Annual Report (ESEF) • Apr 28, 2023
Preview not available for this file type.
Download Source FileThis is poLight .................................................................................................................................................... 3
Message from the CEO ...................................................................................................................................... 6
Board of directors .............................................................................................................................................. 7
Management ..................................................................................................................................................... 8
Investor information .......................................................................................................................................... 9
Board of directors’ report ................................................................................................................................ 12
Corporate governance report .......................................................................................................................... 21
Group financial statements ............................................................................................................................. 30
poLight ASA financial statements .................................................................................................................... 64
Independent auditor’s report .......................................................................................................................... 78
Contact details ................................................................................................................................................. 83
poLight ASA is a Norwegian company, headquartered in Horten, which has introduced a unique optical lens to the market for both consumer devices and professional applications. The new lens replicates the lens of the human eye, enabling new user experiences and easing the implementation of autofocus functions in various applications. poLight’s patented, proprietary technology offers considerable benefits, such as extremely fast focus, compact xy-dimension, no magnetic interference, low power consumption and constant field of view. These features, and others, open the way for its use in a multitude of as yet unimagined ways.
poLight has employees and long-term consultants in Norway, Finland, France, UK, US, China, Taiwan and the Philippines. Since the company was founded in 2005, it has acquired world-class expertise in optics, polymers and MEMS technology. The poLight team comprises highly skilled researchers and technical specialists, all aiming to develop world-leading tunable optics.
poLight´s tunable optics technology enables native capabilities that replicate the human eye, making instant autofocus across a wide focus distance and constant field of view options possible in a variety of camera systems. It can also bring to life beam steering and optical tilting capabilities. Our technology is differentiated by its extremely compact size, ultra-low power consumption, super high speed, and high optical performance, creating a range of new experiences for users and future innovation opportunities for OEM customers and partners.
Optical matching between the optical elements and the deformable optical materials, combined with poLight’s anti-reflective coating technology, means that the optical transmittance can be optimized for a broad range of selected wavelengths from visible to near IR spectrum.
Based on the technology platform the company has developed and patented TLens – a tuneable optical Lens. TLens delivers fast and accurate auto focus compared to standard Voice Coil Motor (VCM) systems, which require advanced calibration procedures, are subject to magnetic noise and temperature fluctuations from power consumption and rely on mechanical movement to change focus. poLight’s TLens technology eliminates many of these issues while enabling instant auto focus, all-in-focus and constant field of view.
The poLight TLens is constructed around a piezo element (pzt film), which is placed on a thin glass membrane and acts as an actuator. A patented polymer is sandwiched between two high-quality glass layers. The piezo material on the thin glass membrane is designed to spherically deform the polymer when a voltage is applied to it. This structure offers a tuneable lens of high optical quality. When the piezo is in standby mode, no force is applied to the thin glass and light passes through the two glass components, and the polymer, without deviation. When a voltage is applied, the piezo actuator will immediately force the thin glass membrane to bend accordingly. This generates a perfect lens, and an optical power, which focuses the light rays.
The TLens can either be used on top of a fixed-focus camera module (i.e. add-on concept) or integrated as part of the lens stack (i.e. add-in concept).
poLight is in mass production with TLens Silver and TLens Silver Premium, as well as the related ASIC driver (PDA 50), which controls the supply of variable voltage to all TLens products and makes them change focus. TLens Platinum will be the next product to be developed.
From an application perspective, the main difference between the various TLens products is that they can be used with different sensor formats (size of the image sensor) due to different aperture sizes (the transparent “opening” in the actuator). The TLens can be supplied as a “packaged” version to enable quick integration/testing. The TLens Silver Premium is considered suitable for both consumer and industrial products, whereas the TLens Silver is best suited for industrial applications where optical range is important.
Other products, based on the same technology platform, can potentially be released. TWegde is an example, - a product which will improve the resolution for LED display solutions.
poLight is fabless and uses partners for most manufacturing processes, except for the polymer, which is produced at the company’s headquarters in Norway. STMicroelectronics is poLight´s manufacturing partner for the MEMS actuator, utilising their thin film piezo technology in an 8-inch semiconductor fabrication plant in Italy. Polymer and wafers with actuators are shipped to manufacturing partners in the Philippines and Taiwan, which assemble and test the complete TLens products and ship them to camera module vendors.
poLight’s TLens technology is suitable for a wide variety of applications, particularly those where there is a need for compact and high-quality autofocus solutions that benefit from high speed, small size and low power consumption. Such applications include, but are not limited to, smartwatches, smartphones, augmented reality (AR) glasses, other wearables/IoT, industrial scanners, readers and sensors, and medical equipment.
| Description | 2022 | 2021 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 85,993 | 70,654 |
| Intangible assets | 11,471 | 11,005 |
| Other financial assets | 2,214 | 1,205 |
| Total non-current assets | 100,678 | 82,864 |
| Current assets | ||
| Inventories | 11,392 | 8,847 |
| Trade and other receivables | 29,089 | 28,123 |
| Cash and cash equivalents | 201,475 | 167,138 |
| Total current assets | 241,956 | 204,108 |
| Total assets | 342,634 | 286,972 |
| Equity and Liabilities | ||
| Equity | ||
| Issued capital | 1,405,462 | 1,405,462 |
| Share premium | 733,733 | 733,733 |
| Retained earnings | (860,372) | (794,875) |
| Reserve of exchange differences on translation | (47,228) | (32,130) |
| Total equity | 1,231,595 | 1,312,190 |
| Liabilities | ||
| Non-current liabilities | ||
| Lease liabilities | 13,959 | 19,020 |
| Deferred tax liabilities | 13,972 | 13,100 |
| Provisions | 3,377 | 3,594 |
| Total non-current liabilities | 31,308 | 35,714 |
| Current liabilities | ||
| Trade and other payables | 36,659 | 34,161 |
| Other financial liabilities | 2,887 | 7,969 |
| Provisions | 2,200 | 2,147 |
| Lease liabilities | 12,645 | 14,978 |
| Total current liabilities | 54,391 | 59,255 |
| Total liabilities | 85,700 | 94,970 |
| Total equity and liabilities | 1,317,294 | 1,407,160 |
| Description | 2022 | 2021 |
|---|---|---|
| Revenue | 117,028 | 76,675 |
| Cost of sales | (28,357) | (18,069) |
| Gross profit | 88,671 | 58,606 |
| Other income | 4,140 | 2,227 |
| Other expenses | (4,600) | (3,640) |
| Research and development expenses | (38,785) | (33,023) |
| Selling, general and administrative expenses | (31,414) | (26,794) |
| Depreciation, amortisation and impairment charges | (5,310) | (4,658) |
| Operating loss | 12,096 | 1,718 |
| Finance income | 2,333 | 455 |
| Finance costs | (2,075) | (3,310) |
| Finance income net | 258 | (2,855) |
| Loss before tax | 12,354 | (1,137) |
| Tax expense | 7,876 | 6,058 |
| Loss for the year | (4,478) | (7,195) |
| Other comprehensive income | ||
| Items that will not be reclassified to profit or loss | ||
| Actuarial gains/losses on defined benefit plans | 1,583 | 1,443 |
| Tax effect on actuarial gains/losses | (440) | (360) |
| Items that may be reclassified subsequently to profit or loss | ||
| Exchange differences on translation of foreign operations | (20,098) | (16,601) |
| Tax effect on exchange differences on translation of foreign ops | 5,628 | 4,650 |
| Other comprehensive income for the year, net of tax | (12,257) | (10,868) |
| Total comprehensive income for the year, net of tax | (16,735) | (18,063) |
| Description | Issued Capital | Share Premium | Retained Earnings | Reserve of Exchange Differences on Translation | Total Equity |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 1,405,462 | 733,733 | (762,731) | (15,529) | 1,360,935 |
| Loss for the year | (7,195) | (7,195) | |||
| Other comprehensive income for the year, net of tax | (16,601) | (16,601) | |||
| Total comprehensive income for the year | (7,195) | (16,601) | (23,796) | ||
| Transactions with owners, recorded separately | |||||
| Share-based payments - cost | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2021 | 1,405,462 | 733,733 | (779,926) | (32,130) | 1,327,142 |
| Loss for the year | (4,478) | (4,478) | |||
| Other comprehensive income for the year, net of tax | (20,098) | (20,098) | |||
| Total comprehensive income for the year | (4,478) | (20,098) | (24,576) | ||
| Transactions with owners, recorded separately | |||||
| Share-based payments - cost | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2022 | 1,405,462 | 733,733 | (784,404) | (52,228) | 1,297,563 |
| Description | 2022 | 2021 |
|---|---|---|
| Cash flows from operating activities | ||
| Loss before tax | (1,137) | (4,478) |
| Adjustments for: | ||
| Depreciation, amortisation and impairment charges | 5,310 | 4,658 |
| Net loss on disposal of property, plant and equipment | 18 | 2 |
| Share-based payments | 0 | 0 |
| Finance income | (2,333) | (455) |
| Finance costs | 2,075 | 3,310 |
| Interest income received | 2,333 | 455 |
| Interest expense paid | (2,075) | (3,310) |
| Changes in working capital: | ||
| Increase in inventories | (2,545) | (3,017) |
| Increase in trade and other receivables | (966) | (9,135) |
| Increase in trade and other payables | 2,498 | 10,534 |
| Net cash generated from/(used in) operating activities | 2,425 | (3,486) |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (20,526) | (11,371) |
| Proceeds from sale of property, plant and equipment | 0 | 0 |
| Purchase of intangible assets | (732) | (1,672) |
| Net cash used in investing activities | (21,258) | (13,043) |
| Cash flows from financing activities | ||
| Proceeds from issuance of share capital | 0 | 0 |
| Repayment of lease liabilities | (16,759) | (16,889) |
| Net cash used in financing activities | (16,759) | (16,889) |
| Net change in cash and cash equivalents | (35,592) | (33,418) |
| Cash and cash equivalents at beginning of year | 167,138 | 200,556 |
| Cash and cash equivalents at end of year | 131,546 | 167,138 |
| Other information | ||
| Interest received | 2,333 | 455 |
| Interest paid | (2,075) | (3,310) |
| Cash and cash equivalents include | ||
| Restricted cash | 0 | 0 |
| Net cash generated from/(used in) operating activities | (12,354) | 1,137 |
This section presents the financial statements for poLight ASA, including the Consolidated Statement of Financial Position, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, and Consolidated Statement of Cash Flows. The financial information is presented in thousands of Norwegian Kroner (NOK).
| Description | 2022 | 2021 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 85,993 | 70,654 |
| Intangible assets | 11,471 | 11,005 |
| Other financial assets | 2,214 | 1,205 |
| Total non-current assets | 100,678 | 82,864 |
| Current assets | ||
| Inventories | 11,392 | 8,847 |
| Trade and other receivables | 29,089 | 28,123 |
| Cash and cash equivalents | 201,475 | 167,138 |
| Total current assets | 241,956 | 204,108 |
| Total assets | 342,634 | 286,972 |
| Equity and Liabilities | ||
| Equity | ||
| Issued capital | 1,405,462 | 1,405,462 |
| Share premium | 733,733 | 733,733 |
| Retained earnings | (860,372) | (794,875) |
| Reserve of exchange differences on translation | (47,228) | (32,130) |
| Total equity | 1,231,595 | 1,312,190 |
| Liabilities | ||
| Non-current liabilities | ||
| Lease liabilities | 13,959 | 19,020 |
| Deferred tax liabilities | 13,972 | 13,100 |
| Provisions | 3,377 | 3,594 |
| Total non-current liabilities | 31,308 | 35,714 |
| Current liabilities | ||
| Trade and other payables | 36,659 | 34,161 |
| Other financial liabilities | 2,887 | 7,969 |
| Provisions | 2,200 | 2,147 |
| Lease liabilities | 12,645 | 14,978 |
| Total current liabilities | 54,391 | 59,255 |
| Total liabilities | 85,700 | 94,970 |
| Total equity and liabilities | 1,317,294 | 1,407,160 |
| Description | 2022 | 2021 |
|---|---|---|
| Revenue | 117,028 | 76,675 |
| Cost of sales | (28,357) | (18,069) |
| Gross profit | 88,671 | 58,606 |
| Other income | 4,140 | 2,227 |
| Other expenses | (4,600) | (3,640) |
| Research and development expenses | (38,785) | (33,023) |
| Selling, general and administrative expenses | (31,414) | (26,794) |
| Depreciation, amortisation and impairment charges | (5,310) | (4,658) |
| Operating loss | 12,096 | 1,718 |
| Finance income | 2,333 | 455 |
| Finance costs | (2,075) | (3,310) |
| Finance income net | 258 | (2,855) |
| Loss before tax | 12,354 | (1,137) |
| Tax expense | 7,876 | 6,058 |
| Loss for the year | (4,478) | (7,195) |
| Other comprehensive income | ||
| Items that will not be reclassified to profit or loss | ||
| Actuarial gains/losses on defined benefit plans | 1,583 | 1,443 |
| Tax effect on actuarial gains/losses | (440) | (360) |
| Items that may be reclassified subsequently to profit or loss | ||
| Exchange differences on translation of foreign operations | (20,098) | (16,601) |
| Tax effect on exchange differences on translation of foreign ops | 5,628 | 4,650 |
| Other comprehensive income for the year, net of tax | (12,257) | (10,868) |
| Total comprehensive income for the year, net of tax | (16,735) | (18,063) |
| Description | Issued Capital | Share Premium | Retained Earnings | Reserve of Exchange Differences on Translation | Total Equity |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 1,405,462 | 733,733 | (762,731) | (15,529) | 1,360,935 |
| Loss for the year | (7,195) | (7,195) | |||
| Other comprehensive income for the year, net of tax | (16,601) | (16,601) | |||
| Total comprehensive income for the year | (7,195) | (16,601) | (23,796) | ||
| Transactions with owners, recorded separately | |||||
| Share-based payments - cost | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2021 | 1,405,462 | 733,733 | (779,926) | (32,130) | 1,327,142 |
| Loss for the year | (4,478) | (4,478) | |||
| Other comprehensive income for the year, net of tax | (20,098) | (20,098) | |||
| Total comprehensive income for the year | (4,478) | (20,098) | (24,576) | ||
| Transactions with owners, recorded separately | |||||
| Share-based payments - cost | 0 | 0 | 0 | 0 | 0 |
| Balance at 31 December 2022 | 1,405,462 | 733,733 | (784,404) | (52,228) | 1,297,563 |
| Description | 2022 | 2021 |
|---|---|---|
| Cash flows from operating activities | ||
| Loss before tax | (1,137) | (4,478) |
| Adjustments for: | ||
| Depreciation, amortisation and impairment charges | 5,310 | 4,658 |
| Net loss on disposal of property, plant and equipment | 18 | 2 |
| Share-based payments | 0 | 0 |
| Finance income | (2,333) | (455) |
| Finance costs | 2,075 | 3,310 |
| Interest income received | 2,333 | 455 |
| Interest expense paid | (2,075) | (3,310) |
| Changes in working capital: | ||
| Increase in inventories | (2,545) | (3,017) |
| Increase in trade and other receivables | (966) | (9,135) |
| Increase in trade and other payables | 2,498 | 10,534 |
| Net cash generated from/(used in) operating activities | 2,425 | (3,486) |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (20,526) | (11,371) |
| Proceeds from sale of property, plant and equipment | 0 | 0 |
| Purchase of intangible assets | (732) | (1,672) |
| Net cash used in investing activities | (21,258) | (13,043) |
| Cash flows from financing activities | ||
| Proceeds from issuance of share capital | 0 | 0 |
| Repayment of lease liabilities | (16,759) | (16,889) |
| Net cash used in financing activities | (16,759) | (16,889) |
| Net change in cash and cash equivalents | (35,592) | (33,418) |
| Cash and cash equivalents at beginning of year | 167,138 | 200,556 |
| Cash and cash equivalents at end of year | 131,546 | 167,138 |
| Other information | ||
| Interest received | 2,333 | 455 |
| Interest paid | (2,075) | (3,310) |
| Cash and cash equivalents include | ||
| Restricted cash | 0 | 0 |
| Net cash generated from/(used in) operating activities | (12,354) | 1,137 |
We have audited the accompanying consolidated financial statements of poLight ASA, which comprise the consolidated statement of financial position as of December 31, 2022, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of poLight ASA as of December 31, 2022, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements and professional responsibilities that are relevant to our audit of the financial statements in [Country], and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. We have determined no key audit matters to communicate in our report.
[This section would typically contain management's report, directors' report, or other supplementary information required by local regulations. As this information is not provided in the input, it is omitted here.]
Management is responsible for the preparation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
[This section would continue with further detailed auditor responsibilities, which are standard across most audit reports. As this information is not provided in the input, it is omitted here for brevity.]
poLight ASA
47, Professor Birkelands vei
N-3174 Horten
Norway
www.polight.com# Smartphones, wearables and accessories
* Smartphone represent a large addressable market for which billions of cameras are produced each year
* 1.5 billion phones per year with 1 front camera and an average of 3 back cameras
* Potential addressable market for TLens®/poLight technology estimated at 3 billion units per year
OEM´s
Driver ASIC
Bare TLens®
Packaged TLens®
“Once again, we had a busy year supporting an increasing number of customer cases and, not least, preparing for a smartphone project. We have been working hard over many years to qualify for our first smartphone project. Although we have been close to a market breakthrough several times, last-minute changes in our customers product release strategy have delayed our entrance into the smartphone market. Finally, we made it, and this will be our chance to show the world our unique technology and the improved user experiences it will offer. The Augmented Reality (AR) market continues to develop very positively for poLight. We are already being used in the latest Magic Leap AR enterprise glasses, Magic Leap 2¹, and it has been confirmed that TLens will be included in several other enterprise AR glasses to be released during 2023. Further we are also involved in projects aiming to develop AR glasses for the consumer market. The platform we have built over the last year within the AR segment is impressive. Other market segments such as industrial, medical, and longer term automotive also adds significant business opportunities future proofing poLight. So, overall, we have experienced a hectic year, with a lot of encouraging progress. However, there are still challenges we need to overcome. The organisation is showing an impressive dedication and willingness to tackle what need to be done and deserves a big vote of thanks! We are looking forward to the coming years!”
Dr Øyvind Isaksen
CEO, poLight ASA
¹ https://www.yolegroup.com/technology-insights/the-polight-tlens-piezoelectric-mems-autofocus-module-is-in-the-magic-leap-2/
Ann-Tove Kongsnes is an Investment Director at Investinor AS. Kongsnes has over her career gained extensive experience from investments, development, M&A, IPO’s and exits of technology companies. Prior to this, she worked for 7 years with international marketing, and was formerly a Director of Marketing and Operations. Kongsnes has extensive board experience, and currently serves on the boards of 6 of Investinor’s portfolio companies in addition to 4 Chair/member seats in Nomination Committees. She holds an MSc in Economics and Business Administration from HIB and took the Advanced Program in Corporate Finance at NHH.
Thomas Görling is a Senior Investment Director at Stiftelsen Industrifonden (Sweden) with a comprehensive involvement in building successful technology companies. Representing Industrifonden, he has been engaged in several portfolio company boards, at present HVR Cardio Oy (Finland) and eBuilder AB (Sweden). Before joining Industrifonden in 1998, Mr Görling held management positions within the European optical instrument and systems industry. Thomas holds a Master of Science from the Royal Institute of Technology in Stockholm and studied business economics at Stockholm University.
Grethe Viksaas has a long career from the Northern European managed service provider Basefarm AS. First as founder and CEO, and later as executive chair and member of the board of directors. Prior to Basefarm, Ms Viksaas served as CEO for SOL System AS and in several management positions in IT companies. She has experience from numerous board positions, including Telenor ASA. She is currently a non- executive director on the boards of Link Mobility Group Holding ASA, Crayon Group Holding ASA and CatalystONE Solutions Holding AS. She also serves as Chair of the Board in Farmforce AS. Ms Viksaas has a master's degree in computer science from the University of Oslo.
Mr. Larsen is an Electronic Engineer from the University of Strathclyde, UK. He was appointed Chief Executive Officer of Nordic Semiconductor in February 2002. Mr. Larsen has broad international experience in the semiconductor business, previously as Director for the Nordic region for Xilinx Inc. He has also been working at Philips Semiconductor.
Juha Alakarhu is the VP of Imaging at Axon in Tampere, Finland. He runs the Axon R&D office in Finland and is responsible for the imaging system for Axon camera products. Dr Alakarhu’s entire career has been devoted to developing cameras. Before joining Axon in 2018, he worked for Nokia and Microsoft, where he developed several pioneering camera solutions, such as oversampling (the 41- megapixel camera), optical image stabiliser, and virtual reality technology. Juha Alakarhu holds a PhD from Tampere University of Technology.
Øyvind Isaksen has been CEO of poLight since August 2014. He has previously held several CEO positions, most recently in the publicly listed company Q-Free ASA, which he left in January 2014, after 7 years as CEO. Øyvind Isaksen holds a PhD in Applied Physics.
Pierre Craen has more than 20 years’ experience in opto-mechanical systems engineering. Prior to joining poLight, he managed product development teams at Varioptic, Barco and Motorola/Symbol. Mr Craen holds an MSc in Optical Engineering from Sup-Optic, as well as an MSc in Applied Physics.
Alf Henning Bekkevik has a background from Arthur Andersen (E&Y), Wallendahl, Fjord Line, Grenland Group, and, most recently, as VP Finance for Wood Group Norway AS. He holds a master’s degree in business & economics (Siviløkonom) from NHH, and is a certified public accountant.
Marianne Sandal has more than 15 years’ experience heading worldwide operations in Nera ASA (telecommunications) and Q-Free ASA (intelligent transportation systems). Ms Sandal holds a BSc in Mechanical Engineering, in addition to courses in economics and management from BI Norwegian School of Management.
poLight ASA (PLT) has one class of shares. Its shares were listed on the Oslo Stock Exchange on 1 October 2018 at NOK 50 per share (NOK 10 after share split). The company had 51,982,700 shares outstanding at the close of 2022, each with a nominal value of NOK 0.04. 30 May 2022 the PLT share was split in the ratio of 1:5 which means every single share before the split was turned into 5 shares after the split. In 2022, the Group’s share price declined from NOK 186.40 per share (NOK 37.28 after share split) at the beginning of the year to NOK 18.50 at close. During the year, the share price varied between NOK 17.10 and NOK 38.80 per share. In total, 21,520,990 shares were traded in 2022 (share split adjusted volume), equivalent to 41% of the shares outstanding.
poLight had 6,337 shareholders registered in the Norwegian Central Securities Depository (VPS) as at 31 December 2022. The 20 largest shareholders owned shares representing 50.6% of the share capital. Non- Norwegian shareholders owned 22.5% of the shares. All the shares registered by name carry equal voting rights. The shares are freely tradable.
0 200 400 600 800 1 000 1 200 1 400
0
5
10
15
20
25
30
35
40
45
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
PLT OSEBX OSEBX PLT
| Ordinary shares | Shareholding | Voting rights | % | % |
|---|---|---|---|---|
| Investinor Direkte AS | 8 899 290 | 17.1 | 17.1 | |
| Stiftelsen Industrifonden | 5 244 125 | 10.1 | 10.1 | |
| Nordnet Bank AB (nominee) | 2 408 642 | 4.6 | 4.6 | |
| Nordnet Livsforsikring AS | 2 156 769 | 4.2 | 4.2 | |
| Deutsche Bank Aktiengesellschaft (nominee) | 1 950 930 | 3.8 | 3.8 | |
| VPF Nordea Avkastning | 778 075 | 1.5 | 1.5 | |
| VPF Pareto Investment | 628 000 | 1.2 | 1.2 | |
| VPF Nordea Kapital | 506 222 | 1.0 | 1.0 | |
| Danske Bank A/S (nominee) | 392 754 | 0.8 | 0.8 | |
| VPF Nordea Norge Plus | 362 535 | 0.7 | 0.7 | |
| Stefan Sveen | 338 000 | 0.7 | 0.7 | |
| Saxo Bank A/S (nominee) | 325 465 | 0.6 | 0.6 | |
| LHH AS | 310 000 | 0.6 | 0.6 | |
| Kjell Mossefin | 307 500 | 0.6 | 0.6 | |
| Asbjørn John Buanes | 307 465 | 0.6 | 0.6 | |
| Erik Schellhorn | 305 497 | 0.6 | 0.6 | |
| Trond Andersen | 297 315 | 0.6 | 0.6 | |
| Fjellstuens Eftf. AS | 296 285 | 0.6 | 0.6 | |
| Li Zhang | 255 884 | 0.5 | 0.5 | |
| Åge Sverre Heggheim | 222 000 | 0.4 | 0.4 | |
| Total number of shares owned by top 20 shareholders | 26 292 753 | 50.6 | 50.6 | |
| Number of shares owned by other shareholders | 25 659 947 | 49.4 | 49.4 | |
| Total number of shares | 51 952 700 | 100.0 | 100.0 |
An overview of the 20 largest shareholders is available on the poLight website, updated each week.
The Board is authorised to issue shares through share option schemes up to a total nominal value of NOK 207,717, equal to 5,192,925 shares.In 2022, 27,220 shares (share split adjusted volume) were issued in order to fulfil the obligation to provide shares following the exercise of share options. As at 31 December, 3,275,312 share options (equal to 8.2% of shares outstanding) were outstanding, all at a weighted average strike price of NOK 12.9 per share.
| Date | Event |
|---|---|
| 04.04.2023 | LLVISION confirm releasing enterprise Augmented Reality glasses using TLens® |
| 30.03.2023 | Customer announcement of release of a new flagship smartphone using TLens® |
| 20.03.2023 | Contemplated underwritten rights issue - notice of extraordinary general meeting |
| 24.01.2023 | Design-win award and PO received for smartphone |
| 15.03.2022 | Design-in award and PO received for samples for an Augmented Reality (AR) case |
| 30.05.2022 | Ex. date share split 1:5 |
| 01.06.2022 | Capital Markets Day 2022 |
| 07.06.2022 | Awarded another barcode design-win for industrial applications |
| 27.06.2022 | Proof-of-Concept agreement with a top tier medical customer |
| 16.08.2022 | Follow-on order from an Augmented Reality customer |
poLight is focused on developing and commercialising its technology and intends to retain any future earnings in the foreseeable future to finance development activities, operations and business growth. The company has not previously distributed any dividends to its shareholders and does not expect to do so in the foreseeable future. Any future decision to pay a dividend will depend on the company's financial position, operating profit and capital requirements.
poLight does not currently have analyst coverage. Any changes will be updated on the company’s website www.polight.com.
| Date | Event |
|---|---|
| 28 February 2023 | Quarterly Report – Q4 2022 |
| 28 April 2023 | Annual report 2022 |
| 11 May 2023 | Quarterly Report – Q1 2023 |
| 24 May 2023 | Annual General Meeting |
| 17 August 2023 | Half-yearly Report 2023 |
| 02 November 2023 | Quarterly Report – Q3 2023 |
| 27 February 2024 | Quarterly Report – Q4 2023 |
Further information can be found on the company’s website www.polight.com and at www.newsweb.no. poLight’s IR policy can be found at www.polight.com.
Overall progress in 2022 has been encouraging. poLight´s TLens ® is now used in eleven products, representing both consumer and professional applications, confirming the versatility and market potential of poLight’s unique technology. There was a high level of activity related to smartphone and augmented reality (AR) throughout the year, which has led to design-win in both very strategically important market segments.
At the AGM held on 25 May 2022, Grethe Viksaas was elected as the Board’s chair for the remaining year, replacing Ann-Tove Kongsnes. Ann-Tove Kongsnes was re-elected for another two years. The AGM also appointed Jan-Erik Hæreid and Anne E.H. Worsøe for another two years as members of the company’s Nomination Committee. On 17 February 2022, Grethe Viksaas became the chair of the Audit Committee, replacing Ann-Tove Kongsnes due to corporate governance recommendations, since Ann-Tove Kongsnes was the chair of the Board. After the annual general meeting Ann-Tove Kongsnes was 15 June 2022 appointed as the chair of the Audit Committee, since Grethe Viksaas was elected as the chair of the Board.
poLight works primarily with two categories of subcontractors – a MEMS/wafer supplier (ST Microelectronics (ST) in Italy) and assembly partners. While ST produces the wafers/actuators, assembly partners assemble the complete product. The polymer (i.e. lens material) is produced at poLight’s headquarters. With regard to assembly and testing, the focus during the year has been on yield-improvement, improved final test setup (both in terms of quality and capacity) and securing supplies for existing and new customer projects. More work and higher production volumes over time will be needed to achieve our targeted yield numbers. In that respect started delivering to smartphone project is a very good opportunity to improve the manufacturing process and yield. The prospect of achieving an acceptable yield has been confirmed by the production carried out over the past few quarters. ST is currently manufacturing a significant backlog of wafers ordered by poLight, which is scheduled to cleared in the first half of 2023. Important changes to the wafers, improving the optical performance of the TLens , is now phased in. Lead-time and capacity constraints in the industry remain challenging. This has required poLight to make material and capacity commitments well in advance of customer orders, leading to the build-up of wafer inventory.
Important improvement projects relating to the performance and reliability of existing products (TLens ) continued during the quarter. Some aspects will be implemented in the short term, while others have a longer-term horizon. With regard to new products/functionality, main focus has been on TWedge , a potential new product that enables wobulation, a method for improving resolution in AR projection display solutions. In mid-2023 technical samples will be available. Customer interactions so far indicate that this may become a very important product. poLight seeks to establish early customer engagement in the development of this new product.
Customer-related activities continued at a good level during the year. poLight is actively engaged in several market areas. This includes consumer market, such as for smartphones, augmented reality devices and accessories, as well as a broad range of professional applications, such as barcode readers, medical devices and augmented reality glasses. Recent developments in the automotive market indicate a future need for autofocus solutions, and TLens has been mentioned as a potential candidate. This market is demanding, and it will take a long time to qualify for such applications. Nevertheless, it is worthwhile exploring since the volume potential is significant. Interest in our solutions remains high and the company continues to make progress on several projects with potential customers. In sum, TLens technology is increasingly being recognised by potential customers in a wide range of market areas. Over time, this is expected to develop into a diversified revenue base for poLight.
The new camera module concept, based on add-in TLens design, is continuing to open up new opportunities for different applications. Several reference designs have been developed to position TLens for various use cases. During the year, the focus was on smartphone and augmented reality applications. Other applications, such as webcams, drones, etc., are also being explored. poLight has been exploring the smartphone market for many years and been close to a market breakthrough several times. However, last-minute changes in customer product release strategy have delayed poLight´s entrance into the smartphone market. After the close of the fourth quarter 2022, the company announced a design-win and mass production purchase order for a flagship phone to be announced during the first half year 2023. The volume is expected to be low, as it is a flagship phone. Customer interaction is encouraging, and they have expressed a strong motivation and interest in continuing to work with poLight. At present, poLight has achieved four design-wins, three design-in´s (two related to AR) and is involved in six ongoing PoC projects relating to the consumer market. Two of the ongoing PoCs are consumer-oriented augmented reality cases.
TLens is being considered/tested by several important AR/VR market players. The TLens® technology’s low power-consumption, no gravity sensitivity, temperature stabilisation (often called athermalisation), high speed and compactness stand out as key technical benefits. The company is currently included in one product already released to market – Magic Leap 2. In addition, six design-ins have been confirmed (two of which are for consumer applications) while four PoCs (two of which are for consumer applications) are ongoing. Good progress was achieved in most cases during the year. Vuzix, XVisio and LLVision are three of the design-ins mentioned above. They are expected to be launched onto the market around mid 2023. In addition, one more is expected to be launched onto the market towards end of the year. To date, the use case for TLens® has mainly related to world-facing cameras. However, the company is also involved in various AR display applications based on both TLens and TWedge . The AR market is entering a very important phase, and poLight expects to see several companies releasing new AR products in the coming years. Most of the initial customer cases relate to the professional/business market, so initial volumes will be low. Over time, however, AR devices are expected to address the consumer market, prompting a significant increase in demand some years down the road. In the longer term, the AR market is expected to be an important market for the company.
The opportunity pipeline for this market segment is quite promising and slowly growing. It will take time to develop this market and will require entry into some broader application areas. In addition to barcode applications, the company is involved in various other industrial applications. In the end of 2022, the company has achieved five design-wins and has fifteen ongoing PoCs (13 of which are for barcode/machine vision applications). The Teledyne e2v product, “2MP Multi-Focus MIPI Module”, is the latest design-win.
The company is continuing to support selected opportunities in this market segment. Most of the cases being explored are based on “incoming calls”.# Sustainability
poLight aims to be a responsible company with regard to working conditions, human rights, the environment and anti-corruption efforts. The company promotes a healthy, safe and fair working environment in accordance with applicable laws and regulations, including the UN Global Compact. poLight has established a code of conduct as an initial step in developing formal guidelines, principles, procedures and standards related to corporate social responsibility.
poLight is not regulated by any environmental permits or regulatory mandates. Management carries out an annual ESG (environmental, social and governance) assessment, including a risk assessment, which is subject to evaluation by poLight ASA’s Board of Directors. The top three risks that are of importance to both stakeholders and poLight are:
Quality risks – customer satisfaction
To ensure quality in customer deliveries, poLight makes significant efforts to support the customer in the integration of the TLens ® as well as thoroughly testing of the products before shipping.
Competence risks – employee attraction
Research, development and manufacturing of TLens ® technology requires a high level of competence. To retain and attract new employees in an organic growth phase, it is therefore extremely important for poLight to be perceived as an exciting and competitive employer.
Supply chain risks
poLight places great emphasis on qualifying and carrying out continuous improvement processes together with manufacturing partners to ensure the quality, cost efficiency and robustness of the supply chain. While managing supply chain partners in general is demanding, it is particularly complex when preparing for various ramp-up scenarios in today’s challenging global supply chain situation.
The company is increasingly aware of its role in contributing to the UN Sustainable Development Goals. As an example, poLight’s products are already in use in medical scientific equipment and hence contributes to important research benefitting the greater society. From a business perspective this is not short- or medium- term key for the company, but important to support for other reasons mentioned above. Also, poLight´s technology might be used in compact surgical devices making surgical procedure safer and more efficient.
poLight had 11 full-time employees and two part-time employee at the close of 2022, compared to 12 full- time and no part-time employees in 2021. In addition, 12 consultants were engaged on long-term contracts, compared with ten in 2020. The employees and consultants were located in eight different countries and represented 13 different nationalities. Women made up 25% of the workforce, compared with 22% in 2021.
poLight is committed to being a healthy workplace, which provides equal opportunities for development to all employees, irrespective of gender, ethnicity or other characteristics. poLight’s code of conduct states that: “poLight expects dedicated employees, who treat others with respect and maintain open communications. There shall be no discrimination or harassment on the grounds of age, gender, disabilities, race, sexual orientation, ethnic origin, religion or political affiliation. poLight shall be an attractive workplace with an inclusive working environment. poLight expects its employees not to act in ways that could harm the poLight brand. When we are working in cultures other than our own, we treat everyone – individuals as well as organisations – with respect, and act in accordance with national laws and regulations. We also pay attention to local etiquette and values in the countries where we are working. In meetings with contacts outside poLight, we behave with professionalism and courtesy. poLight supports and respects internationally recognised human rights, including those set out in the International Labour Organization’s conventions. The company respects the right to freedom of association and opposes any form of child labour, forced labour or discrimination, and requests all representatives and suppliers to abide by the same principles. All employees, partners, etc., are made aware of these guidelines.”
poLight is committed to the health, safety and welfare of its employees and their families, and its customers. Sickness absence came to 1.1% in 2022, compared with 0.7% in 2021. Sickness absence remains well below the Norwegian national average of approximately 6.8% (2021: 6.4%). No work-related accidents caused personal injuries or material damage in 2022.
Members of poLight ASA’s Board and management are covered by directors and officers liability insurance provided by AIG. The insurance also includes poLight’s subsidiaries. The Board considers the coverage to be reasonable.
The Group’s consolidated revenue in 2022 totalled NOK 13.4 million, compared with NOK 10.0 million in 2021. NOK 10.0 million (2021: NOK 8.7 million) reflects sales of TLens © and ASICs for commercial use and sample deliveries, and NOK 3.3 million (2021: 1.4 million) reflects revenue from NRE “non-recurring engineering” relating to customer development projects.
Cost of sales totalled NOK 4.8 million in 2022, compared with NOK 3.9 million in 2021.
R&D expenses, net of government grants, amounted to NOK 32.9 million, up from NOK 25.4 million in 2021. Increased internal resources contributed to the increased expenditure, however the most significant contributor was lower extent of government grants (see Note 14 Government grants for details). No development expenditures have been capitalised in the past two years. Expensed R&D costs include R&D management, patents, improvements of the existing TLens, feasibility study of new concepts, and costs related to integration of TLens in new customer applications/products.
Sales and marketing expenses totalled NOK 13.1 million, up from NOK 7.2 million in 2021, mainly due to increased sales activities.
Operational/supply chain expenses totalled NOK 9.2 million, up from NOK 9.1 million in 2021.
Administrative expenses totalled NOK 12.1 million, up from NOK 6.9 million in 2021. As a result of the positive outcome of the VAT appeal, NOK 12 million was recognised as a cost reduction in 2021.
Depreciation and amortisation amounted to NOK 10.4 million, down from NOK 11.9 million in 2021.
The Group made an operating loss of NOK 69.1 million in 2022, compared with an operating loss of NOK 54.3 million in 2021.
Net financial items in 2022 totalled NOK 1.5 million, up from NOK 0.9 million in 2021. This is attributable primarily to interest on bank deposits. The tax expense in 2022 came to NOK 0.2 million, compared with NOK 0.1 million the year before. The Group made a net loss of NOK 67.9 million in 2022, compared with a net loss of NOK 53.5 million in 2021. This represents a loss in 2022 of NOK 1.31 per share on a fully-diluted basis, compared with a loss of NOK 1.13 per share in 2021.
As at 31 December 2022, total assets came to NOK 178.2 million, compared with NOK 238.7 million at year- end 2021. Total equity came to NOK 150.7 million, compared with NOK 213.4 million at year-end 2021.
Intangible assets amounted to NOK 24.9 million as at 31 December 2022, compared with NOK 33.4 million at the close of 2021, reflecting amortisation over the year. During the year, inventories increased by NOK 28.8 million to NOK 45.6 million at the close of 2022 (NOK 16.8 at year-end 2021). The increase in inventories mainly relates to wafers from ST Microelectronics and a higher number of finished assembled units. The inventory build-up of components with long lead-times (e.g. wafers) will improve readiness for potential volume customers.
Trade and other receivables totalled NOK 8.4 million (NOK 22.1 million in 2021 including VAT claim receivables), hereof recognised government grants of NOK 4.6 million (NOK 7.3 million in 2021).
As at 31 December 2022, the company had cash and cash equivalents of NOK 84.2 million, compared with NOK 157.8 million at the close of 2021. The change was mainly a function of liquidity consumed by operating activities and inventory build-up.
Long-term liabilities totalled NOK 3.0 million at year-end 2022 (NOK 3.9 million in 2021) that is related to the lease of the company’s headquarters in Horten, which was signed in the second quarter 2021. Total current liabilities at year-end 2022 totalled NOK 24.6 million (NOK 21.3 million in 2021).
Net cash flow used in operating activities totalled NOK 63.6 million in 2022, compared with NOK 49.5 million in 2021. The increase is attributable to the inventory build-up of NOK 28.7 million.
Net cash flow used in investing activities totalled NOK 9.2 million in 2022, compared with NOK 2.1 million used in 2021. The increase is primarily due to investments of NOK 5.5 million in additional final test equipment in both Taiwan and the Philippines. The equipment includes sorting features with respect to various performance parameters.# Net cash flow used in financing activities totalled NOK 0.7 million in 2022. The positive cash flow from financing activities in 2021 of NOK 132.3 million reflects the net proceeds from the share issues, which raised NOK 130.3 million in net proceeds.
In 2022, the parent company generated NOK 13.4 million in gross revenue, compared with NOK 10.0 million the year before. It made an operating loss of NOK 71.3 million in 2022, after total operating expenses of NOK 79.8 million. In 2021, the parent company made a loss of NOK 55.9 million, after total operating expenses of NOK 62.1 million.
Operating expenses in 2022 include employee expenses (including consultants engaged on long-term contracts) of NOK 36.6 million, compared with NOK 38.4 million in the preceding year. The parent company had on average 26 employees and consultants in 2022, compared with 19 in 2021. In 2022, other operating expenses amounted to NOK 33.9 million, compared with NOK 12.9 million in 2021. (See Note 3 Specification of operating expenses by nature).
poLight ASA made a net loss of NOK 68.6 million in 2022, compared with a loss of NOK 54.2 million in 2021. The Board proposes that NOK 63.8 million be transferred from the share premium and NOK 4.8 million from retained earnings. The Board does not propose payment of a dividend for 2022.
As at 31 December 2022, poLight ASA had a share capital of NOK 2.1 million, consisting of 51,952,700 shares, with a nominal value of NOK 0.04 each. poLight employees have been granted options to subscribe for shares under share options schemes. The Board is authorised to issue shares – in share option schemes – up to a total nominal value of NOK 207,717 (5,192,925 shares at a nominal value of NOK 0.04). As at 31 December, 4,238,645 share options (equal to 8.16% of shares outstanding) have been granted, all at a weighted average strike price of NOK 12.9 per share with a range from NOK 3.78 to NOK 22.8. 220 000 share options have been granted during the year at strike price of NOK 21 per share. 3,275,312 share options where exercisable at 31. December.
poLight’s risk management is based on the principle that risk assessment is an integral part of all business activities. Reference is also made to the ESG risk assessment described in Sustainability chapter. As a technology company with global operations, poLight is exposed to risk factors of a financial and operational nature, which may affect business activities and the company’s financial position. poLight’s Board places a high priority on managing risk and has established routines and policies to limit overall risk exposure.
poLight develops highly innovative autofocus lenses for consumer and industrial products. The markets for these products are undergoing rapid technological changes. poLight’s future success will depend on the company’s ability to meet changing industry demands, develop new technologies that address prospective customers’ increasingly sophisticated requirements, and ensure high-quality and cost-effective mass production.
To protect the poLight’s intellectual property rights (IPR), poLight relies on a combination of patents, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions. IPR constitutes one of poLight’s key assets and poLight actively seeks to protect its products and technologies in the markets and geographic regions where it operates, and elsewhere as deemed relevant. In its use of IPR, poLight faces several risks. For example, third parties may illegally copy or utilize the poLight’s IPR, third parties may (with or without merit) claim that the poLight’s use of IPR infringes the IPR of that third party, or the IPR of others may limit the poLight’s freedom to operate.
poLight is subject to certain financial risks associated with currency and interest rates. While the company has had limited revenue so far, it does incur costs in various currencies. No single large currency risk that could have a significant impact on the company’s net profit has been identified. Proceeds from share issues are kept in NOK. poLight has not entered into any hedging agreements.
poLight currently operates at a loss. For the next 12 months, the Group's principal source of liquidity will still be cash generated from financing, equity and debt, in addition to net cash flows generated from sales. In April 2023 the company carried out an underwritten rights issue which raised NOK 100 million in net proceeds. However, the company may in the future seek to raise further capital to finance R&D activities and expansion plans.
poLight aims to comply with the Code of Practice for Corporate Governance published by the Norwegian Corporate Governance Board (NUES). A separate section of this annual report provides further details of the poLight Group’s corporate governance.
The risk factors associated with the Covid-19 pandemic relate to the supply chain. Difficulties in moving employees/competence between Europe and Asia have been reduced after the lifting of many travel restrictions. However, the implications of earlier Covid restrictions have significantly reduced spending and impacted various OEMs’ sales volumes and consequently reduced demand from suppliers. The current tensions between China and Taiwan could potentially have a negative impact on the company´s operations. However, the company’s main TLens © assembly activities has been moved to the Philippines, and only the final test is carried out in Taiwan. A similar capability is being established in the Philippines, which will reduce the risk further. Since poLight does not have any operations, customers or direct suppliers in Russia or Ukraine, the war in Ukraine has, to date, not had any direct consequences of significance for the Group’s operations, other than the general impact of the war on the global situation. For the next 12 months, the Group's principal source of liquidity will still be cash generated from financing, equity and/or debt, in addition to net cash flows generated from sales. Management and the Board of Directors are continuously evaluating the Group’s liquidity requirements and in April 2023 poLight carried out an underwritten rights issue which raised NOK 100 million in net proceeds. Accordingly, these consolidated financial statements have been prepared under the assumption that both the Group and the parent company are going concerns, and management confirms that this is an appropriate assumption.
The company’s high activity levels are reflected in a growing pipeline. The company has been, and is still, using substantial resources to position itself for the smartphone market and recently announced a design-win and first mass production purchase order. This is an important milestone for the company. Smartphones undoubtedly represent the most important volume market. The announced project relates to a flagship smartphone, and will hence be a low volume case. Nevertheless, it will represent a key reference for the company in all market segments. The customer behind the announced design-win is expressing interest in using TLens also for future products. The Augmented Reality (AR) market continues to develop very positively for poLight. We are already being used in the latest Magic Leap AR enterprise glasses, Magic Leap 2, and it has been confirmed that TLens will be included in several other enterprise AR glasses to be released during 2023. Further the company is also involved in projects aiming to develop AR glasses for the consumer market. The platform poLight have built over the last year within the AR segment is impressive. Other market segments such as industrial, medical, and longer term automotive also adds significant business opportunities future proofing poLight. In April 2023 poLight successfully carried out an underwritten rights issue which raised NOK 100 million in net proceeds to finance the Group’s growth plan. The share issue was oversubscribed by…..
We confirm that, to the best of our knowledge, the consolidated financial statements for 2022 have been prepared in accordance with IFRS, as adopted by the EU, as well as additional disclosure requirements set out in the Norwegian Accounting Act; and that the financial statements for the parent company for 2022 have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway; and that the information presented in the financial statements provides a true and fair view of the parent company and the Group’s assets, liabilities, financial position and results for the period as a whole; and that the Board of Directors’ report provides a true and fair view of the development, performance and financial position of the parent company and the Group, and includes a description of the material risks that the Board of Directors, at the time of writing this report, considers could have a significant impact on the financial performance of the Group.
poLight ASA
Horten, 28 April 2023
Grethe Viksaas (sign)
Chair, Independent
Ann-Tove Kongsnes (sign)
Deputy chair
Thomas Görling (sign)
Board member
Svenn-Tore Larsen (sign)
Board member, Independent
Juha Alakarhu (sign)
Board member, Independent
Øyvind Isaksen
Chief Executive Officer
poLight ASA was founded in 2005 and is a publicly-traded company (OSE: PLT) that offers a patented, proprietary tunable optics technology, starting with its first product TLens®, which replicates “the human eye” experience in autofocus cameras in devices such as smartphones, augmented reality glasses, smartwatches, barcode scanners, machine vision systems and medical devices. poLight’s TLens® enables better system performance and new user experiences due to differentiated advantages such as fastest focus, smallest size, ultra-low power consumption, no magnetic interference, no gravity sensitivity, and constant field of view. poLight® has built a world-class team with expertise in optics, polymers, MEMS technology, imaging applications and camera systems. This team is establishing poLight® as the world leader in tunable optics. poLight® is a fabless company using MEMS foundry, assembly, and packaging services from well-established suppliers. poLight® is headquartered in Horten, Norway, with employees in Finland, France, China, Taiwan, US, UK, and Philippines.
poLight aims to be a responsible company with regard to working conditions, human rights, the environment and anti-corruption efforts. The company promotes a healthy, safe and fair working environment in accordance with applicable laws and regulations, including the UN Global Compact. poLight has established a code of conduct as an initial step in developing formal guidelines, principles, procedures and standards related to corporate social responsibility. poLight is not regulated by any environmental permits or regulatory mandates.
We create sustainable technology
We are committed to creating cutting-edge technology for a sustainable world and doing so in a sustainable way. We will offer innovative products that remain highly efficient throughout their service life and support a sustainable energy supply. Every technology we develop will be socially responsible and sustainable to preserve a liveable environment.
We prioritize people
People are our biggest asset. We work proactively to ensure employee health, respect, safety and well-being while maintaining a diverse, and participation-based corporate culture that establishes optimum conditions for the sustainable commitment of our employees. We believe diversity enables innovation, stakeholder engagement and supports growth.
We protect the planet
We commit to protecting the environment by mitigating the impact of our activities and minimizing our footprint, thereby delivering our products and services in a way that minimizes their environmental impact. All of our operations, processes, business practices and entire value chain will be firmly anchored in sustainability principles. We are committed to achieving carbon neutrality and reducing all greenhouse gas emissions in our operations, while also striving for zero waste.
Annual Report 2022 Page 22
We generate long-term value for all stakeholders
We believe we have an important role to play in sustainability and that we are stronger if we act collectively. We are committed to collaborating with suppliers who share our values and to working locally to improve the social, economic and environmental well-being of the communities where we operate.
Management carries out an annual ESG (environmental, social and governance) assessment, including a risk assessment, which is subject to evaluation by poLight ASA’s Board of Directors. The top three risks that are of importance to both stakeholders and poLight are:
Quality risks – customer satisfaction
To ensure quality in customer deliveries, poLight makes significant efforts to support the customer in the integration of the TLens as well as thoroughly testing of the products before shipping.
Supply chain risks
poLight places great emphasis on qualifying and carrying out continuous improvement processes together with manufacturing partners to ensure the quality, cost efficiency and robustness of the supply chain. While managing supply chain partners in general is demanding, it is particularly complex when preparing for various ramp-up scenarios in today’s challenging global supply chain situation.
Business ethics
poLight has high focus on anti-corruption efforts. Business associates have to apply to poLight’s code of conduct with The company is increasingly aware of its role in contributing to the UN Sustainable Development Goals. As an example, poLight’s products are already in use in medical scientific equipment and hence contributes to important research benefitting the greater society. From a business perspective this is not short- or medium- term key for the company, but important to support for other reasons mentioned above. Also, poLight´s technology might be used in compact surgical devices making surgical procedure safer and more efficient.
poLight is still in an early phase commercially with low volume production.
Annual Report 2022 Page 23
Annual Report 2022 Page 24
poLight had 11 full-time employees and two part-time employee at the close of 2022, compared to 12 full- time and no part-time employees in 2021. In addition, 12 consultants were engaged on long-term contracts, compared with ten in 2020. The employees and consultants were located in eight different countries and represented 13 different nationalities. Women made up 25% of the workforce, compared with 22% in 2021. poLight is committed to being a healthy workplace, which provides equal opportunities for development to all employees, irrespective of gender, ethnicity or other characteristics. poLight’s code of conduct states that: “poLight expects dedicated employees, who treat others with respect and maintain open communications. There shall be no discrimination or harassment on the grounds of age, gender, disabilities, race, sexual orientation, ethnic origin, religion or political affiliation. poLight shall be an attractive workplace with an inclusive working environment. poLight expects its employees not to act in ways that could harm the poLight brand. When we are working in cultures other than our own, we treat everyone – individuals as well as organisations – with respect, and act in accordance with national laws and regulations. We also pay attention to local etiquette and values in the countries where we are working. In meetings with contacts outside poLight, we behave with professionalism and courtesy. poLight supports and respects internationally recognised human rights, including those set out in the International Labour Organization’s conventions. The company respects the right to freedom of association and opposes any form of child labour, forced labour or discrimination, and requests all representatives and suppliers to abide by the same principles. All employees, partners, etc., are made aware of these guidelines.” poLight is committed to the health, safety and welfare of its employees and their families, and its customers. Sickness absence came to 1.1% in 2022, compared with 0.7% in 2021. Sickness absence remains well below the Norwegian national average of approximately 6.8% (2021: 6.4%). No work-related accidents caused personal injuries or material damage in 2022.
Annual Report 2022 Page 25
poLight ASA (“poLight” or the “company”) seeks to create sustained shareholder value and pays due respect to the company’s various stakeholders. These include its shareholders, employees, business partners, society in general and the public authorities. poLight is committed to maintaining a high standard of corporate governance and has established principles and guidelines that define the roles and relationship between the shareholders, the Board of Directors (the “Board”) and the company’s executive management (“management”). poLight is incorporated and registered in Norway and subject to Norwegian law. The company’s shares are listed on the Oslo Stock Exchange. As an issuer of shares, the company must comply with rules applicable to companies listed on the Oslo Stock Exchange and rules applicable to public limited companies in general. The company observes the Norwegian Code of Practice for Corporate Governance, issued by the Norwegian Corporate Governance Board (the “Code of Practice”). The Code of Practice is available at www.nues.no. Application of the Code of Practice is based on the “comply or explain” principle, which stipulates that any deviations from the code, should be explained. poLight seeks to follow the Code of Practice, and any deviation will be explained in the corporate governance report included in its annual report. poLight’s corporate governance policy is available on its website, www.polight.com, in accordance with the company’s IR policy. The principles and implementation of corporate governance are subject to annual review by the company’s Board of Directors. The corporate governance policy was last reviewed and approved 11 January 2021.
The operations of the company comply with the business objective set forth in its Articles of Association, which reads as follows: “The company’s purpose is to develop and deliver optical components and all naturally related activities, including ownership of shares and other securities in other companies.” The Board of Directors has established goals, strategies and a risk profile for the company within the definition of its business objective which are described in the Annual Report. These are subject to annual review by the Board. poLight has adopted a set of ethical guidelines (code of conduct) which represents the foundation of poLight’s corporate culture. The guidelines define the core principles and ethical standards for the company’s operations, and the integration of stakeholder considerations and how these relate to the value creation by the company.# Annual Report 2022 Page 26
As at 31 December 2022, poLight's consolidated equity totalled NOK 150.7 million, which is equivalent to 85% of total assets. Liabilities were mainly trade payables and other payables. The Board of Directors is responsible for ensuring that poLight is adequately capitalised relative to the company’s goals, strategy and risk profile.
poLight has not previously distributed any dividends to its shareholders and does not expect to pay any dividend in the foreseeable future. The company is focused on developing and commercialising its technology and intends to retain any future earnings to finance development activities, operations and business growth. Any future decision to pay a dividend will depend on the company's financial position, operating profit and capital requirements.
On 25 May 2022, the annual general meeting (AGM) granted the Board of Directors an authorisation to issue new shares to holders of share options in poLight who exercise their rights to subscribe for new shares. The authorisation to issue new shares at a nominal value of NOK 0.04 each, up to the share capital equivalent of NOK 207,717, is valid until the date of the 2023 AGM, or 30 June 2023 at the latest. As at 31 December 2022, shares equal to a share capital of NOK 1,089 have been issued under this authorisation.
The AGM on 25 May 2022 granted the Board a general authorisation to issue shares and to increase the share capital by a maximum of NOK 415,434. The authorisation is valid until the 2023 AGM, or 30 June 2023 at the latest. As at 31 December 2022, no shares have been issued under this authorisation.
The AGM also granted the Board an authorisation to buy back shares equal to a share capital of NOK 207,717. The authorisation is valid until the 2023 AGM, or 30 June 2023 at the latest. The authorisation had not been utilised as at 31 December 2022.
In the event of an increase in share capital, the Board shall propose that existing shareholders be granted pre-emptive rights. If the Board decides to waive the pre-emptive rights of existing shareholders pursuant to an authorisation granted to it by a general meeting of shareholders, the reason therefor shall be publicly disclosed in a stock exchange announcement.
Any trading undertaken by the company in its own shares shall be carried out through the stock exchange, and always at prevailing market prices. If there is limited liquidity in the company’s shares, other ways shall be considered to ensure that all shareholders are treated equally. There has been no trading in treasury shares after the IPO in 2018.
In the event of not immaterial transactions between the company and its shareholders, a shareholder’s parent company, members of the Board, executive personnel or close associates of any such party, the Board shall arrange for an independent third-party valuation. There were no transactions with close non-group related parties in 2022. For further details see Note 18 Related parties to the financial statements in the Annual Report.
poLight ASA has one class of shares and each share carries equal rights, including the right to participate in general meetings. All shareholders shall be treated equally, unless there is just cause for treating them differently. The company’s shares are freely negotiable.
The general meeting of shareholders is the company’s highest decision-making body. The Board shall ensure that the general meeting is an effective forum for communication between the shareholders and the Board, and enable as many shareholders as possible to exercise their rights through their attendance. Extraordinary general meetings (EGM) may be called by the Board at any time, or by shareholders representing at least 5% of the shares.
The Board will ensure that proposed resolutions and any supporting material shall be sufficiently detailed and comprehensive to enable shareholders to understand and form an opinion on all matters to be considered at the general meeting.
Deadlines for shareholders to give notice of their attendance at the general meeting shall be set as close to the date of the general meeting as practically possible. Shareholders who cannot attend the general meeting may vote by proxy on each individual matter.
The agenda for the general meeting is set by the Board. The agenda shall include detailed information on the resolutions to be considered, as well as the Nomination Committee’s recommendations. The shareholders attending may vote to determine who will chair the general meeting. The Board and the general meeting’s chair shall ensure that the shareholders are able to vote separately on each candidate nominated for election. Representatives of the Board and the Nomination Committee’s chair shall be present at general meetings. Although general meetings will normally be chaired by the Board’s chair, the Board must also ensure that the general meeting can appoint an independent chairperson. In 2022, poLight held its AGM on 25 May.
The company shall have a nomination committee consisting of two to three members, see section 7 of its Articles of Association. The general meeting elects the Nomination Committee’s members and chair, and determines their remuneration.
As at 31 December 2022, the Nomination Committee consisted of the following three members: Thomas Wrede Holm (Investinor) as chair, Jan Erik Hæreid (independent) and Anne E. H. Worsøe (independent). The committee’s members were elected by the AGM for terms lasting until the company's AGM in 2023 or 2024. None of the Nomination Committee’s members are members of the Board or executive management. The majority of the Nomination Committee’s members are deemed to be independent of the company’s Board and executive management.
The Nomination Committee is responsible for recommending candidates for election to the Board and the Board’s chair, and the remuneration payable to members of the Board and its sub-committees. It also recommends candidates for election to the Nomination Committee itself. The objectives, responsibilities and functions of the committees are detailed in the company’s “Guidelines for the Nomination Committee”. All shareholders are entitled to nominate candidates for election to the Board of poLight ASA. Nominations are submitted by sending an e-mail to the Nomination Committee’s chair at the following address: [email protected]. Nominations must be received well in advance to be considered for election at poLight’s AGM. All proposals should include information about the candidate, grounds for consideration and contact details for the person nominating the candidate concerned.
According to the company’s Articles of Association, the Board of Directors shall consist of up to five members. At 31 December 2022, the Board consisted of the following five members: Grethe Viksaas (Chair), Ann-Tove Kongsnes (Deputy chair), Thomas Görling, Juha Alakarhu and Svenn-Tore Larsen. The Board’s chair has been elected by the general meeting. Members of the Board are elected for a term of up to two years at a time and may be re-elected. poLight’s annual report and website provide details of board members’ background and expertise. All members of the Board are considered independent of executive management and material business associates. Further, Grethe Viksaas, Juha Alakarhu and Svenn-Tore Larsen are independent of the company’s major shareholder(s). The Board of Directors does not include executive personnel.
| Name | Role | Considered independent | Served since | Term expires | Participation at Board Meetings 2022 | Shares in poLight 31 December (direct/ indirect) |
|---|---|---|---|---|---|---|
| Grethe Viksaas | Chair | Yes | June 2018 | AGM 2023 | 100% | |
| Ann-Tove Kongsnes | Deputy chair | No | December 2011 | AGM 2024 | 86% | 5,244,125 (1) |
| Thomas Görling | Board member | No | May 2021 | AGM 2023 | 100% | 2,408,642 (2) |
| Juha Alakarhu | Board member | Yes | May 2019 | AGM 2023 | 86% | |
| Svenn-Tore Larsen | Board member | Yes | May 2019 | AGM 2023 | 71% |
1) Ann-Tove Kongsnes is Investment Director and Head of International Affairs at Investinor AS. Investinor Direkte AS held 5.24 million shares in poLight ASA at 31 December 2022
2) Thomas Görling is a Senior Investment Director at Stiftelsen Industrifonden, which held 2.4 million shares in poLight ASA at 31 December 2022
Members of the Board of Directors are encouraged to own shares in the company.
The Board of Directors is elected by the shareholders to oversee executive management, and to make sure that the long-term interests of shareholders and other stakeholders are properly served. The Board has ultimate responsibility for management and the company’s activities in general. Its main responsibilities include the company’s organisation and planning, and the control and supervision of its operations. The Board shall also ensure that the organisation of the company’s accounting and cash management is compliant and under satisfactory control. The Board adopts an annual plan for its work, with particular emphasis on objectives, strategy and implementation.# Instructions to the Board of Directors
The Board has issued instructions for its own work, as well as for the CEO, to allocate duties and responsibilities between the CEO and the Board of Directors. The instructions are based on applicable laws and well-established practices. The current instructions were last amended by the Board in April 2015. Members of the Board of Directors and the company’s executive management shall notify the Board in the event of any material direct or indirect interest in a transaction entered into by the company. The Board’s instructions state that, in situations when its chair cannot, or should not, lead the work of the Board, the longest-serving director shall chair the Board, until an interim chairperson has been elected by and from among the directors present.
The Audit and Sustainability Committee supports the Board with respect to the assessment and control of financial risk, financial and sustainability reporting, auditing and control, and prepares discussions and resolutions for board meetings. The Audit and Sustainability Committee does not make decisions on behalf of the Board, and the establishment of the committee does not alter the Board’s legal responsibilities or tasks. In addition, under the whistleblower procedure, complaints from employees and other concerned parties are received and followed up by the Audit and Sustainability Committee. The Chief Financial Officer participates in the meetings. The committee meet quarterly as a minimum but may meet more frequently if deemed advisable. One meeting per year is held with the auditor without the Chief Financial Officer or any other members of the Group Management and administration being present. The Audit and Sustainability Committee held five meetings in 2022 and was in regular contact with the company’s auditor regarding audits of the statutory accounts. The committee also assesses and monitors the auditor’s independence, including non-audit services provided by the auditor. The committee makes recommendations to the Board with respect to;
The tasks and rules of procedure of the Audit Committee are further regulated in the Audit and Sustainability Committee Charter. The Audit and Sustainability Committee shall consist of at least two members of the Board. The committee shall in total have the expertise that, based on the company’s organisation and operations, is necessary to carry out its tasks. At least one of the members of the committee is to be independent of the operations and have accounting or auditing qualifications. The Board shall appoint one member of the committee to be its chair. As at 31 December 2022, the Audit and Sustainability Committee consisted of the following two members: Ann-Tove Kongsnes and Grethe Viksaas.
The Board of Directors has established a remuneration committee which assists and facilitates decision- making related to the remuneration of executive personnel. The purpose of the Remuneration Committee is to ensure thorough and independent preparation of matters relating to compensation to the executive personnel. The Remuneration Committee puts forth a recommendation for the Board of Directors’ guidelines for remuneration to senior executives in accordance with section 6-16a of the Norwegian Public Limited Liability Companies Act. The Remuneration Committee shall consist of at least two members of the Board of Directors. The Remuneration Committee’s members and chair are appointed for a term of two years. All members must be independent of the company’s executive management. As at 31 December 2022, the Remuneration Committee consisted of the following three members: Ann-Tove Kongsnes, Grethe Viksaas and Thomas Görling.
The Board evaluates its performance and expertise annually.
The Board places a high priority on managing risk, and has established routines and policies to limit overall risk exposure. The rules and guidelines take into account the extent and nature of the company’s activities and the integration of stakeholder considerations in the company’s value creation through its corporate values, ethical guidelines and corporate social responsibility policies. The Board conducts an annual review of the company’s most important areas of risk exposure and its internal control arrangements. poLight’s risk management is based on the principle that risk assessment is an integral part of all business activities. As a technology company with global operations, poLight is exposed to various risk factors of a financial and operational nature, which may affect business activities and the company’s financial position. Management reports monthly to the Board of Directors on key operational developments, including project risk assessments, and on financial performance. In addition, quarterly financial reports are prepared and distributed to the financial market, in accordance with the Oslo Stock Exchange’s requirements. Detailed information on the company’s operational and financial risks are included in the Annual Report.
The remuneration payable to board members is decided by the AGM, based on the Nomination Committee’s recommendation. The remuneration paid shall reflect the Board of Directors’ responsibilities, competence, time involved, and the complexity of the business. The remuneration of the Board of Directors shall not be performance-based and shall not contain option elements. Members of board sub-committees shall be compensated separately. The company shall not provide loans to board members. Detailed information on the remuneration of board members is specified in Note 20 to the consolidated financial statements. Members of the Board of Directors and/or companies with which they are associated should not take on specific assignments for the company in addition to their directorships. Should they do so, however, this must be disclosed to the full Board. The remuneration for such additional duties must be approved by the Board of Directors.
The Board of Directors prepares guidelines for the remuneration of the company’s executive management. These guidelines are communicated annually to the Annual General Meeting. A separate remuneration report will be published on poLight's website as a part of the notification of the Annual General Meeting. The remuneration paid to members of executive management consists of a fixed salary in combination with certain benefits in kind and an performance-based bonus, in addition to participation in a share option scheme. See Note 5.2 Employee benefits expense, in the consolidated financial statements for further details. Performance-related remuneration of executive personnel in the form of share options, bonus programmes, or the like, shall be linked to value creation for the shareholders or the company’s earnings performance over time.
The Board places great emphasis on open, honest and timely dialogue with shareholders, potential investors, analysts and other participants of the capital markets. The primary purpose of poLight’s external information activities, is to provide the financial markets with sufficient information to accurately appraise the company’s shares. Such information shall be presented factually and soberly, and shall be issued using methods and channels that ensure simultaneous, fair and wide distribution. All information is published in English, which is poLight’s corporate language. The company’s primary channels for communication are its interim reports, the annual report and associated financial statements. poLight also issues other notices to shareholders when appropriate. All reports and notices are issued and distributed in accordance with the Oslo Stock Exchange’s rules and practices, and are made available on the company’s website, and at www.newsweb.no. poLight has adopted an investor relations policy and guidelines for the company’s contact with shareholders other than through general meetings. The CEO and the CFO are responsible for communicating with shareholders, the stock exchange, analysts and the media. The general meeting provides a forum for shareholders to raise issues with the Board. The Board of Directors will review and evaluate the content of the IR policy at least annually.
In the event of a takeover bid, the Board of Directors and the company’s executive management each have an individual responsibility to ensure that the company’s shareholders are treated equally, and that the company’s activities are not unnecessarily interrupted. The Board has a special responsibility to ensure that the shareholders have sufficient information and time to form an informed opinion about the offer. The Board has established guiding principles for how it will act in the event of a takeover bid. These are available at www.polight.com. If an offer is made for the company’s shares, the Board shall issue a statement evaluating the offer, and make a recommendation as to whether, in the Board’s opinion, the shareholders should or should not accept the offer. If the Board finds itself unable to give a recommendation to shareholders on whether or not to accept the offer, it should explain the reasons for this.The Board of Director’s statement on a takeover bid shall make it clear whether the views expressed are unanimous, and if this is not the case, it shall explain the reasons why specific members of the Board do not endorse the statement. The Board shall consider whether to arrange a valuation from an independent expert. If any member of the Board, or close associates of such member, or anyone who has recently held such a position but has ceased to do so, is either the bidder or has a particular personal interest in the bid, the Board shall arrange an independent valuation. This shall also apply if the bidder is a major shareholder. Any such valuation should either be enclosed with the Board’s statement or reproduced or referred to in the statement.
The company’s external auditor is KPMG. Each year, the Audit and Sustainability Committee ensures that it receives a presentation of the auditor’s plan for its annual audit of the company. Additionally, the Audit and Sustainability Committee requires the auditor to participate in committee meetings where any of the following is on the agenda: the annual financial statements, accounting principles, assessment of any important accounting estimates and matters of importance on which there has been disagreement between the auditor and the company’s management. At least once a year, the Audit and Sustainability Committee and the auditor will jointly review the company’s internal control procedures, including identification of weaknesses and proposals for improvement. The auditor also at least once a year meets with the committee without the presence of the CEO and CFO. The remuneration paid to the auditor is approved by shareholders at the AGM. The Audit and Sustainability Committee will provide the AGM with a breakdown of the fee paid for audit work and fees paid for other services, if any.
Page 33
(in NOK 000)
| Note | 2022 | 2021 |
|---|---|---|
| Sale of goods | 10 034 | 8 683 |
| Rendering of services | 3 328 | 1 350 |
| Revenue | 13 363 | 10 032 |
| Cost of sales | 4 826 | 3 851 |
| Gross profit | 8 536 | 6 182 |
| Research and development expenses | -32 907 | -25 360 |
| Sales and marketing expenses | -13 122 | -7 224 |
| Operational / supply chain expenses | -9 179 | -9 139 |
| Administrative expenses | -12 068 | -6 868 |
| Depreciation and amortisation and net impairment losses | -10 400 | -11 923 |
| Operating profit / loss ( - ) | - 69 140 | - 54 332 |
| Finance income | 3 640 | 1 830 |
| Finance costs | -2 145 | -887 |
| Net financial items | 1 496 | 944 |
| Profit / loss ( - ) before tax | - 67 644 | - 53 388 |
| Income tax expense | -242 | -93 |
| Profit / loss ( - ) for the year | - 67 886 | - 53 481 |
| Attributable to: | ||
| Equity holders of the parent | -67 886 | -53 481 |
| Non-controlling interests | 0 | 0 |
| Earnings per share: | ||
| Basic, attributable to ordinary equity holders of the parent (NOK) | -1.31 | -1.13 |
| Diluted, attributable to ordinary equity holders of the parent (NOK) | -1.31 | -1.13 |
Annual Report 2022
Page 34
(in NOK 000)
| Note | 2022 | 2021 |
|---|---|---|
| Profit / loss ( - ) for the year | - 67 886 | - 53 481 |
| Other comprehensive income | ||
| Exchange differences on translation of foreign operations | 95 | -5 |
| Income tax effect | 0 | 0 |
| Net other comprehensive income to be reclassified to profit or loss in subsequent periods | 95 | -5 |
| Total comprehensive income for the year, net of tax | -67 791 | -53 486 |
| Attributable to: | ||
| Equity holders of the parent | -67 791 | -53 486 |
| Non-controlling interests | 0 | 0 |
Annual Report 2022
Page 35
(in NOK 000)
| Note | 2022 | 2021 |
|---|---|---|
| ASSETS | ||
| Property, plant and equipment | 10 748 | 2 356 |
| Intangible assets | 24 855 | 33 377 |
| Right-of-use assets | 3 871 | 4 778 |
| Total non-current assets | 39 474 | 40 511 |
| Inventories | 45 577 | 16 836 |
| Trade and other receivables | 8 386 | 22 078 |
| Prepayments | 557 | 1 456 |
| Cash and cash equivalents | 84 249 | 157 810 |
| Total current assets | 138 769 | 198 180 |
| Total assets | 178 242 | 238 691 |
| EQUITY AND LIABILITIES | ||
| Share capital | 2 078 | 2 077 |
| Share premium | 145 785 | 209 320 |
| Reserves | 1 130 | 1 035 |
| Retained earnings | 1 699 | 977 |
| Total equity | 150 692 | 213 409 |
| Lease liabilities | 2 970 | 3 934 |
| Total non-current liabilities | 2 970 | 3 934 |
| Trade and other payables | 22 480 | 19 906 |
| Current lease liabilities | 1 100 | 942 |
| Provisions | 1 000 | 500 |
| Total current liabilities | 24 581 | 21 349 |
| Total liabilities | 27 550 | 25 282 |
| Total equity and liabilities | 178 242 | 238 691 |
Annual Report 2022
Page 36
Attributable to equity holders of the parent
(in NOK 000)
| Note | Share capital | Share premium | Retained earnings | Translation reserve | Total |
|---|---|---|---|---|---|
| As at 1 January 2021 | 1 810 | 125 753 | 238 1 040 | 128 840 | |
| Profit / loss (-) for the year | -53 481 | -53 481 | |||
| Other comprehensive income | -5 | -5 | |||
| Total comprehensive income | 0 | 0 | -53 481 | -5 | -53 486 |
| Issue of ordinary shares | 16 | 251 | 137 553 | 137 803 | |
| Share options exercised | 16 | 17 | 3 380 | 3 397 | |
| Transaction costs | 16 | -7 530 | -7 530 | ||
| Equity-settled share-based payments | 5.2 | 4 385 | 4 385 | ||
| Allocation to retained earnings | -49 836 | 0 | |||
| At 31 December 2021 | 2 077 | 209 320 | 977 | 1 035 | 213 409 |
| Profit / loss (-) for the year | - 67 886 | - 67 886 | |||
| Other comprehensive income | 95 | 95 | |||
| Total comprehensive income | 0 | 0 | -67 886 | 95 | -67 791 |
| Issue of ordinary shares | 16 | 0 | 0 | ||
| Share options exercised | 16 | 1 | 253 | 254 | |
| Transaction costs | 16 | 0 | 0 | ||
| Equity-settled share-based payments | 5.2 | 4 821 | 4 821 | ||
| Allocation to retained earnings | -63 788 | 0 | |||
| At 31 December 2022 | 2 078 | 145 785 | 1 699 | 1 130 | 150 692 |
Annual Report 2022
Page 37
(in NOK 000)
| Note | 2022 | 2021 |
|---|---|---|
| Operating activities | ||
| Profit / loss (-) before tax | -67 644 | -53 388 |
| Adjustments for: | ||
| Depreciation and impairment of property, plant and equipment and right-of- use assets | 8 1 877 | 1 654 |
| Amortisation and impairment of intangible assets | 9 8 522 | 10 269 |
| Net finance income | 5.8 -1 496 | -944 |
| Equity-settled share-based payments | 5.2 4 821 | 4 385 |
| Other non-cash items | -430 | 937 |
| Changes in unrealised net foreign exchange rate differences/fluctuations | 143 | 21 |
| Changes in working capital: | ||
| Increase (-) in trade and other receivables and prepayments | 11 925 | -11 332 |
| Increase (-) in inventories | 12 -28 741 | -7 669 |
| Increase (+) in trade and other payables | 2 574 | 9 223 |
| Changes in provisions and government grants | 17,14 3 166 | -2 954 |
| Interest received | 5.8 2 255 | 585 |
| Interest paid | 5.8 -330 | -203 |
| Income tax paid | - 242 | - 129 |
| Net cash flows used in operating activities | -63 600 | -49 546 |
| Investing activities | ||
| Purchase of property, plant and equipment | 8, 9 -9 202 | -2 142 |
| Net cash flows used in investing activities | -9 202 | -2 142 |
| Financing activities | ||
| Proceeds from issuance of ordinary shares | 16 0 | 137 803 |
| Proceeds from exercise of share options | 16 254 | 3 397 |
| Transaction costs on issuance of shares | 16 0 | -7 530 |
| Payment of lease liabilities | 11 -964 | -1 355 |
| Net cash flows from / (used in) financing activities | - 710 | 132 315 |
| Net increase in cash and cash equivalents | -73 513 | 80 627 |
| Effect of exchange rate changes on cash and cash equivalents | -49 | -26 |
| Cash and cash equivalents at 1 January | 15 157 810 | 77 209 |
| Cash and cash equivalents at 31 December | 15 84 249 | 157 810 |
Annual Report 2022
Page 38
poLight ASA is a limited liability company, founded in 2005, which is incorporated and domiciled in Norway. The address of its registered office is Innlaget 230, N-3185 Skoppum, Norway. poLight offers a new autofocus lens which "replicates" the human eye for use in devices such as smartphones, wearables, barcode, machine vision systems and various medical equipment. poLight's TLens® enables better system performance and new user experiences due to benefits such as extremely fast focus, small footprint, no magnetic interference, low power consumption and constant field of view. For more information, visit www.polight.com. Information on the Group and related parties are presented in Note 18 Related parties. The consolidated financial statements of poLight ASA and its subsidiaries (collectively, poLight or the Group) for the year ended 31 December 2022 were authorised for issue in accordance with a resolution of the Board of Directors on 28 April 2023, to be approved by the annual general meeting on 24 May 2023.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and adopted by the EU (IFRS). The consolidated financial statements have been prepared on a historical cost basis. The consolidated financial statements are presented in Norwegian kroner (NOK), and all values are rounded off to the nearest thousand (NOK 000), unless otherwise indicated.
The consolidated financial statements comprise the financial statements of poLight ASA and its subsidiaries. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year, are included in the consolidated financial statements from the date the Group gains control, until the date the Group ceases to control the subsidiary. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.# 2.3 Summary of significant accounting policies
The following are the significant accounting policies applied by the Group in preparing its consolidated financial statements:
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:
* Expected to be realised or intended to be sold or consumed in the normal operating cycle
* Held primarily for the purpose of trading
* Expected to be realised within twelve months after the reporting period, or
* Cash or cash equivalent, unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
* Expected to be settled in the normal operating cycle
* Held primarily for the purpose of trading
* Expected to be settled within twelve months after the reporting period, or
* The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period
The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
During 2022 the group had two revenue streams:
* Sales of TLenses and related driver ASICs. The Group recognizes revenue from sale of TLenses and other components at the point in time when the control of goods is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. Revenue is generally recognised on delivery of the goods.
* Non-recurring engineering (“NRE”) services related to customer development projects. In certain cases, when the counterparty to the contract is a customer or a potential customer, the Group will engage in customer development projects financed by the customer. In general, income is recognised when the project is finalised according to the contract and the customer can obtain the benefits from the project. Revenue may be recognised over time when one of the following criteria are met:
* Customer consumes benefits as the Group performs the service
* Customer controls benefits as the Group performs the service
Earned revenue for the period is earned revenue at the balance sheet date, less earned revenue in prior periods. If the project is ongoing, income will be recognized continuously in accordance with the agreement, based on actual deliveries. The Group has for the periods presented limited sales and revenues. Further information on revenue recognition or disclosures according to IFRS 15 is consequently not relevant for these financial statements.
The Group’s consolidated financial statements are presented in Norwegian kroner (NOK), which is also the parent company’s functional currency. For each entity, the Group determines the functional currency, and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation, and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rate, at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
On consolidation, the assets and liabilities of foreign operations are translated into NOK at the rate of exchange prevailing at the reporting date, and the statement of profit or loss are translated at average monthly exchange rates. The exchange differences arising on the translation are recognised in OCI. Exchange differences arising from the translation of net investment in subsidiaries and borrowings are included in OCI. At December 31, 2022 and 2021 an intercompany subordinated loan to poLight France SAS of EUR 2,750,000 was regarded as a part of the net investment in poLight France SAS.
Government grants are recognised when there is reasonable assurance that the grant will be received, and that all attached conditions will be complied with. When the grant relates to an expense item, it is deducted from the related expense on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed. Where the grant relates to an asset, it reduces the carrying amount of the asset. The grant is then recognised as income over the useful life of the depreciable asset, by way of a reduced depreciation charge.
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation, and it establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities, and their carrying amounts, for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for: all deductible temporary differences: the carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date, and are recognised, to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction, either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities, and the deferred taxes relate to the same taxable entity and the same taxation authority.
Office/lab upgrades and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing parts of the facility upgrades and equipment. Repair and maintenance costs are recognised in the profit or loss as incurred. Refer to Significant accounting judgements, estimates and assumptions (Note 3). Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
* Leased building: The duration of the lease agreement
* Equipment: 3 to 5 years
An item of office/lab upgrade and equipment is derecognised upon disposal, or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognised. The residual values, useful lives and methods of depreciation of office/lab upgrade and equipment are reviewed at each financial year end, and adjusted prospectively, if appropriate.
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.# Right-of-use assets
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
The right-of-use assets are also subject to an impairment assessment.
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments). In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments).
The Group applies the short-term lease recognition exemption to its short-term leases of office leases in Finland and China (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
Intangible assets acquired separately, are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are not capitalised, and expenditure is recognised in the statement of profit or loss when it is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful lives, and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each year. Changes in the expected useful life are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognised in the statement of profit or loss when the asset is derecognised.
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
Following initial recognition of the development expenditure as an asset, the cost model is applied, requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete, and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually.
The Group made upfront payments to purchase software licenses. Licences for the use of intellectual property are granted for periods
A summary of the policies applied to the Group’s intangible assets is as follows:
| Software licence | Development costs | |
|---|---|---|
| Useful lives | Finite (3-5 years) | Finite (3-7 years) |
| Amortisation method used | Amortised on a straight-line basis over the lives of the licences | Amortised on a straight-line basis over the period of expected consumption of future economic benefits from the related project |
| Internally generated or acquired | Acquired | Internally generated |
A financial instrument is any contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity.
The Group´s financial assets are trade receivables, government grant receivables, accruals and cash. Trade receivables are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. The other financial assets are measured initially at fair value plus transaction costs. Subsequently the assets are measured at amortised cost. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial liabilities are recognised initially at net of directly attributable transaction costs and subsequently measured at amortised cost. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell. When determining the net realisable value, the Group assesses the provision for obsolescence. Customers’ demand and age are parameters that are considered when assessing this provision.
Disclosures relating to impairment of non-financial assets are summarised in the following notes:
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash-Generating Unit (CGU)’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets, or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired, and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value, using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. Value in use impairment calculation is based on detailed budgets and forecasts and with use of scenario analyses. These budgets and forecast calculations are generally covering a period of five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses are recognised in the consolidated statement of comprehensive income.
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand, and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the consolidated statement cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, as they are considered an integral part of the Group’s cash management.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit or loss. If the effect of the time value of money is material, provisions are discounted, using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The Group operates one defined contribution plan.# Contributions are recognised in the statement of income in the period in which the contribution amounts are earned by the employee.
Employees (including senior executives) of the Group have received remuneration in the form of share options in poLight ASA (equity- settled transactions). The fair value of share options that are granted has been calculated using the Black-Scholes option pricing model. The basis for the valuation comprises several factors that affect the calculated fair value of granted share options like the share price at the date of the grant, exercise price (strike), the expected number of share options that will ultimately vest, risk-free interest rate and the volatility that is deemed based on historic volatility of the poLight share.
The cost of equity-settled transactions is recognised in employee benefits expense (Note 5.2 Employee benefits expense), together with a corresponding increase in equity (other equity) over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date, reflects the extent to which the vesting period has expired, and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The share options expense includes accrued social security expenses that are calculated based on the number of vested share options and a proportion of share options under vesting multiplied by the difference between market price and exercise price at the end for the period. The expense in the consolidated statement of income for a period, represents the movement in cumulative expense recognised as at the beginning and end of that period.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 7).
Initial capitalisation of costs is based on management’s assessment that technological and economic feasibility is likely, usually when a product development project has reached a defined milestone, according to an established project management model. Cost of material used in manufacturing line until status of “mass production” is achieved is recognised as development costs to the extent that it is not sellable parts. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied, and the expected period of benefits.
The preparation of poLight’s consolidated financial statements requires the use of accounting estimates. Management also needs to exercise judgment in applying poLight’s accounting policies. These estimates and judgments affect the reported amounts of assets, liabilities, income and expenses, and the accompanying disclosures.
Accounting estimates and assumptions, which are continuously reviewed, are based on historical experience and various other factors that are believed to be reasonable and appropriate under the circumstances. Uncertainty about these estimates and assumptions could result in outcomes that require a material adjustment Annual Report 2022 Page 45 to the carrying amount of assets or liabilities affected in future periods.
Changes in accounting estimates and judgments in the application of accounting policies are recognized in the period in which the estimates and judgments are revised, if the revisions affect only that period, or in the period of the revisions and future periods if the revisions affect both current and future periods. The following summarizes the most significant judgments and estimates used in preparing the consolidated financial statements.
Cash-generating units are reviewed for impairment when indicators exists. Judgements are required to determine if impairment indicators are present. If an impairment test is performed, changes in key assumptions may result in an impairment. See Note 10 Research and development costs for further details.
Estimating fair value for share option plans transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model, including the expected life of the share option, volatility and dividend yield, and assumptions about the inputs. For determining the fair value of equity-settled transactions with employees at the grant date, the Group uses the Black-Scholes option pricing model. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 5.2 Employee benefits expense.
When estimating net realisable value of the inventory the Group assesses the provision for obsolescence. Customers’ demand, expected sales prices obtainable in the market and age are parameters that are considered when assessing this provision. Customers’ demand for each product and each variant of the products are determined based on feedback from customers using the TLens® in released products as well as completed and ongoing PoC’s.
Specifically, poLight has made provision on most of the first generation of the TLenses as it most likely is not addressable to the smart phone market or other mass market products as was intended originally when the wafers were produced. A provision has also been made for low volume units with high purchase price and lenses that are yet to be tested are partly written down as it is expected that some items will not pass the pre-test and final quality control. In addition, a general provision has been made for aging of wafers. As there have been limited sales volumes to date, the provisions made are subject to significant estimation uncertainty. The provision is disclosed in Note 12 Inventories.
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. Significant valuation issues are reported to the Group’s Audit and Sustainability Committee.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. IFRS 13.95
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting Annual Report 2022 Page 46 period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in the following notes: Note 5.2 Employee benefits expense, Share option plans Note 12 Inventories
The Group has only one operating segment – the TLens® technology platform, consistent with the reporting to the CEO and the Board. poLight’s product TLens® may be used in devices such as smartphones, wearables, barcode, machine vision systems and various medical equipment. poLight's TLens® enables better system performance and new user experiences due to benefits such as extremely fast focus, small footprint, no magnetic interference, low power consumption and constant field of view.
Revenue (in NOK 000)
| 2022 | 2021 | |
|---|---|---|
| America | 2 198 | 2 618 |
| Asia | 6 222 | 6 026 |
| Europe | 4 943 | 1 388 |
| Total | 13 363 | 10 032 |
| Right-of-use assets | Machinery & equipment | Development costs (in NOK 000) |
|---|---|---|
| 2022 | 2021 | |
| :-------------------- | :---- | :---- |
| Norway | 3 871 | 4 778 |
| France | 0 | 0 |
| Finland | 0 | 0 |
| Taiwan | 0 | 0 |
| The Philippines | 0 | 0 |
| China | 0 | 0 |
| Total | 3 871 | 4 778 |
All patents and most of the economic IP (intellectual property) is owned by parent company based in Norway. A sales office has been established in China, with a parent holding company in Hong Kong.# 5 Other income/expenses
| Note | 2022 | 2021 | |
|---|---|---|---|
| Employee benefits expense 1) | 5.2 | 45 614 | 46 866 |
| Depreciation and amortisation | 10 400 | 11 923 | |
| Other operating expenses 2) | 21 663 | 1 726 | |
| Total operating expenses | 77 676 | 60 514 |
1) Including consultants engaged on long-term contracts
Annual Report 2022 Page 47
2) The positive outcome of the VAT appeal resulted in approximately NOK 12 million being recognised as a cost reduction in 2021
| 2022 | 2021 | |
|---|---|---|
| Included in Research and development expenses: | ||
| Wages and salaries | 10 533 | 10 495 |
| Consultants engaged on long-term contracts | 8 540 | 3 979 |
| Social security costs | 1 935 | 2 190 |
| Pension costs | 554 | 374 |
| Other benefits and social costs | 422 | 511 |
| Share based compensation costs (share options) | 893 | 1 951 |
| Grants | -802 | -2 162 |
| Included in Sales and marketing expenses: | ||
| Wages and salaries | 3 354 | 2 929 |
| Consultants engaged on long-term contracts | 3 292 | 1 509 |
| Social security costs | 616 | 611 |
| Pension costs | 176 | 104 |
| Other benefits and social costs | 135 | 143 |
| Share based compensation costs (share options) | 1 883 | 880 |
| Included in Operational / supply chain expenses: | ||
| Wages and salaries | 1 679 | 1 940 |
| Consultants engaged on long-term contracts | 3 574 | 2 342 |
| Social security costs | 308 | 405 |
| Pension costs | 88 | 69 |
| Other benefits and social costs | 67 | 95 |
| Share based compensation costs (share options) | 466 | 1 530 |
| Included in Administrative expenses: | ||
| Wages and salaries | 8 770 | 7 808 |
| Consultants engaged on long-term contracts | 80 | 0 |
| Social security costs | 1 611 | 1 630 |
| Pension costs | 461 | 278 |
| Other benefits and social costs | 352 | 380 |
| Share based compensation costs (share options) | -3 375 | 6 875 |
| Total employee benefits expense | 45 614 | 46 866 |
| Average number of full-time equivalents, employees | 23 | 21 |
| Average number of full-time equivalents, total including long-term contractors | 35 | 27 |
All employees are included in a cash bonus programme, with identical bonus criteria for all employees except the CEO. The bonus is calculated based on fixed salary, with maximum 50% for the CEO, 30% for management, 20% for department managers and 10% for other employees.
Pensions poLight ASA (the Group’s Norwegian company) is subject to the requirements of the Mandatory Occupational Pensions Act, and the company’s pension scheme follows the requirements of the Act. As the subsidiaries in France, Finland and China are not subject to mandatory pension schemes in addition to the national insurance schemes, no pension scheme has been established there. The pension scheme in Norway is based on a defined contribution plan, and the premium is calculated on the basis of the employees’ income. In 2022 7% of the salary between 0G (1G=NOK 111,477) and 7.1G, and 15% of the salary between 7.1G and 12G was
Annual Report 2022 Page 48
calculated. In 2021 5.55% of the salary between 1G (1G=NOK 106,399) and 7.1G, and 8% of the salary between 7.1G and 12G was calculated. The period’s contributions are recognised in the Consolidated statement of income as pension cost for the period.
| (in NOK 000) | 2022 | 2021 | |
|---|---|---|---|
| Defined contribution plan | 1 195 | 734 | |
| Social security tax | 168 | 104 | |
| Total pension cost | 1 363 | 838 |
Share option plans (equity-settled)
Share options in the parent company are granted to all employees. The exercise price of the share options is equal to, or higher than, the market price of the underlying shares on the date of grant. The company have two programs. Program 1: The share options in each agreement are vested over 3 years, and exercisable with 1/36 each month over 3 years, at the expiry of each calendar month, starting at the date of grant. The company is liable for corporate taxes including National Insurance up to 20%. Program 2: The share options in each agreement are vested over 3 years, and exercisable when fully vested. The employee covers all corporate taxes including National Insurance. Both programs are conditional on the employee’s continued employment in poLight. The share options can be exercised up to two years after the three-year vesting period. Exercisable share options may as a general rule, be exercised and shares issued once per quarter each following the release of poLight ASA’s quarterly reports.
| (in NOK 000) | 2022 | 2021 | |
|---|---|---|---|
| Share option expense | |||
| Share based compensation costs | 4 821 | 4 385 | |
| Accrued social security | -4 953 | 6 852 | |
| Recognised as employee benefits expense | -133 | 11 236 |
The share options expense includes accrued social security expenses that are calculated based on the number of vested share options and a proportion of share options under vesting multiplied by the difference between market price and exercise price at the for the period. The board is authorised to issue additional shares - in share option scheme - up to total par value of NOK 207 717 (5,192,925 shares at par value of NOK 0.04).
Annual Report 2022 Page 49
Outstanding share options at December 31, 2022
| Year issued | Exercise price (NOK) | Outstanding no. of share options | Exercisable no. of share options | Remaining contractual life (years) | Total expensed (in NOK 000) | Remaining estimated expense (in NOK 000) |
|---|---|---|---|---|---|---|
| 2018 | 10.00 | 1 617 296 | 1 617 296 | 0.80 | 6 320 | 0 |
| 2019 | 3.78 | 202 210 | 202 210 | 1.47 | 375 | 0 |
| 2019 | 5.40 | 248 875 | 248 875 | 1.47 | 303 | 0 |
| 2019 | 6.75 | 331 930 | 331 930 | 1.47 | 262 | 0 |
| 2020 | 14.98 | 948 335 | 755 835 | 2.67 | 6 333 | 149 |
| 2021 | 22.80 | 670 000 | 107 083 | 3.45 | 4 844 | 3 773 |
| 2022 | 21.00 | 220 000 | 12 083 | 4.83 | 364 | 1 443 |
| Total | 4 238 646 | 3 275 312 | 18 801 | 5 365 |
Reconciliation of outstanding share options
| 2022 | 2021 | |||
|---|---|---|---|---|
| Number of share options | WAEP | Number of share options | WAEP | |
| Outstanding at 1 January | 4 045 865 | 12.4 | 3 820 660 | 10.1 |
| Granted during the year | 220 000 | 21.0 | 670 000 | 22.8 |
| Forfeited during the year | 0 | - | -27 220 | 8.3 |
| Exercised during the year | -27 221 | 9.4 | -417 575 | 8.1 |
| Expired during the year | 0 | - | 0 | - |
| Outstanding at 31 December | 4 238 646 | 12.9 | 4 045 865 | 12.4 |
| In % of outstanding shares | 8.16 % | 7.79 % | ||
| Exercisable at 31 December | 3 275 312 | 10.6 | 2 734 115 | 9.8 |
The weighted average exercise price (WAEP) for the share options exercised during 2022 was NOK 9.4 (2021: NOK 8.1), and the average market price at the exercise dates was NOK 25.1 (2021: NOK 26.42). The weighted average exercise price for the share options outstanding as at 31 December 2022, was NOK 12.9 (2021: NOK 12.4) with a range from NOK 3.78 to NOK 22.80. The weighted average remaining contractual life for the share options outstanding as at 31 December 2022 was 2.01 years (2021: 2.85 years). At the end of the year, the weighted average exercise price was NOK 10.6 (2021: NOK 9.8) on exercisable options. In the case of an offeror becomes the owner of at least 9/10 of the issued shares of poLight, all of the unvested share options becomes immediately vested.
Share option valuation
The fair value of the options granted in 2022 has been calculated to NOK 1.8 million excluding social security expenses (2021: NOK 5.8 million), by using the Black-Scholes option pricing model. The basis for the valuation comprises several factors that affect the calculated fair value of granted options. The assumptions used in the calculation was:
Annual Report 2022 Page 50
| 2022 | 2021 | |
|---|---|---|
| Program 1 | Program 2 | |
| Price at grant date | NOK 20.05 | NOK 20.05 |
| Exercise price | NOK 21 | NOK 21 |
| Maximum 1) option life | 5 years | 5 years |
| Assumed option life 2) | 2.5 years | 4 years |
| Risk-free interest rate | 3.26% | 3.26% |
| Volatility | 60 % | 60 % |
| Fair value per share option | NOK 7.5 | NOK 9.5 |
1) The share options expire 5 years from the date of the grant, but any vested options shall be exercised no later than 6 months after last day of service.
2) The option life reflects the vesting time plus one year. Expected vesting is estimated based on employee turnover, and volatility is deemed based on historic volatility.
Sensitivity analysis
The fair value of the share options granted in 2022 of NOK 1.8 million was determined based on an assumption of a volatility of 60%. At a volatility of 80%, holding other assumptions constants, would have increased the fair value with NOK 0.5 million over the three- year vesting period. A decrease in the assumed lifetime of the share options with 1 year, would have decreased the fair value with NOK 0.4 million over the vesting period.
| 2022 | 2021 | |
|---|---|---|
| Employee benefits expense (incl. consultants) | 22 878 | 19 500 |
| Other operating expenses | 14 922 | 17 747 |
| Less government grants | -4 892 | -11 886 |
| Capitalized | 0 | 0 |
| Total Research and development expenses | 32 907 | 25 360 |
Research and development costs that are not eligible for capitalisation have been expensed in the period incurred and are recognised as Research and development expenses. None of the development projects were eligible for capitalisation during 2022 and 2021. R&D costs that are expensed, includes R&D management, patents, improvements of the TLens (see Note 14 Government grants), feasibility study of new concepts, software applications and costs related to integration of TLens in new customer applications/products.
| 2022 | 2021 | |
|---|---|---|
| Employee benefits expense (incl. consultants) | 9 457 | 6 176 |
| Other operating expenses | 3 666 | 1 048 |
| Total Sales and marketing expenses | 13 122 | 7 224 |
Annual Report 2022 Page 51
| 2022 | 2021 | |
|---|---|---|
| Employee benefits expense (incl. consultants) | 6 182 | 6 381 |
| Other operating expenses | 2 997 | 2 758 |
| Total Operational / supply chain expenses | 9 179 | 9 139 |
| 2022 | 2021 | |
|---|---|---|
| Employee benefits expense | 7 900 | 16 971 |
| Refund of VAT claim | 0 | -11 624 |
| Other operating expenses | 4 168 | 1 521 |
| Total Administrative expenses | 12 068 | 6 868 |
On 16 December 2021, the Tax Appeals Board issued a final decision and upheld the appeal, giving poLight full refund of the VAT claim. NOK 12.4 million was recognised in the fourth quarter 2021, whereof NOK 11.6 million as a reduction of administrative expenses and NOK 0.8 as financial income (see Note 17 Provisions).## 5.7 Auditor's remuneration (in NOK 000)
| 2022 | 2021 | |
|---|---|---|
| Statutory audit fee | 798 | 689 |
| Audit related fee | 34 | 55 |
| Tax related fee | 30 | 30 |
| Other service fee | 68 | 41 |
| Total Auditor's remuneration (excluding VAT) | 930 | 814 |
| 2022 | 2021 | |
|---|---|---|
| Foreign exchange gain | 1,391 | 465 |
| Interest income | 2,249 | 585 |
| Interest income VAT appeal case | 0 | 780 |
| Finance income | 3,640 | 1,830 |
| Foreign exchange losses | 1,776 | 599 |
| Interest expense on lease liabilities | 330 | 203 |
| Finance expenses | 38 | 84 |
| Finance cost | 2,145 | 887 |
The significant components of income tax expense are:
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Consolidated statement of profit or loss | ||
| Current income tax expense | 242 | 93 |
| Deferred tax: | ||
| Relating to origination and reversal of temporary differences | 0 | 0 |
| Income tax expense reported in the statement of profit or loss | 242 | 93 |
A reconciliation between tax expense and the product of accounting profit multiplied by Norway’s domestic tax rate, is as follows:
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Calculated income tax at statutory rate of 22% | -14,882 | -11,746 |
| Government grants exempt from tax | -1,015 | -1,045 |
| Tax effect of permanent differences | -41 | 2,117 |
| Transaction costs share issues | 0 | -1,657 |
| Change in unrecognised deferred tax assets | 16,880 | 12,374 |
| Change in tax rate | 0 | 398 |
| Effect of different tax rates compared with Norwegian tax rate | -71 | -65 |
| Foreign currency effects | -28 | 132 |
| Adjustments previous year | 0 | -415 |
| Income tax expense | 242 | 93 |
| Effective tax rate | 0.4 % | 0.2 % |
| Balance at 31 December 2022 (in NOK 000) | Net balance at 1 January | Recognised in profit or loss | Recognised in OCI | Net | Deferred tax assets | Deferred tax liabilities |
|---|---|---|---|---|---|---|
| Property, plant and equipment | 427 | -423 | 0 | 4 | 4 | 0 |
| Intangible assets | 5,301 | -135 | 0 | 5,166 | 5,166 | 0 |
| Inventories | 2,903 | 74 | 0 | 2,978 | 2,978 | 0 |
| Group loan | -1,070 | 0 | -318 | -1,387 | 0 | -1,387 |
| Provisions | 110 | 110 | 0 | 220 | 220 | 0 |
| Tax losses carried forward | 145,452 | 17,070 | 0 | 162,522 | 162,522 | 0 |
| Tax assets (liabilities) before set-off | 153,123 | 16,696 | -318 | 169,502 | 170,889 | -1,387 |
| Set-off of tax | 0 | -1,387 | 1,387 | 0 | 0 | 0 |
| Unrecognised deferred tax assets | -169,502 | -169,502 | ||||
| Net tax assets (liabilities) | 0 | 0 | 0 |
| Balance at 31 December 2021 (in NOK 000) | Net balance at 1 January | Recognised in profit or loss | Recognised in OCI | Net | Deferred tax assets | Deferred tax liabilities |
|---|---|---|---|---|---|---|
| Property, plant and equipment | 501 | -74 | 0 | 427 | 427 | 0 |
| Intangible assets | 5,436 | -135 | 0 | 5,301 | 5,301 | 0 |
| Inventories | 2,788 | 116 | 0 | 2,903 | 2,903 | 0 |
| Group loan | -1,361 | 0 | 291 | -1,070 | 0 | -1,070 |
| Provisions | 102 | 8 | 0 | 110 | 110 | 0 |
| Tax losses carried forward | 133,283 | 12,168 | 0 | 145,452 | 145,452 | 0 |
| Tax assets (liabilities) before set-off | 140,749 | 12,083 | 291 | 153,123 | 154,193 | -1,070 |
| Set-off of tax | 0 | -1,070 | 1,070 | 0 | 0 | 0 |
| Unrecognised deferred tax assets | -153,123 | -153,123 | ||||
| Net tax assets (liabilities) | 0 | 0 | 0 |
Total unrecognised deferred tax assets net, relate to:
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Norway (no expiry date) | 162,193 | 146,746 |
| France (no expiry date) | 7,309 | 7,038 |
| Total unrecognised deferred tax assets | 169,502 | 153,784 |
Basic earnings per share (EPS) is calculated by dividing the profit or loss for the year attributable to ordinary equity holders of the parent, by the weighted average number of shares outstanding during the year. The following table reflects the income and share data used in the basic and diluted EPS computations:
| 2022 | 2021 | |
|---|---|---|
| 1) Weighted average number of ordinary shares for basic EPS | 51,939,025 | 47,341,744 |
| Effect of dilution: | ||
| Share options in-the-money (average) | 3,073,867 | 2,507,374 |
| Anti-dilutive for the periods presented | -3,073,867 | -2,507,374 |
| Weighted average number of shares adjusted for the effect of dilution | 51,939,025 | 47,341,744 |
1) Restated following a share split of 1:5 resolution on 31 May 2022
Fully vested and Exercisable share options have no dilution effect on EPS computations, because this would have decreased loss per share. There have been no other transactions involving ordinary shares, or potential ordinary shares, between the reporting date and the date of authorisation of these financial statements.
| (in NOK) | 2022 | 2021 |
|---|---|---|
| Profit / loss (-) attributable to ordinary equity holders of the parent | -67,886 | -53,481 |
| Earnings per share for income attributable to equity holders of poLight: | ||
| Basic | -1.31 | -1.13 |
| Diluted | -1.31 | -1.13 |
| (in NOK 000) | Building | Equipment | Total |
|---|---|---|---|
| Cost at 1 January 2021 | 287 | 12,268 | 12,554 |
| Additions | 1,126 | 1,016 | 2,142 |
| Disposals at cost | -287 | -313 | -599 |
| Foreign currency translation effect | 0 | -110 | -110 |
| Cost at 31 December 2021 | 1,126 | 12,861 | 13,987 |
| Accumulated depreciation and impairment losses at 1 January 2021 | -287 | -11,428 | -11,715 |
| Depreciation | -113 | -512 | -625 |
| Accumulated depreciation and impairment losses disposals | 287 | 313 | 599 |
| Effect of changes in foreign exchange | 0 | 110 | 110 |
| Accumulated depreciation and impairment losses at 31 December 2021 | -113 | -11,518 | -11,631 |
| Net book value at 31 December 2021 | 1,013 | 1,343 | 2,356 |
| (in NOK 000) | Building | Equipment | Total |
|---|---|---|---|
| Cost at 1 January 2022 | 1,126 | 12,861 | 13,987 |
| Additions | 106 | 9,096 | 9,202 |
| Foreign currency translation effect | 0 | 124 | 124 |
| Cost at 31 December 2022 | 1,232 | 22,081 | 23,313 |
| Accumulated depreciation and impairment losses at 1 January 2022 | -113 | -11,518 | -11,631 |
| Depreciation | -236 | -482 | -717 |
| Impairment losses | 0 | -94 | -94 |
| Effect of changes in foreign exchange | 0 | -122 | -122 |
| Accumulated depreciation and impairment losses at 31 December 2022 | -348 | -12,217 | -12,565 |
| Net book value at 31 December 2022 | 884 | 9,864 | 10,748 |
Estimated useful lives (years) | 1) | |
---|---|---|---
| 3-5 | |
1) Modifications and upgrades in leased premises are depreciated over the leasing period that is estimated to 5 years (including an option to extend the lease with 2 years).
| (in NOK 000) | Development costs and TLens patents | Software license | Total |
|---|---|---|---|
| Cost at 1 January 2021 | 78,184 | 242 | 78,427 |
| Disposals | 0 | -61 | -61 |
| Cost at 31 December 2021 | 78,184 | 181 | 78,365 |
| Accumulated amortisation and impairment losses at 1 January 2021 | -34,539 | -242 | -34,780 |
| Amortisation | -10,269 | 0 | -10,269 |
| Disposals | 0 | 61 | 61 |
| Accumulated amortisation and impairment losses at 31 December 2021 | -44,807 | -181 | -44,988 |
| Net book value at 31 December 2021 | 33,377 | 0 | 33,377 |
| (in NOK 000) | Development costs and TLens patents | Software license | Total |
|---|---|---|---|
| Cost at 1 January 2022 | 78,184 | 181 | 78,365 |
| Cost at 31 December 2022 | 78,184 | 181 | 78,365 |
| Accumulated amortisation and impairment losses at 1 January 2022 | -44,807 | -181 | -44,988 |
| Amortisation | -8,522 | 0 | -8,522 |
| Accumulated amortisation and impairment losses at 31 December 2022 | -53,329 | -181 | -53,511 |
| Net book value at 31 December 2022 | 24,855 | 0 | 24,855 |
Intangible assets with finite useful lives, are amortised systematically over their estimated economic lives, ranging between 3 and 7 years. In 2008/2009, poLight acquired the core patents of the TLens® technology for NOK 5 million. The patents were granted in 10 different countries in 2006. poLight has since invested substantial resources in research and product development of the TLens®. poLight started amortising capitalised development costs for TLens Silver and the related ASIC driver in the second quarter of 2019 as they became ready for commercial shipments. The useful lives are deemed to be 7 years which correlates with the remaining number of years of the first patent. Research and development costs that are not eligible for capitalisation have been expensed in the period incurred and are recognised in Research and development expenses net of government grants received.
The part of poLight’s IP (intellectual property) that is recognised as an intangible asset, is the fundamental TLens® technology, which can become a component in smartphones, wearables, augmented reality and various medical equipment, as well as a wide range of industrial applications, such as barcode readers and machine vision/sensor applications.
| (in NOK 000) | Carrying amount before impairment | Carrying amount after impairment | Accumulated net impairment loss |
|---|---|---|---|
| CGU: TLens® technology platform | |||
| At 31 December 2021 | 51,657 | 33,377 | 18,280 |
| At 31 December 2022 | 43,135 | 24,855 | 18,280 |
The TLens® technology platform is poLight’s major asset. In January 2020, the first product using TLens Silver was launched within the consumer market segment. A smartwatch phone for children, with a main camera with an advanced autofocus (AF) function delivered by poLight. Since then, additional 9 design-wins have been achieved. Additional three in consumer products, one web cam a second smartwatch and in January 2023 the first design-win in smartphone. poLight has also achieve several design wins in industrial products like barcode, augmented reality (AR) and medical. The company has one major asset, the TLens® technology platform and the management has evaluated that the group as a whole is one CGU for impairment testing. The remaining carrying value of development costs are NOK 24.9 million and are related to TLens® technology platform, that includes the ASIC driver. Indicators of impairment of the TLens ® technology platform have been reviewed, and none identified. TLens® Platinum, that is a larger version of the TLens® is still under development. Engineering samples have been produced and have already been tested by some potential customers. However, activity to prepare TLens® Platinum for mass production has been put on hold until the product is closer to the anticipated market breakthrough. In December 2019 a management assessment was made and an impairment charge of NOK 18.3 million was recognised related to this product. The recognition of impairment for accounting purposes does not imply that the assets have no commercial value. In addition, management has evaluated that the equity value of the company is an indication of the fair value of the CGU. The company’s shares are listed on Oslo Stock exchange, and fair value is estimated based on the observed share price.## 11 Lease agreements
poLight has entered into commercial leases with regards to premises and office equipment used in its operations. In Norway, the company leases lab facilities, including a clean room, and offices are leased in Norway, Finland and China. The premises in Norway comprises 852 square meters. The contract expires in July 2024 with an option to extend the lease agreement with additional 2 years. The option is assumed to be utilised determining the lease period, increasing the lease assets and liabilities. The office lease terms in Finland and China are terminable by both lessee and lessor with twelve months’ notice or less. The leases of office equipment are with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
| Building (in NOK 000) | 2022 | 2021 |
|---|---|---|
| At 1 January | 4 778 | 964 |
| Additions | 158 | 5 309 |
| Termination of contract | 0 | -465 |
| Depreciation expense | -1 066 | -1 029 |
| At 31 December | 3 871 | 4 778 |
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Annual Report 2022 Page 57
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| At 1 January | 4 876 | 1 048 |
| Additions | 159 | 5 309 |
| Termination of contract | 0 | -522 |
| Interest expense | 330 | 243 |
| Payments | -1 295 | -1 202 |
| At 31 December | 4 070 | 4 876 |
| Current, < 1 year | 1 100 | 942 |
| Non-current | 2 970 | 3 934 |
The maturity analysis of lease liabilities are disclosed in Note 13.2 Financial liabilities.
The following are the amounts recognised in profit or loss:
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Depreciation expense of right-of-use assets | 1 066 | 1 029 |
| Interest expense on lease liabilities | 330 | 243 |
| Expense relating to short-term leases (included in research and development expenses) | 407 | 389 |
| Expense relating to short-term leases (included in sales and marketing expenses) | 769 | 202 |
| Expense relating to leases of low-value assets (included in administrative expenses) | 46 | 40 |
| Total amount recognised in profit or loss | 2 617 | 1 904 |
The Group had total cash outflows for leases of NOK 2 516 in 2022 (2021: NOK 1 833). The Group also had non-cash additions to right-of-use assets and lease liabilities of NOK 159 in 2022 (2021: NOK 5 309). The addition is attributable to the yearly adjustment in lease payment for the company’s headquarters in Horten.
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Components; mainly wafers (at cost) | 50 143 | 25 304 |
| Finished goods; lenses and driver ASICs (at cost) | 8 968 | 4 730 |
| Obsolescence provision (expensed as cost of sales) | -13 534 | -13 198 |
| Total inventories at the lower of cost and net realisable value | 45 577 | 16 836 |
During 2022, NOK 0.3 million (2021: NOK 0.5 million) was recognised as an obsolescence expense for inventories carried at net realisable value. This is recognised in cost of sales.
poLight’s principal financial liabilities comprise trade and other payables, lease liabilities and provisions. poLight’s principal financial assets include trade and other receivables, and cash. poLight is exposed to foreign currency risk, credit risk and liquidity risk.
Annual Report 2022 Page 58
Trade receivables, trade payables and inventory; poLight’s contracts with the suppliers of the actuator and the assembly of the TLens®, are in USD. Foreign currency risk will be mitigated by entering sales contracts in USD or using hedging instruments. The group had not entered into any hedging instruments as at 31 December 2022.
Research and development (“R&D”); a significant part of the R&D expenses is in foreign currency. Services from subsidiaries are invoiced in EUR and development programs at manufacturing partners are invoiced in USD. These activities have not been hedged as of today.
The following tables demonstrate the sensitivity to a reasonably possible change in EUR and USD exchange rates, with all other variables held constant. The impact on the profit before tax is due to changes in the value of monetary assets and liabilities measured in NOK. The impact on the equity is due to the effect on operating activities.
| Change in EUR rate | Effect on profit before tax | Effect on equity |
|---|---|---|
| (in NOK 000) | (in NOK 000) | (in NOK 000) |
| 2022 | ||
| +5% | -796 | -428 |
| -5% | 796 | 428 |
| 2021 | ||
| +5% | -800 | -576 |
| -5% | 800 | 576 |
| Change in USD rate | Effect on profit before tax | Effect on equity |
|---|---|---|
| (in NOK 000) | (in NOK 000) | |
| 2022 | ||
| +5% | -1 151 | -2 605 |
| -5% | 1 151 | 2 605 |
| 2021 | ||
| +5% | -893 | -893 |
| -5% | 893 | 893 |
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. poLight is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. Historically, no bad debt has been recognised and since most receivables are current, no provision is made. Credit quality of a customer is assessed based on D&B’s credit rating scorecard and are regularly monitored. As at 31 December 2022, most of the receivables consisted of government grants with low credit risk. Credit risk from balances with banks are mitigated using 5 different Norwegian banks with a deposit limit of NOK 40 million each. Credit quality is assessed and regularly monitored.
At year-end, poLight had cash deposits of NOK 84 million. In April 2023 the company launched an underwritten preferential rights issue. The rights issue is fully underwritten and will, when it completed at the beginning of May, raise NOK 135 million in gross proceeds. All the conditions for the obligations of the underwriters have been met.
Annual Report 2022 Page 59
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Financial assets at amortised cost: | ||
| Trade receivables | 3 026 | 2 506 |
| Grants recognised, not received | 4 614 | 7 280 |
| VAT receivables, VAT claim (note 17) | 0 | 11 215 |
| Other receivables | 747 | 1 078 |
| Total financial assets | 8 386 | 22 078 |
| Total current | 8 386 | 22 078 |
| Total non-current | 0 | 0 |
Trade receivables are non-interest bearing and generally on 30 day terms. As at 31 December, the ageing analysis of the receivables is as follows:
| (in NOK 000) | Total | < 30 days | 30–60 days | 61–90 days | 91–120 days | > 120 days |
|---|---|---|---|---|---|---|
| 2022 | 8 386 | 6 512 | 1 874 | 0 | 0 | 0 |
| 2021 | 22 078 | 21 721 | 322 | 35 | 0 | 0 |
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Financial liabilities at amortised cost, other than interest-bearing loans and borrowings: | ||
| Trade payables | 10 612 | 4 518 |
| Other payables | 7 923 | 6 490 |
| Accrued employer’s NICs on share option plan (note 5.2) | 3 945 | 8 898 |
| Provisions | 1 000 | 500 |
| Total | 23 480 | 20 406 |
| Total current | 23 480 | 20 406 |
| Total non-current | 0 | 0 |
For all the financial liabilities the carry amounts represent a reasonable approximation of fair value.
Terms and conditions of the above financial liabilities
Annual Report 2022 Page 60
The maturity analysis below shows the remaining contractual maturity of financial liability. The analysis shows contractual undiscounted cash-flows (i.e., includes interest), and thus differs from the amounts recognised in the statement of financial position.
| (in NOK 000) | < 3 months | 3 to 12 months | 1 to 5 years | > 5 years | Total |
|---|---|---|---|---|---|
| As at 31. December 2022 | |||||
| Lease liabilities | 346 | 1 015 | 3 232 | 0 | 4 593 |
| Trade and other payables | 20 679 | 1 801 | 0 | 0 | 22 480 |
| Total | 21 025 | 2 816 | 3 232 | 0 | 27 073 |
| (in NOK 000) | < 3 months | 3 to 12 months | 1 to 5 years | > 5 years | Total |
|---|---|---|---|---|---|
| As at 31. December 2021 | |||||
| Lease liabilities | 317 | 952 | 4 445 | 0 | 5 715 |
| Trade and payables | 18 256 | 1 650 | 0 | 0 | 19 906 |
| Total | 18 574 | 2 603 | 4 445 | 0 | 25 621 |
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may issue new shares and/or debt. The Group monitors cash monthly towards 5-year budgets and forecasts.
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Trade and other payables | 23 480 | 20 406 |
| Less: cash and short-term deposits | -84 249 | -157 810 |
| Net debt | -60 769 | -137 403 |
The Group's capital structure is primarily based on deposits.
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Receivable at 1 January | 7 280 | 5 014 |
| Received during the year | -7 558 | -9 621 |
| Grants recognised as reduction of research and development expenses in the consolidated statement of income | 4 892 | 11 886 |
| Receivable at 31 December | 4 614 | 7 280 |
The group have received grants for development of next generation optical components based on TLens® technology and analyses and testing activities to understand better relations between micro failure in optical components and mechanical, physical and electric testing. The group has in addition received Tax Refund grants related to project for application reference design enabled by poLight technology, autofocus lens and ASIC projects.
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Current | 4 614 | 7 280 |
| Non-current | 0 | 0 |
| Total | 4 614 | 7 280 |
| (in NOK 000) | 2022 | 2021 |
|---|---|---|
| Cash at banks | 82 936 | 156 365 |
| Restricted cash, taxes withheld | 1 313 | 1 263 |
| Restricted cash, deposits | 0 | 181 |
| Cash and short-term deposits | 84 249 | 157 810 |
Cash at banks earns interest at floating rates based on daily bank deposit rates.
Annual Report 2022 Page 61# 16 Issued capital and reserves
| 2022 | 2021 | |
|---|---|---|
| Ordinary shares | 51 952 700 | 51 925 480 |
| Number of shares | Issued share capital (in NOK 000) | |
|---|---|---|
| At 1 January 2021 of NOK 0.20 each | 9 048 822 | 1 810 |
| Exercise of share options on 3 March 2021 each with a par value of NOK 0.20 | 79 378 | 16 |
| Private placement on 13 September 2021 each with a par value of NOK 0.20 | 1 136 363 | 227 |
| Exercise of share options on 29 September 2021 each with a par value of NOK 0.20 | 4 137 | 1 |
| Subsequent offering on 21 October 2021 each with a par value of NOK 0.20 | 116 396 | 23 |
| At 31 December 2021 of NOK 0.20 each | 10 385 096 | 2 077 |
| Exercise of share options on 1 March 2022 each with a par value of NOK 0.20 | 777 | 0 |
| Exercise of share options on 25 May 2022 each with a par value of NOK 0.20 | 4 667 | 1 |
| Share split of 1:5 on 31 May 2022, par value of NOK 0.04 | 41 562 160 | |
| At 31 December 2022 of NOK 0.04 each | 51 952 700 | 2 078 |
Annual Report 2022 Page 62
(in NOK 000)
| 2022 | 2021 | |
|---|---|---|
| At 1 January 2021 | 125 753 | |
| Exercise of share options on 3 March 2021 average of NOK 40.36 (NOK 8.07 after spilt) | 3 188 | |
| Private placement on 13 September 2021 of NOK 110 each (NOK 22 after split) | 124 773 | |
| Exercise of share options on 29 September 2021 average of NOK 46.57 (NOK 9.31 after split) | 192 | |
| Subsequent offering on 21 October 2021 of NOK 110 each (NOK 22 after split) | 12 780 | |
| Decrease due to transaction costs for issued share capital | -7 530 | |
| Allocated to retain earnings | -49 836 | |
| At 31 December 2021 | 209 320 | |
| Exercise of share options on 1 March 2022 average of NOK 8.41 after split | 33 | |
| Exercise of share options on 25 May 2022 average of NOK 9.54 after split | 221 | |
| Allocated to retain earnings | -63 788 | |
| At 31 December 2022 | 145 785 |
To improve the consistency between the presented equity components in the Group and the parent company’s statement of financial position, historical accumulated losses have been offset against share premium also in the consolidated statement of financial position. Comparative figures have been restated for 2021.
The board is authorised to increase the share capital issuing new shares up to a total nominal value of NOK 415 434 (10 385 850 shares at par value of NOK 0.04) that is approximately 20 per cent of shares outstanding, in addition to shares through share option schemes.
The board is authorised to issue shares through share option schemes up to a total nominal value of NOK 207 717 (5 192 925 shares at par value of NOK 0.04), that is approximately 10 per cent of shares outstanding. The company’s share option schemes, with the opportunity to subscribe for shares in poLight, have been offered all employees (Note 5.2 Employee benefits expense).
(in NOK 000)
| Warranty provision | Claims | Total | |
|---|---|---|---|
| At 1 January 2021 | 0 | 1 189 | 1 189 |
| New or increased provisions | 500 | 0 | 500 |
| Unused reversed as administrative expenses | 0 | -1 189 | -1 189 |
| At 31 December 2021 | 500 | 0 | 500 |
| New or increased provisions | 500 | 0 | 500 |
| At 31 December 2022 | 1 000 | 0 | 1 000 |
Annual Report 2022 Page 63
(in NOK 000)
| Warranty provision | Claims | Total | |
|---|---|---|---|
| Current, < 1 year | 1 000 | 0 | 1 000 |
| Non-current | 0 | 0 | 0 |
| At 31 December 2022 | 1 000 | 0 | 1 000 |
A general provision to meet potential claims under the warranty clause.
On 14 September 2018, the Norwegian Tax Administration for South Norway (Skatteetaten Sør-Norge) excluded poLight ASA from the Norwegian VAT Register and claimed repayment of refunded VAT, with effect from 1 January 2013, totalling NOK 13.6 million. The Norwegian Tax Administration claimed that the company was not capable of being profitable and did not therefore qualify as a "business" pursuant to the Norwegian laws and regulations regarding VAT. In September 2018, the decision was appealed to the Tax Appeals Board (Skatteklagenemda). The entire claim was paid in 2018, except the additional associated taxes of NOK 1.2 million, that was accrued for as a provision. On 28 August 2020, the tax authorities decided to re-register poLight ASA in the VAT Register with effect from July 2020 on ordinary terms. The receivable of NOK 8.2 million was recognised in the third quarter 2020, whereof NOK 7.6 million as a reduction of administrative expenses. The cash proceeds from this ruling were received in the fourth quarter 2020. On 16 December 2021, Norway’s Tax Appeals Board issued a final decision and upheld the appeal filed by poLight giving full refund of the VAT claim. NOK 12.4 million was recognised in the fourth quarter 2021, whereof NOK 11.6 million as a reduction of administrative expenses and NOK 0.8 as financial income. The outstanding amount was received in January 2022.
The financial statements include the financial statements of the Group and the subsidiaries listed in the following table:
| Name | Principal activities | Country of incorporation | 2022 | 2021 |
|---|---|---|---|---|
| poLight ASA | R&D, Sales and management | Norway | 100 % | 100 % |
| poLight France SAS | R&D | France | 100 % | 100 % |
| poLight Finland Oy | R&D | Finland | 100 % | 100 % |
| poLight Hong Kong Limited | Holding company | HK, China | 100 % | 100 % |
| poLight (Shenzhen) Technical Service Company Limited | Sales | China | 100 % | 100 % |
poLight ASA is the ultimate parent. None of the shareholders of poLight ASA has control of the company. As of 31 December 2022, the largest shareholder was Investinor Direkte AS, with an ownership of 17.13%.
Intercompany agreements are entered with all the subsidiaries in the Group. All sales in the subsidiaries are made with parent company. All transactions are considered to be on an arm’s length basis.
Annual Report 2022 Page 64
(in NOK 000)
| 2022 | 2021 | |
|---|---|---|
| Purchases from subsidiaries | 14 248 | 11 532 |
| Currency | 2022 | 2021 |
|---|---|---|
| Subordinated loan agreement EUR 000 | 2 750 | 2 750 |
| Trade and other payables NOK 000 | 1 217 | 511 |
A subordinated loan agreement was concluded on 29 December 2016, between poLight ASA and poLight France SAS. Only the part that exceeds a prudent level, with regards to both equity and subordinated loan combined, shall be regarded as loan in respect to interest accrual. For the financial year 2022, the entire principal is considered as equity, and not interest-bearing. Since the loan is considered to be a part of the net investment in poLight France SAS, the currency translation effect is recognised in OCI. In the parent company an impairment loss of NOK 27 112 950 related to the subordinated loan have been recognised, whereof NOK 643 750 recognised in 2022.
No transactions have been made with other related parties for the relevant financial years.
A separate remuneration report will be published on poLight's website as a part of the notification of the Annual General Meeting.
In accordance with the Norwegian public Limited Companies Act §6-16 a, the board of directors prepares a separate statement related to the determination of salary and other benefits for the corporate management. The statement shall be subject to an advisory vote by the annual general meeting in accordance with §5-6 (3). The statement for 2022 will be submitted for approval in the annual general meeting 24 May 2023 and will be available on poLight ASA’s website at the time the notice of the meeting is sent to the shareholders. The total remuneration to the management consists of fixed salary, bonus, benefits in-kind, share option program and pension schemes. The fixed salary is subject to an annual evaluation, and any salary increases and other amendments to the employments terms shall be based on a review by the CEO and the Board each year, taking into account trends in local labour markets, the results achieved, and individual contributions to the development of the Company.
(in NOK 000)
| Salaries | Bonus | Pension costs | Other benefits | Value 1) share options | Total | |
|---|---|---|---|---|---|---|
| 2022 | ||||||
| Øyvind Isaksen - CEO | 3 274 | 791 | 160 | 377 | 415 | 5 016 |
| Pierre Craen - CTO 2) | 2 075 | 474 | 0 | 0 | 111 | 2 660 |
| Alf Henning Bekkevik - CFO | 1 363 | 35 | 152 | 18 | 0 | 1 569 |
| Marianne Sandal - COO | 1 714 | 387 | 178 | 47 | 111 | 2 438 |
| Total management team | 8 427 | 1 688 | 489 | 442 | 638 | 11 683 |
| 2021 | ||||||
| Øyvind Isaksen - CEO | 5 653 | |||||
| Pierre Craen - CTO 2) | 2 747 | |||||
| Alf Henning Bekkevik - CFO | 1 661 | |||||
| Marianne Sandal - COO | 2 354 | |||||
| Total management team | 12 416 |
1) Fair value of the share options vested in 2022 are calculated using the Black-Scholes option pricing model at the date of the grant. No share options were exercised in 2022.
Annual Report 2022 Page 65
2) Pierre Craen has for the period 1.1.2022-31.12.2022 invoiced NOK 2,549 (2021: NOK 2,172) thousand of the remuneration through Tilia-Blue SRL as a consultant, included in the above figure.
If the company terminates the CEO’s employment, the CEO is entitled to nine months’ salary, in addition to a three months’ notice period.
Below is an overview of poLight management's and board members' granted share options:
| Opening balance | Forfeited options | Exercised options | Granted options | Ending balance | Exercisable options | |
|---|---|---|---|---|---|---|
| Øyvind Isaksen - CEO | 1 683 746 | 0 | 0 | 0 | 1 683 746 | 1 605 968 |
| Pierre Craen - CTO | 310 615 | 0 | 0 | 0 | 310 615 | 289 712 |
| Alf Henning Bekkevik - CFO | 251 115 | 0 | 0 | 0 | 251 115 | 251 115 |
| Marianne Sandal - COO | 358 615 | 0 | 0 | 0 | 358 615 | 337 712 |
| Total management team | 2 604 091 | 0 | 0 | 0 | 2 604 091 | 2 484 507 |
The exercise price on exercisable share options for the management’s balance at 31 December 2022 was NOK 9.88 per share in average. No share options were exercised in 2022.
In the case of an offeror becoming the owner of at least 9/10 of the issued shares of poLight, all of the unvested share options becomes immediately vested and exercisable.# Remuneration
| 2022 | 2021 | |
|---|---|---|
| Grethe Viksaas - chair of the board 1) | 338 | 213 |
| Ann-Tove Kongsnes 2) | 325 | 288 |
| Svenn Tore Larsen | 250 | 213 |
| Juha Alakarhu | 250 | 213 |
| Thomas Görling 3) | 250 | 125 |
| Total Board of Directors | 1 413 | 1 050 |
1) Chair of the board from May 25, 2022
2) Chair of the board to May 25, 2022
3) Member from May 26, 2021
There are no loans from poLight to the management or members of the board.
| 2022 | 2021 | |
|---|---|---|
| Thomas S. Wrede-Holm - chair | 40 | 20 |
| Jan-Erik Hæreid | 35 | 20 |
| Anne E. H. Worsøe | 35 | 20 |
| Total Nomination Committee | 100 | 60 |
Annual Report 2022 Page 66
No events have occurred after the end of the reporting period that requires disclosure except that in April 2023 the company launched an underwritten preferential rights issue. The rights issue is fully underwritten and will, when it completed at the beginning of May, raise NOK 135 million in gross proceeds. All the conditions for the obligations of the underwriters have been met.
Issued new standards and amendments are either not applicable for the Group or are not considered to have a significant impact on the financial statements.
Annual Report 2022 Page 67
poLight ASA – for the year ended 31 December (in NOK 000)
| Note | 2022 | 2021 | |
|---|---|---|---|
| Sale of goods | 2 | 10 034 | 8 683 |
| Rendering of services | 2 | 3 328 | 1 350 |
| Revenue | 13 363 | 10 032 | |
| Cost of sales | 4 826 | 3 851 | |
| Gross profit | 8 536 | 6 182 | |
| Research and development expenses | -34 547 | -26 142 | |
| Sales and marketing expenses | -13 433 | -7 866 | |
| Operational / supply chain expenses | -9 179 | -9 139 | |
| Administrative expenses | -13 361 | -8 127 | |
| Depreciation, amortisation and net impairment losses | 10,11 | -9 286 | -10 855 |
| Operating profit / loss (-) | -71 269 | -55 948 | |
| Net financial items | 8 | 2 660 | 1 728 |
| Profit / loss (-) before tax | -68 609 | -54 220 | |
| Income tax expense | 9 | 0 | 0 |
| Profit / loss (-) for the year | -68 609 | -54 220 | |
| Allocated to/from: | |||
| Share premium | 17 | -63 788 | -49 836 |
| Retained earnings | 17 | -4 821 | -4 385 |
| Profit / loss (-) for the year | -68 609 | -54 220 |
Annual Report 2022 Page 68
poLight ASA – as at 31 December (in NOK 000)
| Note | 2022 | 2021 | |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 10 | 10 641 | 2 280 |
| Intangible assets | 11 | 24 855 | 33 377 |
| Investments in subsidiaries | 12 | 320 | 320 |
| Subordinated loan to subsidiaries | 14,20 | 1 800 | 1 000 |
| Total non-current assets | 37 615 | 36 977 | |
| Inventories | 13 | 45 577 | 16 836 |
| Trade receivables | 14 | 3 026 | 2 506 |
| Other receivables | 14 | 5 608 | 20 325 |
| Cash and cash equivalents | 15 | 78 808 | 154 660 |
| Total current assets | 133 019 | 194 326 | |
| Total assets | 170 634 | 231 303 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 16,17 | 2 078 | 2 077 |
| Share premium | 17 | 145 785 | 209 320 |
| Total equity | 147 863 | 211 397 | |
| Trade payables | 14 | 11 311 | 4 932 |
| Public duties payable | 6 021 | 10 894 | |
| Other payables | 14 | 5 440 | 4 080 |
| Total current liabilities | 22 771 | 19 906 | |
| Total liabilities | 22 771 | 19 906 | |
| Total equity and liabilities | 170 634 | 231 303 |
Horten, 28 April 2023
THE BOARD OF DIRECTORS OF POLIGHT ASA
Grethe Viksaas (sign) Chair, Independent
Ann-Tove Kongsnes (sign) Deputy chair
Thomas Görling (sign) Board member
Svenn-Tore Larsen (sign) Board member, Independent
Dr Juha Alakarhu (sign) Board member, Independent
Dr Øyvind Isaksen (sign) Chief Executive Officer
Annual Report 2022 Page 69
poLight ASA – for the year ended 31 December (in NOK 000)
| Note | 2022 | 2021 | |
|---|---|---|---|
| Operating activities | |||
| Profit before tax | -68 609 | -54 220 | |
| Depreciation, amortisation and net impairment losses | 10,11 | 9 286 | 10 855 |
| Changes in inventories, accounts receivables and accounts payable | -22 883 | -7 483 | |
| Changes in other accruals | 15 | 224 | -1 029 |
| Net cash flows from / (used in) operating activities | -66 982 | -51 877 | |
| Investing activities | |||
| Purchase of property, plant and equipment | 10 | -9 124 | -2 099 |
| Dividend from subsidiaries | 8 | 0 | 504 |
| Net cash flows from / (used in) investing activities | -9 124 | -1 595 | |
| Financing activities | |||
| Proceeds from Issue of ordinary shares | 17 | 0 | 137 803 |
| Proceeds from exercise of share options | 17 | 254 | 3 397 |
| Transaction costs on issue of shares | 17 | 0 | -7 530 |
| Net cash flows from / (used in) financing activities | 254 | 133 670 | |
| Net increase in cash and cash equivalents | -75 852 | 80 198 | |
| Cash and cash equivalents at 1 January | 15 | 154 660 | 74 462 |
| Cash and cash equivalents at 31 December | 15 | 78 808 | 154 660 |
Annual Report 2022 Page 70
The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. The consolidated financial statements of the Group have been prepared in accordance with IFRS. The Company’s accounting principles are similar to the accounting principles for the Group unless otherwise noted. Financial statement disclosures for the Company that are substantially different from the disclosures from the disclosures for the Group are shown below. See notes to the consolidated financial statements.
The management has used estimates and assumptions that have affected assets, liabilities, incomes, expenses and information about potential liabilities in accordance with generally accepted accounting principles in Norway.
Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary items in a foreign currency are translated into NOK, using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical price expressed in a foreign currency are translated into NOK, using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date. Changes to exchange rates are recognised in the income statement as they occur during the accounting period.
Revenues from the sale of goods are recognised in the income statement, once delivery has taken place and the risk and control has been transferred.
Development costs are capitalised, providing that a future economic benefit associated with development of the intangible asset can be established and costs can be measured reliably. Otherwise, the costs are expensed as incurred. Capitalised development cost is amortised straight-line over its useful life. Research costs are expensed as incurred.
Government grants are recognised when there is reasonable assurance that the grant will be received, and that all attached conditions will be complied with. When the grant relates to an expense item, it is deducted in the related expense on a systematic basis over the periods that the costs it is intended to compensate, are expensed. Where the grant relates to an asset, it reduces the carrying amount of the asset. The grant is then recognised as income over the useful life of the depreciable asset by way of a reduced depreciation charge.
The tax expense comprises tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all differences between the book value and tax value of assets and liabilities. Deferred tax is calculated as 22% of temporary differences and the tax effect of tax losses carried forward. Deferred tax assets are recorded in the balance sheet when it is more likely than not that the tax assets will be utilized. Taxes payable and deferred taxes are recognised directly in equity, to the extent that they relate to equity transactions.
Current assets and short-term liabilities consist of receivables and payables due within one year, and items related to the operating cycle. Other balance sheet items are classified as fixed assets/long-term liabilities. Current assets are valued at the lower of cost and fair value. Short-term liabilities are recognised at nominal value. Fixed assets are valued at cost, less depreciation and impairment losses. Long-term liabilities are recognised at nominal value.
Annual Report 2022 Page 71
Property, plant and equipment is capitalised and depreciated straight-line over the estimated useful life. Significant fixed assets which consist of substantial components with dissimilar economic life, have been unbundled; depreciation of each component is based on the economic life of the component. Costs for maintenance are expensed as incurred, whereas costs for improving and upgrading property, plant and equipment are added to the acquisition cost and depreciated with the related asset. If carrying value of a non- current asset exceeds the estimated recoverable amount, the asset is written down to the recoverable amount. The recoverable amount is the greater of the net realisable value and value in use. In assessing value in use, the discounted estimated future cash flows from the asset are discounted.
The investments in subsidiaries are valued as cost less any impairment losses. An impairment loss is recognised if the impairment is not considered temporary, in accordance with generally accepted accounting principles. Impairment losses are reversed if the reason for the impairment loss disappears in a later period. Dividends, group contributions and other distributions from subsidiaries are recognised in the same year as they are recognised in the financial statement of the subsidiaries. If dividends/group contribution exceeds withheld profits after the acquisition date, the excess amount represents repayment of invested capital, and the distribution will be deducted from the recorded value of the acquisition in the balance sheet for the parent company.
Inventories are recognised at the lowest of cost and net selling price.# Notes to the Consolidated Financial Statements
The net selling price is the estimated selling price in the case of ordinary operations, minus the estimated completion, marketing and distribution costs. The cost is arrived at using the FIFO method, and includes the costs incurred in acquiring the goods and the costs of bringing the goods to their current state and location.
Receivables
Accounts receivable and other current receivables are recorded in the balance sheet at nominal value less provisions for doubtful accounts. Provisions for doubtful accounts are based on an individual assessment of the different receivables. For the remaining receivables, a general provision is estimated, based on expected loss.
Cash flow statement
The cash flow statement is presented using the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term, highly liquid investments with maturities of three months or less.
| By business area | 2022 | 2021 |
|---|---|---|
| TLens® | 13 363 | 10 032 |
| Total | 13 363 | 10 032 |
| Geographical distribution | 2022 | 2021 |
|---|---|---|
| America | 2 198 | 2 618 |
| Asia | 6 222 | 6 026 |
| Europe | 4 943 | 1 388 |
| Total | 13 363 | 10 032 |
Annual Report 2022 Page 72
| Note | 2022 | 2021 |
|---|---|---|
| Employee benefits expense 1) | 36 635 | 30 059 |
| Depreciation, amortisation and net impairment losses | 9 286 | 10 855 |
| Other operating expenses 2) | 33 885 | 20 680 |
| Total operating expenses | 79 805 | 62 130 |
1) Including consultants engaged on long-term contract
2) The positive outcome of the VAT appeal resulted in approximately NOK 12 million being recognised as a cost reduction in 2021
| 2022 | 2021 | |
|---|---|---|
| At 1 January | 7 280 | 5 014 |
| Received during the year | -7 558 | -9 621 |
| Released to the statement of comprehensive income | 4 892 | 11 886 |
| At 31 December | 4 614 | 7 280 |
poLight ASA has received grants for reimbursement of expenses related to technology and product development and customer product design.
| 2022 | 2021 | |
|---|---|---|
| Wages and salaries | 17 127 | 16 512 |
| Consultants engaged on long-term contract | 15 486 | 7 830 |
| Social security costs | 2 732 | 3 245 |
| Pension costs (note 6) | 1 280 | 825 |
| Other benefits and social costs | 945 | 938 |
| Share based compensation costs | -133 | 11 236 |
| Grants | -802 | -2 162 |
| Total employee benefits expense | 36 635 | 38 424 |
| 2022 | 2021 | |
|---|---|---|
| Average number of full-time equivalents, employees | 14 | 14 |
| Average number of full-time equivalents, total including long-term contracts | 26 | 19 |
All employees are included in a bonus programme, with identical bonus criteria for all, except the CEO. The bonus is calculated based on fixed salary, with maximum 50% for the CEO, 30% for management, 20% for department managers and 10% for other employees. All employees in the group are included in a share option programme. Details are presented in Note 5.2 Employee benefits expense, in the consolidated financial statement. Management and board member’s remuneration are presented in Note 18 Related parties, in the consolidated financial statement.
PoLight ASA is subject to the requirements in the Mandatory Occupational Pensions Act, and the company’s pension scheme adheres to the stipulations of the Act.
Annual Report 2022 Page 73
The pension scheme is based on a defined contribution plan, and the premium is calculated on the basis of the employee’s income. In 2022 7% of the salary between 0G (1G=NOK 111,477) and 7.1G, and 15% of the salary between 7.1G and 12G was calculated. In 2021 5.55% of the salary between 1G (1G=NOK 106,399) and 7.1G, and 8% of the salary between 7.1G and 12G was calculated. At 31 December 2022, 18 members were covered by the plan.
| 2022 | 2021 | |
|---|---|---|
| Defined contribution plan | 1 195 | 734 |
| Social security | 168 | 104 |
| Total pension cost | 1 363 | 838 |
| 2022 | 2021 | |
|---|---|---|
| Statutory audit fee | 748 | 640 |
| Audit related fee | 34 | 55 |
| Tax related fee | 30 | 30 |
| Other service fee | 68 | 41 |
| Total (excluding VAT) | 880 | 765 |
| 2022 | 2021 | |
|---|---|---|
| Interest income from group companies *) | 0 | 0 |
| Other interest income | 2 247 | 1 365 |
| Currency gain on loan to group companies | 1 444 | 0 |
| Reversal of impairment on group loan | 0 | 1 324 |
| Dividend subsidiaries | 0 | 504 |
| Other financial income (currency gain) | 1 391 | 465 |
| Total finance income | 5 082 | 3 659 |
*) According to the subordinated loan (see Note 14 Intercompany balances with group companies) only the part that exceeds a prudent level, both equity and subordinated loan combined, shall be regarded as loan in respect to interest accrual.
| 2022 | 2021 | |
|---|---|---|
| Other interest expenses | 2 | 1 |
| Currency loss on loan to group companies | 0 | 1 324 |
| Impairment of group loan | 644 | 0 |
| Other financial expenses (currency loss) | 1 776 | 606 |
| Total finance expenses | 2 422 | 1 931 |
Annual Report 2022 Page 74
| 2022 | 2021 | |
|---|---|---|
| Current income tax expense | 0 | 0 |
| Changes in deferred tax | 0 | 0 |
| Total income tax expense | 0 | 0 |
| 2022 | 2021 | |
|---|---|---|
| Profit before income tax | -68 090 | -54 220 |
| Permanent differences | -188 | 9 603 |
| Transaction costs on issue of shares | 0 | -7 530 |
| Government grants exempt from tax | -4 614 | -4 750 |
| Temporary differences | -2 499 | -390 |
| Adjustments previous year | 0 | -1 888 |
| Tax base | -75 910 | -59 175 |
| 2022 | 2021 | |
|---|---|---|
| Inventories | 13 534 | 1 319 |
| Fixed assets | 18 194 | 1 940 |
| Intangible assets | 23 481 | 24 095 |
| Group loan | 20 806 | 21 606 |
| Provisions | 1 000 | 500 |
| Tax losses carry forward | 705 065 | 629 155 |
| Net deferred tax assets/(liabilities) | 763 903 | 690 493 |
| 22 % deferred tax asset/(liability) | 168 059 | 151 908 |
| Unrecognised deferred tax assets | -168 059 | -151 908 |
| Recognised net deferred tax assets | 0 | 0 |
| 2022 | |
|---|---|
| Calculated income tax at statutory rate of 22% | -15 094 |
| Tax effect of permanent differences | -4 1 |
| Government grants exempt from tax | -1 015 |
| Change in unrecognised deferred tax assets | 16 150 |
| Income tax expense | 0 |
| Effective tax rate | 0,0 % |
Annual Report 2022 Page 75
| Building | Equipment | Total | |
|---|---|---|---|
| Cost at 1 January 2022 | 1 126 | 10 882 | 12 008 |
| Additions | 106 | 9 018 | 9 124 |
| Cost at 31 December 2022 | 1 232 | 19 901 | 21 133 |
| Accumulated depreciation | -348 | -9 821 | -10 169 |
| Accumulated impairment losses | 0 | -323 | -323 |
| Accumulated depreciation and impairment losses at 31 December 2022 | -348 | -10 144 | -10 492 |
| Net book value at 31 December 2022 | 884 | 9 757 | 10 641 |
| Depreciation for the year | 236 | 434 | 670 |
| Impairment losses for the year | 0 | 94 | 94 |
| Estimated useful lives (years) 1) | Amortisation plan | |
|---|---|---|
| 3-7 | Linear |
1) Modifications and upgrades in leased premises are depreciated over the leasing period.
| Development costs and TLens patents | Software license | Total | |
|---|---|---|---|
| Cost at 1 January 2022 | 78 184 | 110 | 78 294 |
| Disposals | 0 | 0 | 0 |
| Additions | 0 | 0 | 0 |
| Cost at 31 December 2022 | 78 184 | 110 | 78 294 |
| Accumulated amortisation | -35 049 | -110 | -35 159 |
| Accumulated impairment losses | -18 280 | 0 | -18 280 |
| Accumulated amortisation and impairment losses at 31 December 2022 | -53 329 | -110 | -53 439 |
| Net book value at 31 December 2022 | 24 855 | 0 | 24 855 |
| Amortisation for the year | 8 522 | 0 | 8 522 |
| Estimated useful lives (years) | Amortisation plan | |
|---|---|---|
| 3-7 | Linear |
In 2008/2009, poLight acquired the core patents of the TLens® technology for NOK 5 million. The patents were granted in 10 different countries in 2006. poLight has since invested substantial resources in research and product development of the TLens®. poLight started amortising capitalised development investments for TLens Silver and the related ASIC driver in the second quarter of 2019 as they became ready for commercial shipments. The useful lives are deemed to be 7 years which correlates with the remaining number of years of the first patent. Research and development costs that are not eligible for capitalisation have been expensed in the period incurred and are recognised in Research and development expenses.
| Company | Date of foundation | Location | Share ownership | Voting rights |
|---|---|---|---|---|
| poLight France SAS | 19.08.2010 | Lyon, France | 100 % | 100 % |
| poLight Finland Oy | 15.09.2016 | Tampere, Finland | 100 % | 100 % |
| poLight Hong Kong Limited | 08.12.2016 | HK, China | 100 % | 100 % |
| poLight (Shenzhen) Technical Service Company Limited | 24.04.2017 | Shenzhen, China | 100 % | 100 % |
| Company | Share capital NOK 000 | Number of shares | Book value NOK 000 | Equity NOK 000 | Net profit 2022 NOK 000 |
|---|---|---|---|---|---|
| poLight France SAS | 80 | 10 000 | 0 | -23 137 | 37 2 |
| poLight Finland Oy | 23 | 100 | 23 1 | 687 959 | |
| poLight Hong Kong Limited | 202 | 200 000 | 202 | 202 0 | |
| poLight (Shenzhen) Technical Service Company Limited | 246 | 200 000 | 94 | 1 816 295 |
The entities in France and Finland provide R&D services to poLight ASA, Norway. In China a sales office is established with a parent holding company in Hong Kong.
| 2022 | 2021 | |
|---|---|---|
| Work in progress (at cost) | 50 143 | 25 304 |
| Finished goods (at cost) | 8 968 | 4 730 |
| Obsolescence provision (expensed as cost of sales) | -13 534 | -13 198 |
| Total inventories at the lower of cost and net realisable value | 45 577 | 16 836 |
During 2022, NOK 0.3 million (2021: NOK 0.5 million) was recognised as an obsolescence expense for inventories carried at net realisable value. This is recognised in cost of sales.
| 2022 | 2021 | |
|---|---|---|
| Trade receivable | 0 | 0 |
| Other receivables | 0 | 0 |
| Total | 0 | 0 |
| 2022 | 2021 | |
|---|---|---|
| Non-current receivables | 28 913 | 27 469 |
| Impairment | -27 113 | -26 469 |
| Total | 1 800 | 1 000 |
A subordinated loan agreement was concluded on 29 December 2016, replacing all intercompany balance. Because of limited activity in France, a significant part of the loan has been subject to impairment.
Annual Report 2022 Page 77# Payables
(in NOK 000)
| | 2022 | 2021 |
| :------------ | :---- | :---- |
| Trade payables | 1 217 | 511 |
| Other payables | 0 | 0 |
| Total | 1 217 | 511 |
(in NOK 000)
| | 2022 | 2021 |
| :-------------------------------- | :---- | :---- |
| Cash at banks and on hand | 77 496 | 153 216 |
| Restricted cash, taxes withheld | 1 313 | 1 263 |
| Restricted cash, deposits | 0 | 181 |
| Cash and short-term deposits | 78 808 | 154 660 |
| Number of shares | Par value (NOK) | Book value (NOK 000) | |
|---|---|---|---|
| Ordinary shares | 51 952 700 | 0.04 | 2 078 |
Shareholders of poLight ASA at December 31, 2022
| Ordinary shares | Share- holding % | Voting rights % | |
|---|---|---|---|
| Investinor Direkte AS | 8 899 290 | 17.1 % | 17.1 % |
| Stiftelsen Industrifonden | 5 244 125 | 10.1 % | 10.1 % |
| Nordnet Bank AB (nominee) | 2 408 642 | 4.6 % | 4.6 % |
| Nordnet Livsforsikring AS | 2 156 769 | 4.2 % | 4.2 % |
| Deutsche Bank Aktiengesellschaft (nominee) | 1 950 930 | 3.8 % | 3.8 % |
| VPF Nordea Avkastning | 778 075 | 1.5 % | 1.5 % |
| VPF Pareto Investment | 628 000 | 1.2 % | 1.2 % |
| VPF Nordea Kapital | 506 222 | 1.0 % | 1.0 % |
| Danske Bank A/S (nominee) | 392 754 | 0.8 % | 0.8 % |
| VPF Nordea Norge Plus | 362 535 | 0.7 % | 0.7 % |
| Stefan Sveen | 338 000 | 0.7 % | 0.7 % |
| Saxo Bank A/S (nominee) | 325 465 | 0.6 % | 0.6 % |
| LHH AS | 310 000 | 0.6 % | 0.6 % |
| Kjell Mossefin | 307 500 | 0.6 % | 0.6 % |
| Asbjørn John Buanes | 307 465 | 0.6 % | 0.6 % |
| Erik Schellhorn | 305 497 | 0.6 % | 0.6 % |
| Trond Andersen | 297 315 | 0.6 % | 0.6 % |
| Fjellstuens Eftf. AS | 296 285 | 0.6 % | 0.6 % |
| Li Zhang | 255 884 | 0.5 % | 0.5 % |
| Åge Sverre Heggheim | 222 000 | 0.4 % | 0.4 % |
| Total number of shares owned by top 20 shareholders | 26 292 753 | 50.6 % | 50.6 % |
| Number of shares owned by other shareholders | 25 659 947 | 49.4 % | 49.4 % |
| Total number of shares | 51 952 700 | 100.0 % | 100.0 % |
At 31 December 2022, Øyvind Isaksen, CEO, owned 124,280 shares (0.24%), through his company Oimacon AS.
(in NOK 000)
| Share capital | Share premium | Retained earnings | Total | |
|---|---|---|---|---|
| Equity at 31 December 2022 | 2 077 | 209 320 | 0 | 211 397 |
| Profit for the period | -68 609 | -68 609 | ||
| Share options exercised | 1 253 | 0 | 254 | |
| Equity-settled share-based payment | 4 821 | 4 821 | ||
| Allocation to retained earnings | -63 788 | 0 | ||
| Equity at 31 December 2022 | 2 078 | 145 785 | 0 | 147 863 |
poLight ASA has entered into commercial leases on premises and office equipment. The premises (lab facilities and offices) comprise 1,080 square meters, and the contract is renewed annually, with twelve months’ notice. Future minimum rentals payable under non-cancellable operating leases are as follows:
(in NOK 000)
| | 2022 | 2021 |
| :------------------------------------ | :---- | :---- |
| Within one year | 1 365 | 1 273 |
| After one year but not more than five years | 3 232 | 4 445 |
| More than five years | 0 | 0 |
| Total | 4 597 | 5 718 |
(in NOK 000)
| | At 1 January 2022 | New or increased provisions | At 31 December 2022 |
| :---------------------------------- | :---------------- | :-------------------------- | :------------------ |
| Warranty provision | 50 | 500 | 1 000 |
| Total | 50 | 500 | 1 000 |
Expected timing of cash flow
(in NOK 000)
| | Warranty provision | Total |
| :---------------------- | :----------------- | :---- |
| Current, < 1 year | 1 000 | 1 000 |
| Non-current | 0 | 0 |
| At 31 December 2022 | 1 000 | 1 000 |
A general provision to meet potential claims under the warranty clause.
On 14 September 2018, the Norwegian Tax Administration for South Norway (Skatteetaten Sør-Norge) excluded poLight ASA from the Norwegian VAT Register and claimed repayment of refunded VAT, with effect from 1 January 2013, totalling NOK 13.6 million. The Norwegian Tax Administration claimed that the company was not capable of being profitable and did not therefore qualify as a "business" pursuant to the Norwegian laws and regulations regarding VAT. In September 2018, the decision was appealed to the Tax Appeals Board (Skatteklagenemda). The entire claim was paid in 2018, except the additional associated taxes of NOK 1.2 million, that was accrued for as a provision. On 28 August 2020, the tax authorities decided to re-register poLight ASA in the VAT Register with effect from July 2020 on ordinary terms. The receivable of NOK 8.2 million was recognised in the third quarter 2020, whereof NOK 7.6 million as a reduction of administrative expenses. The cash proceeds from this ruling were received in the fourth quarter 2020. On 16 December 2021, Norway’s Tax Appeals Board issued a final decision and upheld the appeal filed by poLight giving full refund of the VAT claim. NOK 12.4 million was recognised in the fourth quarter 2021, whereof NOK 11.6 million as a reduction of administrative expenses and NOK 0.8 as financial income. The outstanding amount was received in January 2022.
poLight ASA is the ultimate parent. None of the shareholders of poLight ASA has control of the company. As of 31 December 2022, the largest shareholder is Investinor Direkte AS, with an ownership of 17.1%.
Intercompany agreements are entered with all the subsidiaries in the group. All sales in the subsidiaries are made with the parent company. All transactions are considered to be on an arm’s length basis. A subordinated loan agreement (balance 31.12.2022: EUR 2,750,000) was concluded on 29 December 2016, between poLight ASA and poLight France SAS. Only the part that exceeds a prudent level, with regards both to equity and subordinated loan combined, shall be regarded as loan in respect to interest accrual. For the financial year 2022, the entire principal is considered as equity, and not interest-bearing.
No transactions were made with other related parties for the relevant financial years.
No events have occurred after the end of the reporting period that requires disclosure except that in April 2023 the company launched an underwritten preferential rights issue. The rights issue is fully underwritten and will, when it completed at the beginning of May, raise NOK 135 million in gross proceeds. All the conditions for the obligations of the underwriters have been met.
Annual Report 2022 Page 78
Annual Report 2022 Page 79
Annual Report 2022 Page 80
Annual Report 2022 Page 81
Annual Report 2022 Page 82
Annual Report 2022 Page 83
Annual Report 2022 Page 84
Annual Report 2022 Page 85
CONTACT DETAILS
Homepage www.polight.com
HQ address Innlaget 230, 3185 Skoppum, Norway
Investor relations contacts:
Øyvind Isaksen CEO +47 90876398, [email protected]
Alf Henning Bekkevik +47 91630514, [email protected]
Annual Report 2022 Page 84
poLight ASA
Innlage t 230
NO-3185 Skoppum, Norway
Tel: +47 33 07 12 60
E-mail: [email protected]
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.