AMBU A/S

Address: Baltorpbakken 13, DK-2750 Ballerup
Registration no.: 63644919

Reporting Period: 2021-10-01 to 2022-09-30

Previous Reporting Period: 2020-10-01 to 2021-09-30

Wizard Version: 1.1.1150.7, by EasyX Aps. www.easyx.eu

Revisionspåtegning

Grundlag for konklusion

Konklusion

Consolidated Member Identifiers: 5299008W2A69WX355710

Time Intervals:
* 2021-10-01 to 2022-09-30
* 2020-10-01 to 2021-09-30
* 2022-09-30
* 2021-09-30
* 2020-09-30

Financial Item Identifiers:
* ifrs-full:IssuedCapitalMember
* ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember
* ifrs-full:RetainedEarningsMember
* ambu:ProposedDividendsMember

ANNUAL REPORT 2021/22

Ambu A/S, Baltorpbakken 13, DK-2750 Ballerup
Registration no. 63644919

ANNUAL REPORT 2021/22

MANAGEMENT REVIEW

INTRODUCTION
- Financial highlights
- Ambu at a glance
- Highlights of the year
- Letter from the CEO
- Letter from the Chairman
OUR BUSINESS
- Our purpose
- How we create value
- Strategy
- Product portfolio
- Outlook 2022/23
- Sustainability
FINANCIAL RESULTS
- Business performance
- Primary statements: Income, balance sheet, cash flow and equity
- Follow-up on announced outlook
- Q4 2021/22 results
GOVERNANCE
- Risk management
- Corporate governance
- Board of Directors and Executive Management
- Remuneration
- Shareholder information
- Company announcements 2021/22
FINANCIAL STATEMENTS
- CONSOLIDATED FINANCIAL STATEMENTS
  - Income statement
  - Balance sheet
  - Cash flow statement
  - Equity statement
  - Notes on the consolidated financial statements
- FINANCIAL STATEMENTS – PARENT COMPANY
  - Income statement
  - Balance sheet
  - Cash flow statement
  - Equity statement
  - Notes on the financial statements
MANAGEMENT STATEMENT AND AUDITOR’S REPORT
- Management statement
- Independent auditor’s report

Our statutory reporting for 2021/22 includes four reports: Annual Report, Sustainability Report, Remuneration Report and Corporate Governance Report.

Corporate Governance 2021/22
Sustainability Report 2021/22
Remuneration Report 2021/22

2 INTRODUCTION

Financial highlights
Ambu at a glance
Highlights of the year
Letter from the CEO
Letter from the Chairman

3 FINANCIAL HIGHLIGHTS

(DKK m)

	2021/22	2020/21	2019/20	2018/19	2017/18
Income statement
Revenue	4,444	4,013	3,567	2,820	2,606
Gross margin, %	57.5	62.4	62.0	58.0	59.4
EBITDA before special items	423	556	609	589	678
Depreciation, amortisation and impairment	-301	-216	-181	-109	-115
EBIT before special items	122	340	428	480	563
Special items	-148	0	0	-174	0
EBIT	-26	340	428	306	563
EBITDA	325	556	609	415	678
Net financials	135	-32	-106	107	-98
Profit before tax	109	308	322	415	580
Net profit for the year	93	43	37	37	47

Balance sheet
Assets	7,215	5,740	5,581	4,558	4,234
Net working capital	1,022	789	581	535	535
Equity	4,261	3,952	2,372	2,182	1,882
Net interest-bearing debt	1,658	759	1,346	1,035	1,245
Invested capital	5,919	4,926	3,718	3,217	3,127

Cash flow
Cash flow from operating activities	95	328	295	533	554
Cash flow from investing activities before acquisitions	-553	-573	-428	-259	-233
Investments in property, plant and equipment	-490	-299	-213	-104	-129
Free cash flow before acquisitions	-458	-245	-133	274	321
Acquisitions of enterprises and technology	-5	-301	-2	-2	-928

Cash flow from operating activities, % of revenue	2	8	8	19	21
Investments, % of revenue	-12	-6	-12	-4	-6
Free cash flow before acquisitions, % of revenue	-10	-6	-4	8	12

Key figures and ratios
Organic growth, %	4	16	26	4	15
OPEX ratio, %	55	54	50	41	38
EBITDA margin before special items, %	9.5	13.9	17.1	20.9	26.0
EBIT margin before special items, %	2.7	8.5	12.0	17.0	21.6
EBIT margin, %	-0.6	8.5	12.0	10.9	21.6
EBITDA margin, %	7.3	13.9	17.1	14.7	26.0
Tax rate, %	15	20	25	23	28
Return on equity, %	2	1	2	2	3
NIBD/EBITDA before special items	3.9	1.4	2.2	1.8	1.8
Equity ratio, %	59	69	48	48	44
Net working capital, % of revenue	23	20	16	14	21
Return on invested capital (ROIC), %	2	6	9	15	17
Average number of employees	4,849	4,437	3,617	2,957	2,712

Share-related ratios
Market price per share, DKK	66	190	180	114	154
Earnings per share (EPS) (DKK)	0.37	0.98	0.98	1.30	1.39
Diluted earnings per share (EPS-D) (DKK)	0.37	0.97	1.17	1.28	1.36
Cash flow per share	-1.5	1.3	1.1	2.2	2.4
Equity value per share	17.0	12.4	9.0	9.0	7.0
Price/equity value	4.0	15.3	20.0	12.7	22.0
Dividend per share	0.00	0.29	0.29	0.38	0.40
Pay-out ratio, %	0	178	194	184	111
P/E ratio	178.4	194.0	183.7	87.7	111.4

4 AMBU AT A GLANCE

FINANCIAL HIGHLIGHTS 2021/22

Organic growth: 4% (Versus 16% last year)
Revenue: DKK 4,444m (DKK 431m up from last year)
Gross margin: 57.5% (-4.9 percentage points)
EBIT before special items: DKK 122m (64% down from last year)
EBIT margin before special items: 2.7% (-5.8 percentage points)
Free cash flow: DKK -458m (DKK -213m down from last year)

REVENUE SHARE BY GEOGRAPHY

Europe: 41%
North America: 48%
Rest of World: 11%

REVENUE BY BUSINESS AREA

Visualization: 52%
- Single-use endoscopes
- Displaying & processor units
- Video laryngoscopes
- Airway tubes with integrated camera
Patient Monitoring & Diagnostics: 23%
- Cardiology electrodes
- Neurology electrodes
- Training manikins
- Neck collars
Anaesthesia: 25%
- Resuscitators
- Laryngeal masks
- Anaesthesia masks
- Breathing circuits

COMPANY

Ambu employs approximately 4,500 people across the world, in more than 20 countries, and our solutions are available in 90+ markets.
Ambu is a medical device company founded in 1937 by Holger Hesse to save lives and improve patient care. We develop solutions for hospitals, clinics and rescue services.
Ambu has innovation centres in Denmark, Germany, China, Malaysia and the USA, as well as production facilities in China, Malaysia, the USA and Mexico.

5 HIGHLIGHTS OF THE YEAR

A new product version of Ambu’s single-use duodenoscope, Ambu® aScope™ Duodeno 1.5, is launched.
Ambu® aScope™ RhinoLaryngo expands the addressable market by supporting Fibreoptic Endoscopic Evaluation of Swallowing (FEES) procedures.
Ambu’s first single-use gastroscope solution, Ambu® aScope™ Gastro and Ambu® aBox™ 2, is launched.
New Executive Management in place – CEO Britt Meelby Jensen and CFO Thomas Frederik Schmidt.
Ambu launches its fifth-generation single-use bronchoscope solution, Ambu® aScope™ 5 Broncho and Ambu® aBox™ 2.
Ambu achieves an AA rating from MSCI as an industry leader in ESG – the highest rating among peers.
719,000 patients diagnosed or treated with Ambu’s cystoscopes and ENT endoscopes.
First products shipped to customers in the USA from our new manufacturing plant in Mexico.
Ambu reaches milestone of more than 1 billion electrodes sold from our combined neurology and cardiology electrode portfolio.

7 LETTER FROM THE CEO

2021/22 was a year of new winds for Ambu. Our teams accomplished many great successes, while also readily adapting to new uncertainties. During macroeconomic headwinds, a change in executive management and global restructuring efforts, we pushed on to bring new innovative medical devices to the hands of our customers. As we end the year, we are standing strong and focused, with a promising future ahead of sustainable growth and improved profitability.

BRITT MEELBY JENSEN
Chief Executive Officer

I am excited to have joined Ambu as Chief Executive Officer.# The company represents a great potential to further advance healthcare, rethinking solutions together with healthcare professionals, while building on an 85-year-old legacy of saving lives and improving patient care. Ambu is uniquely innovative. In Anae- sthesia and Patient Monitoring & Diagnostics, we have a strong brand of high-quality products and impactful customer value. 15 years ago, we reinvented the field of endoscopy with the first single-use endoscopy solution, and we remain world-leading in this rapidly growing market. Gastro and Ambu® aBox™ 2 – entering a new gastrointestinal area. Feedback from custo- mers is very encouraging, and we are excited about the potential to gradually expand in this large market. The strong product performance, the ability to improve customers’ workflow and economics, as well as safety, have been key drivers of our successful entry into new thera- peutic areas. Our Ambu® aScope™ 4 Cysto is a great example of that within urology. We launched the solution in 2019/20, and we continue to see rapid growth. 2021/22 was also the year we strengthened and expanded our manufacturing footprint. The opening of our new factory in Mexico increases our flexibility and reliability to supply customers in our largest market, North America, setting Ambu up for future growth.

GREAT SUCCESSES

We made strong progress and reached im- portant milestones this year. Our accelerated investments into innovation led to quality and functionality improvements, with new solutions that expand the customer reach and potential in new and existing segments. We launched our fifth-generation single-use bronchoscope solu- tion – Ambu® aScope™ 5 Broncho and Ambu® aBox™ 2. It is considered the most superior endoscopy solution by pulmonologists on meaningful parameters, and it is the first and only single-use endoscope that meets the requirements in the bronchoscopy suite, where the most advanced pulmonology procedures are performed. Likewise, we launched our new gastroscope solution – the Ambu® aScope™

The strong product perfor- mance, the ability to improve customers’ workflow and economics, as well as safety, have been key drivers of our successful entry into new therapeutic areas “ 8 for how we best create value for our customers and shareholders. It is a course of zooming in on the key value drivers across solutions, geographies and customer segments. We have learned a lot about customer needs and how to successfully bring single-use endoscopy solu- tions to the market, and we prioritise to engage with customers in high-value markets ourselves – and through distributors in others. Our continuous innovation and improvements are driven by profound insights into customer needs and market conditions. We zoom in on the environment, developing sustainable pro- ducts and minimising environmental impact from emission and waste. And finally, we zoom in on our people, promoting a diverse and inclu- sive culture of strong engagement. We will take advantage of our size, being flexible to re- arrange resources in line with customer needs and market opportunities in the current environ- ment marked by increased macroeconomic uncertainties.

TURNING POINT

While we had much to celebrate at Ambu, the year also came with its challenges. Going into the year, which was driven by significant macro- economic uncertainty, we had set high growth expectations. However, we did not meet them. We were too optimistic in terms of speed of launch into new segments, and we did not accurately estimate the post-Covid 19 situation. At the same time, we had increased invest- ments across too many areas simultaneously. As a consequence, we made the decision to strengthen our focus and align our business to the market situation, and we initiated a global restructuring program expected to result in an annualised cash flow impact of DKK 250m from the financial year 2022/23. While maintaining a strong focus on high-impact projects, invest- ments in innovation were scaled down to indu- stry benchmarks. Our commercial organisation was resized, while still ensuring our ability to provide first-class customer service. These changes marked a turning point towards future solid growth and improved profitability.

ADVANCING OUR FOUNDATION

Today, we have reduced the number of deve- lopment projects at Ambu. Within endoscopy solutions, our eyes are set on the biggest value drivers in the four major endoscopy segments – pulmonology, urology, ear-nose-throat (ENT) and gastrointestinal (GI). We have strong customer relationships and insights, from which we will continue to rethink solutions that save lives and improve patient care. We have identified opportunities to improve our execution, to set our people up for success and, above all, to strengthen the value we bring to our customers. Ambu operates in a market with attractive growth potentials, and as a first- mover and leader, we are uniquely positioned to make a tangible difference for healthcare professionals and hospital systems. The value proposition of improved workflow, attractive economics and sterile solutions that enhance patient safety resonate strongly with an increasing number of hospitals. As the market continues to grow rapidly, we have no doubt that we will keep expanding our leading position in single-use endoscopy. For our employees, who represent the most important asset at Ambu, we are pursuing opportunities to better set them up for success. Despite this year’s challenging conditions, they have made an extraordinary effort, showing resilience, tenacity and passion, for which they deserve much praise. We prioritise to make Ambu a preferred employer, giving our people opportunities to develop, advance and thrive. As the market continues to grow rapidly, we have no doubt that we As we look ahead, we will keep pushing forward with Ambu’s transformation. We will further strengthen our foundation and execution, as we are committed to delivering sustainable and profitable growth in the years to come. will keep expanding our leading position in single-use endoscopy “ I look forward to delivering on this ambition together with my great colleagues around the world. There is much potential to unlock as we deliver on our strategy – for the direct benefit of our employees, customers and shareholders.

STRONG GROWTH PROSPECTS

Our path towards reaching new potentials within single-use endoscopy is set. We have finetuned our strategy, setting the plan of action 9

LETTER FROM THE CHAIRMAN

As the market leader within single-use endo- scopy, Ambu is a strong company with a unique position. Our products and solutions are available in close to 100 countries, impacting over 100 million patients. In the past decade, we have created a rapidly growing endoscopy business, which today represents more than half of our total revenue. with extensive finance and management ex- perience from more than 20 years in the Roche Group. Britt and Thomas were fast to bring Ambu’s Executive Leadership Team together to initiate a global restructuring program and turn- around of the company towards sustainable and profitable growth.

ACTIONS TO IMPROVE PERFORMANCE

Ambu’s success is dependent on setting the right strategy and executing well. We have had a lot of successes and a lot of learnings in recent years, which is integrated into Ambu’s new strategy. An unwavering commitment to zoom in on our endoscopy business, as well as our ability to adapt fast to changing market con- ditions and opportunities, is imperative. Above all, we are committed to running a sustainable and profitable business. In doing so, we must build trust, with all stakeholders, by delivering on the commitments we make. This is an impressive trajectory, with many victories along the way. We are a much larger and stronger company than a few years ago. This comes with different requirements for how we work and execute. And during 2021/22, our execution has not been without its challenges.

FALLING SHORT OF ASPIRATIONS

During the past years, Ambu’s strategic focus has been centred on accelerating investments in our innovation engine and commercial orga- nisations. It was built on an assumption that the market developed rapidly, and the purpose was clear: Expand our single-use endoscopy leadership position as the market expands. Consequently, we entered the gastrointestinal segment with our single-use duodenoscope, the Ambu® aScope™ Duodeno. Our aim was to address the clinical needs of the complex ERCP procedures. Yet, our expectations were not fulfilled. Physicians were reluctant to con- vert from reusable to single-use endoscopes, as the product performance did not fulfil the needs of all customers. As a result, we adjusted our guidance several times, which undoubtedly took a toll on our credibility as a company. We did not adjust our execution and investment levels in time, leading to an unsatisfactory cash flow situation. Ultimately, this called for imme- diate action, and the Board decided to change the Executive Management. As we take action to improve our performance, we will also accelerate our efforts and activities within ESG and sustainability. As a global supplier of single-use medical devices, we feel a responsibility to prioritise sustainable prac- tices and targets. This topic resonates strongly with our customers, employees and share- holders, and in the years to come, this agenda will be a key focus area.

THANK YOU

On behalf of the Board, I want to extend my thanks to the Ambu employees. Their high le- vels of teamwork, capabilities and engagement are driving our success. They are the ones buil- ding impactful relationships with customers, tapping into their expertise and translating this to new innovative medical devices that improve workflow and the lives of patients. Their conti- nued commitment will be instrumental in driving our strategic ambition to secure sustainable and profitable growth.# NEW LEADERSHIP IN PLACE

At the end of May 2022, Britt Meelby Jensen joined Ambu as Chief Executive Officer. Britt is an experienced leader, with a proven track record of delivering transformational business results and creating shareholder value within the healthcare industry. In line with the Scandinavian corporate governance principles, Britt stepped down from the Ambu Board, where she had served since December 2019. Lastly, I would like to thank our shareholders for the ongoing support during a challenging year. I can assure all that the Board remains strongly committed to creating shareholder value.

JØRGEN JENSEN
Chairman of the Board

On 1 June 2022, Thomas Frederik Schmidt joined as Chief Financial Officer, and he comes

OUR BUSINESS

Our purpose
How we create value
Strategy
Product portfolio
Outlook 2022/2023
Sustainability

OUR PURPOSE

Engineer Holger Hesse founded Ambu in 1937 with a dream to develop products that save lives. This dream became a reality when he met the anaesthetist, Henning Ruben, who was seeking a solution to the lack of oxygen supplies at his hospital caused by a transportation strike. Together, the engineer and the doctor invented the world’s first self-inflating manual resuscitator, the Ambu Bag, which still saves lives today.

TOGETHER

We bring people together and collaborate across areas of expertise. We listen to our customers and respond to their needs. Holger Hesse’s eagerness to bring people together to rethink and find better solutions has been a cornerstone of Ambu ever since. Like when one of our colleagues repeatedly observed doctors struggling daily to find an available endoscope – sometimes in life-threatening situations. He gathered a team of Ambu colleagues and doctors to rethink a solution. The result was the world’s first single-use endoscope, the Ambu® aScope™ Broncho.

WE RETHINK

We challenge the conventions by thinking of new ways to solve issues. Innovation and disruption are in our DNA.

SOLUTIONS

We deliver more than products – we provide smarter, simpler solutions.

SAVE LIVES AND IMPROVE PATIENT CARE

We are here to help healthcare professionals do better for patients. This curiosity and collaborative spirit, which is needed to rethink and invent solutions that help healthcare professionals and their patients, remains the lifeblood of Ambu.

Holger Hesse, the founder of Ambu

HOW WE CREATE VALUE

Ambu is a medical device company that develops, manufactures and sells innovative solutions to hospitals, clinics and rescue services all over the world. We work in an iterative framework across innovation, production and sales and marketing, whereby we consistently engage with healthcare professionals to develop new and next-generation solutions that solve real-life medical needs.

R&D is pioneering single-use endoscopy to develop solutions that solve real-life clinical challenges in healthcare
Identifying commercial and user needs
Proof of concept and product development
Product verification and validation
Regulatory filing
Operations’ expertise and continuous optimisation efforts result in a high output of quality single-use devices at low cost
Logistical excellence
Quality assurance
Production and safety ramp-up
Regulatory approval
Sales & marketing drive the single-use transition in the market, using expertise from healthcare economists, direct sales representatives, marketing experts and clinical trainers
Controlled market release
Initial market feedback
Full commercial launch
Next-generation product development

OUR INNOVATION ENGINE

Our innovation engine is focused on rapid innovation in a modular structure, with R&D centres in Denmark, Germany, China, Malaysia, China and the USA. We focus our innovation efforts on new product development and product lifecycle management – keeping the needs of our customers front and centre. New and next-generation products are developed in a rigorous product innovation process, covering screening and scoping of projects and ending with a commercial launch. In the latter part of the development process, we review the user feedback towards the next-generation product development.

Identifying user requirements is at the core of our product innovation process, and we work closely with healthcare professionals to define the design and development of new technologies that solve their real-life clinical challenges. After working closely with our customers to implement user- and clinical feedback, we complete the product development and work with regulatory authorities to prepare for market launch. In our product development, we benefit from a modular approach by leveraging previously approved concepts and approaches. Combined with strong technology partnerships, we utilise the latest technology advancements. We conduct usability studies and clinical evaluations with a global healthcare network of customers and medical advisers to document the effectiveness of our products, ensuring that our products meet the high performance requirements of our customers.

“Our modular innovation engine enables rapid development of disruptive medical solutions for the healthcare sector”
MÅNS BARSNE
Executive Vice President, Chief Innovation Officer, Ambu

OUR HIGH-SCALE, LOW-COST MANUFACTURING

Ambu is committed to providing a strong supply of medical devices to our customers at hospitals and healthcare clinics around the world. We have four manufacturing plants in Malaysia, China, the USA and Mexico, at which we produce high-quality devices at a low cost, based on decades of expertise within optimisation processes and activities. With our latest and largest plant in Ciudad Juárez, Mexico, we have further strengthened our flexibility, proximity and supply of products to our customers in North America, Ambu’s largest market.

Regulatory approval
Production ramp-up
Quality assurance and safety
Logistical excellence

In preparation for regulatory clearance, we establish the production volume needed, including raw materials and product components from suppliers. As soon as we obtain regulatory clearance, we begin the ramp-up of product manufacturing in order to ensure a sufficient stock of products for our customers. Our products are packaged and shipped by sea, train, truck and (rarely) air freight to regional warehouses before ending at their final destination in the hands of our customers. We continuously monitor our product output to ensure that all products meet the highest product quality and safety standards before being shipped to customers around the world.

“Ambu’s manufacturing plant in Mexico strengthens our production capacity and supply of products to our customers in North America”
HENRIK ANKJÆR
Executive Vice President, Global Operations, Ambu

OUR SALES AND MARKETING ORGANISATION

Ambu is proud to have the world’s largest dedicated single-use endoscopy sales & marketing organisation, with two main goals: To expand hospitals’ access to our portfolio of single-use endoscopes and to shape our innovation roadmap. Expanding hospitals’ access to Ambu’s single-use endoscope solutions requires alignment between multiple hospital departments, such as clinical stakeholders, economic stakeholders and stakeholders related to infection prevention and risk management. Ambu takes a targeted approach for each stakeholder, which includes a dedicated clinical selling organisation, focused on doctors and nurses; corporate accounts and healthcare economics teams that are focused on demonstrating the cost-effectiveness and Ambu portfolio benefit to economic stakeholders; and evidence generation teams to increase awareness of the contamination risks of reusable endoscopes and the benefits of sterile single-use solutions. Our teams work together to drive the transition and unlock the benefits of single-use endoscopy in health systems.

Controlled market release
Initial market feedback
Full commercial launch
Next-generation product development

Ambu’s sales & marketing organisation plays an important role in shaping our innovation roadmap. During a solution’s ‘controlled market release’ phase, our teams collect initial market feedback on how our solution performs, as well as for which market segments there is the strongest fit for single-use endoscopy. This feeds directly into our approach for the upcoming full commercial launch, as well as our rapid innovation cycle for next-generation product and technology development.

“Ambu’s sales & marketing organisation is one of our most important assets globally, empowering hospital systems to unlock the benefits of our single-use endoscopy ecosystem”
BASSEL RIFAI
Executive Vice President, Chief Marketing Officer & President APAC, Ambu

Making a difference in Visualization

DISRUPTING FLEXIBLE BRONCHOSCOPY

The spark that ignited the development of the world’s first single-use bronchoscope was a near-fatal incident. During intubation, a patient’s airways presented a challenge, and the anaesthetist was in dire need of a bronchoscope. However, no bronchoscopes were available in the operation theatre, and staff scrambled to find one. As the situation grew more critical, an endoscope tower system was finally wheeled in. The intubation was successful, and the patient survived.

management and procedures undertaken to collect samples from the lungs and to clear the airways. By the launch of the third-generation bronchoscope, Ambu had developed a true bedside solution, complete with the Ambu® aView™ monitor, allowing doctors to eliminate heavy tower equipment and critical delays. Instead, they could perform the procedure immediately and with minimal footprint.# DEVELOPING BRONCHOSCOPY SOLUTIONS TOGETHER WITH HEALTHCARE PROFESSIONALS

The development journey of Ambu’s single-use bronchoscopy solution emphasises how close and consistent collaboration with healthcare professionals is key to developing new innovative solutions and next-generation products that make a real-life difference in healthcare.

2009

Ambu® aScope™ and aScope™ Monitor
The first-generation single-use bronchoscope solution was developed due to clinicians’ need for available bronchoscopes in the operating room.

2011

Ambu® aScope™ 2
Based on valuable feedback from doctors, Ambu’s second-generation bronchoscope showed improved functionality, which led to the single-use concept becoming increasingly accepted.

2013

Ambu® aScope™ 3 and Ambu® aView™
To meet the procedural needs of the intensive care unit, Ambu’s third-generation bronchoscope solution featured a new monitor, along with enhanced functionality and two different sizes of endoscopes. A larger size was further added in 2016.

2017

Ambu® aScope™ 4 Broncho
In 2017, we launched the fourth generation of our bronchoscope for use in operating rooms and intensive care units. This version was vastly improved, based on strong user input, and remains one of our most impactful innovations. Ambu’s fourth-generation solution came with vast improvements in image quality and manoeuvrability, making the solution fit for use in operating rooms and intensive care units alike. A sampling system was also introduced in 2019.

2020

Ambu® aView™ 2 Advance
Due to bronchoscopists’ need for sharp imaging and increased functionality, Ambu upgraded its displaying unit to a lightweight monitor with full-HD resolution and intuitive user design.

2022

Ambu® aScope™ 5 Broncho & Ambu® aBox™ 2
Finally, in 2022, we introduced the Ambu® aScope™ 5 Broncho HD system. This fifth-generation solution reaches beyond the operating rooms and intensive care units by addressing the complex procedures of the bronchoscopy suite. While we are still in the early stages of the global launch, the Ambu® aScope™ 5 Broncho HD has demonstrated ‘on par’ performance – in some cases, even superior – to reusable bronchoscopes. Meeting the high-complexity procedural demands of the bronchoscopy suite was accomplished with Ambu’s fifth-generation bronchoscope solution, fuelled by close collaboration with interventional pulmonologists.

It all started with an observation in the late 2000s that would come to disrupt the field of flexible bronchoscopy. Having single-use bronchoscopes available to perform intubation of difficult airways in the operating room soon proved its clinical and conceptual worth. Today, Ambu offers a strong portfolio of always available, sterile and high-performing bronchoscope solutions, covering clinical needs in operating rooms, intensive care units and bronchoscopy suites. And it all started with an observation in the late 2000s that would come to disrupt the field of flexible bronchoscopy. Over the next years, Ambu developed new generations of the bronchoscope to meet new procedural needs. The next focus area was the intensive care unit: Inspection of the lungs and of endotracheal tube placement, secretion.

STRATEGY

Ambu is a company of great potential. In the last six years, we have doubled the business, and we are leading the single-use endoscopy market – a high-growth market supported by an increased focus on patient safety, workflow and efficiency benefits and rapid technology advancements. Over the past years, we have invested in building a solid platform to grow from. We have expanded our portfolio to bring a complete offering of solutions within all four large endoscopy areas – pulmonology, urology, ear-nose-throat and gastroenterology). We have deepened our customer relations and expanded our direct commercial organisation. And we have strengthened our supply chain by expanding our capacity and proximity to customers with our new manufacturing plant in Mexico.

OUR ASPIRATION

Be the most customer-centric in our field

To meet our aspiration, we are launching our new strategy: ZOOM IN. Now is the time for Ambu to Zoom In and execute on the key value drivers to deliver strong profitable growth. However, our financial performance has been below our expectations, and we see a need to revisit our approach. To fully deliver on our promises and create strong value for our customers, employees and shareholders alike, we are committing ourselves to the aspiration of being the most customer-centric in our field. Our strategy centers on four strategic zoom areas: Zoom in on meeting true customer needs, zoom in on executing efficiently, zoom in on sustainability and zoom in on our people and culture – all together, we will ZOOM IN to deliver strong and profitable growth.

FOUR STRATEGIC ZOOM AREAS

Provide innovative solutions for true customer needs
Excel in execution across the value chain
Take leaps towards a sustainable future
Bring people together in one shared culture

To deliver strong profitable growth

PROVIDE INNOVATIVE SOLUTIONS FOR TRUE CUSTOMER NEEDS

Innovation is in our DNA and providing solutions for true customer needs has been our competitive advantage for 85 years. We have a diverse portfolio of unique solutions to health systems.
* We will launch market-leading solutions across pulmonology, ENT, urology and GI.
* We will focus our commercial organisation on highest-value customer segments and geographies.
* We will drive efficiency and speed of innovation through a modular approach.
* We will improve profitability and enhance portfolio in Anaesthesia and Patient Monitoring & Diagnostics.

EXCEL IN EXECUTION ACROSS THE VALUE CHAIN

Over the past years, we have proven the case for single-use endoscopy in the market and strengthened our leading position. This has come at increased costs, and to return to strong profitable growth, we will drive excellence in execution with a clear focus on efficiencies throughout our value chain.
* We will drive commercial best practices.
* We will improve gross margin through COGS improvements and streamlined portfolio.
* We will strengthen our operating model, balancing efficiency and autonomy.

TAKE LEAPS TOWARDS A SUSTAINABLE FUTURE

As a responsible company, in a world where sustainability is high on the agenda, we recognise our role and need to take action to ensure a sustainable future. We are ambitious on this agenda and commit to taking leaps.
* We will be committed to sustainable endoscopy through circular products and packaging.
* We will commit to operating responsibly and approaching net-zero emissions in collaboration with suppliers and other partners.

BRING PEOPLE TOGETHER IN ONE SHARED CULTURE

Ambu has a strong heritage that goes back to 1937, when Holger Hesse founded the company with the dream to invent products that save lives. Today, this DNA remains a great enabler of innovation, collaboration and progress. As we are embarking on a journey to transform Ambu, it is critical that we unlock the full power of our people and culture.
* We will foster a highly engaged, diverse and inclusive culture.
* We will build a high-performing and customer-centric organisation set up for success.
* We will attract and develop people who want to be challenged and make a difference.

LONG-TERM FINANCIAL ASPIRATION

With our new strategy, we will deliver value for our stakeholders and return to strong profitable growth. With focus and execution excellence, we aspire to deliver long-term sustainable double-digit revenue growth with continuously upward trending EBIT margins to industry levels. We believe this is achievable in a large and growing market, where we lead and expand our portfolio to increase single-use penetration. We will be able to drive scale-advantages, and we have a strong plan with a clear transformation focus.

Long-term sustainable double-digit revenue growth
Continuously upward trending EBIT margin to industry levels
Disciplined capital deployment strategy

GROWTH DRIVERS

Gradually increasing single-use penetration
Large and growing endoscopy market
Leading and expanding portfolio across four largest segments
Scale-advantages from expanding portfolio and reach
Strong execution plan with transformation focus

With our focused strategy, strong growth drivers and commitment to excelling in execution, I am confident that Ambu can deliver on our long-term financial aspirations.

“ THOMAS FREDERIK SCHMIDT
Chief Financial Officer, Ambu

PRODUCT PORTFOLIO

Ambu has been rethinking medical solutions together with healthcare professionals since 1937. Today, millions of patients and healthcare professionals worldwide rely on the efficiency, safety and performance of our single-use endoscopy, anaesthesia and patient monitoring solutions. This part of our business, which we call Visualization, has grown rapidly and now represents more than half of our overall business. The growth potential in this part of our business is our primary focus. The single-use endoscopy market continues to be created at a fast pace, driven by healthcare professionals’ urgent needs for high-performing and intuitive solutions that provide increased patient safety, tangible workflow and efficiency benefits and the latest technology advancements – and Ambu is committed to expanding our position as market leader. In the late 2000s, Ambu developed the world’s first single-use flexible bronchoscope. Since then, we have spearheaded the establishment of single-use endoscopy as a clinical practice and as a business. In recent years, we have expanded from pulmonology into new endoscopy segments: ENT (ear, nose and throat), urology and GI (gastroenterology).# In close collaboration with health- care professionals, we bring new and next- generation single-use endoscopy solutions to the market – with an ever-present focus on meeting the different needs of clinicians, patients and hospital systems. Concurrently, our Anaesthesia and Patient Monitoring & Diagnostics businesses are steady growth engines, ensuring that Ambu is well-positioned to continue to provide high- quality solutions to healthcare professionals and patients.

PATIENT VISUALIZATION

ANAESTHESIA

MONITORING & DIAGNOSTICS

Endoscopes
Displaying units
Resuscitators
Laryngeal masks
Anaesthesia masks
Breathing circuits
Cardiology electrodes
Neurology electrodes
Training manikins
Neck collars
Video laryngoscopes
Airway tubes with integrated camera

22 VISUALIZATION DRIVERS AND TRENDS OF SINGLE-USE ENDOSCOPY

For several decades, endoscopy has been one of the most important areas of clinical and technological advancement in healthcare. Today’s endoscopes are typically long, thin, flexible tubes with a camera at the end that transmits its image to a display monitor, and with a channel down the centre through which doctors can pass instruments into the body. This system allows doctors to perform an increasing range of diagnostic procedures, such as examining internal organs to detect lung or colon cancer, and therapeutic procedures, such as removing kidney stones or treating acid reflux.

Approximately 100 million endoscopy procedures are performed every year across Ambu’s major markets. This number continues to grow rapidly, driven by patient volume growth, increased access to healthcare and the clinical and technology advances that enable the shift from more invasive procedures towards endoscopy.

Within endoscopy, approximately 98% of procedures are performed using reusable endoscope systems. With the transition accelerating over the last three years, ~2% have transitioned to single-use endoscopes, indicating a comprehensive future potential.

Three overall trends support the future expansion of the single-use endoscopy market. We see increasing evidence supporting each of these drivers, and in combination, they continue to support the transition from reusable to single-use.

INCREASED FOCUS ON PATIENT SAFETY
WORKFLOW AND EFFICIENCY BENEFITS
RAPID TECHNOLOGY ADVANCEMENTS

23 INCREASED FOCUS ON PATIENT SAFETY

Awareness of the risk of “cross-contamination” – that reusable endoscopes can carry harmful organisms from one patient to another – is growing. The U.S. Food and Drug Administration (FDA) has increased focus on this area with regard to reusable endoscopy, issuing safety communications and highlighting risks across pulmonology, urology, ENT and GI. Furthermore, over the past year, there has been an increase in product recalls and safety notices for reusable endoscopes in the areas of urology, ENT and GI. Industry bodies, including the Association for the Advancement of Medical Instrumentation (AAMI), have classified pulmonology, urology and GI endoscopes as ‘high-risk’ – and have put more stringent cleaning guidelines in place, resulting in higher costs and complexity within reusable endoscopy. Since single-use endoscopes are sterile and eliminate the need for reprocessing, this boosts the attractiveness of single-use endoscopes for healthcare systems.

WORKFLOW AND EFFICIENCY BENEFITS

Single-use endoscope systems are “always available” and do not require a complex reprocessing infrastructure, which significantly reduces labour, capital intensity and operational complexity. Moreover, health economics studies have shown that for many healthcare systems, single-use endoscopes can result in a financial benefit compared to reusable endoscopes. In contrast, reusable systems are both capital- and labour-intensive. For hospitals, these systems not only entail a big expense; they also require increasingly complex reprocessing, including drying and storage equipment, as well as trained staff. Furthermore, delays in reprocessing, equipment down-time, breaking of endoscopes and staff shortages can all result in procedure delays and other inefficiencies and impacts on patient care.

RAPID TECHNOLOGY ADVANCEMENTS

While the earliest generations of single-use endoscopes proved their clinical worth in terms of cross-contamination, availability and workflow, a performance gap compared to reusable endoscopes limited the pace of adoption. In recent years, technologies have advanced rapidly, including sensors, image enhancement software and monitor processing power, so that the image resolution and clinical performance of single-use endoscopy products are improving considerably. Moreover, with single-use endoscopes, there is greater opportunity for product iterations at a more rapid pace compared to reusable endoscopes. As a result, some of the single-use endoscopes being launched today have demonstrated performance on par with, or even superior to, reusable endoscopes.

24 PRESENCE IN ALL FOUR MAJOR ENDOSCOPY SEGMENTS

The endoscopy market includes four main areas: ENT (ear, nose and throat), pulmonology, gastro- enterology (or gastrointestinal/GI) and urology. Ambu created the single-use market with the first flexible single-use bronchoscope in 2009 – and over the past three years has expanded into all four segments, with entry into ENT in 2018/19, urology in 2019/20 and GI in 2020/21.

PULMONOLOGY

EAR, NOSE AND THROAT (ENT)

UROLOGY

GASTRO- ENTEROLOGY (GI)

Ear, nose and throat (ENT)
- Ambu® aScope™ 4 RhinoLaryngo
Pulmonology
- Ambu® aScope™ 4 Broncho
- Ambu® aScope™ 5 Broncho HD
- Ambu® VivaSight™ 2*
- King Vision® aBlade™
Gastroenterology (GI)
- Ambu® aScope™ Gastro
- Ambu® aScope™ Duodeno 1.5
Urology
- Ambu® aScope™ 4 Cysto

* Ambu® VivaSight™ 2 was voluntarily recalled in May 2022 and will be re-launched in the future.

25 A POWERFUL ENDOSCOPY ECOSYSTEM - DISPLAY AND PROCESSING UNITS

Our display and processing units – the Ambu® aView™ 2 Advance and the Ambu® aBox™ 2 – represent the backbone of Ambu’s single-use endoscopy ecosystem. Both units are built on the same software platform and are designed to work with our single-use endo- scopes. This means that healthcare professionals can take advantage of the same connectivity and interface across different areas of the hospital, while also being able to transmit electronic images, videos and reports to the hospitals’ archiving and communication systems.

Furthermore, the software platform of both units is continuously updated to match the latest technology advancements, providing physicians with a fast track to top-of-the-line image quality, processing power and new features.

The Ambu® aBox™ 2 supports our single- use gastroscope and our fifth-generation bronchoscope as well as future Ambu endoscopes. The Ambu® aView™ 2 Advance supports our single-use endoscope portfolio across broncho- scopy, ENT and urology as well as future Ambu endoscopes. For our duodenoscopy platform, Ambu® aScope™ Duodeno 1.5 connects to a separate display and processing unit, the Ambu® aBox™ Duodeno. Going forward, our future duodenoscopy pipeline, including Ambu® aScope™ Duodeno 2.0, will connect to our Ambu® aBox™ ecosystem.

26 ENDOSCOPE INNOVATION PIPELINE

PULMONOLOGY

Strengthening our market-leading position with:
* Smaller size of Ambu® aScope™ 5 Broncho HD
* Upcoming video laryngoscope 2.0
* Re-launch of Ambu® VivaSight™ 2

EAR, NOSE & THROAT (ENT)

Growing our single-use potential with:
* Development of high-resolution ENT endoscope

UROLOGY

Further expanding our urology footprint with:
* Expansion into ureteroscopy with Ambu® aScope™ Uretero
* Development of Ambu® aScope™ 5 Cysto HD

GASTROENTEROLOGY (GI)

High single-use potential to be captured with:
* Further development of Ambu® aScope™ Duodeno 2.0
* Expansion into colonoscopy
* Expansion into cholangioscopy

DISPLAY AND PROCESSING UNITS

Hardware & software upgrades to:
* Support current and future endoscopes
* Strengthen integration with hospital systems
* Add new performance- and value-adding features

27 POTENTIAL IN THE ENDOSCOPY MARKET

Across the four major endoscopy segments – pulmonology, ENT (ear, nose and throat), urology and GI (gastroenterology), approxi- mately 100 million procedures are performed annually. We see significant potential in this 100-million-procedure market gradually ope- ning up for single-use endoscopy solutions in the future, as continuous improvements of new single-use endoscopy solutions will expand Ambu’s addressable market through enhanced features, quality and performance.

Today, Ambu is strongly positioned within the single-use endoscopy market as the market leader, with approximately 1.7 million proce- dures annually. And we are excited about our potential to further advance our impact in the years to come, ultimately making a bigger difference for healthcare professionals and patients around the world.

Total endoscopy market, ~100 million procedures*
Addressable with current portfolio and active pipeline
Current single-use market
Ambu market share, ~1.7 million procedures

* Source: DRG, Definitive Healthcare, iData & internal market research

28 PULMONOLOGY

Over half of all bronchoscopies performed every year take place in operating rooms (OR) and intensive care units (ICU), where doctors use bronchoscopes to perform basic procedures, such as intubating a patient with a difficult airway or removing secretions from the lungs. In these sites of care, endoscopes are not routinely used, and, when needed, reusable endoscope systems may need to be transported from other departments. Single-use endoscope systems have the advantage of immediate endoscope availability, convenience and sterility. These advantages have driven rapid adoption in the OR and ICU. Since 2009, Ambu has been the market leader within pulmonology, and today, our fourth-generation bronchoscope treats more patients than any other single-use endoscope in the world.# The remaining procedures take place in the bronchoscopy suite, where doctors perform more advanced procedures, including lung cancer diagnosis and treatment, primarily using reusable endoscope systems. With the recent launch of our fifth-generation single-use bronchoscope, Ambu® aScope™ 5 Broncho HD, we introduced advanced technology upgrades, qualifying ourselves for the complex procedures of the bronchoscopy suite. Compared to Ambu® aScope™ 4 Broncho, the price of Ambu® aScope™ 5 Broncho HD is expected to represent a premium of 30-50%. Going forward, we will strengthen our position with the launches of smaller sizes of Ambu® aScope™ 5 Broncho HD, as well as our upcoming video laryngoscope 2.0 and the re-launch of Ambu® VivaSight™ 2. These are all products that are revolving around a unique ecosystem, the Ambu® aView™ 2 Advance and Ambu® aBox™ 2, Ambu’s highly developed data processing and monitor units.

UROLOGY

The urology market includes lower urology – cystoscopies or examinations of the bladder – as well as upper urology – ureteroscopies or examinations of the kidneys. Cystoscopies are typically performed in a hospital outpatient setting, where workflow and convenience are important. Ambu created the single-use cystoscope market with the launch of our Ambu® aScope™ 4 Cysto in 2019/20. It proved to be our most successful launch ever. Going forward, we will continue to expand the cystoscopy single-use market with the launch of a next-generation single-use cystoscope, the Ambu® aScope™ 5 HD. Ureteroscopy is typically performed in an operating room, and the majority of procedures are for doctors to manage or remove kidney stones. Ureteroscopes are among the longest and thinnest, and therefore most fragile, of endoscopes, and stone removal procedures typically result in degradation of reusable ureteroscopes. As a result, repair costs and cost-per-use of reusable ureteroscopes are high compared to other endoscope areas. This has driven the transition to single-use ureteroscopes, which is today a well-established and rapidly growing market. Ambu will enter this market with the upcoming launch of a single-use ureteroscope.

SUPPORTING CUSTOMERS

Ambu® aScope™ 4 Cysto

Dr. Seth Bechis, an Associate Professor of urology in San Diego, is able to perform more bladder cancer surveillances with the Ambu® aScope™ 4 Cysto. The single-use cystoscope requires fewer resources, enables faster set up and removes time-consuming reprocessing. “In the clinic setting, you don’t require access to a sterile processor, which also frees up staff that otherwise would be spending time processing and turning over the scopes,” Dr. Bechis said and continued: “We’ve been able to shorten our appointment times from one-hour procedure slots to only 15 minutes, hereby enabling us to see more patients and provide more procedures in a day.” Dr. Bechis emphasises the Ambu® aScope™ 4 Cysto’s imaging, distal tip and deflection and notes that with single-use scopes, the same reliable performance can be expected each time a new one is opened. Patients also appreciate knowing that the cystoscope used in their exam has not been used in a previous patient, he said, “especially right now when concerns about infection rates are higher.” “It’s really enabled us to thrive and perform better services for our patients,” he said. “Not only can we perform cystoscopy faster, but the staff also really enjoys working with it due to its ease.”

ENT

Within the ENT segment, doctors perform ENT endoscopies (rhinolaryngoscopies) such as examining a patient’s nose or throat to assess breathing problems or swallowing difficulties. The majority of these procedures take place in hospital inpatient and outpatient settings, where workflow and convenience are important. In 2018/19, Ambu launched our first single-use rhinolaryngoscope, quickly becoming the largest player within the ENT segment. This year, we expanded our addressable market by supporting FEES procedures (Fibreoptic Endoscopic Evaluation of Swallowing). Going forward, we will continue to expand the ENT single-use potential with the preparation of a next-generation single-use rhinolaryngoscope.

GASTROENTEROLOGY

The gastrointestinal segment is the largest endoscopy market – a market that extends across biliary (duodenoscopy and cholangioscopy), upper GI (gastroscopy) and lower GI (colonoscopy). Reusable duodenoscope systems have come under increasing scrutiny, because these complex endoscopes have difficult-to-clean components, which have resulted in a risk of cross-contamination from patient to patient. Because of this, a sterile single-use duodenoscope can play an important role in improving patient care. Ambu launched Ambu® aScope™ Duodeno 1.5 earlier this year, during which we faced challenges with slower-than-expected adoption due to the high complexity of the endoscope and the demanding performance requirements of this customer group. We are pushing forward with further development of Ambu® aScope™ Duodeno 2.0, as we remain committed to this high-potential market. Cholangioscopy is a segment that has already transitioned from reusable to single-use systems. Similar to ureteroscopy, these endoscopes are long, thin and fragile, resulting in high breakage and repair rates and cost-per-use of reusable systems. For this reason, single-use alternatives are attractive. Ambu will enter this market with the future launch of a single-use cholangioscope. The majority of gastroscopy procedures are performed in the GI endoscopy suite to diagnose and treat conditions of the oesophagus, stomach and duodenum, while a small fraction of procedures are also performed in other care sites, including the operating room, intensive care unit and emergency room. For these other sites, reusable endoscope systems may not be readily available, and workflow and convenience are important factors. Single-use endoscope systems have the advantage of immediate endoscope availability and convenience. This year, we launched our first single-use gastroscope – Ambu® aScope™ Gastro – which continues to receive positive clinical feedback. We are excited to continue our commercial progress as we move forward. The majority of colonoscopy procedures are performed in the GI endoscopy suite, and the most common procedure is colon cancer screening. Like gastroscopy, a small fraction of procedures are performed at other care sites, where the convenience of single-use could be an important factor. Ambu will enter this market with the future launch of a single-use colonoscope.

SUPPORTING CUSTOMERS

Ambu® aScope™ Gastro

Dr. Morris Washington, the Director of Bariatric Surgery at East Cooper Medical Center in Mount Pleasant, South Carolina, uses the Ambu® aScope™ Gastro to perform upper endoscopies: “It’s really increased my efficiency. It’s made my staff happier, and I don’t have to worry about infectious transmission.” Dr. Washington estimates he performs between 10 and 15 upper endoscopies in a single day. When using a reusable gastroscope, more support staff is needed. Typically, the surgeon will have a technician alongside to help with the procedure, a nurse responsible for charting and an additional staffer to reprocess scopes. Now, Dr. Washington said, he performs the procedure with one technician and one nurse. This means freeing up another technician to help with procedures elsewhere in the operating room, “which is a really big benefit,” he said. Dr. Washington called reprocessing regulations “very rigorous”. His smaller department relies on a single reprocessing system — and if that fails, the entire organisation finds itself in a jam. “I knew that this would allow us to get through the day for sure,” he said of adopting single-use gastroscopes. In his opinion, single-use endoscopes are better than reusables, because they are lighter and have superior retroflexion. He predicts reusable endoscopes will eventually become a thing of the past.

ANAESTHESIA

Ambu’s Anaesthesia product portfolio consists of a wide range of high-quality products, primarily intended to facilitate the ventilation of patients, including laryngeal masks, resuscitators, face masks and breathing circuits.

LARYNGEAL MASKS

Ambu’s range of laryngeal masks are used to secure a patient’s airways, allowing for the lungs to be properly ventilated. Laryngeal masks are intended for use in both routine anaesthesia and emergency medicine – and are often used in conjunction with a resuscitator to ventilate a patient.

RESUSCITATORS

Ambu’s resuscitators feature both single-use and reusable products. They have a wide range of clinical applications, which include use in preoxygenation, short-term non-emergency ventilation and resuscitation. As such, they are suitable for use across all departments within the hospital as well as in pre-hospital medicine.

BREATHING CIRCUITS

Ambu’s breathing circuits facilitate the provision of medical gases to maintain anaesthesia and oxygenate the patient.

FACE MASKS

Ambu’s product range of face masks can be used to maintain anaesthesia as well as provide facemask ventilation. Facemask ventilation is a key airway management skill that functions as both a primary technique and a rescue technique for oxygenation. As such, they deliver a precise mixture of oxygen and anaesthetic gases from the anaesthesia machine to the patient and remove carbon dioxide.

Making a difference in Anaesthesia

66 YEARS OF LIFE-SAVING INNOVATION

Back in 1956, a polio epidemic was sweeping through Denmark, leaving patients requiring manual ventilation around the clock. The ventilation devices available at the time required an oxygen source, but due to a drivers’ strike, oxygen deliveries were few and far between. efficacious use in all environments and clinical scenarios where they are required.Ambu’s resuscitators and laryngeal masks help over 10 million patients every year This led Ambu founder, Holger Hesse, and Dr Henning Ruben to develop the “Ambu bag”, a self-inflating ventilation device that enabled medical staff to ventilate patients without the need for a constant supply of oxygen. Our range of resuscitators continue to be used for a variety of purposes, including preoxy- genation, non-emergency ventilation and resuscitation. They are used throughout hospi- tals and emergency services, on all patients, including the most critically ill, often for life- saving treatment. Today, 66 years later, the original “Ambu bag” has been transformed into a range of modern resuscitators that continue to offer medical staff an effective manual ventilation solution. With a history in the resuscitator market stretch- ing back over 65 years, Ambu’s resuscitators have been used to treat millions of patients and save lives all over the world. In fact, every year, our resuscitators and laryngeal masks help over 10 million patients to breathe. Our current resuscitators feature an innovative single-shutter valve system to facilitate the provision of reliable ventilation to patients. They are designed to be highly portable, ergonomic and easy to use, ensuring quick, efficient and

PATIENT MONITORING & DIAGNOSTICS (PMD)

Ambu’s PMD range mainly covers electrodes that are used for measuring electrical signals to monitor and diagnose patients. In cardiology, we offer electrodes that are used to monitor and diagnose patients’ hearts, while our neurology electrodes are used to measure electrical signals in the brain and from the muscles and nerves. A smaller share of PMD comprise neck collars and manikins, which are used to train medical personnel in basic and advanced life support.

CARDIOLOGY

Ambu’s cardiology elec- trodes are used for monitoring and diagno- sis of the patient’s heart condition.

Ambu’s cardiology electrodes are used across the hospital, including cardiology departments, intensive care units and operating rooms, as well as in the pre-hospital setting.

NEUROLOGY

Ambu’s neurology elec- trodes measure elec- trical signals of the brain and body. Our single-patient use EEG cup electrodes are used to measure electrical signals in the brain, while our EMG needles are used for measuring and recording electrical signals from the muscles and nerves, as well as for treatment of medical muscular conditions. In addition, Ambu has a complete range of surface electrodes for applications, such as evoked potentials, polysomnography, intraoperative monitoring and nerve conduction studies. Our portfolio covers a wide range of electrodes tailored for different applications, ranging from resting and short-term monitoring to stress testing and long-term monitoring.

Making a difference in Patient Monitoring & Diagnostics

IMPACTING THE LIVES OF 100+ MILLION PATIENTS

In 1976, the first Ambu® BlueSensor™ ECG electrode was introduced to the market. It was the beginning of a long journey of continuously optimising and developing products for cardio- logy and neurology applications. Based on insights from close collaborations with users all over the world, today Ambu offers an extensive and varied electrode portfolio. All of our electrodes are for single-patient use, come in a wide range of shapes and sizes and feature high-quality sensor material for moni- toring and diagnostic purposes. They are just as easy to use in the busy neurology unit of a large hospital as in a smaller clinic facility. With our injection electrodes, for example, neurologists can effectively and professionally treat patients who are suffering from severe dystonic issues, such as Parkinson’s, enabling them to leave the clinic freely and comfortably within just a few minutes of treatment. Ambu’s strong heritage of providing high-quality single-use electrodes, combined with the in- creasing attention paid to infection control with- in the healthcare systems, positions us strongly in the market and in the minds of our customers. Similarly, the nurses in the hospital’s neonatal ward can monitor the hearts of vulnerable new- borns with our cardiology electrodes. They can choose electrodes that are comfortable to wear over long periods of time – and find the most suitable size for the neonatal babies within a range of available sizes. Today, we sell more than one billion electrodes worldwide on an annual basis, impacting the lives of more than 100 million patients every year.

OUTLOOK 2022/23

In 2021/22, the transition towards single-use endoscopy continued across several major endoscopy segments, driven by compelling workflow and efficiency benefits, greater focus on infection control and rapid technology advancements. Despite a year of significant volatility, Ambu continued to pioneer single-use endoscopy, developing new products and sol- ving real-life clinical challenges in healthcare. Ambu is present across all four major endo- scopy segments – pulmonology, ENT, urology and gastroenterology – and we continue to see significant growth opportunities across all four segments – from existing products, where innovation will continue, as well as from future product launches in new types of procedures within the existing segments.

FINANCIAL GUIDANCE 2022/23


Organic revenue growth	5-8%
EBIT margin before special items	3-5%

In 2021/22, Ambu launched a cost reduction program to strengthen the company’s free cash flow and improve profitability in order to support future sustainable growth. The cost reduction program is expected to result in an annualised impact of DKK 250m pre-tax free cash flow savings from the financial year 2022/23.

ORGANIC REVENUE GROWTH

The organic revenue growth for 2022/23 is projected at 5-8%, where we will see highest growth coming from Visualization. The ENT (Ambu® aScope™ 4 RhinoLaryngo) and cysto- scopy (Ambu® aScope™ 4 Cysto) businesses will continue to deliver double-digit growth, and the pulmonology business is expected to deliver year-over-year growth from the second half of 2022/23. The newly launched Ambu® aScope™ 5 Broncho is expected to contribute positively to the growth in pulmonology. Below, we will describe the detailed assump- tions, on which we base our view of the expec- ted financial performance for 2022/23.

MARKET CONDITIONS

We expect the single-use endoscopy market to continue to grow in 2022/23, driven by conti- nued awareness and focus on economics and the opportunities for workflow efficiencies, good clinical performance and infection control by medical authorities, offered by our single-use solutions. The GI portfolio, which now is made up of Ambu® aScope™ Duodeno 1.5 and Ambu® aScope™ Gastro, is expected to contribute to the growth, however, the uptake for both products will be gradual compared to the other segments we are present in. During 2021/22, we have seen an unstable and volatile macroenvironment affecting the global economy, with inflationary effects on raw mate- rials, energy prices and logistics costs. While we have seen improvement in the global freight market, we expect raw materials and energy prices to remain at a high level. Organic revenue growth in Anaesthesia and Patient Monitoring & Diagnostics is expected to grow low single digit with Patient Monitoring & Diagnostics growth at the highest rate. The total company growth is expected to ac- celerate quarter-over-quarter through 2022/23, while Q1 2022/23 is expected to be approxi- mately flat vs. Q1 2021/22. 2022/23 will be a transition year for Ambu, and combined with high external volatility, the outlook for 2022/23 is associated with un- certainty. For 2022/23, we have set the financial targets below.

MARGINS


Currency	Expectations
USD/DKK	6.88
MYR/DKK	1.60
CNY/DKK	1.05
GBP/DKK	8.78

ESTIMATE OF THE EFFECT OF A STRENGTHENING OF 10% RELATIVE TO THE DANISH KRONE
	DKKm
	USD
Revenue	270
EBIT	40
EBIT margin	+0.3%

The financial outlook is based on the ex- changed rate assumptions stated in the top table below. Due to higher input costs, Mexico ramp-up and product mix, the gross margin is expected to decrease by ~2 percentage points in 2022/23. The EBIT margin before special items is expec- ted to be in the range of 3-5% for 2022/23 and will be back-end loaded due to more scale in OPEX throughout the year as revenue will grow.

CURRENCY EXPECTATIONS

Approximately 53% of Ambu’s total revenue is invoiced in USD. Furthermore, approximately 33% of revenue is invoiced in EUR or DKK, and approximately 7% in GBP, while the remaining 7% is invoiced in other currencies. Production and capacity costs are predominantly settled in USD, DKK, EUR, MYR and CNY.

OTHER ASSUMPTIONS

The free cash flow before acquisitions will improve in the range of DKK 350-450m vs. 2021/22, approaching full-year neutral level, mainly driven by a normalisation of the inven- tory level and savings from the cost reduction program. The savings are expected to come from lower investment levels into future techno- logies and new product developments within Anaesthesia and Patient Monitoring Diagnostics. & CAPEX relative to revenue is expected to be approximately 9% based on 2022/23 revenue.

Forward-looking statements

Forward-looking statements, in particular relating to future sales, operating income and other key financials, are subject to risks and uncertainties. Various factors, many of which lie outside of Ambu’s control, may cause the realised results to differ materially from the expectations presented in this report.Such factors include, but are not confined to, changes in market conditions and the competitive situation, changes in demand and purchasing patterns, fluctuations in foreign exchange and interest rates, as well as general economic, political and commercial conditions. See also the section concerning risks on page 60.

SUSTAINABILITY

Our sustainability report constitutes Ambu’s compliance with the statutory disclosure on corporate social responsibility pursuant to section 99a and data ethics pursuant to section 99d of the of the Danish Financial Statements Act. For a broader view, find our 2021/22 Sustainability Report on Ambu.com/about/sustainability.

Underpinning our financial performance and strategic progress is a desire to act responsibly and grow sustainably. Our targets and activities are directly linked to our contribution to the UN Sustainable Development Goals. We are committed to promoting gender equality Through our commitment to the Science Based Ambu produces medical devices to promote good health and well-being, while growing sustainably for our people and our planet. Targets initiative, we increase our demand for renewable electricity. We continuously monitor and work to reduce our energy and water consumption, and also strive to up-cycle waste and minimise generated waste. and women’s empowerment in the workplace.

*Scope 3 emissions refer to the financial year 2020/21

OUR FOUR ESG TARGETS

CARBON EMISSIONS

Ambu is working towards a 50% reduction of our scope 1 and 2 carbon emissions by 2025, compared to our 2019 baseline. During 2021/22, we established an inventory of our Scope 3 emissions, enabling us to convert our existing carbon emission target of a “50% reduction of carbon emissions in 2025, compared to 2018/19 baseline” to be in line with the guidance from SBTi. Our science-based targets will include the total of Ambu’s Scope 1, 2 and 3 emissions, and we aim to submit our targets to SBTi during the beginning of 2022/23.Ambu expects continued business growth over the coming years, and we must therefore decouple our carbon emissions from our growth and reduce both our absolute and relative emissions in the years to come.

PACKAGING

Ambu aims for 100% recyclable, reusable or compostable packaging applied by 2025.

PVC-FREE PRODUCTS

Ambu aims for 95% of new products released during and after 2025 to be PVC free. During 2021/22, we launched six new products, of which three products were PVC-free.

FEMALE MANAGERS

Ambu aims to have 40% of its management with direct reports to be female by 2023. The Executive Leadership Team currently comprises 12 executives with global responsibilities as well as the heads of the sales regions, and of the 12 executives, five are currently female. While some parts of the organisation have already achieved the target of 40% female representation, we continue our work to increase gender diversity all throughout Ambu.

SUSTAINABILITY & ESG PERFORMANCE DATA TABLE

See the Ambu sustainability & ESG accounting practices for more information on data definitions and scope.

PRODUCT GOVERNANCE INDICATORS

	2022/23	2021/22	2020/21	2019/20	2018/19	2017/18
Product safety
FDA warning letters (number)	0	0	2	0	0	-
Recalls (number)	-	-	-	-	-	0-5
Non-clinical trials and clinical trials
Total number of biosafety and design validation studies	108	189	-	-	-	-
Total number of animals used in trials with biosafety purpose initiated	210	2	168	2	-	-
Completed clinical trials	-	-	-	-	-	-

ENVIRONMENTAL INDICATORS

	2021/22	2020/21	2019/20	2018/19	2017/18
CO2 Scope 1 (metric tonnes CO2e)	5,364	4,329	957	-	944
Scope 2 – market based (metric tonnes CO2e)	-	845	-	13,996	17,637
Scope 1 + 2 (metric tonnes CO2e) (market based)	9,043	19,360	21,966	-	-
Scope 1 + 2 by tonne of manufactured products (metric tonnes CO2e /ton) (market based)	1.49	2.10	-	-	-
Scope 1 + 2 by revenue (metric tonnes CO2e /DKKm) (market based)	4.36	5.47	-	-	-
Scope 3 (metric tonnes CO2e)	419,783*	-	-	-	-

As of 2021/22 tonne manufactured is based on tonne produced, not tonnes shipped.

	2021/22	2020/21	2019/20	2018/19	2017/18
Energy
Total energy consumption (GJ)	224,342	199,927	138,411	130,849	107,185
Renewable energy share (%)	17.2	2.8	0.13	0.05	-
Renewable electricity share (%)	26.1	4.2	0.15	-	-
Water
Total water consumption (m3)	125,549*	137,115	123,115	129,958	101,142
Waste
Total waste (metric tonnes)	3,011*	2,429	2,276	1,661	1,226
Waste recycled (%)	41	40	41	-	57
Hazardous waste (%)	0.5	0.6	-	70	-

* As of 2021/22, water consumption and waste generation from Ambu’s sales offices is estimated for the first time. The total water consumption and total waste generation 2021/22 can thus not be directly compared.

SOCIAL INDICATORS

	TARGET	2021/22	2020/21	2019/20	2018/19	2017/18
Diversity & equality
Gender – female/total (%)	45-55%	40-45%	40-45%	40%	57	37
Gender – female white-collar managers/all white-collar managers (%)		57	42	39	42	37
Gender – female managers/all managers (%)		33	60	36	41	25
Gender – female executives/Executive Leadership Team (%)		58	37	43	-	-
Employee attraction & retention
Employee turnover rate, white-collar employees (%)	9-12%	27	34	30	4	17
Employee turnover rate, all employees (%)		20*	17*	3*	9	15
Voluntary turnover rate, all employees (%)		-	13	13	-	11
Involuntary turnover rate, all employees (%)		15	-	-	-	15
Employee health & safety
Sickness absence rate (%)		2.14	1.76	1.76	1.51	1.50
Fatalities (number)		0	0	0	0	0
Lost-time injury frequency (number of accidents with lost time per million hours worked)	Max. 2.0	0.93**	1.07	1.44	1.32	-

* Turnover rates for 2019/20 and 2020/21 have been restated, as we discovered errors in the FTE count used for the calculation. This has resulted in an increase in our total turnover rate the past two years (2019/20 14→15, 2020/21 18→20). As the error was in the turnover data for blue-collar employees, the turnover rate for white-collar employees has not changed. Previous years have not been restated.
** The LTIF in 2020/21 covers our three production sites in Xiamen (China), Penang (Malaysia) and Noblesville (USA), as well as HQ in Ballerup (Denmark), while the LTIF 2021/22 covers Ambu globally.

GOVERNANCE AND COMPLIANCE INDICATORS

	TARGET	2022/23	2021/22	2020/21	2019/20	2018/19	2017/18
Corporate governance
CEO pay ratio (times)		11	12	95	24	16	95
Board meeting attendance rate (%)		95	98.8	93.2	13	10	10
Business ethics & compliance
European employees trained in GDPR (%)	100	100	100	100	100	99.7	-
White-collar and indirect blue-collar employees trained in Code of Conduct (%)		100	95	-	-	-	-
Number of reports through Whistleblower Hotline (number)		5	3	0	0	0	-
…of which within scope (number)		12	-	-	-	-	-
White-collar and indirect blue-collar employees trained in Cybersecurity (%)		100	99.0	-	-	-	-

FINANCIAL RESULTS

Business performance
Primary statements: Income, balance sheet, cash flow and equity
Follow-up on announced outlook
Q4 2021/22 results

BUSINESS PERFORMANCE

Comparative figures for 2020/21 are stated in brackets. Ambu has organised its sales across three business areas, Visualization, Anaesthesia and Patient Monitoring & Diagnostics, which are furthermore divided into three regions, North America, Europe and Rest of World.

REVENUE COMPOSITION OF GROWTH

	Organic	Currency	Reported
2021/22	1%	6%	7%
2020/21	31%	4%	27%

REVENUE SPLIT

	2021/22	2020/21
Visualization	52%	52%
Anaesthesia	25%	23%
PMD	23%	25%
Total	100%	100%

	2,324	2,168
4,444	4,013

COMPOSITION OF GROWTH

	Organic	Currency	Reported
North America	11%	1%	12%
Europe	-7%	1%	-6%
Rest of World	4%	-2%	2%
Total	11%	1%	11%

	2,140	1,739
1,825	1,787
479	487
4,444	4,013

PERFORMANCE – VISUALIZATION

2021/22 PERFORMANCE

The Visualization business continues to be Ambu’s biggest revenue contributor, accounting for 52% of the total revenue in 2021/22. Global Visualization revenues grew organically by 1% (31%), while reported growth ended at 7% (27%). Pulmonology reached reported sales of DKK 1.4bn for the full-year 2021/22. Sale of endoscopes totalled 1,705,000 units, which represents a volume growth of 12% positively impacted by a combined sales of 2020/21 driving high market inventories as well as increased competition in especially the American market. Despite the declining performance for the year, compared to pre- Covid-19 (FY 2018/19), global revenue from the bronchoscopy business has grown 70%, confirming the transition from reusable endoscopy to single-use technology. We successfully entered the segment for Ear, Nose and Throat (ENT) in FY 2018/19, and entrance into cystoscopy followed in FY 2019/20. The two have since grown at a rapid pace and contributed to a sizeable and increasing share of revenue, which translates into combined endoscope sales of 719,000 units this fiscal year. We remain excited about the 719,000 units of Ambu® aScope™ 4 RhinoLaryngo (310,000 units) and Ambu® aScope™ 4 Cysto (409,000 units). The largest contributor to Visualization revenue continues to be Ambu® aScope™ 4 Broncho, designed for pulmonology procedures. In 2021/22, the bronchoscopy business faced headwinds due to the high comparables from future potential of Ambu® aScope™ RhinoLaryngo and Ambu® aScope™ 4 Cysto.

Europe presents organic growth at -7% (26%), and the annual result was affected particularly by the high comparables after the Covid-19 pandemic. The negative growth is influenced by a declining pulmonology business, which is contracting to a normalised market level after abnormal growth during Covid-19. Despite the declining performance in 2021/22, the single- use bronchoscopy business in Europe has increased by 68% compared to pre-Covid-19 levels three years ago. Similar to North America, cystoscopy and ENT continue to present double-digit growth numbers for the full year, and thereby contribute positively to this year’s Visualization performance in Europe.As for new product launches, both Ambu® aScope™ Gastro and Ambu® aScope™ 5 Broncho received European regulatory clearance during the year, and the launch is underway for both products. The market dynamics for Ambu® aScope™ Duodeno 1.5 are similar to those experienced in North America.

REGIONAL PERFORMANCE

In North America, Visualization sales grew organically by 17% (33%) in the full year 2021/22. This was driven by strong performance in cystoscopy and ENT, although partly offset by a decline in pulmonology. The ENT and cystoscopy offerings showed sequential quarter-on-quarter growth throughout the year, confirming the strong potential for single-use solutions across these segments. The pulmonology business and especially the sales of our Ambu® aScope™ 4 Broncho platform were negatively impacted by market contraction post-Covid-19, lower ICU admissions and increased competition. The market for single-use bronchoscopy continues to evolve with an increased number of companies entering the U.S. market, driving even greater penetration. Our Ambu® aScope™ 4 Broncho platform continues to be market leading, and with the recent Ambu® aScope™ 5 Broncho launch and future pulmonology launches, we expect to further increase the penetration in the coming years.

In the Rest of World region, the Visualization business experienced organic growth of -24% (47%). The result is negatively impacted by a reduction of in-market inventories and the effect of Covid-19 lockdowns in China, while Australia continues to be the biggest revenue contributor to the region’s Visualization sales, showing positive growth for the year. Ambu® aScope™ Gastro received regulatory approval in both Japan and Australia, meaning that the product is now being launched commercially across all our key markets. The recent addition to our GI portfolio, Ambu® aScope™ Gastro, received regulatory clearance by the U.S. Food and Drug Administration (FDA) in February 2022. The product received encouraging feedback towards the end of the year, and we remain excited about the future opportunity within single-use gastroscopy. For single-use duodenoscopy, since its launch in Q1 2021/22, Ambu® aScope™ Duodeno 1.5 has seen a slower uptake than expected. The clinical complexity of the ERCP procedure leads to high performance requirements and lower willingness to change practice towards single-use products. The market potential for single-use duodenoscopy remains intact, and we continue to be committed to advancing the Ambu® aScope™ Duodeno platform, with Ambu® aScope™ Duodeno 2.0 in development. Whilst the potential is strong, the market creation is expected to be more gradual compared to other segments.

	Organic growth	Reported growth	DKKm	US
21/22
Europe	17%	13%	1,124	239
RoW	-7%	30%	1,063
Total	1%	-6%	1,005	-6%
			195	-24%
20/21
Europe	33%	1%	1,124	239
RoW	47%	-18%	1,063
Total	6%	7%	1,005	-6%
			195	-24%
REPORTED REVENUE, DKKM
2,500
2,000	1%
1,500			2,324	2,168
1,000		organic revenue
500		growth
0	21/22	20/21	19/20	18/19

PERFORMANCE – ANAESTHESIA

2021/22 PERFORMANCE

The Anaesthesia business accounted for 25% of Ambu’s total revenue in 2021/22. impacted by shipment delays due to the congestion of the global container freight market, resulting in Ambu entering 2021/22 with high backlog orders. Clearing these backlog orders, combined with low comparables, had a positive impact on this year’s revenues, driving double-digit growth in the region. Total Anaesthesia revenue grew organically by 5% (-2%) in 2021/22, while reported growth ended at 13% (-6%). The business recovered from a negative first quarter and showed positive organic revenue growth in the following three quarters. On a regional basis, we saw positive growth across all regions, driven by pent-up demand, continued closing of backlog orders and market share gains. During 2021/22, the level of elective hospital activity increased gradually, and the backlog that was carried into the year was reduced throughout the quarters.

In the Rest of World region, Anaesthesia sales experienced organic growth of 11% (-5%). Sales improved gradually throughout the quarters, as the circuits business in particular, combined with the business for face masks and laryngeal masks, showed strong revenue streams. At the geographical level, Japan and Australia were the biggest drivers behind the positive growth, while China was impacted negatively by Covid-19 related lockdowns. In North America, Anaesthesia sales grew organically by 1% (2%) in the full year 2021/22. The biggest revenue driver within the North American Anaesthesia business continues to be our business for breathing circuits, used to provide inhalation and exhalation routes for patients.

	Organic growth	Reported growth	DKKm	US
21/22
Europe	13%	14%	710	147
RoW	11%	19%	243	997
Total	5%	13%	639	211
			174	1,127
20/21
Europe	-9%	10%	710	147
RoW	-5%	1%	243	997
Total	-2%	8%	639	211
			174	1,127
REPORTED REVENUE, DKKM
1,200
1,000			1,127	1,060
800	5%
600		organic revenue	997	991
400		growth	926
200
0	21/22	20/21	19/20	18/19

PERFORMANCE – PATIENT MONITORING & DIAGNOSTICS

2021/22 PERFORMANCE

The Patient Monitoring & Diagnostics (PMD) business accounted for 23% of revenue in 2021/22. backlog orders. The growth rates posted for the year were impacted positively by the clearing of backlog orders, combined with low Covid-19 comparables. Total PMD revenue grew by 13% (9%) revenue in 2021/22, while reported growth ended at 17% (7%). Since the beginning of the year, revenue has gradually increased, confirming the recovery from the Covid-19 pandemic. As for Anaesthesia, revenue growth in PMD across all regions was driven by pent-up demand, continued closing of backlog orders and market share gains.

In the Rest of World region, PMD sales experienced organic growth of 2% (6%). The result for the year is influenced particularly negatively by Covid-19 related lockdowns in China that limited sales significantly. In North America, the PMD business grew organically by 17% (10%) in the full year 2021/22, where we saw strong recovery across most product categories, with cardiology and neurophysiology as the biggest revenue drivers.

	Organic growth	Reported growth	DKKm	US
21/22
Europe	13%	8%	305	112
RoW	2%	13%	578	233
Total	13%	17%	512	103
			103	995
20/21
Europe	8%	14%	305	112
RoW	6%	0%	578	233
Total	9%	13%	512	103
			103	995
REPORTED REVENUE, DKKM
1,200
1,000			995	888
800	13%
600		organic revenue	848	844
400		growth	796
200
0	21/22	20/21	19/20	18/19

In Europe, PMD sales grew organically by 13% (8%). The biggest revenue contributors were, similarly to North America, cardiology and neurophysiology. Like Anaesthesia sales, last year, PMD sales in Europe were impacted by shipment delays due to the congestion of the global container freight market, leading to

PRIMARY STATEMENTS: INCOME, BALANCE SHEET, CASH FLOW AND EQUITY

INCOME STATEMENT

The sales mix within Visualization affected the gross margin by -1 percentage point, as the expanded gross profit from cystoscopy and ENT growth was not enough to make up for the declining sales in the more-profitable pulmonology.

	DKKm	DKKm	%
21/22
Revenue	4,444	4,013	11%
Production costs	-1,890	-1,510
Gross profit	2,554	2,503	2%
Gross margin, %	57.5	62.4
Selling and distribution	-1,634	-1,468	11%
Development	-281	-225	25%
Mgmt. and administrative	-517	-470	10%
Total OPEX	-2,432	-2,163	12%
EBIT before special items	122	340	-64%
EBIT margin before special items, %	2.7	8.5
Special items	-148	0
EBIT	-26	340	-108%

20/21
Revenue	4,013
Production costs	-1,510
Gross profit	2,503
Gross margin, %	62.4
Selling and distribution	-1,468
Development	-225
Mgmt. and administrative	-470
Total OPEX	-2,163
EBIT before special items	340
EBIT margin before special items, %	8.5
Special items	0
EBIT	340

Production costs increased by DKK 380m from last year, including currency effects, as production costs are predominantly settled in USD, MYR and CNY. These currencies appreciated by 11%, 6% and 10%, respectively, versus DKK, compared to last year.

A combined negative effect on the gross margin of -3 percentage points was driven by inflationary effects on input prices, scaling up the factory in Mexico and the write-down of Ambu® VivaSight™ 2, due to the product recall.

The currency effect on the gross margin was negative by less than -1 percentage points.

OPEX totalled DKK 2,432m (DKK 2,163m), up DKK 269m, or 12%, since last year, of which 5 percentage points were driven by currencies. The underlying increase was driven by distribution costs and amortisation from development projects.

Revenue for the year was DKK 4,444m, up DKK 431m from last year, representing a 11% (13%) reported growth. Organic growth was 4% (16%), after adjustment for currency effects, primarily from North America and Rest of World. The OPEX ratio was 55% (54%).

Selling and distribution costs were DKK 1,634m (DKK 1,468m), up by DKK 166m, or 11%, from last year, of which 6 percentage points were driven by currency effects. Selling and distribution costs corresponded to 37% (37%) of revenue. The organic revenue growth was driven by positive volume and mix effects, offset by net price reductions of 1 percentage point. Selling costs, including marketing activities, increased by DKK 26m, representing a flat development after adjustment for currency effects.

Gross profit was DKK 2,554m (DKK 2,503m) up DKK 51m from last year. The gross margin declined by 4.9 percentage points to 57.5% (62.4%), driven by the effects of the sales mix, increasing costs of operating Ambu’s production, inventory write-downs and currencies. Distribution costs increased by DKK 140m. The increase was driven by higher freight rates and increased costs of operating Ambu’s warehouses. The level of air freight was unchanged compared to last year.

Development costs totalled DKK 281m (DKK 225m), corresponding to a 25% increase, or DKK 56m, of which depreciation, amortisation and impairment losses accounted for DKK 41m. Development costs corresponded to 6% (6%) of revenue.## Impairment of in-progress development projects of DKK -50m

Severance costs of DKK -50m associated with the reduction of Ambu’s global workforce, including legal fees
Severance costs associated with the change of CEO of DKK -14m
Income of DKK 15m from remeasuring the deferred purchase price of a historical technology-acquisition in Anaesthesia

In the last three years, investments in innovation activities have increased by 47%, from DKK 372m to DKK 545m.

CASH FLOW IMPACT OF DEVELOPMENT COSTS, 3 YEARS

Operating profit (EBIT) was DKK -26m (DKK 340m), with an EBIT margin of -0.6% (2.6%).

DKKm	21/22	20/21	19/20
Depreciation, amortisation and impairment losses (DA)	351m	216m
Development costs	281	225	157
- Depreciation, amortisation and impairment losses	-150	-109
+ Investments	414	446	306
= Cash flow	545	562	372

Depreciation, amortisation and impairment losses (DA) were DKK 351m (DKK 216m), up DKK 135m, of which DKK 50m stems from allocation to special items. DA corresponded to 8% (5%) of revenue. The increase before special items was driven by the new factory in Mexico of DKK 14m and development projects of DKK 41m.

EBITDA before special items was DKK 423m (DKK 556m), with an EBITDA margin before special items of 9.5% (13.9%). Management and administrative costs were DKK 517m (DKK 470m), corresponding to an increase of DKK 47m. Management and administrative costs corresponded to 12% (12%) of revenue. Approximately half of the increase was driven by additional staff costs. EBITDA was DKK 325m (DKK 556m). Net financials amounted to a net income of DKK 135m (net expense of DKK 32m). The change in net financials compared to last year was impacted by management’s fair value reassessment of the contingent milestone payment of EUR 20m. Operating profit (EBIT) before special items was DKK 122m (DKK 340m), with an EBIT margin after special items of 0.6% (8.5%). The impact of foreign exchange rates on the EBIT margin was less than 1 percentage point. On the acquisition of Invendo Medical GmbH in 2017, the milestone was agreed to be conditional on obtaining FDA clearance of the gastroscope no later than 31 December 2021. Since the FDA clearance was obtained in February 2022, the milestone payment has lapsed, and the provision of DKK 137m has been reversed in the income statement under financial items.

EBIT BEFORE SPECIAL ITEMS – DKKM

800
600
400
200
0
25%
20%
15%
10%
5%
21.6%
17.0%
12.0%
8.5%
340
563
480
428
2.7%
122
0%
17/18
18/19
19/20
20/21
21/22
EBIT margin before special items, %
Special items amounted to a net expense of DKK -148m (DKK 0m), relating to different items and events that are non-routine in nature:
* Write-down of Ambu® aScope™ Duodeno 1.5 inventory of DKK -49m

Bank and lease interest was DKK 32m (DKK 24m). Tax on the profit for the year totalled an expense of DKK 16m (DKK 61m), corresponding to an average effective tax rate on the profit of 15% (20%). Net profit was DKK 93m (DKK 247m). Diluted earnings per share (EPS-D) were DKK 0.37 (DKK 0.98) for the year.

BALANCE SHEET

BALANCE SHEET CONDENSED BY MAIN ITEMS

DKKm	21/22	20/21	Change
Non-current assets	4,911	4,132	779
Inventories	1,222	748	474
Trade receivables	747	699	48
Other current assets	148	97	51
Cash and cash equivalents	187	64	123
Total assets	7,215	5,740	1,475
Equity	4,261	3,952	309
Contingent consideration	0	137	-137
Interest-bearing debt	1,845	1,061	784
Trade and other payables	1,061	742	319
Other liabilities	48	86	-38
Total equity and liabilities	7,215	5,740	1,475

Total assets were DKK 7,215m (DKK 5,740m), and invested capital was DKK 5,919m (DKK 4,711), giving a ROIC of 2% (6%). Inventories were DKK 1,222m (DKK 748m) at year-end, equivalent to 27% (19%) of revenue. Inventories were up DKK 474m since last year and were significantly impacted by the disruption of the global supply chain and lower sales forecast accuracy in previous years. Non-current assets were DKK 4,911m (DKK 4,132m), up DKK 779m since last year, driven by currency effects of approximately DKK 240m, investments in development projects of DKK 387m and a commenced lease agreement for the factory in Mexico, offset by depreciation, amortisation and impairment of DKK 351m. Ambu’s planning cycle was considerably prolonged, as products were sea-freighted from Malaysia or China to main markets in Europe and North America. Long lead times require production plans to be set well in advance of making customer sales, including commitment to sourcing from suppliers of raw materials and electronic parts. For some product categories, this cycle can extend over several quarters. Net working capital (NWC) was DKK 1,022m (DKK 789m), corresponding to an increase of DKK 233m. NWC relative to revenue was 23% (20%), driven by the net effect of higher inventories, only partly offset by increasing payables. Expectations of revenue growth deteriorated during the financial year, and inventory levels were consequently high at the end of 2021/22.

NET WORKING CAPITAL IN DKKM AND NET WORKING CAPITAL RELATIVE TO REVENUE, %

25%
20%
15%
10%
5%
23%
21%
1,400
1,200
1,000
800
600
400
200
0
17/18
18/19
19/20
20/21
21/22
NWC, % of revenue

INVENTORIES IN DKKM AND RELATIVE TO REVENUE, %

30%
25%
20%
15%
10%
5%
27%
1,000
800
600
400
200
0
20%
16%
581
19%
748
18%
14%
15%
382
14%
515
1,022
1,222
600
789
400
535
506
387
0%
0%
17/18
18/19
19/20
20/21
21/22
Inventories, % of revenue

Trade receivables totalled DKK 747m (DKK 699m), corresponding to 17% (17%) of revenue. Calculated at fixed exchange rates, the average number of credit days was 60 (63). Losses on bad debtors, including in OPEX, were equivalent to 0.1% of revenue. The financial risk on trade receivables was unchanged from last year.

Net interest-bearing debt and gearing

Cash and cash equivalents amounted to DKK 187m (DKK 64m). Interest-bearing debt comprised credit institutions at DKK 1,250m (DKK 550m) and leases at DKK 516m (DKK 210m). Net interest-bearing debt (NIBD) totalled DKK 1,658m, representing an increase of DKK 899m from last year’s DKK 759m, corresponding to 3.9 (1.4) of EBITDA before special items. Trade and other payables totalled DKK 1,061m (DKK 742m), corresponding to 24% (18%) of revenue. The increase from last year reflects a higher ratio of inventory to revenue, longer credit days and the effect of the appreciating USD/DKK. The increase in NIBD since last year is due to the negative free cash flow, commencement of lease agreements, including the impact of the new factory in Mexico and distribution of dividends. Contingent consideration was DKK 0m at year-end, against DKK 137m last year. The reduction reflects that the milestone relating to the gastroscope has lapsed.

Capital resources in place

At the end of September 2022, Ambu maintained total committed credit lines with a duration of almost three years at DKK 1,800m (DKK 1,500m), of which DKK 1,250m (DKK 550m) has been utilised. Other liabilities were DKK 48m (DKK 86m) and included deferred taxes, provisions and derivative financial instruments. On this basis, at the end of 2021/22, Ambu had unutilised capital resources from overdraft facilities, credit lines, and cash and cash equivalents of approximately DKK 0.8bn (DKK 1.0bn).

NIBD, EBITDA BEOFRE SPECIAL ITEMS AND NIBD/EBITDA BEFORE SPECIAL ITEMS DEVELOPMENT

DKKm	21/22	18/19	19/20	20/21	21/22
NIBD	1,658	759	678	609	589
NIBD/EBITDA	3.9	1.4	1.8	1.8	1.5
EBITDA b. s. i	423	556	480	563	556

EBITDA BEFORE S.I. AND GEARING

1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
17/18
18/19
19/20
20/21
21/22
NIBD/EBITDA
NIBD
EBITDA b. s. i.

NIBD/EBITDA	4	3	2.5	2	1.5	1	0.5	0
	3.9	3.5	2.2	1.8	1.4	1.8	1.5

CASH FLOW STATEMENT

Change in value	21/22	20/21
Cash flow from operating activities	95	328
Cash flow from investing activities before acquisitions	-553	-573
Free cash flow before acquisitions	-458	-245
Acquisitions of enterprises and technology	-5	-301
Cash flow from financing activities	586	512
Changes in cash and cash equivalents	123	-34

Cash flows in % of revenue:
Cash flow from operating activities	2%	8%
Investments	-12%	-14%
Free cash flow before acquisitions	-10%	-6%
Cash flow from acquisitions of enterprises and technology	-	-12%

Cash flow from operating activities (CFFO) amounted to DKK 95m (DKK 328m), down DKK -233m compared to the previous year. The decrease was mainly driven by the DKK 231m decline in EBITDA over last year. CFFO corresponded to 2% (8%) of revenue. Cash flow from financing activities was DKK 586m (DKK 512m). Raising debt from credit institutions of DKK 700m had a positive effect on the financing activities, while repayment of lease liability of DKK 52m (DKK 44m) and dividend distribution of DKK 75m (DKK 73m) to the shareholders had a negative effect. Cash flow from investing activities before acquisitions totalled DKK -553m (DKK -573m), corresponding to -12% (-14%) of revenue. The decrease was attributable to a lower level of investments in development projects. Free cash flow before acquisition of enterprises and technology totalled DKK -458m (DKK -245m), down DKK 213m from last year, corresponding to -10% of revenue (-6%). Changes in cash and cash equivalents then came to DKK 123m (DKK -34m). Cash flow from acquisitions of enterprises and technology totalled DKK -5m (DKK -301m). Last year, the DKK 298m deferred consideration from the Innovation Medical GmbH acquisition matured.

FREE CASH FLOW BEFORE ACQUISITIONS – DKKM

500
300
100
-100
-300
-500
-700
17/18
18/19
19/20
20/21
21/22
CFFO, % of revenue
CFFI, % of revenue
321
274
-133
-245
-458
20%
15%
10%
5%
0%
-5%
-10%
-15%

EQUITY STATEMENT

At the end of September 2022, equity totalled DKK 4,261m (DKK 3,952m), corresponding to an equity ratio of 59% (69%) of total assets. The share capital was DKK 129m (DKK 129m), distributed on 257.7m (257.7m) shares. The general employee share program, granted in 2019, was vested, and Ambu’s obligations in this respect have thus been fulfilled. Consequently, the holding of treasury shares was reduced by 64,993 Class B shares in Ambu A/S.At the end of the year, Ambu’s portfolio of Class B treasury shares was 3,642,313 (3,976,471), reduced by 334,158 since last year.

OTHER COMPREHENSIVE INCOME

Other comprehensive income included a translation adjustment arising from the translation of subsidiaries in foreign currency of DKK 273m (DKK 33m). The portfolio corresponded to 1.413% (1.543%) of the total share capital. The translation adjustment was primarily driven by the appreciation of the USD/DKK exchange rate since September 2021. In addition, at the end of the year, Ambu employees had exercised a total of 12,500 warrants to subscribe for shares in Ambu A/S for net proceeds of DKK 0.8m.

OTHER EQUITY

At the Annual General Meeting, held on 14 December 2021, it was decided to pay dividend of DKK 75m to Ambu’s shareholders. The dividend has been distributed in full, including DKK 1m for Ambu’s portfolio of treasury shares. In certain jurisdictions, Ambu is entitled to a deduction of employees’ gains on the exercise of options and warrants. During the year, equity was reduced by DKK 14m (increased by DKK 34m), corresponding to the value adjustment of any deductible value of employee gains. During 2021/22, Ambu employees exercised a total of 269,165 purchase options in Ambu A/S, for net proceeds of DKK 11m.

53 FOLLOW-UP ON ANNOUNCED OUTLOOK RELATIVE TO THE REALISED RESULTS IN 2021/22

During the 2021/22 financial year, Ambu adjusted the outlook for organic revenue growth and EBIT margin before special items three times. First in February, when we revised the outlook due to uncertainties regarding the continued impact of Omicron, and then secondly in May, when we saw macroeconomic headwinds, supply chain volatility, ongoing hospital labour shortages and a need for a raw material write-down. As from the beginning of the fiscal year, we expected a rapid return of elective procedure activity, but in May, we revised our expectations, so that this would happen at a steadier pace. Coming out of a challenging July trading, and with the launch of a cost reduction program in August, the guidance was revised as a result of the changes that were to be implemented due to the program.

At the start of the financial year, we expected organic growth of 15-19%, while actual organic growth came to 4% at the end of the year. The guidance for the EBIT margin before special items was adjusted at the same intervals in February, May and August as a result of the same factors. The year ended with an EBIT margin before special items of 2.7% compared to the original expectation of 7-9% at the start of the financial year.

LOCAL CURRENCIES

	Realised 25 Aug 2022	3 Aug 2022	5 May 2022	8 Feb 2022	9 Nov 2022
Organic growth	No less than 4%	No less than 4%	4%	13%+	15%+
	15-19%
DANISH KRONER
	Realised 25 Aug 2022	3 Aug 2022	5 May 2022	8 Feb 2022	9 Nov 2022
EBIT margin before special items	No less than 2%	No less than 2%	2.7%	5%+	7%+
	7-9%

EXCHANGE RATE ASSUMPTIONS FOR 2021/22

	Realised 25 Aug 2022	3 Aug 2022	5 May 2022	8 Feb 2022	9 Nov 2022
USD/DKK	688	687	684	680	650
MYR/DKK	160	160	159	160	155
CNY/DKK	105	105	105	105	102
GBP/DKK	878	880	880	881	880
	642	642	642	642	642
	155	155	155	155	155
	100	100	100	100	100
	877	877	877	877	877

54 Q4 2021/22 RESULTS

REVENUE COMPOSITION OF GROWTH 2021/22

	Split 2020/21	Organic	Currency	Reported
North America	586	435	50%	37%
Europe	493	374	2%	16%
Rest of World	142	13%	159	100%
Revenue	1,163		1,026

In Q4, we saw 4% (18%) organic revenue growth, and with significant regional differences. Reported revenue came in at DKK 1,163m in the quarter. In August 2022, Ambu announced adjustments to pricing practices so as to reduce the level of discounts and rebates, which impacted the Q4 sales equal to approximately 1 percentage point on full-year growth in 2021/22.

significantly affected by a reduction of in-market inventories and the impact of the Covid-19 lockdowns in China. In Q4, Anaesthesia and PMD posted organic growth rates of 0% (-6%) and 10% (13%), respectively. For Anaesthesia, Europe and Rest of World benefitted from pent-up demand and backlog orders that resulted in high double-digit growth rates. North America posted negative growth due to a high baseline from Q4 last year. In PMD, North America showed stable growth, while Europe saw positive impact from pent-up demand and backlog orders. Rest of World had negative growth, as the business was impacted by the Covid-19 lockdowns in China.

Visualization growth in the quarter was 3% (37%) which translates into a performance of 442,000 endoscope units sold. The revenue growth was driven by high double-digit growth in Europe that came from a low baseline as from Q4 2020/21, as well as positive growth in North America. The performance was offset by negative growth in Rest of World, which was

	Q4 21/22	Q4 20/21	Fx
Organic growth
North America	8%	18%	-45%
Europe	1%	25%	18%
Rest of World	-36%
Anaesthesia
North America	5%	18%	-36%
Europe	23%	22%
Rest of World	22%
PMD
North America	10%	11%	7%
Europe	18%	0%	28%
Rest of World	16%
Reported growth
North America	253	197	90
Europe	58	90
Rest of World
Anaesthesia
North America	175	167	-11%
Europe	61	50	50
Rest of World
PMD
North America	93	141	36
Europe	55	127	29
Rest of World
Visualization	317	234	58
Anaesthesia	253	197	90
PMD	253	197	90

INCOME STATEMENT

	Change in value	Change %	DKKm
Revenue	1,163	13%	1,026
Production costs	-519		-416
Gross profit	644	6%	610
Gross margin, %	55.4		59.5
Selling and distribution costs	-432		-415
Development costs	-80		-73
Management and administrative costs	-139		-118
Total OPEX	-651	7%	-606
EBIT before special items	-7		4
Special items	-135		0
EBIT	-142		-135

Revenue totalled DKK 1,163m (DKK 1,026m), corresponding to reported growth of 13% (18%). Adjusted for currency effects, the underlying organic growth was 4% (18%). Total OPEX was DKK 651m (DKK 606m), up 7% from Q4 2020/21, of which 6 percentage points was driven by appreciating currencies. EBIT before special items was DKK -7m (DKK 4m), representing an EBIT margin before special items of -0.6% (0.4%). A slightly positive margin-effect from currencies was realised when comparing to last year. Gross profit was DKK 644m (DKK 610m), corresponding to a margin of 55.4% (59.5%). The decrease in margin since last year is driven by continued inflationary pressure on input prices and currency effects. Special items were a cost of DKK 135m and stems from the cost reduction program.

56 QUARTERLY RESULTS

DKKm	Q4 2021/22	Q3 2021/22	Q2 2021/22	Q1 2021/22	Q4 2020/21	Q3 2020/21	Q2 2020/21	Q1 2020/21
Composition of revenue, products:
Visualization	609	285	269	562	302	264	588	294
Anaesthesia	240	210	547	248	202	558	253	202
Patient Monitoring & Diagnostics	302	264	588	294	240	210	547	248
Revenue	1,163	1,128	1,122	1,031	1,026	973	1,001	1,013
Key figures, revenue:
Endoscopes sold, ’000 units	442	400	444	419	393	386	379	370
Growth in endoscopes sold, %	12	4	17	13	54	15	21	106
Organic growth, products:
Visualization, %	3	0	14	3	37	-6	101	-3
Anaesthesia, %	0	10	20	12	-6	7	44	5
Patient Monitoring & Diagnostics, %	4	9	3	8	13	0	5	-6
Organic growth, %	4	8	8	8	18	4	-1	3
Exchange rate effects, %	9	8	8	-1	39	-6	1	39
Reported revenue growth, %	13	16	12	2	18	33	32	79
Organic growth, markets:
North America, %	2	16	-20	16	18	11	36	18
Europe, %	4	-4	11	7	0	18	13	7
Rest of World, %	8	8	-1	18	7	6	39	2
Organic growth, %	4	8	8	8	18	4	-1	3

DKKm	Q4 2021/22	Q3 2021/22	Q2 2021/22	Q1 2021/22	Q4 2020/21	Q3 2020/21	Q2 2020/21	Q1 2020/21
Revenue	1,163	1,128	1,122	1,031	1,026	973	1,001	1,013
Production costs	-519	-499	-475	-397	-416	-365	-378	-351
Gross profit	644	629	647	634	610	608	623	662
Gross margin, %	55.4	55.8	57.7	61.5	59.5	62.5	62.2	65.4
Selling and distribution costs	-432	-389	-407	-406	-415	-344	-361	-348
Development costs	-80	-72	-65	-64	-73	-53	-52	-47
Management and administrative costs	-139	-126	-128	-124	-118	-123	-110	-119
Total Operating Expenditures (OPEX)	-651	-587	-600	-594	-606	-520	-523	-514
Operating profit (EBIT) before s.i.	-7	42	47	40	4	88	100	148
EBIT margin before special items, %	-0.6	3.7	4.2	3.9	0.4	9.0	10.0	14.6
Special items	-135	-13	0	0	0	0	0	0
Operating profit (EBIT)	-142	29	47	40	4	88	100	148
EBIT margin, %	-12.2	2.6	4.2	3.9	0.4	9.0	10.0	14.6
Financial income	20	12	137	-2	3	1	4	11
Financial expenses	-10	-7	-2	0	-9	-12	0	-30
Profit before tax	-132	34	182	25	-2	77	115	118
Tax on profit for the year	2	-6	-7	-5	1	-15	-20	-27
Net profit for the period	-130	28	175	20	-1	62	95	91

57 QUARTERLY RESULTS (CONTINUED)

DKKm	Q4 2021/22	Q3 2021/22	Q2 2021/22	Q1 2021/22	Q4 2020/21	Q3 2020/21	Q2 2020/21	Q1 2020/21
Balance sheet:
Assets	7,215	4,261	1,658	5,919	6,921	996	6,557	1,038
Net working capital	1,022	1,423	5,705	3,946	1,259	5,205	3,952	759
Equity	4,162	1,417	5,579	6,327	911	5,740	789	5,567
Net interest-bearing debt	4,282	3,952	759	3,904	638	3,861	466	2,394
Invested capital	4,542	4,327
Cash flows, in DKKm:
Cash flow from operating activities	-28	146	5	-28	62	68	92	106
Cash flow from investing activities before acquisitions	-139	-167	-5	-139	7	-141	-136	0
Free cash flow before acquisitions	-134	-162	0	-169	-113	0	-119	-27
Acquisitions of enterprises and tech.	-28	-1	-181	-113	0	-104	2

Cash flows, in % of revenue:

Cash flow from operating activities
Cash flow from investing activities before acquisitions	-299	-12	-14	13	-12	1	0	-12	-12	-3	-13	-16	6	-16	-10	7	-19	-12	9	-12	-3	10
Free cash flow before acquisitions of enterprises and technology	0	-12	-14	13	-12	1	0	-12	-12	-3	-13	-16	6	-16	-10	7	-19	-12	9	-12	-3	10

Key figures and ratios:

Operating Expenditures (OPEX)
OPEX ratio, %	651	56	587	52	600	53	594	58	606	59	520	53	523	52	514	51
EBITDA before special items																	77	119	10.5	-40	-37	0
EBITDA margin before special items %																	125	11.1	-38	-33	-7
Depreciation																	102	9.9	-36	-25	-1
Amortisation																	65	143	14.7	-31	-24	0
Impairment																	150	15.0	-29	-22	1
EBIT before special items																	198	19.5	-27	-22	-1
EBIT margin before special items, %																	6.6	-42	-40	-2
NIBD/EBITDA before special items																	6.3	-31	-26	-4
Net working capital, % of revenue	-7	42	47	40	4	88	100	10.0	0.7	19	148	14.6	2.5	17	-0.6	3.9	23	3.7	3.5	23	4.2	3.3

| | 3.9 | 2.7 | 23 | 0.4 | 1.4 | 20 | 9.0 | 1.1 | 21 | | | | | | | | | | | | | | |
|---|-----|-----|----|-----|-----|----|-----|-----|----|--|--|--|--|--|--|--|--|--|--|--|--|--|

Share-related ratios in DKK:

| Market price per share | 66 | -0.51 | -0.51 | 69 | 0.11 | 0.11 | 100 | 0.69 | 0.69 | 173 | 0.08 | 0.08 | 190 | 0.00 | 0.00 | 241 | 0.24 | 0.24 | 298 | 0.38 | 0.38 | 263 | 0.37 |
| Earnings per share (EPS) | 0.36 | | | | | | | | | | | | | | | | | | | | | | |
| Diluted earnings per share (EPS-D) | 58 | | | | | | | | | | | | | | | | | | | | | | |

GOVERNANCE

Risk management
Corporate governance
Board of Directors and Executive Management
Remuneration
Shareholder information
Company announcements

2021/22

59 RISK MANAGEMENT

Ambu’s business activities involve a number of inherent risks, and the company is exposed to risks on an ongoing basis, which may have a negative impact on daily operations, financial standing, results and future growth. Based on the reported risks, Global Risk & Compliance conducts a series of in-depth interviews with risk officers in the organisation, after which the most significant risks are assessed by risk boards, before being reported to the Executive Management and the Board of Directors on a quarterly basis. Ambu’s risk management is focused on early identification and rigorous assessment of risks, as well as continuous mitigation, management and monitoring of risks, thereby reducing risks to an acceptable level and ensuring that only calculated risks are taken. The management of each function is responsible for identifying, assessing and managing the risks associated with its part of the organisation. The Executive Management is responsible for determining Ambu’s overall risk profile in alignment with the company’s strategy and values. The Executive Management is also responsible for delegating responsibility for the risks that are shared across the organisation, as well as for approving the mitigating activities that address the most significant risks.

RISK REPORTING PROCESS AND GOVERNANCE

The most significant risks to Ambu on the short- to-medium term are identified and assessed, and potential updates to the mitigation plans are reported to Global Risk & Compliance on a quarterly basis. The long-term risks are integrated in the overall development of Ambu's strategy and business plans. The Board of Directors monitors and reviews the reported risks and their planned mitigation, as well as any recommendations from the Executive Management, on a quarterly basis.

RISK ASSESSMENT AREAS

Climate- related
Innovation & development
Product supply, quality and safety
Commercial
Cybersecurity
Financial
Legal & compliance

60 CLIMATE-RELATED RISKS

In 2020/21, Ambu signed a letter of commitment to the Science Based Target initiative Business Ambition to convert our existing carbon emission target to 1.5°C science-based reduction targets to meet the goals of the Paris agreement. We also committed to further developing our TCFD-aligned disclosure. In 2021/22, climate-related risks are integrated as part of our risk management process, and climate-related risks are identified, assessed and responded to according to a standardised process for estimating the impact and likelihood of risks in view of their impact on revenue, cost and reputation, as well as the related compliance requirements. Each business activity is responsible for identifying and prioritising relevant climate-related risks and opportunities and integrating them into relevant processes to ensure that they are managed appropriately. To ensure business continuity and further align with the TCFD recommendations, we developed and conducted scenario analyses guided by the TCFD recommendations to assess the impact and likelihood of potential future climate-related risks resulting from extreme weather events, such as floods, storms and other natural disasters in 2021/22. Specifically, we assessed the resilience of our production sites in China, Malaysia, the USA and Mexico to climate change in three scenarios with a 1.5 °C, 2 °C and 3+/4°C temperature rise by 2100, respectively. The focus was to assess how climate-related physical and transitional risks might affect Ambu. In the scenario analysis, we found that especially the increased frequency and scale of extreme weather conditions, such as heavy rainfall, floods and high temperatures, could affect our operations as well as our employees, regardless of scenario. Physical risks, such as rising water levels, water scarcity and extreme heat and weather patterns, were identified and assessed in relation to the potential effect on Ambu’s manufacturing sites and supply chain. Similarly, transitional risks, such as customers and investors demanding more transparency and improvement on our environmental footprint and stronger regulatory action on carbon emissions, were identified and assessed in relation to Ambu’s activities in general. The outcome of the scenario analysis was integrated into the overall development of Ambu’s strategy, and going forward, risk scenario analysis is conducted on a regular basis and is a permanent aspect of our risk management program.

61 INNOVATION & DEVELOPMENT RISKS

Ambu’s opportunities to achieve its strategic targets depend on its ability to develop unique, high-quality products. A commercial understanding of the sector’s long-term needs, as well as user insights regarding targeted procedures in new segments and their integration into product development are crucial to remaining a market leader. In addition, there is an inherent risk of IP disputes and litigation.

RISK EXAMPLES	PRIMARY RISK MITIGATION ACTIVITIES
* Insufficient capturing of user insights. * Time needed to achieve the required design. * Infringement of intellectual property rights that may reduce Ambu’s competitive advantages and negatively impact sales. * Products are launched in multiple segments.	* The screening process for capturing user insights is very detailed and integrated into product development, allowing for rounds of modifications before the design is locked. * IP clearance processes and IP awareness training.

PRODUCT SUPPLY, QUALITY AND SAFETY RISKS

As a manufacturer and distributor of medical devices, Ambu adheres to the legislation within the territories in which it operates, for example, in the EU, the Medical Device Regulation, and in the USA, the Food & Drug Administration. Failure to comply may negatively impact Ambu’s ability to sell its products. Supply chain disruptions due to infrastructure congestion and delays can lead to higher freight rates. Furthermore, increased demand and/or supply shortages may lead to increased raw material and energy costs – and potentially delay orders.

RISK EXAMPLES	PRIMARY RISK MITIGATION ACTIVITIES
* Major disruption at a manufacturing facility due to a natural disaster or other emergency, such as a fire or a pandemic, may disrupt Ambu’s ability to manufacture and distribute products. * Lockdowns, breakdowns, political unrest, fires, natural disasters, etc., at key suppliers’ sites may result in disruption of Ambu’s supply chain. * Loss of licences to sell or manufacture due to non-compliance with legislation.	* Global production with multiple facilities and re-building safety stock. * Dual sourcing, identification of high-risk suppliers and continuous development of contingency plans. * Continuous development and improvement of control processes and quality procedures and ongoing monitoring of legislation and market standards.

RISK EXAMPLES

PRIMARY RISK MITIGATION ACTIVITIES

* Major disruption at a manufacturing facility due to a natural disaster or other emergency, such as a fire or a pandemic, may disrupt Ambu’s ability to manufacture and distribute products. * Lockdowns, breakdowns, political unrest, fires, natural disasters, etc., at key suppliers’ sites may result in disruption of Ambu’s supply chain. * Loss of licences to sell or manufacture due to non-compliance with legislation.

* Global production with multiple facilities and re-building safety stock. * Dual sourcing, identification of high-risk suppliers and continuous development of contingency plans. * Continuous development and improvement of control processes and quality procedures and ongoing monitoring of legislation and market standards.

62 COMMERCIAL RISKS

In Ambu’s most important markets, there is constant economic and political focus on reducing healthcare costs, leading to a general demand for hospitals to become more efficient. Ambu’s Anaesthesia and PMD businesses have historically experienced modest price pressure, while prices within the Visualization franchise have been more stable.

RISK EXAMPLES	PRIMARY RISK MITIGATION ACTIVITIES
* Delays in product launch and penetration into a market. * Pace of market creation and product acceptance within single-use endoscopy. * Economic and political development leading to budgetary constraints and healthcare reforms.	* Validation of value proposition in single-use, for instance workflow efficiency and sterility. * Continuous improvement of product launch capabilities. * Modular approach within innovation to support a rapid innovation cycle and low-cost production with manufacturing in low-cost jurisdictions to enable competitive pricing.

CYBERSECURITY RISKS

Globally, and across most industries, cybercriminal activity continues to take place. Cyber threats, such as cybercrime and cyberattacks, could have major business impact by affecting Ambu’s operations, delivery performance and competitive advantage.

RISK EXAMPLES	PRIMARY RISK MITIGATION ACTIVITIES
	* Continuously evolving Ambu’s cybersecurity measures to monitor and mitigate potential data breaches, cyberattacks, incident response, crisis management processes and capabilities for timely remediation of security issues. * A solid, risk-based cybersecurity framework, built on the National Institute of Standards and Technology framework, enabling Ambu to protect its assets and continue to manufacture secure products in a digitally evolving space.

RISK EXAMPLES

PRIMARY RISK MITIGATION ACTIVITIES

* Continuously evolving Ambu’s cybersecurity measures to monitor and mitigate potential data breaches, cyberattacks, incident response, crisis management processes and capabilities for timely remediation of security issues. * A solid, risk-based cybersecurity framework, built on the National Institute of Standards and Technology framework, enabling Ambu to protect its assets and continue to manufacture secure products in a digitally evolving space.

The development in Ambu’s results and equity is subject to several financial risks, including foreign exchange risks, interest rate risks, liquidity risks and credit risks, as well as the risk of changing international trading conditions.

| RISK EXAMPLES | PRIMARY RISK MITIGATION ACTIVITIES ## BOARD COMMITTEES

The Board of Directors has established four committees: the Audit Committee, the Innovation Committee, the Nomination Committee and the Remuneration Committee.

The Audit Committee held four meetings during the 2021/22 financial year.
The Innovation Committee held three meetings during the 2021/22 financial year.

Position	Meetings	Position	Meetings
Susanne Larsson	Chairman	Christian Sagild	Member
Michael Del Prado	Jørgen Jensen	Chairman	Member
Mikael Worning	Member	Henrik Ehlers Wulff	Former member
Henrik Ehlers Wulff	Former member

The purpose of the Innovation Committee is to oversee and make recommendations for the innovation strategy and execution of strategy and consider external innovation opportunities. The purpose of the Audit Committee is to assist the Board of Directors in ensuring the quality and integrity of the presentation of the company’s financial statements, reporting and auditing. The Charter of the Innovation Committee can be found at Ambu.com/innovationcom. The Charter of the Audit Committee and the review of the control and risk management systems in connection with the financial reporting can be found at Ambu.com/auditcom.

The Nomination Committee consists of three members of the Board of Directors. The Remuneration Committee consists of three members of the Board of Directors. In addition, the CEO and the CFO attend the meetings.

The Nomination Committee held two meetings during the 2021/22 financial year. Late in the year, Michael del Prado joined the Committee, after Britt Meelby Jensen was appointed CEO and left the Board. Ambu’s CEO occasionally attends the meetings of the Nomination Committee.

The Remuneration Committee held three meetings during the 2021/22 financial year.

Position	Meetings	Position	Meetings
Jørgen Jensen	Chairman	Christian Sagild	Member
Britt Meelby Jensen	Former member	Michael Del Prado	Member
Henrik Ehlers Wulff	Member	Susanne Larsson	Member

The Nomination Committee is charged with evaluating the composition of the Executive Management Team and with evaluating, and possibly renewing, the Board of Directors to ensure that the members of the Board meet the requirements and possess the skills required. The duties of the Remuneration Committee are to ensure that the remuneration offered by Ambu is competitive and sufficient to attract and retain the best qualified directors and executives. The Charter of the Remuneration Committee can be found at Ambu.com/remcom. The Charter of the Nomination Committee can be found at Ambu.com/nomcom.

EXECUTIVE MANAGEMENT

The Executive Management consists of CEO Britt Meelby Jensen and CFO Thomas Frederik Schmidt. The Executive Management is responsible for Ambu’s day-to-day management, including the development of Ambu’s activities and operations and its risk management, financial reporting and internal affairs. The Executive Management also prepares and presents the company’s strategy, long-term financial planning and budgets to the Board of Directors. The delegation of powers and responsibilities by the Board of Directors to the Executive Management is described in the Rules of Procedure for Ambu’s Board of Directors (Bestyrelsens Forretningsorden) and the provisions of the Danish Companies Act (Selskabsloven). The Board of Directors appoints the Executive Management and lays down its terms of employment.

CORPORATE GOVERNANCE

The Board of Directors has considered the Recommendations from the Committee on Corporate Governance from 2 December 2020 (found at Corporategovernance.dk), and has reported hereon in a document available at Ambu.com/corpgov. Ambu complies with all of the recommendations of the Committee on Corporate Governance. Please refer to the Sustainability Report, or go to Ambu.com/dataethics for more information on our data ethics policy prepared in accordance with the Danish Financial Statements Act, section 99d.

ETHICS

A data ethics policy was developed in 2021. It is Ambu’s policy to maintain the highest ethical standards and comply with all applicable data and privacy laws and regulations. Our work with data ethics is governed by the data ethics policy, as well as internal policies and standard operating procedures.

GENDER DIVERSITY AND BOARD ATTENDANCE

Report on the gender composition of the Board of Directors (members elected at the Annual General Meeting), pursuant to Section 99 b, and on diversity pursuant to Section 107d of the Danish Financial Statements Act.

Ambu wants the Board of Directors and Executive Management to be representative across genders, nationalities, ages, education, qualifications, competencies and, thereby, perspectives. The members should, as a group, have sufficient knowledge, insight and professional experience to understand Ambu's activities and the risks related hereto. To ensure equal opportunities for all genders at Ambu, we continue to train and develop our people leaders in diversity and inclusion via recruitment-, leadership- and values training. Ambu gives particular focus to gender diversity, with our target of each gender being represented by at least 40% in management by 2022/23. Among all managers and in the Executive Leadership Team, 42% are female managers. Among white-collar managers, 39% are female. We continue our work to increase gender diversity to reach our target and to maintain an equal gender representation in management.

After the Annual General Meeting in December 2021, the Board of Directors had two female members, until Britt Meelby Jensen became CEO of Ambu and resigned from the Board. Our ambition is to have two female members, corresponding to equal gender representation within a Board of Directors with six members. At the upcoming Annual General Meeting 2022, the Board of Directors proposes two new members, a female and a male. The proposed members are Shacey Petrovic, former President and CEO at Insulet Corporation, and Simon Hesse Hoffmann, professional board member and investor and third generation of the family behind Ambu. Having two female members still corresponds to equal gender representation within a board of Directors with seven members.

For a full report on Ambu’s corporate governance, including the Inclusion and Diversity Policy and the Board of Directors’ views on recommendations from the Committee on Corporate Governance, please go to Ambu.com.

Diversity within the Board of Directors and Executive Management

	Minimum target 2021/22	2021/22	2020/21
Number of genders	2	2	2
Number of nationalities	3	3	3
Number of age intervals (40-49, 50-59, 60-69)	2	2	2
Target 2022/23
Board governance
2021/22	2020/21	2019/20	2018/19
Gender diversity (female members of the Board of Directors, %)	28.6-	71.4	20
CEO pay ratio (times)	-	-	11
Board meeting attendance rate (%)	94.2	100	95.5
Target 2022/23
Diversity & equality
2021/22	2020/21	2019/20	2018/19
Gender – female white-collar managers / all white-collar managers (%)	40-45	42	37
Gender – female managers / all managers (%)	40-45	40	39
Gender – female executives / Executive Leadership Team (%)		41	25

Gender diversity (%) is calculated among white-collar managers, all managers in Ambu, within the Executive Leadership Team and the Board of Directors (BoD). Gender diversity within management includes leaders on a managerial job level and with direct reports. BoD attendance rate and gender diversity of BoD only include members of the BoD elected by the Annual General Meeting (AGM) and does not include employee-elected members. Gender denotation currently available from system provider in global employee system is Female, Male, Unknown, Undeclared, Others. Genders are self-declared.

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

JØRGEN JENSEN
Born 1968
Chairman of the Remuneration Committee and the Nomination Committee
Joined the Board in 2020
Term 2022
Position: Professional board member
Honorary offices: 3Shape (C), Velux (C), Micro Matic (C), Weibel (C), VKR Holding (VC), Healthcare Denmark (C), Armacell International S.A. (MB)
Special competences: International leadership experience from global companies as well as medtech-specific experience covering sales, R&D, production, supply chain and M&A
Independent
16,236 shares
Member of the Audit Committee and the Nomination Committee

CHRISTIAN SAGILD
Born 1959
Vice Chairman
Joined the Board in 2012
Term 2022
Position: Professional board member
Honorary offices: Royal Unibrew (MB), Nordic Solar (C), Penneo (C)
Special competences: Leadership experience and general management of a listed company including special insights into financial matters and risk management
Independent
255,000 shares

HENRIK EHLERS WULFF
Born 1970
Member
Joined the Board in 2015
Term 2022
Position: Executive Vice President, Product Supply, Quality & IT of Novo Nordisk A/S
Honorary offices: Grundfos Holding (MB)
Special competences: General management with experience in the field of global manufacturing, supply chain management, IT and quality management, particularly in the area of GMP
Independent
10,645 shares
Member of the Innovation Committee and the Remuneration Committee

SUSANNE LARSSON
Born 1968
Member
Joined the Board in 2021
Term 2022
Position: Group CFO, EVP Strategy and M&A, IT, GBS, Indirect procurement of Mölnlycke
Honorary offices: Dovista A/S Group (MB and C of Audit Committee)
Special competences: General management and financial leadership experience in public listed companies covering strategy, M&A, transformation and change management, finance and IT
Independent
0 shares
Chairman of the Audit Committee and member of the Remuneration Committee

MICHAEL DEL PRADO
Born 1963
Member
Joined the Board in 2021
Term 2022
Independent
0 shares
Position: Non-executive director
Honorary offices: Cochlear Limited ASX (MB)
Special competences: International leadership experience from major, global healthcare companies including in-depth insights into transformative innovation,
Chairman of the Innovation Committee and member of the Nomination Committee# BOARD OF DIRECTORS (CONTINUED)

JESPER MADS BARTROFF FREDERIKSEN

Born 1975
Employee-elected member
Joined the Board in 2021
Joined Ambu in 2016
Position: Senior Project Management Specialist, Innovation Process, Global Innovation
Term 2025
1,497 shares

CHARLOTTE ELGAARD BJØRNHOF

Born 1983
Employee-elected member
Joined the Board in 2021
Term 2025
Joined Ambu in 2018
Position: Senior Director, Global Product Management, Core & Portfolio Strategy, Global Marketing
645 shares

THOMAS BACHGAARD JENSEN

Born 1983
Employee-elected member
Joined the Board in 2021
Term 2025
Joined Ambu in 2011
Position: Mechanical Module Architect, Manoeuvrability Module, Global Innovation
1,313 shares

EXECUTIVE MANAGEMENT

BRITT MEELBY JENSEN

Honorary offices: Hempel Foundation & Hempel Invest A/S (MB), Novo Holdings (Member of Novo Advisory Group)
Born 1973
Chief Executive Officer
Joined Ambu in 2022
45,333 shares
Special competences: Business and leadership experience from both listed and private companies in the global healthcare industry. This is combined with in-depth knowledge of the commercial area and strategic development

THOMAS FREDERIK SCHMIDT

Honorary offices: No honorary offices
Born 1971
Special competences: Business and financial leadership experience from the global healthcare industry, covering leadership roles in end-market functions as well as HQ functions
Chief Financial Officer
Joined Ambu in 2022
0 shares

REMUNERATION

The overall objective of the remuneration is to create value for the shareholders by enabling Ambu to attract and retain the best qualified directors and executives. Negative compensation of DKK -8.8m (DKK 9.1m) related to long-term incentive schemes is primarily driven by the fair value adjustment of incentives settled in cash and accrual of sign- on bonusses. The Remuneration Policy and Remuneration Report for the Board of Directors and Executive Management is available at Ambu.com/reports. Remuneration in connection with redundancy and resignation was DKK 22.4m. The remuneration of Board of Directors and Executive Management is in accordance with the remuneration policy and the incentive guidelines, and the latest revision was adopted at the Annual General Meeting in 2021.

BOARD OF DIRECTORS

Members of the Board of Directors do not receive variable remuneration and are not part of share-based incentive schemes, but receive a fixed annual base fee of DKK 350,000, which is approved by the shareholders at the Annual General Meeting.

EXECUTIVE MANAGEMENT

The total remuneration earned by the executive management was DKK 17.6m (DKK 15.0m) including sign-on bonusses of DKK 3.2m. The Chairman receives three times the base fee, while the Vice-Chairman receives two times the base fee. The Chairs of the committees receive a fee of DKK 175,000, while members of the committees receive a fee of DKK 117,000. Short-term incentives earned were DKK 0.5m (DKK 1.2m), equivalent to 5% of the full bonus potential reflecting a difficult year. Based on the financial performance for the year, the pre-defined threshold for the KPI of organic revenue growth was not reached. The total remuneration paid to the Board of Directors, including the Board committees, constituted DKK 5.5m (DKK 4.7m). Consequently, no allocation of LTI reflecting an expense of DKK 0.0m (DKK 0.2m) in 2021/22. The increase in remuneration since last year is impacted by the establishment of an Innovation Committee.

DKKm	2021/22	2020/21
Fixed compensation	13.1	12.7
- Tax compensation	0.8	0.8
Sign-on bonusses	3.2	-
Short-term incentive scheme	0.5	1.2
Long-term incentive scheme	0.0	9.1
Total remuneration earned	17.6	15.0
Adjustment of remuneration earned to IFRS	-8.8	0.2
Remuneration in connection with redundancy and resignation pay	22.4	-
Remuneration of Executive Management	24.1	31.2
Remuneration of Board of Directors	5.5	4.7
Total expense in the income statement	36.7	28.8

SHAREHOLDER INFORMATION

SPECIFICATION OF MOVEMENTS IN SHARE CAPITAL

	2021/22	2020/21	2019/20	2018/19	2017/18
Total number of shares (‘000)	257,716	223,396	257,704	252,817	251,810
Total number of A shares	34,320	34,320	34,320	34,320	34,320
Total number of B shares	223,396	189,076	223,384	218,497	217,490
Change in number of shares	4,887	1,007	535	195,703	0.5
Nominal value per share, DKK	0.5	0.5	0.5	0.5	0.5
Share capital (DKK ‘000)	128,858	126,409	128,852	126,405	125,637
Number of treasury shares (‘000)	3,642	3,976	4,903	6,442	7,738

Share information

	DKK
Highest share price	200
Lowest share price	62
Share price at year- end	66
Market capitalisation at year end (DKK ‘000)	17,117,525
Shares traded per year (‘000)	344,425
Average trading per business day (‘000)	1,367

SHARE CAPITAL

Ambu’s share capital is divided into two classes of shares, each with a nominal share value of DKK 0.50. Class A shares carry 1 vote per share, while Class B shares carry one vote per share. There is no difference between the financial rights pertaining to the individual share classes. All shares are paid-up in full. Ambu’s Class B share is listed on Nasdaq Copenhagen under ISIN code DK0060946788 and the short name of AMBU-B, while the Class A share is unlisted and non-negotiable. All Class A shares are owned by the three lines of descendants of Ambu’s founder, Dr Holger Hesse. The share capital consists of 34,320,000 class A shares and 223,396,432 class B shares. The total number of shares is 257,716,432.

SHAREHOLDERS

On 30 September 2022, the total number of shareholders in Ambu, whose holdings are registered by name, was 70,744 (59,131). They hold a combined 96% (98%) of the total share capital.

Back in 1987, a shareholders’ agreement was established by the holders of the Class A shares, as described in the prospectus in connection with the listing of Ambu A/S in 1992. In November 2015, a new shareholders’ agreement was established between the holders of the Class A shares, in which the agreed terms and conditions were updated. The updated shareholders’ agreement now governs the relationship between the three lines of the family and the family’s views on the company’s dividend policy, the appointment of candidates to the Board of Directors of the company, decisions concerning the possible conversion of Class A shares into Class B shares and the process of transferring or selling Class A shares. The shareholders’ agreement solely governs the family’s holdings of Class A shares, while the family’s holdings of listed Class B shares are not governed by the shareholders’ agreement. Moreover, Ambu’s Articles of Association contain provisions on the trading of Class A shares.

As of 30 September 2022, the shareholders featured in the table below had filed ownership of more than 5% of the share capital and/or votes.

	Share of capital, %	Share of votes, %
Inga Kovstrup, Fredericia	5.4	17.9
Dorrit Ragle*, Virum	0.1	17.7
Hannah Hesse, Frederiksberg	10.5	10.4
Simon Hesse, Copenhagen	6.5	14.3
N.P. Louis Hansen ApS, Nivå	3.0	3.0

Dorrit Ragle has transferred a number of Class A shares to family members, but has retained the voting rights associated with the transferred shares.

In addition to the Class A shares, the family holds approximately 13.2 million Class B shares, corresponding to 5.9% (5.9%) of the Class B share capital. The family thus controls a total of 18.4% (18.4%) of the combined Class A and Class B share capital and 62.9% (62.9%) of the votes. As per 30 September 2022, international owners hold 38% (43%) of the share capital. International owners are institutional investors from such countries as the UK, Germany and the USA.

DEVELOPMENT IN SHARE PRICE

2021/22 (INDEX 100)

150
100
50
0
Ambu C25

SHARE PRICE DEVELOPMENT

Ambu’s Class B share opened the financial year at a price of DKK 181 and ended the year at DKK 66, i.e., a change of -64%. At the end of September 2022, Ambu’s market capitalisation equalled DKK 17.1bn. By comparison, Nasdaq Copenhagen’s C25 index decreased by 22% in the same period.

TREASURY SHARES

At the end of the fiscal year, the portfolio of treasury shares comprised 3,642,313 (3,976,471), corresponding to 1.4% (1.5%) of the share capital. The reduction in treasury shares stems from the exercise of 269,165 share options and the disposal of 64,993 shares in connection with matching of the employee share program from 2019.

CAPITAL ALLOCATION

Ambu has set a course to strengthen its financial position and flexibility with the clear aim of strengthening the free cash flow and improving profitability to support future growth. In relation to this, the company has the clear goal of improving the NIBD/EBITDA gearing going forward. Ambu will not compromise on innovation and will continue to invest across innovation projects in line with the medtech industry. Historically, Ambu has been authorised to hold up to 10% of the company’s share capital as treasury shares.

INVESTOR RELATIONS

ANNUAL GENERAL MEETING 2022

The Annual General Meeting will be held on Wednesday 14 December 2022 at 13.00 at the Ambu A/S headquarters, Baltorpbakken 13, DK-2750 Ballerup. Shareholders can sign up to attend the Annual General Meeting and download all relevant material in relation to the meeting at Ambu.com/AGM.

Besides the legally required reporting, Ambu communicates with the market via press releases, investor presentations, conference calls, one-on-one meetings, etc. The aim is to ensure a well-founded share price that reflects past performance, as well as the future value creation of Ambu. Each quarter, a conference call is held to focus on the results of the past quarter, and each quarter, Ambu attends a number of meetings and conferences with investors in Denmark and abroad. Ambu seeks active dialogue with investors, share analysts, journalists and the general public.# INVESTOR RELATIONS

The share is covered by nine analysts (ABG Sundal Collier, Carnegie Bank, Danske Market Equities, Nordea Market Equities, Sydbank, J.P. Morgan Markets, DNB Markets, SEB Equities and Handelsbanken Equity Research). The Ambu.com website is updated on an ongoing basis with information about Ambu’s results, activities and strategy, and all company announcements and financial statements can be viewed and downloaded from here. Ambu’s Investor Relations policy prescribes a four- week ‘quiet period’ prior to the publication of financial reports, when communication on topics relating to Ambu’s business is restricted. During the year, Ambu issued 14 company announcements (see next page).

INVESTOR RELATIONS

NICOLAI THOMSEN
Senior Associate, Investor Relations
[email protected]

MADS LINDEGAARD
Director, Investor Relations & Strategic Finance
[email protected]

COMPANY ANNOUNCEMENTS 2021/22

No.
1	Preliminary results for full-year 2020/21
2	Annual Report 2020/21 (Earnings release)
3	Notice of Annual General Meeting
4	Capital increase in connection with exercise of warrants
5	Decisions of Annual General Meeting
6	Interim Report for Q1 2021/22
7	Capital increase in connection with exercise of warrants
8	Ambu announces new CFO
9	Major shareholder announcement – Bank of America
10	Interim Report for Q2 2021/22 and the half-year
11	Britt Meelby Jensen appointed new CEO of Ambu
12	Preliminary Results for Q3 2021/22, Current Trading (July) and launch of cost reduction program. Full year 2021/22 guidance revised
13	Interim Report for Q3 2021/22
14

FINANCIAL CALENDAR 2021/22

	2021	2022	2023
FINANCIAL CALENDAR
2021/22
Annual Report 2020/21	18 October
Annual General Meeting	14 December	15 November
Q4 quiet period starts
Annual Report 2021/22		14 December
Annual General Meeting 2022
Q1 quiet period starts	11 January
Interim Report for Q1 2021/22	8 February
Earnings release Q1 2022/23		7 February
Q2 quiet period starts	12 April
Earnings release Q2 2022/23		10 May
Interim Report for Q2 2021/22	31 August
Earnings release Q3 2022/23		30 September
Q3 quiet period starts	28 July
End of fiscal year 2022/23			13 December
Annual Report 2022/23			8 November
Annual General Meeting			30 September
Interim Report for Q3 2021/22	25 August
End of the financial year 2021/22	30 September

FINANCIAL CALENDAR 2022/23

CONSOLIDATED FINANCIAL STATEMENTS

Income statement and statement of comprehensive income
Balance sheet
Cash flow statement
Equity statement
Notes

INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

1 October – 30 September

DKKm	Income statement Note	2021/22	2020/21
Revenue	2.2	4,444	4,013
Production costs	2.3, 2.4	-1,890	-1,510
Gross profit		2,554	2,503
Selling and distribution costs	2.3, 2.4	-1,634	-1,468
Development costs	2.3, 2.4	-281	-225
Management and administrative costs	2.3, 2.4	-517	-470
Operating profit (EBIT) before special items		122	340
Special items	2.3, 2.4, 2.6	-148	0
Operating profit (EBIT)		-26	340
Financial income	4.3	169	109
Financial expenses	4.3	-34	-40
Profit before tax		143	308
Tax on profit for the year	2.7	-16	-61
Net profit for the year		127	247
Earnings per share in DKK
Earnings per share (EPS)	2.9	0.37	0.98
Diluted earnings per share (EPS-D)	2.9	0.37	0.98

Statement of comprehensive income

	2021/22	2020/21
Net profit for the year	127	247
Other comprehensive income:
Items which are moved to the income statement under certain conditions:
Translation adjustment in subsidiaries	273	33
Other comprehensive income after tax	273	33
Comprehensive income for the year	366	280

BALANCE SHEET

30 September

DKKm	Note	30.09.22	30.09.21
Assets
Non-current assets
Goodwill	3.1	1,623	1,504
Acquired technologies, trademarks and customer relations	3.2	481	407
Acquired technologies in progress	3.2	212	324
Completed development projects	3.2	764	395
Development projects in progress	3.2	458	572
Rights	3.2	27	42
Intangible assets		3,565	3,244
Land and buildings	3.3, 3.4	732	403
Plant and machinery	3.3	178	164
Other fittings and equipment	3.3, 3.4	185	169
Property, plant and equipment in progress	3.3	181	110
Property, plant and equipment		1,276	846
Deferred tax asset	2.8	70	42
Other non-current assets		70	42
Total non-current assets		4,911	4,132
Current assets
Inventories	3.5	1,222	748
Trade receivables	3.6, 4.2	747	699
Other receivables	4.2	36	20
Income tax receivable		23	13
Prepayments		78	64
Derivative financial instruments	4.2, 4.4	11	0
Cash and cash equivalents	4.2, 4.4	187	64
Total current assets		2,304	1,608
Total assets		7,215	5,740

Equity and liabilities	Note	30.09.22	30.09.21
Equity
Share capital	4.5	129	129
Other reserves	4.5	4,132	3,823
Equity		4,261	3,952
Non-current liabilities
Deferred tax	2.8	8	18
Provisions	4.2, 5.1	19	30
Interest-bearing debt	4.2, 4.4	1,766	760
Non-current liabilities		1,793	808
Current liabilities
Provisions	4.2, 5.1	4	17
Contingent consideration	4.2, 5.2	0	13
Interest-bearing debt	4.2, 4.4	79	63
Trade payables	4.2	600	364
Income tax	4.2	461	980
Other payables	4.2	0	2
Derivative financial instruments		1,161	0
Current liabilities		1,161	378
Total liabilities		2,954	1,788
Total equity and liabilities		7,215	5,740

CASH FLOW STATEMENT

1 October – 30 September

DKKm	Note	2021/22	2020/21
Operating profit (EBIT)		-26	340
Adjustment of items with no cash flow effect	3.7	227	-134
Changes in net working capital	3.8	-197	0
Interest income		-29	-79
Interest expenses and similar items		-79	-18
Income tax paid		-27	-27
Cash flow from operating activities		95	328
Investments in intangible assets		-395	-405
Investments in tangible assets		-158	-176
Sale of non-current assets		0	8
Cash flow from investing activities before acquisitions of enterprises and technology		-553	-573
Free cash flow before acquisitions of enterprises and technology		-458	-245
Acquisition of technology	5.1	-5	-3
Acquisition of enterprises	5.2	0	-298
Cash flow from acquisitions of enterprises and technology		-5	-301
Cash flow from investing activities		-558	-874
Free cash flow after acquisitions of enterprises and technology		-463	-546
Raising of long-term debt	4.6	825	11
Repayment of debt to credit institutions	4.6	-125	0
Repayment of debt to other creditors	4.6	0	575
Repayment in respect of lease liability	4.6	-52	-1,250
Exercise of options		-44	-24
Sale of treasury shares		37	65
Dividend paid		-75	-73
Dividend, treasury shares		1	1
Capital increase, Class B share capital		1	1,225
Cash flow from financing activities		586	512

Changes in cash and cash equivalents		123	-34
Cash and cash equivalents, beginning of year		64	98
Translation adjustment of cash and cash equivalents		0	0
Cash and cash equivalents, end of year		187	64

Cash and cash equivalents, end of year, are composed as follows:
Cash and cash equivalents		187	64
Bank debt		0	0
Cash and cash equivalents, end of year		187	64

EQUITY STATEMENT

1 October – 30 September

DKKm	Reserve for foreign currency translation adjustments	Share capital	Other reserves	Retained earnings	Proposed dividend	Total
Equity 1 October 2021	106	75	3,642	93	0	3,916
Net profit for the year	0	0	0	93		93
Other comprehensive income for the year	273					273
Total comprehensive income	273	0	0	93	0	366
Transactions with the owners:
Share-based payment		12				12
Tax deduction relating to share options		-7				-7
Exercise of options		11				11
Sale of treasury shares		0				0
Distributed dividend				-74		-74
Dividend, treasury shares		1				1
Share capital increase		1				1
Equity 30 September 2022	379	73	3,753	20	0	4,225

Other reserves are made up of share premium, reserve for hedging transactions, reserve for foreign currency translation adjustment, retained earnings and proposed dividend and total DKK 4,132m (DKK 3,823m).

§ Accounting policies Reserve for foreign currency translation adjustments in the consolidated financial statements comprises exchange rate differences arising from the translation of the financial statements of foreign subsidiaries to DKK as well as foreign currency translation adjustments of intercompany balances regarded as a supplement to the net investment in foreign subsidiaries.

NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS

Sections 1-5

SECTION 1: BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1.1 – Basis of preparation Page 86

SECTION 2: OPERATING PROFIT AND TAX

Note 2.1 – Segment information Page 90
Note 2.2 – Revenue Page 91
Note 2.3 – Staff costs Page 92
Note 2.4 – Depreciation, amortisation and impairment losses on non-current assets Page 93
Note 2.5 – Financial risks from operating activities Page 93
Note 2.6 – Special items Page 94
Note 2.7 – Income taxes Page 95
Note 2.8 – Deferred tax Page 96
Note 2.9 – Earnings per share Page 97

SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL

Note 3.1 – Goodwill Page 99
Note 3.2 – Other intangible assets Page 100
Note 3.3 – Property, plant and equipment Page 102
Note 3.4 – Leases Page 103
Note 3.5 – Inventories Page 104
Note 3.6 – Trade receivables Page 105
Note 3.7 – Adjustment of items with no cash flow effect Page 105
Note 3.8 – Changes in net working capital Page 105

SECTION 4: FINANCIAL RISK MANAGEMENT AND CAPITAL STRUCTURE

Note 4.1 – Financial risk management Page 107
Note 4.2 – Financial instruments Page 108
Note 4.3 – Net financials Page 110
Note 4.4 – Net interest-bearing debt Page 110
Note 4.5 – Share capital and treasury shares Page 111
Note 4.6 – Cash flows from financial liabilities classified as financing activities Page 112

SECTION 5: PROVISIONS, OTHER LIABILITIES ETC.# Section 1: BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

This section provides an overview of the accounting policies applied, as well as material estimates and assessments by the management. All the companies in the Ambu Group follow the same accounting policies, and the basic practice is described in this section. The specific accounting policies are included under the respective notes in Sections 2-5.

Section 1: Basis of preparation of consolidated financial statements

1.1 Basis of preparation

The group’s general accounting policies are described below. In connection with this, specific accounting policies have been incorporated into each of the individual notes to the consolidated financial statements. The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the EU and additional requirements in the Danish Financial Statements Act.

The group’s ultimate parent company, Ambu A/S, is a public limited company domiciled in Denmark. The financial statements of the parent company, Ambu A/S, are presented separately from the consolidated financial statements and can be found on the last pages of this report. The parent company’s separate accounting policies are shown in conjunction with the financial statements of the parent company.

The accounting policies described below have been applied consistently in the preparation of the consolidated financial statements in the years presented. The accounting policies have been applied consistently with prior year.

Basis of measurement

The consolidated financial statements are presented in Danish kroner (DKK), which is also Ambu A/S’ functional currency. All amounts are rounded to the nearest million, unless otherwise stated. The annual report has been prepared in accordance with the historical cost principle, except for derivative financial instruments and contingent consideration for business combinations, which are measured at fair value.

Applying materiality

The consolidated financial statements are a result of processing large numbers of transactions and aggregating those transactions into classes according to their nature or function. The transactions are presented in classes of similar items in the consoldiated financial statements. If a line item is not individually material, it is aggregated with other items of a similar nature in the consolidated financial statements or in the notes.

There are substantial disclosure requirements throughout IFRS. Management provides specific disclosure required by IFRS, unless the information is not applicable or considered immaterial to the economic decision-making of the users of these consolidated financial statements.

Significant accounting estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires Management to make estimates and assumptions that can have a significant effect on the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the reported carrying amounts of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in estimates may be necessary if there are changes in the circumstances on which the estimate was based, or more detailed information becomes available. Such changes are recognized in the period in which the estimate is revised.

The application of the company’s accounting policies may require Management to make judgements that can have a significant effect on the amounts recognized in the financial statement. Management’s judgement is required in particular when assessing the substance of transactions that have a complicated structure or legal form. The significant accounting estimates and judgements can potentially significantly impact the consolidated financial statement.

The Group has assessed the impact of climate risk on its financial reporting. The impact assessment was primarily focused on the valuation and useful lives of intangible assets, tangible assets and the identification and valuation of provisions and contingent liabilities, as these are judged to be the key areas that could be impacted by climate risks. No material accounting impacts or changes to judgements or other required disclosures were noted.

Management regards '2.2 Revenue' and '3.2 Other intangible assets' as the key accounting estimates and judgements used in preparation of the consolidated financial statements. Please refer to these specific notes for further information on the key accounting estimates and judgements and the assumptions applied.

1.1 Basis of preparation (continued)

Adoption of new or amended IFRSs

Management has assesed the impact of new or amended and revised accounting standards and interpretations (IFRSs) issued by IASB and IFRSs endorsed by the European Union effective on or after 1 October 2021. It has been assessed that application of amendments effective from 1 October 2021 has not had a material impact on the consolidated financial statements for 2021/22. Furthermore, Management does not anticipate any significant impact on future periods from the adoption of these amendments.

Standards not yet adopted

IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2021/22. Management expects to adopt the accounting standards and interpretations as they become mandatory. None of the new or amended standards or interpretations are expected to have significant impact on the consolidated financial statements.

Reporting under the ESEF regulation

With securities listed on a regulated market within the EU, Ambu are from 2021 required to prepare the Annual Report using a combination of the HTML format and to tag the primary consolidated financial statements using iXBRL (Inline eXtensible Business Reporting Language). The Group’s iXBRL tags have been prepared in accordance with the ESEF taxonomy, which is included in the ESEF regulation and developed based on the IFRS taxonomy published by the IFRS Foundation. The line items in the consolidated financial statements are tagged to elements in the ESEF taxonomy. For financial line items that are not directly defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except for extensions that are subtotals. The Annual Report submitted to the Danish Financial Supervisory Authority (the Officially Appointed Mechanism) are included in the zip file AMBU-2022-09-30-en.zip.

Principles of consolidation

The consolidated financial statements comprise Ambu A/S and companies in which Ambu A/S has a controlling interest. Control is deemed to be obtained if Ambu A/S owns more than 50% of the voting rights, or if Ambu A/S in any other way has a controlling interest in the company. The subsidiaries’ financial statements are adjusted if necessary to ensure that their accounting policies are consistent with those of the rest of the group. All intercompany transactions, balances, income and expenses are fully eliminated on consolidation.

Foreign currency translation

A functional currency is determined for each company in the Ambu group. The functional currency is the currency used in the primary economic environment in which the individual subsidiary operates. Transactions in foreign currencies are translated to the functional currency using the exchange rate applicable at the transaction date. Foreign exchange gains and losses in connection with the settlement of these transactions and the translation of monetary assets and liabilities in foreign currencies at the exchange rates applicable at the balance sheet date are recognized in the income statement under net financials. Receivables, payables and other monetary items denominated in foreign currencies are translated to the functional currency at the exchange rate applicable at the balance sheet date. The difference between the exchange rate applicable at the balance sheet date and the exchange rate applicable at the date on which the receivable or payable occurred or the exchange rate stated in the most recent annual report is recognized in the income statement under net financials. The financial statements of subsidiaries with a functional currency different than DKK are translated to Danish kroner at the exchange rates for balance sheet items applicable at the balance sheet date and at average exchange rates as far as income statement items are concerned.87

Section 1: Basis of preparation of consolidated financial statements

1.1 Basis of preparation (continued)

Presentation of income statement

Income and expenses are recognized according to the accruals concept. The income statement is presented by functions where the respective cost impacts the function to which the cost is deemed to relate. The group’s functions are divided into production, sales and distribution, development, as well as management and administrative costs.

Production costs

Production costs comprise costs incurred in generating the revenue for the year. Production costs include direct and indirect costs for raw materials and consumables, freight costs incurred in connection with the purchase of commodities etc., production wages and salaries for support functions and factory management, as well as depreciation and impairment of plant and depreciation of leases.

Selling and distribution costs

Selling and distribution costs comprise costs for sales staff, advertising and exhibitions, depreciation, impairment and operation of central warehouses, as well as all costs relating to the transport of goods from the group’s factories to the customers.

Development costs

Development costs comprise salaries and costs which, directly or indirectly, can be attributed to product improvements and the development of new products which do not meet the criteria for capitalization of an internally generated development project. In addition, the amortization and impairment of capitalized development costs as well as amortization of rights and acquired technologies are recognized.

Management and administrative costs

Administrative costs comprise expenses incurred for management and administration, including expenses for the administrative staff, office premises and office expenses, as well as amortization and impairment, and depreciation of leases.

Presentation of balance sheet

Prepayments

Prepayments recognized under assets comprise costs incurred in respect of the coming financial year measured at cost.

Cash flow statement

The cash flow statement has been prepared on the basis of the indirect method and shows the group’s cash flows from operating, investing and financing activities for the year. Leases concluded are considered to be non-cash transactions. Cash flows relating to assets held under leases are recognized as payment of interest and repayment of debt. Cash flow from financing activities comprise changes to the size or composition of share capital and costs incidental thereto as well as the arrangement of loans, the repayment of interest-bearing debt, the purchase and sale of treasury shares and the payment of dividend to the group’s shareholders. Cash flow denominated in currencies other than Danish kroner (DKK) are translated using average exchange rates, unless such rates deviate materially from the exchange rates applicable on the transaction date. Cash and cash equivalents comprise cash less short-term bank debt, alternating between positive and negative balances.

Section 2: OPERATING PROFIT AND TAX

Notes in this section explains line items within the net profit for the year. In 2021/22, Ambu reported EBIT before special items of DKK 122m (DKK 340m). The decrease in EBIT before special items of DKK 218m from the previous year can be ascribed to various drivers as illustrated in the table below. Reference is also made to the management commentary.

CHANGES FROM LAST YEAR AS SHOWN IN THE NOTES

	Revenue	Cost of sales*	Staff costs**	Depreciation, amortisation and impairment losses on non-current assets***	Change in value	%	Note
20/21 DA*	4,013	-1,890	-380	-352
21/22	4,444	-1,510	-352	-470	431	11%	Note 2.2
Production costs							Note 3.5
Gross profit	2,554				51	2%	Note 2.3
Gross margin, %	57.5						Note 2.4
Selling and distribution costs		-1,468	-225	-41	-177	-12%	8
Development costs		-470	340	-18	-23	-6%
Management and administrative costs		-166	-56	-148	-47	-25%
EBIT before special items		-529	-85	-71	-218	-64%
EBIT margin before special items, %	2.7
Special items	0	-49	-578	-135	-59	-71%	10
EBIT	340	431	-108%

Cost of sales include inventory write-down.
** Part of the change in staff costs change in Note “2.3 Staff costs” is included in the “Cost of sales” column under Production costs.
*** DA is an abbreviation for Depreciation, amortisation and impairment losses on non-current assets. Part of the DA under Production costs is included under “Cost of sales”.

The effective tax rate was 15% (20%), and the profit for the year was DKK 93m (DKK 247m). The average number of Class A and Class B shares in circulation was 254m (252m), and the diluted earnings per share was DKK 0.37 (DKK 0.98).

Section 2: Operating profit and tax

DKKm

2.1 Segment information

Segment reporting

Ambu is a supplier of medtech products for the global market. Except for the sales of the various products, no structural or organizational aspects allow for a division of earnings from individual products, as sales channels, customer types and sales organizations are identical for all important markets. Furthermore, production processes and internal controls and reporting are identical, which means that, with the exception of revenue, everything else is unsegmented. Ambu has thus identified one segment.

The Group operates in three geographical regions: North America, Europe and Rest of World. The geographical distribution of revenue is based on the country in which the goods are delivered. See note 2.2 for a breakdown of revenue on geography and countries that individually represent more than 10% of the Group's revenue.

The majority of the Group’s intangible and tangible assets are located in Denmark as the parent company owns the Group's intellectual property rights. Denmark accounts for DKK 2,116m (DKK 1,902m) of the figures in Europe presented below. Employed assets in North America and Rest of World primarily relates to the Group's production facilities. The management monitors goodwill as a whole, and goodwill is thus not allocated to geographical areas.

Intangible and tangible assets less goodwill by geographical region:

	2021/22	2020/21
North America	208	161
Europe	2,284	2,042
Rest of World	726	383
Total	3,218	2,586

Section 2: Operating profit and tax

DKKm

2.2 Revenue

	2021/22	2020/21	Change
Total revenue by activities
Anaesthesia	2,324	2,168	156
Patient Monitoring & Diagnostics	1,126	997	129
	994	848	146
Total revenue by markets	4,444	4,013	431
North America¹	2,140	1,787	353
Europe²	1,825	1,739	86
Rest of World	479	487	-8

¹ North America includes revenue in the USA of DKK 2,090m (DKK 1,698m).
² Europe includes revenue of DKK 438m (DKK 409m) from Germany, which accounts for more than 10% of the Group's total revenue. The Group's domicile country, Denmark, is included in Europe at DKK 52m (DKK 49m).

Delivery and payment terms

The Group's primary performance obligation is the sale and delivery of medico products to customers. The performance obligation is fulfilled when the risk of the goods is passed to the buyer, which most often occurs at delivery at the customer's address. Due to the Group's focus on disposable devices, the Group is not subject to any material guarantee obligations and customers are not entitled to return unused goods. The Group's customers have payment terms that reflect the market in which the sale takes place, which varies from 15 to 360 days. For the majority of sales payment terms are 15-60 days. Historically, the Group has not experienced any major losses on trade receivables. See note 3.6 on trade receivables and note 4.1 on credit risks.

§ Accounting policies

Revenue from the sale of goods is recognized in the income statement when all performance obligations have been fulfilled. Revenue is measured at the fair value of the agreed consideration, exclusive of VAT and taxes collected on behalf of a third party. At the time of recognition of income, a number of price adjustments are also estimated. These are recognized as a reduction to revenue.

! Material accounting estimates

Price adjustments

Price adjustments are offset against trade receivables and primarily concern sales in the USA. Price adjustments in the US market are subject to estimation uncertainty as the actual price adjustment is not determined until the dealer’s sale to the end-customer (hospitals, clinics etc.). Price adjustments are the difference between the price agreed with the end-customer and the dealer’s list price. Price adjustments in the amount of DKK 56m (DKK 61m) were recognized.# Section 2: Operating profit and tax DKKm

2.3 Staff costs

The staff costs of the group are distributed onto the respective functions as follows:

	2021/22	2020/21	Change
Production costs	416	315	101
Selling and distribution costs	883	918	-35
Development costs	79	56	23
Management and administrative costs	276	252	24
Special items	59	0	59
Total staff expenses	1,713	1,541	172
Staff costs included in intangible assets	211	179	32
Staff costs included in property, plant and equipment	9	10	-1
Total staff costs	1,933	1,730	203

Staff costs are distributed between the Executive Management, the Board of Directors and other employees as follows:

	2021/22	2020/21	Change
Remuneration, Executive Management	15	15	0
Share-based payment	-6	9	-15
Resignation payment	8	0	8
Severance payment	13	0	13
Severance pay, share-based payment	1	0	1
Staff costs, Executive Management	31	24	7
Wages and salaries	1,679	1,506	173
Pension contributions	68	59	9
Social security costs	138	126	12
Share-based payment	11	10	1
Remuneration, Board of Directors	1	1	0
Total staff costs	1,933	1,730	203

	2021/22	2020/21	Change
Average number of employees during the year	4,849	4,409	440
Number of full-time employees at the end of the year	4,437	4,584	-147

Remuneration to the Executive Management and the Board of Directors totalled DKK 37m (DKK 29m).

§ Accounting policies
Staff costs comprise remuneration, wages and salaries, pension contributions etc. and share-based payment to the company’s employees incl. termination benefits. The group has no defined benefit plans.

2.4 Depreciation, amortization and impairment losses on non-current assets

	2021/22	2020/21	Change
Amortization of intangible assets identified in connection with business combinations	44	60	-16
Amortization of intangible development projects and rights	91	38	53
Depreciation of property, plant and equipment	156	118	38
Impairment losses on non-current assets	56	0	56
Total depreciation, amortization and impairment losses	351	216	135

DKK 50m of the total impairment losses on non-current assets of DKK 60m for the year relates to the cost reduction programme announced on August 3, 2022 and recognized as 'Special items'. Refer to note 2.6 for more information.

Depreciation, amortization and impairment losses have been allocated to the following functions:

	2021/22	2020/21	Change
Production costs	78	43	35
Selling and distribution costs	38	32	6
Development costs	150	109	41
Management and administrative costs	35	32	3
Special items	50	0	50
Total depreciation, amortization and impairment losses	351	216	135

§ Accounting policies
For a description of accounting policies, reference is made to notes 3.1, 3.2 and 3.3.

2.5 Financial risks from operating activities

Foreign currency risks

The majority of Ambu's sales are invoiced in USD, EUR and GBP. The majority of Ambus production costs and OPEX are in USD, DKK, EUR, MYR and CNY. All assets and liabililties in the subsidiaries' balance sheets are denominated in foriegn currency. As a consequence, fluctuations in these exchange rates against DKK might impact Ambu’s financial position and results. The most important exchange rates in relation to risk exposure are USD, MYR, CNY and GBP (collectively referred to as ‘main currencies’). Furthermore, EUR is a currency with large exposure, but the risk is deemed limited due to DKK being pegged to EUR.

Sensitivity analysis

The following table shows the impact on the group's net profit in the event of a 10% fluctuation in the main currencies relative to the recognized financial instruments. The fluctuation of 10% constitutes the management’s assessment of a realistic exchange rate development within the main currencies. The financial instruments comprised by the sensitivity analysis include trade receivables, cash, payables, trade payables and intercompany balances. The sensitivity analysis does not take into consideration any translation effect from functional currency to presentation currency.

	Decrease of 10% in main currencies	Increase of 10% in main currencies
	2021/22	2020/21
Income statement	-93	-40
Other comprehensive income	0	0
Total	-93	-40

2.5 Financial risks from operating activities (continued)

Hedging of expected future transactions

Interest rate swaps have been entered into to hedge the group’s partial debt to credit institutions, converting floating-rate debt into fixed-rate debt. Management has decided not to apply the rules of 'hedge accounting' on the DKK 250m interest rate swap and consequently fair value adjustments are recognised in the income statement. Refer to note 4.1 and note 4.2.

	Contract value	Fair value 30.09.22	Fair value 30.09.21
Interest rate swaps:
Interest rate swap, DKK 500m, floating to fixed rate, maturity March 2022	0	0	11
Interest rate swap, DKK 250m, floating to fixed rate, maturity May 2025	250	-2	0
Total financial liabilities	500	-2	11

2.6 Special items

	2021/22	2020/21
Termination costs CEO, remuneration	13	0
Termination costs CEO, share-based payments	1	0
Severance costs	45	0
Legal and outplacement costs in relation to severance	5	0
Impairment of in-progress development projects	50	0
Write-down of Ambu® aScope™ Duodeno 1.5 inventories	49	0
Remeasurement of technology-debt	-15	0
Total special items	148	0

Special items was a net expense of DKK 148m, mainly driven by two circumstances. Firstly, cost associated with the former CEO being replaced in May 2022 was DKK 14m. Secondly, the cost reduction programme announced on August 3 2022. The cost reduction programme targets three categories. Reductions in work force, scale down in selected in-progress development projects in future technologies and new product developments within Anaesthesia and PMD and a decision not to launch Ambu® aScope™ Duodeno 1.5 in additional markets for now triggered write-down of excess inventories. Lastly, an income of DKK 15m was recognised related to a remeasurement of a historical technology acquisition within Anaesthesia. Reference is made to note 5.1.

If special items had been recognised in Operating profit (EBIT) before special items, the impact would have been allocated to the following functions:

	2021/22	2020/21
Production costs	49	0
Selling and distribution costs	32	0
Development costs	50	0
Management and administrative	17	0
Total special items	148	0

§ Accounting policies
Special items comprise costs or income that cannot be attributed directly to the Group's ordinary activities and are non-recuring of nature. Such costs include the cost related to significant restructuring of the cost base and processes as well as restructuring costs related to resignation of employees. Further special items include redundancy costs' related to Group Management and impairment of assets.

2.7 Income taxes

Ambu develops, manufactures and sells devices to hospitals and rescue services all over the world through its own companies or in collaboration with third parties. This naturally leads to cross-border transactions. In order to counter the inherent tax risk associated with being a multinational company, Ambu follows the OECD’s transfer pricing principles and general guidelines. Even though Ambu operates in OECD member countries, a tax risk still exists given the fact that applicable principles and guidelines are, to some extent, subject to interpretation by the member countries and that applicable case law is not always clear and changes over time.

Tax governance

Our work with income taxes is governed by the Tax Policy, approved by the Board of Directors. Ambu's policy is to have a low tax risk appetite and to refrain from having business in tax havens or low tax jurisdictions for the purpose of conducting tax optimization. In some jurisdictions where we operate, tax incentives are offered to all market participants. Our tax approach does not prevent us from making use of such incentives in so far as our activities are business-driven and not motivated by tax considerations. Tax incentives utilized by Ambu mainly relates to R&D activities. The majority of the current tax incentives is applied in Denmark where Ambu A/S utilizes the possibility for a R&D credit relief.

Tax risks

To counter any future tax disputes and disagreements with the authorities, the management makes estimates and assessments of the group’s tax exposure and, on the basis thereof, makes a provision for uncertain tax positions. Even though the management considers this provision to be sufficient, future liabilities may deviate from this.

	2021/22	2020/21
Tax for the year comprises:
Current tax on profit for the year	61	86
Deferred tax on profit for the year	-57	-21
Adjustment, previous years	12	-4
Tax on profit for the year	16	61
Current tax on other comprehensive income and entries on equity for the year	0	-36
Deferred tax on other comprehensive income and entries on equity for the year	9	2
Tax on other comprehensive income and entries on equity for the year	9	-34
Total income taxes for the year	25	27

Income tax paid
Paid income tax for the year was DKK 79m (DKK 27m), corresponding to 72% (9%) of realized profit before tax.

The reason for the high effective tax payment in 2021/22 compared to the realised average effective tax rate is due to timing differences from deferred tax on profits in previous years.## 2.7 Income taxes (continued)

Tax on profit for the year comprises (%):

	2021/22	2020/21
Applicable tax rate on profit for the year in Parent company	22.0	15.1
Effect of tax rate in foreign subsidiaries	-0.8	10.8
Income not subject to tax	0.3	22.0
Non-deductible costs	3.1	-1.7
Adjustment, change in tax rates	2.6	0.0
Value adjustment of contingent consideration	-1.5	14.7
Tax adjustment in respect of previous years	0.0	4.3
Additional tax deduction on R&D costs	-6.4	-3.9
Additional tax deduction on R&D costs, prior years	-0.2	19.8
Utilization of tax assets not previously recognized	2.7
Average effective tax rate (tax expense divided by profit before tax)	11.2	-17.8

§ Accounting policies

The tax for the year, which consists of current tax and changes in deferred tax, is recognized in the income statement with the portion attributable to the profit for the year, and in equity with the portion attributable to amounts recognized directly in other comprehensive income. The tax effect of share-based payment is included in tax on profit for the year with the portion attributable to the group’s deductible share of the cost from the Black-Scholes or other applied valuation model, and the remaining tax effect being included in equity. Tax is provided on the basis of the tax rules and tax rates applicable in the individual countries.

2.8 Deferred tax

DKKm	30.09.22	30.09.21
Deferred tax at 1 October	-24	-57
Currency translation adjustment	-1	-62
Deferred tax on share-based payment recognized in equity	-9	0
Deferred tax for the year recognized in the income statement	0	3
Change in respect of previous years	-24	11
Deferred tax at 30 September	-383	-48

Deferred tax relates to:

	30.09.22	30.09.21
Intangible assets	438	384
Property, plant and equipment	2	-48
Current assets	0	6
Deferred tax on share-based payment recognized in equity	3	-11
Provisions	-21	-8
Contingent consideration	-473	-473
Payables	34	34
Tax loss carry-forwards	-62	-62

Classified in the balance sheet as follows:

	30.09.22	30.09.21
Deferred tax asset	-70	-42
Deferred tax	-62	-24
Deferred tax falling due within 12 months	-76	-25

Tax losses in the group

In recognising tax loss carry-forwards in Denmark, the management has assessed whether convincing evidence was present as the Group has a history of recent losses in Denmark, which is due to high investment levels and tax deductibility of employees' share-based payments. Tax loss carry-forwards in Denmark totaling DKK 473m (DKK 378m) were recognized by end of the year. The tax loss carry- forwards are recognized on the basis of budgets, strategy plans for the individual activities approved by the management incl. tax planning opportunities that will advance the taxable profit. Estimates and assessments of future taxable income are thus consistent with the basis for the impairment tests and the measurement of contingent consideration carried out.

Unrecognized temporary differences

In Germany, unrecognized temporary deductible differences amounted to DKK 21m (DKK 23m).

§ Accounting policies

Deferred tax is measured under the balance-sheet liability method on the basis of all temporary differences between the carrying amount and tax base of assets and liabilities. Deferred tax is not recognized on temporary differences resulting from the initial recognition of goodwill. Deferred tax assets, including the tax base of tax loss carry-forwards, are recognized under other non-current assets at the expected usable value, either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Adjustment is made of deferred tax in relation to eliminations made as regards unrealised intercompany profits and losses. The value of deductible temporary differences is recognized to the extent that the management, on the basis of budgets, business plans etc., is able to render probable that the value can be offset against temporary deferred tax liabilities or against future taxable income. Tax losses are recognized to the extent that the management can render probable that these can be offset against future taxable income. Deferred tax is calculated on share-based payments to the extent that the individual scheme is deductible for the group. Deferred tax is calculated as the difference between the value of the share-based payment at the time of allocation and the fair value, whichever is higher. Deferred tax assets from share-based payment schemes are recognized proportionately over the vesting period. The tax asset is recognized in the income statement at a value corresponding to the tax deduction for the scheme-related costs recognized in the income statement. Any additional values are recognized directly in equity. Deferred tax is measured on the basis of the taxation rules and tax rates which, pursuant to the legislation in force at the balance sheet date, will apply in the individual countries at the time when the deferred tax is expected to become payable as current tax. Changes in deferred tax resulting from changes in tax rates are recognized in the income statement.

2.9 Earnings per share

	2021/22	2020/21
Net profit for the year	93,247	251,772
Average number of Class A and Class B shares in circulation (’000)	253,985	251,772
Dilutive effect of outstanding share options, warrants and employee share programmes (’000)	441	1,443
Average number of outstanding Class A and Class B shares including the dilutive effect of share-based payment settled in shares (’000)	254,426	253,215
Earnings per DKK 0.50 share (EPS) in DKK	0.37	0.98
Diluted earnings per DKK 0.50 share (EPS-D) in DKK	0.37	0.98

§ Accounting policies

Earnings per share are presented as both earnings per share and diluted earnings per share. Earnings per share are calculated as the net profit for the year divided by the average number of outstanding shares. Diluted earnings per share are calculated as the net profit for the year divided by the sum of the average number of outstanding shares including the dilutive effect of outstanding share-based payment settled in shares that are ‘in the money’. The dilutive effect of share-based payment that are ‘in the money’ is calculated as the difference between the number of shares that could be acquired at fair value for the proceeds from the exercise of the share-based payment offset against the share of the granted fair value of the share-based payment not yet recognized.

Section 3: INVESTED CAPITAL AND NET WORKING CAPITAL

This section provides explanatory notes concerning Ambu’s invested capital and net working capital.

INVESTED CAPITAL

The invested capital totalled DKK 5,919m (DKK 4,711m), corresponding to an increase of DKK 1,208m. The increase is driven by investments in intangible assets, property, plant and equipment and net working capital.

DKKm	Change in value	30.09.21	30.09.22
Intangible assets	1,276	3,244	3,565
Property, plant and equipment	70	846	1,276
Other non-current assets	-808	321	-980
Current assets	-980	1,608	759
Non-current liabilities	899	4,215	5,315
Current liabilities	-181	-985	-1,161
Add back Net-interest bearing debt (NIBD)	1,208	4,711	5,919
Invested capital
Average invested capital

NET WORKING CAPITAL

A total of DKK 1,022m (DKK 789m) was invested in net working capital at the end of 2021/22, corresponding to 23% (20%) of revenue. Significant increases in inventories were only partly offset by higher trade payables as the main driver for the increase in net working capital relative to revenue.

DKKm	30.09.21	Change in value	30.09.22	In % of revenue
Inventories	748	474	1,222	27%
Trade receivables	699	48	747	17%
Other receivables	16	0	16	0%
Prepayments	36	1	37	1%
Trade payables	-364	-236	-600	-14%
Other payables	-378	-83	-461	-10%
Net working capital	789	233	1,022	23%

3.1 Goodwill

DKKm	30.09.22	30.09.21
Cost at 1 October	1,504	1,497
Currency translation adjustment	119	7
Cost at 30 September	1,623	1,504

The carrying amount of goodwill at DKK 1,623m (DKK 1,504m) stems primarily from the business combinations of Invendo Medical GmbH in 2017 and King Systems Corp. in 2013.

Impairment testing

The Ambu group is managed as one single unit, for which reason the management monitors goodwill as a whole at group level. Consequently, the impairment test is based on the group’s total cash flows. The market value of Ambu A/S’s shares based on the quoted price of DKK 66.42 per share on Nasdaq Copenhagen at 30 September 2022 is far higher than the carrying amount of equity. Based on this market value approximation, Ambu's equity value is DKK 17bn which leaves DKK 13bn in headroom to the carrying amount of equity. Therefore, the management has concluded that the net selling price calculated on the basis of a level 1 fair value measurement proves that there is no indication of impairment of goodwill.

§ Accounting policies

On recognition, goodwill represents the excess cost of an acquisition over the fair value of the identifiable net assets of the acquired company. Subsequently, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortized. At the time of acquisition, goodwill is attributed to the cash-generating units which are expected to benefit from the business combination; however, not to a level lower than the segment level and the level on which goodwill is monitored as part of the internal financial management. The management has identified one operating segment being the whole group to which goodwill is allocated. The carrying amount of goodwill is tested for impairment together with the other non-current assets of the cash-generating unit to which goodwill has been allocated (being the whole group) and is impaired to the recoverable amount in the income statement if the carrying amount is higher.# Section 3: Invested capital and net working capital

3.2 Other intangible assets

Impairment of goodwill is recognized as a separate item in the income statement. Goodwill is tested annually for impairment, the first time being by the end of the year of recognition in connection with a business combination. Impairment of goodwill is not reversed. Impairment of other assets is reversed in so far as the assumptions and estimates on the basis of which the impairment is made have been changed. Impairments are only reversed in so far as the new carrying amount of the asset does not exceed the carrying amount of the asset after amortization, had the asset not been impaired.

DKKm	Acquired technologies, trademarks and cust. relations	Acquired technologies in development progress	Completed projects progress	Development projects in 2021/22	Rights	Total
Cost at 1 October	2,374	29	395	-	-	2,794
Currency translation adjustment	592	28	0	0	0	732
Additions during the year	324	0	0	0	-112	212
Disposals during the year	762	0	0	0	-4	758
Transferred during the year	-502	458	124	0	8	0
Cost at 30 September	2,794	132	519	-	-	3,760

Amortization and impairment losses at 1 October	-634	-23	-4	-11	-53	-725
Currency translation adjustment	-251	481	0	212	-496	0
Disposals during the year	764	0	458	0	-105	1,117
Remeasured provisions against asset¹	0	27	0	-852	1,942	2,167
Impairment losses for the year	-496	764	0	458	-105	1,117
Amortization for the year	-185	-22	0	0	0	-207
Amortization and impairment losses at 30 September	-725	-185	-4	-11	-53	-978
Carrying amount at 30 September	2,069	-53	515	-	-	2,782

¹Provisions were remeasured down for the year by DKK 26m as can be seen in note 5.1. The related asset had a carrying amount of DKK 11m prior to the remeasurement and was consequently remeasured to DKK 0. The residual of DKK 15m was then classified as an income in 'Special items'. Reference is made to note 2.6.

DKKm	Acquired technologies, trademarks and cust. relations	Acquired technologies in development progress	Completed projects progress	Development projects in 2020/21	Rights	Total
Cost at 1 October	1,985	1	405	-	-	2,391
Currency translation adjustment	591	1	0	0	0	592
Additions during the year	324	0	0	0	-140	184
Disposals during the year	762	0	0	0	0	762
Transferred during the year	-319	393	0	0	-140	0
Cost at 30 September	2,374	29	395	-	-	2,794

Amortization and impairment losses at 1 October	-634	-23	-4	-11	-53	-725
Translation adjustment	-146	-1	0	0	0	-147
Disposals during the year	-318	0	0	0	0	-318
Impairment losses for the year	0	0	0	0	0	0
Amortization for the year	-38	0	0	0	0	-38
Amortization and impairment losses at 30 September	-502	-24	0	-11	-53	-590
Carrying amount at 30 September	1,872	5	395	-	-	2,204

Material accounting estimates

Impairment of acquired technology in connection with business combinations and subsequent impairment testing thereof

The management performs an annual assessment of whether internal or external indications of impairment of the identified intangible assets exist. If there is any indication of impairment, an impairment test is carried out. The combined recoverable amount of each tested technology classified as acquired technology or a development project is determined on the basis of its value-in-use, calculated using certain key assumptions per technology, i.e. revenue growth, royalty rate and discount rate. The value-in-use cash flow projections for the individual endoscope technologies 'Colonoscopy', 'Gastroscopy' and 'Duodenoscopy' are based on the Company's five-year business plan and a growth rate to extrapolate the revenue in the remaining useful lifetime of the technology. The valuation model applied for determining the recoverable amounts is the Relief-from-royalty model assuming a pre-tax discount rate of 12.8% p.a. (10.0% p.a. net of tax), except for 'Colonoscopy' which is based on a pre-tax discount rate of 15.4% p.a. (12.0% p.a. net of tax). The impairment test made on 'Colonoscopy' and 'Gastroscopy' did not resulted in indication of impairment. The impairment testing for the 'Duodenoscopy' technology concluded no indication of impairment. However, the recoverable amount at 30 September 2022 of DKK 435m exceeds the carrying amount by DKK 19m. This indicate that a reasonably possible change in any of the deemed key assumptions would cause the recoverable amount to below the carrying amount. The revenue growth rate used in determining the recoverable amount of the 'Duodenoscopy' technology for the remaining period after the five-year business plan ranges from 12-35% with a 25% royalty rate throughout the period. The carrying amount of DKK 435m would have exceeded the recoverable amount by DKK 36m if a 12.0% p.a. net of tax discount rate had been applied instead of 10.0%. The carrying amount would have exceeded the recoverable amount by DKK 82m if a 20% royalty rate had been applied throughout the period instead of 25%.

Accounting policies

Acquired technologies, trademarks and customer relationships

Technologies, trademarks and customer relationships and technologies in progress acquired in connection with business combinations, are recognized at fair value on the time of acquisition in connection with a business combination. Subsequently, the assets are measured less accumulated amorization and impairment losses. Acquired technologies, trademarks and customer relations primarily comprise identified technologies. The individual assets are systematically amortized according to the straight-line method over the expected useful lifetime of the assets from the time the management finds that the technology is fit for use. The expected useful lifetime is 5-15 years.

Development projects and rights

Development projects that are clearly defined and identifiable and where the technical utilization degree, sufficient resources and a potential future market or scope for use in the group can be proven, and where the group intends to produce, market or use the project, are recognized as intangible assets where the cost of the project can be calculated reliably and there is sufficient certainty that the future earnings or the net selling price can cover the production costs, selling and distribution costs as well as management and administrative expenses. Other development costs are recognized in the income statement as incurred. Recognized development costs are measured at cost less accumulated amortization and impairment losses. Cost comprises salaries and other external expenses, e.g. consultancy fees and travel expenses, which are directly attributable to the group’s development activities. Upon completion of the development activity, development projects are amortized according to the straight-line method over the estimated useful life as from the time when the asset is ready for use. The basis of amortization is reduced by impairment losses, if any. The useful life of the asset may subsequently be changed if the management believes that the original assumptions on which the useful life and any residual value are based have changed significantly. Rights in the form of distribution rights and licences etc. are measured at cost less accumulated amortization and impairment losses. Rights are amortized according to the straight-line method over the shorter of the remaining term of the agreement and the useful lives of the assets. Development projects and rights are amortized according to the straight-line method over the expected useful lives of the assets. The expected useful lifetime of completed development projects are 5-10 years and 5-20 years for rights.

Impairment testing

Development projects in progress, either acquired or internally generated, are tested for impairment on an annual basis. For completed development projects, it is continuously assessed whether there is any indication of impairment. If the management finds that there is an indication of impairment, an impairment test is carried out, comparing the estimated future net cash flows with the carrying amount of the asset.

3.3 Property, plant and equipment

DKKm	Land and buildings	Other plant, fixtures and equipment	machinery	equipment in progress	Total
Cost at 1 October	474	46	332	23	875
Currency translation adjustment	167	490	-15	42	684
Additions during the year	315	-15	50	-22	328
Disposals during the year	-66	7	-20	120	141
Transferred during the year	42	5	0	-69	-22
Cost at 30 September	932	533	347	172	1,984

Depreciation and impairment losses at 1 October	-126	-15	-53	-11	-205
Currency translation adjustment	-310	-29	-42	-163	-544
Disposals during the year	-163	-7	17	0	-153
Impairment losses for the year	-11	0	0	0	-11
Depreciation for the year	-599	-55	-156	-7	-817
Depreciation and impairment losses at 30 September	-1,009	-106	-281	-181	-1,717
Carrying amount at 30 September	-77	427	66	-9	267

DKKm	Land and buildings	Other plant, fixtures and equipment	machinery	equipment in progress	Total
Cost at 1 October	438	5	410	12	865
Currency translation adjustment	18	255	61	0	334
Additions during the year	82	1	0	0	83
Disposals during the year	-5	0	0	0	-5
Transferred during the year	60	0	0	-7	53
Cost at 30 September	593	261	471	5	1,320

Depreciation and impairment losses at 1 October	-96	-2	-277	-1	-376
Currency translation adjustment	-7	-127	-500	0	-634
Disposals during the year	-1	0	0	0	-1
Impairment losses for the year	0	0	-1	0	-1
Depreciation for the year	-33	-32	-53	-4	-122
Depreciation and impairment losses at 30 September	-137	-161	-831	-5	-1,134
Carrying amount at 30 September	456	100	-360	0	186

3.4 Leases

	Land and buildings	Other plant, fixtures and fittings, tools and equipment	Total
30.09.22	539	51	590
Carrying amount of lease assets	222	58	280
Additions on lease assets during

	30.09.22	30.09.21
Lease liabilities
Less than 1 year	85	53
Between 1 and 5 years	229	112
More than 5 years	475	164
Undiscounted lease liabilities	789	329

Amounts recognized in the income statement	2021/22	2020/21
Expenses related to low value and short-term leases	2	2
Interest on lease liabilities	16	8
Depreciation of lease assets per asset class
Land and buildings	40	23
Other plant, fixtures and fittings, tools and equipment	30	26
Depreciation of lease assets	70	49

Amounts recognized in the cash flow statement	2021/22	2020/21
Total cash outflow for leases	70	54

§ Accounting policies

Lease assets are ‘right-of-use assets’, which is a contract or part of a contract that conveys the lessee’s right to use an asset for a period of time. At the commencement date, the Group recognises a lease liability and a corresponding right-of-use asset at the same amount. A right-of-use asset is initially measured at cost, which equals the initial lease liability and initial direct costs less any lease incentives received. The Group has applied the practical expedient option allowed under IFRS by using a portfolio approach for the recognition of lease contracts related to assets of the same nature and with similar lease terms. The right-of-use asset is depreciated over the earlier of the lease term or the useful life of the asset. The impairment testing of right-of-use assets follows the same principles as those applied for property, plant and equipment, cf. note 3.3. The cost price is adjusted for remeasurement of the lease liability. The Group has elected not to recognise right-of-use assets and liabilities for leases with a term of 12 months or less and leases of low-value assets. Lease payments related to such leases are recognised in the income statement as an expense on a straight-line basis over the lease term.

103 Section 3: Invested capital and net working capital

DKKm

3.5 Inventories

	30.09.22	30.09.21	Change
Raw materials and consumables	449	274	175
Finished goods	773	474	299
Inventories	1,222	748	474

	30.09.22	30.09.21	Change
Direct production costs	1,467	1,207	260
Unallocated indirect production costs incl. inbound freight	379	302	77
Freight costs on transportation between Ambu's warehouses	177	114	63
Cost of sales for the year	2,023	1,623	400

Cost of sales for the year is incurred under the following functions:

	2021/22	2020/21	Change
Production costs	1,846	1,509	337
Selling and distribution costs	177	114	63
Total	2,023	1,623	400

Write-down of inventories included in Operating Profit (EBIT):

	30.09.22	30.09.21	Change
Production costs	28	13	15
Special items	49	0	49
Total write-down	77	13	64

The write-down of inventories in 2021/22 was driven by excess Ambu® aScope™ Duodeno 1.5 inventory following the decision not to launch the scope in additional markets and by the recall of Ambu® VivaSight™ 2 DLT.

§ Accounting policies

Inventories are measured at the lower of cost calculated according to the FIFO principle and net realisable value. The net realisable value is calculated as the selling price less costs of completion and costs necessary to make the sale. The cost of goods for resale as well as raw materials and consumables comprises the acquisition price plus delivery costs. The cost of manufactured goods comprises the cost of raw materials, consumables, direct labour costs and production overheads in the form of logistics and planning costs, production management as well as expenses for production facilities and equipment etc.

104 Section 3: Invested capital and net working capital

DKKm

3.6 Trade receivables

	30.09.22	30.09.21	Change
Ageing of trade receivables:
Not due	604	542	62
1-90 days	126	124	2
91-180 days	7	16	-9
> 180 days	10	17	-7
Trade receivables	747	699	48

	30.09.22	30.09.21	Change
At end of year, trade receivables were written down by:
Not due	-3	-4	1
1-90 days	-5	-2	-3
91-180 days	-2	-1	-1
> 180 days	-4	-11	7
Provision for bad debts	-14	-18	4

Credit risks

Ambu monitors trade receivables on a daily basis by means of due date reports, changes in payment pattern trends, and ordinary follow-up routines to identify any indications that the initial expectations for credit losses on the individual receivables should be adjusted. This risk assessment is target private customers. Public-sector customers are an important part of the company’s receivables, and it is believed that no debtor risks are associated with public-sector customers. In addition to a specific assessment for expected credit losses on private customers, the Management estimates general macro risks on the portfolio of trade receivables. The Group does not use factoring in connection with the collection of debts.

§ Accounting policies

Trade receivables are measured at amortized cost less write-down for lifetime expected credit losses. To measure the expected credit losses, trade receivables are grouped according to shared credit risk characteristics and days overdue. Furthermore, an allowance for lifetime credit losses for trade receivables is recognized on initial recognition.

3.7 Adjustment of items with no cash flow effect

	2021/22	2020/21
Depreciation, amortisation and impairment losses	351	216
Share-based payment, settled in shares	12	11
Total	363	227

3.8 Changes in net working capital

	2021/22	2020/21
Changes in inventories	-402	-134
Changes in receivables	-19	-222
Changes in trade payables etc.	287	188
Total change in net working capital	-134	-163

105 Section 4: FINANCIAL RISK MANAGEMENT AND CAPITAL STRUCTURE

This section provides an overview of Ambu’s capital structure and net financials, as well as a description of the measures taken by the management to prevent and reduce the financial risks to which Ambu is exposed.

Net-interest bearing debt (NIBD) increased to DKK 1,658m (DKK 759m) during the year. The increase is driven by three components: negative free cash flow, commenced leases and distribution of dividend. The financial gearing was 3.9 (1.4) stated as NIBD / EBITDA before special items.

NET-INTEREST BEARING DEBT (NIBD) AT THE BEGINNING OF THE YEAR BRIDGED TO NIBD END OF YEAR, IN DKKM

	Amount
NIBD at beginning of year	759
Free cash flow	-717
Commenced leases	-396
Dividend	-277
Other	30
NIBD at end of year	1,658

106 Section 4: Financial risk management and capital structure

4.1 Financial risk management

Ambu is exposed to fluctuations in foreign exchange and interest rates. Furthermore, Ambu is exposed to liquidity and financing risks. These risks are managed and monitored centrally in the Parent Company in accordance with the Treasury Policy approved by the Board of Directors. Ambu does not undertake any active speculation in financial risks.

Market risk

As described above, the group is exposed to changes in foreign exchange and interest rate risks. Additionally, the group is exposed to changing raw materials prices and freight rates. Ambu's Global Procurement and Global Supply Chain function, respectively, monitor these risk and work to mitigate them to an acceptable level. The Management assesses these risks to be manageable as they represent a small value of the total cost, despite substantial increases in recent years.

Currency risk

The effect of fluctuations in foreign exchange rates on the group’s financial targets and financial position is monitored on an on- going basis. Prior year's analyses and on-going quantification of short term exposure using reckon statistical models has indicated an acceptable level of currency risk to our cash flow and financial targets. On this background, the Company continues to relay on natural hedging given the current mix of transaction in different foreign exchange rates. See note 2.5 for further information about foreign currency exposure and the 'Outlook for 2022/23' section in the Management's commentary section.

Interest rate risk

Ambu's policy is to hedge the interest rate risk to a level that will leave enough room for appropriate reductions of debt from free cash flow based on short to mid-term cash flow projections. Hedging is done through interest rate derivatives swapping floating-rate loans into fixed-rate loans. The group’s credit facilities carry floating interest rate. The development in interest rates is linked to IBOR rates. The interest rate for USD loans will be converted from LIBOR to SOFR reference rate when USD LIBOR ceases by end of June 2023. The Company has entered into a DKK 250m interest rate swap involving receipt of CIBOR 3 months and payment of a fixed interest rate of 1.24%. The derivative is not considered an accounting hedge in accordance with IFRS 9.

Liquidity and financing risk

Financing and sufficient liquidity are fundamental to Ambu’s continued operation and growth. Liquidity is managed centrally from the Parent Company. The objective of the cash management is to ensure a return for the shareholders and to ensure that adequate and flexible cash resources are being maintained, thus enabling Ambu to honour its current obligations, such as repaying loans and settling other liabilities.

Supply chain financing (SCF)

To improve the relationship with our suppliers and minimise the financing cost in the value chain Ambu has introduced a SCF programme. When participating in this programme, the supplier has the option to receive early payment from the bank based on the invoices approved by Ambu through a factoring arrangement between the supplier and the bank, where the outstanding invoices are transferred to the bank without re-course. Ambu's liability in relation to the SCF programme is the outstanding invoices, which are recognised and presented as trade payable until paid upon maturity. The trade payables covered by the SCF programme arise in the ordinary course of business from supply of goods and services and the payment terms of the suppliers there are participating in the SCF programme are not significantly extended compared to trade payables not part of the SCF programme. At the end of 2021/22, trade payables covered by the programme amounted to DKK 51m (DKK 0m).

Credit facility

To cover the group’s liquidity needs, an agreement on credit facilities for a total of DKK 1,800m has been entered into.# Section 4: Financial risk management and capital structure

The facilities carry floating interest, the minimum interest rate being 0.4-2.6%, depending on the group’s gearing and ESG performance. To hedge the interest rate risk, DKK 250m of the debt has been hedged through an interest rate swap up until 2 May 2025 at a fixed interest rate between 1.6-3.8%, depending on gearing. The credit facility is revolving and expires on 28 June 2025, but can be prolonged up to one year. The group's credit facilities are subject to standard financial covenants. The cash resources consist of cash at bank and unutilised credit facilities in banks of DKK 0.8bn (DKK 1.0bn).

4.1 Financial risk management (continued)

Cash-pool solutions are applied to a small extent and intercompany loans have been granted by Ambu A/S to a few subsidiaries. The liquidity risk is countered by a consistent focus on budgeted and realised cash flow.

Credit risk

Ambu is mainly exposed to credit risks in respect of trade receivables. The maximum credit risk corresponds to the carrying amount. Since many years, Ambu has not realised any significant losses on receivables. Reference is made to note 3.6.

Counterparty risk

Counterparty risk for cash and financial instruments are mitigated as the company's primary banks are SIFI banks.

Capital management

The primary objective of the Group’s capital management is to ensure the funding of growth of the Group, while maximizing the return to the shareholders through the optimization of the debt and equity balance. For the purpose of the Group’s capital management, capital includes share capital and all other equity reserves attributable to the equity holders of the parent. The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares.

4.2 Financial instruments

DKKm

	Carrying amount 2021/22	Total
Trade receivables	747	747
Other receivables	36	36
Cash and cash equivalents	187	187
Financial assets measured at amortized cost	970	970

	Carrying amount 2021/22	0-1 year	1-5 years	Total
Provisions	4	0	0	4
Credit institutions	51	0	0	51
Trade payables	600	23	0	600
Other payables	451	7	2	461
Financial liabilities measured at amortized cost	1,106	33	7	1,116

	Carrying amount 2021/22	0-1 year	1-5 years	> 5 years	Total
Derivative financial instruments (level 2)1	3	8	0	0	11
Financial liabilities stated at fair value in the income	3	8	0	0	11

DKKm

	Carrying amount 2020/21	Total
Trade receivables	699	699
Other receivables	20	20
Cash and cash equivalents	64	64
Financial assets measured at amortized cost	783	783

	Carrying amount 2020/21	0-1 year	1-5 years	Total
Provisions	18	0	0	18
Credit institutions	3	0	0	3
Trade payables	364	6	0	364
Other payables	370	9	0	378
Financial liabilities measured at amortized cost	755	63	11	775

	Carrying amount 2020/21	0-1 year	Total
Contingent consideration (level 3)1	149	2	151
Derivative financial instruments (level 2)1	137	2	139
Financial liabilities stated at fair value in the income	137	2	139

1Level 1: The fair value of financial instruments traded on active markets is based on the listed market prices at the balance sheet date. The listed price is used for the group’s financial assets as the current purchase price.
Level 2: The fair value of financial instruments which are not traded in an active market (e.g. over-the-counter derivatives) is determined using ordinary valuation methods.
Level 3: If no observable market data are available, the instrument is included in the last category.

Financial instruments measured at fair value

At the end of the financial year, it is assessed whether an instrument has moved between the levels of the fair value hierarchy. There have been no movements between the various levels this year or the year before. For an overview of this year’s movements in financial instruments at level 3 of the fair value hierarchy, see note 5.2.

Methods and assumptions for the determination of fair value

Derivative financial instruments
Derivative financial instruments are recognized at fair value based on a valuation report prepared by an external party who valuates the instruments based on discounted cash flows, and other inputs based on observable market data.

Contingent consideration
Contingent consideration is recognized at fair value by discounting expected cash flows based on contractual conditions and unobservable inputs such as the expected performance of the acquired assets.

§ Accounting policies

Debt to credit institutions etc. is recognized at the date of borrowing at fair value corresponding to the proceeds received less transaction costs paid. In subsequent periods, the financial liabilities are measured at amortized cost using the ‘effective rate of interest method’ so that the difference between the proceeds and the nominal value is recognized under financial expenses in the income statement for the duration of the loan term.

Derivative financial instruments are recognized as from the transaction date and are measured at fair value in the balance sheet. The fair value of derivative financial instruments is calculated on the basis of current market data as well as accepted valuation methods. Changes in the fair value of derivative financial instruments are recognized on an ongoing basis in the income statement.

Contingent consideration arising as a result of business combinations is recognized at fair value at the time of acquisition. The liability is subsequently adjusted to fair value on an ongoing basis. Other liabilities are measured at amortized cost.

4.3 Net financials

DKKm

	2021/22	2020/21
Interest income, others	1	3
Foreign exchange gains, net	21	4
Fair value adjustment, contingent consideration	137	1
Fair value adjustment, interest rate swap	10	8
Financial income	169	16

Please refer to note 5.2 for more information on the fair value adjustment of contingent consideration totaling DKK 137m.

DKKm

	2021/22	2020/21
Interest expenses, banks	16	16
Interest expenses, leases	0	8
Interest expenses, others	16	2
Fair value adjustment, contingent consideration	0	10
Effect of shorter discount period, acquisition of technology	2	4
Financial expenses	34	40

§ Accounting policies

Financial income and expenses comprise interest, exchange gains and losses, transactions in foreign currencies and amortisation of financial assets and liabilities, including leases. The timing effect and fair value adjustment of contingent consideration and the purchase price payable are classified under net financials.

4.4 Interest-bearing debt

DKKm

	30.09.22	30.09.21
Credit institutions	1,250	550
Leases	516	210
Long-term interest-bearing debt	1,766	760

	30.09.22	30.09.21
Leases	79	63
Short-term interest-bearing debt	79	63

	30.09.22	30.09.21
Interest-bearing debt	1,845	823

The table below shows the composition of the group’s net interest-bearing debt.

	30.09.22	30.09.21
Interest-bearing debt	1,845	823
- Cash and cash equivalents	-187	-64
Net interest-bearing debt	1,658	759

4.5 Share capital and treasury shares

Share capital

Ambu’s share capital is DKK 129m (DKK 129m), divided into two classes of shares with a nominal share value of DKK 0.50. A Class A share carries 10 votes per share, while a Class B share carries one vote per share. There is no difference between the economic rights pertaining to the individual share classes. All shares are paid-up in full.

	Class A shares	Class B shares
	Number of shares in thousands	Number of shares in thousands
	2021/22	2020/21
Number of shares issued, beginning of year	34,320	34,320
Capital increase, private placement	0	0
Capital increase, warrants	0	0
Number of shares issued at end of year	34,320	34,320

Capital increases

Two times in the course of 2021/22, capital increases were effected in connection with the exercising by employees of warrants allocated in 2015 and 2016. As a consequence, Ambu’s share capital was increased by a nominal amount of DKK 6,250 through the issue of 12,500 Class B shares. The total capital increase for the year consisting of 12,500 (4,886,832) Class B shares has been paid at a weighted price of DKK 61.98 (DKK 254.53).

Treasury shares

	No. ('000)	Nominal value (DKKm)	In % of share capital
	2021/22	2020/21	2021/22
Treasury shares, beginning of year	3,977	3,642	2.0
Disposals, sale of treasury shares	-66	-250	-0.1
Disposals, share options	-269	-677	-0.2
Treasury shares, end of year	3,977	4,904	2.0

Disposals of treasury shares during the year can be ascribed to the exercise of allocated option schemes by employees, as well as employee share programmes. The total selling price in 2021/22 of 334,158 (4,886,832) shares amounted to DKK 11m (DKK 103m), corresponding to a weighted price of DKK 34.17 (DKK 110.60) per share.

§ Accounting policies

Acquisition costs and consideration as well as the dividend on treasury shares are recognized directly in retained earnings under equity. Proceeds from the sale of treasury shares and the issue of shares in Ambu A/S in connection with the exercise of share options, and from the sale of employee shares or warrants are taken directly to equity.# Section 4: Financial risk management and capital structure

4.6 Cash flows from financial liabilities classified as financing activities

	DKKm	30.09.21	Cash flow	Adjustments¹	Raising of leases¹	30.09.22
Credit institutions		550	273	823	700	-52
Lease liabilities		648	0	42	42	0
		332	332	1,250	595	1,845
	DKKm	30.09.20	Cash flow	Adjustments¹	Raising of leases¹	30.09.21
Credit institutions		1,225	195	-675	-24	117
Other interest-bearing debt		24	-44	0	0	0
Lease liabilities		5	5	0	0	5
		117	117	550	0	273
		823	1,444	-743

¹Non-cash transactions.

Section 5: PROVISIONS, OTHER LIABILITIES, ETC.

Section 5 includes statutory notes and notes of secondary importance to understanding Ambu’s financial results and financial position.

5.1 Provisions

DKKm	2021/22	2020/21
Provisions at 1 October	43	41
Used during the year	-5	-3
Value adjustment	4	1
Currency translation adjustment	-24	9
Provisions at 30 September	23	43
Provisions expected to fall due:
Non-current liabilities	19	30
Current liabilities	4	13
Provisions at 30 September	23	43

At the end of the year management remeasured provisions on the basis of revised expectations to the timing of future commercial milestones. The value of the remeasurement amounted to DKK 26m, which reduced the net book value of the associated intangible asset from DKK 11m to DKK 0m. The residual income of DKK 15m was taken to Special items. Provisions at the balance sheet date concern the deferred purchase price relating to acquired technology in previous years.

§ Accounting policies

Provisions are recognized when the group, as a result of an event having occurred before or on the balance sheet date, has incurred a legal or actual liability, and it is probable that economic benefits will flow from the group in order to settle the liability. If the effect of the time value of money is significant, provisions are discounted using a pre-tax discount rate. When applying a discount rate, the change in provisions due to the timing is recognized as a financial cost.

5.2 Contingent consideration

DKKm	2021/22	2020/21
Contingent consideration at 1 October	137	426
Paid during the year	0	-298
Adjustments made through the income statement under financial expenses:
Value adjustment	-137	0
Currency translation adjustment	0	10
Contingent consideration at 30 September	0	137
Contingent consideration expected to fall due:
Current liabilities	0	137
Contingent consideration at 30 September	0	137

During 2021/22 the management remeasured the fair value of the milestone conditionally upon FDA clearance of the gastroscope latest 31 December 2021. Since the FDA clearance was not obtained at this date, the management has remeasurement the contingent consideration causing a financial income of DKK 137m. The deferred contingent consideration related to Invendo Medical GmbH acquisition has now been paid in full or lapsed. During financial year 2020/21 Ambu paid contingent consideration of DKK 298m in connection with the milestone payment concerning the FDA clearance of the duodenoscope.

§ Accounting policies

Contingent consideration is recognized at fair value at the date of acquisition by discounting expected cash flows based on contractual conditions and unobservable inputs, corresponding to level 3 of the fair value hierarchy. Adjustments to fair value are recognized in the income statement under net financials.

5.3 Share-based payment

DKKm	2021/22	2020/21
Total share-based payment costs in the income statement
Performance Share Units, amortised cost during the period based on value at grant date	4	-9
Fair value adjustment of settled-in-cash Performance Share Units	0	5
Share options, amortised cost during vesting-period based on value at grant date	3	1
Executive Management	9	-5
Performance Share Units, amortised cost during vesting-period based on value at grant date	4	1
Share options, amortised cost during vesting-period based on value at grant date	6	6
Employee shares, amortised cost during vesting-period based on value at grant date	3	1
Total costs for share-based payment in the income statement	19	6

Performance Share Units (PSU)

In 2020/21 and 2021/22 respectively, Ambu established a PSU program for the Executive Management, key employees selected on the basis of job level and individuals in a special reward programme. The financial target set by the Board of Directors was not achieved and thus all PSUs were subsequently cancelled. However, the CEO was granted a sign-on bonus in respect of a PSU program, at a grant value of DKK 1m earned over the course of three years. On the back of non-achieved targets in 2020/21 a discretionary PSU program was granted in November 2021 to the employees except Executive Management.

	Executive Management	Other and former employees	Total
	2021/22	2021/22	2020/21
Outstanding PSUs beginning of the year	127,928	66,410	0
Allocated during the year	105,190	0	127,928
Transferred during the year	-212,180	0	189,884
Exercised during the year	0	0	0
Cancelled during the year	-12,390	-66,410	127,928
Outstanding PSUs end of the year	8,548	0	0
Of which will be settled in cash

Outstanding PSUs have on average 2.6 years and 1.2 years until contract expiry for the Executive Management and 'Other and former employees', respectively. The market price on the date of exercise was DKK 85.

General terms and conditions for performance share units allocated in the current financial year:

PSU programmes	2020/21	2020/21	2021/22	2021/22
Number of persons included in the programme	25	83	1	4
Total number of PSUs granted	20,056	246,730	8,548	18,252
Number of PSUs granted to Executive Management	-	84,252	8,548	12,390
Vesting date	Nov. 2024.	Jan. 2025.	May 2025.	Jan. 2025.
Fair value per option at grant date (DKK)	187.11	167.87	94.56	75.55

5.3 Share-based payment (continued)

Share options

For all share options, final vesting is preconditional upon full or partial realisation of predetermined financial targets. Share options may be exercised for up to three years after the three-year vesting period, with the exception of the share options allocated under the ‘Big Five’ scheme, where the exercise period is postponed by 12 months to be counted from the date of vesting on 1 October 2020.

	Executive Management	Other and former employees	Total
	2021/22	2021/22	2020/21
Outstanding share options beginning of the year	331,706	1,898,411	2,373,572
Transferred during the year	159,803	-269,165	-14,802
Exercised during the year	-159,803	-14,802	0
Cancelled during the year	0	0	0
Outstanding share options end of the year	159,803	1,774,247	1,898,411
Of which are vested	1,138,654	1,043,129	1,138,654

The average market price on the date of exercise by the Executive Management was DKK 208.00 in 2020/21. The average market price on the date of exercise by other and former employees was DKK 167.65 (DKK 300.34). Outstanding share options for 'Other and former employees' have on average 1.9 years until contract expiry at an average exercise price of DKK 113.30 per option.

Other share-based payments

Ambu has offered all its employees, excluding the Board of Directors, the opportunity to acquire a number of shares based on a fixed percentage of their annual base salary. The number of shares with which an employee participates are matched free of charge after two years. The Executive Management participates with 0 shares in the current employee share programmes currently under vesting. The total market value at the time of allocation in 2022 was DKK 11m (DKK 12m) at a fair value per share of DKK 95.56 at grant date (DKK 235.81).

	Employee shares	Warrants	Total
	2021/22	2021/22	2020/21
Outstanding beginning of the year	128,361	132,094	50,258
Allocated during the year	111,795	0	-45,923
Exercised during the year	0	-12,500	-64,993
Released during the year	-64,993	-45,923	-8,068
Cancelled during the year	-13,110	-8,068	0
Outstanding end of the year	162,053	128,361	310,361

The average market price on the date of exercising warrants was DKK 147.94 (DKK 259.77). All outstanding warrants are vested and have on average 0.1 years until contract expiry and an average exercise price of DKK.

§ Accounting policy

The fair value of Ambu’s share-based payment is expensed on an accrual basis. Fair value of equity-based schemes at the time of allocation is calculated according to recognized valuation models or methods. This value is expensed over the service period for each of the respective schemes and is taken to equity. On recognition of the fair value during the service period, account is taken of the number of employees who are expected to obtain a final right to the scheme, including the conditions to which the allocation is subject. This estimate is reassessed at the end of each reporting period so that only the number of rights expected to be vested are recognised. Adjustments relating to previous periods are recognised in the period in which the adjustment is made. The fair value per unit does not change. Performance Share Units that are settled in cash are taken to liabilities, instead of equity, and the fair value adjustment of the respective scheme end of the period is expensed to P/L.# Section 5: Provisions, other liabilities, etc.

5.4 Fee to auditors appointed by the annual general meeting

	2021/22	2020/21
Audit fee	5,400	1,640
Other assurance engagements	0	0
Tax consultancy services	0	0
Other services	0	0
Total fees	5,400	1,640

5.5 Group companies

This note shows the legal entities which are consolidated in the consolidated financial statements.

Company	Reg. office	Currency	Ownership interest	Develop-ment	Sales¹	Production²	Other
Subsidiaries:
Ambu Australia Pty. Ltd.	Australia	AUD	100%	x	x
Ambu Healthcare Solutions Canada Inc.	Canada	CAD	100%		x
Ambu Ltd.	China	CNY	100%	x	x
Ambu (Xiamen) Trading Co., Ltd.	China	CNY	100%		x	x
Ambu Nordic A/S	Denmark	DKK	100%	x	x
Ambu Operations A/S	Denmark	EUR	100%			x
Ambu Rusland Holding ApS	Denmark	EUR	100%				x
Ambu Sarl	France	EUR	100%	x	x
Ambu GmbH	Germany	EUR	100%	x	x
Ambu Innovation GmbH	Germany	EUR	100%	x
Ambu India Private Limited	India	INR	100%	x	x
Ambu s.r.l.	Italy	EUR	100%	x	x
Ambu KK	Japan	JPY	100%	x	x
Ambu Sdn. Bhd.	Malaysia	MYR	100%		x
Ambu Sales & Services Sdn. Bhd.	Malaysia	MYR	100%		x
Ambu Mexico Operations S. A. DE C. V.	Mexico	EUR	100%	x	x
Ambu B.V.	Netherlands	EUR	100%	x	x
Ambu New Zealand Pty. Ltd.	New Zealand	NZD	100%		x
Ambu LLC	Russia	RUB	100%		x
Firma Ambu, S.L.	Spain	EUR	100%	x	x
Ambu AG	Switzerland	CHF	100%	x	x
Ambu Ltd.	UK	GBP	100%	x	x
Ambu Inc.	USA	USD	100%	x	x	x
King Systems Holding Inc.	USA	USD	100%	x	x	x
King Systems Corp.	USA	USD	100%	x	x	x

¹Sales include promotional activities.
²Production includes the purchase of goods for resale and the coordination thereof.

5.6 Contingent liabilities and other contractual liabilities

Contingent liabilities

Ambu’s ongoing operations and the use of Ambu’s products in hospitals and clinics etc. involve a general risk of claims for damages and sanctions against Ambu. The risk is deemed to be customary for the industry. Ambu is involved from time to time in disputes with customers and patients about Ambu’s products. Appropriate provisions are made on an ongoing basis, and product liability insurance has been taken out. The management believes that the likely outcomes of these disputes can be covered by the provisions made and recognized in the balance sheet at 30 September 2022. For a more detailed description of the group’s risks, see the ‘Risk management’ section on pages 60-64.

Other contractual liabilities

A change-of-control clause exists in respect of committed borrowing facilities, which constitute the main part of Ambu’s loan financing. Change-of-control remuneration to members of the Executive Management is subject to a maximum value corresponding to two years’ remuneration.

5.7 Related parties

The group’s related parties include the company’s Board of Directors and Executive Management and members of their families. Related parties furthermore include enterprises in which the aforementioned persons have a significant interest. During the year, no transactions, except for payment of the management’s remuneration (notes 2.3 and 5.3) and ordinary dividend payments, took place with the Board of Directors, Executive Management, major shareholders or other related parties.

5.8 Subsequent events

No material events have occurred in the period between the end of the financial year and the Board of Directors’ approval of the annual report.

5.9 Adoption of the annual report and distribution of profit

At the board meeting on 15 November 2022, the Board of Directors approved the annual report presented. Subsequently, the annual report will be presented to the shareholders of Ambu A/S for adoption at the annual general meeting on 14 December 2022 included the proposed distribution of profits for the year.

	2021/22	2020/21
Proposed dividend for the year	0	93
Transferred to distributable reserves	93	75
Dividend per share in DKK	0.00	0.29
Pay-out ratio, in % of net profit	0%	30%

§ Accounting policies
Proposed dividend is recognized as a liability at the time of adoption by the general meeting. Expected dividend payable for the year is shown as a separate reserve under equity.

5.10 Non-IFRS financial measures

The Group uses several financial metrics, which are not defined in the International FInancial Reporting Standards (IFRS). These Alternative Performance Measures (APM's) are used in the daily management of the Company and in the communication with external stakeholders. The non-IFRS financial measures are defined by management and therefore may not be comparable with other companies' measures. The most relevant APM's are: 'Organic growth', 'Special items', 'EBITDA before special items', 'Net working capital', 'Net- interest bearing debt' and 'Free cash flow before acquisitions of enterprises and technology'. Below is a reconciliation of the different APM's used in the Annual report. Key figure and ratio definitions are found in note 5.11.

Income statement APM's

	2021/22	2020/21
Operating profit (EBIT)	-26	325
Depreciations, amortizations and impairment losses on non-current assets cf. note 2.4	351	340
EBITDA	216	556
Special items cf. note 2.6	148	-50
of which depreciations, amortizations and impairment cf. note 2.4	0	0
EBITDA before special items	423	556
Depreciations, amortizations and impairment losses, not classified as Special items cf. note 2.4	-301	-216
EBIT before special items	122	340

Balance sheet and cash flow APM's

	2021/22	2020/21
Total current assets (IFRS)	2,304	1,608
Income tax receivable	-23	-13
Derivative financial instruments	-11	-64
Cash and cash equivalents	2,083	1,531
Total current assets adjusted	4,353	3,062

Total current liabilities (IFRS)	-1,161	-980
Provisions	-980	-137
Contingent considerations	13	4
Interest-bearing debt	63	79
Income tax	0	17
Derivative financial instruments	2	0
Net working capital	789	1,022

	2021/22	2020/21
Cash and cash equivalents	-187	-64
Interest-bearing debt non-current	1,766	760
Interest-bearing debt current	-63	-79
Net interest-bearing debt	1,516	617

5.10 Non-IFRS financial measures (continued)

	2021/22	2020/21
Cash flow from operating activities (IFRS)	95	328
Cash flow from investing activities (IFRS)	-558	-874
of which are acquisitions of technology	5	3
of which are acquisitions of enterprises	0	0
Free cash flow before acquisitions of enterprises and technology	-458	-543

5.11 Key figure and ratio definitions

The key figure and ratios used in the annual report is defined as shown below. 'APM' (Alternative Performance Measure) / 'IFRS' indicates whether the metric is defined by IFRS or not. Reference is made to note 5.10 for a reconciliation of APM's to IFRS.

	APM	IFRS	Definition
Income statement
Gross margin, %	X		Gross profit in % of revenue.
EBITDA before special items	X	X	Operating profit before special items, depreciation, amortization and impairment losses.
Operating profit (EBIT) before special items	X	X	Profit for the year before special items, net financials and tax
Operating profit (EBIT)		X	Profit for the year before net financials and tax
Operating Expenditures (OPEX)	X		Selling and distribution costs, development costs, management and administrative expenses as well as other operating income and expenses.
Special items (s.i.)	X		Special items comprise costs that cannot be attributed directly to the Group's ordinary activities and are non-recurring of nature.
Balance sheet
Net working capital	X	X	Inventories, trade receivables, other receivables and prepayments less trade payables and other payables.
Interest-bearing debt	X		Debt on which interest is paid, including bank debt, debt to credit institutions, lease debt and corporate bonds, but not trade payables.
Net interest-bearing debt (NIBD)	X	X	Interest-bearing debt less cash and cash equivalents.
Cash flows
Cash flow from operating activities		X	Cash flow from operating activities as defined in IAS 7.
Cash flow from investing activities		X	Cash flow from investing activities as defined in IAS 7 excluding cash flow for the acquisition of technologies and enterprises.
Free cash flow before acquisitions of enterprises and technology	X	X	The sum of cash flow from operating activities and cash flow from investing activities before acquisitions of enterprises and technology.
Acquisitions of enterprises and technology	X	X	Cash flow from the acquisition of enterprises and technologies, including payment to the seller and payment of earn-outs less cash in acquired enterprises.

5.11 Key figure and ratio definitions (continued)

	APM	IFRS	Definition
Organic growth	X		Development in revenue, adjusted for fluctuations in foreign exchange rates and the effect of acquisitions, in the past 12 months in % of revenue in the period of comparison.
Endoscopes	X		Single-use endoscopes. Currently, endoscopes comprise the following product groups: Ambu® aScope™, VivaSight™ and other endoscopes in the portfolio.
Growth in endoscopes sold	X	X	The development in the number of endoscopes sold in % of the number of endoscopes sold in the period of comparison.
Rate of cost	X		Capacity costs in % of revenue.
Tax rate	X	X	Tax for the year relative to the profit before tax.
EBITDA margin before special items	X	X	EBITDA before special items in % of revenue.
EBIT margin		X	EBIT in % of revenue.
EBIT margin before special items	X	X	EBIT before special items in % of revenue.
Return on equity	X		Net profit/loss for the year for a rolling 12-month period in relation to average equity.
NIBD/EBITDA before special items	X		Net interest-bearing debt/EBITDA before special items.
Equity ratio	X	X	Equity’s share of total assets at end of year.
Investments, % of revenue	X		Cash flow from investing activities, including assets disposed of, in % of revenue.

The Board of Directors and the Executive Management have today considered and approved the Annual Report of Ambu A/S for the financial year from 1 October 2021 to 30 September 2022. The Annual Report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.

In our opinion, the consolidated financial statements and the financial statements give a true and fair view of the Group’s and the company’s assets, equity and liabilities and financial position at 30 September 2022, and of the results of the Group’s and the company’s operations and cash flows for the financial year from 1 October 2021 to 30 September 2022.

In our opinion, the management’s review gives a fair account of the development and performance of the Group and the company, the results for the year and the Group’s and the company’s financial position, together with a description of the principal risks and uncertainties faced by the Group and the company.

In our opinion, the Annual Report of Ambu A/S for the financial year 1 October 2021 to 30 September 2022 identified as AMBU-2022-09-30-en.zip has been prepared, in all material respects, in compliance with the ESEF Regulation.

The Annual Report is submitted for adoption by the Annual General Meeting.

Copenhagen, 15 November 2022

EXECUTIVE MANAGEMENT
BRITT MEELBY JENSEN
Chief Executive Officer
THOMAS FREDERIK SCHMIDT
Chief Financial Officer

BOARD OF DIRECTORS
JØRGEN JENSEN
Chairman
CHRISTIAN SAGILD
Vice Chairman
HENRIK EHLERS WULFF
SUSANNE LARSSON
MICHAEL DEL PRADO
CHARLOTTE ELGAARD BJØRNHOFF
THOMAS BACHGAARD JENSEN
JESPER MADS BARTROFF FREDERIKSEN
Employee-elected
Employee-elected
Employee-elected

INDEPENDENT AUDITOR’S REPORT

To the shareholders of Ambu A/S

OPINION

We have audited the consolidated financial statements and the parent company financial statements of Ambu A/S for the financial year 1 October 2021 – 30 September 2022, pages 80-121 and pages 129-142, which comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including accounting policies, for the group and the parent company.

The consolidated financial statements and the parent company financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.

Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge, we have not provided any prohibited non-audit services as described in article 5(1) of Regulation (EU) no. 537/2014.

APPOINTMENT OF AUDITOR

We were initially appointed as auditor of Ambu A/S on 13 December 2017 for the financial year 2017/18. We have been reappointed annually by resolution of the general meeting for a total consecutive period of five years up until the financial year 2021/2022.

In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the financial position of the group and the parent company at 30 September 2022 and of the results of the group's and the parent company's operations and cash flows for the financial year 1 October 2021 – 30 September 2022 in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.

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 the financial year 2021/2022. These matters were addressed during our audit of the financial statements as a whole and in forming our opinion thereon. We do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. Our opinion is consistent with our long-form audit report to the Audit Committee and the Board of Directors.

Recognition of revenue in the USA due to price adjustment structure

In the US market, a significant portion of Ambu’s sales flow through dealers (third-party warehouses) who sell the products to public and private hospitals and clinics (the end-customers). Ambu’s sales price to the dealer depends on the pricing arrangement Ambu has agreed with the end-customer. As Ambu’s sales to end-customers deviate in amounts and timing from the amounts invoiced to the dealer, Ambu subsequently adjusts the price stated in the preliminary invoice. Price adjustments are recognized on an ongoing basis, and price adjustments which have not been settled at the balance sheet date are recognized as a reduction in trade receivables in the balance sheet. Reference is made to note 3.2 Other intangible assets to the consolidated financial statements.

How our audit addressed the key audit matter

We have identified, tested and assessed key internal controls and related systems which are used to process and calculate price adjustments for dealers. Further, we evaluated the sensitivity analysis on the assumptions applied in the valuations prepared by management. We assessed and reviewed management’s calculation of price adjustments by comparing the assumptions applied with the group’s trading policies, the terms of existing contracts, third-party reported data and historical price adjustment levels. We further made an assessment of the most significant parameters included in the calculation of the non-settled price adjustments as per 30 September 2022 based on historical data, accounting records and the terms of existing contracts.

Valuation of acquired technologies, etc.

based on management’s estimates of the future value based on an assessment of future cash flows on the basis of strategic plans, long-term growth and discount rate. Due to the inherent uncertainty involved in determining the net present value of future cash flows, we considered these impairment tests to be a key audit matter. Reference is made to note 2.2 Revenue to the consolidated financial statements.

How our audit addressed the key audit matter

Our audit procedures included testing the mathematical accuracy of the discounted cash flow model and comparing forecasted profitability to internally approved budgets. We focus on this area, as the assessment of non-settled price adjustments to dealers is complex and includes management estimates and judgements. We evaluated the assumptions and methodologies used in the discounted cash flow model, in particular those relating to the forecast revenue growth and EBIT margin, including comparing with historical growth rates.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs) and 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 consolidated financial statements and the parent company financial statements" (hereinafter collectively referred to as "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. We have fulfilled our responsibilities described in the "Auditor's responsibilities for the audit of the financial statements" section, including in relation to the key audit matters below. Accordingly, our audit included the design and performance of procedures to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements.

STATEMENT ON THE MANAGEMENT'S REVIEW

Management is responsible for the Management's review. Our opinion on the financial statements does not cover the 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 the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements, or our knowledge obtained during the audit, or otherwise appears to be materially misstated.

INDEPENDENCE

We are independent of the group and parent company in accordance with the International
124# 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 International Financial Reporting Standards as adopted by the EU and additional requirements of 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, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements 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 as to 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 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 the financial statements. 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.

As part of an audit conducted in accordance with ISAs and additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit.

We 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.

We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's and the parent company's internal control.

We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.

We evaluate the overall presentation, structure and contents of the financial statements, including the note disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view.

We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's and the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such 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 and the parent company to cease to continue as a going concern.

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 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

REPORT ON COMPLIANCE WITH THE ESEF REGULATION

As part of our audit of the financial statements of Ambu A/S we performed procedures to express an opinion on whether the annual report for the financial year 1 October 2021 – 30 September 2022 with the file name AMBU-2022-09-30-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.

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 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.

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;
Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified;
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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements and the parent company financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

In our opinion, the annual report for the financial year 1 October 2021 – 30 September 2022 with the file name AMBU-2022-09-30-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.

Copenhagen, 15 November 2022

SØREN SKOV LARSEN
State Authorised Public Accountant
mne26797

HENRIK PEDERSEN
State Authorised Public Accountant
mne35456

EY Godkendt Revisionspartnerselskab
CVR no.

Following prior years’ acquisitions including the acquisition of Invendo Medical GmbH in October 2017, the group has recognized acquired technologies, trademarks and customer relations and acquired technologies in progress totalling DKK 693 million as per 30 September 2022. Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act. The value of acquired intangible assets was initially determined in connection with the purchase price allocation. Subsequent, additional internally generated development costs associated to the acquired technologies have been capitalized. In case of indications of impairment, an impairment test is prepared, Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the Management's review.# FINANCIAL STATEMENTS – PARENT COMPANY

Income statement and statement of comprehensive income

Ambu A/S Financial statements for the period 1 October – 30 September

Income statement	Note	2021/22	2020/21
Revenue		3,387	2,646
Production costs		-2,363	-1,885
Gross profit		1,024	761
Selling and distribution costs	2.1, 2.2	-375	-271
Development costs	2.1, 2.2	-273	-222
Management and administrative costs	2.1, 2.2	-314	-322
Operating profit (EBIT) before special items		62	-54
Special items	2.3	-148	0
Operating profit (EBIT)		-86	-54
Financial income	4.2	148	33
Financial expenses	4.2	-29	-533
Profit before tax		533	-511
Tax on profit for the year	2.4	-32	-132
Net profit for the year		501	-643

Statement of comprehensive income

DKKm		2021/22	2020/21
	Net profit for the year		501
	Other comprehensive income		0
	Comprehensive income for the year		501

BALANCE SHEET

Ambu A/S Financial statements at 30 September

Assets	Note	30.09.22	30.09.21
Completed development projects	3.1	766	394
Rights	3.1	697	746
Goodwill	3.1	147	147
Development projects in progress	3.1	456	567
Intangible assets		2,066	1,854
Property, plant and equipment	3.2, 3.4	197	195
Investments in subsidiaries	3.3	2,094	2,102
Deferred tax asset	2.5	4	0
Other non-current assets		2,098	2,102
Total non-current assets		4,361	4,151
Inventories	3.5, 4.1	282	158
Trade receivables	3.6, 4.1	137	172
Receivables from subsidiaries	4.1	529	11
Income tax receivable		11	4.1
Other receivables	4.1	176	6
Prepayments		39	29
Derivative financial instruments	4.1	11	0
Cash and cash equivalents	4.1	127	18
Total current assets		1,142	569
Total assets		5,503	4,720

Equity and liabilities	Note	30.09.22	30.09.21
Share capital		129	129
Other reserves		3,284	3,284
Equity		3,413	3,413
Deferred tax	2.5	0	11
Provisions	4.1, 5.1	19	30
Interest-bearing debt	4.1	1,345	651
Payables to subsidiaries	4.1	23	38
Non-current liabilities		1,387	730
Provisions	4.1, 5.1	4	12
Interest-bearing debt	4.1, 5.2	0	230
Trade payables	4.1	12	130
Payables to subsidiaries	4.1	330	8
Income tax	4.1	0	97
Other payables	4.1	13	201
Derivative financial instruments	4.1	0	0
Current liabilities		703	577
Total liabilities		2,090	1,307
Total equity and liabilities		5,503	4,720

CASH FLOW STATEMENT

Ambu A/S Financial statements for the period 1 October – 30 September

Note	2021/22	2020/21
Operating profit (EBIT)		-86
Adjustment of items with no cash flow effect	3.7	208
Changes in net working capital	3.8	-209
Interest income and similar items		0
Interest expenses and similar items		-20
Income tax received		5
Cash flow from operating activities		-102
Investments in non-current assets		-421
Investments in subsidiaries		-1
Dividend from subsidiaries		-446
Sale of non-current assets		7
Cash flow from investing activities before acquisitions of enterprises and technology		-415
Free cash flow before acquisitions of enterprises and technology		-517
Acquisition of technology		-5
Acquisition of enterprises		0
Cash flow from acquisitions of enterprises and technology		-5
Cash flow from investing activities		-507
Free cash flow after acquisitions of enterprises and technology		-507
Raising of long-term debt		825
Repayment of debt to credit institutions		0
Repayment of debt to other creditors		-11
Repayment in respect of lease liability		0
Exercise of options		37
Sale of treasury shares		-75
Dividend paid		1
Dividend, treasury shares		0
Capital increase, Class B share capital		1
Cash flow from financing activities		631
Changes in cash and cash equivalents		109
Cash and cash equivalents, beginning of year		18
Translation adjustment of cash and cash equivalents		0
Cash and cash equivalents, end of year		127
Cash and cash equivalents, end of year, are composed as follows:
Cash and cash equivalents		127
Bank debt		0
Cash and cash equivalents, end of year		127

EQUITY STATEMENT

Ambu A/S Financial statements for the period 1 October – 30 September

DKKm	Reserve for hedging transactions	Reserve for development costs	Retained earnings	Proposed dividend	Share capital	Total Equity
Equity 1 October 2021	129	0	726	-151	2,483	3,413
Net profit for the year	210	0	0	59	0	269
Other comprehensive income for the year	0	0	0	0	0	0
Total comprehensive income	210	0	0	59	0	269
Transactions with the owners:
Share-based payment	8	0	0	0	0	8
Tax deduction relating to share options	-5	0	0	0	0	-5
Exercise of options	11	0	0	0	0	11
Distributed dividend	-74	0	0	-74	0	-148
Dividend, treasury shares	-1	0	0	0	0	-1
Share capital increase	0	0	1	0	1	2
Equity 30 September 2022	129	0	936	2,348	2,503	5,919

DKKm	Reserve for hedging transactions	Reserve for development costs	Retained earnings	Proposed dividend	Share capital	Total Equity
Equity 1 October 2020	126	0	453	-326	1,444	2,097
Net profit for the year	73	0	0	22	0	95
Other comprehensive income for the year	0	0	0	0	0	0
Total comprehensive income	73	0	0	22	0	95
Transactions with the owners:
Share-based payment	7	0	0	0	0	7
Tax deduction relating to share options	33	0	0	0	0	33
Exercise of options	37	0	0	0	0	37
Sale of treasury shares	65	0	0	0	0	65
Distributed dividend	-72	0	0	-72	0	-144
Dividend, treasury shares	1	0	0	0	0	1
Share capital increase, warrants	1,222	0	0	0	0	1,222
Equity 30 September 2021	129	0	726	-151	2,483	3,413

Other reserves are made up of reserve for hedging transactions, reserve for foreign currency translation adjustment, reserve for development costs, retained earnings and proposed dividend and total DKK 3,284m (DKK 3,284m). Other reserves are free for distribution with the exception of the reserve for development costs.

§ Accounting policies

Reserve for development costs

Contrary to the accounting policies applied in the consolidated financial statements, in accordance with the Danish Financial Statements Act Ambu A/S must tie up a reserve in equity, corresponding to the capitalized value of development costs (see note 3.1). The amortization of the capitalized development costs as well as deferred tax is set off against this reserve.

NOTES ON THE FINANCIAL STATEMENTS

Ambu A/S Financial statements

1.1 Basis of preparation

Ambu A/S is a public limited company domiciled in Denmark. Ambu A/S is the Parent company of the Ambu group. The financial statements of the Parent company are included in the consolidated financial statements in accordance with the provisions of the Danish Financial Statements Act.

General

The financial statements of the Parent company are presented in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the EU as well as additional requirements in the Danish Financial Statements Act.

Accounting policies – Parent company

For information on accounting policies, reference is made to note 1.1 to the consolidated financial statements. In addition, the accounting policies of the Parent company are supplemented for the following items: Equity statement, 2.6 Special items, 3.3 Investments in subsidiaries and 4.2 Net financials.

For information relating to the Parent company, reference is made to the following notes in the consolidated financial statements:

3.1 Goodwill
3.2 Other intangible assets
4.5 Share capital and treasury shares
5.3 Share-based payment
5.6 Contingent liabilities
5.8 Subsequent events
5.9 Adoption of the annual report etc.

The accounting policies have been applied consistently in the preparation of the financial statements of the Parent company for the years presented, as well as being consistent with previous years.

2.1 Staff costs

The staff costs of the parent company are distributed onto the respective functions as follows:	2021/22	2020/21
Production costs	8	8
Selling and distribution costs	108	114
Development costs	176	150
Management and administrative costs	196	189
Special items	32	0
Total staff costs	520	461

Staff costs are distributed between the Executive Management, the Board of Directors and other employees as follows:

DKKm		2021/22	2020/21
	Remuneration, Executive Management		15
	Share-based payment		-6
	Resignation payment		8
	Severance payment		13
	Severance, share-based payment		1
	Staff costs, Executive Management		31
	Wages and salaries		427
	Pension contributions		40
	Social security costs		9
	Share-based payment		7
	Remuneration, Board of Directors		5
	Total staff costs		520

| Average number of employees during the year | 569 | 517
| Number of full-time employees at the end of the year | 507 | 567

2.2 Depreciation, amortization and impairment losses on non-current assets

DKKm		2021/22	2020/21
	Amortization of intangible development projects and rights		125
	Depreciation of property, plant and equipment		25
	Impairment losses on non-current assets		50
	Total depreciation, amortization and impairment losses		200

Depreciation, amortization and impairment losses have been allocated to the following functions:

DKKm		2021/22	2020/21
	Selling and distribution costs		2
	Development costs		129
	Management and administrative costs		19
	Special items		50
	Total depreciation, amortization and impairment losses		200

2.3 Special items

DKKm		2021/22	2020/21
	Termination costs CEO, remuneration		13
	Termination costs CEO, share-based payments		1
	Severance costs in the group		45
	Legal and outplacement costs in relation to severance		5
	Impairment of in-progress development projects		50
	Effect from the decision not to expand Ambu® aScope™ Duodeno 1.5 into new markets		49
	Remeasurement of technology-debt		-15
	Total special items		148

§ Accounting policies

Special items

Special items comprise costs or income that cannot be attributed directly to the Parent ordinary activities and are non-recuring of nature.Such costs include the cost related to significant restructuring of the cost base and processes as well as restructuring costs related to resignation of employees in the Parent company and cost charged by subsidiaries related to such. Further special items include redundancy costs' related to Group Management and impairment of assets.

2.4 Tax on profit for the year

	2021/22	2020/21
Current tax on profit for the year	-5	-31
Deferred tax on profit for the year	10	-5
Adjustment, previous years	-32	-17
Total tax on profit for the year	-26	-54

Tax on profit for the year comprises (%):

	2021/22	2020/21
Applicable tax rate on profit for the year in Parent company	22.0	371.2
Income not subject to tax	14.7	-338.7
Non-deductible costs	-1.4	0.0
Value adjustment of contingent consideration	-83.7	0.0
Additional tax deduction on R&D costs	-62.5	0.0
Additional tax deduction on R&D costs, prior years	61.1	0.0
Tax adjustment in respect of previous years	37.1	168.8
Average effective tax rate (tax expense divided by profit before tax)	16.1	32.1

The group’s transfer pricing setup is based on the widely used principal model. In this model Ambu A/S distributes an arm's length profit to its subsidiaries and any residual profit is repatriated back to Ambu A/S for taxation. The taxable profit is then reduced by deductions from investments made. Furthermore, income tax payable is reduced by Ambu A/S’s tax deduction resulting from the employees’ gains from exercised warrants and share options. Such gains are subject to personal tax.

Income tax paid

Ambu A/S received a tax refund for the year of DKK 5m (DKK 5m) attributable to additional tax deduction on R&D costs in accordance with the Danish Tax Assessment Act.

135
Notes on the financial statements – Ambu A/S financial statements
DKKm

2.5 Deferred tax

	30.09.22	30.09.21
Deferred tax at 1 October	11	6
Deferred tax on share-based payment recognized in equity	-31	-10
Deferred tax for the year recognized in the income statement	4	85
Change in respect of previous years	-32	-44
Deferred tax at 30 September	11	37

Deferred tax relates to:

	30.09.22	30.09.21
Intangible assets	444	388
Property, plant and equipment	-4	-7
Current assets	6	8
Deferred tax on share-based payment recognized in equity	388	-7
Provisions	25	10
Contingent consideration	-3	-2
Payables	0	1
Tax loss carry-forwards	-473	-378

3.1 Intangible assets

	Development in progress	Completed development projects	Goodwill	Rights	Total
2021/22
Cost at 1 October	706	567	399	0	1,672
Additions during the year	502	0	4	0	506
Disposals during the year	-4	0	0	0	-4
Transferred during the year	-502	502	0	0	0
Cost at 30 September	702	1,069	403	0	2,174
Amortization and impairment losses at 1 Oct	-170	-11	-50	0	-231
Currency translation adjustment	0	0	0	0	0
Disposals during the year	1	0	0	0	1
Impairment losses for the year	0	0	0	0	0
Amortization for the year	-312	-45	0	0	-357
Amortization and impairment losses at 30 Sep	-481	-56	-50	0	-587
Carrying amount at 30 September	221	1,013	353	0	1,587

	Development in progress	Completed development projects	Goodwill	Rights	Total
2020/21
Cost at 1 October	147	916	12	0	1,075
Additions during the year	706	0	0	0	706
Disposals during the year	-4	-17	0	0	-21
Transferred during the year	0	139	0	0	139
Cost at 30 September	849	1,038	12	0	1,900
Amortization and impairment losses at 1 Oct	-170	-40	0	0	-210
Disposals during the year	0	4	0	0	4
Impairment losses for the year	-40	-46	0	0	-86
Amortization for the year	-404	-86	0	0	-490
Amortization and impairment losses at 30 Sep	-614	-168	0	0	-782
Carrying amount at 30 September	235	870	12	0	1,118

136
Notes on the financial statements – Ambu A/S financial statements
DKKm

3.2 Property, plant and equipment

	Land and buildings	Plant and machinery	Other fixtures and equipment	Assets in progress	Total
2021/22
Cost at 1 October	274	139	1	140	554
Additions during the year	1	117	5	126	249
Disposals during the year	0	-3	0	-8	-11
Transferred during the year	0	0	0	-17	-17
Cost at 30 September	275	253	6	241	775
Depreciation and impairment losses at 1 October	-17	-62	0	0	-79
Disposals during the year	0	2	0	0	2
Impairment losses for the year	0	-6	0	0	-6
Depreciation for the year	-19	-79	-1	0	-99
Depreciation and impairment losses at 30 September	-36	-145	-1	0	-182
Carrying amount at 30 September	239	108	5	241	593

2020/21
Cost at 1 October	127	89	1	31	248
Additions during the year	127	5	0	117	249
Disposals during the year	-1	0	0	-35	-36
Transferred during the year	0	0	0	0	0
Cost at 30 September	253	94	1	113	461
Depreciation and impairment losses at 1 October	-11	-50	0	0	-61
Disposals during the year	1	0	0	0	1
Impairment losses for the year	0	-7	0	0	-7
Depreciation for the year	-7	-18	-1	0	-26
Depreciation and impairment losses at 30 September	-17	-75	-1	0	-93
Carrying amount at 30 September	236	19	0	113	368

137
Notes on the financial statements – Ambu A/S financial statements
DKKm

3.3 Investments in subsidiaries

	2021/22	2020/21
Cost at 1 October	2,578	2,286
Additions	1	292
Cost at 30 September	2,579	2,578
Impairment losses at 1 October	-476	-476
Impairment losses for the year	-9	0
Impairment losses at 30 September	-485	-476
Carrying amount at 30 September	2,094	2,102

In the financial year 2021/22, subsidiaries distributed DKK 7m (DKK 512m) in dividends to the Parent company, which reduced the net book value of the investments. Impairment losses for the year was DKK 9m of which DKK 6m (DKK 476m) was taken to financial expenses to reflect the lower carrying amount and the remainder was offset against payables to subsidiaries. Reference is made to note 5.5 to the consolidated financial statements for an overview of the company’s subsidiaries.

§ Accounting policies
Investments in subsidiaries are measured at cost including goodwill. If there is any indication of impairment, an impairment test is carried out. Where the cost exceeds the recoverable amount, write-down for impairment is made to the lower value.

138
Notes on the financial statements – Ambu A/S financial statements
DKKm

3.4 Leases

	Land and buildings	Other plant, fixtures and fittings, tools and equipment	Total
30.09.22
Carrying amount of lease assets	111	8	119
30.09.21
Carrying amount of lease assets	115	8	123
Additions on lease assets during the year	15		15

	30.09.22	30.09.21
Lease liabilities
Less than 1 year	12	11
Between 1 and 5 years	37	37
More than 5 years	75	82
Undiscounted lease liabilities	124	130

	2021/22	2020/21
Amounts recognized in the income statement
Expenses related to low value and short-term leases	0	0
Interest on lease liabilities	4	3
Depreciation of lease assets per asset class
Land and buildings	4	4
Other plant, fixtures and fittings, tools and equipment	4	4
Depreciation of lease assets	8	8

Amounts recognized in the cash flow statement
Total cash outflow for leases	11	12

3.5 Inventories

	30.09.22	30.09.21
Raw materials and consumables	16	3
Finished goods	266	173
Total	282	176
Cost of sales for the year	2,275	1,875
Write-down of inventories included in production costs for the year	18	1

139
Notes on the financial statements – Ambu A/S financial statements
DKKm

3.6 Trade receivables

	30.09.22	30.09.21
Ageing of trade receivables:
Not due	119	137
1-90 days	13	8
91-180 days	2	1
> 180 days	2	3
Trade receivables	136	149
At end of year, trade receivables were written down by	3	0

3.7 Adjustment of items with no cash flow effect

	2021/22	2020/21
Depreciation, amortisation and impairment losses	200	116
Share-based payment, settled in shares	8	7
Total	208	123

3.8 Changes in net working capital

	2021/22	2020/21
Changes in inventories	-106	-36
Changes in receivables	10	-69
Changes in balances with group companies	-245	-209
Changes in trade payables etc.	132	-139
Total	-209	-453

140
Notes on the financial statements – Ambu A/S financial statements
DKKm

4.1 Categories of financial instruments

The Parent Company has recognised the following financial instruments:

	30.09.22	30.09.21
Receivables from subsidiaries	529	172
Trade receivables	137	158
Other receivables	6	5
Cash	127	0
Receivables and cash and cash equivalents	799	335
Derivative financial instruments (level 2)	11	0
Financial assets recognized at fair value	11	0

Credit institutions	1,250	550
Provisions	23	43
Trade payables	230	97
Payables to subsidiaries	353	127
Other payables	0	0
Financial liabilities recognised at amortised cost	1,856	817
Contingent consideration (level 3)	0	130
Derivative financial instruments (level 2)	2	0
Financial liabilities stated at fair value in the income statement	2	130

The parent company’s payables fall due as follows:

	0-1 year	1-5 years	> 5 years	Total
2021/22
Credit institutions	0	4	687	691
Provisions	12	23	0	35
Other financial liabilities	0	7	0	7
Total	12	34	687	733

	0-1 year	1-5 years	> 5 years	Total
2020/21
Credit institutions	130	424	0	554
Provisions	30	0	0	30
Contingent consideration	0	0	130	130
Other financial liabilities	0	0	0	0
Derivative financial instruments	2	0	0	2
Total	162	424	130	716

141
Notes on the financial statements – Ambu A/S financial statements
DKKm

4.2 Net financials

	2021/22	2020/21
Interest income, others	1	3
Foreign exchange gains, net	0	17
Dividend from subsidiaries	7	512
Fair value adjustment, contingent consideration	130	0
Fair value adjustment, interest rate swap	10	1
Financial income	148	533

	2021/22	2020/21
Interest expenses, subsidiaries	0	3
Interest expenses, banks	16	16
Interest expenses, leases	4	3
Foreign exchange loss, net	1	0
Fair value adjustment, contingent consideration	0	2
Effect of shorter discount period, acquisition of technology	6	0
Impairment, investments in subsidiaries	29	476
Financial expenses	56	500

§ Accounting policies
Dividend from subsidiaries is recognised under financial income at the time that the dividend is declared.# Notes on the financial statements – Ambu A/S financial statements

DKKm

5.1 Provisions

Provisions at 1 October	2021/22	2020/21
Used during the year	43	41
Value adjustment	-5	-3
Currency translation adjustment	4	1
Provisions at 30 September	43	39
Provisions expected to fall due:
Non-current liabilities	19	30
Current liabilities	23	13
Provisions at 30 September	42	43

5.2 Contingent consideration

Contingent consideration at 1 October	2021/22	2020/21
Paid during the year	130	404
Adjustments made through the income statement under financial expenses:
Value adjustment	-130	-283
Currency translation adjustment	0	9
Contingent consideration at 30 September	0	0
Contingent consideration expected to fall due:
Current liabilities	0	0
Contingent consideration at 30 September	0	0

5.3 Fee to auditors appointed by the annual general meeting

	2021/22	2020/21
Audit fee	2	1
Other assurance engagements	0	0
Tax consultancy services	1	2
Other services	0	0
Total fees	3	3

5.4 Related parties

The Parent company’s related parties include subsidiaries, the company’s Board of Directors and Executive Management and members of their families. Related parties furthermore include enterprises in which the aforementioned persons have a significant interest. Ambu A/S has engaged in the following important transactions with related parties:

	2021/22	2020/21
Sale of goods and services to subsidiaries	2,871	2,674
Purchase of goods and services from subsidiaries	2,245	2,251
Purchase of development services from subsidiaries capitalized as development projects	45	51

During the year, no transactions, except for payment of the Management’s remuneration and intercompany transactions eliminated in the consolidated financial statements, have been carried out with the Board of Directors, Executive Management, senior employees, major shareholders or other related parties. Outstanding balances and receivables in respect of related parties, essentially arising from ordinary business relations, i.e. the purchase and sale of goods and services, are included in the balance sheet of the Parent company. Such transactions are carried out on the same terms as apply to the group’s other customers and suppliers. For information on the year’s interest on intercompany loans, see note 4.2. The Parent company has provided loans to a number of subsidiaries. The loans carry interest on market terms. Guarantees have been provided to banks in respect of the subsidiaries. The subsidiaries have not furnished security for their debt to the Parent company.

	2021/22	2020/21
Guarantees and security provided on behalf of subsidiaries	455	142

Ambu A/S
Baltorpbakken 13
DK-2750 Ballerup
Denmark
Telephone: +45 7225 2000
Registration no. 63644919
Ambu.com

Editors
Kasper Hartvig Lind
Tine Bjørn Schmidt
Mads Lindegaard
Nicolai Thomsen
Mihika Deb

Design and layout
Ambu A/S

Released 15 November 2022

AI assistant

Ambu — Annual Report 2022

AMBU A/S

Revisionspåtegning

Grundlag for konklusion

Konklusion

ANNUAL REPORT 2021/22

ANNUAL REPORT 2021/22

MANAGEMENT REVIEW

2 INTRODUCTION

3 FINANCIAL HIGHLIGHTS

4 AMBU AT A GLANCE

FINANCIAL HIGHLIGHTS 2021/22

REVENUE SHARE BY GEOGRAPHY

REVENUE BY BUSINESS AREA

COMPANY

5 HIGHLIGHTS OF THE YEAR

7 LETTER FROM THE CEO

GREAT SUCCESSES

TURNING POINT

ADVANCING OUR FOUNDATION

STRONG GROWTH PROSPECTS

LETTER FROM THE CHAIRMAN

ACTIONS TO IMPROVE PERFORMANCE

FALLING SHORT OF ASPIRATIONS

THANK YOU

OUR BUSINESS

OUR PURPOSE

TOGETHER

WE RETHINK

SOLUTIONS

SAVE LIVES AND IMPROVE PATIENT CARE

HOW WE CREATE VALUE

OUR INNOVATION ENGINE

OUR HIGH-SCALE, LOW-COST MANUFACTURING

OUR SALES AND MARKETING ORGANISATION

Making a difference in Visualization

DISRUPTING FLEXIBLE BRONCHOSCOPY

2009

2011

2013

2017

2020

2022

STRATEGY

OUR ASPIRATION

FOUR STRATEGIC ZOOM AREAS

PROVIDE INNOVATIVE SOLUTIONS FOR TRUE CUSTOMER NEEDS

EXCEL IN EXECUTION ACROSS THE VALUE CHAIN

TAKE LEAPS TOWARDS A SUSTAINABLE FUTURE

BRING PEOPLE TOGETHER IN ONE SHARED CULTURE

LONG-TERM FINANCIAL ASPIRATION

GROWTH DRIVERS

PRODUCT PORTFOLIO

PATIENT VISUALIZATION

ANAESTHESIA

MONITORING & DIAGNOSTICS

22 VISUALIZATION DRIVERS AND TRENDS OF SINGLE-USE ENDOSCOPY

23 INCREASED FOCUS ON PATIENT SAFETY

WORKFLOW AND EFFICIENCY BENEFITS

RAPID TECHNOLOGY ADVANCEMENTS

24 PRESENCE IN ALL FOUR MAJOR ENDOSCOPY SEGMENTS

PULMONOLOGY

EAR, NOSE AND THROAT (ENT)

UROLOGY

GASTRO- ENTEROLOGY (GI)

25 A POWERFUL ENDOSCOPY ECOSYSTEM - DISPLAY AND PROCESSING UNITS

26 ENDOSCOPE INNOVATION PIPELINE

PULMONOLOGY

EAR, NOSE & THROAT (ENT)

UROLOGY

GASTROENTEROLOGY (GI)

DISPLAY AND PROCESSING UNITS

27 POTENTIAL IN THE ENDOSCOPY MARKET

28 PULMONOLOGY

UROLOGY

Ambu® aScope™ 4 Cysto

ENT

GASTROENTEROLOGY

Ambu® aScope™ Gastro

Ambu Annual Report 2022