Annual Report • Apr 24, 2014
Annual Report
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| FIGURES IN € k | 2013 | 2012 | Change | |
|---|---|---|---|---|
| Revenues | 14,617 | 13,347 | 10 % | |
| of which segment1 | Digitale Mammographie | 11,349 | 10,099 | 12 % |
| Sonstige Befundung | 3,268 | 3,248 | 1 % | |
| of which billing currency1,2 | Euro | 2,371 | 1,491 | 59 % |
| US-Dollar | 12,246 | 11,856 | 3 % | |
| EBITDA | 6,174 | 5,953 | 4 % | |
| EBITDA margin | 42 % | 45 % | ||
| EBIT | 4,026 | 2,975 | 35 % | |
| EBIT margin | 28 % | 22 % | ||
| Net financial result | -210 | -616 | ||
| EBT | 3,816 | 2,359 | 62 % | |
| Consolidated net loss/profit | 3,681 | 2,164 | 70 % | |
| Earnings per share in € (basic and diluted) | 2.14 | 1.26 | ||
| Equity capital | 26,445 | 22,769 | 16 % | |
| Intangible assets | 16,363 | 16,845 | ||
| Non-current and current liabilities | 7,928 | 8,146 | ||
| Balance sheet total | 34,373 | 30,915 | ||
| Equity ratio in % | 77 % | 74 % | ||
| Liquid funds3 | 14,044 | 8,665 | ||
| Employees4 | 108 | 118 |
1 Comprised of intersegment revenues.
2 Revenues are allocated to the currency according to the location of the customer; comprised of indirect sales via industry customers as well as sales to clinical end customers in the segment Distant Services.
3 Comprised of cash, cash equivalents and securities available for sale.
4 Yearly average of full-time equivalents.
| As at December 31, 2013 | |
|---|---|
| Industry sector | Software / Medizintechnik |
| Subscribed capital | € 1,820,000.00 |
| No. of shares | 1,820,000 |
| Last quotation on December 31, 2013 | € 20.49 |
| Last quotation on December 28, 2012 | € 8.40 |
| High/low in 2013 | € 21.98 / € 8.05 |
| Market capitalization | € 35.293 Mio. |
| Treasury stock | 97,553 (5.4 %) |
| Free float | 43.9 % |
| Prime Standard (Regulated market) | Frankfurt and Xetra |
| Over-the-counter markets | Frankfurt, Berlin, Dusseldorf, Munich, Stuttgart |
| Indices | CDAX, PrimeAS, TechnologyAS, DAXsector Soft ware, DAXsubsector Software, GEX |
| ISIN / WKN / Ticker symbol | DE000A0LBFE4 / A0LBFE / M3V |
| CONSOLIDATED KEY FIGURES (IFRS) 1 | |
|---|---|
| KEY SHARE DATA 1 | |
| CONTENT2 | |
| LETTER TO THE SHAREHOLDERS4 | |
| REPORT OF THE SUPERVISORY BOARD FOR FISCAL YEAR 2013 6 | |
| CORPORATE GOVERNANCE REPORT 9 | |
| THE MEVIS SHARE 14 | |
| CONSOLIDATED MANAGEMENT REPORT FOR 2013 17 | |
| Group fundamentals 17 | |
| Group structure 17 | |
| Business activities 17 | |
| Reporting segments 20 | |
| Control system and financial management 20 | |
| Research and development 20 | |
| Economic Report 22 | |
| Macroeconomic and industry skill-based framework 22 | |
| Performance / Sales report 24 | |
| Earnings position 25 | |
| Financial position 27 | |
| Net assets position 27 | |
| Non-financial performance indicators 28 | |
| Overall statement 30 | |
| Corporate disclosures pursuant to section 315 (4) HGB 30 | |
| Corporate Governance statement 32 | |
| Remuneration report 32 | |
| Material events occurring after the balance sheet date 32 | |
| Opportunities and risk report 32 | |
| Accounting risk management system and internal control system 37 | |
| Outlook & Opportunities 38 CONSOLIDATED INCOME STATEMENT39 |
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| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME39 | |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITIONS40 | |
| CONSOLIDATED STATEMENT OF CASH FLOW41 | |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY42 | |
| NOTES TO THE CONSOLIDATED INCOME STATEMENT 201344 | |
| Basic information on the Group 44 | |
| 1. General disclosures 44 |
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| 2. Business activities of the group 44 |
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| 3. Reporting segments of the MeVis Group 45 |
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| Basic principles of the consolidated financial statements 46 | |
| 4. Principles of consolidation 46 |
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| 5. Companies consolidated 46 |
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| 6. Currency translation 48 |
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| Accounting and measurement policies 49 | |
| 7. Accounting and measurement policies 49 |
| 8. | Material judgments and estimates 54 | |
|---|---|---|
| 9. | Effects of new accounting standards 55 | |
| Notes to the consolidated income statement 62 | ||
| 10. | Revenues 62 | |
| 11. | Income from the capitalization of development costs 62 | |
| 12. | Other operating income 62 | |
| 13. | Cost of materials/services purchased 62 | |
| 14. | Staff costs 62 | |
| 15. | Other operating expenses 63 | |
| 16. | Depreciation, amortization and impairment of intangible and tangible assets 63 | |
| 17. | Interest income / interest expense and other net financial result as well as earnings from associated companies 63 |
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| 18. | Income tax 64 | |
| 19. | Earnings per share 65 | |
| Notes to the consolidated balance sheet 66 | ||
| 20. | Intangible assets and property, plant and equipment 66 | |
| 21. | Inventories 67 | |
| 22. | Trade receivables, other financial assets and other assets 67 | |
| 23. | Cash and cash equivalents 68 | |
| 24. | Shareholders equity 68 | |
| 25. | Provisions 70 | |
| 26. | Other non-current financial liabilities 72 | |
| 27. | Other current liabilities 72 | |
| 28. | Deferred income 72 | |
| 29. | Miscellaneous other liabilities 72 | |
| 30. | Contingent liabilities 72 | |
| 31. | Financial obligations 73 | |
| 32. | Management of financial risks 73 | |
| 33. | Disclosures on the cash flow statement 79 | |
| 34. | Segment reporting 79 | |
| 35. | Related parties 81 | |
| 36. | Notification of changes in voting rights in accordance with the german securities trading | |
| act (WpHG) 81 | ||
| 37. | Corporate bodies of MeVis Medical Solutions AG 83 | |
| 38. | Remuneration of Executive Board and Supervisory Board 84 | |
| 39. | Stock option plans 85 | |
| 40. | German Corporate Governance Codex 86 | |
| 41. | Fees paid for services of the statutory auditor KPMG AG Wirtschaftsprüfungsgesellschaft 86 | |
| 42. | Events after the balance sheet date 86 | |
| CHANGES IN CONSOLIDATED ASSETS87 | ||
| AUDITOR´S REPORT91 | ||
| RESPONSIBILITY STATEMENT ("BILANZEID")92 | ||
| DISCLAIMER 93 | ||
| FINANCE CALENDAR 201494 | ||
| CONTACT 94 |
from left: Marcus Kirchhoff, Dr. Robert Hannemann
Dear shareholders, customers, business associates and employees,
For MeVis, 2013 was the most successful year since the IPO in 2007: Sales increased by 10 % to a new record level, and EBIT, at € 4.0 million, outperformed the highly successful previous year by € 1.0 million. We were also able to generate a further € 5.3 million in liquidity. Given this highly positive trend, the share price has more than doubled from € 8.40 to € 20.49.
This brings us to the details of our performance in 2013: Sales rose by 10 % to € 14.6 million. Sales in the new license business increased by 9 % to € 7.6 million, while sales in the maintenance business increased by 4 % to € 6.2 million, accounting for 42 % of consolidated sales. The remaining growth resulted from a rise in sales of development services.
The increase in license sales was primarily attributable to Hologic's 3-D digital mammography development program in the tomosynthesis business. Accordingly, sales in the Digital Mammography segment increased significantly by 12 % to € 11.3 million, while sales in the Other Diagnostics segments remained virtually unchanged at around € 3.3 million.
As our restructuring measures were largely completed already in 2012, we were only able to reduce costs marginally in the past fiscal year. Personnel expenses fell by € 0.2 million to € 7.9 million, while the decrease in other operating expenses was slightly higher, falling by 18 % to € 1.9 million.
Capitalized development expenses were reduced to almost half in fiscal 2013, decreasing by € 1.0 million to € 1.4 million.
EBITDA (earnings before interest, taxes, depreciation and amortization) rose by € 0.2 million to € 6.2 million due to the rise in sales, slightly lower costs and significant reduction in capitalized development expenses.
Depreciation and amortization decreased significantly by € 0.8 million to € 2.1 million, mainly due to lower amortization of intangible assets.
As a result, we were able to achieve yet another considerable increase in EBIT (earnings before interest and taxes), our key performance indicator: This figure rose by € 1.0 million to € 4.0 million, which equates to a highly attractive margin of 28 %.
The net financial result improved by € 0.4 million to € -0.2 million year on year, while tax expenses fell by € 0.1 million to € 0.1 million.
Consolidated net profit after tax increased significantly by € 1.5 million to € 3.7 million, which is equivalent to earnings per share of € 2.14.
Cash and cash equivalents saw a considerable rise of € 5.3 million to € 14.0 million during the fiscal year. Both our strong operating performance and a sustainable reduction in receivables aided this favorable development.
In our view, two main factors contributed to our success in 2013: Firstly, the restructuring measures carried out in previous years have enabled us to achieve a sustained cost reduction, the full effects of which were seen in 2013. Secondly, the increase in sales in the Digital Mammography business has made a significant contribution to our performance.
As things stand today, we do not expect that business with Hologic will remain at this extremely positive current level in 2014. Furthermore, due to the amendments to IFRS 11, the joint venture with Siemens, MBC, which until now was proportionately consolidated, will be consolidated according to the equity method as of fiscal year 2014. This will have a corresponding impact on sales, costs and liquidity, among other things. Given that the fiscal year 2013 was very successful, we anticipate a slight decline in sales to between € 12.0 million and € 12.5 million in 2014. The development of EBIT will in our view be significantly impacted by the forecast slight decline in sales and a marginal increase in costs. We expect EBIT to fall slightly to between € 3.0 million and € 3.5 million. Liquidity is anticipated to rise to between € 15.0 million and € 16.0 million in 2014 as a result of sustained positive cash flows from operating activities.
Our main challenge for 2014 is to create a basis for future sales growth. This includes establishing the online services in Online CAD and Online Academy that we have developed to date as well as expanding our current MeVis Distant Services offering. We are also extremely hopeful for the introduction of lung cancer screening from 2015, initially in the USA, which will provide us with significant market opportunities in this segment. The development of customized products for this potential future market is also one of our focuses this year.
In the medium term, the conversion of the business model with Hologic, our most important customer, from a licensing model to a development support agreement will have a significant impact on MeVis. The business model is to be converted gradually over a period of several years, probably starting in 2016. MeVis will continue to contribute its clinical and software development expertise as a strategic partner in the development of applications. As a result, MeVis expects a gradual reduction of necessary resources for the Hologic business and the expected revenues in the mid and long term. This means that it is even more important that we expand our business operations by extending the product portfolio for existing industrial customers, establishing and increasing our online services, and by taking up a broad position in the potential growth market for lung cancer screening early on.
We remain confident that MeVis is in a position to meet these challenges: Our experienced, highly qualified employees are those on whom our long-term competitiveness depends; they ensure we continue to possess substantial potential for innovation, which we are called upon to harness going forward and transform into business success. In addition, we have a stable business with worldwide-renowned industrial customers and technology partners who are convinced of MeVis' performance.
We would like to take this opportunity to thank all employees for their exceptional performance as well as our business associates, customers and shareholders for their confidence in us.
Marcus Kirchhoff Dr. Robert Hannemann Chairman Member of the Executive Board
from left: Dr. J. Kruse, Prof. Peitgen, P. Kuhlmann-Lehmkuhle
In fiscal year 2013, the Supervisory Board of MeVis Medical Solutions AG once again continued its close and focused cooperation with the Executive Board and discussed in detail the business environment, corporate direction and strategic development of the Company. The Supervisory Board diligently performed the duties incumbent on it under the law, its articles of association and rules of procedure to monitor and advise the Executive Board on its management of the Company.
MeVis Medical Solutions AG has continued to focus on the strategic realignment of the Company in order to secure its future in the long term. The merger of MeVis BreastCare Solutions with its parent company, MeVis Medical Solutions AG, was a final element in this consolidation phase which has now been completed, and which we actively assisted as members of the Supervisory Board. The positive effects arising from this on profit and liquidity have been obvious in the past months. The simplified Group structure and the successful implementation of necessary changes to structures and processes provide a basis for the tasks now to be addressed. On the one hand it is necessary to nurture, deepen and expand our business relations with our existing industry clients, but of far greater importance, in our opinion, is the generation of future sales growth. For this reason we have examined possible new projects and market segments and the growth opportunities for the MeVis Group associated with them in greater detail than ever before.
The Executive Board provides regular and comprehensive reports to the Supervisory Board in oral and written form about the development of MeVis Medical Solutions AG and its subsidiaries. In particular, the Supervisory Board is briefed by the Executive Board on the current performance and business situation of the Company, including: its net assets, liabilities, financial position and earnings situation; corporate planning; strategic development and potential risks. The reports of the Executive Board were discussed in Supervisory Board meetings. The Chairman of the Supervisory Board, in particular, held talks with the Executive Board on business-related matters and events outside of Supervisory Board meetings.
The Supervisory Board was involved at an early stage in all matters and decisions of fundamental importance to the Company and advised the Board on these matters in advance. Transactions requiring the approval of the Supervisory Board were presented to it by the Executive Board in the proper manner, and the Board made appropriate decisions where required. Where necessary, the Supervisory Board also passed resolutions by circulation outside meetings.
The Supervisory Board held a total of four ordinary meetings during fiscal year 2013, at each of which the Executive Board was present: on April 16, June 20, September 18 and December 11, 2013. After thorough review and discussion the Supervisory Board adopted all proposed resolutions of the Executive Board. A resolution by the Supervisory Board approving the granting of stock options to employees and Executive Board members was passed via written procedure in February 2013 and the current Declaration of Compliance from September 2013 was likewise passed via written procedure.
The agenda of the first meeting of the Supervisory Board focused primarily on the review and approval of the annual financial statements of MeVis Medical Solutions AG as well as the consolidated financial statements as of December 31, 2012. To this end the Executive Board submitted the annual financial statements and management report of MMS AG, which were prepared in accordance with the International Financial Reporting Standards (IFRS), and the Group management report for fiscal year 2012. The results were discussed and approved by the Supervisory Board together with auditors KPMG AG Wirtschaftsprüfungsgesellschaft, Bremen. The report of the Supervisory Board and the agenda for the annual general meeting of MeVis Medical Solutions AG on June 20, 2013, including the proposals for required resolutions, were adopted. In this context there was also another detailed discussion about the merger plans between MeVis Medical Solutions AG as the acquiring company and MeVis BreastCare Solutions Verwaltungs-GmbH as the company being acquired. The Supervisory Board also considered the Company's business situation and future strategic focuses. At this meeting the Supervisory Board also carried out its annual examination of efficiency.
The second meeting of the Supervisory Board took place directly after the General Meeting and dealt with the follow-up to the General Meeting, among other things. The primary focus was the Executive Board's reports on the current business situation of the Company, including a detailed overview of existing business relations as well as new marketing activities.
The agenda of the third meeting of the Supervisory Board included the Executive Board's report on the Company's business situation – including its net assets, liabilities, financial position and results of operations for the first half of the year – as well as a risk report and an overview of the status of customer relations. The Executive Board and Supervisory Board then went on to discuss in detail possible new projects and market segments and the growth opportunities emerging from these for the MeVis Group. In particular, new opportunities for offering online services were discussed. In addition, the Executive Board offered detailed insights into developments on the capital market. Furthermore, the investment strategies and cash management of the Group were considered. The results of the examination of efficiency were discussed at the end of the meeting.
Besides reports by the Executive Board on the business situation of the Company including assets, financial position and results for the first three quarters, the main focus of the fourth meeting of the Supervisory Board was the analysis and approval of the business plan for fiscal year 2014. In this meeting, too, the Supervisory Board and Executive Board examined in detail the Company's strategic realignment, with a focus on possible new projects and market segments. Additionally, meeting dates were agreed for 2014.
No changes took place in fiscal year 2013 in the membership of the Supervisory Board and the Executive Board of MeVis Medical Solutions AG.
Committees were not set up, as the Supervisory Board has only three members in total, and to date there has been no need for committees.
The Executive Board and the Supervisory Board support the initiatives of the Government Commission on the German Corporate Governance Code, which summarizes the principles of good and responsible corporate governance, and issue joint Declarations of Compliance pursuant to Section 161 of the German Corporation Act (AktG), which are regularly updated. A comprehensive description of corporate governance at MeVis, including the wording of the targets of the Supervisory Board for its future composition and the latest Declaration of Compliance dated September 10, 2013, can be found in the Corporate Governance Report in this Annual Report. In addition, all relevant information is available at www.mevis.de/ir\_corporate\_governance.html. In accordance with the recommendation of Item 5.6 of the German Corporate Governance Code, the Supervisory Board has once more examined the efficiency of its activities. This takes place annually by means of a questionnaire without external support. No conflicts of interest of Executive Board and Supervisory Board members required to be disclosed to the Supervisory Board arose during fiscal year 2013.
The annual financial statements and management report of the subsidiary MeVis Medical Solutions AG for fiscal year 2013 were audited by statutory auditors KMPG AG Wirtschaftsprüfungsgesellschaft Bremen who had been selected at the annual general meeting and appointed by the Supervisory Board, and unqualified auditor's reports were issued. The same applies to the consolidated financial statements and Group management report of the Company for fiscal year 2013 prepared in accordance with International Financial Reporting standards (IFRS) and applicable supplementary requirements under Section 315a of the German Commercial Code (HGB). The annual financial statements, consolidated financial statements, the management reports and the statutory auditor's reports were provided to all Supervisory Board members within the required time. The Supervisory Board examined the annual financial statements and consolidated financial statements and the management report for fiscal year 2013 prepared by the Executive Board. The relevant individuals from the firm of statutory auditors took part in the examination and discussion and reported to the Supervisory Board on the material results of the audit. After conducting our own review we concurred with the statutory auditor's findings. The Supervisory Board approved the annual financial statements and consolidated financial statements as of December 31, 2013 at its meeting on April 9, 2014. Accordingly the annual and consolidated financial statements are approved and released for publication. The Supervisory Board endorsed the Executive Board's proposal on the appropriation of balance sheet profit for fiscal year 2013. The disclosures stipulated by Sections 289(4) and 315(4) of the HGB (act transposing the EU Takeover Directive) are included in the management report and also in the Group management report. The Supervisory Board has examined and endorsed these disclosures and declarations, which it considers to be complete. The Supervisory Board thanks the members of the Executive Board as well as all Company employees for their outstanding achievements. The Supervisory Board thanks clients and shareholders for the confidence shown in the Board during 2013.
Bremen, 9 April 2014
for the Supervisory Board
Prof. Dr. Heinz-Otto Peitgen Chairman
(INCL. DECLARATION OF CONFORMITY)
Corporate governance means responsible, transparent management and control geared to long-term creation of value. The following contains the Corporate Governance Report and the Corporate Governance Statement issued by the Executive Board and Supervisory Board pursuant to Section 289a of the German Commercial Code (HGB). The report forms a supplementary part of the Group management report. The principles of corporate governance and the Declaration of Conformity are also available on the Company's website.
The Executive Board and Supervisory Board of MeVis Medical Solutions AG hereby declare pursuant to Section 161 of the German Corporation Act (AktG) that the recommendations of the "German Corporate Governance Code Government Commission" in the version of May 13th, 2013 have been and will in future be met with the following exceptions:
Corporate governance of MeVis Medical Solutions AG, as a German stock corporation listed in the Prime Standard, is dictated first and foremost by the German Stock Corporation Act and the recommendations of the current Corporate Governance Code.
Being a manufacturer of medical software products, the statutory provisions of the German Medical Devices Act (MPG), the European directive on medical products (93/42/EEC), the US Code of Federal Regulations (21 CFR Part 820 – Quality System Regulation) as well as the requirements of the ISO 13485 standard (Medical devices – Quality management systems – Requirements for regulatory purposes) apply to the Company.
Quality and quality management are cornerstones of our corporate governance. The quality management system is geared toward meeting our quality objectives and the quality requirements and expectations of our customers in relation to function, handling, reliability and availability, economy, and punctuality.
The Company's quality management system is certified to EN ISO 13485:2012 + AC 2012 by the notified body MEDCERT in the development, manufacture, final inspection and sale of diagnostic software for medical image data, intervention support and evaluation services for medical image data.
The Executive Board manages the Company on its own responsibility with the aim of creating sustainable value. It runs the Company in accordance with the statutory provisions, the Company's articles of association and the rules of procedure for the Executive Board, and works in good faith with the other executive bodies.
The Executive Board sets out the corporate objectives and strategies and, based on them, determines the corporate policy. In the year under review, the Executive Board of Mevis Medical Solutions AG was composed of two members, who were appointed by the Supervisory Board pursuant to the Company's articles of association. The principle of overall responsibility applies: the members of the Executive Board share responsibility for management. The Executive Board works in a cooperative manner and the members keep each other up-to-date on important measures and events in their respective areas. In addition, internal meetings between the entire Executive Board and mid-level management take place at least once a month.
The Supervisory Board has issued a book of rules of procedure for the Executive Board, which documents all the rules of procedure and transactions that require approval.
The Supervisory Board is composed of three members, elected from among the shareholders, pursuant to the Company's articles of association. Official Supervisory Board meetings take place at least four times a year. The members of the Executive Board generally take part in the meetings of the Supervisory Board and report verbally and in writing on the individual items on the agenda, and answer the Supervisory Board members' questions. The members of the Supervisory Board also discuss certain matters outside the official Supervisory Board meetings or pass resolutions by circulation. The Supervisory Board has issued rules of procedure by which it is to abide.
Particularly the chairman of the Supervisory Board meets regularly with the Executive Board to discuss topical issues. Also outside of these meetings, the Executive Board informs the Supervisory Board chairman of the latest developments.
The Executive Board and Supervisory Board are committed to the Company's interests. In the fiscal year ended, there were no conflicts of interest to be promptly disclosed to the Supervisory Board.
MeVis Medical Solutions AG follows the recommendation of the German Corporate Governance Code to disclose individually the remunerations for the Executive Board and the Supervisory Board members. Detailed information on the remuneration of the Executive Board and Supervisory Board is contained in the remuneration report section of the management report, as well as in Note 38 of the consolidated financial statements
Pursuant to Section 5.4.1 GCGC, the Supervisory Board must specify concrete objectives regarding its composition and with due regard for the Company's international activities, potential conflicts of interest, the stipulation of an age limit for members of the Supervisory Board, and diversity. The Supervisory Board must also publish the status of implementation.
The rules of procedure for the Supervisory Board include, among other things, broad Supervisory Board objectives regarding its composition and refer to the articles of association in terms of the number of members, time in office and resolutions.
The Supervisory Board will take the following defined goals relating to the composition of the Supervisory Board, which are reviewed regularly, into account when presenting its election proposals to the annual general meeting, and at standard and replacement elections:
Given its current composition, the Supervisory Board believes that it has largely fulfilled these named goals. The diversity of the Supervisory Board is mainly reflected in the varying professional careers and activities as well as the varying experiences of the individual members, who complement each other very well in their entirety.
To ensure maximum possible transparency, MeVis Medical Solutions AG regularly and promptly informs the capital market, the shareholders and the general public of the Group's financial situation as well as new circumstances and events of importance.
The consolidated financial statements and any interim reports are published within the deadlines stipulated for companies listed in the Prime Standard of the regulated market: within a period of four months for the consolidated annual financial statements and within a period of two months in the case of the semi-annual and quarterly financial reports of the Group.
Insider information that concerns the Group is published immediately pursuant to Section 15 of the German Securities Trading Act (WpHG). Shareholders and potential investors can obtain current information about topical events and recent developments on the internet. All press releases and ad-hoc announcements of Mevis Medical Solutions AG are available online at the company's website. In addition, MeVis Medical Solutions AG takes part in at least one analyst conference per year. Significant and semi-regular events in the financial calendar are published on the corporate website.
The annual general meeting of MeVis Medical Solutions AG is called at least once a year and resolves on all such matters as provided by law, such as appropriation of profit, approval of the actions of the Executive Board and Supervisory Board and the statutory auditor with binding effect upon all shareholders and the Company. Each share carries one vote in shareholders' resolutions.
Each shareholder who registers in time is entitled to attend the annual general meeting or has an option of exercising his or her right to vote through a credit institution, association of shareholders, a proxy engaged by and bound by the instructions of Medical Solutions AG or a different proxy.
The invitation to the annual general meeting as well as the reports and information required for resolutions are published in accordance with the provisions of stock corporation law and made available online on the corporate website.
For MeVis Medical Solutions AG, dealing with risks in a responsible manner is a key element of good corporate governance. The Executive Board has installed an appropriate risk management and risk control system in the Company in order to identify, evaluate, monitor and control the risks arising from operating activities at an early stage. The Executive Board informs the Supervisory Board regularly about the current status of significant risks. The risk management system is continuously reviewed in accordance with the latest developments and adjusted where necessary. Further details and information on risk management can be found in the risk report beginning on page 32.
MeVis Medical Solutions AG prepares its consolidated financial statements and the consolidated interim financial statements in accordance with the International Financial Reporting Standards (IFRS), as applicable in the EU. The annual financial statements of MeVis Medical Solutions AG are prepared in accordance with the German Commercial Code (HGB).
The financial statements are prepared by the Executive Board and audited by the statutory auditor and the Supervisory Board. The annual general meeting selected KPMG AG Wirtschaftsprüfungsgesellschaft, Bremen, as the statutory auditor responsible for auditing the annual and consolidated financial statements for fiscal year 2013. The Supervisory Board then appointed the statutory auditor. This approach ensures that no conflicts of interest affect the work of the statutory auditor.
The audit of the annual and consolidated financial statements for 2013 was conducted by KPMG AG Wirtschaftsprüfungsgesellschaft, Bremen, in accordance with the generally accepted standards for the audit of financial statements promulgated by the German Institute of Auditors (IDW).
Pursuant to Section 15 a of the German Securities Trading Act (WpHG), members of the Company's Executive and Supervisory Boards and related parties are required to announce all transactions involving the purchase or sale of shares in MeVis Medical Solutions AG or of related financial instruments, in particular derivatives, where such transactions total or exceed € 5,000 in a calendar year. The Company immediately publishes such announcements on its homepage. The Company received no Directors' Dealings during the period under review.
As of the balance sheet date, the members of the Executive Board hold no shares of MeVis Medical Solutions AG. As of the balance sheet date, the members of the Supervisory Board hold 408,788 shares of MeVis Medical Solutions AG, corresponding to a share capital of 22.46 %.
The strong performance of the German stock market in 2013 came as a surprise to many. The DAX index, which tracks the performance of the 30 largest listed companies in Germany, recorded an increase of about 25 % compared to the end of 2012 and even reached all-time high of over 9,500 points around the Christmas period. Germany's benchmark share index benefited from a relaxation in the European sovereign debt crisis and the revival of the export markets that form the backbone of the German economy, especially in North America. Contrary to many expectations, political events such as the Bundestag parliamentary elections, the budget dispute in the US and developments in the crisis-ridden European countries, did not have a major impact on the performance of the stock markets. Instead, the loose monetary policy of the central banks, with low interest rates and a lack of attractive investment opportunities for savers, boosted the stock markets. Other indices also closed the year with significant gains: The MDAX recorded a gain of around 39 %, the SDAX climbed by around 29 %, while the Nasdaq even saw a rise of around 41 %.
In the wake of a successful fiscal year 2012, the MeVis share once again performed well during the course of fiscal year 2013, recording an increase of approximately 144 %. The highest price recorded for the Mevis share on the XETRA electronic trading system during 2013 was € 21.98; the lowest level it traded at was € 8.05. MeVis Medical Solutions AG closed the year on December 30, 2013 at a share price of € 20.49 (XETRA) compared to € 8.40 at the end of 2012. At the end of the year, the Company's market capitalization amounted to approximately € 35.3 million in relation to the 1,722,447 shares in circulation. The publications of the positive interim results for the first half and the first nine months of the year were especially well received by the capital markets and raised interest in the MeVis share. As a result, the number of registered deposit accounts increased substantially, from 727 at the end of 2012 to 843 at the end of 2013.
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| Year-end closing price in € | 20.49 | 8.40 | 3.79 |
| Annual high in € | 21.98 | 10.28 | 15.80 |
| Annual low in € | 8.05 | 3.75 | 2.54 |
| Market capitalization in million € (XETRA year-end) | 35.3 | 14.5 | 6.5 |
| Number of shares | 1,820,000 | 1,820,000 | 1,820,000 |
| Treasury stock | 97,553 | 97,553 | 97,553 |
| Price-to-earnings ratio in € (XETRA year-end) | 9.40 | 6.67 | -1.59 |
| Earnings per share in € (basic and diluted) | 2.14 | 1.26 | -2.38 |
As in the previous year, the shareholder structure remained largely unchanged in 2013. The three founders accounted for approximately 48 % of the share capital at the end of the year. The Company has own shares equivalent to 5.4 %. The remaining shares are predominantly held by institutional investors and private shareholders. Due to the increased level of interest in the MeVis share, the number of shareholders in 2013 has increased by approximately 16 %.
Fig.: Shareholder structure as at December 31, 2013
Through a joint venture with Siemens Aktiengesellschaft, Berlin and Munich (hereafter: "Siemens"), MeVis Medical Solutions AG (hereafter: "MMS AG" or "Company") holds 51 % of MeVis BreastCare GmbH & Co. KG (hereafter: "MBC" or "MBC KG").
Under an agreement of October 21, 2008, the business division comprising industry customer Hologic, Inc., Bedford, Massachusetts, USA (hereafter: "Hologic") was carved out of the joint venture and Siemens' stake was taken over by MMS AG. The company MeVis BreastCare Solutions GmbH & Co. KG (hereafter: "MBS KG") arising from this spin-off has been fully included in the Consolidated Financial Statements of MMS AG from November 1, 2008 to and including July 31, 2013. The assets of MeVis BreastCare Solutions Verwaltungs-GmbH were transferred to MMS AG, effective August 1, 2013 following approval granted at the Company's annual general meeting on June 20, 2013, the signing of the merger agreement on June 21, 2013 and entry of the agreement of the merger into the Commercial Register. As MeVis BreastCare Solutions Verwaltungs-GmbH and MMS AG were the sole Shareholders of MBS GmbH & Co. KG, all assets and liabilities of MBS GmbH & Co. KG were accrued to MMS AG, and MBS GmbH & Co. KG ceased to exist. The accrual of MBS GmbH & Co. KG to MMS AG was done with commercial law effect as of 1 August 2013 and tax effect as of January 1, 2013.
MMS AG has held around 41 % of the stock in Medis Holding BV, Leiden (Netherlands) since the beginning of June 2010. The pro-rata earnings of this equity interest are reported in the net financial result.
MMS AG and its affiliates (hereafter also collectively, "MeVis", "Group" or the "Companies") develop innovative software for analyzing and evaluating image data and marketing it to equipment manufacturers of medical devices and providers of medical IT platforms.
MeVis' clinical focuses are image-based early detection and diagnosis of epidemiologically important diseases such as breast, lung, prostate and colon cancer as well as neurological disorders. The software applications support all the imaging modalities available. These not only include X-ray modalities such as computed tomography, digital mammography or digital tomosynthesis, but also magnetic resonance imaging, digital sonography and the simultaneous use of multiple modalities (multimodality). Then there are the more modern imaging modalities, such as positron emission tomography (PET), sonoelastography and molecular imaging. MeVis supplies technologies and applications for global medical industry leaders, meeting their needs and helping them to strengthen their leadership positions.
MeVis also offers image-based support for planning and conducting surgical interventions in the form of MeVis Distant Services, which provides customized services to automate the processing, quantitative analysis and patient-specific visualization of radiological image data. It also offers an internationally unparalleled process for planning complex operations on the liver and other organs is offered. Sales and marketing activities are directly geared towards clinical end users (B2C).
The sociopolitical relevance of our business activities is rooted in the already large and still growing impact of cancerous diseases. According to data from the International Agency for Research on Cancer (IARC), an agency of the World Health Organization, the number of new cancer cases worldwide increased to 14.1 million in 2012; the number of cancer deaths was estimated to be 8.2 million (compared with 12.7 million and 7.6 million respectively in 2008). The most commonly diagnosed cancer cases in men and women
worldwide were cancer of the lungs with 1.8 million (13.0 % of the total), of the breast with 1.7 million (11.9 % of the total), the colon with 1.4 million (9.7 % of the total) and the prostate with 1.1 million (7.9 % of the total). The most common causes of cancer deaths were cancers of the lungs with 1.6 million, the liver with 0.8 million and the stomach with 0.7 million. In women, the proportion of breast cancers in new cancer cases was over 25 %. It is estimated that on account of the growing and aging population, the number of new cancer cases will increase to 19.3 million by 2025. More than half of all new cancer cases (56.8 %) and cancer deaths (64.9 %) occur in less developed regions of the world.
Whereas in previous years the MeVis Group devoted its attention to image-based early detection and diagnosis of breast cancer, MeVis uses clinical expertise, specialist knowledge in the field of breast cancer, technological leadership and its broad network of partner companies to successively develop software applications for use in other oncological diseases. The individual product areas are described in detail below:
The various MeVis software products for breast cancer diagnostics support the analysis and presentation of images from mammography screening and other imaging processes for an early, rapid and reliable diagnosis. Developed through many years of experience in the field of software-based analysis of imaging studies and expertise in workflow, computer-aided diagnosis (CAD) and system integration, these applications offer optimal conditions for detecting and treating breast cancer as early as possible. Aimed at meeting customer needs especially in terms of display and reading speed even when many patients and large amounts of data are involved, MeVis provides programmable workflow capabilities through special keyboards, computeraided diagnosis (CAD) and an optional organization of separate diagnostic opinions linked to RIS and PACS systems. In addition to digital mammography for both screening and diagnosis, other methods such as 3D ultrasound, magnetic resonance imaging (MRI), positron emission mammography (PEM), computed tomography (CT), and tomosynthesis are optimally supported. In particular, the support of tomosynthesis as a three-dimensional development of digital mammography has gained importance in the last few years due to successful market positioning by the respective equipment manufacturers.
MeVis software solutions pertaining to lungs are used to automatically detect anomalies in computertomographical images such as lung tumors or pulmonary embolism. To that end, multi-slice computer tomography (MSCT) constitutes the state of the art in three-dimensional medical X-ray imaging. Thanks to improved detail resolution, it now plays an important role in modern pulmonary diagnostics. Within a few seconds, the smallest details of the entire lung are mapped in three dimensions. Evaluation of the growing volumes of data sets, however, poses a growing challenge. MeVis software allows for a time-efficient and safe radiological diagnosis of MSCT images in clinical practice. State-of-the-art image processing and pattern recognition algorithms for computer-aided diagnosis (CAD) of diseases of the chest make it possible to conduct a detailed segmentation of the anatomical structures of the lung, to fully automate the detection of anomalies (lung tumors, pulmonary embolism), and to assess and quantify these. MeVis CAD technology offers radiologists a supportive, independent and reproducible evaluation of image data and is used worldwide for applications in early detection, clinical diagnosis and treatment of lung diseases.
MeVis Distant Services (MDS) offers comprehensive support in surgical planning for liver surgeons. In cases of serious liver diseases such as liver cancer, hepatitis C and alcoholic cirrhosis, careful surgical planning based on radiological sectional images is critical to the success of a surgical procedure. Due to the complex internal structure of the liver, this always poses a challenge for treating physicians. Aided by computed tomography (CT) or magnetic resonance imaging (MRI) images, the MDS team of experts generates detailed planning alternatives with three-dimensional representations of the liver's anatomy as well as accurate volume quantifications and risk assessments. Leading liver surgeons worldwide utilize this Internet-based service and benefit from MDS team expertise derived from more than 6,000 planning cases.
MeVis software for neurological diseases evaluates complex image-based analyses, providing the basis for the safe and careful planning of brain surgery. fMRI (functional Magnetic Resonance Imaging) and diffusion tensor (DTI) imaging are able to capture function areas such as motor or linguistic regions and make fiber tracts visible. Through the simultaneous display (fusion) of such data with other images, relations to brain tumors can be displayed and complex relationships made visible. As a result, MeVis software solutions help neurosurgeons plan for the best possible access to tumors, allowing for the safe, gentle and reliable treatment of patients with neurological diseases. In addition, dynamic imaging allows for the flow of blood to the brain to be measured. The application calculates various metrics (rCBV, rCBF, TTP, etc.) and displays them in color maps, aiding the diagnosis of primary disorders of cerebral circulation (stroke), assessment of tumor malignancy and follow-up exams.
For prostate diagnostics, MeVis software evaluates dynamic images from magnetic resonance imaging (MRI), an important contribution to the diagnosis of suspected prostate cancer. One of the most frequent preventive care procedures is to determine the PSA level (prostate specific antigen) in the blood. This procedure is not very specific, which is why magnetic resonance imaging has become increasingly popular to diagnose abnormalities. A contrast agent is utilized to diagnose prostate cancer using MRI. Dynamic volume data imaging sets are recorded, whereby a looming tumor is indicated by altered blood flow properties in contrast to healthy tissue. This makes possible a very accurate characterization and localization even of the smallest tumors (5 mm).
MeVis's modern image processing and pattern recognition algorithms for computer-aided diagnosis (CAD) of diseases of the chest facilitate a detailed segmentation of anatomical structures of the lung as well as fully automated detection, assessment and quantification of anomalies (lung tumors, pulmonary embolism). This advanced technology is now also available online and provides clinical end customers with the advantage of case-based accounting, saving costs on hardware and software licenses. The product range will be expanded gradually to other CAD algorithms.
As MeVis Online Academy, MeVis offers interactive online training to improve the diagnostic capabilities of clinical end users. Web-based radiological case collections provide this individualized instruction with matching hanging protocols and interactive tools. The trainable imaging techniques include digital mammography, tomosynthesis, computer tomography (CT), magnetic resonance imaging (MRI) and ultrasonography. An browser application that does not need to be installed utilizes professional viewing tools to give access to a variety of clinical expert casebooks including related solutions, providing clinicians with the advantages of temporal and local flexibility.
For reporting purposes and internal governance, the MeVis Group has two operating segments ("Digital Mammography" and "Other Diagnostics").
The Digital Mammography segment develops and markets software products which support breast diagnostic imaging and intervention. Aside from the original products for digital mammography, new software applications for other imaging modalities such as ultrasound, magnetic resonance imaging and tomosynthesis were added. These products are distributed to the industrial customers Siemens and Hologic. The Digital Mammography segment includes the joint venture MBC KG, operated in conjunction with Siemens AG which was consolidated at 51 % and includes the business with Hologic, Inc.
In addition to the breast diagnostics business based on magnetic resonance imaging conducted with Invivo Corp., the Other Diagnostics segment also includes digital radiology products (e.g. magnetic resonance imaging (MRI), computed tomography (CT), etc.) for other types of diseases such as lung, prostate and intestinal disorders as well as general image-based analysis and diagnostics of radiology images. Other main activities in this segment include image and risk analysis for planning liver surgery and tumor diagnostics in connection with clinical studies of pharmaceutical companies (Distant Services business segment).
The Company uses sales, earnings before interest and taxes (EBIT) and liquidity as essential financial planning tools. A deviation analysis of the applicable budget parameters is performed regularly, but at least monthly, in the light of the results of a corresponding risk situation evaluation. This analysis, together with external market and competitor information, forms the basis for ongoing review of the plan and continuous forecast adjustments.
The Company's cash and cash equivalents are primarily used to finance its operating activities, in particular paying salaries as well as other operating expenses. The Company had no credit facilities at banks as of the balance sheet date. A limited amount of liquidity not directly required to finance the Company's operating activities is placed in low-risk investments capable of being liquidated at short or medium-term notice. As of the balance sheet date, these were predominantly fixed-income securities including investment grade corporate bonds.
The market for software products for use with digital medical imaging processes is characterized by high quality requirements and, in some cases, short innovation cycles in tandem with rising technical complexity. Along the way, the software's user-friendliness and easy integration into the clinical IT environment are becoming increasingly important. For this reason, the product ranges developed by the Group call for ongoing and forward-looking adjustment in light of new medical and technological developments and the constant increase in data volumes to be processed.
The Company has only limited research capacities of its own. The bulk of the research activities are performed by Fraunhofer MEVIS Institute for Medical Image Computing (hereafter: "Fraunhofer MEVIS" or "FME") or other research institutions. Most Company employees are assigned to software development.
In the period under review, the MeVis Group's development activities concentrated on the completion of new product generations as well as increasingly on the development of existing software products to bolster its current strong competitive position and to secure continued maintenance sales for existing products.
MeVis uses its own MeVisLab research and development environment to rapidly develop software prototypes. Through allows the methods and workflows developed to be quickly tested, evaluated and optimized ("rapid prototyping") in clinical settings. Methods, algorithms and workflows that were developed on the basis of MeVisLab can be converted into marketable products in a short time by being linked to product development software technologies. This leads to significantly shorter development and product release periods. This development method was put to use with great success in 2013 when the software product for planning surgical interventions on the liver from CT images was being developed.
MeVisAP, a proprietary technology platform, provides basic services such as integration with the hospital network, license management, the management of studies and work lists, preparation of 2D, 3D and 4D image data and the creation of visually appealing reports and findings. Thanks to the client-server technology, users can work on their own cases from any station, seek the advice of other experts and pause or resume work at any time. The modular concept allows MeVis to quickly put together combinations of different clinical questions or imaging procedures required by the customer and link them with one another. On the one hand, MeVisAP serves as a complete diagnostics platform; on the other hand, partial functions from existing systems (RIS, PACS, system platforms) can be integrated into it as well.
As part of its pioneering research and development activities, MeVis regularly participates in EU-funded research projects. In 2013, MeVis participated in two projects.
(Adapting Breast Cancer Screening Strategy Using Personalized Risk Estimation)
ASSURE is a research project funded by the European Commission with ten academic and clinical partners and several medium-sized enterprises. ASSURE's goal is to research and develop processes and software tools to personalize today's one-size-fits-all mammography screening. After analysis of individual risk factors such as breast density or genetic status, additional screening measures based on automatic 3D ultrasound or MRI scans will be performed. As a leading software company, MeVis Medical Solutions AG will contribute its expertise in the medical imaging market. Working with other technical and clinical partners, two software prototypes will be developed. These are designed to support radiologists to the furthest extent possible in a screening context based on ultrasound or MRI images. The technical foundation for the next two years was laid in 2013 following an intensive requirement analysis. From the patient's perspective, the risk of overlooking an early-stage cancer needs to be minimized with a personalized screening. This is expected not only to reduce mortality, but also to preserve quality of life by using less drastic treatment options.
Radio or radiation therapy includes the medical use of high-energy radiation to cure or delay the progress of malignant tumors. As part of the SPARTA research project partially financed by the Federal Ministry of Education, MeVis Medical Solutions AG develops and evaluates innovative software technologies to contribute sustainably to secure, high-precision radiotherapy by optimizing treatment plans, ongoing assessments and follow-up care. As many as ten institutions are involved in this cooperation project including leading national research centers, oncology clinics and research institutions.
After the global economy had a weak start in early 2013, the overall situation has settled down somewhat and economic development, particularly in Europe and the USA, has picked up again. Correspondingly, the value of the Euro has continually climbed upward, following an initial period of weakness in the spring. What's more, the US economy, the most important national economy for MeVis's business, performed well especially in the first nine months but weakened somewhat in the losing quarter due to the budget dispute. As a result, the growth of the world's largest economy was well below last year's mark but above the general trend. For 2014, however, much stronger economic growth can be expected.
For medical technology companies in Germany, foreign business is of particular importance because of the particularly high export rate of over 60 %. Therefore, positioning on the world market plays a very important role in this industry. While foreign business continues to be a growth driver in 2013, a sideways movement has increasingly become apparent in Germany. Here, medical facilities often lack the necessary financial resources to equip themselves with medical technology. Meanwhile, foreign countries are increasingly investing in health infrastructure and like to make use of German medical technology. This trend is particularly apparent in the emerging markets and in Asia.
According to findings of VDE study "MedTech 2020," international experts anticipate significant gains in innovation for Asia in the coming years, especially in the medical technology sector. Respondents felt that the USA will cease to be a market leader in diagnostic imaging, currently the most lucrative segment, in Asia by 2020. Telemedicine, digitization of healthcare (eHealth), regenerative medicine as well as prosthetics and implants are seen as the most important new areas of innovation.
Global regulations governing the medical services remuneration are crucial for the economic environment and the success of MeVis's products. A main driver behind the success of "Digital Mammography" was the launch of extensive breast cancer screening together with the change over from analog, film-based devices to digital, software-based equipment. The change over from analog to digital devices is now essentially completed in the United States:
Fig.: Proportion of analog and digital FDA certified mammography facilities in the United States Source: U.S. Food and Drug Administration / 2013 Scorecard Statistics / http://www.fda.gov/Radiation-EmittingProducts/MammographyQualityStandardsActandProgram/DocumentArchives/ucm337647.htm
Because of the significant slowdown of the change over from analog to digital facilities, future business will largely depend on technological advancements in MeVis's core market of digital mammography. In this respect, MeVis sees significant market potential in the introduction of three-dimensional digital tomosynthesis. The introduction of this new technology will lead to an increase in demand for the appropriate imaging devices. Again, this requires a dedicated software which MeVis will distribute to industrial customers Hologic and Siemens.
Based on its specialized product portfolio, broad-based research and existing industry customers, MeVis expects to be able to sustain its current, overall market position and expand some segments in 2014. However, large PACS system suppliers are continuing to enter the market also in segments relevant to the Company, requiring an ongoing effort to stay ahead of the competition and widen the technological gap. Given the ongoing reluctance by clinical end users of the new products to make purchases, the future performance of the business will depend to a large degree on the ability of the Company to expand existing distribution channels and to find new ones.
With regards to lung screening, the introduction of appropriate screening programs based on CT imaging has, at least in the USA, taken on a sharper profile since mid-2013. The committee of experts overseeing this effort in the USA (USPSTF) issued a recommendation in December 2013, giving rise to the expectation that these measures will be recoverable as of 2015. Likewise, a sharp increase in CT images is expected. MeVis believes that demand for solutions that simplify, shorten and improve the quality this procedure will soon be on the rise. MeVis is already servicing this potential growth area with its Visia™ Lung CAD product and intends to solidify its position with additional products and services in the area of pulmonary diagnostics. For this reason, MeVis is bringing a dedicated lung screening solution to market during the 2014 fiscal year.
Consolidated sales in the current fiscal year are up by approximately 10 % year on year to € 14,617 k (prev. year: € 13,347 k). Sales in the new license business increased by 9 %, from € 6,979 k to € 7,600 k, while sales in the maintenance business increased by 4 %, from € 5,972 k to € 6,191 k.
The Group's results of operations improved considerably, with earnings before interest and taxes increasing on a massive scale from € 2,975 k in the previous year to € 4,026 k.
The MeVis Group operations consist of two core areas: The development and sale of software licenses and the maintenance business this entails as well as the provision of medical services (Distant Services).
At more than 94 % of total sales, the software business, which includes products for industry customers Hologic, Siemens and Invivo, again made the greatest contribution to total Group sales in this reporting period.
The MeVis Group assumes, based on its specialized product portfolio in the field of breast diagnostics, and its existing industry customers, that the market position it currently occupies can be sustained overall and expanded in some segments in 2014. However, large PACS system suppliers are continuing to develop, also with regard to the market segments relevant to the Company, meaning that it is an ongoing effort to stay ahead of the competition and to widen the technological gap. In addition, the further performance of the business with lung products will depend highly upon whether and to what extent the results of the study on the clinical effectiveness of this technology together with health policy issues will lead to new regulations governing the remuneration of methods in which this technology is used.
Sales in the Digital Mammography segment in the past fiscal year increased by 12 % to € 11,349 k (prev. year: € 10,099 k).
Although license sales in 2013 increased by 19 % to € 5,903 k (prev. year: € 4,968 k) on account of dynamic sales growth, in particular due to the successful launch of the new 3-D tomosynthesis system, revenues from maintenance and support services fell slightly by 1 % to € 4,959 k (prev. year: € 5,032 k). Total Digital Mammography sales (licenses and maintenance) were up by around 9 % to € 10,862 k (prev. year: € 10,000 k).
Revenues from services (consulting & training) in the Digital Mammography segment increased to € 442 k (prev. year: € 67 k) in the reporting period. Hardware sales stood at € 45 k in the year under review (prev. year: € 32 k).
In fiscal year 2013, the Digital Mammography segment uses both the Euro and the US Dollar for invoicing. The choice of currency in the indirect channel depends upon the headquarters of the relevant industry partner. Revenues invoiced in Euro increased by around 42 % to € 1,598 k (prev. year: 1,123 k). Revenues invoiced in US dollars rose by 9 % to € 9,751 k (prev. year: € 8,976 k).
At € 1,433 k, the balance of capitalized internally developed assets in the Digital Mammography segment was significantly below the previous year's level (€ 2,415 k), while amortization also decreased by 15 % to € 1,802 k (prev. year: € 2,122 k).
Operating expenses in the Digital Mammography segment increased to € 4,231 k (prev. year: € 3,440 k), which was attributable to a rise in personnel expenses to € 3,755 k (prev. year: € 3,117 k).
Although sales increased, net profit from operating activities in the segment fell to € 6,749 k (prev. year: € 6,952 k) due to the rise in operating expenses.
Other operating income in the Digital Mammography segment increased to € 136 k (prev. year: € 112 k). Other operating expenses decreased to € 1,346 k (prev. year: € 1,836 k). Net profit in the segment amounted to a total of € 5,539 k (prev. year: € 5,228 k). Accordingly, the EBIT margin in the Digital Mammography segment declined to 49 % (prev. year: 52 %).
Business volume in the Other Diagnostics segment stabilized at € 3,369 k (prev. year: € 3,261 k) in the year under review.
License sales were down by 11 % to € 1,798 k (prev. year: € 2,024 k). In contrast, revenues from maintenance and support services, which consist mostly of maintenance of existing software applications, increased by 32 % to € 1,232 k (prev. year: € 935 k). Total sales with products in the Other Diagnostics segment (licenses and maintenance) fell by around 1 % to € 3,030 k (prev. year: € 2,959 k).
Revenues from services (consulting & training) in the Other Diagnostics segment increased to € 339 k (prev. year: € 302 k) in the reporting period.
In the Other Diagnostics segment, invoices are likewise generated in both Euro and US Dollars; in the indirect channel, the invoice currency depends upon the headquarters of the relevant industry partner, whereas in the direct channel it is based upon the headquarters of the relevant clinical end user. Revenues invoiced in Euro increased by around 129 % to € 874 k (prev. year: 381 k). Revenues invoiced in US dollars, on the other hand, fell by 13 % to € 2,495 k (prev. year: € 2,880 k).
The total value of grants in the Other Diagnostics segment increased to € 180 k (prev. year: € 113 k), which led to overall segment revenues totaling € 3,549 k (prev. year: € 3,374 k).
Since 2012, development expenses for existing and new software products are no longer capitalized in the Other Diagnostics segment, whereas amortization decreased from € 856 k to € 346 thousand year on year.
Operating expenses in the Other Diagnostics segment decreased by 17 % to € 4,440 k (prev. year: € 5,338 k); this increase was caused by an 18 % reduction in personnel expenses to € 4,132 k (prev. year: € 5,066 k).
Due to the lower operating expenses, the segment's operating result improved considerably from € -2,820 k to € -1,237 k year on year.
Other operating income in Other Diagnostics fell to € 1,237 k (prev. year: € 2,193 k), largely due to the secondment of employees to the Digital Mammography segment in the previous year. Other operating expenses decreased by 13 % to € 1,466 k (prev. year: € 1,679 k).
Net profit in the segment amounted to a total of € -1,466 k (prev. year: € -2,306 k). Accordingly, the negative EBIT margin in the Other Diagnostics segment has improved.
Consolidated sales in fiscal year 2013 were positively influenced to a large degree by the increase in license sales.
In the period under review, sales totaled € 14,617 k (prev. year: € 13,347 k), which corresponds to sales increase of 10 %. This was significantly driven by the increased license sales of 9 % to € 7,600 k (prev. year: € 6,979 k), while revenues through maintenance contracts (software service contracts) were also up 4 % to € 6,191 k (prev. year: € 5,972 k).
Based on the capitalization of development costs since 2008, own development services totaling € 1,433 k were capitalized in the reporting year (prev. year: € 2,415 k). The own development work is recognized in "Income from the capitalization of development costs" for neutralization of the costs contained in the various types of staff and material costs in connection with the various development projects.
Other operating income decreased by 49 % to € 535 k (prev. year: € 1,059 k) as income from other periods of € 567 k were incurred in the previous year.
The cost of materials including cost of services purchased increased to € 683 k (prev. year: € 535 k), largely attributable to the expensed inventories derecognized through profit or loss during the year.
Staff costs decreased in the reporting period by 2 % to € 7,878 k (prev. year: € 8,066 k). The annual average number of permanent employees expressed as full-time equivalents declined to 102 (prev. year: 109), and the annual average number of student interns expressed as full-time equivalents declined to 6 (prev. year: 9).
Other operating expenses declined by 18 % to € 1,850 k (prev. year: € 2,267 k). Other operating expenses mainly comprised rental expenses of € 463 k (prev. year: € 586 k), costs for maintenance and energy of € 226 k (prev. year: € 202 k), legal and consulting costs of € 190 k (prev. year: € 266 k), travel expenses of € 163 k (prev. year: € 148 k), accounting and auditing expenses of € 125 k (prev. year: € 130 k) and Supervisory Board remuneration of € 79 k (prev. year: € 80 k). Other operating expenses declined to € 604 k (prev. year: € 855 k).
Earnings before interest, taxes, depreciation and amortization (EBITDA) came to € 6,174 k in 2013 (prev. year: € 5,953 k). The EBITDA margin decreased to 42 % compared to 45 % in the previous year.
Depreciation, amortization and impairments decreased by 28 % to € 2,148 k (prev. year: € 2,978 k), which is largely due to the € 538 k decline in amortization of intangible assets to € 502 k (prev. year: € 1,040 k).
Earnings before interest and taxes (EBIT) were € 4,026 k in the reporting period (prev. year: € 2,975 k). Accordingly, the EBIT margin (return on sales) increased considerably to 28 % compared to a previous year value of 22 %.
The financial result increased in the reporting period to € -210 k (prev. year: € -616 k). The main reason for this rise is the improved earnings of the 41 % share in Medis Holding B.V. of € 162 k (prev. year: € 57 k), which is recognized at equity.
Earnings before taxes (EBT) were € 3,816 k in the reporting period (prev. year: 2,359 k). Accordingly, the EBT margin (return on sales) increased considerably to 26 % compared to a previous year value of 18 %.
Deferred tax assets and liabilities for temporary differences are calculated on the basis of an income tax rate of 31.9 % (prev. year: 31.2 %). Deferred tax assets on the corporation income tax loss carry forwards were calculated on the basis of a 15.8 % tax rate; for the trade tax loss carry forward, the tax rate used in the calculation was 16.1 %.
Income tax expense decreased from € 195 k to € 135 k. Of this amount, € 274 k (prev. year: € 728 k) was related to real income taxes, of which € 288 k (prev. year: € 576 k) was for the current year and € -14 k (prev. year: € 152 k) for previous years.
€ -139 k of the income of € 533 k (prev. year: income of € 533 k) from deferred taxes relates to the recognition of deferred tax assets from tax loss carry forwards due to the improved possibilities for utilizing such losses on account of stabilization of the tax result of MMS AG which reflects the restructuring measures conducted in the reporting year and the restructuring measures anticipated in the previous year.
The consolidated net profit after taxes in the reporting period was therefore € 3,681 k (prev. year: € 2,164 k), which represents basic earnings per share of € 2.14 (prev. year: € 1.26).
Cash flow from current operating activities came to € 7,483 k (prev. year: € 5,288 k) in the period under review. This comprised earnings before interest and taxes (EBIT) of € 4,026 k (prev. year: € 2,975 k), adjusted for depreciation in the amount of € 2,148 k (prev. year: € 2,978 k), changes in provisions of € -294 k (prev. year: € -425 k), the total of all non-cash expenses and income of € 109 k (prev. year: € 128 k), the total of interest paid and received of € 65 k (prev. year: € 70), paid and received taxes in the amount of € -169 k (prev. year: € 10 k), exchange rate differences received and paid of € 0 (prev. year: € -1 k), changes in the inventory and trade receivables, trade receivables and other assets of € 1,020 k (prev. year: € 82 k), and changes in trade payables and other liabilities of € 397 k (prev. year: € -605 k).
In the period under review, cash flow from investing activities came to € -5,562 k (prev. year: € -3,099 k) and mainly consisted of payments for capitalized development expenses of € 1,433 k (prev. year: € 2,415 k), payments for the acquisition of securities of € 4,006 k (prev. year: € 0 k) as well as payments received for the disposal of securities in the amount of € 300 k (prev. year: € 900 k).
Cash flow from financing activities, amounting to € -51 k (prev. year: € -49 k), consisted exclusively of leasing transactions.
The change in cash and cash equivalents in the period under review came to € 1,870 k (prev. year: € 2,140 k).
Liquid funds amounted to € 14,044 k (prev. year: € 8,665 k) as of the balance sheet date. They are comprised of € 9,893 k (prev. year: € 8,149 k) in cash and cash equivalents, and € 4,151 k (prev. year: € 516 k) in securities available for sale.
Total assets increased by € 3,458 k to € 34,373 k (prev. year: € 30,915 k) in the reporting year. The increase in consolidated assets is primarily due to the € 1,744 k rise in cash and cash equivalents and the € 3,721 k increase in other financial assets to € 4,407 k (prev. year: € 686 k).
In this context, the balance sheet structure changed subsequently changed in the reporting year. The equity ratio increased to 77 % (prev. year: 74 %). Equity covered 157 % of property, plant and equipment (prev. year: € 130 %) and amounted to 96 % of current assets (prev. year: 130 %). Property, plant and equipment went down to 49 % compared to total assets (prev. year: 57 %).
Non-current assets declined by 4 % to € 16,868 k (prev. year: € 17,496 k) as of the balance sheet date. Amortization of capitalized development costs of € 1,436 k (prev. year: € 1,478 k) were offset by newly capitalized development costs of € 1,433 k (prev. year: € 2,415 k) in the reporting year.
Property, plant and equipment, which largely consists of leasehold improvements, acquired operating and business equipment as well as spending on modern IT file server technology, increased from € 189 k to € 505 k (prev. year: € 316 k) as of the balance sheet date. Owing to the transfer of Medis Holding B.V. from financial assets to assets held for sale, the interest in associated companies dropped by € 335 k to € 0 k (prev. year: € 335 k) as of the balance sheet date.
The increase in current assets of 30 % to € 17,505 k (prev. year: € 13,419 k) in the reporting period stems from the rise in cash and cash equivalents by € 1,744 k to € 9,893 k (prev. year: € 8,149) and the increase in other financial assets by € 3,721 k, of which € 3,635 k resulted from the acquisition of securities, to € 4,407 k (prev. year: € 686 k). Trade receivables on the other hand declined by € 1,569 k to € 2,334 (prev. year: € 3,903 k).
As a result of consolidated net profit for the year, equity rose by 16 % to € 26,445 k (prev. year: € 22,769 k) as of the balance sheet date. The equity ratio increased to 77 % (prev. year: 74 %). Subscribed capital remained unchanged at € 1,820 k (prev. year: € 1,820 k). The capital reserve decreased to € 9,768 (prev. year: € 28,079 k) owing to withdrawals by MMS AG to offset accumulated losses, while the treasury stock deducted from equity remained at € 3,300 k (prev. year: € 3,300 k). Retained consolidated earnings increased by € 22,146 k to € 17,561 k (prev. year: € -4,585 k). Adjusted for reclassifications of € 18,467 k (prev. year: € 271 k), this corresponds to total consolidated net profit for the year of € 3,681 k (prev. year: € 2,164 k) and actuarial losses of € -2 k (prev. year: € 0 k).
Non-current liabilities as of the balance sheet date amounted to € 2,007 k, which is € 502 k below the previous year's level (prev. year: € 2,509 k). Provisions and other financial liabilities decreased by € 354 k, primarily as a result of payments made. At the same time, deferred tax liabilities contracted by € 148 k to € 1,813 k (prev. year: € 1,961 k) on account of the increased recognition of deferred tax asset differences on loss carry forwards and temporary differences.
Current liabilities increased by 5 % to € 5,921 k (prev. year: € 5,637 k). The increase is primarily related to other financial liabilities and deferred income.
Staff liabilities rose by € 368 k to € 698 k year on year. Other financial liabilities remained constant at € 176 k (prev. year: € 178 k).
Trade payables decreased by € 308 k to € 836 k (prev. year: € 1,144 k).
The rise in deferred income by € 203 k to € 2,339 k (prev. year: € 2,136 k) was primarily due to the payments received during the reporting period under maintenance contracts for which the corresponding maintenance services had already been provided.
Other liabilities increased to € 514 k (prev. year: € 175 k). The rise came on the back of installment payments received from funded projects totaling € 360 k (prev. year: € 0 k).
Income tax liabilities decreased to € 930 k (prev. year: € 1,145 k). The tax assessments for the years 2012 and 2013 are still outstanding as of the balance sheet date.
Beyond defined financial parameters, particularly sales, EBIT and liquidity, non-financial performance indicators are also relevant and thus important indicators of the MeVis Group's long-term success. These so-called non-financial performance indicators are explained below. MeVis does not provide a financial assessment of non-financial performance indicators.
The MeVis Group's workforce is an essential part of our capital. Employee expertise and commitment translates into crucial contributions to the Company's success. Their knowledge and experience guarantees the quality of our products and serves to continually optimize processes and services. Flat hierarchies, the freedom to make decisions and a high degree of personal responsibility are an expression of our open corporate culture. Financial recognition of individual performance is as important to MeVis as the availability of flexible work time models, targeted staff development and health promotion measures.
The MeVis Group had 110 permanent employees as of the balance sheet date (prev. year: 113) as well as 13 student testers on a temporary basis (prev. year: 18). This equates to a total of 108 full-time equivalents (prev. year: 112), 103 of whom were permanent employees (prev. year: 105) and 5 of whom (prev. year: 7) were student testers on a temporary basis.
On annual average, the MeVis Group had a workforce of 125 (prev. year: 143), of which 110 were permanent employees (prev. year: 116) and 15 student testers on a temporary basis (prev. year: 27). This is equivalent to an annual average of 108 full-time positions of which 102 were permanent employees and 6 student testers on a temporary basis.
The vast majority of employees received a small, voluntary bonus payment in the period under review as well as their fixed remuneration.
By resolution of the annual general meeting on June 15, 2011, the Executive Board has been authorized to issue stock options to MeVis Group employees and members of management along with the associated conditional increase of the Company's share capital by € 130,000 on December 31, 2015. In fiscal year 2013, as part of this stock option plan, 19,589 stock options were issued to employees and 8,500 to the Members of the Executive Board. The stock options have a term of five years and are subject to a four-year vesting period. The performance target is formulated in the form of a market condition. The MMS stock price must exceed the TecDAX by at least 15 % at the time the stock option is exercised. Further explanations and information on the stock option program can be found in the Note 39.
The quality of operational processes, including comprehensive expertise in international regulatory processes, is a necessary condition for the achievement of the MeVis Group's strategic objectives, and thus of very high value. Quality and quality management are both a regulatory requirement and an important product feature.
The MeVis Group has installed an extensive quality management system in accordance with EN ISO 13485. MeVis is certified to EN ISO 13485:2012 + AC: 2012 for the areas of "development, manufacture, final inspection and sale of diagnostic software for medical image data, intervention support and evaluation services for medical image data." As a result, the Company is able to develop products that meet the requirements of Directive 93/42/EEC (Europe), FDA 510k (USA) and CMDCAS (Canada) and bring those products to approval.
This ensures that software components we deliver meet the applicable standards and legal requirements. In turn, this significantly accelerates the approval process for our customers' medical products, bringing them to market faster.
Innovation and new technologies are essential for the strategic development of the MeVis Group. The market for software products for use with digital medical imaging processes is characterized by high quality requirements and, in some cases, short innovation cycles in tandem with rising technical complexity. For this reason, the product ranges developed by the Group call for ongoing and forward-looking adjustment in the light of new medical and technological developments and the constant increase in data volumes to be processed. In addition to internal research and development capabilities, MeVis has a wide network of hospitals and research centers at its disposal, enabling us to identify new ideas and market trends early on.
For the rapid development of prototypes tailored to real-life application, MeVis uses its own MeVisLab research and development environment. As a result, newly developed methods and work processes can be tested, evaluated and optimized in clinical environments ("rapid prototyping") to convert developed products into marketable products in a short time. This leads to significantly shorter development and innovation cycles.
The MeVis Group owes its leading market position to its successful long-term cooperation with major international industrial customers. Under the umbrella of the OEM sales model, distribution of software applications is carried out under the industrial customers' respective brand names who are typically also manufacturers of imaging devices. Our major industrial customers include Siemens AG, Hologic, Inc., Invivo Corp (a subsidiary of Philips) and Vital Images (owned by Toshiba). Excellent customer relationships are the basis for the MeVis Group's success. On account of their personal, efficient and competent services, our key account managers contribute to increasing customer satisfaction and promoting a long-term, profitable customer relationship. Above all, happy customers are honest feedback providers and thus the best multipliers for MeVis. Moreover, we consider our customers a driving force for innovation, which is reflected in our continuous development of products with new or additional services at the request of our existing customers.
2013 was extremely successful for MeVis. Our restructuring efforts over the past few years have had a positive impact on the cost structure, and the successful market launch of Hologic's 3-D tomosynthesis system has contributed to a substantial rise in license sales. Liquidity has not only increased on account of the favorable development of costs and sales during the year, but has also received an additional boost thanks to a sustained reduction in receivables due to contractual changes with one industrial customer. In the future, it will become increasingly important for MeVis to secure additional sources of income from additional areas of business other than the current core mammography business. In addition, we will be expanding our online services and intensifying our efforts to acquire new industrial customers.
As of the balance sheet date, the Company had subscribed capital of € 1,820 k, which consisted of 1,820,000 no-par registered shares with voting rights. Each registered share carries one vote. In accordance with the statutory provisions and the Articles of Association the shareholders exercise their voting rights at the General Meeting.
The appointment and dismissal of members of the Executive Board is governed by the provisions of Sections 84 and 85 of the German Stock Corporation Act (AktG). In addition, Section 6 (1) and (2) of the articles of association of MeVis Medical Solutions AG in the version dated June 21, 2013 stipulates that the Supervisory Board shall appoint the members of the Executive Board and determine their number. Amendments to the articles of association are governed by Sections 133 and 179 et seq. of the German Stock Corporation Act. Section 119 (1) No. 5 of that Act stipulates that any amendments to the articles of association require a resolution of the shareholders. Under Section 9 (5) of the articles of association of MeVis Medical Solutions AG in the version dated June 21, 2013, the Supervisory Board may make amendments to the wording of the articles of association.
At the Company's annual general meeting held on August 22, 2007, the shareholders passed a resolution, by amendment resolution of the annual general meeting on September 28, 2007, authorizing the Executive Board to issue, in one or more tranches before December 31, 2011, subject to the Supervisory Board's approval, subscription rights for a total of up to 130,000 of the Company's registered no-par-value ordinary shares to employees and members of the management of the Company and other entities in which the Company directly or indirectly holds a majority of the capital and to create conditional capital of € 130 k. The annual general meeting on June 15, 2011 extended this authorization until December 31, 2015.
In accordance with the resolution passed by the shareholders at the annual general meeting on June 10, 2010, the Executive Board is authorized, subject to the Supervisory Board's approval, to increase the Company's share capital on a cash or non-cash basis by a total of up to € 910 k by issuing new registered nopar-value shares in one or more tranches on or before June 9, 2015. The Executive Board is also authorized, subject to the Supervisory Board's approval, to exclude the subscription rights of shareholders in certain cases. In addition, the Executive Board is authorized to acquire treasury stock up to a total of 10 % of the Company's share capital held on the date on which the resolution was passed by the annual general meeting on June 10, 2010. Including any other treasury stock already held by or attributable to the Company in accordance with Sections 57a et seq. of the German Stock Corporation Act, the shares thus acquired may not exceed 10 % of the Company's total share capital. This authorization does not extend to trading in the Company's treasury stock. The authorization may be exercised in whole or in part, in one or more tranches and for one or several purposes. It may also be exercised by dependent entities or by entities in which the Company holds a majority interest or by third parties for its or their account. The authorization expires at the end of June 9, 2015.
The most recent Corporate Governance Statement starts on page 9 of the Corporate Governance Report and can be accessed on the Company website of MeVis Medical Solutions AG at http://www.mevis.de/ir\_erklaerung\_hgb.html.
The remuneration for the Executive Board consists of fixed and variable components.
The bonuses for Executive Board members are always measured by the level of achievement of a target catalogue agreed upon with the Supervisory Board. Marcus Kirchhoff's and Dr. Robert Hannemann's bonuses are capped at 1.0 and 1.5 times their fixed remuneration respectively. 75 % of the bonus is calculated according to a fixed formula of Group EBITDA adjusted for income from the capitalization of development costs, while the Supervisory Board decides on remaining 25 % at its own discretion. A portion of Executive Board members' bonuses is coupled to the price of the MeVis share within defined thresholds and deferred for three years.
The members of the Executive Board will be taking part in a stock option program, which acts as a further variable remuneration component providing a long-term incentive. In the year under review, Markus Kirchhoff was granted an option on 5,000 stocks, and Dr. Hannemann was granted an option on 3,500 stocks in MMS AG at an issue price of € 8.59, with a vesting period of four years. The stock options have a term of five years as of the date on which they are granted.
The employment contracts for Executive Board members, which have a term of three years, stipulate transitional payments of up to four monthly salaries should their contracts not be extended and the Company fails to comply with the termination period of four months prior to the end of the contracts. In the event of revocation of appointment, the Executive Board member receives their fixed remuneration (in one case the present value) until the end of their contractual term, unless the revocation of appointment is based on negligence on the part of the Executive Board member.
As explained in the consolidated financial statements (Note 38), the total remuneration paid to the Executive Board in the period under review came to € 641 k (prev. year: € 752 k).
On January 17, 2014, the industrial customer Hologic informed MeVis that it will be aiming for an altered form of cooperation with MeVis in the medium term. Over a transitional period of several years, the current licensing business model is to be converted to development support for Hologic, probably starting in 2016. MeVis will continue to contribute its clinical and software development expertise as a strategic partner in the development of applications for diagnosing breast cancer. As a result, MeVis expects a gradual reduction of necessary resources for the Hologic business and the expected revenues in the mid and long term.
The Executive Board of MMS AG believes that the market for medical imaging technology in the extremely important digital mammography segment will increasingly be affected by market saturation. The Executive Board therefore believes that the market environment will become progressively competitive. Key providers of PACS (picture archiving and communication systems) for the archiving and presentation of all clinical patient data are continuing to develop further in market segments relevant to the Company, meaning that it requires an increasing amount of effort to remain one step ahead and continue with its progress. As a result, ongoing activities at MMS AG are based on the conviction that global demand will remain stable, especially when it comes to medical imaging technology and diagnostics support, but that the competitive situation will become more demanding and price pressure will increase. Alongside diagnostic imaging, intervention and treatment planning will also play a more significant role in the optimization of the clinical workflow.
MeVis assumes that its industry customers in the computer-assisted imaging segment will be able to retain the outstanding position of their products on the global market, and that some will be able to generate further growth. MeVis can make a decisive contribution here with its software applications. Against this backdrop of increasing competition, MeVis will continue to focus on maintaining these strong relationships with industry customers. In addition, the Company intends to establish a business model to meet the needs of small- and medium-sized clinical facilities with limited budgets through more extensive marketing of MeVis' online services.
Macroeconomic factors and health policy debates, such as on the importance of screening programs for early lung cancer detection, continue to play a key role in the Company's business environment. The Executive Board is therefore unable to rule out that external factors will adversely impact the market environment as well as the Group's sales and distribution expectations for 2014 and beyond.
On the other hand, the Executive Board of MMS AG is hoping that MeVis will be able to play a leading role, for example, if large-scale lung cancer screening is introduced.
The Group's maintenance business remains strong and the Company also has an array of general oncology, neuro, prostate and virtual colonoscopy products and technologies, all with relatively moderate sales contributions. As the Company is dependent on the success of existing industrial customers, winning new industrial customers and developing alternative sales channels, it is impossible once again in the current fiscal year to reliably forecast future sales developments. In the future, MeVis will focus on the development and marketing of software solutions and services for diagnostic imaging in breast, lung and liver cancer.
In the fiscal year ended, the MMS AG continued its efforts to further enhance its internal risk management processes. Regular extended management meetings continue to be an essential tool for detecting at an early stage any risks to its assets as well as changes in the business performance of the individual segments and Group members or other risks to its going-concern status.
The Company's risk management system is geared toward coordinating the processes for monitoring, early detection and managing all business risks in accordance with the Business Control and Transparency Act. The purpose is to identify at an early stage any risks, in particular risky transactions, accounting misstatements and breaches of the law with a material effect on the assets, financial and earnings of the Company or the Group and to minimize potential negative effects.
The Accounting Law Reform Act further states the mandates of Supervisory and Executive Boards of capital market companies in concrete terms. This includes in particular their responsibilities and monitoring duties in relation to internal risk management, including the internal auditing system.
A monitoring system is at the core of the Group-wide risk management system of MMS AG. It ensures that existing risks are recorded, analyzed and assessed, and also that risk-related information is passed on to the right decision-maker in a systematic manner.
The risk management system documents and regularly updates risk scenarios arising out of operations and based on the environment. The Group has identified the following main opportunities and risks:
Risks arising from dependence on key customers
The MeVis Group generates a substantial portion of its revenue from business with a small number of key industry customers. These customers are of considerable importance for the Group's commercial success. Some of the contracts concluded with these key customers are fixed term and run for several years. In addition, minimum purchase quantities have been agreed for certain products. If the Group does not succeed in retaining the positive business relationships with these key customers or if these key customers decide against continuing these relationship for other reasons or become insolvent, this will have a direct detrimental effect on the Group's assets, liabilities, financial position and profit or loss. For this reason, the Group makes every effort to increase the number of business relationships such that the existing risk is minimized without impacting the quality or profitability of individual areas.
Opportunities arising from acquiring additional key customers
The MeVis Group generates a substantial portion of its revenue from business with key industry customers. If MeVis succeeds in acquiring one or more additional key customers and can conclude contracts for license sales of existing or new software products, this would open up new sales contributions. Broadening the customer base would also reduce the risk of dependence on single industrial customers for revenue.
Opportunities and risks arising from dependence on customers' success
There are risks and opportunities in conjunction with the success of customers, even if relationships with key customers continue or they remain solvent; this is because the Group, due to existing contractual regulations, is contingent on its key customers' ability to market their own products successfully. Although this risk is limited to a small number of areas due, for example, to minimum purchase agreements, it continues to play a significant role for the Group's risk assessment. The same applies in principle to indirect marketing through sales partners. If such products are not distributed successfully or if the customer is not able to obtain the necessary permits for its products, this will negatively impact demand for MMS AG's products as well as those of its affiliates. As a result, this could lead to an adjustment of the value of goodwill in intangible assets. On the other hand, strong sales performance of industrial customers can have a positive effect on MeVis' licensing business.
Risks arising from the expired exclusive agreement with Hologic
The long-term bilateral exclusive agreement with the industrial customer Hologic for the sale of the product SecurView™ expired on January 1, 2012. According to the contractual agreement, which came into effect in 2012, the customer Hologic was able for the first time to supply the market with alternative diagnostic workstations not acquired from MeVis under the SecurView™ name. Although contract provisions include guaranteed minimum transactions with Hologic, withdrawing exclusivity could have a negative impact on the new license business with Hologic. This amendment to the contract could in turn significantly impair the assets, financial position and profit and loss due to the importance of this business for MeVis. However, the Group currently does not expect any material changes to the number of new licenses sold in the current fiscal year based on the new contractual regulations.
Exchange rate risks and opportunities
MMS AG and affiliates offer their services on an international basis and, hence, outside the euro currency zone, particularly in the US market. The sales of MMS AG and its affiliates are invoiced in the currency of the territory in which the customer has its head office. To date, the vast majority of services are therefore being invoiced in US dollars, while most of the Company's expenses are to be paid in euros. Although this exposure is hedged, opportunities and risks from exchange rate fluctuations could arise which may have a positive or negative effect on the profit and loss of the Group, particularly in connection with medium- and long-term contracts which it generally enters into with its customers.
Product development-related risks
The MeVis Group has invested heavily in new technologies and products for some years now. Some of these development costs were capitalized and reported as assets. Due to a change in the assessment of the market environment, the Group already impaired a large portion of these investments in 2010 and 2011. This experience shows that the development of new products and enabling technologies entails a significant risk despite extensive market studies, including in cooperation with new customers. While MeVis increasingly focuses on reducing sales risks relating to the development of products, such as by agreeing on minimum purchase quantities with key customers and sale partners, there remains a financial risk resulting from necessary technological preliminary developments. MeVis has been striving to minimize this risk since 2013 by reducing its capitalization of development costs.
Product liability risks
Despite consistent quality assurance, the risk of defects in the Group's products cannot be ruled out. In such cases, MMS AG or its affiliates may be exposed to warranty claims on the part of its contractual partners or product liability claims. In addition, disputes relating to warranty or product liability claims could result in a loss of confidence in the market and thus harm the MeVis Group's reputation.
Risks in connection with the utilization of brands
It is possible that there are third-party brands, names and company names which are similar to those used or registered as brands by MMS AG or its affiliates for similar or identical goods and services. Therefore there is a possibility of conflicts arising with third parties with respect to brands or designations (e.g. product or company names), which may result in the Group not being permitted to use the designation or brand name in question. This would also entail the risk of liability for damages on the part of MMS AG or its affiliates.
Risks in connection with the utilization of patents and industrial property rights
MMS AG and its affiliates own a number of German, European and US patents and patent applications. In addition, MBC KG holds a German utility patent. The risk of third parties breaching the industrial property rights of the Company or its affiliates cannot be ruled out, nor can the risk of the MeVis Group companies breaching third-party patents and industrial property rights be ruled out.
Liquidity risks
A change to the business and market environment of MMS AG and its affiliates could result in both the Group and its affiliates no longer being in a position to meet their financial obligations arising during the course of their operations. Such an erosion of the Company's liquidity position could result in one of the above-mentioned risks, such as that with existing key customers, or significant payment delays. Securing liquidity therefore forms an integral part of the ongoing liquidity and debtor management at MMS AG and its affiliates. It is therefore just as important as financial due diligence for new customers. On the balance sheet date, the MeVis Group had € 14.0 million in liquid funds including portfolio securities (prev. year: € 8.7 million), although the consent of joint venture partner Siemens is required for the disposal of a partial amount attributable to MBC KG of € 0.6 million (prev. year € 0.8 million). The Company assumes that this liquidity will be sufficient. Additional liquidity needs may arise in years to come, if the planned sales revenues should not be achieved and at the same time the costs of the Group cannot be reduced accordingly. The Group had no credit facilities at banks as of the balance sheet date.
Risks arising from the necessity for ongoing product optimization
In order to remain competitive, MeVis must improve its products on an ongoing basis to bring them into line with market trends taking regional requirements into account, and incorporate the latest technological developments in diagnostic, therapy and intervention methods. It is not possible to exclude the risk of future technological advances that could render the software developed by the MeVis Group obsolete. If MeVis is unable to continue updating its software products in line with the swift and dynamic technological advances in the individual areas of application, this may have an adverse effect on order intake and thus on the assets, liabilities, financial position and profit or loss of MMS AG and its affiliates.
Opportunities arising from the introduction of lung cancer screening
Since mid-2013, there has been an emerging trend, at least in the USA, to introduce CT-based lung cancer screening programs. Following a recommendation for regular screening issued by the US Preventive Services Task Force (USPSTF) in December 2013, it can therefore be assumed that the costs for these measures will be reimbursed by insurers as of 2015. Due to this development, there is likely to be a sharp rise in the need for lung CT scans. MeVis expects that in the wake of an increased demand, it will be able to develop solutions that simplify, shorten and improve the quality of this procedure. MeVis is already in a position to serve this potential growth market with its Visia™ Lung CAD product, and intends to position itself in the field of pulmonary diagnosis with other related products and services. Accordingly, MeVis will be launching a dedicated software product for lung screening during the course of fiscal year 2014. The introduction of large-scale lung cancer screening programs would provide MeVis with opportunities for a significant increase in revenue.
Risks in connection with launch of new development methods
The development efficiency improvements required to secure and increase the Group's competitiveness necessitate ongoing internal processes reviews and adjustments. In the fiscal year just concluded, the Group again pushed forward the launch of leaner and more flexible development methods. These methods are designed to significantly increase development efficiency and speed. While MeVis has high hopes that these processes will cut costs and improve product quality in the medium and long term, each and every change to central business processes entails unavoidable risks, despite careful preparation and management. In particular, these risks relate to the Group's ability to produce high-quality medical technology for our key customers on time and at the envisioned costs during the changeover. No such adverse effects have been determined to date. However, the Group cannot rule out future negative impacts from the launch of new development methods on sales and earnings. There is also a low risk that the launch of new development processes may require further clarification in the course of recertification in accordance with EN ISO 13485:2003 + AC:2009.
Risks arising from the availability of qualified executives and staff
The internal and external availability of qualified employees in sufficient numbers to maintain and expand business operations entails a risk in light of the current situation in the relevant segment of the labor market. Particularly important to MeVis are individuals with expertise in specific areas such as software development for medical technical applications, which is essential to the business. This is especially so given that highly-qualified and specialized employees are not widely available on the open labor market. Despite internal succession plans, knowledge sharing and incentive schemes, the loss of even one of these individuals can have a negative impact on the business and the assets, liabilities, financial position and profit or loss of MMS AG and its affiliates depending on their function.
On the whole, following an extensive review, the Executive Board continues to see no risks to MMS AG and its affiliates as a going concern.
In general, the risk management system and the internal control system also include the accounting processes as well as all risks and controls in relation to accounting. This concerns all elements of the risk management system and internal control system, which may have significant impact on MMS AG's consolidated annual financial statements.
The purpose of the risk management system in relation to the accounting processes is the identification and assessment of risks that may conflict with the aim of compliance of the consolidated annual financial statements with the standards. Any risks identified must be assessed in terms of their effect on the consolidated annual financial statements. The objective of the internal control system in this context is to ensure with sufficient certainty – by implementing appropriate controls – that standards-compliant consolidated annual financial statements are prepared in spite of the risks identified.
The Company has an internal control and risk management system covering the (Group) accounting process, in which suitable structures and processes are defined, and implemented in the organization. Prompt and accurate accounting is ensured for all transactions. Statutory standards and accounting standards are complied with, and the relevance and impacts on the annual financial statements of amendments to the laws and accounting standards are analyzed, adopted and implemented on a continuous basis. The staff involved is regularly trained in this work.
Essential elements of risk management and control in accounting are clear assignment of responsibilities and controls in the process of preparing the financial statements, transparent guidelines on accounting and the preparation of financial statements, and appropriate access controls for the IT systems of relevance to the financial statements.
The principle of dual control and the division of functions are also important control principles in the MeVis Group's accounting process. The identified risks and measures taken as a result are updated in the quarterly reports and reported to the management. The effectiveness of internal controls for accounting is reviewed at least once a year, primarily as part of the process of preparing the financial statements.
In the fiscal year ended, growth was driven primarily by Hologic's success in marketing its new tomosynthesis modalities. Growth in the maintenance business was also stable. In view of these developments, MeVis performed significantly better than was assumed in the forecast for 2013 that was released in April 2013: both sales and EBIT increased instead of decreasing slightly as originally anticipated. Liquidity has risen as predicted. As this positive trend already became apparent in the course of fiscal year 2013, these forecast increases were announced in ad hoc releases in August and November.
The joint venture with Siemens, MBC, will be consolidated according to the equity method as of fiscal year 2014, having being proportionately consolidated until the end of 2013. In light of these facts the Executive Board of MMS AG anticipates revenues in the current fiscal year between € 12.0 million and € 12.5 million. This is a slight decline compared to fiscal year 2013, in which, on a comparable basis, revenues of € 12.8 million would have been recognized. The price of the US dollar has a substantial influence on sales; in its forecasts for 2014, the Executive Board is assuming that the exchange rate will remain stable at \$ 1.35 / € in 2014. The Digital Mammography business segment will therefore remain the main sales driver with around 70 %. As of 2014, this segment will exclusively comprise the business with our industrial customer Hologic.
According to the Executive Board, the development of earnings before interest and taxes (EBIT) will be primarily influenced by the anticipated marginal decline in sales as well as a slight increase in personnel costs, which is mainly attributable to new hires in the areas of development and sales and especially to salary increases in line with inflation. In 2014 the Executive Board expects an EBIT between € 3.0 million and € 3.5 million, which is below the adjusted previous year's figure of € 4.4 million. We expect the operating profitability of Digital Mammography to continue to be markedly higher this year than that of Other Diagnostics in 2012 as well.
Group liquidity as of the balance sheet date amounted to € 14.0 million; this figure includes liquid funds in the amount of € 0.6 million of the, as of fiscal year 2014, no longer proportionately consolidated MBC. MMS AG's liquidity is expected to rise to between € 15.0 million and € 16.0 million in 2014 as a result of a sustained positive cash flow from operating activities.
As in the previous reporting period, the Executive Board will review its expectations during the financial year on a regular basis based on the current business developments. For fiscal year 2015, the Executive Board expects an improvement in sales and earnings for MMS AG and its affiliates compared to the current fiscal year, while the costs structure remains largely unchanged. The expected sales improvement is based in particular on the launch of new products and on winning additional industrial customers and the development of new sales channels. Any delays in the development or launch of these products or insufficient interest from industrial customers or other customer segments would have a negative impact on its sales and earnings development in 2015. This could necessitate a further adjustment of the cost structure.
Bremen, 24 March 2014
Marcus Kirchhoff Dr. Robert Hannemann Chairman Member of the Executive Board
for the period January 1 through December 31, 2013
| FIGURES IN € k | Notes | 2013 | 2012 |
|---|---|---|---|
| Revenues | 10 | 14,617 | 13,347 |
| Income from capitalization of development expenses | 11 | 1,433 | 2.415 |
| Other operating income | 12 | 535 | 1,059 |
| Cost of material | 13 | -683 | -535 |
| Staff costs | 14 | -7,878 | -8,066 |
| Other operating expenses | 15 | -1,850 | -2,267 |
| Earnings before interest, taxes, depreciation and amortization (EBITDA) |
6,174 | 5,953 | |
| Depreciation, amortization and impairment of intangible and tangible assets |
16 | -2,148 | -2,978 |
| Earnings before interest and tax (EBIT) | 4,026 | 2,975 | |
| Share of profit of associates | 5 | 162 | 57 |
| Interest income | 101 | 64 | |
| Interest expenses | -106 | -346 | |
| Other net financial result | -367 | -391 | |
| Net financial result | 17 | -210 | -616 |
| Earnings before tax (EBT) | 3,816 | 2,359 | |
| Income tax | 18 | -135 | -195 |
| Consolidated net profit | 3,681 | 2,164 | |
| Earnings per share in € | 19 | ||
| Basic | 2.14 | 1.26 | |
| Diluted | 2.14 | 1.26 |
for the period January 1 through December 31, 2013
| FIGURES IN € k | Notes | 2013 | 2012 |
|---|---|---|---|
| Consolidated net profit | 3,681 | 2,164 | |
| Items that are never recognized as profit or loss | |||
| Actuarial losses on pensions | 25 | -2 | 0 |
| Items that have been or could be recognized as | |||
| profit or loss | |||
| Changes in the currency translation reserve | 0 | -124 | |
| Changes in fair value of available-for-sale financial in | |||
| struments | 24 | -24 | 0 |
| Deferred tax on changes in fair value | 7 | 0 | |
| -17 | -124 | ||
| Other comprehensive income | -19 | -124 | |
| Total comprehensive income | 3,662 | 2,040 |
as of December 31, 2013
| FIGURES IN € k | Notes | 2013 | 2012 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 20 | 16,363 | 16,845 |
| Property, plant and equipment | 20 | 505 | 316 |
| Interest in associated companies | 5 | 0 | 335 |
| 16,868 | 17,496 | ||
| Current assets | |||
| Inventories | 21 | 0 | 181 |
| Trade receivables | 22 | 2,334 | 3,903 |
| Income tax receivables | 79 | 351 | |
| Other financial assets | 22 | 4,407 | 686 |
| Other assets | 22 | 296 | 149 |
| Cash and cash equivalents | 23 | 9,893 | 8,149 |
| Assets held for sale | 5 | 496 | 0 |
| 17,505 | 13,419 | ||
| ASSETS | 34,373 | 30,915 | |
| Equity capital | 24 | ||
| Subscribed capital | 1,820 | 1,820 | |
| Capital reserve | 9,768 | 28,079 | |
| Revaluation reserve | 611 | 753 | |
| Treasury shares | -3,300 | -3,300 | |
| Cumulated fair value changes of available-for-sale | |||
| financial instruments | -15 | 2 | |
| Retained earnings | 17,561 | -4,585 | |
| 26,445 | 22,769 | ||
| Non-current liabilities | |||
| Provisions | 25 | 49 | 234 |
| Other financial liabilities | 26 | 145 | 314 |
| Deferred taxes | 18 | 1,813 | 1,961 |
| 2,007 | 2,509 | ||
| Current liabilities | |||
| Provisions | 25 | 428 | 519 |
| Trade payables | 836 | 1,144 | |
| Other financial liabilities | 27 | 874 | 518 |
| Deferred income | 28 | 2,339 | 2,136 |
| Other liabilities | 29 | 514 | 175 |
| Income tax liabilities | 930 | 1,145 | |
| 5,921 | 5,637 | ||
| EQUITY AND LIABILITIES | 34,373 | 30,915 |
for the period January 1 through December 31, 2013
| FIGURES IN € k | Notes | 2013 | 2012 |
|---|---|---|---|
| Earnings before interest and tax (EBIT) | 4,026 | 2,975 | |
| + Depreciation and amortization and impairments |
16 | 2,148 | 2,978 |
| +/- Increase/decrease in provisions |
-294 | -425 | |
| +/- Other non-cash expenses/income |
109 | 128 | |
| + Interest received |
109 | 71 | |
| - Interest paid |
-44 | -1 | |
| + Tax received |
330 | 84 | |
| - Tax paid |
-499 | -74 | |
| +/- Exchange rate differences received/paid |
0 | -1 | |
| +/- Decrease/increase in inventories |
181 | 76 | |
| +/- Decrease/increase in trade receivables and other assets |
1,020 | 82 | |
| -/+ Decrease/increase in trade payables and other liabilities |
397 | -605 | |
| = Cash flow from operating activities |
7,483 | 5,288 | |
| - Purchase of property, plant and equipment |
-399 | -148 | |
| - Purchase of intangible assets (excl. development cost) |
-24 | -36 | |
| - Payments for capitalized development cost |
-1,433 | -2,415 | |
| - Investments in subsidiaries |
0 | -1,400 | |
| - Payments for the acquisition for marketable securities |
-4,006 | 0 | |
| + Proceeds from sale of marketable securities |
300 | 900 | |
| = Cash flow from investing activities |
-5,562 | -3,099 | |
| + Repayment of finance lease liabilities |
-51 | -49 | |
| = Cash flow from financing activities |
-51 | -49 | |
| Change in cash and cash equivalents | 1,870 | 2,140 | |
| Effect of exchange rates on cash and cash equivalents | -126 | -67 | |
| + Cash and cash equivalents at the beginning of the period |
8,149 | 6,076 | |
| = Cash and cash equivalents at the end of the period |
23 | 9,893 | 8,149 |
This item comprises cash and cash equivalents.
for the period January 1 through December 31, 2013
| Cumula tive |
||||||||
|---|---|---|---|---|---|---|---|---|
| change in | Curren | |||||||
| fair value | cy | |||||||
| Sub | Re | Trea | for sale | trans | ||||
| scribed | Capital | valuation | sury | of availa | lation | Retained | ||
| FIGURES IN € k | capital | reserve | reserve | shares | ble assets | reserve | earnings | Total |
| Balance on Jan. 1, 2012 | 1,820 | 28,079 | 1,024 | -3,300 | 2 | 124 | -7,020 | 20,729 |
| Transfer to retained earnings | ||||||||
| according to amortization | 0 | 0 | -271 | 0 | 0 | 0 | 271 | 0 |
| Consolidated net profit | 0 | 0 | 0 | 0 | 0 | 0 | 2,164 | 2,164 |
| Other net result | 0 | 0 | 0 | 0 | 0 | -124 | 0 | -124 |
| Consolidated net profit | 0 | 0 | 0 | 0 | 0 | -124 | 2,164 | 2,040 |
| Balance on Dec. 31, 2012 | 1,820 | 28,079 | 753 | -3,300 | 2 | 0 | -4,585 | 22,769 |
| Balance on Jan. 1, 2013 | 1,820 | 28,079 | 753 | -3,300 | 2 | 0 | -4,585 | 22,769 |
| Issue of stock options | 0 | 14 | 0 | 0 | 0 | 0 | 0 | 14 |
| Transfer to retained earnings | ||||||||
| according to amortization | 0 | 0 | -142 | 0 | 0 | 0 | 142 | 0 |
| Withdrawal of the capital | ||||||||
| reserve of the MMS AG | 0 | -18,325 | 0 | 0 | 0 | 0 | 18,325 | 0 |
| Consolidated net profit | 0 | 0 | 0 | 0 | 0 | 0 | 3,681 | 3,681 |
| Other net result | 0 | 0 | 0 | 0 | -17 | 0 | -2 | -19 |
| Consolidated net profit | 0 | 0 | 0 | 0 | -17 | 0 | 3,679 | 3,662 |
| Balance on Dec. 31, 2013 | 1,820 | 9,768 | 611 | -3,300 | -15 | 0 | 17,561 | 26,445 |
MeVis Medical Solutions AG ("MMS AG" for short) is the parent company of the MeVis Group. It was incorporated at the end of 1997 and commenced business in 1998. It has its registered office in Bremen/Germany. Its address is Caroline-Herschel-Str. 1, 28359 Bremen.
The consolidated financial statements as of December 31, 2013 have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The provisions contained in Regulation (EC) No. 1606/2002 on the application of international accounting standards in conjunction with Section 315a(1) of the German Commercial Code (HGB) as well as the supplementary provisions of German commercial law were observed. The requirements have been complied with in full and result in the presentation of a true and fair view of the assets, liabilities, financial position and profit or loss of the MeVis Group.
These consolidated financial statements have been prepared on a voluntary basis to provide a complete picture of the Group's net assets, financial position and results of operations after the subsidiaries of MMS AG were merged or consolidated on August 1, 2013. It comprises the consolidated income statement of the previous subsidiaries for the first eight months of the reporting year. As the subsidiaries no longer exist as of December 31, 2013, they will not be referred to separately hereinafter.
The fiscal year of MMS AG is the same as the calendar year. The balance sheet date for the consolidated financial statements matches the balance sheet date for the parent company.
In principle, the consolidated financial statements are prepared based on the recognition of assets and liabilities at amortized cost. This does not apply to derivative financial instruments or available-for-sale assets, which are recognized at their fair value as of the balance sheet date.
The currency used in the consolidated financial statements is the Euro. Unless otherwise stated, all figures are quoted in thousands of Euro (€ k). The income statement is prepared using the total cost method. In accordance with IAS 1, the current/non-current distinction is applied to assets and liabilities. Non-current assets and liabilities are defined as those which are not due for settlement in less than one year. Deferred taxes are always recognized as non-current assets or liabilities.
The consolidated financial statements as of December 31, 2013 were approved for submission to the Supervisory Board by MMS AG's Executive Board on March 24, 2014. The Supervisory Board is responsible for examining the consolidated financial statements and approving them. The consolidated financial statements are to be published on April 24, 2014.
MMS AG and its affiliates (hereinafter also collectively, "MeVis", "Group" or the "Companies") develop innovative software to analyze and assess image data and markets these to the manufacturers of medical products and providers of medical IT platforms.
The clinical focuses are image-based early detection and diagnosis of epidemiologically important diseases such as breast, lung, prostate and colon cancer as well as neurological disorders. The software applications support all the imaging modalities available. These not only include X-ray modalities such as computed tomography, digital mammography or digital tomosynthesis, but also magnetic resonance imaging, digital sonography and the simultaneous use of multiple modalities (multimodality). Then there are the more modern imaging modalities, such as positron emission tomography (PET), sonoelastography and molecular imaging. MeVis supplies market leaders in the medical sector with technologies and applicators which meet these companies' high demands for technological leadership and thereby help them to expand their market position.
In Distant Services, MeVis also offers image-based support for planning and conducting surgical interventions. MeVis Distant Services offers individual services for software-supported imaging, quantitative analyses and individualized visualization of radiology image data. It also offers an internationally unique procedure for planning complicated surgery on the liver and other organs. Sales and marketing are conducted directly with the clinical end customer (B2C).
For reporting purposes and internal governance, the MeVis Group has two operating segments ("Digital Mammography" and "Other Diagnostics").
The Digital Mammography segment develops and markets software products which support breast diagnostic imaging and intervention. Aside from the original products for digital mammography, new software applications for other imaging modalities such as ultrasound, magnetic resonance imaging and tomosynthesis were added. These products are distributed to the industrial customers Siemens and Hologic. The Digital Mammography segment includes the joint venture MBC KG, operated in conjunction with Siemens AG which was consolidated at 51 % and includes the business with Hologic, Inc.
In addition to the breast diagnostics business based on magnetic resonance imaging conducted with Invivo Corp., the Other Diagnostics segment also includes digital radiology products (e.g. magnetic resonance imaging (MRI), computed tomography (CT), etc.) for other types of diseases such as lung, prostate and intestinal disorders as well as general image-based analysis and diagnostics of radiology images. Other main activities in this segment include image and risk analysis for planning liver surgery and tumor diagnostics in connection with clinical studies of pharmaceutical companies (Distant Services business segment).
Due to the local distribution of realized sales, the MeVis Group differentiates between the geographical areas USA and Europe/Others.
The consolidated financial statements include the annual financial statements of MMS AG and its subsidiaries (proportionately consolidated).
Newly acquired companies are consolidated using the purchase method. Accordingly, the acquisition costs of the business combination are allocated to the identifiable assets acquired and the identifiable liabilities and contingent liabilities assumed, on the basis of their fair values as of the date of acquisition. Ancillary acquisition costs are recorded through profit or loss as they are incurred. Any excess in acquisition costs over the Group's share in the fair values of the identifiable assets, liabilities and contingent liabilities acquired is recognized as goodwill. If the fair values of the assets, liabilities and contingent liabilities acquired exceed the purchase price (negative goodwill), this amount is recognized in the income statement. The acquired entities are consolidated as of the date of acquisition.
Where the acquisition is achieved by successive share purchases, and MMS AG obtains the possibility of exercising control over the company, the provisions contained in IFRS 3 governing the full remeasurement of the assets and liabilities as of the date on which the possibility to exercise control is acquired are applied. Goodwill or any negative differences to be recognized in profit and loss are calculated separately for each acquisition. Any change in the fair values of the assets and liabilities between the date on which the shares are acquired and the date on which the possibility of acquiring control is obtained are recognized in the revaluation reserve within consolidated equity.
Shares in entities whose business activities are co-managed by MMS AG and another company (joint ventures) are consolidated on a proportionate basis. For this purpose, the assets, liabilities, income and expense of the joint venture company are consolidated in accordance with the Group's share in such entity. Capital consolidation within the scope of proportionate consolidation follows the rules for full consolidation.
An associated company is a company on which the Group exercises material influence and which is neither a subsidiary nor a share in a joint venture. Material influence is the ability to affect the financial and business policy decisions of the company in which the investment is held. However, the Group does not control such financial and business policies either individually or in conjunction with other parties. Using as a basis the cost of acquisition as of the date on which the shares were acquired, the changes in the equity of the associated companies are increased or decreased in accordance with the equity method of accounting to the extent that these shares are attributable to MMS AG.
Intragroup balances and transactions including interim results are eliminated. The separate financial statements included in the consolidated financial statements have been prepared using uniform recognition and measurement principles.
In addition to MMS AG, joint venture companies are consolidated on a proportional basis. Shares in associates are accounted for using the equity method of accounting. The following section details the companies consolidated on a proportionate basis as well as the associated companies:
With official registration of the merger between MeVis Medical Solutions AG with its 100%-owned subsidiary MeVis BreastCare Solutions Verwaltungs-GmbH by August 1, 2013 the MeVis Medical Solutions AG has no subsidiaries. As MeVis BreastCare Solutions Verwaltungs-GmbH and MMS AG were the sole Shareholders of MBS GmbH & Co. KG, all assets and liabilities of MBS GmbH & Co. KG were accrued to MMS AG, and MBS GmbH & Co. KG ceased to exist.
Before that, the business activities of the 100%-owned subsidiary MeVis Japan KK, established at the end of 2009 in Tokyo, have been discontinued by the second quarter in 2011.The liquidation of the MeVis Japan KK was completed in October 2012. In addition, the 100 % owned subsidiary MeVis Medical Solutions, Inc., Pewaukee, Wisconsin, founded in 2007, was closed at the end of 2012.
| Name and location of the company | Share in % |
|---|---|
| MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen | 51.0 |
| MeVis BreastCare GmbH & Co. KG, Bremen | 51.0 |
MeVis Medical Solutions AG holds 51 % of MeVis BreastCare GmbH & Co. KG, a joint venture with Siemens Aktiengesellschaft.
As of December 31, 2013, Siemens AG continued to hold 49 % of the capital of MeVis BreastCare GmbH & Co. KG. In addition, Siemens AG has a call option which it may exercise at any time with respect to a further 2 % share in MeVis BreastCare GmbH & Co. KG. In accordance with the provisions contained in the deed of partnership, a 2/3 majority is required for material decisions, meaning that the potential exercise of this option will not have any effect on the MeVis Group's scope for exerting influence on the Company. Accordingly, MeVis BreastCare GmbH & Co. KG is a joint venture and therefore consolidated at 51 %. MeVis BreastCare Verwaltungsgesellschaft mbH is the general partner of MeVis BreastCare GmbH & Co. KG. The investment ratios and consolidation correspond to those of MeVis BreastCare GmbH & Co. KG.
For the purposes of proportionate consolidation, the following proportionate assets and liabilities as well as income and expense were included in the MeVis Group's consolidated financial statements as of December 31, 2013 and the previous year:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Current assets | 955 | 887 |
| current liabilities | 389 | 455 |
| non-current assets | 765 | 1,228 |
| non-current liabilities | 232 | 369 |
| Expenses | 2,273 | 2,285 |
| Revenues | 2,064 | 1,993 |
| Name and location of the company | Share in % |
|---|---|
| Medis Holding B.V., Leiden (Netherlands) | 41.09 |
On January 15, 2010 MMS AG entered into a contract with Reiber Consultancy B.V., Rotterdam (Netherlands) to merge business activities, coupled with the phased acquisition of a holding of up to 100 % in Medis Holding B.V., Leiden (Netherlands), (hereafter also "Medis"). Medis Holding holds a 100 % stake in Medis medical imaging systems, B.V., Leiden (Netherlands). It had been possible to invest equity in Medis Holding B.V. in three fixed phases up to 2011 along with a subsequent earn-out. In the first of these, a cash contribution of € 400 k was agreed and made upon conclusion of the contract, which corresponded to a holding of around 14 %. Another 27 % of the shares in Medis were acquired in a second step on May 31, 2010. The purchase price consisted of a cash component of € 500 k and an exchange of shares, whereby own shares valued at € 367 k were issued. In a third step, MMS AG was granted a purchase option for the remaining 58.9 %, which could be exercised in the period from April 15 to May 1, 2011. The option was not exercised, meaning that MMS AG continues to hold approximately 41.1 % of the stock in Medis.
As part of the strategic focus on industrial clients and online services as well as the breast, lung and liver segments, MeVis decided to sell the 41 % interest in the Dutch company Medis. In the first quarter of 2014, MeVis began negotiations with Reiber Consultancy B.V. concerning a disposal of this interest. Reiber Consultancy B.V. already holds around the remaining 59 % of the stock in Medis. The contract is expected to be concluded in the second quarter of 2014. The shares are accordingly reported as assets held for sale as of December 31, 2013.
As of December 31, 2013 Medis Holding B.V. generated consolidated earnings of € 369 k after taxes. Earnings from associated companies of € 162 k apply to the MeVis Group based on the acquisition which stands at approximately 41.09 %. Consolidated equity amounted to € 1.071 k (2012: € 673 k), of which € 440 k (2012: € 277 k) is attributable to the MeVis Group.
The following information is derived from the Medis consolidated financial statements prepared according to IFRS (without taking into account the differences between the acquisition cost of MMS AG and the pro-rata shareholders' equity of Medis determined under the equity method):
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Current assets | 2,328 | 2,055 |
| Current liabilities | 1,355 | 1,487 |
| Non-current assets | 98 | 105 |
| Non-current liabilities | 0 | 0 |
| Expenses | 4,217 | 4,019 |
| Revenues | 4,586 | 4,157 |
The fiscal year of Medis corresponds to the fiscal year of MMS AG. This information does not refer to the proportion applicable to MeVis, but is disclosed at the full amounts.
The annual average exchange rates are the average exchange rates for the respective fiscal year. The USD/EUR exchange rate underlying currency translation are as follows:
| Annual average End-of-year exchange rate exchange rate |
||||
|---|---|---|---|---|
| Currency | 31.12.2013 | 31.12.2012 | 2013 | 2012 |
| USD/€ | 1.3791 | 1.3194 | 1.3281 | 1.2848 |
Transactions in currencies other than the functional currency are translated at the exchange rate prevailing on the date of the transaction. Currency translation gains and losses arising from fluctuations in exchange rates for foreign currency transactions are reported in the net financial result.
Sales are recognized when it is likely that the economic benefits from the transactions will flow to the MeVis Group and the amount is reasonably assured. As a matter of principle, the MeVis Group distinguishes between the recognition of revenues from the sale of licenses, the provision of services and the sale of hardware.
Revenues from the sale of goods and products are recognized when all of the following conditions are satisfied:
Revenues from the provision of services are recognized when:
As a matter of principle, the above conditions for the sale of goods and products are applied to the sale of software and licenses, i.e. the revenue is recognized once the software is sold. In some cases, contracts for the sale of software include services which are not provided until after the sale of the software. Such "multicomponent contracts" are split into revenue components and the resultant revenue recognized in accordance with the percentage of completion. Revenue components already paid but not yet recognized are deferred.
This has the following specific ramifications for the MeVis Group:
License fees and royalties resulting from the utilization of software are recognized in accordance with the economic purpose of the agreement. In the absence of any agreement to the contrary, revenues are recognized on a straight-line basis over the duration of the license agreement. The granting of unrestricted rights of utilization for a fixed amount (single licenses) constitutes a sale for economic purposes and is recognized as revenue in full.
Revenues from the sale of hardware are recognized upon transfer of risk.
Revenues from the provision of consulting services are recognized in the period in which the service in question is provided.
Revenues from maintenance contracts are recognized in the period in which the service in question is provided. If the selling price of software includes partial amounts for after-sales service (e.g. maintenance), these amounts are deferred and recognized on a pro rata temporis basis over the periods in which the services are provided.
As a matter of principle, the above conditions on the sale of services apply, i.e. the revenues are recognized once the service is provided.
Expenses are recognized in profit and loss in the period in which the corresponding depreciation is caused.
The costs of research activities – that is, for activities undertaken to make new scientific or technical findings – are recognized in full by MeVis as an expense. In contrast, the costs of development activities – that is, when the results of research are incorporated into a plan or a draft for the production of new products and processes – are capitalized, on the condition that the development expenses can be reliably measured, that the product or process is technically and economically feasible and that future economic benefit is likely. In addition, MeVis must have the intention and sufficient resources to conclude the development and to utilize or sell the asset. Therefore, the development expenses incurred for the MeVis Group's software products after the software specifications have been defined and agreed upon with the customer are capitalized or when the marketability of the future products has been adequately demonstrated by market analyses and agreement with the industry customers. In connection with this, individual and overhead costs attributable to the development activities are capitalized up until completion of the product and then written down over a period of two to four years. Developments that are not yet ready for use are subject to an annual impairment test. Impairment tests are also conducted in case of indicators of possible impairment (triggering events).
Interest income is recognized when it arises.
Borrowing costs are recognized as expense unless the borrowing costs can be directly allocated to the construction, acquisition or manufacture of a qualifying asset. An asset is regarded as qualifying if it takes more than six months to get ready for its intended use or sale. The borrowing costs of the MeVis Group largely arise from the imputed interest on liabilities and the interest on tax liabilities.
Goodwill acquired through business combinations is not subject to depreciation and amortization; instead, an impairment test of goodwill is carried out once a year. An impairment test is also carried out if events or circumstances (triggering events) occur, which could indicate possible impairment. Goodwill is carried at cost less any accumulated amortization for impairment. Annual impairment testing is conducted on December 31. Impairment testing of goodwill is carried out at the level of cash generating units (CGU for short) or the groups of cash generating units constituting the lowest level at which goodwill is monitored by Company management. To test for impairment, the acquired goodwill is allocated to the CGU or group of CGUs which are expected to benefit from the synergy arising from the business combination. For the material goodwill of the MeVis Group, the applicable CGU is identical to the, after the accrual of the MBS KG, at MMS AG continued business with Hologic. If the carrying amount of the CGU or group of CGUs to which the goodwill was allocated exceeds the recoverable value, the excess is written off. The recoverable value is the higher of the fair value less cost to sell and the value in use of the CGU. These values are essentially based on discounted cash flow valuations. No reversals of amortization of goodwill are conducted in future periods if the recoverable amount exceeds the carrying amount of the CGU or the group of CGUs to which goodwill is allocated.
Intangible assets consist of software and other intangible assets, patents, licenses and similar rights produced by the Company. The Company depreciates intangible assets with a limited useful life on a straightline basis over the expected useful life to the estimated residual value. The expected useful life of software, patents, licenses and similar rights is generally three to five years. Intangible assets acquired through business combinations relate to customer relationships and technology in particular. Their expected useful lives are between ten years for customer relationships and up to seven years for technology. Intangible assets with an indefinite useful life and intangible assets not ready for use are not subject to scheduled depreciation; rather, an impairment test is carried out once a year.
Property, plant and equipment are shown at acquisition/production cost less scheduled, utilization-related depreciation and amortization as well as extraordinary reductions in value. The cost of acquisition consists of the purchase price plus ancillary and subsequent acquisition costs less discounts received on the purchase price.
Scheduled straight-line depreciation is calculated on the basis of the following estimated useful lives of the assets:
| Useful life in years | |
|---|---|
| IT equipment | 3 |
| Business equipment | 3 - 10 |
| Leasehold improvements | 5 - 10 |
Allowance is made for any impairment losses over and above the depreciation resulting from use of the asset in question. In accordance with IAS 36, such impairment losses are calculated by reference to comparisons with discounted future cash flows. If the reasons for extraordinary depreciation and amortization cease to apply, the assets in question are written up to a maximum of their amortized cost.
A financial instrument is a contract that leads to the development of a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets consist of receivables (excluding income tax receivables) and other financial assets, cash and cash equivalents and derivatives with a positive fair value. They are recognized and measured in accordance with IAS 39. Accordingly, financial assets are recognized in the consolidated balance sheet if they give the MeVis Group the contractual right to receive cash or other financial assets from another entity. Financial assets are derecognized when the contractual obligations are settled, suspended or expire. All customary purchases and sales of financial assets are recognized on the settlement date. Financial assets are initially recognized at their fair value plus transaction costs. Transaction costs arising in connection with the acquisition of financial assets at fair value through profit or loss are immediately taken to the income statement. Receivables which bear little or no interest are initially recognized at the present value of the expected future cash flow. Subsequent measurement is determined in accordance with the following categories of financial asset:
Financial assets at fair value through profit or loss comprise financial assets held for trading or designated financial assets. Derivative financial instruments are assigned to this measurement category. Changes in the fair value of financial assets in this category are recognized in the income statement upon such change arising.
Loans and receivables (LaR) are non-derivative financial assets with fixed or determinable payments, which are not traded in an active market.
Loans and receivables are recognized at amortized cost. This category includes trade receivables, financial receivables included in other financial assets and loans as well as cash and cash equivalents.
Available-for-sale (AfS) financial assets are recognized at fair value in equity. Valuation changes are recorded in a separate shareholders' equity item without affecting profit or loss until the assets are disposed of (AfS reserve). Portfolio securities bearing interest at fixed rates are allocated to this category.
Interest income from items in this category is calculated using the effective interest method.
Inventories solely comprise assets held for sale in the ordinary course of business, which are recognized at cost. If the net realizable value of the inventories drops below their initial cost, they are depreciated to this value. In the event of an increase in the net realizable value of inventories for which impairment expense has previously been recognized, the resultant reversal amount is deducted from the cost of materials.
The Company applies IAS 12, Income Taxes. According to the liability method stipulated under IAS 12, deferred tax assets and liabilities are recognized for the future tax consequences of differences between amounts included in the financial statements (for income and expenditure and assets and liabilities) and those included in the tax assessment. The MeVis Group recognizes in the income statement the effects of changes in tax rates on deferred taxes in the period in which the legislative process on which the change in the tax rate is based is largely concluded. In the event of changes in items recognized in equity, these are also recognized in equity in the period in which the change occurred. MeVis recognizes deferred tax assets to the extent that taxable profits are likely to arise in future. Deductible temporary differences and unused tax losses are allowable against these. Income taxes include all taxes imposed on the Group's taxable profit. The item "income taxes" in the income statement includes current and deferred income taxes. Current income taxes primarily comprise domestic trade tax and corporation income tax.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Movements in the MeVis Group's equity capital are reported in the statement of changes in consolidated equity.
In the case of defined benefit plans, the cost of provision is determined using the projected unit credit method, and an actuarial valuation is conducted as of each balance sheet date. Starting 2013 actuarial gains and losses are not recognized in profit or loss immediately, but regognized in the equity with no effect on profits via other income or offset against this. Past service cost is recognized immediately in profit and loss. For defined benefit plans, the amount recognized in the balance sheet is the present value of the defined benefit obligation, and reduced by the fair value of existing plan assets. If the calculation of the balance sheet amount as set out above results in an asset, the amount recognized is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan.
Provisions are set aside to allow for obligations resulting from past events which will probably lead to a future outflow of resources embodying economic benefits required to settle the obligations, the amount of which can be reliably estimated. Provisions are measured in accordance with IAS 37 on the basis of the best possible estimate of the cost of settling the present obligation as of the balance sheet date. If the outflow of economic resources required to settle an obligation is not expected to arise until after more than one year, the provisions equal the present value of the expected cash outflow.
Equity-settled share-based payments awarded to the Executive Board, management and the employees are recognized at the fair value of the equity instrument on the grant date. The fair value of the liability is recognized under personnel expenses. This is also allocated over the vesting period.
The fair value of the payments in 2009 and 2013 is calculated in each case using a Monte Carlo simulation. The main determinants of the value of staff options are the value of the stocks as well as the price at which the option may be exercised, i.e. the strike price. The difference between the value of the underlying financial instrument and the strike price is the "intrinsic value" of the option.
In addition to modeling movements in the underlying financial instrument, allowance is also made in connection with the measurement of the fair value of the assets for possible exits of option holders from the Company as well as the premature exercise of the options. To cover these eventualities, the Company has derived further relevant input variables for the simulation models on the basis of statistical distribution models which model these decisions.
The Company uses so-called "exponential distribution" to calculate the probability of an option holder leaving the Company prematurely or the holder of an employee option exercising the option prior to the expiry of its term, taking into account the vesting period.
The average service periods, i.e. the service periods of members of the Executive Board and of employees, are analyzed as a basis for determining these probabilities. For this purpose, the Company has utilized freely available market studies. An average service period of 6.2 years for members of the Executive Board was assumed on the basis of this analysis. With respect to the Company's employees, an average service period of 13.3 years is assumed.
Financial liabilities comprise originated liabilities and the negative fair values of derivative financial instruments. Originated liabilities are recognized in the consolidated balance sheet if the MeVis Group has a contractual obligation to transfer cash or any other financial assets to another entity. An originated liability is initially recognized at the fair value of the consideration received or the value of the cash received less any transaction costs. It is subsequently measured at amortized cost using the effective interest method.
Derivative financial instruments are recognized at their fair value through profit or loss. The negative fair values of derivative financial instruments are recognized under other financial liabilities.
Financial liabilities are derecognized when the contractual obligations are settled, suspended or expire.
The MeVis Group receives development grants from public bodies. These are recognized in the income statement as soon as the expenses for which the grants have been received are incurred by the MeVis Group. The installments received are reported under other operating income. If eligible services exceed received grants, these are capitalized under other financial assets.
A lease is classified as an operating lease if, in principle, all risks and opportunities associated with ownership are retained by the lesser. Payments in connection with operating leases are recognized in the income statement as expense on a straight-line basis over the duration of the lease.
The preparation of the consolidated financial statements in accordance with IFRS necessitates, as adopted in the EU, the use of estimates and judgments of individual matters by management. The estimates are based on past experience and further relevant factors on the premise of the business as a going concern.
The main items of the balance sheet subject to management estimates are goodwill of € 10,625 k (2012: € 10,625 k), intangible assets with a definite useful life (€ 5,738 k; 2012: € 6,220 k), and property, plant and equipment (€ 505 k; 2012: € 316 k) with estimated useful lives. In addition to the development expenses included in the intangible assets with a definite useful life with € 3,960 k (prev. year: € 3,963 k), the proceeds that can be generated through the use of these developments have to be estimated. With regard to trade receivables (€ 2,334 k; 2012: € 3,903 k), management does not expect any defaults given the limited number of customers and customers' credit ratings. Deferred tax assets include deferred taxes for tax loss carry forwards (€ 1,877 k; 2012: € 1,340 k). The use of the tax loss carry forwards depends on generating future taxable income. The provisions (€ 477 k; 2012: € 753 k) mainly relate to liabilities from the grant obligation to Fraunhofer MEVIS and warranty costs, the actual amount of which is uncertain. Material estimates with respect to the underlying measurement model as well as various parameters such as staff length of service, movements in the stock price or probability of exercise are applied to the stock options reported under shareholders' equity (€ 271 k; 2012: € 257 k).
At least once a year, the Group conducts impairment testing of existing goodwill (€ 10,625 k; 2012: € 10,625 k). The respective carrying amount of the goodwill is compared to the recoverable value of the corresponding CGU. Calculation of the recoverable value of a CGU involves estimates of the corresponding cash flow and appropriate discount interest on the part of the management.
All capitalized development costs were also tested for any impairment as of December 31, 2013. The impairment tests did not show any need for impairment.
Actual amounts could differ from amounts based on estimates and assumptions.
MMS AG's consolidated financial statements as of December 31, 2013 including the previous year's figures have been prepared in accordance with IFRS as endorsed by the European Union as of the balance sheet date in question. The applied recognition and measurement principles generally correspond to the methods used in the previous year. The Group has also applied the following new/revised standards relevant to the business activities of the Group, for which application first became mandatory in fiscal year 2012: However, they had no or at least no material impact on the consolidated financial statements at the time of first application:
The amendment changes the presentation of other comprehensive income. In future, the items of other comprehensive income later reclassified to the income statement ("recycling") must be shown separately from the items of other comprehensive income that are never reclassified. If the items are reported gross, i.e. without netting effects of deferred taxes, deferred taxes are no longer reported as a total figure but must instead be assigned to the two groups of items.
The presentation of other comprehensive income was accordingly adjusted.
This amendment clarified the valuation of deferred taxes on real estate held as financial investments.
In addition to more extensive disclosure requirements for employee benefits, the revised standard means the following changes in particular:
There was previously an option as to how unexpected fluctuations in pension obligations, known as actuarial gains and losses, can be presented in the financial statements. These could be recognized (a) in profit or loss, (b) in other comprehensive income, or (c) after a delay using the corridor method. The revision of IAS 19 abolishes this option in favor of a more transparent and comparable presentation, which means that only direct recognition in other comprehensive income will be permitted in future.
Also, the expected return on plan assets is currently calculated based on subjective management expectations of portfolio development. Under IAS 19 (revised 2011), only standardized interest on plan assets in the amount of the current discount rate for pension obligations is permitted.
In the past, MMS AG immediately recognized actuarial losses in profit or loss. It therefore applies the changed standard prospectively, using the transitional provisions of IAS 19.173.
This addition to IAS 32 clarifies the requirements for offsetting financial instruments. The addition explains the significance of the current legal right to offsetting and clarifies which methods can be considered gross or net settlement within the meaning of the standard. The regulations on disclosures in the notes in IFRS 7 were also expanded on together with these clarifications.
Unlike the amendment to IFRS 7 applicable for the first time in 2013, the amendment of IAS 23 is applicable for the first time to annual periods starting on or after January 1, 2014.
This standard provides uniform regulations for fair value measurement in IFRS financial statements. In future, fair value measurement as required in all other standards must be applied in line with the uniform regulations of IFRS 13; separate regulations also apply for IAS 17 and IFRS 2 only.
Fair value under IFRS 13 is defined as the exit price, i.e. the price that would be received to sell an asset or paid to transfer a liability. As currently applied for the fair value measurement of financial assets, a threelevel hierarchy graded according to the dependence on observed market prices is being introduced. New fair value measurement can result in different values as compared to current provisions, which was not the case for the 2013 consolidated financial statements of MMS AG.
In accordance with transitional provisions of IFRS 13, the Group prospectively applied the new regulations on fair value measurement and did not provide prior-year comparable figures for new disclosures.
Five standards were amended as part of the annual improvement project. The adjustment of the wording in individual IFRS aims to clarify the existing rules. Some amendments also have an impact on recognition, measurement and the notes. These affect IAS 1, IAS 16, IAS 32, IAS 34 and IFRS 1.
This interpretation aims to standardize the recognition of stripping costs incurred by surface mines.
The following standards and interpretations were also published prior to the preparation of the consolidated financial statements. However, application of these standards is not mandatory as December 31, 2013 and MMS AG did not elect early application. Unless stated otherwise, the impact on the consolidated financial statements of MMS AG is currently being examined.
As part of the passing of IFRS 10 Consolidated Financial Statements, the regulations on the principle of control and the requirements to prepare consolidated financial statements will be removed from IAS 27 and then covered in IFRS 10 (see comments on IFRS 10). As a result, IAS 27 will only contain the regulations for accounting for subsidiaries, joint ventures and associated companies in IFRS separate financial statements in future.
This did not have any effect on the consolidated financial statements of MMS AG.
The amendment is applicable to annual periods starting on or after January 1, 2014.
Amendments were also made to IAS 28 as a result of the passing of IFRS 11 Joint Arrangements. As in the past, IAS 28 regulates the application of the equity method. However, its range of application has been significantly expanded by IFRS 11 as investments in not just associates but also joint ventures (see IFRS 11) have to be measured at equity in future. Proportionate consolidation will also no longer apply to joint ventures.
In future, even potential voting rights and other derivative financial instruments must be considered when assessing if a company has material influence and when determining investors' shares in the company's assets.
Another amendment pertains to accounting pursuant to IFRS 5, if only part of a share in an associated company or joint venture is to be sold. IFRS 5 must be partially applied if only a share or part of a share in an associated company (or joint venture) meets the criteria of "held for sale".
The amendment is applicable to annual periods starting on or after January 1, 2014.
This standard provides a new and comprehensive definition of control. If an entity controls another entity, the parent company must include the subsidiary in consolidation. Under the new concept, control exists when the potential parent company has power over the potential subsidiary on the basis of voting or other rights, it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
This new standard could affect the scope of the consolidated group, including for special purpose entities.
The new standard is applicable for the first time to annual periods starting on or after January 1, 2014. If it is found that an investment qualifies as a subsidiary differently according to IAS 27/SIC 12 and IFRS 10, IFRS 10 must be applied retrospectively. Early adoption is only permitted at the same time as IFRS 11, IFRS 12 and the 2011 amendments to IAS 27 and IAS 28.
IFRS 11 provides new regulations for accounting for joint arrangements. Under the new concept, it must be decided whether the arrangement is a joint operation or a joint venture. In a joint operation, the parties with joint control have rights to the assets and obligations for the liabilities. The individual rights and obligations are accounted for proportionately in the consolidated financial statements. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. This right is accounted for using the equity method in the consolidated financial statements; the option of proportionate inclusion in the consolidated financial statements therefore no longer applies.
The amendment is applicable to annual periods starting on or after January 1, 2014. There are specific regulations for transition, for example, from proportionate consolidation to the equity method. Early adoption is only permitted at the same time as IFRS 10, IFRS 12 and the 2011 amendments to IAS 27 and IAS 28.
MMS AG includes the joint ventures MeVis BreastCare GmbH & Co. KG and MeVis BreastCare Verwaltungsgesellschaft mbH in its consolidated financial statements by way of proportionate consolidation. Please refer to Note 5 for further details. The application of IFRS 11 as from 2014 will lead to affiliates having to be included in the consolidated financial statements using the equity method. This will have corresponding effects on individual items in the consolidated balance sheet and consolidated income statement.
This standard regulates the disclosure requirements for interests in other entities. The necessary information is significantly more extensive as compared to the disclosures previously required under IAS 27, IAS 28 and IAS 31.
The amendment is applicable to annual periods starting on or after January 1, 2014.
The amendments include a clarification and additional easements for the transition to IFRS 10, IFRS 11, and IFRS 12. Adjusted comparable figures are only requested for the latest comparable period. Furthermore, the duty to disclose comparable figures for periods prior to the first-time application of IFRS 12 does not apply in connection with the disclosures in the notes regarding unconsolidated structured entities.
The amendments to IFRS 10, IFRS 11, and IFRS 12 are effective for the first time for annual periods starting on or after January 1, 2014.
The amendments include the definition of the term investment entities and exclude such companies from the area of application of IFRS 10 Consolidated Financial Statements.
According to the amendments, investment entities do not include entities under their control in their IFRS consolidated financial statements. The exception from the general principles is not to be understood as an option. Instead of full consolidation, they measure investment entities at fair value and recognize periodic value fluctuations in profit or loss.
The amendments do not have any effect on consolidated financial statements that include investment entities as long as the group parent is not an investment entity itself.
The amendments are applicable for the first time to annual periods starting on or after January 1, 2014.
A new mandatory disclosure for goodwill impairment tests as per IAS 36 was introduced as a consequential amendment from IFRS 13 Fair Value Measurement. Consequently, the recoverable amount of cashgenerating units must be disclosed regardless of whether an impairment was actually made. This note was introduced by the IASB unintentionally, however, and deleted with the amendment from May 2013.
On the other hand, the amendment requires additional disclosures if impairment is performed and the recoverable amount was determined on the basis of fair value.
The amendments are applicable for the first time to annual periods starting on or after January 1, 2014.
As a result of this amendment, derivatives will continue to be designated as hedging instruments in ongoing hedge accounting under certain conditions despite the novation of a hedging instrument to a central counterparty arising as a consequence of legal requirements.
The amendments are applicable for the first time to annual periods starting on or after January 1, 2014.
Accounting for and measurement of financial instruments under IFRS 9 will replace IAS 39.
In future, financial assets will only be classified into and measured as two groups: those measured at amortized cost and those measured at fair value. The group of financial assets at amortized cost will consist of such financial assets that only provide for payments of principal and interest on the principal outstanding at set dates and that are also held as part of a business model that intends to hold assets. All other financial assets form the group at fair value. Under certain conditions, financial assets in the first category – as was previously the case – can be designated to the at fair value category (fair value option).
Changes in the value of financial assets at fair value must be recognized in profit or loss. However, the option to recognize changes in value in other comprehensive income can be exercised for certain equity instruments; however, dividend claims from these assets must be recognized in profit or loss.
The regulations for financial liabilities will be taken over from IAS 39. The most significant difference concerns the recognition of changes in value of financial liabilities measured at fair value. These must be broken down in future into the liability's credit risk, which is recognized in other comprehensive income, and the remainder, which is recognized in profit or loss.
The initial application of IFRS 9 is still open, but not expected before January 1, 2017
The goal of the new hedge accounting model under IFRS 9 is to better reflect risk management activities in the financial statements. Cash flow hedge accounting, fair value hedge accounting and hedging of a net investment in a foreign operation remain admissible hedging relationships.
In each case, the number of qualifying underlying and hedging transactions was extended. Now groups of underlying transactions are permitted as long as they qualify individually for designation. Net positions and net zero positions can also be designated. All financial instruments that are carried at fair value can be designated as a hedge instrument. This does not apply to liabilities for which the fair value option has been exercised and equity instruments accounted for at fair value through the FVOCI option ("fair value through other comprehensive income") in accordance with the requirements stipulated for the first phase.
IFRS 9 no longer requires the range of 80 % to 125 % to be applied for the purposes of measuring effectiveness required by IAS 39, meaning that no retrospective effectiveness test is required. A prospective effectiveness test and the recognition of any ineffectiveness must still be complied with.
Hedge accounting can only be terminated when the defined conditions are fulfilled, which implies that hedge accounting must be continued at unchanged risk management goals.
Expanded disclosures are required with respect to the risk management strategy, the impact of risk management on future cash flows and the impact of hedge accounting on the financial statements.
Additionally, the recognition of own default risks for financial liabilities under FVO ("Fair Value Option") in other comprehensive income has been isolated, meaning that it is now possible to forgo application of the remaining requirements of IFRS 9.
The procedure for applying the new regulation of hedge accounting for the first time is the same as applying IFRS 9 for the first time. In view of the transition from IAS 39 to IFRS 9, hedge accounting must not be terminated if the conditions relating to quality remain fulfilled. The existing regulations according to IAS 39 can also be applied under IFRS 9.
The amendments provide the option not to adjust the prior year's figures when applying IFRS 9 for the first time. Originally, this easement was only allowed in the case of early application of IFRS 9 prior to January 1, 2012.
It results in additional disclosures in the notes pursuant to IFRS 7 at the time of transition.
The time when this amendment is to be applied for the first time is still open, like the regulations of IFRS 9, but it is not expected before January 1, 2017.
The amendments clarify those regulations that concern the allocation of contributions by employees or third parties to service periods in cases where the contributions are linked to the same period of service. In addition, relief is granted in cases where the contributions are independent of the number of years of service.
The amendments are effective for the first time for annual periods starting on or after July 1, 2014, subject to their outstanding endorsement in EU law.
IFRIC 21 Levies is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It primarily clarifies the question of when a present obligation requires the creation of a provision or liability as a result of levies imposed by the government. Not covered in the interpretation's scope of application are particularly penalties and levies that result from contracts under public law or fall under the regulatory scope of another IFRS, such as IAS 12 Income Taxes. According to IFRIC 12, a liability item is to be created for levies of the event that triggers the levy liability occurs. This triggering event that predicates the obligation is, on the other hand, found in the wording of the underlying norm. Its formulation is in this respect the determining factor for accounting purposes.
The amendments are effective for the first time for annual periods starting on or after January 1, 2014, subject to their outstanding endorsement in EU law.
Seven standards were amended as part of the annual improvement project. The adjustment of the wording in individual IFRS aims to clarify the existing rules. There are also amendments which affect the notes. These affect IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.
The amendments are effective for the first time for annual periods starting on or after July 1, 2014, subject to their outstanding endorsement in EU law or the amendment to IFRS 2 on share-based payments granted on or after July 1, 2014.
Four standards were amended as part of the annual improvement project. The adjustment of the wording in individual IFRS aims to clarify the existing rules. These affect IAS 1, IAS 3, IAS 13 and IAS 40.
The amendments are effective for the first time for annual periods starting on or after July 1, 2014, subject to their outstanding endorsement in EU law.
Revenues break down by type as follows:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Software and licenses | 7,600 | 6,979 |
| Maintenance (software service contracts) | 6,191 | 5,972 |
| Services (consulting and training) | 781 | 364 |
| Hardware | 45 | 32 |
| 14,617 | 13,347 |
The breakdown by segments is disclosed in the segment report (see Note 34).
Pursuant to IAS 38, development expenses incurred for development work by Group staff were capitalized in the amount of € 1,433 k (2012: € 2,415 k). As in the previous year, no third-party development services were capitalized. Further details are provided in Note 20. Research and development expenses in fiscal year 2013 totaled € 4,102 k (2012: € 5,063 k).
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Grants | 180 | 113 |
| Income from recharges | 20 | 79 |
| Income from the derecognition of liabilities | 14 | 53 |
| Off-period income | 5 | 567 |
| Other | 316 | 247 |
| 535 | 1,059 |
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Cost of materials | 210 | 151 |
| Cost of services purchased | 473 | 384 |
| 683 | 535 |
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Wages and salaries | 6,636 | 6,614 |
| Social security charges and expenditure on old age pensions and sup | ||
| port | 1,242 | 1,452 |
| 7,878 | 8,066 |
Social security and old-age pension and related expenses include the employer contribution to the government pension plan for employees of € 529 k (2012: € 548 k). The annual average headcount was 125 (2012: 143). This is equivalent to an average of 108 full-time positions (2012: 118). Of the 125 employees, 17 (2012: 22) apply to the company MeVis BreastCare GmbH & Co. KG consolidated on a proportionate basis. The annual averages include 15 (2012: 27) testers and temporary workers.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Rental/leasing expense | 463 | 586 |
| Legal and consulting costs | 190 | 266 |
| Travel expense | 163 | 148 |
| Maintenance/repairs | 143 | 126 |
| Cost of preparing and auditing financial statements | 125 | 130 |
| Energy costs | 83 | 76 |
| Supervisory Board remuneration | 79 | 80 |
| Stationary | 63 | 15 |
| Advertising costs | 61 | 72 |
| Insurances | 43 | 55 |
| External work | 42 | 50 |
| Internet expense | 42 | 36 |
| Vehicle costs | 39 | 28 |
| Cleaning expense | 38 | 43 |
| Training costs | 37 | 52 |
| Catering costs | 27 | 24 |
| Telephone expense | 21 | 22 |
| Accounting costs | 19 | 60 |
| Cost of annual general meeting | 17 | 32 |
| Membership subscriptions | 15 | 33 |
| Others | 140 | 333 |
| 1,850 | 2,267 |
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Amortization of purchased industrial property rights | ||
| and similar rights and customer base | 502 | 1,040 |
| Amortization of capitalized development costs | 1,436 | 1,478 |
| Depreciation of property, plant and equipment | 210 | 460 |
| Total depreciation, amortization and impairment losses | 2,148 | 2,978 |
All development costs were tested for impairment as of December 31, 2013. The impairment tests did not show any need for impairment.
The MeVis Group's financial result for 2013 was € -210k (2012: € -616 k). This comprises earnings from associated companies of € 162 k (2012: € 57 k), interest income from the investment of cash of € 101 k (2012: € 64 k), interest expense of € 106 k (2012: € 346 k), and the other financial result of € -367 k (2012: € -391 k). The other financial result consists of the revaluation of derivative financial instruments of € -12 k (2012: € 104 k), the balance of exchange rate gains and losses of € -290 k (2012: € -418 k), and expenses for the safekeeping of securities in the amount of € 65 k (2012: € 77 k).
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Current income taxes reporting period | -288 | -576 |
| Current income taxes previous period | 14 | -152 |
| Deferred taxes | 139 | 533 |
| -135 | -195 |
Deferred tax assets and liabilities for temporary differences are calculated on the basis of an income tax rate of 31.9 % (2012: 31.2 %). The increase in the tax rate results from the increase in the trade tax rate in Bremen from 440 % to 460 % starting 2014.
Deferred tax assets on loss carry forwards are calculated on the basis of the applicable tax rate. In Germany, this is 16.1 % (2012: 15.4 %) for trade tax loss carry forwards and 15.8 % for corporation tax loss carry forwards.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Earnings before taxes (EBT) | 3,816 | 2,359 |
| Theoretical tax paid / received 31.9 % (prev. year 31.2 %) | 1,191 | 736 |
| Utilization of unrecognized tax loss carry forwards | -368 | 0 |
| Recognition of tax loss carry forwards due to improved earnings | -561 | -417 |
| Change in tax rate (trade tax rate Bremen) | 37 | 0 |
| Exchange rate difference | 0 | 5 |
| Tax effects off-period | -14 | 152 |
| Deferred tax effects off-period | -149 | -264 |
| Non-deductible expenses | 24 | 3 |
| Extraordinary operating income/-expense | -30 | -27 |
| Other | 5 | 7 |
| Effective tax expense | 135 | 195 |
| Effective tax rate | 3.5 % | 8.3 % |
Deferred income taxes break down as follows as of the balance sheet date:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Deferred tax assets | ||
| Tax loss carry forwards | 1,877 | 1,340 |
| Provisions | 115 | 180 |
| Property, plant and equipment | 0 | 81 |
| Leasing liabilities | 8 | 16 |
| Accruals and deferred income | 32 | 31 |
| Others | 58 | 46 |
| Deferred tax assets gross | 2,090 | 1,694 |
| Offsetting | -2,090 | -1,694 |
| Deferred tax assets | 0 | 0 |
| Deferred tax liabilities | ||
| Intangible assets | 3,873 | 3,626 |
| Property, plant and equipment (leasing) | 3 | 18 |
| Derivatives | 6 | 10 |
| Securities (directly recognized in equity) | 5 | 1 |
| Provisions | 16 | 0 |
| Deferred tax liabilities gross | 3,903 | 3,655 |
| Offsetting | -2,090 | -1,694 |
Deferred tax liabilities 1,813 1,961
Deferred taxes on loss carry forwards break down as follows:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Corporation tax loss carry forwards of the companies | 1,071 | 1,619 |
| Trade tax loss carry forwards of the companies | 2,905 | 2,395 |
| Deferred tax assets gross | 3,976 | 4,014 |
| Non-recognized deferred tax assets on loss carry forwards | -2,099 | -2,674 |
| Deferred tax assets on tax loss carry forwards net | 1,877 | 1,340 |
Deferred tax assets on loss carryforwards are recognized to the extent they are expected to be utilized subject to the minimum tax in the foreseeable future - within 3 years.
Earnings per share equal the profit on continuing activities or profit (after tax) divided by the weighted average number of shares outstanding during the financial year. Earnings per share (fully diluted) are calculated on the assumption that all securities, stock options and stock awards with a potentially dillutionary effect are converted or exercised.
As the criteria for exercising the options had not been satisfied as of the balance sheet date, it can be assumed that no options had been exercised by the employees. Accordingly, they are not included in the calculation of earnings per share, which means that diluted earnings per share are identical to basic earnings per share.
The weighted average number of shares outstanding is calculated on the basis of shares redeemed and reissued subject to chronological weighting.
| 2013 | 2012 | |
|---|---|---|
| consolidated net profit in €k | 3,681 | 2,164 |
| Weighted average of shares outstanding during the reporting period | 1,722,447 | 1,722,447 |
| Basic earnings per share in € | 2.14 | 1.26 |
| Diluted earnings per share in € | 2.14 | 1.26 |
Movements in production and acquisition costs and cumulative amortization of intangible assets (including goodwill) and depreciation on property, plant and equipment for fiscal years 2013 and 2012 are set out in the statement of changes in assets in Appendices 1 and 2 to the Notes.
The main additions to intangible assets in fiscal year 2013 relate to the capitalization of internally generated intangible assets.
| FIGURES IN € k | Assets and licenses | |||
|---|---|---|---|---|
| Acquired intangible assets with a definite useful life |
Internally generated intangible assets with a definite useful life |
Firmenwerte | Gesamt | |
| Balance on Dec. 31, 2013 | 1,778 | 3,960 | 10,625 | 16,363 |
| Balance on Dec. 31, 2012 | 2,257 | 3,963 | 10,625 | 16,845 |
In accordance with IAS 38, software development costs of € 1,433 k (2012: € 2,415 k) were capitalized in 2013 as internally generated intangible assets with a definite useful life. This resulted exclusively from own work capitalized. As in the previous year, no services that can be capitalized were purchased. Depreciation and amortization of € 1,436 k (2012: € 1,478 k) was attributable to capitalized development costs in the year under review.
Goodwill was assigned to specific cash generating units (CGUs) on the acquisition date for the purpose of future impairment tests. Annual impairment testing is conducted as of December 31. The cash generating units along with their respective goodwill as of the balance sheet date are shown at their carrying amounts in the following table.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Goodwill | Goodwill | |
| Digital Mammography | ||
| MeVis Medical Solutions AG (Hologic) | 10,479 | 10,479 |
| Other Diagnostics | ||
| MeVis Medical Solutions AG (MDS) | 146 | 146 |
Goodwill was tested for any indication of impairment as of December 31, 2013. Under IAS 36, an impairment loss must be recognized if the recoverable amount of the cash generating unit is lower than its carrying amount. Fair value less cost to sell of the cash generating unit, calculated using the DCF method, was used as the recoverable amount. This was based on the realizable cash flows forecast by the Company over a detailed planning period of 5 years. The chosen planning period reflects expected short and medium-term market trends. In addition, a going-concern value was determined for the cash generating unit. The goingconcern value equals the present value of the free cash flows after the end of the detailed planning period.
For the purposes of impairment tests, a growth rate of one percent in the cash flows is assumed for the period after the detailed planning phase. Since cash flows are generated almost entirely in the US dollar area, the calculation was done in US dollars.
Each calculation was based on the fair value less cost to sell. The discount rate used in the detailed planning phase was 11.10 % after taxes (2012: 10.95 % after taxes).
Impairment tests according to IAS 36 for CGU MeVis Medical Solutions AG (Hologic) and MeVis Medical Solutions AG (MDS) indicated no impairment losses for fiscal year 2013. Not even applying a 1.00 percentage point increase of the discount rate and reducing the growth rate to zero would have resulted in impairment.
Changes in property, plant and equipment in fiscal year 2013 were mainly influenced by investment in IT equipment. Spending on property, plant and equipment totaled € 399 k (2012: € 148 k). Property, plant and equipment as of December 31, 2013 included assets with a carrying amount of € 8 k (2011: € 57 k) acquired through finance leases.
Unlike the prior year, the Group had no inventories at the end of the fiscal year, as a new contract was concluded during the course of the year, which does not require contingencies. Expensed inventories were therefore derecognized during the year.
An adjustment of € 9 k (2012: € 3 k) was made to trade receivables overdue as of the reporting date, which corresponds to the nominal amount of the receivable. No material change in the credit rating of the individual debtors was identified and it is therefore assumed that the unadjusted amounts owing will be paid in due course. The average age of the overdue receivables of € 186 k (2012: € 347 k) is 92 days (2012: 46 days). The Group does not hold any collateral for these outstanding items.
All trade receivables totaling € 2,334 k (2011: € 3,903 k) are due for settlement within one year.
| FIGURES IN € k | of which: not impaired as of the balance sheet date and overdue during the following time bands |
|||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount |
of which impaired |
not overdue |
less than 30 days |
between 31 and 60 days |
between 61 and 90 days |
between 91 and 180 days |
between 181 and 360 days |
|
| Trade receivables | ||||||||
| as of Dec. 31, 2013 | 2,334 | 0 | 2,148 | 24 | 68 | 5 | 89 | 0 |
| as of Dec. 31, 2012 | 3,903 | 0 | 3,556 | 221 | 0 | 74 | 52 | 0 |
As in the previous year Payments for trade receivables already derecognized not received.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Securities | 4,151 | 516 |
| Loans and receivables | 90 | 62 |
| Accrued interest | 65 | 29 |
| Eligible expenses | 37 | 44 |
| Derivatives | 19 | 31 |
| Other | 45 | 4 |
| 4,407 | 686 |
The securities held are a widely diversified portfolio of fixed-income corporate and government bonds with nominal interest rates of between 0.442 % and 5.875 % p.a. and staggered maturities up to 2021. Since investment in securities is for the purpose of cash management, the securities are listed on an exchange and it is not intended to hold the securities to maturity, these were categorized as "available-for-sale" and classified in general as current assets.
Loans and receivables are due from the MBC minority shareholder at € 84 k (2012: € 43 k).
As of the balance sheet date, the Group had 2 (2012: 2) options transactions denominated in USD in 2013.
From other financial assets of € 4,407 k (2012: € 686 k) € 464 k (2012: € 686 k) are due for settlement within one year within the following maturity bands:
| FIGURES IN € k | of which: | with a term to maturity of | |||||
|---|---|---|---|---|---|---|---|
| Carrying amount |
of which impaired |
less than 30 days |
between 31 and 60 days |
between 61 and 90 days |
between 91 and 180 days |
between 181 and 360 days |
|
| Other financial assets | |||||||
| as of Dec. 31, 2013 | 464 | 0 | 90 | 230 | 52 | 53 | 39 |
| as of Dec. 31, 2012 | 686 | 0 | 66 | 332 | 68 | 7 | 213 |
The fair value of current receivables and other financial assets equals their carrying amount.
Other assets primarily include accruals of € 225 k (2012: € 27 k).
With respect to other financial assets and other assets, there is no evidence as of the balance sheet date that the debtors will not meet their payment obligations when they mature.
The assets contained in this item comprise demand deposits and overnight deposits of € 9,891 k (2012: € 8,148 k) subject to interest of between 0.2 % and 0,4 % p.a. In addition, there is cash on hand of € 2 k (2012: € 1 k)
The changes in subscribed capital, the share premium, the revaluation reserve, the treasury shares, the cumulative change in fair value of available-for-sale assets for the translation reserve and consolidated retained earnings are shown in the statement of changes in shareholder's equity.
The share capital of MMS AG totals € 1,820 k (2012: € 1,820 k) and is comprised of 1,820,000 (2012: 1,820,000) shares without par value. As in the previous year, there was authorized capital of € 910 k and contingent capital of € 130 k as of December 31, 2013.
There were no changes in subscribed capital during the year under review. The conditional capital, which had initially been issued until December 31, 2011, was extended until 2015 by resolution of the annual general meeting on June 15, 2011.
The share premium of € 9,768 k (2012: € 28,079 k) primarily comprises the premium on the equity issue of € 28,080 k arising from the MMS AG stock market flotation in 2007. Net flotation expenses of € 1,139 k were deducted from shareholders' equity. This includes tax relief of € 505 k. The sale of treasury shares in 2007 resulted in an increase of € 1,314 k. In addition, the Group share premium includes an amount of € 271 k (2012: € 257 k) attributable to stock options. The stock options have a term of five years as of the date on which they are granted and may only be exercised after a vesting period of four years. The exercise price payable by the option holder equals the average closing price of the share in XETRA trading for the last five trading days period to the end of the subscription period in which the options in question were granted. € 434 k was offset against the capital reserve due to the disposal of treasury stock worth less than the acquisition costs in 2011.
As at December 31, 2013, € 18,325 k were taken from the capital reserve to compensate for the MMS AG accrued losses.
The share premium of MMS AG of € 9,754 k is not available for dividend distribution.
In connection with the acquisition of the 49 % interest in MBS KG from Siemens AG and the subsequent full consolidation of MBS KG in 2008, the assets and liabilities of MBS KG were completely remeasured. Where this increase was attributable to the 51 % interest in MBS KG already held by the Group, the difference was recognized within the revaluation reserve. The amount of € 1,688 k comprises intangible assets of € 2,411 k net of deferred taxes of € 723 k. Amounts equaling the depreciation and amortization recognized on these assets are reclassified as retained earnings on a proportionate basis.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Status as at Jan. 1 | 753 | 1,024 |
| -Transfer of the amount corresponding to write-downs and the associ ated deferred taxes to retained earnings, without an impact on profit |
||
| and loss | -142 | -271 |
| Status as at Dec. 31 | 611 | 753 |
In accordance with a new resolution passed by the shareholders at the annual general meeting on September 28, 2007 concerning the acquisition of the Company's own stock in accordance with Section 71(1) No. 8 of the German Stock Corporation Act (AktG), the Company was authorized to acquire up to 10 % of its current share capital (€ 1,300 k) on or before March 27, 2009. MMS AG already held 37,800 treasury shares on December 31, 2007. On March 4, 2008 the Executive Board decided to initially buy back up to 53,200 more of the Company's own shares on the stock market by August 30, 2008. As part of this stock buyback program, the Company acquired 53,200 of its own shares for a total amount of € 1,502 k as of June 17, 2008.
In the course of acquiring the software product Colotux for a total of € 220 k on October 23, 2008, half of the first purchase price installment of € 110 k was settled in mid-November 2008 by the transfer of treasury shares (a total of 1,832 treasury shares with a market value of € 55 k).
In accordance with a new resolution passed by the shareholders at the annual general meeting on July 9, 2008 concerning the acquisition of the Company's own shares in accordance with Section 71(1) No. 8 of the German Stock Corporation Act (AktG), the Company was authorized to acquire up to 10 % of its current share capital (€ 1,820 k) on or before January 8, 2010. On November 4, 2008, the Executive Board decided to buy up to 91,000 more of the Company's own shares on the stock market. As part of this stock buyback program, the Company acquired 33,682 of its own shares for a total amount of € 1,163 k as of March 31, 2009. When the stock buyback program was concluded on March 31, 2009, MMS AG held a total of 122,850 treasury shares (6.75 % of share capital). A total of 18,726 treasury shares were transferred to the seller as part of the second stage in the acquisition of Medis shares on May 31, 2010. The second purchase price installment for the acquisition of the Colotux software product was paid in advance on April 15, 2011. The seller was paid a total of 6,571 treasury shares, among other things. Therefore, as in the previous year, a total of 97,553 treasury shares were held as of December 31, 2013. This corresponds to 5.36 % of the current share capital.
The changes in the fair value of fixed-income securities categorized as available-for-sale are recognized under cumulative changes in fair value.
Retained earnings include statutory reserves pursuant to Section 150 of the Stock Corporation Act of € 5 k. In accordance with Section 150(2) of the Stock Corporation Act no further statutory reserves are necessary. In addition, this item includes accumulated gains and losses from previous years and the earnings for the current fiscal year as well as actuarial gains and losses (net of deferred tax).
Provisions for pensions reported in the balance sheet break down as follows:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Defined benefit obligation | 449 | 433 |
| Reinsurance | -400 | -388 |
| Reported in balance sheet | 49 | 45 |
Provisions for pensions relate to defined benefit plans. A retirement capital from reaching the age of 63 years and a surviving dependents capital has been promised.The extent of the benefits varies in principle according to the conversion of remuneration and an annual interest rate of 4 %. The underlying discount rate is 3.6 % (2012: 3.6 %). Pension and related benefits as well as the expenditure necessary to cover these obligations are valued and accounted for according to the projected unit credit method stipulated in IAS 19 "Employee Benefits". Future annual increases in income and entitlements by the time a pension can first be drawn are not taken into account if the entitled party does not have a corresponding claim. The plan was completed in the reporting period.
The change in the present value of entitlements determined pursuant to IAS 19 is shown in the following table:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Defined benefit obligation at the beginning of the fiscal year | 433 | 254 |
| Employee's share (net present value) | 0 | 67 |
| Employer's share (net present value) | 0 | 18 |
| Interest cost of acquired rights | 14 | 12 |
| Actuarial losses | 2 | 82 |
| Defined Benefit Obligation at the end of the fiscal year | 449 | 433 |
A reduction of 0.5 percentage points in the interest rate for calculation purposes, to 3.10 % (2012: 3.10 %), would increase the defined benefit obligation (DBO) disclosed above to € 491 k (2012: € 476 k) as of the December 31, 2013 valuation date.
An increase of 0.5 percentage points in the interest rate for calculation purposes, to 4.10 % (2012: 4.10 %), would decrease the defined benefit obligation (DBO) disclosed above to € 410 k (2012: € 395 k) as of the December 31, 2013 valuation date.
Total expenses on defined benefit plans reported within staff costs break down as follows:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Past service cost: present value of benefit entitlements earned in the | ||
| fiscal year | 0 | 85 |
| Interest expense: interest on the entitlements already vested | 14 | 12 |
| Net pension expenditure on benefit obligations | 14 | 97 |
To secure the employees' pension claims, the MeVis Group has taken out reinsurance, which is pledged to the individual employees. The employees are entitled to the higher of the pension claim or reinsurance coverage. As of December 31, 2013, the fair value of reinsurance amounted to € 400 k, and thus remained as in the previous year below the defined benefit obligation amount.
The development of claims under reinsurance policies is shown in the following table:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Status at the beginning of the reporting year | 388 | 301 |
| Payments employees | 0 | 60 |
| Payments employer | 0 | 16 |
| Added value | 12 | 11 |
| Status at the end of the reporting year | 400 | 388 |
The profits from the appreciation in value of the reinsurance were charged to staff costs.
Over the next five years, pension obligations are payable only to a small extent. Because of the reinsurance policies, the liquidity exposure of the Group from this is minor.
Movements in other non-current provisions were as follows in fiscal year 2013:
| FIGURES IN € k | Status at Jan. 1, 2013 |
Utilization | Accruals | Addition | Transfers | Status at Dec. 1, 2013 |
|---|---|---|---|---|---|---|
| Anticipated losses | 189 | 0 | 8 | 0 | -197 | 0 |
| Other provisions | 189 | 0 | 8 | 0 | -197 | 0 |
Movements in other current provisions were as follows in fiscal year 2013:
| FIGURES IN € k | Status at Jan. 1, 2013 |
Utilization | Reversal | Addition | Transfers | Status at Dec. 1, 2013 |
|---|---|---|---|---|---|---|
| Warranty provisions | 202 | 0 | 0 | 0 | 0 | 202 |
| Anticipated losses | 317 | 250 | 38 | 0 | 197 | 226 |
| Other provisions | 519 | 250 | 38 | 0 | 197 | 428 |
The provisions for contingent liabilities mainly relate to liabilities from the grant obligation to Fraunhofer MEVIS for research and development projects. Based on the evaluation by the Executive Board of the probability of availment without corresponding compensation, which takes into account the diverging developments of the MeVis Group on the one hand and Fraunhofer MEVIS on the other hand, two similar contracts were included when calculating the provision in 2011. The nominal values of payment obligations still amounted to € 240 k (2012: € 490 k) as of the balance sheet date.
The warranty provisions relate to contractual warranty obligations to customers.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Liability from 49 % acquisition of MBS KG | 145 | 305 |
| Leasing liabilities | 0 | 9 |
| Other non-current financial liabilities | 145 | 314 |
Non-current other financial liabilities mainly arise from the acquisition of the 49 % share in MBS KG in 2008. Of the total purchase price for 49 % of the shares in MBS KG, a sum of € 2,500 k was due immediately upon signing of the contract. The other purchase price installments are discounted at interest rates appropriate to the applicable terms, of between 3.34 % and 4.95 %. The amounts due as of 2015 are recorded here, while those due for payment in 2014 (€ 150 k) are recognized as current liabilities.
Other current financial liabilities contain the following items:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Staff liabilities | 698 | 330 |
| Liability from the 49 % acquisition of MBS KG | 150 | 128 |
| Leasing liabilities | 9 | 51 |
| Miscellaneous other financial liabilities | 17 | 9 |
| Other financial liabilities | 874 | 518 |
Reference should be made to Note 26 for details of the liability from the acquisition of the 49 % stake in MBS KG.
Staff liabilities primarily comprise the cost of accrued vacation entitlements and bonuses.
This item comprises income components paid but not recognized under multi-component contracts. In addition, payments received under maintenance contracts are deferred if the corresponding maintenance services have not yet been provided.
Miscellaneous other liabilities contain the following items:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Liabilities from grants | 360 | 0 |
| Current tax liabilities | 77 | 95 |
| Miscellaneous other liabilities | 77 | 80 |
| Miscellaneous other liabilities | 514 | 175 |
The liabilities from grants relate to advance payments from the research project ASSURE. The current tax liabilities relate to income tax and church tax.
MMS AG is under an obligation to grant a loan of up to € 820 k to the joint venture MBC KG, which is consolidated on a proportionate basis, at standard bank conditions in the event that the latter company's capital requirements exceed the capital contributions paid in by the partners. The MeVis Group's share in this obligation stands at € 418 k.
| less than | ||||
|---|---|---|---|---|
| FIGURES IN € k | Total | 1 year | 1 to 5 years | over 5 years |
| Rental contracts | 2,065 | 486 | 1,579 | 0 |
| Leasing contracts | 135 | 72 | 63 | 0 |
| Total financial obligations as of | ||||
| Dec. 31, 2013 | 2,200 | 558 | 1,642 | 0 |
| Rental contracts | 2,254 | 420 | 1,834 | 0 |
| Leasing contracts | 109 | 91 | 18 | 0 |
| Total financial obligations as of | ||||
| Dec. 31, 2012 | 2,363 | 511 | 1,852 | 0 |
The rental contracts comprise solely leases for office space for limited periods of time. In the fiscal year, rental expenses of € 463 k (2012: € 586 k) were incurred by the Group and are shown within other operating expenses.
All of the leases for passenger vehicles and copying stations of the MeVis Group in 2013 are again operating leases. Economic ownership of these leased assets remains with the respective lessor. The MeVis Group recognizes lease payments as expense. In 2012, other operating expenses totaled € 52 k (2012: € 52 k).
A leasing contract was concluded in 2011 on the use of servers, which was classified as a finance lease. A liability was recognized in the same amount as the capitalized present amount of future leasing installments. This liability came to € 9 k (2012: € 60 k) as of the balance sheet date. The leasing installments to be paid in 2014 total € 9 k (present value: € 9 k).
The Group's international business operations expose it first and foremost to fluctuations in exchange rates. It is Company policy to exclude or limit these risks by concluding hedging transactions. Major national banks whose creditworthiness is continuously verified by leading rating agencies serve as partners for the conclusion of hedging transactions.
In accordance with IFRS, derivative financial instruments are recognized at their fair value. IFRS provides for strict hedge accounting rules with respect to the correlation between the hedging instrument and the hedged item and for documenting hedge relationships. In the periods described, the Company did not allocate hedges to their underlying transactions nor document them accordingly. Consequently, hedge accounting as provided for in IAS 39 is not utilized by MeVis Group. Any changes in fair value are recognized in profit and loss.
In addition to the aforementioned exchange rate risk, the MeVis Group is exposed to financial risks in the form of liquidity and default risk.
The MeVis Group provides the details stipulated by IFRS 7, such as the source of risks from financial instruments and the methods used to manage risk, in the Group management report.
Where necessary, the Group enters into different types of currency contracts to manage exchange rate risk resulting from the cash flow from (expected) business activities denominated in foreign currencies. The transaction risk is measured in each relevant foreign currency. The Group's exchange rate exposure is due to its global business activities, particularly the sale of its products to US customers, which are invoiced in US dollars.
As of the balance sheet date, the Group had 2 (2012: 2) options transactions denominated in USD in 2013. The fair value of the contracts is calculated by the banks.
The scope and the market values of the derivatives were as follows as of the balance sheet date:
| Forwards for hedging purposes expected revenues |
Nominal value | Market value | Nominal value | Market value |
|---|---|---|---|---|
| FIGURES IN € k | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 |
| Currency options (Risk Reversal) | 4,092 | 19 | 3,582 | 31 |
The option transactions have different maturities between April 2, 2014 and July 2, 2014.
The Group requires sufficient cash and cash equivalents to settle its financial obligations. Liquidity risks arise when customers are unable to meet their obligations to the MeVis Group in the course of normal business. As of the balance sheet date, the Group has cash and cash equivalents of € 9,893 k (2012: € 8,149 k) as well as securities available for sale in the amount of € 4,151 k (2012: € 516 k).
Liquidity risk is managed on the basis of rolling liquidity planning.
Default risk, i.e. the risk of counterparties failing to meet their payment obligations, are managed by means of credit approvals, the definition of maximum limits and monitoring processes.
To manage this risk, the Group periodically reviews its customers' solvency.
The Group does not expect any defaults on the part of those business partners with a favorable credit rating. As five customers account for most of the Group's revenues, credit risk is concentrated to a significant extent on the one customer group. As the Group has maintained business relations with these customers, all of which have a very good credit rating and enjoy high renown, for several years and no defaults have arisen to date, the Executive Board does not see any significantly heightened risk of default. Provision has been made in the balance sheet for the maximum default risk.
Fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction (except in the case of foreclosure or liquidation proceedings).
A three-stage system is used to measure fair value, which must be implemented in this particular sequence (fair-value hierarchy):
Listed market prices (category 1) are available for the Group's securities, and other observable information (category 2) for derivatives. Category 3 applies to the remaining financial instrument of the Group.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Category 1 (securities) | 4,151 | 516 |
| Category 2 (derivatives) | 19 | 31 |
| Category 3 (other financial assets) | 3,067 | 4,042 |
| Financial assets | 7,237 | 4,589 |
| Category 3 (other financial liabilities) | 1,855 | 1,976 |
| Financial liabilities | 1,855 | 1,976 |
The following methods and assumptions are used to estimate the fair value of the individual classes of financial instruments:
The fair value of the non-current financial liabilities is calculated using the discount cash flow method based on an interest rate of 0.53 % up to 0.86 % p.a. (2012: 0.33 % to 0.91 % p.a.) appropriate to the applicable term and risk.
The carrying amounts of cash and cash equivalents, other financial assets and current financial liabilities are more or less equal to their fair values on account of the relatively short settlement period for these items. Where no listed market prices are available, the fair value of the publicly traded financial instruments is estimated on the basis of the listed market prices of identical or similar assets. In the case of all other financial instruments, the fair value is based on the expected cash flow or the net asset value of the item in question. All carrying amounts are more or less the same as the fair value of the items in question.
Derivatives used as hedging instruments with positive (negative) fair values are classed as other current or non-current financial assets or liabilities depending on their term. They are recognized based on market prices on the balance sheet date.
The carrying amounts, measurement and fair values of the financial instruments are presented by valuation categories below:
| Recognized in accordance with IAS 39 | |||||||
|---|---|---|---|---|---|---|---|
| Carrying | |||||||
| amount as | Fair value | ||||||
| IAS 39 | of Dec. | Amor | Fair value | Fair value | as of Dec. | ||
| FIGURES IN € k | category | 31, 2013 | tized cost | Cost | in equity | in P/L | 31, 2013 |
| Assets | |||||||
| Trade receivables | LaR | 2,334 | 2,334 | 0 | 0 | 0 | 2,334 |
| Other financial assets | AfS | 4,151 | 0 | 0 | 4,151 | 0 | 4,151 |
| Other financial assets | LaR | 237 | 237 | 0 | 0 | 0 | 237 |
| Other financial assets | FAPL | 19 | 0 | 0 | 0 | 19 | 19 |
| Cash and cash equivalents | 9,893 | 9,893 | 0 | 0 | 0 | 9,893 | |
| Equity and liabilities | |||||||
| Other non-current financial liabili | |||||||
| ties | FLAC | 145 | 145 | 0 | 0 | 0 | 145 |
| Trade payables | FLAC | 836 | 836 | 0 | 0 | 0 | 836 |
| Other current financial liabilities | FLPL | 0 | 0 | 0 | 0 | 0 | 0 |
| Other current financial liabilities | FLAC | 874 | 874 | 0 | 0 | 0 | 874 |
| Of which aggregated by IAS | |||||||
| 39 category: | |||||||
| Loans and receivables | LaR | 2,571 | 2,571 | 0 | 0 | 0 | 2,571 |
| Financial assets available for sale | AfS | 4,151 | 0 | 0 | 4,151 | 0 | 4,151 |
| Financial assets at fair value | |||||||
| through profit or loss | FAPL | 19 | 0 | 0 | 0 | 19 | 19 |
| Financial liabilities measured at | |||||||
| amortized costs | FLAC | 1,855 | 1,855 | 0 | 0 | 0 | 1,863 |
| Financial liabilities at fair value | |||||||
| through Profit or Loss | FLPL | 0 | 0 | 0 | 0 | 0 | 0 |
| Carrying amount as |
Fair value | ||||||
|---|---|---|---|---|---|---|---|
| IAS 39 | of Dec. | Amor | Fair value | Fair value | as of Dec. | ||
| FIGURES IN € k | category | 31, 2012 | tized cost | Cost | in equity | in P/L | 31, 2012 |
| Assets | |||||||
| Trade receivables | LaR | 3,903 | 3,903 | 0 | 0 | 0 | 3,903 |
| Other financial assets | AfS | 516 | 0 | 0 | 516 | 0 | 516 |
| Other financial assets | LaR | 139 | 139 | 0 | 0 | 0 | 139 |
| Other financial assets | FAPL | 31 | 0 | 0 | 0 | 31 | 31 |
| Cash and cash equivalents | 8,149 | 8,149 | 0 | 0 | 0 | 8,149 | |
| Equity and liabilities Other non-current financial liabili |
|||||||
| ties | FLAC | 314 | 314 | 0 | 0 | 0 | 333 |
| Trade payables | FLAC | 1,144 | 1,144 | 0 | 0 | 0 | 1,144 |
| Other current financial liabilities | FLPL | 0 | 0 | 0 | 0 | 0 | 0 |
| Other current financial liabilities | FLAC | 518 | 518 | 0 | 0 | 0 | 518 |
| Of which aggregated by IAS 39 category: |
|||||||
| Loans and receivables | LaR | 4,042 | 4,042 | 0 | 0 | 0 | 4,042 |
| Financial assets available for sale | AfS | 516 | 0 | 0 | 516 | 0 | 516 |
| Financial assets at fair value through profit or loss |
FAPL | 31 | 0 | 0 | 0 | 31 | 31 |
| Financial liabilities measured at | |||||||
| amortized costs | FLAC | 1,976 | 1,976 | 0 | 0 | 0 | 1,995 |
| Financial liabilities at fair value | |||||||
| through Profit or Loss | FLPL | 0 | 0 | 0 | 0 | 0 | 0 |
The contractually agreed (non-discounted) interest and capital payments for the originated financial liabilities break down as follows as of the balance sheet date.
| FIGURES IN € k | Cash flow 2014 | Cash flows 2015-2018 | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Carrying amount Dec. 31, 2013 |
Fixed interest rate |
Floating interest rate |
Repay ment |
Fixed interest rate |
Floating interest rate |
Repay ment |
Fixed interest rate |
Floating interest rate |
Repay ment |
|
| Other financial liabilities |
1,019 | 5 | 0 | 874 | 10 | 0 | 145 | 15 | 0 | 1,019 |
| FIGURES IN € k | Cash flow 2013 | Cash flows 2014-2017 | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Carrying amount Dec. 31, 2012 |
Fixed interest rate |
Floating interest rate |
Repay ment |
Fixed interest rate |
Floating interest rate |
Repay ment |
Fixed interest rate |
Floating interest rate |
Repay ment |
|
| Other financial |
||||||||||
| liabilities | 832 | 20 | 0 | 518 | 20 | 0 | 314 | 40 | 0 | 832 |
Net gains/losses by category break down as follows:
| From subsequent measurement | Net result | |||||
|---|---|---|---|---|---|---|
| Derecogniti | ||||||
| on of re | ||||||
| From divi | ceivables | |||||
| dends and | Currency | and liabili | ||||
| FIGURES IN € k | interests | at fair value | translation | ties | 2013 | 2012 |
| Loans and Receivables (LaR) | 66 | 0 | -290 | 0 | -224 | -369 |
| Financial Assets Available for | ||||||
| Sale (AfS) | 35 | 0 | 0 | 0 | 35 | 45 |
| Derivatives | 0 | -12 | 0 | 0 | -12 | 104 |
| Financial Liabilities measured | ||||||
| at Amortised Costs (FLAC) | -106 | 0 | 0 | 14 | -92 | -293 |
| -293 | -513 |
To reflect market risks, IFRS 7 prescribes sensitivity analyses showing the effects of hypothetical changes in the relevant risk variables on earnings and shareholders' equity. The MeVis Group is mainly exposed to exchange rate risk, but not to interest rate risk since the financial liabilities bear interest at fixed rates. Securities bearing interest at fixed rates can also be sold at short notice in case of corresponding general interest rate changes. Examining the receivables portfolio as of December 31, 2013 indicates elasticity of € 472 k (2012: € 788 k) for a 10 % change in the rate on the reporting date. On the basis of these measurement bands, there is elasticity of € 561 k (2012: € 595 k) for cash and cash equivalents as of December 31, 2013.
Around 30 % of expected business volume denominated in US dollars is hedged by means of currency forwards; however, these do not qualify as hedge accounting due to the absence of any correlation to the underlying transaction. On the basis of the market values of the hedges as of December 31, 2013, an increase of +10 % in the underlying exchange rate would cause the net financial result to rise by € 214 k (2012: € 195 k) while a decrease of -10 % would cause it to decline by € 290 k (2012: € 53 k).
The objectives of capital management are derived from the financial strategy and include the provision of liquidity and access to the capital markets at all times.
The capital structure is managed to take account of any changes in economic conditions and risks arising from the underlying assets.
To this end, equity is viewed in the light of prevailing risk and, if necessary, adjusted by means of dividend policy, capital repayments and equity issues. Capital is monitored by reference to the ratio of net financial liabilities/receivables to economic capital. Net financial liabilities/receivables comprise cash plus financial assets net of financial liabilities. Economic capital equals the equity reported in the balance sheet.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Other financial liabilities | 1,019 | 832 |
| Gross financial liabilities | 1,019 | 832 |
| Cash and cash equivalents | 9,893 | 8,149 |
| Other financial assets | 4,407 | 686 |
| Gross financial receivables | 14,300 | 8,835 |
| Net financial receivables | 13,281 | 8,003 |
| Economic capital | 26,445 | 22,769 |
Given the international nature of the MeVis Group's activities, different regional legal and regulatory requirements must be observed in the individual jurisdictions. The status of and any changes in these rules are monitored both locally and centrally and taken into account in capital management.
The cash flow statement breaks down into cash flows from operating activities, cash flows from investing activities and cash flows from financing activities. Net cash inflow from operating activities is calculated using the indirect method.
Cash and cash equivalents comprise cash on hand and demand deposits.
As of December 31, 2013 the activities of the MeVis Group were still subdivided into the reportable segments of Digital Mammography and Other Diagnostics. The management of each of these segments reports directly to the Executive Board of MMS AG in its function as the responsible corporate entity.
Segment net profit and loss, which corresponds to earnings before interest and tax (EBIT), constitutes the key benchmark for assessing and controlling the earnings position of a particular segment.
Segmentation is as follows:
| Digital Mammography |
Diagnostics | Other | Other / Consolidation and reconciliation |
MeVis Group | ||||
|---|---|---|---|---|---|---|---|---|
| Jan. 1 – Dec. 31 | Jan. 1 – Dec. 31 | Jan. 1 – Dec. 31 | Jan. 1 – Dec. 31 | |||||
| FIGURES IN € k | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| External revenues | 11,349 | 10,099 | 3,268 | 3,248 | 0 | 0 | 14,617 | 13,347 |
| Intersegment reve | ||||||||
| nues | 0 | 0 | 101 | 13 | -101 | -13 | 0 | 0 |
| Revenues | 11,349 | 10,099 | 3,369 | 3,261 | -101 | -13 | 14,617 | 13,347 |
| Grants | 0 | 0 | 180 | 113 | 0 | 0 | 180 | 113 |
| Total segment rev | ||||||||
| enues | 11,349 | 10,099 | 3,549 | 3,374 | -101 | -13 | 14,797 | 13,460 |
| Other capitalized costs |
1,433 | 2,415 | 0 | 0 | 0 | 0 | 1,433 | 2,415 |
| Depreciation and | ||||||||
| amortization | -1,802 | -2,122 | -346 | -856 | 0 | 0 | -2,148 | -2,978 |
| Operating expenses | -4,231 | -3,440 | -4,440 | -5,338 | 110 | 177 | -8,561 | -8,601 |
| Segment net profit and loss |
6,749 | 6,952 | -1,237 | -2,820 | 9 | 164 | 5,521 | 4,296 |
| Other operating in come |
136 | 112 | 1,237 | 2,193 | -1,018 | -1,359 | 355 | 946 |
| Other operating ex | ||||||||
| penses | -1,346 | -1,836 | -1,466 | -1,679 | 962 | 1,248 | -1,850 | -2,267 |
| Result of operating activities |
5,539 | 5,228 | -1,466 | -2,306 | -47 | 53 | 4,026 | 2,975 |
| Segment assets | - | 16,185 | - | 20,685 | - | -5,955 | - | 30,915 |
| Segment liabilities | - | 8,114 | - | 2,859 | - | -2,827 | - | 8,146 |
After MBS KG has been accrued to MMS AG the assets and liabilities are no longer part of internal reporting to the Executive Board.
Transactions between segments are carried out at market prices.
Revenues in the segments of Digital Mammography and Other Diagnostics are predominantly achieved with three customers, accounting each for a share of total revenues in excess of 10 %.
Segmentation of external revenues by geographical regions is as follows:
| Mammography | Digital | Diagnostics | Other | MeVis Group | |||
|---|---|---|---|---|---|---|---|
| Jan. 1 – Dec. 31 | Jan. 1 – Dec. 31 | Jan. 1 – Dec. 31 | |||||
| FIGURES IN € k | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |
| USA | 9,751 | 8,976 | 2,495 | 2,880 | 12,246 | 11,856 | |
| Europe | 1,598 | 1,123 | 773 | 368 | 2,371 | 1,491 | |
| External revenues | 11,349 | 10,099 | 3,268 | 3,248 | 14,617 | 13,347 |
The assets of the Other Diagnostics segment contain investments in associated companies accounted for using the equity method in the amount of € 496 k (2012: € 335 k). These were reclassified as assets held for sale as at 31 December 2013 due to a corresponding disposal decision.
The Group enters into transactions with related parties, the details of which are set out below. These transactions form part of its usual business activities and are subject to arm's length conditions.
Related parties include the joint ventures MBC KG and MeVis BreastCare Verwaltungs-GmbH.
As of the balance sheet date, the following receivables were due from and the following liabilities owing to related parties:
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Members of the Supervisory Board | ||
| Liabilities | 0 | 0 |
| Expenses | 80 | 80 |
| Joint Ventures | ||
| Receivables | 78 | 49 |
| Liabilities | 0 | 4 |
| Income | 260 | 128 |
| Expenses | 14 | 43 |
| Associated Companies | ||
| Receivables | 0 | 0 |
| Liabilities | 0 | 3 |
| Income | 79 | 15 |
| Expenses | 1 | 31 |
As of the reporting date, MMS AG had received the following compulsory disclosures in accordance with §§ 21 et seq. of the German Securities Trading Act (WpHG) concerning changes in the voting rights held in MMS AG:
In accordance with § 21(1) of the German Securities Trading Act, the share of voting rights held by Fortelus GP Ltd., c/o M&C Corporate Services Ltd., Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands, Fortelus Special Situations Fund LP, registered office 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA, and Fortelus Special Situations Fund Ltd., c/o M&C Corporate Services Ltd., Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands, exceeded in the aggregate the thresholds of 3 % and 5 % on November 19, 2007, and the aforementioned entities held 112,000 voting rights (equivalent to 6.15 % of all voting rights) as of that date. The voting rights are held by Fortelus Special Situations Master Fund Ltd., George Town, Cayman Islands, and attributable to the aforementioned entities in accordance with § 22(1) Sentence 1 No. 1 of the German Securities Trading Act.
In accordance with § 21(1) of the German Securities Trading Act, the share of voting rights held by Fortelus Special Situations Master Fund Ltd., George Town, Cayman Islands, exceeded the threshold of 10 % on April 2, 2008, standing at 186,037 voting rights (equivalent to 10.22 % of all voting rights) as of that date. In accordance with § 21(1) of the German Securities Trading Act, the share of voting rights held by Fortelus GP Ltd., c/o M&C Corporate Services Ltd., Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands, Fortelus Special Situations Fund LP, registered office 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA, and Fortelus Special Situations Fund Ltd., c/o M&C Corporate Services Ltd., Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands, exceeded in the aggregate the threshold of 10 % on April 2, 2008, and the aforementioned entities held 186,037 voting rights (equivalent to 10.22 % of all voting rights) as of that date. The voting rights are held by Fortelus Special Situations Master Fund Ltd., George Town, Cayman Islands, and attributable to the aforementioned entities in accordance with § 22(1) Sentence 1 No. 1 of the German Securities Trading Act.
On May 8, 2012, Uhuru GmbH, Heidelberg, Germany has informed us according to Article 21, Section 1 of the WpHG that via shares its Voting Rights on MeVis Medical Solutions AG, Bremen, Germany have exceeded the 5 % and the 3 % threshold of the Voting Rights on May 3, 2012 and on that day amounted to 5.17 % (this corresponds to 94101 Voting Rights). All of these Voting Rights are to be attributed to the company according to Article 22, Section 1, Sentence 1, No. 1 WpHG via PEN GmbH.
| Marcus Kirchhoff Chairman Dassendorf |
from Mar. 1, 2012 |
Member of the Shareholders`Committee of MeVis BreastCare GmbH & Co. KG (from Feb. 28, 2013) Managing Director of MeVis BreastCare Solutions Verwaltungs-GmbH (until Aug. 1, 2013) Member of the Board of Trustees of Fraunhofer MEVIS |
|---|---|---|
| Dr. Robert Hannemann Bremen |
from Oct.1, 2010 |
Managing Director of MeVis BreastCare Verwaltungsgesellschaft mbH (from Oct. 15, 2013) Member of the Shareholders`Committee of MeVis BreastCare GmbH & Co. KG Managing Director of MeVis BreastCare Solutions Verwaltungs-GmbH (until Aug. 1, 2013) |
| Prof. Dr. Heinz-Otto Peitgen Chairman Bremen |
from Sep. 6, 2006 |
President of the Jacobs University, Bremen (until Dec. 31, 2013) Member of the Shareholders`Committee of MeVis BreastCare GmbH & Co. KG (until Feb. 28, 2013) Member of the Board of Trustees Stiftung Bremer Wertpapierbörse Member of the Advisory Board of the Kammerphil harmonie Bremen Member of the Board of Trustees of the Center for Art and Media, Karlsruhe |
|---|---|---|
| Dr. Jens J. Kruse Vice-Chairman Braak |
from Jan. 11, 2011 |
Head of Corporate Finance of private bank M.M.Warburg & CO, Hamburg Member of the Supervisory Board of Biesterfeld AG, Hamburg |
| Peter Kuhlmann-Lehmkuhle Bremen |
from June 15, 2011 |
Managing Partner of C. Melchers GmbH & Co. KG |
Shares in the company held by members of its corporate bodies as of December 31, 2013 are as follows:
| SUPERVISORY BOARD | Number of shares | % of share capital |
|---|---|---|
| Prof. Dr. Heinz-Otto Peitgen | 354,039 | 19.45 |
| Peter Kuhlmann-Lehmkuhle | 54,749 | 3.01 |
As of December 31, 2013 the Executive Board held no shares in the company.
| FIGURES IN € | Fixed remu neration |
Perfor mance related re muneration |
Components with long term incentive characteristic |
Pecuniary benefits from non-cash benefits |
Stock options |
Total |
|---|---|---|---|---|---|---|
| Bonus with | ||||||
| share-price dependent |
||||||
| Salary | Bonus | lever | ||||
| Marcus Kirchhoff | 203,000.00 | 103,250.00 | 19,775.00 | 9,070.16 | 8,511.18 | 343,606.34 |
| Dr. Robert Hannemann | 176,400.00 | 66,997.88 | 46,898.52 | 1,132.87 | 5,957.82 | 297,387.09 |
| Total | 379,400.00 | 170,247.88 | 66,673.52 | 10,203.03 | 14,469.00 | 640,993.43 |
The members of the Executive Board received the following remuneration in 2013:
The bonuses for Executive Board members Marcus Kirchhoff and Dr. Robert Hannemann are always measured by the level of achievement of a target catalogue agreed upon with the Supervisory Board. Part of these bonuses is linked to the MeVis share price trend in defined bandwidths and paid after three years to provide a long-term incentive.
In contrast to the principles of Executive Board remuneration explained above and in the Group management report, Marcus Kirchhoff's bonuses are minimum bonuses granted to him for his first year on the Executive Board.
The minimum amount of the part of the bonus linked to the future share price trend is stated as a bonus with share price-related leverage. This could increase by around 86 % over the next three years if the share price were to develop accordingly.
The members of the Executive Board received the following remuneration in 2012:
| FIGURES IN € | Fixed remu neration |
Perfor mance related re muneration |
Components with long term incen tive characteristic |
Pecuniary benefits from non-cash benefits |
Settlement | Total |
|---|---|---|---|---|---|---|
| Salary | Bonus | Bonus with share-price dependent lever |
||||
| Marcus Kirchhoff | 169,166.70 | 75,000.00 | 0.00 | 7,747.28 | 0.00 | 251,913.98 |
| Dr. Robert Hannemann | 161,400.00 | 42,156.25 | 29,509.38 | 1,132.87 | 0.00 | 234,198.50 |
| Dr. Carl J.G. Evertsz | 8,156.56 | 0.00 | 0.00 | 4,842.54 | 0.00 | 12,999.10 |
| Thomas E. Tynes | 67,343.71 | 45,585.78 | 0.00 | 0.00 | 140,275.19 | 253,204.68 |
| Total | 406,066.97 | 162,742.03 | 29,509.38 | 13,722.69 | 140,275.19 | 752,316.26 |
Based on the concluded termination agreement, a provision was recognized in 2011 for Dr. Evertsz, who retired from the board at the beginning of 2012. It comprises, in particular, his agreed settlement. The expense stated in the above table for Dr. Evertsz includes his remuneration for his performance in 2012.
Mr. Tynes retired from the board in April 2012. As part of his termination agreement, he was granted the performance-based remuneration and settlement stated above. Of his salary, around € 11 k relates to the period after his retirement from the board.
Remuneration for the members of the Supervisory Board is governed by § 10 of MMS AG's articles of association, which provides for the members of the Supervisory Board to receive a fixed amount of € 17,500.00 at the end of the fiscal year. The chairman of the Supervisory Board receives twice this amount and his deputy one-and-a-half times this amount. Persons joining or leaving the Supervisory Board during the year receive a proportionate share of this amount.
In addition, the members of the Supervisory Board are reimbursed for all expenses which they incur in attending meetings of the Supervisory Board plus any sales tax due on the reimbursed amount.
The members of the Supervisory Board received the following remuneration in 2012 for their duties:
a. Prof. Dr. Heinz-Otto Peitgen
As Chairman of the Supervisory Board of MMS AG, Prof. Dr. Peitgen received remuneration in the amount of € 35 k in 2013 (2012: € 35 k). He also had expenses reimbursed in the amount of less than € 1 k (2012: € 1 k).
b. Dr. Jens Kruse
As Vice-Chairman of the Supervisory Board of MMS AG, Dr. Kruse received remuneration in the amount of € 26 k (2012: € 26 k) in 2013. He also had expenses reimbursed in the amount of less than € 1 k (2012: € 1 k).
c. Peter Kuhlmann-Lehmkuhle
As Vice-Chairman of the Supervisory Board of MMS AG, Peter Kuhlmann-Lehmkuhle received remuneration in the amount of € 18 k (2012: € 18 k) in 2013.
Pecuniary damage liability insurance was concluded at the expense of the Company for the benefit of the members of the Executive Board and Supervisory Board.
At MMS AG's annual general meeting of August 22, 2007, the shareholders passed a resolution to create contingent capital of € 130 k in order to issue up to 130,000 stock options to staff or members of the Executive Board on or before December 31, 2011. The annual general meeting on June 15, 2011 extended the stock option program until December 31, 2015. The vesting period was also extended from a minimum of two years to at least four years in light of new statutory requirements.
In 2013 19,589 options were issued to employees (2012: 0). In addition, in 2013 8,500 options were granted to Executive Board members (2012: 0). The exercise price for all options granted in 2013 amounts to € 8.59.
MMS AG is entitled to settle the stock options in cash form – in other words, a combination model is in place. In view of the fact that there are no discernible restrictions to the issue of shares to settle the stock options and the Company currently does not have any preference for settling the stock options in cash form, they have been measured in accordance with the principles for equity-settled options.
The options granted are forfeited if an employee leaves the company. All outstanding stock options have a term of five years from the date of grant. Options granted prior to 2011 have now expired. For options granted after 2011 a waiting period of four years applies, this determines the vesting period of the options. Correspondingly, the expense associated with the granting of stock options from 2011 is distributed over 4 years.
The fair value of the employee options granted in 2013 was determined based on a Monte Carlo simulation, estimating the normal distribution of the yield on the future stock price. The nominal distribution is described by the parameters "mean value" and "variance", which were derived from the MeVis share price trend and volatility.
This simulation put the total fair value of stock options of the 28,089 options granted in 2013 at € 65 k (2012: € 0 k), € 2.31 per option. Expense equaling the fair value was spread over the vesting period of four years. For fiscal year 2013 year the expense totals € 14 k (2012: € 0 k).
As the stock option program of MMS AG expires on December 31, 2015, the maximum term of the outstanding options is less than 7 years (until December 31, 2020).
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Beginning of | Beginning of | |||||
| reporting | End of report | reporting | End of report | |||
| period | Change | ing period | period | Change | ing period | |
| Outstanding stock | ||||||
| options | 87,064 | -28,089 | 58,975 | 87,064 | 0 | 87,064 |
| Options granted | 43,421 | 28,089 | 71,510 | 43,421 | 0 | 43,421 |
| Options forfeited | -13,509 | -2,148 | -15,657 | -11,179 | -2,330 | -13,509 |
| Options exercised | 0 | 0 | 0 | 0 | 0 | 0 |
| Options lapsed | -2,925 | -21,839 | -24,764 | -2,925 | 0 | -2,925 |
| Total | 114,051 | -23,987 | 90,064 | 116,381 | -2,330 | 114,051 |
| of which exercisable | ||||||
| options | 0 | 0 | 0 | 0 | 0 | 0 |
Executive Board and Supervisory Board of MeVis Medical Solutions AG support the initiative of the "Government Commission on the German Corporate Governance Code" and thus have issued a joint declaration of conformity pursuant to Section 161 of the German Stock Corporation Act (AktG), confirming that the recommendations of the "Government Commission on the German Corporate Governance Code" in the version dated May 13, 2013 have been and will be generally complied with, disclosing which recommendations have not been and will not be followed. The current declaration of conformity is dated September 10, 2013. Shareholders can view it on the Company's website as a PDF.
| FIGURES IN € k | 2013 | 2012 |
|---|---|---|
| Audit of financial statements | 78 | 97 |
| Other auditing services | 0 | 3 |
| Tax advisory | 95 | 61 |
| Miscellaneous | 3 | 15 |
| Total | 176 | 176 |
With the exception of the events described in the Group management report, no material events occurred after the balance sheet date.
Bremen, 24 March 2014
Marcus Kirchhoff Dr. Robert Hannemann Chairman & CEO Member of the Executive Board
for the period January 1 through December 31, 2013
| Cost of acquisition or manufacturing | ||||||
|---|---|---|---|---|---|---|
| FIGURES IN € k | Balance on Jan. 1, 2013 |
Additions | Disposals | Effects from currency translation |
Balance on Dec. 31, 2013 |
|
| I. | Intangible assets | |||||
| Purchased industrial property rights | ||||||
| and similar rights | 2,122 | 24 | 4 | 0 | 2,142 | |
| Customer base | 4,091 | 0 | 0 | 0 | 4,091 | |
| Development expenses | 11,028 | 1,433 | 0 | 0 | 12,461 | |
| Goodwill | 10,625 | 0 | 0 | 0 | 10,625 | |
| 27,866 | 1,457 | 4 | 0 | 29,319 | ||
| II. | Property, plant and equipment | |||||
| Other equipment, furniture and | ||||||
| office equipment | ||||||
| Leasehold improvements | 697 | 319 | 28 | 0 | 988 | |
| IT-equipment | 935 | 22 | 0 | 0 | 957 | |
| Furniture and office equipment | 519 | 58 | 0 | 0 | 577 | |
| 2,151 | 399 | 28 | 0 | 2,522 | ||
| 30,017 | 1,856 | 32 | 0 | 31,841 |
| Cumulative depreciation and amortization | Carrying amounts | |||||
|---|---|---|---|---|---|---|
| Balance on | Depreciation | Effects from | Balance on | Balance on | Balance on | |
| Jan. 1, | and | currency | Dec. 31, | Dec. 31, | Dec. 31, | |
| 2013 | amortization | Disposals | translation | 2013 | 2013 | 2012 |
| 1,815 | 221 | 3 | 0 | 2,033 | 109 | 307 |
| 2,141 | 281 | 0 | 0 | 2,422 | 1,669 | 1,950 |
| 7,065 | 1,436 | 0 | 0 | 8,501 | 3,960 | 3,963 |
| 0 | 0 | 0 | 0 | 0 | 10,625 | 10,625 |
| 11,021 | 1,938 | 3 | 0 | 12,956 | 16,363 | 16,845 |
| 673 | 150 | 28 | 0 | 795 | 193 | 24 |
| 765 | 6 | 0 | 0 | 771 | 186 | 170 |
| 397 | 54 | 0 | 0 | 451 | 126 | 122 |
| 1,835 | 201 | 28 | 0 | 2,017 | 505 | 316 |
| 12,856 | 2,148 | 31 | 0 | 14,973 | 16,868 | 17,161 |
for the period January 1 through December 31, 2012
| Cost of acquisition or manufacturing | ||||||
|---|---|---|---|---|---|---|
| Balance on | Effects from | Balance on | ||||
| FIGURES IN € k | Jan. 1, 2012 |
Additions | Disposal | currency translation |
Dec. 31, 2012 |
|
| I. | Intangible asstes | |||||
| Purchased industrial property rights | ||||||
| and similar rights | 4,580 | 36 | 2,494 | 0 | 2,122 | |
| Customer base | 4,091 | 0 | 0 | 0 | 4,091 | |
| Development expenses | 8,613 | 2,415 | 0 | 0 | 11,028 | |
| Goodwill | 12,635 | 0 | 2,010 | 0 | 10,625 | |
| 29,919 | 2,451 | 4,504 | 0 | 27,866 | ||
| II. | Property, plant and equipment | |||||
| Other equipment, furniture and | ||||||
| office equipment | ||||||
| Leasehold improvements | 717 | 0 | 20 | 0 | 697 | |
| IT-equipment | 1,876 | 142 | 1,079 | -4 | 935 | |
| Furniture and office equipment | 553 | 6 | 40 | 0 | 519 | |
| 3,146 | 148 | 1,139 | -4 | 2,151 | ||
| 33,065 | 2,599 | 5,643 | -4 | 30,017 |
| Cumulative depreciation and amortization | Carrying amounts | |||||
|---|---|---|---|---|---|---|
| Balance on | Depreciation | Effects from | Balance on | Balance on | Balance on | |
| Jan. 1, | and | currency | Dec. 31, | Dec. 31, | Dec. 31, | |
| 2013 | amortization | Disposals | translation | 2012 | 2012 | 2011 |
| 3,920 | 389 | 2,494 | 0 | 1,815 | 307 | 660 |
| 1,491 | 650 | 0 | 0 | 2,141 | 1,950 | 2,600 |
| 5,587 | 1,478 | 0 | 0 | 7,065 | 3,963 | 3,026 |
| 0 | 0 | 0 | 0 | 0 | 10,625 | 12,635 |
| 10,998 | 2,517 | 2,494 | 0 | 11,021 | 16,845 | 18,921 |
| 541 | 152 | 20 | 0 | 673 | 24 | 176 |
| 1,555 | 237 | 1,024 | -3 | 765 | 170 | 321 |
| 365 | 72 | 40 | 0 | 397 | 122 | 188 |
| 2,461 | 461 | 1,084 | -3 | 1,835 | 316 | 685 |
| 13,459 | 2,978 | 3,578 | -3 | 12,856 | 17,161 | 19,606 |
We have audited the consolidated financial statements prepared by MeVis Medical Solutions AG, Bremen – comprising the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial positions, consolidated cash flow statement, consolidated statement of changes in equity, and notes to the consolidated financial statements – as well as the consolidated management report for the financial year from January 1 until December 31, 2013. The preparation of the consolidated financial statements and consolidated management report in accordance with IFRS as endorsed in the EU and, in supplementation, with the regulations as set forth in Section 315a Paragraph 1 of the German Commercial Code (HGB) is the responsibility of the Executive Board of the Company. Our responsibility is to express an opinion on the consolidated financial statements and the consolidated management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and the German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that material misstatements affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable accounting principles and in the consolidated management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and consolidated management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the Companies included in the consolidation, the definition of the Companies to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Executive Board as well as evaluating the overall presentation of the consolidated financial statements and the consolidated management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit, the consolidated financial statements give a true and fair view of the Group's net assets, financial position and results of operations in accordance with IFRS as endorsed in the EU and, by way of supplementation, in accordance with the provisions of the German Commercial Code (§ 315a (1) HGB). The consolidated management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.
Bremen, 31 March 2014
KPMG AG Wirtschaftsprüfungsgesellschaft
Heuermann Bultmann Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
Responsibility statement required by section 37y no. 1 of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) in conjunction with sections 297(2) sentence 4 and 315(1) sentence 6 of the Handelsgesetzbuch (HGB – German Commercial Code) for the consolidated financial statements and the group management report:
"To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the group management report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group."
Bremen, 28 March 2014
MeVis Medical Solutions AG
Marcus Kirchhoff Dr. Robert Hannemann Chairman & CEO Member of the Executive Board
This report contains forward-looking statements which are based on management's current estimates of future developments. Such statements are subject to risks and uncertainties, which MeVis Medical Solutions AG is not able to control or estimate with any precision, e.g. future market conditions and the general economic environment, the behavior of other market participants, the successful integration of new acquisitions and government acts. If any of these uncertainties or imponderabilities materialize or if the assumptions on which these statements are based prove to be incorrect, this may cause actual results to deviate materially from those expressly or implicitly contained in these statements. MeVis Medical Solutions AG does not intend and is under no obligation to update the forward-looking statements in the light of any events or developments occurring after the date of this report.
Deviations may occur between the accounting data contained in this report and that submitted to the Bundesanzeiger for technical reasons (e.g. conversion of electronic formats). In the case of any doubt, the version submitted to the Bundesanzeiger will prevail.
This report is also available in a German-language version. In case of any doubt, the German-language version takes priority over the English-language one.
The report is available for downloading in both languages on the Internet at: http://www.mevis.de/ir\_finanzberichte.html?&L=1
| May 19, 2014 |
|---|
| June 5, 2014 |
| August 11, 2014 |
| September 1-3, 2014 |
| November 17, 2014 |
| November 24-26, 2014 |
May 19, 2014 Interim report for Q1 2014 June 5, 2014 Annual general meeting, Bremen August 11, 2014 Interim report for H1 2014 September 1-3, 2014 Small Cap Conference, Frankfurt am Main November 17, 2014 Interim report for Q3 2014 November 24-26, 2014 German Equity Forum, Frankfurt am Main
Phone +49 421 22495 0 Fax +49 421 22495 999 [email protected]
MeVis Medical Solutions AG Caroline-Herschel-Str. 1 28359 Bremen Germany Phone +49 421 22495 0 Fax +49 421 22495 999 [email protected] www.mevis.de
Caroline-Herschel-Str. 1 28359 Bremen Germany
Phone +49 421 22495 0 Fax +49 421 22495 999 [email protected]
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