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1 1997 Highlights

2 Letter from the Chief Executive Officer

5 Strategies and Objectives

9 Markets

11 Operations

16 Opportunities and Threats

17 Financial Risks

18 Board of Directors’ Report

19 Five-year Review

20 Income Statement with Comments

22 Balance Sheet with Comments

24 Statement of Changes in Financial Position with Comments

26 The Parent Company

28 Notes

36 Proposed Distribution of Earnings

37 Auditor’s Report

38 The Althin Medical Share

40 Board of Directors and Senior Management

42 Organization and network

44 Glossary

45 Annual General Shareholders’ Meeting

1997 Highlights
Sales Financial position
• Sales increased by 23 percent to 1,038 MSEK • The Group’s financial position remains sound.
(847). Correcting for currency exchange effects, The equity ratio equalled 39 percent (48).
the increase was 15 percent as a whole and 9
percent excluding the impacts of acquisitions. New products
• The Tina™ dialysis machine, which has the add-on
Earnings Hemavision™ option for the measurement of blood
• Operating income totalled 11 MSEK (53) and volume and hematocrit values, was launched during
income after net financial items came to -3 MSEK the year. The new dialyzers from Ronneby were
(43). well-received in the marketplace.
• The sharp drop in profits during the last quarter • In February 1998, the first clinical test of dialyzers
was mainly due to cost overruns in connection fitted with the new Althane™ membrane was success-
with the restructuring of US operations. fully carried out. This is the first membrane based
on a synthetic polymer developed by the company.
Structural measures
• The establishment of the new facility in Ronneby Organization
and the relocation of the Portland operation to • Group management has been concentrated to
Miami Lakes were both completed during the year. Ronneby. Operating units with their own profit
responsibility have been created for the following
Investments regions: Europe (with Africa and the Middle East),
• Investments totalled 70 MSEK (72) and were North and South America, and Asia and Australia.
mainly related to the production line for a new
generation of dialyzers in Ronneby.
• With the new production unit in Ronneby complete, • The Board of Directors proposes that the dividend
Althin Medical’s investments will decrease be 1.00 SEK per share.

The Group 1997 1996

Invoiced sales, MSEK 1.038 847
Operating income, MSEK 11 53
Income before taxes, MSEK -3 43
Return on capital employed before taxes, % 2 11
Return on shareholders’ equity after taxes, % 0 7
Equity ratio, % 39 48
Investments, MSEK 70 72
Number of employees 869 794

Key financial indicators for the company’s share

Earnings per share, SEK -0,1 4,30
Dividend per share, SEK1) 1,00 2,00
Shareholders’ equity per share, SEK 64 61
Definitions, see note 34
Proposed dividend for 1997
1997 – Positioning
ourselves for the future
in the future dialysis market, our company must
possess an efficient structure, organization, and
modern production capacity. This has been achieved
partly through the large investment in the manu-
facturing unit in Ronneby, and partly through the
relocation of the Portland facility to Miami.

In Ronneby, an ultra-modern production facility

for dialyzers (disposable kidneys) was brought
into operation during the autumn of 1997. This
investment means that we have doubled our capa-
city for the manufacturing of dialyzers, and that
the manufacturing can be highly efficient and
optimized for a new, up-to-date dialyzer design.
Together with the production of our award-winning
Tina ™ dialysis machine and our various bicarbo-
nate cartridges in the AltraCart II series, we now
have in Ronneby an excellent facility that we will
benefit greatly in the future as more and more of
the factory’s capacity is utilized.

In the US, the manufacturing of dialysis machines

was moved from Portland to Miami. This relocation
was carried out in order to make production more
efficient and to economize on fixed costs. We esti-
mate that the annual savings will amount to 10-12
MSEK. The move was completed in December,
and during the closing for that month it was dis-
covered that the expenses incurred in the move
greatly exceeded the budget. These expenses plus
a large compensation claim from Japan gave rise
During recent years, the dialysis market has under- to extraordinary expenses of around 30 MSEK that
gone a rapid change in structure, especially in the impacted upon the fourth quarter’s performance.
USA. This has led clinics to merge into larger en- This, coupled with an additional 10 MSEK of un-
tities and form chains of clinics. At the same time, planned cost overruns, caused the fourth quarter’s
Althin Medical’s main competitors have integrated loss to completely eliminate any profits for the
forward into health care services and bought clinics year, resulting instead in a loss of about 0.3 MSEK
and even whole dialysis care chains. It is against after taxes. The Board of Directors was therefore
this background of rapid changes in the environ- forced to issue a statement warning of damaged
ment that Althin Medical’s major investments in profits a week before the monthly accounting was
infrastructure and capacity during 1996 and 1997 made public. When the financial results from US
should be seen. In order to be able to compete operations became available, I immediately took
over executive control of the US subsidiary and joint venture in Canada, Althin Biopharm, which
carried out a reorganization. The Board of Directors was formed in 1995 and which builds on Biopharm’s
decided, on March 3, 1998, to engage a consulting dialysis fluids and Althin Medical’s dialysis pro-
firm to review the Group’s management systems, ducts. In a short time, we have achieved a leading
logistics, and organization. We estimate that, by market position in Canada. In the future, we will
the time of the six-month interim report, we will pursue additional partnerships in order to assure
be able to make public the consulting firm’s re- the continuing fast growth of our development,
commendations and the costs of potential measures, production, and sales.
and also the revenues and cost-savings that we anti-
cipate the measures will generate. At that time, the Our research and development department is
necessary provisions will be made in the Group’s focused on the development of dialysis machines
second-quarter accounting. We have also decided and related software, and also on the development
to carry out a complete audit of the six-month of new dialysis membranes. Of particular interest
interim accounting so as not to be caught off guard is the development of a new synthetic membrane
at the end of the year. It is crucial that we achieve that was developed entirely in-house using our
a better structure in our internal control systems own patented “melt-spinning” method. This new
so that senior management can manage better and membrane, which we have named Althane™-PS,
anticipate developments in the company’s financial underwent clinical tests in the beginning of 1998
performance. at the Huddinge/Söder Hospital in Stockholm.
The results were very satisfactory, and we there-
Fortunately, sales have been strong during 1997 fore hope to be able to make a preliminary launch
and orders have been very vigorous during the start of new dialyzers containing the Althane ™-PS
of 1998. Orders have been especially numerous for membrane by the end of 1998/beginning of 1999.
our award-winning Tina™ dialysis machine. This This new polysulphone membrane will be of great
year, we will complement Tina™ with new add-on significance for our future profitability and growth.
options such as Hemavision®, which measures blood
volume, hematocrit values, and hemodiafiltration. With our positive sales trend and an increasingly
I am certain that this will further increase demand productive R&D department, and with internal
for our outstanding dialysis machine. management and control systems that will begin
working more effectively, we have every reason
In March 1998, a global agreement was signed to look to the future with confidence. To conclude,
with the US dialysis care company TRC (Total I would like to thank all of Althin Medical’s
Renal Care Inc.). TRC is one of the world’s largest employees for their outstanding efforts during
dialysis care companies, with 360 clinics in the a challenging year marked by large investments
USA and a growing number of clinics outside the and rapid changes.
US. This partnership with TRC offers us large
opportunities in preparation for the future, as TRC Ronneby, March 1998
is one of the most rapidly growing care providers
and is ambitiously pursuing rapid growth in inter-
national markets as well. I believe that partnerships
constitute a strategically important path for our Anders Althin
company. A very successful example of this is our Chief Executive Officer

2 3
The warehouse in
Jackson is the
central distribution
hub for the US
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,

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
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
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.

Objective Average 1997 1996 1995

1993 – 97
Sales growth, dialysis 15% 20% 17% 14% 13%
Return on capital
employed 20% 14% 2% 11% 23%
Equity ratio 50% 38% 39% 48% 59%

Review and
training in
the use of
the new Tina™.
Studying technical
manuals at the
Althin Academy
in Taiwan.
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
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®.
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.

Other medical technology products

Dialyzers Since its founding in 1985, Althin Medical has
Dialysis machines distributed medical technology products in the
areas of urology, anesthesia, intensive care, and
Other dialysis products
heart surgery. This business is carried on mainly
Other medical technology
products in the Nordic countries, where Althin is the market
leader in certain product areas.

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.
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

Research and development

Althin Medical’s product development strategy
involves focusing on certain core areas, first
among them membranes /dialyzers and dialysis
machines. Research and development work is
conducted in-house at the Group’s facilities in
Ronneby and Miami Lakes, and also through
collaboration with a number of universities and
colleges in Europe and the USA.
During 1997, a new generation of dialysis
machines based on Althin Medical’s patented The warehouse in
Montreal is one of
melt-spun membrane Althane ™ was launched. the most recent
In parallel, a new membrane has also been additions to our
developed based on polymers other than cellulose. capacity to cover
our delivery com-
Clinical tests of a new synthetic membrane started mitments.
at the beginning of 1998.
Furthermore, in 1997 a new dialysis machine
was launched – Tina™ – which was well-received
by the market. Tina™ will gradually offer new add-
on options for home hemodiafiltration, hemavision,
and home dialysis.

The demand for

Tina™ machines is
steadily growing,
and the production
facility in Ronneby
is under heavy

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
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

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-

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-
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.

Group performance 1993 1994 1995 1996 1997

Income statement (MSEK)
Invoiced sales 655 770 808 847 1.038
Operating income 35 62 84 53 11
Income before taxes 14 45 75 43 -3
Net income 6 29 55 27 0
Balance sheet (MSEK)
Financial assets 7 25 62 37 34
Operating assets 405 446 548 757 978
Total assets 412 471 610 794 1.012
Shareholders’ equity 66 141 360 381 395
Financial liabilities 223 203 134 237 422
Operating liabilities 123 127 116 176 195
Total liabilities and shareholders’ equity 412 471 610 794 1.012
Statement of changes in financial position (MSEK)
Internally generated funds 16 43 72 50 35
Changes in working capital -1 -29 -94 -73 -106
Investments -32 -46 -68 -104 -80
Cash flow after investments -17 -33 -90 -127 -151
Foreign exchange effects -23 13 5 6 -25
New issue – 56 191 – 0
Dividend – – -6 -12 -12
Change in net debt -40 36 100 -133 -188
Key indicators
Sales growth, dialysis, % 35 21 13 14 17
Sales growth, total, % 26 17 12 11 15
Operating margin, % 5 8 10 6 1
Profit margin, % 2 6 9 5 0
Net margin, % 1 4 7 3 0
Return on capital employed before taxes, % 14 21 23 11 2
Return on shareholders’ equity after taxes, % 10 28 19 7 0
Accounts receivable as a % of sales 26 21 23 28 30
Inventories as a % of sales 22 20 19 26 28
Degree of self-financing, % 51 94 119 61 45
Debt-equity ratio, times 3,3 1,3 0,2 0,5 1,0
Equity ratio, % 16 30 59 48 39
Interest coverage ratio, times 1,7 3,6 8,5 5,0 0,8
Definitions are in note 34.

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

Quarterly data I II III IV Full year

Invoiced sales 251 250 256 281 1.038
Gross income 95 94 84 82 355
Operating income 14 12 16 -31 11
Invoiced sales 188 188 217 254 847
Gross income 86 73 75 86 320
Operating income 15 8 15 15 53
Comments on the
Income Statement
Invoiced sales Operating income totalled 11.2 MSEK (53.2), corre-
Sales totalled 1,037.6 MSEK (847.3), representing sponding to an operating margin of 1.1 percent (6.3).
an increase of 23 percent. When adjusted for cur- Total cost increases exceeded anticipated rises
rency fluctuations, the increase in sales was 15 by 40 MSEK. Of this, 30 MSEK consists of extra-
percent, or 9 percent with the effects of corporate ordinary costs incurred by US operations, most
acquisitions removed. For dialysis products, total of them stemming from the move from Portland
sales growth was 17 percent, or 9 percent exclud- to Miami Lakes.
ing the effects of acquisitions. Net financial items increased to -14.0 MSEK
Sales growth has been vigorous, especially for (-10.6). Net interest expense rose to -19.5 MSEK
dialysis machines and bicarbonate cartridges. (-11.4) because of greater net financial liabilities.
The net gain from changes in exchange rates
Net Income totalled 5.1 MSEK (0.2).
Gross income equalled 354.6 MSEK (319.5), Income after net financial items fell to -2.8
corresponding to a margin of 34 percent (38). MSEK (42.6), and the profit margin fell to -0.3
The margin deteriorated due to the fact that a percent (5.0).
larger proportion of sales derived from externally Total taxes amounted to +2.5 MSEK (-15.7).
manufactured products than was the case last year, Of this figure, actual taxes equalled +9.6 MSEK
and also due to thinner margins on products manu- (-7.4), and deferred taxes were -7.1 MSEK (-8.3).
factured in-house. Net income for the year came to -0.3 MSEK
(26.9). Earnings per share were thus 0 SEK (4.30).

Invoiced Return on
MSEK sales Margins capital employed
1.000 % %
900 12 25
700 10
600 8
500 15
400 6
300 4 10
200 5
0 0 0
93 94 95 96 97 93 94 95 96 97 93 94 95 96 97

Other medical Operating margin

technology products Profit margin
Dialysis products

Comments on the diagrams

During the most recent five-year period, average annual growth has amounted to 20 percent for dialysis products and 16 percent
for all products. The Group’s annual growth target is 15 percent for dialysis products. After improvements during 1993-95, the net
income and margins fell during 1996 and 1997, primarily as a consequence of expenses in connection with the expansion of the Group’s
production capacity. Because of the deterioration in financial results during 1996 and 1997, return on capital employed has also fallen.
The Group’s target is 20%.

20 21
Consolidated Balance Sheet
MSEK Note 1997 1996
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

Inventories 19 294,7 222,2

Accounts receivable 308,2 238,0
Other operating receivables 20, 21, 31 75,7 61,6
Current operating assets 678,6 521,8
Operating assets 978,3 756,7
Long-term financial assets 22 10,9 13,1
Current financial assets 23 22,7 24,1
Financial assets 33,6 37,2
Total assets 1.011,9 793,9


Share capital 25 24,9 24,9
Restricted reserves 25 265,3 265,0
Restricted shareholders’ equity 290,2 289,9
Unrestricted reserves 25 104,9 64,0
Net income 25 -0,3 26,9
Unrestricted shareholders’ equity 104,6 90,9
Shareholders’ equity 394,8 380,8
Long-term financial liabilities 26 285,6 215,8
Current financial liabilities 27 135,7 20,8
Financial liabilities 421,3 236,6
Provisions 28 1,2 25,1
Current operating liabilities 29, 30 194,6 151,4
Total liabilities and shareholders’ equity 1.011,9 793,9
Assets pledged 32 61,9 63,4
Contingent liabilities 33 54,9 39,1

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).

Capital Employed MSEK Capital structure Equity ratio

MSEK % 1.000 %
700 70 900 60
600 60 800
700 50
500 50 600 40
400 40 500
400 30
300 30
200 20 300 20
100 10 10
0 0 0 0
93 94 95 96 97 93 94 95 96 97 93 94 95 96 97
% of sales Net debt
Capital employed Shareholders' equity

Comments on the diagrams

During the most recent five-year period, capital employed has increased primarily due to the growth of sales and investments.
Through new share issues in 1994-1995, the Group obtained 250 MSEK and the equity ratio was raised to over 50 percent.
After the large structural investments during 1996-97, the equity ratio was 39 percent.

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

Changes in working capital

Increase in operating receivables -62,8 -33,5
Increase in inventories -51,5 -53,2
Increase in operating liabilities 8,4 -105,9 13,6 -73,1

Cash flow before investments -70,7 -23,1

Shares and participations -2,3 -1,6
Machinery, equipment, and real estate -70,4 -72,2
Intangible assets -7,7 -9,6
Corporate acquisitions – -80,4 -20,6 -104,0

Cash flow after investments -151,1 -127,1

Foreign exchange effects -24,8 6,7

Dividend to shareholders -12,4 -37,2 -12,4 -5,7

Increase/decrease in net financial liabilities -188,3 -132,8

Foreign exchange effects 15,9 -0,9

Increase in debt 168,8 103,5
Decrease in long-term financial assets 2,2 186,9 – 102,6

Change in liquid assets -1,4 -30,2

Change in unutilized approved lines of credit -92,9 99,2
Change in total available liquid assets -94,3 69,0
Comments on the
Consolidated Statement of
Changes in Financial Position
Cash flow before investments Net financial liabilities
Internally generated funds fell from 50.0 to 35.2 As a consequence of the negative cash flow, the
MSEK as a consequence of worsened financial Group’s net financial liabilities have risen, and
results. Working capital increased by 105.9 MSEK at year’s end totalled 387.7 MSEK (199.4), corre-
excluding the effects of exchange-rate fluctuations. sponding to a net debt-equity ratio of 1.0 (0.5).
Cash flow before investments amounted to
-70.7 MSEK (-23.1). Liquid assets
Liquid assets including the unutilized portion of
Investments approved credits amounted to 140.7 MSEK (235.0)
Investments in fixed and intangible assets totalled at year’s end.
78.1 MSEK (81.8), with a degree of self-financing
of 45 percent (61).
Cash flow after investments was -151.1 MSEK

generated funds Investments Current liquidity
80 140 14
70 250
120 12
60 100 10 200
80 8 150
30 60 6
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

Comments on the diagrams

Internally generated funds increased during 1993-1995, but fell during 1996 and 1997 due to lower earnings.
A comprehensive expansion of production capacity was carried out during 1995-1997. This burdened total liquidity,
which was strengthened by a restructuring of external financing during 1996.

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

Sales expenses 6, 8 -59,9 -49,7

Administrative expenses 6, 8 -31,4 -27,2
Research & development expenses 6, 8 -14,0 -9,5
Other operating revenues and expenses 3 8,3 10,0
Operating income 1,1 -1,1
Net financial items 9, 11 6,6 6,4
Income before taxes 7,7 5,3

The Parent Company’s Statement

of Changes in Financial Position
MSEK 1997 1996
Internally generated funds
Operating income before depreciation 11,3 4,8
Net financial items 6,6 17,9 6,4 11,2

Changes in working capital

Increase in inventories -15,8 -10,6
Increase in accounts receivable -16,4 -6,1
Increase in other operating receivables -111,8 -37,7
Increase in operating liabilities 17,3 -126,7 6,8 -47,6

Cash flow before investments -108,8 -36,4

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

Cash flow after investments -172,8 -46,8

Increase in debt 199,9 80,5
Dividend to shareholders -12,4 187,5 -12,4 68,1
Change in liquid assets 14,7 21,3
The Parent Company’s
Balance Sheet
Mkr Not 1997 1996
Intangible fixed assets 13 28,1 8,4
Tangible fixed assets 14, 15 122,8 88,7
Other long-term operating assets 16 137,4 137,4
Long-term operating assets 288,3 234,5

Inventories 19 70,9 55,1

Accounts receivable 70,1 53,7
Receivables from subsidiaries 148,8 35,1
Other operating receivables 20, 21 30,6 32,6
Current operating assets 320,4 176,5
Operating assets 608,7 411,0
Long-term financial assets 1,1 1,1
Current financial assets 23 86,2 71,5
Financial assets 87,3 72,6
Total assets 696,0 483,6


Share capital 25 24,9 24,9
Restricted reserves 25 251,9 251,9
Restricted shareholders’ equity 276,8 276,8
Unrestricted reserves 25 7,7 14,8
Net income for the year 25 7,7 5,3
Unrestricted shareholders’ equity 15,4 20,1
Shareholders’ equity 292,2 297,0
Long-term financial liabilities 26 233,8 106,8
Current financal liabilities 27 72,9
Financial liabilities 306,7 106,8
Current operating liabilities 29, 30 97,1 79,8
Total liabilities and shareholders’ equity 696,0 483,6
Assets pledged 32 50,0 50,0
Contingent liabilities 33 136,8 148,7

26 27
Note 1. Accounting and valuation principles

Unchanged accounting principles Exchange rate differences which can be attributed to

The accounting principles are unchanged from the long-term receivables and liabilities between the parent
previous year. company and its subsidiaries are directly applied to
shareholders’ equity as conversion discrepancies.
The Group’s consolidated financial statements en- Receivables and liabilities
compass the parent company Althin Medical AB and in foreign currency
all companies in which the parent company, at year’s Receivables and liabilities in foreign currency above and
end, either directly or indirectly owned more than 50% beyond long-term receivables and liabilities between
of the voting rights of all shares and participations. the parent company and its subsidiaries are valued
Companies that were acquired during the year have according to the exchange rate at year’s end. Exchange
been included in the consolidated income statement as rate differences are reported under financial items.
of the date of acquisition.
The purchase method Inventories are stated as the lower of the acquisition
The consolidated financial statements have been pre- value – determined according to the first-in/first-out
pared in accordance with the purchase method, where- principle – or the market value. Required reserves are
by the market value of the net assets of the acquired allocated for obsolescence and internal profits.
subsidiaries at time of acquisition is subtracted from
the acquisition value of the subsidiaries’ shares. In cases Reporting of affiliated companies
where the acquisition value is greater than the market according to the equity method
value of acquired net assets, the difference is reported A company is an affiliate of the Group if the latter holds
as goodwill, which is depreciated over an estimated a long-term ownership interest amounting to at least
economic life. This depreciation cost is charged to the 20% and at most 50% of the voting rights of its out-
operating income. If the acquisition value is less than standing shares.
the market value of the acquired net assets, then the In the consolidated income statement, the share
value of non-monetary fixed assets is written down of profits from affiliated companies is reported under
against the difference. The amount that remains after operating income. In the consolidated balance sheet,
the non-monetary fixed assets have been written down shares held in affiliates are reported under long-term
is negative goodwill, which is then written off according operating assets. The difference between the acquisi-
to a prescribed schedule. tion value and market value of net assets assignable
to acquired shares in affiliates is treated in accordance
Conversion of foreign subsidiaries with the rules for goodwill accounting and depreciated
Conversion of the financial statements of foreign sub- over a ten-year period (please see description under
sidiaries is carried out according to the current method, the heading “The purchase method” above). The book
whereby income statements are converted using the value of the equity holdings is adjusted by the propor-
year’s average exchange rates and balance sheets are tion of each respective affiliate’s net income after taxes
converted using the exchange rates as of year’s end. reduced by the value of dividends received. Undistribu-
The discrepancies that arise in connection with currency ted earnings of affiliates are reported as shareholders’
conversion are directly applied to shareholders’ equity. equity under restricted reserves.
Leasing Buildings, machinery, and equipment
In several of the foreign subsidiaries, leasing agreements Depreciation according to plan is based on the acquisi-
have been entered into which essentially bestow all attri- tion values of assets and their estimated economic
butes of ownership upon the lessee (financial leasing). lifetimes.
The present value of future payments in connection For buildings, the depreciation period is 30-33
with these leasing agreements has been capitalized as years. For machinery and equipment, it is 7-12 years.
an asset. Corresponding amounts have been treated Tools, computers, and vehicles are depreciated over
as liabilities. For further information, please see Note at most 5 years.
15 on leasing.
In those cases where Group companies act as Regional establishment grants
lessors in financial leasing agreements, the net invest- Althin Medical AB has been granted certain regional
ment in the leasing agreement has been reported as establishment subsidies regarding the establishment of
a receivable in the balance sheet. Please also see note facilities in Ronneby. The grants are paid out in install-
22 on long-term financial assets. ments after the accomplishment of successive phases,
and are conditional upon the complete implementation
Intangible assets of the investments. The grants are reported under
Goodwill is depreciated according to plan in the income operating income, and are applied during the same
statement. The depreciation period is 10 years. Patents, periods that establishment costs are incurred.
trademarks, and similar rights are depreciated accord-
ing to plan over their estimated economic lives. Expen- Adjustments
ses for research and development are charged against Certain adjustments have been made to previous years’
income in the year in which they are incurred, with figures to permit full comparability.
the exception of those development expenses that are
financed through loans with conditional repayment
obligations. These are capitalized as long-term operating
assets and depreciated at the same pace as the repay-
ment schedule.


Average rate Year-end rate
Country Currency 1997 1996 1997-12-31 1996-12-31
France FRF 1,31 1,31 1,31 1,31
Italy (1.000) ITL 4,48 4,34 4,45 4,50
UK GBP 12,50 10,46 13,12 11,60
Germany DEM 4,40 4,46 4,40 4,42
USA USD 7,64 6,70 7,87 6,87

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.

Note 6. Salaries, other remuneration, and social insurance withholdings

1997 1996
Salaries Social Of which Salaries Social Of which
and other insurance pension and other insurance pension
remuneration withholdings insurance remuneration withholdings insurance
Parent company 37,8 16,8 3,0 27,2 11,1 1,7
Group 245,8 60,6 4,1 191,4 47,1 3,1
Of the parent company’s pension expenses, 0.2 (0.2) pertain to the Group’s Board of Directors and CEO.
The outstanding pension liability of the company to these persons is zero.

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

Group 10,3 235,5 8,4 183,0

Full legally specified details can be obtained from the company.

Note 7. Conditions of the CEO’s employment Note 8. Depreciation and write-downs

The Chief Executive Officer has an annual salary of 2,000,000 Group Parent company
MSEK. The CEO’s retirement pension for 62 – 65 years of age 1997 1996 1997 1996
is 70% of the salary basis for pension calculation, and after that
becomes 50% of the pension salary basis. Machinery and equipment 27,2 17,6 9,6 5,3
The period of notice on the part of the company is 1 year, Buildings 3,1 2,7 0,6 0,6
and on the part of the CEO 6 months. Under certain conditions, Goodwill 3,0 1,2 – –
the CEO has the right to demand a severance payment worth Other intangible assets 2,2 1,6 – –
up to 18 months’ salary. 35,5 23,1 10,2 5,9
Note 9. Income from shares in Note 11. Net financial items
consolidated subsidiaries
Group Parent company
The parent company has received dividends from subsidiary 1997 1996 1997 1996
companies worth 0.6 MSEK.
Interest income 2,2 1,4 12,5 4,2
Interest expenses -21,7 -12,8 -14,3 -1,1
Exchange rate differences 5,1 0,2 7,8 3,1
Note 10. Income from shares in Other 0,4 0,6 0,6 0,2
affiliated companies
-14,0 -10,6 6,6 6,4
Althin Medical’s share of income from Althin-Biopharm Inc.,
Canada, amounted to 2.5 MSEK (1.3) after deductions for taxes
of 1.8 MSEK (1.0). This amount has been included in the
consolidated Group accounts under other fixed assets. Note 12. Taxes on net income for the year
1997 1996
Taxes paid 9,6 -7,4
Deferred taxes -7,1 -8,3
2,5 -15,7

Note 13. Intangible fixed assets

Group Parent company
1997 1996 1997 1996
Starting acquisition value 28,9 6,5
Purchases 24,0
Sales/retirements -3,2
Adjustments for currency conversion 3,9 1,6
Ending accumulated acquisition value 32,8 28,9

Starting depreciation value -2,8 -3,1

Depreciation during the year -3,0 -1,2
Sales/retirements 2,6
Adjustments for currency conversion -0,2 -1,1
Ending accumulated acquisition value -6,0 -2,8
Ending residual value according to plan 26,8 26,1

Other intangible assets

Starting acquisition value 20,3 18,3 3,0 3,0
Purchases 3,6 11,4
Adjustments for currency conversion 4,9 2,0
Ending accumulated acquisition value 28,8 20,3 14,4 3,0

Starting depreciation value -5,5 -4,1 -1,3 -1,3

Depreciation during the year -2,2
Adjustments for currency conversion -2,4 -1,4
Ending accumulated acquisition value -10,1 -5,5 -1,3 -1,3
Ending residual value according to plan 18,7 14,8 13,1 1,7

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

Starting depreciation value -6,4 -3,6 -1,2 -0,6

Depreciation during the year -3,1 -2,6 -0,6 -0,6
Adjustments for currency conversion -0,8 -0,2 – –
Ending accumulated acquisition value -10,3 -6,4 -1,8 -1,2
Ending residual value according to plan 47,5 44,9 21,8 22,1

Machinery and other technical facilities

Starting acquisition value 183,3 138,6 77,7 36,0
Purchases 65,9 – 44,8 –
Sales/retirements -7,5 – -3,1 –
Adjustments for currency conversion 13,5 3,0 – –
Ending accumulated acquisition value 255,2 141,6 119,4 36,0

Starting depreciation value -50,5 -49,1 -11,0 -11,2

Sales/retirements 4,7 – 2,2 –
Depreciation during the year -27,2 – -9,6 –
Adjustments for currency conversion -5,2 -1,4 – –
Ending accumulated acquisition value -78,2 -50,5 -18,4 -11,2
Ending residual value according to plan 177,0 91,1 101,0 24,8

New facilities currently underway

Starting acquisition value – 41,7 – 41,7
Ending residual value according to plan – 41,7 – 41,7
Total residual value according to plan 224,6 177,7 122,8 88,7

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 15. Leasing

Under the category of machinery and equipment are included During the year, fees paid in connection with objects held under
objects held under financial leasing agreements, in the following operational leasing amount to 4.5 MSEK, and to 0.1 MSEK for
amounts: the parent company.
Group Parent company
In total, future fees associated with operational leasing agree-
1997 1996 1997 1996
ments amount to 17.8 MSEK, and to 0.9 MSEK for the parent
Machinery and equipment 23,6 29,3 4,4 4,4 company. Future leasing fees in connection with operational
Accumulated depreciation -9,4 -11,1 -1,6 -1,1 leasing fall due according to the following annual schedule:
14,2 18,2 2,8 3,3 Group Parent company
1998 4,5 0,3
Future payments associated with financial leasing have been repor-
1999 3,3 0,3
ted as liabilities in the balance sheet. Payments due during 1998
2000 3,0 0,2
have been reported as current liabilities. In total, future payments
2001 3,1 0,1
associated with financial leasing agreements amount to 15.9 MSEK,
2002 2,2
and to 1.6 MSEK for the parent company. Future payments fall
2003 and later 1,7
due according to the following annual schedule:
Group Parent company
1998 3,5 0,1
1999 4,1 1,1
2000 3,3 0,4
2001 5,0
Note 16. Other long-term operating assets
Group Parent company
1997 1996 1997 1996
Shares in consolidated
subsidiaries – – 129,1 129,1
Shares in affiliated companies 12,1 9,6 8,3 8,3
Other 2,5 – – –
14,6 9,6 137,4 137,4

Note 17. Shares and participations in subsidiaries

Company Participation Number Book Organization Registered
in % of shares value number location
Althin Medical Inc. 100 5.000.000 68.5 – USA
Althin International AB 100 5.500 5.4 556263-4336 Ronneby
Althin Medical Norden AB 100 20.000 3.6 556140-9011 Stockholm
Mediplast Produktion AB 100 4.000 1.6 556105-6085 Lund
Althin Medical International BV 100 2.000.000 48.5 – Netherlands
Althin Medical Oy 100 150 1.2 – Finland
Althin Medical SNC 0 – France
Althin Medical Sp.z.o.o. 100 500 0,2 – Poland
Althin Mediplast A/S 100 600 0,1 – Denmark
Althin Medical International ZAO 100 1.000 0 – Russia
Total 129.1

Note 18. Shares and participations in affiliated companies

Company Voting and Number Book Organization Registered
equity parti- of value number location
cipation in % shares
Althin-Biopharm Inc. 50 115 8,3 – Canada
Total 8,3
The parent company owns 50% of the voting rights and equity of Althin-Biopharm Inc., Canada, which corresponds to 115 shares.
The remainder are owned by Axcan Pharma Inc.

Note 19. Inventories Note 21. Prepaid expenses

and accrued revenues
Group Parent company
1997 1996 1997 1996 Group Parent company
1997 1996 1997 1996
Raw materials 113,9 69,9 26,1 17,4
Work in process 32,4 39,5 6,6 2,8 Prepaid rent 0,6 0,4 0,4 0,2
Finished goods 148,4 112,8 38,2 34,9 Other items 5,6 6,9 2,5 3,9
294,7 222,2 70,9 55,1 6,2 7,3 2,9 4,1

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

Note 25. Changes in shareholders’ equity

The share capital is distributed among 6,218,000 shares at a par value of 4 SEK. Of these shares, 1,062,500 are Class A shares
and 5.155.500 are Class B shares. Ten voting rights accompany a Class A share and one right a Class B share.

Group Share capital Restricted reserves Unrestricted reserves

At beginning of year 24,9 265,0 90,9
Conversion difference 4,0 22,7
Undistributed portion of earnings from affiliates 2,5 -2,5
Transfer between unrestricted and restricted reserves -6,2 6,2
Dividend -12,4
Net income for the year -0,3
At year’s end 24,9 265,3 104,6

Parent company Share capital Legal reserv Retained earnings

At beginning of year 24,9 251,9 20,1
Dividend -12,4
Net income for year 7,7
At year’s end 24,9 251,9 15,4

Note 26. Long-term financial liabilities Note 28. Provisions

Long-term financial liabilities fall due for payment in the Group
following amounts for these years as follows: 1997 1996
Pensions 1,2 1,1
Group Parent company
Restructuring reserves – 24,0
1999 179,6 175,0
1,2 25,1
2000 3,7 0,4
2001 62,8 57,8 A reserve for restructuring was set aside in connection with
2002 – – the acquisition of Health Care Suppliers in 1996, for anticipated
2003 and later 39,5 0,6 expenses related to restructuring in the USA. The reserve was
gradually utilized during 1996 and 1997.
285,6 233,8

Note 29. Current operating liabilities

Note 27. Current financial liabilities
Group Parent company
Group Parent company 1997 1996 1997 1996
1997 1996 1997 1996
Liabilities to subsidiaries – – 45,3 45,1
Bank loans 116,1 17,1 72,9 – Accounts payable 110,9 91,1 21,1 19,1
Other short-term loans 19,6 3,7 – – Accrued expenses and 67,9 41,3 19,7 7,4
prepaid revenues
135,7 20,8 72,9 –
Other current liabilities 15,8 12,8 11,0 8,2
The amount of credit granted through overdraft facilities Tax liabilities – 6,2 – –
is 125.0 MSEK (125.9).
194,6 151,4 97,1 79,8
Note 30. Accrued expenses Note 33. Contingent liabilities
and prepaid revenues
Group Parent company
Group Parent company 1997 1996 1997 1996
1997 1996 1997 1996
Regional establishment grant 35,2 26,9 35,2 26,9
Liability for vacation salaries 17,9 6,5 4,6 3,3 Group companies – – 101,6 121,8
Social insurance fees 8,2 7,2 4,0 2,4 Other contingent liabilities 19,7 12,2 – –
Accrued interest 4,0 0,7 3,3 –
54,9 39,1 136,8 148,7
Other 37,8 26,9 7,8 1,7
Contingent liabilities for Group companies correspond to the
67,9 41,3 19,7 7,4
value of credits utilized as of year’s end.
During the year, companies in the Althin Medical Group have
neither made nor otherwise been bound by any agreements or
Note 31. Deferred taxes other obligations of significance that have included, been intend-
ed for, or otherwise affected members of the board of directors
The provisions of individual Group subsidiaries to untaxed re-
of Althin Medical AB or Althinvest International AB or the
serves are restated in the consolidated financial statements.
private interests of members of the board.
Thus, in the Group’s income statement, the tax portion is repor-
ted, calculated according to the tax rates of the various respective
countries, along with the year’s tax expense entered as a deferred
tax, while the capital portion is applied to the net income for the Note 34. Definitions of key indicators
year. In the balance sheet, untaxed reserves are split into deferred
tax liabilities and restricted shareholders’ equity. Companies in the Althin Medical Group report their income
statements 10 times per year and their balance sheets each
For the Group, deferred tax credits attributable to temporary quarter. In the calculation of certain indicators, actual average
differences between the book value and tax value of assets and values have been used.
liabilities are reported. These differences are based on the pre-
Capital employed
scribed assessment methods for book and tax values, which vary
Operating assets minus operating liabilities
from country to country.
Shareholders’ equity
Deferred tax credits related to deductions for losses have not Taxed shareholders’ equity to which has been added the equity
been taken into account. Future utilization of deductions for component of the Group’s untaxed reserves. The deferred tax
losses consequently implies a reduced tax expense for the Group. liability corresponding to untaxed reserves has been calculated
The Group’s tax credit includes deferred taxes of 22.7 MSEK (19.8). according to the tax rate valid for each country to which it applies.
Net financial liability
Financial liabilities minus financial assets.
Note 32. Assets pledged Return on shareholders’ equity
Group Parent company Net income after deductions for full taxes as a percentage
of average shareholders’ equity.
1997 1996 1997 1996
Return on capital employed
Regarding long-term
Operating income as a percentage of average capital employed.
liabilities to creditors
Operating margin
Corporate mortgages 11,9 13,4 – – Operating income as a percentage of invoiced sales.
Regarding Profit margin
regional esablishment grants Income after financial items as a percentage of invoiced sales.
Corporate mortgages 50,0 50,0 50,0 50,0 Net margin
61,9 63,4 50,0 50,0 Net income after taxes as a percentage of invoiced sales.

Liabilities for which the Equity ratio

above assets were pledged Shareholders’ equity including minority interests as a percentage
as collateral 17,6 14,5 2,8 2,7 of the balance sheet total.
Debt-equity ratio
Net financial liability in relation to shareholders’ equity including
minority interests.
Interest coverage ratio (Net method)
Operating income divided by net financial items.
Degree of self-financing of investments
Internally generated funds as a percentage of investments.
Shareholders’ equity per share
Shareholders’ equity divided by the number of shares
outstanding at year’s end.
Earnings per share
The year’s net income divided by the average number
of shares outstanding.

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

Ronneby, March 3, 1998

Hans Larsson John-Jacob Engellau Jack Forsgren

Chairman of the Board

Bo Håkansson Ebbe Krook Anders Althin

Chief Executive Officer
Auditor’s Report
To the Annual General Shareholders’ Meeting of Althin Medical AB,
Swedish organization number 556218-3987.

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.

Changes in share capital

Number Increase in share Paid-up amount,
Year Transaction of shares capital, MSEK net MSEK
1990 New issue and shareholders’ contribution
(Althinvest International AB) 60,000 6.0 55.0
1991 New issue (employees) 5.000 0.5 2.5
1994 Stock split 25:1 3,875,000 – –
1994 New issue (institutions) 690,000 2.8 56.4
1995 New issue (institutions and general public) 1,653,000 6.6 191.1

Composition of share capital

Number Number Shares %
Share class of shares of votes in capital votes
A 1,062,500 10,625,000 17.1 67.3
B 5,155,500 5,155,500 82.9 32.7
Total 6,218,000 15,780,500 100.0 100.0

Major shareholdings as of December 31, 1997 Number of shares Votes (%) Capital (%)

Althinvest International AB 3,484,850 82.7 56.0

Handelsbanken Fonder 315,000 2.0 5.1
Trygg-Hansa 308,800 2.0 5.0
Morgan Stanley & Co, USA 301,600 1.9 5.0
Svolder AB 131,800 0.8 2.1
Althinvest International AB is a company owned in full by Anders Althin and family, the primary activity
of which is the ownership of shares in Althin Medical. All Class A shares in Althin Medical are owned by
Althinvest International AB.
Distribution of shares Number of As a % of all Number As a % of
shareholders shareholders of shares all shares
1-1.000 2,926 94.1 673,108 10.9
1.001-10.000 155 5.0 474,537 7.6
10.001-100.000 21 0.7 406,445 6.5
100.001-1.000.000 5 0.2 1,178,260 19.0
1.000.001- 1 0.0 3,484,850 56.0
Total 3,108 100.0 6,218,000 100.0


1993 1994 1995 1996 1997
Earnings per share 1,60 7,00 9,70 4,30 -0,10
Dividend (proposed 1997) 1,25 2,00 2,00 1,00
Shareholders’ equity per share 17,00 31,00 58,00 61,20 63,50
High price 180,00 161,00 173,00
Low price 113,00 128,00 105,00
Ending price 135,00 148,00 122,00

Share-price performance
The share The general index







1995 1996 1997 (c) SIX Findata

38 39
Board of Directors


Members of the Board

Anders Althin, born 1944, B.A. Elected to the Bo Håkansson, born 1946, BA (Econ). Elected
Board 1985. Group President and CEO. Other to the Board 1997. President and CEO of Active
Board memberships include Wihlborg & Son Pu- Biotech AB. Shareholding: 0.
blikt AB, the Swedish American Chamber of Com-
merce USA, and Anders Althins Stiftelse. Share- Ebbe Krook, born 1940, B.A. (Econ).
holding: 1,062,500 A-class shares and 2,422,350 Elected to the Board 1995. President and CEO of
B-class shares through Althinvest International AB. EFG European Furniture Group AB. Other assign-
ments include Walleniusrederierna AB, AssiDomän
John-Jacob Engellau, born 1934, MSc (Eng). Skog & Trä AB. Shareholding: 0.
Elected to the Board 1986. Other assignments
include member of the City Council, Public Works Hans Larsson, born 1942, BA.
Committee, Health Care Committee, and Parking Elected to the Board 1997 Chairman. President
Company (vice-chairman) of Malmö, Sweden; and CEO of Nordstjernan AB. Other assignments
and Conarma AB (chairman). include BTL (Chairman), Bilia, Handelsbanken,
Shareholding: 500 B-class shares. Modo, and NCC. Shareholding: 5,000 B-class
shares (including company and family).
Jack Forsgren, born 1945, MA. Elected to
the Board 1997. President and CEO of Nobel Bio- Deputy member of the Board:
care AB. Other assignments include membership Charlotte Althin, born 1971, BA (Econ) and
in board of Göteborgs-Posten Nya AB, Nordban- training in project management (RMI-Berghs).
ken Region Väst, Svenska Mässans stiftelse, and Elected to the Board 1997.
the West-Swedish Chamber of Commerce (Vice- Shareholding: 3,000 B-class shares.
chairman). Shareholding: 0.
Senior Management
Anders Althin, born 1944. Group President and Hans-Ulrich van Holt, born 1941. Group Vice
CEO. Founded the company in 1985. Sharehol- President Manufacturing. Employed 1992.
ding: 1,062,500 A-class shares and 2,422,350 B-class Shareholding: 16,700 B-class shares.
shares through Althinvest International AB.
Jay Radovich, born 1948. Group Vice President
Arne Bojesson, born 1951. Executive Vice Research and Development. Employed 1993.
President and CFO. Employed 1990. Shareholding: 0.
Shareholding: 25,000 B-class shares.
Otto Svensson, born 1942. Vice President with
Gerry Black, born 1940. Vice President with responsibility for European operations. Employed
responsibility for Asian operations. Employed 1996. Shareholding: 1,000 B-class shares.
1990. Shareholding: 19,000 B-class shares.
Al Kraus, born 1944. President and CEO
Thore Falkvall, born 1942.Group Vice of Althin Medical Inc. and responsible for
President Marketing. Employed 1990. the Americas. Employed 1990.
Shareholding: 25,000 B-class shares. Shareholding: 12,900 B-class shares.

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
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

Sweden United Kingdom France Japan

Althin International AB Althin Medical Ltd Althin Medical S.N.C. Althin Medical International,
St. Gråbrödersgatan 17 B Unit 25 2, rue Alfred de Vigny Ltd.
SE-222 22 LUND Science Park, Milton Road F-78112 FOURQUEUX Hirakawacho Nemoto Bldg.
Tel: +46 46-32 98 00 CAMBRIDGE, CB4 4FW FRANCE 7-11, Hirakawacho 1-chome
Fax: +46 46-13 72 20 UNITED KINGDOM Tel: +33-1-39 21 95 24 Chiyoda-ku, TOKYO 102
Tel: +44-1223-42 76 00 Fax: +33-1-39 21 95 25 JAPAN
Althin Medical Norden AB Fax: +44-1223-42 07 54 Tel: +81-3-3264-4851
Box 508 Fax: +81-3-3264-4852
SE-183 25 TÄBY
Tel: +46 8-446 38 30
Fax: +46 8-446 38 40

Corporate Management

Corporate staff functions:

Accounting, Finance,
Research and Development,
Marketing, Technology

Europe, Africa, Middle East North and South America Asia, Australia

Administration Administration Administration

Sales Sales Sales

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
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
Tel: +1-601-360 95 32
Fax: +1-601-360 95 36

Group ▲ Sales companies Distributors


42 43
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
Notification or
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

Althin Medical AB, 556218-3987. A publicly traded company (publ).

Althin Medical AB. Box 39, SE-372 21 Ronneby, Sweden
Telephone +46 457-759 00. Telefax +46 457-173 95

Table of Contents
Summary 1997 A NNUA L R EPORT 1997

Key figures
Report of the Board of Directors
Income Statement
Balance Sheet
Cash Flow Analysis
Shareholders Policy

@Hugin 1998. All rights reserved.

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