Annual Report • May 7, 2015
Annual Report
Open in ViewerOpens in native device viewer
| GROUP | |
|---|---|
| Multi-year overview 6 | |
| Statement of comprehensive income 7 | |
| Statement of financial position 8 | |
| Statement of changes in shareholders' equity 10 | |
| Statement of cash flows 11 | |
| Income statement 12 | |
|---|---|
| Balance sheet 12 | |
| Equity and liabilities 13 | |
| Statement of cash flow 13 | |
| Statement of changes in shareholders' equity 13 |
| Note 1 Accounting polices 14 | |
|---|---|
| Note 2 Information and geographic areas 19 | |
| Note 3 Revenue distribution 19 | |
| Note 4 Employees, personnel costs and remuneration | |
| to senior executives 19 | |
| Note 5 Auditors' fees and compensation for expenses 21 | |
| Note 6 Options program 22 | |
| Note 7 Operating expenses specified by type of costs 22 | |
| Note 8 Other operating income 22 | |
| Note 9 Other operating expenses 22 | |
| Note 10 Depreciation and amortization of tangible and | |
| intangible fixed assets 22 | |
| Note 11 Operating leases 23 | |
| Note 12 Interest income and interest expense on | |
| financial instruments 23 | |
| Note 13 Appropriations 23 | |
| Note 14 Tax on profit for the year 23 | |
| Note 15 Dividend per share, earnings per share and | |
| number of shares 24 | |
| Note 16 Capitalized development expenditure 24 |
| Note 17 Software 24 | |
|---|---|
| Note 18 Tangible fixed assets 24 | |
| Note 19 Participations in Group companies 25 | |
| Note 20 Accounts receivable 25 | |
| Note 21 Prepaid expenses and accrued income 25 | |
| Note 22 Cash and cash equivalents 25 | |
| Note 23 Deferred tax assets and tax liabilities 26 | |
| Note 24 Untaxed reserves 26 | |
| Note 25 Provisions 26 | |
| Note 26 Accrued expenses and prepaid income 26 | |
| Note 27 Risks and risk management 27 | |
| Note 28 Disclosures on financial instruments in the Group 27 | |
| Note 29 Pledged assets 29 | |
| Note 30 Related-party transactions 31 | |
| Note 31 Interest payments 31 | |
| Note 32 Events after the balance-sheet date 31 | |
| SIGNATURES OF THE MEMBERS OF THE BOARD OF DIRECTORS 32 | |
| AUDITOR'S REPORT 33 | |
|---|---|
| CORPORATE GOVERNANCE REPORT 34 | |
|---|---|
| Auditors' report on the corporate governance report | 37 |
| Board of Directors and auditors 38 | |
| Senior executives 40 | |
| Shares and ownership 44 | |
| Key figures 47 | |
| Definitions 48 | |
RaySearch Laboratories is a medical technology company that develops advanced software solutions for improved radiation therapy of cancer. RaySearch markets the RayStation® treatment planning system to clinics all over the world. RaySearch's products are also distributed through licensing agreements with leading medical technology companies such as Philips, Nucletron, IBA, Varian and Brainlab. To date, 15 products have been launched via partners and RaySearch's software is used by over 2,500 clinics in more than 65 countries. RaySearch was founded in 2000 as a spin-off from Karolinska Institute in Stockholm and the company is listed in the Small Cap segment on NASDAQ OMX Stockholm.
During 2014, RaySearch continued its strategic shift whereby the company is transitioning from being exclusively dependent on partners to also selling directly to clinics, in parallel with the partner-based business model. Accordingly, RaySearch devoted a great deal of energy to developing its proprietary treatment planning system, RayStation, and the organization for sales and service was expanded. The market trend for RayStation was highly favorable, the customer base was doubled and revenues from RayStation rose sharply, while revenues from partner sales declined. During 2014 and for the first time, RayStation accounted for most of the company's revenues. Accordingly, the phase of establishing RayStation is now complete and the strategic shift has been successfully implemented. However, a majority of the employees still work with research and development.
The development work is focused on transforming market demands, customer preferences and research findings into products. This involves the creation of new products combined with enhancements and maintenance of existing products. The development work conducted in 2014 focused on RaySearch's treatment planning system, RayStation, as well as new versions of existing products for other partners. The development work thus covered a broad range of product applications that included treatment planning for rotational therapy and conventional radiation therapy, radiation therapy with protons, adaptive radiation therapy and quality assurance of radiation treatment procedures.
Research is more future-oriented and forms the basis of the next generation of products. The research work is concentrated primarily in the following areas: adaptive radiation therapy, multi-criteria optimization and tools for robust optimization with regard to disturbances and errors arising during the course of treatment. Research operations are conducted in close cooperation with such organizations as the Royal Institute of Technology in Stockholm, Princess Margaret Hospital in Canada, Massachusetts General Hospital and Stanford University in the US, and Fraunhofer ITWM in Germany.
The Parent Company and the Group present their financial statements in SEK.
Sales and service company formed in Germany and distribution agreements signed for Australia, New Zealand and Thailand
In April, it was announced that RaySearch had established a German subsidiary, RaySearch Germany GmbH. The new subsidiary is responsible for marketing, sales and service of RayStation in Germany, Austria and the German-speaking parts of Switzerland. The company will provide support for both new and existing customers, including DKFZ and WPE in Germany, and MedAustron in Austria.
In March, RaySearch signed an exclusive distribution agreement with AlphaXRT (formerly CMS Alphatech), based in Sydney, Australia, and Auckland, New Zealand. The agreement entails that AlphaXRT has been responsible for marketing, sales and service of RayStation® in Australia and New Zealand as of April 1, 2014. In December, a distribution agreement was entered into with Kamol Sukosol Electric Co. (KEC) based in Bangkok, Thailand. Under the agreement, KEC will be responsible for marketing, sales and service of RayStation in the Thai market.
In January, it was announced that RaySearch had been awarded a treatment planning system contract and will supply RayStation to Tayside Cancer Centre at Ninewells Hospital & Medical School in Dundee, UK. Ninewells will be the first clinical installation of RayStation in the UK. In December, the first RayStation order from Thailand was secured, from Lopburi Cancer Hospital in the Mueang district.
In May, the first patient underwent proton therapy with pencil beam scanning (PBS) at the Provision Center for Proton Therapy in Knoxville, Tennessee, which is the only proton therapy facility in Tennessee. The clinical treatment plans were created using RayStation and delivered with medical devices from IBA.
In July, version 4.5 of RayStation was released for sales in Europe and some Asian markets, and in October, the US Food and Drug Administration (FDA) granted marketing clearance. The new version included many new features that help cancer clinics improve the treatment planning process and also enables new steps in adaptive radiation therapy. In December, the next new version, RayStation 4.7, was released, which contains a number of improvements, including multicriteria and proton optimization, as well as certain functionality for optimization of carbon-ion radiation.
In May 2011, the American company Prowess filed a lawsuit against RaySearch at a court in Baltimore, Maryland, in the US. Prowess claimed that RaySearch had infringed on a US patent to which Prowess holds an exclusive license. RaySearch believed that there was no infringement and, in addition, that the patent should be invalidated. In January 2014, RaySearch entered into settlement negotiations at a settlement conference arranged by the court as part of the legal process and, as a result of this, RaySearch entered into a settlement agreement with Prowess in April 2014. The agreement entails that RaySearch will pay Prowess a fixed amount over three years and that Prowess will withdraw its lawsuit. The total cost of the settlement was SEK 34.8 M, which was charged to 2013.
In September, a collaboration agreement with Mevion Medical Systems Inc. was announced. The collaboration aims to validate the use of RayStation to create proton therapy treatments with the pencil beam scanning technique performed with Mevion's new HYPERSCAN technology.
In November, the company's credit facility was expanded from SEK 30 M to SEK 50 M, whereby chattel mortgages were increased to SEK 50 M. The credit facility comprises an overdraft facility of SEK 25 M and a revolving credit facility of up to SEK 25 M. The revolving credit facility entitles RaySearch to decide on loan principals and maturities during the contractual period, which extends over a term of three years from the date the contract comes into effect. Accordingly, RaySearch has a possibility to borrow SEK 10–25 M at maturities starting at one month until the loan term expires in November 2017.
In January 2015, RaySearch's CFO, Anders Martin-Löf, announced that he would be leaving the company in April to become CFO at another company. Anders retained his areas of responsibility as CFO until he left RaySearch in April. His duties are currently being performed by an interim CFO and a process to find a permanent successor has been initiated.
In February 2015, it was announced that Westdeutsches Protonentherapiezentrum Essen (WPE), a unit of the University Hospital Essen in Germany, had started to use RaySearch's treatment planning system RayStation for clinical treatment. WPE is the first university-based proton therapy in Germany and was the first clinic to choose RayStation as a treatment planning system.
Total sales for 2014 increased 39.5 percent year-on-year and amounted to SEK 285.2 M (204.5). Sales consist of license revenues via direct sales and partners, as well as support revenues. The total number of licenses sold via direct sales and partners amounted to 2,172 (1,700) and license revenues in 2014 totaled SEK 256.1 M (179.9). The rise in license revenues was due to increased revenues from direct sales of RayStation and higher product sales from the partnerships with IBA Dosimetry and Varian. In 2014, support revenues rose to SEK 29.1 M (24.5).
Operating expenses, excluding exchange-rate gains and losses, declined SEK 19.6 M compared with 2013 to SEK 204.2 M. The decrease in operating expenses was mainly due to 2013 being charged with the high legal fees and settlement costs arising from the patent process with Prowess, which was finalized in early 2014. However, marketing and personnel costs for sales and service rose, due to the focus on direct sales of RayStation. Other operating income and expenses refer to exchange-rate gains and losses, with the net of these amounting to income of SEK 10.0 M (expense: 0.3) in 2014. The increase was mainly due to the large proportion of accounts receivable denominated in USD, which strengthened substantially during the year.
In 2014, operating profit totaled SEK 79.4 M (loss: 25.7), corresponding to an operating margin of 27.8 percent (neg: 12.6).
Profit after tax was SEK 59.8 M (loss: 20.8), corresponding to earnings per share before and after dilution of SEK 1.75 M (loss: 0.61).
At December 31, 2014, 81 (76) employees were engaged in research and development. Research and development costs include payroll costs, consulting fees, computer equipment and premises. Before capitalization and amortization of development expenditures, research and development costs totaled SEK 92.5 M (91.5). In 2014, capitalized development costs totaled SEK 54.4 M (53.6). Amortization of capitalized development costs amounted to SEK 57.0 M (52.8) in 2014. After adjustments for capitalization and amortization of development expenditure, research and development costs totaled SEK 95.1 M (90.7). Refer to Note 16.
At December 31, 2014, cash and cash equivalents amounted to SEK 56.1 M, compared with SEK 38.2 M at December 31, 2013. On the same date, current receivables totaled SEK 156.6 M, compared with SEK 88.3 M at December 31, 2013. The receivables primarily comprised accounts receivable. The increase derived mainly from a substantial rise in sales, and the fact that a large proportion of sales occurred at the end of the period and the receivables had not yet matured by the end of the reporting period. In November, the company's credit facility was expanded from SEK 30 M to SEK 50 M, whereby chattel mortgages were increased to SEK 50 M. The credit facility comprises an overdraft facility of SEK 25 M and a revolving loan of up to SEK 25 M extending until November 4, 2017. SEK 25 M has been borrowed for a term of three months within the framework of the revolving loan.
Of the company's credit facility of SEK 25 M, SEK 3.8 M has been blocked as collateral for bank guarantees totaling EUR 0.4 M to MedAustron. The remaining SEK 21.2 M is unutilized.
In 2014, cash flow from operating activities rose to SEK 50.3 M (31.3), primarily due to improved earnings. Cash flow from investing activities was a negative SEK 57.8 M (neg: 56.5), which derived from investments in capitalized development expenditure. Cash flow from financing activities amounted to 24.3 (1.6) MSEK. Cash flow for the year amounted to SEK 16.8 M (neg: 23.7).
The company is dependent on trends in the USD and EUR exchange rates against the SEK, since most invoicing is in USD and EUR, while most costs are incurred in SEK. In 2014, revenues in USD were recognized at an average exchange rate of SEK 6.89, compared with SEK 6.51 in 2013. In 2014, revenues in EUR were recognized at an average exchange rate of SEK 9.18, compared with SEK 8.78 in 2013. Accordingly, currency effects had a positive impact on sales. At unchanged exchange rates, sales would have increased 32.9 percent compared with 2013. A sensitivity analysis of the currency exposure indicates that the impact on operating profit in 2014 of a change in the average USD exchange rate of +/- 10 percent is +/- SEK 14.1 M, and that the corresponding impact of a change in the average EUR exchange rate of +/- 10 percent is +/- SEK 7.7 M. The company pursues the currency policy established by the Board of Directors. Refer to the sensitivity analysis in Note 28.
Fixed assets primarily comprised capitalized development expenditure relating to the development of new versions of RaySearch's software products. This development expenditure is capitalized and amortized over a period of five years from when the products are released on the market. In 2014, investments in intangible fixed assets amounted to SEK 54.4 M (53.6) and investments in tangible fixed assets to SEK 9.2 M (2.9).
At year-end 2014, the number of employees in RaySearch was 136 (114). The average number of employees was 126 (107).
Employees have a high level of education; 12.7 percent have Ph.Ds and 85.9 percent have other university/technical institute education. At year-end, 35.2 percent of the company's employees were women and 64.8 percent men. RaySearch has an equal opportunities plan.
RaySearch's products comprise software with no significant environmental impact. The company has an established environmental policy.
Of the employees in the Swedish company, RaySearch Laboratories, the President, the Director of Sales and Marketing and the Director of Sales for Asia & Pacific are the only employees covered by a bonus program. However, other employees in Sweden participate in a profit-sharing foundation.
The profit-sharing foundation covers all employees, including senior executives, except for the President. An allocation to the profit-sharing foundation is made in a given year if the consolidated operating profit for the preceding year reached a level in excess of an operating margin of 20 percent. In such a case, the amount reserved is 10 percent of that part of the operating profit above the limit. The allocation has a maximum outcome of 30 percent of the dividend paid. If a dividend is not paid or if the operating margin does not reach 20 percent, no allocation is made. Since no dividend is proposed for the 2014 fiscal year, no provision has been made for the year.
Employees in RaySearch's foreign-based sales companies – RaySearch Americas, RaySearch Belgium, RaySearch France, RaySearch UK and RaySearch Germany – are covered by bonus schemes based on sales-related targets for each sales company.
The Board of Directors of RaySearch Laboratories consists of four members elected by the Annual General Meeting on May 27, 2014. The company's President is a member of the Board. The Board held seven meetings during 2014. The Board conducts its work in accordance with special rules of procedure and instructions that regulate the division of work between the Board and the President. At each scheduled meeting, the Board reviews specific reports and decision points. The Board considers strategic, structural and organizational issues, as well as research and development issues. The Board also addresses cooperation agreements, interim reports and the annual financial statements, as well as audit and budget-related issues. In addition to the President, who is the reporting party during Board meetings, other company employees also participate as required.
The President's remuneration and benefits for the 2014 fiscal year were approved by the Board of Directors. The President, in consultation with the Chairman of the Board, determined the remuneration of other senior executives. The Board has neither a Remuneration Committee nor a Nomination Committee.
The company's auditor attends at least one Board meeting each year.
A separate Corporate Governance Report has been prepared and is available on pp. 34–36.
RaySearch Laboratories AB (publ) is the Parent Company of the Group.
Since in all material respects the financial reporting of the Parent Company matches the financial reporting of the Group, the comments for the Group are also largely relevant for the Parent Company. However, capitalization of development expenditure and adjustments related to financial leasing are recognized in the Group but not in the Parent Company. In addition, the Parent Company invoices the subsidiary, RaySearch Americas, for licenses sold to American customers, which impacts the Parent Company but not the Group. Profit before tax amounted to SEK 59.6 M (loss: 5.6).
At December 31, 2014, the Parent Company had cash and cash equivalents amounting to SEK 47.9 M (26.3).
The company had no treasury stock in 2014.
RaySearch's share capital amounts to SEK 17,141,386.50. The total number of registered shares in the company at December 31, 2014 was 34,282,773, of which 11,324,391 shares were Class A and 22,958,382 Class B shares. The quotient value per share is SEK 0.50. All shares carry equal rights to the company's
assets and earnings. Each Class A share carries ten votes and each Class B share carries one vote at the Annual General Meeting (AGM). At December 31, 2014, the total number of votes in the company was 136,202,292. All shareholders entitled to vote at the AGM may vote for the full number of shares owned or represented by them, with no restrictions on voting rights.
At year-end 2014, the largest shareholders in RaySearch were Johan Löf, who owned 20.0 percent of the capital and 46.3 percent of the voting rights; Lannebo fonder, which owned 12.8 percent of the capital and 1.9 percent of the voting rights; Montanaro, which owned 8.2 percent of the capital and 2.1 percent of the voting rights, and Erik Hedlund who owned 5.2 percent of the capital and 11.7 percent of the voting rights.
The AGM has authorized the Board to decide on the issuance of new shares or acquisitions of treasury stock. The number of shares that may be issued pursuant to the authorization may not exceed the equivalent of 10 percent of the share capital. The shares may be issued either as a rights issue or by disapplying the preemptive rights of the shareholders, and may also be issued either as or not as a non-cash issue or an issue offsetting debt. The authorization is valid until the immediately following AGM.
To the knowledge of the Board of Directors of RaySearch, there are no shareholder agreements for either Class A or Class B shares. There are no special rules in the Articles of Association regarding appointment and removal of Board members or amendments to the Articles of Association. Should a public offer be tendered to acquire shares in the company, there is no agreement between the company and Board members or employees prescribing any payments should these persons resign, be given notice without reasonable grounds or should their employment cease.
The starting point for the Board is that remuneration and other conditions of employment for members of company management shall be on market terms. The principles for remuneration and other employment conditions for senior executives of the Swedish company RaySearch Laboratories AB during 2014 are described below.
The President has a fixed basic salary and variable remuneration. The variable remuneration amounts to 2.0 percent of the Group's profit before tax, subject to a maximum payment of six months' salary. In addition, the President is entitled to other customary benefits, such as a company car.
The President's salary is reviewed annually. This review is performed through negotiations between the President and the Chairman of the Board, after which the Chairman presents a proposal to the other Board members. The President is not present when the Board discusses and decides on this matter.
Other senior executives comprise the CFO, Director of Research, Director of Development, Director of Products, Director of Sales and Marketing, Director of Sales for Asia & Pacific, Director of Services and the General Counsel.
The Director of Sales and Marketing is to have a fixed basic salary plus variable remuneration. The variable remuneration corresponds to a certain proportion of global sales of RayStation.
The Director of Sales for Asia & Pacific is to have a fixed basic salary plus variable remuneration. The variable remuneration corresponds to a certain proportion of sales of RayStation in the Asia & Pacific region.
The CFO, Director of Research, Director of Development, Director of Products, the Director of Services and the General Counsel are to have a fixed basic salary but no variable remuneration.
The salaries of other senior executives are also to be reviewed annually. This is performed through negotiations between the President and the individual employee.
There is no specific incentive program for senior executives and no such program has been proposed. However, the senior executives, with the exception of the President, together with other employees are entitled to participate in the options and profit-sharing programs applied by the company.
All pension undertakings are defined-contribution plans. Retirement age for the President and other senior executives is 65, and the pension premium is equivalent to the Swedish ITP plan.
If the President chooses to terminate his employment, his term of notice will be six months; if the company terminates his employment, the term of notice will be 12 months. In both cases, the President is entitled to pay during the term of notice. Other senior executives are subject to a mutual three-month term of notice during which salary is paid.
Neither the President nor other senior executives are entitled to any severance pay, in the formal sense, if their employment ceases. However, as stated above, the President and other senior executives are entitled to salary during the notice period.
The Board proposes that the Board be permitted to deviate from the above guidelines if there are special reasons for such deviation.
For 2015, the same guidelines as for 2014 are proposed, except for the fact that the General Counsel is not included in the category of senior executives.
The Board has formulated the Group's financial risk management policy, which constitutes a framework of guidelines and regulations in the form of risk mandates and limits for financial activities. RaySearch is mainly subject to exchangerate risk, since the greater part of net sales is invoiced in USD and EUR while SEK accounts for the lion's part of costs. In accordance with the established financial policy, currency hedging has not been performed. The financial policy is updated at least once annually.
As a result of its activities, RaySearch is exposed to various operational risks, including the following: dependence on key persons, competition, legal disputes and strategic partnerships. RaySearch currently has partnerships with Philips, Nucletron, IBA, Varian, and Brainlab. If RaySearch were to lose one or more of these business partners, this could have a major impact on the company's sales, profit and financial position.
For more information about RaySearch's risks and risk management, refer to Note 28 on page 27.
Refer to Disclosures in the Corporate Governance Report on page 35.
RaySearch has undergone a strategic shift and transitioned from being exclusively dependent on partners to also selling directly to clinics, in parallel with the partner-based business model. The proprietary product RayStation has been launched successfully in the global market. Revenues from RayStation are growing sharply and now account for the majority of the company's revenues, at the same time as Raysearch still has only a small market share globally. Accordingly, the potential for growth in direct sales continues to be highly favorable. In parallel, cooperation with five business partners continues. Although these partnerships remain significant, their relative importance is expected to decline.
The following is at the disposal of the AGM:
| SEK 000s | |
|---|---|
| Retained earnings | 29,462 |
| Profit for the year | 45,980 |
| Total | 75,442 |
The Board and the President propose that SEK 75,442,000 be carried forward.
In accordance with the Board's dividend policy, RaySearch is to distribute about 20 percent of the Group's profit after tax to shareholders, provided that a healthy capital structure is maintained. However, since RaySearch has entered an expansive and capital-intensive development phase, the Board of Directors proposes that no dividend be paid for the 2014 fiscal year.
The Group's earnings and financial position are presented in the following income statements, balance sheets and financial position and cash flow statements, with accompanying notes to the financial statements.
| CONSOLIDATED INCOME STATEMENTS | |||||
|---|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2012 | 2011 | 2010 |
| Net sales | 285,217 | 204,470 | 182,087 | 126,103 | 117,728 |
| Cost of goods sold | -11,627 | -6,059 | -3,029 | -442 | -92 |
| Gross profit | 273,590 | 198,411 | 179,058 | 125,661 | 117,636 |
| Research and development expenditure | -95,069 | -90,720 | -78,657 | -57,575 | -53,500 |
| Other operating expenses | -99,161 | -133,412 | -77,855 | -40,462 | -24,263 |
| Operating profit/loss | 79,360 | -25,721 | 22,546 | 27,624 | 39,873 |
| Net financial items | -659 | 754 | 1,018 | 1,078 | 249 |
| Profit/loss before tax | 78,701 | -24,967 | 23,564 | 28,702 | 40,122 |
| Tax | -18,869 | 4,126 | -3,701 | -11,695 | -11,227 |
| Profit/loss for the year | 59,832 | -20,841 | 19,863 | 17,007 | 28,895 |
| Earnings per share before dilution | 1.75 | -0.61 | 0.58 | 0.50 | 0.84 |
| Earnings per share after dilution | 1.75 | -0.61 | 0.58 | 0.50 | 0.84 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |||||
| SEK 000s | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2010 |
| ASSETS | |||||
| Intangible fixed assets | 164,081 | 166,678 | 165,926 | 161,096 | 133,981 |
| Other fixed assets | 12,951 | 5,970 | 3,711 | 3,978 | 6,999 |
| Total fixed assets | 177,032 | 172,648 | 169,637 | 165,074 | 140,980 |
| Total current assets | 212,721 | 126,514 | 123,390 | 96,710 | 114,946 |
| TOTAL ASSETS | 389,753 | 299,162 | 293,027 | 261,784 | 255,926 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Shareholders' equity attributable to Parent Company shareholders | 251,548 | 196,601 | 217,553 | 196,697 | 196,762 |
| Liabilities | 138,205 | 102,561 | 75,474 | 65,087 | 59,164 |
| TOTAL EQUITY AND LIABILITIES | 389,753 | 299,162 | 293,027 | 261,784 | 255,926 |
| CONSOLIDATED CASH-FLOW STATEMENTS | |||||
| SEK 000s | 2014 | 2013 | 2012 | 2011 | 2010 |
| Cash flow from operating activities | 50,273 | 31,282 | 87,451 | 33,852 | 62,785 |
Cash flow from investing activities -57,844 -56,542 -54,165 -63,092 -50,791 Cash flow from financing activities 24,345 1,563 – -16,991 -16,991 Cash flow for the year 16,774 -23,697 33,286 -46,231 -4,997
| STATEMENT OF COMPREHENSIVE INCOME | |||
|---|---|---|---|
| SEK 000s | NOTE | 2014 | 2013 |
| Net sales | 2, 3 | 285,217 | 204,470 |
| Cost of goods sold | -11,627 | -6,059 | |
| Gross profit | 7 | 273,590 | 198,411 |
| Other operating income | 8 | 16,803 | 3,008 |
| Selling expenses | -78,433 | -53,024 | |
| Administrative expenses | 10 | -30,736 | -80,108 |
| Research and development expenditure | 10 | -95,069 | -90,720 |
| Other operating expenses | 9 | -6,795 | -3,288 |
| Operating profit/loss | 4, 5, 7, 11 | 79,360 | -25,721 |
| Financial income | 310 | 852 | |
| Financial expenses | -969 | -98 | |
| Net financial items | 12 | -659 | 754 |
| Profit/loss before tax | 78,701 | -24,967 | |
| Tax | 14 | -18,869 | 4,125 |
| Profit/loss for the year1 | 59,832 | -20,842 | |
| Other comprehensive income | |||
| Items to be reclassified to profit or loss | |||
| Translation difference of foreign operations for the year | -4,885 | 57 | |
| Items not to be reclassified to profit or loss | – | – | |
| Total comprehensive income for the year¹ | 54,947 | -20,785 | |
| Earnings per share before and after dilution | 15 | 1.75 | -0.61 |
1 100 percent attributable to Parent Company shareholders.
| SEK 000s NOTE |
Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| ASSETS | ||
| FIXED ASSETS | ||
| Intangible fixed assets | ||
| Capitalized development expenditure 16 |
164,081 | 166,678 |
| Software 17 |
0 | 0 |
| 164,081 | 166,678 | |
| Tangible fixed assets | ||
| Equipment, fixtures and fittings 18 |
12,951 | 5,567 |
| 12,951 | 5,567 | |
| Financial fixed assets | ||
| Deferred tax assets 23 |
– | 403 |
| 0 | 403 | |
| Total fixed assets | 177,032 | 172,648 |
| CURRENT ASSETS | ||
| Accounts receivable 20 |
147,810 | 80,918 |
| Tax receivable | 118 | 20 |
| Other receivables | 10 | 738 |
| Prepaid expenses and accrued income 21 |
8,698 | 6,607 |
| Cash and cash equivalents 22 |
56,085 | 38,231 |
| Total current assets | 212,721 | 126,514 |
| TOTAL ASSETS 29 |
389,753 | 299,162 |
| SEK 000s | NOTE | Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | |||
| Share capital | 17,141 | 17,141 | |
| Other contributed capital | 1,975 | 1,975 | |
| Retained earnings including net profit for the year | 232,432 | 177,485 | |
| Shareholders' equity attributable to Parent Company shareholders | 251,548 | 196,601 | |
| Total equity | 251,548 | 196,601 | |
| LIABILITIES | |||
| Deferred tax liabilities | 23 | 40,724 | 36,669 |
| Provisions | 25 | – | 21,950 |
| Other long-term liabilities | 6, 26 | 41,096 | – |
| Total long-term liabilities | 81,820 | 58,619 | |
| Provisions | 25 | – | 12,809 |
| Accounts payable | 9,034 | 6,925 | |
| Tax liabilities | 5,666 | 5,883 | |
| Other liabilities | 26 | 17,311 | 1,667 |
| Accrued expenses and deferred income | 27 | 24,374 | 16,658 |
| Total current liabilities | 56,385 | 43,942 | |
| Total liabilities | 138,205 | 102,561 | |
| TOTAL EQUITY AND LIABILITIES | 29 | 389,753 | 299,162 |
| Pledged assets | 30 | 53,800 | 37,500 |
| Contingent liabilities | – | – |
| Other contributed |
Translation | Retained earnings, including net loss |
|||
|---|---|---|---|---|---|
| SEK 000s | Share capital | capital | reserve | for the year | Total |
| Opening equity Jan. 1, 2013 | 17,141 | 1,975 | 912 | 197,525 | 217,553 |
| Transactions with shareholders | |||||
| Sales of treasury stock1 | 1,563 | 1,563 | |||
| Tax effect, sales of treasury stock | -1,730 | -1,730 | |||
| Total transactions with shareholders | -167 | -167 | |||
| Loss for the year | -20,842 | -20,842 | |||
| Other comprehensive income for the year | 57 | 57 | |||
| Comprehensive income/loss for the year | 57 | -20,842 | -20,785 | ||
| Closing equity Dec. 31, 2013 | 17,141 | 1,975 | 969 | 176,516 | 196,601 |
| Opening equity Jan. 1, 2014 | |||||
| Profit for the year | 59,832 | ||||
| Other comprehensive income for the year | -4,885 | ||||
| Comprehensive income/loss for the year | -4,885 | 59,832 | 54,947 | ||
| Closing equity Dec. 31, 2014 | 17,141 | 1,975 | -3,916 | 236,348 | 251,548 |
1 In October 2013, 246,894 of RayIncentive's shares were sold to the profit sharing foundation RayFoundation for a carrying amount corresponding to SEK 00.62 per share. The remaining 52,734 shares were sold on the market at an average price of SEK 26.97 per share to cover tax expenses related to the transaction. The tax charges comprised withdrawal taxation due to the sale to RayFoundation being completed at a price that was lower than the market price.
RaySearch's managed capital comprises shareholders' equity. Changes in managed equity are described above. For information on the terms and conditions for the Group's external borrowing, reference is made to Note 26.
RaySearch's long-term financial target is to have high sales growth and an EBIT margin exceeding 30 percent. This target will be achieved by establishing RaySearch as the leading global provider of treatment planning systems for radiation therapy.
RaySearch has the following dividend policy: The Board of Directors' intention is to pay as dividends approximately 20 percent of the Group's profit after tax on condition that a healthy capital structure is retained. The quotient value is SEK 0.50 per share.
The translation reserve includes all exchange-rate differences arising from the conversion of financial statements from foreign operations that prepare their financial statements in a currency other than the currency used in the consolidated financial statements. The Parent Company and the Group present their financial statements in SEK.
| SEK 000s NOTE |
2014 | 2013 |
|---|---|---|
| Operating activities | ||
| Profit/loss before tax | 78,701 | -24,967 |
| Adjusted for non-cash items¹ 10, 26 |
46,315 | 87,511 |
| Taxes paid | -15,247 | -3,596 |
| Cash flow from operating activities before changes in working capital | 109,769 | 58,949 |
| Cash flow from changes in working capital | ||
| Increase (-)/Decrease (+) in operating receivables | -48,391 | -26,646 |
| Increase (+)/Decrease (-) in operating liabilities | -11,105 | -1,021 |
| Cash flow from operating activities | 50,273 | 31,282 |
| Investing activities | ||
| Capitalized development expenditure 16 |
-54,426 | -53,576 |
| Acquisition of tangible fixed assets 18 |
-3,418 | -2,966 |
| Cash flow from investing activities | -57,844 | -56,542 |
| Financing activities | ||
| Sale of treasury stock | – | 1,563 |
| Loans raised | 25,000 | – |
| Amortization of financial leasing 6, 26 |
-655 | – |
| Cash flow from financing activities | 24,345 | 1,563 |
| Cash flow for the year | 16,774 | -23,697 |
| Cash and cash equivalents at the beginning of the year | 38,231 | 61,875 |
| Exchange-rate differences | 1,080 | 53 |
| Cash and cash equivalents at year-end | 56,085 | 38,231 |
1 These amounts include amortization of capitalized development costs of SEK 54 M (53), exchange-rate gains/losses of SEK 11.9 M (loss: 1.2) and for 2013 a provision of SEK 34.8 M for the legal patent settlement with Prowess.
Cash and cash equivalents comprise bank balances.
| SUPPLEMENTARY DISCLOSURE TO THE CASH-FLOW STATEMENT | ||
|---|---|---|
| GROUP | ||
| Dec. 31, 2014 | Dec. 31, 2013 | |
| Interest received | 310 | 852 |
| Interest paid | -969 | -98 |
| NOTE | 2014 | 2013 |
|---|---|---|
| 2, 3 | 250,363 | 179,178 |
| -7,223 | -809 | |
| 28 | 243,140 | 178,369 |
| 8 | 16,803 | 3,008 |
| -50,669 | -34,561 | |
| 10 | -30,912 | -80,085 |
| 10 | -92,472 | -91,516 |
| 9 | -6,795 | -3,288 |
| 4, 5, 7, 11 | 79,095 | -28,073 |
| 2,965 | 2,234 | |
| -1,400 | -58 | |
| 12 | 80,660 | -25,897 |
| 13 | -21,029 | 20,326 |
| 59,631 | -5,571 | |
| 14 | -13,651 | 403 |
| 45,980 | -5,168 | |
| BALANCE SHEET | |||
|---|---|---|---|
| SEK 000s | NOTE | Dec. 31, 2014 Dec. 31, 2013 | |
| ASSETS | |||
| FIXED ASSETS | |||
| Tangible fixed assets | |||
| Equipment, fixtures and fittings | 18 | 6,975 | 4,549 |
| Financial fixed assets | |||
| Participations in Group companies | 19 | 2,493 | 2,266 |
| Deferred tax assets | 23 | 0 | 403 |
| Total fixed assets | 9,468 | 7,218 | |
| CURRENT ASSETS | |||
| Current receivables | |||
| Accounts receivable | 20 | 91,656 | 60,819 |
| Receivables from Group companies |
79,989 | 47,590 | |
| Other receivables | 1,107 | 978 | |
| Prepaid expenses and | |||
| accrued income | 21 | 12,487 | 7,772 |
| Total current receivables | 185,239 | 117,159 | |
| Cash and bank balances | 22 | 47,935 | 26,305 |
| Total current assets | 233,174 | 143,464 | |
| TOTAL ASSETS | 242,642 | 150,682 |
| COMPREHENSIVE INCOME | ||
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Profit/loss for the year | 45,980 | -5,168 |
| Other comprehensive income | 0 | 0 |
| Comprehensive income/loss for the year | 45,980 | -5,168 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
|---|---|---|---|
| SEK 000s | NOTE | Dec. 31, 2014 Dec. 31, 2013 | |
| SHAREHOLDERS' EQUITY | |||
| Restricted equity | |||
| Share capital (11,324,391 Class A | |||
| shares, 22,958,382 Class B shares) | 17,141 | 17,141 | |
| Statutory reserve | 43,630 | 43,630 | |
| Total restricted equity | 60,771 | 60,771 | |
| Non-restricted equity | |||
| Retained earnings | 29,462 | 34,629 | |
| Profit/loss for the year | 45,980 | -5,168 | |
| Total unrestricted equity | 75,442 | 29,461 | |
| Total equity | 136,213 | 90,232 | |
| Untaxed reserves | 24 | 21,029 | – |
| Provisions | 25 | – | 21,950 |
| Long-term liabilities | |||
| Bank loans | 25,000 | – | |
| Other long-term liabilities | 11,853 | – | |
| Total long-term liabilities | 25, 26 | 36,853 | 0 |
| Current liabilities | |||
| Provisions | 25 | – | 12,809 |
| Accounts payable | 8,459 | 6,167 | |
| Liabilities to Group companies | 1,364 | 1,467 | |
| Tax liabilities | 1,992 | 3,099 | |
| Other liabilities | 26 | 19,682 | 1,612 |
| Accrued expenses and deferred | |||
| income Total current liabilities |
27 | 17,050 48,547 |
13,346 38,500 |
| TOTAL EQUITY AND LIABILITIES | 242,642 | 150,682 | |
| Pledged assets | 30 | 53,800 | 37,500 |
| Contingent liabilities | – | – |
| CASH FLOW STATEMENT | |||
|---|---|---|---|
| SEK 000s | NOTE | 2014 | 2013 |
| Operating activities | |||
| Profit/loss after financial items | 80,660 | -25,897 | |
| Adjusted for non-cash items¹ | 10, 26 | 1,634 | 36,140 |
| Taxes paid | -14,355 | -3,668 | |
| Cash flow from operating activities before changes in working capital |
67,939 | 6,575 | |
| Cash flow from changes in working capital | |||
| Increase (-)/Decrease (+) in operating receivables |
-68,080 | -33,019 | |
| Increase (+)/Decrease (-) in operating liabilities |
1,057 | -953 | |
| Cash flow from operating activities | 916 | -27,397 | |
| Investing activities | |||
| Acquisition of subsidiaries | -227 | – | |
| Acquisition of tangible fixed assets | -4,059 | -2,980 | |
| Cash flow from investing activities | -4,286 | -2,980 | |
| Financing activities | |||
| Loans raised | 25,000 | – | |
| Cash flow from financing activities | 26 | 25,000 | – |
| Cash flow for the year | 21,630 | -30,377 | |
| Cash and cash equivalents at the beginning of the year |
26,305 | 56,682 | |
| Cash and cash equivalents at year-end | 47,935 | 26,305 |
| Dec. 31, 2014 Dec. 31, 2013 | ||
|---|---|---|
| Interest received | 289 | 807 |
| Interest paid | -1,400 | -58 |
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | Retained earnings, including net profit for |
|||
|---|---|---|---|---|
| SEK 000s | Share capital | Statutory reserve | the year | Total |
| Opening equity Jan. 1, 2013 | 17,141 | 43,630 | 34,629 | 95,400 |
| Total comprehensive income for the year | -5,168 | -5,168 | ||
| Closing equity Dec. 31, 2013 | 17,141 | 43,630 | 29,461 | 90,232 |
| Total comprehensive income for the year | 45,980 | 45,980 | ||
| Closing equity Dec. 31, 2014 | 17,141 | 43,630 | 75,442 | 136,213 |
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the EU. In addition, the Swedish Financial Reporting Board's recommendation RFR 1:2 Supplementary Accounting Rules for Groups has been applied.
The Parent Company implements the same accounting policies as the Group except in those instances specified below under the section "Parent Company's accounting policies."
RaySearch Laboratories AB (publ) is a Swedish registered limited liability company headquartered in Stockholm. The Parent Company's shares are listed in the Small Cap segment of Nasdaq Stockholm. The address of the head office is Sveavägen 44, SE-111 34 Stockholm, Sweden.
The Parent Company's functional currency is the Swedish krona (SEK), which also constitutes the reporting currency for the Parent Company and the Group. This means that financial statements are presented in SEK. All amounts, unless otherwise specified, are rounded off to the nearest thousand.
Assets and liabilities are recognized at their historical cost. Preparing financial statements in accordance with IFRS requires that company management make assessments and estimates as well as assumptions that impact the application of the accounting policies and the recognized amounts of assets, liabilities, revenues and expenses. Actual results may vary from these estimates and assumptions.
The estimates and assumptions are reviewed regularly. Changes to estimates are recognized in the period the change is made if the changes affect only that period and in the current period and future periods if the changes affect both the current period and future periods.
In implementing IFRS, estimates made by company management that have a significant impact on the financial statements and estimates made that could involve significant adjustments to subsequent years' financial statements are described in greater detail on page 18.
The accounting policies specified below for the Group have been applied consistently during all periods presented in the Group's financial statements, unless otherwise stated below. The Group's accounting policies have been applied consistently in regards to the recognition and consolidation of the Parent Company and the subsidiaries.
A number of new or revised accounting standards and interpretations apply for the fiscal year commencing on January 1, 2014. The IFRS rules that became effective for the fiscal year commencing on January 1, 2014 had no impact on the consolidated financial statements.
A number of new or revised IFRS will come into effect in forthcoming fiscal years but were not applied in advance when preparing these financial statements. The IFRSs that are expected to impact, or that may impact, the Group's financial statements are described below. In addition to the IFRSs described below, no other changes approved by IASB at December 31, 2014 are expected to have any impact on the Group's financial statements.
IFRS 9 Financial Instruments becomes effective on January 1, 2018 and will then replace IAS 39 Financial Instruments: Recognition and measurement. The new standard has been revised in various components, one applying to recognition and measurement of financial assets, and financial liabilities. IFRS 9 classifies financial assets in three categories. Classification is determined on initial recognition on the basis of characteristics of the asset and the company's business model. The second component refers to hedge accounting. To a considerable extent, the new policies provide better conditions for recognition that provides a true and fair impression of a company's management of financial risks associated with financial instruments. Finally, new policies have been introduced in respect of impairment losses on financial assets, whereby the model is based on expected losses. The purpose of the new model for impairment losses includes the aim of having provisions for loan losses posted at an earlier stage. It remains unclear whether IFRS 9 will impact the Group. The EU has not yet approved the standard.
IFRS 15 Revenue from Contracts with Customers becomes effective on January 1, 2017 and will then replace all previously issued standards and interpretations addressing revenues (i.e. IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue – Barter Transactions Involving Advertising Services). IFRS 15 contains an integrated model for revenue recognition of customer contracts. The idea underlying the standard is that everything originates from a contract between two parties regarding the sale of a product or a service. Initially, a customer contract is to be identified, which on the part of the seller generates an asset (rights, a promise to provide compensation) and a debt (undertaking, a promise to transfer goods/services). According to the model, revenue must then be recognized thereby proving that the undertaking to deliver the promised goods or services to the customer is being fulfilled. The EU has not yet approved the standard. It remains unclear whether IFRS 15 will impact the Group. During the year, an inquiry will be launched to determine how the effects of the new standard could impact the Group.
Amendments to IAS 1 Presentation of Financial Statements, "Disclosure Initiative", become effective on January 1, 2016. The purpose of these amendments is to provide additional encouragement to companies to apply their professional judgment in determining what information to disclose and how to structure it in the financial statements. To facilitate this, a number of specific improvements have been done in the areas of materiality, disaggregation and subtotals, note structure, disclosure of accounting policies and presentation of items of other comprehensive income arising from equity accounted investments.
An operating segment is a part of the Group that conducts business activities from which it generates income and incurs costs, and for which independent financial information is available. The results of an operating segment are also monitored by the company's chief operating decision maker. In accordance with IFRS 8, segment information is provided for the Group only. Identifying reportable segments is based on the internal reporting to the chief operating decision maker, which is the President at Raysearch. In the internal reporting, the Group is a segment.
Fixed assets and long-term liabilities in the Parent Company and the Group essentially comprise amounts that are expected to be recovered or paid more than twelve months after the balance-sheet date. Current assets and current liabilities in the Parent Company and the Group essentially comprise amounts that the company expects to recover or receive payment for within twelve months of the balance-sheet date.
Subsidiaries are companies that are under the controlling influence of the Parent Company, RaySearch Laboratories. Controlling influence means that RaySearch is exposed to a variable return on its investments and can impact this return through its influence over the company. When determining whether a controlling influence exists, such factors as shares carrying potential voting rights are taken into consideration.
Subsidiaries are recognized in accordance with the purchase method. According to this method, the acquisition of a subsidiary is viewed as a transaction through which the Group indirectly acquires the subsidiary's assets and liabilities. The consolidated cost is determined through an acquisition analysis conducted in conjunction with the acquisition of the operation. In the analysis, the cost is determined for the shares or operations and for the fair value of the acquired identifiable assets and assumed liabilities. Transaction costs, with the exception of transaction costs arising from the issue of equity or debt instruments, are recognized directly in profit or loss for the year. The difference between the cost of subsidiary shares and the fair value of acquired assets and liabilities constitutes consolidated goodwill. When the difference is negative, it is recognized directly in profit or loss. Conditional purchase considerations are recognized in the consolidated financial statements at fair value, with changes in value recognized in profit or loss.
Receivables and liabilities, and revenues or costs and unrealized gains and losses arising from intra-Group transactions are eliminated in the consolidated financial statements. Unrealized losses are eliminated in the same manner as unrealized gains but only insofar as no impairment requirement exists.
Transactions in foreign currency are translated to the functional currency at the exchange rate prevailing on the transaction date. The functional currency is the currency in the primary economic environments in which the companies conduct their business operations. Monetary assets and liabilities in foreign currency are recalculated to the functional currency at the exchange rate prevailing on the closing day. Exchange rate differences arising in translation are recognized in profit for the year. Non-monetary assets and liabilities that are recognized at historic costs are translated to the exchange rate prevailing on the transaction date.
All translation differences that arise from currency translation of the results and financial position of Group companies from the company's functional currency to the Group's reporting currency are recognized in other comprehensive income and accrued in a separate component in equity. Assets and liabilities in foreign operations are translated to SEK based on the exchange rates applying at the balance sheet date, while revenue and cost items are translated using average exchange rate for the year.
Two types of revenue are included in net sales: licenses and support sales. Licenses and support are sold both via partners and directly to end customers. For license sales via partners, the partner is responsible for the end user's installation. For license sales directly to end customers, RaySearch is responsible for the customer's installation.
Revenue is recognized in profit and loss when it is probable that the future economic benefits will flow to the company and that these benefits can be reliably measured. All revenues are recognized at the fair value of the consideration received or receivable, less discounts granted, VAT and after the elimination of intra-Group transactions. Revenues are recognized as follows:
Cost of goods sold comprises costs of sold hardware and royalties for licensed software included in the company's software. Amortization of capitalized development expenditure is not included in cost of goods sold.
The company has received contributions from the EU for a research project, and from Västerbotten County Council pertaining to a joint research project. The contributions are recognized net against research and development expenditure. The contributions received do not add up to any significant amounts. The government assistance is not subject to any repayment obligation.
Financial income and expense comprise interest income on bank accounts and receivables and interest-bearing securities, dividend income and exchange rate differences.
Financial instruments are measured and recognized in the Group in accordance with the regulations of IAS 39.
Financial assets are recognized initially at the cost corresponding to the instrument's fair value plus transaction costs for all financial instruments. Subsequent recognition is based on how they are classified as below.
A financial asset or financial liability is recognized in the statement of financial position when the company becomes a party in accordance with the contractual terms and conditions of the instrument. Accounts receivable are recognized in the statement of financial position when the invoice is sent. Liabilities are recognized when the counterparty has performed and there is a contractual obligation to pay, even though the invoice has not yet been received. Accounts payable are recognized when the invoice is received.
A financial asset is derecognized from the statement of financial position when the rights of the contract are realized, expire or the company loses control over them. The same applies for components of a financial asset. A financial liability is derecognized from the statement of financial position when the obligation in the contract is fulfilled or extinguished in some other manner. The same applies for components of a financial liability.
The fair value of listed financial assets corresponds to the listed bid price on the balance sheet date. At each reporting date, the company performs tests to determine if there is any objective indication that a financial asset or a group of financial assets requires impairment.
IAS 39 classifies financial instruments in categories. The classification depends on the intention behind the acquisition of the financial instrument. Company management determines the classification at the original time of acquisition. The following categories are held by the company:
"Loan receivables and accounts receivable" are financial assets that have determined or determinable payments that are not listed on an active market. These items are measured at cost. Accounts receivable are recognized at the amount expected to flow in, meaning less a deduction for doubtful receivables.
Comprises financial liabilities not held for trading. The Group's accounts payable are included in this category. These items are measured at cost.
Cash and cash equivalents comprise cash funds and on-demand deposits with banks and similar institutions as well as short-term liquid investments with maturities of less than three months, which are subject to only an insignificant risk of value fluctuations. Changes in value are recognized in net financial items. Short-term liquid investments are recognized in the category "Financial assets measured at fair value in profit and loss."
Tangible fixed assets are recognized in the consolidated financial statements at cost less accumulated depreciation and any impairment. The cost includes the purchase price and costs directly attributable to the asset to deliver it in place and in condition to be used in the manner intended by the acquisition. The accounting policies for impairment are presented below.
The carrying amount of a tangible fixed asset is derecognized from the statement of financial position upon disposal or divestment or when no future economic benefit is expected from use or disposal/divestment of the asset. The gain or loss arising from the disposal or divestment of an asset is the difference between the selling price and the asset's carrying amount less direct selling expenses. Gains and losses are recognized as "Other operating income/ expenses."
IAS 17 applies to leased assets. Lease agreements are classified in the consolidated financial statements as a finance or operating lease. A finance lease is a lease that essentially transfers all the risks and rewards associated with ownership of an asset to the lessee. If this is not the case, it is an operating lease.
Under an operating lease, the leasing fee is expensed over the term based on use, which can differ from what is paid de facto as leasing fees during the year.
Assets held under financial lease agreements are recognized as fixed assets and commitments for future payments are recognized as a liability in the balance sheet.
The Group has both operating and financial lease agreements in accordance with these rules.
Depreciation is based on the original cost less any residual value. Depreciation is straight-line over the estimated useful life of the asset. Estimated useful lives: – computers 3–5 years
The residual value and useful life of an asset are tested annually.
Expenditure for research activities that relate to obtaining new scientific or technical knowledge is recognized as an expense as incurred.
Expenditure for development activities, whereby the research results or other knowledge is applied to achieve new or improved products or processes, is recognized as an intangible asset in the statement of financial position, provided the product or process is technically and commercially feasible and the company has sufficient resources to complete development, and is subsequently able to use or sell the intangible asset. The carrying amount includes all directly attributable expenses, such as personnel costs and cost of premises. Other expenses for development are expensed in profit for the year as they arise. In the statement of financial position, capitalized development expenditure is recognized at cost less accumulated amortization and any impairment losses.
Other intangible assets acquired by the company are recognized at cost less accumulated amortization and any impairment losses.
Amortization is recognized in profit for the year on a straight-line basis over the estimated useful lives of intangible assets. The useful lives are reviewed at least once annually. Capitalized development expenditure for which amortization has not commenced is tested for impairment annually or whenever circumstances indicate that the asset may be impaired. Intangible assets with determinable useful lives are amortized from the date on which the assets are available for use. The estimated useful lives are:
The carrying amounts of the Group's assets are tested on each balance-sheet date to determine whether there is any indication of impairment. If any such indication is found, the recoverable amount of the asset is calculated as the higher of the value in use and the fair value less selling costs. An impairment loss is recognized if the recoverable amount is less than the carrying amount. The recoverable amount is determined based on discounted estimated future cash flow from the cash-generating units.
Holdings of own shares (treasury stock) and other equity instruments are recognized as a reduction of shareholders' equity. Acquisitions of such instruments are recognized as deductions from retained earnings. Proceeds from the divestment of equity instruments are recognized as an increase in retained earnings. Any transaction costs are charged directly against shareholders' equity.
Dividends are recognized as a liability after approval of the dividend by the Annual General Meeting.
Earnings per share are calculated on the basis of consolidated earnings attributable to the Parent Company's shareholders and on the weighted average number of shares outstanding during the year. When calculating earnings per share after dilution, profit and the average number of shares are adjusted to take into account the impact of dilutive potential common shares, which during the reported periods originated from options issued to employees. Dilution resulting from options affects the number of shares and arises only when the exercise price is lower than the share price. Dilution increases as the difference between the exercise price and the share price rises.
Short-term remuneration of employees is estimated without discounting and is expensed when the related services have been received.
A provision is recognized for the expected cost of the profit-sharing and bonus payments when the Group becomes subject to a legal or informal obligation to make such payments because the services performed by the employees and the obligation can be measured reliably.
Plans in which the company's commitment is limited to the fees the company has undertaken to pay are classified as defined-contribution plans. In such cases, the size of the employee's pension depends on the fees the company pays into the plan or to an insurance company and the capital return the fees generate. Accordingly, it is the employee who carries the actuarial risks (that the remuneration will be lower than expected) and the investment risk (that the invested assets will be adequate to provide the expected remuneration). The company's commitments to the plans are expensed against profit for the year as they are vested by the employees performing the services for the company over a period of time. The Group only has defined-contribution pensions. The Group's obligation for each period is determined by the amounts that the Group is to contribute for the actual period.
An expense associated with the termination of employment is only recognized when the company is obligated to terminate an employment before the normal date.
The profit-sharing foundation covers all employees of the Parent Company including senior executives, except the President. An allocation to the profit-sharing foundation is made in a given year if operating profit reached a level exceeding an operating margin of 20 percent. In such a case, the amount reserved is 10 percent of the part of the operating profit above the limit. The allocation has a maximum outcome of 30 percent of the dividend paid. If a dividend is not paid or if the operating margin does not reach 20 percent, no allocation is made. The allocation is recognized as a pension cost. For further information, refer to Note 4.
Income tax comprises current and deferred tax. Income tax is recognized in profit or loss for the year except when the underlying transactions are recognized in other comprehensive income or in shareholders' equity, whereby the associated tax effect is recognized in other comprehensive income or in shareholders' equity.
Current tax is the tax payable or refundable for the current year, using the tax rates enacted or substantively enacted on the balance-sheet date. Current tax also includes any adjustment to tax payable in respect of previous years.
Deferred tax is calculated using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences in subsidiaries and associated companies are not taken into account when they will probably not be reversed in the foreseeable future. The amount of deferred tax is based on the expected manner of realization or settlement of the underlying assets and liabilities. Deferred tax is computed using tax rates enacted or substantially enacted on the balance sheet date.
A deferred tax asset relating to deductible temporary differences and loss carry-forwards is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. The value of deferred tax assets is reduced when it is no longer considered probable that they will be utilized.
Provisions are recognized in the balance sheet when the Group has an obligation (legal or constructive) due to a past event and since it is probable that an outflow of resources associated with economic benefits will be required to settle the obligation and the amount can be reliably estimated. Provisions are also made for events after the balance-sheet date to the extent they provide evidence of conditions that existed at the balance-sheet date, such as court rulings on disputes. If the Group expects to receive compensation corresponding to a provision made, through an insurance contract for example, the compensation is recognized as an asset in the balance sheet when it is virtually certain that compensation will be received. If the effect of the time value for the future payment is considered significant, the provision's value is determined by calculating the present value of the expected future payment using a discount rate before tax that reflects the current market assessment of the time value and any risks associated with the obligation. The gradual increase in the provisional amount entailed by the present value calculation is recognized as an interest expense in profit and loss.
A contingent liability is recognized when there is a possible obligation that arises from past events and whose existence will only be confirmed by one or more uncertain future events, or when there is an obligation that is not recognized as a liability or provision because it is not probable that an outflow of resources will be required.
The Parent Company prepared its Annual Report in accordance with the Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The Swedish Financial Reporting Board's statements pertaining to listed companies were also applied. Under RFR 2, the Parent Company in its annual report for the legal entity shall apply all the IFRS and interpretations adopted by the EU to the extent possible within the framework of the Annual Accounts Act and the Pension Obligations Vesting Act, also considering the relationship between financial reporting and taxation. The recommendation states the exceptions from and additions to IFRS that should be made. The differences between the accounting policies applied in the consolidated financial statements and those applied by the Parent Company are presented below. The accounting policies presented below for the Parent Company have been applied consistently in all periods presented in the Parent Company's financial statements.
Unless otherwise specified below, the Parent Company's accounting policies during 2014 changed in the same manner as for the Group.
For the Parent Company, the terms balance sheet and cash-flow statement are used for the statements that the Group calls statement of financial position and statement of cash flows. The income statement and balance sheet for the Parent Company are presented in the manner specified in the Annual Accounts Act, while the statement of comprehensive income, the statement of changes in equity and the cash-flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows, respectively.
All expenditure for research and development is recognized in the Parent Company's income statement. Such reporting is permitted in accordance with RFR 2. In the consolidated financial statements, these development expenditures are recognized as assets in accordance with IAS 38.
In contrast to the Group, untaxed reserves in the Parent Company are recognized without being divided into shareholders' equity and deferred tax liabilities. Similarly in the income statement, the Parent Company does not report part of appropriations as deferred tax assets.
Participations in subsidiaries are recognized in the Parent Company financial statements in accordance with the cost method. This entails that transaction expenses are included in the carrying amount.
Conditional purchase considerations are measured on the basis of the probability of the purchase consideration being paid. Any changes in the provision/ receivable are to be added to/reduced from cost.
Bargain acquisitions that match future anticipated losses and expenses are reversed over the periods in which the losses and expenses are expected to arise.
The Group invests considerable amounts in research and development, parts of which are recognized as intangible assets, refer also to Note 10. Recognition of future development expenditure as an asset requires assumptions that the product is expected to become technically and commercially viable and that future economic benefits are probable. Capitalized development expenditure is amortized over a maximum estimated useful life of five years. The estimated sales volume and useful life, respectively, may be retested, which may result in impairment.
Identifying reportable segments is based on the internal reporting to the chief operating decision maker, which is the President at Raysearch. In the internal reporting, the Group is a segment.
| Tangible fixed assets | Intangible fixed assets | |||
|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Sweden | 11,247 | 4,549 | 164,081 | 166,678 |
| US | 1,424 | 924 | – | – |
| Belgium | 158 | 34 | – | – |
| France | 55 | 31 | – | – |
| UK | 21 | 29 | – | – |
| Germany | 46 | – | – | – |
| 12,951 | 5,567 | 164,081 | 166,678 |
The distribution is specified by the company's registered offices.
RaySearch's products are sold directly to end customers and via partners. The information presented regarding segment revenues refers to the geographic areas grouped by where end customers are located.
| North Europe and the |
||||||||
|---|---|---|---|---|---|---|---|---|
| Sweden | America | Asia | rest of the world | |||||
| % | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Sales | 0.3 | 0.2 | 31.0 | 34.2 | 32.0 | 27.3 | 36.7 | 38.3 |
The division of sales is based solely on license revenues and not on support revenues since no regional information is available for support revenues, which also comprise a small portion of the total.
Sales of RayStation directly to end customers and via distributors amounted to SEK 190,229 (79,872), corresponding to 67 percent. Of the company's five commercial partners, Philips and Varian accounted for the largest share of sales. In 2014, sales through Philips totaled SEK 49,629,000 (52,095,000) and through Varian SEK 19,196,000 (17,853,000).
| GROUP | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 | |
| License revenues | 256,107 | 179,930 | 189,264 | 138,928 | |
| Support revenues | 29,110 | 24,540 | 25,718 | 23,251 | |
| Intra-Group revenues | – | – | 35,381 | 16,999 | |
| 285,217 | 204,470 | 250,363 | 179,178 |
| GROUP | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 | ||
| Salaries and remuneration |
88,225 | 69,318 | 63,661 | 55,409 | ||
| Pension costs, defined contribution plans |
14,524 | 11,161 | 14,252 | 10,967 | ||
| Social security expenses | 18,353 | 18,864 | 16,058 | 17,497 | ||
| 121,102 | 99,343 | 93,971 | 83,873 |
In the Parent Company, the average number of employees was 106 (95), of whom 66 (64) were men and 40 (38) women. In the Group, the average number of employees was 126 (107), of whom 83 (76) were men and 44 (41) women. The average number of employees per country in the Group was 106 (95) in Sweden, 15 (11) in the US, 2 (2) in Belgium, 2 (1) in France, 1 (1) in the UK and 1 (0) in Germany.
There are no women on the Board or any female senior executives who are active in the Group or Parent Company.
| 2014 | 2013 | |||||
|---|---|---|---|---|---|---|
| Senior executives and | Senior executives and | |||||
| GROUP | Board members (12) | Other employees | Board members (11) | Other employees | ||
| Salaries and other remuneration | 15,382 | 72,843 | 11,034 | 58,284 | ||
| (of which, bonus) | 2,137 | 1,372 | 156 | 837 | ||
| Social security expenses | 7,878 | 24,999 | 5,949 | 23,641 | ||
| (of which, pension costs) | 2,822 | 11,701 | 2,484 | 8,676 | ||
| Group total | 23,260 | 97,842 | 16,983 | 81,925 |
| 2014 | 2013 | |||
|---|---|---|---|---|
| Senior executives and | Senior executives and | |||
| PARENT COMPANY | Board members (12) | Other employees | Board members (11) | Other employees |
| Salaries and other remuneration | 15,382 | 48,278 | 11,034 | 44,375 |
| (of which, bonus) | 2,137 | 0 | 156 | – |
| Social security expenses | 7,878 | 22,432 | 5,949 | 22,274 |
| (of which, pension costs) | 2,822 | 11,429 | 2,484 | 8,483 |
| Parent Company total | 23,260 | 70,710 | 16,983 | 66,649 |
| 2014 | Basic salary, Board fees |
Variable remuneration |
Other benefits | Pension costs | Total |
|---|---|---|---|---|---|
| Chairman of the Board Erik Hedlund | 435 | – | – | – | 435 |
| Board member Carl Filip Bergendal | 156 | – | – | – | 156 |
| Board member Hans Wigzell | 156 | – | – | – | 156 |
| President Johan Löf | 4,188 | 1,577 | 413 | 552 | 6,730 |
| Other senior executives (9) | 7,601 | 560 | 296 | 2,270 | 10,727 |
| Total | 12,536 | 2,137 | 709 | 2,822 | 18,204 |
| Basic salary, | Variable | ||||
|---|---|---|---|---|---|
| 2013 | Board fees | remuneration | Other benefits | Pension costs | Total |
| Chairman of the Board Erik Hedlund | 410 | – | – | – | 410 |
| Board member Carl Filip Bergendal | 141 | – | – | – | 141 |
| Board member Hans Wigzell | 141 | – | – | – | 141 |
| President Johan Löf | 3,793 | – | 354 | 486 | 4,633 |
| Other senior executives (7) | 6,391 | 156 | 215 | 1,997 | 8,759 |
| Total | 10,876 | 156 | 569 | 2,483 | 14,084 |
No financial instruments or other share-related remuneration have been paid.
The President has a fixed basic salary and variable remuneration. The variable remuneration amounts to 2.0 percent of the Group's profit before tax, which is capped at the equivalent of six months' salary. Other senior executives have a fixed basic salary with the exception of the Director of Sales and Marketing, who has both a fixed basic salary and variable remuneration. For the employees of foreign subsidiaries, variable remuneration related to sales and achievement of established targets is paid. In 2008, the bonus was removed for all employees in the Swedish company except the President and replaced by a profit-sharing foundation. The profit-sharing foundation covers all employees in the Swedish company, including senior executives, except for the President. A provision is allocated to the profit-sharing foundation in a given year if the operating profit in the preceding year reached a level exceeding an operating margin of 20 percent. In such a case, the amount allocated is 10 percent of the portion of the operating profit that exceeds the limit level. The allocation has a maximum outcome of 30 percent of the dividend paid. If a dividend is not paid or if the operating margin does not reach 20 percent, no allocation is made.
All pension undertakings are defined-contribution plans. The age of retirement for the President is 65 and the pension premium is equivalent to the Swedish ITP plan. The pension commitments for other senior executives are to be equivalent to the Swedish ITP plan. The age of retirement is 65 for all other senior executives. No other pension obligations exist.
If the President chooses to terminate his employment, the term of notice is six months; if the employer terminates his employment, the term of notice is 12 months. In either case, the President is not entitled to any special severance pay, but in both cases the President receives salary during the term of notice. The company and other senior executives have a mutual term of notice of three months during which salary is paid. Members of the Board do not receive any severance pay.
The decision-making process regarding remuneration and benefits is described in greater detail in the Administration Report.
GROUP
| audit assignment | 270 | 577 |
|---|---|---|
| Tax consultancy services | 60 | 25 |
| Other services | 303 | 368 |
| 1,168 | 1,285 | |
| KPMG | ||
| Auditing assignments | – | 250 |
| Auditing assignments in addition to the | ||
| audit assignment | – | – |
| Tax consultancy services | – | 35 |
| Other services | – | – |
| – | 285 | |
| PARENT COMPANY | ||
| EY | ||
| Auditing assignments | 470 | 265 |
| Auditing assignments in addition to the | ||
| audit assignment | 195 | 577 |
| Tax consultancy services | 55 | 25 |
| Other services | 290 | 348 |
| 1,010 | 1,215 | |
| KPMG | ||
| Auditing assignments | – | 244 |
| Auditing assignments in addition to the | ||
| audit assignment | – | – |
| Tax consultancy services | – | 35 |
| Other services | – | – |
| – | 279 |
NOTE 5 AUDITORS' FEES AND COMPENSATION FOR EXPENSES
SEK 000s 2014 2013
| Present | |||
|---|---|---|---|
| Future | value of | ||
| Financial leasing debt | minimum | minimum | |
| falls due for payment as follows: | lease fees | Interest | lease fees |
| Within one year | 1,383 | 137 | 1,246 |
| 2–5 years | 3,100 | 103 | 2,997 |
| 4,483 | 240 | 4,243 |
There was no financial leasing in 2013.
| GROUP | ||
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Opening balance | 0 | 0 |
| Acquisitions during the year | 4898 | – |
| Amortization | -655 | – |
| Closing balance | 4,243 | 0 |
| 4,243 | 0 |
At December 31, 2014, earnings in the Group were charged with costs attributable to financial leasing with amortization accounting for 626 (0) and interest expenses for 141 (0).
Leasing of company vehicles to members of Group management. Leasing of furniture and other office equipment; agreement expires on January 31, 2020.
| 7 NOTE OPERATING EXPENSES SPECIFIED BY TYPE OF COSTS |
||||
|---|---|---|---|---|
| GROUP | PARENT COMPANY | |||
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Cost of goods sold¹ | -11,627 | -6,059 | -7,223 | -809 |
| Personnel costs | -87,295 | -68,637 -103,098 | -94,566 | |
| Amortization and impairment losses | -58,194 | -53,926 | -1,634 | -1,598 |
| Exchange-rate losses | -6,795 | -3,288 | -6,795 | -3,288 |
| Other costs | -58,748 -101,289 | -69,321 -109,997 | ||
| -222,659 -233,199 -188,071 -210,258 |
1 Cost of goods sold comprises costs of sold hardware and royalties for licensed software included in the company's software. Amortization of capitalized development expenditure is not included in cost of goods sold. Amortization and capitalization of development expenditure are included in research and development expenses.
2 Amortization of capitalized development expenditure is included in amortization and impairment losses in the table above.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Exchange-rate gains on operating | ||||
| receivables/liabilities | 16,803 | 3,008 | 16,803 | 3,008 |
| 16,803 | 3,008 | 16,803 | 3,008 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Exchange-rate gains on operating receivables/ |
||||
| liabilities | -6,795 | -3,288 | -6,795 | -3,288 |
| -6,795 | -3,288 | -6,795 | -3,288 |
NOTE 10 DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF TANGIBLE AND INTANGIBLE FIXED ASSETS
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Intangible fixed assets | ||||
| Depreciation/amortization and | ||||
| impairment according to function | ||||
| Administrative expenses | – | – | – | – |
| Research and development | -57,023 | -52,824 | – | -44 |
| -57,023 | -52,824 | – | -44 | |
| Tangible fixed assets | ||||
| Depreciation according to function | ||||
| Administrative expenses | -1,171 | -565 | -1,005 | -1,017 |
| Research and development | – | -537 | -629 | -537 |
| -1,171 | -1,102 | -1,634 | -1,554 | |
| Total depreciation/amortization | -58,194 | -53,926 | -1,634 | -1,598 |
| GROUP | PARENT COMPANY | ||
|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 |
| 11,537 | 10,953 | 10,453 | 10,093 |
| 11,235 | 11,268 | 10,315 | 10,408 |
| 63,692 | 63,640 | 61,449 | 61,490 |
| – | – | – | – |
| 74,927 | 74,908 | 71,764 | 71,898 |
Significant operating agreements pertain to two leases, of which one expires on December 31, 2014 and the other extends from December 1, 2014 until December 31, 2019. The baseline rent is indexed annually.
| 12 NOTE FINANCIAL INCOME AND EXPENSES |
||||
|---|---|---|---|---|
| GROUP | PARENT COMPANY | |||
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Interest income on cash and cash equivalents |
136 | 637 | 114 | 592 |
| Interest income on accounts receivable and loan receivables |
178 | 203 | 178 | 203 |
| Other interest income | -4 | 12 | -4 | 12 |
| Other financial income | – | – | – | – |
| Interest income Group companies | – | – | 2,677 | 1,427 |
| 310 | 852 | 2,965 | 2,234 | |
| Interest expense on other liabilities1 | -969 | -97 | -1,400 | -58 |
| -969 | -97 | -1,400 | -58 | |
| Net | -659 | 754 | 1,565 | 2,176 |
1 Interest expense for the credit facility is based on STIBOR T/N +1.50 percent
| -21,029 | 20,326 | |
|---|---|---|
| Accelerated depreciation for tax purposes, equipment | -956 | -433 |
| Tax allocation reserve, reversals for the year | – | 20,759 |
| Tax allocation reserve, provision for the year | -20,073 | – |
| SEK 000s | 2014 | 2013 |
| GROUP | ||
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Current tax expense | ||
| Tax expense for the year | -14,411 | -574 |
| -14,411 | -574 | |
| Deferred tax expense/income | ||
| Deferred tax for temporary differences regarding capitalized development expenditure |
571 | -175 |
| Untaxed reserves/deferred tax attributable to loss carryforwards |
-5,029 | 4,875 |
| -4,458 | 4,700 | |
| Total tax expense/income recognized in the Group | -18,869 | 4,126 |
| RECONCILIATION OF EFFECTIVE TAX | GROUP | |
| SEK 000s | 2014 | 2013 |
| Recognized profit before tax | 78,701 | -24,967 |
| Tax at current tax rate of 22% | -17,314 | 5,493 |
| Effect of other tax rates for foreign companies | 15 | 10 |
| Effect of non-taxable income | – | 3 |
| Effect of non-deductible costs | -1,589 | -1,271 |
| Standard interest on tax allocation reserve | – | -68 |
| Losses for which deferred tax has not | ||
| previously been recognized | 19 | -41 |
| Recognized effective tax | -18,869 | 4,126 |
| PARENT COMPANY | ||
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Current tax expense | ||
| Tax expense for the year | -13,248 | – |
| Change in deferred tax | -403 | 403 |
| Total tax expense recognized in the Parent Company | -13,651 | 403 |
| RECONCILIATION OF EFFECTIVE TAX | PARENT COMPANY | |
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Recognized profit before tax | 59,631 | -5,571 |
| Tax at current tax rate of 22% | -13,119 | 1,226 |
| Effect of non-taxable income | 1 | – |
| Effect of non-deductible costs | -533 | -755 |
| Standard interest on tax allocation reserve | 0 | -68 |
| Recognized effective tax | -13,651 | 403 |
| Profit for the year attributable to Parent Company shareholders (before and after dilution) |
59,832 | -20,841 |
|---|---|---|
| Earnings per share before/after dilution | 1.75 | -0.61 |
| Average number of shares outstanding during the period |
34,282,773 34,049,820 | |
| Number of shares outstanding at year-end | 34,282,773 34,282,773 | |
| Sales of treasury stock October 2013 | – | 299,628 |
| Number of shares outstanding at beginning of the year |
34,282,773 33,983,145 | |
| Of which treasury stock | – | -299,628 |
| Total number of shares at beginning of the year | 34,282,773 34,282,773 | |
| Dividend per share | – | – |
| 2014 | 2013 |
Treasury stock at December 31, 2012 amounted to 299,628 Class B shares in RaySearch Laboratories through RayIncentive AB. Shares in RayIncentive were allocated already before RaySearch's listing on the stock exchange in 2003 to be used for incentive programs for employees. Since all existing warrants programs had expired, the Board decided to transfer the remaining shares to the profit-sharing foundation, RayFoundation. For further information about the profit-sharing foundation, refer to Note 4. In October 2013, 246,894 of RayIncentive's shares were sold to RayFoundation for a carrying amount corresponding to SEK 00.62 per share. The remaining 52,734 shares were sold on the market at an average price of SEK 26.97 per share to cover tax expenses related to the transaction. Thereafter, RayIncentive had no remaining shares in RaySearch and, at December 31, 2013 and December 31, 2014, there was no treasury stock. No potential common shares that could generate dilution exist.
| GROUP | ||
|---|---|---|
| Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 |
| Accumulated cost | ||
| Opening balance | 373,601 | 320,025 |
| Internally developed assets | 54,426 | 53,576 |
| Closing balance | 428,027 | 373,601 |
| Accumulated amortization/depreciation and impairment according to plan |
||
| Opening balance | -206,923 | -154,143 |
| Amortization according to plan for the year | -57,023 | -52,780 |
| Impairment losses for the year | – | – |
| Closing balance | -263,946 | -206,923 |
| Closing carrying amount | 164,081 | 166,678 |
Capitalized development expenditure pertains to the development of new versions of RaySearch's software products. This development expenditure is capitalized and amortized over a period of five years from the time when the products are released on the market.
| GROUP AND | ||
|---|---|---|
| PARENT COMPANY | ||
| Dec. 31, | Dec. 31, | |
| SEK 000S | 2014 | 2013 |
| Accumulated cost | ||
| Opening balance | 3,658 | 3,658 |
| New acquisitions | – | – |
| Closing balance | 3,658 | 3,658 |
| Accumulated amortization | ||
| Opening balance | -3,658 | -3,614 |
| Amortization according to plan for the year | – | -44 |
| Closing balance | -3,658 | -3,658 |
| Closing carrying amount | 0 | 0 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Equipment, tools, fixtures and fittings |
||||
| Accumulated cost | ||||
| Opening balance | 17,682 | 14,724 | 17,043 | 14,064 |
| New acquisitions | 9,184 | 2,958 | 4,059 | 2,979 |
| Divestments and disposals |
– | – | – | – |
| Closing balance | 26,866 | 17,682 | 21,102 | 17,043 |
| Accumulated depreciation according to plan |
||||
| Opening balance | -12,115 | -11,013 | -12,494 | -10,940 |
| Divestments and disposals |
– | – | – | – |
| Depreciation according to plan for the year¹ |
-1,800 | -1,102 | -1633 | -1554 |
| Closing balance | -13,915 | -12,115 | -14,127 | -12,494 |
| Closing carrying amount |
12,951 | 5,567 | 6,975 | 4,549 |
¹ Of the Group's depreciation, SEK 537,000 (958,000) was capitalized.
Tangible fixed assets include financial leasing in a carrying amount of SEK 4,272,000 (0).
| 19 NOTE PARTICIPATIONS IN GROUP COMPANIES |
||||
|---|---|---|---|---|
| PARENT COMPANY | ||||
| Dec. 31, | Dec. 31, | |||
| SEK 000s | 2014 | 2013 | ||
| Accumulated cost | ||||
| Opening balance | 2,266 | 2,171 | ||
| Acquisition | 227 | 95 | ||
| Impairment loss on subsidiaries | – | – | ||
| Closing balance | 2,493 | 2,266 |
Specification of Parent Company's and Group's holdings of participations in Group companies.
| NUMBER/ | ADJUSTED EQUITY/ | ||
|---|---|---|---|
| GROUP COMPANY/CORP. | PARTICIPA | PROFIT FOR THE | CARRYING |
| REG. NO/REG. OFFICE | TIONS IN % | YEAR¹ | AMOUNT |
| RayIncentive AB, 556635-8247, |
|||
| Stockholm, Sweden | 100.0 | 2,505 / 23 | 2,009 |
| RayIncentive Americas Inc Delaware, USA |
100.0 | -30,282 / -907 | 0 |
| RaySearch Belgium Sprl Brussels, Belgium |
99.0 | 445 / 73 | 170 |
| RaySearch France SAS Paris, France |
100.0 | 259 / 117 | 87 |
| RaySearch UK Ltd London, England |
100.0 | 118 / 86 | 0 |
| RaySearch Germany GmbH Berlin, Germany |
100.0 | 294 / 53 | 227 |
| 2,493 |
² Adjusted equity refers to the share of the company's equity, including the equity component of untaxed reserves. Profit for the year refers to the ownership share of the company's profit after tax, including the equity share in the change for the year in untaxed reserves.
At December 31, 2014, the company made provisions of SEK 2,295,000 (0) for doubtful debts. The company estimates that the credit risk will remain very low and that the credit quality is high.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| AGE ANALYSIS, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, |
| CARRYING AMOUNT | 2014 | 2013 | 2014 | 2013 |
| Not past due | 100,443 | 67,413 | 73,172 | 52,295 |
| Past due 0–30 days | 13,349 | 5,559 | 4,890 | 2,571 |
| Past due 30–90 days | 18,431 | 3,901 | 9,340 | 2,923 |
| Past due more than | ||||
| 90 days | 15,587 | 4,047 | 4,253 | 3,031 |
| Total | 147,8101 | 80,918 | 91,656 | 60,8191 |
¹ At March 31, 2015, SEK 58,699,000 has been paid in.
| PARENT COMPANY | ||
|---|---|---|
| AGE ANALYSIS, RECEIVABLES FROM GROUP | Dec. 31, | Dec. 31, |
| COMPANIES | 2014 | 2013 |
| Not past due | 20,783 | 1,530 |
| Past due 0–30 days | 11,264 | 3,255 |
| Past due 30–90 days | 0 | 2,284 |
| Past due more than 90 days | 47,942 | 40,521 |
| Total | 79,989 | 47,590 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Prepaid rent | 4,584 | 2,565 | 4,437 | 2,378 |
| Prepaid insurance | 263 | 212 | 233 | 182 |
| Accrued interest income | – | – | 4,073 | 1,396 |
| Other items | 3,851 | 3,830 | 3,744 | 3,816 |
| 8,698 | 6,607 | 12,487 | 7,772 |
| 22 NOTE CASH AND CASH EQUIVALENTS |
|||||
|---|---|---|---|---|---|
| GROUP | PARENT COMPANY | ||||
| Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||
| SEK 000s | 2014 | 2013 | 2014 | 2013 | |
| The following sub-compo nents are included in cash and cash equivalents: |
|||||
| Cash and bank balances | 56,085 | 38,231 | 47,935 | 26,305 |
Cash and cash equivalents comprise bank balances. Of the company's credit facility of SEK 25 M, SEK 3.8 M has been blocked as collateral for bank guarantees totaling EUR 0.4 M to MedAustron. The remaining SEK 21.2 M is unutilized.
56,085 38,231 47,935 26,305
| GROUP | ||||
|---|---|---|---|---|
| Dec. 31, | Dec. 31, | |||
| SEK 000s | 2014 | 2013 | ||
| Deferred tax liabilities for: | ||||
| Intangible assets | ||||
| Opening balance | 36,669 | 36,494 | ||
| Change during the year | -571 | 175 | ||
| Closing balance | 36,098 | 36,669 | ||
| Attributable to untaxed reserves | ||||
| Opening balance | 0 | 4,472 | ||
| Change during the year | 4,626 | -4,472 | ||
| Closing balance | 4,626 | 0 | ||
| Carrying amount | 40,724 | 36,669 | ||
| Deferred tax assets in respect of loss carry-forwards |
||||
| Opening balance | 403 | 0 | ||
| Change during the year | -403 | 403 | ||
| Closing balance | 0 | 403 |
Valuation is based on the nominal tax rate.
| PARENT COMPANY | ||
|---|---|---|
| Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 |
| Accumulated depreciation/amortization in excess of plan: |
||
| Opening balance, January 1 | 0 | -433 |
| Reversals/depreciation/amortization in excess of plan for the year |
956 | 433 |
| Closing balance, December 31 | 956 | 0 |
| Untaxed reserves | ||
| Allocated at taxation in 2015 | 20,073 | 0 |
| 21,029 | 0 |
| 25 NOTE |
PROVISIONS |
|---|---|
| GROUP AND PARENT COMPANY Dec. 31, Dec. 31, |
||
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Opening balance | 34,759 | 0 |
| Provision for the year | – | 34,759 |
| Reclassification as liability | -34,759 | |
| Closing balance | 0 | 34,759 |
| of which, short-term component | – | 12,809 |
| of which long-term component | – | 21,950 |
The provision for 2013 pertains to the long and short-term component for Prowess in accordance with the legal settlement of disputes. The provision was reclassified in 2014 to long-term and current liabilities. The payment plan is divided into four stages. The first date of payment is April 30, 2014 for an amount of USD 1 M, the second date of payment is November 1, 2014 for an amount of USD 1 M, the third date of payment is November 1, 2015 for an amount of USD 2 M and the final date of payment is November 1, 2016 for the remaining amount of USD 1.6 M. The total amount of USD 5.6 M is at nominal value. The long-term liability does not carry any interest as per agreement and is therefore calculated according to present value. During the year, the currency and discount effect had a negative impact of SEK 4.6 M on profit from financial items. Payment for the year connected to the settlement amounted to SEK 13.6 M.
| 26 NOTE LONG-TERM LIABILITIES |
||
|---|---|---|
| Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 |
| Opening balance | 0 | 0 |
| Raising of bank loans ¹ | 25,000 | – |
|---|---|---|
| Reclassification from provision ² | 11,853 | – |
| Debt pertaining to financial leasing | 4 243 | – |
| Closing balance Group | 41,096 | 0 |
| Less financial leasing | -4,243 | – |
| Closing balance Parent Company | 36,853 | 0 |
¹ RaySearch has signed a revolving loan for up to SEK 25 M. SEK 25 M has been borrowed over a term of three months within the framework of the revolving loan. The bank loan carries STIBOR interest rates and a margin that reflects the current interest rate of 2.76 percent, which will be paid quarterly. The bank loan is subject to covenants regarding the fulfillment of key figures connected to earnings and shareholders' equity. The revolving loan is repayment free until May 18, 2015, after which RaySearch could choose to repay or continue with the loan until November 4, 2017 at the latest.
2 The total debt to Prowess for dispute settlement amounted to 27,085, of which 11,853 is long-term debt and 15,232 is short-term debt. The short-term debt is recognized as other liabilities. For the maturity structure, see Note 25.
| GROUP AND PARENT COMPANY | ||||||
|---|---|---|---|---|---|---|
| WITHIN 1 | 1–3 | 3–12 | 1–2 | 2–5 | ||
| MONTH | MONTHS | MONTHS | YEARS | YEARS | TOTAL | |
| Interest | ||||||
Bank loan 0 200 600 800 1600 3200 The loan extends until November 4, 2017. In the table, the revolving loan is expected to continue and the prevailing interest rate has been used.
For more information about financial leasing, see Note 6.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |
| SEK 000s | 2014 | 2013 | 2014 | 2013 |
| Social security expenses and vacation costs |
8,385 | 6,532 | 7,735 | 6,074 |
| Other personnel-related costs |
4,579 | 3,506 | 1,861 | 1,841 |
| Deferred income | 4,430 | 1,285 | 826 | 223 |
| Legal expenses | 0 | 1,348 | 0 | 1,348 |
| Other items | 6,980 | 3,987 | 6,628 | 3,860 |
| 24,374 | 16,658 | 17,050 | 13,346 |
The Group is exposed to various types of financial risks through its operations. The term "financial risks" refers to fluctuations in the company's earnings and cash flow due to changes in exchange rates, interest rates, financing and credit risks. The Board has formulated the Group's financial risk management policy, which constitutes a framework of guidelines and regulations in the form of risk mandates and limits for financial activities.
Foreign-exchange risk refers to the risk of fluctuations in the value of a financial instrument because of changes in exchange rates. Foreign-exchange risk derive from changes in expected and contractual payment flows (transaction exposure), receivables and liabilities in foreign currency (translation exposure) and financial exposure in the form of currency risk associated with payment flows and investments. The Group has mainly had net payments in USD and EUR entailing a foreign-exchange risk. No hedging has been made.
Translated to SEK, the Group's transaction exposure is distributed among the following currencies:
| 237,255 | 170,618 | |
|---|---|---|
| Other currencies | 19,684 | 6,720 |
| USD | 140,952 | 96,541 |
| EUR | 76,619 | 67,357 |
| Dec. 31, 2014 | Dec. 31, 2013 | |
The consolidated income statement includes exchange-rate gains of SEK 16,803,000 and exchange-rate losses of SEK 6,795,000. This generates an effect of SEK 10,008,000 (neg: 280,000) on operating profit and 0 (0) on net financial items. Transaction exposure has not been hedged.
| Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|
| 103 229 | 38 011 |
| -667 | -2 912 |
| 102,562 | 35,099 |
| Dec. 31, 2014 | Dec. 31, 2013 |
| 28,781 | 38 165 |
| -770 | -59 |
| 28,011 | 38,106 |
| Dec. 31, 2014 | Dec. 31, 2013 |
| 15 800 | 4 241 |
| -2 886 | -18 |
| 12,914 | 4,223 |
Because most invoicing is in USD and EUR while most costs are incurred in SEK, the company is exposed to trends in the USD and EUR exchange rates against the SEK. In 2014, revenues in USD were recognized at an average exchange rate of SEK 6.89, compared with SEK 6.51 in 2013. In 2014, revenues in EUR were recognized at an average exchange rate of SEK 9.18, compared with SEK 8.78 in 2013. Accordingly, currency effects had a positive impact on sales. At unchanged exchange rates, sales would have increased 32.9 percent compared with 2013. A sensitivity analysis of the currency exposure indicates that the impact on operating profit in 2014 of a change in the average USD exchange rate of +/- 10 percent was +/- SEK 14.1 M, and that the corresponding impact of a change in the average EUR exchange rate of +/- 10 percent was +/- SEK 7.7 M. The company has a debt of USD 3.6 M due to the settlement with Prowess. During the year, the currency effect had a negative impact of SEK 2.0 M on profit from financial items.
Interest-rate risk corresponds to the impact on earnings that a possible change in interest rates would cause. At December 31, 2014, an interest-rate change of +/-1 percent would have impacted the Group's profit before tax by approximately +/- SEK 0.4 M (0.8).
RaySearch's cash and cash equivalents are liquid funds in bank accounts carrying an effective interest rate of 0.31 percent. In accordance with the company's financial policy, investments are made in K1-rated interest-bearing securities.
Financing risk refers to the risk that the company will need to borrow funds in a strained credit market. The Group's operations are financed mainly with shareholders' equity. The Group works actively with its liquidity monitoring and continuously updates forecasts for the expected liquidity trend. This facilitates necessary action in a timely manner. Based on currently known conditions, the assessment is that the Group has sufficient liquidity to conduct its operations in accordance with current plans.
The company's credit risk consists of credit risk for receivables from Philips, Nucletron, IBA, Varian and Brainlab, which were the company's five commercial partners with which products have been launched, and clinics to which the company directly sold systems. The company assesses that this very low level of credit risk will continue and that the quality of credit is high.
Liquidity risk refers to the risk that liquid assets may be insufficient for the activities planned and the risk that difficulties may arise in obtaining or repaying external loans. The Group works actively with its liquidity monitoring and continuously updates forecasts for the expected liquidity trend. This facilitates necessary action in a timely manner. Based on currently known conditions, the assessment is that the Group has sufficient liquidity to conduct its operations in accordance with current plans. RaySearch's cash and cash equivalents are invested in liquid assets with low credit risk.
The Group is exposed to various operational risks through its operations, including the following:
RaySearch's future development is partly dependent on a number of key individuals with specialized expertise remaining in the organization. The loss of one or more of these key individuals could have an adverse impact on the Group's operations. Some employees have been participating in incentive programs and many employees currently hold shares in RaySearch.
RaySearch's main competitors are Varian, Elekta and Philips. These have large development divisions and invest major resources in developing products that compete with RayStation's products. They also utilize their positions as hardware suppliers that sell turnkey solutions with both software and hardware to customers. RaySearch currently sells only software and cannot compete in that type of business.
RaySearch currently has partnerships with Philips, Nucletron, IBA, Varian, and Brainlab. RaySearch also has several research partnerships. If RaySearch were to lose one or more of these partners, this could have a major impact on the company's sales, profit and financial position. RaySearch is continuously engaged in discussions with several partners concerning further collaboration.
Of the three primary forms of cancer treatment – surgery, radiation therapy and chemotherapy – radiation therapy is the form that has increased most for curative groups over the past 20 years. RaySearch estimates that radiation therapy will continue to be an important treatment option in the future.
Should the US insurance system choose not to compensate clinics for treatment involving adaptive radiation therapy, this would have a negative impact on RaySearch.
Medical technology products require regulatory approval. Should any product that any of RaySearch's partners plan to sell not receive regulatory approval, this would have a negative impact on RaySearch.
RaySearch develops highly advanced products, for which RaySearch assumes the risk from the development stage through to launch, which could result in higher costs than anticipated. This is offset through continuous project follow-up and quality assurance.
NOTE 29 DISCLOSURES ON FINANCIAL INSTRUMENTS IN THE GROUP
| Dec. 31, 2014 | Loan receivables/ accounts receivable |
Total financial assets |
Non-financial assets |
Total |
|---|---|---|---|---|
| Assets | ||||
| Intangible assets | – | 0 | 164,081 | 164,081 |
| Tangible assets | – | 0 | 12,951 | 12,951 |
| Accounts receivable | 147,810 | 147,810 | – | 147,810 |
| Tax receivable | – | 0 | 118 | 118 |
| Other receivables | – | 0 | 10 | 10 |
| Prepaid expenses and accrued income | 4,073 | 4,073 | 4,625 | 8,698 |
| Cash and cash equivalents | 56,085 | 56,085 | – | 56,085 |
| 207,968 | 207,968 | 181,785 | 389,753 |
| Financial liabilities | |||
|---|---|---|---|
| measured at | Non-financial | ||
| Dec. 31, 2014 | amortized cost | liabilities | Total |
| Equity and liabilities | |||
| Shareholders' equity | – | 251,548 | 251,548 |
| Deferred tax liabilities | – | 40,724 | 40,724 |
| Other long-term liabilities | 41,096 | – | 41,096 |
| Accounts payable | 9,034 | – | 9,034 |
| Tax liabilities | – | 5,666 | 5,666 |
| Other liabilities | 15,302 | 2,009 | 17,311 |
| Accrued expenses and deferred income | 11,410 | 12,964 | 24,374 |
| 76,842 | 312,911 | 389,753 | |
| Loan receivables/ | Total financial | Non-financial | ||
|---|---|---|---|---|
| Dec. 31, 2013 | Accounts receivable | assets | assets | Total |
| Assets | ||||
| Intangible assets | – | 0 | 166,678 | 166,678 |
| Tangible assets | – | 0 | 5,567 | 5,567 |
| Accounts receivable | 80,918 | 80,918 | – | 80,918 |
| Tax receivable | – | 0 | 20 | 20 |
| Other receivables | – | 0 | 1,141 | 1,141 |
| Prepaid expenses and accrued income | 1,396 | 1,396 | 5,211 | 6,607 |
| Cash and cash equivalents | 38,231 | 38,231 | – | 38,231 |
| 120,545 | 120,545 | 178,617 | 299,162 |
| Financial liabilities | |||
|---|---|---|---|
| measured at | Non-financial | ||
| Dec. 31, 2013 | amortized cost | liabilities | Total |
| Equity and liabilities | |||
| Shareholders' equity | – | 196,601 | 196,601 |
| Deferred tax liabilities | – | 36,669 | 36,669 |
| Provisions, long-term component | – | 21,950 | 21,950 |
| Provisions, short-term component | – | 12,809 | 12,809 |
| Accounts payable | 6,925 | – | 6,925 |
| Tax liabilities | – | 5,883 | 5,883 |
| Other liabilities | – | 1,667 | 1,667 |
| Accrued expenses and deferred income | 7,461 | 9,197 | 16,658 |
| 14,386 | 284,776 | 299,162 |
Fair value measurement contains a measurement hierarchy for the inputs used to measure fair value. The three levels are:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities to which the company has access on the measurement date.
Level 2: Inputs other than the quoted prices in Level 1, which are directly or indirectly observable for the access or liability. This may also include inputs other than quoted prices that are observable for the access or liability, such as interest-rate levels, yield curves, volatility and multiples.
Level 3: Unobservable inputs for the asset or liability. This level takes into account the assumptions that a market participant would apply when pricing the asset or liability, including risk assumptions.
For all of the above items, with the exception of borrowing, the carrying amount is an approximation of the fair value, which is why these items have not been divided into levels according to the measurement hierarchy. Since the loans carry variable interest and other external borrowing carries fixed interest, which in all significant respects is adjudged to correspond to prevailing market interest rates, the assessment is that the carrying amounts of loans essentially matches the fair value.
| Dec. 31, | Dec. 31, | |
|---|---|---|
| SEK 000s | 2014 | 2013 |
| Pledged assets | ||
| Chattel mortgages | 50,000 | 20,000 |
| Restricted bank funds/restricted credit facility | 3,800 | 17,500 |
| Total | 53,800 | 37,500 |
In November, the company's credit facility was expanded from SEK 30 M to SEK 50 M, whereby chattel mortgages were increased to SEK 50 M. The credit facility comprises an overdraft facility of SEK 25 M and a revolving credit facility of up to SEK 25 M. SEK 25 M has been borrowed over a term of three months within the framework of the revolving loan. Of the company's credit facility of SEK 25 M, SEK 3.8 M has been blocked as collateral for bank guarantees totaling EUR 0.4 M to MedAustron.
For a description of transactions with senior executives, refer to Note 4. The Parent Company has a related-party relationship with its subsidiaries, see Note 19.
| SUMMARY PARENT COMPANY | Sales of goods/services |
Purchase of goods/services from |
Receivables from Group companies |
Liabilities to Group companies |
|
|---|---|---|---|---|---|
| SEK 000s | to Group companies | Group companies | Dividends | Dec. 31 | Dec. 31 |
| 2014 | 35,381 | –11,161 | – | 79,989 | 1,364 |
| 2013 | 16,999 | –4,872 | – | 47,590 | 1,467 |
In January 2015, RaySearch's CFO, Anders Martin-Löf, announced that he would be leaving the company in April to become CFO at another company. Anders retained his areas of responsibility as CFO until he left RaySearch in April. His duties are currently being performed by the interim CFO, Peter Thysell, and a process to find a permanent successor has been initiated.
In February 2015, it was announced that Westdeutsches Protonentherapiezentrum Essen (WPE), a unit of the University Hospital Essen in Germany, had started to use RaySearch's treatment planning system RayStation for clinical treatment. WPE is the first university-based proton therapy in Germany and was the first clinic to choose RayStation as a treatment planning system.
The Board of Directors hereby provides assurance that the annual accounts were prepared in accordance with generally accepted accounting policies in Sweden and that the consolidated financial statements were prepared in accordance with the international accounting standards referred to in the European Parliament and Council regulation (EC) no. 1606/2002 dated July 19, 2002 on the application of international accounting standards. The Annual Report and the consolidated financial statements provide a true and fair view of the Group's and Parent Company's financial position and earnings. The Administration Report for the Parent Company and the Group provides a fair summary of the Parent Company's and Group's operations, financial position and earnings, and describes the significant risks and uncertainties faced by the Parent Company and the companies in the Group.
As stated above, the annual accounts and the consolidated financial statements were approved for publication by the Board of Directors on April 22, 2015. The statement of comprehensive income and statement of financial position, and the Parent Company's income statement and balance sheet will be submitted for adoption at the Annual General Meeting on May 28, 2015.
Erik Hedlund Chairman of the Board
Johan Löf President/CEO and Board member
Carl Filip Bergendal Board member
Hans Wigzell Board member
Our audit report was submitted on April 22, 2015
Ernst & Young AB
Per Hedström Authorized Public Accountant
We have audited the annual accounts and consolidated financial statements for RaySearch Laboratories AB (publ) for 2014. The company's annual accounts and consolidated financial statements are included on pages 1–32.
The Board of Directors and the President are responsible for preparing an annual report that provides a true and fair view in accordance with the Swedish Annual Accounts Act, and consolidated financial statements that provide a true and fair view in accordance with International Financial Reporting Standards, such as those adopted by the EU and the Swedish Annual Accounts Act, and for the internal control that the Board of Directors and the President deem necessary for the preparation of annual reports and consolidated financial statements that are free of material misstatement, whether they be due to impropriety or error.
Our responsibility is to express an opinion on the annual accounts and consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the annual accounts and consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated financial statements. The auditor chooses such procedures based on such assessments as the risk of material misstatement in the annual accounts and consolidated financial statements, whether such misstatement is due to fraud or error. In making these risk assessments, the auditor considers internal control measures relevant to the company's preparation and fair presentation of the annual accounts and consolidated financial statements in order to design audit procedures that are appropriate taking the circumstances into account, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the President, as well as evaluating the overall presentation of the annual accounts and consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present a fair view, in all material respects, of the financial position of the Parent Company as of December 31, 2014 and of its financial performance and cash flows for the year in accordance with the Annual Accounts Act. The consolidated financial statements have been prepared in accordance with the Annual Accounts Act and present a fair view, in all material respects, of the financial position of the Group as of December 31, 2014 and its financial performance and cash flows for the year in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is compatible with the other parts of the Annual Report and consolidated financial statements.
We therefore recommend that the annual general meeting of shareholders adopt the income statement and balance sheet for the Parent Company and the statement of comprehensive income and statement of financial position for the Group.
In addition to our audit of the annual accounts and consolidated financial statements, we have examined the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the President of RaySearch Laboratories (publ) for the year 2014.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the President are responsible for administration under the Companies Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined whether the proposal complies with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated financial statements, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the President is liable to the company. We also examined whether any member of the Board of Directors or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the President be discharged from liability for the financial year.
Stockholm, April 22, 2015 Ernst & Young AB
Per Hedström Authorized Public Accountant
Corporate governance in RaySearch is based on the Swedish Companies Act, the Swedish Annual Accounts Act, the Nasdaq Stockholm Issuers Rules, the Articles of Association and RaySearch's application of the Swedish Corporate Governance Code (the "Code"). Companies listed on Nasdaq Stockholm are obligated to apply the Swedish Code of Corporate Governance. The aim of the Code is to improve the governance of Swedish companies and, in particular, to ensure that companies are managed in the best interests of their shareholders. In turn, a high level of corporate governance enhances confidence in listed companies among capital market players and the public at large. For more information on the Code, see www.bolagsstyrning.se.
The term "apply the Code" entails that companies must actively make a decision regarding their approach to the various regulations of the Code. If a company chooses to deviate from the Code's rules, it must explain why in accordance with the principle of "comply or explain."
Since the Code's rules are primarily designed for larger companies with diversified ownership, they may be unnecessarily burdensome and difficult to apply for smaller companies with a more concentrated ownership structure. RaySearch is a small company with a majority shareholder who is also actively involved in the company in his role as President. In most cases, this is the reason why RaySearch has opted not to observe certain Code regulations.
RaySearch submits Corporate Governance Reports in connection with the submission of annual reports for each fiscal year.
Following motions by the shareholders, the Board of Directors and the audit firm (with an auditor-in-charge) are elected at the Annual General Meeting (AGM) for a term of office until the close of the following AGM. The date of the AGM is announced no later than in conjunction with the third-quarter interim report and is simultaneously published on the company's website. Shareholders representing 44.3 percent of the total number of shares and 69.8 percent of the total number of votes in the company participated in RaySearch's AGM on May 27, 2014 in Stockholm. RaySearch's President, Chairman of the Board Erik Hedlund, Member of the Board Carl Filip Bergendal and RaySearch's auditors attended the AGM.
RaySearch is permitted to issue shares in two class, known as Class A and Class B. In voting at the AGM, each Class A share carries ten votes and each Class B share carries one vote. The total number of shares in RaySearch is currently 34,282,773, of which 11,324,391 are Class A and 22,958,382 are Class B shares. There are no special provisions regarding the function of the AGM in the Articles of Association or, to the knowledge of RaySearch, in shareholder agreements.
The AGM on May 27, 2014 resolved, in accordance with the Board's motion, to authorize the Board, on one or several occasions during the period up to the following AGM, to make decisions on the issue of new Class B shares. The number of shares that may be issued pursuant to the authorization may not exceed the equivalent of 10 percent of the registered share capital on the date of the official notice of the AGM, which was SEK 17,141,386.50. The shares may be issued either as a rights issue or by disapplying the preemptive rights of the shareholders, and may also be issued either as or not as a non-cash issue or an issue offsetting debt. The purpose of the authorization is to increase the company's financial flexibility. Disapplying the existing shareholders' preferential rights, the issue price is to be the market price. Other terms and conditions may be decided by the Board of Directors.
The company diverges from the Code's rules by not appointing a Nomination Committee. In view of the ownership structure, the Board believes that such a committee would not fulfill any function, but would simply give rise to additional costs.
RaySearch's Board of Directors makes decisions on matters regarding the company's strategic direction, structure and organization and research and development matters. The Board also addresses partnership agreements, interim reports, the annual accounts, auditing issues, budget and key policies. Moreover, it is the Board's duty to ensure that correct information is provided to the stock market. The Board's work is regulated in such documents as the Companies Act, the Articles of Association and the formal work plan adopted by the Board. Under the Articles of Association, the Board shall comprise no fewer than three and no more than eight members, with no more than three deputies.
After the AGM on May 27, 2014, the Board of RaySearch comprised four members elected by the AGM, and no deputies.
The AGM on May 27, 2014 elected Erik Hedlund as Chairman of the Board until the next Annual General Meeting. The Board fulfills the independence requirement for Board members pursuant to the Code. Once each fiscal year, the Board undertakes an evaluation of its own performance using a systematic and structured process. The evaluation provides a basis for the Board's future work. The Board
| OWNERSHIP STRUCTURE – SHAREHOLDERS WITH AT LEAST 10% OF TOTAL VOTES | ||||||
|---|---|---|---|---|---|---|
| Name | Class A shares | Class B shares | Total shares | Share capital % | Votes % | |
| Johan Löf | 6,243,084 | 618,393 | 6,861,477 | 20.0 | 46.3 | |
| Erik Hedlund | 1,567,089 | 228,699 | 1,795,788 | 5.2 | 11.7 | |
| Anders Brahme | 1,390,161 | 35,989 | 1,426,150 | 4.2 | 10.2 | |
| Others | 2,124,057 | 22,075,301 | 24,199,358 | 70.6 | 31.8 | |
| Total | 11,324,391 | 22,958,382 | 34,282,773 | 100.0 | 100.0 |
also evaluates the work of the President but, in this respect, the company deviates from the Code in that the President may participate in the evaluation. The reason being that the President is a Board member and the Board believes that the President's participation will not affect the evaluation negatively.
The Board's work is governed by a formal work plan that is adopted annually and regulates such issues as the decision-making structure in the company, the Board meeting schedule and the duties of the Chairman. The Board as a whole addresses internal control issues that are its responsibility. In addition, the company's auditors personally report their observations from their audit and their assessment of the internal control to the Board each year. The Board held seven meetings during the year, and all Board members attended each of the meetings. Considering the size of the Board, it was not deemed necessary to introduce a separate delegation of duties among Board members. For the same reason, no committees were established.
RaySearch deviates from the Code by not establishing a Remuneration Committee. This is because the size of the Board and the company does not warrant such a committee. The remuneration of the President is determined by the Board (without the participation of the President) following negotiations between the President and the Chairman of the Board, while remuneration of other senior executives is determined following negotiations between the President and the individual employees.
Shareholders with a direct or indirect shareholding in RaySearch who represent at least one-tenth of the votes in the company are listed in the table on the preceding page.
RaySearch's Articles of Association do not contain any restrictions on how many votes each shareholder may cast at the AGM. Nor do RaySearch's Articles of Association contain any specific provisions on the appointment and dismissal of Board members, or amendments to the Articles of Association.
RaySearch also deviates from the Code by not appointing an Audit Committee. This is because the size of the Board and the company does not warrant any such committee. The Board as a whole performs the duties of an Audit Committee.
Under the Swedish Code of Corporate Governance, the Board is to ensure that RaySearch has sound internal control and continuously remains informed of, and evaluates, the effectiveness of the company's internal control system. A key feature of the control environment is that the organization, decision-making procedures, responsibility and authority are clearly defined and communicated in governance documentation. The Board, in its annual assessment of the possible need for a separate function to review the company's internal financial controls, has concluded that there is no need for an internal audit function.
As part of the effort to create and maintain an effective control environment, the Board has established a number of fundamental and significant documents for financial reporting, including special rules of procedure for the Board and instructions for the President. The Board has delegated to the President to maintain the control environment as directed by the Board. The Board also determines the authorization instructions that delegate the President's authorization responsibilities to other senior executives at RaySearch. The President submits regular reports to the Board and executive management of RaySearch containing comments on the business situation and the financial performance compared with the budget and forecast. In addition, reports are also submitted by RaySearch's auditor. The internal control also builds upon a management system based on RaySearch's organization and manner of conducting business with clearly defined roles and areas of responsibility, and delegated authority. Governing documents, such as policies and guidelines, also have an important function in the control structure.
RaySearch's executive management performs regular risk assessments to identify significant risks relating to financial reporting. As regards financial reporting, the primary risk is deemed to be material misstatement of the financial statements, such as the recognition and measurement of assets, liabilities, income and expenses or other abnormalities. Fraud and loss through embezzlement is another risk. Risk management is incorporated into each process and various methods are used to measure and minimize risks and to ensure that the risks to which RaySearch is exposed are managed in line with established regulations, instructions and monitoring procedures. The purpose of this is to reduce potential risks and promote accurate accounting, reporting and disclosures.
The purpose of the control activities is to manage the risks that the Board and the company's executive management consider significant for the operations, internal control and financial reporting. The control structure includes distinct roles that permit effective allocation of responsibility of specific control functions aimed at the timely identification and prevention of the risk of reporting errors. Such control functions include clear decision-making procedures for major decisions such as acquisitions, other types of major investments, divestments, agreements and analytical monitoring. Another significant task for RaySearch's management is to implement, further develop and maintain the company's control procedures as well as conducting internal checks aimed at critical business issues. Process managers at various levels are responsible for the implementation of controls in respect of financial reporting. The closing accounts and reporting processes include checks in respect of valuations, reporting principles and estimates. The regular analyses made of financial reporting are highly important in ensuring that the financial reports do not include any material errors. RaySearch's CFO plays a key role in the internal control process by checking that financial reporting is accurate and complete and delivered on time.
RaySearch cooperates with the communications consultant Cision to ensure that financial reporting to the market is complete and accurate. The relevant employees are regularly informed about changes in accounting policies and reporting requirements or other information. The Board receives regular financial statements. External information and communication is governed by RaySearch's information policy, which describes the company's general principles for providing information.
The Board and executive management monitor RaySearch's compliance with adopted policies and guidelines. RaySearch's financial situation is dealt with at each Board meeting. The Board and executive management review the financial reporting before Interim and Annual Reports are published. The auditor's duties also include an annual examination of RaySearch's internal control. The Board meets RaySearch's auditor at least once per year, partly to review the internal control but also, in special cases, to assign additional internal controls to the auditor with a special focus on a particular area.
Under the Swedish Companies Act, the Board is responsible for the company's organization and management. If a President is appointed, according to the Swedish Companies Act, he is responsible for the ongoing management of the company according to the guidelines and instructions provided by the Board. RaySearch's President leads the Group's operations based on the frameworks established by the Board and appoints the other members of executive management. At the end of 2014, RaySearch's executive management consisted of the President, the CFO, Chief Science Officer, Director of Development, Chief Technology Officer, Director of Sales and Marketing, Director of Sales Asia & Pacific, the Director of Services and the General Counsel.
During the year, business briefings under the President's leadership were usually conducted every second week, except during holiday periods when they occurred less frequently.
Executive management also meets representatives for the US and European sales and marketing organizations on a regular basis, mainly through the President and Director of Sales and Marketing, respectively, to monitor and evaluate the Group's operations in their entirety. Monitoring is based on the Group's annually established targets and budgets, including RaySearch's strategies, short and long-term targets, operational objectives, competitor analyses, and so forth. The Board is continuously informed about executive management's monitoring and evaluation measures.
For more information about the Board and the President, refer to pages 38–43 and Note 4 in the Annual Report. For more details regarding the auditors, refer to page 21 and Note 5 in the Annual Report.
Stockholm, April 22, 2015
Erik Hedlund Johan Löf Chairman of the Board President and
Board member
Carl Filip Bergdendal Hans Wigzell Board member Board member
The Board of Directors is responsible for the 2014 Corporate Governance Report on pages 34–36 and that it is prepared in accordance with the Swedish Annual Accounts Act.
We have read the Corporate Governance Report and based on this and our knowledge about the company and the Group, we believe that we have sufficient basis for our opinions. This means that our statutory review of the Corporate Governance Report has another direction and is of a considerably smaller scope compared with the direction and scope of an audit in accordance with International Standards on Auditing and generally accepted standards in Sweden.
It is our opinion that a Corporate Governance Report has been prepared, and that its statutory content is consistent with the annual accounts and the consolidated financial statements.
Stockholm, April 22, 2015 Ernst & Young AB
Per Hedström Authorized Public Accountant
Chairman and member of the Board of RaySearch since 2000. Other assignments: Chairman of the Boards of Scandiflash AB, hhDesign AB, Beamocular AB and RayIncentive AB. Born: 1948.
Educational background: M.Sc. in Electrical Engineering from the Royal Institute of Technology (KTH) and MBA from Stockholm University.
Professional experience:A number of senior positions in major international groups, including Siemens and Saab, as well as in small and mid-sized companies. He has concentrated on high-tech companies with the focus on medical technology. Since 1994, his main focus has been on radiation therapy and radiation physics. He is an independent Board member in relation to RaySearch but not in relation to major shareholders in the company.
Shareholding: 1,567,089 Class A and 228,699 Class B.
President and member of the Board of RaySearch since 2000. Other directorships: RayIncentive AB, RaySearch Americas Inc and RaySearch UK Ltd.
Born: 1969.
Educational background: M.Sc. in Engineering Physics from the Royal Institute of Technology and Ph.D. from the Department of Medical Radiation Physics at the Department of Oncology-Pathology, Karolinska Institute. As a doctoral student, he worked with mathematical models for optimization of radiation therapy and also developed the prototype for ORBIT.
Professional experience:President and CEO of RaySearch since 2000. He is not an independent Board member in relation to RaySearch, or in relation to major shareholders in the company. Shareholding: 6,243,084 Class A and 618,393 Class B.
Member of the RaySearch Board since 2000.
Other directorships: Member of the Boards of RayIncentive AB and Cafibe AB.
Educational background: M.Sc. in Engineering Physics from the Royal Institute of Technology in Stockholm and B.Sc., Master of Business Administration Stockholm School of Economics, Sweden. Professional experience: A number of senior positions in the Modo Group (1972–1980) and the medical technology company Stille-Werner (1980–1987), with the two final years as President and CEO. He has worked since 1988 as a certified process manager in Lots® and in this role has also provided support for managers in large and mid-size companies undergoing restructuring processes. Independent Board member in relation to RaySearch and in relation to major shareholders in the company.
Shareholding: 1,061,577 Class A and 154,920 Class B.
Member of the RaySearch Board since 2004. Professor Emeritus at Karolinska Institute in Solna.
Other directorships: Chairman of the Board of Rhenman & Partners Asset Management AB. Board member of Karolinska Development AB,Swedish Orphan Biovitrum AB (publ) (SOBI), Cadila Pharmaceuticals Sweden AB, PRFA Management AB, CPL BCX Pharma AB, Sarepta Pharmaceuticals Inc and AB Wigzellproduktion. Other assignments: Chairman of the Stockholm School of Entrepreneurship.
Member of the Royal Swedish Academy of Science and the Academy of Engineering Science. Born: 1938.
Educational background: Doctor of Medicine.
Professional experience: Dean of Karolinska Institute in Solna, 1995–2003. Independent Board member in relation to RaySearch and in relation to major shareholders in the company. Shareholding: 0. Options: 0.
Auditing firm Ernst & Young AB Per Hedström (auditor-in-charge) Auditor at RaySearch Laboratories. Authorized Public Accountant, Ernst & Young AB. Born in: 1964 Auditor of companies including Alltele, Dibs Payment Services, Medcore, Smarteq and Shelton Petroleum.
LARS JORDEBY SALES DIRECTOR ASIA & PACIFIC
ANDERS LIANDER CHIEF TECHNOLOGY OFFICER
DIRECTOR SALES AND MARKETING
PETER KEMLIN
HENRIK FRIBERGER DIRECTOR OF DEVELOPMENT
PETER THYSELL INTERIM CFO
BJÖRN HÅRDEMARK DIRECTOR OF RESEARCH
NICLAS BORGLUND DIRECTOR OF SERVICES
ANNUAL REPORT 2014
Senior executives, previous spread (from left).
Professional experience: International business operations in both major corporations and small start-up companies. Nearly 20 years of experience from sales and marketing work in the radiation therapy area, from such companies as: Scanditronix Medical AB, IBA Dosimetry AB, C-RAD AB and ScandiDos AB. His various executive positions include direct sales and sales management in markets including Europe, Asia and North America. He is also one of the founders and partners of the company ScandiNova Systems AB. Shareholding: 1,800 Class B. Options: 0
Educational background: M.Sc. in Electrical Engineering from the Royal Institute of Technology, Stockholm, with a focus on medical technology. Professional experience: He began at the Division of Medical Radiation Physics at the Department of Oncology-Pathology, Karolinska Institute in 1996 and was employed for two years as a doctoral student with the main task of developing ORBIT together with Johan Löf. He was employed for two years as a doctoral student with the primary task of developing ORBIT together with Johan Löf. Since RaySearch was founded, he has held various positions and roles in software development including Developer, Architect, Project Manager and Head of Development. He joined RaySearch when the company was founded in 2000.
Shareholding: 1,061,577 Class A, 140,157 Class B.
Educational background: M.Sc.in Engineering, Industrial Business at Chalmers University of Technology.
Professional experience: For the greater part of his career, Peter has worked in the medical technology sector as a consultant working for Swedish hospitals in order to implement cost-effective procurements as well as with sales and marketing, primarily in the radiation therapy business. He also established several Swedish companies in new markets as part of his position as Trade Commissioner at the Swedish Trade Council.
Shareholding: 0. Options: 0.
Member of the RaySearch Board since 2000. Born: 1969.
Other directorships: RayIncentive AB, RaySearch Americas Inc and RaySearch UK Ltd.
Educational background: M.Sc. in Engineering Physics from the Royal Institute of Technology and Ph.D. from the Department of Medical Radiation Physics at the Department of Oncology-Pathology, Karolinska Institute. As a doctoral student, he worked with mathematical models for optimization of radiation therapy and also developed the prototype for ORBIT.
Professional experience: President and CEO of RaySearch since 2000. Shareholding: 6,243,084 Class A and 843,393 Class B.
Educational background: M.Sc. in Electronics from the Royal Swedish Institute of Technology. Human Physiology, one-term course at Karolinska Institutet. Professional experience: After graduating in 1997, Henrik Friberger worked as a software developer at Pacesetter AB (later St Jude Medical AB) in the field of pacemaker systems until he joined RaySearch in 2001. Since that time, he has worked with software development team and project management, and has also managed one of the groups in the development department. He has held the Director of Development title since 2013.
Shareholding: 23,799 Class B shares. Options: 0.
Educational background: Graduate in Business Management from the Stockholm School of Economics.
Professional experience: Peter Thysell joins RaySearch from a position as Interim Director Business Control at Scandic Hotels. Prior to that, he was Interim CFO of Åkers AB, CEO of SiC Processing GmbH, CFO of Generic Sweden AB (publ) and a management consultant at McKinsey & Co. Shareholding: 0. Options: 0.
Peter Thysell joined the group of senior executives during 2014.
1) As of April 2015.
Educational background: M.Sc. in Engineering Physics from the Royal Institute of Technology in Stockholm. Received an award for academic excellence in 2003.
Professional experience: Björn Hårdemark wrote his thesis at RaySearch in 2002 and has since held positions as a Research Engineer, Developer, Project Manager and Head of Physics. Prior to joining RaySearch, he worked at the Swedish National Defense Radio Establishment, where he also served his military service.
Shareholding: 18,000 Class B.
Educational background: Doctor of Physics, Stockholm University. Professional experience: After completing his doctoral studies, Niclas Borglund worked at Savantic AB in a position that mainly involved software development in high-tech projects. He joined RaySearch in 2006 as project manager in the development department. Director of Services since 2010. Shareholding: 400 Class B. Options: 0.
Educational background: M.Sc. in Engineering Physics from the Royal Institute of Technology and ENSIMAG in Grenoble, France. B.Sc. in Business Administration and Economics from Stockholm University.
Professional experience: Before joining RaySearch, Anders Martin-Löf served as Director of Investor Relations and held various business development positions for the biotech company Swedish Orphan Biovitrum AB (publ) (SOBI). Prior to that, he was a management consultant with the Boston Consulting Group, Cell Network and co-founder and CEO of ScienceCap, a consulting firm focused on small-cap companies in the biotech and medtech sectors. Han har också genomgått Försvarets Tolkskola och arbetat på Sveriges Generalkonsulat i St. Petersburg. Anställd i RaySearch sedan 2007.
Shareholding: 0.
Anders Martin-Löf left RaySearch in mid-April 2015.
General Counsel at RaySearch since January 2010. Secretary of the Board since 2000.
Born: 1964.
Other directorships: RaySearch Americas Inc., Vinstandelsstiftelsen RayFoundation.
Educational background: LL.M. (Stockholm University), LLM (King's College London).
Professional experience: County Administrative Court, Jämtland County 1991–1993, Administrative Court of Appeal in Sundsvall 1993–1994, Advokatfirman DLA Nordic 1994–2011 and General Counsel of RaySearch since 2010.
Shareholding: 12,000 Class B.
Thomas Pousette is no longer a member of the executive management team.
RaySearch's share capital amounts to SEK 17,141,386.50. The total number of registered shares in the company at December 31, 2014 was 34,282,773, of which 11,324,391 shares were Class A and 22,958,382 Class B shares. The quotient value per share is SEK 0.50. All shares carry equal rights to the company's assets and earnings. Each Class A share carries ten votes and each Class B share carries one vote at the Annual General Meeting (AGM). At December 31, 2014, the total number of votes in the company was 136,202,292. All shareholders entitled to vote at the AGM may vote for the full number of shares owned or represented by them, with no restrictions on voting rights. A slight shift in ownership has occurred from foreign to Swedish shareholders. Foreign owners' shareholdings in RaySearch increased from 19.1 percent at December 31, 2013 to 19.2 percent at December 31, 2014. The number of shareholders increased in 2014. At December 31, 2014, there were 5,228 (4,885) shareholders.
| Capital | Votes |
|---|---|
| 19.2 | 4.8 |
| 80.8 | 95.2 |
| 32.3 | 8.1 |
| 48.5 | 87.1 |
Principal shareholders Johan Löf, Erik Hedlund and Anders Brahme intend to remain significant, long-term shareholders of RaySearch.
To the knowledge of the Board of Directors of RaySearch, there are no shareholder agreements concerning either Class A or Class B shares.
RaySearch is listed for trading on the NASDAQ Nordic Exchange in Stockholm in the Small Cap segment.
During 2014, a total of 10,025,233 (11,634,907) RaySearch shares were traded at a value of SEK 380.4 M (321.9). This corresponds to an average price of SEK 37.94 (27.67). The highest price paid in 2014 was SEK 54.00 on December 30. The lowest price paid during the year was SEK 26.50 on January 9. On the last trading day of the year, December 30, the closing price was SEK 53.00 (27.40). During 2014, the price of the RaySearch share rose 93 percent (32), while the OMXS increased 12 percent (23). At the end of December, RaySearch's market capitalization was SEK 1,817 M (939). In this calculation, Class A shares, which
| Total | 11,324,391 | 22,958,382 | 34,282,773 | 100 | 100 |
|---|---|---|---|---|---|
| Others | 903 | 6,642,054 | 6,642,957 | 19.4 | 4.9 |
| Nordnet Pension | 0 | 159,840 | 159,840 | 0.5 | 0.1 |
| NTC | 0 | 180,210 | 180,210 | 0.5 | 0.1 |
| SEB | 0 | 278,952 | 278,952 | 0.8 | 0.2 |
| RayFoundation | 0 | 296,098 | 296,098 | 0.9 | 0.2 |
| Avanza pension | 0 | 418,782 | 418,782 | 1.2 | 0.3 |
| Kalmar County | 0 | 424,000 | 424,000 | 1.2 | 0.3 |
| Handelsbanken Liv | 0 | 502,285 | 502,285 | 1.5 | 0.4 |
| Swedbank Robur funds | 0 | 505,000 | 505,000 | 1.5 | 0.4 |
| Home Capital | 0 | 609,460 | 609,460 | 1.8 | 0.5 |
| Fourth AP Fund | 0 | 675,573 | 675,573 | 2.0 | 0.5 |
| Aktie-Ansvar Sverige | 0 | 1,100,000 | 1,100,000 | 3.2 | 0.8 |
| Carl Filip Bergendal | 1,061,577 | 154,920 | 1,216,497 | 3.6 | 7.9 |
| Anders Liander | 1,061,577 | 185,157 | 1,246,734 | 3.6 | 7.9 |
| Second AP Fund | 0 | 1,287,369 | 1,287,369 | 3.8 | 1.0 |
| Anders Brahme | 1,390,161 | 35,989 | 1,426,150 | 4.2 | 10.2 |
| JPMorgan Chase | 0 | 1,479,676 | 1,479,676 | 4.3 | 1.1 |
| Erik Hedlund | 1,567,089 | 228,699 | 1,795,788 | 5.2 | 11.7 |
| Montanaro | 0 | 2,800,000 | 2,800,000 | 8.2 | 2.1 |
| Lannebo funds | 0 | 4,375,925 | 4,375,925 | 12.8 | 3.2 |
| Johan Löf | 6,243,084 | 618,393 | 6,861,477 | 20.0 | 46.3 |
| Name | Class A shares | Class B shares | Total shares | Capital, % | Votes, % |
are not listed on the stock exchange, have been assigned the same value as the listed Class B shares.
The diagram on the next page shows the share price trend for RaySearch from January 2010 through March 2015, and the number of shares traded per month.
To increase the liquidity of its share, RaySearch had an agreement with Erik Penser Bankaktiebolag. This entailed that the liquidity provider committed to quoting daily bid and ask prices on the NASDAQ OMX Stockholm Exchange for RaySearch's Class B shares. The liquidity provider was to work to ensure that the difference between the bid and ask prices for RaySearch shares did not exceed 2 percent. The agreement was terminated in March 2015.
RaySearch may issue an options program to more easily attract, motivate and retain personnel. RaySearch currently has no options programs outstanding.
| OWNERSHIP STRUCTURE | Number of | Number of | Number of | Market capitalization | ||
|---|---|---|---|---|---|---|
| – SIZE OF HOLDING | shareholders | Class A shares | Class B shares | Holding, % | Votes, % | (SEK 000s) |
| 1–500 | 3,454 | 153 | 538,466 | 1.6 | 0.40 | 28,539 |
| 501–1,000 | 690 | 750 | 578,638 | 1.7 | 0.43 | 30,668 |
| 1,001–2,000 | 486 | 0 | 777,231 | 2.3 | 0.57 | 41,193 |
| 2,001–5,000 | 369 | 0 | 1,214,657 | 3.5 | 0.89 | 64,377 |
| 5,001–10,000 | 103 | 0 | 748,095 | 2.2 | 0.55 | 39,649 |
| 10,001–20,000 | 65 | 0 | 951,262 | 2.8 | 0.70 | 50,417 |
| 20,001–50,000 | 25 | 0 | 796,637 | 2.2 | 0.56 | 40,314 |
| 50,001–100,000 | 5 | 0 | 329,460 | 1.0 | 0.24 | 17,461 |
| 100,001–500,000 | 15 | 0 | 3,729,831 | 9.2 | 2.32 | 167,536 |
| 500,001–1,000,000 | 6 | 0 | 4,305,047 | 10.8 | 2.71 | 195,393 |
| 1,000,001–5,000,000 | 9 | 5,080,404 | 8,989,058 | 42.8 | 44.34 | 508,473 |
| 5,000,001–10,000,000 | 1 | 6,243,084 | 0 | 20.0 | 46.29 | 32,775 |
| CHANGES IN RAYSEARCH'S SHARE CAPITAL | ||||||||
|---|---|---|---|---|---|---|---|---|
| Quotient | Change in | Increase in | Number of | Number of | Total number | Total share | ||
| Year | Transaction | value, SEK | number of shares | share capital | Class A shares | Class B shares | of shares | capital, SEK |
| 2005 | Opening balance | 1.5 | 4,237,604 | 6,275,457 | 10,513,061 | 15,769,591.50 | ||
| Non-cash issue (B) | 914,530 | 1,371,795 | 4,237,604 | 7,189,987 | 11,427,591 | 17,141,386.50 | ||
| Reclassification 2005 | -24,596 | 24,596 | ||||||
| Closing balance | 1.5 | 4,213,008 | 7,214,583 | 11,427,591 | 17,141,386.50 | |||
| 2006 | Reclassification 2006 | -100 | 100 | |||||
| Closing balance | 1.5 | 4,212,908 | 7,214,683 | 11,427,591 | 17,141,386.50 | |||
| 2008 | 3:1 share split, 2008 | 22,855,182 | 8,425,816 | 14,429,366 | ||||
| Closing balance | 0.5 | 12,638,724 | 21,644,049 | 34,282,773 | 17,141,386.50 | |||
| 2009 | Reclassification 2009 | -252,756 | 252,756 | |||||
| Closing balance | 0.5 | 12,385,968 | 21,896,805 | 34,282,773 | 17,141,386.50 | |||
| 2011 | Reclassification 2011 | -1,061,577 | 1,061,577 | |||||
| Closing balance | 0.5 | 11,324,391 | 22,958,382 | 34,282,773 | 17,141,386.50 | |||
| 2014 | Closing balance | 0.5 | 11,324,391 | 22,958,382 | 34,282,773 | 17,141,386.50 |
| KEY RATIOS1 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
|---|---|---|---|---|---|
| Number of shares before full dilution | 34,282,773 | 34,282,773 | 34,282,773 | 34,282,773 | 34,282,773 |
| Equity per share, SEK | 7.34 | 5.73 | 6.35 | 5.74 | 5.74 |
| Earnings/loss per share, SEK | 1.75 | -0.61 | 0.58 | 0.50 | 0.84 |
| Earnings/loss per share after full dilution, SEK | 1.75 | -0.61 | 0.58 | 0.50 | 0.84 |
| Share price, SEK | 53.002) | 27.40 | 20.80 | 14.45 | 38.0 |
| P/E ratio before dilution | 30.3 | neg. | 35.9 | 28.9 | 45 |
| P/E ratio after dilution | 30.3 | neg. | 35.9 | 28.9 | 45 |
| Dividend, SEK | 0 (2) | 0 | 0 | 0 | 0.50 |
| Price/adjusted equity per share, multiple | 7.2 | 4.8 | 3.3 | 2.5 | 6.6 |
¹ Definitions of key figures, see inside cover. 2
According to the Board's proposal.
The Board of Directors' intention is to pay as dividends approximately 20 percent of the Group's profit after tax on condition that a healthy capital structure is retained.
The summary shows how the core business developed between 2005 and 2014 and was prepared in accordance with IFRS.
| GROUP | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net sales, SEK M | 285.2 | 204.5 | 182.1 | 126.1 | 117.7 | 83.7 | 62.7 | 64.7 | 69 | 69.9 |
| Growth in net sales, % | 39.5 | 12.3 | 44.4 | 7.1 | 40.7 | 33.5 | -3 | -6.2 | -1.3 | 77 |
| Operating profit, SEK M | 79.4 | -25.7 | 22.5 | 27.6 | 39.9 | 40.9 | 21.1 | 25.8 | 33.5 | 39.6 |
| Operating margin, % | 27.8 | -12.6 | 12.4 | 21.9 | 33.9 | 48.8 | 33.6 | 39.8 | 48.6 | 56.7 |
| Profit margin, % | 27.6 | -12.2 | 12.9 | 22.8 | 34.1 | 49.3 | 38.5 | 43.3 | 50.5 | 57.3 |
| Net profit/loss, SEK M | 59.8 | -20.8 | 19.9 | 17 | 28.9 | 30.1 | 18.2 | 19.8 | 36.2 | 29.1 |
| Earnings/loss per share, SEK³ | 1.75 | -0.61 | 0.58 | 0.5 | 0.84 | 0.88 | 0.53 | 0.58 | 1.06¹ | 0.85 |
| Cash flow per share³ | 1.47 | 0.91 | 2.55 | 0.99 | 1.83 | 1.44 | 0.76 | 1.1 | 0.88 | 1.21 |
| Dividend per share, SEK³ | –² | – | – | – | 0.5 | 0.5 | – | 0.17 | – | – |
| Capital employed, SEK M | 276.5 | 196.6 | 217.5 | 196.7 | 196.8 | 184.9 | 150.4 | 137.9 | 118.1 | 81.9 |
| Interest-bearing liabilities, SEK M | 25.0 | – | – | – | – | – | – | – | – | – |
| Total assets, SEK M | 389.7 | 299.2 | 293 | 261.8 | 255.9 | 233.1 | 188.1 | 173.2 | 146.2 | 107.2 |
| Equity per share, SEK³ | 7.34 | 5.73 | 6.35 | 5.74 | 5.74 | 5.39 | 4.39 | 4 | 3.44 | 2.39 |
| Equity/assets ratio, % | 64.5 | 65.7 | 74.2 | 75.4 | 76.9 | 79.3 | 80 | 79.6 | 80.7 | 76.4 |
| Share of risk-bearing capital, % | 75.0 | 78.0 | 88.2 | 93.1 | 93.2 | 94.3 | 93.9 | 92.8 | 92.9 | 89.3 |
| Return on capital employed⁴, % | 33.7 | -12.0 | 11.4 | 14.6 | 21 | 24.6 | 16.8 | 22.2 | 34.9 | 66.1 |
| Return on total capital⁴, % | 23.1 | -8.4 | 8.5 | 11.1 | 16.4 | 19.6 | 13.4 | 17.8 | 27.5 | 49.5 |
| Return on equity⁴, % | 26.7 | -10.1 | 9.6 | 8.6 | 15.1 | 18 | 12.6 | 15.5 | 36.2 | 48 |
| Share price at year-end³ | 53.0 | 27.4 | 20.8 | 14.45 | 38 | 29.5 | 11.5 | 63.3 | 50 | 59 |
| Average number of employees | 126 | 107 | 92 | 78 | 64 | 52 | 48 | 37 | 28 | 27 |
¹ SEK 0.73 excl. capitalization of tax loss carry-forwards in 2006.
² According to the Board's proposal.
³ Adjusted for 3:1 share split, 2008.
⁴ In preceding years, an income measurement based on rolling 12-month figures was used but as of 2013, and for the comparative figures, an annual income measurement has been used.
Equity plus deferred tax liabilities expressed as a percentage of total assets.
Net income expressed as a percentage of average shareholders' equity.
Operating profit plus financial income expressed as a percentage of average capital employed.
Operating profit plus financial income expressed as a percentage of average total assets.
Equity divided by number of shares at year-end.
Cash flow from operating activities divided by average number of shares during the year.
Share price divided by adjusted equity per share at year-end.
Share price divided by earnings per share, before and after dilution.
Net earnings divided by average number of shares during year.
Operating profit expressed as a percentage of net sales.
Equity expressed as a percentage of total assets.
Total assets less non-interest-bearing liabilities and deferred tax liabilities.
Dividend divided by number of shares at year-end.
Income after financial items expressed as a percentage of net sales.
There are no minority interests within the Group for accounting purposes.
RAYSEARCH LABORATORIES AB (PUBL) Sveavägen 44, SE-103 65 Stockholm, Sweden Tel: +46 (0)8 510 530 00 [email protected] www.raysearchlabs.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.