Annual Report • Mar 29, 2021
Annual Report
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| 1. | MEDISTIM IN BRIEF | 4 |
|---|---|---|
| 2. | KEY FIGURES | 6 |
| 3. | HISTORY | 8 |
| 4. | LETTER FROM THE CEO | 10 |
| 5. | EXECUTIVE MANAGEMENT & BOARD OF DIRECTORS | 12 |
| 5.1 Management Team 5.2 Board of Directors |
12 14 |
|
| 6. | BOARD OF DIRECTOR'S REPORT | 15 |
| 7. | 6.1 Operational review 6.2 Regional development 6.3 Organization, HSEQ and sustainability 6.4 Financial Review 6.5 Parent company financial review 6.6 Corporate governance 6.7 Main risk factors 6.8 Events after the balance sheet date 6.9 Outlook 6.10 Shareholder information COMPANY DESCRIPTION 7.1 Mission, vision and values 7.2 Medistim's product solutions 7.3 Strategy 7.4 Technology and Products 7.5 Research and Development |
15 16 17 18 19 19 20 20 20 21 23 23 24 24 25 26 |
| 7.6 Clinical application areas and target markets 7.7 Geographical target markets |
28 30 |
|
| 8. | CORPORATE GOVERNANCE REPORT |
32 |
| 8.1 Implementation and reporting on corporate governance 8.2 Business activity 8.3 Equity and dividend 8.4 Equal treatment of shareholders and transactions with closely related parties 8.5 Shares and negotiability 8.6 The general meeting 8.7 Nomination committee |
32 32 32 33 33 33 34 |
| 8.8 Board of directors, composition and independence |
34 | |
|---|---|---|
| 8.9 The | work of the Board of directors |
35 |
| 8.10 Risk | management and internal control |
35 |
| 8.11 Remuneration of the board of directors |
35 | |
| 8.12 Remuneration of executive personnel |
36 | |
| 8.13 Information and communications |
36 | |
| 8.14 Takeovers | 36 | |
| 8.15 Auditor | 37 | |
| SUSTAINABILITY REPORT |
38 | |
| 9.1 Strengthening human health through improved surgery |
38 | |
| 9.2 Product stewardship |
39 | |
| 9.3 Responsible business |
40 | |
| 9.4 People | 41 | |
| GROUP CONSOLIDATED FINANCIAL STATEMENTS | 44 | |
| 10.1 Consolidated Income Statement Medistim ASA Group |
44 | |
| 10.2 Consolidated Balance Sheet Medistim ASA Group |
45 | |
| 10.3 Consolidated Cashflow Statement |
46 | |
| 10.4 Consolidated Change in Equity for Medistim ASA |
47 | |
| 10.5 Accounting Principles |
48 | |
| 10.6 Notes to the accounts |
53 | |
| PARENT | COMPANY FINANCIAL STATEMENTS |
76 |
| 11.1 Income Statement Medistim ASA |
76 | |
| 11.2 Balance Sheet Medistim ASA |
77 | |
| 11.3 Cash Flow Statement |
78 | |
| 11.4 Accounting Principles |
78 | |
| 11.5 Notes to the accounts |
80 | |
| ALTERNATIVE | PERFORMANCE MEASURES |
87 |
| RESPONSIBILITY STATEMENT |
90 | |
| AUDITORS | REPORT | 91 |
| 8.12 Remuneration of executive |
personnel | ||
|---|---|---|---|
| 36 | |||
| 8.13 Information and |
communications | 36 | |
| 8.14 Takeovers | 36 | ||
| 8.15 Auditor | 37 | ||
| 9. | SUSTAINABILITY REPORT |
38 | |
| 9.1 Strengthening human |
health through improved surgery |
38 | |
| 9.2 Product stewardship |
39 | ||
| 9.3 Responsible business |
40 | ||
| 9.4 People | 41 | ||
| 10. | GROUP CONSOLIDATED FINANCIAL STATEMENTS | 44 | |
| 10.1 Consolidated Income |
Statement Medistim ASA Group |
44 | |
| 10.2 Consolidated Balance |
Sheet Medistim ASA Group |
45 | |
| 10.3 Consolidated Cashflow |
Statement | 46 | |
| 10.4 Consolidated Change in |
Equity for Medistim ASA |
47 | |
| 10.5 Accounting Principles |
48 | ||
| 10.6 Notes to the accounts |
53 | ||
| 11. | PARENT COMPANY FINANCIAL |
STATEMENTS | 76 |
| 11.1 Income Statement Medistim |
ASA | 76 | |
| 11.2 Balance Sheet Medistim |
ASA | 77 | |
| 11.3 Cash Flow Statement |
78 | ||
| 11.4 Accounting Principles |
78 | ||
| 11.5 Notes to the accounts |
80 | ||
| 12. | ALTERNATIVE PERFORMANCE |
MEASURES | 87 |
| 13. | RESPONSIBILITY STATEMENT |
90 | |
| 14. | AUDITORS REPORT |
91 |
Our vision is that blood flow measurements and intra-operative ultrasound imaging shall benefit all patients and surgeons, regardless of where in the world they are located, and that Medistim's device and solution represent standard clinical practice in all countries. "
- Kari E. Krogstad - CEO
Cardiac and vascular diseases continue to be the most common cause of death in the western world. Globally, more than 700,000 patients undergo coronary artery bypass surgery annually while more than 600,000 patients have vascular surgery procedures performed. Medistim's mission over the past three decades has been to serve patients, surgeons and health care providers with innovative and cost effective medical devices that measure blood flow and visualize atherosclerosis and other problems inside the blood vessels, and thereby help improve the quality and outcome of cardiac and vascular surgery.
Today, Medistim's proprietary products are regarded to be standard-of-care in most European countries and Japan, while market adoption is growing in the USA, Asia and the Middle East. In addition, Medistim in Norway represents about 100 different medical technology companies, as a distributor of their products in this country.
Medistim is a market leader within intra-operative transit time flow measurement (TTFM) and ultrasound imaging, providing the MiraQ™ system to the global market. These systems enable medical professionals to reduce risk and enhance quality of cardiac, vascular and transplant surgery. They provide clinically relevant information that empowers surgeons to make better-informed decisions in the operating room.
The company's devices are developed by working closely together with surgeons, who in turn have produced a growing amount of clinical data and studies that point to their efficacy and costeffectiveness. Medistim is committed to continuing to serve the cardiac and vascular surgeons by investing in new product development.
Medistim has wholly owned subsidiaries with marketing and sales organizations in the USA, Germany, the United Kingdom, Spain, Denmark and Norway, in addition to a global distributor network representing the company in more than 60 countries in Asia, Europe, America and Africa. Medistim ASA is listed on the Oslo Stock Exchange and has its global head office in Oslo, Norway.
*The Journal of Thoracic and Cardiovascular Surgery **The European Journal of Vascular and Endovascular Surgery
Clearance for sale of MiraQ™ in Canada and Japan
-REQUEST study published in JTCVS*
-CIDAC study published in EJVES**
Final results from REQUEST study presented at EACTS
2020 started off on a high note, with record sales in the first quarter, indicating that Medistim was on track to deliverits 10th consecutive year of profitable growth. But, due to the severe implications from the COVID-19 pandemic we ended the year with sales on par with 2019.
However, quickly adapting to the situation, Medistim found ways to manage the new challenges and ended the year with all-time-high operating profit and a strengthened cash position, confirming our market position and robust business model.
During this unprecedented year we experienced that hospitals all over the world, understandably, prioritized COVID-19 patients over elective surgeries.
Widespread travel- and hospital access restrictions limitedmarketing activities anddelayedsalesprojects. Thisimpacted demand forMedistimproductsin 2020. On-site presence for demonstrations and facilitation of clinical evaluations are critically important steps in our sales and purchasing process. We also normally rely on conferences and in-person meetings to promote our products and influence clinical practice.
On the other hand, through our efforts to adapt to this newsituationwe found newways of cooperating and performing our business, ways that may provide great opportunities for us in the future.
To address the challenges, we did as many others in 2020; "we went digital". We quickly adapted to using digital platforms for conferences and meetings with our customers as well as suppliers, distributors, investors, and other stakeholders. Our experience is that it is possible to maintain close contact, exchange information, influence, and make business progress – all while saving cost and time by just becoming more efficient.
By applying digital communication platforms and remotely controlling our ultrasound systems, we were even able to give product demonstrations and clinical evaluations. This has opened new ways for developing future customer relations and support. And while we look forward to meeting people in person in 2021, we will continue to take advantage of these technology-enabled opportunitiesin the future.
Medistim's vision is to become standardof-care in the operating room, all around the globe.
In 2020, sales in all regions were impacted as the pandemic reduced surgical activity. This was offset by higher sales in Japan early in year following the MiraQ regulatory approval in late 2019 and favorable currency effects in Asia and Europe.
The US market continues to be the most important near-term growth driver for the company. This was reflected in our team signing 25 new accounts in a challenging year and underpins our expectation of renewed growth into 2021. Longer term, we expect emerging economies to increasingly contribute to Medistim's growth. The distributor agreement signed with LivaNova in 2020 for India is an important milestone in that respect.
The pandemic is not yet behind us. Still, we saw a decreasing impact on our business from the pandemic's initial onset in the second quarter as the year progressed. We expect to gradually move towards a more normal situation over the course of 2021 and resume more traditional customer interaction by balancing in-person and digital communication.
The roll-out of mass vaccination will create herd immunity and enable societies to re-open and hospitalsto attend to all patient groups. While there may be a backlog of postponed surgeries which provides an upside potential, the most important factorfor usisthatthe need for Medistim's products has not diminished.
Our customers, cardiac and vascular surgeons, are experts in their fields.
Surgeons are progressive, innovative and technology savvy in their desire to improve outcomes of surgery for their patients.
The expectations they set for industry partners and medical equipment are growing and becoming increasingly sophisticated.
For Medistim it means that we need to continue product and solution innovation.
We have therefore created a dedicated innovation team to maximize efficiency of prototyping and testing of new solutions and devices. Some of the team members have background from artificial intelligence and virtual reality and will challenge established thinking on how our devices should operate. We are excited to continue these efforts in 2021 and to bring innovation to our customers over the years to come.
Our employees are our most critical asset and the protection of their health is our number one priority. We are relieved that the pandemic to date has not brought any serious health issues upon us.
Withour120employeesinNorwayandinternational subsidiaries, supported by a distributor network in more than 60 countries, trusted business partners, long-term owners, and our board of directors; the Medistim team is well equipped to continue our journey of profitable growth.
March 2021 Kari E. Krogstad President and CEO
President and CEO, Medistim ASA
Kari E. Krogstad joined Medistim as CEO in September 2009. She has 30 years of experience from the biomedical industry, from commercial leadership roles within the international pharma, biotech and medtech sectors. Before joining Medistim, she spent 11 years at Dynal and held the position as General Manager of Invitrogen Dynal afterthe acquisition from U.S. based Invitrogen in 2005. Krogstad holds a Cand. Scient. degree in Molecular Biology from the University of Oslo as well as a Business degree from IHM Business School.
ThomasJakobsen joined Medistim as VP Finance in 2001. He has broad experience from financing positions, including Controller and Finance Manager at Sysdeco and Finance Director of Microtronica Nordic. Jakobsen holds a B.Sc. in Management from the BI Norwegian School of Management.
Erik Swensen joined Medistim as VP Research & Development in 2002. Previous experience includes Development Engineer at ABB, Norway, where he participated in the development of advanced process control systems and developing ABB's new control system for safety critical applications. Swensen holds a M.Sc. degree in Engineering Cybernetics from the Norwegian University of Science and Technology (NTNU).
Håkon Grøthe joined Medistim as CIO in April 2019. He is an experienced leader with a passion for increasing customer value through digital innovation. Grøthe has put disruptive technologiessuch as AI, VR and Machine learning into work in his leadership roles from IT technology companies such as Impact Reality and Inspera. He also brings methodology experience relevant for agile processes, such as Google Sprint, Design Thinking and Kanban. Grøthe holds an M.Sc. degree in Industrial Economics/Computer Science from the Norwegian University of Science and Technology (NTNU).
Hæge J.K.WetterhusjoinedMedistimasVPMarketing in 2010. She hasmore than 25 years of experienceworking with diagnostic, analytical and biotech device companies. Before joining Medistim, she worked for Invitrogen Dynal where she held a variety of leadership roles in strategic marketing, product development and business development in the area of life science and biotechnology – always with an international focus. Wetterhus is a business economistfromBINorwegianSchoolofManagement, a chemical engineerfromthe TechnicalUniversity of Bergen and holds a B.Sc. Honour in molecular biology from the University of Glasgow, UK.
Roger Morberg joined Medistim as VP Sales in June 2010. He has extensive experience from the healthcare industry and is a trained medical professional. Before joining Medistim he worked for Siemens Medical as Country Manager for Ultrasound. Morberg has previously held various roles within sales and senior management positions in Marquette Electronics, GE Healthcare and Hewlett Packard.
VP Manufacturing, Medistim ASA
Helge Børslid joined Medistim as Vice President Manufacturing in January 2017 from the position as production manager at Halliburton. Previous experience includesroles astest engineer and quality engineer at Norautron, Infineon Technologies, Kongsberg Maritime, and Sensor Development. Børslid holds a B.Sc. in Electronics Engineering from Vestfold University in Norway and is currently completing his final year of a Master's degree in Management from the BI Norwegian Business School.
Tone Veiteberg joined Medistim as VP Quality Assurance & Regulatory Affairs in 2013. She has more than 25 years of experience in Medical and Regulatory Affairs from the pharmaceutical and medical device industry, including Clavis Pharma,the Norwegian Association of Pharmaceutical Manufacturers, Leo Pharmaceuticals, and Glaxo/GlaxoWellcome (now GlaxoSmithKline). Veiteberg holds a M.Sc. in Pharmacy from the University of Oslo.
VP Medical Department, Medistim ASA
Anne Waaler joined Medistim as VP Medical Department in 2016. She has more than 25 years of experience from the pharma and medtech industry, including roles within medical, marketing and strategy with Nycomed and GE Healthcare. Waaler holds a M.Sc. in Pharmacy from the University of Oslo, an MBA from the BI Norwegian School of Management in Oslo, and an ESCP-EAP in Paris.
Managing Director, Medistim Norge AS
Ole Jørgen Robsrud joined Medistim Norge AS as Managing Director in 2010, from the position as Country Manager in HemoCue Norway. He has 13 years of experience in the pharmaceutical company Pfizer, where he has held a variety of management positions in sales and marketing both on national and international level. Robsrud holds a M.Sc. in Business and Economics from the Norwegian Business School (BI) and the University of Florida.
President, Medistim USA, Inc.
Mike Farbelow joined Medistim as Vice President of the US sales team in May 2012. He has extensive sales and management experience from the medical device industry. He served for many years with Smith & Nephew's Endoscopy division both as a sales representative and the Director of Sales for the central region. His most recent position prior to joining Medistim was with Richard Wolf USA where he served as their national sales manager in spinal endoscopy. Farbelow holds a degree in management from the University of Minnesota Carlson School of Management.
Country Manager, Medistim Deutschland GmbH
Cindy Kaffai joined Medistim as Territory Sales Managerfor Germany in 2005. She has 18 years of experience from the medical device industry. Since 2015, Kaffai has led Medistim Deutschland GmbH as General Manager and is responsible for all activities and sales efforts in Germany & BeNeLux. Prior to Medistim she was Territory Sales and Key Account Manager for Stryker Corporation.
2020 was a challenging year for Medistim. As the COVID-19 pandemic escalated, the need to treat COVID-19 patients took priority over elective surgeries. Following a good start to the year, Medistim experienced a significant impact on operationsin first moths of the pandemic. However, due to a solid revenue base and good pipeline activity throughout second half of the year, overall sales for the year ended unchanged from 2019.
The Medistim Group's core business is within developing, producing, servicing, leasing and distributing medical devices. The Group is headquartered in Oslo, with production facilities in Horten, Norway. Medistim sellsits productsthrough more than 60 distributors world-wide, including Medistim's own sales offices in USA, Denmark, Germany, Spain and Norway. At the end of 2020, Medistim's equipment was in use in more than 60 countries and 3,000 clinics all over the world.
The business is focused on ensuring quality within cardiac and vascular surgery. Cardiovascular diseases are the most common cause of death in the western world and on the rise in Asian and Latin American countries adopting western lifestyles. The Group's products contribute to improved quality of surgery, which in turn reduces risk to the patients and contribute to a more efficient health economy. Worldwide, over 700,000 CABG (Coronary artery bypass graft) procedures and 600,000 vascular procedures are performed each year. On a global scale Medistim has a leading position within quality control of CABG.
Medistim is also a distributor of other medical devices through its subsidiaries Medistim Norge AS and Medistim Denmark Aps. The products distributed are medical devices within surgery and opthalmology.
COVID-19 consumed a significant share of hospital capacity as health authorities prioritized the immediate need to treat victims to the pandemic over elective surgeries, thereby reducing the number of procedures using Medistim equipment. Concern for COVID-19 infection may also have impacted the number of people seeking medical assistance, including cardiovascular surgery.
Chair
Øyvin Brøymer has served as chair of Medistim since 2000. He works as a consultant and investor through his own company Intertrade Shipping AS, and holds the position as chair in Vistin Pharma ASA. Previous experience includes executive positions in The Aker Group, Hafslund Nycomed ASA and Leif Høeg & Co ASA, as well as broad board room experience from other companies in the medical industry. He holds a degree within economics and business from Norwegian School of Management and an MBA from the University of Wisconsin.
Deputy Chair
Bjørn M. Wiggen was elected as deputy chair in 2014. He is a partner in Kverva Management, and has broad experience from the Norwegian industry, particularly within food, media and branding. Previous experience includes positions as CEO of Orkla ASA, SAPA and Elkem. Wiggen has a degree in economics from the Norwegian School of Economics (NHH).
Board member
Lars Rønn has been board member in Medistim since 2010. He works as a consultant for Russell Reynolds Associates with focus on recruitment of executives within the med-tech area. He has previous experience as Executive Vice President, Sales & Marketing in Ambu, a Danish med-tech company and as CEO in Origio. He has also experience from several positions in Maersk-Medical AS. Rønn holds a BSc in Business, Language & Culture and has a Graduate Diploma in Int. Trade from Copenhagen Business School. He also has a Management Program from INSEAD.
Board member
Tove Raanes has been board member in Medistim since 2014. She works as an advisor in the investment companies Nore-Invest AS, Dyvi Invest AS and Varner Kapital AS, and serves as board member in Bouvet ASA and Multiconsult ASA. Her experience includes strategy, finance and business development from investment companies and management consulting from McKinsey & Company. Raanes holds a MSc from the Norwegian School of Economics (NHH).
Siri Fürst was elected as board member in Medistim in 2013. She has been a partner of Considium Consulting Group AS since 2005 where she is also chair of the board. She offers expertise in business development and strategy work, in addition to corporate governance and management. She also serves as board member in Norinnova AS, Norinnova Startcap AS, GC Rieber VivoMega AS, Røros Produkter AS, Unicef Norge and JM Hansen AS. She has broad experience in strategy, business development, finance and investor relations from management positions in Hafslund, Hafslund Nycomed and DiaGenic. Fürst holds a degree in economics and finance from the Norwegian School of Economics (NHH).
Sales in markets outside USA, mainly Europe and Asia, were NOK 169 million, up from NOK 160 million in 2019. Adjusted for currency effects, sales were down 3%.
In these markets, the systems are owned by the hospitals and revenues are more evenly split between capital sales and sale of consumables. In 2020, sales of flow and imaging measurement probes amounted for some 60% of total sales, ending at NOK 98 million, compared with NOK 100 million in 2019. Currency neutral sales were down 10% year-over-year, mainly due to lower activity within CABG surgery due to COVID-19. Sale of systems however, increased to NOK 64 million from NOK 53 million in 2019.
Medistim has developed a strong market position in Europe with about 1000 systems installed, representing a solid base for future recurring revenues. Total European sales of own products in 2020 were NOK 105.7 million, up 10% from NOK 95.8 million in 2019. Currency neutral sales were up 1.3 %.
During the year 3,979 probes were sold, (4,294) of which 3,943 were flow probes (4,269) and 36 were imaging (25). Capital sales were 71 units (74), due to high replacements of old installations in the Nordic market. Performance in the UK was good with sales increasing some 30% following a weak 2019 performance. 2020 was also a good year for Medistim in Russia. The installed base continued to increase and solid probe demand resulted in a 75% growth in sales compared to 2019.
Sale to Asian markets were NOK 47 million for the year, up from NOK 42 million in 2019. The increase is mainly driven by higher sales of systems during the first half of the year, following the introduction of MiraQ to the Japanese market late 2019. During 2020, 82 MiraQ systems were sold in the Asian markets, compared with 65 systems in 2019.
Total number of probes sold in Asia decreased 11% from 2019, reflecting reduced CABG activity. The decreasewas partly offset by a significantinventory buildup by the distributor in China during the first half of the year. During 2020, Medistim sold 1,719 probes, (1,937) of which 1,693 were flow probes (1,909) and 26 were imaging (28).
Salesin other markets amounted to NOK 17 million, down from NOK 22 million the previous year.
Medistim has sales representation in its main markets and production and main office functions in Norway. At year-end 2020, Medistim had 121 employees, compared to 118 in 2019. The working environment and culture in Medistim are considered strong, and there is continuous focus on initiatives for improvement. In 2020, absence due to sickness was 3.8 %. This compares to 3.2 % in 2019.
Medistim's growth strategy relies on strong clinical documentation by leading medical centers to create support from Key Opinion Leaders (KOLs). It is a strategic priority to support this by increasing the focus on blood flow measurements, ultrasound imaging, surgical guidance, and quality assurance in relevant forums and channels.
In May 2020, the CIDAC (Comparison of Intraoperative Duplex Ultrasound and Angiography after Carotid Endarterectomy) study was published in the European Journal of Vascular and Endovascular Surgery (EJVES). The results demonstrated that HFUS detected significantly more high-grade defects that needed revision compared to angiography, and with significantly higher interobserver reliability. The authors conclude that given the lesser invasiveness, HFUS could be considered as an alternative to angiography for intra-operative completion control in CEA, further strengthening the support of using Medistim's ultrasound imaging device and probe for reducing the risk of stroke after CEA.
| USA | 2020 2019 | % CHG Y-O-Y |
||
|---|---|---|---|---|
| Flow procedures |
47,256 | 52,206 | -9% | |
| Imaging procedures |
8,803 | 10,233 | -14% | |
| Capital sales |
26 | 33 | -21%. | |
| Lease | 13 | 19 | -32% | |
| OUTSIDE USA | 2020 2019 | % CHG Y-O-Y |
||
| Flow systems Flow and imaging systems |
124 47 |
102 60 |
+22% -22% |
|
| Imaging probes |
75 | 78 | -4% |
USA is the largest market for Medistim's products, representing about 30% of global CABG procedures. Total U.S. sales amounted to NOK 126.4 million in 2020, down 9% from 2019. Adjusted for currency effects, sales were down 13%.
Some 70% of all bypass surgeries in the U.S. are performed by surgeons, using their fingertips to check for a pulse as the only quality assurance. This is a clinically proven unreliable method, highlighting the need and potential for Medistim's products and the Group has highmarket ambitions. Medistim's current market penetration is about 23% of the total market of approximately 200,000 bypass surgery procedures performed annually. In comparable markets like Germany, Scandinavia, and Japan, Medistim has achieved market penetration exceeding 80%. The Group expects that market penetration in USA will develop in the same manner over time.
To strengthen its market outreach, Medistim offers several business models in the USA. In addition to traditional capital investments and purchase of consumables, hospitals can choose to either pay per procedure or enterleasing agreements. In 2020, procedural sales amounted to 80% of the total sales, ending at NOK 99 million. This is down 7% from 2019 (-12% currency adjusted). The reduction is mainly due to strained capacity at hospitals during the COVID-19 pandemic.
During the year, 56,059 procedures were sold, (62,439) of which 47,256 were flow procedures (52,206) and 8,803 were imaging (10,233). Capital saleswere 26 units, comparedwith 33 unitsin 2019.
Net cash flow from financing activities was negative NOK 58.3 million (NOK -46.9 million), of which NOK 50 million (NOK 41.0 million) was payment of dividends. Debt repayment was unchanged at NOK 3 million during the year, while leases amounted to NOK 6.9 million (NOK 5.8 million)
During the year cash and cash equivalents increased byNOK5.1million(NOK19.3million).At31December 2020, total cash and cash equivalents amounted to NOK 71.9 million (NOK 66.7 million).
At 31 December 2020, Medistim's working capital totaledNOK 160.4million, comparedwithNOK 146.9 million the year before. During the year, inventory increased by NOK 22.6 million, mainly related to securing critical and end-of-life components.Account receivables decreased NOK 4.7 million during the year, while account payables decreased NOK 1.3 million. With the implementation of IFRS 16, lease agreements are recorded as assets in the balance sheet with a corresponding debt. As at 31 December 2020, this amounted to NOK 27.9 million.
The total balance sheet amounted to NOK 345.8 million (NOK 336.1 million). Total equity was NOK 256.8 million (NOK 236.9 million), corresponding to an equity ratio of 74% (70.5%). Book value of properties, plants and equipment amounted to NOK 66.6 million (66.8). Intangible assets were NOK 33.5 million (NOK 40.8 million), of which product development and goodwill represented NOK 18.0 million and NOK 14.1 million respectively.
The company has a deferred tax asset of NOK 0.8 million (2.6) related to temporary differences between carrying amount and tax values.
Net interest-bearing debt at the end of the year amounted to NOK 19.5 million, up from NOK 15.5 million atthe end of 2019. The year-end cash position was NOK 71.9 million (NOK 66.7 million).
The Medistim Group's financial position, cash flow and ability to finance its activities is considered satisfactory.
At 31 December 2020 the share capital of the MedistimASAparent companywasNOK4584334,00 split on 18 337 336 shares outstanding at par value of NOK 0.25 per share. The share is freely traded on the Oslo Stock Exchange. The company had over 600 shareholders and owned 148 500 treasury shares at year-end.
The parent company Medistim ASA had 2020 sales of NOK 195.4 million (NOK 200.5 million). Operating profit was NOK 45.4 million (NOK 51.5 million) and profit before tax amounted toNOK 70.0million (NOK 70.2 million). Medistim received a dividend from its subsidiary in Germany and Norway of a combined NOK 25.2 million in 2020 (NOK 17.3 million). No group contribution was received in 2020 or 2019. Profit after tax for the parent company was NOK 60.2 million for the full year (NOK 58.4 million).
At 31 December 2020, the parent company's total assets amounted to 244.7million compared to NOK 233.1 million as of 31 December 2019. Equity in the company was NOK 140,5 million (NOK 133.3 million), corresponding to an equity ratio of 57.4 (57.2%).
At year-end 2020, the parent company had NOK 20.0 million in cash. The company's financial position and ability to finance future activities and investments was considered satisfactory. Cash flow from operating activities was NOK 48.3 million for the parent company in 2020.
The Board of Directors suggests that NOK 55.0 million of the 2020 net profit is allocated to ordinary shareholder dividend, equal to NOK 3.00 per share (NOK 2.75 for 2019), which amounts to NOK 54.6 million corrected for the company's holding of own shares. The remaining NOK 5.6 million is allocated to other equity.
The Board of Directors will propose the dividend to the generalmeeting general. The proposed dividend equals a pay ratio of 78.7% (71%). The dividend reflects the Board's positive expectations of future earnings. Over the past 10 years, the company has paid NOK 326 million in accumulated dividends to shareholders.
Medistimdepends upon good relationswith itsstakeholders to succeed. Good corporate governance is importantto build and maintain trust and confidence in the company and ensure long-term value creation in the best interest of the company's shareholders. The company's corporate governance structure is based on Norwegian legislation and the Norwegian Code of Practice for Corporate Governance, last revised 17 October 2018. Medistim complies with the Code of Practice, with certain deviations, as outlined and explained in the Corporate Governance Report in this annual report.
Medistim strives to be an attractive workplace that offers challenging and motivating jobs and equal development opportunities for all. There is no discrimination due to gender, nationality, culture or religion with respect to remuneration, promotion or recruitment. The Company is committed to recognize diversity and ensure equal opportunities, including fair employment conditions. Medistim supports the United Nations Universal Declaration of Human Rights and the standards advised by the International Labour Organization (ILO).
For more information, please see Chapter "9. Sustainability Report" of this Annual Report.
The Board of Directors confirms that the financial statement has been prepared based on the assumption of a going concern.
The Medistim Group's sales for the full year 2020 ended at NOK 363.1 million (NOK 363.7 million). Currency neutral, sales declined 6.1%.
Sales in Asia increased 12.0%, while sales in the U.S. and "Rest of the world" decreased 7.1% and 24.2%, respectively. Regional sales in Europe rose 5.7%, with sales of own products growing 10.3% and third-party product sales through the subsidiaries in Norway and Denmark on par with 2019.
Total sales of own products in 2020, amounted to NOK 295.6 million (NOK 295.7 million), while sales of third-party products were NOK 67.5 million (NOK 68.1 million). Currency adjusted, sales of own products declined 7.1% during the year, while sale of third-party products was unchanged. Average NOK exchange rates towards USD and EUR in 2020 were 9.37 and 10.72 respectively, while equivalent rates in 2019 were 8.81 for USD and 9.85 for EUR.
Currency adjusted development of total sales in 2020 was 6.1% decline (+7.1%). For own products the volume decline was 7.2% (+10.3%) while thirdparty products was on par with last year (-4.3%). The decline was related to reduced activity within CABG surgery with COVID 19 displacing hospital capacity.
Cost of goods sold (COGS) amounted to NOK 76.6 million (NOK 81.1 million), representing 21.1 % of sales (22.0 %). Positive currency effects explain the relative reduction in COGS. Salary and social expenses were NOK 119.1 million (NOK 122.0 million), while other operating expenses were NOK 48.9 million (NOK 53.8 million).
Medistim continuously invests in existing and new products to cover the surgical requirements for quality verification. Historically, the company has invested between 4% and 10% of annual sales in research and development (R&D). In 2020, total R&D investments amounted to NOK 16.5 million (NOK 12.4 million), corresponding to 5.6 % of sales of own products. Of this, NOK 1.9 million (NOK 4.6 million) was capitalized in the balance sheet.
The result before R&D, depreciation and write-offs was MNOK 133.1 (MNOK 115.6 million), equaling a margin of 36.6% (28.5%). Operating result before depreciation and write-offs (EBITDA) ended at MNOK 118.6 (MNOK 107.8). Depreciation for the year amounted to NOK 23.1 million (NOK 18.0 million). The increase in depreciation was related to the implementation of IFRS 16.
The operating result (EBIT) was a record NOK 95.5 million (NOK 89.8 million), corresponding to an EBITmargin of 26.3 % (24.7 %)
The Group recorded net financials of NOK-3.9 million (NOK 1.3 million), of which NOK 18.0 million of financial expenses (NOK 5.4 million) and NOK 14.1 million of financial income (NOK 6.6 million). The increase in net financial cost in 2020 compared to 2019 was due to a volatile NOK against USD and EUR because of COVID 19 pandemic.
Profit before tax was NOK 91.6 million (NOK 91.0 million). Tax amounted toNOK 22.2million (NOK 20.7 million) and the net profit for the year was NOK 69.4 million (NOK 70.3 million), corresponding to earnings per share for the full year of NOK 3.81 (NOK 3.87).
Average number of shares outstanding during the year were 18.200.836 (18.188.836) by the end of December 2020.
Net cash flow from operating activities amounted to NOK 74.1 million (NOK 80.4 million). Working capital increased NOK 18.7 million during the year, driven by a NOK 22.6 million increase in inventories.
Net cash flow from investing activities was negative NOK 10.6 million (NOK 13.7 million) all related to investments in fixed assets. Medistim reduced investments to a minimum in 2020 to adapt to the uncertainty created by the COVID-19 pandemic.
Medistim is already the global leading provider of flow and imaging systems, with strong market positions in most developed markets, continuously expanding its footprint represented by a current installed base of approximately 3,000 systems in more than 65 countries.
However, market penetration varies from above 80% in selected European and Asian markets, to below 25% in USA, the world's largest market for CABG procedures. This represents a significant market opportunity for Medistim. Through continued strengthening of its sales organization, introduction of alternative business models and convincing clinical documentation and support from KOLs, Medistim aims to develop this large under-penetrated market. The company has also extensive growth ambitions in developing economies, confirmed with the recent Distributor Agreement with LivaNova for the Indian market.
Medistim has delivered solid profit and cash flow despite the impact from COVID-19 in 2020. The
need for Medistim's products has not changed, hence the expectation is that it is only a matter of time before cardiac bypass surgery activity recover normal levels.
Medistim will also continue its technology and product development to improve its offering and combined with recurring revenues from its large installed base, the company is well positioned to continue itsjourney of profitable growth as markets gradually recover to pre-COVID 19 conditions.
Medistim ASA has one class of shares. There were 18,337,336 shares issued at the end of 2020, each with a nominal value of NOK 0.25, unchanged from end of 2019. During the year, the shares traded between NOK 124 and NOK 255 pershare, and 34.2 million shares were traded in total.
Competition: Medistim has one single direct competitor for TTFM technology; Transonic Inc. Transonic has offered their flowmeters to the market for as long as Medistim has been in the market. Medistim today has about 80% of the penetrated market. Medistim is not aware of new competitors or technologies that could change the competitive landscape significantly.
Risks related to device malfunction: Medistim has established comprehensive procedures as part of its Quality Management System in compliance with ISO 13485:2016 to ensure the safety of its products. There was no reportable events in 2020.
Foreign exchange risk: Medistim is exposed to changes in exchange rates with most of the company'srevenues generated in USD and EUR. The company has entered hedging contracts to reduce exposure to changes to foreign exchange rates and the potential impact on financial performance.
Liquidity risk: Medistim prioritizes managing liquidity risk to ensure the company meets its obligations in time and maintains its financial flexibility. Cash generated from operations is Medistim's main source of liquidity. The group has over the past five years utilized strong revenue and profit development to build a cash reserve to meet increasedworking capital requirements as company grows. Additionally, Medistim has a credit facility with a limit of 22.5 MNOK as a source of additional liquidity.
Interest rate risk: The company is exposed to changes in interest rate levels via long-term debt with a floating interest rate.
Macroeconomic risk: The global economic situation will affect the company since Medistim is a supplier to the health care sector in many countries. Management closelymonitorsthe associated financial risks.
Creditrisk: Medistimconsidersthe risk that customers are unable to fulfill economic obligations as low, which is confirmed by the level of historic losses on receivables. The customers are mainly public hospitals with secure financing.
Regulatory risk: Medistim depends upon regulatory approvals from health authorities for permission to sell its products. The company is revised on a regular basisto verify that approvals can bemaintained. There is a latent risk that changes in regulatory conditions can result in a loss-off-approval to sell products in a given market.
Health care priorities: In general, health care institutionshavemanyprioritiesandlimitedresources. For this reason, it is imperative for Medistim that the company's solutions have clinical acceptance in order for health care systems and institutions to invest in Medistim's products.
COVID 19: The outbreak of the Corona virus and ensuing COVID-19 pandemic affects Medistim's operations and markets. In 2020, health authorities and hospitals delayed surgeries, prioritizing acute treatment of Corona virus patients.
Some hospitals have denied unnecessary access to external personnel which may affect sales of new equipment. Virtual meetings and online demonstrations have been implemented to offset these potential effects. Medistim is well positioned in regard its componentssituation with up to 12 months inventory levels and many company functions are handled through home office.
Medistim'sproductionactivitiesdependonemployees physically being present at the production facilities. A large orlocal outbreakmay resultin several employees being infected by the virus or quarantined to avoid the spread of the virus, potentially affecting productivity and output.
The situation is being continuously monitored, contingency plans are in place and the level of measures are being adjusted as appropriate.
The Board of directors has no knowledge about other events after 2020 thatwill affectthe annualreport and financial statement for 2020. See Board of director's report under other risk related to the Corona virus situation.
Medistim's ambition is making blood flow measurements and intraoperative ultrasound imaging standard-of-care in clinical practice for CABG procedures and vascular surgery, and making itstechnology available for all patients and surgeons regardless of economy or geography.
Medistim had 1047 registered shareholders in the Norwegian Central Securities Depository (VPS) at 31 December 2020, whereof the 20 largest shareholders owned 73.7%. The percentage of issued shares held by foreign shareholders was 51%. All the shares registered by name carry equal voting rights. The shares are freely negotiable. 20 largest shareholders is shown in note 20. An overview of the 20 largest shareholders is available on Medistim's website, updated every week.
| CORPORATE ACTION | |
|---|---|
| 2019 Financial statements approved by the Board |
19.03.20 |
| Annual report 2019 disclosed |
27.03.20 |
| Change of dividend proposal for 2019 |
23.04.20 |
| Annual General Meeting 2019 |
28.04.20 |
| Resolution to distribute dividend of |
|
| NOK 2.75 per share |
21.10.20 |
| Ex dividend NOK 2.75 |
22.10.20 |
Oslo 18.3.2021 Board of Director's in Medistim ASA
Tove Raanes Board member
Øyvin A. Brøymer Chairman Sign. Sign. Sign.
Bjørn M. Wiggen Deputy Chairman
Siri Fürst Board member
Lars Rønn Board member Sign. Sign. Sign.
Kari Eian Krogstad CEO
Medistim's shareholder policy is to maximize shareholder value. This will be achieved through business development and growth strategy. Medistim will seek to provide annual dividends, depending upon the company's financial capacity and financing needs to ensure future growth. The company will at all times ensure that it has the financial capacity and equity to achieve future plans for growth.
Based on the 2020 results, the Board of Directors will propose to pay a dividend of 3.00 for 2020 corresponding to a pay-out ratio of 79%. For 2019, Medistim paid a dividend of NOK 2.75 per share corresponding to and a pay-out ratio of 71%. Over the last ten years, Medistim has paid NOK 326 million in accumulated dividend to shareholders.
DNB, Danske Bank and Sparebank 1 Norwegian and Nordic investment banks had active coverage of Medistim ASA in 2020 For contact details, please see the company website www.medistim.com.
The 2020 AGM granted the Board of Directors the following authorizations:
Further information can be found in the minutes from the Annual General Meeting, available from the company's website www.medistim.com and www.newsweb.no.
| FINANCIAL CALENDAR 2021 | |
|---|---|
| Event | Date |
| 4th quarter 2020 results |
26.02.2021 |
| Annual General Meeting |
27.04.2021 |
| 1st quarter 2021 results |
28.04.2021 |
| Half-yearly 2021 results |
13.08.2021 |
| 3rd quarter 2021 results |
22.10.2021 |
Medistim's technologies and solutions increase the probability of a positive outcome of surgery for the patient and enable greater efficiency and lower costs for health care providers by reducing additional and unnecessary surgical re-interventions. The company'slong-term vision isstated as:
Medistim is standard-of-care in the operating room. This implies, making Medistim's solutions the standard-of-care in clinical practice for Coronary Artery Bypass Graft (CABG) surgery procedures and vascular surgery, ensuring that blood flow measurements and intraoperative ultrasound imaging are performed on all patients.
All conduct is based on the four elements of the company's core values – Courage, Innovation, Quality and People.
Cardiovascular diseases (CVDs) is the number one cause of death, representing approximately 1/3 of all deaths worldwide. CVD is a general term for conditions affecting the heart or blood vessels. It is usually associated with a build-up of fatty deposits inside the arteries (atherosclerosis) and an increased risk of blood clots. It can also be associated with damage to arteries in organs such as the brain, heart, kidneys and eyes.
Themainrisk factorsforCVDarehighbloodpressure, dietary risks leading to obesity, diabetes, smoking, in addition to higher age. Both obesity and diabetes are increasing world-wide, reflecting economic growth and a growing middle class in developing economies. In parallel, the number of people above 60 years of age is also growing globally.
Treatment alternatives include the use of pharmaceuticals, endovascular procedures and open surgery.
Endovascular procedures, including Percutaneous Coronary Intervention (PCI), are considered less invasive by accessing blood vessels through a surgical smallincisionandusingacathetertoinsertandtoplace a stent inside the arteriesto obtain revascularization.
A coronary artery bypass graft (CABG) is an open chest surgery and involves taking a blood vessel, also known as a graft from another part of the body (usually the chest, leg or arm) and attaching it to the coronary artery above and below the narrowed area or blockage.
Medistim's devices are increasingly used to support CABG and other vascular surgical procedures. The solutions enable cardiac imaging, blood flow measurement and provide surgeonswith immediate feedback on procedure outcome.
Intraoperative surgical guidance and quality assessment with ultrasonic imaging and blood flow measurement reduce risk of stroke for the patient. It also providesthe surgeonwith a tool to verify graft functionality, indicate when revisions are needed and to optimize graft strategy during surgery.
Globally, more than 700,000 CABG procedures are carried out on an annual basis. Although the use of medical technology for real-time blood flow measurement and ultrasound imaging during procedures is increasing, the vast majority are executed by surgeons merely relying on experience and physical finger palpation for graft patency assessment.
Currently only some 40% of the global CABG market is utilizing support systems. Development of the overall market, by increasing acceptance and use of supporting technology such as Transit Time Flow Measurement (TTFM) and High-Frequency Ultrasound Imaging (HFUS) represents Medistim's biggest growth opportunity.
Medistim is already the leading provider of flow and imaging systems, with strong market positions in most developed markets. The offering is two-fold; 1) medical systems for monitoring and analysis, and 2) consumables, including re-usable cardiac and vascular probes and ultrasound imaging probes. Sales of consumables correlates to the number of procedures executed and is highly dependent on size of installed base of systems. The company is continuously expanding its footprint represented by a current installed base of approximately 3,000 systems in more than 60 countries.
Medistim develops this large under-penetrated market through convincing clinical documentation and support from Key Opinion Leaders (KOLs), to make HFUS and TTFM standard of care for CABG surgery.
Medistim will continue its technology and product development to maintain its strong position and strengthen its sales and marketing organization improving capacity and outreach. Medistim's ambition is that its products and solutions shall benefit all patients and surgeons all over the world.
Medistim assembles and manufactures its devices and probesin Horten Norway, exceptforthe imaging probe and SonoQ system, which are produced by third parties.
Medistim's growth strategy relies on strong clinical documentation, technology and product innovation and development, and the ability to effectively commercialize its product portfolio worldwide.
Clinical studies by leading medical centers create support from Key Opinion Leaders (KOLs), and it is a strategic priority to support this by sharpening the focus on blood flow measurements, ultrasound imaging, surgical guidance, and quality assurance in relevant forums and channels.
Continuoustechnology and product development are required to maintain and develop Medistim's leading positionwithin cardiac aswell as vascularsurgery, and the company plansto launch newproductstailored to the specialties within these fields.
The company is continuously strengthening all parts of its organization. This includes the sales, service, marketing and medical teams which interact directly with customers, and the innovation, R&D, QA & Regulatory, and manufacturing departments.
Medistim's medical devices are used to improve quality of cardiovascular surgery and are subject to high requirements and product certifications with regards to quality and safety, and require high competence and excellent quality systems.
Medistim's blood flow measurement (TTFM) and high-frequency ultrasound imaging (HFUS) systems measure, monitor and image blood flow through veins or arterieswith precise accuracy during surgery.
The solution comprises two different modalities: a quantitative measuring modality (TTFM) and a qualitative imaging modality (HFUS).
The probes constitute the sensor technology that get connected with the patient's blood vessels. The flow probes are placed on a blood vessel, with the volumetric flow measured and analyzed by the system unit and displayed on-screen as blood flow curves, values, and images. The imaging functionality provides surgeons with real-time guidance during surgery and enablesthem to uncover possible causes of poor blood flow, correct technical problems, and achieve optimal clinical outcomes.
With TTFM, ultrasound is used to measure blood flow volume directly, based on the fact that the time required for ultrasound to pass through blood is slightly longer upstream (tu) than downstream (td).
The MiraQ offers the fastest and most accurate flow measurements, verifying graft patency while the patient is still on the operating table.
Ultrasound Imaging can generate images of target areas by transmitting ultrasound pulses and receiving different echoes depending on density. To help locate and understand technical imperfections during blood vessel surgery, the high frequency ultrasound imaging probe can image areas of concern on a realtime basis and reveal morphological (structural) issues for immediate correction before closure.
Epiaortic imaging allows a sensitive, direct diagnosis of aortic disease, which can lead to modifications in intraoperative surgical management.
Epicardial imaging can be used intraoperatively to assess coronary quality, strategize graft placement, and visualize constructed anastomosis(connections).
Imaging of the major carotids blood vessels in the neck after carotid endarterectomies (CEA) can reveal technical imperfections that may lead to thrombus formation and stroke if left unrepaired. Medistim also provides equipment for Doppler measurements of blood flows. However, this technology is increasingly being replaced by HFUS.
Medistim launched its first flowmeter based on transittimeflowmeasurement(TTFM)technology in 1994, the CardioMed. Since then, the company has developed several generations of quality assurance equipment. In 2009, Medistim introduced the first ultrasound imaging probe, and the company is currently the only supplier in the world that offers a user-friendly integrated TTFM and intraoperative high frequency ultrasound (HFUS) imaging system.
The MiraQ™ is Medistim'smost advanced productline
with configurations for both cardiac and vascular surgery. The MiraQ platform offers specialized configurations for cardiac and vascular applications in the products MiraQ Car-
diac and MiraQ Vascular, respectively. The application specific MiraQ product families provide a specialized application menu with a customized user interface adapted to the cardiac and vascular surgeons' requirements, as well as probes tailored for cardiac and vascular applications. The MiraQ is also available with both configurations, asthe
MiraQ Ultimate.
Flow probes utilize the reliable transit time technology to accurately measure blood volume flow intraoperatively in a wide range of applications, from cardiac and vascular, to transplant surgery. Used together with Medistim's systems, they provide fast, accurate and reproducible information to the surgeon instantaneously to provide verification of graft patency and function. The ultimate benefit is quality assurance with immediate feedback that leads to improved surgical outcomes.
Medistim's imaging probes are used to provide interoperative surgical guidance. Epiaortic imaging allows a sensitive, direct diagnosis of aortic disease, which can lead to modifications in intraoperative surgical management. Epicardial imaging can be used intraoperatively to assess coronary quality, strategize graft placement and visualize constructed anastomosis. Medistim's flow probes can be used 50 times and the imaging probe can be used 100 times and even more if treated properly. All the electrical components in use comply with environmental standards for electronic waste.
Medistim continuously invests in existing and new products to keep it's innovation leadership position and meetthe surgeons' increasing requirementsfor sophisticated tools for quality verification. In 2020 The company invested 5.6 % of annual sales of own products in research and development (R&D).
In June 2020, the company released an upgrade of the MiraQ platform, providing improved general performance, an upgraded ultrasound scanner with compound imaging, as well as some new features.
In order to grow technology adoption it is pivotal to make the products as easy to learn and use as possible. Medistim is therefore focusing on innovation to develop new features and ensure "ease of use" for the end-customers. The company's Innovation team collaborates closely with a network of surgeons and hospitals to test
prototypes and new ideas. The goal is to capture the end-customers' needs and expectations before initiation of costly development projects which are subject to strict regulatory regimes. The ambition is to accelerate product innovation and reduce development time by clarifying product design and functionality before a formal development processisinitiated. In 2020, the Innovation team has developed a prototype of a new user interface that will enter into formal development in 2021.
Medistim is part of a collaborative project together with GE Vingmed Ultrasound and Sensocure, to develop new production technology within medical devices. The project, «Advanced Manufacturing Technologies for High Impact Medical Devices», is funded by the Norwegian Research Council's BIA Health program with NOK 14.4 million over 3 years. The project which is executed in collaboration with the University College of Southeast Norway and the research institutions SINTEF and NORNER, will be finalized in the first half of 2021.
Medistim considers the project as a unique opportunity to develop and test technology which may improve efficiency and quality of ultrasound probe production in the future.
REQUEST wasthe first multicenterstudy documenting the surgical changes from the combined use of Transit Time Flow Measurement (TTFM) and High Frequency Ultrasound Imaging (HFUS).
The primary objective of the REQUEST study was to document how often the combination of HFUS and TTFM performedwith Medistim'ssystemchanged the surgical procedure. The REQUEST surgical coronary artery bypass grafting (CABG) protocol included ultrasound scanning of the aorta, conduits, target coronary vessels and anastomoses, as well as TTFM graft assessment.
More than 1,000 CABG patients were included in the study between April 2015 and December 2017, with participation from seven leading cardiac surgery centers from Europe, USA and Canada led by Coordinating Investigator, Professor David Taggart from the University of Oxford.
Final results showed that 25 % of the patient population had one or more surgical changes made to the surgical strategy based on imaging and flow data.
Of the sub-populations that went through aorta scanning and coronary target scanning, 10 % and 20 % ofthe patients had changesin the surgicalstrategy, respectively. Graft assessment with TTFM was performed in 99 % of the patients, with a result of 3 % anastomotic revision rate in 7 % of the patients. These results may be compared with previously published data showing about 4-5 % anastomotic revision rate in about 10 % of the patients.
Furthermore, the in-hospital outcomes showed a remarkably low mortality rate of 0.6 % and stroke/ TIA rate of 1 %.
Professor David Taggart at Oxford university hospital, said when presenting the results of the study: "The final results confirmed the findings from the interim analysis. In the hands of expert cardiac surgeons, and using state-of-the-artsurgical procedures, HFUS for surgical guidance and TTFM for graft assessment led to a 3 % revision rate of the anastomosis and very low level of in-hospital mortality and stroke rates."
Professor Taggart continues: "One of the striking findings is that without routine assessment in the operating room, most of these aorta and graft problems would have not been detected until after thepatienthadlefttheoperatingroom.Theseresults indicate that combining TTFM and HFUS in order to guide surgery, verify graft patency and to avoid or correct surgical problems intraoperatively, may play an important role in our continued endeavors to improve CABG surgery and its outcomes to the benefit of our patients. It should therefore become a standard of care."
Medistim's main interest in the study was to investigate and document the clinical value of the combined use of TTFM and HFUS, and the company believes the final results provided new insights that may positively impact clinical outcomes and change clinical practice going forward.
The data will support initiatives for further guideline recommendations. Medistim is encouraged by the results and look forward to further analysis and results to become available from the vast patient material in the future.
HFUS of aorta, conduits & coronary targets: Changes in 25% of patients
Revision rate 3%
Lifestyle diseases such as obesity and diabetes have increased significantly in recent decades, leading to higher prevalence of cardiovascular diseases (CVD) and need for revascularization procedures. CVDs are the most common cause of death in the western world and on the rise in Asian and Latin American countries adopting western lifestyles.
Hospitals and payers for surgery, such as insurance companies, are increasingly requiring documentation of performance and quality control during any procedure, which is expected to support the adoption of Medistim's solution over time.
Percutaneous Coronary Intervention (PCI), i.e. the use of stents, covers approximately 80% of the revascularization procedures, with CABG covering the remaining 20%. Clinicaltrials documentsuperior results achieved with CABG compared to PCI for patients with multi-vessel disease.
The number of coronary artery bypass surgeries performed has been stable overthe pastseveral years, at more than 700,000 globally per annum.
A decrease in the number of procedures performed in Western countries in recent years has been compensated by an increase in emerging markets such as China, India and Russia. Globally, Medistim expects a stable to growing trend in coming years.
Approximately 80% of CABG procedures are onpump procedures while 20% are off-pump. Both are equally relevant for Medistim'stechnology for TTFM and HFUS. The U.S. is the single largest market for Medistim's products, representing about 30% of the world market, with a combined European market of a similar size.
To date, Medistim hasinstalled about 3,000 systems in more than 65 countries, and Medistim's flow meters have been used on more than two million patients worldwide. Medistim is the clear market leader in its niche, and its systems are currently being used in more than 33% of all bypass surgeries performed worldwide. Competing providers using the transit time measurement principle are estimated to be used in about 7% of the procedures performed.
Thisimpliesthat no equipmentis being used to verify blood flow in about 60% of the bypass surgeries. This untapped market represents Medistim'slargest opportunity.
Medistim expects market penetration and market share to increase gradually, as surgical quality assurance gains more attention and the superiority of the Company's solutions gain wider acceptance.
Total value of the global TTFM market for CABG is estimated to NOK 1 billion per year.
Adding intraoperative ultrasound imaging more than doubles Medistim's market potential, due to an expanded number of applications and higher pricing compared to traditional flow measurement technology. The total market size within cardiac bypass surgery is therefore estimated at around NOK 2 billion annually.
MiraQ's imaging functionality makes the system relevant also for other types of cardiac surgery, such as heart valve surgery. Medistim estimates this added market potential to be approximately NOK 1 billion on an annual basis. This market represents an add-on opportunity to widen the use of the device beyond CABG only and is not considered an independent commercial strategy.
The combination of Medistim's ultrasound imaging technology and the MiraQ platform represents a unique and differentiated product offering in this market segment, which provides Medistim with a competitive advantage.
Medistim recognizes the value of clinical documentation and has initiated clinical studies to support verification of the impact from its solutions on CAGB surgery. The published results from the REQUEST study in 2020 proved the clinical value of adding HFUS to TTFM and the advantages of combining the two modalities are increasingly being recognized by the medical societies and cardiac surgeons.
Inclusion in the leading health organizations' guidelines for clinical surgery is vital to achieve «Standard of Care» status for TTFM and HFUS in coronary bypass surgery. Medistim engages in continuous dialogue with a broad range of organizationsto increase awareness of and knowledge on the company's solutions.
Currently, TTFM during CABG procedures are endorsed by the guidelines from the European Society of Cardiology (ECS), the European Association for Cardio-Thoracic surgery (EACTS), and The British National Institute for Health and Clinical Excellence (NICE). All are highly respected organizations and their recommendations are expected to influence clinical practice also in countries outsides their jurisdictions, including in the U.S.A.
The health care providers and surgeons performing CABG procedures are conservative and it is hard to measure the direct effect from recommendations and studies. However, it is Medistim's experience that the recommendations have influenced demand positively during 2019 and 2020 and expects increasing recognition to continue to support demand in the years to come.
Several countries are going through reforms to make quality healthcare available to a growing population in a financially sustainable way.
Thisincludes demandsfor higher quality procedures with less errors and re-interventions. In the U.S., the Centers for Medicare and Medicaid Services have, for example, cut reimbursement for 30-days re-admission after CABG as a penalty if hospitals have not been able to deliver and document high quality surgical results. Implementing technology that provides intraoperative surgical guidance and quality assessment is one way of achieving and document improved quality and outcomes.
Medistim expects several hospitals to upgrade current systems to the more advanced MiraQ system. It offers a wider range of uses and the system's imaging functionality provides valuable additional information to current TTFM, increasing the economic value for the users.
| Applications | # of procedures |
Clinical needs |
|---|---|---|
| Peripheral bypass |
> 200,000 |
Improve long-term graft patency Improve quality of life |
| CEA | > 200,000 |
Reduce risk of death and stroke Improve cost effectiveness |
| AV Access |
> 200,000 |
Secure maturation of shunt/fistula Reduce risk of cardiac failure hand ischemia |
Secure maturation of shunt/fistula |Reduce risk of cardiac failure and
Medistim has a strong position in the vascular market in the Nordic countries and in Germany and is working to build similar positions in other markets as well. Medistim's focus areas within vascular surgery include peripheral bypass, carotid endarterectomy (CEA) and arteriovenous (AV) access surgery.
Peripheral bypass surgery is primarily performed on the major arteries in the legs, whereas CEA is a procedure where blockages in the neck arteries are surgically removed to reduce risk of stroke. AV access surgery is performed to create a successful shunt or fistula that are used to connect a patient in need of dialysis to a dialysis machine. The MiraQ Vascular solution supports all three types of
Clinical support and studies are key enablers for Medistim to increase market penetration, also in vascularsurgery.
In May 2020, the CIDAC (Comparison of Intraoperative Duplex Ultrasound and Angiography after Carotid Endarterectomy) study was published in the European Journal of Vascular and Endovascular Surgery (EJVES). The results demonstrated that HFUS detected significantly more high-grade defects that needed revision compared to angiography, and with significantly higher interobserver reliability. The authors conclude that given the lesser invasiveness, HFUS could be considered as an alternative to angiography for intra-operative completion control in CEA, further strengthening the support of using Medistim's ultrasound imaging device and probe for reducing the risk ofstroke after CEA.
Medistim is the undisputed market leader in the global CABG market with a strong position in core geographical markets.
Representing about 30% of the global CABG market, USA is the most important market for Medistim, accounting for 43% of total revenue from own products in 2020.
The US subsidiary has 25 employees with sales representatives covering all states, all of which have extensive healthcare experience. The company has had direct sales operations in the US since 2007. Medistim has over 600 systems installed in the US.
In addition to regularsales activities,the commercial strategy includes cooperation with influential surgeons and key opinion leaders at leading cardiac centres. Company representatives are in close dialogue with medical associations like The American Association for Thoracic Surgery (AATS) and The Society of Thoracic Surgeons (STS), to motivate these organizations to include Medistim's equipment in guidelines for standard of care for CABG.
The US CABG-market is underdeveloped, with less than 30% of surgeries performed with support from medical systems ensuring proper blood flow. Medistim has a market share of approximately 23 % of a total market of approximately 200,000 annual bypass surgery procedures and sees a substantial market potential due to the still low penetration of CABG surgery support systems.
To strengthen its offering, Medistim has introduced a flexible business model for the US market. In addition to traditional capital investments and purchase of consumables, hospitals can choose to either pay per procedure or enter leasing agreements. Under these agreements the systems are placed at the hospitals free of charge, with the customer purchasing a "per surgery" smartcard or paying a monthly lease.
Europe represents Medistim's second largest market. The main European markets are served through direct in-country operations, while remaining markets are covered by distributor agreements.
Medistim has a strong position with all cardiac centres in Norway, Sweden, Finland and Denmark, with directs sales in Denmark since 2011. Several vascular centres also have Medistim systems that are being used on a regular basis. The market share of CABG proceduresis above 70%. Both markets are mature, with revenues mainly generated from sale of consumables and irregular replacement of old systems. In Norway and Denmark, Medistim also operates as distributor for other surgical products.
Germany is the largest market in Europe, with about 44,000 CABG procedures performed per year and Medistim has had direct representation there since 2002. Medistim has a high penetration within coronary surgery in Germany with a market share of more than 80% but still have opportunities for growth by converting customers to become both flow and imaging users. The vascular market represents an opportunity for continued growth.
In the UK, Medistim has had direct representation since 2012. Some 16,000 CABG procedures are performed in the UK every year, and Medistim's equipment is currently used in about 10% of these.
Market penetration in the UK has taken longer than anticipated, and sales are still modest compared to the perceived potential. Medistim expects increased adoption of TTFM and HFUS following the 2018 update to the NICE recommendation for use of Medistim's solutions. The company has also established a solid reference centre in Oxford through the REQUEST study, further supporting marketing of Medistim medical solutions.
Medistim established direct representation in Spain in 2017. Around 7.000 coronary artery bypass surgery (CABG) procedures and 8,000 vascular procedures are performed per year.
Medistim has an installed base of 80 systems, most of them on the VeriQ platform and older versions. These versions only include TTFM and do not support imaging modality.
Medistim sees great potential in upgrading of the installed base to the MiraQplatform,which provides the combination of ultrasound imaging and TTFM in one system.
Medistim's technology is used in about 80% of all coronary surgical procedures as the installed base is primarily in cardiac centres. This indicates an untapped potential in the vascular market, which represent only a small number of Medistim's installed base.
Elsewhere in Europe, Medistim is represented through distributors. This includes countries such as Russia, Poland, Italy and France which are considered as promising long-term growth markets.
With over 90% of all CABG procedures using Medistim technology for blood flow measurement systems and ultrasound imaging, Japan is one of the most developed markets for Medistim's solutions. The Japanese market countssome 13,000 procedures annually.
About 50,000 CABG procedures are performed annually and Medistim's share of this market is about 45%.
Approximately 100,000 CABG procedures are performed annually. Medistim's market share is below 1%. This is an interesting target market for Medistim and with the new distributor partnership with LivaNova, it is expected that the Indian market will become a future driver for growth.
Medistim has established distributor partnerships with Medtronic in Canada and LivaNova in Australia and is experiencing positive development in these markets. The company has a high market share in the Middle East, while Latin America to date represents a very small part of business activities.
Medistim depends upon good relations with its stakeholders to succeed. Good corporate governance is important to build and maintain trust and confidence in the company and ensure long-term value creation in the best interest of the company's shareholders.
Medistim is a Norwegian public limited company listed on Oslo Børs, and bases its corporate governance structure on Norwegian legislation and recommended guidelines.
The company therefore seeks to align with the Norwegian Code of Practice ("Code" or "Code of Practice") for Corporate Governance, lastrevised 17 October 2018, issued by the Norwegian Corporate Governance Board (NUES).
This report discusses Medistim's main corporate governance policies and practices and how Medistim has complied with the Code of Practice in the preceding year. Application of the Code is based on the "comply or explain" principle, and any deviations from the Code is explained under each item.
The company's corporate governance policy and practices is subject to annual review by the Board. In 2021, Medistim will focus on updating its governance documents and practices and aligning with the recommendations by the Code of Practice where relevant.
Medistim's mission is to deliver pioneering and cost-effective solutions to health-care providers, patients and payersin the globalsurgical market. Its Ultrasonic Surgical Guidance & Quality Assessment systems are built for intuitive imaging of vascular morphology and instant assessment of blood flow. With its tools, Medistim help surgeons improve surgical quality to reduce adverse events and reinterventions, and ultimately improve the patients' quality of life.
The company's business scope is clearly described in section 3 in the articles of association: "to conduct research, development, production, distribution and sale of medical equipment through its own business or through participation in other companies, as well related activities".
Medistim was founded in 1984 and develops innovative technology and devices which increase the probability of a positive outcome of surgery for patients and enable greater efficiency and lower costsforhealthcareprovidersby reducing additional and unnecessary surgical re-interventions. The company's long-term objective is to make its solutions "standard-of-care" in the operating room.
The board has developed a clear strategy to effectively commercialize its existing product portfolio worldwide. Risk management and internal control systems are in place to manage operational and financial risks. A description of the key risk factors and risk management can be found in the board of director's report in the annual report.
The company has prepared a code of conduct including principles for ethical behavior, trade and anti-corruption that applies for all employees. A separate report on how these guidelines and procedures are integrated with the company's activities and how they relate to value creation for the company's stakeholders can be found in a separate "sustainability" chapter in the annual report for 2020.
The company's objectives,strategies and risk profile are subject to annual review by the Board.
Deviations from the Code of Practice: None
At 31 December 2020, the company's equity was NOK 257 million, which is equivalent to 74% of total assets. The board continuously evaluates the company's capital requirements to ensure that the company has a suitable capitalstructure considering its objectives, strategy and risk profile.
Medistim's shareholder policy is to maximize shareholder value. This will be achieved through sound business development and an aggressive growth strategy. Medistim will seek to provide annual dividends, depending upon the company's financial capacity and financing needs to ensure future growth. The company will at all times ensure that it has the financial capacity and equity to achieve future plans for growth.
The Board of Directors proposes to pay a dividend for 2020 of NOK 3 per share (NOK 54.6 million) based on the financial results for the year. For 2019, the company paid a dividend of NOK 2.75 per share, corresponding to NOK 50 million and a dividend payout ratio of 71%. Over the past ten years, Medistim has paid a total of NOK 326 million in dividend to shareholders, corresponding to an average payout ratio of 76 %.
At the annual general meeting on 28 April 2020, the board was granted two authorizations:
Both authorizations are valid until the next annual general meeting. There was a separate vote on each of the two authorizations. For supplementary information, see the minutes of the annual general meeting available from www.medistim.com.
Deviations from the Code: None
Medistim has one class ofshares. Each share carries equal voting rights, including the right to participate in general meetings. All shareholders shall be treated on an equal basis, unless there is just cause for treating them differently.
In the event of a capital increase based on an authorization from the annual general meeting, where the pre-emptive rights of shareholders are set aside, the company shall provide reasonsfor the action in the stock exchange release in which the capital increase is announced. There were no such events during 2020.
Any transactionsin own shares, i.e. a share buy-back program, will be carried out either through Oslo Børs or at otherwise at stock exchange prevailing prices. If there is limited liquidity in the company's shares, the company will consider other ways to ensure equal treatment of all shareholders. There were no transactions in own shares during 2020.
When there are major transactions between the company, its shareholders, subsidiaries, members of the board, leading employees or other close related parties, an evaluation will be performed by an independentthird party. The generalmeetingwill treat the matter according to law and jurisdiction for Norwegian public companies. There were no such transactions in 2020.
Deviations from the Code: None
The shares of Medistim are freely negotiable. There are no restrictions on owning, trading or voting for shares in the company's articles of association.
Deviations from the Code: None
The general meeting is the company's highest decision-making body. The general meeting is open to all shareholders, and Medistim encourages shareholders to participate and exercise their rights at the company's general meetings. The board, or shareholdersrepresenting at least five percent of the shares, may call for an extraordinary general meeting when deemed necessary.
Notice will be sent to shareholders minimum 21 days before the meeting as required by law. The agenda, related documents and information about the issues to be considered will be included in the notice.
To participate, shareholders will have to register at the latest one day before the meeting. Shareholders unable to attend, may vote by proxy. Guidelines for proxy voting is given in the notice documents, with the opportunity for separate voting instructions.
The board of directorsisrepresented at the meeting. The chairperson of the board normally chairs the general meeting, but if deemed necessary it will be arranged with an independent chair for the meeting. The company's auditor and nomination committee will participate at the meeting.
In 2020, Medistim held its annual general meeting on 28 April with 85.88% of the shares represented.
There were no extraordinary general meetings during the year.
Deviationsfrom the Code: The Code recommendsthatshareholdersshall be able to vote on each individual candidate nominated for election to the board and nomination committee, including in the proxy form. The company has historically practiced combined voting for all nominated candidates but will consider changing this practice from 2021.
Medistim has established a nomination committee, as regulated in the articles of association section 7. The committee consists of three members elected by the general meeting for a term of two years.
The guidelines for the nomination committee is governed by the company's articles of association, which stipulate that members of the nomination committee shall be shareholders in the company or shareholder representatives when elected as committee members.
| Name | Role | Considered independent of the main shareholder and management |
Representing a specific shareholder |
Served since |
Term expires |
Participation in nomination committee meetings in 2020 |
|---|---|---|---|---|---|---|
| Bjørn Henrik | ||||||
| Rasmussen | Chair | Yes | Follum Capital |
2009 | AGM 2021 | 100% |
| Asbjørn Buanes Member | Yes | Asbjørn Buanes |
2005 | AGM 2021 | 100% | |
| Kristin Eriksen | Member | Yes | Salvesen & Thams |
2018 | AGM 2022 | 100% |
The nomination committee is responsible for suggesting candidates to the board of directors and yearly compensation to the board and board committees. Proposals for candidates to the board must be sent to the nomination committee at latest 14 days before the notice of the general assembly is distributed.
Remuneration of the members of the nomination committee is determined by the general meeting.
Deviations from the Code: The Code recommends that the committee's recommendations should provide a justification of how its proposed candidates take into account the interests of shareholders in general and the company'srequirements. Medistim has historically not provided such justification, but the company will consider changing its practice from 2021.
The board of directors shall constitute of three to six directors as regulated in the articles of association section 5. The board and the chairperson are elected by the general meeting for a period of two years and may be re-elected. The nomination committee ensures that not all board members are up for election at the same time. At 31 December 2020, the board consisted of the following five directors:
| Name | Role | Considered independent of main shareholders Served |
since | Term expires |
Participation board meetings 2020 |
Share ownership in Medistim (direct/ indirect) |
|---|---|---|---|---|---|---|
| Øyvin A. Brøymer |
Chair | No | 2000 | AGM 2021 | 100% | 10.91% |
| Bjørn M. Wiggen |
Deputy Chair |
No | 2014 | AGM 2022 | 100% | 10.16% |
| Lars Rønn |
Director | Yes | 2010 | AGM 2022 | 100% | 0.01% |
| Siri Fürst |
Director | Yes | 2013 | AGM 2021 | 100% | 0.01% |
| Tove Raanes |
Director | Yes | 2014 | AGM 2021 | 100% | 0.01% |
The composition of the board is based on representation of the company's shareholders, as well as the company's need for competence, experience, capacity and ability to form balanced decisions. Information on each director's expertise, background and capabilities can be found on the company's website www. medistim.com.
The nomination committee has evaluated all the directors to be independent of the company's executive management and material business contacts. Three out of five members are regarded as independent of the company's main shareholders. The independence of board members is also evaluated by the board
Deviations from the Code: None
The board has the ultimate responsibility for the management of the company and for supervising management, while the CEO is responsible for the day-to-day management.
The board has adopted instructions for the board and the CEO, which are focused on determining allocation of internal responsibilities and duties. The board normally meets six to seven times a year, while the CEO and Chair has continuous dialogue on the company's development.
The board has implemented procedures to ensure that members of the board and executive personnel make the board aware of any material (direct or indirect) interests that they may have in items the company is about to enter. The board will also be chaired by some other member of the board if the board is to consider matters of a material character in which the chair of the board is, or has been, personally involved.
The entire board functions as the audit committee. The board has, considering the size of the company, deemed it unnecessary to appoint other steering committees based upon the issues considered by the board in 2020.
The board conducts a self-assessment of its work once per year.
DeviationsfromtheCode:Theentireboardfunctions as the audit committee. All board members are independent from the company's management, and has collectively the competence required, including accounting and auditing experience.
The board carries the responsibility to ensure that the company has sound and appropriate internal control systems and risk management systems reflecting the extent and nature of the company's activities. Sound risk management is an important tool to create trust, ensure good environment, health and safety standards and enhance value creation. Internal control should ensure effective operations and prudent management of significant risksthat could prevent the company from attaining its targets. The board holds at least one meeting a year with the auditor, to review the company's internal control routines, including identified weaknesses and areas subject to improvements.
Medistim complies with all laws and regulations that apply to the group's business activities. The group's ethical guidelines, anti-corruption policy and code of conduct for ethical trade describes the main principles for ethical behavior which applies to all employees and suppliers. A quality manual has been prepared based on internationally recognized quality standards, to ensure that the company delivers high quality products and services in accordance with product specifications, relevant acts and regulations. The guidelines and quality manual are subject to annual review by the board in connection with the evaluation of the company's internal control and risk management. Medistim is also subject to strict medical rules and regulations, requiring close monitoring and frequent audits of medical equipment and the company's practices concerning health, safety and environment (HSE).
Medistim prepares its accounts in accordance with theInternationalFinancialReportingStandards(IFRS), which are intended to give a true and fair overview of the company's assets, financial obligations, financial position and operating profit. Before each board meeting, the board receives reports from management on operational developments and financial results, which is compared against budget, strategy approved by the board and last year's performance. In addition, quarterly reports are prepared in accordance with the recommendations from Oslo Børs, which are reviewed and approved by the board prior to disclosure.
The board has an annual meeting to review the company's strategy for the next three years, risk exposure and such internal control arrangements. A summary of the main risks is presented in the director'sreport in the annual report.
Deviations from the Code: None
The board of directors receives a fixed yearly compensationdecidedby the general assembly,based on the nomination committee's recommendation. The remuneration reflectsthe board'sresponsibilities, competence, time involved and the complexity of the business.
The remuneration of the board members is not performance based and the company does not grant share options to any board members. No loans are provided to board members.
The board members, or companies with which they are associated, have not been engaged in specific assignments for the company in addition to their appointments as members of the board.
More information on remuneration to the board can be found in note 21 to the annual accounts.
Deviations from the Code: None
The main principle of Medistim's executive remuneration policy is that the compensation shall be competitive and provide the motivation to attract and retain individuals with the required competence.
The board determines remuneration for the CEO, while the CEO determines remuneration for the management team and leading employees. Compensation of the management is based on market terms and evaluated on a yearly basis. The principles have remained the same over several years. These principles are also the basis for future evaluations. Remuneration of the CEO includes a share-based incentive plan.
The executive remuneration consists of a fixed salary and a variable part linked to the company's targets, and pension schemes. No executives will receive additional compensation when leaving the company.
Details on executive remuneration can be found on note 21 of the annual accounts.
Deviations from the Code: The Code recommends that the company's guidelines are included as a separate appendix to the notice calling for the general meeting. The guidelines should inform which aspects that are advisory and which, if any, are binding. The general meeting should vote separately on each of these aspects of the guidelines. Further, the Code recommends that the guidelines contain information on criteria related to performance related remuneration, which should be subject to an absolute limit. Medistim includes a general description of the company's guidelines for remuneration in the annual report, alongside information on remuneration to each director. Executive remuneration is treated as one item by the general meeting.
The board has adopted a shareholder and information policy which sets the basic principles for the company's communication and dialogue with capital markets participants. The company is committed to provide its shareholders timely, relevant and accurate information on the company's developments and plans. Communication with stakeholders shall be based on the principles of equal treatment and transparency in order to build trust and stakeholder confidence. The responsibility for the company's investor relations activities lies with the CEO and the CFO.
Medistim's IR activities shall help capital markets participants to make an informed view on Medistim asaninvestmentcase,includingitsfinancialsituation and prospects, which will contribute to optimize the cost of capital and support a fair valuation of the company's shares. The company does not give any guiding on future sales and results.
Medistim provides interim reports in line with Oslo Børs' recommendations. Presentations are given in connectionwith the disclosure of the interim results to provide an overview of operational and financial developments. The presentations are open to the public and made available through a webcast.
All information is provided in English, and is distributed to the company's shareholders through Oslo Børs' news channel www.newsweb.no and on the company's website www.medistim.no.
Deviation from the Code: The company has not prepared any policy or guidelines specifying who is entitled to speak on behalf of the company or regulating communication with shareholders outside general meetings, as recommended by the Code. As a general principle, the board has decided that the company's spokespersons are the CEO and CFO on investor matters, while the CEO handles media and other inquiries.
In apotentialofferwheretheeffectofthetransaction is a takeover, the Board of Directors will handle the matter in a professional manner and ensure same information and treatment of all shareholders. A takeover requires a general meeting and the board of directors will give their recommendation related to a potential offer for the company's shares.
Deviations from the Code: The board has not established separate guidelines in the event of a take-over bid as recommended by the Code. Takeover bids are usually specific, one-off, events which makes preparation of guidelines challenging. In the event of a take-over process, the Board will ensure that the company's shareholders are treated equally, and that the company's activities are not unnecessarily interrupted. The board will further seek to comply with the relevant recommendations from the Code.
BDO AS has been the company's auditorsince 2010. The auditor is considered independent of Medistim ASA. The board receives an annual confirmation from the auditor that the requirements regarding independence and objectivity have been satisfied.
The auditor participates in the board meeting dealing with the annual accounts. In this meeting, the auditor gives their views on accounting matters and principles, risk areas and internal control. The auditor participates in other board meetings on the request from the board when the board wants to get the auditors view in a specific matter.
Remuneration paid to the auditor is set by the general meeting and described in the notes to the annual accounts. The auditor attends the annual general meeting.
Deviations from the Code: The board has not establishedseparate guidelinesontheuseof auditor for other purposes than auditing, as recommended by the Code. Only the CEO or the CFO hires services from the auditor. If deemed necessary, the auditor is consulted for mechanical tax issues. For other matters, other advisors will be consulted.
Dating its governance documents and practices and aligning with the recommendations by the Code of Practice where relevant.
Medistim develops and sells products improving patients' quality of life and supporting effective health care systems by enhancing quality during surgical procedures. The quality assurance improves surgical outcomes and increases the likelihood that the procedure is performed in a correct manner the first time.
This benefits patients, the health care system and reduces negative impacts and cost for society at large.
Medistim's mission over the past three decades has been to serve patients, surgeons and health care providers with innovative and cost effective medical devices that measure blood flow and visualize atherosclerosis, and thereby help improve the quality and outcome of cardiac and vascular surgery.
Medistim's organization and culture are key drivers for stakeholder value creation. The culture is built on its four core values,which guidesthe daily activities.
The Board of Directors has the overall responsibility for aligning Medistim's strategy and sustainability considerations,whiletheday-to-dayresponsibilitylies with the CEO,supported by the Group management.
Medistim operatesin a highly regulated marketwith regards to product quality, safety and compliance with requirements. The company has a history of technical innovation and financial growth. It recognizes sustainability as an important part of product and service development and operations, and that it is a key contributing factor to the longterm growth and value creation for all stakeholders.
Medistim supports the UN SDGs.
The company considers its greatest impact is to strengthen human health through improved surgery by providing high quality medical devices meeting strict safety requirements.
SDG 3.4 specifies a targeted reduction of premature mortality by 2030 from non-communicable diseases through prevention and treatment of amongst other cardiovascular disease.
The company also supports SDG target 12.6 by adopting sustainable business practices and integrating sustainability information into its reporting cycle.
In early 2021, Medistim conducted a materiality analysis following a stakeholder identification process. Investors, distributors, suppliers and employees were identified as key company stakeholders and invited to participate in the materiality analysis via a digital survey, followed up with selected in-depth interviews. The stakeholders were asked to grade the importance of ESG related factors, based on the SASB materiality map and selected additional factors, by importance for Medistim. A total of 46 stakeholders participated in the survey. Their answers combined with interviews and a weighting of the stakeholder groups provided the external stakeholder ranking of the ESG factors. This was contrasted with the responses of an internal Medistim working group and summarized in the above materiality matrix.
By summarizing the factors identified through the analysis, Medistim has defined the following themes as material to the company.
The themes form the foundation for this report:
This is the company's first ESG report. Medistim will continue to work with the material topics identified and consider initiatives on how the company can improve performance for a more sustainable business conduct. This will include seeking to develop relevant ESG KPI's related to Medistim's activity.
Patient safety is Medistim's absolute priority as a producer of medical devices. This means focusing on quality and compliance with applicable international and national laws and regulations. Increasingly, in line with stakeholders' priorities, the company is working to reduce the environmental impact of Medistim's products, manufacturing process and distribution.
that shall ensure that its products and services are delivered in accordance with relevant acts, regulations and requirements. The company's QMS is based on the ISO 9000:2015 and ISO 13485:2016 standards, and complies with national and international standards, rules and regulations for manufacturers and suppliers of medical devices. The QMS consists of a set of policies, standard operation procedures, forms and work instructions to ensure that the products meet required quality and safety standards.
Medistim relies on third-party suppliers to achieve desired quality results for products and services. All vendors of products, raw materials and services used in the design, development, production and servicing of Medistim medical devices are subject to supplier qualification. This includes consulting services that can affect the quality management system and product quality. The QMS also include procedures for selecting, assessing and approving third-party suppliers such as supplier audit programs and necessary documentation to verify quality and ensure traceability.
The QMS is subject to regular reviews by the management team. Employees are trained on the company's quality policies and standard operating procedures which are continuously evaluated and refined. All reports of adverse events and / or product complaints are promptly investigated and addressed. Adverse events are reported to applicable health authorities according to procedures.
Medistim had no quality incidents affecting patient safety that led to any market actions or need for reporting to health authorities e.g. product recall or field corrective action in 2020.
Medistim has prepared an environmental policy, last updated in 2020, to increase environmental focus, ensure sustainable operations and reduce its environmental footprint.
The company's direct environmental impact relates primarily to the production facilities in Horten, the distribution to European countries and the US as well as some traveling in connection with sales activities. Medical equipment is distributed by postal services with commercial logistics providers based in the Nordic region. When traveling, employees are encouraged to take environmentally friendly options into considerations, by coordinating activities and meetings in order to minimize the number of flights. Employees are further encouraged to reduce consumption and waste generated from their daily business activities.Medistimhas establishedroutines for management of chemicals and waste.
The lifetime of Medistim's products is defined either by the number of use or expected time of performanceafterdistributiontothemarket.Average lifetime of the MiraQ machines is seven years. Flow probes can be used 50 times and the imaging probe can be used 100 times and even more if treated properly. All the electrical componentsin use comply with environmental standards for electronic waste. Hospitals and treatment centers are responsible for safe disposal of the equipment when it has reached end-of life.
All vendors of products, raw materials and services used in the design, development, production and servicing of Medistim medical devices are subject to supplier qualification. All relevant materials used are subject to biocompatibility testing to ensure is not harmful for the patient or operator. All equipment which is in contact with human tissue is designed to withstand required sterilization processes.
Risk management of Medistim's products' life cycle is based on current standards, regulations and national legislation related to medical devices, clinical experience and documentation with these and similar devices as well as state-ofthe-art technology. The company's product risk management procedures are governed by the QMS.
Compliance with national, regional and international laws and regulations is mandatory in all of Medistim's activities, but good business ethics goes beyond mere compliance. In order to live up to the company's mission and values and achieve its strategic goals, everyone is responsible for acting in a manner that safeguards the interests of Medistim and its stakeholders. This way, Medistim will continue to build trust and credibility as a foundation for sustainable operations over time.
Medistim's framework for good business conduct includes ethical guidelines and an anti-corruption handbook that together shall ensure compliance and sustainable operations acrossthe company and its supply chain.
The ethical guidelines, which were last updated in 2020, are built on central UN and ILO conventions and principlesfor human and labor rights and reflects Medistim's values and ethical view on good business conduct.TheguidelinesclarifyMedistim'sexpectations to employees' behavior and cover areas such as discrimination and harassment, substance abuse, confidentiality and protection of information, privacy protection, conflicts of interest, communication, inside information and whistleblowing.
Medistim is committed to a zero-tolerance policy of corruption, which means that the company strictly oppose all forms of corruption. The anti-corruption handbook describes and explain the company's anti-corruption policy and how employees shall act to avoid any illegal or unethicalsituationsin relation to existing and potential business partners.
The ethical guidelines and anti-corruption manual are applicable to all Medistim's employees, including subsidiaries, consultants, and directors, as well as business partners for sales and distribution. All employees and partners must approve in writing that the guidelines are read and understood. This is also followed up after revisions and updates to the guidelines. Violation of the guidelines may have consequences for the employment or partner relationship.
Medistim has established routines for reporting concerns related to illegal or unethical conduct, including a whistleblowing channel for discrete and confidential handling of any potential reports. There were no reported concerns during 2020.
Medistim is a global leader in developing products for quality control within of CABG and vascular surgery. The company's products are sold either directly through subsidiaries or distributors in all continents. A standardized sales process has been established to ensure truthful and responsible selling practices as well as clearly defined requirements related to implementation of the solutions. All customer communication is done by trained and authorized personnel.
Medistim has a flexible business model in which prices are adapted to cost level of each relevant individual market. Each distributor has their own pricing list and a model for how the end-price to the customer is split between Medistim and the distributor. The devices are customizable, enabling delivery of basic models with a lower price point.
The company engagesin continuous dialoguewith a broad range of organizations to increase awareness and knowledge of its solutions. Inclusion in leading health organizations' guidelines for clinical surgery is vital to achieve "Standard of Care" status.
As a healthcare company, Medistim gathers and stores personal data as part of its research and development practices and business operations. At the same time, personal data is increasingly at risk of being misplaced, stolen or shared without consent.
Medistim recognizes its responsibility of managing the data collected in a responsible manner and keeping the data safe.
The company is subject to laws and regulations that stipulate how personal data can be collected and managed, such as General Data Protection Regulation (GDPR). Strict guidelines and procedures have been implementedwith to ensure compliance. This involves regularly reviews and development of the company's internal control systems and risk management processes to continuously improve and address existing and emerging data security and privacy threats. No service is conducted on equipment before patient data have been deleted.
To ensure a modern, secure and well-functioning IT platform, the company has outsourced its IT management to a professionalservice provider. Any breaches to data security and consumer privacy will be reported and followed up immediately. Medistim registered no data and GDPR breaches and no wrongful sharing of personal customer data incidents in 2020.
Medistim is committed to being a responsible employer and promotes an open and strong corporate culture. The company supports internationally recognized human rights and labor standards, as defined by the International Labour Organization's (ILO) fundamental conventions and the UN Declaration of Human Rights.
The ability to attract and retain a skilled workforce is imperative for Medistim to succeed over time. At year-end, Medistim employed 120 people (112), of which 3 were part-time employees.
The company has developed a competence matrix which clarifies required competence and resources needed to ensure the right quality of the products and services provided and to meet customers' needs. Individual training programs are set up for each employee, either when onboarding new workers or after individual evaluations. The training istailored to each role, tasks and duties and includes tutoring and participation at internal and external courses,seminars and other relevant arrangements.
Medistim strives to ensure a good working environment. All employees are entitled to an annual performance review with their immediate supervisor.
Sick leave for the year totaled 3.8% (3.2%). In 2020, Medistim moved its production facility to new and more functional premises, with recreational areas and easy access to massage and chiropractor services. No work-related incidents or accidents were registered in 2020 (0).
Medistim promotes a productive and inclusive working environment, free from harassment, discrimination, and disrespectful behavior. All employees are offered equal opportunities with regards to hiring, compensation, training and promotion regardless of gender, age, ethnic and national origin, religion, sexual orientation, social background or other distinguishing characteristics.
Competence is the main priority when recruiting for new positions. Medistim has fairly equal gender distribution, as the Group traditionally has recruited from environments where women and men are equally represented. The company practices equal pay within the same salary range, but on average Group level men are paid more due to the share of higher-level positions.
Medistim offers full pay during parental leave for both men and women, and in 2020 3.3% of Medistim's female and 1.7% of male employees took parental leave. On average, women took 35 weeks, while men took 9 weeks.
| INDICATORS | 2020 | 2019 |
|---|---|---|
| Working environment, health and safety | ||
| Number of employees |
120 | 112 |
| Number/ share of part-time employees |
3 | 2 |
| Turnover - number of employees leaving |
6 | 3 |
| Employees' co-ownership in the company (% employees owning shares in Medistim) |
4,20% | 4,40% |
| Sickleave (%) |
3,80% | 3,20% |
| Number of work-related injuries |
0 | 0 |
| Gender balance, % women of group total |
50,00% | 47,30% |
| Gender balance, % women executive management |
41% | 41% |
| Gender balance, % women Board of Directors |
40% | 40% |
| Number of women hired during the year |
2 | 7 |
| Number of men hired during the year |
4 | 7 |
| Age distribution, employees < 30 years |
4 | 5 |
| Age distribution, employees 30-50 years |
63 | 56 |
| Age distribution, employees > 50 years |
53 | 51 |
| Average salary female employees in NOK |
626 796 | 616 318 |
| Average salary male employees in NOK |
795 686 | 782 385 |
| All employees incl. management level, womens share of salary per position (Hay Grade) |
711 241 | 699 352 |
| Executive management, womens share of salary per position (Hay Grade) |
22% | 18% |
| Number of weeks for maternity leave (women) |
35 | 13 |
| Number of weeks for paternity leave (men) |
9 | 0 |
| Responsible operations | ||
| Employees conducted training in ethical guidelines/ Code of Conduct (%) |
||
| Reported whistleblower incidents |
0% | 0% |
| Reported incidents of corruption |
0% | 0% |
| Breaches of labor practices in the supply chain |
0% | 0% |
| Governance | ||
| Number of board members |
5 | 5 |
| Independent board members |
3 | 3 |
| Average age of board members |
60 | 59 |
| % meeting participation |
100% | 100% |
10.1 Consolidated Income Statement Medistim ASA Group
| INCOME STATEMENT MEDISTIM ASA GROUP | |||
|---|---|---|---|
| 1 = NOK 1000 | Note | 2020 | 2019 |
| Operating income and expenses | |||
| Revenue | 356 208 | 356 914 |
|
| Other income |
6 927 | 6 809 |
|
| Total revenue | 1,2 | 363 134 | 363 723 |
| Operating expenses | |||
| Cost of goods sold |
3 | 76 577 | 80 138 |
| Salary and social expenses | 4,5,16 | 119 066 | 122 016 |
| Other operating expenses |
8 | 48 865 | 53 790 |
| Operating profit before depreciation and impairment | 118 626 | 107 778 | |
| Depreciation and amortization on assets |
6,7,12 | 23 141 | 18 010 |
| Operating profit | 95 485 | 89 768 | |
| Financial income and expenses | |||
| Total financial income |
9,20 | 14 137 | 6 649 |
| Total financial expenses |
9,20 | 18 015 | 5 373 |
| Net finance | -3 878 | 1 276 | |
| Profit before tax | 91 607 | 91 044 | |
| Tax expense |
10 | 22 219 | 20 738 |
| Profit for the year | 11 | 69 388 | 70 306 |
| Earnings pr. share | |||
| Basic | 11 | 3,81 | 3,87 |
| Diluted | 11 | 3,80 | 3,86 |
| Statement of other comprehensive income | |||
| Net profit |
69 388 | 70 306 |
|
| Items that may be reclassified to profit and loss |
|||
| Exchange differences arising on translation of foreign operations |
-965 | -87 | |
| TOTAL COMPREHENSIVE INCOME | 68 423 | 70 219 |
| CONSOLIDATED BALANCE SHEET MEDISTIM GROUP ASA | |||
|---|---|---|---|
| 1=NOK 1000 | Note | 12/31/2020 12/31/2019 | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment |
6 | 64 684 | 64 892 |
| Deferred tax asset |
10 | 775 | 2 605 |
| Intangible assets |
12 | 32 688 | 38 168 |
| Other long term receivable |
19 | 1 885 | 1 943 |
| Total non current assets | 100 033 | 107 608 | |
| Current assets | |||
| Inventory | 14 | 112 667 | 90 070 |
| Accounts receivable |
15 | 57 485 | 62 188 |
| Other receivables |
15 | 3 744 | 9 497 |
| Financial instruments |
19 | ||
| Cash | 16 | 71 891 | 66 745 |
| Total current assets | 245 787 | 228 501 | |
| Total assets | 345 820 | 336 109 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital |
17 | 4 585 | 4 585 |
| Treasury shares |
17 | -33 | -36 |
| Share premium |
17 | 41 852 | 41 852 |
| Other paid in capital |
17 | 5 762 | 4 330 |
| Other reserves |
17 | 781 | 1 746 |
| Retained earnings |
17 | 203 900 | 184 384 |
| Total equity | 256 846 | 236 861 | |
| Non current liabilities | |||
| Long-term debt |
20,19 | 7 580 | 4 500 |
| Lease obligations |
7 | 21 652 | 22 683 |
| Deferred revenue |
265 | 618 | |
| Total non current liabilities | 20 | 29 497 | 27 801 |
| Current liabilities | |||
| Accounts payable |
13 530 | 14 828 |
|
| Income tax payable |
10 | 12 307 | 13 646 |
| Other short term liabilities |
17 | 23 610 | 33 617 |
| Provisions | 17 | 150 | 150 |
| Short-term debt |
20,19 | 9 880 | 9 206 |
| Total current liabilities | 59 477 | 71 447 | |
| Total liabilities | 88 973 | 99 248 | |
| Total equity and liabilities | 345 820 | 336 109 |
| 1 = NOK 1000 | Note | 2020 | 2019 |
|---|---|---|---|
| Cash flow from operations: | |||
| Profit/loss after tax |
69 388 | 70 306 |
|
| Minus income tax paid |
10 | -19 045 | -18 961 |
| Plus this years tax expense |
10 | 22 219 | 20 738 |
| Plus depreciations |
6,7,12 | 23 141 | 18 010 |
| Change in inventory |
14 | -22 597 | -26 227 |
| Change in accounts receivable |
15 | 4 704 | 8 619 |
| Change in accounts payable |
-1 298 | 2 891 |
|
| Change in other accruals |
-2 378 | 5 005 |
|
| Net cash from operating activities | 74 134 | 80 380 | |
| Investing activities: |
|||
| Purchase of property, plant and equipment |
6,12 | -10 639 | -13 682 |
| Net cash from investing activities | -10 639 | -13 682 | |
| Financing activities: | |||
| Repayment of interest bearing debt |
18,24 | -3 000 | -3 000 |
| Dividend | 11 | -50 052 | -40 925 |
| Lease agreements |
7 | -6 680 | -5 770 |
| Other financing activities |
23 | 1 385 | 2 800 |
| Net cash from financing activities | -58 347 | -46 895 | |
| Foreign currency effect on cash | -549 | ||
| Net change in cash |
5 147 | 19 254 |
|
| Cash as of 01.01 |
66 745 | 47 490 |
|
| Cash as of 31.12 | 16 | 71 892 | 66 745 |
| Available cash and cash withholding |
|||
| Available cash as of 31.12 |
16 | 65 762 | 62 403 |
| Cash withholding for taxes |
16 | 6 130 | 4 342 |
| Cash and cash equivalents as of 31.12 | 71 892 | 66 745 |
| CONSOLIDATED CHANGE IN EQUITY FOR MEDISTIM ASA |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 1 = NOK 1000 | Note | Share capital |
Treasury shares |
Share premium fund |
Other paid in capital |
Total paid in capital |
Other reserves |
Retained earnings |
Other equity |
Total Equity |
| Net result recognized against equity |
4 585 | -46 | 41 852 | 2 219 48 610 | 143 117 951 118 094 166 704 | |||||
| Equity as of 31.12.18 | 4 585 | -39 | 41 852 | 3 628 50 026 | 1 833 154 853 156 686 206 712 | |||||
| Total comprehensive income for the period |
- | - | - | - | - | -87 | 70 306 |
70 219 |
70 219 | |
| Sharebased payments 17 | - | 3 | - | 702 | 704 | - | 150 | 150 | 854 | |
| Dividend | 11 | - | - | - | - | - | - | -40 925 |
-40 925 |
-40 925 |
| Equity as of 31.12.19 | 4 585 | -36 | 41 852 | 4 330 50 730 | 1 746 184 384 186 130 236 861 | |||||
| Total comprehensive income for the period |
- | - | - | - | - | -965 | 69 388 |
68 423 68 |
423 | |
| Sharebased payments 17 | - | 3 | - 1 432 |
1 435 |
- | 180 | 180 | 1 615 | ||
| Other corrections | - | - | - | - | - | - | - | - | - | |
| Dividend | 11 | - | - | - | - | - | - | -50 052 |
-50 052 |
-50 052 |
| Equity as of 31.12.20 | 4 585 | -33 | 41 852 | 5 762 52 165 | 781 203 900 204 681 256 846 |
Other reserves in the equity reconciliation are differences related to translating equity from foreign subsidiaries to NOK. The subsidiaries present their financial statements in EUR, GBP, DKK and USD. When translated to NOK a difference occur due to the change in the exchange between NOK and these currencies. By year end 2019 this difference was 1746 TNOK and the change for the year was-87 TNOK. By year-end 2020, the equivalent was 782 TNOK a change of-965 TNOK from the year before.
Medistim ASA is a public company listed at the Oslo stock exchange. Medistim ASA is incorporated in Norway. The main office is located in Økernveien 94, 0579 Oslo, Norway. The Medistim group's business is within developing, producing, service, leasing and distribution of medical devices.
The board of Director's and the CEOauthorized these financial statements for issue on March 18, 2021.
The financial statement for the group is prepared in accordance with International Financial Reporting standard (IFRS) as adopted by the EU and effective as of 31.12.2020.
The annual accounts for the company and the group has been prepared based on historical cost with exception of financial derivatives which are measured at fair value.
The consolidated accounts have been prepared using consistent accounting policiesforsimilartransactions and events.
The accounting principles for the group for 2020 are same as for the principles used in 2019.
The group presents its financial statements in NOK. This is also the functional currency for the parent company. Asset and liabilities of subsidiaries with other functional currency than NOK, are translated to NOK using the exchange rate at the balance sheet date. Forthe income statement,the averagemonthly rate in the period is used. Translation differences arising from translation to presentation currency, is recognized in other comprehensive income.
The consolidated accounts include Medistim ASA and companies controlled by Medistim ASA. Control normally exists when the Group has more than 50 % ofthe sharesinthe investee. Currently allsubsidiaries are wholly owned.
Intercompany transactions, balances and unrealized gains and losses are eliminated.
Cash includes cash in hand and bank deposits.Cash equivalents are short-term, highly liquid investments that are readily convertible to cash and which are subject to an insignificant risk of changes in value.
Accounts receivable that do not contain a significant financing component, are recognized at the transaction price with a deduction for expected credit losses. Classified as financial asset.
Inventory is valued at the lower of cost, using the FIFO principle, and net realizable value. Production cost includes the cost for components, cost of conversion (including direct labour cost) and other cost in bringing the inventories to their present location and condition. Net realizable value is the estimated sales price in the ordinary course of business less cost of completion and selling cost.
Property, plant and equipment is recorded at cost less accumulated depreciations and write-downs. When an asset is sold, the carrying value of the asset is derecognized and any gain or loss from the sale is recognized in the income statement.
The cost of an acquired item of property, plant and equipment comprises of the purchase price, nonrefundable taxes and other direct cost incurred in order to be able to use the asset as intended.
Thecostforaself-constructeditemofproperty,plant or equipmentisthe same asthe cost of construction the asset for sale. Cost include materials, labour costs and an allocation of production overheads. . The cost allocated to the asset is based upon the time spent to build the asset.
Costs incurred for major replacements and updates are added to cost if it is probable that the cost will bring future economic benefit and the cost can be reliably measured. If new parts are capitalized, replace parts are derecognized. Repair and maintenance costs are expensed as incurred.
Items of property, plant and equipment are depreciated straight line over the estimated useful life from the time it is available for use. Useful life is as follows:
• Machinery and equipment 3-7 years • Other assets 3-5 years
Depreciation method and useful life is evaluated on a yearly basis.
Property, plant and equipment are tested for impairment if there are indication of impairment. If the carrying amount exceedsthe assetsrecoverable amount, being the higher of value in use and fair value less cost of disposal, the asset is written down to the recoverable amount.
The company recognizes a lease liability and a rightof-use asset for leases with a duration of more than 12 months, provided that the underlying asset is not of low value.
The lease liability is the present value of the lease payment over the lease term. Lease payment includes fixed payments and variable lease payments that depend on an index or a rate. The lease term is the non-cancellable period of the lease together periods covered by an option to extend the lease when the exercise of the option is reasonably certain.
The lease payments are generally discounted using the company's incremental borrowing rate, as the rate implicit in the lease generally cannot easily be determined.
The cost of the right of use assets comprises the initial measurement of the lease liability, any lease payments made before the commencement date an any initial direct cost incurred.
Right-of-useassets aredepreciatedovertheshortest of the lease term and useful life. Depreciation of right-of-use assets is presented together with other depreciation in the income statement.
Lease payments are allocated between installments and interest based on a constant periodic rate of interest being the interest used to calculate the lease liability. The interest expense is presented as a financial expense in the income statement.
The assets that are leased to customers are recognized as property, plant and equipment in the balance sheet. Direct cost related to the leasing agreement is added to the carrying amount of the leased assets and is depreciated over the lease term. These are operational leases.
See note 1 for a description of recognition of lease revenue, and note 2 for a split of lease revenue on different product categories.
The group uses forward exchange contracts to reduce exposure towards USD and EUR. Financial derivates are recognized at fair value through profit and loss. Change in fair value is recognized in profit and loss and is presented as financial income or expense. Unrealized gains or losses are recorded in the same manner as realized gains and losses. Hedge accounting is not applied.
Intangible assets are recognized in the balance sheet if it is probable that the future economic benefits will flow to the company, and the cost of the asset can be measured reliable.
Intangible assetwithfinite economic life ismeasured at cost less accumulated amortization and writedowns. Amortization is done on a straight-line basis over expected lifetime. The amortization period and method, are reviewed on a yearly basis.
Intangible assets with indefinite useful life is not amortized, but tested for impairment at least annually.
Business combinations are accounted for using the acquisition method.
Goodwill is recognized as the difference between the aggregate of the consideration transferred and the amount of any non-controlling interest less the fair value of the net identifiable assets at the acquisition date.
Goodwill is not depreciated, but is tested for impairment at least annually.
Research cost is expensed as incurred.
Cost to internal development of intangible assets is capitalized when it is demonstrated that
Expenses capitalized include materials, salary and social expenses and other expenses that can be allocated to the development of the asset.
Internally developed intangible assets are amortized on a straight-line basis over the expected useful life. Amortization starts when the asset is available for use. Intangible assets not ready for use, istested for impairment on a yearly basis.
Capitalized development costs are written down when a newproduct isready forsale or an improved product is ready for sale.
Internally develop intangible asset is tested for impairment on a regular basis by discounting expected cash flow generated from the asset. If the discounted value is lower than the carrying amount the asset is written down.
Capitalized cost related to development of own products are depreciated on a straight-line basis over expected useful life. Expected useful life varies from 3 to 8 years.
A provision is recognized when the group has an obligation arising from a past event, when it is probable that company will be required to settle the obligation, and the obligation can be reliable measured.
The Group provides warranties for general repairs of defects that existed at the time of sale, as required by law. Provisions related to these assurance-type warranties are recognized when the product is sold or the service is provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.
Financial instruments are classified as debt or equity according the economic substance of the financial instrument.
Interest, dividend, profit and lossrelated to a financial instrument are classified as debt, will be presented as an expense or revenue. Amounts distributed to holders of financial instruments classified as equity will be recorded directly against equity.
When treasury shares are purchased, the purchase price including directly attributable costs is recognized in equity. Treasury shares are presented as a reduction of equity. Loss or gain on transactions of treasury shares are not recognized in the income statement.
Transaction costs related to equity transactions are recorded directly against equity in the balance sheet net after tax.
Translation differences arise in connection with exchange-rate differences of consolidated foreign entities. Translation differences are recognized in other comprehensive income and presented as "other reserves" in the balance sheet. Translation differences is recognized in profit and loss when the investment is sold.
Exchange rate differences on monetary assets and liabilities that in substance is part of the net investment in a foreign operation, is also included in translation differences.
Revenue fromcontractswith customersisrecognised when control of the goods orservices are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
Revenue recognition policies are described in detail in note 1.
Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. Financial instruments in foreign currency are translated to Norwegian kroner at the closing rate of the balance day. Non-financial items measured at historic cost are translated to Norwegian kroner using the exchange rate at the time of the transaction. Changes in exchange rates are recorded in the profit and loss statement as either financial income or financial expence.
Assets, liabilities and goodwill in foreign subsidiaries that are consolidated are translated to Norwegian kroner at the date of the balance sheet. Revenue and expenses are translated to Norwegian kroner using the rate at the transaction date. See also comment under translation differences regarding exchange rate differences.
Employees in Medistim with a pension plan are included in a contribution plan where an agreed percentage of the employee's salary is paid to the employee pension account. The company's payment of contributionsis expensedinthe perioditisincurred.
TheGrouphas a share-basedpaymentscheme forits CEO. The program is settled in shares. The fair value of the option at the grant date, is expensed over the vesting period. The expense is included in "salary and social expenses" in the income statement and a corresponding amount is recognized as other paidin capital.
Loan and borrowings are initially recognized at fair value net of directly attributable transaction costs, and subsequently measuring at amortized cost.
The tax expense in the income statement includes both payable taxes for the period and changes in deferred tax. Deferred tax is calculated based on temporary differences between tax values and carrying amount of assets and liabilities.
A deferred tax asset is recognized when it is convincing evidence that the company will have sufficient taxable profit in the future to utilize the tax asset. The companies recognise previously unrecognised deferred tax assets to the extent it has become probable that the company can utilise the deferred tax asset. Similarly, the company will reduce a deferred tax asset to the extent that the company no longer regardsit as probable that it can utilise the deferred tax asset.
Deferred tax and deferred tax assets are determined using the tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax asset is settled/recovered. Deferred tax and tax assets are measured at nominal value and is classified as a non-current asset in the balance sheet.
Tax payable and deferred tax is recorded against equity if the transaction is an equity transaction.
The group is organized, for management purpose, in two divisions dependent upon products and services. The segments are identified based upon different risk and return on investment profile. Information regarding segments is presented in note 2.
Internal profit between the segments is eliminated in a separate column in the segment report.
The segment reporting is similar to the internal reports that are given to the decision makers in the company. The decision makers are responsible for allocating resources and assessing profitabilitywithin the segments, and are identified asthe management team that takes strategic decisions.
Contingent liabilities are not recognized in the financial statements. Information about significant contingent liabilities is disclosed.
Contingent assets are not recognized in the financial statements, but are disclosed if an inflow of economic benefits is probable.
Information after the reporting period that provide evidence of conditions that existed at the end of the reporting ("adjusting events"), are reflected in the amounts recognized in the financial statement. Information after the reporting period that are indicative of conditions that arose after the reporting period ("non-adjusting events") are not reflected in the amounts recognized in the financial statement, but are disclosed if material.
The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that effect the recognition and measurement of certain assets, liabilities, revenue and expense. The following area involves the most critical estimates and judgements for the company:
Future events could lead to a change in estimates. The estimates and assumptions for the estimates are continuously evaluated. Changes in accounting estimates are recognized in the period the change take place. If the change also affect future periods, the effect on future periods will be recognized as income or expense in those future periods.
Of events that has affected future estimates is the COVID 19 pandemic. By-pass surgery is to a large extent elective surgery. When the outbreak of COVID 19 was a fact, several by-pass surgeries where postponed. As a consequence, the activity level within by-pass surgery was reduced compare to normal level. Medistim has over several years had a growth of 7% to 10 % per year, but because of COVID 19 sales in 2020 without growth compared to 2019. The reduced activity level is expected to
be temporarily and to increase above normal for a period to reduce the build up of patient ques.
However, even with a vaccines in place, it is expected that 2021 will have reduced activity level until the vaccine is effective. This means that Medistim anticipate that the situation is back to normal in 2022. The expected COVID 19 effects are included in the estimates and none of the balance sheet values was impaired. See also note 12.
The group's goodwill in the balance sheet is yearly tested for impairment. Goodwill occurred with the acquisition of Medi-Stim Norge AS, and the acquisitionofKir-OpAS thatwasexecutedwitheffect from 06.07.06. Total recorded goodwill by year-end 2020 was 14.1 MNOK. Goodwill in both companies is related to employee know-how, experience in the distribution business and cost savings by gathering common functions. Both companies distribute third party products within surgery. Both entities are within the same segment. The total value of the business is dependent upon the success of maintaining and increasing the product portfolio. The value from the cash-generating unit exceeded the book value in the balance sheet and the goodwill value for 2020 was not impaired. See also note 11 for the assumptions used in the estimate.
Development expenses have been recognized as an intangible asset when Medistim can demonstrate technological feasibility for the asset to be available forsale for both existing products and newproducts. The revenue potential for the projects exceeds the investment. The carrying amount as of 31.12.2020 was MNOK 18.0. The estimates that form the basis for the intangible asset are performed by the management of the company, and there will always be a level of uncertainty in relation to the assessments that are performed on future revenue for future products. Capitilized development costs are depreciated over 3 to 8 years. 8 years is used if it is a new product on a new technological platform that creates the basis for a new generation of products. Based upon a platform or new generation of products there will be further developments and improvements. These enhancements of the products are depreciated over 3 years because of rapid technological development. Within 3 years, it is assumed that parts or all of existing technology is updated.
There are no new standards, interpretations or amendments that are issued, but not yet effective, that are expected to cause any significant changes for Medistim.
Group revenue can be split in three different categories that have different risk and return on investment profile. The split is according to the company's internal reporting structure. The categories are as follows:
Category 1 and 2 covers the same equipment (MiraQ system) and consumables (probes). This is the products that are developed and produced by Medistim and is distributed through local partners unless Medistim has local representation.
Under this model, the equipment and probes are placed at the customersite free of charge. Medistim owns all equipment placed at the customer site. For the customer to be able to use the equipment a procedure (smart card) must be purchased. One procedure equals one surgery. The customer purchases a smart card that makes the system available for use.
The agreement is considered a lease with variable lease payments. Revenue is variable and recognized related to the actual use of the equipment and probes. For Medistim this means that revenue is recognized when a new card is shipped to a customer. There are two types of customers, flow customers and flow and imaging customers. Flow customers purchases a flow procedure, while flow and imaging customers purchase both a flow procedure and an imaging procedure. It istherefore a split of revenue between flow procedures and imaging procedures. Revenue is recognized when smartcards are purchased by the customer. The customer is dependent upon the smartcard in order to open the equipment and probe for use. The agreements are operational since equipment is returned when the agreement expires.
The individual agreement contains a minimum use clause. The duration of the agreement is 1-3 years, but divided into 12-month cycles, so minimum usage applies for 12 months at a time. If minimum usage is not achieved, Medistim has the right to extract the equipment from the customer site.
Under this model, the customer leases the system and purchases probes when needed. The system revenue is recognized on a straight-line basis over the lease term. Probe revenue is recognized when the probe is delivered to the customer.
If a customer with a pay per procedure or lease agreement does not handle the equipment properly, the customer isliable towards Medistim to compensate for the damage and repair. It happens that customers after too low consumption want to keep the equipment. In such cases, the customer may purchase the equipment. In this case, this is registered as a system sale.
Other revenue in the P&L includes service, spare parts, grants and other revenue that is not own products or third party products. See note 1 forsplit of revenue.
The Group's activities are divided into strategic business units that are organized and managed separately. The division is also in accordance with the Group's internal reporting structure. The main divisions are sale of own products and sale of 3. party products.
Medistim sells its own products either through a lease or as capital. Medistim has a flexible business model in the US and leaves it up to the customer whether they want to lease the equipment or purchase the capital equipment and buy probes as consumable. Most customers in the US lease the equipment. The lease model in the USA has been successful since it does not demand upfront capital to have the equipment available. Medistim has direct representation in the USA, which makes it manageable to handle the lease model properly. However, several customers prefer to invest in the equipment and purchase probes as consumables and Medistim promotes both solutions.
The lease model has not been successful outside USA. It is often so that hospitals have a policy that the equipment they use must be hospital property. In addition, Medistim can only follow up this model properly where the company has direct representation, since lease customers require Medistim property at the customer site. Medistim serves around 60 distributors around the world. To follow up assets placed at customer sites in a global scale, and have distributors to manage Medistim assets, is considered to be to complex and risky.
Distribution and sale of third party products is a separate segment. The group sells medical devices from third party manufacturers in Norway and Denmark. The product portfolio is carefully selected and mainly instruments and consumables within surgery.
Transactions between internal business units are performed at market terms. Revenue, cost and result for each segment includes transaction between the segments. On group level these transactions are eliminated.
| SPLIT OF REVENUE AND OPERATING PROFIT PER OPERATING SEGMENT | |||||||
|---|---|---|---|---|---|---|---|
| Segment | Own products | Third party products | Group | ||||
| 1 = NOK 1000 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Sales in USA | |||||||
| Lease revenue from flow | |||||||
| procedures | 52 848 | 58 765 | - | - | 52 848 | 58 765 | |
| Lease revenue from imaging | |||||||
| procedures | 20 686 | 19 188 | - | - | 20 686 | 19 188 | |
| Probes | 22 636 | 24 420 |
- | - | 22 636 | 24 420 | |
| Systems | 12 022 | 10 537 | - | - | 12 022 | 10 537 | |
| Ultrasound imaging | 15 011 | 18 832 | - | - | 15 011 | 18 832 | |
| Ultrasound imaging probes | 3 205 | 4 352 | - | - | 3 205 | 4 352 | |
| Sales outside USA | - | - | |||||
| Probes | 92 626 | 94 985 | - | - | 92 626 | 94 985 | |
| Systems | 35 225 | 23 047 | - | - | 35 225 | 23 047 | |
| Ultrasound imaging | 29 179 | 29 725 | - | - | 29 179 | 29 725 | |
| Ultrasound imaging probes | 5 219 | 5 000 | - | - | 5 219 | 5 000 | |
| Third party sales | - | - | 67 549 | 68 063 | 67 549 | 68 063 | |
| Other revenue | 6 927 | 6 809 | - | - | 6 927 | 6 809 | |
| Total revenue | 295 585 | 295 660 | 67 549 | 68 063 | 363 134 | 363 723 | |
| Cost of goods sold | 41 494 | 42 227 | 35 083 | 37 911 | 76 577 | 80 138 | |
| Salary and social expenses | 104 522 | 107 884 | 14 543 | 14 132 | 119 066 | 122 016 | |
| Other operating expenses | 42 863 | 50 361 | 6 002 | 3 430 | 48 865 | 53 790 | |
| Depreciation | 20 372 | 15 304 | 2 769 | 2 706 | 23 141 | 18 010 | |
| Operating profit per segment | 86 334 | 79 883 | 9 151 | 9 885 | 95 485 | 89 768 |
A geographical sales split is monitored to be able to follow the development in sales in the USA with the greatest potential, Europe where market penetration is strong and Asia with the largest future growth potential.
| Geographic split | Rest of the | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| of segments | USA | Europe | Asia | world | Group | |||||
| 1 = NOK 1000 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
| Revenue own products |
126 408 136 | 094 | 105 713 95 | 801 | 46 811 41 | 790 | 16 651 21 | 975 | 295 584 295 | 660 |
| Revenue 3. party products |
- | - 67 549 68 |
063 | - | - | - | - 67 549 |
68 063 |
||
| Revenue in units |
||||||||||
| Procedures flow 47 256 | 52 206 |
- | - | - | - | - | - 47 256 |
52 206 |
||
| Procedures imaging |
8 803 | 10 233 |
- | - | - | - | - | - | 8 803 | 10 233 |
| Probes | 2 606 | 2 547 |
3 943 | 4 269 1 |
693 | 1 909 |
582 | 1 012 |
8 824 | 9 737 |
| Systems | 14 | 14 | 52 | 54 | 63 | 40 | 9 | 8 | 138 | 116 |
| Ultrasound imaging |
12 | 19 | 19 | 20 | 19 | 25 | 9 | 15 | 59 | 79 |
| Ultrasound imaging probes |
95 | 117 | 36 | 25 | 26 | 28 | 13 | 25 | 170 | 195 |
| Lease of flow systems |
10 | 6 | - | - | - | - | - | - | 10 | 6 |
| Lease of flow and imaging systems |
3 | 13 | - | - | - | - | - | - | 3 | 13 |
| Revenue in units 3. party |
N.A | N.A | N.A | N.A | N.A | N.A | N.A | N.A | N.A | N.A |
The company has in addition to coronary surgery a strategy and focus towards vascular surgery. The principles for guiding and quality assurance within vascular surgery is the same as within coronary surgery. The difference is that within coronary surgery the surgeons focus is to supply the heart with blood, while within vascular surgery the focus is to ensure blood flow in other parts in the body or organs. The vascular market has gained increased focusfromthe company in orderto ensure thatthe productsfromthe company gets a foothold within more than just coronary surgery. It is therefore natural to report sales split between cardiac surgery and vascular surgery.
| SPLIT OF REVENUE BETWEEN CORONARY- AND VASCULAR SURGERY FOR OWN PRODUCTS AND 3 PARTY PRODUCTS | |||||
|---|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | |||
| Sales within coronary surgery |
250 482 | 252 371 |
|||
| Sales within vascular surgery |
45 102 | 43 289 |
|||
| Sales of 3. party products |
67 549 | 68 063 |
|||
| Total sales | 363 133 | 363 723 |
Where Medistim has direct representation the customers are hospitals and none of these are dominant in the sense that they represent a major part of the group revenue. Of Medistims installed base of about 3000 systems, the largest customer has 7 systems. This means that this customer would represent about 0.25 % of total revenue. However, Medistim is also represented through distributors, and the two largest distributors represent 6 % and 5 % of the groups revenue respectively. The two largest distributors are independent of each other and operates in different geographical areas.
| SPLIT OF COST OF GOODS SOLD | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Third party products |
37 307 | 36 398 |
| Components | 33 023 | 37 015 |
| 3.party services |
1 983 | 2 730 |
| Packing material and other materials |
1 106 | 941 |
| Freight | 3 158 | 3 055 |
| Total cost of goods sold | 76 577 | 80 138 |
| 1 = NOK 1000 | 2020 | 2019 |
|---|---|---|
| Salary | 94 965 | 90 947 |
| Employeers tax |
12 475 | 12 299 |
| Bonus | 3 903 | 10 458 |
| Cost for contribution pension plan |
4 661 | 4 396 |
| Compensation to the Board |
1 350 | 1 435 |
| Other social costs |
1 713 | 2 482 |
| Total salary and social cost | 119 066 | 122 016 |
| Average number of employees: | ||
| USA | 23 | 22 |
| Germany | 4 | 4 |
| UK | 1 | 1 |
| Spain | 2 | 2 |
| Denmark | 1 | 1 |
| Norway | 87 | 82 |
| Total | 118 | 112 |
| AUDIT FEE FOR THE GROUP | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2020 |
| Statutory Audit |
1 053 | 1 128 |
| Other services |
154 | 344 |
| Total Audit fee | 1 207 | 1 472 |
The amounts are without VAT
For Norwegian employees there is a contribution plan that covers 5 % of salary up to 7,1 G and 8 % of salary between 7,1 and 12G. 1G is the base amount in the social security system. Employees in the US follow a pension plan, a 401k match that covers 4 % of salary. The total cost for the contribution plans was in 2020 TNOK 4.661, while it was TNOK 4.396 in 2019. It is compulsory by law for the company to have a pension plan for its employees in Norway. The pension plans in the company fulfill the obligation in the Norwegian law. Employees outside Norway and US do not have a pension plan.
| Other | Right to | Total | Other | Right to | Total | |||
|---|---|---|---|---|---|---|---|---|
| Equipment | assets | use assets | assets Equipment | assets | use assets | assets | ||
| 1 = NOK 1000 | 2020 | 2019 | ||||||
| Historical cost | ||||||||
| Balance 1. January |
76 949 | 17 406 | 34 319 | 128 674 | 68 800 |
15 409 |
7 487 |
91 696 |
| Additions | 7 123 | 7 111 | 5 985 | 20 219 | 8 328 |
1 997 |
25 239 |
35 564 |
| Adjustments for |
||||||||
| reasessment and |
||||||||
| lease modifications |
0 | 0 | 0 | - | - | 1 593 |
1 593 |
|
| Disposals | -4 838 | 0 | -28 | -4 866 | -178 | - | - | -178 |
| 31.December | 79 234 | 24 517 | 40 276 | 144 027 | 76 949 | 17 406 | 34 319 | 128 674 |
| Accumulated | ||||||||
| depreciation and | ||||||||
| impairment | ||||||||
| Balance 1. January |
45 447 | 12 688 | 5 648 | 63 782 | 40 658 |
11 352 |
- | 52 010 |
| Depreciation this year |
6 220 | 2 813 | 6 680 | 15 714 | 4 803 |
1 363 |
5 648 |
11 814 |
| Impairmentsthis year |
- | - | - | - | - | - | - | - |
| Disposals | - | - | - | - | - | - | - | - |
| Exchange rate |
||||||||
| differences | 59 | 93 | - | 153 | 15 | 28 | - | 42 |
| 31. December | 51 607 | 15 408 | 12 328 | 79 343 | 45 447 | 12 688 | 5 648 | 63 782 |
| Book value | 27 627 | 9 110 | 27 948 | 64 684 | 31 503 | 4 719 | 28 671 | 64 892 |
| Depreciation in % |
14-33 % |
20-33 % |
12,5-50 % |
14-33 % |
20-33 % |
12,5-50 % |
||
| Useful life |
3-7 years |
3-5 years |
2-8 years |
3-7 years |
3-5 years |
2-8 years |
||
| Depreciation | ||||||||
| method | Linear | Linear | Linear | Linear | Linear | Linear |
Some assets with total historic cost value of 15.5 MNOK isfully depreciated as of 31.12.2020 but are still in use.
Equipment and other assets is pledged as security as of 31.12.2020. The security is related to long-term loan and hedging credit facility. The group's bank had the same security as of 31.12.2019.
The company is renting offices in Økernveien 94 in Oslo, Bromsveien 17 in Horten and in 14000 25ave. N. Suite 108 in Plymouth in Minneapolis, Minnesota, USA. In Oslo and Horten the rental agreement expires in 2025 and 2027 respectively. In the USA the rental agreement expire year-end 2023. The rental is adjusted yearly according to National indexes for goods and services. The lease in Økernveien 94 may be prolonged with 5 years after 2025, the lease in Bromsveien 17 may be prolonged with 2 years after 2027. It is at present uncertain whether these leases will be prolonged.
In Økernvein 94 Medistim has entered an agreement to increase the facilities with 500 square meters. The group also leases office equipment and cars. The longest remaining lease term for office equipment and cars is until November 2024 and September 2024 respectively. According to IFRS 16 leased assets are to be recorded in the balance sheet with a corresponding debt and the lease expense recorded as depreciation and interest expense. Medistims leased assets with right to use and liabilities are shown below.
| NOTE RIGHT-OF-USE ASSETS AND LEASE |
LIABILITIES 2020 | |||
|---|---|---|---|---|
| Right-of-use assets | Buildings | Machinery & equipment |
Vehicles | 2 020 |
| Recognition of right to use of asset |
32 076 |
404 | 1 839 |
34 319 |
| Addition of right-of-use assets, CPI adjustments and |
||||
| other reassessment |
2 389 |
- | 3 596 |
5 985 |
| Disposals | - | -28 | 0 | -28 |
| Acquisition cost 31 december | 34 465 | 376 | 5 435 | 40 276 |
| Accumulated amortisation 1 January | 4 404 | 20 | 1 224 | 5 648 |
| Amortisation | 5299 | 80 | 1301 | 6 680 |
| Accumulated amortisation 31 December | 9 703 | 100 | 2 525 | 12 328 |
| Carrying amount of right-of-use assets 31 December | 24 762 | 276 | 2 910 | 27 948 |
| Lower of remaining lease term or economic life |
4-8 years |
2-5 years |
1-5 years |
|
| Depreciation method |
Linear | Linear | Linear | |
| Lease liabilities | ||||
| Undiscounted lease liabilities and maturity of cash outflows | ||||
| Less than 1 year |
5 748 |
80 | 1184 | 7 012 |
| 1-2 years |
5 761 |
80 | 857 | 6 698 |
| 3-4 years |
5 774 |
80 | 857 | 6 711 |
| 4-5 years |
5 340 |
75 | 246 | 5 661 |
| More than 5 years |
5 173 |
- | - | 5 173 |
| Total undiscounted lease liabilities at 31 December | 27 796 | 315 | 3 144 | 31 255 |
| Summary of the lease liabilities in the financial statements |
Statement of: |
|||
| Initial recognition of right to use of asset as of January |
1st | 28 671 | ||
| New lease liabilities recognised in the year |
5 985 | |||
| Cash payments for the principal portion of the lease |
||||
| liability | Cash flows |
6 680 | ||
| Other | Profit and loss |
201 | ||
| Total lease liabilities at 31. December | 28 177 | |||
| Current lease liabilities |
Financial | position | 6 715 | |
| Non-current lease liabilities |
Financial | position | 21 652 |
Total cash outflows for leases Cash flows 6 881
| NOTE RIGHT-OF-USE ASSETS AND LEASE LIABILITIES - EFFECTS OF IFRS 16 CHANGES |
|||||||
|---|---|---|---|---|---|---|---|
| Right-of-use assets | Buildings | Machinery & equipment |
Vehicles | 2 019 | |||
| Acquisition cost 1 January 2019 |
5 829 |
- | 1 839 |
7 668 |
|||
| Addition of right-of-use assets |
26 247 |
404 | - | 26 651 |
|||
| Disposals | - | 0 | 0 | 0 | |||
| Acquisition cost 31 december 2019 | 32 076 | 404 | 1 839 | 34 319 | |||
| Accumulated amortisation 1 January | - | - | - | ||||
| Amortisation | 4404 | 20 | 1224 | 5 648 |
|||
| Accumulated amortisation 31 December | 4 404 | 20 | 1 224 | 5 648 | |||
| Carrying amount of right-of-use assets 31 December | 27 672 | 384 | 615 | 28 671 | |||
| Lower of remaining lease term or economic life |
4-8 years |
2-5 years |
1-2 years |
||||
| Depreciation method |
Linear | Linear | Linear | ||||
| Lease liabilities | |||||||
| Undiscounted lease liabilities and maturity of cash outflows | |||||||
| Less than 1 year |
4 830 |
80 | 1078 | 5 988 |
|||
| 1-2 years |
9 672 |
161 | 106 | 9 939 |
|||
| 3-4 years |
9 721 |
155 | - | 9 876 |
|||
| 4-5 years |
4 400 |
- | - | 4 400 |
|||
| More than 5 years |
- | - | - | ||||
| Total undiscounted lease liabilities at 31 December | 28 623 | 396 | 1 184 | 30 203 | |||
| Summary of the lease liabilities in the financial statements |
Statement of: |
||||||
| At initial application 01.01.2019 |
7 668 |
||||||
| New lease liabilities recognised in the year |
26 651 |
||||||
| Cash payments for the principal portion of the lease liability |
Cash flows |
5 988 |
|||||
| Interest expense on lease liabilities |
Profit and loss |
218 | |||||
| Depreciation on lease liabilities |
Profit and loss |
5 648 |
|||||
| Total lease liabilities at 31. December 2019 | 28 671 | ||||||
| Current lease liabilities |
Financial | position | 5 988 |
||||
| Non-current lease liabilities |
Financial | position | 22 683 |
||||
| Total cash outflows for leases |
Cash flows |
5 988 |
|||||
| 1 = NOK 1000 | 2020 | 2019 |
|---|---|---|
| Office expenses |
2 429 | 1 654 |
| Travel cost |
3 788 | 10 543 |
| Marketing | 1 803 | 6 366 |
| Consultants | 20 744 | 17 601 |
| Insurance | 2 087 | 1 723 |
| Freight | 1 302 | 1 552 |
| Communication | 1 090 | 1 168 |
| IT cost |
9 258 | 8 762 |
| Other | 6 365 | 4 422 |
| Total | 48 865 | 53 790 |
As of 31.12.2020, the company had 4.5 MNOK in interest bearing debt. Additional cash in the group gave interest revenue of 234 TNOK. Other finance revenue and expenses was realized or unrealized gains or lossestowardsforeign currency. Financialrevenue and expenses are shown below. See note 20 for comment about financial risks and exposure. During 2020 Medistim qualified for a Payroll Protection Program (PPP) loan of MNOK 6.1 in the US. This is part of US government support program during COVID 19 to keep employees employed. The loan may be forgiven if the employees are still employed after year end. There is some uncertainty in regards to the criteria relating to debt forgiveness. By year end the loan was recorded as interest free debt.
| FINANCIAL REVENUE AND EXPENSES | ||
|---|---|---|
| 1 = 1000 NOK | 2 020 | 2 019 |
| Interest income |
5 | 184 |
| Other financial income |
12 | 67 |
| Gains on foreign exchange |
14 120 | 6 397 |
| Total financial income | 14 137 | 6 649 |
| Loss on foreign exchange |
-17 599 | -4 687 |
| Interest cost on loans |
-146 | -435 |
| Other financial expenses |
-270 | -251 |
| Total financial expenses | -18 015 | -5 373 |
| Net financial expenses | -3 878 | 1 276 |
| INCOME TAX | ||
|---|---|---|
| INCOME TAX | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Current income tax charge |
24 046 | 21 211 |
| Deferred tax expense |
-1 827 | -473 |
| Income tax expense reported in income statement | 22 219 | 20 738 |
| Reconciling tax expense towards income before tax |
||
| Tax expense for the year |
22 219 | 20 738 |
| 22% of income before tax |
20 154 | 20 030 |
| Permanent differences and different tax rates | -2 065 | -708 |
| Specification of taxable income | ||
| Expected income tax at tax rate 22 % in Norway |
20 153 | 20 030 |
| Permanent and other differences |
823 | 227 |
| Foreign tax rate differences |
1 242 | 482 |
| Income tax expense | 22 219 | 20 738 |
| Effective income tax rate |
24,3 % | 22,8 % |
| Payable tax in the balance sheet | ||
| Income tax expense |
24 047 | 20 738 |
| Prepaid tax |
-11 740 | -6 207 |
| Utilizing deferred tax asset |
- | -886 |
| Total payable tax | 12 307 | 13 645 |
| Specification of deferred tax |
||
| Temporary differences: |
||
| Non current assets |
-1 178 | -1 307 |
| Current assets |
-2 889 | -11 214 |
| Other obligations |
544 | 680 |
| Total differences | -3 523 | -11 841 |
| Deferred tax asset 22 % |
-775 | -2 605 |
| Deferred tax asset recognized in the balance sheet |
-775 | -2 605 |
The deferred tax asset in the balance sheet is based upon future utilization of deductible temporary differences. There is no time limitation for utilization of the temporary differences. Tax rates in Germany and in the US are different from Norwegian rates. The difference in tax rates increases average tax rate in 2020 to 23.9%.
| TAX EXPENSE FOR THE GROUP IS GEOGRAPHICALLY SPLIT AS FOLLOWS: |
||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Norway | 13 393 | 12 616 |
| Germany | 2 442 | 2 540 |
| USA | 6 255 | 5 025 |
| Spain | - | 528 |
| Denmark | 130 | 28 |
| Total | 22 219 | 20 738 |
| EARNINGS PER SHARE | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Profit for the year |
69 387 | 70 306 |
| Average numbers of shares outstanding | ||
| Average number of shares used in basic EPS |
18 200 | 18 188 |
| Effect of share options |
37 | 25 |
| Average numbers of shares used in diluted EPS | 18 237 | 18 213 |
| 1 = NOK 1 | ||
| Profit per share | ||
| Ordinary | 3,81 | 3,87 |
| Diluted | 3,80 | 3,86 |
| Paid dividend | 50 052 | 40 925 |
| Dividend per share | 2,75 | 2,25 |
The company has only one class of shares. Ordinary earning per share is calculated as the relation between profits for the year that is allocated to ordinary shareholders divided with average number of shares outstanding. Treasure shares is not included and average number of treasury shares are excluded from the calculation. In 2020, there were share options to CEO. The share option plan to CEO is described under chapter 3 compensation to management and note 21. By year-end the company had 126 500 own shares. Dividend per share in 2020 was based upon profits earned in 2019. Dividend per share in 2019 was based upon profits in 2018.
Medistim has in 2020 been affected by the COVID 19 pandemic. Instead of an annual growth in sales of around 10 %, sales in 2020 ended at the same level as 2019. As an international company the experience in 2020 was that the timing during the year was different from region to region dependent upon how the pandemic developed. During the first outbreak all elective surgery was on hold, but as the health care system gained experience dealing with COVID 19, it was opened for elective surgery. However the activity level was not as high as normal and only the most critical patient received treatment. For 2021 the company is optimistic in regard to increased activity level since the patient group Medistim is addressing are critical conditions that at some point will demand treatment. With less activity the number of patient in need of treatmentwill increase. Thiswillrequire additional effortsthan normal activity in orderto reduce healthcare needs. With vaccines available it is the managements evaluation that the situation will be under control at some point. However, 2021 will still be affected by the pandemic before the vaccines are effective. In the estimates used to test for impairment, it is assumed 2021 sales at the same level as 2020. It is management view that the situation normalizes in 2022. The pandemic will not change the need for the company's products and services as other branches might experience.
In 2020, 1.9 MNOK of product technology additions, was recorded in the balance sheet related to the MiraQ products. The MiraQ platform forms the basis for future models from Medistim. All development activity is performed in the parent company. The license agreement is externally acquired from em-tec for the use of the SonoQ products.
| Product technology |
Goodwill | License agreement |
Total intangible |
|---|---|---|---|
| 2020 | 2020 | 2020 | 2020 |
| 75 897 | 14 128 | 2 158 | 92 183 |
| 1 865 | - | 1 865 | |
| 82 | - | 82 | |
| 1 242 | 1 242 | ||
| 77 844 | 14 128 | 2 158 | 94 130 |
| 52 936 | - | 1 079 | 54 015 |
| 6 888 | - | 539 | 7 427 |
| 59 824 | - | 1 618 | 61 442 |
| 18 020 | 14 128 | 540 | 32 688 |
| Product technology |
Goodwill | License agreement |
Total intangible |
|
|---|---|---|---|---|
| 1 = NOK 1000 | 2019 | 2019 | 2019 | 2019 |
| Historic cost | ||||
| Historic cost 31.12. |
71 268 |
14 128 |
2 158 |
87 554 |
| Internal additions |
3 303 |
- | 3 303 |
|
| External additions |
1 326 |
- | 1 326 |
|
| Additions under development |
3 514 |
3 514 |
||
| Historic cost 31.12 | 75 897 | 14 128 | 2 158 | 92 183 |
| Accumulated depreciation and write downs |
47 282 |
- | 539 | 47 822 |
| Depreciations for the year |
5 653 |
- | 539 | 6 193 |
| Total depreciation as of 31.12 | 52 936 | - | 1 079 | 54 015 |
| Net value in balance sheet | 22 961 | 14 128 | 1 079 | 38 168 |
Intangible assets are depreciated on a straight-line basis over the useful life. Useful life for capitalized product development is 3 to 8 years. The license agreement is depreciated over 5 years.
Within vascular surgery, there is a corresponding need to measure blood flow in the same manner as within cardiac surgery. Some vascular surgeons are already using Medistim's equipment despite the fact that the probes are designed for cardiac surgery. The company has seen an increasing demand over time and in 2011, the company developed a specially designed probe for use in the vascular area. The market in vascular surgery is large and it is performed about 600,000 procedures annually. In comparison, about 700,000 procedures are performed per year within cardiac surgery. This is a significant market where Medistim can customize its solution with a modest investment. Book value as of 31.12.2020 was 2.2 MNOK. Expected useful life for the PV probes are 8 years.
Entering into 2021, Medistim had invested 35.6 MNOK in the system platform that represent Medistim's 4th generation of systems within flow measurement and imaging to ensure quality and guiding during surgery. The platform has a flexibility that will allow customer adaption and new applications. The technological improvements have secured and strengthen Medistim's leading position. The product, MiraQ Cardiac, based upon the platform, was launched by the end of 2014. The MiraQ Vascular system was introduced in 2015 together with the new vascular flow probes late 2015. At the same time the MiraQ Ultimate was introduced that combines the two cardiac and vascular modalities. Book value for the MiraQ platform by year-end was 15.8 MNOK. Expected lifetime for the product is 8 years.
In total 14.6 MNOK of the R & D costs was expensed in the P & L in 2020. Similar expense was 7.8 MNOK in 2019. With 1.9 MNOK recognized as asset a total of 16.5 MNOK was used in R & D in 2020. Comparable number for 2019 was 12.4 MNOK.
Medistim entered a license and an OEM agreement with em-tec GmbH in 2015. With the agreement, Medistim obtains exclusive, worldwide rights to market and sell em-tec's transit time flow measurement (TTFM) technology, the SonoQ, for use on human blood vessels within cardiac-, vascular- and transplant surgery. em-tec's flow measurement device is designed as a basic, entrylevel customersolution thatmeetslower price-point market segments and fills a gap within Medistim's product portfolio. The first Medistim labeled device was launched in 2016. As compensation for these rights, Medistim paid 2.7 MNOK, which was recorded in the balance sheet as of 31.12.2016. The rights are exclusive and will be depreciated over 5 years, since it is a 5 year agreement. The depreciation was effective from 2017, since the Medistim labeled product where launched by the end of 2016. Book value by year end 2020 was 0.5 MNOK. Sales of the SonoQ products is shown in note 2 as other revenue.
Goodwill istested forimpairment annually.Goodwill arises from the acquisition of Medi-Stim Norge AS and Kir-Op AS.
| GOODWILL | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Acquisition of Medi-Stim Norge AS |
7 960 | 7 960 |
| Acquisition of Kir-Op AS |
6 168 | 6 168 |
| Total goodwill | 14 128 | 14 128 |
Goodwill is allocated to the cash flow generating unit Medistim Norge AS which represents the third party product segment. The impairment test estimates the value in use of Medistim Norge AS. This is estimated using the company's budget for 2021 and 3-year strategy plan for the years 2022 to 2024 with the assumption of 2 % growth in 2025 compared to 2024. Cash flows for more than five years are estimated by using Gordon's growth formula with a 2 % growth in the terminal year. The cash flow is discounted using 12.1 % discount rate. Thisincludes an additional yield of 11.4 % compared to risk free interest. The value of the discounted cash flow exceeded the recorded book value in the balance sheet and there was no need for a write down of goodwill.
The estimates in the tests are most sensitive to changes in the following parameters:
Within the medical device industry there are major investments done in the development of products. Medistim Norge has certain product lines that have a large portion of total sales. Medistim Norge's financial situation will be affected if a new product was released in the market that would replace existing key products, and Medistim Norge is not distributor for the new product. The company would also be affected if a supplier changes distributor or choosesto go direct in the Norwegian market. For this reason it is important for the company to maintain know how and performance to secure key product lines. It is equally important that the company is able to see trends and take in new products with a future potential. The largest product line forthe company has 20 % of totalsales. If this product line is lost together with another line that is 5 – 10 % of total sales, all goodwill needs to be written down.
The company's largest customers are Norwegian hospitals. The hospitals are continuously improving their purchasing routines and purchasing is centralized and professionalized. This increases the demand for better quality and prices from the suppliers. The company's ability tomaintain prices by offering quality products and services is crucial in the competition for future contracts. The company is well connected to its suppliers and when the competition increases the suppliers is contributing by lowering their prices. However, it is not realistic to expect that the suppliers will compensate for all of the reduction in prices. The company's experience is that about 50 % of the price change is covered by the suppliers in an increased competitive situation. A price reduction of 10 % without any compensation from the suppliers is the break even level for write down of goodwill.
The company uses a discount rate that is equal to risk free interest with an addition of 9.1 %. This level is evaluated on a yearly basis and a change in the discount rate could affect the evaluation of the intangible assets. Risk-free interest rate is based on 10-year government bond that at the beginning of the year was 3.5 %. Including risk free interest of 3.0 % the total discount rate in 2020 isset to 12.1%.
It is projected growth in sales with a variation from 5 % to 2 % in the budget and strategy period, and with 2 % growth in the terminal value. To be able to maintain this increase it is crucial that the company handles existing productlinesin an effectivemanner and that the company is able to identify and get distribution agreements for new product lines that create more business than lost product lines.
Medistim Norge has over the years built a competence within the medical device industry and distribution. It is essential that this knowhow is updated and passed on to new employees.
With the assumption used in the impairment test, the recoverable amount exceeds the carrying amount with 49,6 MNOK ("headroom"), and no impairment loss is recognized. Operating margin and growth is based upon historic achieved margins and sales growth.
If the operating margin is reduced from 11.7% to 5.0% everything else equal, carrying amount would require an evaluation of impairment loss. A change in the discount rate from 12.1 % to 34.0 % everything else equal, would cause an impairment loss. See overview below.
| HEADROOM | |||
|---|---|---|---|
| Discount rate |
12,1% | 27,0 % |
34,0 % |
| Headroom in MNOK |
49.6 | 2.6 | -3.8 |
| Operating margin |
11,7% | 5,0 %% |
1,5 %% |
| Headroom in MNOK |
49.6 | 1.1 | -25.9 |
All subsidiaries are 100 % owned and Medistim has all votes. Medistim Norge AS has offices at Økern in Oslo. Medistim USA Inc has offices in Minneapolis in the USA. Medistim Deutschland GmbH has offices in Munich in Germany, Medistim Denmark has offices in Copenhagen Denmark, Medistim Spain S.L has offices in Madrid and Medistim UK has offices in London UK. None of the subsidiaries are listed at a stock exchange.
| SPECIFICATION OF INVENTORY | ||
|---|---|---|
| 1=NOK 1000 | 2020 | 2019 |
| Raw material |
54 115 | 29 301 |
| Work in progress |
6 909 | 16 722 |
| Finished goods |
36 434 | 26 613 |
| Spare parts |
3 504 | 2 302 |
| Third party products |
14 047 | 16 849 |
| Inventory provision |
-2 343 | -1 717 |
| Total | 112 667 | 90 070 |
Finished goods are measured at cost which includes cost for components and internal labor cost. Work in progress is valued at the total of the component cost and labor cost. The inventory level in 2020 is at a higher level than compared to 2019. It is necessary for the company to keep an additional security inventory for critical components for own developed products. Due to a strict regulatory regime within medical device it takes time to introduce new devices or components. At the same time the tendency isthat electronic components life circle is shorter. For this reason inventory level is high to secure future deliveries for Medistim developed products. Inventory is used as security for loan, see note 18.
| SPECIFICATION OF INVENTORY PROVISION | ||||
|---|---|---|---|---|
| 1=NOK 1000 | 2020 | 2019 | ||
| Carrying amount |
Provision | Carrying amount |
Provision | |
| Demonstration products |
1 562 | 1 172 | 1 465 |
1 099 |
| Spare parts |
1 942 | 970 | 837 | 418 |
| Third party products |
200 | 200 | 200 | 200 |
| Total | 3 704 | 2 342 | 2 502 | 1 717 |
| ACCOUNTS RECEIVABLE | |||||||
|---|---|---|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | |||||
| Accounts | receivable | 57 844 | 62 400 |
||||
| Provision | for bad debt |
-359 | -212 | ||||
| Total | 57 485 | 62 188 | |||||
| AGING ACCOUNTS RECEIVABLE | |||||||
| 1 = NOK 1000 | Not due | 0-30 days 31 - 60 days 61 - 90 days Over 91 days | Total | ||||
| Year 2019 |
Expected loss |
||||||
| Book value of receivables |
37 628 |
12 185 |
3 249 |
6 828 |
2 296 |
62 186 |
|
| Expected credit loss |
- | - | 27 | 137 | 48 | 212 | |
| Total | 37 628 | 12 185 | 3 222 | 6 692 | 2 248 | 61 974 | |
| Year 2020 Expected loss | |||||||
| Book value of receivables |
40 020 | 5 249 | 2 157 | 9 102 | 1 310 | 57 838 | |
| Expected credit loss |
- | - | - | 91 | 262 | 353 | |
| ACCOUNTS RECEIVABLE | |||||||
|---|---|---|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | |||||
| Accounts | receivable | 57 844 | 62 400 |
||||
| Provision | for bad debt |
-359 | -212 | ||||
| Total | 57 485 | 62 188 | |||||
| AGING ACCOUNTS RECEIVABLE | |||||||
| 1 = NOK 1000 | Not due | 0-30 days 31 - 60 days 61 - 90 days Over 91 days | Total | ||||
| Year 2019 |
Expected loss |
||||||
| Book value of receivables |
37 628 |
12 185 |
3 249 |
6 828 |
2 296 |
62 186 |
|
| Expected credit loss |
- | - | 27 | 137 | 48 | 212 | |
| Total | 37 628 | 12 185 | 3 222 | 6 692 | 2 248 | 61 974 | |
| Year 2020 Expected loss | |||||||
| Book value of receivables |
40 020 | 5 249 | 2 157 | 9 102 | 1 310 | 57 838 | |
| Expected credit loss |
- | - | - | 91 | 262 | 353 | |
| ACCOUNTS RECEIVABLE | |||||||
|---|---|---|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | |||||
| Accounts | receivable | 57 844 | 62 400 |
||||
| Provision | for bad debt |
-359 | -212 | ||||
| Total | 57 485 | 62 188 | |||||
| AGING ACCOUNTS RECEIVABLE | |||||||
| 1 = NOK 1000 | Not due | 0-30 days 31 - 60 days 61 - 90 days Over 91 days | Total | ||||
| Year 2019 |
Expected loss |
||||||
| Book value of receivables |
37 628 |
12 185 |
3 249 |
6 828 |
2 296 |
62 186 |
|
| Expected credit |
|||||||
| loss | - | - | 27 | 137 | 48 | 212 | |
| Total | 37 628 | 12 185 | 3 222 | 6 692 | 2 248 | 61 974 | |
| Year 2020 Expected loss | |||||||
| Book value of receivables |
40 020 | 5 249 | 2 157 | 9 102 | 1 310 | 57 838 | |
| Expected credit loss |
- | - | - | 91 | 262 | 353 | |
| Total | 40 232 | 5 249 | 2 157 | 9 011 | 1 048 | 57 485 |
All receivables are due within one year. Historically the group losses have been limited. End customers are often public hospitals with government funding and the risks for losses are low. However, days sales outstanding is high compared to other businesses, something that the aging receivables confirm.
Receivables is used as security for loan, see note 18
Other receivables are shown below:
| OTHER RECEIVABLES | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Other pre-payments |
761 | 2 312 |
| Accrued income |
- | 3 057 |
| VAT receivable |
1 949 | 3 638 |
| Other | 1 035 | 490 |
| Total | 3 744 | 9 497 |
| CASH AND CASH EQUIVALENTS |
||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Available cash in bank |
65 761 | 62 403 |
| Restricted cash in bank |
6 130 | 4 342 |
| Cash and cash equivalents |
71 891 | 66 745 |
| Credit limit |
22 500 | 22 500 |
| Cash available |
88 261 | 84 903 |
Restricted cash as of 31.12.2020 was 6 130 TNOK and was related to tax withheld from salaries. As of 31.12.2019 the restricted cash was 4 342 TNOK related to tax withheld on salaries. The holding company had a credit facility of 22.5 MNOK in 2020 and 22.5 MNOK in 2019. The credit facility was not in use as of 31.12.2020 or 31.12.2019.
The company had 18.337.336 shares at par value of NOK 0.25 per share and total share capital amount to NOK 4.584.334. There is only one class of shares and all shares are treated equally. Each share represents one vote.
| CHANGE IN ISSUED SHARE CAPITAL IN 2020 | |||||
|---|---|---|---|---|---|
| Number of shares | Par value per share Share capital in NOK | ||||
| Share capital 01.01.2020 |
18 337 336 |
NOK 0.25 | NOK 4 548 334.00 | ||
| Changes | - | - | - | ||
| Share capital 31.12.2020 |
18 337 336 |
NOK 0.25 | NOK 4 548 334.00 |
The Board of Directors received by the shareholders meeting the 28th of April 2020 permission to purchase up to 1 833 733 Medistim ASA shares at par value NOK 458 433.25. The permission is valid until the next ordinary general assembly in 2021 in the price range of NOK 0.25 to NOK 300 per share. Further the Board of Directors got permission to increase share capital with NOK 458 433.25 or issue 1 833 733 new shares at par value NOK 0.25. The permission can be used if there is a decision to enter into a merger, acquire another company or to create an option program. The permission is valid until the next ordinary shareholders meeting in 2021. See below for changes in the equity for the last year.
| STATUS FOR THE PERMISSIONS AS OF 31.12.2020 | |||||
|---|---|---|---|---|---|
| Capital increase |
Medistim shares |
||||
| Permission given at the shareholders meeting in 2020 |
1 833 733 |
1 833 733 |
|||
| Permissions used |
- | - | |||
| Share capital 31.12.2020 |
1 833 733 |
1 833 733 |
The company owned 126 500 Medistim shares as of 31.12.2020. Number of Medistim shares by 01.01.2020 was 148 500.
| Shareholder | Number of shares | Shares in % | Nationality |
|---|---|---|---|
| INTERTRADE SHIPPING AS | 2 000 000 |
10,91% | Norway |
| SALVESEN & THAMS INVEST AS | 1 862 500 |
10,16% | Norway |
| VERDIPAPIRFOND ODIN NORDEN | 1 800 000 |
9,82% | Norway |
| State Street Bank and Trust Comp |
1 235 419 |
6,74% | United States |
| Skandinaviska Enskilda Banken AB |
1 034 107 |
5,64% | Sweden |
| FOLLUM CAPITAL AS | 970 000 |
5,29% | Norway |
| Skandinaviska Enskilda Banken AB |
517 028 |
2,82% | Denmark |
| BUANES | 479 936 |
2,62% | Norway |
| State Street Bank and Trust Comp |
415 227 |
2,26% | United States |
| Skandinaviska Enskilda Banken AB |
409 723 |
2,23% | Sweden |
| FD INVT TR: FD SRS INTL SML CP FD |
382 845 |
2,09% | United Kingdom |
| SKANDINAVISKA ENSKILDA BANKEN AB | 378 446 |
2,06% | Luxembourg |
| State Street Bank and Trust Comp |
345 220 |
1,88% | United States |
| Danske Bank A/S |
258 310 |
1,41% | Denmark |
| State Street Bank and Trust Comp |
254 115 |
1,39% | United States |
| The Bank of New York Mellon SA/NV |
250 000 |
1,36% | Belgium |
| BNP Paribas Securities Services |
239 188 |
1,30% | France |
| Skandinaviska Enskilda Banken AB |
238 314 |
1,30% | Sweden |
| Danske Invest Norge Vekst |
228 000 |
1,24% | Norway |
| The Bank of New York Mellon SA/NV |
216 500 |
1,18% | Belgium |
| Total 20 largest shareholders |
13 514 878 |
||
| Total number of shares outstanding |
18 337 336 |
||
| 20 largest shareholders in % |
73,70% |
| BOARD MEMBERS AND MANAGEMENT TEAM WITH SHARES IN THE COMPANY | |||||||
|---|---|---|---|---|---|---|---|
| Shareholder | Number of shares | In % of total | Position | ||||
| Tove Raanes via Trane AS |
1 990 |
0,01 % |
Board member |
||||
| Roger Morberg |
8 438 | 0,046 % |
VP Sales International |
||||
| Bjørn Wiggen (holds 24 % of the shares in Salvesen & Thams Invest AS) |
1 862 500 | 10,16 % |
Deputy Chairman |
||||
| Erik Swensen |
10 000 | 0,54 % |
VP R&D | ||||
| Thomas Jakobsen |
40 096 |
0,22 % |
CFO | ||||
| Kari Eian Krogstad |
91 802 |
0,50 % |
CEO | ||||
| Siri Fûrst |
2 000 | 0,01 % |
Board Member |
||||
| Øyvin A. Brøymer (Intertrade Shipping) |
2 000 000 | 10,91 % |
Chairman | ||||
| Anne Waaler |
451 | 0,002 % |
VP Medical |
||||
| Lars Rønn |
885 | 0,004 % |
Board member |
There were no share options outstanding as of 31.12.2020 except from the share program to CEO described under Chapter 3 Corporate Governance under compensation to management and note 21.
| 1 = NOK 1000 | Carrying | amount | ||
|---|---|---|---|---|
| Interest rate Last due date | 2020 | 2019 | ||
| Secured loan | ||||
| PPP loan from USA |
n.a | n.a | 6 080 | - |
| Lease agreements |
2-4 % |
30/09/27 | 28 368 | 28 889 |
| Deferred revenue |
265 | 618 | ||
| Loan from DNB |
NIBOR + 1,90 % |
18/10/22 | 4 500 | 7 500 |
| Total long-term debt |
39 213 | 37 007 | ||
| Total debt |
39 213 | 37 007 |
||
| Debt due within one year |
-3 000 | -3 000 |
||
| Lease agreements due within one year |
-6 715 | -6 206 |
||
| Total debt with due date more than one year | 29 497 | 27 801 |
Medistim borrowed 15.0 MNOK in 2017 and the remaining balance of the loan was 4.5 MNOK by 31.12.2020. The bank has collateral in property, plant and equipment, accounts receivable and inventory in the holding company and the Norwegian subsidiary. The collateral in property, plant and equipment, accountsreceivables and inventory is not limited. Book value of pledged property, plant and equipment was as of 31.12.2020 31.4 MNOK, 59.6 MNOK for accounts receivables and 103.9 MNOK for inventory. There are no other restrictions related to the loan such as level of equity, minimum profit or similar covenants. The lease agreements are described under note 7.
| OTHER SHORT-TERM DEBT |
||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Accrual for public taxes |
9 613 | 9 387 |
| Accrual for holiday pay |
7 386 | 6 907 |
| Accrual for salaries, commission and board member fee |
4 628 | 11 948 |
| Accrual for customer and supplier obligations |
631 | 1 057 |
| Other | 1 353 | 4 319 |
| Total | 23 610 | 33 618 |
The group's financial liabilities are interest bearing loans , leasing agreements, and accounts payable. The group also has a credit facility. The financial liabilities and facilities are important instruments that contribute to the financing of the group's operational activities. The group's financial assets are accounts receivables, and cash. From time to time the group also enters into financial derivative contracts to hedge currency exposure. Hedge accounting is not applied. The risk arising from financial instruments is market risk, credit risk towards customers, and liquidity risk.
The group had as of 31.12.2020 4.5 MNOK interest bearing debt. If the group needs a loan it is group policy to have floating interest since this will be the lowest interest rate over time. In general, the group considers the exposure towards changes in interest rates as low.
Change in exchange rates involves a direct and indirect financial risk for Medistim ASA. The company has revenue and expenses in EUR and USD where most revenue is in EUR and USD and expenses mostly in NOK. Efforts are made to neutralize net exposure up to 12 months in the future by entering into derivative contracts. The development in NOK towards USD and EUR is continuously monitored. By the end of 2020, the company had no derivative contractsfor EUR or USD. In 2020 6 hedging contracts of EUR 0.2 million each was entered and 6 hedging contracts of USD 0.15 million each was entered. Total amount of the hedging contracts was in EUR 1.2 million and in USD 0.9 million. The hedging contracts are entered to reduce the exchange risk towards currencies. The management and Board of directors evaluate the handling of risks related to exchange rates fluctuations continuously together with its professional advisers.
The group had a credit facility of 6.0 MNOK to enter hedging contracts. The facility represents 10 % of the value of the contracts the group can use and the Group can enter hedging contracts for a total of 60 MNOK. Security related to the facility is related to assets, accounts receivable and inventory with no limit. Book value of secured items was as of 31.12.2020 31.4 MNOK for assets, 56.6 MNOK for accounts receivables and 103.9 MNOK for inventory.
The financial assets and liabilities in the balance sheet by year end 2020 and 2019 is shown below:
| FINANCIAL ASSETS AND LIABILITIES | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Financial assets | Carrying amount Carrying amount | |
| Cash in USD |
6 079 | 8 090 |
| Cash in EUR |
14 458 | 13 008 |
| Accounts receivable in EUR |
39 038 | 19 687 |
| Accounts receivable in USD |
188 | 181 |
| Financial debt |
||
| Accounts payable in EUR |
2 028 | 1 706 |
| Accounts payable in USD |
351 | 301 |
| Interest bearing loan |
||
| Bank loans in NOK |
4 500 | 7 500 |
For 2020 a 5 % weakening in NOK towards EUR would represent an increase in profit of 2573 TNOK. A similar strengthening of NOK towards EUR would represent a reduction in profit of 2451 TNOK. For 2020 a 5 % weakening in NOK towards USD would represent an increase in profit of 296 TNOK. A similar strengthening of NOK towards USD would represent a reduction in profit of 282 TNOK. For 2019 a 5 % weakening in NOK towards EUR would represent an increase in profit of 1549 TNOK. A similar strengthening of NOK towards EUR would represent a reduction in profit of 1476 TNOK. For 2019 a 5 % weakening in NOK towards USD would represent an increase in profit of 399 TNOK. A similar strengthening of NOK towards USD would represent a reduction in profit of 380 TNOK.
Other financial risk as credit risk and liquidity risk is viewed by the company as low based upon the group's financial position as of 31.12.2020.
The group is at some extent exposed towards credit risk. The general risk is low since the majority of customers are financed by public authorities. Still history records for payments, the size of the transaction and the other party's credit risk is evaluated from case to case. The level of credit given is evaluated when there is a change in market conditions. The level ofrisk isreduced by using bank guaranties and prepayments in cases where the level of risk is found to be higher than normally accepted.
See note 15 for a table showing the aging of accounts receivable.
Liquidity risk is the risk that the company is not able to meet its obligations in time. Managing liquidity risk is therefore prioritized to secure financial flexibility. Medistim main source of cash is cash generated from operations. The group has over the last 5 years experienced an increase in profit and available cash. Therefore, the company has been able to build up a cash reserve due to strong profits to handle the increased need for working capital as the company grows. The liquidity buffer also secures cash in situations where the incoming cash is delayed. In addition, the company has a credit facility with a limit of 22.5 MNOK to secure available cash.
Even though the pandemic is affecting the company it has proven through 2020 that the financials are solid. Revenue in 2020 ended at the same level as 2019. Expenses were reduced due to less travel and participation at exhibitions. As a result Medistim deliver its strongest profit in the company history and cash flow from operations is strong with MNOK 74.3. Going into 2021 there will still be effects related to the pandemic, but Medistim addresses a patient group that must be treated for their condition. It is the company's experience in 2020 that the healthcare system provides treatment to patient with a critical condition in parallel with treating COVID 19 patients. This is also expected to be the case in 2021. Now that there are vaccines available it is assumed that conditions are back to normal in 2022. The pandemic will not change the need for the company's product and services as other industries might experience.
The table below sets out the maturity profile of the financial liabilities based on contractual undiscounted payments:
| OVERVIEW OF DEBT | |||||
|---|---|---|---|---|---|
| 1 = NOK 1000 | |||||
| Between 3-12 | Over 5 | ||||
| Year 2020 | Within 3 months | months 1 to 5 years | years | Total | |
| Interest bearing loans |
- | 3 000 | 23 142 | 5 826 | 31 968 |
| Accounts payable |
13 530 | - | - | - | 13 530 |
| Other debt |
24 225 | 18 987 | - | - | 43 212 |
| Total | 37 755 | 21 987 | 23 142 | 5 826 | 88 710 |
| Year 2019 | Within 3 months | Between 3-12 | months 1 to 5 years | Over 5 years |
Total |
|---|---|---|---|---|---|
| Interest bearing loans |
- | 3 000 |
4 500 |
- | 7 500 |
| Lease liabilities |
1 552 |
4 655 |
17 969 |
4 496 |
28 671 |
| Accounts payable |
14 828 |
- | - | - | 14 828 |
| Other debt |
31 258 |
16 993 |
- | - | 48 250 |
| Total | 47 637 | 24 647 | 22 469 | 4 496 | 99 249 |
Management strives to strengthen the group's healthy financial position through profit and a high level of equity. This will secure continued growth and will maximize shareholders values. The group will adjust capital structure to adapt to changes in the financial climate. Capital structure can be adjusted through dividend, repayment of share capital or issue new shares. There were no changes in the financial strategy in the group in 2020 or 2019.
The management group consists of 10 people including CEO. The managing directors in the subsidiaries are included in the management group.
| COMPENSATION AND BENEFITS TO THE MANAGEMENT GROUP IN 2020 | |||||||
|---|---|---|---|---|---|---|---|
| Management | Position | Salary | Bonus | Pension | Share based compensation |
Other | Total |
| Hæge Johanne Krogh Wetterhus |
VP Marketing | 1 285 201 |
178 571 |
89 880 |
- | 4 392 |
1 558 044 |
| Anne Waaler | VP Medical | 1 255 021 |
178 571 |
79 248 |
- | 4 392 |
1 517 232 |
| Roger Reino Morberg |
VP Sales | 1 530 834 |
267 857 |
84 216 |
- | 4 392 |
1 887 299 |
| Erik Swensen | VP Development | 1 243 287 |
178 571 |
80 064 |
- | 4 392 |
1 506 314 |
| Tone Ann Veiteberg |
VP QA\Reg | 1 088 812 |
178 571 |
79 932 |
- | 4 392 |
1 351 707 |
| Ole Jørgen Robsrud |
CEOMedistimNorge AS |
1 208 291 |
71 429 |
88 000 |
- | 4 392 |
1 372 112 |
| Helge Børslid | VP Operations | 1 146 478 |
178 571 |
81 000 |
- | 4 392 |
1 410 441 |
| Håkon Grøthe | VP Innovation | 1 156 984 |
- | 78 408 |
- | 4 392 |
1 239 784 |
| Mike Farbelow | PresidentMedistim USA |
2 082 876 |
674 640 |
85 810 |
- | 105 872 |
2 949 198 |
| Cindy Kaffi | CEOMedistim Germany |
1 244 528 |
300 440 |
- | - | - | 1 544 968 |
| Kari Eian Krogstad | CEO Medistim group | 2 689 226 |
1 116 071 |
88 908 |
1 930 000 |
4 392 |
5 828 597 |
| Thomas Jakobsen | CFO Medistim Group | 1 764 945 |
267 857 |
81 696 |
334 000 |
4 392 |
2 452 890 |
| Sum | 17 696 483 3 591 149 917 162 | 2 264 000 149 792 | 24 618 586 |
| Share based | |||||||
|---|---|---|---|---|---|---|---|
| Management | Position | Salary | Bonus | Pension | compensation | Other | Total |
| Hæge Johanne Krogh Wetterhus |
VP Marketing | 1 261 516 |
87 054 |
84 744 |
- | 4 392 |
1 437 706 |
| Anne Waaler | VP Medical | 1 253 004 |
66 964 |
78 096 |
- | 4 392 |
1 402 456 |
| Roger Reino Morberg |
VP Sales | 1 560 094 |
267 857 |
79 572 |
- | 4 392 |
1 911 915 |
| Erik Swensen | VP Development | 1 178 683 |
66 964 |
76 980 |
- | 4 392 |
1 327 019 |
| Tone Ann Veiteberg |
VP QA\Reg | 1 064 356 |
66 964 |
73 104 |
- | 4 392 |
1 208 816 |
| Ole Jørgen Robsrud |
CEO Medistim Norge AS |
1 218 428 |
35 714 |
77 436 |
- | 4 392 |
1 335 970 |
| Helge Børslid | VP Operations | 1 012 165 |
142 857 |
64 344 |
- | 4 392 |
1 223 758 |
| Håkon Grøthe | VP Innovation | 778 978 |
- | 51 200 |
- | 3 303 |
833 481 |
| Mike Farbelow | President Medistim USA |
1 865 139 |
546 220 |
96 454 |
- | 89 386 |
2 597 199 |
| Cindy Kaffi | CEO Medistim Germany |
1 123 353 |
275 800 |
- | - | - | 1 399 153 |
| Kari Eian Krogstad | CEO Medistim group | 2 556 229 |
856 276 |
85 164 |
855 000 |
4 392 |
4 357 061 |
| Thomas Jakobsen | CFO Medistim Group | 1 718 384 |
200 893 |
77 436 |
- | 4 392 |
2 001 105 |
| Sum | 16 590 329 2 613 563 844 530 | 855 000 132 217 21 035 639 |
There are no severance pay agreements towards any in the management team in case of leaving the company. All members of the management group have a two-way arrangement of 3 months' notice. The exception is management in the US that has no notice period. The management group has the same pension plan as other employees. For Norwegian members of the management group, this is a contribution plan that covers 5 % of salary up to 7.1 G and 8 % of salary for G between 7.1 and 12. 1G equals NOK 101.351. Management in the US has a contribution plan that covers 4 % of salary.
The board decides incentives to CEO. Bonus and incentives to the management group is decided by theCEO.Bonus andincentivesforbothmanagement group and CEO is based on achieved results. Neither the board, CEO nor other employees in the group have loans from the company. The table shows the bonus paid in 2020 and 2019.
Compensation to the boardwas 1 300 TNOK in 2020 and 1 300 TNOK in 2019. The chairman received 400 TNOK as compensation in 2020 and 400 TNOK in 2019. The four board members received a total 225 TNOK each as compensation in 2020, a total of 900 TNOK. In 2019 they received 225 TNOK each, a total of 900 TNOK.
The nomination committee leader received a compensation of 20 TNOK, while the two other members received 15 TNOK each. In total, the nomination committee received 50 TNOK as compensation.
CEO has an agreement with the Board that she can receive up to 36.000 Medistim shares as part of compensation if in position until 2023. The Shares is received by the CEO free of charge and last shares will be received in 2024. Fair value of the share based payment is the share price at grant date multiplied with the and number of shares granted. The fair value of the share based payment is expensed over the vesting period. In 2020, TNOK 1 708 including social security tax was expensed in the accounts related to the arrangement. See also overview below.
| OUTSTANDING SHARES | ||||
|---|---|---|---|---|
| Outstanding 1.1 |
46 500 | |||
| Granted | 12 000 | |||
| Exercised | 12 500 | |||
| Outstanding 31.12 |
46 000 | |||
| Vested as of 31.12 |
12 500 | |||
| Weight average exercise price |
- | |||
| Current year expense for share based payment |
1 708 000 |
|||
| Year | 2020 | 2021 | 2022 | 2023 |
| Vesting of share options |
12 500 | 12 000 | 12 000 | 12 000 |
| Share price time of grant |
79,0 | 77,0 | 167,0 | 250,0 |
| PROVISIONS | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Warranty provision |
150 | 150 |
| Sum | 150 | 150 |
| Currency | Rate 01.01.2020 | Average rate | Rate 31.12.2020 | ||||
|---|---|---|---|---|---|---|---|
| USD | 8.7803 | 9.4004 | 8.5326 | ||||
| DKK | 132.02 | 143.82 | 140.71 | ||||
| EUR | 9.8638 | 10.7207 | 10.4703 | ||||
| GBP | 11.5936 | 12.0514 | 11.6462 |
| CHANGES IN LIABILITIES ARISING FROM FINANCIAL ACTIVITIES | |||||||
|---|---|---|---|---|---|---|---|
| 1 = NOK 1000 | Interest bearing short term debt |
Interest bearing long term debt |
Financial instruments |
Total 2019 | |||
| At 1st of January 2019 |
3 000 |
7 500 |
- | 10 500 |
|||
| Implementation of IFRS 16 |
5 770 |
1 898 |
- | 7 668 |
|||
| New lease agreements |
- | 26 651 |
- | 26 651 |
|||
| Cash flows |
-8 770 |
- | 504 | -8 266 |
|||
| Debt becomming current in 2019 |
9 206 |
-9 206 |
- | - | |||
| Effects of foreign exchange |
- | - | -504 | -504 | |||
| Other | - | 340 | - | 340 | |||
| 31.December 2019 | 9 206 | 27 183 | 0 | 36 389 |
| 1 = NOK 1000 | Interest bearing short term debt |
Interest bearing long term debt |
Financial instruments |
Total 2020 |
|---|---|---|---|---|
| At 1st of January 2020 |
9 206 |
27 183 |
- | 36 389 |
| Lease agreements |
- | 0 | ||
| New lease agreements |
- | 5 957 |
- | 5 957 |
| Interest bearing debt |
-3 000 |
-3 000 | ||
| Cash flows lease agreements |
-6 206 |
- | -6 206 | |
| Debt becomming current in 2020 |
9 880 |
-6 680 |
- | 3 200 |
| Effects of foreign exchange |
- | - | - | |
| Other | - | 3 037 |
- | 3 037 |
| 31.December 2020 | 9 880 | 29 497 | 0 | 39 377 |
The Board of directors has no knowledge about events after 2020 that will affect the annual report and financial statement for 2021. See Board of director's report under other risk related to the Corona virus situation.
| INCOME STATEMENT MEDISTIM ASA | |||
|---|---|---|---|
| 1 = NOK 1000 | Note | 2020 | 2019 |
| Operating income and expenses |
|||
| Revenues | |||
| Sales revenue |
26 | 192 259 | 197 600 |
| Other income |
26 | 3 185 | 2 903 |
| Total revenue | 195 444 | 200 503 | |
| Operational expenses | |||
| Cost of goods sold |
37 663 | 41 432 |
|
| Salary and social expenses |
27 | 62 858 | 63 520 |
| Depreciation on assets |
28 | 13 961 | 10 963 |
| Other operating expenses |
27,29,39 | 35 553 | 33 053 |
| Total operating expenses |
150 036 | 148 968 |
|
| Operating profit | 45 408 | 51 535 | |
| Financial income and expenses | |||
| Financial income | |||
| Dividend from subsidiaries |
31 | 25 230 | 17 268 |
| Other financial income |
37 | 15 920 | 6 332 |
| Financial expenses |
37 | 16 519 | 4 949 |
| Net finance | 24 631 | 18 651 | |
| Profit before tax | 70 039 | 70 186 | |
| Tax expense |
30 | 9 864 | 11 858 |
| Profit for the year | 60 175 | 58 328 | |
| Allocations | |||
| Dividend | 36 | 54 597 | 50 047 |
| Other equity |
36 | 5 578 | 8 281 |
| Total allocation | 60 175 | 58 328 | |
| Earnings per share | |||
| Ordinary | 3,31 | 3,21 | |
| Diluted | 3,31 | 3,21 | |
| Dividend per share | 3,00 | 2,75 |
11.2 Balance Sheet Medistim ASA BALANCE SHEET MEDISTIM ASA ASSETS Non current assets Intangible assets Marketing rights 29 540 Fixed assets Office equipment 28 2 049 Financial assets Other long term receivables 31 8 559 Current assets Other receivables 32,41 3 359 Equity and liability Equity Issued capital Other equity Liabilities Accruals for obligations Deferred income 29 2 132 Other long term debt Short term debt Other short term debt 38,41 4 661
| 1 = NOK 1000 | Note | 31/12/20 | 31/12/19 |
|---|---|---|---|
| ASSETS | |||
| Non current assets | |||
| Intangible assets | |||
| Deferred tax | 30 | 1 483 | 444 |
| Marketing rights | 29 | 540 | 1 079 |
| R & D | 28,29 | 18 020 | 22 961 |
| Fixed assets | |||
| Property, plant and equipment | 28 | 28 269 | 30 523 |
| Office equipment | 28 | 2 049 | 1 307 |
| Financial assets | |||
| Shares in subsidiaries | 31 | 37 392 | 37 306 |
| Other long term receivables | 31 | 8 559 | 9 419 |
| Total non current assets | 96 313 | 103 039 | |
| Current assets | |||
| Inventory | 33 | 87 555 | 63 440 |
| Accounts receivables | 32,41 | 37 525 | 35 693 |
| Other receivables | 32,41 | 3 359 | 7 608 |
| Cash | 34 | 19 955 | 23 351 |
| Total current assets | 148 393 | 130 092 | |
| Total assets | 244 706 | 233 131 | |
| Equity and liability | |||
| Equity | |||
| Issued capital | |||
| Share capital | 35,36 | 4 584 | 4 584 |
| Share premium | 35,36 | 40 253 | 40 253 |
| Other paid in equity | 36 | 5 769 | 4 334 |
| Other equity | |||
| Retained earnings | 36 | 89 862 | 84 107 |
| Total equity | 140 468 | 133 278 | |
| Liabilities | |||
| Accruals for obligations | |||
| Deferred income | 29 | 2 132 | - |
| Total accruals | 2 132 | - | |
| Other long term debt | |||
| Long term debt from bank | 40 | 10 030 | 4 500 |
| Total other long term debt | 10 030 | 4 500 | |
| Short term debt | |||
| Interest bearing short term debt | 40 | 3 000 | 3 000 |
| Accounts payable | 8 643 | 11 245 | |
| Payable tax | 30 | 10 903 | 11 263 |
| Employee withholding, social security taxes | 10 272 | 10 145 | |
| Dividend | 36 | 54 596 | 50 047 |
| Other short term debt | 38,41 | 4 661 | 9 653 |
| Total short term debt | 92 076 | 95 353 | |
| Total equity and liability | 244 706 | 233 131 |
| 1 = NOK 1000 | Note | 2020 | 2019 |
|---|---|---|---|
| Cash flow from operations: | |||
| Profit/loss before tax |
70 039 | 70 186 |
|
| Minus income tax paid |
-8 485 | -8 871 |
|
| Plus this years tax expense |
|||
| Plus depreciations |
28 | 13 961 | 10 963 |
| Change in inventory |
33 | -24 114 | -24 513 |
| Change in accounts receivable |
32 | -1 832 | 15 040 |
| Change in accounts payable |
-2 602 | 4 185 |
|
| Other changes |
1 361 | -1 469 |
|
| Net cash from operating activities | 48 328 | 65 520 | |
| Investing activities: | |||
| Minus investment in assets |
28 | -9 672 | -11 177 |
| Net cash from investing activities | -9 672 | -11 177 | |
| Financing activities: |
|||
| Minus down payment of long term debt |
40 | -3 000 | -3 000 |
| Dividend | 36 | -50 052 | -40 925 |
| New loans |
41 | 11 000 | - |
| Net cash from financing activities | -42 052 | -43 925 | |
| Net change in cash |
-3 396 | 10 418 |
|
| Cash as of 01.01 |
23 351 | 12 933 |
|
| Cash as of 31.12 | 19 955 | 23 351 |
The financialstatement and notesis according toNorwegianGAAP,Norwegian accounting lawand according to best practice within Norwegian GAAP
Sales revenue is recognized in the profit and loss on the date of delivery and when the major risk and ownership of the product have been transferred to the customer. Systems and probes are recognized as revenue when the goods are shipped from Medistim ASA and the risk and ownership is transferred to the distributor or end customer. The same isthe case forsale of proceduresfor quality control of cardiac surgery and other third party products. Services are recognized as revenue at the time the service is performed.
Current assets and short-term debt are defined as items that are due for payment within one year at the last day of the accounting year, and items defined as working capital. Current assets are evaluated at the lowest of cost and net sales value. (The lowest value principle).
Fixed assets are defined as property for long-term use. Fixed assets are valued at cost in the balance sheet and depreciated of the expected economic lifetime. Fixed assets are written down to real value if the reduction in value is expected to be permanent. Write down is reversed if the basis for the write down no longer exists.
Shares in subsidiaries are valuated according to cost. Shares in Medistim Norge AS, Medistim US Inc, Medistim Denmark Aps, Medistim UK Ltd, and Medistim Deutschland GmbH are owned 100 %. The shares are recorded at cost or written down to real value if real value is assumed to be the lowest and that it is permanent. Dividend and group contributions are recognized as revenue in the holding company as financial revenue in the year that it has been accrued given that Medistim had the ownership of the shares in this period.
Balance sheet items in foreign currency are valued at the exchange rate on the balance sheet day. Sales revenue is recorded at the exchange rate that was at the time of the sale. Unrealized gains or losses on hedging contracts are recorded in the profit and loss.
Inventory is valued at the lowest of cost (FIFO principle) and net sales value (lowest value principle). For components, the lowest of historic cost and current price is used to value the component inventory.
Cost for finished goods includes direct cost and a portion of indirect and fixed production cost. Basis for the allocated cost to the products is a normal production situation. Goods in progress are valued at the component cost price.
Account receivables and other receivables are recorded in the balance sheet at par value with deductionforestimatedlosses.Theaccrualforlosses is based upon a separate evaluation in each case. In addition, there has been made an unspecified accrual on receivables to cover expected losses. The same evaluation is made for other receivables.
Tax cost in the income statement includes payable tax for the current accounting year and changes in temporary differences that are due for payment the coming accounting year. Temporary differences occurs using the tax rate by the end of the accounting year (22 %) and comparing tax increasing or tax reducing temporary differences between accounting values and tax values. Tax increasing or reducing temporary differences that can be reversed in the same period is recorded at net value. Deferred tax asset is recorded if it is likely that the companywill be able to utilize the tax asset.
All employees a defined pension plan.
The Group has share based payment scheme for its CEO, the program is measured at fair value at grant date. The share-based payment for the company's top leader is a scheme by issuing shares. For transactions that are settled in equity instruments (arrangements by issuing shares), recognize the value of shares granted during the period as a compensation expense in the income statement and a corresponding additional paid-in capital.
The activities in the development department are split in 3 categories. These are maintenance, general research and development of new products. Maintenance and general research is expensed in the P & L while new products are recorded as an asset and depreciated over expected lifetime. When recorded as an asset it is expected that revenues from the product will exceed activated amounts. An immaterial assetthatis acquired, or otherimmaterial assets that are developed, are recorded as an asset in the balance sheet if they are identifiable and that it is likely to give future economic benefits. The asset is amortized over the expected economic lifetime of the asset. The values of the assets are evaluated yearly and if the book value exceedsfuture economic benefit the asset is written down. The evaluation is performed by the management in the company.
The cash flow analysis is prepared using indirect method. Cash is defined as cash in bank and other financial assets that are due within 3 months after it is acquired.
Shares and other financial assets are evaluated at the lowest of cost and market value. The company enters hedging contracts in USD and EUR. The value of the contracts is based upon the exchange rate at the balance sheet day and a change in value is recorded in the P & L.
Obligations and accruals are made if it is more than 50 % likely that the obligation is real. Best estimate is used to estimate the obligation.
| GEOGRAPHIC SPLIT OF SALES | ||||
|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | ||
| USA | 64 476 | 68 455 |
||
| Asia | 45 342 | 41 790 |
||
| Europe | 74 640 | 72 539 |
||
| Rest of the world |
10 986 | 17 719 |
||
| Total sales |
195 444 | 200 503 |
Other income amounted to TNOK 3 185, where TNOK 2 392 and was income related to services towards subsidiaries and TNOK 793 a grant from Innovasjon Norge. For 2019 other income amounted to 2 903 TNOK and was also related to services towards subsidiaries.
| SALARIES AND OTHER BENEFITS | ||||
|---|---|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 | ||
| Salary | 52 433 | 52 759 |
||
| Social taxes |
7 974 | 7 887 |
||
| Other salary and social |
||||
| expenses | 2 451 | 2 874 |
||
| Total salary expenses |
62 858 | 63 520 |
The totalnumberof employeeswasthroughthe year73.
Medistim has a pension plan for all its employees. Thisis a contribution plan that covers 5 % ofsalary up to 7.1 G and 8 % of salary for G between 7.1 and 12. 1G is the base amount (NOK 101.351) in the social security system. The cost for the contribution plan was in 2020 TNOK 2 752, while it was TNOK 2 531 in 2019.
It is compulsory by law for the company to have a pension plan for its employees. The pension plans in the company fulfill the obligation in the law.
| Management | Position | Salary | Bonus | Pension | Other | Total |
|---|---|---|---|---|---|---|
| Hæge Johanne Krogh Wetterhus |
VP Marketing |
1 285 201 |
178 571 |
89 880 |
4 392 |
1 558 044 |
| Anne Waaler |
VP Medical |
1 255 021 |
178 571 |
79 248 |
4 392 |
1 517 232 |
| Roger Reino Morberg |
VP Sales |
1 530 834 |
267 857 |
84 216 |
4 392 |
1 887 299 |
| Erik Swensen |
VP Development |
1 243 287 |
178 571 |
80 064 |
4 392 |
1 506 314 |
| Tone Ann Veiteberg |
VP QA\Reg |
1 088 812 |
178 571 |
79 932 |
4 392 |
1 351 707 |
| Helge Børslid |
VP Operations |
1 146 478 |
178 571 |
81 000 |
4 392 |
1 410 441 |
| Håkon Grøthe |
VP Innovation |
1 156 984 |
- | 78 408 |
4 392 |
1 239 784 |
| Kari Eian Krogstad |
CEO Medistim Group |
2 689 226 |
1 116 071 |
88 908 |
1 934 392 |
5 828 597 |
| Thomas Jakobsen |
CFO Medistim Group |
1 764 945 |
267 857 |
81 696 |
338 392 |
2 452 890 |
| Sum | 13 160 788 | 2 544 640 | 743 352 | 2 303 528 18 752 308 |
Of other compensation to CEO and CFO, was related to shares received through share program. There are no special agreements towards any in the management team in case of leaving the company. All in the team has a two-way arrangement of 3 months' notice. The Board of Directors, neither CEO nor any other in the company has a loan from Medistim ASA. There are no options to employees or members of the Board except for CEO. The CEO will receive up to 36 000 shares as part of compensation if in position in 2024. Bonus paid in 2020 was based upon 2019 results.
Under other benefits it is included an expense related to CEO share option. CEO receives shares over a time period if in position as CEO. The share program is described in the annual report under the chapter "salary and benefits to management and leading employees". The expense for the share option is calculated based upon the share price at the time of the granted option. The expense is distributed in equal rates over the vesting period. The share program is described in detail under note 21 in the group accounts.
| 1 = NOK 1000 | ||
|---|---|---|
| Chairman Øyvin Brøymer |
400 | |
| Deputy chairman Bjørn Wiggen |
225 | |
| Board member Siri Fürst |
225 | |
| Board member Tove Raanes |
225 | |
| Board member Lars Rønn |
225 | |
| Total compensation to the Board of Directors | 1 300 | |
| COMPENSATION TO AUDITOR | ||
| 1 = NOK 1000 | 2020 | 2019 |
| Expenses for auditing |
1 053 | 849 |
| Compensation for other services |
154 | 317 |
| Total compensation to Auditor | 1 206 | 1 166 |
| Total fixed | Activated | ||||
|---|---|---|---|---|---|
| 1 = NOK 1000 | Equipment | assets | Development Trade name | Total | |
| Historic cost as of 1/1 |
8 829 |
77 829 |
74 883 |
2 697 |
155 408 |
| Additions | 1 549 |
7 725 |
1 947 |
- | 9 672 |
| Disposals | - | -2 705 |
- | - | -2 705 |
| Historic cost as of 31/12 |
10 378 |
82 848 |
76 830 |
2 697 |
162 375 |
| Accumulated depreciation as of 1/1 |
7 522 |
45 996 |
51 921 |
1 618 |
99 535 |
| Ordinary depreciation |
806 | 6 534 |
6 888 |
539 | 13 961 |
| Reversed depreciation |
- | - | - | - | - |
| Accumulated depreciation as of31/12 |
8 329 |
52 530 |
58 809 |
2 158 |
113 497 |
| Book value at 31/12 | 2 049 | 30 318 | 18 020 | 539 | 48 878 |
| Book value at 31/12 | 2049 | |
|---|---|---|
| -- | ---------------------------- | ------ |
Plant and machinery is depreciated over 3 to 7 years on a straight-line basis dependent upon expected economic lifetime.
Tools and equipment is depreciated over 3 to 5 years on a straight-line basis dependent upon expected economic lifetime.
Development cost is recorded as intangible assets when a project has reached technological feasibility and it is likely that it will result in a new product or improved product that has revenue potential that exceeds the investment. Maintenance of existing products is expensed. The investment is depreciated over 3 to 8 years dependent upon whether it is a new product or improvement of existing product. A new product that represents a new technological platform has a longer expected lifetime and for Medistim products this is 8 to 10 years. Product improvements on existing technological platform is replaced more rapid and is therefore depreciated over 3 years.
The R & D expense for 2020 was in total 16.5 MNOK compared to 12.4 MNOK in 2019. In 2020 1.9 MNOK of the R & D expense was activated in the balance sheet while 4.6 MNOK was activated in the balance sheet in 2019. The activated expense in 2020 were related to the coronary and vascular products on the MiraQplatform. The company did notreceive any new FOU or Skattefunn fundsin 2020 or 2019.
Intotal14.6MNOKoftheR&Dexpenseswasrecorded in the P & L in 2020. Similar expense was 7.8 MNOK in 2019. The expensed R & Dwasthe rest value of all R & D expenses after activated R & D was deducted.
Medistim entered a license and an OEM agreement with em-tec GmbH in 2015. With the agreement, Medistim obtains exclusive, eternal, worldwide rights to market and sell em-tec's transit time flow measurement (TTFM) technology for use on human blood vessels within cardiac-, vascular- and transplant surgery. em-tec's flow measurement device is designed as a basic, entry-level customer solution that meets lower price-point market segments and fills a gap within Medistim's product portfolio. The first Medistim labeled device was launched in 2016. As compensation for these rights, Medistim paid 2.7 MNOK, which was recorded in the balance sheet as of 31.12.2016. The rights are exclusive and eternal, but will be depreciated over 5 years. The depreciation was effective from 2017, since the Medistim labeled productwhere launched by the end of 2016. Book value as of 31.12.2020
was 0.5 MNOK.
Note 30 Income tax and temporary differences
| INCOME TAX AND TEMPORARY DIFFERENCES | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Current income tax charge for the year before deferred tax asset is utilised |
10 599 | 11 263 |
| Change in deferred tax |
-1 039 | 595 |
| Income tax expense reported | 9 560 | 11 858 |
| Reconciling income tax expense against profit : |
||
| Income tax expense for the year |
9 560 | 11 858 |
| 22 % of profit before tax |
14 865 | 15 441 |
| permanent differences |
-5 305 | -3 583 |
| Specification of taxable income: | ||
| Profit before tax |
67 569 | 70 186 |
| Permanent differences |
-24 115 | -16 286 |
| Change in temporary differences |
4 723 | -2 702 |
| Taxable profit | 48 177 | 51 197 |
| Payable tax in balance sheet: | ||
| Tax on profit for the year |
10 599 | 11 263 |
| Total payable tax | 10 599 | 11 263 |
| Specification of deferred tax asset | ||
| Differences in accounting and tax values | ||
| Fixed assets |
-2 962 | -1 023 |
| Current assets |
-1 593 | -1 524 |
| Accrual for obligations |
-2 185 | 530 |
| Total differences |
-6 741 | -2 018 |
| Deferred tax asset 22 % | 1 483 | 444 |
| Deferred tax asset in balance sheet | 1 483 | 444 |
Deferred tax assetin the balance sheetwasincreased fromthe year beforewith 0.5 MNOK andwasrecorded at 0.9 MNOK. Deferred tax asset consist of temporary differences in valuation of assets. All deferred tax asset is recorded in the balance sheet as of 31.12.2020, since it is likely that the company will have future taxable income that will exceed temporary differences.
| 1 = NOK 1000 | |||||
|---|---|---|---|---|---|
| Balance | Profit in | ||||
| Unit | Country | Segment | Ownership | sheet value | 2020 |
| Medistim USA Inc. |
USA | Lease and sale within bypass surgery and vascular surgery |
100% | 135 | 17 714 |
| Medistim Deutschland GmbH |
Germany | Capital sales within bypass surgery and vascular surgery |
100% | 188 | 7 470 |
| Medistim Norge AS |
Norway | Sale of 3 pary products and capital sales within bypass surgery and vascular surgery |
100% | 36 953 |
8 973 |
| Medistim UK LTD |
UK | Capital sales within bypass surgery and vascular surgery |
100% | 1 | -262 |
| Medistim Japan KK |
Japan | Dornmat company | 100% | 86 | 0 |
| Medistim Spain S.L |
Spain | Capital sales within bypass surgery and vascular surgery |
100% | 28 | -233 |
| Medistim Danmark Aps |
Denmark | Sale of 3 pary products and capital sales within bypass surgery and vascular surgery |
100% - Owned indirectly through Medistim Norge AS with book value of TNOK 1 103 |
455 | |
| Total | 37 392 | 34 117 |
Medistim Norge AS has a subsidiary Medistim ASA owns indirectly through Medistim Norge AS in Denmark. The company is named Medistim Denmark Aps and is within the same segment as Medistim Norge AS.
| SUMMARY OF FINANCIAL INFORMATION FROM SUBSIDIARIES ALL 100 % OWNED |
|||||
|---|---|---|---|---|---|
| 1 = NOK 1000 | |||||
| Unit | Assets | Debt | Equity | Income | Profit |
| Medistim USA Inc. |
80 086 |
15 622 |
64 464 |
133 539 |
17 714 |
| Medistim Deutschland GmbH |
9 681 |
3 305 |
6 377 |
43 176 |
7 470 |
| Medistim Danmark Aps |
2 769 |
2 183 |
585 | 5 758 |
455 |
| Medistim Japan KK |
86 | 0 | 86 | 0 | 0 |
| Medistim Spain S.L |
11 711 |
11 761 |
-50 | 12 196 |
-233 |
| Medistim UK LTD |
3 329 |
10 509 |
-7 180 |
4 170 |
-262 |
| Medistim Norge AS |
42 700 |
8 357 |
34 344 |
69 113 |
8 973 |
| Total | 150 363 | 51 737 | 98 626 | 267 951 | 34 117 |
Medistim Norge AS has offices at Økernveien 94 in Oslo. Medistim USA Inc has offices in Minneapolis in the USA. Medistim Deutschland GmbH has officesin Munich in Germany, Medistim UK has officesin Nottingham in UK, Medistim Japan KK has offices in Tokyo, Japan and Medistim Denmark has offices in Copenhagen in Denmark. Medistim Spain S.L has offices in Madrid. Book value of goodwill related to the acquisition of Medistim Norge AS was as of 31.12.2020 14 128 TNOK. Goodwill at the time of acquisition was 16 097 TNOK. None of the subsidiaries are listed at a stock exchange.
Of Medistim UK's debt of 10 509 TNOK, 7 743 TNOK is a long-term debt towards Medistim ASA. The debt is part of a cash transfer to finance and establish the company in UK. Interest has been charged on this debt. Medistim ASA received from its German and Norwegian subsidiary a dividend of 15.2 MNOK and 10.0 MNOK respectively in 2020. Medistim ASA has interest bearing debt towards Medistim US Inc of MNOK 11.0.
| ACCOUNTS RECEIVABLE | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Accounts receivable |
37 786 | 35 808 |
| Provision for bad debt |
-261 | -115 |
| Total salary expenses | 37 525 | 35 693 |
All receivables are due within one year. Losses in 2020 were 0 TNOK and losses in 2019 were 0 TNOK. It is recorded an accrual of 115 TNOK to cover expected losses. Historically the company has small losses on receivables. Other receivables are shown below.
| OTHER RECEIVABLES | ||
|---|---|---|
| 1= NOK 1000 | 2020 | 2019 |
| Pre payments |
796 | 829 |
| Prepaid taxes and VAT |
1 949 | 3 638 |
| Accrued revenue |
1 044 | 3 565 |
| Other | -429 | -424 |
| Total other receivables | 3 359 | 7 608 |
| INVENTORY | ||
|---|---|---|
| 1= NOK 1000 | 2020 | 2019 |
| Components | 62 966 | 46 860 |
| Finished goods |
26 731 | 18 097 |
| Inventory accrual |
-2 143 | -1 517 |
| Total | 87 554 | 63 440 |
Finished goods are valued at production costthatincludes costfor components and internal labor cost. Work in progressis valued at the total of the component cost. Inventory accrual isrelated to service inventory and demonstration inventory. The sales value of the products are assessed and found lower than historic cost. See table below:
| SPECIFICATION OF ACCRUAL | ||
|---|---|---|
| 1= NOK 1000 | 2020 | 2019 |
| Demonstration units |
1 172 | 1 099 |
| Service parts |
971 | 418 |
| Total | 2143 | 1517 |
Restricted cash amounted to 4 297 TNOK as of 31.12.2020 and was related to tax withheld on salary paid to employees. The comparable amount as of 31.12.2019 was 2 424 TNOK.
| CHANGE IN EQUITY |
||||||
|---|---|---|---|---|---|---|
| 1 = NOK 1000 | Share capital |
Treasury shares |
Share premium |
Other paid in capital |
Retained earnings |
Total |
| Equity 31.12.19 | 4 584 | (37) | 40 253 | 4 334 | 84 144 | 133 278 |
| Change in equity: |
||||||
| Emisjon | - | - | - | - | - | |
| Change in treasury shares |
- | 3 | - | 1 432 |
180 | 1 615 |
| Other corrections |
- | - | - | - | -4 | -4 |
| Profit for 2020 |
- | - | - | - | 60 175 |
60 175 |
| Dividend to shareholders |
- | - | - | - | -54 597 |
-54 597 |
| Egenkapital 31.12.20 | 4 584 | -34 | 40 253 | 5 766 | 89 899 | 140 468 |
Change in exchange rates involves a direct and indirect financial risk for Medistim ASA. The company has revenue and expenses in EUR and USD where most revenue is in another currency and expenses mostly in NOK. Efforts are made to neutralize net exposure up to 12 months in the future by entering hedging contracts. The development in NOK towards USD and EUR is continuously monitored. In February 2020 6 EUR contracts with EUR 200.000 per contract was secured. Each contract is due by the end of the month with EUR 200.000 until July 2020. In the same manner and timing 6 USD contracts of USD 150.000 was entered. By year end 2020 the company had no hedging contracts.
Unrealized gain or loss related to the contracts is recorded in the balance sheet and the change of the value related to the contractsisrecorded in the profit and loss. The management and Board of directors evaluate the handling of risks related to exchange rates fluctuations continuously together with its professional advisers.
| Total | -451 | 1 692 |
|---|---|---|
| Foreign exchange loss |
16 206 | 4 507 |
| Foreign exchange gain |
15 755 | 6 200 |
| 1= NOK 1000 | 2020 | 2019 |
| GAINS AND LOSSES RELATED TO CURRENCY |
| Total short term debt | 4 661 | 9 653 |
|---|---|---|
| Other | 282 | 424 |
| Accrual for incestment |
2 505 |
|
| Debt towards subsidiary |
1 079 | 650 |
| Board compensation |
1 300 | 1 300 |
| Goods received not invoiced |
||
| Bonus and commission |
2 000 | 4 775 |
| 1= NOK 1000 | 2020 | 2019 |
| SPECIFICATION OF SHORT TERM DEBT | ||
| 2019 |
|---|
| 6 200 |
| 4507 |
| 1692 |
| 2019 |
| 4775 |
| 1 300 |
| 650 |
| 2 5 0 5 |
| 424 |
| 9653 |
| OTHER OPERATING EXPENSES | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Office rental |
7 071 | 5 520 |
| Travel expense |
945 | 3 222 |
| Marketing | 811 | 2 282 |
| Consultancy fee |
12 323 | 9 226 |
| Insurance | 949 | 782 |
| Freight | 571 | 694 |
| Communication | 8 410 | 7 298 |
| Other | 4 473 | 4 029 |
| Total other operating expenses | 35 553 | 33 053 |
Medistim ASA had 4.5 MNOK in long-term debt by the end of 2020. The interest on the loan is 3 months NIBOR plus 1.9 %. Last down payment on the loan is due in the second quarter of 2022. Loan due within 12 months is shown as short-term debt in the balance sheet.
Medistim ASA has a credit facility of 6.0 MNOK to enter foreign currency hedging contracts. The facility represents 10 % of the total value the company can sign up contracts for. In addition, the company has a credit facility of 22.5 MNOK. As security for the facilities are assets, accounts receivable and inventory with 10 MNOK. Book value of secured items was as of 31.12.2020 30.3 MNOK for assets, 37.5 MNOK for accounts receivables and 87.5 MNOK for inventory. See also note 12 for status related to hedging contracts.
| RECEIVABLES AND DEBT TOWARD SUBSIDIARIES | ||
|---|---|---|
| 1 = NOK 1000 | 2020 | 2019 |
| Account receivable |
21 667 | 18 179 |
| Other receivable |
7 743 | 7 743 |
| Short-term debt |
1 079 | - |
| Long-term debt |
11 000 | - |
The Board of directors has no knowledge about events after 2020 that will affect the annual report and financial statement for 2021. See Board of director's report under other risk related to the Corona virus situation.
Alternative performance measures are used by investors, securities analysists and other interested parties. The intention with the alternative performance measures is to provide a better overviewof achieved results and developmentin the company. In addition, concepts and abbreviations that are relevant for the branch Medistim operates in is explained in the below list. The company has referred to these measures over many years and has continued to do so to be consistent. Since Medistim develops its own products it is a point to put focus on how much is used within R & D. High values of intangable assets could result in a one time expense if the impairment test fail, and is highlighted for this reason. The companys exposure to foreign currency, the regulatory regime that forces the company to secure end of life parts and international customers with longer credit time, makes it useful to have measures for currency neutral development and changes in working capital. Below is the list of alternative performance measures, concepts and abbreviations Medistim uses in its reporting.
| ALTERNATIVE PERFORMANCE MEASURES | |
|---|---|
| ProfitbeforeR&D, depreciationandimpairment: |
Margin after cost of goods, salary and social expenses and otheroperating expenses are deducted except for R & D expenses |
| EBITDA: | Earnings before interest, taxes, depreciation and amortization. Corresponds to operating profit before depreciations and impairment loss. |
| EBIT: | Earnings before interest and taxes. Corresponds to operating result. |
| Currency neutral growth: |
Compares this years sales with preavious year sale when sale in foreign currency is recalculated using the same average currency rate in the reporting period to get a neutral comparison |
| Working capital: |
Inventory plus accounts receivable minus accounts payable |
| CONCEPTS AND ABBREVIATIONS | |
| VeriQ: | Medistim's 3. Generation system platform |
| MiraQ: | Medistim's 4. generation system platform |
| SonoQ: | Medistim's basis solution for alternative markets |
| TTFM: | Transit time flow measurement |
| Vascular Surgery: |
Surgery involving veins and arteries in the body except on the heart |
| CABG: | Coronary Artery Bypass Surgery |
| REQUEST: | Registry for Quality Assessment with Ultrasound imaging and TTFM in Cadiac Bypass surgery. A study initiated by Medistim ASA to collect data regarding the combined use of ultrasound imaging and TTFM. |
| HFUS: | High-frequency Ultrasound |
| CIDAC: | Comparison of intraoperative duplex ultrasound and angiography after Carotid Endarterectomy |
| NICE: | British National Institute for Health and CLlinical Excellence; an organization that recommends standard of care within healthcare. |
| AATS: | The American Association for Thoracic Surgery |
| ESC: | European Society of Cardiology |
| STS: | Society for Thoracic Surgery- an American organization focusing on thoracic surgery |
| EACTS: | European Association for Cardio-Thoracic Surgery- a European organization focusing on Thoracic surgery |
| ASCVS: | Asian Society for Cardiovascular and Thoracic Surgery- an Asian organization focusing on cardiovascular surgery |
| ICC: | International Coronary Congress - an organization that focuses on CABG surgery |
| RECONCILIATION OF CURRENCY NEUTRAL REVENUE: |
||
|---|---|---|
| Year | Rates 2020 | Rates 2019 |
| USD | 9,37 | 8,81 |
| EUR | 10,73 | 9,85 |
| GBP | 12,06 | 11,24 |
| DKK | 1,44 | 1,32 |
| Split of revenue in USD, EUR and NOK | Revenue 2020 with | |
| All numbers in NOK 1000 |
2020 | 2019 rates |
| Sales in USD | ||
| Procedural revenue Imaging and flow |
99 376 | 93 437 |
| Capital sales MiraQ flow measurement instruments |
12 022 | 11 303 |
| Capital sales MiraQ imaging and flow measurement instrument |
15 011 | 14 114 |
| Capital sales in Canada\LA |
5 608 | 5 148 |
| Sales in EUR | ||
| MiraQ flow measurement instrument |
35 225 | 32 336 |
| MiraQ imaging and flow measurement instrument |
29 179 | 26 786 |
| Imaging probes |
5 219 | 4 791 |
| Flow measurement probes |
87 018 | 79 882 |
| Other | 6 927 | 6 358 |
| Revenue in USD and EUR | 295 585 | 274 155 |
| Revenue in NOK |
67 549 | 67 549 |
| Total revenue | 363 134 | 341 704 |
| Reconciliation of working capital: | ||
| All numbers in NOK 1000 |
||
| Accounts receivable in balance sheet at year end |
57 485 | 62 188 |
| Inventory in the balance sheet at year end |
112 667 | 90 070 |
| Accounts payable in balance sheet at year end |
(20 210) | (21 034) |
| Working capital | 149 942 | 131 225 |
| Reconciliation of profit before R & D, depreciation and | ||
| impairment test: | ||
| All numbers in NOK 1000 |
||
| EBITDA | 118 626 | 107 778 |
| Expensed R & D |
14 622 | 7 806 |
| Profit before R & D, depreciation and impairment test: | 133 248 | 115 584 |
| Oslo | 18.3.2021 | ||
|---|---|---|---|
Board of Director's in Medistim ASA
Bjørn M. Wiggen
Deputy Chairman
| Siri Fürst | Lars Rønn | |
|---|---|---|
| Board member | Board member | CEO |
| Sign. | Sign. | Sign. |
Kari Eian Krogstad CEO
We hereby confirm that the annual accounts for the group and the company for 2020 to the best of our knowledge have been prepared in accordance applicable accounting standards and give a true and fair view of assets, liabilities, financial position and profit and loss for the group and the company as a whole. The director'sreport give a true and fair viewover development and performance of the business and the position of the group and the company, and a description of principal risk and uncertainties facing the group.
Tove Raanes Board member
Øyvin A. Brøymer Chairman Sign. Sign. Sign.
Bjørn M. Wiggen Deputy Chairman
Siri Fürst Board member
Lars Rønn Board member Sign. Sign. Sign.
Kari Eian Krogstad CEO
Munkedamsveien 45 Postboks 1704 Vika 0121 Oslo www.bdo.no
To the General Meeting in Medistim ASA
Report on the Audit of the Financial Statements
We have audited the financial statements of Medistim ASA.
We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Description of the key audit matter | How the key audit matter was addressed in the audit |
|---|---|
| Revenue recognition | |
| The Group revenue recognition policy for sales in the United States of America (USA) is different from the policy used for sales in the rest of the world. |
We have assessed the appropriateness of management's revenue recognition policies and the application of these policies. Our work includes review and evaluation of procedures and systems related to the Company and Group |
| The Group's deliveries outside the USA entail regular sales of goods where revenue is |
revenues. |
| recognized upon delivery. | We have obtained an understanding of the relevant internal controls and tested these |
| In the US market, there are different sales models. Both regular sales, operational leasing and a sales model based on payment in relation to the use of the equipment and consumables. Under the sales model based on use, |
controls and conducted additional tests to verify that the revenue recognition has been performed in accordance with the policies described. |
| equipment located at the end customer's premises is recognized as assets in the groups and parent company's balance sheet and is amortized over the estimated useful life. Consumables are recognized upon delivery, unless they are an integrated part of the total delivery, making the consideration for the consumables variable. |
Further, we have assessed the adequacy of the description of the Group's policies for revenue recognition in the notes to the financial statements. |
| The difference between the sales models, and the complexity this causes in the accounting – including assessment of possible IFRS 15 effects - has led us to focus specifically on this during our audit. |
|
| We refer to the Annual Report under Accounting policies and note 1 and 2 to the Group financial statements. |
Management is responsible for the other information. The other information comprises the Board of Directors' report and other information in the Annual Report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Penneo Dokumentnøkkel: FOL5G-6ADXM-JPYQ7-ENJDK-AP3K4-4XDL0
The Board of Directors and the Managing Director (management) are responsible for the preparation and fair presentation of the financial statements for the parent company in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation of the group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the parent company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The financial statements of the group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
For further description of Auditor's Responsibilities for the Audit of the Financial Statements reference is made to:
https://revisorforeningen.no/revisjonsberetninger
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the Company's and the Group's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Steinar Andersen State Authorised Public Accountant (This document is signed electronically)
[email protected] www.medistim.com
Medistim ASA (Head office) Økernveien 94 0579 Oslo Norway Phone +47 23 05 96 60
Norway Phone +47 33 03 17 26
0579 Oslo Norway Phone +47 23 03 52 50
4100 Ringsted Denmark Phone +45 23 800 300
USA Phone +1 763 208 9852
14000 25th Ave N. Ste. 108 Plymouth, MN 55447
Medistim Deutschland GmbH Bahnhofstr. 32 82041 Deisenhofen Germany Phone +49 (0) 89 62 81 90 33
Calle Balmes 173, 4º, 2 08006 Barcelona, Spain Phone +34 911 238 318
34 Nottingham South Ind Est Ruddington Lane Wilford NG11 7EP Nottingham, UK Phone +44 (0) 115 981 0871
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