ROVSING

ANNUAL REPORT 2020 / 21

Rovsing A/S
Ejby Industrivej 38
DK-2600 Glostrup
Phone: +45 44 200 800
www.rovsing.dk
[email protected]
CVR: 16 13 90 84

PROFILE

Rovsing A/S (Rovsing) develops, manufactures and delivers systems for functional and electrical testing of spacecrafts (primarily satellites) and their payloads.

Rovsing products and systems are used for testing of spacecraft sub-systems, including external communication connections and instruments.

The Company's products are modular and are sold either on a stand-alone basis or used as modules in system solutions, customized for the specific spacecraft application. In connection with the configuration of system solutions, third parties' products are also used, and software is configured for the individual spacecraft needs.

The products, inclusive software packages, are flexible and configurable, facilitating tailor-made customer solutions.

More specifically, Rovsing offers, the following equipment solutions:

Payload EGSE (Electrical Ground Support Equipment)
Power & Launch EGSE
Platform EGSE
Instrument EGSE
Avionics Test Beds
Central Check-out Equipment
Thermal EGSE
Real-time Simulators

In addition, Rovsing develops software solutions, including solutions based on specific customer specifications, and performs independent software verification/validation (ISVV) for critical space-related software developed by third parties.

Rovsing also provides engineering support for large corporations in the space industry at various locations in Europe and in South America. For more than 15 years, Rovsing has been responsible for configuration control of ground installations at the European space base CSG in Kourou in French Guiana.

The main customers of Rovsing are European and US-based space groups such as Airbus DS, Thales Alenia Space, OHB, Boeing, Lockheed Martin and their key sub-suppliers. The European Space Agency (ESA), NASA and various national space agencies are also among Rovsing's customers.

LIST OF CONTENTS

PROFILE...2
HIGHLIGHTS OF THE YEAR...3
FINANCIAL HIGHLIGHTS AND RATIOS...4
CORPORATE INFORMATION...5
MANAGEMENTS' REVIEW...6
MANAGEMENT STATEMENT...23
INDEPENDENT AUDITOR'S REPORT...24
INCOME AND COMPREHENSIVE INCOME STATEMENT...29
BALANCE SHEET...30
BALANCE SHEET...31
STATEMENT OF CHANGES IN EQUITY...32
CASH FLOW STATEMENT...34
OVERVIEW OF NOTES TO THE FINANCIAL STATEMENTS...35
NOTES...36
EXECUTIVE MANAGEMENT...60
BOARD OF DIRECTORS...61
DEFINITION OF RATIOS...63
GLOSSARY...64

HIGHLIGHTS OF THE YEAR

The financial year 2020/21 was in line with the guided expectations (Announcement no. 317), with a revenue amounting to DKK 27,5 million, compared to a revenue of DKK 21,8 million in 2019/20, corresponding to an increase of DKK 5,7 million, equaling a revenue growth of 26%.
The EBITDA amounts to DKK 2,5 million, an improvement of DKK 3,4 million compared to DKK -0,9 million in 2019/20.
The 2020/21 realised revenue and EBITDA are in line with the expectations of the Management. Steady progress has been achieved on existing projects, despite the challenges of the COVID-19 pandemic. The flexibility of the Rovsing team and an active business continuation plan, remain a significant and critical success factor in driving potential mitigations to the pandemic situation and associated challenges. The positive improvement in revenue, EBITDA and EBIT for the financial year 2020/21 is driven by new and ongoing projects with normalized margins compared to the previous year.
In 2020/21, Rovsing has continued to support its customers as an important key supplier on major ongoing ESA missions, delivering test- and simulation systems, individual products, software solutions, ISVV and on-site engineering services. The market position of Rovsing within the segment has been further strengthened based on the delivered performance and value. Further, Rovsing captured critical core business opportunities on missions such as Mars Sample Return, Artemis, PLATO, FLEX, SMILE and Galileo 2nd Generation.
Management views the development in 2020/21 as positive with regard to ongoing operations, as wells as looking forward towards coming business years, with a solid growth of the order book, reflecting the higher market activity projected in coming years within both institutional and commercial mission segments. The order intake in 2020/21 was DKK 21,2 million (2019/20 DKK 17,7 million) while order backlog in 2020/21 amounted to DKK 31,0 million (2019/20 DKK 20,5 million). Taking into account the recently signed contract for Galileo 2nd Generation (Announcement no. 324) the current order intake stands at DKK 35,0 million while the order backlog amounts to DKK 43,1 million.
Based on the current order backlog and continued positive development in projected order intake, the revenue outlook for 2021/22 is expected to be in the range of DKK 34 to 36 million, with a positive EBITDA in the range of DKK 3,5 to 4,5 million.

FINANCIAL HIGHLIGHTS AND RATIOS

INCOME STATEMENT	2016/17	2017/18	2018/19	2019/20	2020/21
DKK’ooo
Revenue	38,968	25,127	28,184	21,836	27,535
Earnings before interest, taxes, depreciation and amortisation, EBITDA	1,260	-4,513	341	-863	2,514
Operating profit (EBIT)	-1,921	-7,722	-2,929	-5,322	-2,497
Financial income and expenses, net	-1,344	-1,553	-767	-1,188	-918
Profit/loss for the year	-2,675	-9,912	-4,040	-6,810	-3,398
BALANCE SHEET
---	---	---	---	---	---
Non-current assets	25,741	23,268	20,209	17,997	14,053
Current assets	15,718	12,634	14,265	9,248	11,079
Total assets	41,459	35,902	34,474	27,245	25,132
Equity	18,217	18,210	18,560	11,423	9,576
Non-current liabilities	0	4,000	4,080	386	4,687
Current liabilities	23,243	13,692	11,834	15,437	10,869
Total equity and liabilities	41,459	35,902	34,474	27,245	25,132
CASH FLOW STATEMENT
---	---	---	---	---	---
Cash flow from operating activities	-5,038	-11,032	11	5,372	-587
Cash flow from investing activities	-1,329	-1,578	-1,040	-259	-429
Cash flow from financing activities	7,552	11,561	1,109	-5,069	1,002
Total cash flow	1,185	-1,049	81	44	-13
KEY FIGURES
---	---	---	---	---	---
EBITDA margin, %	3.2	-18.0	1.2	-4.0	9.1
EBIT margin, %	-4.9	-30.7	-10.4	-24.4	-9.1
Return on equity, %	-15.3	-39.1	-18.0	-28.8	-14.7
Earnings per share (EPS)	-0.01	-0.03	-0.01	-14.9	-7.3
Earnings per share (EPS D)	-0.01	-0.02	-0.01	-13.2	-6.5
Cash flow per share (CFPS)	-0.04	-0.04	-0.01	-5.7	-22.1
Dividends per share of DKK	-	-	-	-	-
Pay-out ratio, %	-	-	-	-	-
Equity per share, DKK	0.05	0.04	0.04	25.0	20.3
Solvency, %	43.9	50.7	53.8	41.9	38.1
Average number of shares (1,000 shares)	316,778	380,140	429,844	458	463
Number of shares at year-end (1,000 shares)	333,212	404,854	457,881	458	471

The key figures are calculated in accordance with the recommendations issued by the Danish Society of Financial Analysts ("Finansanalytikerforeningen").

Comparable figures for 2016-17, 2017-18 and 2018-19 have not been restated following the implementation of IFRS 16 as Rovsing has chosen to use the modified retrospective transition method.

Rovsing's financial year is from 1 July to 30 June.

CORPORATE INFORMATION

The Company

Rovsing A/S
Ejby Industrivej 38
2600 Glostrup, Denmark

Phone: +45 44 200 800
Fax: +45 44 200 801
Website: www.rovsing.dk
E-mail: [email protected]

Company reg. (CVR) no.: 16 13 90 84
Date of incorporation: 20 May 1992
Municipality of registered office: Ballerup, Denmark

Board of Directors

Michael Hove (Chairman)
Ulrich Beck
Jakob Have

Executive Management

Hjalti Pall Thorvardarson, CEO
Sigurd Hundrup, CFO

Auditors

KPMG
Statsautoriseret Revisionspartnerselskab
Dampfærgevej 28
2100 København Ø

Annual General Meeting

The annual general meeting will be held on 25 October 2021 at 16:00 at Ejby Industrivej 38, 2600 Glostrup, Denmark.

MANAGEMENTS' REVIEW

OPERATIONAL REVIEW

At DKK 27,5 million, Rovsing's revenue increased with DKK 5,7 million, compared to the previous financial year. The Company's earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to DKK 2,5 million, a DKK 3,4 million improvement compared to the previous year DKK -0,9 million.

Tax for the year was DKK 0 million compared to DKK -0,3 million previous year.

The profit/loss after tax was DKK -3,4 million, an improvement from a loss of DKK -6,8 million in 2019/20.

Equity as per 30 June 2021 amounted to DKK 9,6 million (30 June 2020: DKK 11,4 million).

The realised revenue and EBITDA of DKK 27,5 million and DKK 2,5 million, respectively were in line with the guidance to the market during the financial year announced by the Company, increased at the Interim Report for the first half year in February 2021 (Announcement no. 317).

The 2020/21 realised revenue and EBITDA are in line with the expectations of the Management. Steady progress has been achieved on existing projects, despite the challenges of the COVID-19 pandemic. The flexibility of the Rovsing team and an active business continuation plan, remain a significant and critical success factor in driving potential mitigations to the pandemic situation and associated challenges. The positive improvement in revenue, EBITDA and EBIT for the financial year 2020/21 is driven by new and ongoing projects with normalized margins compared to the previous year.

Management views the development in 2020/21 as positive in regard of ongoing operations, as well as looking forward towards coming business years, where the Company has established a solid order book, with in particular the recently signed contract for Galileo 2nd Generation (Announcement no. 324). The overall order intake in 2020/21 was DKK 21,2 million (2019/20 DKK 17,7 million) continues to point towards higher market activity compared to prior years.

As can be seen below, the order intake, including the above mentioned G2G contract, leading up the financial year 2021/22 has increased significantly to DKK 35,0 million compared to previous years:

The G2G award reflects the successful efforts invested in sales and project proposals which have been intensified over the past years in connection with a steady increase in the general activity level of the industry. The figure below shows the order backlog exclusive of ongoing service contracts.

The evolution of the order backlog in 2020/21 to DKK 31,0 million (2019/20 DKK 20,5 million) is satisfactory and underlines the strengthened competitive position of Rovsing in key market segments. When accounting for the G2G contract the order backlog amounts to DKK 43,1 million. Both order backlog and intake numbers are exclusive of ongoing service contracts.

In line with the Company's strategy, focus on growth and diversification will continue from increased activities in European commercial programmes as well as maintained focus on the USA and emerging markets, leveraging our core competencies.

The European market

The European institutional market remains the most important market to Rovsing. The Company continues to invest large effort in providing proposals to the major European Prime contractors in their efforts to bid for the many upcoming institutional and commercial missions. The industry outlook remains a market with increasing activity level and large profile missions such as Galileo $2^{\text{nd}}$ Generation and Mars Sample Return (MSR) entering implementation phase, both of which Rovsing is already participating in. In addition, the prime contractors for the 6 Copernicus High Priority Candidate Missions (HPCM) were chosen in autumn 2020. Best practice tender phases including EGSE started in H2 2020/21.

At the beginning of H1 2020/21, Rovsing provided the two remaining Satellite Interface Simulator (SIS) Power Front-End (PFE) systems for supporting PLAnetary Transits and Oscillations of stars (PLATO) to Thales Alenia Space (TAS) UK.

Rovsing was selected by TAS-UK to deliver the Electrical Power Subsystem (EPS) SCOE for the FLEX programme, signing a PATP in late December 2020, with a successful Design Review in late June 2021, the system delivery is planned before the end of 2021. The FLEX EPS SCOE is a good continuation of Rovsing Power SCOE business line and shares

good synergies with the ongoing PLATO EPS SCOE, also for TAS-UK which completed its Test Readiness Review (TRR) for set #1 in March 2021 and saw the delivery of set 1 in June 2021 with set #2 expected to be delivered before end of 2021.

Rovsing delivered the Payload Module (PLM) EGSE for the Solar wind Magnetosphere Ionosphere Link Explorer (SMILE) mission to Airbus DS Spain back in November 2020. SMILE is a joint venture mission between the European Space Agency and the Chinese Academy of Sciences. Rovsing is also performing the Independent Software Validation (ISVV) for Airbus DS Spain on the SMILE PLM, a contract signed back in September 2020, with first milestone completed in January 2021 and the project expected to run until spring 2022.

Airbus DS in Toulouse led the winning consortium for the Mars Sample Return (MSR) Earth Return Orbiter (ERO) programme. Rovsing is a core consortium member, responsible for providing the Electrical Satellite Interface Simulator (E-SIS). The activity was kicked-off under an ATP in December 2020 and deliveries are planned for spring 2022. The Preliminary Design Review (PDR) was conducted successfully with Airbus DS, ESA and NASA early July 2021

In 2020/21 Rovsing has continued to support the MetOp-SG programme. Work continued during the year on the ISVV for the platform and instruments, with the final closeout of the contract performed in April 2021. In addition, Rovsing received an order for additional 40x RO-5100 SAS Modules by Clemessy for a recurring set of their MetOp-SG SAS SCOE. The SAS Modules were delivered in two batches in October and November 2020.

Together with Critical Software from Portugal, Rovsing is responsible for writing the updated ESA handbook for Independent Software Verification and Validation, work that is expected to be finished in 2021.

Rovsing has continued support for the Artemis missions with the Orion Multi-Purpose Crew Vehicle (MPCV) European Service Module (ESM). Four Solar Array Wing Front End Equipment (SAW FEE) systems are deployed, two with Airbus DS in Bremen and Ariane Group in Les Mureaux, one with Lockheed Martin in Colorado for the Integrated Test Lab and the fourth with NASA at the Kennedy Space Center. As part of the NASA Artemis and Lunar Gateway programmes, ESA has committed to providing additional three ESMs. In this connection Rovsing foresees to continue providing engineering support both remote & onsite as well as spare parts and possible upgrades until 2028.

Leonardo of Milan, Italy ordered a third recurring MPCV-ESM PCDU EGSE back in October 2020 in support of the upcoming ESMs. The 3rd PCDU EGSE has already in June 2021 successfully been assembled in our lab and completed the TRR milestone. The delivery is planned for September 2021.

Rovsing's onsite service business seen expected changes during the financial year 2020/21, a long-term service contract in Bremen for the ISS helpdesk came to an end ultimo December 2020. Replacement of a resource on the SETTERS project towards the end of the 2020 resulted in some unbudgeted extra cost. The Kourou service activities remain in place with existing contracts running until ultimo 2022. An additional resource was added to the Kourou team in November 2020.

The North American market

Rovsing proceeded throughout the year to explore further opportunities with North American customers and responding to quotations. Due to COVID-19, no customer or trade show visits to North America were performed during 2020/21.

In early 2021 a purchase order by Boeing Satellite Systems for several Rovsing High Current Second Level Protections units for use in their test systems was received. The delivery of these units was completed successfully in H2 2020/21.

As a supplier of various EGSE to the European Service Module (ESM) for the Orion Crew Capsule, Rovsing remains a vital partner for the Artemis missions planned in the coming years with the aim of bringing humans back to the Moon. With the ESA and NASA commitment for three additional ESMs, Rovsing foresees to support the Artemis mission for the coming years.

The overall North American market for commercial, military, and civil space remains a growth opportunity of strategic focus for the Company.

Emerging space markets

Rovsing continues to closely monitor emerging and ambitious space markets with their increasing space budgets. However, sales activities and inquiries from emerging markets have been quieter in 2020/21, this can be attributed to the overall world situation where emerging markets and one-off programmes are more sensitive to the COVID-19 pandemic than programmes of more established space nations.

With the delivery of the Turksat 6A EPS EGSE, Rovsing has developed a strong competitive position within the Turkish indigenous space programmes. A segment that is projected to continue growing for the coming years.

Rovsing has worked actively on prospects and bids to capture market opportunities for products and EGSE systems with organizations in both Asia and South America with quotations active in those regions which remain under evaluation.

Product development and production

In the financial year 2020/21, Rovsing continued focus on improving the product base and related logistics, production and testing environments. Management sees time and cost-effective production and testing as a vital part of the foundation for Rovsing's test systems and product offerings and to secure Rovsing's ability to deliver according to plan, quality and within budgeted prices.

Product development and feature improvements in the domains of both software and hardware remain key enablers for Rovsing abilities to deliver diverse market leading system solutions to customers.

Rovsing's strategic roadmap focuses on achieving increased scalability such that our already modular products can better address the expanding range of satellite architectures.

Anticipating the increased focus on diverse deployments in the space segment, Rovsing's development roadmap accommodates scaling down to smaller satellites and constellations as well as scaling up to higher power demands called upon by electrical propulsion enabled satellites and larger manned missions.

Organisation and management

By the end of the financial year 2020/21, Rovsing employed a total of 25 employees, counted on a full-time-equivalent basis. Most employees were employed at the Company's head office in Denmark, but the Company also has employees in Kourou, French Guiana, Toulouse, France and in Bremen, Germany where they provide support and consultancy services.

At the Company's annual general meeting in October 2020 Michael Hove and Ulrich Beck were reelected to the Board of Directors, while Jakob Have was elected to rejoin the board. Steen Rosenkvist and Flemming Hynkemejer did not seek reelection.

COVID-19

The COVID-19 pandemic has been a major disruption event in both personal and professional lives of all. At Rovsing an active business continuity plan to address the COVID-19 situation has been operated to ensure continuous evaluation of the business based on supply chain, internal resources, progress and governmental guidelines.

In Denmark the government initiated a number of comprehensive measures in order to contain the spread of COVID-19. Management closely monitors the situation and remain prepared to take any immediate action necessary to stay agile and responsive. All employees that were not directly part of the production team, were during the height of the pandemic instructed to work from home. With video conferencing, chat and emails the team manages to keep the productivity high in order to meet project milestones and EGSE deliveries to our customers.

The impacts of COVID-19 on opportunities for travel and participation in industry conferences has been felt as the exposure to potential new customers and partners is reduced without physical participation in industry events as the informal aspect is difficult to replicate in digital conferences.

The Company has utilized the governmental COVID-19 help packages related to delayed A-skat and AM-contribution, and granted VAT loan, the obligations related to these measures amounted by the end of the financial year 2020/21 to DKK 2,970 thousand. Repayment will follow the governmental stipulated deadlines, with the last payment due ultimo April 2023.

Management continues to monitor the situation and take appropriate actions to minimize any potential business impacts moving forward.

Incentive schemes

Rovsing has, to a certain degree, used share-based incentive schemes as part of compensation packages for members of the Board of Directors, members of the management team and other staff.

At the end of the financial year 2020/21 there were 58,300 warrants. For additional information about the Company's share-based incentive schemes, please see note 6 to the financial statements on page 40-41.

The Board of Directors consider share-based incentive schemes as relevant and effective incentives that allow the Company to reward good performance, retain key persons and at the same time secure alignment of interests between managers and shareholders. Therefore, it is expected that share-based incentives, such as warrants, will be used more in the future as part of the compensation packages for members of the staff, management and members of the Board of Directors.

ROVSING'S STRATEGY

Management and the Board of Directors have continued the iterative strategic work based on the foundation of the turnaround process and the strategic plan. With the 2020/21 growth the Company's development is on track, with each step on the path strengthening our position as a key agile high-tech SME in the Space & Defense Industry. Rovsing's mission remains to provide our customers with the innovative test and simulations products and systems they require, for supporting their critical path, which is constantly challenged by the need to reduce time-to-operation cycles and external influences like the challenges of the COVID-19 pandemic.

An Agile and Customer focused High-Tech SME

Rovsing has an established track record, which is continuously expanded, being involved as a reliable supplier in almost every major European Institutional Space programme, looking back as well as forward towards new opportunities. The Company is positioned as a first or second tier supplier to all European Large-Scale Integrators (LSIs/OEMs).

Rovsing operates as a focused technology and customer driven SME. Our customers from Space Agencies and Institutions to LSIs act in a dynamic and challenging high-tech environment. Rovsing has the expertise to provide first class products and services to ensure seamless performance for our customers critical systems and infrastructure. Our customers are to a large extent requirements and process driven and have difficulties with swiftly adapting and anticipating challenges. Herein lays Rovsing's asset, being an agile, dynamic expert, we can anticipate, react and create solutions in hours or days which would normally bind our customers for weeks or months.

With best-in-class services, cost-effective and efficient products and systems, we evoke customer satisfaction and trust. By continuing our R&D focus and anticipating the technical developments and challenges, which our customers face now and, in the years, to come, we are able to center our product developments at the heart of their critical path in test and simulation capabilities.

Skills and Expertise

Rovsing is driven by the expertise and engagement of our employees, this is the core of the Company. Growing the organization to meet the growing order backlog while keeping focus on maintaining efficiency and cost requires intense involvement and engagement from the employees. This means not only going the extra mile to ensure our customers satisfaction but also invoke that same mindset in the onboarding of new employees while keeping our minds open to new ideas and improvements arising from new dynamics.

Rovsing's success is based on the talent of the employees, and we strive to make the working environment agile and inclusive, providing flexibility to our employee's needs. We maintain a high level of trust that the same flexibility flows back to ensure we overcome the challenges at hand and that the commitment to improve and grow as both engineers and as a Company, is a shared vision between the entire staff.

Strengthening our Strategic position and Growth

Rovsing has successfully built further on its wide range of contracts and activities during 2020/21. This, together with a track record and reputation provides a baseline to ensure and carry on expanding the Company's competitive position in a evolving competitive market environment, driven by time-to-market, cost structure and quality. Rovsing continuously works on improving its basis of quality and competitiveness.

Our marketplace is a rapidly growing global market. Ongoing investment cycles require Rovsing to establish solid and growing footprints beyond the European institutional environment. Further building our foothold in commercial missions, as well as the institutional US and emerging markets remains essential together with developing and investing in our product and service portfolio with focus on a harmonized, scalable offerings which can support both new and traditional aerospace customers.

Rovsing understands and acts in a way that our Strategic Programme must develop and increase the Company's value. This requires continuous interaction with customers, suppliers and the shareholders and financial community. Management and the Board of Directors are committed to facilitate the reputation of trust and growth into the future of Rovsing.

Company

1. Rovsing Mission

To enable our aerospace customers to verify with confidence that they will perform in all scenarios once deployed, by supplying them with innovative test & simulation tools

2. Vision – Rovsing 2021 Strategic Program

Rovsing is a strong and agile high-tech SME, recognized as a key player in aerospace with key expertise in the Space & Defense industry

3. Values

Innovation & quality in development and implementation work
Customer satisfaction
Continuous and stable business growth
Attractive workplace and good working environment

4. Management, Leadership & Organisation

CEO, CFO and management team with prime space industry expertise;
Board of Directors with financial and industrial expertise, and competences in strategy, turnaround, and profitable growth;
Improved accountability and focus on financial performance in project planning and resource allocation throughout the organization

5. Rovsing’s core skills

Analog & Digital electronics;
Embedded & System software;
Project management & Process competence;
Product quality and reliability;
Responsiveness to customers Product Life Cycle and industrial challenges

6. Product Range / Portfolio

High-tech modular product portfolio and expertise (2020/21):

Test systems & Products (78%)
Software Verification (ISVV) (5%)
On-site engineering Services (17%)

Grow Top Line

7. Market expansion focus

Make products & expertise known worldwide
Strengthen preferred supplier status with ESA, EU national agencies and LSI’s
Pursue opportunities with NASA and other major non-EU space agencies
Establish further foothold in emerging markets
Expand in the US through local partners and increased presence
Refurbishment and repurposing of proven assets
Expand support for professional small satellite programmes & constellations
Leverage competences and product portfolio in the growing Military/Security segment

8. Market sizes

Global market of Electrical Ground Support Equipment

Equipment: USD 100 million p.a.
ESA ESGE market: EUR 40 million p.a.
An average of 135 satellite (> 50kg) launches per year expected until 2025

9. Product development focus

Focus R&D on standard products, reduce complexity while offering improved scalability for both traditional and new customers; increase the digital footprint,
Focus on profitable implementation and configurable S/W for customized systems
Capture ESA/EU/DK funding opportunities to accelerate product development roadmap
Strategic focus on suppliers and synergies to seek cost optimisation

10. Financials

Actual performance 2020/2021:

Revenue: DKK 27,5 million
EBITDA: DKK 2,5 million

Financial guidance 2021/2022:

Revenue: DKK 34 - 36 million
EBITDA: DKK 3,5 - 4,5 million

FINANCIAL REVIEW

Income statement

Revenue amounted to DKK 27,5 million in 2020/21, an increase of DKK 5,7 million, on 2019/20 revenue. Gross profit amounted to DKK 19,1 million compared to DKK 16,9 million in 2019/20 and EBITDA amounted to DKK 2,5 million compared to DKK -0,9 million in 2019/20.

The positive development in revenue and EBITDA in 2020/21 is primarily driven by kick-off of new projects in 2020/21 with higher and more normalised gross margins than in the financial year 2019/20.

Other external expenses of DKK 2,0 million (2019/20 DKK 2,1 million) are in line with expectation.

Depreciation, amortisation and impairment amounted to DKK 5,0 million in 2020/21, against DKK 4,5 million in 2019/20. The increase is attributable to impairment of DKK 0,5 million related to the DSTE product-line, which is expected to be partially phased out in the coming years.

Financial items

Overall, net financial expenses amounted to DKK 0,9 million compared to DKK 1,2 million in 2019/20.

Profit/loss before tax

The Company recorded a loss before tax of DKK 3,4 million in 2020/21 compared to DKK -6,5 million in the year before.

Tax

Tax for the year amounted to DKK 0 million in 2021/21, compared to a cost of DKK 0,3 million in the preceding financial year. The tax consists of current tax (income) of DKK 0,1 million, which relates to reimbursement under section 8x of the Danish Tax Assessment Act (TAA) and a DKK -0,1 million in adjustment related to previous year. The deferred net tax asset amounts to DKK 2,1 million at 30 June 2021. Rovsing expects to be able to utilize the tax asset within the next five years.

Profit/loss for the year and comprehensive income

The Company reported a loss for 2020/21 of DKK 3,4 million, against a loss of DKK 6,8 million in the preceding financial year.

Balance sheet

Assets

At the end of 2020/21, total assets amounted to DKK 25,1 million, against DKK 27,2 million at 30 June 2020.

Intangible assets amounted to DKK 10,9 million at 30 June 2021, down by DKK 3,4 million on 30 June 2020. The decrease was due to ordinary depreciations and amortisations of DKK 3,3 million, impairment of DKK 0,5 million and DKK 0,3 million associated with further development of the SAS product and DKK 0,1 million related to new ERP system.

Deferred tax assets amounted to DKK 2,1 million and is unchanged compared to previous year.

Inventories amounted to DKK 2,4 million compared to DKK 2,5 million in 2019/20.

At 30 June 2021, trade receivables and contract work in progress combined amounted to DKK 7,4 million, which was DKK 1,6 million higher than previous year.

Current assets amounted to DKK 11,1 million, a smaller increase from DKK 9,2 million at 30 June 2020.

Liabilities and equity

Equity amounted to DKK 9,6 million at 30 June 2021, against DKK 11,4 million at 30 June 2020. The year-over-year change of DKK 1,8 million is due to loss on comprehensive income of DKK 3,4 million, and DKK 1,6 million in proceeds from a directed share issue in February 2021. Rovsing holds 1,259 of the Company's own shares with a nominal value of DKK 62,950.

In December 2020 the Company refinanced a bond loan DKK 4,2 million with new convertible bond loans of DKK 4,2 million, which matures 31 December 2023. The bond loans carry an interest of 12% p.a. During February 2021 a new credit facility of DKK 3,6 with Jyske Bank was established. The facility supports and finances a single project entered into with Thales Alenia Space in UK and the credit facility is guaranteed by EKF, Denmark's Export Credit Agency. At year end the Company has a draw on the ordinary credit facility in Jyske Bank of DKK 1,6 million (DKK 2,5 million in 2019/20) and DKK 1,6 million on the EKF guaranteed credit line in Jyske Bank.

Cash flow statement

Cash flow from operations:

Total cash flow from operations were net cash of DKK 0,3 million in 2020/21, against a net cash of DKK 6,1 million in the preceding year. Cash flow from operations before changes in working capital of DKK 2,5 million is offset by an increase in working capital requirements of DKK 2,2 million in 2020/21.

Cash flow from operating activities:

Net interest payables were DKK -0,9 million compared to DKK -1,2 million in 2019/20. Tax reimbursement was DKK 0 vs. DKK 0,5 million in 2019/20 leading up to cash flow from operating activities of DKK -0,5 million in 2020/21 compared to DKK 5,4 million in 2019/20.

Cash flow from investing activities:

In 2020/21 the Company has invested DKK 0,3 million in further development of the SAS product line (2019/20 net DKK 0,3 million) and DKK 0,1 million related to a new ERP system.

Cash flow from financing activities:

Cash flow from financing was DKK 1,0 million vs. DKK -5,1 million in 2019/20. The draw on the two credit facilities in Jyske Bank has increased with DKK 0,8 million in 2020/21 reflecting the increased activity level with higher working capital requirements.

Funding of the Company's operations

The liquidity situation during the financial year 2020/21 has further been strengthened by way of refinancing the bond loan of DKK 4,2 million due 31 December 2020 with new convertible bond loans of DKK 4,2 million, which matures 31 December 2023. In addition, the completed capital increase in February 2021, further strengthened the company's capital structure with DKK 1,6 million.

In 2020/21 Rovsing, Jyske Bank and EKF agreed on an additional credit facility where one specific project (FLEX EPS SCOE) with the customer Thales Alenia Space in the UK is funded with a guarantee backed-up by EKF.

Under the current rules for listed companies, Rovsing may issue new shares for up to 20% of the Company's existing share capital within a financial year. Within this framework, the size of a potential capital increase will be assessed relative to the immediate liquidity requirement, the capital aspects of the Company's strategy and investor appetite for buying Rovsing shares.

Should Rovsing carry out a capital increase, the contributed capital would be expected to be used partly for investing in commercial initiatives aimed at consolidating the Company's growth and competitiveness and as a general liquidity buffer. Reference is made to the section on the Company's risk factors on page 19, which describes risk associated with the Company's liquidity.

DIVIDENDS

The Board of Directors recommends to the annual general meeting that no dividend be declared in respect of the 2020/21 financial year.

OUTLOOK FOR 2021/22

Considering the above developments, the Company's strategy, the current order backlog and the expected order intake for 2021/22 management expects for the financial year 2021/22 a revenue of around DKK 34 - 36 million and an EBITDA of around DKK 3,5 - 4,5 million.

EVENTS AFTER THE REPORTING PERIOD

After the balance sheet date, no events have occurred that materially affect the Company's financial position other than the events described in the Management's review.

NEW & IMPROVED COMPANY LOCATION

As of 23rd of August 2021, Rovsing has started operations in a new and improved location at Ejby Industrivej 34-38 in Glostrup. The new facilities provide the Company with larger and more suited lab, production and development facilities, which will support the Company's projected further growth as well as execution of ongoing projects.

We look forward to welcoming our customers, suppliers and partners to visit!

SIGNIFICANT ACCOUNTING ESTIMATES

For a description of items involving significant recognition and measurement uncertainties, see note 2 to the financial statements.

SHAREHOLDER INFORMATION

Rovsing's shares are listed on Nasdaq OMX Copenhagen and traded under the abbreviation ROV and ISIN code DK0061152170. The Company's share capital has a total nominal value of tDKK 23.567 and is divided into 471.349 shares of DKK 50 each. No shares carry any special rights.

Outstanding shares	No. of shares
Beginning of year	457,881
Capital increase	13.468
End of year	471.349

Share price

The highest and lowest prices of Rovsing shares in 2020/21 were DKK 139 and 37, respectively. At the end of the financial year, the share price was DKK 95. At 30 June 2021, Rovsing had a market capitalisation of DKK 44,8 million.

Share liquidity

The average daily turnover in 2020/21 was 3,858 shares with an average of 38 transactions per day.

Shareholders

Rovsing has a total of 3,111 registered shareholders. 94.0 % of the shares in Rovsing are registered in the name of the holder.

The table below shows the composition of Rovsing's shareholders.

Shareholders	No. of shares	%
CATPEN A/S	31,372	6.66
Other shareholders	439,977	93.34
Total	471,349	100.0

Employee shares

No employee shares were granted in 2020/21.

Current Warrant scheme

In the period until 27 October 2022, the Board of Directors is authorized to issue warrants for board members and/or employees. The Board of Directors may issue warrants with a nominal value up to DKK 2,750,000 in the Company, corresponding to 55,000 warrants of DKK 50 each. In addition, there remains 3,300 warrants issued under the previous authorization totaling 58,300 outstanding warrants.

Dividend policy

Historically, the Company has paid dividends and made distributions, but the Board of Directors presently has no plans to pay dividends or make distributions in the foreseeable future.

Authorities granted to the Board of Directors

Authorities granted to the Board of Directors are set out in articles 5 and 6 of the articles of association.

The articles of association are found on the Company's website www.rovsing.dk under "Investor relations" and "Corporate Governance".

Financial reporting to shareholders

The Company publishes an Annual Report, an interim half year Report and interim Management Statements in Q1 and Q3. These reports and statements are published through NASDAQ OMX Copenhagen.

Annual General Meeting

The annual general meeting of Rovsing will be held on 25 October 2021 at 16:00 at the Company's premises at Ejby Industrivej 38, DK-2600 Glostrup. The general meeting shall be convened by the Board of Directors not more than five weeks and not less than three weeks before the general meeting by publication of an announcement to NASDAQ OMX Copenhagen, on the Company's website www.rovsing.dk and by e-mail to shareholders recorded in the register of shareholders who have so requested.

Amendments to articles of association

Resolutions on any amendment to the articles of association shall be passed by a majority of two-thirds of the votes cast as well as of the voting share capital represented at the general meeting. Proposals to amend the articles of association must be submitted in writing to the Company not later than six weeks before the date of the general meeting.

Financial calendar

10 September 2021, publication of annual report for 2020/21.

25 October 2021, Annual General Meeting regarding financial year 2020/21.

15 November 2021, publication of interim report for Q1 2021/22.

21 February 2022, publication of interim report for H1 2021/22.

16 May 2022, publication of interim report for Q3 2021/22.

9 September 2022, publication of annual report for 2021/22.

24 October 2022, Annual General Meeting regarding financial year 2021/22.

Issued Company Announcements

Announcement no 323 - 28 June 2021
Financial Calendar 2021/22

Announcement no 322 - 17 May 2021
Interim Management Statement covering Q3 2020/21

Announcement no 321 - 26 February 2021
Change in capital of large shareholder

Announcement no 320 - 25 February 2021
Completion of share emission

Announcement no 319 - 24 February 2021
Rovsing announces a change to the share emission terms

Announcement no 318 - 22 February 2021
Rovsing announces a share emission to finance continued growth

Announcement no 317 - 22 February 2021
Interim Report first half year 2020/21

Announcement no 316 - 19 February 2021
Change in capital of large shareholder

Announcement no 315 - 28 December 2020
Change in capital of large shareholder

Announcement no 314 - 16 December 2020
Refinancing of loan

Announcement no 313 - 16 December 2020
Minutes of Extraordinary General Meeting

Announcement no 312 - 24 November 2020
Notice to Extraordinary General Meeting

Announcement no 311 - 16 November 2020
Interim Management Statement covering Q1 2020/21

Announcement no 310 - 19 October 2020
Minutes of General Meeting

Announcement no 309 - 28 September 2020
Change in capital of large shareholder

Announcement no 308 - 25 September 2020
Notice to Annual General Meeting 202

Announcement no 307 - 11 September 2020
Rovsing A/S releases its Annual Report 2019/20

Announcement no 306 - 10 September 2020
Change in capital of large shareholder

Announcement no 305 - 03 September 2020
Change in capital of large shareholder

Announcement no 304 - 30 June 2020
Financial Calendar 2020-21

Registrar

Computershare A/S
Kongevejen 418
DK-2840 Holte

Investor relations contacts

Hjalti Pall Thorvardarson, CEO
Tel: +45 53 39 18 88
E-mail: [email protected]

CORPORATE GOVERNANCE

Rovsing's Board of Directors regularly reviews the Company's corporate governance and strives to follow the recommendations of the Committee on Corporate Governance. www.corporategovernance.dk).

The Company has resolved not to follow all the recommendations of the Committee of Corporate Governance, as the Board of Directors finds it appropriate to organize the Company's governance differently in some respects due to Rovsing's specific circumstances.

Certain of the recommendations with which the Board of Directors has resolved not to comply are described below. For a full report on the status of the Company's compliance with the recommendations, please refer to the corporate governance report published on Rovsing's website under "Investor Relations" and "Corporate Governance". https://rovsing.dk/wp-content/uploads/2021/09/Corporate_governance_2020-21.pdf

Recommendation regarding election of vice-chairman

According to section 2.3.1 of the recommendations, the Board of Directors is recommended to appoint a vice-chairman. Due to the limited size of the Company, the Board of Directors has not considered it necessary so far to appoint a vice-chairman.

Recommendation regarding the composition and organization of the Board of Directors

According to section 3.1.2 of the recommendations, the Board of Directors annually should discuss the company's activities to ensure a diversity relevant to the Company in its management levels and develops and adopt a diversity policy. The Chairman of the Board of Directors assesses in consultation with the Executive Board what competencies the Board of Directors must have and recommend suitable candidates for election at the General Meeting. The Board of Directors currently consist of three members, all males. Their appointment was made before the beginning of the financial year and there are no immediate plans for replacement of current board members.

It is the goal that the underrepresented gender, presently female, should have at least one seat in the Board, equivalent to 33 pct. of the Board of Directors. This is however only possible whenever a replacement in any of the positions becomes relevant, and the goal is therefore presently not fulfilled in 2020/21. The Board will work to achieve female representation once new Board members are appointed, no later than within 4 years.

As Rovsing employs fewer than 50 employees, the Company is not required to have policies for gender parity at the other management levels, cf. the Danish Financial Statements Act § 99. At 30 June 2021, woman accounted for 9% of the total workforce (June 2019 4%). It is the Company's goal to continuously increase the diversity of the workforce.

Recommendation regarding board committees

According to section 3.4.6 of the recommendations, the Board of Directors is recommended to establish a nomination committee. Due to the size of the Company, the Board of Directors has decided that the functions of a nomination committee will be undertaken by the Company's Chairman in collaboration with the other board members.

According to section 3.4.7 of the recommendations, the Board of Directors is recommended to establish a remuneration committee. Due to the size of the Company, the Board of Directors has decided that the functions of a remuneration committee will be undertaken by the full Board of Directors as the board members are deemed to possess the requisite knowledge and experience to do so.

Recommendation regarding evaluation of the work of the Board of Directors and the Executive Board

According to section 3.5.1 of the recommendations, the Board of Directors is recommended to establish an evaluation procedure for an annual assessment of the overall board and individual members. The Board's self-evaluation is organised based on the numbers and the needs of the Company.

Recommendation regarding remuneration in the form of share options

According to section 4.1.3 of the recommendations, the remuneration of the Board of Directors should not include share options. The Board of Directors at Rovsing does not follow this recommendation as the Board of Directors are all participants in the Company's incentive warrant programme.

Management and organisation

Rovsing has two management bodies – the Board of Directors and the Executive Management. The general meeting elects the Board of Directors, which acts as the supreme authority of the Company between general meetings. The Board of Directors is the supervisory management body of the Company, which undertakes the employment of the Executive Management. The role of the Board of Directors is to supervise the Company's activities, development and management. The Executive Management is in charge of the day-to-day management and operation of the Company and must comply with the guidelines given by the Board of Directors.

Pursuant to the Company's articles of association, the Board of Directors must be composed of three to seven members. The Board of Directors is currently composed of four members, elected for a term of one year. The aim is for the Board of Directors to be composed of persons who possess the necessary skills for performing their duties and have an in-depth understanding of the Company's business affairs. In this respect, the Board of Directors considers the following skills to be important: Insight into the institutional and commercial aerospace market, experience in development, manufacturing and sale of advanced test equipment, experience in international project sales and the related legal aspects, and management experience from a listed company.

The Board members' shareholdings through controlled companies and/or held personally are set out on page 61-62.

The remuneration of the Board of Directors for 2020/21 was unchanged at DKK 100,000. The Chairman receives 200% of the basic fee.

The remuneration of the Executive Management consists of a fixed salary and incentive programmes in the form of a cash bonus and warrants. The weighting of the individual remuneration elements is intended to support the Company's positive performance in the short and long term. The cash bonus is performance-based relative to the annual budget to promote the Executive Management's focus on both revenue and costs. The vesting of warrants is based on the CEO's and CFO's employment with the Company and is described in more detail in note 6 to the financial statements.

Internal control and risk management

Rovsing's internal control systems and procedures in relation to financial reporting are to contribute to ensuring that the financial statements give a true and fair view of the Company's financial position and are free from material misstatement.

Rovsing's Board of Directors is responsible for the establishment and approval of an effective internal control and follow-up system for purposes of the Company's risk management, including relevant guidelines, policies and significant accounting principles.

The Executive Management is responsible for risk management and maintaining an efficient control system, considering applicable legislation and other internal guidelines and procedures. Risk management is focused on risk identification, probability and impact assessment, and risk mitigation measures. The purpose of control activities is to prevent, detect and correct any errors or irregularities. The activities have been integrated in Rovsing's accounting and reporting procedures. These activities include procedures for verification, authorization, approval, reconciliation, result analysis, IT application controls, and general IT controls.

Detailed monthly accounting data are prepared, analysed and monitored at entity and Company level. Rovsing's integrated IT controls and general controls contribute to ensuring that the financial statements give a true and fair view. Reporting instructions, including estimation and close-of-month procedures, are updated and implemented on a regular basis. Combined with other policies, these are available to all relevant employees.

Any control weaknesses identified by internal control or external auditors are presented to the Board of Directors, which oversees that Management implements the necessary measures to remedy the weaknesses in a timely manner.

CSR, HUMAN RIGHTS AND CLIMATE CHANGE MITIGATION

Description of Rovsing's business model

Operationally, the structure is that there is only one company that operates with a high degree of operational independence.

The majority of revenue is generated in Europe and derives from sales of products and systems for functional and electrical testing of spacecrafts (primarily satellites) and their payloads for professional clients. The Company has no sales to individuals. The Company's activities are generally conducted in accordance with internationally recognized quality standards.

The Company's purchasing of components comprises a very large number of products purchased from suppliers primarily in Denmark and Europe. The hallmark of these products is that they are manufactured by reputable high-quality technical manufacturers.

Due to the Company's size and short chain of command, the Company has decided to align corporate responsibility efforts with the key risks identified, and has no formalized policies or KPIs on human rights, social and employee relations, anticorruption and business ethics and environment and climate change. However, the Company does address corporate responsibility based on internationally recognized principles, as described below.

Human Rights

Rovsing supports and respects the international human rights contained in the Convention on Human Rights. This means, among other things, that the company works to ensure equal opportunities regardless of gender, religion, origin or sexual orientation. The company does not accept forced labour or child labour.

The Company endorses employees' free choice of trade unions and respect their right to participate in collective bargaining, in accordance with applicable laws and standards in respective countries regarding working hours and wages.

The Company has identified the risk of discrimination against employees to be the most significant risk in relation to human rights. This can affect our ability to attract and retain employees as well as affect our reputation.

The Company translates human rights principles into action by communicating them to employees and monitoring that the principles are observed, but due to the limited scope of its operations, the Company has not otherwise found it necessary to conduct human rights related due diligence. In 2020/21, the result of these efforts was that no human rights violations were found in Rovsing. The Company expects to continue and where appropriate, expand, these efforts in the future.

Social and employee relations

In Rovsing, we believe that results are created through people. We strive to be a responsible employer that ensures proper employment, healthy and safe working conditions and a motivating work environment for our employees.

The company translates these principles into action, inter alia, through the development and maintenance of employees' knowledge and skills, to ensure that the company continues to have a high efficiency, that innovative products and solutions can be produced and that the products manufactured are competitive in the selected markets. The presence of the necessary qualifications is ensured, among other things through targeted training of employees as well as collaboration with external partners.

The Company has identified employees not feeling motivated by working at Rovsing as the most significant social- and employee-related risk. This is, however, not currently the case.

As Rovsing employed 25 FTE in 2020/21, the Company has yet found it necessary to establish any processes for social and employee-related due diligence. The Company expects to continue and where appropriate, expand, these efforts in the future.

Anti-corruption and business ethics

Over the years, we have built a reputation as a company that maintains a high degree of integrity and ethical conduct. We combat all forms of corruption, including bribery and facilitation payments, by informing our employees of our zero-tolerance approach to bribery and corruption.

We have identified the risk of employees using gifts or other means to unduly influence a stakeholder as the main risk related to bribery and corruption. This may also be the case if one of our employees is unduly influenced by a stakeholder. Both cases could have consequences for our reputation.

Due to the limited scope of its operations, the Company has not yet found it necessary to establish processes for anti-bribery and corruption

due diligence. No corruption and bribery offenses have been found or reported in Rovsing in 2020/21, and the Company plans to continue and where appropriate, expand, these efforts in the future.

Environment and climate

It is the Company's goal to strive for a production that limits the climate impact through the use of environmentally friendly processes. This includes choice of materials that are as reusable as possible, but also that the various processes are gentle on the environment.

We believe that the most significant climate- and environment-related risk would be if we use materials in our production that unnecessarily harm the environment. Furthermore, it can be a risk if our production of products has processes or approaches that may unduly impact the environment. We are aware that this risk can have consequences for the local environment as well as have consequences for our reputation.

The Company's climate and environment-related processes entail, that environmental considerations are included as part of the company's innovation processes and business strategy. As of yet, no results have been identified as a result of the efforts, but the Company expects to continue and where appropriate, expand, these efforts in the future.

RISK FACTORS

The risk factors below are not listed in any order of priority according to significance or probability. It is not possible to quantify the significance to Rovsing of each individual risk factor as each of the risk factors mentioned below may materialise individually or simultaneously to a greater or lesser degree and have a material adverse effect on Rovsing's business, operating profit and financial position.

RISKS RELATED TO THE COMPANY

The Company's earnings expectations are subject to considerable uncertainty

The Company's expectations for the future are based on a number of assumptions. If these assumptions are not met, in whole or in part, the Company's future results may deviate considerably from the expectations, which may have a material adverse effect on the Company's operations, results and financial position.

Liquidity risk

The Company's liquidity position has improved during 2020/21 due to a refinancing of a bond loan of DKK 4,2 million maturing 31 December 2020 with new bond loans of DKK 4,2 million, which matures 31 December 2023. In addition, the Company completed a directed share emission in February 2021 of DKK 1,6 million in new capital.

Liquidity problems due to late payment by customers

The aerospace market is sometimes characterized by late payments by customers from time to time. Such delays may adversely affect the Company's liquidity and increase the risks related thereto, as discussed above. Delayed deliveries to or approvals from customers may have a similar effect.

The Company is dependent on a few large customers

Rovsing is dependent on a few large and longstanding customers. The European Space Agency, ESA (end customer), typically delegates the overall responsibility for a space programme to the largest European space companies – Airbus Defense & Space, Thales Alenia Space or OHB ("Prime Contractors") – through contracts.

Although, when awarding a contract to a Prime Contractor, ESA also requires an open competitive process in the selection of subcontractors, it is crucial for the Company's future development in the space industry to maintain its good relations with these Prime Contractors. There can be no assurance of this, and the opposite scenario could lead to a loss of future orders and materially affect the Company's future earnings and results.

Technological developments may impair the Company's competitiveness

Even though the Company is not dependent on individual technologies or processes, technological developments may occur in the future which may impair the Company's competitiveness, including if the Company's fails to maintain a certain level of investment in the maintenance and development of its current intellectual property rights or faces difficulty to source parts.

Tenders may be unsuccessful

The Company's large customers launch a limited number of calls for tenders a year. The outcome of these tenders can have a significant impact on the Company's revenue, earnings and future competitiveness. The outcome of such tenders depends on various factors which are beyond the Company's control, including the quality and price offered by the other tenderers. As there are only a limited number of tenders, there is a risk of losing more than expected or them all, which will materially affect the Company's future results.

The Company is not yet ISO-certified and is therefore facing a risk of being rejected for that reason as supplier to certain customers in the commercial space industry, and this may have a negative impact on the Company's future development opportunities. The process of ISO-certification has continued in 2020/21.

Lack of contract opportunities due to fully allocated return quota

For each ESA programme, a ratio applies to the aggregate contract amount permitted in each participating member state. There is a risk that other Danish businesses are awarded so many contracts under a programme that it reduces Rovsing's contract opportunities under that programme.

Risk of infringement of intellectual property rights

Rovsing's products are developed from scratch, despite this, there is a risk that the products will infringe third party rights, including patent rights. Such infringement may involve substantial claims from the rightsholders and/or cause rightsholders to obtain injunctions against supply of the products containing the infringing material, which may materially affect Rovsing's results.

Fixed-price contracts may involve losses

Although Rovsing has switched to basing its deliveries on standard products, Rovsing remains a development business which, in some tenders, must prepare estimates of the resources and production cost required to perform the individual contracts. There is a risk that Rovsing underestimates the (development) costs and/or the production cost (price of components) associated with existing or future projects and therefore cannot achieve the budgeted contribution margins and/or incurs losses in connection with projects.

Insufficient insurance cover

There is no guarantee that the insurance cover acquired is sufficient to compensate for a loss arising due to a claim, including especially a product liability claim. The Company strives to minimise its exposure by way of its general terms of sale and delivery and its commercial liability and product liability insurance, but there is no certainty that all situations have been agreed in such a way as to prevent an error from having a negative impact on the Company's earnings.

In addition, a loss for which the Company is liable or jointly liable may potentially damage the Company's opportunities to enter into future contracts, as the Company's business concept involves protecting customers against such losses.

Wrong assessment of market penetration time and demand in new markets

Penetration of new markets involves a number of uncertainties – not least in terms of market penetration time. The Company has significant references from the space industry but does not yet possess detailed knowledge of all markets as regards applications. Both the penetration time and the fact that services provided by the Company are often competing with internal resources of other companies, are subject to uncertainty. These factors may materially affect the Company's future revenue and earnings.

Trade restrictions may impact future business

A delivery to one market, e.g. the Chinese market, may affect the possibilities for supplying to other markets, e.g. the USA. Rovsing monitors the evolution of the trade and political conflicts between both countries which are key players in the global space markets.

Restrictions on export bonds to certain countries can impact the Company's ability to enter into new business markets.

Accumulation of application know-how may be affected by lack of recruitment

The Company's strategy is initially to accumulate market knowledge, technical skills and marketing skills in the global aerospace market, primarily through recruitment at the board, management, engineer and sales level. When entering new market areas, the headcount will increase with a resulting risk that capacity adjustment problems may arise.

There is a risk that the Company will not succeed in balancing the capacity to ensure coherence between the contracts concluded and availability of sufficient capacity in terms of both quality and quantity, which may affect the Company's future revenue and results.

The Company is dependent on key persons

As a knowledge-based business, the future development of the Company relies on contributions from current and future employees. The Company's employees are its greatest asset. The Company's ability to attract, retain and develop talented employees is therefore considered essential to the Company's future activities, results and financial position.

The Company's development to date in respect of management, development and marketing has been driven extensively by individuals. A loss of one or more of these employees may have a material adverse effect on the Company's business. However, there can be no assurance that this will not happen.

Unsatisfactory contribution margins of products and services may impact results

The Company's earnings rely strongly on its ability to secure satisfactory contribution margins of its contracts.

The contribution margin depends on the Company's ability to maintain a high level of expertise within its product areas and its possibilities for reusing product developments and maintaining a stable cost base for the manufacturing of the Company's products. A lack of the same will have negative consequences.

Capitalised development costs, product rights and/or tax assets may be written off

In its annual report for 2020/21, Rovsing capitalised development costs and product rights totaling DKK 10,9 million and a tax asset of DKK 2,1 million. There is a risk that the products developed cannot be sold to the extent expected and/or that the Company does not generate a profit in the coming

financial years, and that the capitalised development costs, product rights and/or tax asset will be written off in connection with future financial statements. Such a scenario will affect Rovsing's results and balance sheet.

Exchange rate risk

In the space industry, the Company's contracts are primarily concluded in EUR or USD. As the Danish krone is pegged to the Euro, the exchange rate risk in this connection is low. However, exchange rate risk occurs while the Company enters into contracts in USD.

INDUSTRY SPECIFIC RISK

Competitors may drive the Company out of the market

The Company is competing in an ever-changing market with a large number of development businesses in Europe, including a few in Denmark.

As the Company's customers increasingly use standard products, there is a risk that one or more competitors develop competing standard products which become market leading. This and/or the general competition from other development businesses may entail a substantial reduction of the Company's revenue and may in that case materially affect the Company's results going forward.

Aerospace market may be affected by ESA membership

The Company's market segment mainly consists of the institutional European aerospace market and exclusively exists owing to Denmark's ESA membership.

If Denmark terminates its membership or reduces its contribution considerably, a very substantial part of Rovsing's market will cease to exist, and this will have a very significant impact on the Company's activities, results and financial position. Changes to the geographical return rules may affect the Company's earnings. Lastly, stricter enforcement of the rules, e.g. so that the four large countries (Great Britain, France, Italy and Germany) of ESA's 22-member states gain a larger portion of the contracts, will make the market conditions much more difficult. This also involves a risk to the Company's future development in the European space industry.

At a meeting of ministers in November 2019, Denmark confirmed its continued ESA membership and participation in optional programmes for the period 2020 - 2022 for an aggregate amount of DKK 360 million. This

combined with the mandatory membership fee brings Denmark's contribution to ESA programmes to approximately DKK 240 million a year, which is largely unchanged on the years before.

Hence, there are currently no signs that Denmark is about to withdraw from the ESA collaboration.

Nor are there any signs that the geographical return rules will be abolished or that ESA will apply the return rule more arbitrarily in the future, but there is not guarantee of that. There is a risk that changed political priorities may materially affect the member states' funding of ESA programmes, which in that case will affect the Company's prospective income and have a material adverse impact on results.

In 2016 and earlier, ESA commenced discussions with the delegates of the member states regarding a different procurement policy for its future programmes, and during 2017 ESA completed a pilot project with the new procurement policy for the FLEX and PLATO programmes.

Although there are no indications that this new procurement policy will have a negative impact on the geographical return rules, or that ESA will apply the return rules more arbitrarily in the future, there is no guarantee of that.

ESA contracts involve a process in which the individual companies that have submitted bids for the individual project are assessed, and the individual project participants are subsequently selected. A kick-off meeting is held where the selected project participant receives an approval to commence the project, but the actual contract is signed at a later point in time. This process involves a risk that the contracts are never signed and that only the approved part is completed. Rovsing has never experienced a situation where a kicked off contract was not completed, but there is no guarantee that this will not happen. In that case, such a process may involve substantial losses for the Company.

Complaint costs

In connection with the development and delivery of Rovsing's high-tech solutions, extensive testing is often conducted in collaboration with customers. However, there is a risk that the products contain defects that are not detected during testing. This may subsequently result in complaint costs.

MANAGEMENT STATEMENT

The Board of Directors and the Executive Management have today considered and adopted the annual report of Rovsing A/S for the financial year 1 July 2020 to 30 June 2021. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies. The Management's review is also presented in accordance with Danish disclosure requirements for listed companies.

We consider the accounting policies applied to be appropriate. Accordingly, the financial statements give a true and fair view of the Company's assets, liabilities and financial position at 30 June 2021 and of the Company's activities and cash flows for the financial year 1 July 2020 to 30 June 2021.

We believe that the Management's review includes a fair review of developments in the Company's activities and finances, results for the year and the Company's financial position in general as well as a fair description of the principal risks and uncertainties to which the Company is exposed.

We recommend that the annual report be approved at the Annual General Meeting.

Glostrup, 10 September 2021

EXECUTIVE MANAGEMENT

Hjalti Pall Thorvardarson (CEO)

Sigurd Hundrup (CFO)

BOARD OF DIRECTORS

Michael Hove (Chairman)

Jakob Have

Ulrich Beck

INDEPENDENT AUDITOR'S REPORT
24

To the Shareholders of Rovsing A/S

OPINION

In our opinion, the financial statements give a true and fair view of the Company's assets, liabilities and financial position at 30 June 2021 and of the results of the Company's operations and cash flows for the financial year 1 July 2020 – 30 June 2021 in accordance with the International Financial Reporting Standards as adopted by the EU and additional requirements in the Danish Financial Statements Act.

Our opinion is consistent with our long-form audit report to the Board or Directors and the Audit Committee.

Audited financial statements

Rovsing A/S financial statements for the financial year 1 July 2020 – 30 June 2021 comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and notes, including summary of significant accounting policies, for the Company (the financial statements). The financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional requirements in the Danish Financial Statements Act.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark.

Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the financial statements" section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these rules and requirements.

We declare, to the best of our knowledge and belief, that we have not provided any prohibited non-audit services, as referred to in Article 5(1) of the Regulation (EU) 537/2014 and that we remained independent in conducting the audit.

Independent auditor's report

We were appointed auditors of Rovsing A/S for the first time at the annual general meeting on 3 November 2020 for the financial year ending 30 June 2021.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the financial year 1 July 2020 – 30 June 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in the forming of our opinion thereon. We do not provide a separate opinion on these matters.

Key audit matters

Valuation of intangible assets

Completed development projects represent DKK 10.8 million corresponding to 43% of the Company's assets.

Management conducts annual impairment test to determine whether the carrying amounts of recognised completed development projects are considered to be impaired and, hence, should be written down to the recoverable amount.

Management determines the recoverable amount of the completed development projects using a discounted cash flow model (value in use).

Key assumptions used in the impairment test are increase in revenue and margin and the applied discount rate.

The audit of the recoverable amount has been considered a key audit matter as the determination of the recoverable value is associated with significant estimation uncertainty.

Reference is made to note 13 to the financial statements and the accounting policies.

Revenue recognition

The Company delivers long term contracts, which typically extends over more than one financial year. Due to the nature of these contracts and in accordance with the accounting principles, the Company recognises and measures revenue from such long term contracts over time based on the percentage of completion method.

The percentage of completion is calculated on the basis of the contract costs incurred at the balance sheet date in relation to the estimated total cost of completing the contract.

The audit of the recognition and measurement has been considered a key audit matter as there is a risk that the estimated total costs of the contract are not accurately determined.

Reference is made to note 3 to the financial statements and the accounting policies.

How our audit addressed the key audit matter

For the purpose of our audit, the procedures we carried out included the following:

We have discussed with Management and evaluated the internal controls and procedures for preparing impairment tests and the budget and forecasts.
We have focused our audit on the appropriateness of models and the key assumptions used by Management to calculate the values in use and assessed the consistency of the assumptions applied to internal and external information obtained.
We have assessed the documentation that supports the key assumptions applied and challenged management use of these assumptions.
In addition, we have assessed whether the disclosures; Note 13 Intangible Assets in the financial statements meet the requirements of IFRS.

For the purpose of our audit, the procedures we carried out included the following:

We have considered the appropriateness of the Company's revenue recognition policy and assessed its compliance with IFRS 15 Revenue from Contracts with Customers.
We have discussed with Management and evaluated the internal controls and procedures for the revenue recognition.
We have discussed with Management the key judgements related to recognition of revenue.
We have performed retrospective reviews of realised contract costs to determine the historical accuracy of estimated total costs for completing the contracts.
We have reconciled the terms in the contracts with customers to project calculations supporting the revenue recognition including contract value and the projected stages of completion for the contracts.
We have reconciled the actual realised costs to the calculations of percentage of completion supporting the revenue recognition and the estimated total costs to complete to the latest updated projections approved by Management.
In addition, we have assessed whether the disclosures; Note 3 Revenue in the financial statements meet the requirements of IFRS.

STATEMENT ON THE MANAGEMENT'S REVIEW

Management is responsible for the Management's review.

Our opinion on the financial statements does not cover the Management's review, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated.

Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act.

Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement of the Management's review.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the International Financial Reporting Standards as adopted by the EU and additional requirements in the Danish Financial Statements Act and for such internal control that Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Independent auditor's report

In preparing the financial statements, Management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements may arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
conclude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view.

Independent auditor's report

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Copenhagen, 10 September 2021
KPMG P/S
Statsautoriseret Revisionspartnerselskab
CVR no. 25 57 81 98

Morten Høgh-Petersen
State Authorised
Public Accountant
mne34283

Martin Pieper
State Authorised
Public Accountant
mne44063

INCOME AND COMPREHENSIVE INCOME STATEMENT

Note	INCOME AND COMPREHENSIVE INCOME STATEMENT	2020/21	2019/20
	DKK’ooo
3	Revenue	27,535	21,836
	Production costs, external	-8,456	-4,967
	Gross profit/loss	19,079	16,869
4	Other external expenses	-2,016	-2,112
5,6	Staff costs	-14,549	-15,620
	Operating profit before depreciation and amortisation (EBITDA)	2,514	-863
7,8	Depreciation, amortisation and impairment	-5,011	-4,459
	Operating profit/loss (EBIT)	-2,497	-5,322
9	Financial income	8	7
10	Financial expenses	-926	-1,195
	Profit/loss before tax	-3,415	-6,510
11	Tax on profit/loss for the year	17	-300
	Net profit	-3,398	-6,810
	Comprehensive income	-3,398	-6,810
	Allocation of profit/loss and comprehensive income: Shareholders of Rovsing A/S	-3,398	-6,810
12	Earnings per share
	Earnings per share (EPS Basic)	-7,3	-14,9
	Earnings per share (EPS-D)	-6,5	-13,2

BALANCE SHEET

Note BALANCE SHEET, ASSETS 2020/21 2019/20 30

DKK'000

Non-current assets

Intangible assets

13	Completed development projects	10,832	13,513
13	Patents and licenses	0	797
13	Development projects in progress	90	0
	10,922	14,310
---	---	---

Property, plant and equipment

15	Right-of-Use assets	913	1,488

Other non-current assets

Tax	75	57
16	Deferred tax	2,143	2,143
	2,218	2,200
---	---	---

Total non-current assets

	14,053	17,997

Current assets

4	Inventories	2,396	2,448
17	Trade receivables	4,630	2,249
18	Contract work in progress	2,737	3,559
	Tax	0	236
17	Other receivables	906	49
---	---	---	---
	Prepayments	154	439
	Cash	256	268
Total current assets	11,079	9,248
---	---	---
TOTAL ASSETS	25,132	27,245
---	---	---

BALANCE SHEET

Note	BALANCE SHEET, EQUITY AND LIABILITIES	2020/21	2019/20
	DKK'000
19	Equity
	Share capital	23,568	22,894
	Reserves for development costs	2,892	3,039
	Retained earnings	-16,884	-14,511
	Total equity	9,576	11,422
	Non current liabilities
20	Bond loans	4,200	0
15	Lease liabilities	487	386
	Total non-current liabilities	4,687	386
	Current liabilities
	Credit institutions	3,181	2,425
20	Bond loans	0	4,165
15	Lease liabilities	393	1,214
18	Prepayments from customers	1,014	2,786
	Trade payables	623	645
21	Other payables	5,658	4,202
	Total current liabilities	10,869	15,437
	Total liabilities	15,556	15,823
	TOTAL EQUITY AND LIABILITIES	25,132	27,245

STATEMENT OF CHANGES IN EQUITY

Note	STATEMENT OF CHANGES IN EQUITY
	DKK'000
2019/20	SHARE CAPITAL	RESERVES FOR DEVELOPMENT COSTS	RETAINED EARNINGS	TOTAL
Equity at 1 July 2019	22,894	3,215	-7,550	18,559
Comprehensive income for the period
Comprehensive income	0	0	-6,810	-6,810
Transferred between reserves	0	-176	176	0
Total comprehensive income for the period	0	-176	-6,634	-6,810
Other transactions
Buy own shares	0	0	-78	-78
Costs reverse stock split	0	0	-249	-249
Total transactions with owners	0	0	-327	-327
Equity at 30 June 2020	22,894	3,039	-14,511	11,422

The reserves have been allocated in accordance with the Danish Companies Act.

33
| 2020/21 | SHARE
CAPITAL | RESERVES
FOR
DEVELOP-
MENT COSTS | RETAINED
EARNINGS | TOTAL |
| --- | --- | --- | --- | --- |
| Equity at 1 July 2020 | 22,894 | 3,039 | -14,511 | 11,422 |
| Comprehensive income for the period | | | | |
| Comprehensive income | 0 | 0 | -3,398 | -3,398 |
| Transferred between reserves | 0 | -147 | 147 | 0 |
| Total comprehensive income for the period | 0 | -147 | -3,251 | -3,398 |
| Other transactions | | | | |
| Capital increase | 673 | 0 | 902 | 1,575 |
| Costs capital increase | 0 | 0 | -24 | -24 |
| Total transactions with owners | 673 | 0 | 878 | 1,551 |
| Equity at 30 June 2021 | 23,568 | 2,892 | 16,884 | 9,576 |

The reserves have been allocated in accordance with the Danish Companies Act.

CASH FLOW STATEMENT

Note	CASH FLOW STATEMENT	2020/21	2019/20
	DKK'000
	Profit/loss for the year	-3,398	-6,810
	Adjustment for non-cash operating items etc.:
8	Depreciation, amortisation and impairment	5,011	4,459
26	Other non-cash operating items, net	0	1
9	Financial income	-8	-7
10	Financial expenses	926	1,195
11	Tax on profit/loss for the year	-17	300
	Cash flows from operations before changes in working capital	2,514	-862
26	Change in working capital	-2,182	6,939
	Cash flow from operations	332	6,077
	Interest receivable	8	7
	Interest payable	-926	-1,195
	Tax reimbursement	0	484
	Cash flow from operating activities	-586	5,372
13	Acquisition of intangible assets	-429	-259
	Cash flow from investing activities	-429	-259
23	New bond loans and debt with credit institutions	4,956	-3,901
23	Repayment of bond loan	-4,200	0
	Other debt	35	83
	Capital increase, net proceeds from issue	1,575	0
	Principal paid on lease	-1,340	-923
	Buy own shares	0	-78
	Costs reverse stock split	0	-249
	Costs emission	-24	0
	Cash flow from financing activities	1,002	-5,069
	Net cash flow for the period	-13	44
	Cash, beginning of year	268	224
	Cash, end of year	256	268

OVERVIEW OF NOTES TO THE FINANCIAL STATEMENTS

Note		Note
1	Accounting policies	15	Leasing
2	Accounting estimates and judgments	16	Deferred tax
3	Revenue	17	Receivables
4	Expenses	18	Contract work in progress
5	Staff costs	19	Equity
6	Share-based payment	20	Bond loans
7	Research and development costs	21	Other payables
8	Depreciation, amortisation and impairment	22	Financial risks and financial instruments
9	Financial income	23	Contingent assets and liabilities
10	Financial expenses	24	Collateral
11	Tax on profit/loss for the year	25	Non-cash transactions
12	Earnings per share	26	Working capital changes
13	Intangible assets	27	Related party transactions
14	Property, plant and equipment	28	Events after the reporting period

NOTES

NOTE 1. ACCOUNTING POLICIES

The annual report for 2020/21, which comprises the Company's financial statements, has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and additional Danish disclosure requirements for class D companies for listed companies.

The accounting policies are consistent with those applied in 2019/20.

The annual report is presented in DKK thousands (DKK '000).

Relevant new accounting standards

The annual report is presented in accordance with the standards (IFRS/IAS) and interpretations (IFRIC) applicable for financial years beginning on 1 July 2020 or later.

In the current year, the Company has applied a number of amendments to IFRS Standards and Interpretations issued by the International Accounting Standards Board (IASB) and adopted by the EU that are effective for an annual period that begins on or after 30 June 2020. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

New standards and interpretations not yet adopted

The IASB has issued a number of new amended standards and interpretations that are not mandatory for the financial statements for 2021/22. Some of which have not yet been endorsed by the EU. Rovsing A/S expects to adopt the standards and interpretations when they become mandatory. None of these are expected to have a significant impact on recognition and measurement but may lead to further disclosures in the notes.

Foreign currency translation

Rovsing uses DKK as it's functional and presentation currency.

On initial recognition, transactions denominated in foreign currency are translated at the exchange rate ruling on the transaction date. Foreign exchange differences arising between the exchange rate at the transaction date and at the date of payment are recognised in the income statement under financial income or expenses.

Receivables, payables and other monetary items denominated in foreign currency are translated at the exchange rates ruling at the balance sheet date. The difference between the exchange rate ruling at the balance sheet date and the exchange rate at the date when the receivable or payable arose or was recognised in the most recent financial statements is recognised in the income statement under financial income or expenses.

Segments

The Company consists of one segment as per the definition within IFRS 8, which constitute the entire Company, and as such the segment disclosures are prepared based on this assumption. Consequently, the Company has not been organized around differences in products and services, geographical areas, regulatory environment or otherwise.

Applying materiality

The provisions in IFRS contain extensive disclosure requirements. The specific disclosures required according to IFRS are stated in the consolidated financial statements included in this Annual Report unless the disclosures concerned are considered irrelevant or immaterial for financial decisions made by the financial statement users.

Going concern

Management is required to decide whether the financial statements can be presented on a 'going concern' basis. Based on estimated future prospects, expectations of future cash flows, existence of credit facilities, etc., Management is of the opinion that the Company can continue operating for at least 12 months from the balance sheet date, for further see note 2.

NOTES

Revenue

Income from the sale of goods and services is recognised in the income statement when each of the separate performance obligations are satisfied. Revenue is recognised excluding VAT and taxes and net of discounts related to sales. Each revenue line is subject to the 5-step model which includes: Identification of contract, separation of performance obligations in each contract, determining the transaction price, allocation of price to identified performance obligations and recognition of revenue.

Revenue from contracts with customers is recognised when control of the goods or services are transferred to our customers at an amount that reflects the transaction price to which we expect to be entitled in exchange for these goods or services.

Revenue from projects, products, and services (with the exception of sale of service hours) is recognised over time, using the cost-to-cost method, when we have no alternative use for the goods or services to be delivered and we have an enforceable right to payment for work completed.

If we do have an alternative use for the goods or services to be delivered, e.g. products with a low degree of customisation, such sales will be recognised at the point in time when control transfers to the customer, usually upon delivery.

The percentage of completion for projects is determined on the basis of expenses incurred to date for engineering hours etc. associated with developing, manufacturing and installing the product relative to the expected overall expenses for completion of the projects.

Production costs, external

Other operating costs include cost of goods sold and other external costs incurred to generate the revenue for the year.

Other operating income

Other operating income includes grants, which are recognised in step with completion of the activity eligible for grant.

Other external costs

Other external costs comprise expenses for distribution, sale, marketing, administration, premises, etc.

Warrants

For equity-settled stock options and warrants, the fair value is measured at the grant date and recognised in the income statement under staff costs over the vesting period. The balancing item is recognised directly in equity.

On initial recognition of the stock options, the number of options expected to vest is estimated. Subsequently, adjustment is made only for changes in the number of employees estimated to become entitled to options or warrants.

The fair value is determined according to the Black-Scholes method.

Financial income and expenses

Financial income and expenses include interest income and expenses, exchange gains and losses on securities, payables and transactions in foreign currencies, amortisation of financial assets and liabilities.

Tax

Tax on the profit/loss for the year, consisting of the year's current tax, movements in deferred tax and any prior-year adjustments, is recognised in the income statement as regards the amount that can be attributed to the profit/loss for the year and posted in other comprehensive income or directly in equity as regards the amount that can be attributed to movements in equity.

Deferred tax is measured in accordance with the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities.

The tax value of tax losses carried forward is included in the statement of the deferred tax if the loss is likely to be utilised.

Deferred tax is measured on the basis of the tax regulations and rates that apply at the balance sheet date and are expected to apply at the time when the deferred tax is expected to crystallise as current tax.

Changes in deferred tax due to changes in the tax rates are recognised in the income statement as regards the share that relates to the net profit or loss for the year, whereas the share that relates to entries directly in equity is taken to other comprehensive income or directly to equity.

NOTES

Intangible assets

Intangible assets recognised in the balance sheet are measured at the lower of cost less accumulated amortisation and the recoverable amount.

Investments in development comprise costs and wages directly attributable to the Company's development activities.

Development projects which are clearly defined and identifiable, where the level of technical utilisation, sufficient resources and a potential future market or business opportunity for the Company can be demonstrated, and where the intention is to manufacture, market or utilise the project, are recognised as intangible assets if the cost can be reliably measured, and there is sufficient certainty that the future earnings can cover production and sales costs, administrative expenses and investments in development.

After completion of the development work, development costs are amortised on a straight-line basis over the estimated useful life.

Grants received to cover capitalised development costs are recognised as reduction in the cost of the development asset when the development asset is ready for use and is recognised in the profit & loss as the developed asset is amortised.

Other development costs are recognised in the income statement as incurred.

The usual amortisation period is three to ten years. Acquired rights are amortised over ten years.

Impairment of intangible assets

Development projects in progress are tested for impairment annually by comparing the carrying amounts of the assets with their recoverable amounts. Other development projects are reviewed on an ongoing basis to determine whether there are any indications of impairment in excess of the amount provided for by normal depreciation. If there is an indication that an asset may be impaired, it is tested for impairment.

If the carrying amount of development projects exceeds their recoverable amount, the carrying amount is written down to the recoverable amount.

Property, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation.

Depreciation is charged on a straight-line basis over the expected useful lives of the assets.

Tools and equipment and software are depreciated over three to five years.

Software is measured at cost less accumulated depreciation.

Software is depreciated using the straight-line method over its expected useful life, estimated at three to five years. The assets' residual values and useful lives are assessed annually and adjusted, if appropriate, at each balance sheet date. Gains or losses on the disposal or removal of assets are recognised in the income statement under the same items as the related assets.

Rental and lease matters

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the payments, which are fixed or variable dependent on an index or a rate.

The lease payments are discounted using the implied interest rate of the lease. If that rate cannot be readily determined, which is generally the case for leases in Rovsing, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the lease asset. Service components are excluded from the lease liability.

Lease payments are allocated between principal and finance costs. The finance costs are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and any restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If Rovsing is reasonably certain to exercise a purchase option,

NOTES

the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases and all leases of low-value assets are recognised as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.

Impairment of property, plant and equipment

Depreciable assets are reviewed on an ongoing basis to determine any indications of impairment in excess of what is expressed in the normal depreciation of assets. If there is an indication that an asset may be impaired, it is tested for impairment. Where the recoverable amount is lower than the carrying amount, the value is written down to the lower recoverable amount.

Inventories

Inventories are measured at the lower of cost in accordance with the FIFO (first in, first out) method and the net realisable value. Goods for resale are measured at cost, comprising the purchase price plus delivery costs.

The net realisable value of inventories is calculated as the sales amount less costs of completion and costs necessary to make the sale and is determined taking into account marketability, obsolescence and development in expected selling price.

Receivables

Receivables are measured at amortised cost. Provision is made for bad debts. The company's revenue is generated on relatively few customers and in recent periods there have been no losses on receivables. The company applies the simplified approach to measure expected credit losses as trade receivables do not contain a significant financing component. ECL is determined based on days past due and credit risk in groupings of customer segments.

Contract work in progress

Contract work in progress is measured at the selling price of the production performed. The selling price is calculated with due consideration to costs of completion as basis for estimation of delivered performance obligations, adjusted for any ascertained losses.

On-account payments received are deducted from the item contract work in progress. On account payments received over and beyond the completed part of the project are calculated separately for each contract and recognised in the item prepayments from customers.

Prepayments

Prepayments comprise costs incurred relating to subsequent financial years.

Equity

Reserve for development costs. The reserve for internal development costs comprises capitalized development costs. This reserve cannot be used for dividends or distributions, or to cover losses. If the recognized development costs are sold or otherwise excluded from the company's operations, the reserve will be dissolved and transferred directly to the distributable reserves under equity. If the recognized development costs are written down, the part of the reserve corresponding to the write-down of the development costs will be reserved. If a write-down of development costs is subsequently reserved, the reserve will be re-established. The reserve is reduced by amortization of capitalized development costs on an ongoing basis.

Pension obligations

Contributions to defined contribution plans are expensed as incurred.

Other provisions

Other provisions are recognised when, as a consequence of an event occurring before or at the balance sheet date, the Company has a legal or constructive obligation, and it is probable that there may be an outflow of economic benefits to meet the obligation.

Current and non-current liabilities

Current liabilities, which comprise loans, trade payables, bond loans and other payables, are measured at amortised cost.

Deferred income

Deferred income comprises payments received relating to income in subsequent financial years.

Cash flow statement

The Company's cash flow statement shows the cash flows for the year, broken down by operating, investing and financing activities, and the year's changes in cash and cash equivalents as well as cash

NOTES

and cash equivalents at the beginning and end of the year.

Cash flows from operating activities are calculated indirectly as the profit or loss for the year, adjusted for non-cash operating items, financial items paid and tax paid.

Working capital includes current assets less current liabilities, exclusive of the items included in cash. Cash flows from investing activities comprise the acquisition and disposal of intangible assets, property, plant and equipment and financial assets as well as the purchase of short-term securities.

Cash flows from financing activities comprise the raising of loans and repayment of loans and contribution of capital through share issues.

Cash and cash equivalents comprise deposits with banks.

41
NOTES
NOTE 2. ACCOUNTING ESTIMATES AND JUDGMENTS

When preparing the financial statements, the use of reasonable estimates and judgments is an essential part. Given the uncertainties inherent in our business activities, Management makes a number of accounting estimates and judgments. The estimates and judgments are based on assumptions which form the basis for recognition and measurement of our assets, liabilities, cash flows and related disclosures. Estimates and judgments are regularly reassessed.

Key accounting estimates are expectations of the future based on assumptions, that to the extent possible are supported by historical experience, customer demands, competitor actions and other reasonable expectations. Estimates, by their nature, are associated with uncertainty and unpredictability. The actual amounts may differ from the amounts estimated as more detailed information becomes available. Management believe that the estimates are reasonable, appropriate and the most likely outcome of future events under the given circumstances.

Key accounting judgments are made when applying accounting policies. Key accounting judgments are judgments made, that can have a significant impact on recognition, classification and disclosures of amounts in the financial statements.

Intangible assets

For each project, Management assesses whether the criteria for recognition as intangible assets are met. Completed development projects and product rights are tested annually for indication of impairment. If impairment is identified, an impairment test is performed for the individual development projects.

The carrying amount of completed development projects is DKK 10,832 thousand (2019/20: DKK 13,513 thousand). An impairment has been recognized for 2020/21 of DKK 516 thousand, for further see note 13. For the remaining completed development projects, these relates to the development projects SAS and PSCOE, for further see note 13. An impairment test was prepared for both assets, and the recoverable amounts were estimated to be higher than the carrying amounts for all assets. The most significant assumptions are the revenue back log, cost and expenses associated with both assets. The assumptions used when preparing the impairment tests were:

Revenue is for 2021/22 based on current order back log, which is secured, and for 2022/23 revenue is based on a combination of order back log and estimated revenue. Revenue for 2023/24 and onwards is based on estimated growth rates of average 2%.
Cost and expenses assumptions are based on empirical data from 2020/21 and then inflated as this is considered representative for the future.
WACC amounts to 9% (2019/20: 9%)
Terminal growth 1% (2019/20: 1%). Management believes that the growth rate is reasonable based on demand within the space industry.

The value in use amounts were calculated as future free cash flows based on budgets for 2021/22 and forecasts for the following years incorporating the assumptions used in the financial budgets. The forecast period amounted to 5 years.

Any reasonable possible change in the key assumptions on which the recoverable amount is based would not cause the carrying amount to exceed the recoverable amount.

Development projects in progress are subject to an annual impairment test. Development projects amounts to DKK 90 thousand and no impairment has been recognized.

Contract work in progress

Contract work in progress include non-invoiced services with a value of DKK 10,2 million (2019/20: DKK 11,8 million), which is recognised on the basis of an assessment of the percentage of completion of the delivered service. This assessment is based on the value of fees calculated using standard hourly rates. The fee value is adjusted to match the value calculated according to an estimated percentage of completion. This is part of the ongoing financial management process, and previously made estimates of the percentage of completion are regularly followed up, which reduces uncertainty associated with the calculation of the percentage of completion. See note 18.

Funding in 2020/21

The income statement shows a loss for the year of DKK 3,4 million and the Company has lost above 50% of its registered share capital. Funding in 2021/22 is based on a cash flow forecast with positive cash flow from operations together with a continuation of the existing short-term funding facility provided by Jyske Bank. In addition, the

NOTES

funding in 2021/22 is based on the convertible bond loan of DKK 4,2 million, which was refinanced in December 2020 and the new loan is due 31 December 2023. If the loan is repaid before 31 December 2023 the loan is repaid at a rate of 108.

During 2020/21 Rovsing, Jyske Bank and EKF collaborated on a loan facility, guaranteed by EKF, to finance a major project for the customer Thales Alenia Space UK, which helps to secure the necessary working capital to handle several major projects at the same time. This collaboration will continue in 2021/22.

In recent years, the company has succeeded in raising temporary loans to supplement the credit line in Jyske Bank to cover the need for working capital when necessary.

Based on this, the financial statement has been prepared based on a going concern assumption.

Deferred tax

Rovsing recognises deferred tax assets, including the value of tax-loss carry forwards, if Management considers it likely that there will be sufficient taxable income in future.

Management has as of 30 June 2021 prepared an assessment, which is based on budgets and business plans for a period of 5 years. The assessment is to a large extent backed up by the strong order back log for 2021/22, which has secured a significant part of the 2021/22 budget already and provided a basis for future growth, as well as future prospects from a growing industry where demand within the space industry has increased significantly over the last few years.

For further see note 16.

NOTES

3 REVENUE	2020/21	2019/20
DKK’ooo
Developed products and systems	21,400	14,630
Software Verifications (ISVV)	1,528	1,092
On-site Engineering Services	4,607	6,114
	27,535	21,836
GEOGRAPHIC MARKETS
DKK’ooo
EU	15,318	12,923
UK	9,556	3,140
Outside EU	2,661	5,773
	27,535	21,836

Revenue from three customers were in the interval from 10%-25% of the total revenue in 2020/21. In 2019/20 revenue, included in Developed products and system, from three customers were in the interval from 10%-14% of the total revenue in 2019/20.

Revenue from products, systems and services is recognised over time, using the cost-to-cost method.

The majority of the projects are sold as fixed price contracts and revenue from projects is usually recognised over time; applying the percentage of completion cost-to-cost method. A project contract will often entitle us to receive a down payment from the customer, followed by several milestone payments linked to a milestone progress plan. Upon completion and customer acceptance we will usually be entitled to the final payment.

4 EXPENSES	2020/21	2019/20
Audit fee expenses
DKK’ooo
Audit of financial statements	220	244
Audit fee for other services	0	0
	220	244
Inventory
DKK’ooo
Raw materials and consumables	840	839
Work in progress	1,199	973
Finished goods and goods for resale	357	636
	2,396	2,448

Cost of goods sold included in production costs, external amounts to DKK 2,777 thousand (2019/20: DKK 738 thousand).

NOTES

5 STAFF COSTS	2020/21	2019/20
DKK'ooo
Wages and salaries	12,706	13,693
Pension contribution	705	530
Other social security costs	919	1,244
Other staff costs	219	154
	14,549	15,620
The item includes:
Remuneration of the Executive Management	2,114	2,034
Share-based payments, Executive Management	0	0
Pension to the Executive Management	152	112
Remuneration of the Board of Directors	430	500
Share-based payments, Board of Directors	0	0
Average number of full-time employees	24	23

The Company's Executive Management has a bonus scheme based on achieved revenue and EBITDA. In addition, the Executive Management has an incentive programme, under which warrants vest on the basis of the Executive Management member's employment with the Company.

The service contract with the CEO and CFO may be terminated by the CEO/CFO giving three months' notice and by the Company giving 6 months' notice.

No remuneration has been agreed in connection with the CEO/CFO's potential resignation, and there are no special severance provisions for the CEO/CFO in connection with a takeover of the Company.

6 SHARE-BASED PAYMENT

The expense for share-based payments is calculated under the provision for share-based payments in accordance with IFRS 2. The warrant program has been recognized as an equity program and measured at the fair value of the option at the time of granting using the Black-Scholes formula. The fair value is expensed on a straight-line basis over the vesting period.

Rovsing A/S has a warrant incentive programme for the Company's Board of Directors, CEO and CFO. The programme comprises a total of 55,000 warrants. Each warrant entitles the holder to buy one share of DKK 50 each in Rovsing A/S. In addition, there are 3,300 warrants issued under the previous authorization totaling 58,300 outstanding warrants. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights.

The outstanding warrants for the CEO and CFO equals $2.2\%$ of the share capital if all warrants are exercised. The vesting of warrants for the CEO and CFO is based on employment with the Company. For the CEO and CFO all 10.299 warrants were vested after 12 month (Oct. 2018), 24 month (Oct. 2019) and 36 months (Oct. 2020), respectively. The warrants are issued with an exercise price of DKK 75 each. The vesting of the warrants were subject to continued employment in the Company.

NOTES

The outstanding warrants for the Board of Directors equal 9.0% of the share capital if all warrants are exercised. For the Board of Directors all 42.205 warrants were vested after 12 month (Oct. 2018), 24 month (Oct. 2019) and 36 months (Oct. 2020), respectively. The warrants are issued with an exercise price of DKK 75 each. Exercise of warrants has been extended from 36 to 60 months after the grant and thus expires December 2022. The subscription period is 4 weeks unless the Board of Directors decides otherwise. Options are forfeited if the employee leaves the Group before the options vest.

At 30 June 2021 all warrants are fully vested. In 2020/21 the costs recognised in the income statement relating to warrants is DKK 0 (2019/20: DKK 0).

The calculation of fair value using the Black-Scholes model is made on the assumption of a volatility of 57.6%, a dividend payout ratio of 0% and an annual risk-free interest rate of 0.5%. Expected volatility is calculated as volatility during the last 30 days of trading and amounts to 57.6%. The volatility percentage is based on Management estimation, and if this is increased by 10% it would impact the fair market value per share by 4 DKK positively and if it decreases by 10% it would impact the fair market value per share by 4 DKK negatively.

Specification of outstanding warrants:

	Executive Management	Other employees	Not allocated	Board of Directors	Total	Exercise price per warrant	Fair value per warrant
Number of exercisable options:
Outstanding at 1 July 2020	7,799	5,796	2,500	42,205	58,300	75	35
Reallocated in 2020/21:	2,500	0	-2,500	0	0	75	35
Exercised	0	0	0	0	0	-	-
Lapsed	0	0	0	0	0	-	-
Outstanding at 30 June 2021	10,299	5,796	0	42,205	58,300	75	35

7 RESEARCH AND DEVELOPMENT COSTS

DKK'000

Research and development costs incurred

Development costs recognised as intangible assets

Amortisation and impairment of recognised development costs

Development costs for the year recognised in the income statement

2020/21	2019/20
429	259
-429	-259
3,020	3,020
3,020	3,020

NOTES

8 DEPRECIATION, AMORTISATION AND IMPAIRMENT	2020/21	2019/20
DKK'ooo
Amortisation, completed development projects	3,020	3,020
Amortisation, patents and licenses	281	281
Impairment, patents and licenses	516	0
Depreciation, leasing	1,194	1,036
Depreciation, other fixtures and fittings, tools and equipment	0	121
	5,011	4,459
9 FINANCIAL INCOME	2020/21	2019/20
DKK'ooo
Exchange rate adjustments	8	7
	8	7
10 FINANCIAL EXPENSES	2020/21	2019/20
DKK'ooo
Interest, banks, etc.	797	995
Interest leasing	90	144
Exchange rate adjustments	69	56
	926	1,195

NOTES

11 TAX ON PROFIT/LOSS FOR THE YEAR

DKK'000

Current tax
Adjustment previous year
Deferred tax

Tax on profit/loss for the year

Computed tax of profit/loss before tax

2020/21	2019/20
74	57
-57	0
0	-357
17	-300
---	---

22% 22%

Tax on profit/loss for the year is explained as follows:

Computed tax 22% of profit/loss before tax for the year
Tax effect of:
Unrecognised deferred tax asset
Other non-deductible costs
Adjustment previous year and other adj.
Tax on cost charged to equity
Tax for the year

2020/21	2019/20
751	1,432
-622	-1,761
0	-1
-117	-25
5	55
17	-300

12 EARNINGS PER SHARE

DKK'000

Profit/loss for the year

Average number of issued shares (1,000)
Average number of warrants (1,000)

Earnings per share, (EPS Basic), of DKK 50 each
Earnings per share, (EPS diluted), of DKK 50 each

2020/21	2019/20
-3,398	-6,810
463	458
58	58
-7,3	-14,9
-6,5	-13,2

NOTES

13 INTANGIBLE ASSETS

2020/21	Patents and licenses	Completed development projects	Development projects in progress	Total
DKK'000
Cost at 1 July 2020	22,350	32,106	0	54,546
Additions	0	0	429	429
Reclassification	0	339	-339	0
Cost at 30 June 2021	22,350	32,445	90	54,885
Amortisation and impairment at 1 July 2020	-21,554	-18,593	0	-40,146
Amortisation	-281	-3,020	0	-3,301
Impairment	-516	0	0	-516
Amortisation and impairment at 30 June 2021	-22,350	-21,613	0	-43,963
Carrying amount at 30 June 2021	0	10,832	90	10,922

All intangible assets are considered to have a limited useful life.

An impairment of DKK 516 thousand has been recognized in 2020/21 related to the DSTE product-line, which is expected to be partially phased out in the coming years, and consequently because this is not part of the future strategy of the Company and cash flows from this cannot be measured reliable there is no support for the carrying amount at 30 June 2021 and consequently an impairment has been made. The impairment has been recognized in the income statement in the financial statement captions "Impairment".

At 30 June 2021, Completed development projects comprise the internally generated project SAS with a carrying amount of DKK 9,449 thousand (30 June 2020: DKK 10,805 thousand) and the internally generated project PSCOE with a carrying amount of DKK 1,383 thousand (30 June 2020: DKK 2,708 thousand).

At 30 June 2021, Management performed an impairment test of the carrying amount of intangible assets. Assets are written down to the lower of the recoverable amount and the carrying amount. The recoverable amount in this year's test is based on the value in use of the expected cash flow on the basis of budgets and forecasts for the future.

Reference is furthermore made to Note 2 on significant judgement and estimates regarding the impairment test for 2020/21.

NOTES

2019/20	Patents and licenses	Completed development projects	Development projects in progress	Total
DKK'000
Cost at 1 July 2019	22,350	31,846	0	54,196
Additions	0	0	259	259
Reclassification	0	259	-259	0
Cost at 30 June 2020	22,350	32,105	0	54,455
Amortisation and impairment at 1 July 2019	-21,272	-15,572	0	-36,844
Amortisation	-281	-3,020	0	-3,301
Impairment	0	0	0	0
Amortisation and impairment at 30 June 2020	-21,553	-18,592	0	-40,145
Carrying amount at 30 June 2020	797	13,513	0	14,310

14 PROPERTY, PLANT AND EQUIPMENT

2020/21	2019/20	Other fixtures and fittings, tools and equipment

DKK'000
Cost at 1 July	607	607
Additions during the year	0	0
Disposals at cost	0	0
Cost at 30 June	607	607
Depreciation and impairment at 1 July	-607	-607
Depreciation for the year	0	0
Disposals	0	0
Depreciation and impairment at 30 June	-607	-607
Carrying amount at 30 June	0	0

NOTES

15 RIGHT OF USE ASSET

2020/21	Property lease	Other leases	Total
DKK'000
Cost at 1 July 2020	2,043	480	2,523
Effect of modification to lease terms	0	43	43
Additions	0	483	483
Cost at 30 June 2021	2,043	1,006	3,049
Depreciations at 1 July 2020	-908	-128	-1,036
Effect of modification to lease terms	0	93	93
Depreciations	-983	-210	-1,193
Depreciations at 30 June 2021	-1,891	-245	-2,136
Right of Use asset at 30 June 2021	152	761	913

15 LEASE LIABILITIES

2020/21	Property lease	Other leases	Total
DKK'000
Lease liabilities at 1 July 2020	1,239	361	1,600
Additions	0	483	483
Interest leases liabilities	55	35	90
Effect of modification to lease terms	0	137	137
Lease payments	-1,091	-339	-1,430
Lease liabilities at 30 June 2021	203	677	880
Lease liabilities at 1 July 2019	0	0	0
Effect of adoption of IFRS 16	2,044	480	2,524
Interest leases liabilities	121	23	144
Effect of modification to lease terms
Lease payments	-926	-142	-1,068
Lease liabilities at 30 June 2020	1,239	361	1,600

The lease payments are discounted using an alternative borrowing rate which is calculated at 6.5%. The lease payments have been split into an interest cost and a repayment of the lease liability. Low value lease expenses in 2020/21 is DKK 28 thousand and is not included in the measurement of lease liabilities.

At 30 June 2021, the Company is committed to DKK 421 thousand (30 June 2020: DKK 1,235 thousand) for short-term leases and low value leases. Interest expenses on the lease liability in the income statement for 2020/21 amounts to DKK 90 thousand (2019/20: DKK 144 thousand).

NOTES

MATURITY

	Up to 12 months	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 4 years	Total
DKK'000
Lease liabilities 1 July 2020	996	500	104	0	1,600
Lease liabilities 30 June 2021	392	242	219	26	880

The amounts recognized impact the operating cash outflow by DKK 90 thousand (2019/20: DKK 144 thousand) as well as the cash outflow from financing activities by DKK 1,340 thousand (2019/20: DKK 923 thousand).

The property leases in which the Company is the lessee contain variable lease payment terms that are linked to the development in the net price index. There are no variable payments.

On 23 April 2021, the Company entered into a lease to rent property with a lease period until 31 December 2024, which had not commenced by the year-end and as a result, a lease liability and right-of-use asset has not been recognised at 30 June 2021. The aggregate future cash outflows to which the Group is exposed in respect of this contract is fixed payments of DKK 548 thousand in year 1, and appr. DKK 625 thousand a year for the remaining lease period.

16 DEFERRED TAX

	2020/21	2019/20
Deferred tax asset at 1 July	-2,143	-2,500
Change in deferred tax for the year	-736	-1,404
Prior period adjustment	0	0
Unrecognised deferred tax asset	736	1,404
Write-down of tax asset pursuant to expected realisation (3-5 years)	0	357
Deferred tax asset at 30 June	-2,143	-2,143
Deferred tax in the Company is specified as follows:
DKK'000	2020/21	2019/20
Intangible assets	1,702	2,447
Equipment and lease	-83	-90
Current assets	1,722	5,324
Tax loss carry-forwards	-16,891	-20,507
Non-recognised share of tax asset	11,407	10,683
Deferred tax asset at 30 June	-2,143	-2,143

Utilisation of the tax losses is not time-limited. The tax losses are expected to be utilised in future positive earnings within a five-year period.

The total value of tax losses carried forward amounts to DKK 76,778 thousand (2019/20: DKK 75,445 thousand). Change in tax loss carry-forwards and current assets from 2019/20 to 2020/21 includes changes in dispositions when preparing the final tax return for 2019/20.

NOTES

17 RECEIVABLES

	2020/21	2019/20
DKK'ooo
Trade receivables	4,630	2,249
Write-downs to cover losses	0	0
	4,630	2,249
Other receivables	906	49
	5,536	2,298
Receivables for which no write-downs have been made to cover losses:
Due within 1-30 days	3,015	1,429
Due within 30-90 days	2,013	869
Due after 90 days	508	0
	5,536	2,298
Carrying amount of receivables by currency:
DKK	0	49
EUR	5,536	2,249
	5,536	2,298

18 CONTRACT WORK IN PROGRESS

	2020/21	2019/20	2018/19
DKK'ooo
Contract work in progress, selling price	22,819	67,706	63,528
Invoiced contract work in progress	-21,096	-66,933	-56,174
	1,723	773	7,354
recognised as follows:
Contract work in progress (assets)	2,737	3,559	7,750
Prepayments, customers (liability)	1,014	2,786	396
	1,723	773	7,354
Contract work in progress at cost	13,564	43,508	46,375

The remaining value of work in progress is DKK 9,639 thousand (30 June 2020 DKK 11,055 thousand). No material adjustments have been made to the contract balances neither in this financial year nor in the previous financial year.

NOTES

19 EQUITY

Capital management

The Company regularly assesses the need for adjusting the capital structure so that it complies with the applicable rules and matches the business foundation and scope of activity. Rovsing holds 1,259 of the Company's own shares with a nominal value of DKK 62,950. The Company's solvency ratio stood at 38.1 at 30 June 2021 (30 June 2020: 41.9).

Share capital	2020/21	2019/20
Development in no. of shares (1,000)
No. of shares, beginning of year	458	457,881
Issue of new shares	13	0
Reverse stock split	0	-457,423
No. of shares (1,000), end of year	471	458
Share capital, DKK'000	23,568	22,894

The share capital is divided into 471,349 shares with a nominal value of DKK 50 each (2019/2020: 457,881 shares with a nominal value of DKK 50 each). The shares are fully paid up, and no shares carry any special rights. No shares are subject to restrictions on transferability or voting rights. Presently there are 58,300 outstanding warrants.

In November 2019, the nominal value of the shares in Rovsing was changed from a nominal value of DKK 0.05 each to a nominal value of DKK 50 each by way of a reverse stock split in the ratio 1,000:1 decided on the Ordinary General Meeting held 21 October 2019.

20 BOND LOANS

In December 2020 the Company refinanced a bond loan of DKK 4,2 million with a new convertible bond loan of DKK 4,2 million. The new bond loans mature 31 December 2023 with an interest of 12% pro anno. Fair value of financial liabilities is equal to the carrying amount. If the loan is repaid before maturity the Company must repay the loan at a rate of 108. The Lender can choose to settle in cash or shares if the loan is repaid before maturity.

At ordinary expiration at 31 December 2023, the loan is repaid at rate of 100.

Furthermore, see note 27 for transactions with related parties.

NOTES

21 OTHER PAYABLES

	2020/21	2019/20
Staff costs	3,016	3,306
Other payables	2,642	896
	5,658	4,202

22 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS

The Company is exposed to a number of financial risks, the most important of which are foreign currency and interest rate risk, liquidity risk and credit risk.

The Company does not actively speculate in financial risk, and accordingly, the financial strategy aims exclusively to manage and mitigate financial risks that arise as a consequence of the Company's operations, investments and financing.

Foreign currency risk

Most of the Company's contracts are invoiced in EUR or USD. As the Danish krone is pegged to EUR, the Company's EUR risk is considered minimal. Risk attaching to USD is assessed in an ongoing process, as a result of which in 2019/20 the Company did not use financial instruments to hedge its foreign currency risk. The Company monitors developments in EUR/USD/DKK and regularly assesses whether to hedge its exposure to EUR and USD.

Foreign currency exposure:

	Nominal position
	Cash and receivables	Financial liabilities
EUR receivables/payables)	4,630	127
EUR/USD (cash)	154	0
	4,784	127

Interest rate risk

The Company had net payables to credit institutions of DKK 3,181 thousand at 30 June 2021. The debt carries a floating interest rate based on the money market rate. Interest rates paid on payables to credit institutions in 2020/21 was 7.0%. In the period 1 July until 31 December the Company had net payables to bond holders of DKK 4,200 thousand with a fixed interest rate of 8% and from 1 January until 30 June the refinanced bond loan of DKK 4,200 thousand carried an interest of 12%.

Based on recognised financial assets and liabilities at 30 June 2021, without considering repayments, loans raised and the like in 2020/21, a 1% increase in interest rates would raise the Company's expenses by DKK 0,1 million. A 1% decline in interest rates would result in a correspondingly lower interest expense.

The Company has not used financial instruments to hedge expected developments in interest rates.

NOTES

Liquidity risk

Significant, unforeseen liquidity fluctuations are primarily associated with the commercial risks referred to in the section "Risk factors" and breaching of milestones in contracts. The Company aims to have sufficient cash resources to allow it to operate adequately in case of unforeseen fluctuations in liquidity. The Company regularly assesses its cash resources relative to budgets and forecasts for cash flows in future periods.

Credit risk

As a result of the Company's operations and funding activities, the Company is exposed to credit risk. The Company's credit risks are related to trade receivables and cash. No credit risk is considered to exist in relation to cash as the counterparty is Jyske Bank. Payables to the counterparty exceed cash deposits with the counterparty.

Most of the Company's revenue derives from ESA space industry projects. ESA is the joint-European development organisation for various space programmes. ESA's 22-member states (including Denmark) together funds the activities of ESA. The credit risk associated with ESA is considered minimal. The remaining part of the Company's revenue derives from large, well-consolidated international companies, for which the credit risk is considered minimal.

The Company's financial assets liabilities fall due as follows:

2020/21	Due within 1 year	Due between 1 and 5 years	Due after 5 years	Total	Carrying amount
DKK'000
Cash	256	0	0	256	256
Trade receivables	4,630	0	0	4,630	4,630
Other receivables (current)	906	0	0	906	906
Other receivables (non-current)	0	75	0	75	75
Total loans and receivables	5,792	75	0	5,867	5,867
Credit institutions, floating rate	-3,181	0	0	-3,181	-3,181
Bond loan	0	-4,200	0	-4,200	-4,200
Leasing	-393	-487	0	-880	-880
Trade payables	-623	0	0	-623	-623
Other payables	-5,658	0	0	-5,658	-5,658
Financial liabilities measured at amortised cost	-9,855	-4,687	0	-14,542	-14,542

NOTES

| 2019/20
DKK'000 | Due within 1 year | Due between 1 and 5 years | Due after 5 years | Total | Carrying amount |
| --- | --- | --- | --- | --- | --- |
| Cash | 268 | 0 | 0 | 268 | 268 |
| Trade receivables | 2,249 | 0 | 0 | 2,249 | 2,249 |
| Other receivables (current) | 285 | 0 | 0 | 285 | 285 |
| Other receivables (non-current) | 0 | 57 | 0 | 57 | 57 |
| Total loans and receivables | 2,802 | 57 | 0 | 2,859 | 2,859 |
| Credit institutions, floating rate | -2,425 | 0 | 0 | -2,425 | -2,425 |
| Bond loan | -4,165 | 0 | 0 | -4,165 | -4,165 |
| Leasing | -1,214 | -386 | 0 | -1,600 | -1,600 |
| Trade payables | -645 | 0 | 0 | -645 | -645 |
| Other payables | -4,202 | 0 | 0 | -4,203 | -4,203 |
| Financial liabilities measured at amortised cost | -12,652 | -386 | 0 | -13,038 | -13,038 |

Cash resources and financing facilities

On 16 December 2020, the Company obtained new financing of DKK 4,200 thousand through bond loans with 6 lenders.

The Company has access to financing facilities of DKK 7,346 thousand (30 June 2020: DKK 6,000 thousand) of which unused amounted to DKK 4,125 thousand (30 June 2020: DKK 3,575 thousand) as at the reporting date.

The facilities are subject to financial covenants and no breaches were encountered during the year.

2020/21	Loans 1 July 2020	Proceeds from borrowings	Repayments of borrowings	Other non-cash items	Loans 30 June 2021
DKK'000
Credit institutions, floating rate	2,425	0	866	0	1,559
Bond loan	4,165	4,200	4,165	0	4,200
Credit institutions, EKF floating rate	0	1,662	0	0	1,662
Total loans	6,590	5,862	5,031	0	7,421

NOTES

2019/20	Loans 1 July 2019	Proceeds from borrowings	Repayments of borrowings	Other non-cash items	Loans 30 June 2020
DKK'000
Credit institutions, floating rate	6,326	0	866	0	2,425
Bond loan	0	4,165	0	0	4,165
Total loans	6,326	4,165	866	0	6,590

23 CONTINGENT ASSETS AND LIABILITIES

The Company, as part of its activities enters into various contracts that can include obligations normal for the industry.

24 COLLATERAL

A floating charge in the amount of DKK 9,25 million has been issued as collateral for credit facilities with a credit institution. The floating charge comprises a charge on rights pursuant to the Danish Patents Act, the Danish Trademarks Act, the Danish Design Act, the Danish Utility Models Act, the Danish Registered Designs Act, the Danish Copyright Act and the Danish Act on Protection of the Topographies of Semiconductor Products. Furthermore, the floating charge comprises tools, inventories and unsecured claims arising from the sale of goods and services. The total carrying amount of the floating charge was DKK 19,3 million at 30 June 2021.

NOTES

25 NON-CASH TRANSACTIONS

DKK'000

Financial items

2020/21	2019/20
0	1
0	1

26 WORKING CAPITAL CHANGES

DKK'000

Inventories

Trade payables

Contract work in progress

Tax receivables

Other receivables

Prepaid expenses

Prepayments from customers

Trade payables

Other payables

2020/21	2019/20
51	363
-2,381	-821
822	4,191
236	0
-857	956
286	126
-1,772	2,390
-22	-1,905
1,455	1,639
-2,182	6,939

NOTES

27 RELATED PARTY TRANSACTIONS

The Company has during the financial year 2020/21 entered into a loan agreement with the Chairman of the Board of Directors Michael Hove. Michael Hove is part of the bond loan consortium consisting of 6 companies offering a convertible bond loan of DKK 4,2 million with maturity 31 December 2023. The loan agreement with Michael Hove constitutes an amount of DKK 1 million and carries an interest of 12% p.a. Shareholder, Catpen A/S is part of the bond loan consortium consisting of 6 companies offering a convertible bond loan of DKK 4,2 million with maturity 31 December 2023. The loan agreement with Catpen A/S constitutes an amount of DKK 1 million and carries an interest of 12% p.a.

The Company's related parties also comprise the members of the Board of Directors and Executive Management as well as these persons' family members. Further, related parties comprise companies in which the above-mentioned persons have significant interests.

28 EVENTS AFTER THE REPORTING PERIOD

After the balance sheet date, no events have occurred that materially affect the Company's financial position other than the events described in the Management's review.

EXECUTIVE MANAGEMENT

HJALTI P. THORVARDARSON (BORN 1987)

CEO of Rovsing A/S since March 2018.

Educational background: Computer & Electronics Engineer (B.Eng) from Copenhagen University College of Engineering.

Hjalti has extensive and proven track record within the Space industry from the past 10 years. His knowledge of Rovsing operations and product & service offerings as well as customer contact is deeply rooted in his engagement with the Company since 2010, working in various roles, starting as Hardware Engineer, Senior Project Manager and Head of Systems & Services.

Shareholding at 30 June 2021: 252 shares.

Number of warrants at 30 June 2021: 6,488.

SIGURD HUNDRUP (BORN 1965)

CFO of Rovsing A/S since September 2017.

Educational background: MSc. EBA. Finance, Accounting.

Sigurd has extensive experience and proven track record from many years as CFO. His strong finance professional skills provide essential contribution to the Company's day to day Management, reporting, organizational development, financial analysis and finance administration.

Shareholding at 30 June 2021: 0 shares.

Number of warrants at 30 June 2021: 3,811.

BOARD OF DIRECTORS

MICHAEL HOVE (BORN 1971)

Elected to the Board of Directors in October 2017. Took over the chairmanship in January 2018.

Position: Founder and owner of MH Investment ApS.

Educational background from Copenhagen Business School as economist.

Main directorships:

CEO Scandinavian Investment Group A/S
Chairman of the board of directors of Antique 89 A/S
Managing partner & owner MH Investment ApS
Managing partner SalesPartners A/S

Shareholding at 30 June 2021: 11,566 shares.

Number of warrants at 30 June 2021: 22,702.

JAKOB HAVE (BORN 1981)

Elected to the Board of Directors in 2020. Previously member of the Board of Directors 2018 to 2019.

Position: CEO - Nordic Compound Invest A/S

Educational background: Cand. Merc.Aud

Jakob has extensive experience and proven track record from many years as CFO.

Shareholding at 30 June 2021: 0 shares.

Number of warrants at 30 June 2021: 1,000.

ULRICH BECK (BORN 1964)

Elected to the Board of Directors in October 2017.

Position: Airbus Vice President Finance, Director Finance and Commercial of a joint Venture in Airbus Defense and Space

Ulrich has had more than 25 years of experience and expertise in Aerospace, Defense and Space Industry, in Senior Management positions as for Strategy, international Sales and Business Development, International Compliance Officer, transnational Merger Integration or as Chief Financial and Information Officer (as in Spain for development and industrial set up of Airbus Helicopters). Various Financial Management positions at operations, engineering program and corporate level. M&A, Transaction Management and Industrial Strategy projects.

Main directorships:

Member of the board of directors of Access e.V. and Access Technology GmbH, Institute for Material Sciences and Technology (associated with the RWTH Technical University of Aachen)
Member of the board of DGLR German Society for Aerospace and Space
Senior Member of AIAA American Institute of Aerospace and Aeronautics
Certified Board Member and Financial Expert (by Deutsche Börse AG), Member of related associations

Shareholding at 30 June 2021: 2,482 shares.

Number of warrants at 30 June 2021: 7,775.

DEFINITION OF RATIOS

Ratio	Explanation
No. of shares, end of period	The total number of outstanding shares at any given time, exclusive of the Company's treasury shares.
Cash flow per share (DKK)	Cash flows from operating activities divided by average number of shares.
EBITDA margin (profit margin before depreciation and amortisation) (%)	Earnings before interest, tax depreciation and amortisation as a percentage of revenue.
EBIT margin (profit margin) (%)	Earnings before interest and tax as a percentage of revenue.
Equity ratio	Equity, end of year, as a percentage of total assets.
Return on equity (%)	Profit/loss for the year after tax divided by average equity.
Average no. of outstanding shares (1,000)	Average number of outstanding shares at any given time.
Net asset value per share (DKK)	Equity at year-end divided by number of shares at year-end.
Payout ratio (%)	Total dividends distributed divided by profit/loss for the year.
Earnings per share (DKK)	The Company's share of profit/loss for the year divided by average no. of shares.
Solvency ratio (%)	Traditional way of expressing the Company's financial strength.
Dividend per share of DKK 50	Dividend payment in Danish kroner per share.

GLOSSARY

Term	Explanation
Application	Specific use of a product
Check-out system	System for testing and controlling a satellite or instrument
Critical software	Software, the failure or breakdown of which may cause loss of life, loss of spacecraft or loss of performance of the planned task, or software for which error rectification may prove very costly.
Counter-purchase obligation	Obligation on a non-Danish supplier of defense material to the Danish Armed Forces to buy defense-related equipment from Danish companies.
DSTE	Digital Simulation & Test Equipment
EGSE	Electrical Ground Support Equipment
ESA	The European Space Agency
ESTEC	European Space Research and Technology Centre
EU	The European Union
Galileo	European satellite navigation system similar to the GPS system in the USA
Industrial collaboration agreement	Agreement signed by non-Danish suppliers of defense material to Denmark with the Danish Enterprise and Construction Agency to ensure that the supplier undertakes in return to acquire defense material manufactured by Danish companies.
ISVV (Independent Software Verification & Validation)	Independent verification and validation of software
Kick-Off	Kick-Off meeting to start up a project
MASC	Measurement, Acquisition, Simulation and Commanding
Outsourcing	The outsourcing of part of or a whole assignment with a subcontractor
Prime Contractor	The company with the main responsibility for carrying out a major ESA/NASA/Commercial project
Project manager	Person in charge of carrying out a project
RF Suitcases	Radio Frequently test equipment for testing satellite communication links
Power SCOE	Special Checkout Equipment for testing satellite power systems
SAS	Solar Array Simulator
SLP	Second Level Protection

Rovsing A/S
Ejby Industrivej 38
2600 Glostrup, Denmark
Company reg. (CVR) no. 16 13 90 84
Tel: +45 +45 44 200 800
Fax: (+45) 45 44 200 801
Website: www.rovsing.dk

AI assistant

Rovsing — Annual Report 2021

3458_rns_2021-09-10_87179a8a-07c8-4970-add4-95ed630c6392.pdf

ANNUAL REPORT 2020 / 21

PROFILE

LIST OF CONTENTS

HIGHLIGHTS OF THE YEAR

FINANCIAL HIGHLIGHTS AND RATIOS

CORPORATE INFORMATION

The Company

Board of Directors

Executive Management

Auditors

Annual General Meeting

MANAGEMENTS' REVIEW

OPERATIONAL REVIEW

The European market

The North American market

Emerging space markets

Product development and production

Organisation and management

COVID-19

Incentive schemes

ROVSING'S STRATEGY

An Agile and Customer focused High-Tech SME

Skills and Expertise

Strengthening our Strategic position and Growth

Company

1. Rovsing Mission

2. Vision – Rovsing 2021 Strategic Program

3. Values

4. Management, Leadership & Organisation

5. Rovsing’s core skills

6. Product Range / Portfolio

Grow Top Line

7. Market expansion focus

8. Market sizes

9. Product development focus

10. Financials

FINANCIAL REVIEW

Income statement

Financial items

Profit/loss before tax

Tax

Profit/loss for the year and comprehensive income

Balance sheet

Assets

Liabilities and equity

Cash flow statement

Cash flow from operations:

Cash flow from operating activities:

Cash flow from investing activities:

Cash flow from financing activities:

Funding of the Company's operations

DIVIDENDS

OUTLOOK FOR 2021/22

EVENTS AFTER THE REPORTING PERIOD

NEW & IMPROVED COMPANY LOCATION

SIGNIFICANT ACCOUNTING ESTIMATES

SHAREHOLDER INFORMATION

Share price

Share liquidity

Shareholders

Employee shares

Current Warrant scheme

Dividend policy

Authorities granted to the Board of Directors

Financial reporting to shareholders

Annual General Meeting

Amendments to articles of association

Financial calendar

Issued Company Announcements

Registrar

Investor relations contacts

CORPORATE GOVERNANCE

Recommendation regarding election of vice-chairman

Recommendation regarding the composition and organization of the Board of Directors

Recommendation regarding board committees

Recommendation regarding evaluation of the work of the Board of Directors and the Executive Board

Recommendation regarding remuneration in the form of share options

Rovsing Annual Report 2021