HansaMatrix — Remuneration Information 2022

Apr 29, 2022

STOCK COMPANY "HANSAMATRIX" UNIFIED REGISTRATION NUMBER 40003454390

YEAR 2021 MANAGEMENT BOARD AND SUPERVISORY COUNCIL DIRECTORS REMUNERATION REPORT

Prepared according to the requirements of Financial Instrument Market Law of the Republic of Latvia

CONTENT

1.	INTRODUCTION	3
2.	BOARD AND COUNCIL REMUNERATION	5
3.	ACTUAL REMUNERATION COMPLIANCE WITH REMUNARATION POLICY	8
4.	THE CHANGE OF REMUNERATION AND COMPANY PERFORMANCE	9
5.	ALTERNATIVE PERFORMANCE INDICATORS	9

1. INTRODUCTION

Remuneration report (hereinafter – the "Report") of the members of the Management Board of Directors (hereinafter – the "Management Board" or "Board") and the Supervisory Council (hereinafter – the "Council") of the Stock Company HansaMatrix (hereinafter "HansaMatrix" or the "Company" or "the Group") for 2021 has been prepared in accordance with the Financial Instruments Market Law of the Republic of Latvia and HansaMatrix remuneration policy (hereinafter - the "Policy") for board and council members (hereinafter – "Directors"), approved by the decision of the shareholders' meeting of the Company of 22 May 2020 (Minutes No. 2020-SHM1).

HansaMatrix Group closed the year 2021 with a revenue from contracts with customers (hereinafter – revenue, sales or turnover) of EUR 21.96 million, decreasing by 2.77% compared to the EUR 22.59 million turnover reported in 2020.

In the reporting period, the Group EBITDA was EUR 3.732 million, showing a 23% increase in comparison with EUR 3.034 million in 2020; the net profit was negative EUR 1.952 million in comparison with the net loss of EUR 0.847 million in 2020.

For a better comparison of interim profitability, the Group calculates normalized profit, which in 2021 amounted to 0.928 million EUR and was 107% higher in comparison with the normalized profit of 0.449 million EUR in 2020.

Revenue decrease is explained by the ongoing global electronic component deficit. In the first 6 months of 2021, the Group successfully managed the risks of global component deficit and supply chains and achieved very good results, while in the second half of 2021 the availability of semiconductors significantly affected the Group's financial results. However, 2021 EBITDA growth is explained by comparably larger proportion of high added value products in manufactured product mix and growing demand in data networks and industrial sectors.

The Group's net profit in 2021 was negatively affected by a number of non-cash items, including changes in the fair value of investments in SIA Zinātnes parks, losses on investments in associates, changes in the fair value of EIB guarantees and EIB loans, and interest expenses related to leases.

The significant loss in 2021 is mainly explained by Groups assessment of the recoverable amount of investments in Zinātnes Parks SIA in the amount of 1.358 million EUR due to significantly increased construction costs of new industrial facilities, with losses from the associated company SIA Lightspace technologies, recognized in the Group's statement of comprehensive income for 2021 in the amount of 0.837 million EUR and also with the Group's fair value revaluation of convertible guarantee securities issued in relation to European Investment Bank (EIB) financing agreement due to the decrease in the weighted average market price of HansaMatrix, reducing the carrying amount of convertible guarantee securities. In total, in 2021, the fair value of the above security increased by 0.228 million. EUR, reducing the Group's net profit accordingly.

The fixed and variable remuneration paid to the Directors the Company in 2021 complies with the provisions of the Policy.

The remuneration report has been prepared by the Board of the Company and reviewed by the Council of the Company. The Report is examined by a sworn auditor and it is reviewed and is planned to be approved at the shareholders' meeting together with other components of the annual report.

Riga, April 28, 2022

_______________________ Jānis Sams Chairman of the Management Board

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2. BOARD AND COUNCIL REMUNERATION

On May 17, 2021 Jānis Sams, the current Chief Operating Officer and Member of the Management Board, was appointed as the Chief Executive Officer of the high-tech company HansaMatrix. With the change of the CEO, two new members have been appointed to the Management Board of HansaMatrix - Gatis Grava, HansaMatrix Ventspils manufacturing plant manager and Vitauts Galvanausks, Ogre manufacturing plant manager. Māris Macijevskis continues to serve as HansaMatrix Management Board Member and Chief Financial Officer.

On May 26, 2021 annual general meeting of HansaMatrix shareholders the new Supervisory Council was elected, in addition to the previous Supervisory Council members Ingrīda Blūma, Dagnis Dreimanis, Normunds Igolnieks and Baiba Anda Rubesa, HansaMatrix founder, Ilmārs Osmanis and the Supervisory Council member Anders Lennart Borg were appointed. Baiba Rubesa has been approved as the Chairperson of the Supervisory Council of HansaMatrix, while Ingrīda Blūma will continue to perform the duties of the Deputy Chairperson of the Supervisory Council. Andris Bērziņš has left the composition of the HansaMatrix Council. A. Bērziņš was an independent member of the Council and has been a member of the HansaMatrix Council since October 7, 2015, serving as the Chairman of the Council since April 4, 2018.

HansaMatrix founder Ilmārs Osmanis resigned as HansaMatrix Supervisory Board Member on September 13, 2021.

The dates of service of Directors in the figure below are the dates when the respective Director appointment or leaving decisions are registered in The Register of Enterprises of the Republic of Latvia.

2.1. Total Board and Council remuneration

On October 29, 2019 the Company extraordinary shareholder meeting approved the remuneration policy of the Board of Directors and Supervisory Council (hereinafter "the Remuneration policy") that was subsequently amended by May 22, 2020 the Company's shareholders' meeting.

Figure 1. Total Board and Council remuneration, EUR
	1			2		3	4	5	6
	Fixed remuneration			Variable remuneration Extraordinary			Pension	Total	Proportion of
Name of Director, Position	Base		Other	One-year	Multi-year	items	expense	Remuneration	fixed and variable
(start/end)	salary	Fees	benefits	variable	variable				remuneration
Jānis Sams, Management Board
Member, Chief Operating Officer
Officer, 08.12.2020-31.05.2021,
Chairman of Management Board
01.06.2021-Present	92,480		8,962	51,811				153,253	66% / 34%
Ilmārs Osmanis, Chairman of
Management Board, Chief
Executive Officer, 27.12.2000-
31.05.2021	57,683		6,082				4,000	67,765	100% / 0%
Māris Macijevskis, Management
Board Member, Chief Financial
Officer, 16.02.2018-Present	65,115		9,301	20,114				94,530	79% / 21%
Vitauts Galvanausks,
Management Board Member,
Ogre manufacturing plant
manager, 17.05.2021-Present	48,804		4,284	4,095				57,183	93% / 7%
Gatis Grava, Management Board
Member, Ventspils
manufacturing plant manager,
17.05.2021-Present	50,607		4,290	2,250				57,147	96% / 4%
Baiba Anda Rubesa, Council
member, non-executive director
09.06.2020-25.05.2021, Chairman
of the Counci 26.05.2021-Present	20,640							20,640	100% / 0%
Andris Bērziņš, Chairman of the
Council, non-executive director,
07.10.2015-26.05.2021	11,000							11,000	100% / 0%
Ingrīda Blūma, Deputy Chair of
the Council, non-executive
director, 16.06.2016-Present	12,000							12,000	100% / 0%
Anders Lennert Borg, Council
member, 26.05.2021-present
(payment made to company)	12,956							12,956	100% / 0%
Dagnis Dreimanis, Council
member, non-executive director,
04.04.2018-Present	0							0
Normunds Igolnieks, Council
member, non-executive director,
09.06.2020-Present	0							0
Ivars Ķirsons, Deputy Chair of
the Council, non-executive
director, 26.11.2019 - 09.06.2020	0							0
The Remuneration policy describes									key Remuneration principles for the Company's Board and Council
members considering, inter alia, remuneration and employment conditions of the Company's staff,
thereby facilitating the Company's business strategy, long-term interests and sustainability.
Base Salary in Figure 1 includes the fixed base salary of the director, in exchange for professional
services to serve its mandate or for any other executive or non-executive services or functions provided
during the reported financial year under a specific contract. It also includes									the salary of the director
related to his work as an employee of the company, e.g.,						CFO or COO.
Fees include all fees of the director for the participation in the administrative, management or
supervisory bodies of the company						meetings during the reported financial year.
Other benefits include the value of the following perquisites: medical insurance, company car, mobile
telephone communication services, and mobile phone device.
Variable remuneration includes bonuses consisting of cash and share options which was paid for, or
which as a result of the fulfilment of the predetermined performance criteria vested during the reported
financial year, where the time span does not exceed that financial year.

In 2021 Jānis Sams received 2 400 Company stock options for the fulfillment of pre-determined performance criteria and also received cash bonuses. Figure 3 depicts the variable remuneration split paid out in cash and awarded as Employee share options.

Figure 2. Variable remuneration, EUR
		Employee share
Director	Cash	options	Total
Jānis Sams	36 139	15672	51 811
Ilmārs Osmanis	0	0	0
Māris Macijevskis	20 114	O	20 114
Vitauts Galvanausks	4 095	0	4 095
Gatis Grava	2 250	0	2 250
Total	62 598	15 672	78 270

Pension expense includes the contributions that effectively took place during the reported financial year to finance a fund or other pension scheme for future pension pay-out for the director (or the director's heirs).

In 2021, all members of the Management Board and Council received remuneration from the Company and did not receive any remuneration from other Group companies within the meaning of the Law of Republic of Latvia on Annual Accounts and Consolidated Annual Accounts of the Group.

2.2. Share-based remuneration

On February 16, 2018 the Company extraordinary shareholder meeting approved the Regulation of Employee stock option issuance (hereinafter "the Employee option plan") and approved issuing 18 294 employee stock options (hereinafter – "the Options") for the total monetary amount of 18 294 EUR (eighteen thousand two hundred ninety-four euro).

The purpose of issuing employee stock options is to reward the employees for successful performance and loyalty to the Company and to motivate the Company's employees to take care of the Company's long-term success, as well as increase their interest in effective management of the Company.

The Employee option plan (hereinafter - "the Option plan" or "the Options") includes the following key conditions:

• a) Employee eligibility to receive stock options as compensation: current group employee, works in the group longer than 12 months and has achieved individual or HansaMatrix AS group KPI's.
• b) Board member eligibility to receive stock options as compensation: serves as a board member more than 12 months and has achieved individual or HansaMatrix AS group KPI's.
• c) HansaMatrix Management Board Members can receive up to 2400 Options per year, HansaMatrix 100% subsidiary Management Board Member can receive up to 1200 Options per year and HansaMatrix group key employees can receive up to 600 Options per year for fulfilling HansaMatrix business or individual targets.
• d) Options are cancelled in case the employee work agreement is terminated.
• e) One option entitles to receive one dematerialized bearer share of the Company.
• f) Management Board approves options for employees.
• g) Council approves options for Management board members.
• h) The Board of the Company has the right to determine the recipients of the Options, the employees of the Company and 100% of the subsidiary, non-board members, a conversion period of individual options not exceeding 3 years.
• i) The Supervisory Board of the Company has the right to determine the recipients of the Options, members of the Management Board of the Company and 100% of the subsidiary, a conversion period of individual options not exceeding 3 years.
• j) Management Board is responsible for keeping the employee option register.
• k) Options can be exercised once per year within 1 month after calendar year end. Employee has to have 4-year work experience in the group to exercise the options.
• l) Holders of Options acquire options and convert them into the Company's newly issued shares free of charge.
• m)After the employee decides to exercise the options, Council decides to accordingly change articles of association, the Management Board decides to increase the Company capital.

Figure 3. Share-based remuneration.
										Information regarding the reported financial year
				The main conditions of share option plans			Opening balance		During the year		Closing balance
							Share options			Share options
	Specification of	Performance				Exercise price	held at the beginning of the	Share options	Share options	subject to a performance	Share options awarded and
Name of Director, Position	plan	period		Award date Vesting date	Exercise period	of the share	year	awarded	vested	condition	unvested
Ilmārs Osmanis,	the Employee	01.01.2020-			01.01.2022-
Chairman of Management	option plan		31.12.2020 16/02/2021	17.05.2021	31.01.2022	0	2400	0	0	0	2400
Māris Macijevskis, Management Board
Member, Chief Financial	the Employee	01.01.2019-	17.02.2019-	17.02.2022-	01.01.2023-
Officer	option plan	31.12.2019	01.12.2019	01.12.2022	31.01.2023	0	1100	0	0	0	1100
Māris Macijevskis,
Management Board Member, Chief Financial	the Employee	01.01.2020-			01.01.2025-
Officer	option plan		31.12.2020 16/02/2021	16.02.2024	31.01.2025	0	2400	0	0	0	2400
Jānis Sams, Chairman of	the Employee	01.01.2020-
Management Board	option plan		31.12.2020 01/06/2021	31.05.2024	01/01/2025	0	0	2400	0	0	2400
HansaMatrix business performance indicator set for year 2020. The options granted to Ilmārs Osmanis and Māris Macijevskis remuneration report and in the total remuneration amounts.							in 2021				were included in the 2020
2.3. Use of	the right to	reclaim
In 2021, the Company did not exercise its right to reclaim the variable remuneration previously paid to the members of the Management Board.
3.	ACTUAL REMUNERATION COMPLIANCE WITH						REMUNARATION POLICY
Key provisions out in 2021	of the Remuneration policy complies, are the following:						of the Company, whith which the				director remuneration paid
	a) Remuneration consists of fixed and variable remuneration, stock related compensation and other fringe benefits.
b)	Fixed remuneration is defined on the basis of position, professional skills and education, official
	duties and the			level of the responsibility.
c)	Fixed Remuneration is paid only to independent members of the Council, i.e., those members
	of the Council, including the Chairman of the Council, whose shareholding in the Company does
	not exceed 3% of the total share capital of the Company.
d)	Fixed Remuneration of the Chairman of the Council may not exceed 1/3 of the Fixed
	Remuneration of the Chairman of the Board.
e)	Variable remuneration may be awarded only to Board members. Council members do not
	receive any variable remuneration.
f)	Variable remuneration is linked to the attainment of certain targets the annual maximum
	threshold of it may not exceed 50						% of annual fixed remuneration.
g)	Other fringe benefits include the Company provided mobile devices, paid communication
	expenses, health and accident insurance, contributions to pension funds, provided Company
	cars, additional						paid leaves (marriage, child birth, etc.). The maximum amount of other fringe

2.3. Use of the right to reclaim

3. ACTUAL REMUNERATION COMPLIANCE WITH REMUNARATION POLICY

• a) Remuneration consists of fixed and variable remuneration, stock related compensation and other fringe benefits.
• b) Fixed remuneration is defined on the basis of position, professional skills and education, official duties and the level of the responsibility.
• c) Fixed Remuneration is paid only to independent members of the Council, i.e., those members of the Council, including the Chairman of the Council, whose shareholding in the Company does not exceed 3% of the total share capital of the Company.
• d) Fixed Remuneration of the Chairman of the Council may not exceed 1/3 of the Fixed Remuneration of the Chairman of the Board.
• e) Variable remuneration may be awarded only to Board members. Council members do not receive any variable remuneration.
• f) Variable remuneration is linked to the attainment of certain targets the annual maximum threshold of it may not exceed 50 % of annual fixed remuneration.
• g) Other fringe benefits include the Company provided mobile devices, paid communication expenses, health and accident insurance, contributions to pension funds, provided Company

benefits that Director may be granted yearly in monetary terms shall not exceed 30 % of that person's fixed annual remuneration.

• h) The Company may defer the payment of the variable remuneration, but not more than 50 % of the total variable remuneration. The maximum deferral period for variable remuneration is one year. Deferment of variable remuneration shall be decided by the Council.
• i) Employee stock options are awarded and issued according to the Employee option plan.

The fixed and variable remuneration paid to the Board and the Council Members of the Company in 2021 complies with the provisions of the Remuneration policy described above and all the other conditions of the Remuneration policy. There were no exception cases of temporary derogations from the Remuneration policy.

The variable part of the remuneration for the Management Board Members in 2021 was based on the fulfillment of the Company financial performance indicators such as net profit and EBITDA, as well as individual Director performance targets set by the Council of the Company for 2021. The Employee option share of the total remuneration of the Management Board members ensures and supports long-term performance results of the Company, since the Options granted vest in 3 years after awarding.

4. THE CHANGE OF REMUNERATION AND COMPANY PERFORMANCE

In accordance with Article 66 of the Transitional Provisions of the Financial Instruments Market Law of the Republic of Latvia, the Company discloses a comparison of changes in the remuneration of the Management Board and the Coulcil starting from the financial year 2020 and providing at least for the the last five financial year period, which starts no later than in January, 2020.

Annual change	RFY vc RFY-1	(Information regarding the RFY-1)	(Information regarding the RFY)
Director's remuneration
Jānis Sams, Management Board Member, Chief
Operating Officer Officer	N/A	6002*	153,253
Ilmārs Osmanis, Chairman of Management Board,
Chief Executive Officer	N/A	157,035	67765*
Māris Macijevskis, Management Board Member,
Chief Financial Officer	3%	91,518	94,530
Vitauts Galvanausks, Management Board Member,
Ogre manufacturing plant manager	N/A	N/A	57183*
Gatis Grava, Management Board Member, Ventspils
manufacturing plant manager	N/A	N/A	57147*
Baiba Anda Rubesa, Council member, non-executive
director	N/A	7,316*	20,640
Andris Bērziņš, Chairman of the Council, non
executive director	N/A	26,400	11000*
Ingrīda Blūma, Deputy Chair of the Council, non
executive director	0%	12,000	12,000
Anders Lennert Borg, Council member	N/A	N/A	12956*
Company's performance
Net profit		-846,586	-1,952,310
Normalized net profit	107%	449,371	928,425
EBITDA	23%	3,033,726	3,732,029
Average remuneration on a Full-time equivalent basis of employees
Reference group: Heads of departments	1%	28,020	28,328
* - not full year
Figure 4 compares the Director remuneration with the chosen reference group of manufacturing plant
managers of the Company.

Figure 4. Comparative table on remuneration for the reported financial vear (RFY). EUR

The definitions of alternative performance indicators (APIs) used in this remuneration report can be found on page 127 of the HansaMatrix consolidated and Parent Company's annual report for the year ended December 31, 2021.

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