TABLE OF CONTENTS
3 LETTER FROM THE CEO
4 NEXT BIOMETRICS AT A GLANCE
5 REPORT FROM THE BOARD OF
DIRECTORS
11
CORPORATE
GOVERNANCE REPORT
22
CORPORATE SOCIAL
RESPONSIBILITY REPORT
25
FINANCIAL STATEMENTS - GROUP
30 NOTES TO THE FINANCIAL
STATEMENTS - GROUP
55
FINANCIAL STATEMENTS -
PARENT COMPANY
60
NOTES TO THE FINANCIAL
STATEMENTS - PARENT COMPANY
69
RESPONSIBILITY STATEMENT
70 AUDITOR’S REPORT
75 ALTERNATIVE
PERFORMANCE MEASURES
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ANNUAL REPORT 2023
LETTER FROM THE CEO
DEAR SHAREHOLDERS,
Let us be honest, 2022 was a challenging year for NEXT and many of our newly won customers. On the
other hand, we continued to win new customers and established a stronger distribution network while
post C-19 micro-chip shortages were impacting NEXT and our customers.
Imagine you were running a product company and planned to launch a new product early 2022. You had
just agreed to include a high security fingerprint sensor from NEXT. You would then be met with micro-
chip and component scarcity resulting from C-19 pandemic shutdowns. Unless you were one of the
largest global product companies in the world, you would find it difficult to get hold of several required
components for your new product. And you would have to delay the launch of your new product with
several months if not up to a year. Unfortunately, this became the harsh reality for many of NEXT’s newly
won customers, and unfortunately, these challenges limited NEXT’s ability to deliver sensors to certain
customers during 2022.
Another challenge for NEXT in 2022 was the delay of implementation of the next generation biometric
framework in India. This also resulted in delayed shipments to NEXT’s new partners in India. Still, we were
able to secure a new India-based OEM partner, which placed a large FAP20 purchase order with NEXT.
The above was challenging for us, but there were also major positive developments in 2022.
To start with, we have signed contracts with additional new distributors in several strong biometric
regions during 2022. The new distributors and sales partners are based in South America, South-East
Asia, and China. This will increase our market reach within defined market segments and provide us
with additional new customers, scaling up our business.
Another positive sign is that our increased customer focus has been well demonstrated in the constantly
growing number of design-wins that we have announced during the year. 12 new customers decided that
NEXT sensors are their preferred choice. We have now accumulated 36 design-wins since early 2020.
I believe this to be a solid proof point for our products and our unique technology. With a high security
level, slim form factor and competitive pricing we gain more and more traction with customers. As we
have stated earlier, it’s through new and existing design-wins (customers) that future revenues will be
generated for NEXT.
We will maintain our cost discipline on our journey towards making NEXT a profitable company during
2023. We have come a long way from when I started as CEO in NEXT. The improved cost level was the
first result. More importantly, we introduced the FAP20 product to the market and implemented other
products and marketing improvements. This has lifted gross margins and together they demonstrate
the true potential of our technology and products.
36 new design-wins provides external solid proof points in all our new customer engagements. Even
though many of our recent design-wins are smaller products companies, I can observe that our sales
funnel today contains customers with large volume potential, and we have almost 40 customer
references to refer to from all four market segments and from several markets globally. We are working
steadfast securing additional new design-wins and customers in 2023. I am looking forward to soon
report on progress with our efforts to accelerate design-wins, acquiring larger volume customers and
hence shipments of sensors in larger volumes.
Thank you.
Peter Heuman, CEO
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ANNUAL REPORT 2022
NEXT BIOMETRICS
AT A GLANCE
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,
Internet of Things applications.
The Group has the following main products:
• Notebook sensor products:
- NEXT standard Notebook sensors
- NEXT Secure Bio premium sensor for Notebooks
• FAP20 sensor products used in a variety of applications such as point of sales terminals,
ID devices, Bluetooth printers and digital valets within Fintech applications.
- Readers
- Sensor Modules
• Aadhaar India products connected to the worlds’ largest biometric market
- Sensor modules
During 2022, the Group continued its product development focus working closely with customers
and prospects on improving already developed solutions and accelerating design-ins of new projects.
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. Starting in 2020, the company established 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.
4
ANNUAL REPORT 2022
REPORT FROM THE BOARD
OF DIRECTORS
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,
as 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 cost 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.
HIGHLIGHTS 2022
Key 2022 developments in NEXT:
• Revenues for 2022 of NOK 48.3 million compared to NOK 50.8 million in 2021.
• Gross margin of 31% for 2022 compared to 20% in 2021
• Adjusted EBITDA
1
of NOK -38.8 million in 2022 compared to NOK -32.0 million in 2021
• 12 new design-wins in 2022 and accumulated 36 design-wins as per December 2022,
which will contribute to future revenues
• NEXT’s FAP20 product well positioned for new generation of India biometric standard
in 2023 with local partners
• Established expanded global distributor and partnership network
1.
Please see section Alternative Performance measures on page 75 for further details.
5
ANNUAL REPORT 2022
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 started deploying 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 significant footprint and customers in key markets such as Payment & Fintech,
Public Security, Access control, Office and Notebooks and POS solutions. The Group has shipped close
to 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, quality, standard compliance and unit cost.
NEXT continue to build and expand its global biometric distributor and partnership network. Biometric
Distributors expands NEXT market reach, sales and distribution reach. As per end of 2022, NEXT has
eight biometrics distributors with 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 fingerprints registered. This provides
access to different governmental services and benefit systems. The new generation of India‘s biometric
standard has been launched in 2023. NEXT is working with local partners that will certify their products,
which include NEXT’s FAP20 sensors. These partners are expected to accelerate market deployment
of the company’s Active Thermal technology in India. India’s deployment of fingerprint technology and
solutions has raised interest in other developing countries to deploy national ease of use fingerprint-
based biometric infrastructure and devices for similar purposes.
In China, NEXT has engaged Wiser Group as local market entry partner, which is expected to accelerate
market entry into NEXT’s key market segments in China.
In the Americas, NEXT has two distributors covering US, Mexico and Brazil. The focus in these markets
is to replace current installed base of bulky and expensive 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 22). Reporting required by the Norwegian
Transparency Act will be published at the latest on 30 June 2023 on the company’s website
(www.nextbiometrics.com).
FINANCIAL SUMMARY – THE GROUP
Comprehensive income
Revenues were NOK 48.3 million in 2022 compared to NOK 50.8 million in 2021.
Gross margin was NOK 14.8 million (31%) in 2022 compared to a gross margin of NOK 10.1
million (20%) in 2021.
Adjusted Gross margin was NOK 14.7 million (30%) in 2022 compared to an adjusted gross margin
of NOK 16.3 million (32%) in 2021.
Payroll expenses were NOK 33.4 million in 2022, down from NOK 46.0 million in 2021. Average number
of employees were 28 in 2022 compared to 26 employees in 2021. The Group had 27 employees at
the end of 2022, compared to 26 employees at the end of 2021. Share-based remuneration, including
related accrued social security tax, included in payroll expenses was, NOK 2.1 million in 2022, compared
to NOK 13.0 million in 2021. The reduction in share based renumeration cost in 2022 is due to the
reduced number of options awarded in 2022 and negative stock option social security cost resulting
from the reduction in the company’s stock price. Research and development (R&D) expenses included
in payroll expenses were NOK 5.7 million in 2022 compared to NOK 9.9 million in 2021.
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ANNUAL REPORT 2022
Other operating expenses were NOK 22.2 million in 2022, compared to NOK 15.3 million in 2021.
R&D expenses included in other operating expenses were NOK 5.5 million in 2022, compared to
NOK 5.5 million in 2021.
Total R&D expenses, included in both payroll and other operating expenses, were NOK 11.2 million
in 2022, a decrease from NOK 15.2 million in 2021.
Depreciation, amortization and impairment were NOK 7.2 million in 2022, compared to NOK 7.1
million in 2021.
Net financial items amounted to a net gain of NOK 1.7 million in 2022, compared to a net loss of
NOK 0.1 million in 2021. The gains in 2022 were mainly related to currency gains.
Income tax gain was NOK 0.1 million in 2022, compared to NOK 1.6 million cost in 2021.
EBITDA for the Group was negative NOK 40.8 million in 2022, compared to negative NOK 51.2
million in 2021.
Adjusted EBITDA for the Group was negative NOK 38.8 million in 2022, compared to negative
NOK 32.0 million in 2021.
Loss after taxes for the Group was NOK 46.3 million in 2022, compared to NOK 60.0 million in 2021.
In the outlook section of NEXT’s 2021 annual report it was stated that the company expected increased
number of design-wins, increased revenues, and improved profitability. During 2022 NEXT increased
its number of design win in line with expectations, revenues was lower than anticipated due to project
and governmental approval delays from key customers while loss after taxes was reduced.
CHANGES IN ACCOUNTING POLICIES
The accounting policies applied in preparation of the financial statements for 2022 are consistent
with those applied in the preparation of Annual Report for 2021 with the exception of the reclassified
expenses that are described in note 5.
Financial position and cash
Total assets as of 31 December 2022 amounted to NOK 121.9 million, compared to NOK 161.7
million as of 31 December 2021.
Total equity was NOK 96.0 million at the end of 2022 compared to NOK 134.3 million at the end of
2021.
The Group had non-current liabilities of NOK 1.3 million and current liabilities of NOK 24.6 million at
the end of 2022, compared to non-current liabilities of NOK 2.0 million and current liabilities of NOK
25.4 million at the end of 2021.
Cash amounted to NOK 69.3 million at the end of 2022 compared to NOK 102.7 million at the
end of 2021.
Cash flow
Net cash flow from operating activities was negative with NOK 32.4 million in 2022 compared to
negative NOK 47.7 million in 2021. The improvement in cash flow in 2022 relative to 2021 is mainly
due to the Group’s reduced operating losses and accelerated collection of accounts receivables.
Net cash flow from investing activities was positive NOK 0.6 million in 2022 compared to positive NOK
0.5 million in 2021.
Net cash flow from financing activities was negative NOK 2.0 million in 2022. The cash flow from
financing was positive NOK 83.3 million in 2021 as a result of the share issue that was performed in
Q1 2021.
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ANNUAL REPORT 2022
FINANCIAL SUMMARY – THE PARENT COMPANY
Comprehensive income
Total revenues for the parent company were NOK 9.5 million in 2022 compared to NOK 8.3 million
in 2021. 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 13.7 million in
2022, a decrease from NOK 21.7 million in 2021. The decrease is mainly resulting from reduced share-
based remuneration and option costs in 2022 relative to 2021. There were 5 employees in the parent
company at year-end 2022, compared to 4 employees at the end of 2021.
Other operating expenses for the parent company was NOK 6.7 million in 2022 compared to NOK 6.5
million in 2021.
Depreciation and amortization for the parent company was NOK 1.2 million in 2022 compared to NOK
1.1 million in 2021.
Net financial income was NOK 2.0 million in 2022 compared to a net financial income of NOK 1.7
million in 2021.
The parent company had a loss before taxes in 2022 and 2021. Hence, no payable taxes incurred.
No deferred tax assets have been recognized during 2022 and 2021.
Loss after taxes for 2022 was NOK 10.0 million compared to NOK 19.3 million in 2021.
Financial position and cash
Total assets as of 31 December 2022 amounted to NOK 268.1 million, compared to NOK 275.0 million
as of 31 December 2021.
The parent company had NOK 7.8 million in current liabilities at the end of 2022, compared to NOK 9.8
million at the end of 2021.
Cash amounted to NOK 37.5 million at the end of 2022 compared to NOK 77.5 million at the end of 2021.
Cash flow
Net cash flow from operating activities was negative NOK 8.2 million in 2022, compared to negative NOK
9.0 million in 2021. Net cash flow from investments was negative NOK 31.1 million in 2022 compared to
negative NOK 42.4 million in 2021. Net cash flow from financing was negative NOK 0.7 million in 2022
compared to positive NOK 85.6 million in 2021.
Equity and allocation of profit (loss) after taxes
Equity for the parent company was NOK 259.8 million at the end of 2022 compared to NOK 265.3
million at the end of 2021.
The Board of Directors proposes that the loss after taxes of the parent company of NOK 10.0 million
to be booked to retained earnings.
NEXT SHARES AND SHARE CAPITAL
NEXT ASA’s shares are listed at Oslo Stock Exchange’s main list with ticker NEXT. The 2022 year-end
closing price was NOK 4.5, down from NOK 7.9 at the end of 2021. During 2022, the shares traded in
the range of NOK 3.83 to NOK 7.5.
The issued share capital of the parent company at the end of 2022 amounted to NOK 91.98 million
consisting of 91,980,763 ordinary shares, each share having a par value of NOK 1. At the end of 2022,
there were a total of 4,392 registered shareholder accounts, compared to 5,377 at the end of 2021.
NEXT raised gross proceeds of NOK 0.7 million in one equity issue that was performed in August 2022
in relation to exercise of employee share options. Please see note 19 in group consolidated financial
statement for further details.
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ANNUAL REPORT 2022
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 2022, NEXT has 11,932,228 share options
outstanding. Please see note 19 in group consolidated financial statement for further details.
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 2022.
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 45 million total coverage,
and it covers legal costs, emergency costs and multiple other types of contingency costs.
EMPLOYEES
At the end of 2022, the Group had 27 employees (2021: 26), of which 5 are women (2021: 4).
Additionally, the Group has individual technical/scientific specialists working at its premises on a
contract basis. The female proportion of group employees was 18.5% (2021: 15%).
The parent company had 5 employees by the end of 2022. There were 4 male employees and 1 female
employee at year-end. The female proportion of parent company employees was 20% (2021: 25%).
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 2022. The average sickness absence
rate in the parent company was 0% in 2022 compared to 0% in 2021.
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 “Principles of corporate governance” Annual Report for further details.
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ANNUAL REPORT 2022
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.
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 2022 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 2022 or
the value of the Group or the parent company’s assets and liabilities as of 31 December 2022,
except events mentioned below.
OUTLOOK
The FAP20 product was introduced to an increased number of customers in 2022 relative to 2021,
and it is being integrated into a number of new products that are to be launched. The short term FAP20
shipment volumes will mainly depend on our partners’ progress in India. Longer-term, other customers
and markets are also expected to become important revenue contributors for NEXT.
NEXT Notebook sensor orders have been strong in 2022. We now see indications that NEXT’s PC sensor
shipment volumes in 2023 will be similar to pre-2022 regular demand.
Our partners are making their preparations for launch in India towards late first half of 2023. We expect
end-customers to start their procurement processes 2-3 months before market launch, and our partners
are likely to place orders shortly in advance of end-customers’ order inquiries (start of procurement
processes). As announced recently, India authorities just launched the next generation biometric
standard. Accordingly, we believe the market in India will grow significantly starting from the second half
of 2023 onwards.
The company’s accumulated 36 design-wins from end of 2019 up to end 2022 will contribute to future
revenue growth. The existing portfolio of design-wins alone has the potential to make NEXT profitable.
We see increased customer activity across a wide range of industries, improving the design-win funnel.
Short-term, we are still waiting to see the full impact of our enlarged portfolio of design-wins on our
annual revenues. Many of our design-wins have low to medium potential while we believe some
design-wins will develop into major successes in their respective market segments.
The continued increase in the accumulated number of design-wins is forming the basis for solid
revenue growth in the longer term.
Oslo, 19 April 2023
The board of directors of NEXT Biometrics Group ASA
Petter Fjellstad
Chairman
/Sign/ /Sign/
/Sign/
/Sign/
/Sign/
Odd-Harald Hauge
Board member
Peter Heuman
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
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ANNUAL REPORT 2022
CORPORATE
GOVERNANCE REPORT
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.
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ANNUAL REPORT 2022
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 19 May 2022, gave the board authorization to increase
the Company’s share capital by up to NOK 18,336,000 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 9,309,100, out of which NOK 1,860,000 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 2023 general meeting or 30 June 2023, whichever comes first.
As of 31 December 2022, 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.
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ANNUAL REPORT 2022
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 2022 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.
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.
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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 19 May 2022
for the period until the annual general meeting in 2023. 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 2022, 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.
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 2022, 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 2023.
A presentation of the board can be found on the Company’s website.
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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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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 1 November 2022.
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 1 November 2022.
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 2022
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.
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;
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ANNUAL REPORT 2022
• 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.
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.
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ANNUAL REPORT 2022
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.
For more details on the remuneration to the board, please refer to note 20 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. Following amendments to the Norwegian Public Limited Liability Companies
Act with revised requirements for determining salaries and other remuneration of the executive
management in 2021, the general meeting approved updated the renumeration guidelines in
May 2021. 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 20 in the annual
financial statements, and for details regarding share option arrangements, see note 19 in
the annual financial statements.
The Company deviates from the Code by not having a cap on the performance-related remuneration.
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.
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ANNUAL REPORT 2022
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 2022.
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 20 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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ANNUAL REPORT 2022
ARTICLES OF ASSOCIATION FOR NEXT BIOMETRICS GROUP ASA
Per 31 December 2022
§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 91,980,763, divided into 91,980,763 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 consist 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 2022
CORPORATE SOCIAL
RESPONSIBILITY 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 1 November 2022 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 1 November 2022.
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.
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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 has
suffered work-related injury resulting in sick leave. No accidents nor incidents involving the assets
of the Group have occurred.
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 27
employees in the NEXT group at the end of 2022, 5 are women. At year-end 2022, 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.
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ANNUAL REPORT 2022
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 behavior 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.
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ANNUAL REPORT 2022
FINANCIAL
STATEMENTS -
GROUP
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ANNUAL REPORT 2022
GROUP - CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - 1 JANUARY - 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
Operating revenues 3 46,508 49,788
Other revenues 3 1,784 967
Cost of goods sold 5,12 -33,593 -34,431
Inventory write-downs 12 52 -6,251
Gross margin 14,752 10,073
Payroll expenses 4 -33,385 -45,983
Other operating expenses 5,6,18 -22,207 -15,272
Depreciation and amortization 10,11 -7,229 -7,069
Total operating expenses -62,822 -68,324
Operating profit (loss) -48,070 -58,250
Financial income 7 712 1,048
Financial expenses 7 -118 -1,299
Net currency gains (losses) 7 1,082 108
Net financial items 1,676 -143
Profit (loss) before taxes -46,394 -58,394
Income tax expenses 8 60 -1,621
Profit (loss) after taxes -46,333 -60,014
Earnings per share (in NOK)
Basic and diluted 9 -0.50 0.67
Other comprehensive income (loss) that may be reclassified subsequently to profit and loss:
Translation differences on net investments in foreign operations 2,610 1,593
Other comprehensive income (loss) 2,610 1,593
Total comprehensive income (loss) -43,723 -58,422
Profit (loss) after taxes attributable to:
Owners of the parent company -46,333 -60,014
Total comprehensive income (loss) attributable to:
Owners of the parent company -43,723 -58,422
The consolidated financial statements should be read in conjunction with the accompanying notes.
26
ANNUAL REPORT 2022
GROUP - CONSOLIDATED STATEMENT OF FINANCIAL POSITION - AS OF 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
ASSETS
Deferred tax assets 8 38 32
Intangible assets 10 2,579 3,926
Property, plant and equipment 11 12,347 16,504
Total non-current assets 14,964 20,462
Inventories 12 22,935 18,987
Accounts receivables 13 6,261 11,801
Lease receivables 18 - 517
Other current assets 14 8,387 7,181
Cash 15 69,302 102,706
Total current assets 106,886 141,193
Total assets 121,850 161,655
EQUITY AND LIABILITIES
Share capital 19 91,981 91,681
Share premium 19 4,049 47,335
Other reserves 19 26,069 71,442
Retained earnings -26,099 -76,205
Total equity 96,000 134,253
Non-current lease liabilities 18 1,218 1,899
Other non-current liabilities 17 61 128
Total non-current liabilities 1,279 2,027
Accounts payables 7,776 6,786
Income tax payables 8 143 317
Current lease liabilities 18 1,748 2,597
Other current liabilities 17 14,904 15,676
Total current liabilities 24,571 25,376
Total equity and liabilities 121,850 161,655
27
ANNUAL REPORT 2022
GROUP - CONSOLIDATED STATEMENT OF CASH FLOW - 1 JANUARY - 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
Profit (loss) before taxes -46,394 -58,394
Share based remuneration 19 4,733 8,805
Share based payments social security expense 19 -2,663 4,207
Income taxes paid 8 56 2,386
Depreciation and amortization 10,11 7,229 7,069
Inventory write-downs 12 -52 6,251
Change in inventories -3,949 2,738
Change in accounts receivables 5,540 -7,745
Change in accounts payables 990 -4,261
Change in other working capital items and other 2,130 -8,738
Net cash flow from operating activities -32,378 -47,681
Proceeds from disposal of property, plant and equipment and intangible assets 10,11 - 2
Purchase of property, plant and equipment and intangible assets 10,11 -70 -204
Proceeds from lease receivables 18 696 691
Net cash flow from investing activities 626 489
Net proceeds from issue of shares 19 738 86,681
Repayments of interest-bearing loans 16 - -626
Payment of lease liabilities 18 -2,738 -2,787
Net cash flow from financing activities -2,000 83,268
Net change in cash flow -33,751 36,076
Cash balance as of 1 January 102,706 67,950
Effects of exchange rate changes on cash and cash equivalents 347 -1,320
Cash balance as of 31 December 69,302 102,706
Comprising of:
Cash and cash equivalents 15 69,302 102,706
The consolidated financial statements should be read in conjunction with the accompanying notes.
28
ANNUAL REPORT 2022
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 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 19 -
Share issues, options to employees 19 300 447 747
Share issue costs 19 -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 91,981 4,049 26,069 -26,099 96,000
As of 1 January 2021 75,944 56,633 62,637 -98,027 97,188
Profit (loss) after taxes -80,244 20,229 -60,014
Other comprehensive income (loss) 1,593 1,593
Total comprehensive income (loss) - -80,244 - 21,822 -58,422
Share issues 19 14,820 74,099 88,919
Share issues, options to employees 19 916 1,796 2,712
Share issue costs 19 -4,951 -4,951
Share-based remuneration 19 8,805 8,805
As of 31 December 2021 91,681 47,335 71,442 -76,205 134,253
The consolidated financial statements should be read in conjunction with the accompanying notes.
29
ANNUAL REPORT 2022
NOTES TO THE FINANCIAL
STATEMENTS - GROUP
NOTE 1 – GENERAL INFORMATION
and domiciled in
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 smart card,
government ID, access control and notebook markets.
NEXT ASA’s shares are listed on the Oslo Stock Exchange.
The purpose of the company as stated in the articles of association is to conduct research, development
and commercialization of security products, as well as other activities that will naturally fall under this.
The financial statements have been approved for issuance by the Board of Directors on 19 April 2023
and is subject to approval by the Annual General Meeting on 12 May 2023.
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FINANCIAL
STATEMENTS -
PARENT COMPANY
55
ANNUAL REPORT 2022
PARENT COMPANY - STATEMENT OF COMPREHENSIVE INCOME - 1 JANUARY - 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
Operating revenues 2 9,324 8,253
Other revenues 2 179 65
Total revenues 9,503 8,318
Payroll expenses 3 -12,551 -11,532
Share based remuneration 3 -1,197 -10,166
Other operating expenses 4 -6,656 -6,527
Depreciation and amortization 7,8 -1,170 -1,139
Impairment losses 7,8 - -
Total operating expenses -21,574 -29,364
Operating profit (loss) -12,070 -21,046
Financial income 5 1,165 1,171
Financial expenses 5 -11 -250
Net currency gains (losses) 5 870 796
Net financial items 2,024 1,717
Profit (loss) before taxes -10,046 -19,329
Income tax expenses 6 - -
Profit (loss) after taxes -10,046 -19,329
Other comprehensive income (loss) - -
Total comprehensive income (loss) -10,046 -19,329
56
ANNUAL REPORT 2022
PARENT COMPANY - STATEMENT OF FINANCIAL POSITION - AS OF 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
Intangible assets 7 2,250 3,000
Property, plant and equipment 8,15 935 333
Shares in subsidiaries 9 215,870 173,870
Loans to group companies 10 8,532 18,021
Total non-current assets 227,588 195,223
Accounts receivables 11 - 307
Lease receivables 15 - 517
Other current assets 11,15 2,981 1,471
Cash 12 37,486 77,523
Total current assets 40,467 79,819
Total assets 268,054 275,042
EQUITY AND LIABILITIES
Share capital 13 91,981 91,681
Share premium 13 108,687 108,250
Other reserves 13 19,091 65,337
Retained earnings 13 40,060 -
Total equity 259,819 265,268
Non-current lease liability 15 403 -
Total non-current liabilities 403 -
Accounts payables 528 543
Current lease liabilities 15 461 1,225
Other current liabilities 14 6,843 8,006
Total current liabilities 7,832 9,774
Total equity and liabilities 268,054 275,042
Oslo, 19 April 2023
The board of directors of NEXT Biometrics Group ASA
Petter Fjellstad
Chairman
Odd-Harald Hauge
Board member
Peter Heuman
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
/Sign/ /Sign/
/Sign/
/Sign/
/Sign/
57
ANNUAL REPORT 2022
PARENT COMPANY - STATEMENT OF CASH FLOW - 1 JANUARY - 31 DECEMBER
(amounts in NOK 1,000) Notes 2022 2021
Profit (loss) before taxes -10,046 -19,329
Share based remuneration 13 3,860 5,958
Accrued share option social security cost 13 -2,663 4,207
Depreciation and amortization 7,8 1,170 1,139
Change in accounts receivables 307 15
Change in accounts payables -14 -1,138
Change in other working capital items and other -862 134
Net cash flow from operating activities -8,248 -9,013
Net financing of subsidiary 9,10 -31,860 -43,065
Proceeds from lease receivables 15 723 691
Net cash flow from investing activities -31,137 -42,374
Net proceeds from issue of shares 13 738 86,681
Payment of lease liabilities 15 -1,390 -1,100
Net cash flow from financing activities -652 85,581
Net change in cash flow -40,037 34,194
Cash balance as of 1 January 77,523 43,329
Effects of exchange rate changes on cash and cash equivalents 652 67
Cash balance as of 31 December 37,486 77,523
Comprising of:
Cash and cash equivalents 12 37,486 77,523
58
ANNUAL REPORT 2022
PARENT COMPANY - 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
Retained
earnings
Total
equity
As of 1 January 2022 91,681 108,250 65,337 - 265,268
Profit (loss) after taxes -10,046 -10,046
Other comprehensive income
(loss)
-
Total comprehensive income
(loss)
- - - -10,046 -10,046
Share issues 13
Share issues, options to
employees
13 300 438 738
Share issue costs 13 -
Share-based remuneration 3,860 3,860
Share-based remuneration,
reclassification
13 -50,106 50,106 -
As of 31 December 2022 91,981 108,687 19,091 40,060 259,819
As of 1 January 2021 75,944 56,633 62,637 - 195,215
Profit (loss) after taxes -19,329 -19,329
Other comprehensive income
(loss)
-
Total comprehensive income
(loss)
- -19,329 - - -19,329
Share issues 13 14,820 74,099 88,919
Share issues, options to
employees
13 916 1,796 2,712
Share issue costs 13 -4,951 -4,951
Share-based remuneration 13 2,700 2,700
As of 31 December 2021 91,681 108,250 65,337 - 265,268
59
ANNUAL REPORT 2022
NOTE 1 - GENERAL INFORMATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
NEXT Biometrics Group ASA is a holding company and contains the activities that are performed in
Norway including Group Management.
The financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the EU, being standards and interpretations issued by the International
Accounting Standards Board (“IASB”), in force at 31 December 2022.
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 2022, 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.
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 9.3 million in 2022 (2021: NOK 8.3 million).
Other revenues amounting to NOK 0.2 million represent rental income and sale of office equipment
relating to the company’s prior office location in Oslo.
NOTE 3 – PAYROLL EXPENSES
(amounts in NOK 1,000) 2022 2021
Salaries, fees -9,815 -9,543
Share based remuneration (salary part) -3,860 -5,958
Share based remuneration (employer's tax) 2,663 -4,207
Social security taxes -2,225 -1,615
Pension contribution -440 -432
Other personnel expenses -70 57
Total payroll expenses -13,748 -21,698
Average numbers of employees 5 3
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 2022, there were 5 employees in the parent company.
NOTES TO THE FINANCIAL
STATEMENTS - PARENT COMPANY
60
ANNUAL REPORT 2022
NOTE 4 – OTHER OPERATING EXPENSES
(amounts in NOK 1,000) 2022 2021
Fees to consultants, lawyers and others -4,142 -3,948
Travel expenses -297 -90
Other expenses -2,217 -2,489
Total other operating expenses -6,656 -6,527
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) 2022 2021
Audit fee -479 -353
Attestation -75 -
Tax services -74 -241
Non-audit services - -22
Total audit fees -629 -616
NOTE 5 – FINANCIAL ITEMS
(amounts in 1,000 NOK) 2022 2021
Interest income from group companies (see note 10) 574 527
Interest income on sub-leases (see note 15) 19 62
Interest income 572 581
Total financial income 1,165 1,171
Interest expenses -6 -57
Interest expenses right-to-use assets (see note 15) 38 -100
Other financial expenses (leases) -44 -93
Total financial expenses -11 -250
Realized currency gains (losses) 646 287
Change in unrealized currency gains (losses) 225 509
Net currency gains (losses) 870 796
Write-down on investments in subsidiaries (see note 9) - -
Net financial items 2,024 1,717
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ANNUAL REPORT 2022
NOTE 6 – INCOME TAXES
(amounts in NOK 1,000) 2022 2021
Current taxes - -
Change in deferred taxes - -
Total income tax expenses - -
Income tax expense reconciliation:
Profit (loss) before taxes -10,046 -19,329
Expected income tax expenses at Norwegian nominal tax rate (22%) -2,210 -4,252
Tax effect of permanent differences 850 224
Change in deferred tax assets not recognized 1,360 4,029
Actual income tax expenses - -
Effective tax rate 0% 0%
Deferred tax related to the following temporary differences:
(amounts in NOK 1,000) 2022 2021
Property, plant and equipment 935 332
Long term loans - -
Lease receivables - -39
Lease liabilities - -
Other temporary differences -2,801 -5,541
Tax losses carried forward -216,511 -206,986
Total temporary differences and tax losses carried forward -218,377 -212,234
Deferred tax assets -48,043 -46,691
Deferred tax assets not recognized 48,043 46,691
Deferred tax assets in the balance sheet - -
Tax losses carried forward has no limitations 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:
(amounts in NOK 1,000) 2022 2021
Deferred tax assets - -
Deferred tax assets - -
Net deferred taxes as of 31 December - -
The following table illustrates the basis for calculation of current tax:
(amounts in NOK 1,000) 2022 2021
Profit (loss) before taxes -10,046 -19,329
Permanent differences 3,864 1,017
Change in temporary differences -3,343 3,547
Basis for current taxes -9,525 -14,765
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ANNUAL REPORT 2022
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.
(amounts in NOK 1,000) 2022 2021
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 -4,459 -3,709
Amortization -750 -750
Accumulated amortization and impairment losses of disposed items - -
Translation differences - -
Accumulated amortization and impairment losses as of 31 December -5,209 -4,459
Carrying amount as of 31 December 2,250 3,000
Amortization period in years (straight line) 12 12
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.
NOTE 8 – PROPERTY, PLANT AND EQUIPMENT
(amounts in NOK 1,000) 2022 2021
Office furniture
and equipment
RoU-
assets Total
Office furniture
and equipment
RoU-
assets Total
Accumulated cost as of 1 January 532 817 1,349 532 801 1,333
Additions - 1,020 1,020 - 16 16
Disposals at cost -532 -817 -1,349 - - -
Accumulated cost as of 31 December - 1,021 1,021 532 817 1,349
Accumulated depreciation and impairment
losses as of 1 January
-532 -485 -1,017 -532 -96 -628
Depreciation - -417 -417 - -389 -389
Impairment losses - 0 - - -
Accumulated depreciation and impairment
losses of disposed items
532 817 1,349 - - -
Accumulated depreciation and
impairment losses as of 31 December
- -85 -85 -532 -485 -1,017
Carrying amount as of 31 December - 935 935 - 332 332
Depreciation period in years (straight line) 3 2-4 3 2-4
Right-of-use assets (RoU-assets) represent office leases. Additions in 2022 for right-of-use assets (RoU-
assets) were related to renewal of the existing office lease in Oslo. The lease term for the new office lease
is 2 years. See also note 15 for further information regarding leases.
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ANNUAL REPORT 2022
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.
(amounts in NOK 1,000) Office
"Owned directly
by
Parent
company"
Ownership /
voting interest
in % 2022
Ownership /
voting interest
in % 2021
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%
NEXT Biometrics s.r.o Prague, Czech Republic 100%
Next Biometrics s.r.o was liquidated early 2022.
The table below shows the carrying amount of shares in subsidiaries for the Parent company as of
31 December:
(amounts in NOK 1,000) 2022 2021
NEXT Biometrics AS 215,870 173,870
Total shares in subsidiaries 215,870 173,870
The change in carrying amount from 31 December 2021 to 31 December 2022, is related to capital
increases of NOK 42 million.
The individual share in subsidiary 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 2022. The closing stock price
was NOK 4,495 per share, which corresponds to a total market value of NOK 413.5 million. The market
value of the company was higher than book value of equity of the parent company as per 31 December
2022, and management assessed that there was no indication of impairment.
NOTE 10 – LOANS TO GROUP COMPANIES
(amounts in NOK 1,000) 2022 2021
Loan to NEXT Biometrics Taiwan Ltd. 8,532 13,669
Loan to NEXT Biometrics AS - 4,351
Total loans group companies as of 31 December 8,532 18,021
The loan to NEXT Biometrics Taiwan Ltd. was charged with NIBOR 6 months + 1.0%. Interest for 2022
amounted to NOK 0.4 million (2021: NOK 0.3 million).
The parent company also had a short-term loan to NEXT Biometrics AS as per 31 December 2021.
Interest was charged with NIBOR 6 months + 2.0%. Interest for 2022 amounted to NOK 0.2 million
(2021: NOK 0.2 million). The loan was repaid in November 2022.
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ANNUAL REPORT 2022
NOTE 11 – ACCOUNTS RECEIVABLES AND
OTHER ASSETS
(amounts in NOK 1,000) 2022 2021
Accounts receivables - gross - 307
Total accounts receivables - 307
Lease receivables (see note 15) - 517
Total lease receivables - 517
Receivables NEXT Biometrics AS 141 63
Prepayments 397 470
Deposits 692 676
Other receivables 1,751 262
Total other current assets 2,981 1,471
The company had NOK 2.9 million in other current assets as per 31 December 2022, of which NOK 1.7
million is classified as other receivables that mainly relates to estimated refunds of public duties.
NOTE 12 - CASH
(amounts in NOK 1,000) 2022 2021
Cash - unrestricted 36,865 76,814
Cash - employees withheld payroll tax deposits 621 708
Total cash 37,486 77,523
65
ANNUAL REPORT 2022
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.
Number of shares outstanding 2022 2021
Opening balance 91,680,763 75,944,489
Share issue(s) 14,819,897
Exercised incentive share options 300,000 916,377
Closing balance 91,980,763 91,680,763
For further information regarding share capital, shareholder’s information and share-based options,
please refer to note 19 in group consolidated financial statement.
NOTE 14 – OTHER LIABILITIES
(amounts in 1,000 NOK) 2022 2021
Accrued salary, vacation pay and board remuneration 1,598 1,418
Public duties payable 3,327 1,690
Share options social security tax 1,614 4,277
Unearned revenue - 59
Other current liabilities 304 562
Total other current liabilities 6,843 8,006
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.
66
ANNUAL REPORT 2022
NOTE 15 – LEASES
The table below shows the amounts related to leases recognized in the statement of financial position:
(amounts in NOK 1,000) 2022 2021
Property - office leases (included in "Property, plant and equipment") 935 332
Total right-of-use assets 935 332
Current lease receivables (included in "Other current assets") - 517
Total lease receivables - 517
Non-current lease liabilities (included in "Other non-current liabilities") 403 -
Current lease liabilities (included in "Other current liabilities") 461 1,225
Total lease liabilities 863 1,225
See note 8 for more information regarding right-of-use assets.
The office lease in Norway related to the company’s previous office was subleased from October 2020.
Related lease receivable for the sublease was NOK 0.5 million as per 31 December 2021. The sublease
was terminated in December 2022.
The table below shows the amounts related to leases recognized in the statement of comprehensive
income:
(amounts in NOK 1,000) 2022 2021
Gain on sub-lease (included in "Other revenues") - -
Depreciation property right-of-use assets (included in "Depreciation and amortization") -417 -389
Impairment losses property right-of-use assets (included in "Impairment losses") - -
Expenses relating to low-value leases (included in "Other operating expenses") - -
Expenses relating to short-term leases (included in "Other operating expenses") - -
Interest income (included in "Financial income") 19 62
Interest expenses (included in "Financial expenses") 38 -100
Net expenses related to leases -359 -427
The table below shows a reconciliation of the opening and closing balance for lease liabilities arising
from financing activities:
(amounts in NOK 1,000) 2022 2021
Opening balance 1,225 2,144
Changes from financing cash flows -1,390 -1,100
Changes in lease liabilities due to new/amended lease agreements or CPI adjustments 992 93
Other changes 37 88
Closing balance as of 31 December 863 1,225
The total cash outflow for leases in 2022 was NOK 1.4 million (2021: NOK 1.1 million).
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ANNUAL REPORT 2022
The table below shows the maturity profile for the lease liabilities based on contractual undiscounted
payments:
(amounts in NOK 1,000) 2022 2021
Within one year 495 1,225
More than 1 year but within 5 years 330 -
Total contractual cash flows related to leases 825 1,225
NOTE 16 – RELATED PARTY TRANSACTIONS
The parent company’s significant shareholders, board members and management, are considered
related parties. For overview of transactions with them, please refer to note 22 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 2022 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 2022
or the value of the Group or the parent company’s assets and liabilities as of 31 December 2022.
68
ANNUAL REPORT 2022
RESPONSIBILITY
STATEMENT
We confirm that, to the best of our knowledge, the financial statements for the period from 1 January
to 31 December 2022 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, 19 April 2023
The board of directors of NEXT Biometrics Group ASA
Petter Fjellstad
Chairman
/Sign/ /Sign/
/Sign/
/Sign/
/Sign/
Odd-Harald Hauge
Board member
Peter Heuman
CEO
Emine Lundkvist
Board member
Siri Børsum
Board member
69
ANNUAL REPORT 2022
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 2022, 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 a summary of significant
accounting policies, and
• the consolidated financial statements of Next Biometrics Group ASA and its subsidiaries (the
Group), which comprise the statement of financial position as of 31 December 2022, 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 a summary of
significant accounting policies.
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 2022, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting 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 2022, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting 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 4 years from the election by the general meeting of the
shareholders on 21 May 2019 for the accounting year 2019.
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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. We have not identified
regulatory changes, transactions or other events that qualified as new key audit matters. 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 2022 audit.
Key Audit Matters
How our audit addressed the Key Audit
Matter
Revenue recognition
The Group develops and sells fingerprint
sensors for authentication in the smartcard,
government ID, access control and notebook
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 agent 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 2 where Management describes
their principle for revenue recognition.
Our audit procedures included, among others, a
review of customer contracts and distribution
contracts, and an assessment of contract terms
and business set up to understand how they
relate to IFRS requirements 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
transferred from the Group.
To test whether revenue was recognised in the
correct period, we tested transactions in the
period close to year end. For recognised
revenue 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 Management’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 matter, invoiced sales to the
largest customers representing 91% of total
revenue in 2022, was 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.
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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 appear 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.
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 International Financial Reporting 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 skepticism 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
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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.
• 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, related
safeguards.
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.
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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 Annual report 2022-12-31.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, 19 April 2023
PricewaterhouseCoopers AS
Anne Kristin Huuse
State Authorised Public Accountant
(This document is signed electronically)
ALTERNATIVE
PERFORMANCE MEASURES
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.
(amounts in NOK 1,000)
2022 2021
Operating revenues 46,508 49,788
Other revenues 1,784 967
Cost of goods sold -33,593 -34,431
Inventory write-downs 52 -6,251
Gross margin 14,752 10,073
Gross margin 14,752 10,073
Divided by operating revenue and other revenues 48,293 50,755
Gross margin (%) 31% 20%
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.
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ANNUAL REPORT 2022
(amounts in NOK 1,000)
2022 2021
Operating revenues 46,508 49,788
Other revenues 1,784 967
Cost of goods sold -33,593 -34,431
Inventory write-downs 52 -6,251
Added back inventory write-downs -52 6,251
Adjusted gross margin 14,700 16,324
Adjusted gross margin 14,700 16,324
Divided by operating revenue and other revenues 48,293 50,755
Adjusted gross margin (%) 30% 32%
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.
(amounts in NOK 1,000)
2022 2021
Operating profit (loss) -48,070 -58,250
Added back depreciation and amortization 7,229 7,069
Added back impairment losses - -
EBITDA -40,840 -51,182
Added back share-based remuneration (salary part) 4,728 8,471
Added back share-based remuneration (employer's tax) -2,663 4,495
Added back share-based remuneration (operating part) 5 -36
Added back inventory write-downs -52 6,251
Adjusted EBITDA -38,822 -32,001
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.
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ANNUAL REPORT 2022
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.
(amounts in NOK 1,000)
2022 2021
Operating expenses (OPEX) 55,592 61,255
Deducted share-based remuneration (salary part) -4,728 -8,471
Deducted share-based remuneration (employer's tax) 2,663 -4,495
Deducted share-based remuneration (operating part) -5 36
Operating expenses ex. options (OPEX ex. options) 53,522 48,326
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ANNUAL REPORT 2022
