2.3. Foreign currency  

Items included in the financial statements of each of the Group’s entities are measured using the currency  

of the primary economic environment in which the entity operates (‘the functional currency’). The function-  

al currency of the Company’s operations in the United States of America, Denmark and China are the U.S.  

dollar, Danish kroner, and Chinese Yuan Renminbi, respectively. The consolidated financial statements are  

presented in U.S. dollars, which is the Group’s presentation currency.  

Foreign currency transactions are translated into the functional currency using the exchange rates prevail-  

ing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such  

transactions and from the translation at year-end exchange rates of monetary assets and liabilities denomi-  

nated in foreign currencies are recognized as operating expense in the income statement in foreign exchange  

(loss)/gain.  

Group companies that have a functional currency different from the presentation currency are translated  

into the presentation currency as follows:  

// Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that  

balance sheet;  

// Income and expenses for each income statement are translated at average exchange rates;  

// All resulting exchange differences are recognized in other comprehensive income  

1. GENERAL INFORMATION  

Asetek

A/S (‘

the Company’), and its subsidiaries (together, ‘Asetek Group’, ‘the Group’ or ‘Asetek’) designs,  

develops and markets gaming hardware for computers.

The Group’s core products utilize liquid cooling tech-  

nology to provide improved performance, acoustics and energy efficiency. The Company is based in Aalborg,  

Denmark with personnel in USA, China and Taiwan. The Company’s shares trade on the Nasdaq Copenhagen  

under the symbol ‘ASTK’.  

1.1. Liquidity from rights offerings  

Subsequent to the balance sheet date, on January 6, 2025, the Company issued 219,925,366 new common  

shares of stock in a rights offering, raising net proceeds of $10.5 million. Refer to Note 24. On May 17, 2023,  

the Company issued 71,166,167 new common shares of stock in a rights offering, raising net proceeds of  

$16.1 million after deduction of total issuance costs of $3.7 million.  

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  

The principal accounting policies applied in the preparation of these consolidated financial statements are  

set out below. These policies have been consistently applied to all the years presented, unless otherwise  

stated.  

2.4. Property and equipment  

Property and equipment are stated at historical cost less accumulated depreciation. For assets constructed,  

borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying  

asset are capitalized as part of the historical cost (Note 2.16). Subsequent costs are included in the asset’s  

carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future  

economic benefits associated with the item will flow to the Group and the cost of the item can be measured  

reliably. The carrying amount of any replaced part is derecognized. All other repairs and maintenance are  

charged to the income statement during the financial period in which they are incurred. Depreciation is  

provided over the estimated useful lives of the depreciable assets, generally three to five years, using the  

straight-line method. The assets’ useful lives and residual values are reviewed, and adjusted if appropriate, at  

the end of each reporting period. Gains and losses on disposals are determined by comparing the proceeds  

with the carrying amount and are recognized as other income or expense in the consolidated income state-  

ment. Property, plant and equipment is grouped as follows:  

2.1. Basis of preparation  

The consolidated financial statements have been prepared on a historical cost convention, in accordance  

with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the sup-  

plementary Danish information requirements for class D publicly listed companies.  

2.2. Consolidation  

The consolidated financial statements comprise the Company and its consolidated subsidiaries. Subsidiaries  

are all entities (including structured entities) over which the Group has control. The Group controls an entity  

when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has  

the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from  

the date on which control is transferred to the Group. They are deconsolidated from the date that control  

ceases. Intercompany transactions, balances, income and expenses on transactions between Group compa-  

nies are eliminated. Profits and losses resulting from the intercompany transactions that are recognized in  

assets are also eliminated. Accounting policies of subsidiaries are consistent with the policies adopted by the  

Group.  

2.7. Financial assets  

Recognition and Measurement  

The Group determines the classification of its financial assets at initial recognition. Financial assets within the  

scope of IFRS 9 Financial Instruments are classified as follows:  

// ‘Amortized cost’ are financial assets representing contractual cash flows held for collection, where such  

cash flows solely represent payment of principal and interest.  

// ‘Fair value’. All other financial assets, representing other debt and equity instruments that do not meet  

the ‘amortized cost’ criteria, are recognized at fair value. All fair value movements on financial assets are  

taken through the income statement, or for certain debt instruments that qualify, through other compre-  

hensive income.  

For all years presented, the Group’s financial assets are all classified as ‘amortized cost’.  

Group  

Esꢀmated Useful Life  

Buildings  

30–50 years  

Leasehold improvements  

Lesser of 5 years or lease term  

Plant and machinery  

5 years  

Tools and fixtures  

3 to 5 years  

2.5. Research and development  

Research costs are expensed as incurred. Costs directly attributable to the design and testing of new or  

improved products to be held for sale by the Group are recognized as intangible assets within development  

projects when all of the following criteria are met:  

// it is technically feasible to complete the product so that it will be available for sale;  

// management intends to complete the product and use or sell it;  

// there is an ability to use or sell the product;  

// it can be demonstrated how the product will generate probable future economic benefits;  

// adequate technical, financial and other resources to complete the development and to use or sell the  

product are available; and  

// the expenditures attributable to the product during its development can be reliably measured.  

Impairment of financial assets  

For financial assets carried at amortized cost, the Group measures at the end of each reporting period the  

expected credit losses to be incurred for a financial asset or group of financial assets. The Company utilizes  

historical experience, evaluation of possible outcomes, current conditions and forecasts of future economic  

conditions to determine expected credit losses. Evidence may include indications that the debtors or a group  

of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal pay-  

ments, the probability that they will enter bankruptcy or other financial reorganization, and where observa-  

ble data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in  

arrears or economic conditions that correlate with defaults.  

Directly attributable costs that are capitalized as part of the product include the employee costs associated  

with development. Other development expenditures that do not meet these criteria are recognized as  

expense when incurred. Development costs previously recognized as expense are not recognized as an asset  

in a subsequent period. Development costs recognized as assets are amortized on a straight-line basis over  

their estimated useful lives, which generally range between three and sixty months. Amortization expense  

related to capitalized development costs is included in research and development expense.  

2.8. Financial liabilities  

Recognition and measurement. Financial liabilities within the scope of IFRS 9 are classified as financial  

liabilities at fair value through profit or loss, or other liabilities. The Group determines the classification of its  

financial liabilities at initial recognition. Financial liabilities are recognized initially at fair value less, in the case  

of other liabilities, directly attributable transaction costs. The measurement of financial liabilities depends on  

their classification as follows:  

// ‘Financial liabilities at fair value through profit or loss’ are derivatives entered into that do not meet the  

hedge accounting criteria as defined by IFRS 9. Gains or losses on liabilities held for trading are recognized  

in profit and loss. At December 31, 2024, the Company has no liabilities measured at fair value through  

profit and loss.  

// ‘Other liabilities’ – After initial recognition, interest bearing debt is subsequently measured at amortized  

cost using the effective interest rate method. Gains and losses are recognized in the income statement  

when the liabilities are derecognized as well as through the amortization process. The calculation takes  

into account any premium or discount on acquisition and includes transaction costs and fees that are an  

integral part of the effective interest rate.  

2.6. Impairment of non-financial assets  

Assets that are subject to amortization are reviewed for impairment annually, and whenever events or  

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is  

recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recov-  

erable amount is the higher of 1) an asset’s fair value less costs to sell or 2) its value in use. For the purposes  

of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable  

cash flows (cash-generating units). Non-financial assets other than goodwill that previously suffered an im-  

pairment are reviewed for possible reversal of the impairment at each reporting date. Goodwill is tested for  

impairment annually and whenever there is indication that the goodwill may be impaired. If an impairment  

loss on goodwill is identified, it is recognized as an expense and is not reversed in a subsequent period.  

Offsetting of financial instruments. Financial assets and financial liabilities are offset, and the net amount  

reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset  

the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle  

the liabilities simultaneously.  

2.11. Cash and cash equivalents  

Cash and cash equivalents includes cash on hand, deposits with banks, overdrafts and other short-term  

highly liquid investments with original maturities of three months or less.  

2.12. Share capital  

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary  

shares or options are recorded against equity in the period the equity transaction closes, as a deduction net  

of tax, from the proceeds.  

2.9. Inventories  

Inventories are stated at the lower of actual cost or net realizable value. Cost is determined using the first-in,  

first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business  

less estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realiz-  

able value, if required, are made for estimated excess, obsolescence, or impaired balances.  

2.13. Share-based payments  

The Company issues options (or warrants) that allow management and key personnel to acquire shares in  

the Company. Through equity-settled, share-based compensation plans, the Company receives services from  

employees as consideration for the granting of equity options to purchase shares in the Company at a fixed  

exercise price. The fair value of the employee services received in exchange for the grant of the options is  

recognized as an expense. The total amount to be expensed is determined by reference to the fair value of  

the options granted, excluding the impact of any non-market service and performance vesting conditions.  

The grant date fair value of options granted is recognized as an employee expense with a corresponding in-  

2.10. Trade receivables  

Trade receivables are amounts due from customers for product sold in the ordinary course of business. Trade  

receivables are recognized initially at fair value and subsequently measured at amortized cost using the  

effective interest method, less any provision for expected credit losses. If collection is expected in one year  

or less, trade receivables are classified as current assets. Expected credit losses are determined utilizing the  

simplified approach allowed under IFRS 9 Financial Instruments.  

crease in equity, over the period that the employees become unconditionally entitled to the options (vesting  

period). The fair value of the options granted is measured using the Black-Scholes model, taking into account  

the terms and conditions as set forth in the share option program. Measurement inputs include share price  

on measurement date, exercise price of the instrument, expected volatility, weighted average expected life  

of the instruments (based on historical experience and general option holder behavior), expected dividends,  

and the risk- free interest rate. Service and non-market performance conditions attached to the transactions  

are not taken into account in determining fair value. At each reporting date, the Company revises its esti-  

mates of the number of options that are expected to vest based on the non-market vesting conditions. The  

impact of the revision to original estimates, if any, is recognized in the Statement of Comprehensive Income,  

with a corresponding adjustment to equity.  

The Group’s revenue is predominantly comprised of shipment of Asetek products in fulfillment of customer  

purchase orders. As such, the Company recognizes revenue when a valid contract is in place and control of  

the goods have transferred to the customer. Customer purchase orders and/or contracts are used as evi-  

dence of an arrangement. Delivery occurs and control of the goods is deemed to transfer when products are  

shipped to the specified location and the risks of obsolescence and loss have been transferred to the custom-  

er. For certain customers with vendor-managed inventory, delivery does not occur until product is acquired  

by the customer from the vendor-managed inventory location. The Company assesses collectability based  

primarily on the creditworthiness of the customer as determined by credit checks and customer payment  

history. Customers do not generally have a right of return.  

Income received as a result of patent litigation settlement is recorded as other income as an offset to  

operating expense in the period the award is granted. Estimated costs for future product returns under war-  

ranty are charged to cost of sales and included in accrued liabilities.  

2.14. Current and deferred income tax  

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement,  

except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In  

this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.  

The current income tax expense is calculated on the basis of the tax laws enacted or substantively enact-  

ed at the balance sheet date in the countries where the Company and its subsidiaries operate and generate  

taxable income. Management periodically evaluates positions taken in tax returns with respect to situations  

in which applicable tax regulation is subject to interpretation. Management establishes provisions where  

appropriate on the basis of amounts expected to be paid to the tax authorities.  

Deferred income tax is recognized, using the liability method, on temporary differences arising between  

the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.  

However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill;  

deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a trans-  

action other than a business combination that at the time of the transaction affects neither accounting nor  

taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. Deferred  

income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the  

balance sheet date and are expected to apply when the related deferred income tax asset is realized or the  

deferred income tax liability is settled.  

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit  

will be available against which the temporary differences can be utilized.  

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset  

current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate  

to income taxes levied by the same taxation authority on either the same taxable entity or different taxable  

entities where there is an intention to settle the balances on a net basis.  

2.16. Borrowings and related costs  

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subse-  

quently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and  

the redemption amount is recognized in profit or loss over the period of the borrowings using the effective  

interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the  

loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee  

is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all  

of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized  

over the period of the facility to which it relates.  

Borrowings are removed from the balance sheet when the obligation specified in the contract is dis-  

charged, cancelled or expired. The difference between the carrying amount of a financial liability that has  

been extinguished or transferred to another party and the consideration paid, including any non-cash assets  

transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.  

General and specific borrowing costs that are directly attributable to the acquisition, construction or  

production of a qualifying asset are capitalized during the period of time that is required to complete and  

prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substan-  

tial period of time to get ready for their intended use or sale. Investment income earned on the temporary  

investment of specific borrowings pending their expenditure on qualifying assets is deducted from the  

borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they  

are incurred.  

2.17. Leases  

Lease liabilities are accounted for under IFRS 16 Leases and measured at the present value of the remaining  

lease payments, discounted using the lessee’s incremental borrowing rate. Lease liabilities include the net  

present value of: fixed lease payments, amounts expected to be payable under residual value guarantees,  

any purchase options that are reasonably expected to be exercised, and any penalties for termination re-  

flected in the lease term. The corresponding rental obligations, net of finance charges, are included in other  

long-term debt. Amounts due within one year are included in short-term debt.  

2.15. Revenue recognition and other income  

Revenue represents sale of the Group’s products to customers which are principally resellers and original  

equipment manufacturers. Revenue is measured at the fair value of the consideration received or receivable,  

and represents amounts receivable for goods supplied, stated net of discounts, sales tax, returns and after  

eliminating sales within the Group.