SK hynix NAND Product Solutions UK Limited, Branch Germany

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

SK HYNIX NAND PRODUCT SOLUTIONS UK LIMITED

Swindon/UK

Registration number: 13377249

Contents

Company information

Directors' report

Statement of Directors' responsibilities

Independent Auditor's report

Profit and loss account

Balance sheet

Statement of changes in equity

Notes to the financial statements

Company information

Directors	G Kershaw
	K Lenz
	M Tsui
Company secretary	Oakwood Corporate Secretary Limited
Registered office	Regus Windmill Hill Business Park
	Whitehill Way
	Swindon
	Wiltshire
	United Kingdom
	SN5 6QR
Auditors	Blick Rothenberg Audit LLP
	16 Great Queen Street
	Covent Garden
	London
	WC2B 5AH

Directors' report For the year ended 31 December 2022

The Directors present their report together with the audited financial statements of SK hynix NAND Product Solutions UK Limited (the 'Company') for the year ended 31 December 2022.

As allowed under S414C(ll) of the Companies Act information regarding future developments, engagement with employees and engagement with suppliers, customers and others have been included in the Directors' report.

Principal activity The principal activity of the Company is to act as a distribution company for the EMEA region in relation to NAND product solutions produced by the SK hynix Inc. Group marketed under the Solidigm Technology product banner.

Directors of the Company

The Directors who served throughout the year and up to the date of signing the financial statements except as noted, was as follows:

	G Kershaw (appointed 9 June 2022)
	K Lenz (appointed 9 June 2022)
	M Tsui (appointed 9 June 2022)
	K Jun Han (resigned 9 June 2022)

Key performance indicators

Due to the Company's role as a distributor for the SK hynix Group, the Directors consider that there are no key performance indicators relevant to the Company at the reporting date.

Principal risks and uncertainties

As a global semiconductor business, the Group is exposed to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. This is fully disclosed in the SK hynix Inc and Subsidiaries 2022 Annual Report, which does not form part of this report.

Dividends

No dividends were paid or proposed during the year (2021: $nil).

Impact of Brexit related risks

Although the overall long-term impact of Brexit remains relatively uncertain, the Directors do not believe it will have a significant impact on the Company.

Impact from the risks related to the Covid-19 pandemic

Our visibility toward future performance is more limited than is typical due to the uncertainty surrounding the ultimate impact of COV1D-19 and its variants and uncertainty surrounding the prevailing macroeconomic environment. For example, recent business conditions have been impacted by supply chain disruptions and global shortages in key materials and components, which have impacted our ability to supply certain products. We have also experienced various inflationary impacts, such as increased labor rates, materials price inflation, and increased freight and other costs, and unfavorable foreign currency impacts from a stronger U.S. dollar. In response to these challenges, we have, amongst other measures, aggressively managed supplier relationships to mitigate some of these shortages, developed contingency plans for future supply, aligned our production schedules with demand in a proactive manner, and pursued further improvements in the productivity and effectiveness of our distribution, selling and administrative activities.

Donations

The Company did not make any political contributions inside or outside of the United Kingdom in the current year (2021: $nil).

The Company has a workplace giving scheme and matches charity donations made by employees, during the current year the match value was $31,000 (2021: $nil)

Future developments

The Company is expecting its subsidiary undertakings, SK hynix NAND Product Solutions (Beijing) Co., Ltd. and SK hynix NAND Product Solutions (Shanghai) Co. Ltd., to be disposed of to the Parent.

Aside from the above, there are no expected other future developments and the Directors intend for the Company to continue operating as it has been for the foreseeable future.

Research and development

The Company does not directly participate in research and development activities, however, the Company's subsidiary SK hynix NAND Product Solutions (Shanghai) Co. Ltd., does so on behalf of the Solidigm Technology portfolio of products.

Existence of branches outside the UK

The Company has branches in Belgium, Germany, and the Netherlands.

Financial risk management objectives and policies

The financial risk management objectives and policies of the Company are discussed in the Directors' report on page 2.

Events after the balance sheet date

Details of significant events since the balance sheet date are contained in note 22 to the financial statements.

Directors' liabilities

The Company's parent maintains a directors' and officers' liability insurance policy that applies to the Company's Directors.

During the reporting year, the Company's parent entered into individual indemnification agreements with each Director of the Company providing for indemnification by the parent of such director against all expense, liability, and loss incurred by them in proceedings related to their service as a Director of the Company, to the maximum extent permitted by applicable law, and such agreements remain in force at the date of this report. During the reporting year and through the date of signing the financial statements, the bylaws of the Company's parent included indemnity provisions that provided similar indemnification by the parent of the officers of the parent serving as Directors of the Company.

During the reporting year and through the date of signing the financial statements, the Company's articles of association included indemnity provisions that indemnified the Directors of the Company against costs, charges losses, expenses, and liabilities incurred by them related to the execution and/or discharge of their duties, unless prohibited by applicable law.

Disclosure of information to the auditors

Each Director has taken steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. The Directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Blick Rothenberg Audit LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

Small companies provision statement

These financial statements have been prepared in accordance with the small companies regime under the Companies Act 2006, as applicable to the Company. It is expected the Company will no longer qualify for the small companies regime in the next financial year and the financial statements will be updated based on the requirements of the size category for which if qualifies at that point in time.

Approved by the Board on 12/29/2023 and signed on its behalf by:

Gary Kershaw, Director

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 "The Financial Reporting Standard applicable in the UK and the Republic of Ireland". Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

•	select suitable accounting policies and apply them consistently;
•	make judgements and accounting estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Independent Auditor's report to the members of SK hynix NAND Product Solutions UK Limited

Opinion

We have audited the financial statements of SK hynix NAND Product Solutions UK Limited (the 'Company') for the year ended 31 December 2022, which comprise the Profit and loss account, Balance sheet, Statement of changes in equity, and Notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•	give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except tp the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements and our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory quantities of $7,243 million held at 31 December 2022 (2021: $1,283 million). We have concluded that where the other information refers to the inventory balance or related balances such as cost of sales and net current assets, it may be materially misstated for the same reason.

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, inour opinion, based on the work undertaken in the course of the audit:

•	the information given in the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
•	the Directors' report has been prepared in accordance with applicable legal requirements.

Responsibilities of Directors

As explained more fully in the Statement of Directors' responsibilities set out on page 5, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine 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, the Directors are 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 unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor 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 (UK) 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

•	the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
•	we identified the laws and regulations applicable to the company through discussions with directors and other management;
•	we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery legislation;
•	we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
•	identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

•	making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
•	considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

•	performed analytical procedures to identify any unusual or unexpected relationships;
•	tested a sample of journal entries to identify unusual transactions;
•	assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias: and
•	investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

•	agreeing financial statement disclosures to underlying supporting documentation;
•	reading the minutes of meetings of those charged with governance;
•	enquiring of management as to actual and potential litigation and claims; and
•	reviewing correspondence with HMRC, relevant regulators including the Health and Safety Executive, and the company's legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

12/30/2023

Nicholas Winters, Senior Statutory Auditor

For and on behalf of Blick Rothenberg Audit LLP

Chartered Accountants

Statutory Auditor

16 Great Queen Street

Covent Garden

London

WC2B 5AH

Profit and loss account For the year ended 31 December 2022

		31 December 2022	For the period from 5 May 2021 to 31 December 2021
	Note	$000	$000
Turnover	4	432,387	-
Cost of sales		(435,453)	-
Gross loss		(3,066)	-
Distribution costs		(215)	-
Administrative expenses		(1,175)	(3)
Other operating income	5	7,669	-
Operating profit/(loss)		3,213	(3)
Interest receivable and similar income	6	6	-
Interest payable and similar expenses	7	(462)	(3)
Profit/(loss) before taxation	8	2,757	(6)
Tax on profit/(loss)	11	(524)	-
Profit/(loss) for the financial year		2,233	(6)

The above results were derived from continuing operations.

The Company has no other comprehensive income for the year other than the results above and therefore, no statement of comprehensive income is presented.

Balance sheet As at 31 December 2022

		31 December 2022	31 December 2021
	Note	$000	$000
Fixed assets
Investments	12	19,300	19,300
Current assets
Stocks	13	7,243	1,283
Debtors	14	169,228	8,602
Cash at bank and in hand		8,779	1,542
		185,250	11,427
Creditors: amounts falling due within one year	15	(174,008)	(2,418)
Net current assets		11,242	9,009
Net assets		30,542	28,309
Capital and reserves
Called-up share capital	17	28,315	28,315
Profit and loss account		2,227	(6)
Shareholders' funds		30,542	28,309

The financial statements of SK hynix NAND Product Solutions UK Limited (registration number: 13377249) were approved by the Board of Directors and authorised for issue on .

They were signed on its behalf by:

Gary Kershaw, Director

Statement of changes in equity For the year ended 31 December 2022

	Called-up share capital	Profit and loss account	Total
	$000	$000	$000
At 5 May 2021	-	-	-
Loss for the period	-	(6)	(6)
Total comprehensive loss	-	(6)	(6)
New share capital subscribed	28,315	-	28,315
At 31 December 2021	28,315	(6)	28,309

	Called-up share capital	Profit and loss account	Total
	$000	$000	$000
At 1 January 2022	28,315	(6)	28,309
Profit for the year	-	2,233	2,233
Total comprehensive income for the year	-	2,233	2,233
At 31 December 2022	28,315	2,227	30,542

Notes to the financial statements For the year ended 31 December 2022

1 General information

SK hynix NAND Product Solutions UK Limited (the 'Company') is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:

	Regus Windmill Hill Business Park
	Whitehill Way
	Swindon
	Wiltshire
	United Kingdom
	SN5 6QR

The nature of the company's operations and its principal activities are set out in Directors' report on page 2.

2 Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' and the Companies Act 2006 as they apply to the Company.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are presented in United States Dollars (USD), which is the functional currency of the company, and rounded to thousands ($'000).

The Company trades in United States Dollars (USD, $), Great British Pounds (GBP, $), and Euro (EUR, €). While the Company's primary economic environment is the United Kingdom and Europe, the Company's trade is predominantly derived in USD and as such, the financial statements are presented in USD as the Directors' view this to be more representative of the Company's operations.

Summary of disclosure exemptions

FRS 102 allows a qualifying entity certain disclosure exemptions, if certain conditions, have been complied with, including notification of and no objection to, the use of exemptions by the Company's shareholders. A qualifying entity is defined as a member of a Group that prepares publicly available financial statements, which give a true and fair view, in which that member is consolidated. The Company is a qualifying entity as its results are consolidated into the financial statements of SK hynix Inc which are available from:

	2091 Gyeongchung-daero
	Bubal-eup
	Icheon
	Gyeonggi 17336
	Republic of Korea

As a qualifying entity, the Company has therefore taken advantage of the disclosure exemptions available to it in respect of its separate financial statements. Such exemptions include the presentation of a statement of cash flows, comparative values and movements, and presentation of reconciliation details.

Going concern

The Directors' have assessed the Company's ability to continue on a going concern based on projections of the business performance and are satisfied the Company will be able to continue to trade for a period of at least 12 months from the date of approval of these financial statements. Therefore, the financial statements have been prepared on a going concern basis.

Exemption from preparing group accounts

The financial statements contain information about SK hynix NAND Product Solutions UK Limited as an individual company and do not contain consolidated financial information as the parent of a group.

The Company is exempt under section 401 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its parent, SK hynix NAND Product Solutions Corp, a company incorporated in Republic of Korea. The financial statements of SK hynix NAND Product Solutions Corp, can be obtained from the address given in note 21.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Company's activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The Company recognises revenue when; the amount of revenue can be reliably measured; it is probable that future economic benefits will flow to the entity; and specific criteria have been met for each of the Company's activities.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

Taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the Profit and Loss Account.

Current tax is the amount of income tax payable in respect of the taxable profit for the period or prior periods. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.

Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.

Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference.

Tangible assets

The company applies the SK hynix Inc. Group capitalisation policy for tangible assets, accordingly the company only capitalises tangible assets when they exceed a cost of USD $2,500 and excludes all personal computing equipment from being capitalised, irrespective of cost, as these items and value thresholds are considered low value by the Group.

In the current year, a total of $17,000 was charged to the profit and loss account for low value purchases described above (2021: $nil).

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the Group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Investments

Investments subsidiary undertakings are measured at historical cost.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the Company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

3 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company's accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty

The Company considers the recoverability of the cost of inventory and the associated provisioning required. When calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around anticipated saleability of finished goods..

The Company makes annual assessment of the possible impairment of its investments in subsidiary and other undertakings. When assessing impairment of investments in subsidiary and other undertakings, management considers the net asset value of its investments as well as the future projected cash flows from these investments.

4 Turnover

The analysis of the Company's turnover for the year from continuing operations is as follows:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Sale of goods	432,387	-

The Directors consider the Company to only have a single class of business, being sale of goods via distribution activities, due to its role as a distributor within the Group. All turnover is attributable to this class.

The analysis of the Company's turnover for the year by market is as follows:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
United States	148,601	-
Ireland	192,325	-
Hong Kong	18,432	-
Germany	15,059	-
Spain	11,970	-
Rest of World	46,000	-
	432,387	-

5 Other operating income

The analysis of the Company's other operating income for the year is as follows:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Profit share	5,751	-
Other operating income	1,918	-
	7,669	-

Profit share represents the amount receivable by the Company from a distributor.

Other operating income represents the amount receivable by the Company under an agreement with Intel during the transition period following the SSD business acquisition.

6 Interest receivable and similar income

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Interest income on bank deposits	6	-

7 Interest payable and similar expenses

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Foreign exchange loss	462	3

8 Profit/(loss) before taxation

Profit/(loss) before taxation is stated after charging:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Operating lease expense - property	118	1
Operating lease expense - plant and machinery	5	-
	123	1

9 Staff cost and numbers

The aggregate payroll costs (including Directors' remuneration) were as follows:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Wages and salaries	3,797	-
Social security costs	869	-
Other short-term employee benefits	910	-
Pension costs, defined contribution scheme	59	-
Other employee expense	147	-
	5,782	-

The average number of persons employed by the Company (including Directors) during the year, analysed by category was as follows:

	31 December 2022 No.	For the period from 5 May 2021 to 31 December 2021 No.
Sales, marketing and distribution	-	2
General and administrative	1	-
Sales and management	18	-
Chief officer	1	-
	20	2

10 Directors' remuneration

All of the Directors as at the year end are employees of the ultimate parent company, SK hynix Inc., and are remunerated by those companies for their services to the group as a whole. The Directors did not receive any remuneration in their capacity as Directors of the Company (2021: £nil) as their services were incidental to their services to the group.

11 Tax on profit/(loss)

Tax in the profit and loss account:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Current taxation
UK corporation tax	524	-
Total current income tax	524	-
Deferred taxation
Total deferred taxation	-	-
Tax in the profit and loss account	524	-

The tax on the profit/(loss) for the year is the same as the standard rate of corporation tax in the UK (2021: higher than the standard rate of corporation tax in the UK) of 19% (2021: 19%).

The differences are reconciled below:

	31 December 2022	For the period from 5 May 2021 to 31 December 2021
	$000	$000
Profit/(loss) before taxation	2,757	(6)
Corporation tax at standard UK corporation tax rate of 19% (2021: 19%)	524	(1)
Expenses not deductible	1	-
Income not taxable	(1)	-
Carried forward tax losses not recognised	-	1
Total taxation	524	-

In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. This new rate was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.

12 Investments

	31 December 2022	31 December 2021
	$ 000	$000
Investments in subsidiaries	19,300	19,300
Subsidiaries		$000
Cost or valuation
At 1 January 2022		19.300
At 31 December 2022		19,300
Carrying amount
At 31 December 2022		19,300
At 31 December 2021		19,300

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the Company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking	Registered office	Holding	Proportion of voting rights and shares held 2021 and 2022
Subsidiary undertakings
SK hynix NAND Product Solutions (Beijing) Co., Ltd	Room 1001, 1002 and 1003, 10th Floor, Building No.2, Yard No.15, Guanghua Road, Chaoyang District, Beijing, People's Republic of China	Ordinary class	100% Principal activity - sales and marketing
SK hynix NAND Product Solutions (Shanghai) Co., Ltd	5th Floor, Building 13, No. 1036, Tianlin Road, Minhang District, Shanghai, People's Republic of China	Ordinary class	100% Principal activity - research and development

The aggregate capital and reserves and the result for the financial period ended 31 December 2022 of the subsidiaries noted above was as follows:

	Profit ^*	Capital and reserves ^**
	$	$
SK hynix NAND Product Solutions (Beijing) Co., Ltd	1,749,876	14,721,676
SK hynix NAND Product Solutions (Shanghai) Co., Ltd	2,019,196	6,771,183

^* Converted at average exchange rate of USD $1 = CNY ¥6.733.
^* Converted at year end spot rate of USD $1 = CNY ¥6.898.

The above values have been derived from the financial statements of the subsidiary undertakings, which are prepared using People's Republic of China Accounting Standards for Business Enterprises - Basic Standard and specific accounting standards, implementation guidance, interpretations and other relevant provisions issued subsequently by the People's Republic of China Ministry of Finance.

13 Stocks

	31 December 2022	31 December 2021
	$000	$000
Finished goods and goods for resale	7,243	1,283

There is no significant difference between the replacement cost of the stock and its carrying amount.

14 Debtors

	31 December 2022	31 December 2021
	$000	$000
Trade debtors	99,392	-
Amounts owed by Group undertakings	67,639	7,290
Other debtors	2,089	1,312
Prepayments	1	-
Income tax asset	107	-
	169,228	8,602

Amounts owed by Group undertakings are unsecured, do not bear interest, have no fixed date of repayment, and are repayable on demand.

15 Creditors: amounts falling due within one year

	31 December 2022	31 December 2021
	$000	$000
Trade creditors	76	-
Amounts owed to Group undertakings	165,351	2,418
Social security and other taxes	2,304	-
Other payables	177	-
Accruals	6,100	-
	174,008	2,418

Amounts owed to Group undertakings are unsecured, do not bear interest, have no fixed date of repayment, and are repayable on demand.

16 Pension and other schemes

Defined contribution pension scheme

The Company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Company to the scheme and amounted to $59,000 (2021: $nil).

17 Share capital

Allotted, called-up and fully paid shares

	31 December 2022		31 December 2021
	No. 000	$000	No. 000	$000
Ordinary class shares of £1 each	21,160	28,315	21,160	28,315

Consideration for shares was paid in GBP based on the nominal value of £1 per share, the consideration has been converted using the USD spot rate applicable to the Company on the date of payment.

18 Obligations under leases and hire purchase contracts

Finance leases

At the balance sheet date, the Company does not have any non-cancellable lease commitments. The Company has been using temporary office space for administration purposes prior to the end of the financial period which are not subject to minimum terms and can be cancelled at any time.

19 Dividends

No dividends have been paid or proposed to be paid in respect of the current year (2021:$nil).

20 Commitments

Capital commitments

There are no capital commitments which the Company has not provided for in these financial statements (2021: $nil).

21 Parent and ultimate parent undertaking

The Company's immediate parent is SK hynix NAND Product Solutions Corp, incorporated in United States of America.

The ultimate parent is SK hynix Inc, incorporated in Republic of Korea.

The most senior parent entity producing publicly available financial statements is SK hynix Inc. These financial statements are available upon request from:

	2091 Gyeongchung-daero
	Bubal-eup
	Icheon
	Gyeonggi 17336
	Republic of Korea

22 Events after the balance sheet date

There have been no significant events after the balance sheet date up to the date these financial statements were issued.