Quarterly Report • Feb 14, 2014
Quarterly Report
Open in ViewerOpens in native device viewer
Carl Zeiss Meditec
This pdf document enables you to navigate directly to the desired information – with a simple mouse click:
Revenue in fi rst quarter slightly below previous year. Revenue increase in Ophthalmic Systems and Surgical Ophthalmology; revenue decline in Microsurgery
Adjusted for currency effects, Carl Zeiss Meditec's revenue increased slightly in the fi rst three months, by 1.7 %.
EBIT margin decrease in fi rst quarter; medium-term target of 15 % by 2015 confi rmed
The EBIT margin fell to 12.5 % (previous year: 14.3 %), due in part to foreign currency losses and to the lower share of revenue generated by the Microsurgery SBU.
Investments in research and development (R&D) boost our innovative strength as the key to sustainable growth
Carl Zeiss Meditec continued to invest in R&D, in order to further develop its product portfolio and ensure further growth. 11.2 % of revenue was invested in R&D in the reporting period.
Share of consolidated revenue generated by Rapidly Developing Economies (RDEs) at almost 25 %
We continue to foresee a high level of growth, particularly in the rapidly developing economies of Asia and Latin America. We plan to further strengthen our market presence and exploit the existing potential there, in order to further consolidate our position in these markets.
| To our shareholders | |
|---|---|
| Letter to the shareholders | 4 |
| Interim fi nancial statements | |
| Consolidated management report for the interim fi nancial statements | 6 |
| 1 Summary | 6 |
| 2 Results of operations | 6 |
| 3 Financial position | 10 |
| 4 Net assets | 12 |
| 5 Orders on hand | 13 |
| 6 Events of particular signifi cance | 14 |
| 7 Supplementary report | 14 |
| 8 Employees | 14 |
| 9 Research and development | 14 |
| 10 Outlook | 15 |
| 11 Directors' dealings – notifi able securities transactions by members of the executive bodies of Carl Zeiss Meditec AG in the fi rst three months of fi nancial year 2013/2014 |
17 |
| 12 Shareholder structure | 17 |
| Consolidated income statement (IFRS) | 18 |
| Consolidated statement of comprehensive income (IFRS) | 19 |
| Consolidated statement of fi nancial position (IFRS) | 20 |
| Consolidated statement of cash fl ows (IFRS) | 22 |
| Consolidated statement of changes in equity (IFRS) | 23 |
| Notes to the consolidated interim fi nancial statements | 24 |
|---|---|
| 1. General information | 24 |
| 2. Purchase and sale of business operations | 27 |
| 3. Effects of purchases in previous years | 31 |
| 4. Notes to the consolidated income statement | 31 |
| 5. Disclosures on fair value | 32 |
| 6. Events after the end of the interim reporting period | 33 |
After a very successful fi nancial year 2012/2013 Carl Zeiss Meditec's revenue declined slightly in the fi rst quarter of fi nancial year 2013/2014, to € 212.3 million. This is disappointing, because a comparison on a similar basis would have shown a small amount of growth. However, negative currency effects nullify this positive development. Below the line, business therefore declined by around 3 percent. Earnings before interest and tax (EBIT) total € 26.5 million; the EBIT margin this quarter is 12.5 percent.
The decrease in the margin is attributable to foreign currency losses, an unfavourable regional sales mix, as well as a lower share of revenue generated by the traditionally high-margin business unit, Microsurgery. A more dramatic slump was prevented by the spread of production across several currency zones.
The largest share of revenue continues to be generated by the "Microsurgery" strategic business unit (SBU). At € 92.1 million, this was down compared with the very good fi gure of the previous year. About half of this decline is attributable to currency effects. Market momentum also slowed signifi cantly in this segment. The SBU "Ophthalmic Systems", on the other hand, grew, in spite of persistently intense competitive pressure and negative currency effects: Adjusted for currency effects, this SBU grew by 7 percent and accounted for € 86.7 million of revenue. Once again, the newest SBU, "Surgical Ophthalmology", performed extremely well, achieving a double-digit growth rate. Revenue in this SBU increased to € 33.4 million. Particularly signifi cant growth was once again achieved by premium lenses for cataract surgery. The new toric version of the AT LISA® tri has brought fresh impetus to this area of business.
A look at our three sales regions shows a very mixed picture. Business in the "Asia/Pacifi c" region, in particular, was signifi cantly impacted by currency effects. In addition to a substantial depreciation of the Indian rupee, in particular the weak yen, as well as a general slowdown in economic growth in Japan, had an adverse effect. Development in China and Southeast Asia, on the other hand, was positive. Overall, revenue was 8 percent lower than the previous year, which nevertheless equates to growth of 3 percent after adjustment for currency effects. Although the "Americas" region was rather weak in the same period of the previous year, the 6 percent increase this year is very encouraging. Both the USA and Latin America contributed to growth in this region. The EMEA region (Europe, Middle East and Africa), on the other hand, recorded a decline in revenue, although the expiry of government investment schemes in Russia, in particular, had an adverse effect on new business.
Even though operative business in the fi rst quarter was at a slower pace, Carl Zeiss Meditec did take two signifi cant strategic steps: the acquisition of a sales channel in Turkey and (in the second week of the second quarter) the acquisition of the U.S. IOL specialist Aaren Scientifi c. The purchase of our longstanding distribution partner, Optronik, in Turkey, shall enable us to serve the rapidly growing medical market in Turkey even more effi ciently. The integration of Optronik into ZEISS's global service, sales and support network, shall bring us additional growth opportunities. The acquisition of Aaren Scientifi c shall enable us to offer our customers as tailored and as full a product range as possible. We shall strengthen the growing area of surgical ophthalmology and thus increase the proportion of recurring sales in the longer term.
These strategic steps also further consolidate our already sound position. I am therefore confi dent that we can look to the future with optimism, even though we shall certainly have to continue to deal with volatile markets, negative currency effects and intense competitive pressure in the medium term.
Our assumption remains that we shall grow at least as fast as the markets. We shall also adhere fi rmly to our EBIT target of 15 percent by 2015.
I would be delighted if you would support our endeavours and continue to put your trust in us.
Jena, February 2014
Dr Ludwin Monz President and CEO Carl Zeiss Meditec AG
Carl Zeiss Meditec AG, Jena, Germany, is the parent company of the Carl Zeiss Meditec Group ("Carl Zeiss Meditec", the "Group", the "Company"), which comprises additional subsidiaries.
The following changes occurred with respect to the Group's reporting entity and the structure of its consolidated fi nancial statements in the fi rst three months of 2013/2014: At the end of the fi rst quarter Carl Zeiss Meditec acquired 100 percent of the shares in the distribution and service company Optronik A.S. in Turkey. Carl Zeiss Meditec assumed the business activities of the company with effect from 30 December 2013, as contractually agreed.
Table 1: Summary of key ratios in the consolidated income statement (fi gures in € '000, unless otherwise stated)
| 3 Months 2012/2013 |
3 Months 2013/2014 |
Change | |
|---|---|---|---|
| Revenues | 218,999 | 212,279 | - 3.1 % |
| Gross margin | 53.6 % | 53.7 % | + 0.1 %-pts |
| EBITDA | 35,592 | 30,540 | - 14.2 % |
| EBITDA margin | 16.3 % | 14.4 % | - 1.9 %-pts |
| EBIT | 31,325 | 26,494 | - 15.4 % |
| EBIT margin | 14.3 % | 12.5 % | - 1.8 %-pts |
| Earnings before income taxes | 38,305 | 31,837 | - 16.9 % |
| Tax rate | 34.2 % | 32.7 % | - 1.5 %-pts |
| Consolidated net income after non-controlling interests | 23,327 | 20,098 | - 13.8 % |
| Earnings per share after non-controlling interests | € 0.29 | € 0.25 | - 13.8 % |
After the fi rst three months of the current fi nancial year the Carl Zeiss Meditec Group has generated revenue of € 212.3 million, which means that revenue declined slightly, by 3.1 %, in the fi rst quarter, compared with the previous year (previous year: € 219.0 million). The fall in revenue is mainly due to negative currency effects. Based on constant exchange rates revenue increased slightly, by 1.7 %. This growth is particularly attributable to the intraocular lens business of the "Surgical Ophthalmology" SBU. At a regional level, the "Americas" business region, in particular, grew signifi cantly.
Due to its substantial growth the share of the Group's total revenue generated by the "Surgical Ophthalmology" strategic business unit has now increased to 15.8 % (previous year: 13.5 %). The strategic business unit "Ophthalmic Systems" accounted for 40.9 % (previous year: 38.5 %) of consolidated revenue, while the "Microsurgery" SBU accounted for 43.3 % (48.0 %).
| Figure 1: Share of strategic business units in consolidated revenue in the fi rst three months of fi nancial year 2013/2014 | |||||
|---|---|---|---|---|---|
| Ophthalmic Systems SBU | 40.9 % | ||||
| Surgical Ophthalmology SBU | 15.8 % | ||||
| Microsurgery SBU | 43.3 % |
The "Ophthalmic Systems" strategic business unit increased its revenue to € 86.7 million in the fi rst quarter (previous year: € 84.4 million). The SBU therefore grew by 2.7 %. Both the area of diagnostic equipment and the area of refractive lasers contributed to this growth. At the same time, the environment remains diffi cult due to the intense competition in some segments of the SBU. Growth was also impacted once again by negative currency effects: based on constant exchange rates revenue grew by 7.1 %.
With a 13.5 % increase in revenue, from € 29.5 million to € 33.4 million, the "Surgical Ophthalmology" SBU once again made a very positive contribution to growth in the fi rst quarter. This business remained largely unaffected by foreign exchange rate fl uctuations, so that, based on constant exchange rates, revenue growth was on almost the same level, at 13.7 %. This business unit continued to benefi t in particular from the growing demand for intraocular lenses and multifocal and toric premium lenses for minimally invasive cataract surgery. The launch of the AT LISA® tri toric at the end of the year, an advancement of the AT LISA® tri, with additional astigmatism correction, was very successful.
Revenue growth in the "Microsurgery" SBU declined further, compared with the strong fi rst quarter the in the previous year, with a slowdown in market momentum. Revenue in this SBU amounted to € 92.1 million after the fi rst three months, corresponding to a year-on-year decrease of 12.4 % (previous year: € 105.1 million). It should be noted, however, that the decline in revenue is mainly attributable to currency effects. Based on constant exchange rates the decline would thus equate to 6.3 %. The strongest sales drivers continued to be the surgical microscopes for neurosurgery and ENT surgery.
Figure 2: Consolidated revenue by strategic business unit (fi gures in € '000) 3 Months 2013/2014 3 Months 2012/2013 Ophthalmic Systems SBU 86,738 84,421 + 2.7 % Surgical Ophthalmology SBU 33,438 29,472 + 13.5 % Microsurgery SBU 92,103 105,106 - 12.4 % Consolidated revenue 212,279 218,999
Figure 3: Consolidated revenue by strategic business unit based on constant exchange rates (fi gures in € '000)
The Carl Zeiss Meditec Group has a very balanced range of business activities worldwide, with each of its three strategic business regions generating around one third of its total revenue. In the past three months 33.2 % of consolidated revenue was generated by the region Europe, Middle East and Africa (EMEA). The Americas and Asia/Pacifi c (APAC) regions accounted for 36.5 % and 30.3 %, respectively, of the Group's total revenue.
| Figure 4: Share of regions in consolidated revenue in the fi rst three months of fi nancial year 2013/2014 | ||
|---|---|---|
| EMEA | 33.2 % | |
| Americas | 36.5 % | |
| Asia/Pacifi c | 30.3 % |
Revenue in the EMEA region totalled € 70.5 million for the fi rst quarter of the current fi nancial year, which is down by 7.5 % (adjusted for currency effects: - 7.4 %) compared with the same period of the previous year (previous year: € 76.2 million). As anticipated, the expiry of government investment schemes in Russia had an adverse effect on the development of revenue in this region. Growth in the core regional markets was largely stable overall.
In the Americas region the Carl Zeiss Meditec Group grew its revenue by 6.3 %, from € 73.0 million in the same period of the previous year, to € 77.6 million in the past quarter. Based on constant exchange rates, business in this region grew in the low double digits, by 10.7 %. On the whole, development in both the USA and the countries of South America was positive.
In the APAC region, the high volatility of the Japanese yen, in particular, as well as a general slowdown in growth in Japan in the fi rst quarter, caused revenue to decline by 8.1 %. After the fi rst three months, revenue in this region totaled € 64.2 million (previous year: € 69.8 million). Disregarding negative currency effects, business in this region nevertheless grew slightly, by 2.9 %, compared with the previous year.
Figure 6: Consolidated revenue by region based on constant exchange rates (fi gures in € '000)
Gross profi t for the past quarter amounts to € 114.0 million (previous year: € 117.4 million). The corresponding margin for the period under review is 53.7 % (previous year: 53.6 %).
Functional costs for the reporting year amount to € 87.5 million (previous year: € 86.1 million). The proportion of revenue increased slightly from 39.3 % to 41.2 %. The higher expense for trademark licenses, among other things, played a role in this.
The Carl Zeiss Meditec Group uses earnings before interest and taxes (EBIT = operating result) as a key performance indicator. EBIT amounted to € 26.5 million for the period from October to December (previous year: € 31.3 million). The EBIT margin fell to 12.5 % (previous year: 14.3 %) , due in part to foreign currency losses and to the lower share of revenue generated by the Microsurgery SBU.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased during the reporting period compared with the same period of the previous year, from € 35.6 million to € 30.5 million. The EBITDA margin was thus 14.4 % (previous year: 16.3 %).
The tax rate decreased year-on-year, from 34.2 % to 32.7 %. Generally, an average annual tax rate of between 31 % and 33 % is assumed.
In the fi rst three months basic consolidated net income1 amounted to € 20.1 million (previous year: € 23.3 million). Non-controlling interests accounted for € 1.3 million of this (previous year: € 1.9 million). In the past three months, basic earnings per share of the parent company thus amount to € 0.25 (previous year: € 0.29).
The Carl Zeiss Meditec Group's statement of cash fl ows shows the origin and utilization of the cash fl ows within a fi nancial year. A distinction is made between cash fl ows from operating activities and cash fl ows from investing and fi nancing activities.
Changes in individual items in the income statement and the statement of fi nancial position are recorded in the statement of cash fl ows. In contrast, the consolidated statement of fi nancial position presents the fi gures as they stood at the end of the reporting period on 31 December 2013. As a result, the statements in the analysis of the fi nancial position may differ from the presentation of net assets based on the consolidated statement of fi nancial position.
Cash fl ow from operating activities amounted to € - 6.0 million in the reporting period (previous year: € 7.0 million). The cash outfl ow is mainly due to the higher taxes paid for the reporting period and the greater reduction of trade payables as of the end of the reporting period, which had increased at the end of the fourth quarter of the past fi nancial year, due in particular to the high level of revenue generated. In addition, the recent launches of a number of new products meant greater stockpiling of inventories.
Cash fl ow from investing activities in the reporting period amounted to € - 13.8 million (previous year: € - 3.4 million). However, in the past quarter, the acquisition of longstanding distribution partner Optronik A.S. in Turkey resulted in a higher cash outfl ow than in the same quarter of the previous year.
Cash fl ow from fi nancing activities in the fi rst three months of the current fi nancial year amounts to € 21.2 million (previous year: € - 0.9 million). The difference here is mainly due to a reduction of treasury receivables from the Treasury of Carl Zeiss Financial Services.
| Key ratio Defi nition |
30 September 2013 |
31 December 2013 |
Change | |
|---|---|---|---|---|
| Cash and cash equivalents |
Cash-in-hand and bank balances | 6,286 | 7,284 | 15.9 % |
| Net cash | Cash-in-hand and bank balances + Treasury receivables from Group treasury of Carl Zeiss AG2 ./. Treasury payables to Group treasury of Carl Zeiss AG |
351,839 | 326,524 | - 7.2 % |
| Net working capital | Current assets including fi nancial investments ./. Cash and cash equivalents ./. Treasury receivables from Group treasury of Carl Zeiss AG3 ./. Current liabilities excl. treasury payables to Group treasury of Carl Zeiss AG |
316,377 | 351,020 | 10.9 % |
| Working capital | Current assets ./. Current liabilities |
528,216 | 537,544 | 1.8 % |
| Table 3: Key ratios relating to fi nancial position | ||||
| Key ratio | Defi nition | 3 Months 2012/2013 |
3 Months 2013/2014 |
Change |
| Cash fl ow per share | Cash fl ow from operating activities | € 0.09 | - 0.07 € | < - 100 % |
| Weighted average number of shares outstanding | ||||
| Capex ratio | Investment (cash) in property, plant and equipment | 0.9 % | 1.6 % | + 0.7 %-pts |
| Consolidated revenue |
Table 2: Key ratios relating to fi nancial position (fi gures in € '000)
Total assets amounted to € 962.8 million as of 31 December 2013 (30 September 2013: € 983.1 million). The decline in total assets is mainly attributable to the reduction of treasury receivables from the Group Treasury of Carl Zeiss AG.
Non-current assets increased due to the increase in goodwill associated with the acquisition of Optronik A.S., from € 247.6 million on 30 September 2013 to € 250.1 million on 31 December 2013.
There were signifi cant changes in current assets as of 31 December 2013 (€ 712.7 million; 30 September 2013: € 735.5 million), due mainly to the reduction, at the end of the reporting period, of trade receivables and the signifi cant growth in revenue, particularly at the end of the fourth quarter, as well as to the reduction of treasury receivables from the Group Treasury of Carl Zeiss AG associated with the acquisition of Optronik A.S. Inventories increased to € 162.2 million as of 31 December 2013 (30 September 2013: € 148.5 million).
Figure 9: Structure of the consolidated statement of fi nancial position Liabilities (all fi gures in € '000)
The equity recognized in Carl Zeiss Meditec's consolidated statement of fi nancial position increased, due to the operating performance, to € 728.1 million as of 31 December 2013 (30 September 2013: € 715.3 million). The equity ratio increased to 75.6 % (30 September 2013: 72.8 %) and thus remained at a very comfortable level.
Non-current liabilities amounted to € 59.5 million as of 31 December 2013 (30 September 2013: € 60.5 million). Under current liabilities (€ 175.2 million; 30 September 2013: € 207.2 million) trade payables and liabilities to related parties decreased, due, among other things, to effects relating to the end of the reporting period.
| Table 4: Key ratios relating to net assets | ||||
|---|---|---|---|---|
| Key ratio | Defi nition | 30 September 2013 |
31 December 2013 |
Change |
| Equity ratio | Equity (incl. non-controlling interests) | 72.8 % | 75.6 % | + 2.8 %-pts |
| Total assets | ||||
| Rate of inventory | Cost of goods sold | 2.9 | 2.5 | - 11.9 % |
| turnover | Average inventories | |||
| Days of sales outstanding (DSO)4 |
Trade receivables at the end of the reporting period (gross) ./. rolling monthly sales |
50.8 days | 59.3 days | + 16.8 % |
The Carl Zeiss Meditec Group's orders on hand increased. As of 31 December 2013 orders on hand amounted to € 111.2 million, which corresponds to an increase of almost 11 % compared with the previous year (31 December 2012: € 100.3 million).
At the end of the fi rst quarter Carl Zeiss Meditec acquired its longstanding business partner Optronik A.S. in Turkey, which is domiciled in Ankara. In the past Optronik was the Company's exclusive distribution partner; it shall now be integrated into the global distribution and service network. No further events of material signifi cance for the net assets, fi nancial position and results of operations of the Company occurred in the fi rst three months of fi nancial year 2013/2014.
At the beginning of January 2014 Carl Zeiss Meditec acquired the US manufacturer of intraocular lenses, Aaren Scientifi c Inc., which is domiciled in Ontario/California. Aaren Scientifi c is integrated in the strategic business unit "Surgical Ophthalmology" and supplements the existing locations Berlin in Germany and La Rochelle in France. This acquisition is an important strategic step for Carl Zeiss Meditec in terms of generating further growth in the "Surgical Ophthalmology" SBU in future.
As of 31 December 2013, the Group had a workforce of 2,631 worldwide (30 September 2013: 2,540).
Research and development plays an important role within the Carl Zeiss Meditec Group. Excellence in the area of research and development (R&D) is measured based on the Company's ability to continuously and sustainably raise the performance and increase the growth of the Group through innovations. According to the strategy, innovations are a key driver of future growth. The Carl Zeiss Meditec Group has the necessary resources to secure the Company's future earnings strength with its research and development activities. The Company shall therefore continue to offer innovations in future that make leading technologies available for its customers, enable improvements in effi ciency and continuously enhance treatment results for patients.
The Carl Zeiss Meditec Group once again further expanded its research and development activities in the fi rst three months of the current fi nancial year, and invested a total of € 23.8 million (previous year: € 23.1 million) in research and development, increasing its R&D to 11.2 % at the same time (previous year: 10.6 %).
As of 31 December 2013, there were 408 research and development employees Group-wide (31 December 2012: 409). This corresponds to 15.5 % (previous year: 16.3 %) of the Carl Zeiss Meditec Group's entire workforce.
Research and development at Carl Zeiss Meditec mainly focuses on:
Once again in the reporting period, the Company launched a whole new range of innovations, including at the summer meeting of the European Society of Cataract and Refractive Surgeons (ESCRS) in Amsterdam:
The MEL® 90 is a new and improved excimer laser for laser vision correction. It enables a reduction in the depth of ablation and treatment times, and also ensures even greater reproducibility at the same time. The MEL® 90 guarantees gentle correction and excellent predictability, even in patients with very high or very low ametropia. The shorter treatment time increases comfort for both the patient and the surgeon.
The ZEISS Cataract Suite markerless enables a comprehensive, end-to-end workflow for cataract surgery with astigmatism correction, with all components working together in perfect harmony. It incorporates components such as the ZEISS IOLMaster® 500 for quick reference images of the eye, the comprehensive data management system FORUM®, the OR assistance system CALLISTO eye®, right through to the OPMI LUMERA® 700 surgical microscope. Surgeons can therefore devote their full attention to the surgical procedure and patients benefi t from a more comfortable treatment.
The new ultrasound modulation APM™ (Advanced Power Modulation) for the VISALIS® 500, the phacoemulsifi cation device, is proving impressive in medical tests by signifi cantly reducing phaco energy and increasing anterior chamber stability. For the patient this means better treatment outcomes and faster recovery of the eye after surgery, as well as a signifi cantly shorter treatment time.
The toric trifocal intraocular lens expands the Company's range of premium intraocular lenses. The AT LISA® tri toric 939MP is the fi rst preloaded trifocal toric intraocular lens on the market. Following the extremely successful launch of the AT LISA® tri 839MP last year, ophthalmologists can now also give cataract patients with astigmatism an almost natural visual experience without glasses in the near, distance and intermediate range. Based on the LISA concept and its product platform, the AT LISA® tri toric also offers very good light transmission, as well as an innovative enhancement of asymmetric light distribution: for the patient this means very good vision, even in diffi cult light conditions, the preservation of contrast sensitivity and the reduction of halos and undesirable glare effects, which is particularly important at night.
Carl Zeiss Meditec anticipates further growth in the medical technology market, as the main growth drivers – such as the growing global population, the rising number of older people, and the increasing proportion of the global population with access to medical care – shall remain unchanged.
Last but not least, the development of the global economy infl uences the growth of the medical technology industry inasmuch as private customers or public budgets postpone their investment decisions until the future, or make them early.
Based on the underlying and persistent long-term growth trends, and in spite of imponderable macroeconomic conditions, the management of Carl Zeiss Meditec assumes that there will be further revenue growth in the next two fi nancial years that is at least on a par with the expected market growth for this industry.
The "Ophthalmic Systems" SBU is facing growing competitive pressure. Having largely redesigned our model range in optical coherence tomography at the beginning of the past reporting year, however, as well as launching product innovations with refractive lasers, such as the ReLEx® smile procedure and the new excimer laser MEL® 90, we feel cautiously optimistic about the new fi nancial year and are confi dent that we will be able to defend our market shares.
The "Surgical Ophthalmology" SBU continued to grow in the past three months. We expect this growth to continue in the current year. To achieve this we need to exploit and exhaust any potential that remains in the markets in which we operate and further strengthen our market position through innovations. MICS lenses, which are already well established in the market, play a key role in this, as well as the injectors suitable for implantation, and the successfully established VISALIS® 500 phaco system, which is capable of microincision surgery. Carl Zeiss Meditec's AT LISA® tri, in combination with the BLUEMIXSTM 180 injector, are the only preloaded MICS-compliant trifocal intraocular lenses on the market. The recently launched toric version of the AT LISA® tri for astigmatism patients also performed very well in the fi rst quarter. The portfolio in the fi eld of surgical ophthalmology shall also be signifi cantly expanded by the acquisition of Aaren Scientifi c Inc. at the beginning of the second quarter. Carl Zeiss Meditec therefore has an even more extensive product range for ophthalmic surgery. As a result, we are confi dent that we will be able to further increase our market shares in the current fi nancial year.
We have an extraordinarily strong market position in the "Microsurgery" SBU. In spite of a weak fi rst quarter, we feel optimistic about the development of revenue in the coming quarters. With our surgical microscopes such as the OPMI® Pentero® for neuro, spinal or plastic surgery, the OPMI LUMERA® for surgical procedures on the eye, and the OPMI® VARIO, which is used in the area of ENT surgery, among others, our product range is diversifi ed and we are exploiting the associated market potential to an even greater extent by developing the products further with a view to offering the user additional supporting applications. We expect the "Microsurgery" SBU to continue making signifi cant contributions to earnings in future. We are confi dent that we will be able to defend our market shares in the current fi nancial year.
As a global Group, our continued aim in the years ahead shall be to maintain as balanced a distribution of revenue as possible across our individual markets. Carl Zeiss Meditec currently generates around one third of its revenue in each of its three strategically important business regions: "EMEA", the "Americas" and "APAC".
Given the generally favorable conditions for market development in the medium and long term, and Carl Zeiss Meditec's good strategic position, the Company's management assumes that revenue will continue to grow in the current fi nancial year, provided that general economic conditions remain stable. We anticipate revenue growth at least on a par with the market growth expected for the industry.
A crucial advantage for even greater stability of our overall business is a higher proportion of revenue with case-number-dependent products and services, since there is generally less fl uctuation in these areas than in the capital goods business, for example. From a current perspective, we expect a further increase in fi nancial year 2013/2014. In the medium term we are aiming to increase this percentage of revenue to around 30 % of consolidated revenue.
In the fi rst quarter the EBIT margin amounted to 12.5 %. We shall adhere fi rmly to our medium-term target of a sustainable EBIT margin of 15 % by 2015.
If there are any signifi cant changes in the economic environment currently forecast over the course of the fi nancial year, and should it thus become necessary to amend the statements made here on business development from today's perspective, we shall publish these amendments promptly and specify our expectations in more detail.
In the fi rst three months of the current fi nancial year no member of the Management Board or Supervisory Board and no individual closely related to a member of the Management Board or Supervisory Board executed any notifi able securities transactions pursuant to Section 15a German Securities Trading Act (Wertpapierhandelsgesetz, WpHG).
The details of all securities transactions executed by members of the Management Board and Supervisory Board are published immediately after their disclosure on the Company's website at www.meditec.zeiss.com/ir | Corporate Governance | Directors' Dealings in accordance with the prevailing legal requirements of Section 15b WpHG. The publication documents and the relevant disclosures are forwarded to the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin).
At the current time, no Company shares are held by members of the Management Board or Supervisory Board of Carl Zeiss Meditec AG.
Figure 10: Shareholder structure of Carl Zeiss Meditec AG (as of 31 December 2013) Carl Zeiss Group ca. 65 % Free fl oat ca. 35 %
| (Figures in € '000) | ||
|---|---|---|
| Financial year 2013/2014 1 October 2013 – 31 December 2013 |
Financial year 2012/2013* 1 October 2012 – 31 December 2012 |
|
| Revenue | 212,279 | 218,999 |
| Cost of goods sold | (98,314) | (101,583) |
| Gross profi t | 113,965 | 117,416 |
| Selling and marketing expenses | (53,671) | (53,388) |
| General administrative expenses | (10,027) | (9,583) |
| Research and development expenses | (23,773) | (23,120) |
| Earnings before interests, income taxes, depreciation and amortization |
30,540 | 35,592 |
| Depreciation and amortization | 4,046 | 4,267 |
| Earnings before interests and income taxes | 26,494 | 31,325 |
| Interest income | 622 | 701 |
| Interest expense | (1,499) | (1,307) |
| Foreign currency gains/(losses), net | 5,510 | 6,953 |
| Other fi nancial result | 710 | 633 |
| Earnings before income taxes | 31,837 | 38,305 |
| Income tax expense | (10,413) | (13,118) |
| Net income | 21,424 | 25,187 |
| Attributable to: Shareholders of the parent company Non-controlling interest |
20,098 1,326 |
23,327 1,860 |
| Profi t/(loss) per share, attributable to the shareholders of the parent company in the current fi nancial year (€): – Basic/diluted * The prior-year fi gures are adjusted due to amended IAS 19 regulations. |
0.25 | 0.29 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
(Figures in € '000)
| Financial year 2013/2014 1 October 2013 – |
Financial year 2012/2013* 1 October 2012 – |
|
|---|---|---|
| 31 December 2013 | 31 December 2012 | |
| Net income | 21,424 | 25,187 |
| Other comprehensive income: | ||
| Items, that may be reclassifi ed subsequently to net income/loss |
||
| Foreign currency translation | (9,208) | (12,977) |
| Total of items that may be reclassifi ed subsequently to net income/loss |
(9,208) | (12,977) |
| Items, that will not be reclassifi ed subsequently to net income/loss |
||
| Actuarial gains (losses) on defi ned benefi t pension plans | 589 | (1,889) |
| Total of items that will not be reclassifi ed subsequently to net income/loss |
589 | (1,889) |
| Other comprehensive income | (8,619) | (14,866) |
| Comprehensive Income | 12,805 | 10,321 |
| Attributable to: Shareholders of the parent company Non-controlling interest |
14,617 (1,812) |
13,251 (2,930) |
* The prior-year fi gures are adjusted due to amended IAS 19 regulations.
| (Figures in € '000) | ||
|---|---|---|
| 31 December 2013 | 30 September 2013* | |
| ASSETS | ||
| Goodwill | 127,433 | 121,046 |
| Other intangible assets | 12,369 | 12,531 |
| Property, plant and equipment | 53,694 | 54,433 |
| Investments | 124 | 124 |
| Deferred tax assets | 49,865 | 52,828 |
| Non-current trade receivables | 5,347 | 5,421 |
| Other non-current assets | 1,259 | 1,232 |
| Total non-current assets | 250,091 | 247,616 |
| Inventories | 162,226 | 148,467 |
| Trade receivables | 135,629 | 150,000 |
| Accounts receivable from related parties | 60,342 | 62,701 |
| Treasury receivables | 325,639 | 352,412 |
| Tax refund claims | 563 | 310 |
| Other current fi nancial assets | 11,625 | 6,384 |
| Other current non-fi nancial assets | 9,421 | 8,899 |
| Cash and cash equivalents | 7,284 | 6,286 |
| Total current assets | 712,729 | 735,459 |
* The prior-year fi gures are adjusted due to amended IAS 19 regulations.
| TO | OUR | SHAREHOLDERS | INTERIM | FINANCIAL | STATEMENTS | NOTES | FURTHER | INFORMATION |
|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS) |
| 31 December 2013 | 30 September 2013* | |
|---|---|---|
| LIABILITIES AND EQUITY | ||
| Share capital | 81,310 | 81,310 |
| Capital reserve | 313,863 | 313,863 |
| Retained earnings | 342,863 | 322,765 |
| Gains and losses recognized directly in equity | (44,539) | (39,058) |
| Equity before non-controlling interest | 693,497 | 678,880 |
| Non-controlling interest | 34,622 | 36,434 |
| Total equity | 728,119 | 715,314 |
| Provisions for pensions and similar commitments | 32,299 | 32,747 |
| Other non-current provisions | 3,737 | 3,703 |
| Non-current fi nancial liabilities | 1,704 | 1,820 |
| Non-current leasing liabilities | 11,200 | 11,969 |
| Other non-current non-fi nancial liabilities | 7,960 | 7,863 |
| Deferred tax liabilities | 2,616 | 2,415 |
| Total non-current liabilities | 59,516 | 60,517 |
| Current provisions | 35,563 | 35,785 |
| Current accrued liabilities | 52,463 | 60,274 |
| Current fi nancial liabilities | 1,627 | 2,717 |
| Current portion of non-current fi nancial liabilities | 460 | 507 |
| Current portion of non-current leasing liabilities | 1,904 | 1,835 |
| Trade payables | 24,293 | 35,861 |
| Current income tax liabilities | 7,718 | 11,962 |
| Accounts payable to related parties | 11,948 | 19,833 |
| Treasury payables | 6,399 | 6,859 |
| Other current non-fi nancial liabilities | 32,810 | 31,610 |
| Total current liabilities | 175,185 | 207,243 |
Total liabilities 962,820 983,074
(Figures in € '000)
* The prior-year fi gures are adjusted due to amended IAS 19 regulations.
| (Figures in € '000) | ||
|---|---|---|
| Financial year 2013/2014 1 October 2013 – 31 December 2013 |
Financial year 2012/2013* 1 October 2012 – 31 December 2012 |
|
| Cash fl ows from operating activities: | ||
| Net income | 21,424 | 25,187 |
| Adjustments to reconcile net income to net cash provided by/(used in) operating activities |
||
| Income tax expenses | 10,413 | 13,118 |
| Interest income/expenses | 877 | 606 |
| Depreciation and amortization | 4,046 | 4,267 |
| Gains/losses on disposal of fi xed assets | (190) | (61) |
| Interest received | 116 | 203 |
| Interest paid | (289) | (461) |
| Income tax reimbursement | 985 | 170 |
| Income taxes paid | (15,715) | (9,015) |
| Changes in working capital: | ||
| Trade receivables | 15,928 | (2,552) |
| Inventories | (15,546) | (6,845) |
| Other assets | (5,787) | (5,448) |
| Trade payables | (16,810) | (10,271) |
| Provisions and fi nancial liabilities | (7,117) | (7,602) |
| Other liabilities | 1,635 | 5,717 |
| Total adjustments | (27,454) | (18,174) |
| Net cash provided by operating activities | (6,030) | 7,013 |
| Cash fl ows from investing activities: | ||
| Investment in property, plant and equipment | (2,538) | (1,489) |
| Investment in intangible assets | (64) | (81) |
| Proceeds from fi xed assets | 403 | 56 |
| Acquisition of IOL/OVD-business IMEX Clinic S.L., Spain | (716) | (1,907) |
| Acquisition Optronik A.S., Turkey, net of cash aquired | (10,843) | – |
| Net cash used in investing activities | (13,758) | (3,421) |
| Cash fl ows from fi nancing activities: | ||
| Proceeds from/(repayment of) short-term debt | 160 | 132 |
| Proceeds from/(repayment of) non-current fi nancial liabilities | (163) | (127) |
| (Increase)/decrease in treasury receivables | 22,075 | 6,512 |
| Increase/(decrease) in treasury payables | (460) | (6,941) |
| Change of leasing liabilities | (457) | (437) |
| Net cash provided by/(used in) fi nancing activities | 21,155 | (861) |
| Effect of exchange rate fl uctuation on cash and cash equivalents | (369) | (795) |
| Net increase/(decrease) in cash and cash equivalents | 998 | 1,936 |
| Cash and cash equivalents, beginning of reporting period | 6,286 | 9,526 |
| Cash and cash equivalents, end of reporting period | 7,284 | 11,462 |
* The prior-year fi gures are adjusted due to amended IAS 19 regulations.
| TO | OUR | SHAREHOLDERS | INTERIM | FINANCIAL | STATEMENTS | NOTES | FURTHER | INFORMATION |
|---|---|---|---|---|---|---|---|---|
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S ( I F R S )
| (Figures in € '000) | |||||||
|---|---|---|---|---|---|---|---|
| Share capital |
Capital reserve |
Retained earnings |
Gains and losses recognized directly in equity |
Equity before non controlling interest |
Non controlling interest |
Total equity |
|
| As of 1 October 2012 as reported | 81,310 | 313,863 | 261,309 | (1,491) | 654,991 | 40,806 | 695,797 |
| Effects from the retrospective application of IAS 19 revised |
– | – | 1,849 | (17,780) | (15,931) | – | (15,931) |
| As of 1 October 2012 | 81,310 | 313,863 | 263,158 | (19,271) | 639,060 | 40,806 | 679,866 |
| Foreign currency translation | – | – | – | (17,564) | (17,564) | (9,996) | (27,560) |
| Changes in equity from the remeasurement of pensions liabilities |
– | – | – | (17,564) | (17,564) | (9,996) | (27,560) |
| Net income | – | – | 93,505 | – | 93,505 | 5,617 | 99,122 |
| Sum of comprehensive income for the period |
– | – | 93,505 | (17,564) | 75,941 | (4,379) | 71,562 |
| Dividend payments | – | – | (32,524) | – | (32,524) | – | (32,524) |
| As of 30 September 2013 | 81,310 | 313,863 | 322,290 | (19,055) | 698,408 | 36,427 | 734,835 |
| Effects from the retrospective application of IAS 19 revised |
– | – | (1,374) | (2,223) | (3,597) | 7 | (3,590) |
| As of 1 October 2013 | 81,310 | 313,863 | 322,765 | (39,058) | 678,880 | 36,434 | 715,314 |
| Foreign currency translation | – | – | – | (6,070) | (6,070) | (3,138) | (9,208) |
| Changes in equity from the remeasurement of pensions liabilities |
– | – | – | 589 | 589 | – | 589 |
| Changes in value recognized directly in equity |
– | – | – | (5,481) | (5,481) | (3,138) | (8,619) |
| Net income | – | – | 20,098 | – | 20,098 | 1,326 | 21,424 |
| Sum of comprehensive income for the period |
– | – | 20,098 | (5,481) | 14,617 | (1,812) | 12,805 |
| As of 31 December 2013 | 81,310 | 313,863 | 342,863 | (44,539) | 693,497 | 34,622 | 728,119 |
Carl Zeiss Meditec AG prepared its consolidated fi nancial statements as of 30 September 2013 in accordance with the International Financial Reporting Standards (IFRSs) promulgated by the International Accounting Standards Board (IASB), London, as applicable in the EU as of that date. Accordingly, this interim report has been prepared in accordance with IAS 34 "Interim Reporting".
The accounting and valuation principles applied for the interim fi nancial statements as of 31 December 2013 correspond to those applied for the consolidated fi nancial statements for fi nancial year 2012/2013, with the exceptions described below. A detailed description of these principles was published in the notes to the consolidated fi nancial statements as of 30 September 2013.
The Group was obliged to apply the following standards and interpretations for the first time at the beginning of this fi nancial year:
| Date of issue | Standard/Interpretation | Amendment/New statutory regulation | ||
|---|---|---|---|---|
| 12 May 2011 | IFRS 13 "Fair Value Measurement" | Guidance on measurement and disclosures on the measurement of fair value |
||
| 16 June 2011 Amendment IAS 19 "Employee Benefi ts" |
Accounting treatment of defi ned benefi t pension plans; defi nition of the individual types of employee benefi ts and enhanced disclosure requirements |
|||
| 19 October 2011 | IFRIC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine |
Accounting treatment of overburden removal costs during the production phase in surface mining |
||
| 16 December 2011 Amendments IFRS 7 "Financial Instruments: Disclosures" |
Additional disclosures relating to the offsetting of fi nancial assets and liabilities |
|||
| 13 March 2012 | Amendment to IFRS 1 "First-time Adoption of International Financial Reporting Standards" |
Specifi cation of the accounting treatment of government loans with a below-market rate of interest |
||
| 17 May 2012 | Improvements to IFRSs (2009 – 2011) | Amendments to Standards IFRS 1, IAS 1, 16, 32 and 34 |
||
| 28 June 2012 | Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) |
Expansion of transition regulations to IFRS 10, 11 and 12 |
With the exception of the amendments to IFRS 13 and IAS 19, there were no signifi cant changes to the accounting and valuation methods in connection with any standards and interpretations applied for the fi rst time, nor are such changes expected.
IFRS 13 "Fair Value Measurement", which Carl Zeiss Meditec shall be obliged to apply prospectively from this fi nancial year, specifi es uniform guidelines for calculating fair value and enhances the disclosures in the notes on fair value measurement. The Standard does not, however, contain any requirements stipulating in which cases the fair value is to be applied. The fi rst-time application of IFRS 13 did not have any material effects on the measurement of fair value by the Group. A number of specifi c disclosures concerning fair value are required under IAS 34.16A (j), specifi cally for fi nancial instruments, and therefore affect the reporting period for the condensed consolidated interim fi nancial statements. The Group presents these disclosures in Section 5.
The amendments to IAS 19 "Employee Benefi ts" shall generally be mandatory with retrospective effect for fi nancial statements for fi nancial years starting on or after 1 January 2013. Carl Zeiss Meditec has adjusted the fi gures reported for the previous year for the effects of the amendments to IAS 19. Overall, the amendments to IAS 19 have the following material effects at Carl Zeiss Meditec:
Pensions and similar obligations: Up until now the Group has applied the corridor method. With the abolition of the corridor method as a result of the amended IAS 19, actuarial gains and losses have an immediate effect in the consolidated statement of fi nancial position and led to an increase in provisions for pensions and similar obligations and to a decrease in equity. In addition, pension obligations and plan assets are subject to a standard interest rate (Net Interest Approach).
Partial retirement obligations: Due to the amended defi nition under IAS 19, top-up contributions within the scope of partial retirement agreements shall no longer to be carried in their full amount as liabilities at their present value, rather, the top-up contributions shall be accumulated on a pro rata basis over the respective active service years within the term of the agreement with the partially retired employees. This shall reduce the provisions for partial retirement.
The following table shows the effects of the application of IAS 19 on the main items in the consolidated statement of fi nancial position as of 1 October 2012, and as of 30 September 2013.
(in € '000)
| 30 September 2013 | 1 October 2012 | |
|---|---|---|
| Deferred tax assets | 8,647 | 7,286 |
| Other non-current assets | - 6,144 | - 10,881 |
| Assets | 2,503 | - 3,595 |
| Retained earnings | 475 | 1,849 |
| Gains and losses recognized directly in equity | - 20,003 | - 17,780 |
| Non-controlling interests | 7 | 0 |
| Equity | - 19,521 | - 15,931 |
| Provisions for pensions and similar commitments | 22,113 | 14,944 |
| Other non-current provisions | - 89 | - 2,608 |
| Liabilities | 2,503 | - 3,595 |
The effects on the consolidated income statement for the period 1 October to 31 December 2012 are presented in the following table.
| (in € '000) | |
|---|---|
| 3 Months Financial year 2012/2013 1 October 2012 – 31 December 2012 |
|
| Cost of goods sold | 11 |
| Selling and marketing expenses | 15 |
| General administrative expenses | 69 |
| Earnings before interest and taxes | 95 |
| Other fi nancial result | - 155 |
| Income tax expense | 21 |
| Consolidated net income | - 39 |
| thereof attributable to: Shareholders of the parent company Non-controlling interest |
- 39 0 |
The IASB and IFRS IC also issued the following standards, interpretations and revisions of existing standards; however, application of these is not yet mandatory for Carl Zeiss Meditec. The Company did not opt to apply these standards early:
| Date of issue Standard/Interpretation |
Amendment/New statutory regulation | Date of fi rst mandatory application |
Adopted by the EU |
|
|---|---|---|---|---|
| 12 November 2009 | IFRS 9 "Financial Instruments" | Classifi cation and measurement of fi nancial assets |
Not yet specifi ed | no |
| 28 October 2010 | Revision IFRS 9 "Financial Instruments" | Additional requirements for the accounting Not yet specifi ed of fi nancial liabilities |
no | |
| 12 May 2011 | IFRS 10 "Consolidated Financial Statements" Accounting regulations for the presentation Financial years beginning on or of consolidated fi nancial statements and after 1 January 2014 notes on the principle of control |
yes | ||
| 12 May 2011 | IFRS 11 "Joint Arrangements" | Expansion of requirements for joint arrangements and their accounting treatment |
Financial years beginning on or after 1 January 2014 |
yes |
| 12 May 2011 | IFRS 12 "Disclosure of Interests in Other Enhanced disclosure requirements for Entities" subsidiaries, joint ventures and associates, as after 1 January 2014 well as unconsolidated structured entities |
Financial years beginning on or | yes | |
| 12 May 2011 | IAS 27 "Separate Financial Statements" Guidance on the accounting treatment of investments in subsidiaries, associates and joint ventures in separate fi nancial statements |
Financial years beginning on or after 1 January 2014 |
yes | |
| 12 May 2011 | IAS 28 "Investments in Associates and Guidelines for the accounting treatment Joint Ventures" of associates and principles for applying the equity method |
Financial years beginning on or after 1 January 2014 |
yes | |
| 16 December 2011 | Amendments IFRS 32 "Financial Instruments: Amendment to provisions for offsetting Presentation" fi nancial assets and liabilities after 1 January 2014 |
Financial years beginning on or | yes | |
| 31 October 2012 | Amendment to IFRS 10, IFRS 12 and IAS 27 "Investment Entities" |
Special regulations for fi nancial statements of investment entities |
Financial years beginning on or after 1 January 2014 |
yes |
| 20 May 2013 | IFRIC Interpretation 21: Levies | Accounting treatment of levies imposed by governments |
Financial years beginning on or after 1 January 2014 |
no |
| 29 May 2013 | Amendment to IAS 36 "Impairment of Assets" |
Amended by recoverable amount disclosures for non-fi nancial assets following the adoption of IFRS 13 |
Financial years beginning on or after 1 January 2014 |
yes |
| Date of issue | Standard/Interpretation | Amendment/New statutory regulation | Date of fi rst mandatory application |
Adopted by the EU |
|---|---|---|---|---|
| 27 June 2013 | Amendment IAS 39 "Financial instruments: Recognition and Measurement" |
Novation of derivatives and continuation of hedge accounting |
Financial years beginning on or after 1 January 2014 |
yes |
| 19 November 2013 | Amendment IFRS 9 "Financial instruments" | Enhancement of provisions on hedge Not yet specifi ed accounting |
no | |
| 21 November 2013 | Amendment IAS 19 "Employee Benefi ts" | Specifi cation of the accounting treatment of employee contributions or third-party contributions for defi ned benefi t plans |
Financial years beginning on or after 1 July 2014 |
no |
| 12 December 2013 | Improvements to IFRSs (2010 – 2012) | Amendments to Standards IFRS 2, 3, 8, 13, IAS 16, 24 and 38 |
Financial years beginning on or after 1 July 2014 |
no |
| 12 December 2013 | Improvements to IFRSs (2011 – 2013) | Amendments to Standards IFRS 1, 3, 13, IAS 40 |
Financial years beginning on or after 1 July 2014 |
no |
Carl Zeiss Meditec is not expected to apply any of the standards listed above until the date of fi rst mandatory application. According to the current state of knowledge, the future application of these standards is only expected to have material effects on the accounting and valuation with respect to IFRS 9. The specifi c effects of the fi rst-time application of IFRS 9 are still under review. The other standards listed shall, in some cases, also lead to more extensive disclosures in the notes to the fi nancial statements.
On 5 December 2013 a purchase agreement was concluded between Carl Zeiss Meditec AG and Mr. Ömer Engin Kalinyazgan, Ankara, Turkey, which provides for the purchase of 100 percent of the shares in the distribution and service company Optronik Optik Ve Elektronik Cihazlar Ticaret Ve Sanayi Anonim Sirketi (hereinafter referred to as Optronik), domiciled in Ankara, Turkey. As contractually agreed, Carl Zeiss Meditec assumed the company's business activities with effect from 30 December 2013 (acquisition date).
Optronik was the exclusive trader for Carl Zeiss Meditec products in the Turkish medical sector, as well as for the products of the Microscopy division of Carl Zeiss AG. The latter mainly includes microscopes for the industrial sector, as well as the biomedical research sector. In addition to selling the products mentioned, the business also includes product-related services for private and public customers. Up until the date of the transaction, the company was the exclusive distribution partner of Carl Zeiss Meditec and Carl Zeiss AG for the products mentioned.
This acquisition strengthens Carl Zeiss Meditec's business, particularly in Turkey, and it is a systematic investment in its distribution and service organization. The acquisition of Optronik means that Carl Zeiss Meditec shall be represented in the market with a team of established experts in the area of distribution and support, and shall offer customer-focused product solutions and related services.
The preliminary purchase price is € 12.9 million and consists of a preliminary fi xed sum of € 11.5 million and a contingent earn-out component of € 1.4 million.
The fi xed price component is in part dependent on key ratios in Optronik's statement of fi nancial position according to Turkish accounting standards, and was calculated based on preliminary data available close to the acquisition date. A fi nal calculation of this component shall be performed in the second quarter of fi nancial year 2013/2014 based on the audited statement of fi nancial position of Optronik at the acquisition date. Pursuant to the agreement, the preliminary fi xed price was paid at the end of December 2013. The adjustment payment shall be made in the second quarter of fi nancial year 2013/2014. The earn-out component shall be payable in one tranche one year from the acquisition date, and shall depend on the revenue of the acquired business. The calculation of the earn-out is based on the achievement of defi ned revenue targets for the subsequent 12 months. In the event of signifi cant deviations from the expected revenue targets, the earn-out shall be increased or decreased accordingly. One year from the acquisition date a calculation shall be performed based on the actual revenues generated. The expected earn-out of € 1.4 million results from an achievement of the revenue target of 100 %. The contractual margin of fl uctuation of the earn-out has a lower limit of € 0 and, in the case of over-achievement of the specifi ed targets, is capped at € 2.2 million.
On 30 December 2013 Optronik and the seller, Mr. Ömer Engin Kalinyazgan, Ankara, Turkey, concluded a consultancy agreement, which regulates the rendering of relevant services to Optronik in the period of one year from the acquisition date. The agreement did not specify any remuneration. For this reason it is assumed that the consultancy services, which, based on a preliminary estimate, amount to signifi cantly less than € 0.1 million, shall be compensated for with the earn-out payment. This results in a deduction from the earn-out in the same amount and the corresponding recognition of a prepaid expense under other current non-fi nancial assets, which shall be reversed as an expense under administrative expenses over the term of the agreement.
Prior to the merger, business relations existed between Carl Zeiss Meditec and Optronik in the form of supply and service transactions. At the acquisition date Carl Zeiss Meditec had outstanding trade receivables from this period amounting to € 0.3 million, as well as outstanding sales commission liabilities, also amounting to € 0.3 million. These transactions, which Optronik accounted for identically, shall be treated separately from the acquisition of the assets and liabilities. These items were eliminated as part of consolidation in the consolidated fi nancial statements as of 31 December 2013.
At the date of publication of the interim fi nancial statements of Carl Zeiss Meditec as of 31 December 2013 the allocation of the purchase price to the assets and liabilities of the acquired company was not yet complete. The preliminary fair values of the identifi ed assets and liabilities at the date of acquisition and the corresponding carrying amounts directly prior to the date of acquisition are as follows:
| (in millions of €) | |||
|---|---|---|---|
| Optronik A.S. | |||
| Fair value | Carrying amount | ||
| Intangible assets | 1.6 | 0 | |
| Property, plant and equipment | 0.1 | 0.1 | |
| Inventories | 1.6 | 1.6 | |
| Trade receivables | 2.9 | 2.9 | |
| Other current non-fi nancial assets | 0.2 | 0.2 | |
| Cash and cash equivalents | 0.7 | 0.7 | |
| Deferred tax liabilities | - 0.3 | 0 | |
| Other current liabilities | - 0.5 | - 0.5 | |
| Net assets | 6.3 | 5.0 | |
| Goodwill from acquisition | 6.6 | ||
| Total costs of acquisition | 12.9 | ||
| Cash received | 0.7 | ||
| Capital outfl ow for purchase price components (preliminary) | - 11.5 | ||
| Contingent purchase price payment pursuant to IFRS 3 B64 (g) (i) | - 1.4 | ||
| Net capital outfl ow as of 30 December 2013 | - 10.8 |
The following additional information is given for the acquired receivables:
| (in millions of €) | |||
|---|---|---|---|
| Fair value | Gross amount | Valuation allowances | |
| Trade receivables | 2.9 | 3.1 | 0.2 |
The expected goodwill identifi ed from the acquisition of Optronik is mainly the result of the anticipated synergy effects of the integration of the distribution and service business into the existing business. It shall be allocated to all business units of Carl Zeiss Meditec and to the Microscopy division. As expected, goodwill shall not be deductible for tax purposes.
Incidental acquisition costs were incurred in the fi rst quarter of fi nancial year 2013/2014, in the amount of € 0.1 million. These were recognized under general administrative expenses.
The acquired company shall be recognized in net income for the fi rst time in the Group's interim fi nancial statements as of 31 March 2014.
In the second quarter of fi nancial year 2013/2014 a purchase agreement is expected to be concluded between Optronik and a Turkish subsidiary of Carl Zeiss AG, which shall provide for the sale of assets and liabilities and the transfer to this company of employees connected with the sale of products and services of the Microscopy division.
As the acquisition of Optronik occurred on 30 December 2013, Carl Zeiss Meditec's result in the fi rst quarter of fi nancial year 2013/2014 is not affected by this acquisition.
Assuming that the presented acquisition had already been completed on 1 October 2013, pro forma revenue would have amounted to € 215,607 thousand; pro forma consolidated net income would have amounted to € 21,990 thousand.
These pro forma fi gures were prepared solely for comparison purposes. They provide neither a reliable indication of the operating results that would actually have been achieved had the acquisition taken place at the beginning of the period, nor of future results.
On 7 January 2014 a purchase agreement was concluded between Carl Zeiss Meditec Inc., Dublin, USA, and the shareholders of Aaren Scientifi c Inc., which provides for the acquisition of 100 percent of the shares in Aaren Scientifi c Inc. (hereinafter referred to as Aaren), domiciled in Ontario/California, USA. As contractually agreed, Carl Zeiss Meditec assumed the company's business activities with effect from the same date.
Aaren is a company engaged in the research, development, manufacture and global distribution of a portfolio of intraocular lenses and other ophthalmic surgery products for cataract surgery.
The broadening of the product range as a result of this acquisition facilitates the expansion of Carl Zeiss Meditec's customer base, the addressing of new market segments, as well as the development of new geographical markets in the fi eld of surgical ophthalmology.
The preliminary purchase price is € 51.4 million and is composed of preliminary fi xed sum of € 44.1 million and an escrow amount of € 7.3 million, which has been deposited in a trust account.
The fi xed price component is partly dependent on key ratios in Aaren's statement of fi nancial position prepared in accordance with US-GAAP, and was calculated based on preliminary data available at the acquisition date. A fi nal calculation of this component shall be performed during the course of fi nancial year 2013/2014 based on Aaren's fi nal statement of fi nancial position at the acquisition date. The escrow amount serves to secure contractually regulated warranties and guarantees in a period of 24 months from the acquisition date, for circumstances that date from the time before the merger. The preliminary fi xed price was also paid, like the escrow amount, in January 2014. The escrow amount shall be released to the seller 24 months after the acquisition date, subject to any claims that may have been made during this period.
Pursuant to IFRS 3.B66, the disclosures in accordance with IFRS 3.B64 (e), (g) to (m) and (q) are omitted for this acquisition in the present interim fi nancial statements. This is due to the fact that, in the brief period between the date of acquisition of Aaren and the date of approval for the publication of the Group's interim fi nancial statements as of 31 December 2013, no assurance can be given that the required information will be collected and evaluated to an adequate and meaningful extent, due to the complexity of the acquisition of the acquired production company.
An initial summary of the acquired assets and liabilities is provided by the following overview, which presents the preliminary assets and liabilities shortly before the acquisition date pursuant to the local accounting under US-GAAP by Aaren:
(in millions of €) Aaren Scientifi c Inc. Carrying amounts US-GAAP Intangible assets and property, plant and equipment 4.3 Inventories 3.7 Trade receivables 3.8 Other current assets 0.3 Cash and cash equivalents 0.1 Long-term debt 11.3 Current liabilities 3.8 Net assets - 2.9
The acquired company shall be recognized in net income for the fi rst time in the Group's interim fi nancial statements as of 31 March 2014.
With effect from 1 December 2012 Carl Zeiss Meditec AG assumed from Carl Zeiss EyeTec GmbH (CZ EyeTec GmbH), Aalen, Germany, the necessary assets for the continuation of this company's existing business operations. CZ EyeTec GmbH helps Carl Zeiss Meditec to select qualifi ed suppliers and develops and optimizes diagnostic equipment in collaboration with Carl Zeiss Meditec. The relevant assets (approx. € 0.1 million) and the employees and the related personnel commitments (approx. € 0.5 million) were transferred to Carl Zeiss Meditec AG within its strategic business unit "Ophthalmic Systems". The purchase price amounts to around € - 0.4 million. The resulting receivable from CZ EyeTec GmbH was settled, pursuant to the purchase agreement, in the second quarter of fi nancial year 2012/2013.
This is a transaction under common control, as all companies involved are directly or indirectly majorityowned by Carl Zeiss AG. In line with the accounting method applied by Carl Zeiss Meditec, the transaction is carried at the prior carrying amounts. No hidden reserves or charges are disclosed. Consequently, it does not give rise to any goodwill. Due to the small scope of the transaction in relation to the assets and liabilities of Carl Zeiss Meditec AG, the purchase is considered immaterial.
On 21 September 2011, Carl Zeiss Meditec Iberia, S.A., concluded a purchase agreement with medical distribution and service company IMEX Clinic S.L, Paterna, Spain (IMEX), and Dismedica S.A., Las Arenas/ Bilbao, Spain, which regulated the purchase of assets and the transfer of employees in connection with the distribution and support of intraocular lenses (IOLs) and viscoelastics (OVDs).
The purchase price amounted to € 16.4 million and consisted, in addition to a fi xed sum of € 9.0 million, of a discounted contingent earn-out component of € 3.6 million and a price for the assumed inventories of € 3.8 million. The fi xed price components and the price of the inventories were paid in fi nancial year 2011/2012. The earn-out component shall be payable in three tranches over 30 months starting from the acquisition date, and shall depend on the success of the acquired business.
In December 2012 the fi rst tranche of the earn-out component was paid to the seller in the amount of € 1.9 million. The second tranche was paid in December 2013 in the amount of € 0.7 million. There remains a contingent discounted purchase price payment pursuant to IFRS 3 B54 (g) (i), of € 1.3 million, which is based on an unchanged expectation of the future earnings contribution in comparison with 30 September 2012.
The Group has three operating segments, which also represent the Group's Strategic Business Units ("SBUs"). The Ophthalmic Systems and Surgical Ophthalmology SBUs comprise the activities of Carl Zeiss Meditec in the ophthalmic market. Ophthalmic Systems include medical laser and diagnostic systems. The Surgical Ophthalmology SBU combines the Company's activities in the fi eld of intraocular lenses and consumables. The activities in the fi eld of neuro, ear, nose and throat surgery are presented in the "Microsurgery" segment (the former Neuro/ENT surgery SBU). Surgical visualization solutions in the area of ophthalmic surgery and activities in the fi eld of intraoperative radiation are also allocated to this SBU. Internal management reports are evaluated by the CEO at least every quarter for each of the Strategic Business Units.
| (in € '000) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Ophthalmic Systems |
Surgical Ophthalmology |
Microsurgery | Total | |||||
| 3 Months | 3 Months | 3 Months | 3 Months | |||||
| 2013/2014 | 2012/2013* | 2013/2014 | 2012/2013* | 2013/2014 | 2012/2013* | 2013/2014 | 2012/2013* | |
| External revenue | 86,738 | 84,421 | 33,438 | 29,472 | 92,103 | 105,106 | 212,279 | 218,999 |
| EBIT | 1,243 | 562 | 4,550 | 4,204 | 20,701 | 26,559 | 26,494 | 31,325 |
| Reconciliation of comprehensive income of the segments to the Group's period-end result. | ||||||||
| Comprehensive income of the segments | 26,494 | 31,325 | ||||||
| Consolidated earnings before interest and taxes (EBIT) | 26,494 | 31,325 | ||||||
| Financial result | 5,343 | 6,980 | ||||||
| Consolidated earnings before income taxes | 31,837 | 38,305 | ||||||
| Income tax expense | (10,413) | (13,118) | ||||||
| Consolidated net income | 21,424 | 25,187 |
* The previous year was adjusted due to the amendment to IAS 19.
As a general rule there were no intersegment sales between the SBUs.
There are no signifi cant changes in segment assets compared with the disclosures in the notes to the last consolidated annual fi nancial statements; nor is this the subject of internal management reports.
In the reporting period 2013/2014, transactions with related parties result in revenue of € 59,238 thousand (previous year: € 55,320 thousand). The term "related parties" refers here to Carl Zeiss AG and its subsidiaries.
The principles and methods for measuring at fair value are essentially the same as in the previous year. Detailed notes on the evaluation principles and methods are contained in the Annual Report as of 30 September 2013.
The allocation of the fair values to the three categories of fair value hierarchy is based on the availability of observable market prices on an active market. The valuation categories are defi ned as follows:
Financial instruments traded on active markets, for which the listed prices were taken over unchanged for valuation.
Category 2
Valuation is based on valuation methods for which the infl uencing factors used were derived directly or indirectly from observable market data.
Category 3
Valuation is based on valuation methods for which the infl uencing factors used are not exclusively based on observable market data.
The table below provides an overview of the items in the statement of fi nancial position measured at fair value:
(in € '000)
| 31 December 2013 | ||||
|---|---|---|---|---|
| Carrying amount |
Category 1 | Category 2 | Category 3 | |
| From held-for-trading fi nancial assets | 10.465 | – | 10.465 | – |
| From held-for-trading fi nancial liabilities | (1.312) | – | (1.312) | – |
Carl Zeiss Meditec shall review at the end of each reporting period whether there are grounds for reclassifi cation to or from a valuation category. In the reporting period there were no reclassifi cations amongst the valuation categories.
The fair value of the financial instruments measured at amortized cost, such as receivables and liabilities, is determined through discounting, taking into account a risk-based market interest rate with matching maturity. In comparison with 30 September 2013 there are no signifi cant changes in the ratios between carrying amount and fair value with respect to non-current assets and liabilities. For reasons of materiality the fair value shall be equated to the carrying amount for current items in the statement of fi nancial position.
On 7 January 2014 a purchase agreement was concluded between Carl Zeiss Meditec Inc., Dublin, USA, and the shareholders of Aaren Scientifi c Inc., which provides for the acquisition of 100 percent of the shares in Aaren Scientifi c Inc. (hereinafter referred to as Aaren), domiciled in Ontario/California, USA. For more information on this please refer to section 2 "Purchase and sale of business operations".
| Date | Financial year 2013/2014 | |
|---|---|---|
| 4 March 2014 | Annual General Meeting | |
| 9 May 2014 | 6 Month Report | |
| 9 May 2014 | Telephone conference | |
| 14 August 2014 | 9 Month Report | |
| 14 August 2014 | Telephone conference | |
| 8 December 2014 | Annual Financial Statements 2013/2014 | |
| 8 December 2014 | Analyst's Conference, Frankfurt am Main |
35
Investor Relations Sebastian Frericks
Phone: +49 36 41 22 01 16 Fax: +49 36 41 22 01 17 [email protected]
Concept and editing by: Henriette Meyer
Visual concept and design by: Publicis Erlangen, Zweigniederlassung der PWW GmbH, Erlangen, Germany www.publicis.de
Translation service by: Herold Fachübersetzungen, Bad Vilbel, Germany www.heroldservice.de
This report has been published on 13 Februar 2014.
The 3 Month Report 2013/2014 of Carl Zeiss Meditec AG has been published in German and English.
Both versions and the key fi gures contained in this report can be downloaded from the following address:
www.meditec.zeiss.com/ir
Germany www.meditec.zeiss.com/ir
Carl Zeiss Meditec AG Phone: +49 36 41 22 01 15 Goeschwitzer Strasse 51– 52 Fax: +49 36 41 22 01 17 07745 Jena [email protected]
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.