1
Board of Directors’
Report and Financial
Statements 2022
2
Board of Directors’ Report
Optomed in brief
Optomed is a Finnish medical technology company and a leading manufacturer of
handheld fundus cameras and screening software. Optomed combines handheld
fundus cameras with software and artificial intelligence with the aim to transform
the diagnostic process of various diseases, such as rapidly increasing diabetic
retinopathy. Optomed has offices in Finland, the US and China and the compa-
ny’s products are sold via various sales channels in over 60 countries globally.
Operating Environment
Optomed operates in the global ophthalmic devices market including the fun-
dus camera market, ophthalmic software market and the market for artificial
intelligence in eye screening.
The global fundus camera market exceeded 473 million USD in 2020 and is
anticipated to grow at a CAGR of over 3.2 percent between 2021 and 2027.
The global market for nonmydriatic handheld fundus cameras was estimated at
122.5 million USD in the year 2020 and is projected to reach 192.6 million USD
by 2026, growing at a CAGR of 7.9 percent over the analysis period
1.
The leading markets for handheld cameras are North America and Europe.
The US currently accounts for over 30 percent share in the global market was
estimated at 39 million USD in 2021. Europe is expected to reach approxima-
tely 24 million USD by 2026. The respective forecasted market size for China is
expected at 21.7 million USD
2.
The fundus camera and eye screening market are driven by steady pace of
technological advancements, growing awareness about eye care, increasing
geriatric population and favorable government initiatives2.
The adaptation of artificial intelligence took a major leap forward in 2021 as the
new reimbursement code for diabetic retinopathy screening with AI was opened
in 2021 in the USA. This new CPT-code 92229 “retinal imaging with automated
point-of-care”, will accelerate the use of AI within the US market, as payment
for the service is more straightforward with the new coding. The US national
average physician fee for CPT 92229 is approximately 45.69 USD. The physician
payment amounts varies across the country depends on the applicable Geo-
graphic Practice Cost Indices (GPCI) for a specific locality, and in the locality with
the highest cost index the physician fee for CPT code 92229 is estimated to be
62.93 USD. The Outpatient Prospective Payment System (OPPS) payment rate
for 92229 is 57.12 USD.
“According to the American Association of Ophthalmology, it is estimated that 61
million adults in the United States are at high risk for vision loss although only
half have visited an eye doctor sometime in the last 12 months. New technology,
such as artificial intelligence, may be an important step to make initial screenin-
gs more convenient and accessible, reaching people who may have otherwise
gone without. While it is not expected that artificial intelligence would replace
physicians, it will increase efficiency. As artificial intelligence may be able to as-
sist in the detection of diabetic retinopathy and macular degeneration, it may
help to catch those patients that are currently being missed for this extremely
important examination.”
3
The FDA has now cleared two AI companies’ diabetic retinopathy algorithm
to be sold with dedicated desktop cameras in the US market. Optomed has
completed a prospective clinical study with a selected AI partner, AEYE Health
with the following results: sensitivity 91.9 percent, specificity 93.6 percent and
imageability > 99 percent. The goal of the clinical study is to be able to submit an
application to the FDA to gain clearance for Optomed’s and AEYE’s joint product,
a handheld fundus camera combined with AI.
1 https://www.gminsights.com/industry-analysis/fundus-cameras-market
2 https://www.prnewswire.com/news-releases/global-nonmydriatic-handheld-fundus-cameras-
markets-2021-2026---focus-on-teleophthalmology-presents-opportunities-301438049.html
3 AAO, Artificial Intelligence Trends in Eye Care, Aug 22, 2018
3
Group summary - Key figures and APM’s
Revenue, Profitability and Result
EUR, thousand 2022 2021 Change, % 2020
Revenue 14,660 14,850 -1.3% 13,011
Gross profit * 10,069 10,558 -4.6% 8,955
Gross margin % * 68.7% 71.1% 68.8%
EBITDA -1,952 -2,002 2.5% -733
EBITDA margin *, % -13.3% -13.5% -5.6%
Adjusted EBITDA * -1,952 -2,002 2.5% -733
Adjusted EBITDA margin *, % -13.3% -13.5% -5.6%
Operating result (EBIT) -5,097 -4,780 -6.6% -2,906
Operating margin (EBIT) *, % -34.8% -32.2% -22.3%
Adjusted operating result (EBIT) * -5,097 -4,780 -6.6% -2,906
Adjusted operating margin (EBIT margin) *, % -34.8% -32.2% -22.3%
Net profit/ loss -5,472 -4,249 -28.8% -3,177
Earnings per share -0.37 -0.32 -18.2% -0.24
Cash flow from operating activities -2,370 -2,940 19.4% -2,801
Net Debt -3,251 213 -1,629.6 % -4,090
Net debt/ Adjusted EBITDA (LTM) 1.7 -0.1 5.6
Equity ratio * 65.0% 58.8% 64.6%
R&D expenses personnel 1,198 1,773 -32.5% 1,406
R&D expenses other costs 661 511 29.5% 253
Total R&D expenses 1,859 2,284 -18.6% 1,659
Optomed uses certain alternative performance measures (APMs) with the purpose to provide a better understanding of how the business
develops. These APMs, as defined, cannot be fully compared with other companies’ APMs.
*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.
4
In January-December 2022, Group revenue decreased by 1.3 percent to EUR
14,660 (14,850) thousand. The Devices segment’s revenue decreased by 7.6
percent and the Software segment’s revenue increased by 2.8 percent. The
decrease was mainly driven by the muted business in China where the revenue
decreased approximately EUR 1.5 million.
The gross margin decreased to 68.7 percent from 71.1 percent last year. In
January-December the Company’s other operating income was EUR 857 (810)
thousand. Other operating income includes EUR 841(538) thousand Business
Finland loan waiver related to closed product development projects. The gross
margin for the period adjusted for the total amount of the grants and other ope-
rating income would have been 62.8 percent compared to 65.6 percent in 2021.
EBITDA amounted to EUR -1,952 (-2,002) thousand and EBIT was EUR -5,097
(-4,780) thousand. EBIT was affected by the impairment of the terminated pro-
duct development program amounting to EUR 1,040 thousand. increased staff
costs especially in the US and decreased gross profit had a negative effect on
EBITDA this year.
Net financial items amounted to EUR -454 (453) thousand and consisted mainly
of interest payments to financial institutions and the translation effect of Chinese
RMB and USD to EUR.
Financial summary per segment
Devices segment
Optomed has two synergistic business segments: Devices and Software. The
Devices segment develops, commercializes and manufactures easy-to-use and
affordable handheld fundus cameras, that are suitable for any clinic for screening
o f various eye diseases, such as diabetic retinopathy, glaucoma and AMD (Age
Related Macular degeneration).
In January-December 2022, the Devices segment revenue decreased by 7.6
percent to EUR 5,398 (5,839) thousand. The decline was due to sales in China
being approximately EUR 1.5 million euros lower than during the previous year.
EUR, thousand 2022 2021 Change,%
Revenues Gross 5,398 5,839 -7.6%
profit * Gross 3,738 4,139 -9.7%
margin% * 69.3% 70.9%
EBITDA -670 -1,014 33.9%
EBITDA margin *,% -12.4% -17.4%
Operating result (EBIT) -3,159 -3,182 0.7%
Operating margin (EBIT) *,% -58.5% -54.5%
*) Alternative performance measures, see section Alternative Performance Measures for definitions
and calculations
The gross margin decreased to 69.3 percent from 70.9 percent in the previous
year. Both review and comparison period had other operating income, and the
twelve months’ gross margin adjusted for this other operating income would
have been 53.4 (57.0) percent. The gross margin was positively affected by a
Business Finland loan waiver of 841 (538) thousand, and negatively affected by
an inventory provision for non marketable items of 251 (0) thousand.
EBITDA was EUR -670 (-1,014) thousand or -12.4 (-17.4) percent of revenue. The
staff cost increased especially in the US.
5
*) Alternative performance measures, see section Alternative Performance Measures for definitions
and calculations.
Software segment
Optomed has two synergistic business segments: Devices and Software. The
Software segment develops and commercializes screening software for diabetic
retinopathy and cancer screening for healthcare organizations. The segment
also distributes off-the-shelf products from selected partners to supplement
its own solutions and expertise and provides software consultation to support
the Devices segment screening solution projects.
In January-December 2022, the Software segment revenue increased by 2.8
percent to EUR 9,263 (9,011) thousand. EBITDA was EUR 2,079 (1,855) thousand
or 22.4 (20.6) percent of revenue.
Balance sheet, financial position and
investments
In January-December 2022, the cash flow from operating activities amounted
to EUR –2,370 (-2,940) thousand. Net cash in investing activities was EUR -3,029
(-2,574) thousand and relates mainly to capitalized development expenses. Net
cash from financing activities amounted to EUR 7,003 (1,637) in 2022. Optomed
completed two directed share issues consisting of 2,538,211 shares and collected
gross proceeds of approximately EUR 8.9 million in 2022.
Consolidated cash and cash equivalents at the end of the period amounted to
EUR 8,524 (6,804) thousand. Interest-bearing net debt totaled EUR -3,251 (213)
thousand at the end of the period.
Net working capital was EUR 3,738 (4,315) thousand at the end of the period.
The net working capital includes trade receivables of EUR 3,6 (3,7) million. One
Chinese customer represents approximately 50% of the total group trade recei-
vables out of which approximately EUR 2,0 million is overdue, which after mana-
gement’s assessment have resulted in a credit risk accrual of EUR 589 thousand
which represents approximately 30% of the total outstanding trade receivable.
EUR, thousand 2022 2021 Change, %
Revenues 9,263 9,011 2.8 %
Gross profit * 6,330 6,420 -1.4 %
Gross margin % * 68.3 % 71.2 %
EBITDA 2,079 1,855 12.1 %
EBITDA margin *, % 22.4 % 20.6 %
Operating result (EBIT) 1,431 1,247 14.7 %
Operating margin (EBIT) *, % 15.4 % 13.8 %
Group-wide expenses
Group-wide expenses consist of functions supporting the entire group such as
treasury, group accounting, marketing, legal, HR and IT as well as public listing
expenses.
Group-wide operating expenses amounted to EUR 3,368 (2,844) thousand.
6
Research and development
Optomed is a research and development driven healthcare technology com-
pany. The strong focus on research and development has been the core of the
operations since the foundation of the company in 2004 and has resulted in a
strong international patent portfolio comprising 52 international patents and
21 pending patents. Additionally, Optomed has eleven registered as well as one
pending model protection and 87 registered and 8 pending trademarks.
Optomed’s management believes that the strong patent portfolio and continuous
development of new camera and software solutions are the most important
competitive advantages of the company. Optomed’s proprietary and patented
technology have resulted in Optomed being able to develop and construct hand-
held fundus cameras that are able to provide high- quality fundus images. The
quality of the images is higher or on the same level as most traditional desktop
fundus cameras.
The research and development expenditure totaled EUR 4,000 thousand, rep-
resenting 27.3 percent of revenue in 2022, compared to EUR 4,369 thousand or
29.4 percent of revenue in 2021. The research and development expenditure
decreased 9,2 percent compared to 2021.
Non-financial information
Environment, Social and Governance (ESG) related matters are an integral part
of Optomed’s operations. The company is still rather small which enables the
management to take ESG matters into consideration efficiently.
Optomed has identified manufacturing as one of its key ESG elements and the
key ESG related risks are within the scope of manufacturing. Therefore, the
ESG matters are taken into account when making resolutions with regards to
manufacturing. Currently, Optomed’s devices are manufactured by an ESM
partner that is a NYSE listed entity with its own strict sustainability requirements
and reporting. This gives Optomed visibility and assurance that ESG matters are
taken into account with regards to its device manufacturing.
Optomed has implemented a governance structure required for the Nasdaq
Helsinki main list and implemented significant amount of policies, including the
code of conduct and whistleblowing that all employees are expected to follow.
The code of conduct also highlights Anti-Bribery and Corruption (ABC) matters
as they have been assessed to be extremely important due to the global nature
of Optomed’s operations. The governance function has been strengthened
significantly and new expertise has been brought to the board and audit com-
mittee. The governance structure is described in detail in Optomed’s Corporate
Governance Statement.
Health technology is a regulated sector which also contributes to the company’s
ESG approach. Optomed complies with RoHS, REACH, conflict mineral regulations
and all applicable privacy, consumer protection and product safety regulations.
Optomed’s compliance with respect to various medical devices related regula-
tions is also audited by third parties regularly.
EUR, thousand 2022 2021
R&D expenditure 4,000 4,369
As percentage of revenue 27.3% 29.4%
7
Personnel, management and legal
structure
Personnel
On 31 December 2022, Optomed had a total of 114 employees, of which a
significant number worked in expert roles. The employee contracts are mostly
permanent contracts.
Graphical distribution of employees 2022 2021
Finland 95 103
China 8 9
United States 11 6
Total 114 118
Number of employees 2022 2021
Average number of employees 119 115
Number of employees at the end
of the period
114 118
Management
The Group CEO is responsible for the management of the company’s ope-
rations and governance in accordance with the instructions of the Board of
Directors. The CFO is responsible for the company’s finance function, which
includes accounting and reporting, business controlling, treasury, tax, investor
relations, internal controls as well as legal matters, M&A, compliance, corpo-
rate governance, corporate responsibility, risk management, quality and re-
gulatory. The Chief Financial Officer also acts as the secretary to the Board of
Directors of the company.
The Vice President, Devices is responsible for the company’s Devices segment,
which also includes a sales team, and the Vice President also acts as the Ope-
rating Director of Optomed China. The Vice President, Software is responsible
for the company’s Software segment, in addition the Vice President acts as the
Managing Director of Optomed Software Oy and is responsible for the group’s
IT function.
8
Seppo Kopsala
Chief Executive Officer
Laura Piila
VP, Devices
Markku Myllylä
VP, Software
Sakari Knuutti
Chief Financial Officer
Design
Value Chain
Management
R&D
Sales
Optomed China
Finance and
Accounting
Business Control
and Admin
Marketing
Sales
R&D
Group ICT
functions
Professional services,
non-health care
Healthcare
solutions delivery
Optomed USA
HR
Quality and
Regulation
9
Subsidiaries of the company
Consolidated
shareholding and
voting right, %
Country of
incorporation
Optomed Software Oy 100.0% Finland
O p t o m e d H o n g K o n g L t d 100.0% Hong Kong
O p t o m e d C h i n a L i m i t e d C o . , L t d 100.0% China
Shanghai Optomed Medical
Te ch no log y C o. , L td
100.0% China
O p t o m e d U S A I n c . 100.0% United States
Legal structure
Optomed group consists of the parent company Optomed Plc and four sub-
sidiaries in Finland, China, the USA and Hong Kong. In addition, Optomed Plc
had a branch, Optomed Sweden Filial,in Sweden, which was closed at the end
of 2022. The parent company of the group, Optomed Plc, is responsible for,
among other things, the management of the group as well as finance and ac-
counting functions, human resources, legal affairs and corporate communica-
tion. The parent company is responsible for the Devices segment operations,
while the Software segment operations are carried out through Optomed
Software Oy. In addition to Finland, Optomed operates in China and the USA
through its subsidiaries. The main responsibilities of the foreign subsidiaries
are local sales and distribution channel management, product registration as
well as the launching of new products, brand building, marketing, after-sales
services, and repair services.
The following table presents the subsidiaries of the company along with respe-
ctive ownership shares on 31 December 2022.
Shanghai Optomed Medical Technology Co., Ltd was closed on January 2023.
Shares and shareholders
The company has one share series with all shares having the same rights. At the
end of the review period Optomed Plc’s share capital consisted of 16,541,355
shares and the company held 374,566 shares in the treasury which corresponds
to approximately 2.26 percent of the total amount of the shares and votes. Op-
tomed’s market capitalization was EUR 62.0 million at the of the review period.
10
Sector Number of shareholders % of shareholders Number of shares % of shares
Private companies 309 3.71 2,607,975 15.77
Financial and insurance institutions 19 0.23 3,358,516 20.3
Public sector organizations 4 0.05 965,336 5.84
Households 7,965 95.6 5,201,920 31.45
Non-profit instit serving households 10 0.12 98,045 0.59
Foreigners 15 0.18 18,255 0.11
Total 8,322 99.88 12,250,047 74.06
Nominee registered 10 0.12 4,291,308 25.94
Total shares 16,541,355 100
Number of shares Shareholders % Shares %
1 - 100 3,089 37.07 147,224 0.89
101 – 1,000 4,273 51.28 1,647,483 9.96
1,001 – 10,000 873 10.48 2,286,328 13.82
10,001 – 100,000 77 0.92 2,093,269 12.66
100,001 – 1,000,000 18 0.22 5,056,584 30.57
> 1,000,000 2 0.02 5,310,467 32.1
Total 8,332 100 16,541,355 100
Nominee registered 10 0.12 4,291,308 25.94
Number of shares issued 16,541,355 100
11
Shareholder Shares % of shares
1
* Skandinaviska Enskilda Banken Ab (publ)
Helsinki Branch
4,100,758 24.79
2 OP-Suomi Pienyhtiöt 1,209,709 7.31
3 Sr Aktia Capital 687,409 4.16
4 Suomen Teollisuussijoitus Oy 601,080 3.63
5 Sr Säästöpankki Pienyhtiöt 440,839 2.67
6 Mandatum Henkivakuutusosakeyhtiö 414,237 2.5
7 Optomed Oyj 374,566 2.26
8 Sr Nordea Nordic Small Cap 361,125 2.18
9 Keskinäinen Vakuutusyhtiö Kaleva 322,044 1.95
10 Aura Capital Oy 268,934 1.63
Total 8,780,701 53.08
Nominee registered 4,100,758 24.79
Others 7,760,654 46.92
Total 16,541,355 100
*Nominee register
At the end of the review period, Optomed’s Chairman and Members of the
Board of Directors controlled 33,827 shares, representing approximately 0.20
percent of the total number of all shares and 0.21 percent of all shares exclu-
ding shares in treasury. The CEO and management team owned 204,712 sha-
res and 408,000 options.
Flagging notifications
Under the provisions of the Finnish Securities Markets Act, shareholders of listed
companies have an obligation to notify both the Finnish Financial Supervision
Authority and the listed company of changes in their holdings when crossing pre
-
defined thresholds.
In 2022, Optomed received the following major shareholder notifications:
28.1.2022 BI Asset Management Fondsmægler-selskab A/S notified that, the total
holdings in Optomed shares and votes has decreased to 4.31% of all of the regis
-
tered shares in Optomed.
11.5.2022 Funds (Shanghai Cenova Innovation Venture Fund (Limited Partner
-
ship), Alnair Investment and Cenova China Healthcare Fund IV, L.P.) the total hol-
dings in Optomed shares and votes held by Notifier through has decreased to
14.36 per cent of all of the registered shares in Optomed on 10 May 2022 as a
result of Optomed’s total number of shares increasing on the date.
2.12.2022 OP-Rahastoyhtiö Oy (“Notifier”). According to the notification, the total
holdings in Optomed shares and votes held by Notifier is 5.43 per cent of all of the
registered shares in Optomed on 30 November 2022. The total holdings of the
Notifier have not changed on 30 November 2022. Instead, the disclosure is made
due to the merger of OP-Suomi Mikroyhtiöt and OP-Suomi Pienyhtiöt funds.
Shareholder agreements
The company is not aware of the existence of any Shareholders’ agreements and
it is not controlled by anyone.
Additional information with respect to the shares, shareholding and trading
can
be found on the company’s website www.optomed.com.
12
Group Share Indicators 2022 2021 2020
Earnings per share -0.37 -0.32 -0.24
Equity per share 1.39 1.34 1.51
Dividend per share - - -
Dividend % of earnings - - -
effective dividend yield % - - -
P/E ratio -10.03 -31.00 -31.05
Share price performance, share issue adjusted *
Lowest share price 2.11 7.25 2.92
Highest share price 10.75 18.90 7.57
Average share price 4.56 10.62 5.33
Closing share price 3.75 9.80 7.22
Market value of shares at end of period 62,030 137,231 101,103
Weighted average adjusted number of shares during the financial period 14,052,855 13,390,702 13,262,766
Weighted average adjusted number of shares in the end of financial year 14,640,697 13,441,437 13,262,766
Authorizations
The Annual General Meeting approved the authorization for the Board of Dire-
ctors to accept as pledge and repurchase of Optomed’s own shares. Altogether
no more than 1,400,314 shares may be repurchased or accepted as pledge. The
authorization will be valid until the earlier of the end of the next Annual General
Meeting or 18 months from the resolution of the Annual General Meeting.
The Annual General Meeting authorized the Board of Directors to decide on the
issuance of shares as well as the issuance of options and other special rights
entitling to shares referred to in chapter 10 section 1 of the Finnish Companies
Act. The number of shares to be issued based on this authorization may not
exceed 1,400,314. The Board of Directors is authorized to resolve on all terms
and conditions of the issuance of shares and special rights entitling to shares,
including the right to derogate from the pre-emptive right of the shareholders.
The authorization will be valid until the earlier of the end of the next Annual Ge-
neral Meeting or 18 months from the resolution of the Annual General Meeting.
13
Calculation of share indicators
Option programs
Optomed has established several option programs as incentive programs co-
vering employees, managing directors and consultants of the group.
Optomed’s amended option programs are described below.
Each option entitles its owner to subscribe for one (1) new, or if the company’s
Board of Directors so decides, existing A share in the company or if the company
would only have one class of shares, as is the case following the Listing, such
shares. The share subscription prices, and the exercise periods are set out in
the terms and conditions of the options.
The dividend right of the new shares and other shareholder rights will commence
after the shares upon exercise of the relevant option are recorded into the Trade
Register, or if existing shares of the company are being issued, upon comple-
tion of the transfer of the share provided that the transfer has been fully paid.
Earnings per share Net result / Weighted average number of outstanding shares
Equity per share Shareholders’ equity / adjusted number of shares at the end of the financial period - own shares
Dividend per share Total dividend / adjusted number of shares at the end of the financial period - own shares
Dividend, % of earnings Dividends per share / earnings per share × 100
Effective dividend yield, % Dividend per share x 100 / adjusted share price at the end of the financial period
P/E ratio Market value per share/ earnings per share
The options are forfeited and automatically transferred to the company without
consideration if the employment or service relationship to the group is termi-
nated, for any reason whatsoever, or if the consulting agreement regarding
the option holder’s work performed for the group is terminated for any reason
whatsoever, unless the Board of Directors decides to deviate from the main rule.
14
Program Subscription price (EUR) Exercise Period Outstanding options at the end of 2022
2015 3.5 1 July 2020 – 1 July 2024 118,000
2017 3.5 1 July 2020 – 1 July 2024 131,300
2017B 3.5 1 July 2020 – 1 July 2024 29,300
2018C 3.5 (50%) 1 July 2020 – 31 December 2024 164,500
(50%) 1 July 2021 – 31 December 2024
2019A 3.5 1 July 2021 – 31 December 2024 66,000
2019B 3.5 (40%) 1 July 2020 – 31 December 2024 100,000
(20%) 1 September 2020 – 31 December 2024
(40%) 1 September 2021 – 31 December 2024
2019C 3.5 (50%) 1 July 2020 – 31 December 2024 20,000
(50%) 1 September 2020 – 31 December 2024
2019D 5 1 January 2023 – 31 December 2023 8,000
2020A 3.5 1 January 2023 – 31 December 2023 119,000
2022A 4.17 1 January 2026 – 31 December 2027 147,500
Total 903,600
15
Decisions of the annual general meeting
On 10 May 2022, Optomed held its Annual General Meeting (AGM) that adopted
the financial statements for the financial period ended on 31 December 2021 and
the remuneration report for governing bodies and discharged the members of the
Board of Directors and the CEO from liability for the financial period ended on 31
December 2021. The AGM resolved that no dividend will be paid for the year 2021.
The number of members of the Board of Directors was confirmed as five. Xisi
Guo, Seppo Mäkinen, Petri Salonen, Reijo Tauriainen and Anna Tenstam were
re-elected as members of the Board.
The Annual General Meeting confirmed the annual Board remuneration as follows:
• Chairman of the Board EUR 36,000
• members of the Board EUR 18,000.
In addition, a meeting fee in the amount of EUR 300 is paid to the Chairpersons
and EUR 200 to members of the Committees for each Committee meeting. 40
percent of the Board remuneration is paid in Optomed shares and 60 percent in
cash. The remuneration will be paid once a year in August, after Optomed’s H1
report has been announced.
The AGM decided to elect KPMG Oy Ab, a firm of authorized public accountants,
as the Company’s auditor. KPMG Oy Ab has informed the Company that Autho
-
rized Public Accountant Tapio Raappana will continue as the auditor with principal
responsibility.
The Annual General Meeting resolved in accordance with the Board’s proposal
to amend Section II.2.3 of Stock Option Plan 2017B to extend the subscription
period for shares by two (2) years, so that the subscription period pursuant to
all option rights granted under Stock Option Plan 2017B will end on 1 July 2024.
The General Meeting approved the authorization for the Board of Directors to
repurchase Optomed’s own shares and to accept them as pledge. Altogether
no more than 1,400,314 shares may be repurchased or accepted as pledge. The
authorization will be valid until the earlier of the end of the next Annual General
Meeting or 18 months from the resolution of the Annual General Meeting.
The General Meeting authorized the Board of Directors to decide on the issuance
of shares as well as the issuance of option rights and other special rights entit-
ling to shares referred to in Chapter 10, Section 1 of the Finnish Companies Act.
The number of shares to be issued based on this authorization may not exceed
1,400,314. The Board of Directors is authorized to resolve on all terms and condi-
tions of the issuance of shares and special rights entitling to shares, including the
right to derogate from the pre-emptive right of the shareholders. The authorization
will be valid until the earlier of the end of the next Annual General Meeting or 18
months from the resolution of the Annual General Meeting.
Decisions of the Board of Directors:
At its meeting held after the Annual General Meeting, the Board of Directors
elected from among its members Petri Salonen as its Chairman. The committee
members were elected as follows:
Audit Committee:
• Reijo Tauriainen (Chairman)
• Seppo Mäkinen
• Anna Tenstam
Remuneration Committee:
• Seppo Mäkinen (Chairman)
• Reijo Tauriainen
• Anna Tenstam
Extraordinary General Meeting
On 6 Septmeber 2022, the Company organized an Extraordinary General Meeting
as Board member Xisi Guo decided to leave the Board of Directors of Optomed on
19 August 2022. The Extraordinary General Meeting elected Mr. Mars Duan to the
Board of Directors of the Company. Mars Duan is independent of the Company
and dependent of a major shareholder.
The Board of Directors of Optomed Plc currently consists of the following persons:
the Chairman Petri Salonen, Mars Duan, Seppo Mäkinen, Reijo Tauriainen and
Anna Tenstam.
16
Risks and uncertainties
Aurora AEYE FDA clearance process
Optomed is in the process to obtain a US FDA clearance for its AI handheld ca-
mera Aurora AEYE. Optomed and its partner AEYE Health have a common goal
to obtain the US FDA clearance for the handheld AI fundus camera Aurora AEYE.
The Company has limited visibility to the FDA decision making process and the
Company may be adversely affected if the process is delayed or requires significant
additional work or investments from the Company.
Pandemics
The COVID-19 pandemic is still affecting Optomed’s markets.
The Company may be adversely affected if a new outbreak of COVID-19 or another
disease causes a new pandemic. The COVID-19 pandemic is still affecting various
countries.
Hight quality products
The quality and safety of the Company’s products are extremely important for
Optomed’s competitivenes.
The Company may be adversely affected if it fails to continuously develop and
update its fundus cameras and software solutions or to identify or integrate new
products and product platforms into its offering. The Company’s or its partners
products may also be subject to clinical trials, the results of which are critical for
the products’ regulatory approvals and market acceptance.
Strategy and M&A
The Company may be unsuccessful in fulfilling its strategy or the strategy itself
may be unsuccessful.
The successful implementation of the Company’s strategy depends upon a number
of factors, some of which are completely or partially outside the Company’s cont-
rol. The Company has an appropriate risk management function in the context of
the size of the Company’s operations, however, it may not be able to identify or
monitor all relevant risks and determine efficient risk management procedures
and responsible persons that may again affect the strategy. The Company is also
dependent on its ability to develop and manage varying routes-to-market for its
products, the efficiency of its sales channels and its customer and distributor
relationships. Further, the Company has an opportunistic view on M&A which
by nature include inherent risks. Failure of strategy may force the Company to
record write-downs on its goodwill.
Market and competition
Optomed operates in a niche market that is highly competitive.
Optomed operates in the fundus camera market that is developing fast and
the competition is sometimes fierce. The market acceptance of the Company’s
products and solutions is important for our future growth. Optomed recognizes
a possibility of new market changing products entering the market. Further, in
certain key geographies our client base is limited and, therefore, a loss of a key
customer in a key market may adversely affect our revenue streams.
External economic and political risks and natural disasters
Optomed operates globally and is thus exposed to various external risks.
The Company is exposed to natural disasters taking place in countries where it
operates and general and country specific economic, political and regulatory risks,
which could entail volatile sales in key markets. In the PRC, “Made in China 2025”
national strategic plan may have an effect on medical device manufacturers’ sales
to the public sector.
Supply chain
Optomed’s business is dependent on the effectiveness of purchasing materials,
manufacturing and timely distribution.
The Company is dependent on contract manufacturers for functioning, efficient
and effective production and product assembly. Further, the Company is depen
-
dent on suppliers which may affect the Company’s ability to supply its customers
in a timely manner. Global component sourcing issues make it harder to obtain
the key components for the Company’s medical devices.
Systems and information
Our operations are increasingly dependent on IT systems.
Disruption of the Company’s IT systems could inhibit our business operations in
a number of ways, including disruption to financial reporting, sales, production
and cash flows.
17
Litigation
Optomed operates globally and pursues double-digit annual organic growth in
medium term.
Optomed may not always be able to reach the best contractual terms with sta
-
keholders. The Company may be negatively affected by legal or administrative
proceedings directed at the Company or third parties due to back-to-back liability,
or other disputes and claims including product liability, especially in terms of
medical devices, and intellectual property rights related items.
Trade secrets and patents
The technologic capabilities are a competitive advantage that the Company must
be able to protect.
The Company may not be able to protect its trade secrets and know-how which
could lead to losing the competitive advantage the Company has. At the same
time, we may be forced to take actions against parties that violate our IPRs.
Talent & organisation
A skilled workforce and agile organisation are essential for the continued success
of our business.
The Company may be adversely affected if it would lose its key personnel or fails
to attract the right talent.
Finance
The Company needs external financing to operate and is not currently profitable.
The Company is dependent on external financing and the Company may have
difficulties accessing additional financing on competitive terms or at all which may
again contribute the Company’s liquidity risks. The Company is also subject to
credit and counterparty risks through its trade receivables. Optomed has a large
credit risk concentration related to a major Chinese customer whose payments
are late. The payments from the customer continue but materially slower than
originally agreed.
Forex
We operate globally and are thus exposed to currency exchange risks.
The Company is exposed to foreign exchange rate risks arising from fluctuations
in currency exchange rates, especially with regards USD, EUR and RMB. Currency
rates, along with demand cycles, can result in significant swings in the prices of
the raw materials needed to produce our goods and our sales prices and OPEX.
Legal and regulatory
Compliance with laws and regulations is an essential part of Optomed’s business
operations.
Optomed together with its suppliers and distributors operate globally and are
subject to various national and regional regulations in the areas of medical devices,
product safety, product claims, data protection, intellectual property rights, health
and safety, competition, employment, taxes and anti-money laundering and anti-
bribery & corruption (AML & ABC). Further, many of the Company’s devices are
subject to various medical related assessment (including clinical trials), clearance
and approval processes that are required to place our products the market.
Failure to comply these might lead to loss of sales permits in different markets,
product recalls, reputational issues, civil and criminal actions leading to various
direct and indirect damages to Optomed and our employees that are not comple-
tely covered by Optomed’s insurance coverage. Especially, failures with respect to
compliance with certain medical devices related regulations and processes may
hinder the Company’s devices’ market access.
Disputes
According to the understanding of the company board of directors ,the company
is not currently involved in any disputes or trials that would have a significant
impact on the group’s financial position.
18
Major events after the review period
No material events after the reporting period.
The board’s proposal for the
distribution of profit
The parent company’s non-restricted equity on 31 December 2022, was EUR
23,858,348.30 and the net loss for the financial year was EUR -3,547,640.33 . The
Board of Directors proposes to the Annual General Meeting that no dividend
will be paid and the non-restricted equity on the outstanding 16,541,355 shares
shall be retained and carried forward.
Outlook 2023
Optomed expects its full year 2023 revenue to grow compared to 2022.
19
Consolidated income statement
In thousand of euro Note Jan 1 - Dec 31, 2022 Jan 1 - Dec 31, 2021
Revenue 2, 3 14,660 14,850
Other operating income 4 857 810
Materials and services 5 -5,449 -5,102
Employee benefit expenses 6 -8,827 -8,702
Depreciation, amortization and impaiment losses 8 -3,145 -2,778
Other operating expenses 7 -3,193 -3,858
Operating result -5,097 -4,780
Finance income 8 569 715
Finance expenses 8 -1,024 -263
Net finance expenses -454 453
Loss before income taxes -5,551 -4,327
Income tax expense 10 79 78
Loss for the financial year -5,472 -4,249
Loss for the financial year attributable to
Owners of the parent company -5,472 -4,249
Loss per share attributable to owners of the parent company
Basic loss per share (euro) 11 -0.37 -0.32
20
Consolidated comprehensive income statement
In thousand of euro Jan 1 - Dec 31, 2022 Jan 1 - Dec 31, 2021
Loss for the financial year -5,472 -4,249
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Foreign currency translation difference
Other comprehensive income for the financial year, net of tax 139 -253
Total comprehensive income for the financial year -5,333 -4,502
Total comprehensive loss attributable to
Owners of the parent company
-5,333 -4,502
21
Consolidated balance sheet
In thousand of euro Note Dec 31, 2022 Dec 31, 2021
ASSETS
Non-current assets
Goodwill 4,256 4,256
Development costs 6,562 6,338
Customer relationships 1,164 1,386
Technology 534 636
Other intangible assets 379 358
Total intangible assets 12 12,895 12,975
Tangible assets 13 852 433
Right-of-use assets 14 1,448 1,205
Deferred tax assets 10 15 13
Total non-current assets 15,210 14,626
Current assets
Inventories 15 2,998 2,936
Trade receivables 16.21 3,556 3,658
Other receivables 17 1,012 973
Cash and cash equivalents 16 8,524 6,804
Total current assets 16,090 14,371
Total assets 31,300 28,998
22
LIABILITIES
Non-current liabilities
Borrowings from financial institutions 19.21 3,380 3,813
Government loans 19.21 906 1,940
Lease liabilities 14.19 1,058 818
Deferred tax liabilities 10 387 463
Total non-current liabilities 5,731 7,034
Current liabilities
Borrowings from financial institutions 19.21 794 1,071
Government loans 19.21 193 193
Lease liabilities 14.19 412 396
Trade payables 19 869 944
Other payables 20 2,959 2,308
Total current liabilities 5,227 4,912
Total liabilities 10,957 11,946
Total equity and liabilities 31,300 28,998
In thousand of euro Note Dec 31, 2022 Dec 31, 2021
EQUITY
Share capital
Share premium
Reserve for invested non-restricted equity
Translation differences
Retained earnings
-21,717 -17,721
Profit (loss) for the financial year
-5,472 -4,249
Total equity
18 20,342 17,052
23
Consolidated cash flow statement
In thousand of euro Note Jan 1 - Dec 31, 2022 Jan 1 - Dec 31, 2021
Cash flows from operating activities
Loss for the financial year -5,472 -4,249
Adjustments:
Depreciation, amortization and impairment losses 7 3,145 2,689
Finance income and finance expenses 9 618 -472
Other adjustments -770 454
Cash flows before change in net working capital -2,479 -1,579
Change in net working capital:
Change in trade and other receivables (increase (-) / decrease (+)) 204 -1,409
Change in inventories (increase (-) / decrease (+)) -68 -340
Change in trade and other payables (increase (+) / decrease (-)) 172 516
Cash flows before finance items -2,171 -2,811
Interest paid -76 -66
Other finance expenses paid -123 -64
Interest received 0 1
Net cash from operating activities (A) -2,370 -2,940
Cash flows from investing activities
Capitalization of development expenses 12 -2,249 -2,112
Acquisition of tangible assets 13 -780 -462
24
Net cash from (used in) operating, investing and
financing activities (A+B+C)
Net increase (decrease) in cash and cash equivalents 1,605 -3,876
Cash and cash equivalents at January 1 6,804 10,608
Effect of movements in exchange rate on cash held 115 73
Cash and cash equivalents at December 31 16 8,524 6,804
*Comparison figures for 2021 numbers have been corrected in Operating activities category.
Net cash used in investing activities (B) -3,029 -2,574
Cash flows from financing activities
Proceeds from share subscriptions 18 9,012 1,012
Share issue transaction costs -682 0
Proceeds from loans and borrowings 19 0 1,366
Repayment of loans and borrowings 19 -912 -327
Repayment of lease liabilities 14.19 -415 -414
Net cash from financing activities (C) 7,003 1,637
25
Consolidated statement of changes in equity
Equity attributable to owners of the parent company
In thousand of euro Note
Share
Capital
Share
Premium
Reserve for
invested
non-restricted
Translation
differences
Retained
earnings
Total
Balance at January 1, 2022 80 504 38,526 -88 -21,970 17,052
Comprehensive income
Loss for the financial year -5,472 -5,472
translation differences 139 139
Total comprehensive income for
the financial year
Transactions with owners of the
company
Share issue 8,371 8,371
Share options 6 253 253
Total transactions
with owners of the company
Other adjustments
Balance at December 31, 2022 18 80 504 46,896 51 -27,189 20,342
Other adjustments line is about group elimination booking correction that is related to previous years
26
In thousand of euro Note
Share
Capital
Share
Premium
Reserve for
invested
non-restricted
Translation
differences
Retained
earnings
Total
Balance at January 1, 2021 80 504 37,470 166 -18,147 20,073
Comprehensive income
Loss for the financial year -4,249 -4,249
translation differences -253 -253
Total comprehensive income for
the financial year
- - - -253 -4,249 -4,502
Transactions with owners of the
company
Share options 6 - - 1,055 - 340 1,395
Total transactions
with owners of the company
- - 1,055 - 340 1,395
Other adjustments 86 86
Balance at December 31, 2021 18 80 504 38,526 -88 -21,970 17,052
Other adjustments line is about group elimination booking correction that is related to previous years
Equity attributable to owners of the parent company
27
Notes to the consolidated
financial statements
28
1. Corporate information and basis
of accounting
1.1 Corporate information
Optomed is a Finnish medical technology group (hereafter ‘Optomed’ or ‘Group’)
that specialises in hand-held fundus cameras and solutions for screening of
The Group’s parent company, Optomed Plc. (hereafter the ‘Company’) is a
Finnish public limited liability company established under the laws of Finland ,
and its business ID is 1936446-1. It is domiciled in Oulu , Finland and the Com-
pany’s registered address is Yrttipellontie 1, 90230 Oulu, Finland .
The Board of Directors of Optomed Plc approved these consolidated financial
statements for issue. According to the Finnish Limited Liability Companies’ Act,
the shareholders have the right to approve or reject the financial statements
in the Annual General Meeting held after the publication of the financial state-
ments. Furthermore, the Annual General Meeting can decide on modifications
to be made to the financial statements.
1.2 Basis of accounting
their interpretations adopted in accordance with the procedure laid down in
regulation (EC) No 1606/2002 of the European Parliament and of the Council.
Optomed has consistently applied these policies to all the years presented
(2021-2022), unless otherwise stated.
General policies applied that relate to the consolidated financial statements as
a whole are described in this section 1.2. Accounting policies that are specific to
a component of the financial statements, together with descriptions of manage
-
ment judgements, related estimates and assumptions, have been incorporated
into the relevant note.
The consolidated financial statements are prepared on a historical cost basis,
except for the following that are measured at fair value (refer to 1.2.3 Measu-
rement of fair values below):
— share-based payments
The financial year of Optomed is the calendar year. The figures in the financial
statements are mainly presented in thousands of euro. All figures presented have
been rounded, and consequently the sum of individual figures may deviate from
the presented aggregate figure. Key figures are computed using exact figures.
1.2.1 Consolidation
The consolidated financial statements incorporate the financial statements of
the parent company Optomed Plc. and of all those subsidiaries over which the
parent company has control at the end of the reporting period. Optomed cont-
rols an entity when Optomed is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Acquired subsidiaries are
consolidated from the date on which control is transferred to Optomed until
control ceases. Refer to Note 23. Related party transactions for disclosures on
the Group structure.
Intra-group transactions, receivables, liabilities and unrealized margins, as well
as distribution of profits within the Group, are eliminated in preparing the con-
solidated financial statements. Optomed had no non-controlling interests (NCI)
during the financial years in the report.
Acquired or established subsidiaries are accounted for by using the acquisition
method.
1.2.2 Foreign currency transactions and balances
Items included in the financial statements of each subsidiary are measured
using the currency of the primary economic environment in which the company
operates (‘the functional currency’). The consolidated financial statements are
presented in Euro, which is the functional and presentation currency of the
parent company.
29
For those subsidiaries with non-Euro functional and presentation currency, the
income and expenses for the income statement and comprehensive income sta-
tement, and the items for cash flow statement, are translated into Euro using the
average exchange rates of the reporting period. The assets and liabilities for the
balance sheet are translated using the exchange rates prevailing at the reporting
date. The translation differences arising from the use of different exchange rates
explained above are recognized in consolidated other comprehensive income.
Any goodwill arising on the acquisition of foreign operations and any fair value
adjustments to the carrying amounts of assets and liabilities arising on the
acquisition of those foreign operations are treated as assets and liabilities of
those foreign operations. They are translated into Euro using the exchange rates
prevailing at the reporting date. When a foreign operation is sold, or is otherwise
partially or completely disposed of, the translation differences accumulated in
equity are reclassified in profit or loss as part of the gain or loss on the transaction.
1.2.3 Measurement of fair values
Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measure-
ment date. A number of the Group’s accounting policies and disclosures require
the measurement of fair values, for both financial and non-financial assets and
liabilities. When measuring the fair value of an asset or a liability, the Group
uses observable market data as far as possible. Fair values are categorised into
different levels in a fair value hierachy based on the inputs used in the valuation
techniques as follows:
— Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
— Level 2: inputs other than quoted prices included in Level 1 that are observable
for the asset or liability; either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
— Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
Specific valuation techniques used in fair value measurement include:
— Share-based payments – Black-Scholes option pricing model (Note 6.4 Sha-
re-based payment plans)
1.2.4 Operating result
Optomed has determined operating result to be a relevant subtotal in unders-
tanding the Group’s financial performance. However, IFRS does not define the
concept of operating result. The Group has defined it as follows: operating
result is the net amount attained when revenues are added by other operating
income, less:
— purchase expenses, adjusted with change in inventories
— employee benefit expenses
— depreciation, amortization and any impairment losses, and
— other operating expenses.
All other items are presented below operating result in the income statement.
1.2.5 Non-current assets held for sale
Non-current assets (or disposal groups) are classified as held for sale, if their
carrying amounts are to be recovered principally through a sale transaction
rather than through continuing use. From the date of classification, these assets
(or disposal groups) are measured at the lower of their carrying amounts and
fair value less the costs to sell, and the recognition of depreciation or amor-
tization is discontinued.
1.2.6 Critical management judgments and related
estimates and assumptions
The preparation of financial statements under IFRS requires management to make
judgments, estimates and assumptions that affect the reported amounts of assets
and liabilities, and disclosure of contingent assets and liabilities at the end of the
reporting period as well as the reported amounts of income and expenses during
the reporting period. These estimates and assumptions are based on historical
experience and other justified assumptions, such as future expectations, that
Optomed management believes are reasonable under the circumstances at the
end of the reporting period and the time when they were made.
Although these estimates are based on management’s best knowledge of current
events and actions, actual results may ultimately differ from those estimates.
The estimates and underlying assumptions are reviewed on an on-going basis
30
and when preparing financial statements. Changes in accounting estimates may
be necessary if there are changes in the circumstances on which the estimate
was based, or as a result of new information or more experience. Such changes
are recognized in the period in which the estimate or the assumption is revised.
Use of judgment and estimates
Judgements that management has made in the process of applying accounting
policies and that have the most significant effect on the amounts recognised in
the financial statements, relate to the following areas:
— capitalisation of development costs: determination of development expen-
diture eligible for capitalisation (Note 12. Intangible assets )
— leases: determination of lease term (Note 14. Leases )
Assumptions and estimation uncertainties that have a significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are the following:
— Determining trade receivables credit risk (Note 21. Financial risk management)
— goodwill impairment testing (Note 12. Intangible assets )
— capitalisation of development expenditures
(Note 12. Intangible assets )
— Development expenditures impairment testing
(Note 12. Intangible assets)
1.2.7 Adoption of IFRS agenda decision
IFRS finalized in April 2021 its agenda decision Configuration or Customisation
Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets). In this
agenda decision IFRS IC considered, whether, applying IAS 38, the customer
recognises an intangible asset in relation to configuration or customisation of
the application software, and if an intangible asset is not recognized, how the
customer accounts for the configuration or customisation costs. IFRIC agenda
decisions have no effective date, so they are expected to be applied as soon
as possible. As the Group has cloud computing arrangements in place, it has
analysed this in autumn 2021 and effects on intangible assets were taken into
account in financial statement 2021.
1.2.8 Adoption of new and amended standards in future
financial years
Optomed has not yet adopted the following amended standards and interpre-
tations already issued by the IASB. The Group will adopt these pronouncements
as of the effective date of each of the pronouncements, or if the effective date
is not the first day of the financial year, as of the beginning of the next financial
year following the effective date. Currently Optomed believes that the adoption
of these pronouncements will not have a significant effect on the future conso-
lidated financial statements.
Effective for financial years beginning on or after January 1, 2023:
Amendments to References to Conceptual Framework in IFRS Standards: The
revised Framework codifies IASB’s thinking adopted in recent standards. The
Conceptual Framework primarily serves as a tool for the IASB to develop stan-
dards and to assist the IFRS Interpretations Committee in interpreting them. It
does not override the requirements of individual IFRSs.
Amendments to IAS 1 Financial Statements: Presentation and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors - Definition of Material:
The amendments clarify the definition of material and include guidance to help
improve consistency in the application of that concept across all IFRS standards.
In addition, the explanations accompanying the definition have been improved.
Other amendments and interpretations are not expected to have an impact on
the consolidated financial statements when adopted.
31
2. Segment reporting
2.1 Accounting policy
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses and for which
discrete financial information is available. Optomed has two reportable segments,
Devices and Software.
Software segment offers products for optimal management of various screening
operations as well as IT solutions and services for storing, viewing and working
with medical images. Also professional IT consulting services for government
institutions are included in this segment. Currently it comprises own screening
solution products for diabetic retinopathy and breast, cervical and bowl cancer
screening management as well as distributor of Sectra software solutions and
reseller of artificial intelligence algorithms of several companies.
The Devices segment develops, manufactures and sells Optomed fundus cameras
for use by ophthalmologists, pediatricians, endocrinologists, neurologists and
primary care professionals. Currently Devices segment comprises all Optomed
branded camera products, such as Optomed Smartscope Pro, Optomed Aurora
and Optomed Polaris cameras. Products for OEM customers, Pictor Plus and
Pictor Prestige (Volk), Visuscout 100 (Zeiss), Fundus Module 300 (The Haag-Streit)
and Signal (Topcon) are included in the Devices segment.
In Optomed Group the CEO has been identified as being the chief operating
decision maker responsible for assessing performance of the segments and
making resource allocating decisions. The segment disclosures presented are
based on the internal management reporting. Optomed has not aggregated
operating segments into reportable segments.
32
2022
2.2 Reportable segments
In thousand of euro Devices Software Group Admin Group, Total
External revenue 5,398 9,263 0 14,660
Net operating expenses -1,659 -2,933 0 -4,592
Margin 3,738 6,330 0 10,069
Depreciation and amortization -2,489 -649 -8 -3,145
Other expenses -4,408 -4,251 -3,361 -12,020
Operating result -3,159 1,431 -3,368 -5,097
Finance items 0 0 -454 -454
Loss before tax expense -3,159 1,431 -3,823 -5,551
Segment assets 11,627 8,185 241 20,053
Capital expenditure 1,992 790 49 2,831
Segment liabilities 474 673 146 1,292
33
2021
In thousand of euro Devices Software Group Admin Group, Total
External revenue 5,839 9,011 0 14,850
Net operating expenses -1,700 -2,592 0 -4,292
Margin 4,139 6,420 0 10,558
Depreciation and amortization -2,168 -608 -2 -2,778
Other expenses -5,153 -4,565 -2,843 -12,561
Operating result -3,182 1,247 -2,844 -4,780
Finance items 0 0 453 453
Loss before tax expense -3,182 1,247 -2,392 -4,327
Segment assets 11,974 7,568 241 19,784
Capital expenditure 2,176 197 36 2,409
Segment liabilities 613 400 113 1,126
34
Devices segment sells medical imaging tools and solutions to distributors. The
agreements with distributors are frame agreements. An enforceable contract
is created based on each purchase order combined with the frame agreement.
Typical sales agreements for the Software segment include maintenance ser-
vice agreements, resource hiring agreements, service portal agreements and
software package agreements.
For medical imaging tools and solutions each product in a purchase order forms
a separate performance obligation as:
— the distributor can benefit from the good on its own, and
— the promise to transfer the good to the customer is separately identifiable
from other promises in the contract.
Extended warranty may be sold separately, it is also a separate performance
obligation.
For Software segment:
— A maintenance contract has one performance obligation containing overall
service for the period agreed upon.
— A resource hiring contract is based on hourly fee. Each hour of consulting
service is a separate performance obligation.
— A service portal agreement includes following separate performance obliga-
tions: implementation, additions for
new service providers, reconfigurations and continuous service provided.
— A software package agreement includes following separate performance
obligations: licences, implementation and
continuous maintenance service.
Transaction prices in the contracts are mostly fixed. Some contracts may, however,
include a minimum amount for transactions in a certain period, for example. The
variable fee is constrained to the amount for which it is highly probable that a
significant reversal will not occur subsequently. The terms of payment applied
vary to some extent geographically and in different business areas, but the term
of payment provided is nonetheless always clearly less than a year. Consequently,
contracts do not include a significant financing component.
Optomed allocates the transaction price for medical imaging tools and solutions
to performance obligations based their stand-alone selling prices using price
lists. For service portal and software package contracts the transaction price is
3.1 Accounting policy
Optomed recognises revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which Optomed
expects to be entitled in exchange for those goods or services.
3. Revenue
2.3 Geographic information
In presenting the geographic information, segment assets were based on
the geographic location of the assets. Segment assets are measured in the
same way as in the IFRS financial statements.
Disaggreration of consolidated revenue by geographical market is disclosed in
Note 3.2 Disaggregation of revenue.
In thousands of euro 2022 2021
Finland 15,174 14,337
China 21 276
Total 15,195 14,613
Non-current assets
1
1 Group's non-current assets exclude financial instruments and deferred tax assets. Optomed has
no defined benefit pension plans and thus no related assets.
2.4 Major customers
The Group’s revenues from two major customers in the financial years 2021-2022
were approximately as follows: from one customer EUR 2.4 million (2022), and
EUR 2.4 million (2021), and from another customer EUR 1.3 million (2022) and
EUR 1,4 million (2021).
35
allocated based on costs incurred plus margin.
For Devices segment the revenues from sales of medical imaging tools and
solutions are recognised when the performance obligation is satisfied by tran-
sferring a promised good to the distributor, i.e. at a point in time. The control is
transferred when Optomed has present right to payment, significant risks and
rewards of ownership have transferred to the distributor as well as the legal
title and physical possession of the products.
In respect of Software segment:
— Service revenues are recognised over time as the customer simultaneously
receives and consumes the benefits
provided by Optomed’s performance.
— Revenues from implementation projects are recognised at a point in time
when the customer gets control and is able to
start using the end product.
— Licence revenues are recognised at the point in time when the customer gets
control. This is based on the nature of
licences, being to provide a right to use intellectual property of the Software
segment as that intellectual property
3.2 Disaggregation of revenue
In the following tables, consolidated revenue is disaggregated by geographical
market and timing of revenue recognition.
Trade receivables and related credit losses are described in Notes 16. Financial assets and 21.5
Liquity risk.
In thousands of euro 2022 2021
Finland 8,606 59 % 8,939 60 %
Rest of the Europe 1,715 12 % 1,162 8 %
Rest of the World 4,340 30 % 4,749 32 %
Total 14,660 100 % 14,850 100 %
2022 2021
Products and services
transferred at a point
in time
11,067 75 % 11,267 76 %
Services transferred
over time
3,593 25 % 3,583 24 %
Total 14,660 100 % 14,850 100 %
36
4. Other operating income
4.1 Accounting policy
Other operating income comprises income from activities outside the ordinary
business of Optomed. Examples include government grants, rental income and
gains from disposals of tangible and intangible assets.
The Group recognises a government grant only when:
— there is reasonable assurance that Optomed will comply with the conditions
attached to the grant, and
— the grant will be received.
Income-related grants are recognised in profit or loss over the periods necessary
to match them with the related costs that they are intended to compensate. They
are presented under the line item Other operating income. Asset-related grants,
such as government grants received for development purposes, are deducted
in arriving at the carrying amount of the assets. The grant is recognised over
the life of the asset as a reduced depreciation expense.
4.2 Breakdown of other operating income
During the financial years 2021-2022 Optomed has received government grants
from various organisations, such as Business Finland (previously Tekes). The
most significant grants for the years 2022, 2021 Optomed received from Busi-
ness Finland. 2022 operating income include Business Finland waived loan of
841 (538) thousand EUR.
In thousands of euro 2022 2021
Other operating income 857 810
Total 857 810
5.Materials and services
5.1 Breakdown of materials and services expense
Optomed has recognized 251 thousand inventory provision for non marketable
items during 2022.
In thousands of euro 2022 2021
Purchase expenses -4,974 -5,153
Change in inventories (increase (+),
decrease (-))
-99 403
External services
-375 -352
-5,449 -5,102
6. Employee benefits
6.1 Accounting policy
Employee benefits include the following:
a) short-term employee benefits b) post-employment benefits
c) other long-term employee benefits (no such benefits were provided during
the financial years 2021-2022)
d) termination benefits, i.e. benefits provided in exchange for the termination
of an employment
(no such benefits were provided during the financial years 2021-2022)
e) share-based payments (refer to Note 6.4 Share-based payment plans below).
a) Wages, salaries, fringe benefits, annual leave and bonuses are included in
short-term employee benefits. They are recognised in the period in which the
work is performed.
37
b) Post-employment benefits are payable to employees after the completion of
employment. In Optomed, these benefits are related to pensions. Pension cove-
rage of the Group is arranged through external pension insurance companies.
Pension plans are classified as either defined contribution or defined benefit
plans. Optomed only has defined contribution plans. A defined contribution
plan is a pension plan under which Optomed pays fixed contributions into a
separate entity. Optomed has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees
the related benefits. All other plans are classified as defined benefit plans. The
contributions for defined contribution plans are recognized as employee be-
nefit expense in those periods to which they relate. Prepaid contributions are
recognized as an asset to the extent that a cash refund or a reduction in the
future payments is available.
c) Other long-term employee benefits are all employee benefits other than short-
term employee benefits, post-employment benefits and termination benefits.
Examples include long-term paid absences such as sabbatical leave.
d) Termination benefits are not based on work performance but on the termina-
tion of employment. These benefits consist of severance payments. Termination
benefits result either from the Group’s decision to terminate the employment or
the employee’s decision to accept the benefits offered by Optomed in exchange
for the termination of employment. Such benefits are recognised at the earlier
of: when Optomed can no longer withdraw the offer of the benefits, and when
the Group recognises costs for a restructuring that involves the payment of
termination benefits.
e) The Group has ten share-based incentive plans for the Group key personnel,
which are share option plans. The purpose of the plans is to encourage the emp-
loyees to work on a long-term basis in order to increase shareholder value, and
to commit the key employees to the company. The payments for the incentives
are made with equity instruments.
Share-based compensation is measured at the grant date and expensed using
the straight-line method in the income statement over the vesting period. The
expense determined at grant date is based on Optomed’s estimate of the num-
ber of share options to which it is assumed that rights will vest by the end of
the vesting period. The fair value is determined using the Black-Scholes pricing
model. The Group updates its estimate of the final number of the share options
that will vest at each reporting date. Changes in this estimate are recognised
in the income statement. The options will be returned to Optomed in case the
employee leaves the Group before the subscription period has commenced.
There are no other vesting conditions.
When the option rights are exercised, the proceeds received are recognised in
accordance with the terms of the plan under Reserve for invested non-restricted
equity, net of any transaction costs.
6.2 Expenses recognised in profit or loss
In thousands of euro 2022 2021
Wages and salaries -7,197 -7,053
Contributions to defined contribution
post-employment plans
-1,105 -1,047
Other social security expenses -271 -262
Share-based payment plans -253 -340
Total -8,827 -8,702
38
6.3 Number of personnel
2022 2021
Average number of employees for
the financial year
119 115
option right entitles its holder to subscribe for one new share. Up to 66,000
shares can be subscribed for based on the option rights, corresponding to 0.4%
of the company’s share capital and votes.
2019B: 100,000 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period (40%) July 1, 2020–December 31, 2024,
(20%) September 1, 2020–December 31.2024 and (40%) September 1, 2021–De-
cember 31, 2024 . Each option right entitles its holder to subscribe for one new
share. Up to 100,000 shares can be subscribed for based on the option rights,
corresponding to 0.6% of the company’s share capital and votes.
2019C: 20,000 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period (50%) July 1, 2020–December 1, 2024
and (50%) 1 September 2020–31 December 2024. Each option right entitles its
holder to subscribe for one new share. Up to 20,000 shares can be subscribed
for based on the option rights, corresponding to 0.1% of the company’s share
capital and votes.
2019D: 8,000 Outstanding options on December 31.2022. Subcription price EUR
5.0 per share. Subscription period January 1, 2023–December 31, 2023. Each
option right entitles its holder to subscribe for one new share. Up to 8,000 shares
can be subscribed for based on the option rights, corresponding to 0.0% of the
company’s share capital and votes.
2020A: 119,000 Outstanding options on December 31.2022. Subcription price
EUR 3.5 per share. Subscription period January 1, 2023–December 31, 2023. Each
option right entitles its holder to subscribe for one new share. Up to 119,000
shares can be subscribed for based on the option rights, corresponding to 0.7%
of the company’s share capital and votes.
2022A: 147,500 Outstanding options on December 31.2022. Subcription price
EUR 4.17 per share. Subscription period January 1, 2026–December 31, 2027.
Each option right entitles its holder to subscribe for one new share. Up to 147,500
shares can be subscribed for based on the option rights, corresponding to 0.9%
of the company’s share capital and votes.
6.4 Share-based payment plans
Option programs in effect during the financial year
2015: 118,000 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period July 1, 2020–July 1, 2024. Each option
right entitles its holder to subscribe for one new share. Up to 118,000 shares
can be subscribed for based on the option rights, corresponding to 0.7% of the
company’s share capital and votes.
2017: 131,300 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period July 1, 2020–July 1, 2024. Each option
right entitles its holder to subscribe for one new share. Up to 131,300 shares
can be subscribed for based on the option rights, corresponding to 0.8% of the
company’s share capital and votes.
2017B: 29,300 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period July 1, 2020–July 1, 2022. Each option
right entitles its holder to subscribe for one new share. Up to 29,300 shares
can be subscribed for based on the option rights, corresponding to 0.2% of the
company’s share capital and votes.
2018C: 164,500 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period (50%) July 1, 2020–December 31, 2024
and (50%) 1 July 2021–31 December 2024. Each option right entitles its holder to
subscribe for one new share. Up to 164,500 shares can be subscribed for based on
the option rights, corresponding to 1.0% of the company’s share capital and votes.
2019A: 66,000 Outstanding options on December 31.2022. Subcription price
EUR 3.50 per share. Subscription period July 1, 2021–December 31, 2024. Each
39
Key terms and measurement of option plans
Plan 2015 2017 2017B 2018C 2019A
Maximum number of options 250,000 210,000 58,000 266,000 84,000
Number of options issued 250,000 210,000 58,000 266,000 84,000
Issued 2015-2018 2017 2017 2018 2019
Vesting period 2015 - 2020 2017 - 2020 2017 - 2020 2018 - 2021 2019 - 2021
Vesting condition Employment Employment Employment Employment Employment
Option subscription price 3.50 3.50 3.50 3.50 3.50
Fair value at grant date 2.25 2.17 2.09 2.09 2.09
Total fair value (1,000 EUR) 562 455 121 556 175
Plan 2019B 2019C 2019D 2020A 2022A
Maximum number of options 100,000 20,000 72,000 150,000 250 000
Number of options issued 100,000 20,000 72,000 119,000 147,500
Issued 2019 2019 2019 2020 2022
Vesting period 2019 - 2020 2019 - 2020 2019 - 2023 2020 - 2023 2022 - 2026
Vesting condition Employment Employment Employment Employment Employment
Option subscription price 3.50 3.50 5.00 3.50 4.17
Fair value at grant date 2.02-2.09 2.02 1.69 2.97 1.771
Total fair value (1,000 EUR) 205 40 122 446 443
40
The grant-date fair value of Optomed’s all option programs is determined using
the Black Scholes option pricing model that takes into account the following
key inputs:
— expected fair value of the underlying share EUR 4.0 - 6.5
— expected volatility 30 - 64 %
— the term of the option 1.3 - 3.7 years
Changes in outstanding share options
Option subscription price during the 2022 was 3.50 EUR for exercised options.
Optomed average share price during the 2022 was 4.56 EUR. In case the share
options issued are fully exercised, the number of outstanding A shares will
increase by 5.6%. The subscription prices will be recorded in the Reserve for
invested non-restricted equity.
Expenses from share-based payment plans
Total expenses arising from share-based payment plans recognised as part of
employee benefits were as follows:
Pieces 2022 2021
Outstanding at January 1 854,900 1,167,000
Granted during the year 178,000 14,000
Forfeited during the year -92,000 -17,000
Exercised during the year -37,300 -309,100
Expired during the year - -
Outstanding at December 31 903,600 854,900
Exercisable at December 31 629,100 672,900
In thousands of euro 2022 2021
Equity-settled share-based payments -253 -340
7. Other operating expenses
7.1 Accounting policy
Optomed’s other orerating expenses include:
— expenses other than the cost of goods sold, such as travel, marketing, IT
and office expenses.
— losses on the disposal of tangible and intangible assets.
7.2 Breakdown of other operating expenses
In thousands of euro 2022 2021
Travel expenses -356 -201
Marketing expenses -784 -674
IT expenses -403 -423
Office expenses -186 -196
Other administrative expenses -765 -866
Research and development expenses -361 -412
Credit loss accrual 123 -710
Other fixed expenses -463 -377
Total -3,193 -3,858
Other operating expenses also comprise changes in expected credit losses and
realised credit losses. More info about credit loss acrual in 21.4. Credit risk and
counterparty risk.
41
7.3 Auditor’s fees
In thousands of euro 2022 2021
Audit fees -145 -120
Tax advisory services 0 0
Other services -7 -19
Total -152 -139
8. Depreciation, amortization and
impaiment losses
8.1 Accounting policy
Depreciation and amortization is the systematic allocation of the depreciable
amount of a tangible / an intangible asset over its useful life. Optomed generally
applies the straight-line method. An impairment loss is the amount by which the
carrying amount of an asset exceeds its recoverable amount. Refer to Notes 12.
Intangible assets and 13. Tangible assets.
8.2 Depreciation, amortization and impaiment losses
by asset category
8.3 Impairment losses
The Group recognised impairment losses on intangible assets during financial year
2022 of 1,040 thousand euros and 571 thousand euros in 2021. 2022 and 2021
Impairment losses are due to terminated product development program. There
were no recognised impairment losses on tangible assets during years 2021-2022.
In thousands of euro 2022 2021
Intangible assets
Development costs -1,939 -1,434
Customer relationships -222 -222
Technology -102 -102
Other intangible assets -83 -221
Total -2,346 -1,979
In thousands of euro 2022 2021
Tangible assets
Machinery and equipment -372 -390
Total -372 -390
Total depreciation and
amortization / owned assets
-2,718 -1,779
9. Finance income and expenses
The accounting policies for financial assets and financial liabilities are presented
in Note 16. Financial assets and 19. Financial liabilities.
Recognised through profit or loss
9.1 Finance income
In thousands of euro 2022 2021
Foreign exchange gains 560 562
Interest income 4 17
Other finance income 6 137
Total 569 715
42
9.2 Finance expenses
Net financial items amounted to EUR -454 (453) thousand and consisted mainly
of interest payments to financial institutions and the translation effect of Chinese
RMB and USD to EUR.
In thousands of euro 2022 2021
Foreign exchange losses -756 -97
Interest expenses -115 -101
Other finance expenses -153 -64
Total -1,024 -263
Net finance expenses -454 453
9.3 Borrowing costs - government loans
Optomed has capitalised under Development costs those borrowing costs incurred
from the government loans (Business Finland) granted for development activities,
refer also to Note 19. Financial liabilities. The capitalisation rate used to determine
the amount of borrowing costs to be capitalised was 1 % for the years 2021-2022,
being the interest rate applicable to those loans during the said annual periods.
The capitalised costs amounted to EUR 21 thousand (2022) and EUR 20 thousand
(2021), which were recorded as a deduction to interest expenses. Interest expenses
in 2022, were affected by the Business Finland waived loan of 841 thousand EUR.
10. Income taxes
10.1 Accounting policy
The income tax expense for the period consists of:
— current tax, and
— change in deferred tax assets and deferred tax liabilities.
Income tax is recognized in the income statement, except that the income tax
effects of items recognized in other comprehensive income or directly in equity
are similarly recognized in other comprehensive income or equity.
The current income tax charge is calculated on the basis of the taxable income
determined in accordance with the tax rates and laws enacted (or substantive-
ly enacted) in the countries where Optomed operates and generates taxable
income. Income taxes are adjusted with any taxes relating to previous financial
years. Other taxes not based on income are included within other operating
expenses. Current taxes are calculated using the tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period.
Taxable profit differs from the profit reported in the consolidated income sta-
tement, since:
— some income or expense items are taxable or deductible in other years, and/or
— certain income items are not taxable or certain expense items are non-deduc-
tible for taxation purposes.
Generally deferred tax is provided using the liability method on:
— temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts
in the financial statements, and
— unused tax losses or unused tax credits.
Deferred tax assets are recognised for deductible temporary differences only to
the extent that it is probable that future taxable profits will be available, against
which Optomed can utilise deductible temporary differences. The amount and
the probability of the utilisation of deferred tax assets are reviewed at the end of
each reporting period. A valuation allowance is recognized against the deferred tax
asset, if the utilisation of the related tax benefit is no more considered probable.
Deferred tax liabilities are usually recognized in full. However, deferred tax
liability is not accounted for, if it arises from:
— the initial recognition of goodwill, or
— the initial recognition of an asset or a liability in a transaction which is not a
business combination, and
at the time of the transaction, affects neither accounting profit nor taxable
profit (tax loss).
43
A deferred tax liability is recognised for investments in subsidiaries, except
to the extent that Optomed is able to control the timing of the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are determined using tax rates (and
laws) that are expected to apply when the related deferred tax asset is realized
or the deferred tax liability is settled. The applied tax rate is the rate enacted
or substantively enacted by the balance sheet date in the respective countries.
10.2 Current tax
2022 2021
Profit before income tax -5,551 -4,327
Tax using the Finnish corporate tax rate
(20 %)
1,110 865
Effect of tax rate in foreign
jurisdictions
40 -2
Unrecognised deferred tax assets on
taxable losses
-527 -309
Non-deductible expenses -21 -9
Share option expense -51 -68
Depreciation and amortisation not
deducted for tax purposes
-466 -366
Consolidation-related adjustments -7 -32
Taxes in the income statement 79 78
10.3 Reconciliation between income tax expense
in profit or loss and tax expense calculated using
the Finnish corporate tax rate
10.4 Income taxes recognised in other
comprehensive income
During the years 2021-2022 the Group did not recognise any income taxes in
other comprehensive income.
In thousands of euro 2022 2021
Current tax for the reporting year 0 0
Current tax adjustments for prior years 0 0
Change in deferred taxes 79 78
Total 79 78
44
10.5 Movements in deferred tax asset and deferred tax liability balances
2022
2021
In thousands of euro
At Jan 1,
2022
Business
combinations
Recognised
through
profit or loss
Recognised
in equity
Exchange
differences and
other changes
At Dec 31,
2022
Deferred tax assets
Right-of-use assets 14 2 15
Total 14 2 15
Deferred tax liabilities
PPA Intangible assets -404 65 -340
Development costs -59 12 -47
Total -463 76 -387
Total deferred tax assets and deferred tax liabilities -450 78 -371
In thousands of euro
At Jan 1,
2021
Business
combinations
Recognised
through
profit or loss
Recognised
in equity
Exchange
differences and
other changes
At Dec 31,
2021
Deferred tax assets
Right-of-use assets 11 - 3 - - 14
Total 11 3 - - 14
Deferred tax liabilities
PPA Intangible assets -469 - 65 - - -404
Development costs -70 - 12 - - -59
Total -540 - 76 - - -463
Total deferred tax assets and deferred tax liabilities -529 - 79 - - -450
45
In thousands of euro Dec 31, 2022 Dec 31, 2021
Tax losses approved by tax authorities 6,854 7,723
Depreciation and amortization not
deducted for tax purposes
8,645 6,443
10.6 Group’s tax losses and depreciation and
amortization not deducted for tax purposes
These tax losses relate to Optomed Plc and its Chinese subsidiaries. The Group
has not recognised any deferred tax asset on these losses as at the time of
preparation of these financial statements it is unlikely that these entities will
generate taxable income against which the losses could be utilised before their
expiration dates. The losses will expire in the years 2023-2032.
The depreciation and amortization not deducted for tax purposes relate to
Optomed Plc.
11. Loss per share
11.1 Accounting policy
Basic and diluted earnings (loss) per share
Basic earnings (loss) per share is calculated by dividing:
— the profit (loss) attributable to owners of the parent company
— by the weighted average number of ordinary shares outstanding during the
financial year.
In calculating the diluted earnings (loss) per share, the dilutive effect of all dilutive
potential ordinary shares is taken into account in the weighted average number
of outstanding shares. The Group’s dilutive potential ordinary shares comprise
the share-based incentive plans payable in shares.
11.2 Loss per share
Diluted loss per share is not presented, as the results for the financial years
2021 and 2022 were negative and thus the dilutive instruments would have an
undilutive effect on loss per share.
2022 2021
Loss attributable to owners of the
parent company (in thousands of euro)
-5,472 -4,249
Weighted average number of
shares outstanding during the
financial year (pcs)
14,640,697 13,441,437
Basic loss per share (EUR/share) -0.37 -0.32
46
to use or sell the intangible asset
— Optomed is able to measure reliably the expenditure attributable to the in-
tangible asset during its development. Capitalised development costs comprise
all directly attributable costs (mainly labour) necessary to prepare the asset to
be capable of operating in the manner intended. Optomed has also:
— capitalised borrowing costs arisen from government loans granted for de-
velopment purposes, and
— deducted an applicable amount of major government grants received for
development activities from
the carrying amount.
Development expenditure that was initially expensed is not capitalised at a later
date. The estimated useful life for development costs is 10 years.
Research is original and planned investigation Optomed undertakes with the
prospect of gaining new scientific or technical knowledge and understanding.
Such costs are expensed as incurred.
b) Development costs: Development is the application of research findings or
other knowledge to a plan or design for the production of new or substantially
improved materials, devices, products, processes, systems or services before
the start of commercial production or use. Optomed capitalises such costs
when all the following criteria are met:
— Optomed can demonstrate the technical feasibility of completing the intan-
gible asset so that it will be
available for use or sale.
— Optomed intends to complete the intangible asset and use or sell it.
— Optomed is able to use or sell the intangible asset.
— Optomed is able to demonstrate how the intangible asset will generate
probable future economic benefits.
— The Group has adequate technical, financial and other resources available
to complete the development and
c) Customer relationships and technology: these assets were measured at fair
value at the acquisition date using the multi-period excess earnings method
and the relief-from-royalty method. Their estimated remaining useful lives are
10 years.
d) Other intangible assets: An intangible asset is recognised only if it is probable
that the expected future economic benefits that are attributable to the asset will
flow to Optomed, and the cost of the asset can be measured reliably. All other
expenditure is expensed as incurred. Group’s other intangible assets mainly
comprise patents and trademark rights, which are amortised on a straight-line
basis over their estimated useful lives (10 years).
Optomed reviews the amortization periods and the amortization methods
applied at least at each financial year-end. If the expected useful life of the
asset is different from previous estimates, the amortization period shall be
changed accordingly. The changes of useful lives can be due to e.g. technical
development, changes in demand or competition, for example.
The Group assesses, at each reporting date, whether there is an indication that
12. Intangible assets
12.1 Accounting policy
The Group’s intangible assets comprise the following: a) goodwill, b) develop-
ment costs, c) customer relatioships and technology (identified in the Commit
acquisition) and d) other intangible assets.
a) Goodwill: The excess of the
— consideration transferred
— amount of any non-controlling interest in the acquired entity, measured at
fair value, and
— acquisition-date fair value of any previous equity interest in the acquired entity,
over the fair value of the net identifiable assets acquired is recorded as goodwill.
Goodwill reflects e.g. expected future synergies resulting from acquisitions.
Goodwill is not subject to amortization but is tested annually for impairment,
or more frequently if there is any indication that it might be impaired, refer
to Note 12.3 below. Goodwill is carried at historical cost less accumulated
impairment losses.
47
an intangible asset other than goodwill may be impaired. If any indication exists,
Optomed estimates the asset’s recoverable amount. An impairment loss is re-
cognised in the income statement when the carrying amount of an asset exceeds
its recoverable amount.
12.2 Assumptions and estimation uncertainties –
development costs
Optomed capitalises development expenditure as an intangible asset where the
related criteria are met (refer to 12.1 Accounting policy above). This requires
management to make judgement on when all of the criteria for capitalisation
are met and when to cease capitalisation and start amortising the asset. The
point at which development costs meet the criteria for capitalisation is depen-
dent on Optomed management’s judgement of, for example, the point at which
technical feasibility is demonstrable.
In impairment testing the recoverable amount of development costs are de-
termined based on value-in-use calculations. The calculations use cash flow
projections approved by management covering a eight-year period. The cash
flow projections exclude expansion investments. The discount rate is defined as
WACC (weighted average cost of capital), which reflects the total cost of equity
and debt while considering the asset-specific risks. The pre-tax discount rate
was 19.7% (13.6%) and the post-tax discount rate 13.1% (11.2%)
The sensivity analysis is prepared in respect of the discount rate and the termi-
nal growth rate applied beyond the eight-year projection period. The changes
in these key assumptions - holding other assumptions constant - would result
in the recoverable amount of the tested assets to equal their carrying amount
as at December 31, 2022.
— The pre-tax discount rate should increase by 54.4 percentage point. So that
the net present value of the 8 year forecast is 0.
— The terminal growth rate for break even cannot be measured.
Based on the impairment test carried out as at December 31, 2022 the deve-
lopment costs were not impaired.
The Group recognised impairment losses on intangible assets during financial
year 2022 of 1,040 thousand euros and 571 in 2021. 2022 Impairment loss is
due to terminated product development program. There were no recognised
impairment losses on tangible assets during years 2021-2022.
48
12.3 Reconciliation of carrying amounts
At December 31, 2022
In thousands of euro Goodwill
Develop-
ment costs
Customer
relationships
Technology
Other
intangible
assets
Total
Cost
Balance at January 1 4,256 11,815 2,222 1,023 951 20,267
Additions - 2,163 - - 103 2,266
Balance at December 31 4,256 13,978 2,222 1,023 1,054 22,533
Accumulated amortization and impairment losse
Balance at January 1 - -5,477 -836 -387 -593 -7,292
Amortization - -899 -222 -102 -83 -1,306
Impairment losses - -1,040 - - - -1,040
Balance at December 31 - -7,416 -1,057 -489 -676 -9,638
Carrying amount at Jan 1 4,256 6,338 1,386 636 358 12,975
Carrying amount at Dec 31 4,256 6,562 1,164 534 379 12,895
49
At December 31, 2021
The research and development costs expensed amounted to EUR 1,859 thousand (2022) and EUR 2,284 thousand (2021), mainly comprising personnel expenses.
In thousands of euro Goodwill
Develop-
ment costs
Customer
relationships
Technology
Other
intangible
assets
Total
Cost
Balance at January 1 4,256 9,709 2,222 1,023 945 18,156
Additions - 2,105 - - 6 2,111
Balance at December 31 4,256 11,815 2,222 1,023 951 20,267
Accumulated amortization and impairment losses
Balance at January 1 - -4,043 -614 -286 -461 -5,403
Amortization - -952 -222 -102 -43 -1,319
Impairment losses - -482 - - -89 -571
Balance at December 31 - -5,477 -836 -387 -593 -7,292
Carrying amount at Jan 1 4,256 5,667 1,608 738 485 12,753
Carrying amount at Dec 31 4,256 6,338 1,386 636 358 12,975
50
12.4 Impairment testing of goodwill
12.4.1 Accounting policy
For the purposes of impairment testing goodwill is allocated to the cash-gene-
rating units (CGUs) or the groups of CGUs that are expected to benefit from
the business combination in which the goodwill arose. A cash-generating unit
is the smallest identifiable group of assets in Optomed that generates inflows
that are largely independent from the cash inflows from other assets or groups
of assets. A cash-generating unit is impaired when its carrying amount exceeds
its recoverable amount. The recoverabe amount is:
— the higher of the asset’s or CGU’s fair value less costs of disposal, and
— its value in use.
Optomed determines recoverable amounts based on value-in-use calculations
prepared using discounted future net cash flows.
12.4.2 Assumptions and estimation uncertainties
At each balance sheet date Optomed management assesses if there is any indi-
cation of impairment of goodwill (or other intangible, tangible asset or right-of-
use asset). Review is based on indicators that measure economic performance,
such as Group’s management reporting as well as economic environment and
market follow-up.
Such indications may include, among others:
— unexpected changes in significant factors underlying impairment tests (re-
venues, profitability levels and changes in
prevailing interest rates), and
— changes in market conditions.
The recoverable amount determined in the testing process is based on assump-
tions and estimates made by management on future sales, production costs,
sales growth rate and discount rate, among others.
Optomed has allocated the goodwill arisen from the Commit acquisition to the
Software operating segment. This segment establishes a single cash-generating
unit. The carrying amount of the assets amounted to EUR 7,816 (7,754) thousand
as at December 31, 2022, including the goodwill of EUR 4,256 (4,256) thousand.
In impairment testing the recoverable amount of the Software segment is
determined based on value-in-use calculations. The calculations use cash flow
projections approved by management covering a five-year period. Cash flows
beyond the five-year period are extrapolated using the estimated steady gro-
wth rate of 1.8 %. The cash flow projections exclude expansion investments.
The discount rate is defined as WACC (weighted average cost of capital), which
reflects the total cost of equity and debt while considering the asset-specific
risks. The pre-tax discount rate was 15.7% (13.6%) and the post-tax discount
rate 13.1% (11.2%.)
The sensivity analysis is prepared in respect of the discount rate and the termi-
nal growth rate applied beyond the five- year projection period. The changes
in these key assumptions - holding other assumptions constant - would result
in the recoverable amount of the tested assets to equal their carrying amount
as at December 31, 2022:
— The pre-tax discount rate should increase by 12.7 percentage point.
— The terminal growth rate should decrease by 80.2 percentage point.
Based on the impairment test carried out as at December 31, 2022 the goodwill
was not impaired.
51
13. Tangible assets
13.1 Accounting policy
Tangible assets acquired by Optomed held for use are stated in the balance
sheet at their cost. The cost comprises directly attributable incremental costs
incurred in their acquisition and installation. Subsequently tangible assets
are carried at cost, less any accumulated depreciation and any accumulated
impairment losses. Ordinary repairs and maintenance costs are expensed
during the reporting period in which they are incurred. Government grants are
accounted for by reducing the carrying amount of the asset. The grant is then
recognised in profit or loss over the useful life of the asset by way of a reduced
depreciation charge.
Depreciation is charged so as to write off the cost of assets using the straight-line
method, over their estimated useful lives, as follows:
— Production machinery and equipment: six years
— Other machinery and equipment: three years
— Office furniture: three years
— Cars: three years
Expected useful lives and residual values are reviewed at least at each financial
year-end and if they differ significantly from previous estimates, the useful lives
are revised accordingly. Recognition of depreciation is discontinued when a tan-
gible asset is classified as held for sale. The Group assesses, at each reporting
date, whether there is an indication that a tangible asset may be impaired. If
any indication exists, Optomed estimates the asset’s recoverable amount. An
impairment loss is recognised when the carrying amount of an asset exceeds
its recoverable amount.
The gain or loss arising on the disposal or retirement of a tangible asset is
determined as the difference between any net sale proceeds and the carrying
amount of the asset and is recognised in other operating income or other ope-
rating expenses.
13.2 Reconciliation of carrying amounts
Refer to Note 14. Leases for disclosures on Group’s tangible assets acquired
under lease agreements.
2022 2021
Cost
Balance at January 1 2,721 2,257
Additions 791 464
Balance at December 31 3,512 2,721
Accumulated depreciation and im-
pairment losses
Balance at January 1 -2,288 -1,898
Depreciation -372 -390
Balance at December 31 -2,660 -2,288
Carrying amount at January 1 433 359
Carrying amount at December 31 852 433
Machinery and equipment
52
14. Leases
14.1 Accounting policy
The Group acts as a lessee leasing mainly business premises, IT equipment as
well as other machinery and equipment. As a general rule, Optomed recognises
a leased asset (right-of-use asset) and a lease liability for all leases, except for
short-term leases and leases of low-value items (the accounting treatment is
described below). The Group assesses whether a contract is or contains a lease
at inception of a contract. A contract is or contains a lease if the contract con-
veys the right to control the use of an identified asset for a period in exchange
for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease com-
mencement date. The right-of- use asset is initially measured at cost, which
comprises:
— the amount of the initial measurement of the lease liability
— any lease payments made at or before the commencement date, less any
lease incentives (e.g. lease-free months)
— any initial direct costs incurred by Optomed, and
— an estimate of restoration costs to be incurred by Optomed.
After the commencement date the right-of-use assets are measured at cost less
any accumulated depreciation and any accumulated impairment losses and
adjusted for certain remeasurements of the lease liability. The right-of-use asset
is depreciated using the straight-line method, from the commencement date
to the earlier of the end of the useful life of the right-of-use asset, or the end of
the lease term. The estimated useful life for the business premises applied by
Optomed is three years. The right-of-use asset is tested for impairment where
necessary and any impairment loss identified is recorded in profit or loss.
Initially the lease liability is measured at the present value of the lease payments
that are not paid at the commencement date. The discount rate used by the
Group is Optomed’s incremental borrowing rate. Lease payments included in
the measurement of the lease liability comprise:
— fixed payments, including in substance fixed payments
— variable lease payments that depend on an index or a rate, initially measured
using the index or rate as at
the commencement date of the contract
— amounts expected to be payable under a residual value guarantee, and
— the exercise price under a purchase option that the Group is reasonably
certain to exercise.
Subsequently the lease liability is measured at amortised cost using the effe-
ctive interest method. It is remeasured when there is a change in future lease
payments arising from change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable under a residual value
guarantee or if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option. When a lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
Optomed has elected not to recognise right-of-use assets and lease liability for:
— short-term leases (that have a lease term of 12 months or less)
— leases of low-value assets (each asset with a value of approximately EUR
5,000 or less when new).
Such assets include IT equipment as well as other machinery and equipment.
The Group recognises the lease payments associated with above-mentioned
leases as an expense on a straight-line basis over the lease term.
53
14.2 Management judgements
Some business facility leases of the Group include termination options. Optomed
uses such terms in its contract management to maximise operational flexibility
for its business. Termination options are considered on a case-by-case basis
following a regular management assessment. The factors considered include, for
example, contractual terms and conditions for optional periods compared with
market rates, the importance of the underlying asset to Optomed’s operations
as well as termination and replacement costs.
Optomed has re-negotiated its Oulu office lease during the 2021.
14.3 Amounts recognised in income statement
In thousands of euro 2022 2021
Additions to right-of-use assets 671 449
Depreciation charge for right-of-use assets -428 -409
Carrying amount at the end of
the financial year
1,448 1,205
In thousands of euro 2022 2021
Current 412 396
Non-current 1,058 818
Total 1,470 1,214
14.5 Leased tangible assets
Leased tangible assets comprise business premises and are presented as a
separate line item Right-of-use assets in the consolidated balance sheet.
14.6 Lease liabilities
The weighted average Optomed’s incremental borrowing rate applied for
discounting purposes was 3.2 %.
The above liabilities are presented on the line item Lease liabilities (non-current /
current) in the consolidated balance sheet, based on their maturity. The maturity
analysis is disclosed in Note 21.5 Liquidity risk.
Total cash outflow for leases -415 -414
14.4 Amounts presented in cash flow statement
In thousands of euro 2022 2021
Expense relating to leases of low-value
assets1 (that are not short-term leases)
-5 -3
Depreciation charge for right-of-use assets by
class of underlying asset (business premises)
(included in Depreciation, amortization and
impairment losses in the income statement)
-428 -409
Interest expense on lease liabilities
(included in Finance expenses)
-33 -35
54
15. Inventories
15.1 Accounting policy
Inventories are stated at the lower of cost and net realisable value. The cost
of ready purchased products consists of the purchase price, including direct
transportation, processing and other costs.
Cost is determined using the first-in, first-out (FIFO) method. Net realisable value
is the estimated selling price in the ordinary course of business, less the esti-
mated costs of completion and the estimated costs necessary to make the sale.
Optomed has recognized 251 thousand inventory provision for non marketable
items in inventory during 2022.
In thousands of euro 2022 2021
Raw materials and consumables 2,998 2,936
Total 2,998 2,936
16. Financial assets
16.1 Accounting policy
Optomed classifies financial assets as follows:
— financial assets measured at fair value through profit or loss (FVTPL)
— financial assets measured at amortized cost, and
— financial assets measured at fair value through other comprehensive inco-
me (FVOCI).
Classification of financial assets is made based on their purpose of use upon
initial recognition. Classification relies on the objectives of Optomed’s business
model and the contractual cash flows from financial assets, or by applying
the fair value option upon initial recognition. Optomed recognises all its
financial assets at amortized cost.
All purchases and sales of financial assets are recognised at the trade date. For
financial assets not carried at fair value through profit or loss, transaction costs
are included in the initial carrying amount. Financial assets are derecognised
when the Group loses the rights to receive the contractual cash flows on the
financial asset or it has transferred substantially all the risks and rewards of
ownership outside the Group.
Financial assets measured at amortized cost
Optomed recognises all trade receivables that are non-derivative assets at
amortized cost. In the Group trade receivables are held within a business mo-
del whose objective is to collect the contractual cash flows, and those cash
flows that are solely payments of principal and interest. Trade receivables are
current assets that Optomed has the intention to hold for less than 12 months
from the end of reporting period. Assets classified in this category are measu-
red at amortized cost using the effective interest (EIR) method. The carrying
amounts of current trade receivables are expected to substantially equal their
fair values.
Optomed recognizes a loss allowance for expected credit losses on financial as-
sets that are measured at amortized cost. The expected credit losses on trade
receivables are recorded based on Optomed’s historical knowledge on trade
receivables at default and payment delays due to financial difficulties. The loss
allowance is assessed both on an individual basis and collectively. The expect-
ed loss is measured as the difference between the asset’s carrying amount and
the pre sent value of estimated future cash flows discounted at the financial
asset’s effective interest rate. This adjustment is recognised in other operating
expenses and as a deduction to the carrying amount of the receivable.
All realised credit losses are recognised in profit or loss. A credit loss is reversed
in a subsequent period, if the reversal can be related objectively to an event
occurring after the impairment was recognised.
Optomed did not recognise credit losses during the financial years 2021-2022.
55
Cash and cash equivalents
The Group’s cash and cash equivalents consist of cash on hand, demand depo-
sits and short-term, highly liquid investments. Items qualifying as cash equiva-
lent have a maturity of three months or less from the date of acquisition.
16.2 Carrying amounts - at amortised cost
Current financial assets
The year 2022 include a specific credit risk accrual of EUR 598 (715) thousand
covering overdue trade receivable from a Chinese customer.
More information on Note 21.4.2. The Group had no non-current financial
assets at the end of the financial years 2021-2022.
16.3 Cash and cash equivalents
In thousands of euro 2022 2021
Cash and bank accounts
8,524 6,804
Total 8,524 6,804
In thousands of euro Note 2022 2021
Trade receivables
Recourse factoring 21 324 740
Other trade receivables 21 3,232 2,917
Total trade receivables 3,556 3,658
Cash and cash equivalents 8,524 6,804
Total 12,080 10,462
17. Other receivables
In thousands of euro 2022 2021
Prepayments and accrued income 792 807
Other 220 166
Total 1,012 973
18. Capital and reserves
18.1 Accounting policy
The Group classifies the instruments it has issued either as equity instruments
or financial liabilities based on their nature.
— An equity instrument is any contract that evidences a residual interest in the
assets of Optomed after deducting all of its liabilities.
— A financial liability is an instrument that obligates Optomed to deliver cash
or another financial asset, or the holder has a right to demand cash or anot-
her financial asset.
56
Optomed evaluates the terms of an issued compound instrument to determi-
ne whether it contains both a liability and an equity component. Such compo-
nents are classified separately as financial liabilities, financial assets or equity
instruments in accordance with the substance of the contractual arrangement.
18.2 Share capital and share series
18.2.1 Accounting policy
The share capital consists of the parent company’s ordinary shares classified
as equity. The subscription price of a share received by the company in conne-
ction with share issues is credited to the share capital, unless it is provided in
the share issue decision that a part of the subscription price is to be recorded
in the Reserve for invested non-restricted equity. Transaction costs directly att-
ributable to the issue of new shares are recorded in equity as a deduction, net
of tax, from the proceeds.
The share capital of Optomed Plc amounted to EUR 80 thousand at December
31, 2022 and 80 thousand at December 31.12.2021. The share capital consists
of one share class.
The shares have no nominal value. All issued shares have been fully paid. Each
share carries one vote.
57
18.2.2 Movements in share numbers and Group’s equity
The table below discloses changes in the number of shares and respective changes in Group’s equity.
2022
A series Total
Share
capital
Reserve for invested
non- restricted equity
At January 1, 2022 14,003,144 14,003,144 80 38,526
Share issue 5.5.2022
1,397,853 1,397,853 4,441
Share issue 5.5.2022
1,140,358 1,140,358 3,760
Additions to Reserve for Invested non-equity
based on option subscription
170
At Dec 31, 2022 16,541,355 16,541,355 80 46,896
Pieces In thousands of euro
58
2021
A series Total
Share
capital
Reserve for invested
non- restricted equity
At January 1, 2021 14,003,144 14,003,144 80 37,340
Additions to Reserve for Invested non-equity
based on option subscription
1,055
At Dec 31, 2021 14,003,144 14,003,144 80 38,526
Pieces In thousands of euro
59
18.3 Treasury shares
18.3.1 Accounting policy
The consideration paid for treasury shares, including any directly attributable
transaction costs (net of taxes), is deducted from equity, until the shares are
cancelled or reissued. Where such shares are subsequently sold or reissued,
any consideration received, net of any directly attributable transaction costs
and net of taxes, is directly recognised in equity.
The total amount of treasury shares was 374 566 shares in the end of the fi-
nancial year.
18.4 Dividends
18.4.1 Accounting policy
Dividend distribution to the parent company’s shareholders is recognised as a
liability in the consolidated balance sheet in the period in which the dividends
are approved by the company’s Annual General Meeting.
Under the Finnish Limited Liability Companies Act the amount of capitalised
development costs (accounted for in accordance with the Finnish Accounting
Act) is deducted from unrestricted equity in calculating distributable funds.
18.5 Reserves
Reserve for invested non-restricted equity
The reserve for invested non-restricted equity comprises other equity investments
and that part of the share subscription price that has not specifically been al-
located to share capital.
Share premium
The share premium accrued under the previous Finnish Limited Liability Com-
panies Act. Under the current Act the share premium is classified as restricted
equity and may no longer increase. The share premium may be reduced in
accordance with the rules applying to decreasing share capital and can be used
to increase the share capital as a reserve increase.
Translation differences
The reserve includes translation differences arisen from the IFRS post-transition
date (January 1, 2016) translation of the financial statements of foreign opera-
tions into euro.
Retained earnings
Retained earnings are earnings accrued over the previous financial years that
have not been transferred to equity reserves or issued as dividends to owners.
18.6 Capital management
Optomed’s objective in capital management is to maintain optimum capital
structure in order to secure normal operating conditions and to optimise cost
of capital to create value to shareholders. For capital management purposes,
Optomed manages equity as indicated in the consolidated balance sheet. The
equity is mainly influenced through share issues and restructuring of loans and
borrowings. The Group is not subject to externally imposed capital require-
ments. Group management and the Board of Directors of the parent company
monitor Group’s capital structure and liquidity development. The objective of
this monitoring is to ensure Group’s liquidity and flexibility of capital structure
in order to fulfil the growth strategy.
Optomed monitors the development of capital structure based on equity ratio.
Equity ratio is also the financial covenant of Optomed’s borrowing facilities (line
item Borrowings from financial institutions). For covenant accounting purposes
equity ratio is calculated based on the related terms of the borrowings, refer to
19.4 Financial covenant for more details.
60
19. Financial liabilities
19.1 Accounting policy
Optomed classifies financial liabilities as follows:
— financial liabilities measured at amortized cost, and
— financial liabilities measured at fair value through profit or loss (FVTPL).
Optomed did not use derivative instruments during the years 2021-2022, and
the Group had no other financial liabilities at fair value through profit or loss at
the end of financial years 2021-2022.
Financial liabilities at amortized cost
Financial liabilities are initially recognised at fair value. Transaction costs are
included in the original carrying amount. Subsequently these financial liabilities
are measured at amortized cost using the effective interest rate (EIR) method. A
financial liability is classified as current if Optomed does not have an unconditional
right to defer settlement of the liability for at least 12 months after the end of the
reporting period. In respect of loans and borrowings current financial liabilities
comprise the portion falling due within less than 12 months and repayments in
accordance with the repayment plans.
Financial liabilities may be interest-bearing or non-interest-bearing. The Group’s
all financial liabilities carry interest.
A financial liability (or part of the liability) is not derecognised until the liability
has ceased to exist, that is, when the obligation identified in a contract has been
fulfilled, cancelled or is no longer effective.
Borrowing costs
Optomed capitalises borrowing costs that are directly attributable to creation
of a qualifying asset as an addition to the cost of that asset.
— Borrowing costs are interest and other costs that Optomed incurs in conne-
ction with the borrowing of funds.
— A qualifying asset is an asset that necessarily takes a substantial period of
time to get ready for its intended use.
Optomed considers capitalised development costs to be a qualifying asset.
Consequently, the Group recognises those borrowing costs incurred from the
government loans (from Business Finland), granted for development activities,
as an addition to the carrying amount of the development cost. The capitali-
sed borrowing costs are recorded as a deduction to interest expenses. Other
borrowing costs are expensed in the period in which Optomed incurs them.
Optomed ceases capitalising borrowing costs when the development project
is substantially complete.
For cash flow statement purposes Optomed classifies cash flows related to
capitalised borrowing costs as operating activities.
61
19.2 Financial liabilities measured at amortized cost
In thousands of euro 2022 2021
Non-current financial liabilities
Borrowings from financial institutions 3,380 3,813
Government loans 906 1,940
Lease liabilities 1,058 818
Total 5,344 6,571
Current financial liabilities
Borrowings from financial institutions 794 1,071
Government loans 193 193
Lease liabilities 412 396
Trade payables 869 944
Total 2,268 2,604
Total financial liabilities 7,612 9,175
During the financial year 2022 Business Finland waived loan of 841 (538) thousand
EUR. The company mortgages related to the borrowings from financial insti-
tutions are disclosed in Note 22. Contingent assets, contingent liabilities and
commitments.
19.3 Changes in financial liabilities
During the financial year 2022 the Group adjusted the repayment schedule for
borrowings from financial institutions. Loan payment exemptions were taken
while the loan payment periods remain the same.
19.4 Financial covenant
Optomed’s borrowings from financial institutions contain a financial covenant
(equity ratio) and Optomed also has to meet certain key operative targets. The
related liabilities amounted to EUR 4,172 thousand (at December 31, 2022) and
EUR 4,524 thousand (at December 31, 2021). The borrowings will be repaid in
accordance with the repayment schedule.
Optomed has to comply with the financial covenant terms specified in the loan
agreement terms at the financial year-end. Equity ratio is calculated using the
agreed formula. The table below summarises the Group’s financial covenant term
and compliance over the financial years 2021-2022.Covenant accounting purposes
equity ratio is calculated, based on the related terms of the borrowings.
Nordea loan equity ratio calculation formula: Adjusted equity/Balance sheet total+
Leasing liabilities
OP loan equity ratio calculation formula: Adjusted equity/Balance sheet total-
received advances
Covenant
term
Actual
ratio
Applicable level
Nordea loan
At December 31, 2022
Equity ratio 50 % 62.1 % Optomed Group
Cash amount 2 million 8.5 million Optomed Group
At December 31, 2021
Equity ratio 50 % 56.4% Optomed Group
Cash amount 2 million 6.8 million Optomed Group
OP loan
Equity ratio
At December 31, 2022 35 % 66.1% Optomed Group
At December 31, 2022 35 % 59.0% Optomed Group
62
Optomed was in compliance with the covenant as at December 31, 2021 and as
at December 31, 2022.
19.5 Government loans - borrowings costs
Optomed has capitalised borrowing costs incurred from the government loans
granted for development activities in the balance sheet under Development
costs. Details are disclosed in Note 9.3 Borrowing costs - government loans.
19.6 Fair values - financial liabilities measured
at amortized cost
Optomed considers that the carrying amounts of the financial liabilities measu-
red at amortized cost substantially equal to their fair values. This estimate
corresponds to the fair value hierachy Level 3, as the measurement of the said
liabilities is based on Optomed management view. The fair value hierarchy is
presented in Note 1.2.3 Fair value measurement.
20. Other payables
In thousands of euro 2022 2021
Accrued expenses and prepaid income 1,939 1,580
Other 1,019 726
Total 2,958 2,306
21. Financial risk management
21.1 Principles of financial risk management
Optomed’s financial risks consist of liquidity risk, interest rate risk, foreign exchan-
ge transaction risk, foreign The Group manages centrally loan negotiations for
the parent company and the subsidiaries, for example, and projects the financing
requirements for the next 12 months on a rolling basis, in order to ensure long-
term liquidity. The Group also handles negotiations in respect of letters of
credit and recourse factoring on a centralised basis.
The objective is to ensure that the Group has liquidity for outgoing commitments
at all times and that the financing portfolio is well diversified. The financing port-
folio should also be flexible in case of changes in Optomed’s business operations.
The Board of Directors of the parent company has the following responsibilities:
— reviewing and approving the Group’s risk management policy and the Group’s
strategy concerning external financing and financial
risk management on an annual basis
— evaluating and approving new financial instruments and arrangements
— delegating the authority to undertake financial risk management and financing
activities to the CEO and CFO
— reviewing the Group’s risk exposures on a monthly basis, and
— reviewing any policy breaches.
Currently letters of credit, recourse factoring agreements as well as non-current
loans and borrowings from financial institutions are the only approved financial
instruments.
Subsidiaries should maximise their long-term performance by optimising their
working capital structure. Basic financial management operations are delegated
to the subsidiaries, such as payment transactions and debt collection.
21.2 Foreign exchange transaction risk and foreign
exchange translation risk
Due to its international operations, Optomed is exposed to transaction risks
arising from foreign currency positions and risks from investments denominated
in foreign currencies translated into the functional currency of the parent company.
The Group’s foreign exchange translation risk is defined as the negative effect of
movements in exchange rates on the value of a foreign subsidiary’s assets when
those values are translated into the reporting currency of the parent company.
The Group has subsidiaries in China. So far, the translation difference has
not been a significant item, and thus the Group has not hedged this risk by using
currency derivative instruments.
63
Optomed’s trade receivables and trade payables may be denominated in fo-
reign currencies and thus prone to foreign exchange transaction risk. Foreign
exchange transaction risk may also arise from tangible assets subject to price
changes due to volatility in exchange rates.
The Group has foreign currency positions denominated in Chinese Renminbi
(CNY) and US Dollar (USD). Transaction is managed by actively monitoring cur-
rency positions, i.e. absolute amounts. Should the absolute amounts for currency
positions increase significantly, Optomed may consider using currency derivative
instruments for hedging purposes, where necessary.
21.2.1 Currency risk exposure
In thousands of euro USD CNY
At December 31, 2022
Gross trade receivables 635 1,962
Trade payables 245 0
Total 880 1,962
At December 31, 2021
Gross trade receivables 268 2,382
Trade payables 335 0
Total 603 2,382
21.2.2 Sensitivity analysis on exchange rate movements
In thousands of euro strenghtening weakening
At December 31, 2022
Gross trade receivables
+/- 10 % change in USD 64 -64
+/- 10 % change in CNY 196 -196
Trade payables
+/- 10 % change in USD -24 24
+/- 10 % change in CNY 0 0
Total net effect 235 -235
In thousands of euro strenghtening weakening
At December 31, 2021
Gross trade receivables
+/- 10 % change in USD 27 -27
+/- 10 % change in CNY 238 -238
Trade payables
+/- 10 % change in USD -34 33
+/- 10 % change in CNY 0 0
Total net effect 231 -231
Income statement
64
21.3.1 Cash flow sensitity due to interest rates
21.2.3 Average rates and closing rates for financial
years used in consolidated financial statements
21.3 Interest rate risk
Optomed’s interest rate risk is primarily derived from outstanding floating-rate
borrowings from financial institutions. Interest rate risk is not significant. The
Group’s revenues and operational cash flows are to a large extent independent
of fluctuations in interest rates.
Optomed’s loans and borrowings carry variable interest. The Group had inte-
rest-bearing financial liabilities totaling EUR 5,270 thousand (at December 31,
2022) and EUR 7,017 thousand (at December 31, 2021). Those liabilities are linked
to Euribor rates (0 to 12 months). The weighted average interest rate was 1.6%
(2022) and 1.0% (2021).
Optomed manages interest rate risk by projecting its outstanding net debt for
the next 12 months on a rolling basis. In addition, the Group uses likely interest
rate scenarios to identify the effect interest rate risk could have on Optomed’s
result and key figures. As the interest rate risk is not significant for the Group,
Optomed has not used derivative instruments to hedge financial liabilities against
changes in market interest rates.
The following interest rate sensitivity analysis presents how Optomed’s interest
expenses on borrowings from financial institutions would change following a
change of 1 percentage point (100 basis points) in reference interest rates. In
respect of the government loans a change of 3 percentage points was applied
since only a change of at least 3 percentage points would increase the Group’s
interest expenses, based on the loan terms. The effect of decrease in interest
expenses of 3 (three) percentange points – is excluded from the sensitivity
analysis, as the reference rate cannot be negative.
Average rate Closing rate Average rate Closing rate
2022 2022 2021 2021
EUR/USD 0.95 0.94 0.85 0.88
EUR/CNY 0.14 0.14 0.13 0.14
In thousands of euro 100 bps change 300 bps increase
At December 31, 2022
Borrowings from financial institutions +39,-40
Government loans 40
At December 31, 2021
Borrowings from financial institutions +43,-43
Government loans 70
Income Statement
21.4. Credit risk and counterparty risk
Credit and counterparty risk arise from a counterparty not being able to fulfil its
contractual requirements, and thus resulting in a loss to the creditor. Trade recei-
vables are the main driver of credit and counterparty credit risk. Counterparty risk
results from receivables from companies with which the Group provides credit.
Optomed considers it has heightened risk regarding Chinese customer’s trade
receivables. The credit risk concentration has been formed and is associated
with an increased credit loss risk due to overdue trade receivables .
Optomed manages counterparty credit risk by using credit limits approved by
the Board of Directors and only dealing with authorized counterparties when it
comes to financing activities such as letters of credit.
65
Optomed has policies in place to ensure that products are sold and services
provided only to those clients with appropriate credit history. Client credit data is
reviewed prior to the signing of the agreement. Receivable collection and follow-up
are performed actively and streamlined by the recourse factoring agreement with
a Finnish financial institution. In the recourse factoring arrangement the financial
institution manages collection activities and partly guarantees receivables but the
final risk remains with Optomed. The arrangement reduces the Group’s credit
risk and improves liqiuidity. The Group also manages counterparty credit risk
with advance payments and letters of credit. The maximum exposure to credit
risk at the end of the financial year is the carrying amount of financial assets.
The following tables disclose credit exposure per geographical area, aging
analysis for trade receivables and related expected credit losses (ECL). The loss
allowance has been recorded in accordance with the tables presented below.
21.4.1 Credit exposure per geographical area
In thousands of euro 2022 2021
Gross trade receivables from companies
Finland 1,190 913
China 1,962 2,382
Other 684 349
Total 3,836 3,644
Carrying amount
21.4.2 Exposure to credit risk and loss allowance
In thousands of euro
Gross carrying
amount
Weighted av.
loss rate %
Loss
allowance
At December 31, 2022
Current (not past due) 1,664 0.5 % 8
Past due
1-30 days 161 1.5 % 2
31-60 days 7 4 % 0
61-90 days 29 9 % 3
More than 90
days past due
12 12 % 1
Specific loss allowance 1,962 30 % 589
Total 3,836 604
The year 2022 include a specific credit risk accrual of EUR 589 thousand which consist of
overdue trade receivable from a Chinese customer.
At December 31, 2021
Current (not past due) 1,143 0.5 % 6
Past due
1-30 days 67 1.5 % 1
31-60 days 10 4 % 0
61-90 days 2 9 % 0
More than 90
days past due
40 12 % 5
Specific loss allowance 2,382 30 % 715
Total 3,644 727
The year 2021 include a specific credit risk accrual of EUR 715 thousand which consist of
overdue trade receivable from a Chinese customer.
66
21.5 Liquidity risk
Liquidity risk is incurred from a potential mismatch between Optomed’s liquid
assets and financing requirements. The company adheres to careful liquidity risk
management and aims to ensure sufficient liquidity even in difficult circumstances.
The Group manages liquidity risk by ensuring that non-current liabilities have
different maturities and by limiting individual receivables. Optomed also aims
at ensuring liquidity through credit instruments. The liquidity of the company
is monitored and forecasted over a 12-month period and, if necessary, short-
term liquidity is monitored. Liquidity is followed up on a rolling basis and any
changes are addressed promptly.
The liquidity reserve comprises highly liquid assets that can be used without
delay to cover financial obligations at all times. Optomed aims at ensuring that it
always has the amount of liquid funds available to fund operations. The liquidity
reserve includes the following components: cash and cash equivalents, liquid
investments and credit limits.
The table below analyses financial liabilities based on their contractual maturities.
The amounts disclosed are undiscounted, comprising both interest payments
and repayments of capital.
21.4.3 Reconciliation of loss allowance
Changes in expected credit losses and realised credit losses are recognised
in the income statement under Other operating expenses. Company had no
realized credit losses in 2022.
In thousands of euro 2022 2021
Balance at January 1 727 16
Amounts written off 0 0
Net remeasurement of loss allowance -123 711
Balance at December 31 604 727
21.4.4 Recourse factoring (insured receivables)
In the recourse factoring arrangement, Optomed transfers trade receivables
to be collected by a financial institution and thereby receives credit insurance
covering a large part of the carrying amount of trade receivables. Owing to the
nature of the arrangement and the extent of the insurance, receivables do not
include significant credit risk and consequently those trade receivables are
excluded from expected credit losses (ECL) accounting.
In thousands of euro 2022 2021
Carrying amount at December 31
Trade receivables, recourse factoring 324 740
Total 324 740
67
21.5.1 Contractual maturities of financial liabilities
If the covenants are breached, the financial institutions has the right to imme-
diately terminate the contracts or require repayment and/or alternatively the
right to increase the marginal for the borrowings and obligations by 2 percentage
points. The covenant agreement is in force as long as Optomed Plc has unpaid
debt, obligations or other commitments. For more details about covenant terms
refer to 19.4.Financial covenant.
In 2022 Optomed changed repayment programs and the changes affect the
future payments. The loan periods were extended and repayment amounts
were modified to be better aligned with Optomed’s liquidity. For more details
see note 19.3 Changes in financial liabilities.
It is not possible to repay the borrowings at an earlier date than agreed in the
related terms. The lender has no right to demand for repayment, except in the
event of a breach of the covenant (refer to Note 19.4 Financial covenant). The
borrowings can be renegotiated.
In thousands of euro Total 0-3 months 3-12 months 2-3 years 4-5 years Over 5 years
At December 31, 2022
Borrowings from financial institutions 4,172 199 596 1,794 1,583
Government loans 1,098 32 161 385 263 257
Lease liabilities 1,470 121 363 986
Trade payables 869 869
Total 7,609 1,220 1,119 3,165 1,847 257
In thousands of euro Total 0-3 months 3-12 months 2-3 years 4-5 years Over 5 years
At December 31, 2021
Borrowings from financial institutions 4,538 917 529 2,410 683
Government loans 2,132 32 161 666 623 651
Lease liabilities 1,214 108 325 781
Trade payables 944 944
Total 8,829 2,001 1,015 3,856 1,306 651
68
22.2 Collaterals
In thousands of euro 2022 2021
Liabilities secured under company mortgages
given by Optomed
1
Borrowings from financial institutions, current 987 705
Borrowings from financial institutions, non-cur-
rent
4,286 5,952
Total 5,273 6,657
Collaterals given by collateral type
Borrowings from financial institutions, company
mortgages given
8,700 8,700
Other collaterals given 1,000 800
Total 9,700 9,500
1 Nominal values of the borrowings, which differ from the amounts recognised in the consolidated
balance sheet, measured at amortised cost.
22. Contingent liabilities, contingent
assets and commitments
22.1 Accounting policy
A contingent liability arises when:
— there is a possible obligation that arises from past events and whose existence
will be confirmed by a future event
that is outside the control of Optomed
— there is a present obligation that arises from past events, but probably will
not require an outflow of resources, or
— Optomed cannot make a sufficiently reliable estimate of the amount of a
present obligation.
Contingent liabilities are not recognised, but require disclosure unless the pos-
sibility of outflow is remote.
A contingent asset arises when:
— the inflow of economic benefits to Optomed is probable, but not virtually
certain, and
— occurrence depends on an event outside the control of Optomed.
Contingent assets require disclosure only. If the realisation of income is virtually
certain, the income item is recognised.
22.3 Guarantees
2022
Delivery guarantee, Fabrinet Pte Ltd. USD 1,000 thousand
2021
Delivery guarantee, Fabrinet Pte Ltd. USD 800 thousand
69
22.4 Legal proceedings and disputes
Optomed was not involved in any legal proceedings nor had any disputes during
the financial years 2021-2022.
22.5 Contingencies attaching to government grants
Non-compliance with the conditions attached to the EU Horizon 2020 funding
programme may result in, for example, the rejection of ineligible costs or reduc-
tion of the grant.
23. Related party disclosures
23.1 Accounting policy
The parent company Optomed Plc’s related parties include the following:
— its subsidiaries
— key management personnel, comprising the members of the Board of Dire-
ctors, CEO and the Group Management
Team members
— entities, over which the above-mentioned persons have control, joint control
or significant influence
— close family members of the above-mentioned persons
The related party transactions disclosed consist of transactions carried out with
related parties that are not eliminated in the consolidated financial statements.
23.2 Key management personnel compensation
The amounts disclosed in the tables below represent the expenses recognised
in those financial years. Salary amounts include any fringe benefits. The CEO and
the Group Management Team members are entitled to the statutory pension,
and the retirement age is determined by the Finnish statutory pension system.
In thousands of euro 2022 2021
CEO Seppo Kopsala
Salaries and other short-term employee benefits -137 -128
Pension benefits (defined contribution plans) -30 -26
Share-based payments 0 0
Total -166 -154
In thousands of euro 2022 2021
Group Management Team
Salaries and other short-term employee benefits -627 -649
Pension benefits (defined contribution plans) -143 -142
Share-based payments -124 -194
Total -894 -984
In thousands of euro 2022 2021
Key management personnel
Salaries and other short-term employee benefits -764 -777
Pension benefits (defined contribution plans) -172 -168
Share-based payments -124 -194
Total -1,060 -1,139
70
23.3 Transactions with other related parties and
outstanding balances
Revenues and trade receivables relate to the major shareholders of Optomed
Plc considered to be related parties to the parent company. Due to changes
in the board of directors, the owners will no longer be related parties in 2022.
Other expenses consist of expenses consulting fees paid to the Chairman of
the Board of Directors.
23.4 Group structure
At December 31, 2022 the Group comprised the following companies:
Subsidiary Domicile
Ownership
interest, %
Optomed Software Oy Finland 100
Optomed Hong Kong Ltd. Hong Kong 100
Optomed China Ltd China 100
Shanghai Optomed Medical Technology Ltd China 100
Optomed USA Inc USA 100
Shanghai Optomed Medical Technology Ltd was closed in January 2023.
In thousands of euro Revenues
Trade
receivables
Other
expenses
2022 0 0 -80
2021 1,704 2,382 -87
24. Events after the end of the
reporting period
No material events after the reporting period.
71
Profit and loss account
1 Jan - 31 Dec 2022 1 Jan - 31 Dec 2021
NET TURNOVER 5,150,299.16 5,561,041.66
Other operating income 971,610.36 910,168.23
Materials and supplies
Raw materials and consumables
Purchases during the financial year -2,435,577.19 -2,827,812.64
Change in stocks -222,929.35 5,991.43
External services 0.00 -2,658,506.54 -17,000.00 -2,838,821.21
Personnel expenses
Wages and salaries -2,838,275.46 -2,824,235.13
Social security expenses
Pension expenses -567,531.25 -483,314.38
Other social security expenses -95,724.24 -3,501,530.95 -82,825.58 -3,390,375.09
Depreciation, amortization and impairment
Depreciation and amortization according to plan -1,162,464.99 -1,259,532.15
Impairment of non-current assets -1,040,052.71 -2,202,517.70 -481,779.01 -1,741,311,16
Other operating expenses -2,127,344.66 -2,212,452.82
OPERATING PROFIT (LOSS) -4,367,990.33 -3,711,750.39
Financial income and expenses
From group undertakings 42,155.21 0
From others 3,773.84 30,339.09
Interest expense and other financial expenses
Impairment of securities held as current assets (–) -9,582.03 0
To group undertakings (–) -21,505.63 0
To others (–) -981,756.77 -966,915.38 -8,195.46 22,143.63
PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES -5.334.905.71 -3,689,606.76
Appropriatons
Group contribution 1,787,265.38 1,787,265.38 1,481,140.58 1,481,140.58
PROFIT (LOSS) FOR THE FINANCIAL YEAR -3,547,640.33 -2,208,466.18
Parent Company’s Financial Statements
72
31 Dec 2022 31 Dec 2021
Assets
NON-CURRENT ASSETS
Intangible assets
Development expenditure 5,315,096.65 5,824,053.57
Intangible rights 378,666.83 337,429.48
Other capitalised long-term expenditure 40,555.30 5,734,318.78 85,345.62 6,246,828.67
Tangible assets
Machinery and equipment 855,530.39 422,276.15
Other tangible assets 950 856,480.39 950 423,226.15
Advance payments and construction in process 9,993.16 9,993.16
Investments
Holdings in group undertakings 9,266,906.46 9,266,906.46
Receivables from group undertakings 1,083,006.89 10,349,913.35 1,052,545.19 10,319,451.65
TOTAL NON-CURRENT ASSETS 16,950,705.68 16,989,506.47
CURRENT ASSETS
Stocks
Raw materials and consumables 1,591,574.37 1,246,088.59
Finished products / goods for resale 829,337.46 2,420,911.83 1,257,619.06 2,503,707.65
Long-term receivables
Amounts owed by group undertakings 1,265,704.11 1,265,704.11 441,462.13 441,462.13
Short-term receivables
Trade debtors 2,044,663.59 7,303,117.00
Amounts owed by group undertakings 7,074,826.90 38,794.47
Other receivables 158,019.94 95,473.16
Prepayments and accrued income 479,388.84 9,756,899.27 524,444.50 7,961,829.13
Cash at bank and in hand 7,205,755.63 5,363,730.98
TOTAL CURRENT ASSETS 20,649,270.84 16,270,729.89
Total assets 37,599,976.52 33,260,236.36
Balance sheet
73
Balance sheet
31 Dec 2022 31 Dec 2021
Capital, reserves and liabilities
CAPITAL AND RESERVES
Share capital 80,000.00 80,000.00
Share premium account 503,699.60 503,699.60
Reserve for invested free own capital 51,492,364.99 42,439,622.44
Retained earnings (Cumulative loss) -18,771,279.71 -16,562,813.54
Profit (loss) for the financial year -3,547,640.33 -2,208,466.18
TOTAL CAPITAL AND RESERVES 29,757,144.55 24,252,042.32
LIABILITIES
Non-current
Loans from credit institutions 4,283,472.54 5,759,319.80
Amounts owed to group undertakings 1,040,000.00 5,323,472.54 490,000.00 6,249,319.80
Current
Loans from credit institutions 986,892.00 1,264,051.72
Advances received 167,924.74 57,497.67
Trade creditors 481,657.27 633,237.57
Amounts owed to group undertakings 21,805.07 299.44
Other liabilities 74,633.35 83,402.39
Accurals and deferred income 786,447.00 2,519,359.43 720,385.45 2,758,874.24
TOTAL LIABILITIES 7,842,831.97 9,008,194.04
Total capital, reserves and liablities 37,599,976.52 33,260,236.36
74
Cash flow stament - indirect
1 Jan 2022–31 Dec 2022 1 Jan 2021-31 Dec 2021
Cash flow from operating activities:
Profit(loss) (+/–) -3,547,640.33 -2,208,466.18
Adjustments to operating profit (+/–) for:
Depreciation, amortization and impairment losses 2,202,517.70 1,741,311.16
Unrealised foreign exchange gains and losses 49,471.39 -136,514.38
Financial income and expenses 113,016.97 114,370.74
Other adjustments, share benefit - members of the board 18,925.22 43,140.59
Cash flow before working capital changes -1,163,709.05 -446,158.07
Working capital changes:
Increase/decrease in trade an other short-term interest-free receivables -1,796,731.79 -1,963,846.04
Increase/decrease in stocks 82,795.82 -185,522.31
Increase/decrease in short-term interest-free liabilities -52,775.91 -200,007.82
Operating cash flow before financing items and taxes -2,930,420.93 -2,795,534.24
Interest and other financial expenses paid relating to operating activities (–) -934,347.20 -144,023.85
Interest received relating to operating activities 0.00 30,339.09
Cash flow from operating activities: -3,864,768.13 -2,909,219.00
Cash flow from investing activities:
Purchase of tangible and intangible items (–) -2,142,837.24 -2,205,465.82
Purchase of investments (–) -822,580.33 0.00
Proceeds from repayment of loans 0.00 -48,669.92
Cash flow from investing activities -2,965,417.57 -2,254,135.74
Cash flow from financing activities
Proceeds from issuance of share capital 9,033,817.33 1,012,200.00
Proceeds from short-term borrowings 0.00 366,100.04
Repayment of short-term borrowings (–) -366,550.24 0.00
Proceeds from long-term borrowings 550,000.00 1,490,000
Repayment of long-term borrowings (–) -545,056.74 -327,133.00
Cash flow from financing activities 8,672,210.35 2,541,167.04
Net increase (+)/ decrease (–) in cash and cash equivalents 1,842,024.65 -2,622,187.70
Cash and cash equivalents at beginning of period 5,363,730.98 7,985,918.68
Cash and cash equivalents at end of period 7,205,755.63 5,363,730.98
75
Accounting policies
Optomed Oyj financial statements have been prepared in accordance with the
Finnish Accounting Act (FAS)
Valuation principles and methods
Valuation principles and methods of non-current assets
Tangible and intangible assets are recognised in the balance sheet at cost less
depreciation according to plan. Cost includes variable expenditure relating to
the acquisition and production of the assets. Grants received are deducted from
the cost. Depreciation according to plan is calculated using the straight-line
method based on the useful life of the assets. Depreciation is started at the
month when the asset is taken into use.
The depreciation periods are as follows: Intangible assets 5-10 years
Machinery and equipment 3–6 years
The cost of tangible and intangible assets whose probable useful life is less than
3 years or whose value is low (less than 1,200.00 €) is recognised as an expense
as incurred expense.
Valuation of stocks
Stocks are recognised by using the FIFO method at cost, reacquisition cost, or
probable selling price, whichever lower. Cost includes, in addition to variable
costs, an appropriate portion of fixed costs attributable to the purchase and
production or construction of the asset.
Recognition of development costs and long-term expenditure
Company has capitalized R&D costs relating to new product development accor-
ding to Finnish Accounting Act (KPL 5:8§). Capitalized costs include personnel
and other costs that directly relate to developing the product to its intended use.
Capitalized R&D costs are depreciated during their estimated useful life that is
10 year straight line depreciation.
Change in the presentation of the profit and loss account or
balance sheet
Increase or decrease in stocks is partly included in the purchases during financial
year. This accounting princible has no material effect to the assessment of the
company’s performance and financial position.
Preparation of the cash flow statement
The cash flow statement was drawn up in accordance with the Accounting
Board’s general guideline (30 Jan 2007). Cash flow from operating activities is
indicated on indirect method.
76
Notes to the profit and loss account
1 Jan 2022–31 Dec 2022 1 Jan 2021–31 Dec 2021
Net turnover
Net turnover by geographical markets
Finland 4,329.19 23,487.00
EU 956,822.53 1,047,993.00
Outside the EU 4,189,147.44 4,489,561.66
5,150,299.16 5,561,041.66
Other operating income
Contributions received 853,966.03 806,875.70
Management fee from group companies 116,165.25 100,410.03
Other income 1,479.08 2,882.50
971,610.36 910,168.23
The company’s received contributions includes a waived loan from
Business Finland of EUR 841 thousand.
Materials and services
Materials and supplies
Purchases during the financial year -2,435,577.19 -2,827,812.64
Variation in stocks -222,929.35 5,991.43
External services 0.00 -17,000.00
-2,658,506.54 -2,838,821.21
The inventory change includes a 211 thousand euro inventory write-down provision.
Notes relating to personnel
Average number of personnel during the financial year 54.67 54.54
54.67 54.54
Wages, salaries and pension expenses
Wages and salaries -2,838,275.46 -2,824,235.13
Pension expenses -567,531.25 -483,314.38
Other staff expenses -95,724.24 -82,825.58
-3,501,530.95 -3,390,375.09
Wages, salaries and other remuneration of directors and management
CEO and Board members compensation -261,077.00 -264,315.00
Depreciation, amortization and impairment
Depreciation according to plan -1,162,464.99 -1,259,532.15
Impairment of tangible and intangible assets -1,040,052.71 -481,779.01
-2,202,517.70 -1,741,311,16
77
1 Jan 2022–31 Dec 2022 1 Jan 2021–31 Dec 2021
Other operating expenses
Administrative expenses -543,753.30 -497,879.90
Marketing expenses -141,937.18 -95,276.01
Travelling expenses -179,577.73 -73,903.18
Representation expenses -8,888.17 -1,830.71
Other operating expenses -1,253,188.28 -1,543,563.02
-2,127,344.66 -2,212,452.82
Auditor's fees
Audit of financial statements -128,181.20 -88,470.75
Other fees -6,600.00 -25,938.00
-134,781.20 -114,408.75
Financial income and expenses
Other interest income
From group undertakings 42,155.21 0
From others 3,773.84 30,339.09
Total financial income 45,929.05 30,339.09
Interest and financial expenses
Realized loss in value, investments -9,582.03 0
From group undertakings -21,505.63 -299.44
From others -981,756.77 -7,896.01
Total financial expenses -1,012,844.43 -8,195.45
Total financial income and expenses -966,915.38 22,143.64
78
Notes to assets
Amortization period for capitalised development
expenditure
Development costs: Development is the application of research findings or
other knowledge to a plan or design for the production of new or substantially
improved materials, devices, products, processes, systems or services before
the start of commercial production or use. Optomed capitalises such costs when
all the following criteria are met:
— Optomed can demonstrate the technical feasibility of completing the intan-
gible asset so that it
will be available for use or sale.
— Optomed intends to complete the intangible asset and use or sell it.
— Optomed is able to use or sell the intangible asset.
— Optomed is able to demonstrate how the intangible asset will generate pro-
bable future economic benefits.
— The Group has adequate technical, financial and other resources available to
complete the development and to use or sell the intangible asset
— Optomed is able to measure reliably the expenditure attributable to the
intangible asset during its development.
Capitalised development costs comprise all directly attributable costs (mainly
labour) necessary to prepare the asset to be capable of operating in the manner
intended. Optomed has also:
— capitalised borrowing costs arisen from government loans granted for de-
velopment purposes,
and
— deducted an applicable amount of major government grants received for
development
activities from the carrying amount.
Development expenditure that was initially expensed is not capitalised at a later
date. The estimated useful life for development costs is 10 years.
Amortization period for capitalised intangible rights
and other long-term expenditure
An intangible asset is recognised only if it is probable that the expected future
economic benefits that are attributable to the asset will flow to Optomed, and
the cost of the asset can be
measured reliably. All other expenditure is expensed as incurred. Depreciation
times and methods of other intangible assets are:
License fees and computer software 5 year straight-line
Patents 10 year straight-line
Trademarks 10 year straight-line
Stocks 31 Dec 2022 31 Dec 2021
Raw materials and consumables 1,591,574.37 1,246,088.59
Finished products /
goods for resale
829,337.46 1,257,619.06
2,420,911.83 2,503,707.65
79
Development,
expenditure
Intangible,
rights
Other,longterm,
expenditure
Total
Acquisition,cost,at,1,Jan,2022 10,610,267.05 544,399.75 229,641.63 11,384,308.43
Additions 1,356,477.87 101,754.52 0.00 1,458,232.39
Disposals -1,040,052.71 0.00 0.00 -1,040,052.71
Acquisition,cost,at,31,Dec,2022 10,926,692.21 646,154.27 229,641.63 11,802,488.11
Accumulated,amortization,and,reduction,in,value,at,1,Jan,2022 4,786,213.48 206,970.27 144,296.01 5,137,479.76
Amortization,for,the,financial,year 825,382.08 60,517.17 44,790.32 930,689.57
Accumulated,amortization,and,reduction,in,value,at,31,Dec,2022 5,611,595.56 267,487.44 189,086.33 6,068,169.33
Book,value,at,31,Dec,2022 5,315,096.65 378,666.83 40,555.30 5,734,318.78
Book,value,at,31,Dec,2021 5,824,053.57 337,429.48 85,345.62 6,246,828.67
Tangible assets Machinery and equipment Total
Acquisition cost at 1 Jan 2022 1,623,603.13 1,623,603.13
Additions 665,029.66 665,029.66
Acquisition cost at 31 Dec 2022 2,288,632.79 2,288,632.79
Accumulated amortization and reduction in value at 1 Jan 2022 1,201,326.99 1,201,326.99
Amortization for the financial year 231,775.42 231,775.42
Accumulated amortization and reduction in value at 31 Dec 2022 1,433,102.41 1,433,102.41
Book value 31 Dec 2022 855,530.38 855,530.38
Book value 31 Dec 2021 422,276.14 422,276.14
Book value of machinery and equipment used for production at 31 Dec 2022 751,478.55
Book value of machinery and equipment used for production at 31 Dec 2021 288,184.10
Non-current assets
80
Holdings in other undertakings
Shanghai Optomed Medical Technology Ltd, China was closed on January 2023.
Investments Shares in group companies Receivables from group companies Total
Acquisition cost at 1 Jan 2022 9,266,906.46 1,052,545.19 10,319,451.65
Additions 0.00 30,461.70 30,461.70
Acquisition cost at 31 Dec 2022 9,266,906.46 1,083,006.89 10,349,913.35
Book value 31 Dec 2022 9,266,906.46 1,083,006.89 10,349,913.35
Book value 31 Dec 2021 9,266,906.46 1,052,545.19 10,319,451.65
Group undertakings Ownership %
Optomed Software Oy, Espoo 100
Optomed Hong Kong Limited, China 100
Optomed China Ltd, China 100
Shanghai Optomed Medical Technology Ltd 100
Optomed USA Inc 100
81
Long-term receivables 31 Dec 2022 31 Dec 2021
From group undertakings
Loans receivable 1,083,006.89 1,052,206.30
Other receivables 1,265,704.11 441,801.02
Total 2,348,711.00 1,494,007.32
Total long-term receivables 2,348,711.00 1,494,007.32
Short-term receivables
From group undertakings
Trade debtors 6,044,985.01 5,314,920.08
Other receivables 1,029,841.89 38,794.47
Total 7,074,826.90 5,353,714.55
From others
Trade debtors 2,044,663.59 1,988,196.92
Other receivables 158,019.94 95,473.16
Prepayments and accrued income 479,388.84 524,444.50
Total 2,682,072.37 2,608,114.58
Total short-term receivables 9,756,899.27 7,961,829.13
Analysis of receivables
82
Capital and reserves
Restricted equity 31 Dec 2022 31 Dec 2021
Subscribed capital at 1 January 80,000.00 80,000.00
Subscribed capital at 31 December 80,000.00 80,000.00
Share premium account at 1 January 503,699.60 503,699.60
Share premium account at 31 December 503,699.60 503,699.60
Total restricted equity 583,699.60 583,699.60
Unrestricted equity
Reserve for invested unrestricted equity at 1 January 42,439,622.44 41,384,281.85
Share issue 9,052,742.55 1,055,340.59
Reserve for invested unrestricted equity at 31 December 51,492,364.99 42,439,622.44
Retained earnings from previous financial years at 1 January -18,771,279.71 -16,562,813.54
Retained earnings from previous financial years 31 December -18,771,279.71 -16,562,813.54
Profit for the financial year -3,547,640.33 -2,208,466.18
Total unrestricted equity 29,173,444.95 23,668,342.72
Total capital and reserves 29,757,144.55 24,252,042.32
83
31 Dec 2022 31 Dec 2021
Distributable equity
Calculation regarding distributable equity
Profit from previous financial years -18,771,279.71 -16.562.813.54
Profit of the financial year -3,547,640.33 -2.208.466.18
Reserve for invested unrestricted equity 51,492,364.99 42.439.622.44
Capitalised development expenditure -5,315,096.65 -5.824.053.57
23,858,348.30 17.844.289.15
Optomeds share treasury
Optomed has conveyed 9,951 treasury shares to the members of the Board of
Directors as a part of the Board members’ annual remuneration in accordance
with the decision of the Annual General Meeting 2022.
In addition total of 37,300 of shares have been subscribed for under the Com-
pany’s stock option plans 2015, 2017, 2017B and 2018C and Optomed has used
treasury shares for the share subscriptions.
The total amount of treasury shares was 374,566 shares in the end of the fi-
nancial year.
84
Liabilities
Appropriations 31 Dec 2022 31 Dec 2021
Non-current liabilities
Loans from financial institutions 4,283,472.54 5,759,319.80
Other non-current liabilities 1,040,000.00 490,000.00
5,323,472.54 6,249,319.80
Liabilities falling due later than in five years
Loans from financial institutions 257,335.00 651,168.00
257,335.00 651,168.00
Current liabilities
Other liabilities 21,805.07 299.44
21,805.07 299.44
Amounts owed to others
Loans from financial institutions 986,892.00 1,264,051.72
Advances received 167,924.74 57,497.67
Trade creditors 481,657.27 633,237.57
Other liabilities 74,633.35 83,402.39
Accruals and deferred income 786,447.00 720,385.45
2,497,554.36 2 758 574,79
Material items included in accruals and deferred income
Wages and salaries including social security costs 667,767.63 632,868.15
Interest 20,154.49 14,472.27
Other 98,524.88 73,045.03
786,447.00 720,385.45
85
Related party transactions
The following material transctions were carried out with related parties during the financial period:
The transactions between group companies are carried out with regular terms. Parent company has also received a group contribution of 1,787,265.38€. Parent
company has given loan to daughter company, 822,580,33€ and received loan of 700,000,00€ from another daughter company.
Guarantees and contingent liabilities
Pension obligations
The company’s pension obligations are insured in external pension insurance companies. The pension obligations are fully covered.
31 Dec 2022 31 Dec 2021
Sale of goods, group companies 672,861.42 1,083,473.72
Other operating income, group companies 116,165.25 100,410.03
Interest income of loans, group companies 42,155.21 0.00
Purchases, group companies -376,638.35 -521,747.43
Interests of loans, group companies -21,505.63 -29.44
Total 433,037.90 662,106.88
Liabilities in balance sheet secured by enterprise mortgages 31 Dec 2022 31 Dec 2021
Loans from financial institution 4 172 000,54 4,524,445.24
Enterprise mortgages 8 700 000,00 8,700,000.00
Enterprise mortgages, total 8 700 000,00 8,700,000.00
The liability has been guaranteed with 80% share by Osuuspankki of Oulu
and 20% by Finnvera Oyj special guarantee.
86
Other off-balance-sheet financial
commitments
Company has off-balance sheet commitment to enterprice resource planning
system licence fees total of 143,592.20 euros.
Company has liabilities for the delivery guarantee to Fabrinet Pte Ltd, 1,000,000.00
USD, which is covered 40% by Oulu Osuuspankki corporate mortgage and 60%
Other commitments 31 Dec 2022 31 Dec 2021
Rental commitments (Inc. VAT)
Payble during the following financial year 251,824.08 210,890.52
Payable in later years 0.00 87,871.05
Total 251,824.08 298,761.57
Amounts payable based on lease contracts (Inc.VAT)
Payble during the following financial year 1,122.99 935.99
Payable in later years 3,368.98 0
4,491.97 935.99
by Finnvera’s special guarantee.
Collateralised loans include covenants. The specific terms relate to the compa-
ny’s solvency and liquidity. Breaching the covenants may increase the cost of
financing or result in termination of the loans. The management of the company
states that the covenants are met and they are being monitored.
87
Signatures to the Financial Statements and Board of Director’s Report
Espoo, February 16, 2023
Petri Salonen
Chairman of the Board
Anna Tenstam
Board Member
Seppo Mäkinen
Board Member
Mars Duan
Board Member
Reijo Tauriainen
Board Member
Seppo Kopsala
CEO
Tapio Raappana
Authorised Public Accountant, KHT
The Auditor’s Note
A report on the audit performed has been issued today. Oulu , February 16, 2023
KPMG Oy Ab
88
Auditor’s Report
89
Auditor’s Report
To the Annual General Meeting of Optomed Oyj
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Optomed Oyj (Finnish business
identity code 1936446-1) for the year ended 31 December 2022. The financial
statements comprise the consolidated balance sheet, income statement, sta-
tement of comprehensive income, statement of changes in equity, statement
of cash flows and notes, including a summary of significant accounting policies,
as well as the parent company’s balance sheet, income statement, statement
of cash flows and notes.
In our opinion
— the consolidated financial statements give a true and fair view of the group’s
financial position, financial performance and cash flows in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU
— the financial statements give a true and fair view of the parent company’s
financial performance and financial position in accordance with the laws and
regulations governing the preparation of financial statements in Finland and
comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit
Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland.
Our responsibilities under good auditing practice are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report.
We are independent of the parent company and of the group companies in
accordance with the ethical requirements that are applicable in Finland and are
relevant to our audit, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have
provided to the parent company and group companies are in compliance with
laws and regulations applicable in Finland regarding these services, and we
have not provided any prohibited non-audit services referred to in Article 5(1)
of regulation (EU) 537/2014. The non-audit services that we have provided have
been disclosed in note 7.3 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.
90
KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative (”KPMG International”), a Swiss entity.
Materiality
The scope of our audit was influenced by our application of materiality. The
materiality is determined based on our professional judgement and is used to
determine the nature, timing and extent of our audit procedures and to evaluate
the effect of identified misstatements on the financial statements as a whole.
The level of materiality we set is based on our assessment of the magnitude
of misstatements that, individually or in aggregate, could reasonably be expe-
cted to have influence on the economic decisions of the users of the financial
statements. We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for qualitative reasons for the
users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current pe-
riod. These matters were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. The significant risks of material
misstatement referred to in the EU Regulation No 537/2014 point (c) of Article
10(2) are included in the description of key audit matters below.
We have also addressed the risk of management override of internal controls.
This includes consideration of whether there was evidence of management bias
that represented a risk of material misstatement due to fraud.
91
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
— The carrying amount of goodwill in the consolidated financial statements
amounted to EUR 4,256 thousand as at December 31, 2022, accounting for
14 % of the total assets and 21 % of total balance of equity and reserves.
— Goodwill is tested for impairment by the management annually or more
frequently. Impairment is recorded in case the carrying amount exceeds the
asset’s recoverable amount.
— For purposes of impairment testing, the recoverable amount is determin-
ed by Optomed based on value in use. The projected cash flows underlying
the estimates made involve an element of management judgment regar-
ding profitability of operations, long-term growth factors and interest rates
applicable to the discounting of cash flows.
— Resulting from management judgment underlying estimates and the sig-
nificance of the book value of goodwill, the valuation of goodwill is percei-
ved as a key audit matter.
Our audit measures included, among others:
— We have assessed the key assumptions made by the management such
as profitability of operations, interest rates and long-term growth factors. In
the course of our audit of the estimates we have assessed the projections
prepared by management in comparison with realized cash flows and emp-
loyed professional judgment in the testing of key assumptions and their
effect on sensitivity analyses.
— We involved KPMG’s valuation specialists in the audit for assessment
of the appropriateness of the assumptions employed and the technical
integrity of the calculations. The procedures have included a comparison to
general market and industry-specific forecasts.
— In addition, we assessed the appropriateness of the disclosures to the
accounts relating to goodwill and impairment testing in the consolidated
financial statements.
Goodwill (Basis of Preparation for the consolidated financial statements and Note 12.4 to the Financial Statements)
92
Revenue recognition and trade receivables (Basis of Preparation for the consolidated financial statements and Notes 3, 16.2 and 21.4 to
the Financial Statements)
— The net sales for the Group, total EUR 14,610 thousand, is comprised of sales of medical
screening devices and solutions to wholesale dealers and of sales of software services.
— Optomed recognises revenue to reflect the transfer of negotiated goods or services to
customers in the amount of compensation Optomed expects to be entitled to in exchange
of the goods and services.
— The sales revenue from sales of screening devices and solutions are recognized when the
performance obligation is fulfilled by the delivery of good to wholesale dealer and control is
transferred to customer.
— For the sales of software services, revenue is recognized over a period of time; for licensing
agreements, at a point of time as control is transferred to customer; and for installation so-
lutions, at the point of time as control is transferred and the end product is at the customer’s
disposal.
— Optomed has a significant amount of trade receivables, EUR 3,556 thousand, which consist
of resource factoring receivables and normal trade receivables with payment time of different
lengths. There is always a credit risk in trade receivables, which is increased by a significant
amount of overdue trade receivables, as in Note 21.4 is described. The significant expiry of
trade receivables is a reference of increased credit risk and loss allowance.
— Group recognises all trade receivables at amortised cost. The expected credit losses on
trade receivables are recorded based on Optomed’s historical knowledge on trade receivables
at default and payment delays due to financial difficulties. The loss allowance is assessed both
on an individual basis and collectively.
— Optomed has evaluated the expected credit loss related to overdue trade receivables
and kept the loss allowance of 30% which was recognized EUR 589 (715) thousand this year.
— Following the variety of types of sales proceeds collected by the Group and the significant
amount of overdue trade receivables and related credit loss risk, revenue recognition and
trade receivables are perceived as a key audit matter.
Our audit measures included, among others:
— Our audit measures have included the assessment of internal control environment mo-
nitoring sales processes and overdue trade receivables and testing of effectiveness of key
sales controls identified. Additionally, we have performed substantive audit measures on
net sales recorded.
— We have tested the recording of sales transactions as well as the function of recording and
invoicing of sales transactions and evaluated the correctness of sales proceeds by testing the
accrual of sales between periods.
— We have performed substantive audit procedures for trade receivables in the consolidated
financial statements to evaluate the valuation of trade receivables.
— We have evaluated the reasonability of estimates related to valuation of trade receivables,
especially regarding overdue trade receivables.
— In addition, we assessed the appropriateness of the disclosures to the accounts relating
to sales revenue and trade receivables recognized in the consolidated financial statements.
93
Capitalized development costs (Basis of Preparation for the consolidated financial statements and Note 12.2 to the Financial Statements)
— The development of screening devices is a key part of Optomed Group
operating model. It takes lot of development work before launching the
products. Optomed capitalizes such costs when all the financial statement
regulation criteria are met and those will generate probable future econo-
mic benefits. The carrying amount of capitalized development cost in the
consolidated financial statements amounted to EUR 6,562 thousand as at
December 31, 2022
— Optomed capitalizes development expenditure as an intangible asset
where all the related criteria mentioned in basis of preparation are met.
— This requires management to make judgement on when all of the criteria
for capitalization are met and when to cease capitalization and start amorti-
sing the asset.
— The carrying amount of capitalized development cost is depreciated as a
straight-line amortization over 10 years of economic life and consequently
the capitalized cost has a significant impact on the company’s level of opera-
ting profit.
— Following from the element of management judgment in the capitalized
development cost and the related amortizations, the significance of book
value of the asset and the effect on the result of operations, the appropria-
teness of capitalized development cost is perceived as a key audit matter.
Our audit measures included, among others:
— Our audit measures have included the assessment of internal control
environment monitoring capitalization of development cost processes.
We have assessed if the capitalized development expenses in the financial
period have met all the criteria.
— We have assessed the appropriateness of the principles related to
capitalization, valuation and the amortization period of those development
expense.
— We have assessed the judgements and assumptions made by the mana-
gement decisions related to capitalization, cease capitalization and amorti-
sing the asset.
— We have tested the correctness of capitalized screening device develop-
ment expense by sample tests and analytical substantive audit measures.
— We have assessed the appropriateness of valuation of capitalized
development cost and the amortization period by reviewing the profit
projections of most significant projects and the technical accuracy of the
calculations and employed professional judgment in the testing of key as-
sumptions and their effect on sensitivity analyses.
— We involved KPMG’s valuation specialists in the audit for assessment of
the appropriateness of the assumptions employed and the technical accu-
racy of the calculations.
— In addition, we assessed appropriateness of the disclosures to the ac-
counts relating to capitalized development costs.
94
Responsibilities of the Board of Directors and the Managing
Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the pre-
paration of consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards (IFRS) as adopted by
the EU, and of financial statements that give a true and fair view in accordance
with the laws and regulations governing the preparation of financial statements
in Finland and comply with statutory requirements. The Board of Directors and
the Managing Director are also responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing
Director are responsible for assessing the parent company’s and the group’s
ability to continue as a going concern, disclosing, as applicable, matters relating
to going concern and using the going concern basis of accounting. The financial
statements are prepared using the going concern basis of accounting unless
there is an intention to liquidate the parent company or the group or cease
operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Rea-
sonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with good auditing practice will always detect
a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise
professional judgment and maintain professional skepticism throughout the
audit. We also:
— Identify and assess the risks of material misstatement of the financial sta-
tements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and ap-
propriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the parent
company’s or the group’s internal control.
— Evaluate the appropriateness of accounting policies used and the reasonable-
ness of accounting estimates and related disclosures made by management.
— Conclude on the appropriateness of the Board of Directors’ and the Managing
Director’s use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the parent company’s or the group’s
ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
95
up to the date of our auditor’s report. However, future events or conditions may
cause the parent company or the group to cease to continue as a going concern.
— Evaluate the overall presentation, structure and content of the financial state-
ments, including the disclosures, and whether the financial statements represent
the underlying transactions and events so that the financial statements give a
true and fair view.
— Obtain sufficient appropriate audit evidence regarding the financial informa-
tion of the entities or business activities within the group to express an opinion
on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and com-
municate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we de-
termine those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on 11 May
2016, and our appointment represents a total period of uninterrupted engage-
ment of 7 years. Optomed Oyj has become a Public Interest Entity 5 December
2019 and we have been auditors all that time.
Other Information
The Board of Directors and the Managing Director are responsible for the other
information. The other information comprises the report of the Board of Dire-
ctors and the information included in the Annual Report, but does not include
the financial statements and our auditor’s report thereon. We have obtained
the report of the Board of Directors prior to the date of this auditor’s report,
and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to
read the other information identified above and, in doing so, consider whether
the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. With respect to the report of the Board of Directors, our responsibility
also includes considering whether the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is con-
sistent with the information in the financial statements and the report of the
Board of Directors has been prepared in accordance with the applicable laws
and regulations.
96
If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Oulu 16 February 2023
KPMG OY AB
TAPIO RAAPPANA
Authorised Public Accountant, KHT
affiliated with KPMG International Limited, a private English company limited by guarantee. Domicile Helsinki
KPMG Oy Ab
Kauppurienkatu10 B
90100 Oulu
FINLAND
Telephone +358 20 760 3000
www.kpmg.fi
Independent Auditor’s Reasonable Assurance Report
on Optomed Plc’s ESEF Financial Statements
To the Board of Directors of Optomed Plc
We have undertaken a reasonable assurance engagement in respect of whether the consolidated financial
statements for the year ended 31 December 2022 included in the digital financial statements
7437009IVYWGEE4S7B77-2022-12-31-en.zip of Optomed Plc (Business ID 1936446-1) have been marked
up with iXBRL markups in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815
(ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of
Directors and financial statements (ESEF financial statements) that comply with the requirements of ESEF
RTS. This responsibility includes:
— preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
— marking up the primary statements and the notes to the consolidated financial statements, and the
company identification data included in the ESEF financial statements with iXBRL tags in accordance with
Article 4 of the ESEF RTS; and
— ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem
necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethical requirements applicable in Finland, which
apply to the engagement we have performed, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The auditor applies International Standard on Quality Management ISQM 1, which requires the firm to design,
implement and operate a system of quality management including policies or procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulations
requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking
up of the consolidated financial statements included in the ESEF financial statements comply in all material
respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in
accordance with International Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
— the primary statements of the consolidated financial statements included in the ESEF financial statements
are, in all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS,
and;
— whether the notes to the consolidated financial statements and the company identification data included
in the ESEF financial statements data, have been marked up, in all material respects, with iXBRL tags in
accordance with Article 4 of the ESEF RTS; and
KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG global organization of independent member firms Business ID 1805485-9
2
Optomed Plc
Independent Auditor’s Reasonable Assurance Report on
ESEF Financial Statements
1 March, 2023
— whether the ESEF financial statements and the audited financial statements are consistent with each
other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes
the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether
due to fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the primary statements of the consolidated financial statements, the notes to the consolidated
financial statements and the company identification data included in the ESEF financial statements of
Optomed Plc identified as 7437009IVYWGEE4S7B77-2022-12-31-en.zip for the year ended 31 December
2022 are, in all material respects, marked up in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion on the audit of the consolidated financial statements of Optomed Plc for the year ended 31
December 2022 is set out in our Auditor’s Report dated 16 February 2023. In this report, we do not express
any audit opinion or other assurance conclusion on the consolidated financial statements.
Oulu 1 March, 2023
KPMG OY AB
Tapio Raappana
Authorised Public Accountant, KHT
97
www.optomed.com
This document is an English translation of the Finnish report. Only the Finnish version of the report is legally binding.