2014 Annual report in figures

Aerocrine’s vision
is to improve
the management of
inflammatory airway
disease and the quality
of patient’s lives
worldwide.
k n o w l e d g e i n e v e r y b r e at h ®
Annual Report 2014 Part, 2 Aerocrine in Figures
Aerocrine Årsredovisning 2008
1
Contents
Directors’ report
3
Corporate governance report
10
Report of total comprehensive income
18
Consolidated balance sheet
19
Consolidated changes in shareholders’ equity
20
Consolidated cash flow statement
21
Consolidated key figures
22
Definitions22
Income statement, parent company
23
Report of comprehensive income, parent company
23
Balance sheet, parent company
24
Changes in shareholders’ equity, parent company
25
Cash flow statement, parent company
26
Notes to the consolidated accounts
27
Auditors’ report
52
Six-year summary
53
Board of directors
54
Management55
Part 1, Aerocrine in Words, see separate presentation.
Directors’ report
The Board and Chief Executive Officer of Aerocrine AB (publ) co.
reg. no 556549-1056 hereby presents the Annual Report and
­Consolidated Financial Statement for the 2014 financial year. Unless
otherwise stated all amounts are in SEK thousands (SEK 000).
OPERATIONS
Aerocrine is an international innovation led med-tech company
focused on improving the treatment and care of patients with
inflammatory airway diseases such as asthma. The Company’s
business and products have been developed on the basis of scientific discoveries made by the Company’s founders at the Karolinska
Institutet in Stockholm, Sweden – namely that low, but relatively
constant levels of nitric oxide (NO), are present in air exhaled by
humans, while people with allergic inflammation of the airways
have raised levels of NO. These discoveries enabled the fast and
reliable identification of allergic inflammatory conditions in the
airways, and may thus play a critical role in ensuring more efficient
diagnoses, treatment and care of patients with asthma. Asthma is
one of the world’s largest diseases and there are currently no alternative methods for the routine measurement and monitoring of the
major underlying causes of the disease; allergic inflammation of
the airways.
Since 2009 Aerocrine has partnered with Panasonic Healthcare
in designing, developing prototypes and producing a next generation of products for physicians, as well as for home use when that
becomes a possibility. The first product from this partnership, the
NIOX VERO®, was introduced in Europe during 2013 and launched
during 2014. In 2015 NIOX VERO will be launched in the US and in
Japan. Aerocrine retains all market rights to its products globally.
The Company holds a s­ izeable portfolio of patents, including 26
approved patents in the US and additional patents pending.
­Aerocrine currently markets two products – the NIOX MINO ®
and the NIOX VERO. NIOX MINO was the world’s first handheld NO metre and has gradually been launched in Europe, the
US and other parts of the world since 2005 for broader-scale clinical use.
The Aerocrine Group’s operative units consist of the Parent
Company, Aerocrine AB and its subsidiaries, Aerocrine Inc. in
the US, Aerocrine AG in Germany, Aerocrine Ltd in the UK and
Aerocrine International GmbH in Switzerland. In addition to this,
there is a Swedish subsidiary, Aerocrine ESOP AB, in which the
Group’s personnel options are managed. All subsidiaries are
wholly-owned by Aerocrine.
Since the 15th of June 2007, Aerocrine has been listed on the
Nasdaq OMX Nordic exchange, and is included on the list for
small-cap companies with the ticker AERO.
MARKET CHANNELS
The markets in which NIOX MINO and NIOX VERO have been/
will be launched are assessed on their own merits in terms of
market size and maturity. An analysis of the market is then made
to determine whether sales should be made under Aerocrine’s own
direction or via a distributor. In certain countries (US and Germany)
the Group has its own direct sales and marketing operation. In
these markets it is critical for Aerocrine to have direct market
­contact to pre-empt changes and trends and maintain direct contact with opinion leaders. In other markets the Company’s products
are sold by national distributors. Aerocrine works constantly to
evaluate current distribution networks and expand and develop
new markets. For the UK and Swedish markets ­distributor agreements were signed in the beginning of 2014. The Company has
its own organization in the US for marketing, sales management
and Global Research Sales, which is the commercial group that
sells to pharmaceutical companies, clinical research organizations and governmental agencies.
PRODUCT AND MARKET APPROVAL
Aerocrine is the market leader in terms of using NO as an
inflammatory bio-marker for measuring the degree of allergic
inflammation of asthma patients. During the financial year the
Group has continued focusing on taking part in and preparing
clinical trials to spread the method and get it included in national
clinical guidelines. One of the most important activities in the clinical development group has been to get the method reimbursed by
national insurance systems. Aerocrine works constantly to improve
its product offering. In November 2014 the Company announced
US FDA market clearance for the NIOX VERO, with a subsequent
launch during the first quarter of 2015. Aerocrine’s vision is for
NO measuring to be for people with allergic asthma what blood
glucose measuring at home is for diabetics; a personal device to
proactively keep asthma under control.
CLINICAL GUIDELINES
In the US, the Company’s method has been included in the ATS
(American Thoracic Society) official guidelines since September
2011. The American Academy of Allergy, Asthma and Immunology
also supports the ATS guidelines. During 2014, NICE (National
Institute for Health and Care Excellence) in the UK published
favorable guidelines for the Company which is described in the
Significant events section. Additionally the French SPLF (Société de
Pneumologie de Langue Française) has also published supportive
guidance on FeNO. The Company is continuously working, both
directly and through distributors, to have the Company’s method
included in local guidelines for the treatment of asthma and to
obtain reimbursement and funding under payer guidelines. As the
use of devices for measuring NO in clinical practice becomes recommended in national guidelines it will encourage the method’s
use and the willingness to pay by the healthcare insurance systems.
REIMBURSEMENT
In addition to the inclusion of the Company’s method in clinical
guidelines, a crucial piece of evidence of the benefit of the
­Company’s method and a prerequisite for its widespread use is
that the method is reimbursed by national insurance systems.
In 2014, the Company continued to seek reimbursement
approval from the private health insurance companies to further
hasten broader acceptance and willingness to pay.
To accelerate acceptance for reimbursement for the method,
Aerocrine is carrying out various studies to demonstrate the
method’s potential cost savings in healthcare.
The proportion of people in the US whose private health
­insurance programs reimburse physicians for inflammation tests
­performed was at the end of 2014 approximately 55 percent.
For the publicly financed programs Medicare and Medicaid, the
3
DIRECTORS’ REPORT
corresponding figure was 81 percent. Of the total proportion of
people insured in the US, 63 percent are covered through either
private or governmental insurance systems.
PHARMACEUTICAL COMPANIES
Pharmaceuticals companies are continuing to show major ­interest
in the Company’s products and method. Among other purposes,
NO as an inflammation bio-marker is used to demonstrate the
efficacy of anti-inflammatory medicines. Aerocrine’s method
and NIOX MINO ® are now included in a large number of global
pharmaceutical trials. Sales to pharmaceuticals companies are
referred to as Global Research sales.
Patents
The early focus on patents by Aerocrine’s founders is the foundation
of the Company’s extensive patent portfolio. The Company has
continued to add to its patents over the years. The Company’s
­patents are divided into 25 separate patent families. Continuous
technological development focusing on patents is a key element of
the Company’s long-term strategy. The Company also continuously
follows development in this area to further extend its patent protection through the possible acquisition of Intellectual Property.
The Company has a total of 26 approved patents in the US, 15
in Europe and 14 in Japan. The Company engages in dialogue with
other companies concerning user licenses for use in the Company’s
patent fields. There are currently three such licenses in place,
which generate royalties for the Parent Company. In cooperation
with Panasonic Healthcare, new patents to which the companies
have shared access are being developed and applied for.
The Company’s strategy is to monitor and defend its intellectual
property rights. As such, Aerocrine has been and will be involved
in legal processes considered typical for its area of operations.
This includes disputes concerning infringement, certain patents’
validity and commercial disputes.
SIGNIFICANT EVENTS IN 2014
• On January 17 the Company announced the signing of an
exclusive agreement with UK & Irish medical device company
Healthcare 21 Ltd for sales, marketing and distribution of Aerocrine’s
new airway inflammation monitor and test kit – NIOX VERO® –
across the UK and Ireland. The agreement went into effect on
February 1, 2014 and gave Healthcare 21 exclusive rights for the
sales marketing and distribution of Aerocrine’s new instrument
NIOX VERO and test kits, used for diagnosing and monitoring
patients with asthma. The agreement also includes Healthcare 21
taking on the support, sales and distribution for the already
installed base of Aerocrine’s NIOX MINO ® devices across the
UK & Irish market.
• On March 19 March, the Company announced that Health Care
Service Corporation will begin covering FeNO testing for asthma
diagnosis and management effective April 1, 2014. Aerocrine
received notification that Health Care Service Corporation (HCSC)
will implement a positive coverage policy for Fractional exhaled
Nitric Oxide (FeNO) testing for the diagnosis and management of
asthma effective April 1, 2014. HCSC, the 5th largest private payer
in the US, provides insurance coverage for 14 million individuals.
4
HCSC subsidiaries include Blue Cross and Blue Shield plans of
Illinois, Montana, New Mexico, Oklahoma, and Texas. The new
HCSC policy is a positive coverage policy that states FeNO testing
may be considered medically necessary for the diagnosis and
treatment of asthma. This change in policy now allows reimbursement of claims based on medical necessity. In the last three years,
several of the large Blue Cross and Blue Shield plans have altered
their policies to begin paying for Aerocrine’s test. These include:
WellPoint/Anthem Blue Cross Blue Shield, Blue Cross Blue Shield
of Florida, Horizon Blue Cross and Blue Shield, Blue Cross and
Blue Shield of Minnesota and Premera Blue Cross Blue Shield.
Aerocrine’s test is now reimbursed by the three largest Blue Cross
and Blue Shield companies in the United States, plans that
account for over 40 million covered lives. In all, 64 percent of
US insured lives now have access to Aerocrine’s test nationwide.
HCSC, spent many months reviewing the latest information available and thoroughly challenged the clinical utility and outcomes
information. Currently, seven of the US’s top 12 insurers provide
coverage and reimbursement for this test. During the first quarter;
CIGNA and Highmark, the fourth and eighth largest insurers
respectively have maintained a non-coverage policy.
• On April 2, the Company announced that NICE (National
­Institute for Health and Care Excellence) has published guidelines recommending the use of Aerocrine’s NIOX MINO and
NIOX VERO to help guide the diagnosis and management of
asthma in both adults and children. NICE develops evidencebased guidelines that help the National Health Services, local
authorities and the wider medical community deliver high-quality
healthcare to the British public. The new guidelines recommend
that FeNO tests be used to assist with the diagnosis and management of asthma caused by allergic airway inflammation in adults
and children who, after initial clinical examination, are considered
to have an intermediate probability of having asthma and when
FeNO testing is intended to be done in combination with other
diagnostic options.
• On June 12 the Company announced that Marshall Woodworth
was appointed new Chief Financial Officer. The leadership change
is in alignment with Aerocrine’s strategic direction and increased
focus on key markets both in Europe and internationally.
• On September 29 the Company announced a collaboration
with Microsoft. The collaboration will utilize Microsoft’s secure
cloud services to transmit device telemetry data from physician
and company sites in Sweden, UK and US back to Aerocrine for
analyses. Aerocrine’s goal is to use this information to deploy
its field resources for customer service and sales support in the
future. Microsoft and Aerocrine are working together on this pilot
project because of the unique ability of Aerocrine’s devices to
­generate data at the point of care. This proof of concept was
­conducted ­during the fall and collected data from Aerocrine
devices deployed in Sweden, the UK and the United States.
­Microsoft has connected the Aerocrine devices to its secure cloud
analytics p
­ latform, Microsoft Azure in the first phase to demonstrate the secure and accurate transmission of telemetry data.
• On November 6 the Company announced US FDA market
clearance for the company’s next generation device, NIOX VERO®,
which was subsequently launched during the first quarter of 2015.
DIRECTORS’ REPORT
• On November 8, 2014, a position paper from the French
Speaking Respiratory Society was made available in “Revue des
Maladies Respiratoires (2014)”. The French guidelines for FeNO
are an important step towards submitting for reimbursement in
France. The guidelines are summarized as “Measuring FeNO is the
only noninvasive pulmonary function test allowing (1) detecting,
(2) quantifying and (3) monitoring changes in inflammatory
­processes during the course of various respiratory disorders,
including corticosensitive asthma.
• On November 27, 2014, the Board of Directors resolved to
secure financing of approximately SEK 445m, before transaction
costs. The financing was structured as a rights offering with
67 percent of the financing guaranteed by inter alia Aerocrine’s
largest shareholder Novo A/S and the largest Danish public pension
fund, Arbejdsmarkedets Tillægspension (ATP).
• On December 12, 2014, the Company announced that a nonbinding expression of strategic interest was turned down by the
Company’s Board of Directors in order to secure full focus on the
announced financing.
• On December 15, the Company announced that its handheld
airway inflammation monitoring device, NIOX MINO®, had been
re-registered for marketing and sales by the China Food and
Drug Administration (CFDA). The approval means that Aerocrine
and its partners could resume its sales and marketing activities of
NIOX MINO and grow the deployed base in the Chinese market.
FINANCIAL TARGETS
Aerocrine’s continued growth in the US market and in Asia will
require substantial investment to achieve reimbursement from
private health insurance companies and successful market penetration. Furthermore, the Board takes the view that in the long-run
personal testing of inflammation in in-home asthma care will be a
market with high priority and potential. Part of Aerocrine’s strategic
cooperation with Panasonic is aimed at developing the in-homecare market. It will however require substantial investments to
establish a position in this market in the form of clinical documentation and health-economic studies which the Company today
doesn’t have the financial resources to invest in. The short-term
objectives are to secure growth with the current products in the
current markets while developing a proof of concept for the home
market. The Board has decided not to externally communicate
financial targets.
2014 ANNUAL GENERAL MEETING
Aerocrine’s Annual General Meeting was held on Thursday, May 12,
2014 in Stockholm. For a more detailed description, see the
­Corporate Governance Report on page 12 and for full documentation please visit the Aerocrine website www.aerocrine.com.
EMPLOYEES AND ORGANIZATION
The Group consists of the Swedish Parent Company, Aerocrine AB
with 36 (44) employees and the subsidiaries, Aerocrine Inc. in the
US with 65 (63) employees, Aerocrine AG in Germany with 8 (9)
employees, Aerocrine Ltd in the UK with 1 (6), Aerocrine
­International GmbH in Switzerland with 1 (3) employees and
Aerocrine ESOP AB in Sweden. In addition, the Group also has
a representation office in China. The number of employees has
decreased from 125 at the end of 2013, to a total of 111 at the
end of 2014.
The organization is structured into clearly defined units. The
subsidiary in Germany focus directly on sales and marketing. In
the UK the business has transferred to a distributor model with
only one employee left in Aerocrine Ltd. Aerocrine Inc. in the
US, the largest subsidiary, has departments for sales, marketing,
finance, warehousing, quality assurance, c­ linical development
and technical support. Operations in S­ witzerland include support functions for strategic marketing and medical affairs. The
head office in Solna, north of Stockholm, houses technical and
clinical development, strategic marketing, quality assurance and
regulatory issues, global sales coordination including order management, support and procurement, corporate management and
finance functions.
Recruitment, skills development, employee participation, organi­
zational development and committed leadership are among the
cornerstones of our HR work.
Employee initiatives will, over the long-term, create good working environments, both physical and psychosocial and develop
employees’ skills. A fully functional working environment helps
improve the Company’s finances through improved efficiency
and better quality products and services.
Every year, personal development plans are drawn up for all
employees, in order to make the most of their skills, experience
and opinions on their jobs and working environment, as well as to
encourage participation and enable staff to have an influence over
the development of the business. This helps keep staff turnover
and sickness absence figures down within the Group.
FINANCIAL POSITION AND PROGRESS FOR THE GROUP
SALES
Net sales for the year reached SEK 166.2m (136.2), an increase of
22 percent. Adjusting for the change in currency during the year,
the increase was 16 percent. The net sales for clinical use of NIOX®
products increased 26 percent to SEK 129.3m (102.4), driven mainly
by strong sales in Japan following the market clearance received
in the fourth quarter 2013 and solid performance in the EU.
The implementation of a new sales model in the US slowed
growth in the first half of 2014, with clinical sales down by 9 percent in local currency, but sales rebounded in the last half of Q2
and showed solid growth for the remainder of the year. Changes
were primarily related to additional focus and improved targeting
of potential customers based on level of coverage, size of the
clinic and number of patients with asthma symptoms. Additional
changes included new pricing options and the introduction of an
evaluation program to further stimulate sales, whereby potential
customers are able to use the device for a period of time to
­further access the benefit of FeNO in their practice. For the year,
the Company was able to place 689 evaluations with potential
customers.
Global Research sales for the year, which are included in
Region results, increased by 20 percent compared to the corresponding period in 2013. Global Research sales represented 20
5
DIRECTORS’ REPORT
percent (20 percent) of total sales during the period. It is important to note that Global Research sales fluctuate between quarters
as they are impacted by the size and timing of shipment for clinical
trials. Global Research sales were impacted favorably in the
fourth quarter as a result of a large existing study having to
replace its NIOX MINO ® devices due to expiration.
An important metric for the Company is repeat and initial test
sales volumes. A repeat test is defined as the second and subsequent purchases of test kits. The classification of initial and
repeat tests, as described in this report, are estimates as these
amounts outside of the US are provided via our distributors in
our Europe/ROW and Asia Pacific markets. The Company makes
an estimate of the initial and repeat testing based on a consistently applied methodology as it relates to the ex-US/North
American markets.
During the year a total of approximately 2.0m (1.6) repeat tests
were sold, an increase of approximately 25 percent. This increase
is primarily due to an increase in the number of installed devices
and also increased usage by physicians. Total tests sold for the year
(repeat tests and initial test), were 2.5m (2.0) tests, an increase of
approximately 24 percent compared with the prior year.
Segment reporting
The Group reports geographic segmentation, which reflects
how the business is followed up internally. The Group has three
geographical segments: North America/US, EU/Rest of the
World and Asia/Pacific.
North America/US segment
Sales for the year in the US/North America segment amounted
to SEK 58.8m (57.3) an increase of 3percent. When adjusted for
­currency effects, sales in the segment decreased by 3 percent.
The sales decrease is primarily due to clinical sales showing a
decrease of 6percent in local currency and by decreases in other
revenue generated by NIOX® Flex, in which the Company no
longer supports and less revenue generated by NIOX MINO
accessories, which the US no longer charges to customers beginning in 2014. The changes in the clinical sales model resulted in a
short-term decrease in sales in the first half of the year as compared
to the same period in the prior year. The implementation of the
new sales model was finalized by the end of the second quarter
and we have experienced positive results in the second half of
the FY 2014.
The number of tests sold for clinical use increased 5 percent
when compared to the same period in 2013 and amounted to
approximately 635k (604k) tests sold. The sales of repeat tests for
clinical use grew by 25 percent and the initial test sales decreased
by 22 percent as a consequence of managing through the implementation of the new sales model.
Sales to new and ongoing clinical studies are expected to
­continue to represent an important part of revenues in the US.
Of the sales in the segment, SEK 15.2m (13.0) are attributable to
Global Research sales.
6
EU/Rest of the World segment
Sales for the year in the Europe/ROW segment amounted to
SEK 80.7m (68.2), an increase of 18 percent. When adjusted for
currency effects, sales increased by approximately 13 percent.
Clinical sales, excluding Global Research sales and license revenues, increased by 21 percent and reached a record of SEK 60.9m
(50.2). Germany, Spain, the UK and the Czech Republic were the
main contributors to the clinical sales growth in the segment.
Beginning in 2014, we replaced direct sales organizations with
distributors in the UK and Swedish markets. This change accounted
for additional increased sales of approximately SEK 4.5m and significant growth in new users and test kit usage. Additionally, the
NIOX VERO was introduced in selected markets in the segment
during the year. Global Research sales within the segment
amounted to SEK 17.5m (14.3).
The sales of repeat tests increased by 3 percent in the segment
compared to the prior year and amounted to 947k (921k) tests
sold. The total number of tests sold for clinical use increased by
14 percent and amounted to 1,107k (972k).
Segment Asia/Pacific
Sales for the year in the AP/Pacific segment amounted to
SEK 26.8m (10.7), an increase of 151 percent. When adjusted for
­currency effects, sales in the segment increased by 134 percent.
The main reason for the increased sales in the segment is the
strong growth in the Japanese market, where the latest version of
NIOX MINO received market clearance during the fourth quarter
of 2013, which has been an important driver of growth. As reported
on December 15, the NIOX MINO has been re-registered for
marketing and sales by the China Food and Drug Administration
(CFDA). The approval allows Aerocrine and its partners to
resume sales and marketing activities of the NIOX MINO and
grow its installed base in the Chinese market.
The sales of repeat tests for clinical use grew by 132 percent
in the segment compared to the prior year and amounted to
413k (178k) tests sold. The total number of sold tests for clinical
use grew by 118 percent and amounted to approximately 523k
(240k) tests.
PROFIT AND LOSS
The gross margin for the period was 67 percent (72 percent). The
reduction in gross margin as compared to prior year was driven
primarily by a change in channel mix as well as the write-down in
Q4 of spare part inventory for the Company’s NIOX Flex product,
which is no longer being supported and of short-dated product,
also during the fourth quarter.
The loss after tax for the year amounted to SEK 228.2m (225.6).
The loss per share amounted to SEK 0.7 (0.7). Loss per share has
been calculated in accordance with IAS 33, which stipulates that if
a rights issue is offered to all existing shareholders, the number of
ordinary shares to be used in calculating earnings per share for all
periods before the rights issues is recalculated to reflect the effect
of the rights issue. Adjusted for certain non-operating and noncash items detailed in the table below, underlying on-going
operations generated a loss of SEK 167.6m (202.7).
DIRECTORS’ REPORT
(SEK m)
Loss After Tax
Patent Litigation
Stock Option Expense
inclusive of social charges
Revaluation A/R, Liabilities, Cash
Effective Interest on Loan
Loan Revaluation
Adjusted Loss
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
-228.2
0.1
-225.6
1,4
3.6
-25.8
37.1
45.6
-167.6
1.9
-2.0
23.4
-1.8
-202.7
Adjusted earnings improved mainly due to increased sales and
reduced expenses related to sales and marketing outside the US
and reduced administration and development expenses. Of the
sales and marketing expenses SEK 0.9m (1.6) constitutes non-cash
expenses related to the Group’s personnel stock option program.
The decrease in sales and marketing expenses outside the US is
mainly attributable to a reduction in headcount as the UK and
Swedish markets migrated to distributor model. Development
costs have decreased primarily due to the decrease in litigation
expenses and planned savings. Of the development expenses
SEK 2.6m (-1.8) constitutes non-cash expenses related to the
Group’s personnel stock option program. The decrease in administration costs are primarily due to one-time expenses related to the
financing in 2013. Of the administration expenses SEK +0.1m (2.2)
are attributable to the Group’s personnel stock option program.
The currency effect on the Group’s consolidated sales was
positive to the amount of SEK 8.5m, while the effect on the
Group’s costs and purchasing was negative to the amount of
SEK 13.2m. The total effect of exchange rates was overall negative
on the Group’s net operating results during the year compared to
the prior year by approximately SEK 4.7m.
On 31 December 2014, the Group’s consolidated tax loss was
calculated at SEK 1,784.6m (1,544.4), of which SEK 1,721.3m
(1,488.7) was attributable to the Parent Company. Of the total
tax loss SEK 1,727.6m (1,495.8) is unlimited in terms of the period
in which it can be offset against future taxable profits. The tax
value of the tax-loss carry-forwards has not been capitalized.
INVESTMENTS AND CASH FLOW
The Group’s cash reserves amounted to SEK 130.5m (292.1) at the
end of the period. The rights offering completed on February 6,
2015, resulted in additional gross proceeds of SEK 445m.
Cash flow for the year was negative in the amount of SEK 178.5m
(+89.7) and cash flow from current operations was negative in the
amount of SEK 174.9m (-212.1). The total cash flow in the prior
year was positively impacted by a new share issue of SEK 91.4m
and borrowings under a loan facility of SEK 223.4m in the second
quarter in 2013.
The cash flow from current operations has been negatively
impacted in the year by interest paid of SEK 37.1m (23.4) associated
with borrowings under the 2013 loan facility as well as increased
investments in the US and other changes in working capital
­primarily increased receivables associated with increased sales.
The Group’s investments in tangible assets for the year amounted
to SEK 1.3m (2.2). Investments in intangible assets for the period
amounted to SEK 2.3m (1.1).
FINANCING
On a regular basis the Board reviews the Company’s current and
projected cash position in order to ensure that the Company has
the means and resources necessary to carry out the operations
and strategies as directed by the Board. The Company’s longterm liquidity needs will largely be determined by the success of
products already being commercialized, key development and
regulatory events that might impact the ability to sell the Company’s
products or which could impact the reimbursement rates associated
with use of the Company’s products, and expenses associated
with these same efforts.
The Board of Directors, believing that additional value can be
created for the Company’s shareholders by continuing to fund the
Company’s operations and growth initiatives, and having reviewed
alternatives for raising additional capital, resolved to secure
financing of approximately SEK 445m, before transaction costs.
The financing was structured as a rights offering, which was
approved by the shareholders at an EGM held on January 7, 2015.
The objective for the financing was to enhance the financial
­flexibility and facilitate the Company’s ability to realize its growth
plans and reach profitability, and thereby create additional shareholder value. Given the successful financing, and based on current
forecasts and assumptions, the Board of directors and management believe that the Company will have sufficient liquidity to
attain positive cashflow without additional financing.
SIGNIFICANT AGREEMENTS
The Company’s loan agreement with OrbiMed Advisors LLC and
Novo A / S, established in April 2013 (for further info see Note 26)
contains clauses that address the event that if the Company faces
a change of control in connection with a takeover bid, it must be
approved by the lenders. In the event that an approval is not
granted the loan falls due for payment.
BALANCE SHEET FOR LIQUIDATION PURPOSES
As the Company’s equity as of 30 June 2014 was less than half
of the registered share capital, the board decided to draw up a
balance sheet for liquidation purposes as of 30 June 2014 for
evaluation by its auditor. According to this balance sheet for
liquidation purposes, the Company’s share capital was intact.
Following the completion of the rights offering in February
2015, the share capital has been restored completely.
CONCLUSION OF RIGHTS OFFERING
On February 6, 2015 the Company announced the completion
of the rights offering, which was over-subscribed. The Company
received approximately SEK 445m before transaction costs. A total
of 542,721,067 shares were issued resulting in a total number of
shares of 698,137,454 as of February 27.
In total, approximately 99 percent of the rights issue was
­subscribed for with the exercise of preferential rights. These subscriptions include certain larger shareholders, including Novo A/S,
which have committed to subscribe for their respective pro rata
shares, corresponding to, in aggregate, approximately 26 percent
of the total rights issue.
7
DIRECTORS’ REPORT
Additionally, applications for subscription without the exercise
of preferential rights have been received, corresponding to an
aggregated subscription of approximately SEK 93 million, representing approximately 21 percent of the total rights issue proceeds.
The rights issue was thereby oversubscribed by approximately
20 percent.
In accordance with the guarantee commitment agreement
entered into by and between Arbejdsmarkedets Tillægspension
(ATP) and the Company, as well as the principles outlined in the
prospectus which was published on January 12, 2015, ATP were
allotted the residual shares that had not been subscribed for with
the exercise of preferential rights.
PARENT COMPANY
The Group’s principal operations, including development, marketing and sales, are conducted by the Parent Company, Aerocrine AB.
The Parent Company assumes the Group’s market risk while the
subsidiaries, Aerocrine Inc. and Aerocrine AG, are sales companies
with the objective of conducting marketing and sales activities in
the US and German markets respectively. In addition to its sales
activities, Aerocrine Inc. also conducts service operations. In
connection with the introduction of the Group’s personnel stock
options programme, Aerocrine ESOP AB was founded. During
2013 Aerocrine International GmbH, Switzerland, was formed
with the purpose of supporting the European market.
The Parent Company’s net sales for the year amounted to
SEK 172.8m (139.4), of which sales to Group companies amounted
to SEK 85.7m (77.1). The loss after financial items for the period
amounted to SEK 221.9m (228.6). The Parent Company’s cash
and equivalents amounted to SEK 121.5m (283.7) at the end of
the period. Investments in machinery and equipment for the year
amounted to SEK 0.8m (1.8) and investments in intangible assets
amounted to SEK 2.3m (1.1). The earnings of the Parent Company
were affected negatively by the Group’s internal pricing model,
whereby the Parent Company assumes all market risk and consequently makes marketing contributions to the subsidiaries to
establish and develop their respective markets.
The internal pricing model with marketing support from the
parent means that the equity of the Parent Company is consumed
in approximately the same rate as for the Group. The board continually monitors the equity in relation to the shareholder’s equity
in regards to the potential need to establish a balance sheet for
liquidation purposes. The board has made the assessment that
there is additional value related to intellectual property rights
which was confirmed by the balance sheet for liquidation
­purposes as per June 30, 2014. See further information below
under Balance Sheet for Liquidation Purposes.
TRANSACTIONS WITH RELATED PARTIES
During the year interest amounting to SEK 8.6m has been paid
to Novo A/S. In the balance sheet existing loans from Novo A/S
amounts to SEK 76.5m. This relates to the combined equity and
loan financing during 2013 in which debt was taken out with a
consortium of OrbiMed and Novo A/S.
8
FINANCIAL RISKS
Currency risks – transaction and translation exposure
Currency risk entails the Company’s equity and earnings being
affected by fluctuations in exchange rates. Currency exposures
occur in connection with payment flows in currencies other than
the Company’s functional currency, SEK, (transaction exposure)
and in the translation of the balance sheets and income statements
of foreign subsidiaries to SEK (translation exposure). All internal
invoicing and invoicing by subsidiaries is performed in local currency, while all transactions in other currencies are managed via
the Company. The Company’s credit agreement is denominated
in USD. Furthermore, Aerocrine’s operating expenses are dis­
proportionally denominated in USD. A continued weakening of
SEK against USD implies, inter alia, that the Company’s interest
expenses and the principal loan amount (USD 35 million), as well
as its USD operating expenses, translated to SEK increase. The
Group’s exposure to foreign currency relates primarily to the USD,
EUR and GBP. The Company’s current policy is not to protect
itself against risks relating to transaction and translation exposure
through active hedging measures. Fluctuations in exchange rates
could adversely affect the Company’s business operations, earnings and financial position.
Credit risks
When Aerocrine sells its products to its customers, a risk of no
or partial payment exists. Although the Group has guidelines to
help ensure that sales are made to customers with a suitable
credit history, inadequate payment capacity among its customers
has and could continue to occur and could result in a negative
impact on the Company’s business operations, earnings and
financial position.
Liquidity risks
Liquidity risk refers to the risk that Aerocrine will, due to shortage
of funds, be unable to pay foreseen or unforeseen expenses.
Aerocrine’s liquidity is affected by multiple factors including payment terms on credit provided to customers and on credit received
from suppliers. The Company’s long-term liquidity needs will
largely be determined by the success of products already being
commercialized, key development and regulatory events that
might impact the ability to sell the Company’s products or which
could impact the reimbursement rates associated with use of the
Company’s products, and expenses associated with these same
efforts.
Risks associated with future earning capacity
Primarily due to the substantial costs associated with product
development, clinical development and the marketing and commercialization activities, the Company has reported losses since its
inception. Aerocrine’s future growth and profitability is dependent
on the users of the Company’s method receiving reimbursement
from national insurance systems and on the method being included
in national clinical guidelines for the treatment and management of
DIRECTORS’ REPORT
asthma patients. There is a risk that the Company’s method will
not be included in national reimbursement systems and national
clinical guidelines to a sufficient extent for the ­Company to be
able to achieve future profitability.
Risks associated with future capital needs
Although the rights issue completed in February 2015 strengthens
Aerocrine’s financial position, there is a risk that the Company
may need additional financing in the future – for example, by
securing loans or implementing additional issues of new shares or
other securities. It can be anticipated that such additional funding
will be necessary when the Company’s USD 35 million credit
agreement expires in April 2020 or the loan otherwise is to be
repaid. Access to, and the conditions for, additional financing are
affected by several factors including market terms, the general
availability of credit, as well as Aerocrine’s creditworthiness and
credit capacity. Disruptions and uncertainty in the credit and
capital markets may further limit access to additional capital.
There is a risk that the Company in the future may not have
­sufficient income or positive cash flow to maintain its business
operations. There is also a risk that the Company may not be
able to obtain financing or may not be able to obtain financing
on favorable terms, which may have a negative impact on the
Company’s business operations, earnings and financial position.
Credit agreement
Aerocrine has on April 29, 2013 entered into a USD 35 million
credit agreement with ROS Acquisition Offshore LP (an affiliate of
OrbiMed Advisors LLC), in its capacity as administrator and security agent for the benefit of the lenders, and with ROS Acquisition
Offshore LP and Novo A/S as lenders. The credit agreement provides that Aerocrine may not elect to prepay the loan prior to
April 29, 2016. In addition, the credit agreement imposes significant restrictions on the Company and its subsidiaries regarding
among other things the ability to incur other indebtedness, to
grant certain security, to engage in any other business activities
and to make certain investments. The Company and certain of its
subsidiaries have also granted security over assets (including, but
not limited to security over subsidiary shares, accounts, business
mortgage and intellectual property) in favor of the administrator.
The agreement includes covenants dealing with, among other
things, minimum liquidity whereby the Company is required to
have USD 11.5 million in a controlled account at the end of any
quarter and includes a change of control clause which is triggered
by, inter alia, an event or series of events resulting in one person
(or in some cases, several persons) acquiring shares representing
more than 40 percent of the votes in the Company. The occurrence of breach of covenants and/or a change of control, as well
as the occurrence of for example a material adverse change,
constitute a few of the events of default under the credit agreement, giving the administrator a right to, by giving notice to the
Company, declare immediate repayment of all or any portion of
the outstanding principal as well as prepayment penalties associated with such acceleration. The effect of any such acceleration
would be that Aerocrine would be required to pay a prepayment
penalty equal to 50 percent of the amount being prepaid, provided
that if the entire amount of the loan is being prepaid, the amount of
such penalty would be reduced by interest and milestone payments
already paid. This could have a significant negative impact on the
Company’s financial position and complicate the possibility of the
Company seeking new financing and it could also jeopardize the
Company’s continued operations.
Tax risk
Aerocrine conducts business operations in several countries.
Although, to the Board of Directors’ knowledge, business
­operations both in Sweden and abroad comply with current tax
­legislation, there is a risk that the Company’s interpretation of tax
regulations is incorrect or that the legislation may be changed,
possibly retroactively. The Company’s previous or current tax
­situation may therefore change as a consequence of decisions by
Swedish or foreign tax authorities and this may have a negative
impact on the Company’s business operations, earnings and
­financial position.
CURRENCY AND INTEREST POLICY
The Group invoices in EUR, SEK, GBP or USD. A large proportion
of consolidated costs are also in foreign currency, primarily USD.
No forward contracts or other hedging was arranged over the year.
The Parent Company invests liquid assets in interest-bearing
securities with high credit ratings (K1) and with good liquidity,
or in interest-bearing bank accounts.
SHAREHOLDERS
As of December 31, 2014, Aerocrine AB had approximately 4,659
shareholders, of whom the four largest represented approximately
61.5 percent of the votes and capital. On December 31, 2014, the
total number of registered shares in the Group was 155,063,162.
The largest owners in the Group on December 31, 2014 were Novo
A/S (25 percent), Invifed AB (23 percent), HealthCap ­Holding KB
(10 percent) and the Avanza Pension (3 percent). Of the adopted
personnel stock options programmes (2007 and 2009), 936,964
allocated options remain, which can entail a maximum of
2,985,826 additional shares being issued in the period 2014–2019,
The 2011 implemented program (LIP 2011) can, after recalculation due to an in May 2012 and February 2015 performed rights
issue and reduced by already exercised options, entail that a
maximum of 23,801,550 additional shares can be issued for the
period 2014–2021 by the exercise of 8,885,723 options. In total
8,971,160 have been allocated and of these 1,114,277 have been
exercised. At the AGM’s on May 5 2012, May 7 2013 and May 12
2014 it was decided to implement board share plans (SAP 2012,
SAP 2013) and SAP 2014 for members of the board that are independent from management as well as major owners. In total under
SAP 2012 22,684 options have been allocated which can entail
an additional 57,266 shares. In total under SAP 2013 43,879
options have been allocated which can entail an additional
109,588 shares. In total under SAP 2014 103,769 options have
9
D I R E C TO R S ’ R E P O R T/ C O R P O R AT E G OV E R N A N C E R E P O R T
been allocated which can entail an additional 256,569 shares. For
a full description of these programs, visit www.aerocrine.com. On
full conversion of all stock option programs, the number of shares
including the rights issue completed in February 2015 would
amount to 725,347,886.
ENVIRONMENTAL INFORMATION
Aerocrine systematically works to reduce its environmental
impact. The products meet the EU directive for recycling electronic components (WEEE) and the directive for eliminating heavy
metals in products (RoHS). In all development work, the choice
of material for components is carefully considered in order to
minimise environmental impact, and recycling opportunities for
used products are investigated in advance. To minimise environmental impact, products are shipped in bulk to the US subsidiary
as far as is possible.
Computers and other electronic office equipment are chosen
for their low energy consumption. The use of IT systems for
­storing information and document handling has reduced the
need for paper.
The Group has also invested in a videoconferencing system that
is installed on all computers – thereby generating savings in terms
of the environment, time and money through decreased travel.
REMUNERATION TO SENIOR EXECUTIVES
At the annual general meeting on May 12, 2014 guidelines
­regarding remuneration for senior management were decided
upon. For further information, please see the Corporate
­Governance Report page 15.
SIGNIFICANT EVENTS AFTER
THE END OF THE FINANCIAL YEAR
On January 7, 2015, the Extraordinary General Meeting resolved
to approve the Board of Directors’ resolution to increase the
Company’s share capital through a rights issue of shares with
­pre-emptive rights for the shareholders.
On January 29, 2015, the Company announced that Japanese
health authorities have cleared the use of the Company’s FeNOmeasuring device NIOX VERO® as a tool for assessing patients
with allergic airway inflammation such as asthma. NIOX VERO
will be introduced on the Japanese market in the beginning of the
second quarter 2015.
On February 6, 2015 the Company announced the completion
of the rights offering, which was over-subscribed. The Company
received approximately SEK 445m, before transaction costs.
FUTURE DEVELOPMENTS
The Board is of the opinion that with current strategic priorities
and with room for the Company’s expansion plans, capital will
be sufficient for at least the next 12 months.
In 2015, the Group will continue to invest in and focus on sales
and reimbursement activities in the US, as well as the build-up
of resources for this purpose, continue to support the distributors
in Japan, China and Europe. It will also commence clinical trials
focused on continuing to build strong documentation for reimburse­
ment and extended indications, and it will continue its cooperation with Panasonic Healthcare. The Group will also continue to
actively work to get NO analyses introduced into the national
­guidelines for treating asthma.
PROPOSED APPROPRIATION OF DEFICIT
The Board propose that the Parent Company’s accumulated
deficit consisting of a share p
­ remium reserve of SEK 978,269,769,
loss brought forward of SEK 1 420,007,307 and the deficit for the
year of SEK 221,983,917, totalling SEK 663,721,455 be carried
forward.
The consolidated accumulated deficit according to the consolidated balance sheet is SEK 1,660,913,000.
Corporate governance report
Corporate governance refers to the decision systems through
which the owners, directly or indirectly, control the Company.
The objective of Aerocrine’s corporate governance is to generate
value by ensuring efficient decision making that is in adherence
with the Company’s strategy and that guides operations in the
direction determined by the business objectives established by the
Board and management. The corporate governance also aims to
ensure that Aerocrine lives up to its obligations to shareholders,
employees, customers, suppliers and the surrounding world in
general. This corporate governance report is provided in accor-
10
dance with “Årsredovisningslagen” and the Swedish Corporate
Governance Code “the Code” and accounts for the financial year
2014. The Corporate governance report has been audited by the
Groups auditors, see page 52.
CORPORATE GOVERNANCE WITHIN
AEROCRINE IN GENERAL
Aerocrine’s corporate governance is regulated partly by external
regulations, such as Swedish legislation (mainly the Swedish
­Companies Act and the Swedish Annual Reports Act), NASDAQ
C O R P O R AT E G OV E R N A N C E R E P O R T
Overarching corporate governance structure of the Aerocrine Group
Nomination
Committee
Primarily external regulations that affect
the governance of Aerocrine:
Shareholders
through the
General Meeting
External
auditors
Audit Comm.
Board of Directors
Compliance
Remuneration Comm.
President/
CEO
•Swedish Companies Act
•Swedish Annual Reports Act and other accounting
regulations
•NASDAQ OMX Stockholm’s Rule Book for Issuers
•Swedish Corporate Governance Code
•Other rules and recommendations issued by relevant
organizations
Examples of internal documents that affect
the governance of Aerocrine:
• Articles of Association
• Board’s work procedure
with instructions for CEO
• Policies and guidelines
Executive
Management
• Process descriptions
• Financial handbook
• Personnel handbook
Group structure
Aerocrine AB (Sweden)
Aerocrine Inc.
(USA)
Aerocrine AG
(Germany)
Aerocrine Ltd
(UK)
OMX Stockholm’s Rule Book for Issuers and the Code as well as
other regulations and recommendations issued by relevant organizations, and partly by internal documents, such as the Articles of
Association, the Board’s work procedure with instructions for CEO
and policies and guidelines.
Aerocrine applies the Code, which aims to strengthen the
­confidence in Swedish listed companies by promoting a positive
development of the corporate governance in these companies and
constitutes a part of the self-regulation in the Swedish business sector (the Code is available on www.corporategovernanceboard.se).
Aerocrine Intl GmbH
(Switzerland)
Aerocrine
ESOP AB
It is based on the principle “comply or explain”, which means that
companies may deviate from one or several rules in the Code
provided that the Company describes the solution chosen instead
as well as stating the reasons for this. No deviations from the Code
have taken place during 2014.
The Articles of Association regulate, among other things, the registered office of the Board of Directors, the limits of the Company’s
share capital, where General Meetings are to be held, the matters
to be considered at the Annual General Meeting and participation
in General Meetings. The Articles of Association do not contain
11
C O R P O R AT E G OV E R N A N C E R E P O R T
any special provisions in respect of appointment and dismissal
of Board members and change of the Articles of Association. The
current Articles of Association are available on the Company’s
website, www.aerocrine.com.
The image on page 11 illustrates Aerocrine’s corporate
­governance model.
• Aerocrine’s highest decision making body is the General
­Meeting, at which Aerocrine’s shareholders exercise their influence over the Company. Annual General Meeting is convened
once a year and resolves, among other things, on election of
the Board of Directors and on how the Nomination Committee
is to be appointed.
• The Nomination Committee promotes the interest of all shareholders and its primary tasks are to make proposals concerning
the composition of the Board of Directors, auditor election and
fees to the Board and auditors, to the Annual General Meeting.
• The Board of directors and, by extension, the Chief Executive
Officer (CEO) manage the business of the Company on behalf
of the shareholders. The Board of directors, which is Aerocrine’s
highest administrative body, subordinate to the General Meeting,
is responsible for the Company’s organization and the management of its affairs. In order to streamline and enhance its work
the Board of directors has instigated two committees. The
Board’s Audit Committee monitors, among other things, the
Company’s financial reporting as well as the internal control
and risk management. The Remuneration Committee prepares
and evaluates matters regarding remuneration and other
employment terms for the executive management. There is
also a working group that deals with funding and financing
items and meets on demand.
• The Board appoints the CEO, who is responsible for the on-going
administration of the Company in accordance with the Board’s
guidelines and instructions. The division of assignments and
responsibilities between the Board and the CEO is set out in the
Board’s work procedure, which is set once annually. To help
guide and steer the Company the CEO has a management team.
• The administration and financial reporting by the Board and
CEO are verified by the external auditors, who are appointed
by the Annual General Meeting every four years.
SHAREHOLDERS
Aerocrine is listed on NASDAQ OMX Stockholm since 2007. At
the end of 2014 the total number of shares and votes in Aerocrine
amounted to 155,063,162 and the number of shareholders
amounted to approximately 4,700. The largest shareholder was
Novo A/S, holding 25.3 percent of the total number of shares and
votes in the Company. Invifed AB and HealtCap held 23.2 and
11.0 percent, respectively, of the total number of shares and votes.
Apart from these shareholders, there is no shareholder who, direct
or indirect, holds shares in the Company representing one tenth
or more of the number of votes for all shares in the Company.
GENERAL MEETING
The right of shareholders to decide on company matters is
­exercised at the General Meeting. Aerocrine’s Annual General
­Meeting shall be held in Solna or Stockholm, Sweden, within six
12
months after the end of the financial year. The date, location
and information on when any request to raise a question to the
General Meeting by individual shareholders must be submitted
in order to be included in the notice of meeting is published on
the Company’s website no later than in connection with the third
quarter report. Notice of the Annual General Meeting and such
Extraordinary General Meeting at which amendments to the
­Articles of Association will be considered shall be issued not
­earlier than six weeks and not later than four weeks prior to the
meeting. Notice of other Extraordinary General Meetings shall
be issued not earlier than six weeks and not later than three weeks
prior to the meeting. Notice of a General Meeting shall be made
by announcement in the Swedish Official Gazette (Sw. Post- och
Inrikes Tidningar) and on the Company’s website. Announcement
that notice has been issued shall be made in Dagens Nyheter. The
Annual General Meeting takes decisions on a number of key
issues, such as adoption of income statement and balance sheet,
appropriation of the profit or loss, discharge from liability of the
Board members and the CEO, election of the Board and auditors,
fees to the Board and auditors as well as guidelines for remuneration to senior executives.
To have the right to participate at the General Meeting and vote
for the shares held, the shareholder must be recorded in the share
register as of the record date and notify the Company within a certain time. Shareholders who are unable to attend in person can do
so via a proxy. Shareholders, whose shares have been registered in
the name of a nominee, must, in order to be able to exercise their
voting right at the General Meeting, temporarily reregister their
shares in their own names. Details of how to apply to attend the
General Meeting are presented both in the notice of the meeting
and by the information on the Company’s website.
Each share entitles to one vote and every shareholder entitled
to vote may vote for the maximum number of shares owned and
represented by the shareholder without limitation. Resolutions at
the General Meeting are normally made by a simple majority. In
certain matters, however, the Swedish Companies Act stipulates
that a proposal must be approved by a higher proportion of the
votes represented and cast at the meeting.
Annual General Meeting 2014
Aerocrine’s Annual General Meeting was held on May 12, 2014
in Stockholm. Shareholders representing in aggregate 62.3 percent
of the total number of shares and votes in the Company participated at the meeting. The Annual General Meeting resolved the
following:
• The Parent company’s and the Group’s income statements and
balance sheets were adopted. It was resolved that no dividend
shall be paid and that the year’s loss shall be carried forward.
• Rolf Classon, Thomas Eklund, Lars Gustafsson, Dennis Kane
and Staffan Lindstrand were re-elected as Board members.
Michael Shalmi and Maria Strømme were elected as new
Board members. It was noted that Scott Beardsley and Anders
Williamsson had declined re-election as Board members. Rolf
Classon was re-elected as Chairman of the Board.
• Fees shall be payable to Board members with an amount of
SEK 250,000 to the Chairman and SEK 75,000 to each other
C O R P O R AT E G OV E R N A N C E R E P O R T
Board member. Compensation for committee work shall
amount to SEK 25,000 to the chairman of the Audit Committee
and SEK 12,500 to each other member of the committee, and
SEK 25,000 to the chairman of the Remuneration Committee
and SEK 12,500 to each other member of the committee. The
AGM resolved to approve the Nomination Committee’s proposal
on the implementation of a Board member share plan (“SAP
2014”) for Board members elected by the General Meeting
who are independent in relation to Aerocrine and its executive
management as well as the company’s major shareholders.
Being a part of the Board remuneration, SAP 2014 includes
­so-called Board shares (options to acquire shares in Aerocrine)
(“Board Shares”) and hedging measures created through the
issuance and approval of transfer of warrants. In brief, SAP 2014
entails that, in addition to the cash Board fee that the AGM
resolved upon, each Board member who participates in SAP
2014 shall receive remuneration through the grant of a number
of Board Shares that in value correspond to SEK 250,000 to the
Chairman and SEK 75,000 to each other participant. Moreover,
each participant may elect to receive up to SEK 75,000 of the
cash Board fee that the AGM resolved upon in the form of a
number of additional Board Shares that in value correspond to
the amount thus selected by the participant. Each Board Share
entitles to the acquisition of one share in Aerocrine at an exercise price corresponding to the quota value of the share from
time to time. Exercise of Board Shares shall be allowed in connection with Aerocrine’s publication of interim reports over a
period ending on May 31, 2024. In order to enable the delivery
of shares and otherwise safeguard the fulfillment of Aerocrine’s
obligations under SAP 2014, the AGM resolved, in accordance
with the Nomination Committee’s proposal, to issue not more
than 150,000 warrants to the wholly-owned subsidiary
­Aerocrine ESOP AB and approved that the warrants may be
transferred and disposed of under SAP 2014.
• The AGM resolved that the Nomination Committee for the
2015 AGM shall consist of representatives from the four largest
shareholders by voting powers (grouped by owner) and the
Chairman of the Board. The composition of the Nomination
Committee shall be based on the share register maintained by
Euroclear Sweden AB as per August 31, 2014 and be published
immediately following the appointment of the Nomination
Committee, however by no later than six months prior to the
Annual General Meeting.
• The guidelines for determination of salary and other remuneration to senior management proposed by the Board were
approved by the AGM.
• The AGM resolved to approve the Board’s proposal to authorize
the Board to resolve – at one or several occasions and for the
time period until the next Annual General Meeting – to increase
the Company’s share capital by new share issues and to issue
warrants and convertible bonds, to the extent that it corresponds
to a dilution of not more than 10 percent of the number of shares
outstanding, after full exercise of the authorization. New share
issues, as well as issues of warrants and convertible bonds, may
be made with or without deviation from the shareholders’ preferential rights and with or without provisions for contribution in
kind, set-off or other conditions.
Exraordinary General Meeting 2015
An Extraordinary General Meeting was held on January 7, 2015 in
Stockholm. The General meeting resolved to approve the Board
of Directors’ resolution to increase the company’s share capital
through a rights issue of shares with pre-emptive rights for the
shareholders. A maximum number of 542,721,067 new shares
may be issued, whereby the share capital is increased by not more
than SEK 271,360,533.50 at full subscription. To enable the rights
issue, the general meeting further resolved, in accordance with
the Board of Directors’ proposal, on an amendment to the Articles
of Association as regards the limits for the company’s share capital
and the number of shares.
Annual General Meeting 2015
• The 2015 Annual General Meeting will be held on May 12,
2015 at 5 p.m.
• Shareholders who wished to have matters considered at the
Annual General Meeting have had the opportunity to request this
in accordance with the instructions on the Company’s website.
NOMINATION COMMITTEE
On the 12th of May 2014 the Annual General Meeting resolved
that the Nomination Committee shall comprise representatives
from the four largest shareholders by voting powers (grouped by
owner) and the Chairman of the Board, whom shall also convene
the Nomination Committee for its first meeting. The Nomination
Committee will thereafter elect its chairman, whom may not be
the Chairman of the Board. Further, the Annual General Meeting
resolved that the composition of the Nomination Committee in
respect of the 2015 Annual General Meeting shall be based on
the share register maintained by Euroclear Sweden AB as per 31st
August, 2014. Information on the Nomination Committee’s composition shall be published on the Company’s website immediately
­following the appointment of the Nomination Committee, however
by no later than six months prior to the Annual General Meeting.
The mandate of the Nomination Committee shall last until the
next Nomination Committee’s composition is made public.
The Nomination Committee evaluates the Board and its work
and thereafter prepares proposals to the Annual General Meeting
regarding:
• election of Chairman for the General Meeting,
• election of Chairman of the Board and other members of the
Company’s Board,
• fees for members of the Board and remuneration for committee
work,
• election and fees for auditors (if applicable), and
• instructions to the next Nomination Committee.
Nomination Committee 2014–2015
The Nomination Committee’s composition ahead to the Annual
General Meeting 2015 was published on the Company’s website
on November 17, 2014. The nominating committee consist of
Eivind Kolding (Novo A/S), Lennart Johansson (Investor AB),
Björn Odlander (HealthCap) and Rolf Classon. All shareholders
have had the opportunity to turn to the Nomination Committee
with nomination proposals.
13
C O R P O R AT E G OV E R N A N C E R E P O R T
Work of the Nomination Committee ahead of the 2015
Annual General Meeting
Prior to the Annual General Meeting 2015, the Nomination
Committee has met a number of times and in addition to that
had informal contacts when necessary. In its work to prepare
nominations, the Nomination Committee has read the evaluation
of the Board and its work, which the Chairman of the Board has
carried out, together with a review of the Company’s operations,
targets and strategies. In assessing the extent to which the current
Board of Directors meets the requirements that have been and
will be established on the Board stemming from the Company’s
position and strategic focus, the Nomination Committee has
considered the composition and size of the Board of Directors,
taking, amongst other things, competence, sector experience,
international experience, continuity and diversity into account.
The proposals by the Nomination Committee, its statement motivating its proposal for the composition of the Board of Directors
and supplementary information of proposed Board members will
be published in connection with the notice of the meeting and be
presented alongside an account of the Nomination Committee’s
work at the 2015 Annual General Meeting.
BOARD OF DIRECTORS
The Board is appointed by shareholders at the Annual General
Meeting and has a mandate to serve from the time of the Annual
General Meeting until the end of the next Annual General Meeting.
The Board of Aerocrine shall, in accordance with the Articles of
Association, consist of not less than five and not more than twelve
Board members, with not more than ten deputy Board members.
For a further presentation of the Board members, see page 54 of
the Annual Report 2014.
The Board’s responsibility
Under the Swedish Companies Act, the Board of Directors has a
comprehensive responsibility for the Group’s organization and
management and for ensuring that the control of the accounting,
management of funds and financial circumstances in general are
satisfactory. The Board manages the Company on behalf of the
shareholders by setting targets and establishing strategy, assessing
operational management and safeguarding systems for follow-up
and control of the established targets. It is also the responsibility
of the Board to appoint and evaluate the CEO as well as to ensure
that the Company’s disclosure of information is characterized by
openness and is correct, relevant and reliable.
The Board’s work procedure
In addition to laws and regulations, the work of the Board is regulated by its work procedure. The work procedure also clarify
the distribution of assignments and responsibility between the
Board and the CEO as well as regulate what financial and other
information that the management shall provide to the Board. The
Board reviews and adopts the work procedure annually.
Chairman of the Board
The Chairman of the Board is elected by the Annual General
Meeting. The Chairman shall, among other assignments, organize
and lead the work of the Board, ensure that the Board undergoes
necessary education and continually extends its knowledge of the
Company, ensure that the Board is provided with satisfying information and supporting documents for its work, convey opinions
from the owners and provide support to the CEO. The Chairman
of the Board and the CEO shall propose an agenda for Board
meetings. The Chairman shall control that the decisions of the
Board are executed efficiently, and make an annual assessment
of the Board’s work and ensure that the Nomination Committee
is informed of the results of the assessment.
Assessment of the work of the Board and the CEO
The 2014 assessment of the work of the Board took the form of
individual interviews between the Chairman of the Board and the
members of the Board, as well as by a written questionnaire. The
aim has been to gain an understanding of the Board members’
opinion on how the Board work is conducted and what possible
measures that can be done to improve the work and render it
more efficient.
The Board continuously assesses the work of the CEO by follow­
ing up the established goals. Once a year a formal assessment is
made, which is conducted by the Board without the CEO or any
other member of the executive management attending, and which
thereafter is discussed with the CEO.
Independence of the members of the Board
According to the Code the majority of the members of the Board,
elected by the General Meeting, shall be independent in relation
to the Company and the executive management. Furthermore, at
least two of these members shall be independent in relation to the
major shareholders in the Company. The composition of the
Board meets the requirements of the Code regarding independent
members (see the table).
BOARD COMPOSITION IN 2014
Member
Elected
Position
Rolf Classon
Anders Williamsson
Dennis Kane
Lars Gustafsson
2011
2007
2011
1997
Chairman
Member
Member
Member
1945
1954
1953
1950
Yes
Yes
Yes
Yes
Yes
Yes5)
Yes
Yes
Maria Strømme
Michael Shalmi
Scott Beardsley
Staffan Lindstrand
Thomas Eklund
2014
2014
2010
1999
2011
Member
Member
Member
Member
Member
1970
1965
1967
1962
1967
Yes
Yes
Yes
Yes
Yes
Yes
No1
No4
No2
No3
Represents Novo A/S
Represents HealthCap, resigned from the board December 12, 2014.
Represents Invifed AB, resigned from the board November 26, 2014.
4)
Resigned from the board on the Annual General Meeting on May 12 2014,
represented Novo A/S.
5)
Resigned from the board on the Annual General Meeting on May 12 2014.
1)
2)
3)
14
Independent Independent
in relation
in relation
to the
to major
Born
Company shareholders
C O R P O R AT E G OV E R N A N C E R E P O R T
The work of the Board 2014
Apart from one constituting Board meeting in connection with the
Annual General Meeting, the Board normally holds six ordinary
meetings per year, which follow a certain presentation plan of the
Board’s work procedure. Additional meetings may be held if
needed. In 2014, excluding the constituting meeting, the Board
met on 23 occasions. Apart from fixed items such as business situation, budget, annual accounts and interim reports, the work of
the Board during the year focused primarily on matters regarding
financing and liquidity, strategic issues and operational review.
The CEO has predominantly been the reciter at the Board meetings.
BOARD COMMITTEES AND COMMITTEE WORK IN 2014
The Board of Aerocrine has internally established both an Audit
Committee and a Remuneration Committee.
Audit Committee
The Audit Committee is an elected body within the Company’s
Board with the function to, amongst other things:
• monitor the Company’s financial reporting,
• monitor the efficiency in the Company’s internal control and
risk management as for the financial reporting,
• keep informed on the audit work as well as to review and
monitor the auditors’ impartiality and independence, and
• prepare questions regarding audit procurement, auditor
appointment and auditor fee.
Final decision in these questions is made by the Board as a whole.
The purpose of the work of the committee is, amongst other things,
to ensure that the auditing of the Company has high quality and
ensures that the interests of the Company and its shareholders
are protected as far as possible. The committee shall verify the
Company’s accounting principles and ensure that these follow
good accounting practice and that the Company applies the
­principles correctly. The committee shall also ensure that the
Company otherwise complies with rules and regulations applicable
to the Company’s accounts.
In 2014, Aerocrine’s Audit Committee consisted of three members, all independent in relation to the Company and the executive
management; Thomas Eklund (Chairman), Staffan Lindstrand and
Lars Gustafsson. In addition to that, Lars Gustafsson is independent
in relation to the Company’s major shareholders. When Thomas
Eklund and Staffan Lindstrand resigned from the board in late 2014
the entire board were inducted into the Audit Committee up until
the Annual General Meeting 2015.
During 2014, the Audit Committee met on a total of three
occasions and in addition to that had informal contacts when
needed. The key issues discussed and considered are the reports
from the Company’s auditors concerning the audit of the Group,
new accounting principles, management, control and follow-up
of the business and financing.
Remuneration Committee
The Remuneration Committee’s main function is to:
• process the Board’s resolutions in matters concerning
­remuneration principles, remunerations and employment
terms for the executive management,
• follow and evaluate on-going programs as well as programs
closed during the year regarding variable remuneration to the
executive management, and
• follow and evaluate the application of the guidelines for
­remuneration to the senior executives, which the Annual
­General Meeting resolves on, as well as relevant remuneration
structures and remuneration levels in the Company.
ATTENDANCE AT BOARD MEETINGS AND REMUNERATION TO THE BOARD 2014
Remuneration
Committee
Member
Rolf Classon2)
Anders Williamsson3)
Dennis Kane1)2)
Lars Gustafsson
Maria Strømme2)
Michael Shalmi
Scott Beardsley3)
Staffan Lindstrand5)
Thomas Eklund2) 4)
Total
Chairman
Audit
Committee
As decided
by the AGM 2014
Attendance
Boardmeetings
Attendance
committeemeetings
Board-fees
TSEK*
Committeefees TSEK*
88%
88%
83%
100%
100%
100%
250
–
0
–
12.5
250
–
12.5
250
–
150
47,129
–
28,300
96%
100%
100%
75%
100%
92%
100%
100%
100%
100%
100%
100%
75
75
75
–
50
43.8
568.8
12.5
12.5
25
–
8,3
14.6
85.4
87.5
87.5
100
–
58,3
58.3
654.2
75
75
–
–
–
–
550
14,150
14,150
–
–
–
–
103,729
Total Cash Value of board
Number
fees TSEK
shares TSEK Board-shares
Member
Withdrew cash fee of 75 TSEK in exchange for Board-shares in accordance with SAP 2014P 2012.
2)
Invoiced through company.
3)
Resigned from the board on the Annual General Meeting on May 12, 2014. Attendance on board meetings reflect the time until date of resignation.
4)
Resigned from the board on November 25, 2014, fees are settled in proportion to his time on the board.
5)
Resigned from the board on December 12, 2014, fees are settled in proportion to his time on the board.
1)
*Fees represents remuneration decided by the Annual General Meeting 2014 for the period up until the Annual General Meeting 2015.
Fees are settled yearly at the end of the period.
15
C O R P O R AT E G OV E R N A N C E R E P O R T
Final decision in these questions is made by the Board as a
whole. For example, the Remuneration Committee makes
­proposals to the Board regarding the CEO’s salary and other
employment terms.
In 2014, the Remuneration Committee consisted of Michael
Shalmi (Chairman), Maria Strømme and Dennis Kane.
All is independent in relation to the Company and the executive
management.
During 2014 the Remuneration Committee held one meeting
and had in addition to that informal contacts when needed. The
matters addressed and discussed included guidelines and principles
for remuneration to the CEO and other senior executives and the
general level of salaries within the Company. In addition, the
committee has also addressed, and to the Board proposed,
­allocation under the employee stock option program LIP 2011,
implemented in 2011.
On top of these committees a report is made on a regular basis
by the Company’s compliance officer regarding regulations for
companies active in medical technology. Furthermore there is a
working group within the Board, the Financing committee that
discusses funding and financing needs and meets on demand.
Remuneration to the Board of Directors
Remuneration to the Board of Directors for the coming financial
year is settled each year by the Annual General Meeting. For
Board work 2014–2015, the Annual General Meeting 2014
established that fees shall be payable to Board members with an
amount of SEK 250,000 to the Chairman and SEK 75,000 to each
other Board member. Compensation for committee work shall
amount to SEK 25,000 to the chairman of the Audit Committee
and SEK 12,500 to each other member of the committee, and
SEK 25,000 to the chairman of the Remuneration Committee
and SEK 12,500 to each other member of the committee. One
board member has decided to exchange the board fee in cash in
favor of additional board shares valued at SEK 75,000.
CHIEF EXECUTIVE OFFICER (CEO)
AND EXECUTIVE MANAGEMENT
Aerocrine’s President and CEO, Scott Myers, is responsible for
the on-going management of the business, in accordance with the
Board’s guidelines and instructions. The work instructions for the
CEO, adopted annually by the Board, establish the work distribution between the Board and the CEO. The CEO is, amongst
other things, responsible for the Board of Directors receiving the
infor­mation it needs to be able to make well-informed decisions.
The CEO has appointed an executive management team that
is liable for various parts of the business. In addition to the CEO,
Aerocrine’s executive management comprise six people (for a more
detailed presentation, see page 55 of the Annual Report 2014).
The executive management meets on a regular basis to manage
and follow-up the business operations and current p
­ rojects and to
discuss personnel related and organization issues. In addition to
these meetings, the executive management also holds overarching
strategy meetings to which relevant p
­ articipants from within the
Company are also invited to participate. Four times a year, specific
matters regarding quality and resources are addressed so that
corrective measures can be implemented if necessary.
16
Remuneration to senior executives
At the Annual General Meeting held on the 12th of May 2014,
the Board resolved on guidelines for determination of salary and
other remuneration for the CEO and other senior executives,
principally entailing the following.
Remuneration to executive management shall consist of fixed
salary, variable salary, other benefits and pension benefits. The
aggregate remuneration shall be in line with market conditions
and be competitive as well as related to position, performance,
responsibility and authority. The variable salary shall consist of
bonus and be based on predetermined and well defined objectives.
The variable salary shall have a cap and never exceed the fixed
salary, nor shall it entitle to pension benefits.
Dismissal and severance pay shall in aggregate not exceed 12
months for the executives. Employment agreements should not
include provisions on severance pay. Pension benefits shall either
be benefit- or contribution defined, or a combination thereof. In
addition, share-based or share prised-based incentive programs
may be resolved upon from time to time. Consultant fees in line
with prevailing market conditions may be payable insofar as any
Board member performs work on behalf of the Company, in
addition to Board work. The Board is entitled to deviate from
the guidelines, provided that there are particular reasons for such
deviation in an individual case.
The Board intends to propose to the Annual General Meeting
2015 that unchanged guidelines should apply for 2015.
For a more detailed presentation of the remuneration to senior
executives for 2014, see Note 9 on page 36 of the Annual Report
2014.
Share and share price related incentive programs
Aerocrine has three employee stock option programs that were
implemented following decisions made by the Annual General
Meetings in 2007 and 2009 and the Extraordinary General
­Meeting in 2011, respectively. Information on these employee
stock option programs is set out in Note 31 on page 46 of the
Annual Report 2014.
EXTERNAL AUDITORS
In accordance with the Articles of Association the Company
shall have one or two auditors, with or without deputies. Auditor
is appointed by the Annual General Meeting. The auditor assignment runs until the end of the Annual General Meeting held in the
fourth financial year after the election of auditor. The assignment
for the auditors is to verify on behalf of shareholders Aerocrine’s
Annual Report and accounts as well as the administration of the
Board and CEO.
At the Annual General Meeting 2012, the auditing company
Öhrlings PricewaterhouseCoopers AB was elected as auditor for
Aerocrine for the period up until the end of the 2016 Annual
­General Meeting. The authorized public accountant Mikael
Winkvist is the principally responsible auditor. The Company’s
auditor participates in the Audit Committee’s meetings. The
Annual General Meeting 2012 also resolved that fees to the
­auditor should be paid according to approved account. On
page 38, Note 11 of the Annual Report part 2, 2014 the fees to
the auditors over the past three financial years are presented.
C O R P O R AT E G OV E R N A N C E R E P O R T
INTERNAL CONTROL AND RISK MANAGEMENT
­C ONCERNING THE FINANCIAL REPORTING
Background
Internal control regarding the financial reporting is an integrated
part of Aerocrine’s corporate governance. In accordance with the
Swedish Companies Act and the Code, the Board of Directors is
responsible for internal controls. Good internal control ensures
that operations are conducted in an appropriate and efficient
manner and that the financial reporting is reliable and established
in accordance with legislation, relevant accounting standards and
other requirements for listed companies.
Control environment
The base for internal controls comprises the overall control environment. A good control environment is based on an organization
that has clearly defined decision-making paths and where both
responsibility and authority are clearly established. The Company
sets policies, guidelines and process descriptions for each point in
the business flow, from transaction handling to accounting and the
preparation of external reports. The Company’s financial handbook, which is revised annually, sets out all the essential process
descriptions.
The governance of the Company is based on the budget and
strategic plan adopted once per year by the Board. These detail
the operations and key activities planned to achieve the targets set
by the Board. These targets are then broken down to the departmental and individual level to ensure that the entire organization
adheres to the plan adopted by the Board.
Risk assessment
The Board of Directors and by extension the Audit Committee
have responsibility for identifying and handling key financial risks
and any risks concerning errors in external reporting. The Audit
Committee annually assesses the need for risk management and
sets written principles for overall risk management as well as specific areas such as currency risk, interest rate risk, credit risks and
investment of excess liquidity. These principles are established by
the Board. For a more detailed description of risks, refer to the
Risks section on page 17–18 of the Annual Report 2014, part one.
Control activities
To ensure that activities are executed efficiently and that financial
reports at all times provide an accurate picture the Company has
a number of built-in control activities. These activities involve all
levels of the organization from the Board and the executive
­management to all other employees. The purpose is to prevent,
identify and correct any faults and deviations that arise.
Each month, financial information is analyzed and checked by
the Company’s central financial department. Controls cover
reporting of non-compliance and manual controls as well as
assessments of reasonability. Subsidiaries are governed by means
of monthly reviews in relation to the budget set for the Group and
broken down for each company, through their individual company
boards and through group management where they are represented.
In addition, the Company’s auditors check the Company’s accounts
and administration at least twice per year. This is done at group
level as well as locally within each subsidiary.
At present the size of the Company does not require that an internal
audit is carried out. The Board considers that this is not necessary at
present due to good contacts with the Company’s auditors and the
procedures that exist for follow-up and control.
Information and communication
In order to ensure that external information is correct and complete, the Board has produced a communication policy that states
what type of information shall be communicated, by whom and in
which format.
Up-to-date information is published continuously on the
­Company’s website to enable Aerocrine’s shareholders to follow
the business and its development. Aerocrine’s interim and annual
reports are published in both Swedish and English. Information
about events that are considered likely to affect the share price is
published in press releases.
Follow-up
The compliance with internal controls and their efficiency are
­followed up continually. The Company’s financial situation
and strategy concerning the financial situation are addressed at
each Board meeting when the Board receives monthly reports
concerning the financial situation and the development of the
business. Each interim report is analyzed by the Audit Committee,
discussed with the CFO and is finally approved by the Board
prior to publication.
With regard to the Group’s and the Parent Company’s operations and position in general, please refer to the following
income statements and balance sheets, cash flow statements with notes and additional information.
17
Report of total comprehensive income
(SEK 000)
Net sales
Cost of goods sold
Gross Profit/Loss
Sales and marketing expenses
Administration expenses
Development expenses
Other operating income
Other operating expenses
Operation Profit/Loss
Financial income
Financial expenses
Profit/loss before taxes
Taxes
Profit/loss for the period
Note
5
11
12
12
6,9,10,16,17,18,19,20, 21
13
14
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
166,222
-54,768
111,454
136,168
-38,338
97,830
147,009
-40,815
106,194
-166,828
-56,362
-60,509
5,153
-1,089
-168,181
-170,082
-58,997
-75,127
3,652
-2,986
-205,710
-162,052
-65,324
-84,137
10,444
-2,156
-197,031
24,671
-84,730
-228,240
28,454
-48,182
-225,438
-160
-225,598
5,952
-10,400
-201,479
–
-201,479
15
-228,240
Other comprehensive income for the period:
Reassessment of net pension obligation
Translation differences on foreign operations
Sum other comprehensive income for the period, net after taxes
–
-71
-72
2,722
293
-455
2,722
222
-527
Total comprehensive income for the period
-225,518
-225,376
-202,006
Net Profit attributable to:
Parent Company shareholders
-228,240
-225,598
-201,479
Total comprehensive income attributable to:
Parent Company shareholders
-225,518
-225,376
-202,006
-0.7
-0.7
-0.7
154,938,616
151,381,295
127,857,137
12,421
10,708
1,712
11,880
10,185
1,695
11,888
10,101
1,787
Earnings per share based on Net Profit
attributable to Parent Company shareholders
(in SEK per share)
Profit/loss per share (before and after dilution)*, **
25
Other information:
Average number of shares outstanding
Amortisation/depreciation included in operating expenses
- of which intangible assets
- of which tangible fixed assets
*Profit/loss per share after dilution is not reported, since this would imply improved earnings per share.
** Profit/loss per share has been recalculated due to the rights issue in accordance with IAS 33.
18
Consolidated balance sheet
(SEK 000)
Note
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
16
20
17
3,186
0
17,231
2,484
212
26,134
2,351
496
35,036
Equipment and tools
Improvement expenditure on other party's property
18
19
4,251
2,262
4,003
2,223
3,235
2,566
Financial fixed assets
Other financial investments
Total Tangible Assets
21
2,644
29,574
1,911
36,967
1,628
45,312
8
26,867
19,513
20,220
7
26,819
5,127
11,989
43,935
20,683
2,899
7,386
30,968
27,833
4,888
6,117
38,838
32
130,489
201,286
292,133
342,614
199,913
258,971
5
230,865
379,581
304,283
Note
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
77,532
1,465,391
3,576
-1,661,331
-114,832
77,314
1,465,391
659
-1,439,178
104,186
72,819
1,378,493
366
-1,220,112
231,566
1,795
1,680
1,528
5,003
1,453
4,117
1,397
6,967
1,412
8,926
1,513
11,851
267,928
267,928
215,755
215,755
–
–
26,263
93
3,438
1,580
41,392
72,766
14,987
82
2,422
2,109
33,073
52,673
16,171
0
2,280
600
41,815
60,866
230,865
379,581
304,283
Fixed Assets
Intangible Assets
Intangible Assets
Capitalized development expenditure
Customer relations
Acquired patents
Tangible fixed assets
Current assets
Inventories
Goods for resale
Current receivables
Receivables
Other receivables
Prepaid expenses and accrued income
Current receivables
Cash equivalents
Total current assets
Total assets
(SEK 000)
SHAREHOLDERS’ EQUITY
24
33
Capital and reserves attributable to:
Parent Company shareholders
Share capital (155,063,162 shares)
Other paid-in capital
Accumulated translation differences
Accumulated deficit including net earnings/Loss
Shareholders’ equity attributable to Parent Company shareholders
LIABILITIES
Provisions
Pension commitments
Provisions for payroll overheads, staff option plan
Provisions, other
Provisions
Long-term liabilities
Loan
Long-term liabilities
Current liablities
Accounts payable
Current tax liabilities
Other current liabilities
Provisions for guarantees
Accrued expenses and deferred income
Current liablities
Total shareholders' equity and liabilities
29
26
29
27
19
Consolidated changes in shareholders’ equity
Note
(SEK 000)
Opening balance at January 1 2012
Comprehensive income
Net earnings/Loss for the period
Other comprehensive income
Reassessment of net pension obligation
Translation differencies foreign operations
Sum other comprehensive income
Total comprehensive income
Transactions with shareholders
New share issue
Issue expenses
Converible bond
Staff option plan:
-value of employee services
Total transactions with shareholders
Closing balance, December 31 2012
Opening balance at January 1 2013
Comprehensive income
Net earnings/Loss for the period
Other comprehensive income
Reassessment of net pension obligation
Translation differencies foreign operations
Sum other comprehensive income
Total comprehensive income
Transactions with shareholders
New share issue
Issue expenses
Staff option plan:
-value of employee services
Total transactions with shareholders
Closing balance, December 31 2013
Opening balance at January 1 2014
Comprehensive income
Net earnings/Loss for the period
Other comprehensive income
Reassessment of net pension obligation
Translation differencies foreign operations
Sum other comprehensive income
Total comprehensive income
Transactions with shareholders
New share issue
Staff option plan:
-value of employee services
Total transactions with shareholders
Closing balance, December 31 2014
20
33
Attributable to shareholders in the Parent Company
Share
capital
Other
capital
contributions
Cumulative
translation
differences
Revaluation of
net pension
obligation
Profit/loss
brought forward,
incl. profit/loss
for the period
Total
shareholders’
equity
51,173
1,055,301
821
-276
-1,035,016
72,003
-201,479
-201,479
–
–
–
–
–
–
–
–
–
–
–
–
–
-455
-455
-455
-72
–
-72
-72
–
–
0
-201,479
-72
-455
-527
-202,006
15,217
–
6,429
–
–
21,646
72,819
246,327
-10,973
100,191
-12,353
–
323,192
1,378,493
–
–
–
–
–
–
366
–
–
–
–
–
-348
–
–
–
–
16,731
16,731
-1,219,764
261,544
-10,973
106,620
-12,353
16,731
361,569
231,566
72,819
1,378,493
366
-348
-1,219,764
231,566
-225,598
-225,598
–
–
–
–
–
–
–
–
–
–
–
–
–
293
293
293
-71
–
-71
-71
–
–
–
-225,598
-71
293
222
-225,376
4,495
–
90,563
-3,665
–
–
–
–
–
–
95,058
-3,665
–
4,495
77 ,314
–
86,898
1,465,391
–
–
659
–
-419
6,603
6,603
-1,438,759
6,603
97,996
104,186
77,314
1,465,391
659
-419
-1,438,759
104,186
-228,240
-228,240
–
–
–
–
–
–
–
–
–
–
–
–
–
2,918
2,918
2,918
–
–
–
0
–
–
–
-228,240
0
2,918
2,918
-225,322
218
–
–
–
–
218
–
218
77,532
–
0
1 465,391
–
–
3,577
–
6,086
6,086
-1,660,913
6,086
6,304
-114,832
-419
Consolidated cash flow statement
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
-168,181
-205,710
-197,031
12,420
5,501
639
–
3,649
-87
11,880
-2,352
43
87
1,793
850
11,888
-1,121
60
5
18,210
-2,939
-146,059
-193,409
-170,928
318
-22,242
3
927
-19,814
-78
2,512
-12,758
-19
Cash flow from operating activities
before change in working capital
Change in inventories
Change in accounts receivables
Change in current receivables
Change in accounts payable
Change in current liabilities
Total change in working capital
-167,980
-4,073
-4,466
-6,359
10,230
-2,284
-6,952
-212,374
691
7,180
740
-1,181
-7,135
295
-181,193
-3,458
-12,017
-2,216
2,306
12,401
-2,984
Cash flow from operating activities
-174,932
-212,079
-184,177
18,19
16,17,20
-1,296
-2,297
–
-3,593
-2,188
-1,132
-285
-3,605
-5,082
-386
-292
-5,760
33
26
218
–
-215
3
91,393
213,945
0
305,338
344,838
–
-106,089
238,749
Cash flow for the year
-178,522
89,654
48,812
Increase/Decrease in cash equivalents
Cash equivalents at start of the year
Exchange rate differences in cash equivalents
Cash equivalents at end of the year
292,133
16,878
130,489
199,913
2,566
292,133
150,227
874
199,913
(SEK 000)
Note
Cash flow from operation activities
Operating loss before financial items
Adjustment for non-cash flow items
Depreciation and amortization
Exchange rate differences
Provisions for pension commitments
Gain/loss on sale and disposal of tangible asstes
Provisons for staff options
Other non-cash flow items
Interest received
Interest paid
Income tax paid
Cash flow from investment activities
Acquisition of fixed assets
Acquisiton of intangible assets
Investment in other financial assets
Cash flow from investment activities
Cash flow from financing activities
New share issue
Borrowings
Amortization of loan
Cash flow from financing activities
16,17,18,19,20
15
32
21
Consolidated key figures
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
166,222
67%
neg
neg
-1.20
240%
115
3,593
60,509
21%
136,168
72%
neg
27%
-0.73
613%
133
3,320
75,127
25%
147,009
72%
neg
76%
-0.86
392%
107
5,468
84,137
28%
Data per share
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
Number of shares at closing of period (before dilution)
Number of shares at closing of period (after dilution) 1)
Average number of shares (before dilution)
Average number of shares (after dilution) 1)
Shareholders equity per share SEK, before full dilution
Shareholders equity per share SEK, after full dilution 1)
Earnings per share, SEK (before dilution) 1)
155,063,162
154,802,600
154,938,616
157,802,460
-0.74
-0.74
-0.70
154,628,698
158,276,053
151,381,295
156,041,724
0.67
0.66
-0.70
145,637,781
155,776,825
127,857,137
137,849,377
1.59
1.49
-0.70
Netsales TSEK
Gross margin %
Return on average shareholders’ equity %
Equity/Asset ratio %
Net indebtness, multiple
Liquid ratio %
Average number of employees
Investments, TSEK
Expenses related to development, TSEK
Development expenses in % of total expenses
1)
Profit/loss per share after dilution is not reported, since this would imply improved earnings per share.
Profit/loss per share has been recalculated due to the rights issue in accordance with IAS 33.
Definitions
Gross margin
Gross profit as a percentage of net sales for the period.
Equity/Asset ratio
Shareholders’ equity as a percentage of total assets.
Return on average shareholders’ equity %
Profit/loss as a percentage of average shareholders’ equity.
Earnings per share
Net profit/loss divided by average number of shares
before and after full dilution.
Average number of shares
Number of shares adjusted for share issues conducted during
the year (before dilution) and option programmes outstanding
(after dilution).
Net indebtness
Interest-bearing liabilities less current investments and cash
and equivalents divided by shareholders’ equity.
22
Shareholders’ equity per share
Shareholders’ equity (adjusted for dilution effects) divided
by the number of shares at the close of the period before
and after full dilution.
Liquid ratio
Current assets, excluding inventories and work in progress,
in relation to current liabilities.
Income statements, parent company
(SEK 000)
Net sales
Cost of goods sold
Gross Profit/loss
Sales and marekting expenses
Administration expenses
Development expenses
Other operating income
Other operating expenses
Operation Profit/loss
Note
5
11
12
12
6,9,10,16,17,18,19,20
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
172,799
-57,863
114,936
139,369
-41,702
97,667
147,970
-44,161
103,809
-194,834
-39,357
-47,119
4,540
-1,075
-162,909
-206,223
-37,722
-63,400
3,148
-2,140
-208,670
-185,262
-50,297
-72,810
10,081
-1,847
-196,326
Earnings from shares in Group companies
Financial income
Financial expenses
Profit/Loss from financial items
13
14
–
25,706
-84,781
-59,075
-1,187
29,448
-48,179
-19,918
–
6,975
-10,400
-3,425
Loss after financial items
Taxes
Loss for the year
15
-221,984
–
-221,984
-228,588
–
-228,588
-199,751
–
-199,751
Report of total comprehensive income,
parent company
(SEK 000)
Loss for the period
Other comprehensive income
Total comprehensive income
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
-221,984
–
-221,984
-228,588
–
-228,588
-199,751
–
-199,751
23
Balance sheets, parent company
(SEK 000)
Note
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
ASSETS
Fixed Assets
Intangible Assets
Capitalized development expenditure
Customer relations
Acquired patents
16
20
17
3,186
0
17,231
2,484
212
26,134
2,351
496
35,036
Tangible fixed Assets
Equipment and tools
18
2,213
2,205
1,270
23
22,30
23,403
18,466
64,499
25,311
12,514
68,860
22,949
11,603
73,705
8
18,079
13,810
14,719
7
16,121
3,767
10,296
30,184
11,624
2,390
5,242
19,256
18,361
4,249
4,465
27,075
121,494
283,686
192,833
Total current assets
169,757
316,752
234,627
Total assets
234,256
385,612
308,332
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
77,532
487,123
564,655
77,314
487,123
564,437
72,819
487,123
559,942
978,270
-1,420,008
-221,984
-663,722
978,270
-1,197,506
-228,588
-447,824
891,372
-1,004,358
-199,751
-312,737
-99,067
116,613
247,205
1,401
1,680
3,081
1,800
4,117
5,917
600
8,926
9,526
–
267,928
267,928
–
215,755
215,755
–
–
–
18,136
16,948
1,283
25,947
62,314
8,990
17,875
2,108
18,354
47,327
11,805
14,280
1,895
23,621
51,601
234,256
385,612
308,332
351,895
None
547,462
None
21,878
None
Financial assets
Shares in Group companies
Receivables in Group companies
Total fixed assets
Current assets
Inventory
Goods for resale
Current receivables
Receivables
Other receivables
Prepaid expenses and accrued income
Current receivables
Cash equivalents
(SEK 000)
SHAREHOLDERS' EQUITY
24
32
Note
33
Restricted shareholder's equity
Share capital (155,063,162 shares)
Statutory reserves
Accumulated deficit
Share premium reserve
Loss carried forward
Loss for the year
Shareholders' equity
LIABILITIES
Provisions
Provisions for guarantees
Provisions for payroll overheads, staff option plans
Total provisions
Long term liabilities
Convertible bond
Loan
Total long term liabilities
Current liabilities
Accounts payable
Liabilities to group companies
Other current liabilities
Accrued expenses and prepaid income
Total current liabilities
29
26
30
27
Total shareholders' equity and liabilities
Pledged assets
Contingent liablilities
24
28
Changes in shareholders’ equity, parent company
Note Restricted shareholders’ equity
Non-restricted shareholders’ equity
Share
capital
Statutory
reserve
Share
premium
reserve
Other
non-restricted
shareholders’
Total
shareholders’
equity
51,173
–
487,123
–
560,100
–
15,217
6,429
–
–
–
246,327
-10,973
108,271
-12,353
-1,013,011
-199,751
-199,751
–
–
-8,080
85,385
-199,751
-199,751
261,544
-10,973
106,620
-12,353
–
72,819
–
487,123
–
891,372
16,733
-1,204,109
16,733
247,205
Opening balance at January 1, 2013
Loss of the year
Total items reported via income statement
New share issue
Issue expenses
Staff option plan:
- value of employee service
Closing balance, December 31, 2013
72,819
–
–
4,495
487,123
–
–
–
–
891,372
–
–
90,563
-3,665
-1,204,109
-228,588
-228,588
–
–
247,205
-228,588
-228,588
95,058
-3,665
–
77,314
–
487,123
–
978,270
6,603
-1,426,094
6,603
116,613
Opening balance at January 1, 2014
Loss of the year
Total items reported via income statement
New share issue
Staff option plan:
- value of employee service
Closing balance, December 31, 2014
77,314
–
–
218
487,123
–
–
–
978,270
–
–
–
-1,426,094
-221,984
-221,984
–
116,613
-221,984
-221,984
218
–
77,532
–
487,123
–
978,270
6,086
-1,641,992
6,086
-99,067
(SEK 000)
Opening balance at January 1, 2012
Loss of the year
Total items reported via income statement
New share issue
Issue expenses
Conversion of convertible bond
Issue expenses
Staff option plan:
-value of employee service
Closing balance, December 31, 2012
33
25
Cashflow statement, parent company
Aerocrine AB
Jan 1, 2014
Dec 31, 2014
Jan 1, 2013
Dec 31, 2013
Jan 1, 2012
Dec 31, 2012
-162,909
-208,670
-196,326
11,558
5,501
-399
–
-353
–
-146,602
11,005
–
1,200
–
-2,422
–
-198,887
11,197
1,121
350
–
9,374
-2,420
-176,704
1,353
-22,241
1,924
-19,814
3,535
-3,743
-167,490
-216,777
-176,912
-4,269
-4,497
-11,927
9,357
-2,495
-13,831
909
6,737
1,082
-2,815
-1,459
4,454
-2,291
-9,132
-2,306
2,226
-18
-11,521
-181,321
-212,323
-188,433
-858
-2,295
5,909
0
-509
2,247
-1,755
-1,132
1,853
-1,187
-502
-2,723
-316
-387
-147
–
-3,643
-4,493
218
–
-215
3
91,393
213,945
0
305,338
344,838
–
-106,089
238,749
Cash flow for the year
-179,021
90,292
45,823
Increase/Decrease in cash equivalents
Cash equivalents at start of the year
Exchange rate differences in cash equivalents
Cash equivalents at end of the year
283,686
16,879
121,494
192,833
561
283,686
145,889
1,121
192,833
(SEK 000)
Note
Cash flow from operating activities
Operating loss before financial items
Adjustment for non-cash flow items
Depreciation and amortization
Exchange rate differences
Provisions for guarantees
Gain/loss on sale and disposal of tangible assets
Provisons for staff options
Other non-cash flow items
16,17,18,19,20
Interest received
Interest paid
Cash flow from operating activities
before change in working capital
Change in inventories
Change in accounts receivables
Change in current receivables
Change in accounts payable
Change in current liabilities
Total change in working capital
Cash flow from operating activities
Cash flow from investment activities
Acquisition of fixed assets
Acquisiton of intangible assets
Investments in subsiduaries
Sold of subsidiaries
Investments in other financial assets
Cash flow from investment activities
Cash flow from financing activities
New share issue
Loan
Amortization of loan
Cash flow from financing activities
26
18
5,16,17
23
13,22, 23
33
26
32
Notes to the consolidated accounts
GENER AL INFOR M ATION
Aerocrine AB (publ) (Parent Company) and its subsidiaries (together comprising the Group) form an international medical technology corporation
dedicated to improved treatment and care for patients with inflammatory
respiratory diseases, such as asthma. The Company markets NIOX MINO®,
the world’s first hand-held device for measuring airway inflammation, on
global markets and since the end of 2013 NIOX VERO ® from the Groups
collaboration with PHC (Panasonic Healthcare). Both products enable
swift and reliable checks of inflammatory conditions in airways and can
thus play a critical role in improving diagnosis, treatment and follow-up of
people with asthma. Aerocrine is based in Sweden and has wholly-owned
subsidiaries in the US, Germany, Switzerland and the UK. Other markets
are served by distributors. The Group sells its products primarily in Europe,
the US/North America and Asia/Oceania.
The Parent Company is a publicly owned corporation and the registered office is in Solna, Sweden. The address is Råsundavägen 188th,
PO Box 1024, SE-171 21 Solna, Sweden.
This annual report and consolidated report was adopted for publication
by the Board of Directors on 1 April 2015.
2. SUMMARY OF KEY ACCOUNTING PRINCIPLES
The key accounting principles applied during the preparation of this annual
report are presented below. These principles were applied consistently for
all years of comparison, unless otherwise stated.
2.1 Basis for preparing the reports
The consolidated accounts for the Aerocrine Group have been prepared
in accordance with the International Financial Reporting Standards (IFRS)
issued by the International Financial Accounting Standards Board (IASB),
interpretations announced by the International Financial Reporting Inter­
pretations Committee (IFRIC) adopted by the EU, and the Swedish Annual
Accounts Act. Recommendation RFR 1 of the Swedish Financial Accounting
Standards Council (Additional consolidated accounting regulations) has also
been applied.
The Consolidated Accounts have been prepared in accordance with
the acquisition method.
Preparing financial statements in conformity with IFRS requires the use
of certain critical accounting estimates.
It also requires management to exercise its judgment in applying the
Group’s accounting policies.
The areas involving a high degree of judgment or complexity, or areas
where assumptions and estimates are significant to the consolidated financial
statements referred to in Note 4.
The Parent Company applies the same accounting principles as the
Group, with exceptions outlined in the section entitled “Parent Company’s
accounting principles”. Deviations between the Group’s and Parent
Company’s accounting principles are caused by restrictions in applying
IFRS for the Parent Company due to the Swedish Annual Accounts Act
and, in certain cases, for tax purposes.
2.2 Changes in accounting principles and information
New and amended IFRS applied by the Group
New and amended IFRS-standards and interpretations applied by the Group
that affects or may affect the accounting for the Group are commented
upon below. Changes that are deemed to have no material impact on the
accounting are not commented upon.
New standards, amendments and interpretations to existing standards that
have not been adopted by the Group
IFRS 15 is the new standard for revenue recognition. The standard is the
result of a harmonization project between the IASB and the FASB. IFRS 15
supersedes IAS 18 Revenue and IAS 11 Construction Contracts and all
attendant interpretations (IFRIC and SIC). Revenue is recognized when the
customer obtains control of the sold goods or services. A customer has
control of a good or service when it can control the use of this asset and
obtain any further benefit from it. The basic principle in IFRS 15 is that a
company recognizes revenue in the manner that best reflects the transfer
of the promised goods or services to the customer, to the amount that the
company expects to be entitled to receive in exchange for the transferred
goods or service. This accounting is done using a five-step;
•Step 1: Identify the contract with the customer
•Step 2: Identify the different performance obligations in the contract
•Step 3: Determine the transaction price
•Step 4: Allocate the transaction price to performance commitments
•Step 5: Identify revenue when a performance obligation is met
IFRS 15 contains significantly increased disclosure requirements. The
information aims to provide the user of the financial statements with useful
information about the type of income, amount, settlement dates, and
uncertainties related to revenue recognition and cash flows originating
from. The Group is yet to assess IFRS 15’s full impact.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9
was issued in November 2009 and October 2010. It replaces the parts
of IAS 39 that relate to the classification and measurement of financial
instruments. IFRS 9 requires financial assets to be classified into two
measurement categories: those measured as at fair value and those measured at amortized cost. The determination is made at initial recognition.
The classification depends on the entity’s business model for managing
its financial instruments and the contractual cash flow characteristics of
the instrument. For financial liabilities, the standard retains most of the
IAS 39 requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair value change
due to an entity’s own credit risk is recorded in other comprehensive
income rather than the income statement, unless this creates an accounting
mismatch.
No other IFRS or IFRIC-interpretations not yet adopted are expected
to have a significant effect on the consolidated financial statements of
the Group.
2.3 Consolidated accounts
Subsidiaries
Subsidiaries are all entities (including businesses for a particular purpose)
in which the Group has the power to govern financial and operating
­policies in a manner usually associated with a shareholding of more than
50 percent of the voting rights. The existence and effect of potential voting
rights that it is currently possible to exercise or convert are taken into consideration when assessing whether the Group is exercising a controlling
influence over another company. Subsidiaries are fully consolidated from
the date when control is transferred to the Group.
They are de-consolidated from the date that control ceases.
The purchase method of accounting is used for reporting the Group’s
business combinations. The purchase price for the acquisition of a subsidiary
27
NOTES
comprises the fair value of assets transferred, liabilities and those shares
that have been issued by the Group. The purchase price also includes
the fair value of all assets or liabilities resulting from an agreement on
conditional purchase price. Expenses relating to acquisitions are booked
as and when they arise. Identifiable assets acquired and liabilities assumed
in a business combination are measured initially at their fair values on
the day of acquisition. For each acquisition, the Group decides whether
all non-controlling interests in the acquired company are recognized at
fair value, or at the holding’s proportional percentage of the acquired
company’s net assets.
The difference between the purchase price, possible non-controlling
interests and fair value on the date of acquisition of previous shareholdings,
and the fair value of the Group’s share of identifiable net assets acquired is
recorded as goodwill. If the amount is less than the fair value of the acquired
subsidiary’s assets, what is known as a “bargain purchase”, the difference
is reported directly in the comprehensive statement. Intercompany transactions, balances and unrealized gains and losses on transactions between
Group companies are eliminated. Accounting principles for subsidiaries are
changed where necessary to ensure consistent application of the Group’s
principles.
2.4 Segment reporting
Operating segments are reported in a way that corresponds with the
internal reporting that is submitted to the chief operating decision-maker.
The chief operating decision-maker is the function that is responsible for
allocating resources and reviewing the results of the operating segments.
In the Group, the executive leadership team that implements the by the
board decided upon strategic direction, has been identified as holding
this function. Aerocrine’s segments comprise North America/US, Asia/
Pacific and EU/Rest of the world (RoW).
2.5 Translation of foreign currency
Functional and reporting currency
Items included in the financial reports for the different units within the Group
are valued in the currency used for the primary economic environment
where the unit is active (functional currency). In the consolidated accounts
SEK is used, which is both the Parent Company’s functional currency and
presentation currency.
Transactions and balances
Transactions in foreign currency are translated into the functional currency
at the exchange rates that apply on the transaction date. Exchange rate
profit/loss arising from the payment of such transactions and from the
translation of monetary assets and liabilities in foreign currency at the
closing rate, are reported in the profit/loss statements. Exchange rate
changes for operating items are reported as other operating income or
other operating costs while exchange rate changes for long-term items
are reported as financial income or financial costs.
Group companies
The results and financial position of all Group companies (none of which
are operating with hyper-inflation currencies) that have an operational
currency other than the presentation currency, are translated into the
Group’s presentation currency as follows:
(i) assets and liabilities on each balance sheet are translated at the
closing rate,
28
(ii) income and expenses for each profit/loss statement are translated at
the average exchange rate (unless this average rate is not a reasonable
approximation of the accumulated effect of the rates that apply on the
transaction date, in which case income and expenses are translated at the transaction day rate), and
(iii)all exchange rate differences that arise are reported as a separate part of equity. When consolidation is performed, exchange rate differences that arise from translating net investments are reported under share-
holders’ equity.
2.6 Tangible fixed assets
Inventories and tools mainly comprise tools used in production and development, equipment for service replacements and demonstration purposes,
and office materials. Improvements made on another owner’s property
include expenses for rented facilities. All tangible fixed assets are reported at
acquisition cost with deductions for depreciation. Acquisition cost includes
expenses that can be directly attributable to acquisition of the asset.
Additional costs are added to the reported value of the asset or
reported as a separate asset, depending on which is appropriate, only
when it is probable that the future economic benefit associated with the
asset will benefit the Group and the asset’s value can be measured reliably.
All other forms of repairs and maintenance are reported as costs in the
income statement during the period when they arise.
Depreciation is performed linearly as follows
over the expected utilization period:
Equipment for service replacements
Equipment for demonstration purposes
Production tools
Office materials Expenses for improvements to rented property
5 years
3–5 years
5–7 years
5 years
5 years
The residual value and useful life of the assets are assessed at each closing
day and adjusted as needed.
An asset’s reported value is written down immediately to its recovery
value if the reported value of the asset is higher than the estimated recovery
value (point 2.8).
Profit/loss on disposal is established through a comparison between
the sales income and reported value and is reported on the income
statements as other operating income or other operating expenses.
2.7 Development costs, patents and customer relations
Expenditures incurred in development projects (relating to design and
testing of new or improved products and expenses for clinical trials) and
expenses for patents are reported as intangible assets when the following
criteria are fulfilled:
a)it is technically feasible to finish the intangible asset so that it can be
used or sold;
b)management intends to finish the intangible asset and use or sell it;
c)conditions exist to use or sell the intangible asset;
d)the way in which the intangible asset will generate probable future
economic benefits can be demonstrated;
e)adequate technical, financial and other resources exist to complete
the development and to use or sell the intangible asset; and
f) the expenditures which relate to the intangible asset during its
development can be calculated in a reliable manner.
NOTES
Development
Patents
Customer relations
5 years
between 5 and 7 years
3.5 years
Other development expenditures which do not fulfil these conditions are
reported as expenses when incurred.
2.8 Impairment
Assets that are subject to amortization are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized using
the amount by which the asset’s reported value exceeds its recovery
value. The recovery value is the higher of an asset’s fair value less sales
costs and utilization value. When assessing for impairment, assets are
grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
2.9 Financial Instruments
Financial instruments reported on the balance sheet include financial
fixed assets, loan liabilities, liquid assets, accounts receivable and
accounts payable.
A financial asset or financial liability is reported on the income statement
when the Company becomes a party to the contractual terms relating to the
instrument. A financial asset is removed from the balance sheet when the
rights in the agreement are realized, expire or the Company loses control
over them. A financial liability is removed from the balance sheet when
the obligation in the agreement is discharged or otherwise expires.
The Group classifies its financial assets in the following categories:
• Financial assets assessed at fair value via the income statement
• Accounts receivable and loan receivables
• Financial assets held for sale
Classification depends on the purpose for which the instrument was
acquired. Managers determine the classification for the instrument when
it is first reported. During the financial year the Group has not held any
instruments belonging to the category “Financial instruments held for sale”
or “Financial assets assessed at fair value via the income statement”.
Accounts receivable and loan receivables
Loans and receivables are initially reported at fair value and thereafter at
accrued acquisition value applying the effective annual interest rate method,
less any provisions for depreciation. Their distinguishing feature is that they
arise when the Group provides money, goods or services directly without
any intention to trade with the arising receivable. They are included in
current assets, with the exception of items payable more than 12 months
after the balance sheet date. Loan receivables and accounts receivables
are removed from the balance sheet when the right to receive payment
has expired or been transferred and that in large all risks and benefits
attached to the ownership has been transferred.
Provision is made for impairment of accounts receivable when there is
objective evidence that the Group will be unable to receive all amounts
which are due and payable according to the original terms of the receivables. The size of the provision comprises the difference between the
reported value of the asset and the current value of estimated future cash
flow, with a discount for original effective interest. Any reserves for customer losses are reported in the income statement as operating expenses.
Accounts payable and loan liabilities
Accounts payable are initially reported at fair value and thereafter at
accrued acquisition value using the effective interest method.
Loan liabilities are reported initially at the received amount after
deductions for transaction costs. It is thereafter reported at accrued
acquisition amount using the effective interest method. If the reported
amount differs from the amount to be repaid on the due date the difference is allocated as interest expense or interest income over the loan
period. In this way the reported amount and the amount to be repaid
are in agreement at the due date.
Reporting of financial liabilities ends when liabilities are realized
through repayment or they are waived. All transactions are reported on
the settlement date.
2.10 Inventories
Inventories are valued as the lowest of the acquisition cost and the net
realizable value. The FIFO (first in, first out) principle is used to calculate
the acquisition value for inventories. Inventories mainly comprise products
for sale and stocks of components for the service activities in Sweden and
the US. The acquisition value comprises all expenses for purchases. The
net realizable value is the expected sale price in current activities minus
expected costs for preparation and selling.
2.11 Liquid funds
Liquid funds comprise cash and bank accounts and other current investments with due dates within three months of the acquisition date, as well
as banking overdrafts. Banking overdrafts are reported in the balance sheet
as loans under Current liabilities.
2.12 Shareholders’ equity
Transaction expenses directly attributable to the issuing of new shares
or warrants are reported, net after tax, under shareholders’ equity as a
deduction from the issue amount.
2.13 Current and deferred income tax
The tax expense for the period covers current and deferred tax. Tax is
reported in the income statement unless when the tax refers to items
reported in other comprehensive income or directly towards equity. In
those cases the tax is reported in other comprehensive income and equity.
The current tax is calculated based on the tax rules that are in effect at the
balance sheet date or substantively enacted in the markets were the Group
is active or generates taxable income.
Deferred tax is reported in full using the balance sheet method for the
temporary differences that arise between tax values for assets and liabilities
and values reported in the consolidated income statement. If however the
deferred tax arises due to a transaction that represents the first reporting of
an asset or liability that is not a company acquisition and which, at the time
of the transaction, neither affects the reported or taxable profit/loss, then it
is not reported. Deferred tax is estimated using tax rates (and tax laws) that
have been decided or announced on the closing date and which can be
expected to be valid when the deferred tax receivable is realized or the
deferred tax liability is settled.
Deferred tax receivables are reported to the extent that it is probable
that future taxable surpluses will be available, against which the temporary
differences can be utilized.
Deferred tax receivables and liabilities are offset when there is a legally
enforceable right to offset current tax receivables and liabilities.
29
NOTES
2.14 Employee benefits
Pension commitments
Plans for remuneration after employment has ended shall be classified
either as defined-contribution or defined-benefit pension plans. The sub­
sidiary in the US is the only company in the Group that supports a pension
plan reported as a defined-benefit plan. It covers the former CEO only and
was signed in 2006. Remuneration via this pension plan is based on average
salary during the employment period. The Group carries the risk associated
with this plan that the promised remuneration is paid out.
The liability reported in the balance sheet for defined-benefit pension
plans is the current value of the defined-benefit commitment on the
­closing date adjusted for unreported actuarial profit/loss for service in earlier
periods. The defined benefit obligation is calculated annually by independent actuaries using the project unit credit method. The current value
of the defined-benefit commitment is established by discounting estimated
future cash flow using interest rates for first class corporate bonds issued
in the same currency as the remuneration will be paid in and with a term
comparable with the pension liability.
Actuarial profits and losses that arise from experience-based adjustments
and changes in actuarial assumptions are reported in Other comprehensive
income in the item ‘‘Remeasurement of post employment benefit obligation”.
For defined-contribution pension plans, the Group pays fees to publicly
or privately managed pension insurance plans on a compulsory, contractual
or voluntary basis.
The Group has no other payment obligations once the fees are paid. The
fees are reported as staff costs when they fall due for payment. Prepaid fees
are reported as an asset to the extent that cash repayment or reduction of
future payments can benefit the Group.
Severance benefits
Severance benefit is paid when employment is terminated before the normal
pension period or when an employee voluntarily accepts redundancy in
return for severance benefit. The Group reports severance benefit when it
is obliged either to make the employee redundant in accordance with a
detailed formal plan that cannot be revoked, or to pay remuneration on
termination as the result of an offer made to encourage voluntary redundancy. Benefits that fall due more than 12 months after the closing date
are discounted to current value.
Bonus
Bonuses not already paid to staff are reported as a liability when it is
probable that a bonus-linked target in accordance with a fixed plan will be
realized in part or in full and the liability can be calculated reliably. The
liability is reported in relation to fulfilment of the target. The bonus for the
CEO and other senior executives is always established by the Board.
2.15 Provisions
Provisions are reported when the Group has a legal or informal commitment
due to the occurrence of an event, and it is more probable than not that an
outflow of resources will be required to settle the commitment, and it has
been possible to calculate the amount in a reliable way.
2.16 Share-related remuneration
The Group has a number of share-related remuneration plans in which
settlement is made using shares. The fair value of service that entitles an
employee to an allocation of share warrants is reported as an expense. The
total amount to be reported as an expense during the period of service is
based on the fair value of the allocated share warrants. On the closing date
the Company re-examines its assessment of how many share warrants are
expected to be earned. Any discrepancy between the original assessment
and the re-examination is reported in the income statement and any
30
adjustment is reported under shareholders’ equity. Received payments, after
deductions for any directly attributable transaction costs are credited to the
share capital and premium reserve when the share warrants are utilized.
Social security contributions attributable to share-related instruments
for employees are reported as an expense during the period of service.
The expense is calculated using the same assessment model used when the
share warrants were issued. The provision that arises shall be re-assessed on
the closing date based on a calculation of the expenses that may be required
to be paid when the instrument is redeemed.
2.17 Revenue recognition
Revenue comprises the fair value of goods and services sold, excluding
VAT and discounts and after elimination of intra-Group sales. Income is
reported as follows:
Sale of goods
The Company sells medical technology equipment that enables inflammation of the airways to be measured. In addition the Company sells
consumable items and spare parts. The Group provides 12-month guarantees for its products. Sales of goods are reported as income when the
significant risks and benefits have transferred to the buyer and the seller
no longer has any significant control over the goods. In the event that a
sale includes an element of installation of the product, the income is
reported in full after the installation is completed.
Sale of services
The sale of services refers in the first instance to service of sold products.
In addition, installation services and training are sold. Services are sold at a
fixed price and income is reported successively as the service is provided.
License income
Income from licenses occurs when a second company (license holder)
sells products that use the Company’s technology for as long as the patent
is valid. Such companies pay a fixed fee per sold unit and this income is
reported in the period when the Company receives the payment from
the license holder sold units. Of the Groups net income license revenues
represents 2014: 0.6 percent (2013: 0.7 percent; 2012: 0.4 percent).
Interest income
Interest income is reported as interest earned.
2.18 Leasing
Leasing in which a significant part of the risks and benefits of ownership
reside with the leaseholder, is classified as operational leasing. Payments
made during the leasing period (after deductions for any rewards from the
lease provider) are booked as a cost in the income statements on a straightline basis over the leasing period. At present all leasing agreements within
the Group are operational leasing agreements.
2.19 Accounting policies of the Parent Company
The Parent Company has prepared its annual report in accordance with
the Annual Accounts Act and recommendation RFR 2 of the Swedish
Financial Accounting Standards Council (Accounting for legal entities).
RFR 2 requires that parent companies reporting as legal entities shall
apply all EU adopted IFRS and announcements as far as this is possible
within the framework of the Annual Accounts Act and the Swedish law
safeguarding pension commitments, and with consideration to connections between reporting and taxation. The recommendation indicates
which exceptions and additions shall be made regarding IFRS. There is
no difference between the Group’s accounting principles and those of
the Parent Company.
NOTES
3. FINANCIAL RISK M ANAGEMENT
3.1 Financial risk factors
Through its operations, the Group is exposed to a number of different financial risks: market risks (including exchange rate, interest rate and price risks),
credit risks, liquidity risks and cash flow risks. At present the Group’s policy
does not involve securing against financial risks concerning borrowings,
transaction and translation exposure. This decision was taken by the Board
with consideration for the current amounts that the Group is exposed to and
the cost for securing against possible risk. This policy is reviewed annually.
The Board assesses the need for risk management and sets written
principles for overall risk management as well as specific areas such as
currency risk, interest rate risk, credit risk, use of derivative instruments
and nonderivative financial instruments and investment of excess liquidity.
Market risks
Exchange rate risks
The Group is active on international markets and is exposed to transaction
risks when buying and selling and when performing financial transactions
in foreign currencies. Exchange rate risk is defined as the risk that fluctuations in exchange rates have a negative effect on Group earnings. All
internal invoicing and invoicing by subsidiaries is performed in local
­currency, while all transactions in other currencies are managed via the
Parent Company. The Group’s exposure to foreign currency relates primarily
to USD, EUR and GBP.
The loan that the Group raised in 2013 in USD (in total 35 MUSD) is
maintained in USD to as great extent as possible to minimize the currency
risk. The majority of the loan will be used in the continuous investments
the Group makes on the US market and by maintaining the loan in USD
as a consequence the currency risk is minimized. The Groups net result is
influenced by translation exposure related to the loan and by maintaining
the loan in USD the effect is as much as possible offset.
If the Swedish krona (SEK) falls/rises by 10 percent in relation to USD
and other variables had been constant, profit as of 31 December 2014
would have been SEK 38,475,00 (SEK 31,611,000 in 2013; SEK 6,593,000
in 2012) higher/lower, mainly due to translation of earnings from the US
subsidiary, translation of receivables for subsidiaries and translation of
­purchases made in USD (which also includes invoiced ­marketing support
from the subsidiary in the US to the Parent Company).
Shareholders’ equity should have been SEK 37,555,00 (SEK 30,601,000
in 2013; SEK 5,898,000 in 2012) lower, mainly as a result of restatement
of the result.
If the Swedish krona (SEK) falls/rises by 5 percent in relation to EUR
and other variables had been constant, profit as of 31 December 2014
would have been SEK 3,018,000 (SEK 2,660,000 in 2013; SEK 2,788,000
in 2012) higher/lower, mainly due to recalculation of invoiced sales,
­translation of accounts receivable in EUR, translation of earnings for the
German subsidiary, translation of receivables for sub­sidiaries and translation of purchases made in EUR.
Shareholders’ equity would have been SEK 3,195,000 (SEK 2,924,000
in 2013 and SEK 3,006,000 in 2012), higher/lower, mainly as a result of
restatement of the results.
Credit risk
The Group has established guidelines for ensuring that products and
­services are sold to customers with a suitable credit background. If
­considered necessary, goods will only be delivered after a customer has
made an advance payment. The Group’s five largest customers account
for 26 (2013: 26; 2012: 27) percent of net sales.
The following table shows accounts receivable for the Group presented
in periods in relation to the contracted due date. The amounts shown are
the contracted, non-discounted cash flows. The amounts that fall due
within 12 months are in agreement with the booked amounts, since the
discount effect is insignificant.
2014
Amount Share
Not due
2013
2012
Amount Share Amount Share
18,769
70%
13,162
64%
16,078
58%
Overdue 0–2 months
6,912
26%
4,946
24%
6,308
23%
Overdue 2–4 months
1,067
4%
1,804
9%
4,433
16%
Overdue 4–6 months
37
0%
515
2%
679
2%
Overdue >6 months
34
0%
256
1%
335
1%
Total
26,819
20,683
27,833
Liquid funds at bank accounts also constitutes a credit risk. This risk is managed by only using well established banks with credit ratings AAA or K1.
Liquidity risks
Liquidity risks are defined as the risk that the Group will not be able to pay
foreseen or unforeseen expenses. The Group’s liquid assets comprise bank
accounts. Aerocrine AB has the responsibility for the liquidity of subsidiaries
and secures financing for the Group.
Managers must also pay close attention to regular forecasts of the
Group’s liquidity reserves on the basis of estimated cash flow.
The following table analyses the Group’s financial liabilities divided
into periods remaining to the agreed due date after the closing date. The
amounts shown are the contracted, non-discounted cash flows. The
amounts that fall due within 12 months are in agreement with the booked
amounts, since the discount effect is insignificant.
As of 31 Dec. 2014
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Loan, interest and
milestone*
37,461
38,923
126,509
Repayment of loan
–
–
–
Accounts payable
and other liabilities
72,766
–
–
Total
110,227
38,923
126,509
As of 31 Dec. 2013
More than
5 years
21,227
273,410
–
294,637
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
More than
5 years
Loan, interest and
milestone*
Repayment of loan
Accounts payable
and other liabilities
Total
28,870
–
31,527
–
102,634
–
54,307
227,794
52,673
81,543
–
31,527
–
102,634
–
282,101
As of 31 Dec. 2012
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
More than
5 years
–
–
–
–
60,866
60,866
–
–
–
–
–
Convertible bond
Accounts payable
and other liabilities
Total
*Milestone: According to the terms of the loan a predetermined fee for the
loan that is progressive over the life of the loan. The milestone payment
starts from 2015.
31
NOTES
Interest risk related to cash flow and fair value
Interest risk is defined as the risk that a change in interest rates has a
negative impact on the Group’s earnings or competitive strength. The loan
raised during 2013 has a fixed interest rate of 12.5 percent. Therefore there
is a risk exposure regarding the real value of the loan.
Price risk
Price risk is defined as the risk that the Group’s costs for goods are changed
negatively due to changed purchasing prices or negative changes in Group
earnings due to reduced prices for the Group’s products and services. The
Group’s purchasing prices are renegotiated with suppliers at 6–12 month
intervals.
3.2 Capital risk management
The Group’s objective concerning capital structure is to secure the Group’s
ability to continue its business so as to continue generating a return for
shareholders and to maintain an optimum capital structure in order to keep
costs relating to capital low. The Group has primarily financed the operations through shareholder contributions in the form of new share issues but
during 2013 also raised debt through loans to finance the operations.
Total borrowings
Less liquid funds
Net debt
Total shareholders' equity
Total Capital
Debt/equity ratio
2014
2013
2012
267,928
130,489
137,439
-114,832
230,865
215,755
292,133
-76,378
104,186
379,581
–
199,913
n/a
231,566
304,283
60%
-20%
n/a
3.3 Calculating fair value
Reported value, less any impairment, for accounts receivable and accounts
payable, are expected to match their fair value, since they are current items.
The fair value of financial liabilities is calculated, for reporting in the notes,
by discounting future contracted cash flow at the current market interest
rate that is available for the Group for similar financial instruments.
4. CRITICAL ESTIMATES AND ASSESSMENTS
USED FOR ACCOUNTING PURPOSES
Estimates and assessments are checked continually and are based on
­historic experience and other factors, including expectations for future
events considered to be reasonable under current conditions.
The Group makes estimates for, and assumptions about, the future.
Estimates for accounting purposes, by definition, rarely match actual
outcomes. The estimates and assumptions that entail a significant risk
for major adjustments in reported value for assets and liabilities in the
coming financial year are presented below.
32
4.1 Expenses for product guarantees
Estimated expenses for product guarantees impact on operating expenses
when products are sold. Estimated expenses cover expected contractual
undertakings as well as goodwill commitments (guarantee commitments in
addition to contractual guarantees or campaigns performed in accordance
with a fixed policy or to maintain good relations with a customer). Provisions for guarantees are based on statistics with regard to known changes
concerning guarantee commitments, periods, average time from fault
being discovered to guarantee claim reaching the Company and expected
changes in quality index. Differences between fair value and estimated
guarantee expenses affect reported expenses and provisions during the
coming periods. Repayments from suppliers, which reduce costs for guarantee commitments, are reported when they are considered to be secure.
As of 31 December 2014 provisions for guarantee expenses amounted to
SEK 1,580,000 (SEK 2,109,000 in 2013; SEK 1,481,000 in 2012).
4.2 Deficit deductions
The Group’s deficit deductions have not been assessed and are not reported
as a deferred tax receivable. Deficit deductions are assessed only when the
Group has established a level that managers know with certainty will lead to
a taxable surplus.
Significant estimates and assessments
4.3 Share-based compensation plans
The Group has a number of share-based compensation plans. The
accounting principles for theses are described on page 46. The cost of
compensation recognized in a period depends on the initial valuation
made at the time of the contract with the staff, the number of months
employees must serve in order to be entitled to exercise their options
(accruals occurs over this time), the number of options that are expected
to be vested by the staff under the terms of the plans and a continuous
reassessment of the value of the tax benefit for staff in the plans (as a basis
for the provision of social costs). The estimates that affect the cost in one
period and the corresponding increase in equity is mainly input in the
valuations of the options. Two models have been used in this regard:
Monte Carlo and Black-Scholes. Key assumptions in these valuations
are presented in Note 31. The estimates are made in consultation with
external consultants who have extensive experience in option valuation.
In addition to the valuation the costs in a period are affected by estimates
regarding the number of employees who are assumed to vest their options.
By the staff work described in other parts of the annual report and the
history of staff turnover, management has a very good basis for estimating
the number of employees who will complete the program.
NOTES
5. SEGMENT INFORMATION
Operating segments are reported in a way that corresponds with the internal
reporting that is submitted to the chief operating decision-maker. The chief
operating decision-maker is the function that is responsible for allocating
resources and reviewing the results of the operating segments. In the Group,
the executive leadership team that implements the by the board decided
upon strategic direction, has been identified as holding this function.
­Aerocrine’s segments comprise North America/US, Asia/Pacific and
EU/Rest of the world (RoW). Reportable segments:
North
America
Segments income
58,777
Sales between segments
Income from external
customers
58,777
Aerocrine Group
Aerocrine Group
2014
2013
Asia/
Pacific
EU/
ROW
Aerocrine Group
2012
North
America
Asia/
Pacific
26,765 170,091 255,633
-89,411 -89,411
57,309
10,679
162,311 230,299
-94,131 -94,131
26,765
57,309
10,679
68,180 136,168
Total
80,680 166,222
EU/
ROW
North
America
Total
Asia/
Pacific
EU/
ROW
Total
54,625
18,770 160,217
-86,603
233,612
-86,603
54,625
18,770
73,614 147,009
Aerocrine Group
2014
Total EBIT for reportable segment
Financial income
Financial expenses
Group – net profit/loss before taxes
The result is charged with:
-Cost personal option plan
-Depreciation
North America
Asia/Pacific
EU / ROW
Other unallocated
Total
-139,751
–
8,776
–
-37,206
–
–
24,671
-168,181
24,671
–
–
–
-84,730
-84,730
-139,751
8,776
-37,206
-60,059
-228,240
-3,616
-592
–
–
-2,470
-11,829
–
–
-6,086
-12,421
Aerocrine Group
2013
Total EBIT for reportable segment
Financial income
Financial expenses
Group – net profit/loss before taxes
The result is charged with:
-Cost personal option plan
-Depreciation
North America
Asia/Pacific
EU / ROW
Other unallocated
Total
-131,603
–
411
–
-74,518
–
–
28,454
-205,710
28,454
–
–
–
-48,182
-48,182
-131,603
411
-74,518
-19,728
-225,438
-4,273
-567
–
–
2,366
-11,508
–
–
-1,907
-12,075
Aerocrine Group
2012
Total EBIT for reportable segment
Financial income
Financial expenses
Group – net profit/loss before taxes
The result is charged with:
-Cost personal option plan
-Depreciation
North America
Asia/Pacific
EU / ROW
Other unallocated
Total
-110,785
–
-3,071
–
-83,175
–
–
5,952
-197,031
5,952
–
–
–
-10,400
-10,400
-110,785
-3,071
-83,175
-4,448
-201,479
-6,788
-484
–
–
-16,064
-11,404
–
–
-22,852
-11,888
33
NOTES
6. EXPENSES DISTRIBUTED BY TYPE
Aerocrine Group
Depreciation
Staff expenses
Material & goods
Office, insurance and administration expenses
Marketing and sales expenses
Clinical trials
Service expenses
Development expenses
Other external consulting expenses
Other expenses
Total expenses for sold goods, marketing and
development expenses and administration expenses
2013
2012
2014
2013
2012
12,421
136,509
54,704
15,145
73,613
5,408
343
8,448
17,420
14,458
11,880
142,983
38,338
15,977
66,900
6,985
678
14,972
21,191
22,640
11,888
144,063
40,744
8,566
57,959
10,136
615
9,734
48,602
20,021
11,558
46,126
57,863
8,266
170,231
3,845
279
8,448
14,273
18,285
11,006
48,604
41,702
9,152
179,318
6,086
619
14,972
18,112
19,476
11,197
57,665
44,161
5,704
152,424
10,136
543
9,734
43,843
17,123
338,468
342,544
352,328
339,174
349,047
352,530
7. ACCOUNTS RECEIVABLES
Accounts receivables
Minus: reserve for bad debt
Accounts receivables - net
Aerocrine AB
2014
Aerocrine Group
Aerocrine AB
2014
2013
2012
2014
2013
2012
28,014
-1,195
26,819
21,301
-618
20,683
28,392
-559
27,833
16,586
-465
16,121
11,754
-130
11,624
18,481
-120
18,361
As of December 31st 2014 were Accounts receivables TSEK 8,050 (2013: 7,522, 2012: 11,755) due but without any imparment considered necessary.
The aging analysis of these Accounts receivables is as follows:
Aerocrine Group
Overdue 0–2 months
Overdue 2–4 months
Overdue 4–6 months
Overdue >6 months
Total
Aerocrine AB
2014
2013
2012
2014
2013
2012
6,912
1,067
37
34
8,050
4,946
1,804
516
256
7,522
6,308
4,433
679
335
11,755
2,940
435
37
34
3,446
1,968
489
42
203
2,702
1,996
3,452
258
221
5,927
As of December 31st 2014 the Group has reported Accounts receivables where impairment exists with TSEK 1,195 (2013: 618; 2012: 559). The reserve for doubtful debts amounted to TSEK 1,195 (2013: 618; 2012: 559). Age analysis of these is presented below.
Aerocrine Group
Overdue >6 months
Total
Aerocrine AB
2014
2013
2012
2014
2013
2012
1,195
1,195
618
618
559
559
465
465
130
130
120
120
There is no concentration of credit risks concerning accounts receivable because the Group has a large number of customers dispersed across the globe.
8. INVENTORY
Aerocrine Group
Goods for resale
Service stocks
Total
2013
2012
2014
2013
2012
23,613
3,254
26,867
14,362
5,151
19,513
15,412
4,808
20,220
15,599
2,480
18,079
9,857
3,953
13,810
11,042
3,677
14,719
An impairment of inventories due to obsolescence was varied out
amounting to TSEK 5,781 (2013: 2,779, 2012: 1,627) for the Group
and TSEK 4,455 (2013: 2,673, 2012: 1,627) for the Parent Company.
34
Aerocrine AB
2014
The booked expense for inventories is included in the item entitled
“Expenses for sold goods” and amounts to TSEK 51,382 (2013: 35,826;
2012: 37,729 ) for the Group and TSEK 55,061 (2013: 39,737; 2012: 41,691)
for the Parent Company.
NOTES
9. EMPLOYEES
2014
Averge number of employees
2013
2012
Total number
of employees
Of which
men
Total number
of employees
Of which
men
Total number
of employees
Of which
men
39
63
42
73
36
55
6
59%
53%
91%
4
60%
51%
68%
9
4
133
45%
74%
57%
10
2
107
61%
100%
57%
Parent Company, Sweden
Subsidiaries in the US
Subsidiaries in the UK
10
58%
50%
54%
Subsidiaries in Germany
Subsidiaries in Switzerland
Group, Total
1
2
115
100%
75%
54%
At the end of the year there were 111 employees (of whom 60 men and 51 women).
2014
Expenses for
employee benefits
Parent Company, Sweden
-of which pension expenses
Subsidiaries
-of which pension expenses
Group, total
-of which pension expenses
Salaries and
other remu­
nerations
30,622
–
77,423
–
108,045
–
2013
Social
costs
Sharerelated remuneration
Salaries and
other remu­
nerations
9,190
2,248
462
388
9,652
2,636
-358
–
4,002
–
3,644
–
33,755
–
78,683
–
112,438
–
2012
Social
costs
Sharerelated remuneration
Salaries and
other remu­
nerations
14,332
4,830
9,405
969
23,737
5,799
-2,308
–
6,013
–
3,705
–
28,394
–
71,109
–
99,503
–
ShareSocial related remucosts
neration
11,801
3,167
8,201
392
20,002
3,559
14,004
–
8,836
–
22,840
–
Share-related remuneration includes expenses for social security expenses in accordance with UFR 7.
2014
Parent Company Sweden
- of which bonus
Subsidiaries in the US
- of which bonus
Subsidiaries in the UK
- of which bonus
Subsidiaries in Germany
- of which bonus
Subsidiaries in Switzerland
- of which bonus
Group, Total
- of which bonus
2013
2012
Board of Directors and CEO
Other
employees
Board of Directors and CEO
Other
employees
Board of Directors and CEO
Other
employees
3,939
1,607
4,022
2,280
–
–
1,617
222
–
–
9,578
4,109
26,684
3,202
888
4,426
449
–
–
1,217
104
–
–
8,845
1,440
30,553
4,905
1,272
6,003
1,894
–
–
2,188
377
–
–
13,096
3,543
23,489
63,649
2,638
4,320
1,823
99,114
Remuneration and terms for senior executives, etc.
Guidelines for remuneration to senior executives
Remuneration to the Chairman of the Board and to Board members for
Board and committee assignments is determined by a vote at the Annual
General Meeting. Remuneration to the CEO and other senior executives
comprises a basic salary, variable salary, other benefits and pension. Senior
executives are the four individuals plus the CEO who formed the Group
management team during the year. For the composition of this team, see
page 55. The division between basic salary and variable remuneration
shall be in proportion to the responsibility and authority of the executive.
The share of total remuneration to other executives comprising bonus varies
depending on the position. Each bonus contract has a ceiling and can’t
exceed 100 percent of the basic salary (see page 16).
Bonus
The bonus for the CEO in 2014 was based on the Group’s net sales,
­operating earnings, cash flow, qualitative targets and increased coverage by
private insurance companies in the US. A bonus of MSEK 3,2 was paid for
the CEO for the 2014 financial year, which corresponds to 100% of the basic
61,327
3,700
4,106
3,907
103,593
51,426
2,871
5,092
3,529
86,407
salary denominated in USD. For other senior executives the bonus for 2014
was based on net sales, operating earnings, cashflow, qualitative targets and
increased coverage by private insurance companies in the US. For other
senior executives the bonus for 2014 corresponded to 20% of the basic salary. Share options/Warrants
During 2014 senior executives acquired 875,000 options. Share-related
remuneration At the Annual General Meeting held on April 12, 2007 a
decision was made to establish long-term incentive schemes. One of them
– LIP 2007 – was aimed at around 40 current and future employees of the
Aerocrine Group, and the other one was directed at the Chairman of the
Aerocrine Board, Anders Williamsson. At the Annual General Meeting in
April 2009, a decision was made to establish a long-term incentive scheme
– LIP 2009 – aimed at around 40 current and future employees of the
Aerocrine Group. At the Annual General Meeting in November 2011, a
decision was made to establish a long-term incentive scheme – LIP 2011 –
aimed at around 80 current and, additionally, future senior executives and
other employees of the Group, as well as other key individuals, including
scientific and clinical consultants.
35
NOTES
Share-related remuneration
At the Annual General Meeting held on April 12, 2007 a decision was
made to establish long-term incentive schemes. One of them – LIP 2007 –
was aimed at around 40 current and future employees of the Aerocrine
Group, and the other one was directed at the Chairman of the Aerocrine
Board, Anders Williamsson. At the Annual General Meeting in April 2009,
a decision was made to establish a long-term incentive scheme – LIP 2009
–aimed at around 40 current and future employees of the Aerocrine Group.
At the Annual General Meeting in November 2011, a decision was made
to establish a long-term incentive scheme – LIP 2011 – aimed at around
80 current and, additionally, future senior executives and other employees
of the Group, as well as other key individuals, including scientific and
clinical consultants.
Basic salary/
Board fees
2014
Rolf Classon, Chairman of the board
Anders Williamsson, member o the board 1)
Dennis Kane, member of the board
Lars Gustafsson, member of the board
Maria Strömme, member of the board
Michael Shalmi, member of the board
Scott Beardsley, member of the board 1)
Staffan Lindstrand, member of the board 3)
Thomas Eklund, member of the board 2)
Managing director
Other senior executives*
Total
*Average 6 people during the year.
Terms of severance
Between the company and the current CEO, a mutual period of notice of
termination of six months applies. If dismissed by the company, the CEO
shall receive 12 months’ salary. Notice of termination of contract between
other senior executives and the company is 3–12 months.
Pensions
For the CEO and other senior executives, pension benefits are paid in
accordance with the ITP plan. The retirement age for the CEO and other
senior executives is 65 years.
Variable
remuneration
250
0
13
88
62
62
0
84
92
3,275
11,271
15,197
Other
remuneration***)
Other
benefits
Pension
cost
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
**Excluding social security contributions.
–
–
–
–
3,177
2,674
5,852
–
8
85
93
–
233
1,352
1,585
0
595
595
Share-related
remuneration**
Total
257
37
166
83
–
–
–
–
–
1,776
3,406
5,725
507
37
179
171
62
62
0
84
92
8,468
19,384
29,046
***Severance.
Resigned forme the board at the AGM on May 12, 2014.
Resigned from the board on November 25, 2014. Remuneration is in proportion to his board assignment for the period 2014-2015.
3)
Resigned from the board on December 12. 2014. Remuneration is in proportion to his board assignment for the period 2014-2015.
1)
2)
2013
Rolf Classon, Chairman of the board
Anders Williamsson, member o the board
Dennis Kane, member of the board
Lars Gustafsson, member of the board
Scott Beardsley, member of the board
Staffan Lindstrand, member of the board
Thomas Eklund, member of the board
Managing director
Other senior executives*
Total
*Average 5 people during the year.
36
Basic salary/
Board fees
Variable
remuneration***
Other
benefits
Pension
cost
Share-related
remuneration**
Total
263
113
0
75
88
88
100
3,052
11,347
15,126
–
–
–
–
–
–
–
1,077
1,766
2,843
–
–
–
–
–
–
–
293
351
644
–
–
–
–
–
–
–
165
957
1,122
83
237
150
75
–
–
–
3,288
2,756
6,589
346
350
150
150
88
88
100
7,875
17,177
26,324
**Excluding social security contributions.
NOTES
2012
Anders Williamsson, Chairman of the board
Dennie Kane, member of the board
Lars Gustafsson, member of the board
Rolf Classon, member of the board
Scott Beardsley, member of the board
Staffan Lindstrand, member of the board
Thomas Eklund, member of the board
Managing director
Other senior executives *)
Total
Basic salary/
Board fees
Variable
remuneration***
Other
benefits
Pension
cost
Share-related
remuneration**
–
–
–
–
–
–
–
–
–
–
–
–
132
132
66
132
213
0
75
13
88
88
100
–
–
–
–
–
–
–
–
–
–
–
–
Total
345
132
141
145
88
88
100
3,095
2,419
479
22
5,831
11,846
9.879
13,551
3,927
6,346
1,118
1,597
995
1,017
5,916
12,209
21,835
34,720
*Average 6 people during the year. **Excluding social security contributions. ***The variable remuneration includes bonus for 2012 and part of bonus related to
2011 which wasn’t accounted for in 2011: TSEK 508 for CEO and TSEK 100 for other senior executives.
Programme from 2014
Share-related remuneration
Chairman of the board
Other members of the board
Other senior executives*
Other senior executives*
Other senior executives*
Total
Employee stock options 2014/2018
Allocation
Number
Value**
(SEK thousand)
Aquisition
price
Exercise
price (SEK)
47,169
42,450
250,000
850,000
75,000
1,264,619
281
253
1,048,700
1,307,902
256
2,357,392
–
–
–
–
–
0.50
0.50
0.50
5.90
8.10
* 3 participants
** At time of allocation. The actual value for options allocated during 2014 is between SEK 0.006 och 0.619.
Programme from 2013
Share-related remuneration
Chairman of the board
Other members of the board
CEO
CEO
Other senior executives*
Other senior executives*
Total
Employee stock options 2013/2017
Allocation
Number
Value**
(SEK thousand)
Aquisition
price
Exercise
price (SEK)
23,095
27,712
87,500
31,250
55,000
20,000
244,557
249
299
342
337
215
216
1,658
–
–
–
–
–
–
0.50
0.50
11.60
0.50
11.60
0.50
*4 participants.
** At time of allocation. The actual value for options allocated during 2013 is between SEK 3.9 and 10.8.
Programme from previous years
Share-related remuneration
Chairman of the board
Other members of the board
CEO
CEO
Other senior executives*
Other senior executives*
Other senior executives*
Other senior executives*
Total
Employee stock options 2011/2016
Allocation
Number
Shares***
number
Value**
(SEK thousand)
Aquisition
price
Exercise****
price (SEK)
11,342
28,355
2,850,000
540,000
1,649,705
25,000
450,000
418,754
5,973,156
11,342
28,355
3,063,750
582,282
1,773,433
26,875
450,000
442,055
6,378,092
149
372
8,521
4,070
4,892
111
2,237
3,791
24,143
–
–
–
–
–
–
–
–
0.50
0.50
7.44
0.50
7.53
10.40
13.20
0.50
* 5 participants
** At time of allocation. The actual value for options allocated during 2011 and 2012 is between SEK 2.8 and 13.13.
*** The number of shares the option program corresponds to.
**** Recalculation of the exercise price in SEK due to the in 2012 performed new share issue.
37
NOTES
Programme from previous years
Employee stock options 2007/2012
Share-related remuneration
Chairman of the board**
Other members of the board
CEO
Other senior executives*
Totalt
Allocation
number
Shares***
number
Value**
(SEK)
Aquisition
price
Exercise
price (SEK)
175,000
–
–
89,723
264,723
211,348
–
–
102,560
313,908
4,314
–
–
813
5,127
–
–
–
–
0.50
0.50
* 2 participants.
** At time of allocation. Fair value of options allocated in 2007 and 2008 was SEK 24.65, for options allocated in 2009 between SEK 0.5 and 2.7.
*** The number of shares the option program corresponds to.
2014
Board of Directors and senior executives
Aerocrine Group (including subsidiaries)
Board members
Senior executives*
Aerocrine AB
Board members
Senior executives*
2013
2012
Number on
closing date
Of which
men
Number on
closing date
Of which
men
Number on
closing date
Of which
men
16
6
100%
83%
16
6
100%
83%
16
6
100%
83%
5
2
80%
100%
7
3
100%
100%
7
3
100%
100%
“CEO”, “CFO”, “VP Developement”, “VP Sales”, “Director Clinical Development” and “President of Aerocrine Inc.”.
10. OPER ATIONAL LEASING AGREEMENTS
The Group rents offices, warehouses, cars and office machinery on operational leasing that cannot be terminated.
These agreements have different terms, index clauses and rights concerning extensions.
Aerocrine Group
Aerocrine AB
2014
2013
2012
2014
2013
2012
Fall due for payment within 1 year
Fall due for payment within 1 to 5 years
Fall due for payment later than 5 years
Total
6,422
12,484
554
19,460
8,311
12,710
239
21,260
5,405
12,083
2,621
20,109
4,347
6,798
0
11,145
6,169
10,723
–
16,892
3,748
6,199
–
9,947
2014
2013
2012
2014
2013
2012
Leasing expenses
-6,461
-7,440
-7,104
-4,180
-5,548
-4,158
38
NOTES
11. REMUNER ATION TO AUDITOR S
Aerocrine Group
Aerocrine AB
2014
2013
2012
2014
2013
2012
PwC
- Auditing
- Other assignments, not auditing
- Tax advice
- Other services
Total
1,591
456
103
334
2,484
1,798
224
39
958
3,019
1,462
438
392
345
2,637
1,090
456
103
314
1,963
1,301
224
39
958
2,522
1,040
438
392
345
2,215
Oury Clark
- Auditing
- Other assignments, not auditing
- Tax advice
- Other services
Total
52
65
0
0
117
27
11
2
99
139
38
–
–
46
84
–
–
–
–
0
–
–
–
–
0
–
–
–
–
0
The auditing assignment refers to checks of the annual report and accounts and the management of the Board and the CEO, other duties that the
­auditors of the company are asked to perform and advice or other support relating to observations made during the auditing assignment or related duties.
All other work is ‘Other assignments’.
12. OTHER OPERATING INCOME/EXPENSES
Aerocrine Group
Other income
Exchange rate differences
Other income
Total
Aerocrine AB
2014
2013
2012
2014
2013
2012
5,109
44
5,153
3,282
370
3,652
1,300
9,144
10,444
4,538
2
4,540
3,144
4
3,148
1,300
8,781
10,081
Payment from Apieron Inc’s bankruptcy estate of MSEK 8,8 is included in 2012 Other income.
Aerocrine Group
Other expenses
Exchange rate differences
Other expenses
Total
Aerocrine AB
2014
2013
2012
2014
2013
2012
-1,089
0
-1,089
-2,902
-84
-2,986
-1,847
-309
-2,156
-1,075
–
-1,075
-2,140
–
-2,140
-1,847
–
-1,847
13. FINANCIAL INCOME
Aerocrine Group
Interest income
Exchange rate gains
Total
Of which Group companies
Aerocrine AB
2014
2013
2012
2014
2013
2012
318
24,353
24,671
5,544
930
27,524
28,454
2,260
2,513
3,439
5,952
–
1,353
24,353
25,706
6,579
1,924
27,524
29,448
3,260
3,536
3,439
6,975
1,024
14. FINANCIAL EXPENSES
Aerocrine Group
Interest expenses
Exchange rate gains
Total
Of which Group companies
Aerocrine AB
2014
2013
2012
2014
2013
2012
-37,087
-47,643
-84,780
-96
-23,416
-24,766
-48,182
-1,851
-3,743
-6,657
-10,400
–
-37,138
-47,643
-84,781
-96
-23,416
-24,763
-48,179
-1,851
-3,743
-6,657
-10,400
–
39
NOTES
15. INCOME TA X
Aerocrine Group
Earnings/loss before tax
Tax based on national tax rates for earnings in that country
Non-deductible expenses
Non-taxable income
Items that are deductible for tax purposes
but not reported as expenses
Taxable deficit for which no deferred tax receivable is reported
Reported tax expense
Aerocrine AB
2014
2013
2012
2014
2013
2012
-228,241
49,483
-751
-225,509
49,914
-554
-201,551
52,061
-532
-221,984
48,836
-194
-228,588
50,289
-102
-199,751
52,535
-79
1
1
2
1
1
2
175
-48,908
0
1,095
-50,378
78
8,579
-60,110
0
0
-48,644
0
810
-50,998
0
6,571
-59,029
0
The weighted average tax rate was 21% (2013: 22%; 2012: 26%).
Aerocrine Group
Deferred tax
Aerocrine AB
2014
2013
2012
2014
2013
2012
Deficit deduction
-1,773,152
-1,544,423
-1,315,309
-1,709,811
-1,488,704
-1,256,892
- of which falling due < 10 years
-of which falling due > 10 years < 20 years
-of which can be exploited indefinitely
-4,221
-52,801
-1,716,130
–
-48,596
-1,495,827
–
-50,753
-1,264,556
–
–
-1,709,811
–
–
-1,488,704
–
–
-1,256,892
The board makes the assessment that it is not probable that losses may be utilized during the coming years, so no value has been assigned.
Temporary differences
Temporary differences between booked value and tax value are TSEK 0 (2013:0 2012:0) both in the Group and in the Parent Company.
16. EXPENSES BROUGHT FORWARD FOR DEVELOPMENT ACTIVITIES
Aerocrine Group
Aerocrine AB
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Opening acquisition amount
Activated
Sales/scrapping
Exchange rate changes
Closing accumulated acquisition value
Opening depreciiation brought forward
Depreciation for the year
Sales/scrapping
Exchange rate changes
Closing accumulated depreciation
Closing residual value according to plan
Book value
Depreciation distributed as follows:
Sales and marketing expenses
Administration expenses
Development expenses
Total
40
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
6,549
2,297
–
–
8,846
-4,065
-1,595
–
–
-5,660
3,186
3,186
5,417
1,132
–
–
6,549
-3,066
-999
–
–
-4,065
2,484
2,484
5,030
387
–
–
5,417
-2,196
-870
–
–
-3,066
2,351
2,351
6,549
2,297
–
–
8,846
-4,065
-1,594
–
–
-5,660
3,186
3,186
5,417
1,132
–
–
6,549
-3,066
-999
–
–
-4,065
2,484
2,484
5,030
387
–
–
5,417
-2,196
-870
–
–
-3,066
2,351
2,351
–
–
1,595
1,595
–
–
999
999
–
–
870
870
–
–
1,595
1,595
–
–
999
999
–
–
870
870
NOTES
17. ACQUIRED PATENTS
Aerocrine Group
Aerocrine AB
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Opening acquisition amount
Purchases
Sales/scrapping
Exchange rate changes
Closing accumulated acquisition value
Opening depreciation brought forward
Depreciation for the year
Sales/scrapping
Exchange rate changes
Closing accumulated depreciation
Closing residual value according to plan
Book value
Depreciation distributed as follows:
Sales and marketing expenses
Administration expenses
Development expenses
Total
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
57,774
–
–
–
57,774
-31,640
-8,903
-40,543
17,231
17,231
57,774
–
–
–
57,774
-22,738
-8,902
–
–
-31,640
26,134
26,134
57,774
–
–
–
57,774
-13,791
-8,947
–
–
-22,738
35,036
35,036
57,774
–
–
–
57,774
-31,640
-8,903
–
–
-40,543
17,231
17,231
57,774
–
–
–
57,774
-22,738
-8,902
–
–
-31,640
26,134
26,134
57,774
–
–
–
57,774
-13,791
-8,947
–
–
-22,738
35,036
35,036
–
–
8,903
8,903
–
–
8,902
8,902
–
–
8,947
8,947
–
–
8,903
8,903
–
–
8,902
8,902
–
–
8,947
8,947
18. EQUIPMENT AND TOOLS
Aerocrine Group
Aerocrine AB
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Opening acquisition amount
Purchases
Sales/scrapping
Exchange rate changes
Closing accumulated acquisition value
Opening depreciation brought forward
Depreciation for the year
Sales/scrapping
Exchange rate changes
Closing accumulated depreciation
Closing residual value according to plan
Book value
Depreciation distributed as follows:
Sales and marketing expenses
Administration expenses
Development expenses
Total
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
31,295
1,313
-254
1,705
34,059
-27,292
-1,356
254
-1,414
-29,808
4,251
4,251
29,566
2,188
-500
41
31,295
-26,331
-1,354
413
-20
-27,292
4,003
4,003
29,508
2,267
-1,679
-530
29,566
-26,857
-1,609
1,677
458
-26,331
3,235
3,235
23,407
858
–
–
24,265
-21,202
-850
–
–
-22,052
2,213
2,213
21,652
1,755
–
–
23,407
-20,382
-820
–
–
-21,202
2,205
2,205
21,436
317
-101
–
21,652
-19,387
-1,096
101
–
-20,382
1,270
1,270
519
311
527
1,356
582
253
519
1,354
705
42
862
1,609
59
275
515
850
93
219
508
820
255
42
798
1,096
41
NOTES
19. EXPENSES FOR IMPROVEMENTS OF PROPERTY OWNED BY OTHER PARTIES
Aerocrine Group
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Opening acquisition amount
Purchases
Sales/scrapping
Exchange rate changes
Closing accumulated acquisition value
Opening depreciation brought forward
Depreciation for the year
Sales/scrapping
Exchange rate changes
Closing accumulated depreciation
Closing residual value according to plan
Book value
Depreciation distributed as follows:
Sales and marketing expenses
Administration expenses
Development expenses
Total
Aerocrine AB
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
2,773
–
–
555
3,328
-550
-356
–
-160
-1,066
2,262
2,262
2,776
–
–
-3
2,773
-210
-341
–
1
-550
2,223
2,223
6,210
2,815
-6,006
-243
2,776
-6,176
-178
6,003
141
-210
2,566
2,566
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
285
53
18
356
273
51
17
341
142
36
–
178
–
–
–
–
–
–
–
–
–
–
–
–
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
20. CUSTOMER REL ATIONS
Aerocrine Group
Opening acquisition amount
Purchases
Sales/scrapping
Exchange rate changes
Closing accumulated acquisition value
Opening depreciiation brought forward
Depreciation for the year
Sales/scrapping
Exchange rate changes
Closing accumulated depreciation
Closing residual value according to plan
Book value
Depreciation distributed as follows:
Sales and marketing expenses
Administration expenses
Development expenses
Total
Aerocrine AB
995
–
–
–
995
-783
-212
–
–
-995
0
0
995
–
–
–
995
-499
-284
–
–
-783
212
212
995
–
–
–
995
-214
-285
–
–
-499
496
496
995
–
–
–
995
-783
-212
–
–
-995
0
0
995
–
–
–
995
-499
-284
–
–
-783
212
212
995
–
–
–
995
-214
-285
–
–
-499
496
496
212
–
–
212
212
–
–
212
285
–
–
285
212
–
–
212
212
–
–
212
285
–
–
285
Dec 31, 2013 Dec 31, 2012
Dec 31, 2014
Dec 31, 2013
Dec 31, 2012
–
–
–
–
–
–
–
–
–
–
–
–
21. LIFE INSUR ANCE
Aerocrine Group
Dec 31, 2014
Opening acquisition amount
Increase
Exchange rate changes
Closing accumulated acquisition value
1,911
350
383
2,643
Refers to pension benefit for former CEO of the subsidiary Aerocrine Inc.
42
1,628
285
-2
1,911
Aerocrine AB
1,431
292
-95
1,628
NOTES
22. GROUP COMPANY RECEIVABLES
Aerocrine AB
2014
2013
2012
12,514
504
12,298
3,644
–
4,339
11,603
11,603
Opening acquisition value
Additional receivables
Regulated receivables
Exchange rate differences
Closing accumulated aquisition amount
5,448
18,466
11,603
502
–
409
12,514
Closing residual value
18,466
12,514
23. PARTICIPATION IN GROUP COMPANIES
Aerocrine AB
Opening acquisition value
Increase
Shareholders’ contribution paid/repaid
Sales
Closing accumulated acquisition amount
Opening impairment
Impairment for the year
Closing accumulated impairment
Closing residual value
2014
2013
2012
90,161
4,002
-5,910
0
88,253
87,799
142
4,215
-1,995
90,161
78,816
147
8,836
–
87,799
-64,850
–
-64,850
-64,850
–
-64,850
-64,850
–
-64,850
23,403
25,311
22,949
Booked value
Capital
share
Voting
share
Nominal
value
2014
2013
2012
100%
100%
100%
100%
100%
100%
100%
100%
10
0
0
100
14,687
503
7,969
100
11,071
117
13,879
100
6,798
94
13,962
100
Zumikon
0%
0%
0
0
0
1,995
Pfäffikon
100%
100%
142
144
144
0
Parent Company
Location
Aerocrine Inc. (EIN 41-2032037)
Aerocrine Ltd (reg. no. 4834316)
Aerocrine AG (reg. no. 0322808141)
Aerocrine ESOP AB (reg. no. 556729-1785)
Aerocrine Europe GmbH
(reg. No. CH-020.4.047.364.2)
Aerocrine International GmbH
(reg. No. CH-020.4.051.050-7)
Delaware
Berkshire
Bad Homburg
Solna
24. PREPAID EXPENSES AND ACCRUED INCOME
Aerocrine Group
Pre-paid rent
Pre-paid insurance expenses
Preliminary registered inventory invoices
Other pre-paid expenses
Accrued income
Total
Aerocrine AB
2014
2013
2012
2014
2013
2012
1,073
1,125
2,641
6,674
476
11,989
1,070
1,397
1,675
3,244
–
7,386
381
1,840
1,214
2,682
–
6,117
1,054
1,125
2,641
5,111
365
10,296
1,053
1,397
1,675
1,117
–
5,242
381
1,840
1,214
1,030
–
4,465
43
NOTES
25. EARNINGS PER SHARE
Aerocrine Group
Earnings attributable to Parent Company shareholders’
Weighted average number of shares before dilution
Weighted average number of shares before dilution, adjusted according to IAS33
Earnings per share before dilution (SEK per share)
Before dilution
Earnings per share before dilution are calculated by dividing the earnings
attributable to parent company shareholders with a weighted average
number of outstanding ordinary shares Outstanding ordinary shares
during the period excluding buy back shares held by parent company.
After dilution
To calculate earnings per share after dilution the weighted average
number of outstanding shares is adjusted with the dilution effect of all
potential ordinary shares. The parent company’s potential ordinary shares
2014
2013
2012
-221,984
154,938,616
339,053,264
-0.7
-225,598
151,381,295
331,268,753
-0.7
-201,479
127,857,137
279,790,673
-0.7
comprise subscription options and staff options. Since it is not permitted for
earnings per share to be affected positively by the dilution effect, earnings
per share after dilution is not reported.
Recalculation of earnings per share according to IAS 33
Loss per share has been calculated in accordance with IAS 33, which
­stipulates that if a rights issue is offered to all existing shareholders to a
price below the current share price, the number of ordinary shares to be
used in calculating earnings per share for all periods before the rights
issues is recalculated to reflect the effect of the rights issue.
26. BORROWINGS
Aerocrine Group
Aerocrine AB
2014
2013
2012
2014
2013
2012
Loan1)
273,410
227,794
–
273,410
227,794
–
Accrual funding costs
Total
-5,481
267,928
-12,039
215,755
–
–
-5,481
267,928
-12,039
215,755
–
–
Borrowing of MUSD 35 was made in April 2013 at Novo A/S and at OrbiMed Advisors LLC. The terms of the loan is a seven year term to April 29th 2020
with an annual fixed interest rate of 12.5% with quarterly payments. In addition, a milestone fee is paid, which is progressive over the time of the loan and
which corresponds to an effective interest rate of 16,7%.
1)
Change in the
effective rate
-1%-units
+1%-units
-2,5%-units
Fairvalue, tkr
Difference compared
to the book value, tkr
274,977
257,582
245,599
7,049
-10,346
-22,329
Security for the loan consists of Group’s float charges and all assets.
Fixed rate means that the Group’s exposure is 0. The loan that the group
raised in May 2013 has for the loan and the Company unique terms including floating charges and covenants, which make a fair valuation difficult.
If the Group wouldn’t have raised the loan at the time but instead waited
until now the conditions to raise a loan would be essentially different and
t­herefore the current terms wouldn’t be possible. This in itself makes an
assessment of the fair value almost impossible. The Company has however
made a ­sensitivity analysis of the loan at different interest rates (see table).
Aerocrine requested conversion of the convertible bond in May 2012 in
acordance with the terms of the bond. In total this meant that 12 857 143
shares were issued with the conversion price of SEK 8,75 per share. The
terms of the loan was a five year term with an annual fixed interest rate of
8%. Novo A/S had the right to convert to shares at a set conversion price of
SEK 8,75 per share, which corresponded to a premium of 41% in the share
compared to the closing price per September 15, 2010. Aerocrine had the
corresponding right to request conversion during the term of the loan if the
share price during a certain period was above SEK 13,125 per share.
Aerocrine Group
The Group has the following unutilized borrowings
Unutilized bank overdraft
Aerocrine AB
2014
2013
2012
2014
2013
2012
0
0
15,000
0
0
15,000
27. ACCRUED EXPENSES AND PRE-PAID INCOME
Aerocrine Group
Accrued holiday pay
Accrued social security expenses
Accrued salary
Accrued pension expenses
Accrued expenses, suppliers
Invoicing in advance
Accrued interest expenses
Other items
Total
44
Aerocrine AB
2014
2013
2012
2014
2013
2012
2,771
2,378
15,903
126
8,386
2,597
8,336
895
41,392
2,990
1,539
11,130
305
11,196
1,832
0
4,081
33,073
2,376
1,715
11,064
356
20,683
2,481
0
3,140
41,815
1,905
2,282
4,836
126
6,923
644
8,336
895
25,947
2,182
1,389
5,215
192
7,715
726
0
935
18,354
1,689
1,228
2,654
186
16,560
359
0
945
23,621
NOTES
28. PLEDGED ASSETS AND CONTINGENT LIABILITIES
Aerocrine Group
Pledged assets
Assets as per balance sheet
Floating charges on loans
Blocked bank account rental guarantees
Floating charges on supplier warranty
Unused overdraft facilities
For own provisions and liabilities
Contingent liabilities
Contingent liabilities: guarantee commitment.
Aerocrine AB
2014
2013
2012
2014
2013
2012
164,488
153,000
4,052
8,850
–
330,390
379,581
146,298
6,802
8,750
–
541,431
–
–
6,878
–
15,000
21,878
185,993
153,000
4,052
8,850
–
351,895
385,612
146,298
6,802
8,750
–
547,462
–
–
6,878
–
15,000
21,878
–
–
–
–
–
–
The Group’s and Parent Company’s all assets are pledger as security for loan taken in 2013.
In addition there are also floating charges or total 166 MSEK relating to loan, rental and supplier guarantees.
2 9. PR OV I S I O N S
Provisions for guarantees
Per January 1, 2014
Expenses reported in consolidated
income statement
Additional provisions
Utilized during the year
Per December 31, 2014
Aerocrine Group
Aerocrine AB
2,109
1,800
0
-529
1,580
Aerocrine Group
Aerocrine AB
1,481
600
0
-399
1,401
Provisions for guarantees
Per January 1, 2013
Expenses reported in consolidated
income statement
Additional provisions
Utilized during the year
Per December 31, 2013
2,271
-1,643
2,109
2,843
-1,643
1,800
The Group offers in general a one-year guarantee for its products with
the exception of Aerocrine Inc, who since 2012 offers a two year guarantee
for NIOX MINO®. After performing a service, the Group offers a guarantee
between 3 and 12 months. Provisions are only made for guarantee expenses
for which the Group/Parent Company does not have a corresponding
guarantee from its suppliers.
Provisions for guarantees
Per January 1, 2012
Expenses reported in consolidated
income statement
Additional provisions
Utilized during the year
Per December 31, 2012
Aerocrine Group
Aerocrine AB
950
950
2,271
-1,740
1,481
300
-650
600
Provisions for
NIOX MINO trade-in program
Provisions for
NIOX MINO trade-in program
Aerocrine Group
Aerocrine AB
1,513
–
72
-188
1,397
–
–
–
Per January 1, 2014
Expenses reported in consolidated
income statement
Additional provisions
Utilized during the year
Per December 31, 2014
Aerocrine Group Aerocrine AB
1,397
–
824
-694
1,527
–
–
–
The definition of the trade-in program is that previous products, NIOX®
and it’s successor NIOX Flex, actively has been exchanged for NIOX MINO
and tests. As the remaining value of the exchanged products can be
perceived as higher than the value of the the product offered instead
the customer has in certain cases received a pledge to receive a certain
number of tests for NIOX MINO to be utilized over a determined timeperiod. The purpose of the trade-in program is to increase the ditribution
and the use of NIOX MINO in key clinics.
Per January 1, 2013
Expenses reported in consolidated
income statement
Additional provisions
Utilized during the year
Per December 31, 2013
Provisions for
NIOX MINO trade-in program
Aerocrine Group
Aerocrine AB
Per January 1, 2012
Expenses reported in consolidated
income statement
Additional provisions
1,524
–
400
–
Utilized during the year
Per December 31, 2012
-411
1,513
–
–
45
NOTES
30. TRANSACTIONS WITH RELATED PARTIES
Aerocrine Group
Net invoicing for fiscal year
Aerocrine Inc.
Aerocrine AG
Net invoicing for fiscal year
Aerocrine Ltd
Aerocrine Europe GmbH
Aerocrine International GmbH
Novo A/S, interest expense Anders Williamsson, Chairman of the Board
Dennie Kane, member of the Board
Closing balance
Aerocrine Inc, net receivable
Aerocrine AG, net receivable
Aerocrine ESOP AB, net receivable
Aerocrine Ltd, net receivable
Aerocrine AG, net liability
Aerocrine Ltd, net liability
Aerocrine Inc, net liability
Aerocrine Europe GmbH, net liability
Aerocrine International GmbH, net liability
Novo A/S, liability – loan 10 MUSD
Aerocrine AB
2014
2013
2012
2014
2013
2012
–
–
–
–
–
–
69,475
16,249
63,757
13,335
58,775
14,442
2014
2013
2012
2014
2013
2012
–
–
–
8,671
–
–
–
–
–
5,623
–
–
–
–
–
250
–
–
–
3,686
8,671
–
–
8,170
7,812
1,653
5,623
–
–
6,176
6,976
–
–
250
–
2014
2013
2012
2014
2013
2012
–
–
–
–
–
–
–
–
–
-78,117
–
–
–
–
–
–
–
–
–
-65,084
–
–
–
–
–
–
–
–
–
12,857
1,425
1
3,906
–
–
-15,906
11,560
624
1
–
–
-1,214
-15,322
–
-1,010
-65,084
11,573
30
1
0
–
-826
-9,762
-3,782
–
–
-1,042
-78,117
The subsidiary, Aerocrine Inc, has been invoiced for products for onward sale and service activities.
The subsidiary, Aerocrine AG, has been invoiced for products for onward sale.
31. SHARE OPTIONS PROGR A MME
Incentive Programme 2007
The 2007 Annual General Meeting resolved to establish two long-term
incentive programmes – one targeting existing and future Group employees
(“LIP 2007”) and one targeting the Chairman of the Board (jointly named
“Incentive Programme 2007”). Allocations are made free of charge.
­Personnel options allocated according to LIP 2007 are earned over a fouryear period at a rate of one quarter per year with an initial vesting date 12
months after allocation, a second after 24 months, etc. The options expire
in 2016. The overall cost for the programme at time of introduction was
calculated to be SEK 45.4 million excluding social security expenses. The
programme is to be settled entirely using equity instruments in the form of
shares. To safeguard the supply of shares 2,695,238 subscription warrants
were issued to the wholly-owned subsidiary Aerocrine ESOP AB.
Incentive Programme 2009
The 2009 Annual General Meeting resolved to establish a long-term
incentive programme consisting of personnel stock options (“Incentive
Programme 2009”). The maximum cost for the programme, excluding
social security expenses was calculated at SEK 1.72 million in connection
with the introduction of the programme. Allocations are made free of
charge. The earning of staff options allocated to an individual takes place
during a four-year period after allocation, with a third of the allocation
being awarded at a time. The first date for earning being when the daily
average price of an Aerocrine share on NASDAQ OMX Stockholm
(“Average share price”) was a minimum of SEK 4.53 for 30 trading days in
succession, the second earning date being when the average share price
46
was a minimum of SEK 9.06 for 30 trading days in succession, and the
third earning date being when the average share price was a minimum of
SEK 13.59 for 30 trading days in succession. The options expire in 2019.
The programme is to be settled entirely using equity instruments in the
form of shares. To safeguard the supply of shares on utilisation of personnel
options and rights in accordance with the above, the Company has, in
accordance with a resolution by the 2009 Annual General Meeting, issued
1,314,200 sub­scription warrants to the wholly-owned subsidiary Aerocrine
ESOP AB.
Incentive Programme 2011
The Extraordinary General Meeting of 16 November 2011, resolved to
establish a long-term incentive programme consisting of personnel stock
options (“Incentive Programme 2011”). The programme encompasses at
most 10,000,000 personnel stock options of series I-III. The maximum
cost for the programme, excluding social security expenses was calculated
at SEK 34.7 million in connection with the introduction of the programme.
Allocations are made free of charge. Earning of series I personnel options
allocated to a holder takes place over a period of up to five years with a
quarter being earned on 31 December of the year in which the allocation
was made and 1/48 of the remainder being earned at the close of each
month over the subsequent four years. Earning of series II and III personnel
options allocated to a holder takes place over a period of up to five years
with a fifth being earned on 31 December of the year in which the allocation was made and a fifth of the remainder being earned at a time on
NOTES
31 December over the subsequent four years. The options expire in
2021. The programme is to be settled entirely using equity instruments
in the form of shares. To safeguard the supply of shares on utilisation of
personnel options in accordance with the above, the Company has, in
accordance with a resolution by the Extraordinary General Meeting of
16 November 2011, issued 8,648,461 subscription warrants to the whollyowned subsidiary Aerocrine ESOP AB (a portion of the subscription
­warrants issued in accordance with LIP 2007 and Incentive Programme
2009 may, in accordance with a resolution by the Annual General Meeting
be used for the implementation of Incentive Programme 2011).
Board share programme (SAP 2012) SAP 2012, which was adopted by the 2012 Annual General Meeting,
­comprises Board shares that are allocated to Board members elected by
the Annual General Meeting and who are independent in relation to
­Aerocrine, its management and the Company’s major shareholders. In
addition to the cash Board fees approved by the 2012 Annual General
Meeting, Board members participating in SAP 2012 receives fees through
the allocation of a number of Board shares that in terms of value correspond
to SEK 75,000. In addition, each participant could choose to receive
up to SEK 75,000 of his/her cash Board fee as set by the 2012 Annual
General Meeting as an additional number of Board shares corresponding
in value to the cash Board fee thus chosen by the participant. The options
expire in 2022. The programme is to be settled entirely using equity
instruments in the form of shares. To safeguard the supply of shares on
utilization, the 2012 Annual General Meeting resolved to issue at most
67,000 subscription warrants. Three out of four Board members chose to
use the opportunity to refrain from cash fees in exchange for additional
Board shares.
Board share programme (SAP 2013) SAP 2013, which was adopted by the 2013 Annual General Meeting,
­comprises Board shares that are allocated to Board members elected by the
Annual General Meeting and who are independent in relation to Aerocrine,
its management and the Company’s major shareholders. SAP 2013 entails
participating Board members receiving, beyond the cash Board fee set by
the Annual General Meeting, Board fees through the allocation of a number
of Board shares corresponding in value to SEK 225,000 to the Chairman
of the Board and SEK 75,000 to other Board members. In addition, each
participant shall be able to receive up to SEK 75,000 of his/her cash Board
fee as set by the 2013 Annual General Meeting as an additional number of
Board shares corresponding in value to the cash Board fee thus chosen by
the participant. The options expire in 2023. The programme is to be settled
entirely using equity instruments in the form of shares. To safeguard the
supply of shares on utilization, the 2012 Annual General Meeting resolved
to issue at most 80,000 subscription warrants. Three out of four Board
members chose to use the opportunity to refrain from cash fees in exchange
for additional Board shares.
Board share programme (SAP 2014)
SAP 2014, which was adopted by the 2014 Annual General Meeting,
­comprises Board shares that are allocated to Board members elected
by the Annual General Meeting and who are independent in relation to
­Aerocrine, its management and the company’s major shareholders.
SAP 2013 entails participating Board members receiving, beyond the
cash Board fee set by the Annual General Meeting, Board fees through
the allocation of a number of Board shares corresponding in value to
SEK 225,000 to the Chairman of the Board and SEK 75,000 to other
Board members. In addition, each participant shall be able to receive up
to SEK 75,000 of his/her cash Board fee as set by the 2013 Annual General
Meeting as an additional number of Board shares corresponding in value
to the cash Board fee thus chosen by the participant. The options expire in
2024. The programme is to be settled entirely using equity instruments in
the form of shares. In order to enable the delivery of shares and otherwise
safeguard the fulfillment of Aerocrine’s obligations under SAP 2014, the
AGM resolved, in accordance with the Nomination Committee’s proposal,
to issue not more than 150,000 warrants to the wholly-owned subsidiary
Aerocrine ESOP AB and approved that the warrants may be transferred
and disposed of under SAP 2014.
Due to performed new share issues a recalculation has been performed in regards to subscription and excercise price in accordance with the terms of
the personell options program which has affected the number of shares and excercise price. The new share issue in February 2015 is not considered in
the recalculations below.
2014
Per January, 1
Allotted
Forfeited
Exercised
Recalculation
Per December, 31
1)
Average
exercise price in
SEK per share
Options
(Number)
6.3
4.3
8.8
0.9
–
6.3
8,991,596
1,402,769
-706,538
-599,335
–
9,088,492
2013
Shares
(Number)1)
Average
exercise,price,in,
SEK,per,share
Options
(Number)
9,686,980
1,402,769
-745,175
-653,298
–
9,691,276
6
7.75
7.62
0.9
–
6.3
9,188,797
705,607
-565,622
-337,186
–
8,991,596
2012
Shares
(Number)1)
Average
exercise price in
SEK per share
Options
(Number)
Shares
(Number)1)
9,932,318
705,607
-574,247
-376,698
–
9,686,980
4.9
9.2
5.4
1
0
6.0
9,245,909
1,874,697
-542,856
-1,388,953
–
9,188,797
9,472,034
1,935,300
-565,800
-1,551,759
642,543
9,932,318
Number of shares the options corresponds to.
47
NOTES
LIP 2007
2009
Allotted options
(Number) per
January 1, 2014
Allotted
options 2014
Exercised
options (number)
Forfeited
options (number)
Outstanding
options (Number) per
December 31, 2014
Of which vested
per Dec 31, 2014
2,210,259
0
1,141,109
287,417
781,733
781,733
859,300
0
487,632
216,436
155,232
155,232
9,289,173
1,299,000
995,635
1,617,014
7,975,524
4,662,214
SAP 2012
39,697
0
11,342
0
28,355
28,355
SAP 2013
50,807
0
6,928
0
43,879
43,879
SAP 2014
0
103,769
0
0
103,769
51,885
12,449,236
1,402,769
2,642,646
2,120,867
9,088,492
5,723,298
Outstanding options
recalculated to
number of shares
per Dec 31, 2013
Options that
can be allocated
at a later date
(number)
Options that can
be allocated at a
later date recalculated to shares
Maximun
number of
new shares
Exercise
price, SEK
Dilution
943,289
0
0
943,289
0.50
0.61%
LIP 2011
Total
LIP 2007
2009
LIP 2011
SAP 2012
172,528
0
0
172,528
0.50
0.11%
8,399,456
1,028,840
1,083,369
9,482,825
Serie I: 7.44–13.40
6.12%
28,355
0
0
28,355
Serie II & III: 0.50
0.02%
0.03%
SAP 2013
43,879
0
0
43,879
0.50
SAP 2014
103,769
0
0
103,769
0.50
9,691,276
1,028,840
1,083,369
10,774,645
Total
0.07%
6.95%
The Groups total costs related to employee option programs excluding social expenses was for 2014 SEK 6,086,000 (2013: 6,603,000; 2012: 16,731,000)
Weigthed average fair value for allocated options
Market price
per share at time
of allottment, SEK
LIP 2007
LIP 2007/2
2009
LIP 2011
SAP 2012
SAP 2013
SAP 2014
24.65 kr
24.65 kr
1.99 kr
4.34 kr
13.13 kr
10.80 kr
10.80 kr
Allotted
2014
2.55 kr
Allotted
2013
4.47 SEK
Allotted
2012
5.76 SEK
13.13 SEK
10.80 SEK
10.80 kr
Valuation model
Black & Scholes
Black & Scholes
Monte Carlo-simulation
Black & Scholes
Black & Scholes
Black & Scholes
Black & Scholes
Significant assumptions in connection with calculation of fair value
Allotted 2014
Valuationmodel
Risk-free interest
Volatility
Weigthed average
share-price
Expected
dividend
Expected
duration
LIP 2011
Black & Scholes
0.48%–1.79%
37%–40%
4.50 SEK–5.75 SEK
0
0.55 years–6.40 years
SAP 2014
Black & Scholes
1.27%–1.33%
37%
6.42 SEK
0
5.14 years–5.53 years
Allotted 2013
Valuationmodel
Risk-free interest
Volatility
Weigthed average
share-price
Expected
dividend
Expected
duration
LIP 2011
Black & Scholes
0.87%–1.91%
37%
7.64 SEK–11.26 SEK
0
0.19 years–6.68 years
SAP 2013
Black & Scholes
1.32%–1.36%
37%
11.26 SEK
0
5.14 years–5.54 years
48
NOTES
Alloted 2012
Valuation model
Risk-free interest
Volatility
Weigthed average
share-price
Expected
dividend
Expected
duration
LIP 2011
Black & Scholes
0.84%–1.60%
37%
11.09 kr–12.89 SEK
0
0.52 years–7.45 years
SAP 2012
Black & Scholes
1.34%–1.37%
37%
13.59 SEK
0
5.29 years–5.65 years
Alloted 2011
Valuationmodel
LIP 2011
Black & Scholes
Risk-free interest
Volatility
Weigthed average
share-price
Expected
dividend
Expected
duration
0.85%–1.61%
37%
8.02 SEK–8.09 SEK
0
0.06 years–7.16 years
32. LIQUID ASSETS
Aerocrine Group
Cash and bank accounts
Aerocrine AB
2014
2013
2012
2014
2013
2012
130,489
292,133
199,913
121,494
283,686
192,833
33. SHARE CAPITAL AND OWNERSHIP STRUCTURE
The share capital is distributed as follows
Serie B
Total
Amount per
Dec 31, 2013
New
share issue
Amount per
Dec 31, 2014
Voting value
%
Share capital
Dec 31, 2014
%
154,628,698
154,628,698
481,757
481,757
155,063,162
155,063,162
155,063,162
155,063,162
100
100
77,531,581
77,531,581
100
100
Shareholders at the annual general meeting on May 12th, 2014 authorized
the Board on one or more occasions up to the next annual general meeting
at the latest to issue new shares, warrants and convertible. The number of
shares, warrant or convertible bonds that can be issued shall not exceed a
dilution of 10%. The quota value amounts to SEK 0.50 per share.
Largest shareholders per Dec 31, 2014 (Source: Euroclear)
Total number
of shares
Share
of capital
and votes
Novo A/S
Invifed AB c/o Investor
Health Cap*
Avanza Pension Försäkring AB
Brohuvudet AB
Swedbank Robur Medica
Carnegie fonder (Luxemburg)
Nordnet Pensionsförsäkring AB
Tredje AP fonden
Founders
Others
Total
39,160,713
35,821,770
17,032,835
4,333,026
2,000,000
1,732,247
1,721,624
1,442,155
900,000
563,498
50,355,294
155,063,162
25.30%
23.10%
11.00%
2.80%
1.30%
1.10%
1.10%
0.90%
0.60%
0.40%
32.50%
100.00%
As of December 31 the Company had approximately 4,700 shareholders.
*HealthCap comprises HealthCap Aero Holdings KB and Odlander, Fredriksson & Co AB.
49
NOTES
Share capital development
Date
Event
Nov 1997
Dec 1997
Dec 1997
Aug 1999
Aug 1999
Formation of company
New share issue
Bonus issue
Reclassification
Rights issue for
HealthCap and Investor
New share issue
New share issue
Reclassification
New share issue
New share issue
New share issue
Reclassification
Oct 1999
June 2000
Dec 2000
June 2001
Dec 2002
Jan 2003
May 2003
June 2003
Aug 2003
Dec 2004
Jan 2005
May 2005
Aug 2005
Aug 2005
June 2006
June 2006
May 2007
June 2007
Dec 2008
In 2009
No of
A shares
No of
B shares
100,000
900,000
360,000
-100,000
No of
preference
shares
Class P
100,000
1,600,000
P1
711,687
-30,693
1,732,414
1,526,142
171,454
-875
-2,430
2,013,508
378,030
3,196 436
4,000,000
999,457
4,000,000
1,304,348
4,000,000
1,304,348
P2
P2
P3
P4
P4
P2
P3
P1
P1
P1
P5
P5
P5
P5
P5
P5
288,451
30,693
3,305
Quota
value per
share, SEK
Share
capital after
change, SEK
1,000,000
1,360,000
1,360,000
1,360,000
0.1
0.1
0.5
0.5
100,000
136,000
680,000
680,000
2,960,000
3,248,451
3,960,138
3,960,138
5,692,552
7,218,694
7,390,148
0.5
0.5
0.5
0.5
0.5
0.5
0.5
1,480,000
1,624,226
1,980,069
1,980,069
2,846,276
3,609,347
3,695,074
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
6,211,959
6,684,496.50
10,680,041.50
12,680,041.50
13,197,770
15,197,770
15,831,944
17,831,944
18,484,118
22,984,118
22,984,118
33,245,952.50
33,251,455.50
41,287,169.50
50,374,250
51,006,835
51,123,756.50
51,173,184.50
51,336,462.50
10
10
10
10
10
10
11.5
10
11.5
25
57,765,034
72,206,292
72,257,317
72,310,960
8.75
9
0.5
8.2
9,000,000
45,968,236
20,523,669
11,006
16,071,428
18,174,161
1,265,170
233,843
98,856
326,556
-45,968,236
–
–
–
–
–
–
–
–
12,423,918
13,368,993
21,360,083
25,360,083
26,359,540
30,359,540
31,663,888
35,663,888
36,968,236
45,968,236
45,968,236
66,491,905
66,502,911
82,574,339
100,748,500
102,013,670
102,247,513
102,346,369
102,672,925
12,857,143
28,882,516
102,050
107,286
–
–
–
–
115,530,068
144,412,584
144,514,634
144,621,920
0.5
0.5
0.5
0.5
Subscription
price, SEK
70
25
25
50
70
23.33
23.33
May 2012
Q2 2012 I
Q2 2012 II
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
Reclassification
New share issue
Options subscribed
New share issue
New share issue
New share issue
Options subscribed
Options subscribed
Options subscribed
Conversion
Convertible bond
New share issue
Options subscribed
Options subscribed
Q3 2012
Options subscribed
326,079
–
144,947,999
0.5
72,473,999.50
0.5
Q4 2012
Q1 2013
Options subscribed
689,782
–
145,637,781
0.5
72,818,890.50
0.5
Options subscribed
318,624
–
145,956,405
0.5
72,978,820.50
0.5
May 2013
New share issue
8,625,000
–
154,581,405
0.5
77,290,702.50
11
Q4 2013
Options subscribed
47,293
–
154,628,698
0.5
77,314,349
0.5
Q1 2014
Options subscribed
222,496
154,851,194
0.5
77,425,597
0.5
Q2 2014
Options subscribed
208,344
155,059,538
0.5
77,529,769
0.5
Q2 2014
Options subscribed
3,624
155,063,162
0.5
77,531,581
0.5
Sep 2010
Oct 2010
Nov 2010
In 2010
In 2011
Q1 2012
May 2012
3,020,262
567,045
4,794,654
Total no
of shares
4.25
0.5
7
7
7
0.5
0.5
0.5
34. KEY EVENTS AFTER CLOSING DATE
On January 7, 2015, the Extraordinary General Meeting resolved to
approve the Board of Directors’ resolution to increase the Company’s
share capital through a rights issue of shares with pre-emptive rights for
the shareholders.
On January 29, 2015, the Company announced that Japanese health
authorities have cleared the use of the Company’s FeNO-measuring
50
device NIOX VERO ® as a tool for assessing patients with allergic airway
inflammation such as asthma. NIOX VERO will be introduced on the
Japanese market in the beginning of the second quarter 2015.
On February 6, 2015 the Company announced the completion of
the rights offering, which was over-subscribed. The Company received
approximately SEK 445m, before transaction costs.
The income statement and balance sheets will be adopted at the AGM on May 12, 2015.
Solna, Sweden March 30, 2015
The Board of Directors and the CEO give their assurance that the consolidated accounts have
been prepared in accordance with International Financial Standards, IFRS, as adopted by
the EU and provide a fair picture of the position and results of the Group. The annual report
has been prepared in accordance with good accounting practices and provide a fair
picture of the Parent Company’s position and results.
The Directors’ report for the Group and Parent Company provide a fair picture of the development
of the Groups’ and Parent Company’s business, position and results and describe the significant
risks and uncertainties facing the Parent Company and the companies making up the Group.
Lars Gustafsson
Dennis Kane
Michael Shalmi
Maria Strømme
Board member
Board member
Board member
Board member
Rolf Classon
Scott Myers
Chairman of the board
Chief Executive Officer
Our audit report was submitted on April 2, 2015.
Öhrlings PricewaterhouseCoopers AB
Mikael Winkvist
Authorized public accountant
51
Auditor’s report
To the annual meeting of the shareholders of Aerocrine AB (publ), corporate identity number 556549-1056
Report on the annual accounts and consolidated accounts
We have audited the annual accounts and consolidated accounts
of Aerocrine AB (publ) for the year 2014. The annual accounts
and consolidated accounts of the Company are included in the
printed version of this document on pages 3–51.
Responsibilities of the Board of Directors and the Managing
­Director for the annual accounts and consolidated accounts
The Board of Directors and the Managing Director are responsible
for the preparation and fair presentation of these annual accounts
and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual
Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable
the preparation of annual accounts and consolidated accounts that
are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these annual
accounts and consolidated accounts based on our audit. We
­conducted our audit in accordance with International Standards
on Auditing and generally accepted auditing standards in Sweden.
Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the annual accounts and consolidated accounts
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts
and consolidated accounts. The procedures selected depend on
the auditor’s judgement, including the assessment of the risks of
material misstatement of the annual accounts and consolidated
accounts, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to
the Company’s preparation and fair presentation of the annual
accounts and consolidated accounts 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 appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors
and the Managing Director, as well as evaluating the overall
­presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinions
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly,
in all material respects, the financial position of the Parent
­Company as of 31 December 2014 and of its financial performance and its cash flows for the year then ended in accordance
with the Annual Accounts Act. The consolidated accounts have
been prepared in accordance with the Annual Accounts Act and
present fairly, in all material respects, the financial position of the
Group as of 31 December 2014 and of their financial performance
and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and
the Annual Accounts Act. A corporate governance statement
has been prepared. The statutory administration report and the
corporate governance statement are consistent with the other
parts of the annual accounts and consolidated accounts.
We therefore recommend that the Annual General Meeting
of shareholders adopt the income statement and balance sheet
for the Parent Company and the report of total comprehensive
income and balance sheet for the Group.
Report on other legal and regulatory requirements
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the proposed appropriations of
the Company’s profit or loss and the administration of the Board
of Directors and the Managing Director of Aerocrine AB (publ)
for the year 2014.
Responsibilities of the Board of Directors
and the Managing ­Director
The Board of Directors is responsible for the proposal for
­appropriations of the Company’s profit or loss, and the Board
of Directors and the Managing Director are responsible for
administration under the Companies Act.
Auditor’s responsibility
Our responsibility is to express an opinion with reasonable
­assurance on the proposed appropriations of the Company’s
profit or loss and on the administration based on our audit. We
conducted the audit in accordance with generally accepted
­auditing standards in Sweden.
As a basis for our opinion on the Board of Directors’ proposed
appropriations of the Company’s profit or loss, we examined
whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability,
in addition to our audit of the annual accounts and consolidated
accounts, we examined significant decisions, actions taken and
circumstances of the Company in order to determine whether any
member of the Board of Directors or the Managing Director is liable
to the Company. We also examined whether any member of the
Board of Directors or the Managing Director has, in any other way,
acted in contravention of the Companies Act, the Annual Accounts
Act or the Articles of Association.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions.
Opinions
We recommend to the annual meeting of shareholders that the
loss be dealt with in accordance with the proposal in the statutory
administration report and that the members of the Board of
Directors and the Managing Director be discharged from liability
for the financial year.
Stockholm April 2, 2015
Öhrlings PricewaterhouseCoopers AB
Mikael Winkvist
Authorized Public Accountant
52
Six-year summary
Amounts in SEK m
2014
2013
2012
2011
2010
2009
Income Statement
Net revenues
Gross profit
Operating expenses adjusted for below specified items
Operating loss before patent litigation, option schemes and non-recurring items
Expenses for patent litigation
Expenses for option schemes
Non-recurring expenses related to appointment of new CEO
Non-recurring expenses related to new distributors in China and parts of EU
166.2
111.5
-275.9
-164.4
-0.1
-3.6
–
–
136.2
97.8
-300.2
-202.4
-1.4
-1.9
–
–
147.0
106.2
-252.2
-146.0
-17.6
-22.8
–
-10.7
93.5
64.2
-165.3
-101.1
-8.8
-13.3
-9.6
–
84.7
57.5
-117.4
-59.9
-23.0
-2.1
–
–
98.8
69.0
-116.9
-47.9
-22.2
-13.9
–
–
Operating loss after patent litigation and option schemes
Earnings/loss from financial investments
Loss after financial investments
Tax
Earnings/loss for the year
-168.1
-60.1
-228.2
0.0
-228.2
-205.7
-19.7
-225.4
-0.2
-225.6
-197.1
-4.4
-201.6
0.0
-201.5
-132.8
-5.9
-138.7
0.0
-138.7
-85.0
-0.8
-85.8
0.0
-85.8
-84.0
-1.0
-85.1
0.0
-85.1
Balance Sheet
Intangible assets
Tangible assets
Financial assets
Inventories
Current receivables
Cash equivalents
Total assets
20.5
6.5
2.6
26.9
43.9
130.5
231.0
28.8
6.2
1.9
19.5
31.0
292.1
379.6
37.9
5.8
1.6
20.2
38.8
199.9
304.3
47.6
2.7
1.4
17.6
25.2
150.2
244.8
52.0
5.5
1.1
18.7
20.8
252.9
351.0
2.0
14.3
0.9
13.1
18.4
24.3
68.0
Shareholders’ equity
Long-term liabilities
-114.8
273.0
104.2
222.7
231.6
11.9
72.0
116.5
201.5
110.5
31.6
7.5
Current liabilities
Total shareholders’ equity and liabilities
72.8
231.00
52.7
379.6
60.9
304.3
56.3
244.8
38.9
351.0
28.8
68.0
Cash flow statement
Cash flow from operating activities
before changes in working capital
Changes in working capital
Cash flow from investment activities
Operating cash flow
-167.9
-6.9
-3.6
-178.5
-210.6
0.3
-3.6
-213.9
-181.2
-3.0
-5.8
-189.9
-102.0
5.5
-6.4
-102.9
-74.3
0.3
-56.7
-130.6
-63.9
-1.9
-2.8
-68.5
Cash flow from financing activities
Cash flow for the year
0.0
-178.5
305.3
89.7
238.7
48.8
0.0
-102.8
360.9
230.3
0.0
-68.5
2014
2013
2012
2011
2010
2009
67%
neg
neg
158.2
130.5
-1.20
neg
60.5
2.3
1.3
115
128.1
72%
neg
neg
326.9
292.1
-0.73
27%
75.5
1.1
2.2
133
139.9
72%
neg
neg
243.4
199.9
-0.86
76%
84.1
0.4
5.1
107
142.3
69%
neg
neg
188.5
150.2
-2.09
29%
53.2
5.4
0.7
71
87.2
68%
neg
neg
312.0
252.9
-1.25
57%
56.3
55.8
0.6
54
56.5
70%
neg
neg
39.7
24.3
-0.77
47%
57.3
0.1
1.8
56
65.0
-0.7
-0.7
-1.15
155,063.2
154,938.7
-0.7
0.7
-1.47
154,628.7
151,381.3
-0.7
1.6
-1.30
145,637.8
127,857.1
-0.6
0.7
-1.01
102,346.4
102,304.1
-0.5
2.0
-1.28
102,247.5
74,239.1
-0.6
0.5
-1.03
66,502.9
66,496.4
Amounts in SEK m
Key Ratios
Gross margin, %
Operating margin, %
Return on equity, %
Capital employed
Net cash
Net debt/equtiy ratio, multiple
Equity/assets ratio, %
Development expenses
Investments in intangible assets
Investments in tangible assets
Average number of employees
Payroll expenses (salaries, payroll overheads and reimbursement)
Data per share
Earnings per share, SEK*
Shareholders’ equity, SEK
Operating cashflow, SEK
Number of shares at end of year, 000s
Average number of shares, 000s
Definitions
Capital employed: Total shareholders’ equity and liabilities minus current liablities. Other defintions see page 22, key figures.
*Earnings per share has been recalculated in accordance with IAS 33.
53
Board of Directors
According to the Articles of Association, the board of Aerocrine shall consist
of at least five and at most 12 members, as well as at most ten deputies.
The Board currently comprises five people, including the Chairman. All
board members are elected for the period that ends with the 2015 annual
general meeting. Below is a presentation of the directors with titles, when
they were elected, year of birth, education, experience, current assignments
and assignments completed in the past five years, as well as their holdings
in Aerocrine. All holdings of shares and employee stock options refer to
current holdings as of 31st of December 2014 and include the holdings
of spouses and minor children as well as holdings through companies in
which the director has a significant ownership interest and/or significant
influence.
Rolf Classon, Chairman of the board, elected 2011.
Born 1945.
Education: M.A. (Politics), ­Gothenburg University.
Experience: Rolf Classon has extensive experience
from senior positions in the pharmaceutical and
MedTech industry, including at Pharmacia, Bayer
Diagnostics and as CEO of Bayer HealthCare.
Current assignments: Chairman of Auxilium
Pharmaceuticals (NASD), Hill-Rom Corp (NYSE), and Tecan Group
(Zurich Stock Exchange) as well as Board member of Fresenius Medical
Care (Frankfurt Stock Exchange and NYSE).
Holdings: Board shares (options) corresponding to 81,606 shares.
Dennis Kane, Board member, elected 2011.
Born 1953.
Education: B.A. in biology, ­Kalamazoo College,
Michigan, USA.
Experience: Dennis Kane has over 35 years of
experience in sales and marketing of pharma­
ceuticals and diagnostics, including over 20
years with a focus on allergy and asthma. He
has been responsible for American sales and marketing at Phadia AB
­(formerly Pharmacia diagnostics) and worked with building up and
expanding operations within Upjohn Inc. relating to disease management
and pharmaceutical economics.
Current assignments: Board member of Armune Bioscience Inc.
Holdings: Board shares (options) corresponding to 53,498 shares.
Michael Shalmi, Board member, elected 2014.
Born 1965.
Education: MD, University of Copenhagen,
­Executive MBA from Scandinavian International
Management Institute.
Experience: Senior Partner at Novo Growth
Equity (Novo A/S) since 2009 and prior to that
14 years of experience of various management
positions at Novo Nordisk.
Current assignments: Board member of Orexo AB. Holdings: None.
Lars Gustafsson, Board member, elected 1997.
Born 1950.
Education: M.D. and Ph.D., ­Karolinska Institutet.
Experience: Lars Gustafsson is one of the founders
of Aerocrine. He is a ­professor at the Department
of Physiology and Pharmacology at Karolinska
Institutet and is engaged in research on the
mechanisms behind the formation of nitric oxide
(NO) in the airways and mechanisms identified with asthma.
Current assignments: CEO and board member for Attgeno AB and
­Nitrograf bioanalysis AB. Chairman of Stiftelsen Ulf von Eulers lecture
fund and board member of Stiftelsen Lars Hiertas Minne.
Holdings: 275,000 shares as well as option rights and board shares
(options) corresponding to 221,659 shares.
Maria Strømme, Board member, elected 2014.
Born 1970.
Education: Professor of Nanotechnology at the
University of Uppsala.
Experience: Played essential roles including
being part of a Research Board as an advisor
to the department of National Research and
­Education. She is the founder of several start-up
companies based on their own inventions and has held several directorships, including the Swedish Space Corporation and a foundation for
Strategic Environmental Research.
Current assignments: Head of Division of Nanotechnology and
­Functional Materials at the Ångström Laboratory. Member of the Board
of Biolin ­Scientific Holding, Swednanotech, Uppsala University Board
(Senate) and in own companies Disruptive Materials and BactInact.
Vice chairman and member of the board of the Royal Swedish Academy
of Engineering ­Sciences (IVA) and Member of the Royal Swedish Academy
of Sciences (KVA).
Holdings: Board shares (options) corresponding to 14,150 shares.
Shareholdings are as of December 31, 2014.
Auditors
Öhrlings PricewaterhouseCoopers AB are Aerocrine’s auditors and
were ­re-elected at the 2012 annual general meeting. Mikael Winkvist
(authorised public accountant and member of FAR) from Öhrlings
PricewaterhouseCoopers AB, is principal auditor.
54
Management
Aerocrine’s management consists of six people. Below is a presentation
of their responsibilities, years of employment, year of birth, education,
experience, current assignments and assignments completed in the last
five years, as well as their holdings in Aerocrine. All holdings of shares
and employee stock options refer to current holdings as of 31 December
2014 and include the holdings of spouses and minor children as well as
holdings through companies in which the director has a significant owner­
ship interest and/or significant influence.
Scott Myers, President and CEO since 2011.
Born 1966.
Education: MBA Finance, University of Chicago;
B.A. Ecology and Evolutionary Biology Northwestern University, Illinois.
Experience: Scott Myers has over 20 years of
experience from the pharmaceutical industry and
as a consultant, including extensive experience
from both the US and Europe within sales and marketing, as well as
­business development. Before taking over as CEO of Aerocrine he worked
at UCB and previously held senior positions at Johnson & Johnson,
including the head of McNeil Specialty Products.
Current external assignments: None.
Holdings: Shares 619,438 and employee stock options corresponding to
3,564,720 shares.
Ken Marshall, President of the subsidiary
­Aerocrine Inc. since 2012.
Born 1959.
­Education: BSBA Marketing and Economics,
Western Carolina University: MBA, Houston
­Baptist University.
Experience: Seventeen years of senior
­commercial responsibility at ­GlaxoSmithKline
in the areas of Infectious Disease, Oncology, Neurology, Urology and
­Business Development. Three years in leadership positions in marketing
and sales at Ikaria for inhaled nitric oxide in term/near term neonates
with ­pulmonary hypertension.
Current external assignments: None.
Holdings: 61,000 shares and employee stock options corresponding
to 554,000 shares.
Mats Carlson, Deputy managing director
and director of technical development and
production since 1998.
Born 1953.
Education: Master of Science and Engineering,
chemical engineering, Royal Institute of
­Technology.
Experience: Mats Carlson was previously CEO
of Pharmacia Chiron Partnership. He has also been active as a consultant
for Wenell Management AB, project coordinator for Pharmacia and project
manager at Siemens-Elema in product development for intensive care.
Mats have also been a board member of the Swedish Industrial Design
Foundation and in the PhD project in biotechnology with a focus on
industry at Karolinska Institutet.
Current external assignments: Board member of NeoDynamics AB
and deputy board member of RegMan AB. Holdings: 59,084 shares and
employee stock options corresponding to 798,052 shares.
David Plotts, Vice President Commercial
Operations, Europe and Asia, since 2013.
Born 1967.
Education: Business Studies, Open University
and Science, University of Western Australia.
Experience: David Plotts has 18 years
­commercial and marketing experience within
the ­European medtech industry where he has
held roles including UK Sales & Marketing Director at Tyco Healthcare,
Vice ­President of Sales for UK, Ireland & South Africa at Covidien and
­European Marketing Vice President at Covidien. David has also been
an active member of the Association of British Healthcare Industries
(ABHI) where he currently sits on the NHS Procurement ­Committee.
Current external assignments: Member of NHS Procurement
Committee in the Association of British Healthcare Industries.
Holdings: Employee stock options corresponding to 376,875 shares.
Marshall Woodworth, CFO since 2014.
Born 1958.
Education: BS of Geology, University of
­Maryland; MBA, Indiana University.
Experience: Former CFO of Furiex Pharma­
ceuticals, a US-based biotech company. More
than 25 years of experience with Initial Public
Offerings (IPO), financial reporting, mergers and
acquisitions, fundraising and corporate finance functions, both domestic
and international.
Current external assignments: None.
Holdings: Employee stock options corresponding to 525,000 shares.
Kathleen Rickard, Chief medical officer since 2011.
Born 1958.
Education: M.D., Hahnemann University School
of Medicine, Philadelphia, Pennsylvania; Internal
Medicine, Ohio State ­University; Pulmonary and
Critical Care ­Medicine, University of Nebraska
Medical ­Center.
Experience: Kathleen Rickard is an American
doctor specializing in pulmonary ­medicine. She brings fifteen years of
industry experience from senior leadership at GlaxoSmithKline in the US,
where she was responsible for medical and clinical development of GSK’s
world-leading asthma drugs.
Current external assignments: None.
Holdings: 41,667 shares and employee stock options corresponding to
763,100 shares.
Shareholdings are as of December 30, 2014.
55
k n o w l e d g e i n e v e r y b r e at h ®
Aerocrine AB
Visiting address:
Råsundavägen 18, Solna
P.O. Box 1024
171 71 Solna
Sweden
Phone: +46(0)8-629 07 80
Fax: +46(0)8-629 07 81
E-mail: [email protected]
Aerocrine Inc.
5151 McCrimmon Parkway
Suite 260
Morrisville, NC 27560
USA
Phone: +1-866-275-6469
Fax: +1-866-630-6469
E-mail: [email protected]
[email protected]
Aerocrine AG
Louisenstraße 21
61348 Bad Homburg
Germany
Phone: +49 6172 49560 0
Fax: +49 6172 683414
E-mail: [email protected]
Aerocrine International
GmbH
c/o A. Antunes
Rigistrasse 22D
8330 Pfäffikon ZH
Switzerland
www.aerocrine.com • www.nioxmino.com
Aerocrine Ltd
The Tannery
19 Kirkstall Road
Leeds
West Yorkshire, LS3 1HS
UK
Phone: +44 (0)845 548 1511
Fax: +44 (0)845 548 1512
E-mail: [email protected]