Annual Report2022

www.ovzon.com

CONTENTS

This is Ovzon
Ovzon’s unique solution
Ovzon in brief
Ovzon’s history
Ovzon 2022
Comments from the CEO
Strategy and targets
Operations and service
Applications and customers
The European market
Ovzon 3MarketStrengths and competitive advantages
Sustainability
Customer case: Opicon Legal
Risks

The share
4
5
6
7
8
10
12
20
22
25
29
33
35
40
43

Share and shareholder information

47

Corporate governanceCorporate governance report
Auditor’s statement on thecorporate governance report
Board of Directors,
Auditor and Group Management

49
53
54

Financial information
Administration Report
Financial statements
Notes
Auditor’s Report
Alternative performance measures

60
64
71
86
91

Information and contacts
Information for shareholders
Contact information

92
92

While every care has been taken in the translation of this report, readers are reminded that the official report,signed by the Board of Directors, is in Swedish and prepared in the European single electronic format (Esef),published at www.ovzon.com.

Connecting the world’s
critical missions
via satellite
Performance
Mobility
Resiliency

Ovzon Annual Report 2022

3

Ovzon’s unique solution
2

1

Mobile satellite terminals

Space segment
Manages a global fleet of satellites
and bandwidth with unique performanceand functionality on proprietarysatellites and leased capacity

Extensive experience indevelopment, design, production
and delivery of mobile
satellite terminals

3

Secure terrestrial stations
and connection to theterrestrial network
Access to a network of
secure terrestrial stations

Ovzon SATCOM-as-a-Service
4

Global service and support
Dedicated network and performance management
24/7, as well as service and support

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OVZON IN BRIEF

Ovzon offers world-class mobile satellite-based mobile
communications services, SATCOM-as-a-Service,
to global customers with critical missions
Ovzon offers SATCOM-as-a-Service over leased satellite capacity to customers around the world. Using the company’s satellite
technology and portable terminals, proprietary developed in-house, mobile users can connect quickly anywhere and transmit
large amounts of data in a short period of time. Ovzon’s SATCOM-as-a-Service manages the growing demand for global
connections from customers with stringent requirements for performance, resiliency and security, such as defense forces,
government agencies, rescue services, NGOs, and the media. The company’s skilled, committed and experienced teams
ensure that these advanced services are delivered to demanding customers. Founded in 2006, Ovzon has offices in
Stockholm, Sweden as well as Herndon, VA and Tampa, FL in the US. Ovzon is listed on Nasdaq Stockholm Mid Cap.

VisionBusiness idea

Operational targets

Customer segments

Key trends

Connecting the world’s
critical missions via
satellite.

The Group provides aunique satellite-based
communication
service for demanding
customers who have aneed for sending andreceiving at high data
rates from small
portable or mobile
satellite terminals.

The company’s
targets are to pursue
profitable growth andto continue growing
and expanding its
current service offering
while preparing forthe launch of its firstsatellite, developed to
Ovzon’s specification.

• Defense

Increased demand for:• Government
agencies• Integrated solutions• Rescue services• Mobility

Sales, MSEK
357

• Bandwidth209• NGOs• Media

201

208

231
160

191

112

2015

2016

2017 2018 2019 2020 2021 2022

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OVZON’S HISTORY

2022

2020

2015

Start of deliveries to the Italian Fire andRescue Services.

Partnership agreement with Airbus, and new
distributors in Benelux, Colombia, Peru andFrance.

A second satellite design produced.

Launch of Ovzon 3 postponed.
Renewed order totaling USD 17.9 million fromthe US Department of Defense (U.S. DOD)
pertaining to SATCOM-as-a-Service.
Renewed order totaling USD 1.1 million fromthe UK Ministry of Defence, and a new orderof USD 2.9 million from UK partner GRC.
Signed new French partner, Nigma, and new
Swedish partner, SSC.
Increased growth through high levels of sales
activity, product demonstrations, and tests
with new and existing customers.

2021

Launch of the Ovzon T6 terminal.
Capital raised totaling approximately SEK 590
million in three stages.
Contract with Intelsat for capacity on IS-39
and IS-37. Substantially expanded capacityand geographic reach.

2019
Signed agreement with Arianespace regarding
launch of proprietary satellite.
Financing secured for Ovzon 3.
Agreement signed with Maxar for productionof the proprietary satellite Ovzon 3.

Listing on Nasdaq Stockholm Mid Cap.
Names Syntronic as a new partner for
managing production and logistics forterminals.
Significant expansion of service orders fromthe US Department of Defense totaling USD
22.3 million (14.6).
Directed share issue of approximately SEK
238 million.
Order of USD 9.8 million from the Italian
distributor Gomedia Satcom.

2018
Version 3 (current) of satellite design
produced.
Ovzon listed on Nasdaq First North PremierGrowth Market.

2017
Development of Ovzon-designed On-Board
Processor (OBP) commenced.

2014
First phase of Ovzon’s satellite-based mobile
communications services launched.
Initial order from the US Department of
Defense (U.S. DOD).

2013
The Ovzon T5 mobile satellite terminal
developed.

2010
Application for the first patents submitted.
Development of the Tactical Variant (TV)terminal, the prototype for Ovzon T5.

2009
First frequency license, 59.7° E on Cyprus,
received. First satellite design produced.

2006
What would become Ovzon was founded as
OverHorizon Plc. in Nicosia, Cyprus.

Additional orders from US Department of
Defense, the UK Ministry of Defence, SAAB,
the UN, and the Colombian government.

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OVZON 2022

Important events in 2022

Q4

Q3

Q2

Q1

• Noora Jayasekara appointed CFO
starting November 1, 2022.

• Renewed order of USD 1.1 million
for SATCOM-as-a-Service from the
UK Ministry of Defence.

• Start of delivery of SATCOMas-a-Service to the Italian Fireand Rescue Services.

• Announcement that the launch of
Ovzon 3 has been delayed and now
planned for late 2022.

• Announcement regarding the launchof Ovzon 3 between December 2022
and February 2023.

• Renewed order of USD 1.8 million
for SATCOM-as-a-Service fromthe U.S. DOD.

• Order of USD 2.9 million for themarket leading SATCOM-as-a-Service
from Global RadioData Communications Ltd (GRC) in the UK.
• Order of USD 16 million from U.S.
DOD for Ovzon SATCOM-as-a-Service
starting December 15, 2022.
• Order of USD 1 million for Ovzon
SATCOM-as-a-Service from new
French partner Nigma.
• Order of SEK 10 million for Ovzon
SATCOM-as-a-Service from SSC,
with delivery in H1 2023.

Events after the end of the period• Completed directed share issue of SEK 200 million and ensured additional financing
through loans to finance the change in launch partner and delay.
• Notice to attend an Extra General Meeting on March 3, 2023.
• The announcement that additional provisions of SEK 34 million for bad debt had
been charged to earnings for 2022.

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COMMENTS FROM THE CEO

Strong growth and continued
market expansion
In 2021, Ovzon embarked on a strategy to drive a step-change in profitable growth, and in 2022 it began
having a palpable effect. Ovzon’s revenue rose, and the company expanded its customer base, primarilyin Europe. New contracts were signed with deliveries to leading government agencies and government
supporting organization.
Our achievements are built on a strong focus on quality andperformance as well as the capacity to sell, deliver, and support
our customers in the contracts we sign. We are exceptionallycompetent as regards rapidly adapting our services anddelivering products of the highest quality. In 2022, we not
only continued to renew important contracts with our current
key customers – primarily the U.S. DOD and UK Ministry of
Defence – but we also saw that our initiatives and investments in Europe were yielding results with new customers
and orders in the UK, France, and Sweden. After year-end,
we also signed a contract with the Spanish National Police.
Demand for Ovzon’s SATCOM-as-a-Service is robust, but it
is clear that it takes time to successfully conclude the larger
strategic contracts involving national government agencies
and procurements. However, these commitments and orders
are definitely worth the effort and time invested, which is
confirmed by current customers renewing their contracts.

Our revenue for 2022 totaled SEK 357 million, corresponding
to growth of 58 percent adjusted for currency effects.
Operating loss for the full year totaled SEK -81 million, of
which provisions of approximately SEK 50 million negatively
impacted earnings. We are seeing gradual improvements
to profitability in our business due to increased capacity
utilization. Excluding provisions for bad debt, we achieved
positive operating earnings in the fourth quarter.

Updated timetable for Ovzon 3
We are also continuing to invest in our proprietary satellite,
Ovzon 3, whose unique patented technology in combination
with Ovzon’s On-Board Processor and the new Ovzon T7
mobile satellite terminal entails a further boost in termsof fast, reliable and resilient mobile communications. Our
integrated solution – Ovzon SATCOM-as-a-Service – is truly
the next generation of satellite-based communication thattakes performance and resiliency to new levels.

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COMMENTS FROM THE CEO

At the same time as we achieved major improvements in
2022, we also faced challenges in completing our firstproprietary satellite and launching it to its orbital position.
Our team worked around the clock but the manufacturer ofour satellite, Maxar Technologies, unfortunately experienced
further delays. This in turn meant that we were unable tokeep to the timetable (December 2022–February 2023) we
had set with Arianespace, our contractual launch partner.
We were therefore compelled to find a new launch partner,
SpaceX, for the launch of Ovzon 3 in the period from July to
September, 2023. The delay and change of launch partner
meant additional costs of USD 25 million, which we refinanced through our creditor, P Capital Partners, and througha directed share issue from our long-term and committed
shareholders. Along with our suppliers and partners, we will
do our utmost to get Ovzon 3 into orbit in 2023.

Provisions for bad debt
After year-end, it became increasingly clear to Ovzon thatthe financial situation of Gomedia, the company’s Italian
distributor, was vulnerable. In the autumn of 2022, Gomedia
began falling behind on its payments. Regardless of thepayment plan we had agreed on and a signed pledge ofassets, provisions for bad debt of SEK 6 million were thus
set aside in our third-quarter report and SEK 44 million in the
fourth quarter.
This situation illustrates Ovzon’s past and, to a certain extent,
continued dependence on a few large customers. Thisentails a potential risk despite the success of the company’s
strategy for reaching a broader customer base in 2022.

society of today are dependent on connectivity.
Delivering this requires linking up different methods of communication. Satellite-based communication is an integral part ofcommunication technology, and links all of the world’s services
to a large number of industries, companies, governments,
and individuals. At Ovzon, we are proud to support not only
critical military and civil defense assignments, but also humanitarian efforts and rescue services such as those in the Ischia
landslide in Italy, and as support for efforts in conjunction
with the devastating earthquakes in Türkiye and Syria.
Due to our insightful and experienced choice of technology,
our products, services, and solutions are uniquely positioned
to serve all countries, organizations, and businesses on
mission critical assignments that require the highest level ofsatellite-based communication performance in areas where
infrastructure is weak, insufficient, or non-existent. It is also
the primary fall-back alternative to more traditional communication systems.
Currently, Ovzon is the only solution provider in the world
capable of delivering a unique satellite-based communication service (Ovzon SATCOM-as-a-Service) that includes

TSEK

Despite the provisions made for bad debt in 2022, we donot see any increased need for new capital. The world andLast but not least, through our proximity to the end-customers,
our partnership strategy, and our own efforts, we willcontinue to broaden our base of quality customers wherereliable, rapid, high-performance satellite communications isessential and crucial.
The world is undergoing a paradigm shift where SATCOM is
no longer just a “nice to have” – it is a substantial part of an
integrated communication system. That perfectly fits Ovzon’s
vision – Connecting the world’s critical missions via satellite.

Per Norén, CEO Ovzon

2022

2021

Revenue

365,993

191,378

Operating loss

-81,064-113,383

neg

neg-36,185-83,854

-0.71

-1.78

Operating margin, %Well positioned for 2023

high-bandwidth networks, mobile satellite terminals, tested
and secure internet connections, and global support andservices around the clock, 365 days a year. Using ourunique technology and integrated solutions, we securely
deliver the highest data transfer speeds through the smallest
mobile satellite terminals in the market. In addition, we
have skilled and experienced employees, and we recently
strengthened our organization further with new key recruitments.

Loss after tax
Earnings per share

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STRATEGY AND TARGETS

During the year, Ovzon has further narrowed and focused its
strategic planning for the coming years. The company’s strategic
targets can be divided into four parts:

Long-term
VisionCritical
success
factors

Targets

Measuresvision
2–5 years
Strategic plan
1–3 years
Planned measures
Operational
implementation

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STRATEGY AND TARGETS

1.

2.

3.

4.

Operational implementation

Planned measures, 1–3 years

Strategic plan, 2–5 years

Long-term vision

Service based on leased satellite capacity
Ovzon’s existing service was launched in2014 and is based on leased capacity from anumber of external mobile satellite terminals
in combination with Ovzon’s proprietaryterminal technology and integrated service
offerings. The focus in 2022 was on increased
and closer customer dialogue, delivering oncontracts won, and preparing for the launch of
Ovzon 3 as well as a step change in profitable
growth in such areas as industrialization,customer support, product development andglobal presence.

In 2023, the company will continue the activities that were begun in 2022. The company’s
first proprietary satellite, Ovzon 3, will considerably increase performance in the company’s
integrated service offering, making the use ofeven smaller mobile satellite terminals – andentirely new functionalities – possible. Ovzon 3
will also expand coverage areas and available
bandwidth. Interest in the new functionality
is significant. In the next few years, thecompany will focus on sales and marketing
activities that target customers to achieve
rapid capacity utilization of the satellite, as
well as on broadening functionality to target
new target groups. SATCOM-as-a-Service
is the core of the company’s offering, which
will generate recurring revenue and scalable
growth. The company will continue to focus on
own sales, as well as on an expanded networkof partners for sales and support. Communication with increased resiliency, mobility, andspeed are clear trends in Ovzon’s favor, andthe company’s offering should be even moreclearly positioned as a premium service forcustomers where the unique characteristics ofthe service make a big difference.

Service based on own satellite capacity
Ovzon’s strategic goal is to offer broadband
via satellite to mobile satellite terminals, using
proprietary satellite and terminal technology,
in a service offering with considerably higher
performance than what is currently available,
all in combination with the flexibility that leased
capacity contributes. The company’s five-yearplan goes hand in hand with the measurespreviously described, and can be grouped into
four building blocks:

Connecting the world’s critical missions via
satellite – A fleet of Ovzon-owned satellites
Ovzon’s long-term vision is to have several of
its own satellites that facilitate global coveragewith proprietary satellite technology that makes
Ovzon a leading provider of satellite-based
mobile communication.

• Mobile satellite terminals• Global network• Gateways and networks• Customer support, delivery, and service

Ovzon’s plan is a rapid step by step expansion, and the company already has orbital
positions that ensure future global coverage.
The company currently has ten orbital
positions registered with the International
Telecommunication Union (ITU).
Ovzon provides the smallest mobile satellite
terminals for satellitebased communication in
the market – a position the company intends
to preserve and strengthen. A fleet of Ovzonowned satellites equipped with the company’s
technology forms a solid base for this.

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OPERATIONS AND THE SERVICE

How satellite-based communication works
A satellite orbits the Earth in a circular or elliptical path – typically at a height of between 160 and 35,800 kilometers. Satellitebased communication requires a free line of sight between the satellite and a station or terminal on Earth. The satellite’s viewof Earth and, accordingly, the area that can be served by it, varies according to the altitude of the satellite’s orbit and position.
There are three primary altitudes where communication satellites are placed: LEO, GEO, and MEO.

Communication is conducted via radio frequencies
Satellites transmit information to receivers on Earth by way ofradio waves, which means that high-quality communication
can be made available to remote areas in the world without
requiring large investments in terrestrial equipment. The
frequency of the radio waves is significant for a number ofproperties that are important in satellite-based communication:

The most common frequency bands used by GEO communication satellites are:• Frequency bands with a higher frequency typically havegreater available bandwidth, which in theory entails higher
data rates and higher total capacity.

2. C band (4–6 GHz): Generally used for TV broadcasting,data and voice communication, especially in areas of heavy
precipitation.

• On the other hand, higher frequencies are affected anddampened more by atmospheric effects and weather
conditions.

3. L band (1.5–1.6 GHz): The L band is for example used
for satellite phone services. The relatively narrow spectrum
severely limits the total data rate.

1. Ku and Ka bands (10–31 GHz): The bands are typicallyused for TV broadcasting, VSAT networks, and maritime andaeronautical services. The Ku band is the band used for
Ovzon’s services.

Historically, the satellite-based communication market has
been divided into two segments: Fixed Satellite Service(FSS) and Mobile Satellite Service (MSS). These boundaries
are not as clearly defined as they once were, as increased
investments in new satellites with steerable beams andsmall mobile terminals blur the dividing lines, a trend that is
expected to continue.

4. X band (8–12 MHz): Mainly used for defense applications.

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OPERATIONS AND SERVICE

LEO
Low Earth Orbit, up
to 2,000 km from Earth

MEO
Medium Earth Orbit,
2,000–36,000 km
from Earth

GEO
Geostationary Earth Orbit, 36,000 km from Earth. The orbit is in the
Earth’s equatorial plane and the satellite’s orbital period matches the
Earth’s rotation. Accordingly, a GEO satellite appears to be fixed in the sky
when viewed from Earth. The satellite’s view of the Earth corresponds toapproximately one third of the planet’s surface, and the entire Earth canthus be covered with only four satellites. For this reason, GEO satellites
are used for more than 90 percent of all satellite telecommunication.
Ovzon’s service currently uses GEO satellites and the company’s planned
proprietary satellite will be located in a geostationary orbit.

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OPERATIONS AND THE SERVICE

Unique services for satellite-based
mobile communication with global reachOvzon’s SATCOM-as-a-Service offering delivers unique capacity and performance to customers worldwide.
Ovzon’s solutions are unique in that they can manage large amounts of data and extremely transmissionintensive applications. The company’s SATCOM-as-a-Service offering of satellite-based mobile broadband
services was launched in 2014. The offering has been well received and Ovzon’s revenues increased fromSEK 53.3 million in 2014 to SEK 357.0 million in 2022.
Ovzon’s unique SATCOM-as-a-Service offering makes it
possible for users to obtain the highest data rates with thesmallest mobile satellite terminals. The service builds on
capacity that is leased from existing satellites and satellite
operators. The service is sold as an end-to-end solution andincludes terminals, satellite capacity, network management,
service and support.

The smallest terminals and highest data rates
Ovzon’s offering combines secure, high-bandwidth satellitebased communication services with the smallest, most mobile
terminals on the market. The user terminals, with antenna sizes
starting at 15 cm, can be used when the user is stationary(On-the-Pause) or mobile. (On-the-Move). The terminals areeasy to carry in the accompanying bags, or can be placed inmoving vehicles such as UAVs, helicopters, marine vessels
or land vehicles. Ovzon’s mobile services currently have thehighest up- and download data rates in the market; they cansend up to 70 Mbps and receive up to 120 Mbps.

Simple, secure use
Ovzon’s terminals have been developed for ease-of-use andprovide the user with quick connections (<60 seconds).
Sending data with Ovzon’s services means secure communication for government authorities, defense customers, rescue
services and media customers around the globe. Ovzon has
been ISO 9001 certified since 2021. Ovzon’s certified quality
management system strengthens the company’s positionand capacity for meeting its customers’ needs and expectations for secure and reliable satellite-based communication.
Customer support is provided around the clock, seven daysa week, via the company’s network operations center (NOC)in Tampa, Florida.

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OPERATIONS AND THE SERVICE

Data transmission rates with Ovzon T6
or Ovzon’s “On-the-Move” terminals

Up to 10 Mbps
Up to 20 Mbps w/ steerable beams
Up to 40 Mbps w/ steerable beams
Up to 60 Mbps w/ steerable beams

Disclaimer: Service depends on availability

Best performance in all environments
The service has been designed to function in the mostremote and challenging geographical locations aroundthe world. The technology has been proven in Arctic cold,
extreme heat and under tropical conditions, regardless of
atmospheric conditions.

Global coverage
Ovzon’s services currently use satellites that cover the
US and Latin America, Asia, Europe and Africa. In Europe
and Africa, there are gateways that are the backbone ofsatellite connections. Over the years, Ovzon has built up
lengthy strategic relationships with a large number of global
satellite operators. The company has a long-term agreementwith Intelsat that grants exclusive access to three powerfulsteerable beams. Ovzon also has agreements with a numberof other operators, which facilitates both short- and long-term
access to satellite capacity and networks globally. Ovzon

can thus now offer satellite capacity over nearly the entire
globe. With the company’s proprietary Ovzon 3 satellite, its
coverage will be further expanded.
High rate of innovation and new launches
With extensive experience and knowledge of development
and integration of small satellite terminals, Ovzon is wellequipped for the challenge of developing the next generationof terminals and services, which are well suited for the satellites utilized by Ovzon. Over the last few years, Ovzon has
kept a high rate of innovation, with launches of new terminals
and services.

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OPERATIONS AND THE SERVICE

Services
In contrast to private market customers who primarily want to receive data, Ovzon’s customers
need to send large amounts of data in real time from, for example, sensors, high-resolution
cameras or mobile devices. Ovzon’s services are therefore uniquely developed to send at highdata rates from small mobile terminals.
The target groups consist primarily of government authorities and defense organizations, nongovernment organizations and operations that offer humanitarian assistance, border surveillance, disaster aid, and police, fire and rescue services as well as media and news monitoring.
At present, Ovzon’s services and satellite coverage encompass the US and Latin America,
Asia, Europe, Africa and Australia. Teleports with secure trunk connections are located inEurope and Africa. The services are provided, monitored and controlled via the company’s
Network Operations Center (NOC) in Tampa, Florida (US).
Ovzon HeroOvzon Hero is an advanced, customized high-performance service developed for the mostdemanding customers to perform the most critical missions. The service facilitates data rates
of up to 60 Mbps. These services are achieved using Ovzon’s “On-the-Pause” and “On-theMove” terminals, and are based on Ovzon’s global network and satellite capacity, including
steerable, high-performance coverage areas.
Ovzon GoOvzon Go is a unique satellite service that provides users with access to a flexible, high-bandwidth connection that is easy to use from the smallest terminals. The service is delivered with
Ovzon’s market-leading “On-the-Move” and “On-the-Pause” terminals. Ovzon Go is offered withdata rates of up to 10 Mbps, and the service is based on Ovzon’s regional satellite capacity.
Ovzon Plus
This service offers global accessibility using Ovzon’s global network of satellites. Ovzon Plus
offers data rates of up to 4/4 Mbps and can easily be upgraded to the Ovzon Go service asneeded. The service can be launched in less than 90 seconds.
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OPERATIONS AND THE SERVICE

Products
Ovzon T6 On-The-Pause
In the autumn of 2020, Ovzon launched its latest terminal: the T6. The Ovzon T6 – thesmallest of its type in the world – is designed for the most challenging situations and mostremote places. In 2021, Ovzon received a large number of orders pertaining to the Ovzon T6,
including from the US Department of Defense and the Italian Fire and Rescue Services.
Ovzon T7
Ovzon T7 is Ovzon’s next-generation mobile terminal. For more information, see page 18.
Ovzon Mini On-The-Move and Ovzon Medium On-The-Move
These robust high-performance satellite terminals are optimized for On-The-Move applications.
In combination with Ovzon’s satellite services, they offer mobility, a user-friendly experienceand high data speeds in the most demanding environments. They are ideal for vehicles,
aircraft, helicopters, and UAVs as well as marine vessels. At present, Ovzon purchases theseterminals from a third party and adapts them for Ovzon’s services.
Innovation and the next generation of Ovzon’s mobile satellite terminals
Ovzon’s SATCOM-as-a-Service, a globally unique satellite-based communication service thatenables the highest speeds through the smallest terminals, is built on the latest range ofinnovative, small, easy-to-use On-the-Pause and On-the-Move terminals. The company’s newsatellite, Ovzon 3, will not only significantly improve performance in these terminals but will also
facilitate the introduction of a new generation of even smaller terminals that approach the form
factors of smart phones more closely than traditional mobile satellite terminals do.
Ovzon’s objective is to always deliver the highest data transfer capacity in the smallest,lightest, most easy-to-use portable format. Megabit for megabit, kilo for kilo and centimeterfor centimeter, we are improving and developing our products.

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Ovzon T7– smaller, faster, more resilient
Ovzon T7 is Ovzon’s next-generation mobile satellite terminal
for satellite-based communication. The device is adapted
for use via Ovzon’s future own satellite, Ovzon 3, which will
carry Ovzon’s new on-board processor (OBP), developed
in-house. The combination of technology in the terminal, thesatellite (Ovzon 3) and OBP offers new and revolutionary
potential in terms of functionality, mobility, and transfer ofdata at high rates. Ovzon T7 contains a built-in modem
developed in-house to benefit fully from the advanced
functions in Ovzon’s OBP. Ovzon T7 is thus adapted tocustomer demands for rapid, reliable, and secure communication in the most challenging environments with low current
consumption.

Data security and mobility are becoming increasingly
important for Ovzon’s customers in rescue services as wellas civil and military defense. Ovzon T7 features functionalitythat can hide signals from the terminal, which makes theterminal invisible for other users in the vicinity. Ovzon T7
is small enough to fit into a backpack without needing aseparate pack for transportation, and facilitates fast, easy,
and immediate connections in all environments regardless of
weather conditions.
From a purely commercial and operational perspective,
Ovzon T7 fills a gap in the market and is positioned as a small
and mobile yet powerful terminal that is affordable. Ovzon T7
and Ovzon’s SATCOM-as-a-Service offering thus entail a newlevel of capacity and performance for customers that demanddata rates in Mbps rather than Kbps, enabling them toconduct operations where communication is entirely crucial.

Functions include:•E asy to use; biaxial adjustment only, not triaxial
adjustment like other terminals in the market• User interface for day/night use• Weight: only 2.8 kg• IP65• Size: 20.2×17.9×7.8 cm (7.95×7.1×3.1 in)•T olerates temperatures between -20 °C
and +55 °C

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”

Very simply put,cybersecurity concerns
identifying andminimizing risks

Mubashir Hussain,
Senior Director, Network
Architecture, Cybersecurity:
Ovzon works around the clock tosecure frameworks, strategy andimplementation of cybersecurity inevery part of its operation – frominnovation to product. Very simply
put, cybersecurity concerns identifying and minimizing risks, somethingthat is crucial for the type ofcustomer that our service helps.

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APPLICATIONS AND CUSTOMERSStrong confidence from the US Department of
Defense and continued expansion in Europe
During the year, Ovzon extended and expanded its long-term partnership with the US Department of Defense through more
contracts and more customers within the organization. The company has also signed new and smaller contracts in Europe andSouth America, and has continued to develop its unique SATCOM-as-a-Service offering.

Ovzon focuses on developing and marketing its services
to government agencies and defense, media and nongovernmental organizations (NGOs) as these customers are
deemed to have the greatest need for high bandwidth andhigh-mobility communication solutions. Sales and customer
contacts are made either through the company’s salesorganization or in partnership with distributors and resellers.
Several contracts in government and defense
Currently, Ovzon has contracts with the US Department of
Defense, either directly or through resellers. In 2022, thecompany once again renewed its contracts with the US
Department of Defense — a partnership that was initiatedback in 2013. During the year, new and renewed contracts
were secured and the order book at the end of the year

amounted to USD 20.7 million. These orders enable
the US Department of Defense to use Ovzon’s SATCOMas-a-Service – which includes our new and existing Ovzon
terminals – in even more locations globally, with increased
functionality and performance for both “On-the-Move” and“On-the-Pause”. Ovzon’s customers both depend and relyon the company’s services to be able to perform theirassignments and operate in remote places across the globe
where infrastructure is nonexistent or unreliable, and when
they absolutely need a guaranteed communication solution.
During the year, Ovzon also established itself as a supplierto the UK Ministry of Defence through a renewed order via its
new partner, Global RadioData Communications Ltd (GRC)in the UK. The partnership with GRV also encompasses
working up other European countries. Read more on page 23.

17,9million USD in order intake
from the US Departmentof Defense (U.S. DOD)

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20

APPLICATIONS AND CUSTOMERSIn the government and defense customer segment, there aremany areas of application for Ovzon’s services – applications
that markedly simplify and streamline the customer’s
operations and communication on the ground, in the air andat sea. There are areas of operation where Ovzon’s services
are exceptionally well suited. Monitoring borders both onland and at sea, for example, is a challenge for many
countries in conjunction with humanitarian crises that result
in large streams of refugees. Ovzon’s service can provide
completely new possibilities for video monitoring and data
communication in these situations. Also in situations where
UAVs are used, such as in connection with inspections andmonitoring of large land areas of forest, animals or otherassets, Ovzon’s service can improve efficiency and increase
security. The same applies in the event of natural catastrophes, when ordinary communication infrastructure is down or
non-functional.

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21

THE EUROPEAN MARKET

New partners in the UK,
France, and Sweden
In 2022, Ovzon markedly strengthened its position in the European market. Theinterest in Ovzon’s services has increased, as a result of factors such as thegeopolitical unrest that followed from the war in Ukraine. The increased interestis rooted in several different needs, for example, being able to establish secure,
rapid, and reliable communication where connections are insufficient or absent.

The need from aid organizations has been significant, andwhat is clearly evident is that many countries are once againinterested in reinforcing their civil and military defenses, aswell as rescue services of various types as a result of the
security policy situation.

In line with Ovzon’s growth strategy, new customers aretargeted both directly and through partners. Many of thesepartners already have established relationships with potential
customers. When Ovzon receives an order, it is therefore
normally signed via the partner. Toward the end of 2022,
Ovzon gained several new customers via a number of newpartners, all with significant future potential. These orders
were also secured in strategically important markets such as
the UK, France, and Sweden.

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22

Exciting partnership with GRC in the UK:
Previously, Ovzon won a number of orders for the UK
Ministry of Defence, and has thereby already establisheda good position in the UK. Additionally, a partnership with
the UK company Global RadioData Communications Ltd(GRC) was initiated in the autumn of 2022. At the sametime, an order for USD 2.9 million (around SEK 30 million)
was received pertaining to Ovzon’s SATCOM-as-a-Service.
GRC Ltd offers an integrated, full-scale satellite-based
communication service named 6-SAT. GRC’s products andservices are used by government agencies and defense
forces, rescue services, and commercial companies as wellas oil, gas, and mineral prospecting companies around theworld. Ovzon’s unique SATCOM-as-a-Service solution will
therefore be added to GRC’s 6-SAT service and productportfolio. According to GRC, Ovzon plays a leading role inmeeting increased demand for small, mobile, easy-to-use
terminals that function in high-performing networks.

First partnerships in France and Sweden
In late 2022, Ovzon also established a partnership with its
first French partner in the form of Nigma Conseil SAS. Nigma
Conseil provides world-class consulting services in communication solutions, security, business intelligence, and digital
security for customers who require guaranteed secure anduser-friendly satellite-based communication. The partnershipalso resulted in a new order worth SEK 10 million for
SATCOM-as-a-Service from Nigma Conseil. Like Ovzon,
Nigma focuses on customers and markets that demand thestrictest requirements for secure and innovative solutions to
support their critical missions.
A few days before year-end, an order was also signed with
the Swedish Space Corporation (SSC). The total value of theorder, pertaining to Ovzon’s SATCOM-as-a-Service solution,
was SEK 10 million. The initial contract pertains to a period
in the first half of 2023, when the service will begin to be
used. As a result of this contract, Ovzon is expanding its
partnership with SCC, which is acting as the main party
in the dialogue with customers among primarily Swedish
government agencies and essential organizations as well as
a partner for delivery of service. Both represent key parts inthe complete solution that has now been created to meet the
specific critical needs of these end customers.

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23

”

We no longer deliver“nice to have” – wedeliver “must have”

Gabriele Arrighetti,
International Sales Manager:
As demand for security and control is
growing so too is the need for highly
efficient satellite-based mobile
communication. Our customers demanda service that can guarantee thelevel of security they need, andadditionally give them full control
over the activity taking place on the
network. We no longer deliver “niceto have” – we deliver “must have”.

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OVZON 3

Ovzon 3 – the catalyst for aparadigm shift in satellite-based
communication
Since its founding, Ovzon’s objective has been to deliver the most advanced,
high-performance and resilient mobile satellite-based communication service to its
customers. In its continual, in-depth dialogue with customers and trusted advisers,
the company has combined these insights and requirements with its own insights,
experiences, and unique technology. This has led to the design and developmentof a new generation of satellites with integrated leading-edge technology. All this tobe able to deliver the fastest, most secure and best satellite-based communication
service – Ovzon SATCOM-as-a-Service – to Ovzon’s customers.

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25

OVZON 3

The launch of Ovzon’s first satellite, Ovzon 3, using a
Falcon-9 rocket is planned for between July and September
2023 and will be carried out by SpaceX. The launch of
Ovzon 3 is one of the most important milestones in thecompany’s history to date. The launch was previously
planned for the period between December 2022 andFebruary 2023, but due to delays in the production of thesatellite, the launch could not be carried out in this window.

also had an impact include the completion of a large numberof other satellites in the industry. This rescheduling will not
impact Ovzon’s current business, service, and support, ordeliveries to new or existing customers, since the company
had previously secured long-term satellite capacity for
Ovzon’s in-demand SATCOM-as-a-Service offering.
Ovzon’s customers continue to show significant interest
in and need for the use of Ovzon 3, which is designed
to deliver leading industry performance, resilience, andincreased mobility once the satellite has reached its final orbit.

The postponement is a consequence effects of COVID-19 as
well as of the shortage of key components. Other factors that

Leased regional satellite

Proprietary satellite

Control

Control over coverageand networks by owner

Increased control

Control over coverageand networks by Ovzon

Data rate

Up to 20 Mbps /40 Mbps
(up/down)

Up to 5x
fasterUp to 100 Mbps /200 Mbps
(up/down)

Mobility

Ovzon T6 terminal– laptop size

Smallerterminals

Ovzon T7 terminals

Newfunctionality

Ovzon’s current satellite-based communication services aredelivered through purchased capacity from other satellite
operators. Using the company’s unique technology, products,
and services for secure communication, Ovzon already has
an offering that yields significantly faster and more efficient
data transfer than its competitors. Ovzon 3 will facilitateeven higher data speeds, and moreover will provide a rangeof new functions as well as entirely new groundbreaking
advantages for Ovzon’s customers.

Functionality

Incl. single-hop directcommunication fromterminal to terminal

With proprietary satellites, Ovzon’s patented technology can be fully utilized.

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26

OVZON 3

Advantages of a proprietary satellite:
1. Increased control
With a proprietary satellite, Ovzon’s
customers can choose which portion of the
Earth’s surface their satellite-based communication will cover. This makes the service
better adapted to customers’ specific needs.
Ovzon’s design of the satellite for SATCOMas-a-Service means the technology, andthe satellite’s unique ability, are adapted toboth current and future customer needs.
Ovzon will be able to provide flexible andrapid steerability of the satellite’s coveragearea. Moreover, the regulatory conditions
for rapidly shifting and steering the satellite’s
coverage area have been taken into account.

2. Faster, more efficient service
Ovzon’s satellite-based communication
services are already significantly fasterand more efficient than its competitors’.
With Ovzon-owned satellites, data transfer,communication speeds, and efficiency
can increase in the SATCOM-as-a-Service
offering.

3. Smaller and lighter
mobile satellite terminals
Ovzon’s mobile satellite terminals, developed
in-house, are currently the smallest, lightest,
and most user-friendly on the market. Boththe first generation of mobile satellite terminal,
Ovzon T5, and the current industry-leading
terminal, Ovzon T6, are comparable in size
to a laptop. Ovzon 3 is designed with theend user in mind, and therefore contains
unique integrated technology for secure andefficient communication both via satellite
and on the ground. In 2022, the work
continued on developing the next mobile
satellite terminal, which will be even smaller
and lighter and will contain unique technology specifically adapted to the Ovzon 3
satellite. Ovzon will launch this new mobile
satellite terminal, Ovzon T7, in connection
with Ovzon 3 going online.

4. New revolutionary functionality
With Ovzon 3, the company introduces its
On Board Processor (OBP), developed
in-house, which functions as the central
hub of the satellite. The OBP will make itpossible to offer the following trailblazing
functionality:•T he use of Ovzon’s mobile satellite
terminals as temporary teleports/gateways, meaning the part of the communication chain that connects the signal to
the terrestrial network (e.g., the internet).
•T he facilitation of “single-hop communication,” which involves a user on the groundbeing able to communicate directly withanother user via the satellite.
Read more on page 28.

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27

Ovzon’s new
on-board processor
With the launch of Ovzon 3, Ovzon will be introducing the industry’s
first software-defined on-board processor (OBP).
which is the next generation of in-house developed andsoftware-defined data processor in space. It facilitates new
applications and unique functions that will allow Ovzon’s
customers to benefit fully from Ovzon’s SATCOM-as-aService solution.
The OBP architecture facilitates mesh networks andsingle-hop communication among Ovzon’s mobile satellite
terminals such as the forthcoming Ovzon T7. The architecture
is distributed across several steerable beams, with minimal
delay and full data rates on uplink and downlink. Customers
can thus maintain a simultaneous, direct, and secureconnection with a gateway and other users, regardless ofwhether they are located in the same or different coverage
areas on the ground.

Stability and reliability are keywords and properties thatcharacterize the design. Encrypted monitoring and control
links form the foundation of a secure, nominal network
setting while a fully autonomous state can be activated for
scenarios where no terrestrial connection other than theuser network is available or desired. The systems supports
features such as frequency-hopping to counteract jammingand use in environments without GPS coverage.
The OBP platform can be reconfigured and reprogrammed inorbit, which makes the Ovzon service future-proof, and newfunctions can be activated as customer needs develop over time.

Functions include:•S ingle-hop communication•C ross-connections and routing within
and between steerable coverage areas•E ncrypted control links•A utonomous state• Frequency-hopping

In addition, the next generation of satellite terminals – Ovzon
T7 – will come with a built-in modem (OBP compatible) tobenefit fully from the advanced functions in the Ovzon
on-board processor.

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28

MARKET

Continued robust market growthand significant investments
The global market for satellite-based communication continued to grow in 2022. The market continues
to be characterized by major investments in new technology and increased capacity, which is driving theindustry forward. The more advanced part of the market, which Ovzon addresses, is driven primarily by theneed not only for a high degree of mobility and high-speed data transfer but also by security and performance. The increased security policy concerns resulting from the war in Ukraine are also expected toincrease national expenditure for military preparedness, which includes satellite-based communication.

Ovzon operates in the field of satellite-based communication, which is the largest of the three fields that comprise
the global space economy. Sales in the part of the field ofsatellite-based communication that Ovzon addresses were
estimated at around USD 21 billion in 2022. In 2023, theaddressable market for Ovzon is expected to have USD
22.5 billion in sales, corresponding to 7 percent growth.
According to the industry organization NSR, the largest
amount of growth in coming years will occur in the field ofsatellite-based mobile communication.

Ovzon’s addressable market is divided into three segments,
which had the following estimated sales in 2023:• Government agencies and defense forces (USD 7.0 billion);• mobility services for land, air and marine transportation(USD 7.5 billion); and• industrial solutions for the media, aid organizations,transportation, mine operation, oil and gas, energy, andthe internet of things (USD 8.0 billion).
Ovzon believes that the company’s unique offering is well
positioned to meet the needs of the addressable market.
The company’s service offers truly mobile communication,
meaning small and portable terminals that have secure directconnections and can send/receive at the highest data speedswith guaranteed availability of communication globally.

Ovzon’s addressable markets(USD billion)$7.0

Government& Defense

$8.0
$7.5

Mobility
services

Industryand IOT
services

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29

MARKET

Satellite-based communication value chain and example companies
Satellite
manufacturers• Airbus• Boeing• Lockheed Martin• Oribital ATK• Maxar• Thales Alenia Space• OneWeb• Starlink

Launchers• Arianespace• ILS• SpaceX• ULA

Satellite terminal
manufacturers• Cobham (BGAN)• General Dynamics• GetSat• Hughes (BGAN)• Tampa Microwave• Kymeta• Intellian

Satellite operators

Service providers

End users• Eutelsat• Inmarsat• Intelsat• ViaSat• SES• Telesat• OneWeb• Starlink• Ovzon• 
Government agencies
and defense forces• Rescue services• NGOs• Media/Broadcast• Energy/Oil/Gas• 
Marine shipping• Aviation• Drones

Other parts of the satellite-based communication market
such as broadband access or broadband internet, areneither priorities for nor addressed by Ovzon.

government organizations and companies are being exposed
to hacking and attacks via terrestrial networks that threaten toparalyze operations and government agencies for long periods.

Key market drivers

The demand and market for satellite-based communication in
2022 was also impacted by increased geopolitical turbulence. This was evident above all in Europe. The invasion of
Ukraine and the regional instability it has created is a major
concern for most European nations, with expected increases
in expenditure for military preparedness as a share of GDP
over the next decade. Ovzon 3, in its planned orbital position,is highly suited to meet Europe’s need for robust, resilient,and secure communication. The European market will remain
in focus for Ovzon, and additional resources and investments
will be targeted at this region in 2023.

In the part of the satellite-based communication market that
Ovzon addresses, the company believes that the main driveris based on the need for services with a high degree ofmobility, high-speed data transfer, and resilience.
From a global perspective, the need for communication inall sectors of society is growing. Stringent demands andexpectations are being placed on access to connections withhigh data rates and mobility, as well as a robust increase indata and content. This requires stable, reliable connections
with small, portable communication devices that can transmit
large amounts of data regardless of where the users arelocated – in a city, in areas with insufficient infrastructure, orin the most remote and isolated areas in the world. Moreover,the demand for secure communication is growing. More

The value chain• Anuvu• Intelsat Government• Leonardo/DRS• Marlink• Network Innovations• Speedcast• ViaSat• SES Government• Inmarsat Government

significant market shares. Ovzon’s clear strategy and offering
create competitive advantages through a strategic balance ofimportant characteristics adapted to the company’s focus on
specific customer segments that have stringent requirementsthat are characterized by unique needs such as mobility,
high data rates (both uplink and downlink), a high degree oflink accessibility and a high level of security. Ovzon believes
competition in this part of the market is limited.
One of Ovzon’s closest competing offerings comes frommobile satellite service (MSS) operators. These services
include satellite terminals that are equal in size to Ovzon’s,
but with a transmission speed and performance that issignificantly lower. There are also competing offerings fromhigh throughput satellite (HTS) operators with satellite-based
communication terminals that are somewhat larger but have
only the capacity to transmit at lower data rates.

The market comprises many different operators acting as
generalists, integrators, and specialists. This is evidenced
by the fact that a small number of satellite operations haveOvzon Annual Report 2022

30

MARKETGEO satellite-based communication services
Our competitors’ services are largely based on high-capacity
geostationary earth orbit (GEO) satellites. The geostationary
earth orbit is a circular orbit on the Earth’s equatorial plane,
at a distance where a satellite in this orbit rotates around theEarth in the same direction and with the same orbital period
as the Earth’s rotational period. They have been designed tooffer the largest possible total accumulated bandwidth in thesatellite, equally distributed over a large geographical area.
The main competitive advantages of these types of services
are coverage area and a price that is often lower. Froma mobility perspective, however, this service design has
involved clear disadvantages in the form of relatively lower
transmission speeds and a need for larger terminals on the
ground. They are thus more difficult to manage for mobile
solutions, take longer to install and the transmission speed issignificantly lower than the one Ovzon offers.
Ovzon’s first satellite – Ovzon 3 – is a leader in the development of a new generation of GEO satellites and, comparedwith many other satellites, has more antennas with a larger
amount of targeted capacity and energy. It is also largely
software-defined, using a unique and proprietary on-board
processor (OBP). It can thus be said that the addressable
market is being provided with a new type of trailblazing
functionality as well as a higher degree of mobility, data
rates, and resilience.
Ovzon 3 will thus enable continued innovations of evensmaller portable terminals on the ground with higher data
rates, unbeatable flexibility and mobility, and built-in security.
The development of new types of application that are notcurrently available in satellite-based communication, suchas direct communication between two small satellite-based

communication terminals without needing to connect via
a teleport/gateway located on Earth and connected to theinternet, will also be on offer. This increases protection
against disruptions and will result in unbroken communication even if the ground network and other communication
alternatives are rendered inoperable. It also reduces delays.

LEO-based services
The introduction of services that use, or are intended to use,
low earth orbit (LEO) satellites is continuing. LEO satellites
are smaller in size, and the business model is based on alarger number of smaller satellites that create a network. For
decades, the satellite-based communication industry has
sought to develop LEO communication solutions. In recent
years, this development has progressed rapidly due to major
investments in, for example, companies such as SpaceXwith its Starlink satellites. To date, they have launched over
3,600 satellites, of which 2,850 remain operational. Starlink
intends to launch 40,000 satellites at an estimated initialcost of approximately SEK 400 billion. Starlink is designed
primarily to provide high-speed internet – especially downlink
speeds – and initially for the consumer market. The service
is targeted above all at consumers who lack access to theinternet, and competes primarily with terrestrial internet
and 4G/5G.

applied to launch over 3,000 LEO satellites. It has booked
83 launches, and expects to send up two prototype satellites
in 2023. Another project, OneWeb, had sent up 72 satellites
through March 2020, when the company went bankrupt. The
company re-emerged in late 2020 with newly invested capitaland a reconstructed ownership group, and has launchedapproximately 460 satellites to date; it is unclear how
many of them must be replaced with the next generation ofsatellites. The plan is to send up some 650 satellites in total.
In 2022, the satellite operator Eutelsat decided on a merger
with OneWeb, with the aim of creating a multi-orbit solution.
However, one important aspect – and a potential bottleneck– is access to terminals.
Another LEO company, AST Space Mobile, could potentiallybe considered to have the most audacious concept from atechnological and regulatory perspective. It aims to launchsignificantly larger LEO satellites into an orbit 700 km above
the Earth’s surface that will communicate directly with aregular mobile phone using a high degree of bandwidth andwithout extra equipment. The company sent up a new prototype satellite in 2022, successfully unfolding the 64-square
meter satellite antenna. Thales, Ericsson, and Qualcom alsoannounced a project that involved testing 5G via LEO.

The strength of GEO presents challenges for LEO
The Canadian satellite operator Telesat, which is alreadyan established geosynchronous earth orbit (GEO) player,
announced several years ago that it intended to launch an
LEO network with only around 300 satellites at a cost ofaround SEK 50 billion. It has now scaled the project backto contain 188 satellites, though at the same investment
amount, of which roughly SEK 17 billion remains unfinanced.
In parallel, Amazon has initiated Project Kuiper and has

Even though several LEO solutions have made significant
progress and are offering their services commercially, many
challenges remain. From a historical perspective, achieving
profitability in these projects has proven difficult. There arefundamental obstacles that are in part based on the global
nature of the LEO systems, and in part to the fact that large
portions of the Earth are uninhabited and there are thus
very few or no potential paying customers on approximately

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31

MARKET90 percent of the Earth’s surface. In parallel, the paceof continual expansion of the terrestrial communication
network is increasing. A number of similar LEO projects
were launched in the early 2000s. Some were shut down
before launch, while others such as Iridium, Orbcomm, ICO
Global Communications and Globalstar later went bankrupt –though some of these, such as Iridium, later re-emerged.
What is often ignored is that the LEO satellites must be
replaced more frequently – up to every five years – since
they are closer to Earth and are thus more affected byits gravitational pull. These can be compared with GEO
satellites, which have a service life of approximately 15 to
20 years. In most cases, the investments referred to in LEO
projects thus concern the initial investment.
There are other challenges – such as technical and regulatory – as well. GEO satellites always have regulatory priority
over LEO satellites, which means that LEO satellites have noprotection if a disruption occurs.

services are an excellent complement and potential partners
for Ovzon, which addresses other customer needs. Ovzon is
focused on markets, customers, and segments that require
guaranteed secure communication capability, which is a
supplement to LEO-based consumer services.
Ovzon’s SATCOM-as-a-Service offering is specially designed
for the most demanding customers and for difficult environments. The service is used in critical situations where thecapacity to provide the highest data rates – both sending
and receiving – with the smallest portable terminals and asecure connection are crucial.

Ovzon’s market-leading satellite-based
communication service
Ovzon’s choice of basing the company’s unique SATCOMas-a-Service offering on, and using, GEO satellites has
to do with the demands of the company’s customers forhigh-performance and integrated complete solutions. Thismeans the company is in a unique position and has a brandin the markets it has chosen to operate in. Ovzon has always
focused primarily on understanding its customers’ needs
and requirements, today and in the future. Accordingly, thetechnology and innovation are designed and applied todeliver the best integrated products and services.
The market for satellite-based communication continues toattract a great deal of venture capital and major investments
via high-quality investors. This drives development rapidly
forward and generates continual progress. Ovzon has astrong position as a leader due to the company’s proximity
to its customers and its capacity for integrating hardware,
software, and satellite-based communication. In combination
with the company’s position on the leading edge of technological solutions, this means that the company is highly
relevant for the customers and markets that it has chosen
to address. Ovzon is the only service provider that furnishes
a fully integrated portfolio of products and services forhigh-performance satellite-based mobile communication.

A certain advantage of the LEO project is lower signal delay
due to the satellites’ proximity to Earth. It should be noted,
however, that passing through teleports/gateways and othersatellites increases signal delay and also creates a risk ofhacking.

Add-ons, and potential collaboration
and business partners, for Ovzon
As mentioned previously, investments in the LEO segment
are considerable, which is driving developments forward bothwithin the segment and for the industry as a whole. This is apositive for the entire satellite-based communication industry
and its customers. If any of these projects are realized inaccordance with plans, however, these LEO players and theirOvzon Annual Report 2022

32

STRENGTHS AND COMPETITIVE ADVANTAGES

Many factors speak in favor of Ovzon
Ovzon’s services are designed to deliver competitive advantages to our customers through a unique combination of highmobility due to handheld terminals, a high degree of accessibility and security and high data rates. Moreover, Ovzon’s
proprietary satellite design facilitates future launches of even smaller satellite-based communication terminals and new applications, which additionally can communicate directly with one another without needing to be linked via a terrestrial station.

1

Growing market for satellitebased communication services

Ovzon operates in a section of the market known as theadvanced satellite connectivity market, which the industry
organization NSR estimates is worth approximately USD 21
billion – according to NSR, a segment with a high rate of
growth.

2Increased demand for mobility

The need for advanced communication is growing globallyand in all sectors of society. Greater demands and expectations are thus being imposed for access to high-speed
connections and increased mobility. At the same time,
there is a robust increase in data and content. This requires
constant connection by small, portable communication
devices that can transmit large amounts of data, both incities and in areas with or without reliable infrastructure andin the most remote and isolated areas in the world. Moreover,the demand for secure communication is growing. Moregovernment organizations and companies are being exposedto cyberattacks, meaning hacking and attacks via terrestrial
networks that threaten to paralyze operations and government agencies for long periods.

3

Ovzon’s unique offering

Ovzon has designed its SATCOM-as-a-Service offering
to provide high data rates – on uplink and downlink –combined with mobility, where small handheld user terminals
provide the same data throughput capacity as large fixedsatellite terminals. The service is designed to work even inareas with severe weather conditions or in areas where theinfrastructure is insufficient or nonexistent. This applies aswell to areas that have been hit with natural catastrophes
or geopolitical instability. This also places great demands
on secure communication. The service has been designed
primarily to meet increased needs among organizations andcustomers that have the strictest requirements for mobility
and data rates. Ovzon has designed – and is now preparingfor – the launch of Ovzon 3, its proprietary satellite. Its
purpose is to offer even greater mobility with the introductionof even smaller terminals and higher data transfer rates.
In addition, it facilitates the introduction of completely new
functions, including signal capacity and security.

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33

STRENGTHS AND COMPETITIVE ADVANTAGES

4

Leading technology and solutions

Ovzon has developed a unique solution and technology thatfacilitates such features as the ability of small, handheld
satellite-based communication terminals to communicate
directly with other small handheld terminals using the highest
data transfer rates. Terminals with antennas as small as 3.5”
can be used. Signals can be hidden in order to obstructdetection. The service has also been developed to meet therequirements of more advanced customers for being able
to send at high data rates. Ovzon thus distinguishes itself
from operators who orient on the consumer market, where
the typical need is for receiving large amounts of data.
Additionally, the company’s service has been designed towork around the world, in all kinds of weather. The On-Board
Processor, which will be aboard Ovzon 3, has been uniquelydeveloped by Ovzon and contains the most powerful circuits
ever to be launched into space. They will facilitate completely
new functionality that is currently unavailable in the market.

5

Major barriers to entry due
to patents, frequency licenses
and orbital positions

Ovzon’s value proposition and position are protected by anumber of barriers to entry:• Strong patent portfolio: A significant part of the patentportfolio pertains to methods for detecting and handlinginterference, a major challenge in providing communication services in the Ku band.
• Ku band frequencies: Ovzon’s strategic positioning in
the Ku band allows for a unique combination of high data
throughput, operational reliability, availability and mobile
terminals.

6

Management and employees with broad
experience in satellite-based
communication, and the hardware andsoftware industries

Ovzon’s management has thorough, successful and in-depth
experience in the management and international expansionof both technology and satellite-based communicationcompanies. Ovzon’s employees have extensive, uniquecompetence in the satellite-based communication industry
as well as the software and hardware industries. Moreover,Ovzon’s management has long-standing relationships withstate and commercial customers, and a successful, proventrack record of commercialization, business development,
technological development, and innovation.

• Orbital positioning ensuring global coverage: Ovzon has
registered ten orbital positions with the ITU, one throughCyprus and the other nine through PTS, the Swedish Post
and Telecom Authority. The planning and maintenanceof the orbital positions requires coordination with othersatellite systems to avoid interference.
• Ovzon develops and delivers small terminals capableof communicating by high data rates: Ovzon offers
SATCOM-as-a-Service, a unique end-to-end solution, withterrestrial terminals as well as service and support as partof its offering. Ovzon works actively on continuing innovations in order to offer even smaller terminals.

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SUSTAINABILITY

Sustainability in spaceOvzon provides a unique satellite-based communication service for the most demanding customers who have a need forsending and receiving at high data rates via the smallest mobile satellite terminals in the market. By conducting responsible
operations, Ovzon aims to contribute to a sustainable development.

Based on its vision, “Connecting the world’s critical missions
via satellite”, Ovzon can provide infrastructure through its
unique SATCOM-as-a-Service solution that supports people
and the planet, and upholds democratic values. This meansthat Ovzon’s solution facilitates qualitative communication
for the most remote locations that currently lack similar
infrastructure. This is a crucial function for the company’s
customers in defense, rescue services, and humanitarian aid,
since their missions ultimately require reliable communication
for saving lives.
Ovzon is dedicated to conducting responsible operations
for its employees and stakeholders as well as the planet.
Sustainability initiatives are therefore a vital component ofoperations, forming the basis of how the company acts,
develops and performs. The ambition is for operations tohave a positive impact on the community where the company
operates, and thereby promote sustainable development.

Ovzon’s main contributions in this area are facilitating
communication for a more secure world, and the company’ssolutions promoting a decreased need for travel and thereby
reducing emissions.
GovernanceOvzon’s Board of Directors bears ultimate responsibility forthe company’s sustainability initiatives. Sustainability is partof the Board’s annual agenda, and any necessary updates
and measures for improvement are discussed. The Management Group bears ultimate responsibility for updating policy
documents and ensuring that the information reaches therest of the organization. Operating activities are conducted
and secured by the respective area managers. All employees
must accept the company’s policy documents and act
accordingly. The company has a Code of Conduct thatencompasses all of Ovzon and its employees. It covers how
Ovzon is to conduct business, the company’s work environment and corporate culture, and how Ovzon is to carry out
environmentally sustainable operations.

Ovzon strives to develop itself in its sustainability initiatives,
and routinely reviews how its operations can promote
positive development going forward. During the year, thecompany reviewed its efforts in order to create a better
platform for continuing its development in the area of sustainability. In parallel with adoption by the Board of Directors’of the new vision and business model, decisions were also
made on Ovzon’s continued sustainability program, which
resulted in an updated definition of the company’s focus
areas and appurtenant key performance measures.

Policies in place in 2022:• Environmental policy• Travel policy• Anti-corruption policy• Code of Conduct for colleagues
and employees

Ovzon Annual Report 2022

35

SUSTAINABILITY

Focus areas
As part of its sustainability program, Ovzon has chosen
to work on three focus areas, with priority issues in eacharea. The former focus area, “Contribute to society,” wasmerged with the “An attractive employer” focus area toform a new area, “Social responsibility”. The focus areas
have been identified through industry benchmarking anddialogue with both internal and external stakeholders.
To put Ovzon’s impact in a global perspective, the focus
areas were surveyed against the UN Sustainable Development Goals (SDGs); there is a more detailed description
on the right of which SDGs the respective focus areas are
expected to promote.

Nasdaq Transparency Partner
The Nasdaq Transparency Partner certification wasdeveloped by Nasdaq for the purpose of increasing
market transparency and thereby also raising the reporting
standard for selected key performance measures. In
2022, Ovzon became a certified partner, which meansthat it reported on key performancemeasures in the areas ofenvironment, social relations,and governance. A selectionof measures is presented inthis Annual Report under therespective focus areas.

Environmental responsibility•Emissions•Efficient resource
management•Space debris

Justification: Ovzon’s design ensures that satellites that have reached the end of
their lives can leave the geostationary orbit 36,000 kilometers away from Earth. Itmeans that Ovzon’s products will not contribute to increasing the amount of debrisin space, and that Ovzon manages the waste associated with its services responsibly. In addition, Ovzon is committed to being as resource-efficient an operation as
possible, basing its efforts on existing international frameworks.

Social responsibility•Societal responsibility withhigh-quality communication
infrastructure•An attractive employer

Justification: Using Ovzon’s services, geographical areas that have limited
traditional terrestrial communications can have access to high-quality satellite-based communication, which in certain cases could also entail increased
safety and security for people in the region. By using these services, Ovzon’s
customers can work to maintain a more peaceful and safer world where
democratic values are protected.

Governance•Data security and integrity•Product quality•Responsible relationships

Justification: Using Ovzon’s technology, our customers can enable accessto high-quality communication technology for more people. The products
can be used in the most remote locations in the world without requiring
major investments in terrestrial equipment, which creates good conditions forincreased global digitization and prosperity.

Ovzon Annual Report 2022

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SUSTAINABILITY

Environmental responsibility
Ovzon strives to reduce the environmental impact of its operations and can thereby promote positive
performance in the industry. Competence development is a key component of these efforts, and the goal
is for all employees to have a basic awareness of the company’s environmental initiatives.

Emissions
Ovzon’s main contribution to a better environment is thatits services generate a reduced need for travel. In 2022,
Ovzon surveyed its CO2 emissions based on the structureof the Greenhouse Gas Protocol regarding Scope 1, 2, and
3. Scope 1 contains the direct emissions that the company
generates; Scope 2 contains all indirect emissions such asenergy and heating consumption; and Scope 3 contain all
indirect emissions that arise in Ovzon’s value chain. The
company’s emissions must continually be reduced, andinternal environmental initiatives must be conducted in order
to continually develop operations.

Efficient resource management
The Earth’s resources are limited, and should be managed
efficiently. In general, there is increasing awareness of how
the planet’s environment needs to be protected and how
operations should be conducted to minimize their climate
impact. Ovzon endeavors to efficiently manage resources
and reduce energy consumption in its operations. For
example, Ovzon ensures that all materials from end-of-life
terminals are recycled, and that the resources can berecirculated into the production of new technology.
Ovzon aims to minimize the impact of its operations to thegreatest possible extent and will always choose the mostenvironmentally friendly alternative. The company operates
on the principle of replacing all bad and outdated technology
with more energy-efficient and climate-smart technology.
Under the EU waste hierarchy, technology to be scrappedmust be re-used to the greatest extent possible, or otherwise
recycled.

342

tCO2eq in carbon emissionsin Scope 1, 2, and 3

162

MWh in energy consumption

Ovzon Annual Report 2022

37

SUSTAINABILITY

What is space debris?
Space debris is all the non-functional artificial objects – including fragments and components of these objects – that are orbiting
the Earth or re-entering the atmosphere.

Protection of environments beyond the boundaries ofEarth is an area where awareness is currently insufficient
but where joint efforts are required. The UN General
Assembly has recognized that “space debris is an issueof concern to all nations” and that the likelihood of
future accidental collisions is “expected to increase as
more objects are placed into orbit”. In the near future,space debris therefore constitutes an imminent threat to
global access to space and an increased risk of satellite
collisions.

What is Ovzon doing?
For Ovzon, creating a service that does not contributeto the debris orbiting Earth has been important from thevery beginning. The company’s specially built satellites
are designed, manufactured and tested to safely leave
geostationary orbit, 36,000 kilometers from Earth. Startingwith the launch of the company’s first proprietary satellite,
Ovzon will continually monitor its health and status todetect faults that could have a negative impact on waste
management.

Ovzon complies with the Swedish Space Activities Act,and all the company’s partners for satellite manufacture,launch and operation comply with the Space Debris
Mitigation Guidelines from the Inter-Agency Space
Debris Coordination Committee (IADC). The regulations
describe how space debris is to be avoided, minimized
and managed internationally. Ovzon is also a memberof the Satellite Industry Association (SIA), which works
for responsible operations in space and ensures futureaccessibility to space.

Ovzon Annual Report 2022

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SUSTAINABILITY

Social responsibility
Ovzon works to increase awareness of satellite technology in society andthe benefits that satellite-based communication can contribute. Good
communications are key to many crucial societal functions. Ovzon’s
employees are the most important resource for delivering good communication, and focus is therefore on their health and well-being.

Societal responsibility with high-quality
communication infrastructure
Ovzon is engaged in promoting society’s interest in space,satellites, and communication technology, and encourages
the younger generation to take inspiration from and learn
more about these fields in various ways, including by
providing places for internships and supporting thesis work.
Ovzon’s employees are involved with a number of universities, where they conduct activities such as lecturing in thesecore areas.

Good communications are key to crucial societal functions,regardless of where they are in the world. Rescue personnel
in extreme environments – whether tropical heat or Arctic
cold – need reliable channels of communication. Ovzon’s
satellite services can play a decisive role here. Ovzon’s technology has been proven to maintain a high level of quality
regardless of atmospheric conditions and has enabled rescue
personnel to perform their tasks without any technical difficulties.
Ovzon’s service has long been a key component of rescue

efforts in conjunction with events such as volcanic eruptions,avalanches and earthquakes where terrestrial telecommunications were either out of operation or could not reach.
With Ovzon’s satellite-based mobile communication, rescue
personnel can smoothly connect to high-speed networks,
thus saving lives. In 2022, Ovzon continued to assist various
defense forces with ultra-light mobile satellite terminals forhelp in various initiatives and emergency situations.

Ovzon Annual Report 2022

39

CUSTOMER CASE

Opcion Legal – Communication solutions
facilitate democratic voting in Colombia
During its presidential election in 2022, Colombia chose to use Ovzon’s SATCOM-as-a-Service solution to ensure communication with voting stations around the country. Many locations in Colombia do not have access to reliable infrastructure formodern voting stations. Ovzon’s service offers mobility and reliability and is easy to manage, which enabled a process where
election results could be efficiently and reliably collected from the entire country.

Ovzon’s Colombian partner Bansat also works together
with Opcion Legal, an NGO in Colombia that is linked
to the UN High Commission for Refugees (UNHCR) andprovides services such as community education, resource
administration, land reclamation and legal aid to victimsof violence in remote communities, and has a criticalhumanitarian task. Ovzon’s service is used to provide
satellite-based mobile broadband connections to UDAPV(the Division for Vulnerable Populations), which is a partof the Colombian civil registration authority. The service
is used in the most remote and hard-to-reach areas in
Colombia, where large sections of the country lack broadband connections and access to the internet. Ovzon’s
satellite services with easy-to-use mobile terminals makeit possible for UDAPV personnel to support humanitarianefforts through offering secure identification services atremote locations in Colombia – regions such as Guajira,
Norte de Santander, Atlántico and Arauca. For Ovzon, it isan honor to be part of supporting these efforts.

“Opcion Legal needed a solution that was easy
to launch and easy to use for their personnel.
It should be easy to transport and be able toguarantee a connection even in the most remotelocations in Colombia. Ovzon’s light terminals
and bandwidth availability have completelychanged how Opcion Legal’s personnel
can work today.”Luis Guillermo Sandoval O., CEO Bansat
Ovzon Annual Report 2022

40

SUSTAINABILITY”

Ovzon is a
growing company

An attractive employer
Ovzon’s employees are crucial to the company’s continued
development and success. That is why their health andwell-being are continually in focus. If current and future
employees are to continue choosing Ovzon as an employer,
it is also important that they feel there is scope for personal
development. This applies to all roles, Management Group
included. To achieve this, annual performance reviews are
conducted with all employees and their immediate supervisors. This creates a better understanding of how employees
are feeling, and their expectations of Ovzon as an employer.
Good health and well-being among employees are factorsthat are crucial for the company’s long-term performanceand success. That is why daily physical activity is encouraged in all offices, and the Swedish offices also offer all
employees a health care allowance.
Since Ovzon has offices on two continents – in Sweden andthe US – this means that the entire company needs to beengaged in order to create a pleasant work environment.

A shared culture in which all employees thrive and feel
committed to Ovzon’s development is therefore important.
More structured efforts are planned to monitor satisfaction
among Ovzon employees, with the aim of ensuring apleasant working environment.
Equality and diversity
Ovzon works for an equitable workplace where everyone isto be treated equally, and with respect. There is a zero-tolerance policy as regards all types of discrimination and harassment at the workplace. Should this occur despite everything,these incidents will be handled with integrity and measures
will be taken.
In a recruitment process, all candidates will be treatedequally and employed on merit, personal qualities and skills.
Ovzon is aware that the company operates in a male-dominated industry and that the organization would benefit froma higher level of equality. To achieve this, the Management
Group is reviewing how the company’s recruitment process
can be developed to bring in more women, in both executive
positions and in all other parts of the organization.

Anna Carlsson,
Senior Software Engineer:
Ovzon is a growing company, and by
all appearances 2023 will be an
eventful year. Growth puts demands
on us as an organization. To maintain quality in our products andservices, we must ensure that ourefforts toward our shared operationaland financial goals are structured andefficient.

Key performance measures
Gender distribution, %

Men

Women

Organization89

11

Age distribution, %<30		2

Management Group88

1230–50		61

Board of Directors

83

17>50		37

Ovzon Annual Report 2022

41

SUSTAINABILITY

Responsible businessOvzon is engaged in conducting business responsibly, with a high degree ofbusiness ethics that respects human rights. By guaranteeing secure flows of
information for the company’s customers, having thorough quality checks andethical business relationships throughout the value chain, Ovzon can promote
positive developments in the market and set a good example in the industry.
Data security
Ovzon operates in an industry where the flow of informationis critical, and the communication that occurs via the company’s satellites is often highly confidential. This means that thecompany must have a high level of security in its systems
and conduct its business responsibly. Ovzon complies withall laws and regulations concerning information management,
including the General Data Protection Regulation (GDPR). Alldata is stored with robust security protection, and checks are
conducted continually so that no data reaches unauthorizedparties.
Product safety
All the products that Ovzon sells undergo thorough quality
controls to ensure that hazardous products do not reach themarket. A qualitative selection of components is carried out
during design of the terminals, and suppliers are continuallyaudited to ensure that they meet Ovzon’s requirements. The
components are quality-assured, primarily before the components reach Ovzon, but in certain cases there is also a needfor checks on arrival. Several checks are conducted anddocumented during installation, and all installers are routinely
trained in order to minimize incorrect installations. Once theterminal has undergone all quality assurance checks andtesting, the process is concluded with a factory acceptancetest (FAT) in which the terminal is tested against a satellite.
All terminals are also checked through a visual inspection
before they are sent to the customer. No products are sentout to customers without having undergone all the tests thatenable Ovzon to guarantee secure, quality products.
ISO 9001
In order to ensure the company’s compliance with therequired high security standards, Ovzon has implemented
a formal quality management system. ISO 9001 certification means that the company is audited annually by
an ISO-certified third party. Through certification, thecompany strengthens its position and capacity for meetingits customers’ needs for and expectations on secure andreliable satellite-based communication.

Key performance measures
Data security incidents
Employees who have read andacknowledged the Code of Conduct
Incidents of corruption

0
100%
0

Responsible relationships
Ovzon has a zero-tolerance policy toward corruption. All
employees must accept the company’s anti-corruption policy,
which has been approved by the Board. No one in theoperation or its value chain may, under any circumstances
whatsoever, offer or accept bribes. This includes consultants,
partners, distributors and suppliers. Ovzon partners primarily
with local suppliers, and all distributors and suppliers are
informed about and must accept the company’s values.
Ovzon has a whistleblower function where incidents arereported to the CEO, CFO or Chairman of the Board. The
information is handled discreetly in order to protect theanonymity of the whistleblower.
Conducting ethical operations is a fundamental value for
Ovzon. According to the company’s Code of Conduct, its
business must be conducted on a sound ethical basis where
human rights are always respected. Regardless of where in
the world business is conducted, laws and regulations must
be complied with, on a basis of sound corporate governancein all stages.

Ovzon Annual Report 2022

42

RISKS

Risk management is an importantpart of our strategy
Ovzon is exposed to a number of different risks that could have a direct or indirect
impact on the operations. Some of the risk factors and significant circumstancesthat are considered to have a materially negative impact on the company’s operations, financial position and earnings are described below, in no specific order andwith no claim of being exhaustive.

MarketA competitive market
Ovzon faces competition today from a number of verylarge and established companies. It is likely that Ovzon willcontinue to face increasing competition in some or all of its
market segments in the future.
Management
Ovzon routinely monitors the competitive situation for the
purpose of proactively responding to any initiatives fromcompetitors.
New technology could make the services obsolete
The space and communications industries are subject torapid advances and innovations in technology. Innovations
could render the current technologies less competitiveby satisfying end-user demand in more attractive or cost-effective ways.

Management
Ovzon’s service is based on proprietary and patent-protected
technology. In addition, the company invests in maintaining
its technological lead. Ovzon currently has a revolutionary
service that combines high bandwidth with high mobility.
The company considers itself to be unique in this position,
which will be further strengthened when the company’s firstproprietary satellite is put into operation in 2023.

Customers
Limited number of end users
Ovzon sells its current services to a small number of
separate end users, including the US Department of Defense(U.S. DOD). Spending authorizations for defense-related
and other programs have fluctuated in the past, and futurelevels of expenditure and authorization for these programs
may decrease, remain constant or shift to programs in areas
where Ovzon does not currently provide services.

Management
Ovzon works constantly to broaden its customer base, andover the past two years the company signed agreementswith partners that facilitated such an expansion, which
resulted in a few smaller orders. In addition, the company
conducted a number of successful pilot tests in several
supplementary market niches.
Lengthy sales cycles in contracting new customers
Ovzon currently depends on individual customers. If Ovzon
cannot retain its existing customers, the company could be
negatively impacted.
Management
In order to reduce its dependency on individual customers,
Ovzon is making efforts to expand its customer base anddevelop new segments for its services. New and existing

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43

RISKS

customers have shown interest in Ovzon launching its
own satellite. Between 2020 and 2022, the company took
several important steps toward launching a satellite in 2023.
Funding for Ovzon’s proprietary satellite has been secured
and production is proceeding according to plan. Renewed
contracts with existing customers have been secured,as have significant agreements for the future proprietarysatellite. New products and services that further strengthen
our offering have been launched.

Partners
Dependence on third parties
Ovzon is dependent on the availability of satellite capacityfrom third parties with relevant geographic coverage areas,
orbital positions and performance in relation to current
customer requirements.
Management
Ovzon has good relations with established and recognizedsuppliers of satellite capacity. The company has further
expanded its partner base over the last several years, andcan today offer in principle double global coverage of its
services. The company intends to launch its own satellite tostrengthen its independence and take further control of its
value chain.
Financial stability
Ovzon is active in an industry characterized by major infrastructure investments. Many companies, including Ovzon’s
partners, are severely indebted and it cannot be ruled outthat they will experience financial difficulties if interest ratelevels and/or their debtors’ view of their ability to repaychanges.

Management
Ovzon carefully monitors the situation of its partners. In
2022, Ovzon’s Italian distributor Gomedia experienced financial difficulties. To safeguard its receivables, Ovzon agreed
on a payment plan with Gomedia.

Management
Ovzon continuously reviews its product, partner andmanufacturing strategy and plans for future growth. In 2022,
Ovzon significantly increased its manufacturing capacity
through its partner, Syntronic.

Dependence on cooperation
with Intelsat General Corporation
Ovzon provides its services to end customers primarily
through a third party, IGC (Intelsat). The agreement isrenewed annually. If the agreement is not renewed inaccordance with its terms, Ovzon may be unable to continue
providing its services in the short term or at all.

StrategyManagement
Ovzon currently has a desirable service that IGC sells andthe parties have a long-term relationship.
Delivery of contracted capacityfrom Intelsat General Corporation
Ovzon signed a contract with Intelsat in 2020 for capacity on
IS-39 and IS-37 via three powerful steerable beams, which
substantially enhances the capacity and reach of Ovzon’s
offerings.
Management
Ovzon engages in continual dialogue with Intelsat and theparties have a long-term relationship.
Dependence on external manufacturers for parts of the
manufacture and installation of current products
Ovzon relies on third-party manufacturers, including for part ofthe installation and manufacture of the company’s T6 terminals.
If demand for the terminals were to increase significantly,
there is a risk that Ovzon would not be able to meet it.

Implement strategy and meet targets
Ovzon’s long-term strategy is built on the introduction of
proprietary satellite capacity. The launch of a proprietarysatellite depends on access to capital, suppliers andpartners. Successful implementation of the strategy is thus
dependent on assumptions relating to the developmentof the market, future demand, costs of the launch, ability
to implement new and sustainable pricing, success inincreasing the customer base and creating new customer
segments and the ability to secure additional satellite
capacity to resell.
Management
Over the last three years, Ovzon implemented a number ofmeasures that reduced these risks – for example, in the formof funding a proprietary satellite, new customer contracts,
new customers and agreements with strategic partners such
as Hispasat, Gomedia, Hellas Sat, Airbus and more.

Financing
Financing and insufficient working capital
Ovzon’s doubtful trade receivables, if they are confirmed,
could mean that its working capital is insufficient. This could
lead to Ovzon needing to seek further financing in the future,and to renegotiate and refinance existing loans. Futurefinancing could depend on such factors as the general situation in the financial markets, Ovzon’s creditworthiness andOvzon Annual Report 2022

44

RISKS

Ovzon’s capacity to manage its indebtedness. Accordingly,
Ovzon may be forced to obtain financing on less advantageous terms.
Management
To date, Ovzon has been able to manage its doubtful tradereceivables within its existing working capital. Over the last
three years, Ovzon has successfully financed the company’splans to launch its own satellite. The company believes
that any future financing needs can be solved with loans orequity. For a more detailed description of the financial risks– credit and counterparty risks, for example – and how they
are managed, refer to Note 3.
Credit and counterparty risk
The Group’s financial transactions give rise to credit
risks with respect to financial counterparties. ‘Credit andcounterparty risk’ means the risk of losses if a counterparty
does not meet its obligations. In the event the counterparty’s
ability to pay is deemed to be uncertain, a bank guarantee,
surety,or other proof of ability to pay is required.
Management
The Group endeavors to work primarily with establishedcustomers who have a documented capacity to pay andcompetitive operations. The financial position of the Group’s
customers is subject to a credit check through measures
including a documented due diligence procedure.

Other
Satellites are subject to operational risks
Satellites in orbit are subject to operational risks. Theserisks include functional disruptions (commonly referred toas anomalies) that may be attributable to several different
factors such as faults in manufacture, problems regarding
the satellites’ power or steering systems and general faults
attributable to managing a satellite in space. A satellite canalso be struck by meteoroids.
Management
Ovzon has chosen a recognized and well-qualified manufacturer for the company’s planned satellite, based on Ovzon’s
specifications. This choice of manufacturer means that therisk of anomalies is reduced.
The satellite’s service life is not achieved
Ovzon’s opportunities for generating long-term revenue fromits proprietary satellite depend on the satellite’s service life. A
number of factors affect a satellite’s useful life, including thequality of its construction, the durability of its components,
the ability to maintain a proper orbit and control over thesatellite’s functions, the efficiency of the satellite, and theremaining on-board fuel following launch.
Management
Ovzon has chosen a recognized and well-qualified manufacturer for the company’s satellite, based on Ovzon’s specifications. Well-planned manufacturing is the most reliable
protection for achieving the planned service life.

Failed launches or otherdamage to the satellite
Failed launches result in significant delays due to the timerequired for organizing a replacement
satellite, typically 20 months or more. In addition, carrier
rockets may underperform, in which case the satellite canstill be put into use by deploying its drive system to reach thedesired orbit. This, however, reduces their useful life.
Management
Ahead of the launch of Ovzon’s own satellite, insurance has
been taken out to provide compensation for damage and apotential failed launch.
Risks related to intellectual property rights
Ovzon holds a number of patents and may acquire ordevelop further products and technical solutions that can bepatented, registered or protected in some other way. Thereis a risk that Ovzon will not be able to maintain patents andother intellectual property rights and that registration applications for new intellectual property rights will not be grantedor, if granted, will be limited in scope or by geography. Oncethe term of a patent has expired, there is a risk that Ovzon
will not be able prevent competitors and other market participants from using Ovzon’s products or technical solutions.
There is also a risk of Ovzon infringing on, or being accusedof infringing on, third-party intellectual property rights, which
may entail expenses either to defend itself or to settle an
infringement dispute.

Ovzon Annual Report 2022

45

RISKSManagement
Since the company’s inception, Ovzon has been thoroughin protecting the company’s innovations using patents andother intellectual property assets. This is a key part of thecompany’s strategy moving forward, as the company offers
services that are unique in terms of scope and performance.

Management
Today, Ovzon meets all regulatory requirements that areplaced on the company. The company has insight, planningand foresight regarding increased costs for compliancemoving forward, as well as the company’s ability to retain or
expand frequency licenses, orbital positions, and permits.

Recruitment and employees
Technological competence and innovation are critical to
Ovzon’s business, and depend to a significant degree on
the work of technically skilled employees. In addition, Ovzon
is also dependent on attracting and retaining personnel
capable of establishing and maintaining relationships withcustomers. The market for these types of employees iscompetitive.

In 2022, the ITU requested additional information related tothe extension of the right of use of one of the company’s
orbital positions. The company responded with documentation, argumentation, and constructive dialogue to assist in apositive decision from the ITU.

Management
Ovzon intends to continue to offer an attractive environment
for existing and future employees using the right remuneration terms and incentives, a positive corporate culture and aunique service with technological superiority.
Regulation in Ovzon’s areas of operation
Ovzon’s business is subject to regulation. Compliancewith rules and regulations entail costs for Ovzon, and any
non-compliance could expose Ovzon to fines and could
limit Ovzon’s ability to provide existing and new services.
The maintenance and expansion of Ovzon’s business isdependent upon such factors as the ability to obtain required
frequency licenses, orbital positions, and authorizations in atimely manner, at reasonable costs and on satisfactory terms
and conditions.

Ovzon Annual Report 2022

46

SHARE AND SHAREHOLDER INFORMATION

Share and shareholder information
Ovzon’s disclosures to shareholders and the rest of the capital market are aimed at providing a fair view of thecompany’s development, minimizing the risk of rumors and increasing interest in the company’s share. The
ambition is always to provide clear and current financial information.
Since April 20, 2021, Ovzon AB has been listed on the
Nasdaq Stockholm main list. Prior to that, starting on May
18, 2018, the company had been listed on Nasdaq First
North Premier Growth Market.
Market capitalization and sales
The last price paid on December 30, 2022, was SEK 57.6,
entailing a market capitalization for Ovzon of SEK 2,953
million. During the period January 1 through December 30,
an average of 28,469 shares were traded per day and in
total, 7.2 million Ovzon shares were traded at a value of SEK
365 million. The lowest price paid was SEK 37.2 (on October
14) and the highest price paid was SEK 74.0 (on January4). The price decrease in 2022 was 83 percent, which canbe compared with the Nasdaq OMX Small Cap Sweden
GI index, which declined by 30.2 percent during the same
period.
Share capital
At December 31, 2022, Ovzon’s share capital amounted to
SEK 5,127,087.60 distributed among 51,270,876 shares witha par value of SEK 0.1 per share. According to the Articles

of Association, which were adjusted in conjunction with an
Extraordinary General Meeting on December 27, 2018, theshare capital is to be not less than SEK 3,358,556 and not
more than SEK 13,434,224 distributed among not fewer than
33,585,596 shares and not more than 134,342,384 shares.
Each share carries an equal right to participation in thecompany’s assets and earnings. At the Annual General Meeting,each share provides entitlement to one vote and all shareholders can vote for the full number of shares held without
restrictions to voting rights. The shares can be freely transferred.

Dividend and dividend policy
Ovzon’s Board of Directors has not adopted a dividend
policy because the company is in a growth phase.
Financial information
Ovzon publishes four interim reports and one annual reportper year. All reports are available to read and download fromthe company’s website, www.ovzon.com.
10 largest shareholders at December 31, 2022
Shareholder

Analysts
Analysts who continuously monitor the company:
Simon Granath
ABG+46 8 566 286 32
simon.granath@abgsc.se
Mikael Laséen
Carnegie+46 8 588 687 21
mikael.laseen@carnegie.se

1
2
3
4
5
6
7
8
9
10

Number of shares Percentage, %Öresund Investment AB
Bure Equity AB (publ)
Pension, Futur
Handelsbanken Fonder
Fourth Swedish National Pension Fund
AFA Försäkring
Staffan Persson
AB Stena Finans
Insurance company, Avanza Pension
Per Wahlberg

Total

6,089,828
5,861,034
4,934,166
4,800,000
4,669,195
3,896,991
3,152,281
1,630,064
999,443
676,046

11.9
11.4
9.6
9.4
9.1
7.6
6.1
3.2
1.9
1.3

36,709,048

71.6

Ovzon Annual Report 2022

47

SHARE AND SHAREHOLDER INFORMATION

Warrants issued
In conjunction with raising a subordinated credit facility of
TSEK 200,000 on July 3, 2019, 1,500,000 warrants were
issued to the subordinated creditors. Following the rights
issues in June 2020, the terms for the warrants were recalculated. Each warrant provides entitlement to subscribe for1.02 new shares in the company at a price of SEK 98.16 pershare. The warrants run for a maximum of five years and canbe exercised for subscription for shares up to and including
July 3, 2024.
An Extraordinary General Meeting on May 18, 2020 resolved
on issuing a maximum of 900,000 warrants under the
2020/2023 warrants program. The company’s Management
Group has subscribed for the maximum number of warrants
allotted – 500,000 in total – and other personnel havesubscribed for a total of 200,000 options. Each warrant
provides entitlement to subscribe for one new share in thecompany at a price of SEK 102.10 per share. If all warrants
allotted are used in the option program, a dilution of 1.4
percent of the shares and votes in the company will occur.
The exercise period for all warrants runs from June 18, 2023
until July 18, 2023.
The Annual General Meeting on April 13, 2021 resolved
to issue a maximum of 1,100,000 warrants under the2021/2024 warrants program. The company’s Management
Group has subscribed for a total of 410,000 warrants andother personnel have subscribed for a total of 186,000
options. Each warrant provides entitlement to subscribe for
one new share in the company at a price of SEK 145.6 pershare. If all warrants allotted are used in the option program,a dilution of 1.2 percent of the shares and votes in thecompany will occur. The exercise period for the warrants
runs from May 15, 2024 until June 15, 2024.

The Annual General Meeting on April 21, 2022 passed
resolutions on the 2022/2025 warrants program and the2022/2025 employee stock option program. The Meeting
resolved to issue a maximum of 225,000 warrants (under
the warrants program) to the company’s employees, primarily
in Sweden, and 225,000 employee stock options (underthe employee stock option program) to the company’s

employees, primarily in the US. The company’s Management
Group has subscribed for 255,000 shares.
Annual General Meeting for 2023
The Annual General Meeting of Ovzon AB will beheld on April 20, 2023 in the company’s premises
at Anderstorpsvägen 10, Solna, Sweden.

Share capital development
		YearTransaction
2016
1/1/2017
1/1/2018
2/7/2018
5/18/2018
6/11/2018
1/30/2019
1/29/2020
5/26/2020
6/24/2020
6/9/2021
7/29/2021
9/22/2021

Change innumber of shares———
Share split
Rights issue
Exercise of the over-allotment option
Rights issue
Directed share issue
Directed share issue
Rights issue
New share issue (TO 2018/2021)
New share issue (TO 2018/2021)
Directed share issue

Change inshare capital, SEK

Total
share capital, SEK

Total
number of shares————
269,997
69,6432,518,920
135,855744,681385,372
20,394
16,126
466,098.80

500,000
500,000
500,000
500,000
769,997
839,640
3,358,560
3,494,415
4,239,097
4,624,469
4,644,862.80
4,660,988.80
5,127,087.60

5,000
5,000
5,000
5,000,000
7,669,971
8,396,399
33,585,596
34,944,155
42,390,964
46,244,688
46,448,628
46,609,888
51,270,876———
4,995,000
2,699,971
696,428
25,189,197
1,358,559
7,446,809
3,853,724
203,940
161,260
4,660,988

Share price
SEK
100
80
60
40
20
0

|

|

Jan

Feb

|

|

Mar

|

Apr

|

May

Jun

|

|

|

|

|

|

Jul

Aug

Sep

Oct

Nov

Dec

2022

Ovzon Annual Report 2022

48

CORPORATE GOVERNANCE REPORT

Corporate Governance Report
Ovzon AB is listed on Nasdaq Stockholm Mid Cap. Ovzon complies with statements from the Swedish Securities Council
regarding best practice in the Swedish securities market, and applies the Swedish Corporate Governance Code (“the Code”).
The Board of Directors is of the opinion that in all respects, Ovzon complied with the Code in 2022 and therefore has no
deviations to report or explain. This Corporate Governance Report does not form part of the formal Annual Report, but is aseparate report that has been reviewed by the company’s auditor.

GENERAL MEETINGS

2022 AGM

Major shareholders

Pursuant to the Companies Act, the general meeting of shareholders
is the company’s supreme decision-making body and shareholders
exercise their voting rights at such meetings. The Annual General
Meeting (AGM) must be held within six months of the end of eachpreceding financial year to consider such matters as statutory
accounts and reports, disposition of profit or loss and discharging
the Board members from liability. Ovzon’s Articles of Association
stipulate that the notice to attend the AGM shall be published in
the Official Swedish Gazette (Post- och Inrikes Tidningar) and be
made available on Ovzon’s website. Announcement of the notice toattend shall be published in the Swedish daily newspaper Svenska
Dagbladet. The notice to attend the AGM shall be published noearlier than six weeks and no later than four weeks prior to themeeting.
Extraordinary General Meetings are held when the Board of
Directors considers such meetings appropriate, or when either theauditor or shareholders representing at least 10 percent of all shares
outstanding request such a meeting in writing for a specific purpose.

• Re-election of Board members Anders Björkman, Nicklas Paulson,
Magnus René, Patrik Tigerschiöld, Dan Jangblad and Cecilia
Driving. Magnus René was also re-elected as Chairman of theBoard.

Ovzon’s three largest shareholders are:• Grant Thornton Sweden AB was reappointed auditor for thecompany. Grant Thornton Sweden AB announced that Carl-JohanRegell would remain auditor in charge.
• The Meeting resolved to adopt guidelines for remuneration tosenior executives in accordance with the Board’s proposal. The
guidelines remained essentially unchanged from previous years.

Shareholder
1. Öresund
2. Bure Equity
3. Futur Pension

Number of shares

Percentage, %6,089,828
5,861,034
4,934,166

11.9
11.4
9.6

Nomination Committee
The purpose of the Nomination Committee is to submit proposals
regarding the chairman at general meetings, candidates for Board
members including the position of Chairman of the Board, fees andother remuneration to each member of the Board of Directors, andremuneration for committee work as well as the election of andremuneration to the external auditor.
For the period up until a new Nomination Committee isappointed, the Nomination Committee comprises Andreas Hofmann,nominated by Investment AB Öresund; Sophie Hagströmer,nominated by Bure Equity; Thomas Ehlin, nominated by the Fourth
Swedish National Pension Fund; and Magnus René, Chairman of theBoard of Ovzon.

Ovzon Annual Report 2022

49

CORPORATE GOVERNANCE REPORTNo remuneration is paid to the members of the Nomination
Committee. The Nomination Committee is entitled to request
remuneration from the company for reasonable expenses that arenecessary for the Nomination Committee to fulfill its assignment. The
mandate period of the Nomination Committee extends until suchtime as a new Nomination Committee is announced. In conjunction
with the work of the Nomination Committee and for its own improvement efforts, the Board of Directors conducts a self-evaluation of its
work and efficiency on an annual basis. The results are reported to
the Nomination Committee.

Board of Directors
Composition of the Board

According to the company’s Articles of Association, the Board of
Directors shall consist of no less than three ordinary members andno more than ten ordinary members. Six members were elected
at the 2022 Annual General Meeting: Anders Björkman, Nicklas
Paulson, Patrik Tigerschiöld, Magnus René, Cecilia Driving and Dan
Jangblad. Magnus René was elected Chairman of the Board. The
CEO is not a member of the Board but is always in attendance atBoard meetings (refer to pages 55–58 in this Annual Report for
more information on the Board of Directors and CEO). The company’s CFO serves as the secretary to the Board.
Board observer

On July 3, 2019, the company secured a credit facility of USD 60
million from Proventus Capital Partners (PCP). The loan was grantedon the condition that PCP be given the right to appoint an observer
who is co-opted onto the Board (without voting rights). The observer
will be provided with financially significant information, regardless ofwhether or not it comprises insider information and could have an
impact on the assessment of the credit risk for the loan. Additionally,
the observer will be provided with all other information that does
not comprise insider information, and has been sent to the Board
members prior to Board meetings and presented at the meetings.
PCP has requested to be permitted to study this information inorder to materially facilitate PCP’s continual assessment of how thecompany’s financial risk is developing, ultimately for the purpose ofbeing able to more efficiently contribute to solving the company’s
upcoming financial challenges.
The company ensures through procedures and agreements that,to the extent the observer receives insider information, it will remain
confidential and will be handled in a structural manner. The company
is of the opinion that the structure is in compliance with Article 17 of
the Market Abuse Regulation (MAR). Additionally, the company also
deems the participation of the observer not to be in violation of theCompanies Act.

Board activities

The Board of Directors bears ultimate responsibility for governing thecompany’s operations between Annual General Meetings. The Board
decides on issues pertaining to the company’s strategic approach,financing, major investments, acquisitions, divestments, organizational issues, incentive principles and key policies. The Board’s work
is regulated, for example, by the Swedish Companies Act (ABL),
the Articles of Association, the rules of procedure that the Board
has established for its work and the Board’s instructions to theCEO. The Board’s Articles of Association clarify the responsibilitiesof the individual members, especially the Chairman, as well as the
allocation of responsibilities between the Board and CEO and theauthority of the latter.
These are further clarified in the instructions to the CEO. The
rules of procedure also indicate, at a general level, the topics thatthe Board of Directors will normally address during the work year
and the allocation of time for the work.
In 2022, the Board of Directors reviewed its rules of procedure,
the instructions to the CEO and the reporting instructions, andevaluated the work of the CEO.
The Board has appointed a Remuneration Committee that during
the year comprised Anders Björkman (chairman) and Dan Jangblad.
The company has an Audit Committee consisting of Cecilia Driving(chairman), Nicklas Paulson and Patrik Tigerschiöld. The Board held
13 minuted meetings in 2022.

The Remuneration Committee prepares items and/or material for
decisions concerning the following remuneration issues:• Providing the Board with proposals for remuneration guidelines
and other conditions of employment for the CEO and other senior
executives (in accordance with the regulations of the CompaniesAct) at the first scheduled Board meeting of the financial year.
This includes policies regarding salaries, remuneration and otherconditions of employment for Ovzon’s management. Examples ofthese are policies for short- and long-term bonus and incentive
plans, pension policies, policies for basic salaries, and otherconditions of employment.
• Proposals regarding individual salaries and other remuneration
to the CEO.
• In accordance with proposals from the CEO, decisions on
individual salaries and other remuneration to directors who report
directly to the CEO.

The tasks of the Remuneration Committee
Board of Directors			Independent			in relation			to the company
			and Group
Name
Position
ElectedManagement

Independent inrelation to
the company’s
major
shareholders

Magnus René

Chairman

2018

No

Anders Björkman

Board member

2019

Patrik Tigerschiöld

Board member

Nicklas Paulson

Attendanceat Board
meetings

Attendanceat committee
meetings

Yes

13/13

–

Yes

Yes

13/13

4/4

2018

Yes

No

10/13

2/6

Board member

2018

Yes

No

13/13

6/6

Cecilia Driving

Board member

2020

Yes

Yes

11/13

6/6

Dan Jangblad

Board member

2020

Yes

Yes

13/13

4/4

Ovzon Annual Report 2022

50

CORPORATE GOVERNANCE REPORTThe tasks of the Audit Committee

Remuneration and terms of employment

The Audit Committee monitors the company’s financial reporting.The
Committee is tasked with reviewing the procedures for the company’s risk management and control, as well as financial reporting.
Through continual contact with the company’s auditors andtreasury function, the Committee ensures that internal and external
audits fulfill the necessary requirements and that relevant policies
and governance documents exist, and discusses the scope andfocus of audit activities.
The Audit Committee annually reviews the auditors’ proposal foran audit plan and defines shared issues that the audit will focus on.
The Committee evaluates audit measures and approves additional
services that the company purchases from the external auditors.
The Committee also helps the Nomination Committee in preparing
proposals for auditors and the fees for the work.
The chairman of the Audit Committee is responsible forroutinely informing the Board of Directors about the activities of theCommittee and will hand matters over to the Board for decision asneeded.
The Committee’s opportunities for in-depth discussions with theauditors do not replace the meetings between the auditors and thefull Board of Directors. Such meetings must take place at least oncea year, normally in conjunction with publication of the Annual Report.

Board of Directors

CEO and Group Management

Ovzon will offer market-based total compensation that permits
recruitment and retention of senior executives. Compensation willcomprise fixed salary, earnings-based remuneration, share shavings
programs, pensions and other remuneration. Altogether, these
portions composed the total compensation to an individual.
The fixed salary will take into account the individual’s areas of
responsibility and experience, and will be reviewed annually. The
performance-based remuneration will depend on the individual’sfulfillment of qualitative and quantitative targets. For senior executives, the variable portion can constitute up to 50 percent of the fixedsalary.
The Board of Directors decides on the remuneration policy for the
CEO and Group Management. As of the date of publication of thisAnnual Report, the applicable policy is designed in accordance with

The amount of remuneration granted to the Board of Directors,
including the Chairman, is determined by resolution at the AGM.
At the AGM on April 21, 2022, it was resolved that fees of SEK
200,000 would be paid to Board members not employed by thecompany and that a fee of SEK 400,000 would be paid
to the Chairman. Additionally, remuneration of SEK 80,000 would
be paid to the chair, and SEK 35,000 to other members of the Audit
Committee, and SEK 25,000 to the chair, and SEK 20,000 to theother members of the Remuneration Committee.
The members of the Board of Directors are not entitled to any
benefits upon ceasing to serve as members of the Board of Directors. Remuneration to the members of the Board of Directors for the2022 financial year amounted to a total of SEK 1,595,000.

The shareholders comprise the Annual General Meeting
Nomination
CommitteettAnnual General Meeting

Proposalt Elected

t Elected

Board of Directors
t Targets and strategiest

Information

CEO and Group management
Internal governance documents

Articles of Association, the Board’s rules of procedure,
instructions to the CEO, communication policy andfinance policy. The policy document and manuals with rules
and recommendations, principles and guidance for thecompany’s operation and its employees.

s Information

Auditors

Responsibility for control of the entire operation.
Reports to the Board of Directors and the shareholders.

s Reports and controlt

The CEO is responsible for the routine management of the company’s affairs and the daily operations. The division of work between
the Board of Directors and CEO is set forth in the company’s rules ofprocedure for the Board of Directors and the instructions to the CEO.
The CEO keeps the Board continually informed of the company’s
operations, results of operations and financial position throughmonthly reports and other measures. The CEO is responsible forpreparing reports and compiling information for Board meetings andfor presenting these materials at the Board meetings.
Per Norén has been President and CEO since May 1, 2021
and the management group at December 31, 2022 comprised
CFO Noora Jayasekara, COO Tom Hopkins, CCO Dan Gager, EVPBusiness Development Per Wahlberg, VP Satellite Operations Pål
Ekberg, CTO Kennet Lejnell and VP Key Accounts Jim Gerow.

CEO and Group Management

Information

External governance documents

The Swedish Companies Act, other applicable legislation and rules,
Nasdaq’s rulebook for issuers and the Swedish
Corporate Governance Code.

Ovzon Annual Report 2022

51

CORPORATE GOVERNANCE REPORT

the guidelines for remuneration of the CEO and Group Management,
as adopted by the Annual General Meeting. Individual remuneration
to the CEO is proposed by the Remuneration Committee andapproved by the Board of Directors, whereas individual remuneration
to other members of Group Management is proposed by the CEO
and approved by the Remuneration Committee.
During the financial year, CEO Per Norén drew a salaryof TUSD 438 (280). Variable remuneration to the company’s CEO
for 2022 totals TUSD 28 (7).

Auditing
The company’s statutory auditor is appointed at the Annual General
Meeting. During the year, the Board receives presentations from thecompany’s auditors, who have reviewed whether the company’s
internal control and external reporting meet the requirements placedon a listed company. Carl-Johan Regell from Grant Thornton Sweden
AB was appointed as auditor for 2022. For the 2022 financial year,
the total remuneration to the company’s auditor amounted to TSEK
1,478.

Internal control and risk management

Internal audit

The Board of Directors is responsible for internal control. Internal
control and risk management regarding financial reporting is aprocess designed by the Audit Committee and the Board of Directors for the purpose of providing the Board, management and others
concerned in the organization with reasonable assurance concerning
reliability in the external financial reporting, and whether the financial
reports have been prepared in accordance with accepted businesspractice and applicable laws and ordinances as well as otherrequirements for listed companies.

Ovzon has established a governance and internal control system,compliance with which is monitored regularly at different levels in thecompany. In light of this, the Board of Directors is of the opinion that
there is currently no need to inaugurate a special audit function. This
assessment is reviewed annually by the Board.

Control environment
The basis for the internal control environment is the allocationof authority and responsibility among the Board of Directors, itscommittees, the CEO and the rest of company management. Within
the company, the most substantial components of the control
environment are documented in the Board’s rules of procedure andthe instructions to the CEO as well as policies and other governing
documents.

Control activities
Suitable control activities are a prerequisite for managing substantial
risks in internal control. To safeguard this internal control, theCompany has both automated system-based controls and manualcontrols, for example, in the form of check-offs and inventories.
Financial analyses of the company’s earnings and monitoring ofplans and forecasts supplement the controls, providing an overall
confirmation of the quality of the reporting.

Information and communication
The company’s governing documentation in the form of policies,
guidelines and manuals in terms of internal and external communication is kept updated and is communicated internally through the relevant channels, such as internal meetings and internal news mails.
The company’s communication policy, containing the guidelines
for how information is to be disclosed, applies to communication
with external parties. The purpose of this policy is to ensure that thecompany meets its disclosure obligations correctly and completely
in accordance with applicable legislation and rules. Ovzon submitted
the interim reports for 2022 to Finansinspektionen on time but not
to the Swedish Companies Registration Office in accordance with
reporting requirements; the reports were submitted in December.

Solna, March 30, 2023
Board of Directors of Ovzon AB

Ovzon Annual Report 2022

52

Revisorsyttrande om
bolagstyrningsrapporten
Till årsstämman i Ovzon AB (publ), org.nr 559079-2650

Uppdrag och ansvarsfördelning
Det är styrelsen som har ansvaret för bolagsstyrningsrapporten för år 2022 på sidorna 49-52
och för att den är upprättad i enlighet med årsredovisningslagen.
Granskningens inriktning och omfattning
Vår granskning har skett enligt FARs rekommendation RevR 16 Revisorns granskning av
bolagsstyrningsrapporten. Detta innebär att vår granskning av bolagsstyrningsrapporten har en
annan inriktning och en väsentligt mindre omfattning jämfört med den inriktning och omfattning
som en revision enligt International Standards on Auditing och god revisionssed i Sverige har.
Vi anser att denna granskning ger oss tillräcklig grund för våra uttalanden.

Uttalande
En bolagsstyrningsrapport har upprättats. Upplysningar i enlighet med 6 kap. 6 § andra stycket
punkterna 2–6 årsredovisningslagen samt 7 kap. 31 § andra stycket samma lag är förenliga
med årsredovisningen och koncernredovisningen samt är i överensstämmelse medårsredovisningslagen.
Stockholm den 30 mars 2023
Grant Thornton Sweden AB

Carl-Johan Regell
Auktoriserad revisor

Ovzon Annual Report 2022

53

Board of Directors, Auditor
and Group Management

Ovzon Annual Report 2022

54

BOARD OF DIRECTORS, AUDITOR AND GROUP MANAGEMENT

Board of Directors

Magnus René
Chairman of the Board (since 2021),
Board member (since 2018).
Born 1962
Nationality: Swedish.
Education: Electrical Engineering,
Chalmers Institute of Technology.
Current engagements: Chairman of theBoard of Elos Medtech AB and Advanced
Manufacturing Technologies Ltd, Board
member of Inkbit Corporation and Bomill
AB. Member of the Royal Swedish Academyof Engineering (IVA).
Previous engagements/Experience: CEO
Ovzon AB 2019–2021; CEO Arcam AB
2001–2018. CEO and business areapresident Hogia Teknik 1999–2000. VP
Customer Service Mycronic, 1990–1999.
Not independent in relation to the company
and Group Management. Independent inrelation to the company’s major shareholders.
Magnus René holds 87,272 shares and
200,000 call options in the company. In
addition, Magnus holds 100,000 warrants inthe 2020/2023 option program.

Anders Björkman
Board member (since 2019)
Born 1959
Nationality: Swedish.
Education: M.Sc., Chalmers Instituteof Technology, Gothenburg.
Current engagements: Chairman of the Boardof Vinnergi AB, Maven Wireless AB, Elonroad AB, Kebni AB and Proptivity AB. Board
member of Allgon AB and Eastern Light AB.
Previous engagements/Experience: Anders
has a background in the telecommunications industry, where he was a driving
force in the formation of what is now
the Swedish telecom operator Tele2. Heworked for Ericsson AB, was the CEO for
Joint Ventures between OnePhone Holding
with KPN and British Telecom and CEOof Argnor Wireless Ventures as well as apartner in Brainheart Capital. Chairman of
the Board of Ovzon, 2019–2021.
Independent in relation to the company andGroup Management. Independent in relation
to the company’s principal owners.
Anders Björkman owns 4,363 shares in thecompany.

Patrik Tigerschiöld
Board member (since 2018)
Born 1964
Nationality: Swedish.
Education: M.Sc. in Business andEconomics, Stockholm University.
Current engagements: Chairman of theBoard of Bure Equity AB, Mycronic AB,
Cavotec S/A, ACQ Bure AB, and SNS.
Board member of Fondita AB. Member ofthe Royal Swedish Academy of Engineering
Sciences (IVA).
Previous engagements/Experience: CEOof Bure Equity AB 2010–2013; CEO of
Skanditek Industriförvaltning 1999–2010;
CEO of SEB Allemansfonder AB 1995–1999.
Independent in relation to the company andGroup Management. Not independent inrelation to the company’s principal owners.
Patrik Tigerschiöld holds 218,181 shares in
the company.

Nicklas Paulson
Board member (since 2018)
Born 1970
Nationality: Swedish.
Education: M.Sc. in Business andEconomics, Stockholm University.
Current engagements: CEO of Investment
AB Öresund. Board member of Bilia AB.
Previous engagements/Experience: Investment Banking at Carnegie Investment BankAB (publ) and Alfred Berg ABN AMRO.
Independent in relation to the company andGroup Management. Not independent inrelation to the company’s principal owners.
Nicklas Paulson (including related parties)
holds 10,907 shares in the company.

Ovzon Annual Report 2022

55

BOARD OF DIRECTORS, AUDITOR AND GROUP MANAGEMENT

Board of Directors, cont.

Cecilia Driving
Board member (since 2020)
Born 1971
Nationality: Swedish.
Education: LL.M. and a B. Sc. in Business
Administration from Stockholm University.
Current engagements: Group CFO,
Mabtech AB. Board member of Embracer
Group AB.
Previous engagements/Experience:
Deputy CEO and CFO, Biovica InternationalAB, and several positions as CFO in life
science, private equity, research andtelecom companies.
Independent in relation to the company andGroup Management. Independent in relation
to the company’s principal owners.
Cecilia Driving holds 1,000 shares in thecompany.

Dan Jangblad
Board member (since 2020)
Born 1958
Nationality: Swedish.
Education: M.Sc. in Mechanical Engineering,
Linköping University.
Current engagements: Owner and CEO of
Emmern Konsult AB, including commission
as Senior Adviser to CEO of Saab AB. Board
member of Combitech AB; Chairman of theBoard of Visual Sweden Vinnäx Innovation
Program (Vinnova) and Vice Chairman of
the Board of Linköping University.
Previous engagements/Experience: Headof business areas and CSO for Saab AB,
CEO of Swedish Space Corporation SSC.
Responsible for Saab’s venture capital portfolio
and Chairman of the Board of Combitech
AB. Chairman of the Board of Defense Innovation Sweden (SOFF) and Board memberof Swedish ICT and LIU Holding AB.
Independent in relation to the company andGroup Management. Independent in relation
to the company’s principal owners.
Dan Jangblad holds 650 shares in thecompany.

Huvudansvarig revisor
Carl-Johan Regell
Född 1963
Auktoriserad revisor.
Grant Thornton Sweden AB

Ovzon Annual Report 2022

56

BOARD OF DIRECTORS, AUDITOR AND GROUP MANAGEMENTGroup Management

Per Norén
CEO (since 2021)
Born 1965
Nationality: Swedish and US.
Education: Economics, Gothenburg Schoolof Economics. Swedish Infantry Officers’
College. Executive Education, Harvard
Business School.
Current engagements: Board member of
the National Nordic Museum in Seattle,
Washington.
Previous engagements/Experience:
President of Anuvu, 2017–2021. Vice
President of the Boeing Company, 2007–2017. President and CEO Carmen Systems
AB 1998–2007.
Per Norén owns 20,000 shares in thecompany. In addition, Per holds 100,000
warrants in the 2021/2024 option program
as well as 50,000 warrants in the 2022/
2025 warrants program.
Own holdings of shares updated as of December 31, 2022.

Per Wahlberg
Deputy CEO
Born 1966
Nationality: Swedish.
Education: History of Science and Ideas,Umeå University; radio link technician,Swedish Air Force tele-technical school;
and tele-technical program in upper
secondary school.
Current engagements: Deputy CEO
responsible for innovation and businessdevelopment in the company, deputy CEO
and Board member for Ovzon Sweden AB,
founder and Board member of Etheron AB.
Previous engagements/Experience: Satellite
operator Tele-X and project manager at
Swedish Space Corporation; co-founder of
Swe-Dish Satellite Systems AB.
Per Wahlberg (including related parties)
holds 676,046 shares in the company.
In addition, Per holds 50,000 warrants inthe 2020/2023 warrants program, 50,000
warrants in the 2021/2024 option program,and 25,000 warrants in the 2022/2025
warrants program.

Kennet Lejnell
CTO
Born 1968
Nationality: Swedish.
Education: Ph.D. in Theoretical Physics,
Stockholm University and Princeton
University.
Current engagements: CTO of the company
and Board member of Equi Performance
Sweden AB and Banhof AB.
Previous engagements/Experience: CTO
and CSO at Swe-Dish Satellite Systems.
Kennet Lejnell (including related parties)
holds 289,017 shares in the company. In
addition, Kennet holds 50,000 warrants
in the 2020/2023 warrants program and25,000 warrants in the 2022/2025 warrants
program.

Noora Jayasekara
CFO
Born 1978
Nationality: Finnish and Swedish.
Education: Master’s degree in Economics,
specialization in Financing.
Current engagements: Board member ofDoro AB.
Previous engagements/Experience:
CFO at Humana AB, Manager and consult
at consultancy group EY.
Noora Jayasekara holds 5,000 warrants
in the 2022/2025 warrant program.

Ovzon Annual Report 2022

57

BOARD OF DIRECTORS, AUDITOR AND GROUP MANAGEMENTGroup Management, cont.

Tom Hopkins
COO
Born 1962
Nationality: US.
Education: MBA, Benedictine College
and BA in Political Science, University ofConnecticut.
Current engagements: –Previous engagements: Executive Director
for Raytheon Blackbird Technologies, Inc;
commissioned officer (colonel) in the UnitedStates Army, with several positions ofcommand in crucial organizations.
Tom Hopkins holds 50,000 warrants inthe 2020/2023 option program, 50,000
warrants in the 2021/2024 option program,and 25,000 options in the 2022/2025
employee stock option program.

Daniel Gager
CCO
Born 1971
Nationality: US.
Education: B. Sc. in Science andTechnology, Cameron University.
Current engagements: –Previous engagements: VP Business
Development at Comsat; Director ofGovernment Business at Iridium, various
positions at SATCOM with the US Department of Defense.
Daniel Gager holds 50,000 warrants inthe 2020/2023 option program, 10,000
warrants in the 2021/2024 option program,and 25,000 options in the 2022/2025
employee stock option program.

Pål Ekberg
VP Satellite Operations
Born 1972
Nationality: Swedish.
Education: Political Science andEconomics, Lund University.
Current engagements: CEO of
OverHorizon LLC.
Previous engagements: VP Sales at
Swe-Dish Satellite Systems, consultant at
the Swedish Trade Council (Exportrådet)and lieutenant in the Swedish Air ForceReserve.
Pål Ekberg holds 140,000 shares in thecompany. In addition, Pål holds 50,000
employee stock options in the 2020/2023
option program, 50,000 warrants in the2021/2024 option program, and 25,000
warrants in the 2022/2025 employee stock
option program.

Jim Gerow
Key Accounts Manager
Born 1961
Nationality: US.
Education: Bachelor of Science in ElectricalEngineering, University of Connecticut.
Current engagements: –Previous engagements/Experience:
President of Swe-Dish Satellite Systems
LLC; Government Program Manager at
USSOCOM, Department of the Army (DOA);
USSOCEUR. Department of the Navy
(DON) at the Naval Air Warfare Center.
Jim Gerow (including related parties) holds
42,254 shares in the company. In addition, Jim holds 50,000 warrants in the2020/2023 option program, 50,000
warrants in the 2021/2024 option program,and 25,000 options in the 2022/2025
employee stock option program.

Own holdings of shares updated as of December 31, 2022.

Ovzon Annual Report 2022

58

Annual Report

2022
Ovzon Annual Report 2022

59

Administration Report
The Board of Directors and CEO of Ovzon AB (publ), Corporate Registration Number 559079-2650, hereby submit the Annual
Report and consolidated financial statements for the 2022 financial year. It is proposed that the Annual General Meeting on
April 20, 2023, approve the Annual Report. The company is listed on Nasdaq Stockholm Mid Cap under the symbol OVZON,
and has its registered office in Solna, Sweden. The Annual Report is prepared in Swedish kronor and in accordance with theInternational Financial Reporting Standards (IFRS) as adopted by the EU.
General information about the operations
Parent Company

Ovzon AB (publ) is the Parent Company of a Group established in
2006, offering mobile satellite-based communication services overown and leased satellite capacity to customers around the world.
The Parent Company’s operations comprise senior management andstaff functions and other central functions.
Group

The Group’s operations comprise providing SATCOM-as-a-Service
over proprietary and leased satellite capacity with user-friendly,
light and compact terminals. Since its start in 2006, Ovzon has
developed a complete solution to meet the increasing need formobile broadband connections in areas that do not have traditional
telecom services and where connections do not achieve the desired
performance.
Using advanced satellite-based communication with uniquecompact, portable terminals, packaged as a service that provides
high-speed data, the company resolves many specific needs fordifferent customer segments. Our customers consist of defense
forces, rescue services, commercial organizations, media and NGOs
who are dependent on, for example, real-time sensors and video
upload, either from mobile platforms or from on-site staff carrying theterminals with them. Ovzon’s solution provides a transfer speed thatis markedly faster than competing offerings.

The company’s current service offering is provided with leased
capacity on existing satellites. In 2019, the company began a project
to build and launch Ovzon 3, its first proprietary satellite. Launch of
the satellite is planned for 2023, and it will supply high-performancesteerable beams and proprietary technology that will make directcommunication between small terminals possible.
The company has a strong patent portfolio and in addition
currently has ten orbital positions with associated frequency licenses
for global coverage. The orbit positions are registered by the International Telecommunication Union (ITU) in the GEO stationary orbit.
The company has its head office in Solna, Sweden, and also has
offices in Tampa, Florida and Herndon, Virginia, both in the US.
VisionConnecting the world’s critical missions via satellite
Operational targets

The company’s goals are to pursue profitable growth and tocontinue growing and expanding its current service offering while
preparing for the launch of its first satellite, developed to Ovzon’s
specification.

Significant events during the financial year
In 2022, Ovzon strengthened its position and took several significant
steps toward expanding and broadening its business with SATCOMas-a-Service and a focus on profitable growth.

In the first quarter it was announced that the launch of Ovzon 3
had been delayed somewhat as a consequence of shortcomings
and delays in the delivery of key components, which impacted thecompletion of Ovzon 3 and a large number of other satellites in theindustry. The launch had been planned for the second half of 2022.
In the second quarter the delivery of SATCOM-as-a-Service
began to the Italian Fire and Rescue Services. Ovzon also received
a renewed order of USD 1.8 million from U.S. DOD for SATCOM-asa-Service beginning June 15, 2022.
In the third quarter Ovzon received a renewed order pertaining to
SATCOM-as-a-Service from the UK Ministry of Defence through thecompany’s partner Airbus. The 18-month renewal, valued at USD 1.1
million, began on September 1, 2022 and pertains to an extensionof Ovzon’s services in specific parts of the world. Ovzon’s CFO
Johan Brandt ended his tenure in September 2022.
In the fourth quarter Noora Jayasekara was appointed as the
new CFO, and took office on November 1, 2022. Ovzon received anorder totaling USD 2.9 million for SATCOM-as-a-Service from Global
RadioData Communications Ltd (GRC) in the UK. The U.S. DOD,
a long-term customer, renewed orders for a total value of USD 16
million pertaining to SATCOM-as-a-Service. Ovzon received an orderof SEK 10 million for SATCOM-as-a-Service from a new partner,
the Swedish Space Corporation. In addition, Ovzon received a neworder totaling SEK 10 million for SATCOM-as-a-Service from its new
French partner, Nigma Conseil SAS.

Ovzon Annual Report 2022

60

The market and events
The company is experiencing continued strong interest in its service,from defense-related operators as well as other customer segments
in need of mobile broadband services via satellite in areas without
functioning infrastructure. In 2022, the company continued tobroaden its marketing through agreements with several distributors
and resellers, thereby reaching new customer groups in newgeographical markets.
During the year, a number of marketing activities and demonstrations relating to Ovzon’s mobile broadband service were conductedin the US and for Europe’s leading defense organizations andother relevant customer segments. The applications demonstrated
included high-definition video, data acquisition from terrestrial andairborne sensors, broadband Internet access, telephony, and PushTo-Talk which was communicated via satellite in real time between
vehicles (on-the-move) and handheld manpack terminals.
In 2022, the company participated in many trade exhibitions in
the US and Europe.
In the US, Ovzon attended Satellite 2022 and SOFIC, as well
as a number of specialized events. In Europe, the company choseto attend well-known exhibitions such as Eurosatory in Paris, andGlobal MILSATCOM in London, but also a number of new exhibitions
including SEDEXPO in Spain, GSOF in Hungary, and Space Tech
Expo in Germany.

Financial performance
During the year — the last half of the year in particular — Ovzon
advanced its positions as the company signed several key agreements with new and existing customers.
The increase in sales for 2022 compared with 2021 is a result of
the new key contracts that were signed with the US Department of
Defense and the UK Ministry of Defence, as well as completely new
customers in the UK, France, and Sweden.
Earnings for full year 2022 were impacted by the strategic
investment in, and the initially lower capacity utilization of, betterand global leased satellite capacity. The unsold capacity of aroundSEK 38 million (58) that was charged to earnings was instead used
to a significant extent for tests and customer demonstrations of
the company’s satellite service. In the last quarter, all capacity had
been utilized, which shows that the investment in both capacity andmarket activities had been correct.
Earnings were further adversely impacted by provision of SEK
50 million for bad debt related to the company’s Italian distributor
due to late payments. The parties have come to an agreement on a
repayment plan, and Ovzon has also received a pledge in the formof assets owned by the distributor, but despite this the provision has
been made as a precautionary measure.
The order intake for SATCOM-as-a-Service (excluding terminals)
for the full year amounted to USD 2.1 million (34.2), and the orderbook pertaining to undelivered SATCOM-as-a-Service (excluding
terminals) amounted to USD 20.8 million (29.2) at year-end(excluding sold capacity on Ovzon 3). Third- and fourth-quarter
earnings were adversely impacted by provisions pertaining to bad
debt. Due to the crucial function of the end customer (the Italian Fireand Rescue Services), Ovzon will continue delivery of the service.

In the second quarter of 2021, the company received state support
in the US linked to COVID-19 totaling SEK 1.8 million. A further SEK
2.3 million linked to the company’s move to Nasdaq Stockholm inthe spring of 2021 was charged to operating loss.
Loss after tax totaled SEK -36.2 million (-83.9); excluding
currency translations, the loss was SEK -79.5 million (-111.9).
Earnings per share totaled SEK -0.71 (-1.78).
Cash flow information

Cash flow from operating activities totaled SEK -112.2 million(-75.9). The reduction in cash flow from operating activities is linked
primarily to higher inventory and late customer payments.
Cash flow from investing activities totaled SEK -150.6 million(-273.8). The investments were attributable primarily to developmentof new terminals and the company’s first proprietary satellite, Ovzon
3, a project that is estimated to be completed in the period between
July and December 2023.
Cash flow from financing activities totaled SEK 101.5 million(558.6). During the year, loan expenditure totaled TSEK 57,541(36,134). Of this expenditure, interest paid totaled TSEK 48,754.
These have been capitalized and thus recognized as part ofinvesting activities in the statement of cash flows. Of the company’s
total available credit facility of USD 55 million, USD 10 million was
unutilized as of the end of the reporting period.

Earnings

Revenue totaled SEK 357.0 million (191.4), which corresponds togrowth of 87 percent (19); adjusted for exchange rate fluctuations,
growth was 58 percent (28). Adjusted for sales of production inventory in the fourth quarter of 2021, the growth rate was 107 percent(7); excluding exchange rate fluctuations, growth was 76 percent(15). The increase in sales for full year 2022 was driven by newcontracts with customers and the resulting higher capacity utilizationof satellite capacity previously purchased for the long term, as well
as sales of terminals.
Operating loss totaled SEK -81 million (-113.4) and the operating
margin totaled -22.7 percent (-59.2). Profitability was gradually
positively impacted during the year by improvements to capacity
utilization in the steerable beams on satellites that were purchased
for the long term. In total, unsold capacity on the steerable beams
impacted the operating loss by SEK -37.7 million (-58.3). The year
was adversely impacted by a provision for bad debt of SEK 50
million (0). The company is working actively and closely with thecustomer to ensure payment, including the preparation of apayment plan.

Investments

Investments in property, plant and equipment and intangible assets
amounted to SEK 163.1 million (273.8). Investments in 2022
pertained primarily to the Ovzon 3 satellite.
Financial position

The Group’s cash and cash equivalents amounted to SEK 275.6
million (406.1) at the end of the reporting period.
Consolidated multi-year overview

2022

2021

2020

2019

2018

Revenue, TSEKOperating profit/loss, TSEKOperating profit/loss, TSEK (adjusted)
Operating margin, % (adjusted)
Profit/loss after financial items, TSEK
Profit/loss after tax, TSEK
Balance sheet total, TSEK
Average number of employees

356,993-81,064-81,064
neg-35,778-36,185
1,921,668
39

191,378-113,383-113,383
neg-83,886-83,854
1,853,318
35

160,477-48,284-48,284
neg-106,998-104,049
1,329,36529

231,642
11,41923,716
10
38,78829,230891,98522

207,883-17,5368,524
4-24,637-25,640
131,150
16

Ovzon Annual Report 2022

61

Equity amounted to SEK 1,392.8 million (1,450.3) and the company’s debt/equity ratio was 72 percent (78). It is proposed that nodividend be paid for the 2022 financial year.

Parent Company
Revenue in 2022 amounted to SEK 24.3 million (24.8) and operating profit was SEK 0.3 million (0.2).

Board activities
Six members were elected at the 2022 Annual General Meeting:Anders Björkman, Nicklas Paulson, Patrik Tigerschiöld, Magnus
René, Cecilia Driving and Dan Jangblad. Magnus René was elected
Chairman of the Board.
During the year, the Board of Directors held 23 meetings, atwhich it addressed issues of technical development, sales, Ovzon
3, credit risks, financing, and financial statements. Additionally, theactivities of the board in 2021 were assessed, and the results werereported to the Nomination Committee. The Board is responsible
for the company’s organization and management and continuously
assesses the company’s financial situation. The Board has adopted
written rules of procedure, which regulate such matters as Board
meetings, business submitted to the Board, financial reports andinstructions for the CEO. The company’s creditor, P Capital Partners,
has the right to appoint an observer who is co-opted onto the Board(without voting rights). Refer further to the Corporate Governance
Report on pages 49–52, which is not part of the formal Annual
Report but constitutes a report in its own right that is reviewed by thecompany’s auditors.

Guidelines for salaries and other
remuneration to senior executives
The Board complies with the guidelines established by the general
meeting of shareholders for determining salary and other remuneration for the CEO and other members of company management.
Remuneration is paid in the form of fixed salary and bonus programs
set annually on the basis of the established earnings targets.
The Board of Directors of Ovzon AB (publ) proposes that theunchanged guidelines remain in force for determining salaries andother remuneration to senior executives in the company for theperiod from the 2022 Annual General Meeting through the end of
the 2023 Annual General Meeting:• Remuneration to Group Management will encompass fixed salary,variable remuneration (if any), pensions and other benefits, aswell as company cars (if any), occupational health services andmore. The total remuneration shall be under market conditions
and competitive, and reflect the individual’s performances andresponsibilities, and — with regard to any share-based incentive
plans — the further performance of the company’s share that
accrues to the shareholders.

Transactions with related parties
Apart from transactions with subsidiaries on market terms andcontractual remuneration to the Board of Directors and CEO, thecompany had no transactions with related parties in 2021 or 2022.

Significant events after the end of the financial year
• Any variable cash salary will presume that defined and measurable performance-based targets have been met. Variable cash
salary will total a maximum of 50 percent of the annual fixedsalary of the respective senior executives. Programs for variable
remuneration will grant the Board of Directors, under exceptional
economic conditions, to limit or forbear from payment of variable
remuneration if such action is deemed necessary as reasonable
and compatible with the company’s responsibilities toward its
shareholders, employees and other stakeholders.

At December 31, 2022, Ovzon’s share capital amounted to
SEK 5,127,087.6 distributed among 51,270,876 shares with a parvalue of SEK 0.10 per share. According to the Articles of Association, the share capital is to be not less than SEK 3,358,556 andnot more than SEK 13,434,224 distributed among not fewer than
33,585,596 shares and not more than 134,342,384 shares.

On February 3, the company announced that the launch of Ovzon
3 would be postponed, and that the company was switching toSpaceX as a partner. The delay was due to the announcement by
the satellite manufacturer, Maxar Technologies, regarding further
delays to the completion of Ovzon 3 and the new planned period forlaunch between July and September.
On February 3, the company announced that additional financing
had been secured to complete and conduct the launch of Ovzon 3,
in part by increasing the current credit facility with P Capital Partners
from USD 60 million to USD 65 million. Several of the company’s
major shareholders have also confirmed their interest in subscribing
for shares in a new share issue.
On February 6, a directed share issue was carried out, totaling
4,494,382 shares at a share price of SEK 44.50. The subscription
price was established using an accelerated book-building process
conducted by Carnegie Investment Bank AB (publ). The company
generated around SEK 200 million less costs related to the issue.
The directed share issue entailed a dilution of roughly 8.1 percentof the number of shares and votes. The company published thenotice to attend an Extraordinary General Meeting on February 6 toapprove the conditional share issue.
On March 3, 2023, the Extraordinary General Meeting was held,
which resolved to approve the decision of the Board on a shareissue of a maximum of 4,494,382 shares, with a derogation of theshareholders’ preferential rights. The total increase in the company’s
share capital was SEK 449,438.20, and the subscription price has
been established at SEK 44.50.
On March 22, the company announced that additional provisionsof SEK 34 million for bad debt had been charged to earnings for 2022.

The company’s major shareholders

Anticipated future development

At the end of the year: Investment AB Öresund (11.9 percent), Bure
Equity AB (11.4 percent), Futur Pension (9.6 percent), Handelsbanken Fonder (9.4 percent), the Fourth Swedish National Pension
Fund (9.1 percent), AFA Försäkring (7.6 percent), Staffan Persson(6.1 percent), AB Stena Finans (3.2 percent), Avanza Pension(1.9 percent), and Per Wahlberg (1.3 percent). The holdings of theremaining shareholders totaled 28.4 percent. At the end of thereporting period, the number of shares amounted to 51,270,876.

The company is of the opinion that sales for 2023 will be greaterthan for 2022, and the launch of Ovzon 3 will take place between
July and September 2023 provided that the final integration andtesting turn out as planned.

• Pension benefits will be defined-contribution. The retirement age
will follow from the pension regulations in the specific country.

Personnel
The company continued to strengthen its organization in 2022. At
the end of 2022, the number of employees in the Group was 43(36).

Sustainability
See the separate section concerning Ovzon’s sustainability initiatives
on pages 35–42 of this Annual Report.

The share and share capital

Ovzon Annual Report 2022

62

Other significant conditions

Distributors and agents

Liquidity risk

The Group’s satellite operations currently generate revenue from
customer agreements that are renewed every year for continued
validity. Satellite operations usually require permits. However,operations are currently being conducted using leased satellites andit is the responsibility of the satellite owners to provide the required
frequency licenses and other permits.

In the majority of its markets, Ovzon depends on distributors andagents that both provide valuable customer contacts and are responsible for local expertise and implementation regarding regulatory
requirements in their respective markets.

The company’s liquidity is managed with caution, which entails thatcash and cash equivalents are deposited in a bank. The company
has the objective of maintaining a strong cash balance.

Financing

Risks relating to regulation in the company’s areas of operation The
maintenance and expansion of Ovzon’s business depends on suchfactors as the ability to obtain required frequency licenses and authorizations in a timely manner, at reasonable costs and on satisfactoryterms and conditions.

Financing and assumption that the business is a going concern

Significant risks and uncertainties
Risks associated with the Group’s operations can generally be
divided into strategic and operational risks related to businessactivities and risks related to financial activities. There were no
crucial changes to material risks or uncertainties during the year.
The Board is responsible for ensuring that the company manages
its risks correctly and that there is compliance with the establishedpolicies for financial statements and internal control.
On pages 43–46 and in Note 3 of this Annual Report, Ovzon
reports in greater detail on the company’s principal risks and themeasures taken to reduce these. A summary of the risks is set out
below.

MarketTechnical development and competition

Ovzon has developed and validated a commercially viable satellite-based communication service. Ovzon has developed a unique
technology to boost its competitiveness. which will be available inOvzon 3, its proprietary satellite.
The space and communications industries are subject to rapid
advances and innovations in technology. In addition to competition
from current systems, Ovzon may therefore face competition in the
future from companies using new technologies and new satellite
and terrestrial systems, such as smart antenna systems and terminal
technologies not available for Ovzon’s frequency bands. Progress ortechnical innovations could render the company’s current technologies less competitive by satisfying end-user demand in more
attractive or cost-effective ways.
Partners

Ovzon relies on the availability of satellite capacity within the relevant
frequency band and orbital positions from third parties for theprovision of its current communications services.
However, the availability of suitable third-party satellite capacity is
subject to certain limitations as well as certain risks and uncertainties, many of which cannot be foreseen.
Customers

The majority of Ovzon’s services are sold indirectly to an individual
end user. Through its customer agreement with IGC (a subsidiary ofIntelsat), Ovzon provides its current services to a single end user:
the US Department of Defense and other departments and agencies.
For the 2022 financial year, approximately 64 percent of Ovzon’s
revenues were attributable to this customer.

In 2019, the company signed a senior credit facility of USD 60
million in order to ensure financing of its proprietary satellite, Ovzon
3. USD 45 million of the senior credit facility had been utilized asof December 31, 2022. The loan extends up to six years with aninterest rate, in USD, of LIBOR 3m + 10 percent.
After the news about the further delay of the company’s firstproprietary satellite and thereby additional costs, a directed shareissue was conducted in February 2023 that generated roughly SEK
200 million less expenses. In addition, an agreement was signed
to increase the credit facility with P Capital Partners from USD 60
million to USD 65 million. The total unutilized borrowing capacity isthus USD 20 million. The terms of the loan include the customarycovenants, which are reconciled on a quarterly basis; refer to Note 24.
The company’s financing risk corresponds to potential difficulties
in obtaining financing for activities at a given time. In addition,
there is a risk that the company will be unable to comply with theconditions that the credit facilities impose.
Ovzon’s earning capacity is highly dependent on the company’s
ability to grow its sales through contracts with new and existingcustomers, as well as on future market performance. There is arisk that contracts will be delayed, or that deliveries will be delayed,which will thus impact earnings capacity. There is also a risk thatthe market for satellite-based communication will perform morepoorly that it is at present. Additionally, there is a risk for further
increased costs in the event the company’s proprietary satellite
is delayed further. The remaining receivable from the company’s
Italian distributor, in the event the contracting party does not fulfill
its obligations in accordance with the payment plan, may adversely
affect the company’s cash flow.
Considering the aforementioned risks, the company is of theopinion that any additional need for financing can be resolved withloans or equity, and that the existing cash flow and working capitalwill be sufficient for the coming 12 months.

Credit and counterparty risk
In 2022, the company accumulated a bad debt from its Italian
distributor. Ovzon is actively engaged in securing payments from thecustomer, and has taken measures such as preparing a payment
plan. For further information, refer to page 20.

Other

Employees

There are a number of key employees at Ovzon, who have a highlevel of competence and established customer relations. Ovzon isdependent on recruiting and retaining personnel capable of developing the company’s technology, and establishing and maintaining
relationships with core customers.
The war in Ukraine

The war in Ukraine and the altered security policy situation has not
yet had an appreciable impact on Ovzon, but the Board of Directors
and the Management Group are monitoring the course of events inorder to evaluate and manage potential risks.
Currency risk

The Group’s policy is to balance revenue and expenses as far as
possible as assets and liabilities through exposure in the same
currency. The Group’s revenues for the satellite operation are in
USD. The satellite capacity purchased on existing satellites is also in
USD, as are most of the Group’s operating expenses. See also Note
3 Financial risk management.

Proposed allocation of profits
The following profits are at the disposal of the Annual General
Meeting (SEK)Profit brought forward
Profit for the year

1,819,755,379
54,144,680
1,873,900,058

The Board of Directors proposes thatthe following be carried forward

1,873,900,058

For the Group’s and Parent Company’s earnings and position otherwise, refer to the income statements and balance sheets, cash-flowstatements and supplementary disclosures below. All amounts are
expressed in thousands of Swedish kronor (TSEK) unless otherwise
stated.

Ovzon Annual Report 2022

63

Consolidated financial statements
Consolidated income statement

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Operating income, etc.
Revenue5
Capitalized work on own account		
Other operating income		

356,993
13,152
14,054

191,378
10,535–

Operating expenses
Purchased satellite capacity and other direct costs		
Other external costs
7
Employee benefit expenses
8
Depreciation/amortization and impairment of property,
plant and equipment and intangible assets
9
Other operating expenses		

-245,451-105,260-78,786-177,313-58,868-65,618-23,380-12,386-9,895-3,602

Operating loss		

-81,064-113,383

Income from financial items
Financial income
Financial expenses

45,786
-500

29865
-368

10
11

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Net profit for the year attributable to:Shareholders of the Parent Company		-36,185-83,854

Total loss for the year		-36,185-83,854

Earnings per share and share data
13
Earnings per share attributable to Parent Company, SEK		– before dilution		-0.71
Average number of shares before dilution		
51,270,876
Warrants		0
Average number of shares after dilution		
51,270,876– after dilution		
-0.71

-1.78
47,023,823
047,023,823-1.78

Consolidated statement of comprehensive income		Jan – Dec
TSEK		
2022

Jan – Dec
2021

Loss for the year		-36,185
Other comprehensive income:		
Items that can be subsequently reclassified to the income statement:		
Loss after financial items		
-35,778-83,886– Translation differences		-22,182
		
Other comprehensive income net after tax		
-22,182
Tax on the profit for the year
12
-407
32
COMPREHENSIVE INCOME FOR THE YEAR 		-58,367
LOSS FOR THE YEAR		
-36,185-83,854		Comprehensive income for the year attributable to:Shareholders of the Parent Company		
-58,367-83,854

		

45,28629,497COMPREHENSIVE INCOME FOR THE YEAR		

-58,367-11,085-11,085-94,939-94,939-94,939

Ovzon Annual Report 202264

Consolidated balance sheet

		
TSEK
Note

ASSETS
Fixed assets
Intangible fixed assets
Capitalized expenditure for development
Patents and licensing rights

Dec 31,2022

Dec 31,2022

Dec 31,2021

EQUITY AND LIABILITIES
Equity23
Share capital 		
5,127
Other paid-in capital		
1,813,199
Reserves		 -17,148
Accumulated deficit including loss for the year		-408,359
Equity attributable to the Parent Company’s shareholders		
1,392,819

5,127
1,812,438
5,034-372,331
1,450,268

28,023
6,653
1,317,280

Total equity		

1,392,819

1,450,268

1,485,455

1,351,956

144

102

Non-current liabilities
Borrowing
Lease liabilities
Other provisions

24
17
—

469,670
8,377
1,400

316,529
7,139
—

144

102

		

479,447

323,668

1,545,077

1,375,920

Current liabilities
Trade payables		Current tax liabilities		
Other liabilities		
Accrued expenses and deferred income
25

19,943281
2,448
26,73052,219231
3,681
23,251

		

49,402

79,382

1,921,668

1,853,318

14
15

Dec 31,2021

33,92225,556–23,862

		
59,478Property, plant and equipment
Equipment, tools, fixtures and fittings
16
42,621
Right-of-use assets
17
7,787
Construction in progress and advance payments
18
1,435,047

23,862		Financial assets
Deferred tax assets				
Total fixed assets		
Current assets
Inventory, etc.
Inventory		

53,922

25,259		Current receivables
Trade receivables
20
Other receivables		Prepaid expenses and accrued income
21

53,922

25,25930,056
5,104
11,89732,532
6,986
6,537

		

47,05746,055

Cash and cash equivalents

22

275,612

406,084

Total current assets		

376,591

477,398

TOTAL ASSETS		

1,921,668

1,853,318

		
TSEK
Note

TOTAL EQUITY AND LIABILITIES		

Ovzon Annual Report 2022

65

Consolidated statement of changes in equity

Equity attributable to the Parent Company’s shareholders
			
		
Share
TSEK		
capitalOther		Accumulated
paid-in		
loss incl. profit/
capitalReserves
loss for the year

Total
equityEquity at January 1, 2021		
Loss for the year		
Other comprehensive income		

4,624
—
—

1,560,446——

16,119—-11,085-288,578-83,854—

1,292,611-83,854-11,085

Total comprehensive income		

——-11,085-83,854-94,939

Warrants		—Rights issue		
503
Costs attributable to the issue		—
Share-based remuneration		
—2,283
258,505-8,796
—

—
—
—
—

—
—
—
100

2,283
259,008-8,796100

Total transactions with shareholders:		

503

251,992—

100

252,596

Equity at December 31, 2021		

5,127

1,812,438

5,034-372,331

1,450,268

Equity at January 1, 2022		
Loss for the year		
Other comprehensive income		

5,127
—
—

1,812,438
—
—

5,034
—
-22,182-372,331-36,185—

1,450,268-36,185-22,182

Total comprehensive income		

——-22,182-36,185-58,367

Warrants		—Share-based remuneration		
—

761
—

—
—

—
158

761
158

Total transactions with shareholders:		

—

761

—

158

918

Equity at December 31, 2022		

5,127

1,813,199-17,148-408,359

1,392,819

Ovzon Annual Report 2022

66

Consolidated cash flow statement

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Operating activities
Operating loss		
Adjustments for non-cash items
27
Interest received, etc.		
Interest paid, etc.		
Income tax paid		

-81,064
26,2402,382-70—-113,383
9,895
10,514-368-673

Investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Sale of property, plant and equipment

14, 1516, 1916-33,922-129,179
12,455-2,610-271,204—

Cash flow from investing activities		

-150,646-273,814

Cash flow from operating activities
before changes in working capital		

-52,512-94,015

Financing activities
New share issue		
Costs in conjunction with issue		Remuneration received for warrants		
Amortization of lease liability		
Loans raised		

——761-1,445102,194

259,008-8,796
2,283-1,348
307,475

Cash flow from changes in working capital
Decrease(+)/increase(-) in inventory		
Decrease(+)/increase(-) in trade receivables		
Decrease (+)/increase (-) in current receivables		
Decrease (-)/increase (+) in trade payables		
Decrease (–)/increase (+) in current liabilities		

-28,6632,476-3,478-32,276
2,298

9,428
-25,478-13,833
31,672
16,298Cash flow from financing activities		

101,510558,622

Total change in working capital		

-59,643

18,087

Cash flow for the year		
Cash and cash equivalents at the beginning of the year		
Exchange rate difference in cash and cash equivalents		

-161,291
406,084
30,819208,880
185,025
12,179Cash flow from operating activities		-112,155-75,928

Cash and cash equivalents at the end of the year		275,612

406,084

Ovzon Annual Report 2022

67

Parent Company financial statements
Parent Company income statement

Parent Company statement of comprehensive income

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Operating income, etc.
Revenue5, 6Other operating income		

24,357
1,419

24,8181,260

		

25,776

26,078Operating expenses		
Other external costs
7
Employee benefit expenses
8-15,630-9,822-15,233-10,613

		

-25,478-25,846

298

232

111,449-57,602

175,925-137,056

53,84738,869Operating profit		Income from financial items
Other interest income and similar items
Interest expenses and similar items

10
11

		

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Profit for the year		
Other comprehensive income		

54,145–

39,101–COMPREHENSIVE INCOME FOR THE YEAR 		54,145

39,101

Profit after financial items		
54,145
39,101		
Tax on profit for the year
12——
PROFIT FOR THE YEAR		
54,145
39,101		Ovzon Annual Report 2022

68

Parent Company balance sheet

		
TSEK
Note

Dec 31,
2021

		
TSEK
Note

438

—

EQUITY AND LIABILITIES
Equity23
Restricted equity
Share capital 		

5,127

5,127

		 438Financial assets
Participations in Group companies
19
1,843,491
Receivables from Group companies
29283,176

–

		

5,127

5,127

1,395,491
375,136		

1,770,627

Unrestricted equity
Profit brought forward		
Profit for the year		

1,819,755
54,145

1,779,894
39,101		

1,873,900

1,818,995

Total equity		

1,879,027

1,824,122

ASSETS
Fixed assets
Intangible fixed assets
Capitalized expenditure

14

Total fixed assets		
Current assets
Receivables from Group companies 		
Other receivables		Prepaid expenses and accrued income21

Dec 31,2022

2,126,667
2,127,105

Dec 31,2021

1,770,627

—
905
553

—
269
384

		 1,458

653

Cash and cash equivalents

Dec 31,2022

22

224,933

380,551

Total current assets		

226,391

381,204

TOTAL ASSETS		

2,353,496

2,151,831

Non-current liabilities
24
Liabilities to credit institutions		

469,670

316,529

		

469,670

316,529

Current liabilities
Trade payables		Liabilities to Group companies		Current tax liabilities		
Other liabilities		
Accrued expenses and deferred income
25

1,169
—
280
623
2,727

1,052
—
231
1,375
8,522

		

4,799

11,1802,353,496

2,151,831

TOTAL EQUITY AND LIABILITIES		

Ovzon Annual Report 2022

69

Parent Company statement of changes in equity

Restricted equity

Parent Company cash flow statement

Unrestricted equity

		Profit/loss
		 brought forward, incl.
TSEK
Share capital profit/loss for the year

Total
equityEquity at January 1, 2021
Profit for the year
Other comprehensive income

4,624
—
—

1,527,901
39,101—

1,532,525
39,101—

Total comprehensive income—

39,101

39,101

503——

258,505-8,7962,283

259,008-8,7962,283

Equity at December 31, 2021

5,127

1,818,995

1,824,122

Equity at January 1, 2022
Profit for the year
Other comprehensive income

5,127
—
—

1,818,995
54,145—

1,824,122
54,145—

Total comprehensive income—

54,14554,145

Other paid-in capital

—

761

761

5,127

1,873,900

1,879,027

New share issue
Issue expenses
Other paid-in capital

Equity at December 31, 2022

		
TSEK
Note

Jan – Dec
2022

Jan – Dec
2021

Operating activities
Operating profit		Interest received, etc.		
Interest paid		
Income tax paid		

298
134,874-57,60249

232
166,250-128,001-34

Cash flow from operating activities
before changes in working capital		

77,61938,447

Cash flow from changes in working capital
Decrease (+)/increase (-) in current receivables		
Decrease (-)/increase (+) in trade payables		
Decrease (–)/increase (+) in current liabilities		

-805
117
-6,54887,886-3,689
7,647

Total change in working capital		

-7,236

91,844

Cash flow from operating activities		

70,383130,291

Investing activities
Shareholders’ contributions paid
19
Acquisition of intangible assets		
Changes in receivables in Group companies		

-448,000-438
91,960-362,000–-79,944

Cash flow from investing activities		

-356,478-441,944

Financing activities
New share issue		
Costs in conjunction with issue		
Loans raised from credit institutions		
Remuneration received for warrants		

——102,194761

259,008-8,796
307,475
2,283

Cash flow from financing activities		

102,955

559,970

Cash flow for the year		
Cash and cash equivalents at the beginning of the year		-183,140
380,551

248,317
122,559

Cash and cash equivalents at the end of the year		
Exchange rate difference in cash and cash equivalents		

224,933
27,522

380,551
9,675

Ovzon Annual Report 2022

70

NotesNOTE 1 – GENERAL INFORMATION
Ovzon AB (publ) is the Parent Company of a Group that has theobjective of providing broadband satellite services through its own
and leased satellite capacity to customers in various parts of the world.
The Parent Company, Ovzon AB (publ), with corporate registration number 559079-2650 is a limited liability company registered in
Sweden, with its head office in Solna. The address of the head officeis Andertorpsvägen 10, SE-171 54 Solna, Sweden.
The operations of the Parent Company Ovzon AB (publ)
comprise exclusively Group coordinating assignments and theassets comprise mainly shares and participations in Group
companies, as well as transactions among Group companies.
The Annual Report and consolidated financial statements wereapproved by the Board of Directors on March 30, 2023 and will bepresented for approval at the upcoming Annual General Meeting on
April 20, 2023.

NOTE 2 – SUMMARY OF
IMPORTANT ACCOUNTING POLICIESThe most important accounting policies applied in the preparationof this report are presented below. These policies were appliedconsistently for all of the years presented, unless otherwise stated.

2.1 Basis of preparation
The consolidated financial statements were prepared in accordancewith the Swedish Annual Accounts Act, RFR 1 Supplementary
Accounting Rules for Groups, and the International Financial ReportingStandards (IFRS) and IFRIC interpretations as adopted by the EU for
the financial year beginning January 1, 2022. The Parent Company
prepares its financial statements in accordance with the Swedish
Annual Accounts Act and RFR 2, Accounting for Legal Entities.
The Group has applied a number of new standards and interpretations since January 1, 2022. None of the new standards and interpretations that the Group has applied since January 1, 2022, has resulted
in any material impact on the consolidated financial statements.
The consolidated financial statements were prepared based on
historical cost, meaning that assets and liabilities are recognized atthese values. The functional currency for the Parent Company and
the Group’s reporting currency is Swedish kronor (SEK). All amounts
are rounded to the nearest thousand (TSEK), unless otherwise
stated. The income statement is organized by cost type. Amounts inbrackets pertain to the preceding year.
Preparing financial statements in accordance with IFRS requires
the application of some key estimates for accounting purposes.
Further, the Board of Directors and the management are required

to make certain judgments in the application of the company’s
accounting policies. The areas requiring a high degree of judgment,
which are complex or areas in which assumptions and estimates areof material importance for the consolidated financial statements, aredescribed in Note 4.
The financial statements have been prepared under the assumption that the Group is conducting its operations as a going concern,
which entails an assumption that the Group will be able to settle
its debts as they fall due. By confirming the assumption of a going
concern when preparing the reports, the Group took the following
specific factors into consideration:• The management group prepares an annual budget and long-term
strategy plans, including an assessment of cash flow needs,
and continues to monitor actual outcome against budget andplans throughout the reporting period. Based on these facts, themanagement group has reasonable expectations that the Grouphas, and will have, adequate resources to continue its operations
for the foreseeable future.
• The Group strengthened its capital base through several newshare issues, and secured loan financing.
• The Group is growing organically, increasing sales by 87 percent,and improved its operating profit by SEK 32 million.
• The Group has attracted growing media interest, the number ofcustomer inquiries and contracts has increased, and the company
has qualified as one of the top 10 hottest in satellite-based
communication.

2.4 Consolidated financial statements
Group companies are consolidated as of the day the Group has
control of the company according to the definitions stated undereach category of Group company below. Divested Group companies
are included in the consolidated financial statements until the day
the Group ceases to have control or influence over these companies. Internal Group transactions have been eliminated.
Subsidiaries

Subsidiaries include all companies in which Ovzon AB (publ) has
control. Control means that the Ovzon Group has the ability tocontrol the subsidiary, is entitled to its returns and can use its influence to steer the activities that affect the returns. All of the Group’s
subsidiaries are wholly owned.

2.5 Segment reporting
Operating segments are reported in a manner that corresponds tothe internal reporting that is submitted to the highest decisionmaking officer. The highest decision-making officer is the function
with responsibility for the allocation of resources and assessment of
the operating segment’s results. In the Group, this function has been
identified as the CEO. The regular internal reporting to the CEO of
results that meet the criteria for constituting a segment is done for
the Group in its entirety. The Group in total is therefore reported as
the company’s only segment.

2.6 Foreign currency translation
2.6.1 Functional and presentation currencies

Considering the size of the company as well as its operation andenvironmental impact, the Board of Directors and management
group believe that the climate issues have not had, and will not have,a material effect on the financial statements in the foreseeable future.

2.2 Standards, interpretations and amendments thatentered force in 2022
No new standards and interpretations that Ovzon has applied
since January 1, 2022, has resulted in any material impact on the
consolidated financial statements.

2.3 New standards, interpretations and amendmentsthat have been published but have not yet entered force
A number of new standards and interpretations enter force for thefinancial years commencing after 2022 and have not been appliedin the preparation of this financial report. New standards andamendments are not deemed to have any material effect on the
consolidated financial statements.

Items included in the financial statements for the different entities
in the Group are measured in the currency used in the economic
environment where each company is predominantly active (functional
currency). The Swedish krona (SEK) is used as the Parent Company’s functional currency and as the presentation currency in the
consolidated financial statements. The American dollar (USD) is thefunctional currency for the American and Cypriot subsidiaries.
2.6.2 Transactions and balance sheet items

Foreign currency transactions are translated into the functional
currency according to the exchange rates applicable on the dateof the transaction or the day on which the items are revalued.
Exchange gains and losses, resulting from settlement of suchtransactions and when translating monetary assets and liabilities inforeign currency at the year-end rate, are recognized in the income
statement.

Ovzon Annual Report 202271

2.6.3 Translation of foreign subsidiaries

2.7.4 Financial income and expenses

When preparing consolidated accounts, the balance sheets for
the Group’s foreign operations are translated from their functional
currency into Swedish kronor based on the exchange rate on thereporting date. The income statement and other comprehensive
income are translated at the average exchange rate for the period.
The translation differences that arise are recorded in other comprehensive income against the translation reserve in equity. The accumulated translation difference is removed and recognized as part ofcapital gain or capital loss in the event that the foreign operation is
disposed of. Goodwill and fair value adjustments attributable to theacquisition of operations with a functional currency other than the
Swedish krona are treated as assets and liabilities in the currency of
the acquired operation and translated at the year-end exchange rateon the reporting date.

Financial income primarily comprises interest income on cash andcash equivalents and the translation of intra-Group and externalloans. Financial expenses comprise interest expenses and translation of intra-Group and external loans.

2.7 Revenue
The basic principle of IFRS 15 Revenue from Contracts with
Customers is that the company recognizes the revenue when
the customer takes control of the good or service. The amountrecognized as revenue is the remuneration the company expects
to have the right to in exchange for the transfer of the service tothe customer. The company’s performance obligation pertaining
to services is met over time in conjunction with the service being
delivered and the transaction price comprises a relatively small
share of the length of the service contract. The company’s performance obligation pertaining to goods is met at a specific time inconjunction with the goods being delivered and the transaction pricecomprises the value of the entire contract.

2.8 Leases
IFRS 16 replaced IAS 17 as of January 1, 2019. Under the newstandard, the company recognized an asset (regarding a right touse) and a financial liability (regarding an obligation to make lease
payments) in the balance sheet. The company further divided thecost of the leased asset into amortization and interest payments.
The company’s contracts with Intelsat concerning capacity on IS-39
and IS-37 total USD 39.4 million and extend for four years startingfrom November 1, 2020. Since the capacity leased on the beams
does not correspond materially to the full capacity of the beam,
those portions of capacity that have been leased are not identified
assets, and therefore the contracts are deemed not to meet thedefinition of a lease under IFRS 16.

2.9 Employee benefits

Primarily, satellite terminals are included in SATCOM-as-a-Service,
but there are customers whose wish or requirement is that they
own the equipment themselves. In these cases, the Group both
sells its in-house Ovzon T6 On-the-Pause (OTP) terminals, and isa distributor of On-the-Move (OTM) terminals. The income fromsales of terminals is recognized when the risk has transferred to thecustomer, which normally occurs when the terminals are shipped.

Salaries, national insurance contributions, bonuses and other current
remuneration to employees are recognized when the employee has
performed the service. The Group has only defined-contribution
pension plans. For these, the Group pays contributions to privately
managed pension insurance plans on a compulsory, contractual or
voluntary basis. The Group has no further payment obligations after
the contributions have been paid. The contributions are recognized
as personnel expenses when they fall due for payment.
In 2018, the company issued warrants for employees in Sweden
and employee stock options for employees in the US. In 2020, thecompany issued warrants for employees in both Sweden and the
US. The options under the Warrants Programs were transferred to
employees on market terms. On the acquisition of warrants by theemployee, the payment received is booked against other paid-in
capital. When the options are exercised, the share capital increases
by the par value of each newly issued share and the associatedsurplus price is added to the other paid-in capital. The options under
the Employee Stock Option Program were transferred at no charge
to employees and are recognized in accordance with IFRS 2 andUFR7. The fair value of the allotted options is recognized as an
employee expense with a corresponding increase in equity. The fairvalue is calculated at the time of allotment and distributed across thevesting period (three years). Since the employee stock options are
deemed to qualify as incentive stock options, they are not deemed
to incur any costs in the form of social contributions.

2.7.3 Other operating income

2.10 Taxes

Other operating income consists primarily of operational currency
exchange gains as well as profit from the sale of current assets.

Tax for the period comprises current tax and, when applicable,
deferred tax. Taxes are recognized in the income statement except

2.7.1 Sales of SATCOM-as-a-Service

The Group leases capacity on existing satellites, and markets andsells broadband services via this leased capacity. Revenue fromsales of broadband services are recognized on a straight-line basis
over the length of the contract period, which is normally six to twelve
months or alternately based on data used or connection time.
Contract conditions are “matched” to the widest possible extent
between leased and sold capacity.
2.7.2 Sales of terminals

when the underlying transaction is recognized in other comprehensive income or directly in equity, in which case the associated tax
effect is also recognized under the same item.
Current tax is the tax calculated on the taxable earnings for theperiod. The taxable profit (tax loss) differs from the accounting profit
because of adjustments for non-taxable and non-deductible items.
Current tax is the tax paid or recovered for the current year, adjusted
for any current tax attributable to prior periods.
Deferred tax is recognized according to the balance sheet
method, whereby deferred tax liabilities are recognized in thebalance sheet for all temporary differences that arise between the
carrying amount and tax base of assets and liabilities. However,deferred tax is not recognized if the temporary difference has arisen
on initial recognition of assets and liabilities that constitute theacquisition of an asset. A deferred tax asset for deductible temporary differences and losses carried forward is recognized only tothe extent that it is probable that the amount can be utilized against
future taxable profit. Deferred tax is calculated in accordance withstatutory tax rates that have been enacted or announced at the endof the reporting period and are expected to apply when the deferred
tax asset in question is realized or the deferred tax liability settled.
In 2017, a new interpretation regarding recognition of income
taxes, IFRIC 23, was issued. The statement clarifies how doubtful
tax items are to be recognized and measured. The company applies
IFRIC 23 as of January 1, 2019. The modified retroactive applicationmeans that comparative figures have not been restated.

2.11 Intangible assets
An intangible asset is recognized in the balance sheet when it isprobable that the future economic benefits that are attributable
to the asset will flow to the Group and when value of the asset
can be measured reliably. Development costs are capitalized andrecognized in the balance sheet as intangible assets if the criteria
for recognition in the balance sheet in accordance with IAS 38
Intangible Assets have been satisfied.
Research and development

Expenses for research are expensed immediately and consist
exclusively of direct costs. Expenses relating to development
projects (attributable to the design and testing of new or improved
products) are carried forward as intangible assets to the extent thatthese expenses are expected to generate future financial benefits.
Since the basic technology development is completed, the company
is of the opinion that future development expenses will be mainly
expensed and that, accordingly, only a small part will be capitalized.
Development costs expensed earlier are not brought forward as an
asset in subsequent periods. Development costs brought forward
are amortized straight line over the period that the anticipated benefits are expected to accrue to the company and from the time thatcommercial production commences. In the consolidated balance
sheet, capitalized development expenses are recognized at cost lessOvzon Annual Report 202272

accumulated amortization and impairment. The amortization period
is based on the estimated period in use, which for development isfour years.
Patents and licenses

Patents and licenses acquired separately are recognized at cost.
Patents and licenses acquired through a business combination arerecognized at their fair value at the acquisition date. Patents andlicenses have a finite useful life and are recognized at cost lessaccumulated amortization. Amortization is carried out on a straightline basis to allocate the cost of patents and licenses over theirestimated useful life of 15 years.

2.12 Property, plant and equipment
Property, plant and equipment are recognized at cost less adeduction for accumulated depreciation and impairment losses. The
cost includes expenses directly attributable to the acquisition of theasset. Subsequent costs are only added to the asset’s carrying value
or recognized as a separate asset when it is probable that the future
economic benefits associated with the asset will benefit the Groupand the cost of the asset can be measured reliably. The carrying
amount for the replaced portion is derecognized from the balance
sheet. All other forms of repair and maintenance are recognized as
expenses in the income statement in the period in which they arise.
Depreciation of property, plant and equipment is recognized asa cost so that the value of the asset is depreciated on a straightline basis over its assessed useful life. The following depreciation
schedule applies:• Equipment, tools, fixtures and fittings 3–5 years
The assets’ residual values and useful lives are assessed at the endof each reporting period and adjusted when necessary. The carrying
amount of an asset is written down immediately to its recoverable
amount if the carrying amount of the asset exceeds its assessed
recoverable amount.
Gains and losses on disposal are determined by comparing saleproceeds with the carrying amount and are reported on a net basis
in the income statement.
Accounting policies regarding ongoinginvestments and advance payments

Ongoing investments regarding the company’s first proprietarysatellite are assessed as direct internal and external expenses
directly attributable to getting the satellite into a usable condition inaccordance with the intentions of Executive Management.
The company has signed an agreement with Maxar Technology
for the construction of a satellite. While the supplier of the satellite is
carrying out their side of the agreement, the company has its own
expenses for its part of the work. An integrated part of this project isthat the company finances the project in pace with its progress. Thismeans that for a certain amount of time, the financing is an advancepayment that then transitions into being the ongoing satellite project.
Since this is such an integrated project regarded by the company
as a project, the company has chosen to recognize the project in an
integrated item designated in the balance sheet as Construction inprogress and advance payments.
Borrowing expenses during construction are capitalized aspart of the cost. The capitalized borrowing expenses are based on
the specific borrowing by the Group for the investment, and aredescribed in Note 2.20.

2.13 Impairment of non-financial assets
Intangible assets with an indefinite useful life or intangible assets not
yet available for use are not amortized but are tested for impairment
annually. Assets that are amortized are considered with regard to
impairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset’s carrying amountexceeds its recoverable amount. The recoverable amount is the higherof an asset’s fair value less costs of disposal and value in use. For
the purposes of assessing impairment, assets are grouped at thelowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets
or groups of assets (cash-generating units). Non-financial assets otherthan goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.

2.14 Financial instruments
Financial assets recognized in the balance sheet include – on theasset side – loans, trade receivables and cash and cash equivalents. On the liability side, there are non-current and current loans,together with trade payables. The Group does not hold any derivative
instruments. A financial asset or liability is entered in the balance
sheet when the Group becomes a party to the contractual terms andconditions. Trade receivables are included when an invoice has been
sent and trade payables when an invoice has been received. Apartfrom cash and cash equivalents, only an insignificant portion of thefinancial assets are interest-bearing, for which reason no statement
has been made in respect of interest rate exposure. The maximum
credit risk corresponds to the carrying amount of financial assets.
Conditions for non-current and current loans are shown in Note 24;
other financial liabilities are not interest-bearing. A financial asset, or
portion thereof, is recognized when the rights under the agreement
have been realized or have expired. A financial liability, or portion
thereof, is recognized when it has been settled, when the obligation
under the agreement has been performed or ceases in some otherway. On each balance sheet date, the Group evaluates whether
there are objective indications that a financial asset or group offinancial assets are in need of impairment due to events that haveoccurred. For all financial assets and liabilities, the carrying amountis considered to be a good approximation of the fair value.

The categories are presented in Note 28 Supplementary disclosures,financial assets and liabilities. Financial assets and liabilities are only
offset and reported at a net amount in the balance sheet when there
is a legally enforceable right to set off the recognized amounts andan intention to settle them on a net basis or to realize the asset andsettle the liability simultaneously.

2.15 Inventory
Inventory consists largely of finished terminals, as well as a smaller
share of spare parts and accessories for the terminals.
The inventory is measured at the lowest of cost and revenue.
The cost is calculated according to the weighted average prices andincludes fees that arise on the acquisition of inventory assets andtheir transport to their current place and state. The net realizablevalue is defined as sales price less costs of production and sales
costs.
Aggregate costs of TSEK 49,130 (26,227) attributable to inventory were included in earnings for 2022. The Group recognized anamount of TSEK 2,980 (7,096) as a result of impairment of inventory
due to an assessment of obsolescence.

2.16 Trade receivables and other receivables
Trade receivables are recorded on a net basis after making provision
for expected bad debt losses. The expected life of trade receivables
is short, for which reason the value is recognized at a nominal
amount on an undiscounted basis in accordance with the amortizedcost method. A reserve is made for expected bad debt losses for
trade receivables when there are objective grounds to assume that
the Group may not receive all amounts due under the original terms
and conditions for the receivables. The size of the reserve comprises
the difference between the asset’s carrying amount and the value of
assessed future cash flows. The sum set aside is recognized in theincome statement.

2.17 Cash and cash equivalents
Cash and cash equivalents include cash, bank balances and, whenapplicable, other current financial investments due within threemonths. Cash and cash equivalents are recognized at their nominal
amount.

2.18 Equity
Equity in the Group comprises the following items:•S hare capital – represents the par value of issued and registeredshares.
•O ther paid-in capital – contributions that the company has received
from its shareholders and that are not recognized as share capital.
•R eserves – comprises exchange differences referable totranslation of foreign subsidiaries.
• Accumulated deficit, incl. profit/loss for the year – corresponds tothe accumulated profits and losses generated in total in the Group.
Ovzon Annual Report 2022

73

Transaction costs directly referable to an issue of new shares or
options are recognized in equity, net of tax, as a reduction in theproceeds.
The costs for employee stock options allotted in 2018 are
expensed straight line across the vesting period and recognizedagainst equity in accordance with IFRS 2.

or when there is an existing obligation originating from events thathave occurred but are not recognized as a liability or provision since
it is not likely that an outflow of resources will be required to settle
the obligation, or the scope of the obligation cannot be estimatedwith sufficient reliability.

2.19 Provisions

Cash flow statements are prepared in accordance with the indirect
method. This means that cash flow from operating activities isrecognized by adjusting profit or loss for the effects of transactionsof a non-cash nature and also for revenue and expenses associatedwith the cash flows from investing or financing activities.

A provision differs from other liabilities as there is uncertainty
regarding the time of payment or the size of the amount forthe settlement of the provision. A provision is recognized in thestatement of financial position when there is an existing legal orinformal obligation as a result of an event that has occurred, and it
is probable that an outflow of economic resources will be required
to settle the obligation and a reliable estimate of the amount can be
made.

2.20 Borrowing
Borrowings are initially recognized at fair value, net of transaction
costs incurred. Borrowing is subsequently recorded at amortizedcost and any difference between the amount received (net oftransaction costs) and the amount repaid is recognized in theincome statement distributed over the period of the loan, applying
the effective interest method. Borrowing is classified as current
liabilities unless the Group has an unconditional right to postpone
payment of the liability by at least 12 months after the end of thereporting period.
Borrowing costs directly attributable to the acquisition, construction or manufacture of a qualifying asset are capitalized during theperiod of time required for completing and preparing the asset for
its intended use or sale. Other borrowing costs are expensed in the
period in which they arise and are recognized under Finance costs(refer to Note 11).
Transaction costs paid before loans are recognized as prepaid
costs, and recognized against the loan when the loan is realized,
in accordance with IFRS 9. Transaction costs are subsequently
included as part of the effective interest rate.

2.21 Trade payables
These amounts represent liabilities for goods and services provided
to the group prior to the end of financial year which are unpaid.
Trade payables are categorized as other financial liabilities. As thematurities of trade payables are expected to be short, the value isreported at a nominal amount.

2.22 Contingent liabilities
A contingent liability is recognized when there is a potential obligation originating from events that have occurred whose existence isconfirmed solely by the fact that one or more uncertain future events
that are not fully under the company’s control occur or fail to occur,

recognized as appropriations. In the Parent Company, shareholder
contributions are capitalized as shares and participations. Impairment testing is also made as required of shareholder contributions
together with other holdings in the receiving company.
Leases2.23 Cash flow statement

2.24 Parent Company accounting policies
GeneralThe Parent Company has prepared this Annual Report in accordancewith the Swedish Annual Accounts Act (1995:1554) and the Swedish
Financial Reporting Board’s recommendation RFR 2 Accounting
for Legal Entities. The statements issued by the Swedish Financial
Reporting Board also apply to listed companies. RFR 2 entails that,in the annual report of the legal entity, the Parent Company is to
apply all IFRS and statements adopted by the EU as far as possible
within the framework of the Annual Accounts Act and in regard to theconnection between accounting and taxation. The recommendation
states the exceptions and additions that are to be made to IFRS.
Accordingly, the Parent Company applies the policies presented
in Note 2 of the consolidated financial statements above, with the
exception of what is stated below. The policies are applied consistently for all years presented, unless otherwise stated.
Classification and structures

The Parent Company’s income statement and balance sheet follow
the Annual Accounts Act in their structure. The differences comparedwith IAS 1 Presentation of Financial Statements, applied in thepresentation of the Group’s financial statements, mainly pertain
to the recognition of financial income and expenses, fixed assets,
equity and the recognition of provisions under a separate heading in
the balance sheet.
Participations in Group companies

Participations in Group companies are recognized in the Parent
Company in accordance with the cost method. Acquisition-related
costs for Group companies, which are expensed in the consolidated
financial statements, are included as part of the cost of shares inGroup companies.
Group contributions and shareholder contributions for legal entities

The Parent Company recognizes Group contributions and shareholder contributions in accordance with statement RFR2 fromthe Swedish Financial Reporting Board. Group contributions are

All leases are recognized in the Parent Company in accordance withthe regulations for operating leases. Lease payments made underoperating lease agreements are expensed on a straight-line basis
over the term of the lease.

NOTE 3 – FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors
The Group is exposed to various financial risks through its activities.
The overall objective of financial risk management is to minimize therisks of an adverse effect on the Group’s result.

3.1.1 Liquidity risk
‘Liquidity risk’ means a situation where cash and cash equivalents
cannot be ensured to pay for obligations. The Group’s liquidity
reserve shall provide freedom of action to implement decided
investments and fulfill payment obligations. Liquidity forecasts are
updated on an ongoing basis, and Group Management actively
monitors the liquidity situation so that liquidity risks can be attended
to in a timely fashion.

3.1.2 Financing risk
‘Financing risk’ corresponds to potential difficulties in obtaining
financing for activities at a given time. The Group actively works toachieve a low refinancing risk in relation to market pricing, i.e. thebest possible net financial income/expense within given risk frames.
The refinancing risk is limited as the Group always plans ahead
during refinancing negotiations. The Group endeavors to obtainloan commitments for all major investments to minimize financing
risk. The Board of Directors determines the ongoing level of capitaltied up in the loan portfolio. The management prepares ongoing
forecasts for the Group’s liquidity on the basis of expected cash
flows. The Group endeavors to have a loan portfolio that has a broad
spread of credit maturities and facilitates amortization.

3.1.3 Interest rate risk
‘Interest rate risk’ means the risk of changes in the market rate ofinterest having an adverse effect on the Group’s net interest income/expense. The Group’s revenue and cash flows from its operation
are basically independent of changes in market rates of interest as
the Group has no significant interest-bearing assets. The Group’s
interest rate risk arises through non-current borrowing. Fixed interest
borrowing exposes the Group to interest rate risk in terms of fairvalue. Group Management continually monitors interest rate changes
and acts accordingly.

Ovzon Annual Report 2022

74

3.1.4 Credit and counterparty risk

3.3 Sensitivity analysis

The Group’s financial transactions give rise to credit risks withrespect to financial counterparties. ‘Credit risk’ and ‘counterparty
risk’ mean the risk of losses if a counterparty does not fulfill its
obligations. The Group endeavors to work primarily with establishedcustomers who have a documented capacity to pay and competitive
operations. Measures include a credit check of the financial positionof the Group’s customers by obtaining information from credit rating
agencies. In the event the counterparty’s ability to pay is deemed
to be uncertain, a bank guarantee, surety, or other proof of ability to
pay is required.

No further analyses have been prepared apart from the sensitivity
analyses in Section 3.1.5 above.

3.1.5 Currency risk
‘Currency risk’ means the risk of an impact on the Group’s
performance and financial position as a consequence of changes
in exchange rates. Currency risk arises through future business
transactions, reported assets and liabilities and also net investments
in foreign operations. The Group Management continually monitors
changes in exchange rates and acts accordingly.
The Group’s operations are mainly conducted in the US and
Sweden, as well as to a lesser extent in Cyprus. The sale of satellite
services is made in its entirety in USD. Associated capacity costs
are also in USD. Of the other operating expenses, excluding
depreciation/amortization, approximately 40 percent occurs in USD
and approximately 60 percent in SEK. Purchases in EUR occur to aminor extent.
As a comparison, it can be said that if the USD/SEK had been
an average of 10 percent lower in 2022, sales would have declined
to the same extent and operating profit would have improved by SEK
5 to 10 million.
Ovzon’s net financial liabilities in USD at the end of the reporting
period amounted to USD 23.5 million (12.9). During the year, thecompany called off USD 10 million (35) of the USD 60 million credit
facility signed in 2019. See also the Administration Report under
Financial risks. For the impact on operating profit, refer to Notes 11
and 12.

3.1.6 Terms of loans
The terms of loans are shown in Note 24 Liabilities to credit
institutions.

3.2 Operating risks and external risks
The most important operating risks and external risks are attributable
to competition and commercial success and also dependency on
key personnel, cooperating partners and individual major customers.
Furthermore, Ovzon is dependent on access to satellite capacity
provided by a third party. Ovzon’s services are sold indirectly to anindividual end user.

3.4 Asset management
The Group’s objective in respect of its capital structure is to secure
the Group’s ability to continue its operations so that it can continue
to generate returns for shareholders while creating benefits for otherstakeholders, and to maintain an optimal capital structure as ameans of reducing the cost of capital.
To maintain or adjust its capital structure, the Group may decideto change the dividend paid to shareholders, repay capital to its
shareholders, issue new shares or sell assets to reduce its liabilities.
In the same way as other companies in the industry, the Groupassesses its capital on the basis of the debt/equity ratio. This
performance measure is calculated as net liability divided by capital
employed. Net liability is measured as total borrowing (including
the items Current borrowing and Non-current borrowing in the
consolidated balance sheet) less cash and cash equivalents. Capital
employed is measured as Equity in the consolidated balance sheet
plus the net liability.

NOTE 4 – IMPORTANT ESTIMATES AND
ASSESSMENTS FOR ACCOUNTING PURPOSES
The management must make assessments and assumptions inorder to prepare accounts in accordance with generally accepted
accounting principles. These affect reported asset and liability items
and income and expense items and also information otherwise
provided. These assessments are based on experience and assumptions that the management and Board of Directors consider to bereasonable under the prevailing circumstances. Actual outcomesmay then differ from these assessments if other conditions arise. The
assessments that are most important when preparing the financial
statements are described below.

4.1 Important assessments of the management
4.1.1 Assumption that the business is a going concern
In 2019, the company signed a senior credit facility of USD 60
million in order to ensure financing of its proprietary satellite, Ovzon
3. USD 45 million of the senior credit facility had been utilized as ofDecember 31, 2022. The loan extends up to six years with aninterest rate, in USD, of LIBOR 3m + 10 percent.
After the news about the further delay of the company’s firstproprietary satellite and thereby additional costs, a directed shareissue was conducted in February 2023 that generated roughly SEK
200 million less expenses. In addition, an agreement was signed
to increase the credit facility with P Capital Partners from USD 60

million to USD 65 million. The total unutilized borrowing capacity isthus USD 20 million. The terms of the loan include the customarycovenants, which are reconciled on a quarterly basis.
The company’s financing risk corresponds to potential difficulties
in obtaining financing for activities at a given time. In addition, there
is a risk that the company will be unable to comply with the conditions that the credit facilities impose. Ovzon’s earning capacity ishighly dependent on the company’s ability to grow its sales throughcontracts with new and existing customers, as well as on future
market performance. There is a risk that contracts will be delayed,or that deliveries will be delayed, which will thus impact earnings
capacity. There is also a risk that the market for satellite-based
communication will perform more poorly that it is at present.
Additionally, there is a risk for further increased costs in the eventthe company’s proprietary satellite is delayed further. The remaining
receivable in the company’s Italian distributor, in the event thecontracting party does not fulfill its obligations in accordance withthe payment plan, may adversely affect the company’s cash flow.
The aforementioned risks notwithstanding, the company is of theopinion that any additional need for financing can be resolved withloans or equity, and that the existing cash flow and working capitalwill be sufficient for the coming 12 months.

4.2 Uncertainty in accounting estimates
The estimates and assumptions that could entail a risk for adjustments to the carrying amounts of assets and liabilities in the next
financial years are:
• Useful life of intangible assets and property, plantand equipment.
• Ability to comply with creditors’ terms for financing of the ongoingsatellite construction.
•Opening parameters for the assessment of fair value pertaining tointangible assets as well as property, plant, and equipment.
• Provision for income tax and measurement of deferred tax assets.
• Assessment of doubtful trade receivables.

4.2.1 Income tax
Thorough assessments are required in order to establish theprovision for income tax. There are transactions and calculations
where the final tax is uncertain. In the event that the final tax forthese differs from the amount originally recognized, these differences
will impact current and deferred tax receivables and liabilities during
the period in which these taxes were established. No deferred tax
receivable has been recognized due to uncertainty concerning
the possibility of utilizing the tax loss carry forward that the tax is
attributable to.

Ovzon Annual Report 2022

75

NOTE 5 – BREAKDOWN OF REVENUE
Group

2022
SATCOM-as-a-Service
Italy
USA
Rest of World

Terminals
Italy
USA
Rest of WorldManagement services
EuropeUSA
Cyprus

Total

Parent Company

2021

2022

2021

66,391
207,648
19,505

9,435
154,443
5,936

—
—
—

—
—
—

293,544

169,81400—40,30023,149—2,317
19,247

—
—
—

—
—
—

63,44921,564

0

0

—
—
—

—
—
—

7,077
17,000280

7,538
17,000280——

24,357

24,818356,993

191,378

24,357

24,818The Group is dependent on a few customers, one of which accounts
for 64 percent of the Group’s revenue. The Group’s revenues arereceived entirely in USD. Income from Rest of World pertain to thecountries where the customers have their registered operations.

NOTE 6 – DISCLOSURES ON INTRA- GROUPPURCHASES AND SALES, ETC.
Parent Company			

2022

2021

Purchases, %			Sales, %			

15
100

16
100

Pertains to the share of the Parent Company’s revenue and externalcosts, respectively, managed within the Group.

NOTE 7 – DISCLOSURES ON AUDITOR FEES AND REMUNERATION
Group
2022

2021

2022

2021

966
180
307
25

715
145
379
125

696
180
307
25

688
145
379
125

Total
Fees to other audit firms for other services

1,478
—

1,364
54

1,208
—

1,337
54

Total

1,478

1,418

1,208

1,391

Grant Thornton
Audit engagements
Auditor activities other than audit engagements
Tax consultancy
Other services

The term audit engagement pertains to the auditors’ work on the statutory audit, and auditor activities other than audit engagements pertain to various types of quality assurance services.
Other services are those not included in the audit engagements, audit business or tax consultancy.

NOTE 8 – AVERAGE NUMBER OF EMPLOYEES, SALARIES, OTHER REMUNERATION AND PAYROLL OVERHEADS

Total current assets by geographic market
			12/31/22

Group
12/31/21

Europe			1,491,687 1,150,731
Cyprus			30,762
21,018USA			 22,628 204,171

Parent Company

Average no. of employees

Parent Company

2022

2021

2022

2021

Women
Men

4
35

4
31

1
2

–
2

Total

39

35

3

2

Total			1,545,077 1,375,920
Group
Subsidiaries

Of which, women

2022

2021

2022

2021

Sweden
USA

22
17

21
14

4
—

4
—

Total

39

35

4

4

Board of Directors
and company management

Number of Board members– of which, women
Number of senior
executives incl. CEO– of which, womenGroup

Parent Company

2022

2021

2022

2021

6
(1)

6
(1)

6
(1)

6
(1)

10
1

9
(—)

3
1

2
(—)

Ovzon Annual Report 2022

76

2022
Board of Directors and CEO
Salaries and remuneration amount to:(of which bonuses)

Parent Company
Subsidiaries
SwedenUSA
Total remuneration subsidiaries

Group total

Other
employees

Total

1,595
4,659
6,254
(—)		
(—)

1,490
4,122
5,612
(—)		
(—)

—
17,831
17,831
4,718
30,151
34,869(283)		
(283)

—15,42915,4294,167
20,224
24,391(568)		
(568)

4,718
47,98252,700(283)		
(283)

4,167
35,65339,820(478)		
(478)

Statutory and contractual national insurance costs:– Parent Company
501– Subsidiaries
268
Pension expenses:– Parent Company–– Subsidiaries
224
Total social contributions and pensions

2021

Other		 Board of Directors and CEO
employees
Total(of which bonuses)

1,465
8,473

1,966
8,742

468
245

1,295
7,933

1,763
8,177

1,316
5,766

1,316
5,990

–
204

1,161
4,965

1,161
5,169

993

17,02118,014917

15,355

16,271

7,306

69,662

76,968

6,573

55,13061,703Pensions

The company and Group have no outstanding pension commitments. Premiums for pension insurance must correspond primarily
to the supplementary pensions for salaried employees (ITP) plan.
However, the American subsidiary, Ovzon LLC, pays premiums undera defined-benefit plan.
Remuneration to senior executives

Board members Anders Björkman, Nicklas Paulson, Magnus
René, Patrik Tigerschiöld, Cecilia Driving and Dan Jangblad
were re-elected at the 2021 AGM. Board fees (including fees forcommittee activities) were paid according to the table below.
Until April 30, 2021, Chairman of the Board Magnus René was
CEO of the company and thus employed in the subsidiary, Ovzon
LLC. As CEO, Magnus René drew a basic salary of TUSD 142,
received variable remuneration of TUSD 57 for financial year 2020and TUSD 4 for financial year 2021. During the period from January
1 to April 30, 2021, he had the right to insurance corresponding to
the 401K plan in the US. No additional benefits were paid out.

Per Norén, the company’s CEO, is employed in the subsidiaryOvzon LLC and draws an annual salary of TUSD 420. Per Norénsucceeded Magnus René on May 1, 2021 and during the period
from May 1 to December 31, 2021 drew a basic salary of TUSD 280
as well as variable remuneration of TUSD 7 for 2021. The CEO has
the right to insurance equivalent to a 401k insurance plan in the US,
but no other benefits are paid in addition to this. The remaining nine(eight) senior executives receive market-based remuneration.
Incentive plans

In 2018, the company inaugurated two incentive plans: the2018/2021 warrants program and the 2018/2021 employee stock
option program. The company’s Management Group has subscribed
for the maximum number of warrants allotted – 167,000 in total –and other personnel have subscribed for 121,000 options. Following
the rights issues in January 2019 and June 2020, the terms for the
warrants program and the employee stock option program wererestated. Each warrant provides entitlement to subscribe for 2.06
new shares in the company at a price of SEK 58.32 per share.
Under these programs, 365,200 warrants were subscribed during
the vesting period (May 15 to June 15, 2021).

An Extraordinary General Meeting on May 18, 2020 resolved on
issuing a maximum of 900,000 warrants under the 2020/2023
warrants program. The company’s management group has
subscribed for the maximum number of options allotted — 450,000
in total — and other personnel have subscribed for a total of 200,000
options. Each warrant provides entitlement to subscribe for one
new share in the company at a price of SEK 102.10 per share. If
all options allotted are used in the option programs, a dilution of
1.4 percent of the shares and votes in the company will occur. The
exercise period for all warrants runs from June 18, 2023 until July18, 2023.
The Annual General Meeting on April 13, 2021 resolved to issue
a maximum of 1,100,000 warrants under the 2021/2024 warrants
program. The company’s Management Group has subscribed fora total of 410,000 warrants and other personnel have subscribedfor a total of 186,000 options. Each warrant provides entitlement
to subscribe for one new share in the company at a price of SEK
145.60 per share. If all warrants allotted are used in the option
program, a dilution of 1.2 percent of the shares and votes in thecompany will occur. The exercise period for the warrants runs fromMay 15, 2024 until June 15, 2024.
The Annual General Meeting on April 21, 2022 resolved to issue
a maximum of 450,000 options under two incentive plans: The
2022/2025 warrants program (maximum 225,000 warrants transferred at market value) and the 2022/2025 employee stock option
program (maximum 225,000 employee stock options that were
issued at no charge). In May, the company’s Management Group
subscribed for the maximum number of warrants allotted – 250,000
in total – and other personnel subscribed for a total of 140,000
options. In December 2022, new employees in the second half of2022 were offered the opportunity to subscribe for the remaining
options, of which a total of 25,000 options and 10,000 employee
stock options were subscribed. Each warrant and employee stock
option provides entitlement to subscribe for one new share in thecompany at a price of SEK 80.93 per share. If all options issued areused in the option programs, a dilution of 0.9 percent of the sharesand votes in the company will occur. The exercise period for the
warrants runs from June 1, 2025 until June 30, 2025.

Ovzon Annual Report 202277

2018/2021 option programGroup			2022
Warrants allotted and outstanding in Sweden		—
Employee stock options allottedand outstanding in the US			—
Useful life of the options			
—Value per option at allocation, underBlack & Scholes model (SEK)			
—Subscription rights (Number of shares per option)*—
Subscription price (SEK)*			—IFRS 2 Costs of employee stock optionsin the US for the period (TSEK)			
—Vesting period: May 15, 2021 to June 15, 2021			
Number of shares issued inconjunction with redemption in 2021			
—

2021
—
—
3 yrs
5.63
2.06
58.32
100

365,200* Following the rights issues in January 2019 and June 2020, the terms for warrants
programs and employee stock option programs were recalculated.

2020/2023 option programGroup			2022
Warrants allotted and outstanding			 700,000
Useful life of the options			
3 yrs
Value per option at allocation, underBlack & Scholes model (SEK)			
3.05
Subscription rights (Number of shares per option)		
1.00
Subscription price (SEK)			 102.10
Vesting period: June 18, 2023 to July 18, 2023.
2021/2024 option programGroup			2022
Warrants allotted and outstanding			 596,000
Useful life of the options			
3 yrs
Value per option at allocation, underBlack & Scholes model (SEK)			
3.83
Subscription rights (Number of shares per option)		
1.00
Subscription price (SEK)			 145.60
Vesting period: June 18, 2023 to July 18, 2023.

			
2022
Basic salary /Variable
Remuneration to senior executives
invoiced fees remuneration

2021
700,000
3 yrs
3.05
1.00
102.102022/2025 option programGroup			2022
Warrants allotted and outstanding			 425,000
Useful life of the options			
3 yrs
Value per option at allocation, underBlack & Scholes model (SEK)			
3.70
Subscription rights (Number of shares per option)		
1.00
Subscription price (SEK)			
80.93
IFRS 2 Costs of employee stock optionsin the US for the period (TSEK)			
158
Vesting period: June 1, 2025 to July 30, 2025

2021
—
—
—
—
—
—

2021
596,000
3 yrs
3.83
1.00
145.60Board ofDirectors
fees

Other
benefits

Pension
cost

Total

Magnus René, Chairman of the Board
Anders Björkman, Board member
Nicklas Paulson, Board member
Patrik Tigerschiöld, Board member
Cecilia Driving, Board member
Dan Jangblad, Board member
Per Norén, Chief Executive Officer
Other senior executives (9)

—
—
—
—
—
—
4,435
18,551

—
—
—
—
—
—
283
749

400
225
235
235
280
220
—
—

—
—
—
—
—
—
—
—

—
—
—
—
—
—
222
1,997

400
225
235
235
280
220
4,940
21,296

Total

22,985

1,032

1,595

—

2,219

27,831

			
2021
Basic salary /Variable
Remuneration to senior executives
invoiced fees remuneration

Board ofDirectors
fees

Other
benefits

Pension
cost

Total

Magnus René, Chairman
Anders Björkman, Board member
Nicklas Paulson, Board member
Patrik Tigerschiöld, Board member
Cecilia Driving, Board member
Dan Jangblad, Board member
Per Norén, Chief Executive Officer
Other senior executives (8)

1,196
—
—
—
—
—
2,403
15,100

508
—
—
—
—
—
60
2,347

370
210
220
220
265
205
—
—

—
—
—
—
—
—
—
—

84
—
—
—
—
—
120
2,139

2,158
210
220
220
265
205
2,583
19,586

Total

18,699

2,915

1,490

—

2,342

25,446

Other option programs
In conjunction with raising the subordinated credit facility of TSEK
200,000 on July 3, 2019, 1,500,000 warrants were issued to thesubordinated creditors. Following the rights issues in June 2020,
the terms for the warrants were recalculated. Each warrant provides
entitlement to subscribe for 1.02 new shares in the company at a
price of SEK 98.16 per share. The warrants run for a maximum of
five years and can be exercised for subscription for shares up to andincluding July 3, 2024.

Ovzon Annual Report 2022

78

NOTE 9 – DEPRECIATION/AMORTIZATION AND
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT
Group

2022

NOTE 12 – TAX ON PROFIT FOR THE YEAR
Group

Parent Company

2021

2022

2021

-1,684——

Amortization and impairmentof intangible assets:-1,954
Depreciation of right-of-use
assets:-2,537
Depreciation and impairmentof property, plant andequipment:-18,889-2,072——-6,139

—

—

Total

-9,895——-23,380

NOTE 10 – FINANCIAL INCOME
Group

Parent Company

2022

2021

2022

2021

Exchange gains
Interest income
Other items

43,3342,450
229,863
2—

36,02917,87957,541

26,69912,173137,053

Total

45,78629,865

111,449

175,925

NOTE 11 – FINANCIAL EXPENSES
Group

Parent Company

2022

2021

2022

2021

Exchange losses
Interest expenses
Interest expenses, IFRS 16,
leased assets
Other financial expenses

—
-88

—
-4

—
-61

—
-3

-412
—

-364
—

—
-57,541—-137,053

Total

-500

-368

-57,602-137,056

Other financial expenses in the Parent Company pertain to financing
costs that are invoiced onward in the Group and capitalized there as
fixed assets in the Ovzon 3 project.

Parent Company

2022

2021

2022

2021

The following components areincluded in the tax expense:— Current tax-431
Deferred tax related to:— Temporary differences
24

—

—

—

32

—

—

Tax reported

32

—

—

-407

Recognized profit/loss
before tax-35,778
Tax under applicable tax rate 7,370
Tax effect of:
Deductible expenses
recognized against equity—
Other deductible expenses
not in recognized earnings–
Adjustment of tax from prior years -507
Non-taxable income-125
Adjustments, net interest items—
Non-deductible expenses-28
Effect attributable to othertax rates in subsidiaries
291
Effect of uncapitalized
loss carry forwards, net-7,408
Tax reported-407-83,886
17,281

54,145-11,154

39,101-8,055

1,812

—

1,812

–
–
—
—
-16,779

–
–
-125
3670
-18

–
–
—
259
0

515

—

—

-2,796

7,627

5,984

32

—

NOTE 13 – EARNINGS PER SHARE AND SHARE DATA
Earnings attributable to shareholdersof the Parent Company, TSEK
Earnings per share attributable toParent Company shareholders, SEK
Earnings per share attributable to Parent
Company shareholders after dilution, SEK
Average number of shares before dilution
Average number of shares after dilution
Total number of shares issued
Number of shares outstanding at thebalance date after dilution

			2022

2021

Cyprus, %			Sweden, %			
USA, %			

12.5
21.6
21.0

At the end of the financial year, there were saved tax loss carryforwards totaling TSEK 135,453 (118,442) in the Group. The following
table indicates the losses carried forward broken down by country(amounts in TSEK):			12/31/22

12/31/21

Cyprus			—Sweden			51,685
US			83,768—
79,92538,5172022

2021-36,185-83,854

-0.71

-1.78

-0.71
47,023,823
47,023,823
51,270,876-1.78
47,023,823
47,023,823
51,270,876

51,270,876

51,270,876

NOTE 14 – CAPITALIZED EXPENDITURE
FOR DEVELOPMENTGroup
12/31/22—

The Group companies operate in different countries and are thus
subject to different income tax rates, which are as follows:
12.5
20.6
21.0

There is a time limit of five years for the loss carry forwards in
Cyprus and time limit of 20 years for the loss carry forwards in the
US. There is no time limit for the loss carry forwards in Sweden.
Based on the Group’s financial situation, no value has been
assigned for deferred tax assets on saved loss carry forwards in thebalance sheet.

Parent Company

12/31/21 12/31/22

12/31/21

Cost, opening balance
Purchases
Exchange difference

22,491
33,922
3,537

20,320
—
2,171

—
438
—

—
—
—

Accumulated cost,closing balance

59,95022,491

438—

Amortization,
opening balance
Exchange difference
Amortization for the year

-22,491-3,537—-19,899-2,146
-446

—
—
—

—
—
—

Accumulated cost,closing balance-26,028-22,491——

Carrying amount,closing balance

33,922—

438—

Ovzon Annual Report 2022

79

NOTE 15 – PATENTS AND LICENSING RIGHTS
Group
12/31/22

NOTE 17 – LEASESParent Company

12/31/21 12/31/22

12/31/21

Cost, opening balance
Purchases
Exchange difference

25,924
3,994

20,982
2,610
2,332

—
—
—

—
—
—

Accumulated cost,closing balance

29,91825,924——

Amortization,
opening balance
Exchange difference
Amortization for the year

-2,062-346-1,954-693-131-1,238

—
—
—

—
—
—

Accumulated cost,closing balance-4,362-2,062——Carrying amount,closing balance

25,55623,862

—

—

Group

Cost, opening balance
Purchases
Sales/scrapping
Exchange difference
Reclassifications

39,40039,545-9,212—
3,564—

Parent Company

12/31/21 12/31/22

11,182
26,181
—
1,359
678

—
—
—
—
—

12/31/21

—
—
—
—
—

Accumulated cost,closing balance

73,29739,400——Depreciation,
opening balance
Sales/scrapping
Exchange difference
Reclassifications
Depreciation for the year

-11,377914-1,324—-18,889-4,172—-521-545-6,139

—
—
—
—
—

—
—
—
—
—

Accumulated depreciation,
closing balance-30,676-11,377—

Carrying amount,closing balance

28,023—42,621Group
12/31/22

Parent Company

12/31/21 12/31/22

12/31/21

Carrying amount at the
beginning of the year
11,791
Future agreements for the year 3,623
Exchange difference
48

8,106
3,144
541

—
—
—

—
—
—

Accumulated cost,closing balance

15,462

11,791——

Amortization, opening balance -5,138
Depreciation for the year
-2,537-3,066-2,072————

Accumulated amortization,
closing balance-7,675-5,138——Carrying amount,closing balance

6,653

—

—

7,787

Lease liabilities

Group
12/31/22

NOTE 16 – EQUIPMENT,TOOLS, FIXTURES AND FITTINGS
12/31/22

Right-of-use assets

Parent Company

12/31/21 12/31/22

12/31/21

Short-termLong-term

2,833
5,544

2,122
5,017

—
—

—
—

Carrying amount,closing balance

8,377

7,139

—

—

NOTE 18 – CONSTRUCTION IN PROGRESS
AND ADVANCE PAYMENTS
Group

Cost, opening balance
Purchases
Reclassifications
Exchange difference
Accumulated cost,closing balance

Construction in progress has been impairment tested as part of thevalue of shares in subsidiaries (Ovzon Sweden AB) since work in progress is a significant part of the value in the subsidiary. Construction inprogress is therefore tested indirectly on an annual basis to see whether
there is a need for impairment. The annual impairment test is carried out
by estimating the recoverable value, which consists of the value in use.
The value in use is built on cash flow estimates, which are based on
specific financial plans that are established by the management groupfor the next 16 years. The reason for a forecast period of 16 years isthat Ovzon 3 will be completed in 2023 and then put into operation andbegin generating income in 2024. The general economic and technicalservice life of a satellite is assumed to be 15 years.
Cash flow in the first year of the forecast period is assumed toconsist of the continued investment in the completion of Ovzon 3,
the sale of leased satellite capacity, and operating costs. The cash
flow that is estimated thereafter, for years 2 to 16, are based on theassumptions of the degree of utilization of Ovzon 3, a 5 percent rateof growth in operating costs, and personnel costs. The degree of
utilization in years 2 to 6 will gradually be increased, and thereafter
remain constant for the remainder of the forecast period. In theforecast for investments, the first year corresponds to the remaining
investments in Ovzon 3; it is assumed that investments will be ata lower level in years 2 to 16. The present value of the estimatedcash flows was then calculated using a discount rate (WACC) of
10.9 percent after tax and 13.75 percent before tax. A growth rateof 2 percent is assumed after the forecast period, which contains
the assumption that the company will retain and grow its volumes
through additional proprietary satellites, or through leased capacity.
Key assumptions in the assessment

Parent Company

12/31/22

12/31/21 12/31/22

1,329,578
89,634—28,133

989,494
323,820—
16,264————

12/31/21————

1,447,345

1,329,578——

Impairment, opening balance -12,298
Impairment for the year—

-12,298
—

—
—

—

—

Accumulated cost,closing balance-12,298-12,298———

Carrying amount,closing balance

1,435,047

1,317,280——

The rate of growth is governed based on the degree of utilizationin Ovzon 3, which has been assessed individually per year andis an assessment by the management group of how quickly wewill be able to sell available capacity. The discount rate (WACC)
is produced by using a weighted average cost of capital for theindustry, and reflects the current market-based evaluations of thetime value of money and assessed specific risks.
			20222021

Forecast period, years*			
Discount rate before tax, percent			
Discount rate after tax, percent			Tax rate, percent			
Growth after forecast period, percent			

15
12.0
9.5
20.6
2

16
13.8
10.9
20.6
2

* Longer forecast period in 2022 due to delayed completion of Ovzon 3

Sensitivity analysis

The estimated recoverable value was not close to the carrying
amount, but a sensitivity analysis was conducted pertaining toadjustment of the discount rate (WACC). No need for impairment
exists if the discount rate were to increase by 2 percentage points.
Ovzon Annual Report 2022

80

NOTE 19 – PARTCIPATIONS IN GROUP COMPANIESNOTE 20 TRADE RECEIVABLES

Parent Company			

12/31/22

12/31/21

Cost, opening balance			
Shareholders’ contributions			

1,395,491
448,000

1,033,491
362,000

Accumulated cost, closing balance			

1,843,491

1,395,491

Carrying amount, closing balance			

1,843,491

1,395,491

Directly owned subsidiaries
Company name
Ovzon Sweden AB
OverHorizon OHO 1 Limited
Ovzon US, LLC

Carrying amount

Numberof votes

Votes/Sharesof capital, %12/31/22

12/31/21

1,000
1,000
1,000

100
100
100

1,761,535
81,88670

1,313,535
81,88670——

1,843,491

1,395,491

Directly owned subsidiaries
Company name

Corporate			ID number
DomicileCountry

Ovzon Sweden
OverHorizon OHO 1 Limited
Ovzon US, LLC

556679-1181
262622
S226247-7

Subsidiaries indirectly owned throughOvzon US LLC

Corporate				 Votes/share of
ID number
DomicileCountry		
capital, %Ovzon LLC

S226246-9

Stockholm
Nicosia
Arlington, VA

Herndon, VA

SwedenCyprusUSA

Profit/loss
for the year

Equity-44,405597-50,258

1,576,239
6,899-201,071

USA		

100

Group
12/31/22

Parent Company

12/31/21 12/31/22

12/31/21

Receivables not due
29,433
Receivables due, <30 days 11,266
Receivables due, 31–60 days 7,083
Receivables due, 61–90 days 7,240
Receivables due, 91–120 days 6,907
Receivables due, >120 days 17,901
Bad debt reserves-49,773

28,204
1,039
828
1,095
—
1,366
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

Total

32,532——30,056

All amounts are short-term. The net carrying amount for tradereceivables is regarded as a reasonable approximation of fair value.
In 2022, the company accumulated provision for bad debt from
Gomedia Satcom, and it came to light that the company’s financial
position is worse that previously assessed. For precautionary
reasons, the company has therefore made a provision of SEK 50
million for bad debt in 2022. The company is working actively andclosely with the customer that is behind on its payments to ensure
settlement of the debt. Ovzon has signed agreements with the
distributor on a payment plan including pledges on the reseller’s
assets.

NOTE 21 – PREPAID EXPENSES
AND ACCRUED INCOME
Group
12/31/22

Parent Company

12/31/21 12/31/22

12/31/21

Prepaid leases
Accrued income
Prepaid satellite leases
Other prepaid expenses

676
7,448
1,531
2,242

167
—
4,591
1,779

—
—
—
553

—
—
—
384

Total

11,897

6,537

553

384

NOTE 22 – CASH AND CASH EQUIVALENTS
Group

Parent Company

12/31/22

12/31/21 12/31/22

Cash and bank balances

275,612

406,084

224,933

12/31/21

380,551

Total

275,612

406,084

224,933

380,551

Ovzon Annual Report 2022

81

NOT 23 – EQUITY
12/31/22

12/31/21

No. ofsharesPar value(SEK)

No. of votes
per shareSharecapitalNo. ofsharesPar value(SEK)

No. of votes
per shareSharecapitalClass A shares 51,270,876

0.10

1

5,127

51,270,876

0.10

1

5,127

51,270,876		51,270,876

5,127

51,270,876		51,270,876

5127

Class of share

Total

Share capital development - past two years		
No. ofYear
Event
new shares
2021
Jun. 30, 2021
Jul. 30, 2021
Sep. 30, 2021

Opening balance
New share issue
New share issue
New share issue

No. of class
A sharesNo. of class
B sharesTotal no.
of shares

Change in sharecapital, TSEK

Total sharecapital, TSEK

—
—
—
—

—
—
—
—

46,244,688
46,448,628
46,609,888
51,270,876

—
20
16
466

4,624
4,644
4,661
5,127

—
203,940
161,260
4,660,988

Note 24 – LIABILITIES TO CREDIT INSTITUTIONS
Group
12/31/22

Parent Company

12/31/21 12/31/22

Group

12/31/21

Liabilities to credit institutions 469,670

316,529

469,670

316,529

Total
Total borrowings

316,529
316,529

469,670
469,670

316,529
316,529

469,670
469,670

NOTE 25 – ACCURED EXPENSES
AND DEFERRED INCOME

In 2019, the company signed a senior credit facility of USD 60
million in order to ensure financing of its proprietary satellite, Ovzon
3. USD 35 million of the credit facility was called off in 2021, and
USD 5 million of the unutilized portion of the facility was forfeit in thefirst quarter of 2022. A further USD 10 million was called off in thesecond quarter of 2022. As of the end of the reporting period, thetotal unutilized facility was thus USD 10 million. The loan extend up
to six years with an interest rate, in USD, of LIBOR 3m + 10 percent.
The credit facility is conditional on the company meeting certain
financial covenants including key financial metrics such as loans tocost (loans in relation to the investment in Ovzon 3), a lowest level ofcash balances, and a ratio in the valuation of the subsidiaries. The
company met these covenants during the year.

12/31/22

Other paid-in capital

Other paid-in capital includes the contributions that the company hasreceived from its shareholders and that are not reported as sharecapital.
Reserves

The item fully comprises exchange differences referable
to translation of foreign subsidiaries.
Accumulated deficit

This item includes accumulated profit or loss in Ovzon. Other
transactions with owners, such as dividends, are also reported here
when applicable.

NOTE 26 – PLEDGED ASSETSAND CONTINGENT LIABILITIESParent Company

12/31/21 12/31/22

12/31/21

Accrued personnel expenses 6,489
Deferred income
9,443
Other accrued expenses
10,798

7,439—
15,812

839
—
1,888

2986
—
5,536

Total

23,251

2,727

8,522

26,730

Otherwise, refer to the Group’s and the Parent Company’s
Specifications of change in equity.

TSEK 3,864 (7,023) of the Group’s cash and cash equivalents
consist of frozen funds. In conjunction with the utilization of the credit
facility in April 2021, the company and its subsidiaries have pledged
central assets under the loan agreement and related collateralagreements, including but not limited to the following: shares in thecompany’s subsidiaries, certain intellectual property rights, certain
intra-Group liabilities, central supplier contracts in the Ovzon 3
project (and signed direct contracts between certain suppliers andcreditors) as well as certain bank balances, and the subsidiaries
have taken over the loan agreement and guarantee the loans during
the tenor of the loan agreement.
Group
12/31/22

Liabilities to credit institutions
Shares pledgedin Group companies
1,018,920
Receivables fromGroup companies—
Pledged bank funds
3,864
Total

1,022,784

Parent Company

12/31/21 12/31/22

12/31/21

1,048,753 1,843,491 1,395,491—
7023

246,517—375,136—

1,055,776 2,090,008 1,770,627

Contingent liabilities

No contingent liabilities existed at the end of the reporting period.

Ovzon Annual Report 2022

82

NOTE 27 – SUPPLEMENTARY DISCLOSURES ON CASH FLOW STATEMENT
Adjustments for non-cash items
Group
12/31/22

Parent Company

12/31/21 12/31/22

12/31/21

Depreciation/amortizationand impairment fixed assets 23,380
Other items
2,860

9,895
—

—
—

—
—

Total

9,895

—

—

26,240Change in liabilities with cash flows		
in financing activities, Group
Liabilities to credit institutions

Lease liabilities

Total

Opening balance January 1, 2021
Loans raised
Amortization
Non-cash items
Capitalized interest and currency effects, net
Future lease liabilities, IFRS 16—
307,475—

5,343—-1,348

5,343
307,475-1,348

9,054
—

—
3,144

9,054
3,144

Closing balance, December 31, 2021

316,5297,139

323,668

Opening balance January 1, 2022
Loans raised
Amortization
Non-cash items
Capitalized interest and currency effects, net
Future lease liabilities, IFRS 16

316,529
102,916—

7,139—-2,455

323,668
102,916-2,45550,225——
3,693

50,225
3,693

Closing balance, December 31, 2022

469,6708,377

478,047

NOTE 28 – SUPPLEMENTARY DISCLOSURES, FINANCIAL ASSETS AND LIABILITIES
Disclosures concerning financial instruments measured at fair value in the balance sheet

The Group has no derivative instruments or other financial instruments measured at fair value.
Finansiella tillgångar och skulder per värderingskategori
		Other
Loans andfinancial
12/31/22
trade receivables
liabilities

Total
carrying
amountAccruedcost		Other
Loans andfinancial
12/31/21
trade receivables
liabilities

Total
carrying
amountAccruedcost
fair value

32,532406,084——

32,532406,084

32,532406,084438,616—

438,616

438,616

Financial liabilities measured
at amortized cost
Lease liabilities, IFRS 16 Leases
Trade payables
Other current liabilities

—
—
—

7,139
52,2193,681

7,139
52,2193,681

7,139
52,219
3,681

Total

—

63,03963,03963,039Financial assets measured
at amortized cost
Trade receivables
Cash and cash equivalents

30,056
275,612——30,056
275,61230,056
275,612Financial assets measured
at amortized cost
Trade receivables
Cash and cash equivalents

Total

305,668—

305,668

305,668

Total

Financial liabilities measured
at amortized cost
Liabilities to credit institutions
Lease liabilities, IFRS 16 Leases
Trade payables
Other current liabilities

—
—
—
—

469,670
8,377
19,943
2,448

469,670
8,377
19,943
2,448

469,670
8,377
19,943
2,448

Total

—

500,438

500,438

500,438

Ovzon Annual Report 2022

83

The Group’s maturity structure in respect of undiscounted cash flows for financial liabilities
				
Nominal amount at December 31, 2022
Within 1 year
1–2 years
2–5 years

More than
5 yearsNodue date

Liabilities to credit institutions
Lease liabilities, IFRS 16 Leases
Trade payables
Other current liabilities

62,2992,833
19,943
2,448

62,2992,833——

501,246
4,248
—
—

—
—
—
—

—
—
—
—

Total

87,523

65,132505,494——				Nominal amount at December 31, 2021
Within 1 year
1–2 years
2–5 years

More than
5 yearsNodue date

Liabilities to credit institutions
Lease liabilities, IFRS 16 Leases
Trade payables
Other current liabilities

40,3902,328
52,2193,681

40,3902,328——

397,309
3,831
—
—

—
—
—
—

—
—
—
—

Total

98,61842,718401,140——NOTE 29 – TRANSACTIONS WITH RELATED PARTIES
Balances with related parties

Parent Company			 12/31/22

12/31/21

Ovzon Sweden AB			
489
OverHorizon OHO 1 Limited			 34,914
Ovzon US LLC			
1256
Ovzon LLC			 246,516

9,112
32,800845
332,379

Total			283,176

375,136

For remuneration to the Board of Directors, the CEO and othersenior executives in the company, refer to Note 8.

NOTE 30 – SIGNIFICANT EVENTSAFTER THE END OF THE REPORTING PERIOD• On February 3, the company announced that the launch of Ovzon
3 would be postponed, and that the company was switching toSpaceX as a partner. The delay was due to the announcement by
the satellite manufacturer, Maxar Technologies, regarding further
delays to the completion of Ovzon 3 and the new planned period
for launch between July and September.
• On February 3, the company announced that additional financing
had been secured to complete and conduct the launch of Ovzon
3, in part by increasing the current credit facility with P CapitalPartners from USD 60 million to USD 65 million. Several of thecompany’s major shareholders have also confirmed their interestin subscribing for shares in a new share issue.
• On February 6, a directed share issue was carried out, totaling
4,494,382 shares at a share price of SEK 44.50. The subscription
price was established using an accelerated book-building process
conducted by Carnegie Investment Bank AB (publ). The company
generated around SEK 200 million less costs related to the issue.
The directed share issue entailed a dilution of roughly 8.1 percentof the number of shares and votes. The company published thenotice to attend an Extraordinary General Meeting on March 3 toapprove the conditional share issue.
• On March 3, the Extraordinary General Meeting was held, which
resolved to approve the decision of the Board on a share issue ofa maximum of 4,494,382 shares, with a derogation of the shareholders’ preferential rights. The total increase in the company’s
share capital was SEK 449,438.20, and the subscription price has
been established at SEK 44.50.
• On March 22, the company announced that additional provisionsof SEK 34 million for bad debt had been charged to earnings for
2022.

NOTE 31 – PROPOSED ALLOCATION OF PROFITSThe following profits are at the disposalof the Annual General Meeting (SEK):

1,873,900,058

The Board of Directors proposes thatthe following be carried forward (SEK):

1,873,900,058

Ovzon Annual Report 2022

84

The Board of Directors and Chief Executive Officer give their assurance that the Annual Report has been prepared in accordance with generally accepted
accounting principles in Sweden, and that the consolidated financial statements have been prepared in accordance with international accounting standards as referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international
accounting standards. The Annual Report and consolidated financial statements provide a true and fair account of the financial position and earnings of the
Parent Company and the Group. The Administration Reports for the Parent Company and the Group provide a true and fair overview of the developmentof the operations, financial position and earnings of the Parent Company and the Group, and describe material risks and uncertainties faced by the Parent
Company and the companies included in the Group.

As indicated above, the Annual Report and consolidated financial statements have been
approved for issue by the Board of Directors and the CEO on March 30, 2023.

Magnus René
Chairman of the Board

Dan Jangblad
Board member

Anders Björkman
Board member

Nicklas Paulson
Board member

Cecilia Driving
Board member

Patrik Tigerschiöld
Board member

Per NorénCEO

Our audit report was submitted on March 30, 2023

Grant Thornton Sweden AB

Carl-Johan Regell
Authorized Public Accountant

Ovzon Annual Report 2022

85

Auditor’s report
To the general meeting of the shareholders of Ovzon AB (publ) (publ.)
Corporate identity number 559079 - 2650
N.B. The English text is a translation of the official version in Swedish. In the event of any conflict between the Swedish and English version, the Swedish shall prevail.

Report on the annual accounts and consolidated accounts
Opinions
We have audited the annual accounts and consolidated
accounts of Ovzon AB (publ) (publ.) for the year 2022. The
annual accounts and consolidated accounts of the company
are included on pages 59 – 85 in this document. In our
opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in allmaterial respects, the financial position of parent company
as of 31 December 2022 and its financial performance andcash flow for the year then ended in accordance with theAnnual Accounts Act. The consolidated accounts have been
prepared in accordance with the Annual Accounts Act andpresent fairly, in all material respects, the financial positionof the group as of 31 December 2022 and their financial
performance and cash flow for the year then ended inaccordance with International Financial Reporting Standards(IFRS), as adopted by the EU, and the Annual Accounts Act.
The statutory administration report is consistent with theother parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet forthe parent company and the group.

Our opinions in this report on the annual accounts andconsolidated accounts are consistent with the content of
the additional report that has been submitted to the parent
company’s audit committee in accordance with the Audit
Regulation (537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International
Standards on Auditing (ISA) and generally accepted auditing
standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and thegroup in accordance with professional ethics for accountantsin Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

Material Uncertainty Related to Going Concern
We would like to draw attention to the management report
and the board’s opinion under the heading “Financing andassumption of going concern” and Note 4 “Assumptionof going concern”, where the company explains that thecompany’s future financing is dependent on the outcome ofa forecasted increase in sales, that the outstanding claim on
the company’s Italian dealers are repaid in full and that any
additional financing needs may have to be solved with loansor new share issues. The uncertainty regarding the future
outcome of these scenarios means that there is a significant
uncertainty factor about the company’s ability to continue
operations.

This includes that, based on the best of our knowledge
and belief, no prohibited services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided to theaudited company or, where applicable, its parent company or
its controlled companies within the EU. We believe that theaudit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinions.

Ovzon Annual Report 2022

86Key Audit Matters
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our auditof the annual accounts and consolidated accounts of thecurrent period, and include, among other things, the mostimportant assessed risks of material misstatement. These
matters were addressed in the context of our audit of, andin forming our opinion thereon, the annual accounts andconsolidated accounts as a whole, but we do not provide aseparate opinion on these matters.

Valuation of tangible fixed assets (the Group)and valuation of participations in Group companies(Parent company)
Ovzon Group´s booked value of property, plant and equipment amounts to 1 485 455 kSEK, and mainly pertains to an
ongoing investment in their own satellite Ovzon 3, which is
expected to be completed in 2023. A corresponding impairment test is performed by the parent company regarding thevalue of participations in Group companies (Ovzon Sweden
AB of 1 843 491 kSEK).

Revenue recognition
Revenues amount to 356 993 kSEK and revenue related
receivables amount to 30 056 kSEK for the financial year
2022. The revenues mainly consist of revenue for soldbroadband services, but also to some extent of self-develops
products sold in forms of terminals. Revenues from broadband
services are accounted for on a straight-line bases over theagreement period, normally 6 – 12 months, or alternatively
based on consumed data or used connection time. Revenue
is reported at the time of delivery and based on the fulfillment of performance commitments. The Group´s revenues
and receivables are considered a significant amount andcontains essential element of assessments, why these has
been considered a key audit matter in the audit. Information
regarding accounting principles and supplementary disclosure
can be found in Note 2 and 20 in the Annual report for Ovzon
AB (publ). Our audit included, but was not limited to, thefollowing audit procedures:

An impairment test has been performed to ensure that there
is no need for impairment, by calculation a recoverable
amount. This is based on management’s assessmentof factors such as sales growth, margin development,
investment needs, weighted average cost of capital andperpetual growth rate. The groups principles for accounting
for property, plant and equipment and additional information
are described in Note 2 and 18. The parent company´sprinciples for reporting participations in Group companies
are set out in Note 2 and 19.

• Audit of the routines and controls for revenue recognition,• Revenues from sold broadband services and products
sold were reconciled against customer agreements,
received payments, and counterpart confirmations,• Audit of the valuation of income-related assets,• Audit that the applied revenue accounting principles are inaccordance with IFRS and that the information provided in
the Annual report essentially meets the requirements.

The reported value is significant and impairment tests are
sensitive to changes in assumptions, why we considered thisto be a key audit matter in our audit. Our audit included, but
was not limited to;• Audit and assessment of the Group´s routines for
impairment tests,• Evaluation of the reasonableness of management´sassumptions and forecasts regarding future cash flows,
including an assessment of sales growth and margindevelopment,•T ogether with our valuation specialists, compare andchallenge significant assumptions in the management’s
valuation model for calculating the recoverable amount,
including an assessment of the weighted average costs ofcapital and perpetual growth rate,•A udit that the applied accounting principles are inaccordance with IFRS and that the and that the information provided in the Annual report essentially meets therequirements.
Responsibilities of the Board of Directors and theManaging Director
The Board of Directors and the Managing Director are
responsible for the preparation of the annual accounts andconsolidated accounts and that they give a fair presentationin accordance with the Annual Accounts Act and, concerning
the consolidated accounts, in accordance with IFRS as
adopted by the EU. The Board of Directors and the Managing
Director are also responsible for such internal control as they
determine is necessary to enable the preparation of annual
accounts and consolidated accounts that are free frommaterial misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts,
The Board of Directors and the Managing Director are
responsible for the assessment of the company’s and thegroup’s ability to continue as a going concern. They disclose
as applicable, matters related to going concern and using
the going concern basis of accounting. The going concern
basis of accounting is however not applied if the Board of
Directors and the Managing Director intend to liquidate thecompany, to cease operations, or has no realistic alternative
but to do so.
The Audit Committee shall, without prejudice to the Board of
Director’s responsibilities and tasks in general, among otherthings oversee the company’s financial reporting process.

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Auditor’s responsibility
Our objectives are to obtain reasonable assurance about
whether the annual accounts and consolidated accounts
as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that
includes our opinions. Reasonable assurance is a high levelof assurance, but is not a guarantee that an audit conductedin accordance with ISAs and generally accepted auditing
standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of theseannual accounts and consolidated accounts.
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 annual accounts and consolidated accounts, whether
due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence thatis sufficient and appropriate to provide a basis for our
opinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of the company’s internal control
relevant to our audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness ofthe company’s internal control.

• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates andrelated disclosures made by the Board of Directors andthe Managing Director.
• Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern
basis of accounting in preparing the annual accounts andconsolidated accounts. We also draw a conclusion, basedon the audit evidence obtained, as to whether any 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 disclosuresin the annual accounts and consolidated accounts or, if
such disclosures are inadequate, to modify our opinion
about the annual accounts and consolidated accounts.
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 a company and a groupto cease to continue as a going concern.

We must inform the Board of Directors of, among othermatters, the planned scope and timing of the audit. We mustalso inform of significant audit findings during our audit,
including any significant deficiencies in internal control that
we identified.
We must also provide the Board of Directors with a statementthat we have complied with relevant ethical requirements
regarding independence, and to communicate with them
all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors,
we determine those matters that were of most significance inthe audit of the annual accounts and consolidated accounts,
including the most important assessed risks for material
misstatement, and are therefore the key audit matters. We
describe these matters in the auditor’s report unless law or
regulation precludes disclosure about the matter.

• Evaluate the overall presentation, structure and content of
the annual accounts and consolidated accounts, including
the disclosures, and whether the annual accounts andconsolidated accounts represent the underlying
transactions and events in a manner that achieves fairpresentation.
• Obtain sufficient and appropriate audit evidence regarding
the financial information of the entities or businessactivities within the group to express an opinion on
the consolidated accounts. We are responsible for the
direction, supervision and performance of the group audit.
We remain solely responsible for our opinions.

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88

Report on other legal and regulatory requirements

The auditor’s audit of the administration of the Boardof Directors and the Managing Director and the proposed
appropriations of the company’s profit or loss
Opinions
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administrationof the Board of Directors and the Managing Director of
Ovzon AB (publ) (publ.) for the year 2022 and the proposed
appropriations of the company’s profit or loss.
We recommend to the general meeting of shareholders thatthe profit be appropriated in accordance with the proposal
in the statutory administration report and that the membersof the Board of Directors and the Managing Director bedischarged from liability for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally
accepted auditing standards in Sweden. Our responsibilities
under those standards are further described in the Auditor’s
Responsibilities section. We are independent of the parent
company and the group in accordance with professional ethics
for accountants in Sweden and have otherwise fulfilled our
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors
and the Managing Director
The Board of Directors is responsible for the proposal
for appropriations of the company’s profit or loss. At
the proposal of a dividend, this includes an assessmentof whether the dividend is justifiable considering therequirements which the company’s and the group’s type ofoperations, size and risks place on the size of the parent
company’s and the group’s equity, consolidation requirements, liquidity and position in general.

Our objective concerning the audit of the proposed
appropriations of the company’s profit or loss, and thereby
our opinion about this, is to assess with reasonable degreeof assurance whether the proposal is in accordance with theCompanies Act.

The Board of Directors is responsible for the company’sorganization and the administration of the company’s affairs.
This includes among other things continuous assessmentof the company’s and the group’s financial situation andensuring that the company’s organization is designed so thatthe accounting, management of assets and the company’s
financial affairs otherwise are controlled in a reassuring
manner. The Managing Director shall manage the ongoingadministration according to the Board of Directors’ guidelines
and instructions and among other matters take measuresthat are necessary to fulfill the company’s accounting inaccordance with law and handle the management of assets
in a reassuring manner.

Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance withgenerally accepted auditing standards in Sweden will always
detect actions or omissions that can give rise to liability to
the company, or that the proposed appropriations of thecompany’s profit or loss are not in accordance with theCompanies Act.

Auditor’s responsibility
Our objective concerning the audit of the administration,and thereby our opinion about discharge from liability, is toobtain audit evidence to assess with a reasonable degree of
assurance whether any member of the Board of Directors or
the Managing Director in any material respect:• has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or• in any other way has acted in contravention of theCompanies Act, the Annual Accounts Act or the Articles
of Association.

As part of an audit in accordance with generally accepted
auditing standards in Sweden, we exercise professional
judgment and maintain professional skepticism throughout
the audit. The examination of the administration and the
proposed appropriations of the company’s profit or loss
is based primarily on the audit of the accounts. Additional
audit procedures performed are based on our professional
judgment with starting point in risk and materiality. Thismeans that we focus the examination on such actions,areas and relationships that are material for the operations
and where deviations and violations would have particularimportance for the company’s situation. We examine and test
decisions undertaken, support for decisions, actions taken
and other circumstances that are relevant to our opinion
concerning discharge from liability. As a basis for our opinion
on the Board of Directors’ proposed appropriations of thecompany’s profit or loss we examined whether the proposal
is in accordance with the Companies Act.

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89

The auditor’s examination of the Esef report
Uttalande
In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of
Directors and the Managing Director have prepared theannual accounts and consolidated accounts in a format
that enables uniform electronic reporting (the Esef report)
pursuant to Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528) for Ovzon AB (publ) (publ.) for
the year 2022. Our examination and our opinion relate only
to the statutory requirements.
In our opinion, the Esef report has been prepared in a format
that, in all material respects, enables uniform electronic reporting.
Basis for opinion
We have performed the examination in accordance with
FAR’s recommendation RevR 18 Examination of the Esef
report. Our responsibility under this recommendation is
described in more detail in the Auditors’ responsibility
section. We are independent of Ovzon AB (publ) (publ.)
in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Responsibilities of the Board of Directors and theManaging Director
The Board of Directors and the Managing Director are
responsible for the preparation of the Esef report inaccordance with the Chapter 16, Section 4 a of the Swedish
Securities Market Act (2007:528), and for such internal
control that the Board of Directors and the Managing Director
determine is necessary to prepare the Esef report withoutmaterial misstatements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether
the Esef report is in all material respects prepared in aformat that meets the requirements of Chapter 16, Section
4 a of the Swedish Securities Market Act (2007:528), basedon the procedures performed. RevR 18 requires us to planand execute procedures to achieve reasonable assurance
that the Esef report is prepared in a format that meetsthese requirements. Reasonable assurance is a high levelof assurance, but it is not a guarantee that an engagement
carried out according to RevR 18 and generally accepted
auditing standards in Sweden will always detect a material
misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually orin aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
the Esef report. The firm applies International Standard on
Quality Management 1, which requires the firm to design,
implement and operate a system of quality management
including policies or procedures regarding compliance withethical requirements, professional standards and applicablelegal and regulatory requirements.
The examination involves obtaining evidence, throughvarious procedures, that the Esef report has been preparedin a format that enables uniform electronic reporting of theannual accounts and consolidated accounts. The procedures

selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement in thereport, whether due to fraud or error. In carrying out this risk
assessment, and in order to design audit procedures thatare appropriate in the circumstances, the auditor considers
those elements of internal control that are relevant to the
preparation of the Esef report by the Board of Directors andthe Managing Director, but not for the purpose of expressing
an opinion on the effectiveness of those internal controls.
The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the
Board of Directors and the Managing Director.
The procedures mainly include a validation that the Esef
report has been prepared in a valid XHMTL format and areconciliation of the Esef report with the audited annual
accounts and consolidated accounts. Furthermore, theprocedures also include an assessment of whether the
consolidated statement of financial performance, financial
position, changes in equity, cash flow and disclosures in the
Esef report have been marked with iXBRL in accordance withwhat follows from the Esef regulation.
RemarkThe interim report for the period January-June 2022 have notbeen submitted to the Swedish Companies Registration Officeby the time specified in the Annual Accounts Act ch. 9 2 §.
Grant Thornton Sweden AB, Kungsgatan 57, 111 22
Stockholm, was appointed auditor of Ovzon AB (publ) (publ.)
by the general meeting of the shareholders on the 21 April
2022 and has been the company’s auditor since the17 January 2017.

Stockholm the 30 March 2023
Grant Thornton Sweden AB
Carl-Johan Regell
Authorised Public Accountant
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Alternative performance measures
The company reports alternative performance measures in this Annual Report.
The alternative performance measures provide valuable supplementary
information to investors and other stakeholders as they enable evaluation of
the company’s performance. The alternative performance measures in thisAnnual Report may differ from the calculation method of similar measuresused by other companies.

Adjusted operating profit/loss and adjusted EBITDA
Operating income, operating profit, and EBITDA adjusted foritems affecting comparability. Items affecting comparability
were adjusted so as to facilitate a fair comparison between
two comparable periods of time, and to show the underlying
performance in operating activities excluding non-recurring
items.
Order book
The aggregate value of orders received but not yet delivered.

Order intake
Value of new orders received.
Earnings per share
Profit for the period in relation to the average number ofshares. Average number of shares is calculated as thenumber of shares at the end of the period multiplied by
the number of days that this number of shares has existed
during the period, plus any other number of shares during
the period multiplied by the number of days that this numberof shares has existed during the period, divided by the total
number of days in the period.

Interest-bearing net debt
Borrowing excluding interest-rate derivatives, less cash andcash equivalents and interest-bearing assets. Net debt isused to easily illustrate and assess the Group’s possibilities
for fulfilling its financial commitments.
Operating margin
Operating margin refers to operating profit/loss in relation
to revenue.
Equity/assets ratio
Equity expressed as a percentage of total assets.

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91

Information for shareholders
The Board of Directors of Ovzon AB has issued notice of the Annual General Meeting.
Time: Thursday, April 20, 2023 at 3:00 p.m.
Venue: The company’s premises at Anderstorpsvägen 10, Solna, Sweden.
Registration in the share register and notification
Shareholders wishing to attend the Annual General Meeting must:i. be registered on the record date, which is Wednesday, April 12, 2023, in the share register
maintained by Euroclear Sweden AB; andii. by April Friday, 14, 2023 at the latest register themselves and any assistants (maximumof 2) in writing by post to Baker & McKenzie Advokatbyrå, Attn: Carl Bohman, Box 180,
SE-101 23 Stockholm, Sweden (please mark the envelope “Årsstämma 2023 Ovzon AB(publ)”) or by e-mail to carl.bohman@bakermckenzie.com. The registration should indicate
the full name, personal or corporate identity number, shareholding, share type, address,
telephone number and (where applicable) information on representatives, proxies orassistants. Where applicable, the registration should be accompanied by power of attorney,
proof of registration and other authorizing documents.
When registering, the shareholder should state their full name, personal identification number
or corporate registration number, address and daytime telephone number. Shareholders
are requested when registering to also provide details of representatives, proxy holders andadvisors where applicable. Shareholders whose shares are registered under a nominee shareholder at a bank or other nominee must temporarily register the shares under their own namethrough the agency of the nominee in order to have the right to attend the meeting. Suchregistration, which normally takes a few days, must be completed by Wednesday, April 12,2023 and should therefore be requested from the nominee well in advance of that date. Voting
rights registration that has been requested by the shareholders at such time that the registration
was carried out by the relevant nominee by Friday, April 14, 2023 at the latest will be taken into
consideration in producing the share register.

Dividend
The Board of Directors of Ovzon AB will propose to the Annual General Meeting that nodividend be paid for the 2022 financial year. In the coming years, Ovzon AB will primarily use
generated cash flow for continued expansion.
Financial calendar
Annual General Meeting 2023		
Interim Report January – March 2023
Interim Report January – June 2023
Interim Report January – September 2023

April 20, 2023
April 20, 2023
August 18, 2023
October 20, 2023

Contact information
Magnus René
Chairman of the Board
magnus.rene@mareadvisory.com

Per NorénCEO
pno@ovzon.com

Ovzon AB (publ)Anderstorpsvägen 10
SE-171 54 Solna, Sweden
www.ovzon.com+46 8 508 600 60

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92

Production: Ovzon, in partnership with Vero Kommunikation and Soformia.

Ovzon AB (publ)Anderstorpsvägen 10, SE-171 54 Solna, Sweden
www.ovzon.com+46 8 508 600 60
Corp. ID No. 559079-2650