q3/17 report november 13, 2017 infoscan s.a....forecasts that in 2018e 85% of 3.8m sleep apnea exams...

InfoSCAN S.A.

Fair Value: PLN 9.80 Initiating Coverage

Rating: n.a.

Company profile

InfoSCAN S.A. is a Polish telehealth company, which

has developed a device for the detection of breathing

disorders during sleep. The company expects to re-

ceive FDA approval by Q1/18E.

Website www.infoscan.pl

Sector Telemedicine

Country Poland

ISIN PLINFSC00019

Reuters ISTP.WA

Bloomberg IST PW

Share information

Last price 6.48

Number of shares (m) 4.53

Market cap. (PLNm) 29.38

Market cap. (EURm) 6.84

52-weeks range PLN 6.49 / PLN 0.68

Average volume 13,405

Performance

4-weeks 48.28%

13-weeks 54.29%

26-weeks 90.59%

52-weeks 444.54%

YTD 478.57%

Shareholder structure

Shareholder's agreement* 12.51%

AgioFunds TFI through SNIPER FIZ 10.72%

Formonar Investments Ltd. 11.26%

Free float 65.51%

* includes key staff

Financial calendar

Q3/17 report November 13, 2017

Analyst

Adrian Kowollik

[email protected]

InfoSCAN (IST) is a Polish company, which has developed a telehealth device for diagnostics of breathing disorders during sleep.

The MEDRecorder device, which already has the CE registration for European Union, is currently used by 25 hospitals and clinics and generates recurring

revenues from rent and per exam. While in Europe future growth should be

positively impacted by an EU directive, which obliges doctors to send candidates for drivers to a sleep apnea exam if they could be affected, the

market entry in the US is dependent on FDA approval. In the US, the number of respective exams amounts to >3.5m per year. In contrast to Poland, where

it only equals 13k, these exams are reimbursed by public and private health

insurances.

Sleep apnea is a disorder, which is characterized by pauses in

breathing or periods of shallow breathing during sleep that is

followed by loud snoring. It affects 1%-6% of adults and 2% of children (only in the US, >43m people suffer from it). If it is not treated, it can lead to

other health problems e.g. diabetes, stroke, heart attack or failure, obesity, fatty liver disease. InfoSCAN has developed a telehealth device, which allows

to conduct an overnight sleep study at home, thus is an improvement of an already known method, which saves costs and patients’ time as the patient

does not need to go to the doctor or clinic anymore. The so-called

MEDRecorder collects the data of the patient and sends it to InfoSCAN’s central server, where a technical report is created. The patient’s doctor can analyze

the report and the data with InfoSCAN’s own cloud-based software MEDium24.

The market for sleep apnea is estimated at USD 4.6bn with a CAGR 16-21E of 7.8%. In order to exploit its knowledge in the area of telemedicine

and diversify revenues, InfoSCAN has developed a prototype of a Holter ECG device for use at home, which it plans to introduce on the market at the end of

2018E upon receiving the necessary approvals. The global market for ECG is

forecast to grow at a CAGR of 5.7% to USD 6.5bn in 2025E.

We initiate coverage of InfoSCAN with a FV of PLN 9.80 per share. We

like that IST has a very low cash burn of PLN 70k/month and its MEDRecorder,

which is already registered in the EU, and will likely receive FDA approval in H1/18E. While we believe that the expansion to the US might require an

additional capital increase in 2018E, there is additional upside from the new Holter ECG product, which we have not included in our model.

in PLNm 2016 2017E 2018E 2019E 2020E 2021E

Net sales 0.08 0.09 1.09 5.17 13.39 29.01

EBITDA -1.27 -2.07 -5.98 -0.66 3.20 10.87

EBIT -1.50 -2.31 -6.23 -0.92 2.93 10.58

Net income -1.49 -2.32 -6.22 -0.89 2.41 8.63

Diluted EPS -0.60 -0.51 -1.37 -0.20 0.53 1.90

DPS 0.00 0.00 0.00 0.00 0.00 0.00

Dividend yield 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

RoE -174.78% -1229.55% -907.49% -100.29% 146.55% 120.39%

Net gearing -18.78% 1759.19% 239.37% 1321.19% 273.75% 32.23%

EV/Sales neg neg 26.58x 5.59x 2.16x 1.00x

EV/EBITDA neg neg neg neg 9.04x 2.66x

P/E neg neg neg neg 12.18x 3.40x

InfoSCAN S.A. | Initiating Coverage | October 2017

1

Content

Investment Case ......................................................................................................... 2

SWOT Analysis ............................................................................................................ 2

Valuation ..................................................................................................................... 4

Recent results ............................................................................................................. 6

Financial forecasts ...................................................................................................... 9

Business description ................................................................................................. 12

Market environment ................................................................................................. 19

Profit and loss statement ......................................................................................... 21

Balance Sheet ........................................................................................................... 22

Cash Flow Statement................................................................................................ 23

Financial ratios ......................................................................................................... 23

Disclaimer ................................................................................................................. 24


2

Investment Case

• InfoSCAN (IST) is a Polish company, which has developed a telehealth device for

diagnostics of breathing disorders during sleep. The MEDRecorder device, which already

has the CE registration for European Union, is currently used by 25 hospitals and clinics

and generates recurring revenues from rent and per exam. While in Europe future

growth should be positively impacted by an EU directive, which obliges doctors to send

candidates for drivers to a sleep apnea exam if they could be affected, the market entry

in the US is dependent on FDA approval. According to e.g. Novasom, the number of

sleep apnea exams in the US amounts to >3.5m per year (>43m Americans suffer from

this disorder). In contrast to Poland, where it only equals 13k, these exams are

reimbursed by public and private health insurances.

• Sleep apnea is a disorder, which is characterized by pauses in breathing or periods of

shallow breathing during sleep that is followed by loud snoring. It affects 1%-6% of

adults (especially men in the age group 55-60 years) and 2% of children. If it is not

treated, it can lead to other health problems e.g. diabetes, stroke, heart attack or

failure, obesity, fatty liver disease. InfoSCAN has developed a telehealth device, which

allows to conduct an overnight sleep study at home, thus is an improvement of an

already known method, which saves costs and patients’ time as the patient does not

need to go to the doctor or clinic anymore. The so-called MEDRecorder, which has

already completed >1,500 commercial exams with a success rate of 98%, collects the

data of the patient and sends it to InfoSCAN’s central server, where a technical report is

created. The patient’s doctor can analyze the report and the data with InfoSCAN’s own

cloud-based software MEDium24.

• The market for sleep apnea is estimated at USD 4.6bn with a CAGR 16-21E of 7.8%. In

order to exploit its knowledge in the area of telemedicine and diversify revenues,

InfoSCAN has developed a prototype of a Holter ECG device, which targets a global

market that is expected to grow at a CAGR of 5.7% to USD 6.5bn in 2025E. Upon

receiving the necessary approvals, the company plans to start sales of this device at the

end of 2018E.

• In H1/17, InfoSCAN’s generated revenues of PLN 36k and EBIT of PLN -1.1m, which

was negatively affected by tests at laboratories in the US and preparation of the FDA

filing. In our view, H2/17E will additionally be affected by costs relating to activities

relating to the planned start of sales in North America (foundation of a subsidiary, trade

mission). Thus, for full-year 2017E, we expect sales of PLN 87k and EBIT of PLN -2.3m.

However, while costs will be impacted by registration of the Holter ECG and marketing

of the MEDRecorder in the US (EBIT of PLN -6.2m), revenues in 2018E should already

reach PLN 1.1m. We expect that the break-even on EBIT level will be reached in 2020E.

• We initiate coverage of InfoSCAN with a Fair Value of PLN 9.80 per share. We like that

IST has a very low cash burn of PLN 70k/month and its MEDRecorder, which is already

registered in the EU, and will likely receive FDA approval in H1/18E. While we believe

that the expansion to the US might require an additional capital increase next year, our

model does not include sales of the Holter ECG device from 2019E.


3

SWOT Analysis

Strengths Weaknesses

- Unique telehealth device and cloud-based platform with - No patent and brand protection so far

CE registration in the EU, which is an optimisation of already - Weak brand and product recognition at the current stage

existing methods of development

- The MEDRecorder for the detection of breathing issues during - No remuneration by health insurances in Poland of diagno-

sleep has so far been used >1,500 times commercially and stics relating to sleep apnea

180 in clinical trials; the device generates both revenues from - Listing in the illiquid NewConnect segment of the Warsaw

rent and exams Stock Exchange

- InfoSCAN targets medical professionals and patients as - InfoSCAN has had serious management problems in the

clients; the company already has 25 Polish clinics as customers past; the first filing for FDA approval was done incorrectly

- The EU directive 2014/85/UE obliges all doctors to send candi-

dates for drivers to an exam relating to sleep apnea if they

could be affected

- InfoSCAN only has a monthly cash burn of PLN 70k, thus min.

60% less than its Polish peers; production of the MEDRecorder

is completely outsourced to three partners, each of whom is

able to manufacture several 10k devices per year

- Implementation of the ISO 13485 quality certificate

- Committed management team, which also are the largest

shareholders of the company

Opportunities Threats

- Focus on three markets with reimbursement of sleep apnea - In order to be successful abroad, InfoSCAN needs to persu-

and/or ECG in the coming years: Poland, US and UK; manage- ade the respective medical communities and health insurances

ment expect the FDA approval in H1/18E at the latest to use its product

- Distribution through local partners, who also take over marke- - The market for Holter ECGs, which InfoSCAN wants to enter

ting costs in 2018E, is already highly competitive worldwide

- MarketsandMarkets expects the sleep apnea segment to grow - Potential issues with necessary approvals (especially from

by 2021E at a CAGR of 7.8% to USD 6.7bn; Frost & Sullivan the US-based FDA)

forecasts that in 2018E 85% of 3.8m sleep apnea exams in - Loss of key employees and problems to find qualified perso-

the US will be done at home; Novasom estimates the number nnel

of Americans suffering from sleep apnea at >43m; >85% of - Different legal regulations relating to data storage

them do not know about it - Increasing competition by much larger and financially

- Development and market introduction of a Holter ECG device stronger players

by year-end 2018E, which targets a large and developed market; - Dilution risk due to potential share issues (equity as of H1/17

Research and Markets sees the ECG segment growing by was PLN 1.3m)

2025E at a CAGR of 5.7% to USD 6.5bn

- Takeover by a large healthcare company


4

Valuation

Due to the company’s early-stage character we have decided to value InfoSCAN by using a

DCF approach only. This results in a fair value per share of PLN 9.80. We would like to

emphasize that due to the relatively low equity as of 30/06/2017 (PLN 1.3m), development

of the Holter ECG device and planned investments in international distribution there is a risk

that InfoSCAN will have to conduct another capital increase soon.

DCF model

in PLNm 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Net sales 0.09 1.09 5.17 13.39 29.01 34.66 41.40 44.64 48.13

(y-o-y change) n.a n.a 375.4% 158.9% 116.6% 19.5% 19.4% 7.8% 7.8%

EBIT -2.31 -6.23 -0.92 2.93 10.58 12.51 14.78 15.11 15.31

(operating margin) n.a -572.8% -17.7% 21.9% 36.5% 36.1% 35.7% 33.9% 31.8%

NOPLAT -2.31 -6.23 -0.92 2.37 8.57 10.13 11.97 12.24 12.40

+ Depreciation & amortisation 0.23 0.25 0.26 0.27 0.28 0.30 0.31 0.33 0.35

= Net operating cash flow -2.07 -5.98 -0.66 2.64 8.86 10.43 12.29 12.57 12.75

- Total investments (Capex and WC) -0.60 -3.89 -2.01 -4.68 -4.80 4.03 0.54 -0.95 -1.67

Capital expenditure -0.26 -1.75 -0.27 -0.28 -0.29 -0.31 -0.32 -0.34 -0.36

Working capital -0.33 -2.14 -1.75 -4.40 -4.51 4.34 0.86 -0.61 -1.32

= Free cash flow (FCF) -2.67 -9.88 -2.67 -2.04 4.05 14.47 12.83 11.63 11.08

PV of FCF's -2.61 -8.38 -1.97 -1.31 2.26 7.01 5.40 4.26 3.53

PV of FCFs in explicit period 8.19

PV of FCFs in terminal period 29.99

Enterprise value (EV) 38.18

+ Net cash / - net debt (30 June 2017) 0.46

+ Investments / - minorities 0.00

Shareholder value 38.64

Number of shares outstanding (m) 4.53

WACC 15.0% 28.8% 29.8% 30.8% 31.8% 32.8% 33.8% 34.8%

Cost of equity 15.0% 11.0% 16.65 17.13 17.60 18.08 18.55 19.03 19.50

Pre-tax cost of debt 10.0% 12.0% 14.15 14.55 14.95 15.35 15.74 16.14 16.54

Normal tax rate 19.0% 13.0% 12.13 12.46 12.80 13.14 13.47 13.81 14.14

After-tax cost of debt 8.1% 14.0% 10.46 10.75 11.03 11.32 11.61 11.89 12.18

Share of equity 100.0% 15.0% 9.07 9.31 9.56 9.80 10.05 10.30 10.54

Share of debt 0.0% 16.0% 7.88 8.10 8.31 8.52 8.74 8.95 9.16

Fair value per share in PLN (today) 8.52 17.0% 6.88 7.06 7.25 7.43 7.62 7.80 7.99

Fair value per share in PLN (in 12 months) 9.80

Terminal EBIT margin

WA

CC

Source: East Value Research GmbH


5

Peer Group

We have found the following companies, which like InfoSCAN offer telehealth solutions in the

area of sleep apnea and/or electrocardiography:

(1) Medicalgorithmics S.A.: Medicalgorithmics (MDG), which is based in Warsaw/Poland, is a

producer and supplier of innovative technologies in the area of distant cardio-

diagnostics. The company focuses on distant monitoring and analysis of the heart based

on a proprietary technology called PocketECG. Apart from cardiac telemetry, the system

is also used in clinical trials on drugs relating to cardiac safety as well as research

projects. Medicalgorithmics is listed on the Warsaw Stock Exchange. In fiscal-year 2016,

it generated sales of PLN 127.9m and an EBIT margin of 36.4%. MDG’s current market

capitalization is PLN 699.7m. It trades at an EV/Sales 2017E of 3.2x and P/E 2017E of

19.1x.

(2) Telemedycyna Polska S.A.: Telemedycyna Polska, which is headquartered in

Katowice/Poland, is a Polish leader in the area of telesurveillance of cardiology patients.

The company owns a Center for Monitoring of the Heart with experienced doctors from

the area of non-invasive cardiology diagnostics. Telemedycyna Polska specializes in 24/7

cardiologic treatment and ECG exams online and by phone. In 2016, the company had

revenues of PLN 5.4m and an EBIT margin of -1.3%. Telemedycyna’s current market

capitalization is PLN 11.1m.

(3) MedApp S.A.: MedApp, which is based in Krakow, has developed the analytical cloud-

based health system Carna Life, which it targets at medical professionals and health

facilities. The solution can be used in multiple areas including cardiology, angioplasties,

diabetology, dietetics, chronic illnesses and elderly care. Among others, Carna Life

provides the possibility to use Microsoft 3D/4D HoloLens glasses, which allow to use

virtual and augmented reality technology during surgeries. In 2016, MedApp generated

revenues of PLN 25k and an operating loss of PLN 935k. Currently, the company has a

market cap of PLN 194.5m.

(4) Novasom Inc.: Novasom, which is based in Glen Burnie/US, provides Obstructive Sleep

Apnea (OSA) home testing with its AccuSom telehealth sleep test. The solution, which

has FDA clearance, provides next-day test results and interpretation. According to its

website, NovaSom is accredited by the Joint Commission as an Ambulatory Care Sleep

Diagnostic Center & Telehealth Provider and is classified by CMS as an Independent

Diagnostic Testing Facility.


6

(5) Itamar Medical Ltd.: Itamar Medical, which is based in Caesarea/Israel, has developed

non-invasive medical devices using the proprietary PAT™ (Peripheral Arterial Tone)

signal for diagnosis of cardiovascular disease and respiratory disorders. According to the

company’s presentation, its WATCHPat device for diagnosis of sleep apnea has a failure

rate of 3%. In fiscal-year 2016, it generated sales of USD 18.4m and an operating loss

of USD 10m. Itamar’s current market capitalization is USD 185.2m.

(6) Koninklijke Philips NV: Royal Philips, which is based in Amsterdam/Netherlands, is a

world leader in health technology. The Philips Respironics area offers both in-lab and in-

home sleep apnea and ECG solutions. In fiscal-year 2016, Koninklije Philips had

revenues of EUR 24.5bn (thereof Connected Care & Health Informatics segment: EUR

3.2bn) and generated an EBIT margin of 7.7% (8.7%). Its current market capitalization

equals EUR 32.9bn. It trades at an EV/Sales 2017E of 2x and P/E 2017E of 22.9x.

(7) ResMed Inc.: ResMed Inc., which is based in San Diego/US, offers medical devices and

cloud-based software applications that improve diagnostics, treatment and management

of sleep apnea, chronic obstructive pulmonary disease (COPD) and other chronic

diseases. ResMed, which is present in >100 countries, is a global leader in connected

care, with more than 3 million patients remotely monitored every day. In fiscal-year

2016, it generated sales of USD 2.1bn and an EBIT margin of 20.5%. ResMed’s current

market capitalization is USD 12bn. It trades at an EV/Sales 2017E of 5.4x and P/E 2017E

of 27.5x.

(8) Fisher Paykel Healthcare Corp Ltd.: Fisher Paykel Healthcare (FPH), which is

headquartered in Auckland/New Zealand, designs, manufactures and markets heated

humidification products and systems for use in respiratory care and the treatment of

sleep apnea. The company also offers patient warming and neonatal care products,

including warming products and infant resuscitators. In fiscal-year 2016, it generated

sales of NZD 318.7m and an EBIT margin of 26.6%. FMH’s current market capitalization

is NZD 7.6bn. It trades at an EV/Sales 2017E of 7.5x and P/E 2017E of 40.6x.

(9) SomnoMed Ltd.: SomnoMed, which is based in New South Wales/Australia, is the world

leader in providing simple devices that treat obstructive sleep apnea by keeping the

airway continually open. More than 200,000 patients have used the company’s solutions

to date. In fiscal-year 2016, it generated sales of AUD 44.1m and an EBIT margin of

11.3%. SomnoMed’s current market capitalization is AUD 214.4m. It trades at an

EV/Sales 2017E of 2.7x and P/E 2017E of 127.2x.

(10) Compumedics Ltd.: Compumedics Ltd., which is based in Abbotsford/Australia, is a

medical device company involved in the development, manufacture and

commercialisation of diagnostics technology for the sleep, brain and ultrasonic blood-

flow monitoring applications. It operates worldwide incl. Europe, the Americas, Australia

and Asia-Pacific and the Middle East. In fiscal-year 2016, Compumedics generated sales

of AUD 34.4m and an EBIT margin of 3.8%. Its current market capitalization is AUD

56.7m. It trades at an EV/Sales 2017E of 1.1x and P/E 2017E of 12.1x.


7

(11) DeVilbiss Healthcare: DeVilbiss Healthcare, which is based in Somerset/US, is a world

leader in the design, manufacture, and marketing of respiratory medical products that

address the respiratory needs of patients in institutional and homecare settings. Our

primary product lines include sleep therapy, pulmonary drug delivery, stationary and

portable supplemental oxygen, homecare suction devices, and ENT Professional

instruments. DeVilbiss’ products are distributed in more than 100 countries around the

world.

(12) Braebon Medical Corp.: Braebon, which is based in Kanata/Canada, is a single-source

provider of PSG sensors, accessories, snoring & apnea screeners, full PSG diagnostic

systems, core management outcomes software, and therapeutic intraoral appliances.

(13) GE Healthcare Inc.: General Electric, which is based in Boston/US, is a globally

diversified technology and financial services company. The company's products and

services include aircraft engines, power generation, water processing, and household

appliances to medical imaging, business and consumer financing, and industrial

products. Its Healthcare division produces ECG and sleep apnea solutions for use in

ambulatory and home setting. In fiscal-year 2016, GE Healthcare had revenues of USD

123.7bn (thereof GE Healthcare: USD 18.3bn) and EBIT margin of 14.2% (17.3%). GE’s

current market capitalization equals USD 180bn. GE trades at an EV/Sales 2017E of 1.9x

and P/E 2017E of 18.1x.

(14) BioTelemetry Inc.: BioTelemetry (formely known as CardioNet), which is based in

Malvern/US, is the world's leading supplier of Mobile Cardiac Outpatient Telemetry that

enables heartbeat-by-heartbeat, ECG monitoring, analysis and response, at home or

away, 24/7/365. The company provides the next-generation ambulatory cardiac

monitoring service with beat-to-beat, real-time analysis, automatic arrhythmia detection

and wireless ECG transmission. In fiscal-year 2016, BioTelemetry generated sales of

USD 165.7m and an EBIT margin of 10.9%. Its current market capitalization equals USD

956.2m. It trades at an EV/Sales 2017E of 3.3x and P/E 2017E of 29.6x.

On July 12, 2017, BioTelemetry announced the complete takeover of Swiss LifeWatch

AG, a provider of advanced digital health systems and wireless remote diagnostic patient

monitoring services. According to e.g. moneycab.com, the transaction valued LifeWatch

at CHF 270m, which corresponds to an EV/Sales 2016 of 2.3x.


8

Recent results

Revenues and Profitability

In H1/17, InfoSCAN had revenues of PLN 36k, which stemmed from provision of diagnostic

services and leasing of telehealth devices. The reason for the 9.8% decline y-o-y was a lack

of R&D orders from third parties.

in PLNm H1/17 H1/16

change

(%)

Net sales 0.04 0.04 -9.8%

EBITDA -1.00 -0.53 90.4%

EBITDA margin n.a n.a

EBIT -1.10 -0.64 72.2%

EBIT margin n.a n.a

Net income -1.10 -0.63 74.5%

Net margin n.a n.a

Source: Company information, East Value Research GmbH

Between January and June 2017, EBIT reached PLN -1.1m (H1/16: PLN -638k) and net

income PLN -1.1m (PLN -633k). The largest cost position were CoGS of PLN 840k (H1/16:

PLN 419k), which comprise external services. Other expenses included Personnel costs of

PLN 170k (PLN 121k), Depreciation and Amortization of PLN 97k (PLN 112k) and Other

operating expenses incl. travel costs of PLN 80k (PLN 80k).

Balance sheet and Cash flow

As of 30 June 2017, InfoSCAN had equity of PLN 1.3m, which had a share of 78.5% in the

balance sheet total. While fixed assets were very small (PLN 51k) as the company

outsources most of work, intangibles (software, patents, licenses) equaled PLN 400k.

Working capital amounted to PLN 614k. At the end of H1/17, InfoSCAN had no interest-

bearing debt.

Between January and June 2017, InfoSCAN generated an operating cash flow of PLN -1.6m,

which resulted from the net loss. According to our calculation, cash flow from investing and

financing equaled PLN -24k and PLN 2m respectively. We believe that the company’s current

monthly cash burn amounts to PLN 70k, which is at least 60% lower than of similar listed

Polish telehealth companies.


9

Financial forecasts

Revenues and Profitability

Although the company was already founded in 2007, it has only been generating revenues

since 2012, when it received the CE registration for European Union. Currently, InfoSCAN is

only operating in Poland, where it works together with 25 clinics and has so far conducted

>1,500 commercial exams relating to description of breathing problems during sleep. While

in Poland there are only 13k exams conducted per year that (at least for now) are not

reimbursed by the public and private health insurances, we expect that InfoSCAN’s results

will significantly be boosted from H1/18E, when the company will likely receive the FDA

approval. In the US, which is by far the largest healthcare market worldwide, the number of

exams relating to sleep apnea amounts to >3.5m per year. Moreover, in contrast to Poland

the exams, which are only conducted in c. 2,500 sleep labs, are reimbursed by all major

health insurances e.g. Medicare.

Apart from the US, InfoSCAN plans to concentrate its international distribution efforts only

on the UK, where sleep apnea exams are reimbursed by public or private health insurances.

In addition, the company plans to look for distribution partners, which could also take over a

significant portion of marketing activities in the respective countries. We highly appreciate

this approach, which in our view is more efficient and less risky from shareholder’s

perspective.

Apart from its MEDRecorder, through its 100% subsidiary cardio.link Sp. z.o.o InfoSCAN is

also working on a Holter ECG, whose development is financed by a subsidy of PLN 12.7m

and which is supposed to be introduced on the market in H2/18E. While the market for ECG

is large, we believe that competition in this area is very intense. We have not accounted for

it in our valuation model as the product is still in the prototype phase and needs to be

registered in order to generate sales.

Below is our sales model for InfoSCAN. For the MEDRecorder device, we have assumed that

it will generate revenues in two ways: First, monthly fees from leasing the devices, and

second, fees per exam. Both will be generated based on contracts with unlimited duration.

Moreover, retail clients, who sign up through InfoSCAN’s website, as well as B2B clients, who

oblige to conduct a certain number of exams per month, might not have to lease the

MEDRecorder device. As our model only takes into account Poland and the US, it is in our

view very conservative.


10

We have assumed a strong increase of devices and exams from 2018E due to the market

entry in the US and the realization of the Bialystok PLUS project (examinations relating to

sleep apnea on 5,000 people in co-operation with the Medical University in Bialystok in max.

72 months).

Country Population

Number of

practising

physicians

Thereof:

Otolaryngologists

Thereof:

Cardiologists

Health

expenditures per

capita (total)

Health

expenditures per

capita (private)

Poland 38.52m 88,437 3,589 4,382 USD 1,530 USD 447

United States 324m 820,251 c. 19,000 31,491 USD 8,713 USD 4,516

United Kingdom 64.43m 181,673 1,487 2,580 USD 3,235 USD 540

Total 1,174,165 24,976 39,819

Source: OECD, Onekey database, gmc-uk.org, entjournal.com, nii.org.pl, medicalboard.gov.au

2017E 2018E 2019E 2020E 2021E

Rent 0.03 0.11 0.36 1.05 1.92

(% of sales) 35.8% 9.7% 7.0% 7.8% 6.6%

Gross margin 10.0% 45.0% 65.0% 78.0% 91.0%

Number of leased devices 26 70 200 500 800

Average fee per month 100 125 150 175 200

Exams 0.06 0.98 4.81 12.34 27.09

(% of sales) 64.2% 90.3% 93.0% 92.2% 93.4%

Gross margin 10.0% 25.0% 35.0% 45.0% 48.0%

Number of exams 280 3,640 13,200 25,080 45,144

Average price per exam 200 270 365 492 600

Total revenues 0.09 1.09 5.17 13.39 29.01

(change y-o-y) n.a 1147.5% 375.4% 158.9% 116.6%


in PLNm 2017E 2018E 2019E 2020E 2021E

Net sales 0.09 1.09 5.17 13.39 29.01

EBITDA -2.07 -5.98 -0.66 3.20 10.87

EBITDA margin -2375.3% -550.2% -12.7% 23.9% 37.5%

EBIT -2.31 -6.23 -0.92 2.93 10.58

EBIT margin -2643.7% -572.8% -17.7% 21.9% 36.5%

Net income -2.32 -6.22 -0.89 2.41 8.63

Net margin -2655.2% -571.8% -17.1% 18.0% 29.8%



11

in PLNm Q1/16 Q2/16 Q3/16 Q4/16 2016 Q1/17 Q2/17

Net sales 0.02 0.02 0.02 0.02 0.08 0.02 0.02

y-o-y change n.a n.a n.a n.a -87.3% 0.1% -18.7%

EBITDA -0.18 -0.35 -0.25 -0.50 -1.27 -0.39 -0.61

EBITDA margin n.a n.a n.a n.a n.a n.a n.a

EBIT -0.23 -0.40 -0.29 -0.57 -1.50 -0.44 -0.66

EBIT margin n.a n.a n.a n.a n.a n.a n.a

Net income -0.23 -0.40 -0.29 -0.57 -1.49 -0.44 -0.66

Net margin n.a n.a n.a n.a n.a n.a n.a


CAPEX and Working capital

In our model, we have assumed gross CAPEX of PLN 2.3m in 2017E-2019E, which in our

opinion will mainly increase intangibles due to the development of the Holter ECG and

improvements of the MEDRecorder. We have forecast that working capital will grow by PLN

4.2m in 2017E-2019E and will amount to >20% of total sales in the long run (cash

conversion cycle of 60 days). As InfoSCAN outsources production of its MEDRecorder device

and uses an external warehouse, there will be no inventories visible on its balance sheet.

We expect that in order to finance the development of the Holter ECG the subsidiary

cardio.link Sp. z.o.o will soon conduct a capital increase. However, we believe that InfoSCAN

will continue to control 60% of the subsidiary and consolidate its results.


12

Business description

InfoSCAN S.A., which is based in Warsaw, is a Polish company that offers a proprietary

telehealth device and cloud-based software for the non-invasive detection of breathing

disorder during sleep with functions for the monitoring of the heart. It is targeted especially

at doctors such as otolaryngologists, pulmonologists, cardiologists as well as medical facilities

and individual patients. The device, which was registered for sale in Europe in 2012, will

likely receive the FDA approval in H1/18E. In addition, InfoSCAN is working on a ECG cardiac

monitoring device, which it plans to introduce on the market in H2/18E. The company, which

currently has 9 employees (thereof 3 work in product development, 1 in customer service, 2

are in charge of monitoring of the exams, 1 of description of exams, 2 work in business

development and operations), has been listed in the NewConnect segment of the Warsaw

Stock Exchange since 2014.

Company history

2007: Foundation of InfoSCAN Sp. z.o.o by Messrs Jerzy Karol Kowalski (PhD Engineering),

Tomasz Widomski and Robert Bender.

2008: Completion of a first model of an electronic telehealth device for the non-invasive

measurement of blood saturation.

2009: Completion of the second model of the telehealth device and development of a

telemedical system for PCs.

2010: Co-operation agreement between InfoSCAN sp. z o.o. and Inven Capital sp. z o.o.

regarding the commercialization of the company’s technology as well as start of

development of a telehealth device for diagnostics of breathing problems during sleep

with ECG functions.

2011: Capital increase by PLN 50k.

Robert Kitlowski follows Tomasz Widomski as the CEO of InfoSCAN.

Capital increase by additional PLN 12.5k.

2012: CE registration of the InfoSCAN MEDRecorder device in Europe.

Start of pilot sales of telehealth services in Poland.

Granting of the ISO13485 certificate.

2013: Consortium with the Medical University in Warsaw relating to the planned submission

of an application for a grant from the National Center for Research and Development

(NCBiR).

Contract between the scientific consortium and NCBiR for the project „Telemedical

System for Registration and Analysis of Breathing Problems during Sleep” worth PLN

587k.


13

Investment agreement with private individuals, which foresees an investment of PLN

700k in InfoSCAN Sp. z.o.o.

Initiation of work relating to a module for the detection and analysis of cardiological

issues (Holter ECG diagnostics).

The shareholder’s meeting of InfoSCAN Sp. z.o.o decides on a capital increase of PLN

52k and a Supervisory Board, which includes Messrs Leszek Piaskowski, Robert

Bender, Tomasz Widomski, Dawid Sukacz and Pawel Turno.

Distribution agreement relating to telehealth solutions with LifeWatch Technologies

Ltd.

2014: Scientific consortium with the Medical University in Warsaw, the Medical University in

Lodz and the Military Technical Academy. Submission of three applications for grants

relating to financing of R&D as part of the “Applied Exams III” program, which is

organized by NCBiR.

Launch of a Polish version of the MEDium24 cloud-based software and an English

version of the portal.

Transformation to the joint-stock company InfoSCAN S.A. Messrs Jerzy Kowalski,

Robert Kitlowski, Jacek Kadukowski and Milosz Jamrozy become Members of the

Board.

300 commercial exams relating to diagnostics of breathing issues during sleep.

Application at the Food and Drug Administration for a Small Business status.

FDA Applicatiion for the registration of the InfoSCAN MEDRecorder as a medical

device.

2015: Capital increase of 153.65k shares at PLN 6.90 per share (PLN 1.06m) and listing in

the NewConnect segment of the Warsaw Stock Exchange.

Another private placement of 260.4k new shares at PLN 4 per share (PLN 1.04m).

The number of commercial exams relating to diagnostics of breathing issues during

sleep reaches 500.

2016: Private placement of 439.6k new shares at PLN 1.10 per share (PLN 483.6k).

Issue of 160k warrants for key staff at PLN 1 per warrant, which can be converted

into the same number of shares with a lock-up of 6 months.

The number of commercial exams with the InfoSCAN MEDRecorder device reaches

1,000.


14

2017: Private placement of 1.87m new shares at PLN 1 per share (PLN 1.87m) in February. In March, signing of an agreement with Polish PARP for the financing of participation

in international fairs (“Go To Brand” program).

Successful completion of usability tests (Human Factor Study) as well as tests relating

to electromagnetic compatibility in the US in Q1/17.

Official launch of the “AMULET” project in May as part of the StrategMED program,

on which InfoSCAN works together with a scientific consortium that consists of the

Military Medical Institute, Military Technical Academy, 4. Military Clinical Hospital with

Polyclinic SP ZOZ in Wroclaw, Medical University in Gdansk and the Medical University

in Wroclaw.

The objective of the project is the development of a system for the treatment of

patients with non-performing heart with latest methods of non-invasive hemo-

dynamic evaluation and telemedicine. The medical analysis of patients is supposed to

be enriched with automated analysis of e.g. heart beats, blood pressure, volume of

the left heart chamber.

Submission of the FDA application in June 2017 in co-operation with Smith

Associates, which has already worked on >300 such applications in the past. In July,

the formal phase was successfully completed, and the factual phase was started.

What is sleep apnea?

According to Wikipedia.org, sleep apnea is a sleep disorder, which is characterized by pauses

in breathing or periods of shallow breathing during sleep. Each pause can last for a few

seconds to a few minutes and happen many times a night. In the most common form, this is

followed by loud snoring. There may be a choking or snorting sound as breathing resumes.

As it disrupts normal sleep, those affected may experience sleepiness or feel tired during the

day. In case of children, it may cause problems in school or hyperactivity.

There are three forms of sleep apnea: obstructive (OSA), central (CSA), and a combination

of the two called mixed. In OSA, which is the most common form, breathing is interrupted

by a blockage of airflow. In CSA, breathing stops due to a lack of effort to breathe. Most

people, who have sleep apnea, are not aware of their illness.

Sleep apnea is often diagnosed with an overnight sleep study. While 1-6% of adults are

affected and 2% of children, it affects men c. twice as often as women, especially those

between 55 and 60 years old. People with sleep apnea have problems with daytime

sleepiness, impaired alertness, and vision problems. OSA can increase the risk of driving

accidents and work-related accidents. If OSA is not treated, it can lead to more serious

health problems e.g. diabetes, stroke, heart attack or failure, obesity, fatty liver disease.


15

The MEDRecorder device and the MEDium24 system

InfoSCAN’s solution consists of the MEDRecorder telehealth device and the MEDium24 cloud-

based system for data analysis, which both were developed in-house. So far, the company

has distributed c. 25 MED Recorder devices to Polish clinics, where they conduct 1-4 exams

per month. In total, the device has completed >1,500 commercial and 180 clinical exams in

the last years at a significantly higher success rate than in case of similar non-telemedical

devices (98% vs. 85-88%).

The InfoSCAN MEDRecorder registers the following parameters, which are useful in the

diagnostics of breathing disorder during sleep: (1) ECG (2) blood saturation (3) pulse wave

(4) movements of the chest and stomach (5) position of the patient’s body and its

movements (6) air movements through lips and nose as well as (7) snoring intensity. In

addition, the device, which comprises a GPRS modem that allows real-time data

transmission, offers the possibility to conduct ECG, holter/event holter ECG and online ECG

monitoring exams.

The MEDRecorder device



16

How does the exam with the MEDRecorder look like?


During the exam with the MEDRecorder, which must take at least six hours without a break,

the parameters of the patients are transmitted to InfoSCAN’s data center, where the

company’s medical experts can analyze them with the company’s web-based platform

MEDium24. The system collects the data from the MEDRecorder, aggregates and stores it.

Moreover, it is able to filter and analyze them with its own algorithms for the detection of

sleep apnea and heart arrhythmia. Finally, the complete analysis is sent to the patient’s

physician.

Distribution strategy

The InfoSCAN MEDRecorder received the CE certificate, which allows the distribution in the

European Union, from TÜV Nord in January 2012. The approval was renewed after the audit

in December 2016. However, the company’s strategy foresees a concentration on Poland and

only the most promising international markets, namely the US and UK. These countries are

most developed when it comes to diagnostics of sleep apnea and the respective exams are

reimbursed by local health insurances.

To date, InfoSCAN has only been operating in Poland, where it has acquired 25 hospitals and

clinics as clients (B2B channel), but also sells its MEDRecorder device through an own online

shop (B2C). With regard to international sales, management’s focus is now on the US, which

is the largest health market worldwide and where >3.5m exams (Poland: 13k) relating to

sleep apnea are conducted per year. Upon approval of the MEDRecorder by the FDA, which

InfoSCAN will likely receive in H1/18E (the application has already passed the formal phase),

the company wants to start the distribution of its device through operators of so-called

“sleep labs”.

“Sleep labs”, of which there are c. 2,500 in the US, are facilities, where examinations relating

to breath disorder during sleep are conducted. Throughout North America, there are c. 100

companies, which manage them.


17

Production

With regard to production of the MEDRecorder device, InfoSCAN relies completely on three

outsourcing partners, which are based in Poland and are able to produce several 10

thousand devices per year each. While this strategy is risky as the company has not full

control over quality and the outsourcing partners also co-operate with other clients, it

reduces InfoSCAN’s CAPEX and working capital requirements significantly.

Holter ECG – New product

As part of the project “AMULET”, on which the company works together with a scientific

consortium comprised of Military Medical Institute, Military Technical Academy, 4. Military

Clinical Hospital with Polyclinic SP ZOZ in Wroclaw, Medical University in Gdansk and the

Medical University in Wroclaw, InfoSCAN develops a new Holter ECG telemedical device for

monitoring of heart disorder, which is currently in the prototype phase. After receiving the

necessary approvals, InfoSCAN wants to introduce it on the market in H2/18E. The costs of

the project of PLN 13m are almost entirely covered by a non-refundable research grant of

PLN 12.7m. The development of the Holter ECG is conducted through cardio.life Sp. z.o.o,

which is 100%-owned by InfoSCAN.

While the market for ECG is highly competitive (e.g. the Polish company Medicalgorithmics is

very successful with its product in the US), it is large, and the respective examinations are

usually reimbursed by health insurances. InfoSCAN believes that it will be able to compete

with its sophisticated algorithms, unique functions, and more user-friendly, energy-efficient

devices. Moreover, its system is supposed to be for 24-hour ECG examinations, whereas

those of its competitors are for exams that take several days.

The distribution and production strategy relating to the new Holter ECG is supposed to be

the same as in case of the MEDRecorder for sleep apnea (production will be outsourced;

InfoSCAN will charge either a monthly fee for rent + a fee per exam or only a fee per exam

if client obliges to conduct a certain number of exams per month). According to

management, there are already two clients, who would like to use the product.


18

Management

Jacek Gnich (CEO): Mr Jacek Gnich is CEO of InfoSCAN. He is also Member of the

Supervisory Board at MTI Mobilna Telefonia Internetowa S.A., at US-based company Kansas

Semiconductor LLC and Direct eServices S.A. Previously, he worked among others as CEO at

Invento Sp. z.o.o, where he was in charge of implementation of an innovative package, the

construction and launch of a production facility in Poland and commercialization of the

technology in the US. Mr Gnich graduated with a Bachelor’s degree in Finance and

Accounting at the Higher Management School The Polish Open University in Warsaw. He also

completed several professional courses in Financial and Strategic Management.

Milosz Jamrozy (Vice President of the Board): Mrs Jamrozy is Vice President of the Board at

InfoSCAN and as such responsible for medical topics. He graduated with a Master’s degree in

Mechatronics at the Technical University in Warsaw and has a technical PhD in

Biocybernetics and Biomedical Engineering. Currently, he is student in the fifth year in

Human Medicine at the Medical University in Warsaw. In the last years, he has conducted

clinical studies with medical devices and acquired knowledge about planning and prototyping

of new medical products.

Bartosz Turczynowicz (Vice President of the Board): Mr Bartosz Turczynowicz is Vice

President of the Board at InfoSCAN and as such responsible for business development.

Previously, he worked among others as Business Development Manager at the IT company

EnterCOM. Mr Turczynowicz graduated with a Master’s degree in Economics with focus on

Strategic Management from the SGH in Warsaw. During his studies, he also spent several

months at HEC Montreal.

Prof. Zbigniew Gaciog PhD (Member of the Supervisory Board): Prof. Gaciog is Member of

InfoSCAN’s Supervisory Board. He is Head of the Department of Internal Diseases and

Hypertensions at the Medical University in Warsaw and a National Consultant in

hypertensiology in Poland. He is also member of the scientific council of the “Vienna School

of Clinical Research”, “Institute of Tiberculosis and Lung Diseases” and “Polish Mother’s

Memorial Hospital Research Institute”. He graduated in Human Medicine at the Medical

University in Warsaw in 1980 and in 1996 received the title of a Professor in Medical Science.

He also completed medical programs organized by the American Heart Institute. Prof. Gaciog

has been awarded with the Order of Merit by the Polish President.

Jerzy Kowalski (Member of the Supervisory Board): Mr Jerzy Kowalski is Member of

InfoSCAN’s Supervisory Board and is also the company’s co-founder. He is author of

numerous patents and scientific papers and since 1997 has been involved in the

development of new methods of diagnosing Breathing Disorder During Sleep. Mr Kowalski

holds a PhD in Technical Sciences from the Military Technical Academy and completed a

Master’s degree at the Warsaw University of Technology.


19

Market environment

The global market for telemedicine

According to BCC Research, the global telemedicine market, which is segmented into the

areas Telehome (c. 55% of the market) and Telehospital/Clinic (45% share), is set to grow

from USD 23.8bn in 2016 to USD 55.1bn in 2021E (CAGR of 18.3%). The Telehome segment

is forecast to exhibit an above-average growth with a CAGR of 24%, which should allow it to

grow its market share to 60% by 2021E. According to Research and Markets, Europe will

likely maintain its position as the second-largest telehealth market worldwide after the US,

while Asia-Pacific (especially India, China and Japan) should exhibit the fastest growth.

The market for sleep apnea

According to Marketsandmarkets.com, the global market for sleep apnea devices was worth

USD 4.59bn in 2016 and is expected to grow to USD 6.7bn by 2021E (CAGR of 7.8%). The

largest segments are therapeutic devices (PAP devices, facial interfaces, oxygen

concentrators, adaptive servo-ventilation instruments, airway clearance systems etc.). The

respective oral appliances are expected to be the main growth driver going forward. Within

diagnostic devices (PSG devices, respiratory polygraphs, single-channel screening devices,

actigraphy systems), single-channel screening devices are projected to register the highest

CAGR in the coming years. Single-channel screening devices are non-invasive and painless

cardiorespiratory monitors that are used to assess the oxygen saturation level of arterial

blood.

MarketsandMarkets.com also expects that from all end-users of sleep apnea devices home

care settings, which also covers telehealth, will exhibit the highest CAGR by 2021E. While

North America and Europe were the No 1 and No 2 sleep apnea markets in 2016, Europe is

expected to grow the fastest in the coming years due to among others increasing funding

and grants for sleep apnea devices and treatment.


20

Global market for ECG

According to Research and Markets, the global ECG equipment market will reach USD 6.5bn

by 2025E, growing at a CAGR of 5.7%.

The global ECG equipment market by product is divided into three main segments: resting

system, stress system, and Holter monitor system. The market is driven by the growing size

of the geriatric population, rising incidences of lifestyle diseases, and technological

developments. With the development of better and safer, portable, power efficient ECG

devices that are more accurate, the market will be witnessing growth especially in resting

ECG and Holter monitor systems.

The North American diagnostic ECG market accounts for the highest share (c. 44%) and will

likely remain the No 1 in the future. APAC (Asia-Pacific) is expected to grow at a highest

CAGR (6.6%) over the forecast period.


21

Profit and loss statement

in PLNm 2016 2017E 2018E 2019E 2020E 2021E

Revenues 0.08 0.09 1.09 5.17 13.39 29.01

Cost of goods sold -1.02 -0.08 -0.79 -3.25 -7.02 -14.26

Gross profit -0.95 0.01 0.29 1.92 6.37 14.75

Other operating income 0.11 0.12 0.12 0.12 0.13 0.13

Personnel expenses -0.29 -0.40 -0.60 -0.80 -1.00 -1.25

Marketing expenses 0.00 -1.60 -5.50 -1.50 -1.80 -2.16

Other operating expenses -0.14 -0.20 -0.30 -0.40 -0.50 -0.60

EBITDA -1.27 -2.07 -5.98 -0.66 3.20 10.87

Depreciation & amortisation -0.22 -0.23 -0.25 -0.26 -0.27 -0.28

Operating income -1.50 -2.31 -6.23 -0.92 2.93 10.58

Net financial result 0.00 -0.01 0.01 0.03 0.05 0.07

EBT -1.49 -2.32 -6.22 -0.89 2.98 10.65

Income taxes 0.00 0.00 0.00 0.00 -0.57 -2.02

Minorities 0.00 0.00 0.00 0.00 0.00 0.00

Net income / loss -1.49 -2.32 -6.22 -0.89 2.41 8.63

Diluted EPS -0.60 -0.51 -1.37 -0.20 0.53 1.90

DPS 0.00 0.00 0.00 0.00 0.00 0.00

Share in total sales

Revenues 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %

Cost of goods sold -1365.02 % -90.00 % -73.07 % -62.91 % -52.41 % -49.15 %

Gross profit -1265.02 % 10.00 % 26.93 % 37.09 % 47.59 % 50.85 %

Other operating income 146.14 % 137.61 % 11.25 % 2.41 % 0.95 % 0.45 %

Personnel expenses -389.11 % -458.72 % -55.16 % -15.47 % -7.47 % -4.31 %

Marketing expenses 0.00 % -1834.86 % -505.61 % -29.01 % -13.44 % -7.45 %

Other operating expenses -188.94 % -229.36 % -27.58 % -7.73 % -3.73 % -2.07 %

EBITDA -1696.93 % -2375.32 % -550.16 % -12.71 % 23.90 % 37.47 %

Depreciation & amortisation -296.92 % -268.40 % -22.59 % -4.99 % -2.02 % -0.98 %

Operating income -1993.86 % -2643.72 % -572.75 % -17.70 % 21.87 % 36.49 %

Net financial result 4.41 % -11.47 % 0.92 % 0.58 % 0.37 % 0.24 %

EBT -1989.45 % -2655.19 % -571.83 % -17.12 % 22.25 % 36.73 %

Income taxes 0.00 % 0.00 % 0.00 % 0.00 % -4.23 % -6.98 %

Minorities 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %

Net income / loss -1989.45 % -2655.19 % -571.83 % -17.12 % 18.02 % 29.75 %

* We believe that due to losses in the past InfoSCAN will not pay any income taxes until 2020E


22

Balance Sheet

in PLNm 2016 2017E 2018E 2019E 2020E 2021E

Cash and equivalents 0.06 0.10 0.23 0.39 0.39 4.00

Financial assets 0.00 0.00 0.00 0.00 0.00 0.00

Inventories 0.06 0.09 0.00 0.00 0.00 0.00

Trade accounts and notes receivables 0.04 0.29 2.68 4.96 10.09 15.89

Other current assets 0.09 0.09 0.09 0.10 0.10 0.10

Current assets, total 0.26 0.56 3.00 5.44 10.58 19.99 Property, plant and equipment 0.04 0.06 0.06 0.07 0.07 0.08

Other intangible assets 0.48 0.50 2.00 2.01 2.01 2.02

Goodwill 0.00 0.00 0.00 0.00 0.00 0.00

Other assets 0.00 0.00 0.00 0.00 0.00 0.00

Deferred tax assets 0.00 0.00 0.00 0.00 0.00 0.00

Non-current assets, total 0.52 0.56 2.06 2.07 2.08 2.09

Total assets 0.78 1.12 5.06 7.51 12.66 22.08

Trade payables 0.09 0.02 0.19 0.71 1.44 2.73

Other short-term liabilities 0.15 0.15 0.15 0.16 0.16 0.16

Short-term financial debt 0.00 0.00 0.00 0.00 0.00 0.00

Pension provisions 0.00 0.00 0.00 0.00 0.00 0.00

Provisions 0.00 0.00 0.00 0.00 0.00 0.00

Current liabilities, total 0.24 0.17 0.34 0.87 1.60 2.90

Long-term financial debt 0.00 0.90 3.40 6.20 8.20 7.70

Pension provision 0.00 0.00 0.00 0.00 0.00 0.00

Other long-term liabilities 0.21 0.00 0.00 0.00 0.00 0.00

Deferred tax liabilities 0.00 0.00 0.00 0.00 0.00 0.00

Long-term liabilities, total 0.21 0.90 3.40 6.20 8.20 7.70

Total liabilities 0.45 1.07 3.74 7.07 9.80 10.60

Shareholders equity, total 0.33 0.05 1.33 0.44 2.85 11.48

Minority interests 0.00 0.00 0.00 0.00 0.00 0.00

Total liabilities and equity 0.78 1.12 5.06 7.51 12.66 22.08


23

Cash Flow Statement

in PLNm 2016 2017E 2018E 2019E 2020E 2021E

Net income / loss -1.49 -2.32 -6.22 -0.89 2.41 8.63

Depreciation & amortisation 0.22 0.23 0.25 0.26 0.27 0.28

Change of working capital -0.73 -0.33 -2.14 -1.75 -4.40 -4.51

Others -0.01 0.00 0.00 0.00 0.00 0.00

Net operating cash flow -2.01 -2.42 -8.12 -2.37 -1.72 4.40

Cash flow from investing -0.04 -0.26 -1.75 -0.27 -0.28 -0.29

Free cash flow -2.05 -2.68 -9.87 -2.64 -2.00 4.11

Cash flow from financing 1.49 2.72 10.00 2.80 2.00 -0.50

Change of cash -0.56 0.03 0.13 0.16 0.00 3.61

Cash at the beginning of the period 0.62 0.06 0.10 0.23 0.39 0.39

Cash at the end of the period 0.06 0.10 0.23 0.39 0.39 4.00

Financial ratios

Fiscal year 2016 2017E 2018E 2019E 2020E 2021E

Profitability and balance sheet quality

Gross margin -1265.02% 10.00% 26.93% 37.09% 47.59% 50.85%

EBITDA margin -1696.93% -2375.32% -550.16% -12.71% 23.90% 37.47%

EBIT margin -1993.86% -2643.72% -572.75% -17.70% 21.87% 36.49%

Net margin -1989.45% -2655.19% -571.83% -17.12% 18.02% 29.75%

Return on equity (ROE) -174.78% -1229.55% -907.49% -100.29% 146.55% 120.39%

Return on assets (ROA) -191.78% -206.19% -123.03% -12.19% 18.67% 38.77%

Return on capital employed (ROCE) -274.45% -243.78% -131.85% -13.78% 21.46% 44.69%

Economic Value Added (in PLN) -1.58 -2.45 -6.94 -1.91 0.71 5.69

Net debt (in PLNm) -0.06 0.80 3.17 5.81 7.81 3.70

Net gearing -18.78% 1759.19% 239.37% 1321.19% 273.75% 32.23%

Equity ratio 42.41% 4.08% 26.17% 5.86% 22.54% 52.00%

Current ratio 1.09 3.27 8.86 6.25 6.60 6.90

Quick ratio 0.45 2.23 8.58 6.14 6.54 6.87

Net interest cover 452.21 -230.53 623.04 30.51 -58.58 -151.20

Net debt/EBITDA 0.05 -0.39 -0.53 -8.85 2.44 0.34

Tangible BVPS 0.13 0.01 0.29 0.10 0.63 2.53

CAPEX/Sales 58.06% 303.53% 160.94% 5.18% 2.10% 1.02%

Working capital/Sales -54.82% 336.72% 224.08% 80.91% 64.10% 45.14%

Cash Conversion Cycle (in days) 202 1500 815 270 200 130

Trading multiples

EV/Sales 385.22 331.63 26.58 5.59 2.16 1.00

EV/EBITDA -22.70 -13.96 -4.83 -44.01 9.04 2.66

EV/EBIT -19.32 -12.54 -4.64 -31.60 9.87 2.73

P/Tangible BVPS 49.02 643.62 22.17 66.76 10.30 2.56

P/E -10.86 -12.69 -4.72 -33.19 12.18 3.40

P/FCF -14.33 -10.96 -2.98 -11.12 -14.72 7.15


24

Disclaimer

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general character of its content this document does not replace investment advice.

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Advertisements) (Exemptions) Order 1996 (as amended). This research may not be

distributed and forwarded directly or indirectly to any other group of individuals. The

distribution of this document in other international jurisdictions may be restricted by law and

individuals who possess this study should inform themselves about any existing restrictions

and comply with them.

Neither this document nor any copy of it may be taken or sent to the United States of

America, Canada, Japan or Australia or distributed, directly or indirectly, in the United States

of America, Canada, Japan or Australia or to any resident thereof. Any failure to comply with

these restrictions may constitute a violation of United States, Canadian, Japanese or

Australian securities laws or the law of any other jurisdiction.

Declaration according to § 34b WpHG and FinAnV on potential conflicts of interest (As of

July 24, 2013): The preparation of this research report by East Value Research was

commissioned by InfoSCAN S.A.


25

Declaration according to § 34b WpHG and FinAnV on additional disclosures (As of July 24,

2013):

It is in the sole decision of East Value Research GmbH whether and when a potential update

of this research will be made.

Relevant basis and measures of the valuations, which are included in this document:

The valuations, which are the basis for East Value Research‘ investment recommendations,

are based on generally-accepted and widely-used methods of fundamental analysis such as

the Discounted-Cash-Flow method, peer group comparison, or Sum-of-the-Parts models.

The meaning of investment ratings:

Buy: Based on our analysis, we expect the stock to appreciate and generate a total return of

at least 10% over the next twelve months

Add: Based on our analysis, we expect the stock to appreciate and generate a total return

between 0%- 10% over the next twelve months

Reduce: Based on our analysis, we expect the stock to cause a negative return between 0%

and -10% over the next twelve months

Sell: Based on our analysis, we expect the stock to cause a negative return exceeding -10%

over the next twelve months

The respective supervisory authority is:

Bundesanstalt für Finanzdienstleistungsaufsicht

Lurgiallee 12

60439 Frankfurt

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