Optomed Plc Stock Exchange Release 4 August 2022 at 9.00, Helsinki

 Optomed Plc: Half-year financial report, January - June 2022

• Revenue decreased by 7.0 percent to EUR 3,7 (4,0) million.
• Devices segment revenue decreased by 28.2 percent to EUR 1,4 (1,9) million as the revenue from China declined over 90% whereas the rest of the world grew over 40%.
• Software segment revenue increased by 12.1 percent to EUR 2,4 (2,1) million.
• Adjusted EBITDA amounted to EUR -813 (177) thousand corresponding to -21.8 (4.4) percent of revenue.
• Optomed successfully completed directed share issue raising EUR 4.8 million.

• Revenue decreased by 12.7 percent to EUR 6,9 (8,0) million.
• Devices segment revenue decreased by 27.5 percent to EUR 2,4 (3,3) million.
• Software segment revenue decreased by 2.0 percent to EUR 4,5 (4,6) million.
• Adjusted EBITDA amounted to EUR -1,750 (-138) thousand corresponding to -25.2 (-1.7) percent of revenue.
• Optomed announced the results from the prospective, multi-center clinical trial intended to assess its handheld fundus camera Aurora together with AEYE Health's AI for autonomous detection of more than mild diabetic retinopathy, and the FDA clearance process is proceeding as planned.

Key figures

EUR, thousand Q2/202 Q2/202 Change, H1/202 H1/202 Change, 2021
2 1 % 2 1 %
Revenue 3,733 4,012 -7.0% 6,947 7,956 -12.7% 14,850
Gross profit 2,149 3,324 -35.4% 4,339 5,901 -26.5% 10,558
*
Gross margin 57.6% 82.9% 62.4% 74.2% 71.1%
% *
EBITDA -813 177 -559.1% -1,750 -138 -1,172.0% -2,002

EBITDA margin -21.8% 4.4% -25.2% -1.7% -13.5%
*, %
Adjusted -813 177 -559.1% -1,750 -138 -1,172.0% -2,002
EBITDA *
Adjusted -21.8% 4.4% -25.2% -1.7% -13.5%
EBITDA margin
*, %
Operating -1,355 -859 -57.7% -2,815 -1,710 -64.7% -4,780
result(EBIT)
Operating  -36.3% -21.4% -40.5% -21.5% -32.2%
margin
(EBIT) *, %
Adjusted -1,355 -859 -57.7% -2,815 -1,710 -64.7% -4,780
operating
result(EBIT)
*
Adjusted -36.3% -21.4% -40.5% -21.5% -32.2%
operating
margin (EBIT
margin)
*, %
Net profit/ -1,328 -864 -53.8% -2,698 -1,480 -82.3% -4,249
loss
Earnings per -0.10 -0.06 -48.8% -0.20 -0.11 -76.4% -0.32
share
Cash flow -965 -1,403 31.2% -1,665 -1,659 -0.4% -2,940
from
operating
activities
Net Debt -825 -2,042 -59.6% -825 -2,042 -59.6% 213

Net debt/ 0.2 -68.7 0.2 -68.7 -0.1
Adjusted
EBITDA (LTM)
Equity ratio  61.5% 64.5% 61.5% 64.5% 58.8%
*
R&D expenses 222 490 -54.7% 598 968 -38.2% 1,773
personnel
R&D expenses 147 161 -9.0% 356 310 14.6% 511
other
costs
Total R&D 368 651 -43.4% 954 1,279 -25.4% 2,284
expenses

*)
Alternative
performance
measures,
see section
Alternative
Performance
Measures
for
definitions
and
calculations.

CEO Review

Significant growth investments and recruitments in the United States.

The first half of the year was weak, as exptected. The second half and the near future looks strong.

Optomed completed in May a direct share issue raising gross proceeds of EUR 4.8 million.

The second quarter and therefore also the first half of the year were weak, as previously predicted, caused by decrease in revenue from China. The near future looks strong due to rapid growth from Western markets and the upcoming new product launches, such as the Aurora AEYE, are expected to accelerate growth in the coming years.  We expect sales in China to pick up during the second half of the year, however the Chinese market has been a significant part of Optomed's revenue in the past years, and there are still major uncertainties regarding the market recovery in China. We maintain our current full year outlook, but despite our success in Western markets, the Chinese market still causes uncertainty over the full year revenue.

The US market will be centric for the success of Optomed's strategic goals and revenue growth for the next five years. Diabetic retinopathy screenings are expected to move to primary care with accelerating pace as the new national AI-based reimbursement code for diabetic retinopathy screening (CPT 92229) was approved by the US authorities (Centers for Medicare and Medicaid, CMS) early 2022. Because of the high reimbursemet enabled by the new code as well as Medicare star rating benefits, diabetic retinopathy screenings are highly profitable for primary care units. According to various estimates, there are currently approximately 200,000 - 500,000 different point of care units in the United States that may start screening for diabetic retinopathy in the coming years, and are potential customers of Optomed's Aurora AEYE solution.

According to the estimate we made together with our partners, customers and advisors, in the next 5-10 years there will be at least 50,000 - 100,000 fundus cameras connected to artificial intelligence in the United States to screen for diabetic retinopathy and later also for other blinding- and systemic diseases. It is expected that a few market leaders will supply the majority of these devices. Optomed aims to be one of these market leaders with its highly competitive products and early market entry. If we succeed in this, the diabetic retinopathy screening market in the United States alone will be able to multiply Optomed's revenue, and it will all be reoccurring revenue.

We are currently focusing our growth investments strongly in the United States. The FDA clearance process for our Aurora AEYE product is proceeding as planned. During the past quarter, we have hired additional sales and marketing personnel in the United States, and started training and preparing our organization and partners for the upcoming product launch. Optomed currently has a strong management, sales- and marketing and other operational organization ready in the USA.

In the rest of the world, the company's operating expenses are decreasing. Our largest long-term development projects are getting closer to completion and as a result, the company's fixed costs and investments will decrease outside the US during the second half of the year. As a result, and despite increasing investments in the US market, the company's profitability is expected to improve in the near future.

Seppo Kopsala

CEO

Outlook 2022

Optomed expects its full year 2022 revenue to grow compared to 2021.

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 4 August 2022 at 11.00 EEST, (10.00 CEST). The event will be held in English. The presentation material will be available at www.optomed.com/investors 10.00 EEST at the latest.

The participants are requested to register for the call-in advance by email to sakari.knuutti@optomed.com.

Please see the call-in numbers below:

FI +358 9 856 263 00

SE +46 8 505 218 52

UK +44 20 3321 5273

US +1 646 838 1719

FR +33 1 70 99 53 92

The conference id is is 552 064 878#.

Please note that by dialing into the conference call, the participant agrees that personal information such as name and company name will be collected.

Group performance

April - June 2022

In April-June 2022, Group revenue decreased by 7.0 percent to EUR 3,733 (4,012) thousand. The main reason for the decline was the earlier communicated changes in China impacting camera sales. This was partly compensated by strong sales of the Software segment, and the strong global distributor and OEM sales of the Devices segment". The Devices segment's revenue decreased by 28.2 percent  as the revenue from China declined over 90% whereas the rest of the world grew over 40% and the Software segment's revenue increased by 12.1 percent compared to same period last year.

The gross margin decreased to 57.6 from 82.9 percent of last year. The Company received grants and other operating income EUR 0 (624) thousand. The gross margin of the comparison period in 2021 was boosted by Business Finland waiving a loan of the Company in the amount of EUR 538 thousand. The gross margin for the second quarter of 2022 adjusted for grants and other operating income would have been 57.6 percent compared to 67.3 percent in 2021.

EBITDA amounted to EUR -813 (177) thousand. The lower gross profit in the second quarter 2022 compared to 2021 was mainly caused by lower revenue in China and higher gross profit in 2021. EBIT was EUR -1,355 (-859) thousand.

Net financial items amounted to EUR 6 (-25) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

January - June 2022

In January-June 2022, Group revenue decreased by 12.7 percent to EUR 6,947 (7,956) thousand, driven mainly by the same reasons as for the second quarter. The Devices segment's revenue decreased by 27.5 percent and the Software segment's revenue decreased by 2.0 percent.

The gross margin decreased to 62.4 percent from 74.2 percent last year. The Company's other operating income includes governmental grants of EUR 37 (705) thousand in the first half of 2022 and 2021, which increased the gross margin of both periods. The gross margin for the first half of 2022 adjusted for the total amount of the grants and other operating income would have been 61.9 percent compared to 65.3 percent in 2021.  

EBITDA amounted to EUR -1,750 (-138) thousand and EBIT was EUR -2,815 (-1,710) thousand.

Net financial items amounted to EUR 77 (191) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB to EUR.

Cash flow and financial position

In April-June 2022, the cash flow from operating activities amounted to EUR -965 (-1,403) thousand. Net cash used in investing activities was EUR -825 (-489) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR 4,208 (-6). Optomed completed in May a direct share issue raising gross proceeds of EUR 4.8 million.

Consolidated cash and cash equivalents at the end of the period amounted to EUR 7,079 (7,818) thousand. Interest-bearing net debt totalled EUR -825 (-2,042) thousand at the end of the period.

Net working capital was EUR 4,239 (4,804) thousand at the end of the period.

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 of various eye diseases, such as diabetic retinopathy, glaucoma and AMD (Age Related Macular Degeneration).

EUR, thousand Q2/2022 Q2/2021 Change,% H1/2022 H1/2021 Change,% 2021
Revenue 1,361 1,896 -28.2 % 2,425 3,343 -27.5 % 5,839
Gross profit 642 1,811 -64.6 % 1,283 2,653 -51.7 % 4,139
*
Gross margin% 47.2 % 95.5% 52.9 % 79.4% 70.9 %
*
EBITDA -464 593 -178.3 % -963 362 -365.8 % -1,014
EBITDA margin -34.1 % 31.3% -39.7 % 10.8% -17.4 %
*,%
Operating -843 -292 -188.3 % -1,707 -907 -88.2 % -3,182
result (EBIT)
Operating -61.9 % -15.4% -70.4 % -27.1% -54.5 %
margin (EBIT)
*,%

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

April-June 2022

In April-June 2022, the Devices segment revenue decreased by 28.2 percent to EUR 1,361 (1,896) thousand. The negative growth was mainly due to changes in China, which were communicated in February, impacting camera sales. This was partly compensated by strong global distributor and OEM sales. The revenue from China declined over 90% whereas the rest of the world grew over 40%.

The gross margin decreased to 47.2 percent from 95.5 percent in the previous year and the other operating income was EUR 0 (623) thousand. The delta was due to the previously mentioned waived loan. In the second quarter of 2022 the gross margin adjusted for grants and the total amount of other operating income would have been 47.2 percent compared to 62.6 percent in 2021. The increased share of OEM sales of the total sales also affected the gross margin negatively.

EBITDA was EUR -464  (593) thousand or -34.1 (31.3) percent of revenue. The key driver for the decrease in EBITDA was the lower revenue in China and gross margin.

January-June 2022

In January-June 2022, the Devices segment revenue decreased by 27.5 percent to EUR 2,425 (3,343) thousand, mainly driven by the same reasons as for the second quarter.

The gross margin decreased to 52.9 percent from 79.4  percent in the previous year. In 2022, the first half year gross margin adjusted for other operating income would have been 51.4 percent compared to 58.3 percent in 2021.

EBITDA was EUR -963 (362) thousand or -39.7 (10.8) percent of revenue. The reason for the decrease in EBITDA was mainly the same as for the second quarter.

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.

EUR, thousand Q2/2022 Q2/2021 Change,% H1/2022 H1/2021 Change,% 2021
Revenue 2,372 2,116 12.1 % 4,522 4,613 -2.0 % 9,011
Gross profit * 1,507 1,513 -0.4 % 3,056 3,248 -5.9 % 6,420
Gross margin % 63.5 % 71.5 % 67.6 % 70.4 % 71.2 %
*
EBITDA 478 248 92.9 % 898 788 14.0 % 1,855
EBITDA margin 20.2 % 11.7 % 19.9 % 17.1 % 20.6 %
*, %
Operating 317 97 225.1 % 580 486 19.4 % 1,247
result (EBIT)
Operating 13.3 % 4.6 % 12.8 % 10.5 % 13.8 %
margin (EBIT)
*, %

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

April - June 2022

In April-June 2022, The Software segment revenue increased by 12.1 percent to EUR 2,372 (2,116) thousand. A large license delivery that was postponed from Q1 was delivered in Q2 which had a positive effect on Q2, whereas Q1 was previously negatively impacted. Global screening solution projects continued well in Asia and the Middle-East. EBITDA stood at EUR 478 (248) thousand or 20.2 (11.7) percent of revenue, respectively.

January - June 2022

In January-June 2022, the Software segment revenue decreased by 2.0 percent to EUR 4,522 (4,613) thousand, EBITDA was EUR 898 (788) thousand or 19.9 (17.1) percent of revenue.

Group-wide expenses

Group-wide expenses relate to functions supporting the entire group such as treasury, group accounting, legal, HR, and IT.

April - June 2022

Group-wide operating expenses amounted to EUR 827 (664) thousand.  The increase is mainly related to strengthened of Group Marketing function, started already in second half of 2021. 

January - June 2022

Group-wide operating expenses amounted to EUR 1,685 (1,288) thousand. The change is due to strengthening of Group Marketing function.

Personnel

Number of personnel at the end of the reporting period.

6/2022 6/2021
Devices 55 55
Software 43 41
Group common 22 19
Total 120 115

Corporate Governance

Optomed complies with Finnish laws and regulations, Optomed's Articles of Association, the rules of Nasdaq Helsinki and the Finnish Corporate Governance Code 2020 issued by the Securities Market Association of Finland. The code is publicly available at http://cgfinland.fi/en/. Optomed's corporate governance statement 2021 is available on the company website www.optomed.com/investors/.

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 Authorized 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 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 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

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 15,400,997 shares and the company held 386 517  shares in the treasury which approximately corresponds to 2.5 percent of the total amount of the shares and votes. Additional information with respect to the shares, shareholding and trading can be found on the company's website www.optomed.com/investors/.

Directed share issue

Optomed completed a directed share issue costisting of 1,397,853 shares and collected gross proceeds of approximately EUR 4.8 million in May 2022. The main purpose of the share issue was to ensure sufficient financing for the implementation of the Company's growth strategy especially in the US diabetic retinopathy screening market and to strengthen its balance sheet. The subscription price was EUR 3.45 per share corresponding to a discount of approximately 6.76 per cent to the closing price of the Company's share on 5 May 2022. The subscription price was credited in full to the Company's reserve for invested unrestricted equity. The investors include institutional and qualified investors with past experience and expertise in the medical devices sector (such as Joensuun Kauppa & Kone Oy, Timo Syrjälä, Markku Kaloniemi, Berenberg funds and SP funds), which the Company expects to support the Company's strategy and demonstrate the Company's attractive position in the market. The new shares were registered in the Finnish Trade Register and trading in the new shares together with the existing shares commenced on Nasdaq Helsinki Ltd on 10 May 2022.

Risks and uncertainties

The key risks and uncertainties are described in the company's annual report 2021 which was published on 4 March 2022. The complete report is available at https://www.optomed.com/investors/. The risk position of Optomed has not changed since then.

Audit review

This financial report has not been audited by the company's auditors.

Financial reporting in 2022

3 November 2022 Interim Report for 1 January - 30 September 2022

For more information, contact

Lars Lindqvist, CFO

Tel: +46 702 59 57 89

E-mail: lars.lindqvist@optomed.com

Seppo Kopsala, CEO

Tel.: +358 40 555 1050

E-mail:  seppo.kopsala@optomed.com

About Optomed

Optomed is a Finnish medical technology company and one of the leading providers of handheld fundus cameras. Optomed combines handheld screening devices with software and artificial intelligence with the aim to transform the diagnostic process of blinding eye-diseases such as rapidly increasing diabetic retinopathy. In its business Optomed focuses on eye-screening devices and software solutions related R&D in Finland and sales through different channels in over 60 countries.

Alternative Performance Measures

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 Definition
Performance
Measures
Gross profit Revenue + Other
operating
income -
Materials and
services
expenses
Gross margin, % Gross profit /
Revenue
EBITDA Operating
result before
depreciation,
amortisation
and impairment
losses
EBITDA margin, % EBITDA /
Revenue
Operating result Profit/loss
after
depreciation,
amortisation
and impairment
losses
Operating margin, % Operating
result /
Revenue
Adjusted operating Operating
result result
excluding items
affecting
comparability
Adjusted operating Adjusted
margin, % operating
result /
Revenue
Adjusted EBITDA EBITDA
excluding items
affecting
comparability
Adjusted EBITDA Adjusted EBITDA
margin % / Revenue
Items affecting Material items
comparability outside
ordinary course
of business
including
restructuring
costs, net
gains or losses
from sale of
business
operations or
other non
-current
assets,
strategic
development
projects,
external
advisory costs
related to
capital
reorganisation,
impairment
charges on non
-current assets
incurred in
connection with
restructurings,
compensation
for damages and
transaction
costs related
to business
acquisitions.
Net Debt Interest
-bearing
liabilities
(borrowings
from financial
institutions,
government
loans and
subordinated
loans) - cash
and cash
equivalents
(excl. lease
liabilities
according to
IFRS 16)
Net Debt / Adjusted Net Debt /
EBITDA (LTM), times Adjusted EBITDA
(for the last
twelve months,
LTM)
Earnings per share Net result /
Number of
outstanding
shares
Equity ratio, % Total equity /
Total assets
R&D expenses Employee
benefit
expenses for
R&D personnel
and other
operational
expenses
related to R&D
activities

Consolidated income statement

In thousands Q2/2022 Q2/2021 H1/2022 H1/2021  2021
of euro
Revenue 3,733 4,012 6,947 7,956 14,850
Other 0 624 37 705 810
operating
income
Materials and -1,584 -1,311 -2,645 -2,761 -5,102
services
Employee -2,124 -2,257 -4,367 -4,405 -8,702
benefit
expenses
Depreciation, -542 -1,036 -1,066 -1,572 -2,778
amortisation
and
Impairment
losses
Other -838 -890 -1,722 -1,634 -3,858
operating
expenses
Operating -1,355 -859 -2,815 -1,710 -4,780
result

Finance 302 103 418 342 715
income
Finance -296 -128 -340 -151 -263
expenses
Net finance 6 -25 77 191 453
expenses

Profit (loss) -1,348 -884 -2,738 -1,519 -4,327
before
income taxes

Income tax 20 20 39 39 78
expense

Loss for the -1,328 -864 -2,698 -1,480 -4,249
period

Loss for the
period
attributable
to
Owners of the -1,328 -864 -2,698 -1,480 -4,249
parent
company
Loss per
share
attributable
to owners
of
the parent
company
Weighted 13,797,968 13,353,833 13,797,968 13,353,833 13,441,437
average
number
of shares
Basic loss -0.10 -0.06 -0.20 -0.11 -0.32
per share
(euro)

Consolidated condensed comprehensive income statement

In thousands of euro Q2/2022 Q2/2021 H1/2022 H1/2021 2021
Loss for the period -1,328 -864 -2,698 -1,480 -4,249
Other comprehensive income
Foreign currency translation -43 -56 -120 -134 -253
difference
Other comprehensive income, net of -43 -56 -120 -134 -253
tax
Total comprehensive income for the -1,372 -920 -2,818 -1,614 -4,502
period
Total comprehensive loss -1,372 -920 -2,818 -1,614 -4,502
attributable to Owners of the
parent company

Consolidated balance sheet

In thousands of euro June 30, 2022 June 30, 2021 Dec 31, 2021
ASSETS
Non-current assets
Goodwill  4,256  4,256  4,256
Development costs  7,115  5,531  6,338
Customer relationships  1,275  1,497  1,386
Technology  585  687  636
Other intangible assets  355  451  358
Total intangible assets  13,586  12,422  12,975
Tangible assets  664  352  433
Right-of-use assets  1,029  989  1,205
Deferred tax assets  14  11  13
Total non-current assets  15,293  13,774  14,626

Current assets
Inventories 3,161 2,552  2,936
Trade and other receivables 5,190  5,501 4,631
Cash and cash equivalents  7,079  7,818  6,804
Total current assets  15,429  15,871  14,371

Total assets  30,722 29,646  28,998

In thousands of euro June 30, 2022 June 30, 2021 Dec 31, 2021
EQUITY
Share capital  80  80  80
Share premium  504  504  504
Reserve for invested  43,089  37,832  38,526
non-restricted equity
Translation -207  32 -88
differences
Retained earnings -21,879 -17,839 -17,721
Profit (loss) for the -2,698 -1,480 -4,249
financial year
Total equity  18,888  19,129  17,052
LIABILITIES
Non-current
liabilities
Borrowings from  3,822  3,079  3,813
financial
institutions
Government loans  1,871  1,896  1,940
Lease liabilities  640  605  818
Deferred tax  425  501  463
liabilities
Total Non-current  6,758  6,081  7,034
liabilities

Current liabilities
Borrowings from  368  441  1,071
financial
institutions
Government loans  193  361  193
Lease liabilities  405  386  396
Trade and other  4,112 3,249 3,252
payables
Total current  5,077  4,436  4,912
liabilities

Total liabilities  11,835  10,517  11,946

Total equity and  30,722  29,646  28,998
liabilities

Consolidated statement of changes in shareholders' equity

Equity
attributable
to
owners of the
parent
company
In thousands Share Share Reserve Translation Retained Total
of euro capital premium for differences earnings
invested
non
-restricted
equity

Balance at 80 504 38,526 -88 -21,970 17,052
January 1,
2022
Comprehensive
income
Loss for the -2,698 -2,698
period
Other
comprehensive
income
Translation -120 -120
differences
Total -120 -2,698 -2,818
comprehensive
income for
the period

Share options  4,563 91 4,654
Total 4,563 91 4,654
transactions
with
owners of the
company
Other 0
adjustments
Balance at 80 504 43,089 -207 -24,577 18,888
June 30, 2022

Equity
attributable
to
owners of the
parent
company
In thousands Share Share Reserve Translation Retained Total
of capital premium for differences earnings
euro invested
non
-restricted
equity

Balance at 80 504 37,470 166 -18,147 20,073
January 1,
2021
Comprehensive
income
Loss for the -1,480 -1,480
period
Other
comprehensive
income
Translation -134 -134
differences
Total -134 -1,480 -1,614
comprehensive
income
for the
period

Share options  362 222 584
Total 362 222 584
transactions
with owners
of the
company
Other 86 86
adjustments
Balance at 80 504 37,832 32 -19,319 19,129
June
30, 2021

Equity
attributable
to
owners of the
parent
company
In thousands Share Share Reserve Translation Retained Total
of euro capital premium for differences earnings
invested
non
-restricted
equity

Balance at 80 504 37,470 166 -18,147 20,073
January 1,
2021
Comprehensive
income
Loss for the -4,249 -4,249
period
Other
comprehensive
income
Translation -253 -253
differences
Total -253 -4,249 -4,502
comprehensive
income for
the period

Share options  1,055 340 1,395
Total 1,055 340 1,395
transactions
with owners
of the
company
Other 86 86
adjustments
Balance at 80 504 38,526 -88 -21,970 17,052
December
31, 2021

Consolidated cash flow statement

In thousands of euro Q2/202 Q2/202 H1/2022 H1/2021 2021
2 1
Cash flows from operating activities
Loss for the financial year -1,328 -864 -2,698 -1,480 -4,249

Adjustments:
Depreciation, amortisation and 542 1,036 1,066 1,572 2,689
impairment

losses
Finance income and finance expenses 403 20 330 -201 -472
Other adjustments 15 -445 30 -356 992
Cash flows before change in net -369 -253 -1,273 -465 -1,041
working capital
Change in net working capital:
Change in trade and other receivables -872 -1,104 -438 -1,702 -1,409

(increase (-) / decrease (+))
Change in inventories 115 -200 -184 10 -340

(increase (-) / decrease (+))
Change in trade and other payables 568 192 671 536 -22

(increase (+) / decrease (-))
Cash flows before finance items -557 -1,365 -1,223 -1,622 -2,811

Interest paid -10 -11 -22 -30 -66
Other finance expenses paid -398 -27 -420 -8 -64
Interest received 0 0 0 1 1
Net cash from operating activities (A) -965 -1,403 -1,665 -1,659 -2,940

Cash flows from investing activities
Capitalization of development expenses -750 -445 -1,281 -881 -2,112
Acquisition of tangible assets -75 -43 -391 -164 -462
Net cash used in investing activities -825 -489 -1,672 -1,046 -2,574
(B)
Cash flows from financing activities
Proceeds from share subscriptions 4,892 125 4,945 362 1,012
Share issue transaction costs -382 0 -382 0 0
Proceeds from loans and borrowings 14 0 14 0 1,366
Repayment of loans and borrowings -213 -33 -778 -225 -327
Repayment of lease liabilities -103 -97 -205 -216 -414
Net cash from financing activities (C) 4,208 -6 3,595 -79 1,637
Net cash from (used in) operating, 2,418 -1,897 257 -2,784 -3,876
investing and financing activities
(A+B+C)
Net increase (decrease) in cash and 2,418 -1,897 257 -2,784 -3,876
cash equivalents
Cash and cash equivalents at beginning 4,630 9,767 6,804 10,608 10,608
of period
Effect of movements in exchange rate 31 -51 17 -6 73
on cash held
Cash and cash equivalents at end of 7,079 7,818 7,079 7,818 6,804
period

Selected notes

Corporate information and basis of accounting                                            

Corporate information

Optomed is a Finnish medical technology group (hereafter `Optomed' or `Group') that specialises in handheld fundus cameras and solutions for screening of blinding eye diseases, established in 2004.

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 Company's registered address is Yrttipellontie 1, 90230 Oulu, Finland.

Basis of accounting     

Optomed's consolidated financial statements has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The preparation of this interim report also takes into account the amendments to IFRS standards that have become effective by January 1, 2022.

All presented figures have been rounded. Financial ratios have been calculated using exact figures.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with Group`s last annual consolidated financial statements as at and for the year ended 31 December 2021.

This Interim financial statements do not include all of the information required for a complete set of IFRS financial statements: selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group`s financial position and performance since the last annual financial statements.

This report has been authorised for issue by the company`s board of directors.

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 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:

- Determining trade receivables credit risk

- capitalisation of development costs: determination of development expenditure eligible for capitalisation

- impairment testing of development expenditures

Reportable segments

Q2/2022

In thousands of euro Devices Software Group Admin Total
External revenue  1,361  2,372 0  3,733
Net operating expenses -719 -865 0 -1,584
Margin 642 1,507 0  2,149
Depreciation and amortisation -378 -162 -2 -542
Other expenses -1,106 -1,029 -827 -2,961
Operating result -843 317 -829 -1,355
Finance items 0 0 6 6
Loss before tax expense -843 317 -822 -1,348

Q2/2021

In thousands of euro Devices Software Group Admin Total
External revenue  1,896  2,116 0  4,012
Net operating expenses -85 -603 0 -688
Margin 1,811 1,513 0  3,324
Depreciation and amortisation -885 -151 0 -1,036
Other expenses -1,218 -1,265 -664 -3,147
Operating result -292 97 -664 -859
Finance items 0 0 -25 -25
Loss before tax expense -292 97 -689 -884

H1/2022

In thousands of euro Devices Software Group Admin Total

External revenue  2,425  4,522 0  6,947
Net operating expenses -1,143 -1,466 0 -2,609
Margin 1,283 3,056 0  4,339
Depreciation and amortisation -743 -319 -4 -1,066
Other expenses -2,246 -2,158 -1,685 -6,088
Operating result -1,707 580 -1,689 -2,815
Finance items 0 0 77 77
Loss before tax expense -1,707 580 -1,611 -2,738

H1/2021

In thousands of euro Devices Software Group Admin Total

External revenue  3,343  4,613 0  7,956
Net operating expenses -690 -1,365  0 -2,055
Margin 2,653 3,248 0   5,901
Depreciation and amortisation -1,269 -303 0 -1,572
Other expenses -2,291 -2,460 -1,288 -6,038
Operating result -907 486 -1,288 -1,710
Finance items 0 0 191 191
Loss before tax expense -907 486 -1,098 -1,519

In thousands of euro Devices Software Group Admin Group
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 amortisation -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

2021

Revenue

Disaggregation of revenue

In thousands of euro Q2/2022 Q2/2021 H1/2022 H1/2021 2021

Finland  2,066  2,047  4,172  4,505  8,939
China  57  876  106  1,651  2,165
Other  1,610  1,089  2,669  1,800  3,746
Total 3,733  4,012  6,947  7,956 14,850

Other operating income

In thousands of euro Q2/2022 Q2/2021 H1/2022 H1/2021 2021
Other operating income 0 624 37 705 810
Total 0 624 37 705 810

Other operating income consist of received grants, profit from sales of fixed assets and Business Finland loan conversion to grant during the 2021 comparison period. During the financial years 2021-2022 Optomed has received government grants from various organisations, such as Business Finland.

Other operating expenses

Other operating expenses Q2 2022 Q2 2021 H1 2022 H1 2021 2021
Sales and marketing -204 -149 -378 -281 -674
Research and development -82 -234 -263 -361 -412
General and administration -551 -507 -1,081 -992 -2,772
Total operating expenses -838 -890 -1,722 -1,634 -3,858

Other operating expenses also comprise changes in expected credit losses and realised credit losses.

Tangible assets

In thousands of euro Machinery Machinery Machinery and equipment
and and
equipment equipment
30.6.2022 30.6.2021 2021
Cost
Balance at January 1  2,721 2,257  2,257
Additions  405  165  464
Balance at End of  3,126 2,422    2,721
Period

Accumulated
depreciation and
impairment losses
Balance at January 1 -2,288 -1,898 -1,898
Depreciation -174 -173 -390
Balance at end of -2,462 -2,070 -2,288
period

Carrying amount at 433  359  359
January 1
Carrying amount at June  664 352  433
30/ December 31

Leases

Leased tangible assets
In thousands of euro 30.6.2022 30.6.2021 2021

Additions to right-of-use  35  27  449
assets
Depreciation change for -211 -203 -409
right-of-use assets
Carrying amount at the 1,029 989 1,205
end of the reporting
period
Leased tangible assets
comprise business
premises and are
presented as a separate
line item Right-of-use
assets in the
consolidated balance
sheet.

Lease liabilities

In thousands of euro 30.6.2022 30.6.2021 2021

Current  405  386  396
Non-current  640  605  818
Total  1,044  991  1,214

The above liabilities are presented on the line item Lease liabilities (non-current / current) in the consolidated balance sheet, based on their maturity.

Intangible assets

At June 30 Goodwill Development Customer Technology Other Total
2022 costs relationships intangible
assets
In thousands
of euro
Cost
Balance at  4,256  11,815  2,222  1,023  951  20,267
January 1
Additions 0  1,245 0 0  48  1,293
Balance at  4,256  13,060  2,222  1,023  999  21,560
June 30

Accumulated
amortisation
and
impairment
losses
Balance at 0  -5,477 -836 -387 -593 -7,292
January 1
Amortization  0  -468 -111 -51 -51 -681
Impairment  0  0 0 0 0 0
losses
Balance at 0  -5,945 -947 -438 -644 -7,973
June 30
 -  
Carrying  4,256  6,338  1,386  636  358  12,975
amount at
January 1
Carrying  4,256  7,115  1,275  585  355  13,586
amount at
June
30

At June 30 Goodwill Development Customer Technology Other Total
2021 costs relationships intangible
assets
In thousands
of euro
Cost
Balance at  4,256  9,709  2,222  1,023  945  18,156
January 1
Additions 0   831 0 0  34  865
Balance at  4,256  10,541  2,222  1,023  979  19,021
June 30

Accumulated
amortisation
and
impairment
losses
Balance at 0  -4,043 -614 -286 -461 -5,403
January 1
Amortization  0  -486 -111 -51 -67 -715
Impairment  0  -482 0 0 0 -482
losses
Balance at  0  -5,010 -725 -337 -527 -6,599
June 30

Carrying 4,256 5,667 1,608 738 485 12,753
amount at
January 1
Carrying 4,256 5,531 1,497 687 451 12,422
amount at
June
30

At December Goodwill Development Customer Technology Other Total
31 2021 costs relationships intangible
assets
In thousands
of euro

Cost
Balance at  4,256  9,709  2,222  1,023  945  18,156
January 1
Additions 0   2,105 0 0  6  2,111
Balance at  4,256  11,815  2,222  1,023  952  20,267
December 31
 -  
Accumulated  -  
amortisation
and
impairment
losses
Balance at 0   -4,043 -614 -286 -461 -5,403
January 1
Amortization 0 -952 -222 -102 -43 -1,319
Impairment 0 -482 0 0  -89  -571
losses
Balance at 0 -5,477 -836 -387 -593 -7,292
December 31
 -  
Carrying 4,256  5,667  1,608  738  485  12,753
amount at
January 1
Carrying 4,256  6,338  1,386  636  358  12,975
amount at
December 31

Financial assets

Carrying amounts - at amortised cost

Current financial assets
In thousands of euro 30.6.2022 30.6.2021 2021
Trade receivables
Recourse factoring  358  351  740
Other trade receivables 3,673 3,787 2,917
Total trade receivables  4,031  4,138  3,658
Cash and cash equivalents  7,079  7,818  6,804
Total  11,109  11,957  10,462

Due to overdue trade receivables, financial assets are subject to an increased risk of credit loss.

Exposure to credit risk and loss allowance

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. Chinese customer has paid its overdue receivable according to planned schedule.Planned schedule was renegotiated in July.

In Gross carrying amount Weighted av. Loss
thousands
of euro loss rate % allowance

At June
30, 2022
Current                    1,800   0,5 % 9
(not past
due)
Past due
1-30 days                       172   1,5 % 3
31-60                         45   4 % 2
days
61-90                         11   9 % 1
days
More than  40 12 % 4
90 days
past due
Specific  2,382 30 % 700
loss
allowance
Total  4,391  718

In thousands of euro Gross carrying amount Weighted av. Loss

loss rate % allowance

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

Financial liabilities

In thousands of euro  30.6.2022  30.6.2021  31.12.2021 

Non-current financial liabilities 
Borrowings from financial institutions  3,822 3,079 3,813
Government loans  1,871 1,896 1,940
Lease liabilities  640 605 818
Total  6,333 5,580 6,571

Current financial liabilities 
Borrowings from financial institutions  368 441 1,071
Government loans  193 361 193
Lease liabilities  405 386 396
Trade payables  1,159 913 944
Total  2,123 2,100 2,604
  
Total financial liabilities  8,456 7,680 9,175

In the financial year 2022 the Group extended the repayment schedule for borrowings from OP bank and in 2021 negotiated new loan from Nordea.

Fair values - financial liabilities measured at amortized cost

Optomed considers that the carrying amounts of the financial liabilities measured at amortized cost substantially equal to their fair values. This estimate corresponds to the fair value hierarchy Level 3, as the measurement of the said liabilities is based on Optomed management view.

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 borrowings will be repaid in accordance with the new 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 summarizes the Group's financial covenant term and compliance during the reporting period.

Covenant term Actual ratio Applicable level
Nordea loan
At June 30. 2022
Equity ratio 50 % 61,48 % Optomed Group
Cash amount 2 million 7,1 million Optomed Group
At December
31.2022 and
thereafter
EBITDA 0 Optomed Group
OP loan equity
ratio
At June 30, 2022 35 % 62,73 % Optomed Group
At June 30, 2021 35 % 68,87 % Optomed Group
At December 31, 35 % 59,04 % Optomed Group
2021

Company's Equity ratio is calculated as follows depending on the lender:

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)

Optomed was in compliance with the covenant as at June 30, 2022.

Related party transactions

In thousands of euro Revenues Trade receivables Other expenses
Jan 1 - Jun 30 2022  394 2,530 -40
Jan 1 - Jun 30 2021  1,734 2,477 -48
Jan 1 - Dec 31 2021 1,704 2,382 -87

Revenues and trade receivables relate to the major shareholders of Optomed Plc considered to be related parties to the parent company.

Other expenses consist of consulting fees and travel expenses paid to the Chairman of the Board of Directors.

Events after the review period

Chinese customer's payment schedule was renegotiated in July. Management view is, that risk for credit loss has not increased.