Deloitte

Statsautoriseret
Revisionspartnerselskab
CVR-nr. 33963556
Weidekampsgade 6
2300 Copenhagen S

Telefon 36 10 20 30
Telefax 36 10 20 40
www.deloitte.dk

Sonion A/S
Byleddet 12-14
4000 Roskilde
Central Business Registration No
25141350

Annual report 2016

The Annual General Meeting adopted the annual report on 31.05.2017

Chairman of the General Meeting

Name: Christian Johannes Gellert Nielsen

Medlem af Deloitte Touche Tohmatsu Limited

Sonion A/S

Contents

Page

Entity details 1

Statement by Management on the annual report 2

Independent auditor's report 3

Management commentary 6

Income statement for 2016 9

Balance sheet at 31.12.2016 10

Statement of changes in equity for 2016 12

Notes 13

Accounting policies 18

lwesselhoff/30.05.2017 - 14:13/W.6.5.0/MStC_C Selskaber/E.19.2017 Status II: 0

Sonion A/S 1

Entity details
Entity details

Entity
Sonion A/S
Byleddet 12-14
4000 Roskilde

Central Business Registration No: 25141350

Registered in: Roskilde
Financial year: 01.01.2016 - 31.12.2016

Phone: 46306666
Fax: 46306677
Website: www.sonion.com
E-mail: sonion@sonion.com

Board of Directors
Walther Thygesen, Chairman
Christian Johannes Gellert Nielsen
Kim Vorbeck Jans

Executive Board
Jesper Ahlmann Funding Andersen
Christian Johannes Gellert Nielsen

Auditors
Deloitte Statsautoriseret Revisionspartnerselskab
Weidekampsgade 6
2300 Copenhagen S
Sonion A/S 2

Statement by Management on the annual report

Statement by Ma nage ment o n the a nnua l report

The Board of Directors and the Executive Board have today considered and approved the annual report of
Sonion A/S for the financial year 01.01.2016 - 31.12.2016.

The annual report is presented in accordance with the Danish Financial Statements Act.

In our opinion, the financial statements give a true and fair view of the Entity’s financial position at
31.12.2016 and of the results of its operations for the financial year 01.01.2016 - 31.12.2016.

We believe that the management commentary contains a fair review of the affairs and conditions referred to
therein.

We recommend the annual report for adoption at the Annual General Meeting.

Roskilde, den 31.05.2017

Executive Board

Jesper Ahlmann Funding Christian Johannes Gellert

Andersen Nielsen

Board of Directors

Walther Thygesen Christian Johannes Gellert Kim Vorbeck Jans

Nielsen
Chairman
Sonion A/S 3

Independent auditor's report

Independent a uditor's report

To the shareholder of Sonion A/S

Opinion
We have audited the financial statements of Sonion A/S for the financial year 01.01.2016 - 31.12.2016,
which comprise the income statement, balance sheet, statement of changes in equity and notes, including a
summary of significant accounting policies. The financial statements are prepared in accordance with the
Danish Financial statements Act.

In our opinion, the financial statements give a true and fair view of the Entity’s financial position at
31.12.2016 and of the results of its operations and cash flows for the financial year 01.01.2016 - 31.12.2016
in accordance with the Danish Financial statements Act.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional re-
quirements 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 this auditor’s
report. We are independent of the Entity in accordance with the International Ethics Standards Board of
Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements ap-
plicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these require-
ments. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Management's responsibilities for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in ac-
cordance with the Danish Financial statements Act, and for such internal control as Management determines
is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.

In preparing the financial statements, Management is responsible for assessing the Entity’s ability to continue
as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going
concern basis of accounting in preparing the financial statements unless Management either intends to liqui-
date the Entity or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material
misstatement when it exits. 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:
Sonion A/S 4

Independent auditor's report

• 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 evi-
dence 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 Entity’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti-
mates 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 Entity’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
Entity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the dis-
closures in the notes, 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 the management commentary

Management is responsible for the management commentary.

Our opinion on the financial statements does not cover the management commentary, 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 the management
commentary and, in doing so, consider whether the management commentary is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.

Moreover, it is our responsibility to consider whether the management commentary provides the information
required under the Danish Financial statements Act.
Sonion A/S 5

Independent auditor's report

Based on the work we have performed, we conclude that the management commentary 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 the management commentary.

Copenhagen, 31.05.2017

Deloitte
Statsautoriseret Revisionspartnerselskab
Central Business Registration No: 33963556

Kim Takata Mücke

State Authorised Public Accountant
Sonion A/S 6

Management commentary
Manage ment co mmentary

2016 2015 2014 2013 2012

USD'000 USD'000 USD'000 USD'000 USD'000
Financial highlights
Key figures
Revenue 184.936 178.226 163.176 154.687 143.388
Gross profit/loss 8.787 8.659 18.908 15.866 9.579
Operating profit/loss 2.657 3.744 8.200 8.478 1.850
Net financials (1.315) (972) 6.545 (58.192) 4.196
Profit/loss for the year (423) 1.408 (60) 63.787 7.348
Total assets 356.835 366.317 292.581 356.219 230.003
Investments in property,
987 1.716 1.832 2.258 1.405
plant and equipment
Equity 61.467 62.854 149.027 192.512 23.048
Employees in average 71 76 72 74 109

Ratios
Return on equity (%) (0,7) 1,3 0,0 59,2 42,0
Equity ratio (%) 17,2 17,2 50,9 54,0 10,0
Net profit ratio (%) 1,4 2,1 5,0 5,5 1,3
Return on assets (%) 1,7 1,1 2,1 3,0 0,9

Financial highlights are defined and calculated in accordance with "Recommendations & Ratios 2015" issued by the Danish Society of Financial Analysts.

Ratios Calculation formula Ratios

Profit/loss for the year x 100
Average equity The entity's return on capital invested in the
Return on equity (%)
entity by the owners.
Equity x 100
Total assets
Equity ratio (%) The financial strength of the entity.

Profit from ordinary operations activities

Revenue x 100
Net profit ratio (%) Profitability of the entity.

Profit from ordinary operations activities

Average operating assets x 100 The entity's ability to generate returns on
Return on assets (%)
capital invested.
Sonion A/S 7

Management commentary

Primary activities
The primary activity of the Company is development of micro mechanical components and sale of advanced
micro acoustic and micro mechanical component and solutions.

In cooperation with group related companies the Company provides solutions for manufacture of hearing
instruments.

At group level we are a global leader within sale and development of advanced micro-acoustic and micro
mechanical components as well as cost-efficient production. We combine our audiological expertise with our
substantial experience in low-cost production areas.

In 2016, we succesfully continued our strategy aimed at servicing the hearing health industry with innovative
technologies and solutions and we now have an even stronger platform.

In recent years, we have made an expansion of our R&D capacity and we have made investments in produc-
tion expansions. These actions have taken place to meet the demand there is in the market for our innovative
products.

Also for 2016, we have seen that these investments continue to provide a satisfactory yield. Our customers
have shown great interest in the the many products we have introduced in the recent years and we have
similar high expectations for our 2017 launches. Our quality, delivery performance and production efficiency
have been at a high satisfactory level, which means that we have been able to meet our customers’ expec-
tations.

We feel strongly positioned to capitalise on the possibilities we see in our market and we thus expect to
realize growth also in 2017.

Development in activities and finances

The Company realised a revenue growth of 4% compared to 2015 measured in the main currency of the
Company, US Dollar. The Company’s operating results and financial development were realised as expected
in our latest annual report and, as a whole, they are considered satisfactory.

Gross profit
Gross profit amounts to USD 8.8 million equivalent to a gross margin of 5% which is similar to 2015.

Profit from operating activities

Operating profit amounts to USD 2.7 million, which, is a decrease of USD 1 million compared to 2015.

Financial income and expenses

For 2016, these items comprise primarily interest expenses regarding interest and foreign exchange adjust-
ments of loans, including bank loans.

Balance sheet
The total assets at the end of 2016 showed an amount of USD 357 million equivalent to a decrease of USD
9 million compared to 2015.
Sonion A/S 8

Management commentary

Risks
Sonion A/S has comitted to a high standard of business conduct and rational management of our risk in
order to protect the Company’s assets, secure shareholder investments and comply with applicable laws.

Sonion A/S follows the Group’s program concerning risk management.

Statutory report on corporate social responsibility

The Group has chosen to publish the statutory report on corporate social responsibility on the Company’s
website. Please use the following URL:
http://www.sonion.com/about/CSR.aspx

Events after the balance sheet date

No events have occurred after the balance sheet date to this date which would influence the evaluation of
this annual report.

Outlook
We expect the hearing instrument market to continue its long-term volume growth rates of approximately
5% in 2017

Based on the underlying increase in the marked for hearing aid, combined with a very positive customer
feedback of new product launches, we expect to continue our growth in 2017.
Sonion A/S 9

Income statement for 2016

Inco me statement for 201 6

2016 2015
Notes USD'000 USD'000

Revenue 1 184.936 178.226

Production costs 4 (176.149) (169.567)
Gross profit/loss 8.787 8.659

Distribution costs 4 (2.522) (3.096)

Administrative costs 3, 4 (3.608) (1.819)
Operating profit/loss 2.657 3.744

Other financial income 5 6.328 24.385

Other financial expenses 6 (7.643) (25.357)
Profit/loss before tax 1.342 2.772

Tax on profit/loss for the year 7 (1.765) (1.364)

Profit/loss for the year 8 (423) 1.408

Sonion A/S 10

Balance sheet at 31.12.2016

Balance sheet at 31.12.2 016

2016 2015
Notes USD'000 USD'000

Acquired intangible assets 22 77

Goodwill 113.364 119.662
Intangible assets 9 113.386 119.739

Plant and machinery 2.430 3.147

Other fixtures and fittings, tools and equipment 351 268
Leasehold improvements 5 8
Property, plant and equipment in progress 406 196
Property, plant and equipment 10 3.192 3.619

Receivables from group enterprises 189.712 195.946

Other receivables 4.337 110
Fixed asset investments 11 194.049 196.056

Fixed assets 310.627 319.414

Raw materials and consumables 102 160

Work in progress 0 24
Manufactured goods and goods for resale 3.254 4.408
Inventories 3.356 4.592

Trade receivables 26.915 30.241

Receivables from group enterprises 415 9.782
Deferred tax 12 927 881
Other receivables 124 86
Prepayments 13 642 737
Receivables 29.023 41.727

Cash 13.829 584

Current assets 46.208 46.903

Assets 356.835 366.317

Sonion A/S 11

Balance sheet at 31.12.2016

2016 2015
Notes USD'000 USD'000

Contributed capital 1.757 1.757

Retained earnings 59.710 61.097
Equity 61.467 62.854

Bank loans 219.663 239.472

Non-current liabilities other than provisions 14 219.663 239.472

Current portion of long-term liabilities other than

14 20.140 20.217
provisions
Bank loans 113 1.279
Trade payables 502 487
Payables to group enterprises 47.184 36.080
Income tax payable 1.238 944
Other payables 15 6.528 4.984
Current liabilities other than provisions 75.705 63.991

Liabilities other than provisions 295.368 303.463

Equity and liabilities 356.835 366.317

Contingent liabilities 16
Related parties with controlling interest 17
Group relations 18
Sonion A/S 12

Statement of changes in equity for 2016

Statement of c hanges in equity for 2016

Contributed Retained
capital earnings Total
USD'000 USD'000 USD'000

Equity beginning of year 1.757 61.097 62.854

Other equity postings 0 (964) (964)
Profit/loss for the year 0 (423) (423)
Equity end of year 1.757 59.710 61.467
Sonion A/S 13

Notes
Notes

1. Revenue
Sonion A/S omits to disclose the distribution of the revenue in business areas and geographical segments in
accordance with the Danish Financial Statement Act § 96.

2016 2015
USD'000 USD'000
3. Fees to the auditor appointed by the Annual General Meeting
Statutory audit services 41 34
Tax services 28 112
Other services 20 27
89 173

2016 2015
USD'000 USD'000
4. Staff costs
Wages and salaries 5.619 5.996
Pension costs 509 511
Other social security costs 34 34
6.162 6.541

Number of employees at balance sheet date 67 83

Average number of employees 71 76

2016 2015
USD'000 USD'000
5. Other financial income
Financial income arising from group enterprises 4.720 6.112
Exchange rate adjustments 1.533 18.264
Other financial income 75 9
6.328 24.385
Sonion A/S 14

Notes

2016 2015
USD'000 USD'000
6. Other financial expenses
Financial expenses from group enterprises 899 1.244
Interest expenses 6.115 6.216
Exchange rate adjustments 629 15.633
Other financial expenses 0 2.264
7.643 25.357

2016 2015
USD'000 USD'000
7. Tax on profit/loss for the year
Tax on current year taxable income 1.811 2.269
Change in deferred tax for the year (46) 321
Adjustment concerning previous years 0 (1.226)
1.765 1.364

2016 2015
USD'000 USD'000
8. Proposed distribution of profit/loss
Retained earnings (423) 1.408
(423) 1.408

Acquired
intangible
assets Goodwill
USD'000 USD'000
9. Intangible assets
Cost beginning of year 1.025 125.960
Cost end of year 1.025 125.960

Amortisation and impairment losses beginning of year (948) (6.298)

Amortisation for the year (55) (6.298)
Amortisation and impairment losses end of year (1.003) (12.596)

Carrying amount end of year 22 113.364

Sonion A/S 15

Notes

Other
fixtures and Property,
fittings, tools Leasehold plant and
Plant and and improve- equipment in
machinery equipment ments progress
USD'000 USD'000 USD'000 USD'000
10. Property, plant and
equipment
Cost beginning of year 24.939 4.819 1.680 196
Transfers 182 0 0 (182)
Additions 187 249 0 551
Disposals (300) (1.640) 0 (159)
Cost end of year 25.008 3.428 1.680 406

Depreciation and
impairment losses beginning (21.792) (4.551) (1.672) 0
of the year
Depreciation for the year (992) (166) (3) 0
Reversal regarding disposals 206 1.640 0 0
Depreciation and
impairment losses end of (22.578) (3.077) (1.675) 0
the year

Carrying amount end of

2.430 351 5 406
year

11. Fixed asset investments

Receivables
Other recei-
from group
vables
entreprises
USD '000 USD '000
Cost Begnning of year 195.946 110
Additions 0 4.227
Disposals (6.234) 0

Cost end of year 189.712 4.337

Carrying amount end of year 189.712 4.337

Sonion A/S 16

Notes

2016
USD'000
12. Deferred tax
Changes during the year
Beginning of year 881
Recognised in the income statement 46
End of year 927

The deferred tax assets is expected to be set-off against taxable income in the foreseeable future.

13. Prepayments
Prepayments comprise incurred cost relating to subsequent financial years

Instalments Instalments Instalments

within 12 within 12 beyond 12
months months months
2016 2015 2016
USD'000 USD'000 USD'000
14. Liabilities other than provisions
Bank loans 20.140 20.217 219.663
20.140 20.217 219.663

2016 2015
USD'000 USD'000
15. Other payables
VAT and duties 930 979
Wages and salaries, personal income taxes, social security costs, etc
374 290
payable
Holiday pay obligation 798 770
Other costs payable 4.426 2.945
6.528 4.984

Application of financial instruments

In order to hedge the value of future cash flows, the Company applies forward exchange contrats, options
and interest swaps. At 31 December 2016, the Company had an unrealized net loss of USD 3.057 k, which
has been recognized under other debt and in equity. At 31 December 2015, the Company had an unrealized
net loss of USD 1.857 k which was recognized under other debt and in equity. At 31 December 2016, the
nominal value of the contracts entered into amounts to USD 61.100 k (2015: USD 48.500 k). All currency
hedging contracts have been entered to hedge costs in EUR, DKK, PHP and CHF.
Sonion A/S 17

Notes

16. Contingent liabilities

Sonion A/S has operating lease commitments of USD 12 k regarding cars and copying equipment. The
leases will expire in April 2018 at the latest.

Sonion A/S has entered into rental contracts with a notice period of nine months, equivalent to USD 156 k.

Sonion A/S has provided a payment guarantee to third party of USD 334 k.

The Company participates in a Danish joint taxation arrangement. According to the joint taxation provisions
of the Danish Corporation Tax Act, the Company is therefore liable from the financial year 2013 for income
taxes etc for the jointly taxed companies and from 1 July 2012 also for obligations, if any, relating to the
withholding of tax on interest, royalties and dividend for the jointly taxed companies.

17. Related parties with controlling interest

Related parties with a controlling interest:

Name Registered office Basis of influence

Novo Nordisk Fonden Hellerup, Denmark Ultimate owner

18. Group relations

Name and registered office of the Parent preparing consolidated financial statements for the smallest group:

Novo Nordisk Fonden, Hellerup, Denmark

Sonion A/S 18

Accounting policies
Accounti ng policies

Reporting class
This annual report has been presented in accordance with the provisions of the Danish Financial Statements
Act governing reporting class C enterprises (large).

The financial statements is presented in USD, which is the functional currency of the Entity.
At 31 December 2016 the financial statement is translated using the exchange rate at the balance sheet data
which was 7.05 and ind 2015 was 6.83.

The accounting policies applied to these financial statements are consistent with those applied last year.

Recognition and measurement

Assets are recognised in the balance sheet when it is probable as a result of a prior event that future economic
benefits will flow to the Entity, and the value of the asset can be measured reliably.

Liabilities are recognised in the balance sheet when the Entity has a legal or constructive obligation as a
result of a prior event, and it is probable that future economic benefits will flow out of the Entity, and the
value of the liability can be measured reliably.

On initial recognition, assets and liabilities are measured at cost. Measurement subsequent to initial recog-
nition is effected as described below for each financial statement item.

Anticipated risks and losses that arise before the time of presentation of the annual report and that confirm
or invalidate affairs and conditions existing at the balance sheet date are considered at recognition and
measurement.

Income is recognised in the income statement when earned, whereas costs are recognised by the amounts
attributable to this financial year.

Foreign currency translation

On initial recognition, foreign currency transactions are translated applying the exchange rate at the trans-
action date. Receivables, payables and other monetary items denominated in foreign currencies that have
not been settled at the balance sheet date are translated using the exchange rate at the balance sheet
date. Exchange differences that arise between the rate at the transaction date and the rate in effect at the
payment date, or the rate at the balance sheet date are recognised in the income statement as financial
income or financial expenses. Property, plant and equipment, intangible assets, inventories and other non-
monetary assets that have been purchased in foreign currencies are translated using historical rates.

Derivative financial instruments

On initial recognition in the balance sheet, derivative financial instruments are measured at cost and sub-
sequently at fair value. Derivative financial instruments are recognised under other receivables or other
payables.

Changes in the fair value of derivative financial instruments classified as and complying with the requirements
for hedging future transactions are recognised directly in equity. When the hedged transactions are realised,
the accumulated changes are recognised as part of cost of the relevant financial statement items.
Sonion A/S 19

Accounting policies

For derivative financial instruments that do not comply with the requirements for being treated as hedging
instruments, changes in fair value are recognised currently in the income statement as financial income or
financial expenses.

Income statement
Revenue
Revenue from the sale of manufactured goods and goods for resale is recognised in the income statement
when delivery is made and risk has passed to the buyer and income can be measured reliable and is expected
to be received. Revenue from the sale of services is recognised in the income statement when delivery is
made to the buyer. Revenue is recognised net of VAT, duties and sales discounts and is measured at fair
value of the consideration fixed.

Production costs
Production costs comprise cost of sales and indirect production cost, including wages and salaries and de-
preciation incurred to achieve the years’s revenue.

Production cost also include development cost, that do not meet the critieria for capitalization in the balance
sheet.

Distribution costs
Distribution costs comprise costs incurred for distribution of goods sold, including cost for sales and distribu-
tion staff, advertising cost as well as depreciation and amortisation.

Administrative costs
Administrative costs comprise expenses incurred for the Company’s administrative functions, including wages
and salaries for administrative staff and Management, stationery and office supplies as well as depreciation
and amortisation.

Other financial income

Other financial income comprises interest income, including interest income on receivables from group en-
terprises, currency gains and transactions in foreign currencies etc.

Other financial expenses

Other financial expenses comprise interest expenses, including interest expenses on payables to group en-
terprises, currency losses as well as tax surcharge under the Danish Tax Prepayment Scheme etc.

Tax on profit/loss for the year

Tax for the year, which consists of current tax for the year and changes in deferred tax, is recognised in the
income statement by the portion attributable to the profit for the year and recognised directly in equity by
the portion attributable to entries directly in equity.

The Company is part of joint taxation. The current Danish income tax is allocated among the jointly taxed
companies proportionally to their taxable income (full allocation with a refund concerning tax losses)
Sonion A/S 20

Accounting policies

Balance sheet
Goodwill
Goodwill is the positive difference between cost and value in use of assets and liabilities taken over as part
of the acquisition. Goodwill is amortised straight-line over its estimated useful life which is fixed based on
the experience gained by Management for each business area. The amortisation period is 20 years.
The amortisation is included in production costs.

Goodwill is written down to the lower of recoverable amount and carrying amount.

Intellectual property rights etc

Intellectual property rights etc comprise patents.

Intellectual property rights acquired are measured at cost less accumulated amortisation and impairment
losses. Patents are amortised over their remaining duration.

Property, plant and equipment

Leasehold improvements, plant and machinery as well as other fixtures and fittings, tools and equipment are
measured at cost less accumulated depreciation and impairment losses.

Cost comprises the acquisition price, costs directly attributable to the acquisition and preparation costs of
the asset until the time when it is ready to be put into operation. For own-manufactured assets, cost com-
prises direct and indirect costs of materials, components, subsuppliers and labour costs.

The basis of depreciation is cost less estimated residual value after the end of useful life. Straight-line de-
preciation is made on the basis of the following estimated useful lives of the assets:

Plant and machinery 5-10 years

Other fixtures and fittings, tools and equipment 3-10 years
Leasehold improvements 2-10 years

Items of property, plant and equipment are written down to the lower of recoverable amount and carrying
amount.

Gains and losses from the sale of property, plant and equipment are calculated as the difference between
selling price less selling cost and carrying amount at the time of sale. Gains or losses are recognised in the
income statement as adjustment to depreciation and impairment losses, or under other operating income if
the selling price exceeds original cost.

Receivables
Receivables are measured at amortised cost, usually equalling nominal value less writedowns for bad and
doubtful debts.

Inventories
Inventories are measured at the lower of cost using the FIFO method and net realisable value.
Sonion A/S 21

Accounting policies

Cost consists of purchase price plus delivery costs. Cost of manufactured goods and work in progress consists
of costs of raw materials, consumables, direct labour costs and indirect production costs.

The net realisable value of inventories is calculated as the estimated selling price less completion costs and
costs incurred to execute sale. Furthermore, net realizable value is determined with regard to marketability,
obsolescence and development in expected selling price.

Deferred tax
Deferred tax is recognised on all temporary differences between the carrying amount and tax-based value of
assets and liabilities, for which the tax-based value of assets is calculated based on the planned use of each
asset.

Deferred tax assets, including the tax base of tax loss carryforwards, are recognised in the balance sheet at
their estimated realisable value, either as a set-off against deferred tax liabilities or as net tax assets.

Prepayments
Prepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at
cost.

Cash
Cash comprises cash in hand and bank deposits.

Operating leases
Lease payments on operating leases are recognised on a straight-line basis in the income statement over
the term of the lease.

Other financial liabilities

Other financial liabilities are measured at amortised cost, which usually corresponds to nominal value.

Income tax receivable or payable

Current tax payable or receivable is recognised in the balance sheet, stated as tax computed on this year's
taxable income, adjusted for prepaid tax

Cash flow statement

According to section 86(4) of the Danish Financial Statements Act, a cash flow statement has not been
prepared.