Optomed Plc         Stock Exchange Release   5 August 2021 at 9.30, Helsinki

Optomed Plc: Half-year financial report, January - June 2021

• Revenue increased by 54.5 percent to EUR 4,012 (2,597) thousand.
• Devices segment revenue increased by 123.5 percent to EUR 1,896 (848) thousand.
• Software segment revenue increased by 21.0 percent to EUR 2,116 (1,749) thousand
• Adjusted EBITDA amounted to EUR 177 (-325) thousand corresponding to 4.4 (-12.5) percent of revenue.
• The very strong revenue growth compared to the weak COVID-19 affected comparison period was driven by solid performance in China and increased demand for handheld cameras and software solutions also in other key markets

• Revenue increased by 41.3 percent to EUR 7,956 (5,631) thousand.
• Adjusted EBITDA amounted to EUR -138 (-900) thousand corresponding to -1.7 (-16.0) percent of revenue
• Collaboration with a new strategic distribution partner, China National Pharmaceutical Group Co., Ltd (Sinopharm) started during the first quarter

Key figures

EUR, thousand Q2/202 Q2/202 Change, H1/202 H1/202 Change, 2020
1 0 % 1 0 %
Revenue 4,012 2,597 54.5% 7,956 5,631 41.3% 13,011
Gross profit 3,324 1,907 74.3% 5,901 3,884 51.9% 8,955
*
Gross margin 82.9% 73.4% 74.2% 69.0% 68.8%
% *
EBITDA 177 -325 154.5% -138 -900 84.7% -733
EBITDA margin 4.4% -12.5% -1.7% -16.0% -5.6%
*, %
Adjusted 177 -325 154.5% -138 -900 84.7% -733
EBITDA *
Adjusted 4.4% -12.5% -1.7% -16.0% -5.6%
EBITDA margin
*, %
Operating -859 -973 11.7% -1,710 -2,034 15.9% -2,906
result(EBIT)
Operating  -21.4% -37.5% -21.5% -36.1% -22.3%
margit
(EBIT) *, %
Adjusted -859 -973 11.7% -1,710 -2,034 15.9% -2,906
operating
result(EBIT)
*
Adjusted -21.4% -37.5% -21.5% -36.1% -22.3%
operating
margin (EBIT
margin)
*, %
Net profit/ -864 -976 11.5% -1,480 -2,226 33.5% -3,177
loss
Earnings per -0.06 -0.08 22.5% -0.11 -0.19 41.7% -0.24
share
Cash flow -1,403 107 -1,408.0% -1,659 -2,814 41.0% -2,801
from
operating
activities
Net Debt -2,042 -5,165 -60.5% -2,042 -5,165 -60.5% -4,090

Net debt/ -68.7 4.1 -68.7 4.1 5.6
Adjusted
EBITDA (LTM)
Equity ratio  64.5% 66.0% 64.5% 66.0% 64.6%
*
R&D expenses 490 338 44.9% 968 763 27.0% 1,406
personnel
R&D expenses 161 31 422.1% 310 121 157.0% 253
other
costs
Total R&D 651 369 76.4% 1,279 884 44.7% 1,659
expenses

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

CEO comments

Very strong growth continued

Optomed's revenue continued to grow very strongly during the second quarter. The Devices segment revenue increased by 124% especially driven by favourable performance in China. Also, other key markets of the Devices segment grew well. The comparison period was weak due to the Covid-19 pandemic.The Software segment revenue also grew very strongly by 21% during the quarter. Overall, the Group's revenue increased by 55%. The megatrends favorable for the company, such as the increase in the total number of eye screenings and their increased prevalence also in primary health care, as well as the increase in telemedicine services, have remained unchanged.

Revenue increased during the review period in almost all our sales channels, although the Covid-19 pandemic continues to negatively impact our traditional distribution channels in several countries. During  the quarter, we saw significant growth in both Optomed's own-branded products as well as our OEM orders. Our international eye screening solution projects also progressed favorably in both Asia and the Middle East.

During the first quarter of the year, we started collaborating with a new strategic distribution partner in China. This new partner, China National Pharmaceutical Group Co., Ltd. (Sinopharm), is one of the world's leading healthcare companies. In addition to Optomed's cameras, Sinopharm is also a reseller for Optomed's long-term strategic customer, Phoebus Medical Technology Co., Ltd. (Phoebus) for their telemedicine services in China. Optomed sells cameras to Phoebus to be used as part of a complete solution that includes Optomed handheld cameras and Phoebus' telemedicine software and services. Sinopharm acts as a distribution channel for this complete solution. The agreement is an exclusive, China-wide distribution agreement. Through this cooperation, our goal is to significantly increase the coverage of our distribution in China and thereby grow our business. We delivered a significant number of new devices to these partners during the quarter, and the current focus is on training their sales and marketing staff. Initiating such a collaboration with a large healthcare company is often time consuming, and we expect this start-up phase to take approximately 12 to 18 months and incur reasonable non-recurring costs for Optomed throughout this period. The long-term potential and business growth can realistically be assessed at the end of the start-up phase. Due to the same reason, it is still hard to estimate what our second half of 2021 will look like.

In the United States, we have continued to sell our products through our own direct sales organization and focused on establishing a distribution network as planned. The demand for our products remained strong and revenue continued to grow in line with our expectations.

During the quarter we launched a disposable eye cup for our handheld cameras, as well as two traditional desktop cameras to complement our screening solutions portfolio. All of these products are expected to increase Optomed's long-term growth and improve profitability, but we are not expecting these launches to have a significant impact yet in 2021.

Optomed has continued the significant investments we started during the first quarter in expanding our sales channels, focusing on clinical research, and developing and launching new products. These investments are reflected in higher expenses in the current and coming quarters. Our most significant strategic development projects are the ongoing clinical trials to gain FDA clearance for artificial intelligence solutions for diabetic retinopathy screening in the US market, the validation and commercialization of other new artificial intelligence algorithms in Europe and other key markets, and development and subsequent market launches of new eye diagnostics devices in the coming years.

We are pleased with the progress we have made during the second quarter.

Seppo Kopsala

CEO

Outlook 2021

Optomed expects its full year 2021 revenue to grow strongly compared to 2020.

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 5 August 2021 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 703 421 921#.

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 2021

In April-June 2021, Group revenue increased by 54.5 percent to EUR 4,012 (2,957) thousand. The main driver for revenue growth against the weak Covid-19 affected comparison period of 2020 was the Devices segment's solid performance in China, but also other markets of the Devices segment showed good progress. The Devices segment's revenue increased by 123.5 percent. The Software segment's strong performance continued, and revenue increased by 21.0 percent mainly driven by stable recurring business from existing customers. Global screening solution projects continued well in Asia and the Middle-East. The clinical trials with the aim to the FDA approval for Aurora AEYE, a handheld camera with autonomous AI for retinal screening, are progressing as planned. During the quarter, we also launched two third-party desktop fundus cameras as a part of our screening solutions portfolio. Customers often demand both products, the more traditional desktop cameras and handheld cameras. As Optomed does not have its own desktop cameras, the company has complemented its product portfolio by acquiring desktop cameras with a private label agreement. The cameras are competitive and of high quality, and they integrate with Optomed's software and artificial intelligence solutions. Offering also these complementary products is expected to increase the demand and number of users of Optomed's complete screening solutions, but they are not expected to have a significant impact on revenue or earnings in the short term.

The gross margin increased to 82.9 from 73.4 percent of last year. The gross margin was positively affect by a waived loan of EUR 538 thousand from Business Finland related to a terminated product development project for the Devices segment. The waived loan has been booked as grants. The Company received grants and other operating income EUR 624 (87) thousand, which increased the gross margin of both periods. The gross margin for the second quarter of 2021 adjusted for grants and other operating income would have been 67.3 percent compared to 70.0 percent in 2020.

EBITDA amounted to EUR 177 (-325) thousand. The main reason for the improved EBITDA is the EUR 538 thousand waived loan. The higher gross profit in the second quarter 2021 compared to 2020 was offset by higher operating expenses as 2020 was strongly affected by the COVID-19 pandemic and the related cost savings actions taken by the Company.   EBIT was EUR -859 (-973) thousand. EBIT was affected by the amortization of the terminated product development program amounting to EUR 482 thousand.

Net financial items amounted to EUR -25 (-22) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

January - June 2021

In January-June 2021, Group revenue increased by 41.3 percent to EUR 7,956 (5,631) thousand, driven mainly by the same reasons as for the second quarter.  The Devices segment's revenue increased by 83.4 percent and the Software segment's revenue increased by 21.1 percent.

The gross margin increased to 74.2 percent from 69.0 percent last year. The Company's other operating income includes governmental grants of EUR 624 (87) thousand in the first half of 2021 and 2020, which increased the gross margin of both periods. The gross margin for the first half of 2021 adjusted for the total amount of the grants  and  other operating income would have been 65.3 percent compared to 67.4 percent in 2020.  

EBITDA amounted to EUR -138 (-900) thousandand EBIT was EUR -1,710 (-2,034) thousand.

Net financial items amounted to EUR 191 (-231) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB to EUR. The positive variance versus 2020 are related to exchange rate profit mainly in the first quarter of the year.

Cash flow and financial position

In April-June 2021, the cash flow from operating activities amounted to EUR -1,403 (107) thousand. Net cash used in investing activities was EUR -489 (-411) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR -6 (-92).  

Consolidated cash and cash equivalents at the end of the period amounted to EUR 7,818 (11,742) thousand. Interest-bearing net debt totalled EUR -2,042 (-5,165) thousand at the end of the period.

Net working capital was EUR 4,804 (3,218) thousand at the end of the period. This increase in working capital is due to higher product delivery volumes and increased trade receivables, especially in China.

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 Q2/2021 Q2/2020 Change,% H1/2021 H1/2020 Change,% 2020
Revenue 1,896 848 123.5 % 3,343 1,822 83.4 % 5,097
Gross profit 1,811 543 233.2 % 2,653 940 182.4 % 2,862
*
Gross margin% 95.5% 64.1% 79.4% 51.6% 56.1%
*
EBITDA 593 -121 591.1 % 362 -542 166.9 % -251
EBITDA margin 31.3% -14.2% 10.8% -29.7% -4.9%
*,%
Operating -292 -617 52.6 % -907 -1,375 34.0 % -1,820
result (EBIT)
Operating -15.4% -72.7% -27.1% -75.4% -35.7%
margin (EBIT)
*,%

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

April-June 2021

In April-June 2021, the Devices segment revenue increased by 123.5 percent to EUR 1,896 (848) thousand  against a weak COVID-19 affected second quarter of last year. The increase was mainly driven by solid performance in China, but also other key markets and sales channels showed good progress.

The gross margin increased to 95.5 percent from 64.1 percent in the previous year due to the waived loan mentioned earlier. The Devices Segment's other operating income was  EUR 623 (71) thousand in the second quarter, which increased the gross margin of both periods. In the second quarter of 2021 the gross margin adjusted for grants and the total amount of other operating income would have been 62.6 percent compared to 55.7 percent in 2020. 

EBITDA was EUR 593 (-121) thousand or 31.3 (-14.2) percent of revenue. The key driver for the increase in EBITDA was the increase in revenue and gross margin, and higher operating expenses while the comparison period last year was affected by the COVID-19 related savings.

January-June 2021

In January-June 2021, the Devices segment revenue increased by 83.4 percent to EUR 3,343 (1,822) thousand, mainly driven by the same reasons as for the second quarter.

The gross margin increased to 79.4 percent from 51.6 percent in the previous year. The Company received governmental grants of EUR 704 (71) thousand in. In 2021, the first half year gross margin adjusted for other operating income would have been 58.3 percent compared to 47.6 percent in 2020. The first quarter of 2020 was affected by sourcing arrangements and purchases of certain key components, which were carried out to secure our manufacturing capability in the current COVID-19 situation. 

EBITDA was EUR 362 (-542) thousand or 10.8 (-29.7) percent of revenue. The reason for the increase 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 Q2/2021 Q2/2020 Change,% H1/2021 H1/2020 Change,% 2020
Revenue 2,116 1,749 21.0 % 4,613 3,809 21.1 % 7,913
Gross profit * 1,513 1,363 11.0 % 3,248 2,944 10.3 % 6,093
Gross margin % 71.5 % 78.0 % 70.4 % 77.3 % 77.0 %
*
EBITDA 248 366 -32.3 % 788 847 -6.9 % 1,926
EBITDA margin 11.7 % 20.9 % 17.1 % 22.2 % 24.3 %
*, %
Operating 97 213 -54.4 % 486 546 -11.2 % 1,323
result (EBIT)
Operating 4.6 % 12.2 % 10.5 % 14.3 % 16.7 %
margin (EBIT)
*, %

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

April - June 2021

In April-June 2021, The Software segment's strong performance continued, and revenue increased by 21.0 percent mainly driven by stable recurring business from existing customers. Global screening solution projects continued well in Asia and the Middle-East. The gross margin included other operating income of EUR 16 thousand in 2020. EBITDA stood at EUR 248 (366) thousand or 11.7 (20.9) percent of revenue, respectively. The profitability was affected by additional recruitments and development work made to support the long-term growth.

January - June 2021

In January-June 2021, the Software segment revenue increased by 21.1 percent to EUR 4,613 (3,809) thousand, mainly driven by the same reasons as for the second quarter. The gross margin included other operating income of EUR 16 thousand in 2020. EBITDA was EUR 788 (847) thousand or 17.1 (22.2) 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 2021

Group-wide operating expenses amounted to EUR 664 (570).  The increase is mainly related to last year's saving program related to the COVID-19 pandemic.

January - June 2021

Group-wide operating expenses amounted to EUR 1,288 (1,205).  The increase is related to the same reasons as for the second quarter, i.e. last year's saving program related to the COVID-19 pandemic.

Personnel

Number of personnel at the end of the reporting period.

6/2021 6/2020
Devices 55 47
Software 41 41
Group common 19 15
Total 115 103

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 2020 is available on the company website www.optomed.com/investors/.

Annual General Meeting

On 28 April 2021, Optomed held its Annual General Meeting (AGM) that adopted the financial statements 2020 and the remuneration report for governing bodies and discharged the members of the Board of Directors and the CEO from liability for 2020. The AGM resolved that no dividend will be paid for the year 2020.

• Seppo Mäkinen, Petri Salonen, Reijo Tauriainen and Anna Tenstam were re-elected as members of the Board

• Xisi Guo was elected as a new member of the Board.

• Chairman of the Board EUR 36,000

• members of the Board EUR 18,000.

In addition, a meeting fee in the amount of EUR 500 is paid to the Chairman of the Audit Committee for each Audit 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 AGM 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:

• Reijo Tauriainen (Chairman)

• Seppo Mäkinen
• Anna Tenstam

• 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 14,003,144 shares and the company held 609,678 shares in the treasury which approximately corresponds to 4.4 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/.

Risks and uncertainties

The key risks and uncertainties are described in the company's annual report 2020 which was published on 12 March 2021. The complete report is available at https://www.optomed.com/investors/. The risk position of Optomed has not changed since then.

Flagging notifications

On 17 February 2021, the total holdings of treasury shares held by Optomed Plc decreased to 4.61 per cent of all the registered shares.

On 8 April 2021, the total holdings in Optomed shares and votes held by OP-Rahastoyhtiö Oy  increased to 5.46 per cent of all of the registered shares in Optomed.

On 28 April 2021, the total holdings in Optomed shares and votes held by BI Asset Management Fondsmægler-selskab A/S increased to 5.69 per cent of all of the registered shares in Optomed.

On 25 May 2021, the total holdings in Optomed shares and votes held by Robert Bosch Venture Capital GmbH decreased to below 5.00 per cent of all of the registered shares in Optomed.

Other events

On 7 May 2021
Optomed announced that it has received medical devices registration for its Aurora camera in Brazil.

On 14 May 2021
Optomed announced that it has been selected as a partner to develop Pihlajalinna's imaging archive and distribution system.

On 4 June 2021
Optomed announced that it launches disposable eye cup for its handheld cameras.

Audit review

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

Financial reporting in 2021

4 November
Interim Report for 1 January - 30 September 2021

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

Reconciliation of Alternative Performance Measures

In thousands of euro Q2/2021 Q2/2020 H1/2021 H1/2020 2020
Revenue 4,012 2,597 7,956 5,631 13,011
Other operating income 624 87 705 89 157
Material and services -1,311 -777 -2,761 -1,836 -4,213
Gross profit 3,324 1,907 5,901 3,884 8,955
Operating profit/loss -859 -973 -1,710 -2,034 -2,906
(EBIT)

Items affecting
comparability
Adjusted EBIT -859 -973 -1,710 -2,034 -2,906
Depreciation, 1,036 648 1,572 1,134 2,173
amortization and
impairment losses
Adjusted EBITDA 177 -325 -138 -900 -733

Consolidated income statement

In thousands Q2/2021 Q2/2020 H1/2021 H1/2020  2020
of euro
Revenue 4,012 2,597 7,956 5,631 13,011
Other 624 87 705 89 157
operating
income
Materials and -1,311 -777 -2,761 -1,836 -4,213
services
Employee -2,257 -1,758 -4,405 -3,674 -7,319
benefit
expenses
Depreciation, -1,036 -648 -1,572 -1,134 -2,173
amortisation
and
Impairment
losses
Other -890 -474 -1,634 -1,110 -2,369
operating
expenses
Operating -859 -973 -1,710 -2,034 -2,906
result

Finance 103 79 342 154 452
income
Finance -128 -102 -151 -386 -794
expenses
Net finance -25 -22 191 -231 -341
expenses

Profit (loss) -884 -996 -1,519 -2,265 -3,247
before
income taxes

Income tax 20 20 39 39 70
expense

Loss for the -864 -976 -1,480 -2,226 -3,177
period

Loss for the
period
attributable
to
Owners of the -864 -976 -1,480 -2,226 -3,177
parent
company
Loss per
share
attributable
to owners
of
the parent
company
Weighted 13,353,833 11,696,476 13,353,833 11,696,476 13,262,766
average
number
of shares
Basic loss -0.06 -0.08 -0.11 -0.19 -0.24
per share
(euro)

Consolidated condensed comprehensive income statement

In thousands of euro Q2/2021 Q2/2020 H1/2021 H1/2020 2020
Loss for the period -864 -976 -1,480 -2,226 -3,177
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss
Foreign currency translation -56 31 -134 40 77
difference
Other comprehensive income, net of -56 31 -134 40 77
tax
Total comprehensive income for the -920 -945 -1,614 -2,186 -3,100
period
Total comprehensive loss -920 -945 -1,614 -2,186 -3,100
attributable to Owners of the
parent company

Consolidated balance sheet

In thousands of euro June 30, 2021 June 30, 2020 Dec 31, 2020
ASSETS
Non-current assets
Goodwill  4,256  4,256  4,256
Development costs  5,531  5,273  5,667
Customer relationships  1,497  1,719  1,608
Technology  687  789  738
Other intangible assets  451  491  485
Total intangible assets  12,422  12,528  12,753
Tangible assets  352  377  359
Right-of-use assets  989  873  1,165
Deferred tax assets  11  9  11
Total non-current assets  13,774  13,787  14,289

Current assets
Inventories 2,552  2,850  2,539
Trade and other receivables  5,501  2,970  3,637
Cash and cash equivalents  7,818  11,742  10,608
Total current assets  15,871  17,562  16,784

Total assets 29,646  31,349  31,073

In thousands of euro June 30, 2021 June 30, 2020 Dec 31, 2020
EQUITY
Share capital  80  80  80
Share premium  504  504  504
Reserve for invested  37,832  37,341  37,470
non-restricted equity
Translation  32  128  166
differences
Retained earnings -17,839 -15,151 -14,970
Profit (loss) for the -1,480 -2,226 -3,177
financial year
Total equity  19,129  20,676  20,073
LIABILITIES
Non-current
liabilities
Borrowings from  3,079  3,293  3,520
financial
institutions
Government loans  1,896  3,057  2,670
Lease liabilities  605  547  782
Deferred tax  501  578  540
liabilities
Total Non-current  6,081  7,476 7,512
liabilities

Current liabilities
Borrowings from  441  0  0
financial
institutions
Government loans  361  226  328
Lease liabilities  386  369  425
Trade and other  3,249  2,602  2,736
payables
Total current  4,436  3,197 3,489
liabilities

Total liabilities  10,517  10,673  11,001

Total equity and  29,646  31,349  31,073
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 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 capital premium for differences earnings
euro invested
non
-restricted
equity

Balance at 80 504 37,341 89 -15,376 22,637
January 1,
2020
Comprehensive
income
Loss for the -2,226 -2,226
period
Other
comprehensive
income
Translation 40 40
differences
Total 40 -2,226 -2,186
comprehensive
income
for the
period

Share options 225  225
Total 0 225 225
transactions
with owners
of the
company
Other
adjustments
Balance at 80 504 37,341 128 -17,377 20,676
June
30, 2020

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 37,341 89 -15,376 22,637
January 1,
2020
Comprehensive
income
Loss for the -3,177 -3,177
period
Other
comprehensive
income
Translation 77 77
differences
Total 77 -3,177 -3,100
comprehensive
income for
the period

Share options  129 406 535
Total  129 406 535
transactions
with owners
of the
company
Other
adjustments
Balance at 80 504 37,470 166 -18,147 20,073
December
31, 2020

Consolidated cash flow statement

In thousands of Q2/202 Q2/2020 H1/2021 H1/2020 2020
euro 1
Cash flows from
operating
activities
Loss for the -864 -976 -1,480 -2,226 -3,177
financial year
Adjustments:
Depreciation, 1,036 648 1,572 1,134 2,173
amortisation and
impairment losses
Finance income and 20 22 -201 231 343
finance expenses
Other adjustments -445 51 -356 98 284
Cash flows before -253 -254 -465 -763 -377
change in net
working capital
Change in net
working capital:
Change in trade and -1,104 704 -1,702 1,237 496
other receivables
(increase (-) /
decrease (+))
Change in -200 -86 10 -389 -83
inventories
(increase (-) /
decrease (+))
Change in trade and 192 -226 536 -2,668 -2,402
other payables
(increase (+) /
decrease (-))
Cash flows before -1,365 139 -1,622 -2,582 -2,367
finance items
Interest paid -11 -11 -30 -39 -75
Other finance -27 -88 -8 -347 -725
expenses paid
Interest received 0 67 1 154 366
Net cash from -1,403 107 -1,659 -2,814 -2,801
operating
activities (A)
Cash flows from
investing
activities
Acquisition of -445 -346 -881 -654 -1,553
intangible assets
Acquisition of -43 -65 -164 -112 -268
tangible assets
Net cash used in -489 -411 -1,046 -766 -1,820
investing
activities
(B)
Cash flows from
financing
activities
Proceeds from share 125 0 362 0 92
subscriptions
Proceeds from loans 0 6 0 -174 -167
and borrowings
Repayment of loans -33 0 -225 -3,173 -3,233
and borrowings
Repayment of lease -97 -98 -216 -197 -390
liabilities
Net cash from -6 -92 -79 -3,544 -3,698
financing
activities (C)

Net cash from (used -1,897 -397 -2,784 -7,124 -8,319
in) operating,
investing and
financing
activities
(A+B+C)

Net increase -1,897 -397 -2,784 -7,124 -8,319
(decrease) in cash
and
cash equivalents
Cash and cash 9,767 12,145 10,608 18,866 18,866
equivalents at
beginning
of period
Effect of movements -51 -6 -6 -0 61
in exchange rate
on cash held
Cash and cash 7,818 11,742 7,818 11,742 10,608
equivalents at end
of
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 31.12.2020 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, 2021. 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 2020. 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.

IFRS IC 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 started to analyse, if this agenda decision has an impact to the accounting policies applied to implementation costs in cloud computing arrangements. The Group will undertake this analysis under the fall 2021, and the possible impacts will be implemented retrospectively in the financial statements 2021 at the latest.

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:

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

- impairment testing of development expenditures

Reportable segments

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

Q2/2020

In thousands of euro Devices Software Group Admin Total
External revenue  848  1,749 0  2,597
Net operating expenses -305 -385 0 -690
Margin 543 1,363  0   1,907
Depreciation and amortisation -496 -153 0 -648
Other expenses -664 -997 -570 -2,232
Operating result -617 213 -570 -973
Finance items 0 0 -22 -22
Loss before tax expense -617 213 -593 -996

H1/2021

In thousands of euro Devices Software Group Admin Total

External revenue  3,343  4,613  7,956
Net operating expenses -690 -1,365 -2,055
Margin 2,653 3,248  -   5,901
Depreciation and amortisation -1,269 -303 -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

H1/2020

In thousands of euro Devices Software Group Admin Total

External revenue  1,822  3,809 0  5,631
Net operating expenses -883 -864 0 -1,747
Margin  940  2,944 0   3,884
Depreciation and amortisation -833 -300 0 -1,134
Other expenses -1,481 -2,097 -1,205 -4,784
Operating result -1,375  546 -1,205 -2,034
Finance items 0 0 -231 -231
Loss before tax expense -1,375  546 -1,437 -2,265

In thousands of euro Devices Software Group Admin Group
External revenue  7,309  7,668 0  14,977
Net operating expenses -3,109 -1,924  0 -5,033
Margin  4,200  5,744 0   9,944
Depreciation and amortisation -1,504 -757 0 -2,261
Other expenses -4,609 -4,077 -1,593 -10,279
Operating result -1,913  909 -1,593 -2,596
Finance items 0 0 -356 -356
Loss before tax expense -1,913 909 -1,949 -2,952

2020

Revenue

Disaggregation of revenue

In thousands of euro Q2/2021 Q2/2020 H1/2021 H1/2020 2020

Finland  2,047  1,727  4,505  3,743  7,777
China  876  355  1,651  440 2443
Other  1,089  515  1,800  1,448  2,791
Total  4,012  2,597  7,956  5,631  13,011

Other operating income

In thousands of euro Q2/2021 Q2/2020 H1/2021 H1/2020 2020
Other operating income 624 87 705 89 157
Total 624 87 705 89 157

Other operating income consist of received grants, profit from sales of fixed assets and Business Finland loan conversion to grant. During the financial years 2020-2021 Optomed has received government grants from various organisations, such as Business Finland.

Tangible assets

In thousands of euro Machinery Machinery Machinery and equipment
and and
equipment equipment
30.6.2021 30.6.2020 2020
Cost
Balance at January 1 2,257  1,992  1,992
Business combinations
Additions  165 111  265
Balance at End of 2,422   2,103    2,257
Period

Accumulated
depreciation and
impairment losses
Balance at January 1 -1,898 -1,585 -1,585
Depreciation -173 -141 -313
Balance at end of -2,070 -1,726 -1,898
period

Carrying amount at  359  406  406
January 1
Carrying amount at June 352 377 359
30/ December 31

Leases

Leased tangible assets
In thousands of euro 30.6.2021 30.6.2020 2020

Additions to right-of-use assets  27 0  484
Depreciation change for right-of-use assets -203 -203 -394
Carrying amount at the end of the reporting 989 873  1,165
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 30.6.2021 30.6.2020 2020

Current  386  547  425
Non-current  605  369  782
Total  991  916  1,207

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
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  -   831  -   -   34  865
Balance at  4,256  10,541  2,222  1,023  979  19,021
June 30
 -  
Accumulated  -  
amortisation
and
impairment
losses
Balance at  -  -4,043 -614 -286 -461 -5,403
January 1
Amortization  -  -486 -111 -51 -67 -715
Impairment  -  -482  -   -   -  -482
losses
Balance at  -  -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 June 30 Goodwill Development Customer Technology Other Total
2020 costs relationships intangible
assets
In thousands
of euro

Cost
Balance at  4,256  8,246  2,222  1,023  859  16,606
January 1
Additions  -   617  -   -   32  650
Balance at  4,256  8,864  2,222  1,023  891  17,256
June 30
 -  
Accumulated  -  
amortisation
and
impairment
losses
Balance at  -   -3,029 -392 -184 -340 -3,945
January 1
Amortization  -  -411 -111 -51 -61 -634
Impairment  -  -150 - - - -150
losses
Balance at  -  -3,590 -503 -235 -401 -4,729
June 30
 -  
Carrying  4,256 5,218 1,829 840 519 12,662
amount at
January 1
Carrying  4,256 5,273 1,719 789 491 12,528
amount at
June
30

At December Goodwill Development Customer Technology Other Total
31 2020 costs relationships intangible
assets
In thousands
of euro

Cost
Balance at  4,256  8,246  2,222  1,023  859  16,606
January 1
Additions  -   1,463  -   -   86  1,549
Balance at  4,256  9,709  2,222  1,023  945  18,156
December 31
 -  
Accumulated  -  
amortisation
and
impairment
losses
Balance at  -  -3,029 -392 -184 -340 -3,945
January 1
Amortization  -  -854 -222 -102 -121 -1,298
Impairment  -  -160  -   -   -  -160
losses
Balance at  -  -4,043 -614 -286 -461 -5,403
December 31
 -  
Carrying 4,256 5,218 1,829 840 519 12,662
amount at
January 1
Carrying 4,256 5,667 1,608 738 485 12,753
amount at
December 31

Financial assets Carrying amounts - at amortised cost

Current financial assets
In thousands of euro 30.6.2021 30.6.2020 2020
Trade receivables
Recourse factoring  351  461  131
Other trade receivables 3,787 1,255 2,508
Total trade receivables  4,138  1,715  2,639
Cash and cash equivalents  7,818  11,742  10,608
Total  11,957  13,457  13,247

Financial liabilities

In thousands of euro  30.6.2021  30.6.2020 31.12.2020

Non-current financial liabilities 
Borrowings from financial institutions  3,079 3,293 3,192
Government loans  1,896 2,831 2,998
Lease liabilities  605 547 782
Total  5,580 6,672 6,972

Current financial liabilities 
Borrowings from financial institutions  441 0 0
Government loans  361 226 328
Lease liabilities  386 369 425
Trade payables  913 446 595
Total  2,100 1,040 1,348
  
Total financial liabilities  7,680 7,712 8,320

Business Finland loan amount of 538 thousand was converted to grant during the Q2 2021.

Fair values - financial liabilities measured at amortised cost

Optomed considers that the carrying amounts of the financial liabilities measured at amortised 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 in FAS figures using the agreed formula. The table below summarises the Group's financial covenant term and compliance during reporting period.

Equity ratio
Covenant term Actual ratio Applicable level
At June 30,2021 35 % 68.87 % Optomed Group
At June 30, 2020 25 % 70.18 % Optomed Group
At December 31, 2020 25 % 69,03 % Optomed Group

Related party transactions

In thousands of euro Revenues Trade receivables Other expenses
Jan 1 - Jun 30 2021  1,734 2,477 -48
Jan 1 - Jun 30 2020  773 467 -30
Jan 1 - Dec 31 2020 2,685 1,389 -103

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

There were no significant events after the reporting period.