ANNUAL REPORT
NEXT BIOMETRICS GROUP ASA
NEXTBIOMETRICS.COM
202 3 202 3 202 3
23
Contents
3 Letter from the CEO
4 NEXT Biometrics at a glance
5 Report from the board of directors
11 Corporate Governance Report
21 Corporate Social Responsibility Report
24 Financial Statements Group
29 Notes to financial statement - Group
56 Financial Statements Parent company
61 Notes to the financial statements - Parent
72 Responsibility statement
73 Auditor’s report
78 Alternative performance measures
Annual Report 2023
2
DEAR SHAREHOLDER,
As announced earlier, starting October
1, 2023, I was appointed the new CEO of
NEXT Biometrics. As communicated on
our capital markets day in February, I look
forward to driving and developing our
operations further as we have now entered
our scale-up phase. We have strengthened
our management and our sales and
marketing team, and I am excited that we
are progressing in terms of new design-
wins, contracts and purchase orders from
customers and partners. I believe we are
well prepared to take on the challenges
ahead of us.
During 2023, our high-security fingerprint
sensors based on NEXT Active Thermal®
technology resulted in contracts with
demanding customers in the world’s
largest biometric markets. And we will
continue our quest to develop our
technology. This year we will focus on
further product development based on
our successful, flagship sensor FAP20;
product development which includes
innovative technical coating and further
improved Anti-Spoofing capabilities.
Moreover, we will be working on NEXT’s
prospective FAP30 product, which already
has gathered strong interest from partners.
NEXT can offer the FAP30 sensor at a
competitive price and we are targeting to
have the FAP30 product ready during 2024.
As a rather small player on a large, global
market – sales and marketing is crucial.
Thus, in 2023, we initiated projects to further
strengthen the knowledge of NEXT and
what our brand stands for, but perhaps most
of all, we also focused on explaining our
technology. We have a unique technology
– but for the world and our customers to
understand the perks of using it, we have to
explain it in a way that is easy to understand
as well. We see this as one of our clear
missions during 2024.
NEXT’s revenues were lower in 2023
compared to 2022. Rebuilding a company
with long sale cycles requires patience.
The main factors contributing to the
revenue development in 2023 were the
delayed market launch in India, lower PC
shipments due to inventory adjustment and
lastly, also a lower end-user PC demand;
following the higher volumes experienced
during the pandemic. Still, I would like to
highlight the significant progress that
was made by NEXT during 2023 on the
markets in India and China.
In India, our partner ACPL received its
L1 certificate in the second half of 2023,
and we have two other partners that are
applying for the same certificate. Hence,
we have a total of three, India-based OEMs
planning to produce their products with
NEXT’s sensors integrated. Moreover, we
signed a five-year commercial agreement
with our new OEM partner in India and
received a minimum purchase order worth
more than NOK 65 million. Following several
years of delays, the Indian authorities also
communicated the generational upgrade
of India’s national Aadhaar program. In short,
all current so called ”L0 devices” would
need to be upgraded to the next security
level, the so-called ”L1 level”. The volume of
tenders in India is increasing and we expect
to see a strong increase in end-customer
demand, which will cascade through the
supply chain, resulting in more NEXT orders.
If you have followed us, you already know
this announcement has been important to
us all throughout 2023. Implementation of
the generational upgrade initially moved
slowly, but several tenders in combination
with banks and other large players
beginning to accept L1 devices during
the second half of 2023 increased the
speed. All L0 devices must be replaced
by the end of June 2024, thus this is a
generational upgrade which creates
strong momentum for NEXT.
We made significant progress in China as
well. In China, security remains a strong
market driver and being the world’s most
biometrics enabled country, the interest
for our FAP20 sensor including the anti-
spoofing feature has been strong. We
announced our breakthrough contract
with the Asian distributor in May 2023
and the first purchase order in December.
We started delivering on this order in Q4
and will continue in the first half of 2024.
In January 2024, we announced that one
of our other partners also got awarded
the prestigious China ID certification for
the FAP20 sensor. Now that we have the
certification in place, we expect to receive
more orders from China.
We remain confident in our outlook: NEXT
is well positioned for success in the high-
end fingerprint sensor market. With multiple
new customers and strategic design-wins,
we have a strong market position. NEXT
provides its customers and ecosystem
partners a very attractive, and increasingly
holistic, offering within the domain of
secure, biometric authentication across all
our main market areas.
Our team has entered 2024 with high
energy, a well-known agenda, and crystal-
clear targets. I look forward to continuing our
joint journey towards profitable growth.
Thank you.
Ulf Ritsvall, CEO
202 3
Letter from the CEO
3
Annual Report 2023 Letter from the CEO
NEXT provides secure easy-to-use fingerprint sensor technology for
authentication in four different market segments Public Security, Access
control, Office and Notebooks, Payments and Fintech. The Group’s
patented NEXT Active Thermal® principle allows the development of large,
high quality fingerprint sensors in both rigid and flexible formats.
Product development
Historically, NEXT has had a strong R&D focus and
has made significant progress with its’ product and
technology development roadmaps. The Group
has developed products for the four different
market segments. The products are used in various
applications such as point of sales terminals,
Notebooks and Access solutions.
The Group has the following main products:
Notebook sensor products:
NEXT standard Notebook sensors
FAP20 sensor products used in a variety of
applications such as point of sales terminals,
ID devices and digital wallets within Fintech
applications:
Readers
Sensor Modules
Aadhaar India products connected to the worlds’
largest biometric market:
Sensor Modules
NEXT is engaged in R&D activities with the
target to develop improved and enlarged
fingerprint sensors. In 2024, the company
started development activities with the target
to launch a new FAP30 fingerprint sensor.
Sales and marketing
The Group has a dedicated sales force that
has established relationships with major
OEMs active in selected market segments.
Historically, the company has shipped most
of its sensor products to Notebook OEMs.
The company has a diversified customer base,
which includes Biometric technology companies,
POS manufacturers, biometric HW manufacturers
and Government ID providers.
The Group has established partner agreements
with a number of players in different target
markets to leverage the Group’s large-size, highly
secure, easy-to-use and cost-effective sensor
products to drive increased revenue. NEXT’s
ongoing business development efforts are
expected to bring additional volumes from new
use cases and targeted niche applications.
Manufacturing
NEXT has established outsourced production
with strong partners in Asia with proven ability
to produce large volumes of high quality and
robust sensors at very high yield rates for mass-
market deployment which is highly recognized
and appreciated by existing and potential new
customers. The Group can increase production
capacity rapidly when needed.
NEXT Biometrics
at a glance
4
Annual Report 2023 NEXT Biometrics at a glance
A global leader in fingerprint
sensor technology
NEXT Biometrics Group ASA (“Parent Company”)
is a public limited liability company incorporated
and domiciled in Norway, with headquarters in
Apotekergata 10B, 0180 Oslo, Norway. The Parent
company and its subsidiaries (“NEXT” or “the Group”)
provides advanced fingerprint sensor technology
that delivers uncompromised security and accuracy
for the best possible user experience in the market
segments Payment & Fintech, Public Security,
Access Control, Office and Notebooks.
NEXT’s fingerprint sensors are unique, using active
thermal conductivity to read the fingerprint image, a
s opposed to capacitive or optical sensing.
This patented sensing principle allows designs
uniquely compatible with low temperature
polysilicon production processes (“LTPS”) used
in high-end display factories. This enables
significantly lower production costs for the Group’s
fingerprint sensors compared to competing sensor
technologies. The Group has developed and
markets a portfolio of fingerprint sensor modules,
readers, and flexible biometric subassemblies,
which may be incorporated into a wide range of
products and solutions.
The Group has five wholly owned subsidiaries:
NEXT Biometrics AS (Norway) and its subsidiaries
NEXT Biometrics Inc. (Seattle, USA), NEXT Biometrics
China Ltd. (Shanghai, China), NEXT Biometrics
Taiwan Ltd. (Taipei, Taiwan) and NEXT Biometrics
Solutions India Pvt. Ltd. (Bengaluru, India).
NEXT Biometrics Group ASA’s shares are listed on
the Oslo Stock Exchange.
Report from the board of directors
Highlights 2023
Key 2023 developments in NEXT:
Revenues for 2023 of NOK 34.4 million compared
to NOK 48.3 million in 2022
Gross margin of 21% for 2023 compared to
31% in 2022
Adjusted gross margin
1
of 33% for 2023 compared
to 30% in 2022
Adjusted EBITDA
1
of NOK -43.7 million in 2023
compared to NOK -38.8 million in 2022
Commercial breakthrough in China and strong
progress in the market in India
10 new design-wins in 2023 and accumulated
46 design-wins as per December 2023, which
will contribute to future revenues
1
Please see section Alternative Performance measures on page 78
for further details
5
Annual Report 2023 Report from the board of directors
Title
Business overview
Biometric fingerprint sensing technology continues
to gain traction across the world. Biometric
technology is used in Notebooks and Governmental
projects and businesses have deployed the
technology in medical services, devices for financial
inclusions such as pension payments, point of sale
devices (POS), Office and facility access, voting
registration and Time and Attendance solutions.
The Group has developed products, established its
manufacturing platform and sales and marketing
to establish a business with a significant footprint
and customers in key markets such as Payment
& Fintech, Public Security, Access control, Office
and Notebooks. The Group has shipped over 10
million units to its customers since the initiation
of the company. The Group has a unique proven
technology that outperforms competitive solutions
in key markets from form factor (size and thickness),
biometric performance (higher security), quality,
standard compliance and unit cost.
NEXT continues to expand its global biometric
distributor and partnership network. As per end
of 2023, NEXT has biometrics distributors with a
presence in the Americas, Asia, Europe and Africa.
NEXT is represented in major large and growing
biometric markets with high-security needs and
extensive use of biometrics.
In India, the Aadhaar program holds more than
one billion people’s fingerprints registered. This
provides access to different governmental services
and benefit systems. The new generation of India‘s
biometric standard has been launched. Our partner
ACPL has already received its L1 certificate, and we
have two additional partners who are applying for the
same certificate. The new local partners will certify
its’ own products, which include NEXT’s FAP20
sensors. Hence, the Indian authorities’ generational
upgrade of India’s national Aadhaar program and our
local partners are expected to trigger strong demand
for NEXT sensors in 2024 and later years.
In China, security remains a strong market driver,
being the world’s most biometrics enabled country,
the interest in our FAP20 sensor, including our
liveness feature, has been very strong. In line with
our strategy, we have continued to make progress
in the rapidly evolving Asian biometric market. We
announced NEXT´s breakthrough contract with the
Asian distributor in May 2023, and the first purchase
order towards the end of the year. Early 2024, we
announced that one of our other partners was
awarded the China ID certification for the FAP20
sensor. Now that we have the certification in place,
we expect to receive additional orders from China.
In the Americas, NEXT has two distributors covering
the US, Mexico and Brazil. The focus in these
markets is to replace current installed base of optical
fingerprint products.
In the Notebook market, the Group is working
to increase the run rate revenues from existing
clients. The Group is also working on new business
opportunities with additional laptop manufacturers,
focusing both on developing new opportunities with
standard sensors and the FAP20 higher security
implementations.
Sustainability and transparency
NEXT meets the authorities’ requirements for
sustainability reporting and further information can
be found in Corporate Social Responsibility Report
(see page 21). Reporting required by the Norwegian
Transparency Act for the 2022 financial year was
published in the 2022 financial reporting section
on the company’s website in June 2023. (www.
nextbiometrics.com/investors/financial_reports_
presentations/). Transparency act reporting for 2023
will be published at the latest on 30 June 2024 at the
same web site location.
6
Annual Report 2023 Report from the board of directors
Financial summary – The Group
Comprehensive income
Revenues were NOK 34.4 million in 2023 compared
to NOK 48.3 million in 2022.
Gross margin was NOK 7.4 million (21%) in 2023
compared to a gross margin of NOK 14.8 million
(31%) in 2022.
Adjusted Gross margin was NOK 11.4 million (33%) in
2023 compared to an adjusted gross margin of NOK
14.7 million (30%) in 2022.
Payroll expenses were NOK 42.4 million in 2023,
compared to NOK 33.4 million in 2022. Average
number of employees were 24 in 2023 compared to
27 employees in 2022. The Group had 23 employees
at the end of 2023, compared to 27 employees at the
end of 2022. Share-based remuneration, including
related accrued social security tax, included in
payroll expenses was, NOK 10.3 million in 2023,
compared to NOK 2.1 million in 2022. The increase in
share based renumeration cost in 2023 is due to the
increased number of options awarded in 2023 and
stock option social security cost resulting from the
increase in the company’s stock price. Research and
development (R&D) expenses included in payroll
expenses were NOK 6.4 million in 2023 compared
to NOK 5.7 million in 2022.
Other operating expenses were NOK 23.2 million in
2023, compared to NOK 22.2 million in 2022. R&D
expenses included in other operating expenses
were NOK 2.6 million in 2023, compared to NOK
5.5 million in 2022.
Total R&D expenses, included in both payroll and
other operating expenses, were NOK 9 million in
2023, a decrease from NOK 11.2 million in 2022.
Depreciation, amortization and impairment were
NOK 8.2 million in 2023, compared to NOK 7.2 million
in 2022. The increase in 2023 is mainly related to
impairment losses amounting to NOK 1.1 million.
Net financial items amounted to a net gain of NOK
0.9 million in 2023, compared to a net gain of NOK
1.7 million in 2022. The gains in 2023 were mainly
related to interest income.
Income tax cost was NOK 0.2 million in 2023,
compared to NOK 0.1 million gain in 2022.
EBITDA for the Group was negative NOK 58.2
million in 2023, compared to negative NOK 40.8
million in 2022.
Adjusted EBITDA for the Group was negative
NOK 43.7 million in 2023, compared to negative
NOK 38.8 million in 2022. Loss after taxes for the
Group was NOK 65.7 million in 2023, compared to
NOK 46.3 million in 2022.
In the outlook section of NEXT’s 2022 annual report
it was stated that the company expected increased
number of design-wins, increased revenues, and
improved profitability. During 2023 NEXT increased
its number of design-wins slightly lower than
expected, revenues was lower than anticipated due
to project and governmental approval delays from
key customers and the loss after taxes was increased.
Changes in accounting policies
The accounting policies applied in preparation
of the financial statements for 2023 are consistent
with those applied in the preparation of Annual
Report for 2022.
Financial position and cash
Total assets as of 31 December 2023 amounted to
NOK 118.9 million, compared to NOK 121.9 million as
of 31 December 2022.
Total equity was NOK 94.4 million at the end of 2023
compared to NOK 96.0 million at the end of 2022.
The Group had non-current liabilities of NOK 0.2
million and current liabilities of NOK 24.4 million at
the end of 2023, compared to non-current liabilities
of NOK 1.3 million and current liabilities of NOK 24.6
million at the end of 2022.
Cash amounted to NOK 67.8 million at the end
of 2023 compared to NOK 69.3 million at the end
of 2022.
Cash flow
Net cash flow from operating activities was negative
with NOK 56.3 million in 2023 compared to negative
NOK 32.4 million in 2022. The decline in cash flow in
2023 relative to 2022 is mainly due to lower sales.
Net cash flow from investing activities was negative
NOK 0.05 million in 2023 compared to positive NOK
0.6 million in 2022.
Net cash flow from financing activities was positive
NOK 54.9 million in 2023 as a result of the share
issue that was performed in Q3 2023. Net cash
flow from financing activities was negative NOK 2.0
million in 2022.
7
Annual Report 2023 Report from the board of directors
Financial summary – The Parent Company
Comprehensive income
Total revenues for the parent company were NOK
8.9 million in 2023 compared to NOK 9.5 million
in 2022. The revenues were mainly resulting from
management fees and royalties charged to the
subsidiary NEXT Biometrics AS.
Payroll expenses including share-based
remuneration for the parent company were NOK 21.1
million in 2023, an increase from NOK 13.7 million in
2022. The increase is mainly resulting from increased
share-based remuneration and option costs in 2023
relative to 2022. There were 4 employees in the
parent company at year-end 2023, compared to
5 employees at the end of 2022.
Other operating expenses for the parent company
was NOK 6.7 million in 2023 compared to NOK 6.7
million in 2022.
Depreciation and amortization for the parent
company was NOK 1.3 million in 2023 compared to
NOK 1.2 million in 2022.
Net financial income was NOK 1.9 million in 2023
compared to a net financial income of NOK 2.0
million in 2022.
The parent company had a loss before taxes in 2023
and 2022. Hence, no payable taxes incurred. No
deferred tax assets have been recognized during
2023 and 2022.
Loss after taxes for 2023 was NOK 18.2 million
compared to NOK 10.0 million in 2022.
Financial position and cash
Total assets as of 31 December 2023 amounted to
NOK 313.7 million, compared to NOK 268.1 million as
of 31 December 2022.
The parent company had NOK 10.6 million in current
liabilities at the end of 2023, compared to NOK 7.8
million at the end of 2022.
Cash amounted to NOK 40.1 million at the end of 2023
compared to NOK 37.5 million at the end of 2022.
Cash flow
Net cash flow from operating activities was negative
NOK 10.9 million in 2023, compared to negative NOK
8.2 million in 2022. Net cash flow from investments
was negative NOK 43 million in 2023 compared
to negative NOK 31.1 million in 2022. Net cash flow
from financing was positive NOK 56.5 million in 2023
compared to negative NOK 0.7 million in 2022.
Equity and allocation of profit (loss) after taxes
Equity for the parent company was NOK 303.2 million
at the end of 2023 compared to NOK 259.8 million at
the end of 2022.
The Board of Directors proposes that the loss after
taxes of the parent company of NOK 18.2 million to
be booked to the share premium account.
NEXT shares and share capital
NEXT ASA’s shares are listed at Oslo Stock Exchange’s
main list with ticker NEXT. The 2023 year-end closing
price was NOK 7.1, up from NOK 4.5 at the end of 2022.
During 2023, the shares traded in the range of NOK
4.0 to NOK 7.1.
The issued share capital of the parent company at
the end of 2023 amounted to NOK 104.0 million
consisting of 104,024,929 ordinary shares, each share
having a par value of NOK 1. At the end of 2023, there
were a total of 4,079 registered shareholder accounts,
compared to 4,392 at the end of 2022.
NEXT raised gross proceeds of NOK 60 million in a
private placement that was completed in September
2023. NEXT also issued new shares in relation to
exercise of employee share options in 2023, which
resulted in total gross proceeds of NOK 0.15 million.
Please see note 18 in group consolidated financial
statement for further details.
The Group has entered into, and plan to continue to
enter into, stock option agreements to attract talented,
experienced and highly valued employees. As per 31
December 2023, NEXT has 14,048,519 share options
outstanding. Please see note 18 in group consolidated
financial statement for further details.
8
Annual Report 2023 Report from the board of directors
Financial risk, capital
management
NEXT is exposed to certain financial risks related
to exchange rates and interest levels. These are,
however, insignificant compared to the business risk.
NEXT’s business risk may be summarized in:
(a) NEXT currently has higher costs than revenues
and has negative cash flow from operations.
(b) NEXT’s business plan assumes additional
revenue from existing and new products under
development.
(c) Revenue from NEXT’s products depends, among
other things, on market factors which are not
controlled by NEXT.
(d) Competing companies’ products have entered
the commercial stage, and the competitive
situation for NEXT’s products is constantly
changing.
(e) NEXT’s intended markets are undergoing rapid
technological changes.
NEXT manages its liquidity passively, which means
that funds are placed in floating-interest bank
accounts. The majority of cash is held in Norwegian
kroner at parent company level and is distributed
when appropriate to the affiliates. This is both to
have control of the overall liquidity situation and to
manage expense levels in the affiliates.
NEXT has financial liabilities related to office leases in
multiple locations as per 31 December 2023.
NEXT’s sales and production cost are in US dollars.
Other operating expenses are mainly in Norwegian
kroner (NOK) and US dollars (USD), depending on
the location. Equity transactions are in NOK. In the
parent company, the majority of the cost and all
equity transactions are in NOK. NEXT does not use
financial instruments to hedge this risk.
The Group is exposed to credit risk, although this has
historically not resulted in significant losses. NEXT
sells its sensors to leading international distributors
and original equipment manufacturers of electronic
components, primarily based in Asia, Europe and
North America. The Group’s receivables are not
credit insured, but credit monitoring routines are
in place for setting up credit lines and demanding
advance payments when required.
Liability insurance
The Group has directors and officer’s liability
insurance with a NOK 50 million total coverage, and
it covers legal costs, emergency costs and multiple
other types of contingency costs.
Employees
At the end of 2023, the Group had 23 employees
(2022: 27), of which 5 are women (2022: 5).
Additionally, the Group has individual technical/
scientific specialists working at its premises on a
contract basis. The average female proportion of
group employees was 20.7% in 2023 (2022: 18.7%).
The parent company had 4 employees by the
end of 2023. There were 3 male employees and 1
female employee at year-end. The average female
proportion of parent company employees was 21% in
2023 (2022: 22%). There are currently 4 members of
the board, of which 2 are women.
The parent company had no long-term leave of
absence due to illness or any work-related incidents
or accidents resulting in material damage or
personal injury during 2023. The average sickness
absence rate in the parent company was 0% in 2023
compared to 0% in 2022.
Corporate governance
NEXT’s guidelines for corporate governance are
in accordance with the Norwegian Accounting
Act §3-3b and seek to comply with the Norwegian
code of Practice for Corporate Governance, dated
14 October 2021. Please see annual report section
“Corporate Governance Report”.
Social responsibility
NEXT’s guidelines for social responsibilities are
in accordance with the Norwegian Accounting
Act §3-3c. Please see separate annual report
section “Corporate Social Responsibility Report”
for more information.
9
Annual Report 2023 Report from the board of directors
Going concern
In accordance with § 3-3a of the Norwegian
Accounting Act, the Board of Directors confirms that
the financial statements have been prepared under
the assumption of going concern.
Subsequent events
Between 31 December 2023 and the resolution of
these financial statements, there has not been any
event which have had any noticeable impact on
the Group’s or the parent company’s result for 2023
or the value of the Group or the parent company’s
assets and liabilities as of 31 December 2023.
Outlook
Based on signed orders and the further market
opportunities we see in India, China and the rest
of the world; we expect strong growth in FAP20
revenues and total revenues in 2024. NEXT’s
PC sensor shipment volumes in 2024 is expected
to be similar to 2023.
The FAP20 share in the product mix is expected
to increase and NEXT’s gross margin is expected
to improve as a result of this. Moreover, FAP20
revenues from India and China will be significantly
higher in 2024 compared to 2023.
We expect revenues for 2024 to grow by at least
250% compared to 2023. The Group is targeting
a positive EBITDA in 2024.
Oslo, 23 April 2024
The Board of directors of
NEXT Biometrics Group ASA
Petter Fjellstad
Chairman
/Sign/
/Sign/
/Sign/
/Sign/
/Sign/
Odd-Harald Hauge
Board member
Ulf Ritsvall
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
10
Annual Report 2023 Report from the board of directors
1. INTRODUCTION
For NEXT Biometrics Group ASA (“NEXT” or the
“Company”), good corporate governance is about
doing the right things, and doing the things right.
The manner in which the Company is managed is
vital to the development of the Company’s value
over time. The Company’s corporate governance
framework has been designed to provide a
foundation for value creation, business risk reduction,
and to ensure good control mechanisms. NEXT
believes in open and honest communication
with the shareholders, and interaction between
shareholders, the board of directors and the
Company’s management. NEXT aims to show
respect and responsibility for shareholders as well
as with all stakeholder groups, such as co-operating
partners, customers, suppliers, employees and
authorities. NEXT is subject to corporate governance
reporting requirements according to section 3-3b of
the Norwegian Accounting Act and the continuing
obligations of stock exchange listed companies
at Oslo Stock Exchange. Further, NEXT’s board of
directors endorses “The Norwegian Code of Practice
for Corporate Governance” (the “Code”), most
recently revised in October 2021 and issued by the
Norwegian Corporate Governance Policy Board.
The Code is available at http://www.nues.no/.
2. NEXT’S IMPLEMENTATION
AND REPORTING ON
CORPORATE GOVERNANCE
NEXT aspires to comply with the recommendations
of the Code. Taking into account the size and
maturity of the Company, there may be deviations
from the Code. If the Code is deviated from, the
deviation is described and explained in the relevant
section of this report. The Company’s policies,
instructions and internal processes are continuously
developed. A review of the Company’s corporate
governance policy is performed annually to ensure
continued compliance with the Code.
3.
BUSINESS
NEXT’s business is clearly described in the
Company’s articles of association: “The objective of
the company is to conduct research, development
and commercialization of security products,
participation and investment in companies
conducting similar activities as well as other activities
that will naturally fall under this”. The Company’s
articles of association are available at the Company’s
homepage, www.nextbiometrics.com.
Basic corporate values
The Company has formulated three basic corporate
values to form a guideline for the Company’s
business operations: (i) innovative business models,
(ii) close client relationship and (iii) global reach. ”The
ethical and corporate social responsibility guideline”
has been set out in accordance with these values.
Ethics and corporate social responsibility
The Company has implemented ethical and
corporate social responsibility guidelines, in
accordance with its basic corporate values.
Moreover, the Company promotes and ensures
sustainable business operations and supply chain.
Additional information is included in the sections
related to specific Environmental, Social, and
Governance matters in this report.
Corporate
Governance Report
11
Annual Report 2023 Corporate Governance Report
4. EQUITY AND DIVIDENDS
Capital structure
The board of directors and the management of the
Company seek, at all times, to have a sound relation
between the Company’s capital structure and the
Company’s objectives, strategies and risk profile.
The board shall immediately take adequate steps
should it be apparent at any time that the Company’s
equity or liquidity is less than adequate.
Dividend policy
It is a long-term objective of the Company to generate
returns to shareholders in the form of dividends and
capital appreciation, at a level which is at least equal to
other investment possibilities with comparable risk.
Since NEXT is in a growth-phase, no dividend has
been paid so far. Further, no dividend has been
proposed for the coming year. When the Company
reaches a steady state position, NEXT intends to
establish a clear and predictable dividend policy,
which will form the basis for any proposals on dividend
payments to be resolved by the general meeting.
Authorizations to the board of directors
The annual general meeting, held on 12 May 2023,
gave the board authorization to increase the
Company’s share capital by up to NOK 18,396,000
to enable the Company to conduct share issues
in an effective manner. The board of directors was
also granted authorization to deviate from the
shareholders’ preferential rights when using
the authorization.
Moreover, the board of directors was given an
authorization to increase the Company’s share capital
for the option program by up to NOK 10,900,558, out
of which NOK 1,660,000 can be used to issue shares
to board members under options granted to board
members in 2019, 2020 and 2022. The authorization
covers capital increases by way of contributions
in kind but does not cover capital increases in
connection with mergers, and the board may decide
that the shareholders’ pre-emption right to the new
shares can be deviated from. The authorization is
limited in time until the 2024 general meeting or
30 June 2024, whichever comes first.
As of 31 December 2023, there are no further
authorizations granted to the board of directors,
neither to increase the share capital by issuing new
shares, nor to the Company to purchase its own
shares. Any future authorizations given will be
limited in time until the next general meeting,
in accordance with the Code.
5.
EQUAL TREATMENT OF
SHAREHOLDERS AND
TRANSACTIONS WITH CLOSE
ASSOCIATES
Class of shares
The Company has one class of shares and there are
no voting restrictions. Each share represents one
vote and equal rights at the Company’s general
meeting. The par value per share is NOK 1.00.
Pre-emption rights of existing shareholders
NEXT’s existing shareholders have pre-emption
rights to subscribe for shares in the event of a share
capital increase, unless otherwise indicated by
special circumstances. Any decision to deviate from
the pre-emption rights of existing shareholders
shall be justified. The justification for such decisions
shall be publicly disclosed in a stock exchange
announcement issued in connection with the
increase in share capital.
Transactions with close associates
The Company’s significant shareholders, a
shareholder’s parent company, board members,
executive personnel and close associates of any
such parties are considered to be related parties. All
transactions with related parties will be carried out in
accordance with the arm’s length principle.
All transactions with related parties that are not
immaterial will be publicly disclosed by NEXT. In
the event that such a transaction occurs, the board
will arrange for a valuation to be obtained from an
independent third party. This will not apply if the
transaction requires the approval of the general
meeting pursuant to the requirements of the
Norwegian Public Limited Companies Act.
If NEXT should carry out any transaction in its own
shares, this will be carried out either through the
stock exchange or at prevailing stock exchange
prices to ensure equal treatment of all shareholders.
Other than this, the board is not aware of any
transactions in 2023 between the Company and
the shareholders, a shareholder’s parent company,
directors, executive personnel or parties
closely related to such individuals that qualify
as material transactions.
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Annual Report 2023 Corporate Governance Report
6. SHARES AND NEGOTIABILITY
The shares in the Company are freely transferable,
and the Company’s articles of association contain no
restrictions on transferability, ownership,
trading or voting.
7.
GENERAL MEETINGS
The general meeting is the Company’s
supreme governing body, and all shareholders
are guaranteed participation and the opportunity
to exercise their rights.
The Company’s board takes steps to ensure
that the shareholders can participate in the general
meetings of the Company. The board of directors
will ensure that:
the resolutions and any supporting
information distributed are sufficiently
detailed, comprehensive and specific to allow
shareholders to form a view on all matters to
be considered at the general meeting;
members of the board of directors,
the chairman of the nomination committee
and the auditor (if the items to be considered
are of such a nature that the auditor’s
attendance must be regarded as essential)
are present at the general meeting;
the general meeting is able to elect
an independent chairperson for the
general meeting; and
that shareholders are able to vote on each
independent matter, including on each
individual candidate nominated for election.
Shareholders are encouraged to give notice of their
intention to attend the AGM, with a deadline as
close to the date of the General Meeting as possible,
typically one day in advance.
Shareholders who are unable to attend the general
meeting in person will be given the opportunity to,
and encouraged to, vote by proxy or through written
voting in a period prior to the general meeting.
The Company will in this respect provide information
on the procedure for representation at the general
meeting and prepare a proxy form/written voting
form that makes voting on each individual matter
possible. The Company will nominate a person to
act as a proxy for the shareholders.
8.
NOMINATION COMMITTEE
Article 6 of the Company’s articles of association sets
out the requirements for the nomination committee.
Composition
The nomination committee shall consist of two
to three members, where all members, including
the chairman, are elected by the general meeting,
which also have approved guidelines for the duties
and remuneration of the nomination committee.
The nomination committee members shall be
independent of the board of directors and executive
management. The members are elected for a
period of up to two years.
The current nomination committee was elected
at the annual general meeting on 12 May 2023 for
the period until the annual general meeting in 2024.
All of the members of the nomination committee
have been selected to consider the interests of
shareholders in general and are independent from
both the Company’s executive management and
the Company’s board of directors. As of 31 December
2023, the nomination committee consisted of Jon
Frode Vaksvik (chairman), Haakon M. Sæter and
Hans Herman Horn.
NEXT is not aware of the existence of any
agreements or business partnerships between
the Company and any third parties in which
members of the nomination committee have
direct or indirect interests.
Instructions and work
Instructions to the nomination committee were last
revised by the general meeting held on 16 May 2014.
The nomination committee is responsible for seeking
out and nominating qualified candidates for the
board of directors and the nomination committee,
and for proposing the remuneration to be paid to the
board of directors and the nomination committee,
including an explanation of how it came to its
recommendations. The nomination committee has
contact with shareholders, the board of directors
and the Company’s executive personnel as part
of its work on proposing candidates for election
to the board.
The Company provides information on the
membership of the committee.
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9. THE BOARD OF DIRECTORS: COMPOSITION
AND INDEPENDENCE
Composition of the board of directors
The articles of association state that the Company’s
board of directors should comprise three to nine
board members elected by the general meeting.
The chairman of the board is elected by the general
meeting and among the Company’s board.
NEXT emphasizes that the board shall have
requisite competency to independently evaluate
the cases presented by the executive management
team as well as the Company’s operation. It is also
considered important that the board can function
well as a body of colleagues.
As of 31 December 2023, the board of directors
comprises the following four members:
Petter Fjellstad
Odd Harald Hauge
Emine Lundkvist
Siri G. Børsum
All of the abovementioned board members are
elected for the period until the annual general
meeting in 2024.
A presentation of the board can be found on
the Company’s website.
The board’s independence
NEXT believes that it is in the best interests of
the Company and its shareholders to have
independent directors and applies the Code’s list
of criteria for evaluating whether a director
is considered independent.
Two out of the four board members are women, and
none of the members of the Company’s executive
management or main business connections are
members of the board of directors. The members
of the board of directors are independent of the
Company’s main shareholders. The composition of
the board ensures that it can attend to the common
interests of all shareholders and meet the Company’s
need for expertise, capacity and diversity, and that it
can operate independently of any special interests.
Each independent director who experiences a
change in circumstances that could affect such
director’s independence is obligated to deliver a
notice of such change to the chairman of the board.
Members of the board are encouraged to own
shares in the Company.
Election of the board of directors
The general meeting appoints the members of the
board of directors based on the proposal from the
Company’s nomination committee. The chairman
of the board is elected by the general meeting.
It is the Company’s view that directors who have
developed a valuable insight into the Company
and its operations over time make an important
contribution to the board as a whole. On this
background, the Company does not wish to establish
time limits in relation to the term of office for board
members, however, directors are elected each year.
To ensure that the board continues to generate new
ideas and operate effectively, the board evaluates
and assesses their performance annually, and takes
necessary steps in order to continue their service
as directors.
A member of the board is entitled to retire prior to
the end of his or her term of appointment if special
circumstances arise. If possible, the board and the
nomination committee shall be given reasonable
prior notice thereof.
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Annual Report 2023 Corporate Governance Report
10. THE WORK OF THE BOARD OF DIRECTORS
The board’s responsibilities
Norwegian law lays down the tasks and
responsibilities of the board of directors.
These include the overall management and
supervision of the Company. This means that the
board bears the ultimate responsibility for managing
the Company and for monitoring its administration
and business activities. The board is responsible
for establishing internal control systems and for
ensuring that the Company operates in compliance
with the adopted value platform and Code of Ethics.
The directors of the board shall discharge their
duties in a loyal manner.
The fundamental responsibility of the directors is
to oversee day-to-day management and evaluate
strategy, to exercise their business judgment to
act in what they reasonably believe to be the best
interests of the Company and its shareholders.
The board is also to oversee such matters as are
required by statutory law, the Company’s articles of
association, policies, instructions and procedures
as well as resolutions of the general meeting. It is
the duty of the board to oversee the management’s
performance to ensure that the Company operates
in an effective, efficient and ethical manner in order
to produce value for the Company’s shareholders.
The board also evaluates the Company’s overall
strategy and monitors the Company’s performance
against its operating plan.
The board is responsible for supervising strategic,
financial and execution risks and exposures
associated with the Company’s business strategy,
product innovation and sales road map, policy
matters, significant litigation and regulatory
exposures, and other current matters that may
present material risk to the Company’s financial
performance, operations, infrastructure, plans,
prospects or reputation, acquisitions and
divestitures. Further, the board shall ensure that
the ongoing activities of the Company are subject
to adequate control.
Annual plan
The board of directors sets an annual plan
for its work, with particular emphasis on financial
objectives, strategy and implementation. This plan
covers the follow-up of the Company’s operations,
internal control, strategy development and
other issues.
Instructions for the board of directors
The board of directors has implemented instructions
for its own work. The board’s instructions are subject
to review every second year and are revised
as needed. The current instruction was revised
6 December 2023.
The instructions cover the following items:
appointment of the board of directors; board
member independence; tenure and retirement;
by-election; the duties of the board; committees;
takeovers; allocation of the work within the
board; the working procedures of the board;
meeting – including meeting plan; quorum;
disqualification; majority requirements; categories
of decision; minutes; safety procedures and duty
of confidentiality; information concerning the work
of the board; evaluation of the work of the board
and board committees; directors’ liability insurance;
liability for damages; new board members or CEO
awareness of instructions; waiver and amendment;
approval of transactions with related parties and
communications with shareholders.
Instruction for the CEO
There is a clear segregation of duties between the
board of directors and the executive management.
The board has prepared a set of instructions for
the CEO. The current instruction was revised 6
December 2023.
The CEO shall follow the guidelines and instructions
issued by the board of directors. The CEO is
responsible for the day-to-day management of the
Company, pursuant to section 6-14 in the Norwegian
Public Limited Companies Act. The CEO ensures
that the board receives relevant information in an
accurate, sufficient, and timely manner in order to
allow the board to carry out its duties. The CEO
represents the Company externally in matters that
form part of the day-to-day management. The
day-to-day management does not cover matters
of extraordinary nature or of major importance.
However, the CEO is authorized to decide on
matters of extraordinary nature or major important
cases, where the decisions of the board of directors
cannot be awaited without serious detriment to the
Company. The board of directors must be notified of
the decision as soon as possible.
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Annual Report 2023 Corporate Governance Report
Financial reporting
The board is responsible for ensuring the integrity
of financial information. The board evaluates
the integrity of the Company’s accounting and
financial reporting systems, including the audit
of the Company’s annual financial statements by
the independent auditors, and that appropriate
disclosure controls and procedures and systems of
internal control are in place.
Quarterly and annual financial reports are reviewed
and approved at board meetings and form the basis
for external financial reporting.
In connection with the presentation of the year-
end financial statements, the CEO and the CFO
declare that the accounts have been prepared in
accordance with generally accepted accounting
principles, and that to the best of their knowledge all
information is accurate and no material information
has been omitted.
Board meetings
The board shall deliberate matters and
make decisions in meetings, unless the chairman
of the board finds that the matter may be
presented in writing or be dealt with in another
satisfactory manner.
The directors are free to consult the Company’s
executives as needed. Any board member or the
CEO can require specific matters to be deliberated
on by the board. The CEO shall, in consultation with
the chairman of the board, prepare matters to be
deliberated by the board. Any matter shall always
be prepared and presented in such a manner as
to provide the board with a satisfactory basis for
making a decision.
The CEO has a right and a duty to attend the
board’s deliberation of matters, unless otherwise
determined by the board with respect to each
individual matter. The CEO is not entitled to cast
votes. Other participants are called in as needed.
Conflicts of interest and disqualification
The board of directors ensures that members of
the board of directors and executive personnel
make the Company aware of any material interest
that they may have in items to be considered by
the board of directors.
A member of the board or the executive
management may not participate in the discussion
or decision of issues of such special and prominent
interest to the person in question, or to any closely
related party of said person, that the board member
or member of the executive management must be
regarded as having a distinct personal or financial
interest in the matter. This is in compliance with
section 6-27 of the Norwegian Public Limited
Companies Act.
Chairman of the board of directors
The chairman of the board of directors ensures that
the board of directors operates well and carries out
its duties. In addition, the chairman of the board of
directors also has certain specific duties in respect
of the general meeting. Matters to be considered
by the board are prepared by the chief executive
in collaboration with the chairman, who chairs the
meetings of the board.
Board Committees
The board has appointed a separate audit
committee. The committee shall prepare, draw up
and present items for consideration by the board
as a whole.
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Annual Report 2023 Corporate Governance Report
Audit Committee
The Company’s audit committee is governed by
the Norwegian Public Limited Companies Act and
a separate instruction adopted by the board. A
majority of the members shall have qualifications in
accounting or auditing. The principal tasks of the
audit committee are:
prepare the board of directors’ supervision of
the Company’s financial reporting process;
monitor the systems for internal control and
risk management;
have continuous contact with the Company’s
auditor regarding the audit of the annual
accounts;
review and monitor the independence of
the Company’s auditor, including in particular
the extent to which services other than
auditing provided by the auditor or the audit
firm represent a threat to the independence
of the auditor;
monitor the Company’s compliance with
applicable legal and regulatory requirements;
handle and investigate concerns raised by the
Company’s employees related to the internal
revision or audit; and
evaluate the audit committee’s activities.
The audit committee consists of Petter Fjellstad
(Chair) and Emine Lundkvist.
Remuneration Committee
The remuneration committee draws up guidelines
and proposals for senior executive remuneration.
The Company’s remuneration policy, including
remuneration to the CEO and the senior executives,
are dealt with at one of the board meetings and
accounted for in the Board’s annual report.
The remuneration committee consists of Odd Harald
Hauge (Chair) and Siri G Børsum.
The board of director’s evaluation of its own work
The board shall annually evaluate its activities,
performance and competence, and has adopted
a self-assessment questionnaire for the purpose
thereof. The assessment results shall be submitted
to the nomination committee.
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Annual Report 2023 Corporate Governance Report
11. RISK MANAGEMENT AND
INTERNAL CONTROL
It is ultimately the responsibility of the board of
directors to ensure that NEXT has sound internal
controls and risk management systems appropriate
to the Company’s size and business. The board,
and the management, have increased focus on risk
management and internal controls. The board of
directors forms its opinion on the Company’s internal
controls and risk management systems based on the
information presented to it by the management.
The executive management closely monitors the
main risk factors, to ensure the Company has proper
guidelines, processes and internal controls in place.
The board of directors conducts annual reviews of
the Company’s most important areas of exposure to
risk and such areas’ internal control arrangements.
NEXT has experienced finance and accounting
personnel, who continuously strive to improve
routines and internal control systems. Initiatives are
ongoing to ensure risks are efficiently managed, and
that key controls are in place to achieve financial
goals, operational goals, and compliance with
regulations. The Company’s internal controls and
systems also cover the Company’s corporate values,
ethical guidelines and principles of corporate
social responsibility.
The size of the Group’s operations and limited
staff size necessarily lead to dependence on
key individuals and a limitation on the possible
implementation of internal control risk
reduction measures.
The Norwegian entities of NEXT have an internal
risk management, finance and accounting function.
The board presents an in-depth review of NEXT’s
financial status in the “Report from the board
of directors” as part of this annual report.
12. REMUNERATION OF THE
BOARD OF DIRECTORS
The remuneration of the board reflects the board’s
responsibility, expertise, time commitment and the
complexity of the Company’s activities.
The general meeting approves the remuneration
paid to the board of directors each year.
The nomination committee prepares the
proposed remuneration to the general meeting.
The remuneration of the board of directors is not
linked to the Company’s performance. The current
board members were granted share options in 2019,
2020 and 2022, which were approved at the annual
general meetings held in 2019, 2020 and 2022.
Moreover, the board members’ options awarded
in the 2019 and 2020 options were extended to
June 2026 at the 2023 annual general meeting.
The Company deviates from the Code by
granting options to board members.
For more details on the remuneration to the board,
please refer to note 19 in the annual financial
statements. Except for the one deviation above,
the Company does not deviate from the Code in
relation to remuneration of the board of directors.
13.
REMUNERATION OF
EXECUTIVE MANAGEMENT
The board establishes guidelines for the
remuneration of the executive management
team setting out the main principles applied in
determining the salary and other remuneration of
the executive management team. The general
meeting approved the remuneration guidelines
in May 2023. The guidelines are available on
the Company’s website.
The main principle in the Company’s policy for
remuneration is that the leading employees should
be offered competitive terms to attract and retain
the competence that the Company needs.
The general meeting has approved the Company’s
share option programs.
For details regarding remuneration to the executive
management, see note 19 in the annual financial
statements, and for details regarding share
option arrangements, see note 18 in the annual
financial statements.
The Company deviates from the Code by not having
a cap on the performance-related remuneration.
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Annual Report 2023 Corporate Governance Report
14. INFORMATION AND
COMMUNICATIONS
NEXT believes in open and honest communication
with the shareholders, and interaction between
shareholders, the board of directors and the
Company’s management. The board of directors
and the executive management team assign
considerable importance to giving the shareholders
and other stakeholders relevant and current
information about the Company and its activity areas.
Regular information is published through annual
reports, quarterly reports, press releases, notices to
the stock exchange and investor presentations in
accordance with what is deemed appropriate from
time to time. Information on value drivers and risk
factors is provided through the interim reporting,
which will enable investors to evaluate NEXT’s
performance and risk.
The CEO is responsible for investor relations and
is the main contact person of the Company for
the capital market. All communication is done
solely in the English language.
All reports and notices are issued and distributed
according to the rules and regulations of the Oslo
Stock Exchange. Information relevant to investors
is published at Oslo Stock Exchange and made
available on the Company’s website. Shareholder
information, including a financial calendar and
information about webcasts, is available on
www.nextbiometrics.com/investors.
15.
TAKE-OVERS
The Company has established guidelines for the
board on how it will act in the event of a take-over bid.
The board will handle take-over bids in accordance
with Norwegian law, including the Norwegian
Securities Trading Act and the Code. The Company
has not been subject to any take-over bids in 2023.
There are no defense mechanisms against take-over
bids in the Company’s articles of association nor any
underlying steering document. In corporate take-over
or restructuring situations, the board shall exercise
due and proper care so that all shareholder values
and interests are preserved. During the course of a
take-over process, the board and management shall
ensure that the shareholders are treated equally,
and that the Company’s business activities are not
disrupted unnecessarily. The board has a particular
responsibility to ensure that shareholders are given
sufficient information and time to form a view on the
offer. The board of directors otherwise concurs with
what is stated in the Code regarding this issue.
16. AUDITOR
The Company’s auditor is elected by the general
meeting and is fully independent from the Company.
PricewaterhouseCoopers AS is the Company’s
auditor. NEXT represents a small share of the
auditor’s business. NEXT does not obtain significant
business or tax planning advice from its auditor.
For further information, see note 19 to the group
financial statements.
The board of directors is responsible for ensuring
that the board and the audit committee are provided
with sufficient insight into the work of the auditor. In
this regard, the board of directors ensures that the
auditor submits the main features of the plan for
the audit of the Company to the audit committee
annually. The board of directors invites the auditor
to participate in board meeting(s) that deal with the
annual accounts. At these meetings, the auditor (i)
reports on any material changes in the Company’s
accounting principles and key aspects of the audit,
(ii) comments on any material estimated accounting
figures, and (iii) reports all material matters on which
there has been disagreement between the auditor
and the executive management of the Company.
The audit committee shall at least once a year
perform a review of the Company’s internal control
procedures with the auditor, including weaknesses
identified and proposals for improvement. The board
and the audit committee shall review periodically the
use of the auditor for services other than the audit. At
least once a year, the audit committee and the board
will meet the auditor without the presence of the
CEO or other members of executive management.
At the annual general meeting, the board shall
present a review of the auditor’s compensation as
paid for audit work required by law and remuneration
associated with other assignments.
In connection with the auditor’s presentation to the
board of the annual work plan, the board considers if
the auditor to a satisfactory degree also carries out a
control function.
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ARTICLES OF ASSOCIATION FOR NEXT BIOMETRICS GROUP ASA
Per 31 December 2023
§ 1 – The Company name
The name of the company is NEXT Biometrics Group
ASA. The company is organised as a public limited
liability company.
§ 2 – Business office
The company’s registered office is in Oslo
municipality.
§ 3 – Business Activities
The objective of the company is research and
development, and commercialisation of safety
products, trade and investment in such companies
and what is connected with such business.
§ 4 – Share capital
The company’s share capital is NOK 104,024,929,
divided into 104,024,929 shares, each with a
nominal value of NOK 1. The company’s shares
shall be registered in the Norwegian Central
Securities Depository.
§ 5 – Board of Directors
The Company’s board of directors shall consists of 3
– 9 members as appointed by the general meeting.
§ 6 – Nomination Committee
The company shall have a nomination committee.
The nomination committee shall consist of two or
three members appointed by the general meeting.
The members of the nomination committee,
including the director, shall be elected by the
general meeting. The nomination committee shall
be elected for a period of two years, if not other
period is decided upon by the general meeting.
The nomination committee makes recommendations
to the general meeting regarding election of
board members and members to the nomination
committee, and regarding remuneration to the
board members and members of the nomination
committee. The general meeting shall resolve the
remuneration to the members of the nomination
committee. The general meeting may lay down
guidelines for the nomination committee.
§ 7 – Signatory Rights
Two board members jointly have the right to sign on
behalf of the company. The board of directors may
give power of procuration.
§ 8 – General Meeting
Documents regarding matters to be discussed
at the general meeting of the company, also
applying documents that, pursuant to law, shall
be included in, or attached to the notice of the
general meeting of shareholders, can be made
available at the company’s website. The requirement
regarding physical distribution shall then not apply.
A shareholder may in any case request to be sent
documents that shall be discussed at the
general meeting.
The shareholder may vote in writing, including by way
of electronic communication in advance in a period
prior to the general meeting. The board of directors
may establish guidelines for such advanced voting. It
shall be stated in the notice for the general meeting
the guidelines laid down. At the ordinary general
meeting the following matters shall be addressed
and decided upon:
1. Approval of the annual accounts and annual
report, including the distribution of dividends.
2. Other matters that pursuant to law or the
articles of association must be dealt with at
the general meeting
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Annual Report 2023 Corporate Governance Report
This review of NEXT Biometrics Group ASA (“NEXT” or the “Group”)’s corporate
social responsibility principles and practice is prepared in compliance with
Section 3-3c of the Norwegian Accounting Act.
NEXT’s business consists of research &
development, commercialization and manufacturing
of fingerprint technology and products for a variety
of uses. NEXT works closely with world class
manufacturing subcontractors and distribution
partners. NEXT is committed to be a good corporate
citizen and demonstrate integrity and high ethical
standards in all its business dealings.
NEXT’s board and management are committed
to maintaining high ethical standards and have
implemented guidelines with regards to values
and ethics. The purpose of these standards and
guidelines is to create a sound corporate culture
and to preserve the integrity of NEXT by helping
employees to promote standards of good business
practice. NEXT’s Ethical and Social Responsibility
Guidelines were last approved by the board on 6
December 2023 and applies to all employees of
the Group. They also apply to anyone who holds a
position of trust in the Group (including membership
of boards) and hired consultants acting on behalf
of the Group. They aim to provide guidance to our
people for a common platform.
NEXT has also established a Supplier Code of
Conduct that requires NEXT Biometrics Group
suppliers to conduct business in a responsible
manner, based on the duty to respect human
rights, labor rights, protect health, safety and the
environment, prevent corruption and in general,
apply sound business practices. NEXT’s Supplier
Code of Conduct was last updated and approved
by the Board on 6 December 2023.
The Group strives for a business culture
characterized by openness. Openness is a
prerequisite for motivation, trust, confidence
and safety at work. Everyone shall feel confident to
raise any concern, small or large, with their manager
or another colleague.
The Ethical and Corporate Social Responsibility
Guidelines support NEXT’s vision, core values
and principles. The guidelines are instrumental
for NEXT’s approach to human rights, fair working
environment and equal rights, health and safety,
environment, business ethics and anti-corruption.
The Group regularly reviews the guidelines and take
steps to update and educate the organization.
Corporate Social
Responsibility Report
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Annual Report 2023 Corporate Social Responsibility Report
Human rights
In addition to following national rules and
regulations, NEXT conducts its business in line with
fundamental international rules. Including those
described in international human rights conventions
such as the UN Convention on Human Rights and
the labour rights conventions of the International
Labour Organization (ILO).
The Group respects the right to freedom of
association and opposes any form of child labour,
forced labour or discrimination. NEXT practices equal
opportunities and rights and encourage all business
relations to follow the same principles. Any violations of
basic human rights are unacceptable to the Group.
It is our goal to have no form of human rights
abuse or labor issue at any stage related to
production of our products.
Fair working environment
NEXT has a personnel policy designed to prevent
discrimination on the grounds of race, color, gender,
sexual orientation, age, disability, language, religion,
legitimate political or other opinions, national or
social origin, property, birth or other status.
The Group employs many different nationalities from
a diversity of cultures and has built an international
mindset for years. Employees are encouraged to
treat each other and business contacts with respect
and act according to local laws and regulations, as
well as to pay attention to local values and norms
for social conduct.
The Group does not tolerate degrading treatments
towards any employee. The Group’s employees are
encouraged to report any incident of discrimination
to their nearest leader or through the applicable
whistle-blow channels through our HR department.
NEXT’s board and management seek to create a
working environment that is pleasant, stimulating,
safe and beneficial to all employees. The working
environment complies with the existing rules and
regulations. The board has not found reason to
implement special measures. No employee in the
group has suffered work-related injury resulting
in sick leave. No accidents nor incidents involving
the assets of the Group have occurred. The parent
company had no long-term leave of absence due
to illness or any work-related incidents or accidents
resulting in material damage or personal injury
during 2023. The average sickness absence rate
in the parent company was 0% in 2023 compared
to 0% in 2022.
Equal rights
All facilities are equally well equipped for females
and males. Traditionally, fewer women than men
have graduated in NEXT’s fields of work, and the
candidates available for recruiting have often
predominantly been males. The management
structure reflects the composition of the technical
staff. Of the 23 employees in the NEXT group at the
end of 2023, 5 are women. At year-end 2023, the
parent company has 4 board members, of which
2 are women. The parent company complies with
Norwegian legal requirement with respect to gender
representation in the board of directors.
Raising awareness of employees on human rights
and labor principles and relevant issues are
regularly done by internal training and as part
of the introduction program for new employees.
Health and Safety
Health and safety are an indispensable component
in all the Group’s activities. All hazards and risks
to health and safety must be avoided. Generally,
NEXT’s business involves low safety risk in the day-
to-day activities, without use of heavy machinery or
equipment that can cause damage or injuries. As a
fabless biometrics company, production has been
outsourced to specialized manufacturers. NEXT is
concerned for safety of employees in third party
factories and it is an integral part of the evaluation
criteria which the Group applies ahead of being
classified as a “NEXT certified vendor/partner”.
None of the processes in use by the suppliers
are known to be of particular hazard to the staff.
202 3
22
Annual Report 2023 Corporate Social Responsibility Report
Title
Environment and climate impact
NEXT does not own or operate manufacturing
facilities. Manufacturing is done through third parties
that comply with the ISO 14001 environmental
standard, among others. Consequently, there is little
pollution associated with the Group’s operations.
NEXT seeks to limit resource consumption, prevent
unnecessary environmental pollution including
optimizing transportation of goods, and manage
waste in an environmentally friendly and resource
efficient manner.
NEXT climate impact and potential risk is low in the
short to medium term. The Group is not impacted
by physical climate risk such as potential flooding
or general increase in the sea level. Moreover, NEXT
does not face any potential liabilities due to damage
caused by climate change. Still, NEXT is likely to
be impacted by the regulatory and technological
changes that are to be implemented (in the future)
to reach a carbon neutral society, which may lead to
long term increased electronic component purchase
and manufacturing costs.
Business ethics & anti-corruption
The Group’s operations depend on the trust of
contractual parties, the authorities, shareholders,
employees and society in general. In order to gain
trust, the Group is dependent upon professionalism,
expertise and high ethical standards in all aspects of
the Group’s work. This applies to the way the Group
operates and to the conduct of each individual. All
employees are therefore expected to behave with
care, integrity and professionalism and abstain from
actions that may weaken trust in the Group.
The NEXT Biometrics’ Ethical and Corporate Social
Responsibility Guidelines contain guidelines for
ethical behaviour in business relations. These
clearly states that NEXT strongly oppose all forms of
corruption or bribery. NEXT encourages reporting
of suspected misconduct; a «whistle-blower»
communication channel. NEXT adheres to national
and foreign antitrust laws.
No one may receive benefits for themselves or for
others from the Group’s business contacts if such
benefits are based on the employment relationship.
Correspondingly, no one shall give such benefits
to the Group’s business contacts. The guidelines
explicitly govern conflict of interests, gifts and
money laundering. Business courtesies of modest
value, conforming to normal social customs and not
intended for influence, are not considered bribes. All
gifts with an estimated value of more than NOK 1,000
must be reported to the Group’s CFO, who will keep
a log over such gifts and assess whether the relevant
gift can be retained or provided, based on a case-
by-case evaluation.
NEXT has to date not been accused of, or involved
in, any cases pertaining to any form of corruption or
bribery. NEXT encourages each employee to report
on possible censurable incidents. NEXT’s employees
have an obligation to report on criminal activity and
on incidents which could endanger life or health.
The board of directors and management are not
aware of any breach of our code of conduct.
Raising awareness of the guideline has been
the Group’s main action with regard to this area.
The Group is not aware of any breach of the
implemented guideline. The Group does not have
any other guidelines or actions regarding Corporate
Social Responsibility due to the limited size and
resources of the parent company. The Group will
continue to have focus on these guidelines and
incorporate them into our company culture.
The Group will do this by updating and
educating the organization.
23
Annual Report 2023 Corporate Social Responsibility Report
Title
Financial
Statements
Group
24
Annual Report 2023 Financial Statements Group
Group
|
Consolidated statement of comprehensive income 1 January - 31 December
(amounts in NOK 1,000) Notes 2023 2022
Operating revenues
3 33,717 46,508
Other revenues 3 666 1,784
Cost of goods sold
12 -22,962 -33,593
Inventory write-downs 12 -4,042 52
Gross margin 7,379 14,752
Payroll expenses
4 -42,370 -33,385
Other operating expenses 5,6,18 -23,218 -22,207
Depreciation and amortization
10,11 -7,068 -7,229
Impairment losses 10,11 -1,139 -
Total operating expenses -73,795 -62,822
Operating profit (loss) -66,416 -48,070
Financial income
7 1,054 712
Financial expenses 7 -62 -118
Net currency gains (losses)
7 -74 1,082
Net financial items 918 1,676
Profit (loss) before taxes -65,498 -46,394
Income tax expenses
8 -234 60
Profit (loss) after taxes -65,732 -46,333
Earnings per share (in NOK)
Basic and diluted
9 -0.69 0.50
Other comprehensive income (loss) that may be reclassified subsequently to profit and loss:
Translation differences on net investments in foreign operations
Other comprehensive income (loss) 1,170 2,610
Total comprehensive income (loss) -64,562 -43,723
Profit (loss) after taxes attributable to:
Owners of the parent company -65,732 -46,333
Total comprehensive income (loss) attributable to:
Owners of the parent company -64,562 -43,723
The consolidated financial statements should be read in conjunction with the accompanying notes.
25
Annual Report 2023 Financial Statements Group
Group
|
Consolidated statement of financial position As of 31 December
(amounts in NOK 1,000) Notes 2023 2022
Deferred tax assets
8 - 38
Intangible assets 10 1,530 2,579
Property, plant and equipment
11 6,738 12,347
Total non-current assets 8,268 14,964
Inventories
12 23,126 22,935
Accounts receivables
13 12,303 6,261
Other current assets 14 7,451 8,387
Cash
15 67,753 69,302
Total current assets 110,632 106,886
Total assets 118,900 121,850
Share capital
18 104,025 91,981
Share premium 30,858 4,049
Other reserves 31,965 26,069
Retained earnings -72,498 -26,099
Total equity 94,351 96,000
Non-current lease liabilities
17 194 1,218
Other non-current liabilities - 61
Total non-current liabilities 194 1,279
Accounts payables 5,984 7,776
Income tax payables
8 33 143
Current lease liabilities 17 1,745 1,748
Other current liabilities
16 16,594 14,904
Total current liabilities 24,355 24,571
Total equity and liabilities 118,900 121,850
Board member
The consolidated financial statements should be read in conjunction with the accompanying notes.
26
Annual Report 2023 Financial Statements Group
Group
|
Consolidated statement of cash flow 1 January - 31 December
(amounts in NOK 1,000) Notes 2023 2022
Profit (loss) before taxes -65,498 -46,394
Share based remuneration
4.5 5,896 4,733
Share based payments social security expense
18 4,611 -2,663
Income taxes paid 8 -26 56
Depreciation and amortization
10,11 7,068 7,229
Impairment losses
10,11 1,139 -
Inventory write-downs
12 4,042 -52
Change in inventories -190 -3,949
Change in accounts receivables -6,042 5,540
Change in accounts payables -1,792 990
Change in other working capital items and other -6,590 824
Interests received 1,054 693
Interests paid -303 -131
Net cash flow from operating activities -56,630 -33,123
Purchase of property, plant and equipment and intangible assets
10,11 -13 -70
Proceeds from lease receivables
17 - 696
Net cash flow from investing activities -13 626
Net proceeds from issue of shares
18 60,150 747
Payments of transaction costs equity transactions
18 -3,134 -9
Payment of lease liabilities
17 -2,078 -2,738
Net cash flow from financing activities 54,938 -2,000
Net change in cash flow -1,705 -34,496
Cash balance as of 1 January 69,302 102,706
Translation differences from subsidiaries 334 744
Effects of exchange rate changes on cash and cash equivalents -178 347
Cash balance as of 31 December 67,753 69,302
Comprising of:
Cash
15 67,753 69,302
The consolidated financial statements should be read in conjunction with the accompanying notes.
27
Annual Report 2023 Financial Statements Group
Group
|
Consolidated statement of changes in equity 1 January - 31 December
Attributable to owners of the parent company
(amounts in NOK 1,000) Notes
Share
capital
Share
premium
Other
reserves
Accumulated
losses
Total
equity
As of 1 January 2023 91,981 4,049 26,069 -26,099 96,000
Profit (loss) after taxes -65,732 -65,732
Other comprehensive income (loss) 1,170 1,170
Total comprehensive income (loss) - - - -64,562 -64,562
Share issues
19 12,000 48,000 60,000
Share issues, options to employees 19 44 106 150
Share issue costs 19 -3,134 -3,134
Share based remuneration
19 5,896 5,896
Transfer of loss to share premium -18,163 18,163 -
As of 31 December 2023 104,025 30,858 31,965 -72,498 94,351
As of 1 January 2022 91,681 47,335 71,442 -76,205 134,253
Profit (loss) after taxes -46,333 -46,333
Other comprehensive income (loss) 2,610 2,610
Total comprehensive income (loss) - - - -43,723 -43,723
Share issues
Share issues, options to employees 300 447 747
Share issue costs -9 -9
Share based remuneration
19 4,733 4,733
Share-based remuneration reclassification
19 -50,106 50,106 -
Transfer of loss to share premium
19 -43,723 43,723 -
As of 31 December 2022 19 91,981 4,049 26,069 -26,099 96,000
Incremental costs directly attributable to the issue
of ordinary shares are recognized as a deduction
from equity. Income tax relating to transaction costs
of an equity transaction is accounted for in
accordance with IAS 12.
The consolidated financial statements should be read in conjunction with the accompanying notes.
28
Annual Report 2023 Financial Statements Group
29
Annual Report 2023 Notes to financial statement - Group
30
Annual Report 2023 Notes to financial statement - Group
31
Annual Report 2023 Notes to financial statement - Group
32
Annual Report 2023 Notes to financial statement - Group
33
Annual Report 2023 Notes to financial statement - Group
34
Annual Report 2023 Notes to financial statement - Group
35
Annual Report 2023 Notes to financial statement - Group
36
Annual Report 2023 Notes to financial statement - Group
37
Annual Report 2023 Notes to financial statement - Group
38
Annual Report 2023 Notes to financial statement - Group
39
Annual Report 2023 Notes to financial statement - Group
40
Annual Report 2023 Notes to financial statement - Group
41
Annual Report 2023 Notes to financial statement - Group
42
Annual Report 2023 Notes to financial statement - Group
43
Annual Report 2023 Notes to financial statement - Group
44
Annual Report 2023 Notes to financial statement - Group
45
Annual Report 2023 Notes to financial statement - Group
46
Annual Report 2023 Notes to financial statement - Group
47
Annual Report 2023 Notes to financial statement - Group
48
Annual Report 2023 Notes to financial statement - Group
49
Annual Report 2023 Notes to financial statement - Group
50
Annual Report 2023 Notes to financial statement - Group
51
Annual Report 2023 Notes to financial statement - Group
52
Annual Report 2023 Notes to financial statement - Group
53
Annual Report 2023 Notes to financial statement - Group
54
Annual Report 2023 Notes to financial statement - Group
55
Annual Report 2023 Notes to financial statement - Group
Title
Financial Statements
Parent company
56
Annual Report 2023 Financial Statements Parent company
Parent company
|
Statement of comprehensive income 1 January - 31 December
(amounts in NOK 1,000) Notes 2023 2022
Operating revenues
2 8,921 9,324
Other revenues 2 - 179
Total revenues 8,921 9,503
Payroll expenses
3 -11,953 -12,551
Share based remuneration
3,13 -9,111 -1,197
Other operating expenses
4 -6,686 -6,656
Depreciation and amortization 7,8 -1,265 -1,170
Total operating expenses -29,014 -21,574
Operating profit (loss) -20,093 -12,070
Financial income
5 1,385 1,165
Financial expenses
5 -191 -11
Net currency gains (losses)
5 737 870
Net financial items 1,930 2,024
Profit (loss) before taxes -18,163 -10,046
Income tax expenses
6 - -
Profit (loss) after taxes -18,163 -10,046
Other comprehensive income (loss) - -
Total comprehensive income (loss) -18,163 -10,046
57
Annual Report 2023 Financial Statements Parent company
Parent company
|
Statement of financial position As of 31 December
(amounts in NOK 1,000) Notes 2023 2022
Intangible assets
7 1,500 2,250
Property, plant and equipment 8.15 447 935
Shares in subsidiaries
9 266,616 219,219
Loans to group companies 10 6,137 8,532
Total non-current assets 274,700 230,937
Other current assets
11 3,699 2,981
Cash 12 40,091 37,486
Total current assets 43,790 40,467
Total assets 318,490 271,403
Share capital
13 104,025 91,981
Share premium 135,496 108,687
Other reserves 28,336 22,440
Retained earnings 40,060 40,060
Total equity 307,918 263,169
Non-current lease liability
15 - 403
Total non-current liabilities - 403
Accounts payables 697 528
Current lease liabilities
15 430 461
Other current liabilities
14 9,446 6,843
Total current liabilities 10,572 7,832
Total equity and liabilities 318,490 271,403
Petter Fjellstad
Chairman
/Sign/ /Sign/
/Sign/
/Sign/
/Sign/
Odd-Harald Hauge
Board member
Ulf Ritsvall
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
The board of directors
of NEXT Biometrics
Group ASA
Oslo, 23 april 2024
58
Annual Report 2023 Financial Statements Parent company
Parent company
|
Statement of cash flow 1 January - 31 December
(amounts in NOK 1,000) Notes 2023 2022
Profit (loss) before taxes -18,163 -10,046
Share based remuneration
13 4,500 3,860
Accrued share option social security cost
13 4,611 -2,663
Depreciation and amortization 7,8 1,265 1,170
Change in accounts receivables - 307
Change in accounts payables 168 -14
Change in other working capital items and other -3,784 -743
Interests received 733 571
Interests paid -35 -38
Net cash flow from operating activities -10,705 -7,596
Net financing of subsidiary
9,10 -46,000 -42,000
Repayments of intercompany loan 2,800 9,488
Proceeds from lease receivables
15 - 723
Net cash flow from investing activities -43,200 -31,788
Proceeds from issue of shares
13 60,150 747
Payments of transaction costs equity transactions -3,134 -9
Payment of lease liabilities
15 -506 -1,390
Net cash flow from financing activities 56,510 -652
Net change in cash flow 2,605 -40,037
Cash balance as of 1 January 37,486 77,523
Effects of exchange rate changes on cash -10 652
Cash balance as of 31 December 40,091 37,486
Comprising of:
Cash
12 40,091 37,486
The consolidated financial statements should be read in conjunction with the accompanying notes.
59
Annual Report 2023 Financial Statements Parent company
Parent company
|
Statement of changes in equity 1 January - 31 December
(amounts in NOK 1,000) Notes Share capital
Share
premium
Other
reserves
Retained
earnings Total equity
As of 1 January 2023 91,981 108,687 22,440 40,060 263,169
Profit (loss) after taxes -18,163 -18,163
Other comprehensive income (loss) - -
Total comprehensive income (loss) - - -18,163 -18,163
Share issues
13 12,000 48,000 60,000
Share issues, options to employees
13 44 106 150
Share issue costs
13 -3,134 -3,134
Share-based remuneration 13 5,896 5,896
Transfer of loss to share premium -18,163 18,163
As of 31 December 2023 104,025 135,496 28,336 40,060 307,918
As of 1 January 2022 91,681 108,250 67,814 - 267,744
Profit (loss) after taxes -10,046 -10,046
Other comprehensive income (loss) - -
Total comprehensive income (loss) - - - -10,046 -10,046
Share issues
13 0
Share issues, options to employees
13 300 438 738
Share issue costs 13 -
Share-based remuneration
13 4,733 4,733
Share-based remuneration,
reclassification
13 -50,106 50,106 -
As of 31 December 2022 91,981 108,687 22,440 40,060 263,169
As an alignment of principles, Next Biometrics ASA
has in 2023 made a material adjustment to the
2021 and 2022 share-based remuneration effect in
equity statement, with a corresponding increase to
investments in subsidiaries, as compared to the 2022
financial statements.
60
Annual Report 2023 Financial Statements Parent company
Note 1 - General information and summary of
material accounting policies
NEXT Biometrics Group ASA is a holding company
and contains the activities that are performed in
Norway including Group Management.
These financial statements have been prepared in
accordance with IFRS® Accounting Standards as
adopted by the EU per 31 December 2023.
NEXT Biometrics Group ASA’s accounting principles
are consistent with the accounting principles for the
Group, as described in note 2 of the consolidated
financial statements. Where the notes for the parent
company are substantially different from the notes
for the Group, these are shown below. Otherwise,
refer to the notes to the consolidated
financial statements.
Shares in subsidiaries are accounted for using the
cost method. The investments in subsidiaries are
valued at cost unless impairment is required. When
the parent has an obligation to settle share-based
remuneration to employees in subsidiaries in its
own equity instruments, this is accounted for as an
increase in equity and a corresponding increase in
shares in subsidiaries.
Shares in subsidiaries and loans provided to
subsidiaries are evaluated at the lower of cost or
fair value. Assessments of impairment on shares in
subsidiaries are done by the end of each reporting
period. At year-end 2023, the market value of NEXT
Biometrics Group ASA at Oslo Stock Exchange was
higher than the book value of the equity in the parent
company. Hence, no indication of impairment.
Notes to the financial
statements - Parent
Note 2 – Revenues
Operating revenues are management fee and
royalty charged to the subsidiary NEXT Biometrics
AS. Revenues from NEXT Biometrics AS totals to
NOK 8.9 million in 2023 (2022: NOK 9.3 million).
Other revenues in 2022 amounting to NOK 0.2
million represent rental income and sale of office
equipment relating to the company’s prior office
location in Oslo.
61
Annual Report 2023 Notes to the financial statements - Parent
(amounts in NOK 1,000) 2023 2022
Salaries, fees -9,513 -9,815
Share based remuneration (salary part) -4,500 -3,860
Share based remuneration (employer’s tax) -4,611 2,663
Social security taxes -1,780 -2,225
Pension contribution -481 -440
Other personnel expenses -178 -70
Total payroll expenses -21,064 -13,748
Average numbers of employees 5 5
Note 3 – Payroll expenses
The parent company, NEXT Biometrics Group ASA,
provides a contribution-based pension insurance
scheme for all employees. The scheme satisfies
the mandatory service pension (‘OTP’) in Norway.
By the end of 2023, there were 4 employees in
the parent company.
Other expenses include insurance, marketing
expenses, Oslo stock exchange fees, DNB stock
register fee and other costs.
Fees to consultants, lawyers and others includes
remuneration to auditor, see specification in
table below:
(amounts in NOK 1,000) 2023 2022
Fees to consultants, lawyers and others -3,779 -4,142
Travel expenses -598 -297
Other expenses -2,309 -2,217
Total other operating expenses -6,686 -6,656
(amounts in NOK 1,000) 2023 2022
Audit fee -286 -479
Attestation -145 -75
Tax services - -74
Non-audit services -38 -
Total audit fees -468 -629
Note 4 – Other operating expenses
62
Annual Report 2023 Notes to the financial statements - Parent
(amounts in NOK 1,000) 2023 2022
Interest income from group companies (see note 10) 410 574
Interest income on sub-leases (see note 15) - 19
Interest income 974 572
Total financial income 1,385 1,165
Interest expenses -156 -6
Interest expenses right-to-use assets (see note 15) -35 38
Other financial expenses (leases) - -44
Total financial expenses -191 -11
Realized currency gains (losses) 320 646
Change in unrealized currency gains (losses) 416 225
Net currency gains (losses) 737 870
Net financial items 1,930 2,024
Note 5 – Financial items
(amounts in NOK 1,000) 2023 2022
Current taxes - -
Change in deferred taxes - -
Total income tax expenses - -
Income tax expense reconciliation:
Profit (loss) before taxes -18,163 -10,046
Expected income tax expenses at Norwegian nominal tax rate (22%) -3,996 -2,210
Tax effect of permanent differences 309 850
Change in deferred tax assets not recognized 3,686 1,360
Actual income tax expenses - -
Effective tax rate 0% 0%
Note 6 – Income taxes
63
Annual Report 2023 Notes to the financial statements - Parent
(amounts in NOK 1,000) 2023 2022
Property, plant and equipment 447 935
Long term loans - -
Lease receivables - -
Lease liabilities - -
Other temporary differences -6,623 -2,801
Tax losses carried forward -228,957 -216,511
Total temporay differences and tax losses carried forward -235,133 -218,377
Deferred tax assets -51,729 -48,043
Deferred tax assets not recognized 51,729 48,043
Deferred tax assets in the balance sheet - -
(amounts in NOK 1,000) 2023 2022
Deferred tax assets - -
Deferred tax liabilities - -
Net deferred taxes as of 31 December - -
(amounts in NOK 1,000) 2023 2022
Profit (loss) before taxes -18,163 -10,046
Permanent differences 1,406 3,864
Change in temporary differences 4,310 -3,343
Basis for current taxes -12,446 -9,525
Deferred tax related to the following temporary
differences:
Tax losses carried forward has no limitiations in
expiry date.
Due to a history of losses, deferred tax assets are
not recognized.
The following table illustrates the deferred
tax balance recognized in the statement of
financial position:
The following table illustrates the basis for calculation
of current tax:
64
Annual Report 2023 Notes to the financial statements - Parent
(amounts in NOK 1,000) 2023 2022
Accumulated cost as of 1 January 7,458 7,458
Additions - -
Disposals at cost - -
Translation differences - -
Accumulated cost as of 31 December 7,458 7,458
Accumulated amortization and impairment losses as of 1 January -5,209 -4,459
Amortization -750 -750
Accumulated amortization and impairment losses of disposed items - -
Translation differences - -
Accumulated amortization and impairment losses as of 31 December -5,959 -5,209
Carrying amount as of 31 December 1,500 2,250
Amortization period in years (straight line) 12 12
Note 7 – Intangible assets
Intangible assets consist mainly of acquisition of right
to use the patent and know-how (IP) described as
the NEXT Active Thermal® Sensing principle.
The individual intangible asset is not considered
as separate cash generating units. Rather, that
assets are evaluated for impairment in combination
with other assets. Therefore, impairment tests have
been performed as part of an overall impairment
assessment. Consequently, it was concluded that
there was no need for impairment of intangible
assets. See note 9 for further information.
65
Annual Report 2023 Notes to the financial statements - Parent
2023 2022
(amounts in NOK 1,000)
RoU-
assets Total
Office furniture
and equipment
RoU-
assets Total
Accumulated cost as of 1 January 1,021 1,021 532 817 1,349
Additions 27 27 - 1,020 1,020
Disposals at cost - -532 -817 -1,349
Accumulated cost as of 31 December 1,048 1,048 - 1,021 1,021
Accumulated depreciation and impairment losses as of 1 January -85 -85 -532 -485 -1,017
Depreciation -515 -515 - -417 -417
Impairment losses - - -
Accumulated depreciation and impairment losses of disposed items - - 532 817 1,349
Accumulated depreciation and impairment losses as of 31 December -600 -600 - -85 -85
Carrying amount as of 31 December 447 447 - 935 935
Depreciation period in years (straight line) 2-4 3 2-4
Note 8 – Property, plant and equipment
Right-of-use assets (RoU-assets) represent office
leases. Additions in 2023 were related to KPI
adjustments of the existing lease contract in Oslo.
In 2022, the company extended the Oslo office
lease by 2 years. Additions in 2022 for right-of-use
assets (RoU-assets) were related to the extension of
the office lease in Oslo. See also note 15 for further
information regarding leases.
66
Annual Report 2023 Notes to the financial statements - Parent
(amounts in NOK 1,000) Office
Owned directly by
Parent company
Ownership / voting
interest in % 2023
Ownership / voting
interest in % 2022
NEXT Biometrics AS Oslo, Norway x 100% 100%
NEXT Biometrics Inc. Seattle, USA 100% 100%
NEXT Biometrics China Ltd. Shanghai, China 100% 100%
NEXT Biometrics Taiwan Ltd. Taipei, Taiwan 100% 100%
NEXT Biometrics Solutions Pvt. Ltd. Bengaluru, India 100% 100%
Note 9 – Shares in subsidiaries and group companies
The table below shows the subsidiaries in the Group.
All subsidiaries are consolidated in the Group’s
financial statements.
The table below shows the carrying amount of
shares in subsidaries for the Parent company as
of 31 December:
The change in carrying amount from 31 December
2022 to 31 December 2023, is related to capital
increases of NOK 46 million and increase in
investments in subsidiaries of 1.4 million related
to share-based remuneration for employees in
group subsidiaries.
The individual share in subsidary asset is not
considered as separate cash generating units.
Rather, that assets is evaluated for impairment in
combination with other assets. The main asset in
the parent company is shares in subsidiaries.
The market value of equity is considered to be the
market value of equity based on the closing stock
price at Oslo Stock Exchange at year-end 2023.
The closing stock price was NOK 7,1 per share, which
corresponds to a total market value of NOK 739
million. The market value of the company was higher
than book value of equity of the parent company as
per 31 December 2023, and management assessed
that there was no indication of impairment.
The loan to NEXT Biometrics Taiwan Ltd.
was charged with NIBOR 6 months + 1.0%.
Interest for 2023 amounted to NOK 0.4 million
(2022: NOK 0.4 million).
The parent company had a short-term loan to
NEXT Biometrics AS during 2022. Interest was
charged with NIBOR 6 months + 2.0%. Interest for
2022 amounted to NOK 0.2 million. The loan was
repaid in November 2022.
(amounts in NOK 1,000) 2023 2022
NEXT Biometrics AS 266,616 219,219
Total shares in subsidiaries 266,616 219,219
(amounts in NOK 1,000) 2023 2022
Loan to NEXT Biometrics Taiwan Ltd. 6,137 8,532
Total loans group companies as of 31 December 6,137 8,532
Note 10 – Loans to group companies
67
Annual Report 2023 Notes to the financial statements - Parent
The company had NOK 3.7 million in other current
assets as per 31 December 2023, of which NOK 0.3
million is classifed as other receivables that mainly
relates to estimated refunds of public duties.
(amounts in NOK 1,000) 2023 2022
Receivables NEXT Biometrics AS 2,772 141
Prepayments 496 397
Deposits 86 692
Other receivables 345 1,751
Total other current assets 3,699 2,981
(amounts in NOK 1,000) 2023 2022
Cash - unrestricted 39,669 36,865
Cash - employees withheld payroll tax deposits 422 621
Total cash 40,091 37,486
Note 11 – Other current assets
Note 12 - Cash
68
Annual Report 2023 Notes to the financial statements - Parent
For financial liabilities at amortised cost, the
carrying amount is assessed to be a reasonable
approximation of fair value. All items above are at
amortised cost or nominal value.
(amounts in NOK 1,000) 2023 2022
Accrued salary, vacation pay and board remuneration 1,304 1,598
Public duties payable 1,437 3,327
Share options social security tax 6,225 1,614
Other current liabilities 479 304
Total other current liabilities 9,446 6,843
Note 14 – Other liabilities
As of 31 December 2023, the Company has one
share option program. There are currently an
accumulated 14,048,519 (13.5% of total number of
shares in the Company) share options outstanding.
As an alignment of principles, NEXT Biometrics
ASA has in 2023 made a material adjustment to the
2021 and 2022 share-based remuneration effect
in equity statement, with a corresponding increase
to investments in subsidiaries, as compared to the
2022 financial statements. The total equity effect
of share based remuneration for the 2023 financial
period was NOK 5.9 million, of which NOK 4.5 million
was booked as payroll expense and NOK 1.4 million
was booked as investment in subsidiaries. The total
equity effect of share based remuneration for the
2022 financial period was NOK 4.7 million, of which
NOK 3.9 million was booked as payroll expense
and NOK 0.9 million was booked as investment in
subsidiaries.
For further information regarding share capital,
shareholder’s information and share-based options,
please refer to note 19 in group consolidated
financial statement.
Number of shares outstanding 2023 2022
Opening balance 91,980,763 91,680,763
Share issue(s) 12,000,000 -
Exercised incentive share options 44,166 300,000
Closing balance 104,024,929 91,980,763
Number of shares outstanding 2023 2022
Share based remuneration cost , NEXT Biometrics Group ASA 4,500 3,860
See note 3, payroll expenses
Share based remuneration cost , employees in NEXT Biometrics
Group ASA subsidiaries 1,229 868
Booked as addition to investment in
subsidiaries (Note 9, shares in subsidiaries)
Share based remuneration cost , consultants/contractors in NEXT
Biometrics Group ASA subsidiaries 167 5
Booked as addition to investment in
subsidiaries (Note 9, shares in subsidiaries)
Total 5,896 4,733
Note 13 -Equity
There is one class of shares. All shares have equal
rights and are freely negotiable. The share capital
is fully paid in. The par value of the shares is NOK 1
per share.
69
Annual Report 2023 Notes to the financial statements - Parent
See note 8 for more information regarding right-of-
use assets.
The table below shows the amounts related to leases
recognized in the statement of comprehensive
income:
The table below shows a reconciliation of the
opening and closing balance for lease liabilities
arising from financing activities:
The total cash outflow for leases in 2023 was
NOK 0.5 million (2022: NOK 1.4 million).
The table below shows the maturity profile
for the lease liabilities based on contractual
undiscounted payments:
(amounts in NOK 1,000) 2023 2022
Property - office leases (included in "Property, plant and equipment") 447 935
Total right-of-use assets 447 935
Non-current lease liabilities (included in "Other non-current liabilities") - 403
Current lease liabilities (included in "Other current liabilities") 430 461
Total lease liabilities 430 863
(amounts in NOK 1,000) 2023 2022
Opening balance 863 1,225
Changes from financing cash flows -506 -1,390
Changes in lease liabilities due to new/amended lease agreements or CPI adjustments 27 992
Other changes 47 36
Closing balance as of 31 December 430 863
(amounts in NOK 1,000) 2023 2022
Depreciation property right-of-use assets (included in “Depreciation and amortization”) -515 -417
Interest income (included in "Financial income") - 19
Interest expenses (included in "Financial expenses") -35 38
Net expenses related to leases -549 -359
(amounts in NOK 1,000) 2023 2022
Within one year 352 495
More than 1 year but within 5 years - 330
Total contractual cash flows related to leases 352 825
Note 15 – Leases
The table below shows the amounts related to leases
recognized in the statement of financial position:
70
Annual Report 2023 Notes to the financial statements - Parent
Note 16 – Related party
transactions
The parent company’s significant shareholders,
board members and management, are considered
related parties. For overview of transactions with
these parties, please refer to note 21 in group
consolidated financial statement.
Companies within the Group are also considered
related parties. See note 2 for overview of sales to
group companies and note 10 for overview of loans
to group companies.
Note 17 - Events occurring after
the balance sheet date
Between 31 December 2023 and the resolution of
these financial statements, there has not been any
event which have had any noticeable impact on
the Group’s or the parent company’s result for 2023
or the value of the Group or the parent company’s
assets and liabilities as of 31 December 2023.
71
Annual Report 2023 Notes to the financial statements - Parent
Responsibility statement
We confirm that, to the best of our knowledge, the
financial statements for the period from 1 January
to 31 December 2023 have been prepared in
accordance with IFRS as adopted by the EU, with
such additional information as required by the
Norwegian Accounting Act, and give a true and fair
view of the Group’s and Parent company’s assets,
liabilities, financial position and result of operations,
and that the Board of Directors’ report gives a true
and fair view of the development, performance
and financial position of the Group and the Parent
company, and includes a description of the principal
risks and uncertainties that they face.
Oslo, 23 April 2024
Petter Fjellstad
Chairman
/Sign/ /Sign/
/Sign/
/Sign/
/Sign/
Odd-Harald Hauge
Board member
Ulf Ritsvall
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
72
Annual Report 2023 Responsibility statement
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Next Biometrics Group ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Next Biometrics Group ASA, which comprise:
● the financial statements of the parent company Next Biometrics Group ASA (the Company), which
comprise the statement of financial position as at 31 December 2023, statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and
notes to the financial statements, including material accounting policy information, and
● the consolidated financial statements of Next Biometrics Group ASA and its subsidiaries (the
Group), which comprise the statement of financial position as at 31 December 2023, the statement
of comprehensive income, statement of changes in equity and statement of cash flow for the year
then ended, and notes to the financial statements, including material accounting policy information.
In our opinion
● the financial statements comply with applicable statutory requirements,
● the financial statements give a true and fair view of the financial position of the Company as at 31
December 2023, and its financial performance and its cash flows for the year then ended in
accordance with IFRS Accounting Standards as adopted by the EU, and
● the consolidated financial statements give a true and fair view of the financial position of the Group
as at 31 December 2023, and its financial performance and its cash flows for the year then ended
in accordance with IFRS Accounting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company and the Group as required by
relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence Standards)
(IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation
(537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 5 years from the election by the general meeting of the
shareholders on 21 May 2019 for the accounting year 2019.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. The Group’s business activities are largely unchanged compared to last
year. Revenue recognition has the same characteristics and risks this year as the previous year and
continues to be an area of focus also for the 2023 audit.
Auditor’s report
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Auditor’s report
2 / 4
Key Audit Matters
How our audit addressed the Key Audit Matter
Revenue recognition
The Group develops and sells fingerprint sensors
for authentication in the Payment & Fintech, Public
Security,
Access Control, Office, and Notebooks
markets.
The Group’s sales are either handled
through distributors or sales directly to end
customers.
We consider revenue recognition to be an area of
focus because it is challenging to determine, based
on the terms of the contracts and the business set
up, whether a distributor is considered an age
nt or
a principal for accounting purposes, when
distributors are used by the Group. The complexity
of the arrangements with customers and
distributors results in an inherent risk of
misinterpretation of the terms, and consequently,
a risk that revenue is
recorded before control has
passed over to the customer.
Furthermore, there is a risk that revenue is
recorded net of service charge to distributors if the
distributor is considered an agent rather than a
principal. Consequently, there is a risk that
both
revenue and cost of goods sold are
understated by
the same amount.
We refer to note 3 where Management describes
their principle for revenue recognition.
Our audit procedures included, among others, a
review of customer and distributor contracts and an
assessment of contract terms
and the setup of the
business between the parties to understand how
they relate to IFRS criteria for revenue recognition.
Further, we assessed whether the distributor, when
acting in line with the stipulations
in the
agreements, was an agent or a principal and when
control of the goods was to be determined
transferred from the Group.
To test whether revenue was recognised in the
correct period, we tested transactions in the period
close to year end. If recognise
d revenue was
related to goods shipped to the distributor acting as
agent to the Group, we assessed based on
materiality whether any part of this revenue was
related to goods not transferred to end
-customers
before year end.
Furthermore, we evaluated Mana
gement’s
assessment of the probability of return of goods.
Our evaluation was also supported by performed
tests of credit notes after year end, and analysis of
historical returns. In addition to the audit
procedures tailored to the identified key audit
mat
ter, invoiced sales to customers representing
89% of total
revenue in 2023, were tested by
obtaining
confirmations from customers. No
material errors were noted during our audit.
We read the note relevant to revenue recognition
and found that the note gave
an adequate
description of how the Group applies IFRS on
revenue recognition
.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information in the
Board of Directors’ report and the other information accompanying the financial statements. The other
information comprises information in the annual report, but does not include the financial statements and
our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the
Board of Directors’ report nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’
report and the other information accompanying the financial statements. The purpose is to consider if there
is material inconsistency between the Board of Directors’ report and the other information accompanying
the financial statements and the financial statements or our knowledge obtained in the audit, or whether the
Board of Directors’ report and the other information accompanying the financial statements otherwise
appears to be materially misstated. We are required to report if there is a material misstatement in the
Board of Directors’ report or the other information accompanying the financial statements. We have nothing
to report in this regard.
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Auditor’s report
3 / 4
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
● is consistent with the financial statements and
● contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
● identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
● obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's and the Group's internal control.
● evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
● conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company's and the Group's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Company and the Group to cease to continue as a going concern.
● evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves a true and fair view.
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Auditor’s report
4 / 4
● obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Next Biometrics Group ASA, we have performed an
assurance engagement to obtain reasonable assurance about whether the financial statements included in
the annual report, with the file name “NB_Group_ASA-2023-12-31-en.zip”, have been prepared, in all
material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section
5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the
annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation.
This responsibility comprises an adequate process and such internal control as management determines is
necessary.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF
reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 23 April 2024
PricewaterhouseCoopers AS
Audun Bakke Andersen
State Authorised Public Accountant
(This document is signed electronically)
76
Auditor’s report
Signers:
Name
This document package contains:
- Closing page (this page)
- The original document(s)
- The electronic signatures. These are not visible in the
document, but are electronically integrated.
This le is sealed with a digital signature.
The seal is a guarantee for the authenticity
of the document.
Method
Date
2024-04-23 10:28BANKIDAndersen, Audun Bakke
Revisjonsberetning
77
Auditor’s report
NEXT’s financial information has been prepared in
accordance with International Financial Reporting
Standards (IFRS). In addition, it is management’s
intent to provide alternative performance measures
that are regularly reviewed by management
to enhance the understanding of NEXT’s
performance, but not instead of, the financial
statements prepared in accordance with IFRS.
The alternative performance measures presented
may be determined or calculated differently
by other companies.
Definitions
Most of these key figures are alternative performance
measures according to ESMA’s definition. How
these key figures are used is described below,
as is how they are calculated. The alternative
performance measures are used to provide a more
comprehensive description of how the operational
activities are developing, such as gross margin and
Adjusted EBITDA.
Revenues adjusted for unfulfilled order backlog
Revenues for the period adjusted for unfulfilled order
backlog is defined as revenues for the year plus
unfulfilled purchase orders received by the company
with requested customer delivery in the same year.
In most cases such unfulfilled orders were note
delivered due to supply chain delays.
Gross margin / gross margin (%)
Gross margin is defined as operating revenue plus
other revenue less cost of goods sold and
inventory write-downs.
Gross margin (%) is expressed as a percentage of
operating revenue and other income.
Alternative
performance measures
78
Annual Report 2023 Alternative performance measures
(amounts in NOK 1,000) 2023 2022
Operating revenues 33,717 46,508
Other revenues 666 1,784
Cost of goods sold -22,962 -33,593
Inventory write-downs -4,042 52
Gross margin 7,379 14,752
Gross margin 7,379 14,752
Divided by operating revenue and other revenues 34,383 48,293
Gross margin (%) 21% 31%
(amounts in NOK 1,000) 2023 2022
Operating revenues 33,717 46,508
Other revenues 666 1,784
Cost of goods sold -22,962 -33,593
Inventory write-downs -4,042 52
Added back inventory write-downs 4,042 -52
Adjusted gross margin 11,421 14,700
Adjusted gross margin 11,421 14,700
Divided by operating revenue and other revenues 34,383 48,293
Adjusted gross margin (%) 33% 30%
Adjusted gross margin / Adjusted gross margin (%)
Adjusted gross margin is defined as operating
revenue plus other income less cost of goods sold
and excluding inventory write-downs.
Adjusted gross margin (%) is expressed as a
percentage of operating revenue and other income.
79
Annual Report 2023 Alternative performance measures
(amounts in NOK 1,000) 2023 2022
Operating profit (loss) -66,416 -48,070
Added back depreciation and amortization 7,068 7,229
Added back impairment losses 1,139 -
EBITDA -58,209 -40,840
Added back share-based remuneration (salary part) 5,729 4,728
Added back share-based remuneration (employer's tax) 4,611 -2,663
Added back share-based remuneration (operating part) 167 5
Added back inventory write-downs 4,042 -52
Adjusted EBITDA -43,659 -38,822
(amounts in NOK 1,000) 2023 2022
Operating expenses (OPEX) 65,588 55,592
Deducted share-based remuneration (salary part) -5,729 -4,728
Deducted share-based remuneration (employer's tax) -4,611 2,663
Deducted share-based remuneration (operating part) -167 -5
Operating expenses ex. options (OPEX ex. options) 55,081 53,522
EBITDA / Adjusted EBITDA
EBITDA is earnings before interest, taxes,
depreciation, amortization and impairment losses.
Adjusted EBITDA ex options is equal to EBITDA
excluding “share-based remuneration” (salary part,
employer’s part and operating part) and inventory
write-downs.
Cost of goods sold (COGS)
Cost of goods sold (COGS) is cost of materials and
production service expenses.
Inventory write-downs
Inventory write-downs are costs related to excess
inventory in relation to raw materials, semi-
finished goods, products and product lines that
are discontinued and/or in the process of being
discontinued.
Operating expenses (OPEX)
Operating expenses (OPEX) consist of salaries and
personnel cost and other operating expenses.
Operating expenses ex. options (OPEX ex. options)
Operating expenses excluding options (OPEX ex
options) is defined as salaries and personnel cost
and other operating expenses excluding share
based remuneration.
80
Annual Report 2023 Alternative performance measures
