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ORIGIO is a world leader in Assisted Reproductive Technology (ART) solutions. Through research and innovation, ORIGIO aims to provide the best products to medical professionals to help the #1 dream of every infertile couple come true
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Annual Report 2010
MIDATL ANTICDEVICES
MEDICULTMEDIA
HUMAGENPIPETS
OrigiO Annual report 2010
To make the #1 dream of every infertile couple come true
We deliver leading, innovative ART solutions to the benefit of families
Vision: Mission:
Highlights 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cover B
Key Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cover C
Letter from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 6
Management Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 8
Sales and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 11
R&D Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 14
ORIGIO Prepares for the Next Generation of Culture Media . . . . . . . . . . . . . page 18
Financial Guidance and Business Milestones 2011 . . . . . . . . . . . . . . . . . . . . . page 23
New Facilities in Måløv, Copenhagen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 26
Precision Micro Devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 27
ORIGIO ScanLab Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 28
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 30
ORIGIO AUSTRALASIA Pty . Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 35
Control and Risk Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 36
Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 37
Company Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 38
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 41
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 42
Executive Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 44
ORIGIO’s Recent Journey – a Corporate Transformation . . . . . . . . . . . . . . . . page 46
Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 48
Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 49
Statement by the Board of Directors and Executive Board . . . . . . . . . . . . . . page 79
Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 80
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 82
Obituary, Professor Kjell Bertheussen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 82
ORIGIO offices
Worldwide presence
OrigiO Around the World
DeAr custOMers, cOlleAgues AnD shArehOlDers,
Over thirty years have passed since Professor
Robert Edwards developed human in vitro
fertilization (IVF) therapy . In 2010, he was awarded
the Nobel Prize for his pioneering work that made
it possible to treat infertility . Assisted Reproductive
Technology (ART) has created hope for millions
of infertile couples throughout the world to make
their ‘#1 dream come true’, and a cumulative total of
more than 4 million babies have been conceived via
ART since 1978 .
The ART market has progressed tremendously
since the inception three decades ago, but it is still
a young and hugely underpenetrated market . At
the same time, several mega-trends support the
continued development and growth of the ART
market .
ORIGIO wants to be in the forefront of the evolution
of the ART industry and again in 2010, the ORIGIO
team secured substantial progress on key targets .
Our pipeline
Most notable was the headline data from the
world’s largest fertility culture media study ever .
The data substantiated a very interesting product
concept named EmbryoGen® – a superior medium
for the commercially attractive subgroup of patients
having had a previous miscarriage . We believe,
by launching a product for this subgroup, we can
create a rare win-win-win-win situation:
letter from the ceO
• the patient wins due to a more
gentle and cost-effective fertility process,
• the IVF clinics win, as they can provide improved
treatment options and, in that way, potentially
also attract more patients to their clinics,
• the society at large wins by welcoming more new
world citizens at a lower cost per baby,
• and ultimately, ORIGIO wins by being able to
execute on its vision – to help infertile couples
around the world make their #1 dream come true
– while launching a financially, highly attractive
product .
Our family
We are very happy to have welcomed more new
members into the ORIGIO corporate family during
the year;
• the joint venture of ORIGIO ScanLab Equipment
a/s securing our customers’ high quality IVF
workstations,
• the acquisition of Precision Micro Devices, LLC
further strengthening our already excellent value
proposition for micropipettes for ART,
• our new Russian and Australian colleagues
allowing us to expand faster in these sizeable IVF
markets,
ORIGIO offices
Worldwide presence
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
5
• also, it was my pleasure to welcome a new
Chairman of the Board of Directors – Mr .
Flemming Pedersen, an experienced healthcare
industry insider – while thanking the previous
Chairman – Mr . Jens Holst – wholeheartedly for
his strong contributions during the past years,
• 2010 was also the year during which ORIGIO’s
new media manufacturing facility and corporate
headquarters in Måløv, Denmark was completed
ensuring adequate space for a continued
expansion in the years to come .
It was with great sadness that we learned of the
passing of Professor Kjell Bertheussen on February
14, 2011 . Professor Bertheussen was one of the
founders of ORIGIO and his deep insight into
biochemistry and cell biology has been of great
value to ORIGIO .
Our financials
Last but not least, ORIGIO secured attractive
progress on the key financial guiding parameters
of organic growth, EBITDA development, and
operating cash flow .
In conclusion, I find that 2010 was a very exciting year
for the ART industry and ORIGIO, and that we, once
again, proved to live out our corporate values of being
aspirational, reliable and caring at the same time .
I would like to take this opportunity to thank, yet
again, my colleagues in ORIGIO globally as well as
our many distribution partners around the world for
their strong contributions to our sustained growth
and development; our customers for their continued
support and inspiration to further innovation; and
our shareholders for their loyalty and patience
towards our cause and corporation .
Our mission is as motivating to us all, as it ever was .
We are confident that we – yet again – during 2011
will pursue an exciting path of continued progress
for the benefit of all stakeholders .
Yours sincerely,
Jesper Funding Andersen
CEO, ORIGIO a/s
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
Management report
Introduction
ORIGIO is a leader in delivering leading innovative
ART solutions that benefit families . Through
innovation and product advancement, we aim to
help the #1 dream of every infertile couple come
true . ORIGIO currently consists of three product
families; MediCult Media, Humagen Pipets and
MidAtlantic Devices, that cater for the broadest
range of products – from disposables to equipment
– for global ART professionals .
Our market
It is estimated that one in six couples world-wide
experience some kind of infertility problem at
least once during their reproductive lifespan .
Approximately one third of infertility cases is female
factor related infertility, one third is male factor, and
the remaining third involves problems on either side
or unexplained causes .
The development of ART has progressed
significantly over the last three decades . Today,
the global ART market is estimated to be around
1 .4 million cycles per year, and more than 300,000
babies were conceived from ART in 2010 . The
ART market has experienced steady growth but
with big variations from country to country due to
e .g . infrastructure and reimbursement levels . A
number of mega-trends support the growth and the
continued development of the ART industry in the
years to come:
• Thereproductionchallenge.Many developed
countries face a “reproductive challenge” (see
chart 1), as the number of children being born is
not sufficient to sustain the population . In order
to maintain the current population, an average
of 2 .1 children must be born per female . ORIGIO
believes that this population deficit brings
attention to the need for fertility treatment and
that it thus will play an increasingly important
role in the stabilization and demographic
management of a country’s population .
• Increasedwealthcreation.In developing
countries like Brazil, Russia, India and China,
increased wealth leads to a growing middle-
classes making ART affordable for more couples .
• Maternalage.The average age for a mother
at first birth has increased over the last several
decades . This is a consequence of societal
changes, as more women are in the workforce
and many are waiting to further their career
and secure their financial position before
having children . This does not correlate well
with the biological fact that women’s fertility
decreases with age, with a significant drop in
their early thirties, as the quality of women’s
eggs decreases . Developing technologies, such
as cryopreservation for the storage of gametes,
embryos and blastocysts, can extend the natural
fertility period, as it is the age of the eggs – not
the age the of the mother – which is relevant for a
successful reproduction .
• Obesityandotherhealthrelatedproblems.
The rise of health problems like obesity (chart
2), eating disorders and diabetes world-wide
impacts the reproduction capacity negatively .
This together with e .g . Chlamydia, gonococcal,
and other diseases have negative consequences
for fertility rates .
• Lowerspermquality.There has been a genuine
decline in semen quality over the past 50 years .
As male fertility is to some extent correlated
with sperm count, the results reflect an overall
reduction in male fertility . Male infertility is
believed to be on the rise due to among other
things increased environmental contamination .
ART can help couples facing this problem by
either sperm treatment or full ICSI cycles .
Japan
Ko
rea, South
Italy
Russia
Germ
any
Switzerland
Spain
China
Canad
a
Belg
ium
Netherland
s
Australia
United
King
do
m
France
United
States
Turkey
Brazil
Indo
nesia
Mexico
India
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Source: CIA World Fact Book, 2010 estimate
Demographic Balance = 2.1
7
Chart 1: Total fertility rate in Top 20 economies (GDP).
Average number of children born by women in the reproductive age span (age 15-49)
0 10 20 30 40 50
% of population
USA
Argentina
Mexico
Saudi Arabia
Australia
Canada
UK
Germany
South Africa
Turkey
Brazil
Russia
Italy
South Korea
France
China
Indonesia
India
Japan
* Body Mass Index of at least 30 kg/m2Source: Financial Times, September 2010
• Broadeningofmotherhood.Many countries
are experiencing an increasing acceptance of a
broadening of motherhood from the traditional
heterosexual couples to other types of potential
parents (single mothers, donors, surrogacy,
homosexuals, etc .) . The use of ART can make this
happen .
Due to the abovementioned economic, sociological
and medical reasons, ORIGIO believes that the
underlying need for ART will increase in the future .
In addition, the global ART market is massively
underpenetrated (please refer to page 20-21),
supporting the fact that this market is poised for
attractive growth in years to come .
Chart 2: Obesity* across G-20 economies (excluding EU)
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
9
Revenue for 2010 totaled DKK 308 .0 million,
corresponding to an increase of 16% in floating
currencies . Overall organic growth for the group
amounted to 12% in constant currencies . Sales of
disposables amounted to DKK 261 .0 million and
now represents 85% of the total revenue . The
sales of disposables achieved organic growth of
8% in 2010, particularly as a result of selling direct
in more markets, a successful introduction of the
Cryopette®, and better cross-selling of ORIGIO’s
products in general . In 2010, revenue within
equipment increased by 43% in constant currencies
and totaled DKK 47 .0 million . The high growth in
sales and Marketing
equipment sales was driven by the mini incubator
ORIGIO/Planer BT37, equipment sales in North
America, as well as a heads-up start for the new
joint venture, ORIGIO ScanLab Equipment, which
specializes in sales of equipment for IVF laboratories
world-wide .
The strongest geographical growth in 2010 was
seen outside Europe and Americas with organic
growth of 22% . In Europe, revenue was up by 13% in
constant currencies and now represents 51% of total
revenue . In the Americas, organic growth amounted
to 7%, mainly driven by high equipment sales .
Chart 3: Geographical and product sales mix
Sales by Region 2010 Sales by Product Groups 2010
Europe 51%
Americas 28%
Rest of World 21%
IVF pipets 38%
IVF media 38%
IVF other disposables 9%
IVF equipment 15%
ProductsplitofrevenueDKK million Revenue 2009 Revenue 2010 Revenue growth Organic growth*
Disposables 237 .7 261 .0 10% 8%
Equipment 28 .0 47 .0 68% 43%
Total 265.7 308.0 16% 12%
*Constant currency
GeographicalsplitofrevenueDKK million Revenue 2009 Revenue 2010 Revenue growth Organic growth*
Europe 142 .5 156 .4 10% 13%
Americas 78 .6 87 .1 11% 7%
Rest of World 44 .6 64 .5 45% 22%
Total 265.7 308.0 16% 12%
*Constant currency
51%
21%
9%
38%28%
15%
38%
A number of organizational initiatives were taken
during 2010 to further strengthen the sales and
marketing organization .
To broaden the already strong footprint in terms
of sales subsidiaries and distributor networks
around the world, ORIGIO LLC was established in
St . Petersburg, Russia . The company successfully
initiated its operation during the third quarter of
2010 . ORIGIO LLC is owned 51% by ORIGIO and
49% by AVA-Peter Ltd . – a leading medical supply
company in Russia and ORIGIO’s long-term partner
in Russia .
In Australia and New Zealand, ORIGIO started
direct sales of all product categories July 1, 2010
(please refer to page 35) . To manage the full scale
roll-out of ORIGIO’s products, a new General
Manager was hired . Also in July, ORIGIO began
direct sales to customers in Finland .
In the US, the ORIGIO sales force was expanded in
April 2010 to take over direct sales to customers in
Canada . As part of the US integration, the two US
entities were legally merged and are now operating
on the same software platform . The merger enables
an enhanced ability to leverage resources and
product synergies and thereby strengthen the
Group’s leading position in the US .
The strengthening of the sales and marketing
organization world-wide furthermore included the
recruitment of an International Technical Product
Director for equipment support and a new General
Manager for the Nordic & Baltic regions . Extra
resources were also added to the sales teams in
China and Italy to better support the customers .
Finally, ORIGIO ScanLab Equipment a/s, was
established as a joint venture on July 1, 2010
with the objective of selling work stations for IVF
laboratories world-wide (please refer to page 28) .
A new corporate website was launched in
June 2010. The website embraces all three
brands and has detailed information about
the products and services that ORIGIO
offers. Furthermore, new functionalities like
online ordering and order tracking are in
development.
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
11
trade exhibitions
ORIGIO also presented a new Product
Catalogue during 2010 containing all
three brands: MediCult Media, Humagen
Pipets and MidAtlantic Devices.
At the annual European Society of Human Reproduction
and Embryology (ESHRE) exhibition 2010 in Rome,
ORIGIO was represented with two exhibition stands,
split into the traditional ORIGIO brands and ORIGIO
ScanLab Equipment . The Cryopette® was presented at
two live demonstration desks, which attracted several
hundreds of embryologists . Also the bench top Incubator
“ORIGIO/Planer BT37” was demonstrated at ESHRE for
the first time – with great interest from many potential
customers .
The 2010 American Society for Reproductive Medicine
(ASRM) annual conference was held in Denver, Colorado,
October 24-27, with approximately 5,000 participants .
Based on numerous comments from customers,
management believes that the ORIGIO brand is an
increasingly recognized and acknowledged brand as the
company of choice in relation to ART needs .
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
Emerging technologies
The ORIGIO Group possesses a world-leading
pipeline of R&D projects within ART and the related
stem cell field (please see chart 4) .
GM-CSF / EmbryoGen®
In December, 2010, ORIGIO completed the
world’s largest clinical study of IVF culture media,
“The effect of granulocyte-macrophage colony-
stimulating factor (GM-CSF) during in vitro culture
of human embryos on subsequent implantation
rates” . The study included 1,332 patients and was
designed as a multi-center, randomized, parallel
group, double-blinded, placebo-controlled,
efficacy trial of a culture medium (EmbryoAssist™)
containing GM-CSF .
Exposure to GM-CSF showed a statistical significant
improvement of the ongoing implantation rate in
the commercially attractive subgroup comprising
women who have previously experienced
miscarriage, either naturally or in relation to an IVF
cycle . The study documented that exposure to
GM-CSF increased the overall ongoing implantation
rate for this subgroup by 44 .1% (p = 0 .001) in week
7 and by 40 .6% in week 12 (p = 0 .003) compared
to the control group . This improvement correlates
well with the scientific hypothesis that GM-CSF
positively influences the embryo implantation
potential .
ORIGIO plans to start the launch of the new culture
medium during the third quarter of 2011 . The
product will be launched under the product name
EmbryoGen® (for further details please refer to
pages 18-19) .
The patentability of the use of GM-CSF in IVF media
within the EU has been opposed by a UK based
company . On October 20, 2010, oral proceedings
took place at the European Patent Office in Munich
and the result was that the patent integrity for
human use of GM-CSF in IVF media was upheld .
ORIGIO thereby maintains its strong intellectual
property rights position for the use of IVF medium
enriched with GM-CSF for human use world-wide .
The opposition has appealed the decision .
IGF-II
The research activities on IGF-II, conducted at the
University of Adelaide, Australia, have shown that
treatment of embryos with a combination of three
components, added to ORIGIO’s EmbryoAssist™
and BlastAssist® IVF media improves embryo
development of murine embryos at day 5 and
implantation rates at day 8 compared to controls .
In 2010, the research group demonstrated that
embryo culture in media supplemented with
the combination of insulin-like growth factor-II
(IGF-II), urokinase plasminogen activator (uPA)
and plasminogen significantly increased the
percentage of murine mothers pregnant at day 18
by 27 .8% compared to controls . The treatment had
no adverse effects on maternal body composition,
birth weight or postnatal growth .
ORIGIO holds exclusive world-wide rights to any
product concept emanating from the results .
Iloprost
The first part of the safety and efficacy study on
the effect of the prostacyclin analogue, Iloprost,
was completed successfully in March 2010 . This
study has proven that the addition of Iloprost
to Blastocyst culture medium is safe as
evaluated on embryo development .
The second part of the study will,
on a preliminary basis, investigate
the efficacy of Iloprost on
implantation rates . This part
will include approximately
100 patients and is
expected to be
completed by the third
quarter of 2011 .
The study is an
investigator initiated
study taking place in
Houston, USA . ORIGIO
has world-wide rights to the patent
that comprises the application of Iloprost added
to media for ART .
r&D Pipeline
Our products facilitate human birth every 5 minutes somewhere around the world
13
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
EmbryoSure™
There is a growing trend within ART towards single
embryo transfer rather than transfer of multiple
embryos in order to reduce the risk of adverse
effects on mother and child . Today, the selection of
embryos is based entirely on visual/morphological
scoring of the embryos . For single embryo
transfer to replace multiple transfers world-wide,
an improved selection of the best embryo(s) by
objective measures is required to achieve similar or
higher success rates .
In Q1, 2009, ORIGIO signed a definitive agreement
with Novocellus Ltd . (Guildford, UK) to license
the non-invasive embryo selection technology,
EmbryoSure™, developed by Professor Henry Leese
at the University of York, UK . The technology is
based on amino acid profiling and is fully patented .
As part of the agreement, ORIGIO will co-fund
a human study program . The purpose of the
clinical program is to investigate the extent to
which EmbryoSure™ is superior to current visual
techniques in selecting the most implantation
competent embryos . The clinical program will imply
an exploratory phase followed by a prospective
efficacy phase . The exploratory phase is to
determine the algorithm for the selection of the
embryos and is expected to take place in 4-6 clinics
and involve 400 patients . Results are expected in
the fourth quarter of 2011 .
By gaining access to this leading-edge technology,
ORIGIO positions itself at the forefront of the
emerging trend of single embryo transfer in ART .
Incept BioSystems, Inc.
In January 2011, ORIGIO completed an asset
acquisition of the US-based Incept BioSystems,
Inc . (Incept) . Incept has developed an innovative
and patented microfluidics system ‘SMART Start™‘
that mimics in vivo conditions and thereby delivers
unique control and physiologic conditions ideal for
embryo culture in the assisted reproduction lab .
Incept concluded an investigational human study
evaluating the SMART Start™ system in October
2010 . The study assessed the system’s capacity to
safely support morphological embryo development
and survival rates, in comparison to the existing
practice of growing embryos in a conventional
culture dish . Data from the study showed that
Incept’s SMART Start™ Embryo Culture System
met the primary endpoint of non-inferiority to the
conventional static dish culture .
ORIGIO plans to perform internal studies on bovine
embryos prior to initiating a second phase human
clinical study .
Stem cell media
ORIGIO has developed a superior well defined
growth media for the culture of adult stem cells and
embryonic stem cells . The patented SSRx media
supplement is free of any human or animal derived
components and is broadly applicable to other
stem cell lines or bio-industrial lines . The ORIGIO
technology has shown increased mesenchymal stem
cell growth by 50% compared to serum-free control
media without SSRx .
Based on input from potential partners and to
enable the optimal commercialization path of the
concepts in this area, ORIGIO has in 2010 worked on
three activities in parallel:
1 . continued to develop and document the
performance of the media concepts
2 . performed media tests in collaboration with
potential customers
3 . continued progress on regulatory compliance of
the components
Performance tests of human Embryonic Stem Cells
(hESC) cultured with SSRx have shown promising
results . Furthermore, in-house studies have proved
that SSRx performs well in long-term tests and that
stability is favorable for commercialization .
Material transfer agreements have been signed
with potential partners in order for them to make
their own performance tests and thereby validate
ORIGIO’s results . These external tests are expected
to run during the first half of 2011 .
The business potential (size of market, price point
and speed of adoption) is dependent on the
Chart 4 R&D Pipeline
* Probability at this stage estimated at 20-40% for EmbryoSure due to other uncertainties related to clinical use** Timeline uncertain due to investigator initiated study . Probability at this stage estimated at 20-40%*** Revenue potentials may not be additive for IVF media projects
EmbryoGen®
IVF
med
ia
IVF
Stem
cel
ls
Em
bry
o
sele
ctio
nM
icro
flui
dic
sSt
em c
ell
med
ium
Probability of success
Product
0 - 10%
Preclinical
DevelopmentResearch
10 - 20%
Human safety
20 - 40%
Without transfer
Human efficacy
40 - 80%*
With transfer
80 - 100%
next milestone
est. revenue potential***
DKK mill/yearRegulatory
Sequential launch 100+
Pilot impl data 0 - 100+
Update in April 2011 0 - 350+
Exploratory data 0 - 350+
0 - 200+Bovine test
Agreement 0 - significant
Iloprost**
IGF-II
EmbryoSure™*
SMART Start™
Stem cells Different development path
Q3 2011
Q4 2011
Q4 2011
Q3 2011
15
outcome of the external performance tests as well
as the final conclusion on regulatory compliant
components and performance tests hereof . Timing
of a potential product launch or partner agreement
will be decided shortly after the final results are
available (expected Q2 2011) .
Regulatory update 2010
IVF media and related disposables are classified
as medical devices . Regulations on IVF products
continue to intensify and regulatory requirements
will further increase world-wide .
In 2009, the name of the new company group
comprising the previous MediCult, Humagen
Fertility Diagnostics and Mid-Atlantic Diagnostics
was changed to ORIGIO . The name change
required a re-registration of the product portfolio
in more than 50 countries world-wide . Furthermore,
ORIGIO moved to a new facility in Denmark and
changed the content of antibiotics in all media
to gentamicin . All changes required a substantial
additional regulatory effort from Regulatory Affairs
which continued in 2010 .
During 2010, ORIGIO obtained several new product
approvals . In EU, the following products were CE
marked:
• Cryopette®
• ICSI Cumulase®
• MediCult Vitrification Cooling and Warming
• Embryo Thawing Pack
• Biopsy Medium
In the US, the following products have been cleared:
• Cryopette®
• MediCult Vitrification Cooling and Warming
In Australia, the following product was registered:
• Cryopette®
In China, regulatory demands are particularly strict .
ORIGIO is in the process of registering its media
range in this growth market . So far, the product test
standards are in preparation and meetings with the
Chinese authorities (SFDA) have taken place during
the second half of 2010 . The regulation process is
expected to last more than two years .
OrigiO Prepares for the next generation of culture Media
2011 will be the year during which ORIGIO’s largest
media development investment, the GM-CSF
medium, moves from pipeline to product . Project
P-0022 becomes EmbryoGen®, a new option for
couples who experience the greatest challenges in
achieving and maintaining pregnancy .
The idea behind GM-CSF
Granulocyte-Macrophage Colony-Stimulating
Factor was first known to control white blood cell
growth in the body, and thus its nomenclature . The
name of the molecule has no direct connection to
embryology .
Since then, several other roles of GM-CSF have
been discovered in the human body . It is present
throughout the reproductive tract, and specific
GM-CSF receptors are expressed by the embryo .
Several studies have subsequently shown a powerful
positive effect on IVF embryos, both animal and
human .
IVF embryos are still inferior to their in vivo
counterparts showing lower cell numbers and
cleavage rates, higher apoptosis (i .e . programmed
cell death), slower compaction and expansion, and
ultimately lower birth weight . GM-CSF has been
shown to alleviate most of these problems bringing
IVF embryos closer to naturally conceived embryos .
The embryo is evolved to respond to growth factors
such as GM-CSF, and its development is clearly
impaired when such factors are not present during
early development .
The trial
In December 2010, the results from the world’s
largest IVF media trial were announced . More than
1,300 patients in 14 centers received IVF treatment
with either a standard IVF medium or a medium
supplemented with GM-CSF . The study end-point
was Ongoing Implantation Rate, i .e . fetal heart beat
monitored in week 7 of gestation, followed by a
follow-up monitoring in week 12 .
For the entire patient mix, the effect of
EmbryoGen® did not reach statistical significance
by week 7; but further data exploration revealed a
striking effect:
EmbryoGen® beneficiaries
The group of patients who had suffered previous
miscarriages experienced a highly significant
benefit from EmbryoGen® . At week 7 and 12, these
patients were 44 .1% and 40 .6% more likely to have
maintained an implanted embryo .
The study demonstrated that access to GM-CSF
strongly improves the embryo implantation capacity
in women who struggle to maintain ongoing
implantation and pregnancy . These patients, who
must endure repeated IVF attempts and whom IVF
centers struggle to assist, now have an improved
treatment option . Improving success rates in this
group of patients means raising the baseline of IVF
capabilities .
Chart 5: Ongoing implantation rate* in the
subgroup ’previous miscarriage’
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EmbryoGen® market potential
At the moment, the primary target group for
EmbryoGen® is assessed to be at least 200,000
cycles per year . Clinics offering i .e . multiple
treatment “packages” will see a substantial financial
benefit (and professional satisfaction) in improving
success rates in this group . And clinics under
reimbursement will see the cost of securing live
birth from this group decrease substantially . Having
secured world-wide exclusive rights for the use of
GM-CSF in human ART media, EmbryoGen® poses
a very attractive prospect for commercial value .
ORIGIO is committed to advancing IVF treatment .
The growth factor-enriched EmbryoGen® is a bold
step towards helping women who are capable of
pregnancy and healthy childbirth, but for whom
both natural conception and even standard IVF is
not quite enough . Perfectly in line with ORIGIO’s
vision and mission .
Pending regulatory approvals, EmbryoGen® is
expected to be available in most jurisdictions as
from Q3 2011 .
A Win - Win - Win - Win situation
society• Helpintertilecouples
• LesscostsperIVFbaby
OrigiO• ExecutingonORIGIO’svision
• Increasedrevenue/profit
• Increasedscientficvoice
Patient• Qualityoflife(lesscycles)
• Lesscost
clinic• Bettertreatment
• Increasedpatientintake
Number of treatment cycles needed for life birth (average)
Estimated global medical need for IVF . Number of IVF/ICSI cycles
= 90 - 240 mill
Size of world population
Percentage being women age 15-44
Women desiring pregnancy during
reproductive age span(estimate)
Share of related infertile couples (1 of 6) or women with no partner
(estimate)
Share of these for which IVF/ICSI
would be optimal treatment option
(estimate)
x x x x x
glObAl iVF – A MAssiVely unDerPenetrAteD MArKet
WHO has defined both male and female infertility
as diseases . The equation above estimates the
world-wide medical need for treatment of these
diseases to correspond to 90-240 million IVF/ICSI
cycles .
Why then is the actual annual number of treatment
cycles only some 1 .4 million per year leading to a
penetration of only some 1% of the medical need?
There are many reasons for this but on top of the list
presides the following four ‘I’s:
• Information – the fact that knowledge about
treatment options and outcome in many parts of
the world are insufficiently prevalent . Education
of patient groups is growing but is still a vast
challenge in most jurisdictions .
• Infrastructure – the infrastructure of capable IVF
clinics is in many countries insufficient to meet
demand and develop the market . New clinics are
opening at increased speed in many developing
countries but it will take a long time before the
global infrastructure is fully developed to meet
the medical need .
• Investment – IVF treatment is costly – and in
most countries around the world patients have
to pay all or the majority of the treatment costs
themselves . This severely limits current treatment
levels . Naturally, ongoing wealth creation in
developing countries as well as potential for
increased reimbursement in countries where
governments have demographic imbalances
(i .e . too low fertility rates) or for other reasons
decide to offer public funds for treating this
medical need, will over time alleviate this
obstacle . Several socio-economic calculations
6.9 billion 23%1.6 bn
75%1.2 bn
17%200 mill
15% - 30%30 - 60 mill
3-4
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Chart 6: Global medical need for IVF versus current penetration
Global medical need for IVF
(100% = 90-240 million cycles)1%
99%
Annual current penetration
(1.4 million cycles)
show that ART treatment clearly adds value to
the society, also from an economic perspective,
as the lifetime societal benefits outweigh the
costs of an ART baby – this calculation supports a
reimbursement policy from the government (see
page 37 for details) .
• Innovation – improving treatment efficacy and
gentleness via innovation will also improve
penetration, as more patients will seek the IVF
treatment option, if success rates are higher and
the overall treatment less stressful for the patient .
While ORIGIO will do its part in relation to the last
mentioned ‘I’ above (Innovation – please refer to
‘R&D Pipeline’ on page 14), the company does
anticipate other stakeholders to work gradually more
on the other ‘I’s in the years to come .
It is a fact that the global IVF market is still
underpenetrated (although the exact levels
of under-penetration can always be debated)
and will be so for many years ahead . ORIGIO is
grateful to serve a market with a clear medical
need and massive room for improvement in
terms of penetration levels and does believe
that penetration will increase going forward . The
company does not anticipate a decrease of the
underlying infertility prevalence or that any good
alternative to IVF treatment will surface in the near
future . From a penetration perspective, it is also
worth noting that just 30 years ago only around
200 IVF cycles were performed globally . It truly is
a young market in which ORIGIO is operating, and
the company feels that there is an ever-increasing
demand for fertility treatments which will support
the growth for many years to come .
Source: ORIGIO estimate based on Demographic and Health Surveys (DHS) Comparative reports No. 9: ”Infecundity,
infertility, and childlessness in developing countries” by ORC Macro and the World Health Organization (2004)
PrOFit AnD lOss 2010
Revenue for 2010 totaled DKK 308 .0 million,
corresponding to an increase of 16% in floating
currencies and 12% organic growth, on a constant
currency basis .
The gross margin was 59 .4% in 2010, which was
slightly higher than in 2009 . In 2010, EBITDA before
special items increased by 21% to DKK 43 .8 million
bringing the EBITDA-margin before special items
to 14 .2% of revenue . The increase in EBITDA before
special items is a result of higher revenue combined
with effective cost management .
Depreciation in 2010 was DKK 7 .1 million . The
increase of DKK 3 .0 million compared to 2009 is
related to depreciation of the newly constructed
media manufacturing and headquarters building in
Denmark . Amortizations of DKK 8 .9 million is DKK
2 .0 million lower than the previous year . A significant
part of the amortizations relates to the acquisitions
of the US business in 2007 and 2008, and the
majority of the intangible assets were amortized
within the first three years .
It has been decided to state a number of items
separately (special items) in the income statement
to give a more transparent view of the ORIGIO
group’s ongoing operating profit/(loss) . Special
items amounted to DKK -13 .2 million in 2010 .
Of this DKK 5 .7 million relates to ORIGIO’s old
headquarters in Jyllinge as management has
assessed the net selling price and decided to
write the book value down . Furthermore, special
items include DKK 6 .7 million as write-down of
the former automation project following the
acquisition in Q2 2010 of the new state-of-the-art
manufacturing technology for micropipettes (PMD) .
ORIGIO succeeded to establish a joint venture
in Russia in 2010, ORIGIO LLC . The associated
expenses amounted to DKK 0 .8 million and are
also included under special items . Special items in
2009 amounted to a total of DKK -5 .1 million, which
relates to the VitroLife/Merck offer process and
corporate re-branding project .
Net financial expenses increased from a net of
DKK 9 .1 million in 2009 to DKK 18 .2 million in 2010
partly due to the increased debt associated with
the new manufacturing and headquarters building .
Impairment test of investments has resultated
in a write-down of DKK 6 .8 million of ORIGIO’s
initial investments from 2005/2008 in Incept
BioSystems, Inc . The write-down is due to the fact
that ORIGIO in January 2011 purchased assets
from Incept BioSystems Inc . at a price of which the
corresponding part is substantially lower than the
acquisition cost of ORIGIO’s 10% shareholding in
Incept BioSystems, Inc . The amount is included
under financial expenses .
Corporate tax for 2010 was DKK 6 .3 million
compared to DKK 5 .5 million in 2009 .
Net loss was DKK -10 .0 million in 2010 compared
to a profit of DKK 1 .4 million in 2009 . The decrease
in net profit is due to the negative effect of special
items of DKK -13 .2 million and write-down of the
investment in Incept BioSystems Inc .
cAsh FlOW
Cash flow from operating activities
Cash flow from operating activities increased from
DKK 25 .6 million in 2009 to DKK 27 .5 million in 2010 .
Cash management is a discipline within ORIGIO that
has received increased focus during the past couple
of years . This focus will continue, as management
acknowledge the importance of cash management
supporting the continued growth of the company .
bAlAnce sheet
Assets
Total assets increased from DKK 478 .8 million at
the end of 2009 to DKK 529 .9 million at the end of
2010, predominantly due to the completion of the
building project in Denmark . Total capitalization of
the new building amounted to DKK 161 million .
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Liabilities
Total liabilities increased from DKK 300 .3 million at
the end of 2009 to DKK 337 .0 million at the end of
2010 . Net equity increased from DKK 178 .5 million
at the end of 2009 to DKK 192 .9 million at the end of
2010 generating a 2010 year-end equity ratio of 36% .
Net Interest Bearing Debt (NIBD) as at December
31, 2010 was DKK 233 .2 million . ORIGIO believes
it has sufficient capital reserves to run its daily
business as well as execute on its pipeline projects .
A clear strategy has been defined to reduce NIBD
by consistently growing EBITDA and ensuring that
EBITDA is converted into free cash flow by focused
cash management .
Tax assets
ORIGIO a/s has accumulated significant negative
taxable income . This negative income represents
an asset, as it will reduce taxes to be paid on future
earnings . The accumulated negative taxable income
to be carried forward in Denmark amounted to
DKK 74 million in 2010 . With a corporate tax rate in
Denmark of 25%, this asset represents a potential
future (not discounted) value of DKK 19 million at
current taxation rates . Of this, DKK 15 million is
recognized as an asset . ORIGIO has accumulated
negative taxable income in its subsidiaries with a
potential tax value of DKK 9 million of which only
DKK 4 million is recognized as assets .
Own shares
ORIGIO currently holds a total of 213,824 of its
own shares . In June, 2010, 25,240 shares were used in
connection with the closing of the PMD acquisition,
and in November, 2010, 35,680 shares were
transferred in connection with the deferred payment
to the sellers of Mid-Atlantic Diagnostics, Inc .
the shArehOlDers
ORIGIO aims to increase its shareholder value in
order to make the company an attractive long-
term investment . The company strives to provide
open and trustworthy information to shareholders,
other investors, analysts, the press, and other
Financial guidance and business Milestones 2011Ensuring profitable growth, while furthering ambitions to develop superior products within ART and stem cells,
continues to be the key objective for ORIGIO in 2011 . ORIGIO will strive to ensure a balance between short-
term progress in EBITDA investment in an industry leading product portfolio and R&D pipeline, and a powerful
organization capable of realizing its long-term objectives and vision .
Note: Guidance is based on a USD/DKK rate (average) of 5 .35 for 2011
Financial Milestones
• Revenue of DKK 330-340 million including organic
growth of ~7-10% (constant currencies), excluding
revenue from EmbryoGen®
• EBITDA percentage of 13-15%, excluding
EmbryoGen® launch effect and related costs
• Capital expenditures (capex) of DKK 10-15 million
• Operating cash flow above DKK 25 million
business Milestones
• Launch of EmbryoGen® in Europe, the Middle East,
Asia and South America (Q3 2011)
• Consolidate US manufacturing of disposables at
one site (Q2 2011)
• Full implementation of PMD workstations for ICSI
pipettes (Q3 2011)
• EmbryoSure: interim exploratory data (Q4 2011)
• Microfluidics: completion of bovine test (Q4 2011)
• Stem cells: partnering agreement (Q2 2011)
stakeholders and thereby give the best possible
basis for assessing the company’s activities,
potential, and risk elements . ORIGIO endeavors to
increase the proportion of institutional investors
amongst its shareholders to further increase the
robustness of its shareholder structure .
ORIGIO’s shares are listed on the Oslo Stock
Exchange . At the end of 2010, ORIGIO had more
than 29 .0 million shares outstanding . The share
price as at December 31, 2010 was NOK 15 .2,
equivalent to a 25% increase during 2010 . The
market capitalization at the end of 2010 was NOK
441 million .
In previous years, ORIGIO has offered warrant-
based incentive programs to its Executive
Management and other employees, but during
2010, no warrants were issued . Details of
outstanding warrants are provided in the notes
to the financial statements . Warrants are always
offered at exercise prices equaling the share price at
the time of allotment to ensure maximum alignment
of interests between the officers of the company
and its shareholders .
Capital structure
The ORIGIO Group aims to have an adequate
capital structure in relation to the underlying
operating requirements and R&D projects . In this
way, it is always possible for the Group to provide
sufficient and the necessary credit and guarantee
facilities to support its operations and its long-term
growth targets .
risK MAnAgeMent
Key risk elements
The ORIGIO business model involves, as any other
commercial business model, a number of risk
factors that potentially could impact its earning
power and future business life . The most relevant of
these are commented on below:
Profit and loss risk
A number of factors may impact ORIGIO’s future
profitability, among these:
• Theglobaleconomicclimate. Although the
general economic climate in the world economy
does impact ORIGIO, management is of the
opinion that ORIGIO is relatively less exposed
to general economic conditions than many
other industries . However, in markets with
limited reimbursement there will be a short-term
negative impact, as IVF treatment is expensive .
• Radicalinnovationfromcompetition. There
is always a risk that radical innovation from
competition could circumvent a company’s
products or make its segments less valuable .
However, ORIGIO does not foresee any ‘game
changing’ innovation from competition or new
entrants into human IVF in the short to mid-term
future that could render its products or services
irrelevant . Competition can always emerge with
radical innovation, but ORIGIO believes it is well-
positioned in the ART market .
• Competitivepressure. Increasing price
competition is always a risk that could impact
earnings negatively . This could occur because
the buying side increases its bargaining power
or because the selling side becomes more
competitive, e .g . some commoditization of the
products over time . ORIGIO believes that, over
time, the buying side will gain more power, as
clinics will team up in larger entities in certain
markets .
• Pricecompetition.Even without ongoing
incremental or radical innovation, product ranges
will commoditize and be exposed to increased
price competition . If the ORIGIO Group is not
successful in terms of ongoing incremental and
radical innovation, it will be more exposed to
price competition . ORIGIO’s response to this is,
at all times, to increase cost-effectiveness within
its processes while pursuing innovation .
Financial risks
Developments in ORIGIO’s results and equity
are impacted by a number of financial risks,
including foreign exchange risks, interest rate risks,
liquidity and credit risks . ORIGIO has a centralized
management of financial risks in the group’s
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finance function . The financial risks are presented
and discussed regularly at the Board Meetings .
The strategy has in general been to use the least
complicated type of hedging .
• Exchangeratefluctuations. With a substantial
turnover in non-DKK based currencies, ORIGIO’s
income faces a substantial currency risk exposure
– especially versus the USD and EUR, and to a
smaller extent versus the GBP . While ORIGIO
does not perceive the EUR as carrying a large
negative risk, there is inherent risk particularly
in the USD exposure . However, with a large
part of the cost base denominated in USD,
the net risk decreases . Rather than hedging
EBITDA or balance sheet exposure per se,
ORIGIO has decided to hedge its key covenant
versus the bank – NIBD/EBITDA – by borrowing
approximately USD 14 .2 million denominated
in USD . Apart from this, no currency hedge is
undertaken .
• Interestratefluctuations. As can be seen from
note 14, ORIGIO’s biggest single loan, the real
estate loan of DKK 100 .2 million, is interest-rate
hedged with an interest rate swap fixed at 4 .97%
for 20 years . Details regarding the reminding
interest-bearing debt can be seen in note 14 .
The ORIGIO group does not engage in speculative
transactions .
Financial risks and financial risk management are
described in further detail in notes 12, 14 and 15 .
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new Facilities in Måløv, copenhagen
ORIGIO has moved to brand new facilities in the
Copenhagen area in Måløv, Denmark . The new
production site meets all the highest quality and
clean-room standards required by regulatory
authorities, clinics and customers throughout the
world .
On July 12, ORIGIO successfully relocated the
majority of its Danish activities to Måløv . On
November 26, after four months of process
validation and qualification, the ORIGIO MediCult
Media production also relocated to the new state of
the art facilities .
We have done our utmost to make sure that the
only thing customers noticed was the new address
on media bottles . But many changes were made to
further improve our reliability in the quality and the
delivery of our media .
The entire facility has been designed to optimize
material flow and manufacturing processes while
supporting interdepartmental cooperation and
team work .
ORIGIO MediCult Media comprises mixed, sterile
filtered media aseptically filled in ISO classified
clean rooms . To guarantee the quality of the
manufactured media, the clean rooms are divided
into a number of zones classified from ISO 8
to ISO 5, according to a decreasing number of
particles . ISO 5 is the cleanest zone and this is
where filling is performed .
25
The first floor of the building is almost completely
occupied by the clean rooms’ ventilation system .
Running and maintaining a high standard of clean
rooms require very significant investments in
technical installations .
To further improve the robustness of
manufacturing, the new facilities incorporate a
number of new features:
• continuous monitoring of critical parameters,
• access to manufacturing IT systems at all
workstations,
• further automation of filling to improve
reproducibility .
Further to quality improvements, the new facilities
constitute a significant increase in capacity enabling
ORIGIO to service its customers even better .
Quality Control and Research laboratories are
designed for maximum performance and flexibility
and include isolator technology for sterility testing,
bovine research facilities and specialized facilities
for stem cell media research .
The environment also benefits from our new
facilities, as ORIGIO has installed and validated
an innovative ventilation system in its clean
room enabling a significantly reduced energy
consumption compared to traditional technol ogy .
The new facility has been designed to meet the
highest standards for aseptic manufacturing . It was
designed and constructed by NNE-Pharmaplan
contributing with its vast experience in the design
and construction of pharmaceutical manufacturing
plants throughout the world .
An acquisition of PrecisionMicroDevices (PMD)
and thereby its operational assets was completed
in June, 2010 . PMD has developed an automated
workstation for the production of quality specialty
pipettes and microtools for ART .
The new technology enables ORIGIO Humagen
Pipets to substantially increase the productivity
of the micropipette manufacturing process while
further improving ORIGIO Humagen Pipets already
leading and consistent quality .
Precision Micro Devices
OrigiO scanlab equipment
ORIGIO ScanLab Equipment a/s was established
as a joint venture and is owned 51% by ORIGIO and
49% by LaboGene ApS . The company specializes in
sales of equipment for IVF laboratories world-wide .
The joint venture has been operational as from July
1, 2010 and is located in Måløv, Denmark .
LaboGene ApS is a Danish company that specializes
in the design, development and manufacture of
laboratory and industrial equipment in the fields
of clean air & laminar flow, vacuum & cooling
and centrifugation . Prior to the joint venture
establishment, LaboGene had, for many years, been
in close co-operation with ORIGIO MidAtlantic
Devices regarding laminar flow cabinets to the
Americas IVF market .
The establishment of this joint venture signals
ORIGIO’s desire to become more involved on a
global scale in high quality IVF equipment – both in
order to be able to supply an even broader range
of high-end current products to our customers, i .e .
the IVF labs; but also because ORIGIO expects that
advanced equipment will be part of some emerging
technology concepts in IVF that hold a promise
for an increasing baby-take-home rate within the
coming decade . In preparation for this, ORIGIO
has thus decided to expand its offerings and
capabilities in this area of IVF .
With the introduction of the ORIGIO/Planer
BT37 mini-incubator and now ORIGIO ScanLab
Equipment, this is an important starting point
enabling the ORIGIO sales organization to handle
equipment service and support as well as sales
activities . Sales and technical seminars have
been held in 2010 to educate and develop the
distribution network .
ORIGIO ScanLab Equipment offers highly
specialized laminar air flow cabinets and
centrifuges .
centriFuges:
ScanFuge is a range of low speed centrifuges
of distinction from ORIGIO ScanLab
Equipment comprising ideal centrifuge and
accessories for IVF applications and protocols
from the ScanFuge range:
ScanFuge-Mini “The personal Micro –
Centrifuge of Choice”
ScanFuge Midi “Low Speed with Finesse”
ScanFuge Maxi “Quality with Class”
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lAMinAr Air FlOW cAbinets
The Fortuna IVF cabinets & Mars IVF Class 2
cabinets utilize a revolutionary new design of digital
electronically commutated fans with 110 mm deep
HEPA filters . Both cabinets can be customized to
suit the needs and preferences of embryologist, for
example by installing a microscope or a monitor .
TheMars-IVFClass2 provides a comfortable
working en vironment with maximum protection
for the operator, the embryo and the laboratory .
It is built and tested according to the EN 12469
Standard .
The Mars-IVF Class 2 provides ultimate clean air
perform ance . A unique laminator system ensures
that the down flow is uniform and balanced, thus
ensuring that embryos are well protected by
turbulent-free laminar flow, clean air, and with
improved anti vibration performance .
The Mars-IVF Class 2 is a dual HEPA filter cabinet
and has a re-circulated air flow configuration with
70% being re-circulated and 30% exhausted via an
HEPA exhaust filter . The filter is surrounded by an
area of negative pressure to ensure that no leakages
can occur around the seals . An activated charcoal
filter can also be fitted on the exhaust side of the
airflow, facilitating the removal of volatile organic
compounds from both the work chamber and the
laboratory .
TheFortuna-IVF Class1range of cabinets offers
the ultimate in sample protection, operator comfort
and optional fittings to provide the cabinet best
suited for laboratories and laboratory procedures .
Fortuna-IVF Cabinets – vertical flow laminar with
turbulent-free air flow gives a clean, sterile work
chamber environ ment with complete protection of
the procedures against microbiological intrusion or
contamination .
Low energy and noise free electronically
commutated fans and lamina tor technology ensure:
less vibration less heat transmission a turbulent-free
air flow to the chamber .
Advantages
• considerably reduced noise levels
• significantly improved air distribution
and prolonged filter life
• better balanced and uniform down flow
• superior product protection
The Norwegian Corporate Governance Board
issued on October 21, 2010, a revised Code of
Practice for Corporate Governance . The Code
of Practice outlines the corporate governance
guidelines for companies quoted on the Oslo Stock
Exchange . Adherence to the Code of Practice is
based on a ‘comply or explain’ principle whereby
companies must comply with the individual items
or explain why they have chosen an alternative
approach . The below descriptions cover every
section of the Code of Practice .
According to Norwegian company law, a company
with more than 200 employees must elect a
corporate assembly . ORIGIO, being a Danish
company, does not have a corporate assembly .
Implementation and reporting on corporate
governance
It is the responsibility of ORIGIO’s Board of
Directors to define how it wants to exercise
corporate governance . The Board of Directors has
decided that ‘the Norwegian Code of Practice for
Corporate Governance’ is to be observed with only
a few exceptions as per below .
The Board of Directors does not define the
corporate values of ORIGIO, but approves
them after such values have been defined by
management and staff . Guidelines regarding
corporate social responsibility is defined in
accordance with the Board of Directors (for more
details, please see ORIGIO’s stated values on page
38 and its corporate social responsibility on page
37) .
The Board of Directors and the management
have ensured that employees (either directly or
through employee representatives) have direct
access to the Board of Directors, should they find
that management acts illegally or violates ethical
standards .
Business
ORIGIO’s business activities clause in its Articles of
Association reads: “The Objects of the Company
are to develop, produce and sell products for use
within the area of human reproduction and cell
cultures and other related business at the Board of
Directors’ discretion” . The Articles of Association
can be found on ORIGIO’s website at www .ORIGIO .
com .
Equity and dividends
The Board of Directors considers the consolidated
equity to be satisfactory . ORIGIO’s need for
financial strength is considered at any given time
in light of its objectives, strategy and risk profile .
ORIGIO focuses on optimizing shareholder
value and believes that for the coming years, this
will mean that the company should not pay out
dividends, but rather re-invest the proceeds from
its operations into future growth . Once its improved
‘pipeline’ products have been launched successfully,
the company believes dividend payments may be
relevant .
A mandate can be given by the Annual General
Meeting to The Board of Directors to increase
ORIGIO’s share capital for the use at the Board of
Directors’ discretion, hereunder for the purpose
of acquiring other companies or parts thereof .
The Board of Directors believes that a mandate
with a wider scope than what the Code of Practice
recommends will provide the necessary flexibility to
act to the best interest of the shareholders and the
company . The mandate is limited in time to the date
of the next Annual General Meeting .
Equal treatment of shareholders and
transactions with close associates
ORIGIO’s share capital consists of shares subject
to public trading and without voting limitations
or special rights . All shares are equal . Neither the
Board of Directors nor Management is aware of
the existence of any shareholders’ agreement
containing pre-emption rights or restrictions in
voting rights .
corporate governance
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ORIGIO has defined in-house guidelines for trading
in the ORIGIO shares . The rules are in compliance
with applicable legislation and regulations for
primary insiders and insider trading . The in-house
guidelines require, among other things, that primary
insiders must obtain internal clearance from the
company’s Chief Executive Officer prior to trading
in the company’s shares .
The Board of Directors’ mandate to acquire treasury
shares is based on the assumption that purchases
will take place on the market . Acquired shares
may be disposed on the market as payment for
acquisitions .
In the Board of Directors’ opinion there have
been no transactions between the company and
a shareholder, director, member of the executive
management or a party closely related to such
individuals that can be described as significant .
The Board of Directors has appointed the law firm
Plesner as ORIGIO’ key legal council . Plesner is
represented by the Vice Chairman of the Board of
Directors, Mr . Jens Zilstorff . Fees paid to Plesner
in this capacity can be summarized to (amount in
thousands): 2008: DKK 2,135, 2009: DKK 3,300 (of
which DKK 1,363 relates to the take-over process
and branding project), and 2010: DKK 1,785 .
The Board of Directors should always be notified
in the event that a board member or executive
personnel possesses a material interest in a
transaction or other matter entered into by the
company or legally binding on the company . The
Board of Directors will in such event evaluate
the need for a valuation to be obtained from an
independent third party .
Freely Negotiable Shares
ORIGIO’s share capital consists of shares subject
to public trading and without voting limitations or
special rights .
General Meetings
The Annual General Meeting (AGM) ensures the
shareholders’ participation in ORIGIO’s governing
body . The AGM will be held before May 1 each
year . The 2011 AGM is scheduled for April 28 . The
relevant documents are available on ORIGIO’s
website at least 21 days prior to the date of the
General Meeting . The documents will contain the
information necessary for the shareholders to take
a position on agenda items . The final registration
date for attending the AGM is seven days prior to
the date of the General Meeting .
Registration to attend the AGM can be made
by mail, telefax, or electronically via VPS
Investortjenester or www .ORIGIO .com .
The Board of Directors tries to make it possible
for as many shareholders as possible to attend the
General Meeting . Shareholders, who cannot attend
the General Meeting themselves, may choose to
authorize a proxy, which clearly states that the proxy
can be used on each individual item for discussion .
The shareholders may also choose to vote in writing,
including electronic means of communication,
during a specified period in advance of the General
Meeting .
At least one representative of the Board of Directors
participates in the General Meetings . Management
is represented by the Chief Executive Officer and
the Chief Financial Officer . In 2010, 42 .97% of the
aggregate share capital was represented .
The agenda is prepared by the Board of Directors,
and the main items on the agenda are specified in
§8 of the Articles of Association . The first item is the
selection of the chairman of the General Meeting .
The Chief Executive Officer will review the status
of ORIGIO . The minutes of the AGM are made
available on ORIGIO’s website .
ORIGIO does not fully comply with ‘the Norwegian
Code of Practice for Corporate Governance’ in
relation to the presence of Auditor, and the entire
Board of Directors does not usually attend the
AGM . The items on the agenda for the AGM do not
require this . The Chairman or the Vice Chairman of
the Board of Directors is always present to respond
to questions .
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Nomination Committee
A Nomination Committee was appointed at
the Extraordinary General Meeting on June 10,
2009 . According to the Articles of Association,
the Nomination Committee is tasked with
recommending the General Meeting candidates
for the company’s Board of Directors as well as the
board members’ fees . The Nomination Committee
shall comprise up to four members, the majority
of whom must be shareholders of the company or
representatives of shareholders of the company,
and they shall be independent of the company’s
Board of Directors and management . The
Chairman of the Nomination Committee must be
a shareholder of the company or a representative
of a shareholder of the company . In case of a tied
vote, the vote of the Chairman of the Nomination
Committee shall count as two votes .
The Nomination Committee currently consists
of the following four members: Janne Flessum
(Chairman, representing Orkla), Kristian Falnes
(representing Skagen Vekst), Nils Vogt (representing
Miami AS), and Jaime Grego-Mayor (representing
Leti Pharma S .L .) .
The Chairman of the Board of Directors shall –
without having any voting right – be convened to
at least one meeting in the Nomination Committee
prior to it submitting its final recommendation to
the General Meeting .
Corporate assembly and Board of Directors:
composition and independence
It is essential that the Board of Directors as a whole
is competent to deal with the board’s work and the
main business activities of ORIGIO .
According to the Articles of Association, four to
six members of ORIGIO’s Board of Directors shall
be external members . At present, the Board of
Directors consists of five external members and
two employee representatives: Flemming Pedersen
(Chairman), Jens Zilstorff (Vice Chairman), Jaime
Grego-Mayor, Flemming Juul Jensen, Jørgen Drejer,
Kirsten Bakbøl, and Bente Jensen . The two latter
have been elected by the employees as employee
representatives . The Chief Executive Officer is not a
member of the Board of Directors .
The board members are elected for one year at a
time, except for the employee representatives who
according to Danish law are elected for a 4-year
term . Expertise of the elected board members
and information on records of attendance at board
meetings as well as individual shareholdings in
ORIGIO is listed on page 41 .
All shareholder elected members are considered
autonomous and independent of ORIGIO’s
management . The same applies in connection with
important business associates . Laboratories LETI
S .L ., represented by Jaime Grego-Mayor, owned
8 .58% at year-end 2010 . The Board of Directors
favors a representation of a long-term shareholder .
The work of the Board of Directors
The Board of Directors has an annual plan for its
work and decides on all matters of substantial
importance pertaining to the ORIGIO group’s
activities . Such matters include decisions on
strategic priorities, approval of periodic plans and
budgets, as well as decisions on major investments
or divestitures . The Board of Directors performs
an annual self-assessment in which it evaluates its
performance and expertise .
In matters of material character in which the
Chairman of the Board of Directors is, or has
been, personally involved, the Board of Directors’
consideration of such matters will be chaired by the
Vice Chairman .
There is a clear division of responsibilities
between the Board of Directors and the executive
management . The Chairman is responsible for
the board’s work being conducted in an efficient,
correct manner . The Chief Executive Officer is
responsible for the operational management of
the ORIGIO group, including the responsibility
for ORIGIO being organized, operated and
further developed in compliance with applicable
legislation, the Articles of Association, and
31
decisions made by the Board of Directors and the
shareholders at the Annual General Meeting .
A key responsibility of the Board of Directors is to
appoint the Chief Executive Officer and participate
in the appointment of other executive management
members, as well as make recommendations to the
General Meeting for the appointment of auditors .
The Board of Directors schedules regular board
meetings each year . There are usually five fixed
board meetings per year, and additional meetings
are held whenever needed, some face to face, and
some as teleconferences . In 2010, there were six
face-to-face meetings, three conference calls and
one board seminar .
All board members receive regular information
about ORIGIO’s operational and financial progress,
and the management seeks to mail the information
to the Board of Directors in sufficient time for its
preparation . The ORIGIO business plan, strategy
and risk management are routinely reviewed
and evaluated by the Board of Directors . Board
members are free to consult the executives of
ORIGIO, if needed .
The Chief Executive Officer usually proposes the
agenda for each board meeting . The final agenda
is completed in consultation between the Chief
Executive Officer and the Chairmanship . Besides
the board members, board meetings are attended
by the executive management, except for non-
Danish resident members, who participate in at
least one board meeting per year or by conference
calls when relevant .
The Danish Public Companies Act stipulates that
large companies must appoint an Audit Committee .
The Audit Committee is charged with the overview
of the financial reporting and disclosure as well as
regulatory compliance and risk management .
The Audit Committee consists of two members:
Flemming Pedersen (Chairman) and Jens Zilstorff .
The auditor participates in at least one annual
meeting with the the Audit Committee .
Risk management and internal control
The executive management consists of seven
individuals, see pages 44-45 . ORIGIO’s executive
management has monthly conferences calls
supplemented by face-to-face meetings on an ad
hoc basis . Subgroups of the executive management
meet on a weekly basis in order to review various
operational issues .
Management provides monthly performance
reports to be reviewed by the board members . The
quarterly financial statements are also reviewed at
board meetings . The Board of Directors undertakes
an annual review in early February . The independent
auditor attends this meeting .
Risk management and internal controls are typically
agenda items for at least one board meeting per
year (for further information on risk management
and internal control, please see page 36) .
Remuneration of the Board of Directors
According to the Articles of Association,
the Nomination Committee is tasked with
recommending the board members’ fees . The
members’ fees are not linked to performance,
warrant programs or the like . Only one board
member, Jens Zilstorff (Vice Chairman), works for
ORIGIO in another capacity, as he is the key legal
counsel of ORIGIO . Fees paid to Plesner in this
capacity are summarized on page 31 .
Remuneration of the Executive Management
Company guidelines for remuneration of the
executive management can be described as follows:
The executive management shall at any point in
time obtain a fully competitive compensation
package reflecting each member’s experience,
capabilities and contributions to the company .
The package shall consist of fixed and variable
components – the latter typically comprising
an annual bonus with an absolute limit, linked
to a realized EBITDA-level as well as the ad hoc
allocation of warrants . Warrants are always allocated
at the market price at the time of the allocation .
The Code of Practice stipulates that the
annual report should provide disclosure of the
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
remuneration of all members of the company’s
executive management . For privacy reasons,
ORIGIO’s Board of Directors has decided not to
abide by this and only disclose the remuneration of
the Chief Executive Officer in the annual report .
Information and communication
ORIGIO normally presents provisional annual
accounts in late February . The annual report is
available on the company’s website at least 21 days
prior to the Annual General Meeting . In addition to
this, ORIGIO publishes its accounts on a quarterly
basis . The presentations of the annual and quarterly
reports are posted on ORIGIO’s website after they
have been published at the Oslo Stock Exchange .
It is considered essential to keep owners and
investors informed about ORIGIO’s progress and
economic and financial status . Open investor
presentations are conducted in relation to ORIGIO’s
annual and quarterly reports . The Chief Executive
Officer reviews results and comments on markets
and prospects for the future . Other members
of the executive management, the Director of
Investor Relations, and the Chairman of the Board
of Directors participate in these presentations from
time to time .
All shareholders are treated equally as a matter of
principle, thus the same information is released to
the entire equity market at the same time whenever
information is deemed share price sensitive .
The financial calendar for 2011 including an
overview of the financial reporting dates, the date
for the Annual General Meeting, etc . is published
on ORIGIO’s website .
Takeovers
There are no defense mechanisms against takeover
bids in ORIGIO’s Articles of Association, nor
have other measures been implemented to limit
opportunities to acquire shares in ORIGIO .
In the event that a bid is made for the company,
the Board of Directors will arrange for a valuation
by an independent expert and make a statement
containing a well-founded evaluation of the bid,
including a recommendation to shareholders
whether or not to accept the offer . It will be
explained, if any specific board members have
excluded themselves from the Board of Directors’
statement . Furthermore, the Board of Directors
has a responsibility to ensure that the company’s
business activities are not disrupted unnecessarily,
that the shareholders are treated equally, and that
the shareholders are given sufficient information
and time to form a view of the offer .
Auditor
The independent auditor is always present during
the Board of Directors’ discussions of the annual
financial statements . At such meeting, the financial
statements and any issues of particular concern
to the auditor, including any points of contention
between the auditor and the management, are
discussed .
At least once a year, a meeting will be held between
the auditor and the Board of Directors without the
presence of the Chief Executive Officer or other
members of the executive management .
In the long-form Audit Report, the independent
auditor reports to the Board of Directors on,
among other things, significant weaknesses in
the procedures and intern controls . Furthermore,
management letters with recommendations are
issued by the independent auditor .
Details of the fee paid for audit work and for other
specific auditor assignments are specified in the
financial statement, note 18 .
33
Michael Henman, General Manager: “After 23 years working as an embryologist in an
IVF laboratory, I saw it as a challenge to develop
ORIGIO’s position in the Australian and New Zealand
ART market. I have been impressed by the way
ORIGIO has strategically expanded the business,
and today has the strongest, full-scale product
portfolio within embryo culture media, pipettes,
devices and equipment for ART labs.”
ORIGIO AUSTRALASIA, representing the MediCult
Media, Humagen Pipets and MidAtlantic Devices
branded products, is now up and running in the
important markets of Australia and New Zealand .
The three brands were previously represented
by MediCult Australasia for culture media and a
local Australian distributor for the Humagen and
MidAtlantic brands . ORIGIO AUSTRALASIA began
its operations in the third quarter of 2010 and is
concentrating on building the foundations for a
sustainable business in this important market .
The Australian and New Zealand markets have
a combined annual number of fresh ART cycles
approaching 40,000 and more than 62,000 fresh and
frozen cycles combined . Although the population
is relatively low when compared to some of the
larger world markets, the uptake of ART services by
the population of reproductive age women (15-45
years), particularly in the larger Australian market, is
very high, being 12 .6 per 1,000 women .
Population growth and favorable demographics
mean that the market is likely to return to its long-
term growth trajectory .
OrigiO AustrAlAsiA Pty. ltd.
Western Australia5 clinics
South Australia3 clinics
Victoria 9 clinics
Tasmania2 clinics
New Zealand7 clinics
Queensland16 clinics
New South Walesincl. Australian Capital Territory20 clinics
Northern Territory1 clinic
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HUMAGENPIPETS
The main features of ORIGIO’s internal control and risk
management systems in connection with its financial
reporting are as follows:
Control environment
The Board of Directors has established an auditing
committee . The Audit Committee assists the Board
of Directors in supervising the presentation of the
financial statement and the efficiency of the internal
control and risk management systems regarding the
preparation of the financial statement .
The management has the responsibility for sustaining
an effiencient control environment and an internal
control and risk management system in connection
with the presentation of the financial statement .
Managers at various levels are responsible within their
respective areas .
The Board of Directors approves ORIGIO’s conduct of
business including the currency and interest policies .
Other policies and procedures are approved by the
Executive Management . The daily supervision of
compliance is the responsibility of all managers .
The organisational structure and the internal
guidelines constitute the control environment together
with the international Reporting Standards and the
Danish Financial Statements Act .
Risk assessment
The risk and control overview has been updated for
2010 . The risk assessment in relation to the financial
statement is performed to identify items posing
potential risks . Based on the risk assessment, it is
ORIGIO’s aim to describe and evaluate all business
units’ existing procedures and controls to minimise
or eliminate the potiential risks . Generally, it is the
evaluation that the group has reasonable procedures
and controls .
Control activities
The purpose of the control activities is to prevent,
reveal and correct any errors or irregularities . These
activities are integrated into ORIGIO’s accounting
and reporting procedures and include, among
other things, procedures for producing the financial
statement, procedures for approval and attestation,
reconciliation, analyses and general IT controls .
ORIGIO has introduced internal control standards, i .e .
standards for checks in connection with the financial
reporting from subsidiaries . The purpose of these
standards is to establish and maintain a uniform level
of internal checks and controls in connection with the
financial reporting . A central function is responsible
for controlling the financial reporting from the
subsidiaries .
Information and communication
ORIGIO wil continue to improve its information and
communication systems to ensure the correctness and
completeness of its financial reporting . The reporting
instructions are updated as necessary,
including budgeting and month-end accounting
procedures, and are reviewed at least once a year .
Monitoring
At least once a year, updated risk and control analysies
are presented to the Audit Committee including a
control overview and evaluation of its effectiveness .
The independent auditor reports to the Board of
Directors in the long-form Audit Report, among
others, about significant weaknesses in the procedures
and internal controls . Furthermore, management
letters with recommendations are issued .
Comprehensive monthly data are reported from
all group companies . The data are analysed and
questioned making it possible to identify and
correct any errors and irregularities in the financial
reporting at an early stage to ensure correctness and
completeness .
ORIGIO is in the process of implementing the same
ERP platform – Navision – in all its companies . In 2010,
the Navision ERP system was implemented in ORIGIO
LLC in Russia, and ORIGIO Scanlab Equipment a/s
had already implemented Navision entering the joint
venture with ORIGIO . Using the same platform will
ensure more standardized reporting and transparency .
control and risk Management systems
35
ORIGIO aims to actively contribute with a positive
impact on society through our activities, customer,
colleagues and communities . The company’s core
values of being aspirational,reliableandcaring
form the basis for its decision making, both in terms
of being a social responsible cooperation as well as
being a sound business .
The ORIGIO Group has a vision to ‘make the #1
dream of every infertile couple come true’ . This
is highly meaningful to us and could per se be
perceived as ORIGIO’s core quest in relation to
Corporate Social Responsibility . In addition to
this very significant endeavor, several national
economic analyses have proven that investing in
reimbursement of human IVF can be a healthy
investment for a government . Chart 8 shows
that e .g . the Danish government after 50 years
has received a 7-16 fold return (dependent of
the mother’s age at birth) in present value on an
“investment” of an IVF-conceived citizen .
ORIGIO considers it essential to supply high quality
products that are safe for the patient, ensure that
clinicians obtain consistent and optimal results, and
at the same time guarantee that the products are
manufactured in a sustainable manner . ORIGIO has
received CE markings in EU, clearance by the Food
and Drug Administration (FDA (USA)) as well as
Therapeutic Goods Administration (TGA (Australia))
certifications for a large range of its marketed
IVF products . This provides reassurance that the
products comply with the relevant regulatory
authorities’ health and safety legislation . ORIGIO
is pursuing CE markings of the full MediCult Media
portfolio and in 2010, 92% of the product sales were
obtained from products with a CE markings .
0
300.000
600.000
900.000
1.200.000
1.500.000
DKK NPV of net benefit to society 50 years after birth
Cost of IVF-baby
>40 years old mother<40 years old mother
Source: Dr. Mark Connolly, Global market Access Solutions
Chart 8: Cost and net present value of benefit to society per IVF-baby after 50 years
(Danish example)
corporate social responsibility
With our focus on the future, we are committed to improve IVF through innovation, to consistently provide high quality products and services, to attract and retain the top talent, to take on new challenges, and to anticipate and embrace change .
You can depend on us to provide the best products, tailor-made services and timely, relevant information . Issues are dealt with openly, fearlessly and fairly, every time .
How we handle our business from the supply of vital products, to our interactions with colleagues, customers and shareholders, and ultimately to the lives our products help create .
Aspiration
Reliability
Care
company Values
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37
sAFe AnD heAlthy WOrK enVirOnMent
ORIGIO believes that each employee contributes
directly to ORIGIO’s growth and success . It is the
objective of the company to create a place of
employment with a good and challenging working
climate where employees jointly produce results
which are beneficial to the key stakeholders .
Policies
ORIGIO wants to retain its employees and ensure
that they are well-trained for their jobs and that the
individual skills are developed through continuous
education, in-job-challenges and changes . At the
same time, ORIGIO is committed to creating a safe
and healthy work environment and continuously
improve the physical and psychological work
environment . It is our objective to provide
equal employment opportunities for all persons
regardless of race, color, gender, age, religion,
marital status, national origin, disability, or other
protected categories .
This policy applies to all terms and conditions
of employment, including hiring, promotion,
termination, layoff, recall, transfers, leaves of
absence, benefits, and training .
Actions
Upon joining ORIGIO, the employee participates
in an orientation program during which he/
she receives an introduction to the company, its
mission, vision, values and work expectations . At the
same time, each employee receives an individual
training program regarding his/her specific, new
job function as well as associated work- and safety
procedures .
ORIGIO regularly conducts working climate
surveys among all employees world-wide, in which
employees respond anonymously to a series
of questions . Based on the results, actions are
established to improve the work environment .
Action plans are followed up at appropriate
intervals .
The company has safety representatives, who are
responsible for creating a safe and healthy work
environment . The safety representatives make
suggestions for reducing risks, implementing
preventive actions, and, in that way, ensure that
employee safety is incorporated in the daily routines .
Results
The focused program on building a better
workplace has also resulted in a significant decrease
in the illness rate . The illness rate in Denmark has
for example decreased from 4 .2% in 2008 to 3 .4% in
2010 .
AnticOrruPtiOn
ORIGIO is a global company present, either directly
or through distributors, in a large number of
countries with many different cultures . ORIGIO is in
favor of competition on fair terms and it is important
to ORIGIO to act responsibly . The objective of
the company is therefore always to comply with
legislation and rules in the countries in which it
operates .
Policies
ORIGIO does not tolerate or support any form of
corruption, including but not limited to extortion
and bribery .
Actions
Efforts will be directed to make a specific
policy covering this area and ensure that all
employees know the policy and are aware that
the consequences of non-compliance could have
implications for continued employment . This
obviously applies especially for employees who
have interaction with suppliers, customers or public
authorities .
Results
ORIGIO is not aware of any involvement in anti-
corruption issues .
ORIGIO will continue to work on Corporate Social
Responsibility matters during 2011 .
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
39
As at December 31, 2010, the share capital
consisted of 28,995,246 shares with a nominal value
of DKK 5 . All shares are subject to public trading
and without voting limitation or special rights .
Shareholders have the ultimate authority over the
company, and exercise their right to make decisions
regarding ORIGIO at general meetings, either in
person or by proxy . Resolutions can be passed by
a simple majority, while resolutions to amend the
articles are subject to adoption by at least two
thirds of votes cast and capital represented unless
stricter requirements are imposed by the Danish
company law . The annual general meeting approves
the annual report and any amendments to the
articles .
On February 22, 2011, the share capital consisted of
29,115,695 shares with a nominal value of DKK 5 . The
company’s 20 largest registered shareholders were
as follows:
shareholder information
name shareholding number Of shares Ownership%
Orkla Asa 3,110,100 10 .68%
Leti Pharma S .L . 2,488,000 8 .55%
Skagen Vekst 1,550,000 5 .32%
MP Pensjon 950,000 3 .26%
Storebrand Vekst 769,029 2 .64%
Bio Holding As v/Jens Holst 751,419 2 .58%
Ormestad Tellef 680,272 2 .34%
Danske Bank A/S (Nominee Account) 661,719 2 .27%
Miami As 600,000 2 .06%
Zwilgmeyer Peter Kenneth 500,000 1 .72%
Nordea Bank (Nominee Account) 454,416 1 .56%
Ml Pierce Fenner (Nominee Account) 409,824 1 .41%
SEB Enskilda Asa Egenhandelskonto 400,000 1 .37%
Holst Jens Ulrik 385,445 1 .32%
Hovde Reidar 365,500 1 .26%
Kvam Jan Arvid 325,500 1 .12%
Skjerven Ketil Einar 310,100 1 .07%
Joff Eiendom A/S 309,527 1 .06%
Noer Eiendom A/S 308,500 1 .06%
Debra Bryant 303,701 1 .04%
Other 13,482,643 46 .31%
Total 29,115,695 100 .00%
board of Directors
Flemming Pedersen (Chairman)
Diploma in Business Economics and MSc . in Business
Administration and Auditing from the Copenhagen
Business School . Born 1965 . Joined the Board of
Directors in 2010 . Chief Financial Officer, Executive
Vice President at ALK Abelló A/S (leading allergy
vaccine company) . Possesses an extensive experience
from several board and executive positions involving
general management, acquisitions and finance . Member
of the Board of Directors of MBIT Consulting A/S . Lives
in Copenhagen, Denmark . Owns 0 shares and 0 warrants .
Participated in all board meetings in 2010 after his
election to the Board of Directors in April 2010 .
Jens Zilstorff (Vice Chairman)
Master of Law . Born 1955 . Elected to the Board of
Directors in 1990 . Partner at Plesner Advokatfirma (Law
Firm) since 1989 . Possesses strong legal expertise in an
international and Scandinavian arena and has an in-depth
knowledge of ORIGIO . Member of the Board of Directors
of Baxter A/S, Solar Fonden af 1978, H .C . Petersen
& Co .’s Eftf . A/S, Consort A/S, Consort Immobilien
A/S, Geograf A/S, Info-Connect A/S, RC-Holding A/S,
Jobindex A/S, Bruun Rasmussen Kunstauktioner A/S, Key
Maritime Rederi A/S, MEIVIC ApS, Skanacid A/S, SEW-
Eurodrive A/S, Inge og Skjold Burnes Fond, The Danish
European High Yield Fund F .M .B .A ., Aktieselskabet af
20 . november 2003, Consort KHB A/S, Consort Isefjord
A/S, Colexon Renewable Energy A/S, CHA Furniture A/S,
Colexon Solar Invest A/S, HTI-Import og Handel A/S, ITH
Træindustri A/S . Lives in Copenhagen, Denmark . Owns
50,000 shares and 0 warrants . Participated in all board
meetings in 2010 .
Jaime Grego-Mayor
B .A . Liberal Arts from Brown University, General
Management Program IESE Business School . Born 1964 .
Elected to the Board of Directors in 2007 . Possesses a
strong international expertise within pharma, medtech
and business development areas . Specific experience
within strategy, innovation and corporate finance . Vice
Chairman of the Board of Directors of Laboratorios
LETI, S .L .U . (leading Spanish allergy vaccine company) .
Chairman of Audit and Election Committees of
Laboratorios LETI, S .L .U . Chairman of the Board of
Directors and Executive Committee in Calzados Royalty,
S .A . General Manager of Laboratorios LETI, S .L .U . 1993-
2005 . Lives in Barcelona, Spain . Represents Leti Pharma,
S .L ., which owns 2,488,000 ORIGIO shares . Participated in
all board meetings in 2010, except two .
Flemming Juul Jensen
M .Sc . Pharm . Born 1949 . Elected to the board of Directors
in 2000 . Former Executive Vice President, Sales &
Marketing and member of the management at Lundbeck
A/S (a leading Danish pharmaceutical company) . Has a
broad expertise in international sales and marketing of
pharmaceutical products and subsidiary management .
Member of the Board of Directors of STT-Condigi
Holding AB . Lives in Buckinghamshire, UK . Owns 110,500
shares and 0 warrants . Participated in all board meetings
in 2010 .
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
41
Kirsten Bakbøl
Born 1955 . Joined the Board of Directors in 2004 as
employee representative . Joined ORIGIO in 1999 as
Assistant, Purchasing department . Has an in-depth
knowledge of ORIGIO business and its organization .
Owns 10,200 shares and 0 warrants . Participated in
all board meetings in 2010, except one .
Jørgen Drejer
Ph .D . Neurobiology . Born 1955 . Elected to the
Board of Directors in 1998 . Executive Vice President
and member of the executive management of
NeuroSearch A/S (a leading Danish biotech company) .
Possesses a strong and broad competence within
pharmaceutical research and development as well
as biotechnology in general . Member of the Board
of Directors of NsGene A/S, Atonomics A/S, Delta
and the Danish Council for Independent Research .
Member of the Academy of Technical Sciences . Lives
in Copenhagen, Denmark . Owns 50,000 shares and 0
warrants . Participated in all board meetings in 2010 .
Bente Jensen
Diploma in International Trade . Born 1950 . Joined
the Board of Directors in 2003 as employee
representative . Joined ORIGIO in 2000 as Customer
Service Representative . Has an in-depth knowledge
of ORIGIO business and its organization . Owns
5,000 shares and 0 warrants . Participated in all board
meetings in 2010 .
executive Management
Jesper Funding Andersen, CEO – ORIGIO a/s
Master of Business Economics from Copenhagen Business
School . Born 1966 . Appointed Chief Executive Officer of
ORIGIO in November 2005 . Previous experience includes
Management Consultant in McKinsey & Co . Inc . (a global
strategy consulting company), Group Vice President at
Maersk Medical A/S (a leading Danish medical device
company), Senior Vice President for International Business
at GN Resound A/S (a large Danish hearing aid company) .
Member of the Board of Directors of MissionPharma
A/S (a supplier of generic pharmaceuticals to third world
countries) and Chairman of the Board of Directors of
Ellipse A/S (a Danish supplier of laser and light based
medical equipment) . Owns 88,046 shares and 665,000
warrants .
Susanne Hauschildt Bendz, CSO, EVP Innovation &
Corporate Marketing – ORIGIO a/s
Ph .D . in biology (immunology) from University of
Copenhagen . Born 1958 . Appointed Executive Vice
President and Chief Scientific Officer in August 2004 .
Previous experience includes Research Assistant, and
Clinical Research Director at ALK Abelló A/S (a leading
Danish allergy vaccine company) and later in Coloplast
A/S in Wound Care Management Group and Corporate
responsible for clinical development (the largest Danish
medical device company) . Owns 75,000 shares and
135,000 warrants .
Søren Østergaard, EVP International Sales – ORIGIO a/s
Bachelor of Science in Medical engineering from
Engineering Academy of Aarhus, Denmark . Born 1959 .
Appointed Executive Vice President of in December
2007 . Previous experience includes more than 20 years of
international sales and marketing experience in the medical
technology sector, latest as Vice President and General
Manager in GN Resound A/S (a large Danish hearing aid
company) and as Director of Sales in Europe at Medicotest
(a Danish manufacturer of electrodes for medical
applications) . Owns 0 shares and 55,000 warrants .
Debra Bryant, EVP – ORIGIO a/s, CEO – ORIGIO, Inc.
Ph .D . Microbiology, Wake Forest University, 1980 . Born
1955 . NIH Postdoctoral Fellow in Molecular Biology, 1980-
1983 . Research Scientist, Oncogen (owned by Bristol
Myers) 1983-1984 . Research Scientist for Humagen Pipets
Inc . 1984-1990 . Chief Executive Officer at Humagen 1990 .
2007, appointed Executive Vice President of ORIGIO a/s
and Chief Executive Officer of ORIGIO, Inc . Owns 303,701
shares and 55,000 pre-assigned warrants .
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HUMAGENPIPETS
Terry Fortino, EVP Americas Sales – ORIGIO a/s,
CEO – ORIGIO, Inc.
B .S . Marketing, Michigan State University, 1970 . Born
1947 . Diagnostics Sales, Wampole Laboratories 1970-
1973 . Laboratory Equipment & Diagnostics Sales,
Rupp & Bowman Co . 1973-1984 . Eastern U .S . Division
Manager, Rupp & Bowman Co . 1984-1988 . Director
of Sales, Biogen 1988-1989 . Founder & President,
MidAtlantic Diagnostics 1989-2008 . Executive Vice
President, ORIGIO a/s and CEO, ORIGIO, Inc . 2008 .
Owns 85,936 shares and 0 warrants .
Allan Toft Jacobsen, EVP Manufacturing – ORIGIO a/s
M .Sc . in Chemical Engineering from the Technical
University of Denmark, specialized in microbiology and
molecular biology . Born 1971 . Joined ORIGIO in 2005 .
Appointed Executive Vice President Manufacturing in
December 2007 . Previous experience includes Manager
for Manufacturing and QC at ORIGIO, various other QC,
manufacturing and production positions at Colgate
Palmolive in Denmark and France . Owns 10,000 shares
and 85,000 warrants .
Jeannett Hvidkjær, CFO – ORIGIO a/s
Bachelor in Business Economics and Accounting
from Copenhagen Business School . Born 1966 .
Joined ORIGIO in 2005 as Chief Accountant .
Appointed Chief Financial Officer in August 2009 .
12 years of experience as a public accountant at
Ernst & Young and 5 years as Chief Accountant at
a national Danish newspaper . Owns 0 shares and
45,000 warrants .
43
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
OrigiO’s recent Journey – a corporate transformation
ORIGIO (MediCult Media) was founded in Norway
in 1987 by Doctors Kjell Bertheussen and Nicolai
Holst together with Jens U . Holst after Doctor
Bertheussen, professor of biochemistry at Norway’s
Tromsø University, pioneered the novel serum-free
Synthetic Serum Replacement (SSR™) principle
for media production . In 1988, ORIGIO entered
the fertility market with media applications for IVF
treatments . ORIGIO developed subsequently a full
range of media products covering all processes
within IVF . The company was listed on the Oslo
Stock Exchange in 1996, and its first two sales
subsidiaries were established in the UK and France
during the same period .
Geographical dimension– in terms of ORIGIO’s global
foot-print with direct sales
presence
Product range dimension- in terms of current product range
offered to ART clinics
Innovative dimension- in terms of ORIGIO’s exposure
to emerging and radical new
technologies each with a potentially
substantial impact on the relevant
‘baby-take-home-rate’
In 2005, ORIGIO embarked on a transformative journey along three dimensions
Key milestones on that journey are depicted on the opposite
page – including, the acquisitions of Humagen Pipets and
MidAtlantic Devices . So far, the transformation has created the
largest, focused player on the global ART scene, with a broad
product offering and a leading pipeline of new technologies .
2.
1.
3.
45
Expansion of geographical presence (via own subsidiaries)
•2005 Italy
•2005 Germany
•2005 Australia
•2006 Spain
Current product range•2007 HumagenPipets acquired (quality
specialty pipettes and microtools for IVF) from founder Debra Bryant, Ph .D .
•2008 MidAtlanticDevices acquired (innovative devices and ‘total supplier’ to IVF labs) from founder Terry Fortino
•2009 Exclusive global rights obtained to the Planer/BT37 mini-incubator
•2010 Joint venture, ORIGIOScanLabEquipment, established with a leading manufacturer of equipment for IVF labs
Emerging/innovative technologies•2005 Global exclusive rights obtained to the
patented concept of adding Iloprost to a fertility media
•2005 Global exclusive rights obtained to the patented concept of adding IGF-II to a fertility media
•2005 Initial investment undertaken by Humagen Pipets in IVF microfluidics via InceptBioSystems
•2007 The world’s largest IVF study on culture media enhanced by GM-CSF undertaken by ORIGIO
•2008 Positive interim results published by ORIGIO regarding the GM-CSF study
•2009 Global exclusive rights acquired to the patented embryo selection technology from Novocellus Ltd . (EmbryoSure)
•2010 Positive headline results for the GM-CSF study published by ORIGIO announcing the product launch of EmbryoGen® for a commercially attractive subgroup of IVF patients
•2006 USA
• 2008 Benelux
•2008 China
•2010 Russia
2.
3.
1.
Key MilestOnes On OrigiO’s trAnsFOrMAtiOnAl JOurney
Oocyte retrieval Sperm preparation
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
Product OfferingselecteD PrODucts
Fertilization
IVF
Embryo
cryopreservation
Embryo transfer
Microtools
ICSI
Oocyte retrieval Sperm preparation
Sperm immobilization
In vitro
maturation
Denudation
Oocyte cryopreservation
More than 100,000 babies per year are born using ORIGIO products
Embryo biopsy / PGD
Blastocyst transfer
Blastocyst
cryopreservation
ART equipmentEmbryo culture
Financial statement
47
(DKK ’000) Group Parent
Note 2010 2009 2008 2010 2009 2008
Revenue 2 307,988 265,683 203,235 95,238 88,706 89,047
Costs of sales 3 (125,051) (108,664) (75,171) (37,766) (33,279) (31,016)
Gross contribution 182,937 157,019 128,064 57,472 55,427 58,031
Sales and Marketing expenses 3 (85,043) (71,590) (60,049) (22,168) (21,413) (24,300)
Administrative expenses 3 (34,348) (31,236) (24,129) (17,818) (19,357) (17,094)
Research and Development expenses 3 (19,725) (17,997) (18,891) (17,477) (16,224) (18,115)
EBITDA before special items 43,821 36,196 24,995 9 (1,567) (1,478)
Depreciation 3 (7,137) (4,182) (3,152) (5,148) (2,404) (1,939)
EBITA before special items 36,684 32,014 21,843 (5,139) (3,971) (3,417)
Amortization 3 (8,934) (10,928) (11,499) (1,339) (331) (2,793)
EBIT before special items 27,750 21,086 10,344 (6,478) (4,302) (6,210)
Special items 4 (13,232) (5,140) 0 (6,551) (5,140) 0
EBIT 14,518 15,946 10,344 (13,029) (9,442) (6,210)
Financial income 5 161 967 2,882 15,822 7,988 13,116
Financial expenses 5 (18,339) (10,045) (7,491) (7,580) (7,946) (5,596)
Profit/loss before income tax (3,660) 6,868 5,735 (4,787) (9,400) 1,310
Income tax 6 (6,335) (5,476) 7,773 0 0 9,800
Profit/loss for the year (9,995) 1,392 13,508 (4,787) (9,400) 11,110
Distribution of profit/loss
Minority interests 582 243 584 – – –
Transferred to retained earnings (10,577) 1,149 12,924 (4,787) (9,400) 11,110
Profit/loss for the year (9,995) 1,392 13,508 (4,787) (9,400) 11,110
Earnings per share
Earnings per share (EPS) 7 (0 .37) 0 .04 0 .47
Earnings per share diluted (EPS diluted) 7 (0 .37) 0 .04 0 .47
statement of comprehensive income
(DKK ’000) Group Parent
Note 2010 2009 2008 2010 2009 2008
Profit/loss for the year (9,995) 1,392 13,508 (4,787) (9,400) 11,110
Other comprehensive income:
Interest swap (3,624) (44) (10,087) (3,624) (44) (10,087)
Exchange rate adjustment
foreign subsidiaries 4,202 (1,513) 917 – – –
Other comprehensive income 578 (1,557) (9,170) (3,624) (44) (10,087)
Comprehensive income (9,417) (165) 4,338 (8,411) (9,444) 1,023
income statement
(DKK ’000) Group Parent
Note 2010 2009 2010 2009
Goodwill 139,450 131,560 0 0
Licenses and rights 1,829 2,017 1,619 1,787
Development projects in progress 9,635 6,166 9,635 6,166
Other intangible assets 37,279 21,178 21,818 141
Intangible assets 8 188,193 160,921 33,072 8,094
Properties 158,824 30,341 145,315 17,356
Plant and machinery 14,590 4,861 9,333 2,156
Assets under construction 2,636 86,637 125 81,872
Other fixtures and fittings,
tools and equipment 17,462 7,420 15,646 5,387
Property, plant and equipment 9 193,512 129,259 170,419 106,771
Shares in subsidiaries 10 – – 25,960 25,499
Loan to subsidiaries 10 – – 181,574 183,365
Other investments 10 561 6,747 0 0
Deferred tax asset 6 18,977 18,777 15,000 15,000
Financial non-current assets 19,538 25,524 222,534 223,864
Total non-current assets 401,243 315,704 426,025 338,729
Inventories 11 39,622 30,833 11,844 10,147
Trade receivables 12 53,408 42,630 6,695 6,701
Receivables from group enterprises – – 23,673 14,367
Other receivables 2,409 7,644 169 5,620
Prepayments 2,254 2,996 849 1,923
Receivables, etc. 58,071 53,270 31,386 28,611
Securities 437 63,437 71 63,437
Cash and cash equivalents 18,560 15,551 3,783 6,674
Assets classified as held for sale 13 11,995 0 11,995 0
Total current assets 128,685 163,091 59,079 108,869
Total assets 529,928 478,795 485,104 447,598
statement of Financial Position as at December 31 – Assets
MIDATL ANTICDE VICES
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HUMAGENPIPETS
49
(DKK ’000) Group Parent
Note 2010 2009 2010 2009
Share capital 144,976 141,964 144,976 141,964
Translation reserve (1,383) (5,585) 106 106
Retained earnings 47,642 41,131 40,596 28,295
Equity attributable to ORIGIO a/s 191,235 177,510 185,678 170,365
Minority interest in equity 1,696 985 - -
Total equity 192,931 178,495 185,678 170,365
Credit institutions 14 203,147 196,013 202,321 195,693
Other non-current liabilities 529 8,890 0 0
Deferred tax 6 465 465 0 0
Non-current liabilities 204,141 205,368 202,321 195,693
Short-term portion of non-current liabilities 14 26,832 25,916 16,636 15,352
Bank borrowings 20,554 4,502 17,527 3,088
Trade payables 27,097 25,119 9,996 16,859
Payables to group enterprises - - 10,322 19,476
Income taxes 3,252 1,047 0 0
Other payables 43,726 38,348 31,229 26,765
Other current liabilities 121,461 94,932 85,710 81,540
Liabilities associated with assets
held for sale 13 11,395 0 11,395 0
Total current liabilities 132,856 94,932 97,105 81,540
Total liabilities 336,997 300,300 299,426 277,233
Total equity and liabilities 529,928 478,795 485,104 447,598
Financial instruments 15
Contingent assets and liabilities,
security etc . 16
Staff and remuneration 17
Fee to the independent auditor 18
Related parties and transactions 19
statement of Financial Position as at December 31 – equity and liabilities
(DKK ’000) Group Parent
Note 2010 2009 2010 2009
Profit/loss for the year (9,995) 1,392 (4,787) (9,400)
Depreciation and other adjustments 20 51,406 31,691 4,189 4,751
Changes in net working capital 21 (4,290) (473) (4,670) 4,044
Cash flow from operations before
financial items and tax 37,121 32,610 (5,268) (605)
Financial income 3,780 598 16,301 1,448
Financial expenses (9,080) (3,514) (4,527) (5,444)
Tax (4,363) (4,134) 0 0
Cash flow from operating activities 27,458 25,560 6,506 (4,601)
Investment in intangible assets (5,265) (6,249) (4,963) (4,154)
Investment in property, plant
and equipment (100,167) (49,435) (94,766) (45,308)
Investment in securities (net) 55,495 75,673 55,861 77,826
Investment in group companies – – (461) (4,569)
Loans to group companies – – 1,791 (9,818)
Loans from group companies – – (8,615) 16,846
Interest on loans to group companies – – 7,682 7,293
Investment in associated companies 0 (560) 0 0
Investment deferred payment – – 0 1,091
Cash flow from investment activities (49,937) 19,429 (43,472) 39,207
Cash flow before financing activities (22,479) 44,989 (36,966) 34,606
Loan and credit institutions repayment (16,246) (15,019) (16,246) (14,768)
Deferred payment acquisitions (11,503) (10,292) 0 0
Short-term employee loan 0 1,619 0 1,619
Capital paid by minority 424 173 – –
New loans established 36,376 0 35,857 0
Capital increase including
warrants exercised 3,055 0 3,055 0
Interest paid on acquisition loans (3,052) (2,363) (3,052) (2,363)
Cash flow from financing activities 9,054 (25,882) 19,614 (15,512)
Change in cash and cash equivalents (13,425) 19,107 (17,352) 19,094
Cash and cash equivalents at January 1 11,049 (8,048) 3,586 (15,508)
Exchange rate adjustments 382 (10) (8) 0
Cash and cash equivalents
as at December 31 22 (1,994) 11,049 (13,774) 3,586
statement of cash Flow
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
51
statement of changes in equity
(DKK ’000) Group
Sharecapital Translationreserve Retainedearnings Minorityinterest Total
Equity as at January 1, 2009 141,964 (4,072) 37,464 569 175,925
Comprehensive income – (1,513) 1,105 243 (165)
Warrants compensation 2,058 2,058
Disposals of own shares 504 504Capital increases 173 173Equity as at December 31, 2009 141,964 (5,585) 41,131 985 178,495
Equity as at January 1, 2010 141,964 (5,585) 41,131 985 178,495
Comprehensive income – 4,202 (14,201) 582 (9,417)
Warrants compensation 738 738
Disposals of own shares 823 823Dividend paid to minority (295) (295)Capital increases 3,012 19,151 424 22,587Equity as at December 31, 2010 144,976 (1,383) 47,642 1,696 192,931
(DKK ’000) Parent
Sharecapital Translationreserve Retainedearnings Total
Equity as at January 1, 2009 141,964 106 35,177 177,247
Comprehensive income – – (9,444) (9,444)
Warrant compensation – – 2,058 2,058
Disposals of own shares – – 504 504
Equity as at December 31, 2009 141,964 106 28,295 170,365
Equity as at January 1, 2010 141,964 106 28,295 170,365
Comprehensive income – – (8,411) (8,411)
Warrant compensation – – 738 738
Disposals of own shares – – 823 823
Capital increase 3,012 – 19,151 22,163
Equity as at December 31, 2010 144,976 106 40,596 185,678
(DKK ‘000) Group
Sharecapital(nominal) 2010 2009 2008 2007 2006 Share capital as at January 1, 2010 141,964 141,964 138,442 113,217 100,124Equity issues 3,012 – 3,522 25,000 10,000Warrants exercised – – – 225 3,093Share capital as at December 31, 2010 144,976 141,964 141,964 138,442 113,217
Total number of shares 28,995,246 28,392,897 28,392,897 27,688,424 22,643,424
Numberof Costsof Nominal %ofshare
Ownshares shares shares value capital Own shares as at January 1, 2010 274,744 3,178 1,374 1 .0%Purchase – – – 0%Sale 60,920 705 305 0 .3%Own shares as at December 31, 2010 213,824 2,473 1,069 0.7%
MIDATL ANTICDE VICES
MEDICULTMEDIA
HUMAGENPIPETS
53
Accounting Policies
The Financial Statement for ORIGIO a/s for 2010 has been prepared in accordance with the International Financial Reporting Standards (IFRS) as approved adopted by the EU, the Oslo Stock Exchange’s requirements for financial reporting by listed companies, and Danish disclosure requirements for listed companies .
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below . These policies have been consistently applied to all years presented, except for the implementation of IFRS3 (revised in 2009) – please refer to page 62 for a description of the impact on the reporting .
In the Income Statement, a number of items are classified separately in order to give a more transparent view of the ORIGIO Group’s operating profit/(loss) . The comparable figures and key figures for 2009 have consequently been presented accordingly .
The Consolidated Financial StatementsThe consolidated financial statement comprises the parent company, ORIGIO a/s, and subsidiaries in which ORIGIO a/s directly or indirectly owns more than 50% of the voting rights or in other way has control .
The group financial statement is prepared on the basis of the financial statements of the individual companies, compiled according to uniform accounting principles . Eliminations are made for dividends from subsidiaries, all revenue and expenditure items, internal profits and internal-company balances as well as inter-company shares .
Minority interests’ share of the result is included in the net results for the group and the share of the group’s equity is included as a separate item of the group equity
Acquisition and Divestment of CompaniesNewly acquired or newly established companies are recognized in the consolidated financial statement from the date of acquisition . Divested or terminated (closed down) companies are recognized in the consolidated income statement to the date of divestment . Comparative figures are not adjusted for newly acquired, divested or terminated companies .
On acquisition of companies, the purchase method is applied, according to which the newly acquired companies’ identified assets and liabilities are measured at fair value on the date of acquisition . Any excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recognized as goodwill . Any deficiency in the cost of acquisition below the fair value of the identifiable net assets acquired (i .e . discount on acquisition) is credited to profit and loss in the year of acquisition . The interest of minority shareholders is stated at the minority proportion of the fair value of the assets and liabilities recognized . Subsequently, any losses applicable to the minority interest in excess of the minority interests are allocated against the interests of the parent company .
Foreign CurrencyTransactions in foreign currency are stated at the exchange rate on the transaction date . Monetary items in foreign currency are converted at the exchange rates on the balance sheet date .
Financial statements of foreign subsidiaries are converted using the exchange rates on the balance sheet date for balance sheet items and average exchange rate for items of the profit and loss account . All exchange rate adjustments are included in the profit and loss account under financial items, apart from the exchange rate differences arising on:
• Conversion of equity in subsidiaries at the beginning of the year at the exchange rates on the balance sheet date• Conversion of the profit for the year from average exchange rates to exchange rates on the balance sheet date• Conversion of long-term loans that constitute an addition to the holding of shares in subsidiaries• Conversion of the forward hedging of investments in subsidiaries• Conversion of capital interests in associated companies
These exchange rate differences are recognized as other comprehensive income .
Derivative Financial InstrumentsOn initial recognition, derivative financial instruments are recognized at cost in the balance sheet and subsequently measured at fair value . Positive and negative fair values of derivative financial instruments are recognized under other receivables or other payables, respectively .
note 1. Accounting Policies and estimates
Changes in the fair value of a derivative financial instrument that meets the criteria for hedging the fair value of a recognized asset or liability are recognized in the income statement with the changes in the value of the hedged asset or liability .
Changes in the fair value of a derivative financial instrument that meets the criteria for hedging the fair value of a future asset or liability are recognized in other comprehensive income . Income and expenses related to such hedging transactions are transferred from other comprehensive income at the realization of the hedged asset or liability and recognized under the same item as the hedged asset or liability .
Changes in the fair value of derivative financial instruments that do not meet the criteria for treatment as hedging instruments are recognized in the income statement .
Warrant ProgramsEquity based warrant programs have been established and are offered to a number of employees, the Executive Board and members of the Board of Directors . Warrant programs were offered in 2005, 2007 and 2008 .
The value of services received as consideration for granted warrants is measured at the fair value of the warrant . The fair value is measured at the allotment date and recognized in the income statement under staff costs over the period in which the final right to the warrants is obtained . The contra entry to this is recognized under equity .
In connection with the initial recognition of the warrants, an estimate is made of the number of warrants that the employees are expected to obtain rights to . Subsequently, an adjustment is made for changes in the estimate of the number of shares that the employees have obtained rights to so that the total recognition is based on the actual number of shares that the employees have obtained rights to .
The fair value of the allotted warrants is estimated by application of the Black and Scholes pricing model .
Segment InformationThe information is based on business segments which the management uses to report on and control the group internally . The segment information complies with the group’s accounting policies, risks and internal controls . Geographical segmentation is provided for revenue and non-current assets of the major individual countries or areas . the incOMe stAteMent
In the income statement, classifications are made according to function . This means that all costs have been transferred to the function to which they relate: costs of sales, sales and marketing, administrative costs or development expenses .
RevenueRevenue related to sales of goods for resale and finished goods is recognized in the income statement provided that delivery and risk transition has taken place before the year-end . Revenue is recognized less VAT and discounts .
Cost of SalesCost of sales comprises raw materials and consumables, trading goods, QC costs and other costs including premises and salaries, which have been incurred in order to obtain the net revenue for the year .
Sales and Marketing ExpensesSales and marketing expenses include expenses for sales and marketing personnel, advertising and exhibition expenses, distribution expenses and premises .
Administrative ExpensesAdministrative expenses comprise the expenses related to the management and administration of the group, including expenses related to the administrative staff, management, office premises as well as office expenses .
Research and Development ExpensesResearch and development expenses comprise regulatory expenses, wages and salaries, clinical and non-clinical testing, external scientific consultancy as well as other expenses, which directly or indirectly can be attributed to the company’s research and development projects, product improvements and development projects which do not fulfil the criteria for capitalization . In addition, the amortization and impairment of capitalized development projects are recognized .
All expenses concerning research activities are recognized as expenses incurred .
MIDATL ANTICDE VICES
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HUMAGENPIPETS
55
Special ItemsSpecial items comprise significant income and expenses of an exceptional nature relative to ORIGIO’s operating activities . Significant amounts such as costs of restructuring processes, costs related to investment in or divestment of activities/companies and amounts of a one-off nature such as costs related to take-over offers, corporate branding process and impairment write-down are included in special items .
FinancialsFinancial income and financial expenses include interest, exchange gains and losses on securities, debt and transactions denominated in foreign currencies, amortization of financial assets, etc .
Tax on Results for the YearCalculated tax, comprising tax on the taxable income for the year and the year’s change in deferred tax, is recognized in the income statement with the part that relates to profit and in other comprehensive income with the part that relates to items recognized there .
The Danish corporation tax is allocated to the jointly taxed Danish companies according to their taxable incomes (full division with refund regarding tax losses) . Jointly taxed companies are included in the Danish tax prepayment scheme .
Deferred tax is calculated on all temporary differences between accounting and taxable values . Deferred tax is calculated with the actual tax rate . Deferred tax arising on tax-deductible temporary differences (tax assets) is included in the balance sheet only if there is reasonable certainty that the tax assets can be off set by the company against future taxable income .
stAteMent OF the FinAnciAl POsitiOn
Intangible AssetsLicenses and patent investigating costs related to the license agreements are entered at cost less accumulated amortization . Amortization is made on a straight-line basis over term of the agreement .
Other intangible fixed assets are stated at cost less accumulated amortisation . Amortization of these assets is made according to a declining method over the expected future lifetime of the assets .
The expected lifetimes are:• Licenses: 10 years• Customer relations: 9 years• Technology: 15 years
Goodwill arisen from acquisition of companies and activities is measured at cost price less any impairment as a result of permanent decreases in the earning capacity of the company in question .
Development ExpensesDevelopment projects that are clearly defined and identifiable and where sufficient resources are allocated to complete the project and a potential future market can be proven and where the company intends to produce, market or use the project, are recognized as intangible assets where the expenses of the project can be calculated reliably and there is sufficient certainty that the future earnings or the net selling price can cover the production, selling, administration and development expenses . ORIGIO defines the above criteria for capitalization of development expenses as the point in time when projects have successfully passed the interim data phase in the human efficacy trial . Other development expenses are recognized in the income statement as incurred .
Recognized development expenses are measured at cost less accumulated amortization and impairment losses . The cost comprises salaries and other costs attributable to the company’s development activities .
Upon completion of the development activity, development projects are amortized according to the straight-line method over the estimated useful life as from the point in time when the asset is ready for use . The basis of amortization is reduced by impairment losses, if any .
Properties, Plant and EquipmentProperties, plant and equipment are measured at cost less depreciation on a straight-line basis according to the physical and financial lifetime of the assets . Cost comprises acquisition price and costs directly related to acquisition until the time when the company starts using the asset .
The expected lifetimes are:• Building and building parts: 20-30 years• Plant and machinery: 15-30 years• Other fixtures and fittings, tools and equipment: 3-10 years
The carrying amount of land is not depreciated . The depreciation basis is determined taking into account the scrap value of the asset less any impairment losses . The scrap value is revalued on a regular basis .
Profit and losses arising from disposals are recognized in the income statement under depreciation .
LeasesLeases related to property, plant and equipment where the company assumes all material risks and rewards of ownership (financial leases), are recognized as assets . On initial recognition, the assets are valued at computed cost equal to fair value . Assets held under finance leases are depreciated as other similar tangible assets .
Lease payments under agreements considered as operating leases and other rental agreements are recognized in the income statement over the term of the agreements . The company’s total obligation related to operating leases and rental agreements is stated under contingent assets and liabilities, etc .
Other InvestmentsThe shares in other investments are measured at fair value less any impairment as a result of permanent decreases in the earning capacity of the company in question . Received dividends are included in the financial income .
Investments in Subsidiaries and Associated Companies by the Parent CompanyThe parent company’s shares in subsidiaries and associated companies are measured at cost less write-downs as a result of permanent decreases in the earning capacity of the company in question . For transactions with companies within the group, inter-company profits are eliminated . Received dividends are included in the income statement of the parent company .
Impairment of Non-current AssetsThe carrying amount of intangible assets, property, plant and equipment as well as non-current asset investments is reviewed for impairment when events or changed conditions indicate that the carrying amount may not be recoverable . If there is such an indication, an impairment test is made . An impairment loss is calculated based on the higher of the net present value and the net selling price . In order to assess the impairment, the assets are grouped on the smallest identifiable group of assets that generates cash flows (cash flow generating units) . Impairments are recognized in the income statement under the same items as the related depreciation and amortization .
InventoriesInventories are valued at the lower of historical cost (compiled by the FIFO principle) and net realisation value . Cost of goods for resale as well as raw materials and consumables comprises the purchase costs .
Costs of finished goods and work in progress comprises the cost of raw materials, consumables, direct payroll, manufacturing costs and indirect production costs . Indirect production costs comprise indirect materials and payroll costs as well as maintenance of and depreciation on machinery, plant and equipment used in the production, plant administration and management . Borrowing costs are not capitalized .
The net realizable value of stocks is measured as the selling price less costs related to the completion of the products and costs related to the execution of sales . Furthermore, net realizable value is determined with regard to marketability, obsolescence and development in expected selling price .
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ReceivablesReceivables are measured after write-offs for individual risks .
Securities – BondsBonds are measured at market value . Both realized and unrealized value adjustments are recognized in the income statement as financial items .
PrepaymentsPrepayments recognized under assets comprise expenses incurred related to the following financial year .
Assets held for saleAssets are classified as assets held for sale when activities to carry out such sale have been initiated and it is probable that the assets will be disposed of within 12 months . They are stated at the lower of carrying amount and fair value less selling costs . Assets held for sale are not depreciated .
EquityOwn shares acquired by the parent company or subsidiaries are recognized directly under equity . Correspondingly, sales fees and dividends are included directly under equity .
Income Tax Payable and Deferred TaxCurrent tax liabilities and current tax receivables are measured as tax calculated on the taxable income for the year adjusted for tax on the previous years’ taxable income and taxes paid on account/prepaid . Deferred tax is measured in respect of temporary differences between the carrying amount and the tax base of assets and liabilities . No deferred tax is recognized for goodwill unless amortization of goodwill for tax purposes is allowed . In cases, e .g . in respect of shares, in which the statement of the tax base can be made according to alternative taxation rules, deferred tax is measured on the basis of the planned use of the asset or settlement of the liability, respectively .
Deferred tax assets, including the tax value of tax loss carried forward, are measured at the expected realizable value, either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction .
Adjustment of deferred tax is made as regards elimination of unrealized inter-company profits and losses .
Deferred tax is measured on the basis of the tax rules and tax rates in force in the respective countries at the balance sheet date when the deferred tax is expected to crystallize as current tax . Any changes in deferred tax as a consequence of amendments to tax rates are recognized in the income statement .
Financial LiabilitiesDebt to banks and other credit institutions is recognized initially at the proceeds received net of transaction expenses incurred . In subsequent periods, financial liabilities other than provisions are measured at amortized cost corresponding to the capitalized value using the effective interest method; consequently, the difference between the proceeds and the nominal value is recognized in the income statement over the maturity period of the loan .
The capitalized residual lease commitment on finance leases is recognized under finance leases .
Other liabilities, comprising trade payables and other payables, are measured at amortized cost corresponding to nominal value .
Cash Flow StatementThe cash flow statement shows the cash flow for the year from operating, investment and financing activities, changes in cash and bank borrowings, and cash and bank borrowing position at the beginning and end of the year .
Cash Flow from Operating ActivitiesCash flow from operating activities is presented as the share of the results for the year adjusted for non-cash operating items, changes in the net working capital and income tax paid .
Cash Flow from Investment ActivitiesCash flow from investment activities comprises payments in connection with the purchase and sale of intangible assets, property, plant and equipment and financial fixed assets .
Cash Flow from Financing ActivitiesCash flow from financing activities comprises changes in size or structure of the share capital and related costs, contracting of loans, instalments on interest-bearing debt, payment of dividends to shareholders and paid interest on debt related to acquisitions .
Cash and Cash EquivalentsCash and cash equivalents comprise cash and cash equivalents and bank borrowing with a term not exceeding three months and which can be traded into cash without any difficulties and which are only exposed slightly to changes in value .
Key FiguresKey figures are presented in accordance with the following definitions:
Gross contribution margin, %: Gross contribution divided by revenue .EBITDA before special items margin, %: EBITDA before special items divided by revenue .EBITDA margin, %: EBITDA divided by revenue .EBIT before special items margin, %: EBIT before special items divided by revenue . EBIT margin, %: EBIT divided by revenue .Earnings Per Share: Profit/loss for the year divided by the average number of shares excluding treasury shares .Earnings Per Share after dilution: Profit/loss for the year divided by the diluted average number of shares excluding treasury shares .Cash Flow Per Share: Cash flow from operating activities divided by average number of shares excluding treasury shares .Equity ratio, %: The equity divided by the total amount of assets as per balance sheet day .Return on equity: Profit/loss for the year divided by average equity .
Accounting estimates and Assessments
In the statement of the carrying amounts of certain asset and liability items, estimates are required on how future events will affect the carrying amounts of these assets and liabilities at the balance sheet date . Estimates material to the financial reporting are, among others, made in the statement of depreciation/amortization, write-downs and contingent assets and liabilities .
The estimates used are based on assumptions assessed by management . However, estimates are inherently uncertain . The assumptions can be incomplete or inaccurate and unexpected events or circumstances might occur . Furthermore, the enterprise is subject to risks and uncertainties that might result in deviations in actual results compared to estimates . As part of the accounting policies applied by the group and besides from estimates, management assesses situations which might influence amounts, recognized in the financial statements materially . Such assessments comprise among others determination of revenue recognition as well as recognition of development costs and share-based transactions .
ORIGIO considers a variety of factors in determining the appropriate method of revenue recognition under these arrangements, such as the degree to which elements of the contract can be separated, their value to ORIGIO, the earnings process associated with each element and the degree of further work required to be completed by ORIGIO under the agreement .
Generally, ORIGIO measures goods or services rendered at the fair value of goods or services received . For the warrants granted to employees, ORIGIO measures their value by reference to the fair value on the date of allocation of equity securities to be issued upon exercise, taking into account the terms and conditions upon which the warrants were granted, including trading conditions and market parameters such as volatility of the shares and vesting aspects .
Recoverable Amount of GoodwillThe assessment of whether goodwill is impaired requires a determination of the value in use of the cash-generating units to which the goodwill amounts have been allocated . The determination of the value in use requires estimates of the expected future cash flows of each cash generating unit and a reasonable discount rate .
Property, Plant and EquipmentThe carrying amount of the tangible assets is reviewed annually in order to determine whether it is aligned with reasonable assumptions about underlying values to the company .
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Assets held for salesThe disposal of the previous facilities in Jyllinge, Denmark is expected to be realized to an amount lower than the depreciated cost price . The carrying amount has thus been written down in 2010, although the assessment of the sales price is subject to uncertainty .
A sale is expected within the next twelve months and the facilities in Jyllinge, Denmark have thus been reclassified to asset held for sale .
TaxManagement is required to make an estimate of future taxable income related to the recognition of deferred tax assets and liabilities . Management recognizes deferred tax assets when it is probable that they can be set off against future taxable income .
impact of new international Financial reporting standards
ORIGIO has adopted all new or amended and revised International Financial Reporting standards (IFRS/IAS) and interpretations (IFRICs) endorsed by the EU effective for the accounting period beginning on January 1, 2010 .
Accounting policies have been changed regarding acquisition costs in connection with “Business Combinations” which are expensed from January 1, 2010 as a consequence of the revised IFRS 3 . Expensed acquisition costs regarding business combinations amount to DKK 0 .
During 2010, the International Accounting Standard Board (IASB) issued a number of IFRS, amendments and interpretations (IFRICs) of which some have been endorsed by the EU as per December 31, 2010 and are mandatory for the Groups’ accounting period beginning on or after January 1, 2011 and some are not yet adopted by the EU . The Company has assessed the amendments and interpretations and determined that none of them will have a material impact on the consolidated financial statements going forward .
note 2. segment information
(DKK ’000) Group
2010 2009
Business segments Dispos- Equip- Fertility Stem Total Dispos- Equip- Fertility Stem Total 2010 ables ment products Cells ables ment products Cells
External revenue 260,967 47,021 307,988 0 307,988 237,690 27,993 265,683 0 265,683
Totalrevenue 260,967 47,021 307,988 0 307,988 237,690 27,993 265,683 0 265,683
Research and
Development expenses 0 0 (16,687) (3,038) (19,725) 0 0 (14,181) (3,816) (17,997)
EBITDA
before special items 0 0 46,859 (3,038) 43,821 0 0 40,012 (3,816) 36,196
EBIT
befores special items 0 0 30,788 (3,038) 27,750 0 0 24,902 (3,816) 21,086
Assets 0 0 529,756 172 529,928 0 0 478,600 195 478,795
Liabilities 0 0 336,511 486 336,997 0 0 299,622 678 300,300
Investments in
intangible assets 0 0 26,619 0 26,619 0 0 6,611 0 6,611
Property, plant
and equipment 0 0 91,721 0 91,721 0 0 57,114 0 57,114
Geographical split 2010 Denmark Europe Americas Rest of World Total
Revenue 4,998 151,371 87,148 64,471 307,988
Assets 255,626 77,929 186,583 9,790 529,928
Investments in:
intangible assets 26,316 303 0 0 26,619
Property, plant and equipment 85,996 140 5,175 410 91,721
Geographical split 2009 Denmark Europe Americas Rest of World Total
Revenue 3,915 138,609 78,625 44,534 265,683
Assets 249,866 51,188 177,741 0 478,795
Investments in:
intangible assets 4,154 2,457 0 0 6,611
Property, plant and equipment 45,308 8,141 3,665 0 57,114
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(DKK ’000) Group Parent
2010 2009 2010 2009
Costs of sales 140,596 110,394 46,346 34,446
Sales and Marketing expenses 87,177 74,423 22,590 23,629
Administrative expenses 44,135 46,276 20,031 23,202
Research and Development expenses 21,562 18,644 19,300 16,871
Incl . depreciation, amortization and special items
note 3. expenses classified by Function
note 4. special items(DKK ’000) Group Parent
2010 2009 2010 2009
Property, Jyllinge (former headquarters) 5,706 0 5,706 0
Former US automation project 6,681 0
Establishment of ORIGIO LLC (Russia) 845 0 845 0
VitroLife/Merck process 0 2,979 0 2,979
Branding process 0 2,161 0 2,161
Total special items 13,232 5,140 6,551 5,140
Special items is charged as:
Cost af sales 1,987 0 500 0
Sales and Marketing 0 2,161 0 2,161
Administrative 1,161 2,979 845 2,979
Depreciation and write-down 10,084 0 5,206 0
note 6. corporate taxDKK (‘000) Group Parent
2010 2009 2010 2009
Actual corporate tax 6,335 6,529 0 0
Changed in deferred tax 0 (1,053) 0 0
Total corporate tax 6,335 5,476 0 0
Net result before tax (3,660) 6,868 (4,787) (9,400)
Computed 25% tax on result (915) 1,717 (1,196) (2,350)
Tax effect of:
Adjustments to previous years (929) (1,112) 0 0
Effect of differences in tax rate 1,048 2,138 - -
Tax exempt income 0 0 673 0
Non-deductible costs, incl . warrants 3,422 752 233 449
Deferred tax on entries in equity 874 (317) 0 (12)
Reversal of write-downs 0 0 0 0
Deferred tax asset not recognized 2,853 2,298 1,636 1,913
Total corporate tax 6,335 5,476 0 0
Effective tax rate 25% 25% 25% 25%
Components of the deferred tax
are as follows:
Non-current assets (18,337) (16,896) (15,471) (14,011)
Current assets (1,223) (1,252) (29) (137)
Tax deductible losses (8,232) (6,831) (3,017) (2,733)
Total (27,792) (24,979) (18,517) (16,881)
Deferred tax asset recognized 18,977 18,777 15,000 15,000
Tax asset not recognized as asset 9,280 6,667 3,517 1,881
Deferred tax liability (465) (465) 0 0
As earnings are expected to increase in future years, it has been decided to maintain a partly capitalized deferred tax asset,
corresponding to the expected tax on the parent company’s estimated earnings within a foreseeable future .
note 5. Financial items (DKK ’000) Group Parent
2010 2009 2010 2009
Financial income:
Interest income 161 852 118 695
Exchange gains 0 115 5,331 0
Interest income from subsidiaries 0 0 7,682 7,293
Dividend from subsidiaries 0 0 2,691 0
Total 161 967 15,822 7,988
Financial expenses:
Interest expenses 11,350 7,892 7,580 4,230
Fair value adjustments of securities 0 2,153 0 2,153
Impairment of investments 6,766 0 0 0
Exchange losses 223 0 0 1,563
Total 18,339 10,045 7,580 7,946
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(DKK’000) Group Parent
2010 Goodwill Licenses & Development Other Licenses & Development Other rights projects intangible rights projects intangible in progress assets in progress assets
Cost as at January 1 131,560 6,280 6,166 47,268 5,983 6,166 148
Additions from business combinations 0 0 0 0 0 0 0
Additions internal cost 0 0 1,575 0 0 1,575 0
Additions in the year 191 1,894 22,959 191 1,894 22,656
Exchange rate adjustments 7,890 0 0 3,808 0 0 0
Cost as at December 31 139,450 6,471 9,635 74,035 6,174 9,635 22,804
Amortization and impairment
as at January 1 0 4,263 0 26,090 4,196 0 6
Amortization 0 379 0 8,555 359 0 980
Impairment 0 0 0 0 0 0 0
Exchange rate adjustments 0 0 0 2,111 0 0 0
Amortizations and
impairment as at December 31 0 4,642 0 36,756 4,555 0 986
Carrying amount as at December 31 139,450 1,829 9,635 37,279 1,619 9,635 21,818
Remaining life time, years – 1-10 – 8-15 1-10 – 8-15
Amortization and impairment is
charged as:
Cost of sales – 0 – 13 0 – 13
Sales and Marketing – 20 – 164 0 – 164
Administrative – 0 – 7,627 0 – 52
Research and Development – 359 – 751 359 – 751
note 8. intangible Assets
note 7. earnings per share(DKK ’000)
2010 2009 2008
Profit for the year (9,995) 1,392 13,508
Minority interests (582) (243) (584)
Profit for the year to equity
holders of the parent (10,577) 1,149 12,924
Average number of shares 28,741,736 28,392,897 28,060,229
Average number of own shares 255,164 317,462 325,000
Average number of shares
excluding own shares 28,486,572 28,075,435 27,735,229
Average dilution effect of warrants 25,629 0 0
Diluted average number of shares 28,537,645 28,075,435 27,735,229
Earnings per share (EPS), DKK (0 .37) 0 .04 0 .47
Earnings per share, adjusted* 0 .33 0 .22 0 .47
Earnings per share diluted (EPS), DKK (0.37) 0.04 0.47
*Adjusted for special items and impairment of investments .
note 8. intangible Assets
An impairment test regarding goodwill is performed based on the discounted values of future cash flows for each unit . Future cash flows are based on the budget for 2011 and projections for nine years . Important parameters are sales, EBIT, working capital, tangible assets and growth assumptions after the indicated 10-year period . Budgets are based on specific commercial assessments of the business areas while projections that go beyond 2011 are based on general parameters .
A major part of the goodwill is related to the business units in the US . The parameters in the projection for the period 2012-2020 are sales growth of 5-8%, and corresponding EBIT growth . Parameters in projection for the periode 2012-2020 for goodwill related to other business units are sales growth of 5-10%, and corresponding EBIT growth . Applying a decrease of 50% in expected growth rate from 2012 to 2020 will cause a limited need for impairment of the goodwill . The rate of discount is 7 .3% . Alternatively, applying an increase of 1 percentage point on the rate of discount will not cause a need for impairment of goodwill . The tax rate is assumed to be between 30-40% . The test did not result in any impairment .
(DKK’000) Group Parent
2009 Goodwill Licenses & Development Other Licenses & Development Other rights projects intangible rights projects intangible in progress assets in progress assets
Cost as at January 1 132,925 5,890 946 47,256 5,593 946 0
Additions internal cost 0 0 1,537 0 0 1,537 0
Additions in the year 426 390 3,683 575 390 3,683 148
Exchange rate adjustments (1,791) 0 0 (563) 0 0 0
Cost as at December 31 131,560 6,280 6,166 47,268 5,983 6,166 148
Amortization and impairment
as at January 1 0 3,918 0 15,842 3,871 0 0
Amortization 0 345 0 10,583 325 0 6
Impairment 0 0 0 0 0 0 0
Exchange rate adjustments 0 0 0 (335) 0 0 0
Amortizations and
impairment as at December 31 0 4,263 0 26,090 4,196 0 6
Carrying amount as at December 31 131,560 2,017 6,166 21,178 1,787 6,166 141
Amortization and impairment is
charged as:
Cost of sales – 0 – 3 0 – 3
Sales and Marketing – 20 – 3 0 – 3
Administrative – 0 – 10,577 0 – 0
Research and Development – 325 – 0 325 – 0
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note 9. Properties, Plant and equipment (DKK ’000) Group Parent
2010 Properties Plant and Assets Other Properties Plant and Assets Other equipment under operating equipment under operating construction assets construction assets
Cost as at January 1 39,712 11,197 86,637 16,289 25,445 7,241 81,872 12,484
Additions in the year 15 462 85,432 5,812 0 426 80,309 5,261
Reclassifications 147,276 10,552 (164,933) 7,105 147,276 7,763 (162,056) 7,017
Disposals in the year (25,445) (3,922) 0 (4,970) (25,445) (3,922) 0 (4,505)
Exchange rate adjustments 1,163 315 378 38 0 0 0 0
Cost as at December 31 162,721 18,604 7,514 24,274 147,276 11,508 125 20,257
Depreciation as at January 1 9,371 6,336 0 8,869 8,090 5,084 0 7,095
Depreciation in the year 8,200 1,592 4,878 2,551 7,648 686 0 2,021
Depreciation on disposals
in the year (13,777) (3,595) 0 (4,629) (13,777) (3,595) 0 (4,505)
Exchange rate adjustments 103 (319) 0 21 0 0 0 0
Depreciation as at December 31 3,897 4,014 4,878 6,812 1,961 2,175 0 4,611
Carrying amount as at December 31 158,824 14,590 2,636 17,462 145,315 9,333 125 15,646
Capitalized financial items 15,025 0 0 0 15,025 0 0 0
Depreciation etc., charged as:
Costs of sales 1,898 920 – 784 1,567 651 – 784
Sales and Marketing 221 0 – 549 221 0 – 19
Administrative 512 637 – 928 291 14 – 928
Research and Development 363 35 – 290 363 21 – 290
Special items 5,206 – 4,878 0 5,206 0 – 0
2009 Properties Plant and Assets Other Properties Plant and Assets Other equipment under operating equipment under operating construction assets construction assets
Cost as at January 1 39,541 9,589 34,355 13,512 25,445 7,199 31,306 10,371
Additions in the year 381 856 53,234 2,643 0 42 50,691 1,988
Reclassifications 35 803 (963) 125 0 0 (125) 125
Disposals in the year 0 (10) 0 (363) 0 0 0 0
Exchange rate adjustments (245) (41) 11 372 0 0 0 0
Cost as at December 31 39,712 11,197 86,637 16,289 25,445 7,241 81,872 12,484
Depreciation as at January 1 8,201 5,209 0 6,788 7,403 4,602 0 5,860
Depreciation in the year 1,200 1,166 0 1,816 687 482 0 1,235
Depreciation on disposals
in the year 0 0 0 (120) 0 0 0 0
Exchange rate adjustments (30) (39) 0 385 0 0 0 0
Depreciation as at December 31 9,371 6,336 0 8,869 8,090 5,084 0 7,095
Carrying amount as at December 31 30,341 4,861 86,637 7,420 17,356 2,157 81,872 5,389
Capitalized financial items – – 10,697 – – – 10,697 –
Carrying amount of leased assets 0 0 0 112 0 0 0 112
Depreciation etc., charged as:
Costs of sales 647 717 – 363 339 462 – 363
Sales and Marketing 46 18 – 585 46 2 – 4
Administrative 417 424 – 643 212 11 – 643
Research and Development 90 7 – 225 90 7 – 225
note 10. Financial Assets(DKK ’000) Group Parent
2010 Other Loans to Shares in investments subsidiaries subsidiaries
Cost as at January 1 7,036 183,365 60,175
Additions in the year 0 11,175 461
Disposals in the year 0 (28,296) 0
Exchange rate adjustments 0 15,330 0
Cost at December 31 7,036 181,574 60,636
Adjustments at January 1 (289) 0 (34,676)
Exchange rate adjustments 550 0 0
Adjustments as at December 31 261 0 (34,676)
Amortization and impairment as at January 1 0 0 0
Impairment 6,766 0 0
Exchange rate adjustments (30) 0 0
Amortization and impairment at December 31 6,736 0 0
Carrying amount at December 31 561 181,574 25,960
(DKK ’000) Group Parent
2009 Other Loans to Shares in investments subsidiaries subsidiaries
Cost as at January 1 6,476 176,417 55,606
Additions from business combinations 0 0 0
Additions in the year 560 11,082 4,569
Disposals in the year 0 (1,264) 0
Exchange rate adjustments 0 (2,870) 0
Cost as at December 31 7,036 183,365 60,175
Adjustments as at January 1 (176) 0 (34,676)
Ajustments on disposals previous years
Exchange rate adjustments (113) - -
Adjustments as at December 31 (289) 0 (34,676)
Carrying amount as at December 31 6,747 183,365 25,499
The operational subsidiaries in the group are listed on page 83 . In addition, the group comprise the following subsidiaries:
Name Registered office Ownership
ORIGIO US Inc . Delaware, US 100%
ORIGIO MediCult Inc . Delaware, US 100%
ORIGIO Ltd . Hong Kong, China 51%
Aktieselskabet af 20/11 2003 Copenhagen, Denmark 100%
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note 12. trade receivables(DKK ’000) Group Parent
2010 2009 2010 2009
The aging of trade receivables at
the reporting date was:
Not past due 24,224 22,194 5,319 4,938
Past due up to 3 months 18,180 13,456 1,222 1,631
Past due from 3 to 6 months 4,308 4,828 111 189
Past due more than 6 months 6,847 2,753 158 490
53,559 43,231 6,810 7,248
The changes in the provision
for impairment in respect of trade
receivables during the year were
as follows:
Balance as at January 1 601 1,393 547 1,340
Impairment loss recognized (450) (792) (432) (793)
Balance as at December 31 151 601 115 547
Based on historic default rates, the group believes that no impairment provision is necessary in respect of trade receivables not past due
or past due up to 3 months .
CreditrisksOutstanding receivables are monitored on a regular basis in accordance with the company’s debtor policy which is based on concrete
debtor assessments of private customers .
Public-sector customers are an important part of the company’s receivables, and it is believed that no credit risks are associated with
public-sector customers . In the event of uncertainty regarding a customer’s ability or willingness to pay a receivable and if it is deemed
that the claim is subject to risk, a write-down is made . Public-sector customers account for approximately 63% of the outstanding debt-
ors, with a balance past due of more than 6 months, which in spite of slow payment reduces the risk of loss .
(DKK ’000) Group Parent
2010 2009 2010 2009
Raw materials and consumables 6,664 7,203 7,443 5,466
Manufactured goods 30,553 22,272 4,367 3,857
Work in progress 2,405 1,358 34 824
Inventories 39,622 30,833 11,844 10,147
Cost of material included in
production cost 61,506 55,013 13,348 12,593Expensed write-downs on inventories 143 21 143 21
note 11. inventories
note 13. Assets classified As held For sale(DKK ’000) Group Parent
2010 2009 2010 2009
Assets classified as held for sale:
Property 11,995 0 11,995 0
Liabilities associated with
assets held for sale
Credit institutions 11,395 0 11,395 0
note 14. non-current liabilities Outstanding Market Outstanding Market Interest debt value Interest debt value
2010 Principal %p.a. (DKK‘000)(DKK’000) Principal %p.a. (DKK‘000)(DKK’000)
Realkredit Danmark (DKK) 100,191,113 3) Var . 100,191 96,033 107,945,000 3) Var . 107,945 102,818
Realkredit Danmark (EUR) - - - - 1,295,700 1) 4 .5 6,301 6,311
Realkredit Danmark (EUR) - - - - 743,800 1) 4 .5 3,617 3,623
Realkredit Danmark (EUR) - - - - 403,800 1) 4 .5 2,446 2,450
Danske Bank (USD) 9,950,000 2) 2 .16 41,000 41,000 9,950,000 2) 2 .16 50,545 50,545
Danske Bank (USD) 6,915,868 4) Var . 38,821 38,821 6,915,868 2) Var . 4,195 35,894
Danske Bank (DKK) 6,175,000 2) 6 .7 3,830 4,170 6,175,000 6 .7 - 4,195
Danske Bank (DKK) 36,000,000 3 .5 35,512 35,512 - - - -
Monte Dei Paschi di Siena (EUR) 1,118,160 5) 2 .1 979 979 - - - -
UniCredit Banca d’Impresa (EUR) 1,491,000 5) 3 .9 320 320 1,391,000 5) 2 .0 744 744
1) Realkredit Danmark (EUR) is reclassified to Current Liabilities, as the related property is for sale
2) Fixed interest
3) For the first two quarters of 2011, the interest rate is adjusted to 1 .55% The interest rate is fixed to 4 .97, please refer to note 15
4) Adjustment of interest every 1 to 6 months . From January 1, 2011, the interest rate is adjusted to 0 .26%
5) Adjustment of interest every quarter
(DKK ‘000)
Leases Creditinstitutions Leases Creditinstitutions 2010 2009 2010 2009 2010 2009 2010 2009
Liabilities due after more than 5 years 0 0 134,354 118,684 0 0 134,171 118,683
Liabilities due between 2-5 years 0 0 68,793 77,330 0 0 68,150 77,011
Liabilities due within 1 year 0 111 17,110 15,148 0 111 16,636 14,723
2010 2009
Group Parent
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From time to time, the ORIGIO Group enters into financial instrument contracts with the aim of minimizing its exposure to interest and currency fluctuations .
Currency risksGenerally, the investments in foreign group enterprises are not hedged though in connection with ORIGIO Inc ., a partial hedging of the investment has been entered into, by taking up loans of USD 14 million . Adjustments arising on net investments as a result of changes in the exchange rates are recognized in other comprehensive income . An increase in USD currency rate versus DKK of 10% will effect the net profit by approximately DKK 0 .4 million and will affect the equity by DKK 7 .3 million including effect of translation between USD and DKK .
The exposures of the ORIGIO Group to currency fluctuations are mainly related to foreign receivables and payables .
note 15. Financial instruments
(DKK ’000) Group
Currency Securities Receivables Liabilities Net 2010 and cash position
USD 26 155,099 89,033 66,092
EUR 2,224 55,452 20,353 37,323
GBP 1 1 124 (122)
DKK 0 0 159 (159)
Other 46 2,602 136 2,513
2009
USD 80 147,479 92,226 55,333
EUR 220 35,812 15,033 20,999
GBP 4 0 405 (401)
DKK 0 0 0 0
Other 528 104 48 586
Group
Received Paid Principal Maturity 2010 interest interest amount (DKK)
Danske Bank A/S Cibor6 4 .97 107,945,000 December 31, 2027
2009
Danske Bank A/S Cibor6 4 .97 107,945,000 December 31, 2027
The fair value of the interest rate swap has been calculated by the bank according to general accepted valuation principles . The interest
rate is recognized as a hedge and consequently fair value adjustments are recognized in equity .
From May 2009, the interest rate related to the acquisition loan in Danske Bank of USD 9,950,000 has been fixed at 2 .16% plus bank margin .
Of the USD liabilities, USD 14 .2 million is regarded as hedge of the equity in the US subsidiary .
Credit risksORIGIO is exposed to credit risks in respect of receivables and bank balances . The maximum credit risk corresponds to the carrying amount . Cash is not deemed to be subject to any credit risks, as the counterparts are banks with good credit ratings .
Interest rate risksThe exposure of the ORIGIO Group to interest fluctuations mainly relates to cash and securities as well as loans as specified in note 14 . ORIGIO has entered into an interest swap agreement as specified below:
note 15. Financial instruments
(DKK ’000) Group
Fair Carrying 0-1 year 1-5 years > 5 years Total value amount
Credit institution 26,832 68,793 134,354 229,979 225,802 229,979
Bank debt 20,554 0 0 20,554 20,554 20,554
Trade payables 27,097 0 0 27,097 27,097 27,097
Other payables 46,978 0 0 46,978 46,978 46,978
Total financial liabilities 121,461 68,793 134,354 324,608 320,431 324,608
Cash 18,560 0 0 18,560 18,560 18,560
Trade receivables 53,408 0 0 53,408 53,408 53,408
Other receivables 4,663 0 0 4,663 4,663 4,663
Total financial asssets 76,631 0 0 76,631 76,631 76,631
Liquidity risk
as at December 31, 2010 (44,830) (68,793) (134,354) (247,977) (243,800) (247,977)
Liquidity risk
as at December 31, 2009 (26,111) (77,330) (118,684) (222,125) (217,017) (222,125)
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note 17. staff and remuneration(DKK ’000) Group Parent
2010 2009 2010 2009
Total staff salaries, etc ., excluding
warrants, can be specified as follows:
Salaries 100,167 86,878 46,976 43,337
Pension schemes 6,610 9,410 3,887 3,635
Other social security costs 5,075 8,055 478 470
111,852 104,343 51,341 47,442
Remuneration included in above to the:
Executive Board 3,752 3,602 3,752 3,602
Board of Directors 813 597 813 597
4,565 4,199 4,565 4,199
Warrants, Executive Board 184 480 184 480
Warrants, Board of Directors* 0 84 0 84
4,749 4,763 4,749 4,763
Average number of employees 221 220 90 87
* No warrants programmes have been issued to the Board of Directors since 2007
note 16. contingent Assets and liabilities, security etc.(DKK ’000) Group Parent
2010 2009 2010 2009
Lease obligations 7,479 2,445 1,133 447
Lease obligations falling due
within 1 year from the balance date 2,669 1,552 514 410
Lease obligations falling due
between 2-5 years from the balance date 4,451 893 619 37
Lease obligations falling due more than
5 years from balance date 359 0 0 0
Lease expenses 3,227 1,660 558 481
Pledge as securityThe shares in ORIGIO Inc . have been pledged as security for the USD bank loans as listed in note 14 . The property in Jyllinge, Denmark, carrying amount of DKK 12 million, has been pledged as security for the Realkredit Danmark (EUR) loans . The property in Måløv, Denmark, carrying amount of DKK 163 .0 million, has been pledged as security for the Realkredit Danmark (DKK) loan on DKK 100 .2 million .
note 17. staff and remunerationOutstanding warrants
Program Program Program (number of warrants ’000) of 2005 of 2007 of 2008 Total
Outstanding as at January 1, 2010 646 294 413 1,353
Allotted during the year 0
Utilized during the year 0
Cancelled during the year 0
Outstanding as at December 31, 2010 646 294 413 1,353
Program Program Program of 2005 of 2007 of 2008 Total
Specified as follows:
Board of Directors 0 50 0 50
Executive Board 500 65 100 665
Managers 146 163 291 600
Other employees 0 16 22 38
Total 646 294 413 1,353
Program Program Program Black & Scholes parameter of 2005 of 2007 of 2008
Term (months) 48 48 48
Volatility 50 .9 39 .3 57 .1
Exercise price (NOK) 11 .9 20 .3 16 .2
Dividend not expected not expected not expected
Risk free interest rate 3% 4% 4%
Dilution of year end share capital at
year end share price 0 .0% 0 .0% 0 .0%
The expected volatility rate is based on the historical volatility . In 2010, the fair value of warrants recognized in the income statement amounts to DKK 738,000 of which DKK 184,000 relates to the Executive Board . The amount is charged as:
(DKK ’000)
Costs of sales 212
Sales and Marketing expenses 129
Administrative expenses 240
Research and Development expenses 157
Total 738
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ORIGIO a/s has no related parties with controlling interests .
ORIGIO’s related parties with significant influence comprise group enterprises as well as the company’s Board of Directors and Executive Board .
No transactions were conducted with the Board of Directors, Executive Board, major shareholders or other related parties in the year, apart from intercompany transactions eliminated in the consolidated financial statement as well as usual remuneration, please refer to note 17, and legal fees of DKK 1,785,000 .
note 19. related Parties and transactions
Trade with group enterprises comprise:
(DKK ‘000) Subsidiaries
2010 2009
Revenue 38,979 32,494
Cost of goods 1,161 331
Reimbursement of operational costs (6,381) 0
Interest income 7,682 7,292
Dividend 2,691 0
Non-current receivables 181,574 183,365
Trade receivables 23,673 14,367
Trade payables 10,322 19,476
note 18. Fee to the independent Auditor(DKK ’000) Group
2010 2009
Fee to the parent company’s independent auditor:
Audit fee 370 350
Tax consultancy 47 85
Other assurance services 57 18
Other fees 446 271
Total 920 724
note 20. Depreciation and Other Adjustments(DKK ’000) Group Parent
2010 2009 2010 2009
Depreciation and amortization 16,071 15,110 6,487 2,735
Depreciation and amortization in special items 10,084 0 5,206 0
Impairment of investments 6,766 0 0 0
Warrant compensation expenses 738 2,058 738 2,058
Miscellaneous provisions 0 (31) 0 0
Financial income (161) (967) (15,822) (7,988)
Financial expenses 11,573 10,045 7,580 7,946
Tax 6,335 5,476 0 0
Total adjustments to cash flows 51,406 31,691 4,189 4,751
note 21. changes in net Working capital(DKK ’000) Group Parent
2010 2009 2010 2009
Increase in inventories and receivables (14,103) (6,906) (6,161) (662)
Decrease/increase in payables and other debt 9,813 6,433 1,491 4,706
Changes in net working capital (4,290) (473) (4,670) 4,044
note 22. cash, cash equivalents and bank borrowings
(DKK ’000) Group Parent
2010 2009 2010 2009
Cash and cash equivalents 18,560 15,551 3,783 6,674
Bank borrowings (20,554) (4,502) (17,527) (3,088)
Cash, cash equivalents and bank borrowings (1,994) 11,049 (13,744) 3,586
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statement by the board of Directors and executive board
Today the Board of Directors and Executive Board
have discussed and approved the Annual Report
of ORIGIO a/s for the financial year January 1 –
December 31, 2010 .
The Annual Report has been prepared in
accordance with International Financial Reporting
Standards as adopted by the EU, the Oslo Stock
Exchange´s requirements for financial reporting
by listed companies, and Danish disclosure
requirements for listed companies .
In our opinion the consolidated financial statements
and the parent company financial statements give
a true and fair view of the Group’s and the Parent
Company’s financial position at December 31, 2010,
and of the results of the Group’s and the Parent
Company’s operations and cash flows for the
financial year January 1 – December 31, 2010 .
In our opinion the management’s review includes
a fair review about the development in the Parent
Company’s and the Group’s operations and
economic conditions, the results for the year and
the Parent Company’s financial position, and the
position as a whole for the entities included in
the consolidated financial statements, as well as a
review of the more significant risks and uncertainty
the Parent Company and the Group face, in
accordance with Danish disclosure requirements for
listed companies .
We recommend that the Annual Report be
approved at the Annual General Meeting .
Måløv, on February 22 2011
Executive Board
Jesper Funding Andersen
Board of Directors
Flemming Pedersen Jens Zilstorff Jørgen Drejer
(Chairman)
Flemming Juul Jensen Jaime Grego-Mayor Bente Jensen
Kirsten Bakbøl
tO the shArehOlDers OF OrigiO a/s
Report on consolidated financial statement and
parent company financial statement
We have audited the consolidated financial
statements and the parent company financial
statements of ORIGIO a/s for the financial year
January 1 to December 31, 2010, which comprise
the income statement, statement of comprehensive
income, statement of financial position, statement
of cash flows, statement of changes in equity
and notes, for the Group as well as for the Parent
Company . The consolidated financial statements
and the parent company financial statements
are prepared in accordance with International
Financial Reporting Standards as adopted by the
EU, the Oslo Stock Exchange´s requirements for
financial reporting by listed companies and Danish
disclosure requirements for listed companies .
Board of Directors’ and Executive Board’s
responsibility for the consolidated financial
statements and parent company financial
statements
The Board of Directors and Executive Board are
responsible for the presentation and preparation
of consolidated financial statements and parent
company financial statements that give a true
and fair view in accordance with International
Financial Reporting Standards as adopted by the
EU, the Oslo Stock Exchange´s requirements for
financial reporting by listed companies and Danish
disclosure requirements for listed companies . This
responsibility includes, designing, implementing
and maintaining internal control relevant for the
presentation and preparation of consolidated
financial statements and parent company financial
statements that give a true and fair view, free
from material misstatement, whether due to
fraud or error, selecting and applying appropriate
accounting policies, and making accounting
estimates that are reasonable in the circumstances .
Auditor’s responsibility and basis of opinion
Our responsibility is to express an opinion on the
consolidated financial statements and the parent
company financial statements based on our audit .
We conducted our audit in accordance with Danish
Standards on Auditing . Those standards require
that we comply with ethical requirements and
plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial
statements and the parent company financial
statements are free from material misstatement .
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the consolidated financial statements and
the parent company financial statements . The
procedures selected depend on the auditor’s
judgment, including the assessment of the risks
of material misstatements in the consolidated
financial statements and the parent company
financial statements, whether due to fraud or error .
In making those risk assessments, the auditor
considers internal control relevant to the entity’s
presentation and preparation of consolidated
financial statements and parent company financial
statements that give a true and fair view in order
to design audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
entity’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
Executive Board, as well as the overall presentation
independent Auditor’s report
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of the consolidated financial statements and the
parent company financial statements .
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a
basis for our opinion .
The audit has not resulted in any qualification .
Opinion
In our opinion, the consolidated financial
statements and the parent company financial
statements give a true and fair view of the Group’s
and the Parent Company’s financial position at
December 31, 2010 and of the results the Group’s
and Parent Company’s operations and cash flow for
the financial year January 1 to December 31, 2010 in
accordance with International Financial Reporting
Standards as adopted by the EU, the Oslo Stock
Exchange´s requirements for financial reporting
by listed companies, and Danish disclosure
requirements for listed companies .
Statement on the management’s review
The Board of Directors and Executive Board are also
responsible for the preparation of a management’s
review that includes a fair review in accordance
with the Danish disclosure requirements for listed
companies .
The audit has not included the management’s
review . Pursuant to the Danish Financial Statements
Act, we have however read the management’s
review . We have not performed any further
procedures in addition to the audit of the
consolidated financial statements and the parent
company financial statements .
On this basis, it is our opinion that the information
provided in the management’s review is consistent
with the consolidated financial statements and the
parent company financial statements .
Copenhagen, on February 22, 2011
Grant Thornton
Incorporated State Authorised Public Accountants
Gert Fisker Tomczyk
State Authorised Public Accountant
Henrik Ødegaard
State Authorised Public Accountant
ORIGIO is a world leader in Assisted Reproductive Technology (ART) solutions . Through research and innovation, ORIGIO aims to provide the
best products to medical professionals to help the #1 dream of every infertile couple come true . ORIGIO currently comprises the three product
families, MediCult Media, Humagen Pipets and MidAtlantic Devices, that cater for the broadest range of ART requirements . ORIGIO, which is
headquartered in Måløv, Denmark and has subsidiaries in 10 countries, is listed on the Oslo Stock Exchange under the symbol ORO . For further
information, please visit www .ORIGIO .com .
MIDATL ANTICDEVICES
MEDICULTMEDIA
HUMAGENPIPETS
”At the end of the day, its all about life; the
opportunity of new life for patients and our
own new life as ORIGIO. Life is everything.
That’s what we stand for.”
for life
Leads the way in the
development and
provision of specialized
and innovative ART media .
Provides innovative
devices, equipment, and
services to ART labs .
Focuses on the creation
of the highest quality
speciality pipets and
microtools for ART .