1.1 Corporate information
Nordic Semiconductor ASA is a public limited company whose ordinary shares are listed on the Oslo Stock Exchange with ticker code NOD. The company is domiciled in Norway, and the registered head office is at Otto Nielsens veg 12, 7052\u00a0Trondheim.
The Group includes the ultimate parent company Nordic Semiconductor ASA and its wholly owned subsidiaries, as specified in Note 13: Subsidiaries.
Nordic Semiconductor is a Norwegian fabless semiconductor company specializing in wireless communication technology that powers the Internet of Things (IoT). Nordic was established in 1983 and has around 1400 employees across the globe. The Group\u2019s award-winning Bluetooth\u00ae Low Energy solutions pioneered ultra-low power wireless, making it the global market leader. Nordic\u2019s technology range was later supplemented by ANT+, Thread and Zigbee. In 2018, Nordic launched its low power, compact LTE-M/NB-IoT cellular IoT solutions to extend the penetration of IoT. The Nordic portfolio was further complemented by Wi-Fi technology in 2021.
1.2 Basis for preparation
The financial accounts for the Group have been prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d) as endorsed by the European Union and Norwegian authorities, and are effective as of December 31, 2022. The consolidated financial statements also comply with IFRS as issued by the International Accounting Standards Board (\u201cIASB\u201d) and the disclosure requirements as specified under the Norwegian Accounting Law (Regnskapsloven).
The consolidated financial statements are presented in US dollars (USD), which is the functional currency of the parent company. All USD amounts are rounded to the nearest thousand, if nothing else is noted. As a result of rounding differences, it is possible that amounts and percentages do not add up to the total.
Gross profit is revenue less cost of materials and direct project costs. Cost of materials include direct and indirect cost of production. Nordic Semiconductor uses gross profit for internal reporting and has therefore chosen to include it in the external financial reporting.
The Group has only one operating segment. The Group does not report or monitor profitability on a lower level, but breaks down its revenue into the following end product markets: Consumer, Industrial, Healthcare, and Other. The Group also breaks down its revenue in the geographical areas in which its distributors are located.
The financial accounts were audited and approved for publication by the Board of Directors on March 17, 2023, and will be presented for approval at the Annual General Meeting on April 2th, 2023.
1.3 Accounting standards adopted in 2022
1.1 Corporate information
Nordic Semiconductor ASA is a public limited company whose ordinary shares are listed on the Oslo Stock Exchange with ticker code NOD. The company is domiciled in Norway, and the registered head office is at Otto Nielsens veg 12, 7052\u00a0Trondheim.
The Group includes the ultimate parent company Nordic Semiconductor ASA and its wholly owned subsidiaries, as specified in Note 13: Subsidiaries.
Nordic Semiconductor is a Norwegian fabless semiconductor company specializing in wireless communication technology that powers the Internet of Things (IoT). Nordic was established in 1983 and has around 1400 employees across the globe. The Group\u2019s award-winning Bluetooth\u00ae Low Energy solutions pioneered ultra-low power wireless, making it the global market leader. Nordic\u2019s technology range was later supplemented by ANT+, Thread and Zigbee. In 2018, Nordic launched its low power, compact LTE-M/NB-IoT cellular IoT solutions to extend the penetration of IoT. The Nordic portfolio was further complemented by Wi-Fi technology in 2021.
1.2 Basis for preparation
The financial accounts for the Group have been prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d) as endorsed by the European Union and Norwegian authorities, and are effective as of December 31, 2022. The consolidated financial statements also comply with IFRS as issued by the International Accounting Standards Board (\u201cIASB\u201d) and the disclosure requirements as specified under the Norwegian Accounting Law (Regnskapsloven).
The consolidated financial statements are presented in US dollars (USD), which is the functional currency of the parent company. All USD amounts are rounded to the nearest thousand, if nothing else is noted. As a result of rounding differences, it is possible that amounts and percentages do not add up to the total.
Gross profit is revenue less cost of materials and direct project costs. Cost of materials include direct and indirect cost of production. Nordic Semiconductor uses gross profit for internal reporting and has therefore chosen to include it in the external financial reporting.
The Group has only one operating segment. The Group does not report or monitor profitability on a lower level, but breaks down its revenue into the following end product markets: Consumer, Industrial, Healthcare, and Other. The Group also breaks down its revenue in the geographical areas in which its distributors are located.
The financial accounts were audited and approved for publication by the Board of Directors on March 17, 2023, and will be presented for approval at the Annual General Meeting on April 2th, 2023.
1.3 Accounting standards adopted in 2022
2.1 Basis for consolidation
The consolidated financial statements incorporate the results, cash flows, and assets and liabilities of the parent company and its subsidiaries.
A subsidiary is an entity that is controlled, either directly or indirectly, by the parent company. Control exists when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power to direct the relevant activities of the investee. Generally, such power exists where the parent company holds a majority of the voting rights of an investee.
Subsidiaries are consolidated from the date control is obtained until the date that control ceases. All subsidiaries are wholly owned by the parent company and there are no non-controlling interests. Intercompany transactions, balances, and unrealized gains on transactions between group companies are eliminated.
2.2 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires that management uses judgement, estimates, and assumptions that effect the amounts reported in the financial statements and its disclosures. Management bases its estimates and judgement on previous experience and on various other factors deemed to be reasonable and sensible given the specific circumstances. The main areas of uncertainty for assessments and estimates are the balance sheet date, which represent a risk of creating significant changes to the value of assets and liabilities, are discussed below.
Estimates are continuously reassessed based on changes in the underlying assumptions. Changes in accounting estimates are recognized in the period in which such changes occur. If such changes also apply to future periods, the effect is distributed between current and future periods. The Group's Financial Statement
currently holds low volume of assets that are dependent on assessment of future cashflows. Hence, the climate risk is assessed to have low impact on current financial statement although it may impact the Group's future as described in Report from the Board of Directors.
Revenue recognition
Principles are described in\u00a02.4 Revenue recognition.
Nordic Semiconductor predominantly sells to electronic distributors under a distribution agreement. The distributors will hold a given level of Nordic Semiconductor's inventory that is subsequently shipped to an end customer. Nordic Semiconductor uses a \u201csell in\u201d model in connection with revenue recognition to distribution customers. Under a \u201csell in\u201d model, management needs to make judgements and estimates the amount that can affect the reported amounts of revenues and expenses. The main judgments are described\u00a0as\u00a0follows.
Variable consideration for \u201cShip and Debit\u201d
When a distributor sells components to specified customer accounts, the distributor will receive an additional rebate after the sale is made, commonly known as a \u201cShip and Debit\u201d rebate. In estimating the variable consideration, the Group is required to use the expected value method. The Group estimates the rebate based on historical discounts to each distributor, the distributors\u2019 inventory level as of 31 December 2022, and expected sales mix. An estimate for this rebate is provided in the accounts, reducing the revenue and increasing refund liabilities. See note 3.3.
Development costs
Development costs are capitalized in accordance with the principles in 2.5 Intangible assets.
In order to determine the amount to be capitalized, it is necessary for management to make assumptions regarding expected future cash flow, and the expected period of benefits. Capitalized development costs are subject to amortization on a straight-line basis over the period of expected future benefits, normally 1-5 years.
Uncertainty exists with respect to the estimated period of expected future benefit, as this depends on the future technological development in the market. During 2022 USD 6.5 million was capitalized. The carrying amount of capitalized development costs as of December 31, 2022 and 2021 was USD 27 million and USD 32 million\u00a0respectively.
Leases - Estimating the incremental borrowing rate
The interest rate implicit in the lease cannot readily be determined, therefore the incremental borrowing rate (IBR) is used to measure lease liabilities.
The lessee's IBR is defined in IFRS 16 as \u201cthe rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic\u00a0environment\u201d.
The Group has a centralized treasury department, and all financing is from the parent company in order to minimize the costs of finance. The subsidiaries are self-financed with low credit risk due to cost-plus intercompany invoicing for services, and do not enter into financing transactions into third parties. The Group entities have stand-alone arrangements for lease payments either with deposits or bank guarantee.
The IBR reflects what the companies of the Group \u2018would have to pay\u2019 , which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary\u2019s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary\u2019s standalone credit rating).
2.3 Foreign currency translation
Each entity within the Group has a functional currency, which is normally the currency in which the entity primarily generates and expends cash. The parent company is the most significant entity in the Group, and its functional currency is USD.
At entity level, a foreign currency is a currency other than the entity\u2019s functional currency. Transactions in the profit and loss statement denominated in foreign currencies are recorded in the entity\u2019s functional currency at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the balance sheet date. Currency translation differences arising at entity level are recognized in profit or loss.
The Group\u2019s presentation currency is USD, and foreign operations are those of the parent company\u2019s subsidiaries and branches whose functional currency is not USD. On consolidation, assets and liabilities of foreign operations are translated into USD according to the exchange rates prevailing on the balance sheet date. Profit or loss items are translated according to monthly average exchange rates. Changes in net assets resulting from exchange rate movements are recognized in other comprehensive income and taken to the currency translation reserve.
2.4 Revenue recognition
The Group is in the business of developing and selling integrated circuits. Revenue from customers is mainly generated from sale of products. Services delivered consists of consulting services. The Group and the customer do not receive financing from the sales, and therefore there are no significant financing components to be accounted for separately from the revenue transaction. The normal credit term is 30-60 days upon delivery. In other words, the contract does not require the customer to pay in advance or require the customer to pay a significant amount after delivery.
Sale of products
Sales of products are mostly made to distributors (customers). Revenue from product sales is recognized when control of the goods is transferred to the customer The time of delivery is considered to be when the goods are transferred to the transport carrier. Upon delivery, the Group has the right of payment for the asset, the customer has legal title to the asset, physical possession has been transferred to the customer, and the customer has full ownership of the asset.
Revenue recognized on the sale of products is measured at the fair value of the consideration received or receivable, excluding sales taxes and after making allowance for variable considerations such as rebates and product returns.
Ship and debit rebate
The Group sells products to certain distributors on \u201cship and debit\u201d terms. It means that the distributor may be entitled to a rebate if the distributor sells the product to end customers at a price lower than the price at which the distributor purchased the products from the Group. The difference in price is then claimed (debited) by the\u00a0distributor.
The Ship and Debit rebates are recognized as reduction in revenue and an increase in liabilities before the sale has taken place.
Stock rotation rights
Some distributors are entitled to limited rights of return, referred to as stock rotation rights. The Group tracks the distributor's inventory and can initiate a stock rotation earlier if a certain product is selling better with another distributor. As the products have similar margin, there are no significant losses for the Group when stock rotations are initiated. The Group does not make provisions or adjustments for stock rotation unless we expect the goods returned to be obsolete. Stock rotation provisions are made if necessary, based on most likely amount method.
End-customer volume rebates
Some end customers have entered into agreements with Nordic to receive a rebate based on their purchase quantity and price from the distributor. The rebates are recognized as reduction in revenue and increase in liabilities before payout by the end\u00a0customer.
Sale of services
Revenue from services is recognized as the services are rendered/delivered.
Trade receivables
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 2.9.
Assets and liabilities arising from rights of return
Right of return asset
Right of return asset represents the Group\u2019s right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of the returned goods.
The Group updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products. As the customers are only able to exchange the goods, the Group does not have a right of return asset.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Group ultimately expects it will have to return to the customer. The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting\u00a0period.
2.5 Intangible assets
Capitalized development expenses
Research costs are expensed as incurred. Costs associated with development are capitalized if the following criteria are met in full:
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process is clearly defined and the cost elements can be identified and measured\u00a0reliably;
\u25a0\u00a0\u00a0\u00a0\u00a0The technical feasibility is demonstrated;
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process will be sold or used in the\u00a0business;
\u25a0\u00a0\u00a0\u00a0\u00a0The asset will generate future financial benefits;
\u25a0\u00a0\u00a0\u00a0\u00a0Sufficient technical, financial and other resources for project completion are in place
Costs expensed in prior accounting periods will not be capitalized. Depreciation begins when the product is transferred from development to production. Depreciation is calculated on a straight-line basis over 1-5 years. Uncertainty exists with respect to the expected period of benefits, as this depends on the future technological development in the market.
Goodwill
Goodwill acquired in a business combination is carried at cost as established at the acquisition date, less impairment losses, if any.
Other intangible assets
Other intangible assets comprise identifiable intangibles acquired in business combination (IP, developed technology), licenses and computer software. The assets held by the Group have finite useful lives determined by the expected usage of the asset by the entity. The assets are amortized on a straight-line basis over its estimated useful lives, normally 3-10 years.
The other intangible assets are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises the purchase price of the asset (including non-refundable purchase taxes) and any costs directly attributable to preparing the asset for
its intended use. In the case of an asset acquired in a business combination, the cost is its fair value at the acquisition date.
The amortization period and the amortization method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting\u00a0estimates.
2.6 Government grants
Grants received are tax refunds and are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover. Tax refunds are accounted for as a cost reduction. See note 5 and 9.
2.7 Property, plant and equipment
Property, plant and equipment are valued at the lower of cost net of accumulated depreciation and net realizable value. When an asset is sold or discontinued, the gain or loss from the transaction is recognized in the income statement. Cost comprises the purchase price of the asset including fees/taxes and any direct costs associated with commissioning the asset for use.
Repair and maintenance costs are expensed when incurred. If repair and maintenance increase the value of the asset, the cost will be added to the asset on the balance sheet. Depreciation is calculated on a straight-line basis over the following periods of time:
Office and lab equipment | 3-5 years |
Computer equipment | 3-4 years |
Leasehold improvements | 5 years |
The assets\u2019 residual value, useful lives and methods of depreciation are reviewed on an ongoing basis and adjusted prospectively, if necessary.
2.8 Impairment of non-financial assets
The Group\u2019s non-financial assets includes:
\u25a0\u00a0\u00a0\u00a0\u00a0Goodwill
\u25a0\u00a0\u00a0\u00a0\u00a0Capitalized development expenses
\u25a0\u00a0\u00a0\u00a0\u00a0Other intangible assets (software and IP)
\u25a0\u00a0\u00a0\u00a0\u00a0Property, plant and equipment
\u25a0\u00a0\u00a0\u00a0\u00a0Right-of-use assets
Non-financial assets are tested for impairment whenever there is an indication that their carrying amounts may not be recoverable. Goodwill and intangible assets still under development are subject to an annual impairment\u00a0test.
A CGU of one non-financial asset is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill does not generate cash flows independently of other assets and is, therefore, tested for impairment at the level of the CGU or group of CGUs that are expected to benefit from the synergies of the related business combination.
If any indication exists, the Group estimates the asset\u2019s recoverable amount. An asset\u2019s recoverable amount is the higher of an asset\u2019s or cash generating unit\u2019s (CGU) fair value less costs of disposal and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable\u00a0amount.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value\u00a0indicators.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
2.9 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
The Group is recognizing a financial asset or liability when it becomes a party to the instrument's contractual\u00a0terms.
The Group\u2019s financial assets and liabilities includes money market fund, accounts receivable, other financial assets, other current receivables, accounts payable, and other current payables.
Financial assets
Initial recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the asset. There is an exemption for accounts receivables, that do not contain a significant financing component or for which the Group has applied the practical expedient, are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in section 2.4 Revenue recognition.
Depending of the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them, the assets are at initial recognition and subsequently measured at amortized cost, fair value through other comprehensive income (OCI) or fair value through profit or\u00a0loss.
Financial assets are classified and measured at amortized cost or fair value through OCI, if it gives rise to cash flows that are \"solely payments of principal and interest (SPPI)\" on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group\u2019s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or\u00a0both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at amortized cost (debt instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt\u00a0instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through profit and loss (held for trading)
The categories relevant for the Group is amortized cost, including accounts receivables and other current receivables, and fair value through profit or loss (held for trading), including money market fund.
The Group measures financial assets at amortized cost if both of the following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and
\u25a0\u00a0\u00a0\u00a0\u00a0The contractual terms the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value through profit and loss\u00a0are subsequently at fair value with resulting gains and losses recognized in profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group\u2019s consolidated statement of financial position)\u00a0when:
\u25a0\u00a0\u00a0\u00a0\u00a0The rights to receive cash flows from the asset have expired, or
\u25a0\u00a0\u00a0\u00a0\u00a0The Group has transferred the asset according to IFRS 9 paragraph 3.2.4 and 3.2.5
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and accounts payables, net of directly attributable transaction costs.
Subsequent measurement
All financial liabilities are measured at amortized cost, except for financial liabilities at fair value through profit or loss.
After initial recognition, borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category includes derivative financial instruments (currency swap) entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by\u00a0IFRS 9.
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or\u00a0loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
2.10 Cash and cash equivalents
Cash and cash equivalents include cash at bank, short- term deposits with an original maturity of three months or less and money market fund. Money market funds and short-term time deposits are defined as cash equivalents because they are highly liquid and not subject to material fluctuations in value.
2.11 Inventory
Inventory is valued at the lower of cost according to the FIFO principle and net realizable value after deduction for obsolescence. Net realizable value is estimated as the selling price less cost of completion and the cost necessary to make the sale. Cost of inventories includes purchase price of raw materials and costs directly related to the conversion of materials into finished goods. They also include fixed and variable overheads which can be allocated to items based on normal\u00a0capacity.
The Group applies standard cost method to measure cost of inventories. The cost on products with high sales volume is reviewed monthly, and quarterly for other goods. Standard cost variance is the difference between standard cost and actual cost. This variance is impacting the cost of goods sold, and the variance is monitored on a regular basis.
Obsolete inventory is written down completely.
2.12 Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for\u00a0consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying\u00a0assets.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of\u00a0the\u00a0asset.
The Group has used the optional exemption in IFRS 16 and not accounted lease concessions, such as reduction in lease payments, due to Covid-19 as a lease modification. The following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The reversed consideration is substantially the same or less than the original consideration
\u25a0\u00a0\u00a0\u00a0\u00a0The reduction in lease payments relates to payments due on or before 30 June 2022
\u25a0\u00a0\u00a0\u00a0\u00a0No other substantive changes have been made to the terms of the lease
That means reductions in lease payments are accounted for as negative variable lease payments and be recognized in profit and loss.
The right-of-use assets are also subject to impairment, see note 2.8
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets\u00a0
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and low-value assets. The low value election is made on a lease-by-lease basis, and it refers to underlying assets with a value in order of USD 5 000 or less. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight- line basis over the lease\u00a0term.
2.13 Income taxes
Income tax expenses consist of taxes due and changes to the net deferred tax assets or liabilities.
Deferred tax assets and liabilities are calculated based on the differences between the carrying value of assets and liabilities in the financial accounts and their tax basis when such differences are considered at temporary in nature.
Deferred tax assets are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax assets.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Deferred income tax relating to items recognized in Other Comprehensive Income (\u201cOCI\u201d) or directly in equity is recognized outside profit or loss.
The parent company pays its tax obligation in NOK and the fluctuations between the NOK and the USD impact the financial items. The Group\u2019s legal entities that do not have their tax base in USD are exposed to changes in the USD/ tax base currency rates. Effects within the current year are classified as tax\u00a0expense.
2.14 Provisions
Provisions (such as legal claims and contractual severance) are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed each balance sheet date and the level reflects the best estimate of the obligation. When the time value is insignificant, the amount of the provision will be equal to the estimated expenditure required to settle the obligation. When the time effect is significant, the amount of the provision will be equal to the present value of future estimated expenditures to settle the obligation.
2.15 Employee benefits
Defined benefit pension plans
The Group had a defined benefit pension plan for its employees who were hired before December 31, 2007. The Group has also established a similar plan for employees in the Philippines. This plan is still open. Pension plan assets are valued at fair value. The defined benefit scheme in Norway was converted to a defined
contribution scheme. In connection with the transfer, the employees received a \u201cPaid up benefit\u201d for all earned benefits in the defined benefit plan. As there exist certain obligations related to retirees and employees on sick leave, an actuarial calculation is performed and a liability for these employees is included as of December 31, 2022.
Defined contribution pension plans
Employees hired after January 1, 2008, have a defined contribution pension plan described in note\u00a018.\u00a0\u00a0\u00a0\u00a0
Share based compensation
The Group grants restricted stock units and other awards over its ordinary shares to all employees. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 19.
That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other paid in capital), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). See note 19.
Accounting treatment of social security tax is not treated in IFRS 2. Social security tax is accrued over the vesting period based on the actual value of the stock unit.
2.16 Treasury shares
When treasury shares are purchased, the purchase price, including directly attributable costs are recognized as changes in equity. Treasury shares are presented as a reduction of equity. Gains or losses on transactions in treasury shares are not recognized in the income\u00a0statement.
2.17 Cash flow statement
The Group focuses on the sale of standard components for wireless communication. These wireless components are broken into the following end product areas: Consumer, Industrial, Healthcare and Others. In 2022, wireless components accounted for 99.4% of sales versus 98.9% in 2021. In addition to standard components, the Group sells customer-specific ASIC components (Application Specific Integrated Circuits) and related Consulting Services.
The Group recognized the first long-range (cellular IoT) revenue in the second half of 2018. Most of Nordic\u2019s cellular IoT customers are still in the development phase or in early commercial phase. When cellular IoT revenue materialize, Nordic will report the revenue in the relevant end product\u00a0areas.
GROUP | PARENT | |||
2022 | 2021 | Revenue | 2022 | 2021 |
483\u00a0799 | 408\u00a0156 | Consumer | 483\u00a0799 | 408\u00a0156 |
191\u00a0543 | 141\u00a0936 | Industrial | 191\u00a0543 | 141\u00a0936 |
67\u00a0623 | 35\u00a0575 | Healthcare | 67\u00a0623 | 35\u00a0575 |
29\u00a0163 | 18\u00a0376 | Others | 29\u00a0163 | 18\u00a0376 |
772\u00a0128 | 604\u00a0044 | Wireless components | 772\u00a0128 | 604\u00a0044 |
4\u00a0607 | 6\u00a0083 | ASIC components | 4\u00a0607 | 6\u00a0083 |
0 | 400 | Consulting services | 0 | 400 |
0 | 0 | Management fee | 1\u00a0029 | 1\u00a0049 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
The Group also classifies its revenues on a geographical basis according to its customers\u2019 location.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
97\u00a0868 | 53\u00a0116 | Europe | 98\u00a0679 | 53\u00a0886 |
107\u00a0966 | 61\u00a0663 | Americas | 108\u00a0123 | 61\u00a0910 |
570\u00a0899 | 495\u00a0749 | Asia/Pacific | 570\u00a0961 | 495\u00a0781 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
776\u00a0734 | 610\u00a0128 | Goods transferred at a point in time | 776\u00a0734 | 610\u00a0128 |
0 | 400 | Services transferred over time | 1\u00a0029 | 1\u00a0449 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days. See note 22 for further details.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Trade receivables | 175\u00a0120 | 141\u00a0748 |
3.3 Refund liabilities
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
30\u00a0694 | 20\u00a0530 | Refund liability \u2013 from ship & debit | 30\u00a0694 | 20\u00a0530 |
23\u00a0382 | 10\u00a0757 | Refund liability \u2013 from end-customer rebates | 23\u00a0382 | 10\u00a0757 |
3.4 Performance obligations
The performance obligations for the sale of components are normally satisfied upon the time of delivery. Payment is generally due 30 to 60 days within delivery.
For the consulting services, the performance obligation is satisfied over-time and the customer is generally invoiced at month-end for the work performed.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
387\u00a0088 | 276\u00a0402 | Purchased materials | 387\u00a0088 | 276\u00a0402 |
-47\u00a0147 | 7\u00a0012 | Changes in inventory | -47\u00a0147 | 7\u00a0012 |
339\u00a0941 | 283\u00a0415 | Cost of materials | 339\u00a0941 | 283\u00a0415 |
34\u00a0356 | 9\u00a0704 | Raw materials | 34\u00a0356 | 9\u00a0704 |
25\u00a0380 | 18\u00a0440 | Work in Progress | 25\u00a0380 | 18\u00a0440 |
42\u00a0355 | 26\u00a0799 | Finished goods | 42\u00a0355 | 26\u00a0799 |
102\u00a0091 | 54\u00a0943 | Total inventory | 102\u00a0091 | 54\u00a0943 |
5\u00a0006 | 5\u00a0712 | Amount Written down | 5\u00a0006 | 5\u00a0712 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
24\u00a0837 | 19\u00a0580 | Service and maintenance | 23\u00a0222 | 18\u00a0288 |
17\u00a0422 | 15\u00a0527 | Other consultancy fees | 12\u00a0318 | 11\u00a0658 |
2\u00a0301 | 1\u00a0582 | Office expenses | 1\u00a0088 | 1\u00a0030 |
1\u00a0956 | 1\u00a0558 | Office equipment | 1\u00a0246 | 1\u00a0201 |
11\u00a0401 | 6\u00a0198 | Material and components | 9\u00a0720 | 5\u00a0142 |
-57 | -108 | Tax grant | -57 | -108 |
-2\u00a0034 | -1\u00a0515 | Capitalized development expenses | -2\u00a0036 | -1\u00a0515 |
3\u00a0585 | 1\u00a0068 | Travel and meeting expenses | 1\u00a0799 | 742 |
10\u00a0274 | 8\u00a0207 | Other operating expenses | 8\u00a0448 | 7\u00a0297 |
\u2014 | \u2014 | Other operating expenses intercompany | 110\u00a0581 | 86\u00a0715 |
69\u00a0685 | 52\u00a0097 | Total other operating expenses | 166\u00a0328 | 130\u00a0450 |
Auditor remuneration, excl. of VAT
Fees to the auditor are included in consultancy fees above.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
109 | 90 | Audit services | 93 | 72 |
14 | 4 | Other attestation Services | 14 | \u2014 |
4 | 3 | Tax advisory Services | \u2014 | 3 |
\u2014 | \u2014 | Other Non Audit Services | \u2014 | \u2014 |
128 | 96 | Total revenues | 107 | 74 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Tax consists of | 2022 | 2021 |
-43\u00a0907 | -17\u00a0427 | Tax payable | -42\u00a0837 | -17\u00a0181 |
-2\u00a0102 | 2\u00a0663 | Change in deferred tax / benefit | -1\u00a0940 | 2\u00a0719 |
\u2014 | \u2014 | Group contribution, tax amount | -83 | \u2014 |
1\u00a0192 | -1\u00a0325 | Other items | 2\u00a0397 | -156 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
GROUP | PARENT | |||
2022 | 2021 | Reconciliation of nominal and actual tax expense | 2022 | 2021 |
167\u00a0155 | 87\u00a0260 | Profit before tax | 159\u00a0405 | 80\u00a0305 |
-36\u00a0774 | -19\u00a0197 | Tax at nominal rate 22 % | -35\u00a0069 | -17\u00a0667 |
42 | 47 | Tax effect of different tax rates in other countries | 42 | -89 |
518 | 4\u00a0605 | Tax effect permanent differences | 1\u00a0527 | 4\u00a0679 |
726 | \u2014 | Credit for tax paid | 98 | \u2014 |
-265 | 25 | Excess tax provision previous year | \u2014 | 25 |
-9\u00a0064 | -1\u00a0568 | Currency effect from translation to USD | -9\u00a0061 | -1\u00a0566 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
The Group has not recognized net deferred tax benefit of USD\u00a034 related to the subsidiary in India.
GROUP | ||||||
Deferred taxes: | Balance sheet | Income statement | Other. Comp. income | |||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Inventory | 757 | 1\u00a0517 | 600 | 1\u00a0023 | \u2014 | \u2014 |
Fixed Assets | 3\u00a0267 | 2\u00a0439 | -1\u00a0178 | 613 | \u2014 | \u2014 |
Leasing | 177 | 36 | -145 | -121 | \u2014 | \u2014 |
Options (share based payments) | \u2014 | 1\u00a0729 | 1\u00a0547 | 747 | \u2014 | \u2014 |
Pension obligation | 95 | 122 | -3 | -10 | 13 | 33 |
Financial instrument | \u2014 | 114 | \u2014 | 48 | \u2014 | \u2014 |
Accruals | 341 | 489 | 212 | 344 | \u2014 | \u2014 |
Deferred tax benefit - gross | 4\u00a0637 | 6\u00a0446 | 1\u00a0033 | 2\u00a0644 | 13 | 33 |
Gain and loss account | 24 | 33 | 6 | -10 | \u2014 | \u2014 |
Net other tax-obligations | \u2014 | 82 | 73 | 24 | \u2014 | \u2014 |
Financial instrument | 59 | \u2014 | -161 | \u2014 | \u2014 | \u2014 |
Deferred tax obligation - gross | 83 | 115 | -82 | 14 | 0 | 0 |
Currency effect of translation to USD | -21 | 165 | ||||
Net deferred tax benefit (obligation) | 4\u00a0554 | 6\u00a0331 | ||||
Deferred tax expense | 1\u00a0094 | 2\u00a0795 | 13 | 33 |
PARENT | ||||||
Deferred taxes: | Balance sheet | Income statement | Other. Comp. income | |||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Inventory | 757 | 1\u00a0517 | 600 | 1\u00a0023 | \u2014 | \u2014 |
Fixed Assets | 2\u00a0836 | 2\u00a0044 | -1\u00a0008 | 857 | \u2014 | \u2014 |
Leasing | 173 | 36 | -140 | -121 | \u2014 | \u2014 |
Options (share based payments) | \u2014 | 1\u00a0729 | 1\u00a0547 | 747 | \u2014 | \u2014 |
Pension obligation | 95 | 122 | -3 | -10 | 13 | 33 |
Financial instrument | \u2014 | 114 | \u2014 | 48 | \u2014 | \u2014 |
Accruals | 30 | 302 | 240 | 157 | \u2014 | \u2014 |
Deferred tax benefit - gross | 3\u00a0891 | 5\u00a0864 | 1\u00a0236 | 2\u00a0701 | 13 | 33 |
Gain and loss account | 24 | 33 | 6 | -10 | \u2014 | \u2014 |
Net other tax-obligations | \u2014 | 82 | 70 | 24 | \u2014 | \u2014 |
Financial instrument | 59 | \u2014 | -161 | \u2014 | \u2014 | \u2014 |
Deferred tax obligation - gross | 83 | 115 | -85 | 14 | 0 | 0 |
Currency effect of translation to USD | -9 | 127 | ||||
Net deferred tax benefit (obligation) | 3\u00a0808 | 5\u00a0749 | ||||
Deferred tax expense | 1\u00a0312 | 2\u00a0813 | 13 | 33 |
GROUP | PARENT | |||
2022 | 2021 | Reconciliation of net deferred tax obligation | 2022 | 2021 |
6\u00a0331 | 3\u00a0668 | Opening balance as of 1.1 | 5\u00a0748 | 3\u00a0029 |
-1\u00a0083 | 2\u00a0795 | Tax expense recognized in the P&L | -1\u00a0312 | 2\u00a0813 |
13 | 33 | Tax expense recognized in OCI | 13 | 33 |
-711 | -165 | Currency effect from translation to USD | -645 | -127 |
4\u00a0550 | 6\u00a0331 | Net deferred tax obligation / benefit 31.12 | 3\u00a0804 | 5\u00a0748 |
GROUP | PARENT | |||
2022 | 2021 | Net deferred tax recognized in OCI as of 31.12 | 2022 | 2021 |
13 | 33 | Net gain on actuarial gains and losses | 13 | 33 |
13 | 33 | Total tax other comprehensive income | 13 | 33 |
Basis for calculation of basic earnings per share | 2022 | 2021 |
Earnings for the year (USD \u2018000) | 122\u00a0339 | 71\u00a0171 |
Weighted average number of outstanding shares (\u2018000) | 191\u00a0365 | 190\u00a0961 |
Earnings per share (USD) | 0.64 | 0.37 |
Basis for calculation of fully diluted earnings per share | ||
Earnings for the year (USD \u2018000) | 122\u00a0339 | 71\u00a0171 |
Weighted average number of outstanding shares (\u2018000) | 192\u00a0739 | 193\u00a0042 |
Earnings per share (USD) | 0.63 | 0.37 |
The number of shares was as follows:
Date | Shares issued | Shares outstanding | |
01.01.2022 | Opening balance | 192\u00a0781\u00a0600 | 190\u00a0962\u00a0563 |
31.12.2022 | Closing balance | 192\u00a0781\u00a0600 | 191\u00a0575\u00a0087 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Combined expenses for salary and other compensation are distributed as follows: | 2022 | 2021 |
115\u00a0380 | 104\u00a0476 | Salary and vacation pay | 57\u00a0004 | 56\u00a0579 |
28\u00a0335 | 25\u00a0239 | Other compensation | 15\u00a0448 | 16\u00a0747 |
11\u00a0704 | 14\u00a0011 | Payroll tax | 8\u00a0692 | 11\u00a0869 |
-424 | -431 | Tax grant | -424 | -431 |
10\u00a0898 | 10\u00a0650 | Defined contribution pension | 4\u00a0606 | 3\u00a0840 |
-4\u00a0453 | -4\u00a0121 | Capitalized development expenses (hourly costs) | -4\u00a0453 | -4\u00a0121 |
161\u00a0440 | 149\u00a0824 | Total | 80\u00a0872 | 84\u00a0483 |
1\u00a0311 | 1\u00a0090 | Weighted average number of full time employees | 647 | 599 |
GROUP | PARENT | |||
2022 | 2021 | Employees as of December 31, are distributed as follows: | 2022 | 2021 |
612 | 518 | Norway | 612 | 518 |
322 | 273 | Finland | \u2014 | \u2014 |
115 | 93 | Poland | \u2014 | \u2014 |
49 | 52 | India | \u2014 | \u2014 |
57 | 49 | USA | \u2014 | \u2014 |
58 | 49 | Taiwan | \u2014 | 49 |
77 | 48 | UK | \u2014 | \u2014 |
41 | 34 | Philippines | 41 | 34 |
40 | 28 | Sweden | \u2014 | \u2014 |
28 | 19 | China | \u2014 | 19 |
15 | 13 | Hong Kong | \u2014 | \u2014 |
4 | 5 | South Korea | 4 | 5 |
4 | 4 | Germany | \u2014 | \u2014 |
4 | 3 | Japan | \u2014 | \u2014 |
3 | 3 | The Netherlands | 3 | 3 |
0 | 2 | Spain | \u2014 | 2 |
2 | 2 | Australia | 2 | 2 |
0 | 1 | Switzerland | \u2014 | 1 |
4 | 1 | Singapore | \u2014 | 1 |
1\u00a0435 | 1\u00a0197 | Total | 662 | 634 |
All figures in USD 1 000
Note 10.1: Management remuneration
Pursuant to the changes in the Public Limited Liability Companies Act, i.e., the addition of a new section 6-16 (b), and associated new regulations, Nordic will publish a separate management remuneration report for presentation at the Annual General Meeting on 20 April 2023, containing detailed information on remuneration to Executive Management Team (EMT) for the reporting year 2022. The remuneration report includes detailed information on EMTs remuneration complementing the numbers
presented below. This includes an overview of the operational, financial, environmental, social and governance targets that form basis for the short-term incentives.
EMT members\u2019 salaries and other benefits, including long term incentive plans are presented in the table below. Unless otherwise stated, Nordic did not have any loans to or guarantees made on behalf of any of the EMT members in 2022 and 2021.
The remuneration paid or awarded to the CEO and other members of the EMT was aligned with Nordics\u2019s remuneration policy. The policy is available in its full at nordicsemi.com.
Total compensation* expensed during the year for the CEO and other executives: | |||||||
2022 | Salary | Bonus | Options & PSU** | RSUs & | Other Comp. | Pension expenses | Total |
Svenn-Tore Larsen, CEO | 461 | 185 | 71 | 267 | 2 | 87 | 1\u00a0072 |
P\u00e5l Elstad, CFO/EVP Finance | 273 | 98 | 34 | 124 | 4 | 42 | 575 |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 308 | 112 | 41 | 140 | 4 | 52 | 657 |
Geir Langeland, EVP Sales & Marketing | 290 | 118 | 36 | 150 | 4 | 50 | 648 |
Ebbe R\u00f8mcke, SVP Quality & Sustainability**** | 189 | 65 | 23 | 83 | 2 | 26 | 387 |
Ole Fredrik Morken, EVP Supply Chain*** | 303 | 74 | 29 | 98 | 3 | 31 | 538 |
Marianne Frydenlund, SVP Legal**** | 121 | \u2014 | 19 | \u2014 | 1 | 9 | 150 |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 203 | 65 | 25 | 84 | 4 | 25 | 406 |
Kjetil Holstad, EVP Product Management | 203 | 73 | 20 | 87 | 3 | 30 | 417 |
Katarina Finneng, EVP People & Communication | 227 | 83 | 1 | 103 | 3 | 35 | 453 |
Linda Pettersson, SVP Legal & Compliance**** | 136 | 40 | 0 | 4 | 2 | 17 | 198 |
Ola Bostr\u00f6m, SVP Quality & Sustainability**** | 160 | 44 | 0 | 28 | 3 | 20 | 257 |
Total | 2\u00a0873 | 958 | 299 | 1\u00a0168 | 35 | 425 | 5\u00a0758 |
2021 | Salary | Bonus | Options & PSU** | RSUs & | Other Comp. | Pension expenses | Total |
Svenn-Tore Larsen, CEO | 488 | 270 | 11 | 237 | 4 | 18 | 1\u00a0027 |
P\u00e5l Elstad, CFO/EVP Finance | 289 | 143 | 7 | 112 | 2 | 18 | 571 |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 327 | 162 | 8 | 128 | 2 | 18 | 645 |
Geir Langeland, EVP Sales & Marketing | 306 | 168 | 7 | 132 | 2 | 18 | 633 |
Ebbe R\u00f8mcke, SVP Quality & Sustainability**** | 203 | 96 | 5 | 75 | 2 | 18 | 399 |
Ole Fredrik Morken, EVP Supply Chain*** | 328 | 109 | 6 | 90 | 2 | 18 | 552 |
Marianne Frydenlund, SVP Legal**** | 182 | 90 | 2 | 68 | 2 | 18 | 361 |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 224 | 97 | 5 | 78 | 2 | 18 | 424 |
Kjetil Holstad, EVP Product Management | 208 | 101 | 4 | 74 | 2 | 18 | 407 |
Katarina Finneng, EVP People & Communication | 239 | 118 | 6 | 69 | 2 | 18 | 451 |
Total | 2\u00a0794 | 1\u00a0355 | 60 | 1\u00a0063 | 19 | 179 | 5\u00a0470 |
*Management compensation is paid in NOK. Exchange rate for 2022: 9.62 and 2021: 8.56
**Option cost is the expense of fair value of options based on Black Scholes calculation
***Includes expat allowances
****Marianne Frydenlund and Ebbe R\u00f8mcke were no longer a part of the EMT by year end 2022. Linda Pettersson and Ola Bostr\u00f6m joined the EMT during 2022, in July and August respectively
The Group has granted EMT members the following RSUs and performance shares (PSUs): | ||||
EMT member | 2022 | 2021 | ||
Svenn-Tore Larsen, CEO | 6 532 RSUs | 6 532 PSUs | 10 933 RSUs | 6 213 PSUs |
P\u00e5l Elstad, CFO/EVP Finance | 3 193 RSUs | 3 193 PSUs | 3 056 RSUs | 3 056 PSUs |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 3 609 RSUs | 3 609 PSUs | 3 455 RSUs | 3 455 PSUs |
Geir Langeland, EVP Sales & Marketing | 3 379 RSUs | 3 379 PSUs | 6 139 RSUs | 3 189 PSUs |
Ebbe R\u00f8mcke, SVP Quality & Sustainability | 2 111 RSUs | 2 111 PSUs | 2 059 RSUs | 2 059 PSUs |
Ole Fredrik Morken, EVP Supply Chain** | 2 429 RSUs | 2 429 PSUs | 2 325 RSUs | 2 325 PSUs |
Marianne Frydenlund, SVP Legal*** | 0 RSUs | 0 PSUs | 1 927 RSUs | 1 927 PSUs |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 2 087 RSUs | 2 087 PSUs | 2 066 RSUs | 2 066 PSUs |
Kjetil Holstad, EVP Product Management | 2 380 RSUs | 2 380 PSUs | 2 156 RSUs | 2 156 PSUs |
Katarina Finneng, EVP People & Communication | 2 662 RSUs | 2 662 PSUs | 2 524 RSUs | 2 524 PSUs |
During 2022 the executives exercised the following options:
Executives | Grant year | Number of options exercised | Strike price | Cash payout in USD 1000 |
Svenn-Tore Larsen, CEO | 2019 Option | 12\u00a0721 | 45.10 | 119 |
2019 PSU | 26\u00a0872 | 533 | ||
P\u00e5l Elstad, CFO/EVP Finance | 2019 Option | 7\u00a0880 | 45.10 | 74 |
2019 PSU | 12\u00a0804 | 254 | ||
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 2019 Option | 9\u00a0381 | 45.10 | 88 |
2019 PSU | 15\u00a0244 | 302 | ||
Geir Langeland, EVP Sales & Marketing | 2019 Option | 8\u00a0256 | 45.10 | 77 |
2019 PSU | 13\u00a0414 | 266 | ||
Ebbe R\u00f8mcke, SVP Quality & Sustainability | 2019 Option | 5\u00a0254 | 45.10 | 49 |
2019 PSU | 8\u00a0536 | 168 | ||
Ole Fredrik Morken, EVP Supply Chain** | 2019 Option | 6\u00a0567 | 45.10 | 62 |
2019 PSU | 10\u00a0670 | 212 | ||
Marianne Frydenlund, SVP Legal | 2019 Option | 4\u00a0315 | 45.10 | 40 |
2019 PSU | 7\u00a0012 | 138 | ||
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 2019 Option | 5\u00a0816 | 45.10 | 55 |
2019 PSU | 9\u00a0452 | 187 | ||
Kjetil Holstad, EVP Product Management | 2019 Option | 4\u00a0691 | 45.10 | 44 |
2019 PSU | 7\u00a0622 | 15 | ||
Katarina Finneng, EVP People & Communication | 2019 Option | 6\u00a0667 | 45.10 | 63 |
*The RSU for management vest after three years for management two years for employees
** Purchased shares, no cash payout from the company
*** Grant in 2022 due to ended employment contract
Note 10.2: Board remuneration
Total compensation expensed for Board Members* | 2022 | 2021 |
Birger Steen, Chair | 165 | 132 |
Inger Berg \u00d8rstavik, Board Member | 68 | 57 |
Endre Holen, Board Member | 90 | 72 |
Jan Magnus Frykhammar, Board Member | 80 | 65 |
\u00d8yvind Birkenes, Board Member | 62 | 50 |
Annastiina Hintsa, Board Member | 63 | 50 |
Anita Huun, Board Member | 68 | 57 |
Jon Helge Nistad, Board Employee Representative (Board remuneration only) | 16 | 18 |
Susheel Nuguru, Board Employee Representative (Board remuneration only) | 5 | 18 |
Morten Dammen, Board Employee Representative (Board remuneration only) | 16 | 18 |
Joel Stapleton, Board Employee Representative (Board remuneration only) | 5 | 18 |
Gro Fykse, Board Employee Representative (Board remuneration only) | 10 | 0 |
Anja Dekens, Board Employee Representative (Board remuneration only) | 10 | 0 |
Total | 659 | 554 |
All figures in USD 1 000
GROUP | |||||
2022 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 37\u00a0980 | 66\u00a0006 | 6\u00a0716 | 333 | 111\u00a0035 |
Additions | 8\u00a0027 | 11\u00a0492 | 1\u00a0374 | \u2014 | 20\u00a0893 |
Disposals | -6\u00a0163 | -32\u00a0826 | -1\u00a0950 | -40\u00a0939 | |
Acqusition cost as of 31.12 | 39\u00a0843 | 44\u00a0673 | 6\u00a0138 | 333 | 90\u00a0989 |
Opening balance | 25\u00a0192 | 47\u00a0999 | 3\u00a0958 | \u2014 | 77\u00a0149 |
Depreciation expenses | 7\u00a0485 | 10\u00a0781 | 990 | \u2014 | 19\u00a0257 |
Disposals | -6\u00a0163 | -32\u00a0825 | -2\u00a0032 | \u2014 | -41\u00a0020 |
Accumulated depreciation as of 31.12 | 26\u00a0514 | 25\u00a0955 | 2\u00a0916 | 0 | 55\u00a0384 |
Net carrying value as of 31.12 | 13\u00a0329 | 18\u00a0716 | 3\u00a0222 | 333 | 35\u00a0603 |
PARENT | |||||
2022 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 25\u00a0482 | 61\u00a0891 | 5\u00a0469 | 333 | 93\u00a0174 |
Additions | 2\u00a0818 | 11\u00a0315 | 771 | \u2014 | 14\u00a0903 |
Disposals | -10\u00a0038 | -32\u00a0650 | -3\u00a0262 | \u2014 | -45\u00a0950 |
Acqusition cost as of 31.12 | 18\u00a0262 | 40\u00a0555 | 2\u00a0977 | 333 | 62\u00a0126 |
Opening balance | 15\u00a0563 | 45\u00a0382 | 3\u00a0404 | \u2014 | 64\u00a0349 |
Depreciation expenses | 4\u00a0402 | 10\u00a0334 | 577 | \u2014 | 15\u00a0313 |
Diposals | -7\u00a0753 | -32\u00a0589 | -2\u00a0465 | \u2014 | -42\u00a0807 |
Accumulated depreciation as of 31.12 | 12\u00a0212 | 23\u00a0127 | 1\u00a0517 | 0 | 36\u00a0855 |
Net carrying value as of 31.12 | 6\u00a0050 | 17\u00a0429 | 1\u00a0460 | 333 | 25\u00a0271 |
GROUP | |||||
2021 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 30\u00a0055 | 53\u00a0470 | 5\u00a0556 | 333 | 89\u00a0414 |
Additions | 7\u00a0925 | 12\u00a0536 | 1\u00a0159 | \u2014 | 21\u00a0619 |
Acqusition cost as of 31.12 | 37\u00a0980 | 66\u00a0006 | 6\u00a0716 | 333 | 111\u00a0034 |
Opening balance | 18\u00a0725 | 39\u00a0302 | 3\u00a0104 | \u2014 | 61\u00a0131 |
Depreciation expenses | 6\u00a0468 | 8\u00a0697 | 854 | \u2014 | 16\u00a0019 |
Accumulated depreciation as of 31.12 | 25\u00a0192 | 47\u00a0999 | 3\u00a0958 | 0 | 77\u00a0149 |
Net carrying value as of 31.12 | 12\u00a0788 | 18\u00a0007 | 2\u00a0757 | 333 | 33\u00a0885 |
PARENT | |||||
2021 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 20\u00a0565 | 50\u00a0051 | 4\u00a0795 | 333 | 75\u00a0743 |
Additions | 4\u00a0917 | 11\u00a0840 | 674 | \u2014 | 17\u00a0430 |
Acqusition cost as of 31.12 | 25\u00a0482 | 61\u00a0891 | 5\u00a0469 | 333 | 93\u00a0174 |
Opening balance | 11\u00a0031 | 37\u00a0014 | 2\u00a0737 | \u2014 | 50\u00a0782 |
Depreciation expenses | 4\u00a0532 | 8\u00a0368 | 667 | \u2014 | 13\u00a0567 |
Accumulated depreciation as of 31.12 | 15\u00a0563 | 45\u00a0382 | 3\u00a0404 | 0 | 64\u00a0349 |
Net carrying value as of 31.12 | 9\u00a0919 | 16\u00a0509 | 2\u00a0064 | 333 | 28\u00a0824 |
GROUP AND PARENT | |||||
Estimated useful life | 3 - 5 years | 3 - 4 years | 5 years | ||
Depreciation method | Straight-line | Straight-line | Straight-line | No depreciation |
Total depreciation expenses consist of depreciation of fixed assets and depreciation of intangible assets (note\u00a012).
Non-depreciable property assets:
The parent company has an apartment in Trondheim for use by employees in the Oslo office while in Trondheim. The apartment is assessed at acquisition cost. The residual value is expected to be at least equal to the book value.
Scrapped capital assets
All capital assets that are ready to be scrapped have been fully depreciated and have no residual book value.
Capital assets temporarily out of operation
The Group has no capital assets that are temporarily out of operation.
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
All figures in USD 1 000.
GROUP | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Additions | 2\u00a0909 | 6\u00a0489 | -102 | 9\u00a0297 |
Disposals | -22\u00a0684 | -29\u00a0491 | \u2014 | -52\u00a0175 |
Acqusition cost as of 31.12 | 31\u00a0121 | 57\u00a0015 | 2\u00a0284 | 90\u00a0424 |
Accumulated depreciation | ||||
Opening balance | 35\u00a0132 | 48\u00a0477 | \u2014 | 83\u00a0609 |
Depreciation expenses | 7\u00a0068 | 11\u00a0423 | \u2014 | 18\u00a0491 |
Disposals | -22\u00a0734 | -29\u00a0491 | \u2014 | -52\u00a0225 |
Accumulated depreciation as of 31.12 | 19\u00a0466 | 30\u00a0408 | 0 | 49\u00a0874 |
Net carrying value as of 31.12 | 11\u00a0655 | 26\u00a0608 | 2\u00a0284 | 40\u00a0547 |
PARENT | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Additions | 2\u00a0135 | 6\u00a0489 | \u2014 | 8\u00a0624 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Acqusition cost as of 31.12 | 28\u00a0839 | 57\u00a0015 | 249 | 86\u00a0103 |
Accumulated depreciation | ||||
Opening balance | 34\u00a0155 | 48\u00a0476 | \u2014 | 82\u00a0631 |
Depreciation expenses | 6\u00a0642 | 11\u00a0423 | \u2014 | 18\u00a0065 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Accumulated depreciation as of 31.12 | 18\u00a0114 | 30\u00a0408 | 0 | 48\u00a0522 |
Net carrying value as of 31.12 | 10\u00a0726 | 26\u00a0608 | 249 | 37\u00a0583 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
98\u00a0672 | Personnel expenses | 40\u00a0232 |
38\u00a0488 | Other operating expenses | 29\u00a0209 |
137\u00a0160 | Total cost recognized in income statement | 69\u00a0441 |
143\u00a0649 | Total cost for R&D (incl. capitalized development cost) | 75\u00a0930 |
GROUP | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 47\u00a0799 | 74\u00a0373 | 2\u00a0393 | 124\u00a0566 |
Additions | 3\u00a0096 | 5\u00a0646 | -7 | 8\u00a0735 |
Acqusition cost as of 31.12 | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0894 | 39\u00a0811 | \u2014 | 67\u00a0705 |
Depreciation expenses | 7\u00a0238 | 8\u00a0665 | \u2014 | 15\u00a0904 |
Accumulated depreciation as of 31.12 | 35\u00a0132 | 48\u00a0477 | 0 | 83\u00a0610 |
Net carrying value as of 31.12 | 15\u00a0764 | 31\u00a0542 | 2\u00a0386 | 49\u00a0693 |
PARENT | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 46\u00a0517 | 74\u00a0373 | 249 | 121\u00a0140 |
Additions | 2\u00a0870 | 5\u00a0644 | \u2014 | 8\u00a0514 |
Acqusition cost as of 31.12 | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0231 | 39\u00a0811 | \u2014 | 67\u00a0042 |
Depreciation expenses | 6\u00a0924 | 8\u00a0665 | \u2014 | 15\u00a0589 |
Accumulated depreciation as of 31.12 | 34\u00a0155 | 48\u00a0476 | 0 | 82\u00a0631 |
Net carrying value as of 31.12 | 15\u00a0232 | 31\u00a0541 | 249 | 47\u00a0022 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
102\u00a0189 | Personnel expenses | 49\u00a0886 |
37\u00a0211 | Other operating expenses | 25\u00a0335 |
139\u00a0400 | Total cost recognized in income statement | 75\u00a0221 |
145\u00a0046 | Total cost for R&D (incl. capitalized development cost) | 80\u00a0866 |
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
All figures in USD 1 000
The following subsidiaries have been included in the financial statements:
Subsidiaries consolidated in | Established Year | Location | Share Ownership | Voting Rights |
Nordic Semiconductor Inc | 2006 | USA | 100% | 100% |
Nordic Semiconductor Poland S.P z o.o | 2013 | Poland | 100% | 100% |
Nordic Semiconductor Finland OY | 2014 | Finland | 100% | 100% |
Nordic Semiconductor Japan KK | 2017 | Japan | 100% | 100% |
Nordic Semiconductor Germany GmbH | 2018 | Germany | 100% | 100% |
Nordic Semiconductor Norway AS | 2020 | Norway | 100% | 100% |
Nordic Semiconductor UK Limited | 2020 | UK | 100% | 100% |
Nordic Semiconductor India Pvt. Ltd | 2020 | India | 100% | 100% |
Nordic Semiconductor Sweden AB | 2020 | Sweden | 100% | 100% |
Nordic Semiconductor Hong Kong Limited | 2021 | Hong Kong | 100% | 100% |
Nordic Semiconductor (Shenzhen) Limited | 2021 | China | 100% | 100% |
Nordic Semiconductor Singapore PTE Ltd | 2022 | Singapore | 100% | 100% |
Nordic Semiconductor Denmark ApS | 2022 | Denmark | 100% | 100% |
Nordic Semiconductor Philippines, Inc. | 2022 | Philippines | 100% | 100% |
Subsidiaries as of 31 December 2022 | Ownership | Share of votes | Net profit 2022 | Equity 31. Dec 2022 |
Nordic Semiconductor Inc, USA | 100% | 100% | 407 | 3\u00a0551 |
Nordic Semiconductor Poland S.P z o.o | 100% | 100% | 1\u00a0106 | 3\u00a0061 |
Nordic Semiconductor Finland OY | 100% | 100% | 2\u00a0513 | 17\u00a0423 |
Nordic Semiconductor Japan KK | 100% | 100% | 6 | 110 |
Nordic Semiconductor Germany GmbH | 100% | 100% | 7 | 115 |
Nordic Semiconductor Norway AS | 100% | 100% | 75 | 3\u00a0674 |
Nordic Semiconductor UK Limited | 100% | 100% | 507 | 2\u00a0149 |
Nordic Semiconductor India Pvt. Ltd | 100% | 100% | 388 | 1\u00a0794 |
Nordic Semiconductor Sweden AB | 100% | 100% | 351 | 749 |
Nordic Semiconductor Hong Kong Limited | 100% | 100% | 112 | 300 |
Nordic Semiconductor (Shenzhen) Limited | 100% | 100% | 176 | 257 |
Nordic Semiconductor Singapore PTE Ltd | 100% | 100% | 20 | 140 |
Nordic Semiconductor Denmark ApS | 100% | 100% | -8 | -8 |
Nordic Semiconductor Philippines, Inc. | 100% | 100% | 0 | 18 |
\u25a0\u00a0\u00a0\u00a0\u00a0All intellectual property (IP) is owned by Nordic Semiconductor ASA. Nordic Semiconductor ASA is the ultimate parent company of the Group. All subsidiaries invoice Nordic Semiconductor ASA according to the Group's transfer pricing policy.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Inc is a market development, product promotion, and support company, but since 2016 has run a small R&D department as well.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Poland Sp. z.o.o. is an extension of the software development team in the parent company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Finland OY is a development company working with mainly long range technology. The R&D team in Finland works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Japan KK is a market development, product promotion, and support company,
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Germany GmbH is a market development, product promotion, and support company,
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Norway AS is the parent company of Nordic Semiconductor UK Limited, Nordic Semiconductor India Pvt. Ltd, Nordic Semiconductor Sweden AB, Nordic Semiconductor Hong Kong Limited and Nordic Semiconductor (Shenzhen) Limited.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor UK limited is a development company working with Wi-Fi and PMIC technology. The R&D team in the UK works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor India Pvt. Ltd is a development company working with Wi-Fi technology. The R&D team in India works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Sweden AB is a development company working mainly with Wi-Fi technology. The R&D team in Sweden works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Hong Kong Limited is a market development, product promotion, and support\u00a0company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor (Shenzhen) Limited is a market development, product promotion, and support company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Singapore PTE Ltd is Nordic's regional head office in APAC.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Denmark ApS is a development company working across technologies. The R&D team in the Denmark works closely alongside the rest of the R&D teams in the Group.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Gross receivables | 175\u00a0120 | 141\u00a0748 |
\u2014 | 236 | Provision for doubtful accounts | \u2014 | 236 |
175\u00a0120 | 141\u00a0984 | Accounts receivable, net | 175\u00a0120 | 141\u00a0984 |
All figures in USD 1 000
PARENT | 2022 | 2021 |
Loan to group companies | \u2014 | \u2014 |
Receivables group companies | 10\u00a0486 | 1\u00a0692 |
Total | 10\u00a0486 | 1\u00a0692 |
Payables | \u2014 | \u2014 |
Accounts payable, group companies | 31\u00a0994 | 25\u00a0596 |
Total | 31\u00a0994 | 25\u00a0596 |
PARENT | 2022 | 2021 |
Service fee for management services | 1\u00a0029 | 1\u00a0049 |
Total revenue intercompany | 1\u00a0029 | 1\u00a0049 |
Service fee for R&D and product promotion | 110\u00a0581 | 86\u00a0715 |
Total intercompany expenses | 110\u00a0581 | 86\u00a0715 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Cash and cash equivalents as of the balance sheet date were as follows: | 2022 | 2021 |
277\u00a0700 | 223\u00a0786 | Cash at bank | 268\u00a0304 | 217\u00a0886 |
2\u00a0479 | 2\u00a0285 | Restricted cash (withholding tax account) | 2\u00a0479 | 2\u00a0285 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
48\u00a0458 | 53\u00a0259 | Money market funds | 48\u00a0458 | 53\u00a0259 |
379\u00a0104 | 279\u00a0330 | Cash and cash equivalents in statement of financial position | 369\u00a0709 | 273\u00a0430 |
\u25a0\u00a0\u00a0\u00a0\u00a0Cash at banks earns interest at floating rates based on daily bank deposit rates.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor ASA presents total bank deposits in the international cash pool, while Nordic Semiconductor OY presents its share of the international cash pool as a receivable from the company. Nordic Semiconductor ASA and Nordic Semiconductor OY participate in the cash pool, which is operated by Danske Bank.
\u25a0\u00a0\u00a0\u00a0\u00a0Restricted deposits are held by Nordic Semiconductor ASA. They are subject to regulatory restrictions and are therefore not available for general use by the entities within the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Interest on bank deposits is set to floating rates based on daily bank deposit rates.
Share capital
The share capital in Nordic Semiconductor as of December 31, 2022 consists of one share class with a total of 192,781,600 shares with a face value of NOK 0.01, with a total share capital of NOK 1,927,816. Each share grants the same rights in the company, and
in the event of any increase in capital, existing shareholders have preemptive rights for any new shares. During the year the following changes have been made in the number of shares, share capital and share\u00a0premium:
GROUP | Number of shares | Share capital | Treasury shares | Share premium | ||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Holdings as of 1.1 | 192\u00a0781\u00a0600 | 192\u00a0781\u00a0600 | 317 | 317 | -3 | -3 | 235\u00a0448 | 235\u00a0448 |
Change in treasury shares | 1 | |||||||
Holdings as of 31.12 | 192\u00a0781\u00a0600 | 192\u00a0781\u00a0600 | 317 | 317 | -2 | -3 | 235\u00a0448 | 235\u00a0448 |
Dividend
No dividend was paid during 2022.
Treasury shares
The company owned 1,206,513 treasury shares on December 31, 2022. On January 1, 2022, the company owned 1,819,037 treasury shares. Based on a resolution of the annual general meeting of April 28, 2022, the Board has authority to purchase the company\u2019s own shares with a limit of a face value of NOK 192,000 through one or more transactions. This authority is limited to 9.96% of the company\u2019s share capital, and the price per share that the company may pay for shares shall not be lower than the face value and not higher than NOK 350. This authority applies until the company\u2019s annual general meeting in 2023, and by June 30, 2023 the latest.
Long-Term Incentive plan
With reference to the annual general meeting, on April 28, 2022, Nordic Semiconductor approved a Restricted Stock Unit (RSU) program for all employees, and a combination of RSUs and Performance Shares for Executive Management. See note 19 for further information.
Shareholder overview
The largest shareholders in Nordic Semiconductor ASA were as follows as of December 31, 2022 based on data provided by an investor relations advisory service provider*, and is obtained through an analysis of beneficial ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the Nordic VPS share register.
Shareholder | Shares | Percentage |
Folketrygdfondet | 17\u00a0077\u00a0869 | 8.9% |
Capital Research and Management | 11\u00a0662\u00a0016 | 6.0% |
DNB Asset Management | 9\u00a0405\u00a0822 | 4.9% |
Danske Bank | 6\u00a0022\u00a0054 | 3.1% |
The Vanguard Group | 5\u00a0539\u00a0580 | 2.9% |
Invesco Advisers | 5\u00a0089\u00a0089 | 2.6% |
Hardman Johnston Global Advisors | 4\u00a0847\u00a0702 | 2.5% |
Alfred Berg Kapitalforvaltning | 4\u00a0473\u00a0230 | 2.3% |
Swedbank Robur Fonder | 4\u00a0240\u00a0000 | 2.2% |
KLP Kapitalforvaltning | 4\u00a0177\u00a0632 | 2.2% |
Oberweis Asset Management | 4\u00a0104\u00a0644 | 2.1% |
Robeco Institutional Asset Management | 3\u00a0675\u00a0000 | 1.9% |
Contour Asset Management | 3\u00a0035\u00a0986 | 1.6% |
Handelsbanken Fonder | 2\u00a0808\u00a0596 | 1.5% |
Passesta | 2\u00a0700\u00a0000 | 1.4% |
RBC Global Asset Management | 2\u00a0669\u00a0001 | 1.4% |
Eika Kapitalforvaltning | 2\u00a0535\u00a0666 | 1.3% |
BlackRock Fund Advisors | 2\u00a0271\u00a0762 | 1.2% |
Storebrand Asset Management | 2\u00a0036\u00a0606 | 1.1% |
Alden | 2\u00a0000\u00a0000 | 1.0% |
Total for the 20 largest shareholders | 100\u00a0372\u00a0255 | 52.1% |
Other shareholders | 92\u00a0409\u00a0345 | 47.9% |
Total shares outstanding | 192\u00a0781\u00a0600 | 100.0% |
*Every reasonable effort has been made to verify the data, however neither Nordic nor the investor relations advisory service provider can guarantee the accuracy of the analysis.
Defined benefit plan
The pension liability for the Group consists of liabilities in Norway, Poland, India and The Philippines.
Nordic has set up a pension plan for the Philippine office as of January 2014. The retirement plan is unfunded and of the defined benefit type which provides a retirement benefit calculated based on number of years of credited service. At the end of 2022 the pension liability was USD\u00a0210,944.
For the company in Finland, pensions are financed by contributions from the insured employees and employers. The Norwegian company in the Group is required to have mandatory employment pension for employees in Norway, according to the Mandatory Employment Pension Act.
The defined benefit plan was closed for new members effective January 1, 2008 and from this point a new defined contribution plan was established. The two different types of pensions are described below:
\u00a0All figures in USD 1 000
Defined Pension Plan | 2022 | 2021 |
Current service cost | \u2014 | \u2014 |
Interest expense | 16 | 17 |
Expected return on plan assets | -13 | -14 |
Administration fee | 2 | 2 |
Total pension expense excl. Social security tax | 5 | 5 |
Social security tax | 1 | 1 |
Total pension expense incl. Social security tax | 6 | 6 |
Net pension obligation for the year was calculated as follows: | 2022 | 2021 |
Pension obligations | 1\u00a0091 | 1\u00a0195 |
Plan assets | 899 | 964 |
Estimated net obligation | 192 | 231 |
Social security tax | 27 | 33 |
Total actual net obligation ink. Social security tax | 219 | 263 |
Total pension liability for the Group | 2022 | 2021 |
Employees in Norway | 219 | 263 |
Employees in Philippines | 211 | 290 |
Employees in the UK | \u2014 | 4 |
Employees in Poland | 30 | 22 |
Employees in India | 216 | \u2014 |
Total | 676 | 580 |
Defined contribution pension plan
Shares held by the Board of Directors and Executive Management were as follows as of December 31, 2022:
Board of Directors | Shares | Executive Management | Shares |
Birger Steen | 196\u00a0840 | Svenn-Tore Larsen | 1\u00a0932\u00a0272 |
Endre Holen | 154\u00a0888 | Geir Langeland | 201\u00a0114 |
Jan Frykhammar | 24\u00a0258 | Ole Fredrik Morken | 190\u00a0670 |
Anita Huun | 13\u00a0258 | St\u00e5le Ytterdal | 135\u00a0452 |
\u00d8yvind Birkenes | 10\u00a0600 | Ola Bostr\u00f8m | 575 |
Inger Berg \u00d8rstavik | 5\u00a0258 | P\u00e5l Elstad | 31\u00a0650 |
Annastiina Hintsa | 4\u00a0258 | Svein-Egil Nielsen | 32\u00a0244 |
Jon Helge Nistad | 600 | Kjetil Holstad | 10\u00a0415 |
Anja Dekens | 300 | Linda Pettersson | 0 |
Morten Dammen | 1\u00a0150 | Katarina Finneng | 600 |
Gro Fykse | 850 | ||
Total | 412\u00a0260 | Total | 2\u00a0534\u00a0992 |
On March 15, 2019, Nordic Semiconductor granted 1,752,366 share options to 666 employees. The options were granted at a strike price of NOK 39.44 (10% above volume weighted average share price the five days prior to the grant date). If the company\u2019s share price exceeds a cap of NOK 118.32, the company may settle the option grant by compensating the employee the difference between the cap and the strike price.
On May 3, 2019, Nordic Semiconductor granted 196,644 share options and 55,814 performance shares to the management group. The options were granted at a strike price of NOK 45.1 (10% above volume weighted average share price the five days prior to the grant date If the company\u2019s share price exceeds a cap of NOK 135.3, the company may settle the option grant by compensating the employee the difference between the cap and the strike price. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 29, 2020, Nordic Semiconductor granted 754,224 Restricted Stock Units (RSUs) and Performance shares to 775 employees. A share price of NOK 58.4 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 28, 2021, Nordic Semiconductor granted 452,353 Restricted Stock Units (RSUs) and Performance shares to 1,087 employees. A share price of NOK 182.2 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 28, 2022, Nordic Semiconductor granted 486,677 Restricted Stock Units (RSUs) and Performance shares to 1,288 employees. A share price of NOK 183.8 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
A summary of share options transactions during 2022 and 2021 below: | 2022 | 2021 |
Outstanding options 1.1 | 545\u00a0203 | 2\u00a0548\u00a0589 |
Granted | \u2014 | \u2014 |
Forfeited | 705 | 28\u00a0992 |
Exercised | 544\u00a0498 | 1\u00a0974\u00a0394 |
Expired | \u2014 | \u2014 |
Outstanding options 31.12 | \u2014 | 545\u00a0203 |
Of which exercisable | \u2014 | \u2014 |
A summary of RSUs transactions during 2022 and 2021 below: | 2022 | 2021 |
Outstanding RSUs 1.1 | 1\u00a0058\u00a0947 | 690\u00a0617 |
Granted | 486\u00a0677 | 423\u00a0383 |
Forfeited | 50\u00a0340 | 55\u00a0053 |
Exercised | 492\u00a0780 | \u2014 |
Outstanding RSUs 31.12 | 1\u00a0002\u00a0504 | 1\u00a0058\u00a0947 |
A summary of performance shares during 2022 and 2021 below: | 2022 | 2021 |
Outstanding performance shares 1.1 | 142\u00a0990 | 114\u00a0020 |
Granted | 30\u00a0376 | 28\u00a0970 |
Forfeited | 7\u00a0921 | \u2014 |
Exercised | 111\u00a0626 | \u2014 |
Outstanding performance shares 31.12 | 53\u00a0819 | 142\u00a0990 |
The fair value of the options, RSUs and performance shares are set on the grant date and expensed over the vesting period. USD\u00a07,797 thousand was expensed during 2022 and USD 4,287 thousand in 2021.
The fair value per RSU and performance share without market condition granted in 2022 was NOK 236.00 and 177.50. The fair value of the performance shares with Relative Total Shareholder Return performance condition granted in 2022 was NOK\u00a0270.1612. The valuation is based on a Monte Carlo simulation model with the following assumptions:
Share price on the grant date
The closing share price of the company and peer group companies (SOX Index) were NOK 177.35 and USD 2,982.06, respectively.
Risk-free interest rate
The risk-free interest rate is set equal to the relevant interest rate on government bonds on the date of grant in 2022, i.e. 2.676 % in Norway and US.
Volatility
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equaled 47.89% on the date of grant in 2022 for the company and 37.92% for the SOX\u00a0Index.
Expected lifetime
Performance shares vest on the April 28, 2025. Performance end date is December 31, 2024, so as of vesting date the quantity to vest is known. Performance shares expire 3 years from grant date, i.e. 28th of April 2025.
Correlation coefficients
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
\u2014 | Accounts payable from subsidiaries | 31\u00a0994 | 25\u00a0596 | |
43\u00a0758 | 17\u00a0427 | Taxes payable | 42\u00a0837 | 17\u00a0181 |
14\u00a0542 | 17\u00a0452 | Employee benefit obligations | 7\u00a0333 | 10\u00a0312 |
6\u00a0455 | 7\u00a0599 | Social security tax and payroll tax | 4\u00a0745 | 6\u00a0266 |
10\u00a0129 | 8\u00a0620 | Holiday pay | 5\u00a0991 | 5\u00a0548 |
30\u00a0694 | 20\u00a0530 | Ship and debit rebate | 30\u00a0694 | 20\u00a0530 |
23\u00a0382 | 10\u00a0757 | End-customer rebate | 23\u00a0382 | 10\u00a0757 |
1\u00a0011 | Contractual severance payment | \u2014 | \u2014 | |
567 | Legal claims | \u2014 | 567 | |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
520 | Currency swap | \u2014 | 520 | |
7\u00a0547 | 5\u00a0197 | Accrued expenses | 5\u00a0450 | 2\u00a0879 |
145 | 79 | Other current liabilities | 74 | 68 |
177\u00a0160 | 123\u00a0747 | Total current liabilities | 187\u00a0648 | 131\u00a0703 |
All figures in USD 1 000.
The Group is a lessee and has entered into agreements to lease office space, office equipment, machinery and vehicles.
The Group's office leases range between 1 to 7 years. Equipment and machinery leases range between 1 to 5 years. Vehicles are leased for less than 4\u00a0years.
There are no leases with variable lease payments, other than lease payments linked to a consumer price index. Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximize operational flexibility in terms of managing the assets used in the Group\u2019s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Extension options have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.
The Group also has certain leases of office buildings and office equipment and machinery with lease terms of 12 months or less and leases of office equipment and machinery and vehicles with low value. The Group applies the \"short-term lease\" and \"lease of low-value assets\" recognition exemptions for these leases.
In 2022, there have been no material rent concessions as a direct consequence of the Covid-19\u00a0pandemic.
In 2022, Nordic Semiconductor ASA signed an office rental agreement in Oslo with an expected commencement date of 1 April 2023 and an office rental agreement in Trondheim with a commencement date of 1 October 2027. Nordic Semiconductor UK Limited has signed an office rental agreement in Bristol with an expected commencement date of 4 May 2023
Below is the contractual cash flow of right to use assets and short-term leases with commencement date after balance sheet date.
GROUP | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Office lease commitments | \u2014 | 253\u00a0479 | 4\u00a0505 | 51\u00a0303 | 197\u00a0670 |
Short-term leases | \u2014 | 196 | 196 | \u2014 | \u2014 |
Total | \u2014 | 253\u00a0675 | 4\u00a0701 | 51\u00a0303 | 197\u00a0670 |
PARENT | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Office lease commitments | \u2014 | 248\u00a0927 | 3\u00a0748 | 47\u00a0508 | 197\u00a0670 |
Short-term leases | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Total | \u2014 | 248\u00a0927 | 3\u00a0748 | 47\u00a0508 | 197\u00a0670 |
Minimum lease payments payable on leases are presented in note 23.
Amounts recognized in the balance sheet:
The balance sheet shows the following amounts relating to leases:
GROUP | PARENT | |||
31.12.2022 | 31.12.2021 | Right of use assets | 31.12.2022 | 31.12.2021 |
21\u00a0416 | 18\u00a0786 | Property | 12\u00a0076 | 14\u00a0774 |
\u2014 | 149 | Office equipment and machinery | \u2014 | 149 |
21\u00a0416 | 18\u00a0935 | Total | 12\u00a0076 | 14\u00a0923 |
GROUP | PARENT | |||
31.12.2022 | 31.12.2021 | Lease liabilities | 31.12.2022 | 31.12.2021 |
6\u00a0280 | 5\u00a0594 | Current | 2\u00a0813 | 3\u00a0921 |
14\u00a0861 | 14\u00a0281 | Non-Current | 8\u00a0711 | 11\u00a0673 |
21\u00a0141 | 19\u00a0876 | Total | 11\u00a0524 | 15\u00a0594 |
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
8\u00a0951 | -80 | Additions and adj. to right-of-use assets | 1\u00a0277 | -1\u00a0998 |
\u2014 | \u2014 | Disposals to the right-of-use assets | -534 | \u2014 |
In 2021, Nordic Semiconductor ASA signed an office rental agreement in Oslo with commencement date of 1 January, 2023. During 2022, the date of expire was changed from 31 December 2022 to 1 April 2023. The total adjustment to the right-of-use asset is a reduction of USD 0.2m.
The statement of profit or loss shows the following amounts relating to leases:
GROUP | PARENT | |||
2022 | 2021 | Depreciation of right-of-use assets | 2022 | 2021 |
5\u00a0974 | 5\u00a0662 | Properties | 3\u00a0427 | 3\u00a0524 |
162 | 213 | Office equipment and machinery | 162 | 213 |
6\u00a0135 | 5\u00a0875 | Total depreciation | 3\u00a0588 | 3\u00a0737 |
621 | 822 | Interest expense | 478 | 733 |
513 | 214 | Expenses relating to short-term leases | 235 | 182 |
644 | 543 | Expenses relating to leases of low-value assets | 303 | 285 |
7\u00a0914 | 7\u00a0454 | Total amount recognized in profit and loss | 4\u00a0603 | 4\u00a0937 |
7\u00a0766 | 7\u00a0265 | The total cash outflow for leases | 4\u00a0311 | 4\u00a0938 |
Below are the carrying amounts of lease liabilities and movements during the period:
GROUP | Cash flow information for lease liabilities | PARENT |
19\u00a0876 | Net liabilities as at 1 January 2022 | 15\u00a0594 |
-6\u00a0609 | Lease payments | -3\u00a0773 |
8\u00a0951 | Acquisitions and adjustments | 1\u00a0277 |
\u2014 | Disposals | -534 |
629 | Interest | 477 |
-1\u00a0706 | Other | -1\u00a0517 |
21\u00a0141 | Net liabilities as at 31 December 2022 | 11\u00a0524 |
All figures in USD 1 000.
Capital structure
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group\u2019s requirements for ongoing operations and for new investments. Management believes that it is especially important to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, Nordic may purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares.
Nordic Semiconductor targets to have an equity ratio above 50% at all times, measured as total equity divided by total assets.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
583\u00a0544 | 458\u00a0209 | Total equity | 561\u00a0074 | 440\u00a0690 |
776\u00a0241 | 596\u00a0817 | Total assets | 757\u00a0864 | 584\u00a0620 |
75% | 77% | Equity share | 74% | 75% |
Financial assets
The Group holds the following financial assets at amortized cost:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
5\u00a0562 | 3\u00a0606 | Other current receivables | 12\u00a0989 | 3\u00a0606 |
280\u00a0178 | 220\u00a0171 | Cash at bank | 270\u00a0783 | 220\u00a0171 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
511\u00a0327 | 365\u00a0526 | Total financial assets at amortized cost | 509\u00a0359 | 365\u00a0526 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
48\u00a0458 | 53\u00a0259 | Money market fund | 48\u00a0458 | 53\u00a0259 |
267 | \u2014 | Currency swap | 267 | \u2014 |
48\u00a0725 | 53\u00a0259 | Total financial assets at fair value through profit or loss | 48\u00a0725 | 53\u00a0259 |
Changes in financial assets at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
53\u00a0259 | 54\u00a0701 | As at 1 January | 53\u00a0259 | 54\u00a0701 |
1\u00a0073 | 337 | Changes in fair value | 1\u00a0073 | 337 |
-5\u00a0607 | -1\u00a0779 | Currency translation differences | -5\u00a0607 | -1\u00a0779 |
48\u00a0725 | 53\u00a0259 | As at 31 December | 48\u00a0725 | 53\u00a0259 |
Financial liabilities
The Group holds the following financial liabilities:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
86\u00a0439 | 64\u00a0215 | Other current liabilities | 104\u00a0918 | 76\u00a0258 |
14\u00a0861 | 14\u00a0281 | Non-current lease liabilities | 8\u00a0711 | 11\u00a0673 |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
141\u00a0809 | 112\u00a0482 | Total financial liabilities at amortized cost | 148\u00a0777 | 119\u00a0410 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
\u2014 | 520 | Currency swap | \u2014 | 520 |
\u2014 | 520 | Total financial liabilities through profit or loss | \u2014 | 520 |
Changes in financial liabilities at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
520 | 302 | As at 1 January | 520 | 302 |
-520 | 218 | Changes in fair value | -520 | 218 |
\u2014 | 520 | As at 31 December | \u2014 | 520 |
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
All figures in USD 1 000.
The Group's finance department is responsible for carrying out the policies and guidelines for financial risk management approved by the Board.
The Group is mainly exposed to counterparty credit risk, liquidity risk, and market risk (including interest rate risk and foreign currency risk).
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily accounts receivables) and from its financing activities, including foreign exchange transactions, cash and cash equivalents with banks and other financial institutions and other financial\u00a0instruments.
The Group\u2019s sale of components takes place through its distribution partners within defined geographic regions, where Asia is the dominant region. The Group depends on a relatively small number of customers. Customer credit risk is managed by each region subject to the Group\u2019s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit evaluation and individual credit limits are defined in accordance with this assessment. Outstanding accounts receivables are regularly monitored and assurance from distributors that end customer sales is secured through letter of credits is\u00a0obtained.
The Group make an allowances for expected credit losses on receivables based on a provision matrix that is initially based on the historical observed default rates. The Group has calibrated the matrix to adjust the historical credit loss experience with forward-looking information.
Age distribution of customer receivables was:
GROUP | PARENT | |||
2022 | 2021 | Gross total | 2022 | 2021 |
143\u00a0750 | 112\u00a0399 | Not due | 143\u00a0750 | 112\u00a0399 |
30\u00a0241 | 29\u00a0327 | Past due 0-30 days | 30\u00a0241 | 29\u00a0327 |
846 | 68 | Past due 31-120 days | 846 | 68 |
283 | 190 | Over 120 days | 283 | 190 |
175\u00a0120 | 141\u00a0984 | Total | 175\u00a0120 | 141\u00a0984 |
Historically there has not been any significant credit losses. 82% percent of trade receivables were within terms at the balance sheet date. On that basis, expected credit loss for trade receivables are limited and allowances for doubtful accounts at 31 December 2022 was 0m.
The Group has a limited number of customers, regular contact and long-term relationships with most of its customer base. Some of the customers are dependent on Nordic Semiconductor to stay in business.
Financial assets at fair value through profit or loss
The Group is also exposed to credit risk in relation to debt investments that are measured at fair value through profit and loss.
The maximum exposure to credit risk on the balance sheet date was:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
17\u00a0539 | 11\u00a0951 | Other current receivables | 21\u00a0884 | 11\u00a0283 |
379\u00a0104 | 279\u00a0331 | Cash and cash equivalents | 369\u00a0709 | 273\u00a0430 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
622\u00a0230 | 433\u00a0030 | Total | 617\u00a0180 | 426\u00a0462 |
The credit risk in table above is diversified over a range of distributors, vendors, and\u00a0banks.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations when due and to close out market positions.
Overall, we monitor cash flows at both Group and entity level. The Group seeks to minimize risk when investing its cash balances and. Investments can only be made in securities which have been approved by the Board.
As of 31 December 2022, cash and cash equivalents amounted to USD\u00a0379.1m (USD 279.3m), see note 16 for details. The total balance includes short-term bank deposits at fair value USD 50.5m and money market fund at fair value USD 48.5m.
The Group has no externally imposed capital requirements or agreements, and has no contracts or legal requirements which are not being upheld. The Group has the following due dates with regard to contracts for financial liabilities as of December 31,\u00a02022:
GROUP | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 34\u00a0229 | 34\u00a0229 | 34\u00a0229 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 136\u00a0652 | 136\u00a0652 | 136\u00a0652 | \u2014 | \u2014 |
Lease liabilities *) | 21\u00a0141 | 23\u00a0056 | 6\u00a0639 | 15\u00a0795 | 622 |
Total | 192\u00a0021 | 193\u00a0937 | 177\u00a0520 | 15\u00a0795 | 622 |
PARENT | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 32\u00a0335 | 32\u00a0335 | 32\u00a0335 | \u2014 | \u2014 |
Accounts payable subsidiaries | 31\u00a0994 | 31\u00a0994 | 31\u00a0994 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 120\u00a0506 | 120\u00a0506 | 120\u00a0506 | \u2014 | \u2014 |
Lease liabilities *) | 11\u00a0524 | 12\u00a0481 | 3\u00a0003 | 9\u00a0479 | \u2014 |
Total | 196\u00a0360 | 197\u00a0316 | 187\u00a0838 | 9\u00a0479 | \u2014 |
*Lease liabilities is mainly office facility rent in Trondheim, lease ending 31 December 2027
Interest rate risk
The Group\u2019s liquidity requirements and risk assessment determine its investment strategy and interest rate exposure.
The Group\u2019s policy is to maintain a short-term investment horizon for its surplus cash. The investment portfolio should not have an average duration longer than six (6)\u00a0months.
The Group has a sustainability linked revolving credit facility, which enables it to borrow up to USD 150 million with an interest rate equal to SOFR + margin. The line of credit expires in June 2025, with option to extend. The security for the credit line is provided by inventory, receivables and operating equipment.
If interest rates increase 1 basis point, the negative effect on profit before tax given current utilization of the RCF is USD 0 per year as the credit facility as of December 31, 2022 is not utilized.
Foreign currency risk
The Group is subject to foreign currency risk as it operates internationally with development and commercial activities.
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity.
The dominated functional currency for the Group is USD. Nearly all revenues and cost of goods are in USD. However, approximately 45% of the Group\u2019s operating expenses (excluding depreciation and amortization) are denominated in NOK and 25% are denominated in EUR. The Group does not use hedging instruments to minimize its exposure to foreign currency risk from operating activities affecting profit and loss.
Below is a sensitivity analysis of changes in the NOK exchange rate on Group balance sheet items, and their impact on profit and loss:
Profit before tax | |
NOK exchange rate +/- 10% | +/- 4 038 |
The tables below show the exposure in sales to foreign currency risk in the most significant currencies:
GROUP | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 776\u00a0712 | 776\u00a0712 | 100.0% | 610\u00a0283 | 610\u00a0283 | 100.0% |
EUR | 6 | 6 | \u2014% | 175 | 208 | \u2014% |
Other | 130 | 16 | \u2014% | 314 | 37 | \u2014% |
Total | 776\u00a0734 | 100.0% | 610\u00a0528 | 100.0% |
PARENT | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 777\u00a0106 | 777\u00a0106 | 99.9% | 610\u00a0528 | 610\u00a0528 | 99.8% |
EUR | 356 | 369 | \u2014% | 538 | 636 | 0.1% |
Other | 4\u00a0532 | 287 | \u2014% | 5\u00a0163 | 411 | 0.1% |
Total | 777\u00a0763 | 100.0% | 611\u00a0577 | 100.0% |
The Group uses derivative financial instruments to reduce its exposure to currency exchange rate movements and hold currency swap in relation to fixed income fund investments. Derivatives are not held for speculative\u00a0purposes.
All derivative financial instruments are recognized as assets and liabilities measured at fair value, and all fair value gains and losses are recognized in profit or loss. Where the fair value of a derivative on initial recognition differs from the transaction price, if any, the difference is recognized immediately in profit or loss only if the fair value is evidenced by a quoted price in an active market or is based on a valuation technique that uses only data from observable markets.
The tables below show the exposure at the end of reporting period in the most significant\u00a0currencies:
All amounts stated in USD 1000.
GROUP | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 1\u00a0955 | \u2014 | 1\u00a0024 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 528 | \u2014 | 374 |
Total | 175\u00a0120 | 34\u00a0229 | 141\u00a0971 | 28\u00a0392 |
PARENT | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 499 | \u2014 | 461 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 90 | \u2014 | 103 |
Total | 175\u00a0120 | 32\u00a0335 | 141\u00a0971 | 27\u00a0558 |
Determination of fair value
As of December 31, 2021 the Group had no financial assets or financial liabilities where there is considered to be a difference between book value and fair value.
Below is an overview of Nordic\u2019s financial instruments:
GROUP | 2022 | 2021 | ||
Book value | Fair market value | Book value | Fair market value | |
Financial assets | ||||
Accounts receivable | 175\u00a0120 | 175\u00a0120 | 141\u00a0748 | 141\u00a0748 |
Current financial assets | 267 | 267 | \u2014 | \u2014 |
Short-term receivables | 17\u00a0539 | 17\u00a0539 | 11\u00a0951 | 11\u00a0951 |
Cash and cash equivalents | 379\u00a0104 | 379\u00a0104 | 279\u00a0330 | 279\u00a0330 |
incl. money market fund | 48\u00a0458 | 48\u00a0458 | 53\u00a0259 | 53\u00a0259 |
Financial liabilities | ||||
Accounts payable | 34\u00a0229 | 34\u00a0229 | 28\u00a0392 | 28\u00a0392 |
Current financial liabilities | \u2014 | \u2014 | 520 | 302 |
Other current liabilities | 86\u00a0439 | 86\u00a0439 | 64\u00a0215 | 64\u00a0215 |
PARENT | 2022 | 2021 | ||
Book value | Fair market value | Book value | Fair market value | |
Financial assets | ||||
Accounts receivable | 175\u00a0120 | 175\u00a0120 | 141\u00a0748 | 141\u00a0748 |
Current financial assets | 267 | 267 | \u2014 | \u2014 |
Short-term receivables | 21\u00a0884 | 21\u00a0884 | 11\u00a0283 | 11\u00a0283 |
Cash and cash equivalents | 369\u00a0708 | 369\u00a0708 | 273\u00a0430 | 273\u00a0430 |
incl. money market fund | 48\u00a0458 | 48\u00a0458 | 53\u00a0259 | 53\u00a0259 |
Financial liabilities | ||||
Accounts payable | 32\u00a0335 | 32\u00a0335 | 27\u00a0558 | 27\u00a0558 |
Current financial liabilities | \u2014 | \u2014 | 520 | 302 |
Other current liabilities | 104\u00a0918 | 104\u00a0918 | 76\u00a0258 | 76\u00a0258 |
During the first quarter 2023, Nordic made a prepayment of USD 100 million related to ongoing initiatives to strengthen supply resilience and diversification.
On February 1, 2023, Nordic received regulatory approval for the acquisition of Mobile Semiconductor. The transaction was closed in March 2023.
1.2 Basis for preparation
The financial accounts for the Group have been prepared in accordance with International Financial Reporting Standards (\u201cIFRS\u201d) as endorsed by the European Union and Norwegian authorities, and are effective as of December 31, 2022. The consolidated financial statements also comply with IFRS as issued by the International Accounting Standards Board (\u201cIASB\u201d) and the disclosure requirements as specified under the Norwegian Accounting Law (Regnskapsloven).
The consolidated financial statements are presented in US dollars (USD), which is the functional currency of the parent company. All USD amounts are rounded to the nearest thousand, if nothing else is noted. As a result of rounding differences, it is possible that amounts and percentages do not add up to the total.
Gross profit is revenue less cost of materials and direct project costs. Cost of materials include direct and indirect cost of production. Nordic Semiconductor uses gross profit for internal reporting and has therefore chosen to include it in the external financial reporting.
The Group has only one operating segment. The Group does not report or monitor profitability on a lower level, but breaks down its revenue into the following end product markets: Consumer, Industrial, Healthcare, and Other. The Group also breaks down its revenue in the geographical areas in which its distributors are located.
The financial accounts were audited and approved for publication by the Board of Directors on March 17, 2023, and will be presented for approval at the Annual General Meeting on April 2th, 2023.
2.1 Basis for consolidation
The consolidated financial statements incorporate the results, cash flows, and assets and liabilities of the parent company and its subsidiaries.
A subsidiary is an entity that is controlled, either directly or indirectly, by the parent company. Control exists when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power to direct the relevant activities of the investee. Generally, such power exists where the parent company holds a majority of the voting rights of an investee.
Subsidiaries are consolidated from the date control is obtained until the date that control ceases. All subsidiaries are wholly owned by the parent company and there are no non-controlling interests. Intercompany transactions, balances, and unrealized gains on transactions between group companies are eliminated.
2.2 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires that management uses judgement, estimates, and assumptions that effect the amounts reported in the financial statements and its disclosures. Management bases its estimates and judgement on previous experience and on various other factors deemed to be reasonable and sensible given the specific circumstances. The main areas of uncertainty for assessments and estimates are the balance sheet date, which represent a risk of creating significant changes to the value of assets and liabilities, are discussed below.
Estimates are continuously reassessed based on changes in the underlying assumptions. Changes in accounting estimates are recognized in the period in which such changes occur. If such changes also apply to future periods, the effect is distributed between current and future periods. The Group's Financial Statement
currently holds low volume of assets that are dependent on assessment of future cashflows. Hence, the climate risk is assessed to have low impact on current financial statement although it may impact the Group's future as described in Report from the Board of Directors.
Revenue recognition
Principles are described in\u00a02.4 Revenue recognition.
Nordic Semiconductor predominantly sells to electronic distributors under a distribution agreement. The distributors will hold a given level of Nordic Semiconductor's inventory that is subsequently shipped to an end customer. Nordic Semiconductor uses a \u201csell in\u201d model in connection with revenue recognition to distribution customers. Under a \u201csell in\u201d model, management needs to make judgements and estimates the amount that can affect the reported amounts of revenues and expenses. The main judgments are described\u00a0as\u00a0follows.
Variable consideration for \u201cShip and Debit\u201d
When a distributor sells components to specified customer accounts, the distributor will receive an additional rebate after the sale is made, commonly known as a \u201cShip and Debit\u201d rebate. In estimating the variable consideration, the Group is required to use the expected value method. The Group estimates the rebate based on historical discounts to each distributor, the distributors\u2019 inventory level as of 31 December 2022, and expected sales mix. An estimate for this rebate is provided in the accounts, reducing the revenue and increasing refund liabilities. See note 3.3.
Development costs
Development costs are capitalized in accordance with the principles in 2.5 Intangible assets.
In order to determine the amount to be capitalized, it is necessary for management to make assumptions regarding expected future cash flow, and the expected period of benefits. Capitalized development costs are subject to amortization on a straight-line basis over the period of expected future benefits, normally 1-5 years.
Uncertainty exists with respect to the estimated period of expected future benefit, as this depends on the future technological development in the market. During 2022 USD 6.5 million was capitalized. The carrying amount of capitalized development costs as of December 31, 2022 and 2021 was USD 27 million and USD 32 million\u00a0respectively.
Leases - Estimating the incremental borrowing rate
The interest rate implicit in the lease cannot readily be determined, therefore the incremental borrowing rate (IBR) is used to measure lease liabilities.
The lessee's IBR is defined in IFRS 16 as \u201cthe rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic\u00a0environment\u201d.
The Group has a centralized treasury department, and all financing is from the parent company in order to minimize the costs of finance. The subsidiaries are self-financed with low credit risk due to cost-plus intercompany invoicing for services, and do not enter into financing transactions into third parties. The Group entities have stand-alone arrangements for lease payments either with deposits or bank guarantee.
The IBR reflects what the companies of the Group \u2018would have to pay\u2019 , which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary\u2019s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary\u2019s standalone credit rating).
2.3 Foreign currency translation
Each entity within the Group has a functional currency, which is normally the currency in which the entity primarily generates and expends cash. The parent company is the most significant entity in the Group, and its functional currency is USD.
At entity level, a foreign currency is a currency other than the entity\u2019s functional currency. Transactions in the profit and loss statement denominated in foreign currencies are recorded in the entity\u2019s functional currency at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the balance sheet date. Currency translation differences arising at entity level are recognized in profit or loss.
The Group\u2019s presentation currency is USD, and foreign operations are those of the parent company\u2019s subsidiaries and branches whose functional currency is not USD. On consolidation, assets and liabilities of foreign operations are translated into USD according to the exchange rates prevailing on the balance sheet date. Profit or loss items are translated according to monthly average exchange rates. Changes in net assets resulting from exchange rate movements are recognized in other comprehensive income and taken to the currency translation reserve.
2.4 Revenue recognition
The Group is in the business of developing and selling integrated circuits. Revenue from customers is mainly generated from sale of products. Services delivered consists of consulting services. The Group and the customer do not receive financing from the sales, and therefore there are no significant financing components to be accounted for separately from the revenue transaction. The normal credit term is 30-60 days upon delivery. In other words, the contract does not require the customer to pay in advance or require the customer to pay a significant amount after delivery.
Sale of products
Sales of products are mostly made to distributors (customers). Revenue from product sales is recognized when control of the goods is transferred to the customer The time of delivery is considered to be when the goods are transferred to the transport carrier. Upon delivery, the Group has the right of payment for the asset, the customer has legal title to the asset, physical possession has been transferred to the customer, and the customer has full ownership of the asset.
Revenue recognized on the sale of products is measured at the fair value of the consideration received or receivable, excluding sales taxes and after making allowance for variable considerations such as rebates and product returns.
Ship and debit rebate
The Group sells products to certain distributors on \u201cship and debit\u201d terms. It means that the distributor may be entitled to a rebate if the distributor sells the product to end customers at a price lower than the price at which the distributor purchased the products from the Group. The difference in price is then claimed (debited) by the\u00a0distributor.
The Ship and Debit rebates are recognized as reduction in revenue and an increase in liabilities before the sale has taken place.
Stock rotation rights
Some distributors are entitled to limited rights of return, referred to as stock rotation rights. The Group tracks the distributor's inventory and can initiate a stock rotation earlier if a certain product is selling better with another distributor. As the products have similar margin, there are no significant losses for the Group when stock rotations are initiated. The Group does not make provisions or adjustments for stock rotation unless we expect the goods returned to be obsolete. Stock rotation provisions are made if necessary, based on most likely amount method.
End-customer volume rebates
Some end customers have entered into agreements with Nordic to receive a rebate based on their purchase quantity and price from the distributor. The rebates are recognized as reduction in revenue and increase in liabilities before payout by the end\u00a0customer.
Sale of services
Revenue from services is recognized as the services are rendered/delivered.
Trade receivables
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 2.9.
Assets and liabilities arising from rights of return
Right of return asset
Right of return asset represents the Group\u2019s right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of the returned goods.
The Group updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products. As the customers are only able to exchange the goods, the Group does not have a right of return asset.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Group ultimately expects it will have to return to the customer. The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting\u00a0period.
2.5 Intangible assets
Capitalized development expenses
Research costs are expensed as incurred. Costs associated with development are capitalized if the following criteria are met in full:
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process is clearly defined and the cost elements can be identified and measured\u00a0reliably;
\u25a0\u00a0\u00a0\u00a0\u00a0The technical feasibility is demonstrated;
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process will be sold or used in the\u00a0business;
\u25a0\u00a0\u00a0\u00a0\u00a0The asset will generate future financial benefits;
\u25a0\u00a0\u00a0\u00a0\u00a0Sufficient technical, financial and other resources for project completion are in place
Costs expensed in prior accounting periods will not be capitalized. Depreciation begins when the product is transferred from development to production. Depreciation is calculated on a straight-line basis over 1-5 years. Uncertainty exists with respect to the expected period of benefits, as this depends on the future technological development in the market.
Goodwill
Goodwill acquired in a business combination is carried at cost as established at the acquisition date, less impairment losses, if any.
Other intangible assets
Other intangible assets comprise identifiable intangibles acquired in business combination (IP, developed technology), licenses and computer software. The assets held by the Group have finite useful lives determined by the expected usage of the asset by the entity. The assets are amortized on a straight-line basis over its estimated useful lives, normally 3-10 years.
The other intangible assets are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises the purchase price of the asset (including non-refundable purchase taxes) and any costs directly attributable to preparing the asset for
its intended use. In the case of an asset acquired in a business combination, the cost is its fair value at the acquisition date.
The amortization period and the amortization method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting\u00a0estimates.
2.6 Government grants
Grants received are tax refunds and are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover. Tax refunds are accounted for as a cost reduction. See note 5 and 9.
2.7 Property, plant and equipment
Property, plant and equipment are valued at the lower of cost net of accumulated depreciation and net realizable value. When an asset is sold or discontinued, the gain or loss from the transaction is recognized in the income statement. Cost comprises the purchase price of the asset including fees/taxes and any direct costs associated with commissioning the asset for use.
Repair and maintenance costs are expensed when incurred. If repair and maintenance increase the value of the asset, the cost will be added to the asset on the balance sheet. Depreciation is calculated on a straight-line basis over the following periods of time:
Office and lab equipment | 3-5 years |
Computer equipment | 3-4 years |
Leasehold improvements | 5 years |
The assets\u2019 residual value, useful lives and methods of depreciation are reviewed on an ongoing basis and adjusted prospectively, if necessary.
2.8 Impairment of non-financial assets
The Group\u2019s non-financial assets includes:
\u25a0\u00a0\u00a0\u00a0\u00a0Goodwill
\u25a0\u00a0\u00a0\u00a0\u00a0Capitalized development expenses
\u25a0\u00a0\u00a0\u00a0\u00a0Other intangible assets (software and IP)
\u25a0\u00a0\u00a0\u00a0\u00a0Property, plant and equipment
\u25a0\u00a0\u00a0\u00a0\u00a0Right-of-use assets
Non-financial assets are tested for impairment whenever there is an indication that their carrying amounts may not be recoverable. Goodwill and intangible assets still under development are subject to an annual impairment\u00a0test.
A CGU of one non-financial asset is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill does not generate cash flows independently of other assets and is, therefore, tested for impairment at the level of the CGU or group of CGUs that are expected to benefit from the synergies of the related business combination.
If any indication exists, the Group estimates the asset\u2019s recoverable amount. An asset\u2019s recoverable amount is the higher of an asset\u2019s or cash generating unit\u2019s (CGU) fair value less costs of disposal and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable\u00a0amount.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value\u00a0indicators.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
2.9 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
The Group is recognizing a financial asset or liability when it becomes a party to the instrument's contractual\u00a0terms.
The Group\u2019s financial assets and liabilities includes money market fund, accounts receivable, other financial assets, other current receivables, accounts payable, and other current payables.
Financial assets
Initial recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the asset. There is an exemption for accounts receivables, that do not contain a significant financing component or for which the Group has applied the practical expedient, are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in section 2.4 Revenue recognition.
Depending of the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them, the assets are at initial recognition and subsequently measured at amortized cost, fair value through other comprehensive income (OCI) or fair value through profit or\u00a0loss.
Financial assets are classified and measured at amortized cost or fair value through OCI, if it gives rise to cash flows that are \"solely payments of principal and interest (SPPI)\" on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group\u2019s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or\u00a0both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at amortized cost (debt instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt\u00a0instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through profit and loss (held for trading)
The categories relevant for the Group is amortized cost, including accounts receivables and other current receivables, and fair value through profit or loss (held for trading), including money market fund.
The Group measures financial assets at amortized cost if both of the following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and
\u25a0\u00a0\u00a0\u00a0\u00a0The contractual terms the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value through profit and loss\u00a0are subsequently at fair value with resulting gains and losses recognized in profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group\u2019s consolidated statement of financial position)\u00a0when:
\u25a0\u00a0\u00a0\u00a0\u00a0The rights to receive cash flows from the asset have expired, or
\u25a0\u00a0\u00a0\u00a0\u00a0The Group has transferred the asset according to IFRS 9 paragraph 3.2.4 and 3.2.5
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and accounts payables, net of directly attributable transaction costs.
Subsequent measurement
All financial liabilities are measured at amortized cost, except for financial liabilities at fair value through profit or loss.
After initial recognition, borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category includes derivative financial instruments (currency swap) entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by\u00a0IFRS 9.
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or\u00a0loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
2.10 Cash and cash equivalents
Cash and cash equivalents include cash at bank, short- term deposits with an original maturity of three months or less and money market fund. Money market funds and short-term time deposits are defined as cash equivalents because they are highly liquid and not subject to material fluctuations in value.
2.11 Inventory
Inventory is valued at the lower of cost according to the FIFO principle and net realizable value after deduction for obsolescence. Net realizable value is estimated as the selling price less cost of completion and the cost necessary to make the sale. Cost of inventories includes purchase price of raw materials and costs directly related to the conversion of materials into finished goods. They also include fixed and variable overheads which can be allocated to items based on normal\u00a0capacity.
The Group applies standard cost method to measure cost of inventories. The cost on products with high sales volume is reviewed monthly, and quarterly for other goods. Standard cost variance is the difference between standard cost and actual cost. This variance is impacting the cost of goods sold, and the variance is monitored on a regular basis.
Obsolete inventory is written down completely.
2.12 Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for\u00a0consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying\u00a0assets.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of\u00a0the\u00a0asset.
The Group has used the optional exemption in IFRS 16 and not accounted lease concessions, such as reduction in lease payments, due to Covid-19 as a lease modification. The following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The reversed consideration is substantially the same or less than the original consideration
\u25a0\u00a0\u00a0\u00a0\u00a0The reduction in lease payments relates to payments due on or before 30 June 2022
\u25a0\u00a0\u00a0\u00a0\u00a0No other substantive changes have been made to the terms of the lease
That means reductions in lease payments are accounted for as negative variable lease payments and be recognized in profit and loss.
The right-of-use assets are also subject to impairment, see note 2.8
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets\u00a0
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and low-value assets. The low value election is made on a lease-by-lease basis, and it refers to underlying assets with a value in order of USD 5 000 or less. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight- line basis over the lease\u00a0term.
2.13 Income taxes
Income tax expenses consist of taxes due and changes to the net deferred tax assets or liabilities.
Deferred tax assets and liabilities are calculated based on the differences between the carrying value of assets and liabilities in the financial accounts and their tax basis when such differences are considered at temporary in nature.
Deferred tax assets are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax assets.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Deferred income tax relating to items recognized in Other Comprehensive Income (\u201cOCI\u201d) or directly in equity is recognized outside profit or loss.
The parent company pays its tax obligation in NOK and the fluctuations between the NOK and the USD impact the financial items. The Group\u2019s legal entities that do not have their tax base in USD are exposed to changes in the USD/ tax base currency rates. Effects within the current year are classified as tax\u00a0expense.
2.14 Provisions
Provisions (such as legal claims and contractual severance) are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed each balance sheet date and the level reflects the best estimate of the obligation. When the time value is insignificant, the amount of the provision will be equal to the estimated expenditure required to settle the obligation. When the time effect is significant, the amount of the provision will be equal to the present value of future estimated expenditures to settle the obligation.
2.15 Employee benefits
Defined benefit pension plans
The Group had a defined benefit pension plan for its employees who were hired before December 31, 2007. The Group has also established a similar plan for employees in the Philippines. This plan is still open. Pension plan assets are valued at fair value. The defined benefit scheme in Norway was converted to a defined
contribution scheme. In connection with the transfer, the employees received a \u201cPaid up benefit\u201d for all earned benefits in the defined benefit plan. As there exist certain obligations related to retirees and employees on sick leave, an actuarial calculation is performed and a liability for these employees is included as of December 31, 2022.
Defined contribution pension plans
Employees hired after January 1, 2008, have a defined contribution pension plan described in note\u00a018.\u00a0\u00a0\u00a0\u00a0
Share based compensation
The Group grants restricted stock units and other awards over its ordinary shares to all employees. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 19.
That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other paid in capital), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). See note 19.
Accounting treatment of social security tax is not treated in IFRS 2. Social security tax is accrued over the vesting period based on the actual value of the stock unit.
2.16 Treasury shares
When treasury shares are purchased, the purchase price, including directly attributable costs are recognized as changes in equity. Treasury shares are presented as a reduction of equity. Gains or losses on transactions in treasury shares are not recognized in the income\u00a0statement.
2.17 Cash flow statement
2.1 Basis for consolidation
The consolidated financial statements incorporate the results, cash flows, and assets and liabilities of the parent company and its subsidiaries.
A subsidiary is an entity that is controlled, either directly or indirectly, by the parent company. Control exists when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power to direct the relevant activities of the investee. Generally, such power exists where the parent company holds a majority of the voting rights of an investee.
Subsidiaries are consolidated from the date control is obtained until the date that control ceases. All subsidiaries are wholly owned by the parent company and there are no non-controlling interests. Intercompany transactions, balances, and unrealized gains on transactions between group companies are eliminated.
A subsidiary is an entity that is controlled, either directly or indirectly, by the parent company. Control exists when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power to direct the relevant activities of the investee. Generally, such power exists where the parent company holds a majority of the voting rights of an investee.
Subsidiaries are consolidated from the date control is obtained until the date that control ceases. All subsidiaries are wholly owned by the parent company and there are no non-controlling interests. Intercompany transactions, balances, and unrealized gains on transactions between group companies are eliminated.
2.2 Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires that management uses judgement, estimates, and assumptions that effect the amounts reported in the financial statements and its disclosures. Management bases its estimates and judgement on previous experience and on various other factors deemed to be reasonable and sensible given the specific circumstances. The main areas of uncertainty for assessments and estimates are the balance sheet date, which represent a risk of creating significant changes to the value of assets and liabilities, are discussed below.
Estimates are continuously reassessed based on changes in the underlying assumptions. Changes in accounting estimates are recognized in the period in which such changes occur. If such changes also apply to future periods, the effect is distributed between current and future periods. The Group's Financial Statement
currently holds low volume of assets that are dependent on assessment of future cashflows. Hence, the climate risk is assessed to have low impact on current financial statement although it may impact the Group's future as described in Report from the Board of Directors.
Revenue recognition
Principles are described in\u00a02.4 Revenue recognition.
Nordic Semiconductor predominantly sells to electronic distributors under a distribution agreement. The distributors will hold a given level of Nordic Semiconductor's inventory that is subsequently shipped to an end customer. Nordic Semiconductor uses a \u201csell in\u201d model in connection with revenue recognition to distribution customers. Under a \u201csell in\u201d model, management needs to make judgements and estimates the amount that can affect the reported amounts of revenues and expenses. The main judgments are described\u00a0as\u00a0follows.
Variable consideration for \u201cShip and Debit\u201d
When a distributor sells components to specified customer accounts, the distributor will receive an additional rebate after the sale is made, commonly known as a \u201cShip and Debit\u201d rebate. In estimating the variable consideration, the Group is required to use the expected value method. The Group estimates the rebate based on historical discounts to each distributor, the distributors\u2019 inventory level as of 31 December 2022, and expected sales mix. An estimate for this rebate is provided in the accounts, reducing the revenue and increasing refund liabilities. See note 3.3.
Development costs
Development costs are capitalized in accordance with the principles in 2.5 Intangible assets.
In order to determine the amount to be capitalized, it is necessary for management to make assumptions regarding expected future cash flow, and the expected period of benefits. Capitalized development costs are subject to amortization on a straight-line basis over the period of expected future benefits, normally 1-5 years.
Uncertainty exists with respect to the estimated period of expected future benefit, as this depends on the future technological development in the market. During 2022 USD 6.5 million was capitalized. The carrying amount of capitalized development costs as of December 31, 2022 and 2021 was USD 27 million and USD 32 million\u00a0respectively.
Leases - Estimating the incremental borrowing rate
The interest rate implicit in the lease cannot readily be determined, therefore the incremental borrowing rate (IBR) is used to measure lease liabilities.
The lessee's IBR is defined in IFRS 16 as \u201cthe rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic\u00a0environment\u201d.
The Group has a centralized treasury department, and all financing is from the parent company in order to minimize the costs of finance. The subsidiaries are self-financed with low credit risk due to cost-plus intercompany invoicing for services, and do not enter into financing transactions into third parties. The Group entities have stand-alone arrangements for lease payments either with deposits or bank guarantee.
The IBR reflects what the companies of the Group \u2018would have to pay\u2019 , which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary\u2019s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary\u2019s standalone credit rating).
2.3 Foreign currency translation
Each entity within the Group has a functional currency, which is normally the currency in which the entity primarily generates and expends cash. The parent company is the most significant entity in the Group, and its functional currency is USD.
At entity level, a foreign currency is a currency other than the entity\u2019s functional currency. Transactions in the profit and loss statement denominated in foreign currencies are recorded in the entity\u2019s functional currency at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the balance sheet date. Currency translation differences arising at entity level are recognized in profit or loss.
The Group\u2019s presentation currency is USD, and foreign operations are those of the parent company\u2019s subsidiaries and branches whose functional currency is not USD. On consolidation, assets and liabilities of foreign operations are translated into USD according to the exchange rates prevailing on the balance sheet date. Profit or loss items are translated according to monthly average exchange rates. Changes in net assets resulting from exchange rate movements are recognized in other comprehensive income and taken to the currency translation reserve.
2.3 Foreign currency translation
Each entity within the Group has a functional currency, which is normally the currency in which the entity primarily generates and expends cash. The parent company is the most significant entity in the Group, and its functional currency is USD.
At entity level, a foreign currency is a currency other than the entity\u2019s functional currency. Transactions in the profit and loss statement denominated in foreign currencies are recorded in the entity\u2019s functional currency at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the balance sheet date. Currency translation differences arising at entity level are recognized in profit or loss.
The Group\u2019s presentation currency is USD, and foreign operations are those of the parent company\u2019s subsidiaries and branches whose functional currency is not USD. On consolidation, assets and liabilities of foreign operations are translated into USD according to the exchange rates prevailing on the balance sheet date. Profit or loss items are translated according to monthly average exchange rates. Changes in net assets resulting from exchange rate movements are recognized in other comprehensive income and taken to the currency translation reserve.
2.4 Revenue recognition
The Group is in the business of developing and selling integrated circuits. Revenue from customers is mainly generated from sale of products. Services delivered consists of consulting services. The Group and the customer do not receive financing from the sales, and therefore there are no significant financing components to be accounted for separately from the revenue transaction. The normal credit term is 30-60 days upon delivery. In other words, the contract does not require the customer to pay in advance or require the customer to pay a significant amount after delivery.
Sale of products
Sales of products are mostly made to distributors (customers). Revenue from product sales is recognized when control of the goods is transferred to the customer The time of delivery is considered to be when the goods are transferred to the transport carrier. Upon delivery, the Group has the right of payment for the asset, the customer has legal title to the asset, physical possession has been transferred to the customer, and the customer has full ownership of the asset.
Revenue recognized on the sale of products is measured at the fair value of the consideration received or receivable, excluding sales taxes and after making allowance for variable considerations such as rebates and product returns.
Ship and debit rebate
The Group sells products to certain distributors on \u201cship and debit\u201d terms. It means that the distributor may be entitled to a rebate if the distributor sells the product to end customers at a price lower than the price at which the distributor purchased the products from the Group. The difference in price is then claimed (debited) by the\u00a0distributor.
The Ship and Debit rebates are recognized as reduction in revenue and an increase in liabilities before the sale has taken place.
Stock rotation rights
Some distributors are entitled to limited rights of return, referred to as stock rotation rights. The Group tracks the distributor's inventory and can initiate a stock rotation earlier if a certain product is selling better with another distributor. As the products have similar margin, there are no significant losses for the Group when stock rotations are initiated. The Group does not make provisions or adjustments for stock rotation unless we expect the goods returned to be obsolete. Stock rotation provisions are made if necessary, based on most likely amount method.
End-customer volume rebates
Some end customers have entered into agreements with Nordic to receive a rebate based on their purchase quantity and price from the distributor. The rebates are recognized as reduction in revenue and increase in liabilities before payout by the end\u00a0customer.
Sale of services
Revenue from services is recognized as the services are rendered/delivered.
Trade receivables
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 2.9.
Assets and liabilities arising from rights of return
Right of return asset
Right of return asset represents the Group\u2019s right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of the returned goods.
The Group updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products. As the customers are only able to exchange the goods, the Group does not have a right of return asset.
Refund liabilities
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Group ultimately expects it will have to return to the customer. The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting\u00a0period.
Ship and debit rebate
The Group sells products to certain distributors on \u201cship and debit\u201d terms. It means that the distributor may be entitled to a rebate if the distributor sells the product to end customers at a price lower than the price at which the distributor purchased the products from the Group. The difference in price is then claimed (debited) by the\u00a0distributor.
The Ship and Debit rebates are recognized as reduction in revenue and an increase in liabilities before the sale has taken place.
End-customer volume rebates
Some end customers have entered into agreements with Nordic to receive a rebate based on their purchase quantity and price from the distributor. The rebates are recognized as reduction in revenue and increase in liabilities before payout by the end\u00a0customer.
2.5 Intangible assets
Capitalized development expenses
Research costs are expensed as incurred. Costs associated with development are capitalized if the following criteria are met in full:
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process is clearly defined and the cost elements can be identified and measured\u00a0reliably;
\u25a0\u00a0\u00a0\u00a0\u00a0The technical feasibility is demonstrated;
\u25a0\u00a0\u00a0\u00a0\u00a0The product or the process will be sold or used in the\u00a0business;
\u25a0\u00a0\u00a0\u00a0\u00a0The asset will generate future financial benefits;
\u25a0\u00a0\u00a0\u00a0\u00a0Sufficient technical, financial and other resources for project completion are in place
Costs expensed in prior accounting periods will not be capitalized. Depreciation begins when the product is transferred from development to production. Depreciation is calculated on a straight-line basis over 1-5 years. Uncertainty exists with respect to the expected period of benefits, as this depends on the future technological development in the market.
Goodwill
Goodwill acquired in a business combination is carried at cost as established at the acquisition date, less impairment losses, if any.
Other intangible assets
Other intangible assets comprise identifiable intangibles acquired in business combination (IP, developed technology), licenses and computer software. The assets held by the Group have finite useful lives determined by the expected usage of the asset by the entity. The assets are amortized on a straight-line basis over its estimated useful lives, normally 3-10 years.
The other intangible assets are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises the purchase price of the asset (including non-refundable purchase taxes) and any costs directly attributable to preparing the asset for
its intended use. In the case of an asset acquired in a business combination, the cost is its fair value at the acquisition date.
The amortization period and the amortization method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting\u00a0estimates.
Goodwill
Goodwill acquired in a business combination is carried at cost as established at the acquisition date, less impairment losses, if any.
Other intangible assets
Other intangible assets comprise identifiable intangibles acquired in business combination (IP, developed technology), licenses and computer software. The assets held by the Group have finite useful lives determined by the expected usage of the asset by the entity. The assets are amortized on a straight-line basis over its estimated useful lives, normally 3-10 years.
The other intangible assets are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises the purchase price of the asset (including non-refundable purchase taxes) and any costs directly attributable to preparing the asset for
its intended use. In the case of an asset acquired in a business combination, the cost is its fair value at the acquisition date.
The amortization period and the amortization method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting\u00a0estimates.
Goodwill
Goodwill acquired in a business combination is carried at cost as established at the acquisition date, less impairment losses, if any.
Other intangible assets
Other intangible assets comprise identifiable intangibles acquired in business combination (IP, developed technology), licenses and computer software. The assets held by the Group have finite useful lives determined by the expected usage of the asset by the entity. The assets are amortized on a straight-line basis over its estimated useful lives, normally 3-10 years.
The other intangible assets are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises the purchase price of the asset (including non-refundable purchase taxes) and any costs directly attributable to preparing the asset for
its intended use. In the case of an asset acquired in a business combination, the cost is its fair value at the acquisition date.
The amortization period and the amortization method for intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting\u00a0estimates.
2.6 Government grants
Grants received are tax refunds and are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover. Tax refunds are accounted for as a cost reduction. See note 5 and 9.
2.7 Property, plant and equipment
Property, plant and equipment are valued at the lower of cost net of accumulated depreciation and net realizable value. When an asset is sold or discontinued, the gain or loss from the transaction is recognized in the income statement. Cost comprises the purchase price of the asset including fees/taxes and any direct costs associated with commissioning the asset for use.
Repair and maintenance costs are expensed when incurred. If repair and maintenance increase the value of the asset, the cost will be added to the asset on the balance sheet. Depreciation is calculated on a straight-line basis over the following periods of time:
Office and lab equipment | 3-5 years |
Computer equipment | 3-4 years |
Leasehold improvements | 5 years |
The assets\u2019 residual value, useful lives and methods of depreciation are reviewed on an ongoing basis and adjusted prospectively, if necessary.
Office and lab equipment | 3-5 years |
Computer equipment | 3-4 years |
Leasehold improvements | 5 years |
2.8 Impairment of non-financial assets
The Group\u2019s non-financial assets includes:
\u25a0\u00a0\u00a0\u00a0\u00a0Goodwill
\u25a0\u00a0\u00a0\u00a0\u00a0Capitalized development expenses
\u25a0\u00a0\u00a0\u00a0\u00a0Other intangible assets (software and IP)
\u25a0\u00a0\u00a0\u00a0\u00a0Property, plant and equipment
\u25a0\u00a0\u00a0\u00a0\u00a0Right-of-use assets
Non-financial assets are tested for impairment whenever there is an indication that their carrying amounts may not be recoverable. Goodwill and intangible assets still under development are subject to an annual impairment\u00a0test.
A CGU of one non-financial asset is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill does not generate cash flows independently of other assets and is, therefore, tested for impairment at the level of the CGU or group of CGUs that are expected to benefit from the synergies of the related business combination.
If any indication exists, the Group estimates the asset\u2019s recoverable amount. An asset\u2019s recoverable amount is the higher of an asset\u2019s or cash generating unit\u2019s (CGU) fair value less costs of disposal and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable\u00a0amount.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value\u00a0indicators.
2.9 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
The Group is recognizing a financial asset or liability when it becomes a party to the instrument's contractual\u00a0terms.
The Group\u2019s financial assets and liabilities includes money market fund, accounts receivable, other financial assets, other current receivables, accounts payable, and other current payables.
Financial assets
Initial recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the asset. There is an exemption for accounts receivables, that do not contain a significant financing component or for which the Group has applied the practical expedient, are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in section 2.4 Revenue recognition.
Depending of the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them, the assets are at initial recognition and subsequently measured at amortized cost, fair value through other comprehensive income (OCI) or fair value through profit or\u00a0loss.
Financial assets are classified and measured at amortized cost or fair value through OCI, if it gives rise to cash flows that are \"solely payments of principal and interest (SPPI)\" on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group\u2019s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or\u00a0both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at amortized cost (debt instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt\u00a0instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through profit and loss (held for trading)
The categories relevant for the Group is amortized cost, including accounts receivables and other current receivables, and fair value through profit or loss (held for trading), including money market fund.
The Group measures financial assets at amortized cost if both of the following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and
\u25a0\u00a0\u00a0\u00a0\u00a0The contractual terms the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value through profit and loss\u00a0are subsequently at fair value with resulting gains and losses recognized in profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group\u2019s consolidated statement of financial position)\u00a0when:
\u25a0\u00a0\u00a0\u00a0\u00a0The rights to receive cash flows from the asset have expired, or
\u25a0\u00a0\u00a0\u00a0\u00a0The Group has transferred the asset according to IFRS 9 paragraph 3.2.4 and 3.2.5
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and accounts payables, net of directly attributable transaction costs.
Subsequent measurement
All financial liabilities are measured at amortized cost, except for financial liabilities at fair value through profit or loss.
After initial recognition, borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category includes derivative financial instruments (currency swap) entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by\u00a0IFRS 9.
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or\u00a0loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Financial assets
Initial recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the asset. There is an exemption for accounts receivables, that do not contain a significant financing component or for which the Group has applied the practical expedient, are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in section 2.4 Revenue recognition.
Depending of the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them, the assets are at initial recognition and subsequently measured at amortized cost, fair value through other comprehensive income (OCI) or fair value through profit or\u00a0loss.
Financial assets are classified and measured at amortized cost or fair value through OCI, if it gives rise to cash flows that are \"solely payments of principal and interest (SPPI)\" on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group\u2019s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or\u00a0both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at amortized cost (debt instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt\u00a0instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
\u25a0\u00a0\u00a0\u00a0\u00a0Financial assets at fair value through profit and loss (held for trading)
The categories relevant for the Group is amortized cost, including accounts receivables and other current receivables, and fair value through profit or loss (held for trading), including money market fund.
The Group measures financial assets at amortized cost if both of the following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and
\u25a0\u00a0\u00a0\u00a0\u00a0The contractual terms the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value through profit and loss\u00a0are subsequently at fair value with resulting gains and losses recognized in profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group\u2019s consolidated statement of financial position)\u00a0when:
\u25a0\u00a0\u00a0\u00a0\u00a0The rights to receive cash flows from the asset have expired, or
\u25a0\u00a0\u00a0\u00a0\u00a0The Group has transferred the asset according to IFRS 9 paragraph 3.2.4 and 3.2.5
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group\u2019s consolidated statement of financial position)\u00a0when:
\u25a0\u00a0\u00a0\u00a0\u00a0The rights to receive cash flows from the asset have expired, or
\u25a0\u00a0\u00a0\u00a0\u00a0The Group has transferred the asset according to IFRS 9 paragraph 3.2.4 and 3.2.5
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or\u00a0loss.
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Impairment of financial assets
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). The Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic\u00a0environment.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and accounts payables, net of directly attributable transaction costs.
Subsequent measurement
All financial liabilities are measured at amortized cost, except for financial liabilities at fair value through profit or loss.
After initial recognition, borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category includes derivative financial instruments (currency swap) entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by\u00a0IFRS 9.
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or\u00a0loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
2.10 Cash and cash equivalents
Cash and cash equivalents include cash at bank, short- term deposits with an original maturity of three months or less and money market fund. Money market funds and short-term time deposits are defined as cash equivalents because they are highly liquid and not subject to material fluctuations in value.
2.11 Inventory
Inventory is valued at the lower of cost according to the FIFO principle and net realizable value after deduction for obsolescence. Net realizable value is estimated as the selling price less cost of completion and the cost necessary to make the sale. Cost of inventories includes purchase price of raw materials and costs directly related to the conversion of materials into finished goods. They also include fixed and variable overheads which can be allocated to items based on normal\u00a0capacity.
The Group applies standard cost method to measure cost of inventories. The cost on products with high sales volume is reviewed monthly, and quarterly for other goods. Standard cost variance is the difference between standard cost and actual cost. This variance is impacting the cost of goods sold, and the variance is monitored on a regular basis.
Obsolete inventory is written down completely.
2.12 Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for\u00a0consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying\u00a0assets.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of\u00a0the\u00a0asset.
The Group has used the optional exemption in IFRS 16 and not accounted lease concessions, such as reduction in lease payments, due to Covid-19 as a lease modification. The following conditions are met:
\u25a0\u00a0\u00a0\u00a0\u00a0The reversed consideration is substantially the same or less than the original consideration
\u25a0\u00a0\u00a0\u00a0\u00a0The reduction in lease payments relates to payments due on or before 30 June 2022
\u25a0\u00a0\u00a0\u00a0\u00a0No other substantive changes have been made to the terms of the lease
That means reductions in lease payments are accounted for as negative variable lease payments and be recognized in profit and loss.
The right-of-use assets are also subject to impairment, see note 2.8
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets\u00a0
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and low-value assets. The low value election is made on a lease-by-lease basis, and it refers to underlying assets with a value in order of USD 5 000 or less. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight- line basis over the lease\u00a0term.
2.13 Income taxes
Income tax expenses consist of taxes due and changes to the net deferred tax assets or liabilities.
Deferred tax assets and liabilities are calculated based on the differences between the carrying value of assets and liabilities in the financial accounts and their tax basis when such differences are considered at temporary in nature.
Deferred tax assets are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax assets.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Deferred income tax relating to items recognized in Other Comprehensive Income (\u201cOCI\u201d) or directly in equity is recognized outside profit or loss.
The parent company pays its tax obligation in NOK and the fluctuations between the NOK and the USD impact the financial items. The Group\u2019s legal entities that do not have their tax base in USD are exposed to changes in the USD/ tax base currency rates. Effects within the current year are classified as tax\u00a0expense.
Deferred tax assets are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax assets.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Deferred income tax relating to items recognized in Other Comprehensive Income (\u201cOCI\u201d) or directly in equity is recognized outside profit or loss.
2.14 Provisions
Provisions (such as legal claims and contractual severance) are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed each balance sheet date and the level reflects the best estimate of the obligation. When the time value is insignificant, the amount of the provision will be equal to the estimated expenditure required to settle the obligation. When the time effect is significant, the amount of the provision will be equal to the present value of future estimated expenditures to settle the obligation.
2.15 Employee benefits
Defined benefit pension plans
The Group had a defined benefit pension plan for its employees who were hired before December 31, 2007. The Group has also established a similar plan for employees in the Philippines. This plan is still open. Pension plan assets are valued at fair value. The defined benefit scheme in Norway was converted to a defined
contribution scheme. In connection with the transfer, the employees received a \u201cPaid up benefit\u201d for all earned benefits in the defined benefit plan. As there exist certain obligations related to retirees and employees on sick leave, an actuarial calculation is performed and a liability for these employees is included as of December 31, 2022.
Defined contribution pension plans
Employees hired after January 1, 2008, have a defined contribution pension plan described in note\u00a018.\u00a0\u00a0\u00a0\u00a0
Share based compensation
The Group grants restricted stock units and other awards over its ordinary shares to all employees. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 19.
That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other paid in capital), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). See note 19.
Accounting treatment of social security tax is not treated in IFRS 2. Social security tax is accrued over the vesting period based on the actual value of the stock unit.
Share based compensation
The Group grants restricted stock units and other awards over its ordinary shares to all employees. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in note 19.
That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other paid in capital), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). See note 19.
2.16 Treasury shares
When treasury shares are purchased, the purchase price, including directly attributable costs are recognized as changes in equity. Treasury shares are presented as a reduction of equity. Gains or losses on transactions in treasury shares are not recognized in the income\u00a0statement.
The Group focuses on the sale of standard components for wireless communication. These wireless components are broken into the following end product areas: Consumer, Industrial, Healthcare and Others. In 2022, wireless components accounted for 99.4% of sales versus 98.9% in 2021. In addition to standard components, the Group sells customer-specific ASIC components (Application Specific Integrated Circuits) and related Consulting Services.
The Group recognized the first long-range (cellular IoT) revenue in the second half of 2018. Most of Nordic\u2019s cellular IoT customers are still in the development phase or in early commercial phase. When cellular IoT revenue materialize, Nordic will report the revenue in the relevant end product\u00a0areas.
GROUP | PARENT | |||
2022 | 2021 | Revenue | 2022 | 2021 |
483\u00a0799 | 408\u00a0156 | Consumer | 483\u00a0799 | 408\u00a0156 |
191\u00a0543 | 141\u00a0936 | Industrial | 191\u00a0543 | 141\u00a0936 |
67\u00a0623 | 35\u00a0575 | Healthcare | 67\u00a0623 | 35\u00a0575 |
29\u00a0163 | 18\u00a0376 | Others | 29\u00a0163 | 18\u00a0376 |
772\u00a0128 | 604\u00a0044 | Wireless components | 772\u00a0128 | 604\u00a0044 |
4\u00a0607 | 6\u00a0083 | ASIC components | 4\u00a0607 | 6\u00a0083 |
0 | 400 | Consulting services | 0 | 400 |
0 | 0 | Management fee | 1\u00a0029 | 1\u00a0049 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
The Group also classifies its revenues on a geographical basis according to its customers\u2019 location.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
97\u00a0868 | 53\u00a0116 | Europe | 98\u00a0679 | 53\u00a0886 |
107\u00a0966 | 61\u00a0663 | Americas | 108\u00a0123 | 61\u00a0910 |
570\u00a0899 | 495\u00a0749 | Asia/Pacific | 570\u00a0961 | 495\u00a0781 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
776\u00a0734 | 610\u00a0128 | Goods transferred at a point in time | 776\u00a0734 | 610\u00a0128 |
0 | 400 | Services transferred over time | 1\u00a0029 | 1\u00a0449 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days. See note 22 for further details.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Trade receivables | 175\u00a0120 | 141\u00a0748 |
3.3 Refund liabilities
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
30\u00a0694 | 20\u00a0530 | Refund liability \u2013 from ship & debit | 30\u00a0694 | 20\u00a0530 |
23\u00a0382 | 10\u00a0757 | Refund liability \u2013 from end-customer rebates | 23\u00a0382 | 10\u00a0757 |
3.4 Performance obligations
The performance obligations for the sale of components are normally satisfied upon the time of delivery. Payment is generally due 30 to 60 days within delivery.
For the consulting services, the performance obligation is satisfied over-time and the customer is generally invoiced at month-end for the work performed.
The Group focuses on the sale of standard components for wireless communication. These wireless components are broken into the following end product areas: Consumer, Industrial, Healthcare and Others. In 2022, wireless components accounted for 99.4% of sales versus 98.9% in 2021. In addition to standard components, the Group sells customer-specific ASIC components (Application Specific Integrated Circuits) and related Consulting Services.
The Group recognized the first long-range (cellular IoT) revenue in the second half of 2018. Most of Nordic\u2019s cellular IoT customers are still in the development phase or in early commercial phase. When cellular IoT revenue materialize, Nordic will report the revenue in the relevant end product\u00a0areas.
GROUP | PARENT | |||
2022 | 2021 | Revenue | 2022 | 2021 |
483\u00a0799 | 408\u00a0156 | Consumer | 483\u00a0799 | 408\u00a0156 |
191\u00a0543 | 141\u00a0936 | Industrial | 191\u00a0543 | 141\u00a0936 |
67\u00a0623 | 35\u00a0575 | Healthcare | 67\u00a0623 | 35\u00a0575 |
29\u00a0163 | 18\u00a0376 | Others | 29\u00a0163 | 18\u00a0376 |
772\u00a0128 | 604\u00a0044 | Wireless components | 772\u00a0128 | 604\u00a0044 |
4\u00a0607 | 6\u00a0083 | ASIC components | 4\u00a0607 | 6\u00a0083 |
0 | 400 | Consulting services | 0 | 400 |
0 | 0 | Management fee | 1\u00a0029 | 1\u00a0049 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
The Group also classifies its revenues on a geographical basis according to its customers\u2019 location.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
97\u00a0868 | 53\u00a0116 | Europe | 98\u00a0679 | 53\u00a0886 |
107\u00a0966 | 61\u00a0663 | Americas | 108\u00a0123 | 61\u00a0910 |
570\u00a0899 | 495\u00a0749 | Asia/Pacific | 570\u00a0961 | 495\u00a0781 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
776\u00a0734 | 610\u00a0128 | Goods transferred at a point in time | 776\u00a0734 | 610\u00a0128 |
0 | 400 | Services transferred over time | 1\u00a0029 | 1\u00a0449 |
776\u00a0734 | 610\u00a0528 | Total revenue from contracts with customers | 777\u00a0763 | 611\u00a0577 |
Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days. See note 22 for further details.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Trade receivables | 175\u00a0120 | 141\u00a0748 |
3.3 Refund liabilities
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
30\u00a0694 | 20\u00a0530 | Refund liability \u2013 from ship & debit | 30\u00a0694 | 20\u00a0530 |
23\u00a0382 | 10\u00a0757 | Refund liability \u2013 from end-customer rebates | 23\u00a0382 | 10\u00a0757 |
3.4 Performance obligations
The performance obligations for the sale of components are normally satisfied upon the time of delivery. Payment is generally due 30 to 60 days within delivery.
For the consulting services, the performance obligation is satisfied over-time and the customer is generally invoiced at month-end for the work performed.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
387\u00a0088 | 276\u00a0402 | Purchased materials | 387\u00a0088 | 276\u00a0402 |
-47\u00a0147 | 7\u00a0012 | Changes in inventory | -47\u00a0147 | 7\u00a0012 |
339\u00a0941 | 283\u00a0415 | Cost of materials | 339\u00a0941 | 283\u00a0415 |
34\u00a0356 | 9\u00a0704 | Raw materials | 34\u00a0356 | 9\u00a0704 |
25\u00a0380 | 18\u00a0440 | Work in Progress | 25\u00a0380 | 18\u00a0440 |
42\u00a0355 | 26\u00a0799 | Finished goods | 42\u00a0355 | 26\u00a0799 |
102\u00a0091 | 54\u00a0943 | Total inventory | 102\u00a0091 | 54\u00a0943 |
5\u00a0006 | 5\u00a0712 | Amount Written down | 5\u00a0006 | 5\u00a0712 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
387\u00a0088 | 276\u00a0402 | Purchased materials | 387\u00a0088 | 276\u00a0402 |
-47\u00a0147 | 7\u00a0012 | Changes in inventory | -47\u00a0147 | 7\u00a0012 |
339\u00a0941 | 283\u00a0415 | Cost of materials | 339\u00a0941 | 283\u00a0415 |
34\u00a0356 | 9\u00a0704 | Raw materials | 34\u00a0356 | 9\u00a0704 |
25\u00a0380 | 18\u00a0440 | Work in Progress | 25\u00a0380 | 18\u00a0440 |
42\u00a0355 | 26\u00a0799 | Finished goods | 42\u00a0355 | 26\u00a0799 |
102\u00a0091 | 54\u00a0943 | Total inventory | 102\u00a0091 | 54\u00a0943 |
5\u00a0006 | 5\u00a0712 | Amount Written down | 5\u00a0006 | 5\u00a0712 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
24\u00a0837 | 19\u00a0580 | Service and maintenance | 23\u00a0222 | 18\u00a0288 |
17\u00a0422 | 15\u00a0527 | Other consultancy fees | 12\u00a0318 | 11\u00a0658 |
2\u00a0301 | 1\u00a0582 | Office expenses | 1\u00a0088 | 1\u00a0030 |
1\u00a0956 | 1\u00a0558 | Office equipment | 1\u00a0246 | 1\u00a0201 |
11\u00a0401 | 6\u00a0198 | Material and components | 9\u00a0720 | 5\u00a0142 |
-57 | -108 | Tax grant | -57 | -108 |
-2\u00a0034 | -1\u00a0515 | Capitalized development expenses | -2\u00a0036 | -1\u00a0515 |
3\u00a0585 | 1\u00a0068 | Travel and meeting expenses | 1\u00a0799 | 742 |
10\u00a0274 | 8\u00a0207 | Other operating expenses | 8\u00a0448 | 7\u00a0297 |
\u2014 | \u2014 | Other operating expenses intercompany | 110\u00a0581 | 86\u00a0715 |
69\u00a0685 | 52\u00a0097 | Total other operating expenses | 166\u00a0328 | 130\u00a0450 |
Auditor remuneration, excl. of VAT
Fees to the auditor are included in consultancy fees above.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
109 | 90 | Audit services | 93 | 72 |
14 | 4 | Other attestation Services | 14 | \u2014 |
4 | 3 | Tax advisory Services | \u2014 | 3 |
\u2014 | \u2014 | Other Non Audit Services | \u2014 | \u2014 |
128 | 96 | Total revenues | 107 | 74 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
24\u00a0837 | 19\u00a0580 | Service and maintenance | 23\u00a0222 | 18\u00a0288 |
17\u00a0422 | 15\u00a0527 | Other consultancy fees | 12\u00a0318 | 11\u00a0658 |
2\u00a0301 | 1\u00a0582 | Office expenses | 1\u00a0088 | 1\u00a0030 |
1\u00a0956 | 1\u00a0558 | Office equipment | 1\u00a0246 | 1\u00a0201 |
11\u00a0401 | 6\u00a0198 | Material and components | 9\u00a0720 | 5\u00a0142 |
-57 | -108 | Tax grant | -57 | -108 |
-2\u00a0034 | -1\u00a0515 | Capitalized development expenses | -2\u00a0036 | -1\u00a0515 |
3\u00a0585 | 1\u00a0068 | Travel and meeting expenses | 1\u00a0799 | 742 |
10\u00a0274 | 8\u00a0207 | Other operating expenses | 8\u00a0448 | 7\u00a0297 |
\u2014 | \u2014 | Other operating expenses intercompany | 110\u00a0581 | 86\u00a0715 |
69\u00a0685 | 52\u00a0097 | Total other operating expenses | 166\u00a0328 | 130\u00a0450 |
Auditor remuneration, excl. of VAT
Fees to the auditor are included in consultancy fees above.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
109 | 90 | Audit services | 93 | 72 |
14 | 4 | Other attestation Services | 14 | \u2014 |
4 | 3 | Tax advisory Services | \u2014 | 3 |
\u2014 | \u2014 | Other Non Audit Services | \u2014 | \u2014 |
128 | 96 | Total revenues | 107 | 74 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
5\u00a0230 | 340 | Interest income | 5\u00a0203 | 350 |
972 | 389 | Other financial income | 968 | 387 |
6\u00a0202 | 730 | Financial income | 6\u00a0171 | 737 |
621 | 822 | Interest expenses on lease liabilities | 478 | 733 |
646 | 307 | Other financial expense | 616 | 268 |
1\u00a0267 | 1\u00a0128 | Financial expense | 1\u00a0094 | 1\u00a0001 |
-619 | -739 | Foreign exchange loss (net) | -673 | -704 |
5\u00a0554 | 340 | Net financial | 5\u00a0749 | 441 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Tax consists of | 2022 | 2021 |
-43\u00a0907 | -17\u00a0427 | Tax payable | -42\u00a0837 | -17\u00a0181 |
-2\u00a0102 | 2\u00a0663 | Change in deferred tax / benefit | -1\u00a0940 | 2\u00a0719 |
\u2014 | \u2014 | Group contribution, tax amount | -83 | \u2014 |
1\u00a0192 | -1\u00a0325 | Other items | 2\u00a0397 | -156 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
GROUP | PARENT | |||
2022 | 2021 | Reconciliation of nominal and actual tax expense | 2022 | 2021 |
167\u00a0155 | 87\u00a0260 | Profit before tax | 159\u00a0405 | 80\u00a0305 |
-36\u00a0774 | -19\u00a0197 | Tax at nominal rate 22 % | -35\u00a0069 | -17\u00a0667 |
42 | 47 | Tax effect of different tax rates in other countries | 42 | -89 |
518 | 4\u00a0605 | Tax effect permanent differences | 1\u00a0527 | 4\u00a0679 |
726 | \u2014 | Credit for tax paid | 98 | \u2014 |
-265 | 25 | Excess tax provision previous year | \u2014 | 25 |
-9\u00a0064 | -1\u00a0568 | Currency effect from translation to USD | -9\u00a0061 | -1\u00a0566 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
The Group has not recognized net deferred tax benefit of USD\u00a034 related to the subsidiary in India.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Tax consists of | 2022 | 2021 |
-43\u00a0907 | -17\u00a0427 | Tax payable | -42\u00a0837 | -17\u00a0181 |
-2\u00a0102 | 2\u00a0663 | Change in deferred tax / benefit | -1\u00a0940 | 2\u00a0719 |
\u2014 | \u2014 | Group contribution, tax amount | -83 | \u2014 |
1\u00a0192 | -1\u00a0325 | Other items | 2\u00a0397 | -156 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
GROUP | PARENT | |||
2022 | 2021 | Reconciliation of nominal and actual tax expense | 2022 | 2021 |
167\u00a0155 | 87\u00a0260 | Profit before tax | 159\u00a0405 | 80\u00a0305 |
-36\u00a0774 | -19\u00a0197 | Tax at nominal rate 22 % | -35\u00a0069 | -17\u00a0667 |
42 | 47 | Tax effect of different tax rates in other countries | 42 | -89 |
518 | 4\u00a0605 | Tax effect permanent differences | 1\u00a0527 | 4\u00a0679 |
726 | \u2014 | Credit for tax paid | 98 | \u2014 |
-265 | 25 | Excess tax provision previous year | \u2014 | 25 |
-9\u00a0064 | -1\u00a0568 | Currency effect from translation to USD | -9\u00a0061 | -1\u00a0566 |
-44\u00a0817 | -16\u00a0089 | Tax expense | -42\u00a0463 | -14\u00a0618 |
The Group has not recognized net deferred tax benefit of USD\u00a034 related to the subsidiary in India.
GROUP | ||||||
Deferred taxes: | Balance sheet | Income statement | Other. Comp. income | |||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Inventory | 757 | 1\u00a0517 | 600 | 1\u00a0023 | \u2014 | \u2014 |
Fixed Assets | 3\u00a0267 | 2\u00a0439 | -1\u00a0178 | 613 | \u2014 | \u2014 |
Leasing | 177 | 36 | -145 | -121 | \u2014 | \u2014 |
Options (share based payments) | \u2014 | 1\u00a0729 | 1\u00a0547 | 747 | \u2014 | \u2014 |
Pension obligation | 95 | 122 | -3 | -10 | 13 | 33 |
Financial instrument | \u2014 | 114 | \u2014 | 48 | \u2014 | \u2014 |
Accruals | 341 | 489 | 212 | 344 | \u2014 | \u2014 |
Deferred tax benefit - gross | 4\u00a0637 | 6\u00a0446 | 1\u00a0033 | 2\u00a0644 | 13 | 33 |
Gain and loss account | 24 | 33 | 6 | -10 | \u2014 | \u2014 |
Net other tax-obligations | \u2014 | 82 | 73 | 24 | \u2014 | \u2014 |
Financial instrument | 59 | \u2014 | -161 | \u2014 | \u2014 | \u2014 |
Deferred tax obligation - gross | 83 | 115 | -82 | 14 | 0 | 0 |
Currency effect of translation to USD | -21 | 165 | ||||
Net deferred tax benefit (obligation) | 4\u00a0554 | 6\u00a0331 | ||||
Deferred tax expense | 1\u00a0094 | 2\u00a0795 | 13 | 33 |
PARENT | ||||||
Deferred taxes: | Balance sheet | Income statement | Other. Comp. income | |||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Inventory | 757 | 1\u00a0517 | 600 | 1\u00a0023 | \u2014 | \u2014 |
Fixed Assets | 2\u00a0836 | 2\u00a0044 | -1\u00a0008 | 857 | \u2014 | \u2014 |
Leasing | 173 | 36 | -140 | -121 | \u2014 | \u2014 |
Options (share based payments) | \u2014 | 1\u00a0729 | 1\u00a0547 | 747 | \u2014 | \u2014 |
Pension obligation | 95 | 122 | -3 | -10 | 13 | 33 |
Financial instrument | \u2014 | 114 | \u2014 | 48 | \u2014 | \u2014 |
Accruals | 30 | 302 | 240 | 157 | \u2014 | \u2014 |
Deferred tax benefit - gross | 3\u00a0891 | 5\u00a0864 | 1\u00a0236 | 2\u00a0701 | 13 | 33 |
Gain and loss account | 24 | 33 | 6 | -10 | \u2014 | \u2014 |
Net other tax-obligations | \u2014 | 82 | 70 | 24 | \u2014 | \u2014 |
Financial instrument | 59 | \u2014 | -161 | \u2014 | \u2014 | \u2014 |
Deferred tax obligation - gross | 83 | 115 | -85 | 14 | 0 | 0 |
Currency effect of translation to USD | -9 | 127 | ||||
Net deferred tax benefit (obligation) | 3\u00a0808 | 5\u00a0749 | ||||
Deferred tax expense | 1\u00a0312 | 2\u00a0813 | 13 | 33 |
GROUP | PARENT | |||
2022 | 2021 | Reconciliation of net deferred tax obligation | 2022 | 2021 |
6\u00a0331 | 3\u00a0668 | Opening balance as of 1.1 | 5\u00a0748 | 3\u00a0029 |
-1\u00a0083 | 2\u00a0795 | Tax expense recognized in the P&L | -1\u00a0312 | 2\u00a0813 |
13 | 33 | Tax expense recognized in OCI | 13 | 33 |
-711 | -165 | Currency effect from translation to USD | -645 | -127 |
4\u00a0550 | 6\u00a0331 | Net deferred tax obligation / benefit 31.12 | 3\u00a0804 | 5\u00a0748 |
GROUP | PARENT | |||
2022 | 2021 | Net deferred tax recognized in OCI as of 31.12 | 2022 | 2021 |
13 | 33 | Net gain on actuarial gains and losses | 13 | 33 |
13 | 33 | Total tax other comprehensive income | 13 | 33 |
Basis for calculation of basic earnings per share | 2022 | 2021 |
Earnings for the year (USD \u2018000) | 122\u00a0339 | 71\u00a0171 |
Weighted average number of outstanding shares (\u2018000) | 191\u00a0365 | 190\u00a0961 |
Earnings per share (USD) | 0.64 | 0.37 |
Basis for calculation of fully diluted earnings per share | ||
Earnings for the year (USD \u2018000) | 122\u00a0339 | 71\u00a0171 |
Weighted average number of outstanding shares (\u2018000) | 192\u00a0739 | 193\u00a0042 |
Earnings per share (USD) | 0.63 | 0.37 |
The number of shares was as follows:
Date | Shares issued | Shares outstanding | |
01.01.2022 | Opening balance | 192\u00a0781\u00a0600 | 190\u00a0962\u00a0563 |
31.12.2022 | Closing balance | 192\u00a0781\u00a0600 | 191\u00a0575\u00a0087 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Combined expenses for salary and other compensation are distributed as follows: | 2022 | 2021 |
115\u00a0380 | 104\u00a0476 | Salary and vacation pay | 57\u00a0004 | 56\u00a0579 |
28\u00a0335 | 25\u00a0239 | Other compensation | 15\u00a0448 | 16\u00a0747 |
11\u00a0704 | 14\u00a0011 | Payroll tax | 8\u00a0692 | 11\u00a0869 |
-424 | -431 | Tax grant | -424 | -431 |
10\u00a0898 | 10\u00a0650 | Defined contribution pension | 4\u00a0606 | 3\u00a0840 |
-4\u00a0453 | -4\u00a0121 | Capitalized development expenses (hourly costs) | -4\u00a0453 | -4\u00a0121 |
161\u00a0440 | 149\u00a0824 | Total | 80\u00a0872 | 84\u00a0483 |
1\u00a0311 | 1\u00a0090 | Weighted average number of full time employees | 647 | 599 |
GROUP | PARENT | |||
2022 | 2021 | Employees as of December 31, are distributed as follows: | 2022 | 2021 |
612 | 518 | Norway | 612 | 518 |
322 | 273 | Finland | \u2014 | \u2014 |
115 | 93 | Poland | \u2014 | \u2014 |
49 | 52 | India | \u2014 | \u2014 |
57 | 49 | USA | \u2014 | \u2014 |
58 | 49 | Taiwan | \u2014 | 49 |
77 | 48 | UK | \u2014 | \u2014 |
41 | 34 | Philippines | 41 | 34 |
40 | 28 | Sweden | \u2014 | \u2014 |
28 | 19 | China | \u2014 | 19 |
15 | 13 | Hong Kong | \u2014 | \u2014 |
4 | 5 | South Korea | 4 | 5 |
4 | 4 | Germany | \u2014 | \u2014 |
4 | 3 | Japan | \u2014 | \u2014 |
3 | 3 | The Netherlands | 3 | 3 |
0 | 2 | Spain | \u2014 | 2 |
2 | 2 | Australia | 2 | 2 |
0 | 1 | Switzerland | \u2014 | 1 |
4 | 1 | Singapore | \u2014 | 1 |
1\u00a0435 | 1\u00a0197 | Total | 662 | 634 |
Defined benefit plan
The pension liability for the Group consists of liabilities in Norway, Poland, India and The Philippines.
Nordic has set up a pension plan for the Philippine office as of January 2014. The retirement plan is unfunded and of the defined benefit type which provides a retirement benefit calculated based on number of years of credited service. At the end of 2022 the pension liability was USD\u00a0210,944.
For the company in Finland, pensions are financed by contributions from the insured employees and employers. The Norwegian company in the Group is required to have mandatory employment pension for employees in Norway, according to the Mandatory Employment Pension Act.
The defined benefit plan was closed for new members effective January 1, 2008 and from this point a new defined contribution plan was established. The two different types of pensions are described below:
\u00a0All figures in USD 1 000
Defined Pension Plan | 2022 | 2021 |
Current service cost | \u2014 | \u2014 |
Interest expense | 16 | 17 |
Expected return on plan assets | -13 | -14 |
Administration fee | 2 | 2 |
Total pension expense excl. Social security tax | 5 | 5 |
Social security tax | 1 | 1 |
Total pension expense incl. Social security tax | 6 | 6 |
Net pension obligation for the year was calculated as follows: | 2022 | 2021 |
Pension obligations | 1\u00a0091 | 1\u00a0195 |
Plan assets | 899 | 964 |
Estimated net obligation | 192 | 231 |
Social security tax | 27 | 33 |
Total actual net obligation ink. Social security tax | 219 | 263 |
Total pension liability for the Group | 2022 | 2021 |
Employees in Norway | 219 | 263 |
Employees in Philippines | 211 | 290 |
Employees in the UK | \u2014 | 4 |
Employees in Poland | 30 | 22 |
Employees in India | 216 | \u2014 |
Total | 676 | 580 |
Defined contribution pension plan
All figures in USD 1 000
Note 10.1: Management remuneration
Pursuant to the changes in the Public Limited Liability Companies Act, i.e., the addition of a new section 6-16 (b), and associated new regulations, Nordic will publish a separate management remuneration report for presentation at the Annual General Meeting on 20 April 2023, containing detailed information on remuneration to Executive Management Team (EMT) for the reporting year 2022. The remuneration report includes detailed information on EMTs remuneration complementing the numbers
presented below. This includes an overview of the operational, financial, environmental, social and governance targets that form basis for the short-term incentives.
EMT members\u2019 salaries and other benefits, including long term incentive plans are presented in the table below. Unless otherwise stated, Nordic did not have any loans to or guarantees made on behalf of any of the EMT members in 2022 and 2021.
The remuneration paid or awarded to the CEO and other members of the EMT was aligned with Nordics\u2019s remuneration policy. The policy is available in its full at nordicsemi.com.
Total compensation* expensed during the year for the CEO and other executives: | |||||||
2022 | Salary | Bonus | Options & PSU** | RSUs & | Other Comp. | Pension expenses | Total |
Svenn-Tore Larsen, CEO | 461 | 185 | 71 | 267 | 2 | 87 | 1\u00a0072 |
P\u00e5l Elstad, CFO/EVP Finance | 273 | 98 | 34 | 124 | 4 | 42 | 575 |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 308 | 112 | 41 | 140 | 4 | 52 | 657 |
Geir Langeland, EVP Sales & Marketing | 290 | 118 | 36 | 150 | 4 | 50 | 648 |
Ebbe R\u00f8mcke, SVP Quality & Sustainability**** | 189 | 65 | 23 | 83 | 2 | 26 | 387 |
Ole Fredrik Morken, EVP Supply Chain*** | 303 | 74 | 29 | 98 | 3 | 31 | 538 |
Marianne Frydenlund, SVP Legal**** | 121 | \u2014 | 19 | \u2014 | 1 | 9 | 150 |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 203 | 65 | 25 | 84 | 4 | 25 | 406 |
Kjetil Holstad, EVP Product Management | 203 | 73 | 20 | 87 | 3 | 30 | 417 |
Katarina Finneng, EVP People & Communication | 227 | 83 | 1 | 103 | 3 | 35 | 453 |
Linda Pettersson, SVP Legal & Compliance**** | 136 | 40 | 0 | 4 | 2 | 17 | 198 |
Ola Bostr\u00f6m, SVP Quality & Sustainability**** | 160 | 44 | 0 | 28 | 3 | 20 | 257 |
Total | 2\u00a0873 | 958 | 299 | 1\u00a0168 | 35 | 425 | 5\u00a0758 |
2021 | Salary | Bonus | Options & PSU** | RSUs & | Other Comp. | Pension expenses | Total |
Svenn-Tore Larsen, CEO | 488 | 270 | 11 | 237 | 4 | 18 | 1\u00a0027 |
P\u00e5l Elstad, CFO/EVP Finance | 289 | 143 | 7 | 112 | 2 | 18 | 571 |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 327 | 162 | 8 | 128 | 2 | 18 | 645 |
Geir Langeland, EVP Sales & Marketing | 306 | 168 | 7 | 132 | 2 | 18 | 633 |
Ebbe R\u00f8mcke, SVP Quality & Sustainability**** | 203 | 96 | 5 | 75 | 2 | 18 | 399 |
Ole Fredrik Morken, EVP Supply Chain*** | 328 | 109 | 6 | 90 | 2 | 18 | 552 |
Marianne Frydenlund, SVP Legal**** | 182 | 90 | 2 | 68 | 2 | 18 | 361 |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 224 | 97 | 5 | 78 | 2 | 18 | 424 |
Kjetil Holstad, EVP Product Management | 208 | 101 | 4 | 74 | 2 | 18 | 407 |
Katarina Finneng, EVP People & Communication | 239 | 118 | 6 | 69 | 2 | 18 | 451 |
Total | 2\u00a0794 | 1\u00a0355 | 60 | 1\u00a0063 | 19 | 179 | 5\u00a0470 |
*Management compensation is paid in NOK. Exchange rate for 2022: 9.62 and 2021: 8.56
**Option cost is the expense of fair value of options based on Black Scholes calculation
***Includes expat allowances
****Marianne Frydenlund and Ebbe R\u00f8mcke were no longer a part of the EMT by year end 2022. Linda Pettersson and Ola Bostr\u00f6m joined the EMT during 2022, in July and August respectively
The Group has granted EMT members the following RSUs and performance shares (PSUs): | ||||
EMT member | 2022 | 2021 | ||
Svenn-Tore Larsen, CEO | 6 532 RSUs | 6 532 PSUs | 10 933 RSUs | 6 213 PSUs |
P\u00e5l Elstad, CFO/EVP Finance | 3 193 RSUs | 3 193 PSUs | 3 056 RSUs | 3 056 PSUs |
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 3 609 RSUs | 3 609 PSUs | 3 455 RSUs | 3 455 PSUs |
Geir Langeland, EVP Sales & Marketing | 3 379 RSUs | 3 379 PSUs | 6 139 RSUs | 3 189 PSUs |
Ebbe R\u00f8mcke, SVP Quality & Sustainability | 2 111 RSUs | 2 111 PSUs | 2 059 RSUs | 2 059 PSUs |
Ole Fredrik Morken, EVP Supply Chain** | 2 429 RSUs | 2 429 PSUs | 2 325 RSUs | 2 325 PSUs |
Marianne Frydenlund, SVP Legal*** | 0 RSUs | 0 PSUs | 1 927 RSUs | 1 927 PSUs |
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 2 087 RSUs | 2 087 PSUs | 2 066 RSUs | 2 066 PSUs |
Kjetil Holstad, EVP Product Management | 2 380 RSUs | 2 380 PSUs | 2 156 RSUs | 2 156 PSUs |
Katarina Finneng, EVP People & Communication | 2 662 RSUs | 2 662 PSUs | 2 524 RSUs | 2 524 PSUs |
During 2022 the executives exercised the following options:
Executives | Grant year | Number of options exercised | Strike price | Cash payout in USD 1000 |
Svenn-Tore Larsen, CEO | 2019 Option | 12\u00a0721 | 45.10 | 119 |
2019 PSU | 26\u00a0872 | 533 | ||
P\u00e5l Elstad, CFO/EVP Finance | 2019 Option | 7\u00a0880 | 45.10 | 74 |
2019 PSU | 12\u00a0804 | 254 | ||
Svein Egil Nielsen, CTO/EVP R&D and Strategy | 2019 Option | 9\u00a0381 | 45.10 | 88 |
2019 PSU | 15\u00a0244 | 302 | ||
Geir Langeland, EVP Sales & Marketing | 2019 Option | 8\u00a0256 | 45.10 | 77 |
2019 PSU | 13\u00a0414 | 266 | ||
Ebbe R\u00f8mcke, SVP Quality & Sustainability | 2019 Option | 5\u00a0254 | 45.10 | 49 |
2019 PSU | 8\u00a0536 | 168 | ||
Ole Fredrik Morken, EVP Supply Chain** | 2019 Option | 6\u00a0567 | 45.10 | 62 |
2019 PSU | 10\u00a0670 | 212 | ||
Marianne Frydenlund, SVP Legal | 2019 Option | 4\u00a0315 | 45.10 | 40 |
2019 PSU | 7\u00a0012 | 138 | ||
St\u00e5le Ytterdal, SVP IR & Strategic Sales | 2019 Option | 5\u00a0816 | 45.10 | 55 |
2019 PSU | 9\u00a0452 | 187 | ||
Kjetil Holstad, EVP Product Management | 2019 Option | 4\u00a0691 | 45.10 | 44 |
2019 PSU | 7\u00a0622 | 15 | ||
Katarina Finneng, EVP People & Communication | 2019 Option | 6\u00a0667 | 45.10 | 63 |
*The RSU for management vest after three years for management two years for employees
** Purchased shares, no cash payout from the company
*** Grant in 2022 due to ended employment contract
Note 10.2: Board remuneration
Total compensation expensed for Board Members* | 2022 | 2021 |
Birger Steen, Chair | 165 | 132 |
Inger Berg \u00d8rstavik, Board Member | 68 | 57 |
Endre Holen, Board Member | 90 | 72 |
Jan Magnus Frykhammar, Board Member | 80 | 65 |
\u00d8yvind Birkenes, Board Member | 62 | 50 |
Annastiina Hintsa, Board Member | 63 | 50 |
Anita Huun, Board Member | 68 | 57 |
Jon Helge Nistad, Board Employee Representative (Board remuneration only) | 16 | 18 |
Susheel Nuguru, Board Employee Representative (Board remuneration only) | 5 | 18 |
Morten Dammen, Board Employee Representative (Board remuneration only) | 16 | 18 |
Joel Stapleton, Board Employee Representative (Board remuneration only) | 5 | 18 |
Gro Fykse, Board Employee Representative (Board remuneration only) | 10 | 0 |
Anja Dekens, Board Employee Representative (Board remuneration only) | 10 | 0 |
Total | 659 | 554 |
All figures in USD 1 000
GROUP | |||||
2022 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 37\u00a0980 | 66\u00a0006 | 6\u00a0716 | 333 | 111\u00a0035 |
Additions | 8\u00a0027 | 11\u00a0492 | 1\u00a0374 | \u2014 | 20\u00a0893 |
Disposals | -6\u00a0163 | -32\u00a0826 | -1\u00a0950 | -40\u00a0939 | |
Acqusition cost as of 31.12 | 39\u00a0843 | 44\u00a0673 | 6\u00a0138 | 333 | 90\u00a0989 |
Opening balance | 25\u00a0192 | 47\u00a0999 | 3\u00a0958 | \u2014 | 77\u00a0149 |
Depreciation expenses | 7\u00a0485 | 10\u00a0781 | 990 | \u2014 | 19\u00a0257 |
Disposals | -6\u00a0163 | -32\u00a0825 | -2\u00a0032 | \u2014 | -41\u00a0020 |
Accumulated depreciation as of 31.12 | 26\u00a0514 | 25\u00a0955 | 2\u00a0916 | 0 | 55\u00a0384 |
Net carrying value as of 31.12 | 13\u00a0329 | 18\u00a0716 | 3\u00a0222 | 333 | 35\u00a0603 |
PARENT | |||||
2022 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 25\u00a0482 | 61\u00a0891 | 5\u00a0469 | 333 | 93\u00a0174 |
Additions | 2\u00a0818 | 11\u00a0315 | 771 | \u2014 | 14\u00a0903 |
Disposals | -10\u00a0038 | -32\u00a0650 | -3\u00a0262 | \u2014 | -45\u00a0950 |
Acqusition cost as of 31.12 | 18\u00a0262 | 40\u00a0555 | 2\u00a0977 | 333 | 62\u00a0126 |
Opening balance | 15\u00a0563 | 45\u00a0382 | 3\u00a0404 | \u2014 | 64\u00a0349 |
Depreciation expenses | 4\u00a0402 | 10\u00a0334 | 577 | \u2014 | 15\u00a0313 |
Diposals | -7\u00a0753 | -32\u00a0589 | -2\u00a0465 | \u2014 | -42\u00a0807 |
Accumulated depreciation as of 31.12 | 12\u00a0212 | 23\u00a0127 | 1\u00a0517 | 0 | 36\u00a0855 |
Net carrying value as of 31.12 | 6\u00a0050 | 17\u00a0429 | 1\u00a0460 | 333 | 25\u00a0271 |
GROUP | |||||
2021 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 30\u00a0055 | 53\u00a0470 | 5\u00a0556 | 333 | 89\u00a0414 |
Additions | 7\u00a0925 | 12\u00a0536 | 1\u00a0159 | \u2014 | 21\u00a0619 |
Acqusition cost as of 31.12 | 37\u00a0980 | 66\u00a0006 | 6\u00a0716 | 333 | 111\u00a0034 |
Opening balance | 18\u00a0725 | 39\u00a0302 | 3\u00a0104 | \u2014 | 61\u00a0131 |
Depreciation expenses | 6\u00a0468 | 8\u00a0697 | 854 | \u2014 | 16\u00a0019 |
Accumulated depreciation as of 31.12 | 25\u00a0192 | 47\u00a0999 | 3\u00a0958 | 0 | 77\u00a0149 |
Net carrying value as of 31.12 | 12\u00a0788 | 18\u00a0007 | 2\u00a0757 | 333 | 33\u00a0885 |
PARENT | |||||
2021 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
Opening balance | 20\u00a0565 | 50\u00a0051 | 4\u00a0795 | 333 | 75\u00a0743 |
Additions | 4\u00a0917 | 11\u00a0840 | 674 | \u2014 | 17\u00a0430 |
Acqusition cost as of 31.12 | 25\u00a0482 | 61\u00a0891 | 5\u00a0469 | 333 | 93\u00a0174 |
Opening balance | 11\u00a0031 | 37\u00a0014 | 2\u00a0737 | \u2014 | 50\u00a0782 |
Depreciation expenses | 4\u00a0532 | 8\u00a0368 | 667 | \u2014 | 13\u00a0567 |
Accumulated depreciation as of 31.12 | 15\u00a0563 | 45\u00a0382 | 3\u00a0404 | 0 | 64\u00a0349 |
Net carrying value as of 31.12 | 9\u00a0919 | 16\u00a0509 | 2\u00a0064 | 333 | 28\u00a0824 |
GROUP AND PARENT | |||||
Estimated useful life | 3 - 5 years | 3 - 4 years | 5 years | ||
Depreciation method | Straight-line | Straight-line | Straight-line | No depreciation |
Total depreciation expenses consist of depreciation of fixed assets and depreciation of intangible assets (note\u00a012).
Non-depreciable property assets:
The parent company has an apartment in Trondheim for use by employees in the Oslo office while in Trondheim. The apartment is assessed at acquisition cost. The residual value is expected to be at least equal to the book value.
Scrapped capital assets
All capital assets that are ready to be scrapped have been fully depreciated and have no residual book value.
Capital assets temporarily out of operation
The Group has no capital assets that are temporarily out of operation.
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
All figures in USD 1 000.
GROUP | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Additions | 2\u00a0909 | 6\u00a0489 | -102 | 9\u00a0297 |
Disposals | -22\u00a0684 | -29\u00a0491 | \u2014 | -52\u00a0175 |
Acqusition cost as of 31.12 | 31\u00a0121 | 57\u00a0015 | 2\u00a0284 | 90\u00a0424 |
Accumulated depreciation | ||||
Opening balance | 35\u00a0132 | 48\u00a0477 | \u2014 | 83\u00a0609 |
Depreciation expenses | 7\u00a0068 | 11\u00a0423 | \u2014 | 18\u00a0491 |
Disposals | -22\u00a0734 | -29\u00a0491 | \u2014 | -52\u00a0225 |
Accumulated depreciation as of 31.12 | 19\u00a0466 | 30\u00a0408 | 0 | 49\u00a0874 |
Net carrying value as of 31.12 | 11\u00a0655 | 26\u00a0608 | 2\u00a0284 | 40\u00a0547 |
PARENT | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Additions | 2\u00a0135 | 6\u00a0489 | \u2014 | 8\u00a0624 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Acqusition cost as of 31.12 | 28\u00a0839 | 57\u00a0015 | 249 | 86\u00a0103 |
Accumulated depreciation | ||||
Opening balance | 34\u00a0155 | 48\u00a0476 | \u2014 | 82\u00a0631 |
Depreciation expenses | 6\u00a0642 | 11\u00a0423 | \u2014 | 18\u00a0065 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Accumulated depreciation as of 31.12 | 18\u00a0114 | 30\u00a0408 | 0 | 48\u00a0522 |
Net carrying value as of 31.12 | 10\u00a0726 | 26\u00a0608 | 249 | 37\u00a0583 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
98\u00a0672 | Personnel expenses | 40\u00a0232 |
38\u00a0488 | Other operating expenses | 29\u00a0209 |
137\u00a0160 | Total cost recognized in income statement | 69\u00a0441 |
143\u00a0649 | Total cost for R&D (incl. capitalized development cost) | 75\u00a0930 |
GROUP | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 47\u00a0799 | 74\u00a0373 | 2\u00a0393 | 124\u00a0566 |
Additions | 3\u00a0096 | 5\u00a0646 | -7 | 8\u00a0735 |
Acqusition cost as of 31.12 | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0894 | 39\u00a0811 | \u2014 | 67\u00a0705 |
Depreciation expenses | 7\u00a0238 | 8\u00a0665 | \u2014 | 15\u00a0904 |
Accumulated depreciation as of 31.12 | 35\u00a0132 | 48\u00a0477 | 0 | 83\u00a0610 |
Net carrying value as of 31.12 | 15\u00a0764 | 31\u00a0542 | 2\u00a0386 | 49\u00a0693 |
PARENT | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 46\u00a0517 | 74\u00a0373 | 249 | 121\u00a0140 |
Additions | 2\u00a0870 | 5\u00a0644 | \u2014 | 8\u00a0514 |
Acqusition cost as of 31.12 | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0231 | 39\u00a0811 | \u2014 | 67\u00a0042 |
Depreciation expenses | 6\u00a0924 | 8\u00a0665 | \u2014 | 15\u00a0589 |
Accumulated depreciation as of 31.12 | 34\u00a0155 | 48\u00a0476 | 0 | 82\u00a0631 |
Net carrying value as of 31.12 | 15\u00a0232 | 31\u00a0541 | 249 | 47\u00a0022 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
102\u00a0189 | Personnel expenses | 49\u00a0886 |
37\u00a0211 | Other operating expenses | 25\u00a0335 |
139\u00a0400 | Total cost recognized in income statement | 75\u00a0221 |
145\u00a0046 | Total cost for R&D (incl. capitalized development cost) | 80\u00a0866 |
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
All figures in USD 1 000.
GROUP | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Additions | 2\u00a0909 | 6\u00a0489 | -102 | 9\u00a0297 |
Disposals | -22\u00a0684 | -29\u00a0491 | \u2014 | -52\u00a0175 |
Acqusition cost as of 31.12 | 31\u00a0121 | 57\u00a0015 | 2\u00a0284 | 90\u00a0424 |
Accumulated depreciation | ||||
Opening balance | 35\u00a0132 | 48\u00a0477 | \u2014 | 83\u00a0609 |
Depreciation expenses | 7\u00a0068 | 11\u00a0423 | \u2014 | 18\u00a0491 |
Disposals | -22\u00a0734 | -29\u00a0491 | \u2014 | -52\u00a0225 |
Accumulated depreciation as of 31.12 | 19\u00a0466 | 30\u00a0408 | 0 | 49\u00a0874 |
Net carrying value as of 31.12 | 11\u00a0655 | 26\u00a0608 | 2\u00a0284 | 40\u00a0547 |
PARENT | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Additions | 2\u00a0135 | 6\u00a0489 | \u2014 | 8\u00a0624 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Acqusition cost as of 31.12 | 28\u00a0839 | 57\u00a0015 | 249 | 86\u00a0103 |
Accumulated depreciation | ||||
Opening balance | 34\u00a0155 | 48\u00a0476 | \u2014 | 82\u00a0631 |
Depreciation expenses | 6\u00a0642 | 11\u00a0423 | \u2014 | 18\u00a0065 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Accumulated depreciation as of 31.12 | 18\u00a0114 | 30\u00a0408 | 0 | 48\u00a0522 |
Net carrying value as of 31.12 | 10\u00a0726 | 26\u00a0608 | 249 | 37\u00a0583 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
98\u00a0672 | Personnel expenses | 40\u00a0232 |
38\u00a0488 | Other operating expenses | 29\u00a0209 |
137\u00a0160 | Total cost recognized in income statement | 69\u00a0441 |
143\u00a0649 | Total cost for R&D (incl. capitalized development cost) | 75\u00a0930 |
GROUP | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 47\u00a0799 | 74\u00a0373 | 2\u00a0393 | 124\u00a0566 |
Additions | 3\u00a0096 | 5\u00a0646 | -7 | 8\u00a0735 |
Acqusition cost as of 31.12 | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0894 | 39\u00a0811 | \u2014 | 67\u00a0705 |
Depreciation expenses | 7\u00a0238 | 8\u00a0665 | \u2014 | 15\u00a0904 |
Accumulated depreciation as of 31.12 | 35\u00a0132 | 48\u00a0477 | 0 | 83\u00a0610 |
Net carrying value as of 31.12 | 15\u00a0764 | 31\u00a0542 | 2\u00a0386 | 49\u00a0693 |
PARENT | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 46\u00a0517 | 74\u00a0373 | 249 | 121\u00a0140 |
Additions | 2\u00a0870 | 5\u00a0644 | \u2014 | 8\u00a0514 |
Acqusition cost as of 31.12 | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0231 | 39\u00a0811 | \u2014 | 67\u00a0042 |
Depreciation expenses | 6\u00a0924 | 8\u00a0665 | \u2014 | 15\u00a0589 |
Accumulated depreciation as of 31.12 | 34\u00a0155 | 48\u00a0476 | 0 | 82\u00a0631 |
Net carrying value as of 31.12 | 15\u00a0232 | 31\u00a0541 | 249 | 47\u00a0022 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
102\u00a0189 | Personnel expenses | 49\u00a0886 |
37\u00a0211 | Other operating expenses | 25\u00a0335 |
139\u00a0400 | Total cost recognized in income statement | 75\u00a0221 |
145\u00a0046 | Total cost for R&D (incl. capitalized development cost) | 80\u00a0866 |
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
All figures in USD 1 000.
GROUP | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Additions | 2\u00a0909 | 6\u00a0489 | -102 | 9\u00a0297 |
Disposals | -22\u00a0684 | -29\u00a0491 | \u2014 | -52\u00a0175 |
Acqusition cost as of 31.12 | 31\u00a0121 | 57\u00a0015 | 2\u00a0284 | 90\u00a0424 |
Accumulated depreciation | ||||
Opening balance | 35\u00a0132 | 48\u00a0477 | \u2014 | 83\u00a0609 |
Depreciation expenses | 7\u00a0068 | 11\u00a0423 | \u2014 | 18\u00a0491 |
Disposals | -22\u00a0734 | -29\u00a0491 | \u2014 | -52\u00a0225 |
Accumulated depreciation as of 31.12 | 19\u00a0466 | 30\u00a0408 | 0 | 49\u00a0874 |
Net carrying value as of 31.12 | 11\u00a0655 | 26\u00a0608 | 2\u00a0284 | 40\u00a0547 |
PARENT | ||||
2022 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Additions | 2\u00a0135 | 6\u00a0489 | \u2014 | 8\u00a0624 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Acqusition cost as of 31.12 | 28\u00a0839 | 57\u00a0015 | 249 | 86\u00a0103 |
Accumulated depreciation | ||||
Opening balance | 34\u00a0155 | 48\u00a0476 | \u2014 | 82\u00a0631 |
Depreciation expenses | 6\u00a0642 | 11\u00a0423 | \u2014 | 18\u00a0065 |
Disposals | -22\u00a0683 | -29\u00a0491 | \u2014 | -52\u00a0174 |
Accumulated depreciation as of 31.12 | 18\u00a0114 | 30\u00a0408 | 0 | 48\u00a0522 |
Net carrying value as of 31.12 | 10\u00a0726 | 26\u00a0608 | 249 | 37\u00a0583 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
98\u00a0672 | Personnel expenses | 40\u00a0232 |
38\u00a0488 | Other operating expenses | 29\u00a0209 |
137\u00a0160 | Total cost recognized in income statement | 69\u00a0441 |
143\u00a0649 | Total cost for R&D (incl. capitalized development cost) | 75\u00a0930 |
GROUP | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 47\u00a0799 | 74\u00a0373 | 2\u00a0393 | 124\u00a0566 |
Additions | 3\u00a0096 | 5\u00a0646 | -7 | 8\u00a0735 |
Acqusition cost as of 31.12 | 50\u00a0896 | 80\u00a0019 | 2\u00a0386 | 133\u00a0302 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0894 | 39\u00a0811 | \u2014 | 67\u00a0705 |
Depreciation expenses | 7\u00a0238 | 8\u00a0665 | \u2014 | 15\u00a0904 |
Accumulated depreciation as of 31.12 | 35\u00a0132 | 48\u00a0477 | 0 | 83\u00a0610 |
Net carrying value as of 31.12 | 15\u00a0764 | 31\u00a0542 | 2\u00a0386 | 49\u00a0693 |
PARENT | ||||
2021 | Software and other intangible assets | Capitalized development expenses | Goodwill | Total |
Acquisition cost | ||||
Opening balance | 46\u00a0517 | 74\u00a0373 | 249 | 121\u00a0140 |
Additions | 2\u00a0870 | 5\u00a0644 | \u2014 | 8\u00a0514 |
Acqusition cost as of 31.12 | 49\u00a0387 | 80\u00a0017 | 249 | 129\u00a0653 |
Accumulated depreciation | ||||
Opening balance | 27\u00a0231 | 39\u00a0811 | \u2014 | 67\u00a0042 |
Depreciation expenses | 6\u00a0924 | 8\u00a0665 | \u2014 | 15\u00a0589 |
Accumulated depreciation as of 31.12 | 34\u00a0155 | 48\u00a0476 | 0 | 82\u00a0631 |
Net carrying value as of 31.12 | 15\u00a0232 | 31\u00a0541 | 249 | 47\u00a0022 |
Estimated useful life | 3 - 10 years | 1 - 5 years | No depreciation | |
Depreciation method | Straight-line | Straight-line | NA |
GROUP | R&D expenses: | PARENT |
102\u00a0189 | Personnel expenses | 49\u00a0886 |
37\u00a0211 | Other operating expenses | 25\u00a0335 |
139\u00a0400 | Total cost recognized in income statement | 75\u00a0221 |
145\u00a0046 | Total cost for R&D (incl. capitalized development cost) | 80\u00a0866 |
Impairment
There have been no indications of impairment losses during the year.
Change in estimate with respect to useful lives and depreciation methods
GROUP | R&D expenses: | PARENT |
98\u00a0672 | Personnel expenses | 40\u00a0232 |
38\u00a0488 | Other operating expenses | 29\u00a0209 |
137\u00a0160 | Total cost recognized in income statement | 69\u00a0441 |
143\u00a0649 | Total cost for R&D (incl. capitalized development cost) | 75\u00a0930 |
All figures in USD 1 000
The following subsidiaries have been included in the financial statements:
Subsidiaries consolidated in | Established Year | Location | Share Ownership | Voting Rights |
Nordic Semiconductor Inc | 2006 | USA | 100% | 100% |
Nordic Semiconductor Poland S.P z o.o | 2013 | Poland | 100% | 100% |
Nordic Semiconductor Finland OY | 2014 | Finland | 100% | 100% |
Nordic Semiconductor Japan KK | 2017 | Japan | 100% | 100% |
Nordic Semiconductor Germany GmbH | 2018 | Germany | 100% | 100% |
Nordic Semiconductor Norway AS | 2020 | Norway | 100% | 100% |
Nordic Semiconductor UK Limited | 2020 | UK | 100% | 100% |
Nordic Semiconductor India Pvt. Ltd | 2020 | India | 100% | 100% |
Nordic Semiconductor Sweden AB | 2020 | Sweden | 100% | 100% |
Nordic Semiconductor Hong Kong Limited | 2021 | Hong Kong | 100% | 100% |
Nordic Semiconductor (Shenzhen) Limited | 2021 | China | 100% | 100% |
Nordic Semiconductor Singapore PTE Ltd | 2022 | Singapore | 100% | 100% |
Nordic Semiconductor Denmark ApS | 2022 | Denmark | 100% | 100% |
Nordic Semiconductor Philippines, Inc. | 2022 | Philippines | 100% | 100% |
Subsidiaries as of 31 December 2022 | Ownership | Share of votes | Net profit 2022 | Equity 31. Dec 2022 |
Nordic Semiconductor Inc, USA | 100% | 100% | 407 | 3\u00a0551 |
Nordic Semiconductor Poland S.P z o.o | 100% | 100% | 1\u00a0106 | 3\u00a0061 |
Nordic Semiconductor Finland OY | 100% | 100% | 2\u00a0513 | 17\u00a0423 |
Nordic Semiconductor Japan KK | 100% | 100% | 6 | 110 |
Nordic Semiconductor Germany GmbH | 100% | 100% | 7 | 115 |
Nordic Semiconductor Norway AS | 100% | 100% | 75 | 3\u00a0674 |
Nordic Semiconductor UK Limited | 100% | 100% | 507 | 2\u00a0149 |
Nordic Semiconductor India Pvt. Ltd | 100% | 100% | 388 | 1\u00a0794 |
Nordic Semiconductor Sweden AB | 100% | 100% | 351 | 749 |
Nordic Semiconductor Hong Kong Limited | 100% | 100% | 112 | 300 |
Nordic Semiconductor (Shenzhen) Limited | 100% | 100% | 176 | 257 |
Nordic Semiconductor Singapore PTE Ltd | 100% | 100% | 20 | 140 |
Nordic Semiconductor Denmark ApS | 100% | 100% | -8 | -8 |
Nordic Semiconductor Philippines, Inc. | 100% | 100% | 0 | 18 |
\u25a0\u00a0\u00a0\u00a0\u00a0All intellectual property (IP) is owned by Nordic Semiconductor ASA. Nordic Semiconductor ASA is the ultimate parent company of the Group. All subsidiaries invoice Nordic Semiconductor ASA according to the Group's transfer pricing policy.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Inc is a market development, product promotion, and support company, but since 2016 has run a small R&D department as well.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Poland Sp. z.o.o. is an extension of the software development team in the parent company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Finland OY is a development company working with mainly long range technology. The R&D team in Finland works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Japan KK is a market development, product promotion, and support company,
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Germany GmbH is a market development, product promotion, and support company,
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Norway AS is the parent company of Nordic Semiconductor UK Limited, Nordic Semiconductor India Pvt. Ltd, Nordic Semiconductor Sweden AB, Nordic Semiconductor Hong Kong Limited and Nordic Semiconductor (Shenzhen) Limited.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor UK limited is a development company working with Wi-Fi and PMIC technology. The R&D team in the UK works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor India Pvt. Ltd is a development company working with Wi-Fi technology. The R&D team in India works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Sweden AB is a development company working mainly with Wi-Fi technology. The R&D team in Sweden works closely alongside the rest of the R&D teams in the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Hong Kong Limited is a market development, product promotion, and support\u00a0company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor (Shenzhen) Limited is a market development, product promotion, and support company.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Singapore PTE Ltd is Nordic's regional head office in APAC.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor Denmark ApS is a development company working across technologies. The R&D team in the Denmark works closely alongside the rest of the R&D teams in the Group.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Gross receivables | 175\u00a0120 | 141\u00a0748 |
\u2014 | 236 | Provision for doubtful accounts | \u2014 | 236 |
175\u00a0120 | 141\u00a0984 | Accounts receivable, net | 175\u00a0120 | 141\u00a0984 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Gross receivables | 175\u00a0120 | 141\u00a0748 |
\u2014 | 236 | Provision for doubtful accounts | \u2014 | 236 |
175\u00a0120 | 141\u00a0984 | Accounts receivable, net | 175\u00a0120 | 141\u00a0984 |
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Cash and cash equivalents as of the balance sheet date were as follows: | 2022 | 2021 |
277\u00a0700 | 223\u00a0786 | Cash at bank | 268\u00a0304 | 217\u00a0886 |
2\u00a0479 | 2\u00a0285 | Restricted cash (withholding tax account) | 2\u00a0479 | 2\u00a0285 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
48\u00a0458 | 53\u00a0259 | Money market funds | 48\u00a0458 | 53\u00a0259 |
379\u00a0104 | 279\u00a0330 | Cash and cash equivalents in statement of financial position | 369\u00a0709 | 273\u00a0430 |
\u25a0\u00a0\u00a0\u00a0\u00a0Cash at banks earns interest at floating rates based on daily bank deposit rates.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor ASA presents total bank deposits in the international cash pool, while Nordic Semiconductor OY presents its share of the international cash pool as a receivable from the company. Nordic Semiconductor ASA and Nordic Semiconductor OY participate in the cash pool, which is operated by Danske Bank.
\u25a0\u00a0\u00a0\u00a0\u00a0Restricted deposits are held by Nordic Semiconductor ASA. They are subject to regulatory restrictions and are therefore not available for general use by the entities within the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Interest on bank deposits is set to floating rates based on daily bank deposit rates.
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | Cash and cash equivalents as of the balance sheet date were as follows: | 2022 | 2021 |
277\u00a0700 | 223\u00a0786 | Cash at bank | 268\u00a0304 | 217\u00a0886 |
2\u00a0479 | 2\u00a0285 | Restricted cash (withholding tax account) | 2\u00a0479 | 2\u00a0285 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
48\u00a0458 | 53\u00a0259 | Money market funds | 48\u00a0458 | 53\u00a0259 |
379\u00a0104 | 279\u00a0330 | Cash and cash equivalents in statement of financial position | 369\u00a0709 | 273\u00a0430 |
\u25a0\u00a0\u00a0\u00a0\u00a0Cash at banks earns interest at floating rates based on daily bank deposit rates.
\u25a0\u00a0\u00a0\u00a0\u00a0Nordic Semiconductor ASA presents total bank deposits in the international cash pool, while Nordic Semiconductor OY presents its share of the international cash pool as a receivable from the company. Nordic Semiconductor ASA and Nordic Semiconductor OY participate in the cash pool, which is operated by Danske Bank.
\u25a0\u00a0\u00a0\u00a0\u00a0Restricted deposits are held by Nordic Semiconductor ASA. They are subject to regulatory restrictions and are therefore not available for general use by the entities within the Group.
\u25a0\u00a0\u00a0\u00a0\u00a0Interest on bank deposits is set to floating rates based on daily bank deposit rates.
Share capital
The share capital in Nordic Semiconductor as of December 31, 2022 consists of one share class with a total of 192,781,600 shares with a face value of NOK 0.01, with a total share capital of NOK 1,927,816. Each share grants the same rights in the company, and
in the event of any increase in capital, existing shareholders have preemptive rights for any new shares. During the year the following changes have been made in the number of shares, share capital and share\u00a0premium:
GROUP | Number of shares | Share capital | Treasury shares | Share premium | ||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
Holdings as of 1.1 | 192\u00a0781\u00a0600 | 192\u00a0781\u00a0600 | 317 | 317 | -3 | -3 | 235\u00a0448 | 235\u00a0448 |
Change in treasury shares | 1 | |||||||
Holdings as of 31.12 | 192\u00a0781\u00a0600 | 192\u00a0781\u00a0600 | 317 | 317 | -2 | -3 | 235\u00a0448 | 235\u00a0448 |
Dividend
No dividend was paid during 2022.
Treasury shares
The company owned 1,206,513 treasury shares on December 31, 2022. On January 1, 2022, the company owned 1,819,037 treasury shares. Based on a resolution of the annual general meeting of April 28, 2022, the Board has authority to purchase the company\u2019s own shares with a limit of a face value of NOK 192,000 through one or more transactions. This authority is limited to 9.96% of the company\u2019s share capital, and the price per share that the company may pay for shares shall not be lower than the face value and not higher than NOK 350. This authority applies until the company\u2019s annual general meeting in 2023, and by June 30, 2023 the latest.
Long-Term Incentive plan
With reference to the annual general meeting, on April 28, 2022, Nordic Semiconductor approved a Restricted Stock Unit (RSU) program for all employees, and a combination of RSUs and Performance Shares for Executive Management. See note 19 for further information.
Shareholder overview
The largest shareholders in Nordic Semiconductor ASA were as follows as of December 31, 2022 based on data provided by an investor relations advisory service provider*, and is obtained through an analysis of beneficial ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the Nordic VPS share register.
Shareholder | Shares | Percentage |
Folketrygdfondet | 17\u00a0077\u00a0869 | 8.9% |
Capital Research and Management | 11\u00a0662\u00a0016 | 6.0% |
DNB Asset Management | 9\u00a0405\u00a0822 | 4.9% |
Danske Bank | 6\u00a0022\u00a0054 | 3.1% |
The Vanguard Group | 5\u00a0539\u00a0580 | 2.9% |
Invesco Advisers | 5\u00a0089\u00a0089 | 2.6% |
Hardman Johnston Global Advisors | 4\u00a0847\u00a0702 | 2.5% |
Alfred Berg Kapitalforvaltning | 4\u00a0473\u00a0230 | 2.3% |
Swedbank Robur Fonder | 4\u00a0240\u00a0000 | 2.2% |
KLP Kapitalforvaltning | 4\u00a0177\u00a0632 | 2.2% |
Oberweis Asset Management | 4\u00a0104\u00a0644 | 2.1% |
Robeco Institutional Asset Management | 3\u00a0675\u00a0000 | 1.9% |
Contour Asset Management | 3\u00a0035\u00a0986 | 1.6% |
Handelsbanken Fonder | 2\u00a0808\u00a0596 | 1.5% |
Passesta | 2\u00a0700\u00a0000 | 1.4% |
RBC Global Asset Management | 2\u00a0669\u00a0001 | 1.4% |
Eika Kapitalforvaltning | 2\u00a0535\u00a0666 | 1.3% |
BlackRock Fund Advisors | 2\u00a0271\u00a0762 | 1.2% |
Storebrand Asset Management | 2\u00a0036\u00a0606 | 1.1% |
Alden | 2\u00a0000\u00a0000 | 1.0% |
Total for the 20 largest shareholders | 100\u00a0372\u00a0255 | 52.1% |
Other shareholders | 92\u00a0409\u00a0345 | 47.9% |
Total shares outstanding | 192\u00a0781\u00a0600 | 100.0% |
*Every reasonable effort has been made to verify the data, however neither Nordic nor the investor relations advisory service provider can guarantee the accuracy of the analysis.
Shares held by the Board of Directors and Executive Management were as follows as of December 31, 2022:
Board of Directors | Shares | Executive Management | Shares |
Birger Steen | 196\u00a0840 | Svenn-Tore Larsen | 1\u00a0932\u00a0272 |
Endre Holen | 154\u00a0888 | Geir Langeland | 201\u00a0114 |
Jan Frykhammar | 24\u00a0258 | Ole Fredrik Morken | 190\u00a0670 |
Anita Huun | 13\u00a0258 | St\u00e5le Ytterdal | 135\u00a0452 |
\u00d8yvind Birkenes | 10\u00a0600 | Ola Bostr\u00f8m | 575 |
Inger Berg \u00d8rstavik | 5\u00a0258 | P\u00e5l Elstad | 31\u00a0650 |
Annastiina Hintsa | 4\u00a0258 | Svein-Egil Nielsen | 32\u00a0244 |
Jon Helge Nistad | 600 | Kjetil Holstad | 10\u00a0415 |
Anja Dekens | 300 | Linda Pettersson | 0 |
Morten Dammen | 1\u00a0150 | Katarina Finneng | 600 |
Gro Fykse | 850 | ||
Total | 412\u00a0260 | Total | 2\u00a0534\u00a0992 |
Dividend
No dividend was paid during 2022.
Treasury shares
The company owned 1,206,513 treasury shares on December 31, 2022. On January 1, 2022, the company owned 1,819,037 treasury shares. Based on a resolution of the annual general meeting of April 28, 2022, the Board has authority to purchase the company\u2019s own shares with a limit of a face value of NOK 192,000 through one or more transactions. This authority is limited to 9.96% of the company\u2019s share capital, and the price per share that the company may pay for shares shall not be lower than the face value and not higher than NOK 350. This authority applies until the company\u2019s annual general meeting in 2023, and by June 30, 2023 the latest.
On March 15, 2019, Nordic Semiconductor granted 1,752,366 share options to 666 employees. The options were granted at a strike price of NOK 39.44 (10% above volume weighted average share price the five days prior to the grant date). If the company\u2019s share price exceeds a cap of NOK 118.32, the company may settle the option grant by compensating the employee the difference between the cap and the strike price.
On May 3, 2019, Nordic Semiconductor granted 196,644 share options and 55,814 performance shares to the management group. The options were granted at a strike price of NOK 45.1 (10% above volume weighted average share price the five days prior to the grant date If the company\u2019s share price exceeds a cap of NOK 135.3, the company may settle the option grant by compensating the employee the difference between the cap and the strike price. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 29, 2020, Nordic Semiconductor granted 754,224 Restricted Stock Units (RSUs) and Performance shares to 775 employees. A share price of NOK 58.4 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 28, 2021, Nordic Semiconductor granted 452,353 Restricted Stock Units (RSUs) and Performance shares to 1,087 employees. A share price of NOK 182.2 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
On April 28, 2022, Nordic Semiconductor granted 486,677 Restricted Stock Units (RSUs) and Performance shares to 1,288 employees. A share price of NOK 183.8 was used as basis for the calculation of RSUs and Performance Shares, which was the weighted average share price the five trading days after the Annual General Meeting. The RSUs vest after two and three years. The performance shares are issued conditional upon the achievement of a certain set of objectives. The performance shares vest and will be delivered at par value upon the completion of the performance period, which is three\u00a0years.
A summary of share options transactions during 2022 and 2021 below: | 2022 | 2021 |
Outstanding options 1.1 | 545\u00a0203 | 2\u00a0548\u00a0589 |
Granted | \u2014 | \u2014 |
Forfeited | 705 | 28\u00a0992 |
Exercised | 544\u00a0498 | 1\u00a0974\u00a0394 |
Expired | \u2014 | \u2014 |
Outstanding options 31.12 | \u2014 | 545\u00a0203 |
Of which exercisable | \u2014 | \u2014 |
A summary of RSUs transactions during 2022 and 2021 below: | 2022 | 2021 |
Outstanding RSUs 1.1 | 1\u00a0058\u00a0947 | 690\u00a0617 |
Granted | 486\u00a0677 | 423\u00a0383 |
Forfeited | 50\u00a0340 | 55\u00a0053 |
Exercised | 492\u00a0780 | \u2014 |
Outstanding RSUs 31.12 | 1\u00a0002\u00a0504 | 1\u00a0058\u00a0947 |
A summary of performance shares during 2022 and 2021 below: | 2022 | 2021 |
Outstanding performance shares 1.1 | 142\u00a0990 | 114\u00a0020 |
Granted | 30\u00a0376 | 28\u00a0970 |
Forfeited | 7\u00a0921 | \u2014 |
Exercised | 111\u00a0626 | \u2014 |
Outstanding performance shares 31.12 | 53\u00a0819 | 142\u00a0990 |
The fair value of the options, RSUs and performance shares are set on the grant date and expensed over the vesting period. USD\u00a07,797 thousand was expensed during 2022 and USD 4,287 thousand in 2021.
The fair value per RSU and performance share without market condition granted in 2022 was NOK 236.00 and 177.50. The fair value of the performance shares with Relative Total Shareholder Return performance condition granted in 2022 was NOK\u00a0270.1612. The valuation is based on a Monte Carlo simulation model with the following assumptions:
Share price on the grant date
The closing share price of the company and peer group companies (SOX Index) were NOK 177.35 and USD 2,982.06, respectively.
Risk-free interest rate
The risk-free interest rate is set equal to the relevant interest rate on government bonds on the date of grant in 2022, i.e. 2.676 % in Norway and US.
Volatility
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equaled 47.89% on the date of grant in 2022 for the company and 37.92% for the SOX\u00a0Index.
Expected lifetime
Performance shares vest on the April 28, 2025. Performance end date is December 31, 2024, so as of vesting date the quantity to vest is known. Performance shares expire 3 years from grant date, i.e. 28th of April 2025.
Correlation coefficients
All figures in USD 1 000
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
\u2014 | Accounts payable from subsidiaries | 31\u00a0994 | 25\u00a0596 | |
43\u00a0758 | 17\u00a0427 | Taxes payable | 42\u00a0837 | 17\u00a0181 |
14\u00a0542 | 17\u00a0452 | Employee benefit obligations | 7\u00a0333 | 10\u00a0312 |
6\u00a0455 | 7\u00a0599 | Social security tax and payroll tax | 4\u00a0745 | 6\u00a0266 |
10\u00a0129 | 8\u00a0620 | Holiday pay | 5\u00a0991 | 5\u00a0548 |
30\u00a0694 | 20\u00a0530 | Ship and debit rebate | 30\u00a0694 | 20\u00a0530 |
23\u00a0382 | 10\u00a0757 | End-customer rebate | 23\u00a0382 | 10\u00a0757 |
1\u00a0011 | Contractual severance payment | \u2014 | \u2014 | |
567 | Legal claims | \u2014 | 567 | |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
520 | Currency swap | \u2014 | 520 | |
7\u00a0547 | 5\u00a0197 | Accrued expenses | 5\u00a0450 | 2\u00a0879 |
145 | 79 | Other current liabilities | 74 | 68 |
177\u00a0160 | 123\u00a0747 | Total current liabilities | 187\u00a0648 | 131\u00a0703 |
All figures in USD 1 000.
The Group is a lessee and has entered into agreements to lease office space, office equipment, machinery and vehicles.
The Group's office leases range between 1 to 7 years. Equipment and machinery leases range between 1 to 5 years. Vehicles are leased for less than 4\u00a0years.
There are no leases with variable lease payments, other than lease payments linked to a consumer price index. Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximize operational flexibility in terms of managing the assets used in the Group\u2019s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Extension options have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.
The Group also has certain leases of office buildings and office equipment and machinery with lease terms of 12 months or less and leases of office equipment and machinery and vehicles with low value. The Group applies the \"short-term lease\" and \"lease of low-value assets\" recognition exemptions for these leases.
In 2022, there have been no material rent concessions as a direct consequence of the Covid-19\u00a0pandemic.
In 2022, Nordic Semiconductor ASA signed an office rental agreement in Oslo with an expected commencement date of 1 April 2023 and an office rental agreement in Trondheim with a commencement date of 1 October 2027. Nordic Semiconductor UK Limited has signed an office rental agreement in Bristol with an expected commencement date of 4 May 2023
Below is the contractual cash flow of right to use assets and short-term leases with commencement date after balance sheet date.
GROUP | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Office lease commitments | \u2014 | 253\u00a0479 | 4\u00a0505 | 51\u00a0303 | 197\u00a0670 |
Short-term leases | \u2014 | 196 | 196 | \u2014 | \u2014 |
Total | \u2014 | 253\u00a0675 | 4\u00a0701 | 51\u00a0303 | 197\u00a0670 |
PARENT | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Office lease commitments | \u2014 | 248\u00a0927 | 3\u00a0748 | 47\u00a0508 | 197\u00a0670 |
Short-term leases | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Total | \u2014 | 248\u00a0927 | 3\u00a0748 | 47\u00a0508 | 197\u00a0670 |
Minimum lease payments payable on leases are presented in note 23.
Amounts recognized in the balance sheet:
The balance sheet shows the following amounts relating to leases:
GROUP | PARENT | |||
31.12.2022 | 31.12.2021 | Right of use assets | 31.12.2022 | 31.12.2021 |
21\u00a0416 | 18\u00a0786 | Property | 12\u00a0076 | 14\u00a0774 |
\u2014 | 149 | Office equipment and machinery | \u2014 | 149 |
21\u00a0416 | 18\u00a0935 | Total | 12\u00a0076 | 14\u00a0923 |
GROUP | PARENT | |||
31.12.2022 | 31.12.2021 | Lease liabilities | 31.12.2022 | 31.12.2021 |
6\u00a0280 | 5\u00a0594 | Current | 2\u00a0813 | 3\u00a0921 |
14\u00a0861 | 14\u00a0281 | Non-Current | 8\u00a0711 | 11\u00a0673 |
21\u00a0141 | 19\u00a0876 | Total | 11\u00a0524 | 15\u00a0594 |
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
8\u00a0951 | -80 | Additions and adj. to right-of-use assets | 1\u00a0277 | -1\u00a0998 |
\u2014 | \u2014 | Disposals to the right-of-use assets | -534 | \u2014 |
In 2021, Nordic Semiconductor ASA signed an office rental agreement in Oslo with commencement date of 1 January, 2023. During 2022, the date of expire was changed from 31 December 2022 to 1 April 2023. The total adjustment to the right-of-use asset is a reduction of USD 0.2m.
The statement of profit or loss shows the following amounts relating to leases:
GROUP | PARENT | |||
2022 | 2021 | Depreciation of right-of-use assets | 2022 | 2021 |
5\u00a0974 | 5\u00a0662 | Properties | 3\u00a0427 | 3\u00a0524 |
162 | 213 | Office equipment and machinery | 162 | 213 |
6\u00a0135 | 5\u00a0875 | Total depreciation | 3\u00a0588 | 3\u00a0737 |
621 | 822 | Interest expense | 478 | 733 |
513 | 214 | Expenses relating to short-term leases | 235 | 182 |
644 | 543 | Expenses relating to leases of low-value assets | 303 | 285 |
7\u00a0914 | 7\u00a0454 | Total amount recognized in profit and loss | 4\u00a0603 | 4\u00a0937 |
7\u00a0766 | 7\u00a0265 | The total cash outflow for leases | 4\u00a0311 | 4\u00a0938 |
Below are the carrying amounts of lease liabilities and movements during the period:
GROUP | Cash flow information for lease liabilities | PARENT |
19\u00a0876 | Net liabilities as at 1 January 2022 | 15\u00a0594 |
-6\u00a0609 | Lease payments | -3\u00a0773 |
8\u00a0951 | Acquisitions and adjustments | 1\u00a0277 |
\u2014 | Disposals | -534 |
629 | Interest | 477 |
-1\u00a0706 | Other | -1\u00a0517 |
21\u00a0141 | Net liabilities as at 31 December 2022 | 11\u00a0524 |
All figures in USD 1 000.
Capital structure
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group\u2019s requirements for ongoing operations and for new investments. Management believes that it is especially important to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, Nordic may purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares.
Nordic Semiconductor targets to have an equity ratio above 50% at all times, measured as total equity divided by total assets.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
583\u00a0544 | 458\u00a0209 | Total equity | 561\u00a0074 | 440\u00a0690 |
776\u00a0241 | 596\u00a0817 | Total assets | 757\u00a0864 | 584\u00a0620 |
75% | 77% | Equity share | 74% | 75% |
Financial assets
The Group holds the following financial assets at amortized cost:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
5\u00a0562 | 3\u00a0606 | Other current receivables | 12\u00a0989 | 3\u00a0606 |
280\u00a0178 | 220\u00a0171 | Cash at bank | 270\u00a0783 | 220\u00a0171 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
511\u00a0327 | 365\u00a0526 | Total financial assets at amortized cost | 509\u00a0359 | 365\u00a0526 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
48\u00a0458 | 53\u00a0259 | Money market fund | 48\u00a0458 | 53\u00a0259 |
267 | \u2014 | Currency swap | 267 | \u2014 |
48\u00a0725 | 53\u00a0259 | Total financial assets at fair value through profit or loss | 48\u00a0725 | 53\u00a0259 |
Changes in financial assets at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
53\u00a0259 | 54\u00a0701 | As at 1 January | 53\u00a0259 | 54\u00a0701 |
1\u00a0073 | 337 | Changes in fair value | 1\u00a0073 | 337 |
-5\u00a0607 | -1\u00a0779 | Currency translation differences | -5\u00a0607 | -1\u00a0779 |
48\u00a0725 | 53\u00a0259 | As at 31 December | 48\u00a0725 | 53\u00a0259 |
Financial liabilities
The Group holds the following financial liabilities:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
86\u00a0439 | 64\u00a0215 | Other current liabilities | 104\u00a0918 | 76\u00a0258 |
14\u00a0861 | 14\u00a0281 | Non-current lease liabilities | 8\u00a0711 | 11\u00a0673 |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
141\u00a0809 | 112\u00a0482 | Total financial liabilities at amortized cost | 148\u00a0777 | 119\u00a0410 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
\u2014 | 520 | Currency swap | \u2014 | 520 |
\u2014 | 520 | Total financial liabilities through profit or loss | \u2014 | 520 |
Changes in financial liabilities at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
520 | 302 | As at 1 January | 520 | 302 |
-520 | 218 | Changes in fair value | -520 | 218 |
\u2014 | 520 | As at 31 December | \u2014 | 520 |
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
All figures in USD 1 000.
Capital structure
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group\u2019s requirements for ongoing operations and for new investments. Management believes that it is especially important to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, Nordic may purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares.
Nordic Semiconductor targets to have an equity ratio above 50% at all times, measured as total equity divided by total assets.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
583\u00a0544 | 458\u00a0209 | Total equity | 561\u00a0074 | 440\u00a0690 |
776\u00a0241 | 596\u00a0817 | Total assets | 757\u00a0864 | 584\u00a0620 |
75% | 77% | Equity share | 74% | 75% |
Financial assets
The Group holds the following financial assets at amortized cost:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
5\u00a0562 | 3\u00a0606 | Other current receivables | 12\u00a0989 | 3\u00a0606 |
280\u00a0178 | 220\u00a0171 | Cash at bank | 270\u00a0783 | 220\u00a0171 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
511\u00a0327 | 365\u00a0526 | Total financial assets at amortized cost | 509\u00a0359 | 365\u00a0526 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
48\u00a0458 | 53\u00a0259 | Money market fund | 48\u00a0458 | 53\u00a0259 |
267 | \u2014 | Currency swap | 267 | \u2014 |
48\u00a0725 | 53\u00a0259 | Total financial assets at fair value through profit or loss | 48\u00a0725 | 53\u00a0259 |
Changes in financial assets at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
53\u00a0259 | 54\u00a0701 | As at 1 January | 53\u00a0259 | 54\u00a0701 |
1\u00a0073 | 337 | Changes in fair value | 1\u00a0073 | 337 |
-5\u00a0607 | -1\u00a0779 | Currency translation differences | -5\u00a0607 | -1\u00a0779 |
48\u00a0725 | 53\u00a0259 | As at 31 December | 48\u00a0725 | 53\u00a0259 |
Financial liabilities
The Group holds the following financial liabilities:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
86\u00a0439 | 64\u00a0215 | Other current liabilities | 104\u00a0918 | 76\u00a0258 |
14\u00a0861 | 14\u00a0281 | Non-current lease liabilities | 8\u00a0711 | 11\u00a0673 |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
141\u00a0809 | 112\u00a0482 | Total financial liabilities at amortized cost | 148\u00a0777 | 119\u00a0410 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
\u2014 | 520 | Currency swap | \u2014 | 520 |
\u2014 | 520 | Total financial liabilities through profit or loss | \u2014 | 520 |
Changes in financial liabilities at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
520 | 302 | As at 1 January | 520 | 302 |
-520 | 218 | Changes in fair value | -520 | 218 |
\u2014 | 520 | As at 31 December | \u2014 | 520 |
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
All figures in USD 1 000.
Capital structure
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group\u2019s requirements for ongoing operations and for new investments. Management believes that it is especially important to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, Nordic may purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares.
Nordic Semiconductor targets to have an equity ratio above 50% at all times, measured as total equity divided by total assets.
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
583\u00a0544 | 458\u00a0209 | Total equity | 561\u00a0074 | 440\u00a0690 |
776\u00a0241 | 596\u00a0817 | Total assets | 757\u00a0864 | 584\u00a0620 |
75% | 77% | Equity share | 74% | 75% |
Financial assets
The Group holds the following financial assets at amortized cost:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
5\u00a0562 | 3\u00a0606 | Other current receivables | 12\u00a0989 | 3\u00a0606 |
280\u00a0178 | 220\u00a0171 | Cash at bank | 270\u00a0783 | 220\u00a0171 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
511\u00a0327 | 365\u00a0526 | Total financial assets at amortized cost | 509\u00a0359 | 365\u00a0526 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
48\u00a0458 | 53\u00a0259 | Money market fund | 48\u00a0458 | 53\u00a0259 |
267 | \u2014 | Currency swap | 267 | \u2014 |
48\u00a0725 | 53\u00a0259 | Total financial assets at fair value through profit or loss | 48\u00a0725 | 53\u00a0259 |
Changes in financial assets at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
53\u00a0259 | 54\u00a0701 | As at 1 January | 53\u00a0259 | 54\u00a0701 |
1\u00a0073 | 337 | Changes in fair value | 1\u00a0073 | 337 |
-5\u00a0607 | -1\u00a0779 | Currency translation differences | -5\u00a0607 | -1\u00a0779 |
48\u00a0725 | 53\u00a0259 | As at 31 December | 48\u00a0725 | 53\u00a0259 |
Financial liabilities
The Group holds the following financial liabilities:
GROUP | PARENT | |||
2022 | 2021 | Amortized cost | 2022 | 2021 |
34\u00a0229 | 28\u00a0392 | Accounts payable | 32\u00a0335 | 27\u00a0558 |
86\u00a0439 | 64\u00a0215 | Other current liabilities | 104\u00a0918 | 76\u00a0258 |
14\u00a0861 | 14\u00a0281 | Non-current lease liabilities | 8\u00a0711 | 11\u00a0673 |
6\u00a0280 | 5\u00a0594 | Current lease liabilities | 2\u00a0813 | 3\u00a0921 |
141\u00a0809 | 112\u00a0482 | Total financial liabilities at amortized cost | 148\u00a0777 | 119\u00a0410 |
GROUP | PARENT | |||
2022 | 2021 | Fair value through profit or loss | 2022 | 2021 |
\u2014 | 520 | Currency swap | \u2014 | 520 |
\u2014 | 520 | Total financial liabilities through profit or loss | \u2014 | 520 |
Changes in financial liabilities at fair value through profit or loss:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
520 | 302 | As at 1 January | 520 | 302 |
-520 | 218 | Changes in fair value | -520 | 218 |
\u2014 | 520 | As at 31 December | \u2014 | 520 |
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Interest-bearing loans and borrowings:
The Group has long-term revolving credit facilities (\"RCF\"), which enables it to borrow up to USD 150m any time with an interest rate equal to SOFR + margin. The line of credit expires in June 2025. As of December 31, 2022, Nordic has not drawn on any of the credit lines. The security is provided by inventory, receivables and operating equipment with book values as follows; inventories USD 102m, accounts receivable USD 175m and operating equipment USD 25m.
The following financial covenants are included for the revolving credit facilities:
\u25a0\u00a0\u00a0\u00a0\u00a0Equity ratio shall not be lower than 40 %.
The remainder of the Group\u2019s financing is made through short-term, non-interest bearing debt. This financing typically consists of debt to suppliers, the public sector, employees and others. Nordic has entered into a Tenancy Guarantee with Danske Bank as unconditional guarantor for NOK 41.4m for the office in Trondheim and SEK 0.4m for the office in Stockholm. The first warranty is given to secure payments of up to 24 months of rent for the office in Trondheim.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
Fair value measurement
The financial instruments that are carried at fair value are revalued on a recurring basis. The financial instruments are not designated at fair value through profit or loss on initial recognition.
In 2022, the Group has investments in these financial assets and liabilities using the following methods and assumptions:
\u25a0\u00a0\u00a0\u00a0\u00a0Term deposit is defined as cash equivalents because the asset is liquid and there is no significant risk of a change in value as a result of an early withdrawal. The asset is remunerated at fixed maturity date and rate, determined in advance.
\u25a0\u00a0\u00a0\u00a0\u00a0Money market fund is defined as cash equivalents because the asset is liquid and not subject to material fluctuations in value. The asset is measured at quoted market price in an active market at the balance sheet date.
All figures in USD 1 000.
The Group's finance department is responsible for carrying out the policies and guidelines for financial risk management approved by the Board.
The Group is mainly exposed to counterparty credit risk, liquidity risk, and market risk (including interest rate risk and foreign currency risk).
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily accounts receivables) and from its financing activities, including foreign exchange transactions, cash and cash equivalents with banks and other financial institutions and other financial\u00a0instruments.
The Group\u2019s sale of components takes place through its distribution partners within defined geographic regions, where Asia is the dominant region. The Group depends on a relatively small number of customers. Customer credit risk is managed by each region subject to the Group\u2019s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit evaluation and individual credit limits are defined in accordance with this assessment. Outstanding accounts receivables are regularly monitored and assurance from distributors that end customer sales is secured through letter of credits is\u00a0obtained.
The Group make an allowances for expected credit losses on receivables based on a provision matrix that is initially based on the historical observed default rates. The Group has calibrated the matrix to adjust the historical credit loss experience with forward-looking information.
Age distribution of customer receivables was:
GROUP | PARENT | |||
2022 | 2021 | Gross total | 2022 | 2021 |
143\u00a0750 | 112\u00a0399 | Not due | 143\u00a0750 | 112\u00a0399 |
30\u00a0241 | 29\u00a0327 | Past due 0-30 days | 30\u00a0241 | 29\u00a0327 |
846 | 68 | Past due 31-120 days | 846 | 68 |
283 | 190 | Over 120 days | 283 | 190 |
175\u00a0120 | 141\u00a0984 | Total | 175\u00a0120 | 141\u00a0984 |
Historically there has not been any significant credit losses. 82% percent of trade receivables were within terms at the balance sheet date. On that basis, expected credit loss for trade receivables are limited and allowances for doubtful accounts at 31 December 2022 was 0m.
The Group has a limited number of customers, regular contact and long-term relationships with most of its customer base. Some of the customers are dependent on Nordic Semiconductor to stay in business.
Financial assets at fair value through profit or loss
The Group is also exposed to credit risk in relation to debt investments that are measured at fair value through profit and loss.
The maximum exposure to credit risk on the balance sheet date was:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
17\u00a0539 | 11\u00a0951 | Other current receivables | 21\u00a0884 | 11\u00a0283 |
379\u00a0104 | 279\u00a0331 | Cash and cash equivalents | 369\u00a0709 | 273\u00a0430 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
622\u00a0230 | 433\u00a0030 | Total | 617\u00a0180 | 426\u00a0462 |
The credit risk in table above is diversified over a range of distributors, vendors, and\u00a0banks.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations when due and to close out market positions.
Overall, we monitor cash flows at both Group and entity level. The Group seeks to minimize risk when investing its cash balances and. Investments can only be made in securities which have been approved by the Board.
As of 31 December 2022, cash and cash equivalents amounted to USD\u00a0379.1m (USD 279.3m), see note 16 for details. The total balance includes short-term bank deposits at fair value USD 50.5m and money market fund at fair value USD 48.5m.
The Group has no externally imposed capital requirements or agreements, and has no contracts or legal requirements which are not being upheld. The Group has the following due dates with regard to contracts for financial liabilities as of December 31,\u00a02022:
GROUP | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 34\u00a0229 | 34\u00a0229 | 34\u00a0229 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 136\u00a0652 | 136\u00a0652 | 136\u00a0652 | \u2014 | \u2014 |
Lease liabilities *) | 21\u00a0141 | 23\u00a0056 | 6\u00a0639 | 15\u00a0795 | 622 |
Total | 192\u00a0021 | 193\u00a0937 | 177\u00a0520 | 15\u00a0795 | 622 |
PARENT | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 32\u00a0335 | 32\u00a0335 | 32\u00a0335 | \u2014 | \u2014 |
Accounts payable subsidiaries | 31\u00a0994 | 31\u00a0994 | 31\u00a0994 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 120\u00a0506 | 120\u00a0506 | 120\u00a0506 | \u2014 | \u2014 |
Lease liabilities *) | 11\u00a0524 | 12\u00a0481 | 3\u00a0003 | 9\u00a0479 | \u2014 |
Total | 196\u00a0360 | 197\u00a0316 | 187\u00a0838 | 9\u00a0479 | \u2014 |
*Lease liabilities is mainly office facility rent in Trondheim, lease ending 31 December 2027
Interest rate risk
The Group\u2019s liquidity requirements and risk assessment determine its investment strategy and interest rate exposure.
The Group\u2019s policy is to maintain a short-term investment horizon for its surplus cash. The investment portfolio should not have an average duration longer than six (6)\u00a0months.
The Group has a sustainability linked revolving credit facility, which enables it to borrow up to USD 150 million with an interest rate equal to SOFR + margin. The line of credit expires in June 2025, with option to extend. The security for the credit line is provided by inventory, receivables and operating equipment.
If interest rates increase 1 basis point, the negative effect on profit before tax given current utilization of the RCF is USD 0 per year as the credit facility as of December 31, 2022 is not utilized.
Foreign currency risk
The Group is subject to foreign currency risk as it operates internationally with development and commercial activities.
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity.
The dominated functional currency for the Group is USD. Nearly all revenues and cost of goods are in USD. However, approximately 45% of the Group\u2019s operating expenses (excluding depreciation and amortization) are denominated in NOK and 25% are denominated in EUR. The Group does not use hedging instruments to minimize its exposure to foreign currency risk from operating activities affecting profit and loss.
Below is a sensitivity analysis of changes in the NOK exchange rate on Group balance sheet items, and their impact on profit and loss:
Profit before tax | |
NOK exchange rate +/- 10% | +/- 4 038 |
The tables below show the exposure in sales to foreign currency risk in the most significant currencies:
GROUP | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 776\u00a0712 | 776\u00a0712 | 100.0% | 610\u00a0283 | 610\u00a0283 | 100.0% |
EUR | 6 | 6 | \u2014% | 175 | 208 | \u2014% |
Other | 130 | 16 | \u2014% | 314 | 37 | \u2014% |
Total | 776\u00a0734 | 100.0% | 610\u00a0528 | 100.0% |
PARENT | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 777\u00a0106 | 777\u00a0106 | 99.9% | 610\u00a0528 | 610\u00a0528 | 99.8% |
EUR | 356 | 369 | \u2014% | 538 | 636 | 0.1% |
Other | 4\u00a0532 | 287 | \u2014% | 5\u00a0163 | 411 | 0.1% |
Total | 777\u00a0763 | 100.0% | 611\u00a0577 | 100.0% |
The Group uses derivative financial instruments to reduce its exposure to currency exchange rate movements and hold currency swap in relation to fixed income fund investments. Derivatives are not held for speculative\u00a0purposes.
All derivative financial instruments are recognized as assets and liabilities measured at fair value, and all fair value gains and losses are recognized in profit or loss. Where the fair value of a derivative on initial recognition differs from the transaction price, if any, the difference is recognized immediately in profit or loss only if the fair value is evidenced by a quoted price in an active market or is based on a valuation technique that uses only data from observable markets.
The tables below show the exposure at the end of reporting period in the most significant\u00a0currencies:
All amounts stated in USD 1000.
GROUP | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 1\u00a0955 | \u2014 | 1\u00a0024 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 528 | \u2014 | 374 |
Total | 175\u00a0120 | 34\u00a0229 | 141\u00a0971 | 28\u00a0392 |
PARENT | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 499 | \u2014 | 461 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 90 | \u2014 | 103 |
Total | 175\u00a0120 | 32\u00a0335 | 141\u00a0971 | 27\u00a0558 |
Determination of fair value
As of December 31, 2021 the Group had no financial assets or financial liabilities where there is considered to be a difference between book value and fair value.
Below is an overview of Nordic\u2019s financial instruments:
GROUP | 2022 | 2021 | ||
Book value | Fair market value | Book value | Fair market value | |
Financial assets | ||||
Accounts receivable | 175\u00a0120 | 175\u00a0120 | 141\u00a0748 | 141\u00a0748 |
Current financial assets | 267 | 267 | \u2014 | \u2014 |
Short-term receivables | 17\u00a0539 | 17\u00a0539 | 11\u00a0951 | 11\u00a0951 |
Cash and cash equivalents | 379\u00a0104 | 379\u00a0104 | 279\u00a0330 | 279\u00a0330 |
incl. money market fund | 48\u00a0458 | 48\u00a0458 | 53\u00a0259 | 53\u00a0259 |
Financial liabilities | ||||
Accounts payable | 34\u00a0229 | 34\u00a0229 | 28\u00a0392 | 28\u00a0392 |
Current financial liabilities | \u2014 | \u2014 | 520 | 302 |
Other current liabilities | 86\u00a0439 | 86\u00a0439 | 64\u00a0215 | 64\u00a0215 |
PARENT | 2022 | 2021 | ||
Book value | Fair market value | Book value | Fair market value | |
Financial assets | ||||
Accounts receivable | 175\u00a0120 | 175\u00a0120 | 141\u00a0748 | 141\u00a0748 |
Current financial assets | 267 | 267 | \u2014 | \u2014 |
Short-term receivables | 21\u00a0884 | 21\u00a0884 | 11\u00a0283 | 11\u00a0283 |
Cash and cash equivalents | 369\u00a0708 | 369\u00a0708 | 273\u00a0430 | 273\u00a0430 |
incl. money market fund | 48\u00a0458 | 48\u00a0458 | 53\u00a0259 | 53\u00a0259 |
Financial liabilities | ||||
Accounts payable | 32\u00a0335 | 32\u00a0335 | 27\u00a0558 | 27\u00a0558 |
Current financial liabilities | \u2014 | \u2014 | 520 | 302 |
Other current liabilities | 104\u00a0918 | 104\u00a0918 | 76\u00a0258 | 76\u00a0258 |
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily accounts receivables) and from its financing activities, including foreign exchange transactions, cash and cash equivalents with banks and other financial institutions and other financial\u00a0instruments.
The Group\u2019s sale of components takes place through its distribution partners within defined geographic regions, where Asia is the dominant region. The Group depends on a relatively small number of customers. Customer credit risk is managed by each region subject to the Group\u2019s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit evaluation and individual credit limits are defined in accordance with this assessment. Outstanding accounts receivables are regularly monitored and assurance from distributors that end customer sales is secured through letter of credits is\u00a0obtained.
The Group make an allowances for expected credit losses on receivables based on a provision matrix that is initially based on the historical observed default rates. The Group has calibrated the matrix to adjust the historical credit loss experience with forward-looking information.
Age distribution of customer receivables was:
GROUP | PARENT | |||
2022 | 2021 | Gross total | 2022 | 2021 |
143\u00a0750 | 112\u00a0399 | Not due | 143\u00a0750 | 112\u00a0399 |
30\u00a0241 | 29\u00a0327 | Past due 0-30 days | 30\u00a0241 | 29\u00a0327 |
846 | 68 | Past due 31-120 days | 846 | 68 |
283 | 190 | Over 120 days | 283 | 190 |
175\u00a0120 | 141\u00a0984 | Total | 175\u00a0120 | 141\u00a0984 |
Historically there has not been any significant credit losses. 82% percent of trade receivables were within terms at the balance sheet date. On that basis, expected credit loss for trade receivables are limited and allowances for doubtful accounts at 31 December 2022 was 0m.
The Group has a limited number of customers, regular contact and long-term relationships with most of its customer base. Some of the customers are dependent on Nordic Semiconductor to stay in business.
Financial assets at fair value through profit or loss
The Group is also exposed to credit risk in relation to debt investments that are measured at fair value through profit and loss.
The maximum exposure to credit risk on the balance sheet date was:
GROUP | PARENT | |||
2022 | 2021 | 2022 | 2021 | |
175\u00a0120 | 141\u00a0748 | Accounts receivable | 175\u00a0120 | 141\u00a0748 |
17\u00a0539 | 11\u00a0951 | Other current receivables | 21\u00a0884 | 11\u00a0283 |
379\u00a0104 | 279\u00a0331 | Cash and cash equivalents | 369\u00a0709 | 273\u00a0430 |
50\u00a0467 | \u2014 | Short-term bank deposits | 50\u00a0467 | \u2014 |
622\u00a0230 | 433\u00a0030 | Total | 617\u00a0180 | 426\u00a0462 |
The credit risk in table above is diversified over a range of distributors, vendors, and\u00a0banks.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations when due and to close out market positions.
Overall, we monitor cash flows at both Group and entity level. The Group seeks to minimize risk when investing its cash balances and. Investments can only be made in securities which have been approved by the Board.
As of 31 December 2022, cash and cash equivalents amounted to USD\u00a0379.1m (USD 279.3m), see note 16 for details. The total balance includes short-term bank deposits at fair value USD 50.5m and money market fund at fair value USD 48.5m.
The Group has no externally imposed capital requirements or agreements, and has no contracts or legal requirements which are not being upheld. The Group has the following due dates with regard to contracts for financial liabilities as of December 31,\u00a02022:
GROUP | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 34\u00a0229 | 34\u00a0229 | 34\u00a0229 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 136\u00a0652 | 136\u00a0652 | 136\u00a0652 | \u2014 | \u2014 |
Lease liabilities *) | 21\u00a0141 | 23\u00a0056 | 6\u00a0639 | 15\u00a0795 | 622 |
Total | 192\u00a0021 | 193\u00a0937 | 177\u00a0520 | 15\u00a0795 | 622 |
PARENT | Carrying amount | Contractual cash flow | Less than one year | One to five years | More than five years |
Accounts payable | 32\u00a0335 | 32\u00a0335 | 32\u00a0335 | \u2014 | \u2014 |
Accounts payable subsidiaries | 31\u00a0994 | 31\u00a0994 | 31\u00a0994 | \u2014 | \u2014 |
Currency swap | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Other current liabilities | 120\u00a0506 | 120\u00a0506 | 120\u00a0506 | \u2014 | \u2014 |
Lease liabilities *) | 11\u00a0524 | 12\u00a0481 | 3\u00a0003 | 9\u00a0479 | \u2014 |
Total | 196\u00a0360 | 197\u00a0316 | 187\u00a0838 | 9\u00a0479 | \u2014 |
*Lease liabilities is mainly office facility rent in Trondheim, lease ending 31 December 2027
Interest rate risk
The Group\u2019s liquidity requirements and risk assessment determine its investment strategy and interest rate exposure.
The Group\u2019s policy is to maintain a short-term investment horizon for its surplus cash. The investment portfolio should not have an average duration longer than six (6)\u00a0months.
The Group has a sustainability linked revolving credit facility, which enables it to borrow up to USD 150 million with an interest rate equal to SOFR + margin. The line of credit expires in June 2025, with option to extend. The security for the credit line is provided by inventory, receivables and operating equipment.
If interest rates increase 1 basis point, the negative effect on profit before tax given current utilization of the RCF is USD 0 per year as the credit facility as of December 31, 2022 is not utilized.
Foreign currency risk
The Group is subject to foreign currency risk as it operates internationally with development and commercial activities.
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency of the relevant group entity.
The dominated functional currency for the Group is USD. Nearly all revenues and cost of goods are in USD. However, approximately 45% of the Group\u2019s operating expenses (excluding depreciation and amortization) are denominated in NOK and 25% are denominated in EUR. The Group does not use hedging instruments to minimize its exposure to foreign currency risk from operating activities affecting profit and loss.
Below is a sensitivity analysis of changes in the NOK exchange rate on Group balance sheet items, and their impact on profit and loss:
Profit before tax | |
NOK exchange rate +/- 10% | +/- 4 038 |
The tables below show the exposure in sales to foreign currency risk in the most significant currencies:
GROUP | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 776\u00a0712 | 776\u00a0712 | 100.0% | 610\u00a0283 | 610\u00a0283 | 100.0% |
EUR | 6 | 6 | \u2014% | 175 | 208 | \u2014% |
Other | 130 | 16 | \u2014% | 314 | 37 | \u2014% |
Total | 776\u00a0734 | 100.0% | 610\u00a0528 | 100.0% |
PARENT | 2022 | 2021 | ||||
Local currency | USD | Share of total revenue in % | Local currency | USD | Share of total revenue in % | |
USD | 777\u00a0106 | 777\u00a0106 | 99.9% | 610\u00a0528 | 610\u00a0528 | 99.8% |
EUR | 356 | 369 | \u2014% | 538 | 636 | 0.1% |
Other | 4\u00a0532 | 287 | \u2014% | 5\u00a0163 | 411 | 0.1% |
Total | 777\u00a0763 | 100.0% | 611\u00a0577 | 100.0% |
The Group uses derivative financial instruments to reduce its exposure to currency exchange rate movements and hold currency swap in relation to fixed income fund investments. Derivatives are not held for speculative\u00a0purposes.
All derivative financial instruments are recognized as assets and liabilities measured at fair value, and all fair value gains and losses are recognized in profit or loss. Where the fair value of a derivative on initial recognition differs from the transaction price, if any, the difference is recognized immediately in profit or loss only if the fair value is evidenced by a quoted price in an active market or is based on a valuation technique that uses only data from observable markets.
The tables below show the exposure at the end of reporting period in the most significant\u00a0currencies:
All amounts stated in USD 1000.
GROUP | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 1\u00a0955 | \u2014 | 1\u00a0024 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 528 | \u2014 | 374 |
Total | 175\u00a0120 | 34\u00a0229 | 141\u00a0971 | 28\u00a0392 |
PARENT | 2022 | 2021 | ||
Accounts receivable | Accounts payables | Accounts receivable | Accounts payables | |
USD | 175\u00a0120 | 30\u00a0640 | 141\u00a0971 | 25\u00a0140 |
EUR | \u2014 | 499 | \u2014 | 461 |
NOK | \u2014 | 1\u00a0106 | \u2014 | 1\u00a0854 |
Other | \u2014 | 90 | \u2014 | 103 |
Total | 175\u00a0120 | 32\u00a0335 | 141\u00a0971 | 27\u00a0558 |
During the first quarter 2023, Nordic made a prepayment of USD 100 million related to ongoing initiatives to strengthen supply resilience and diversification.
On February 1, 2023, Nordic received regulatory approval for the acquisition of Mobile Semiconductor. The transaction was closed in March 2023.