AN N UAL REPORT 1997

Contents
Page

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
• Sales increased by 23 percent to 1,038 MSEK
(847). Correcting for currency exchange effects,
the increase was 15 percent as a whole and 9
percent excluding the impacts of acquisitions.
Earnings
• Operating income totalled 11 MSEK (53) and
income after net financial items came to -3 MSEK
(43).
• The sharp drop in profits during the last quarter
was mainly due to cost overruns in connection
with the restructuring of US operations.
Structural measures
• The establishment of the new facility in Ronneby
and the relocation of the Portland operation to
Miami Lakes were both completed during the year.
Investments
• Investments totalled 70 MSEK (72) and were
mainly related to the production line for a new
generation of dialyzers in Ronneby.
• With the new production unit in Ronneby complete,
Althin Medical’s investments will decrease
substantially.
Financial position
• The Group’s financial position remains sound.
The equity ratio equalled 39 percent (48).
New products
• The Tina™ dialysis machine, which has the add-on
Hemavision™ option for the measurement of blood
volume and hematocrit values, was launched during
the year. The new dialyzers from Ronneby were
well-received in the marketplace.
• In February 1998, the first clinical test of dialyzers
fitted with the new Althane™ membrane was success-
fully carried out. This is the first membrane based
on a synthetic polymer developed by the company.
Organization
• Group management has been concentrated to
Ronneby. Operating units with their own profit
responsibility have been created for the following
regions: Europe (with Africa and the Middle East),
North and South America, and Asia and Australia.
Dividend
• The Board of Directors proposes that the dividend
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
1)
Proposed dividend for 1997
 1997 – Positioning
ourselves for the future
During recent years, the dialysis market has under-
gone a rapid change in structure, especially in the
USA. This has led clinics to merge into larger en-
tities and form chains of clinics. At the same time,
Althin Medical’s main competitors have integrated
forward into health care services and bought clinics
and even whole dialysis care chains. It is against
this background of rapid changes in the environ-
ment that Althin Medical’s major investments in
infrastructure and capacity during 1996 and 1997
should be seen. In order to be able to compete
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
to extraordinary expenses of around 30 MSEK that
impacted upon the fourth quarter’s performance.
This, coupled with an additional 10 MSEK of un-
planned cost overruns, caused the fourth quarter’s
loss to completely eliminate any profits for the
year, resulting instead in a loss of about 0.3 MSEK
after taxes. The Board of Directors was therefore
forced to issue a statement warning of damaged
profits a week before the monthly accounting was
made public. When the financial results from US
operations became available, I immediately took
over executive control of the US subsidiary and
carried out a reorganization. The Board of Directors
decided, on March 3, 1998, to engage a consulting
firm to review the Group’s management systems,
logistics, and organization. We estimate that, by
the time of the six-month interim report, we will
be able to make public the consulting firm’s re-
commendations and the costs of potential measures,
and also the revenues and cost-savings that we anti-
cipate the measures will generate. At that time, the
necessary provisions will be made in the Group’s
second-quarter accounting. We have also decided
to carry out a complete audit of the six-month
interim accounting so as not to be caught off guard
at the end of the year. It is crucial that we achieve
a better structure in our internal control systems
so that senior management can manage better and
anticipate developments in the company’s financial
performance.
Fortunately, sales have been strong during 1997
and orders have been very vigorous during the start
of 1998. Orders have been especially numerous for
our award-winning Tina™ dialysis machine. This
year, we will complement Tina™ with new add-on
options such as Hemavision®, which measures blood
volume, hematocrit values, and hemodiafiltration.
I am certain that this will further increase demand
for our outstanding dialysis machine.
In March 1998, a global agreement was signed
with the US dialysis care company TRC (Total
Renal Care Inc.). TRC is one of the world’s largest
dialysis care companies, with 360 clinics in the
USA and a growing number of clinics outside the
US. This partnership with TRC offers us large
opportunities in preparation for the future, as TRC
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
company. A very successful example of this is our
joint venture in Canada, Althin Biopharm, which
was formed in 1995 and which builds on Biopharm’s
dialysis fluids and Althin Medical’s dialysis pro-
ducts. In a short time, we have achieved a leading
market position in Canada. In the future, we will
pursue additional partnerships in order to assure
the continuing fast growth of our development,
production, and sales.
Our research and development department is
focused on the development of dialysis machines
and related software, and also on the development
of new dialysis membranes. Of particular interest
is the development of a new synthetic membrane
that was developed entirely in-house using our
own patented “melt-spinning” method. This new
membrane, which we have named Althane™-PS,
underwent clinical tests in the beginning of 1998
at the Huddinge/Söder Hospital in Stockholm.
The results were very satisfactory, and we there-
fore hope to be able to make a preliminary launch
of new dialyzers containing the Althane ™-PS
membrane by the end of 1998/beginning of 1999.
This new polysulphone membrane will be of great
significance for our future profitability and growth.
With our positive sales trend and an increasingly
productive R&D department, and with internal
management and control systems that will begin
working more effectively, we have every reason
to look to the future with confidence. To conclude,
I would like to thank all of Althin Medical’s
employees for their outstanding efforts during
a challenging year marked by large investments
and rapid changes.
Ronneby, March 1998
Anders Althin
Chief Executive Officer
2 3
 The warehouse in
Jackson is the
central distribution
hub for the US
market.
 Strategies and Objectives
Business concept and strategy
Althin Medical is an international medical techno-
logy group with its core business in the area of
hemodialysis, which accounts for 85 percent of
all dialysis care world-wide. Althin Medical has
chosen not to integrate forward via acquisition of
clinics, and is thus – as far as linkages to custo-
mers are concerned – one of the largest totally
independent dialysis companies in the world.
Althin Medical’s ambitions are to, through
continuing innovative product development and
marketing, strengthen its market shares and to,
through corporate acquisitions and strategic alli-
ances, broaden its product line and expand its
market presence.
History
In 1985, Althin began operations by focusing on
trading medical equipment within Europe.
In 1990, American company CD Medical was
acquired from Dow Chemical. Through this, the
Group obtained a world-wide organization with
its own manufacturing and development unit in
the area of kidney care.
In 1995, the company went public and started
the establishment of the production facility in
Ronneby. At the end of the year, a joint venture
was set up in Canada.
In 1996, the core business area of kidney care
was further strengthened through the acquisition
of the US company Health Care Providers, which
distributes dialysis products in the USA.
In 1997, the corporate management and head-
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
use of computer monitors and microscopes. Miami to take part in the Althin Academy’s
various educational programs.
Financial objectives
Althin Medical’s overarching objective is to pro-
vide investors with good return on investment and
value growth. This is to be achieved within the
context of normal business risk and with due con-
sideration of other stakeholders, such as creditors,
business partners, and employees.
For the Group’s operations, objectives have
been established regarding profitability, sales
growth, and financial position. For the operating
units, there are corresponding goals for profitabi-
lity and growth, and in addition internal objectives
for capital structure.
Profitability
The Group’s profit objective is an annual return
on capital employed of 20 percent. This is an objec-
tive that holds for the Group as a whole as well as
for the three operating units.
This profitability objective was achieved in
1994 and 1995, but due to low operating margins
and the tying up of more capital in investment and
restructuring programs in Sweden and the USA,
it was not met in 1996 or 1997.
In 1997, the return on capital employed equalled
1.6 percent, corresponding to an operating margin
of 1.1 percent and a turnover rate for capital em-
ployed of 1.5 times.
The target for 1998 is to increase the operating
margin through higher sales and thus higher utili-
zation of capacity, and to raise the turnover rate of
capital employed through a lower level of invest-
ment and a reduction in working capital.
The dialysis clinic in Miami,
with capacity for 18 patients.
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.

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.
 Markets
The dialysis market
Dialysis involves the cleansing of the blood by
artificial means and is a life-maintaining treatment
for patients suffering from chronic kidney failure.
There are two types of dialysis: hemodialysis and
peritoneal dialysis. In hemodialysis, a dialyzer
(artificial kidney) takes over the kidney’s function
of cleansing the blood of waste products, which
are usually removed via the urine, and of excess
fluids. In peritoneal dialysis, the patient’s own
peritoneum (the connective membrane between
the inner walls of the abdomen and the abdominal
organs) is used as a dialysis filter. Kidney trans-
plants are an alternative to dialysis, but are limited
by a shortage of donated organs.
At present, there are approximately 900,000
dialysis patients in the world, of whom 85 percent
receive hemodialysis and the remaining 15 percent
peritoneal dialysis. Of these patients, 75 percent
live in Europe, North America, and Japan.
The world market for dialysis products as a
whole amounts to around 45 billion SEK, of which
35 billion is related to hemodialysis.
Customers
The customer structure, which encompasses
hospitals, clinics, and chains of clinics, varies
around the world. In Europe and Japan, dialysis
care is financed and operated for the most part
by the public sector, while in the USA more than
half of the treatments are carried out by nation-
wide chains of clinics. The clinic chains are either
operated as independent, often publicly traded
companies or are part of dialysis companies that
also manufacture.
Training in dialysis techniques The new production facility for dialyzers.
at the Althin Academy in Miami.
Competitors
The largest global competitors in dialysis are the
American company Baxter, German Fresenius,
Swedish Gambro, and several Japanese companies.
In addition, there are a number of regional compe-
titors.
Market position
Althin Medical holds a 3 percent share of the
global market in hemodialysis, but conducts no
business in peritoneal dialysis. For the Group’s
core products – dialysis machines and dialyzers/
membranes – the market shares in terms of
volumes are 9 and 6 percent, respectively.
Market prospects
The dialysis market enjoys a stable annual growth
rate of around 8 percent measured in number of
patients, corresponding to a growth in value of
about 6 percent. The rate of growth is currently
greater for hemodialysis than for peritoneal dialysis.
The increasing number of patients depends
upon several factors:
• Rising standards of living mean that more
and more people are gaining access to dialysis
care. This can be clearly seen in many so-called
emerging markets, where annual growth
is 10-20 percent.
• Lengthening lifetimes lead to a higher
frequency of cases of kidney failure.
• Dialysis treatment is being offered to more
and to older patients.
Meeting in the well-designed office in Parma.
8 9
 The new Tina™
dialysis machine
creates a quiet
and safe working
environment.

Production
Althin Medical carries on production in its own
facilities in Sweden and the USA, and in a 50-
percent-owned company in Canada.
In Ronneby, Sweden, dialyzers, dialysis machi-
nes, and bicarbonate cartridges are manufactured.
This facility is also the central warehouse for
business operations in Europe.
Dialysis membranes, dialyzers, and dialysis
machines are manufactured in Miami Lakes,
Florida in the USA. The central warehouse for
US operations lies in Jackson, Mississippi.
Althin Biopharm in Canada produces dialysis
fluids.
Certain other products for dialysis treatment
are manufactured externally under contract or
outsourced.
Products
Membranes/dialyzers
Althin Medical manufactures and sells both mem-
branes for dialyzers and complete dialyzers.
Manufacturing of membranes takes place using
the unique, patented melt-spinning method, which
unlike other processes does not require toxic
solvents.
Dialyzers
Dialysis machines
Other dialysis products
Other medical technology
products
The office and warehouse in Parma
provides all of Italy with support and products.
Operations
Althin Medical offers a wide assortment of dia-
lyzers, covering most patients’ needs. The products
differ in both price and performance.
Dialysis machines
Althin Medical manufactures and sells the System
1000® and Tina™ dialysis machines, both of which
are based on a computerized concept and have a
touch screen, making two-way communication
possible between the user and the machine.
In 1991, System 1000® was introduced, and its
successor Tina ™ was introduced in 1997. Tina™
is a further development of System 1000®.
Altracart and dialysis fluids
Althin Medical produces and sells the powder
concentrate system Altracart II, which comes in
two sizes for one or two treatments. Altracart has
shown strong sales performance since its launch
in the beginning of 1996.
Althin Medical also markets ordinary concen-
trates of dialysis fluids.
Other dialysis products
Althin Medical also markets among other things
blood hoses, dialysis needles, and catheters, and
thus covers a comprehensive product range for
dialysis treatment.
Other medical technology products
Since its founding in 1985, Althin Medical has
distributed medical technology products in the
areas of urology, anesthesia, intensive care, and
heart surgery. This business is carried on mainly
in the Nordic countries, where Althin is the market
leader in certain product areas.
An interesting cooperation involves the university The new Tina™ machine is used in a
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.

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
pressure.

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
Alliances
For Althin Medical, alliances with other companies
can mean both increased sales of our own products
and a complement to our product line.
Independent suppliers
Althin Medical has chosen to not integrate forward
through the acquisition of clinics, and feels that
this creates a competitive advantage in selling to
independent clinics and clinic operators.
New products
Althin Medical strives to broaden its product
range, which yields economies of scale in sales.
New markets
Althin Medical is represented in most countries
with well-developed dialysis care, with market
shares that vary from country to country. The
objective is to strengthen the Group’s position
through increased investments in Asia and Latin
America, in particular.
Economies of scale
Althin Medical had, at the end of 1996, a shortage
of capacity in the production of dialyzers, but this
was eliminated during 1997 through the invest-
ments in Ronneby. An increasing utilization of
capacity will gradually lead to visible economies
of scale in production over the coming years.
Rationalization of capital
A Group project has been initiated in order to re-
duce tied-up capital in inventories and accounts
receivable by 150 MSEK at the current level of
sales.
Unique know-how
Althin Medical’s unique know-how in, for example,
membrane technology, makes possible both low
production costs and applications in related areas.
Threats
Cost saving in health care
In many countries, cost savings are being demanded
in the area of health care. Althin Medical seeks to
meet these demands through developing products
and systems of good quality and high overall cost
effectiveness.
Transplants
Kidneys are transplanted with some frequency,
limited however by the shortage of donors. One
further complication is rejection of organs. Re-
search is also being conducted into whether it is
possible to transplant animals’ kidneys. Althin
Medical feels that the transplantation of animal
kidneys will not take place to any significant
extent in the foreseeable future.
Government inspections
Medical technology products are, in most coun-
tries, subject to a more or less comprehensive go-
vernment inspection, which can be both time-
consuming and expensive. At the same time, these
costs present an entry barrier to new market parti-
ciparts.
Dependence on larger customers
The loss of large customers can cause a negative
impact on profits if it is not offset by other sales.
Althin Medical’s dependence on large single custo-
mers has however gradually decreased during the
1990s. At present, the three largest customers
account for 15% of the Group’s total sales.
Product liability
Dialysis is a form of treatment that potentially
exposes manufacturers and care providers to the
risk that improper treatment or accidents can lead
to claims for damages. It is hard to judge how an
incorrectly carried-out treatment or accident might
affect the company financially or commercially.
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
level of financial readiness and to minimize capi-
tal costs and financial risks. The management of
these questions is to a large extent centralized in
the parent company.
Financing and liquidity
Financing risk refers to the risk that the Group’s
access to new capital becomes more difficult or
unnecessarily expensive.
Althin Medical seeks to ensure a high level of
financial readiness by entering into binding, long-
term credit agreements.
Current liquidity is maintained using liquid
assets, short-term investments, and binding credit
agreements which must altogether amount to at
least 10 percent of sales. As of December 31, 1997,
liquid assets and short-term investments amounted
to 23 MSEK, and unused binding lines of credit
amounted to 118 MSEK – altogether totalling 14
percent of Group sales for 1996.
The Group’s liquid assets are invested with a
limited degree of risk and high accessibility, pri-
marily in the Swedish money market.
Interest-rate risks
Interest-rate risk concerns the risk that changes
in the level of interest rates will affect the Group’s
net income.
By maintaining liquidity readiness mainly in
the form of unused lines of credit, the interest-rate
risk becomes primarily attributable to gross debt.
The average time over which interest rates could
be fixed for gross debt equalled 3.3 months as of
the end of 1997.
Foreign exchange risk
Foreign exchange risk refers to the risk that changes
in currency exchange rates will negatively affect
the Group’s net income and risk capital.
Althin Medical’s foreign exchange risks are
posed by changes in exchange rates in payment
flows (flow exposure) and the conversion of the
value of foreign subsidiaries’ net assets to Swedish
crowns (conversion exposure).
Althin Medical is also affected by the impacts
of changes in exchange rates on relative competi-
tiveness.
Flow exposure
Althin Medical experiences its cashflows primarily
in SEK, USD, and the larger European currencies,
especially DEM, FRF, GBP, and ITL. The flows
which can significantly affect Althin Medical’s
earnings are at present inflows in the European
currencies with a net value of about 150 MSEK,
and also outflows in USD with a net value of
about 50 MSEK. A change in exchange rates of
+/-10 percent for the preceding European curren-
cies or USD would consequently affect the Group’s
net income by +/-15 MSEK or -/+5 MSEK, respec-
tively.
The Group does not actively hedge its flows
of future payments.
Exchange rate risk in individual subsidiaries,
which is primarily attributable to the net of accounts
receivable and accounts payable in foreign currency,
is normally minimized through borrowing in the
currency in question.
Conversion exposure
When exchange rates change, the consolidation of
the net assets of foreign subsidiaries gives rise to
conversion differences. The effect of a conversion
difference on the Group’s risk capital expressed in
the currency of the parent company (SEK) can be
minimized through borrowing and hedging in the
corresponding currencies. At the same time, this
increases the risk of changes in the Group’s equity
ratio compared to the situation in which hedging
does not take place.
The net assets of Althin Medical’s subsidiaries
are mainly financed by the parent company in the
form of equity and long-term loans. Althin Medical
has elected to not hedge its net investment in its
foreign subsidiaries.
Economic exposure
Althin Medical’s main competitors primarily manu-
facture in Germany, Italy, and Japan, and, like
Althin Medical, in Sweden and the USA. Changes
in currency exchange rates that mainly affect the
cost situation in Germany, Italy, and Japan affect
Althin Medical’s competitiveness relative to these
competitors.
16 17
 Board of Directors’ Report
The Board of Directors and Chief Executive Officer
of Althin Medical AB (publ) herewith report the
account of the operations during fiscal year 1997
of the parent company and the Group.
Ownership structure
Althin Medical AB is a subsidiary of Althinvest
International AB, which owns 56 percent of the
shares and 83 percent of the voting rights of the
company.
Since April 1995, Althin Medical’s B-class
shares have been listed on the O list of the Stock-
holm Stock Exchange.
Operations during 1997
The year was characterized above all by large
structural changes in the Group. These have nega-
tively affected the Group’s profits for the year, but
have simultaneously strengthened the Group’s
long-term competitiveness.
Sales rose during 1997 by 23 percent to 1,037.6
MSEK (847.3). Operating income equaled 11.2
MSEK (53.2) and income after financial items
came to -2.8 MSEK (42.6).
In connection with the year-end closing, large
cost increases in US operations were confirmed.
The combined increase in costs beyond what was
planned totalled about 40 MSEK, of which around
30 MSEK is considered extraordinary. The total
costs for the move from Portland to Miami Lakes,
including productivity losses, training, and similar
costs, amounted to 52 MSEK, of which 27 was
written off against previously created restruc-
turing reserves. Additional costs of 25 MSEK in-
clude 8 MSEK due to delays in the sale of the pro-
perty, which is expected to take place during 1998.
Because of the unexpected rise in costs, a con-
sulting firm has been engaged to examine the mana-
gement systems, logistics, and organization in the
Group. The restructuring expenses that arise as a
result of proposed measures will be charged to
Group income during the first half of 1998.
Net income for 1997 was also negatively affec-
ted by the expansion of capacity. Its impact on in-
come will gradually lessen over the coming years.
US operations
The restructuring of US operations started in the
autumn of 1996 after the acquisition of Health Care
Suppliers with the transfer of the logistics function
from Miami Lakes, Florida to Jackson, Mississippi.
During 1997, the development department and
production operations were moved from Portland,
Oregon to Miami Lakes. When the problems were
detected in the US subsidiary, the Group CEO im-
mediately stepped in as Chief Executive Officer
and a reorganization began.
Establishment of the Ronneby facility
The establishment of the Ronneby facility is now
completed. The start of production of dialyzers took
place in July and complements the manufacturing
of dialysis machines and bicarbonate cartridges.
The Group’s other Swedish activities plus corpo-
rate management and the headquarters have also
been concentrated to the Ronneby facility. Since
CE certification of dialyzers in October, all produc-
tion lines in Ronneby – dialysis machines, bicarbo-
nate cartridges, and dialyzers – are approved for
sales to all EU countries.
Product development
During the year, a series of new products were
launched, of which the most noticeable were the
Tina™ dialysis machine and its add-on Hemavision™
option for the measurement of blood volume and
hematocrit. The new dialyzers from Ronneby were
well-received.
In February of 1998, the first clinical tests were
successfully carried out of dialyzers with the new
Althane™-PS membrane. This is the first membrane
based on synthetic polymers that the company has
developed.
Investments
The investments in machines, equipment, and
buildings totalled 70 MSEK (72) and mainly con-
cerned the production unit for a new generation
of dialyzers in Ronneby. With the new unit in full
operation, the Group’s manufacturing capacity
for dialyzers is doubled.
With the Ronneby facility now fully expanded,
the Group’s total investment will decrease signifi-
cantly.
 Financial position
Even after the large investments in Ronneby and
the relocation of operations from Portland to Miami
Lakes, the Group’s financial position is good. The
equity ratio equalled 39 percent, compared to 48
percent the previous year.
Personnel
The number of employees was on average 869 (794).
The increase is partly due to increased staffing in
the USA in connection with the move of operations
from Portland to Miami Lakes. At the end of the
year, the total number of employees equalled 790.
The Board’s work
Althin Medical’s Board of Directors consists of
six members including the Chief Executive Officer
plus a deputy member, all elected at the Annual
General Shareholders’ Meeting. Executives of the
Group take part in the Board’s meetings and assign-
ments. The company’s auditor, in conjunction with
the preparation of the annual report, presents his
observations from the audit.
The Board met six times during the year. The
division of labor and responsibility between the
Board and the Chief Executive Officer is laid down
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

1997
Invoiced sales 251 250 256 281 1.038
Gross income 95 94 84 82 355
Operating income 14 12 16 -31 11
1996
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
Sales totalled 1,037.6 MSEK (847.3), representing
an increase of 23 percent. When adjusted for cur-
rency fluctuations, the increase in sales was 15
percent, or 9 percent with the effects of corporate
acquisitions removed. For dialysis products, total
sales growth was 17 percent, or 9 percent exclud-
ing the effects of acquisitions.
Sales growth has been vigorous, especially for
dialysis machines and bicarbonate cartridges.
Net Income
Gross income equalled 354.6 MSEK (319.5),
corresponding to a margin of 34 percent (38).
The margin deteriorated due to the fact that a
larger proportion of sales derived from externally
manufactured products than was the case last year,
and also due to thinner margins on products manu-
factured in-house.
Operating income totalled 11.2 MSEK (53.2), corre-
sponding to an operating margin of 1.1 percent (6.3).
Total cost increases exceeded anticipated rises
by 40 MSEK. Of this, 30 MSEK consists of extra-
ordinary costs incurred by US operations, most
of them stemming from the move from Portland
to Miami Lakes.
Net financial items increased to -14.0 MSEK
(-10.6). Net interest expense rose to -19.5 MSEK
(-11.4) because of greater net financial liabilities.
The net gain from changes in exchange rates
totalled 5.1 MSEK (0.2).
Income after net financial items fell to -2.8
MSEK (42.6), and the profit margin fell to -0.3
percent (5.0).
Total taxes amounted to +2.5 MSEK (-15.7).
Of this figure, actual taxes equalled +9.6 MSEK
(-7.4), and deferred taxes were -7.1 MSEK (-8.3).
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
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

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
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

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

LIABILITIES AND SHAREHOLDERS’ EQUITY

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).
(210.9).

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
200
100 10 10
100
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

Investments
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
(-127.1).

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

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

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

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
ASSETS
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

LIABILITIES AND SHAREHOLDERS’ EQUITY

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
 Notes
Note 1. Accounting and valuation principles
Unchanged accounting principles
The accounting principles are unchanged from the
previous year.
Consolidation
The Group’s consolidated financial statements en-
compass the parent company Althin Medical AB and
all companies in which the parent company, at year’s
end, either directly or indirectly owned more than 50%
of the voting rights of all shares and participations.
Companies that were acquired during the year have
been included in the consolidated income statement as
of the date of acquisition.
The purchase method
The consolidated financial statements have been pre-
pared in accordance with the purchase method, where-
by the market value of the net assets of the acquired
subsidiaries at time of acquisition is subtracted from
the acquisition value of the subsidiaries’ shares. In cases
where the acquisition value is greater than the market
value of acquired net assets, the difference is reported
as goodwill, which is depreciated over an estimated
economic life. This depreciation cost is charged to the
operating income. If the acquisition value is less than
the market value of the acquired net assets, then the
value of non-monetary fixed assets is written down
against the difference. The amount that remains after
the non-monetary fixed assets have been written down
is negative goodwill, which is then written off according
to a prescribed schedule.
Conversion of foreign subsidiaries
Conversion of the financial statements of foreign sub-
sidiaries is carried out according to the current method,
whereby income statements are converted using the
year’s average exchange rates and balance sheets are
converted using the exchange rates as of year’s end.
The discrepancies that arise in connection with currency
conversion are directly applied to shareholders’ equity.
Exchange rate differences which can be attributed to
long-term receivables and liabilities between the parent
company and its subsidiaries are directly applied to
shareholders’ equity as conversion discrepancies.
Receivables and liabilities
in foreign currency
Receivables and liabilities in foreign currency above and
beyond long-term receivables and liabilities between
the parent company and its subsidiaries are valued
according to the exchange rate at year’s end. Exchange
rate differences are reported under financial items.
Inventories
Inventories are stated as the lower of the acquisition
value – determined according to the first-in/first-out
principle – or the market value. Required reserves are
allocated for obsolescence and internal profits.
Reporting of affiliated companies
according to the equity method
A company is an affiliate of the Group if the latter holds
a long-term ownership interest amounting to at least
20% and at most 50% of the voting rights of its out-
standing shares.
In the consolidated income statement, the share
of profits from affiliated companies is reported under
operating income. In the consolidated balance sheet,
shares held in affiliates are reported under long-term
operating assets. The difference between the acquisi-
tion value and market value of net assets assignable
to acquired shares in affiliates is treated in accordance
with the rules for goodwill accounting and depreciated
over a ten-year period (please see description under
the heading “The purchase method” above). The book
value of the equity holdings is adjusted by the propor-
tion of each respective affiliate’s net income after taxes
reduced by the value of dividends received. Undistribu-
ted earnings of affiliates are reported as shareholders’
equity under restricted reserves.
 Leasing
In several of the foreign subsidiaries, leasing agreements
have been entered into which essentially bestow all attri-
butes of ownership upon the lessee (financial leasing).
The present value of future payments in connection
with these leasing agreements has been capitalized as
an asset. Corresponding amounts have been treated
as liabilities. For further information, please see Note
15 on leasing.
In those cases where Group companies act as
lessors in financial leasing agreements, the net invest-
ment in the leasing agreement has been reported as
a receivable in the balance sheet. Please also see note
22 on long-term financial assets.
Intangible assets
Goodwill is depreciated according to plan in the income
statement. The depreciation period is 10 years. Patents,
trademarks, and similar rights are depreciated accord-
ing to plan over their estimated economic lives. Expen-
ses for research and development are charged against
income in the year in which they are incurred, with
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.
Buildings, machinery, and equipment
Depreciation according to plan is based on the acquisi-
tion values of assets and their estimated economic
lifetimes.
For buildings, the depreciation period is 30-33
years. For machinery and equipment, it is 7-12 years.
Tools, computers, and vehicles are depreciated over
at most 5 years.
Regional establishment grants
Althin Medical AB has been granted certain regional
establishment subsidies regarding the establishment of
facilities in Ronneby. The grants are paid out in install-
ments after the accomplishment of successive phases,
and are conditional upon the complete implementation
of the investments. The grants are reported under
operating income, and are applied during the same
periods that establishment costs are incurred.
Adjustments
Certain adjustments have been made to previous years’
figures to permit full comparability.

EXCHANGE RATES FOR SELECTED CURRENCIES

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
Goodwill
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
2002
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
financial statements, accounting records, and the
administration of the Board of Directors and Chief
Executive Officer for 1997. It is the Board of Directors
and Chief Executive Officer who bear the responsibi-
lity for the accounting records and administration.
It is my responsibility to comment upon the annual
report, consolidated financial statements, and admini-
stration on the basis of my audit.
The examination has been carried out in accord-
ance with generally accepted auditing practice.
This means that I have planned and carried out
the audit in order to, within a reasonable degree
of certainty, ascertain that the annual report and
consolidated financial statements do not contain
significant errors. An audit involves the inspection
of a sample of the documents that support amounts
and other information in the accounting records.
Also included in an audit is a test of whether
generally accepted accounting principles have
been followed, including whether they have been
applied by the Board of Directors and Chief Ex-
ecutive Officer, and also to assess the collected
information in the annual report and consolidated
financial statements. I have reviewed significant
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
Executive Officer are liable for recompense to the
company or in any other way have acted in con-
flict with the Swedish Stock Corporation Act, the
Swedish Annual Reporting Act, or the Articles of
Incorporation. I consider my audit to provide me
with reasonable grounds for my recommendations
below.
The annual report and consolidated financial
statements have been prepared in accordance with
the Swedish Annual Reporting Act. I therefore
recommend:
– that the income statement and the balance sheet
of the parent company and the group be adopted,
and
– that the earnings of the parent company be
distributed in accordance with the proposal
in the Board of Directors’ Report
The members of the Board of Directors and the
Chief Executive Officer have taken no measure nor
incurred responsibility for any negligence that in
my judgement might occasion liability for recomp-
ense to the company. I therefore recommend:
– that the members of the Board of Directors
and the Chief Executive Officer be granted
a discharge from liability for the fiscal year.
Ronneby, March 19, 1998
Åke Stenmo
Authorized Public Accountant
36 37
 The Althin Medical Share
Stock Exchange Trading
Althin Medical’s Class B shares have been listed
since April of 1995 on the O List of the Stockholm
Stock Exchange.
The total volume of shares traded during 1997
was 3,411,000 (3,549,000), which is equivalent
to a daily average of 13,600 (14,200).
During 1997, Althin Medical’s share price fell
18 percent, from 148 to 122 SEK. The general in-
dex rose 25% during the year. The Althin Medical
share was quoted at a low for 1997 of 105 SEK,
and at a high of 173 SEK.
Dividend policy
The objective of the Board of Directors is for the
dividend over the next few years to be equal to
approximately 20% of after-tax net income.
When the company’s capital requirements and
financial position later permit, it is the intention
of the Board to propose gradual increases in the
distributed portion of earnings.
Dividend
For the 1997 accounting year, the Board of Direc-
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

Ownership
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

SHARE DATA (SEK)

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

Sweden United Kingdom France Japan

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

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
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

Group ▲ Sales companies Distributors

factories

42 43

Anesthetics
Painkiller, pain relief.
Dialysis machine
Circulates blood and dialysis
fluid via the dialyzer, measures
the pressure relationship of the
blood and dialysis fluid sides,
respectively, regulates the saline
content in the dialysis fluid, and
monitors the treatment so that the
patient is not exposed to risks or
harmed in any way.
Dialysis fluid
Is the pure saline solution that, in
hemodialysis, flows on the oppo-
site side of the semipermeable
membrane in relation to the blood.
Dialyzer
The artificial kidney that is em-
ployed in hemodialysis. It consists
of semipermeable membranes in
the form of capillaries. In the dia-
lyzer, blood and dialysis fluid flow
on their respective sides of the
membrane. Waste products diffuse
from the blood through the mem-
brane to the dialysis fluid because
of the difference in concentration
between the two solutions. Surplus
fluid is removed from the blood
because of pressure differences
between the blood side and the
dialysis fluid side.
Production: Althin Medical AB / N.A.D. Design: N.A.D. Skogs Boktryckeri AB. Printed on Swan-marked paper: Cover and pages: MultiArt.
Glossary
Diffuse, diffusion Peritoneal dialysis
Is the physical principle whereby Dialysis that occurs in the patient’s
two fluids of different molecular abdominal cavity where the perito-
concentrations in contact strive to neum acts as a dialysis membrane.
equalize their mutual difference
in concentration. In hemodialysis, Renal failure
this implies that waste products The condition that occurs when the
in the blood diffuse across to the function of the kidneys is reduced
dialysis fluid via the semiperme- or ceases entirely. Renal failure is
able membrane. primarily caused by chronic renal
inflammation and agerelated
Hematocrit changes in renal function.
The total volume of blood cells
expressed as a percentage of the Semipermeable
total blood volume. Implies that the membrane only
allows the passage of molecules
Hemodialysis of a certain molecular size.
Treatment that replaces the kidney
function in patients suffering from Solution spinning
renal failure. In this treatment, The production process for mem-
the patient’s blood is cleansed of branes in which different toxic
waste products, and the blood is solvents are employed in the
relieved of surplus fluid outside manufacturing process.
of the body, using a dialyzer.
Transplantation
Melt spinning Implies that an organ, in this case
A production process for mem- a kidney, from a donor is grafted
branes that, unlike solution into a patient and restores the
spinning, does not utilize toxic patient’s renal function.
solvents.
Urology
Membrane (in dialysis) That branch of medicine which
Is the major component in a dia- concerns itself with the urinary
lyzer and consists of a semiperme- tract, its illnesses and their
able barrier that allows fluids and treatment.
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.
 Annual General
Shareholders’ Meeting
The Annual General Shareholders’ Meeting of Althin
Medical AB will take place on Wednesday, April 22,
1998 at 4 PM in the Auditorium, Soft Center, Ronneby.
The address of the entrance is Soft Center III,
Högeskolevägen 8, Ronneby.
Right to Participate
To be entitled to participate in the Annual General
Meeting, shareholders must be entered in the stock
register maintained by the Swedish Securities Register
Center (Värdepapperscentralen VPC AB) no later than
April 12, 1998, and have submitted advance notification
of their intention to participate in the Annual General
Meeting to Althin Medical AB by 4 PM, April 17, 1998
at the latest.
In order for their votes in the Annual General Meeting
to be valid, shareholders who have permitted their shares
to be registered with a nominee – such as a bank trust
department or brokerage company – must temporarily
have the shares entered in their own name in the Swedish
Securities Register Center’s stock register. Shareholders
must inform their nominees of this well in advance of
April 12, 1998.
Notification
Advance notification of the intention to participate
in the Annual General Meeting must be submitted
to the company at Box 39, 372 21 Ronneby, Sweden.
Notification may also be made by telephone,
+46 457 759 00, or fax, +46 457 173 95.¨
Dividend
For financial year 1997, a dividend of 1.00 SEK per
share is proposed. April 27, 1998 is proposed as the day
Althin Medical AB, Org.no. 556218-3987. A publicly traded company (publ).
upon which the dividend will be recorded. If the Annual
General Meeting decides to adopt the Board’s proposal,
then it is anticipated that the dividend will be paid out
by VPC AB on May 5, 1998.
Change of address
Private individuals who are domiciled in Sweden do not
need to notify the Swedish Securities Register Center of
address changes; this is taken care of automatically via
the Swedish postal service. Other shareholders who have
changed their address, name, and/or account number
should send notification of the changes as soon as pos-
sible to the financial intermediary handling their account.
All shareholders who have registered their shares with
a nominee should notify the nominee of any changes
of name, address, or account number without delay.
A special notification form can be obtained at banks.
Financial information
Althin Medical’s financial information is published in
Swedish and English. The reports can be ordered from
Althin Medical AB, Box 39, 372 21 Ronneby, Sweden,
tel. +46 457 759 00, fax +46 457 173 95. Financial
information is also available via Internet at
http://www.althin.com
or http://www.afv.se/bolagsinfo/althin.
During 1998, Althin Medical AB will issue the following
financial reports:
1st quarter interim report (January-March 1998),
on April 22, 1998
Six month interim report (January-June 1998),
on August 10, 1998
3rd quarter interim report (January-September 1998),
on October 29, 1998
Althin Medical AB. Box 39, SE-372 21 Ronneby, Sweden
Telephone +46 457-759 00. Telefax +46 457-173 95
 Althin

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

@Hugin 1998. All rights reserved.

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