annual report 2014 - revenio group...annual report 2014 xx in 2014, approximately 10 million...
TRANSCRIPT
ANNUAL REPORT
2014
XXIn 2014, approximately 10 million intraocular pressure measure-ments were taken with Icare tonometers around the world
10 MILLION
Osteoporosis causes more than 8.9 million fractures annually
8,9 MILLION
We manufactured more than 7 million disposable probes in 2014
7 MILLION
150 MILLION
Approximately 150 million people suffer from glaucoma
TABLE OF CONTENTS
Revenio in brief 5CEO’s review 6 – 7Strategy 8 – 9Quality 10Perspective 11Glaucoma and osteoporosis 12 – 13Revenio Health Tech 14 – 17R&D projects 18Investor information 19
Key figures 3 – 4
The year 2014 2
Board of Directors and Management Team 20 – 21Review of operations and financial statements 2014 24 – 66Corporate Governance Statement of Revenio Group Corporation 67
The statements and estimates regarding markets and the future presented in this Annual Report are based on the best knowledge of the management of the Group and its subsidiaries at the time they were made. Due to their nature they contain a certain amount of uncertainty and may change in the event of changes in the general economic conditions or the conditions in the industry.
1
Profitability
10
8
6
4
2
0
Operating profit, EUR millions
3.3
4.3 4.4
2012 2013 2014
Growth Dividends
0.8
0.6
0.4
0.2
0
Dividends, cents
0.220.3
0.45
2012 2013 2014
0.42
*Additional dividend, 2013
Equity ratio
80
70
60
50
40
30
20
10
0
62.266.1
62.4
2012 2013 2014
Equity ratio %
2014
30
25
20
15
10
5
0
Net sales, EUR millions
11.113.5
16.0
2012 2013 2014
2
KEY FIGURES
Trade in Revenio shares 2014
2.7 38.4 33.7 % 5,468million shares EUR million of shares shareholders
18
16
14
12
10
8
6
4
2
0
Share price development 2014
01/31/14 02/28/14 03/31/14 04/30/14 05/30/14 06/30/14 07/31/14 08/29/14 09/30/14 10/30/14 11/28/14 12/30/14
KEY FIGURES
2014 2013 2012 Net sales 16.0 13.5 11.1
Operating profit 4.4 4.3 3.3
Revenio Health Tech
Net sales 16.0 13.5 11.1
Operating profit 5.4 5.4 3.3
Average number of personnel
Health Tech 23 19 12
Parent company 5 6 4
Discontinued operations 44 48 204
Consolidated key figures, continuing operations
Net sales 16.0 13.5 11.1
Operating profit 4.4 4.3 3.3
Operating margin, % 27.5 31.6 29.6
Return on equity, % –5.1 25.7 –1.8
Return on investment, % 1.1 29.7 0.7
Equity ratio, % 62.4 66.1 62.2
Net leveraging, % –22.4 –16.8 –9.2
Earnings per share, continuing operations, undiluted, EUR 0.47 0.38 0.38
Equity per share 1.52 1.95 1.91
Revenio Group, continuing operations
Figures for 2012 and 2013 are unofficial and have been amended for purposes of comparison to correspond to the organizational structure at the end of 2014. As a result, they differ from the official/reported figures for 2012 and 2013.
3
KEY FIGURES
REVENIO IN FIGURES
The need for efficiency and cost savings is a global challenge faced by health care. There is an immense need for innovations that respond to these challenges – now and in the future.
Easy-to-use innovations enabling cost- efficient implementation worldwide will increase the quality and productivity of health care everywhere in the world.
In addition to our current product range, we invest heavily in new development ideas and research.
16.0 MEURNet sales
18.7 %Growth from 2013
4.9 MEUREBITDA
27Number of personnel
• Population growth and aging• Rationalization of health care everywhere in the world
• Growth of glaucoma awareness• Increase of patient-initiated IOP screening
MEGATRENDS THAT SUPPORT REVENIO’S GROWTH IN IOP MEASUREMENT
4
REVENIO IN BRIEF
One of the major developments in 2014 was the launch of a new home-use tonometer designed for the consumer market. Icare aims at creating new treatment practices in which a doctor treat-ing a glaucoma patient, or one suspected of having glaucoma, can lend an Icare HOME tonometer to the patient for around-the-clock home measurement. The resulting information on the patient’s 24-hour IOP fluctuation would help the doctor to make the proper treatment decisions. For patients diagnosed with glauco-ma, continuous IOP monitoring forms a key part of the treatment in order to prevent progression of the disease and to determine the right medication. IOP monitoring, especially at different times of the day, is particularly important.
Launch of osteoporosis-measurement device proceeding according to planOscare Medical Oy, of which Revenio owns 53 %, specializes in screening for and diagnosing osteoporosis. The launch of the Oscare Sono™ measuring device for these applications is pro-ceeding according to plan. In 2014, the main focus was on clini-cal trials and building a distribution network. The first serially pro-duced devices have already been delivered to customers. The most important customer segments for this product group are phar-macy chains, gynecologists, orthopedists, clinics, pharmaceutical plants and screening companies.
REVENIO IS A FINNISH HEALTH TECH GROUP
Revenio is a Finnish health tech group operating internationally in various markets. The Group’s worldwide success is based on a Finnish invention: strongly patented IOP measurement technology. The growth of the Group’s core business is based on opening new markets for its tonometers – measuring devices intended for the measurement, monitoring, and screening of intraocular pressure as part of diagnosing glaucoma. As the nucleus for future growth, Revenio group owns a 53 % majority share of Oscare Medical, a company that sells a device for the detection of and screening for osteoporosis, representing pioneering expertise and techno-logy in its field.
In late 2014, Revenio established a subsidiary, Revenio Research Oy, to manage the R&D projects of Revenio Group. The company will focus both on the development of existing products and on health tech-related R&D projects with the purpose of iden-tifying and commercializing new screening opportunities related to health tech. The common denominators of these projects include screening, follow-up and the global need to make cost savings in health care through preventive measures. Revenio’s goal is to build future growth paths from these nuclei alongside the current products of Revenio Group.
Strong continued growth and internationalization of Icare product familyThe need for intraocular pressure (IOP) measurement is grow-ing around the world. The principal markets of Icare Finland Oy, representing health tech business in the Group, are in North America, Europe, Russia and certain Asian countries, such as Japan and Australia, which have been strong areas in 2014. Icare sells its products in no less than 75 countries – this creates a strong foundation for the company’s goal of attain-ing global market leadership in IOP measurement. The company seeks to further grow its distribution network to encompass all of the world’s key countries.
Key products include tonometers for the detection and moni-toring of glaucoma, the disposable probes used with the meters, and HOME self-measuring devices as a new product group.
Revenio does internationally significant work as a developer, manufacturer and seller of tonometers and osteoporo-sis detection devices. See the facts on glaucoma and osteoporosis on pages 12–13!
New Icare HOME tonometer opens new markets
5
REVENIO IN BRIEF
CEO’S REVIEWWe implemented an extensive and at times hard pro-cess of change in our company in 2014. Since our change of strategy in 2012, we have travelled towards our goal in a determined manner; Revenio will become, and already is, a health tech group and the global mar-ket leader in IOP screening. We have been forced to make hard decisions and give up business operations to which we were extremely committed. Our Board of Directors, senior management, Management Team and personnel are highly committed to taking Revenio Group into the future as the global leader in health tech screening.
Until recently, Revenio has largely been thought of as Icare. However, our vision is more ambitious. Our new health tech R&D projects tackle global public health challenges in which the common denominator is a pressing need to make cost savings in health care through preventive measures. Screening and monito-ring play a key role precisely in this preventive work.
Icare naturally continues to play a vital role in Revenio Group but, as we have stated, we are de-termined to make new innovative products avail-able for the screening of diseases with signifi-cance to public health, in order to contribute to the global improvement of quality of life and life ex-pectancy. I am particularly proud of the important work that the whole staff of Revenio Group, the experts that rely on our competence and our partners do around the world.
Our new growth drivers concentrate on screeningTo Revenio, building the foundation for future growth does not automatically mean acquisitions. We consid-er finding a cost-effective and rapid way to break into a market more important than buying up companies, of which our release of January 21 on screening for skin cancer and project for the screening and treat-ment of asthma conditions, announced on February 2, 2015, are prime examples. We license tried-and-true technologies, which entails less costs in compa-rison to a corporate acquisition and we pay the deve-lopers for actual net sales, not for vision. To manage these new opportunities for growth, we established Revenio Research Oy in 2014. From now on, this com-pany will be responsible for Revenio Group’s product development and health tech R&D projects, whose goal is to discover and commercialize new health tech oppor-tunities, particularly in the field of screening.
Our leading market position in IOP measurement and screening provides a solid foundation for the further development of the Icare product family. With regard to Icare and IOP screening, our focus is on im-proving our existing products and launching new ones.
In 2015, we are also expecting news on the progress of the FDA license of HOME, intended for self-measurement as part of the treatment process, and on the schedule for proceeding in this new, int-riguing market. The marketing authorizations obtained for HOME in other countries than the United States al-ready enable the serial production and sales of the pro-duct in other markets. Once we obtain the FDA license, we will be in a fantastic position to expand our sales to cover the significant US market.
Budding growth in other areas related to screeningHealth care around the world will face entirely new challenges in the coming years. The aging of popu-lations, increasing inequality and, in particular, increased health care costs are forcing national eco-nomies to look for more efficient methods for treating and preventing diseases. Screening is of vital signi-ficance in this development. The screening market is global, and far too little screening is still performed in relation to the potential benefits. In contrast to the development of new pharmaceuticals, scree-ning does not require prolonged clinical trials; rather, the benefits can be achieved with quick and precise referral for treatment. Revenio’s role in the screening process is to produce simple and easy-to-use methods and devices to replace old-fashioned and inefficient operating models for screening large populations. We are on the brink of a global health care revolution, and Revenio wants to play a key role in this development.
My heartfelt thanks to all Revenio Group per-sonnel, our customers and partners everywhere in the world, and to our owners for a fantastic 2014. We have achieved much together and have created a great foundation to build on.
Olli-Pekka Salovaara President & CEO Revenio Group
6
CEO’S REVIEW
”Revenio’s role in the screening process is to produce simple and easy-to-use methods and devices to replace old-fashioned and ineffi-cient operating models for screening large popu-lations. We want to play a key role in this preven-tive work.”
7
CEO’S REVIEW
PRINCIPAL DRIVERS OF GROWTH AND PRODUCT DEVELOPMENTIn 2014, Revenio’s health tech R&D projects focused both on the improvement of existing products and on opening new territory.
The cost and availability of health care are posing greater and greater challenges all across the world. Innovations that are easily available everywhere in the world increase the quality and pro-ductivity of health care. This is our focus, and we intend to remain pioneers in the field in the future as well. The Group made its all-time highest strategic investments in R&D in 2014. This is the
means to ensure future growth potential. Health tech R&D has already generated some interesting ideas, and we are actively investigating their practical potential. The common denomina-tors of these new budding products include screening, follow-up and the global need to make cost savings in health care through preventive measures.
CORNERSTONES OF REVENIO’S STRATEGY
R&DPROJECTSSkin cancer,
asthma
LICENSING NEW TECHNO-
LOGIES
CONSOLIDATING ICARE’S MARKET
POSITION
New markets,new target groups,
new products
MARKETING AND SALES OF OSCARE
Pharmacy chains, gynecologists, ortho-
pedists, clinics, pharma-ceutical factories,
screening companies
Glaucoma,osteoporosis
FOCUS ONHEALTH TECH
8
STRATEGY
Glaucoma is the second-most common cause of blindness worldwide. With the aging of the population, more and more people are contracting the disease. Early detection improves the likelihood for pre-venting serious eye damage or blindness.
Osteoporosis is an equally serious illness, which is already spoken of as a national disease in Finland. One million people around the world are unaware that they have osteoporosis. The diagnostic, clinical assess-ment, treatment and follow-up practices for osteoporosis are still taking shape.
In 2014, we concentrated on the further improvement of our existing products and on making new openings, with the common denominators of screening, follow-up and the global need to make cost savings in health care through preventive measures.
Revenio is a pioneer and leader in these fields of health tech and, through them, as a promoter of global health. A Finnish health tech group.
PROFITABLY GROWING BUSINESS THAT PROMOTES HEALTH, GLOBALLY
While our existing products are continuing break into new markets and the market for replacement devices is growing, our R&D team concentrates on discovering new screening-related products for new markets and target groups.
9
STRATEGY
TOP QUALITY GUARANTEES A HEAD STARTQuality is created from the ability to produce excellent services and products that meet the expectations of customers. Icare’s quality man-agement system is deeply encoded in the com-pany’s processes and functions, so that we may not only meet but exceed the expectations of our customers. Our top quality guarantees the best and most innovative products on the mar-ket for our customers everywhere in the world.
Quality management systems are always based on the requirements of customers and customer satisfaction. All key indicators for mon-itoring and steering the realization of quality are built around these. Icare’s audited quality management system is based on the ISO 13485 standard. The system’s purpose is to collect data on the func-tionality of processes to enable their improvement and the prevention of potential problems. Performed within the framework of the qua-lity management system, design, data collection on manufacturing processes, and analysis of feedback obtained from the field provide Icare’s management with the tools to make the required decisions, guide resourcing and training – in short, to ensure our head start.
At Icare, quality stems from the strategyThe unique character of Icare’s quality management system is based on the company’s business model, which is built
around a broad network of partners. In addition to the quality of products, the actions of Icare’s distributors, subcontrac-tors, and customers and their stakeholders have a major impact on the company’s quality image. Continuous innovation and product development, international business and the diverse requirements of different countries require the constant improvement of the quality management system. Market leadership obliges. Quality measurement and auditsIcare’s quality management system has been certified in accor-dance with an international standard for health tech service pro-viders and manufacturers and designers of medical devices. To ensure the alignment of operations with strategy, quality realization is monitored through carefully specified indicators. Various audits, such as those of internal and external subcontracting, ensure quality and compliance with official requirements. Icare’s opera-tions are also audited by numerous representatives of third parties, and by the authorities of some countries. External audits (FDA for example) are frequently related to statutory procedures or other requirements for obtaining marketing authorizations.
Product registration is part of qualityCountry-specific product registrations constitute a quality --related process constantly underway at Icare. Icare Finland Oy currently holds marketing authorizations in 50 countries. In addition to new country-specific product regis-trations, the registration process involves operations such as maintaining the validity of existing country-specific registrations.
Constantly changing regulations and the fragmented nature of the information makes keeping track of global requirements challenging. In its largest markets, Icare works in close cooperation with independent partners that register the company’s products and manage Icare’s product certificates. This procedure is part of quality assurance – while giving Icare more room to choose and, if necessary, change distributors without having to start the marke-ting authorization application process from the beginning.
10
QUALITY
See the components of Icare quality on page 17.
Cost pressures are constricting public economies to a greater extent, and working populations are no longer able to pay for increasing health care needs. Operators capable of taking an inter-national role are required to produce services and innovations that improve health and prevent disease worldwide.
Managing Director Terhi Kajaste of the Finnish Health Technology Association FiHTA:“Developed economies are ramping up their investment in technologies that enable cost-savings in health care. Preventive health care plays a vital role in this regard. On the other hand, developing nations are still investing in the basics of
THE GLOBAL CHALLENGES OF HEALTH CARE ARE OPPORTUNITIES FOR THE BEST IN THE INDUSTRY
“Measurement of IOP over the 24-hour period is going to be a transformative event for patients, and a disruptive event for all of glaucoma management as we look forward to the next five to ten years.”Robert N. Weinreb, MD, Glaucoma Specialist, Chairman of Ophthalmology UCSD
“In patients with suspected glaucoma, daily intraocular pres-sure monitoring is also essential. In a high proportion of these patients, IOP elevations may be missed during regular sched-uled examinations. Knowing these pressure peaks exist can help control the disease and personalize and optimize the treatment regimen. Autotonometry is an efficient option for this purpose, as well as being comfortable for the patient.”José María Martínez De La Casa, MD, Professor of Ophthalmology University of Madrid, Spain
• An emerging field of research suggests that the variation in pressure readings may hold the key to disease progression.• How important are swings in IOP? Very, say a growing number of glaucoma specialists. These ophthalmologists argue that the variation in IOP readings, referred to in the literature as fluctuation, is an independent risk factor for progression. Forget the law of averages, they say. Smoothing out pressure swings could be as important as — or even more important than — achieving a target pressure. Steady is the way to go.• But what about target pressure? “There has to be a com-plete rethinking of that,” said Rohit Varma, MD, MPH, professor of ophthalmology and preventive medicine at the University of Southern California. “We’re proposing that it’s not one number
Health care is facing unprecedented global challenges. Populations are aging, the inci- dence of chronic disease is growing, and existing health care infrastructures are inca-pable of treating the required numbers of patients – or there is no infrastructure to begin with. We need new types of innovations and operating models.
health care. Cost-effectiveness and prevention are the bywords wherever you go,” says Terhi Kajaste.
Finland is known for its technological innovations. We are among the top countries when there are challenges to be solved or new things to build. Health technology represents everything that is being asked of successful Finnish companies at the moment: growth, internationality, innovativeness and top expertise.
“However, it should be kept in mind that achieving a breakthrough with new innovations and methods in the health care industry requires perseverance. Demonstrating effectiveness and building a brand and credibility take hard work and determination. The com-petition between health technology and service providers is also fierce. Breaking into the total service chain requires a company to be the best in its field, a pioneer,” Kajaste adds.
that you come up with. You may have a target IOP in mind. We’re not saying, ‘Get rid of that.’ But in addition to target IOP, we now need a target range of IOP variation. In my view, this is just the start of a complete reconceptualization of how we’ll need to look at IOP.”• Sanjay G. Asrani, MD, agreed. The standard practice has been to look at average pressures, said Dr. Asrani, associate professor of ophthalmology at Duke University. “Our emphasis has been, ‘low is better.’ But low average pressure is not necessarily better. Stable is better.”
ASIANTUNTIJALAUSUNTOJA:
GLAUCOMA SPECIALISTS HAVE BEEN RETHINKING THE IMPORTANCE OF TARGET PRESSURE.
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PERSPECTIVE
GLAUCOMA AND OSTEOPOROSIS ARE INTERNATIONALLY SIGNIFICANT AND CONTINUOUSLY SPREADING DISEASES
GLAUCOMA
Left untreated, glaucoma is one of the most common eye
diseases leading to blindness. This can nevertheless be
prevented if the disease is detected at a sufficiently early
stage and treated and monitored with care.
Glaucoma is a disease in which elevated intraocular pres-
sure gradually damages the optic nerve without the patient
experiencing any pain or inconvenience.
75 MILLION
diagnoses
150 MILLION
people with glaucoma
75 MILLION
have glaucoma without knowing
The number of patients is projected to grow by 30 % by 2020
30%
12
INTRAOCULAR PRESSURE AND OSTEOPOROSIS – WHAT ARE THEY ABOUT?
OSTEOPOROSIS
Osteoporosis is a bone disease characterized by a reduction
in bone mass, damage to bone structures and a resulting
increase in fracture risk. Osteoporosis is a factor in the
majority of fractures sustained by adults. The most seri-
ous fractures from the point of view of public health and the
eco nomy are hip fractures (fractures of the upper thigh bone),
and more than 7,000 occur in Finland each year.
8,9 MILLION
Osteoporosis causes more than 8.9 million fractures annually
200 MILLION
Osteoporosis is estimated to affect more than 200 million women
Screening can detect the disease and contri-bute to preventing its progression, resulting in significant health care savings.The purpose of screening is to discover diseases, their precursors or pathogens at the symptom-free stage. There is a global need for early diagnoses that can entail health care cost savings via pre-ventive care. Ideally, screening would be a key part of health care everywhere in the world.
The products of the Icare product family and the detection device developed by Oscare Medical make screening, diagnosis and moni-toring easy and effective
• Reliable and quick measurement
• Small mobile devices
• Easy implementation
• Completely painless measurement
• The osteoporosis detection device functions in the familiar Windows operating system
• Physicians can make the diagnosis and treatment plan based on the results and other patient information
• The Icare HOME tonometer is an important aid in the cooperation between physician and patient when round-the-clock monitoring is required
The start of treatment is often delayed because osteoporosis is not detected in time
240 %The number of hip fractures sustained by women is expected to grow 240 % by 2050, and even more for men: by 310 %
310 %
13
INTRAOCULAR PRESSURE AND OSTEOPOROSIS – WHAT ARE THEY ABOUT?
REVENIO HEALTH TECHThe need for cost-efficient health care and disease prevention is increasing markedly throughout the world. Aging populations, increasing inequality and scarcer national resources amount to a challenge that can only be met by developing more efficient treatment methods and technologies. Easy-to-use innovations enabling cost-efficient implementation worldwide will markedly increase the cost-efficiency of health care. One of the key tools to address these needs is effective screening technology.
14
REVENIO HEALTH TECH
In relation to their cost-effectiveness, screening is still far too rare, and its significance in preventive, cost-effective health care will keep increasing. Screening refers to examinations targeted at a specific population group in order to discover symptom-free carriers of the disease screened for, or persons with an elevated risk of contracting the condition. The objective of screening is to improve the prognosis and start treatment as early as possible The goal is to improve the patient’s quality of life and to reduce mortality.
The objective of Revenio Group is to assume a significant role in screening and to eventually achieve a leading position in this field. The Group aims at developing even more efficient methods for the early-stage detection of diseases with signi-ficance for public health. The earlier a disease is diagnosed, the better the chance of successful treatment and the smaller the mortality rate. The focus of Revenio’s screening technology lies on early detection of glaucoma, osteoporosis, skin cancer and asthma, and measurement of these during the treatment process.
Market leadership in intraocular pressure screening for glaucoma identification and IOP measurement as part of the treatment process creates a strong basis for expanding both Revenio’s existing product portfolio and launching new screen-ing products.
Health Tech on strong growth trackThe net sales and profitability of Revenio’s Health Tech segment developed extremely positively. The segment’s net sales totaled EUR 16.0 million (EUR 13.5 million) in 2014, representing growth of 18.7 percent.
The operating profit for the Revenio Health Tech segment totaled EUR 5.4 million (5.4), down by 0.1 percent from 2013. In terms of sales, the last quarter of 2014 was the best in the history of Icare.
A challenging but profitable year for IcareEarly 2014 was a challenging time in Icare’s main market, the United States, due to the confusion resulting from the health care reform. The drop caused by the reform affected several companies selling health technology in the U.S. market, including Icare. In the latter year-half, the situation clarified, and the year-end was strong for Icare, as expected. Even in normal conditions, Icare’s business is characterized by seasonal variation, in which sales tend to be concentrated in the latter half of the year. The extremely strong last quarter of 2014, in which the company posted the best monthly sales in its history, is a good example.
In 2014, the market situation was favorable in all of Icare’s key markets, including the United States, Japan, the UK, Australia, Scandinavia, Switzerland, Korea and India. Our efforts in these market generated results and very strong sales.
In the fourth quarter, U.S. sales grew by an impressive 21 per-cent, with December 2014 being the all-time highest sales month for Icare. One major contributor to this was the fact that customers had exceptionally large amounts of remaining budget at their dis-posal, following the changes in tax allowances implemented in early 2014. Furthermore, Icare’s sales efforts generated great results.
10 MILLION
“An estimated total of 10,000,000 people and animals were measured with Icare in 2014”
Health Tech segment net sales growth
Health Tech segment operating profit
18.7 % 5.4 MEUR 31.2 %Growth of probe sales
15
REVENIO HEALTH TECH
Probe sales grew by 40.3 % in the last quarter, and more than 7 million probes were sold in 2014. This rep-resents a growth of more than 30 % year-on-year, which indicates that the devices remain in active use.
Following its release in early 2014, sales of the new Icare HOME began in Europe and Asia. The feedback we have received has been very encouraging. Towards the end of the year, Icare HOME tonometer sales showed strong growth, the sales volume for 2014 exceeding 500 units. In addition to the EU, the device has been granted marketing authorizations in Australia, Japan and Canada. To accelerate the marketing authorization process in the United States, Icare opened two new measurement points alongside the Johns Hopkins Hospital in early 2015 to speed up the flow of patients. The clinical tests related to the sales permit application require the use of test subjects who meet strict crite-ria and have a certain IOP. In particular, finding patients with an IOP exceeding 40 mmHg has been challenging. Once the clinical trials have been completed, an authorization application will be submitted to the FDA.
Oscare in mass productionAt the end of 2013, Revenio seized a development opportunity by increasing its holdings in Oscare Medical Oy, a company special-izing in the detection and screening of osteoporosis, to 53 percent. The first mass-produced osteoporosis detection devices were completed and delivered to customers in the first half of 2014.
In 2014, the focus of operations was on clinical trials and building a distribution network. In addition to Finland, the compa-ny has distributors in Poland and the Baltic countries. Particularly interesting target groups for building sales for the product include pharmacy chains, screening companies and gynecologists. As expected, the product’s commercial significance remained low in 2014.
Revenio Research to manage new R&D projects In December 2014, Revenio established a subsidiary, Revenio Research Oy, to manage the R&D projects of Revenio Group. The company will focus both on the development of existing products and on health tech-related R&D projects with the pur-pose of identifying and commercializing new health tech opportu-nities. The common denominators of our projects include screen-ing, follow-up and the global need to make cost savings in health care through preventive measures. The goal is to build growth paths from these new openings alongside the current products of Revenio Group.
“Icare was taken on a zero-gravity flight by NASA”
REVENIO HEALTH TECH
Oscare Medical has developed a unique detec-tion device for the detection and screening of osteoporosis. OSCARE SONO™ DETECTION DEVICE
As the population gets older, osteoporosis becomes more common but is often detected late. Oscare Medical develops, manufactures, and markets a unique, ultrasound-based detection
device for the screening, diagnosis and monitoring of osteoporosis. The OsCare SonoTM assesses bone strength in the forearm
radial bone. Measurement results correlate well with bone cortical thickness, bone elasticity and bone mineral density, which are all important determinants of bone strength.
The launch of the device has proceeded according to plan, and clinical trials and the building of a distribution network are underway. The preliminary results of clinical trials conducted in Finland support our opinion on the device’s benefits in screening for bone health.
”Icare HOME the #4 most inte-resting innovation in 2014” The Ophthalmologist
2014
16
REVENIO HEALTH TECH
“Several new VET distribution channels opened in 2014”
”Kauppalehti Achiever award”
COMPONENTS OF ICARE QUALITY • Base data for device design: needs, usability, safety • Documentation of the manufacturing process and a rapid marketing authorization process• Safety and other testing of the devices by R&D • Resourcing (project management)• Choice and steering of R&D partner, choice of device manufacturer, supervision of subcontracting • Controlled transfer to production• Testing during production and final inspection• Smooth ordering and delivery processes and delivery reliability• Smooth customer service • Processing and measurement of feedback from the field
“Eyesight Act of the Year award 2014”
2014
17
REVENIO HEALTH TECH
“Start of domestic probe production” “Icare HOME launched to a positive reception by experts”
Revenio is a health tech group with a focus on screening In the past, Revenio has been largely considered interchange-
able with Icare. Revenio has larger goals, however, and the Group
seeks to grow its business to cover a wider spectrum of disease
screening. Revenio’s vision is to assume a significant role in
screening and to eventually achieve a leading position in this field.
After the review period, in January 2015 Revenio announced two
significant new steps in the field of health technology.
Revenio aims to launch a screening device to detect skin can-
cer. To this end, Revenio signed a joint cooperation agreement
in January with VTT Technical Research Centre of Finland and
University of Jyväskylä to commercialize technology for skin
cancer screening.
Also in January, Revenio signed a license agreement with
Tide Medical Oy concerning a patented invention relating to
the diagnosis of asthma. This agreement allows Revenio to use
this invention to develop and commercialize products for the
screening, diagnosis, monitoring and treatment of asthma.
Both of these openings are related to major national diseases,
early detection of which is essential for successful treatment.
Asthma is one of the most common chronic diseases in the world. More than 300 million people suffer from it. In Finland, 9.4 % of the population has asthma.
The incidence of skin cancer and its pre-cursors is increasing rapidly throughout the world. The underlying cause of various skin changes lies in continuously increasing exposure to UV radiation. Some three million cases of skin cancer are diagnosed each year.
REVENIO IS A HEALTH TECH GROUP WITH A FOCUS ON SCREENING
18
R&D PROJECTS
Annual General Meeting The Annual General Meeting of the Revenio Group Corporation
will be held on Thursday, March 19, 2015, at Finlandia Hall,
Mannerheimintie 13 e, 00100 Helsinki, Finland. The listing of per-
sons who have registered for the meeting and the distribution of
voting tickets will commence at 2:30 p.m.
Shareholders who have been registered in the Company’s share-
holder register, maintained by Euroclear Finland Ltd, by March 9,
2015, have the right to attend the Annual General Meeting.
The company’s annual report will be available in Finnish Revenio’s
website at www.revenio.fi in the week nine.
More information on the Annual General Meeting is available at
www.reveniogroup.fi/fi/varsinainen-yhtiokokous-2015/
Payment of dividendThe Board of Directors of Revenio Group Corporation propose a
dividend of EUR 0.45 per share for 2014. If the Annual General
Meeting approves the Board’s proposal, the balance date of
dividend payment will be March 23, 2015 and the payment date
March 30, 2015.
Share registerShareowners are requested to notify the book-entry register in
which they have their book-entry account of any changes in their
contact details.
Financial informationRevenio Group Corporation will publish its 2015 financial reports
in Finnish and English according to the following schedule:
• Interim report Q1: Friday, April 24, 2015
• Interim report Q2: Monday, August 10, 2015
• Interim report Q3: Tuesday, October 27, 2015
Revenio as an investmentRevenio represents Finnish health technology expertise
on the international market. We use Finnish technology to imp-
rove the life expectancy and quality of life of people around the
world. Health care megatrends, such as aging populations and a
global need for cost savings, support our growth targets. We ha-
ve strong evidence of the growth of net sales and our good level
of profitability. We have an excellent operating profit margin. More
than 60 percent of our share capital is owned by private investors
and briskly traded. We always seek to remember our owners and
have a history of good dividend payment capacity.
Principles of investor relationsRevenio is committed to proactive, transparent communications
with all stakeholders. The company’s communications are based
on facts and transparency. They are systematic, honest, impartial,
and up to date. Revenio’s communications seek to provide a fac-
tual picture of the company’s operations, operating environment,
strategy, targets and financial performance.
Revenio’s website, www.revenio.fi, and its stock exchange relea-
ses are the most important publication channels for information
regarding the company’s operations and finances. All stakehol-
ders have an equal opportunity to use the information provided
on the website.
A separate document about Revenio’s disclosure policy describes
the principles and key channels of the company’s communications.
The Revenio Group Corporation’s President & CEO is responsible
for investor relations.
www.revenio.fi
19
INVESTOR INFORMATION
INVESTOR INFORMATION
BOARD OF DIRECTORS
Pekka TammelaChairman of the Board Pekka Tammela is a partner in Pajamaa Partners Oy. He has served in various managerialposts in 1999–2006, such as CFO at Solteq Oyj and Panostaja Oyj, and as a se-nior manager at KPMG and PricewaterhouseCoopers. Until 1999, Mr. Tammela worked as an Authorized Public Accountant. Mr. Tammela has been a member of Revenio’s Board of Directors since 2007.
Ari KohonenAri Kohonen, M.Sc. (Eng.), M.Sc. (Econ.), is Chairman of the Board of Directors of Gerako Oy. His previous work has included Managing Director of Tekla Oy (2004–2013) and several interna-tional and investment banking positions at Nordea (1983–2003). Prior to this, he was with Kemira Oy. Mr. Kohonen has been a member of Revenio’s Board of Directors since 2013.
Pekka RönkäPekka Rönkä, M.Sc. (Eng), currently acts as Chairman of the Board of Directors of HLD Healthy Life Devices Oy and Magnasense Technologies Oy. His previous positions include Senior Vice President and General Manager in Thermo Fisher Scientific (1999–2012). Mr. Rönkä has been a member of Revenio’s Board of Directors since 2014.
Rolf FryckmanRolf Fryckman is Chairman of the Board of Directors of Eyemaker’s Finland Oy. He is also a partner in the com-pany, and plays a leadership role in companies in whichEyemaker’s Finland Oy has a stake. His involvement in the optical industry began in 1974 as an entrepreneur, and he has also held various sales and marketing roles. Most recently, he has been the managing director of Cazze Optikot (since 2000). Mr. Fryckman has been a member of Revenio’s Board of Directors since 2010.
Kyösti KakkonenKyösti Kakkonen is the founder of Tokmanni Group and served as CEO of the Group for 20 years until 2009. Today, Mr. Kakkonen acts as CEO in several companies of his own, such as Joensuun Kauppa ja Kone Oy, K2 Invest Oy and Kakkonen-Yhtiöt Oy. Mr. Kakkonen has been a member of Revenio’s Board of Directors since 2014.
20
BOARD OF DIRECTORS
MANAGEMENT TEAM
Riku LamppuRiku Lamppu, A.B.A, is Segment Director of the Group’s discontinued Technology and Services segment and CEO of Boomeranger Boats Oy. Mr. Lamppu has been in the Group’s service since 2010.
Timo HildénTimo Hildén, M.Sc. (Econ.), is CEO of both Icare Finland Oy and Revenio Research Oy. Mr. Hildén has been in the Group’s service since 2012.
Olli-Pekka SalovaaraOlli-Pekka Salovaara, M.Sc. (Econ.), is President & CEO of Revenio Group and Segment Director of the Health Tech segment. He has served as President & CEO of the Group since September 2007.
Jasmin KuittinenJasmin Kuittinen, BBA, is CFO of Revenio Group. Ms. Kuittinen has been employed by the Group since 2013.
21
MANAGEMENT TEAM
TABLE OF CONTENTS
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS 2014
REVIEW BY THE BOARD OF DIRECTORS 23 – 27
FINANCIAL STATEMENTS
KEY FIGURES 28
CONSOLIDATED COMPREHENSIVE PROFIT & LOSS STATEMENT JAN 1 – DEC 31, 2014 30
CONSOLIDATED BALANCE SHEET DEC 31, 2014 31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 32
CONSOLIDATED CASH FLOW STATEMENT JAN 1 – DEC 31, 2014 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014 33 – 57
PARENT COMPANY PROFIT & LOSS STATEMENT JAN – DEC 31, 2014 58
PARENT COMPANY BALANCE SHEET DEC 31, 2014 59
PARENT COMPANY CASH FLOW STATEMENT JAN 1 – DEC 31, 2014 60
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014 61 – 65
SIGNATURES TO THE FINANCIAL STATEMENTS AND REVIEW OF OPERATIONS 66
AUDITOR’S NOTE 66
NOTES ON ACCOUNTING MATERIALS 66
CORPORATE GOVERNANCE STATEMENT OF THE REVENIO GROUP CORPORATION 67
22
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
REVIEW BY THE BOARD OF DIRECTORS JAN 1 – DEC 31, 2014
Revenio is a Finnish health tech group whose core business lies in screening. The Revenio Health Tech segment comprises the busi-ness operations of Icare Finland Oy and Oscare Medical Oy, which specializes in osteoporosis screening and detection. In addition, Revenio has identifi ed new growth opportunities relating to health tech in which common denominators are screening, follow-up and the global need to make cost savings in health care via preven-tive measures. Revenio’s vision is to assume a signifi cant role in screening and to eventually achieve a leading position in this fi eld. The focus of Revenio’s screening technology lies on early detection of glaucoma and osteoporosis, and will expand to skin cancer and asthma and the measurement of these during treatment processes.
The subsidiary Revenio Research Oy was established in 2014 to manage the R&D projects of the Revenio Group.
Boomeranger Boats Oy and Done Software Solutions Oy, former-ly part of the now discontinued Technology and Services segment, were transferred to discontinued operations and put on sale in December 2014. These business operations will be sold, due to Revenio’s strategic focus on health tech and the related divestment of non-core operations. In operational terms, the companies will continue to operate as usual and the arrangement does not have an effect on current or future customer relationships.
OPERATING ENVIRONMENT AND DEVELOPMENT OF BUSINESS OPERATIONS
REVENIO HEALTH TECHIn January–December, the net sales of the Revenio Health Tech segment totaled EUR 16.0 million (13.5), up 18.7 % on the pre-vious year. The operating result was EUR 5.4 million (5.4), a decline of 0.1 %.
Icare Finland OyIn 2014, the market situation was favorable in all of Icare’s key markets, including the United States, Japan, the UK, Australia, Scandinavia, Switzerland, Korea and India. Our active work in these market generated results and very strong sales.
Approximately 40 percent of Icare sales comes from the United States where the reform of the healthcare system and the sub-sequent unclear situation gave rise to challenges in early 2014. The drop caused by the reform affected several companies sel-ling health technology in the U.S. market, including Icare. In the latter half of the year-, the situation clarifi ed, and the year-end was strong for Icare, as expected. Even in normal circumstances, Icare’s business is characterized by seasonal variation, in which sales peak in the latter half of the year.
In the fourth quarter, US sales grew by an impressive 21 percent, with December 2014 being the all-time highest sales month for Icare. One major contributor to this was the fact that customers had exceptionally large amounts of remaining budget at their disposal, following the changes in tax allowances implemented in early2014. Furthermore, Icare’s sales efforts generated great results.
The sales of disposable probes for tonometers grew by 31.2 % in January–December, and no less than 40.3 % during the last quar-ter. Whole-year probe sales volume exceeded 7 million probes. The increased use of purchased devices, an increase in patient-led screening, and a change in user profi les have all fueled sales of
probes. The transfer of the central phases of probe production to Finland during the reporting period will have a positive effect on the probe production process, capacity and margin structure in the future.
During the latter half of the year, Icare received orders from two major international optician chains. Overall, optician chains are increasingly interested in Icare’s intraocular pressure (IOP) measu-rement technology, and we expect this business segment to bring interesting opportunities in the future.
One of the major development steps in 2014 was the launch of a new home-use tonometer designed for consumer customers. Following its completion in early 2014, sales of the new Icare HOME began in Europe and Asia. The device was positively re-ceived, and ophthalmologists have shown great interest towards the Icare concept. Towards the end of the year, Icare HOME tonometer sales showed strong growth, the total sales volume for 2014 exceeding 500 units. The device has been granted a sales permit in over 30 European countries as well as Australia, Japan and Canada. To accelerate the sales permit process in the United States, Icare will open two new measurement points, alongside the Johns Hopkins Hospital, in early 2015 to speed up the fl ow of patients. The clinical tests related to the sales permit application require the use of test subjects who meet strict crite-ria and have a certain IOP. In particular, fi nding patients with a high IOP exceeding 40 mmHg has been challenging. Once the clinical trials have been completed, a permit application will be submitted to the FDA.
Icare aims at creating new treatment practices in which a doctor treating a glaucoma patient, or someone suspected of having glaucoma, can lend an Icare HOME tonometer to the patient for around-the-clock home measurement. The resulting information on the patient’s 24-hour IOP fl uctuation would help the doctor to make the proper treatment decisions. For patients diagnosed with glaucoma, continuous IOP monitoring forms a key part of the treat-ment in order to contribute to preventing progression of the disease and to determine the proper medication. IOP monitoring, especially at different times of the day, is particularly important.
Icare aims at expanding its product sales to new geographi-cal areas and to new user groups. Previously, tonometers were targeted primarily to professionals, such as ophthalmologists, opticians, and optometrists. Today, an entirely new market has opened up alongside the professional segment, providing new target groups such as patients, those providing home care, ER nursing staff and other general medical personnel.
In December, Icare HOME tonometer was ranked fourth in The Ophthalmologist magazine’s Innovation Awards 2014. The result was based on the votes of fi ve well-respected Key Opinion Leaders. A total of 35 products participated in the competition.
Oscare Medical OyAt the end of 2013, Revenio seized a development opportunity by increasing its holdings in Oscare Medical Oy, a company specia-lizing in the detection and screening of osteoporosis, to 53 percent. In 2014, Revenio mapped target customer segments and started to build a distribution network. In addition, training of the fi rst distri-butors outside of Finland was started, and we established relation-ships with opinion leaders central to the development of our busi-ness. Clinical studies in Finland were completed and the results support our previous understandings of the benefi ts the device provides in bone health screening.
23
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
The most intriguing customer segments for this product group are pharmacy chains, gynecologists, orthopedists, clinics, pharmaceu-tical plants and screening companies. In 2014, the commercial sig-nifi cance of this product was still clearly in the red.
Revenio Research OyIn December 2014, Revenio established a subsidiary, Revenio Research Oy, to manage the R&D projects of the Revenio Group. The company will focus both on the development of existing pro-ducts and on health tech-related R&D projects with the purpose of identifying and commercializing new health tech products. The common denominators of our projects include screening, follow-up and the global need to make cost savings in health care via preven-tive measures. The goal is to build growth paths from these new openings alongside the current products of the Revenio Group.
REVENIO TECHNOLOGY AND SERVICESIn December, the Revenio Group Corporation announced that it will sell off its holdings of Boomeranger Boats Oy and Done Software Solutions Oy, which represent its Technology and Services seg-ment, and transfer said companies to available-for-sale discon-tinued operations. According to the plans of Revenio’s manage-ment, the sale of these companies will be carried out within a year of the classifi cation decision in accordance with IFRS 5.8. These business operations will be sold due to Revenio’s strategic focus on health tech and the related divestment of non-core operations. At the same time, Revenio has written down Boomeranger Boats Oy’s goodwill, approximately EUR 3.1 million.
In operational terms, the companies will continue to operate as usual and the arrangement does not have an effect on the current or future customer relationships of these businesses.
Boomeranger Boats Oy and Done Software Solutions Oy, which re-present the Technology and Services segment and have been trans-ferred to available-for-sale discontinued operations, had net sales of EUR 6.8 million and an operating profi t of EUR 0.6 million in 2013.
NET SALES AND FINANCIAL PERFORMANCEConsolidated net sales from the Revenio Group’s continuing operations for the period January 1 – December 31, 2014 tota-led EUR 16.0 million (13.5). This represented net sales growth of 18.7 %. Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were EUR 4.9 million (4.7), or 30.8 % (34.9) of net sales, a rise of 4.6 %.Operating profi t (EBIT) from continuing operations was EUR 4.4 (4.3) million, representing 27.5 % (31.6) of net sales, an increase of 3.3 %. Profi t before taxes for continuing operations totaled EUR 4.7 million (4.2), or 29.1 % (31.0) of net sales, up by 11.1 %. The profi t for continuing operations for the period was EUR 3.7 million (2.9), or 23.3 % (21.8) of net sales, an increase of 26.8 %. The losses for discontinued operations during the period totaled EUR -4.4 million
(EUR 1.4 million). Net profi t for the period totaled EUR -0.7 (4.3) mil-lion. Undiluted earnings per share from continuing operations were EUR 0.47 (0.38) and diluted earnings per share were EUR 0.47 (0.37). For discontinued operations, the undiluted and diluted ear-nings per share were EUR -0.56 (0.18). Dilution-adjusted earnings per share for continuing and discontinued operations during the pe-riod were EUR -0.09 (0.55). Equity per share was EUR 1.52 (1.95). Revenio Health Tech segment net sales grew by 18.7 %. The con-solidated net sales of continuing operations saw a year-on-year increase of 18.7 % and totaled EUR 16.0 million (13.5).
The operating profi t for the Revenio Health Tech segment was EUR 5.4 million (5.4), down 0.1 % year-on-year. This was attributable to larger investments in R&D, marketing measures related to Oscare and the launch of the Icare HOME tonometer. The consolidated operating profi t of continuing operations in the period under review increased by 26.8 % to EUR 3.7 million (2.9).
BALANCE SHEET, FINANCIAL POSITION AND INVESTMENTSThe consolidated balance sheet total stood at EUR 19.3 mil-lion (22.7) on 12/31/2014. Shareholders’ equity came to EUR 12.1 million (15.0). At the end of the reporting pe-riod, net interest-bearing liabilities amounted to EUR -2.7 (-2.5) million and leveraging stood at -22.4 % (-16.8).The consolidated equity ratio was 62.4 % (66.1). The Group’s liquid assets amounted to EUR 4.1 million (4.6) at the end of the repor-ting period. On December 31, 2014, the company’s interest-bea-ring liabilities equaled EUR 1.4 million (2.1). Notwithstanding investments for future growth in the Health Tech segment, the Group’s fi nancial position remained stable during the reporting period. The consolidated goodwill recorded on the balance sheet on December 31, 2014 was EUR 1.1 million (7.0).
Cash fl ow from continuing operations totaled EUR 3.6 (5.6) million. The Group’s purchases of PPE and intangible assets totaled EUR 1.2 million (0.9). These investments were concentrated primarily on product development.
Sales made to the United States are invoiced in U.S. dollars. The strengthening of the U.S. dollar that began at the end of 2014 imp-roved the competitiveness of Icare tonometers in the U.S. mar-kets. The year saw no signifi cant currency exchange gains/losses as net sales are entered as exchange rates based on a 12-month cumulative average.
GROUP STRUCTUREAt the end of the fi scal year, the Revenio Group consisted of the parent company Revenio Group Corporation and its wholly owned subsidia-ries, all active companies: Boomeranger Boats Oy, Done Software Solutions Oy, Icare Finland Oy, Kauhajoen Sisälogistiikka Oy
Net sales Net sales Segment profi t margin Segment profi t margin Jan–Dec, 2014 Jan–Dec, 2013 Jan–Dec, 2014 Jan–Dec, 2013
MEUR Change (%) MEUR MEUR % Change (%) MEUR %Health Tech 16.0 19 13.5 5.4 33 0 5.4 40Total 16.0 19 13.5 5.4 33 0 5.4 40Parent company's expenses -0.9 -1.1Operating profi t 4.4 28 3 4.3 32
NET SALES AND OPERATING PROFIT BY SEGMENT, 2013–2014
24
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
and Revenio Research Oy. Boomeranger Boats Oy, Kauhajoen Sisälogistiikka Oy and Done Software Solutions Oy have been classifi ed as discontinued operations in Group reporting. The Group includes Oscare Medical Oy as a 53 % owned subsidiary and Done Medical Oy as a 100 % owned subsidiary.
PERSONNELThe annualized average number of personnel employed by the Group in continuing operations during the period amounted to 28 (25). At the end of the period, the number of employees stood at 27 (27).
The number of personnel employed by the Group’s continuing operations during the fi scal year, by segment, averaged:
Wages, salaries, and other remuneration paid for continuing operations during the period totaled EUR 2.1 million (2.0).
MANAGEMENTOlli-Pekka Salovaara is the President and CEO of Revenio Group Corporation. The Management Team consists of President and CEO Olli-Pekka Salovaara, Boomeranger Boats Oy CEO Riku Lamppu, Icare Finland Oy CEO Timo Hildén and acting CFO Jasmin Kuittinen.
Timo Hildén is CEO of the Group’s subsidiaries (Icare Finland, Revenio Research). Riku Lamppu acts as CEO of the disconti-nued Kauhajoen Sisälogistiikka and Boomeranger Boats Oy, and Ari Suominen acts as CEO of Done Software Solutions Oy.
SHARES, SHARE CAPITALAND MANAGEMENT HOLDINGSOn December 31, 2014, the Revenio Group Corporation’s fully paid-up share capital registered with the Trade Register was EUR 5,314,918.67 and the number of shares totaled 7,932,078.
During the reporting period, the number of shares increased by 81,599 following subscriptions made on the basis of the 2007 stock option scheme. Series 2007A option rights were used to subscri-be for 0 shares, 2007B option rights to subscribe for 68,599 sha-res and 2007C options rights to subscribe for 13,000 shares. The subscription period for Series 2007A options ended on May 1, 2013 and that for Series 2007B options ended on November 1, 2014. The outstanding 2007C options can be used to subscribe for a total of 47,330 shares until the close of the subscription period on May 1, 2016.
The company has one class of share, and all shares confer the same voting rights and an equal right to dividends and the com-pany’s funds. On December 31, 2014, the President & CEO, members of the Board of Directors and their closely related par-ties held 11.8 % of the company’s shares (936,798 shares) and 0.0 % of the option rights.
CHANGES IN SHAREHOLDING On March 26, 2014, Revenio was notifi ed that Eyemaker’s Finland Oy’s holdings in terms of the total number of shares and voting rights in Revenio Group Corporation had declined to under one-twentieth (1/20).
BUYBACK OF OWN SHARES The company did not buy back any of its own shares during the fi s-cal year. Of the 5,358 treasury shares acquired in earlier fi scal pe-riods that were held by the company at the beginning of the fi scal year, 2,657 were used for the payment of emoluments to Members of the Board of Directors in accordance with the decision taken by the Annual General Meeting of shareholders on March 20, 2014. Board members Rolf Fryckman, Ari Kohonen, Kyösti Kakkonen and Pekka Rönkä were each issued 443 shares in emoluments. Pekka Mäntylä, the Chairman of the Board, received 885 shares in Board emoluments. At the end of the fi scal year, the company held a total of 2,701 of its own shares.
OPTION RIGHTSThe company has a corporate option scheme that began in 2007. On the basis of the share issue authorization approved by the Annual General Meeting of April 3, 2007, the Board of Directors of the Revenio Group Corporation decided, on November 23, 2007, on a new corporate option scheme comprising a maxi-mum of 3,684,365 option rights. Ten option rights entitle the hol-der to subscribe for one (1) Revenio Group Corporation share. On December 31, 2014, the proportion of shares that can still be subscribed for on the basis of the option rights issued represented a maximum of 0.6 percent of the company’s shares and votes, on-ce all new shares subscribed for with these option rights have been registered. New shares subscribed for via the option program entit-le the holder to a dividend from the year of subscription onwards.
The option rights have been divided into three series: Series A (1,684,365), B (1,000,000) and C (1,000,000). The share subscrip-tion periods with the options are as follows: Series A, May 1, 2009–May 1, 2013; Series B, November 1, 2010–November 1, 2014; and Series C, May 1, 2012–May 1, 2016. The share subscription price will be the trade-weighted average price during the period November 1–30, 2007 multiplied by ten (EUR 5.99, Series A), April 1–30, 2009multiplied by ten (EUR 1.75, Series B), and November 1–30, 2010 multiplied by ten (EUR 1.69, Series C).
A total of 40,000 new Series 2007B option rights were issued to management during the period.
TRADING ON NASDAQ OMX HELSINKI During the period January 1 – December 31, 2014, the Revenio Group Corporation’s share turnover on the NASDAQ OMX Helsinki exchange totaled EUR 38.4 million (23.8), representing 2.7 million (2.1) shares or 33.7 % (27.1) of all shares outstanding. The highest trading price was EUR 17.20 (14.30) and the lowest EUR 11.32 (4.10). At the end of the period, the closing price was EUR 14.55 (12.38), and the average share price for the period was EUR 14.38 (11.20). The Revenio Group Corporation’s market value stood at EUR 115.4 million (97.2) on December 31, 2014.
ANNUAL GENERAL MEETING AND BOARD AUTHORIZATIONS IN EFFECTThe Annual General Meeting held on March 20, 2014 approved the company’s fi nancial statements and granted a discharge of liability to the President & CEO and the members of the Board of Directors for the fi scal year January 1–December 31, 2013.
Dec 31, 2014
Dec 31, 2013
Change
Revenio Health Tech
23 19 4
Parent company 5 6 -1Total 28 25 3Discontinued operations
44 48 -4
THE AVERAGE NUMBER OF PERSONNEL EMPLOYEDBY THE GROUP DURING THE PERIOD BY SEGMENT:
25
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
The Annual General Meeting decided to elect fi ve members to the Board of Directors. Rolf Fryckman, Ari Kohonen and Pekka Tammela were re-elected as Board members, and Kyösti Kakkonen and Pekka Rönkä were elected as new members. At its organiza-tion meeting, held after the Annual General Meeting, the Board of Directors re-elected Pekka Tammela as Chairman of the Board.
The AGM decided that the Chairman of the Board should be paid a director’s fee of EUR 36,000 per annum and other Board mem-bers a director’s fee EUR 18,000 per annum. A total of 40 percent of Board members’ emoluments will be paid out in the form of com-pany shares, while 60 percent will comprise a monetary payment.
The AGM re-appointed PricewaterhouseCoopers Oy, Authorized Public Accountants, as the company’s auditors with Juha Tuomala, Authorized Public Accountant, as principal auditor.
The AGM accepted the Board’s proposal on profi t distribution, ac-cording to which the parent company’s net loss for the reporting period, EUR -304,972.66, will be deducted from retained earnings, and a dividend of EUR 0.30 per share will be paid.
The Annual General Meeting rescinded the earlier authorization to buy back 771,107 of the company’s own shares, and authorized the Board of Directors to buy back a maximum of 785,047 of the com-pany’s own shares following the approval of the reverse share split, either in one or several blocks, using the companys unrestricted equity, in which case any buyback will reduce the amount of distri-butable earnings. The company may buy back shares in order to develop its capital structure, in order to fi nance and implement any corporate acquisitions or other transactions, and to implement sha-re-based incentive plans or otherwise dispose of or cancel them. This authorization is valid until April 30, 2015.
The AGM authorized the Board of Directors, following the appro-val of the reverse share split, to decide on the issuance of a maxi-mum of 3,000,000 shares or to grant special rights (including stock options) conferring entitlement to shares, as referred to in Section 1 of Chapter 10 of the Limited Liability Companies Act, in one or several tranches. This authorization was granted for the purpose of fi nancing and implementing any prospective corporate acquisitions or other transactions, implementing the company’s share-based in-centive schemes, or for other purposes determined by the Board.
This authorization is valid until April 30, 2015. This authorization shall supersede the authorization to decide on an issuance of new shares and on the granting of special rights giving entitlement to shares granted at the AGM of March 21, 2013.
BOARD OF DIRECTORS AND AUDITORS As of March 21, 2014, the Revenio Group Corporation’s Board of Directors has consisted of: Pekka Tammela, M.Sc. (Econ.), Authorized Public Accountant, partner in PJ Maa Partners Oy (Chairman); Rolf Fryckman, optician, Chairman of the Board of Eyemaker’s Finland Oy; Ari Kohonen, M.Sc. (Eng.), M.Sc. (Econ.), Chairman of the Board of Gerako Oy; and, as new Board Members, Kyösti Kakkonen, LL.B., Chairman of the Board of Joensuun Kauppa ja Kone; and Pekka Rönkä, M.Sc. (Eng.).
PricewaterhouseCoopers Oy, Authorized Public Accountants, ser-ves as the company’s Auditors, with Juha Tuomela, Authorized Public Accountant, as Principal Auditor.
In 2014, the Board of Directors met twenty (20) times. On avera-ge, Board members’ meeting attendance rate was 94.0 percent.
In accordance with the AGM’s decision, 40 percent of Board mem-bers’ total emoluments were paid out in the form of shares in the company, while 60 percent consisted of monetary payment. In the course of the fi scal year, the company made, in total, EUR 59,400 in monetary payments as Board emoluments. In addition, 2,657 Revenio Group Corporation shares in all were granted as Board emoluments.
In the 2014 fi scal year, the President and CEO was paid EUR 320,507.32 in salary.
COMPLIANCE WITH CORPORATE GOVERNANCE RECOMMENDATIONSRevenio Group Corporation complies with the Guidelines for Insiders issued by NASDAQ OMX Helsinki Ltd, which came into force on October 9, 2009, and the Finnish Corporate Governance Code, which entered into force on October 1, 2010. The compa-nys general principles of corporate governance are stated in the Investors section of Revenio’s website.
AN ASSESSEMENT OF MAJOR BUSINESS RISKS AND UNCERTAINTY FACTORSRevenio Group’s risks are defi ned as strategic, operational, trade cycle, hazard, and fi nancial risks.
The Group’s strategic risks include competition in all sectors, the threat posed by new competing products, and any other actions of the company’s rivals that may affect the competitive situation. Another factor posing a strategic risk is related to success in R&D operations and, therefore, preservation of the product range’s com-petitiveness. In the Group’s sectors, requiring particular expertise in accordance with the strategy, essential risks also include those related to the retention and development of key personnel as well as dependence on the operational ability of the subcontractor and supplier network.
Corporate acquisitions and the purchase of assets with growth potential related to health tech are part of Group strategy. The success of these has a signifi cant impact on the achievement of growth and profi tability targets. Potential corporate acquisitions and the purchase of assets with growth potential may also alter the Group’s risk profi le.
Strategic risks and the need for action are regularly assessed and are monitored in connection with day-to-day management, monthly Group reporting, and annual strategy updates.
Operational risks are associated with the retention and develop-ment of major customers, the operations of the distribution network and success in extending the customer base and markets. In the Revenio Health Tech segment especially, operational risks inclu-de factors related to expansion into new markets, such as various countries’ regulation of sales licenses for medical instruments im-posed at national level and the related offi cial decisions concer-ning the health care market. Success in health tech R&D projects launched in accordance with the strategy can also be classifi ed as an operational risk.
The operational risks related to the manufacture, product develop-ment, and production control of medical instruments are estimated to be higher than average in the Revenio Health Tech segment, be-cause of that sector’s requirements concerning quality.
Project-based operations, mainly carried out in the Technology and Services segment which has been transferred to discontinued
26
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
operations, involve exposure to operational risks related to the ma-nagement of demanding end-to-end deliveries, which may concern the company’s own project work, subcontractors and suppliers.
Hazard risks are covered by insurance. Property and business interruption insurance provide protection against risks in these areas. The business pursued is covered by international liability insurance.
Financial risks consist of credit, interest, liquidity, and foreign exchange risks. To manage credit loss risks, the Group has ta-ken out credit insurance covering all companies in the Group. Every month, and more frequently if necessary, the Board, in its meetings, assesses matters related to fi nancial issues. If required, the Board provides decisions and guidelines for the management of fi nancial risks concerning interest-rate and currency hedging, for instance. The liquidity risk can be affected by the availability of external fi nancing, the development of the Group’s credit stan-ding, the trend in business operations and changes in the payment behavior of customers. Liquidity risks are monitored by means of cash forecasts, which are drawn up for periods of 12 months at most at a time.
DISPUTESThe company is not currently involved in any disputes or trials that would have a signifi cant impact on the Group’s fi nancial position according to the opinion of the Board.
ENVIRONMENTAL FACTORSThe direct environmental impact of the Revenio Group Corporation’s operations is minor.
RESEARCH AND DEVELOPMENT ACTIVITIESR&D expenditure during the fi scal year totaled EUR 1.0 million (EUR 0.8 million). A total of EUR 0.6 (0.6) million of R&D costs were capitalized during the reporting period.
MAJOR EVENTS AFTER THE CLOSE OF THE PERIODOn January 19, 2015, Icare Finland Oy, which is part of the Revenio Group, received a sales permit for the company’s TA01 tonometer in China. The company believes that the sales permit will enable several hundred devices to be sold in China during 2015. In addi-tion to the sales permit for the TA01 tonometer, Icare has applied for a sales permit for its PRO and HOME tonometers in China, and the applications have advanced to the stage of processing by the relevant authorities.
On January 21, 2015, the Revenio Group Corporation signed a license agreement with VTT Technical Research Centre of Finland concerning intellectual property rights and know-how regarding the hyperspectral camera technology developed by VTT. Revenio aims to launch an easy-to-use, mobile screening device for dermatolo-gists to use to detect skin cancers and their precursors. According to the company’s current view, the screening device is not expected to generate signifi cant commercial value for a few years.
On February 2, 2015, Revenio announced that it had signed a license agreement with Tide Medical Oy concerning a patented in-vention relating to the diagnosis of asthma. This agreement allows Revenio to use this invention as a basis on which to develop and commercialize products relating to the screening, diagnosis, mo-nitoring and treatment of asthma. Revenio expects that it will take several years before these products become commercially signi-fi cant for the company.
Both of these openings are related to major national diseases, early detection of which is essential for successful treatment. Skin can-cers and their precursors are increasingly rapidly throughout the world. The underlying cause of various skin changes lies in conti-nuously increasing exposure to UV radiation. Asthma, on the other hand, is one of the most common chronic diseases: More than 300 million people suffer from it. In Finland, 9.4 percent of the popula-tion has asthma.
OUTLOOK FOR 2015Icare Finland’s net sales and operating profi t in 2015 are expect-ed to increase from the previous year. The Group’s consolidated operating profi t and cash fl ow will be affected by the investments in the new health tech businesses. These investments are not sig-nifi cant during 2015.
THE BOARD’S PROPOSAL TO THE ANNUAL GENERAL MEETINGThe consolidated net profi t for the year totaled EUR -693,677.25 and that of the parent company EUR 1,047,421.70. The parent company’s distributable earnings on December 31, 2014 totaled EUR 8,952,835.50. The Board of Directors will propose to the Annual General Meeting on March 19, 2015 that the parent com-pany’s distributable earnings be allocated by paying a per-share dividend of EUR 0.45, for a total of EUR 3,569,435.51, against the total number of shares at the close of the reporting period.
The rest of the distributable retained earnings will be entered under equity.
In the Board’s opinion, the proposed distribution of earnings does not endanger the parent company’s or Group’s liquidity.
27
REVIEW OF OPERATIONS AND FINANCIAL STATEMENTS
Key fi guresJan–Dec, 2014 Jan–Dec, 2013 Jan–Dec, 2012 Jan–Dec, 2011 Jan–Dec, 2010
12 months 12 months 12 months 12 months 12 monthsIFRS IFRS IFRS IFRS IFRS
Net sales, TEUR 16,031 13,508 21,563 21,449 29,420Operating profi t, TEUR 4,413 4,273 4,255 3,340 -715Operating profi t, % 27.5 31.6 19.7 15.6 -2.4Profi t before taxes, TEUR 4,658 4,191 4,683 3,013 -739Profi t before taxes, % 29.1 31.0 21.7 14.0 -2.5Net profi t for fi nancial period, TEUR -694 4,338 -287 3,911 -589Net profi t, % -4.3 32.1 -1.3 18.2 -2.0Gross capital expenditure, TEUR 1,150 913 287 707 695Gross capital expenditure, % of net sales 7.2 6.8 1.3 3.3 2.4R&D expenses, TEUR 1,020 846 350 360 432R&D expenses, % 6.4 6.3 1.6 1.7 1.5Return on equity, % -5.1 25.7 -1.8 14.1 -4.0Return on investment, % 1.1 29.7 0.4 20.2 -2.5Equity ratio, % 62.4 66.1 62.2 66.6 60.8Net leveraging, % -22.4 -16.8 -12.2 -17.3 4.9Leveraging 11.6 17.7 21.6 9.9 19.6Average number of personnel 74 209 198 201 423
Key indicators per share Jan–Dec, 2014 Jan–Dec, 2013 Jan–Dec, 2012 Jan–Dec, 2011 Jan–Dec, 201012 months 12 months 12 months 12 months 12 months
IFRS IFRS IFRS IFRS IFRSEarnings per share, continuing operations, EUR
0.474 0.378 0.500 0.028 -0.011
Earnings per share, discontinued operations, EUR
-0.562 0.179 -0.540 0.023 0.003
Equity attributable to equity owners of the parent per share, EUR
1.52 1.91 1.91 2.14 1.83
Dividend per share, EUR 0.45 0.30 0.20 0.20 0.20Dividend payout ratio, % * 54.3 * 392.2 *Effective dividend yield, % 3.1 2.4 5.0 4.2 6.7P/E ratio, continuing operations 30.7 22.4 8.0 171.4 -272.7Diluted number of shares at end of period 7,932,078 7,850,479 7,692,973 7,688,973 7,683,973Diluted number of shares, average during period (acquired own shares excluded)
7,876,183 7,845,121 7,683,379 7,686,233 7,683,973
Share price, year low, EUR 11.32 4.00 3.30 3.00 2.80Share price, year high, EUR 17.20 14.30 5.00 6.20 3.80Share price, average, EUR 14.38 8.34 4.20 4.40 3.00Share price at end of period, EUR 14.55 12.38 4.00 4.80 3.00Market capitalization at end of period, MEUR 115.4 97.2 30.8 36.9 23.1Turnover, number of shares 2,669,163 2,964,541 3,268,179 3,936,797 2,474,513Turnover, % 33.7 37.8 42.5 51.2 19.2
28
KEY FIGURES
The earnings per share indicators have been calculated using the average diluted numbers of shares during the fi nancial periods, and the equity per share indicators using the diluted numbers of shares at the ends of fi nancial periods, taking account of the effect of the reverse share split implemented on March 27, 2013. The dividend per share of EUR 0.45 in 2014 represents the proposal made by the Board of Directors to the Annual General Meeting of March 19, 2015
Figures for 2010–2012 are not as such comparable with the years 2013 and 2014, due to the organizational structure at the end of 2014.
Defi nition of key fi gures:
Profi t before taxes: operating profi t + fi nancing income – fi nancing expenses
Return on equity %: 100 x profi t for the fi nancial period shareholders’ equity + non-controlling interest (average during period)
Return on investment %: 100 x profi t before taxes + interest and other fi nancial expenses balance sheet total – non-interest-bearing debt (average during period)
Equity ratio %: 100 x balance sheet equity + non-controlling interest balance sheet total – advance payments received
Net leveraging %: 100 x interest-bearing debt – cash & equivalents total equity
Equity per share: equity attributable to shareholders number of shares at end of the reporting period
Earnings per share: net profi t for the reporting period average number of shares during the reporting period
Equity per share: equity attributable to shareholders number of shares at end of the reporting period
Dividend payout ratio %: dividend per share earnings per share
Effective dividend yield %: dividend per share fi nal share price at end of the reporting period
P/E ratio: fi nal share price at end of period earnings per share
Average share price: total value of shares traded during the period, in euros total number of shares traded during fi nancial period
Leveraging %: 100 x interest-bearing net debt total equity
29
KEY FIGURES
Consolidated comprehensive Profi t & Loss Statement
NOTE NO. JAN 1 – DEC 31, 2014TEUR
JAN 1 – DEC 31, 2013TEUR
CONTINUING OPERATIONS
Net sales 1, 2 16,031 13,508
Other operating income 5 19 99
Use of materials and services
Materials:
Purchases during the fi nancial period -3,210 -2,357
Change in inventories 314 251
External services -2,233 -1,808
Materials and services total -5,129 -3,914
Employee benefi t expenses 6
Salaries and fees 6, 22 -2,111 -2,029
Indirect personnel costs
Pension costs 6 -456 -357
Other indirect personnel costs -51 -106
Employee benefi t expenses total -2,618 -2,491
Depreciation, amortization and impairment 7
Depreciation -526 -448
Impairment 0 0
Depreciation and amortization total -526 -448
Other operating expenses 8, 9 -3,365 -2,482
Operating profi t 4,413 4,273
Financial income and expenses 10
Financial expenses -37 -256
Financial income 282 175
Financial income and expenses total 245 -81
Profi t before taxes 4,658 4,191
Taxes 11
Income taxes -922 -1,245
Taxes total -922 -1,245
Net profi t from continuing operations 3,736 2,946
DISCONTINUED OPERATIONS
Net profi t from discontinued operations 3 -4,430 1,392
Net profi t for the period -694 4,338
Other comprehensive income items 0 0TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -694 4,338
Total comprehensive income attributable to
Parent company owners -694 4,338
Non-controlling interest 0 0
Earnings per share calculated from the profi t 12
of the period attributable to the parent company shareholders
Basic earnings per share (EUR), continuing operations 0.47 0.38
Diluted earnings per share (EUR), continuing operations 0.47 0.37
Basic earnings per share (EUR), discontinued operations -0.56 0.18
Diluted earnings per share (EUR), discontinued operations -0.56 0.18
Basic earnings per share (EUR), net profi t for the period -0.09 0.56
Diluted earnings per share (EUR), net profi t for the period -0.09 0.55
The notes to the fi nancial statements form an essential part of the fi nancial statements.
30
CONSOLIDATED COMPREHENSIVE PROFIT & LOSS STATEMENT JAN 1 – DEC 31, 2014
Consolidated balance sheet
Dec 31, 2014 Dec 31, 2013APPENDIX TEUR TEUR
ASSETS
Non-current assets
Property, plant and equipment 13 585 1,349
Goodwill 14 1,191 6,966
Other intangible assets 15 2,825 2,430
Shares in associated companies 16 0 0
Available-for-sale fi nancial assets 0 2
Other receivables 0 27
Deferred tax assets 17 205 521
Non-current assets total 4,807 11,295
Current assets
Inventories 18 1,256 1,091
Trade and other receivables 19 2,348 4,492
Advance payments 0 17
Cash and cash equivalents 20, 28 4,105 4,602
Current assets total 7,708 10,203
Non-current assets held for sale from discontinued operations 6,821 1,159
ASSETS TOTAL 19,336 22,657
EQUITY AND LIABILITIES APPENDIX TEUR TEUR
Parent company shareholders’ equity 21
Share capital 5,315 5,315
Share premium account 2,439 2,439
Fair value reserve 300 300
Invested unrestricted capital reserve 4,631 4,499
Other reserves 280 280
Retained earnings -893 2,182
Translation differences 3 -2
Own shares -14 -57
Parent company shareholders’ equity total 12,061 14,957
Non-controlling interest 0 0
SHAREHOLDERS’ EQUITY TOTAL 12,061 14,957
LIABILITIES
Non-current liabilities
Deferred tax liabilities 17 18 163
Provisions 23 0 82
Financial liabilities 24, 28 773 1,305
Other non-current liabilities 132 71
Non-current liabilities total 923 1,621
Current liabilities
Trade and other payables 26 1,856 4,780
Financial liabilities 24, 28 632 783
Current liabilities total 2,488 5,563
Non-current liabilities from discontinued operations 3,864 516
LIABILITIES TOTAL 7,275 7,700
EQUITY AND LIABILITIES TOTAL 19,336 22,657
The notes to the fi nancial statements form an essential part of the fi nancial statements.
31
CONSOLIDATED COMPREHENSIVE PROFIT & LOSS STATEMENT JAN 1 – DEC 31, 2014 CONSOLIDATED BALANCE SHEET DEC 31, 2014
Parent company shareholders’ equityEUR THOUSAND Equity Share
premium reserve
Reserve for invested unrestricted
equity
Other reserves
Own shares
Translationdifferences
Retained earnings
Total Shareholders'equity total
non-controllinginterest
Total equity
Equity Jan 1, 2013 5,315 2,439 7,055 580 -86 0 -627 14,676 0 14,676Comprehensive profi t 0Net profi t for the period 4,338 4,338 0 4,338Translation differences -2 -6 -7 0 -7TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
0 0 0 0 0 -2 4,332 4,330 0 4,330
Transactions with ownersDividends -1,523 -1,523 0 -1,523Capital repayment -3,294 -3,294 0 -3,294Direct costs resulting from the issue of new shares
-18 -18 0 -18
Purchase of own shares 29 29 0 29Exercised options 755 755 0 755Transactions withowners total
0 0 -2,556 0 29 0 -1,523 -4,050 0 -4,050
Equity Dec 31, 2013 5,315 2,439 4,499 580 -57 -2 2,183 14,957 0 14,957Equity Jan 1, 2014 5,315 2,439 4,499 580 -57 -2 2,183 14,957 0 14,957Comprehensive profi tNet profi t for the period -694 -694 0 -694Translation differences 5 -27 -22 0 -22TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
0 0 0 0 0 5 -721 -716 0 -716
Transactions with ownersDividends -2,355 -2,355 0 -2,355Direct costs resulting from the issue of new shares
-12 -12 0 -12
Purchase of own shares 43 43 0 43Exercised options 144 144 0 144Transactions withowners total
0 0 132 0 43 0 -2,355 -2,180 0 -2,180
Equity Dec 31, 2014 5,315 2,439 4,631 580 -14 3 -894 12,061 0 12,061
Consolidated statement of changes in equity
Consolidated cash fl ow statement JAN 1 – DEC 31, 2014 JAN 1 – DEC 31, 2013APPENDIX TEUR TEUR
Cash fl ow from operationsNet profi t for the period -694 4,338Adjustments:Non-cash items 27 526 657Interest and other fi nancial expenses 10 37 -178
Interest and other fi nancial gains 10 -282 281Taxes 11 922 1,180Change in working capital:Changes in trade and other receivables 19 -670 1,229Changes in current assets 18 -147 -288Changes in trade and other payables 26 3,686 -1,804Changes in reserves 23 0 0Other items 770 237Change in working capital, total 3,639 -627Interests paid 10 -17 -45Interests received 10 3 1Taxes paid -563 -6Net cash fl ow from operations 3,571 5,602Cash fl ow from discontinued operations -808 -118Cash fl ow from investing activitiesAcquisitions of subsidiaries less cash and cash equivalents at acquisition time 0 -697Proceeds from sale of subsidiary less cash and cash equivalents at the time of sale
3 923 1,685
Acquisitions of tangible current assets 13 -440 -282Acquisitions of intangible assets -825 -630Net cash fl ow from investing activities -342 76Cash fl ow from discontinued operations -89 0Cash fl ow from fi nancing activitiesCurrent loans taken 24 0 0Current loans paid back 24 -589 -1,702Payments of fi nance lease liabilities 24 -17 -119Dividends paid and capital repayment 21 -2,355 -4,830Share subscription through exercised options 132 738Associate company loans granted 0 0Net cash fl ow from fi nancing activities -2,829 -5,913Cash fl ow from discontinued operations 0 0Net change in cash and credit accounts -497 -354Cash and cash equivalents at beginning of period 4,602 4,954Cash and cash equivalents at end of period 20 4,105 4,602The notes to the fi nancial statements form an essential part of the fi nancial statements.
32
CONSOLIDATED CASH FLOW STATEMENT JAN 1 – DEC 31, 2014
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2014 General Revenio Group Corporation is the parent company of the Revenio Group. The company is a public limited company registered in Finland, with its domicile in the City of Vantaa, and listed on the NASDAQ OMX Helsinki Stock Exchange since October 2001. The company’s registered address is Äyritie 22, 01510 Vantaa, Finland.
Revenio Group Corporation’s main business is the design, manufacture and sales of medical instruments used for measuring intraocular pressure and bone density. The company has addition-al, discontinued, business operations: software for indoor logistics automation systems and the manufacture of Rigid Infl atable Boats. The continuing operations of the Revenio Group Corporation con-stitute a single reported business area. Besides Finland, the com-pany operates in the United States, where it has a subsidiary.
The fi gures in the consolidated fi nancial statements are expressed in thousands of euros.
The Board of Directors of the Revenio Group Corporation has approved these fi nancial statements for publication in its meeting on February 12, 2015. According to the Finnish Limited Liability Companies Act, shareholders have the right to approve or reject the fi nancial statements in the Annual General Meeting following their issuance. The AGM may also decide on amendments to the fi nancial statements.
Copies of the fi nancial statements are available at the Head Offi ce of the Group’s parent company and on the company’s web-site at www.revenio.fi .
Accounting principles for the consolidated fi nancial statements
Basis of preparationThe consolidated fi nancial statements have been prepared in ac-cordance with the International Financial Reporting Standards, IFRS, approved for use in the EU. The IAS and IFRS Standards and SIC and IFRIC Interpretations in effect on December 31, 2014 have been applied. International Financial Reporting Standards refer to the Standards and their interpretations approved for appli-cation in the EU in accordance with the procedure stipulated in EU regulation (EU) no 1606/2002 and embodied in Finnish accounting legislation and the statutes enacted under it. The notes to the con-solidated fi nancial statements also comply with Finnish account-ing and company legislation complementing the IFRS Standards.
The consolidated fi nancial statements are chiefl y based on the purchase method of accounting. Exceptions are available-for-sale fi nancial assets stated at cost, and fi nancial assets recognized at fair value through profi t or loss, including derivatives.
The preparation of fi nancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting principles. These are disclosed under “Critical accounting estimates and judgments” below.
The consolidated fi nancial statements are presented in the euro currency, which is the operational and accounting currency for the Group’s parent company and all of its subsidiaries. Application of new or revised IFRS Standards and IFRIC InterpretationsThe consolidated fi nancial statements have been prepared on the same principles as in 2013, with the exception of the following new Standards, Interpretations and revisions to Standards in effect on January 1, 2014 or before.
IFRS 10 ”Consolidated Financial Statements”: IFRS 10 outlines
the requirements for the preparation and presentation of consoli-dated fi nancial statements, when an entity exercises control over one or more other entities. The Standard defi nes the principle of control, which constitutes the basis for consolidation in consolidat-ed fi nancial statements. The Standard provides instructions on the application of the concept of control when determining whether or not an investor exercises control over an investment, and whether or not it would thus have to consolidate the investment into the consolidated fi nancial statements. The Standard also sets forth requirements on the preparation process for consolidated fi nan-cial statements. The amendment does not have any impact on the consolidated fi nancial statements.
IFRS 11 ”Joint Arrangements”: IFRS 11 is a more realistic refl ec-tion of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Parties to joint operations have rights regarding assets and obligations related to the arrangement, and such parties are required to account for their share of the assets, liabilities, income and expenses. The parties in a joint venture have rights to the net assets of the arrangement and account for their shares according to the equity method. Proportional consolidation of joint ventures is no longer allowed. The amendment does not have any impact on the consolidated fi nancial statements.
IFRS 12 ”Disclosures of interests in other entities”: IFRS 12 in-cludes the disclosure requirements for all forms of interest in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The amendment does not have any impact on the consolidated fi nancial statements.
IAS 27 (revised 2011) “Separate fi nancial statements”: The re-vised Standard includes the requirements relating to separate fi -nancial statements that remained when the regulations concerning controlling interest were transferred to the new IFRS 10 Standard. The amendment does not have any impact on the consolidated fi nancial statements.
IAS 28 “Associates and joint ventures”: The revised Standard includes the requirements for joint ventures and associates. Following the issue of IFRS 11, the equity method of accounting is applied to both. The amendment does not have any impact on the consolidated fi nancial statements.
Revision to IAS 32 “Financial Instruments: Presentation,” con-cerning the offsetting of fi nancial assets and fi nancial liabilities: The amendment concerns guidelines of the standard’s application, clar-ifying some requirements for offsetting fi nancial assets and fi nan-cial liabilities on the balance sheet. The amendment does not have any impact on the consolidated fi nancial statements.
Revision to IAS 36 “Impairment of assets,” concerning recover-able amount disclosures for nonfi nancial assets: The amendment pertains to information on the recoverable amount for impaired as-sets if their value is based on fair value less transfer costs. The amendment has not had a material impact on the consolidated fi nancial statements.
The IASB has published the following new or revised Standards and Interpretations, which the Group has not applied as of yet. The Group will adopt each Standard and Interpretation from the date of their becoming effective or, if the date is not the fi rst day of a fi nancial period, from the beginning of the fi nancial period following their becoming effective:
IFRIC 21 ”Levies”: The Interpretation concerns the Standard, IAS 37 “Provisions, Contingent Liabilities and Contingent Assets.” IAS 37 sets out criteria for recognizing liabilities. One of those is the requirement that the company has a liability caused by a previous event (trigger event). The Interpretation clarifi es that the obligat-ing event for the recognition of a liability is the activity that triggers the payment of the levy in accordance with the relevant legisla-tion. The Interpretation will become effective on June 17, 2014.
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
The amendment does not have any impact on the consolidated fi -nancial statements.
Revision to IAS 19 “Employee benefi ts,” concerning the pay-ments of employees or third parties: The Interpretation will become effective on July 1, 2014. The amendment does not have any im-pact on the consolidated fi nancial statements.The 2010–2012 annual improvement will become effective on July 1, 2014. They include amendments to the following standards:
IFRS 2 “Share-based Payment”: The defi nition of ”vesting con-ditions” is clarifi ed by separately defi ning a ”performance condition” and ”service condition.”
IFRS 3 ”Business Combinations”: Clarifi es that liabilities re-garding the payment of contingent considerations, when such liabilities correspond to the defi nition of fi nancial instruments, are classifi ed as fi nancial liabilities or equity in accordance with the defi nitions included in IAS 32 ”Financial instruments: presentation.” Also clarifi es that contingent considerations that are not equity can only be measured at fair value on each reporting day, with changes in fair value being presented in either profi t or loss.
IFRS 8 ”Operating Segments”: Adds a requirement to disclose in the fi nancial statements decisions made by management on the basis of judgment when aggregating operating segments. In the presentation of segment-specifi c assets, a balancing calculation between the assets of the segment and the entity as a whole must also be presented.
IFRS 13 ”Fair Value Measurement”: The justifi cations of the conclusions have been changed by clarifying that the intention was not to prohibit the valuation of current receivables and liabilities on the basis of invoices if the effect of the discounting is minor.
IAS 16 ”Property, Plant and Equipment” and IAS 38 ”Intangible Assets”: Clarifi es the handling of gross carrying value and accumu-lated depreciation if the revaluation method is used.
IAS 24 ”Related Party Transactions”: Entities (”management entity”) providing key management personnel services to the re-porting entity or its parent company are identifi ed as related par-ties. The sums charged from the reporting entity must be disclosed. These amendments do not have a material impact on the consoli-dated fi nancial statements.
The 2013 annual improvements will become effective on July 1, 2014.
They include amendments to the following standards:IFRS 3 ”Business Combinations”: This amendment clarifi es
that IFRS 3 is not applied to the formation of joint ventures as defi ned in IFRS 11.
IFRS 13 ”Fair Value Measurement”: The Standard is amended by clarifying that the portfolio exception included in the Standard applies to all contracts within the scope of IAS 39 or IFRS 9 (including non-fi nancial contracts).
IAS 40 ”Investment Property”: Clarifi es that IAS 40 and IFRS 3 are not mutually exclusive. IAS 40 helps in the differentiation of investment properties and owner-occupied properties. The guidelines of IFRS 3 have to be taken into account when deciding whether or not the acquisition of an investment property constitutes a business combination.
These amendments do not have a material impact on the con-solidated fi nancial statements.
Amendment to IFRS 11 ”Joint Arrangements,” concerning accounting for the acquisition of an interest in a joint operation. The amendment will become effective on January 1, 2016*
Amendments to IAS 16 ”Property, Plant and Equipment” and IAS 38 ”Intangible Assets,” concerning depreciation. The amend-ment will become effective on January 1, 2016*
Amendment to IAS 27 ”Separate Financial Statements,” con-cerning the equity method. The amendment will become effective on January 1, 2016*
The 2014 annual improvements will become effective on July 1, 2016. They include amendments to the following Standards:
• IFRS 5 ”Non-current Assets Held for Sale and Discontinued Operations” • IFRS 7 ”Financial Instruments: Disclosures”• IAS 19 ”Employee Benefi ts” • IAS 34 ”Interim Financial Reporting”
The effect of the amendments on future consolidated fi nancial statements is under review.
The new IFRS 15 Standard includes guidelines on recogniz-ing revenue from contracts with customers, replacing existing IAS 18 and IAS 11 Standards. The Standard will become effective on January 1, 2017* The effect of the amendments on future consol-idated fi nancial statements is under review.
The new IFRS 9 Standard will change the classifi cation and valuation of fi nancial assets. The Standard will replace existing IAS 39 Standard and become effective on January 1, 2018* The effect of the amendments on future consolidated fi nancial state-ments is under review. * The new or revised Standard is pending endorsement by the EU. Subsidiary companiesSubsidiary companies are companies (including structured entities) in which the Group has a controlling interest. The Group has a con-trolling interest in a company if the interest exposes the Group to the company’s variable returns or entitles it to such returns, and the Group is able to infl uence these returns by exercising its power over the company. Subsidiary companies are consolidated wholly from and including the date on which the Group has acquired the right of control. The consolidation will cease when the right of control ends.
Additional purchase costs, if applicable, are recognized at fair value on the acquisition date and classifi ed as a liability or share-holder equity. Additional purchase cost classifi ed as a liability is recognized via a gain or a loss at fair value on the last day of each reporting period. Additional purchase cost classifi ed as equity is not re-recognized.
The amount of shareholders’ equity attributable to non-con-trolling interests is recognized either at fair value or at an amount corresponding to the non-controlling interests’ proportion of the individualized net assets. The recognition principles are deter-mined separately for each acquisition. The recognition of goodwill created through acquisitions is detailed in the section, Goodwill.
Acquired companies are consolidated from the moment when the Group has acquired right of control, and divested companies until the moment when the right of control ceases to exist. All inter-company transactions, receivables, payables, unrealized profi ts and internal distribution of profi t between subsidiaries are eliminated as part of the consolidation process. Unrealized losses are not elimi-nated if the loss is a result of impairment. The distribution of profi t or loss between owners of the parent company and non-controlling interests is presented in a separate Profi t & Loss Statement. The distribution of comprehensive profi t between owners of the parent company and non-controlling interests is presented in the compre-hensive Profi t & Loss Statement. The comprehensive profi t is shared between parent company owners and non-controlling interests even if it means that the share of non-controlling interests becomes nega-tive. The share of equity of non-controlling interests is presented on the balance sheet as a separate item under equity.
Changes in the parent company’s holdings in subsidiaries that do not lead to loss of right of control are treated as equity-related transactions. In gradual acquisitions, the earlier holdings are rec-ognized at fair value, and the subsequent profi t or loss is recog-nized as a gain or a loss. When the Group ceases to have control,
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
any retained interest in the equity is re-assessed to its fair value at the date when control is lost, with the change in carrying amount recognized as a gain or loss.
Acquisitions that took place before January 1, 2010 are recog-nized according to the prevailing provisions at that time. Associated companiesAssociated companies are companies in which the Group has a signifi cant controlling interest. As a rule, a signifi cant controlling interest arises when the Group holds 20 % or more of the compa-ny’s voting power or otherwise is able to exercise signifi cant con-trol, but not the right of control. Associated companies are con-solidated using the equity method. If the Group’s share of the associated company’s losses exceeds the book value of the in-vestment, this investment is entered at zero value in the balance sheet and any losses in excess of this value are not recognized unless the Group has obligations with respect to the associated company. Investments in associated companies include any good-will arising from their acquisition. Unrealized profi ts between the Group and its associated companies are eliminated on the ba-sis of the Group’s proportionate holdings. The Group’s share of the results of its associated companies is shown as a separate item under operating profi t. The Group’s share of its associated companies’ other changes in comprehensive income are recog-nized under other comprehensive income in the consolidatedcomprehensive Profi t & Loss Statement. The Group’s associated companies did not have such income items in the 2013 and 2014 fi nancial periods.
Translation of foreign currency itemsTransactions in foreign currency are recognized in the Group’s operating currency (euro) using the exchange rate in effect on the date of the transaction. Monetary foreign currency items are trans-lated into euros using the rates prevailing on the last day of the reporting period.
Gains or losses from the translation of foreign-currency trans-actions and monetary items are recognized via a gain or a loss. Exchange rate gains and losses are included in the corresponding items above operational profi t. Exchange rate gains and losses from fi nancing are recorded in fi nancial gains and losses.
Translation of the fi nancial statements of Group companies outside FinlandThe income and expense items in the separate Profi t & Loss Statements of Group companies outside Finland are translated into euros at the rates prevailing on the dates of the respective transactions, and balance sheets using the rates in effect on the last day of the reporting month. The income and comprehensive income translations at varying exchange rates in the Profi t & Loss Statement and comprehensive Profi t & Loss Statement on the one hand, and on the Balance Sheet on the other, create a translation difference recognized under equity, the effect of which is recorded in other comprehensive income items. The accumulated translation differences are treated as gain or loss in the case of divestments.
When a Group company outside Finland is founded by the Group itself, its acquisition does not entail goodwill or adjustments to its fair book value that should be translated into euros at the rate in effect on the last day of the reporting month.
Recognition principles Reported net sales include the income from the sale of goods and services at fair value and adjusted by indirect taxes, discounts and foreign currency exchange rate differences. Income from the sale of goods is recognized when the material risks, rewards and own-ership of the goods have been transferred to the buyer. This usually
happens at the moment of handover as stated in the terms and con-ditions of the sale of products. Income from services is recognized in the fi nancial period when the service is delivered.
Long-term projectsThe income and expenses of long-term projects are recognized on a percentage-of-completion basis when the end results can be reliably estimated. The percentage of completion is determined by calculating the proportion of the expenses for each task completed by the review date in respect of the estimated total expenses of the project. When it is probable that the total expenses required for the completion of the project exceed the total income for the project, the expected loss is immediately recognized as an expense. If the results of the long-term project cannot be reliably estimated, the costs in relation to the project are recorded as an expense during the period when they arise, and income from the project is recor-ded only insofar as the income amount corresponding to realized cost can be recovered. Losses from the project are immediately recognized as an expense. Expenses related to projects not yet recognized are recorded as work-in-progress under current assets. If realized expenses and recorded income exceed the amount in-voiced for the project, the difference is presented under the balance sheet item “trade and other receivables.” If realized expenses and recorded income are less than the amount invoiced for the project, the difference is presented under the balance sheet item “accounts payable and other payables.”
Government grantsGovernment grants for offsetting realized expenses are recorded under other operating income. Government grants are recognized at the same time as the expenses relating to the target of the grant are recorded as an expense.
Research and development expensesResearch expenses are recognized through profi t or loss. Development expenses for new or more advanced products are capitalized on the balance sheet as intangible goods from the mo-ment the product is technically feasible, it can be utilized commer-cially, and it is estimated that commercial benefi ts can be extracted from it. Capitalized development expenses include those material, work, and testing costs directly attributable to the completion of the product for its intended use. Development expenses recognized as expenses earlier are not capitalized later.
Amortization is recognized for a good from the moment it is ready for use. A good not yet ready for use is annually tested for impairment. After initial recording, capitalized R&D expenses are recognized adjusted by amortization on the purchase cost and im-pairment. The useful life of capitalized R&D costs is at least 10 years, during which period they are recorded as expenses through straight-line amortization.
Employee benefi tsPension liabilitiesThe Group’s pensions are handled by external pension insurance companies. The Group only has defi ned contribution plans. Expenses related to defi ned contribution plans are recorded as expenses for the fi nancial period they arise. Share-based paymentsThe Group has a share-based incentive program in which shares can be subscribed for at a price defi ned in the program. The bene-fi ts granted on the basis of the arrangement are recognized at fair value at grant date, and recorded in the Profi t & Loss Statement on a straight-line basis during the vesting period. The expense at grant date is based on fair value calculated according to the
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
Black-Scholes option pricing model. The effect on the fi nancial re-sult of the arrangement is presented in the Profi t & Loss Statement under employee benefi t expenses. Granted options are equity instruments. When option rights are exercised, the considerations received on the basis of share subscriptions are recorded in the unrestricted equity reserve under shareholders’ equity.
Lease agreements The Group as a lessee Part of the equipment used for the Group’s production and busi-ness support functions is leased. Leases for tangible and intangible goods where the Group carries a substantial portion of the risks and rewards of ownership are classifi ed as fi nance lease agreements. Finance leases are capitalized at the commencement of the lease at the present value of the minimum lease payments, and are de-preciated over the useful life of the asset or over the lease period, if shorter. Each lease payment is allocated between liability and fi nance charges during the lease period in a way that the interest rate of the outstanding liability remains unchanged. Lease liabilities are included in fi nancial liabilities.
Leases where the lessor retains a signifi cant portion of the risks and rewards are classifi ed as other leases. Payments made under these leases are recognized in the Profi t & Loss Statement as an expense on a straight-line basis over the period of the lease.
The Group does not act as a lessor towards external parties. Dividends Payment of dividends to the company’s shareholders is recognized as a liability on the consolidated balance sheet for the fi nancial pe-riod during which the distribution of profi t is approved by the Annual General Meeting. Income taxThe tax expense in the Profi t & Loss Statement comprises the tax based on the company’s taxable income for the period together with deferred taxes. The tax based on taxable income for the pe-riod is the taxable income of the Group companies calculated on the applicable tax rate. The tax is adjusted for any tax related to previous periods. Deferred tax is calculated on all temporary dif-ferences between their book and actual tax values. Deferred tax is not recognized for accountable assets and liabilities not concern-ing combination of operations when the recognition of such an as-set or liability will not affect accounting results nor taxable income at the time of the transaction. Deferred tax is not recognized for non-deductible goodwill impairment or for distributable earnings of subsidiaries where it is probable that the difference will not reverse in the foreseeable future.
The largest temporary differences, thus deferred tax, arise from unused tax losses and the fair-value recognition of intangible and tangible assets in connection with corporate acquisitions.
Deferred tax assets are recognized to the extent that it is probable that future taxable profi t, against which the temporary differences can be utilized, will be available. Property, plant and equipmentProperty, plant and equipment are valued at original acquisition cost less accumulated depreciation and amortization as well as impairment losses.
Property, plant and equipment are amortized using the straight-line method based on the estimated useful life of the asset. Estimated useful lives for various assets are:
Buildings and structures depreciation over 20 years Machinery and equipment depreciation over 3 – 5 years
When a part of property, plant and equipment is dealt with as a separate entity, costs related to its replacement are capitalized. In other cases, costs arising later are included in the accounting for a tangible asset only if it is likely that the asset will generate com-mercial benefi t to the Group, and the acquisition cost of the asset can be reliably determined. Other repair and maintenance costs are recognized through profi t or loss as realized.
When a tangible asset is classifi ed as available for sale in ac-cordance with the IFRS 5 standard, its depreciation is discontinued.
The residual value and useful life of assets are checked at least in connection with each fi nancial statement and, if necessary, adjusted to refl ect changes in the expectation of economic benefi t.
Gains and losses from disposals are determined by compar-ing the disposal proceeds with the book amount and are included in other operating income or expenses. Intangible assetsGoodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired company at the date of acquisition. For companies acquired before January 1, 2004, goodwill represents the excess of the cost of an acquisition over the book value of the Group’s share of the netassets of the acquired company at the date of acquisition. Forassociated companies, goodwill is included in the acquisi-tion cost.
Goodwill is not amortized, but tested annually for any impair-ment. For this purpose, goodwill is attributed to one cash gene-rating unit that the Group expects to benefi t from the combination of operations having created the goodwill. Goodwill is valued at acquisition cost less impairment losses.
Other intangible assetsAn intangible asset is recognized on the balance sheet only if its acquisition cost can be reliably determined and it is likely that the asset will generate commercial benefi t to the Group.
Other intangible assets with a limited useful life are recognized on the balance sheet and expensed on a straight-line basis over their useful lives. For acquisitions after January 1, 2004, intangible assets are valued at fair value.
Estimated useful lives for various assets are:
Customer agreements and related customer relationships depreciation over 1–7 years Patents and trademarks depreciation over 10 yearsSoftware depreciation over 3 –7 years Capitalized R&D expenses depreciation over 10 years
The Group has no intangible assets with an unlimited useful life. Impairments of tangible and intangible assetsOn every closing date the Group management reviews asset items for any indication of impairment. If there are such indications, the amount recoverable from the said asset item is assessed. The re-coverable amount is the higher of the asset item’s fair value less the cost arising from disposal and its value in use. When determi-ning value in use, the expected future net cash fl ows from the as-set item or cash-generating unit are discounted based on their present values. The interest rate calculated by the WACC method (Weighted Average Cost of Capital) before taxes is used as the discount interest rate. Factors affecting the interest in the WACC calculation include a risk-free interest rate, the cost of borrowed capital, the risk premium on the stock market, the beta coeffi cient and the industry’s capital structure.
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
An impairment loss is recognized in the Profi t & Loss Statement when the book value of an asset item is greater than its recoverable amount. For other asset items except goodwill, the impairment loss can later be reversed if a change in the estimates used for determining the recoverable amount has occurred. The impairment loss is, however, not reversed by more than what the book value of the asset would be without the recognition of the impairment loss.
Factors considered by the Group management as central in determining whether impairment testing should be done include the asset item’s signifi cantly lower profi t in comparison with previ-ous or expected future profi ts, negative changes in the industry or market conditions or threats thereof, and signifi cant changes in the way the asset item is used or the business strategy.
Financial assetsCategorizationThe Group’s fi nancial assets are categorized under fi nancial assets measured at fair value through profi t and loss, loans and other re-ceivables, and available-for-sale fi nancial assets. The categoriza-tion depends on the purpose for which the asset has been acquiredand takes place in connection with the original recognition of the asset.
Financial assets measured at fair value through profi t and lossFinancial assets measured at fair value through profi t and loss are held for trading purposes. A fi nancial asset falls into this category if it has been acquired mainly for sale in the near future. Derivatives are also held for trading purposes, unless they are categorized as hedges. Asset items in this group are short-term assets.
Loans and other receivablesLoans and other receivables are assets not belonging to deriva-tive assets, the payments of which are fi xed or quantifi able and which are not quoted on an active market. They are included in short-term assets except when they mature more than 12 months after the closing date, in which case they are categorized as long-term assets.
Financial assets available for saleFinancial assets available for sale are assets not belonging to derivative assets that are either explicitly categorized as such or not placed in any other category.
Financial assets available for sale include listed shares included in long-term assets unless they are held for sale within 12 months of the closing date, in which case they are categorized as short-term assets
Financial assets – recognition and measurementThe acquisition and disposal of fi nancial assets are recognized based on the date of the transaction. Investments in fi nancial as-sets not recognized through profi t and loss are recognized at the original value including transaction costs. Financial assets recog-nized through profi t and loss are recognized at the original value, and the transaction costs are recognized as income in the Profi t & Loss Statement. Financial assets are derecognized when rights to the cash fl ows from the investment have expired or been trans-ferred, and the Group has transferred an essential part of their ownership-related risks and rewards. Financial assets available for sale and recognized through profi t and loss are later measured at fair value.
Loans and other receivables are measured at amortized cost using the effective interest method.
Unrealized and realized gains and losses due to changes in fair value relating to assets categorized as fi nancial assets at fair
value through profi t or loss are recognized in operating profi t in the accounting period in which they arise. Dividend income from fi nancial assets recognized at fair value, through profi t or loss are recorded on the balance sheet as other income when the right to payment has arisen for the Group.
When securities categorized as available for sale are sold or depreciated, the changes in fair value recognized in equity are inclu-ded under the balance sheet item “other operating profi t/loss net.”
Interest on securities available for sale, calculated using the effective interest method, is recognized in fi nancial items on the balance sheet. Dividends from equity instruments available for sale are recognized in other income on the balance sheet when the right to payment has arisen for the Group.
The fair values of quoted investments are based on current bid prices. If there is no active market for a fi nancial asset, fair value is established by using valuation techniques. These include the use of recent arm’s length transactions, the fair values of other instru-ments that are substantially the same, or the present value of dis-counted cash fl ows.
On each closing date, it is evaluated whether objective evi-dence exists that a fi nancial asset is impaired. For available-for-sale equity instruments, a signifi cant or prolonged decrease of their fair values below the acquisition cost is considered to constitute evidence of impairment. The accumulated loss, determined as the difference between acquisition cost and current fair value less pre-viously recognized impairment loss for the said asset, is transferred through profi t or loss. An impairment loss relating to equity invest-ment is not later reversed through profi t or loss.
Financial liabilitiesFinancial liabilities are initially recognized in accounting at fair val-ue less transaction costs. Subsequently, all fi nancial liabilities are measured at amortized cost using the effective interest method. Financial liabilities include current and non-current liabilities. Financial liabilities are categorized as current unless the Group has an unconditional right to postpone payment at least to 12 months after the closing date.
Commissions associated with loan commitments are recog-nized as transaction costs to the extent that it is probable that the entire loan commitment or part of it will be taken up. In such a case, the commission is entered in the balance sheet until the loan is taken up. When it is, the commission associated with loan commitments is recognized as part of the transaction costs. If the loan commitment is unlikely to be taken up, the commission is recognized as an advance payment for a liquidity service and is amortized as a cost for the period of the loan commitment.
A fi nancial liability is removed from the balance sheet when the contractual obligations related to the liability expire. If needed, credit accounts are included in loans recognized in current debt.
The fair values of all fi nancial assets and liabilities are presented in note 28 “Fair values of fi nancial assets and liabilities.”
EquityOutstanding ordinary shares are presented as share capital. Transaction costs due to the issuance of new equity instruments are presented as a deduction from equity. The own shares repur-chased by Revenio Group Corporation are presented as a deduc-tion from equity.
GoodwillRegardless of whether any indications of impairment exist, the re-coverable amount for goodwill is assessed annually. The recover-able amount is the fair value of the asset less disposal cost, or the fair value if higher. Fair value means estimated future cash fl ows from the said asset or cash-generating unit that are discounted to
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
their present value. The discount rate used is a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset.
An impairment loss is recognized in the Profi t & Loss Statement when the book value of an asset item is greater than its recover-able amount. The impairment loss is recognized in the Profi t & Loss Statement.
The assessment of fair value is based on estimates of future cash fl ows. The cash fl ows are most affected by discount interest rates, closing values as well as the assumptions and estimates used in assessing cash fl ows. The management determines the discount interest rate based on the WACC method (Weighted Average Cost of Capital). Even though the management esti-mates that the assessments have been made with due diligence, the estimates may differ signifi cantly from actual future values. Discounted cash fl ows are calculated at the level of cash-gene-rating units.
InventoriesInventories are recognized at the lower of cost and net realizable value. The acquisition cost is determined using the FIFO method. The net realizable value is the estimated selling price in a conven-tional transaction less the cost to make the sale. The acquisition cost of completed products and work in progress comprises direct costs such as materials, direct costs of labor, other direct costs and the allocation of the variable manufacturing overheads and fi xed overhead at normal operating capacity.
Trade receivablesTrade receivables are recognized at original invoiced price less impairment loss. An impairment loss is recognized when evidence exists that the company cannot collect its receivables in accor-dance with the initial terms and conditions. The impairment loss is the difference between the book value of the receivables and their recoverable amount, and it corresponds to the present value of expected cash fl ows. Evidence is regularly considered to exist when the receivable is more than 180 days outstanding when no credit insurance or a security through other means is available. External evidence of a risk related to a receivable even before it is 180 days outstanding will lead to the recognition of impairment loss. Such evidence may be, for example, the debtor’s signifi cant economic diffi culties, company reorganization or bankruptcy pro-ceedings. The impairment loss is recognized in the Profi t & Loss Statement in other operating expenses.
Cash and cash equivalentsCash and cash equivalents include cash in hand, bank deposits withdrawable on demand and other liquid short-term investments with original maturities of one month or less from acquisition. ProvisionsProvisions on the balance sheet are probable future liabilities due to earlier events, the amount of which can be reliably estimated. Provisions are measured at the discounted present value of the cost required to cover the liability. The discount rate used is a rate that refl ects current market assessments of the time value of mon-ey and the risks specifi c to the liability.
Critical accounting estimates and assumptions The preparation of the fi nancial statements requires the use of estimates and assumptions about the future. The actual results may differ from these estimates and assumptions. In addition, judgment needs to be exercised in the application of the accounting principles.
The most signifi cant items of the fi nancial statements where
the management has been required to use its judgment and for which the estimates include signifi cant uncertainty are presented below.
In acquired businesses, the defi nition of the fair value of intan-gible assets is based on estimates about the cash fl ows from those assets. Estimates and prognoses need to be used for the dura-tions of customer contracts and the cash fl ows generated by them with regard to intangible assets. More information on the valuation of the intangible assets in acquired businesses is provided in Note 3. The Group tests goodwill annually and assesses indications of impairment as described above under accounting principles. The recoverable amounts of cash-generating units are defi ned based on value in use. These calculations require the use of estimates on the profi tability of the business and on all factors that may af-fect it. For intangible assets with a limited useful life, it is estimated annually whether any indications of their impairment exist. If such indications are detected, the intangible assets are subjected to impairment testing. The recoverable amounts of cash-generating units are defi ned based on value in use. These calculations require the use of estimates. More information on the impairment testing of goodwill and intangible assets is provided in Notes 14 and 15.
Besides the Group strategy, and action and financial plans and prognoses for the coming years, Group management bases its prognoses on estimates about the macro- and micro-eco-nomic factors that affect demand in the business. The esti-mates used reflect actual history and are consistent with exter-nal information.
As presented in the recognition principles, the income and expenses from long-term projects are recognized based on per-centage of completion when the end result of the project can be reliably assessed. Percentage-of-completion recognition is based on estimates on expected income and expenses from the project, as well as reliable measurement of the project’s progress. In case estimates on the end result of the project change, the recognized sales and profi t are adjusted for the period when the change is fi rst known and estimated. Any expected loss from the project is recog-nized immediately as an expense. MANAGEMENT OF FINANCIAL RISKS Financial risks and the risk management processThe management of financial risks is the responsibility of the CEO together with the Board of Directors. The Board defines the main outlines of the company’s financing and the general man-agement principles for financial risks, and gives guidelines as necessary for any special issues such as liquidity risk, interest risk, credit risk, and the investment of surplus liquid funds. The Board of Directors discusses the Group’s financial standing at its monthly meetings.
According to its strategy, the company may seek growth through acquisitions of companies and business operations. The imple-mentation of these acquisitions may require debt fi nancing. Debt can also be used for other strategic and operational purposes de-cided on by the Board. Equity fi nancing may also be used for all fi nancing needs, in particular for acquisitions of companies and business operations.
Types of fi nancial risksIn its operational activities, the company may be exposed to several types of fi nancial risks, including changes in currency exchange rates, interest rates and changes in the stock market. A central ob-jective of fi nancial risk management is to identify fi nancial market risks that are relevant to the Group, and seek to minimize the harm-ful effects of fi nancial market changes on the Group’s profi t.
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
The main areas of fi nancial risk management are:
i) Currency riskThe United States is a signifi cant export market for the com-pany’s Health Tech segment. The company has a subsidi-ary in the United States through which sales are conduct-ed on the US market. The operating currency of the subsidiary is the U.S. dollar. In sales to and local purchases in the U.S., the company is exposed to a risk of fl uctuating exchange rates between the U.S. dollar and the euro. At the end of the fi nan-cial period, the company’s cash and cash equivalents in U.S.dollars were USD 2,213,000. In the event the Euro weakens against the U.S. dollar by 10 percent, this would increase the company’s cash and cash equivalents on the closing date by EUR 203,000.
Invoicing between Icare Finland Oy and Icare US Inc. takes place in USD. The currency risk is borne by Icare Finland Oy, since business transactions between Group companies are not hedged against currency risks. The U.S. market represents approximately 40 % of the total net sales of the Group’s continuing functions. Icare US Inc. had USD 1,016,000 in account receivables from sales on the closing date. Icare US Inc. had USD 638,000 cash in bank on the closing date. Net investment in Icare US Inc. totaled USD 423,000 on the closing date. In addition to the above sums, the Group’s USD currency account held USD 1,575,000 on the closing date.
(ii) Interest rate risk In the company’s balance sheet structure, interest rate risk is involved in borrowings. The Group’s profi t and cash fl ow from operations are to an essential extent independent of fl uctuations in market interest.
When taking up new fi nancing, for example for corporate acquisitions, the company always evaluates the need for interest rate hedging, taking into account the amount of debt, hedging costs and expected interest rate development during the fi nancing period. Approximately 3 percent of the Group’s borrowings have fi xed interest rates. The Group’s non-current loans from banks are fi xed in three months’ Euribor. Finance lease debt is fi xed-rate. The increase of reference rates by one percentage point would on December 31,
2013 increase the annual interest cost of interest-bearing debt by an estimated EUR 7,000 (2013: approx. EUR 11,000). The sensi-tivity analysis takes into account the Group’s fl oating rate debt. The company has no interest rate investments or derivatives to which cash fl ow hedging would be applied.
(iii) Credit risk The Group’s credit policy lays down the requirements for selling on credit and the requirements for credit management. Corporate customers who are granted a credit insurance limit by an external credit insurance company are eligible for credit sales. The credit quality of a new customer is controlled by applying for a credit insurance limit every time a new customer relationship is estab-lished. The credit limit and credit sales eligibility is reassessed if the customer’s purchase volumes change or if the credit insurance company changes the granted credit limit as a result of a change in the customer’s credit quality.
No single customer or customer group constitutes a signifi -cant credit risk concentration for the Group. During the fi nancial period, credit losses and credit loss reserves recognized through profi t and loss totaled EUR 0 (2013: EUR 10,000). The theoretical maximum credit risk at the end of the period corresponds to the book value of trade receivables. The aging of trade receivables is presented in Note 19.
(iv) Liquidity riskThe most signifi cant factor affecting the suffi ciency of liquid funds in the short term is the profi tability of the business oper-ations. Thus the development of cash fl ows from operations is affected by the management’s profi tability management mea-sures, and additionally, operational risks and external risks such as general economic development, fi nancial market conditions and other macro economic demand factors over which the company management has no control.
The Group’s liquidity in 2014 remained good. Liquidity was posi tively infl uenced by the good profi tability development of the Health Tech segment and the divestment of the Contact Center business. Liquid funds were decreased in 2014 by the payment of dividends. On December 31, 2014, the Group’s cash and cash equivalents totaled EUR 4,105,000 (2013: EUR 4,602,000). The company continuously monitors and assesses the fi nancing needs of its business operations to ensure suffi cient liquidity for fi nan cing its operations. In addition to its cash and cash equivalents, the company has a revolving credit limit of EUR 2 million for effi cient management of its liquidity at Group level. The limit was not used during the fi nancial period. The checking account limit in use during earlier fi nancial periods has been terminated and paid back. The Board of Directors follows the actual and forecast development of the Group’s liquidity monthly, and decides on possible correc-tive actions.
The Group’s interest-bearing debt at end of period:Liability Use Initial amount,
EUR thousandPrincipal outstanding,
EUR thousandVintage
Bank loan Revolving credit 2,000 750 2012Finance lease liability Property, Plant &
Equipment, software424 24 2010–2013
Bank loan Subsidiary’s TEKES loan 502 413 2010–2013
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
The parent company bank loan mentioned above includes fi nancial covenants that are reported to the bank annually for the preced-ing 12-month period. In case of breach of covenants, the creditor may demand accelerated payback of the credits or, alternatively, the increase of the interest by 0.5 percentage points. The sensi-tivity margins of the covenants, based on equity ratio, conditions related to the Group structure and the ratio of the Group’s net debt
to EBITDA, were good in 2013. According to the management’s assessment, there is no indication that the covenants would be breached during the remainder of the loan period.
The table below details the contractual maturity analysis. The fi gures are not discounted and include both interest and prin-cipal payments.
Dec 31, 2014 Appendix Under 1 year 1–2 years 2–5 years Over 5 years Cash fl ow total
Trade payables and other non-interest-bearing debt
26 1,856 0 0 0 1,856
Loans from fi nance institutions-principal 24 630 398 353 0 1,381-interest payments 15 4 4 0 23Finance lease liabilities 24-principal 24 0 0 0 24-interest payments 1 0 0 0 1
12/31/2013 Appendix Under 1 year 1–2 years 2–5 years Over 5 years Cash fl ow total
Trade payables and other non-interest-bearing debt
26 4779 0 0 0 4779
Loans from fi nance institutions-principal 24 589 589 820 0 1998-interest payments 16 13 8 0 37Finance lease liabilities 24-principal 30 56 4 0 90-interest payments 3 2 0 0 5Currency forward contracts 24-principal 1,146 0 0 0 1,146
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Financial liabilities 1,405 2,088Cash and cash equivalents 4,105 4,602Net liabilities -2,700 -2,514Equity total 12,061 14,957Net leveraging -22.4 % -16.8 %
(v) Management of capital assetsThe Group's capital management activities seek to optimize capital structure and thereby support the Group's business activities by ensuring normal operating conditions for business activities, while also increasing shareholder value and aiming for the best possible profi t.
Capital structure can be infl uenced by dividend distribution and the issue of shares. The Group may vary and adjust the amount of dividends paid to shareholders or the number of new shares issued, or decide to sell assets in order to reduce its debts. The Group monitors its capital structure through leveraging. At the end of 2014, the Group's interest-bearing net liabilities totaled EUR -2.7 million (EUR -2.5 million at the end of 2013) and leveraging stood at -22.4 percent (-16.8 %). When calculating leveraging, interest-bearing net liabilities are divided by shareholders' equity. Interest-bearing liabilities are included in net liabilities, with interest-bearing receivables and cash and cash equivalents deducted. The Group's strategy is to keep leveraging below 25 percent. There has been no change in this strategy since the previous year.
The Group applies external capital requirements in respect of loans from fi nancial institutions in 2012, and part of project warran-ties. These capital requirements cover minimum equity ratio, the ownership relations between the Group’s parent and subsidiaries, and the maximum amount of interest-bearing net debt in relation to operating profi t before depreciations. The Group continuously monitors these key fi gures as part of monthly assessments of its fi nancial position.
Earlier corporate acquisitions by the Group have included stock swaps, which may involve contingent considerations agreed for periods of several years. These contingent considerations can al-so be balanced by transferring the company’s own shares to the seller. An estimate of such contingent considerations is recognized on the balance sheet under other fi nancing liabilities at the time of the transaction. The consolidated balance sheet did not include such contingent considerations at the end of 2013 or the compa-rison period.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
1) Operating segments The Group consists of a single reportable segment formed out of its independent subsidiaries with business operations.
Dec 31, 2014 Appendix Under 1 year 1–2 years 2–5 years Over 5 years Cash fl ow total
Trade payables and other non-interest-bearing debt
26 1,856 0 0 0 1,856
Loans from fi nance institutions-principal 24 630 398 353 0 1,381-interest payments 15 4 4 0 23Finance lease liabilities 24-principal 24 0 0 0 24-interest payments 1 0 0 0 1
12/31/2013 Appendix Under 1 year 1–2 years 2–5 years Over 5 years Cash fl ow total
Trade payables and other non-interest-bearing debt
26 4779 0 0 0 4779
Loans from fi nance institutions-principal 24 589 589 820 0 1998-interest payments 16 13 8 0 37Finance lease liabilities 24-principal 30 56 4 0 90-interest payments 3 2 0 0 5Currency forward contracts 24-principal 1,146 0 0 0 1,146
On December 1, 2014, the Group decided to divest Boomeranger Boats Oy and Done Software Solutions Oy, which represent its Technology and Services segment, and to transfer said companies to available-for-sale discontinued operations. According to the plans of Revenio’s management, the sale of these companies will be carried out within a year of the classifi cation decision in accordance with IFRS 5.8.
The segment reported by the Group is:Revenio Health Tech (Icare Finland Oy, Oscare Medical Oy and Revenio Research Oy)
Design, manufacture and sales of tonometers; design, manufacture and sales of bone density measurement device; management of the Group's R&D projects
Information about geographical areas 2014, EUR thousand Finland Rest of Europe Other TotalNet sales 620 4,254 11,157 16,031Assets 17,693 0 1,643 19,336Capital expenditure 1,150 0 0 1,150 2013, EUR thousand Finland Rest of Europe Other TotalNet sales 536 3,566 9,406 13,508Assets 20,919 0 1,738 22,657Capital expenditure 913 0 0 913
2) Net sales, TEUR 2014 2013 Net sales, goods 15,843 13,353 Net sales, services 188 155 Total 16,031 13,508
3) Discontinued operations
The discontinued operations of the Group in 2014 comprise the Contact center business (entire stock of Midas Touch Oy) and the busi-ness operations of Done Software Solutions Oy and Boomeranger Boats Oy, whose discontinuation was decided on Dec 1, 2014. The Contact center business was sold on September 11, 2014 as part of the Group's strategic focus on health technology. On December 1, 2014, the Group decided to divest the business operations of the Technology and Services segment.
The discontinued operations of the Group in the fi nancial period 2013 consisted of the Information Display business (entire stock of FLS Finland Oy), and the business operations of Kauhajoen Sisälogistiikka Oy (formerly Done Logistics Oy), decided to be discontinued in the fi nancial period 2012. On December 18, 2012, the company decided to discontinue the business operations of Done Logistics Oy, and some business operations were sold outside of the corporation on February 7, 2013. The Information Display business was sold on November 28, 2013 as part of the new strategic focus on health technology
The profi ts, gains from divestments and share of cash fl ows for the discontinued operations were:
EUR thousand Information Display(FLS Finland Oy)
Kauhajoen Sisälogistiikka Oy / Done Logistics Oy
Jan 1 – Dec 31, 2014
Jan 1 – Oct 31, 2013
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Income 0 2,512 323 2,051Expenses -28 -2,329 -482 -2,140Profi t before taxes -28 183 -159 -89Taxes 0 0Profi t after taxes -28 183 -159 -89
Gains from divestment before taxes 0 -317 0 0Taxes 0 0 0 0Gains from divestment after taxes 0 -317 0 0
Profi t for the period, discontinued operations
-28 -134 -159 -89
Cash fl ow from operations -28 113 327 -231Cash fl ow from investing activities 0 0 0 0Cash fl ow from fi nancing activities 0 0 0 0
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
EUR thousand Done Software Solutions Oy Boomeranger Boats Oy
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Income 1,573 2,107 3,666 4,677Expenses -1,240 -1,361 -3,484 -4,522Profi t before taxes 333 746 182 155Taxes -5 0 0 0Profi t after taxes 328 746 182 155
Gains fromdivestment before taxes
0 0 -3,122 0
Taxes -5 0 4 0Gains from divestment after taxes
-5 0 -3,118 0
Profi t for the period, discontinued operations
323 746 -2,936 155
Cash fl ows:
Cash fl ow from operations 354 698 -1,461 169Cash fl ow from investing activities
-19 -2 -71 -221
Cash fl ow from fi nancing activities
0 0 0 0
EUR thousand Contact center (Midas Touch Oy)Jan 1 – August 31,
2014Jan 1 – Dec 31,
2013Discontinued operations total
Income 3,450 5,459 Profi t from discontinued operations is presented on the Profi t & Loss
Statement row Net profi t from disconti-nued operations, consistingof sold or available-for-sale
companies.
Expenses -3,110 -4,745Profi t before taxes 340 714Taxes 18 0
Profi t after taxes 358 714
Gains from divestment before taxes
-1,988 0
Taxes 0 0Gains from divestment after taxes
-1,988 0
Profi t for the period,discontinued operations
-1,630 714 -4,430 1,392
Cash fl ows:Cash fl ow from operations 237 678Cash fl ow from investing activities
-9 -27
Cash fl ow from fi nancing activities
0 0
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
EUR thousand Contact center (Midas Touch Oy)Jan 1 – August 31,
2014Jan 1 – Dec 31,
2013Discontinued operations total
Income 3,450 5,459 Profi t from discontinued operations is presented on the Profi t & Loss
Statement row Net profi t from disconti-nued operations, consistingof sold or available-for-sale
companies.
Expenses -3,110 -4,745Profi t before taxes 340 714Taxes 18 0
Profi t after taxes 358 714
Gains from divestment before taxes
-1,988 0
Taxes 0 0Gains from divestment after taxes
-1,988 0
Profi t for the period,discontinued operations
-1,630 714 -4,430 1,392
Cash fl ows:Cash fl ow from operations 237 678Cash fl ow from investing activities
-9 -27
Cash fl ow from fi nancing activities
0 0
4) Acquired businesses The Group did not acquire any new businesses in the 2014 fi nancial period. On December 4, 2013, the Group acquired 30.5 percent of the shares of bone density measurement device manufacturer Oscare Medical Oy and, having previously owned 22.5 percent of the company, thus gained right of control in the company. The deal increased the Group’s ownership to 53 percent, the share of non-controlling interest being 47 percent. The acquisition is part of the Group’s new strategic focus on health technology. The acquired company’s main product is pending introduction to the market. The acquisition price for the shares was EUR 3,000 paid in cash. In addition, the Group acquired equity loan receivables and loan receivables from other shareholders of Oscare Medical in the amount of EUR 516,000. Other terms of the deal included that the Group take responsibility for a reasonable por-tion of the product’s completion and market introduction costs, and that the parties reconsider the ownership structure after 2–3 years. The acquisition did not create any consolidated goodwill. The values of acquired assets and adopted liabilities at the time of acquisition were:
Note Recognized values Jan 1 – Dec 31,
2014
Recognized values Jan 1 – Dec 31,
2013Intangible fi xed assets 15 0 1,524Inventories 19 0 0Trade and other receivables
20 0 14
Cash and cash equivalents 21 0 6Assets total 0 1,544
Deferred tax liabilities 18 0 0Financial liabilities 25 0 1,626Other liabilities 27 0 63Liabilities total 0 1,689
Net assets 0 -145
5) Other operating incomeJan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Grants and subsidies received 10 2Other 9 97Total 19 99
6) Employee benefi t expensesJan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Salaries and wages -2,111 -2,029Pension costs – defi ned contribution plans -456 -357Other indirect personnel costs -51 -106Total -2,618 -2,491
Average number of personnel during fi nancial period
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Revenio Health Tech (Icare Finland Oy, Oscare Medical Oy and Revenio Research Oy)
25 19
Discontinued operations 44 48Administration (Revenio Group Corporation) 5 7Total 74 74
Information of the management’s employment benefi ts, shareholdings and option rights are presented in Note 30) Related party transactions.Information on options granted are presented in Note 22) Share-based payments
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
7) Depreciation, amortization and impairment Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
TEUR TEURDepreciation and amortization by type of asset Development expenses Intangible assets
-112 0-221 -261
Depreciation and amortization by type of asset, intangible assets total -333 -261
Property, plant and equipment Machinery and equipment -193 -187Depreciation, amortization and impairment during fi nancial period, total -193 -187
Impairment total 0 0
Depreciation, amortization and impairment during fi nancial period, total -526 -448
8) Other operating expensesJan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Voluntary personnel costs -96 -81Rent -312 -263Other operating expenses -19 -32IT, machinery and equipment expenses -326 -253Marketing and travel expenses -1,318 -974R&D expenses -387 -241Administrative services -865 -657Other operating expenses -42 19Total -3,365 -2,482
10) Financing expenses (net)Jan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Interest on fi nancial liabilities -32 -26Exchange rate losses from liabilities, unrealized -5 -197Other fi nancial expenses 0 -33Exchange rate gains from liabilities, unrealized 267 165Other fi nancial income 15 10Total 245 -81
9) Research and development expensesThe Profi t & Loss Statement includes R&D costs recognized as expenses in the amount of EUR 387,000 in 2014 (2013: EUR 241,000)
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
10) Financing expenses (net)Jan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Interest on fi nancial liabilities -32 -26Exchange rate losses from liabilities, unrealized -5 -197Other fi nancial expenses 0 -33Exchange rate gains from liabilities, unrealized 267 165Other fi nancial income 15 10Total 245 -81
11) Income taxJan 1 – Dec 31,
2014Jan 1 – Dec 31,
2013TEUR TEUR
Income tax from actual operations -601 -120Tax from previous fi nancial periods -5 -20Change in deferred tax liabilitiesand assets
-316 -1,105
Income taxes -922 -1,245
Reconciliation of tax expenses in the Profi t & Loss Statement and taxes calculated using the parent company tax rate 20 % (24.5 %):
Tax rate reconciliation Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
TEUR TEURProfi t before taxes 4,658 4,191
Income tax using parent company tax rate -932 -1,027Different tax rates of foreign subsidiaries 28 35Non-taxable income 230 0Non-deductible expenses -7 -5Impact of change in corporate tax rate on deferred tax asset 0 -92Temporary differences created and rever-sed in deferred tax assets and liabilities
104 27
Use of previously unrecognized losses from taxation -420 -371Tax adjustments for previous fi scal years -5 -20Tax losses without recognized deferred tax assets 79 208Taxes recognized in Profi t & Loss Statement
-922 -1,245
12) Earnings per shareThe basic earnings per share are calculated by dividing profi t for the period by the weighted average number of outstanding shares during the fi nancial period.
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Profi t for the period attributable to owners of parent (TEUR), continuing operations 3,736 2,946Profi t for the period attributable to owners of parent (TEUR), discontinued operations
-4,430 1,392
Weighted average number of outstanding shares during the fi nancial period (own shares deducted), qty
7,876,183 7,795,330
Basic earnings per share (EUR), continuing operations 0.47 0.38Basic earnings per share (EUR), discontinued operations -0.56 0.18
The diluted earnings per share are calculated by dividing profi t for the period by the weighted average number of outstanding shares during the fi nancial period, including the diluting effect of stock options. The 473,300 (1,318,752) stock options had a diluting effect of 41,768 shares at the end of the fi nancial period.
Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
Profi t for the period attributable to owners of parent (TEUR), continuing operations 3,736 2,946Profi t for the period attributable to owners of parent (TEUR), discontinued operations
-4,430 1,392
Weighted average number of outstanding shares during the fi nancial period (own shares deducted), qty
7,876,183 7,795,330
Impact of stock options, qty 41,768 94,646Weighted average number of outstanding shares during the fi nancial period(for calculation of diluted earnings per share), qty 7,917,951 7,889,976Diluted earnings per share (EUR), continuing operations 0.47 0.37Diluted earnings per share (EUR), discontinued operations -0.56 0.18
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
13) Property, plant and equipmentJan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
Land and water areas TEUR TEURAcquisition cost Jan 1 64 64Transfer to non-current assets for sale -64 0Acquisition cost Dec 31 0 64Decrease during the period 0 0Book value Dec 31 0 64Book value Jan 1 64 64The additions to the historical cost of land and water do not include items rented through fi nance lease agreements.
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Buildings and constructionsAcquisition cost Jan 1 979 979Transfer to non-current assets for sale -979 0Acquisition cost Dec 31 0 979Accumulated depreciation Jan 1 -354 -308Depreciation during the year -42 -46Transfer to non-current assets for sale 396 0Accumulated depreciation Dec 31 0 -354Book value Dec 31 0 625Book value Jan 1 625 671The additions to the historical cost of buildings and structures do not include items rented through fi nance lease agreements.
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Machinery and equipment TEUR TEURAcquisition cost Jan 1 3,702 3,740Increase during the period 435 283Transfer to non-current assets for sale -787 0Decrease during the period -659 -321Acquisition cost Dec 31 2,691 3,702Accumulated depreciation Jan 1 -3,133 -3,025Transfer to non-current assets for sale 394 0Depreciation during the year -234 -265Decrease during the period, divestments 775 157Accumulated depreciation Dec 31 -2,198 -3,133Book value Dec 31 493 569Book value Jan 1 569 715
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Finance lease agreements, machinery and equipment TEUR TEURAcquisition cost Jan 1 736 750Increase during the period 0 16Transfer to non-current assets for sale -40 0Decrease during the period -252 -30Acquisition cost Dec 31 444 736Accumulated depreciation Jan 1 -645 -587Transfer to non-current assets for sale 57 0Depreciation during the year -74 -118Decrease during the period, divestments 225 60Accumulated depreciation Dec 31 -437 -645Book value Dec 31 7 91Book value Jan 1 91 163
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Advance payments and purchases in progress TEUR TEURAcquisition cost Jan 1 0 0Increase during the period 85 0Acquisition cost Dec 31 85 0Book value Dec 31 85 0Book value Jan 1 0 0
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Machinery and equipment TEUR TEURAcquisition cost Jan 1 3,702 3,740Increase during the period 435 283Transfer to non-current assets for sale -787 0Decrease during the period -659 -321Acquisition cost Dec 31 2,691 3,702Accumulated depreciation Jan 1 -3,133 -3,025Transfer to non-current assets for sale 394 0Depreciation during the year -234 -265Decrease during the period, divestments 775 157Accumulated depreciation Dec 31 -2,198 -3,133Book value Dec 31 493 569Book value Jan 1 569 715
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Finance lease agreements, machinery and equipment TEUR TEURAcquisition cost Jan 1 736 750Increase during the period 0 16Transfer to non-current assets for sale -40 0Decrease during the period -252 -30Acquisition cost Dec 31 444 736Accumulated depreciation Jan 1 -645 -587Transfer to non-current assets for sale 57 0Depreciation during the year -74 -118Decrease during the period, divestments 225 60Accumulated depreciation Dec 31 -437 -645Book value Dec 31 7 91Book value Jan 1 91 163
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Advance payments and purchases in progress TEUR TEURAcquisition cost Jan 1 0 0Increase during the period 85 0Acquisition cost Dec 31 85 0Book value Dec 31 85 0Book value Jan 1 0 0
14) GoodwillJan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
Goodwill TEUR TEURAcquisition cost Jan 1 6,966 8,118Book value Jan 1 6,966 8,118Increase during the period 0 0Decrease during the period -5,775 -1,152Acquisition cost Dec 31 1,191 6,966Book value Dec 31 1,191 6,966
Breakdown of book values of goodwill:Revenio Health Tech 1,191 1,191Discontinued operations 0 5,775Book value Dec 31 1,191 6,966
Goodwill impairment tests For goodwill impairment testing in the 2014 fi nancial period, the Group consisted of one cash-generating unit to which the goodwill stated on the consolidated balance sheet is allocated. The cash-generating unit and its allocated goodwill amount is:
Cash-generating unit (CGU) Goodwill TEURCGU1: Icare Finland Oy, Revenio Health Tech segment 1,191Total goodwill Dec 31, 2014 1,191 This goodwill has accumulated through corporate acquisitions. The division of the companies into cash-generating units follows the Group’s corporate structure. The justifi cations for recognizing goodwill have been separately assessed in connection with each corporate acquisi-tion. The justifi cation for recognizing Icare Finland Oy’s goodwill is the proprietary intraocular pressure measurement techno-logy it has developed and owns, and the strong competitiveness and market potential of the products based on the technology. The share capital of Midas Touch Oy was sold in 2014, and the company's remaining consolidated goodwill of EUR 2,653,000 was writ-ten down. The goodwill of Boomeranger Boats Oy (EUR 3,122,000) was written down on December 1, 2014 due to the company being moved to discontinued operations.
The recoverable amounts from CGUs are determined by the value-in-use method. The cash fl ow projections are based on forecastsapproved by the management and covering a fi ve-year period. In addition to strategy, latest budgets and forecasts, management bases its cash fl ow projections on an estimate of the effect of the recent trade cycle changes on the capability of the CGUs to generate cash fl ows, and on other external information management deems to have this effect. The assumptions used are consistent with past developments, and, in the management’s opinion, moderate in respect of the growth and profi tability opportunities in the coming years. The pre-tax discount interest rate used for calculating value-in-use is determined separately for each cash-generating unit using the WACC (Weighted Average Cost of Capital) method, which projects the total cost of own and borrowed capital taking into account the specifi c risks of the assets.
Cash-generating unit (CGU) Discount interest rate % Discount interest rate % Change 2013–2014 Dec 31, 2014 Dec 31, 2013CGU1: Icare Finland Oy 8.7 10.3 -1.6CGU2: Boomeranger Boats Oy 0.0 7.9 -7.9CGU3: Midas Touch Oy 0.0 5.6 -5.6
The percentage of increase in the terminal value is assumed at 2 %. Annual recoverable cash fl ows have been assessed with regard to the company's strategy and current level of profi ts for all calculation components over a fi ve-year period and with the same accuracy that has been used for drawing up action plans and budgets for units, until the year serving as the basis for the terminal value. On the basis of the testing performed, there was no reason to lower the goodwill specifi ed in the consolidated balance sheet for the 2014 fi nancial period.
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
Goodwill impairment testing sensitivity analysis According to the sensitivity analysis performed using goodwill testing methods, the following changes may also occur in key items without any need to lower existing goodwill:
Cash-generating unit (CGU) Increase in discount rate, per-centage points
Decrease in the operating profi t level of the unit used in the fore-
cast period, %CGU1: Icare Finland Oy 229.6 97.7
As far as the assessment of Icare Finland Oy's recoverable amount is concerned, management is of the opinion that no potential change in any key forecast factor, reasonably assessed, could result in a situation in which the goodwill recorded in the consolidated balance sheet would have to be lowered.
15) Intangible assetsJan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
Intangible assets TEUR TEURAcquisition cost Jan 1 4,683 3,089Increase during the period 726 629
Addition, corporate acquisition 0 1,629Transfer to non-current assets for sale -32 0Decrease during the period -61 -664Acquisition cost Dec 31 5,316 4,683Accumulated depreciation Jan 1 -2,253 -2,464Transfer to non-current assets for sale 31 0Depreciation during the year -345 -345Decrease during the period 76 556Accumulated depreciation Dec 31 -2,491 -2,253Book value Dec 31 2,825 2,430Book value Jan 1 2,327 625
Intangible assets consist mainly of capitalized R&D expenses, patents acquired in connection with corporate acquisitions, and other intangible assets. They also include software.
16) Investments in associatesJan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
TEUR TEUR
Acquisition cost Jan 1 0 1
Decrease during the period 0 -1Acquisition cost Dec 31 0 0Book value Dec 31 0 0Book value Jan 1 0 1
The earlier associate company Oscare Medical Oy became a subsidiary during the 2013 fi nancial period as a result of the acquisition of a majority share as described above in Note 3.
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
17) Deferred tax assets and liabilitiesJan 1, 2014 Recognized in the Profi t &
Loss StatementDec 31, 2014
Itemization of deferred tax assets, 2014 TEUR TEUR TEURFrom tax losses carried forward 420 -420 0Finance leases -18 18 0Options 64 -64 0Cash and cash equivalents 9 -9 0Internal inventory margin 46 142 188Postponed depreciation 0 17 17Total 521 -316 205
Itemization of deferred tax assets, 2013 Jan 1, 2013 Recognized in the Profi t & Loss Statement
Dec 31, 2013
TEUR TEUR TEURFrom tax losses carried forward 1,552 -1,132 420Finance leases 1 -19 -18Options 64 0 64Cash and cash equivalents 9 0 9Internal inventory margin 0 46 46Total 1,626 -1,105 521
Itemization of deferred tax liabilities, 2014 Jan 1, 2014 Recognized in the Profi t & Loss
Statement
Transferred to non-cur-rent liabilities for sale
Dec 31, 2014
TEUR TEUR TEUR TEURCapitalization of intangible assets from value allocation
130 -3 0 127
Measurement of tangible and intangible assets at fair value in connection with combinations of business
65 -39 0 26
Impact of change in tax rate -6 6 0 0Corporate restructuring -26 -41 -68 -135Total 163 -77 -68 18
Itemization of deferred tax liabilities, 2013 Jan 1, 2013 Recognized in the Profi t & Loss Statement
Dec 31, 2013
Capitalization of intangible assets from value allocation 109 21 130Measurement of tangible and intangible assets at fair value in connection with combinations of business
111 -46 65
Impact of change in tax rate -6 0 -6Corporate restructuring 0 -26 -26Total 214 -51 163
Deferred tax assets and liabilities are temporary differences arising from corporate restructuring, recognition of fi nance leaseliabilities and the use of tax losses in taxation over the coming years.
Dec 31, 2014 Dec 31, 2013Deferred tax assets net 187 358
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
18) InventoriesDec 31, 2014 Dec 31, 2013
TEUR TEURMaterials and supplies 1,036 722Work in progress/advance payments -49 18Finished goods 269 369Total 1,256 1,109
19) Trade and other receivables Dec 31, 2014 Dec 31, 2013TEUR TEUR
Sales receivables 1,760 1,949Loans receivable 0 1Gross receivables from customers, long-term projects
0 0
Receivables from associate companies 0 0Other receivables 212 213Accrued income 376 2,330Total 2,348 4,493
The balance sheet values of trade and other receivables constitute the maximum credit risk amounts. No signifi cant credit risk concentrations are included in the receivables.
Aging of trade receivables and items recognized as impairmentDec 31, 2014 Impairment Net Dec 31, 2014
TEUR lossesNot fallen due 1,375 1,375Fallen due
Under 30 days 260 26030–60 days 58 58
61–90 days 60 60Over 90 days 7 7
Total 1,760 0 1,760
Dec 31, 2013 Impairment NetTEUR losses Dec 31, 2013
Not fallen due 1,766 1,766Fallen due
Under 30 days 82 8230–60 days 18 1861-90 days 28 28Over 90 days 55 55
Total 1,949 0 1,949
20) Cash and cash equivalents Dec 31, 2014 Dec 31, 2013
TEUR TEURBank accounts and cash in hand
4,105 4,602
Total 4,105 4,602
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
18) InventoriesDec 31, 2014 Dec 31, 2013
TEUR TEURMaterials and supplies 1,036 722Work in progress/advance payments -49 18Finished goods 269 369Total 1,256 1,109
19) Trade and other receivables Dec 31, 2014 Dec 31, 2013TEUR TEUR
Sales receivables 1,760 1,949Loans receivable 0 1Gross receivables from customers, long-term projects
0 0
Receivables from associate companies 0 0Other receivables 212 213Accrued income 376 2,330Total 2,348 4,493
The balance sheet values of trade and other receivables constitute the maximum credit risk amounts. No signifi cant credit risk concentrations are included in the receivables.
Aging of trade receivables and items recognized as impairmentDec 31, 2014 Impairment Net Dec 31, 2014
TEUR lossesNot fallen due 1,375 1,375Fallen due
Under 30 days 260 26030–60 days 58 58
61–90 days 60 60Over 90 days 7 7
Total 1,760 0 1,760
Dec 31, 2013 Impairment NetTEUR losses Dec 31, 2013
Not fallen due 1,766 1,766Fallen due
Under 30 days 82 8230–60 days 18 1861-90 days 28 28Over 90 days 55 55
Total 1,949 0 1,949
20) Cash and cash equivalents Dec 31, 2014 Dec 31, 2013
TEUR TEURBank accounts and cash in hand
4,105 4,602
Total 4,105 4,602
21) Changes in the number of shares and their impact on equity
The following presents the changes in the number of shares and their impact on shareholder equity in the 2013 and 2014 fi nancial periods.
Number ofshares
Shareholder Equity
Share premium
Reserve for invested
Ownshares
Total
reserve unrestricted equity
TEUR TEUR TEUR TEURJan 1, 2013 76,929,730 5,315 2,439 7,055 -86 14,723Share subscription with options Jan 31, 2013 181,060 47 47Share subscription with options Mar 20, 2013 578,300 313 313Reverse share split Mar 27, 2013, number of shares
7,768,909 0
Own shares held by company May 2, 2013 29 29Share subscription with options May 14, 2013 70,000 73 73Capital repayment -940 -940Share subscription with options Oct 7, 2013 4,125 304 304Capital repayment -2,353 -2,353Share subscription with options 12/4/2013 7,445 17 17Direct expenses from share subscriptions
-17 -17
Dec 31, 2013 7,850,479 5,315 2,439 4,499 -57 12,196
Number ofshares
Equity Share premium
Reserve for invested
Ownshares
Total
reserve unrestricted equity
TEUR TEUR TEUR TEUR1/1/2014 7,850,479 5,315 2,439 4,499 -57 12,196Share subscription with options Mar 14, 2014 6,040 12 12Share subscription with options May 30, 2014 26,500 46 46Treasaury shares held by company May 31, 2014
43 43
Share subscription with options Sep 26, 2014 10,600 19 19Share subscription with options Nov 14, 2014 38,459 67 67Direct expenses from share subscriptions
-12 -12
Dec 31, 2014 7,932,078 5,315 2,439 4,631 -14 12,371
All issued shares have been paid in full. The company's share capital consists of 7,932,078 shares of a single class. At the end of the fi nancial period, the company held 2,701 of its own shares (REG1V). All shares confer an equal right to dividends and the company’s funds.
Description of equity reserves Share premium reserve Where shares have been issued or option rights granted under the repealed Finnish Companies Act (734/1978), the monetary considerations received from subscriptions are recorded in equity and the share premium reserve according to the terms and conditions of the arrangement less transaction costs.
Invested unrestricted equity reserve The invested unrestricted equity fund includes other equity investments and the subscription price of shares to the extent it is not recognized in share capital by an explicit decision. Fair value reserve The difference between the fair value and the subscription price of directed share issues used for consideration for acquired operations is recognized in the fair value reserve. Own shares reserve: The own shares reserve includes the acquisition cost of own shares in possession of the Group. The acquisition cost of repurchased shares is presented by decreasing equity. When own shares are canceled, the corresponding amount is transferred to the accumulated profi ts account. The Board of Directors proposes to the ordinary Annual General Meeting convening on March 19, 2015 that the parent company’s distributable funds are used as follows: – Payment of a dividend of EUR 0.45 per share, a total of EUR 3,569,435.10 with the number of shares at the end of the fi nancial period – Retention of the remainder of distributable funds in equity
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
22) Share-based payments Option rights of personnel The company has a stock option program decided by the Board of Directors on November 23, 2007, based on the authorization of the Annual General Meeting on April 3, 2007, comprising a maximum of 3,684,365 option rights. Ten option rights entitle to the subscription of one Revenio Group Corporation share. The total maximum of shares available for subscription on the basis of the option rights in the program was 0.6 % of the total number of shares and voting rights at the end of the fi nancial period, after the new shares subscribed with the option rights have been registered. The option rights are divided into three series: A (1,684,365 option rights), B (1,000,000 option rights) and C (1,000,000 option rights). The subscription period for series A is May 1, 2009 to May 1, 2013 (expired), that for series B November 1, 2010 to November 1, 2014 (expired), and that for series C May 1, 2012 to May 1, 2016. The share subscription price is the weighted average quotation of the Revenio Group Corporation share on November 1–30, 2010, EUR 1.69 (series C). On the record date of dividend distribution, the subs-cription price is decreased by the amount of dividend decided between the end of the determination period and the beginning of the share subscription period. By way of deviation from the shareholders' preemptive subscription right, the option rights are granted to members of the Revenio Group’s management and to Revenio's wholly owned subsidiary, Done Medical Oy. The shareholders’ preemptive subscription right is waived as the option rights are intended to constitute a part of the incentive program of Revenio Group Corporation. At the time of issuance, all of the 2007B and 2007C option rights, as well as part of the 2007A option rights, were granted to Done Medical Oy. At the end of the fi nancial period on December 31, 2012, the options granted to personnel were of the series 2007A, 2007B, and 2007C option rights. The remaining 2007A, 2007B, and 2007C option rights held by Done Medical Oy can be granted to personnel in full or in part on a later date. Granted option rights are equity instruments.
In case the employment contract of the recipient of an option right ends before the share subscription period, the person must, without consideration, offer back to the company such option rights for which the share subscription period had not yet started on the date of the termination of the employment contract.
Changes in options 2007B 2007COutstanding options at beginning of fi nancial period 646,002 603,300New options granted during fi nancial period 40,000 0Options returned to the company 0 0Reallocated options 0 0Used options 686,000 130,000Expired options 2 0Outstanding options at end of fi nancial period 2 473,300Exercisable options at end of fi nancial period 0 473,300
Defi nition of fair value The Group uses the Black-Scholes model for determining the fair value of options. The expected volatility is determined on the basis of actual historical share price development, taking into account the remaining validity periods of the options. The fair value of the shares is based on actual quotations.
Assumptions used for fair value determination, fi nancial periods 2012–2014: 2007C, granted on Apr 26, 2012Expected volatility 52Average time to maturity, years 3.0Risk-free interest 3.0Personnel retention, % 100Fair value of option on grant date, EUR 0.143 No expenses were recognized from option programs 2007B and 2007C during the fi nancial period or the comparison period.
As part of the conditions of his employment contract, Mr. Olli-Pekka Salovaara, President and CEO of the Revenio Group Corporation, or a company where he holds a controlling interest, is entitled to demand a directed share issue to themselves at any time during the employment contract. The share price will be the average price on the last 30 trading days on NASDAQ OMX Helsinki Stock Exchange, and the maximum amount of the issue EUR 1.0 million. The share issue will be directed to the President and CEO by authority of the Boardof Directors, or, in the event of no such authorization being in effect, a general meeting of shareholders shall be convened to grant the authorization and/or decide upon the said share issue. The options have been recognized as expenses at the time of granting in the fi nancial period 2007, to a total of EUR 55,000.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
23) ProvisionsExpenses Provisions
EUR thousand in warranty period totalJan 1, 2014 82 82Increase in provisions 0 0Used provisions -21 -21Transfer of provisions to non-current assets for sale -61 -61Impact of discounting 0 0Dec 31, 2014 0 0
Dec 31, 2014 Dec 31, 2013TEUR TEUR
Long-term provisions 0 82Total 0 82
24) Financial liabilities Dec 31, 2014 Dec 31, 2013TEUR TEUR
Long-term fi nancial liabilities measured at amortized costsLoans from fi nancial institutions 574 1,122Finance lease liabilities 0 60Capital loans 199 123Total 773 1,305
Short-term fi nancial liabilities measured at amortized costsRepayments of long-term loans from fi nancial institutions 608 630Loans from joint ventures 0 123Finance lease liabilities 24 30Total 632 783
The fair values of liabilities are presented in Note 29. The Group’s loans from fi nancial institutions have fi xed and fl oating interest rates. The average interest rate is 1.23 % (2013: 1.06 %).All of the Group’s current and non-current fi nance liabilities are in the euro denomination. The loans will mature by 2019. Some of the loans from fi nancial institutions include collateral, for which mortgage of company assets is used. The amounts of the Group’s fl oating- interest liabilities and their contractual repricing periods are:
2014 2013Up to 6 months 750 1,2506–12 months 0 0Over 12 months 0 0Total 750 1,250
Maturing periods of fi nance lease liabilities: Dec 31, 2014TEUR
Dec 31, 2013
TEURFinance lease liabilities – minimum rent totals Within 1 year In more than 1 and no more than 5 years
25 630 31
In over 5 years 0 0Total 25 94
Finance lease liabilities – present value of minimum rent Within 1 year In more than 1 and no more than 5 years In over 5 years
24 600 300 0
Total 24 90
Financing expenses accumulating in the future 1 4Total amount of fi nance lease liabilities 24 90
The fi nancing expenses accumulating in the future consist of the interest expenses of machinery and equipment rented on the basis of fi nance lease agreements.The majority of fi nance lease agreements run for three years, fi xed to the 3-month Euribor plus a margin determined by the fi nancing agreement.As a rule, the residual value of machinery and equipment covered by the fi nance lease agreements is 1 % of principal remaining at the end of the lease period.
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
25) Operating leases
The Group as lesseeMinimum lease payments payable on the basis of other non-cancellable leases:
Dec 31, 2014TEUR
Dec 31, 2013TEUR
Within 1 year 517 462In more than 1 and no more than 5 years 989 1,009In over 5 years 0 0Total 1,506 1,471
The Group leases most of the production and offi ce premises used by it. The most signifi cant lease liability pertains to the premises in Vantaa used by the parent company and the Health Tech segment, for which the remaining liability runs for approximately 3.5 years. Other business premise leases run indefi nitely with 3- or 6-month notice periods.
26) Trade payables and other current liabilitiesDec 31, 2014 Dec 31, 2013
TEUR TEURAdvances received 0 1,274Trade payables 784 790Other liabilities 125 608Accrued expenses and deferred income
946 2,108
Total 1,856 4,780
Material items included in accruedliabilities and deferred incomeAccrued personnel expenses 690 1,361Other accruals and deferred income 256 747Total 946 2,108
27) Adjustments to cash fl ows from operating activities Dec 31, 2014 Dec 31, 2013
TEUR TEURNon-cash operations: Depreciation and impairment 526 448Total 526 448
28) Fair values of fi nancial assets and liabilities
Non-current fi nancial assets Dec 31, 2014 Dec 31, 2013Book value Fair value Book value Fair value
Loans from fi nance institutions 574 574 1,122 1122Finance lease liabilities 0 0 60 60Capital loans 199 199 123 123Total 773 773 1,305 1,305
The fair values of current liabilities are equal to their book values, since the effect of discounting is not signifi cant. Nearly all of the Group's non-current liabilities have fl oating interest rates, and their book values do not differ materially from their fair values on the closing date, as the company's credit premium has not changed in a material degree since the loans were taken out.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
29) Commitments
MortgagesMortgages given Dec 31, 2014 Dec 31, 2013
TEUR TEURLoans from fi nancing institutions with mortgages as collateral 750 1,250Mortgages given for bank loan collateral 1,500 1,000Bank guarantees with mortgages as collateral 1,272 2,695Mortgages given for bank guarantees 1,370 1,000Mortgages given, total 2,870 2,000
Collateral Dec 31, 2014 Dec 31, 2013TEUR TEUR
PledgesPledged cash and cash equivalents as collateral for own lease liabilities, goods credits and project work
77 77
Pledges total 77 77
Guarantees Absolute guarantees for subsidiary 1,309 2,961On-demand guarantees for subsidiary project work 0 11,658Guarantees total 1,386 14,619
30) Related party transactionsThe Group's related parties consist of the parent company, the subsidiaries and associated companies, the President and CEO,and the members of the Board of Directors and the Management Team.
Parent and subsidiary relationships of the Group: Domicile OwnershipParent company Revenio Group Corporation
Vantaa
Done Medical Oy Seinäjoki 100.0 % Kauhajoen Sisälogistiikka Oy Helsinki 100.0 % Done Software Solutions Oy Seinäjoki 100.0 % Icare Finland Oy Helsinki 100.0 % Boomeranger Boats Oy Loviisa 100.0 % Revenio Research Oy Vantaa 100.0 % Oscare Medical Helsinki 53.0 %All Group companies are consolidated in the parent company’s consolidated fi nancial statements. Kauhajoen Sisälogistiikka Oy, Done Software Solutions Oy and Boomeranger Boats Oy are classifi ed as operations to be discontinued.
Related party transactions: Jan 1 – Dec 31, 2014
Jan 1 – Dec 31, 2013
TEUR TEURa) Employment benefi ts for managementSalaries and other short-term employment benefi ts
721 736
Other long-term benefi ts 125 71Total 846 807
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
Other long-term benefi ts consist of the 2013–2015 long-term incentive program for the members of the 2013 corporate Management Team. Payments based on the incentive program will be effected no earlier than in 2016. Expenses arising from short-term incentive programs are recognized as provisions in the fi nancial statements of the year of their determination and presented under Related party transactions in the fi nancial period during which the Board of Directors decides on their payment.
Salaries and remunerations of the members of the Board of Directors and the President and CEO:
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
TEUR TEUROlli-Pekka Salovaara, President & CEO 321 296Pekka Tammela, Chairman of the Board 36 36Rolf Fryckman, member of the Board 18 23Ari Kohonen, member of the Board 18 13.5Pekka Rönkä, member of the Board 13.5 0Kyösti Kakkonen, member of the Board 13.5 0Timo Mänty, former member and Chairman of the Board 0 15Matti Hyytiäinen, former member of the Board 0 9Julia Ormio, former member of the Board 0 9Total 420 401
The President and CEO's period of notice for which he is entitled to a salary is 18 months if notice is given by the company and 6 months if given by the CEO. The CEO’s retirement age is defi ned by law. During the fi nancial period, no credit loss provisions or expenses have been recognized for lost or uncertain related party transactions. b) Members of the Management Team deemed to be related parties and the managing directors of subsidiaries possessed the following option rights at the end of the fi nancial period:
Option right Dec 31, 2014 Dec 31, 2013
2007B 2 25,0022007C 85,000 105,000Total 85,002 130,002
At the time of granting, the options listed above were held by the subsidiary Done Medical Oy, to which they had been granted in 2007. No option rights have been granted to members of the Board of Directors. Ten option rights entitle the holder to subscribe for one Revenio Group Corporation share at the price defi ned by the option program, which is the weighted average price of the Revenio Group Corporation share for the last 30 trading days prior to the time of granting on NASDAQ OMX Helsinki Stock Exchange. The main principles of the option program’s conditions are detailed above in Note 23) Share-based payments.
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
31) Key fi gures from the last fi ve fi nancial periodsJan–Dec, 2014 Jan–Dec, 2013 Jan–Dec, 2012 Jan–Dec, 2011 Jan–Dec, 2010
12 months 12 months 12 months 12 months 12 monthsIFRS IFRS IFRS IFRS IFRS
Net sales, TEUR 16,031 13,508 21,563 21,449 29,420Operating profi t, TEUR 4,413 4,273 4,255 3,340 -715Operating profi t, % 27.5 31.6 19.7 15.6 -2.4Profi t before taxes, TEUR 4,658 4,191 4,683 3,013 -739Profi t before taxes, % 29.1 31.0 21.7 14.0 -2.5Net profi t for fi nancial period, TEUR -694 4,338 -287 3,911 -589Net profi t, % -4.3 32.1 -1.3 18.2 -2.0Gross capital expenditure, TEUR 1,150 913 287 707 695Gross capital expenditure, % of net sales 7.2 6.8 1.3 3.3 2.4R&D expenses, TEUR 1,020 846 350 360 432R&D expenses, % 6.4 6.3 1.6 1.7 1.5Return on equity, % -5.1 25.7 -1.8 14.1 -4.0Return on investment, % 1.1 29.7 0.4 20.2 -2.5Equity ratio, % 62.4 66.1 62.2 66.6 60.8Net leveraging, % -22.4 -16.8 -12.2 -17.3 4.9Leveraging 11.6 17.7 21.6 9.9 19.6Average number of personnel 74 209 198 201 423
Key indicators per share Jan–Dec, 2014 Jan–Dec, 2013 Jan–Dec, 2012 Jan–Dec, 2011 Jan–Dec, 201012 months 12 months 12 months 12 months 12 months
IFRS IFRS IFRS IFRS IFRSEarnings per share, continuing operations, EUR
0.474 0.378 0.500 0.028 -0.011
Earnings per share, discontinued operations, EUR
-0.562 0.179 -0.540 0.023 0.003
Equity attributable to equity owners of the parent per share, EUR
1.52 1.91 1.91 2.14 1.83
Dividend per share, EUR 0.45 0.30 0.20 0.20 0.20Dividend payout ratio, % * 54.3 * 392.2 *Effective dividend yield, % 3.1 2.4 5.0 4.2 6.7P/E ratio, continuing operations 30.7 22.4 8.0 171.4 -272.7Diluted number of shares, at end of period 7,932,078 7,850,479 7,692,973 7,688,973 7,683,973Diluted number of shares, average during period (acquired own shares excluded)
7,876,183 7,845,121 7,683,379 7,686,233 7,683,973
Share price, year low, EUR 11.32 4.00 3.30 3.00 2.80Share price, year high, EUR 17.20 14.30 5.00 6.20 3.80Share price, average, EUR 14.38 8.34 4.20 4.40 3.00Share price at end of period, EUR 14.55 12.38 4.00 4.80 3.00Market capitalization at end of period, MEUR 115.4 97.2 30.8 36.9 23.1Turnover, number of shares 2,669,163 2,964,541 3,268,179 3,936,797 2,474,513Turnover, % 33.7 37.8 42.5 51.2 19.2
The earnings per share indicators have been calculated using the average diluted numbers of shares during the fi nancial periods, and the equity per share indicators using the diluted numbers of shares at the ends of fi nancial periods, taking account of the effect of the reverse share split implemented on March 27, 2013. The dividend per share of EUR 0.45 in 2014 represents the proposal made by the Board of Directors to the Annual General Meeting of March 19, 2015
Figures for 2010–2012 are not as such comparable with the years 2013 and 2014, due to the organizational structure at the end of 2014. 32) Shares and shareholders Information on the shares and shareholders of the parent company is presented in the notes to the fi nancial statements of the parent company.
33) Events after the fi nancial periodThere are no signifi cant events after the fi nancial period in view of the 2014 fi nancial statements drawn up in accordance with the IFRS Standards.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DEC 31, 2014
PARENT COMPANY PROFIT & LOSS STATEMENT (FAS)Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
APPENDIX EUR EURNET SALES 1 295,195.07 207,041.79 Other operating income 2 8,276.30 97,265.00
Employee benefi t expensesSalaries and fees 3 -854,015.98 -964,196.65Indirect personnel costsPension costs -197,269.63 -161,658.56Other indirect personnel costs -4,991.69 -60,807.88Personnel expenses total -1,056,277.30 -1,186,663.09
Depreciation, amortization and impairment
Depreciation and amortization total -19,622.15 -20,761.53
Other operating expenses 4 -746,943.11 -726,483.14
NET PROFIT / LOSS -1,519,371.19 -1,629,600.97
Financial income and expenses 5Income from shares in Group companies 1,410,149.98 0.00Other fi nancial income and interest receivable 64,134.34 310,435.21Impairment of share in Group companies -3,122,076.24 0.00Interest and other fi nancial expenses -22,550.75 -25,476.40Financial income and expenses total -1,670,342.67 284,958.81
PROFIT / LOSS BEFORE EXTRAORDINARY ITEMS -3,189,713.86 -1,344,642.16
Extraordinary income and expenses 6Extraordinary income 7,439,441.34 6,618,839.28Extraordinary expenses -2,352,874.27 -5,579,169.78Extraordinary income and expenses total 5,086,567.07 1,039,669.50
PROFIT / LOSS BEFORE APPROPRIATIONSAND TAXES 1,896,853.21 -304,972.66
Income taxes for the fi nancial period 7 -849,431.51 0.00
NET PROFIT/LOSS 1,047,421.70 -304,972.66
58
PARENT COMPANY BALANCE SHEET DEC 31, 2014
PARENT COMPANY BALANCE SHEET (FAS)Dec 31, 2014 Dec 31, 2013
ASSETS APPENDIX EUR EURNON-CURRENT ASSETS 8
Intangible assetsOther non-current expenses 4,152.54 16,121.91
Tangible assetsMachinery and equipment 22,958.36 21,419.00
Investments 9Holdings in Group companies 9,135,177.73 12,588,318.53Holdings total 9,135,177.73 12,588,318.53
NON-CURRENT ASSETS TOTAL 9,162,288.63 12,625,859.44
CURRENT ASSETS
Non-current receivablesReceivables from Group companies 3,992,168.00 3,498,668.00Non-current receivables, total 3,992,168.00 3,498,668.00
Short-term receivablesSales receivables 783.93 0.00Receivables from Group companies 10 7,321,106.08 6,797,005.31Other receivables 71,911.00 92,816.43Accrued income 11 189,586.54 151,022.20Short-term receivables total 7,583,387.55 7,040,843.94
Bank and cash 3,309,251.57 3,527,131.45
INVENTORIES AND SHORT-TERM ASSETS TOTAL
14,884,807.12 14,066,643.39
TOTAL ASSETS 24,047,095.75 26,692,502.83
SHAREHOLDER EQUITY AND LIABILITIES APPENDIX EUR EURSHAREHOLDER EQUITY 12Share capital 5,314,918.72 5,314,918.72Share premium account 2,439,301.82 2,439,301.82Reserve for invested non-restricted equity
4,631,190.08 4,499,415.33
Paid for own shares -13,927.73 -57,127.73Retained earnings 3,288,151.45 5,948,472.41Net profi t for the period 1,047,421.70 -304,972.66
SHAREHOLDERS’ EQUITY TOTAL 16,707,056.04 17,840,007.89
LIABILITIES
Non-current liabilitiesLoans from fi nancial institutions 13 250,000.00 750,000.00Accrued expenses and deferred income 125,000.00 71,000.00Non-current liabilities, total 375,000.00 821,000.00
Current liabilitiesLoans from fi nancial institutions 13 500,000.00 500,000.00Trade payables 239,625.62 162,969.69Liabilities to Group companies 14 6,029,305.72 6,920,147.62Other liabilities 10,799.37 77,115.54Accrued expenses and deferred income 15 185,309.00 371,262.09Current liabilities total 6,965,039.71 8,031,494.94
BORROWED CAPITAL TOTAL 7,340,039.71 8,852,494.94
LIABILITIES TOTAL 24,047,095.75 26,692,502.83
59
PARENT COMPANY CASH FLOW STATEMENT JAN 1 – DEC 31, 2014
PARENT COMPANY CASH FLOW STATEMENT (FAS)Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
EUR EURCash fl ow from operationsProfi t before extraordinary items -3,189,713.86 -1,344,642.16Planned depreciation 19,622.15 20,761.53Unrealized exchange rate income and losses -28,182.63 0.00Financial income and expenses 288,375.32 -284,958.81Change in non-interest-bearing current receivables -25,442.84 112,241.22Change in non-interest-bearing current liabilities -175,613.33 227,293.84Interest and payments paid from operations -22,914.05 -25,476.40Interest and payments received from operations 35,951.71 310,435.21Direct taxes paid -869,641.35 0.00Cash fl ow from operations -3,967,558.88 -984,345.57
Cash fl ow from investment activitiesInvestment in tangible and intangible assets -11,398.25 -31,411.25Loans granted -973,315.72 -335,737.03Other investment -2,500.00 -266,768.00Capital gains from other investments 922,678.73 1,873,815.65Cash fl ow from investment activities -64,535.24 1,239,899.37
Cash fl ow from fi nancing activities
Share capital increase through issue of new shares 131,774.75 737,776.60Repayments of long-term borrowings -500,000.00 -950,000.00Repayments of short-term borrowings 0.00 -752,044.38Dividends paid and other distribution of profi ts -2,355,348.30 -4,830,237.56Group contributions received and paid 6,537,787.79 5,265,131.76Cash fl ow from fi nancing activities 3,814,214.24 -529,373.58
Change in cash and cash equivalents -217,879.88 -273,819.78
Cash and cash equivalents at beginning of period 3,527,131.45 3,800,951.23Cash and cash equivalents at end of period 3,309,251.57 3,527,131.45Change in cash and cash equivalents -217,879.88 -273,819.78
60
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
PARENT COMPANY CASH FLOW STATEMENT (FAS)Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
EUR EURCash fl ow from operationsProfi t before extraordinary items -3,189,713.86 -1,344,642.16Planned depreciation 19,622.15 20,761.53Unrealized exchange rate income and losses -28,182.63 0.00Financial income and expenses 288,375.32 -284,958.81Change in non-interest-bearing current receivables -25,442.84 112,241.22Change in non-interest-bearing current liabilities -175,613.33 227,293.84Interest and payments paid from operations -22,914.05 -25,476.40Interest and payments received from operations 35,951.71 310,435.21Direct taxes paid -869,641.35 0.00Cash fl ow from operations -3,967,558.88 -984,345.57
Cash fl ow from investment activitiesInvestment in tangible and intangible assets -11,398.25 -31,411.25Loans granted -973,315.72 -335,737.03Other investment -2,500.00 -266,768.00Capital gains from other investments 922,678.73 1,873,815.65Cash fl ow from investment activities -64,535.24 1,239,899.37
Cash fl ow from fi nancing activities
Share capital increase through issue of new shares 131,774.75 737,776.60Repayments of long-term borrowings -500,000.00 -950,000.00Repayments of short-term borrowings 0.00 -752,044.38Dividends paid and other distribution of profi ts -2,355,348.30 -4,830,237.56Group contributions received and paid 6,537,787.79 5,265,131.76Cash fl ow from fi nancing activities 3,814,214.24 -529,373.58
Change in cash and cash equivalents -217,879.88 -273,819.78
Cash and cash equivalents at beginning of period 3,527,131.45 3,800,951.23Cash and cash equivalents at end of period 3,309,251.57 3,527,131.45Change in cash and cash equivalents -217,879.88 -273,819.78
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS DEC 31, 2014 ACCOUNTING PRINCIPLES FOR THE PARENT COMPANY FINANCIAL STATEMENTS Basis of preparation The fi nancial statements of the parent company Revenio Group Corporation have been prepared in accordance with the Finnish Accounting Act, Limited Liability Companies Act and the Finnish Accounting Standards (FAS). Subsidiaries Direct expenses from the acquisition of subsidiary companies are recognized in the acquisition cost of subsidiary company holdings. Pension arrangements Personnel’s pension security is handled by external pension insurance companies. Pension costs are recorded as expenses in the year in which they are incurred.
Lease agreements Rent for assets acquired through lease agreements is recognized as expense in the Profi t & Loss Statement over the lease period. Temporary differences After taxation for the fi nancial period, the company will not have tax losses carried forward.
NOTES TO THE PROFIT & LOSS STATEMENT
1) Distribution of net sales Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Administrative services to subsidiaries 295,195.07 207,041.79Net sales total 295,195.07 207,041.79
2) Other operating income Jan 1 – Dec 31, 2014EUR
Jan 1 – Dec 31, 2013EUR
Contractual penalty 0.00 97,265.00Administrative services to others 8,276.30 0.00Other operating income total 8,276.30 97,265.00
3) Salaries and remunerations Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
President & CEO -320,507.32 -296,075.85Board members -99,600.00 -104,999.98Other salaries and remunerations -507,356.49 -298,593.63Total -927,463.81 -699,669.46Accrued salaries and remunerations total -854,015.98 -964,196.65
Average number of personnel during period Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013Management 3 3Others 4 4Total 7 7
4) Other operating expenses Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Rent of business premises -63,532.79 -75,901.51Vehicle and travel expenses -91,525.71 -102,213.44Machinery and equipment expenses -66,508.40 -65,282.07Marketing and entertainment -40,129.47 -33,747.20Expert services purchased -190,949.34 -128,047.78Administrative expenses -175,497.81 -187,540.54Other operating expenses -118,799.59 -133,750.60Total -746,943.11 -726,483.14
Auditor’s feesAuditor’s fees 36,000.00 36,000.00Certifi cates and statements 0.00 0.00Other fees 5,000.00 0.00Total 41,000.00 36,000.00
61
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
62
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
5) Financing income and expenses Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
EUR EURDividend income from Group companies 1,410,149.98 0.00Impairment of investment in non-current assets -3,122,076.24 0.00Exchange rate gains 28,182.63 0.00Interest income from others 3,675.05 745.17Interest income from Group companies 32,276.66 309,690.04Interest payable to others -15,943.28 -22,212.16Other fi nancing expenses to others -6,607.47 -3,264.24Total -1,670,342.67 284,958.81
6) Extraordinary income and expenses Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Extraordinary incomeGroup contributions received 6,473,005.90 6,618,839.28Group contributions paid -2,352,874.27 -5,281,940.30Profi t from disposal of property, plant and equipment, investments 966,435.44 0.00Loss from disposal of property, plant and equipment, investments 0.00 -297,265.48Total 5,086,567.07 1,039,633.50
7) Income taxes Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Income tax for extraordinary items -824,026.33 0.00Income tax for actual operations 298,575.49 0.00Income tax for previous fi scal years -316,980.67 0.00Total -849,431.51 0.00
NOTES TO BALANCE SHEET ASSETS8) Changes in property, plant and equipment acquisition costs and other non-current expenses by balance sheet item.
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Intangible assetsOther non-current expensesAcquisition cost Jan 1 43,989.54 42,413.76Increase during the period 0.00 7,875.78Decrease during the period 0.00 -6,300.00Acquisition cost Dec 31 43,989.54 43,989.54Accumulated depreciation Jan 1 -27,867.63 -14,245.77Depreciation during the year -11,969.37 -13,621.86Accumulated depreciation Dec 31 -39,837.00 -27,867.63Book value Dec 31 4,152.54 16,121.91Book value Jan 1 16,121.91 28,167.99
Tangible assetsMachinery and equipmentAcquisition cost Jan 1 31,638.07 8,102.60Increase during the period 10,386.26 23,535.47Decrease during the period -1,194.12 0.00Acquisition cost Dec 31 40,830.21 31,638.07Accumulated depreciation Jan 1 -10,219.07 -3,079.40Depreciation during the year -7,652.78 -7,139.67Accumulated depreciation Dec 31 -17,871.85 -10,219.07Book value Dec 31 22,958.36 21,419.00Book value Jan 1 21,419.00 5,023.20
Holdings in Group companiesAcquisition cost Jan 1 12,588,318.53 14,702,849.66Increase during the period 2,500.00 3,550.00Decrease during the period -333,564.56 -2,118,081.13Impairment during period -3,122,076.24 0.00Acquisition cost Dec 31 9,135,177.73 12,588,318.53Book value Dec 31 9,135,177.73 12,588,318.53
Shares in associated companiesAcquisition cost Jan 1 0.00 600.00Sale of shares 0.00 0.00Impairment reversals during period 0.00 0.00Decreases during period 0.00 -600.00Impairment during period 0.00 0.00Acquisition cost Dec 31 0.00 0.00Book value Dec 31 0.00 0.00
62
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
5) Financing income and expenses Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
EUR EURDividend income from Group companies 1,410,149.98 0.00Impairment of investment in non-current assets -3,122,076.24 0.00Exchange rate gains 28,182.63 0.00Interest income from others 3,675.05 745.17Interest income from Group companies 32,276.66 309,690.04Interest payable to others -15,943.28 -22,212.16Other fi nancing expenses to others -6,607.47 -3,264.24Total -1,670,342.67 284,958.81
6) Extraordinary income and expenses Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Extraordinary incomeGroup contributions received 6,473,005.90 6,618,839.28Group contributions paid -2,352,874.27 -5,281,940.30Profi t from disposal of property, plant and equipment, investments 966,435.44 0.00Loss from disposal of property, plant and equipment, investments 0.00 -297,265.48Total 5,086,567.07 1,039,633.50
7) Income taxes Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Income tax for extraordinary items -824,026.33 0.00Income tax for actual operations 298,575.49 0.00Income tax for previous fi scal years -316,980.67 0.00Total -849,431.51 0.00
NOTES TO BALANCE SHEET ASSETS8) Changes in property, plant and equipment acquisition costs and other non-current expenses by balance sheet item.
Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013EUR EUR
Intangible assetsOther non-current expensesAcquisition cost Jan 1 43,989.54 42,413.76Increase during the period 0.00 7,875.78Decrease during the period 0.00 -6,300.00Acquisition cost Dec 31 43,989.54 43,989.54Accumulated depreciation Jan 1 -27,867.63 -14,245.77Depreciation during the year -11,969.37 -13,621.86Accumulated depreciation Dec 31 -39,837.00 -27,867.63Book value Dec 31 4,152.54 16,121.91Book value Jan 1 16,121.91 28,167.99
Tangible assetsMachinery and equipmentAcquisition cost Jan 1 31,638.07 8,102.60Increase during the period 10,386.26 23,535.47Decrease during the period -1,194.12 0.00Acquisition cost Dec 31 40,830.21 31,638.07Accumulated depreciation Jan 1 -10,219.07 -3,079.40Depreciation during the year -7,652.78 -7,139.67Accumulated depreciation Dec 31 -17,871.85 -10,219.07Book value Dec 31 22,958.36 21,419.00Book value Jan 1 21,419.00 5,023.20
Holdings in Group companiesAcquisition cost Jan 1 12,588,318.53 14,702,849.66Increase during the period 2,500.00 3,550.00Decrease during the period -333,564.56 -2,118,081.13Impairment during period -3,122,076.24 0.00Acquisition cost Dec 31 9,135,177.73 12,588,318.53Book value Dec 31 9,135,177.73 12,588,318.53
Shares in associated companiesAcquisition cost Jan 1 0.00 600.00Sale of shares 0.00 0.00Impairment reversals during period 0.00 0.00Decreases during period 0.00 -600.00Impairment during period 0.00 0.00Acquisition cost Dec 31 0.00 0.00Book value Dec 31 0.00 0.00
63
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
9) Holdings in other Group companies Dec 31, 2014
Group companies Domicile Ownership share Book valueDone Medical Oy Seinäjoki 100.0 % 645,008.99Kauhajoen Sisälogistiikka Oy Helsinki 100.0 % 1,000.00Done Software Solutions Oy Seinäjoki 100.0 % 321,225.23Icare Finland Oy Helsinki 100.0 % 6,199,469.75Boomeranger Boats Oy Loviisa 100.0 % 1,962,423.76Oscare Medical Helsinki 53.0 % 3,550.00Revenio Research Oy Helsinki 100.0 % 2,500.00Book value Dec 31, 2014 9,135,177.73
10) Current receivables from Group companiesDec 31, 2014 Dec 31, 2013
Sales receivables 102,703.43 310,281.65Loans receivable 2,109,532.95 1,536,289.11Other receivables 5,108,869.70 4,950,434.55Total 7,321,106.08 6,797,005.31
Receivables from Group companies, total 7,321,106.08 6,797,005.31
11) Prepaid expenses and accrued incomeDec 31, 2014 Dec 31, 2013
EUR EURPrepaid expenses 169,011.03 151,022.20Income taxes 20,209.84 0.00Total 189,220.87 151,022.20
NOTES TO BALANCE SHEET LIABILITIES12) Changes in equity Jan 1 – Dec 31, 2014 Jan 1 – Dec 31, 2013
EUR EURShare capitalShare capital Jan 1 5,314,918.72 5,314,918.72Share capital Dec 31 5,314,918.72 5,314,918.72
Share premium reserveShare premium reserve Jan 1 2,439,301.82 2,439,301.82Share premium reserve Dec 31 2,439,301.82 2,439,301.82
Reserve for invested non-restricted equityReserve for invested non-restricted equity Jan 1 4,499,415.33 7,055,201.15Share subscriptions with stock options 131,774.75 737,776.60Capital repayment 0.00 -3,293,562.42Reserve for invested non-restricted equity Dec 31 4,631,190.08 4,499,415.33
Profi t/loss from previous fi nancial periodsProfi t/loss from previous fi nancial periods Jan 1 7,195,005.69 7,499,978.35Dividends -3,906,854.24 -1,551,505.94
Profi t/loss from previous fi nancial periods Dec 31 3,288,151.45 5,948,472.41
Amount paid for own shares in possession of the companyOwn shares in possession of the company Jan 1 -57,127.73 -85,927.73Shares transferred as fees to members of the Board 43,200.00 28,800.00Own shares in possession of the company Dec 31 -13,927.73 -57,127.73
Profi t/Loss for the periodProfi t/loss for the period Dec 31 1,047,421.70 -304,972.66
Equity total Dec 31 16,707,056.04 17,840,007.89
Distributable fundsReserve for invested non-restricted equity 4,631,190.08 4,499,415.33Profi t from previous fi nancial periods less treasury shares held by the company 3,274,223.72 5,891,344.68Profi t for the period 1,047,421.70 -304,972.66Distributable funds Dec 31 8,952,835.50 10,085,787.35
The share capital of Revenio Group Corporation on December 31, 2014 was EUR 5,314,918.72, and the number of shares 7,932,078. There is one class of shares. All shares confer an equal right to dividends and the company’s funds. On the closing date, the company held 2,701 of its own shares (REG1V).
13) Interest-bearing debtDec 31, 2014 Dec 31, 2013
EUR EURBank loan 750,000.00 1,250,000.00Total 750,000.00 1,250,000.00
Debt maturing after more than fi ve years 0.00 0.00
14) Intra-group liabilities Dec 31, 2014 Dec 31, 2013
EUR EURCurrent intra-group liabilitiesTrade payables 0.00 186.00Intra-group bank account 553,042.99 2,679,459.35Other liabilities 5,476,262.73 4,240,502.27Total 6,029,305.72 6,920,147.62
15) Principal items of accrued liabilities and deferred incomeDec 31, 2014 Dec 31, 2013
EUR EURVacation pay liability 77,291.49 79,373.44Interest on interest-bearing debt 457.88 821.18Payables from indirect salary costs 13,674.37 20,058.00Other accruals and deferred income 93,885.26 271,009.47Total 185,309.00 371,262.09
16) Notes to collateral and commitments
Collateral Dec 31, 2014 Dec 31, 2013EUR EUR
Mortgages givenFinancing limit with collateral 0.00 0.00Mortgages given 0.00 0.00Total 0.00 0.00
PledgesDebt with shares as collateral 0.00 0.00Pledged subsidiary shares at book value 0.00 0.00Total 0.00 0.00
Guarantees Bank loan guarantees for subsidiaries 1,271,860.44 2,127,497.68Guarantees for others for project guarantees, other guarantees 0.00 0.00On-demand reciprocal guarantees for project guarantees 0.00 0.00On-demand guarantees for subsidiary project work 0.00 11,658,495.76Guarantees total 1,271,860.44 13,785,993.43
Commitments and other liabilities Dec 31, 2014 Dec 31, 2013EUR EUR
Lease commitmentsLease commitments maturing next year 12,204.76 40,311.18Lease commitments maturing later than next year 24,950.08 63,509.42Total 37,154.84 103,820.60
Lease agreements run for 2–3 years and do not include special notice or purchase option clauses.
Rent liabilities Dec 31, 2014 Dec 31, 2013Rent liability for business premises 1,049,307.10 1,052,382.96Total 1,049,307.10 1,052,382.96
64
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
13) Interest-bearing debtDec 31, 2014 Dec 31, 2013
EUR EURBank loan 750,000.00 1,250,000.00Total 750,000.00 1,250,000.00
Debt maturing after more than fi ve years 0.00 0.00
14) Intra-group liabilities Dec 31, 2014 Dec 31, 2013
EUR EURCurrent intra-group liabilitiesTrade payables 0.00 186.00Intra-group bank account 553,042.99 2,679,459.35Other liabilities 5,476,262.73 4,240,502.27Total 6,029,305.72 6,920,147.62
15) Principal items of accrued liabilities and deferred incomeDec 31, 2014 Dec 31, 2013
EUR EURVacation pay liability 77,291.49 79,373.44Interest on interest-bearing debt 457.88 821.18Payables from indirect salary costs 13,674.37 20,058.00Other accruals and deferred income 93,885.26 271,009.47Total 185,309.00 371,262.09
16) Notes to collateral and commitments
Collateral Dec 31, 2014 Dec 31, 2013EUR EUR
Mortgages givenFinancing limit with collateral 0.00 0.00Mortgages given 0.00 0.00Total 0.00 0.00
PledgesDebt with shares as collateral 0.00 0.00Pledged subsidiary shares at book value 0.00 0.00Total 0.00 0.00
Guarantees Bank loan guarantees for subsidiaries 1,271,860.44 2,127,497.68Guarantees for others for project guarantees, other guarantees 0.00 0.00On-demand reciprocal guarantees for project guarantees 0.00 0.00On-demand guarantees for subsidiary project work 0.00 11,658,495.76Guarantees total 1,271,860.44 13,785,993.43
Commitments and other liabilities Dec 31, 2014 Dec 31, 2013EUR EUR
Lease commitmentsLease commitments maturing next year 12,204.76 40,311.18Lease commitments maturing later than next year 24,950.08 63,509.42Total 37,154.84 103,820.60
Lease agreements run for 2–3 years and do not include special notice or purchase option clauses.
Rent liabilities Dec 31, 2014 Dec 31, 2013Rent liability for business premises 1,049,307.10 1,052,382.96Total 1,049,307.10 1,052,382.96
64
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
65
NOTES TO THE PARENT COMPANY’S FINANCIAL STATEMENTS DEC 31, 2014
Shareholders by sector Dec 31, 2014No. of shareholders Percentage of shareholders No. of shares Percentage of shares and
percentage of voting rightsCompanies 229 4.2 % 1,504,375 19.0 %Households 5,172 94.6 % 4,873,984 61.4 %Financial and insurance institutions
11 0.2 % 642,807 8.1 %
European Union 26 0.5 % 64,525 0.8 %Foreign entities and nominee-registered
20 0.4 % 492,301 6.2 %
Non-profi t entities 9 0.2 % 89,086 1.1 %Public entities 1 0.0 % 265,000 3.3 %Total 5,468 100.0 % 7,932,078 100.0 %
Shareholders by share ownership Dec 31, 2014Shares, qty No. of shareholders Percentage of shareholders No. of shares Percentage of shares and
percentage of voting rights1–1000 4,755 87.0 % 1,136,309 14.3 %1001–5000 565 10.3 % 1,221,732 15.4 %5001–10000 70 1.3 % 522,282 6.6 %10001–50000 60 1.1 % 1,134,016 14.3 %50001– 18 0.3 % 3,917,739 49.4 %Total 5,468 100.0 % 7,932,078 100.0 %
17) Other notes Stock option rights granted to personnel and management Option rights of personnel On the basis of the share issue authorizations approved by the Annual General Meeting of April 3, 2007, the Board of Revenio Group Corporation decided, on November 23, 2007, on a new corporate option scheme comprising a maximum of 3,684,365 option rights. Ten (10) option rights entitle to the subscription of one Revenio Group Corporation share. The total maximum of shares available for subscription on the basis of outstanding option rights was 0.6 % of the total number of shares and voting rights at the end of the fi nancial period, when the new shares subscribed for using the option rights have been registered.
The option rights are divided into three series: A (1,684,365 option rights), B (1,000,000 option rights) and C (1,000,000 option rights).The subscription period for series A is May 1, 2009 to May 1, 2013 (expired), that for series B November 1, 2010 to November 1, 2014 (expired), and that for series C May 1, 2012 to May 1, 2016. The share subscription price is the weighted average quotation of the Revenio Group Corporation share on November 1–30, 2010, EUR 1.69 (series C).
By way of deviation from the shareholders' preemptive subscription right, the option rights are granted to members of the Revenio Group’s management and to Revenio's wholly owned subsidiary, Done Medical Oy. The shareholders’ preemptive subscription right is waived as the option rights are intended to constitute a part of the incentive program of Revenio Group Corporation. At the time of issuance, all of the 2007B and 2007C option rights, as well as part of the 2007A option rights, were granted to Done Medical Oy.
The number of shares and stock option rights held by the members of the Board of Directors, the President and CEO, and entities in their control on Dec 31, 2014
% No.Shares 11.8 % 936,798Option rights 0.0 % 0
At the end of the fi nancial period on December 31, 2014, the valid and unused share issue authorization for the Board of Directors, as decided by the ordinary Annual General Meeting of March 21, 2013, covered 3,000,000 shares, including special rights to shares as stipulated in section 10, paragraph 1 of the Finnish Limited Liability Companies Act, and the authorization to repurchase the company’s own shares covered 771,107 shares. As of December 31, 2014, the company held 2,701 of its own shares (REG1V). The authorization to issue shares and repurchase its own shares is valid until April 30, 2015.
Major shareholders Dec 31, 2014No. of shares Percentage of shares and
percentage of voting rights1 Merivirta Jyri 950,000 12.0 %2 Joensuun Kauppa ja Kone Oy 441,509 5.6 %3 Gerako Oy 340,000 4.3 %4 Investment Fund Evli Suomi Pienyhtiöt 336,086 4.2 %5 Etera Mutual Pension Insurance Company 265,000 3.3 %6 Alpisalo Mia Elisa 211,199 2.7 %7 Investment Fund “Danske Invest Suomen Pienyhtiöt” 190,000 2.4 %8 Eyemaker’s Finland Oy 150,000 1.9 %9 Salovaara Olli-Pekka 109,207 1.4 %10 Siik Rauni Marjut 92,500 1.2 %Others 4,846,577 61.1 %Total 7,932,078 100.0 %
SIGNATURES TO THE FINANCIAL STATEMENTS AND REVIEW OF OPERATIONS Vantaa, February 12, 2015 Board of Directors and President & CEO of Revenio Group Corporation
Pekka Tammela Rolf Fryckman Ari KohonenChairman Board Member Board Memberof the Board Kyösti Kakkonen Pekka Rönkä Olli-Pekka SalovaaraBoard Member Board Member President & CEO
AUDITOR’S NOTEWe have issued an audit report today based on the audit we have performed.
Helsinki, Thursday, February 12, 2015
PricewaterhouseCoopers OyFirm of Authorized Public Accountants
Juha TuomalaAuthorised Public Accountant
INFORMATION CONCERNING BOOKKEEPING DATA List of accounting books Format Journals and general ledger CD-ROM Lists of accounts receivable/payable CD-ROM Bound balance sheet book Printed on paper Voucher types Type Legend Archiving method Voucher numbers10 Handelsbanken Electronic 1–15111 Nordea Electronic 1–10312 Danske Bank Electronic 130 Accruals Electronic 1–44540 Purchase invoice Electronic 1–82650 Purchase payment Electronic 1–81660 Sales invoice Electronic 1–27370 Sales payment Electronic 1–27580 Pay slips Electronic 1–1299 Memo vouchers Electronic 1–404AT System- generated Electronic 1–12T Automatic accounting entries Electronic 1 Storage of accounting materials Accounting materials are archived at the Head Offi ce of Revenio GroupCorporation in Vantaa in their original electronic and printed formats. The Head Offi ce address is Äyritie 22, 01510 Vantaa, Finland.
AUDITOR’S REPORT To the Annual General Meeting of Revenio Group Corporation We have audited the accounting records, the fi nancial statements, the report of the Board of Directors and the administration of Revenio Group Corporation for the fi nancial period January 1–December 31, 2014. The fi nancial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity and statement of cash fl ows, and notes to the consolidated fi -nancial statements, as well as the parent company’s balance sheet, income statement, cash fl ow statement and notes to the fi nancial statements.
Responsibility of the Board of Directors and the President & CEO The Board of Directors and the President & CEO are responsible for the preparation of consolidated fi nancial statements that give a true and fair view in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU, as well as for the prepara-tion of fi nancial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regu-lations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the com-pany’s accounts and fi nances, and the President & CEO shall see to it that the accounts of the company are in compliance with the law and that its fi nancial affairs have been arranged in a reliable manner.
Auditor’s responsibility Our responsibility is to express an opinion on the fi nancial statements, the consolidated fi nancial statements and the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to ob-tain reasonable assurance about whether the fi nancial statements and the report of the Board of Directors are free from material miss-tatement, and whether the members of the Board of Directors of the parent company and the President & CEO are guilty of an act or neg-ligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making tho-se risk assessments, the auditor considers internal control relevant to the entity’s preparation of fi nancial statements and report of the Board of Directors that give a true and fair view 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 company’s internal control. An audit also includes evaluating the ap-propriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated fi nancial statementsIn our opinion, the consolidated fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance, and cash fl ows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the company’s fi nancial statements and the report of the Board of Directors In our opinion, the fi nancial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company’s fi nancial performance and fi nancial position in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the fi nancial statements.
Helsinki, February 12, 2015
PricewaterhouseCoopers Oy Authorized Public Accountants
Juha Tuomala Authorized Public Accountant
66
SIGNATURES TO THE FINANCIAL STATEMENTS AND REVIEW OF OPERATIONS
The Revenio Group Corporation’s regulationsand administrative code Revenio Group Corporation (”Revenio” or ”the company”) is a Finnish public limited company. Its obligations and the responsibilities of its decision-making body are governed by Finnish law. The Revenio Group comprises the parent company Revenio Group Corporation and its subsidiaries. The company is domiciled in Vantaa.
The highest decision-making authority rests with the Annual General Meeting of the company’s shareholders. The sharehold-ers elect the members of the Board of Directors and the auditors of the company in the Annual General Meeting. The day-to-day ope-rations of the Revenio Group is managed by the Board of Directors and the President & CEO. The company operates according to the single-tier administration model.
In its decision-making and corporate governance, Revenio
Group Corporation abides by the Finnish Limited Liability Companies Act, other legal provisions concerning listed compa-nies, Revenio Group Corporation’s Articles of Incorporation, and the rules and guidelines issued by NASDAQ OMX Helsinki Ltd. As of October 1, 2010, the company complies with the Finnish Corporate Governance Code issued on June 15, 2010 by the Securities Market Association (”governance code”). The full Governance Code is available at www.cgfi nland.fi .
Deviation from Governance Code recommendationsThe Members of the Board of Directors elected by the Annual GeneralMeeting on March 20, 2014 are all male. This constitutes a devia-tion from recommendation No. 9 of the Governance Code, accor-ding to which a versatile composition of a Board of Directors should include both genders.
CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
REVENIO GROUP CORPORATIONCORPORATE GOVERNANCE STRUCTURE
General Meeting
Auditor Board of Directors Internalaudit
President & CEO
Elects Elects
Elects
Elects
Reports
Reports
Issues auditor's report
Revenio Health Tech Discontinued operations
IcareFinland Oy
Done SoftwareSolutions Oy
BoomerangerBoats Oy
Kauhajoen Sisälogistiikka Oy
Group administration
OscareMedical Oy
53%
Revenio Research Oy
67
CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
Annual General MeetingOrdinary and extraordinary general meetings of shareholders The ordinary Annual General Meeting is held annually on a date determined by the Board of Directors no later than the end of June. The AGM considers matters stipulated by the company’s Articles of Incorporation, and any other proposals/recommen-dations made to the AGM. In recent years, Revenio’s ordinary Annual General Meeting has been held in March–April. The com-pany may also convene an extraordinary meeting of shareholders. General meetings of shareholders are convened by the Board of Directors. An extraordinary general meeting of shareholders shall also be convened if shareholders with at least 10 % of the com-pany’s shares demand it in writing for the consideration of a spe-cifi c matter. As a rule, the AGM considers matters presented to it by the Board of Directors. In accordance with the Finnish Limited Liability Companies Act, a shareholder has the right to submit a matter under the jurisdiction of the AGM for consideration by a re-quest to the Board of Directors, made suffi ciently in advance for the matter to be included in the notice of the AGM. The sharehol-der shall deliver the request to include a matter on the agenda for the AGM, together with its grounds or suggested decision, to the address Revenio Group Corporation, Äyritie 22, 01510 VANTAA, FINLAND, in writing.
Principal matters to be decided by the general meeting of shareholdersThe principal matters to be decided by the general meeting of shareholders are:
• the number of members on the Board of Directors • election of the members of the Board of Directors • the remuneration and fi nancial benefi ts paid to members of the Board of Directors • election of the company’s auditor and deciding on the auditor’s fee • adoption of the fi nancial statements • the discharge of the President & CEO and the members of the Board of Directors from liability • amendments to the Articles of Incorporation • changes in share capital • distribution of the company’s funds, such as the distribution of profi t
Notice of the general meeting of shareholders Notice of a General Meeting shall be given no earlier than two (2) months and no later than twenty-one (21) days prior to the meeting by publishing the notice on the company’s website at www.revenio.fi , or additionally also in at least one Finnish-language national daily newspaper as determined by the Board of Directors, or by delivering the notice in writing to the address entered for each shareholder in the shareholder register. The notice of the general meeting shall indicate: • the time and place of the meeting • the proposed agenda for the meeting • proposal for members to be elected to the Board of Directors together with their personal information • proposal for auditor • guidelines for the procedure the shareholder must follow in order to participate and vote in the general meeting • the record date determining the right to participate and vote in the general meeting
• the place where documents related to the meeting and decision proposals are available • the address of the company’s website
The notice and the Board’s proposals for the meeting are published in the form of a stock exchange release.
In addition to the above information, the following will be pre-sented to shareholders on the company’s website no later than 21 days prior to the meeting: • the total number of shares and votes by classes of shares on the date of the notice • the documents to be presented to the general meeting • decision proposals by the Board or another executive body • matters included on the agenda for which no decision is proposed
Right to participate in general meetings of shareholdersShareholders who are registered in the Company’s shareholder register maintained by Euroclear Finland Ltd on the record date specifi ed by the company have the right to attend the AGM. Participants are required to register for the general meeting by the date given in the notice, which is no later than ten (10) days prior to the date of the meeting. Shareholders may attend the meeting in person or by a proxy representative. A proxy representative must present a dated power of attorney or otherwise in a reliable man-ner prove that they are authorized to represent the shareholder. The shareholder or proxy representative may have one assistant at the meeting
Minutes of the Annual General MeetingMinutes will be taken at general meetings of shareholders and made available, together with attachments relating to the decisions made by the meeting, to the shareholders, on the company’s web-site within two (2) weeks of the meeting. Attachments relating to decisions made by the meeting will be available only to the extent they pertain to the actual subject matter of the decision. In addition, the decisions of the general meeting are published in the form of a stock exchange release without delay after the meeting.
Senior management presence at general meetingsThe intention is for all members of Revenio Group Corporation’s Board of Directors to be present at general meetings of sharehol-ders. The Chairman of the Board, a suffi cient number of members of the Board, and the President & CEO are present at general meetings. In addition, the auditor attends ordinary Annual General Meetings. First-time candidates to the Board of Directors must be present at the meeting deciding on their election unless a compel-ling reason for absence exists.
Share classes The company has one class of shares. One share entitles to one vote. In a vote, the decision of the general meeting shall according to the Finnish Limited Liability Companies Act usually be the pro-posal carried by more than half of the votes given. According to the Finnish Limited Liability Companies Act, however, there are several matters that require a qualifi ed majority in respect of the number of shares and the votes granted by the shares. Such matters include the amendment of the Articles of Incorporation and the decision on a directed share issue.
Revenio’s Articles of Incorporation do not include any redemp-tion clauses or voting restrictions. To the knowledge of the com-pany, no shareholder agreements exist for exercising voting rights in the company, nor restrictions on the transfer of the company’s shares.
68
CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
Annual General MeetingOrdinary and extraordinary general meetings of shareholders The ordinary Annual General Meeting is held annually on a date determined by the Board of Directors no later than the end of June. The AGM considers matters stipulated by the company’s Articles of Incorporation, and any other proposals/recommen-dations made to the AGM. In recent years, Revenio’s ordinary Annual General Meeting has been held in March–April. The com-pany may also convene an extraordinary meeting of shareholders. General meetings of shareholders are convened by the Board of Directors. An extraordinary general meeting of shareholders shall also be convened if shareholders with at least 10 % of the com-pany’s shares demand it in writing for the consideration of a spe-cifi c matter. As a rule, the AGM considers matters presented to it by the Board of Directors. In accordance with the Finnish Limited Liability Companies Act, a shareholder has the right to submit a matter under the jurisdiction of the AGM for consideration by a re-quest to the Board of Directors, made suffi ciently in advance for the matter to be included in the notice of the AGM. The sharehol-der shall deliver the request to include a matter on the agenda for the AGM, together with its grounds or suggested decision, to the address Revenio Group Corporation, Äyritie 22, 01510 VANTAA, FINLAND, in writing.
Principal matters to be decided by the general meeting of shareholdersThe principal matters to be decided by the general meeting of shareholders are:
• the number of members on the Board of Directors • election of the members of the Board of Directors • the remuneration and fi nancial benefi ts paid to members of the Board of Directors • election of the company’s auditor and deciding on the auditor’s fee • adoption of the fi nancial statements • the discharge of the President & CEO and the members of the Board of Directors from liability • amendments to the Articles of Incorporation • changes in share capital • distribution of the company’s funds, such as the distribution of profi t
Notice of the general meeting of shareholders Notice of a General Meeting shall be given no earlier than two (2) months and no later than twenty-one (21) days prior to the meeting by publishing the notice on the company’s website at www.revenio.fi , or additionally also in at least one Finnish-language national daily newspaper as determined by the Board of Directors, or by delivering the notice in writing to the address entered for each shareholder in the shareholder register. The notice of the general meeting shall indicate: • the time and place of the meeting • the proposed agenda for the meeting • proposal for members to be elected to the Board of Directors together with their personal information • proposal for auditor • guidelines for the procedure the shareholder must follow in order to participate and vote in the general meeting • the record date determining the right to participate and vote in the general meeting
• the place where documents related to the meeting and decision proposals are available • the address of the company’s website
The notice and the Board’s proposals for the meeting are published in the form of a stock exchange release.
In addition to the above information, the following will be pre-sented to shareholders on the company’s website no later than 21 days prior to the meeting: • the total number of shares and votes by classes of shares on the date of the notice • the documents to be presented to the general meeting • decision proposals by the Board or another executive body • matters included on the agenda for which no decision is proposed
Right to participate in general meetings of shareholdersShareholders who are registered in the Company’s shareholder register maintained by Euroclear Finland Ltd on the record date specifi ed by the company have the right to attend the AGM. Participants are required to register for the general meeting by the date given in the notice, which is no later than ten (10) days prior to the date of the meeting. Shareholders may attend the meeting in person or by a proxy representative. A proxy representative must present a dated power of attorney or otherwise in a reliable man-ner prove that they are authorized to represent the shareholder. The shareholder or proxy representative may have one assistant at the meeting
Minutes of the Annual General MeetingMinutes will be taken at general meetings of shareholders and made available, together with attachments relating to the decisions made by the meeting, to the shareholders, on the company’s web-site within two (2) weeks of the meeting. Attachments relating to decisions made by the meeting will be available only to the extent they pertain to the actual subject matter of the decision. In addition, the decisions of the general meeting are published in the form of a stock exchange release without delay after the meeting.
Senior management presence at general meetingsThe intention is for all members of Revenio Group Corporation’s Board of Directors to be present at general meetings of sharehol-ders. The Chairman of the Board, a suffi cient number of members of the Board, and the President & CEO are present at general meetings. In addition, the auditor attends ordinary Annual General Meetings. First-time candidates to the Board of Directors must be present at the meeting deciding on their election unless a compel-ling reason for absence exists.
Share classes The company has one class of shares. One share entitles to one vote. In a vote, the decision of the general meeting shall according to the Finnish Limited Liability Companies Act usually be the pro-posal carried by more than half of the votes given. According to the Finnish Limited Liability Companies Act, however, there are several matters that require a qualifi ed majority in respect of the number of shares and the votes granted by the shares. Such matters include the amendment of the Articles of Incorporation and the decision on a directed share issue.
Revenio’s Articles of Incorporation do not include any redemp-tion clauses or voting restrictions. To the knowledge of the com-pany, no shareholder agreements exist for exercising voting rights in the company, nor restrictions on the transfer of the company’s shares.
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CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
Board of Directors Composition and Term of the Board of Directors and independence of its members
According to its Articles of Incorporation, Revenio Group Corporation’s Board of Directors is to be composed of no fewer than three (3) and no more than six (6) members. The general meeting of shareholders elects the members of the Board. The Board elects its chairperson from among its members. All members of the Board of Directors are non-executive directors. According to the Articles of Incorporation, the term of a member of the Board is one year beginning at the end of the general meeting of sharehol-ders by which the member was elected and ending at the end of the next ordinary general meeting of shareholders.
Board MembersPekka Tammela (b. 1962), M.Sc. (Econ. & Bus.Adm.), APAPekka Tammela, M.Sc. (Econ. & Bus.Adm.), APA, is a partner in Pajamaa Partners Oy. He served in various managerial posts in 1999–2006, such as CFO of Solteq Oyj and of Panostaja Oyj and as a senior manager in both KPMG and PricewaterhouseCoopers. Before 1999, he worked as an Authorized Public Accountant. Mr. Tammela has been a member of Revenio’s Board of Directors since April 3, 2007.
Rolf Fryckman (b. 1954), opticianRolf Fryckman is Chairman of the Board of Directors of Eyemaker’s Finland Oy. He is also a partner in the company, and plays a lea-dership role in companies in which Eyemaker’s Finland Oy has a stake. His involvement in the optical industry began in 1974, as an entrepreneur, and he has also held various sales and marke-ting roles. Most recently, he has been the Managing Director of Cazze Optikot (since 2000). Mr. Fryckman has been a member of Revenio’s Board of Directors since April 8, 2010.
Ari Kohonen (b. 1955), M.Sc. (Eng.), M.Sc. (Econ.) Ari Kohonen is Chairman of the Board of Directors of Gerako Oy. His previous work has included several international and investment banking positions at Nordea (1983–2003). Prior to this, he was with Kemira Oy (1980–1983). Mr. Kohonen has been a member of Revenio’s Board of Directors since March 21, 2013.
Kyösti Kakkonen (b. 1956), LL.B.Kyösti Kakkonen is the founder of Tokmanni Group and served as CEO of the Group for 20 years until 2009. Today, Mr. Kakkonen acts as CEO in several companies of his own, such as Joensuun Kauppa ja Kone Oy, K2 Invest Oy and Kakkonen-Yhtiöt Oy. Mr. Kakkonen has been a member of Revenio’s Board of Directors since March 20, 2014.
Pekka Rönkä (b. 1952), M.Sc. (Eng.)Pekka Rönkä, M.Sc. (Eng), currently acts as Chairman of the Board of Directors of HLD Healthy Life Devices Oy and Magnasense Technologies Oy. His previous positions include Senior Vice President and General Manager of Thermo Fisher Scientifi c (1999–2012). Mr. Rönkä has been a Member of Revenio’s Board of Directors since March 20, 2014. All Board Members are independent of the company and its major shareholders.
The Board reviews the neutrality of its members on a regu-lar basis. Board Members are obligated to provide the Board of Directors with the information required for the assessment of neutrality.
Responsibilities of the Board of DirectorsThe Board is responsible for the company’s administration and the appropriate organization of the company’s business operations. It makes decisions on principles governing corporate strategy, organization, accounting, and fi nances.
The Board appoints the company’s President & CEO and, based on the CEO’s proposal, the members of the company’s Management Team. It also ratifi es the company’s organization and structure. As the Board does not have separate committees, its re-sponsibilities also include those of committees as stipulated by the Governance Code.
The Board holds regular meetings approximately once a month, and more often as required.
As stipulated by its charter, the Board’s principal tasks are to: • decide on Group strategy and ratify the strategies of the various business areas • approve the Group’s annual plan (budget) • approve the Group’s fi nancing and investment policies • ratify the Group’s risk management principles, and discuss the Group’s most important risks and factors of uncertainty • confi rm and ratify the Group’s insurance policy • discuss and approve the consolidated fi nancial statements, interim fi nancial reports, stock exchange releases pertaining to these, and the review of operations • decide on specifi c investments, acquisitions, divestments, corporate reorganization and commitments that have strategic or fi nancial importance • decide on rules concerning management authorizations • decide on the Group’s high-level structure and organization • appoint and dismiss the President & CEO, approve the CEO’s service contract, and decide on the CEO’s salary, benefi ts, and other fi nancial remuneration • approve the appointments of the members of the Group Management Team, the Managing Directors of subsidiaries, their salaries and fi nancial benefi ts • decide on the incentive systems of the Revenio Group, including the granting of any stock options within limits set by the general meeting of shareholders
The Board’s decision-makingThe task of Revenio Group Corporation’s Board of Directors is to further the interests of the Group and all of its shareholders. Members of the Board do not represent the entities or persons who proposed their election. Members of the Board are disqualifi ed from participating in the management of matters or transactions taking place between themselves and the company. Voting is based on the simple majority vote principle. In the case of an even vote, the proposal supported by the Chairman will prevail.
The Board’s meeting procedures and self-assessmentThe Chairman is responsible for convening the Board mee-tings and for the work at the meetings. The Board has not as-signed any particular areas of business for monitoring to its mem-bers. The Board regularly reviews its operation and procedures,
Fryckman Rolf Yes YesKakkonen Kyösti Yes YesKohonen Ari Yes YesRönkä Pekka Yes YesTammela Pekka Yes Yes
Assessment of independence of the members of Revenio Group Corporation’s Board of Directors
Independent of signi-fi cant shareholders
Independent of the company
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CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
and performs self-assessments at necessary intervals.In 2014, the average attendance of Board members at mee-
tings was 94.0 %, while in 2013 it was 98.2 %
Director’s fees and other fi nancial benefi ts of the members of the Board of DirectorsThe ordinary Annual General Meeting of shareholders decides the fees and other fi nancial benefi ts of the members of the Board of Directors for one year at a time. According to the decision of the AGM on March 21, 2013, 40 percent of the Board members’ fee is paid in the company’s own shares and 60 percent in money. No separate fees are paid to Board members for meeting attendance. The travel expenses of the members of the Board are reimbursed in accordance with the Finnish Tax Administration’s ruling on tax-free reimbursements of travel expenses.
President & CEOAccording to the Articles of Incorporation, Revenio Group Corporation shall have a President and CEO. The CEO’s task is to manage the operation of the company in accordance with guide-lines and rules laid out by the Board of Directors, and inform the Board of the development of the company’s business operations and fi nancial position. Additionally, the CEO is responsible for or-ganizing the company’s day-to-day management and to assure that the company’s asset management is arranged in a reliable way. The CEO is appointed by the Board of Directors, which al-so decides the terms and conditions of the CEO’s employment. A written service contract exists between the company and the CEO.
The Revenio Group Corporation’s President and CEO is Mr. Olli-Pekka Salovaara, M.Sc. (Econ.). Mr. Salovaara has more than 25 years of experience in different positions in international sales, marketing and general corporate management, including the posts of Marketing Manager and Managing Director at Halton-System Oy,
Development Director at Konecranes USA, and Managing Director of Pan-Oston Oy. While working for Ruukki Group Corporation, he was responsible for companies in the metal industry.
Administration of subsidiariesThe members of the Boards of Directors of the subsidiaries of the Revenio Group Corporation are elected from Group management. Persons who have employment agreements or service contracts with Group companies are not paid a separate fee for mem-bership on the Boards of Directors of subsidiary companies.The responsibilities of the Boards of subsidiaries are provided for in legislation. Business control of the subsidiaries takes place through the parent companys Board of Directors, President & CEO, the sub-sidiary’s Managing Director, and the Group’s management system.
Directors of the business segments and Managing Directors of subsidiaries Dec 21, 2014
Revenio Health TechRevenio Health Tech segment is headed by Olli-Pekka Salovaara, President and CEO of the Revenio Group, in addition to his other duties. His personal details are presented above. The Managing Directors of the segment companies are:
Icare Finland Oy: Timo Hildén, M.Sc. (Econ.) since April 9, 2012. Timo Hildén has 30 years of experience in general management, sales and marketing positions within the health technology sector, at Orion Group, Labsystems, Thermo Electron and Thermo Fisher Scientifi c. In the early 1990s, he was involved in the launch of pro-duction and sales companies in Russia and China, later assum-ing responsibility for production and marketing units in the USA, Mexico and Finland. He was also in charge of product develop-ment units in Finland and the United States. Timo was involved in numerous acquisitions while working for Thermo.
Revenio Research Oy: Timo Hildén, M.Sc. (Econ.) since December 29, 2014.
Discontinued operationsThe Segment Director of discontinued operations is Riku Lamppu, A.B.A., who also serves as Managing Director of Boomeranger Boats Oy in the Group’s discontinued operations. His background is presented below under Boomeranger Boats Oy. The Managing Directors of companies in discontinued operations are:
Done Software Solutions Oy: Mr. Ari Suominen, Civil Engineer, since May 1, 2010. Before his present position, Mr. Suominen was the director of the Logistics Software business unit of Done Logistics Oy for 8 years. Previously, he worked for Kone Oy, Kone Wood in international product development and project duties, as head of the design department of FidaWare Oy, a company sup-plying logistics information systems, and various sales duties at the German sales offi ce of Fidaco Logistics Oy.
Boomeranger Boats Oy: Riku Lamppu, A.B.A., since September 9, 2014. Before his present post, Riku Lamppu worked in the HoReCa wholesale business, serving for 12 years as Managing Director of E. Ahlström Oy and for a short time as Managing Director of Icecool Oy. Prior to this, Mr. Lamppu held management positions at Instrumentarium Oy Optical Group as Product Manager for eyeglass frames and sunglasses, responsible for frame imports and product range development. During his years at Instrumentarium, Mr. Lamppu also worked as Regional Manager for the Nissen chain with responsibility for the development of the chain’s retail operations, and, before his appointment as Managing
Remuneration to the President & CEO and Director’s Fees to the members of the Board of Directors 2013–2014 (TEUR)
2014 2013President & CEO Olli-Pekka Salovaara 321 296Chairman of the Board Pekka Tammela 36 36Board Member Rolf Fryckman 18 23Board Member Ari Kohonen 18 13.5Board Member Pekka Rönkä 13.5 0Board Member Kyösti Kakkonen 13.5 0Former Board Member and Chairman of the Board Timo Mänty 0 15Former Board Member Matti Hyytiäinen 0 9Former Board Member Julia Ormio 0 9
President & CEO’s age of retirement, pension benefi ts,period of notice and discharge compensation:
Retirement age TyELPension benefi ts TyELPeriod of notice 18 monthsCompensation payble in addition to – salary for period of notice
Salary Bonuses Benefi ts Option Total in money in kind rightsOlli-Pekka 2014 2014 2014 2014 2014Salovaara 215,404 103,680 1,423 0 320,507 2013 2013 2013 2013 2013 204,636 21,652 240 69,548 296,076
President and CEO’s salary, bonuses and benefi ts in kind 2013–2014 (EUR)
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CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
Director for E. Ahlström Oy, he was Sales Manager for Finland and the Baltics for Johnsson & Johnsson Vistakon.
RemunerationThe remuneration system for the President & CEO, the Group Management Team, and the subsidiaries’ Managing Directors comprises a fi xed monthly salary, short and long-term bonuses determined by the profi t impact of the position, and a stock option program. The company does not have a share-based incentive scheme. As of January 1, 2012, the CEO, Group Management Team, and CEOs of subsidiaries will benefi t from group pension insurance and medical expenses insurance. The fi nancial impact of this insurance is insignifi cant to the company.
The Board of Revenio Group Corporation decides on the salaries and other fi nancial benefi ts of the Chairman of the Board, members of the Management Team, and the Managing Directors of subsidiaries. The Board also decides on the criteria for the perfor-mance-based bonus system and other principles for management’s performance-based bonuses. The President & CEO makes deci-sions pertaining to the salaries and bonuses of any Management Team members not mentioned above, and also decides on the de-tails of performance-based bonus schemes for other managerial staff, using the one-over-one principle.
The maximum amount of performance-based remuneration granted to members of Revenio Group Corporation’s manage-ment is equal to four months’ salary under the short-term perfor-mance-based bonus scheme and two months’ salary under the long-term scheme. A determination period of one year is used for both. The maximum remuneration for the President & CEO is equal to six months’ salary under the short-term performance-based bo-nus scheme and four months’ salary under the long-term scheme. The criteria for the short-term performance-based bonus scheme are performance requirements at both Group level and for one’s own area of responsibility, along with an assessment component. The Group’s operating profi t is the criterion for the long-term incen-tive scheme. The short-term performance-based bonus scheme applies to fi ve people in managerial posts at Group companies. A part of the current Group Management Team falls within the scope of the long-term performance-based bonus scheme.
In addition to its performance-based bonus scheme, Revenio Group Corporation also has an option scheme for Group manage-ment, dating from 2007. Revenio Group Corporation’s Board of Directors decides on the distribution of options.
The Group’s fi nancial reporting The Group’s fi nancial development and achievement of the Group’s fi nancial goals are monitored through monthly fi nancial repor ting covering the entire Group. The monthly performance reports include actual performance at the Group and segment levels together with analysis, realized performance over the year before, realized performance compared against fi nancial plans, and forecasts for the current calendar year. In addition, each seg-ment reports a number of key fi nancial and business fi gures.
The Group’s short-term fi nancial planning is based on annually drawn-up fi nancial plans for the following calendar year.
The Group’s fi nancial position and development are communi-cated through interim reports and the fi nancial statements release.
Risk management and controlRisk managementThe Group’s risk management aims to ensure the continuity of business and the Group’s capacity to operate in any risk scenarios that can be identifi ed in advance. Revenio Group Corporation’s Board of Directors defi nes the targets and priorities of strategic risk management.
Risk management responsibilities and rolesThe implementation of risk management is the responsibility of business management teams and the Group’s Management Team. These bodies ensure that suffi cient risk identifi cation, assessment, management and reporting procedures are included in the pro-cesses under their respective responsibilities.
Subsidiaries’ business management teams locally organize risk management implementation methods, taking the subsi-diary’s size into account. For certain risk management areas in which a centralized approach is appropriate, such as the man-agement of insurance and fi nancial risks, the parent company’s Board of Directors makes such decisions based on a proposal by the President & CEO.
Risks and any changes therein are reported to Revenio Group Corporation’s Board of Directors. At least once a year, the Board considers major risks and their management, and analyzes the effectiveness of risk management.
Risk management is assessed by the Internal Audit function during internal audit procedures.
Risk management implementation The business segments assess risks when preparing their annu-al plans. Business segments’ management discuss risks and their management, and update risk assessments at least once a year. Separate risk analyses are made for signifi cant projects, such as major customer projects.
Major risks and uncertainty factorsRevenio Group’s risks are defi ned as strategic, operational, trade cycle, hazard, and fi nancial risks.
The Group’s strategic risks include competition in all sectors, the threat posed by new competing products, and any other actions of the company’s rivals that may affect the competitive situation. Another factor posing a strategic risk is related to success in R&D operations and, therefore, preservation of the product range’s com-petitiveness. In the Group’s sectors, requiring particular expertise in accordance with the strategy, essential risks also include those related to the retention and development of key personnel as well as dependence on the operational ability of the subcontractor and supplier network.
Corporate acquisitions are part of the Group’s strategy. The success of these acquisitions has a signifi cant impact on the reach-ing of growth and profi tability targets. Acquisitions may also change the Group’s risk profi le.
Strategic risks and the need for action are regularly assessed and are monitored in connection with day-to-day management, monthly Group reporting, and annual strategy updates.
Operational risks are associated with the retention and development of major customers, the operations of the distribution network and success in extending the customer base and markets. In the Health Care segment especially, operational risks include factors related to expansion into new markets, such as various countries’ national regulations of marketing authorizations for medical instruments and the related offi cial decisions concerning the health care market.
The operational risks related to the manufacture, product development, and production control of medical instruments are estimated to be higher than average in the Health Care segment, because of that sector’s requirements concerning quality.
Project-based operations, mainly carried out in the discontinued Revenio Technology and Services segment, entail exposure to sub-contractor and supplier risks in the management of demanding in-tegrated solutions.
The ratio of deferred tax assets to assets in the consolidated Balance Sheet is signifi cant. Changes in business profi tability and
71
CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
in both tax legislation and its interpretation could lead to changes in the availability and amount of deferred tax assets.
Hazard risks are covered by insurance. Property and business interruption insurance provide protection against risks in these areas. The business pursued is covered by international liability insurance.
Financial risks consist of credit, interest, liquidity, and foreign exchange risks. To manage credit loss risks, the Group has taken out credit insurance covering all companies in the Group. Every month, and more frequently if necessary, the Board, in its meet-ings, assesses matters related to fi nancial issues. If required, the Board provides decisions and guidelines for the management of fi nancial risks concerning interest-rate and currency hedging, for instance. The liquidity risk can be affected by the availability of external fi nancing, the development of the Group’s credit stand-ing, the trend in business operations and changes in the payment behavior of customers. Liquidity risks are monitored by means of cash forecasts, which are drawn up for periods of 12 months at most at a time.
Internal auditingThe Board of Directors is responsible for internal auditing, which is carried out by an external public accountancy fi rm, authorized by the Central Chamber of Commerce and selected by the Board. The authorized public accountancy fi rm performing internal audit cannot be the same fi rm that acts as the company’s auditor.
The objective of internal auditing is to assess and verify the effi ciency of risk management, internal control, and management and administration. The audits are based on an annual audit plan approved by the Board of Directors of Revenio Group Corporation.
Internal auditing is conducted by Ernst & Young Oy.
Internal controlRevenio Group Corporation’s internal control function is responsible for providing support and ensuring that: • targets are achieved • resources are used economically and effi ciently • operational risks are managed • fi nancial and other managerial information is reliable and accurate • legislation and regulations, strategies, plans, and internal regulations and procedures are complied with
Internal control encompasses all fi nancial and other control car-ried out by the Board of Directors, the President & CEO, and other personnel. At Group level, internal control is based on monthly re-ports, analyses and forecasts prepared by subsidiaries, all of which are discussed at the parent company’s monthly Board meetings. The internal control practices applied by subsidiaries with respect to, for example, key fi nancial processes are defi ned in company- specifi c guidelines. Insider issuesRevenio Group Corporation’s Guidelines for InsidersRevenio Group Corporation complies with the Guidelines for Insiders issued by NASDAQ OMX Helsinki Ltd, which came into force on October 9, 2009. The guidelines have been sent to all insiders.
Revenio Group Corporation’s permanent insiders and insider registersUnder the Finnish Securities Markets Act, Revenio Group Corporation’s public permanent insiders include the members of the company’s Board of Directors, the President & CEO, and the chief auditor from the Authorized Public Accountants. The company’s
Board of Directors has also decided that, alongside the President & CEO, the other members of the Management Team will also be permanent public insiders. Anyone defi ned as a permanent public insider, the statutory information concerning them and their close relations, and organizations in which they exercise control or infl u-ence have been entered in the company’s public insider register.
The company’s permanent insiders also include those who regularly receive, in the course of their duties for the Board of Directors, insider information and are therefore entered into the Group’s non-public, company-specifi c insider register.
SupervisionGroup Management supervises compliance with the Guidelines for Insiders and maintains the company’s insider registers in coopera-tion with Euroclear Finland Ltd. Permanent public insiders are regu-larly sent an extract of the information entered in the insider regis-ter. Their adherence to the restrictions on trading set for permanent insiders is monitored and the relevant guidelines are provided.
Permanent insiders cannot acquire or dispose of securities issued by the company, or any securities or derivatives enti-tling to said securities, during the 14 days prior to the publication of an interim report and during the 21 days prior to the publi-cation of fi nancial statements. These publication dates are an-nounced annually in advance in a stock exchange release. In ad-dition, those participating in projects involving insiders may not, during the project, trade in securities or derivatives issued by the company.
AuditingAccording to the Articles of Incorporation, the company must have one (1) regular auditor, which must be a fi rm of Authorized Public Accountants certifi ed by the Central Chamber of Commerce. The proposal to the Annual General Meeting on the company’s auditor is prepared by the Board of Directors. The term of the auditor is equal to the fi nancial period of the company, and the term of the auditor ends at the end of the ordinary Annual General Meeting of shareholders following the election of the auditor.
The auditor provides the statutory auditor’s report as to the company’s shareholders in connection with the fi nancial state-ments, and regularly reports on its observations to the Board of Directors.
The Annual General Meeting of 2014 appointed PricewaterhouseCoopers Oy, Authorized Public Accountants, as the company’s auditor. The principal auditor for the company is Mr. Juha Tuomala, APA. The AGM decided that the auditor’s fee be paid according to an invoice approved by the company.
Other issuesStock exchange information and releasesThe fi nancial content of stock exchange information and inves-tor communications are the responsibility of the President and CEO. The observance of rules and regulations in respect of stock exchange information is controlled and monitored by the compa-ny’s General Counsel and the CFO.
In its investor communications, the company observes a princi-ple of equality and publishes all investor information on its website in both Finnish and English.
Auditors’ fees in 2013–2014, TEUR:
2014 2013Audit 36 36Other services 5 0Total 41 36
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CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
IR PrinciplesThe aim of the company is to provide continuous, correct and up-to-date information to the market in order to provide a basis for de-termining the price of the company’s share. The goal is to improve awareness of the company’s operations and increase the transpa-rency of investor information, thus also increasing the attractive-ness of the company as an investment. The company publishes a printed annual report in both Finnish and English. The company maintains a mailing list for the annu-al report. Interested parties may subscribe to the mailing list by sending email to [email protected] . Through this email address, it is also possible to subscribe to stock exchange and press releases delivered by email. The company observes a 14-day silent period before publication of its interim reports and a 21-day silent period before publication of its fi nancial statements. At other times, investor queries are re-plied to by telephone, email and by organizing investor meetings.
Updates to the Corporate Governance statements and additional informationThese Corporate Governance statements are published simultane-ously with the company’s Annual Report for 2014 on the company website and will be updated as necessary. Please direct all your questions and comments regarding the Corporate Governance principles to the email address [email protected] .
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CORPORATE GOVERNANCE STATEMENT OF REVENIO GROUP CORPORATION
www.revenio.fi