Bactiguard is primarily exposed to market related risks, operational related risks and financial risks. The risks Bactiguard is thus exposed to are addressed separately below and how they are managed.

Production risk

Bactiguard both licenses its coating technology and has its own product portfolio. Its own products are produced at its facilities in Malaysia and Sweden. By having several facilities, the Group is less exposed to the risk of any production losses if a site is forced to reduce or stop production.

Financial risk management and financial instruments

Through its activities, the Group is exposed to various types of risk and therefore has a comprehensive risk management programme that concentrates on minimising potential unfavourable effects on financial results. The company’s Board of Directors is ultimately responsible for the exposures, management and follow-up of the Group’s financial risks.

The frameworks that apply are set by the Board of Directors and revised annually. The Board of Directors has delegated responsibility for daily risk management to the company’s CEO, who in turn has delegated this to the company’s CFO. The Board of Directors is able to decide on temporary departures from these established frameworks.

^{Financial risks are described in note 4 in the Annual Report 2021.}

Climate risks

Bactiguard has not identified any company-specific risks relating to climate change. The Group has a negative impact on the climate through, among other things, transports of products and inputs. Bactiguard always strives to optimize transport to reduce the negative environmental impact. During the pandemic, passenger travel has been very limited. The policy is that employees should always choose a more environmentally friendly alternative and, if possible, replace the trip with a digital meeting.

Liquidity risk

The liquidity risk is monitored on a monthly basis through rolling 12-month forecasts which evaluate the liquidity situation and is the base of taking relevant financial or operational measures. In 2021 a targeted new share issue was carried out to the Swedish pension fund AMF, which provided Bactiguard with MSEK 228 in capital. On 31 December 2021 cash and cash equivalents amounted to MSEK 217.6 (9.9) and the executive management team makes the assessment that current liquidity levels will be sufficient to manage the company’s commitments for the coming year.

Macroeconomic risk

Weak economic performance and high national debt may cause both public and private customers to experience difficulty in obtaining financing. As well, this may have a negative impact on some countries’ ability and political willingness to invest in and allocate public resources to healthcare. Bactiguard maintains market presence in many geographic markets for the purpose of minimising any country-specific portion of the combined macroeconomic risk.

Regulatory risk

As a manufacturer of medical devices, Bactiguard’s operations are subject to requirements and standards that are determined by regulatory authorities for each of the markets where Bactiguard operates and sells products. Regulatory processes in various countries may cause a risk of delays in the launching process of products in these countries. Bactiguard works with its local distributors and regulatory advisors to minimise these risks..

Technology risk

There are technological advances in medical technology, which result in new products and improved treatment methods being launched continuously. Bactiguard has obtained patents in many of the countries in which the company operates in order to protect its coating technology, and has applied for patents in additional countries. Bactiguard has also taken several other measures to ensure that company-unique knowledge (such as application and manufacture of the Bactiguard coating) is not disclosed to any competitor. Regulations for medical devices, for example, the MDR, are getting stricter, which means that Bactiguard’s strong clinical evidence will become an even more important competitive advantage. Bactiguard’s technology has been tried and tested
for many different applications. New competitors and technologies must invest in clinical evidence in order to be approved, which takes a long time and requires significant financial investment.

COVID-19 pandemic

As well as the risks identified above, the impact of the Covid-19 pandemic is analysed on a regular basis. Bactiguard as a company complies with the recommendations of the equivalent body to the Public Health Agency of Sweden in the relevant country, and implements measures accordingly.

In 2021 the pandemic impacted Bactiguard in several different ways. The need for infection prevention has increased creating new opportunities for Bactiguard, which had a positive effect on sales at the start of the pandemic. In the fourth quarter the pandemic clearly had a negative impact on our operations as regular health services were cut back and operations were postponed. In 2021 we saw a stabilisation of the license revenues from BD, as healthcare in the USA recovered more quickly than in the rest of the world. The sales of BIP products continued to be affected in 2021 by the reduced ordinare care caused by Covid-19.

The roll-out of the vaccine will continue to have a positive impact on the return to a more normal situation for healthcare and society as a whole, and we can see that there is a great  need for infection prevention. However, what will happen in the near future is still difficult to assess.

Although the pandemic has had a negative impact on sales and profit, we believe this to be temporary. The need for healthcare remains and a healthcare backlog is building up that needs to be tackled.

During the pandemic societies and companies have closed down, which has increased the risk of payments being delayed or defaulted. The company continually monitors payments from all of its customers. In 2021 there were no defaults on large payments, so the pandemic did not result in an increase in customer losses for Bactiguard.

With regard to the company’s earnings and position in general, reference is made to subsequent income statements and balance sheets with accompanying notes.