Professional Documents
Culture Documents
Contents
Page
1 1997 Highlights
9 Markets
11 Operations
17 Financial Risks
19 Five-year Review
28 Notes
37 Auditor’s Report
44 Glossary
2 3
The warehouse in
Jackson is the
central distribution
hub for the US
market.
Strategies and Objectives
Business concept and strategy Financial objectives
Althin Medical is an international medical techno- Althin Medical’s overarching objective is to pro-
logy group with its core business in the area of vide investors with good return on investment and
hemodialysis, which accounts for 85 percent of value growth. This is to be achieved within the
all dialysis care world-wide. Althin Medical has context of normal business risk and with due con-
chosen not to integrate forward via acquisition of sideration of other stakeholders, such as creditors,
clinics, and is thus – as far as linkages to custo- business partners, and employees.
mers are concerned – one of the largest totally For the Group’s operations, objectives have
independent dialysis companies in the world. been established regarding profitability, sales
Althin Medical’s ambitions are to, through growth, and financial position. For the operating
continuing innovative product development and units, there are corresponding goals for profitabi-
marketing, strengthen its market shares and to, lity and growth, and in addition internal objectives
through corporate acquisitions and strategic alli- for capital structure.
ances, broaden its product line and expand its
market presence. Profitability
The Group’s profit objective is an annual return
History on capital employed of 20 percent. This is an objec-
In 1985, Althin began operations by focusing on tive that holds for the Group as a whole as well as
trading medical equipment within Europe. for the three operating units.
In 1990, American company CD Medical was This profitability objective was achieved in
acquired from Dow Chemical. Through this, the 1994 and 1995, but due to low operating margins
Group obtained a world-wide organization with and the tying up of more capital in investment and
its own manufacturing and development unit in restructuring programs in Sweden and the USA,
the area of kidney care. it was not met in 1996 or 1997.
In 1995, the company went public and started In 1997, the return on capital employed equalled
the establishment of the production facility in 1.6 percent, corresponding to an operating margin
Ronneby. At the end of the year, a joint venture of 1.1 percent and a turnover rate for capital em-
was set up in Canada. ployed of 1.5 times.
In 1996, the core business area of kidney care The target for 1998 is to increase the operating
was further strengthened through the acquisition margin through higher sales and thus higher utili-
of the US company Health Care Providers, which zation of capacity, and to raise the turnover rate of
distributes dialysis products in the USA. capital employed through a lower level of invest-
In 1997, the corporate management and head- ment and a reduction in working capital.
quarters were moved to Ronneby, and the Portland,
Oregon operation was relocated to Miami Lakes,
Florida.
Quality control of membranes requires the People from all over the world come to The dialysis clinic in Miami,
use of computer monitors and microscopes. Miami to take part in the Althin Academy’s with capacity for 18 patients.
various educational programs.
4 5
The Kungsholm
dialysis clinic in
Stockholm has
created a warm
and friendly
environment.
Growth
The Group’s and the operating units’ objective is
The central
to increase sales of dialysis products by on average warehouse in
at least 15 percent per year. The assumption is that Jackson is now
this is of crucial importance for their long-term fully completed.
competitiveness and profitability.
The dialysis market has a stable annual growth
rate of around 8 percent in terms of numbers of
patients. This corresponds to a growth in market
value of about 6 percent. The Group’s growth
objective thus necessitates increases in market
shares through organic growth and corporate
acquisitions.
As a dialysis company, Althin Medical partici-
pates in a global market. Through its own sales
companies and via distributors, the Group sells to
approximately 70 countries. Throughout the 1990s,
the Group’s growth and strategy have encompassed
all larger national markets.
During 1997, sales of dialysis products – ad- A practical
justed for currency fluctuations – rose by 17 per- demonstration
cent, and over the most recent five-year period, at the Althin
Academy in
sales have risen on average 20 percent per year. Ronneby.
Financial position
The Group’s objective is for its equity ratio to rise
to 50 percent so that organic growth can be finan-
cially assured and readiness can be created for
new acquisitions and other business opportunities.
However, in connection with acquisitions and
larger investments such as those during 1996 and
1997, the equity ratio can fall temporarily below
what is desirable over the long run.
After the extensive investments and the in-
crease in working capital during 1996 and 1997,
the equity ratio fell to 39 percent. During 1998,
investment will be considerably reduced. Further-
The membrane
more, a capital rationalization project has been production
initiated with the aim of reducing accounts receiv- facility in Miami
able and inventories by 150 MSEK at the current is one of the
five largest in
level of sales. the world.
In consideration of the ever-lower rate of in-
flation in Althin Medical’s main markets, and their
fundamentally stable market growth, the Board of
Directors will determine during 1998 whether the
equity-ratio target should be reduced.
Review and
training in
the use of
the new Tina™.
Studying technical
manuals at the
Althin Academy
in Taiwan.
Markets
The dialysis market Competitors
Dialysis involves the cleansing of the blood by The largest global competitors in dialysis are the
artificial means and is a life-maintaining treatment American company Baxter, German Fresenius,
for patients suffering from chronic kidney failure. Swedish Gambro, and several Japanese companies.
There are two types of dialysis: hemodialysis and In addition, there are a number of regional compe-
peritoneal dialysis. In hemodialysis, a dialyzer titors.
(artificial kidney) takes over the kidney’s function
of cleansing the blood of waste products, which Market position
are usually removed via the urine, and of excess Althin Medical holds a 3 percent share of the
fluids. In peritoneal dialysis, the patient’s own global market in hemodialysis, but conducts no
peritoneum (the connective membrane between business in peritoneal dialysis. For the Group’s
the inner walls of the abdomen and the abdominal core products – dialysis machines and dialyzers/
organs) is used as a dialysis filter. Kidney trans- membranes – the market shares in terms of
plants are an alternative to dialysis, but are limited volumes are 9 and 6 percent, respectively.
by a shortage of donated organs.
At present, there are approximately 900,000 Market prospects
dialysis patients in the world, of whom 85 percent The dialysis market enjoys a stable annual growth
receive hemodialysis and the remaining 15 percent rate of around 8 percent measured in number of
peritoneal dialysis. Of these patients, 75 percent patients, corresponding to a growth in value of
live in Europe, North America, and Japan. about 6 percent. The rate of growth is currently
The world market for dialysis products as a greater for hemodialysis than for peritoneal dialysis.
whole amounts to around 45 billion SEK, of which The increasing number of patients depends
35 billion is related to hemodialysis. upon several factors:
• Rising standards of living mean that more
Customers and more people are gaining access to dialysis
The customer structure, which encompasses care. This can be clearly seen in many so-called
hospitals, clinics, and chains of clinics, varies emerging markets, where annual growth
around the world. In Europe and Japan, dialysis is 10-20 percent.
care is financed and operated for the most part
• Lengthening lifetimes lead to a higher
by the public sector, while in the USA more than
frequency of cases of kidney failure.
half of the treatments are carried out by nation-
wide chains of clinics. The clinic chains are either • Dialysis treatment is being offered to more
operated as independent, often publicly traded and to older patients.
companies or are part of dialysis companies that
also manufacture.
Training in dialysis techniques The new production facility for dialyzers. Meeting in the well-designed office in Parma.
at the Althin Academy in Miami.
8 9
The new Tina™
dialysis machine
creates a quiet
and safe working
environment.
Operations
Production Althin Medical offers a wide assortment of dia-
Althin Medical carries on production in its own lyzers, covering most patients’ needs. The products
facilities in Sweden and the USA, and in a 50- differ in both price and performance.
percent-owned company in Canada.
In Ronneby, Sweden, dialyzers, dialysis machi- Dialysis machines
nes, and bicarbonate cartridges are manufactured. Althin Medical manufactures and sells the System
This facility is also the central warehouse for 1000® and Tina™ dialysis machines, both of which
business operations in Europe. are based on a computerized concept and have a
Dialysis membranes, dialyzers, and dialysis touch screen, making two-way communication
machines are manufactured in Miami Lakes, possible between the user and the machine.
Florida in the USA. The central warehouse for In 1991, System 1000® was introduced, and its
US operations lies in Jackson, Mississippi. successor Tina ™ was introduced in 1997. Tina™
Althin Biopharm in Canada produces dialysis is a further development of System 1000®.
fluids.
Certain other products for dialysis treatment Altracart and dialysis fluids
are manufactured externally under contract or Althin Medical produces and sells the powder
outsourced. concentrate system Altracart II, which comes in
two sizes for one or two treatments. Altracart has
Products shown strong sales performance since its launch
Membranes/dialyzers in the beginning of 1996.
Althin Medical manufactures and sells both mem- Althin Medical also markets ordinary concen-
branes for dialyzers and complete dialyzers. trates of dialysis fluids.
Manufacturing of membranes takes place using
the unique, patented melt-spinning method, which Other dialysis products
unlike other processes does not require toxic Althin Medical also markets among other things
solvents. blood hoses, dialysis needles, and catheters, and
thus covers a comprehensive product range for
dialysis treatment.
The office and warehouse in Parma An interesting cooperation involves the university The new Tina™ machine is used in a
provides all of Italy with support and products. college at Soft Center, the County Council’s hospital large number of clinics in Southeast Asia.
district, and Althin Medical in Ronneby.
10 11
The Althin Academy
in Miami is an
education center
that receives
many visitors.
Sales
Althin Medical sells via its own companies
Professor Vittorio
and through distributors in around 70 countries. Bonomini at Bologna
During 1995 – 97, sales were geographically University has co-
distributed as follows: operated with Althin
Medical for the past
seven years.
Sales by market area
1995 % 1996 % 1997 %
Europe, Africa, Middle East 436 49 417 49 463 45
North and South America 227 34 287 34 416 40
Asia and Australia 145 17 143 17 159 15
Total 808 100 847 100 1.038 100
Althin Academy
Althin Academy conducts both basic and advanced
education in dialysis for our own personnel,
physicians, nurses, and others working in the area.
Education takes place in our own premises in
Checking the
Miami Lakes and Ronneby, and also in the form functions of a
of seminars in various parts of the world. Tina™ machine.
Althin Academy is also responsible for the
Althin Scientific Advisory Board, on which sit
around ten well-known experts from around the
world.
12 13
Quality control
of dialyzers.
Organization and personnel Membrane manufacturing is carried out using the
Althin Medical is organized into three operating melt-spinning method, which possesses environ-
units with profit responsibility, plus corporate mental advantages compared to alternative pro-
management and a corporate staff. cesses. In contrast to solution spinning, melt
The three operating units cover the following spinning uses no toxic solvents.
market areas: Packaging for the new dialyzers is made of
• Europe, Africa, and the Middle East polyamide.
• North and South America
• Asia and Australia Other
Patents and trademarks
Since CD Medical was acquired at the end of 1990, Patents and trademarks are an important part
the largest portion of employees has been in the of the company’s operations.
USA. Through the establishment of the Ronneby Patents have been obtained for the melt-spinning
facility, the number of employees in Sweden has process for the manufacture of membranes, the
doubled over recent years. During 1995-97, method for manufacturing dialyzers, and the touch
personnel were distributed as follows: screen on the dialysis machines.
Trademark protection covers the company name
1995 1996 1997 and most products, including Tina™, Altracart™,
and the various dialyzers and membranes.
Sweden 63 109 139
Other Europe 75 76 77
Insurance
North and South America 559 598 638
The parent company coordinates the Group’s
Asia 14 11 15 insurance protection for property, liability, and
Total 711 794 869 transport. The negotiation and management of
policies is carried out through an external global
The increase during 1997 is partly explained by in- insurance broker. The Group has, in the opinion of
creased personnel needs in the USA in connection senior management, adequate insurance coverage.
with the relocation from Portland to Miami Lakes.
At the end of the year, employees totalled 790. Disputes
Althin Medical is not party to any disputes, litiga-
Environment tion, or arbitration the outcome of which could
Althin Medical actively works to meet internal negatively affect the company’s economic position
and external environmental demands. to any significant degree.
In the new production facility for dialyzers
in Ronneby, releases of isocyanate are limited
to 3 percent of the permitted level.
The Althin Academy in Ronneby. Process control in dialyzers manufacturing. Preparing for an Althin Academy seminar.
14 15
Opportunities Threats
Alliances Cost saving in health care
For Althin Medical, alliances with other companies In many countries, cost savings are being demanded
can mean both increased sales of our own products in the area of health care. Althin Medical seeks to
and a complement to our product line. meet these demands through developing products
and systems of good quality and high overall cost
Independent suppliers effectiveness.
Althin Medical has chosen to not integrate forward
through the acquisition of clinics, and feels that Transplants
this creates a competitive advantage in selling to Kidneys are transplanted with some frequency,
independent clinics and clinic operators. limited however by the shortage of donors. One
further complication is rejection of organs. Re-
New products search is also being conducted into whether it is
Althin Medical strives to broaden its product possible to transplant animals’ kidneys. Althin
range, which yields economies of scale in sales. Medical feels that the transplantation of animal
kidneys will not take place to any significant
New markets extent in the foreseeable future.
Althin Medical is represented in most countries
with well-developed dialysis care, with market Government inspections
shares that vary from country to country. The Medical technology products are, in most coun-
objective is to strengthen the Group’s position tries, subject to a more or less comprehensive go-
through increased investments in Asia and Latin vernment inspection, which can be both time-
America, in particular. consuming and expensive. At the same time, these
costs present an entry barrier to new market parti-
Economies of scale ciparts.
Althin Medical had, at the end of 1996, a shortage
of capacity in the production of dialyzers, but this Dependence on larger customers
was eliminated during 1997 through the invest- The loss of large customers can cause a negative
ments in Ronneby. An increasing utilization of impact on profits if it is not offset by other sales.
capacity will gradually lead to visible economies Althin Medical’s dependence on large single custo-
of scale in production over the coming years. mers has however gradually decreased during the
1990s. At present, the three largest customers
Rationalization of capital account for 15% of the Group’s total sales.
A Group project has been initiated in order to re-
duce tied-up capital in inventories and accounts Product liability
receivable by 150 MSEK at the current level of Dialysis is a form of treatment that potentially
sales. exposes manufacturers and care providers to the
risk that improper treatment or accidents can lead
Unique know-how to claims for damages. It is hard to judge how an
Althin Medical’s unique know-how in, for example, incorrectly carried-out treatment or accident might
membrane technology, makes possible both low affect the company financially or commercially.
production costs and applications in related areas. The management is of the opinion that the Group
enjoys adequate insurance coverage for product
liability.
Purchasing of clinics
When clinics and clinic operators are acquired by
competitors, Althin Medical’s potential market
shrinks. The independent clinics and clinic opera-
tors have, however, at the same time an interest in
developing business ties to independent suppliers
like Althin Medical.
Financial Risks
Althin Medical has as its goal to maintain a high Flow exposure
level of financial readiness and to minimize capi- Althin Medical experiences its cashflows primarily
tal costs and financial risks. The management of in SEK, USD, and the larger European currencies,
these questions is to a large extent centralized in especially DEM, FRF, GBP, and ITL. The flows
the parent company. which can significantly affect Althin Medical’s
earnings are at present inflows in the European
Financing and liquidity currencies with a net value of about 150 MSEK,
Financing risk refers to the risk that the Group’s and also outflows in USD with a net value of
access to new capital becomes more difficult or about 50 MSEK. A change in exchange rates of
unnecessarily expensive. +/-10 percent for the preceding European curren-
Althin Medical seeks to ensure a high level of cies or USD would consequently affect the Group’s
financial readiness by entering into binding, long- net income by +/-15 MSEK or -/+5 MSEK, respec-
term credit agreements. tively.
Current liquidity is maintained using liquid The Group does not actively hedge its flows
assets, short-term investments, and binding credit of future payments.
agreements which must altogether amount to at Exchange rate risk in individual subsidiaries,
least 10 percent of sales. As of December 31, 1997, which is primarily attributable to the net of accounts
liquid assets and short-term investments amounted receivable and accounts payable in foreign currency,
to 23 MSEK, and unused binding lines of credit is normally minimized through borrowing in the
amounted to 118 MSEK – altogether totalling 14 currency in question.
percent of Group sales for 1996.
The Group’s liquid assets are invested with a Conversion exposure
limited degree of risk and high accessibility, pri- When exchange rates change, the consolidation of
marily in the Swedish money market. the net assets of foreign subsidiaries gives rise to
conversion differences. The effect of a conversion
Interest-rate risks difference on the Group’s risk capital expressed in
Interest-rate risk concerns the risk that changes the currency of the parent company (SEK) can be
in the level of interest rates will affect the Group’s minimized through borrowing and hedging in the
net income. corresponding currencies. At the same time, this
By maintaining liquidity readiness mainly in increases the risk of changes in the Group’s equity
the form of unused lines of credit, the interest-rate ratio compared to the situation in which hedging
risk becomes primarily attributable to gross debt. does not take place.
The average time over which interest rates could The net assets of Althin Medical’s subsidiaries
be fixed for gross debt equalled 3.3 months as of are mainly financed by the parent company in the
the end of 1997. form of equity and long-term loans. Althin Medical
has elected to not hedge its net investment in its
Foreign exchange risk foreign subsidiaries.
Foreign exchange risk refers to the risk that changes
in currency exchange rates will negatively affect Economic exposure
the Group’s net income and risk capital. Althin Medical’s main competitors primarily manu-
Althin Medical’s foreign exchange risks are facture in Germany, Italy, and Japan, and, like
posed by changes in exchange rates in payment Althin Medical, in Sweden and the USA. Changes
flows (flow exposure) and the conversion of the in currency exchange rates that mainly affect the
value of foreign subsidiaries’ net assets to Swedish cost situation in Germany, Italy, and Japan affect
crowns (conversion exposure). Althin Medical’s competitiveness relative to these
Althin Medical is also affected by the impacts competitors.
of changes in exchange rates on relative competi-
tiveness.
16 17
Board of Directors’ Report
The Board of Directors and Chief Executive Officer US operations
of Althin Medical AB (publ) herewith report the The restructuring of US operations started in the
account of the operations during fiscal year 1997 autumn of 1996 after the acquisition of Health Care
of the parent company and the Group. Suppliers with the transfer of the logistics function
from Miami Lakes, Florida to Jackson, Mississippi.
Ownership structure During 1997, the development department and
Althin Medical AB is a subsidiary of Althinvest production operations were moved from Portland,
International AB, which owns 56 percent of the Oregon to Miami Lakes. When the problems were
shares and 83 percent of the voting rights of the detected in the US subsidiary, the Group CEO im-
company. mediately stepped in as Chief Executive Officer
Since April 1995, Althin Medical’s B-class and a reorganization began.
shares have been listed on the O list of the Stock-
holm Stock Exchange. Establishment of the Ronneby facility
The establishment of the Ronneby facility is now
Operations during 1997 completed. The start of production of dialyzers took
The year was characterized above all by large place in July and complements the manufacturing
structural changes in the Group. These have nega- of dialysis machines and bicarbonate cartridges.
tively affected the Group’s profits for the year, but The Group’s other Swedish activities plus corpo-
have simultaneously strengthened the Group’s rate management and the headquarters have also
long-term competitiveness. been concentrated to the Ronneby facility. Since
Sales rose during 1997 by 23 percent to 1,037.6 CE certification of dialyzers in October, all produc-
MSEK (847.3). Operating income equaled 11.2 tion lines in Ronneby – dialysis machines, bicarbo-
MSEK (53.2) and income after financial items nate cartridges, and dialyzers – are approved for
came to -2.8 MSEK (42.6). sales to all EU countries.
In connection with the year-end closing, large
cost increases in US operations were confirmed. Product development
The combined increase in costs beyond what was During the year, a series of new products were
planned totalled about 40 MSEK, of which around launched, of which the most noticeable were the
30 MSEK is considered extraordinary. The total Tina™ dialysis machine and its add-on Hemavision™
costs for the move from Portland to Miami Lakes, option for the measurement of blood volume and
including productivity losses, training, and similar hematocrit. The new dialyzers from Ronneby were
costs, amounted to 52 MSEK, of which 27 was well-received.
written off against previously created restruc- In February of 1998, the first clinical tests were
turing reserves. Additional costs of 25 MSEK in- successfully carried out of dialyzers with the new
clude 8 MSEK due to delays in the sale of the pro- Althane™-PS membrane. This is the first membrane
perty, which is expected to take place during 1998. based on synthetic polymers that the company has
Because of the unexpected rise in costs, a con- developed.
sulting firm has been engaged to examine the mana-
gement systems, logistics, and organization in the Investments
Group. The restructuring expenses that arise as a The investments in machines, equipment, and
result of proposed measures will be charged to buildings totalled 70 MSEK (72) and mainly con-
Group income during the first half of 1998. cerned the production unit for a new generation
Net income for 1997 was also negatively affec- of dialyzers in Ronneby. With the new unit in full
ted by the expansion of capacity. Its impact on in- operation, the Group’s manufacturing capacity
come will gradually lessen over the coming years. for dialyzers is doubled.
With the Ronneby facility now fully expanded,
the Group’s total investment will decrease signifi-
cantly.
Financial position The Board’s work
Even after the large investments in Ronneby and Althin Medical’s Board of Directors consists of
the relocation of operations from Portland to Miami six members including the Chief Executive Officer
Lakes, the Group’s financial position is good. The plus a deputy member, all elected at the Annual
equity ratio equalled 39 percent, compared to 48 General Shareholders’ Meeting. Executives of the
percent the previous year. Group take part in the Board’s meetings and assign-
ments. The company’s auditor, in conjunction with
Personnel the preparation of the annual report, presents his
The number of employees was on average 869 (794). observations from the audit.
The increase is partly due to increased staffing in The Board met six times during the year. The
the USA in connection with the move of operations division of labor and responsibility between the
from Portland to Miami Lakes. At the end of the Board and the Chief Executive Officer is laid down
year, the total number of employees equalled 790. in a work program for the Board and an instruction
for the Chief Executive Officer.
18 19
Consolidated Income Statement
MSEK Note 1997 1996
Invoiced sales 2 1.037,6 847,3
Cost of goods sold -683,0 -527,8
Gross income 354,6 319,5
Sales expenses 6, 8 -155,4 -131,2
Administrative expenses 6, 8 -126,9 -103,0
Research & development expenses 6, 8 -48,7 -44,4
Other operating revenues and expenses 3, 10 -12,4 12,3
Operating income 11,2 53,2
Net financial items 11 -14,0 -10,6
Income after financial items -2,8 42,6
Taxes 12 2,5 -15,7
Net income for the year -0,3 26,9
Key indicators 34
Operating margin, % 1,1 6,3
Profit margin, % -0,3 5,0
Net margin, % 0 3,2
Interest coverage ratio, times 0,8 5,0
Return on capital employed before taxes, % 1,6 10,5
Return on shareholders’ equity after taxes, % -0,7 7,3
Earnings per share after full taxes, SEK 0 4,3
Invoiced Return on
MSEK sales Margins capital employed
1.000 % %
900 12 25
800
700 10
20
600 8
500 15
400 6
300 4 10
200 5
2
100
0 0 0
93 94 95 96 97 93 94 95 96 97 93 94 95 96 97
20 21
Consolidated Balance Sheet
MSEK Note 1997 1996
ASSETS
Intangible fixed assets 13 60,5 47,6
Tangible fixed assets 14, 15 224,6 177,7
Other long-term operating assets 16, 17, 18 14,6 9,6
Long-term operating assets 299,7 234,9
Key indicators 34
Equity ratio, % 39,0 47,8
Net debt-equity ratio 1,0 0,5
Shareholders’ equity per share, SEK 63,5 61,2
Comments on the
Consolidated Balance Sheet
Capital employed Shareholders’ equity
Capital employed increased to 782.5 MSEK Shareholders’ equity increased by 14.0 MSEK
(580.2) at year’s end. Of this, working capital to 394.8 MSEK (380.8) as a consequence of
made up 482.8 MSEK (345.3) and long-term the following factors:
operating assets accounted for 299.7 MSEK
(234.9). Net income for the year -0,3
As a percentage of sales, and adjusted for cor- Dividend -12,4
porate acquisitions, accounts receivable grew from Conversion differences 26,7
26 to 30 percent and inventories from 24 to 28 Total 14,0
percent. The build-up in inventories was carried
out in order to buffer the Group’s ability to fulfill
Shareholders’ equity per share at year’s end
orders while the move from Portland to Miami
totalled 63.5 SEK (61.2).
Lakes was underway.
Assets pledged
External financing
Total assets pledged at year’s end amounted to
Gross debt grew by 184.7 MSEK to 421.3 MSEK
61.9 MSEK (63.4), and Group obligations against
(236.6). The unutilized portion of approved lines
which assets were pledged as security equaled
of credit at year’s end equaled 118.0 MSEK
17.6 MSEK (14.5).
(210.9).
22 23
Consolidated Statement of
Changes in Financial Position
MSEK 1997 1996
Internally generated funds
Operating income before depreciation 46,7 76,3
Net financial items -14,0 -10,6
Taxes 2,5 35,2 -15,7 50,0
Internally
generated funds Investments Current liquidity
MSEK MSEK % MSEK
80 140 14
70 250
120 12
60 100 10 200
50
80 8 150
40
30 60 6
100
20 40 4
10 20 2 50
0 0 0 0
93 94 95 96 97 93 94 95 96 97 93 94 95 96 97
Investments Unutilized credit
% of sales Liquid assets
24 25
The Parent Company’s
Income Statement
MSEK Note 1997 1996
Invoiced sales 4 355,4 319,6
Cost of goods sold 4 -257,3 -244,3
Gross income 98,1 75,3
Investments
Shares and participations – -0,8
Long-term receivables from subsidiaries – 46,6
Long-term claim – -1,1
Machinery, equipment, and real estate -44,3 -50,6
Intangible assets -19,7 -64,0 -4,5 -10,4
26 27
Notes
Note 1. Accounting and valuation principles
28 29
Amounts are in MSEK unless otherwise stated
Note 2. Distribution of sales Note 4. Purchases and sales within the Group
Sales revenues were distributed among geographic markets During the year, the parent company purchased products worth
as follows: 177.4 MSEK (172.9) from other Group companies, and sold
products worth 141.3 MSEK (114.6) to other Group companies.
1997 1996 1995
Europe, Africa, Middle East 463 417 436
North and South America 416 287 227
Note 5. Average number of employees
Asia and Australia 159 143 145
1997 1996
1.038 847 808
Number of Of which Number of Of which
employees women employees women
Parent company 139 60 109 47
Note 3. Other operating revenues and costs Subsidiaries 730 291 685 279
Group Parent company 869 40% 794 41%
1997 1996 1997 1996
Full legally specified details can be obtained from the company.
Regional establishment grants 8,3 10,0 8,3 10,0
Share of income in affiliated
companies 4,3 2,3
Expenses in excess of plan
for restructuring in the USA -25,0 –
-12,4 12,3 8,3 10,0
See also Note 28.
Salaries and other remunerations are distributed among company directors etc. and employees as follows:
1997 1996
Board and CEO Other Board and CEO Other
(of which profit sharing etc) employees (of which profit sharing etc) employees
Parent company 2,8 35,0 1,4 25,8
Development expenses
Starting acquisition value 6,7 6,7 6,7 6,7
Purchases 8,3 – 8,3 –
Ending residual value according to plan 15,0 6,7 15,0 6,7
Total residual value according to plan 60,5 47,6 28,1 8,4
30 31
Note 14. Tangible fixed assets
Group Parent company
1997 1996 1997 1996
Buildings and land
Starting acquisition value 51,3 50,5 23,3 23,3
Purchases 2,5 – 0,3 –
Adjustments for currency conversion 4,0 0,8 – –
Ending accumulated acquisition value 57,8 51,3 23,6 23,3
Real estate
Book value 47,6 44,9 21,8 22,1
Taxation values 21,8 21,8 21,8 21,8
Reported taxation values refer only to those properties held by the parent company (in Sweden).
Note 20. Other operating receivables Note 22. Long-term financial assets
Group Parent company Long-term financial assets consist of receivables associated
1997 1996 1997 1996 with financial leasing totalling 10.9 MSEK. The gross investment
in connection with financial leasing agreements amounts to 20.2
Prepaid expenses and
MSEK, of which 2.6 MSEK comprises unearned financial income.
accrued revenues 6,2 7,3 2,9 4,1
Included in current financial assets are receivables relating to
Outstanding taxes receivable 26,7 19,8 0,5 –
financial leasing of 6.7 MSEK.
Other receivables 42,8 34,5 27,2 28,5
75,7 61,6 30,6 32,6
32 33
Note 23. Current financial assets Note 24. Loans and guaranties granted
as benefits to corporate executives
Group Parent company
1997 1996 1997 1996 Neither the parent company nor any of the subsidiaries has
granted loans or guaranties as benefits to corporate executives.
Cash & bank deposits 16,0 16,2 1,1 0,9
Short-term investments – 1,5 85,1 70,6
Financial leasing 6,7 6,4 – –
22,7 24,1 86,2 71,5
34 35
Proposed Distribution
of Earnings
According to the consolidated balance sheet, Retained earnings at beginning of year 7,7 MSEK
unrestricted shareholders’ equity amounts to Net income for the year 7,7 MSEK
104.6 MSEK. 15,4 MSEK
The Board of Directors and the Chief Executive Be distributed as follows:
Officer Propose that those funds which, according A dividend of 1.00 SEK per share
to the balance sheet, are at the disposal of the to the shareholders 6,2 MSEK
Annual General Shareholders’ Meeting, that is: Carried forward as new retained
earnings 9,2 MSEK
15,4 MSEK
I have examined the annual report, consolidated Swedish Annual Reporting Act, or the Articles of
financial statements, accounting records, and the Incorporation. I consider my audit to provide me
administration of the Board of Directors and Chief with reasonable grounds for my recommendations
Executive Officer for 1997. It is the Board of Directors below.
and Chief Executive Officer who bear the responsibi- The annual report and consolidated financial
lity for the accounting records and administration. statements have been prepared in accordance with
It is my responsibility to comment upon the annual the Swedish Annual Reporting Act. I therefore
report, consolidated financial statements, and admini- recommend:
stration on the basis of my audit.
The examination has been carried out in accord- – that the income statement and the balance sheet
ance with generally accepted auditing practice. of the parent company and the group be adopted,
This means that I have planned and carried out and
the audit in order to, within a reasonable degree – that the earnings of the parent company be
of certainty, ascertain that the annual report and distributed in accordance with the proposal
consolidated financial statements do not contain in the Board of Directors’ Report
significant errors. An audit involves the inspection
of a sample of the documents that support amounts The members of the Board of Directors and the
and other information in the accounting records. Chief Executive Officer have taken no measure nor
Also included in an audit is a test of whether incurred responsibility for any negligence that in
generally accepted accounting principles have my judgement might occasion liability for recomp-
been followed, including whether they have been ense to the company. I therefore recommend:
applied by the Board of Directors and Chief Ex-
ecutive Officer, and also to assess the collected – that the members of the Board of Directors
information in the annual report and consolidated and the Chief Executive Officer be granted
financial statements. I have reviewed significant a discharge from liability for the fiscal year.
decisions, measures, and relationships in the
company in order to be in a position to judge
whether any members of the Board or the Chief Ronneby, March 19, 1998
Executive Officer are liable for recompense to the
company or in any other way have acted in con- Åke Stenmo
flict with the Swedish Stock Corporation Act, the Authorized Public Accountant
36 37
The Althin Medical Share
Stock Exchange Trading Dividend policy
Althin Medical’s Class B shares have been listed The objective of the Board of Directors is for the
since April of 1995 on the O List of the Stockholm dividend over the next few years to be equal to
Stock Exchange. approximately 20% of after-tax net income.
The total volume of shares traded during 1997 When the company’s capital requirements and
was 3,411,000 (3,549,000), which is equivalent financial position later permit, it is the intention
to a daily average of 13,600 (14,200). of the Board to propose gradual increases in the
During 1997, Althin Medical’s share price fell distributed portion of earnings.
18 percent, from 148 to 122 SEK. The general in-
dex rose 25% during the year. The Althin Medical Dividend
share was quoted at a low for 1997 of 105 SEK, For the 1997 accounting year, the Board of Direc-
and at a high of 173 SEK. tors proposes a dividend of 1 SEK per share.
Ownership
Major shareholdings as of December 31, 1997 Number of shares Votes (%) Capital (%)
Share-price performance
The share The general index
275
250
225
200
175
150
125
100
1995 1996 1997 (c) SIX Findata
38 39
Board of Directors
ANDERS ALTHIN JACK FORSGREN EBBE KROOK HANS LARSSON JOHN-JACOB ENGELLAU BO HÅKANSSON CHARLOTTE ALTHIN
Auditor
Åke Stenmo, born 1945. Certified Public
Accountant. Auditor of Althin Medical AB
since 1985. Partner in Ernst & Young AB.
Shareholding: 0.
40 41
Organization and Network
Headquarters Denmark Finland Italy
Althin Medical AB Althin Medical A/S Althin Medical Oy Althin Medical SpA
Box 39 Gydevang 4 A Pl 33 Via Fantelli, 17
SE-372 21 RONNEBY DK-3450 ALLERØD SF-00841 HELSINKI I-43100 PARMA
SWEDEN DENMARK FINLAND ITALY
Tel: +46 457-759 00 Tel: +45-48-14 11 48 Tel: +358-9-69 89 133 Tel: +39-521-77 51 54
Fax: +46 457-173 95 Fax: +45-48-14 11 94 Fax: +358-9-69 85 775 Fax: +39-521-77 51 55
Corporate Management
Europe, Africa, Middle East North and South America Asia, Australia
Production Production
Canada Poland Singapore Germany
Althin Biopharm, Inc. Althin Medical Sp.zo.o Althin Medical International, Althin Medical GmbH
3885 Boul. Industrial ul. Miedziana 14 Ltd Kurze Strasse 40
LAVAL, QUEBEC 00-835 Warsawa #16-04 Cathay Building D-70794 Filderstadt
CANADA H7L 4S3 POLAND 2, Handy Road GERMANY
Tel: +1-514-662-2211 Tel: +48-22-620 82 20 SINGAPORE 229233 Tel: +49-711-77 55 60
Fax: +1-514-629-1221 Fax: +48-22-620 82 20 SINGAPORE Fax: +49-711-77 55 43
Tel: +65-336 1331
Norway Russia Fax: +65-339 2669 USA
Sinsenveien 53D Althin International AO Althin Medical, Inc.
N-0585 Oslo Moscow Office Spain 14620 NW 60th Avenue
NORWAY VO Sovincenter Althin Medical S.L MIAMI LAKES, FL. 33014
Tel: +47-2209-4500 Office 503 B Calle Calabria 259, Primero 4ta USA
Fax: +47-2209-4505 Krasnopresnenkaya nab. 12 BARCELONA 08029 Tel: +1-305-823-5240
123610 Moscow SPAIN Fax: +1-305-822-6217
RUSSIA Tel: +34-3-439 16 01/02
Tel: +7-095-253 16 80 Fax: +34-3-410 95 29 Althin Healthcare, Inc.
Fax: +7-095-253 91 89 855 Boling Street
Jackson, MS 39209
USA
Tel: +1-601-360 95 32
Fax: +1-601-360 95 36
42 43
Glossary
Anesthetics Diffuse, diffusion Peritoneal dialysis
Painkiller, pain relief. Is the physical principle whereby Dialysis that occurs in the patient’s
two fluids of different molecular abdominal cavity where the perito-
Dialysis machine concentrations in contact strive to neum acts as a dialysis membrane.
Circulates blood and dialysis equalize their mutual difference
fluid via the dialyzer, measures in concentration. In hemodialysis, Renal failure
the pressure relationship of the this implies that waste products The condition that occurs when the
blood and dialysis fluid sides, in the blood diffuse across to the function of the kidneys is reduced
respectively, regulates the saline dialysis fluid via the semiperme- or ceases entirely. Renal failure is
content in the dialysis fluid, and able membrane. primarily caused by chronic renal
monitors the treatment so that the inflammation and agerelated
patient is not exposed to risks or Hematocrit changes in renal function.
harmed in any way. The total volume of blood cells
expressed as a percentage of the Semipermeable
Dialysis fluid total blood volume. Implies that the membrane only
Is the pure saline solution that, in allows the passage of molecules
hemodialysis, flows on the oppo- Hemodialysis of a certain molecular size.
site side of the semipermeable Treatment that replaces the kidney
membrane in relation to the blood. function in patients suffering from Solution spinning
renal failure. In this treatment, The production process for mem-
Dialyzer the patient’s blood is cleansed of branes in which different toxic
The artificial kidney that is em- waste products, and the blood is solvents are employed in the
ployed in hemodialysis. It consists relieved of surplus fluid outside manufacturing process.
of semipermeable membranes in of the body, using a dialyzer.
the form of capillaries. In the dia- Transplantation
lyzer, blood and dialysis fluid flow Melt spinning Implies that an organ, in this case
on their respective sides of the A production process for mem- a kidney, from a donor is grafted
membrane. Waste products diffuse branes that, unlike solution into a patient and restores the
from the blood through the mem- spinning, does not utilize toxic patient’s renal function.
brane to the dialysis fluid because solvents.
of the difference in concentration Urology
between the two solutions. Surplus Membrane (in dialysis) That branch of medicine which
fluid is removed from the blood Is the major component in a dia- concerns itself with the urinary
because of pressure differences lyzer and consists of a semiperme- tract, its illnesses and their
between the blood side and the able barrier that allows fluids and treatment.
dialysis fluid side. certain molecules to pass, while
preventing the passage of other
molecules and cells. The proper-
ties of the membrane are deter-
mined by the manufacturing pro-
cess and by the polymer type
employed in the membrane.
Production: Althin Medical AB / N.A.D. Design: N.A.D. Skogs Boktryckeri AB. Printed on Swan-marked paper: Cover and pages: MultiArt.
Annual General
Shareholders’ Meeting
The Annual General Shareholders’ Meeting of Althin upon which the dividend will be recorded. If the Annual
Medical AB will take place on Wednesday, April 22, General Meeting decides to adopt the Board’s proposal,
1998 at 4 PM in the Auditorium, Soft Center, Ronneby. then it is anticipated that the dividend will be paid out
The address of the entrance is Soft Center III, by VPC AB on May 5, 1998.
Högeskolevägen 8, Ronneby.
Change of address
Right to Participate Private individuals who are domiciled in Sweden do not
To be entitled to participate in the Annual General need to notify the Swedish Securities Register Center of
Meeting, shareholders must be entered in the stock address changes; this is taken care of automatically via
register maintained by the Swedish Securities Register the Swedish postal service. Other shareholders who have
Center (Värdepapperscentralen VPC AB) no later than changed their address, name, and/or account number
April 12, 1998, and have submitted advance notification should send notification of the changes as soon as pos-
of their intention to participate in the Annual General sible to the financial intermediary handling their account.
Meeting to Althin Medical AB by 4 PM, April 17, 1998 All shareholders who have registered their shares with
at the latest. a nominee should notify the nominee of any changes
of name, address, or account number without delay.
In order for their votes in the Annual General Meeting A special notification form can be obtained at banks.
to be valid, shareholders who have permitted their shares
to be registered with a nominee – such as a bank trust Financial information
department or brokerage company – must temporarily Althin Medical’s financial information is published in
have the shares entered in their own name in the Swedish Swedish and English. The reports can be ordered from
Securities Register Center’s stock register. Shareholders Althin Medical AB, Box 39, 372 21 Ronneby, Sweden,
must inform their nominees of this well in advance of tel. +46 457 759 00, fax +46 457 173 95. Financial
April 12, 1998. information is also available via Internet at
http://www.althin.com
Notification or http://www.afv.se/bolagsinfo/althin.
Advance notification of the intention to participate
in the Annual General Meeting must be submitted During 1998, Althin Medical AB will issue the following
to the company at Box 39, 372 21 Ronneby, Sweden. financial reports:
Notification may also be made by telephone, 1st quarter interim report (January-March 1998),
+46 457 759 00, or fax, +46 457 173 95.¨ on April 22, 1998
Six month interim report (January-June 1998),
Dividend on August 10, 1998
For financial year 1997, a dividend of 1.00 SEK per 3rd quarter interim report (January-September 1998),
share is proposed. April 27, 1998 is proposed as the day on October 29, 1998
Table of Contents
97
Overview
Summary 1997 A NNUA L R EPORT 1997
Key figures
Report of the Board of Directors
Income Statement
Balance Sheet
Cash Flow Analysis
Notes
Shareholders Policy
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