Annual Report (ESEF) • Apr 13, 2022
Preview not available for this file type.
Download Source FileUntitled ANNUAL REPORT 2 BONESUPPORT 2021 ANNUAL REPORT BONESUPPORT™ is a fast growing orthobiologics company that focuses on innovative products for the treatment of bone disorders. The company develops and sells injectable bio-ceramic bone graft substitutes based on its CERAMENT® platform, which remodels to bone and has the ability to release pharmaceuticals to promote healing. BONESUPPORT markets CERAMENT®|BONE VOID FILLER (BVF), CERAMENT®|G and CERAMENT®V, and is developing pre-clinical product candidates that are designed to promote bone regrowth. BONESUPPORT’s products focus on trauma, revision arthroplasty (replacement of joint prostheses), chronic osteomyelitis (bone infection) and foot and ankle surgery. BONESUPPORT has its registered oce in Sweden and is listed on Nasdaq Stockholm. Net sales in 2021 amounted to SEK 213 million (181) and the company had 98 (95) employees at year-end. CERAMENT® is a registered trademark of BONESUPPORT AB TABLE OF CONTENTS 3 2021 in brief 4 Mission, Vision and Strategy 6 Message from the CEO 8 CERAMENT 12 Market expansion 16 Research and Development 18 Health Economics 22 Sustainability 26 Operations in overview 28 Directors’ Report 35 Financial statements 2021 46 Notes to the nancial statements 61 The Board's assurance 62 Auditor's report 67 BONESUPPORTs share 68 Corporate Governance Report 2021 73 The Board of Directors 74 Group Management 76 Denitions - Alternative performance measures 77 Glossary The company's formal annual accounts and consolidated accounts are included on pages 28–65 in this document. BONESUPPORT 2021 ANNUAL REPORT 3 Sales 213 SEKm Margin 89 % Prot/Loss -81 SEKm Earnings/share -1,34 SEK FINANCIAL RESULTS 2021 IN BRIEF IMPORTANT EVENTS In February 2021, the company announced that the U.S. Food and Drug Administration (FDA) had informed BONESUPPORT that the company's De Novo application for CERAMENT G for bone infection required additional information and clarication. The requested supplements were submitted in September to the FDA. At the end of February 2022, the FDA announced that nal notication of the De Novo application is delayed, as a lagging eect of the pandemic and high workload within the agency. In April, the company was awarded a GPO-contract with Premier. Premier is a leading healthcare and purchasing network with over 4,100 U.S. aliated hospitals. In July, the company received “breakthrough device designa- tion” for CERAMENT G for the indication trauma. The company announced in September that the results of the company's Investigational Device Exemption (IDE) study FORTIFY were non-conclusive. The primary safety parameter for CERAMENT G was met. In December, Michael Wrang Mortensen joined the company in the newly established role as Executive Vice President (EVP) Research & Development (R&D) and Operations. COVID19PANDEMIC Despite the gradually increased ratio of fully vaccinated in the population, the pandemic has continued to have a major impact on healthcare resource priorities and the number of postponed orthopedic surgeries. In 2021, we have periodically experienced continued local restrictions, to varying degrees and with large regional dierences. CERAMENT has shown positive health economic eect as well as shortened hospital stay and can benet from an increased focus on procedures that reduce the large backlog in orthopedic care. Net sales increased by 18% (23% in constant ex- change rates) and amounted to SEK 213 million (181). The North America segment increased by 22% (31% in constant exchange rates) and the EUROW seg- ment reported a sales increase of 12% (13% in constant exchange rates). The gross margin was 89% (89). Operating prot amounted to SEK -81 million (-99). Earnings per share before and after dilution were –1.34 SEK (-1.72). 4 BONESUPPORT 2021 ANNUAL REPORT MISSION Improve health and quality of life for patients with bone injuries BONEUPPORT’s unique product technology has properties with the potential to revolutio- nize the care of patients with bone disorders by enabling faster rehabilitation, limiting the num- ber of surgical procedures and reducing the risk of severe infections. For patients, this means that they can return to a more normal life more quickly. Since its foundation, BONESUPPORT’s products have been used in approximately 70,000 surgi- cal procedures in more than 20 countries. The most common procedures consist of bone dis- orders where the body is unable to perform na- tural healing and single-stage operations in connection with bone infection. Our soul ... ... our heart BONESUPPORT 2021 ANNUAL REPORT 5 VISION To become a global leader in orthobiology BONESUPPORT’s unique technology means that over time the company’s injectable bioce- ramic bone graft substitutes remodel to natu- ral bones and have the ability to release drugs. This enables new treatment standards in the treatment for bone diseases/skeletal injuries. The company’s ambition is to grow sales by 40 percent a year after the pandemic, including rapid expansion in the U.S., which is the world’s largest healthcare market. STRATEGY The strategy is based on three pillars: Innovation – BONESUPPORT has the market’s most innovative solution for the treatment of bone disorders. Clinical and health economic evidence – The clinical evidence for the CERAMENT plat- form continues to grow and now amounts to more than 240 publications and abstracts. An important milestone for BONESUPPORT is the CERTiFy study, which shows that CERAMENT is at least as good as autograft. Eective commercial platform – BONESUPPORT’s commercial and medical or- ganization provides healthcare with products, information, service and training. Our soul ... ... our heart VISION AND MISSION 6 BONESUPPORT 2021 ANNUAL REPORT CEO EMIL BILLBÄCK COMMENTS ON THE PROGRESS IN 2021 CONTINUED STRONG SALES GROWTH DESPITE ONGOING PANDEMIC With sales growth of 23 percent, we continued to take significant market share in 2021 BONESUPPORT 2021 ANNUAL REPORT 7 Despite the consequences of the COVID-19-pandemic in 2021, it was BONESUPPORT's best year ever. Sales of SEK 213 million correspond to growth of 23 percent over 2020 and 44 percent over 2019, in constant exchange rates. The sales growth is a material conrmation of CERAMENT's clear benets and our strong commercial model and means that we continued to take signicant market share from other treatment options. During the pandemic, we saw a direct correla- tion between the number of orthopedic surge- ries and the incidence of COVID-19, as well as res- trictions related to the pandemic. Due to lockdowns, our capacity for physical customer meetings was limited, especially in Europe but also in parts of the U.S. This meant that our custo- mer interactions in some regions was largely done through digital meetings. The pandemic thus aected not only the number of orthopedic surgeries, but also new customer contacts and the possibility of winning new customers. In 2021, the healthcare backlog increased in ort- hopedic procedures and in the fourth quarter it reached its highest level ever in Sweden and the U.K. – the markets where we have the best ac- cess to this type of data. CERAMENT can cost-ef- fectively help reduce healthcare backlog through its unique benets that enable a one- step procedure. In February 2021, the FDA announced that it re- quired additional data and supplements of pa- tient data to complete the assessment ahead of a potential market approval for CERAMENT G for the indication bone infection. In September 2021, we submitted the requested data and the con- trol group - which is compared to the treatment group of 163 patients - now contains data from over 200 patients. At the end of February 2022, the FDA announced that nal notication on the De Novo application is delayed, as a lagging ef- fect of the pandemic and high workload within the agency. CERAMENT G received a breakthrough device designation for the indication trauma in February 2021. However, the pandemic not only aected our sales and new customer processing, but also meant that the follow-up of patients in the FORTIFY study was negatively aected. With a drop-out rate of 29 percent, the study became non-conclusive, which means that the study did not meet the requirements for a PMA applica- tion. Following a potential market approval for the indication bone infection, we will explore al- ternative opportunities to reach market approval also for additional indications. During the year, we continued to drive market penetration in hospitals and clinics within the framework of previously won GPO agreements. In April, we were also able to announce that we had signed an agreement with Premier. Premier is one of the largest group purchasing organiza- tion (GPO) networks in the United States, with over 4,100 aliated hospitals. In January 2022 we announce that we signed a distribution agre- ement with OrthoPediatrics to distribute CERAMENT BVF to OrthoPediatrics’ network of 250 children's hospitals in the U.S. The agre- ement represents an important strategic expan- sion for CERAMENT into a previously unaddres- sed network of hospitals. Despite the challenges in the market, impacted by the pandemic in 2021, we strengthened our market position, mainly through expanded mar- ket access and market penetration. Our goal, gi- ven a more normalized post-pandemic market dynamic, is to grow sales by 40 percent per year. Emil Billbäck CEO MESSAGE FROM THE CEO 8 BONESUPPORT 2021 ANNUAL REPORT CERAMENT Eective and natural healing WHEN BONE INJURIES OCCUR THAT DO NOT HEAL There are several dierent situations in which the natural healing of bone injuries does not work. This can occur, for example, in complicated bone fractures (trauma), revision arthroplasty (replace- ment of joint prosthesis), tumors and in case of infection. This may be due to missing bone frag- ments, or that the surgeon has had to remove dead or damaged bone tissue, so that the dama- ge becomes too large for the bone to heal. If the- se injuries are not treated, there is a risk of severe complications. Traditionally, orthopedists have treated bone injuries that do not heal themselves using the patient's own bone tissue transplanted from another part of the bone structure, so-cal- led autograft, or through donated bone tissue, known as allograft. TRADITIONAL TREATMENT STANDARD Since autograft consists of the patient's own bone tissue, tolerance and healing are usually good. However, autograft requires an additional surgical intervention (as a rule at the hip bone) to harvest the bone tissue to be transplanted. The availability of bone tissue may also be limited in relation to the need. Each procedure takes extra surgical resources from the healthcare system, in- creases the risk of infections which could extend the period of medical care. Nearly 50 percent of patients experience restrictions on daily activities for up to six months as well as long-term pain from the procedure. There are studies that show that many patients even experience pain up to ten years after the procedure. Allograft is aected by limited access and quality and poses a risk of transmission of viral diseases. CERAMENT is a synthetic bone graft substitute for the treatment of bone injuries. The material has unique advantages in that it promotes bone remodeling, which means that within six to twelve months, CERAMENT is resorbed and replaced by the patient's own bone tissue. CERAMENT is injectable and visible on X-rays, making it ideal for minimally invasive surgery. CERAMENT is also available as a combination product with two dierent types of antibiotics, CERAMENT G (gentamicin) and CERAMENT V (vancomycin). The antibiotics are released locally for about 30 days and protect the bone healing from infection. 1. Long-term Autograft Harvest Site Pain After Ankle and Hindfoot Arthrodesis. Judith F. Baumhauer et al. BONESUPPORT 2021 ANNUAL REPORT 9 OUR PRODUCTS 10 BONESUPPORT 2021 ANNUAL REPORT CERAMENT – A SYNTHETIC ALTERNATIVE WITH ESSENTIAL BENEFITS FOR THE PATIENT AND THE HEALTHCARE SYSTEM CERAMENT is remodeled into endogenous bone, which means that the original injury is replaced by the patient’s own bone within six to twelve months. The CERTiFy trial, a randomized con- trolled trial of 135 patients, showed that CERAMENT is an equal alternative to the previous gold standard treatment of autograft. CERAMENT is a synthetic bone substitute, eectively eliminating the need for additional surgical procedures to harvest bone tiss- ue and hence the risk of shortage of material. Studies have shown that many patients experience restrictions in daily activities for up to six months after the procedure, as well as long-term pain from the donor site. The great advantages of CERAMENT are: More ecient use of healthcare resources Easy to use Unlimited availability No need to take bone from donors Elimination of complications such as long-term pain CERAMENT WITH ANTIBIOTICS – WHEN THE RISK OF INFECTION ASSOCIATED WITH BONE INJURIES IS HIGH Chronic bone infection, open trauma fractures, and unsuccessful bone healing are a few of the conditions that are strongly associ- ated with the risk of (re)infection. Postoperative infection is not only associated with signicant suering for the individual, but also involves an extensive use of resources and a cost burden for society-at-large. Hoekstra et al (BE) showed that the healthcare costs for patients who suered a deep infection were on average ve times higher than for those who did not get an infection, in the case of severe tibia fractures. The combination products CERAMENT G and CERAMENT V eectively promote and protect bone healing by eluting high-dose local antibiotics at levels that eliminate bacterial growth. With CERAMENT G and CERAMENT V, a high local concentration of antibiotics is maintained, for approx- imately 30 days with negligible systemic inuence and side ef- fects. Treatment with CERAMENT G and CERAMENT V has shown a drastic reduction in re-infection in cases of chronic bone infec- tion and elimination of infection incidence in open tibia fractures (see section Clinical evidence, page 16). CERAMENT G and CERAMENT V enable healthcare to perform single-stage opera- tions in connection with injuries caused by infection or when there is a high risk of infection. This contributes to fewer days of care in hospitals and thus better healthcare economy. As CERAMENT has been proven to be as eective as autograft in healing bone injuries, the need for an additional operation is eli- minated, resulting in better utilization of resources concerning both surgical teams and operating theaters. A product that can both regenerate bone and at the same time elute high doses of local antibiotics over approximately 30 days has also opened up the possibility of using single-stage surgery in the treatment of bone infections and open fractures. The benets of CERAMENT G and CERAMENT V High local antibiotic concentration without systemic impact Possibility of treating with a surgical single-stage operation Increased possibility of being infection-free Increased possibility of rapid bone healing Reduced risk of amputation A Belgian study by Hoekstra et al1 involving 358 patients, studied the costs of tibia fractures. The study showed that the medical costs for patients aected by a deep infection were on average ve times higher than for those who did not get an infection, which resul- ted in the cost of treatment increasing from EUR 9,500 to EUR 48,700. 1. Hoekstra et al. Economics of open tibial fractures: the pivotal role of length-of-stay and infection. Health Econ Rev 2017;7:32 BONESUPPORT 2021 ANNUAL REPORT 11 OUR PRODUCTS 12 BONESUPPORT 2021 ANNUAL REPORT MARKET EXPANSION Successful customer base expansion in North America The successful customer base expansion that has been ongoing in the U.S. since we shifted distribu- tion strategy almost three years ago, continues to deliver stable sales growth. The increasing market penetration can be attributed, among other things, to the contracts signed with larger Group Purchasing Organization (GPO) in previous years and which were expanded with Premier during the year, one of America’s largest purchasing networks. This has enabled the introduction of CERAMENT BVF in a variety of hospitals and clinics that have not previously been addressed and in- formed about the benets of CERAMENT. With a broad and loyal customer base in the U.S., we have built a strong foundation for continued geographical expansion and increased market share. At the end of the year, our commercial organization in the United States had 19 employees and more than 40 contracted distributors. BONESUPPORT re- ports the net sales to the customer on whom the distributors receive a commission. 22 % growth (31% CER) in North America 2021 Continued commercial progress despite the impact from the pandemic During the year, we have further strengthened our position in North America as well as revitalizing our distributor markets, including the establishment of hybrid models in Italy and Spain, but also including the market expansion to Australia and South Africa that began the year before. The hybrid model involves qua- lied personnel from BONESUPPORT working side by side with the local dist- ributor's sales force. The COVID-19-pandemic has also had a signicant impact on market conditions in 2021. Despite the impact of the pandemic, growth amounted to 18 percent, 23 percent at a constant exchange rates. The growth is mainly driven by the strengthened customer base in North America together with the larger GPO contracts signed, and a periodically and geographically dispersed recovery from the pandemic in EUROW. 1. Revenue growth in constant exchange rate, CER BONESUPPORT 2021 ANNUAL REPORT 13 COMMERCIAL ORGANIZATION AND MARKET Continued commercial progress in EUROW despite the pandemic In Europe, CERAMENT is sold by both the compa- ny's own sales organization and by distributors. Germany, United Kingdom, Switzerland, Sweden, Denmark and BENELUX countries are key markets where BONESUPPORT has its own sales represen- tatives. In other European markets and in other parts of the world (ROW), the company coopera- tes with specialist distributors. Despite the continued impact of the COVID-19- pandemic on marketing and sales opportunities, we have continued to strengthen our market presence during the year, partly by establishing a hybrid model in Italy and Spain, and partly through the market expansion to Australia and South Africa that began the year before. The hy- brid involves qualied local sta from BONESUPPORT working side by side with the local distributor's sales representatives. During the year, we have built on the positive and appreciated experiences of our digital edu- cations and meetings that continue to be well at- tended and have received high score on these. Periodically, the COVID-19 infection rate in socie- ty has enabled the physical meetings that are so important for our new customer processing, but we have continuously, with large geographical dierences, experienced periods of extensive lock- downs and dicult priorities in healthcare systems. 12 % growth (13% CER) in EUROW 2021 In-house sales company and distributors U.S. Own sales companies BENELUX Denmark Switzerland United Kingdom Sweden Germany Hybrid markets Italy Spain Distributors Finland France Ireland Croatia Norway Poland Austria Australia Colombia Canada Oman Saudi Arabia South Africa 1. Revenue growth in constant exchange rate, CER 14 BONESUPPORT 2021 ANNUAL REPORT BONESUPPORT FOCUS MARKET REPRESENTS USD 0.7 BILLION OF THE ADDRESSABLE GLOBAL BONE GRAFT MARKET OF USD 1.3 BILLION. The market for bone grafts is growing by 5% per year THE GLOBAL MARKET FOR BONE GRAFT AMOUNTS TO USD 3.3 BILLION Orthopaedic diseases and injuries are the second most common cause of physical impairments. The demographic structure is a driving factor for an increasing need for treatment of the diseases of the organs of movement: an increasing number of elderly people leads to higher in- cidence of osteoporosis and osteoarthritis combined with the desire to remain active longer and an increased sporting activity. Bone has the ability to heal completely, without leaving any traces of injury. However, bone damage that leads to voids and bone defects may occur when the damage to the bone is too large to heal sponta- neously or when the natural healing process is inhibited, for instance in case of infection. The most common underlying causes of bone voids and bone defects are complicated fractures (trauma), revision arthro- plasty (replacement of joint prostheses), bone infection or benign bone tumors. The obvious benets of synthetic bone grafts mean that their use will grow steadily, at the expense of autograft and allograft. BONESUPPORT’s CERAMENT products are synthetic bone grafts and are unique in their ability to remodel to bone within 6-12 months and, in the case of CERAMENT G and CERAMENT V, to release antibiotics to protect the bone healing process from infection. 39% Approved indications for CERAMENT 61% Indications where CERAMENT is not yet approved: Spine and Cranio- Maxillofacial Total bone graft market USD 3.3 billion 25% Top 5 Europe USD 0,7 billion 25% U.S. Other countries 720 thousand surgical procedures per year BONESUPPORTs addressable market USD 1.3 billion BONESUPPORT focus market BONESUPPORT 2021 ANNUAL REPORT 15 Trauma 55% Revision arthroplasty 19% Diabetes foot injuries 17% Cysts and bone tumors 6% Chronic bone infection 3% Indications for bone graft Treatment options bone graft 4 INDICATIONS AND TREATMENT OPTIONS Previous standard treatment (organic grafts/transplantation): In about half of all patients, everyday activities are adversely aected for up to six months after treatment with autograft due to pain at the donation site. 39% of patients experience long term pain from the donor site. Allograft fails on between 25-50% of occasions requiring additional treatment stages. 1. Lementovski et al. ‘Acute and chronic complications of intracortical iliac crest bone grafting versus the traditional corticocancellous technique for spinal fusion surgery.’ Orthopedics(2010);33. 2. http://www,surgeryencyclopedia,com/A-Ce/Bone- Grafting,html 3. Zheng et al, Mechanism of bone allograft failure, J Bone Joint Surg Br 2002 vol, 84-B no, SUPP III 234 4. Refers to addressable market ■ Synthetic bone graft 31% ■ Allograft 27% ■ Autograft 25% ■ Allograft DBM 17% Allograft DBM Autograft Allograft Synthetic bone graft COMMERCIAL ORGANIZATION AND MARKET 16 BONESUPPORT 2021 ANNUAL REPORT RESEARCH AND DEVELOPMENT BONESUPPORT’s clinical development program focuses on further developing CERAMENT’s properties, broadening clinical application areas and leveraging CERAMENT’s unique drug-eluting properties via the development of combination products which promote bone healing. A number of combinations with CERAMENT have been studied to add osteoinductive properties, i.e. the capability to actively stimulate bone healing. Among other research activities, the company has conducted research in the form of preclinical can- didates which combined CERAMENT with bisp- hosphonates, bone morphogenic proteins (BMP), bone marrow aspirate (BMA) and demineralized bone matrix (DBM). Priority product candidates for own development are CERAMENT combined with bisphosphonate and CERAMENT combined with DBM, while CERAMENT combined with BMP is a candidate for potential partner development. Bisphosphonate is a well-established substance for the treatment of osteoporosis and is used to in- hibit the activity of osteoclasts, resulting in impro- ved bone healing and bone density. Demineralized bone matrix is based on allograft which is reduced in minerals. The material has been shown to have wide usage in conditions and situations where na- tural bone regrowth is weak. Preclinical research has shown that the addition of zoledronic acid to CERAMENT can increase bone volume and improve the anchoring of screw im- plants. Further preclinical research has shown that the combination of CERAMENT, zoledronic acid and bone morphogenic protein-2 (BMP-2) can also be used in reconstruction of large segment de- fects instead of bone transplantation. CLINICAL EVIDENCE, A STRATEGIC CORNERSTONE One of the three cornerstones of BONESUPPORT’s strategy is to provide industry-leading scientic and clinical evidence that validates the many be- nets of CERAMENT. Already today there is a comprehensive database of more than 240 rese- arch publications and abstracts of preclinical and clinical studies with CERAMENT. RESULTS FROM CERTIFY DRIVES CHANGE IN STANDARD OF CARE CERTiFy is a randomized, controlled clinical trial conducted at 20 trauma centers in Germany with 135 patients. The study, which was done on tibia plateau fractures, shows that CERAMENT BVF can replace autograft as the standard of care. The study conrmed that CERAMENT has the ability to be converted to bone. In addition, treatment with CERAMENT BVF resulted in signicantly lower patient-experienced post-operative pain and a signicantly lower blood loss. BONESUPPORT expects the results of the study published in The Journal of Bone and Joint Surgery in December 2019 to represent a miles- tone in driving change in the standard of care and that more clinics in consultation with the pa- tient will choose CERAMENT over autograft. THE SOLARIO STUDY BONESUPPORT supports the SOLARIO study (Short or Long Antibiotic Regimes in Orthopedics), with the aim of investigating if synthetic bone graft substitutes containing anti- biotics can lead to shorter treatment time com- 1. Hofmann et al. Autologous Iliac Bone Graft Compared with Biphasic Hydroxyapatite and Calcium Sulfate Cement for the Treatment of Bone Defects in Tibial Plateau Fractures, The Journal of Bone and Joint Surgery: February 5, 2020 - Volume 102 - Issue 3 - p 179-193. BONESUPPORT 2021 ANNUAL REPORT 17 RESEARCH AND DEVELOPMENT pared to systemic antibiotics and thereby reduce risk of antibiotic resistance, side eects and addi- tional costs. The study is led by the Oxford University Hospital’s NHS Foundation Trust in col- laboration with EBJIS (European Bone and Joint Infection Society). SOLARIO is a randomized un- blinded European multicenter study that is ex- pected to include 500 patients. The rst patient was recruited in February 2019 and the study is expected to be closed during Q1 2023. A positive result of the study may contribute to a paradigm shift in the protocol for treating bone infections. THE CONVICTION STUDY The French CRIOAc Network has initiated CONVICTION, a randomized controlled trial to evaluate the ecacy of CERAMENT G in the treat- ment of osteomyelitis. The French Ministry of Health has decided to fund the study. A research grant from BONESUPPORT to partially nance the products used in the study, has been awarded. The study will evaluate the eectiveness of CERAMENT G in the treatment of osteomyelitis. The study is a national multicenter study and will be conducted by clinics that are part of the CRIOAc network. A positive outcome of the study would mean that a large commercial opportunity will arise in the French market and that improved reimburse- ment status is obtained. 2. CRIOAc (Reference Center for Osteoarticular Infections) is a health care network in France that is implemented through a nationwide health ministry program to improve outcomes in the management of bone and joint infections. 18 BONESUPPORT 2021 ANNUAL REPORT HEALTH ECONOMICS One of the largest challenges when introducing new and innovative healthcare treatment is to ensure that healthcare systems around the world understand the value of the treatment and include it in the care oered to the patient. BONESUPPORT undertakes a variety of activities to ensure that the company’s products are included in the remuneration systems where our products are marketed. One of the obvious health economic benets that comes from the clinical benets CERAMENT oers is a reduced utilization of healthcare re- sources. A reduced number of re-infections as a result of treatment with CERAMENT G and CERAMENT V in a one-step procedure naturally leads to fewer return visits and fewer surgeries and, as a consequence, fewer hospital stays. Improved clinical outcomes also have a positive impact on society as a whole - such as reduced sick leave, reduced need for rehabilitation and care. The signicance of health benets and the calculation models for evaluating the cost-eec- tiveness of health benets dier between die- rent healthcare systems. Our teams therefore work closely with local expertise to increase our ability to include the CERAMENT platform more quickly in replacement systems in new markets. CERAMENT G and CERAMENT V free up healthcare resources … BONESUPPORT 2021 ANNUAL REPORT 19 HEALTH ECONOMICS CERAMENT G and CERAMENT V free up healthcare resources … CERAMENT G AND CERAMENT V PROVIDE A MORE COSTEFFECTIVE MEDICAL CARE WITH FEWER SURGICAL PROCEDURES AND SHORTER PERIODS OF HOSPITALIZATION 0 - 2 weeks 3 - 4 weeks 5 - 6 weeks 7 + weeks One-step surgery to heal skeletal injuries while reducing the risk of infection Reinfection rate: 4,3% One stage procedure Reinfection rate: 13-36% Multi stage procedure One surgical procedure Injection of CERAMENT G/V Promotion and protection of bone healing TREATMENT WITH CERAMENT G & V Multi-stage surgery to prevent infection and heal skeletal injuries 1st surgical procedure Placement of non-absorbable antibiotic carrier 2nd surgical procedure Harvest bone graft (autograft) 3rd surgical procedure Removal of non-absorbable antibiotic carrier plus bone transplantation Plus systemic antibiotics Plus systemic antibiotics Plus systemic antibiotics TRADITIONAL TREATMENT Bone healing 20 BONESUPPORT 2021 ANNUAL REPORT HEALTH ECONOMIC MODEL OSTEOMYELITE USA One of the major projects that has been started in 2021 is a cost and benet analysis of what a change of treatment regime to a one-step procedure with CERAMENT G could mean for the American healthcare system. The modeling, which is based on av- ailable clinical data and cost data from CMS, Centers for Medicare & Medicaid Services, takes place in collaboration with national ex- pertise in health economics and clinical orthopedics. The goal is for this study to be completed in the second quarter of 2022. BONESUPPORT 2021 ANNUAL REPORT 21 CERAMENT G OR CERAMENT V CONTRIBUTES TO REDUCED DAYS OF CARE IN PATIENTS WITH BONE INFECTION¹ The Nueld Orthopaedic Center (NOC) has shown that they have been able to reduce the degree of re-infection in oste- omyelitis patients by 56 percent compared to their previous standard of treatment. In an analysis involving approximately 25,000 patients who underwent surgical treatment for oste- omyelitis in 2013-2017, the patient group treated at NOC after the introduction of CERAMENT G or CERAMENT V in a one-step procedure was compared with patients cared for at other hospitals in England. The results presented in The Journal of Bone and Joint Infection¹ showed that CERAMENT G or CERAMENT V in a one-step procedure contributed to signi- cantly improved patient outcomes. The hospital stay, in con- nection with osteomyelitis surgery and the following two years, were on average 16 days shorter for the group that received CERAMENT G and CERAMENT V at NOC. In addition, patients at NOC had a signicantly lower risk of amputation (6.47 percent) compared to the Rest of England control group (12.71 percent). With the addition of CERAMENT G or CERAMENT V in the treat- ment of osteomyelitis, the total saving in the number of days of care associated with surgery and subsequent care, could amount to approximately GBP 44 million annually, calculated on 6,250 treated patients per year. 1. Ferguson, J et al. A retrospective cohort study comparing clinical outcomes and healthcare resource utilisation in patients undergoing surgery for osteomyelitis in England: a case for reorganising orthopaedic infection services, J. Bone Joint Infect., 6, 151–163 REDUCED RISK OF DEEP INFECTIONS WITH CERAMENT G AND CERAMENT V Another area where CERAMENT G and CERAMENT V could help reduce healthcare costs is in the treatment of open tibial fractu- res. Open tibial fractures represent about 15 percent¹ of all tibial fractures and have a high incidence of infection, with no bone healing as a result. Bone infections often lead to great suering for the patient and very high healthcare costs. In a Belgian study by Hoekstra et al² of 358 patients, the cost of tibial fractures was studied. The study showed that healthcare costs for patients aected by a deep infection were on average ve times higher than for those who did not get an infection, resulting in the cost of treatment increasing from EUR 9,500 to EUR 48,700. There are a number of studies that show that CERAMENT contributes to cost-eective care by reducing the number of deep infections. One of these is a study by Aljawadi et al³ on 80 patients with severe open tibial fractures treated with CERAMENT G in a one-step procedure. In the study, one patient (1.3 percent) suered from a deep infection compared with historical references of up to 52 percent incidence of infec- tion. This shows that one-step treatment with antibiotic-eluting CERAMENT for open tibial fractures can eectively reduce the incidence of cost-driving infections. 2. Hoekstra et al. Economics of open tibial fractures: the pivotal role of length-of- stay and infection. Health Econ Rev 2017;7:32 3. Aljawadi, A et al. Adjuvant Local Antibiotic Hydroxyapatite Bio-Composite in the management of open Gustilo Anderson IIIB fractures. Journal of Orthopaedics, 2020; 18: 261-266 HEALTH ECONOMICS … and leads more quickly to improved quality of life. 22 BONESUPPORT 2021 ANNUAL REPORT SUSTAINABILITY BONESUPPORT operates with in medical technology, a highly regulated environment that places high demands on products, organization, and operations. Sales are made globally, partly directly through own established subsidiaries, and partly indirectly through collaborations with distributors. DEVELOPMENT IN 2021 In 2021, BONESUPPORT has continued with its sys- tematic sustainability work. We work cross-func- tionally, and all employees have the opportunity to contribute. Our ambition remains high to fur- ther strengthen and integrate sustainability issues into all our work, so that the environment, sustai- nability and governance continue to be an inte- gral part of our way of working. In 2021 we have, among other things, developed and implemented a global travel policy that takes sustainability into account from several perspecti- ves - the people, the environment as well as costs. GOVERNANCE AND RESPONSIBILITY The Board of Directors has overall responsibility for the group and is therefore ultimately respon- sible for the company's sustainability work. The Board of Directors has adopted policy do- cuments and guidelines regarding environmen- tal issues, anti-corruption, and respect for human rights, as well as a code of conduct that applies to all employees within the group. The CEO is responsible for implementing the Board's decisions and within the management team Kristina Ingvar, Executive Vice President Quality Management & Regulatory Aairs, is re- sponsible for sustainability work. There is also a working group on sustainability issues within the group. BONESUPPORT CODE OF CONDUCT BONESUPPORT's Code of Conduct describes the basis for how employees should act in contacts with external stakeholders such as customers, partners, hospital employees, and also internally in relation to colleagues. All employees must an- nually take note of the Code of Conduct and con- rm that they have understood its content. The Code of Conduct is evaluated on an ongoing ba- sis and adopted annually by BONESUPPORT’s Board of Directors. There is a whistleblowing function that employ- ees can use to report suspected violations of the Code of Conduct. In order to guarantee indepen- dence and anonymity, BONESUPPORT has cho- sen for all reporting and investigation through the whistleblowing function to be handled by an external party. QUALITY BONESUPPORT works with medical technology, where good quality is a prerequisite for safe and ecient products and therefore works long-term with quality issues: We comply with international standards for medical devices We carry out inspections of contract manufacturers and other subcontractors on a regular basis We are regularly inspected by accredited bodies that certify the activities Our quality system is certied according to ISO 13485 OUR VIEW OF ANTIBIOTIC USE Antimicrobial Resistance (AMR) is an increasing th- reat to global public health and collaboration is im- portant in order to counteract this. BONESUPPORT is committed to the responsible use of antibiotics and supports antibiotic stewardship. OUR VIEW OF ANIMAL TESTING As part of research and development in the med- ical device industry, it is sometimes necessary to carry out experiments on animals, as this is re- quested by the responsible authorities. Strict ethical deliberations are made before animal tes- ting is initiated or funded by BONESUPPORT. Alternative methods, such as mathematical mo- delling or in vitro biological systems, are used if- possible. If animal studies are deemed necessary, BONESUPPORT strives to involve as few animals as possible. The protocol is designed to be as gentle as possible for the animals and, in accor- dance with the legislation, the study protocol is always approved by an ethics committee. BONESUPPORT takes animal welfare very seriously. BONESUPPORT 2021 ANNUAL REPORT 23 SUSTAINABILITY ENVIRONMENT BONESUPPORT works actively to reduce the group's environ- mental impact. This applies to everything from small eorts in daily work, such as waste sorting, to long-term work with manu- facturing and transport. In 2021, the company's work on the di- gitization of paper-based systems has continued, which also contributes to reduced paper consumption. From an environmental perspective, the products in the CERAMENT platform have many advantages. The main compo- nent of the products is ceramic powder, which is produced in processes that do not cause harmful environmental impacts, such as pollution or hazardous waste. The powder is then mix- ed with a water-based liquid, which does not contain organic solvents. This means that the product is also safe for the health- care professional who handles it. Our development laboratory in Lund is regularly checked by the environmental administra- tion in Lund municipality with regards to the handling of che- micals and waste. The production of BONESUPPORT's products is undertaken through contract manufacturers and supplier control is a high priority area. Suppliers are carefully selected, and high demands are placed on their compliance with current regulations. Where possible, priority is given to suppliers who carry out active en- vironmental work. BONESUPPORT's main contract manufactu- rer is certied according to the international standard ISO 14001. All materials and components are carefully controlled by BONESUPPORT. Production takes place in cleanrooms, a strictly controlled environment without pollution. In 2021, strategic work was initiated to carry out a review of the entire production chain including transport. The purpose of this is to identify the areas with the greatest environmental impact, in order to be able to target future improvement measures where they are most needed. However, due to the pandemic and the global impact on supply chains that has arisen, this work has had to be postponed and will thus continue in 2022. 24 BONESUPPORT 2021 ANNUAL REPORT AGENDA 2030 AND THE 17 SUSTAINABLE DEVELOPMENT GOALS Agenda 2030 consists of 17 Sustainable Development Goals (SDGs) aimed at eradica- ting poverty, halting climate change and crea- ting peaceful and safe societies. BONESUPPORT has identied the following sustainability goals as the most essential to the business and whe- re BONESUPPORT has the greatest opportunity to inuence: ESG dimension (UN’s global sustainable development goals) Category Target 2022 Result 2021 Existing goals: Social (3, 12) Product/patient safety Zero-vision product recalls No product recalls Social (3) Company culture Team development work carried out in at least ve teams 5 Social (3) Employee turnover 6% +/- 2% 8% Social (3) Puls survey Employe Engagement Score < 7.8 Implemented globally in 2022 Environmental (12) Environment > 5 A-suppliers certied according to ISO 14001 6 suppliers certied according to ISO 14001 Governance (12) Code of conduct Zero-vision regarding the occurrence of cor- ruption, bribery or fraud or related investigations No instance of corrup- tion, bribery or fraud or related investigations New goals: Social/Environmental (12) Digitization >1 additional document category digitized New goal BONESUPPORT 2021 ANNUAL REPORT 25 SUSTAINABILITY EMPLOYEES BONESUPPORT has for four years worked with in- dividual goals for all employees. Each of us is me- asured both on nancial and qualitative measu- res. The latter are based on the company's overall strategic goals, which are broken down for each function and individual in collaboration between functions to coordinate our workday and ensure that we all work in the same direction. This well-structured and consistent work contributes to our performance culture. During the autumn of 2021, we have carried out self-assessments of our culture in the teams. These have shown that our culture has become stronger since we initiated the work. The passion and the commitment that exists for our company and our products are very strong. This is shown in very high results regarding areas such as le- adership, engagement, culture and eNPS in the pulse surveys we started with during the year in Lund. During the pandemic years, our culture proved to be so strong that all functions and countries participated in voluntary temporary wage cuts to keep costs down at a time when sales were hea- vily aected by the pandemic. We believe that our culture was also strengthened by this. Our employee turnover has remained low even during the past year. Since we have a need to dri- ve improvements, a balanced sta turnover is preferable to create dynamic. The employee turnover this year was 8 percent, which was slightly higher than in 2020. The fact that the market conditions changed in 2021 was obvious to us in the search for compe- tence. Own recruitment had to be largely replaced by recruitment with the help of partners. With the help of a scalable and well-functioning process, we have managed to keep both the cost and the average time for a recruitment at a reasonable le- vel. In our recruitment processes, we strive for the best skills at both individual and group level and strive for diversity in all respects. Diversity has many aspects: age, gender, ethnicity, culture and personality. With a focus on this, we also create value and diversity at the company level. GOALS 2022 A main focus of BONESUPPORT is patient and product safety. The goal for 2022 is a zero-vision for product recalls. Since the production of BONESUPPORT's products takes place through contract manufacturers, it is important that critical suppliers/contract manufacturers conduct active environmental work. One goal for 2022 is that at least ve of BONESUPPORT's most important suppliers/contract manufacturers, so-called A suppliers, shall be certied according to the international environmental standard ISO 14001 or another comparable standard. Impacted by the pandemic, we, like other companies, have developed our ability to work virtually instead of physically, with the aim of maintaining and developing both people and productivity. The ongoing digitization will continue, with the goal for 2022 to digitize at least one additional document category. Continued focus on further developing our culture and structure. The work includes, among other things, continuing a team development concept initiated in 2021, which includes, among other things, cultural self-assessment. Five teams have started team development work according to the concept, and the goal for 2022 is to start up this team development work in several parts of the organization, with the ambition to reach at least ve more teams in 2022. Our target for 2021 for sta turnover was six percent plus/minus two percentage points. We landed at eight percent, which is within the target (previous year 4.5 percent). For 2022, our target will remain at six percent plus/minus two percentage points. In 2022, the goal is to implement the model for employee survey that has been tested regionally in 2021, on a global basis. The aim is also to reach an average during the year regarding Employe Engagement Score of at least 7.8 percent. 1. eNPS is a method that measures how willing employees are to recommend their workplace to others 26 BONESUPPORT 2021 ANNUAL REPORT NET SALES 2017-2021, SEKm 0 50 100 150 200 250 20212020201920182017 OPERATING PROFIT/LOSS 2017-2021, SEKm -200 -150 -100 -50 0 20212020201920182017 NET SALES SEGMENT NA 2017-2021, SEKm 0 30 60 90 120 150 20212020201920182017 REVENUE GROWTH 2017-2021, % -50 0 50 100 150 20212020201920182017 GROSS MARGIN 2017-2021, % 0 20 40 60 80 100 20212020201920182017 NET SALES SEGMENT EUROW 2017-2021, SEKm 0 20 40 60 80 100 20212020201920182017 Operations in overview DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2021 28 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 DIRECTORS’ REPORT GROUP GENERAL INFORMATION BONESUPPORT HOLDING AB (publ), org.no. 556802-2171, registered in Lund, is the parent company of BONESUPPORT AB. BONESUPPORT is a rapidly growing orthobiologics company in the commercial phase that primarily targets the major orthopedic markets in the U.S. and Europe. BONESUPPORT was founded in 1999 and has its registered oce in Lund with wholly owned subsidiaries in the U.S., United Kingdom, Germany, Sweden, Denmark, Switzerland, Spain, Italy and the Netherlands. BONESUPPORT develops and commercializes innovative injectable bio-ceramic bone graft substitutes that remodel to the patient’s host bone and have the ability to release drugs. BONESUPPORT’s bone graft substitutes are based on the proprietary technology platform CERAMENT. To date, three primary commercial products have been developed: - CERAMENT®|BVF (BONE VOID FILLER) injectable ceramic bone graft substitute that remodels to host bone. - CERAMENT®|G injectable ceramic bone graft substitute that re- models to host bone and elutes Gentamicin during the critical rst 30 days of bone healing. CERAMENT G constitutes a unique addition to the treatment and prevention of bone infection. - CERAMENT®V injectable ceramic bone graft substitute that re- models to host bone and elutes Vancomycin during the critical rst 30 days of bone healing. CERAMENT V constitutes a unique addition to the treatment and prevention of bone infection. All three products are marketed in several markets in Europe and the rest of the world, but in the U.S. so far only CERAMENT BVF has been given U.S. Food and Drug Administration (FDA) approval for use. The work to get a market approval for CERAMENT G in the US is ongoing but nal notication is impacted by delays within the FDA. BONESUPPORT’s strategy focuses primarily on continuing to increase sales of current products in existing and new markets, as well as gene- rating additional clinical data through studies and health economic data (HEOR data) to highlight the benets of CERAMENT. BONESUPPORT has all the necessary skills to take a medical device from the research and development stage through sales to the end customers. Most of the production is outsourced to third parties. BONESUPPORT con- trols the product ow from supplier to customer. The products are based on an innovative technology backed by a patent portfolio of approximately 100 registered and/or pending patents. BONESUPPORT has fteen years of documented experience of safety and ecacy and estimates, based on sales data, that more than 70,000 treatments have been performed with its products worldwide. There is great market potential in trauma, chronic osteomyelitis, revision arthro- plasty, bone tumors and foot infections due to diabetes. The company’s research focuses on continuing to further develop and rene the current technology and to extend it to additional indications through the release of other drugs. MULTI-YEAR OVERVIEW - GROUP * Average full-time equivalent. For denitions and calculations of alternative performance measures see page 77. SIGNIFICANT EVENTS IN 2021 - In February 2021, the company announced that the U.S. Food and Drug Administration (FDA) had informed BONESUPPORT that the company’s De Novo application for CERAMENT G for bone infection requires additional information and clarication. The requested supplements were submitted in September to the FDA. At the end of February 2022, the FDA announced that nal notication of the De Novo application is delayed, as a lagging eect of the pandemic and high workload within the agency. - In April, the company was awarded a GPO-contract with Premier. Premier is a leading healthcare and purchasing network with over 4,100 U.S. aliated hospitals. - In July, the company received “breakthrough device designation” for CERAMENT G for the indication trauma. - The company announced in September that the results of the company’s Investigational Device Exemption (IDE) study FORTIFY were non-conclusive. The primary safety parameter for CERAMENT G was met. - In December, Michael Wrang Mortensen joined the company in the newly established role as Executive Vice President (EVP) Research & Development (R&D) and Operations. DIRECTORS’ REPORT 2021 2020 2019 2018 2017 Net sales, SEKm 212.9 180.9 155.5 96.6 129.3 Net sales growth, % 17.7 16.3 60.9 -25.3 23.6 Gross prot, SEKm 189.7 161.6 135.9 81.5 112.4 Gross margin, % 89.1 89.4 87.4 84.3 87.0 Operating result, SEKm -80.7 -98.6 -158.1 -174.4 -99.3 Net loss, SEKm -85.5 -101.4 -161.1 -176.4 -128.9 Equity, SEKm 265.7 398.9 124.3 278.5 450.8 Net debt, SEKm -185.0 -343.3 -81.7 -261.5 -434.7 Operating cash ow, SEKm -83.4 -100.3 -163.8 -171.6 -107.5 Cash at year end, SEKm 206.5 353.7 92.1 261.5 533.4 Earnings per share before and after dilution, SEK -1.34 -1.72 -3.10 -3.46 -3.24 Average number of employees* 92 86 78 72 57 Net sales per employee, SEKt 2 314 2 103 1 993 1 342 2 268 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 29 DIRECTORS’ REPORT REVENUES Revenue is generated through three channels: - A combination of our own sales company and distributors in the U.S. - Direct sales in key markets in Europe with own sales organization - Sales through distributors in all other markets During 2021, the focus has been on continued commercial develop- ment, establishment of hybrid structure in Spain and Italy as well as adaptation to prevailing circumstances as a result of the pandemic. During the year, there has been ongoing evaluation of contracted dist- ributors in order to optimize the market presence of CERAMENT and to ensure both geographical coverage and for various indications. Net sales amounted to SEK 212.9 million (180.9), an increase of 18 percent (23 percent at constant exchange rates). The NA segment increased by 22 percent (31 percent at constant exchange rates) to SEK 121.7 million (99.7) and the EUROW segment increased by 12 percent (13 percent in constant exchange rates) to SEK 91.2 million (81.1). SALES AND MARKETING In the U.S., CERAMENT BVF is distributed through BONESUPPORT’s dist- ributor network, which at year-end amounted to more than 40 distri- butors supported by our commercial platform, of our directly employed and specially trained U.S. sales and marketing organization. At year end, the U.S. commercial organization had 21 (22) employees. In Europe, BONESUPPORT currently has direct sales with 31 (29) sales representatives in the U.K., Germany, Switzerland, Sweden, Denmark and the Benelux countries. BONESUPPORT sells via distributors in Fin- land, France, Ireland, Italy, Croatia, Norway, Poland, Spain and Austria. BONESUPPORT also sells through distributors in a small number of selected countries outside North America and Europe. The company has established a hybrid model in Italy and Spain, with qualied local sta from BONESUPPORT working side by side with the local distri- butors’ sales representatives. RESEARCH AND DEVELOPMENT BONESUPPORT’s clinical development program focuses on further deve- loping CERAMENT’s properties, broadening clinical application areas, and utilizing CERAMENT’s unique drug-releasing properties via the develop- ment of combination products which promote bone healing. A number of combinations with CERAMENT have already been studied to supply osteoinductive properties, i.e. the capability to actively stimulate bone healing. Among other research activities, the company has con- ducted research in the form of preclinical candidates which combined CERAMENT with bisphosphonates, bone-joint proteins (BMP), bone mar- row aspirates (BMA) and demineralized bone matrix (DBM). Prioritized product candidates for own development are CERAMENT combined with bisphosphonate and CERAMENT combined with DBM, while CERAMENT combined with BMP is a candidate for potential partner development. Bisphosphonate is a well-established substance in treatment of osteoporosis and is used to inhibit the activity of osteoclasts, which results in improved bone healing and bone density. Demineralized bone matrix is based on allograft reduced on minerals. The material has been shown to be widely used in conditions and situations where the patient has weak natural bone regeneration. Preclinical research has shown that the addition of zoledronic acid to CERAMENT may increase bone volume and improve the anchoring of screw implants. Further preclinical research has shown that the combination CERAMENT, zoledronic acid and bone morphogenic protein-2 (BMP-2) can also be used in the reconstruction of large segment defects instead of bone grafting. One of the three cornerstones of BONESUPPORT’s strategy is to provide compelling scientic and clinical evidence that validates the many bene- ts of CERAMENT. There is already an extensive database of more than 240 research publications and abstracts of preclinical and clinical studies with CERAMENT. CERTiFy was a randomized controlled trial conducted at 20 trauma centers in Germany, involving a total of 135 patients. The clinical trial, conducted on tibial plateau fractures, shows that CERAMENT BVF can replace autograft as a treatment standard. The trial conrmed that CERAMENT remodels to bone. In addition, treatment with CERAMENT BVF led to signicantly lower patient-perceived postoperative pain and signicantly reduced loss of blood. The study, published in The Journal of Bone & Joint Surgery in December 2019, is an important tool for dri- ving change in the standard of care, which means that more and more clinicians, in consultation with the patient, are choosing CERAMENT over autograft BONESUPPORT supports the SOLARIO trial (Short or Long Antibiotic Regimens in Orthopaedics) to investigate whether synthetic bone graft substitute containing antibiotics can lead to shorter treatment times compared to systemic antibiotic treatment, thereby reducing the risk of antibiotic resistance, side eects and additional costs. The trial is led by Oxford University Hospitals NHS Foundation Trust in collaboration with EBJIS - The European Bone and Joint Infection Society. The SOLARIO trial is a randomized controlled open-label European multicenter trial that is estimated to recruit 500 patients. The rst patient was recruited in February 2019 and the trial is expected to end in the rst quarter of 2023. If the trial shows a positive outcome, it will certainly contribute to a paradigm shift in the treatment of bone infections. The French CRIOAc healthcare network has initiated CONVICTION, a ran- domized controlled trial to evaluate the eectiveness of CERAMENT G in the treatment of chronic osteomyelitis. The French Ministry of Social Aairs and Health has made the decision to nance the trial with a research grant from BONESUPPORT partially nancing the cost of the products used in the trial. The trial will evaluate the eectiveness of CERAMENT G in the treatment of osteomyelitis. The trial is a national multicenter trial and will be conducted by clinicians included in the CRIOAc Network. A positive outcome from the trial would open up signicant commer- cial potentials in the French market and it would be possible to obtain improved compensation status. HEALTH ECONOMICS One of the largest challenges when introducing new and innovative treatment is to ensure that healthcare systems around the world under- stand the value of the treatment and includes it in the care oered to the 1. Hofmann et al. Autologous Iliac Bone Graft Compared with Biphasic Hydroxyapatite and Calcium Sulfate Cement for the Treatment of Bone Defects in Tibial Plateau Fractures, The Journal of Bone and Joint Surgery: February 5, 2020 - Volume 102 - Issue 3 - p 179-193 2.CRIOAc (Regional Referral Center for Bone and Joint Infection,) is a healthcare network in France that is implemented via a nationwide health ministry program to improve outcomes in the management of bone and joint infection. 30 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 DIRECTORS’ REPORT patient. BONESUPPORT undertakes a variety of activities to ensure that the company’s products are included in the remuneration systems where our products are marketed. One of the obvious health economic benets that comes from the clinical benets CERAMENT oers is a reduced utilization of healthcare resour- ces. A reduced number of re-infections as a result of treatment with CERAMENT G and CERAMENT V in a one-step procedure naturally leads to fewer return visits and fewer surgeries and, as a consequence, fewer hospital stays. Improved clinical outcomes also have a positive impact on society as a whole - such as reduced sick leave, reduced need for rehabi- litation and care. The signicance of health benets and the calculation models for evaluating the cost-eectiveness of health benets dier between dierent healthcare systems. Our teams therefore work closely with local expertise to increase our ability to include the CERAMENT plat- form more quickly in replacement systems in new markets. One of the major projects that has been started is a cost and benet analysis of what a change of treatment regime to a one-step procedure with CERAMENT G could mean for the American healthcare system. The modeling, which is based on available clinical data and cost data from CMS, Centers for Medicare & Medicaid Services, takes place in collabora- tion with national expertise in health economics and clinical orthopedics. The Nueld Orthopaedic Center (NOC) has shown that they have been able to reduce the degree of re-infection in osteomyelitis patients by 56 percent compared to their previous standard of treatment. In an analysis involving approximately 25,000 patients who underwent surgical treat- ment for osteomyelitis in 2013-2017, the patient group treated at NOC after the introduction of CERAMENT G or CERAMENT V in a one-step procedure was compared with patients cared for at other hospitals in England. The results presented in The Journal of Bone and Joint Infection¹ showed that CERAMENT G or CERAMENT V in a one-step procedure contributed to signicantly improved patient outcomes. The hospital stay, in connection with osteomyelitis surgery and the following two years, were on average 16 days shorter for the group that received CERAMENT G and CERAMENT V at NOC. In addition, patients at NOC had a signicantly lower risk of amputation (6.47 percent) compared to the Rest of England control group (12.71 percent). With the addition of CERAMENT G or CERAMENT V in the treatment of osteomyelitis, the total saving in the number of days of care associated with surgery and subsequent care, could amount to approxima- tely GBP 44 million annually, calculated on 6,250 treated patients per year. Another area where CERAMENT G and CERAMENT V could help reduce healthcare costs is in the treatment of open tibial fractures. Open tibial fractures represent about 15 percent of all tibial fractures and have a high incidence of infection, with no bone healing as a result. Bone infections often lead to great suering for the patient and very high healthcare costs. In a Belgian study by Hoekstra et al² of 358 patients, the cost of tibial fractures was studied. The study showed that healthcare costs for patients aected by a deep infection were on average ve times hig- her than for those who did not get an infection, resulting in the cost of treatment increasing from EUR 9,500 to EUR 48,700. There are a number of studies that show that CERAMENT contributes to cost-eective care by reducing the number of deep infections. One of these is a study by Aljawadi et al³ on 80 patients with severe open tibial fractures treated with CERAMENT G in a one-step procedure. In the study, one patient (1.3 percent) suered from a deep infection compared with historical referen- ces of up to 52 percent incidence of infection. This shows that one-step treatment with antibiotic-eluting CERAMENT for open tibial fractures can eectively reduce the incidence of cost-driving infections. STAFF AND ORGANIZATION The average number of employees in 2021 was 92 (86) for the group. Of these, 55 percent (55) worked within in Sales and marketing and 24 percent (24) within Research and development. EXPENSES AND RESULTS Gross prot As a result, mainly of the increased net sales in North America, an increa- sed gross prot of SEK 189.7 million (161.6) was reported, corresponding to a gross margin of 89.1 percent (89.4). Operating expenses As in the previous year, the year was marked by the COVID-19 pande- mic and the dampening eect it had on sales but also through certain reduction of the cost base, although not in line with the large savings reported for 2020. Sales and marketing costs excluding sales commissions to distributors in the U.S. increased to SEK 139.3 million (123.8). The increase is partly due to the large cost reductions that aected the previous year and a gradually increasing level of activity in 2021, during periods of reduced pandemic measures, and partly due to the establishment of a hybrid structure in southern Europe. Sales commissions to distributors in the United States increased in line with sales growth by SEK 7.0 million to SEK 38.6 million (31.6). Research and development costs decreased to SEK 53.0 million (57.9), the decrease is mainly explained by the fact that the FORTIFY study was completed during the second half year. Adminis- trative expenses decreased to SEK 44.1 million (45.5) and include costs within the framework of active incentive programs with SEK 5.6 million (8.7). Of the total operating expenses, depreciation amounted to SEK 6,5 million (6.9). Operating prot/loss Operating prot/loss amounted to SEK -80.7 million (-98.6). The increase in sales contributed positively with improved gross prot while operating costs increased as a result of higher sales commissions and investments in the hybrid model in southern Europe, but is also related to the cost reductions which aected the previous year as a result of the COVID-19 pandemic. Net nancial items Net nancial items amounted to SEK -1.2 million (-0.4), of which all regar- ded interest expenses. Loss for the year For the reasons described above, the loss for the year amounted to SEK -85.5 million (-101.4). INVESTMENTS Investments amounted to SEK 0.8 million (2.3) for capitalized deve- lopment expenses during the year, and SEK 2.6 million (0.3) for equipment and tools. 1. Ferguson, J et al. A retrospective cohort study comparing clinical outcomes and health care resource utilisation in patients undergoing surgery for osteomyelitis in England: a case for reorganising orthopaedic infection services, J. Bone Joint Infect., 6, 151–163. 2.Hoekstra et al. Economics of open tibial fractures: the pivotal role of length-of-stay and infection. Health Econ Rev 2017; 7:32. 3. Aljawadi, A et al. Adjuvant Local Antibiotic Hydroxyapatite Bio-Composite in the management of open Gustilo Anderson IIIB fractures. Journal of Orthopaedics, 2020; 18: 261-266. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 31 DIRECTORS’ REPORT FINANCIAL POSITION AND CASH FLOW Cash and cash equivalents amounted to SEK 206.5 million (353.7) at year- end, a decrease of SEK 147.3 million since the beginning of the year. The change mainly consists of cash ow from operating activities amoun- ting to SEK -82.4 million (-100.3) mainly attributable to the operating loss, and by a share swap agreement of SEK -62.3 million. During the third quarter of 2021, BONESUPPORT, in accordance with a resolution from the annual general meeting 2021, exercised its authorization to enter into a share swap agreement to secure the commitments in the group’s incentive programs that the annual general meeting had deci- ded to implement. A total of 786,000 shares were hedged during the third quarter at an average value of SEK 79.30 per share, a total value of SEK 62.3 million. At the end of the year, equity amounted to SEK 265.7 million (398.9), of which SEK 40.9 million (40.6) were share capital. QUALITY SYSTEMS AND PRODUCT APPROVAL BONESUPPORT’s quality system complies with the Medical Device Directive 93/42/EEC, ISO 13485 ”Medical Device-Quality management system-Requirements for regulatory purposes”, the FDA’s Quality Sys- tem Requirements and other national regulations. Implementation of the new EU regulatory framework Regulation on Medical Devices 2017/745 is going according to plan. The company’s products are class III products in Europe, undergoing extensive design verication/validation before being assessed and app- roved for CE marking by the testing body, the British Standards Institute. ENVIRONMENT The company’s operations are not subject to authorization under the Environmental Code. During the year, the company continued to work with the work environment. OPERATIONAL AND FINANCIAL RISKS During 2018, we conducted a signicant strategic review of operations. There are many potential application areas for the CERAMENT platform. In our strategy, we have chosen to focus on those areas where there is strong clinical evidence of CERAMENT’s therapeutic benets, i.e. trauma, revision arthroplasty, osteomyelitis, foot and ankle surgery and bone tumors. By concentrating our resources on these indications, we address a market of approximately 720,000 surgical procedures per year. Our strategy is based on three pillars: - Innovation - Leading clinical and health economics evidence - Eective commercial platform BONESUPPORT’s main operating, as well as nancial risks are in market development and the time it takes to create acceptance for the pro- ducts and thereby generate revenue. There is currency exposure, primarily to USD, GBP and EUR. Since the revenues are mainly generated in these currencies, a weak SEK has a positive eect. BONESUPPORT’s results have been aected, and will continue to be aected in the future, by several factors wholly or partly outside the company’s control. In addition to the above, the following is a descrip- tion of the main factors that BONESUPPORT believes have aected the results of the business and which can be expected to continue to aect the company’s results. - Risks related to the regulatory environment for medical devices and combination products, such as the high costs of complying with applicable regulatory frameworks, in particular as regards the requi- rements arising from the EU Directive on medical devices, and corre- sponding national and regional medical devices legislation, and the eects of amended regulations as well as the consequences resulting from failure to comply with the applicable regulatory framework. - Risks related to the conduct and outcome of clinical trials, such as time-consuming and costly clinical trials and may be delayed, become more expensive or be discontinued as a result of a number of factors including lack of authorization for the conduct of studies, lack of patient recruitment, undesirable side eects or lack of required clinical ecacy. - Risks related to a lack of market acceptance from healthcare provi- ders, patients and healthcare payers, for example based on perceived advantages over competing treatments, the presence and extent of side eects and costs of treatment compared to competing treat- ments, and risks related to a lack of availability of adequate reimbur- sement systems that may lead to a reluctance to use the company’s products. - Risks that BONESUPPORT does not achieve sucient revenue or cash ow to nance its operations in the future or is unable to obtain the necessary funding where necessary. - Risks related to manufacturing, supply and warehousing, such as the company’s suppliers and manufacturers not fullling their commit- ments or having their operations curtailed as a result of government intervention, which would risk entailing time-consuming and costly processes for the company to replace/nd new suppliers. - Risks related to competition and that the company has a limited pro- duct portfolio based on a technology platform such that competing products may prove to be better or achieve greater market accep- tance or that the company’s product candidates do not show su- cient potential for further development, which could lead to failure to obtain market approval. - Risks related to key employees and qualied personnel, such as the company’s dependence on its senior executives and other key per- sonnel and if the company loses key employees, or fails to recruit the necessary personnel, may lead to delays or interruptions in the continued business and product development. - Risks related to intellectual property rights such as the company’s patent protection not being sucient to adequately protect its ope- rations, that the company infringes the intellectual property rights of third parties or that the company becomes involved in intellectual property disputes. - Risks related to potential product liability claims and insurance issues such that the company faces signicant liability risks if its products or product candidates should cause patients to suer side eects invol- ving illness, bodily injury or death, and that the company’s insurance coverage cannot be maintained or provide adequate protection. - Risks related to a continued and persistent COVID-19 pandemic and the impact on healthcare systems, our operations and our sta. A more detailed description of risks is given in Note 2. Regarding the group’s internal control and risk management system in connection with the preparation of consolidated accounts, please refer to the Cor- porate Governance Report. 32 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 DIRECTORS’ REPORT LEGAL DISPUTES BONESUPPORT has no ongoing or known potential legal disputes within the group. LONG TERM STRATEGIC ACTIVITIES BONESUPPORT’s strategy can be broken down into the following main activities: - Produce compelling clinical and health economic data. - Commercial focus on selected markets and indications. - Regulatory market approval for CERAMENT G in the U.S. - Develop new products that meet market needs in the short, medium and long term. BONESUPPORT will develop further compelling clinical and health eco- nomic data to strengthen its position in the markets for trauma, revision arthroplasty, chronic osteomyelitis and foot infections due to diabetes. A number of combinations with CERAMENT have been studied to supply osteoinductive properties, i.e. the capability to actively stimulate bone healing. Among other research activity, the company has condu- cted research using preclinical candidates which combined CERAMENT with bisphosphonates, bone-joint proteins (BMP), bone marrow aspi- rates (BMA) and demineralized bone matrix (DBM). Priority product candidates for own development are CERAMENT with bisphosphonate and CERAMENT with DBM, while CERAMENT with BMP is a candidate for potential partner development. OUTLOOK The strengthened commercial platform, both in the U.S. and in Europe, the results of our clinical trials and the launch of new products mean that we expect a strong sales increase after the COVID-19 pandemic and an annual sales growth of around 40 per cent. THE BOARD OF DIRECTORS AND ITS WORK Håkan Björklund, Björn Odlander, Lars Lidgren, Tone Kvåle, Lennart Johansson and Simon Cartmell were re-elected at the Annual General Meeting in May 2021. Lennart Johansson was re-elected Chairman of the Board. The work of the Board of Directors is governed by rules of procedure that are revised and adopted by the Board at least once a year. The Rules of Procedure mainly contain provisions for the work of the Board of Directors, as well as instructions for the division of duties between the Board of Directors and the CEO, as well as instructions for nancial reporting. The Swedish Code of Corporate Governance applies. More details are given in the Corporate Governance Report. CORPORATE GOVERNANCE The company has chosen to issue the Corporate Governance Report separately to the Annual Report. The Corporate Governance Report can be found on page 69. THE BOARD OF DIRECTOR’S PROPOSALS FOR PRINCIPLES OF REMUNERATION TO SENIOR EXECUTIVES Pursuant to the Swedish Companies Act, the Annual General Meeting shall decide on guidelines for remuneration of the CEO and other senior executives. At the Annual General Meeting on May 2021, guidelines were adopted with primarily the content below. The guidelines that were adopted 2021 apply until further notice. These guidelines cover the persons who are members of BONESUPPORT HOLDING AB’s (”BONESUPPORT”) group management. Group manage- ment currently consists of nine positions. The guidelines also include any remuneration to Board members for work in addition to board fees. The guidelines shall be applied to the remuneration agreed, and changes made to already agreed remuneration, after the guidelines have been adopted by the Annual General Meeting 2021. The guideli- nes do not cover remuneration resolved by the General Meeting, such as fees to Board members or share-related incentive programs. The company’s starting point is that remuneration shall be at a market and competitive level and shall consist of the following components: xed salary, variable cash remuneration, pension benets and other benets. The level of remuneration for each individual executive shall be based on factors such as duties, expertise, experience, position and performance. In addition, the Annual General Meeting may – and inde- pendently of these guidelines – resolve on, for example, share and share price-related remuneration. In the case of employment relationships governed by rules other than Swedish regulations, appropriate adjustments may be made, in respect of pension benets and other benets, to comply with such mandatory rules or established local practice, taking into account, as far as possible, the overall purpose of these guidelines. The CEO and other senior executives shall be oered a xed annual salary. The xed salary shall be determined taking into account the senior executive’s expertise, area of responsibility and performance. The xed salary should be reassessed annually. In addition to xed salary, the CEO and other senior executives may, by separate agreement, receive variable cash remuneration. Variable cash remuneration covered by these guidelines shall aim to promote BONESUPPORT’s business strategy and long-term interests, including its sustainability. Compliance with criteria for the payment of variable cash remuneration shall be measured over a period of one year. The annual variable cash remuneration may not exceed 75 percent of the xed annual salary for the CEO and not more than 40 percent of the xed annual salary of other senior executives, the individual highest level being determined, inter alia, in the light of his or her position. The variable cash remuneration shall not be pensionable, subject to mandatory collective agreement provisions. The variable cash remuneration shall be linked to one or more predeter- mined and measurable criteria that may be nancial, such as net sales and operating prot, or non-nancial, such as qualitative targets. The variable cash remuneration shall be less than 40 percent dependent on non-nancial criteria. Clearly and measurably linking the remuneration of senior executives to BONESUPPORT’s nancial and operational deve- lopment, promotes the implementation of the company’s business strategy, long term interests and sustainability. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 33 DIRECTORS’ REPORT Once the measurement period for compliance with the criteria for the payment of variable cash remuneration has been completed, the extent to which the criteria have been met shall be assessed. The Remunera- tion Committee is responsible for such assessment. Compliance with nancial criteria shall be determined based on the latest nancial infor- mation published by the company. The Board of Directors shall have the possibility to recover, in whole or in part, variable remuneration paid on the basis of information that has subsequently been found to be incorrect. Pension benets, including health insurance, shall be dened contri- bution to the extent that the executive is not covered by a dened benet pension in accordance with mandatory collective agreement provisions. Premiums for dened contribution pensions, including health insurance, may amount to a maximum of 40 percent of the xed annual salary. Other benets may include life insurance, medical insurance and car benet. Senior executives shall be employed until further notice or for a certain period of time. In the event of termination by BONESUPPORT, the notice period may not exceed 12 months. Severance pay, in addi- tion to salary and other remuneration during the notice period, may not exceed an amount equal to twelve times the monthly salary. In the event of resignation by the senior executive, the notice period may not exceed six months. In addition, compensation may be paid for any commitment to restrict competition in order to compensate for any loss of income. Such remu- neration shall be paid only to the extent that the former senior executive is not entitled to severance pay. The remuneration shall be based on the xed salary at the time of termination and shall amount to a maximum of 60 percent of the xed salary at the time of termination, subject to mandatory collective agreement provisions, and shall be paid for the duration of the anti-competition undertakings, which shall not exceed 12 months after termination of employment. To the extent that the Board Member performs work on behalf of the company, in addition to the work of the Board of Directors, a market-ba- sed consulting fee for such work may be paid to a Board Member or to a company controlled by a Board Member, provided that the services contribute to the implementation of BONESUPPORT’s business strategy and the safeguarding of BONESUPPORT’s long term interests, including its sustainability. The Board of Directors has set up a Remuneration Committee. The Remuneration Committee’s tasks include preparing the Board’s resolu- tion on proposals for guidelines for remuneration to senior executives. The Board of Directors shall prepare proposals for new guidelines at least every four years and shall submit the proposal for resolution at the Annual General Meeting. The guidelines shall remain in force until new guidelines have been adopted by the Annual General Meeting. The Remuneration Committee shall also monitor and evaluate programs for variable remuneration to company management, the application of guidelines for remuneration to senior executives and the current remuneration structures and levels in the company. The members of the Remuneration Committee are independent in relation to the com- pany and company management. The CEO or other members of the executive management may not be present at the Board’s discussion of and decisions on remuneration-related matters, to the extent that they are aected by the issues. The Board of Directors may decide to temporarily deviate from the guidelines in whole or in part, if in an individual case there are special reasons for this and a deviation is necessary to satisfy the company’s long-term interests, including its sustainability, or to ensure the com- pany’s nancial viability. As stated above, it is part of the Remuneration Committee’s task to prepare the Board’s decisions on remuneration iss- ues, which includes decisions to deviate from the guidelines. In addition to the commitments to pay ongoing remuneration such as salary, pension and other benets, there is no previously resolved remuneration to any senior executive that has not become due for pay- ment. For further information on remuneration to senior executives, see Note 11. 34 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 DIRECTORS’ REPORT PARENT COMPANY REVENUES, LOSS AND FINANCIAL POSITION The parent company BONESUPPORT HOLDING AB (publ) owns and administers the shares in BONESUPPORT AB, which in turn owns the shares in the other group companies. BONESUPPORT HOLDING AB does not undertake any operational activities. BONESUPPORT HOLDING AB was registered on March 15, 2010 in connection with the restructuring of the Group. In 2021, management fees were charged within the group. In the parent company, SEK 43.6 million (39.4) has been recognized as net sales and SEK 49.5 million (47.5) as administrative costs. The parent company’s operating expenses amount to SEK 51.1 million (46.2). During the year, unconditional shareholder contributions of SEK 125.0 million were made to BONESUPPORT AB, compared to SEK 105.0 mil- lion the previous year. The prot/loss for the year amounted to SEK -3.1 million (-3.1). Equity has increased to SEK 1,268.3 million (1,265.2). Cash and bank balances amounted to SEK 181.3 million (338.1) at the end of the year. FINANCIAL RISKS The parent company’s nancial risks are essentially the same as the group’s. OWNERSHIP AT DECEMBER 31, 2021 The largest shareholders at the end of the year were Avanza Pension 11.0%, HealthCap V LP 10.1%, Swedbank Robur Fonder 6.3%, Stiftelsen Industri- fonden 5.8%, Third Swedish National Pension Fund 5.6%, State Street Bank and Trust 4.9%, and Fourth Swedish National Pension Fund 4.8%. THE SHARE The company has ordinary shares and class C-shares. The quotient book value of the shares is SEK 0.625 per share. As of December 31, 2021, the total number of ordinary shares amounted to 64,164,672 (63,764,222) divided among 7,453 shareholders (5,977), and the total number of class C-shares amounted to 1,290,000 (1,235,000). The ordinary shares entitle to one vote each and the C-shares entitle to one tenth of a vote each. According to the Articles of Incorporation, the number of shares shall be not less than 29,000,000 (29,000,000) and not more than 116,000,000 (116,000,000). Own shares BONESUPPORT HOLDING AB holds all class C-shares. Pursuant to authorization from the Annual General Meeting on May 22, 2018, the Board of Directors of BONESUPPORT HOLDING AB resolved to issue 505,000 class C-shares and then immediately repurchase them. The shares were issued and repurchased in accordance with the Performance Share Program Employees 2018/2021 and the performance share pro- gram Board of Directors 2018 adopted by the Annual General Meeting on May 22, 2018. SEK 315,625 was paid for the class C-shares in 2019. Pursuant to authorization from the Annual General Meeting on May 14, 2019, the Board of Directors of BONESUPPORT HOLDING AB resolved to issue 730,000 class C-shares and then immediately repurchase them. The shares were issued and repurchased in accordance with the Per- formance Share Program Employees 2019/2022 adopted by the Annual General Meeting on May 19, 2019. SEK 456,250 was paid for the class C-shares during the year. Pursuant to authorization from the Annual General Meeting on May 19, 2020, the Board of Directors of BONESUPPORT HOLDING AB resolved to issue 55,000 class C-shares and then immediately repurchase them. The shares were issued and repurchased in accordance with the Perfor- mance Share Program Employees 2020/2023 adopted by the Annual General Meeting on May 19, 2020. SEK 34,675 was paid for the class C-shares during the year. The share of the class C-shares in the share capital amounts to two (two) percent. THE BOARD OF DIRECTORS’ PROPOSAL FOR APPROPRIATION The Board of Directors proposes that the share premium reserve, accumulated losses and loss for the year be carried forward. Appropriation parent company, SEK Unrestricted equity in the parent company Share premium reserve 1 563 670 389 Accumulated losses -333 110 703 Net loss for the year -3 141 005 Total unrestricted equity in the parent company 1 227 418 682 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 35 FINANCIAL INFORMATION CONSOLIDATED INCOME STATEMENT SEKt Note 2021 2020 Net sales 4 212 885 180 860 Cost of sales 4, 6, 7 -23 182 -19 256 Gross prot 4 189 703 161 604 Selling expenses 6, 7, 10, 11, 21 -139 274 -123 818 Sales commissions 4, 6 -38 571 -31 598 Research and development expenses 6, 7, 10, 11 -53 009 -57 898 Administrative expenses 6, 7, 8, 10, 11, 12 -44 122 -45 492 Other operating income 13 11 308 12 188 Other operating expenses 6, 14 -6 704 -13 547 Operating prot/loss 4 -80 669 -98 561 Loss from nancial items Interest income 0 5 Interest expenses -1 168 -445 Net nancial items 4 -1 168 -440 Prot/loss before income tax 4 -81 837 -99 001 Income tax 16 -3 694 -2 411 Net prot/loss for the year -85 531 -101 412 Attributable to: Equity holders of the parent -85 531 -101 412 Earnings per share calculated on earnings attributable to equity holders of the parent Earnings per share before and after dilution, SEK 23 -1.34 -1.72 36 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 FINANCIAL INFORMATION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME SEKt 2021 2020 Loss for the year -85 531 -101 412 Other comprehensive income Other comprehensive income to be reclassied to prot or loss in subsequent periods: Exchange dierences on translation of foreign operations 1 023 -834 Other comprehensive income of the year 1 023 -834 Total comprehensive income of the year -84 508 -102 246 Attributable to: Equity holders of the parent -84 508 -102 246 Total comprehensive income of the year -84 508 -102 246 Other comprehensive income of the year refers in its entirety to exchange dierences with no tax eects BONESUPPORT HOLDING AB ANNUAL REPORT 2021 37 FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEET SEKt Note December 31, 2021 December 31, 2020 ASSETS Non-current assets Intangible assets 18 Capitalized development expenses 5 968 6 115 Patents 2 397 2 725 Total intangible assets 8 365 8 840 Tangible assets Right of use assets 26 22 504 11 840 Equipment and tools 19 4 574 3 163 Total tangible assets 27 078 15 003 Total non-current assets 35 443 23 843 Current assets Inventories 17 Raw materials and consumables 34 234 30 951 Finished goods and goods for resale 17 528 14 604 Total inventories 51 762 45 555 Current receivables Trade receivables 21, 25 38 413 32 108 Other operating receivables 21, 25 6 126 5 317 Prepaid expenses 22 3 219 3 359 Deferred income 22 2 492 1 299 Total current receivables 50 250 42 083 Cash and cash equivalents 25, 27 206 464 353 737 Total current assets 308 476 441 375 TOTAL ASSETS 343 919 465 218 38 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEET SEKt Note December 31, 2021 December 31, 2020 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 23 40 909 40 625 Other paid-in capital 1 563 670 1 557 639 Translation reserve 129 -894 Fund for development expenses 5 490 5 352 Accumulated losses including loss for the year -1 344 494 -1 203 823 Total equity 265 704 398 899 Non-current liabilities Leasing debt 25, 26 16 152 5 622 Provisions 24 363 329 Total non-current liabilities 16 515 5 951 Current liabilities Leasing debt 25, 26 5 270 4 858 Trade payables 25 18 719 12 680 Income tax payable 1 903 4 985 Other operating liabilities 5 625 6 974 Accrued expenses 22, 25 30 183 30 871 Total current liabilities 61 700 60 368 Total liabilities 78 215 66 319 TOTAL EQUITY AND LIABILITIES 343 919 465 218 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 39 FINANCIAL INFORMATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY SEKt Share capital Paid but not registered share issue Other paid-in capital Translation reserve Fund for development expenses Accumulated losses inclu- ding net loss for the year Total equity As at January 1, 2020 32 826 100 1 191 775 -60 3 552 -1 103 884 124 309 Comprehensive income Net loss for the year -101 412 -101 412 Other comprehensive income Exchange dierences on translation of foreign operations -834 -834 Total comprehensive income 0 0 0 -834 0 -101 412 -102 246 Transactions with equity holders Change in fund for development expenses 1 800 -1 800 0 New share issue, employee stock option programs 780 -100 10 569 11 249 Directed share issue 6 563 371 437 378 000 Transaction costs, directed share issue -16 142 -16 142 New share issue and repurchase of own C-shares 456 -456 0 Share-based payment transactions 3 729 3 729 Total transactions with equity holders 7 799 -100 365 864 0 1 800 1 473 376 836 As at January 1, 2021 40 625 0 1 557 639 -894 5 352 -1 203 823 398 899 Comprehensive income Net loss for the year -85 531 -85 531 Other comprehensive income Exchange dierences on translation of foreign operations 1 023 1 023 Total comprehensive income 0 0 0 1 023 0 -85 531 -84 508 Transactions with equity holders Share swap -62 333 -62 333 Change in fund for development expenses 138 -138 0 New share issue, employee stock options and warrants 250 6 031 6 281 New share issue and repurchase of own C-shares 34 -34 0 Share-based payment transactions 7 365 7 365 Total transactions with equity holders 284 0 6 031 0 138 -55 140 -48 687 As at December 31, 2021 40 909 0 1 563 670 129 5 490 -1 344 494 265 704 For treatment of the share swap, see Note 23. 40 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 FINANCIAL INFORMATION CONSOLIDATED STATEMENT OF CASH FLOWS SEKt Note 2021 2020 Operating activities Operating loss -80 669 -98 561 Non-cash adjustments 28 6 757 20 781 Interests received 0 5 Interests paid -1 168 -6 Income tax paid -3 761 -4 970 Net cash ows from operating activities before changes in working capital -78 841 -82 751 Changes in working capital Increase (-) in inventories -117 -13 202 Increase (-) in operating receivables -5 421 -2 916 Increase (+)/decrease (-) in operating liabilities 958 -1 406 Net cash ows from operating activities -83 421 -100 275 Investing activities Investments in intangible assets 18 -808 -2 312 Investments in equipment and tools 19 -2 608 -346 Net cash ows from investing activities -3 416 -2 658 Financing activities Share swap -62 333 0 New share issue, employee stock options and warrants 6 281 11 248 Directed share issue 0 378 000 Transaction costs, directed share issue 0 -16 142 Repayments of leasing debt 26 -5 509 -7 768 Net cash ows from nancing activities -61 561 365 338 Net cash ows -148 398 262 405 Cash and cash equivalents as at beginning of the year 25 353 737 92 065 Net foreign exchange dierence 1 125 -733 Cash and cash equivalents as at end of the year 25 206 464 353 737 For treatment of the share swap, see Note 23. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 41 FINANCIAL INFORMATION PARENT COMPANY INCOME STATEMENT SEKt Note 2021 2020 Net sales 5 43 646 39 371 Administrative expenses 5, 8, 10, 11 -49 542 -47 462 Other operating income 13 121 1 642 Other operating expenses 14 -1 659 -331 Operating loss -7 434 -6 780 Result from nancial items Other interest income and similar income 15 5 565 4 624 Other interest expenses and similar expenses 15 -1 272 -966 Net nancial items 4 293 3 658 Result before taxes -3 141 -3 122 Income tax 16 0 0 Loss for the year -3 141 -3 122 Parent company loss for the year equals comprehensive income 42 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 FINANCIAL INFORMATION PARENT COMPANY BALANCE SHEET SEKt Note December 31, 2021 December 31, 2020 ASSETS Non-current assets Non-current nancial assets Participations in group companies 20, 25 956 652 831 652 Receivables on group companies 25 172 020 132 427 Total non-current nancial assets 1 128 672 964 079 Total non-current assets 1 128 672 964 079 Current assets Current receivables Other receivables 21 47 0 Prepaid expenses 22 660 633 Total current receivables 707 633 Cash 25 181 275 338 114 Total current assets 181 982 338 747 TOTAL ASSETS 1 310 654 1 302 826 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 43 FINANCIAL INFORMATION PARENT COMPANY BALANCE SHEET SEKt Note December 31, 2021 December 31, 2020 EQUITY AND LIABILITIES Equity Restricted equity Share capital 23 40 909 40 625 Total restricted equity 40 909 40 625 Unrestricted equity Share premium reserve 1 563 670 1 557 639 Accumulated losses -333 110 -329 954 Loss for the year -3 141 -3 122 Total unrestricted equity 1 227 419 1 224 563 Total equity 1 268 328 1 265 188 Non-current liabilities Liabilities to group companies 35 043 27 411 Total non-current liabilities 35 043 27 411 Current liabilities Trade payables 25 141 550 Other liabilities 810 2 598 Accrued expenses 22, 25 6 332 7 079 Total current liabilities 7 283 10 227 TOTAL EQUITY AND LIABILITIES 1 310 654 1 302 826 44 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 FINANCIAL INFORMATION PARENT COMPANY STATEMENT OF CHANGES IN EQUITY SEKt Share capital Paid but not registered share issue Share premium reserve Accumulated losses Total equity As at January 1, 2020 32 826 100 1 191 775 -329 499 895 202 Comprehensive income Loss for the year -3 122 -3 122 Total comprehensive income 0 0 0 -3 122 -3 122 Transactions with equity holders New share issue, employee stock option programs 780 -100 10 569 11 249 Directed share issue 6 563 371 437 378 000 Transaction costs, directed share issue -16 142 -16 142 New share issue and repurchase of own C-shares 456 -456 0 Total transactions with equity holders 7 799 -100 365 864 -456 373 108 As at January 1, 2021 40 625 0 1 557 639 -333 077 1 265 188 Comprehensive income Loss for the year -3 141 -3 141 Total comprehensive income 0 0 0 -3 141 -3 141 Transactions with equity holders New share issue, employee stock option programs and warrants 250 6 031 6 281 New share issue and repurchase of own C-shares 34 -34 0 Total transactions with equity holders 284 0 6 031 -34 6 281 As at December 31, 2021 40 909 0 1 563 670 -336 251 1 268 328 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 45 FINANCIAL INFORMATION PARENT COMPANY STATEMENT OF CASH FLOWS SEKt Note 2021 2020 Operating activities Operating loss -7 434 -6 780 Interest received 5 566 4 624 Interests paid -1 273 -966 Net cash ows from operating activities before changes in working capital -3 141 -3 122 Changes in working capital Increase (-)/decrease (+) in operating receivables -74 21 677 Iincrease (+)/decrease (-) in operating liabilities 4 688 -12 257 Net cash ows from operating activities 1 473 6 298 Investing activities Shareholders' contribution -125 000 -105 000 Net cash ows from investing activities -125 000 -105 000 Financing activities New share issue, employee stock options and warrants 6 281 11 248 Directed share issue 0 378 000 Transaction costs, directed new share issue 0 -16 142 Change in balances towards group companies -39 593 -9 839 Net cash ows from nancing activities -33 312 363 267 Net cash ow -156 839 264 565 Cash as at beginning of the year 25 338 114 73 549 Cash as at end of the year 25 181 275 338 114 46 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES NOTES NOTE 1 GENERAL INFORMATION, ACCOUNTING POLICIES GENERAL INFORMATION BONESUPPORT operates within orthopedic products and develops and commercializes innovative injectable bio-ceramic bone graft substitu- tes that remodel to the patient’s host bone and have the ability to release drugs. BONESUPPORT’s marketed synthetic bone graft substitutes are CERAMENT BVF, CERAMENT G and CERAMENT V, all of which are based on the innovative and patented CERAMENT technology platform. BONESUPPORT HOLDING AB (publ) is a limited liability company with its registered oce in Lund, Sweden. The address of the head oce is Scheelevägen 19, SE-223 70 Lund, Sweden. The Board of Directors approved these consolidated accounts on March 16, 2022 and they will be presented before the Annual General Meeting for adoption on May 19, 2022. THE GROUP’S ACCOUNTING PRINCIPLES The main accounting principles applied at the time of the prepared consolidated accounts are set out below. These principles have been applied consistently for all the years presented unless otherwise stated. The consolidated accounts are prepared in accordance with Interna- tional Financial Reporting Standards (IFRS) issued by the International Financial Accounting Standards Board (IASB) as adopted by the EU. Fur- thermore, the consolidated accounts are prepared in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 1 Supplementary accounting regulations for Groups. The consolidated accounts are based on historical acquisition values and prepared on a going concern basis. The company’s functional currency is SEK and all amounts are in SEK thousand unless otherwise stated. Implementation of new accounting principles The accounting policies applied include new and changed standards man- datory for the rst time for scal years beginning January 1, 2021 None of these have had a material impact on the group’s nancial statements. New or amended IFRS standards eective from 2022 or later have not been applied in the preparation of these nancial statements. The assessment is that these will not have a material impact on the group’s nancial results and nancial position. ESTIMATES, ASSUMPTIONS AND ASSESSMENTS When preparing the company’s nancial statements, a number of assessments and estimates, as well as assumptions, have been made that aect the application of accounting policies and the reported amounts in the income statements and balance sheets. Actual outco- mes may dier from these estimates and assessments. Estimates and assessments are continuously evaluated and based on historical expe- rience and other factors, including expectations of future events. The areas of the consolidated accounts containing a signicant degree of estimates, assumptions or assessments are described in Note 3. Current assets and current liabilities are expected to be recovered or paid within one year. Other balance sheet items are expected to be recovered or paid later. BASIS FOR CONSOLIDATION The consolidated accounts cover the parent company and its subsidia- ries. The nancial statements of the parent company and the subsidia- ries included in the consolidated accounts relate to the same period and are prepared in accordance with the accounting principles applicable to the group. All intra-group balances, revenues, costs, gains or losses arising in transactions between the companies covered in the consoli- dated accounts are eliminated in full. SUBSIDIARIES Subsidiaries are companies in which the parent holds, directly or indirectly, more than half of the voting rights or otherwise has a controlling interest. A subsidiary is included in the consolidated accounts from the date of acquisition, which is the date on which the parent company acquired con- trolling interest, and is included in the consolidated accounts until the date on which that controlling interest ceases. Subsidiaries are recognized according to the acquisition method. The pur- chase price for the acquisition of a business consists of the fair value of trans- ferred assets, liabilities and issued shares. The purchase price also includes the fair value of all assets or liabilities that are a consequence of the agreed contingent purchase price. Identiable acquired assets and assumed liabi- lities are initially measured at fair value on the date of acquisition. TRANSLATION OF FOREIGN SUBSIDIARIES’ FINANCIAL STATEMENTS Items on the balance sheets of subsidiaries are valued in the relevant functional currency, which is the same as the country’s local currency. The group’s nancial statements are presented in SEK, which is the parent company’s functional currency. The income statements and balance sheets of the foreign subsidiaries are translated into SEK. The balance sheets are translated at the exchange rates on the balance sheet date. The prot and loss accounts are translated using the average rates for the year. The exchange dierences on translation do not aect prot or loss for the year but are recognized in other comprehensive income in the consolidated accounts and accumulated. The following exchange rates have been used for translations: USD EUR CHF GBP DKK Closing day rate December 31, 2021 9.044 10.245 9.894 12.211 1.378 Average rate 2021 8.582 10.145 9.385 11.802 1.364 Closing day rate December 31, 2020 8.214 10.074 9.288 11.139 1.353 Average rate 2020 9.204 10.487 9.798 11.798 1.407 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 47 NOTES CASH FLOW STATEMENT The cash ow statement has been prepared according to the indirect method. The reported cash ow covers only transactions involving inward or outward payment. REVENUE RECOGNITION The group’s revenues are mainly generated through one revenue stream, the sales of CERAMENT products. Sales revenue is recognized when the performance obligation is fullled, i.e. when control of an item is trans- ferred to the buyer. For our customers, the delivery terms of Ex Works BONESUPPORT’s warehouse are applied, which means that the control passes to the buyer when the goods leave the warehouse. Some custo- mers, however, keep consignment stocks. In these cases, the income is recognized when withdrawals from consignment stocks are made. Revenue is generated through three channels: - A combination of own sales company and distributors in the U.S. - Direct sales in six countries in Europe - Sales through distributors in all other markets Sales in the U.S. and in countries with direct sales are made to end custo- mers. For sales in the U.S., the assessment has been made that contrac- ted distributors constitute agents and the end customer is BONESUP- PORT’s customer. Distributors receive commission on generated sales to end customers as compensation for their service as agents. This is recognized as a sales commission when the income is reported as the depreciation period for these would otherwise have been for a shorter period than one year, based on the practical exception in IFRS 15.94. BONESUPPORT has its own inventory in the U.S. from which delivery takes place directly to the end customer, and the distributors never get control over the goods. For distributor markets outside the U.S., sales are made to the distributor. Delivery to these distributors takes place from BONESUPPORT’s ware- house in Lund. Control of the goods passes to the distributor as soon as they leave BONESUPPORT’s inventory and the revenue is recognized at the same time. The sales agreements do not contain any right of return, this applies to both distributors and end customers. Guarantee costs in accordance with IAS 37 exist but amount to immaterial amounts, which is why no provision is made. For warehousing distributors, no return of pro- ducts may take place without prior permission from BONESUPPORT. BONESUPPORT has an agreed opportunity but no obligation to take back products and in recent years has in principle not used that oppor- tunity. BONESUPPORT therefore makes the assessment that there is no need to provision for returns. In general, 30 dayd payment terms are applied to the company’s direct markets. For sales to distributors, market-adjusted terms of up to 90 days are applied. INTANGIBLE ASSETS Capitalized development expenses and patents: Expenditure on the development of new products is recognized as an intangible xed asset once it has received regulatory approval from licensing authorities and if such high-collateral expenditure will bring economic benets to the enterprise. Capitalized development expen- ses are recognized as intangible assets and amortization is made from the time the product is ready to use. The amortization period is the useful life, but never longer than ten years. Development expenditure that does not meet these criteria is written o. Externally acquired patents are activated and reported as patents. All intangible assets are assessed annually for any impairment requi- rement. LEASING For leases where BONESUPPORT is the lessee, IFRS 16 Leases is applied. The company has no leases where it is the lessor. At the beginning of a contract, it is assessed whether it is a lease that should be recognized as leasing. All leases in which the company is a lessee are recognized as leases. The lease liability is initially valued at the present value of future lease payments, discounted at the group’s marginal loan rate. Lease pay- ments included in the valuation of lease liabilities include xed fees less any deduction for benets associated with the contract; variable lease payments that depend on an index or price; amounts expected to be paid by the lessee under residual value guarantees; the exercise price of an option to purchase if the lessee is reasonably certain to exercise such an option; and penalties payable in the event of termination of the contract, if the lease period reects that the lessee will exercise an opportunity to terminate the lease. The lease liability is presented on its own rows in the balance sheet, with a breakdown according to maturity. The lease liability is recognized in subsequent periods by increasing the liability to reect the eect of interest and decreasing it to reect the eect of lease payments made. The lease liability is revalued with a corresponding adjustment of the right-of-use asset in accordance with the rules set out in IFRS 16. The right-of-use asset is initially recognized at the value of the lease liabi- lity, with additions for lease payments made at the start date of the agre- ement and initial direct expenses. The right-of-use asset is recognized in subsequent periods at cost, less depreciation and any impairment losses. The same principles apply to impairment of the right-of- use asset as those described in the Equipment and Tools section. The right-of-use asset is depreciated over the estimated useful life or, if shorter, over the agreed lease term. If a contract transfers or is likely to transfer ownership at the end of the lease term, the right-of-use asset is depreciated over the estimated useful life. Depreciation starts at the initial date of the lease. The right-of-use asset is presented on its own row in the balance sheet. EQUIPMENT AND TOOLS Equipment and tools are recognized at cost less accumulated depreci- ation and any impairment losses. The cost includes expenses directly attributable to the acquisition of the asset. Additional expenses are added to the reported value of the asset or recognized as a separate asset, as applicable. Depreciation according to plan is based on the depreciable amount, which consists of the cost less its residual value, which is distributed over the expected useful life. Equipment and tools are depreciated over ve years. Gains and losses on disposal are determined by comparing the pro- ceeds of sales obtained with the carrying amount. The dierence is reported in the income statement as other operating income/expenses. 48 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES IMPAIRMENT OF NON-FINANCIAL ASSETS Assets that are written down are assessed for impairment whenever events or changes in conditions indicate that the carrying amount may not be recoverable. An impairment loss is made at the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value reduced by the selling costs and the value in use. When assessing impairment require- ments, assets are grouped at the lowest levels where there are separa- tely identiable cash ows (cash-generating units). FINANCIAL INSTRUMENTS A nancial asset or liability is included in the balance sheet when the group becomes a party in a contractual relationship. Financial assets are removed from the balance sheet when the right to receive cash ows from the instrument has expired and the group has transferred all risks and benets associated with ownership. Financial liabilities are removed from the balance sheet once the obligation in the contract has been fullled. CLASSIFICATION OF FINANCIAL ASSETS Financial assets: All assets are held to receive ongoing payments. These are initially valued at fair value including transaction costs and then at amortized cost in accordance with the eective interest method. Gains and losses attributable to nancial assets are reported in the income statement. Interest rate eects arising from the application of the eective inte- rest method are also reported in the income statement. BONESUPPORT recognizes the following interest-bearing assets in the balance sheet: - Trade receivables - Other receivables - Cash and cash equivalents Impairment of nancial assets: For interest bearing nancial assets, a credit risk reserve is recognized and this is based on the future expected losses of the individual assets. For trade receivables, the credit risk reserve is calculated based on the asset’s expected loss over its total life. For cash and cash equivalents, the write-down that could be considered is immaterial. INVENTORIES Inventories are reported at the lowest of the acquisition cost and the net realizable value. The acquisition cost is determined using the rst in, rst out (FIFO) method. The cost of nished goods consists of raw materials, direct salaries and other direct costs. Borrowing costs are not included. The net realizable value is the sales price less estimated costs that are necessary to achieve a sale. The sales price is the price that the company would normally receive when selling in the operating activities. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash and bank balances. FOREIGN CURRENCY Transactions in foreign currency are reported at the exchange rate on the transaction date. Monetary assets and liabilities denominated in foreign currency are converted at the exchange rate of the balance sheet date and exchange gains and losses are reported in prot or loss as other operating income/expenses. SHARE CAPITAL Transaction costs directly attributable to the issue of new shares are recognized, net of tax, in equity as a deduction after the issue proceeds.. SHARE SWAP AGREEMENT During the third quarter of 2021, BONESUPPORT, in accordance with a resolution from the annual general meeting in May of that year, exercised its authorization to enter into a share swap agreement to secure the com- mitments in the group’s incentive programs LTI 2021. A total of 786,000 shares were hedged during the third quarter at an average value of SEK 79.30 per share, a total value of SEK 62,333 thousand. The swap agreement has been treated in line with acquisition of own shares and has therefor been recognized at acquisition cost in unrestricted equity. EMPLOYEE BENEFITS Pensions: The group only has dened contribution pension plans. The dened contribution pension plans mainly cover retirement pension, disability pension and family pension. The premiums are paid on an ongoing basis during the year by each group company to separate legal entities, such as insurance companies. The amount of the premium is based on the salary level. Pension costs for the year are included in the income statement. Share-based remuneration: The group has outstanding employee stock options, which are regula- ted by equity instruments. For detailed descriptions of the programs, please refer to Note 12. Share-based remuneration (employee stock options) is valued based on the market value of the employee stock options at the time the options were assigned. The value of the com- pensation is not revalued after the assignment date. The total cost is distributed over the vesting period, which is the period during which all the specied vesting conditions are to be met. The cost is recognized as a personnel cost and credited in equity. At each closing date, the group reassesses how many shares are expected to be earned. Any deviations from the initial assessments that resulted from the review are reported in the income statement and the corresponding adjustments are made in equity. When the options are exercised, the company issues new shares. Pay- ments received are credited to the share capital (quota value) and other contributed capital when the options are exercised. Social costs attributable to equity-related instruments as described above are expensed according to the periods during which the servi- ces are performed. The cost is calculated based on the same valuation model used when the employee stock options were assigned. The liabi- lity for social security contributions incurred is revalued at each closing date on the basis of a new calculation of the contributions that may be paid when the instruments are redeemed. This means that the basis for calculating the social security debt is a new market valuation of the options made at each closing date. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 49 NOTES DEFERRED TAX Deferred tax is recognized on temporary dierences. Deferred tax is calculated using a tax rate that has been decided or announced at the balance sheet date and is expected to apply when the deferred tax asset concerned is realized or the deferred tax liability is settled. Deferred tax assets relating to tax decits are reported to the extent that they are likely to be oset against future taxable surpluses. OPERATING SEGMENTS The group manages and monitors operations in two operating seg- ments: North America (NA) and Europe & Rest of the World (EUROW). Information about operating segment sales and prot or loss is repor- ted in Note 4. Neither assets nor liabilities are followed-up at segment level as management and follow-up of these are done by management and the Board at group level. THE PARENT COMPANY’S ACCOUNTING POLICIES The parent company prepares its annual report in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2 Accounting for Legal Entities. RFR 2 sets out that the parent company’s annual report for the legal entity shall apply all EU approved IFRS and statements, as far as possible within the framework of the Annual Accounts Act, and taking into account the connections between accounting and taxation. The recommendation species the exceptions and additions to be made compared to IFRS accounting. The following dierences exist between the group’s and the parent company’s accounting policies: - Shares in group companies are recognized in the parent company according to the cost method. - Shares in group companies and receivables on group companies are impairment tested annually, or in case of indication of a decline in value, based on a cash ow forecast over the next ve years. For further information see Notes 3 and 20. - The parent company does not apply IFRS 9 and IFRS 16. The parent company recognizes nancial instruments at accrued acquisition value. There are currently no leases in the parent company. - The parent company complies with the Presentation form of the Annual Accounts Act for the income statement and balance sheet, which means, among other things, a dierent set-up for equity. NOTE 2 FINANCIAL RISK MANAGEMENT Through its operations, the group is exposed to various types of nan- cial risks such as market, liquidity and credit risk. Market risk consists mainly of currency risk. BONESUPPORT has an overall nancial policy for both the parent company and the group, which regulates the division of responsibilities in nancial matters between the Board of Directors, the CEO, CFO and other group companies. The Board’s Audit Commit- tee is tasked with monitoring the design of the nancial policy and, if necessary, proposing changes to the Board. The nancial policy is cha- racterized by a low level of risk. There have been no changes in nancial policy or risk management compared to 2020. The strategy includes continuously identifying and managing risks. MARKET RISK Market risk is the risk that the fair value of or future cash ows from a nancial instrument vary due to changes in market prices. Market risks are divided into three types; currency risk, interest rate risk and other price risk. The market risk that primarily aects the group is currency risk. Currency risk Currency risk refers to the risk that fair value or future cash ows uctu- ate as a result of changes in exchange rates. The exposure to currency risk mainly stems from foreign currency payment ows (transaction exposure) and from the translation of foreign subsidiaries’ income sta- tements and balance sheets into SEK (translation exposure). The group’s operations are international and exposed to currency risk, mainly from USD, EUR and GBP. Approximately 57 percent (58) of BONESUPPORT AB sales are invoiced in USD, approximately 17 percent (18) in EUR and approximately 18 percent (17) in GBP. This is only partly oset by the fact that purchases are also made mainly in EUR. If, all else being equal, USD strengthens or weakens by 5 percent against the Swedish SEK, the group’s prot after tax will be aected by +/- approximately SEK 1.0 million (0.2) based on 2021 tran- sactions, a corresponding strengthening/weakening in EUR gives an impact of +/- 0.2 MSEK (0.3) and for GBP an impact of +/- 0.8 MSEK (0.6). The foreign subsidiaries invoice and collect costs in their respective local currencies; USD, EUR, GBP, CHF and DKK. The translation risk means that the value of the group’s net investments in foreign currency may be adversely aected by changes in exchange rates when the net assets are consolidated in SEK at the balance sheet date. The currency risk is mainly attributable to the exposure of outstanding accounts receivable at the end of the reporting period, see Note 21 for distribution by currency. Since the total outstanding accounts receiva- ble consists mostly of USD (about 57 percent), and subsequently of EUR (about 19 percent) and GBP (about 16 percent), currency uctuations may aect future cash ows. If, all else being equal, USD strengthens or weakens by 5 percent against the Swedish krona, the group’s equity and prot after tax will be aected by +/- SEK 1.1 million (0.9) based on outstanding accounts receivable as of December 31, 2021. The corre- sponding eect for EUR amounts to +/- 0.4 MSEK (0.3) and for GBP to +/- 0.3 MSEK (0.2). The group does not currently use forward contracts or other instru- ments to reduce currency risk. The sensitivity analysis in the table below shows the impact on the group of changes in SEK against the largest currencies. The gures are based on 2021 results and nancial position. The impact of the transaction risk is measured in the net prot/loss for the year and the impact of the tran- slation risk is measured in equity including net prot/loss for the year. + means a weakening of SEK - means a strengthening of SEK SEKm +/- 5% USD +/- 5% EUR +/- 5% GBP Transaction risk +/- 1.0 +/- 0.2 +/- 0.8 Translation risk +/- 0.2 +/- 0.1 +/- 0.2 50 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES Interest rate risk Interest rate risk refers to the risk that fair value or future cash ows uctuate as a result of changes in market interest rates. As of December 31, 2021, a general increase or decrease in interest rates will not have any impact on the group’s results as there are no bank loans in the group. The eect on the group’s leases is considered marginal. Price risk Price risk refers to the risk that fair value or future cash ows uctuate as a result of changes in prices. The group’s sales prices are based on the clinical and health economic benets validated by a large number of clinical studies and therefore present a low risk of major price movements. The sensitivity to the pur- chase prices of input goods is mainly managed through long contract times and high stock security. CREDIT AND COUNTERPARTY RISK Credit risk refers to the risk that the counterparty in a transaction causes the group a loss by not fullling its contractual obligations. The group’s exposure to credit risk is mainly attributable to accounts receivable. A simplied model is used to calculate credit losses on the group’s accounts receivable. Expected credit losses are calculated based on past events, current conditions and projections of future economic conditions. The group’s customers consist primarily of hospitals, clinics and distri- butors with a high credit rating. Accounts receivable are spread across a large number of customers and no single customer accounts for a sub- stantial part of the total accounts receivable. Accounts receivable are spread geographically. The group considers that the concentration risks are limited. Reversal of estimated customer losses in 2021 amounted to SEK 0 thousand (833) and new reserves were made with SEK 22 thousand (69). See also Note 21 for more information about accounts receivable. The credit risk in cash and cash equivalents is deemed intangible because the counterparties are banks with high credit ratings awar- ded by international credit rating agencies. As of December 31, 2021, cash and cash equivalents amount to SEK 206,464 thousand (353,737), of which 90 percent (96) in SEK, 6 percent (1) in USD, 3 percent (1) in GBP and 1 percent (1) in EUR. The group’s maximum exposure to credit risk is assessed by carrying amounts of all nancial assets, see Note 25. LIQUIDITY AND FINANCING RISK Liquidity risk refers to the risk that the group will have problems meeting payment commitments for nancial liabilities. Financing risk refers to the risk that the group will not be able to raise sucient funding at a reasonable cost. Liquidity risk is low because the group’s nancial liabilities at the end of 2021 are short term and consist of accounts payable and accrued costs. Payment for the vast majority is due within three months. The nancing risk is assessed based on multi-year liquidity planning, and is about whether the future cash ows are sucient to run planned operations. In the event that there is a risk that they are not sucient, the company will balance costs against future revenues in good time and/ or seek alternative nancing via borrowings or similar. NOTE 3 ESTIMATES, ASSUMPTIONS AND ASSESSMENTS When preparing the company’s nancial statements, a number of assessments and estimates, as well as assumptions, have been made that aect the application of accounting policies and the reported amounts in the income statements and balance sheets. Actual out- comes may dier from these estimates and assessments. Estimates and assessments are continuously evaluated and based on historical experience and other factors, including expectations of future events. The estimates, assumptions and assessments are described in more detail below. VALUATION OF TAX LOSS CARRY-FORWARDS The possibilities for activating deferred tax assets for tax loss carry-for- wards are examined annually. Deferred tax assets are included only to the extent that there are compelling reasons why they can be oset against future taxable surpluses. For more information on this, see Note 16. VALUATION OF SHARES IN GROUP COMPANIES The parent company tests annually or more frequently whether there is an indication of a decline in value and whether there is any impairment requirement for shares in group companies. Recoverable amounts for the shares in group companies have been determined by calculating the value in use, which requires that comprehensive estimates and ass- umptions must be made. Discounted forecast future cash ows over the next four years have been calculated in these assumptions, taking into account a discount rate of 8.4 percent after tax (10.54 percent before tax). The calculation of discount rates has taken risk-free interest rates, market risk premium and company-specic capital structure and the current tax rate into consideration. Cash ow after the four-year period (the test covers 20 years) is calculated on the basis of an initial forecast growth rate of 47 percent, with a gradual de-escalation corresponding to 10 percent per year. The calculated value in use has since been com- pared with the carrying amount and this comparison shows that there is no need for impairment. A sensitivity analysis where dierent discount rates were simulated has been carried out. An increase in the discount rate by ve percentage points would not entail any impairment requi- rement. The result of the test shows a surplus and therefore there is no impairment requirement for shares in group companies. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 51 NOTES 2021 2020 Prot and loss items NA EUROW Other Total NA EUROW Other Total Net sales 121 657 91 228 0 212 885 99 727 81 133 0 180 860 of which CERAMENT BVF 119 428 12 453 0 131 881 97 451 12 808 0 110 259 of which CERAMENT G and CERAMENT V 0 78 775 0 78 775 0 68 313 0 68 313 of which other 2 229 0 0 2 229 2 275 12 0 2 288 Cost of sales -7 882 -15 300 0 -23 182 -6 070 -13 186 0 -19 256 Gross prot 113 775 75 928 0 189 703 93 657 67 947 0 161 604 Selling commissions -38 571 0 0 -38 571 -31 598 0 0 -31 598 Other operating costs¹ -72 491 -63 328 0 -135 819 -78 880 -54 785 0 -133 665 Contribution 2 713 12 600 0 15 313 -16 821 13 162 0 -3 659 Other operating items² 0 0 -95 982 -95 982 0 0 -94 902 -94 902 Operating result 2 713 12 600 -95 982 -80 669 -16 821 13 162 -94 902 -98 561 Net nancial items 0 0 -1 168 -1 168 0 0 -440 -440 Loss before income tax 2 713 12 600 -97 150 -81 837 -16 821 13 162 -95 342 -99 001 NOTE 4 OPERATING SEGMENTS GROUP 2021 2020 Cost for inventory items -22 249 -14 791 Personnel costs -140 020 -141 226 Depreciation and amortization of tangible and intangible assets -8 276 -8 465 Sales commissions -38 571 -31 598 Other expenses -95 746 -95 529 Total -304 862 -291 609 Other expenses mainly concern external services, advertising & public relations, travel expenses and exchange rate losses. Exchange rate losses amount to SEK 6,697 thousand (15,513). NOTE 6 EXPENSES BY TYPE NOTE 5 INTRAGROUP PURCHASES AND SALES Intra-group purchases and sales amounted to SEK 347,838 thousand (321,455). The parent company rendered services to group companies of SEK 43,646 thousand (39,371) and purchased services from group companies of SEK 36,625 thousand (30,470). All intra-group dealings, income, expenses, gains or losses, which arise in transactions between group companies are eliminated in total. BONESUPPORT manages and monitors operations in the North America (NA) and Europe & Rest of the World (EUROW) segments. The sales function follows the segments, where each segment is managed by a responsible business manager, including members of group management. Other functions are organized mainly group-wide, although it is a minor development unit that operates in the United States. The costs included in other operating items are mainly costs for group functions that cannot be directly allocated to any of the two operating segments. Costs for the option programs are not allocated by segment, as the cost of these programs depends partly on external factors such as valuation of the company. Therefore, a breakdown by segment could lead to a non-fair allocation if an external factor aects with dierent impact per segment. The contribution per segment is calculated as net sales minus directly attributable operating costs (see denition above) for the segments. Markets that delivered more than 10 percent of net sales during 2021 were United States with SEK 121.9 million (99.7) and United Kingdom with SEK 38.1 million (28.4). Net sales in Sweden amounted to SEK 7.9 million (7.9). No (0) customer represented more than 10 percent of net sales. The amounts in the table above are eliminated for group transactions. Inter company sales from EUROW to NA amounted to SEK 91.6 million (79.3). The group’s non-current assets are primarily based in Sweden. 1. Other operating costs comprise selling expenses and research & development costs directly attributable to a segment 2. Other operating items comprise administrative expenses, other operating income and expenses and selling expenses and research & development expenses not directly attributable to a segment 52 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES GROUP 2021 2020 Capitalized development expenses 955 823 Patents 328 329 Right of use assets 5 786 5 970 Equipment and tools 1 207 1 343 Total 8 276 8 465 Amortization and depreciation is included in cost of sales with SEK 1,740 NOTE 7 DEPRECIATION AND AMORTIZATION OF TANGIBLE AND INTANGIBLE ASSETS NOTE 9 PERSONNEL AVERAGE NUMBER 2021 Men Women Total PARENT COMPANY: Sweden 1 0 1 SUBSIDIARIES: Sweden 12 28 40 Germany 5 7 12 USA 15 6 21 The Netherlands 2 1 3 Switzerland 1 0 1 United Kingdom 9 3 12 Italy 1 0 1 Denmark 0 1 1 Total subsidiaries 45 46 91 Total Group 46 46 92 GROUP PARENT COMPANY 2021 2020 2021 2020 EY Audit fees related to the assignment 1 983 1 942 1 198 1403 Audit related fees 62 25 62 25 Total 2 045 1 967 1 260 1 428 Other auditors Moore Kingston Smith Audit fees related to the assignment 236 228 0 0 Other assignments 12 58 0 0 Total 248 286 0 0 Frank Hirth UK Audit fees related to the assignment 0 121 0 0 Other assignments 0 675 0 0 Total 0 796 0 0 NOTE 8 COMPENSATION TO AUDITORS The above are reported fees and compensation to auditors expensed during the year. Compensation for consultations is reported in cases where the same audit rm holds the audit assignment in the individual company. Audit fees related to the assignment refer to the statutory audit of the annual report and the administration of the Board of Directors and the managing director. Audit related fees refer to the audit of management or nancial information to be performed in accordance with statutes, articles of association, or agreements not included in the audit assignment, which shall be concluded in a report, certicate or other document intended for others than the client. Other fees are consultations that cannot be attributed to any of the other categories. 2020 Men Women Total PARENT COMPANY: Sweden 1 0 1 SUBSIDIARIES: Sweden 12 23 35 Germany 6 7 13 USA 16 6 22 The Netherlands 2 0 2 Switzerland 2 0 2 United Kingdom 7 3 10 Denmark 0 1 1 Total subsidiaries 45 40 85 Total Group 46 40 86 The number of employees in the tables above represents average full-time equivalents. At the end of the nancial year, the Board of Directors was composed of 4 (4) men and 1 (1) woman. The management comprised 6 (6) men and 3 (3) women. 2021 2020 GROUP Board & CEO Other employees Board & CEO Other employees Salary and other compensation Parent company 5 548 0 6 915 0 Subsidiaries 0 98 813 0 93 955 Total 5 548 98 813 6 915 93 955 NOTE 10 SALARY, OTHER COMPENSATION AND SOCIAL SECURITY BONESUPPORT HOLDING AB ANNUAL REPORT 2021 53 NOTES NOT E 11 COMPENSATION TO SENIOR EXECUTIVES AND RELATED PARTY TRANSACTIONS Compensation to Chairman of the Board, Board of Directors and Senior Executives, Group 2021 2020 Salaries, fees Social security Share-based compensation Salaries, fees Social security Share-based compensation Lennart Johansson¹ Chairman of the Board 400 -53 550 409 526 28 Håkan Björklund Director 157 49 0 195 61 0 Lars Lidgren Director 135 14 0 146 15 0 Björn Odlander Director 157 49 0 170 54 0 Tone Kvåle¹ Director 247 -13 27 268 214 28 Simon Cartmell Director until November 19, 2020 0 0 0 211 -118 -84 Emil Billbäck¹ CEO 4 228 840 1 127 5 700 4 206 1 137 Other senior executives¹ 8 (8) persons 14 901 3 842 1 161 12 359 4 131 1 155 Compensation to the Board of Directors in the table above, excluding the share- based compensations, are fees that have been paid during 2021. In Note 10, fees expensed regarding 2021 are reported. Accrued board fees amount to SEK 906 thousand (683). The guidelines for remuneration to senior executives adopted at the Annual General Meeting 2021 are described in the Director’s report and the Corporate Governance Report. Bonus to the CEO is included in salaries and fees and amounts to SEK 965 thousand (2,527) and to other senior executives to SEK 1,650 thousand (1,121). For the current CEO and other senior executives, the company pays pension premiums, with the exception of one manager, who administers this himself. The payments are made according to a scheme where 7 percent is calculated on salaries up to 7.5 of the current price base, 24 percent on price base between The amounts in the table do not include share-based remuneration. These are included in Note 11. Social security costs include social security costs on employee stock option benets. Social security all employees 2021 2020 Parent company 1 321 2 365 (of which pension cost) (267) (253) Subsidiaries 22 038 21 975 (of which pension cost) (7 062) (6 035) Total 23 359 24 340 (of which pension cost) (7 329) (6 288) NOTE 10, CONT’D SALARY, OTHER COMPENSATION AND SOCIAL SECURITY Compensation to the CEO is decided by the Board of Directors on a proposal from the remuneration committee. The guidelines that were adopted 2021 and that described on page 69, apply until further notice. Senior executives during the year consisted of the CEO and an additional 8 (8) persons. On December 31, 2021 the number of senior executives was 9 (9) including the CEO. For the group management, market conditions apply to salaries and other employment benets, which are approved by the remuneration committee. Most employees have individual, variable bonus systems with measurable goals. Follow-up and evaluation is done quarterly or yearly. The CEO’s agreement can be terminated by either party with a notice period of 6 (6) months. In case of termination on the part of the company, a severance pay of 12 (12) months salary (and benets and average bonus for the last three years will be paid). Other senior executives’ contracts have notice periods of up to 6 (6) months. 7.5-20 and 16 percent on price base between 20-30. The pension schemes are dierent since the senior executives, excluding the CEO, are based in 4 (4) dierent countries. Pension premiums relating to the CEO were paid at SEK 267 thousand (253) and premiums to other senior executives were paid at SEK 1,531 thousand (1,080). Members of the Board have not received any pension. During 2018, BONESUPPORT signed a consultancy agreement with the previous Board Director Simon Cartmell’s company Route 2 Advisors Ltd. SEK 61 thousand (407) has been paid during the year. The agreement was terminated during the rst quarter of 2021. BONESUPPORT has reimbursed board member Björn Odlander for travel expenses of SEK 0 thousand (9) through the company Odlander, Fredrikson & Co AB. 1. The social security for these persons includes change in the liability for social security contributions for active incentive programs. 54 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES NOTE 12 EMPLOYEE STOCK OPTION PROGRAMS AND PERFORMANCE SHARE PROGRAMS VALUATION - PERFORMANCE SHARE PROGRAM EMPLOYEES 2021/2023 Jul 12, 2021 Dividend - Expected volatility 40% Interest rate -0.28% Valuation of the share (SEK) 71.74 Valuation model Black & Scholes/Monte Carlo VALUATION - PERFORMANCE SHARE PROGRAM BOARD 2021/2023 Jul 12, 2021 Dividend - Expected volatility 40% Interest rate -0.26% Valuation of the share (SEK) 71.74 Valuation model Black & Scholes/Monte Carlo VALUATION - PERFORMANCE SHARE PROGRAM EMPLOYEES 2020/2023 Dec 16, 2020 Dividend - Expected volatility 35% - 40% Interest rate -0.23% - -0.39% Valuation of the share (SEK) 39. 61 Valuation model Black & Scholes/Monte Carlo VALUATION - PERFORMANCE SHARE PROGRAM EMPLOYEES 2019/2022 Dec 10, 2019 Dividend - Expected volatility 35% Interest rate -0.32% - -0.57% Valuation of the share (SEK) 27.10 Valuation model Black & Scholes/Monte Carlo VALUATION - PERFORMANCE SHARE PROGRAM EMPLOYEES 2018/2021 Nov 7, 2018 Dividend - Expected volatility 35% Interest rate -0.21% Valuation of the share (SEK) 10.17 Valuation model Black & Scholes/Monte Carlo VALUATION - PERFORMANCE SHARE PROGRAM BOARD 2018/2021 Jun 20, 2018 Dividend - Expected volatility 35% Interest rate -0.21% Valuation of the share (SEK) 10.17 Valuation model Black & Scholes/Monte Carlo At the year end, there are three dierent employee stock option programs and six performance share programs. Employee stock option programs Of the three employee stock option programs, two run over ten years and expire 2022 and 2025 and one program runs over eight years and expires 2024. Each stock option gives the holder the right to acquire 0.2 ordinary share in BONESUPPORT when exercising the option. This at a price of 0.125 SEK, equivalent to 0.625 SEK per share, in the rst two programs and 5.30 SEK, equivalent to 26.50 SEK per share, in the third program. The employee stock options are vested according to a schedule in each program. A condition for allotment of options is employment or a contractual relationship with the company at each vesting date. Of the allocated 25.7 million options, 21.6 million (21.6) options were fully vested before the end of the year. Performance share programs There are four programs for newly recruited employees and two programs for two Directors. The programs run as follows with the below end dates: - The program for employees decided at the annual general meeting in 2018 runs until 31 December 2021; - The program for two board members decided at the annual general meeting in 2018 runs until 31 December 2021; - The program for employees decided at the annual general meeting in 2019 runs until 31 December 2022; - The program for employees decided at the annual general meeting in 2020 runs until 31 December 2023; - The program for employees decided at the annual general meeting in 2021 runs until 31 December 2023; and - The program for two board members decided at the annual general meeting in 2021 runs until the date of the annual general meeting in 2024. In each program for employees decided at the annual general meetings in 2018, 2019 and 2020, each savings share gives the opportunity to be allotted to the employees a maximum of two, three or four performance shares with- out payment depending on share price development and the company’s development in terms of sales and EBITDA during the duration of the program. In the program for two board members decided at the annual general meeting in 2018, each savings share gives the opportunity to be allotted a maximum of two performance shares without payment depending on share price develop- ment. The performance shares were issued in the form of class C-shares with a subscription price and quota value of SEK 0.625 per share. In the program for employees decided at the annual general meeting in 2021, each savings share gives the opportunity to be allotted a maximum of six performance shares without payment depending on share price development and the company’s development in terms of sales and EBITDA during the duration of the program. In the program for two board members decided at the annual general meeting in 2021, each savings share gives the opportunity to be allotted a maximum of three performance shares without payment depending on share price development. The annual general meeting in May 2021 authorized the board to enter a share swap-agreement with a third party bank to full the company’s commitments under the incentive programs LTI 2021 and LTI 2021 Board and to secure social security charges for these programs. The mandate wasexercisedduring the third quarter. Employee stock options and performance shares are valued at fair value at the date of allocation. The total cost is distributed over the vesting period. At the end of the vesting period, a reduction in sta turnover is assumed, which entails an increased cost. The cost is accounted for as personnel cost and is credited to equity. The social security cost is revalued at fair value. When the options are exercised, the company issues new shares. Payments received on behalf of the shares issued are credited to equity. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 55 NOTES VALUATION - EMPLOYEE STOCK OPTION PROGRAM 2012/2022 Jan 1, 2012 Dividend - Expected volatility 40% Interest rate 0% Subscription price (SEK) - recalculated after share consolidation 5:1 0.625 Valuation model Black & Scholes VALUATION - EMPLOYEE STOCK OPTION PROGRAM 2016/2024 Nov 9, 2016 Dividend - Expected volatility 50% Interest rate 0% Subscription price (SEK) - recalculated after share consolidation 5:1 26.50 Valuation model Black & Scholes CHANGES DURING THE YEAR (NUMBER) - PERFORMANCE SHARE PROGRAMS 2021 2020 Outstanding at January 1 1 195 000 1 225 000 Granted during the year 606 000 110 000 Cancelled during the year -10 000 -140 000 Outstanding at December 31 1 791 000 1 195 000 Exercisable at December 31 227 134 0 CHANGES DURING THE YEAR (NUMBER) - EMPLOYEE STOCK OPTION PROGRAM 2016/2024 2021 2020 Outstanding at January 1 499 062 2 210 112 Adjustment during the year 50 000 0 Cancelled during the year 0 -169 167 Exercised during the year -96 771 -1 541 883 Outstanding at December 31 452 291 499 062 Exercisable at December 31 452 291 456 353 CHANGES DURING THE YEAR (NUMBER) - EMPLOYEE STOCK OPTION PROGRAM 2012/2022 2021 2020 Outstanding at January 1 981 125 2 766 908 Cancelled during the year 0 -25 000 Exercised during the year -100 000 -1 760 783 Outstanding at December 31 881 125 981 125 Exercisable at December 31 881 125 981 125 Weighted average exercise price for the options that were exercised during the year was SEK 2.67 (0.63) per share. The expected maturity of the options is based on current expectations and is not necessarily an indication of future actual exercising. The valuation of the share is based on the latest issue price and is xed. The total cost will change as social security is calculated on the fair value and a new fair value calculation is made quarterly. Volatility, at end of period 40 percent (40), is a conservative valuation of market risk and is based on peer group data due to the share being traded a limited period of time. During 2021, the cost of employee stock option plans, excluding social security contributions, was recognized as operating expense amounting to SEK 7,365 thousand (3,729). For information about the part that regards Board Members and the management team, see Note 11. The social security contributions amounted to a reduced expense of SEK 1,810 thousand, compared to an expense of SEK 4,926 thousand previous year. Liability for social security contributions amounts to SEK 6,290 thousand (8,100). GROUP PARENT COMPANY 2021 2020 2021 2020 Exchange rate gains 10 253 10 616 121 1 642 Government refunds relating to COVID-19 348 558 0 0 Other 707 1 014 0 0 Total 11 308 12 188 121 1 642 NOTE 13 OTHER OPERATING INCOME GROUP PARENT COMPANY 2021 2020 2021 2020 Exchange rate losses 6 697 13 544 1 659 331 Other 7 3 0 0 Total 6 704 13 547 1 659 331 NOTE 14 OTHER OPERATING EXPENSES NOTE 15 FINANCIAL ITEMS PARENT COMPANY 2021 2020 Interest income, group 5 565 4 624 Interest expenses, group -1 272 -966 Net nancial items 4 293 3 658 NOTE 16 INCOME TAX GROUP The following components are included in the tax expense of the year: 2021 2020 Current tax on loss for the year -3 636 -2 630 Adjustment of taxes attributable to previous years -58 219 Current tax expense -3 694 -2 411 Deferred tax related to changes in temporary dierences 0 0 Reported tax -3 694 -2 411 Reconciliation between reported tax and tax expense based on applicable tax rate: 2021 2020 Loss before income tax -81 837 -99 000 Tax according to the applicable tax rate 20.6% (21.4) 16 858 21 186 Dierence between Swedish and foreign tax rates -721 -540 Non tax-deductible items -5 771 -918 Non taxable income 0 232 Costs that are to be deducted but which are not included in the reported result 0 3 454 Current tax attributable to prior years -58 219 Loss carry forward for which no deferred tax asset has been recognized -14 002 -26 044 Tax expense for the year -3 694 -2 411 56 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES Changes in inventory are classied as cost of sales and amount to a negative cost of SEK 176 thousand (negative cost of 2,200). Impairment write-down of inventory to net realizable value due to products with short durability or other impairment risk, amounts to SEK 15 thousand (0). This is done as the net sale value is lower than the acquisition value. NOTE 17 INVENTORIES GROUP Dec 31, 2021 Dec 31, 2020 Opening accumulated acquisition value 6 949 6 824 Investments for the year 2 608 346 Translation dierence 163 -221 Closing accumulated acquisition value 9 720 6 949 Opening accumulated depreciation -3 786 -2 624 Depreciation for the year -1 207 -1 343 Translation dierence -153 181 Closing accumulated depreciation -5 146 -3 786 Closing book value 4 574 3 163 NOTE 19 EQUIPMENT AND TOOLS PARENT COMPANY Dec 31, 2021 Dec 31, 2020 Opening accumulated acqusition value 1 129 438 1 024 438 Shareholders' contribution 125 000 105 000 Closing accumulated acquisition value 1 254 438 1 129 438 Opening accumulated write-down -297 786 -297 786 Closing accumulated write-down -297 786 -297 786 Closing book value 956 652 831 652 NOTE 20 PARTICIPATIONS IN GROUP COMPANIES GROUP Capitalized development expenses: Dec 31, 2021 Dec 31, 2020 Opening accumulated acquisition value 15 087 13 561 Disposals for the year 0 -787 Investments for the year 808 2 313 Closing accumulated acquisition value 15 896 15 087 Opening accumulated amortization -8 972 -8 936 Disposals for the year 0 787 Amortization for the year -955 -823 Closing accumulated amortization -9 927 -8 972 Closing book value 5 968 6 115 NOTE 18 INTANGIBLE ASSETS Patents: Dec 31, 2021 Dec 31, 2020 Opening accumulated acquisition value 3 283 3 283 Investments for the year 0 0 Closing accumulated acquisition value 3 283 3 283 Opening accumulated amortization -558 -229 Amortization for the year -328 -329 Closing accumulated amortization -886 -558 Closing book value 2 397 2 725 PARENT COMPANY Reported tax expense: 2021 2020 Tax expense of the year 0 0 Reconciliation between reported tax and tax expense based on applicable tax rate: 2021 2020 Loss before income tax -3 141 -3 122 Tax according to the applicable tax rate 20.6% (21.4) 647 668 Non tax-deductible items -6 -2 Costs that are to be deducted but which are not included in the reported result 0 3 454 Loss carry forward for which no deferred tax asset has been recognized -641 -4 120 Tax expense for the year 0 0 The parent company's prevailing tax rate is 20.6 percent (21.4). Reported tax expense relate to foreign subsidiaries, mainly the U.S. company that reports positive result before tax. Tax eect from non-deductible costs primarily relates to intercompany prot in inventory and costs for employee stock option programs. No tax is reported in the comprehensive income or directly against equity. The group’s total loss carry forwards as per December 31, 2021 amount to approximately SEK 1,081 million (1,013) whereof SEK 117 million (114) refers to the parent company. The tax loss carry forwards have no xed maturity. Deferred tax assets attributable to the loss carry forward has been valued at zero as it is currently not possible to assess when tax losses carry forwards can be utilized. Despite of the positive development at the present, the probability of the company recognizing prots during the near future is small. When the outlook for this is dierent, the company will consider if there are compelling reasons to recognize a deferred tax asset. NOTE 16, CONT’D INCOME TAX BONESUPPORT HOLDING AB ANNUAL REPORT 2021 57 NOTES Share of equity % Number of shares Book value Dec 31, 2021 Book value Dec 31, 2020 Corporate reg. no. Registered oce BONESUPPORT AB 100 1 000 956 652 831 652 556800-9939 Lund SUBSIDIARIES OF BONESUPPORT AB: Share of equity % Number of shares Book value Dec 31, 2021 Book value Dec 31, 2020 Corporate reg. no. Registered oce BONESUPPORT Inc. 100 100 69 69 98-0539754 Delaware BONESUPPORT GmbH 100 1 000 0 0 HRB 80228 Frankfurt BONESUPPORT BV 100 18 000 183 183 34377023 Amsterdam BONESUPPORT Switzerland GmbH 100 20 000 171 171 CHE-474.771.411 Zürich BONESUPPORT UK Ltd 100 1 0 0 10352673 London BONESUPPORT ApS 100 500 69 69 40081135 Kongens Lyngby BONESUPPORT, S.L.U. 100 3 500 36 36 B67244988 Barcelona BONESUPPORT SRL 100 10 000 102 0 11708750960 Milano BONESUPPORT Incentive AB 100 100 000 840 840 556739-7780 Lund NOTE 21 TRADE RECEIVABLES AND OTHER RECEIVABLES GROUP PARENT COMPANY Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Trade receivables 38 413 32 108 0 0 Other receivables 6 126 5 317 172 067 132 427 Total 44 539 37 425 172 067 132 427 Other receivables above refer to: Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Receivables on group companies 0 0 172 020 132 427 VAT receivable 2 247 2 021 0 0 Tax receivable 1 269 334 47 0 Other nancial receivables 514 436 0 0 Other 2 097 2 526 0 0 Total 6 126 5 317 172 067 132 427 Group's trade receivables per currency: Dec 31, 2021 Dec 31, 2020 USD 21 944 17 932 EUR 7 284 5 664 GBP 6 311 4 428 DKK 1 095 1 803 SEK 964 1 205 CHF 690 1 076 CAD 125 0 Total 38 413 32 108 No provision for expected credit losses have been made for other receivables since it is considered immaterial. Receivables on group companies are tested for impairment together with shares in group companies. The four largest customers represent 10 percent (13) of total trade receivables. The single largest customer represents 4 percent (5). GROUP Credit risk exposure: Dec 31, 2021 Dec 31, 2020 Trade receivables not past due, gross amounts 23 663 19 176 Expected credit loss 0 0 (Expected credit loss, %) 0% 0% Trade receivables past due, gross amounts 14 844 13 001 Expected credit loss -94 -69 (Expected credit loss, %) 1% 1% Total trade receivables 38 413 32 108 Credit risk exposure, per credit rating: Dec 31, 2021 Dec 31, 2020 Low 38 413 32 108 Medium 0 0 High 94 69 Credit risk provision -94 -69 Total carrying amount 38 413 32 108 Principles for measurement of expected credit losses are described in Note 1. Changes in credit risk provision: 2021 2020 As of January 1 69 930 Provision for bad debts 22 69 Reversal of previous provisions for bad debts 0 -833 Recovery of provision for bad debts 0 -97 Translation dierence 3 -1 As of December 31 94 69 NOTE 20, CONT’D PARTICIPATIONS IN GROUP COMPANIES The group’s customers are mainly hospitals and clinics. Credit risk is considered low for the vast majority of customers. The group shows a history of very low realised credit losses. Due date for trade receivables past due but not written o: Dec 31, 2021 Dec 31, 2020 Less than 1 month 7 653 5 521 1-3 months 3 649 4 668 More than 3 months 3 448 2 743 Total 14 750 12 932 58 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES GROUP PARENT COMPANY Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Prepaid expenses Prepaid insurance 1 291 1 138 533 513 Other prepaid expenses 1 928 2 221 127 120 Total 3 219 3 359 660 633 Deferred income Deferred income 2 492 1 299 0 0 Total 2 492 1 299 0 0 Accrued expenses Accrued social security contributions for employee stock options 6 290 8 100 2 781 3 416 Accrued bonus including social security contributions 8 903 8 234 1 218 1 572 Accrued holiday pay including social security contributions 5 667 5 555 516 622 Other accrued social security contributions 1 825 1 525 386 361 Accrued pension 1 272 1 822 65 61 Accrued board fees 906 683 906 683 Accrued audit expenses 812 800 435 260 Accrued expenses for received goods 578 654 0 0 Accrued consultancy expenses 493 987 0 10 Other accrued expenses 3 437 2 511 25 94 Total 30 183 30 871 6 332 7 079 NOTE 22 ACCRUALS AND PREPAID ITEMS NOTE 24 PROVISIONS The group has capitalized direct pensions that has been presented net in the balance sheet. Payroll tax relating to the pensions has been recorded as a provision. 2021 2020 As of January 1 329 305 Re evaluation 34 24 As of December 31 363 329 NOTE 23 SHARE CAPITAL AND EARNINGS PER SHARE Total number of shares, quotient value 0.625 SEK (0.625) 65 454 672 Number of shares December 31, 2019 52 521 342 Share issue, C-shares 730 000 Share issue, ordinary shares 10 500 000 Conversion of employee stock options 660 532 Conversion of warrants 587 348 Number of shares December 31, 2020 64 999 222 Share issue, C-shares 55 000 Conversion of employee stock options 39 354 Conversion of warrants 361 096 Number of shares December 31, 2021 65 454 672 Number of votes 64 293 672 EARNINGS PER SHARE - BEFORE DILUTION Earnings per share before dilution is calculated using the following results and number of shares: 2021 2020 Loss for the year, SEKt -85 531 -101 412 Weighted average number of shares, thousands 63 999 59 081 Earnings per share before dilution, SEK -1.34 -1.72 The total number of shares at the end of the year is 65,454,672 (64,999,222) of which 64,164,672 (63,764,222) are ordinary shares and 1,290,000 (1,235,000) are series C-shares. The share capital amounts to SEK 40,909 thousand (40,625). During 2021, 39,354 (660,532) shares were issued from exercise of employee stock options. EARNINGS PER SHARE AFTER DILUTION BONESUPPORT has in total 266,685 (657,135) potential shares in form of employee stock options. Of the number of potential shares as of end 2021, 0 (361,096) are warrants. As the result is negative, dilution does not aect earnings per share. SHARE SWAP In accordance with a resolution from the 2021 Annual General Meeting, BONESUPPORT’s Board of Directors in 2021 has used the authorization to enter into a share swap agreement with a third party in order to ensure the company’s delivery of performance shares to participants in the long-term incentive programs decided by the AGM, and to hedge such expenses as social security contributions, from a cash ow perspective. A total of 786,000 shares have been hedged to an average value of SEK 79.30 per share, a total of SEK 62,333 thousand. The share swap is an instrument in which the company pays an amount in advance to a counterparty for the right to receive the fair value of a certain number of its shares in cash at a given time. The agreement has aected the group’s cash ow with an outow of SEK 62,333 thousand. The payment was made on July 22, 2021. In the group, the transaction has been recognized in line with the acquisition of own shares and the transaction has thus been reported at acquisition value in unrestricted equity. As it is BONESUPPORT AB that has entered into the agreement, BONESUPPORT Holding AB reports the amount as a non-current receivable from subsidiaries instead of against restricted equity. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 59 NOTES NOTE 25 CLASSIFICATION OF FINANCIAL INSTRUMENTS The group’s nancial assets and liabilities valued at amortized cost: Dec 31, 2021 Dec 31, 2020 Financial assets: Trade receivables 38 413 32 108 Other receivables 514 436 Cash and cash equivalents 206 464 353 737 Financial liabilities: Leasing debt 21 422 10 480 Trade payables 18 719 12 680 Accrued expenses 6 349 5 636 The parent company’s nancial assets and liabilities: Dec 31, 2021 Dec 31, 2020 Financial assets: Participations in group companies 956 652 831 652 Receivables on group companies 172 020 132 427 Cash 181 275 338 114 Financial liabilities: Trade payables 141 550 Accrued expenses 1 368 1 047 NOTE 26, CONT’D LEASING All nancial liabilities are valued at amortized cost. The fair value of nancial assets and liabilities is estimated to be in accordance with the booked value due to the short maturity. The parent company values all nancial assets except participations in group companies at amortized cost. Accrued expenses are specied in Note 22. For information on interest income on nancial assets, see Note 15. Losses on nancial assets, recognized in the income statement as credit losses are described in Note 21. The right of use assets and the leasing debt and how their book values have changed during the year is summarized below: NOTE 26 LEASING The group has lease agreements with Första Fastighets AB IDEON (Wihlborgs) in Sweden and John Hancock Life Insurance Company/John Hancock Life & Health Insurance Company in the U.S. for the lease of oce and warehouse space. During the year, the group has extended its agreement with Första Fastighets AB IDEON with another ve years, until the end of August 2027. In addition to the agreements relating to premises, the group has contracts with a number of suppliers for car leasing and a leasing contract with ATEA regarding the rental of computers and other IT equipment. All items are used in the company’s daily operations. The lease period for premises extends between three and ve years, for cars between three and four years and for computers and other IT equipment for three years. The terms of the agreement are market-based and none of the contracts require the group to maintain any nancial key gures. No leasing contracts last longer than ve years. GROUP - RIGHT OF USE ASSETS Buildings Cars Equipment Total Acquisition value Opening accumulated acquisition value January 1, 2020 12 571 3 202 306 16 079 New leasing objects 3 753 2 150 1 522 7 425 Terminated agreements -119 -99 0 -218 Closing accumulated acquisition value December 31, 2020 16 205 5 253 1 828 23 286 Opening accumulated acquisition value January 1, 2021 16 205 5 253 1 828 23 286 Re evaluation of agreement 13 847 -258 10 13 599 New leasing objects 0 585 485 1 070 Terminated agreements -6 841 -2 050 -22 -8 913 Translation dierence 825 58 0 883 Closing accumulated acquisition value December 31, 2021 24 036 3 588 2 301 29 925 Depreciation for the year Opening accumulated depreciation value January 1, 2020 -4 339 -1 253 -102 -5 694 Terminated agreements 119 99 0 218 Depreciation for the year -3 879 -1 726 -365 -5 970 Closing accumulated depreciation December 31, 2020 -8 099 -2 880 -467 -11 446 Opening accumulated depreciation value January 1, 2021 -8 099 -2 880 -467 -11 4 46 Terminated agreements 6 842 1 921 22 8 785 Depreciation for the year -3 905 -1 268 -613 -5 786 Translation dierence 834 196 -4 1 026 Closing accumulated depreciation December 31, 2021 -4 328 -2 031 -1 062 -7 421 Closing book value Closing book value December 31, 2020 8 106 2 373 1 361 11 840 Closing book value December 31, 2021 19 708 1 557 1 239 22 504 60 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 NOTES NOTE 28 ITEMS NOT INCLUDED IN THE CASH FLOW GROUP - ITEMS NOT INCLUDED IN CASH FLOW 2021 2020 Depreciation regarding right of use assets 5 786 5 970 Other depreciation and amortization 2 490 2 495 Costs for employee incentive programs 7 365 3 729 Unrealized exchange rate dierences -8 293 8 531 Write-down on trade receivables 74 32 Other -665 24 Total 6 757 20 781 NOTE 29 EVENTS AFTER THE CLOSING DAY NOTE 26, CONT’D LEASING NOTE 27 PLEDGED SECURITIES AND CONTINGENT LIABILITIES PLEDGED SECURITIES The U.S. subsidiary BONESUPPORT Inc. has provided a guarantee for its rented facilities of USD 56 thousand (56), corresponding to SEK 506 thousand (460). The parent company guarantees a corresponding amount. BONESUPPORT AB has capital-invested direct pensions amounting to SEK 979 thousand (979). The parent company has pledged collateral amounting to the corresponding amount. At the end of 2021 and 2020, the group and the parent company had no other contingent liabilities. The war in Ukraine has created unrest and insecurity in the world. The business impact is dicult to predict, but higher shipping costs and higher prices for input goods are likely eects under prevailing market conditions. NOTE 30 PROPOSAL FOR APPROPRIATION PARENT COMPANY SEK Unrestricted equity in the parent company Dec 31, 2021 Dec 31, 2020 Share premium reserve 1 563 670 389 1 557 639 419 Retained earnings -333 110 703 -329 954 292 Net loss for the year -3 141 005 -3 122 036 Total 1 227 418 682 1 224 563 092 The Board of Directors propose that the share premium reserve, retained earnings and net loss for the year should be carried forward. The proposal will be presented at the Annual General Meeting on May 19, 2022. The amounts with which leasing has been reported in the income statement are as follows: GROUP 2021 2020 Depreciation right of use assets 5 786 5 970 Interest expense for leasing debt 1 038 437 Total 6 824 6 407 The parent company is not engaged in any lease contracts. Leasing is included in the group’s total cash ow with SEK 1,038 thousand (437) regarding interest payments and SEK 6,546 thousand (5,509) regarding repayment of borrowings. GROUP - LEASING DEBT 2021 2020 Opening balance 10 480 0 Re evaluation of agreement 13 847 0 Debt for new leasing objects 835 7 426 Disposal -130 0 Repayment of debt -5 509 -7 768 Interest expense 1 038 437 Translation dierence 861 0 Closing balance 21 422 10 480 of which non-current leasing debt 16 152 5 622 of which current leasing debt 5 270 4 858 When calculating the liability of remaining payments, an interest rate of 6 percent (6) has been applied as discount rate. As the group has no external loans, the marginal borrowing rate has been based on discussions with the group’s main bank. After discussing with the external lenders, a reasonable borrowing rate for a real estate loan has been evaluated. A development company carries a high risk premium why 6 percent has been considered reasonable. The group’s leasing debts have the following, undiscounted maturities: GROUP - LEASING DEBT PER MATURITY Dec 31, 2021 Dec 31, 2020 Within one year 6 686 6 321 Between one and two years 6 213 4 947 Between two and three years 4 315 2 340 Between three and four years 3 262 1 053 Between four and ve years 3 250 0 Between ve and six years 2 437 0 Sum 26 163 14 661 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 61 THE BOARD’S ASSURANCE Lund April 13, 2022 Lennart Johansson Chairman of the Board Håkan Björklund Board member Tone Kvåle Board member Lars Lidgren Board membert Björn Odlander Board member Emil Billbäck CEO Our audit report was delivered on April 13, 2022 Ernst & Young AB Ola Larsmon Authorized Public Accountant The Board of Directors and the CEO assure that the consolidated accounts have been prepared in accordance with international accoun- ting standards IFRS as adopted by the EU and give a true and fair view of the group’s position and results. The Annual report has been prepared in accordance with generally accepted accounting standards and gives a true and fair view of the parent company’s position and results. The Annual report of the group and the parent company gives a true and fair view of the development and the group’s and the parent com- pany’s operations, position and results, and describes signicant risks and uncertainties facing the parent company and the companies that are part of the group. THE BOARD’S ASSURANCE 62 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 AUDITOR’S REPORT REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS Opinions We have audited the annual accounts and consolidated accounts of BONESUPPORT HOLDING AB (publ) for the year 2021. The annual accounts and consolidated accounts of the company are included on pages 27-61 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the nancial position of the parent company as of 31 December 2021 and its nancial performance and cash ow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the nancial position of the group as of 31 December 2021 and their nancial performance and cash ow for the year then ended in accordance with International Finan- cial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent com- pany and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company’s audit committee in accor- dance with the Audit Regulation (537/2014) Article 11. Basis for Opinions We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fullled our ethical respon- sibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been pro- vided to the audited company or, where applicable, its parent company or its controlled companies within the EU. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinions. KEY AUDIT MATTERS Key audit matters of the audit are those matters that, in our professional judgment, were of most signicance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fullled the responsibilities described in the Auditor’s respon- sibilities for the audit of the nancial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the nancial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying nancial statements. AUDITOR’S REPORT TO THE GENERAL MEETING OF THE SHAREHOLDERS OF BONESUPORT HOLDING AB PUBL, CORPORATE IDENTITY NUMBER 5568022171 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 63 AUDITOR’S REPORT Revenue recognition Other Information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-26, 67 and 72-76. The remuneration report for the nancial year 2020, which will be issued after the date of this auditor’s report, also constitutes other information. The Board of Directors and the Managing Director are responsible for this other information. Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identied above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, con- clude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Description Net sales for 2021 amounts to KSEK 212.885 in the consolidated income statement. The revenue recognition principles are descri- bed in Note 1. Revenues are reported based on the compensation expected to be received by the group in exchange for transfer of promised goods or services to a customer, exclusive of any amounts collected on behalf of third parties (such as sales taxes), at the point at which the control over the good has transferred to the custo- mer. The revenues arise primarily from one revenue stream, sales of goods, via three channels with dierent sales conditions; sales in the United States with a combination of sales entity and distri- butors, direct sales in six countries/regions in Europe and sales via distributors on all other markets. We have thus considered revenue recognition to represent a key audit matter. A description of the principles for revenue recognition is included in Note 1 and information on operating segments in Note 4. How our audit addressed this key audit matter We have evaluated the company’s revenue recognition process through our audit. Amongst other we have tested the company’s recorded revenue transactions, audited credit notes and accounts receivable, performed data analytics and performed analytical review procedures. Moreover, we have analyzed sales compared to the prior year and movements in the recorded revenues compared to expectations, audited customer agreements, conducted sample tests on accruals at nancial statement closing and conducted tests of incoming payments. We have audited disclosures in the annual report. Shares in subsidiaries Description The carrying amount of shares in subsidiaries per 31 December 2021 amounts to KSEK 956.652 in the parent company’s balance sheet, which corresponds to 73% of total assets in the parent company. The company annually and at indication of impairment that repor- ted values do not exceed the estimated recoverable amount. The recoverable amount is determined by a present value calculation of future cash ows. Future cash ows are based on management’s forecasts and include a number of assumptions, including earnings, growth, investment needs and discount rates. Changes in assumptions have a major impact on the calculation of the recoverable amount and the assumptions applied by the com- pany may therefore be of major importance for the assessment of impairment. We have therefore considered the reporting of shares in subsidiaries as a key audit matter. A description of the impairment test is included in the section on assessments, estimates and assumptions in Note 3 and information about shares in subsidiaries is included in Note 20. How our audit addressed this key audit matter In our audit we have evaluated and tested the company’s process for establishing impairment tests, amongst other by evaluating accuracy in previous forecasts and assumptions. We have also made comparisons with other companies to evaluate the fairness of future cash ows and growth assumptions, and with the help of our valua- tion specialists evaluated the applied discount rate and assumptions about long-term growth. Moreover, we have examined the model and method for carrying out impairment test. We have audited disclosures in the annual report. 64 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 AUDITOR’S REPORT When we read the remuneration report, if we conclude that there is a material misstatement therein, we are required to communicate the matter with the Board of Directors and require a correction. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accor- dance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assess- ment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so. The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s nancial reporting process. Auditor’s responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Miss- tatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sucient and appropriate to provide a basis for our opinions. The risk of not detecting a material missta- tement 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 the company’s internal control relevant to our audit in order to design audit procedures that are appropri- ate in the circumstances, but not for the purpose of expressing an opinion on the eectiveness of the company’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director. - Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or con- ditions that may cast signicant doubt on the company’s and the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolida- ted accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclo- sures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sucient and appropriate audit evidence regarding the nancial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions. We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of signi- cant audit ndings during our audit, including any signicant decien- cies in internal control that we identied. We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding inde- pendence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or related safe- guards applied. From the matters communicated with the Board of Directors, we deter- mine those matters that were of most signicance in the audit of the annual accounts and consolidated accounts, including the most impor- tant assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter. BONESUPPORT HOLDING AB ANNUAL REPORT 2021 65 AUDITOR’S REPORT REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Report on the audit of the administration and the proposed appropriations of the company’s prot or loss Opinions In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of BONESUPPORT HOLDING AB (publ) for the year 2021 and the proposed appropriations of the com- pany’s prot or loss. We recommend to the general meeting of shareholders that the prot be appropriated (loss be dealt with) in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the nancial year. Basis for opinions We conducted the audit in accordance with generally accepted audi- ting standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise ful- lled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinions. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company’s prot or loss. At the proposal of a dividend, this inclu- des an assessment of whether the dividend is justiable considering the requirements which the company’s and the group’s type of operations, size and risks place on the size of the parent company’s and the group’s equity, consolidation requirements, liquidity and position in general. The Board of Directors is responsible for the company’s organization and the administration of the company’s aairs. This includes among other things continuous assessment of the company’s and the group’s nancial situation and ensuring that the company’s organization is designed so that the accounting, management of assets and the com- pany’s nancial aairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration accor- ding to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulll the company’s accounting in accordance with law and handle the management of assets in a reassuring manner. Auditor’s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect: - has undertaken any action or been guilty of any omission which can give rise to liability to the company, or - in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. Our objective concerning the audit of the proposed appropriations of the company’s prot or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted audi- ting standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appro- priations of the company’s prot or loss are not in accordance with the Companies Act. As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional skepticism throughout the audit. The examination of the administration and the proposed appropriations of the company’s pro- t or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the exami- nation on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstan- ces that are relevant to our opinion concerning discharge from liability. As a basis for our opinion on the Board of Directors’ proposed app- ropriations of the company’s prot or loss we examined whether the proposal is in accordance with the Companies Act. The auditor’s examination of the ESEF report Opinion In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolida- ted accounts in a format that enables uniform electronic reporting (the Esef report) pursuant to Chapter 16, Section 4(a) of the Swedish Secu- rities Market Act (2007:528) for BONESUPPORT HOLDING AB (publ) for the nancial year 2021. Our examination and our opinion relate only to the statutory require- ments. In our opinion, the ESEF report #[checksum] has been prepared in a for- mat that, in all material respects, enables uniform electronic reporting. Basis for opinion We have performed the examination in accordance with FAR’s recom- mendation RevR 18 Examination of the ESEF report. Our responsibility 66 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 AUDITOR’S REPORT under this recommendation is described in more detail in the Auditors’ responsibility section. We are independent of BONESUPPORT HOL- DING AB (publ) in accordance with professional ethics for accountants in Sweden and have otherwise fullled our ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sucient and appro- priate to provide a basis for our opinion. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in accordance with Chapter 16, Sec- tion 4(a) of the Swedish Securities Market Act (2007:528), and for such internal control that the Board of Directors and the Managing Director determine is necessary to prepare the Esef report without material miss- tatements, whether due to fraud or error. Auditor’s responsibility Our responsibility is to obtain reasonable assurance whether the Esef report is in all material respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Mar- ket Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reaso- nable assurance that the Esef report is prepared in a format that meets these requirements. Reasonable assurance is a high level of assurance, but it is not a guaran- tee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of the Esef report. The audit rm applies ISQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and other Assurance and Related Services Engagements and accordingly maintains a compre- hensive system of quality control, including documented policies and procedures regarding compliance with professional ethical require- ments, professional standards and legal and regulatory requirements. The examination involves obtaining evidence, through various proce- dures, that the Esef report has been prepared in a format that enables uniform electronic reporting of the annual and consolidated accounts. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circum- stances, the auditor considers those elements of internal control that are relevant to the preparation of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the eectiveness of those internal controls. The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a technical validation of the Esef report, i.e. if the le containing the Esef report meets the technical specication set out in the Commission’s Delegated Regulation (EU) 2019/815 and a reconciliation of the Esef report with the audited annual accounts and consolidated accounts. Furthermore, the procedures also include an assessment of whether the Esef report has been marked with iXBRL which enables a fair and com- plete machine-readable version of the consolidated statement of nan- cial performance, nancial position, changes in equity and cash ow. Ernst & Young AB, Box 7850, 103 99 Stockholm, was appointed auditor of BONESUPPORT HOLDING AB (publ) by the general meeting of the shareholders on the 20 of May 2021 and has been the company’s auditor since the 22 April 2010. Malmö 13 April 2022 Ernst & Young AB Ola Larsmon Authorized Public Accountant BONESUPPORT HOLDING AB ANNUAL REPORT 2021 67 SHARE BONESUPPORT’S SHARE BONESUPPORT CLOSING PRICE VS INDEX BONESUPPORT has been listed on Nasdaq Stockholm since 21 June 2017 and from the beginning of 2021 on the Mid Cap segment. The company has ordinary shares (Class A shares) and class C-shares. During 2021, the number of shareholders increased by 1,477 to 7,454 (5,977). The highest share price in 2021 was SEK 86.80 and the lowest was SEK 34.90. The closing price on December 31, 2021 was SEK 44.00. SHARE CAPITAL AND NUMBER OF SHARES On December 31, 2021, the share capital amounted to SEK 40,909 thousand divided into 65,454,672 shares with an implied book value per share of SEK 0.625. SHARE TURNOVER In 2021, 95,628,67 shares were traded, representing an average turnover of SEK 20.8 million per trading day. OWNERSHIP At the end of 2021, BONESUPPORT had 7,454 (5,977) shareholders, with Swedish shareholders representing 71.55 percent of capital and 71.03 percent of votes. DIVIDEND AND DIVIDEND POLICY BONESUPPORT has so far not paid any dividends. Any future dividends and the size thereof will be determined on the basis of the company’s long term growth, earnings development and capital requirements, taking into account current targets and strategies. Avanza 11.0% HealthCap V LP 10.1% Swedbank Robur Fonder 6.3% Stiftelsen Industrifonden 5.8% Tredje AP-fonden 5.6% State Street Bank and Trust 4.9% Fjärde AP-Fonden 4.8% Övriga aktieägare 51.5% SHAREHOLDERS DECEMBER 31 2021 Övriga aktieägare Lundbeck 4AP Tellacq 3AP Robur Industrifonden HealthCap DEVELOPMENT NUMBER OF SHARES 2021 Date Event No. of shares December 31, 2020 Opening balance 64 999 222 January-December 2021 Conversion of options to shares 39 354 February 2021 Issue of C-shares 55 000 April 2021 Conversion of warrants to shares 361 096 December 31, 2021 Closing balance 65 454 672 Bonesupport OMX Stockholm PI Share turnover per wee k Källa: Web Financial Group 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Jan FebMar AprMay Jun Jul AugSep OctNov DecNo.SEK 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 0 10 20 30 40 50 60 70 80 90 100 110 120 130 0 10 20 30 40 50 60 70 80 90 100 110 120 130 68 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 CORPORATE GOVERNANCE REPORT BONESUPPORT HOLDING AB (publ) (”BONESUPPORT”) is a Swedish public limited company with its registered oce in Lund, Sweden. The company’s shares are listed on Nasdaq Stockholm and are traded under the ticker symbol BONEX. BONESUPPORT’s corporate governance is based on the applicable statutes, regulations, rules and recommenda- tions for stock-exchange listed companies, such as the Swedish Corpo- rate Governance Code (the ”Code”), Nasdaq Stockholm’s Rule Book for Issuers, BONESUPPORT’s Articles of Incorporation, and company-spe- cic rules and guidelines. For more information, refer to the compa- ny’s website www.bonesupport.com. During the 2021 nancial year, BONESUPPORT has applied the Code without any deviations. SHAREHOLDERS MEETING The Annual General Meeting, or, where applicable, an extraordinary meeting of shareholders, is the ultimate decision-making body of BONESUPPORT, in which all shareholders are entitled to participate. The AGM makes decisions on principle matters, for instance concerning amendments to the Articles of Incorporation, the election of Members of the Board of Directors and the auditor, adoption of the prot & loss statement and balance sheet, discharge from liability for Members of the Board of Directors and the Chief Executive Ocer (CEO), disposition of prots or losses, principles for the appointment of members of the Nomi- nation Committee, and guidelines for remuneration of senior executives. At the Annual General Meeting on May 20, 2021, 54 shareholders were represented, corresponding to holdings of 50 percent of the total number of shares and voting rights in the company. Advokat Hans Petersson, a lawyer, was elected as Chair of the AGM. At the Annual General Meeting 2021, resolutions were passed on, among other things, the determination of fees for the Board of Directors and the auditors, re-election of Håkan Björklund, Björn Odlander, Lars Lidgren, Tone Kvåle and Lennart Johansson as ordinary members, instructions and rules of procedure for the Nomination Committee, adoption of remuneration policy for senior executives, introduction of long term incentive pro- grams for employees, introduction of long term incentive programs for certain Board Members, and amendment of the Articles of Incorpora- tion. Lennart Johansson was elected Chairman of the Board. Ernst & Young AB were reappointed as auditor with authorized public accoun- tant Ola Larsmon as the auditor in charge. The Annual General Meeting 2022 will be held on Thursday, May 19, 2022. For further information concerning the Annual General Meeting, please visit BONESUPPORT’s website. All shareholders have the right to participate and vote for all their shares at the Annual General Meeting. For information concerning shares and voting rights, see the Directors’ Report, page 34 in the Annual Report. NOMINATION COMMITTEE According to the Code, the company is to have a Nomination Commit- tee, the duties of which shall include the preparation and drafting of proposals regarding the election of Members of the Board, the Chair- man of the Board, the Chair at the shareholders meetings and the audi- tor(s). The Nomination Committee shall also propose directors’ fees for Members of the Board and fees for the auditor(s). At the 2021 Annual General Meeting, it was resolved to adopt an Instruction and Rules of Procedure for the Nomination Committee, under which the Nomination Committee is to consist of four members representing the three largest shareholders as per the end of September, together with the Chairman of the Board. For information concerning ownership, see page 71 in the Annual Report or the company’s website www.bonesupport.com. In accordance with the adopted Instructions, a Nomination Commit- tee has been constituted in preparation of the 2022 Annual General Meeting consisting of Staan Lindstrand (Chair) representing Health- Cap V LP, Caroline Sjösten representing Swedbank Robur Fonder, and Jonas Brambeck representing Stiftelsen Industrifonden, along with the Chairman of the Board, Lennart Johansson. The composition of the Nomination Committee for the 2022 Annual General Meeting was publicly notied via a press release for the interim report for January – September on November 4, 2021. During 2021, the Nomination Committee held six meetings and had ongoing contact between the meetings. The Nomination Committee has complied with the Instructions adopted at the Annual General Meeting on May 20, 2021. In its work, the Nomination Committee has in its work applied Rule 4.1 of the Code as a diversity policy, whereby the Nomination Committee has taken into account that the Board of Directors, with regard to the company’s business activities, stage of development and circumstan- ces in general, shall be characterized by diversity and breadth with res- pect to members’ qualications, skills and expertise, experience and background, and that an even gender balance shall be strived for. The Nomination Committee’s ambition is that the gender balance will be equalized over time. EXTERNAL AUDIT The company’s auditor is appointed by the Annual General Meeting for the period until the end of the next following Annual General Meeting. The auditor examines the Annual Report with accompanying nancial statements, as well as the management by the Board of Directors and the CEO. Following each nancial year, the auditor shall submit an auditor’s report to the Annual General Meeting. Each year, the company’s auditor reports his/her observations from the audit to the Board of Directors. At the 2021 Annual General Meeting, Ernst & Young AB was re-appoin- ted as the company’s auditor with authorized public accountant Ola Larsmon as auditor in charge. It was also resolved at the Annual General Meeting that the fees to the auditor should be paid in accordance with the normal billing standards and on receipt of approved invoices. More information regarding the auditor’s fees can be found in Note 8 in the Annual Report. THE BOARD OF DIRECTORS After the Annual General Meeting, the Board of Directors is the com- pany’s highest decision-making body. The Board of Directors is respon- CORPORATE GOVERNANCE REPORT 2021 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 69 CORPORATE GOVERNANCE REPORT sible for the company’s organization and the management of the company’s aairs, for example by establishing targets and strategies, securing procedures and systems for monitoring the established tar- gets, continuously assessing the company’s nancial position and evaluating the operational management. Furthermore, it is the Board of Directors’ has the responsibility to ensure that true and correct infor- mation is provided to the company’s stakeholders, that the company complies with laws and regulations, and that the company develops and implements internal policies and ethical guidelines. The Board of Directors also appoints the company’s CEO and determines his/her salary and other remuneration, based on the guidelines adopted by the Shareholders Meeting. The Board Members elected by the Annual General Meeting are elec- ted annually at the Annual General Meeting for the term until the next Annual General Meeting is held. According to the company’s Articles of Incorporation, the Board of Directors is to consist of a minimum of three and a maximum of eight members without alternates. According to the Code, the majority of the Board Members elected by the Annual Gene- ral Meeting must be independent of the company and its management. Furthermore, at least two of the Board Members who are independent in relation to the company and its management must also be indepen- dent in relation to major shareholders. Major shareholders are sharehol- ders who directly or indirectly control 10 percent or more of the total shares and voting rights in the company. In determining whether or not a Board Member is independent, an overall assessment is to be made of all the circumstances which may call into question the independence of the Board Member vis-à-vis the company, its management, or the major shareholders. A Member of the Board who is employed or a Member of a Board of Directors of a company that is a major shareholder is not consi- dered to be independent. There are no further provisions in the Artic- les of Incorporation concerning the appointment and resignation of Members of the Board or amendments to the Articles of Incorporation. All Board Members elected by the Annual General Meeting, except Björn Odlander, are independent of the major shareholders, and all Board Members elected by the Annual General Meeting are indepen- dent of the company and its management. Björn Odlander is indepen- dent in relation to the company and its management, but not in relation to major shareholders as he is a partner of HealthCap. As indicated, the Board of Directors is of the view that the company fulls the Code’s requirement in regard to independence. The Board of Directors’ mem- bers, own and closely related parties’ holdings and the year in which they were elected are presented on the page 73 of the Annual Report. The Board of Directors follows a written Rules of Procedure, which is reviewed annually and adopted at the statutory Board of Directors meeting. The Rules of Procedure govern, among other things, the Board of Directors’ working methods, duties, responsibilities, decision-making within the company, the Board of Directors’ meeting agenda, the duties and responsibilities of the Chairman of the Board, and the allocation of responsibilities and duties between the Board of Directors and the CEO. The Instruction regarding nancial reporting and the Instruction to the CEO are also adopted in connection with the statutory Board of Directors meeting. The work of the Board of Directors is also carried out on the basis of an annual plan, which fullls the Board of Directors’ need for information. In addition to meetings of the Board of Directors, the Chairman of the Board of Directors and the CEO have an ongoing dialogue concerning the management of the company. The Board of Directors meets according to a pre-determined annual schedule and shall, in addition to the statutory Board of Directors meeting, hold at least six ordinary Board of Directors meetings between each Annual General Meeting. In addition to these meetings, extraordi- nary meetings may be arranged to deal with matters that cannot wait until any of the regular meetings. The work of the Board of Directors during the year has followed the framework described above. Thirteen meetings were held in 2021. See the table below for the attendance record. Board Member Meetings Lennart Johansson 13/13 Håkan Björklund 13/13 Björn Odlander 13/13 Lars Lidgren 12/13 Tone Kvåle 13/13 The work of the Board of Directors is evaluated annually with the pur- pose of further developing the Board of Directors’ working methods and eciency. The Chairman of the Board is responsible for the evalua- tion, and for presenting it to the Nomination Committee. The purpose of the evaluation is to obtain an idea of the Board Members’ views on how the work of the Board of Directors is conducted and what mea- sures could be taken to streamline the work of the Board of Directors, and whether the Board of Directors is well balanced in terms of skills and expertise. The evaluation is an important basis for the Nomination Committee in preparation for the Annual General Meeting. The Chairman of the Board conducted an evaluation with all Members of the Board in 2021. The results of the evaluation have been reported to and discussed by the Board of Directors and the Nomination Committee. Remuneration to the Board of Directors The directors’ fees to be paid to the Members of the Board elected by the Annual General Meeting are decided by the Annual General Meeting. In the preparation of the 2022 Annual General Meeting, the Nomination Committee will make proposals in regard to the directors’ fees. At the Annual General Meeting held on May 19, 2021, it was resol- ved that a directors fee of SEK 375,000 would be paid to the Chairman of the Board and SEK 200,000 would be paid to each of the other Mem- bers of the Board who are not employed by the company. In addition, it was decided that remuneration for work related to the committee is to be paid in the amount of SEK 125,000 to the Chair of the Audit Committee, and SEK 70,000 to each of the other members of the Audit Committee, and in the amount of SEK 50,000 to the Chair of the Remu- neration Committee and SEK 25,000 to each of the other members of the Remuneration Committee. For the 2021 nancial year, remuneration was paid to the Members of the Board of Directors as set out in the table below. All amounts are stated in SEK thousands. From the Annual General Meeting held on May 19, 2020 to September 30, 2020, all Board Members voluntarily waived 10 percent of their fees, and from January 11, 2021 to March 31, 2021, all Board Members voluntarily waived 10 per- cent of their fees. The voluntary waivers took place in the same way as the company’s management during the periods when the pandemic created great uncertainty and impact on operations. 70 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 CORPORATE GOVERNANCE REPORT Name Task Remuneration decided by the Annual General Meeting Paid remuneration (i) Lennart Johansson Chairman of the Board, member of the Audit Committee, Chair of the Remuneration Committee 420 378 Håkan Björklund Member of the Board, member of the Remuneration Committee 200 180 Tone Kvåle Member of the Board, Chair of the Audit Committee 275 247 Björn Odlander Member of the Board, member of the Remuneration Committee 175 157 Lars Lidgren Member of the Board 150 135 (i) Utbetalt belopp efter frivilligt avstående Audit Committee The primary task and responsibility of the Audit Committee is to moni- tor the company’s nancial position, to monitor the eectiveness of the company’s internal controls, internal audit and risk management, to be informed about the audit of the Annual Report and accompanying nancial statements/consolidated accounts, and to review and moni- tor the auditor’s impartiality and independence. The Audit Committee shall also assist the Nomination Committee in proposals for decisions concerning the election and remuneration of the auditor. The Audit Committee is comprised of Tone Kvåle (Chair) and Lennart Johansson. The work of the Audit Committee during the year has followed the framework described above. During the 2021 nancial year, the Audit Committee held six meetings and discussed matters concerning the company’s control system, review of quarterly reports, assessment of the auditor’s work, and evaluation of risk management. See the table below for the attendance record. Board Member Meetings Tone Kvåle 6/6 Lennart Johansson 6/6 Remuneration Committee The task and responsibility of the Remuneration Committee are pri- marily to prepare matters regarding remuneration and other terms of employment for the CEO and members of senior management. The Remuneration Committee shall also monitor and evaluate ongoing and completed programs for variable remuneration of senior executi- ves during the year, and monitor and evaluate the implementation of the guidelines for remuneration to senior executives which the Annual General Meeting has adopted. The Remuneration Committee is compri- sed of Lennart Johansson (Chair), Håkan Björklund and Björn Odlander. During the 2021 nancial year, the Remuneration Committee held four meetings and dealt with matters regarding the CEO’s and other group management’s bonus results for 2020, bonus criteria and salary audit for 2021, plus the implementation of a performance-based share savings pro- gram for employees for 2021. See the table below for the attendance record. Board Member Meetings Lennart Johansson 4/4 Håkan Björklund 4/4 Björn Odlander 4/4 CEO AND OTHER MEMBERS OF SENIOR MANAGEMENT The CEO is subordinate to the Board of Directors in the role, the CEO has as the primary task and responsibility to manage the company’s ongoing management and day-to-day business operations of the company. The Board of Directors’ Rules of Procedure and Instruction for the CEO sti- pulate which matters and issues the company’s Board of Directors is to decide on and which decisions fall within the area of responsibilities of the CEO. The CEO is also responsible for preparing reports and the requi- site basis for decision-making in preparation of the Board of Directors meetings and presents the materials at the Board of Directors meetings. BONESUPPORT has a management team of nine, including the CEO. For further information about the CEO and other senior executives, please refer to pages 72-73 in the Annual Report. Remuneration to senior executives Remuneration to senior executives consists of a base salary, variable remuneration, pension benets, share-based incentive programs and other benets. Salary and other remuneration for the nancial year 2021 were paid to the CEO and other senior executives in accordance with the table below. All amounts are stated in SEK thousands. SEK THOUSAND Salary Social security costs Share-based remuneration CEO 4 228 840 1 127 Other senior executives 14 901 3 842 1 161 Guidelines for remuneration to senior executives Pursuant to the Swedish Companies Act, the Annual General Meeting shall decide on guidelines for remuneration of the CEO and other senior executives. At the Annual General Meeting on May 19, 2021, guidelines were adopted with primarily the following content: The company’s starting point is that the company is to oer remuneration at market levels, and which facilitate the ability to recruit and retain senior executives, and that the terms and conditions must be competitive with consideration of the market practice in the country where the senior exe- cutive is employed. Remuneration to senior executives may consist of xed salary, variable cash remuneration, pension benets and other benets. The base salary shall be determined taking skills and expertise, area of responsibility and performance into account. The variable cash remu- neration shall be based on one or more predetermined and measurable BONESUPPORT HOLDING AB ANNUAL REPORT 2021 71 CORPORATE GOVERNANCE REPORT criteria that may be nancial, such as net sales and operating prot, or non-nancial, such as qualitative targets. The variable remunera- tion shall be capped and for the CEO may not exceed 75 percent of the annual base salary, and for other senior executives 40 percent of the annual base salary, whereby the maximum individual level is to be determined based on factors relating to the position held by the spe- cic individual etc. In addition to what is required by law and collective bargaining agre- ements or other contracts, the CEO and other senior executives may be entitled to arrange pension solutions on an individual basis. Refraining from receiving a salary and variable remuneration can be used for incre- ased pension contributions, provided that the total cost to the company is unchanged over time. In addition, the Annual General Meeting may – and independently of these guidelines – make a resolution regarding, for example, share and share price-related remuneration. The senior executives may be granted other customary benets, such as a company car, occupational healthcare services, etc. In the event of termination of a position as a senior executive by the company, the notice period may not exceed twelve months. Severance pay, in addition to salary and other remuneration during the notice period, may not exceed an amount equal to twelve times the monthly salary. In addition, compensation may be paid for any commitment to restrict competition in order to compensate for any loss of income. Such remuneration shall be paid only to the extent that the former senior executive is not entitled to severance pay. The remuneration shall be based on the xed salary at the time of termination and shall amount to a maximum of 60 percent of the xed salary at the time of termination, subject to mandatory collective agreement provisions, and shall be paid for the duration of the anti-competition undertakings, which shall not exceed 12 months after termination of employment. The Board of Directors shall be entitled to deviate from these guidelines in individual cases, if there are special reasons for doing so. INTERNAL CONTROL The Board of Directors’ responsibility for the internal control is gover- ned by the Swedish Companies Act, the Swedish Annual Reports Act – which requires that information concerning the primary elements of BONESUPPORT’s internal control and risk management systems related to the nancial reporting each year is to be included in the Corporate Governance Report – as well as the Code. The Board of Directors is to ensure, inter alia, that BONESUPPORT has sucient internal control and formalized procedures that ensure compliance with established prin- ciples for nancial reporting and internal control, and that there are eective systems for follow-up and control of the company’s business operations and the risks associated with the company and its business operations. The overall purpose of internal control is to ensure, to a reasonable extent, that the company’s operating strategies and targets are moni- tored and that the shareholders’ investment is protected. Furthermore, internal control is to ensure that external nancial reporting is, to a reasonable extent, reliable and prepared in accordance with generally accepted accounting principles, compliance with applicable laws and regulations, and that requirements imposed on stock-exchange listed companies are complied with. The internal control primarily consists of the following ve components: control environment, risk assessment, control activities, information and communication and monitoring. There is no unit in the company for internal auditing. The Board of Directors evaluates the need for this unit annually and has made the assessment that, considering the size of the company, there is not su- cient need to introduce a formal internal audit unit. 1. Control environment The Board of Directors has overall responsibility for internal control in relation to the nancial reporting. In order to establish and maintain a functioning control environment, the Board of Directors has adopted a number of policies and regulatory documents that govern the nancial reporting. These consist primarily of the Board of Directors’ Rules of Pro- cedure, Instruction for the CEO, and Instruction for nancial reporting. BONESUPPORT has also adopted a special authorization policy. In addi- tion, the company has a nancial manual that contains the principles, guidelines and process descriptions for bookkeeping, accounting and nancial reporting. The company has also summarized its procedures for internal control in a separate internal control policy. Finally, the Board of Directors has established an audit committee whose primary task is to monitor the company’s nancial position, monitor the eectiveness of the company’s internal control, internal audit and risk management, keep itself informed about the audit of the Annual Report with accompa- nying nancial statements including consolidated nancial statements, and review and monitor the auditor’s impartiality and independence. The responsibility for the day-to-day work with nancial control has been delegated to the company’s CEO, who in turn has delegated this responsibility to the company’s Chief Financial Ocer (CFO), who has overall responsibility for maintaining sound internal control over the nancial reporting environment. The CEO regularly reports to the Board of Directors in accordance with the established instruction for the CEO and the instruction for nancial reporting. 2. Risk assessment The risk assessment includes identifying risks that may arise if the basic requirements for nancial reporting in the company are not fullled. In a special risk assessment document, BONESUPPORT’s management team has identied and evaluated the risks that arise in the company’s busi- ness operations and assessed how these risks can be properly mana- ged. Within the Board of Directors, the Audit Committee has primary responsibility for continuously assessing the company’s risk situation, after which the Board of Directors also conducts an annual review of the risk situation. During the year, senior management has reviewed the risks related to strategies, compliance, and nancial and operational iss- ues. Afterwards, these risks were assessed according to probability and eect, where risks with either a high degree of probability or potential impact have been prioritized. This has subsequently been presented to the Audit Committee before being reviewed by the Board of Directors. 72 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 CORPORATE GOVERNANCE REPORT The company has assigned each risk factor to at least one person in Group management for them to lead the eorts in developing and exe- cuting plans for courses of action. 3. Control activities In order to prevent, detect and correct mistakes and deviations, a fra- mework for control in terms of policies, processes and procedures has been established within BONESUPPORT in relation to control objecti- ves. The control activities help to ensure that the requisite measures are taken to identify and address risks consistent with achieving the company’s objectives. Examples of control activities at an overall level are that BONESUPPORT has a clear governance structure and division of responsibilities with a number of forums and activities which conti- nuously monitor the business operations. Well-dened business proces- ses, separation of duties, and appropriate delegation of authority are also activities that promote good corporate governance and internal control. Key processes identied to have potential signicant risks are mapped out in detail in a separate process description in the nancial hand- book and key process steps are dened in order to ensure that there is sucient segregation of responsibilities and that the sucient control mechanisms are in place. 4. Information and communication BONESUPPORT has information and communication established for the intention to promote the accuracy of nancial reporting, and to facilitate reporting and feedback from the business operations to the Board of Directors and senior management, for example by making corporate gover- nance documents such as internal policies, guidelines and Instructions regarding the nancial reporting known and accessible to the employees aected. The Board of Directors has also adopted an information policy that regulates the company’s external disclosure. 5. Monitoring The compliance with and eectiveness of the internal controls are con- tinually monitored. The CFO is responsible for ensuring that appropriate processes for monitoring are in place, and the CEO ensures that the Board of Directors continuously receives reports on the developments concerning of the company’s business activities, including the deve- lopments with the company’s prots or losses and nancial position, as well as information on signicant events, such as research results and important contracts. The CEO also makes a report concerning these matters at each Board of Directors meeting. The company’s compliance with relevant policies and guidelines shall be evaluated annually and a report is to be made to the Audit Committee annually by the CFO. A summary of identied proposals for improvements shall then be pre- sented to the Board of Directors. Lund, April 13, 2022 THE BOARD OF DIRECTORS OF BONESUPPORT HOLDING AB AUDITOR’S REPORT ON THE CORPORATE GOVERNANCE STATEMENT TO THE GENERAL MEETING OF THE SHAREHOLDERS OF BONESUPPORT HOLDING AB PUBL, CORPORATE IDENTITY NUMBER 5568022171 Engagement and responsibility It is the Board of Directors who is responsible for the corporate gover- nance statement for the year 2021 on pages 68-71 and that it has been prepared in accordance with the Annual Accounts Act. The scope of the audit Our examination has been conducted in accordance with FAR’s stan- dard RevR 16 The auditor’s examination of the corporate governance statement. This means that our examination of the corporate gover- nance statement is dierent and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sucient basis for our opinions. Opinions A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolida- ted accounts and are in accordance with the Annual Accounts Act. Malmö April 13, 2022 Ernst & Young AB Ola Larsmon Authorized Public Accountant BONESUPPORT HOLDING AB ANNUAL REPORT 2021 73 THE BOARD OF DIRECTORS THE BOARD OF DIRECTORS LENNART JOHANSSON Chairman Born: 1955 Elected: 2017 Education: MBA from Handelshögskolan, Stockholm (1980) Experience: Lennart Johansson has been Senior Advisor for Patricia Industries AB since 2015 and was previously Managing Director (Business Development, Operational and Financial Investments) at Investor AB (2006-2015). Prior to that, he was a partner and CEO of Emerging Technologies ET AB and b-business part- ners. Today he is a Board Member of Chalmers Ventu- res Ab, Hi3G Access AB, Atlas Antibodies AB and GoCo Development AB. Shareholding: 70,000 shares (own holding) BJÖRN ODLANDER Member of the Board Born: 1958 Elected: 2010 Education: Medical degree from Karolinska Institutet Experience: Doctor of Medicine in Biochemistry at Karolinska Institutet in Stockholm. Founder and part- ner of HealthCap. Björn Odlander sits on the Board of Directors of Oncorena AB and the KK Foundation, among others. Shareholding: – HÅKAN BJÖRKLUND Member of the Board Born: 1956 Elected: 2016 Education: Ph.D. in Neuroscience from Karolinska Institutet Experience: Dr. Håkan Björklund is a partner in Tellacq AB, a private investment company. He was elected to the Board of Directors of BONESUPPORT in December 2016 in connection with the funding of USD 37 million (SEK 315 million), led by Tellacq. Håkan Björklund has a long and successful career in the healthcare industry, including as CEO of Nycomed. During his time there, Nycomed grew from being a small Scandinavian company to becoming a global business, which was bought by Takeda in 2011. He is currently Chairman of the Board of Swedish Orphan Biovitrum AB. Shareholding: Owns 25 percent of the shares in Tellacq AB, which holds 1,180,976 shares. TONE KVÅLE Member of the Board Born: 1969 Elected: 2016 Education: Diploma in Finance & Administration from UiT Arctic University of Norway, Harstad. She has com- pleted the education and examination for the Advan- ced Program in Corporate Finance at the Norwegian School of Management, NHH Experiencet: Tone Kvåle has more than 25 years of experience in the biotech industry. She has been CFO of Herantis Pharma Plc, Finland, since October 2020. Prior to Herantis Pharma, she was CFO of Nordic Nano- vector for 7 years and has also has CFO roles at NorDiag, Kavli Holding and Dynal Biotech (Norway). She has held senior positions at Invitrogen/Life Technologies, USA, now ThermoFisher. Shareholding: 17,000 shares (own holding). LARS LIDGREN Founder and Member of the Board Born: 1943 Elected: 2010 Education: M.D., Ph.D. and Professor of Orthopedics at Lund University Experience: Doctor of Medicine and Professor of Orthopedics at Lund University Hospital. Lars Lid- gren leads a research group in regenerative medicine at Lund University. The unit is a member of the ISOC group, an association of world-leading orthopedic hospitals. He is an honorary member of several major scientic societies and initiated the global project ”Bone and Joint Decade” 2000-2010. Lars Lidgren has founded the companies Scandimed (Biomet), AMeC, Safeture and Moroxite in Sweden. He is a Board Mem- ber of the listed companies Orthocell in Australia and Agilit Holding in Sweden. Shareholding: 400,150 shares (own holding and through companies). 74 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 GROUP MANAGEMENT GROUP MANAGEMENT EMIL BILLBÄCK Chief Executive Ocer Born: 1970 Employed since: 2018 Education: B.Sc. in Business Administration from Karl- stad University Experience: Emil Billbäck joined BONESUPPORT as Chief Executive Ocer in March 2018. He has more than 25 years of experience in life science. He has had operational roles at BSN Medical, Astra Zeneca and Beiersdorf. Today he is a Board Member in Atos and Doctrin. Emil Billbäck has lived and worked in the United States and in Germany. Shareholding: 362,000 shares (own holding). MICHAEL DIEFENBECK EVP Medical & Clinical Aairs Chief Medical Ocer Born: 1974 Employed since: 2017 Education: M.D. from Ludwig-Maximilians-University Munich, Germany. Ph.D. from Friedrich-Schiller-Univer- sity, Jena, Germany Experience: Michael Diefenbeck is a certied ort- hopedic and trauma surgeon with 15 years of clinical experience. He founded Scientic Consulting in Ort- hopedic Surgery in 2014 and has subsequently worked on several projects with BONESUPPORT as an inde- pendent medical advisor. He has 16 years of clinical experience from various hospitals in Germany and is the author of 27 published research articles in the eld. Shareholding: 102,400 shares (own holding). HÅKAN JOHANSSON Chief Financial Ocer Born: 1963 Employed since: 2018 Education: B.Sc. in Business Administration & Finance from Mid Sweden University Erfarenhet: Håkan Johansson joined BONESUPPORT as Chief Financial Ocer in November 2018. He has more than 20 years of experience as CFO and other senior management roles from several industries in the public and private sectors. Prior to BONESUPPORT, Håkan Johansson was CFO for Northern Europe at Thunstall Healthcare Group (2012-2018), a global com- pany in security technology and system solutions for healthcare. He has previously worked at toy manu- facturer BRIO AB (publ) and Arctic Paper Group. Shareholding: 33,000 shares (own holding). MICHAEL WRANG MORTENSEN EVP R&D and Operations Born: 1975 Employed since: 2021 Education: M.Sc. in Engineering from Technical Uni- versity of Denmark, a Ph.D. in Chemistry from Univer- sity of Copenhagen and an executive MBA from the AVT Business School in Denmark Experience: Michael Wrang Mortensen joined BONESUPPORT in December 2021 as Executive Vice President with the overall responsibility for R&D and Operations. Michael has 15 years of experience from the Medical Device and Healthcare industry with solid leadership and management experience within Innovation, Product Realization, Commercial Develop- ment and Operations. Prior to joining BONESUPPORT, Michael Wrang Mortensen was Director for Develop- ment and Supply at Nanovi A/S. Before this Michael held various management positions at Ferrosan Med- ical Devices A/S innovating and developing combina- tion products in partnership with large global players such as Ethicon Biosurgery Inc, Johnson and Johnson. Shareholding: 7,700 shares (own holding). ANNELIE AAVA VIKNER EVP Marketing & Communications Born: 1971 Employed since: 2018 Education: Bachelors degree in Chemistry from Lin- köping University and further education in leadership from Glasgow Caledonian University Experience: A nnelie Aav a Vikner join ed BONE SUPPOR T as Executive Vice President (EVP) Marketing & Commu- nications in March 2019. She has more than 20 years of experience in medical devices and pharmaceuti- cals. Prior to joining BONESUPPORT, she worked in several leading regional marketing services, within Medtronic, one of the world’s leading medical device companies (2002-2019). Her most recent role before BONESUPPORT was as Senior Strategy & Marketing Manager, RTG, ABGI&NORDICS (Restorative Therapy Group, Austria, Switzerland, Benelux, Greece, Israel and the Nordic region). Shareholding: 15,000 shares (own holding). HELENA L BRANDT Head of Human Resources Born: 1965 Employed since: 2017 Education: M.Sc. in International Economics from Lund University Experience: Helena L Brandt has more than 20 years of experience in HR and of managerial positions from a wide range of industries. She has held global HR roles at Astra Zeneca, Sony and Tetra Pak. Shareholding: 20,000 shares (own holding). BONESUPPORT HOLDING AB ANNUAL REPORT 2021 75 GROUP MANAGEMENT FERGUS MACLEOD GM & EVP Commercial Operations EUROW Born: 1970 Employed since: 2019 Education: HND Business & Finance, University of Bedfordshire, Executive Leadership Program, Center for Creative Leadership Experience: Fergus MacLeod joined BONESUPPORT as General Manager & Executive Vice President Com- mercial Operations EUROW in November 2019. He has more than 20 years experience from international sales leadership positions in the orthobiology and medical equipment sectors with companies such as Johnson Matthey, RTI Surgical and Stryker. Shareholding: 20,000 shares (own holding). KRISTINA INGVAR EVP Quality Management & Regulatory Aairs Born: 1972 Employed since: 2019 Education: Bachelor of Science in Medicine and Certi- ed Market Economist Experience: Kristina Ingvar joined BONESUPPORT in February 2020 as Executive Vice President Quality Management & Regulatory Aairs. Kristina Ingvar has a medical degree from Lund University. Prior to BONESUPPORT, she worked at Novo Nordisk, where her most recent role has been Global Program Vice President, Regulatory Aairs. During her 20 year career, Kristina Ingvar has had various product, project and person-related responsibilities in regulatory, quality, safety and medical areas. She has worked closely with R&D and manufacturing. Shareholding: 20,300 shares (own holding) MICHAEL ROTH EVP Commercial Operations for North America Born: 1963 Employed since: 2020 Education: BA degree in international development from Clark University Experience: Michael Roth started at BONESUPPORT as General Manager and Executive Vice President Commercial Operations for North America in June 2020. Michael Roth has over 25 years of experience with senior positions in both large and small com- panies active in orthopedics, with both direct and distributor-led sales. His most recent role was as Vice President of Sales and Marketing for Surgical Planning Associates (HipXpert). He has also served as Vice Pre- sident of Sales for the Eastern Region at both Wright Medical and Microport Orthopaedics. Shareholding: 20,000 shares (own holding) 76 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 DEFINITIONS - ALTERNATIVE PERFORMANCE MEASURES BONESUPPORT uses Alternative Performance Measures (APM) to enhance understandability of the information in the nancial reports, both for external analysis and comparison and internal performance assessment. DEFINITIONS ALTERNATIVE PERFORMANCE MEASURES Contribution Net sales minus by the cost of goods sold and directly attributable sel- ling expenses and research and development expenses. A measure of result showing the performance of segments and their contribution to cover other group costs. Interest bearing liabilities Borrowings from banks, nancial institutions and lease liabilities, short and long term. Shows the debt level of the group and forms the base for interest expenses. Net debt Interest bearing debt minus cash and cash equivalents. Shows the group’s net debt and is used to measure the leverage level of the group and future funding needs. Alternative Performance Measures are key gures are not dened in nancial reports prepared in accordance with IFRS. The following key gures are used: Net sales growth The dierence in net sales between two years in relation to net sales for the earlier year. Shows the operations’ sales performance. Net sales growth in constant exchange rates, CER The dierence in net sales between two years in relation to net sales for the earlier year. The net sales for the current year is re¬calculated using the earlier year’s exchange rates. Shows the operations’ sales performance. Gross prot Net sales minus cost of goods sold. Shows the prot to cover other costs and prot margin. Gross margin Net sales reduced by the cost of goods sold, divided by net sales. Shows results in relation to net sales and the margin for covering other costs and prot margin. SEKm 2021 2020 Net sales 212.9 180.9 Sales growth, % 17.7 16.3 Cost of sales -23.2 -19.3 Gross prot 189.7 161.6 Gross margin, % 89.1 89.4 Directly attributable selling expenses -159.8 -142.0 Selling expenses, not directly attributable -18.0 -13.4 Selling expenses including commissions -177.8 -155.4 Directly attributable research & development expenses -14.6 -23.3 Research & development expenses, not directly attributable -38.4 -34.6 Research & development expenses -53.0 -57.9 Contribution 15.3 -3.7 Dec 31 SEKm 2021 2020 Non-current borrowings 16.2 5.6 Current borrowings 5.3 4.9 Interest bearing debt 21.5 10.5 Cash and cash equivalents 206.5 353.7 Net debt -185.0 -343.3 SEKm CER Net sales 2021 calculated with average rates for 2020 Net sales 2020 NA 31% 130.5 99.7 EUROW 13% 92.0 81.1 Sum 23% 222.5 180.9 BONESUPPORT HOLDING AB ANNUAL REPORT 2021 77 GLOSSARY GLOSSARY Allograft. The transplant of an organ or tissue from one individual to another of the same species, with a dierent genotype Autograft. A bone graft harvested from the patient’s own skeleton, usually from the liliac crests. Bisphosphonate. A group of medicines that inhibit bone breakdown Bone graft substitute. Synthetic material used as bone grafts instead of biological bone tissue BMA. Bone Marrow Aspirate BMP. Bone Morphogenetic Protein Class C-shares. Performance shares within the Performance share programs issued in the form of Class C-shares CERAMENT BVF. CERAMENT BONE VOID FILLER CERAMENT G. CERAMENT with gentamicin CERAMENT V. CERAMENT with vancomycin CERTiFy. A prospective, randomized, controlled clinical trial with 137 patients in 20 leading trauma centers in Germany, aimed to compare treatment using CERAMENT BVF with autologous bone graft (autograft) transplantation Clinical study. Study on humans of e.g. a medical device or a pharmaceutical product CONVICTION. A randomized, controlled trial to evaluate the ecacy of CERAMENT G in the treatment of osteomyelitis (chronic bone infection) CRIOAc. A healthcare network in France implemented that is implemented through a nationwide health ministry program to improve outcomes in the management of bone and joint infections DBM. Demineralized Bone Matrix. A bone substitute biomaterial FDA. U.S. Food and Drug Administration FORTIFY. A prospective, randomized, multicenter-controlled test of CERAMENT G that evaluates the ability of CERAMENT G to improve treatment outcomes in patients with open shin fractures GPO. (Group Purchasing Organisation). An entity with the purpose to realize savings and eciencies by aggregating purchasing volumes Haematoma. A localized collection of blood outside the blood vessels HEOR. Health Economics and Outcomes Research. Scientic discipline that quanties the economic and clinical outcomes of medical technology ICUR. Incremental Cost-Utility Ratio Micro-CT. Micro Tomography, uses X-ray scanning to recreate a 3D-model without destroying the object Osteoinduction. At bone graft material or growth factor can stimulate the dierentiation of osteoblasts, forming new bone tissues Osteomyelitis. A bacterial infection aecting bones PMA. Premarketing Approval is the FDA process to review Class III medical devices SOLARIO. A randomized, unblinded, European multicenter study with the aim of investigating if synthetic bone graft substitutes containing antibiotics can lead to shorter treatment times compared to systemic antibiotics Tibia plateau fracture. Fracture of the upper part of the tibia Toxicity. The degree to which a substance (a toxin or poison) can harm humans or animals HEADQUARTERS BONESUPPORT HOLDING AB Scheelevägen 19 223 70 Lund, Sweden +46 46 286 53 70 www.bonesupport.com [email protected] 549300COLY053IGTLD632021-01-012021-12-31549300COLY053IGTLD632020-01-012020-12-31549300COLY053IGTLD632021-12-31549300COLY053IGTLD632020-12-31549300COLY053IGTLD632019-12-31BON:IssuedCapitalRegisteredMember549300COLY053IGTLD632020-01-012020-12-31BON:IssuedCapitalRegisteredMember549300COLY053IGTLD632019-12-31BON:PaidButNotRegisteredShareCapitalMember549300COLY053IGTLD632020-01-012020-12-31BON:PaidButNotRegisteredShareCapitalMember549300COLY053IGTLD632019-12-31ifrs-full:AdditionalPaidinCapitalMember549300COLY053IGTLD632020-01-012020-12-31ifrs-full:AdditionalPaidinCapitalMember549300COLY053IGTLD632019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300COLY053IGTLD632020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300COLY053IGTLD632019-12-31BON:ReserveOfDevelopmentExpenseMember549300COLY053IGTLD632020-01-012020-12-31BON:ReserveOfDevelopmentExpenseMember549300COLY053IGTLD632019-12-31ifrs-full:RetainedEarningsMember549300COLY053IGTLD632020-01-012020-12-31ifrs-full:RetainedEarningsMember549300COLY053IGTLD632019-12-31549300COLY053IGTLD632020-12-31BON:IssuedCapitalRegisteredMember549300COLY053IGTLD632021-01-012021-12-31BON:IssuedCapitalRegisteredMember549300COLY053IGTLD632021-12-31BON:IssuedCapitalRegisteredMember549300COLY053IGTLD632020-12-31BON:PaidButNotRegisteredShareCapitalMember549300COLY053IGTLD632021-01-012021-12-31BON:PaidButNotRegisteredShareCapitalMember549300COLY053IGTLD632021-12-31BON:PaidButNotRegisteredShareCapitalMember549300COLY053IGTLD632020-12-31ifrs-full:AdditionalPaidinCapitalMember549300COLY053IGTLD632021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember549300COLY053IGTLD632021-12-31ifrs-full:AdditionalPaidinCapitalMember549300COLY053IGTLD632020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300COLY053IGTLD632021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300COLY053IGTLD632021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300COLY053IGTLD632020-12-31BON:ReserveOfDevelopmentExpenseMember549300COLY053IGTLD632021-01-012021-12-31BON:ReserveOfDevelopmentExpenseMember549300COLY053IGTLD632021-12-31BON:ReserveOfDevelopmentExpenseMember549300COLY053IGTLD632020-12-31ifrs-full:RetainedEarningsMember549300COLY053IGTLD632021-01-012021-12-31ifrs-full:RetainedEarningsMember549300COLY053IGTLD632021-12-31ifrs-full:RetainedEarningsMemberiso4217:SEKiso4217:SEKxbrli:shares
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.