The annual report was presented and adopted at the
Company's annual general meeting
on _______________________________ 20 ____
__________________________________________
Teracloud ApS
Bryghuspladsen 8, 4. 402
1473 København K
Denmark
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Annual report 2022
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Contents
Statement by the Board of Directors and the Executive Board 2
Independent auditor's report 3
Management's review 6
Company details 6
Financial highlights group 7
Operating review 8
Consolidated financial statements 1 January – 31 December 13
Income statement 13
Statement of comprehensive income 13
Statement of financial position 14
Statement of changes in equity 16
Statement of cash flow 17
Notes 18
Parent Company financial statements 1 January – 31 December 46
Income statement 47
Statement of financial position 48
Statement of changes in equity 50
Notes 51
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Statement by the Board of Directors and the Executive
Board
Executive Board:
Board of Directors:
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Independent auditor's report
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Independent auditor's report
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Independent auditor's report
CVR no. 25 57 81 98
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Management's review
Company details
Denmark
CVR no. 43 12 80 35
Established: 7 March 2012
Registered office: Copenhagen
Financial year: 1 January – 31 December
Board of Directors
Johan Harald Gedda
Jenny Marie Helbrink Gann
Danielle O’Brien Dickie
Executive Board
Johan Harald Gedda
Auditor
CVR no. 25 57 81 98
Annual general meeting
The annual general meeting will be held on 29 June 2023.
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Management's review
Financial highlights group
USD’000 2022 2021 2020* 2019* 2018*
Revenue 61,879 50,466 38,748 28,699 19,189
Gross profit/loss 58,650 49,215 29,598 20,540 16,234
Operating profit/loss 14,531 11,505 1,593 -2,000 1,816
Profit/loss before financial income and
expenses
6,874 4,043 -463 -3,588 -3,109
Profit/loss from financial income and
expenses
5,910 3,700 -156 -4,152 -1,908
Profit/loss for the yea
r
5,622 3,560 1,654 -4,414 -2,139
Total assets 100,530 77,566 52,481 43,708 37,584
Investments in property, plant and
equipment
176 511 628 439 81
Equity 49,573 44,084 30,541 32,561 29,300
Cash flows from operating activities 20,611 7,923 13,173 2,128 2,735
Cash flows from investing activities -33,527 -10,511 -2,378 -5,211 -12,583
Cash flows from financing activities 8,606 8,503 1,381 4,264 11,506
Total cash flows 19,045 23,355 12,176 1,181 1,658
Gross margin 94.8% 97.5% 76.4% 71.6% 84.6%
Operating margin 11.1% 8.0% -1.2% -12.5% -16.2%
Return on invested capital 44.0% 22.6% -3.1% -21.1% -20.7%
Current ratio 158.1% 181.4% 137.5% 57.9% 57.6%
Return on equity 12.0% 9.5% 5.2% -27.1% -14.6%
Average number of full-time employees 258 182 124 86 55
* The group has implemented IFRS on 1 January 2021. The consolidated comparative figures for 2020, 2019 and 2018 are presented
in accordance with US GAAP (reference is made to note 18 for further description).
The financial ratios have been calculated as follows:
Gross margin
Gross profit/loss x 100
Revenue
Operating margin
Profit/loss before financial income and expenses x 100
Revenue
Return on invested capital
Profit/loss before financial income and expenses x 100
Average invested capital
Invested capital Operational intangible assets and
property, plant and equipment as well as
net working capital
Current ratio
Current assets x 100
Short-term debt
Return on equity
Profit after tax x 100
Average equity
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Management's review
Operating review
Principal activities
The purpose of Teracloud ApS (Teracloud or the Company) is to acquire participating interest in various
technology-oriented businesses. The Company's principal operating brands are:
21st Century Software (“21CS”) - 21CS develops, markets, and supports recovery assurance and enterprise
disaster recovery solutions. Its solutions complement existing backup and archiving tools by monitoring
application data activity in real time, determining what files are most critical and would need to be recovered.
Additionally, its solutions are hardware-neutral and run on most major z/OS-based mainframes.
VMS Software (“VMS”) – VMS develops, markets, and supports innovative and advanced releases of the
OpenVMS operating system. OpenVMS is a multi-user, multiprocessing virtual memory-based operating
system designed to support time-sharing, batch processing, transaction processing and workstation
applications.
VSEn (“VSE”) – The Company’s first version of the VSE operating system enters the market under the name:
VSEn V6.3. VSEn is designed to offer non-disruptive compatibility with previous versions of IBM z/VSE.
VSEn V6.3 also addresses fixes and features that have been applied to IBM z/VSE 6.2 and offers the newest
releases of the TCP/IP stacks and installation enhancements.
Risks and Uncertainties
The Company is subject to a number of risks associated with emerging, technology-oriented companies.
Principal among these risks are risks associated with an evolving and unpredictable business model,
development of new technological innovations, customer acceptance of new products, marketing the
Company's products, dependence upon key individuals, competition from larger, more financially
independent competitors and the need to obtain adequate financing to fund future operations.
Events after the balance sheet date
During February 2023, the Company opened a subsidiary in Greece to operate as an additional Center of
Excellence.
During March 2023, the Company and IBM entered into an additional license agreement for total cash
consideration of USD 4.0 million. Under the license agreement, the Company licensed IBM Streams, which
evaluates a broad range of streaming data — unstructured text, video, audio, geospatial and sensor — to
help organizations spot opportunities and risks as they happen. Neither the above listed events nor any
other events have occurred after the balance sheet date to this date that would influence the assessment
and evaluation of this annual report in any substantial way.
At 31 December 2022, the Company held bonds with a carrying value of USD 1.5 million that are expected
to be fully written down in 2023. This is considered as a non-adjusting subsequent event.
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Management's review
Operating review
Development in activities and financial position
The Company has been a key contributor to the OpenVMS operating system and z/OS ecosystems,
including solutions for disaster recovery, reporting, change management, and migration solutions, making
the company the expert on data storage. In 2022, Teracloud generated over USD 61.9 million in revenue
compared to USD 50.5 million in 2021. Total operating expense in 2022 was USD 49.4 million compared to
USD 50.2 million in 2021.
Currently, the Company has offices in Denmark, the US, Sweden, Armenia, and the UK, as well as a Centers
of Excellence in Australia and Germany which have nearly 70 and 26 technical architects, software
developers, technical writers, and other IT experts, respectively. With plans to open an additional Center of
Excellence in Greece (see note on Events After the Balance Sheet Date for more detail), the Company is
continuing to grow its portfolio, employee base, and revenue.
Investments in new products
The Company is continuously diversifying its portfolio to optimize the skills and expertise of the workforce.
The Company’s plan to introduce new products to the market will be based on the revenue potential that we
expect, especially the potential to garner new customers and/or expand into new vertical markets.
21CS continues to make investments in new products to diversify product offerings and provide a wide
variety of solutions to customers. These include but are not limited to enhancing compliance, configuration
control, resiliency, cloud data enablement, local or global data migration, and intelligent and automated data
set encryption.
VMS, plans to release OpenVMS on x86 in 2023. OpenVMS x86 migrates VMS products to the industry
standard x86_64 architecture to help customers protect their investment in OpenVMS infrastructure,
especially in virtualized environments and in the cloud to support even more environments and products.
Outlook
The Company has experience with the management and analysis of vast amounts of data that can be used
to provide valuable business insights. Our operating systems, mainframe storage, and capacity products are
used by some of the largest business enterprises in the world to provide actionable insights into how best to
manage their computing environments.
Our priority will be to support the current customer base and ensure products remain viable and continue to
provide customer benefits. Given our experience with data management we expect to both improve the
performance of the product and investigate additional business uses cases that provide business value.
The Company’s marketing plan will be based on those industries that require the ability to continuously
analyze data in motion across multiple sources. Fortunately, those industries currently include many in the
financial and insurance sector where we have significant marketing experience.
The Company’s plan to introduce new products to the market will be based on the revenue potential that we
expect, especially the potential to garner new customers and/or expand into new vertical markets.
The Company expects results for the year 2023 in the range of USD 4 million.
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Management's review
Operating review
Research and development activities
The Company has significant research and development activities across all products. The largest labs
performing these activities are the Centers of Excellence in Australia and Germany and expanding into
Greece in 2023. Research and development activities are conducted on existing products in order to
maintain as well as enhance and improve the customer benefits and experience of our products. Research
and development activities are conducted on new products in order to enhance and update as deemed
necessary to introduce to customers.
The Company does not capitalize hours spend on development as the Company isn’t able to split hours
between development and maintenance.
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Management's review
Operating review
Corporate social responsibility (continued)
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Management's review
Operating review
Goals and policies for the underrepresented gender (continued)
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Consolidated financial statements 1 January –
31 December
Income statement
USD'000 Note 2022 2021
Revenue 2 61,879 50,466
Cost of sales -3,229 -1,252
Gross profit/loss 58,650 49,215
Other external costs -13,530 -12,446
Staff costs 3 -30,589 -25,263
Depreciation, amortisation and impairment losses 7, 8, 9 -7,657 -7,462
Profit/loss before financial income and expenses 6,874 4,043
Financial income 5 897 665
Financial expenses 5 -1,862 -1,008
Profit/loss before tax 5,910 3,700
Tax on profit/loss for the yea
r
6 -287 -140
Profit/loss for the yea
r
Profit/loss attributable to:
Owners of the Company 5,622 3,560
Statement of comprehensive income
Profit/loss for the yea
r
Other comprehensive income that will be reclassified
subsequently to the profit or loss
Cumulative translation adjustment -133 -17
Total comprehensive income 5,489 3,543
Profit/loss attributable to:
Owners of the Company 5,489 3,543
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Consolidated financial statements 1 January –
31 December
Statement of financial position
USD'000 Note
2022 2021
1 January
2021
ASSETS
Intangible assets 7 26,215 29,845 25,569
Property, plant and equipment 8 379 490 113
Right-of-use asset 9 3,106 4,500 3,091
Financial assets 16 11,334 364 111
Deferred tax assets 10 3,211 2,205 1,918
Total non-current assets 44,245 37,404 30,802
Trade receivables 11 13,403 9,540 5,038
Prepayments 2,643 339 562
Income tax receivables 0 119 198
Other investments 12 19,873 0 0
Other receivables 826 6,809 609
Cash at bank and in hand 19,540 23,355 17,440
Total current assets 56,285 40,162 23,847
TOTAL ASSETS 100,530 77,566 54,649
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Consolidated financial statements 1 January –
31 December
Statement of financial position
USD'000 Note 2022 2021
1 January
2021
EQUITY AND LIABILITIES
Equity
Contributed capital 13 131 131 131
Foreign currency translation reserve -150 -17 0
Retained earnings 49,592 43,970 30,410
Total equity 49,573 44,084 30,541
Non-current liabilities 16
Lease liability 1,968 3,032 1,369
Contract liabilities 13,397 7,172 5,318
Other payables 0 1,144 83
Total non-current liabilities 15,365 11,349 6,770
Current liabilities 16
Loans from credit institutions 10,000 0 0
Lease liability 1,372 1,237 1,301
Trade payables 3,105 1,892 2,695
Other payables, including taxes payable 4,359 2,621 1,756
Contract liabilities 16,756 16,384 11,585
Total current liabilities 35,592 22,134 17,337
Total liabilities 50,957 33,482 24,107
TOTAL EQUITY AND LIABILITIES 100,530 77,566 54,649
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Consolidated financial statements 1 January – 31 December
Statement of changes in equity
Attributable to owners of the Company
USD’000
Contributed
capital
Foreign
currency
translation
reserve
Retained
earnings Total
Equity at 1 January 2021 131 0 30,410 30,541
Net profit for the year 0 0 3,560 3,560
Other comprehensive income for the yea
r
Total comprehensive income for the yea
r
Transactions with owners of the Company
Capital contribution 0 0 10,000 10,000
Total contribution 0 0 10,000 10,000
Equity at 31 Decembe
r
2021 131 -17 43,970 44,084
Net profit for the year 0 0 5,622 5,622
Other comprehensive income for the yea
r
Total comprehensive income for the yea
r
Equity at 31 Decembe
r
2022 131 -150 49,592 49,573
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Consolidated financial statements 1 January –
31 December
Statement of cash flow
USD'000 Note 2022 2021
Profit/loss for the yea
r
Depreciation, amortisation and impairment losses 7,657 7,462
Other adjustments of non-cash operating items -1,027 807
Cash generated from operations before changes in working
capital
Changes in working capital 15 9,364 -3,764
Cash generated from operations 15,994 4,505
Interest paid -510 -111
Interest received 0 0
Tax paid 0 -31
Cash flows from operating activities 21,106 7,923
Acquisition of intangible assets -2,000 -10,000
Acquisition of financial assets -11,334 0
Acquisition of other investments -20,017 0
Disposal of property, plant and equipment -176 -511
Cash flows from investing activities -33,527 -10,511
Proceeds from credit institutions 10,000 0
Capital contribution from shareholders 0 10,000
Payment of lease liabilities -1,394 -1,497
Cash flows from financing activities 8,606 8,503
Net change in cash flow -3,815 5,915
Cash flow for the yea
r
Cash and cash equivalents at the beginning of the yea
r
Effect of movements in exchange rates on cash held 0 0
Cash and cash equivalents at year end 19,540 23,355
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies
The annual report for the period 1 January – 31 December 2022, includes the consolidated financial
statements of Teracloud ApS (the Parent) and its subsidiary undertaking (the Group). The consolidated
financial statements of the Group have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements applying to entities
of reporting class C large.
First-time adoption of IFRS for consolidated financial statements
The consolidated statements in this annual report are the first consolidated statements that are presented
in accordance with IFRS. The comparative figures for 2021 in the income statement and the balance sheet
items as of 1 January 2021 and December 2021 were restated in accordance with IFRS. The Group has
applied the standards which are mandatory as of 31 December 2022.
Reference is made to note 19 for information about the effect of the groups first-time adoption of IFRS.
Foreign currency translation
The Group’s consolidated financial statements are presented in U.S. Dollar (USD), which is also the Parent
Company’s functional currency. Most of the Company's customers enter into contracts that are denominated
in U.S. Dollars. The Company's expenses are generally denominated in the currencies of the countries
where its operations are located, which is primarily in the U.S., Australia and Europe.
All monetary assets and liabilities denominated in foreign currencies are translated into U.S. Dollars using
the exchange rates in effect at the balance sheet date. All other assets and liabilities are translated into U.S.
Dollars using historical exchange rates at the transaction date. Foreign currency denominated revenue and
expenses are remeasured using the average exchange rates in effect during each period.
Differences in exchange rates arising from the translation of foreign subsidiaries’ equity at the beginning of
the year at the exchange rates at the balance sheet date and from the translation of income statements from
the average exchange rates for the currency exchange rates at the balance sheet date are recognised
directly in other comprehensive income.
Consolidated financial statements
The consolidated financial statements comprise the Parent Company, Teracloud ApS and its subsidiaries.
On consolidation, intra-group income and expenses, shareholdings, intra-group balances and dividends and
realised and unrealised gains and losses on intra-group transactions are eliminated.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
New standards and interpretations not yet adopted
The IASB has issued a number of new amendments to accounting standards which are not mandatory for
31 December 2022 reporting periods. The amendments are not early adopted by the Company. Teracloud
ApS expects to adopt these standards, amendments, and interpretations when they become mandatory.
It is Management's assessment that none of these will significantly affect the Company’s financial
statements.
Critical accounting estimates and judgements
The preparation of the consolidated financial statements requires Management to make estimates and
assumptions that may have a significant effect on the application of policies and reported amounts of assets,
liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based
on historical experience and various other factors.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Changes in estimates may be necessary if there are changes in the circumstances on
which the estimate was based, or if more detailed information becomes available. Such changes are
recognised in the period in which the estimate in question is revised.
The application of the Company’s accounting policies may require Management to make judgments that can
have a significant effect on the amounts recognised in the consolidated financial statements. Management
judgment is required in particular when assessing the substance of transactions that have a complicated
structure or legal form.
The critical accounting estimates and judgments could potentially have a significant impact on the
consolidated financial statements.
The table below shows critical accounting estimates and judgments and their level of potential impact on the
consolidated financial statements:
Financial Statement Line Item Note
Critical accounting
estimate and
judgements
Estimate/
judgement
Potential impact from
estimate and
judgement
Intangible assets and
impairment of goodwill
7 Impairment of
intangible assets
and goodwill
Estimate
●●○
Trade receivables 11 Allowance for
doubtful trade
receivables
Estimate
●○○
Right of use assets and lease
obligations
9 Assessment of
determined
lease term including
expected exercise
of extension- and
termination options.
Judgement
●●○
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Income statement
Revenue
License
The Company’s licenses grant the customer a right to use the intellectual property (IP) and as the Company
does not undertake activities that substantively change the IP to which the customer has rights during the
license period, revenue is according to IFRS 15 satisfied at a point in time. Revenue is recognized at the
point in time when the software license key is delivered to the customer, and the customer may use and
benefit from the software license.
Maintenance and support
The Company's maintenance and support is made up of technical support, bug fixes, and when-and-if
available unspecified software upgrades. Maintenance and support revenue are recognized over time
measured based on the percentage of completion relative to the term of the maintenance and support
contract. Maintenance and support contracts are invoiced upon execution of the contract or annually over
the term of the contract.
Professional Services
The Company's professional services primarily include consulting services associated with the
implementation of software licenses. Professional services are distinct performance obligations, and the
related revenue is recognized at the point in time when the customer can benefit from the services. The
Company applies the practical expedient of recognizing revenue upon invoicing tor time and materials-based
arrangements as the invoiced amount corresponds to the value of the professional services provided.
Royalties and Service Fees
The Company derives royalty revenues in connection with three supplier relationship agreements with
International Business Machine Corporation (IBM). Under these agreements with IBM, the total royalty due
associated with the sale of a software license is received via a one-time payment after the software license
key is delivered to the end customer. Royalty revenue for software licenses is recognized at a point in time
upon delivery of the software license key. The total royalty or service fee due associated with the sale of
maintenance and support is recognized pro rata on an over time basis on a quarterly basis over the term of
the underlying contract with the end customer.
Cost of sales
Cost of sales comprises costs incurred to generate revenue for the year.
Other external costs
Other external costs comprise costs for distribution and sales costs, costs for advertising, administrative
expenses, costs of premises, etc.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Staff costs
Staff costs comprise wages and salaries, including holiday allowance, pension and other social security
costs. The costs are recognised in the year which the associated services are rendered by the employees.
Depreciation, amortisation and impairment losses
Depreciation, amortisation and impairment losses relating to intangible assets and property, plant and
equipment comprise depreciation, amortisation and impairment losses for the financial year, calculated on
the basis of the residual values and useful lives of the individual assets and impairment testing.
Financial income and expenses
Finance income and costs comprise interest income and expense, payables and transactions denominated
in foreign currencies as well as surcharges and refunds under the on-account tax scheme, etc.
Tax on profit/loss for the year
Tax for the year comprises current tax for the year and changes in deferred tax, including changes in tax
rates. The tax expense relating to the profit/loss for the year is recognised in the income statement at the
amount attributable to the profit/loss for the year and directly in equity at the amount attributable to entries
directly in equity.
Statement of financial position
Intangible assets
Intangible assets comprise goodwill and other intangible assets such as customer relationships, technology,
tradename and covenant not to complete.
Goodwill
Initially, goodwill is recognised at cost. Subsequently, goodwill is measured at cost less accumulated
impairment. Goodwill is not amortised.
The carrying amount of goodwill must be tested for impairment at least annually. The impairment test may
be performed at any time during the year provided that it is performed at the same time each year.
Impairment losses are recognised directly in profit for the year and are not subsequently reserved.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Intangible assets (continued)
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and impairment losses.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful economic lives and is recognised in profit and loss as
incurred.
The estimated useful lives are as follow:
Customer relationship 6-11 years
Technology 5-15 years
Tradename 6-9 years
Amortisation methods, useful lives and residual values are received at each reporting date and adjusted is
appropriate.
Property, plant and equipment
Property, plant and equipment are initially recognised at cost and subsequently measured at cost less
accumulated depreciation and impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line methods over the estimated useful life and is recognised in profit and
loss. The estimated useful lives are as follows:
Computer equipment 1 - 7 years
Furniture and fixtures 5 years
Leasehold improvements 5 years
The useful life and residual value are reassessed annually. Changes are treated as accounting estimates,
and the effect on depreciation is recognised prospectively.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Impairment of non-current assets
The carrying amount of intangible assets and property, plant and equipment is subject to an annual test for
indications of impairment other than the decrease in value reflected by depreciation or amortisation.
Impairment tests are conducted of individual assets or groups of assets when there is an indication that they
may be impaired. Write-down is made to the recoverable amount if this is lower than the carrying amount.
Leases
Leases are recognised as right-of-use assets with the corresponding liability at the time the asset is available
for use by the Group. Assets and liabilities arising from a lease are measured on a present value basis.
Right-of-use assets are recognised at the commencement date of the lease when the asset is available for
use. Right-of-use assets are initially measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the
amount of lease liabilities recognised, initial direct costs incurred, lease payments made at or before the
commencement date, less any lease incentives received. Right-of-use assets are depreciated over the
shorter of the asset’s useful life and the lease term on a straight-line basis. An assessment is made at each
reporting date of whether there is any indication that a right-of-use asset may be impaired. If any such
indication exists, an impairment test is carried out.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, of that rate cannot be readily
determined, the Company’s incremental borrowing rate. Lease payments included in the measurement of
the lease liability comprise the following:
- fixed payments, including in-substance fixed payments,
- variable lease payments that depend on an index or a rate, initially measured using the index or
rate as at the commencement date,
- amounts expected to be payable under a residual value guarantee, and
- the exercise price under a purchase option that the Company is reasonably certain to exercise,
lease payments in an optional renewal period if the company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease unless the Company is reasonably
certain not to terminate early.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Financial instruments
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designed
as FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows;
and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost as described above are measured at
FVTPL.
Trade receivables are initially recognised when they are originated. All other financial assets and liabilities
are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
Receivables are measured at amortised cost using the effective interest method less allowance for lifetime
expected credit losses using the simplified approach. Interest income, foreign exchange gains and losses
and impairment are recognised in profit and loss. Any gain or loss on derecognition is recognised in profit or
loss.
The Company recognises loss allowance for expected credit loss on financial assets measured at amortised
cost. To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and days past due. Furthermore, an allowance for lifetime expected credit losses for
trade receivables is recognised on initial recognition. Lifetime expected credit losses are the expected credit
losses that result from all possible default events over the expected life of a financial instrument. Credit
losses are measured as the present value of all cash shortfalls and is discounted at the effective interest
rate of the financial asset.
The Company consider financial assets to be in default when:
- the debtor is unlikely to pay its credit obligations to the Company in full, without recourse by the
Company to actions such as realising security (if any is held), or
- the financial asset is more than 90 days past due.
Loss allowance for financial assets measured at amortised cost are deduced from the gross carrying
amounts of the assets.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit
impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred.
Prepayments
Prepayments comprise prepayment of costs incurred relating to subsequent financial years.
Cash and cash equivalents
The company considers all highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Corporation tax and deferred tax
Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxable
income for the year, adjusted for tax on the taxable income of prior years and for tax paid on account. The
amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or
received that reflects uncertainty related to income taxes. It is measured using tax rates arising from
dividends.
Corporation tax and deferred tax (continued)
Deferred tax assets are recognised for the tax value of tax loss carryforwards, are recognised at the expected
value of their utilisation within the foreseeable future; either as a set-off against tax on future income or as a
set-off against deferred tax liabilities in the same legal tax entity.
Deferred tax is measured in accordance with the tax rules and at the tax rates applicable at the balance
sheet date when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a
result of changes in tax rates are recognised in the income statement, statement of other comprehensive
income or equity, respectively.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
Temporary differences in relation to a right-of-use asset and lease liability for a specific lease are regarded
as a net package (the lease) for the purpose of recognising deferred tax.
Deferred tax assets are reviewed at each reporting date and are reduced on the extent that it is no longer
probable that the related tax benefit will be realised, such reductions are reversed when the probability of
future taxable profits improves.
Equity
Ordinary shares are classified as equity. Premium on issue of ordinary shares are recognised as share
premium.
Liabilities
Financial liabilities are recognised at cost at the date of borrowing, corresponding to the proceeds received
less transaction costs paid. In subsequent periods, the financial liabilities are measured at amortised cost
using the effective interest method. Accordingly, the difference between cost and the nominal value is
recognised in the income statement over the term of the loan together with interest expenses.
Other liabilities are measured at amortised cost, which normally corresponds to nominal value.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Fair value measurement
The Company uses fair value for certain disclosures and measurement of financial instruments. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the assumption that the transaction to sell the asset or transfer the
liability takes place either in the principal market for the asset or liability or, in the absence of a principal
market, in the most advantageous market for the asset or liability. The fair value of an asset or a liability is
measured using the assumptions that market participants would use when pricing the asset or liability,
presuming that they are acting in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, thus maximising the use of relevant observable inputs and
minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or
disclosed are categorised within the fair value hierarchy (levels 1, 2 and 3), described as follows, on the
basis of the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
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Consolidated financial statements 1 January –
31 December
Notes
1 Accounting policies (continued)
Cash flow statement
The cash flow statement shows the Company's cash flows from operating, investing and financing activities
for the year, the year's changes in cash and cash equivalents as well as the Company's cash and cash
equivalents at the beginning and end of the year.
Cash flows from operating activities
Cash flows from operating activities are calculated as the profit/loss for the year adjusted for non-cash
operating items, changes in working capital and corporation tax paid.
Cash flows from investing activities
Cash flows from investing activities comprise payments in connection with acquisitions of intangible assets,
financial assets and property, plant and equipment.
Cash flows from financing activities
Cash flows from financing activities comprise changes in size or composition of the Company's contributed
capital and costs in this respect as well as raising of loans and payments of lease liabilities.
Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term marketable securities with a short term, which are
easily convertible into cash and which are subject to only an insignificant risk of changes in value.
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Consolidated financial statements 1 January –
31 December
Notes
2 Revenue
All of the Group’s revenue is from license, maintenance and support, and services of software which is sold
to the customer. All revenue is from contracts with customers. Invoices is typically due within 30 days after
delivery.
If a contract contains multiple performance obligations, each distinct performance obligation is accounted
for separately. The Company allocates revenue to each of the performance obligations included in a contract
at the inception of the contract.
The Group generates revenue primarily in the United States, Scandinavia and in a number of other regions.
Revenue from sales of licenses is recognised at a point in time while maintenance and support and
professional services is recognised over time.
In the following table, revenue from contracts with customers is disaggregated by service type.
USD’000 2022 2021
License 21,641 17,436
Maintenance and support 33,101 30,625
Professional services 7,137 2,405
61,879 50,466
The following table provides information about receivables and contract liabilities from contracts with
customers.
USD’000 2022 2021
1 January
2021
Receivables, which are included in ‘trade receivables’ 13,403 9,540 5,038
Contract liabilities 30,153 23,556 16,903
Contract liabilities relate to the advance consideration received from customers, which is mainly
prepayments from clients for unsatisfied or partially satisfied performance obligations in relation to licenses,
maintenance and support and professional services, and to amounts where Teracloud has a contractual
right to bill but before transferring any license or service.
The following table provides information about the recognition of contract liabilities:
USD’000 2022 2021
Balance at 1 January 23,556 16,903
Recognised as revenue during the period -16,806 -10,721
Prepayments received from customer during the period
23,404 17,374
Balance at 31 Decembe
r
30,153 23,556
T
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Consolidated financial statements 1 January –
31 December
Notes
3 Staff costs
USD’000 2022 2021
Wages and salaries 27,850 22,987
Defined contribution pension plans 1,206 937
Other social security costs 1,533 1,339
Total staff costs 30,589 25,263
Average number of full-time employees 258 182
Key management personnel compensation
USD’000 Total
2022
Wages and salaries 2,323
Pension 71
Total 2,394
2
021
Wages and salaries
2,273
Pension
66
Total 2,339
In accordance with section 98b 3.2 of the Danish Financial Statements Act, renumeration to the Executive
Board has not been disclosed due to only one person receiving remuneration.
The Board of Directors consists of representatives from the Group who do not receive specific compensation
for their role as board members in neither the Company or in the Group. Allocating the board members total
remuneration would result in an insignificant allocation to their role as board members.
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Consolidated financial statements 1 January –
31 December
Notes
4 Fees to auditor appointed at the general meeting
USD’000 2022 2021
Statutory audit 244 96
Tax assistance 114 190
Other assurance engagements 0 0
Non-audit services 32 70
Total fees to KPMG 389 355
In 2022, audit fees included the audit of the consolidated and local financial statements. Tax assistance
related primarily to tax compliance service. Non-audit services primarily related to assistance with transfer
cross border.
5 Financial income and expense
USD’000 2022 2021
Interest income measured at amortised cost 418 0
Foreign exchange gains 1 2
Other interest income 7 0
Other financial income 471 662
Total financial income 897 665
Interest expense measured at amortised cost 376 111
Lease interest 134 111
Foreign exchange losses 1,352 785
Other interest expense 0 1
Total financial expenses 1,862 1,008
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Consolidated financial statements 1 January –
31 December
Notes
6 Tax on profit/loss for the year
Current tax for the yea
r
1,302 418
Deferred tax adjustment for the yea
r
-1,015 -278
287 140
Tax on result for the year can be explained as:
Calculation of effective tax rate:
Corporate tax rate in Denmark/Luxemburg -22.0% -22.0%
Non-taxable income less non-deductible expenses 2.7% 20.6%
Othe
r
14.5% -2.4%
Effective tax rate
-4.9% -3.8%
7 Intangible assets
The carrying amount of goodwill amounted to USD 758 thousand (31 December 2021: USD 758 thousand).
The impairment test was carried out with the activities in the Group as the cash-generating unit. The
recoverable amount was based on value in use and estimated on input from Group Management. The test
included a 5-year period followed by a terminal period.
Key assumptions applied in the impairment test were expected revenue, EBITDA ratio, discount rate and
growth rate in the terminal period. The key assumptions applied are set out below:
In percent 2022
Pre-tax discount rate 16.7
Terminal value growth rate 2.0
Expected revenue growth in the budget period (average of next five years) 9.3
EBITDA ratio 10.7
The impairment test showed headroom from value in use to the carrying amount. Management is of the
opinion that the assumptions applied are sustainable.
Management has identified that an increase in the pre-tax discount rate of 13.4 percent would need to
change individually for the estimated recoverable amount to be equal to the carrying amount.
Sensitivity tests of key assumptions were carried out which showed that none of the other key assumption
would with reasonable possible change cause the carrying amount to exceed the recoverable amount.
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Consolidated financial statements 1 January –
31 December
Notes
7 Intangible assets (continued)
USD'000 Goodwill
Customer
relations Technology Tradename Total
Cost at 1 January 2022 758 8,302 43,988 122 53,170
Additions 0 0 2,000 0 2,000
31 Decembe
r
2022 758 8,302 45,988 122 55,170
Amortisation and
impairment losses at
1 January 2022
0 4,165 19,038 122 23,325
Amortisation for the
period
0 871 4,760 0 5,630
31 Decembe
r
2022 0 5,036 23,797 122 28,955
Carrying amount at
31 Decembe
r
2022 758 3,266 22,191 0 26,215
USD'000 Goodwill
Customer
relations Technology Tradename Total
Cost at 1 January 2021 758 8,302 33,988 122 43,170
Additions 0 0 10,000 0 10,000
31 Decembe
r
2021 758 8,302 43,988 122 53,170
Amortisation and
impairment losses at
1 January 2021
0 3,294 14,185 122 17,602
Amortisation for the
period
0 871 4,852 0 5,723
31 Decembe
r
2021 0 4,165 19,038 122 23,325
Carrying amount at
31 Decembe
r
2021 758 4,137 24,950 0 29,845
Technology includes USD 10 million (2021: USD 10 million) capitalised but not ready for use why
amortisation have not started.
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Consolidated financial statements 1 January –
31 December
Notes
8 Property, plant and equipment
USD'000
Computer
equipment
and
software
Furniture
and fixtures
Leasehold
improve-
ments Total
Cost at 1 January 2022
1,103 68 30 1,201
Additions
128 48 0 176
Disposals
-105 0 0 -105
Cost at 31 Decembe
r
2022
1,126 116 30 1,272
Depreciation and impairment losses at
1 January 2022
651 40 21 712
Depreciation
199 13 3 215
Disposals
-34 0 0 -34
Depreciation and impairment losses at
31 Decembe
r
2022
816 53 24 893
Carrying amount at 31 Decembe
r
2022
310 63 6 379
USD'000
Computer
equipment
and
software
Furniture
and fixtures
Leasehold
improve-
ments Total
Cost at 1 January 2021
607 58 25 690
Additions
495 10 6 511
Cost at 31 Decembe
r
2021
1,102 68 31 1,201
Depreciation and impairment losses at
1 January 2021
534 28 15 577
Depreciation
117 12 5 134
Depreciation and impairment losses at
31 Decembe
r
2021
651 40 20 711
Carrying amount at 31 Decembe
r
2021
451 28 11 490
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Consolidated financial statements 1 January –
31 December
Notes
9 Right-of-use assets
Leases
The Group leases hardware and buildings with a lease term of 3-5 years. Some of the agreements include
an option to purchase the assets at the end of the contract term or options to renew the contract. At the
lease commencement date the Group assesses whether it is reasonably certain to exercise such option and
reassesses if there is a significant event.
Information about leases for which the Company is a lessee is presented below.
USD'000
Buildings
and office
space Hardware Total
At 1 January 2022
3,228 1,272 4,500
Additions
307 110 418
Depreciation
-957 -855 -1,812
Carrying amount at 31 Decembe
r
2022
2,578 527 3,106
At 1 January 2021
761 2,330 3,091
Additions
2,816 197 3,014
Depreciation
-457 -1,148 -1,604
Carrying amount at 31 Decembe
r
2021
3,121 1,379 4,500
Teracloud Consolidated Financial Statements 2022
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Consolidated financial statements 1 January –
31 December
Notes
9 Right-of-use assets (continued)
USD’000 2022 2021
Amounts recognised in profit and loss
Depreciation on right-of-use assets
1,812 1,604
Interest expenses
134 111
Total recognition in costs
1,946 1,715
Amounts recognised in statement of cash flows
Cash flow for leases
1,394 1,497
Total cash outflows for leases
1,394 1,497
Lessee exemptions
The company do not lease any leases that can be classified at short-term leases or any leases that can be
classified as low-value leases.
10 Tax and deferred tax
USD’000 2022 2021
Amounts recognised in profit or loss
Current tax expense
Current tax on profits for the yea
r
1,302 418
Total current tax 1,302 418
Deferred tax expense
Origination and reversal of temporary differences 125 -278
Adjustment for deferred tax of prior periods 196 0
Recognition of previously unrecognised deferred tax assets -1,335 0
Total deferred tax -1,015 -278
Total tax expense 287 140
Teracloud Consolidated Financial Statements 2022
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Consolidated financial statements 1 January –
31 December
Notes
10 Tax and deferred tax (continued)
USD'000 2022 2021
1 January
2021
Deferred tax at 1 January 2,204 1,918 492
Deferred tax adjustment in the income statement 1,015 278 1,426
Othe
r
-8 8 0
Deferred tax at 31 Decembe
r
3,211 2,204 1,918
The elimination period for the deferred tax is expected to
be:
0-1 yea
r
2,388 720 578
1-5 years -56 -48 -155
>5 years 879 1,533 1,495
3,211 2,205 1,918
Deferred tax that is expected to fall due more than five years after the balance sheet date relates to tax
losses carried forward and deferred revenue. Tax losses allowed for carryforward are attributable to
subsidiaries operating in the US. Due to a positive taxable income in the last years, the losses are expected
to be realisable within the foreseeable future.
It is expected that USD 2,640 thousand of the deferred tax recognised at 31 December 2022 will be
realised as current tax in 2023.
11 Trade receivables
USD’000 2022 2021
1 January
2021
Trade receivables before write-down 13,330 9,540 5,038
Amounts written down 31 Decembe
r
73 0 0
Total trade receivables 31 Decembe
r
13,403 9,540 5,038
Teracloud Consolidated Financial Statements 2022
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Consolidated financial statements 1 January –
31 December
Notes
12 Other investments
USD’000 2022 2021
Corporate bonds
–
at FVTPL 19,873 0
Total other investments 19,873 0
13 Contributed capital
On 31 December 2022 the share capital amounted to DKK 862,038 (USD 131,191) divided into 862,038
shares (unchanged from 2021).
All shares rank equally.
Dividends
After the reporting date, the Board of Directors proposed dividends of USD 10 million. The dividends have
not been recognised as liabilities and there are no tax consequences.
14 Capital management
The capital structure is managed for the Company in accordance with the financial policy, as approved by
the Board of Directors. The Company’s policy is to maintain a strong capital base as to maintain investor,
creditor and market confidence and to sustain future development of the business.
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern
so that they can continue to provide returns for shareholders and benefits for other stakeholders and
maintain an optimal capital structure to reduce the cost of capital.
In order to aid such objectives Management prepares cash flow forecast regularly. This enables
Management to act in due time in order to comply with the capital management objectives.
The Group’s net debt to adjusted equity ratio at December 2022 was as follows.
USD’000 2022 2021
Total liabilities 50,957 33,482
Cash and cash equivalents 19,540 23,355
Net debt 31,417 10,127
Total equity 49,573 44,084
Adjusted equity 49,573 44,084
Net debt to adjusted equity ratio 0.63 0.23
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Consolidated financial statements 1 January –
31 December
Notes
15 Changes in working capital
Change in trade and other receivables
-185 -10,478
Change in prepayments
6,598 6,652
Change in trade and other payables
2,951 62
Change in other current liabilities
0 0
9,364 -3,764
16 Financial risks
Risk management framework
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the
Company’s risk management framework. The Company’s risk management policy is established to identify
and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks
adherence to limits.
The Company is subject to a number of risks associated with emerging, technology-oriented companies.
Principal among these risks are risks associated with an evolving and unpredictable business model,
development of new technological innovations, customer acceptance of new products, marketing the
Company's products, dependence upon key individuals, competition from larger, more financially
independent competitors and the need to obtain adequate financing to fund future operations.
The Company has ensured that a comprehensive risk framework is in place to manage these risks.
Market risks
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices.
The Company is exposed to transactional foreign currency risk to the extent that there is a mismatch between
the currencies in which the Company operates. The functional currency of most of the Company’s foreign
subsidiaries is in USD, and most of the Company’s customers enter into contracts that are dominated in
USD. Furthermore, the Company’s expenses are generally denominated in the currencies of the countries
where its operations are located. The Company are therefore not severely impacted by foreign exchange
fluctuations, as both income and costs are generally settled in the functional currency of the Company.
The currency risk is therefore low due to trading primarily in few currencies (USD and EUR).
Because the services provided by the Group doesn’t involve material financing, currency fluctuation and
commodities the market risk is very limited in general.
Credit risks
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.
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily
of cash held on deposit and trade receivable. The Company's cash at times may exceed federally insured
limits. The Company has not experienced any losses in such accounts and believes it has no exposure to
any significant credit risk on cash. The Company generally does not require collateral from customers for
trade receivable balances.
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Consolidated financial statements 1 January –
31 December
Notes
16 Financial risks (continued)
Credit risks (continued)
Under the Company’s policy for assuming credit risk, all major clients and other business partners are
assessed prior to any contract being signed. As of 31 December 2022, the trade receivable balance due
from two major customers represented 41% of total trade receivable. As of 31 December 2021, the trade
receivable balance due from two major customers represented 18% of the total trade receivables.
During 2022, one major customer represented 26% (2021: 36%) of total revenue. To reduce the risk
associated with its trade receivable balance, the Company routinely assesses the financial condition of its
customers.
Historically, the Company has not experienced any significant credit loss related to its customers.
The following table provides information about the exposure to credit risk for trade receivables as of 31
December:
USD’000
Weighted-
average
loss rate
Gross
carrying
amount
Loss
allowance
Credit risk
Current
0.0% 2,558 0
Overdue 0-30 days
0.0% 2,409 0
Overdue 31-60 days
0.0% 3,456 0
Overdue 61-90 days
0.0% 966 0
Overdue more than 90 days
-1.8% 4,015 -73
,
Total 31 December 2022
-0.5% 13,403 -73
USD’000
Weighted-
average
loss rate
Gross
carrying
amount
Loss
allowance
Credit risk
Current
0.0% 216 0
Overdue 0-30 days
0.0% 3,377 0
Overdue 31-60 days
0.0% 2,994 0
Overdue 61-90 days
0.0% 892 0
Overdue more than 90 days
0.0% 2,061 0
,
Total 31 December 2021
0.0% 9,540 0
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Consolidated financial statements 1 January –
31 December
Notes
16 Financial risks (continued)
Liquidity risks
Liquidity risk is the risk that an entity will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or other financial assets. The Company’s objective
when managing liquidity is to ensure, that it will have sufficient liquidity to meet its liabilities when they are
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the Company’s reputation.
The amounts disclosed in the following table are the contractual undiscounted cash flows.
USD'000
Carrying
amount
2022
Less than 1
yea
r
Between
1-5 years
More than
5 years
Total
contractual
cash flow
Loans from credit
institutions
10,000 10,000 0 0 10,000
Lease liabilities 3,340 1,372 1,968 0 3,340
Trade payables 3,105 3,105 0 0 3,105
Other payables 4,359 4,359 0 0 4,359
Contract liabilities 30,153 16,756 13,397 0 30,153
Total financial
liabilities
50,957 35,592 15,365 0 50,957
USD'000
Carrying
amount
2021
Less than 1
yea
r
Between
1-5 years
More than
5 years
Total
contractual
cash flow
Lease liabilities 4,270 1,237 3,032 0 4,270
Trade payables 1,892 1,892 0 0 1,892
Other payables 3,765 2,621 1,144 0 3,765
Contract liabilities 23,556 16,384 7,172 0 23,556
Total financial
liabilities
33,482 22,134 11,348 0 33,482
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Consolidated financial statements 1 January –
31 December
Notes
16 Financial risks (continued)
USD’000
Loans form
credit
institutions
Lease
liabilities Total
Net debt as of 1 January 2022
0 4,270 4,270
Cash flow
10,000 -1,394 8,606
Additions
0 465 465
Net debt as of 31 December 2022
10,000 3,340 13,340
USD’000
Loans form
credit
institutions
Lease
liabilities Total
Net debt as of 1 January 2021
0 2,670 2,670
Cash flow
0 -1,497 -1,497
Additions
0 3,096 3,096
Net debt as of 31 December 2021
0 4,270 4,270
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Consolidated financial statements 1 January –
31 December
Notes
16 Financial risks (continued)
Financial assets and liabilities
The Company’s financial assets and liabilities by measurement category:
USD’000 2022 2021
Financial assets
Financial assets at amortised cost
Trade receivables 13,403 9,540
Cash and cash equivalents 19,530 23,344
Financial assets 11,334 364
44,267 32,884
Assets at fair value through profit and loss
Money market instruments 11 11
Bonds 19,873 0
Total financial assets 44,278 32,895
Financial liabilities
Liabilities at amortised cost
Lease liabilities 3,340 4,270
Trade payables 3,105 1,892
Other payables 4,359 3,765
Loans from credit institutions 10,000 0
Contract liabilities 30,153 23,556
Total financial liabilities 50,957 9,927
The fair value is approximately equal to the carrying amount of all financial assets and liabilities.
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Consolidated financial statements 1 January –
31 December
Notes
17 Fair value measurement
The following table provides a summary of significant assets and liabilities that are measured at fair value
on recurring basis at 31 December 2022:
Basis of fair value measurement
USD’000 Level 1 Level 2 Level 3
Assets
Money market instruments 11 - -
Bonds 19,873 - -
The following table provides a summary of significant assets and liabilities that are measured at fair value
on recurring basis at 31 December 2021:
Basis of fair value measurement
USD’000 Level 1 Level 2 Level 3
Assets
Money market instruments 11 - -
The following table provides a summary of significant assets and liabilities that are measured at fair value
on recurring basis at 1 January 2021:
Basis of fair value measurement
USD’000 Level 1 Level 2 Level 3
Assets
Money market instruments 11 - -
Measurement of fair values
The Company had cash equivalents of USD 11 at 31 December 2022 and 2021 which were invested in
money market instruments. The Company carries these cash equivalents at fair value based on quoted
market prices, which are a Level 1 inputs in the hierarchy of fair value measurements.
Contingent consideration
At 31 December 2021, the Group had recognised an earn-out liability at USD 1,144 thousand.
During 2022, Management have reassessed the likelihood of settlement of the earn-out. As a result of
changes in estimation the Group has reversed the earn-out liability.
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Consolidated financial statements 1 January –
31 December
Notes
18 Related party disclosures
The group is controlled by Kapitalen ApS, which is also the ultimate controlling party.
No other parties exercise control or significant influence over Teracloud ApS.
Teracloud ApS' related parties comprise key management personnel and their close family members,
entities controlled by these persons and Teracloud ApS’ subsidiaries.
Control
Kapitalen ApS
Bryghuspladsen 8, 4. 402
1473 København K
Kapitalen ApS holds the majority of the contributed capital in the Company. Teracloud ApS ownership
comprises per 31 December 2022 as follows:
Name/legal form
Registered
office
Equity
interest
2022
Equity
interest
2021
Equity
interest at
1 January
2021
Parent company:
Kapitalen ApS Denmark
Subsidiaries:
21
st
Century Software, Inc. United States 100% 100% 100%
VMS Software, Inc. United States 100% 100% 100%
Teracloud AB Sweden 100% 100% 100%
Teracloud GMBH Germany 100% 100% 100%
Teracloud Ltd. United Kingdom 100% 100% 100%
Teracloud PTY Ltd. Australia 100% 100% 100%
Teracloud Russia Russia 100% 100% 100%
Teracloud LLC Armenia 100% 100% 100%
Operations in Teracloud Russia ceased in early 2022.
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Consolidated financial statements 1 January –
31 December
Notes
18 Related party disclosures (continued)
Related party transactions
Transactions and outstanding balances from related parties:
USD’000 2022 2021
Parent:
Management fee
3,600 2,400
Group entities:
Purchase of services
1,963 383
19 First time adoption of IFRS
The financial statement for the year ended 31 December 2022, are the first financial statements that the
Company has prepared in accordance with IFRS. The date of transition to IFRS is 1 January 2021, and an
opening statement of financial position was prepared as of this date. For periods up to and including the
year ended 31 December 2021, the Company did not present consolidated financial statements in
accordance with the U.S. GAAP.
Accordingly, the Company has prepared financial statements that comply with IFRS applicable as at 31
December 2022, together with the comparative period financial information for the year ended 31 December
2021, as described in the summary of significant accounting policies. In preparing the financial statements,
the Company’s opening statement of financial position as at 1 January 2021 was prepared in accordance
with IFRSs, the Company’s date of transition to IFRS.
Exemptions applied
IFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain
requirements under IFRS. The Group has applied the exemption in IFRS 1.D13 and thereby elected in its
financial statements, to measure cumulative translation differences for all foreign operations at the carrying
amount that would be included in the parent’s consolidated financial statements, based on the parent’s date
of transition to IFRSs. Furthermore, the Group has also applied the exemption not to recognise leases for
which the lease term ends within 12 months from the date of transition in accordance with IFRS 1.D9D(b).
In accordance with IFRS 1.28 have a reconciliation to previous GAAP not been prepared as the Company
did not present consolidated financial statements.
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Consolidated financial statements 1 January –
31 December
Notes
20 Contractual obligations, contingencies collateral, etc.
Indemnification obligations
The Company indemnifies its customers for any actions brought by a third party due to the Company's
infringement of another party's intellectual property. As of 31 December 2022, and 31 December 2021, the
Company has not experienced any material losses related to these indemnification obligations and no claims
with respect thereto were outstanding. The Company does not expect significant claims related to these
indemnification obligations, and consequently, has not established any related reserves.
Legal proceedings
From time to time, legal actions arise in the ordinary course of business. In the opinion of Management, the
ultimate disposition of these matters will not have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
Collateral
Bonds with a carrying amount of USD 19,873 thousand and cash accounts has been provided as collateral
for loans from credit institutions and unutilized credit facilities.
21 Events after the balance sheet date
During February 2023, the Company opened a subsidiary in Greece to operate as an additional Center of
Excellence.
During March 2023, the Company and IBM entered into an additional license agreement for total cash
consideration of USD 4.0 million. Under the license agreement, the Company licensed IBM Streams, which
evaluates a broad range of streaming data — unstructured text, video, audio, geospatial and sensor — to
help organizations spot opportunities and risks as they happen. Neither the above listed events nor any
other events have occurred after the balance sheet date to this date that would influence the assessment
and evaluation of this annual report in any substantial way.
At 31 December 2022, the Company held bonds with a carrying value of USD 1.5 million that are expected
to be fully written down in 2023. This is considered as a non-adjusting subsequent event.
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Parent Company financial statements 1 January – 31
December
Income statement
USD'000 Note 2022 2021
Revenue 44,832 39,590
Cost of sales -26,228 -23,455
Other external costs -8,113 -8,731
Gross profit/loss 10,491 7,404
Staff costs 2 -344 0
Depreciation/amortisation and impairment losses 4,5 -5,636 -5,724
Profit/loss before financial income and expenses 4,511 1,680
Income from equity investments in subsidiaries 20,000 0
Financial income 801 0
Financial expenses -1,408 -1,026
Profit/loss before tax 23,903 654
Tax on profit/loss for the yea
r
455 70
Profit/loss for the yea
r
3 24,359 724
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Parent Company financial statements 1 January – 31
December
Statement of financial position
USD'000 Note 2022 2021
ASSETS
Intangible assets
Intangible assets 4 25,724 29,354
Property, plant and equipment 5 56 0
Investments in subsidiaries 6 19 19
Receivables from group entities 1,485 1,701
Other receivables 11,056 0
Total non-current assets 38,341 31,075
Receivables
Trade receivables 1,909 2,326
Receivables from group entities 12,580 0
Deferred tax asset 7 1,334 0
Other receivables 1,943 6,582
Prepayments 8 2,168 125
Other securities and equity investments 9 9,517 0
Cash at bank and in hand 1,596 5,540
Total current assets 31,046 14,573
TOTAL ASSETS 69,387 45,647
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Parent Company financial statements 1 January – 31
December
Statement of financial position
USD'000 Note 2022 2021
EQUITY AND LIABILITIES
Equity
Contributed capital 9 131 131
Retained earnings 49,930 35,571
Proposed dividends for the financial yea
r
10,000 0
Total equity 60,061 35,702
Non-current liabilities 10
Contract liabilities 1,803 1,946
Other payables 1,010 1,144
Total non-current liabilities 2,813 3,090
Current liabilities
Trade payables 2,382 1,139
Payables to group entities 0 231
Other payables, including taxes payable 1,013 964
Contract liabilities 3,118 4,521
Total current liabilities 6,513 6,855
Total liabilities 9,326 9,945
TOTAL EQUITY AND LIABILITIES 69,387 45,647
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Parent Company financial statements 1 January – 31 December
Statement of changes in equity
USD’000
Contributed
capital
Retained
earnings
Proposed
dividends
for the
financial
yea
r
Total equity
Equity at 1 January 2021 131 34,847 0 34,978
Transferred over the distribution of loss 0 724 0 724
Equity at 31 Decembe
r
2021 131 35,571 0 35,702
Transferred over the profit appropriation 0 14,359 10,000 24,359
Equity at 31 Decembe
r
2022 131 49,930 10,000 60,061
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Parent Company financial statements 1 January – 31
December
Notes
1 Accounting policies
The annual report of Teracloud ApS for 2022 has been prepared in accordance with the provisions applying
to reporting class C (medium) entities under the Danish Financial Statements Act.
The Parent Company’s financial statements for 2022 are presented in the functional currency U.S. Dollar
(USD).
The exchange rate from DKK to USD were at 31 December 2022 697.2200 (31 December 2021: 656.1200).
Omission of statement of cash flows
Pursuant to section 86(4) of the Danish Financial Statements Act, no cash flow statement has been
prepared. The Company's cash flows are included in the cash flow statement in the consolidated financial
statements of Teracloud Group.
Foreign currency translation
Transactions in foreign currency are upon first recognition converted at the exchange rate of the day of the
transaction. Foreign exchange differences arising between the exchange rates at the transaction date and
the date of payment are recognised in the income statement as financial income or financial expenses.
Receivables, payables, and other monetary items denominated in foreign currency are translated at the
exchange rate of the balance sheet date. Differences between the exchange rate at the balance sheet date
and the exchange rate at the time when the receivables or payables arise are recognised in profit and loss
under financial income and expenses.
Fixed assets purchased in foreign currency are measured at the exchange rate on the date of the transaction.
Income statement
Revenue
IFRS 15 is used as basis for recognition and measurement.
License
The Company’s licenses grant the customer a right to use the intellectual property (IP) and as the Company
does not undertake activities that substantively change the IP to which the customer has rights during the
license period, revenue is according to IFRS 15 satisfied at a point in time. Revenue is recognised at the
point in time when the software license key is delivered to the customer, and the customer may use and
benefit from the software license.
Maintenance and support
The Company's maintenance and support is made up of technical support, bug fixes, and when-and-if
available unspecified software upgrades. Maintenance and support revenue are recognized over time
measured based on the percentage of completion relative to the term of the maintenance and support
contract. Maintenance and support contracts are invoiced upon execution of the contract or annually over
the term of the contract.
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Parent Company financial statements 1 January – 31
December
Notes
1 Accounting policies (continued)
Professional Services
The Company's professional services primarily include consulting services associated with the
implementation of software licenses. Professional services are distinct performance obligations, and the
related revenue is recognised at the point in time when the customer can benefit from the services. The
Company applies the practical expedient of recognising revenue upon invoicing tor time and materials-based
arrangements as the invoiced amount corresponds to the value of the professional services provided.
Royalties and Service Fees
The Company derives royalty revenues in connection with three supplier relationship agreements with
International Business Machine Corporation (IBM). Under these agreements with IBM, the total royalty due
associated with the sale of a software license is received via a one-time payment after the software license
key is delivered to the end customer. Royalty revenue for software licenses is recognised at a point in time
upon delivery of the software license key. The total royalty or service fee due associated with the sale of
maintenance and support is recognised pro rata on an over time basis on a quarterly basis over the term of
the underlying contract with the end customer.
Cost of sales
Cost of sales comprises costs incurred to generate revenue for the year.
Other external costs
Other external costs comprise costs for distribution, sales and advertising, administrative expenses, costs
of premises, etc.
Staff costs
Staff costs comprise wages and salaries, including holiday allowance, pension and other social security
costs.
Financial income and expenses
Finance income and expenses comprise interest income and expense, payables and transactions
denominated in foreign currencies as well as surcharges and refunds under the on-account tax scheme, etc.
Dividends from equity investments in group entities measured at cost are recognised as income in the Parent
Company's income statement in the financial year when the dividends are declared.
In case of indication of impairment, an impairment test is conducted. Indication of impairment exists if
distributed dividends exceed profit for the year or if the carrying amount of equity investments exceeds the
consolidated carrying amounts of the net assets in the subsidiary.
Tax on profit/loss for the year
Tax for the year comprises current tax for the year and changes in deferred tax, including changes in tax
rates. The tax expense relating to the profit/loss for the year is recognised in the income statement at the
amount attributable to the profit/loss for the year and directly in equity at the amount attributable to entries
directly in equity.
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Parent Company financial statements 1 January – 31
December
Notes
1 Accounting policies (continued)
Balance sheet
Intangible assets
Intangible assets comprise goodwill and other intangible assets such as customer relationships, technology,
tradename and covenant not to complete.
Goodwill
Initially, goodwill is recognised at cost. Subsequently, goodwill is measured at cost less accumulated
impairment. Goodwill is amortised on a straight-line basis over the useful life.
Gains and losses on the disposal of intangible assets are determined as the difference between the selling
price less selling costs and the carrying amount at the date of disposal. Gains and losses are recognised in
the income statement as other operating income or other operating costs, respectively.
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and impairment losses.
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful economic lives and is recognised in profit and loss as
incurred.
The estimated useful lives are as follow:
Goodwill 7 years
Technology 5-15 years
Tradename 6-9 years
Amortisation methods, useful lives and residual values are received at each reporting date and adjusted is
appropriate.
Property, plant and equipment
Computer equipment, furniture and fixtures and leasehold improvements are initially recognised at cost and
subsequently measured at cost less accumulated depreciation and impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line methods over the estimated useful life and is recognised in profit and
loss. The estimated useful lives are as follows:
Computer equipment 1 - 7 years
Furniture and fixtures 5 years
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Parent Company financial statements 1 January – 31
December
Notes
1 Accounting policies (continued)
The useful life and residual value are reassessed annually. Changes are treated as accounting estimates,
and the effect on depreciation is recognised prospectively.
Investments
Equity investments in subsidiaries are measured at cost. In case of indication of impairment, an impairment
test is conducted. When the cost exceeds the recoverable amount, write-down is made to this lower value.
Other receivables are recognised at amortised cost.
Impairment of fixed assets
The carrying amount of intangible assets and property, plant and equipment as well as equity investments
in subsidiaries is subject to an annual test for indications of impairment other than the decrease in value
reflected by depreciation or amortisation.
Impairment tests are conducted of individual assets or groups of assets when there is an indication that they
may be impaired. Write-down is made to the recoverable amount if this is lower than the carrying amount.
Receivables
Receivables are measured at amortised cost.
Write-down is made for bad debt losses based on the expected-credit loss model.
Prepayments
Prepayments comprise prepayment of costs incurred relating to subsequent financial years.
Cash and cash equivalents
Cash at bank and in hand comprise cash and bank deposits.
Corporation tax and deferred tax
Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxable
income for the year, adjusted for tax on the taxable income of prior years and for tax paid on account.
Deferred tax is measured using the balance sheet liability method on all temporary differences between the
carrying amount and the tax value of assets and liabilities measured on the planned use of the asset or
settlement of the liability, respectively. However, deferred tax is not recognised on temporary differences
relating to office buildings non-deductible for tax purposes and other items where temporary differences
arise at the date of acquisition without affecting either profit/loss or taxable income.
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Parent Company financial statements 1 January – 31
December
Notes
1 Accounting policies (continued)
Deferred tax assets, including the tax value of tax loss carryforwards, are recognised at the expected value
of their utilisation within the foreseeable future; either as a set-off against tax on future income or as a set-
off against deferred tax liabilities in the same legal tax entity. Any deferred net assets are measured at net
realisable value.
Deferred tax is measured in accordance with the tax rules and at the tax rates applicable at the balance
sheet date when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a
result of changes in tax rates are recognised in the income statement or equity, respectively.
Liabilities
Financial liabilities are recognised at cost at the date of borrowing, corresponding to the proceeds received
less transaction costs paid. In subsequent periods, the financial liabilities are measured at amortised cost
corresponding to the capitalised value using the effective interest rate. Accordingly, the difference between
cost and the nominal value is recognised in the income statement over the term of the loan together with
interest expenses.
Other liabilities are measured at amortised cost.
Contract liabilities
Contract liabilities comprises payments received regarding income in subsequent years.
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Parent Company financial statements 1 January – 31
December
Notes
2 Staff costs and incentive schemes
USD’000 2022 2021
Wages and salaries 332 0
Defined contribution pension plans 10 0
Other social security costs 2 0
Total staff costs 344 0
Average number of full-time employees 3 0
In accordance with section 98b 3.2 of the Danish Financial Statements Act, remuneration to the Executive
Board has not been disclosed due to only one person receiving renumeration.
The Board of Directors consists of representatives from the Group who do not receive specific compensation
for their role as board members in neither the Company or in the Group. Allocating the board members total
remuneration would result in an insignificant allocation to their role as board members.
3 Profit/loss appropriation
USD’000 2022 2021
Proposal to profit/loss appropriation
Proposed dividends for the yea
r
10,000 0
Retained earnings 14,359 724
24,359 724
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Parent Company financial statements 1 January – 31
December
Notes
4 Intangible assets
USD'000 Goodwill Technology Tradename Total
Cost at 1 January 2022 758 29,314 41 30,113
Addition 0 25,298 26 25,324
Cost at 31 Decembe
r
2022 758 54,612 67 55,437
Amortisation at 1 January 2022 758 23,298 27 24,083
Amortisation for the period 0 5,618 13 5,630
Accumulated amortisation at
31 Decembe
r
2022
758 28,916 40 29,713
Carrying amount at 31 Decembe
r
2022 0 25,696 27 25,724
Cost at 1 January 2021 758 42,612 67 43,437
Additions 0 10,000 0 10,000
Cost at 31 Decembe
r
2021 758 52,612 67 53,437
Amortisation losses at 1 January 2021 758 17,588 13 18,360
Amortisation for the period 0 5,710 13 5,723
Accumulated amortisation at
31 Decembe
r
2021
758 23,298 26 24,083
Carrying amount at 31 Decembe
r
2021 0 29,314 41 29,354
Technology includes USD 10 million capitalised but not ready for use why amortisation have not started.
5 Property, plant and equipment
USD'000
Computer
equipment
and
software
Furniture
and fixtures Total
Cost at 1 January 2022
207 0 207
Additions
14 48 62
Cost at 31 Decembe
r
2022
221 48 269
Accumulated depreciation at 1 January 2022
207 0 207
Depreciation
1 4 5
Accumulated depreciation at 31 Decembe
r
2022
208 4 212
Carrying amount at 31 Decembe
r
2022
13 44 56
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Parent Company financial statements 1 January – 31
December
Notes
5 Property, plant and equipment (continued)
USD'000
Computer
equipment
and
software
Furniture
and fixtures Total
Cost at 1 January 2021
207 0 207
Additions
0 0 0
Cost at 31 Decembe
r
2021
207 0 207
Depreciation and impairment losses at 1 January 2021
207 0 207
Depreciation
0 0
Depreciation and impairment losses at 31 December
2021
207 0 207
Carrying amount at 31 Decembe
r
2021
0 0 0
6 Investments in subsidiaries
USD'000 2022 2021
Cost at 1 January 19 19
Cost at 31 Decembe
r
19 19
Carrying amount at 31 Decembe
r
19 19
Name/legal form
Registered
office
Equity
interest Equity
Result for
the year
USD’000 USD’000
Subsidiaries:
Teracloud AB United States 100% 25 67
21
st
century software Inc. United States 100% 979 841
VMS Software, Inc Sweden 100% 11,377 1,461
Teraclou GMBH Germany 100% -419 48
Teracloud Ltd. United Kingdom 100% 41 0
Teracloud PTY Ltd. Australia 100% -244 -237
Teracloud Russia Russia 100% -27 77
Teracloud LLC Armenia 100% -31 8
Operations in Teracloud Russia ceased in 2022 and the entity is expected to fully shutdown in 2023.
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Parent Company financial statements 1 January – 31
December
Notes
7 Deferred tax
USD'000 2022 2021
Deferred tax at 1 January 0 0
Deferred tax adjustment for the year in the income statement 1,334 0
1,334 0
Provisions for deferred tax relate to:
Intangible assets 1,337 0
Property, plant and equipment -2 0
1,334 0
The Company was previously registered with domicile in Luxembourg. In 2022 the Company was registered
with domicile in Denmark in accordance with the Danish Company Act § 318 n. As a consequence, it is the
first financial period there the Company recognises deferred tax assets.
8 Prepayments
Prepayments consists of various prepaid expenses amounting to USD 2,138 thousand and prepaid
insurance amounting to USD 29 thousand.
9 Other securities and equity investments
Other securities and equity investments comprise corporate bonds. The bonds were acquired in 2022.
USD'000. 2022 2021
Changes in fair value recognised in the income statement 476 0
Fair value at the end of the financial year 9,517 0
10 Contributed capital
On 31 December 2022 the share capital amounted to DKK 862,038 (USD 131,191) divided into 862,038
shares (unchanged from 2021).
All shares rank equally.
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Parent Company financial statements 1 January – 31
December
Notes
11 Non-current liabilities
Liabilities other than provisions can be specified as follows:
USD'000 2022 2021
Contract liabilities:
0-1 years 3,118 4,521
1-5 years 1,803 1,946
>5 years 0 0
4,921 6,467
Other payables:
0-1 years
1,013 964
1-5 years 1,010 1,144
>5 years 0 0
2,024 2,108
Total non-current liabilities 6,944 8,575
Total liabilities >5 years:
Contract liabilities 0 0
Other payables 0 0
Total liabilities >5 years 0 0
12 Contractual obligations, contingencies, collateral, etc.
Indemnification obligations
The Company indemnifies its customers for any actions brought by a third party due to the Company's
infringement of another party's intellectual property. As of 31 December 2022, and 31 December 2021, the
Company has not experienced any material losses related to these indemnification obligations and no claims
with respect thereto were outstanding. The Company does not expect significant claims related to these
indemnification obligations, and consequently, has not established any related reserves.
Legal proceedings
From time to time, legal actions arise in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
Joint taxation
The company is taxed jointly with the other Danish companies in the group and is liable for income taxes on
a pro rata basis and must comply with any obligations to withhold tax at source on interest, royalties and
dividends for the jointly taxed companies. The maximum liability totals an amount corresponding to the share
of the capital in the company which is owned directly or indirectly by the ultimate parent.
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Parent Company financial statements 1 January – 31
December
Notes
12 Contractual obligations, contingencies, collateral, etc. (continued)
Collateral
Bonds with a carrying amount of USD 9,517 thousand and cash accounts of USD 87 thousand have been
provided as collateral for unutilized credit facilities.
13 Related parties
Refer to note 18 in the consolidated financial statements for additional information about related parties and
control.
Related party transactions
DKK'000 2022
Purchase of services from the Parent Company 3,615
Sale of services to subsidiaries 24,756
Purchase of services from subsidiaries 29,209
Dividends received from subsidiaries 20,000
Sale of goods to affinities 99
Purchase of goods from affinities 1,790
14 Events after the balance sheet date
During February 2023, the Company opened a subsidiary in Greece to operate as an additional Center of
Excellence.
During March 2023, the Company and IBM entered into an additional license agreement for total cash
consideration of USD 4.0 million. Under the license agreement, the Company licensed IBM Streams, which
evaluates a broad range of streaming data — unstructured text, video, audio, geospatial and sensor — to
help organizations spot opportunities and risks as they happen. Neither the above listed events nor any
other events have occurred after the balance sheet date to this date that would influence the assessment
and evaluation of this annual report in any substantial way.
At 31 December 2022, the Company held bonds with a carrying value of USD 1.5 million that are expected
to be fully written down in 2023. This is considered as a non-adjusting subsequent event.