14The supervisory board and executive board have today discussed and approved the annual report of Silicom Denmark A/S for the financial year 1 January - 31 December 2022.The annual report is prepared in accordance with the Danish Financial Statements Act.In our opinion, the financial statements give a true and fair view of the company's financial position at 31 December 2022 and of the results of the company's operations for the financial year 1 January - 31 December 2022.In our opinion, management's review includes a fair review of the matters dealt with in the management's review.Management recommends that the annual report should be approved by the company in general meeting.Liron EizenmanCEOAvinoam EizenmanchairmanEran GiladYeshayhu OrbachTo the shareholder of Silicom Denmark A/SWe have audited the financial statements of Silicom Denmark A/S for the financial year 1 January - 31 December 2022, which comprise a summary of significant accounting policies, income statement, balance sheet, statement of changes in equity and notes. The financial statements are prepared under the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the company's financial position at 31 December 2022 and of the results of the company's operations for the financial year 1 January - 31 December 2022 in accordance with the Danish Financial Statements Act.We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the “Auditor's responsibilities for the audit of the financial statements” section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Management is responsible for the preparation of financial statements, that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.Statement on management's review Management is responsible for management's review. Our opinion on the financial statements does not cover management's review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read management's review and, in doing so, consider whether management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of management's review.Roskilde2023-01-20 Trekroner Revision A/SJohn CubbinRegistered Public Accountantmne3105Business review The company is engaged in developing, producing and selling network interface cards and related services.Expected development of the company, including specific prerequisites and uncertainties The income statement for the period 1. January - 31. December 2022 shows a result of USD 825.652. The balance sheet shows an equity of USD 3.097.302.The annual report of Silicom Denmark A/S for 2022 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to enterprises of reporting class B, as well as provisions applying to reporting class C entities. The accounting policies applied is consistent with those of last year. The annual report is presented in USD.In the income statement revenue is recognized, when it is earned, including value adjustments of financial assets and liabilities. In the income statement all costs, including depreciation and impairment losses are recognized. Assets are recognised in the balance sheet when it is probable that future economic benefits will flow to the company and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow from the company and the value of the liability can be measured reliably. On initial recognition, assets and liabilities are measured at cost. On subsequent recognition, assets and liabilities are measured as described below for each individual accounting item. Certain financial assets and liabilities are measured at amortised cost using the effective interest method. Amortised cost is calculated as the historic cost less any installments and plus/less the accumulated amortisation of the difference between the cost and the nominal amount. On recognition and measurement, allowance is made for predictable losses and risks which occur before the annual report is presented and which confirm or invalidate matters existing at the balance sheet date.Gross profit reflects an aggregation of revenue, changes in inventories of finished goods and work in progress and other operating income less costs of raw materials and consumables and other external expenses.Income from the sale of goods for resale and finished goods is recognised in the income statement, provided that the transfer of risk, usually on delivery to the buyer, has taken place and that the income can be measured reliably and is expected to be received. Revenue is measured at the fair value of the agreed consideration, excluding VAT and other indirect taxes. Revenue is net of all types of discounts granted.Costs of raw materials and consumables include the raw materials and consumables used in generating the year’s revenue.Other external expenses include expenses related to distribution, sale, advertising, administration, premises, bad debts, payments under operating leases, etc.Staff costs include wages and salaries, including compensated absence and pensions, as well as other social security contributions, etc. made to the entity's employees. The item is net of refunds made by public authorities.Amortisation, depreciation and impairment losses comprise the year's amortisation, depreciation and impairment of intangible assets and property, plant and equipment.Financial income and expenses are recognised in the income statement at the amounts that relate to the financial year. Net financials include interest income and expenses, financial expenses relating to finance leases, realised and unrealised capital/exchange gains and losses on securities, liabilities and foreign currency transactions, amortisation of financial assets and liabilities and surcharges and allowances under the Danish Tax Prepayment Scheme, etc.Tax for the year, which comprises the current tax charge for the year and changes in the deferred tax charge, is recognised in the income statement as regards the portion that relates to the profit/loss for the year and directly in equity as regards the portion that relates to entries directly in equity.Development and licences Development costs are measured at cost less accumulated depreciation or to the recovery value where this is lower. Development costs are amortized on a straight-line basis over the estimated useful life of the individual projects, which are assessed at 3 years. Licences are measured at cost less accumulated amortisation and impairment losses. Licenses are amortized over the licence term of 3 years.Plant and machinery are measured at cost less accumulated depreciation and impairment losses. The depreciable amount is cost less the expected residual value at the end of the useful life. Cost comprises the purchase price and any costs directly attributable to the acquisition until the date when the asset is available for use. The cost of self-constructed assets comprises direct and indirect costs of materials, components, sub-suppliers and wages. Where individual components of an item of property, plant and equipment have different useful lives, and the individual component is a significant part of the total cost, the cost is divided into separate components, which are depreciated separately. Straight-line depreciation is provided on the basis of the following estimated useful lives of the assets: Useful life Residual value Licenses 3 years 0 % Development costs 3 years 0 % Plant and machinery 3 - 5 years 0 % Assets costing less than USD 4.446 are expensed in the year of acquisition. Gains or losses from the disposal of property, plant and equipment are recognised in the income statement as other operating income or other operating expenses, respectively.Stocks are measured at cost using the weighted average method. Where the net realisable value is lower than the cost, inventories are recognised at this lower value. The cost of goods for resale, raw materials and consumables comprises the purchase price plus delivery costs. The cost of finished goods and work in progress includes the cost of raw materials, consumables, direct cost of labour and production/production overheads. The net realisable value of stocks is calculated as the expected selling price less direct costs of completion and expenses incurred to effect the sale. The net realisable value is determined taking into account marketability, obsolescence and expected selling price movements.Receivables are measured at amortised cost. An impairment loss is recognised if there is objective evidence that a receivable or a group of receivables is impaired. If there is objective evidence that an individual receivable is impaired, an impairment loss for that individual asset is recognised.Prepayments recognised under 'Current assets' comprises expenses incurred concerning subsequent financial years.Cash and cash equivalents comprise cash and short-term securities whose remaining life is less than three months and which are readily convertible into cash and which are subject only to insignificant risk of changes in value.Reserve for development costs An amount corresponding to capitalised development costs is recognised in the reserve. The reserve is reduced as development costs are amortised.Current tax liabilities and current tax receivables are recognised in the balance sheet as the estimated tax on the taxable income for the year, adjusted for tax on the taxable income for previous years and tax paid on account. Deferred tax is measured according to the liability method in respect of temporary differences between the carrying amount of assets and liabilities and their tax base, calculated on the basis of the planned use of the asset and settlement of the liability, respectively. Deferred tax is measured at net realisable value.Liabilities, which include trade payables, payables to group entities and other payables, are measured at amortised cost, which is usually equivalent to nominal value.On initial recognition, foreign currency transactions are translated applying the exchange rate at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and at the date of payment are recognised in the income statement as financial income or financial expenses. If foreign currency instruments are considered cash flow hedges, any unrealised value adjustments are taken directly to a fair value reserve under ‘Equity’.592576888488845007835613114017808838105073984523366943737798759171494416799104213020074862164784117408256521595746219611-6251656060412220911516253187129836416812349989486836441312761816732821198923174133960765092686526509268652646822456942660942640973366609426409733638006650057257951457960302098159611238351194762978466131290560920910209281971015512333884392359692758327983279232724131131500140894099128115910961943097302208668569170859469170859452095455358752095455358762955849654541268941842562161304538436238741442866515649733204095677451387399688439235969275832791311389409910961940018496521961160604108327923272415001401281159459529748674684363234564665621860031218361146719-29836460045650078356131140424616812271829161276109221178088381050229503714848759137377987591449992029270388222124208706437112847149441679916130453840660576-126666-540202650862169733600002983643250862468097-233215-2152921-40246-16812-273461-21697335162529836448414827642801316648414828959435653064439632055782741973512226664413167328Deferred tax recognised in income statement 69.170 8.594 Provision for deferred tax at 31 December 2022 69.170 8.594 Provisions for deferred tax on: Intangible assets 76.998 0 Property, plant and equipment -7.832 0 Tax loss carry-forward 0 8.594 69.170 8.594 769980-78320085945535875209540520954The company has a commitment for rent of premises. The commitment is calculated to be USD 99.000 The company has a commitment for inventories placed at manufacturers. The commitment is calculated to be USD 1.450.000.According to the company’s register of shareholders, the following shareholder holds at least 5% of the votes or at least 5% of the share capital:Årsrapport28991355Trekroner Revision A/SUniversitetsparken 24000 Roskilde2022-01-012022-12-312021-01-012021-12-3131301270Silicom Denmark A/SPoppelgårdvej112860SøborgDKDanmark2008-03-12Gladsaxe+45 46327455www.silicom.dkNordea Bank Danmark A/S, Stændertorvet AfdelingTrekroner Revision A/S28991355John CubbinRegistered Public AccountantUniversitetsparken24000RoskildeDKDanmark2023-03-20Avinoam EizenmanRegnskabsklasse BtrueRevisionspåtegningCaseWare-FSRfalsefalsefalsefalse313012702022-01-012022-12-31313012702022-01-012022-12-311313012702021-01-012021-12-31313012702022-01-012022-12-31h:OtherStatutoryReservesMember313012702021-01-012021-12-31h:OtherStatutoryReservesMember313012702022-01-012022-12-31h:RetainedEarningsMember313012702021-01-012021-12-31h:RetainedEarningsMember313012702021-12-31313012702022-12-31313012702022-01-012022-12-311313012702022-01-012022-12-312313012702022-01-012022-12-313313012702022-01-012022-12-311313012702022-01-01h:ContributedCapitalMember313012702022-12-31h:ContributedCapitalMember313012702022-01-01h:RetainedEarningsMember313012702022-01-012022-12-31h:RetainedEarningsMember313012702022-12-31h:RetainedEarningsMember313012702022-01-01h:AcquiredPatentsMember313012702022-01-01h:DevelopmentProjectsInProgressMember313012702022-01-012022-12-31h:DevelopmentProjectsInProgressMember313012702022-12-31h:DevelopmentProjectsInProgressMember313012702022-01-012022-12-31h:AcquiredPatentsMember313012702022-12-31h:AcquiredPatentsMember313012702022-01-01h:PlantAndMachineryMember313012702022-01-012022-12-31h:PlantAndMachineryMember313012702022-12-31h:PlantAndMachineryMember313012702022-01-01h:LeaseholdImprovementsMember313012702022-01-012022-12-31h:LeaseholdImprovementsMember313012702022-12-31h:LeaseholdImprovementsMember313012702022-12-31h:LongtermEquityLoanMember313012702022-01-01h:LongtermEquityLoanMember313012702022-12-31h:IntangibleAssetsMember313012702021-12-31h:IntangibleAssetsMember313012702022-12-31h:PropertyPlantAndEquipmentMember313012702021-12-31h:PropertyPlantAndEquipmentMember313012702022-12-31h:TaxLossesMember313012702021-12-31h:TaxLossesMember313012702022-01-01h:ReserveFundMember313012702022-01-012022-12-31h:ReserveFundMember313012702022-12-31h:ReserveFundMember313012702022-01-01h:ReserveForDevelopmentExpenditureMember313012702022-01-012022-12-31h:ReserveForDevelopmentExpenditureMember313012702022-12-31h:ReserveForDevelopmentExpenditureMemberiso4217:USDxbrli:pure