Annual report 2007 07

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07 Annual report 2007

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Ortivus iN BriEF

1985

Ortivus is founded with the purpose of developing, manufacturing and marketing a unique system for monitoring patients suffering from ischemic heart disease – MiDA (Myocardial ischemia Dynamic Analysis). initial development takes place in collaboration with the Medical and technological Foundation at Chalmers in Gothenburg.

1987-1991

Clinical prototypes of MiDA are tested and assessed at sites that include the Karolinska and sahlgrenska hospitals.

1992

the first commercial version of MiDA-Coronet is launched on the swedish market. Most of the customers choose this system, which gains a strong footing in sweden.

1994

An OEM agreement (Original Equipment Manu- facturer) is signed with Hewlett-Packard (later Philips Medical systems) for MiDA. Ortivus acquires svenska telemedicin system AB in Gothenburg, which develops and markets various telemedicine applications, including MobiMed.

1995

MobiMed is introduced in a full-scale commer- cial version to the swedish market.

1997

Ortivus is listed on the stockholm stock Exchange ordinary list. Ortivus us is founded in order to establish the company on the us market.

1998

MobiMed PWs-1000 is launched, probably the world’s fi rst complete portable telemedicine terminal for pre-hospital use. Ortivus uK is founded to market MobiMed on the British market.

HistOry

O

rtivus develops and markets integrated IT solutions for patient information and decision support that save lives and make healthcare more efficient. The company focuses on Emergency and Patient Management.

Ortivus’ core competence is its profound understanding of healthcare, emergency services and public safety processes as well as clinical knowledge and cutting edge IT and data communications. Budget restraints within the healthcare sector, an aging population with greater care needs, more centralized specialist care and quality assurance requirements are all trends that support Ortivus’ strategy and business concept.

Ortivus focuses on Europe and North America, and the company has subsidiaries in the UK, Germany, Canada and USA.

Sales and marketing activities are carried out by partners in selected markets in Europe.

The company was founded in 1985, and is listed on the OMX Nordic Exchange Small Cap list. Ortivus has a total workforce of 160, and its head office is located in Stockholm.

rtivus ANNUAL REPORT 2007

This is a translation of Ortivus Annual report in Swedish and in case of discrepancy the Swedish version shall prevail.

table of contents

1 The Year in Brief

2 Vision, business concept, strategies and goals 4 CEO Report

6 Emergency Services

8 Cardiovascular Disease management 10 Clinical Information Systems 12 Employees

13 Research and Development 15 Quality and Environment 16 Board and Management 18 Shares and share holders 20 Director’s Report 26 Financial reports, Group 30 Financial reports, parent company 34 Notes

51 Auditor’s report

52 Corporate governance report 54 Five year overview

55 Glossary, definitions, Annual General Meeting

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• Net sales totalled MSEK 162,4 (199,8).

• Operating margin was MSEK–53,9 (–128,4) MSEK.

• Write downs of immaterial assets affected together with restruc- turing costs the operating result with MsEK 31,0 (82,0) MsEK.

• Operating result excluding write downs and restructuring costs amounted to MSEK –22,9 (–46,4) MSEK.

• Result after tax amounted to MSEK –61,3 (–149,2).

• Result per share was SEK -2,96 (–8,51).

• Strategy changes and restructurings of the swedish operation.

tHE yEAr iN BriEF

Key figures 2007 2006

Net Sales, MSEK 162,4 199,8

Operating result, MSEK –53,9 –128,4 Result for the year, MSEK –61,3 –149,2

Operating margin, % neg neg

Result per share, SEK –2,96 –8,51

Return on equity neg neg

Equity ratio, % 64 68

Average no of employees 157 172

2001

Acquisition of the us company, sweet Compu- ter services inc. in the us, which gives Ortivus a strong market position within administrative systems for ambulance healthcare. Ortivus is the first company in the world to present a medical technology product that uses Blue-

2004

Co-operation with Philips Medical ends.

A pilot project for a new monitoring system for cardiac intensive care wards, CoroNet, is installed at a trial customer.

2005

tion in the Emergency services market. in May 2005, MEDOs AG is acquired in Germany. this involves both a broadening and strengthening of the product range in Healthcare it, and establishment on the German market.

2006

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rtivus ANNUAL REPORT 2007 2

Ortivus has a total of approximately 160 employees. The head office is located in Stockholm. The company’s three Business Units, competence centers with focus on both sales and product development, are located in Sweden, Germany and North America. One subsidiary, a so called Sales and Service Unit, is located in the UK. Ortivus is represented by business partners in other key markets in Europe.

visiON, BusiNEss CONCEPt, strAtEGiEs AND GOALs

visiON Ortivus’ vision is to be the customers’ first choice as supplier of integrated information and decision-support systems within the business area Emergency & Patient Management.

BusiNEss CONCEPt Ortivus is a Healthcare it company that offers information and decision-making support systems for Healthcare, Emergency Medical services and Public safety in Europe and North America.

Ortivus’ business is divided into three application areas:

• Emergency Services

• Cardiovascular Disease Management

• Clinical Information Systems

The products within Emergency Services aim at making clinical and administrative processes within healthcare, emergency services and public safety more efficient.

Ortivus’ offering within Cardiovascular Dis- ease Management aim at increasing the care of heart patients through flexible solutions for a modern clinical work process.

The products within Clinical Information Systems aim at increaseing the efficiency of picture based processes wtihin areas such as radiology, patology och cardiology.

The right decision for the

correct care, in the right

time and the right place

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To sum up, the products belonging to all of the application areas aim at assisting personnel, within healthcare, emergency medical services and public safety to make the correct decisions so that they, in turn, can help patients to get the correct care at the right time, in the right place..

strAtEGiEs

Ortivus will use its process know-how within the three defined application areas, in combination with in-depth clinical knowledge and leading technology, in order to create efficient customer offernings with scalability and development potential.

Focus on markets and customers Ortivus’ systems and products is developed in close cooperation with its customers and are characterized by operational

benefits and user-friendliness. As our work encompasses the entire chain, from product development to sales and aftermarket services, there is always an ongoing dialogue with customers, which ensures that new requirements and trends are reacted to quickly.

Ortivus’ product range is complemented with after-market services such as training, software updates, service contracts and consulting.

internationalization

Ortivus will grow on select key markets in Europe and North America. There is a trend towards quality assurance, efficiency gains and stricter demands on coordination of IT and emergency services in several European markets., requirements for which Ortivus’

products are well suited.

Ortivus’ sales work is handled partlyby own sales organizations and partly by partners.

Product strategy

Ortivus’ solutions build upon existing standards and offer open interfaces in order to facilitate integration with other suppliers’

products and customers’ existing systems.

Ortivus offers modular systems, making it easy for OEM partners to sell the products.

OPErAtiNG AND FiNANCiAL GOALs

2008–2009

• Build a platform for long term profitability and growth via modified strategies

• Achieve positive cash flow

Own companies Partners

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D

uring 2007 our North American operation has continued to develop and deliver stable results. The company has an established position on its home market and within its segment in the ambulance sector. Develop- ment of the first applications based on a new software platform has been finalized, and will be launched during 2008.

A new CEO was appointed for Medos, our German subsidiary, in the beginning of the autumn. After further restructurings and business model adjustments, Medos now shows a profitable operating result. The company is thereby stabilized, and has a favorable position going into 2008.

The efforts and business models for the internationalization of the parent company’s products MobiMed and CoroNet has not generated the expected outcome. In spite of a large interest from many markets, business volumes and revenue have been lower than expected, and the organisation set up for this purpose has been revised. There are nevertheless many positive signals as well as experiences gained, to leverage on in the further efforts.

During the year, the first MobiMed system in Spain has been sold. In Germany, an important reference project focussing on modern logistics related to PCI treatment of heart attack patients was launched. In this project we are in cooperation with leading German cardiologists, emergency doctors and ambulance organisations, gaining experiences important for our further activities in Germany.

A first MobiMed system has been sold in Switzerland. Thus, MobiMed is installed in Swe- den, Norway, Great Britain, Italy, Spain, Germany, Switzerland, Finland and Canada.

CoroNet has during the year been selected by yet another university hospital, in Umeå, Sweden, and has also been sold to smaller hospitals. An international market approach has been initiated through partner in Germany, Belgium, Italy and Spain, and orders are expected during 2008. CoroNet as a product is now stable and ready for a more intense internationalization.

Ortivus is awaiting the deployment of the ambulance applikation within the english Connect for Health (CfH) project. It is well know that this huge IT project for the english health care sector has suffered from delays, but several services have been launched and are used extensively. The timeline for introduction of various applications is however difficult to assess. Ortivus are ready to deliver within the framework of the cooperation with Fujitsu. During 2007, Ortivus received a first order related to the CfH project, and a partial delivery has been made. Both MobiMed and CoroNet have been very successful on our home market, with market dominance within their respective niches. Both products adress important and relevant issues for the health care of today and tomorrow: qualified and flexibel monitoring of heart patients, and clinical and operational development and quality assurance for pre hospital health care. These areas are not unique for Sweden, but are relevant for most countries. The difference is the organisation, financing and workflows of the health care sector in different countries. Therefore, local adaptions of products and business models are necessary, which requires local knowledge in many areas. Ortivus will achieve this through cooperations with partners with the right profile for the individual markets.

Ortivus as a company can not thrive on the home market alone. An internationalization of MobiMed and CoroNet is necessary. We will therefore during 2008 continue to adress the international market, with a revised strategy based on previous experiences. The strategy is based on selection of and focussing on geographical markets, and partnerships and industrial cooperations. The business model is being revised, aiming at positioning Ortivus as a software and solutions provider. Based on this, we will gradually adapt our

Reflection and restart

CEO rEPOrt 2007

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offerings. The German speaking market with a population of 100 million is of great interest. We will in 2008 again adress this market, through leveraging on the current reference project as well as previous experiences and relationships. Further important markets are Great Britain, Italy and Spain. In total, we will adress European markets with a population of approximately 250 million.

Ortivus North America will in 2008 continue to be a leading actor within its segment of the ambulance market. With new solutions for e g CAD/AVL and documentation we will be able to adress also the Public Safety segment in a better way.

Medos will during 2008 continue to develop its product portfolio, and also increase cooperation with other actors to thereby strenghten its offering. One of the goals for 2008n is to increase the relatively stable customer base. Another goals is to strengthen the position within integrated teleradiology applications.

With a stable North American operation, and Medos on the right track it’s quite natural to focus mainly on CoroNet and MobiMed during 2008. The challenge facing us is not easy, but we have great confidence in our know how, and we know that there are significant possibilities for success also outside of the home market.

During 2007 our North American operation has continued to develop and deliver stable results. The company has an established position on its home market and within its segment in the ambulance sector. Development of the first applications based on a new software platform has been finalized, and will be launched during 2008.

A new CEO was appointed for Medos, our German subsidiary, in the beginning of the autumn. After further restructurings and business model adjustments, Medos now shows a profitable operating result. The company is thereby stabilized, and has a favorable position going into 2008.

The efforts and business models for the internationalization of the parent company’s products MobiMed and CoroNet has not generated the expected outcome. In spite of a large interest from many markets, business volumes and revenue have been lower than expected, and the organisation set up for this purpose has been revised. There are nevertheless many positive signals as well as experiences gained, to leverage on in the further efforts.

BENGt ArNE sJÖQvist

Acting CEO, Business Development Director Ortivus AB

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COORDINATED COMMUNICATION AND INFORMATION HANDLING INCREASINGLY IMPORTANT

With it’s range of products targeting ”Emer- gency Services” or ”Public Safety”, Ortivus can give operational and clinical information and communication support to all parts of the emergeny chain; from dispatch to patient delivery, reporting and follow up.

Within Emergency Services, Ortivus carries out development and sales both in the North American subsidiaries as well as in the Swedish parent company. The North American operation is focussing on dispatch, automatic vehicle location and patient care reporting, for ambulance and public safety.

The primary market is North America. The European operation is focussed on clinical and operational process and decision support, mainly for the European market.

Products and solutions for vehicle location and positioning, map support and communication enables the right vehicle to be at the right place, in the right time, and with the right equipment. Systems for documentation and operational follow up enables control, analysis and development of the operation as well as correct charging for the services.

To be able to offer the correct and qualified care, solutions that facilitate and support the staff, increase the care quality and decrease cost are required. Ortivus systems solutions and products for Emergency Services are developed to correspond to the demands and trends that characterize todays application areas:

• Coordination with other actors

• Increasing need for documentation

• Integration with other systems

• Mobile data communication

• Operational follow up

• Quality assurance

• Process development

EUROPE – CLINICAL AND OPERATIONAL PROCESS AND OPERATIONAL SUPPORT Background and market

In Europe Ortivus primarily adresses the ambulance organisations, with an estimated

total of 20-25.000 ambulances. All ambulance organisations have two main tasks;

to deliver efficient and well functioning transportation, and to supply qualified care, where the ambulance often is an integrated part of a predefined care process. The level of ambition and utilization of e g technology differ between countries and organisations, but the main tasks and the basics needs are the same. High operational and clinical efficiency and security are important goals.

An increased use of IT and communications solutions contributes to this.

There are differences between countries related to the IT solutions maturity of the ambulance organisations as well as to the ambulance organisation’s role in the health care market. Europe in general, and the Nordic countries and Great Britain in particu- lar, are well advanced in this respect. The introduction of new care programs, such as for acute care and “fast tracks” in connection with stroke, trauma or chest pain/suspected heart attack, influence the set up of IT and communications solutions in the ambulance.

The successes with telemedecin from ambulances, for example in Sweden, have been evident during the last 10 years when it comes to reduce injuries and mortality.

Many countries now switch from pre-hospital trombolysis to so called PCI treatment in hospitals in connection with acute heart attacks. This treatment model relies on communication between all actors for to enable patient selection, logistics handling and arrival preparation. The electronic patient journal is an important part of the ambulance care. This is a tool for documentation and follow up for all assignments, but also for telemedicine information exchange and connection with e g the hospital’s journal system.

In the future, the ambulance care will be an even more important part of the total health care system. Similar proposals turm up in many countries, such as the UK. Concepts such as “Treat and leave” and “Treat and refer” are central. The background is that studies have shown that if the correct docu-

mented decisions could have been made at first contact, 50% of the patients could have been treated on site or been referred to other parts of the care system rather than have burdened the emergency room.

In summary, the ambulance is becoming an increasingly integrated part of a greater healtcare-IT environment. This requires increased interaction with other systems and suppliers, and hence requirements on corresponding solutions.

Ortivus offering

In Europe, Ortivus offers solutions based on the MobiMed product family. Integrated solutions can be offered through interaction with other systems, such as local solutions for dispatch or record systems. Ortivus aims at delivering complete and scalable systems for pre hospital care, and process development adapted for the customers current and future needs, through own products and interfaces and connections to third party solutions.

The MobiMed product family therefore includes components and tools for :

• Decision support (monitoring and analysis of vital data, telemedecine, checklists, jour- nals, guidelines, chat functionality) • Documentation (journal, check lists, etc)

• Communication (Mobitex, GSM, GPRS, Tetra etc)

• Integration (Integration engine, open interfaces, etc)

• Operational analysis and follow up

Because of the wide application possibilities of MobiMed, Ortivus can face different types of competitors. On most markets, the main competitors are larges international companies offering defibrillators with some limited telemedecine possibilities. When the focus is documentation and follow up, the competitors are often regional communications or IT companies with limited international operations.

Ortivus sales channels are own companies as well as distributors and partners. The main markets are the Nordic countries, Germany, EMErGENCy sErviCEs

Coordination

and communication matter

more

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Switzerland, Great Britain, Italy, Spain and to some extent Canada. The sales process is characterized by public tenders, long sales cycles, need for know how related to clinical and administrative processes and modern IT and data communication. Ortivus customers are public and privately owned ambulance organisations and hospitals.

the year 2007

During 2007 Ortivus maintained its already strong position for MobiMed in Sweden, where close to 70% of the countu councils/

regions are using MobiMed. MobiMed has also been successful in Norway, where almost 30% of the ambulance fleet is equipped with Ortivus telemedicine equipment.

Great Britain has been the single largest installed base for MobiMed, with close to 400 ambulances. This fleet has been subject to support, upgrades and complements during 2007. The Connect for Health project is of major interest. Under this project, Ortivus will via Fujitsu deliver electronic patient records to the ambulances in the so called Southern Cluster. A first order within the framework of this project was received in 2007.

MobiMed has been installed in the Piemonte region in Italy, and a first system has been delivered in Spain. A cooperation project related to PCI logisitics has been initiated in Gemany.

Outlook

Ortivus will modify its internationalization model during 2008. This means a geographical focussing and a closer cooperation with a

ORTIVUS NORTH AMERICA

Ortivus activities in North America are con- centrated in 2 sub-market segments which are frequently summarized as one under the name of Emergency Services. These 2 sub- segments are EMS and Police/Fire.

EMS is the largest source of North American revenue presently which is generated by the Billing, Field Data, CAD/AVL and Mobimed solutions. Police and Fire are addressed by CAD/AVL solutions and will be joined by RMS in end-2008. This overlap both in market operational behavior and our applications produces an economy in development, sales and support for the Ortivus applications enabling lower costs and expanded market opportunities.

Generally speaking there is a profound movement toward better inter-operational behavior of all emergency services segments. This has reached out and touched the hospital Emergency room as well. The EMS market is a dispersed market with many organizations, mostly small, comprised of both public (municipal) and private (for profit) ambulance companies and out-source oriented billing service companies. Police and Fire are increasingly coming together with EMS to ensure better public services as well as reduced cost.

EMS competition generally comes from smaller companies, like Ortivus, against which it sells direct. Competitors include Zoll, Healthware, Ram, EMS Charts and others.

The Police and Fire segments are much larger and therefore Ortivus uses partnerships with Motorola, Raytheon and others

US Government attempts to control the current healthcare costs growth has placed considerable pressure on ambulance service providers with little if any real market growth. Simultaneously police/Fire and related services are experiencing growth even though funding for such purchases are uncertain as the US Government continues to redefine how Federal money is allotted and distributed. The growth of Emergency Services is also occurring in the rest of the world and particularly Europe.

Looking forward it is readily apparent to all that the Emergency Services Market, except for EMS, is an expanding opportunity which offers Ortivus, given its positioning, sizable opportunity for continued growth.

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Background and market

Cardiovascular disease is the most common cause of death in the Western world.

In Sweden, over 100.000 persons suffer an acute coronary attack every year, and just over 10% of those die within 28 days.

Chronic heart failure is another major cardiovascular disease. Around two percent of Western inhabitants are calculated to suffer from chronic heart failure. The proportion of population affected is also increasing, among other things because the population as a whole is aging, but also because more patients who, in the past, would die from a coronary attack, now survive. Another growing group includes stroke patients. Statistics show that today, stroke is the second most common cause of death. Statistics also show that the number of deaths resulting from ischemic heart disease (coronary attack) is as large as the total number of cancer deaths. Consequently, good and effective methods of diagnosis and treatment of cardiovascular disease are essential to healthcare providers.

The current trend for acute chest pain management is an increasingly aggressive treatment. PCI is increasing as the standard treatment method, and it is important to identify cases as soon as possible, e.g.

already during ambulance transport, where this is the appropriate course of action. A number of different tools, such as EKG and biochemical markers, are available to facilitate selection and prioritisation.

Altered management procedures lead to shorter inpatient periods and less intensive care for the majority of patients. In addition to introduction of new management procedures, there is also a change in patient range. The percentage of elderly and multiple-disease patients is increasing, and these demand more intensive treatments and cooperation between different special- ists. New management procedures mean that more flexible and simple monitoring solutions are demanded at cardiac units.

Patients are to be limited to beds as little as possible and, preferably, should be able

to move around relatively freely while still being monitored.

In the same manner as in other areas of healthcare, IT solutions play an increasing part. Linking between different systems and databases, connection and integration with patient records systems, lab systems etc, are sought for and demanded.

Cardiovascular care is also increasingly governed by – often international – recom- mended guidelines for a large number of

”standard” diseases. This, in conjunction with the introduction of e.g. national quality databases, open up to a new, more process- oriented management, where IT systems for process management, workflow, follow-up and quality management will be a natural part.

The market for patient monitoring within cardiology is characterised by stability, and being mainly a replacement market. Growth, therefore, is limited in the traditional markets, which are dominated by companies such as Philips Medical Systems, Dräger Medical and GE Medical. There are also a number of internationally established smaller American and European companies.

On the increase, we find Asian companies, who often have an aggressive pricing policy.

These companies offer, primarily, more generalised monitoring systems for all hospital monitoring needs, including cardiac care. Or- tivus have, in this market situation, opted to exploit its unique and historically well documented expertise to specialise explicitly in cardiac monitoring. This, in conjunction with qualified and innovative technical solutions, will aid in achieving a strong position in this niche, where unique demands are not always fulfilled by the more generalised solutions from larger market players. At the same time, Ortivus’ solutions offer linking possibilities with other systems and suppliers whenever desired, either as a sub-supplier or in OEM format. lo This will bring about direct sales as well as industrial partnerships.

Ortivus’ offer

By combining their own expertise within

cardiology with leading technology, Ortivus have developed, in collaboration with users, a modern and flexible system for cardiac patient monitoring adapted to modern standard practices. The system is named CoroNet and contains bed units and wireless patient units as well as central monitoring, worksta- tion and telemetry via Bluetooth. Beyond that, a special PCI module is available to support operators during PCI treatment.

Included also in CoroNet is Ortivus’

patented MIDA method. This method follows oxygen deprvation, ischemia, which occurs in hearts during myocardial infarcts or angina pectoris. The MIDA method is internationally renowned and scientifically well documented, and is used by hundreds of hospitals in different countries.

Ergonomic, comprehensible and user- friendly products are essential in healthcare. Mistakes and errors in judgement can result in serious consequences for patients.

Ortivus’ solutions focus on these circumstances. They are designed to facilitate the daily work of care professionals and support their making sound judgement calls. CoroNet contributes to more efficient and accurate diagnoses for patients presenting with chest pain, which means hospital staff will be able to make swift and early decisions about the most appropriate treatment.

The increased demands for mobility refer to increased flexibility and freedom of movement for patients as well as relevant information being available for decision makers at the appropriate time. CoroNet contains, among other items, a portable monitoring unit which allows patients complete mobility within the ward, at the same time allowing a continuous flow of relevant clinical patient date which is transferred telemetrically by means of bluetooth technology to the central monitoring station, without disruptions or negative effects on measuring precision.

With CoroNet, patients can also be transferred between different wards without interrupting the flow of information. It is also possible to integrate CoroNet with the hospital’s other IT systems. This way, clinical CArDiOvAsCuLAr DisEAsE MANAGEMENt

Our goal:

to be the cardiologists best

friend

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and patient-specific data is always available to hospital staff.

CoroNet can also be linked with Ortivus MobiMed. This way, a continuous chain of information is established from the first patient contact until date of discharge from hospital care.

Markets and sales channels

CoroNet is sold directly as well as via distributors and partners. Markets addressed at the moment are Sweden, Norway, Finland, Germany, Belgium, Italy and Spain. Ortivus aim to establish an increasing number of col- laborations with industrial partners outside the home market. This enables them to complement each other’s client offerings in their current markets as well as collaborate within product development.

the year 2007

Ortivus maintained its strong position for CoroNet in Sweden, and could add yet another university hospital, Umeå, to the customer list. Further deals were won in Sweden, and also in Åland. Internationally, cooperation with industrial partners such as et medical (Italy and Spain) and Medste (Germany) was intensified, which should start paying off in 2008. Product development continued, with the aim to have a product ready for a broad international market in the beginning of 2008.

Outlook

Ortivus will continue to modify the inter- nationalisation model for its’ cardiology know how and CoroNet, in line with what was initiated during the latter part of 2007.

The long term ambition is to broaden the company’s product and service offering within cardiology, to meet the changes oc- curing in this area, such as increased process orientation, application of guidlines, increase of older patient with multiple disesases, and an increase in distributed care.

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Background and market

Based on limited financial capital and increasing costs due to legal requirements (introduction of quality management, settle- ment with health insurance companies, documentation requirements, etc.) healthcare in Germany as well as in other countries is under increased need for reaction. Hospitals are forced to exploit their resources more efficiently, to optimize their processes and to exhaust their saving potentials. These economical trends also affect picture and functional diagnosis activities. The public investment grants for radiological devices, such as computer tomography and magnetic resonance imaging is declining. The actual trend to outsource radiological departments out of the hospital environment continues.

Another development in relation to radiology is foreseeable: The growing importance of teleradiology. Teleradiology, or eHealth, as a separate area within the telemedicine is a market segment with a wide range of scopes and an increasing number of users.

It provides a cost-effective way of patient care with increasing quality of results. Costs savings can be reached - particularly in implementing integrated digital infrastruc- tures – which are designed in terms of the

“electronic patient-record”.

Mergers and co-operations characterize the economical and political environment.

Even in the health care sector this subject gains more and more important. This effects the merger and/ or co-operation of smaller practices. On the other hand the number of startup of medical health care centers increases.

The present market development also shows that medium-sized and smaller hospitals recognize potential savings with RIS and PACS system in terms of workflow management.

On Medos RIS/PACS markets, there is a limited number of larger international com-

panies and some local small and medium- sized companies. A further consolidation in this limited market is foreseeable. The current situation is characterized by aggressive competition as well as of price and cost pressure.

Medos offering

Under the brand name “.med” Medos is offering a number of solutions for the picture based activities of hospitals or care units. The focus is on radiology, where a departments work flow, picture analysis, documentation and communication is sup- ported. Applications and soiutions are also offered for pathoiogy, nuclear medicine and radio therapy. As a complement, consultancy services within integration, support and traninig is offered.

the year 2007

In 2007 Medos AG was certified according to DIN EN ISO 9001 and DIN EN ISO 13485.

This attests that all products and services delivered by MEDOS are in line with requirements regarding quality and reliability.

Restructuring measures have been taken, and has led to are completed and led to a well organized and efficient company. In addition to this, the existing product portfolio has been adopted to the market requirements.

Medos has a solid customer base. Medos radiology solution is well accepted in the German market. The development of the new .NET technology was appreciated by all customers. With the latest version of the radiology information system .med RIS Medos provides a complete developed solution with extended features.

As a logical consequence of the quality efforts, customer´s needs were well documented and integrated in the development process. The delivery of the new release started in end 2007.

Sales successes were reached in matter CLiNiCAL iNFOrMAtiON systEMs

Focussing

and market adaptation

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of new customers, with five new customers. The Kreuznacher Diakonie hospital, in Bad Kreuznach, Germany modernized their radiologiy department by using the .med RIS solution. The Markus-Hospital in Frankfurt, choose MEDOS .med PACS.

Beyond that, MEDOS will install its new RIS/PACS solution in the hospitals of St.

Georg Hospital GmbH, in Leipzig and the hospital Fachkrankenhaus Hubertusburg GmbH, in Wermsdorf.

Outlook 2008

MEDOS is well organized and the financial situation is satisfying. The core competence is the base for the strategic orientation, Radiology Information Systems (RIS). One of the goals is to broaden the customer base.

Against this background Medos will also concentrate on co-operations in the area of software development and distribution. Late in 2007 a partnership with Infinitt, a leading provider of medical image processing and archiving software, was signed. Medos took over the sale and distribution of Infinitt’s PACS and 3D solution in Germany, Austria and Switzerland. Through this partnership Medos is in a position to offer leading technology within an enlarged product portfolio.

The holistic approach of Infinitt-PACS provides an attractive solution that is optimal when integrated in the Medos system.

For to further stabilize and develop the market position Medos will also introduce a new software line. This complements Medos’

existing product range with additional solutions for documentation of pictures and medical evidences. Medos will also seek to

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Ortivus operates in a niche market, which requires unique expertise and knowledge

within both IT and clinical processes. The workforce has a high level of education

and a wealth of experience. Split per function, 36 % work within R&D, 43 % within marketing and sales, and 21 % within admin- istration/finance. Ortivus is an international company: 43% of the Group’s employees work in the US and Canada, 25%

in the Nordic region and 32% in the rest of Europe. Higher international involvement will

impose increased demands on the skills of our workforce in both sales and marketing.

It is important for Ortivus to be an attractive employer. Employees should feel that they play a part and are responsible.

Four key words mark the daily activities at Ortivus:

ENCOurAGEMENt At Ortivus, we promote

Heart at work

open, direct and honest communication,in which everyone encourages each other.

We highlight individuals and reward individual efforts.

rEsPONsiBiLity All employees take responsibility for both their own and their colleagues’ work. Those who see opportunities or difficulties communicate their observations.

PArtiCiPAtiON Cooperation and communication within the company are completely decisive for an efficient and successful company. Great emphasis is placed on creating team spirit and the essence of us.

COMMitMENt Ortivus’ business contributes to saving lives and increasing quality of life. The pride in this creates commitment, which in turn gives job satisfaction and enjoyment at the workplace.

EMPLOyEEs

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The cornerstones of Ortivus’ development strategy are:

• Clear market-driven development

• Solutions that offer an open IT interface with existing customer applications

• Modularization and platform strategy

• Clear project management and follow-up

Market-driven development

The structuring of amarket-driven development process is ongoing. Among other things, the new common products are speci- fied according to the internationally adopted RUP process, already from the initiation of a project.

Open interface

The work on improving integration possibilities continues to be prioritized since it is one of the key success factors for Ortivus.

This affects the products as well as the regulatory aspects, and of course how the products are sold and implemented. Ortivus can now offer integration as a customer project, without having to change the basic software.

Modulization and platform strategy The platform development continues according to plan. The structured reduction of the number of platforms, from seven to three, is now showing the first signs of success. This effort means that development and resource synergies can be utilized between the various entities in the group.

One example is that swedish staff is working at the development department in Canada in order to ensure maximum effect.

Project management and follow-up The work on initiated product and process improvements is ongoing and will continue to develop for many years. Further activities have been identified that will provide Ortivus with the preconditions for strong growth.

Outsourcing of electronics and mechan- ics development

The parent company’s electronics and me- chanics development has during 2007 been outsourced to an external party in order to further focus on the development of application software. The parent company’s hardware production has also been outsourced, to achieve maximum synergy effects.

rEsEArCH AND DEvELOPMENt

Integration increasingly

important

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Our head office in Sweden develops and manufactures medical technology product for cardiac monitoring. These are products with high risk classification according to the EU’s Medical Devices Directive, MDD. Ortivus has therefore chosen to employ a complete quality system that is certified according to ISO 13485:2003 in order to comply with annex II of the MDD and thereby enable the marketing of the products. Ortivus has adapted its quality management system in order to meet North American directives and legislation, CMDCAS (Canada) and QSR (USA). The work of incorporating Ortivus UK in Ortivus AB’s ISO registration continues.

The roll-out plans for the major project in the southern UK are also being prepared in accordance with ISO 20000/ITL and Prince 2. Constant improvement is one of the most important components of ISO 13485:2003.

The ongoing quality follow-up process has been reviewed and improved. Our German subsidiary MEDOS has been certified in accordance with ISO 9001 during the year. The main focus of the North American companies is upon meeting product requirements and standards, such as NEMSIS.

the environment

Ortivus has a documented environmental policy. According to the policy, the ambition of Ortivus is for as few environmentally hazardous materials as possible to be used in the production of the company’s products and for transport to customers. Packaging, accessories and future repairs are also ex- amined from an environmental perspective.

It must be easy to sort the product waste into its source components.

Ortivus’ products are assembled from standardized components that are pur- chased from sub-contractors. Ortivus offers a certain amount of in-house developed hardware that is assembled by sub-contractors in accordance with specifications supplied by the company. Thus, the company has no hardware component production internally. Handling of environmental mat- ters is a significant factor in the selection of sub-contractors. Ortivus collaborates with the subcontractors in the selection of consumables, components and production methods. Ortivus is actively monitoring future regulations in order to be able to comply with them proactively. At present, we envisage no problems arising from future directives or regulations.

QuALity AND ENvirONMENt

Right quality - a matter of

life

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BOArD AND AuDitOr

JON risFELt

Born: 1961. Appointed 2007.

Education: M.Sc. Chemical Engineering, Royal Insti- tute of Technology.

Other positions: Board chairman at Xponcard AB (publ). Board member at TeliaSonera AB (publ), Ångpanneföreningen AB (publ), Bilia AB (publ) and Enea AB (publ).

Stockholding: 1000 series B shares.

Number of Board meetings 2007: 8

Independent in relation to the company and the main shareholders.

LENNArt riBOHN Born: 1943. Appointed 2002.

Education: BA, University of Stockholm.

Other positions: Board chairman at Försäkrings AB Nordisk Garanti. Board member at SEB Investment Managment AB, FPG Försäkrings- bolagetPensionsgaranti, Segulah Advisor AB, Reachin Technologies AB and Artimplant AB (publ).

Board member at the Swedish Securities Council.

Stockholding: 15 000 series B shares.

ANNA sÖDErBLOM Born: 1963 . Appointed 2006

Post graduate, Stockholm School of Economics.

Education: Matemathician, University of Lund; BA University of Stockholm.

Other positions: Board member at Bong

Ljungdahl AB (publ), Avega AB (publ), Readsoft AB (publ) and IQube AB.

Stockholding: 4000 series B shares.

Number of Board meetings 2007: 14 Independent in relation to the company and the main shareholders.

JAN WÜrtZ

Managing Director, Gyros AB (until Jan 2008).

Other positions: Board chairman at Solbackens Handelsträdgård AB. Board member at Athera Biolog- ics AB.

Stockholding: 0

Independent in relation to the company and the main shareholders

AKBAr sEDDiGH Chairman of the Board.

Education: Chemistry, Market economist diploma.

Other positions: Board chairman at Elekta AB (publ), Hedson Technologies (publ), Innovationsbron and Blekinge Tekniska Högskola. Board member at Af- färsstrategerna AB (publ) and Biolight AB (publ).

Stockholding: 58 325 series A shares Number of Board meetings 2007: 15

LAurENt LEKsELL Born: 1952. Appointed 2005.

Education: B.Sc and Ph.D Economics, Stockholm School of Economics.

Other positions: Board member at Elekta AB (publ), Karobio AB (publ), American Chamber of Commerce and Kungliga Konsthögskolan.

Board chairman at Stockholms Stadsmission.

Stockholding (through companies and private):

569 514 series A shares and 171 000 series B shares

PONtus LEssE Born: 1954. Appointed 2007.

Education: M.Sc Industrial economics.

Other positions: Board chairman at Media Exchange AB. Board member at EOS Russia AB (publ).

Stockholding: 0

AuDitOr (not present) Helene Willberg

Born: 1967. State authorized auditor, KPMG, Auditor for Ortivus sinces 2004.

DEPuty AuDitOr (not present) Joakim Thilstedt

Born: 1967. State authorized auditor, KPMG.

Deputy Auditor for Ortivus sinces 2004.

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MANAGEMENt

PEr BOurN

Chief Financial Officer Ortivus AB.

Born: 1964.

Employed 2006.

Education: B.Sc. Business and Economics, University of Lund.

Experience: More than 15 years’ experience as Controller and Financial Director for high tech/IT companies such as Coding Technologies AB, Enea AB, Enea OSE Systems AB and the Ericsson Group.

Stockholding: 1 500 series B.

BENGt ArNE sJÖQvist

Acting CEO, Business Development Director, Ortivus AB.

Born: 1952. Anställd 1994.

Education: Ph.D Medical Technology. Adjunct profes- sor in Care Informatics at Chalmers University of technology.

Experience: More than 30 years’ experience of research and development within medical technology and telemedicine. Formerly engaged in innovation and entreprenurial businesses. Commissioned medical technology and IT for clients including NUTEK, KK-stiftelsen and Vinnova.

PEr sLEtMO

Development and production director Ortivus AB.

Born: 1966.

Employed 2005.

Education: Engineering degree, Royal Institute of Technology, Stockholm.

Experience: Many years of experience, with an emphasis on medical technology. Previous employers include ABB, Sigma, Siemens-Elema, Microsoft and Getinge Maquet Critical Care, where he held leading positions within development, quality, IT and process management.

JOHAN FOLKuNGEr

Marketing and sales director Ortivus AB.

Born: 1968.

Employed 2005.

Education: B.Sc. Business and Economics, University of Uppsala.

Experience: Many years of exeperience from international sales within telecom and high tech/IT companies. Previous employers include Net Insight and Telia.

Stockholding: 0

tHOMAs PAsOLD Managing Director Medos AG.

Born: 1960.

Employed 2007.

Education: Economics, informatics.

Experience: More than 15 years’ experience from leading positions in the european Healthcare IT sector, primarily IT solutions for hospitals. Solid experience from management positions as well as of restructurings, integration and turn-around of IT companies.

Stockholding: 0

WALtEr K. yOuNG Managing Director Ortivus Inc.

Born: 1948.

Employed 1999.

Education: MA in political science (Temple University, Philadelphia), PhD studies in marketing.

Experience: Responsible for acquisition of Sweet Computers (USA) and AVeL-TECH (Canada). More than 25 years’ experience in leading positions in the US and international healthcare sector and IT. Formerly employed by Marquette Medical (now GE Medical) where he was international marketing director for clinical information systems for six years..

Stockholding: 0

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sHArE AND sHArEHOLDErs

The capital stock of Ortivus was MSEK 103,5 MSEK as per December 31, 2007.

In total there are 20,7 million shares, split into 1,1 million A shares and 19,6 million B shares.

One A share counts as ten votes, and one B share counts as one vote. All shares have the same right to share of the company’s assets and profits.

During 2007 a total of 7,5 (5,3) million B shares were traded, an increase with 43 percent. On average, 32 000 shares were traded per trading day. The share price for the B share decreased by -73 percent (-52). The market capitalization at year-end totaled MSEK 107,6 (399,3) MSEK, a decrease with -73 percent (-28).

DIVIDEND

The Board proposes that no dividend should be paid for the 2007 fiscal year.

OWNERSHIP STRUCTURE

The number of shareholders decreased with 12 percent to 1 899 (2 318) during the year.

The 10 largest shareholders held together 68,3 (57,2) percent of the capital, and 72,7 (63,6) percent of the votesprocent. The number of legal entities that holds shares in Ortivus decreased to 211 (272). Together, legal entities held 80,8 percent (79,6) of the capital and 81,5 (79,6) percent of the votes.

Foreign owners held 32,0 (29,3) percent

Ortivus sHArEHOLDErs DECEMBEr 31, 2007

Share %

Name A shares B shares Votes votes capital

Bonit Invest S.A. 568,764 150,000 5,837,640 19.0 3.5

Consepio 168,000 2,915,250 4,595,250 15.0 14.9

Ponderus Invest AB 54,500 2,156,380 2,701,380 8.8 10.7

Investors Bank and Trust Co. 114,300 859,965 2,002,965 6.5 4.7

Oppenheimer Funds Inc 0 1,917,750 1,917,750 6.2 9.3

Banco Teknik & Innovation 0 1,595,100 1,595,100 5.2 7.7

Skandia 0 1,086,000 1,086,000 3.5 5.2

Bliwa Livförsäkring 0 976,485 976,485 3.2 4.7

Banco Småbolagsfond 0 900,000 900,000 2.9 4.3

Länsförsäkringar Småbolag 0 681,200 681,200 2.2 3.3

Seddigh, Akbar 58,325 0 583,250 1.9 0.3

Pettersson, Rune 0 477,500 477,500 1.6 2.3

Hedlund, Sture 45,000 30,000 480,000 1.6 0.4

Sjögren, Bo 43,000 35,100 465,100 1.5 0.4

Petersson, Lars-Erik 7,250 109,569 182,069 0.6 0.6

Ståhlberg, Jan 0 150,000 150,000 0.5 0.7

US Allianz Tempelton 0 149,800 149,800 0.5 0.7

Helleberg, Richard 3,000 103,000 133,000 0.4 0.5

Nordica Life (Bermuda) Ltd 0 130,000 130,000 0.4 0.6

Larsson, Rune 1,935 105,000 124,350 0.4 0.5

Other 44,381 5,071,634 5,515,444 18.0 24.7

tOtAL 1,108,455 19,599,733 30,684,283 100 100

of the capital and 18,3 (23,7) percent of the votes. The largest individual owner in Ortivus is Bonit Invest SA, controlled by Ortivus Board member Laurent Leksell. Other large owners include Ponderus Invest, controlled by Peter Edwall, called in Board member, the Consepio fund, and Oppenheimer Funds Inc. The holding of Investors Bank and Trusts is on behalf of Oppenheimer Funds.

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Capital stock development Share No of

Year capital shares

Share capital Dec 31, 1992 15,198,690 1,519,869

New issues 1993 2,500,000 250,000

New issues 1993 11,801,310 1,180,131

New issues 1994 1,500,000 150,000

New issues 1995 15,500,000 1,550,000

New issues 1996 4,650,000 465,000

Split 1998 0 5,580,000

New issues 2000 9,497,250 1,899,450

New issues 2001 3,364,420 672,884

New issues 2002 365,625 73,125

New issues 2006 34,513,645 6,902,729

total no of shares 103,540,940 20,708,188

The Ortivus share

Listed on the OMX Nordic Exchange

Ticker ORTI

Trading lot 500

Market capitalization Dec 31 2007 107,6 MSEK

B share A share

Highest price 2007 19.50 19.80

Lowest price 2007 5.05 5.15

At close 2007 5.20 5.15

No of No of No of No of Share of, % Market

By country shareholders A shares B shares shares capital votes capital, MSEK

Sweden 1,795 992,567 15,154,497 16,147,064 78.0 81.7 81.7

USA 20 114,300 3,394,726 3,509,026 16.9 14.8 14.8

Luxemburg 11 300 375,470 375,770 1.8 1.2 1.2

Switzerland 12 0 172,345 172,345 0.8 0.6 0.6

Great Britain 13 738 88,341 89,079 0.4 0.3 0.3

Netherlands 1 0 74,870 74,870 0.4 0.2 0.2

Other 47 550 339,484 340,034 1.6 1.1 1.1

total 1,899 1,108,455 19,599,733 20,708,188 100 100 107.6

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20

ANNUAL REPORT 2007

Directors’ Report Ortivus Group 2007

This is the report of the Board of Directors and the Managing Director of Ortivus AB (publ) for the financial year 2007.

INFORMATION ON THE BUSINESS

Ortivus is a Healthcare IT company that develops and markets complete information and decision support systems for health services, ambulance services, police and rescue services in Europe and North America. Through its knowledge of processes in conjunction with clinical knowledge and leading technology, Ortivus offers solutions in three application areas:

• Emergency Services: system solutions that render processes more effective and offer clinical and administrative support in the field of emergency care, police and rescue services. Products that illustrate this line of business are MobiMed and invoicing services for ambulance companies.

• Cardiovascular Disease Management: systems for cardiological monitoring of patients, mainly marketed through the product CoroNet.

• Clinical Information Systems: IT applications that support and develop work processes in the field of image-based specialist areas such as radiology and pathology. Products that illustrate this line of business are MIS (information systems for radiology, for example) and PACS (Picture Archiving and Communication Systems).

Ortivus’ market organisation is divided into three geographical segments: North America, Europe (excluding the Nordic countries) and the Nordic countries & Other countries.

MARKET

Patient and medical care in many countries are facing a time of strong change. Strained budgets, demands on efficiencies, co-ordination and standardisation as well as an aging population with higher care needs are examples of clear market trends. Other important characteristics are on-going consolidation and long procurement and decision processes. Ortivus’ clients are mainly public and privately financed ambulance services and hospitals in Europe and North America. Ortivus AB markets its solutions partly through its wholly-owned subsidiaries in Germany, USA, Canada and Great Britain and partly through partners in Norway, Italy, Spain and Germany.

2007 SUMMARY

The comprehensive investments in the market organisation and the products MobiMed and CoroNet that were initiated in 2005 for the purpose of building marketing channels in a short time and developing internationally competitive products were completed in the first half of the year. Development expenses for products, which have been activated to a large extent, have been reduced to a more normal level during the second half of the year. Delayed launch dates, long penetration times and some wrong investments in the development of market channels have meant that evalu- ations of international growth have been reviewed from a time aspect. Therefore strong measures aimed at cutting costs and changing market strategies have been taken.

In 2007, a number of promising projects were initiated, both with partners and clients in several places in Europe. Among other things, a first MobiMed system was sold by our partner in Spain, and in Germany, an important reference installation was put into operation.

CoroNet was chosen by one more university hospital in Sweden and from an international perspective, market processing has intensified, mainly through co-operation with our partners in Germany and Italy.

In England, the company received an order worth SEK 14 million at the beginning of the year for ePR (electronic patient records) in the field of the NHS Connecting for Health project (CfH). A partial delivery of SEK 4.7 million has been made, but due to CfH delays it is still uncertain when the operation of the Ortivus application can start. Ortivus has met its obligations and is ready to start delivery.

The German subsidiary has now been stabilised. A number of strategic changes have been made in order for the company to improve the use of its competence and position to meet the hard competition. A new Managing Director took over after the summer and introduced additional cost reductions and efficiencies. Now the underlying operating performance is positive, and the company has a stable starting position for long-term growth.

A new software platform has been developed in North America.

The platform makes possible a quicker response to changed client and market requirements and is also a prerequisite for a potential launching of the North American application in Europe. Core activity in North America is showing constant growth. However, the process has been influenced negatively by the falling dollar rate.

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NET SALES

The group’s net sales amounted to SEK 162.4 (199.8) million for the whole year.

SEK million

Net sales 2007 Jan. – Dec.

2007 Jan. – Dec.

2006 Change

%

North America 62.9 68.1 -8

Europe

(excluding Nordic countries) 70.9 83.0 -15

Nordic countries

(& Other countries) 28.6 48.7 -41

Total 162.4 199.8 -19

There was a strong decline in the net sales in the Nordic countries, mainly as a result of successful launching and sales on the Swedish market in 2006. This influences comparisons between the years.

The net sales in Europe decreased by 15 % for the whole year, attributable to Germany. This is due mainly to a change in the product mix, with a larger share of hardware, which however yields a higher relative gross profit margin. The net sales for Europe includes SEK 4.7 million for the order totalling SEK 14 million for ePR (electronic patient records) related to the NHS Connecting for Health project received during the second quarter of the year.

The net sales in North America Europe decreased by 8 % for the whole year, which is mainly attributable to changes in the rate of exchange. The net sales in local currency for the USA business increased by 5 %.

GROSS PROFIT AND EXPENSES

The group’s gross profit amounted to SEK 106.7 (121.8) million for the whole year. The gross profit margin increased from 61 % to 66 %, which is mainly due to a lower share of hardware deliveries to Germany and to revenues from licenses for the ePR (electronic patient records) order in England.

The group’s operating costs amounted to SEK 160.6 (250.1)

2007 2006

Total operating costs 160.6 250.1

Restructuring costs, Germany 5.9 8.7

Restructuring costs for operations in Sweden 1.5 - Severance payment for previous managing director 4.9 - Goodwill write-offs for the German company - 48.9 Intellectual property rights write-offs 18.7 24.1 Liquidation of associated company in Germany - 0.3

Total reservations/write-offs 31.0 82.0

Operating costs excluding reservations/write-offs 129.6 168.1

Intellectual property rights write-offs for 2007 include activated development expenses for MobiMed and CoroNet. In Germany the restructuring of 2006 led to a marked decrease of costs in 2007.

During the autumn the new Managing Director of the German company adopted a new strategy and made further adjustments to the organisation, which led to reservations for restructuring costs to the amount of SEK 4.0 million. In total, restructuring costs in Germany amounted to SEK 5.9 (8.7) million.

The activated expenses for the whole year amounted to SEK 18.3 (33.3) million, out of which activation of development expenses for MobiMed and CoroNet amounted to SEK 12.5 (26.5) million.

RESULT

The company’s operating result for the whole year amounted to SEK -53.9 (-128.4) million, out of which write-offs and restructuring costs amounted to SEK -31.0 (-82.0) million. Excluding these costs, the operating result amounted to SEK -22.9 (-46.4) million.

The changes in the German operations have led to a positive operating profit for the underlying business operations of the German company (excluding restructuring costs and group-internal debiting).

Pre-tax profit/loss amounted to SEK -53.1 (-127.8) million. The

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22

ANNUAL REPORT 2007

RESEARCH AND DEVELOPMENT

Research and development costs amounted to SEK 61.6 (67.2) million (net), of which write-offs amounted to SEK 18.7 (24.1) million. Research and development costs, excluding write-offs, activation of development expenses and depreciation of activated development expenses and licenses amounted to SEK 50.6 (65.7) million. The reduction mainly took place at the parent company, for MobiMed and CoroNet, for which the activation of development expenses was markedly reduced during the second part of the year, but also in North America.

RISK HANDLING

Risk-taking is a natural part of business operations. Risks can be roughly divided into operative and financial risks.

Operative risks

Operative risks are risks owned and handled by an operative unit, for example a subsidiary. The unit is responsible for the risk and is monitored by internal management boards and/or by the group management. Certain risks, such as those eligible for insurance, are co-ordinated centrally. The most important risk factors are:

• The capacity to hire and retain highly qualified personnel

• Technological and market development

Financial risks

As a result of its operations, the Ortivus Group is exposed to various types of financial risks, such as currency risks, interest risks, financing risks, liquidity risks and counterparty risks. The group has an established financial policy that governs the financial risk handling which is dealt with by the financial function within the parent company and is monitored by the management.

A more detailed account of the handling of these risks is pre- sented in note 24.

The risks and uncertainty factors that can influence Ortivus’

CASH FLOW, INVESTMENTS AND LIQUIDITY

Operating activities yielded a negative cash flow amounting to SEK -1.4 (-40.4) million for the whole year, and was negatively influenced by SEK -5.1 million for restructuring costs in Germany.

Investments amounted to SEK -23.0 (-40.3) million and con- sisted mainly of balanced developments expenses. The reduction in investments is mainly due to a strong reduction in development expenses for MobiMed and CoroNet. The financing activity yielded a cash flow of SEK -8.5 (152.8) million for the whole year as a result of the amortisation of long-term loans. The cash flow from financing activities in 2006 was influenced by a new issue of shares for SEK 173 million.

The year’s cash flow was SEK -32.9 (72.2) million. The group’s liquid resources amounted to SEK 57.2 (90.8) million at the beginning of the year. Short-terms placements amounted to SEK 8.2 (7.8) million. The group’s net interest income amounted to SEK 0.8 (0.6) million, and the group’s equity ratio amounted to SEK 0.13x (0.16x) million.

BALANCE SHEET

The group’s intellectual property rights amounted to SEK 123.2 (134.4) million at the end of the year, of which goodwill represents SEK 63.9 (63.9) million.

Impairment tests in accordance with IAS 36 with respect to intellectual property rights have led to a write-off of activated development expenses for CoroNet and MobiMed to amount of SEK 18.7 million. The goodwill item is attributable to the subsidiaries in Germany and North America and was found to be balance approved.

The current liquid assets amounted to SEK 104.0 (167.1) million at the end of the year. The change is mainly due to reduced re- ceivables and liquid assets. Equity amounted to SEK 163.0 (226.0) million at the turn of the year. The group’s interest-bearing debts amounted to SEK 21.5 (35.2) million at the end of the year.

North America Europe excl Nordic

region The Nordic Region &

Other countries Eliminations Group

MSEK Jan-Dec 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

External sales 62,9 68,1 70,8 83,0 28,7 48,7 0,0 0,0 162,4 199,8

Internal sales - 1,5 1,2 1,1 5,0 -2,6 –6,2

Net sales 62,9 68,1 72,3 84,2 29,8 53,7 -2,6 –6,2 162,4 199,8

Operating profit/loss 10,6 6,6 -6,1 –76,1 -58,3 –58,9 -0,1 0,0 -53,9 –128,4

The table above shows Ortivus net sales and operating profit/loss for respective geographical region and the Group as a whole.

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turnover and result on a short-term basis are primarily:

Export investments on prioritised markets

In order to generate growth, Ortivus made strong investments in 2005 and 2006 promoting expansion outside the established markets. These investments have not however yielded positive results so far, which has had a strong effect on liquidity. In 2007, a new strategy was laid out based on a small number of selected markets and partners.

Under these circumstances, the short to medium-term business situation continues to be difficult to judge.

The NHS Connecting for Health project

Ortivus is the chosen provider of ePR in the area of the “NHS Con- necting for Health” project in England, which has been postponed several times. It is not certain when the remaining part of the first SEK 14 million part order and further orders can be taken up as income.

Liquidity

The uncertainty factors described above influence liquidity. The management is actively working on the financing issue and in April it obtained a syndicated loan from a few larger shareholders. Read more under “Events after the balance sheet date” below.

ENVIRONMENTAL INFORMATION

Ortivus’ environmental policy is based on the ambition that the production and transport of the company’s products should be as environment-friendly as possible. The policy includes not only the company’s own business operations; but for example, environmental issues are essential decision criteria in choosing subcontractors.

The parent company Ortivus AB does not pursue any activity that is harmful to the environment and requires permission or is subject to reporting in accordance with the Swedish Environmental Code.

SEK 0.1 (4.5) million. During the year the company made investments in intangible assets in connection with balanced development expenses of SEK 12.5 (26.5) million. Write-offs of intangible fixed assets were charged to profits and amounted to SEK -18.7 (-16.9) million. Reservations for restructuring, including severance payment to the previous managing director were charged to profit/

loss for the year and amounted to SEK -6.4 (-) million. The average number of employees was 37 (39). On the accounting date, the company had interest-bearing debts amounting to SEK 20.7 (27.6) million.

PERSONNEL

The average number of group employees dropped by 9 % and was 157 (172).

PERSONNEL OPTIONS

Of the previous three-year option programme decided upon and initiated in 2005, at the beginning of the year there remained 221,667 options for issuance for 2007. However, the board decided not to propose that these options be issued in the 2007 annual general meeting. Therefore no options have been issued under this programme.

BOARD, MANAGEMENT AND OTHER INFORMATION Ortivus’ 2007 annual general meeting decided to elect the fol- lowing persons as board members; re-elected members Laurent Leksell, Lennart Ribohn, Anna Söderblom and Jan Würtz, newly elected members Jon Risfelt and Pontus Lesse and Akbar Seddigh, re-elected chairman. The meeting also decided that the number of members should be seven. As per the 3 December 2007 decision, the board of directors in consultation with the election committee appointed Peter Edwall as a co-opted member of the board.

The activity of the board of directors at Ortivus AB is regulated by the companies act and by the work regulations established