 3 rate plus 2.4 to 3.1 percentage points, which in total ranged from 5.2% to 5.9% at December 31, 2024. The following is a summary of the Company’s net debt and reconciliation of the lines of credit: (USD 000’s) 2024 2023 Line of credit- due within one year (2,213) (14,700) Equipment financing- due within one year (320) (270) Leases- amounts due within one year (327) (812) DEBT INCLUDED IN CURRENT LIABILITIES (2,860) (15,782) Line of credit- due after one year (18,634) (1,489) Equipment financing- due after one year (556) (756) Leases- amounts due after one year (11) (351) TOTAL DEBT (22,061) (18,378) Less cash and cash equivalents 3,293 9,121 NET DEBT (18,768) (9,257) The following table summarizes the common share activity in the years presented: (USD 000’s) 2024 2023 Common shares outstanding- January 1 97,058 25,891 Common shares issued in rights offering – 71,167 COMMON SHARES OUTSTANDING – DECEMBER 31 97,058 97,058 19. NET DEBT (USD 000’s) 2024 2023 Beginning balance, line of credit (16,189) (18,971) Net paid (drawn) on line of credit (5,759) 3,354 Foreign exchange impact 1,101 (572) ENDING BALANCE, LINE OF CREDIT (20,847) (16,189) The Company’s debt at December 31, 2024 consists of the following: // Asetek A/S, the Parent company, has a line of credit with Jyske Bank for DKK 137.5 million (USD 19.3 million) at December 31, 2024. This line is secured by the mortgage deed for the Group’s land and building and carries interest at Danish CIBOR 3 rate plus 2.45 percentage points which in total was 5.2% at December 31, 2024. The line specifies quarterly payments of DKK 2.35 million (USD 329,000) and matures on March 31, 2028. NOTES ASETEK Annual report 2024 / Page 60 20. LEASES Right-of-use Assets. The following table presents a summary of the Right-of-use assets under lease, which is a subset of the property, plant and equipment presented in Note 15: Asetek leases certain equipment, office facilities and motor vehicles. Contracts are typically for fixed periods of five years or more for office facilities, five years for equipment, and two years or less for motor vehicles. The leased asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Operating expenses associated with leases of one year or less are not significant in 2024 and 2023. In 2024, the Company moved its Aalborg, Denmark headquarters from a leased facility to a newly con- structed facility owned by Asetek in Svenstrup, Denmark. The lease on the former office space in Aalborg expires in March 2025. The Company’s office space in Taipei, Taiwan is under lease until August 2025. Other ﬁxtures, ﬁꢁngs, tools, (USD 000’s) Machinery equipment Properꢀes Total COST: Balance at December 31, 2023 1,402 339 2,912 4,653 Additions - 152 - 152 Disposals and transfers - (223) (130) (353) Exchange rate differences - (3) (163) (166) BALANCE AT DECEMBER 31, 2024 1,402 265 2,619 4,286 ACCUMULATED DEPRECIATION: Balance at December 31, 2023 (1,098) (68) (2,160) (3,326) Disposals and transfers - 90 - 90 Depreciation for the year - (88) (496) (584) Exchange rate differences - 1 138 139 BALANCE AT DECEMBER 31, 2024 (1,098) (65) (2,518) (3,681) CARRYING AMOUNT AT DECEMBER 31, 2023 304 271 752 1,327 CARRYING AMOUNT AT DECEMBER 31, 2024 304 200 101 605 Reconciliation of lease liability (USD 000’s) 2024 2023 Beginning balance 1,163 1,664 Additions to lease liabilities 152 273 Payments of lease liabilities (709) (802) Adjustments/reductions to leases (133) (54) Foreign exchange impact (135) 82 ENDING BALANCE 338 1,163 Total cash payments for leases was $735,000 and $840,000 in 2024 and 2023, respectively. Future minimum lease payments are as follows as of the balance sheet date: Future minimum lease payments (USD 000’s) 2024 2023 Minimum lease payments at December 31 221 1,010 Asset residual at end of lease 147 183 Less: amount representing interest (30) (30) TOTAL OBLIGATIONS UNDER LEASES 338 1,163 Obligations under leases due within one year 327 812 Obligations under leases due after one year 11 351 TOTAL OBLIGATIONS UNDER LEASES 338 1,163 NOTES ASETEK Annual report 2024 / Page 61 21. TRANSACTIONS WITH RELATED PARTIES 23. AUDIT FEES The Company’s CEO serves as Chairman of the Board for a vendor that supplies information technology ser- vices to the Company. In 2024, the Company purchased services totaling $0.9 million ($0.8 million in 2023) from this vendor. At December 31, 2024 and 2023, the Company had outstanding payables to this vendor of $56,000 and $66,000, respectively. The Company sponsors and occasionally purchases equipment and other services from Valdemar Eriksen Racing A/S (“VER”), an organization partially owned by the Company’s CEO. In the years ended December 31, 2024 and 2023, the Company paid $14,500 and $2,000 to VER. The Group’s principal auditors perform audits for all of Asetek’s entities except for the Xiamen, China sub- sidiary, which is audited by a local firm. The Group’s principal auditors received a total fee of $415,000 and $586,000 in 2024 and 2023, respectively. Fees for services other than statutory audits provided by PricewaterhouseCoopers Statsautoriseret Revi- sionspartnerselskab to the group amount to $111,000 ($371,000 in 2023). Other assurance services in 2024 were principally review and verification of filings associated with the Company’s rights offering preparation in late 2024. Tax and other services provided in 2024 were transfer pricing documentation and benchmark- ing, U.S. tax structure considerations, and other miscellaneous services. Other assurance services in 2023 were principally financial review and verification of filings associated with the Company’s rights offerings and listing on Nasdaq Copenhagen in May 2023. Tax and other services provided in 2023 were tax advice related to transfer pricing and other miscellaneous services. 22. SUBSIDIARIES The following entities are included in the consolidated accounts: Voꢀng Company Domicile Stake Share Acꢀvity Asetek A/S Denmark 100% 100% Trading Asetek Holdings, Inc. USA 100% 100% Inactive Asetek USA, Inc. USA 100% 100% Trading Asetek Danmark A/S Denmark 100% 100% Trading Xiamen Asetek Computer Industry Co., Ltd. China 100% 100% Trading The fee is distributed between these services: (USD 000’s) 2024 2023 Audit 267 215 Other assurance services 51 294 Tax services 88 62 Other services 9 15 TOTAL 415 586 NOTES ASETEK Annual report 2024 / Page 62 24. POST BALANCE SHEET EVENTS The Company has evaluated the period after December 31, 2024 up through the date of the Management Statement and determined that there were no transactions that required recognition in the Company’s financial statements, except for the following: On January 6, 2025, the Company issued 219,925,366 new common shares of stock in a rights offering raising net proceeds of DKK 75.5 million, after deducting offering expenses of DKK 12.5 million (Net proceeds of USD 10.5 million, after deducting offering expenses of USD 1.8 million). The shares were issued through an offering to then-existing shareholders to purchase three common shares for each share held at a price of DKK 0.40 per share, representing an approximate discount of 14% from fair market value. Incremental costs incurred directly attributable to the share issuance will be recorded as an offset to equity in January 2025. The transaction meets the requirements for exemption from accounting for derivative financial instruments per IAS 32 Financial Instruments Presentation. On January 27, 2025, in consideration of the dilution effect of the January rights offering, the Board of Directors reduced the exercise prices of outstanding share options by 51%. The effect of this option repricing is not expected to have a material impact to share-based compensation expense. 25. CONTINGENT LIABILITIES Debt collateral. In conjunction with the debt referenced in Note 19, Asetek’s creditors have secured the following as collateral for the credit provided: The total loan amount of DKK 142.5 million (USD 20.0 million) at the Group level with Jyske Bank, representing DKK 137.5 million (USD 19.3 million) to Asetek A/S and DKK 5 million (USD 0.7 million) to Asetek Denmark A/S, is secured by the mortgage deed for the property located at Skjoldet 20, 9230 Svenstrup. The mortgage deed of DKK 140 million (USD 19.6 million) serves as collateral for the loan commitments in both Asetek A/S and Asetek Danmark A/S. Asetek A/S has executed a guarantee to Jyske Bank for all outstanding matters with Asetek Danmark A/S. adverse judgment in any pending litigation could cause a material impact on the Group’s business opera- tions, intellectual property, results of operations or financial position. In addition to the above, Asetek Group is engaged in various other ongoing cases. In the opinion of Management, neither settlement nor contin- uation of such proceedings are expected to have a material effect on Asetek’s financial position, operating profit or cash flow. The Company has challenged the Danish tax authorities in a matter related to the deductiblity of expens es related to stock options granted to certain employees of a subsidiary. The maximum tax exposure for the Company is about $0.1 million. A formal complaint has been initiated and further proceedings are pending. On September 30, 2024, Cooler Master Co., Ltd. filed a review petition with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office to challenge the validity of Asetek’s ’681 patent. Asetek will soon file an opposition to Cooler Master’s petition, explaining flaws in Cooler Master’s petition and requesting that the PTAB not institute trial on the petition. The PTAB will decide whether to institute trial later in 2025. If the PTAB institutes trial, Asetek will have the opportunity to provide more fulsome briefing to explain why the petition should be denied. Legal proceedings. In the ordinary course of conducting business, the Company is involved in various intel- lectual property proceedings, including those in which it is a plaintiff that are complex in nature and have outcomes that are difficult to predict. Asetek records accruals for such contingencies to the extent that it is probable that a liability will be incurred, and the amount of the related loss can be reasonably estimated. The Company’s assessment of each matter may change based on future unexpected events. An unexpected XXXXX ANNUAL REPORT 2024 / Page 58 PARENT COMPANY FINANCIAL STATEMENTS Comprehensive income statement, parent company 64 65 Balance Sheet, parent company Statement of changes in equity, parent company 66 67 68 Statement of cash ﬂows, parent company Notes, parent company FINANCIAL STATEMENTS, PARENT COMPAMY ASETEK Annual report 2024 / Page 64 COMPREHENSIVE INCOME STATEMENT, PARENT COMPANY (USD 000’s) Note 14 2024 2,646 507 2023 3,699 – Service fees Rental income TOTAL REVENUE 7 3,153 3,699 Research and development Selling, general and administrative Special items 3, 4 3, 4 3 (52) (4,065) (61) (3,769) (847) (13,791) (17,908) TOTAL OPERATING EXPENSES (4,677) OPERATING INCOME (14,754) (978) Foreign exchange gain (loss) Finance income 6 6 6 947 5 (294) 101 Finance costs (1,414) (462) (333) (526) TOTAL FINANCIAL INCOME INCOME BEFORE TAX (15,216) (1,504) Income tax (expense) benefit 10 (763) 58 INCOME FOR THE YEAR (15,979) (1,446) TOTAL COMPREHENSIVE INCOME (LOSS) (15,979) (1,446) FINANCIAL STATEMENTS, PARENT COMPAMY ASETEK Annual report 2024 / Page 65 BALANCE SHEET, PARENT COMPANY (USD 000’s) (USD 000’s) Note 2024 2023 Note 2024 2023 ASSETS EQUITY AND LIABILITIES EQUITY NON-CURRENT ASSETS Investments in subsidiaries Property, plant and equipment Receivables from subsidiaries TOTAL NON-CURRENT ASSETS 11 7 20,100 42,150 – 20,100 49,549 337 Share capital 13 1,478 43,264 1,478 58,961 Retained earnings Translation and other reserves TOTAL EQUITY 12 (11,206) 33,536 (11,206) 49,233 62,250 69,986 CURRENT ASSETS NON-CURRENT LIABILITIES Payables to subsidiaries Long-term debt Other assets 446 49 999 183 12 8,634 17,998 26,632 5,323 – Cash and cash equivalents TOTAL CURRENT ASSETS 8, 9 495 1,182 TOTAL NON-CURRENT LIABILITIES 5,323 TOTAL ASSETS 62,745 71,168 CURRENT LIABILITIES Short-term debt 8, 9 1,700 437 14,896 153 Accrued liabilities Accrued compensation and employee benefits Trade payables 299 65 141 1,498 16,612 21,935 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES 2,577 29,209 TOTAL EQUITY AND LIABILITIES 62,745 71,168 FINANCIAL STATEMENTS, PARENT COMPAMY ASETEK Annual report 2024 / Page 66 STATEMENT OF CHANGES IN EQUITY, PARENT COMPANY Share capital Share premium Translaꢀon Treasury Retained earnings (USD 000’s) reserves share reserves Total EQUITY AT DECEMBER 31, 2022 Total comprehensive income for 2023 Income for the year 444 – – (11,206) 44,785 34,023 – – – – – – – – (1,446) (1,446) (1,446) (1,446) Total comprehensive income for 2023 Transactions with owners in 2023 Shares issued in rights offering, net of issuance costs Transfer 1,034 – 15,108 – – – – – – 16,142 – (15,108) – 15,108 514 Share-based payment expense Transactions with owners in 2023 EQUITY AT DECEMBER 31, 2023 Total comprehensive income for 2024 Income for the year – – – – – – 514 1,034 1,478 15,622 58,961 16,656 49,233 (11,206) – – – – – – – – (15,979) (15,979) (15,979) (15,979) Total comprehensive income for 2024 Transactions with owners in 2024 Share-based payment expense – – – – 282 282 Transactions with owners in 2024 – – – – 282 282 EQUITY AT DECEMBER 31, 2024 1,478 – – (11,206) 43,264 33,536 FINANCIAL STATEMENTS, PARENT COMPAMY ASETEK Annual report 2024 / Page 67 STATEMENT OF CASH FLOWS, PARENT COMPANY (USD 000’s) (USD 000’s) Note 2024 2023 Note 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) for the year CASH FLOWS FROM FINANCING ACTIVITIES Lease payments on right-of-use assets Borrowings (repayment) on line of credit Proceeds from issuance of share capital Costs incurred for issuance of share capital Financing of equipment (15,979) (1,446) 9 8 (63) 5,790 – (88) (18) Depreciation and amortization Impairment of property, plant and equipment Share-based payments expense Finance cost incurred 7 7 407 13,791 282 86 – 13 13 17,019 (878) – – 4 514 76 6 2,396 (2,389) 763 1,062 (1,058) (58) NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 5,803 16,035 Finance cost, cash paid 6 Income tax expense (income) 10 Effect of exchange rate changes on cash and cash equivalents (1,019) 482 Cash received (paid) for income taxes 10 (1,287) 553 841 3,548 (3,385) 104 NET CHANGES IN CASH AND CASH EQUIVALENTS (134) (1,426) Changes in other assets Cash and cash equivalents at beginning of period 183 1 609 Changes in trade payables and accrued liabilities NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (322) CASH AND CASH EQUIVALENTS AT END OF PERIOD 49 183 (1,786) SUPPLEMENTAL DISCLOSURE - NON-CASH ITEMS CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Assets acquired under leases 152 273 7 (6,780) 3,648 (22,985) 4,938 Net receipts from (payments to) subsidiaries NET CASH USED IN INVESTING ACTIVITIES 12 (3,132) (18,047) FREE CASH FLOW (4,918) (17,943) NOTES, PARENT COMPANY ASETEK Annual report 2024 / Page 68 NOTES, PARENT COMPANY Special items. In 2024, the Company recorded a non-cash impairment charge of $13.8 million as a conse- quence of an assessed impairment within the cash generating units. This one-time charge is classifed as a special item in operating expense on the income statement and was recorded as impairment of the Compa- ny’s headquarters facility in property, plant and equipment. Refer to Note 2.22 in the consolidated financial statements. 1. GENERAL INFORMATION Regarding accounting policies, refer to Note 2 to the Consolidated Financial Statements. In May 2023, In conjunction with the rights offering described in Note 18 of the consolidated financial statements, the Company began transition of its shares for trading from Oslo Stock Exchange to Nasdaq Co- penhagen. Operating expense in 2023 includes $0.8 million of non-recurring costs associated with this listing change, classified as a special item in operating expense on the income statement. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The 2024 financial statements for Asetek A/S have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by IASB and adopted by the EU. The financial statements are presented in U.S. Dollars (USD), which is the functional currency. The accounting policies for the Parent Company are the same as for the Asetek Group, as per Note 2 to the consolidated financial statements, with the exception of the items listed below: 4. PERSONNEL EXPENSES Total personnel costs by type for the year ended December 31 1.1. Dividends on investments in subsidiaries, joint ventures and associates. Dividends on investments in subsidiaries, joint ventures and associates are recognized as income in the income statement of the Parent Company in the financial year in which the dividend is declared. (USD 000’s) 2024 1,842 282 2023 1,948 514 Salaries, pension and other Share-based payment TOTAL PERSONNEL EXPENSES 1.2. Investments in subsidiaries, joint ventures and associates. Investments in subsidiaries, joint ventures and associates are measured at the lower of cost or the recoverable amount. An impairment test on the investment in subsidiaries is performed if the carrying amount of the subsidiaries’ net assets is below the carrying value of the Parent Company’s investments in the consolidated financial state- ments. 2,124 2,462 Total personnel costs by classification in the income statement for the year ended December 31 (USD 000’s) 2024 52 2023 61 Research and development Selling, general and administrative TOTAL EXPENSES 2,072 2,124 2,401 2,462 3. TOTAL OPERATING EXPENSES Operating expenses consisted of the following for the year ended December 31 The average number of employees in the Parent company is two for both years presented. The figures listed above include a portion of the executive management’s cash compensation based on an estimate of the actual resources allocated to the management of the Parent company. The figures include incentive-based compensation in the form of share options and warrants granted to employees in the Asetek Group. Refer to Notes 6 and 7 in the Consolidated Financial Statements for information regarding incentive compensation programs and management remuneration. Remuneration of the Group Board of Directors is specified in Note 6 to the Consolidated Financial Statements. The Company’s share-based incentive pay program is described in Note 7 to the Consolidated Financial Statements. (USD 000’s) 2024 2,124 769 2023 2,462 622 Personnel expenses (Note 4) Legal, consultants and auditor Special items 13,791 1,224 17,908 847 Other expenses 746 TOTAL EXPENSES 4,677 NOTES, PARENT COMPANY ASETEK Annual report 2024 / Page 69 5. AUDIT FEES 7. PROPERTY, PLANT AND EQUIPMENT Fees associated with the Parent company financial statements for services provided by the Company’s princi- pal auditors were as follows: In September 2024, the Company completed construction of its headquarters building and occupied it. The Company is leasing sections of the building that are not occupied by Asetek and plans to continue to do so for three to five years and to subsequently occupy the entire facility thereafter. The sections leased are contiguous with the premises occupied by Asetek and cannot be feasibly separated. As a result, the asset is accounted for as a domicile property, recorded at cost and depreciated over its estimated useful life of 50 years. In 2024, the Company recorded an impairment charge of $13.8 million as a consequence of an assessed impairment within the cash generating units. Refer to Note 2.22 in the consolidated financial statements. (USD 000’s) 2024 189 51 2023 157 294 62 Audit Other assurance services Tax services Other services TOTAL 88 7 14 As of December 31, 2024 and 2023, carrying value of vehicles under right-of-use leases totaled $181,000 and $195,000, respectively, and their associated leases are for terms of 12 months. Total property, plant and equipment is specified as follows: 335 527 Services other than statutory audit are described in Note 23 in the consolidated financial statements. Building under construcꢀon Vehicles and soﬅware Land and Building Company Total COST: 6. FINANCIAL INCOME AND COSTS Balance at January 1, 2023 Additions 158 492 (95) 555 555 854 – 2,493 – 23,854 22,766 – 26,505 23,258 (95) (USD 000’s) 2024 947 2023 FOREIGN EXCHANGE GAIN (LOSS) (294) Disposals – BALANCE AT DECEMBER 31, 2023 Balance at January 1, 2024 Additions 2,493 2,493 – 46,620 46,420 6,078 (52,698) – 49,668 49,668 6,932 – Interest income on loans to subsidiaries Interest from bank accounts FINANCE INCOME – 5 5 90 12 101 Transfer 52,698 – Disposals (223) 1,186 (223) 56,377 Interest cost on loans from subsidiaries Interest cost on line of credit Interest cost on leases and equipment financing Other banking and finance fees Subtotal (1,027) (1,237) (7) (326) (698) (4) BALANCE AT DECEMBER 31, 2024 ACCUMULATED DEPRECIATION: Balance at January 1, 2023 Disposals 55,191 – (75) 42 – – (75) 42 (126) (2,396) 982 (34) – – (1,062) 729 Depreciation for the year BALANCE AT DECEMBER 31, 2023 Balance at January 1, 2024 Impairment (86) (119) (119) – – – – (86) Less: amount capitalized – (119) (119) (13,791) 90 FINANCE COST (1,414) (333) – – (13,791) – – Disposals 90 – Depreciation for the year BALANCE AT DECEMBER 31, 2024 CARRYING AMOUNT AT DECEMBER 31, 2023 (163) (192) 436 (244) (14,035) 2,493 – - (407) (14.227) 49,549 46,620 CARRYING AMOUNT AT DECEMBER 31, 2024 994 41,156 - 42,150 NOTES, PARENT COMPANY ASETEK Annual report 2024 / Page 70 8. NET DEBT 9. LEASES Asetek A/S has a long-term line of credit with Jyske Bank for DKK 137.5 million (USD 19.3 million) at Decem- ber 31, 2024, with a temporary increase of DKK 1.6 million (USD 0.2 million) payable on January 2, 2025. This line is secured by the mortgage deed for the Group’s land and building and carries interest at Danish CIBOR 3 rate plus 2.45 percentage points which in total was 5.2% at December 31, 2024. The line specifies quarterly payments of DKK 2.35 million (USD 329,000) and matures on March 31, 2028. Obligations under leases are as follows: (USD 000’s) 2024 5 2023 15 Minimum lease payments as of December 31 Asset residual value at end of lease Less: amount representing interest TOTAL OBLIGATIONS UNDER LEASES 147 (1) 184 (3) Net debt is as follows at December 31: 151 196 (USD 000’s) 2024 (1,537) (151) 2023 (14,700) (196) – Total lease obligations due within one year were $151,000 and $196,000 at December 31, 2024 and 2023, respectively. Operating expenses associated with leases of one year or less are not significant. Line of credit- amounts due within one year Leases- amounts due within one year Equipment financing -amounts due within one year DEBT INCLUDED IN CURRENT LIABILITIES Line of credit - amounts due after one year Equipment financing - amounts due after one year TOTAL DEBT (12) (1,700) (17,934) (64) (14,896) – 10. INCOME TAX At December 31, 2024 and 2023, the tax benefit (provision) for Asetek A/S differed from the statutory tax rate principally as a result of impairment charges and share compensation expenses that are treated differ- ently for tax purposes. – (19,698) 49 (14,896) 183 Cash and cash equivalents NET DEBT (19,649) (14,713) (USD 000’s) 2024 (15,216) 3,348 2023 (1,504) 331 INCOME BEFORE TAX Tax calculated at domestic rates applicable to profits/losses in respective countries Reconciliation of line of credit (USD 000’s) 2024 (14,700) (5,790) 1,018 2023 (14,236) 18 Differences between book and tax (4,111) (273) Beginning balance INCOME TAX (EXPENSE) (763) 58 Net paid (drawn) on line of credit Foreign exchange impact ENDING BALANCE, LINE OF CREDIT (482) (19,471) (14,700) 11. INVESTMENT IN SUBSIDIARIES Investment in Asetek Holdings, Inc. (USD 000’s) Balance at December 31, 2023 Additions 20,100 – Balance at December 31, 2024 CARRYING AMOUNT AT DECEMBER 31, 2023 CARRYING AMOUNT AT DECEMBER 31, 2024 20,100 20,100 20,100 Asetek A/S acquired 100% of Asetek Holdings, Inc. through the exchange of shares in February 2013. At the time of acquisition, Asetek Holdings, Inc. had negative net equity, resulting in the initial investment to be valued at zero. Asetek Holdings, Inc. represents Asetek A/S’s only direct investment in subsidiaries. NOTES, PARENT COMPANY ASETEK Annual report 2024 / Page 71 12. NET RECEIVABLES FROM (PAYABLES TO) SUBSIDIARIES 15. EVENTS AFTER THE REPORTING PERIOD Net receivables is as follows at December 31: Refer to Note 24 to the consolidated financial statements. (USD 000’s) 2024 (7,220) (1,541) 31 2023 (5,323) 135 16. CONTINGENT LIABILITIES Asetek Danmark A/S Asetek USA, Inc. The Danish group enterprises are jointly and severally liable for tax on group income subject to joint taxation, as well as for Danish withholding taxes by way of dividend tax, royalty tax, tax on unearned income and any subsequent adjustments to these. Asetek A/S has executed a guarantee to its Group’s principal bank, Jyske Bank, for all outstanding matters with its wholly owned subsidiary, Asetek Danmark A/S. Refer to Note 25 to the Consolidated Financial Statements. Asetek Xiamen 109 Asetek Holdings, Inc. NET DUE FROM (TO) SUBSIDIARIES AVERAGE EFFECTIVE INTEREST RATE 96 93 (8,634) 10.3% (4,986) 10.2% During construction of the headquarters facility, Asetek Danmark A/S maintained a line of credit to support financing of the building for Asetek A/S. The total outstanding on this line of credit was $0 and $1.5 million as of December 31, 2024 and 2023. Refer to Note 19 in the consolidated financial statements. Borrowing costs of $0.4 million and $0.4 million incurred in 2024 and 2023, respectively, on the Asetek Danmark A/S line of credit are included as capitalized cost of the building. 13. EQUITY Refer to Note 18 to the Consolidated Financial Statements. 14. TRANSACTIONS WITH RELATED PARTIES Asetek A/S charges its subsidiaries a management service fee. Reference Notes 6 and 12 regarding trans- actions with subsidiaries. With regard to transactions with related parties that are not subsidiaries, refer to Note 21 to the consolidated financial statements. MANAGEMENT STATEMENT ASETEK Annual report 2024 / Page 72 MANAGEMENT STATEMENT The Board of Directors and Executive Board have today considered and adopted the Annual Report of Asetek A/S for the financial year 1 January – 31 December 2024. The Consolidated Financial Statements and the Parent Company Financial Statements have been pre- pared in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Management’s Review has been prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at 31 December 2024 of the Group and the Parent Company and of the results of the Group and Parent Company operations and cash flows for 2024. In our opinion, Management’s Review includes a fair review of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as well as a description of the most significant risks and ele- ments of uncertainty, which the Group and the Parent Company are facing. In our opinion, the annual report of Asetek A/S for the financial year 1 January to 31 December 2024 with the file name Asetek-2024-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. We recommend that the Annual Report be adopted at the Annual General Meeting. Aalborg, Denmark March 7, 2025 Executive Board André S. Eriksen Peter Dam Madsen CEO CFO Board of Directors René Svendsen-Tune Erik Damsgaard Chairman Vice chairman Jukka Pertola Anja Monrad Member Member INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 73 INDEPENDENT AUDITOR’S REPORTS To the shareholders of Asetek A/S REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Compa- ny’s financial position at 31 December 2024 and of the results of the Group’s and the Parent Company’s operations and cash flows for the financial year 1 January to 31 December 2024 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of Asetek A/S for the financial year 1 January to 31 December 2024 comprise in- come statement and statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material account- ing policy information for the Group as well as for the Parent Company. Collectively referred to as the “Financial Statements”. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Account- ants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment Following the admission of the shares of Asetek A/S for listing on Oslo Stock Exchange, we were first appointed auditors of Asetek A/S on 24 April 2014 for the finan- cial year 2014. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 11 years including the financial year 2024. We were reappointed following a tendering process at the General Meeting on 30 April 2024. INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 74 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2024. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Capitalization of development costs How our audit addressed the key audit matter We assessed whether the Group’s accounting policies are in accordance with IFRS Accounting Standards. The Group capitalizes development costs when certain criteria according to IFRS are met. The criteria for recognition and measurement of development costs are subject to Management’s judgment and assumptions, which is uncertain by nature. Completed development projects are assessed for impairment indica- tions. For in-progress development projects impairment tests are performed at least annually. The impairment tests are based on the strategy plan approved by Management and value-in-use calculations based on expected future cash flows. We carried out risk assessment procedures in order to obtain an understanding of IT systems, business processes and relevant controls regarding capitalized de- velopment costs. For the controls, we assessed whether they were designed and implemented to effectively address the risk of material misstatement. We selected a sample of in-progress development projects and considered whether all criteria described in IFRS Accounting Standards were met as basis for capitalization. We focused on this area because the criteria for recognition and measurement of development projects are subject to Management judgments and assump- tions. Refer to note 14 in the Consolidated Financial Statements. We evaluated and challenged Management’s assessment of impairment indica- tors of completed development projects based on the commercial prospects of the projects. For in-progress development projects and projects with impairment indicators, we challenged the key assumptions applied in the value-in-use cal- culations. Our work was based on our understanding of the business cases and significant assumptions applied. We challenged whether the intent to finalize the projects remain and whether the projects are expected to generate future economic benefits exceeding the carrying values. INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 75 Key audit matter Impairment of non-current assets How our audit addressed the key audit matter During 2024, Management identified impairment indicators for the Group. Consequently, Management prepared impairment tests resulting in impairment losses recognized for the Group’s property, plant and equipment. As part of our audit, we considered the appropriateness of the CGUs defined by Management and the methodology used by Management to assess the carrying amount of the non-current assets assigned to CGUs. The impairment tests are based on Management’s assumptions of expected cash inflows and outflows for the individual cash-generating units (CGUs). The impair- ment tests are prepared as value-in-use calculations for the individual CGUs. We performed detailed testing of Management’s impairment tests for the CGUs, and challenged the significant assumptions affecting the future cash flows, in- cluding assumptions related to revenue growth, margins and operating expenses as well as the discount rate. The significant assumptions in estimating the future cash flows are Manage- ment’s outlook for revenue growth rates, margins and operating expenses, as well as Management’s determination of the discount rate. We used our internal valuation specialists to independently challenge the dis- count rate used. In calculating the discount rate, the key inputs used were inde- pendently sourced from market data, and we assessed the methodology applied. Further, we tested the mathematical accuracy of the impair-ment models pre- pared by Management. We focused on this area because the impact on the profit for the year is signif- icant, and because the impairment tests of non-current assets are considered complex non-routine transactions and require significant judgments in determin- ing the assumptions. Finally, we assessed the adequacy of disclosures provided by Management in the Financial Statements. Reference is made to notes 2.22 and 15 in the Consolidated Financial State- ments. INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 76 Statement on Management’s Review Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Re- view is materially inconsistent with the Financial Statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management’s Review includes the disclosures required by the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstate- ment in Management’s Review. Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclos- ing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the pur- pose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 77 Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material un- certainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to commu- nicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. Report on compliance with the ESEF Regulation As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of Asetek A/S for the financial year 1 January to 31 December 2024 with the filename Asetek-2024-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human-readable format; and • For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. INDEPENDENT AUDITOR’S REPORTS ASETEK Annual report 2024 / Page 78 Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is prepared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; • Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suita- ble element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of Asetek A/S for the financial year 1 January to 31 December 2024 with the filename Asetek-2024-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. In our opinion, the annual report of Asetek A/S for the financial year 1 January to 31 December 2024 with the filename Asetek-2024-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Aalborg, 7 March 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 33 77 12 31 Mads Melgaard Line Borregaard State Authorised Public Accountant mne34354 State Authorised Public Accountant mne34353 DEFINITION OF RATIOS AND METRICS ASETEK Annual report 2024 / Page 79 DEFINITIONS OF RATIOS AND METRICS Asetek uses various metrics, financial and non-financial ratios which provide shareholders with useful information about the Group’s financial position, performance and development. STOCK MARKET PROFIT & LOSS Earnings per share, basic Earnings per share, diluted Share price to earnings Refer to Note 12 of the Consolidated financial statements Adjusted EBITDA Operating income + amortization & depreciation + share-based compensation + special items Refer to Note 12 of the Consolidated financial statements Gross margin Gross profit / Revenue Share price / DKK to USD exchange rate / Earnings per share, diluted. If earnings is negative, not reported. Operating margin Operating income / Revenue Income for the year / Invested capital Market capitalization BUSINESS DRIVERS (Shares issued – Treasury shares) x (Share price in DKK / DKK to USD exchange rate) Return on Invested Capital (ROIC) Organic growth (Revenue current year – Comparable revenue prior year) / Comparable revenue prior year Average selling price per unit, Liquid cooling revenue / Sealed loop units shipped Liquid Cooling BALANCE SHEET Invested capital Revenue per employee Revenue / Number of employees Equity raised from sale of shares and conversion of debt + interest bearing debt Quick ratio (Cash and cash equivalents + Trade receivables and other) / Total Current Liabilities Current ratio Total current assets / Total current liabilities Trade receivables / (Revenue / 365 days) Cost of sales / (beginning inventory + ending inventory / 2) Trade payables / (Cost of sales / 365 days) Interest-bearing debt / Total equity Days sales outstanding Inventory turns per year Days payable outstanding Debt to equity * Comparable revenue excludes changes in revenue attributable to foreign exchange rates and any acquisitions or divestments.

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