Zyxel Networks A/S

Financial risks Board of Directors Our Managerial Position Report on data ethics ZyXEL Networks A/S is a trading company that sells products for the Company's owner to a limited number of customers in the countries where the Company is represented and, on this background, the Company does not have any specific general risks. ZyXEL Networks A/S invoices and purchases goods mainly in EUR, however we also trade in GBP and USD. An exchange rate risk exists in the UK & Turkey where we trade in etiher GBP or USD. The risks are not hedged in financial instruments. The exchange risk related to sales in other countries is minimal. At the end of 2021, prior to the official start of the Russian invasion of Ukraine, ZyXEL Networks A/S had limited exposure in terms of assets and unpaid debts owed by our Russian customers. In 2022, post the Invasion, banking sanctions were put in place on our banks to restrict any payments or receivables from Russian banks, which initially left us exposed to an accounts receivable risk. During 2022 our Russian sales operation has subsequently closed down due to the ongoing war in Ukraine in accordance with the ongoing EU sanctions against the region. In 2022, there were no changes to the Board of Directors which is why we did not achieve the target figure. Taking the industry into consideration, we might encounter challenges in achieving our target within the defined timeframe. ZyXEL Networks A/S aspires to have one of each gender in the final stage of the hiring processes. In 2022 we will continue to work towards making changes to the gender distribution in senior management roles to increase female representation to a more equal distribution. ZyXEL Networks A/S is committed to following best practice when it comes to the ongoing management of our customer data, to ensure that we are adhering to ethical guidelines. The amount of exposure we have to customer data is limited, due to the type of data we have on customers and personal data within our customer relationship management tool and other data tools. We are still in transition to fully implement the guidelines on ethical policies implemented in 2022, alongside our data protection policy that already fulfills GDPR compliance. ZyXEL Networks A/S plans to fully implement the new data ethics policy in 2023 to support and complement our current data protection policy.

The world-wide chip-set shortage in the IT networking industry caused by covid-19 in 2020, had an overall impact on the company’s business activities in 2022. Intermittent supply of goods in H1 2022 had the effect of high demand for certain products, but also impacted our operating costs, such as freighting due to an increase in the overall cost of shipping goods by sea and air. This also meant that due the high demand of goods in Europe and the subsequent delivery of products in Q4 22 caused a higher than normal inventory holding at the end of 2022. The Company's income statement for 2022 shows a profit of EUR 1,873,743 as against EUR 2,556,068 in 2021. Equity in the Company's balance sheet at 31 December 2022 stood at EUR 16,265,118 as against EUR 14,391,375 at 31 December 2021. The development in revenue and profit for the year is considered satisfactory and in line with the expectations expressed in the financial statements for 2021. The Group expected results for 2023 - revenue in the range of EUR 110,000 thousand and profit is expected to be consistent with the levels of profit in 2022.