Annual Report • Jan 9, 2014
Annual Report
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Carl Zeiss Meditec
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Revenue increased by 5.2 % to € 906.4 million, with Surgical Ophthalmology providing the highest growth rate.
Innovations and solutions are the key to maintaining and improving our market position. For this reason we shall keep our investments in research and development high, at around 10 % of revenue. In the reporting year we invested 10.7 % of our revenue in this area.
Our EBIT margin increased further in the year under review, from 14.3 % to 14.8 %. We shall adhere to our medium-term target of a sustainable EBIT margin of 15 % by 2015.
Earnings per share increased – boosted further by a good fi nancial result – to € 1.15.
Once again, we plan to allow our shareholders to participate to an appropriate extent in the Company's success, and to propose to the Annual General Meeting the distribution of a dividend of € 0.45 per for the past fi nancial year.
Generating a higher proportion of revenue from case-number-dependent products and services is a crucial advantage for ensuring greater stability of our overall business. We already achieved our objective of increasing this share of revenue to 25 % by 2015 in the reporting year.
Annual Report 2012/2013
Part|ner|ship noun -ship\: 1. the state of being = partners (e.g. a joint interest or association), a strategic = partnership, close partnership, to work in partnership together, to = maintain a partnership, to join in partnership 2. a relationship between partners
| Letter to the shareholders | 3 |
|---|---|
| Dialog | 4 |
| Partner to the customer | 8 |
| Partner in research | 10 |
| Partner in training | 12 |
| Information to the shareholders | 15 |
| Single-entity and consolidated fi nancial statements | 27 |
| Corporate Governance | 131 |
| Additional information | 141 |
I am delighted to inform you that Carl Zeiss Meditec can present very good fi gures, for both revenue and earnings, for fi nancial year 2012/2013. As you know, there was no shortage of challenges during the past fi nancial year.
In the forecast we issued for fi nancial year 2012/2013 after the fi rst six months, we projected revenue of between 880 and 910 million euros. Following the positive development of our business, particularly in the fourth quarter, we came close to achieving the top end of this estimate at the end of the year, with revenue growth of just over fi ve percent. This result is particu larly encouraging, especially in light of the unfavorable overall development of exchange rates. All three strategic business units and regions made a positive contribution to our total re venue of € 906.4 million – albeit to different extents.
Growth in the "Ophthalmic Systems" strategic business unit was initially very restrained in the fi rst six months, as we were about to implement an extensive model change in the area of optical coherence tomography, and there was a perceptible increase in competitive pressure in this segment. The business unit noticeably made up for its decline in revenue in the second half of the year, however, despite persistently strong competition, and closed out the year with satisfactory overall growth of 4 percent. In the "Microsurgery" strategic business unit we continue to benefi t from a persistently high demand for surgical microscopes, in particular for neuro and ear, nose and throat surgery, which puts us in a very good position earnings-wise. Nevertheless, there was signifi cant slowdown in growth during the course of the year. Our premium lenses for minimally invasive cataract surgery from the still-nascent "Surgical Ophthalmology" strategic business unit are in high demand. With double-digit growth, this business unit has now increased its share of revenue to over 13 percent. We expect this SBU to continue making a substantial contribution to revenue in future, too.
The solidity and stability of our Company is further evidenced by the balanced distribution of revenue and growth across our three business regions, "Europe, Middle East and Africa" (EMEA), the "Americas" and the "Asia/Pacifi c" region. This means we can absorb uncertainties well, such as those arising from unpredictable currency movements and fl uctuating market trends – and offset them if necessary. It was a predominantly mixed picture in the EMEA region for large parts of the fi nancial year, which included very positive development in Germany, with a slight recovery in Southern Europe only in the second half of the year. This region accounted for a good 6 percent of overall growth. The USA, too, which provided no stimulus for growth in the fi rst six months, eventually experienced a noticeable recovery in the second half of the year, which ultimately resulted in growth
of almost 8 percent in the "Americas" region. In Japan, which made a signifi cant contribution to growth in the Asia/Pacifi c region, alongside China and the countries of Southeast Asia, currency effects had a material adverse effect on the development of revenue. Adjusted for currency effects, growth was 9 percent, however.
Our medium-term objectives include, among others, reaching a profi tability target of 15 percent by 2015. With our continuously rising EBIT margin, which now stands at 14.8 percent, we are already close to achieving this target and expect to stabilize our EBIT margin on this level over the next two fi nancial years and reach a sustainable 15 percent margin by 2015. We have already succeeded in achieving our goal of increasing the percentage of case-number-dependent products and services to 25 percent ahead of schedule – an incentive for us to strive for further progress in the next two fi nancial years. In the medium term we consider an increase to 30 percent realistic.
The end-of-year results we are able to present to you in this report should be considered positive in all respects, particularly in view of the challenges I outlined earlier. They are the result of our strategy and our operative strength. We are therefore also well equipped for the future. We assume that we can continue to expect increasingly fi erce competition and volatile markets. What is important now is that we continue to extend our innovation leadership through new technologies and excellent products and manage costs prudently and consistently.
The products launched at the start of the new fi nancial year, such as the premium intraocular lens AT LISA® tri toric for astigmatic patients, the ZEISS Cataract Suite Markerless for an optimum workfl ow in cataract treatments, the improved excimer laser MEL® 90 for vision correction, as well as the new ultra sound modulation for VISALIS® 500, are just some ex am p les of this effi cient and continuous advancement of our port folio.
Carl Zeiss Meditec has been successfully exploiting the demographic trends and developments in the health care market and using them to advantage of its business for years. This success is attributable to our committed employees, with whom we work together to overcome the challenges that face us.
I would be delighted if you would continue to accompany us on this journey.
Dr. Ludwin Monz President and Chief Executive Offi cer
Thomas Simmerer Member of the Management Board
Dr. Ludwin Monz President and Chief Executive Offi cer
Dr. Christian Müller Member of the Management Board
Over the years, ZEISS has proved again and again that it can develop products that become standard-setters in the medical world. What role have partnerships with clinics, doctors and scientists played? What role do they play today? This was the topic of discussion for Prof. Dr. Thomas Reinhard, Executive Medical Director, and Dr. Ludwin Monz, President and CEO of Carl Zeiss Meditec AG at Freiburg University Ophthalmology Clinic.
" Our healthcare system continues to live on massive idealism; it is borne by people for people".
Prof. Dr. Thomas Reinhard Executive Medical Directorat Freiburg University Ophthalmology Clinic
Discussion
Ludwin Monz: Prof. Reinhard, I am delighted to have this opportunity today to exchange some views with you on the subject of partnership. Because, as I see it, collaboration with clinicians, in other words, medical practices, plays a vital role in the success of our company. In fact, I am not aware of any products whose success is not the result of a particularly close partnership. That began as far back as the industrial production of the slit lamp...
Thomas Reinhard: ... and its inventor, Allvar Gullstrand, who then also received the Nobel Prize for medicine in 1911. That must have been an excellent partnership.
Without a doubt. And the list goes on, with the development of the surgical microscope, the perimeter for measuring the fi eld of vision, the establishment of optical coherence tomography, which was driven forward by true teamwork, and, most recently, the development of the innovative femtosecond laser, which was also the result of a close partnership between doctors and our company. For me, the benefi ts a partnership offers are plain to see: We focus on making technologies available – that's our specialty. The clinicians, however: they know what is needed in practice. That is why working in partnership is the key to success.
From my experience I can only agree. I think that this cooperation between industry and users such as a university clinic, will become even more important in future. Our specialist area has always been small, and yet the changing structure of the population means that it will have to deal with a rapid increase in the number of treatments required. People over the age of sixty often become ophthalmology patients with cataracts, age-related macular degeneration, dry eyes, lid problems, glaucoma and other diseases. What does this demographic change specifi cally mean for you, here in such an important ophthalmology clinic in the South West of Germany?
As the population ages, our workload increases. In the state of Baden-Württemberg alone, we believe that the number of people over sixty will increase from a current total of around 2.6 million to around 3.9 million in 2050. On the other hand, technological progress means that we are increasingly better able to help people with vision problems. In turn, this will only be possible if we can offer our services even more effi ciently in future, as resources in the healthcare sector are limited. That is why, together with the technology developers, we should look for new ways of bringing effective and affordable technologies to clinics and practices.
Dr. Ludwin Monz
This brings with it at least two major challenges. The fi rst relates to medical treatment, in other words, the question of how the therapy options can be improved, including through the use of new technologies. The second challenge is that these technologies have to be developed in such a way that they are effi cient to use, for example by being optimally set up from the outset for treating as many patients as possible in a short period. It is therefore not just about meeting medical requirements, but also effi ciency, treatment costs, improved patient throughput and the question of which core tasks must be performed by doctors, and which tasks may be performed by medical assistants.
And that's exactly the way to describe the situation. Long gone are the times when it was enough just to develop the best equipment – something we have been involved in from day one. Nowadays, the focus is increasingly on the workfl ows in day-today work in the clinic, and this is both a hardware and, increasingly, a software issue. That is why we need partners who really understand how we work and how they can support us effectively. For example, surgery reports, letters to patients, and primary reports, should generally be created digitally and it should be possible to exchange these between clinics and registered doctors. Here, too, I agree with you that the issue of how we can make work easier for the doctors is very relevant. We are starting to see a shortage of doctors, and this will help to combat this and at the same time it will also help to cut costs.
One excellent example of this is the IOLMaster, which allows contactless eye measurements. I fi rmly believe that this product's continued success is also due to the fact that it no longer has to be operated by a doctor.
This certainly contributed to this measurement method establishing itself as the gold standard. Even during my training, it was only possible to calculate intraocular lenses using ultrasound. That was a task for a doctor. I am happy that we now have equipment that makes this task simpler, less susceptible to errors and, what is more, much more pleasant for patients. Nowadays, hardly any doctor involvement is required for this task.
Let's also take a look at the equipment. In your opinion, how well are we succeeding overall in supporting you with your workfl ows?
My impression is that the collaboration has become much more intense and has improved greatly over the years. That also means that workfl ows are better understood. Any reservations that may have existed in the past with regard to cooperating with industry have lessened signifi cantly. We know that we can achieve a whole lot more if we work together. That is why the strategic alliance spans all hierarchy levels and areas in the company; employees at ZEISS and other well-known technology providers are very closely involved in our discussions to improve clinical workfl ows.
At the same time, the general public and legislators take a critical view of this cooperation. I have the impression that we are running the risk of building so many barriers in regulating our industry that we will lose some of our innovative strength, particularly in Europe.
I believe the main priority must always be patient well-being – and patients benefi t from that, because they can be sure that they have rapid access to these innovations. In this respect I can understand the concerns. We have a very effi cient healthcare system in Germany, and we must ensure that this continues to be the case. Of course, it is important for any collaboration between industry, clinics and medical practices to always uphold the interests of patients and the interests of the general public.
The best was to do this, in my opinion, is for all parties to ensure transparency. It needs to be clear what the purpose of the collaboration is. All of the results, including results that show, for example, that a new method is not effective, and are therefore not in the customer's interests, should be made public. That is why the scientifi c publications written by clinicians are also so close to our hearts at ZEISS. We need and use this feedback from leading researchers such as yourself to confi rm and correct our work.
And that's the way it should be. Transparency really is important in this regard: that also applies to the subsidization of training and further education, and research. It has to be obvious how a partnership works, and what rights and obligations are associated with it. However, for clinical studies, I believe that stricter regulation is both good and important. Because today, I can tell all of the patients at the Freiburg University Ophthalmology Clinic that to be offered the opportunity to participate in a study is the best thing that could happen to a patient. This is because patients taking part in a study will receive support that goes far beyond the usual standard possible.
The question of standards is hotly disputed in many medical disciplines, and the same is true of
Prof. Dr. Thomas Reinhard " We know that we can achieve a whole lot more if we work together".
ophthalmology. An optic nerve examination, which could give an early indication of glaucoma, is no longer part of standard care. Does that mean we're avoiding the issue of the value of sight?
That is a really diffi cult question, and one which society needs to fi nd an answer to. It's easy to forget: our healthcare system continues to live on massive idealism; it is borne by people for people, and I'm happy to say that this is something that health economists are slowly coming to realize. At the same time, we can see that our solidarity-based system is reaching its limits. What we actually need to do is examine the optic nerve in everyone over the age of 40, in order to be able to diagnose glaucoma in good time. That should be a task for our solidarity system, and should not be a health service to be paid for privately. The core issue is to ascertain what value we place on healthy eyesight – for the individual and for society. What value has life? What value has a life without sight? I am glad that it is not up to me to decide.
Close customer relationships stem from having a strong customer orientation and they are also the key to successful growth and marketing. Creating added benefi ts for customers gives a company a clear edge over the competition. In order to be a good business partner to customers it is fi rst important to understand the challenges and problems facing each customer. The solutions offered can vary greatly. They could be technical in nature, or involve optimizing delivery times or offering a special training course. Sales and service are also pivotal here. Because providing a good range of services helps build long-term loyalty.
" It's always important to look at things from your customers' perspective and to build bridges to their requirements."
Peter van Altena, Senior Vice President Global Service & Customer Care
To generate new sales with new products it is necessary to install effi cient innovation processes, the results of which help create value-added for customers. Which is why Carl Zeiss Meditec AG has always collaborated closely with doctors and scientists from all over the world. We can thus shape the innovation process jointly and test the effi ciency of procedures and products in clinical studies which are oriented towards the local market requirements.
" The daily work in the operating room helps us to understand what the doctors really need. I'm convinced we should strengthen such close, long-term relationships with customers – only then can ZEISS employees gauge which new developments could ultimately go on to become successful innovations."
Guido Hattendorf 1), ZEISS employee at the Barrow Neurological Institute in Phoenix, Arizona
1) Together with surgeons Guido Hattendorf plans, carries out and documents clinical studies on new applications and products in the field of microsurgery.
Mike Wang, Head of Marketing Carl Zeiss Meditec Shanghai
" Providing training for existing and potential customers is a firm part of our strategy. This is because the clinic partnerships allow us to demonstrate the practical benefits of our products and technologies in a pragmatic and vivid way to doctors. And they also help us to tap into new market segments on a long-term basis."
Training courses and partnerships with renowned universities are crucial factors in building up long-term customer relationships and trust-based collaboration. The training courses held by ZEISS Dental Academy at various European locations and the partnership with the Dental Medicine Faculty at the University of Pennsylvania are helping to develop the young dentistry market The close liaison with training centers plays an important role in other regions too. Take, for example, the Chinese growth market, where Carl Zeiss Meditec AG offers courses for potential customers at leading ophthalmic institutes and clinics.
Report of the Supervisory Board 16
The Carl Zeiss Meditec share 21
This Report does not constitute an offer to sell or solicitation of an offer to purchase any securities of Carl Zeiss Meditec Aktiengesellschaft in the United States of America or in any other jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. Readers of this Report are requested to inform themselves about how to observe any such restrictions.
Prof. Dr. Michael Kaschke, Chairman of the Supervisory Board
From the Supervisory Board's perspective we have another successful fi nancial year behind us: Carl Zeiss Meditec achieved further growth in all three of its strategic business units and all three regions in the reporting year. This growth can be attributed to the Company's sound fi nancial basis, its very broadly diversifi ed product range, a well-balanced regional presence, as well as a strategy that is geared towards achieving long-term success – the Meditec Excellence and Growth Agenda (MEGA) 2015, which focuses essentially on the areas of "Innovation", "Customer Focus", "New Markets", "Employees" and "Processes".
The employees at all locations worldwide have proactively and responsibly contributed to ensuring the right interplay between all these factors, and I would like to take this opportunity to express, on behalf of all members of the Supervisory Board, my appreciation for their commitment and active collaboration, and thank them – and the members of the Management Board – for their achievements.
The Supervisory Board continued to duty fully focus on the business development and position of the Company, and assessed and evaluated the Company's future prospects. The Supervisory Board advised the Management Board on managing the Company and performed the duties incumbent upon it pursuant to legal requirements, the Company's Articles of Association and the Supervisory Board's rules of procedure.
In its advisory and monitoring capacity the Supervisory Board was provided with regular, up-to-date and comprehensive written and verbal reports by the Management Board concerning the economic situation, strategic development, business development in the individual strategic business units, and the position of the Group as a whole, including the risk situation, the risk management system, the internal control system, and compliance.
The Supervisory Board also continued to engage in a regular exchange of information and ideas with the Company's Management Board outside of Supervisory Board meetings. Any collaboration between the Supervisory Board and the Management Board was always based on openness and trust and constructive dialogue.
Regular attention was given in particular to the current development of business and to the fi nancial and risk situation of Carl Zeiss Meditec AG. The economic environment, which was characterized, compared with the previous year, by more restrained market growth in microsurgery and intense competition in the ophthalmic systems business, as well as the resulting challenges in managing and controlling the Company, were discussed in detail. The risk management system established within the Company helps to identify, early on, any abnormalities that arise during the course of business as well as any existing risks. These are then analyzed and discussed, as necessary, and the appropriateness of the measures initiated to regulate these issues is determined.
The type and scope of the reports provided by the Management Board to the Supervisory Board and the discussion of additional matters have not given the Supervisory Board any cause to inspect or audit the books and publications of Carl Zeiss Meditec AG in accordance with Section 111 (2) AktG.
The Code of Conduct of the Carl Zeiss Group, the full scope of which also applies within Carl Zeiss Meditec AG, supports compliance with laws, requirements and Company guidelines and promotes an ethical corporate culture. It serves as a guideline for all employees and conforms to the basic values and principles of the Company. Compliance with these rules of conduct is regularly monitored. The executive and supervisory bodies are obliged to adapt their conduct to the values and standards described in the Code and comply with these.
The Supervisory Board also complied with these rules of conduct without exception.
Confl icts of interest among the members of the Supervisory Board did not arise in fi nancial year 2012/2013.
During the past fi nancial year the Supervisory Board convened at four ordinary meetings in which the Management Board also participated. The meeting on 14 January 2013 was held in the form of a telephone conference, since the agenda items to be discussed during this meeting related solely to the resolution on proposed resolutions that had already been discussed or prepared. One circular resolution was also passed.
The subject of the regular monitoring and consulting activities of the Supervisory Board were the revenue and earnings situation and the employment trend at the Carl Zeiss Meditec Group, as well as the fi nancial situation of the Company and ongoing strategic projects, and future investments and their fi nancing. The Management Board of Carl Zeiss Meditec AG gave a transparent insight into and explained the decisions and developments clearly and comprehensively.
In addition, the Supervisory Board addressed all other business transactions of importance for the Company and, after a close examination, raised no objections or doubts concerning the legitimacy or correctness of the management by the Management Board.
After careful examination of the fi nancial statements and a detailed discussion with KPMG AG Wirtschaftsprüfungsgesellschaft, the Supervisory Board approved the annual fi nancial statements and the management report, as well as the consolidated fi nancial statements and the consolidated management report, of the Company for fi nancial year 2011/2012 at the meeting to approve the fi nancial statements on 29 November 2012, and thus adopted the annual fi nancial statements pursuant to Section 172 AktG. At the same meeting the members of the Supervisory Board passed the resolution on the utilization of profi ts based on the proposals of the Management Board, and discussed the recommendations of the German Corporate Governance Code. Furthermore, KPMG AG Wirtschaftsprüfungsgesellschaft reported on the main results of the audit of the dependent company report, and the Supervisory Board reported on the results of its own audit of this report. Current strategic projects were also addressed.
During the Supervisory Board meeting held by telephone conference on 14 January 2013 the agenda for the Annual General Meeting on 5 March 2013 was adopted and, at the recommendation of the Audit Committee, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, was appointed as auditor of the annual and the consolidated fi nancial statements for fi nancial year 2012/2013.
The Supervisory Board also asserted during the meeting – in agreement with the Management Board – that holdings of shares of the Company should no longer be built up in future, as a general rule, by members of the Supervisory Board, members of the Management Board and individuals related to them (persons with a close relationship pursuant to Section 15a (3) German Securities Trading Act (Wertpapierhandelsgesetz, WpHG). With regard to the existing shareholdings of members of the Supervisory Board, the Management Board and related individuals, it was recommended that these holdings be sold in the medium term, subject to the insider trading rules.
At the Supervisory Board meeting on 4 March 2013 a draft resolution was prepared for the Annual General Meeting on 4 March 2014 pertaining to an amendment to the remuneration of the Supervisory Board. This draft resolution proposes to restrict the remuneration of the Supervisory Board members to a fi xed sum, which would comply with Section 5.4.6 of the Germany Corporate Governance Code. The circular resolution to update the Declaration of Conformity pursuant to Section 161 AktG was passed on the same date. Ongoing strategic projects were also discussed.
The fourth ordinary meeting of the Supervisory Board was held on 20 September 2013 to resolve, among other things, the budget for fi nancial year 2013/2014, and to adopt the proposal to amend the remuneration of the Supervisory Board.
In accordance with its rules of procedure, the Supervisory Board of Carl Zeiss Meditec AG is supported in its work by three committees. These committees carry out preliminary work on topics to be discussed at the plenary Supervisory Board meeting and make decisions on behalf of the Supervisory Board, insofar as the plenary session has instructed them to do so in accordance with statutory regulations. The current chairs of the committees report to the Supervisory Board about their work in the committees.
The General and Personnel Committee advises the Management Board on matters of Company strategy. It assists the Chairman of the Supervisory Board between Supervisory Board meetings. It is jointly responsible for coordinating and preparing for the Supervisory Board meetings. In addition, this committee prepares the Supervisory Board's personnel decisions and passes resolutions on the transactions requiring approval submitted by the Management Board. Finally, the Supervisory Board may pass a special resolution charging this committee with further responsibilities, where this is legally permissible.
The General and Personnel Committee convened at one meeting during the past fi nancial year.
The Audit Committee is mainly concerned with the development of business and monitoring the accounting process, the effi ciency of the internal control system and the internal auditing and risk management system, auditing and in particular the independence of the auditor, as well as the additional services rendered by the auditor, and the specifi cation of focus areas. The Audit Committee also deals with compliance issues.
Pursuant to the requirements of German stock corporation law, at least one member of the Audit Committee, and, pursuant to the provisions of the German Corporate Governance Code, the Chairman of the Audit Committee, must be competent in the areas of accounting of auditing, and must be independent; this is fulfi lled.
The Audit Committee convened at fi ve meetings during the reporting period.
In the event of the appointment of new Supervisory Board members, the Nominating Committee proposes suitable candidates to the Supervisory Board for its candidate proposals to the Annual General Meeting.
The Audit Committee did not hold any meetings during the reporting period.
In Germany, every listed company is obliged to address the German Corporate Governance Code in accordance with Section 161 German Stock Corporation Act (AktG). In addition, the Company is obliged to issue a declaration of conformity each year, providing information on compliance with the recommendations of the Code and stating reasons for any deviations from these recommendations. Responsible corporate management and control that is geared to achieving sustainable value-added has always been an integral part of Carl Zeiss Meditec AG's ethos and an important element of its corporate culture. It is characterized by a transparent structure and clear chains of command in the collaboration between the Management Board, Supervisory Board and the Annual General Meeting.
The Supervisory Board and the Management Board continued to address the principles of good corporate governance in the past fi nancial year and discussed the further development and implementation of the German Corporate Governance Code in its version dated 13 May 2013.
In the opinion of the Supervisory Board members and the management, the recommendations and suggestions of the German Corporate Governance Code provide a good basis for responsible, transparent management of the organization that is geared to achieving long-term and sustainable value-added, which serves not only the Company itself, but also its shareholders and other external interest groups. For Carl Zeiss Meditec, indications of the fulfi lment of the recommendations and suggestions include a good relationship with its shareholders, open and dutiful communication, effective and trusting collaboration between the Supervisory Board and the Management Board, a transparent and achievements-oriented remuneration system for the management and a transparent accounting system, as well as early reporting.
Further information on corporate governance reporting and the declaration of conformity can be found in this Annual Report.
The single-entity and consolidated fi nancial statements for fi nancial year 2012/2013, and the related management reports, have been audited in accordance with the resolution of the Annual General Meeting of 5 March 2013 by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft ("EY"), Stuttgart.
Before making its candidate proposal to the Annual General Meeting, the Supervisory Board obtained a declaration from the auditor. In this declaration EY confi rms that there are no private, professional, business, fi nancial or other relationships between the auditor and its executive bodies or audit managers, on the one hand, or between the Company and its executive body members, on the other. On 8 April 2013 the Supervisory Board engaged EY to audit all of the fi nancial statements and management reports for the past fi nancial year, including the dependent company report on relationships with associated companies of Carl Zeiss Meditec AG pursuant to Section 312 AktG.
The annual fi nancial statements of Carl Zeiss Meditec AG were prepared in accordance with the rules of the German Commercial Code (Handelsgesetzbuch, HGB). The consolidated fi nancial statements were prepared in accordance with the International Financial Reporting Standards (IFRSs) prevailing at the end of the reporting period, as they are to be applied in the EU, and in accordance with Section 315a HGB in compliance with specifi c provisions of the HGB.
EY audited the annual fi nancial statements and consolidated fi nancial statements, as well as the associated management reports for fi nancial year 2012/2013, including the accounting, and issued all the fi nancial statements with an unqualifi ed audit certifi cate.
The annual fi nancial statements and consolidated fi nancial statements prepared by the Management Board to 30 September 2013, and the associated management reports, as well as the audit reports prepared by the appointed auditor were submitted in good time for inspection by all members of the Supervisory Board and discussed in detail and audited in advance at the meeting of the Supervisory Board's Audit Committee in the presence of the auditor, in accordance with the requirements of Section 171 (1) Sentence 2 AktG, taking the lawfulness of the management into account, and subsequently at the plenary Supervisory Board meeting on 27 November 2013. The Supervisory Board approves the results of the audit. No objections were raised following the Supervisory Board's conclusive review of the audit. The Supervisory Board thus approved the annual fi nancial statements prepared by the Management Board and the consolidated fi nancial statements at its meeting on 27 November 2013. The annual fi nancial statements are thus adopted.
After a detailed examination and taking the development of earnings and the fi nancial position into consideration, the Supervisory Board has approved the Management Board's proposal on the utilization of profi t.
It is therefore intended to utilize a portion of the net retained profi ts from fi nancial year 2012/2013, amounting to € 82,342,484.67, to pay a dividend totaling € 36,589,324.50. Based on the current share capital of € 81,309,610, this would correspond to € 0.45 per no-par value share. The remaining profi t of € 45,753,160.17 shall be carried forward to new account.
Given that Carl Zeiss Meditec AG is a company within Carl Zeiss AG, the Management Board of Carl Zeiss Meditec AG prepared a report, pursuant to Section 312 AktG, on relations with associated companies in fi nancial year 2012/2013, which states that – under the circumstances known to the Management Board at the time the legal transactions were concluded – Carl Zeiss Meditec AG received an appropriate consideration for each of the transactions listed and that reportable measures were neither implemented nor omitted in the fi nancial year.
After conducting its audit EY issued the report with the following audit certifi cate pertaining to the correctness of the actual disclosures and the appropriateness of the Company's compensation with respect to the legal transactions listed:
"Based on the results of our statutory audit and assessment, we confi rm that
Both the dependent company report and the respective audit report were submitted in good time for inspection by the Supervisory Board of Carl Zeiss Meditec AG.
At the meeting on 27 November 2013 the auditor reported on the main results of the audit and participated in the Supervisory Board's discussion. After conducting its own audit of the dependent company report and inspecting the audit report prepared by the auditor, the Supervisory Board concluded that it agrees with the statements and conclusions in the dependent company report and the audit report. On completion of its own audit the Supervisory Board has no objections to raise against the declaration of the Management Board at the end of the dependent company report.
There were no changes to the members of Carl Zeiss Meditec AG's Management Board or Supervisory Board in fi nancial year 2012/2013.
The good general conditions that prevail due to the persistent long-term market trends, on the one hand, and the fi nancial stability brought by the encouraging development of business over the past few years, as well as the Company's strong innovative capacity and global presence, on the other, lay important foundations for the future success of Carl Zeiss Meditec. The Supervisory Board and the Management Board therefore agree that the Company is in a good position, both from a current perspective and in the current fi nancial year, to continue its successful business development, if the general economic trend remains largely stable.
Jena, 27 November 2013
On behalf of the Supervisory Board p y
Prof. Dr. Michael Kaschke (Chairman) (Ch i )
REPORT OF THE SUPERVISORY BOARD
THE CARL ZEISS MEDITEC SHARE
The capital markets and global benchmark share indices were largely stable up until autumn 2013. Although various crises scenarios (Cyprus crisis, Syrian crisis) continued to dominate opinion during the year, and there was a general loss of momentum in the global economy, the world's most important indices in Europe, the USA and Asia recorded growth in 2013. At the same time, development during the fi nancial year was characterized by a high level of volatility. During the fi rst few months after the start of 2013 confi dence of investors in the fi nancial markets had grown noticeably in light of the expansionary monetary policy, the continuing reform efforts in the crises countries and the slight improvement in the economic outlook.
Based on twelve months to 30 September 2013, both the US benchmark index, S&P 500, and the German benchmark index, the DAX, increased by more than 15 %, respectively, in this environment. The TecDAX index, in which Carl Zeiss Meditec AG is listed, also recorded very positive growth of more than 30 %.
The share's performance during fi nancial year 2012/2013 was positive. On the fi rst day of trading of the new fi nancial year (1 October 2012) the share opened at a price of € 20.01, which was also the share's lowest price of the year. During the course of the day on 15 July 2013, if fi nally reached its highest price for the fi nancial year of € 26.88. The Company's share thus benefi ted, like the main German share indices, the DAX, TecDAX and MDAX, from the generally strong economic development in Germany, and closed fi nancial year 2012/2013 on the fi nal day of trading (30 September 2013) at a price of € 22.07 and a total price increase of around 9 %.
Development in the overall market in Germany was similarly positive. At the beginning of fi nancial year 2012/2013 the German share index, the DAX, was listed at 7,227.81 points, and increased over the course of the reporting period to 8,694 points, before closing at 8,594 points at the end of the fi nancial year on 30 September 2013. This equates to growth of around 19 %. The MDAX opened on 1 October at 10,986.77 points, grew by almost 37 % in the reporting period, and closed fi nancial year 2012/2013 at 15,034.27 points. The TecDAX, in which Carl Zeiss Meditec share is listed, rose by more than 25 % in the reporting year and closed on 30 September 2013 at 1,083.51 points, after starting fi nancial year 2012/2013 at 809.76 points.
Figure 1: Relative performance of Carl Zeiss Meditec shares compared with the DAX, MDAX and TecDAX indices (period: 1 October 2012 to 30 September 2013)
22
Carl Zeiss Meditec AG's market capitalization (product of shares issued multiplied by the share price at the end of the reporting period) was higher as of 30 September 2013, compared with the same period of the previous year, due to the moderate price increase from € 1.62 billion to € 1.79 billion. The trading volume (number of shares traded on the Frankfurt Stock Exchange multiplied by the respective price at which the shares were traded) in fi nancial year 2012/2013 was € 332.35 million, corresponding to an increase of around 12 % compared with the transaction volume in the previous year (€ 295.44 million).
Figure 4: Trading volume of the Carl Zeiss Meditec share on the Frankfurt Stock Exchange in fi nancial year 2012/2013 (in millions of €)
During the reporting period, an average of 57,205 ordinary shares (previous year: 64,800) of Carl Zeiss Meditec AG were traded each trading day.
The German TecDAX share index brings together the 35 largest technology stocks in terms of market capitalization and trading volume on the Frankfurt Stock Exchange. All technology stocks are listed on a quarterly basis. Carl Zeiss Meditec AG was ranked 14th in terms of market capitalization as of 30 September 2013 (previous year: 10th place). In terms of stock market turnover or trading volume, the Carl Zeiss Meditec share improved its ranking, moving up from 18th place in the previous year to 17th place.
A large number of German and international fi nancial analysts monitor the movements of the Carl Zeiss Meditec share. At present, we are in contact with 11 analyst fi rms. The analysts covering our share see the current price target at an average of € 23.85. Two of the analysts have given it a "buy" recommendation; 7 recommend to "hold" and two recommend to "sell".
A continuously updated overview of the individual analysts' recommendations can be found on our website at www.meditec.zeiss.com/ir.
Even in times of economic turbulence, we remain in pursuit of a profi t-driven and continuous dividend policy. We aim to adhere to this strategy in the future and to continue to allow shareholders to participate to a reasonable extent in the Company's success.
Our reference for the regular dividend is a dividend ratio of at least 30 % of consolidated net income after non-controlling interests for the fi nancial year just ended. On 4 March 2014, therefore, the Management Board and the Supervisory Board of Carl Zeiss Meditec AG shall propose to the Annual General Meeting the distribution to shareholders of a regular dividend of € 0.45 per share for fi nancial year 2012/2013. This would equate to a total distribution of € 36.65 million and a dividend ratio of 39.1 % (previous year: 45.3 %). The dividend return (ratio of dividend per share to opening price for the respective fi nancial year) would be 2.25 %.
Figure 5: Development of the dividend for the Carl Zeiss Meditec share: The shareholders of Carl Zeiss Meditec AG were paid a special dividend in fi nancial year 2009/2010*
Carl Zeiss Meditec AG's subscribed capital is composed of 81,309,610 ordinary shares, each with a theoretical par value of € 1 per share. The Carl Zeiss Group holds around 65 % of the shares. According to our knowledge, the remaining 35 % are in free fl oat.
The comprehensive, transparent and up-to-the-minute information provided to our investors was once again the focus of our investor relations work in fi nancial year 2012/2013, with the aim of boosting confi dence in our sustainable corporate governance. This includes the publication of Carl Zeiss Meditec AG's strategy and management principles, its operative and fi nancial business development, as well as the prospects for the Company vis-à-vis existing and potential investors and other market players, such as analysts, journalists, etc.
We regularly inform our shareholders about strategic and business development within the Group through quarterly, six-monthly and annual reports, as well as ad hoc disclosures and press releases. In addition, both the Management Board and the members of the Investor Relations team endeavour in many different ways to meet the high demand for information from all interest groups. Besides numerous conferences and roadshows, which were mainly held in London, Stockholm, Munich and Frankfurt am Main, we also had regular telephone conferences concerning our interim fi nancial statements, as well as a large number of one-to-one and group meetings with institutional and private investors.
Furthermore, our Annual General Meeting gives shareholders the opportunity to directly infl uence and directly quiz Carl Zeiss Meditec AG's Management Board. The Annual General Meeting in the last fi nancial year was held on 5 March 2013 in Weimar. Around 82 % of the voting share capital was represented at this General Meeting.
Carl Zeiss Meditec AG share
| Segment | Prime Standard | |||||
|---|---|---|---|---|---|---|
| ISIN | DE 0005313704 | |||||
| German securities code (WKN) | 531370 | |||||
| Trading volume | 57,205 shares/trading day | |||||
| Indices | TecDAX | CDAX | DAX International Mid 100 | |||
| DAXsector Pharma & Healthcare | DAXsector All Pharma & Healthcare | |||||
| DAXsubsector All Medical Technology | DAXsubsector Medical Technology | |||||
| Prime All Share | Technology All Share | |||||
| Price development | ||||||
| Share price at beginning of fi nancial year 2012/2013 | € 20.005 | |||||
| Share price at end of fi nancial year 2012/2013 | € 22.07 | |||||
| Share price on 30 November 2013 | € 23.85 | |||||
| Highest price in the fi nancial year 2012/2013 | € 26.81 | |||||
| Lowest price in the fi nancial year 2012/2013 | € 20.005 | |||||
| Shareholder structure | ||||||
| Free fl oat | 35 % | |||||
| Carl Zeiss AG | 65 % | |||||
| Evaluation | ||||||
| Market capitalization of share capital as of 30 November 2013 | € 1.94 billion | |||||
| Market capitalization of free fl oat as of 30 November 2013 | € 678.5 million | |||||
Designated Sponsor ICF Kursmakler AG
| Consolidated management report | 28 |
|---|---|
| 1 The Carl Zeiss Meditec Group | 28 |
| 2 Business report | 31 |
| 3 Non-fi nancial performance indicators | 44 |
| 4 Remuneration report | 48 |
| 5 Risk report | 51 |
| 6 Disclosures pursuant to Section 289 (4) and Section 315 (4) HGB | 59 |
| 7 Supplementary report | 61 |
| 8 Outlook | 61 |
| 9 Final declaration of the Management Board on the dependent company report pursuant to Section 312 (3) AktG |
66 |
| 10 Declaration on corporate governance pursuant to Section 289a HGB | 66 |
| Consolidated income statement (IFRS) | 68 |
| Consolidated statement of comprehensive income (IFRS) | 69 |
| Consolidated statement of fi nancial position (IFRS) | 70 |
| Consolidated statement of cash fl ow (IFRS) | 72 |
| Consolidated statement of changes in equity (IFRS) | 73 |
| Notes to the consolidated fi nancial statements | 74 |
| Responsibility statement | 127 |
| Audit opinion | 128 |
| Single-entity fi nancial statements (Summary) | 129 |
A distinction is made within the Carl Zeiss Meditec Group essentially between two main areas in which the Company operates: Ophthalmology and Microsurgery.
Ophthalmic equipment and systems offered by the Company are used for diagnosis, progress control, treatment and follow-up treatment of different ophthalmic syndromes. A distinction is made here between conditions such as vision defects (refraction), cataracts, glaucoma and retinal disorders, the incidence of which particularly increases with age. The various diseases each occur in different sections within the human eye. The lens, among other things, can be affected, in that it gradually begins to turn opaque, as is the case with cataracts. Retinal diseases can also impair the vision of the human eye and can even cause irreparable damage or, ultimately, blindness.
Ophthalmology within the Carl Zeiss Meditec group unites the two strategic business units (SBUs) Ophthalmic Systems and Surgical Ophthalmology. The Ophthalmic Systems SBU covers almost the entire spectrum of laser and diagnostic systems for ophthalmology. The Surgical Ophthalmology SBU combines Carl Zeiss Meditec's activities in the fi eld of ophthalmic implants (intraocular lenses or IOLs) and disposables.
In the Microsurgery SBU, Carl Zeiss Meditec offers surgical microscopes and visualization solutions, e. g. for ear, nose and throat surgery, or neurosurgery. These products are mainly used as supporting equipment for the removal of tumors as well as the treatment of vascular diseases and functional disorders. The future technologies for intraoperative radiation therapy have also been assigned to this SBU.
This management report contains certain forward-looking statements. Forward-looking statements are all statements contained in this management report that do not relate to historical facts or events, including information regarding the future net assets, fi nancial position and results of operations of the Carl Zeiss Meditec Group, its strategy, plans, expectations and goals, as well as future developments and possible regulatory changes in its existing or target markets. These forward-looking statements are based on the Group's current assessment, to the best of its knowledge, of its future prospects and fi nancial development. Words such as "anticipate", "assume", "believe", "estimate", "expect", "intend", "can/could", "plan", "project", "should" and similar terms are characteristic of such forward-looking statements. By their nature, such forward-looking statements involve risks, uncertainties, assumptions and other factors that may cause the Carl Zeiss Meditec Group's actual results of operations, including its fi nancial condition and profi tability, to differ materially from or be more negative than those made or described in, or suggested by, these forward-looking statements. Furthermore, even if the Carl Zeiss Meditec Group's results of operations are consistent with the expectations contained in this Annual Report, those results may not be indicative of results in subsequent periods.
The Carl Zeiss Meditec Group has operations all over the world. With headquarters in Jena (Germany) and operating sites and subsidiaries in Germany, France, Spain, the USA and Japan the Company has a direct presence in the world's most important markets. The Company can also exploit the Carl Zeiss group's powerful global distribution network and use its around 40 sales companies and more than 100 agencies worldwide to obtain close links to customers and gain a distinct advantage over international rivals.
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. These are presented in the chart below, which shows the investment structure of the Carl Zeiss Meditec group as of 30 September 2013.
Figure 2: Investment structure of the Carl Zeiss Meditec Group as of 30 September 2013
The Group's reporting entity did not change during the fi nancial year.
There were no substantial changes to the structure of the consolidated fi nancial statements in fi nancial year 2012/2013.
The Carl Zeiss Meditec Group has set itself the task to develop innovative products to improve the diagnosis and treatment of diseases. The solutions the Company develops aim to improve the treatment result, simplify clinical workfl ows and, ultimately, reduce costs of treatment. They also allow physicians to focus all their attention on their work and their patients. After all, at the end we want the patient to leave the clinic with the best possible outcome and a high level of satisfaction.
Our aim with the MEGA 2015 program is to focus on mission-critical areas, and work specifi cally on these. The individual focus areas are Innovation, Customer Focus, New Markets, Employees and Processes. We have made major progress in each of these areas, and the Company is now reaping the benefi ts.
The overriding corporate objective is to contribute to the advancement of medical technology with targeted innovations and thus generate long-term value-added for the Group. The tools for fi nancial management of Carl Zeiss Meditec comprise a system of key performance indicators, the scope and content of which far exceed the legal requirements. The greatest importance is attached to Economic Value Added® ("EVA®")2 , free cash fl ow3 , the EBIT margin and revenue growth. These control ratios defi ne the balance between growth, profi tability and fi nancial power, upon which sustainable growth of the Company is built.
The global economy has gained momentum over the past fi nancial year. The revival was most pronounced in the advanced economies, while the pace of growth in the emerging economies barely increased at all.
The development of the US economy was increasingly more stable following the elections at the beginning of the year, although it remained restrained overall. A positive effect was had by the expansionary monetary policy and the improved situation on the labour market, which resulted in a slight overall increase in private consumption again. Economic experts forecast an increase in gross domestic product (GDP) of 1.5 % in the USA in 2013. Due to the intensifying sovereign debt and banking crisis in the eurozone, the US dollar found itself on a both short-term and medium-term upwards trend; however, this was once again diminished as a result of the US budget crisis. Overall, the dollar has fallen 1.2 % against the euro since the beginning of fi nancial year 2012/2013.
In the eurozone the continuous decline in private domestic demand and the ongoing efforts to consolidate public budgets had a curbing effect on the economy. In contrast, there was the expansionary monetary policy of the central banks and the extensive reform efforts in the individual countries. Overall, the economy in the eurozone experienced another slight slowdown during the course of 2013.
Germany has always played a special positive role up until now, due to its stable economic development. The optimism of German companies rose continuously this year. Positive impetus continued to come from exports and from the rise in spending by private households. Germany's GDP is expected to grow by 0.4 % in 2013 as a whole, while GDP in the eurozone is expected to shrink by 0.4 %.
The comparatively restrained economic expansion in Asia thus far in 2013 is particularly attributable to the decline in economic growth in China. Japan experienced renewed growth due in particular to the special effects of the reconstruction following the earthquake disaster – although momentum slowed considerably over the course of the year. Experts forecast growth of 7.5 % in China but just 1.9 % in Japan. Overall, the Asian economy is expected to grow by 4.5 % in 2013.
Calculation: EVA® = operating result after taxes minus capital costs
Calculation: FCF = EBIT +/- changes in trade receivables +/- changes in inventories, including advance payments +/- changes in provisions (excluding provisions for pensions and tax provisions) +/- changes in current accrued liabilities +/- changes in trade payables [- increase in investments in property, plant and equipment and intangible assets] [+ write down of investments in property, plant and equipment and intangible assets] = Free Cash Flow
Joint Economic Forecast project group (publisher): Autumn 2013 "Economy picking up – Put budget surpluses to good use", Joint Economic Forecast Autumn 2013,15 October 2013, Essen
The overall forecast for the global economy in 2013 is GDP (gross domestic product) growth of 2.8 % compared with the previous year.
Medical technology is one of the fast-growing sectors in the medium to long term. This is due, fi rstly, to the ever-growing global population and, secondly, to the increasing proportion of older people in the overall population. This means that the total number of patients suffering from age-related diseases will inevitably rise. At the same time, there is a growing need for comprehensive and high-quality health care.
In the traditional selling markets of the western industrialized nations it is assumed that the demand for high-quality medical technology innovations and more product variety shall continue to rise, as a result of more and more demanding consumer and patient desires, due to a high income level and a growing tendency to pursue health care services. At the same time, the growing cost pressure in the major industrialized countries means there is increasing demand for the development of effective devices and effi cient treatments.
The demand for health care goods and services in the RDEs shall also increase as a result of the rising per capita income and growing prosperity, which will, in turn, create massive growth potential for the medical technology sector in future. Increases in the volumes of conventional medical technology and medical health care products, in particular, shall play an increasingly more important role here, due to improvements in the standard of living.
It can therefore be assumed that the demand for diagnostic and therapeutic products will continue to grow long term, both in microsurgery and in ophthalmology.
The market for ophthalmic products in the broader sense includes devices and systems for the diagnosis, treatment and post-treatment of ophthalmic diseases, implants for ophthalmic surgery and pharmaceuticals for ophthalmology, contact lenses, contact lens care products, consumables – with the exception of glasses and glasses frames. According to our estimates, this market had a global volume of around US\$ 33.7 billion (about € 26.0 billion) in 2012.
The Group's product range includes devices and systems, implants, consumables and instruments for ophthalmology and ophthalmic surgery. According to our estimates, these sub-markets had a volume of around US\$ 9.1 billion, or around € 7.0 billion, in 2012.
We estimate our share of the "devices and systems for ophthalmology" market segment, traditionally served by the Company, at about 21 % in 2012. In the market segment "implants, consumables and instruments for ophthalmic surgery", we estimate our global market share in 2012 at about 3 – 4 %. However, our regional market shares in the countries we are currently focusing on range between 5 and 20 %.
Overall, based on the knowledge at hand, we estimate that we largely maintained or, in some cases, slightly increased our market shares in the market segments we serve, compared with the previous year.
Besides ophthalmology, the Company also operates in the market for microsurgery, particularly neuro/ear, nose and throat surgery ("neuro/ENT surgery"). The overall neuro/ENT surgery market is divided into three market segments: "Implants", "Surgical instruments" and "Visualization".
In the "Visualization" market segment served by the Company a distinction can be made between the sub-segments "Surgical Microscopes" and "Other Visualization". According to recent estimates of the Group, this market segment had a total volume of around US\$ 1.2 billion in 2012, or over € 0.9 billion. The above-average increase in market size compared with the previous year is due to changed estimates based on new fi ndings in specifi c areas of the sub-segment "Other Visualization", which are not served by Microsurgery. With a market share that it estimates to be more than 20 %, Carl Zeiss Meditec is thus one of the largest providers in this segment. According to own estimates, the Carl Zeiss Meditec Group continues to be the global market leader in the sub-segment "Surgical microscopes", with a market share of more than 50 %.
In spite of a number of challenges in specifi c business segments and regional uncertainties that revealed themselves during the course of the fi nancial year under review, the Carl Zeiss Meditec Group achieved the revenue target it forecast after the fi rst six months of fi nancial year 2012/2013 (€ 880 – 910 million), with revenue growth of 5.2 % (adjusted for currency effects: 8.0 %), to € 906.4 million. All three strategic business units and regions made a positive contribution to this growth to varying degrees. The Group therefore also achieved its objective to grow at least on a par with the market in all three of its strategic business units and all three business regions.
Profi tability also increased in the past fi nancial year. The Group achieved an EBIT margin of 14.8 % (previous year: 14.3 %), with earnings before interest and taxes of € 133.9 million (previous year: € 122.9 million). As confi rmed during the fi nancial year, the Company is still acting on the assumption in the medium term that it will increase profi tability to an EBIT margin of 15 % by 2015.
Furthermore, the Group achieved its objective of generating cash fl ow from operating activities in the high double-digit millions (€ 64.6 million).
In order to increase its innovative strength, to ensure the Company's future growth and sustainable performance, the Company invests around 10 % of its revenue each year in research and development (R&D), as budgeted. R&D spending was also on this level in the past fi nancial year, amounting to 10.7 % of revenue.
The Carl Zeiss Meditec Group's fi nancial position continued to be stable. It is also helping towards the achievement of the Company's growth and excellence-driven objectives, and protects the Group against external infl uences.
Table 1: Comparison of actual business development with forecast development in fi nancial year 2012/2013
| Forecast Financial year 2012/2013 |
Results Financial year 2012/2013 |
Target achieved |
|
|---|---|---|---|
| Revenue | € 880 – 910 million | € 906.4 million | P |
| EBIT margin | Target until 2015: 15 % | 14.8 % | P |
| Cash fl ow from operating activities | High double-digit millions | € 64.6 million | P |
| Research and development expenses/revenue | ~ 10 % | 10.7 % | P |
| Free cash fl ow | - | € 92.9 million | |
| Economic Value Added® ("EVA®") | - | € 65.4 million5 |
Table 2: Summary of key ratios in the consolidated income statement (fi gures in € '000, unless otherwise stated)
| Financial year 2011/2012 |
Financial year 2012/2013 |
Change | |
|---|---|---|---|
| Revenue | 861,875 | 906,445 | + 5.2 % |
| Gross margin | 53.5 % | 53.8 % | + 0.3 %-pts |
| EBITDA | 140,795 | 152,593 | + 8.4 % |
| EBITDA margin | 16.3 % | 16.8 % | + 0.5 %-pts |
| EBIT | 122,900 | 133,874 | + 8.9 % |
| EBIT margin | 14.3 % | 14.8 % | + 0.5 %-pts |
| Earnings before income taxes | 116,179 | 147,587 | + 27.0 % |
| Tax rate | 34.2 % | 32.8 % | - 1.4 %-pts |
| Consolidated net income after non-controlling interests | 71,870 | 93,505 | + 30.1 % |
| Earnings per share after non-controlling interests | € 0.88 | € 1.15 | + 30.7 % |
2.3.2 Revenue
In the reporting period the Carl Zeiss Meditec Group increased its revenue by 5.2 % (adjusted for currency effects: 8.0 %), from € 861.9 million to € 906.4 million. All strategic business units and all business regions made a positive contribution to this growth.
Figure 3: Share of strategic business units in consolidated revenue in fi nancial year 2012/2013
In the reporting year more than 85 % of total revenue was attributable to the two largest strategic business units, Ophthalmic Systems and Microsurgery. The Ophthalmic Systems SBU accounted for 43.1 % of this revenue (previous year: 43.6 %). The Microsurgery SBU contributed 43.5 % (previous year: 43.9 %) of consolidated revenue. The share of revenue generated by the Surgical Ophthalmology SBU increased further, from 12.5 % in the same period of the previous year, to 13.4 %.
| Surgical Ophthalmology SBU | 13.4 % | |
|---|---|---|
| Ophthalmic Systems SBU | 43.1 % | |
| Microsurgery SBU | 43.5 % |
The Ophthalmic Systems SBU increased its revenue in the reporting year, to € 391.0 million (previous year: 375.9 million) as of 30 September 2013. In particular the business with diagnostic equipment was initially very restrained in the fi rst half of the year, after a weak start at the beginning of the fi nancial year under
review. This development was mainly due to an extensive model change in the area of optical coherence tomography. At the same time, competition noticeably intensifi ed in some segments of this business unit. In the second half of the year Ophthalmic Systems made a signifi cant recovery and achieved overall growth of 4.0 %. Based on constant exchange rates, this equates to an increase of 6.8 %.
Revenue in the Microsurgery SBU increased by 4.2 % (adjusted for currency effects: 7.7 %), from € 378.2 million in the previous year to € 394.2 million. Growth was therefore much more moderate compared with the previous year and was once again more in alignment with overall market growth, which was slightly slower overall in comparison with the previous year. Going forward, the Company anticipates a return to the expected growth rates for this business, in the single-digit percentage range. Microsurgery continued to benefi t from the strong demand for surgical microscopes, particularly for the fi eld of neurosurgery and ear, nose and throat surgery.
With an increase in revenue of 12.6 %, from € 107.7 million to € 121.3 million, the Surgical Ophthalmology SBU made a very positive contribution to growth in the past fi nancial year. 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 as the previous year, at 12.7 %. 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. In this regard, in particular, the innovative intraocular lens AT LISA® tri which was most recently launched on the market has recorded very pleasing growth.
Figure 4: Consolidated revenue by strategic business unit (fi gures in € '000) Financial year 2012/13 Financial year 2011/2012 Microsurgery SBU 394,182 378,225 + 4.2 % Surgical Ophthalmology SBU 121,310 107,741 + 12.6 % Ophthalmic Systems SBU 390,953 375,909 + 4.0 % Consolidated revenue 906,445 861,875
Figure 5: Consolidated revenue by strategic business unit based on constant exchange rates (fi gures in € '000)
| Financial year 2012/2013 | Financial year 2011/2012 | ||
|---|---|---|---|
| Microsurgery SBU | 394,182 366,021 |
+ 7.7 % | |
| Surgical Ophthalmology SBU | 121,310 107,597 |
+ 12.7 % | |
| Ophthalmic Systems SBU | 390,953 366,013 |
+ 6.8 % | |
| Consolidated revenue | 906,445 839,631 |
Asia/Pacifi c 29.9 %
The Carl Zeiss Meditec Group has a very balanced range of business activities worldwide, with each of its three strategic business units generating around one third of its total revenue. In the past fi nancial year 33.9 % of consolidated revenue was attributable to the region Europe, Middle East and Africa (EMEA). The Americas and Asia/Pacifi c regions accounted for 36.1 % and 29.9 %, respectively, of the Group's total revenue. All regions made a positive contribution to revenue growth in the past fi nancial year.
| Americas | 36.1 % | |
|---|---|---|
| EMEA | 33.9 % |
In the Americas region the Carl Zeiss Meditec Group increased its revenue from € 303.9 million in the same period of the previous year, to € 327.5 million. Carl Zeiss Meditec generates more than 80 % of its revenue in this business region in the USA, as the most important medical technology market worldwide. Whereas the Company achieved positive growth rates throughout the fi nancial year in South America, there was a downward trend in the USA during the fi rst six months. In this region in particular the uncertainties regarding political decisions for the health care sector following the US elections, announced tax increases, as well as the model change in the area of diagnostics within the "Ophthalmic Systems" SBU, caused buying resistance among customers in the fi rst half of the fi nancial year. There was a noticeable recovery in the USA in the second half of the year, resulting in overall growth of 7.8 % in the "Americas" region (adjusted for currency effects: 8.8 %).
Revenue in the Europe, Middle East and Africa (EMEA) region increased by 5.9 % overall (adjusted for currency effects: 5.9 %), to € 307.6 million (previous year: € 290.5 million). The picture remained mixed here during the year: in the fi rst half of the year revenue declines in some countries and in particular in Southern Europe were overcompensated, both by the positive development of business and by the high contribution to revenue from Germany, the currently fast-growing business in Russia, and the overall good growth in the Middle East. In the second half of the year parts of Southern Europe noticeably recovered and also made a positive contribution to growth in the EMEA region.
The Asia/Pacifi c (APAC) region grew by 1.4 % in the year under review, from € 267.5 million in the previous year to € 271.4 million. Due to the high volatility of the Japanese yen, currency effects were more noticeable in this region during the fi nancial year. Based on constant exchange rates, this region also achieved encouraging growth of 9.4 %. The greatest impetus for growth came from China, Japan, the countries of Southeast Asia, and Australia.
Figure 7: Consolidated revenue by region (fi gures in € '000)
In fi nancial year 2012/2013 gross profi t increased from € 461.4 million to € 487.8 million. The corresponding gross margin for the reporting period amounts to 53.8 % (previous year: 53.5 %).
Functional costs for the reporting year amount to € 353.9 million (previous year: € 338.5 million), increasing slightly disproportionately to revenue, by 4.6 %. Accordingly, the share of functional costs in revenue decreased slightly, from around 39.3 % last year, to around 39.0 %. The main reasons for the absolute increase in costs were the higher sales volume, in addition to strategic initiatives on the expansion of a number of business fi elds, and further investments in innovation.
The Carl Zeiss Meditec Group uses earnings before interest and taxes (EBIT = operating result) as a key performance indicator. EBIT increased by 8.9 % in the past fi nancial year, from € 122.9 million to € 133.9 million. As a result of positive economies of scale, in conjunction with the revenue growth achieved, as well as positive contributions from higher-margin areas and regions, the EBIT margin increased by 0.5 percentage points, from 14.3 % in the previous year, to 14.8 %. An effi cient cost management system in the Group also contributed to the improvement in profi tability.
In the fi nancial year, earnings before interest, taxes, depreciation and amortization (EBITDA) improved from € 140.8 million in the previous year to € 152.6 million. The EBITDA margin was thus 16.8 %, which was 0.5 percentage points higher than the previous year (16.3 %).
Interest income/expenses (net) amounted to € - 4.7 million in the reporting period (previous year: € - 3.1 million).
Currency effects arose in the form of foreign currency gains in the amount of € 14.5 million (previous year: € - 6.4 million), mainly as a result of the implementation of currency forward contracts and their valuation as of 30 September 2013 .
The tax rate increased year-on-year from 34.2 % to 32.8 %. Generally, an average annual tax rate of between 31 % and 33 % is assumed. The change in the tax rate is particularly due to changes in the valuation of deferred taxes, due, among other things, to a change in the accounting treatment of tax subsidy programs in the USA and a lower tax rate in Japan compared with the previous year.
In fi nancial year 2009/2010 the basic consolidated revenue6 increased to € 93.5 million (previous year: € 71.9 million). Non-controlling interests accounted for € 5.6 million of this (previous year: € 4.5 million). In fi nancial year 2012/2013, therefore, basic earnings per share of the parent company amount to € 1.15 (previous year: € 0.88).
A primary objective of fi nancial management at Carl Zeiss Meditec is to ensure the solvency of the Company and to manage this effi ciently throughout the Group. The Group's main source of liquidity comes from the
business operations of the individual business units, upon which the fi nancial activities and the strategic orientation of the Group are also based. The Company therefore operates a global fi nancial management system that covers all of its subsidiaries and is centrally organized at Group level. The Company also strives to continuously improve its fi nancial power and reduce fi nancial risks by keeping a constant check on the solvency of its debtors, which also involves the use of fi nancial instruments.
The Company deposits any liquidity it does not require at normal market conditions with the Group treasury of Carl Zeiss AG. When investing surplus liquidity, short-term availability mainly comes before the goal of maximising earnings, so that funds can be accessed quickly if, for example, acquisition opportunities arise. The Group has production facilities in the USA and Europe and is thus only partly exposed to a direct currency risk, which it hedges against using simple currency forward contracts. Details on these can be found in the notes to the consolidated fi nancial statements under "(2) (h) Financial instruments", "(28) Additional disclosures on fi nancial instruments", "(37) Financial risk management, (2) (u) and (34) "Related party disclosures".
The ratio of borrowed capital to total assets increased to 33.4 % as of 30 September 2013 (30 September 2012: 38.4 %).
The Group's dynamic debt ratio7 improved in the course of fi nancial year 2012/2013, to 0.4 years (2011/2012: 0.2 years). The Company is thus still in a position to settle its net debt within less than half a year using cash fl ow from its operating activities.
The interest coverage ratio, i.e., the coverage of interest income by the operating result before depreciation and amortization (EBITDA), amounts to 32.8 (previous year: 46.0). The change is mainly due to a lower interest income compared with the previous year, due, among other things, to the change in interest rates on capital investments as a result of fi nancial market trends.
Cash infl ows generated from operating activities provide an important source of fi nancing for Carl Zeiss Meditec AG. The parent company can also create additional liquidity by issuing new shares on the capital market. Furthermore, the Group has the option to assume loans either from the Group treasury of Carl Zeiss AG or from banks.
For further information on the fi nancial liabilities of Carl Zeiss Meditec please refer to note "(25) Noncurrent fi nancial liabilities", "(26) Current accrued liabilities" and "(27) Other current non-fi nancial liabilities" in the accompanying notes to the consolidated fi nancial statements.
Since the Group possesses enough cash funds to fi nance its operating and strategic objectives, changes in credit conditions are not currently having any material effect on the Company's fi nancial situation.
The Carl Zeiss Meditec Group's statement of cash fl ows shows the origins 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 30 September 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.
Calculation: (Borrowed capital excluding non-controlling interests, less cash and less treasury receivables, plus fi nancial investments in the amount of € 140 million for fi nancial year 2012/2013)/cash fl ow from operating activities
Figure 11: Summary of key ratios in the consolidated statement of cash fl ows (fi gures in € '000)
Cash fl ow from operating activities amounted to € 64.6 million in the reporting period (previous year: € 92.1 million). The lower cash infl ow compared with the previous year is primarily attributable to the higher increase in trade receivables at the end of the reporting period, particularly in the fourth quarter, as well as to a greater degree of inventory stockpiling, due, among other things, to the start of the new series production in optical coherence tomography, and to the stockpiling of inventories in Surgical Ophthalmology, to ensure fast delivery capacity.
In the reporting period cash fl ow from investing activities amounted to € - 32.2 million (previous year: € - 37.4 million). In the previous year there was a cash outfl ow due to the acquisition, in fi nancial year 2011/2012, of the IOL/OVD business of IMEX Clinic S.L., Spain and higher investments in a new administration and production building for the production of intraocular lenses in Berlin. In addition, fi xed-term deposits increased by € 10 million in the same period of the previous year. The cash outfl ow in the reporting period is mainly the result of the increase in fi xed-term deposits by € 20 million to € 140 million.
Cash fl ow from fi nancing activities in fi nancial year 2012/2013 amounts to € - 34.2 million (previous year: € - 242.9 million). The substantial difference in amount is mainly due to a reclassifi cation in the statement of fi nancial position of cash and cash equivalents to treasury receivables from the treasury of Carl Zeiss Financial Services in the previous year. Note "(2) (e) Cash and cash equivalents" in the notes to the consolidated fi nancial statements contains further information on this. In addition, the distribution of the dividend resulted in a cash outfl ow of € 32.5 million (previous year: € 24.4 million).
To achieve a leading market position in the medical technology sector companies need to make well considered investments. A distinction is made here between two types of investment: capacity expansions and replacement investments. These investments are fi nanced from operative cash fl ow.
In terms of the production of devices and systems, the Company mostly confi nes itself to the integration of individual components to create system solutions. For this reason, the ratio of tangible fi xed assets to total assets and investments in such tangible fi xed assets is comparatively low. One exception, however, is the production of intraocular lenses, which generally demands higher investments due to a large vertical range of manufacture.
Nevertheless, the investment of capital in real assets is only necessary to a relatively limited extent within the Group, which is evident from the development of the capex ratio – the ratio of total investments8 in property, plant and equipment to consolidated revenue. In fi nancial year 2012/2013, it was 1.1 %; in the previous fi nancial year 1.7 %.
At Carl Zeiss Meditec AG and its subsidiaries intangible assets and property, plant and equipment are subject to scheduled, straight-line amortization and depreciation, respectively, over their estimated useful lives. Further details on this can be found in note "(2) (f) Other intangible assets" and "(2) (g) Property, plant and equipment" in the accompanying notes to the consolidated fi nancial statements.
| Table 3: Key ratios relating to fi nancial position (fi gures in € '000) | ||||
|---|---|---|---|---|
| Key ratio | Defi nition | 30 September 2012 |
30 September 2013 |
Change |
| Cash and cash equivalents |
Cash-in-hand and bank balances | 9,526 | 6,286 | - 34.0 % |
| Cash and cash equivalents plus treasury receivables from/payables to the Group treasury of Carl Zeiss AG |
Cash-in-hand and bank balances + Treasury receivables from Group treasury of Carl Zeiss AG ./. Treasury payables to Group treasury of Carl Zeiss AG + Financial investments9 |
356,318 | 351,839 | - 1.3 % |
| Net working capital | Current assets ./. Cash and cash equivalents ./. Treasury receivables from Group treasury of Carl Zeiss AG10 ./. Current liabilities excl. treasury payables to Group treasury of Carl Zeiss AG |
258,766 | 316,377 | + 22.3 % |
| Working capital | Current assets ./. Current liabilities |
495,084 | 528,216 | + 6.7 % |
Table 4: Key ratios relating to fi nancial position
8
| Key ratio | Defi nition | Financial year 2011/2012 |
Financial year 2012/2013 |
Change |
|---|---|---|---|---|
| Cash fl ow per share | Cash fl ow from operating activities | € 1.13 | € 0.79 | - 30.1 % |
| Weighted average number of shares outstanding | ||||
| Capex ratio | Investment (cash) in property, plant and equipment | 1.7 % | 1.1 % | - 0.6 %-pts |
| Consolidated revenue |
In fi nancial year 2012/2013 total investments in property, plant and equipment (cash) amounted to € 9.7 million, compared with € 14.5 million the previous year.
9 € 140 million in 2012/2013; € 120 million in 2011/2012; for fi nancial year 2012/2013 the fi nancial investments in the amount of € 140 million are carried under treasury receivables from the Group treasury of Carl Zeiss AG 10 Excluding fi nancial investments of € 140 million for fi nancial year 2012/2013
Total assets increased to € 980.6 million as of 30 September 2013 (30 September 2012: € 962.9 million). This increase is mainly the result of the growth-related expansion of business volume and the associated increase in working capital.
Within noncurrent assets (€ 245.1 million; 30 September 2012: the item "Other intangible assets" decreased, due, among other things, to scheduled depreciation and write-downs. Property, plant and equipment increased as a result, among other things, due to investments in production and offi ce equipment for the production building newly acquired in Oberkochen in the fi nancial year, as well as to an increase in asset investments in equipment for demonstration purposes, and study equipment.
There were signifi cant changes in current assets as of 30 September 2013 (€ 735.5 million; 30 September 2012: € 708.8 million), due in particular to the reduction in other current fi nancial assets due to the maturity of fi xed-term deposits in the amount of € 120 million. At the same time, treasury receivables increased, due, among other things, to new fi xed-term deposits totaling € 140 million. Inventories increased to € 148.5 million as of 30 September 2013 (30 September 2012: € 143.0 million), due, among other things, to the stockpiling of inventories in Surgical Ophthalmology, to ensure fast delivery capacity, and as part of an extensive model change in the area of optical coherence tomography. In addition, trade receivables increased to € 150.0 million as of the end of the reporting period, due to their high share of revenue, particularly at the end of the fourth quarter (30 September 2012: € 136.7 million).
Figure 13: 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 good operating performance, to € 734.8 million as of 30 September 2013 (30 September 2012: € 695.8 million). The equity ratio increased to 74.9 % (30 September 2012: 72.3 %) and thus remained at a very comfortable level.
Under noncurrent liabilities (€ 38.5 million; 30 September 2012: € 53.3 million) the item "Other noncurrent provisions" in the statement of fi nancial position was reduced, among other things, by the payment of the contingent purchase price obligation ("earn-out") for fi nancial year 2011/2012 in connection with the acquisition of the IOL/OVD business of IMEX Clinical S.L., Spain.
Under current liabilities (€ 207.2 million; 30 September 2012: € 213.7 million) there was a decline in current fi nancial liabilities, due, among other things, to the scheduled repayment of a loan. Trade payables were on almost the same level as at 30 September 2013, amounting to € 35.9 million (30 September 2012: € 36.9 million), while liabilities to related parties increased due to growth and effects at the end of the reporting period (€ 19.8 million; 30 September 2012: € 13.6 million).
| Table 5: Key ratios relating to net assets | ||||
|---|---|---|---|---|
| Key ratio | Defi nition | 30 September 2012 |
30 September 2013 |
Change |
| Equity ratio | Equity | 72.3 % | 74.9 % | + 2.6 %-pts |
| Total assets | ||||
| Rate of inventory | Cost of goods sold | 2.9 | 2.9 | +- 0.0 % |
| turnover | Average inventories | |||
| Days of sales outstanding (DSO)11 |
Trade receivables at the end of the reporting period (gross) ./. rolling monthly sales |
54.6 days | 50.8 days | - 7.0 % |
11 This key ratio indicates how many days the Company will need to collect the receivable at the end of the reporting period, assuming that the receivable is being paid on an ongoing basis and only the most recent receivables are open at the end of the reporting period.
The Carl Zeiss Meditec Group's orders on hand increased. As of 30 September 2013 orders on hand amounted to € 102.4 million, which corresponds to an increase of 1.6 % compared with the previous year (30 September 2012: € 100.8 million).
There were no other events of particular signifi cance during the reporting period.
Highly qualifi ed and motivated employees are a necessity for the long-term success of a company. Responsible human resources development and continuous improvement play a crucial role here. As of 30 September 2013 the Carl Zeiss Meditec Group had 2,540 employees worldwide (previous year: 2,460). The rise in employee numbers compared with the same period of the previous year is mainly attributable to the general investment in strategic initiatives and the associated recruitment of employees in Research & Development and Sales.
| Figure 14: Workforce of the Carl Zeiss Meditec Group at the end of the fi nancial year | ||
|---|---|---|
| Financial year 2008/2009 | 2,147 | |
| Financial year 2009/2010 | 2,189 | |
| Financial year 2010/2011 | 2,366 | |
| Financial year 2011/2012 | 2,460 | |
| Financial year 2012/2013 | 2,540 |
At 29.0 % (previous year: 29.4 %) and 26.5 % (previous year: 25.9 %), respectively, the majority of employees were working in "Production" or "Sales and Marketing" as of 30 September 2013. A total of 18.8 % (previous year: 19.0 %) were employed in "Service" as of 30 September 2013. The percentage of employees working in "Research and Development" increased to 16.2 % as of the end of the reporting period (previous year: 15.8 %). The percentage of employees working in commercial operations decreased slightly during the same period, to 9.4 % as of 30 September 2013 (previous year: 9.9 %).
At 65.6 % (previous year: 64.8 %) almost two thirds of employees of the Carl Zeiss Meditec Group work in Europe. A total of 29.1 % of the workforce work in the "Americas" region (previous year: 29.9 %), while 5.2 % work in the "Asia/Pacifi c" region (previous year: 5.3 %).
| Figure 16: Distribution of employees by region | ||
|---|---|---|
| EMEA | 65.63 % | |
| Americas | 29.13 % | |
| APAC | 5.24 % |
It is the Company's employees, with their competence and achievements, who lay the foundations for Carl Zeiss Meditec's global success. That is why the sustained development and targeted support of all our employees' potential is the primary task of the human resources management at Carl Zeiss Meditec. The focus here is particularly on the personal and professional development of employees in the Group. The Company considers this a sound basis for ensuring long-term economic success. The Company aims to increase its attractiveness as an employer through strategic employee development.
The Carl Zeiss Meditec Group manufactures its products in Jena, Oberkochen and Berlin in Germany, Dublin in the USA and in La Rochelle in France. The Group also has a number of smaller sites belonging to subsidiaries of Carl Zeiss Meditec S.A.S. in Besançon (France), Livingston (Scotland) and Mauritius. Systems and devices for ophthalmology are manufactured by the Company in Dublin and in Jena. The Group manufactures ophthalmic and microsurgical visualization solutions in Oberkochen; intraocular lenses are mainly manufactured in La Rochelle and Berlin. The broad product portfolio is rounded off by viscoelastics, which are produced at the facility in Livingston and are mainly used for treating cataracts. The two remaining production facilities of Carl Zeiss Meditec S.A.S. manufacture instruments and consumables for the treatment of ophthalmic diseases.
The production of devices and systems at Carl Zeiss Meditec focuses on the assembly of system components. Intraocular lenses (IOL), on the other hand, are largely manufactured in-house, i. e., no pre-manufactured products are purchased from third-parties. Only a number of specifi c steps in the production process are outsourced to external companies.
Less than half of all preliminary products purchased were procured from suppliers within the Carl Zeiss Group. The remainder are sourced from other suppliers outside the Carl Zeiss Group. In order to reduce its dependency on individual suppliers, the Carl Zeiss Meditec Group strives to qualify additional suppliers for key components and vendor parts.
The main focus concerning production processes is to be able to respond quickly to customer enquiries and requirements, to implement short chains of command and to be able to quickly and effi ciently carry innovations over into production. Shorter throughput times play a major role in this, as well as reducing inventories, while simultaneously optimizing production costs, and improving product quality.
Production planning in Jena, Oberkochen and Dublin is based on the rolling forecast method. The majority of distribution partners prepare a sales forecast once a quarter for the next 15 months. The sales forecast is then translated into a demand forecast for production units, taking inventory changes into account. In order to keep stocks to a minimum, products are usually assembled to customer order (series production of individual items). The rolling forecast method described above is also applied for the manufacture of intraocular lenses. Limited quantities of the fi nished products are stockpiled, however, since customers expect the implants to be delivered very quickly. To this end replenishment orders are forwarded by the customers to a central warehouse; these, in turn, trigger a new order thus ensuring customers are served as quickly as possible. The Carl Zeiss Meditec Group also operates consignment warehouses in clinics and hospitals, which – depending on consumption – are continuously restocked.
Research and development plays an important role within the Carl Zeiss Meditec Group. Our excellence in the area of research and development (R&D) is measured based on our ability to continuously and sustainably raise the performance and increase the growth of the Group through innovations. According to our 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. We shall therefore continue to offer innovations in future that make leading technologies available for our customers, enable improvements in effi ciency and continuously enhance treatment results for patients.
That is why we want to expand our broad product range and constantly improve products that are already on the market. Our main priority here shall be to increase the effi ciency and effectiveness of diagnosis and treatment. We attach great importance to the needs of our customers and constantly work closely together with them.
In fi nancial year 2012/2013 research and development expenses increased by 4.1 % to € 97.3 million (previous year: € 93.5 million). At the same time the R&D ratio remained almost the same as in the previous year at 10.7 % (previous year: 10.8 %).
In the reporting period 16.2 % of the entire workforce of the Carl Zeiss Meditec Group were employed in Research and Development.
Research and development at Carl Zeiss Meditec mainly focuses on:
examining new technological concepts in terms of their clinical relevance and effectiveness. The concept of "evidence-based medicine" plays a major role in this, i. e., we consider it extremely important to prove the effi cacy of the developed diagnostic and treatment methods.
A number of new innovations were thus launched on the market both during the reporting period and directly thereafter.
The new CIRRUSTM photo offers physicians and patients the opportunity to use the functions of two devices in a single session. It unites the rapid, precise OCT analysis with clear, informative images from the fundus camera. The fast that the patient no longer needs to be moved back and forth between the various devices means an improvement in the treatment process for the physician and a more comfortable treatment for the patient.
The new CirrusTM HD-OCT 5000/500 is the successor to the previous model CirrusTM HD-OCT 4000/400. It offers the highest-resolution visualization options for very precise assessment of pathological changes, and now also includes the new retina tracking system, Fast-TracTM. Now, if patients move during the scan, this will not affect the precision of the results.
Ophthalmologists can now analyse visual fi eld data interactively, on any device, using the FORUM Glaucoma Workplace and the enhanced version of the FORUM Archive & Viewer 3.1, and can improve their practice effi ciency by combining structural and functional information. From now on, customers shall also have mobile access to diagnostic patient data with the new FORUM Viewer App.
Work was completed on a number of other innovations during the past fi nancial year, which were promptly presented at the end of the fi nancial year 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 workfl ow 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 APMTM (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 a 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.
At the present time, the Carl Zeiss Meditec Group currently owns more than 800 patent families worldwide. Patent protection varies from country to country. However, the Company aims to protect all its products in its various markets by patent. Therefore, Carl Zeiss Meditec invests in innovations and solutions and ensures that these have an innovative edge through patents. Carl Zeiss Meditec is granted more than one patent a week, on average. Since a number of products have already been on the market for some time, patent protection does not extend to the basic functionality of these products, but, rather, to individual features and enhancements that protect benefi cial solutions. As a result, the Group is able to successfully and permanently maintain its position in the market.
In addition, the Company has more than 560 registered brands and brand registrations (as of 30 September 2013). These include, among other things, product names, slogans, images, logos and other specifi c characteristics of the Company.
The members of the Management Board are remunerated based on Section 87 German Stock Corporation Act (Aktiengesetz). According to this, the Supervisory Board determines the remuneration, which comprises fi xed and variable components, and payments in kind. The Supervisory Board's General Committee proposes the amount and structure of the remuneration to be paid to the Management Board, and these are then approved by the Supervisory Board as a whole. The appropriateness of the Management Board remuneration is based on the duties and the personal contribution of the individual members of the Management Board, as well as the Company's fi nancial position and market environment.
In its meeting on 29 November 2012, the General and Personnel Committee of the Supervisory Board examined the achievement of the objectives of the Management Board members in relation to fi nancial year 2011/2012. The corresponding variable remunerations were then determined during the Supervisory Board meeting on the same date. This meeting also reviewed the salary of Mr. Thomas Simmerer and adjusted it based on the standard remuneration. The salaries of Management Board members Dr. Ludwin Monz and Dr. Christian Müller were reviewed on the date of effectiveness of their contract extensions, which were agreed in fi nancial year 2011/2012, on 1 October 2012 and 1 June 2012, respectively.
The remuneration paid to the Management Board of Carl Zeiss Meditec AG consists of a fi xed and a variable portion. The variable portion is split into two components: the fi rst component is contingent upon the achievement of certain targets for the respective current fi nancial year and the second bears a longterm incentive effect.
The fi xed portion of the remuneration paid to the Management Board is not contingent upon the achievement of certain targets. It is paid monthly.
The variable portion of the remuneration, which relates to targets set for the respective fi nancial year, is contingent upon the achievement of certain quantitative and qualitative targets. The quantitative targets, which bear the most weight, are mainly Economic Value Added® (EVA®) and free cash fl ow, as well as the non-fi nancial indicator NPS (Net Promoter Score). Strategic targets agreed individually between the Chairman of the Supervisory Board and the members of the Management Board are also taken into consideration. This portion of the remuneration is paid after the end of the respective fi nancial year. The amount is contingent upon the degree of target fulfi lment.
In addition to the two components of Management Board remuneration described above, there is also a so-called Long Term Incentive Program ("LTIP"), which was redesigned and published in fi nancial year 2011. This program constitutes a remuneration component with a long-term incentive, which enables Management Board members to achieve, at the end of a three-year period, an additional income equating to 50 % of the current variable remuneration paid out to the respective individual member for the fi nancial year that precedes the beginning of the term of an LTI tranche, plus interest. A precondition for payment of this remuneration is that the members of the Management Board have not handed in their notice at the end of the applicable three-year period per tranche, and the equity ratio of the Carl Zeiss Group is higher than 20 % at this point. The fi rst payment shall be made with the salary payment in December 2014.
Table 6: Itemized breakdown of the remuneration paid to the members of the Management Board of Carl Zeiss Meditec AG (fi gures in € '000)
| Fixed remuneration |
Payments in kind12 |
Variable remuneration13 |
Total remuneration paid directly |
LTIP | Total remuneration pursuant to Section 314 (1) No. 6a) HGB |
|
|---|---|---|---|---|---|---|
| Dr. Ludwin Monz | 270.0 | 16.9 | 200.8 | 487.7 | – | 487.7 |
| 2011/2012 | 249.7 | 17.0 | 187.4 | 454.1 | – | 454.1 |
| Dr. Christian Müller | 216.0 | 16.5 | 163.9 | 396.4 | – | 396.4 |
| 2011/2012 | 198.7 | 20.4 | 140.2 | 359.3 | – | 359.3 |
| Thomas Simmerer | 224.4 | 17.6 | 169.1 | 411.1 | – | 411.1 |
| 2011/2012 | 220.0 | 17.4 | 151.6 | 389.0 | – | 389.0 |
Management Board remuneration for fi nancial year 2012/2013
Directors & Offi cers (D&O) liability insurance has been taken out for the members of the Management Board of Carl Zeiss Meditec AG, which provides for an excess that is also specifi ed in the Management Board contracts. This complies with the excess that has been prescribed by the German Stock Corporation Act (AktG) since 5 August 2009 of at least 10 % of the damages up to at least one-and-a-half times the fi xed annual remuneration.
The appropriation to the pension provisions or pension funds should be stated annually with respect to the retirement benefi t commitments for the members of the Management Board. The expenses relating to pension commitments attributable to the individual members of the Management Board are presented in the following overview.
Table 7: Itemized breakdown of the pension commitments to the members of the Management Board of Carl Zeiss Meditec AG (fi gures in € '000)
| Pension commitments for fi nancial year 2012/2013 | |||||
|---|---|---|---|---|---|
| Appropriation to pension provision for retirement benefi t commitments |
Present value of pension commitment for the single-entity fi nancial statement of the AG Total |
||||
| Dr. Ludwin Monz | 244.3 | 1,185.7 | |||
| 2011/2012 | 295.1 | 941.4 | |||
| Dr. Christian Müller | 56.2 | 278.3 | |||
| 2011/2012 | 94.0 | 222.1 | |||
| Thomas Simmerer | 34.6 | 134.5 | |||
| 2011/2012 | 44.4 | 99.9 |
12 Payments in kind include other benefi ts such as non-cash benefi ts like the provision of a company car and the reimbursement of employer contributions to the statutory pension and unemployment insurance schemes, as well as contributions to group accident insurance.
13 Variable remunerations include both the formation of a provision for the bonus for the current fi nancial year and payments for the bonus for the previous year, insofar as this differs from the previous year's fi gure.
Projected unit credits for pensions for other former members of the Management Board of Carl Zeiss Meditec amounted to € 560.5 thousand (previous year: € 488.7 thousand).
In the event of premature termination of the employment relationship, the contracts for members of the Management Board do not contain any explicit promise of a severance payment. A severance payment may, however, ensue from a severance agreement concluded on an individual basis.
The remuneration of the members of the Supervisory Board has been changed, effective from 1 October 2010, by way of an amendment of Art. 19 of Carl Zeiss Meditec AG's Articles of Association, resolved during the Annual General Meeting on 12 April 2011.
In addition to a basic remuneration and remuneration for work on the committees, the Supervisory Board remuneration determined on this basis also includes a variable component, which takes appropriate account of the Company's earnings per share. The basic remuneration for each member of the Supervisory Board is € 20,000. The Chairperson of the Supervisory Board receives double this amount and the Deputy Chairperson one-and-a-half times this amount. With the exception of members of the Nominating Committee and the Chairman and Deputy Chairman of the General Committee, members of committees receive an additional, fi xed remuneration of € 5,000; the Chairman of the Audit Committee receives double this amount.
If consolidated earnings per share amount to at least € 0.20, a total amount of € 1,000.00 shall be calculated for each full € 0.02 consolidated earnings per share above € 0.20 consolidated earnings per share for the respective fi nancial year just ended, multiplied by the number of members of the Supervisory Board. From this total amount, each member shall be entitled to a portion equivalent to his/her share of the annual remuneration of all members – consisting of basic and committee remuneration. The amount of variable remuneration paid is limited to the annual fi xed remuneration (sum of basic and committee remuneration).
The following overview provides an itemized breakdown of the total remuneration paid to each Supervisory Board member:
Table 8: Itemized breakdown of remuneration paid to the Supervisory Board of Carl Zeiss Meditec AG pursuant to Art. 19 (1) of the Articles of Association of Carl Zeiss Meditec AG (fi gures in € '000)
| Supervisory Board remuneration for fi nancial year 2012/2013 | |||||
|---|---|---|---|---|---|
| Basic remuneration |
Committees | Remuneration for earnings per share |
Total remuneration |
||
| Prof. Dr. Michael Kaschke (Chairman) | 40.0 | 5.0 | 45.0 | 90.0 | |
| 2011/2012 | 40.0 | 5.0 | 45.0 | 90.0 | |
| Dr. Markus Guthoff (Deputy Chairman) | 30.0 | – | 30.0 | 60.0 | |
| 2011/2012 | 30.0 | – | 30.0 | 60.0 | |
| Thomas Spitzenpfeil | 20.0 | 5.0 | 25.0 | 50.0 | |
| 2011/2012 | 20.0 | 5.0 | 25.0 | 50.0 | |
| Dr. Wolfgang Reim | 20.0 | 10.0 | 30.0 | 60.0 | |
| 2011/2012 | 20.0 | 10.0 | 30.0 | 60.0 | |
| Cornelia Grandy (from 11 October 2011) | 20.0 | – | 20.0 | 40.0 | |
| 2011/2012 | 19.4 | – | 19.4 | 38.8 | |
| Jörg Heinrich (from 11 October 2011) | 20.0 | 5.0 | 25.0 | 50.0 | |
| 2011/2012 | 19.4 | 4.7 | 24.1 | 48.2 | |
| Franz-Jörg Stündel (until 11 October 2011) | – | – | – | – | |
| 2011/2012 | 0.6 | 0.2 | 0.7 | 1.5 | |
| Wilhelm Burmeister (until 11 October 2011) | – | – | – | – | |
| 2011/2012 | 0.6 | – | 0.6 | 1.2 |
The Company did not pay members of the Supervisory Board any additional remunerations or benefi ts for personally rendered services (in particular consultancy and agency services) in fi nancial year 2012/2013.
Directors & Offi cers (D&O) liability insurance has been taken out for the members of the Management Board of Carl Zeiss Meditec AG, which provides for an excess that is also specifi ed in the amendment to the Articles of Association of the Company. This corresponds to at least 10 % of the damage up to at least one-and-a-half times the fi xed annual remuneration.
The term "risk" refers to all circumstances and developments within and outside the Company which could have a negative effect on the attainment of business targets and budgets within a defi ned period of assessment.
The Carl Zeiss Meditec Group is naturally exposed to a large number of risks within the scope of its business dealings. Regulating and controlling these risks within the bounds of risk-taking is a basic requirement for the Company's success. An effective risk management system implemented for this purpose serves to sustainably protect and – with respect to the associated opportunities – increase corporate value.
The risk management system of the Carl Zeiss Meditec Group incorporates all fully consolidated subsidiaries and is essentially decentralized, i. e., the legally independent entities are responsible for their own local risk management. At Group level the same principles apply for the Group functions. Risks are communicated along the legal and organizational structure. The provision of a standard, group-wide conceptional framework and the coordination of the local entities with respect to the risk management process is incumbent upon the Group risk manager, who reports directly to the Management Board.
Risk management is an integral part of corporate management at Carl Zeiss Meditec and is based on the following two major components: a risk reporting system and an internal control system.
This is a clearly structured, traceable feedback loop which encompasses all of the Company's activities, is integrated in its organizational structure and its control and reporting processes, and comprises a systematic and ongoing process for the identifi cation, assessment, regulation/control, as well as the documentation and communication of any risks. This enables any relevant information to be immediately passed on to the responsible decision makers. The main features of this system are as follows:
Regular risk reports are sent to the Management Board, the Managing Directors of the subsidiaries and other decision-makers within the Group on the basis of specifi ed thresholds for relevant risks and in accordance with the classifi cation using the risk matrices. Signifi cant risks arising at very short notice are reported to this responsible group immediately.
On this basis, appropriate steps are taken to avoid identifi ed risks or reduce the probability of their occurrence, and to minimize the potential fi nancial losses. The measures for reducing risks and the early-warning indicators are regularly updated.
The risk reporting system is continuously reviewed and further developed, and is also audited by the auditor for Carl Zeiss Meditec AG.
The internal control system is the set of all of the control activities prescribed by management that serve to control the systematic, enduring risks and thus ensure proper running of operations and correct management reporting. The organizational measures are integrated in the operative business processes. The internal control system works to support the achievement of business policy objectives through effective and effi cient management, compliance with laws and legal requirements (compliance), protection of the Company's assets, assurance of the reliability and completeness of internal and external accounting and timely and reliable fi nancial reporting. The operative function of the internal control system is closely linked to the risk reporting system.
The structure of the internal control system of Carl Zeiss Meditec Group is based on the component dimension of the internationally accepted COSO (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management Framework. The result forms a complete, Group-wide, risk-based ICS description, which is maintained within the scope of the quarterly risk reporting cycles. Information about the function of the internal control system, the regulation of responsibilities and general instructions are compiled in the Group risk management policy at Carl Zeiss Meditec.
The accounting-related part of the internal control system is a system structured under the CFO's supervision which ensures that the preparation of the consolidated annual fi nancial statements is in line with International Financial Reporting Standards (IFRS) and that external fi nancial reporting is reliable.
The operative, timely implementation of the systemic requirements is effected by the affected areas of Carl Zeiss Meditec AG and its subsidiaries. These are supported and monitored by Carl Zeiss Meditec's Finance Group department. Group Finance is responsible for consolidated reporting, including Group-wide fi nancial and management information, forecasts, budgets and risk reporting. Acts of law, accounting standards and other pronouncements are constantly analyzed with regard to their relevance for and impact on the consolidated and annual fi nancial statements. Relevant requirements are communicated in consolidated accounting guidelines and, together with the applicable Group-wide fi nancial reporting calendar, form the basis for the fi nancial statement preparation process. In addition, supplementary instructions for methods, standardized reporting formats, IT systems and IT-supported reporting and consolidation processes support the process for uniform and proper consolidated accounting.
The internal control system is regularly assessed and further developed with respect to the effi cacy of compliance with external requirements and the containment of organizational risks.
The internal control system can only provide reasonable but not absolute assurance that the relevant targets will be achieved. Measures implemented may therefore only aim to control the known or potential systematic sources of error. Another matter to consider when setting up an internal control system is cost effectiveness.
Evidence of the effectiveness of the internal control system is shown from the results of the measures specifi cally set up to assess the effectiveness of the internal control system or from the observation of processes anchored in the normal course of business. Information and data from other sources is also a key component of management assessment, as these can show up management shortcomings or confi rm the effectiveness of the established measures. Such sources include reports from Group Auditing at Carl Zeiss AG, reports on audits conducted by or on behalf of supervisory authorities, reports prepared by external auditors, as well as reports commissioned to assess the effi ciency of processes outsourced to third parties.
The effectiveness of the internal control system is reviewed by the Audit Committee of the Supervisory Board of Carl Zeiss Meditec AG. Monitoring in this respect is based on an adequate level of information.
The assessment performed by the Management Board, which includes the information from all the above-mentioned sources, led to the conclusion that the internal control system is appropriately structured, effectively implemented and effi cient in terms of the correctness of the accounting process and compliance.
The individual risks identifi ed by the risk management system are detailed below.
As a company with global operations, Carl Zeiss Meditec is particularly exposed to developments that pose a risk for the global economy. Therefore, the general global political situation, major natural disasters, overall economic development and market trends in individual regions of the world may have diverse effects on Carl Zeiss Meditec Group's chances of success.
In particular the underlying conditions in the global economy have become more volatile over the past few years, which has heightened economic risks overall. Economic growth may be curbed signifi cantly by the euro crisis, the debt situation in the USA and a slowdown in growth in China. Such a trend in the overall economic situation may have an adverse effect on the economic situation of our customers and their demand for Carl Zeiss Meditec's products. This could lead, at least temporarily, to demand shortfalls and thus negative consequences for sales and earnings. Thanks to the early-warning system established within the Carl Zeiss Meditec Group, these risks are recognized in good time and can be countered accordingly. In addition, the Group's international presence means it is less affected by regional crises, and the highly differentiated product and customer structure of Carl Zeiss Meditec limits its sales risks.
Carl Zeiss Meditec is exposed to fi erce competition in specifi c segments in its search for new treatment methods. New competitors may enter the market. Some competitors are larger than the Carl Zeiss Meditec Group in terms of their total sales and have greater fi nancial resources at their disposal to deal with this competitive pressure. Furthermore, existing competitors may be bought up by large, fi nancially strong companies, or they may form alliances. The resulting or heightened competitive pressure this would cause could lead to lower selling prices, margin pressure and/or the loss of market shares. The Company prepares for the potential risks of a changing market environment by continuously observing the market, in order to be able to react with the necessary foresight.
Health insurance funds, insurance companies or government health schemes reimburse the costs of certain medical treatments carried out using products of the Carl Zeiss Meditec Group. Changes in health and reimbursement policy in Germany or abroad could lead to the denial or reduction of reimbursement services. If reimbursement rates are too low, the profi t margin of doctors and hospitals may fall, prompting them to suspend or restrict the performance of the respective treatments. The complete or partial discontinuation of reimbursements may accordingly reduce the demand for Carl Zeiss Meditec's products. In the case of new products, for which it cannot be predicted with any certainty whether health insurance funds, insurance companies or government health schemes will offer any reimbursement at all, or treatments with products for which there is no reimbursement, e. g. laser treatments for vision correction, demand may be signifi cantly impaired by the fi nancial situation of consumers.
The appearance of press reports about the potential risks of certain treatments, or changes in fashions and trends, may also adversely affect consumer decisions. A decline in the demand for such treatments may lead to a decrease in the Carl Zeiss Meditec Group's revenue, as physicians and treatment centers may no longer purchase the same quantities of such devices.
In addition, on the customer side, and particularly in the private healthcare sector, there may be an increase in the formation of regional and national purchasing alliances, as well as in clinic chains. Such a trend may lead to falling selling prices in this customer segment.
On the other hand, the demographic trend in industrialized countries and economic development in the RDEs, as well as the increasing requirements being placed on medical devices for diagnosing and treating age-related eye diseases, present growth opportunities for the Company.
The markets in which the Group operates are characterised by a constant stream of technological innovations. A capacity for innovation and rapid product development are key competitive factors. New scientifi c fi ndings may lead to shorter development and product cycles, alternative technologies or new pharmaceutical procedures. The success of the Carl Zeiss Meditec Group therefore depends heavily on the quick development of innovative and market-driven products, and on the timely recognition and conversion of new technology trends and new medical fi ndings into new products. Should the Group lose touch with technological developments on the market, react too late to trends or technological advancements, this could weaken its competitive position. There is also a risk of one or several of the Group's products being completely superseded by alternative technologies, pharmaceutical procedures or treatment methods, thus reducing or entirely eliminating demand for certain products, which could result in losses in sales and earnings.
Carl Zeiss Meditec actively counters this risk by investing heavily in research and development and upstream areas of the production of products with a technological edge and unique selling points. To this end, the management concerns itself with detailed market and competition analyses, market scenarios, the relevant cost drivers and critical success factors of the Company.
The Group's success also depends on its ability to recruit and retain for the long term well qualifi ed specialists and managers for all functions in all regions. Employee competence, commitment and motivation play a vital role in determining the Group's success and its competitive chances. When looking for qualifi ed employees, the Company has to compete with many other companies in the same sector. Unfi lled positions could limit the technological advancement and sale of the products and services it offers. Carl Zeiss Meditec counters this risk through active employee development and successor planning, and by maintaining and improving its attractiveness as an employer.
In many of the countries where Carl Zeiss Meditec operates there are special government regulations that apply. As the Group aims to sell its products worldwide, such regulations have to be taken into consideration when manufacturing and launching products in the market, especially where explicit regulatory approvals and certifi cations are required.
Although the relevant legal requirements are incorporated into all stages of development, production and distribution, there is no guarantee that products requiring approval will be granted regulatory approval at all or in time for their planned launch in the market, or that the Group's various registrations will still exist or be renewed in the future. This could lead to losses in sales. A delayed product launch may, in certain circumstances, result in that product not being accepted or meeting with only a small level of acceptance, as competitors may have launched similar products in the meantime. It is also possible for a sales ban to be imposed on the products of the Company, or for the regulatory approval requirements to be tightened in future.
In order to be able to identify such developments in good time and react appropriately, the Group keeps a very close eye on developments in this area and monitors approval procedures extremely closely as part of its quality management system.
The Carl Zeiss Meditec Group and the Carl Zeiss Group have close contractual relationships in some areas. This relates in particular to the procurement of IT services, the licensed use of the "ZEISS" brand and agreements with distribution companies of the Carl Zeiss Group. This distribution network provides major opportunities, which are rooted particularly in the close-meshed coverage worldwide, a high level of professional distribution expertise, and a more cost-effi cient market development approach.
Carl Zeiss Meditec uses components from external suppliers to a very large extent, to manufacture its products. This cooperation with external suppliers is becoming progressively more intense, due to general cost pressure and the complexity of the components being supplied, which is leading to mutual dependencies. Outsourcing contracts to third parties presents the risk of non-delivery or delivery delays, as well as the possibility of temporary shortages of specifi c goods and vendor parts, if individual business or cooperation partners do not duly fulfi l their contractual obligations. Unforeseen price increases or even a termination of business relationships could also interfere with the course of business. Qualifying new suppliers, which would be necessary in this case, could take a long time. Furthermore, Carl Zeiss Meditec may be liable vis-à-vis its own customers for the breach of contractual obligations by its business and cooperation partners. This could have negative implications for the production, sale and the quality of Carl Zeiss Meditec's products.
Monitoring supplier risks plays a key role in the early-warning, risk information and management system. In order to limit the risks of such supplier shortages, the Carl Zeiss Meditec Group selects its suppliers carefully. By implementing consistent supply chain measures, such as qualifying its suppliers, identifying secondary suppliers and preparing a strategic inventory plan, Carl Zeiss Meditec protects itself as best it can against supplier dependencies and changes on the commodities market.
The competitiveness of the Company depends on the protection of its technological innovations against exploitation of these innovations by third parties. Violations of intellectual property and patent protection may compromise the Company's technological lead and thus its competitive advantage. In order to counter this risk, the Group protects its own inventions with patents, acquires or licences patents from third parties and endeavours to protect these patents and its other intellectual property. The expiry of property rights, particularly patents, as well as the geographical limitation of property rights could, however, result in new or existing competitors exploiting the inventions of the Carl Zeiss Meditec Group to enter the market or strengthen their market position.
Furthermore, in spite of the measures taken, third parties may still attempt to copy or partly copy products of the Group, since the unauthorized use of intellectual property is generally diffi cult to monitor and copyright laws only provide for limited protection. The Company may become involved in lengthy and costly litigation proceedings in this respect. There is also no guarantee that the measures taken by the
Group to protect its own intellectual property rights will successfully prevent the development and design of products or technologies that are either similar to or that could compete with the products of the Company. If Carl Zeiss Meditec fails to ensure adequate protection of its technological innovations, this could impair the competitiveness of the Carl Zeiss Meditec Group.
In order to avoid the above-mentioned legal disputes, patents and patent applications in the relevant fi elds are analysed by the Patents department at regular intervals.
The Carl Zeiss Meditec Group owns a large number of business secrets. A set of measures serves to ensure that the confi dentiality of business secrets is effectively protected and that there are no infringements. If business secrets of Carl Zeiss Meditec leak to competitors, this may have adverse effects on the Group's competitive position. To limit this risk, ethical rules of behaviour were laid down in the Carl Zeiss Group's "Code of conduct" and brought to the attention of all employees.
In the sphere of IT solutions the Group has established a number of mechanisms to protect confi dential data. Conformance to and the effectiveness of these measures is continuously monitored.
There is an inherent risk of malfunctions in some of the medical technology devices, systems solutions and implants manufactured by the Company causing injury or treatment errors to patients. This can be due, among other things, to components and raw materials purchased from external suppliers not meeting the specifi ed quality requirements. These risks cannot be entirely excluded, even if the Carl Zeiss Meditec Group applies all reasonable quality control measures and complies with all legal requirements. Although no signifi cant product liability claims have been brought against the Company to date, no guarantee can be given that Carl Zeiss Meditec will not be faced with such claims in the future. This may lead, on the one hand, to considerable legal costs, irrespective of whether a claim for damages ultimately materialises. On the other hand, it could damage the reputation of Carl Zeiss Meditec in the long term.
The Company covers itself against potential product liability claims by taking out product liability insurance. Risk liability claims can be particularly high, especially in the USA, not to mention the costly recall campaigns that may be required. The possibility cannot be entirely excluded that the Carl Zeiss Meditec Group's existing insurance coverage may not be suffi cient to cover potential claims.
Certifi ed quality management: A vital part of early risk detection is the Group's certifi ed quality management system. Clearly structured and documented quality management processes ensure not only transparency, but are now a prerequisite in most markets for obtaining regulatory approval for medical devices. The quality assurance system employed by Carl Zeiss Meditec was certifi ed by DQS GmbH Deutsche Gesellschaft zur Zertifi zierung von Managementsystemen and complies with the US standard for "Good Manufacturing Practice" ("GMP"), 21 C.F.R. part 820, Quality System Regulation.
Uncontrollable environmental infl uences, such as natural disasters or terrorist attacks may have an adverse effect on the affected economy or beyond. The consequences of such events, such as the loss of employees or an interruption to business operations at the affected locations, may prevent the Company from providing regular production, distribution and other services in these regions and generating the expected earnings. In addition, they could have material adverse effects on the Company's customers domiciled in the affected region and on their willingness to invest, as well as its local suppliers there and their readiness to supply. As a result, the Company's reputation, business activities, fi nancial condition and results of operations, and its cash fl ow, could become signifi cantly compromised.
The Group has taken a number of precautions to minimize these effects. The headquarters, which house our main research and development departments, and other central corporate functions, are situated in Germany. This region is not generally affl icted by severe natural disasters. Another of our productions sites is located in Dublin, California, a region with a heightened risk of earthquakes. In order to minimize potential damage and enable a concerted, effective reaction by corporate management, Carl Zeiss Meditec has set up a crisis management system, and has also developed local and central plans for maintaining the functionality of critical business processes (business continuity plans). Although the described risks may materialize, the Company believes, in view of these measures and the organization of Carl Zeiss Meditec, that the risk of material adverse effects on its business activities, fi nancial condition and results of operations, and on its cash fl ow, is limited.
Information technology plays a crucial role in the execution of the Company's business processes. Providing and exchanging up-to-date, complete and correct information, and being able to implement fully functional IT applications, are of central importance for a global company like Carl Zeiss Meditec. Functioning and adequately documented IT systems are also a prerequisite for obtaining product approvals in certain countries. Risks that, in the event of damage, could result in an interruption of business processes due to IT system failures or the loss or falsifi cation of data, are therefore identifi ed and evaluated across the entire life cycle of the applications and IT systems. Carl Zeiss Meditec has defi ned appropriate measures so that risks can be avoided and potential losses can be limited.
Potential risks associated with acquisitions are carefully and systematically assessed in advance. In order to conclude transactions successfully, a standard process for mergers & acquisitions was established, which pays particular attention to due diligence. Each transaction is systematically assessed for impairment and synergy potential. The transparency that this creates helps the Company to make more confi dent decisions.
Pursuant to IFRS 3, the goodwill usually arising from the acquisition of other companies is not subject to scheduled amortization but, rather, is regularly examined for impairment. This involves and impairment test pursuant to IAS 36. Carl Zeiss Meditec reviews its goodwill for impairment at least once a year.
Based on past acquisitions Carl Zeiss Meditec reported goodwill totaling € 121.0 million in its consolidated statement of fi nancial position as of 30 September 2013.
The impairment tests carried out in the current fi nancial year did not give any indication of impairment of the goodwill-bearing cash-generating unit (CGU). Based on the development of business, the Group also anticipates positive results from subsequent tests. For the future, however, the possibility cannot be entirely ruled out that the net assets, fi nancial position and results of operations of individual or all of the goodwillbearing CGUs may deteriorate. In such an event, Carl Zeiss Meditec may be forced to recognize in income an impairment of the reported goodwill in its consolidated fi nancial statements.
In future, the Group may achieve further growth by acquiring other companies, among other things. When looking for suitable acquisition targets, the Carl Zeiss Meditec Group competes with other manufacturers. There is a risk that there may not be any suitable companies for acquisition or that these cannot be acquired at acceptable conditions. Acquisitions also bear the additional entrepreneurial risk of the acquired company not performing as well economically as expected in the market, or of the sales and earnings targets being pursued with its acquisition not being reached, or of intended synergy effects with the Carl Zeiss Meditec Group not being achievable. With regard to other companies that may be acquired in future, there is a general risk that it may not be possible to fully and successfully integrate these companies into the Carl Zeiss Meditec Group. In such an event, this could have adverse effects on the net assets, fi nancial position and results of operations of the Group. Further details on business acquisitions concerning Carl Zeiss Meditec can be found in note "(3) Purchase and sale of business operations" in the notes to the consolidated fi nancial statements.
Legal risks may arise due, among other things, to changes in general legal conditions in the relevant markets and to legal disputes with competitors, business associates or customers.
Within the scope of its business operations, the Carl Zeiss Meditec Group may be party to various litigation proceedings or may become involved in such proceedings in future. These could individually have a signifi cant impact on the economic position of the Carl Zeiss Meditec Group. It is not possible to determine or predict the outcome of pending or threatened proceedings. Involvement in any litigation could lead to considerable costs for the Company, irrespective of the outcome. At the present time, there is no pending litigation that poses a substantial risk. Should it be necessary, adequate provisions will be set up as a precaution.
Further details on litigation and arbitration proceedings involving Carl Zeiss Meditec can be found in note "(30) Contingent liabilities and other fi nancial commitments" in the accompanying notes to the consolidated fi nancial statements.
As a result of the European debt crisis there is a latent credit quality risk concerning business banks at which Carl Zeiss Meditec holds deposits. These risks have been reduced by the package of measures adopted by the EU to stabilize the capital markets and the affected countries. Nonetheless, Carl Zeiss Meditec has taken a number of additional measures to limit these risks. One of these measures was to introduce a monitoring procedure to monitor the current situation on the capital markets.
The fi nancial risks also include liquidity risks, price fl uctuation risks for fi nancial instruments and risks associated with fl uctuations in cash fl ows. These risks and their management are adequately described in note "(37) Financial risk management".
In spite of the enduring euro and debt crisis, the Company has categorized the fi nancial risks it faces as minor. The basis for this categorization is the sound fi nancing structure with an equity ratio of 74.9 %, the large reserve of cash and cash equivalents, and a strong cash fl ow from operating activities.
Cash and cash equivalents are kept in reserve at Carl Zeiss Meditec based on a rolling monthly cash forecast within a fi xed planning period, and are transferred to Group companies as required as part of a Group-wide Carl Zeiss cash pool. The Company does not therefore anticipate any material adverse effect on the Company's fi nancial result.
The main risks in the accounting process are that the fi nancial statements may not provide a true and fair view of the net assets, fi nancial position and results of operations as a result of unintentional errors or wilful actions, or that there is a delay in their publication, which would mean that the accounting would not provide a true and fair view of the Group. Deviations are classifi ed as signifi cant if they could individually or collectively infl uence the economic decisions taken by the recipients of the fi nancial statements based on the fi nancial statements.
The accounting process integrates internal controls that have been defi ned under risk aspects. These aim to minimize the risk of errors in the fi nancial statements. The accounting-related ICS incorporates both preventative and disclosure controls.
With regard to consolidated accounting, workfl ows with integrated controls ensure that the consolidated fi nancial statements are complete and correct. These processes to organize and execute the consolidation work and to create the consolidated fi nancial statements, as well as the associated controls, have been documented and are reviewed regularly. All of the Group's internal accounting and valuation guidelines are collated in an accounting manual, which is available to all of the relevant organizational units and all of the Company's employees via the Group's intranet.
5.3.15 Other disclosures in accordance with Section 289 (2) No. 2 HGB, Section 315 (2) No. 2 HGB Price fl uctuation risks can essentially not be ruled out. However, Carl Zeiss Meditec counters these risks by focusing on product innovations and optimising its production costs with cost-cutting and effi ciency-enhancing measures.
Potential risks of default on trade receivables – particularly given the euro and debt crisis and the generally greater risk of bad debt losses that comes with it – are minimized by way of an active credit control system. The Group also regularly sets up adequate provisions to cover such risks. On the whole, however, we consider this to be a limited risk. The ratio of valuation allowances on trade receivables to consolidated revenue was 0.6 % in the year under review, the same as in the previous year.
Carl Zeiss Meditec's fi nancial situation can be considered stable. Cash and cash equivalents amounted to € 6.3 million at the end of the reporting period on 30 September 2013. We also had credit balances, recognized as receivables from the Group treasury of Carl Zeiss AG, of € 352.4 million. The Group also generated cash fl ow from operating activities of € 64.6 million in the reporting period. At the current time, therefore, there are no liquidity risks.
Carl Zeiss Meditec is not subject to any signifi cant fl uctuations in cash fl ow that would result, for example, from a distinct seasonality of its business.
All cash and cash equivalents, including the balances via the Group treasury of Carl Zeiss AG, are deposited at banks. Should it come to a loss of individual banks – due in particular to the euro and debt crisis – the balances existing there may be endangered. Carl Zeiss Meditec counters this risk by continuously monitoring the solvency of the banks with which it has a business relationship and by spreading its assets among several banks via the Group treasury of Carl Zeiss AG.
As a company with global operations Carl Zeiss Meditec is exposed to the effects of exchange rate fl uctuations. In order to hedge against this currency risk, Carl Zeiss Meditec concludes currency forward contracts based on planned transactions in foreign currency. These contracts generally span a period of up to one year.
There were no signifi cant changes in the Carl Zeiss Meditec Group's risk situation during the reporting period compared with the previous year. The assessment of the overall risk situation is the result of a consolidated consideration of all material individual risks. The Company exercises active and effi cient risk control in all areas of Carl Zeiss Meditec to keep a general check on risks to the Group and ensure that they are manageable.
From the current perspective there are no perceptible risks which could – on their own or collectively – jeopardize the future operations of the Carl Zeiss Meditec Group.
Carl Zeiss Meditec AG's subscribed capital amounts to € 81,309,610 and is composed of 81,309,610 no-par value ordinary bearer shares (no-par value shares), each with a theoretical interest in the share capital of € 1.00 per no-par value share. Each share entitles the bearer to one voting right and an equal share in Company profi ts.
Carl Zeiss Meditec AG is aware of the following direct and indirect holdings in the capital of Carl Zeiss Meditec AG that exceed ten percent of the voting rights. Carl Zeiss AG, Oberkochen, Germany, holds, both directly and indirectly, a total of 65.05 % of the voting rights in Carl Zeiss Meditec AG. This corresponds to 52,893,270 no-par value shares. These include 7.47% of the voting rights or 6,074,256 no-par value shares in Carl Zeiss Meditec AG, which Carl Zeiss AG holds indirectly via its wholly owned subsidiary Carl Zeiss Inc., Thornwood, USA.
Employees of Carl Zeiss Meditec AG or its affi liated companies pursuant to Section 15 et seqq. AktG, who participated in the Company in previous years via employee share plans relating to the share capital of Carl Zeiss Meditec AG, exercise their control rights directly like all other shareholders of the Company.
Pursuant to Section 179 and Section 133 AktG, an amendment to the Articles of Association requires a resolution by the General Meeting which, in turn, requires a simple majority of the votes cast and a majority comprising at least three quarters of the share capital represented at the time the resolution is passed. The Articles of Association may specify a different capital majority; in the case of an amendment to the purpose of the Company, however, only a larger capital majority may be specifi ed. Art. 25 of Carl Zeiss Meditec AG's Articles of Association states that in cases for which the law requires a majority of the share capital represented at the time of resolution, a simple majority of the share capital represented is suffi cient, provided that a greater majority is not mandatory by law. In accordance with Art. 28 of the Articles of Association of Carl Zeiss Meditec AG, the Supervisory Board is authorized to resolve amendments to the Articles of Association that only affect the version. This complies with Section 179 (1) Sentence 2 AktG.
The legal provisions concerning the appointment and dismissal of members of the Management Board are set forth in Section 84 and Section 85 AktG. In compliance with this, Art. 6 (2) of the Articles of Association of Carl Zeiss Meditec AG stipulates that the Supervisory Board shall be responsible for appointing and dismissing the members of the Management Board. Pursuant to statutory provisions, a member of the Management Board may only be dismissed for compelling reasons.
Pursuant to Art. 4 (5) of the Articles of Association of Carl Zeiss Meditec AG, the Company has an Authorized Capital. Accordingly, the Management Board is authorized, subject to the approval of the Supervisory Board, to increase the share capital, on one or several occasions in the period until 11 April 2016, by up to € 39,654,800.00. To this end, new no-par value bearer shares may be issued against cash and/or contributions in kind. The Management Board is authorized, subject to the approval of the Supervisory Board, to exclude the statutory subscription right of shareholders in the following cases:
The Management Board is authorized, subject to the approval of the Supervisory Board, to specify the details of capital increases from Authorized Capital.
Based on the resolution of the General Meeting of Carl Zeiss Meditec AG on 4 March 2010, the Management Board is authorized to purchase treasury shares. This authorization is valid until 3 March 2015. The shares may be purchased in order, with the consent of the Supervisory Board:
to offer them for purchase to employees of the Company and the companies affi liated with the Company within the meaning of Section 15 et seqq. German Stock Corporation Act (AktG) – noting that the right of shareholders to subscribe to treasury shares is excluded – or
This authorization is limited to the acquisition of shares equivalent to share capital of € 8,130,000.00 or less than 10 % of the total existing share capital. The shares shall be purchased at the stock exchange. The consideration paid by the Company per share (excluding incidental purchase costs) may not be more than 10 % above or below the closing rate of the shares in Xetra trading (or an equivalent successor system to the Xetra trading system) at the Frankfurt Stock Exchange on the previous day of trading. At no time may the purchased shares, together with other treasury shares held by the Company and ascribable to it pursuant to Section 71a et seqq. AktG, exceed 10 % of the share capital.
No events of material signifi cance for the Group's net assets, fi nancial position and earnings occurred after the end of fi nancial year 2012/2013. The development of business at the beginning of fi nancial year 2013/2014 validates the statements made in the following "Outlook".
In fi nancial year 2013/2014 we aim to continue the success of the past 12 months and achieve sustainable growth. Our strategy is geared towards the strategic focus areas of the MEGA program: Innovation, Customer Focus and New Markets. Innovation, in particular, shall play a key role.
A key element of our growth strategy consists in making cutting-edge technology in medical application accessible to our customers. We are therefore striving to establish our products as the new gold standards in medical diagnostics and therapy. Based on the breadth of our product range, we are offering our customers, particularly in the area of ophthalmology, the opportunity to make their workfl ows more effi cient and improve their clinical results by cleverly combining devices and systems. For example, we already support the entire workfl ow of our customers in cataract treatment and offer them additional options for the treatment of astigmatic patients with product innovations developed in the reporting year.
At the present time we see the greatest market potential in the rapidly growing markets of Asia and Latin America. Particularly in markets like India or China, it is necessary to develop a market-specifi c product range. Our use of Carl Zeiss AG's local research centers puts us in a position to work closely with our customers on site and determine local needs. We expect to further expand our presence in these new markets in 2013/2014.
A primary objective of our innovation strategy is to improve the diagnosis and treatment of diseases. Our customers value our support and service in order to be able to satisfy the ever-growing growing demands for treatment quality and effi ciency. Continuously expanding our global service business shall thus be a key growth driver for us for the next few years. We expect the share of consolidated revenue generated by our Service business to increase further in fi nancial year 2013/2014.
Our aim is to exceed the expectations our customers have of our products with excellent quality. This requires stable processes in all areas of the Group that are continuously further developed. In the reporting year progress was achieved in particular with the supply chain for the intraocular lens business, to ensure quick and reliable processing of the ever-increasing number of orders.
For us, a forward-looking human resources policy means sustainable and targeted development of the potential of our employees. We have already seen some success in this respect with the MEGA program, and we aim to strengthen and continue this in the future. Signifi cant in this respect are, for example, the mentoring program, employee training and systematic successor planning.
According to the forecast of the Joint Economic Forecast project group in autumn 2013, a sustainable recovery of the global economy is expected in 2014. In order for global GDP to increase by 3.5 %, as projected, companies, private households and investors will have to gradually learn to put their trust in the reform and consolidation efforts being made in the eurozone, private consumption in the USA will have to continue to rise and the emerging economies will have to maintain their growth. In autumn 2013 sentiment indicators were on an upwards trend, particularly in the German economy, and are thus still considered more favorable than in the rest of the eurozone.
Private demand in the USA is expected to rise. Nevertheless, fi nancial adjustments and the budget dispute in the US Congress continue to put pressure on the economy, so that projected economic growth for 2014 as a whole is just 2.2 %.
Economic experts anticipate a gradual stabilization of the economy in the eurozone in 2014 and a slow emergence from the recession for the crisis countries. With growth of 0.9 %, economic momentum will remain slow, but will gradually turn into a slight economic recovery. According to the assumptions, additional impetus shall come from countries like Russia, among others. For the German economy, the research institutes are forecasting growth of 1.8 % and a sustainable upwards trend. This would mean Germany would remain the nation with the highest growth rate among the largest economies in the eurozone. Overall, the heterogeneous development in the individual countries is expected to continue.
For Asia, the fi nancial institutes are once again predicting a slight increase in growth rates. GDP is expected to rise by 4.8 %, particularly because the Asian economies are expected to benefi t disproportionately from the slight growth of the global economy. The Chinese economy, in particular, is expected to be able to achieve growth of 7.5 %. The situation is reversed in Japan: growth there is expected to slow to 1.8 % in 2014. India is expected to grow by 4.5 %.
The overall forecast for the global economy in 2014 is GDP (gross domestic product) growth of 3.5 % compared with the previous year.
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.
Furthermore, the greater requirements being placed on the innovations in the medical technology sector shall play an important role from an effi ciency and cost perspective. Consequently, the products and procedures of medical technology manufacturers shall no longer be measured based only on their effectiveness and safety, but also on their cost-effi ciency. Integrated system solutions for simplifi ed workfl ows at the customer are an important distinguishing feature in our opinion.
Last but not least, the development of the global economy infl uences the growth of the medical technology industry in as much as private customers or public budgets postpone their investment decisions until the future, or make them prematurely.
At the present time the medical technology industry as a whole is expected to grow in the coming years until 2020 in the low to mid-single-digit percentage range. The statements concerning the future development of Carl Zeiss Meditec's business were made on the basis of the above-mentioned assumptions, which are in line with the information the Company currently has at hand.
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.
During the past fi nancial year we further increased our revenue in the "Ophthalmic Systems" SBU and expect this growth to continue in 2013/2014. We can attribute this in particular to our technological core competencies in products already on the market for the diagnosis and therapy of ophthalmic diseases. With our broad product range it is our ambition to be able to provide our customers with effi cient solutions for a smooth workfl ow, with the best possible benefi t for the patient. System networking and integrated data management are other important strategic focus points in this respect.
The year under review was characterized in the "Ophthalmic Systems" SBU by growing competitive pressure. Having largely redesigned our model range in optical coherence tomography at the beginning of the 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 fi nancial year. We expect this growth to continue in fi nancial year 2013/2014. 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 offers the only preloaded trifocal intraocular lens suitable for MICS on the market. In the reporting year a toric version of the AT LISA® tri was also developed for astigmatic patients. We are therefore confi dent that we will be able to further increase our market shares in 2013/2014.
Our "Microsurgery" SBU recorded further revenue growth in the year under review and thus further improved our already extremely strong market position. We expect this growth to continue in 2013/2014. With our surgical microscopes such as the OPMI® Pentero® for neurospinal or plastic surgery, the OPMI LUMERA® for surgical procedures on the eye, and the OPMI® VARIO, which is used in the ENT area, 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 new 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 all three of its strategically important business regions: "EMEA", the "Americas" and "Asia/ Pacifi c". We see particularly promising business prospects in the Asia/Pacifi c region. These prospects shall become even more important in the medium to long term, due to the rapid economic growth in the Asia/ Pacifi c region. Carl Zeiss AG's research centers in India and China, which Carl Zeiss Meditec uses for product development, shall help to expand and ensure this growth. These centers help us to work closely together with our customers on site and thus to gear our activities, in respect of the marketing, development, procurement and production of our products, to the market conditions specifi c to the region, and to the prevailing needs of customers there. Another promising market, which we consider to hold signifi cant market potential for our products, is Latin America. We aim to exploit the potential in these countries to an even greater extent in the future and generate further revenue growth.
We aim to continue to be a pioneer of innovative solutions and processes and to continuously develop our expertise in this area. Carl Zeiss Meditec invests around 10 percent of its revenue in research and development projects and plans to invest in R&D on a similar scale in 2013/2014. Effi cient and targeted development processes play a key role in this. Upstream from these is the search for new technologies and market trends, which are systematically identifi ed and evaluated on an ongoing basis, in order to specifi cally carry over the most promising ideas to new development projects and then to establish ourselves on the market with new solutions. The important thing is to consider the regional market conditions and the needs of our customers in the development process from the outset.
Investments are a basic requirement to be able to maintain our technology leadership in the future. The investment ratio at Carl Zeiss Meditec has been largely constant over the past few years. The investments required to realize growth targets shall not lead to a material change in the current investment ratio in the coming fi nancial year. We aim to invest around 1 % to 3 % of revenue in property, plant and equipment in fi nancial year 2013/2014, which is about the same as in previous years.
Carl Zeiss Meditec pursues a long-term and earnings-oriented dividend policy. The Company's management plans to propose to the Annual General Meeting the distribution of a dividend of € 0.45 per share for the past fi nancial year. The management also intends to allow shareholders to continue to participate fairly in the Company's success in the future. The special dividend, an instrument that has been used several times in the past, may also be used again.
Our employees are indispensable for the Company's success: we need them to be able to continue to work innovatively and profi tably in future. It is equally important to us to keep investing in the further development of our existing employees in future, as well as to recruit well qualifi ed specialists and managers for the Company. We therefore expect our workforce to grow in the coming periods in line with the growth of the Company's business.
Interest income and expenses depend on changes in interest rates in the fi nancial markets. At the present time, the Company does not expect any marked improvements in investment conditions in the next two
years. Interest income and interest expenses are thus expected to remain at around the previous year's level. As of 30 September 2013 current cash and cash equivalents of around € 360 million were available for fi nancing. In view of this and the ongoing expectation of positive business development and a positive cash fl ow from operating activities as a result, as well as the possibility to use other fi nancial instruments and sources of fi nancing, we consider Carl Zeiss Meditec's fi nancing capacity to be adequate. In 2013/2014 we aim to achieve operative cash fl ow in the high double-digit millions, based on active working capital management.
The global medical technology market is characterized by fundamentally sustainable growth. This applies to both ophthalmology and microsurgery and assures us of good selling conditions for the Company.
We continue to foresee a high level of growth particularly in the rapidly developing economies (RDEs) 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. Additional opportunities are provided by our innovative and broad product range, which we shall continue to expand in the coming fi nancial year. Our strong fi nancial profi le, which safeguards the Company's development against external infl uences, should also have a positive effect. The Company is in a position to protect itself against direct risks in the short term, without losing sight of its long-term objectives. Due to our ZEISS brand our customers perceive us as a reliable and trustworthy partner, and we look back on a long, successful collaboration. We can therefore build upon an extremely positive brand image.
Our future development shall also include external growth opportunities in some areas. Using a systematic process we shall look for strategically useful expansion opportunities, which we shall evaluate and follow up, where appropriate. It is not possible at this point to gauge how feasible such opportunities might be.
At the time of publication of this Annual Report the management of Carl Zeiss Meditec considers the outlook for the next two fi nancial years to be positive. This assumption is based on the persistent long-term trends: An ever-growing global population and the constantly growing number of older people associated with an increasing life expectancy. This is particularly signifi cant for ophthalmology, since the incidence of diseases in this fi eld is strongly related to the advanced age of the patients. Better and better access to medical care in the emerging economies also offers long-term potential for growth for medical technology products. Accordingly, the Company's management assumes that the demand for products and solutions of Carl Zeiss Meditec will continue to increase in the next two fi nancial years.
General economic conditions and economic development are crucial to making a forecast about the future development of business. Given the large number of imponderables in the individual regions in the year under review and the increasingly high level of uncertainty with regard to future development, the Company's management plans to keep a close eye on the further course of general business so that it can react to any changes in good time. Staying in regular contact with our customers shall play an important role in this. The investment behavior of our customers depends heavily on economic development. Planned investments in the private sector may be delayed, or signifi cant cuts in public budgets may adversely affect demand.
Based on the generally favourable conditions for market development, in the medium and long term, and Carl Zeiss Meditec's good strategic position, the Company's management assumes, both from a current perspective and for the next two years, that revenue will continue to grow, 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 (recurring revenue), since there is generally less fl uctuation in these areas than in the capital goods business. We already achieved our objective of increasing this share of revenue to 25 % by 2015 in reporting year 2012/2013 – two years earlier than planned. 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 fi nancial year 2012/2013, we increased our EBIT margin further, from 14.3 % in the previous year to 14.8 %. For the next two fi nancial years we shall strive to stabilize our EBIT margin at the current level. 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 based on the current perspective, we shall publish these amendments promptly and specify our expectations in more detail.
As a member of Carl Zeiss AG, Carl Zeiss Meditec AG has prepared a dependent company report pursuant to Section 312 German Stock Corporation Act (AktG). In light of the circumstances known to the Management Board at the time the legal transactions were concluded, the companies of Carl Zeiss Meditec AG received an appropriate consideration for each of the transactions listed in this report concerning relations with affi liated companies. No other reportable transactions pursuant to Section 312 (1) Sentence 2 AktG were entered into by the Company.
The declaration on corporate governance (pursuant to Section 289a HGB) includes the declaration of conformity pursuant to Section 161 AktG, relevant information on corporate governance practices applied which go beyond the statutory requirements, in addition to information of where these are publicly accessible and a description of how the Management and Supervisory Boards work, as well as the composition and mode of working of their committees. You can fi nd this information on our website at www.meditec.zeiss.com/ir.
Jena, 22 November 2013
Dr. Ludwin Monz Dr. Christian Müller Thomas Simmerer President and Chief Financial Offi cer Member of the Chief Executive Offi cer and Member of the Management Board Management Board
Thomas
| Note | Financial year 2012/2013 1 October 2012 – 30 September 2013 |
Financial year 2011/2012 1 October 2011 – 30 September 2012 |
|
|---|---|---|---|
| Revenue | (2p) (4) | 906,445 | 861,875 |
| Cost of goods sold | (418,624) | (400,511) | |
| Gross profi t | 487,821 | 461,364 | |
| Selling and marketing expenses | (214,294) | (204,037) | |
| General and administrative expenses | (42,317) | (40,977) | |
| Research and development expenses | (34) | (97,319) | (93,450) |
| Other expense | (5) | (17) | – |
| Earnings before interests, income taxes, depreciation and amortisation |
152,593 | 140,795 | |
| Depreciation and amortisation | 18,719 | 17,895 | |
| Earnings before interests and income taxes | 133,874 | 122,900 | |
| Results from investments accounted for using the equity method |
– | 10 | |
| Interest income | (7) | 1,942 | 3,023 |
| Interest expense | (7) | (6,591) | (6,083) |
| Foreign currency gains/(losses), net | (2c) (2v) (7) | 14,496 | (6,358) |
| Other fi nancial result | (7) | 3,866 | 2,687 |
| Earnings before income taxes | 147,587 | 116,179 | |
| Income tax expense | (8) | (48,465) | (39,787) |
| Net income | 99,122 | 76,392 | |
| Attributable to: Shareholders of the parent company Non-controlling interest |
93,505 5,617 |
71,870 4,522 |
|
| Profi t/(loss) per share, attributable to the shareholders of the parent company in the current fi nancial year (€): – Basic/diluted |
(2r) (9) | 1.15 | 0.88 |
CONSOLIDATED INCOME STATEMENT (IFRS)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
| (Figures in € '000) | |||
|---|---|---|---|
| Note | Financial year 2012/2013 1 October 2012 – 30 September 2013 |
Financial year 2011/2012 1 October 2011 – 30 September 2012 |
|
| Net income | 99,122 | 76,392 | |
| Other comprehensive income: | |||
| Items, that may be reclassifi ed subsequently to net income/loss |
|||
| Foreign currency translation | (2m) (22) | (27,560) | 9,729 |
| Total of items that may be reclassifi ed subsequently to net income/loss |
(27,560) | 9,729 | |
| Total of items that will not be reclassifi ed to net income/loss |
– | – | |
| Other comprehensive income | (27,560) | 9,729 | |
| Comprehensive income | 71,562 | 86,121 | |
| Attributable to: Shareholders of the parent company Non-controlling interest |
75,941 (4,379) |
80,346 5,775 |
| Note | 30 September 2013 | 30 September 2012 | |
|---|---|---|---|
| ASSETS | |||
| Goodwill | (2e) (11) | 121,046 | 121,627 |
| Other intangible assets | (2f) (12) | 12,531 | 20,922 |
| Property, plant and equipment | (2g) (13) | 54,433 | 48,484 |
| Investments | (14) | 124 | 364 |
| Deferred tax assets | (2i) (15) | 44,181 | 47,198 |
| Noncurrent trade receivables | (18) | 5,421 | 4,393 |
| Other noncurrent assets | (16) | 7,376 | 11,056 |
| Total noncurrent assets | 245,112 | 254,044 | |
| Inventories | (2j) (17) | 148,467 | 143,013 |
| Trade receivables | (18) | 150,000 | 136,662 |
| Accounts receivable from related parties | (2t) (34) | 62,701 | 42,718 |
| Treasury receivables | (2t) (34) | 352,412 | 241,389 |
| Tax refund claims | 310 | 2,380 | |
| Other current fi nancial assets | (2h) (19) | 6,384 | 124,064 |
| Other current non-fi nancial assets | (20) | 8,899 | 9,079 |
| Cash and cash equivalents | (2l) (21) | 6,286 | 9,526 |
| Total current assets | 735,459 | 708,831 |
| Note | 30 September 2013 | 30 September 2012 | |
|---|---|---|---|
| LIABILITIES AND EQUITY | |||
| Share capital | (22) | 81,310 | 81,310 |
| Capital reserve | (22) | 313,863 | 313,863 |
| Retained earnings | (22) | 322,290 | 261,309 |
| Gains and losses recognized directly in equity | (2m) (22) | (19,055) | (1,491) |
| Equity before non-controlling interest | 698,408 | 654,991 | |
| Non-controlling interest | (22) | 36,427 | 40,806 |
| Total equity | 734,835 | 695,797 | |
| Provisions for pensions and similar commitments | (2n) (23) | 10,634 | 12,973 |
| Other noncurrent provisions | (2o) (24) | 3,792 | 12,583 |
| Noncurrent fi nancial liabilities | (25) | 1,820 | 2,386 |
| Noncurrent leasing liabilities | (2k) (29) | 11,969 | 14,366 |
| Other noncurrent non-fi nancial liabilities | 7,863 | 7,532 | |
| Deferred tax liabilities | (2i) (15) | 2,415 | 3,491 |
| Total noncurrent liabilities | 38,493 | 53,331 | |
| Current provisions | (2o) (24) | 35,785 | 29,728 |
| Current accrued liabilities | (26) | 60,274 | 65,126 |
| Current fi nancial liabilities | (2h) | 2,717 | 5,938 |
| Current portion of noncurrent fi nancial liabilities | (25) | 507 | 6,432 |
| Current portion of noncurrent leasing liabilities | (2k) (29) | 1,835 | 1,787 |
| Trade payables | 35,861 | 36,935 | |
| Current income tax liabilities | 11,962 | 10,723 | |
| Accounts payable to related parties | (2t) (34) | 19,833 | 13,613 |
| Treasury payables | (2t) (34) | 6,859 | 14,597 |
| Other current non-fi nancial liabilities | (27) | 31,610 | 28,868 |
| Total current liabilities | 207,243 | 213,747 | |
| Total liabilities | 980,571 | 962,875 |
(Figures in € '000)
| (Figures in € '000) | |||
|---|---|---|---|
| Note | Financial year 2012/2013 1 October 2012 – 30 September 2013 |
Financial year 2011/2012 1 October 2011 – 30 September 2012 |
|
| Cash fl ows from operating activities: | |||
| Net income | 99,122 | 76,392 | |
| Adjustments to reconcile net income to net cash provided by/(used in) operating activities |
|||
| Income tax expenses | (8) | 48,465 | 39,787 |
| Interest income/expenses | (7) | 4,649 | 3,060 |
| Results from investments accounted for using the equity method | (7) | – | (10) |
| Result from other participations | (7) | (18) | (21) |
| Depreciation and amortisation | (12) (13) | 18,719 | 17,895 |
| Gains/losses on disposal of fi xed assets | 442 | 786 | |
| Dividends received | 18 | 21 | |
| Interest received | 2,643 | 1,824 | |
| Interest paid | (1,897) | (2,141) | |
| Income tax reimbursement | 2,673 | 1,365 | |
| Income taxes paid | (46,279) | (38,344) | |
| Changes in working capital: | |||
| Trade receivables | (18) | (45,508) | (1,937) |
| Inventories | (17) | (20,212) | (5,611) |
| Other assets | (16) (19) (20) | 172 | (11,306) |
| Trade payables | 8,734 | 7,357 | |
| Provisions and fi nancial liabilities | (23) (24) (26) | (11,754) | 1,513 |
| Other liabilities | (27) | 4,655 | 1,470 |
| Total adjustments | (34,498) | 15,708 | |
| Net cash provided by operating activities | 64,624 | 92,100 | |
| Cash fl ows from investing activities: | |||
| Investment in property, plant and equipment | (13) | (9,723) | (14,541) |
| Investment in intangible assets | (12) | (918) | (714) |
| Proceeds from fi xed assets | 350 | 603 | |
| Proceeds from liquidation of investments accounted for using the equity method | – | 10 | |
| Proceeds from fi xed term deposits | 120,000 | – | |
| Investments in fi xed term deposits | (140,000) | (10,000) | |
| Acquisition of IOL/OVD-business IMEX Clinic S.L., Spain | (3) | (1,907) | (12,759) |
| Net cash used in investing activities | (32,198) | (37,401) | |
| Cash fl ows from fi nancing activities: | |||
| Proceeds from/(repayment of) of short-term debt | (36) | 87 | |
| Proceeds from/(repayment of) of noncurrent fi nancial liabilities | (25) | (6,508) | (307) |
| (Increase)/decrease in treasury receivables | (2t) (34) | 14,394 | (225,187) |
| Increase/(decrease) in treasury payables | (2t) (34) | (7,738) | 8,612 |
| Change of leasing liabilities | (29) | (1,779) | (1,682) |
| Dividend payments to shareholders of Carl Zeiss Meditec AG | (10) | (32,524) | (24,393) |
| Net cash provided by/(used in) fi nancing activities | (34,191) | (242,870) | |
| Effect of exchange rate fl uctuation on cash and cash equivalents | (1,475) | 3,056 | |
| Net increase/(decrease) in cash and cash equivalents | (3,240) | (185,115) | |
| Cash and cash equivalents, beginning of reporting period | (21) | 9,526 | 194,641 |
| Cash and cash equivalents, end of reporting period | (21) | 6,286 | 9,526 |
CONSOLIDATED STATEMENT OF CASH FLOW (IFRS)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)
| (Figures in € '000) | Gains and losses recognised directly in equity |
|||||||
|---|---|---|---|---|---|---|---|---|
| Note | Share capital |
Capital reserve |
Retained earnings |
Reserves from currency conversion |
Equity before non controlling interest |
Non controlling interest |
Total equity |
|
| As of 1 October 2011 | 81,310 | 313,863 | 213,832 | (9,967) | 599,038 | 35,031 | 634,069 | |
| Foreign currency translation | (2c) (22) | – | – | – | 8,476 | 8,476 | 1,253 | 9,729 |
| Changes in value recognized directly in equity |
(2m) (22) | – | – | – | 8,476 | 8,476 | 1,253 | 9,729 |
| Net income | – | – | 71,870 | – | 71,870 | 4,522 | 76,392 | |
| Sum of comprehensive income for the period |
(2m) (22) | – | – | 71,870 | 8,476 | 80,346 | 5,775 | 86,121 |
| Dividend payments | (10) | – | – | (24,393) | – | (24,393) | – | (24,393) |
| As of 30 September 2012 | 81,310 | 313,863 | 261,309 | (1,491) | 654,991 | 40,806 | 695,797 | |
| Foreign currency translation | (2c) (22) | – | – | – | (17,564) | (17,564) | (9,996) | (27,560) |
| Changes in value recognized directly in equity |
(2m) (22) | – | – | – | (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 |
(2m) (22) | – | – | 93,505 | (17,564) | 75,941 | (4,379) | 71,562 |
| Dividend payments | (10) | – | – | (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 |
Carl Zeiss Meditec AG, Jena, Germany, is the parent company of the Carl Zeiss Meditec Group (the "Company", "Carl Zeiss Meditec", the "Group"), which comprises additional subsidiaries. The Group offers end-to-end solutions for the diagnosis and treatment of ophthalmic diseases, including implants and consumables. In microsurgery, the Group provides innovative visualization solutions. The Group's customers are physicians in various fi elds and hospitals worldwide.
Carl Zeiss Meditec AG's headquarters are located in 07745 Jena, Germany (Göschwitzer Straße 51 – 52), Germany's traditional center of excellence for optical and optical-related technologies. The Company has major subsidiaries in the USA, France, Japan, Spain, the United Kingdom and Germany.
Carl Zeiss Meditec AG is recorded in the commercial register of Jena Local Court under HRB 205623.
The consolidated fi nancial statements may be obtained from the Company's headquarters and are published on the Internet and in the Federal Gazette (Bundesanzeiger).
The consolidated fi nancial statements of Carl Zeiss Meditec AG are based on the going concern assumption. They were prepared in accordance with the International Financial Reporting Standards ("IFRSs") promulgated by the International Accounting Standards Board ("IASB"), London, and take into account all accounting standards and interpretations adopted by 30 September 2013 for which application is mandatory, as they are to be applied in the EU. The present version of the consolidated fi nancial statements complies with the provisions of Section 315a of the German Commercial Code (Handelsgesetzbuch, HGB). It forms the legal basis for group accounting in accordance with international standards in Germany, in conjunction with the Regulation ("EC") No. 1606/2002 of the European Parliament and Council dated 19 July 2002 relating to the application of international accounting standards.
The fi nancial year of Carl Zeiss Meditec and its subsidiaries ends on 30 September.
The consolidated fi nancial statements comprise the fi nancial statements of Carl Zeiss Meditec AG and all of its subsidiaries and joint ventures. Subsidiaries are all companies controlled by Carl Zeiss Meditec. A company is controlled if Carl Zeiss Meditec has the opportunity to determine the fi nancial and business policy in order to derive benefi t from the company's activities. Carl Zeiss Meditec holds the majority of voting rights in all of the companies it controls. Joint ventures are companies jointly managed with other companies. A full breakdown of the shareholdings of Carl Zeiss Meditec can be found in Note (40) "Other mandatory disclosures pursuant to Art. 314 and Art. 285 (1) No. 10 HGB" in these notes to the consolidated fi nancial statements.
All relevant intragroup transactions, balances and interim results from transactions between Group companies were eliminated within the scope of consolidation. Non-controlling interests in the net assets of consolidated subsidiaries were calculated and shown in the consolidated statement of fi nancial position separate from the equity attributable to shareholders of the parent company.
Capital consolidation takes place in accordance with the acquisition method pursuant to IFRS 3 "Business combinations". This means that the fi rst-time evaluation values the identifi able assets and liabilities at their respective fair values on the date of acquisition. Non-controlling interests are thus stated as a proportion of the attributable fair values of the assets and liabilities. The acquisition costs of the acquired interests are offset against the Group's share in the subsidiary's equity valued at fair value. Acquisition costs are recorded as an expense as they are incurred. Insofar as an asset-side difference remains after this offsetting, this is reported as goodwill.
The fi gures for the acquired subsidiaries are incorporated in the consolidated income statement according to their affi liation to the Group, i. e., from their effective date of acquisition (possibility to be controlled). A subsidiary is deconsolidated as soon as Carl Zeiss Meditec loses its control over the company. Third-party equity interests are recorded in the consolidated fi nancial statements as part of consolidated equity under the item "Non-controlling interests".
Jointly controlled entities within the meaning of IAS 31 "Interests in Joint Ventures" are reported according to the equity method of accounting pursuant to IAS 31.38. When applying the equity method pursuant to IAS 28 "Investments in associates", equity investments are initially recorded at cost in the statement of fi nancial position and are subsequently adjusted to refl ect the Group's share in the equity (net assets) after acquisition and for losses due to impairment. Insofar as the acquisition of shares results in goodwill, this is included in the investment book value and is not subject to scheduled amortization.
Investments in which Carl Zeiss Meditec holds less than 20 % are carried in the accounts as a fi nancial instrument (see 2(h)), if Carl Zeiss Meditec is unable to exercise any material or signifi cant infl uence over the investee enterprise and the investee enterprise is not jointly controlled.
Intragroup business combinations, uniting of interests or similar transactions are regarded – both from the perspective of the superordinate parent company (Carl Zeiss AG) and from the perspective of the participating subsidiary (Carl Zeiss Meditec) – as "transactions under common control" which, pursuant to IFRS 3.2 (c), are not to be classifi ed as company acquisitions. Transactions under common control are treated in Carl Zeiss Meditec's statement of fi nancial position according to the principle of "predecessor accounting"1 , with the assumption that the consolidated fi nancial statements of Carl Zeiss Meditec are to be regarded merely as an excerpt from the consolidated fi nancial statements of the superordinate parent company, Carl Zeiss AG. The respective assets and liabilities are thus carried at book value.
The consolidated fi nancial statements have been prepared in euros, as the majority of Group transactions are executed in this currency, and because the euro is the functional currency of Carl Zeiss Meditec AG. Unless there is a note to the contrary, all amounts are stated in thousands of euros (€ '000 or € thousand). Figures are rounded according to proper commercial standards; this may result in slight discrepancies.
The assets and liabilities of those foreign subsidiaries whose functional currency is one other than the euro are translated using the exchange rate as of the reporting date. Equity transactions are translated at historic rates of exchange on the date of the transaction. The fi gures in the income statement are converted at the average exchange rate for the fi nancial year. Differences from currency translation are allocated to gains and losses recognized in other comprehensive income.
Transactions executed in foreign currencies are recorded using the rate of exchange in effect at the transaction date. Monetary assets and liabilities denominated in foreign currency, such as cash and cash equivalents, trade receivables or payables, are revalued at each reporting date until settlement. The resulting income or expenses are shown in the income statement under "Foreign currency gains/(losses), net".
The following table shows the exchange rates applied in the preparation of the consolidated fi nancial statements:
| Exchange rate 30 September 2013 |
Exchange rate 30 September 2012 |
+/- % |
Average exchange rate 2012/2013 |
Average exchange rate 2011/2012 |
+/- % |
|
|---|---|---|---|---|---|---|
| US\$ | 0.7408 | 0.7738 | - 4.3 | 0.7620 | 0.7701 | - 1.1 |
| JPY | 0.0076 | 0.0100 | - 24.0 | 0.0082 | 0.0098 | - 16.3 |
| GBP | 1.1964 | 1.2529 | - 4.5 | 1.1890 | 1.2140 | - 2.1 |
| CAD | 0.7180 | 0.7888 | - 9.0 | 0.7503 | 0.7643 | - 1.8 |
| SEK | 0.1155 | 0.1185 | - 2.5 | 0.1164 | 0.1133 | 2.7 |
| CHF | 0.8182 | 0.8270 | - 1.1 | 0.8161 | 0.8261 | - 1.2 |
| AUD | 0.6906 | 0.8068 | - 14.4 | 0.7563 | 0.7921 | - 4.5 |
| PLN | 0.2371 | 0.2431 | - 2.5 | 0.2393 | 0.2347 | 2.0 |
| ZAR | 0.0735 | 0.0937 | - 21.6 | 0.0821 | 0.0955 | - 14.0 |
| CZK | 0.0389 | 0.0398 | - 2.3 | 0.0391 | 0.0397 | - 1.5 |
The preparation of the consolidated fi nancial statements in accordance with the IFRSs requires the use of certain assumptions and estimates that relate to the recognition and measurement of assets and liabilities, income and expenses, and contingent liabilities. The assumptions and estimates are mostly based on the uniform s tipulation within the Group of useful lives, the determination of values in use of cash-generating units, the accounting and valuation of provisions, as well as the certainty of realizing future tax relief. Actual values may vary in individual cases from the assumptions and estimates made. Changes are shown at the time the true value became known.
Goodwill and other intangible assets with an indefi nite useful life are not subject to scheduled amortization but are reviewed regularly for impairment (impairment test). During impairment testing as stipulated by IAS 36, the Company assesses whether or not an asset has been impaired.
To do this, Carl Zeiss Meditec determines (i) the cash-generating units, (ii) the respective net assets of the cash-generating units and (iii) the recoverable amounts for the cash-generating units.
The cash-generating units of goodwill correspond to the business segments pursuant to IFRS 8.5, which constitute the lowest level at which goodwill is monitored for internal management purposes.
Insofar as the recoverable amount of the asset – which corresponds to the higher of fair value less costs to sell and the value in use – falls below the carrying amount, an impairment shall be made. If the reason for previous impairment no longer applies, assets, with the exception of goodwill, are written up to a maximum of the amortized cost.
The recoverable amount for the cash-generating units is determined – as value in use – using cash fl ow forecasts. These forecasts are based on fi nancial forecasts approved by the Company's management and modifi ed to the current state of knowledge in each case. These fi nancial forecasts, or management forecasts, relating to the development of sales, costs and earnings, which are taken as a basis for the impairment test, are, in turn, based on a planning horizon of fi ve years. They are determined based on historical values, detailed budgets for the following year and the future strategic orientation of the business unit or cash-generating unit (medium-term planning). In addition, external information sources, such as market studies and the results of market surveys and publications are used in order to take macroeconomic trends into account to a reasonable extent.
Sales planning considers a market growth of between approx. 2 % and 8 % in relation to corporate strategy. Especially in the Surgical Ophthalmology SBU market growth is anticipated to be above the sector average as published in industry studies. Cost planning also considers strategic aspects as well as price trends in the procurement markets. Pursuant to IAS 36.44, the cash fl ow projections resulting from the management's fi nancial forecasts do not contain any cash fl ows from future restructuring measures, enhancements or improvements to increase earnings power. The estimates of future cash fl ows also contain no infl ows or outfl ows of cash from fi nancing activities or income tax revenues or payments (see IAS 36.50). The value in use of the cash-generating unit is derived from the sum of discounted future cash fl ows at a standard, riskadjusted capitalization interest rate.
The capitalization interest rate is calculated from the parameters risk-free base rate, risk premium (market risk premium and beta factor), borrowed capital spread and tax effect, and refl ects the capital structure usual for the industry. To extrapolate (perpetuity) the cash fl ow forecasts beyond the fi ve-year period, the capitalization interest rate is used without assuming a particular growth rate.
The carrying amount of a cash-generating unit includes all assets that stimulate the fl ow of cash, i. e., that contribute to the creation of a saleable service. This means that all non-operating items and interest-bearing borrowings are excluded from the calculation. The pre-tax discount rate applied for cash fl ow forecasts is 9.4 % (previous year: 9.5 %).
Carl Zeiss Meditec reviews its goodwill for impairment at least once a year or at the onset of major events or changed circumstances which indicate that the fair value of a reporting unit of the Group has fallen below its carrying amount. In addition, capitalized intangible assets with an indefi nite useful life and intangible assets not yet available for use are examined at least once a year for impairment.
Carl Zeiss Meditec completed its annual impairment testing of goodwill and capitalized intangible assets with an indefi nite useful life, and intangible assets not yet available for use, in the last quarter of fi nancial year 2012/2013. The results of these tests, based on values in use, did not give any indication of a need for impairment of goodwill or intangible assets not yet available for use. Based on this result a calculation of fair value less costs to sell pursuant to IAS 36.19 was omitted. The legally protected trademark, which was capitalized as part of the PPA of Laser Diagnostics Technologies Inc., San Diego, USA, was written off completely in fi nancial year 2012/2013. Further information can be found in note (12).
The sensitivity analyses performed by the Company showed a devaluation of goodwill with a change in the discount rate to 14.5 % (SBU Surgical Ophthalmology), or 18.8 % (SBU Ophthalmic Systems), or a reduction in EBIT for the last detailed planning period and the perpetuity by 46.0 % (SBU Surgical Ophthalmology) or 64.0 % (SBU Ophthalmic Systems), respectively. Such changes are currently considered to be unlikely.
For details on the change in goodwill in fi nancial year 2012/2013 and the previous year please refer to note (11).
Intangible assets acquired separately are valued at cost less accumulated amortization and impairment.
Research and development expenses are recorded as expenses in the period in which they arise.
A self-constructed intangible asset, which results from development activities (or from the developmental phase of an internal project), is recorded, if evidence can be provided that the criteria according to IAS 38.57 are fulfi lled.
The amount at which a self-constructed intangible asset is fi rst capitalized is equivalent to the sum of the expenses incurred from the date on which the intangible asset fulfi ls the above-mentioned conditions. If a self-constructed intangible asset cannot be capitalized, the development costs are recognized in income in the period in which they arise.
In subsequent periods, self-constructed intangible assets are valued at cost less accumulated amortization and impairment.
Self-constructed intangible assets are mostly allocated to the category "Development costs" (note 12).
Intangible assets acquired as part of a company merger are recorded separately from goodwill as soon as they conform to the defi nition of an intangible asset and can be individually identifi ed. The acquisition cost of such intangible assets corresponds to their fair value at the date of acquisition. In subsequent periods, intangible assets acquired as part of a company merger shall be valued in exactly the same way as intangible assets acquired individually – at cost less accumulated amortization and accumulated impairment.
All other intangible assets which are ready for use shall be amortized on a straight-line basis over the following periods, unless an indefi nite useful life is assumed (see note (12)):
Brand name |
5 – 10 years |
|---|---|
Software |
1 – 10 years |
Licenses |
3 – 7 years |
Patents and other industrial property rights |
2 – 19 years |
Development costs |
3 – 10 years |
Other intangible assets |
5 – 10 years |
The amortization amounts for other intangible assets may be recognized in the income statement under both cost of goods sold and other operative costs. Assets are each allocated individually with respect to their intended purpose or assignment to certain areas of the company. These assets are also reviewed regularly for impairment (impairment test). The results of these tests did not give any indication of a need for impairment of capitalized other intangible assets in the current fi nancial year, with the exception of one brand name (see note 12). Please refer to (e) above with regard to the method applied in the impairment test.
Property, plant and equipment are valued at cost, net of accumulated depreciation and impairment. In the case of property, plant and equipment acquired within the scope of a company merger, the acquisition costs correspond to their fair values at their date of acquisition. Depreciation is calculated using the straight-line method over the estimated useful life of each asset. The following depreciation periods were applied:
Buildings and leasehold improvements |
3 – 32 years |
|---|---|
Plant and machinery |
2 – 21 years |
Other offi ce equipment, fi xtures and fi ttings |
1 – 23 years |
Leasehold improvements are depreciated over their estimated useful life or the term of the rental or lease agreement, if shorter. Estimated useful life is regularly reviewed by the Company's management, taking current technological advancement into account. Maintenance and repairs are expensed as incurred, while renewals and improvements that extend the useful life or increase capacity are capitalized if they fulfi l the general recognition criteria under IAS 16. Property, plant and equipment are also reviewed for impairment (impairment test), if indicated. Please refer to (e) above with regard to the general method of calculating the value applied in the impairment test. Upon the sale or retirement of property, plant and equipment, the accounts are relieved of the cost and the related accumulated depreciation and impairments, and any resulting gain or loss is recognized through profi t or loss. The scheduled depreciation amounts and any impairment losses and write-ups recorded in the period on property, plant and equipment are recognized in the consolidated income statement according to the function for which the assets are used.
Financial assets and fi nancial liabilities are recognized in the consolidated statement of fi nancial position from the date on which the Group becomes a contracting party to the fi nancial instrument. Financial assets acquired or sold at standard market conditions are generally accounted for on the settlement date.
Financial assets and liabilities in the sense of IAS 39 are classifi ed either as loans and receivables (LaR), held to maturity (HtM) investments, fi nancial assets available for sale (AfS), fi nanc ial assets or liabilities held for trading (FAHfT/FLHfT), or as fi nancial liabilities at amortized cost (FLAC). The classifi cation depends on the type and the intended purpose of the fi nancial assets and liabilities and occurs upon addition.
The Company's primary fi nancial instruments mainly consist of cash and cash equivalents, fi nancial assets, treasury receivables (group cash management [treasury] of Carl Zeiss Financial Services GmbH, Oberkochen), trade receivables and payables, current loans, noncurrent debts and other fi nancial assets and liabilities.
Loans and receivables and current and noncurrent fi nancial liabilities are carried at amortized cost. The amortized cost of a fi nancial asset or fi nancial liability is the term used to describe that amount at which a fi nancial asset or liability was valued when fi rst recorded, less any repayments using the effective interest method and losses for impairment.
The amortized cost of current assets and liabilities are generally equivalent to the nominal or repayment amount.
Trade receivables are disclosed at their nominal value, net of any allowance for accounts presumed to be uncollectible.
Appropriate valuation allowances are recorded against doubtful receivables and loans with discernible collection risks on the basis of regular, systematic reviews and credit control assessments. This control measure takes into account historical bad debt losses, the size and adequacy of securities, as well as other relevant factors. Impairments are carried out based on objective indicators and take account of the default risk. Objective indicators can include, for example, major fi nancial diffi culties of the debtor, a breach of contract, such as default on or arrears in interest or redemption payments owed, or the high probability of insolvency proceedings being brought against the debtor. Receivables and loans are written off against these valuation allowances, if they are considered uncollectible. Please refer to note (37) for further information on credit risks.
Primary fi nancial assets which are not classifi ed either as loans or receivables, held to maturity investments, fi nancial assets or liabilities held for trading, or as fi nancial liabilities at amortized cost, shall be allocated to the category fi nancial assets available for sale. Existing fi nancial assets are allocated to this category due to the fact that the non-controlling interests are not listed on a stock exchange, meaning that their fair values cannot be reliably determined, these fi nancial assets are carried at cost. There are no plans to dispose of these fi nancial instruments at the present time.
Noncurrent, non-interest-bearing receivables and loans are discounted based on market conditions; interest is shown as income according to the effective interest method.
The Group is a company with global operations, and as such it is subject to the effects of exchange rate fl uctuations. In order to hedge against this currency risk, it concludes currency forward contracts based on planned transactions in foreign currency. Hedge accounting within the meaning of IAS 39 is not applied. These contracts generally cover a period of up to 1.5 years. Derivative fi nancial instruments which have a positive fair value are carried in the statement of fi nancial position, depending on their time to maturity, under the item "Other current fi nancial assets" or "Other noncurrent assets", and derivative fi nancial instruments with a negative fair value are carried in the statement of fi nancial position, depending on their time to maturity, under the item "Current fi nancial liabilities" or "Noncurrent fi nancial liabilities". The sole purpose of the derivative fi nancial instruments is currency hedging.
Net income from the fi nancial instruments recognized at fair value through profi t and loss would, if relevant, also include income from interest and dividends. Please refer to note (37) for further information on currency risks.
Current taxes are recognized for taxes owed on income at the time the Group companies incur them. Income taxes are calculated in accordance with the Asset and Liability Method pursuant to the rules of IAS 12 "Income Taxes". All liabilities or claims relating to taxes on income and earnings arising during a fi nancial year are refl ected in the consolidated fi nancial statements pursuant to the relevant tax laws.
Deferred income taxes are computed annually based on the asset/liability approach pursuant to the rules of IAS 12 "Income taxes" on the treatment of income taxes. In order to take account of the tax effects of differences between the carrying amounts of assets and liabilities in the consolidated statement of fi nancial position and the corresponding tax bases, and of differences arising from consolidation processes, and loss carryforwards, deferred taxes are calculated each year, if these differences are expected to be offset over time. This is based on those tax rates that are expected to apply in the years in which these temporary differences are reversed or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in income in the period in which the change was legally enacted.
Deferred tax assets are written down as necessary to refl ect the net amount that is likely to be realized. Income tax expense comprises the taxes payable to or refundable by the tax authorities for the reporting period, plus or minus the changes in deferred taxes (to be recognized through profi t or loss).
Deferred tax claims for tax losses carried forward are carried at the amount at which the associated tax benefi ts are expected to be realized as a result of future tax profi ts.
Deferred tax assets and liabilities are carried net, insofar as a right exists to offset actual income tax receivables and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same tax authorities and are owed to the same Group companies.
Inventories are valued at the lower of cost or net realizable value. Costs are determined using the weightedaverage cost method. Production costs include materials and labor, as well as direct manufacturing and material overheads, including depreciation. In addition, the costs of company retirement benefi ts, the Company's social establishments and the Company's voluntary social benefi ts are also included to the extent that these can be allocated to the production area. Administrative costs are taken into account to the extent that these are attributable to production. Production costs do not include any borrowing costs. In the case of inventories acquired within the scope of a business combination, the acquisition costs correspond to their fair values at their date of acquisition.
Valuation allowances shall be made on inventories where cost exceeds the expected net realizable values. The net realizable value is the estimated price that could be obtained in the ordinary course of business, less the estimated costs of completion and selling costs.
The Group has leased certain assets under long-term contracts. Leases are classed as fi nance leases if the lessee bears the majority of the risks and opportunities associated with ownership. All properties under arrangements that qualify as fi nance leases are capitalized as noncurrent assets pursuant to IAS 17 "Leases" at the lower of fair value and the present value of minimum lease payments. The corresponding leasing obligations are carried as current or noncurrent liabilities according to their time to maturity. The lease payments to be paid are divided into a redemption component and an interest component. The redemption component reduces the liability, while the interest component is carried as an interest expense. The capitalized assets are amortized in conformance with IAS 16. IAS 36 is observed with regard to possible impairment. The leasing obligations are carried at the present value identifi ed at the end of the respective reporting period. Conversely, the Group also acts as lessor for fi nance leases.
Other leasing transactions are treated as operating leases. The total payments required under operating lease agreements are reported as an expense on a straight-line basis over the term of the lease. Conversely, the Group also acts as lessor for operating leases.
Cash on hand and at the bank, as well as all fi nancial investments with an original maturity of up to three months, which are only subject to minor risks of valuation changes, are disclosed as cash and cash equivalents. This also includes current fi nancial investments at Carl Zeiss Financial Services GmbH, which are secured by a declaration of pledge. Current fi nancial investments at Carl Zeiss Financial Services GmbH that are not secured by a declaration of pledge are carried under "Treasury receivables". Because of their short maturity, the carrying amounts of cash and cash equivalents are approximately equal to their fair value.
The item "Gains and losses recognized in other comprehensive income" includes the other changes in equity not refl ected in income that are not associated with transactions with shareholders. In the Group's case, this currently relates exclusively to foreign currency translation (see note (22)).
The company pension scheme comprises obligations at Carl Zeiss Meditec AG and various subsidiaries arising from current annuities and defi ned benefi t obligations. It also includes liabilities-side provisions of the US company for post-employment health care benefi t obligations. The companies of the Group maintain a number of pension schemes: a distinction is made between defi ned contribution plans and defi ned benefi t plans.
In defi ned contribution plans, the Company does not enter into any commitments other than paying contributions to funds or public services with a specifi c purpose. The contributions are recognized under personnel expenses as due.
This mainly relates to the US subsidiary, which, in addition to a defi ned benefi t plan for the majority of its employees, also fi nances a savings scheme described as a defi ned contribution plan. This plan enables the participating employees to save a proportion of their income in accordance with the specifi ed guidelines. The Company currently contributes a percentage of employee contributions up to a certain limit. These plans also include the employer's statutory contributions of German and foreign companies to pension plans.
The Group offers certain employees defi ned benefi t plans. Such benefi ts are determined primarily on the basis of the employee's remuneration and length of service. Benefi ts of this kind exist at Group companies both in Germany and abroad.
Defi ned benefi t plans within the Group are fi nanced partly with provisions and partly with funds from external sources.
Commitments for pensions and similar pension-related commitments are determined at Group companies within Germany in accordance with actuarial principles based on the Heubeck Guideline Tables 2005 G devised by Prof. Dr. Klaus Heubeck. Commitments for pensions and similar pension-related commitments at foreign companies are determined according to country-specifi c parameters.
Pension obligations and related costs are calculated according to the prescribed projected unit credit method pursuant to IAS 19 "Employee benefi ts". The projected unit credit method refl ects economic assumptions based on long-term expectations, as well as the performance of assets legally set aside to fund future benefi t payments.
Actuarial gains or losses that may arise from changes in the valuation premises or a deviation in actual circumstances from the evaluation basis are only recognized through profi t or loss if the balance of the accumulated actuarial gains or losses amounts to more than 10 % of the higher of the present value of the defi ned benefi t obligation and the fair value of the plan assets. Any amount that lies outside this 10 % corridor is posted to income over the average residual term of service of employees eligible for pensions expected at 30 September 2013.
The pension provisions carried in the consolidated statement of fi nancial position correspond to the present value of the defi ned benefi t obligation (DBO) at the end of the reporting period less the fair value of the plan assets, adjusted for accumulated actuarial gains and losses not previously recognized in income.
Provisions are formed if the Group has a current (de facto or statutory) commitment as a result of a past event, the outfl ow of resources with an economic benefi t to fulfi l the commitment is probable and it is possible to reliably estimate the amount of the commitment. To the extent that the Group expects at least a partial reimbursement for a provision carried as a liability (as is the case, for example, in insurance policies), the reimbursement is only recorded as a separate asset if the reimbursement is as good as secure. Expenses for the formation of provisions are disclosed in the consolidated income statement after deduction of the reimbursement.
If the interest impact is material, provisions are discounted using a pre-tax interest rate, which refl ects the specifi c risks for the liability. In the event of discounting, the increase in the provision over time is carried as interest expenses. Provisions are broken down into their expected maturities, with the result that provisions which are due in less than one year are carried as current provisions and provisions which are due in more than one year are carried as noncurrent provisions.
The provisions for personnel and social commitments mostly relate to commitments for partial retirement and anniversary expenses.
The provisions for partial retirement and anniversaries are measured using a projected unit credit method based on actuarial surveys. The measurement parameters correspond to the economic assumptions for fi nancing the pension commitments. Plan assets for partial retirement obligations were set up in the current fi nancial year; these were offset at their fair value at the end of the reporting period with the provision for partial retirement.
The Company furnishes the buyer with a warranty for the perfect functioning of sold products for the contractually guaranteed period of 15 to 27 months, depending on the product. Provisions are set up for this purpose based on the average values of warranty claims made in the past. These provisions are regularly adjusted to refl ect actual experience. The appropriation to these warranty provisions is recorded under cost of goods sold.
The provisions for other commitments relate to identifi able risks and uncertain obligations arising mainly from litigation risks, as well as the provisions for the earn-out from the acquisition of the business segment of IMEX Clinic S.L and Dismedica S.A.
The Group generates revenue from selling products on the basis of corresponding contracts. The sale takes place once all the parts of the product have been supplied, the risks have passed, the payment can be reliably determined and there are no major obligations towards the customer and the payment of the receivable is deemed probable. Revenue from services is recorded according to the percentage of completion, if this can be reliably determined.
Maintenance revenue from service contracts is realized on a proportionate basis throughout the contractual period of performance.
Revenue is refl ected net of trade discounts, customer bonuses and rebates. The Group posts shipping and handling costs billed to customers to revenue and recognizes the corresponding expenses under the cost of goods sold. The freight costs not billed to customers are shown under selling and marketing expenses.
Pursuant to IAS 20 "Accounting for government grants and disclosure of government assistance" government grants are only recognized, if there is suffi cient assurance that the associated conditions will be fulfi lled and the grants will be allocated.
The Group received subsidies from various public bodies within the scope of government economic stimulus programs, for example for the construction of production facilities, research and development activities and advanced training programs.
Investment grants and investment subsidies for which it is suffi ciently certain that the associated conditions are being complied with and that they will be awarded, reduce the costs of the relevant assets. Investment subsidies, such as investment grants and tax-free investment allowances, are recognized through profi t or loss over the useful life of the subsidized assets (as a reduction in depreciation of the subsidized property, plant and equipment).
Government grants received in fi nancial years 2012/2013 and 2011/2012 are listed in note (33).
Basic earnings per share were calculated by dividing the consolidated net income attributable to shareholders of the parent company by the weighted-average number of ordinary shares issued during each individual accounting period. As in the previous year the number of shares in this fi nancial year remained unchanged at 81,309,610 thousand. There were no conversion or option rights in circulation. As in the previous fi nancial year there were no dilution effects in the year under review.
Borrowing costs are recognized as expenses in the period in which they are incurred, since there are not usually any qualifi ed assets pursuant to IAS 23.5.
The parent company of Carl Zeiss Meditec AG is Carl Zeiss AG (which is controlled by the Carl Zeiss Foundation (Carl-Zeiss-Stiftung). The Carl Zeiss Foundation, Heidenheim and Jena, Carl Zeiss AG, Oberkochen, and its subsidiaries, excluding the Carl Zeiss Meditec Group (the "Carl Zeiss Group"), Schott AG, Mainz, including its subsidiaries (the "Schott Group"), as well as the associated unconsolidated companies, are regarded as related parties, and business transactions, for example income, receivables from and liabilities to these companies, are reported separately in note (34).
The Group sells some of its products via the distribution companies of the Carl Zeiss Group. For the purposes of furnishing the Group with short-term funds and investing surplus liquidity, Carl Zeiss Meditec cooperates with the group cash management system of Carl Zeiss Financial Services GmbH, Oberkochen. Loans granted and monies invested within the scope of this business relationship are shown as liabilities to or receivables from treasury, and as cash and cash equivalents, and usually are available daily. Pursuant to the cash pooling agreement, the companies of Carl Zeiss Meditec Group are authorized to utilize liquidity to fi nance their ongoing business activities, so that, from the Group's perspective, the cash pool transactions have the character of fi nancing, are thus to be classifi ed as fi nancing activities and, in this sense, are carried in the statement of cash fl ows under cash fl ow from fi nancing activities. Since the treasury receivables, which are now no longer secured by declarations of pledge, are also cash pool transactions, these are also carried in the statement of cash fl ows under cash fl ows from fi nancing activities, thus ensuring the consistency of the accounting.
In addition to fi nancial services the Group procures various services from the Carl Zeiss Group, including Carl Zeiss AG. These include research and development services, HR and administrative services, as well as logistics, distribution and IT services provided on the basis of contractual agreements. In addition, preliminary products are procured from companies of the Carl Zeiss Group and the Schott Group. These transactions with related parties are conducted under the same conditions as arm's length transactions.
The Group was obliged to apply the following standards and interpretations for the fi rst time at the beginning of this fi nancial year:
| Date of issue Standard/Interpretation |
Amendment/New statutory regulation | ||
|---|---|---|---|
| 16 June 2011 | Amendment IAS 1 "Presentation of Financial Statements" | Presentation of items of other comprehensive income |
For all standards and interpretations applied for the fi rst time there were no signifi cant changes to the accounting and valuation methods, nor are such changes expected.
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 ahead of time:
| 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 |
Financial years beginning on or after 1 January 2015 |
no |
| 28 October 2010 | Revision IFRS 9 "Financial Instruments" | Additional requirements for the accounting of fi nancial liabilities |
Financial years beginning on or after 1 January 2015 |
no |
| 12 May 2011 | IFRS 10 "Consolidated Financial Statements" |
Accounting regulations for the presentation of consolidated fi nancial statements and notes on the principle of control |
Financial years beginning on or after 1 January 2014 |
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 Entities" |
Enhanced disclosure requirements for subsidiaries, joint ventures and associates, as well as unconsolidated structured entities |
Financial years beginning on or after 1 January 2014 |
yes |
| 12 May 2011 | IFRS 13 "Fair Value Measurement" | Guidance on measurement and disclosures on the measurement of fair value |
Financial years beginning on or after 1 January 2013 |
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 Joint Ventures" |
Guidelines for the accounting treatment of associates and principles for applying the equity method |
Financial years beginning on or after 1 January 2014 |
yes |
| 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 |
Financial years beginning on or after 1 January 2013 |
yes |
| 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 |
Financial years beginning on or after 1 January 2013 |
yes |
| 16 December 2011 | Amendments IFRS 32 "Financial Instruments: Presentation" |
Amendment to rules for offsetting fi nancial assets and liabilities |
Financial years beginning on or after 1 January 2014 |
yes |
| 16 December 2011 | Amendments IFRS 7 "Financial Instruments: Disclosures" |
Additional disclosures relating to the offsetting of fi nancial assets and liabilities |
Financial years beginning on or after 1 January 2013 |
yes |
| 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 |
Financial years beginning on or after 1 January 2013 |
yes |
| Date of issue | Standard/Interpretation | Amendment/New statutory regulation | Date of fi rst mandatory application |
Adopted by the EU |
|---|---|---|---|---|
| 17 May 2012 | Improvements to IFRS (2009 – 2011) | Amendments to Standards IFRS 1, IAS 1, 16, 32 and 34 |
Financial years beginning on or after 1 January 2013 |
yes |
| 28 June 2012 | Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) |
Expansion of transition regulations to IFRS 10, 11 and 12 |
Financial years beginning on or after 1 January 2014 |
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 |
no |
| 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" |
Amendment of recoverable amount disclosures for non-fi nancial assets following the adoption of IFRS 13 |
Financial years beginning on or after 1 January 2014 |
no |
| 27 June 2013 | Amendment to IAS 39 "Financial instruments: Recognition and Measurement" |
Novation of derivatives and continuation of hedge accounting |
Financial years beginning on or after 1 January 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, 13 and IAS 19. The specifi c effects of the fi rst-time application of IFRS 9 are currently still under review. The other standards listed shall, in some cases, also lead to more extensive notes to the fi nancial statements.
IFRS 13 "Fair Value Measurement" defi nes a single IFRS framework for measuring fair value. It also establishes extensive disclosure requirements for fair value measurement. IFRS 13 is applicable for the fi rst time for fi nancial years beginning on or after 1 January 2013. The effects of the amendments are not quantifi able at the present time.
The amendment to IAS 19 "Employee Benefi ts" provides for the elimination of options to recognize actuarial gains and losses. Carl Zeiss Meditec AG has used the corridor method up until now. Under this method actuarial gains or losses are only recognized through profi t or loss on a pro rata basis, if the accumulated actuarial gains or losses exceed 10 % of the higher of present value of the defi ned benefi t obligation and fair value of the plan assets. In future only the immediate recognition in equity under "Other result" in the statement of comprehensive income shall be permissible for this. New regulations shall also apply for the manner of recognition, among other things, of expected returns on plan assets, and the defi nition of the individual types of employee benefi ts. The disclosure requirements in the notes to the fi nancial statements shall also be enhanced. The amendments are applicable for the fi rst time for fi nancial years beginning on or after 1 January 2013. A fi rst-time application on 30 September 2013 would results in a reduction in equity of € 28,156 thousand, corresponding to the total of unrecognized actuarial losses existing as of 30 September 2013. The accounting treatment of partial retirement agreements shall also be amended. Potential further material effects arising from the fi rst-time application of the amended IAS 19 are still under review.
A large number of the consolidated accounting principles and notes to the fi nancial statements require a defi nition of the fair values of the respective fi nancial and non-fi nancial assets and liabilities involved. The fair values are calculated in accordance with the methods described below. If required, additional information on the assumptions made for the calculation of the fair values is provided in the specifi c notes on the respective items described in the statement of fi nancial positions and the income statement.
The fair values of property, plant and equipment acquired within the scope of business combinations are based on market prices. The market price of land and buildings is determined based on the estimated value at which the respective asset could prudently and reasonably be exchanged without coercion between two independent partners based on normal market conditions. The market prices of other items of property, plant and equipment, such as plant and machinery, as well as leasehold improvements and equipment are based on quoted prices on the market for similar goods of the same kind.
The fair values of trademark, patent and technology rights or similar, which were acquired within the scope of a business combination, are determined according to the relief from royalty method. In this method an analogy is used, whereby the fi nancial contributions (cash fl ows) of an intangible asset due to royalties are estimated, which the owner of this asset is then spared from paying, contrary to the alternative of licensing a similar asset with an equivalent use. The method thus calculates the fi ctitious licensing fees that would be payable if the respective intangible asset were to be owned by a third party.
The fair values of intangible assets consisting of customer relationships acquired within the scope of a business combination are determined according to the multi-period excess earnings method. Customer relationships generally only generate cash fl ows in conjunction with other tangible or intangible assets. The planning of excess earnings is thus based on a collection of assets. The calculation of the relevant excess earnings received thus regards fi ctitious payments made for these "supporting" assets as fi ctitious user fees. It is assumed that the supporting assets are fi ctitiously rented or leased by a third party to the extent necessary to generate the cash fl ows.
The fair value of inventories acquired within the scope of a business combination is based on the estimated selling price attainable in the normal course of business, less the estimated production and selling costs, as well as an adequate profi t margin.
The fair value of trade receivables and other receivables is calculated as the present value of future cash fl ows, discounted by a standard market interest rate. The fair value of current trade receivables and other receivables basically corresponds to their nominal value, due to their short-term nature.
The fair value of fi nancial assets, which are either measured at fair value through profi t or loss or classifi ed as available for sale, is based, if an active market exists, on listed stock prices. If there is no active market, the fair value is measured using an appropriate valuation method, e. g. based on current market prices of similar fi nancial instruments, or the discounted cash fl ow method.
The fair value of derivative fi nancial instruments is based on the prevailing market or stock market value. The market value of a fi nancial instrument is estimated as the amount that could be obtained in a business transaction between independent contracting partners under prevailing market conditions. The market values are calculated on the basis of market conditions as of the end of the reporting period – interest rates, currency rates, commodity prices – and the evaluation methods described below.
If there is no active market, the fair value is determined using fi nancial mathematical methods, e. g. by discounting the estimated future cash fl ows using the market interest rate or by applying recognized option pricing models, and through confi rmations from the banks that process the transactions. The interest rates applied across the various maturities and foreign currencies range from - 0.1 % to + 6.6 % (previous year: + 0.1 % to + 6.3 %).
The Group exclusively holds currency forward contracts as derivative fi nancial instruments. The fi nancial assets held for trading (FAHfT/FLHfT) are carried at fair value, although changes in market value are recognized through profi t or loss in the income statement. The market value of currency forward transactions is calculated based on the average spot exchange rate at the end of the reporting period, adjusted for forward premiums and discounts for the respective residual term of the contract, compared with the contracted forward exchange rate.
The fair value of fi nancial liabilities is calculated based on the present value of future capital and interest payment fl ows – discounted by a standard market interest rate – as of the end of the reporting period. The interest rates applied range from 1.2 % to 2.3 % (previous year: 1.2 % to 3.4 %).
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 optometric 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's 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 used 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 this purchase is considered insignifi cant.
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. Pursuant to the agreement, the fi xed price components were paid in two separate tranches of € 4.5 million, one at the beginning of October 2011, and the other at the date of acquisition. The agreed price for the inventories was settled in November 2011. The earn-out component is payable in three tranches over 30 months starting from the acquisition date, and shall depend on the success of the assumed business. The calculation of the earn-out is based on the achievement of defi ned revenue targets for the subsequent 30 months. This is based on the assumption that the gross margin is mainly stable
during this period and there is no major fl uctuation in the absorbed workforce. In the case of signifi cant deviations from the expected gross margin and major fl uctuations in employee numbers, the revenue-based earn-out shall be discounted. A calculation shall be performed based on the actual earnings contributions at the end of a period in each case, after one year, after two years and after thirty months following the acquisition date. The discounted expected earn-out of € 3.6 million results from an achievement of the target earnings contribution of 80 % and 87 %, respectively. 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 not limited to € 3.6 million, but is theoretically infi nite.
The fair value of the goodwill resulting from the acquisition is unchanged compared with 30 September 2012, at € 7.8 million. There was also no evidence of impairment for the assumed intangible assets and inventories in fi nancial year 2012/2013 to 30 September 2013.
In December 2012 the fi rst tranche of the earn-out component was paid to the seller in the amount of € 1.9 million. This basically corresponds, as anticipated, to a target achievement of around 82 %. There remains a contingent, discounted purchase price payment, pursuant to IFRS 3 B54 (g) (i), of € 2.0 million, which is based on the same expectation for the future earnings contribution as compared with 30 September 2012. This amount of € 2.0 million includes, since the acquisition date, expenses from the interest cost of the obligation of € 0.3 million, which were recognized in fi nancial year 2011/2012 (€ 0.2 million) and in fi nancial year 2012/2013 to 30 September 2013 (€ 0.1 million) under "Interest expenses".
Group earnings for fi nancial years 2012/2013 and 2011/2012 mainly consist of sales revenues. The table below shows a breakdown of revenue:
| Total | 906,445 | 861,875 |
|---|---|---|
| Income from royalties/licenses | 7,075 | 5,600 |
| Income from the provision of services (incl. sale of replacement parts) |
74,427 | 69,388 |
| Income from the sale of merchandise | 824,943 | 786,887 |
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| (in € '000) |
Other expenses for fi nancial years 2012/2013 and 2011/2012 were as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Prior-period expenses | 17 | – |
| Total | 17 | – |
Personnel expenses for fi nancial years 2012/2013 and 2011/2012 were as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Wages and salaries | 182,047 | 170,037 |
| Social security expenses | 33,327 | 32,885 |
| Pension costs | 9,044 | 8,166 |
| Total | 224,418 | 211,088 |
The employer's statutory pension contribution is contained in the social security costs. Total expenses from all additional defi ned contribution plans in the current fi nancial year amounted to € 2,954 thousand (previous year: € 2,824 thousand). Contrary to the previous year these expenses are carried under pension expenses.
The table below shows employee numbers and the personnel structure of the Group:
| 30 September 2013 |
30 September 2012 |
Average/ fi nancial year 2012/2013 |
Average/ fi nancial year 2011/2012 |
|
|---|---|---|---|---|
| Production | 736 | 722 | 735 | 721 |
| Sales & Marketing | 677 | 638 | 667 | 629 |
| Service | 478 | 468 | 477 | 470 |
| Research & Development | 411 | 388 | 409 | 377 |
| Administration | 238 | 244 | 237 | 244 |
| Total | 2,540 | 2,460 | 2,525 | 2,441 |
| Trainees | 17 | 19 | 19 | 17 |
The fi nancial result comprises the following:
(in € '000)
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Interest income | 1,942 | 3,023 |
| Interest expenses | (6,591) | (6,083) |
| thereof interest expense pensions | (3,277) | (3,183) |
| Net interest income/loss | (4,649) | (3,060) |
| Investment income | – | 10 |
| Currency gains | 27,097 | 10,598 |
| Currency losses | (12,601) | (16,956) |
| Currency gains/(losses), net | 14,496 | (6,358) |
| Expected return on plan assets | 3,235 | 2,446 |
| Miscellaneous other fi nancial result | 631 | 241 |
| Other fi nancial result | 18,362 | (3,671) |
| Total fi nancial result | 13,713 | (6,721) |
The interest expense for pensions must be considered in conjunction with the anticipated return on plan assets shown under "Other fi nancial result". The balance of these two values gives the Group's net fi nancing expense for pensions.
The miscellaneous other fi nancial result contains dividend income from an investment valued at cost of € 18 thousand (previous year: € 21 thousand).
Income taxes are comprised as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Current taxes: | ||
| Germany | 35,653 | 24,571 |
| Abroad | 13,323 | 16,859 |
| 48,976 | 41,430 | |
| (thereof prior-period) | (2,902) | (1,471) |
| Deferred taxes: | ||
| Germany | 1,433 | (5,411) |
| Abroad | (1,944) | 3,768 |
| (511) | (1,643) | |
| Total | 48,465 | 39,787 |
Current and deferred taxes taken directly to equity were not incurred in fi nancial years 2012/2013 and 2011/2012.
The tax effects on gains and losses recognized in other comprehensive income are as follows:
| (in € '000) | ||||||
|---|---|---|---|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|||||
| Before tax |
Tax expense/ income |
After tax |
Before tax |
Tax expense/ income |
After tax |
|
| Gains/(losses) recognized in other comprehensive income from revaluation of available-for-sale fi nancial assets |
– | – | – | – | – | – |
| Gains/(losses) on foreign currency translation | (27,560) | – | (27,560) | 9,729 | – | 9,729 |
| Other result | (27,560) | – | (27,560) | 9,729 | – | 9,729 |
In accordance with the tax law applicable in fi nancial year 2012/2013, the income of Group subsidiaries in Germany is subject to a corporation tax rate of 15 % (previous year: 15 %). Taking into account the solidarity surcharge and the varying trade income tax rates, companies in Germany are subject to a tax rate of between 27.73 % and 30.53 % (previous year: 27.73 % to 30.53 %) The nominal tax rates applicable outside Germany in the fi nancial year range between 23.50 % and 39.43 % (previous year: 25.00 % and 42.10 %).
The tax rate applicable for the tax reconciliation account is the nominal tax rate of the parent company, Carl Zeiss Meditec AG, Jena, of 29.36 %, which applied in the past fi nancial year (previous year: 29.36 %). Deferred taxes on interim profi ts are calculated in each case using the current or future tax rate applicable for the receiving Group company. This results in a tax rate ranging from 23.50 % to 39.43 % (previous year: 25.00 % to 39.43 %). For the sake of simplicity, other deferred taxes are calculated using the applicable nominal tax rate for the parent company, Carl Zeiss Meditec AG, Jena, of 29.36 % (previous year: 29.36 %).
The reconciliation of the expected income tax expense in relation to earnings before income taxes to the actual income tax expense is as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Expected income tax expense | 43,331 | 34,110 |
| Non-deductible expenses | 1,012 | 1,390 |
| Tax-free income | (1,344) | (1,813) |
| Effects of changes in the tax rate | (178) | 745 |
| Taxes previous years | 2,902 | 1,471 |
| Foreign tax rate differential | 3,840 | 4,831 |
| Net retained earnings of subsidiaries intended for disbursement | – | (1,427) |
| Recognition & measurement of deferred tax assets | (1,170) | (12) |
| Other | 72 | 492 |
| Actual income tax expense | 48,465 | 39,787 |
| Effective tax rate | 32.8 % | 34.2 % |
The following table shows the calculation of earnings per share:
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Net income attributable to shareholders of the parent company (€ '000) |
93,505 | 71,870 |
| Weighted average of issued shares | 81,309,610 | 81,309,610 |
| Earnings per share (in €) | 1.15 | 0.88 |
During the period under review, a dividend of € 0.40 per share (previous year: € 0.30 per share) was paid to the shareholders of Carl Zeiss Meditec AG for fi nancial year 2011/2012.
| Financial year 2012/2013 |
Financial year 2011/2012 |
||||
|---|---|---|---|---|---|
| € cent per share |
€ '000 Total |
€ cent per share |
€ '000 Total |
||
| Dividend paid | 40 | 32,524 | 30 | 24,393 |
The table below shows the development of the Group's recognized goodwill and its allocation to the respective strategic business units (SBUs) for fi nancial years 2012/2013 and 2011/2012:
| (in € '000) | |||
|---|---|---|---|
| Surgical Ophthalmology SBU |
Ophthalmic Systems SBU |
Total | |
| As of 1 October 2012 | 92,626 | 29,001 | 121,627 |
| Currency effects | – | (581) | (581) |
| As of 30 September 2013 | 92,626 | 28,420 | 121,046 |
| As of 1 October 2011 | 84,791 | 28,421 | 113,212 |
| Additions | 7,835 | – | 7,835 |
| Currency effects | – | 580 | 580 |
| As of 30 September 2012 | 92,626 | 29,001 | 121,627 |
The recognized book values correspond to the acquisition costs. Accumulated impairment losses of the capitalized goodwill do not exist. The allocation of existing goodwill to cash-generating units conforms to IAS 36.80. Accordingly, the relevant goodwill is allocated within the Group independently of other individual assets and liabilities; rather, it is allocated to the smallest cash-generating unit, which is expected to benefi t from the synergy effects of the business combination. The cash-generating unit is determined based on the Group's internal reporting system.
The change in the goodwill of the cash-generating unit "Surgical Ophthalmology" SBU resulted in the previous year from the acquisition of a business unit from IMEX (see note (3)). As in the previous year, currency effects also arose this year within the "Ophthalmic Systems" SBU between the US dollar and the euro.
Intangible assets developed as follows in fi nancial years 2012/2013 and 2011/2012:
| (in € '000) | |||||||
|---|---|---|---|---|---|---|---|
| Brand names and trademarks |
Software | Licenses, royalties |
Patents and other industrial property rights |
Develop ment expenses |
Miscella neous other intangible assets |
Total | |
| Acquisition and production costs as of 1 October 2012 |
8,116 | 12,451 | 1,622 | 28,362 | 9,037 | 26,998 | 86,586 |
| Additions | – | 394 | – | 103 | 391 | – | 888 |
| Reclassifi cations | – | 103 | – | 1,147 | – | (1,250) | – |
| Disposals | – | (470) | – | – | (228) | – | (698) |
| Currency effects | (40) | (382) | – | (163) | (143) | (545) | (1,273) |
| As of 30 September 2013 | 8,076 | 12,096 | 1,622 | 29,449 | 9,057 | 25,203 | 85,503 |
| Depreciation and write downs as of 1 October 2012 |
6,226 | 9,555 | 1,513 | 22,669 | 6,360 | 19,341 | 65,664 |
| Additions | 381 | 1,007 | 41 | 1,915 | 1,610 | 3,141 | 8,095 |
| Impairments | 914 | – | – | – | – | – | 914 |
| Reclassifi cations | 141 | – | (141) | 1,145 | – | (1,145) | – |
| Disposals | – | (470) | – | – | (180) | – | (650) |
| Currency effects | (25) | (284) | – | (122) | (105) | (515) | (1,051) |
| As of 30 September 2013 | 7,637 | 9,808 | 1,413 | 25,607 | 7,685 | 20,822 | 72,972 |
| Net carrying amount as of 30 September 2013 |
439 | 2,288 | 209 | 3,842 | 1,372 | 4,381 | 12,531 |
| (in € '000) | |||||||
|---|---|---|---|---|---|---|---|
| Brand names and trademarks |
Software | Licenses, royalties |
Patents and other industrial property rights |
Develop ment expenses |
Miscella neous other intangible assets |
Total | |
| Acquisition and production costs as of 1 October 2011 |
8,076 | 11,861 | 1,587 | 28,060 | 7,902 | 22,597 | 80,083 |
| Additions acquisitions | – | – | – | – | – | 4,421 | 4,421 |
| Additions | – | 215 | 35 | 61 | 440 | 17 | 768 |
| Reclassifi cations | – | 19 | – | – | 561 | (580) | – |
| Disposals | – | (14) | – | – | – | (3) | (17) |
| Currency effects | 40 | 370 | – | 241 | 134 | 546 | 1,331 |
| As of 30 September 2012 | 8,116 | 12,451 | 1,622 | 28,362 | 9,037 | 26,998 | 86,586 |
| Depreciation and write downs as of 1 October 2011 |
5,845 | 8,095 | 1,486 | 20,123 | 4,108 | 16,258 | 55,915 |
| Additions | 381 | 1,260 | 27 | 2,377 | 1,621 | 3,232 | 8,898 |
| Reclassifi cations | – | – | – | – | 561 | (561) | – |
| Disposals | – | (14) | – | – | – | (3) | (17) |
| Currency effects | – | 214 | – | 169 | 70 | 415 | 868 |
| As of 30 September 2012 | 6,226 | 9,555 | 1,513 | 22,669 | 6,360 | 19,341 | 65,664 |
| Net carrying amount as | 1,890 | 2,896 | 109 | 5,693 | 2,677 | 7,657 | 20,922 |
of 30 September 2012
Miscellaneous other intangible assets include assets identifi ed via purchase price allocations (PPA) for customer relationships with a carrying amount of € 4,181 thousand (previous year: € 5,911 thousand) and for technology with a carrying amount of € 114 thousand (previous year: € 1,756 thousand).
As of 30 September 2013 the Group does not hold any other intangible assets with an indefi nite useful life. The legally protected trademark, which was allocated to the strategic business unit (SBU) "Ophthalmic Systems" and which was capitalized as part of the PPA of LDT2 , was written down in full in this fi nancial year and has a book value of € 0 thousand (previous year: € 929 thousand).
Property, plant and equipment developed as follows in fi nancial years 2012/2013 and 2011/2012:
| (in € '000) | |||||
|---|---|---|---|---|---|
| Land, buildings and leasehold improvements |
Technical plant and machinery |
Other offi ce equipment, fi xtures and fi ttings |
Construction in progress |
Total | |
| Acquisition and production costs as of 1 October 2012 |
41,897 | 23,805 | 53,657 | 1,227 | 120,586 |
| Additions | (191) | 3,996 | 10,509 | 3,437 | 17,751 |
| Reclassifi cations | (1,298) | 139 | 2,165 | (1,006) | – |
| Disposals | 249 | (1,394) | (5,584) | (57) | (6,786) |
| Currency effects | (1,148) | (502) | (1,375) | (16) | (3,041) |
| As of 30 September 2013 | 39,509 | 26,044 | 59,372 | 3,585 | 128,510 |
| Depreciation and write downs as of 1 October 2012 |
20,381 | 13,026 | 38,695 | – | 72,102 |
| Additions | 1,769 | 2,368 | 5,573 | – | 9,710 |
| Reclassifi cations | (589) | (2) | 591 | – | – |
| Disposals | 249 | (989) | (5,095) | – | (5,835) |
| Currency effects | (693) | (310) | (897) | – | (1,900) |
| As of 30 September 2013 | 21,117 | 14,093 | 38,867 | – | 74,077 |
| Net carrying amount as of 30 September 2013 |
18,392 | 11,951 | 20,505 | 3,585 | 54,433 |
| (in € '000) | |||||
|---|---|---|---|---|---|
| Land, buildings and leasehold improvements |
Technical plant and machinery |
Other offi ce equipment, fi xtures and fi ttings |
Construction in progress |
Total | |
| Acquisition and production costs as of 1 October 2011 |
34,769 | 18,940 | 48,361 | 2,056 | 104,126 |
| Additions | 5,545 | 3,442 | 8,021 | 912 | 17,920 |
| Reclassifi cations | 457 | 884 | 405 | (1,746) | – |
| Disposals | (51) | (73) | (3,952) | – | (4,076) |
| Currency effects | 1,177 | 612 | 822 | 5 | 2,616 |
| As of 30 September 2012 | 41,897 | 23,805 | 53,657 | 1,227 | 120,586 |
| Depreciation and write downs as of 1 October 2011 |
17,798 | 10,661 | 35,165 | – | 63,624 |
| Additions | 1,961 | 2,056 | 4,980 | – | 8,997 |
| Disposals | (51) | (70) | (2,131) | – | (2,252) |
| Currency effects | 673 | 379 | 681 | – | 1,733 |
| As of 30 September 2012 | 20,381 | 13,026 | 38,695 | – | 72,102 |
| Net carrying amount as of 30 September 2012 |
21,516 | 10,779 | 14,962 | 1,227 | 48,484 |
Property, plant and equipment – mainly land, buildings and leasehold improvements – includes leased property with a net book value of € 6,671 thousand (previous year: € 7,722 thousand).
Property, plant and equipment with a net book value of € 4,173 thousand (previous year: € 4,379 thousand) serve as collateral for liabilities.
The table below shows the changes in investments in fi nancial years 2012/2013 and 2011/2012:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| As of 1 October | 364 | 364 |
| Depreciation | (240) | – |
| As of 30 September | 124 | 364 |
The item "Investments" in the statement of fi nancial position includes the non-controlling interests carried at amortized cost in Elsia S.A.S., Périgny/La Rochelle, France (€ 0 thousand) and Polymerexpert S.A., Pessac, France (€ 122 thousand). Carl Zeiss Meditec S.A.S. holds 13.8 % (previous year: 13.8 %) of the shares in Elsia S.A.S. and 8.6 % (previous year: 8.6 %) of the shares in Polymerexpert S.A.
The non-controlling interest in Elsia S.A.S. was written down in full in this fi nancial year and has a book value of € 0 thousand (previous year: € 240 thousand).
This item also includes the non-controlling interest carried at amortized cost in S&V Technologies AG, Hennigsdorf (€ 2 thousand).
Deferred tax assets and liabilities are broken down into the following items in the statement of fi nancial position:
| (in € '000) | ||||
|---|---|---|---|---|
| 30 September 2013 | 30 September 2012 | |||
| Deferred tax assets |
Deferred tax liabilities |
Deferred tax assets |
Deferred tax liabilities |
|
| Loss carryforwards | 1,162 | – | 2,476 | – |
| Intangible assets | 2,758 | 1,678 | 977 | 2,873 |
| Fixed assets | 4,014 | 962 | 3,588 | 1,421 |
| Financial assets | 601 | 363 | 1,493 | 468 |
| Inventories | 16,577 | 586 | 18,371 | 177 |
| Trade receivables | 1,258 | 32 | 1,099 | 1 |
| Other assets | 178 | 1,212 | 276 | 291 |
| Provisions | 12,379 | 100 | 15,976 | – |
| Trade payables | 72 | – | – | 1 |
| Other liabilities | 7,928 | 228 | 4,709 | 26 |
| Total | 46,927 | 5,161 | 48,965 | 5,258 |
| Deferred tax assets (net) | 41,766 | 43,707 |
The consolidated statement of fi nancial position contains deferred tax assets, after offsetting pursuant to IAS 12, totaling € 44,181 thousand (previous year: € 47,198 thousand), and deferred tax liabilities of € 2,415 thousand (previous year: € 3,491 thousand).
Deferred tax liabilities of € 7,628 thousand (previous year: € 7,886 thousand) on retained earnings at subsidiaries in the amount of € 304,471 thousand (previous year: € 296,566 thousand) were not carried as liabilities.
The table below shows the reconciliation of deferred taxes:
| (in € '000) | |
|---|---|
| Deferred tax assets (net) as of 30 September 2011 | 41,179 |
| Effects recognized in income | 1,643 |
| Currency effects | 885 |
| Deferred tax assets (net) as of 30 September 2012 | 43,707 |
| Effects recognized in income | 511 |
| Currency effects | (2,452) |
| Deferred tax assets (net) as of 30 September 2013 | 41,766 |
Other noncurrent assets comprise the following:
For more details on plan assets for pension commitments please refer to note (23).
Inventories comprise the following:
(in € '000)
| 30 September 2013 | 30 September 2012 | |
|---|---|---|
| Raw materials and supplies | 61,934 | 52,924 |
| Work in progress | 18,540 | 22,736 |
| Finished goods | 90,173 | 91,978 |
| Total inventories, gross | 170,647 | 167,638 |
| Valuation allowances | (22,180) | (24,625) |
| Total inventories, net | 148,467 | 143,013 |
Inventories were written up/down as follows:
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Beginning of fi nancial year | 24,625 | 24,516 |
| Additions recognized as expenses | 7,939 | 8,162 |
| Currency effects | (419) | 285 |
| Reversals/utilization | (9,965) | (8,338) |
| End of fi nancial year | 22,180 | 24,625 |
The carrying amount of inventories carried at their net realizable value totaled € 87,322 thousand as of 30 September 2013 (previous year: € 78,404 thousand). Write-ups in the amount of € 3,958 thousand (previous year: € 3,337 thousand) were recognized in income. The write-ups are mainly attributable to the historical adjustment of depreciation routines. The cost of materials totaled € 304,264 thousand and € 311,230 thousand, respectively, in fi nancial years 2012/2013 and 2011/2012. These expenses are calculated according to the total cost format and include the costs of raw materials and supplies and purchased goods and services, plus any valuation allowances and changes in inventories. No inventories have been pledged as collateral for liabilities.
Trade receivables comprise the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Current trade receivables | 155,471 | 141,476 |
| Noncurrent trade receivables | 5,430 | 4,396 |
| Trade receivables, gross | 160,901 | 145,872 |
| Valuation allowances | (5,480) | (4,817) |
| Trade receivables, net | 155,421 | 141,055 |
Other current fi nancial assets comprise the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Current fi nancial investments | – | 120,000 |
| Credit card receivables | 635 | 1,637 |
| Accrued interest | – | 1,107 |
| Derivative fi nancial instruments | 5,557 | 1,112 |
| Loans to employees | 83 | 106 |
| Other receivables | 109 | 102 |
| Other current fi nancial assets | 6,384 | 124,064 |
Other current non-fi nancial assets comprise the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Prepaid expenses | 5,303 | 5,012 |
| Receivables from the tax offi ce | 1,257 | 1,157 |
| Subsidies | 64 | 1,205 |
| Accounts receivable from R&D subsidies | – | 35 |
| Commission receivable | 381 | – |
| Advances paid | 1,076 | 699 |
| Other receivables | 818 | 971 |
| Other current non-fi nancial assets | 8,899 | 9,079 |
Receivables from the tax offi ce mainly include receivables from advance VAT payments.
Cash and cash equivalents comprise the following:
| (in € '000) | |||
|---|---|---|---|
| ------------- | -- | -- | -- |
| 30 September 2013 | 30 September 2012 | |
|---|---|---|
| Cash | 17 | 14 |
| Bank balances | 4,214 | 7,998 |
| Short-term time deposits | 2,055 | 1,514 |
| Cash and cash equivalents | 6,286 | 9,526 |
As in the previous fi nancial year 2011/2012, the share capital of Carl Zeiss Meditec AG consists of 81,309,610 no-par value shares bearing equal rights, each with a theoretical value of € 1, and was fully paid in. Ownership of the shares is linked to voting rights at the General Meeting and profi t participation rights for resolved disbursements.
Pursuant to a resolution of the Annual General Meeting in fi nancial year 2010/2011 and the entry in the commercial register dated 19 May 2011, the Management Board is authorized, with the consent of the Supervisory Board, to increase the share capital of the Company, on one or several occasions until 11 April 2016, by up to a maximum of € 39,655 thousand, by issuing new no-par value bearer shares with a theoretical nominal value of € 1 per share (39,654,800 shares) against cash and/or contributions in kind (Authorized Capital I). The Management Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' statutory subscription rights in certain cases.
The capital reserve contains the amounts obtained in excess of the theoretical value from the share issue.
Under the German Stock Corporation Act (Aktiengesetz), the dividend available for distribution to the shareholders is dependent upon equity as reported in the single-entity fi nancial statements of Carl Zeiss Meditec AG in accordance with the German Commercial Code (HGB). Dividends may only be declared and paid from any retained earnings that exist (after transfer to statutory reserves). The net profi t disclosed in the single-entity fi nancial statements (HGB) of Carl Zeiss Meditec AG generally differs from the accumulated net profi t shown in these consolidated fi nancial statements (IFRS). As of 30 September 2013, the singleentity fi nancial statements of Carl Zeiss Meditec AG showed a net profi t of € 82,342 thousand (previous year: € 63,849 thousand).
The item non-controlling interests comprises the holdings of other shareholders in the equity of Carl Zeiss Meditec Co. Ltd., Tokyo.
The amounts recorded under gains and losses recognized in other comprehensive income resulting from currency translation developed as follows:
| (in € '000) | |
|---|---|
| Currency translation as of 30 September 2011 | (9,967) |
| Development in fi nancial year 2011/2012 | 8,476 |
| Currency translation as of 30 September 2012 | (1,491) |
| Development in fi nancial year 2012/2013 | (17,564) |
| Currency translation as of 30 September 2013 | (19,055) |
The Group uses legally independent trusts to cover its pension commitments – within the scope of contractual trust arrangements (CTAs) – as well as pledged reinsurance policies.
The amount disclosed in the statement of fi nancial position on the basis of the Company's obligation from defi ned benefi t plans is based on the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Present value of obligations not fi nanced by plan assets | 9,929 | 12,193 |
| Present value of obligations wholly or partly fi nanced by plan assets | 91,201 | 82,026 |
| Total value of defi ned benefi t obligation (DBO) | 101,130 | 94,219 |
| Fair value of plan asset | 68,484 | 66,302 |
| Net obligation | 32,646 | 27,917 |
| Unrecognized actuarial net gains/(losses) | (28,156) | (25,825) |
| Net amount recognized | 4,490 | 2,092 |
| thereof in: Other noncurrent assets | 6,144 | 10,881 |
| thereof in: Provisions for pensions and similar commitments | 10,634 | 12,973 |
The limit on the defi ned benefi t asset, recognized in other noncurrent assets, pursuant to IAS 19.58 (b), has no effect.
The following amounts are recognized in the income statement for defi ned benefi t plans:
(in € '000)
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Current service cost | 4,851 | 4,315 |
| Interest expense | 3,277 | 3,183 |
| Expected return on plan assets | (3,235) | (2,446) |
| Recognized actuarial (gains)/ losses | 1,239 | 1,027 |
| Net expenditure in the fi nancial year | 6,132 | 6,079 |
| Actual (income)/expense on plan assets | (3,322) | (3,769) |
The current service cost of € 4,851 thousand (previous year: € 4,315 thousand) is included under both "Cost of goods sold" and "Functional costs", depending on the allocation of personnel costs to the functional areas. This also applies to the actuarial gains/losses recognized. Interest costs in the amount of € 3,277 thousand (previous year: € 3,183 thousand) are included in interest expenses. The expected return on plan assets is included in the other fi nancial result.
| (in € '000) |
|---|
| ------------- |
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Defi ned benefi t obligation (DBO) at beginning of fi nancial year | 94,219 | 73,097 |
| Current service cost | 4,851 | 4,315 |
| Interest expense | 3,277 | 3,183 |
| Benefi t payments | (2,009) | (2,278) |
| Employee contributions | – | 109 |
| Actuarial (gains)/losses | 3,932 | 16,095 |
| Additions/(disposals) | (7) | (1,347) |
| Currency translation differences from foreign plans | (3,133) | 1,045 |
| Defi ned benefi t obligation (DBO) at end of fi nancial year | 101,130 | 94,219 |
The changes in the fair value of the plan assets are as follows:
| (in € '000) |
|---|
| ------------- |
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Fair value of plan assets at beginning of fi nancial year | 66,302 | 47,865 |
| Expected return on plan assets | 3,235 | 2,446 |
| Gains/(losses) on plan assets | 89 | 1,337 |
| Employer contributions | 366 | 15,393 |
| Employee contributions | 39 | 109 |
| Pension payments from plan assets | (989) | (1,362) |
| Currency translation differences from foreign plans | (558) | 514 |
| Fair value at end of fi nancial year | 68,484 | 66,302 |
For the coming fi nancial year the Group intends to pay a contribution of € 977 thousand (previous year: € 947 thousand) into the defi ned benefi t plans.
The main investment categories of the plan assets were as follows at the end of the reporting period:
(in € '000)
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
|---|---|---|
| Equity instruments | 18,465 | 13,631 |
| Debt instruments | 39,654 | 27,571 |
| Cash | 6,930 | 20,682 |
| Other | 3,435 | 4,418 |
| Total plan assets | 68,484 | 66,302 |
The expected total return on plan assets is calculated on the basis of the market prices prevailing for the period in which the obligation is fulfi lled. Expected returns on fi xed-interest capital investments are based on the gross effective interest rate at the end of the reporting period. Expected returns on equity securities refl ect the empirical effective long-term returns to be achieved in the respective markets.
| (in %) | ||||||
|---|---|---|---|---|---|---|
| Germany Financial year |
USA Financial year |
Japan Financial year |
||||
| 2012/2013 | 2011/2012 | 2012/2013 | 2011/2012 | 2012/2013 | 2011/2012 | |
| Discount factor | 3.60 | 4.07 | 4.64 | 3.56 | 0.80 | 0.80 |
| Noncurrent increase in salaries | 3.00 | 3.00 | 0.00 | 4.00 | 2.28 | 2.54 |
| Future increase in pensions | 2.00 | 2.00 | 0.00 | 4.00 | 2.28 | 2.54 |
| Cost trend medical care | – | – | 0.00 | 3.50 | – | – |
| Expected return on plan assets | 4.50 | 4.50 | 7.25 | 7.50 | – | – |
The following average valuation factors were used to determine benefi t obligations:
The calculation of pensions is linked to employee turnover. Depending on the respective plan, the pensionable age was set at 62 to 65. As in the previous year, benefi t obligations in Germany were calculated based on Prof. Dr. Klaus Heubeck's 2005 G life expectancy tables. The calculation of the underlying discount factor also took market changes into account.
A change of 1 % would have the following effect, assuming the current cost trends for post-employment health care benefi t obligations, which exclusively affect the US subsidiary.
| (in € '000) | ||
|---|---|---|
| Increase | Decrease | |
| Effect on total current service cost and interest expense | 11 | (10) |
| Effect on defi ned benefi t obligation | 313 | (274) |
| (in € '000) | |||||
|---|---|---|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
Financial year 2010/2011 |
Financial year 2009/2010 |
Financial year 2008/2009 |
|
| Present value of defi ned benefi t obligation | 101,130 | 94,219 | 73,097 | 70,440 | 51,323 |
| Fair value of plan assets | 68,484 | 66,302 | 47,865 | 42,678 | 39,505 |
| Plan surplus/(defi cit) | (32,646) | (27,917) | (25,232) | (27,762) | (11,818) |
| Historical adjustments of plan liabilities as of the end of reporting period |
3,932 | 16,095 | (3,253) | 13,057 | 6,064 |
| Historical adjustment of plan assets as of the end of the period |
89 | 1,337 | (2,202) | (499) | (1,129) |
The table below shows the development of current and noncurrent provisions:
(in € '000)
| Personnel and social |
Ongoing operations |
Other | Total | |
|---|---|---|---|---|
| As of 1 October 2012 | 6,391 | 21,162 | 14,758 | 42,311 |
| Additions | 2,616 | 23,715 | 7,380 | 33,711 |
| Interest yield | 94 | – | 112 | 206 |
| Reclassifi cations | (31) | – | (394) | (425) |
| Reversals | (2,937) | (8,097) | (978) | (12,012) |
| Utilization | (1,321) | (12,139) | (9,565) | (23,025) |
| Currency effects | (31) | (538) | (620) | (1,189) |
| As of 30 September 2013 | 4,781 | 24,103 | 10,693 | 39,577 |
| Current provisions | 989 | 24,103 | 10,693 | 35,785 |
| Noncurrent provisions | 3,792 | – | – | 3,792 |
| Provisions as of 30 September 2013 | 4,781 | 24,103 | 10,693 | 39,577 |
| Current provisions | 80 | 16,893 | 12,755 | 29,728 |
| Noncurrent provisions | 6,311 | 4,269 | 2,003 | 12,583 |
| Provisions as of 30 September 2012 | 6,391 | 21,162 | 14,758 | 42,311 |
Further information can be found in note (2 (o)). Noncurrent provisions for personnel and social commitments include provisions for partial retirement obligations. The fair value of the plan assets was offset against the provision at the end of the reporting period as follows:
| Reported net liability for partial retirement obligations | 1,246 | 3,719 |
|---|---|---|
| Fair value of plan asset | 808 | 443 |
| Present value of partial retirement obligations | 2,054 | 4,162 |
| 30 September 2013 | 30 September 2012 | |
| (in € '000) |
Noncurrent fi nancial liabilities comprise the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Annuity loans | 2,278 | 2,728 |
| Other loans | 49 | 6,090 |
| Total noncurrent loans | 2,327 | 8,818 |
| Less current portion of noncurrent loans | 507 | 6,432 |
| Noncurrent loans, net of current portion | 1,820 | 2,386 |
The variable-interest annuity loan of one Group company has a term of 18 years and is redeemed in quarterly installments of € 124 thousand, each including interest. In fi nancial year 2012/2013 this loan bore an average interest rate of 1.81 % p. a.
The item "Other loans" mainly consisted last year of a mezzanine loan to Carl Zeiss Meditec AG, which bore interest at a rate of 7.93 %. The total term of this loan was 7 years and it was repaid as planned in fi nancial year 2012/2013.
As of 30 September 2013 the Company's noncurrent liabilities had the following maturities:
| Noncurrent liabilities, total | 2,327 |
|---|---|
| 2019 and thereafter | 0 |
| 2018 | 396 |
| 2017 | 483 |
| 2016 | 475 |
| 2015 | 466 |
| 2014 | 507 |
| Financial year ending 30 September | Liabilities |
| (in € '000) |
26. Current accrued liabilities
Current accrued liabilities include the following items:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Outstanding invoices | 19,744 | 27,290 |
| Christmas bonus, special payments and other personnel – related liabilities |
33,462 | 30,988 |
| Commissions/bonuses | 3,983 | 4,197 |
| Year-end costs | 492 | 551 |
| Consultancy fees | 153 | 107 |
| Insurance | 569 | 600 |
| Other accrued liabilities | 1,871 | 1,393 |
| Current accrued liabilities | 60,274 | 65,126 |
Other current non-fi nancial liabilities comprise the following:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Deferred income | 17,060 | 15,424 |
| Advance payments received on account of orders | 3,379 | 3,685 |
| Liabilities from taxes not related to income | 3,285 | 2,499 |
| Liabilities from social security | 2,072 | 2,139 |
| Wage withholding tax | 2,003 | 1,598 |
| Outstanding customs duties | 1,774 | 1,260 |
| Other liabilities | 2,037 | 2,263 |
| Other current non-fi nancial liabilities | 31,610 | 28,868 |
The following table shows the book values, carrying amounts and fair values by valuation category of the Company's fi nancial instruments as of 30 September 2013 and 30 September 2012. Contrary to the previous year, cash is carried under the category "Loans and Receivables (LaR)".
(in € '000)
| 30 September 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Valuation category according to IAS 39 |
Carrying amount |
Amortized cost |
Fair value recognized directly in equity |
Carrying amount statement of fi nancial position IAS 39 Fair value recognized through profi t or loss |
Recogni tion cash reserves |
Carrying amount statement of fi nancial position IAS 17 |
Fair value* |
|
| Primary fi nancial instruments | ||||||||
| Assets | ||||||||
| Trade receivables | LaR | 155,421 | 155,421 | – | – | – | – | 155,421 |
| Accounts receivables from related parties | LaR | 62,701 | 62,701 | – | – | – | – | 62,701 |
| Treasury receivables | LaR | 352,412 | 352,412 | – | – | – | – | 352,412 |
| Investments | AfS | 124 | 124 | – | – | – | – | 124 |
| Other noncurrent fi nancial assets | LaR | 129 | 129 | – | – | – | – | 129 |
| Other current fi nancial assets Financial assets which cannot be allocated to any category within the meaning of IAS 39: |
LaR | 827 | 827 | – | – | – | – | 827 |
| Cash | LaR | 6,286 | – | – | – | 6,286 | – | 6,286 |
| Liabilities | ||||||||
| Trade payables | FLAC | 35,861 | 35,861 | – | – | – | – | 35,861 |
| Liabilities to related parties | FLAC | 19,833 | 19,833 | – | – | – | – | 19,833 |
| Treasury payables | FLAC | 6,859 | 6,859 | – | – | – | – | 6,859 |
| Loans from banks | FLAC | 2,402 | 2,402 | – | – | – | – | 2,395 |
| Other fi nancial liabilities | FLAC | 1,455 | 1,455 | – | – | – | – | 1,455 |
| Financial liabilities which cannot be allocated to any category within the meaning of IAS 39: |
||||||||
| Leasing liabilities | n. a. | 13,804 | – | – | – | – | 13,804 | 17,397 |
| Derivative fi nancial instruments | ||||||||
| Assets | ||||||||
| Currency hedging contracts | FAHfT | 5,557 | – | – | 5,557 | – | – | 5,557 |
| Liabilities | ||||||||
| Currency hedging contracts | FLHfT | 1,187 | – | – | 1,187 | – | – | 1,187 |
| Thereof aggregated by valuation category pursuant to IAS 39 |
||||||||
| Loans and Receivables (LaR) | 577,776 | 571,490 | – | – | 6,286 | – | 577,776 | |
| Available-for-Sale Financial Assets (AfS) | 124 | 124 | – | – | – | – | 124 | |
| Financial Assets Held for Trading (FAHfT) | 5,557 | – | – | 5,557 | – | – | 5,557 | |
| Financial Liabilities Measured at Amortized Cost (FLAC) |
66,410 | 66,410 | – | – | – | – | 66,403 | |
| Financial Liabilities Held for Trading (FLHfT) | 1,187 | – | – | 1,187 | – | – | 1,187 | |
* Insofar as no fair value can be calculated, book value is stated
(in € '000)
| Carrying amount statement of fi nancial position IAS 39 | 30 September 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Valuation category according to IAS 39 |
Carrying amount |
Amortized cost |
Fair value recognized directly in equirty |
Fair value recognized through profi t or loss |
Recognition cash reserves |
Carrying amount statement of fi nancial position IAS 17 |
Fair value* |
|
| Primary fi nancial instruments | ||||||||
| Assets | ||||||||
| Trade receivables | LaR | 141,055 | 141,055 | – | – | – | – | 141,055 |
| Accounts receivables from related parties | LaR | 42,718 | 42,718 | – | – | – | – | 42,718 |
| Treasury receivables | LaR | 241,389 | 241,389 | – | – | – | – | 241,389 |
| Investments | AfS | 364 | 364 | – | – | – | – | 364 |
| Other noncurrent fi nancial assets | LaR | 137 | 137 | – | – | – | – | 137 |
| Other current fi nancial assets | LaR | 122,953 | 122,953 | – | – | – | – | 122,953 |
| Financial assets which cannot be allocated to any category within the meaning of IAS 39: |
||||||||
| Cash | LaR | 9,526 | – | – | – | 9,526 | – | 9,526 |
| Liabilities | ||||||||
| Trade payables | FLAC | 36,935 | 36,935 | – | – | – | – | 36,935 |
| Liabilities to related parties | FLAC | 13,613 | 13,613 | – | – | – | – | 13,613 |
| Treasury payables | FLAC | 14,597 | 14,597 | – | – | – | – | 14,597 |
| Loans from banks | FLAC | 2,888 | 2,888 | – | – | – | – | 2,885 |
| Other fi nancial liabilities | FLAC | 6,090 | 6,090 | – | – | – | – | 6,090 |
| Financial liabilities which cannot be allocated to any category within the meaning of IAS 39: |
||||||||
| Leasing liabilities | n. a. | 16,153 | – | – | – | – | 16,153 | 18,523 |
| Derivative fi nancial instruments | ||||||||
| Assets | ||||||||
| Currency hedging contracts | FAHfT | 1,112 | – | – | 1,112 | – | – | 1,112 |
| Liabilities | ||||||||
| Currency hedging contracts | FLHfT | 5,778 | – | – | 5,778 | – | – | 5,778 |
| Thereof aggregated by valuation category pursuant to IAS 39 |
||||||||
| Loans and Receivables (LaR) | 557,778 | 548,252 | – | – | 9,526 | – | 557,778 | |
| Available-for-Sale Financial Assets (AfS) | 364 | 364 | – | – | – | – | 364 | |
| Financial Assets Held for Trading (FAHfT) | 1,112 | – | – | 1,112 | – | – | 1,112 | |
| Financial Liabilities Measured at Amortised Cost (FLAC) |
74,123 | 74,123 | – | – | – | – | 74,120 | |
| Financial Liabilities Held for Trading (FLHfT) | 5,778 | – | – | 5,778 | – | – | 5,778 |
* Insofar as no fair value can be calculated, book value is stated
The abbreviations of the valuation categories according to IAS 39 are explained in note (2(h)). The following reclassifi cations should be noted for a comparison of valuation categories with items in the statement of fi nancial position:
| Classifi cation acc. to IFRS 7 | Category according to IAS 39 |
Statement of fi nancial position item |
|---|---|---|
| Trade receivables | LaR | Noncurrent trade receivables Trade receivables |
| Accounts receivable from related parties | LaR | Receivables from related parties |
| Treasury receivables | LaR | Treasury receivables |
| Investments | AfS | Investments |
| Securities | AfS | Securities |
| Noncurrent loans to employees Other noncurrent fi nancial assets |
LaR LaR |
Other noncurrent assets |
| Other current fi nancial assets Asset-side currency hedging contracts |
LaR FAHfT |
Other current financial assets |
| Cash | LaR | Cash and cash equivalents |
| Trade payables | FLAC | Trade payables |
| Liabilities to related parties | FLAC | Liabilities to related parties |
| Treasury payables | FLAC | Treasury payables |
| Other financial liabilities | FLAC FLAC |
Noncurrent financial liabilities Current portion of noncurrent fi nancial liabilities |
| Loans from banks | FLAC FLAC FLAC |
Noncurrent financial liabilities Current portion of noncurrent fi nancial liabilities Current financial liabilities |
| Liabilities-side currency hedging contracts | FLHfT | Current financial liabilities |
| Leasing liabilities | n. a. | Noncurrent leasing liabilities Current portion of noncurrent leasing liabilities |
As of 30 September 2013 the Company had currency hedging contracts with a total nominal value of € 283,168 thousand (previous year: € 251,181 thousand). Gains and losses on the valuation of derivative fi nancial instruments not yet due totaling € + 4,516 thousand (previous year: € - 4,285 thousand) are recorded in the income statement under "Foreign currency gains/(losses), net". As in the previous year the Group does not hold any fi nancial instruments to be allocated to the categories "held-to-maturity" or, based on the respective designation, "assets or liabilities to be measured at fair value through profi t or loss".
The following table shows the distribution of income from interest, the subsequent valuation of fi nancial instruments at fair value, and from currency translation among the individual categories of fi nancial instruments in the sense of IAS 39, and how the respective net result is calculated.
| (in € '000) | Interest | From subsequent valuation | Write | Result | Net | |||
|---|---|---|---|---|---|---|---|---|
| effects | at fair value |
Currency translation |
Valuation allowance |
offs | recog nized in other compre hensive income |
result | ||
| From loans and receivables | 30 September 2013 | 1,893 | n. a. | (8,114) | (1,185) | (198) | n. a. | (7,604) |
| 30 September 2012 | 2,831 | n. a. | (371) | (431) | (97) | n. a. | 1,932 | |
| From available-for-sale fi nancial | 30 September 2013 | – | – | – | – | – | – | – |
| assets | 30 September 2012 | – | – | – | – | – | – | – |
| From held-for-trading fi nancial | 30 September 2013 | – | 4,516 | 16,984 | – | – | – | 21,500 |
| assets and liabilities | 30 September 2012 | – | (4,285) | 3,632 | – | – | – | (653) |
| From fi nancial liabilities carried | 30 September 2013 | (727) | n. a. | 1,110 | n. a. | n. a. | n. a. | 383 |
| at amortized cost | 30 September 2012 | (718) | n. a. | (5,334) | n. a. | n. a. | n. a. | (6,052) |
| Other | 30 September 2013 | (5,815) | – | – | 3,866 | – | – | (1,949) |
| 30 September 2012 | (5,173) | – | – | 2,697 | – | – | (2,476) | |
| Total | 30 September 2013 | (4,649) | 4,516 | 9,980 | 2,681 | (198) | – | 12,330 |
| 30 September 2012 | (3,060) | (4,285) | (2,073) | 2,266 | (97) | – | (7,249) | |
| thereof through profi t or loss | 30 September 2013 | (4,649) | 4,516 | 9,980 | 2,681 | (198) | – | 12,330 |
| 30 September 2012 | (3,060) | (4,285) | (2,073) | 2,266 | (97) | – | (7,249) | |
| thereof selling and marketing | 30 September 2013 | – | – | – | (1,185) | (198) | – | (1,383) |
| expenses | 30 September 2012 | – | – | – | (431) | (97) | – | (528) |
The interest from fi nancial instruments is carried under "Interest income"; dividends are carried under "Other fi nancial result" (see note (7)). Carl Zeiss Meditec records the other components of the net result under "Other fi nancial result", with the exception of the valuation allowances on trade receivables attributable to the valuation category "Loans and receivables", which are carried under "Selling expenses". In addition, the income statement also takes into account all factors that cannot be allocated to fi nancial instruments. The Company did not make use of the option under IAS 39.9 (b), to recognize fi nancial assets or liabilities at fair value through profi t or loss upon fi rst recognition.
The following table shows the fi nancial assets carried at fair value by valuation category. The valuation categories are defi ned as follows:
Category 1
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.
| (in € '000) | |||||
|---|---|---|---|---|---|
| Category 1 | Category 2 | Category 3 | Total | ||
| From held-for-trading fi nancial assets | 30 September 2013 | – | 4,370 | – | 4,370 |
| and liabilities | 30 September 2012 | – | (4,666) | – | (4,666) |
The Group leases technical equipment as well as other offi ce equipment, fi xtures and fi ttings.
The future accumulated minimum lease and rental payments from binding operating lease agreements amount to the following:
| (in € '000) | |
|---|---|
| Total minimum lease and rental payments | 840 |
|---|---|
| More than 5 years | 0 |
| 1 to 5 years | 380 |
| Up to 1 year | 460 |
| Lease and rental payments | |
The Company leases buildings and offi ce equipment under lease and rental agreements which may not be cancelled during the basic term. The leases have different conditions and extension and purchase options.
The lease and rental expenses recorded in the income statement for fi nancial years 2012/2013 and 2011/2012 amount to € 12,067 thousand and € 10,260 thousand, respectively.
The future accumulated minimum rental and leasing payments based on binding operating leases amount to the following:
(in € '000)
| Total minimum lease and rental payments | 60,264 |
|---|---|
| More than 5 years | 21,873 |
| 1 to 5 years | 27,843 |
| Up to 1 year | 10,548 |
| Lease and rental payments |
The future minimum lease payments for the leasing of buildings include the rental payments for the subsequent binding rental period. Extension options exist for these rental agreements.
The future lease payments for the current fi nancial year include a new business premises at the Oberkochen site. The lease began in April 2013 and has a fi xed term of 10 years until March 2023.
In some cases the Company offers fi nancing models within the scope of selling its products, in the form of lease agreements, which, due to their nature, must be classifi ed as fi nance leases.
| (in € '000) | ||||||
|---|---|---|---|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
Financial year 2012/2013 |
Financial year 2011/2012 |
Financial year 2012/2013 |
Financial year 2011/2012 |
|
| lease payments | Present value of future | Interest portion of future lease payments |
Total future lease payments |
|||
| Due within 1 year | 1,150 | 843 | 19 | 32 | 1,169 | 875 |
| Due within 1 to 5 years | 1,952 | 1,126 | 91 | 33 | 2,043 | 1,159 |
| Due after more than 5 years | – | – | – | – | – | – |
| Total | 3,102 | 1,969 | 110 | 65 | 3,212 | 2,034 |
In the fi nancial year just ended there was no outstanding fi nancial income, no non-guaranteed residual values accruing to the lessor, no valuation allowances for uncollectible outstanding minimum lease payments, and no contingent rental payments recognized as income in the reporting period.
On 28 September 1999 Carl Zeiss Meditec Inc. sold and leased back land, buildings and leasehold improvements in Dublin, USA, for € 34,081 thousand. This sale-and-lease-back arrangement is categorized as a fi nance lease pursuant to IAS 17, whereby the land, buildings and leasehold improvements continue to be carried and depreciated on the lessee's books. The lease agreement has a term of 20 years. After the original term of the lease expires in 2019, the lessee will have two opportunities to extend the lease by fi ve years in each case. The lease also includes a clause to increase the lease installments by 13 % every fi ve years.
In addition, the land and buildings of the French subsidiary Carl Zeiss Meditec S.A.S. in Périgny/La Rochelle are fi nanced via a fi nance lease. This lease agreement comprises three contracts. The basic lease agreement was concluded in 2001 and was extended in 2002 and 2003 by additional agreements. Each of these agreements has a term of 15 years. After the original term expires, the leased assets can be acquired for a price of € 1.00 each. The leases do not include any price adjustment clauses; however, they are subject to variable interest rates.
Carl Zeiss Meditec S.A.S. and F.C.I. S.A.S. also have fi nance leases for company vehicles.
The obligations from fi nance leases are as follows:
| (in € '000) | ||||||
|---|---|---|---|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
Financial year 2012/2013 |
Financial year 2011/2012 |
Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Present value of future lease payments |
Interest portion of future lease payments |
Total future lease payments |
||||
| Due within 1 year | 1,835 | 1,787 | 987 | 1,144 | 2,822 | 2,931 |
| Due within 1 to 5 years | 9,369 | 9,105 | 2,523 | 3,252 | 11,892 | 12,357 |
| Due after more than 5 years | 2,600 | 5,261 | 193 | 597 | 2,793 | 5,858 |
| Total | 13,804 | 16,153 | 3,703 | 4,993 | 17,507 | 21,146 |
As in the previous year, no guarantees have been assumed on behalf of external third parties.
Carl Zeiss Meditec has purchase commitments towards suppliers for property, plant and equipment amounting to € 1,331 thousand (previous year: € 769 thousand) and for intangible fi xed assets totaling € 139 thousand (previous year: € 0 thousand).
With the exception of the proceedings described below, the Carl Zeiss Meditec Group is not currently involved in any litigation or arbitration proceedings which, in the Company's current estimation, could individually have a material effect on the fi nancial position of Carl Zeiss Meditec AG. Nor are such proceedings pending or to be expected to the Company's knowledge.
Furthermore, a litigation risk arises from the claim of a former sales partner in Egypt for compensation and damages. The Company believes that there is no suffi cient basis for this claim and is therefore contesting it.
Another risk arises from proceedings initiated by a competitor based on an alleged infringement of industrial property rights by the Company and its German distribution company. As the Carl Zeiss Meditec Group believes that there has been no such infringement, an appeal has been launched to have this case completely dismissed.
Provisions were set up for the expected costs (note 24).
Borrowings in the amount of € 2,278 thousand (previous year: € 2,728 thousand) are secured with land and buildings, plant and machinery. There are no restrictions on rights of disposal.
The Group does not hold any assets pledged as security.
Pursuant to IFRS 8, the Group publishes its operating segments based on the information that is reported internally to the CEO, who is also Chief Operating Decision Maker. The operating segments correspond to the Group's Strategic Business Units (SBUs). The Ophthalmic Systems and Surgical Ophthalmology SBUs comprise Carl Zeiss Meditec's main activities 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 Company's activities in the fi eld of neurosurgery and ear, nose and throat surgery are brought together in the "Microsurgery" SBU. Visualization solutions for ophthalmic surgery and activities in the area of intraoperative radiation are also allocated to this SBU. For more information on the business activities of the SBUs please refer to the management report in this Annual Report.
Internal management reports are evaluated by the CEO at least once every quarter for each of the strategic business units with regard to making decisions on resource allocation and performance. In addition to publication of the results at segment level, the amortization and depreciation and the additions to provisions, are also published for each SBU.
| (in € '000) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Ophthalmic Systems Financial year |
Surgical Ophthalmology Financial year |
Microsurgery Financial year |
Total Financial year |
|||||
| 2012/2013 | 2011/2012 | 2012/2013 | 2011/2012 | 2012/2013 | 2011/2012 | 2012/2013 | 2011/2012 | |
| External revenue | 390,954 | 375,909 | 121,310 | 107,741 | 394,181 | 378,225 | 906,445 | 861,875 |
| Gross profi t | 176,153 | 185,489 | 68,796 | 58,514 | 242,872 | 217,361 | 487,821 | 461,364 |
| Selling and marketing expenses |
(88,952) | (85,172) | (35,116) | (31,468) | (90,226) | (87,397) | (214,294) | (204,037) |
| General and administrative expenses |
(17,052) | (16,161) | (9,726) | (7,968) | (15,539) | (16,848) | (42,317) | (40,977) |
| Research and development expenses |
(55,194) | (52,008) | (8,808) | (10,363) | (33,317) | (31,079) | (97,319) | (93,450) |
| Other | (17) | – | – | – | – | – | (17) | – |
| Earnings before interest and income taxes |
14,938 | 32,148 | 15,146 | 8,715 | 103,790 | 82,037 | 133,874 | 122,900 |
| Depreciation and amortization |
7,766 | 6,772 | 7,132 | 7,695 | 3,821 | 3,428 | 18,719 | 17,895 |
| Appropriation to provisions |
14,813 | 10,370 | 1,894 | 1,273 | 17,004 | 12,431 | 33,711 | 24,074 |
| Reconciliation of segments' comprehensive income to the Group's period-end result: | ||||||||
| Comprehensive income of the segments | 133,874 | 122,900 | ||||||
| Consolidated earnings before interest and taxes (EBIT) | 133,874 | 122,900 | ||||||
| Financial result | 13,713 | (6,721) | ||||||
| Consolidated earnings before income taxes | 147,587 | 116,179 | ||||||
| Income tax expense | (48,465) | (39,787) | ||||||
| Consolidated net income | 99,122 | 76,392 | ||||||
| Thereof attributable to: | ||||||||
| Shareholders of the parent company | 93,505 | 71,870 | ||||||
| Non-controlling interests | 5,617 | 4,522 |
There were generally no inter-segment sales between the segments.
The information on geographic regions is based on the regions of Germany, the USA, Japan, Europe (excluding Germany) and Rest of world according to the registered offi ce of the subsidiary which recognizes the revenues or which holds the noncurrent assets. Each region essentially offers the same type of products and services.
| (in € '000) | |||||
|---|---|---|---|---|---|
| Financial year 2012/2013 | |||||
| Revenue | Noncurrent assets |
Revenue | Noncurrent assets |
||
| Germany | 397,683 | 62,398 | 366,111 | 63,191 | |
| USA | 299,996 | 30,556 | 284,092 | 32,332 | |
| Japan | 113,703 | 706 | 119,999 | 1,023 | |
| Europe | 95,063 | 101,288 | 91,673 | 105,223 | |
| Other | 0 | 438 | – | 320 | |
| Total | 906,445 | 195,386 | 861,875 | 202,089 |
Segment assets comprise the noncurrent assets of the segment less deferred income taxes of € 44,181 thousand (previous year: € 47,198 thousand), investments of € 124 thousand (previous year: € 364 thousand) and noncurrent trade receivables of € 5,421 thousand (previous year: € 4,393 thousand).
Carl Zeiss AG and its subsidiaries (except Carl Zeiss Meditec Group) constitute one of Carl Zeiss Meditec's major customers, accounting for more than 10 % of total revenue. Revenue is generated with Carl Zeiss AG and its subsidiaries in all segments (see note (34)).
Grants allocated for fi nancial year 2012/2013 and 2011/2012 were as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Research and development subsidies | 178 | 655 |
| Grants for assets | 525 | 939 |
| Other subsidies | 33 | 0 |
| Total | 736 | 1,594 |
Grants received in the amount of € 525 thousand (previous year: € 939 thousand) were deducted from the acquisition costs of the relevant property, plant and equipment. Investment grants and investment subsidies are recognized when there is adequate assurance that the associated terms and conditions will be met and the grants and subsidies will actually be awarded. Specifi cally, the investment grant is subject to the respective property, plant and equipment remaining in the assisted area for fi ve years. The Group has not identifi ed any risks of repayment for which a provision has not been set up. The subsidies awarded for research and development costs were recognized under "Research and development expenses". In the previous year grants for assets included a one-time subsidy of € 773 thousand for a solar energy plant, which was erected on the building of Carl Zeiss Meditec Inc. in Dublin, USA.
Other subsidies include wage subsidies of the French subsidiary F.C.I. S.A.S., which are recognized in production and functional costs.
The following transactions and outstanding balances arise from various agreements with related parties:
| (in € '000) | |||||
|---|---|---|---|---|---|
| Transaction amount | Outstanding balance | ||||
| Financial year 2012/2013 |
Financial year 2011/2012 |
30 September 2013 |
30 September 2012 |
||
| Income | 236,659 | 213,850 | Receivables | 62,701 | 42,718 |
| thereof Carl Zeiss AG | 1,235 | 2,289 | thereof Carl Zeiss AG | 7,132 | 5,517 |
| Expenses | 109,723 | 97,699 | Liabilities | 19,833 | 13,613 |
| thereof Carl Zeiss AG | 37,446 | 29,437 | thereof Carl Zeiss AG | 9,170 | 4,519 |
Expenses include research and development costs of € 10,479 thousand commissioned at the Carl Zeiss Group in fi nancial year 2012/2013 (previous year: € 8,532 thousand). Expenses also include expenses arising from lease and rental payments due to the Carl Zeiss Group in fi nancial year 2012/2013 amounting to € 4,562 thousand (previous year: € 2,815 thousand). Relationships with key personalities with a signifi cant infl uence do not and did not exist.
In addition, there was income – mostly fi nancial income – and expenses – mostly fi nancial expenses – totaling € 25,239 thousand (previous year: € 3,700 thousand) and € 3,149 thousand (previous year: € 11,954 thousand), as well as receivables from and liabilities to Carl Zeiss Financial Services GmbH in the amount of € 352,412 thousand (previous year: € 241,389 thousand) and € 6,859 thousand (previous year: € 14,597 thousand).
Receivables from Carl Zeiss Financial Services GmbH in fi nancial year 2012/2013 include a current fi xed-term deposit of € 140,000 thousand.
There were no transactions with the Carl Zeiss Foundation in the fi nancial year just ended; there were no open items at the end of the reporting period.
The Company did not issue any stock options or free shares in fi nancial years 2012/2013 and 2011/2012.
In the past fi nancial year members of the Management Board and Supervisory Board executed notifi able securities transactions pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG).
At the current time, no Company shares are held by members of the Management Board or Supervisory Board of Carl Zeiss Meditec AG.
The details of the above-mentioned securities transactions were published immediately after their disclosure on the Company's website at www.meditec.zeiss.com/ir – Corporate Governance – Directors' Dealings in accordance with the legal requirements of Section 15b WpHG. The publication documents and the relevant disclosures were forwarded to the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin).
The Group operates a global fi nancial risk management system, which comprises all subsidiaries and is organized centrally at Group level. The prime objective of the fi nancial risk management system is to provide the necessary liquidity for the operations of companies within the Group and to limit the fi nancial risks.
Due to its use of a range of fi nancial instruments, the Group is exposed to risks which arise particularly as a result of fl uctuation in exchange rates, interest rates and changes in the creditworthiness of the contracting partners involved.
The Group's exposure to each of the risks listed above is described below. The Group's objectives, strategies and procedures for controlling and methods for measuring the risks are also described. The risk report in the management report also contains information about the risk management system.
The Group mainly holds interest-bearing fi nancial instruments via its short-term cash and cash equivalent investments, loans and treasury receivables – from the Carl Zeiss group cash management of Carl Zeiss Financial Services GmbH, Oberkochen (see note (2(h)). The Group also holds noncurrent, interest-bearing fi nancial receivables and liabilities and leasing liabilities.
An interest sensitivity analysis is based on the following assumptions: changes in market interest rates on primary fi nancial instruments with fi xed interest rates will only have an effect on income if these are measured at fair value. As a result, all fi nancial instruments carried at amortized cost with fi xed interest are not subject to any risks of interest rate changes within the meaning of IFRS 7. In addition, forex derivatives are not subject to any major risk of interest rate changes and thus do not impact interest rate sensitivities. Variable-interest fi nancial instruments with an original term of less than 91 days are not subjected to an interest sensitivity analysis, since the interest fl uctuation risk of these fi nancial instruments can be considered negligible, due to their short maturity.
As in the previous year, the Group did not hold any fi xed-interest fi nancial instruments measured at fair value at the end of the reporting period. It is therefore assumed that the Group is only exposed to interest fl uctuation risks associated with variable-interest fi nancial instruments with an original term of more than 90 days.
The table below shows the Company's interest-bearing, non-derivative fi nancial instruments with a term of more than 90 days.
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Variable-interest fi nancial assets | – | – |
| Fixed-interest fi nancial assets | – | – |
| Total interest-bearing assets | – | – |
| Variable-interest fi nancial liabilities | 2,571 | 3,100 |
| Fixed-interest fi nancial liabilities | 13,560 | 22,030 |
| Total interest-bearing liabilities | 16,131 | 25,130 |
A change in the average variable interest rate by 100 base points would have increased (decreased) the result as of the end of the reporting period as follows. This analysis assumes that all other variables remained constant.
| (in € '000) | ||||||
|---|---|---|---|---|---|---|
| Carrying amount |
Effects of interest risks on | |||||
| Result | Equity | |||||
| + 100 BP | - 100 BP | + 100 BP | - 100 BP | |||
| Variable-interest fi nancial instruments | 30 September 2013 | 2,571 | (57) | 57 | – | – |
| 30 September 2012 | 3,100 | (37) | 37 | – | – |
The interest fl uctuation risk is countered within the scope of the overall fi nancial risk management system, by regularly monitoring key items and their inherent interest fl uctuation risks to limit these, if necessary. At the present time, this risk can be considered negligible.
IFRS 7 requires that the presentation of market risks also includes information about the effects hypothetical changes in risk variables could have on the prices of fi nancial instruments. Possible risk variables are in particular stock market prices or indices. As in the previous year, there were no material risks of this kind within the Group as of 30 September 2013.
The currency risk for the Group in the sense of IFRS 7 results from its fi nancial instruments, which arose from its business operations and investing and fi nancing activities. The Group counters a risk that remains after compensation of payments made and received in the same foreign currency mainly by concluding simple currency forward contracts. Most of these transactions relate to the US dollar, the British pound and the Japanese yen and the Australian dollar. Carl Zeiss Meditec AG and its subsidiaries are linked to the currency hedging processes of Carl Zeiss AG, Oberkochen via its treasury company, Carl Zeiss Financial Services GmbH. The total foreign currency payments made and received and reported to the treasury by the Group's subsidiaries on a monthly basis are thus hedged against the Euro by means of currency forward contracts with a term of max. 1.5 years in the amount of the ratio fi xed.
The book values of the Group's fi nancial assets and liabilities denominated in foreign currencies refl ect the level of risk exposure as of the end of the reporting period. The tables below provide an overview of the Group's foreign currency fi nancial instruments.
| (in € '000) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total | Thereof: in the following currencies – translated to € – | |||||||||||||
| EUR | EUR | US\$ | JPY | GBP | CAD | SEK | CHF | AUD | PLN | ZAR | CZK | Other | ||
| Assets | ||||||||||||||
| Trade receivables | 30 September 2013 | 155,421 | 155,272 | 19 | – | – | – | – | – | – | – | – | – | 130 |
| 30 September 2012 | 141,055 | 141,048 | 7 | – | – | – | – | – | – | – | – | – | – | |
| Receivables from | 30 September 2013 | 62,701 | 45,920 7,301 | – 2,041 | 708 | 300 | 104 3,305 1,142 | 722 | 654 | 504 | ||||
| related parties | 30 September 2012 | 42,718 | 29,761 8,613 | – 1,983 1,022 | 450 | 693 | – | – | – | – | 196 | |||
| Asset-side currency | 30 September 2013 | 5,557 | – 2,143 1,401 | 14 | 145 | 44 | 1 1,287 | – | 226 | 3 | 293 | |||
| hedging contracts | 30 September 2012 | 1,112 | – | 406 | 383 | 147 | 16 | 8 | 13 | 51 | 22 | – | 66 | – |
| Total assets | 30 September 2013 | 223,679 | 201,192 9,463 1,401 2,055 | 853 | 344 | 105 4,592 1,142 | 948 | 657 | 927 | |||||
| 30 September 2012 | 184,885 | 170,809 9,026 | 383 2,130 1,038 | 458 | 706 | 51 | 22 | – | 66 | 196 | ||||
| Liabilities | ||||||||||||||
| Trade payables | 30 September 2013 | 35,861 | 32,554 2,129 | 989 | 109 | – | – | 68 | 3 | – | – | – | 9 | |
| 30 September 2012 | 36,935 | 34,337 2,044 | 99 | 35 | – | – | 400 | 3 | – | – | – | 17 | ||
| Liabilities to | 30 September 2013 | 19,833 | 18,535 | 866 | – | 33 | 1 | 1 | 49 | 17 | – | – | – | 331 |
| related parties | 30 September 2012 | 13,613 | 12,457 | 872 | – | 51 | 23 | – | – | – | – | – | – | 230 |
| Liabilities-side currency | 30 September 2013 | 1,187 | – | 437 | 10 | 292 | – | 16 | 42 | 26 | 94 | 59 | 19 | 192 |
| hedging contracts | 30 September 2012 | 5,778 | – 2,292 1,376 | 473 | 332 | 237 | 14 | 459 | 261 | – | 32 | 302 | ||
| Total liabilities | 30 September 2013 | 56,881 | 51,089 3,432 | 999 | 434 | 1 | 17 | 159 | 46 | 94 | 59 | 19 | 532 | |
| 30 September 2012 | 56,326 | 46,794 5,208 1,475 | 559 | 355 | 237 | 414 | 462 | 261 | – | 32 | 549 |
In order to better present the currency risks that exist, the effects of hypothetical fl uctuations in the relevant currencies on net income for the year and equity are presented below based on a currency sensitivity analysis. If, hypothetically, the Euro had been 10 % stronger (weaker) as of the end of the reporting period against the main foreign currencies used by the Group – ceteris paribus – earnings before taxes and equity would have been affected as follows:
| (in € '000) | |
|---|---|
| ------------- | -- |
| Effects of currency risks on | ||||||
|---|---|---|---|---|---|---|
| Result | Equity | |||||
| + 10 % | - 10 % | + 10 % | - 10 % | |||
| Assets | ||||||
| Trade receivables | 30 September 2013 | 155,421 | (15) | 15 | – | – |
| 30 September 2012 | 141,055 | (1) | 1 | – | – | |
| Receivables from | 30 September 2013 | 62,701 | (1,678) | 1,678 | – | – |
| related parties | 30 September 2012 | 42,718 | (1,296) | 1,296 | – | – |
| Asset-side currency hedging contracts |
30 September 2013 | 5,557 | 18,901 | (18,901) | – | – |
| 30 September 2012 | 1,112 | 2,017 | (2,017) | – | – | |
| Effect of fi nancial | 30 September 2013 | 223,679 | 17,208 | (17,208) | – | – |
| instruments before taxes | 30 September 2012 | 184,885 | 720 | (720) | – | – |
| Liabilities | ||||||
| Trade payables | 30 September 2013 | 35,861 | 331 | (331) | – | – |
| 30 September 2012 | 36,935 | 260 | (260) | – | – | |
| Liabilities to | 30 September 2013 | 19,833 | 130 | (130) | – | – |
| related parties | 30 September 2012 | 13,613 | 116 | (116) | – | – |
| Liabilities-side currency | 30 September 2013 | 1,187 | 3,034 | (3,034) | – | – |
| hedging contracts | 30 September 2012 | 5,778 | 19,879 | (19,879) | – | – |
| Effect of fi nancial | 30 September 2013 | 56,881 | 3,495 | (3,495) | – | – |
| instruments before taxes | 30 September 2012 | 56,326 | 20,255 | (20,255) | – | – |
The Group is exposed to a default risk due to its business operations and fi nancing activities. The following applies to all performance relationships underlying the primary fi nancial instruments: depending on the type and level of the respective service, collateral is required, credit information/references are obtained and historical data from the previous business relationship is used, in particular regarding payment behavior, in order to mini-mize the default risk. To the extent that default risks can be identifi ed for the individual fi nancial assets, these risks are covered by valuation allowances. The management is routinely involved in such decisions on risk provisioning. The default risk from the derivative fi nancial instruments used is not believed to be material, due to credit checks, among other things. There is no discernible concentration of default risks from business relationships with individual debtors or groups of debtors. The maximum default risk is refl ected by the carrying amounts of the fi nancial assets recognized in the statement of fi nancial position. It is assumed that default rates will not change signifi cantly in the future. As in the previous year, no signifi cant fi nancial assets were individually impaired at the end of the reporting period, nor were the terms and conditions of the fi nancial assets renegotiated, as they would otherwise have been past due or impaired.
The risks associated with trade receivables are adequately covered by valuation allowances. Valuation allowances developed as follows:
(in € '000)
| Valuation allowance on trade receivables | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Beginning of fi nancial year | 4,817 | 4,904 |
| Appropriation | 1,411 | 725 |
| Utilization | (483) | (581) |
| Reversal | (226) | (294) |
| Exchange rate differences | (39) | 63 |
| End of fi nancial year | 5,480 | 4,817 |
| Gross book value of impaired trade receivables | 38,056 | 34,901 |
| Net book value of impaired trade receivables | 32,576 | 30,084 |
The credit risks remaining after the individual valuation allowance for trade receivables are presented using the following age analysis:
| (in € '000) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount |
thereof neither impaired nor |
thereof not impaired at the end of the reporting period, but past due in the following periods |
||||||
| past due at the end of the reporting period |
up to 30 days |
from 31 to 90 days |
from 91 to 180 days |
from 181 to 360 days |
more than 360 days |
|||
| Trade receivables | 30 September 2013 | 155,421 | 90,247 | 13,228 | 7,976 | 3,985 | 5,145 | 2,264 |
| 30 September 2012 | 141,055 | 87,928 | 12,661 | 6,518 | 2,131 | 1,099 | 634 | |
| Receivables from | 30 September 2013 | 62,701 | 48,372 | 4,087 | 3,050 | 3,368 | 3,171 | 653 |
| related parties | 30 September 2012 | 42,718 | 29,999 | 9,605 | 2,283 | 342 | 489 | – |
| Treasury receivables | 30 September 2013 | 352,412 | 352,412 | – | – | – | – | – |
| 30 September 2012 | 241,389 | 241,389 | – | – | – | – | – |
The majority of the trade receivables result from sales with companies of the Carl Zeiss Group and public authorities. In addition, large orders are subject to an independent credit check. For this reason and from past experience it is assumed that there is no need for impairment for receivables that are not past due.
In order to ensure solvency and fi nancial fl exibility within the Group, Carl Zeiss Meditec forecasts, within a fi xed planning period, the funds it will require using a cash forecast, and holds a corresponding liquidity reserve in the form of cash and unused lines of credit at the treasury of Carl Zeiss AG. Due to the high amount of cash and cash equivalents and treasury receivables within the Group, as well as the Group's sound fi nancing structure with an equity ratio of 74.9 %, the risk of insolvency is currently considered negligible.
| (in € '000) | ||||||||
|---|---|---|---|---|---|---|---|---|
| End of reporting period |
Book value |
Statement of contractually agreed undiscounted | cash outfl ows | |||||
| Total | up to 30 days |
from 31 to 90 days |
from 91 to 180 days |
from 181 to 360 days |
more than 360 days |
|||
| Trade payables | 30 September 2013 | 35,861 | 35,861 | 28,653 | 7,203 | 5 | – | – |
| 30 September 2012 | 36,935 | 36,935 | 29,592 | 7,262 | 78 | 3 | – | |
| Liabilities to related parties | 30 September 2013 | 19,833 | 19,833 | 18,349 | 1,484 | – | – | – |
| 30 September 2012 | 13,613 | 13,613 | 12,548 | 1,046 | 19 | – | – | |
| Treasury payables | 30 September 2013 | 6,859 | 6,859 | 6,859 | – | – | – | – |
| 30 September 2012 | 14,597 | 14,597 | 14,597 | – | – | – | – | |
| Liabilities to banks | 30 September 2013 | 2,402 | 2,508 | 124 | – | 124 | 372 | 1,888 |
| 30 September 2012 | 2,888 | 3,040 | 160 | – | 124 | 372 | 2,384 | |
| Leasing liabilities | 30 September 2013 | 13,804 | 17,507 | 236 | 473 | 710 | 1,403 | 14,685 |
| 30 September 2012 | 16,153 | 21,026 | 244 | 504 | 732 | 1,463 | 18,083 | |
| Other fi nancial liabilities | 30 September 2013 | 1,455 | 1,455 | 1,423 | 16 | 16 | – | – |
| 30 September 2012 | 6,090 | 6,090 | – | – | – | 5,983 | 107 | |
| Total | 30 September 2013 | 80,214 | 84,023 | 55,644 | 9,176 | 855 | 1,775 | 16,573 |
| 30 September 2012 | 90,276 | 95,301 | 57,141 | 8,812 | 953 | 7,821 | 20,574 |
As of 30 September 2013 the Group's primary fi nancial liabilities had the following maturities.
As of 30 September 2013 the Group's fi nancial liabilities had the following maturities.
| (in € '000) | |||||||
|---|---|---|---|---|---|---|---|
| End of reporting |
Undiscounted cash outfl ows from derivative fi nancial | liabilities with settlement on a gross basis | |||||
| period | Total | up to 30 days |
from 31 to 90 days |
from 91 to 180 days |
from 181 to 360 days |
more than 360 days |
|
| Cash outfl ows | 30 September 2013 | 80,064 | 7,030 | 10,837 | 21,254 | 40,943 | – |
| 30 September 2012 | 201,750 | 16,170 | 40,330 | 59,459 | 85,791 | – | |
| Cash infl ows | 30 September 2013 | 81,001 | 7,150 | 11,048 | 21,685 | 41,118 | – |
| 30 September 2012 | 207,664 | 16,715 | 41,895 | 61,990 | 87,064 | – |
The Group manages its capital with the aim of minimizing the Group's capital costs and, at the same time, maintaining the balance between cash fl ow volatility and fi nancial fl exibility. In order to achieve this goal, the ratio of equity to borrowed capital, among other things, must be optimized accordingly. Currently the Company is moving within the specifi ed target corridor. The main decisions relating to the fi nancing structure are made by the Management Board. The key ratios equity ratio and net debt are used as a control ratio for the ratio between equity and borrowings. Carl Zeiss Meditec calculates these key ratios regularly and informs the Management Board of them to allow the Management Board to introduce any measures necessary. The key ratio "equity ratio" is defi ned as the percentage ratio of equity, including non-controlling interests, to total capital. Net debt is calculated from the Group's borrowings less cash and cash equivalents and treasury receivables (group treasury of Carl Zeiss AG). In the past fi nancial year, the equity ratio stood at 74.9 % (previous year: 72.3 %). Net debt amounted to € 27,038 thousand (previous year: € 16,163 thousand). In the fi nancial year under review, the Company set up the current fi nancial investment at Carl Zeiss Financial Services GmbH, Oberkochen and increased it to € 140,000 thousand. This investment is carried in fi nancial year 2012/2013 under "Treasury receivables". The Company is not subject to any external minimum capital requirements. The table below shows the above key ratios in the reporting period:
| (in € '000) | ||
|---|---|---|
| 30 September 2013 | 30 September 2012 | |
| Equity* | 734,835 | 695,797 |
| Borrowed capital | 245,736 | 267,078 |
| Total assets | 980,571 | 962,875 |
| Cash and cash equivalents | 6,286 | 9,526 |
| Treasury receivables | 352,412 | 241,389 |
| thereof fi nancial investment | 140,000 | – |
| Treasury receivables (excluding fi nancial investment) | 212,412 | 241,389 |
| Current fi nancial investments (external) | – | 120,000 |
| Equity ratio in percent | 74.9 % | 72.3 % |
| Net debt | 27,038 | 16,163 |
* including non-controlling interests
The dynamic debt ratio, i. e., the ratio of net debt to operative cash fl ow, of the Group amounts to 0.4 years in the course of fi nancial year 2012/2013 (previous year: 0.2 years). The interest coverage ratio, i. e., the coverage of interest income by the operating result before depreciation and amortization (EBITDA), amounted to 32.8 in fi nancial year 2012/2013 (previous year: 46.0).
The Group's overall strategy with regard to capital management remained the same as the previous year.
The Management Board and Supervisory Board propose a dividend payment of € 36,589 thousand (€ 0.45 per share). Based on fi nancial year 2011/2012, a dividend of € 32,524 thousand (€ 0.40 per share) was proposed in the fi nancial year under review and distributed to the shareholders.
The following were appointed as members of the Management Board of Carl Zeiss Meditec AG in fi nancial year 2012/2013 and entered in the commercial register:
| Member of Management Board |
Membership of statutory supervisory boards and similar supervisory bodies at companies of the Carl Zeiss Group |
Membership of statutory supervisory boards and similar supervisory bodies at other companies |
|---|---|---|
| Dr. Ludwin Monz | Chairman of the Board of Directors of Carl Zeiss Meditec Inc., Dublin, USA Member of the Board of Directors of Carl Zeiss Meditec Co. Ltd., Tokyo, Japan |
Member of the Board of the International Council of |
| Chairman | Chairman of the Supervisory Board of Carl Zeiss Microscopy GmbH, Jena, Germany |
Ophthalmology Foundation, San Francisco, USA |
| Physics graduate, MBA | (since 5 December 2012) | |
| Area of responsibility: SBU "Ophthalmic Systems", "Microsurgery", strategic business development, Group functions Human Resources, Corporate Communications, Quality |
||
| Year of fi rst appointment 2007 | ||
| Thomas Simmerer Dipl.-Ing. |
Member of the Board of Directors of Carl Zeiss Ltd., Cambridge, United Kingdom Member of the Board of Directors of Carl Zeiss Meditec Co. Ltd., Tokyo, Japan Member of the Board of Directors of Carl Zeiss Meditec France S.A.S., Marly-le-Roi, France |
|
| Area of responsibility: Sales, Service |
Chairman of the Board of Directors of Carl Zeiss Meditec Iberia S.A., Tres Cantos, Spain Member of the Board of Directors of Carl Zeiss S.p.A., Arese, Italy (since 27 December 2011) |
|
| Year of fi rst appointment 2011 | ||
| Dr. Christian Müller | Member of the Board of Directors of Carl Zeiss Meditec France S.A.S., Marly-le-Roi, France Member of the Board of Directors of Carl Zeiss Meditec, Inc., Dublin, USA |
|
| Dipl.-Kaufmann (MBA) | Member of the Board of Directors of Carl Zeiss Meditec Iberia S.A., Tres Cantos, Spain |
|
| Area of responsibility: "Surgical Ophthalmology" SBU, Group functions Finance and Controlling, Investor Relations, IT, Legal Affairs, Taxes |
||
| Year of fi rst appointment 2009 |
The total remuneration paid directly to the active members of the Management Board amounted to € 1,295 thousand in fi nancial year 2012/2013 (previous year: € 1,202 thousand). Details of this remuneration are contained in the remuneration report in the management report. Projected unit credits for pensions for former members of the Management Board of Carl Zeiss Meditec amounted to € 561 thousand (previous year: € 489 thousand). Furthermore, the expense for transfers to provisions for pensions of active Management Board members was € 335 thousand (previous year: € 434 thousand).
| Member of Supervisory Board |
Membership of statutory supervisory boards and similar supervisory bodies at companies of the Carl Zeiss Group |
Membership of statutory supervisory boards and similar supervisory bodies at other companies |
|---|---|---|
| Prof. Dr. Michael Kaschke Chairman Chairman of the Management Board of Carl Zeiss AG, |
Chairman of the Board of Directors of Carl Zeiss India Pte. Ltd., Singapore, Singapore Chairman of the Board of Directors of Carl Zeiss Pte. Ltd., Singapore, Singapore Chairman of the Board of Directors of Carl Zeiss Pty. Ltd., North Ryde, Australia Chairman of the Supervisory Board of Carl Zeiss Microscopy GmbH, Jena, Germany Chairman of the Board of Directors of Carl Zeiss Co., Ltd., Tokyo, Japan Chairman of the Board of Directors of Carl Zeiss Co. Ltd., Seoul, South Korea |
Member of the Supervisory Board of Henkel AG & Co. KGaA, Düsseldorf, Germany |
| Oberkochen, Germany Member of the Supervisory Board since 2002. |
Chairman of the Board of Directors of Carl Zeiss Far East Co., Ltd., Kowloon, Hong Kong, China Member of the Board of Directors of Carl Zeiss India (Bangalore) Pte. Ltd., Bangalore, India Chairman of the Supervisory Board of Carl Zeiss SMT GmbH, Oberkochen, Germany |
|
| Suspended mandate pursuant to Section 105 AktG between 22 July 2008 and 21 July 2009. Member of the Supervisory Board since 2010 |
Chairman of the Advisory Board of CZ Vision Holding GmbH, Aalen, Germany (until 6 August 2013) |
|
| Dr. Markus Guthoff | none |
none |
| Deputy Chairman | ||
| Member of the Managing Board (CFO) of ALBA Group plc & Co. KG, Berlin, Germany |
||
| Member of the Supervisory Board since 2004 |
||
| Thomas Spitzenpfeil Member of the Management Board (CFO) of Carl Zeiss AG, Oberkochen, Germany Member of the Supervisory Board since 2011 |
Chairman of Carl Zeiss Pensions-Treuhand e.V., Oberkochen, Germany Chairman of the Board of Directors of Carl Zeiss Ltd., Cambdridge, United Kingdom Chairman of the Board of Directors of Carl Zeiss B.V., Sliedrecht, Netherlands Chairman of the Board of Directors of Carl Zeiss N.V.-S.A., Zaventem, Belgium Chairman of the Administrative Board of Carl Zeiss AG., Feldbach, Switzerland Chairman of the Board of Directors of Carl Zeiss AB, Stockholm, Sweden Chairman of the Administrative Board of Carl Zeiss GmbH, Vienna, Austria Chairman of the Board of Directors of Carl Zeiss S.A.S., Marly-le-Roi, France Chairman of the Board of Directors of Carl Zeiss S.p.A., Arese, Italy Chairman of the Board of Directors of Carl Zeiss (Pty.) Ltd., Randburg, South Africa Chairman of the Board of Directors of Carl Zeiss Inc., Thornwood, USA Chairman of the Board of Directors of Brock & Michelsen A/S, Birkerød, Denmark (since 3 January 2012) Chairman of the Board of Directors of Brock & Michelsen Invest A/S, Birkerød, Denmark (since 3 January 2012) Member of the Board of Directors of Carl Zeiss Beteiligungs-GmbH, Oberkochen, Germany (since 24 February 2012) Chairman of the Board of Directors of Carl Zeiss SBE, LLC, Thornwood, USA (since 29 May 2012) Member of the Supervisory Board of Carl Zeiss GmbH, Jena, Germany (since 13 March 2013) Member of the Advisory Board of CZ Vision Holding GmbH, Aalen, Germany (until 6 August 2013) |
none |
Member of Supervisory Board Membership of statutory supervisory boards and similar supervisory bodies at companies of the Carl Zeiss Group
| Supervisory Board | bodies at companies of the Carl Zeiss Group | supervisory boards and similar supervisory bodies at other companies |
|---|---|---|
| Dr. Wolfgang Reim Independent MedTech consultant |
none |
Member of the Board of Directors of GN Store Nord, Ballerup, Denmark Member of the Board of Directors |
| Member of the Supervisory Board since 2007 |
of Elekta AB, Stockholm, Sweden Chairman of the Advisory Board of Ondal Medical Systems GmbH, Hünfeld, Germany (since October 2012) Member of the Advisory Board of Klingel GmbH, Pforzheim, Germany (until October 2012, and again since December 2012) Member of the Advisory Board of Medlumics S.L., Madrid, Spain (since January 2013) Chairman of the Advisory Board of Sabirmedical, S.L., Barcelona, Spain (until September 2012) Member of the Board of Directors of ESAOTE S.p.A., Genoa, Italy (until December 2012) |
|
| Cornelia Grandy* Service engineer and deputy chairwoman of the Works Council of Carl Zeiss Meditec AG, Jena, Germany Member of the Supervisory Board since 2011 |
none |
none |
| Jörg Heinrich* | none |
none |
| Employee for quality/complaint management and member of the General Works Council of Carl Zeiss Meditec AG, Jena, Germany |
||
| Member of the Supervisory Board since 2011 |
Membership of statutory
* elected employee representatives
| Members | ||||
|---|---|---|---|---|
| General and Personnel Committee | Prof. Dr. Michael Kaschke, Chairman Dr. Markus Guthoff Thomas Spitzenpfeil |
|||
| Audit Committee | Dr. Wolfgang Reim, Chairman Dr. Michael Kaschke Jörg Heinrich |
|||
| Nominating Committee | Thomas Spitzenpfeil, Chairman Dr. Wolfgang Reim Dr. Markus Guthoff |
The total remuneration of the active members of the Supervisory Board amounted to € 350 thousand in fi nancial year 2012/2013 (previous year: € 350 thousand). Details of this remuneration are contained in the remuneration report in the management report. The remuneration of Supervisory Board members is governed by Art. 19 of the Articles of Association of Carl Zeiss Meditec AG.
No advances or loans were granted to members of the executive bodies. The Company did not enter into any contingent liabilities in favor of members of the Management Board or Supervisory Board.
Since fi nancial year 2012/2013 the consolidated fi nancial statements of Carl Zeiss Meditec have been audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (previous years KPMG).
The total fee charged by the Group auditor in Germany is composed as follows:
| (in € '000) | ||
|---|---|---|
| Financial year 2012/2013 |
Financial year 2011/2012 |
|
| Auditing of fi nancial statements | 254 | 275 |
| Other audit expenses | 0 | 33 |
| Tax consultancy services | 0 | 3 |
| Name and registered offi ce of the company |
Currency | Share of voting capital (in %) |
Equity as of 30 September 2013 translated at the market rate* at the end of the reporting period |
thereof gain/(loss) for fi nancial year 2012/2013 translated at average annual rate* |
|---|---|---|---|---|
| Carl Zeiss Meditec, Inc., Dublin, USA |
US\$ '000 € '000 |
100 | 194,442 144,037 |
15,159 11,551 |
| Carl Zeiss Meditec Asset Management Verwaltungsgesellschaft mbH, Jena, Germany |
€ '000 | 100 | 68,058 | 202 |
| Carl Zeiss Meditec Iberia S.A., Tres Cantos, Spain |
€ '000 | 100 | 5,075 | - 1,151 |
| Carl Zeiss Meditec Co. Ltd., Tokyo, Japan |
JPY '000 € '000 |
51 | 9,474,398 71,773 |
1,350,933 11,092 |
| Carl Zeiss Meditec Vertriebsgesellschaft mbH, Oberkochen, Germany |
€ '000 | 100 | - 1,381 | 1,987 |
| Atlantic S.A.S., Périgny/La Rochelle, France |
€ '000 | 100 | 73,462 | 7,673 |
| HYALTECH Ltd., Livingston, United Kingdom |
GBP '000 € '000 |
100 | 14,662 17,541 |
1,898 2,257 |
| F.C.I. S.A.S., Paris, France |
€ '000 | 100 | 12,812 | 813 |
| Carl Zeiss Meditec France S.A.S., Marly-le-Roi, France |
€ '000 | 100 | 3,492 | 670 |
| Carl Zeiss Meditec S.A.S., Périgny/La Rochelle, France |
€ '000 | 100 | 57,195 | 2,790 |
| F.C.I. SUD Ltd., Quatre Bornes, Mauritius |
MUR '000 € '000 |
100 | 77,104 1,873 |
18,476 456 |
| F.C.I. Ophthalmics Inc., Pembroke, USA |
US\$ '000 € '000 |
100 | 3,053 2,262 |
579 442 |
*The fi gures show the values calculated according to the respective national accounting standards.
All voting rights announcements can be inspected on the Company's website at www.meditec.zeiss.com/ir, "Corporate Governance – Vote Rights Disclosures".
The declaration mandated under Section 161 German Stock Corporation Act (AktG) was issued by the Management and Supervisory Boards and made available to the shareholders on the Company's website at: www.meditec.zeiss.com/ir.
The Management Board of Carl Zeiss Meditec AG cleared these IFRS consolidated fi nancial statements to be handed over to the Supervisory Board on 22 November 2013. The Supervisory Board's task is to review the consolidated fi nancial statements and declare whether it approves the consolidated fi nancial statements.
Jena, 22 November 2013
Carl Zeiss Meditec AG
Dr. Ludwin Monz Dr. Christian Müller Thomas Simmerer President and Chief Financial Offi cer Member of the
Chief Executive Offi cer and Member of the Management Board Management Board h
Thomas M b fh
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RESPONSIBILITY STATEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated annual fi nancial statements of Carl Zeiss Meditec give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the Group, and the consolidated management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Carl Zeiss Meditec Group.
Jena, 22 November 2013
Carl Zeiss Meditec AG
Dr. Ludwin Monz Dr. Christian Müller Thomas Simmerer President and Chief Financial Offi cer Member of the Chief Executive Offi cer and Member of the Management Board Management Board
We have audited the consolidated fi nancial statements prepared by Carl Zeiss Meditec AG, Jena, comprising the statement of fi nancial position, the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of cash fl ows and the notes to the fi nancial statements, together with the group management report for the fi scal year from 1 October 2012 to 30 September 2013. The preparation of the consolidated fi nancial statements and the group management report in accordance with IFRSs (International Financial Reporting Standards) as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB (Handelsgesetzbuch: German Commercial Code) is the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated fi nancial statements and on the group management report based on our audit.
We conducted our audit of the consolidated fi nancial statements in accordance with Sec. 317 HGB and German generally accepted standards for the audit of fi nancial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, fi nancial position and results of operations in the consolidated fi nancial statements in accordance with the applicable fi nancial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated fi nancial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual fi nancial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and signifi cant estimates made by management, as well as evaluating the overall presentation of the consolidated fi nancial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the fi ndings of our audit, the consolidated fi nancial statements comply with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, fi nancial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated fi nancial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.
Eschborn/Frankfurt am Main, 22 November 2013
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Jäger Bätz Wirtschaftsprüferin Wirtschaftsprüfer
[German Public Auditor] [German Public Auditor]
AUDIT OPINION
SINGLE-ENTITY FINANCIAL STATEMENTS (SUMMARY)
The complete annual fi nancial statements of Carl Zeiss Meditec AG, Jena, in accordance with the German Commercial Code (Handelsgesetzbuch, HGB), including the unqualifi ed audit certifi cate, will be available for downloading from the Carl Zeiss Meditec Website www.meditec.zeiss.com/ir.
Table 1: Overview of key items in the single-entity fi nancial statements (in € '000)
| Income statement | Financial year 2011/2012 |
Financial year 2012/2013 |
Change |
|---|---|---|---|
| Revenue | 519,683 | 566,978 | + 9.1 % |
| Gross profi t | 232,380 | 245,228 | +5.5 % |
| Result from ordinary activities | 66,477 | 83,088 | + 25.0 % |
| Net income/loss for the year | 47,083 | 51,017 | + 8.4 % |
| Retained profi ts brought forward | 41,159 | 63,849 | +55.1 % |
| Net retained profi t | 63,849 | 82,342 | + 29.0 % |
| Balance sheet | 30 September 2012 |
30 September 2013 |
Change |
|---|---|---|---|
| Fixed assets | 580,514 | 572,160 | -1.4 % |
| Current assets | 346,693 | 363,240 | +4.8 % |
| thereof: trade receivables | 20,088 | 20,993 | +4.5 % |
| thereof: cash and cash equivalents | 120,024 | 3 | -100.0 % |
| Shareholders' equity | 794,553 | 813,046 | +2.3 % |
| Liabilities | 52,004 | 55,171 | +6.1 % |
| Total assets | 938,498 | 943,884 | + 0.6 % |
Financial year 2012/2013 closes with net income for the year of € 51,016,979.72.
The Management Board recommends utilizing the net retained profi ts of € 82,342,484.67 for fi nancial year 2012/2013 as follows:
| 1. Payment of a dividend of € 0.45 per no-par value share for | |
|---|---|
| 81,309,610 no-par-value shares: | € 36,589,324.50. |
| 2. Carry forward of residual profi t to new account: | € 45,753,160.17. |
Corporate Governance
| Corporate Governance report | 132 |
|---|---|
| Corporate Governance declaration | 137 |
| Other disclosures | 139 |
The Management Board and Supervisory Board of Carl Zeiss Meditec AG are committed to responsible corporate governance and control that is geared to increasing the value of the Company in the long term. At the same time, the Management Board and Supervisory Board have made it their goal to ensure the best-possible transparency for all German and international interest groups, and fi rmly believe that this is the way to lay an important foundation for sustainably increasing the confi dence of shareholders, business partners, employees and the public.
In fi nancial year 2012/2013 the Management Board and Supervisory Board of Carl Zeiss Meditec AG focused intensively on corporate governance, particularly on the amendments to the Code in its applicable version dated 13 May 2013. On 27 November 2013 the Management Board and Supervisory Board adopted the Declaration of Conformity pursuant to Section 161 AktG, which is permanently accessible to the shareholders on the Company's website. This declaration states that the Company complies fully with the recommendations of the Government Commission on the German Corporate Governance Code with just two exceptions.
Section 5.4.1 of the German Corporate Governance Code stipulates that the Supervisory Board shall set specifi c targets regarding its composition, which – taking the company-specifi c situation into account – shall consider the Company's international activities, potential confl icts of interest, the number of independent Supervisory Board members within the meaning of Section 5.4.2, an age limit to be defi ned for Supervisory Board members, and diversity. These targets should, in particular, also include the appointment of a reasonable number of women to the Supervisory Board. Proposals of the Supervisory Board to the responsible election bodies should take these targets into consideration. The objectives of the Supervisory Board and the implementation status should be published in the Corporate Governance report.
An international company such as Carl Zeiss Meditec AG also considers aspects such as internationality and the appropriate participation of women when appointing its Management Board and Supervisory Board. Carl Zeiss Meditec has taken these principles into consideration when fi lling positions in the past and shall continue to do so when making decisions in future. The Supervisory Board of Carl Zeiss Meditec AG does not specify quantitative objectives in terms of these principles.
Rather, the Supervisory Board of Carl Zeiss Meditec believes that the composition of the board should be geared, fi rst and foremost, to the interests of the Company, and be effi cient in advising and monitoring the Management Board. Accordingly, when appointing the Supervisory Board of Carl Zeiss Meditec AG, the priority shall therefore be to ensure that the members have the necessary capabilities, skills and specialist qualifi cations to properly fulfi l their duties, and that they are independent.
Section 5.4.6 of the Code in its version dated 15 May 2012 provides, for the fi rst time, for a variable remuneration promised to the members of the Supervisory Board to be tied to the sustainable success of the Company.
Art. 19 of Carl Zeiss Meditec AG's Articles of Association contains the detailed regulations concerning the remuneration of the members of the Supervisory Board. These provisions stipulate a variable remuneration, which is dependent on the Company's earnings per share and is limited to no more than the fi xed remuneration (including the fi xed remuneration for advisory activities).
The Supervisory Board has addressed the issue of the remuneration of the Supervisory Board, as already announced at the Annual General Meeting on 5 March 2013. At its meeting on 20 September 2013 the Supervisory Board approved a draft resolution pertaining to the amount and structure of the remuneration of the Supervisory Board. This resolution provides for the existing remuneration to be limited to a fi xed sum. The draft resolution on the amendment to the remuneration of the Supervisory Board to be applied retrospectively as of 1 October 2013 shall be presented for resolution to the Annual General Meeting on 4 March 2014.
Around 150 shareholders and guests participated in the Annual General Meeting on 5 March 2013 in Weimar. The calculated presence was around 82 % of the total voting share capital. The voting results from each of the most recent Annual General Meetings can be inspected on the Company's website at www.meditec.zeiss.com in the "Investor Relations" section under "IR Calendar and Events".
Carl Zeiss Meditec AG arranges for the appointment of a proxy to exercise the shareholders' voting rights according to their instructions. This proxy can be reached during the entire event. The Company thus helped its shareholders once again in 2013 to personally exercise their rights, and assists them with voting by proxy.
As a company under German law, Carl Zeiss Meditec AG has a dual management system consisting of the Supervisory Board and the Management Board, which each have specifi c competencies and are strictly separate from each other in terms of their membership. Further elements of their collaboration, such as their objectives and organization, are outlined in the declaration on corporate governance at www.meditec.zeiss.com in the "Investor Relations" section under "Corporate Governance". Specifi c information on the content and scope of the collaboration between the Supervisory Board and Management Board in fi nancial year 2012/2013 can be found in the Report of the Supervisory Board (page 16).
As previously, the Management Board of Carl Zeiss Meditec AG had three members in the period under review.
The rules of procedure for the Management Board of Carl Zeiss Meditec AG, which have been inspected and approved by the Supervisory Board, regulate, among other things, the departmental responsibilities of the individual members of the Management Board, matters reserved for the Management Board as a whole, and the majorities required to pass Management Board resolutions. No changes were made to the rules of procedure of the Management Board in the past fi nancial year.
Both the Supervisory Board and the other members of the Management Board must be informed immediately of any confl icts of interest of a Management Board member. There were no confl icts of interest in the past fi nancial year. In addition, a member of the Management Board may only pursue secondary employment with the consent of the Supervisory Board, particularly in the case of a position on the Supervisory Board of companies outside the Group. In the past fi nancial year none of the members of the Management Board were engaged in any ancillary activities.
As of 30 September 2013 the Supervisory Board of Carl Zeiss Meditec AG had a total of six members. The composition of Carl Zeiss Meditec AG's Supervisory Board conforms to the German One-Third Participation Act. Accordingly, the Supervisory Board is composed of four shareholder representatives and two employee representatives. There were no changes in the composition of the Supervisory Board in terms of its members in the past fi nancial year.
In its own estimation, the Supervisory Board has a suffi cient number of independent members, with Dr. Guthoff and Dr. Reim, who have no business or personal relationship with Carl Zeiss Meditec AG or the Management Board. There were no confl icts of interest on the Supervisory Board in fi nancial year 2012/2013.
To fulfi l its duties, the Supervisory Board has formed three permanent committees, each of which has three members: the General and Personnel Committee, the Audit Committee and the Nominating Committee. The Chairman of the Supervisory Board is Chairman of the General and Personnel Committee. Information on the work of the individual committees can be found in the report of the Supervisory Board (page 16).
The remuneration of the Management Board and the Supervisory Board is uniformly presented and published in a remuneration report within the management report. To avoid duplication, please refer to the management report in this Annual Report (page 28) for more information.
For selected press releases and price-related news – so-called ad hoc disclosures – Carl Zeiss Meditec uses electronic distribution channels, which ensure that these disclosures are distributed simultaneously worldwide in German and English. In the past fi nancial year the Company published 16 press releases. Of these, four press releases – taking precedence over the development of business in the individual quarters of the fi nancial year – and three ad hoc disclosures on the planned increase in the dividend for fi nancial year 2012/2013, the increased licensing fee due to longer-term usage of the "ZEISS" brand name, and the anticipated preliminary sales fi gures for the fi rst six months of 2012/2013, were published via Thomson Reuters' international distribution system, as being particularly relevant for the capital market.
The Company website at www.meditec.zeiss.com/ir publishes, in German and English, the mandatory publications such as the Company's interim and annual fi nancial statements, among other things, as well as additional information, such as corporate governance, presentations, share price data, press releases, a calendar of events, and much more, for the various interest groups. Telephone conversations, conferences and regular visits to the Company with or by investors, during which the Company explains its philosophy, the development of its business and its strategy, serve as additional channels of communication for the Company.
During the past fi nancial year, both members of the Management Board and members of the Supervisory Board, and individuals related to them (persons with a close relationship pursuant to Section 15a (3) German Securities trading Act (Wertpapierhandelsgesetz, WpHG)), executed notifi able transactions pursuant to Section 15a WpHG, which were published immediately after their disclosure on the Company's website at www.meditec.zeiss.com/ir | Corporate Governance | Directors' Dealings.
In order to ensure a uniform position concerning the holding of Company shares by members of the Supervisory and Management Board, to enable them to decide independently on personal investment matters and, at the same time, to prevent possible speculative action in the capital market, the Supervisory Board resolved, at its meeting on 14 January 2013, in agreement with the Management Board, that Supervisory Board and Management Board members and related individuals (persons with a close relationship as per Section 15a (3) WpHG) shall not, as a general rule, build up holdings of shares in the Company in the future.
At the current time, no Company shares are held by members of the Management Board or Supervisory Board of Carl Zeiss Meditec AG.
In the past fi nancial year Carl Zeiss Meditec AG received one report from shareholders stating that the notifi able voting rights thresholds pursuant to the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) had been reached, exceeded, or had fallen below the lower limit.
In April, Massachusetts Mutual Life Insurance Company, in compliance with Section 21 (1), Section 22 (1) and Section 24 WpHG, reported that the share of voting rights of Massachusetts Mutual Life Insurance Company, Springfi eld, MA, United States of America, had exceeded the threshold of 3 % of the voting rights.
The legally prescribed single-entity fi nancial statements of Carl Zeiss Meditec AG, which are relevant for the dividend payment, are prepared in accordance with the provisions of the German Commercial Code (Handelsgesetzbuch, HGB) and the German stock corporation act (Aktiengesetz, AktG). The annual consolidated fi nancial statements and the interim reports of the Carl Zeiss Meditec Group have been prepared by the Management Board, since 2005, in accordance with the principles of the International Financial Reporting Standards (IFRSs), as they are to be applied in the European Union. The fi nancial statements are audited and approved by the Supervisory Board. The annual fi nancial statements prepared in accordance with German commercial law are thus adopted.
EY GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, audited the consolidated fi nancial statements for 2012/2013, as prepared in accordance with the provisions listed above, and issued them with an unqualifi ed audit certifi cate. This also applies to the annual fi nancial statements for fi nancial year 2012/2013 prepared by Carl Zeiss Meditec AG in accordance with the provisions of the German Commercial Code (HGB).
The Annual General Meeting on 5 March 2013 appointed EY GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, as auditor for the annual fi nancial statements of Carl Zeiss Meditec AG and the consolidated fi nancial statements for fi nancial year 2012/2013 for the fi rst time, after the Supervisory Board had fi rst obtained a declaration confi rming the auditor's independence.
The Supervisory Board agreed with the auditor that the Chairmen of the Supervisory Board and the Audit Committee shall be immediately informed of any disqualifi cation or bias issues that may arise during the audit, if these cannot be remedied. The requirements concerning the internal rotation of the auditors (Section 319a (1) sentence 1 No. 4 HGB) shall be complied with.
It was also agreed that the auditor shall promptly report all fi ndings and events of relevance to the responsibilities of the Supervisory Board that may arise during the course of the audit. In addition, the auditor shall inform the Chairman of the Supervisory Board and the Audit Committee, or make a note in the audit report, if it discovers circumstances during the course of the audit that could cause an inaccuracy in the declaration on the German Corporate Governance Code submitted by the Management Board and the Supervisory Board.
In accordance with its voluntary commitment to good corporate governance, Carl Zeiss Meditec AG implements not only the recommendations of the Code – with just two exceptions – but also observes any relevant "discretionary provisions" of the Code.
Table 1: Implementation status of discretionary provisions of the Code by Carl Zeiss Meditec AG in fi nancial year 2012/2013
| No. | Discretionary provision | Compliance by the Company |
|---|---|---|
| 2.2.4 | The meeting chairman should ensure that the annual general meeting proceeds quickly. He should follow the guideline that an ordinary general meeting should last no longer than 4 to 6 hours. |
P |
| 2.3.2 | Proxies nominated by the company should also be contactable during the annual general meeting. |
P |
| 2.3.3 | The company should allow shareholders to follow the AGM via modern communication media (e. g. the Internet). |
P Experiences of other companies show that very few shareholders have taken advantage of such opportunities to date, resulting in an unfavorable cost/benefi t ratio. Carl Zeiss Meditec shall monitor current developments and respond quickly to any fundamental changes. |
| 3.7 | In the event of a takeover offer the Management Board should convene an extraordinary general meeting. |
P This shall be reviewed, if required. However, the necessity did not arise in fi nancial year 2012/2013. |
| 3.10 | The company should comment on the Code's suggestions in its corporate governance report. |
P |
| 5.1.2 | When new management board members are appointed, the maximum possible term of offi ce of fi ve years should not be the general rule. |
P |
CORPORATE GOVERNANCE DECLARATION
Under Section 161 AktG the Management Board and Supervisory Board of Carl Zeiss Meditec AG are obliged to submit an annual declaration of conformity stating whether the recommendations of the Government Commission on the German Corporate Governance Code, as published in the offi cial section of the Federal Gazette (Bundesanzeiger), were and are being complied with. In addition, they must state, giving reasons, which recommendations were not and are not being complied with. The latest amendment to the German Corporate Governance Code in its version dated 13 May 2013 was published in the Federal Gazette on 10 June 2013.
The Management Board and Supervisory Board of Carl Zeiss Meditec AG hereby declare, pursuant to Section 161 (1) Sentence 1 AktG, that since issuing its last Declaration of Conformity on 29 November 2012, Carl Zeiss Meditec AG has conformed and does conform to all recommendations of the Government Commission on the German Corporate Governance Code, as published by the German Federal Ministry of Justice in the offi cial section of the Federal Gazette, initially in the version dated 15 May 2012 – published in the Federal Gazette on 15 June 2012 – and subsequently, since it entered into effect, in the version dated 13 May 2013 – published in the Federal Gazette on 10 June 2013 – with the following two exceptions:
Section 5.4.1 of the German Corporate Governance Code stipulates that the Supervisory Board shall set specifi c targets regarding its composition, which – taking the company-specifi c situation into account – shall consider the Company's international activities, potential confl icts of interest, the number of independent Supervisory Board members within the meaning of Section 5.4.2, an age limit to be defi ned for Supervisory Board members, and diversity. These targets should, in particular, also include the appointment of a reasonable number of women to the Supervisory Board. Proposals of the Supervisory Board to the responsible election bodies should take these targets into consideration. The objectives of the Supervisory Board and the implementation status shall be published in the Corporate Governance report.
An international company such as Carl Zeiss Meditec AG also considers aspects such as internationality and the appropriate participation of women when appointing its Management Board and Supervisory Board. Carl Zeiss Meditec has taken these principles into consideration when fi lling positions in the past and shall continue to do so when making decisions in the future. The Supervisory Board of Carl Zeiss Meditec AG does not specify quantitative objectives in terms of these principles.
It believes that the composition of the Supervisory Board should be geared, fi rst and foremost, to the interests of the Company, and be effi cient in advising and monitoring the Management Board. Accordingly, when appointing the Supervisory Board of Carl Zeiss Meditec AG, the priority shall therefore be to ensure that the members have the necessary capabilities, skills and specialist qualifi cations to properly fulfi l their duties, and that they are independent.
Section 5.4.6 of the Code in its version dated 15 May 2012 provides, for the fi rst time, for a variable remuneration promised to the members of the Supervisory Board to be tied to the sustainable success of the Company.
Art. 19 of Carl Zeiss Meditec AG's Articles of Association contains the detailed regulations concerning the remuneration of the members of the Supervisory Board. These provisions stipulate a variable remuneration, which is dependent on the Company's earnings per share and is limited to no more than the fi xed remuneration (including the fi xed remuneration for advisory activities).
The Supervisory Board has addressed the issue of the remuneration of the Supervisory Board, as already announced at the Annual General Meeting on 5 March 2013. At its meeting on 20 September 2013 the Supervisory Board approved a draft resolution pertaining to the amount and structure of the remuneration of the Supervisory Board. This resolution provides for the existing remuneration to be limited to a fi xed sum. The draft proposal to amend the remuneration of the Supervisory Board, effective retrospectively from 1 October 2013, shall be submitted to the Annual General Meeting for resolution on 4 March 2014.
Jena, 27 November 2013
(Prof. Dr. Michael Kaschke) (Dr. Ludwin Monz)
For the Supervisory Board For the Management Board
139
CORPORATE GOVERNANCE DECLARATION OTHER DISCLOSURES
As an introduction please refer to the disclosures pursuant to Art. 289 Section 4 and 315 Section 4 HGB in the consolidated management report for fi nancial year 2012/2013, which are self-explanatory. In addition to these disclosures, the Management Board of Carl Zeiss Meditec AG is issuing the following explanatory report:
Classes of shares other than those described in the disclosures of the consolidated management report for fi nancial year 2012/2013 as mentioned above do not exist. Nor are there restrictions on behalf of Carl Zeiss Meditec AG concerning the voting rights or transfer of shares. Furthermore, the Management Board is not aware of any other agreements concluded, for example, between individual shareholders.
The voting rights announcement last issued by Carl Zeiss AG pursuant to Art. 21 Section 1, Art. 22 Section 1 Sentence 1 No. 1 German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) is dated 15 February 2006. Another voting rights announcement in connection with Germany's Transparency Directive Implementation Act (Transparenzrichtlinie-Umsetzungsgesetz, TUG) by 20 January 2007 was not required due to Art. 41 Section 4a Sentence 2 WpHG. The voting rights announcement pursuant to Section 21 (1), Section 24 WpHG, which was issued by Carl Zeiss AG on behalf of Carl Zeiss, Inc., is dated 27 October 2006. All above mentioned voting rights announcements can be inspected on the Company's website at www.meditec.zeiss.com/ir, "Corporate Governance – Vote Rights Disclosures".
The Company did not issue shares with special rights that grant supervisory powers.
The legal provisions concerning the appointment and dismissal of members of the Management Board are set forth in Section 84 and Section 85 AktG. In compliance with this, Art. 6 (2) of the Articles of Association of Carl Zeiss Meditec AG stipulates that the Supervisory Board shall be responsible for appointing and dismissing the members of the Management Board. Pursuant to statutory provisions, a member of the Management Board may only be dismissed for compelling reasons. The Supervisory Board is responsible for concluding and terminating contracts of employment with the members of the Management Board.
Further details on the authorization of the Management Board to repurchase own shares can be found in the Invitation to the Annual General Meeting 2010 under Agenda item 6 "Resolution on authorization to purchase Company's own shares" and the related report of the Management Board. The invitation may be inspected on the Company's website at: www.meditec.zeiss.com/ir, "Investors", "AGM 2010".
The Company has not entered into any signifi cant agreements contingent upon a change of control following a takeover bid.
Nor has the Company concluded any compensation agreements with the members of the Management Board or employees for the event of a takeover offer.
| Important terms and abbreviations | 142 |
|---|---|
| Dates and contacts | 146 |
Abbreviation for "Capital expenditure".
Indicates the level of investment in property, plant and equipment.
Usually stated as the capex ratio, i. e., cash fl ow from investments in property, plant and equipment in the reporting period in relation to consolidated revenue for the same period.
Abbreviation for "Days of sales outstanding".
This key ratio indicates how many days the Company will need to reduce the receivables at the end of the reporting period, assuming that the receivables are being paid on an ongoing basis and only the most recent receivables are open at the end of the reporting period.
Indicates the consolidated earnings per share that were generated. Calculation: consolidated net income divided by the weighted average number of outstanding shares in the reporting period.
Abbreviation for "Earnings before interest and taxes".
Abbreviation for "Earnings before interest, taxes, depreciation and amortization". Property, plant and equipment and intangible assets are depreciated and amortised, respectively, insofar as they have a limited useful life.
Abbreviation for "International Financial Reporting Standards", until 2001: "International Accounting Standards" or IAS.
International accounting regulations developed and published by the London-based "International Accounting Standards Board" (IASB).
Pursuant to Section 62 German Stock Exchange Regulations (Börsenordnung, BörsO), companies in Germany that are listed on the offi cial or regulated market with extended admission criteria (Prime Standard), must prepare consolidated fi nancial statements according to IFRSs or US GAAP.
Calculated from the difference between current assets and current liabilities and thus refl ects, in purely fi nancial terms, the extent to which current liabilities are covered by current assets.
Working capital is also an indicator of how much capital generated from operating activities is tied up in the company, i. e., it indicates the portion of current assets not tied up to cover current liabilities and that therefore "work" in the procurement, production and selling process.
Vision defect caused by an irregularly shaped cornea. Different light incidences entering the pupil are not evenly refracted such that e. g. a ball is perceived as a line or a rod.
ZEISS AT LISA® tri and ZEISS AT LISA® tri toric represent the next generation of ZEISS multifocal IOLs and are the fi rst trifocal and trifocal toric preloaded true-MICS IOLs for True Living Vision. These two members of the ZEISS AT LISA® tri family, based on the proven ZEISS AT LISA® platform, offer excellent intermediate vision without compromising distance and near vision due to an optimized optic design with an additional dedicated focal point.
Novel injector, which can also be used for the implantation of preloaded refractive ZEISS MICS intraocular lenses (multifocal, toric and multifocal toric IOLs). The lenses to be implanted do not have to be loaded fi rst, thus ensuring quick and safe implantation. The injector enables an incision of 1.8 mm and is therefore MICS-compatible.
CALLISTO eye® is a modular platform assisting the surgeon in the operation room and thus optimizing the documentation and visualization of diagnostic and patient data. CALLISTO eye® works seamlessly with the OPMI LUMERA® 700 surgical microscope and simplifi es operation and mirroring of microscopic settings into the eyepiece.
Deterioration of vision through opacity of the lens. Most common cause of blindness worldwide; typical disease among the elderly.
High-resolution diagnostic system for the structural examination of cross-sections and three-dimensional reconstructions of the fundus of the eye (e. g. for the early detection of glaucoma or the diagnosis of age-related macular degeneration).
CIRRUS™ photo delivers fundus images and OCT scans in a single, integrated system and thus provides a deeper insight and more comprehensive diagnostic fi ndings. Each examination mode is, in itself, a diagnostic instrument of the highest quality. In combination the different modes of operation allow you to examine and describe the status of the patient more easily and in greater detail.
Abbreviation: "ENT surgery" Also: Otorhinolaryngology Medical fi eld concerned with the recognition and surgical treatment of diseases, injuries, malformations and malfunctions in the entire head and neck area.
State-of-the-art data management system for ophthalmology. It serves to store all relevant examination data and images in a central location and also gives access to and presents this data in a clinically relevant manner via viewer software, in the practices and clinics, or by remote access. FORUM® can communicate with virtually all available examination devices and EMR (Electronic Medical Record) systems.
Ophthalmic disease which leads to increasing restriction of the fi eld of vision, often caused by an increase in ocular pressure.
Second most common cause of blindness in industrialized countries.
Abbreviation of "Intraocular lens". Synthetic lens to replace the natural lens of the eye, used in cataract surgery.
Device for accurate and effi cient non-contact measurement of the eye and calculation of the required intraocular lens prior to cataract surgery.
The new and improved excimer laser for laser vision correction.
Medical fi eld concerned with the treatment of diseases, injuries and malformations of the central nervous system (brain, spinal cord, peripheral nerves).
Surgical microscope for ophthalmology, which uses Stereo Coaxial Illumination (SCI) to enable surgeons to visualize details of the eye that were previously extremely diffi cult to identify. Newly available assistance functions enable the surgeon to work more comfortably and more precisely, and the freely movable ceiling mount creates space and headroom in the operating room.
High-end surgical microscope for neuro- and spinal surgery that accurately displays diseased tissue, e. g. brain tumors and vascular diseases.
Innovative technologies, such as various fl uorescence modules are fully integrated in the surgical microscope and make surgical workfl ows more effi cient.
Microsurgical procedures in the brain and spinal cord can thus be performed with much less invasion.
Multidisciplinary surgical microscope with outstanding optical features, intuitive user interface and ergonomic design for spinal, ear, nose and throat, plastic and reconstructive surgery, and neurosurgery.
Minimally invasive procedure for the correction of vision defects which is based on lenticule extraction and which only uses state-of-the-art and precise femtosecond technology.
A modular system for cataract and retinal surgery. It therefore offers all device functions required in the ophthalmic operating room and is very versatile in use.
| Date | Financial year 2013/2014 |
|---|---|
| 13 February 2014 | 3 Month Report |
| 13 February 2014 | Telephone conference |
| 4 March 2014 | Annual General Meeting |
| 13 May 2014 | 6 Month Report |
| 13 May 2014 | Telephone conference |
| 14 August 2014 | 9 Month Report |
| 14 August 2014 | Telephone conference |
| 10 December 2014 | Annual Financial Statements 2013/2014 |
| 10 December 2014 | Analyst's Conference, Frankfurt am Main |
| Date | Financial year 2013/2014 |
|---|---|
| 27 – 30 January 2014 | ARAB Health (Image) Dubai, United Arab Emirates |
| 14 – 16 February 2014 | ESCRS Winter Meeting (European Society of Cataract & Refractive Surgery) (Ophthalmology) Ljubljana, Slowenia |
| 19 – 21 March 2014 | EBCC 9 (European Breast Cancer Conference) (Oncology) Glasgow, Scotland |
| 2 – 6 April 2014 | WOC & APAO (World Ophthalmic Congress/Asia-Pacifi c Academy of Ophthalmology) (Ophthalmology) Tokyo, Japan |
| 4 – 8 April 2014 | ESTRO 33 (European Society for Radiotherapy & Oncology) (Radiotherapy and Oncology) Vienna, Austria |
| 5 – 9 April 2014 | AANS (American Association of Neurological Surgeons) (Neurosurgery) San Francisco, USA |
| 25 – 29 April 2014 | ASCRS (American Society of Cataract and Refractive Surgery) (Ophthalmology) San Francisco, USA |
| 15 – 17 May 2014 | DOC (27th International Congress of German Ophthalmic Surgeons) (Ophthalmology) Nuremberg, Germany |
| 26 – 28 June 2014 | ESBS (The European Skull Base Society) (ENT) Paris, France |
| 6 – 11 July 2014 | ESPRAS/BAPRAS (Congress of the European Society of Plastic Reconstructive and Aesthetic Surgery) (P&R) Edinburgh, Scotland |
| 11 – 14 September 2014 | FDI (World Dental Congress) (Dental) New Dehli, India |
| 11 – 14 September 2014 | Euretina (Ophthalmology) London, Great Britain |
| 13 – 17 September 2014 | ESCRS Summer Meeting (European Society of Cataract & Refractive Surgery) (Ophthalmology) London, Great Britain |
| 18 – 21 October 2014 | AAO (American Academy of Ophthalmology) (Ophthalmology) Chicago, USA |
| 18 – 23 October 2014 | CNS (Congress of Neurological Surgeons) (Neurosurgery) Boston, USA |
Investor Relations Sebastian Frericks
Phone: +49 36 41 22 01 16 Fax: +49 36 41 22 01 17 [email protected]
Corporate Communications Jann Gerrit Ohlendorf
Phone: +49 36 41 22 03 31 Fax: +49 36 41 22 01 12 [email protected]
Concept and editing by: Henriette Meyer, Susanne Hellwage
Visual concept and design: Publicis Erlangen, Zweigniederlassung der PWW GmbH, Erlangen www.publicis.de
Translation services by: Herold Fachübersetzungen, Bad Vilbel, Germany www.heroldservice.de
The Annual Report 2012/2013 of Carl Zeiss Meditec AG was published on 5 December 2013 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
Goeschwitzer Strasse 51– 52 Fax: +49 36 41 22 01 17 07745 Jena [email protected] Germany www.meditec.zeiss.com/ir
Carl Zeiss Meditec AG Phone: +49 36 41 22 01 15
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