Annual Report • Sep 4, 2009
Annual Report
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| Human care makes the future possible 0-1 |
|---|
| Elekta's operations 2008/09 2-3 |
| Letter from the President and CEO 5-7 |
| Financial outlook7 |
| The cornerstones of Elekta9 |
| Elekta's development 10-13 |
| Global markets15-17 |
| Elekta Neuroscience 18-21 |
| Elekta Oncology 22-25 |
| Elekta Software 26-29 |
| Elekta's personnel 31-32 |
| Financial information |
| Board of Director's report 34-37, 39, 41, 43, 45 |
| Income statement 38 |
| Balance sheet 40 |
| Changes in shareholders' equity 42 |
| Cash flow statement 44 |
| Notes 46-64 |
| Appropriation of profit 65 |
| Audit report 66 |
| Corporate governance report 67-74 |
| Board of Directors 69 |
| CEO, Executive Committee & organization 71-72 |
| Internal control 73 |
| Responsible business and operations 74 |
| The Elekta share 75-77 |
| Five-year review, key figures and definitions . 78-79 |
| Glossary 80 |
| Annual General Meeting and readers' guide 81 |
| Financial calendar |
| 3-month interim report, |
| May-July 2009/10 September 15, 2009 |
| May-July 2009/10 September 15, 2009 | |
|---|---|
| Annual General MeetingSeptember 15, 2009 | |
| 6-month interim report, | |
| May-October 2009/10 December 10, 2009 | |
| 9-month interim report, | |
| May-January 2009/10 March, 2010 | |
| Fiscal year-end report, 2009/10 June, 2010 |
This document presents Elekta's product portfolio. Certain products or functionality described may be works in progress or pending regulatory approval for certain markets.
For more information about Elekta, visit www.elekta.com Contact: Elekta Investor Relations, phone: +46 8 587 254 00, e-mail: [email protected]
It is estimated that more than 12 million people were diagnosed with cancer in 2008. According to WHO, the number of new cases is expected to reach more than 16 million by 2020.
Elekta is a human care company with a mission to improve, prolong and save lives by providing clinical solutions for treating cancer and brain disorders. The company develops intelligent and resource-efficient tools and treatment planning systems for radiation therapy and radiosurgery, as well as workflow enhancing software systems across the spectrum of cancer care.
Elekta is a world leader in image guided and stereotactic clinical solutions for radiosurgery and radiation therapy, giving radiation oncologists and neurosurgeons the capability to aggressively treat tumors and functional targets with ultra-high precision while sparing healthy tissue.
Elekta develops its clinical solutions and information systems through collaborative relationships with customer partners in research and product development. Through these efforts Elekta is addressing the needs of healthcare systems as well as patients by reducing hospitalization costs and providing better treatment options. All of Elekta's solutions employ non-invasive or minimally invasive techniques and are therefore clinically effective, gentle on the patient and cost-effective.
Elekta was founded in 1972 by the late Lars Leksell, Professor of Neurosurgery at the Karolinska Institute in Stockholm, Sweden. Today, Elekta clinical solutions and information systems are used in over 5,000 hospitals globally, and every day more than 100,000 patients receive diagnosis, treatment or follow-up with the help of a solution from Elekta.
Elekta employs 2,500 employees globally. The corporate headquarter is located in Stockholm, Sweden, and the company is listed on the Nordic Exchange under the ticker EKTAb.
In the fiscal year 2008/09 net sales amounted to SEK 6,689 M (5,081) and net profit reached SEK 546 M (406).
Elekta's products and clinical solutions are sold globally. The Group's sales are divided into the following three regions:
Toronto
St Louis New Jersey Sunnyvale
Edmonton
Las Vegas
Atlanta
Order bookings for the region rose 8 percent*. Net sales increased to SEK 2,709 M. During the year Elekta established its own organization in South America, which successfully proved to be a growth market for Elekta.
São Paulo
Order bookings for the region rose 14 percent*. Net sales increased to SEK 2,518 M. The largest markets for Elekta are the United Kingdom, Germany, France, Italy and the Netherlands.
Sydney Pretoria
New Dehli
Innsbruck
Milan Athens Madrid
Budapest
Helsinki
Hamburg Schwabmünchen Linköping
Stockholm
Best
Mägenwil
Brussels
Dublin
Paris Crawley
Freiburg
Asia Pacific
Tokyo Beijing
Hong Kong
Kobe
Shanghai
Order bookings for the region rose 53 percent*. Net sales increased to SEK 1,462 M. Asia Pacific are Elekta's fastest growing markets. Growth in Japan, Australia and India was particularly strong. 41% 40% 19%
* For 2008/09, based on unchanged exchange rates compared with the previous year.
Each area focuses on specific medical technology needs and clinical solutions and as such shares to a large extent a common technology base and competence structure.
Elekta Neuroscience provides integrated solutions for stereotactic radiosurgery and minimally invasive neurosurgery. From the original Gamma Knife to the latest Leksell Gamma Knife® Perfexion™, Elekta Neuroscience advances innovations for treating cancer and brain disorders.
Examples of offering: Leksell Gamma Knife®, Elekta Axesse™, Leksell Stereotactic System® and Elekta Neuromag®.
Elekta Oncology has a broad portfolio of clinical solutions for radiation therapy, including linear accelerators, integrated X-ray systems and clinical solutions for patient positioning and fixation. Elekta has a leading position in image guided radiotherapy (IGRT) with innovations that simplify treatment and improve outcome.
Examples of offering: Elekta Compact™, Precise Treatment System™, Elekta Synergy® and Elekta Infinity.
Elekta Software is the leading worldwide provider of integrated treatment planning, information and workflow management systems that streamline clinical and business operations across the entire spectrum of cancer care, from diagnosis and treatment to long-term follow-up.
Examples of offering: MOSAIQ®, XiO®, ERGO++, Focal 4D, Monaco and Atlas-Based Autosegmentation (ABAS).
■ In May, the Japanese Ministry for Health, Labor and Welfare, issued regulatory approval for Leksell Gamma Knife® Perfexion™, which made it possible for Elekta to market and install this technology in Japan. The first Leksell Gamma Knife Perfexion in Japan was delivered during the first quarter.
■ In June, Elekta received FDA 510(k) clearances for Elekta VMAT (Volumetric Modulated Arc Therapy), a technology that dramatically reduces treatment times while also enabling the delivery of a higher dose to the tumor target without compromising coverage and patient safety.
* Compared to last fiscal year at unchanged exchange rates.
| Key figures | |||
|---|---|---|---|
| 12 months, May-April | 2006/07 | 2007/08 | 2008/09 |
| Order bookings, SEK M | 5,102 | 5,882 | 7,656 |
| Net sales, SEK M | 4,525 | 5,081 | 6,689 |
| Operating result, SEK M | 509 | 650 | 830 |
| Operating profit, % | 11 | 13 | 12 |
| Shareholders' equity, SEK M | 1,863 | 1,813 | 2,555 |
| Capital employed, SEK M | 2,850 | 3,262 | 4,182 |
| Equity/assets ratio, % | 35 | 29 | 32 |
| Net debt/equity ratio, times | 0.27 | 0.58 | 0.31 |
| Return on shareholders' equity, % | 19 | 23 | 27 |
| Return on capital employed, % | 20 | 24 | 24 |
Second quarter, August-October 2008: ■ At ASTRO 2008 (American Society for Therapeutic Radiology and Oncology) Elekta presented Elekta Infinity, the new advanced linear accelerator that increases speed and precision in delivering Elekta VMAT (Volumetric Modulated Arc Therapy).
■ At CNS 2008 (Congress of Neurological Surgeons), Elekta presented Elekta Axesse™, an integrated image guided system for stereotactic radiosurgery and radiation therapy (SRS/SRT) and announced the frameless fixation system Extend™ for Gamma Knife® surgery.
■ In Scandinavia, Odense University Hospital in Denmark became the first cancer center to order Elekta VMAT and Haukeland University Hospital in Norway the first hospital to purchase the latest technology for non-invasive treatment of brain disorders – Leksell Gamma Knife Perfexion.
■ In January, Elekta received approval from the Chinese SFDA (State Food and Drug Administration) to sell its new linear accelerator Elekta Compact™ in China.
■ Elekta received multiple orders for Elekta Synergy® with VMAT capabilities, for example from Uppsala University Hospital and Lund University Hospital in Sweden and Tartu University Hospital in Estonia, but also in Germany and the UK.
■ Elekta received its first Russian order for Leksell Gamma Knife® Perfexion™ from Khanty Mansiysk in Siberia.
Fourth Quarter, February-April 2009:
■ Elekta and Nucletron reached an agreement to market and license Elekta's software system MOSAIQ® to Nucletron's existing software customers.
■ Elekta received a substantial number of orders for its new, highly cost efficient linear accelerator Elekta Compact™.
■ Elekta signed an agreement with the Swedish Export Credit Corporation, SEK, that strengthens and expands Elekta's opportunities for offering competitive solutions for customer financing. SEK will offer care providers financing in the form of installment credit and leasing of Elekta's clinical systems.
E lekta continues to build a platform for future profitable growth that will continue to deliver value to our shareholders. Some of the key elements for success are our ability to leverage our core competency, to capitalize on our increasingly integrated solutions and to enhance collaboration with our growing number of customers.
Strategic decisions made in recent years have laid the groundwork for a successful 2008/09 fiscal year. The combination of innovative new products, both hardware and software, developed organically or added to our portfolio through our acquisitions, have proven to be highly effective in modern cancer therapy. Our growing strength is as much due to these developments as to our role as a partner to our customers, not just a product supplier.
Despite the challenges presented by the worldwide economic crisis, Elekta has performed well in all product areas and regions. Asia was the strongest of our three regions, with double-digit growth.
In North and South America, order bookings based on unchanged exchange rates increased by 8 percent over the previous year. Investment in Latin America has been a great success, with a number of significant orders this year.
In Europe, Middle East and Africa, Elekta saw order bookings in local currency increase by 14 percent. Russia and the Middle East saw the fastest expansion in this region.
In Asia and the Pacific, order bookings in local currency increased by 53 percent, with the strongest growth in Japan, Australia, New Zealand and India.
Overall, order bookings rose 18 percent compared to last fiscal year at unchanged exchange rates, while order backlog reached an all time high of SEK 7,267 million. In addition, we saw operating profit rise 28 percent to SEK 830 million and net profit increase to SEK 546 million compared to SEK 406 million in the previous year.
We have also initiated steps to improve efficiency, including further streamlining of the organization, synergies based on our acquisitions, clustering regions into larger units and regionalizing the Asian operations to improve our ability to capture market opportunities. In addition, we have initiated a cost reduction effort of SEK 100 million on an annual basis. The cost of implementing the measures is estimated to SEK 40 million.
Through acquisitions and organic growth, Elekta has assembled a comprehensive product portfolio that offers a seamless flow of activity for the patient, while simplifying procedures for clinicians. We are successfully helping clinicians focus on the needs of their patients in the most efficient way possible.
Our leadership in workflow solutions has been secured through our strategy of providing integrated software solutions, including the integration of radiation therapy, chemotherapy and surgical disciplines. For our customers, Elekta software is achieving continuous cost reductions through scale and innovation. We can confidently say that we have made a successful shift from being a technology supplier to a comprehensive partner.
While profit development for Elekta Software has been slightly lower this year than expected due to delays in delivery, the back log however, has been growing satisfactorily. It has nevertheless been an exciting year for this product area. For example, Elekta has launched Monaco VMAT and XiO® with Electron Montecarlo. We have also launched Atlas-Based Autosegmentation (ABAS) with support for MR images and brain atlases.
Ultimately, our focus is on providing the cutting-edge tools " that enable patients to live longer and better lives."
Our software systems have been involved in the first patient treated at the Rinecker Proton Therapy Center, the first fully certified European proton radiation center that provides a complete hospital setting for the treatment of cancer tumors. In addition, Elekta has for the first time provided Volumetric Modulated Arc Therapy in combination with Elekta Axesse™ linear accelerators.
We are working on the imminent release of MOSAIQ® RTP, a new suite of treatment planning applications that is designed to integrate all steps in the patient treatment process. Today, Elekta is the leading worldwide provider of integrated treatment planning, information and workflow management systems that streamline clinical and business operations across the entire spectrum of cancer care, from diagnosis and treatment to long-term follow-up.
Elekta continues to break new ground with state-of-the-art image guided radiation therapy (IGRT) innovations that build on our expertise in 3D imaging. Advanced high-dose escalation radiation therapy, with 4D treatment planning, stereotactic techniques and VMAT are showing success in tests on early stage lung cancer patients.
With the introduction of VMAT and management of adaptive techniques, such as Critical Structure Avoidance, developed in collaboration with leading global oncology experts at Antoni van Leeuwenhoek Hospital, Elekta continues to pave the way forward in adaptive and dynamic treatment guidance. Intuity, Elekta's new IGRT software release, will be the first solution to offer quantitative information and tools that help manage the placement of dose to compensate for organ movement.
The rollout of Elekta Compact™, a more affordable linear accelerator specifically developed for countries in need of rapid build up of additional capacity, has enjoyed good demand from India and China and, more recently, Latin America. With Compact, Elekta offers a complete portfolio in all segments and product needs.
Based on 60 years experience in stereotaxy, Elekta has set the gold standard for stereotactic treatment of the brain and other parts of the body – and continues to do so with new additions to Elekta's stereotactic lineup like Elekta Axesse™ that offers clinicians the ability to deliver higher and more conformal doses in fewer fractions.
A new innovation to the Leksell Gamma Knife® Perfexion™ is the Extend™ program, which allows radiation oncologists and neurosurgeons to treat new indications that were previously not suited for Gamma Knife surgery.
Looking towards the next fiscal year and beyond, we can conclude that Elekta is well positioned for continued strong growth.
A crucial contribution to Elekta's growth is our Research and Development program, with expenditure for the fiscal year 2009/10 increasing over last year's R&D budget. We are focusing on three areas where we already enjoy leadership positions: Leksell Gamma Knife, Elekta Axesse and related neuroscience technologies; image guidance and image integration in linear accelerators in oncology; and further integration of our software solutions.
Another important contributor to growth is our people, who have successfully navigated the challenges of becoming a global company that offers the full range of products across the spectrum of cancer care. In the past 12 months, Elekta's people have been instrumental in implementing a new organization leading to increased efficiency.
Another area of growth is our after-sales organization, where we have increased the number of people to manage the needs of our 5,000 customers, which is an important source for future recurrent revenue. This organization, along with our R&D efforts and collaboration with major research institutions, hospitals and leading experts, will help us continue to add value to this installed base.
With new technologies in the pipeline and the further integration of treatment planning, information management and workflow, Elekta is well positioned to hold its position and make further inroads into the cancer therapy market in the future.
Our cooperation with Swedfund International AB, a company that offers financing and competence for investments in Africa, Asia, Latin America and Eastern Europe (non-EU members), will strengthen Elekta's expansion into new markets and to new customers.
The growing rate of cancer, aging populations and better diagnostics all point to an increased need for the kind of cancer care offered by Elekta. What was once considered palliative treatment for cancer patients is increasingly succeeding as curative treatment. Ultimately, our focus is on providing the cutting-edge tools that enable patients to live longer and better lives – and, in a growing number of cases, remove the scourge of cancer from their lives. Elekta is bringing more innovation, accuracy, insight and success to this vision.
STOCKHOLM, AUGUST 13, 2009
Tomas Puusepp, President and CEO
In fiscal year 2009/10, Elekta's net sales are expected to grow by more than 8 percent in local currency. Elekta's operating profit in SEK is expected to grow by more than 35 percent.
Net sales and operating profit are for fiscal year 2009/10 also expected to be significantly higher in the second half of the year compared with the first.
Elekta's aim is to achieve sustainable profitable growth. Elekta conducts its operations with a long term plan, regularly reviewed and evaluated by the Board of Directors and with a perspective of at least three years. The financial objectives form the base in the long term planning.
We are creating new ways for our customers to provide improved patient care
We have a clear foundation that underlies all aspects of our business. By consistent application of Elekta's mission, vision and values, we can reach the goal of our strategy – the continuous enhancement of customer value.
Everything that Elekta does and represents, is about improving, prolonging and saving lives. From the devices we produce for delivering treatment in a precise and adaptive way, to the systems that allow the capture and efficient exchange of information.
Elekta, by its very nature, is a company of innovation. From novel ways of treating intracranial tumors without surgery to the rapid and targeted delivery of radiation to inoperable tumors, Elekta, through close customer collaborations, has been responsible for one advance after another. These innovations have redefined clinical practice as it is today.
Elekta's decentralized organization and decision processes give each manager and employee considerable scope in making decisions regarding his or her work. While this implies a large degree of freedom, it also places substantial demands on Elekta's employees. The five Elekta Values function as support for decision-making and as general guidelines in the daily internal and external work.
Elekta is building collaborative and long-term relationships with its customers. These relationships have yielded the breakthroughs that have and are transforming treatment and practice.
For Elekta demonstrating commitment to the very highest level of service and customer care is about a shared responsibility for cancer care and a trust we will deliver – to colleagues and to customers.
The creative spirit of Elekta is at the core of our research and development strategy and the way we do business, the way we work with our customers to forge the relationships that yield the paradigm shifts in treatment and care.
Elekta's pioneering spirit has enabled the company to push the boundaries of what is possible. Making the most of resources – whether time, money or simply human endeavor – is key to our competitiveness and the impact of our clinical advances.
Whether it is the continual refinement of our solutions to benefit patients and providers, the service promise we make to all of our customers, or the collaborations and partnerships we build internally and externally, speed and flexibility of response are integral to building our reputation for excellence.
The year 2009 marks 60 years since the stereotactic frame was first placed in clinical use, a development that revolutionized neurosurgery and gave millions of patients suffering from brain disease renewed hope and clinicians around the world a new, more gentle, non-invasive method for treating these diseases.
The inventor of this life-saving technology was the late Swedish professor and neurosurgeon Lars Leksell, who also founded Elekta. First introduced at the Karolinska Institute in Stockholm as a way to minimize intracranial surgical
intervention, the stereotactic technology has since become the foundation for a broader development of stereotaxy as a method for locating and treating structures in other parts of the body.
The development of stereotaxy is an important milestone. Although many manufacturers using various targeting solutions claim the technology today, Elekta's stereotactic innovations have propelled the company to the forefront of this technology. In addition to Gamma Knife® surgery, Elekta's stereotaxy solutions today also include Leksell® Stereotactic Neurosurgery and Elekta Axesse™.
From this auspicious beginning, Elekta has since evolved from a dedicated neurosurgery company to a human care company pioneering significant innovations and clinical solutions for treating cancer and brain disorders. Elekta's treatment planning systems and workflow solutions are based on vendor-neutral, open systems that enable vendors and collaborating partners to work towards a vision of providing integrated and comprehensive patient-oriented solutions across the entire spectrum of cancer care.
For Elekta's customers, one of the key advantages of the open system approach is that it allows hospitals and clinics to mix and match hardware and software in ways that suit their needs without locking themselves into one system. Likewise, the open interfaces built into Elekta's systems make it possible for them to be added to the IT-systems of other providers' systems.
When customers invest in a product from Elekta, they are not just acquiring a highly advanced system – they are also buying into a specific vision of the future. Elekta's technology will remain current during the 10-15 years of its lifetime. Furthermore, with most of Elekta's equipment dependent on software for
Elekta has developed from a technology supplier to a comprehensive partner within oncololgy and neuroscience. Elekta provides solutions adapted for the needs of patients and their specific diseases.
performance upgrades, these systems have the capability to migrate capabilities into next generation technology.
Elekta's ability to continue to launch groundbreaking technology on a continuous basis is the result of a tradition of innovation. Significant, long-term commitment to R&D has been central to Elekta's efforts to develop and commercialize next-generation systems that improve the lives of customers' patients.
Most of Elekta's new products are the result of long-term, collaborative efforts with customers and partners. A shining example of this effort is the Leksell Gamma Knife® Perfexion™, the fruition of an intense collaboration between Elekta engineers and a handful of leading experts and neurosurgeons who were long-time users of Leksell Gamma Knife. Starting at the earliest stage in the concept development, the final result
was a new-generation of the product that allowed clinics to process a significantly larger caseload of patients, as well as offer enhanced treatment capabilities while maintaining the same level of precision.
Elekta Synergy® and Elekta Axesse™ were also the result of extensive joint collaborations between Elekta and leading experts in radiosurgery and radiation oncology. The same principle applies to much of the new workflow and treatment
1983 1984 1985 1986 1989 1994 1995 1996 First foreign subsidiary established in the USA First fully digital accelerator introduced First commercial Leksell Gamma Knife® delivered Leksell Gamma Knife® Society formed Elekta AB listed on the Stockholm Stock Exchange IMRT Consortium established Stereotactic Body Frame® launched
planning software developed by Elekta Impac Software and Elekta CMS Software, whose adherence to open systems and the highest standards have been important factors in successful collaborations with leading clinics and hospitals around the world.
For example, Monaco, a new paradigm in second-generation IMRT planning, was developed in collaboration with the University of Tübingen, Germany. The result is an advanced, clinically relevant IMRT planning system backed by research and capabilities of a leading European university.
None of this would be possible without the commitment and dedication that Elekta employees bring to their work, whether they are responsible for training customers on Elekta Neuromag® or providing emergency services to customers whose IT-system may have gone down.
Elekta employees feel passionately, both on a professional and personal level, about the outcome of their products and treatment systems have on the lives of patients.
That is the essence of the brand message, Human care makes the future possible. It signifies Elekta's commitment to placing all the company's resources, from product innovation to training, installation and customer service, into improving, prolonging and saving lives.
To help customers improve outcomes for their patients, Elekta provides critical after-sales support known as Elekta Lifecycle Services. Lifecycle Services offerings include comprehensive customer support programs, covering everything from site planning and monitoring to intelligent device management and clinical applications training.
Helping customers be as efficient as they can be is a challenge that is of growing importance as healthcare providers in most countries seek to cut costs and
improve efficiencies. To be effective, cancer care professionals must rapidly introduce new diagnostic and treatment techniques, adopt new clinical and business technologies and processes, and deal with the ever-changing legislative and reimbursement landscape of cancer care. One example of how Elekta helps customers succeed with this challenge is Elekta Software's STRATEGIQ™, a consultative service designed to transform Elekta technology investments into effective management solutions that add clinical and operational value to the cancer program.
Elekta has been successful in meeting the challenge of integrating a number of companies acquired in recent years. As a long-term process, the merging of cultures takes time, but the seamless integration of Elekta's offerings is coming together nicely.
Since the invention of Lars Leksell's stereotactic frame 60 years ago, Elekta has come a long way. Now a global company, Elekta has assembled all the pieces, through acquisition and organic growth, to consolidate its position as a provider of integrated solutions across the entire spectrum of cancer care.
But maintaining this position takes constant development. It requires continuous advances in image guided radiation therapy, further extensions to the Gamma Knife product line, full
integration of Elekta's increasingly advanced software solutions, including both treatment planning systems and workflow management.
Elekta will continue to grow and develop a broader range of advanced, vendor-neutral technologies, products and solutions to improve care for cancer patients and enhance the efficiency and productivity of the medical professionals who treat them.
Redefining global standards of care by meeting and adapting to local needs
14 ELEKTA AB (publ) | Annual Report 2008/09
The number of people diagnosed with cancer is expected to grow in the next ten years to more than 16 million annually in 2020* compared to over 12 million cases in 2008, mostly due to aging populations.
A growing need for treatment, shortage of treatment capacity, better diagnostics and outcomes as well as more ambitious patient treatment efforts will lead to increased demand for radiation therapy.
The demand on healthcare systems to improve efficiency is also expected to drive demand for radiation therapy since it is considered a more cost-efficient method than other applications.
In fiscal year 2008/09 the economic
slowdown had limited effects on investments in cancer care. Elekta experienced solid demand with increased order bookings in all regions and product areas. However, the global recession has generated some uncertainty. Private customers' financing and healthcare spending could be negatively effected. In fiscal year 2009/10 net sales is expected to grow by more than 8 percent in local currency.
According to Elekta's long-term financial objectives, which reflects at least a three-year perspective, organic sales growth is expected to exceed 10 percent in local currency on average.
Market development in Europe, especially Western Europe, is driven by replacements as well as national and regional initiatives to remedy the lack of radiation treatment capacity. A majority of treatment systems in Europe are procured through public tenders, facilitating transparent yet relatively long sales processes.
Customers in the region continue to demand bundled product offerings which decrease treatment time and improve return on investment. The largest markets for Elekta are the United Kingdom, Germany, France, Italy and the Netherlands. In Eastern Europe and in the Middle East there is a large unmet need for radiotherapy capacity. Elekta is expanding its presence in these markets, today viewed as key growth markets.
To address the demand from the installed base in Europe and better serve important growth markets, Elekta has implemented a new structure in Europe. The new organization will enable sharing of expertise and best practice across the region as well as streamline processes and reporting structures.
In 2008/09 order bookings for the
region rose 14 percent based on unchanged exchange rates compared with the previous year. Net sales for the region rose 25 percent and reached SEK 2,518 M.
Elekta has strong research and development collaborations in the region including the Elekta International IMRT consortium, Elekta Synergy Research Group and Leksell Gamma Knife Society. There will be a continued
expansion and support of collaborations in the university segment, which is setting the standard for the other markets and provides a strong and trusted reference base.
In Europe, Middle East and Africa the market is expected to be stable, showing single digit-growth in the fiscal year 2009/10. The growth is supported by an aging population, cancer incidence and improved diagnostic.
The North American market is primarily driven by rising cancer incidence and rapid acceptance of new and advanced treatment methods. Elekta's largest market in the region is the United States. Due to the financial crisis in 2008 and the economic downturn, the sales cycle became longer and demand grew for alternative financing.
Demand in the region continued to be solid for services, upgrades and software systems that support the entire treatment process, which normally is an integrated part of the delivery of treatment systems in this region.
During the year Elekta established its own organization in South America, which successfully proved to be a growth market for Elekta.
In 2008/09 order bookings for the
region rose 8 percent based on unchanged exchange rates compared to previous year. Net sales increased by 29 percent to SEK 2,709 M.
For North and South America Elekta expects a flat development for the major part of the fiscal year 2009/10, followed by a steady recovery in the coming years.
The economic environment created additional challenges in the US. Both hospitals and freestanding cancer centers were impacted. However, reimbursement remains favorable for Radiation Therapy and Stereotactic Radiosurgery/ Radiotherapy in 2008/09.
While the government's Medicare and Medicaid programs are a significant source of payment for radiation therapy and radiosurgery services, the majority of the healthcare provided in the US is paid for by private insurance.
Medicare is a health insurance program for people aged 65 or older and people with certain disabilities, while Medicaid is available only to certain low-income individuals and families. In total, these programs cover about 93 million people in the US while private insurance covers about 171 million people.
In radiation therapy about 65 percent is reimbursed through Medicare/Medicaid.
The equivalent proportion for Gamma Knife surgery is 35 percent.
The reimbursement levels are revised annually by the Centers for Medicare & Medicaid Services (CMS). Reimbursement levels are important for Elekta's customers and major changes may influence demand. In 2009, the reimbursement level for IMRT delivery in a hospital outpatient setting was significantly increased, by 18 percent, while proton therapy received a 14 percent decrease for hospital outpatient setting. Reimbursement for Gamma Knife surgery slightly decreased but continued to be a very profitable service line for hospitals.
To provide healthcare to the large numbers of Americans lacking health insurance, President Barack Obama has made healthcare reform a top priority. Among possible measures presented to finance this effort is USD 600 B in savings within Medicare/Medicaid, which could negatively affect the insurance industry.
President Obama has also presented an initiative to fund investments in software in the healthcare sector to improve efficiency. The HITECH Act of 2009 includes USD 19.2 B in spending to increase the use of electronic health records (EHR) by physicians and hospitals. Elekta's software buiness is well positioned to benefit from government-sponsored hospital IT spending.
The Asia Pacific market for clinical solutions for treatment of cancer and brain disorders is expected to continue to grow while the region is expected to increase relative to other markets. There are large unmet needs for radiation therapy, with a lack of equipment, lack of oncologists and lack of radiotherapists. The Asia Pacific Region has the largest overall discrepancy between estimated need and supply for radiation therapy systems.
Medical device spending as part of total healthcare spending is linked to national investment initiatives, with Japan being the highest at 7 percent (average 4 percent).
In the fiscal year 2008/09 order bookings for Elekta increased by 53 percent based on unchanged exchange rates in the Asia Pacific Region.
Net sales grew by 52 percent to SEK 1,462 M. Growth in Japan, Australia and India was particularly strong.
Elekta operates directly in the biggest spending markets, with distributors in others. Elekta will further develop the infrastructure to support the entire region and capitalize on the full and adapted range of solutions to suit all market needs in all product areas.
Of all countries in the world, Japan is the second largest market. Elekta has a long history in Neuroscience with a large installed base of Leksell Gamma Knife® units and treatment planning software from Elekta CMS Software. Elekta Oncology is growing its market share from previously low levels. Despite the economic downturn, the prospects for cancer care are favorable in Japan. To improve cancer care, the
In the region* there is one linear accelerator per 1,246,000 persons, compared to 84,000 in the US and 135,000 in Scandinavia.
Japanese government is allocating resources for the acquisition of equipment and education of oncologists and medical physicists.
In China spending on healthcare is also increasing. As part of its healthcare reform plans, the government has announced that it will invest USD 125 B in the healthcare sector. Coupled with general economic growth and demographic trends, this effort is expected to lead to increased opportunities for more people to receive treatment.
The market for linear accelerators in China is expected to grow by more than 10 percent annually in the coming years, according to Elekta's projections.
In January 2009, Elekta received approval from the Chinese State Food and Drug Administration to sell its new, highly cost-efficient linear accelerator Elekta Compact™ in China. Elekta has also gained CE marking for Elekta Compact.
* Average for Japan, Taiwan, New Zealand, Australia, Hong Kong, Singapore, South Korea, Malaysia, China, Thailand, Philippines, Vietnam, India, Indonesia, Bangladesh and Pakistan together.
Leksell Gamma Knife® is used in over 270 hospitals worldwide, treating more than 50,000 patients every year. In total, this clinical technology has helped more than half a million patients worldwide live longer and better lives.
E lekta Neuroscience provides physicians and clinicians with advanced technology for extremely accurate, patient-friendly, non-invasive stereotactic radiosurgery and radiation therapy, as well as minimally invasive stereotactic neurosurgery.
Based on 60 years of experience in stereotaxy, Elekta has long set the standard for stereotactic treatments in the head, neck and other parts of the body. Leksell Gamma Knife® is complemented by Elekta Axesse™, the world's most advanced and efficient stereotactic body radiosurgery system.
Since the Leksell stereotactic frame was first introduced into clinical use 60 years ago it has become the world's most trusted stereotactic system. Origi-
nally invented by late Swedish professor and neurosurgeon Lars Leksell, this technology has revolutionized neurosurgery and served as the basis for a number of groundbreaking stereotactic products pioneered by Elekta.
Gamma Knife surgery has given hospitals and clinics the capacity to help more seriously ill patients live longer and improve their quality of life. A new generation in
the product line is Leksell Gamma Knife® Perfexion™, which sets a new standard for intracranial radiosurgery with respect to accuracy, dose conformity, patient comfort and program efficiency.
As one of a number of continuous Elekta innovations, the Extend™ program allows radiation oncologists and neurosurgeons to treat new indications via fractionation that were previously not suited for Gamma Knife surgery.
In the 1930s, when Elekta's founder, late Professor Lars Leksell, decided to become a neurosurgeon, the mortality rate for patients undergoing brain surgery was a staggering 50-60 percent. To improve this outcome, Leksell devised the stereotactic frame and in 1949 introduced the Leksell Stereotatic System®, an important foundation for further innovations. In 1968, Dr Leksell and Professor Börje Larsson developed the stereotactic radiation knife,
Leksell Gamma Knife®, used for the first time to treat tumors and other brain disorders. This, too, was a groundbreaking invention in the field of neurosurgery and to
date half a million patients have been treated using this technique.
To commercialize this groundbreaking innovation, Elekta Instrument AB was founded in 1972, and in the 1980s the first version of Leksell Gamma Knife was exported to the US.
Stereotaxy or stereotactic surgery is an integrated solution for secure and precise localization and
18
Another stereotactic innovation for locating and treating structures in other parts of the body is Elekta Axesse™, which offers clinicians the ability to deliver higher and more conformal doses of radiation to the target in fewer fractions than with conventional radiation therapy techniques.
Brain metastases are tumors that have spread to the brain from another site in the body, commonly the lung or breast. About 30 percent of all cancer patients develop brain metastases and usually in a late stage of the primary disease.
How brain tumors are treated depends on the age of the patient, the stage of the disease, the type and location of
the tumor and whether the cancer is a primary tumor or brain metastases. Brain cancer and brain tumors are somewhat unique because of a bloodbrain barrier that prevents some substances from penetrating into the brain. This makes chemotherapy for brain lesions more difficult than for lesions elsewhere in the body.
The common alternative for patients with brain metastases is known as whole brain radiation therapy. This method is nowadays being challenged more often in scientific literature because of the risk of side effects.
The therapeutic alternatives are the same in cases with less malignant types of tumors and in all benign tumors. However, for these patients, there is the noninvasive radiosurgery alternative, such as that offered by Leksell Gamma Knife®.
A growing number of studies show that stereotactic radiosurgery delivers better results. The Leksell Gamma Knife product line, with its high precision and automation, makes it particularly suitable for treatment of multiple brain metastases. In fact, it is more and more common today to have cases where more than 10 metastases have been eliminated during a single treatment.
treatment of targets in the body. It was originally based wholly on Dr Leksell's stereotactic frame with its 3-dimensional coordinate system and specifically used within neurosurgery.
Today, stereotaxy, as developed by Elekta and others, now also includes various methods of locating and treating targets in other parts of the body with the support of different stereotactic
techniques as well as advanced image processing.
In particular, Elekta's aids for stereotactic microsurgery, centered on the stereotactic frame and Leksell Stereotactic System, have been widely distributed. The precision and simplicity of this technology make it possible to perform minimal invasive neurosurgery, reduced trauma and shorter convalescence.
Neurological disorders* irradiated with Leksell Gamma Knife®
* Based on data from Leksell Gamma Knife Society. Note: Approval of indications may vary between different countries.
Since introducing Leksell Gamma Knife Perfexion in May 2006, Elekta set a new standard in stereotactic radiosurgery. As a new platform in the Gamma Knife product line, Perfexion's patented collimator design offers virtually unlimited ability for sculpting the dose distribution, enabling dynamic shaping with absolute accuracy.
Recently, Elekta has added the ability to perform fractionated stereotactic radiation therapy with Perfexion. The Extend™ program lets radiation oncologists and neurosurgeons treat indications that were previously untreatable with Gamma Knife surgery, such as lesions too large or so critically located to be safely treated in a single session.
Patients are fitted with a non-invasive stereotactic frame for the head. The Extend program, with its rigid carbonfiber frame, provides the most accurate non-invasive localization available.
The program, which is installed as an integrated part of Leksell Gamma Knife Perfexion treatment planning system and treatment control system, includes all the tools necessary for efficient and accurate management of staged or fractionated treatments.
The Extend program is based on the Leksell legacy of simple, accurate and clinically relevant design, while ensuring an optimized workflow for every patient.
The Extend program provides advantages for both stereotactic radiosurgery and stereotactic radiation therapy, offering a new tool for both neurosurgeons
and radiation oncologists to treat more patients.
The Extend program is also developed for use in fractionated radiotherapy with Elekta Axesse™ or Elekta Synergy®. This provides a bridge between neurosurgery and radiation oncology for enhanced clinical applications.
The Extend program requires FDA 510(k) review and is not yet commercially available in the United States.
Gamma Knife® surgery is, with very few exceptions, given in a single session and without general anesthesia. After Gamma Knife surgery the patient normally leaves the hospital the same day, making it a very cost effective alternative to open surgery.
During the procedure, some 200 radiation beams from cobalt-60 sources converge on the target with very high accuracy. Each individual beam has a low intensity and therefore does not affect the tissue through which it passes on its way to the target.
The beams converge in an isocenter where the cumulative radiation intensity becomes extremely high. By moving the patient's head in relation to the beams' isocenter, the radiation dose can be optimized in relation to the shape and size of the target. The extreme precision of Leksell Gamma Knife, guaranteed to be better than 0.5 mm, makes it possible to administer a high radiation dose to the diseased area, with minimal risk of damaging adjacent healthy tissue.
The Comprehensive Cancer Center at Wake Forest University Baptist Medical Center (WFUBMC) has upgraded to Leksell Gamma Knife® Perfexion™ and implemented Elekta Axesse™ to provide its community with head-to-toe stereotactic radiosurgery (SRS).
"We now have the best pair of tools to treat the widest range of indications with stereotactic treatment solutions," explains Dr Ed Shaw, radiation oncologist and member
of the Center's Gamma Knife program with 20 years Gamma Knife experience. By upgrading to Leksell Gamma Knife Perfexion, Wake Forest Baptist will expand their high-volume Gamma Knife program that already treats an average of 325
patients a year, including patients with metastatic brain tumors, trigeminal neuralgia, meningiomas, acoustic neuromas, pituitary adenomas and vascular malformations.
The addition of Elekta Axesse will allow the center to
perform extracranial radiosurgery to not only lung and liver, but also spinal and paraspinal tumors and other areas in the head and neck, chest, abdomen, and pelvis with significantly greater precision and higher doses.
"We've previously been treating these challenging cases with conventionally fractionated radiation using a standard linac or, in some cases, not treating them at all," Dr Shaw acknowledges. "Now Axesse will allow us to treat these indications with anywhere from a single fraction or up to five fractions of radiation."
With the addition of Elekta's premium stereotactic radiosurgery technology, WFUBMC will also be designated Elekta's first 'Leksell Center of Radiosurgery.' As such, WFUBMC will focus on the development and dissemination of clinical guidelines across Elekta's latest line of stereotactic radiosurgery solutions.
Shaw concludes, "As a Leksell Center of Radiosurgery we look forward to collaborating with Elekta on SRS clinical development, peer education, and community outreach."
Gamma Knife surgery is a non-invasive method for treating brain disorders by delivering a single, high dose of irradiation to a small volume inside the skull. The latest in the product line, Leksell Gamma Knife® Perfexion™, is an integrated system that provides an automated, single pushbutton treatment approach.
Elekta Axesse™ is a fully integrated stereotactic system that combines threedimensional (3D) image guidance at the time of treatment with highly conformal beam shaping and robotic 6D submillimeter patient positioning to deliver fast, efficient and accurate treatment.
Leksell Stereotactic System® is the most widely used frame in the world. The system's modular design, unique components and range of optional accessories offers the surgeon an optimal operative system for diagnostic and therapeutic procedures – functional interventions, microsurgery and Gamma Knife® surgery.
Elekta Neuromag® is the world's most advanced and most used magnetoencephalograph (MEG) system. It provides real-time mapping of brain activity by non-invasively measuring both aptial and high temporal (millisecond) resolutions – the magnetic fields produced by the brain cells.
SonoWand Invite™ is an intra-operative imaging system with high quality 3D ultrasound and navigation for brain surgery. Elekta has a distribution agreement with the Norwegian-based company SONOWAND AS.
An industry leader in the integration of linear accelerators with imaging devices, Elekta is today providing patients with significant improvements in accuracy, effectiveness and safety in the treatment of extracranial cancers.
E lekta has a broad portfolio of clinical solutions in oncology including linear accelerators, integrated X-ray systems and clinical solutions for patient positioning and fixation.
For example, with its image guided radiation therapy (IGRT) enabled Elekta Synergy®, which integrates highresolution 3D imaging at the time of treatment, Elekta is paving the way for treating previously untreatable or difficult-to-treat extracranial cancers.
Last year, Elekta's oncology portfolio was expanded with the introduction of Elekta Compact™, a system for high quality, conventional radiotherapy.
Another important introduction was
Elekta VMAT (Volumetric Modulated Arc Therapy), a solution that combines a significant reduction in treatment time with dose escalation and optimal avoidance of radiation dose to healthy tissues surrounding the tumor.
The entire treatment strategy from planning to delivery can be easily con-
trolled from a single workstation supported by an electronic medical record (EMR) and paperless workflow using the MOSAIQ® Oncology Information System.
Today, with the introduction of VMAT and management of adaptive techniques, such as Critical Structure Avoidance, Elekta continues to pave the way in adaptive and dynamic treatment guidance. Intuity, Elekta's next IGRT software release will be the first solution to offer quantitative information and tools that help manage the placement of dose when compensating for organ movement and deformation. And Elekta's forthcoming Symmetry solution enhances the existing 3D VolumeView to handle respiratory motion.
Elekta has also pioneered innovations such as the X-ray Volume Imaging (XVI), which is essentially the ability to
acquire and analyze three dimensional image data with high-speed computer systems, matching the image to dose planning and radiation delivery.
Generally, treatment of extracranial cancer, such as lung, breast or prostate, depends on the type of cancer, its location and size, as well as the age and health of the patient. Most challenging is lung cancer for which surgical removal is generally performed when the cancer is confined to the lung. Typically, a small section of the lung that contains the tumor along with a margin of healthy tissue is removed.
Chemotherapy, which can be used as a first line treatment for lung cancer or as an additional treatment after surgery, may involve a combination of drugs to kill cancer cells. In breast cancer, chemotherapy depends on the size of the tumor, characteristics of the cancer cells and extent of the spread of cancer.
Cryosurgery, biotherapy and immunotherapy are treatment methods
among those being tested in prostate cancer clinical trials. For breast cancer, hormone blocking therapy is used to treat women whose cancers are sensitive to hormones – estrogen and progesterone receptor positive cancers.
Radiation therapy provides oncologists with a tool to treat tumors with extremely high accuracy so that healthy tissue can be spared. The treatment methods are often used in combination.
Lung cancer is the biggest cancer killer in the world, causing more deaths than breast and prostate cancer combined.
Lung cancer rates have stabilized due to public awareness campaigns to ban smoking in public places. However, recent studies show women are more susceptible to developing lung cancer than men.
There are a number of different types of lung cancer. The most common are non-small cell lung cancer (NSCLC), the most common at about 75 percent, and small cell lung cancer (SCLC).
In lung cancer, tumors move significantly due to normal respiration, presenting a particular challenge during imaging and planning – a challenge Elekta has been tackling with a series of innovations.
In recent years, Elekta, together with the Antoni van Leeuwenhoek Hospital in Amsterdam, has developed an innovative 4DCT (4D computer tomography) technique to manage the motion of lung tumors. The forthcoming Symmetry 4D image guided (with time as the fourth dimension) process utilizes the planning 4DCT in conjunction with a 4D volumetric image features on Elekta Synergy® .
The 4D volumetric image is generated automatically using a patented technique, which helps clinics to eliminate both set up errors and baseline shifts in the tumor position, thereby minimizing the volume of healthy lung tissue irradiated.
Elekta's innovation in image guided radiation therapy (IGRT) continues to break new ground with features that build on Elekta's existing expertise in 3D imaging. These have been developed in collaboration with leading global oncology experts at Antoni van Leeuwenhoek Hospital (NKI-AVL), Amsterdam.
The key to excellence in IGRT is to understand the relative relationship of both tumors and healthy tissues, and compensate for them on a daily basis with an optimized dose placement. Intuity, Elekta's next release of IGRT software, will be the first solution to offer quantitative information regarding the positions of both tumor and healthy tissues. Elekta's sophisticated Critical Structure Avoidance (CSA) will provide this functionality, with registration of two separate volumes for both the target and critical structure. Utilizing information about the relative relationship will allow fast and efficient interpretation of changes, to avoid the risk of inadvertent overdose to organs at risk.
The advances Intuity offers will provide the key to understanding and responding to complex anatomical changes. This in turn brings increased
confidence for advanced treatment deliveries in a fast and efficient workflow tailored to busy clinical environments.
Another problem present in radiation therapy is respiratory motion during lung cancer treatments. This makes it difficult to accurately target the tumor and can, for example, cause distortion and blurring during imaging. Elekta's forthcoming Symmetry solution improves the handling of respiratory motion. By precisely controlling the gantry speed during acquisition, one can sample multiple breathing phases and effectively image the patient's breathing. The resulting projection data can be sorted into different phases using internal anatomy
to create a 4D image and actually look at how the tumor is moving.
Tumors, which move during respiratory motion, also show variance in motion path between treatment sessions. These changes can only be accurately plotted using 4D imaging.
With Symmetry Elekta also provides an automated registration algorithm to find the time-weighted average position, allowing the dose to be symmetrically applied to the tumor. The tumor will still be moving, but the dose is applied centrally on the tumor's motion on that particular day. By being able to better track the tumor, the margins can be substantially reduced.
A linear accelerator produces a radiation beam of either high energy X-rays or electrons. The patient is positioned to ensure the beam is directed at the tumor and shaped to conform to the contour of the tumor.
In the majority of cases, radiation therapy is provided as fractionated treatment, meaning that the patients receive a daily dose of radiation five days a week for six to seven weeks. At each daily treatment, the radiation beam from the head of the linear accelerator is rotated around the patient at different angles so that the entire tumor receives an optimal radiation dose.
With Elekta Synergy® the patient is imaged at the time of treatment and in the treatment position, using a kilovoltage X-ray source and an additional imaging panel. This enables 2D images, fluoroscopic real-time monitoring and 3D volumetric images.
On August 28, 2008, the University of Tokyo Hospital treated its first prostate patient with Volumetric Modulated Arc Therapy (VMAT) on Elekta Synergy®. The treatment took just over three minutes, and was repeated on the following day. The hospital has since expanded treatment by using Elekta VMAT to all new prostate cancer patients, as well as patients with neck cancer and bone metastases.
"We are currently scheduling ten VMAT patients a day, which is twice the number of IMRT (intensity modulated
radiation therapy) patients before VMAT was introduced," explains Dr Keiichi Nakagawa MD, PhD, Associate Professor in the Department of Radiology at University of Tokyo Hospital. "The total number of scheduled patients a day with Elekta
Synergy has been increased by ten percent since VMAT was introduced."
"Elekta VMAT saves a great deal of time, since the treatment times are shorter than other IMRT delivery techniques," adds Dr Nakagawa.
The Elekta VMAT control system automatically selects the optimal gantry speed and dose rate to deliver the prescribed dose.
"For a QA procedure, we can save perhaps one day totally," says Dr Nakagawa. "For treatment planning only, we save more than five hours. As a result, about five additional patients have been newly treated by VMAT each month. Another advantage is that patients spend much less time on the treatment table, which reduces the impact of intrafraction motion."
Elekta Compact™ is Elekta's smaller, more affordable linear accelerator for radiation therapy that addresses the cancer care needs of a wider population. Purposefully designed with a single low-energy photon beam and a small footprint specifically, Elekta Compact is ideally positioned for use in small treatment rooms.
Precise Treatment System™ is designed to ensure that the performance parameters for a wide range of radiation therapy techniques and advanced applications, such as intensity modulated radiation therapy (IMRT), are easily achieved. The precision of beam delivery from the digital accelerator, combined with the accuracy of patient positioning on Precise Table provides speed, accuracy and resolution.
Elekta Synergy® is the first advanced multi-functional linear accelerator with intensity modulated radiation therapy (IMRT) and image guided radiation therapy (IGRT). It enables clinicians to both image and treat patients in the same frame of reference, at the time of treatment. It also enables more aggressive treatment of tumors while minimizing damage to surrounding healthy tissue.
Elekta Infinity is the new digital linear accelerator optimized for delivering Volumetric Modulated Arc Therapy (VMAT). It offers fast intensity modulated radiation therapy (IMRT) quality treatment delivered in single or multiple arcs that more precisely targets tumors and protects surrounding healthy tissue.
By optimizing treatment planning, information management and workflow, Elekta delivers human-centric software designed to work the way clinicians do, enabling them to focus on patients and their needs in the most efficient way.
E lekta is the leading worldwide provider of integrated treatment planning, information and workflow management systems that streamline clinical and business operations across the entire spectrum of cancer care, from diagnosis and treatment to long-term follow-up.
Elekta's oncology information system encompasses image-enabled solutions for electronic medical records (EMR) as well as modules for many of the needs of a busy oncology practice.
Elekta's two main treatment planning systems include one for general purpose planning and another that supports advanced linac-based stereotactic
radiotherapy and radiosurgery. In addition, Elekta offers a wide range of related applications and integrated functionalities.
Elekta's treatment planning components are open, vendor-neutral systems that allow cross-platform flexibility and the integration of future advanced methods
such as adaptive radiotherapy, which will require increasingly tighter coupling between treatment planning, delivery workflow management and review.
Elekta Software information technology solutions ranges from capturing initial cancer diagnoses to effectively managing cancer treatment and cancer registry tools to handling long-term surveillance. The information is easily accessible to the entire cancer care team.
MOSAIQ® is a dedicated oncology information system (OIS) that streamlines the entire therapy workflow from the first diagnosis and staging, through planning, treatment, follow-up and long-term survivorship.
At the heart of this system is the electronical medical record (EMR) by which healthcare professionals communicate information about their patients through the entire spectrum of cancer care.
Following are some highlights of its electronic medical record (EMR):
The oncology treatment record starts with initial diagnosis and referral and includes importing pathology reports, imaging studies and available lab reports, as well as documenting diagnosis and staging information.
One important innovation is Elekta's clinical workflow manager, a feature that allows for the automation of often time-consuming, manual complex or routine tasks.
Elekta's integrated oncology management system is based on a single database and user interface for handling patient management, medical oncology and radiation oncology tests. Most oncology software providers have multiple databases, each handling a separate task.
While streamlining the process of often complex treatments, Elekta Software delivers secure access to patient information and images that drive the clinical decision-making. Elekta's software's EMR for radiation oncology provides a flexible treatment management solution designed to support the complexity of image guided radiation therapy (IGRT).
With Elekta's software solution, hospitals can electronically manage all aspects of cancer care, including reviewing clinical information while fully automating ordering, tracking of treatment progress, electronic prescription and care plan management. Complex tasks are automated through sophisticated workflow engine technology related to lab reports, chemotherapy ordering and related tasks.
This open systems approach, together with strict adherence to the highest standards, also allows researchers and clinicians the possibility to integrate components of their software in their research to improve the quality of patient care and the evolution of
medical technology. The tight integration of the planning tools with the oncology information system's EMR opens the way to real outcome analysis and evidencebased medicine.
With over 30 years of experience, in radiation treatment planning software Elekta has long been a pioneer, with significant research and development investment in pushing the boundaries of radiation treatment planning-related technologies. Elekta provides ongoing software upgrades and support and provides training programs including Impac University. This is an intensive course that trains clinicians on a myriad of uses for MOSAIQ® and other oncology information system products.
Surgery/radiation, therapy/chemotherapy The system is designed specifically to handle the complexities and nuances of medical oncology, including managing prescriptions of chemotherapy, all aspects of treatment planning and surgery procedure reporting and data management.
The laboratory information system offers laboratories flexible tools to streamline business and clinical operations. The system is open standardsbased and operates with true web server based technology, making it easy to operate the program entirely over the Internet for ordering, inquiry, and report distribution.
The ability to access and interpret cancer data in a manner that is easy and cost-effective is becoming inceasingly critical to the quest for better treatment options and outcomes.
Elekta's software provides tools for cancer case tracking, data aggregation, analysis, and reporting for single hospitals, hospital networks, and university hospital settings as well as for state and regional cancer registries.
Treatment planning is rapidly evolving from an isolated, functionality-centric event to becoming a ubiquitous and comprehensive patient-centric process that evolves over the course of therapy with various steps taking place throughout the clinic or hospital.
Elekta's MOSAIQ RTP, a new suite of treatment planning applications under development, is designed to integrate all these processes into one. With MOSAIQ RTP, clinicians will be able to run a variety of services, starting with patient data entry, through treatment, all the way to patient follow-up as part of a comprehensive planning solution.
MOSAIQ RTP will serve as a single platform that will support the practice of personalized medicine anchored on the electronic medical record (EMR), as well as a suite of tools that will automate the adaptive planning process.
Utilizing Workflow Manager, it will be possible to add these and many other services over time to the MOSAIQ backbone. It also allows other vendors and collaborative partners to develop specific pieces of the radiation therapy planning service puzzle and connect them seamless to MOSAIQ.
Providing support across the radiation oncology spectrum, Elekta is developing treatment planning with a modular approach. MOSAIQ RTP will include Simulate, Evaluate, Anatomy, Dose, and Optimize to support the treatment planning clinical team.
Monaco, the first next-generation intensity modulated radiotherapy (IMRT) treatment planning system, introduces a set of tools to make the treatment planning process easier, more straightforward and clinically reliable. The result is that clinicians are empowered with better tools to provide a higher standard of patient care.
While IMRT delivers significant improvements for radiation treatment, the technology presents challenges, including managing time and resource intensive processes associated with planning. With Monaco, Elekta offers new approaches that improve IMRT planning.
Featuring biological modeling, constrained optimization and dose calculation algorithms Monaco represents a fundamentally new approach to IMRT planning.
With biological modeling, the underlying biology of anatomical structures is accounted for in addition to the full dose-based prescription capabilities, treating dose requirements for tumors differently than for organs-at-risk.
Extended to the Volumetric Modulated Arc Therapy (VMAT) technique, Monaco accounts for real particle tracking and dose deposition leading to improved accuracy and much faster treatment time.
Monaco was developed in collaboration with the University of Tübingen in Germany. Markus Alber, PhD, and colleagues developed the Hyperion project, which is the engine behind the new Monaco system. The result is an advanced, clinically sophisticated IMRT planning system backed by the core research and capabilities of one of the world's leading research institutes.
Three years ago, the Department of Radiation Oncology, University Medical Center Mannheim, transformed its routines from traditional, paper- and film-based workflow to a paperless, filmless workflow by upgrading to Elekta's MOSAIQ® oncology information system.
"We had several IMRT planning systems which we had to archive differently," says Frederik Wenz, MD, Chairman, Department of Radiation Oncology at Mannheim University
Medical Center. "MOSAIQ dramatically streamlined the data and patient management process. Everything is paperless and all data are housed in a single environment for better management." Since then, the Mannheim department
has taken several more steps towards a fully integrated, streamlined, push-button workflow. The department's new MOSAIQ 2.0 version is both a more powerful and simpler version and allows for easier archiving and accessing of a
wide range of modalities, such as X-ray based electronic portal images (EPIDS), electronic film imagery, Cone-Beam CT datasets as well as treatment plans.
Additionally, therapy delivery workflows have been made easier with SYNERGISTIQ™, a sophisticated hardware and software configuration making the work with data and image management much more efficient and integrated.
Recently, Mannheim acquired VMAT (Volumetric Modulated Arc Therapy), along with ERGO++, the first commercial treatment planning system in combination with VMAT.
VMAT has allowed the Mannheim team to increase treatment speed by 50 percent or more. "Paraspinal retreatments, typically treated with intensity modulated radiotherapy, can now be shortened from seven to three minutes, beam on to beam off," says Dr Frank Lohr, MD, vice chairman of the Mannheim Department. "For prostate treatments, we're down to three minutes from six minutes previously with a static approach."
MOSAIQ® is an image-enabled oncology electronic medical record (EMR) with fully integrated business features such as scheduling, billing and management reporting and analysis.
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XiO® is a comprehensive 3D IMRT treatment planning platform that combines the latest tools and most robust dose calculation algorithms with an intuitive, user-friendly interface, allowing users to generate plans quickly and accurately to optimize the delivery of radiation therapy.
ERGO++ provides conformal and IMRT planning for static and rotational beams with high specialization in the stereotactic radiosurgery field.
Focal is a desktop PC-based distributed planning solution that provides the treatment team with flexible, convenient access to planning functionality and patient data. Focal 4D supports the visualization and utilization of 4D image sets to create structures and review treatment options.
Monaco is an IMRT-radiation treatment planning system. Extended to Volumetric Modulated Arc Therapy (VMAT), Monaco accounts for real particle tracking dose deposition and significantly shorter treatment times.
ABAS is an automated contouring application designed to expedite delineation of target volumes and organs-at-risk (OAR). The atlases range from head-neck to prostate as well as the brain.
Elekta's employees are key drivers behind what has developed from a one product line company into a truly international company, offering a broad range of clinical solutions for cancer therapy.
Until 1996, Elekta was a Sweden-based export company that depended mainly on a single product line, Leksell Gamma Knife®, which today is largely represented within Elekta Neuroscience. In this environment, most employees knew one another, even across borders, and business was largely conducted through personal networks.
Twelve years later, the company has grown tenfold both in terms of revenues and number of employees, and has a truly global presence. As of April 30, 2009, the Elekta Group had a total of 2,509 employees.
During the fiscal year 2008/09, the St. Louis-based treatment planning company CMS Inc. was integrated into Elekta Software and into the respective regions.
This past fiscal year, Elekta also implemented a new matrix organization to increase efficiency and enhance governance. Over the past twelve months, this new structure has been fine-tuned to better allow Elekta to provide worldclass service to its customers.
Three regions sell and service products that are developed, manufactured, installed and maintained by three areas: Elekta Oncology, Elekta Neuroscience and Elekta Software.
With all the changes to the business and organization, the level of complexity that faces employees in carrying out their daily work has increased.
What are the factors for success in a changing business and organization? Below and on the next page, we have asked a few Elekta employees about their experience.
Dee Mathieson is Senior Vice President for Business Line Management of both Elekta Oncology and Elekta Software, based in Crawley, UK.
"We all share a keen sense of wanting Elekta to succeed in a very competitive
market place. We are driven to ensure that we meet our business objectives by keeping up the collaborative spirit and clear communication that differentiates Elekta."
"Resourcefulness. Every year we strive to do more. Our rate of innovation sets the pace for others to follow. I am so proud to have been part of the company that introduced image guidance to revolutionize radiation therapy and improve patient treatment for years to come."
Bruce Fullerton is Vice President for Service and Support in Region North America, based in Atlanta, Georgia.
"We share common goals, such as improving the customer experience,
improving our methods and lately, a more significant focus on our efficiencies. We often need to compare the ways we do our jobs and sometimes find ways to help each other."
"Yes, we work on the same devices and systems and share a common language of 'technology' and concern for our customers' patients. Even though the spoken languages may be different, the commonalities keep us well-connected – the focus on the customer and their relationship with patients is key to providing the best customer experience possible."
Candice Weir is Senior Program Manager for Elekta Neuroscience within Education & Training and is based in Stockholm, Sweden.
"Success comes from efficient communication, dedication and
diligence to the task at hand. This job entails the rewarding challenge of being a mental globetrotter on a daily basis. Days may begin with projects in Asia, to continue over Europe and end on the North American West Coast. Elekta employees have a high level of expertise and are yet humble and approachable. We work toward common goals to benefit the customer, patient and the business."
Toru Isobe is Marketing Product Manager for Elekta Oncology in Japan.
"I have regular contact with the product management team within Elekta Oncology in Crawley, mostly
via e-mail because of the time difference, to keep myself updated on the future plans of the Oncology product range."
"What makes this interaction effective is the common platform of expertise and technical knowledge. The awareness that we need an Open System philosophy in our product design, that makes the product adaptable in all parts of the world, also facilitates our cooperation."
Laurent Chel is Service Manager in France within the European Region.
"I work everyday with colleagues in many countries, in different areas, within the European Region or from
the global service team. Technical or logistics support, resource sharing, improvement workshops are few example of those multiple opportunities.We all focus on our customer satisfaction and on the patients. We now have a very large product portfolio and rely on colleagues in many different areas. Knowing people and their roles and responsibilities is important to provide solutions to our customers. And it's the opportunity for everyone to improve by learning from others."
"The most important values for me are trust and long-term relationships. This was already the case at the beginning when we were a small team. It has been a key factor for the success of our organization and for its growth."
To summarize, the common denominators that unite Elekta's employees in working together and always doing their very best is their passion for the company's products, its customers and the desire to serve patients globally.
Elekta's employees have mutual respect for each other's technical knowledge, experience and specialization, and they all speak a common language independent of nationality. Together with the alignment of business goals and priorities and common work flows, this approach underpins the entrepreneurial values that have been present throughout the expansion of Elekta's business.
| Board of Directors' report |
34-37, 39, 41, 43, 45 |
|---|---|
| Income statement | 38 |
| Balance sheet | 40 |
| Changes in shareholders' equity |
42 |
| Cash flow statement | 44 |
| Notes | 46–64 |
| Appropriation of profit | 65 |
| Audit Report | 66 |
The Board of Directors and the President of Elekta AB (corp. reg. no. 556170-4015) hereby submit the annual report and consolidated accounts for the fiscal year from May 1, 2008 to April 30, 2009.
Elekta is a human care company pioneering significant innovations and clinical solutions for treating cancer and brain disorders. The company develops sophisticated state of the art tools and treatment planning systems for radiation therapy and radiosurgery, as well as workflow enhancing software systems across the spectrum of cancer care. Stretching the boundaries of science and technology, providing intelligent and resourceefficient solutions that offer confidence to both healthcare providers and patients, Elekta aims to improve, prolong and even save patient lives, making the future possible today.
Today, Elekta solutions in oncology and neurosurgery are used in over 5,000 hospitals globally, and every day more than 100,000 patients receive diagnosis, treatment or follow-up with the help of a solution from the Elekta Group.
The total market for Elekta's clinical solutions, IT systems and services is expected to grow by 5-10 percent annually. However, the high value of individual orders and the particularities of the healthcare industry market often lead to significant quarterly variations in business volume, product mix and geographical mix.
Market development is driven by a shortage of radiation treatment capacity that prevails in most countries and by the increased cancer incidence and prevalence, as a result of an aging population, better diagnostics and improved treatment. New advanced, more precise and accurate methods are expected to increase the role of radiation therapy in the future. The rapid development of new technology is resulting in higher values. An increasing number of customers are requesting more comprehensive and long-term relationships with suppliers.
In virtually all countries, healthcare systems are under strong pressure to improve efficiency and at the same time slow down cost expansion. Therefore, software systems for higher efficiency, in patient throughput as well as information management and administration, are becoming more critical for operations.
* In addition to these pages, the Board of Directors' report includes the comments on financial results and position provided in conjunction with the income statement, balance sheet, changes in shareholders' equity and cash flow statement on pages 39, 41, 43 and 45.
Elekta's main competitors on the global market for radiation therapy are Varian Medical Systems and Siemens Medical Solutions and to some extent also niche players such as TomoTherapy and Accuray. Elekta is currently the world's second largest supplier.
In the area of radiation therapy planning, Elekta supplies system both developed by Elekta and by CMS, acquired in March 2008. The main competitors in this area are Philips Medical and Varian Medical Systems.
In the market for Gamma Knife surgery, Elekta has no direct competitors, although Leksell Gamma Knife® in certain areas competes with other treatment technologies.
Elekta is, with systems developed by IMPAC, the leader on the market for administrative software and information processing systems for cancer care, with Varian Medical Systems as the largest competitor.
Order bookings rose 30 percent to SEK 7,656 M (5,882). CMS, acquired in March 2008, contributed SEK 545 M (119). Order bookings increased by 18 percent, based on unchanged exchange rates.
Based on unchanged exchange rates order bookings in North and South America rose 8 percent, region Europe including Middle East and Africa rose 14 percent and Asia Pacific rose 53 percent.
Order backlog April 30, 2009 was at an all time high level
| Order bookings | |||
|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | Change, % |
| North and South America | 3,235 | 2,694 | 20 |
| Europe, Middle East, Africa | 2,642 | 2,200 | 20 |
| Asia Pacific | 1,779 | 988 | 80 |
| Group | 7,656 | 5,882 | 30 |
of SEK 7,267 M (5,069). Order backlog is converted at closing exchange rates, which resulted in a positive translation difference of SEK 1,229 M.
The North American market is primarily driven by rising cancer incidence and rapid acceptance of new and refined treatment methods. Due to the financial crisis in 2008 and the economic downturn, the sales cycle has become longer and there is a demand for alternative financing.
The demand continues to be solid for services, upgrades and software systems that support the entire treatment process, which normally is an integrated part of the delivery of treatment systems in this region.
Elekta has established an own organization in South America, which during its first year successfully proved to be a growth market for Elekta.
The market development in Europe, especially Western Europe, is driven by replacements and by national and regional initiatives to remedy the lack of radiation treatment capacity. Elekta's ability to provide comprehensive and integrated solutions, based on open connectivity, as well as the ability to offer industry leading Image Guided Radiotherapy (IGRT), makes the company an attractive partner. There is demand for modern information systems for cancer care, particularly for the purpose of improving productivity and multi-site connectivity.
There is a solid rationale for a continued long-term market growth in Asia. There are substantial unmet needs and the capacity for cancer care is low by international comparisons. Elekta is well positioned in the region to support health care providers in their quest to develop and improve cancer care. Elekta is the market leader in China in the segment for advanced radiation therapy solutions and the successful launch of Elekta Compact™ is expected to further strengthen Elekta's market position in China and in the region. In Japan, Leksell Gamma Knife® Perfexion™ has been used clinically for the first time and Elekta will continue to build presence in oncology based on excellent technology and a strong market position for software solutions. In Australia and India, Elekta is expanding its presence and market share.
| Net sales | |||
|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | Change, % |
| North and South America | 2,709 | 2,098 | 29 |
| Europe, Middle East, Africa | 2,518 | 2,020 | 25 |
| Asia Pacific | 1,462 | 963 | 52 |
| Group | 6,689 | 5,081 | 32 |
Net sales rose 32 percent to SEK 6,689 M (5,081). CMS contributed with SEK 424 M (123). Net sales increased by 18 percent based on unchanged exchange rates.
Operating result increased by 28 percent and amounted to SEK 830 M (650), positively impacted by higher volumes and positive currency effects, and negatively affected by geographical mix.
Net financial items amounted to an expense of SEK 56 M (expense 26). Net interest expenses increased to SEK 84 M (expense 44) due to a higher net debt position during the year.
Profit after financial items amounted to SEK 774 M (624). Tax expense amounted to SEK 228 M or 29 percent, positively impacted by corrections of previous years' taxes and reduced tax rate in Sweden. Profit after taxes amounted to SEK 546 M (406).
Earnings per share increased by 35 percent and amounted to SEK 6.00 (4.46) before dilution and SEK 6.00 (4.44) after dilution.
Investment in intangible and tangible fixed assets amounted to SEK 142 M (108). Amortization of intangible and depreciation of tangible fixed assets amounted to SEK 208 M (176).
Operating flow for the year amounted to SEK 737 M (635), mainly due to higher operating profit.
Working capital was broadly unchanged for the year. Cash flow from operating activities was positive SEK 740 M (319). There was a significant improvement in the relation working capital to sales. DSO also improved compared to last year.
Cash flow after investments was positive SEK 580 M (neg. 280). Acquisitions were included with SEK 71 M (553). Part of previously recorded liabilities for additional purchase price for Medical Intelligence and 3D Line were paid during the year.
Interest-bearing liabilities increased to SEK 1,627 M (1,449) and liquid funds increased to SEK 828 M (402). Of total bank balances SEK 1 M were pledged.
Elekta has secured its long term financing to 2013-2014 and has undrawn committed credit facilities of approximately SEK 1,200 M.
Net debt amounted to SEK 799 M (1,047). Net debt/equity ratio was 0.31 and equity/assets ratio was 32 percent.
The global financial crisis and economic downturn constitute a risk. The worldwide recession might mean less availability of finance for private customers and reduced future health care spending.
Political decisions that could impact the healthcare reimbursement systems also constitute a risk factor. Since Elekta operates in a large number of countries, this risk is limited for the Group as a whole.
Product safety issues and the regulatory approval processes in various countries constitute a risk since they could delay the ability of introducing products into the countries affected.
Elekta's ability to deliver treatment equipment is, to a large extent, dependent on customers being able to accept delivery in the agreed timeframe, which results in a risk of delayed deliveries and corresponding delayed revenue recognition.
In its operations, Elekta is subject to a number of financial risks, primarily related to exchange rate fluctuations. The Group's credit risks are limited since customer operations are, to a large extent, financed either directly or indirectly by public funds.
Risk management is regulated through a financial policy established by the Board of Directors. Overall responsibility for handling the Group's financial risks and developing methods and guidelines for dealing with financial risks, rests with executive management and the finance function. For more detailed information regarding these risks, please see note 2.
Elekta's operations are characterized by significant quarterly variations in delivery volumes, which have a direct impact on net sales and profits.
Elekta's gross margin, meaning sales minus costs for sold products, can vary considerably from period to period depending on projects delivered, product and geographic mix and currency movements. During the year, Elekta had a gross margin of 45 percent (43).
As a result of its international operations and structure, Elekta has considerable exposure to exchange rate fluctuations. This pertains primarily to expenses in SEK and GBP against revenues in USD and EUR. A general change of 1 percentage point in the exchange rate for SEK against other currencies affects the Group's profit by about SEK 18 M, given the current structure and business focus. Short term the effect of currency movements is reduced through forward contracts. Hedging is conducted on the basis of expected net sales over a period of up to 24 months. The scope of this hedging is determined by the company's assessment of currency risks.
A general change of 1 percentage point in the interest on loans and investments would affect Elekta's profit by about SEK 3 M.
Elekta conducts intensive R&D aimed at strengthening and enhancing the company's position as technology leader in its markets and product areas. During the year, SEK 516 M, corresponding to 8 percent of net sales, were invested in the following areas:
Significant portions of Elekta's R&D investments involve integration and further development of acquired technology, with the purpose of strengthening Elekta's ability to offer integrated and comprehensive solutions for treatment of cancer and brain disorders.
Elekta has continued its investments in global and efficient communications and systems solutions. The IT infrastructure is being continuously expanded to support business processes and to strengthen productivity and competitiveness. The acquisitions made by Elekta require significant resources for integration and harmonization of the IT infrastructure of the Group.
Elekta works determinedly to improve and assure quality in all processes within the Group. Quality work also ensures that all government requirements are fulfilled. All Elekta's development and production units are certified in accordance with the relevant ISO 9000 and ISO 13485 where appropriate. Elekta conducts regular audits to ensure that the Group complies with the requirements that various supervisory authorities have established for medical technology companies.
The average number of employees was 2,446 (2,113), of which the new entities, CMS and Brazil, accounted for 307 (49). The number of employees on April 30, 2009 totaled 2,509 (2,406). Value added per employee amounted to SEK 1,096,000 (965,000).
The operations of the Parent Company include Group management, joint Group functions and financial management. The Parent Company's profit after financial items amounted to SEK 258 M (595). The change derives from dividends from subsidiaries. The average number of employees was 22 (21).
In fiscal year 2009/10, Elekta's net sales are expected to grow by more than 8 percent in local currency. Elekta's operating profit in SEK is expected to grow by more than 35 percent.
Net sales and operating profit for fiscal year 2009/10 are also expected to be significantly higher in the second half of the year compared with the first.
Elekta's aim is to achieve sustainable profitable growth. Elekta conducts its operations with a long term plan, regularly reviewed and evaluated by the Board of Directors and with a perspective of at least three years. The financial objectives form the base in the long term planning.
Elekta's policyl is to distribute 20 percent or more of net profit in the form of dividends, repurchase of shares or comparable measures. The dividend decisions are based on Elekta's financial position, earnings trend, growth potential and investment requirements.
In accordance with the Company's dividend policy, the Board proposes an increased dividend of SEK 2.00 (1.75) per share, corresponding to approximately SEK 184 M and 33 percent of net profit.
Similar to previous years, the Board also intends to propose to the Annual General Meeting to renew the authorization for the Board to repurchase a maximum of 10 percent of the number of shares outstanding in Elekta AB.
Principles for remuneration to the executive management are described in note 24 on pages 61-63. The Board proposes unchanged principles for 2009/10.
| IFRS GROUP |
SWEDISH GAAP PARENT COMPANY |
|||||
|---|---|---|---|---|---|---|
| SEK M | Note | 2008/09 | 2007/08 | 2008/09 | 2007/08 | |
| Net sales | 4 | 6,689 | 5,081 | — | — | |
| Cost of products sold | –3,658 | –2,899 | — | — | ||
| Gross profit | 3,031 | 2,182 | — | — | ||
| Selling expenses | –933 | –679 | — | — | ||
| Administrative expenses | –642 | –498 | –83 | –67 | ||
| R&D expenses | –485 | –383 | — | — | ||
| Currency exchange differences in operations | –141 | 28 | — | — | ||
| Operating profit/loss | 5, 23-26 | 830 | 650 | –83 | –67 | |
| Income from participations in Group companies | 6 | — | — | 383 | 676 | |
| Income from participations in associated companies | 7 | 1 | 10 | — | — | |
| Interest income | 8 | 23 | 32 | 56 | 55 | |
| Interest costs and similar profit/loss items | 8 | –107 | –76 | –90 | –67 | |
| Financial currency exchange differences | 27 | 8 | –8 | –2 | ||
| Profit after financial items | 774 | 624 | 258 | 595 | ||
| Appropriations | 9 | — | — | –5 | –6 | |
| Taxes | 10 | –228 | –218 | –3 | –4 | |
| PROFIT FOR THE YEAR | 546 | 406 | 250 | 585 | ||
| Attributable to: | ||||||
| Parent Company shareholders | 552 | 411 | 250 | 585 | ||
| Minority shareholders | –6 | –5 | ||||
| Earnings per share before dilution, SEK | 6.00 | 4.46 | ||||
| Earnings per share after dilution, SEK | 6.00 | 4.44 | ||||
| Average number of shares before dilution, 000s | 92,125 | 92,199 | ||||
| Warrants, 000s | — | 280 | ||||
| Average number of shares after dilution, 000s | 92,125 | 92,479 |
Net sales rose 32 percent to SEK 6,689 M (5,081). CMS, acquired in March 2008, contributed with SEK 424 M (123). Net sales increased by 18 percent based on unchanged exchange rates.
| Net sales, SEK M |
Change, % |
Operating profit, SEK M |
Operating margin, % |
|
|---|---|---|---|---|
| Q1 | 1,025 | 5 | 13 | 1 |
| Q2 | 1,467 | 21 | 105 | 7 |
| Q3 | 1,664 | 52 | 191 | 11 |
| Q4 | 2,533 | 41 | 521 | 21 |
| Full year 2008/09 | 6,689 | 32 | 830 | 12 |
Operating result increased by 28 percent and amounted to SEK 830 M (650), positively impacted by higher volumes and positive currency effects, and negatively affected by geographical mix.
Gross margin amounted to 45 percent (43) and operating margin was 12 percent (13).
The purchase of products, materials and consumables comprises the largest single cost item, accounting for 41 percent (41) of the Group's total operating expenses. The second largest item is personnel costs at 35 percent (34).
For comparable business units, operating cost excluding material increased by 11 percent in local currency compared to the same period previous year. The cost increase originates from Elekta's geographical expansion and strengthened marketing activities. Newly acquired CMS had a marginal effect on earnings.
Investments in research and development rose 25 percent to SEK 516 M (414) equal to 8 percent (8) of net sales. Capitalization of development costs and amortization of capitalized development costs affected earnings positively by SEK 31 M (31). Capitalization amounted to SEK 63 M (52) and amortization to SEK 32 M (21).
Reported IFRS 2 costs for Elekta's outstanding option programs amounted to SEK 27 M (23).
Currency exchange rate effects on operating profit compared with previous year:
In total, exchange fluctuations affected operating profit for the year, compared with previous year, negatively by approximately SEK 190 M.
Exchange rate losses from forward contracts in operating profit were SEK 217 M (gains 16). Unrealized exchange rate losses from cash flow hedges amounted to SEK 44 M and are reported in shareholders' equity taking into account the tax impact. Elekta's currency hedging policy is based on anticipated sales in foreign currency up to 24 months.
Net financial items amounted to an expense of SEK 56 M (expense 26). Net interest expenses increased to SEK 84 M (expense 44) due to a higher net debt position during the year.
Profit after financial items amounted to SEK 774 M (624). Tax expense amounted to SEK 228 M or 29 percent, positively impacted by corrections of previous years' taxes and reduced tax rate in Sweden. Profit after taxes amounted to SEK 546 M (406).
| IFRS GROUP |
SWEDISH GAAP PARENT COMPANY |
|||||
|---|---|---|---|---|---|---|
| SEK M | Note | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 | |
| Intangible assets | 11 | 3,150 | 2,659 | — | — | |
| Tangible fixed assets | 12 | 265 | 226 | — | — | |
| Shares in associated companies | 13 | 26 | 21 | 8 | 8 | |
| Deferred tax assets | 10 | 34 | 14 | 13 | 37 | |
| Other financial fixed assets | 13 | 33 | 16 | 1,520 | 2,034 | |
| Total fixed assets | 3,508 | 2,936 | 1,541 | 2,079 | ||
| Inventories | 14 | 553 | 529 | — | — | |
| Current tax assets | 10 | — | — | — | 4 | |
| Receivables | 15 | 3,062 | 2,455 | 1,588 | 723 | |
| Liquid funds | 16 | 828 | 402 | 252 | 17 | |
| Total current assets | 4,443 | 3,386 | 1,840 | 744 | ||
| TOTAL ASSETS | 4 | 7,951 | 6,322 | 3,381 | 2,823 | |
| Parent Company shareholders | ||||||
| Share capital | 184 | 185 | 184 | 185 | ||
| Contributed funds | 227 | 194 | — | — | ||
| Statutory reserve | — | — | 156 | 156 | ||
| Reserves | 31 | -270 | — | — | ||
| Retained earnings | 2,107 | 1,695 | 865 | 672 | ||
| Minority interest | 6 | 9 | — | — | ||
| Total shareholders' equity | 17 | 2,555 | 1,813 | 1,205 | 1,013 | |
| Untaxed reserves | 9 | — | — | 37 | 32 | |
| Deferred tax liabilities | 10 | 195 | 135 | — | — | |
| Other longterm provisions | 18 | 73 | 58 | 22 | 12 | |
| Long-term interest-bearing liabilities | 19 | 1,508 | 1,416 | 1,508 | 1,384 | |
| Total long-term liabilities | 1,776 | 1,609 | 1,530 | 1,396 | ||
| Short-term provisions | 18 | 68 | 58 | — | — | |
| Short-term interest-bearing liabilities | 19 | 119 | 33 | 530 | 265 | |
| Current tax liabilities | 10 | 121 | 114 | 2 | — | |
| Other interest-free liabilities | 20 | 3,312 | 2,695 | 77 | 117 | |
| Total liabilities | 3,620 | 2,900 | 609 | 382 | ||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 7,951 | 6,322 | 3,381 | 2,823 | ||
| Assets pledged | 21 | 1 | 2 | — | — | |
| Contingent liabilities | 22 | 75 | 64 | 625 | 304 |
The Group's total assets rose SEK 1,629 M to SEK 7,951 M (6,322).
The Group's fixed assets totaled SEK 3,508 M (2,936) at fiscal year-end.
Current assets excluding liquid funds rose SEK 631 M to SEK 3,615 M (2,984). Accounts receivable, accrued income and inventories have increased by 25 percent. Accounts receivable and accrued income reduced by customer advances and prepaid income corresponded to 99 days (112) of net sales. Inventory value in relation to net sales was 8 percent (10).
Liquid funds increased by SEK 426 M to SEK 828 M (402) at year-end, totaling 10 percent (6) of total assets. Of total bank balances SEK 1 M (2) were pledged primarily for commercial guarantees.
Expressed in SEK, the value of the Group's foreign net assets was SEK 2,458 M (1,949).
The Group's capital employed increased to SEK 4,182 M (3,262). Capital turnover ratio was 1.0 (0.9).
Interest-bearing liabilities totaled SEK 1,627 M (1,449). Net debt amounted to SEK 799 M (1 047). Net debt/equity
ratio was 0.31 (0.58) and equity/assets ratio was 32 percent (29). Interest-free liabilities and provisions rose SEK 709 M to
SEK 3,769 M (3,060). Operating liabilities exceeded operating assets by SEK 120 M (62).
Shareholders' equity was SEK 2,555 M (1,813).
Return on shareholders' equity was 27 percent (23) and return on capital employed totaled 24 percent (24).
| Elekta's | ||||||||
|---|---|---|---|---|---|---|---|---|
| Share | Premium | Translation | Hedge | Retained | owners' | Minority | ||
| Group, SEK M IFRS |
capital | reserve | reserve | reserve | earnings | equity | interest | Total |
| Opening balance May 1, 2007 | 188 | 172 | –72 | 13 | 1,556 | 1,857 | 6 | 1,863 |
| IFRS 2 cost and deferred tax | — | — | — | — | 17 | 17 | — | 17 |
| IAS 39 unrealized cash flow hedges | — | — | — | –8 | — | –8 | — | –8 |
| Translation of subsidiaries and associated companies | — | — | –149 | — | — | –149 | — | –149 |
| Translation of loans for equity hedge | — | — | –54 | — | — | –54 | — | –54 |
| Minority's capital contribution | — | — | — | — | — | — | 8 | 8 |
| Profit for the year | — | — | — | — | 411 | 411 | –5 | 406 |
| Total changes excluding transactions | ||||||||
| with Company's owners | 0 | 0 | –203 | –8 | 428 | 217 | 3 | 220 |
| Dividend | — | — | — | — | –92 | –92 | — | –92 |
| Repurchase of shares | — | — | — | — | –200 | –200 | — | –200 |
| Cancellation of repurchased shares | –3 | — | — | — | 3 | 0 | — | 0 |
| Exercise of warrants | 0 | 22 | — | — | — | 22 | — | 22 |
| Closing balance April 30, 2008 | 185 | 194 | –275 | 5 | 1,695 | 1,804 | 9 | 1,813 |
| IFRS 2 cost and deferred tax | — | — | — | — | 19 | 19 | — | 19 |
| IAS 39 unrealized cash flow hedges | — | — | — | –37 | — | –37 | — | –37 |
| Translation of subsidiaries and associated companies | — | — | 269 | — | — | 269 | 3 | 272 |
| Translation of loans for equity hedge | — | — | 69 | — | — | 69 | — | 69 |
| Profit for the year | — | — | — | — | 552 | 552 | –6 | 546 |
| Total changes excluding transactions | ||||||||
| with Company's owners | 0 | 0 | 338 | –37 | 571 | 872 | –3 | 869 |
| Dividend | — | — | — | — | –161 | –161 | — | –161 |
| Cancellation of repurchased shares | –2 | — | — | — | 2 | 0 | — | 0 |
| Exercise of warrants | 1 | 33 | — | — | — | 34 | — | 34 |
| Closing balance April 30, 2009 | 184 | 227 | 63 | –32 | 2,107 | 2,549 | 6 | 2,555 |
| Parent Company, SEK M | SWEDISH GAAP | Share capital |
Statutory reserve |
Premium reserve |
Unrestricted reserve |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|
| Opening balance May 1, 2007 | 188 | 156 | 16 | 50 | 342 | 752 | |
| Exchange difference on monetary item that is | |||||||
| part of net investment in subsididary | — | — | — | — | –54 | –54 | |
| Profit for the year | — | — | — | — | 585 | 585 | |
| Dividend | — | — | — | — | –92 | –92 | |
| Repurchase of shares | — | — | — | –50 | –150 | –200 | |
| Cancellation of repurchased shares | –3 | — | — | — | 3 | 0 | |
| Exercise of warrants | 0 | — | 22 | — | — | 22 | |
| Closing balance April 30, 2008 | 185 | 156 | 38 | — | 634 | 1,013 | |
| Exchange difference on monetary item that is | |||||||
| part of net investment in subsididary | — | — | — | — | 69 | 69 | |
| Profit for the year | — | — | — | — | 250 | 250 | |
| Dividend | — | — | — | — | –161 | –161 | |
| Cancellation of repurchased shares | –2 | — | — | — | 2 | 0 | |
| Exercise of warrants | 1 | — | 33 | — | — | 34 | |
| Closing balance April 30, 2009 | 184 | 156 | 71 | — | 794 | 1,205 |
During 2008/09, 554,202 new B-shares were subscribed through exercise of warrants distributed within the framework of the established option programs.
During January – February 2008, Elekta repurchased 951,300 B-shares. These shares were cancelled in March 2009, in accordance with a decision made by the Annual General Meeting in 2008.
The total number of shares in Elekta as of April 30, 2009, amounted to 92,124,563 of which 3,562,500 A-shares and 88,562,063 B-shares. One A-share entitles the holder to ten votes and B-shares to one vote each. All shares carry equal rights to participate in the Company's assets and profits. In accordance with Section 12 of the Articles of Association, A-shares are subject to right of first refusal. All A-shares are owned by Laurent Leksell. At a General Meeting, each shareholder is entitled to exercise unlimited voting rights on the full number of shares that he/she owns or represents.
Shareholders' equity includes foreign currencies valued at the closing rate. The translation difference is reported directly against shareholders' equity. Shareholders' equity in foreign currency is hedged when it is deemed appropriate in individual cases. Long-term borrowing in USD raised in December 2002 is used to hedge part of net investment in US-companies.
The translation reserve includes all exchange rate differences arising in conjunction with the translation of foreign operations that have prepared their financial reports in a currency other than that used in the Group's financial reports. In addition, the translation reserve consists of exchange rate differences arising from the translation of liabilities raised as a hedging instrument for a net investment in foreign operations.
In accordance with IAS 39 cash flow hedges are also reported directly against shareholders' equity. Elekta hedges its currency risk in line with the policy established by the Board. The scope of this hedging is determined by the Company's currency
risk assessment. Currency hedging is defined on the basis of the expected sales in foreign currency over up to 24 months. Hedging is done to reduce the effects of short-term fluctuations on the currency markets.
The hedge reserve includes the effective portion of the accumulated net change in the fair value of cash flow hedging instruments attributable to hedging transactions that have not yet occurred. See note 2.
Shareholders' equity and return
| IFRS GROUP |
SWEDISH GAAP PARENT COMPANY |
|||||
|---|---|---|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 | ||
| Profit for the year | 546 | 406 | 250 | 585 | ||
| Adjustment for: | ||||||
| Depreciation and writedowns charged against these results | 208 | 176 | — | — | ||
| Participation in profit/loss of associated companies, after tax | –1 | –10 | — | — | ||
| Result from divestments of fixed assets | — | 3 | — | — | ||
| IFRS 2 | 25 | 22 | — | — | ||
| Capitalized development | –63 | –52 | — | — | ||
| Appropriations | — | — | 5 | 6 | ||
| Taxes unpaid | 22 | 90 | 2 | –6 | ||
| Operating flow | 737 | 635 | 257 | 585 | ||
| Increase (–)/ decrease (+) in current receivables | –272 | –536 | –837 | –597 | ||
| Increase (–)/ decrease (+) in inventories | 57 | –127 | — | — | ||
| Increase (+)/ decrease (–) in interest-free liabilities | 218 | 347 | –30 | –244 | ||
| Changes in working capital | 3 | –316 | –867 | –841 | ||
| Cash flow from operating activities | 740 | 319 | –610 | –256 | ||
| Investments in shares and participations | –2 | –6 | –27 | –177 | ||
| Repayments from partnerships | 8 | 10 | — | 57 | ||
| Increase (–)/ decrease (+) in long-term receivables | –17 | 0 | 610 | 155 | ||
| Investments in intangible assets | –3 | –1 | — | — | ||
| Investments in machinery and equipment | –78 | –55 | — | — | ||
| Sale of fixed assets | 3 | 6 | — | — | ||
| Acquisition of operations* | –71 | –553 | — | — | ||
| Investments and divestments | –160 | –599 | 583 | 35 | ||
| CASH FLOW AFTER INVESTMENTS | 580 | –280 | –27 | –221 | ||
| Borrowings | 30 | 590 | 531 | 590 | ||
| Repayment of debt | –142 | –131 | –142 | –188 | ||
| New issues, warrant premiums and repurchase of shares | 34 | –176 | 34 | –176 | ||
| Dividend | –161 | –92 | –161 | –92 | ||
| Minority contribution | — | 8 | — | — | ||
| External financing | –239 | 199 | 262 | 134 | ||
| Change in liquid funds during the year | ||||||
| excl. translation differences | 341 | –81 | 235 | –87 | ||
| Translation differences on liquid funds | 85 | –1 | — | — | ||
| Change in liquid funds during the year | 426 | –82 | 235 | –87 | ||
| Liquid funds at the beginning of the year | 402 | 484 | 17 | 104 | ||
| Liquid funds at year-end | 828 | 402 | 252 | 17 | ||
| * Acquired operations | ||||||
| Intangible assets | 672 | |||||
| Tangible fixed assets | 15 | |||||
| Financial fixed assets | 2 | |||||
| Inventories | 19 | |||||
| Operating receivables | 87 | |||||
| Liquid funds | 13 | |||||
| Liabilities | –242 | |||||
| Purchase price paid | 566 | |||||
| Liquid funds in acquired companies | –13 | |||||
| Effect on Group's liquid funds | 553 |
The purpose of a cash flow statement is to describe the ability of the operations to generate cash and cash equivalents. Elekta's cash flow is used primarily to finance market growth, strategic research projects and investments. Based on the income statement and balance sheet translated at the average exchange rate, the statement shows the Group's net flows during the year.
Elekta's project-based operations affect cash flow as well as order booking and net sales. Payment flows from projects generally occur in connection with order receipt, delivery and acceptance, generating considerable fluctuations in the amount of working capital during the year.
Profit for the year, adjusted for items not affecting cash flow, provided an operating flow of SEK 737 M, an improvement of SEK 102 M compared with the preceding year.
Working capital was broadly unchanged for the year. Cash flow from operating activities increased compared to the preceding year by SEK 421 M to SEK 740 M.
Cash flow from continuous investments and divestments amounted to a negative SEK 89 M (neg. 46). Cash flow after continuous investments was positive SEK 651 M (pos. 273).
Cash flow after investments was positive SEK 580 M (neg. 280). Acquisitions were included with SEK 71 M (553). Part of previously recorded liabilities for additional purchase price for Medical Intelligence and 3D Line were paid during the year.
Elekta's consolidated financial statements were prepared in accordance with the EU-approved International Financial Reporting Standards (IFRS) and the Swedish Annual Accounts Act. Also, additional information is provided in accordance with Recommendation RFR 1.1 of the Swedish Financial Reporting Board, Supplementary accounting rules for corporate groups. The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and recommendation RFR 2.1, Accounting for legal entities.
New standards (IAS/IFRS), amendments and interpretations adopted by the EU that will have an impact on Elekta's fiscal year starting May 1, 2009:
IAS 1 Presentation of financial statements. Format and designation of the financial statements have been changed. Elekta's financial statements will be impacted by this standard.
IFRS 2 Share-based payment. Amendment pertaining to vesting conditions and introduces a new term, "non-vesting conditions" (conditions that are not defined as vesting conditions). This amendment may change future transactions.
IFRS 8 Operating segments. Replaces IAS14. According to IFRS 8 segment information must be reported on the basis of how management internally follows up operations. Elekta will report regions as segment.
New standards (IAS/IFRS), amendments and interpretations adopted by the EU but not yet effective:
IFRS 3 Business combinations. The amendment means that reporting of future business combinations has been changed with regard to recognition of transaction costs that may no longer be included in the acquisition value but must be expensed and the fair value of the additional purchase price shall be determined at the time of acquisition. When in effect, this amendment will affect Elekta's accounting for such future transactions.
IAS 27 Consolidated and separate financial statements. The amendment means that transactions with minority shareholders must always be recognised in equity and that in cases where a Parent Company does not have control, any remaining share is remeasured at fair value. When in effect, this amendment will affect Elekta's accounting for such transactions.
Elekta's assessment is that other new standards, amendments and interpretations so far published will not have any effect on the Group.
| Exchange rates | Average rate | Closing rate | |||||
|---|---|---|---|---|---|---|---|
| May–Apr. | May–Apr. Change, | Apr. 30 | Apr. 30 Change, | ||||
| Country | Currency | 2008/09 | 2007/08 | % | 2009 | 2008 | % |
| Australia | 1 AUD | 5.532 | 5.695 | –3 | 5.875 | 5.620 | 5 |
| Canada | 1 CAD | 6.363 | 6.363 | 0 | 6.703 | 5.935 | 13 |
| China | 1 CNY | 1.066 | 0.878 | 21 | 1.170 | 0.860 | 36 |
| Euro | 1 EUR | 10.124 | 9.317 | 9 | 10.663 | 9.367 | 14 |
| Great Britain | 1 GBP | 12.021 | 13.052 | –8 | 11.880 | 11.815 | 1 |
| Hong Kong | 1 HKD | 0.941 | 0.834 | 13 | 1.030 | 0.770 | 34 |
| Japan | 100 JPY | 7.394 | 5.772 | 28 | 8.175 | 5.780 | 41 |
| USA | 1 USD | 7.312 | 6.504 | 12 | 7.985 | 6.008 | 33 |
Elekta's financial statements include all companies in which the Parent Company directly or indirectly holds more than 50 percent of the shares' voting rights as well as companies in which the Group exerts a decisive influence in some other manner. Companies in which Elekta holds more than 20 percent and less than 50 percent of the voting rights or in some other manner exerts significant influence are reported as associated companies. Associated companies are reported in line with the equity method.
Consolidated accounts was prepared in accordance with the purchase method, which means that the subsidiary's equity on the acquisition date – determined as the difference between the identifiable assets, liabilities and the fair value of any undertakings – is eliminated in its entirety against the acquisition price. Any remaining, non-eliminated share of the acquisition price is reported as goodwill.
Acquired companies are included in the consolidated accounts as of the date on which the Group gains control or influence over the company.
Internal transactions, internal balances and unrealized internal profits in the Group are eliminated in the consolidated accounts.
The income statements and balance sheets of foreign subsidiaries have been translated in accordance with the current method. This means that all items in the income statements have been translated at the average rate for the fiscal year, while assets and liabilities in the balance sheets have been translated at the fiscal year-end rate. Translation differences have been reported directly against consolidated shareholders' equity.
Long-term financing of subsidiaries in their functional currency is considered to represent an increase in the Parent Company's net investment in a subsidiary. Taking the tax effect into consideration, exchange gains and losses are reported against translation reserve in shareholders' equity.
Income from all Elekta products is recognized upon delivery of the products and when significant risks and benefits associated with ownership of the products are transferred to the purchaser.
Remuneration paid to employees in the form of wages/salary, paid vacation, etc. is reported as it is earned.
Most of Elekta's pension commitments are met through ongoing payments to authorities or other independent organizations that administer the pension plans. For these defined contribution pension plans, a pension cost is reported on a continuous basis as the benefits are earned, which normally coincides with the date on which the fees are paid.
Elekta has defined benefit pension plans for certain employees in a few countries. Independent actuaries calculate the magnitude of the obligations in each plan and revalue the obligations of the pension plans each year. The pension costs are estimated using the so-called Projected Unit Credit Method in a way that
distributes the costs over the employee's working life. These obligations are valued at the present value of the expected future payments.
Actuarial gains and losses are reported in the income statement in the period during which they arise.
Elekta has two employee share option programs in progress, Elekta AB 2004 Share Unit Plan and Elekta AB 2007 Share Unit Plan. They are reported in line with IFRS 2, Share-based payments, which entails that an estimated cost corresponding to the earned portion of the option value on the allotment of the option program 2004/2008, 2006/2010, 2007/12 and 2008/12 is charged to earnings. In addition, there are calculated social security expenses for the earned portion of the options based on a theoretical market valuation of the option. The market value is calculated in accordance with Black & Scholes based on the share price on the closing date and the subscription price. For options exercised, social security expenses are paid on the basis of the difference between the market value on the exercise date and the price paid for the share.
Deferred tax is calculated and reported in accordance with the balance sheet method. In accordance with this method, deferred tax is calculated on the basis of the difference between the taxable value and the reported value of assets and liabilities. Loss carry-forwards that arise are treated as deferred tax assets in those cases in which it is probable that these will be utilized. Valuation is based on the anticipated tax rate for the immediately following year in each country.
Reported tax expense includes current tax, changes in deferred tax assets/liabilities and taxes on participations in the earnings of associated companies.
Research costs are expensed as they are incurred. In those instances in which it is difficult to distinguish between the research phase and the development phase in a project, the entire project is considered as research and is expensed on an immediate basis. Identifiable costs for the development of new products are capitalized to the extent that these are considered to provide future financial benefits. In other instances, development expenditures are expensed as they are incurred. Costs for development reported for a period in the income statement are never capitalized during future periods. Capitalized expenditures are amortized on a straightline basis from the time when the asset begins to be used or is produced commercially and during the estimated useful life of the asset. The amortization period is 3–5 years.
Goodwill comprises the amount by which the acquisition price exceeds the market value of the net assets acquired by the Group in connection with a corporate acquisition. Goodwill is
not amortized but is instead tested annually to identify any impairment requirement.
Customer relations and other intangible assets
Intangible assets include technology, brands, customer relations, etc. In conjunction with the acquisition of such assets, the acquisition values are reported as assets, which are amortized straightline during the estimated useful life. Surplus value in acquired order backlog is also reported as other intangible assets.
| Technology | 5-11 years |
|---|---|
| Brands | 6-10 years |
| Customer relations | 15-20 years |
| Order backlog | 0.5-1 year |
Tangible fixed assets acquired by Group companies are reported at their historic acquisition value, less accumulated depreciation and any write-downs. Assets in acquired companies are reported at the fair value on the acquisition date after deduction for subsequent accumulated deprecation. Machinery and equipment is depreciated on a straightline basis during its economic life of between 3 and 5 years. Installations and improvements on other parties' property are depreciated during the period of the lease agreement.
The residual value of assets and their useful economic lives are reviewed annually and adjusted as required.
In conjunction with each reporting period, an assessment is made of whether there is any indication of a decline in value of the Group's assets. If this is the case, a calculation is made of the asset's recoverable value. Goodwill has been allocated to cash generating units and is subject to annual impairment testing. The recoverable value consists of the higher of the value in use of the asset in operations and the value that would be received if the asset was sold to an independent party, the net sales value. Value in use consists of all incoming and outgoing payments attributable to the asset during the period it is expected to be used in operations, plus the net sales value at the end of the service life. If the calculated recoverable amount is less than the reported value, impairment is made to the asset's recoverable value. Impairment is reported in the income statement.
The leasing of fixed assets, for which the Group is essentially responsible for the same risks and benefits as it would be in the case of direct ownership, is classified as financial leasing. The leased asset is reported as a fixed asset and the corresponding obligation to pay a leasing fee is reported as an interestbearing liability. The leasing payments are distributed between amortization of the liability and financial expense, so that each reporting period is charged with an interest amount corresponding to a fixed interest rate on the reported liability during
each period. The leased asset is depreciated in accordance with the same principles that apply to other assets of the same type. If any uncertainty exists about whether the asset will be taken over at the end of the leasing period, the asset is depreciated during the leasing period, if this is shorter.
Leasing of assets, for which the lessor, for all practical purposes, is considered the owner, is classified as operational leasing. The leasing fee is expensed on a straightline basis over the leasing period.
Inventories are valued at the lower of acquisition value and fair value.
Financial instruments, which are reported in the balance sheet, include cash and cash equivalents, securities, other financial receivables, accounts receivable, accounts payable, loan liabilities and derivatives.
A financial asset or a financial liability is reported in the balance sheet when the company becomes party to the contractual terms and conditions of the instrument. A financial asset is removed from the balance sheet when the contractual rights are realized, fall due or the company loses control of them. Spot acquisitions or sales of financial assets are reported on the settlement date, which is the date on which the asset is delivered. Accounts receivable are reported in the balance sheet when the invoice is dispatched.
The fair value of listed financial assets corresponds to the asset's listed bid price on the closing date. In the absence of such information, a valuation is carried out using generally accepted methods such as the discounting of future cash flows at the quoted market interest rate for the particular maturity.
For short term loans and investments, the fair value is deemed to comply with the carrying amount in view of the fact that a change in market rate of interest does not have a material effect on the market value.
Financial assets and liabilities are netted and reported in a net amount in the balance sheet when there is a legal right to net and when the intention is to settle the items using a net amount or simultaneously realize the assets and settle the liability.
Receivables are valued at the accumulated acquisition value less any provision for a decline in value. Since the anticipated lifetime of accounts receivable is short, reporting is done in the amounts expected to be received, based on individual assessment of doubtful receivables without discounting in accordance with the method for accumulated acquisition value.
Liquid funds equivalents comprise cash and bank balances with financial institutions and current investments and are reported at the nominal value.
All derivatives are reported at fair value in the balance sheet. Changes in value relating to cash flow hedges are reported in shareholders' equity and are reversed to the income statement at the pace at which the hedged cash flow affects the income statement. Any ineffective portion of the change in value is reported directly in the income statement.
The result of a revaluation of derivatives used to hedge fair value is reported in the income statement along with changes in the fair value of the receivable or liability exposed to the hedged risk.
Loan liabilities are reported initially at fair value, net of transaction costs, and subsequently at amortized cost according to the effective interest method. Loan liabilities carrying a fixed rate of interest that are reported in hedge accounting in line with the method for fair value hedging are valued at market in respect of the interest component. Changes in market value are reported in net form with changes in value of the hedge instrument in net financial items.
Loans in foreign currency are reported at the fiscal year-end rate. Exchange rate differences for loans in connection with hedging of foreign operations are reported in shareholders' equity, with tax effects taken into account, and are thus offset against the translation differences that arise when translating the subsidiaries' balance sheets into SEK.
The valuation principle for accounts payable is the accumulated acquisition value. The expected lifetime for accounts payable is short and thus the payables are reported at nominal value without discounting.
Provisions are reported when the Group has, or is considered to have, an obligation resulting from an event that has occurred and for which payments are likely to be demanded to meet the obligation. A further condition is that it is possible to make a reliable estimate of the amount that will be paid.
Estimated costs for product guarantees are charged against operating costs in conjunction with the income recognition of the products. The estimated costs are established using historic statistics, with known changes taken into account in regard to product quality, repair costs and similar items.
The cash flow statement is prepared according to the indirect method.
Financial risks are handled within the framework of a finance policy established by the Board of Directors. The Group's financial risks are compiled and followed up continuously to ensure compliance with the finance policy.
The primary objective for Elekta's capital management is to maintain high creditworthiness and well balanced capital structure with the aim of generating return to shareholders and benefit for other stakeholders, and to keep the costs of capital down.
The capital structure objective is a net debt/equity ratio that does not exceed 0.50. April 30, 2009 shareholders' equity in Elekta was SEK 2,555 M (1,813) and net debt/equity was 0.31.
As a result of its international operations and structure, Elekta has considerable exposure to exchange rate fluctuations. This pertains to currency flows in different currencies, transaction exposure, and the translation of foreign subsidiaries' profits and net assets into SEK, translation exposure.
Transaction exposure is generated mainly through expenses in SEK and GBP and revenue in USD and EUR. The sales companies' revenues and expenses are mainly in local currencies. The proportion of invoiced sales in foreign currency exceeds 95 percent of the Group's total invoicing.
Elekta's policy is to hedge the exchange rate risk using forwards or options, the extent of which is determined by the Group's estimation of the exchange rate risk and in accordance with the Group's established policy. Hedging is conducted on the basis of expected net sales over a period up to 24 months. Hedging is carried out to reduce the effects of short-term fluctuations in currency markets. During 2008/09, exchange rate losses in the operating profit on forward contracts amounted to SEK 217 M (gains 16).
The Group's consolidated earnings and shareholders' equity are affected by translation exposure. Consolidated earnings are normally not hedged. Shareholders' equity in foreign currency is hedged when deemed appropriate, following individual assessment. The long-term USD loan raised in 2002 is used to hedge part of the net investments in US subsidiaries.
With its present income and expense structure, a general change of one percentage point in the SEK exchange rate against other currencies affects Group earnings by approximately SEK 18 M. Currency hedging limits the short-term effect of exchange rate movements.
The Group's net sales and operating expenses in 2008/09 are shown in the diagram above.
Net sales and operating expenses per currency 2008/09
Interest rate risk pertains to the risk that changes in interest rates will adversely affect Elekta's earnings.
At year-end, liquid funds accounted for 10 percent (6) of the Group's total assets. Liquid funds were invested so as to obtain a return equivalent to the short-term market rate for each currency.
On April 30, 2009, interest-bearing liabilities totaled SEK 1,627 M (1,449), of which SEK 1 M (1) pertained to financial leasing. The average fixed interest term was 2.8 years (2.7) and the weighted average interest rate taking interest rate derivatives into account was 3.2 percent (4.8).
An overall change in interest rate on borrowings and investments by one percentage point would effect Elekta's earnings by some SEK 3 M.
The liquidity and financing risk pertains to the risk not to be able to cover payment obligations due to insufficient liquid funds or difficulties in obtaining external financing.
In an effort to reduce the liquidity risk, Elekta endeavors to maintain readily available funds equal to at least 10 percent of net sales. On April 30, 2009, available cash and cash equivalents amounted to SEK 827 M (400), or 12 percent (8) of net sales. In addition, Elekta had approximately SEK 1,200 M (681) in unutilized credit facilities.
Elekta has secured its long term financing to 2013-2014, see note 19.
Exposure occurs when surplus liquidity is invested, and in the handling of the Group's financial risks. Elekta's finance policy includes special counterparty regulations in which the maximum credit exposure and the lowest credit rating for various counterparties are specified. An objective is that counterparties should have a minimum credit rating from Standard & Poor's/ Moody's of A/A (long) and A-2/P-2 (short). Elekta invests its liquidity solely in liquid instruments with a low credit risk and with credit-worthy banks.
| April 30, 2009 | April 30, 2008 | |
|---|---|---|
| Not due | 1,251 | 957 |
| Overdue < 30 days | 112 | 180 |
| Overdue 30-60 days | 46 | 110 |
| Overdue 60-90 days | 52 | 69 |
| Overdue > 90 days | 231 | 174 |
| Total accounts receivables, net | 1,692 | 1,490 |
| Bad debt reserve | ||
| Opening balance of bad debt reserve | –24 | –20 |
| Increase through business combination | — | –4 |
| Reserved during the year | –9 | –4 |
| Reversals during the year | 3 | 2 |
| Realized loss | 3 | 1 |
| Translation differences | –6 | 1 |
| Closing balance of bad debt reserve | –33 | –24 |
| SEK M | Nominal | Assets | Liabilities |
|---|---|---|---|
| Currency derivatives | 3,344 | 45 | 73 |
| Interest rate derivatives | 319 | 45 | 0 |
| Total | 3,663 | 90 | 73 |
Outstanding derivatives with hedge accounting, April 30, 2009 Hedging
| SEK M | Nominal | Assets | Liabilities | reserve after tax |
|---|---|---|---|---|
| Currency derivatives: | ||||
| Cash flow hedges | 2,036 | 27 | 72 | 32 |
| Interest rate derivatives: | ||||
| Hedging of fair value | 319 | 45 | 0 | — |
| Total | 2,355 | 72 | 72 | 32 |
Financial assets and liabilities are reported at fair value with one exception, the 10-year bond loan that is reported at its amortized cost, taking into account interest rate derivatives, of SEK 1,038 M while the nominal value is SEK 998 M.
Elekta's credit risks are limited since customer operations are, to a large extent, financed either directly or indirectly by public funds. No customer accounts for 10 percent or more of Elekta's net sales. Elekta's credit losses have historically been low.
The presentation below shows the overall schedule for the derivatives that have affected the Group's balance sheet and income statement as of April 30, 2009.
| Currencies | Amount | Term | Rates |
|---|---|---|---|
| MUSD/SEK | 62 | 2-20 mon | 7.8420 |
| MUSD/GBP | 80 | 2-20 mon | 1.5413 |
| MEUR/SEK | 22 | 8-20 mon | 10.4977 |
| MEUR/GBP | 34 | 5-20 mon | 0.8576 |
| MJPY/SEK | 2,900 | 3-20 mon | 8.2511 |
| MJPY/GBP | 1,400 | 3-20 mon | 144.1674 |
The preparation of the financial statements and application of various accounting standards are frequently based on management's assessments or assumptions and estimates that are viewed as reasonable under the prevailing circumstances. These assumptions and estimates are frequently based on experience as well as other factors, including expectations of future events. Using other assumptions and estimates, the result can
be different and the actual outcome, by definition, seldom complies with the anticipated result.
In computing the cash generating units' recoverable value for the assessment of any impairment requirement of goodwill, a number of assumptions concerning future circumstances and estimates of parameters have been made, see note 11.
Elekta's business operations are confined to a single operating segment, namely treatment methods for cancer and brain disorders. This operating segment is the primary segment.
The secondary segment is geographical areas. Sales figures are based on the country in which the customer is located. Assets and investments are reported where the assets are located.
| Secondary Segment | NET SALES | INVESTMENTS IN TANGIBLE AND INTANGIBLE FIXED ASSETS |
ASSETS APRIL 30 | |||
|---|---|---|---|---|---|---|
| Group, SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 | 2009 | 2008 |
| Europe, Middle East, Africa | 2,518 | 2,020 | 54 | 46 | 3,705 | 3,180 |
| North and South America | 2,709 | 2,098 | 67 | 52 | 3,251 | 2,531 |
| Asia | 1,462 | 963 | 21 | 10 | 995 | 611 |
| Total net sales | 6,689 | 5,081 | 142 | 108 | 7,951 | 6,322 |
| GROUP | |||
|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | |
| Cost of products sold | –74 | –69 | |
| Selling expenses | –38 | –20 | |
| Administrative expenses | –44 | –47 | |
| R&D expenses | –52 | –40 | |
| Total depreciation/amortization | –208 | –176 |
| PARENT COMPANY | ||
|---|---|---|
| SEK M | 2008/09 | 2007/08 |
| Dividends from subsidiaries | 383 | 676 |
| Result from participations in Group companies | 383 | 676 |
| GROUP | ||
|---|---|---|
| SEK M | 2008/09 | 2007/08 |
| Income from participations in associated companies | 4 | 12 |
| Internal profit eliminations for products sold | –3 | –2 |
| Result from participations in associated companies | 1 | 10 |
SEK 56 M (55) of the Parent Company's interest income of SEK 45 M (43) was received from Group companies. Parent Company's interest expense and similar profit/loss items amounted to SEK 90 M (67), of which SEK 14 M (0) pertained to Group companies.
| APPROPRIATIONS | UNTAXED RESERVES | |||
|---|---|---|---|---|
| Parent Company, SEK M | 2008/09 | 2007/08 | April 30, 2009 | April 30, 2008 |
| Tax allocation reserve | –5 | –6 | 37 | 32 |
| Total | –5 | –6 | 37 | 32 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 |
| Current taxes | –200 | –208 | –5 | –5 |
| Deferred taxes | –28 | –10 | 2 | 1 |
| Participations in taxes of associated companies | 0 | 0 | — | — |
| Total taxes | –228 | –218 | –3 | –4 |
| Tax expenses: | 29% | 35% | ||
| Swedish tax | 28% | 28% | ||
| Effect of other tax rates for foreign companies | 5% | 7% | ||
| Changes in tax legislation | –1% | 0% | ||
| Tax related to prior years | –4% | 0% | ||
| Others | 1% | 0% |
| Current tax liabilities | GROUP | |||
|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
| Opening balance | 114 | 35 | –4 | 1 |
| Through business combination | — | 3 | — | — |
| Adjustment for prior years | –33 | 3 | — | — |
| Current tax for the year | 233 | 205 | 5 | 5 |
| Paid taxes | –206 | –128 | 1 | –10 |
| Translation differences | 13 | –4 | — | — |
| Closing balance | 121 | 114 | 2 | –4 |
Deferred tax assets/liabilities in the balance sheet are attributable to the following:
| Group, SEK M | April 30, 2009 | Assets | Liabilities | Net |
|---|---|---|---|---|
| Loss carry-forwards | 45 | — | 45 | |
| Untaxed reserves | — | –63 | –63 | |
| Intangible assets | 3 | –268 | –265 | |
| Tangible fixed assets | 6 | –4 | 2 | |
| Financial fixed assets | — | –6 | –6 | |
| Other assets | 83 | –25 | 58 | |
| Operating liabilities/Provisions | 72 | –4 | 68 | |
| Deferred tax assets/tax liabilities | 209 | –370 | –161 | |
| Offsetting | –175 | 175 | 0 | |
| Net deferred tax assets/tax liabilities | 34 | –195 | –161 |
| SEK M | Group net | Parent Company net | |
|---|---|---|---|
| Opening balance May 1, 2008 | –121 | 37 | |
| Changed tax law | 5 | — | |
| Adjustment for prior years | –4 | — | |
| Deferred taxes for the year | –29 | 2 | |
| Deferred taxes charged against shareholders' equity | –9 | –26 | |
| Translation differences | –3 | — | |
| Closing balance April 30, 2009 | –161 | 13 |
| SEK M | Goodwill | Capitalized development |
Customer relationships |
Other intangible assets |
Total |
|---|---|---|---|---|---|
| Acquisition value May 1, 2008 | 1,973 | 225 | 191 | 473 | 2,862 |
| Acquisition through business combination | 2 | — | — | — | 2 |
| Purchases/capitalization | — | 63 | — | 1 | 64 |
| Sales/disposals | — | –22 | — | –1 | –23 |
| Translation differences | 415 | 18 | 63 | 109 | 605 |
| Acquisition value April 30, 2009 | 2,390 | 284 | 254 | 582 | 3,510 |
| Accumulated amortization May 1, 2008 | –60 | –23 | –120 | –203 | |
| Sales/disposals | 22 | — | 0 | 22 | |
| Amortization for the year | –53 | –13 | –68 | –134 | |
| Translation differences | –4 | –9 | –32 | –45 | |
| Accumulated amortization April 30, 2009 | –95 | –45 | –220 | –360 | |
| Residual value according to plan April 30, 2009 | 2,390 | 189 | 209 | 362 | 3,150 |
Goodwill is tested for impairment every year.
Goodwill is distributed among cash-generating units (product lines) as follows:
| SEK M | April 30, 2009 | April 30, 2008 | |
|---|---|---|---|
| Radiation Therapy | 421 | 419 | |
| IMPAC | 1,182 | 889 | |
| CMS | 490 | 369 | |
| Medical Intelligence | 176 | 176 | |
| BMEI | 118 | 118 | |
| Other | 3 | 2 | |
| Total | 2,390 | 1,973 |
The recoverable amount for the Group's cash-generating units with goodwill are tested annually by computing the value in use for each unit. The 2009 test indicated that there was no impairment requirement.
The calculation of the value in use for each unit was conducted by estimating future cash flow based on assumptions of growth, margin development and investments in fixed assets and working capital. These estimates are based on financial budgets (the next fiscal year), expected growth in the shortterm (2–5 years) and medium-term (6–10 years). For long-term periods (>10 year), the extrapolation of expected cash flow has been assumed to be a prudent 2 percent – considerably
lower than the anticipated industry growth. The cash flow has been discounted using a pre-tax interest rate in line with the Elekta Group's weighted capital cost (9 percent). Discounted cash flow is compared with capital employed for each cash-generating unit. Testing of the impairment requirement is done in April/May after the budget and business plans have been set by company management.
Sensitivity analyses have been carried out with regard to the discount rate (risk) and long-term growth. Even if the long-term (>10 years) growth rate declines by 1 percentage point and the weighted capital cost rises to 11 percent, there is no write-down requirement.
| SEK M | Machinery etc. for production |
Equipment, tools and installations |
Finance lease equipment |
Buildings | Total |
|---|---|---|---|---|---|
| Acquisition value May 1, 2008 | 80 | 541 | 45 | 26 | 692 |
| Purchases | 17 | 60 | — | 1 | 78 |
| Sales/disposals | –1 | –5 | –14 | — | –20 |
| Translation differences | 6 | 56 | 3 | 8 | 73 |
| Acquisition value April 30, 2009 | 102 | 652 | 34 | 35 | 823 |
| Accumulated depreciation May 1, 2008 | –54 | –365 | –45 | –2 | –466 |
| Sales/disposals | 1 | 2 | 14 | — | 17 |
| Depreciation for the year | –8 | –65 | 0 | –1 | –74 |
| Translation differences | –2 | –31 | –3 | 1 | –35 |
| Accumulated depreciation April 30, 2009 | –63 | –459 | –34 | –2 | –558 |
| Residual value according to plan April 30, 2009 | 39 | 193 | 0 | 33 | 265 |
| GROUP | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 | |
| Participations in Group companies | — | — | 1,419 | 1,392 | |
| Receivables from Group companies | — | — | 101 | 642 | |
| Participations in associated companies | 26 | 21 | 8 | 8 | |
| Participations in other companies | 2 | 2 | — | 0 | |
| Other long-term receivables | 31 | 14 | — | — | |
| Total financial fixed assets | 59 | 37 | 1,528 | 2,042 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK M | Associated companies | Other companies | Associated companies | Group companies |
| Opening balance May 1, 2008 | 21 | 2 | 8 | 1,392 |
| Investments | 2 | — | — | 27 |
| Sales/repayments | –8 | — | — | — |
| Participations in income of associated companies | 1 | — | — | — |
| Translation differences | 10 | — | — | — |
| Closing balance April 30, 2009 | 26 | 2 | 8 | 1,419 |
| Company | Corp. reg. No. | Domicile | No. of shares and participations |
Proportion of capital and votes, % |
Book value, SEK M |
|---|---|---|---|---|---|
| Elekta Instrument AB | 556492-0949 | Stockholm, Sweden | 1,000,000 | 100.0 | 50 |
| Elekta Neuromag Oy | 0756256-7 | Helsinki, Finland | 1,832 | 100.0 | 44 |
| Elekta KK | 65 820 | Kobe, Japan | 2,000 | 100.0 | 0 |
| Elekta Holding Limited | 2699176 | Crawley, Great Britain | 22,810,695 | 100.0 | 277 |
| Elekta Holdings US Inc. | 58-1876545 | Norcross, USA | 6,020 | 100.0 | 433 |
| Elekta Canada Inc. | R889657862 | Toronto, Canada | 1 | 100.0 | 0 |
| Elekta Asia Ltd | 502 493 | Hong Kong | 81,022,160 | 100.0 | 13 |
| Elekta Instrument (Shanghai) Ltd | Shanghai, China | 100.0 | 2 | ||
| Elekta BMEI (Beijing) Medical | |||||
| Equipment Co., Ltd. | Beijing, China | 80.0 | 196 | ||
| Elekta Pty Limited | ACN 109 006 966 | Sydney, Australia | 1 | 100.0 | 1 |
| Elekta Medical System | |||||
| India Private Limited | U33112DL2005PTC139794 | New Delhi, India | 10,000 | 100.0 | 0 |
| Elekta SA | B 414 404 913 | Paris, France | 2,500 | 100.0 | 4 |
| Elekta Medical SA | A-818 867 31 | Madrid, Spain | 10,000 | 100.0 | 3 |
| Elekta GmbH | HRB 63500 | Hamburg, Germany | 100.0 | 5 | |
| Medical Intelligence | |||||
| Medizintechnik GmbH | HRB 14835 | Schwabmünchen, Germany | 100.0 | 231 | |
| Elekta Kft. | Budapest, Hungary | 100.0 | 2 | ||
| Elekta GmbH | FN 166018w | Innsbruck, Austria | 1 | 100.0 | 3 |
| Elekta Hellas EPE | 998 569 196 | Aten, Greece | 100.0 | 0 | |
| Elekta S.A./N.V. | HRB 613 484 | Zaventem, Belgium | 250 | 100.0 | 1 |
| Elekta BV | 17 097 384 | Best, The Netherlands | 40 | 100.0 | 0 |
| Elekta Holding BV | 33 292 546 | Best, The Netherlands | 40 | 100.0 | 0 |
| Elekta S.p.A. | 02723670960 | Agrate Brianza (MI), Italy | 500,000 | 100.0 | 34 |
| 3D Line Research and Development S.r.l. | Milano, Italy | 100.0 | 119 | ||
| Elekta Medical Systems Comercio e Prestacao de Servicos para Radiologia, |
|||||
| Radiocirurgia e Radioterapia Ltda | Sao Paolo, Brazil | 100.0 | 1 | ||
| Elekta (Pty) Ltd | 2000/018814/07 | Pretoria, South Africa | 1 | 100.0 | 0 |
| Total participations in Group companies | 1,419 |
| Company | Corp. reg. No. | Domicile | No. of shares and participations |
Proportion of capital and votes, % |
Book value, SEK M |
|---|---|---|---|---|---|
| AB Motala Verkstad | 556031-3503 | Motala, Sweden | 29,960 | 49.9 | 11 |
| Participations in associated companies | 15 | ||||
| Total participations in associated companies | 26 | ||||
The book value of AB Motala Verkstad in the Parent Company is SEK 8 M.
| GROUP | |||
|---|---|---|---|
| SEK M April 30, 2009 |
April 30, 2008 | ||
| Components | 120 | 82 | |
| Work in progress | 74 | 97 | |
| Finished goods | 359 | 350 | |
| Total inventories | 553 | 529 |
| PARENT COMPANY | ||||
|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
| Accounts receivable | 1,692 | 1,490 | — | — |
| Receivables from Group companies | — | — | 1,537 | 690 |
| Derivative instruments (see note 2) | 90 | 42 | 45 | 18 |
| Other receivables | 92 | 134 | 2 | 13 |
| Prepaid expenses and accrued income | 1,188 | 789 | 4 | 2 |
| Total receivables | 3,062 | 2,455 | 1,588 | 723 |
The Prepaid expenses and accrued income item in the consolidated balance sheet includes accrued income of SEK 1,081 M (635).
| GROUP | ||||
|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
| Cash and bank | 828 | 402 | 252 | 17 |
| Total liquid funds | 828 | 402 | 252 | 17 |
| Number of shares in Elekta AB (publ) | A-shares | B-shares | Total | |
|---|---|---|---|---|
| Number of shares May 1, 2007 | 3,562,500 | 90,232,276 | 93,794,776 | |
| Cancellation of repurchased shares | –1,630,871 | –1,630,871 | ||
| Exercise of warrants | 357,756 | 357,756 | ||
| Number of shares April 30, 2008 | 3,562,500 | 88,959,161 | 92,521,661 | |
| Cancellation of repurchased shares | –951,300 | –951,300 | ||
| Exercise of warrants | 554,202 | 554,202 | ||
| Number of shares April 30, 2009 | 3,562,500 | 88,562,063 | 92,124,563 |
One A-share entitles the holder to 10 votes and one B-share to one vote. In accordance with section 12 of the Articles of Association, A-shares are subject to right of first refusal. All A-shares are currently owned by Laurent Leksell via company.
The Board's proposed dividend is SEK 2.00 per share equal to SEK184 M.
951,300 B-shares repurchased during January-February 2008 were cancelled following the approval of the Annual General Meeting.
For additional information on Elekta shares, see pages 75-77.
| GROUP | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 | |
| Warranty provisions | 68 | 58 | — | — | |
| Short-term provisions | 68 | 58 | — | — | |
| Provision for pensions | 53 | 35 | 15 | 7 | |
| Other provisions | 20 | 23 | 7 | 5 | |
| Long-term provisions | 73 | 58 | 22 | 12 |
Elekta has defined benefit pension plans for certain employees in a few countries. Most common is however defined contribution plans.
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 |
|---|---|---|---|---|
| Current service cost | –5 | –5 | –1 | –1 |
| Interest expense | –5 | –4 | –1 | –1 |
| Return on plan assets | –4 | –5 | –3 | 0 |
| Actuarial gains (+) and losses (–) | –8 | 0 | –4 | –3 |
| Total pension costs defined benefit plans | –22 | –14 | –9 | –5 |
The pension plans are funded through insurances, the funds are therefore not reported in Elektas balance sheet.
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
|---|---|---|---|---|
| Defined benefit obligation, funded plans | 114 | 94 | 40 | 33 |
| Fair value of plan assets | –78 | –72 | –25 | –26 |
| Provisions for pension, funded plans | 36 | 22 | 15 | 7 |
| Defined benefit obligation, unfunded plans | 17 | 13 | — | — |
| Provisions for pension, unfunded plans | 17 | 13 | — | — |
| Pension liability for defined benefit plans, net | 53 | 35 | 15 | 7 |
Provision for pensions, net
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 |
|---|---|---|---|---|
| Opening balance | 35 | 22 | 7 | 2 |
| Pension costs | 22 | 14 | 9 | 5 |
| Contributions | –5 | –5 | –1 | 0 |
| Benefit payments | –3 | — | — | — |
| Translation differences | 4 | 4 | — | — |
| Provisions for pensions, net | 53 | 35 | 15 | 7 |
| weighted average | April 30, 2009 | April 30, 2008 | |
|---|---|---|---|
| Discount rate | 3.6% | 4.5% | |
| Expected return on plan assets | 3.6% | 4.8% | |
| Future salary increases | 1.9% | 2.5% |
| GROUP | PARENT COMPANY | ||
|---|---|---|---|
| SEK M | Warranty provisions | Other provisions | Other provisions |
| Opening balance May 1, 2008 | 58 | 23 | 5 |
| Provisions/reversals during the year | 57 | –2 | 2 |
| Provisions released during the year | –56 | –2 | — |
| Translation differences | 9 | 1 | — |
| Closing balance April 30, 2009 | 68 | 20 | 7 |
| GROUP | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 | ||
| Bond loan | 1,038 | 762 | 1,038 | 762 | ||
| Liabilities to credit institutions | 588 | 686 | 513 | 654 | ||
| Liabilities to Group companies | — | — | 487 | 233 | ||
| Finance lease liabilities | 1 | 1 | — | — | ||
| Other interest-bearing liabilities | — | — | — | — | ||
| Total interest-bearing liabilities | 1,627 | 1,449 | 2,038 | 1,649 | ||
| Maturity term structure external loans | ||||||
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 | ||
| Within 1 year | 119 | 33 | 43 | 32 | ||
| Within >1 year <5 years | 470 | 652 | 470 | 620 | ||
| After 5 years | 1,038 | 764 | 1,038 | 764 | ||
| Total | 1,627 | 1,449 | 1,551 | 1,416 | ||
| Specification per currency | ||||||
| Currency | April 30, 2009 Amount |
April 30, 2009 MSEK |
April 30, 2008 Amount |
April 30, 2008 MSEK |
||
| Swedish kronor, SEK M | 470 | 470 | 590 | 590 | ||
| Euro, EUR M | 0 | 0 | 0 | 1 | ||
| US dollars, USD M | 130 | 1 081 | 136 | 826 | ||
| Chinese yuan, CNY M | 65 | 76 | 37 | 32 | ||
| Total | 1,627 | 1,449 | ||||
| Fixed interest term including effects of derivative transactions | ||||||
| SEK M | April 30, 2009 | April 30, 2008 | ||||
| < 1 year | 909 | 928 | ||||
| > 1 year < 2 years | — | — |
| Total | 1,627 | 1,449 | |
|---|---|---|---|
| > 5 years | 718 | 521 | |
| > 2 years <5 years | — | — |
| PARENT COMPANY | ||||
|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
| Advance payments by customers | 924 | 686 | — | — |
| Accounts payable | 621 | 517 | 5 | 7 |
| Liabilities to Group companies | — | — | 46 | 35 |
| Accrued expenses and prepaid income | 1,550 | 1,417 | 22 | 71 |
| Derivative instruments (see note 2) | 73 | 15 | 2 | 0 |
| Other interest-free liabilities | 144 | 60 | 2 | 4 |
| Total interest-free liabilities | 3,312 | 2,695 | 77 | 117 |
| Accrued expenses and prepaid income | ||||
| Prepaid service income | 748 | 491 | — | — |
| Reserve for additional project costs | 161 | 179 | — | — |
| Accrued commission costs | 75 | 48 | — | — |
| Accrued vacation pay liability | 84 | 61 | 4 | 3 |
| Accrued social costs | 19 | 21 | 1 | 4 |
| Accrued interest expenses | 13 | 13 | 9 | 8 |
| Other items | 450 | 604 | 8 | 56 |
| Total | 1,550 | 1,417 | 22 | 71 |
| GROUP | |||
|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | |
| Collateral pledged for contingent liabilities: | |||
| Bank balances | 1 | 2 | |
| Total assets pledged | 1 | 2 |
| GROUP | ||||
|---|---|---|---|---|
| SEK M | April 30, 2009 | April 30, 2008 | April 30, 2009 | April 30, 2008 |
| Guarantees | 75 | 64 | 7 | 17 |
| Guarantees for subsidiaries | — | — | 618 | 287 |
| Total contingent liablities | 75 | 64 | 625 | 304 |
| AVERAGE NUMBER OF EMPLOYEES | OF WHOM WOMEN | ||||
|---|---|---|---|---|---|
| 2008/09 | 2007/08 | 2008/09 | 2007/08 | ||
| Parent Company | 22 | 21 | 10 | 10 | |
| Subsidiaries: | Sweden | 182 | 178 | 63 | 55 |
| Australia | 18 | 12 | 5 | 4 | |
| Belgium | 8 | 7 | 1 | 1 | |
| Brazil | 7 | — | 3 | — | |
| Finland | 22 | 21 | 3 | 3 | |
| France | 48 | 46 | 7 | 8 | |
| Greece | 11 | 9 | 2 | 2 | |
| Hong Kong | 15 | 14 | 4 | 5 | |
| India | 33 | 29 | 1 | 1 | |
| Italy | 59 | 56 | 13 | 11 | |
| Japan | 99 | 55 | 23 | 12 | |
| Canada | 25 | 20 | 2 | 4 | |
| China | 306 | 274 | 81 | 70 | |
| Mexico | 1 | — | — | — | |
| The Netherlands | 17 | 17 | 3 | 3 | |
| New Zealand | 1 | — | — | — | |
| Switzerland | 4 | 5 | — | 1 | |
| Spain | 30 | 26 | 5 | 5 | |
| Great Britain | 485 | 470 | 82 | 80 | |
| South Africa | 7 | 7 | 2 | 2 | |
| Germany | 134 | 96 | 32 | 19 | |
| Hungary | 3 | 3 | — | — | |
| USA | 894 | 733 | 338 | 279 | |
| Austria | 15 | 14 | 3 | 5 | |
| Total average number of employees | 2,446 | 2,113 | 683 | 580 |
The Board of Directors in Elekta AB was 75 (86) percent men. The Executive Committee was 80 (83) percent men.
The total absence due to illness amounts in the Swedish companies to 1.5 percent, of which men 1.0 percent and women 2.5 percent. 8 percent of the absences are long-term, more than 60 consecutive days.
Absence due to illnes for the ages 29 years or younger, 30-49 years and 50 years or older are 0.8, 1.4 respective 1.8 percent.
| SALARIES AND REMUNERATION TO THE BOARD AND THE PRESIDENT |
SALARIES AND REMUNERATION TO OTHER EMPLOYEES |
||||
|---|---|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 | |
| Parent Company | 7 | 6 | 18 | 21 | |
| Subsidiaries: | Sweden | 2 | — | 105 | 95 |
| Australia | 2 | 1 | 11 | 8 | |
| Belgium | 2 | 1 | 4 | 3 | |
| Brazil | 3 | — | 6 | — | |
| Finland | 2 | 2 | 13 | 9 | |
| France | 2 | 2 | 22 | 18 | |
| Greece | 1 | 1 | 4 | 3 | |
| Hong Kong | — | — | 12 | 15 | |
| India | 1 | 1 | 3 | 2 | |
| Italy | 2 | 2 | 29 | 27 | |
| Japan | 2 | 2 | 70 | 30 | |
| Canada | — | — | 23 | 14 | |
| China | — | 1 | 52 | 33 | |
| Mexico | — | — | 1 | — | |
| The Netherlands | 1 | 1 | 12 | 10 | |
| Switzerland | — | — | 3 | 3 | |
| Spain | 1 | 1 | 14 | 11 | |
| Great Britain | 3 | 3 | 230 | 221 | |
| South Africa | 1 | 1 | 2 | 3 | |
| Germany | 6 | 3 | 80 | 51 | |
| Hungary | — | — | 1 | 1 | |
| USA | 13 | 11 | 695 | 461 | |
| Austria | 1 | 2 | 7 | 6 | |
| Total wages, salaries and other remunerations | 52 | 41 | 1,417 | 1,045 | |
| Pension costs, Parent Company | 1 | 1 | 14 | 8 | |
| Pension costs, subsidiaries | 3 | 2 | 83 | 89 | |
| Other social security costs, Parent Company | 2 | 2 | 12 | 12 | |
| Other social security costs, subsidiaries | 5 | 4 | 241 | 164 | |
| Total wages, salaries, other remuneration and social security costs | 63 | 50 | 1,767 | 1,318 |
Bonus payments included in the above Wages, salaries and other remunerations paid to the Boards and the Presidents of subsidiaries amounted to SEK 14 M (8), and SEK 1 M (1) in the Parent Company.
The Annual General Meeting of shareholders of 2004 resolved to adopt the Elekta AB 2004 Share Unit Plan ("the Plan"). The resolution meant that the conditions and the guidelines stated in the Plan shall be the framework for yearly grants of employee options to key employees within the Elekta Group during the period 2004/05 – 2006/07. Board members who are not employed in the company are not encompassed by Elekta's option program. The main terms of the Plan are (i) it is required that, for an employee to receive employee options and retain the possibility to acquire shares, the employee shall acquire a certain number of shares in the Company on the market and hold these shares until exercise of the option; (ii) the number of shares that will be possible to acquire based on the employee options is determined based on the fulfillment of a collectively established performance goal; (iii) it shall be possible to exercise one third of the options annually; (iv) the options are nontransferable;
(v) the options are dependent upon continued employment; (vi) the price that shall be paid to receive shares on exercise of the option shall amount to not less than 110 percent of the share's market value at the time of the option offer; (vii) the lifetime of the option shall be a maximum of four years, and (viii) the financial gain that the employee could receive on the granted options is maximized to 400 percent of the price that shall be paid for the shares. If the option holder's employment in the Group ceases, the option expires immediately to the extent that the option cannot yet be used, otherwise the option expires normally after three months from the cessation of employment. Delivery of shares under the employee option program has been secured through Elekta AB (publ) issuing warrants for new subscription to B-shares to a subsidiary. Thus, the employee options provide formal right to the acquisition of warrants transferred from the subsidiary. However, the option holder may not
| Share Unit Plan (employee options) | 2004/2008 | 2006/2010 | 2007/2012 | 2008/2012 |
|---|---|---|---|---|
| Number of shares after split after confirmed performance requirements | 1,675,611 | 989,692 | 1,597,500 | 1,500,000 |
| Exercise price per share | SEK 65.20 | SEK 152.00 | SEK 124.00 | SEK 114.00 |
| Expiration date for options | July 31, 2008 | July 31, 2010 | July 31, 2012 | July 31, 2012 |
| Number of shares as per outstanding options, April 30, 2008 | 674,314 | 913,193 | 1,582,500 | — |
| Expired during the year | –120,112 | –35,062 | –116,250 | –80,000 |
| Number of shares acquired during the year (option exercise)* | –554,202 | — | — | — |
| Number of shares as per outstanding options, April 30, 2009** | 0 | 878,131 | 1,466,250 | 1,420,000 |
| * Weighted average share price on exercise was SEK 119. ** Number of redeemable options totaled 976,673. |
dispose of the acquired warrants in a manner other than through the immediate exercise to subscribe for shares.
The Annual General Meeting of shareholders of 2007 resolved to adopt the Elekta AB 2007 Share Unit Plan ("the Plan"). The resolution meant that the conditions and the guidelines stated in the Plan shall be the framework for yearly grants of employee options to key employees within the Elekta Group during the period 2007/08 – 2009/10. Board members who are not employed in the company are not encompassed by Elekta's option program. The main terms of the Plan are (i) it is required that, for an employee to receive employee options and retain the possibility to acquire shares, the employee shall acquire a certain number of shares in the Company on the market and hold these shares until exercise of the option; (ii) the number of shares that will be possible to acquire based on the employee options is determined based on the fulfillment of a collectively established performance goal; (iii) it shall be possible to exercise one fourth of the options annually; (iv) the options are nontransferable; (v) the options are dependent upon continued employment; (vi) the price that shall be paid to receive shares on exercise of the option shall amount to not less than 110 percent of the share's market value at the time of the option offer; (vii) the lifetime of the option shall be a maximum of five years, and (viii) the financial gain that the employee
In accordance with the decision at the Annual General Meeting, Board fees totaling SEK 2,385,000 were paid, of which SEK 570,000 was paid to the Board Chairman, SEK 285,000 each to external Board members, SEK 70,000 to the Executive Compensation Committee Chairman, and SEK 35,000 to the other external Board member on the company's Executive Compensation Committee.
It is of fundamental importance to the Group and its shareholders
could receive on the granted options is maximized to 400 percent of the price that shall be paid for the shares. If the option holder's employment in the Group ceases, the option expires immediately to the extent that the option cannot yet be used, otherwise the option expires normally after three months from the cessation of employment. Delivery of shares under the employee option program has been secured through Elekta AB (publ) issuing warrants for new subscription to B-shares to a subsidiary. Thus, the employee options provide formal right to the acquisition of warrants transferred from the subsidiary. However, the option holder may not dispose of the acquired warrants in a manner other than through the immediate exercise to subscribe for shares.
Employee options are reported in line with IFRS 2 Sharebased payments. The calculated costs amounted to SEK 27 M (23). Employee options granted 2006 entitle the option holders to acquire 878,131 B-shares. Employee options granted 2007 entitle the option holders to acquire 1,466,250 B-shares. Employee options granted 2008 entitle the option holders to acquire 1,420,000 B-shares.
The dilution effect and the impact on earnings per share as a result of outstanding warrants issued to secure the delivery of shares pursuant to the 2006, 2007 and 2008 employee option programs are shown in the table Data per share on page 77.
that the principles for compensation and other employment conditions for the executives of the Group aims to, in the short and long term, attract, motivate and retain competent employees and managers. To obtain this goal, it is important to ensure fairness and internal equality, while maintaining market competitiveness of the structure, scope and level of executive compensation within Elekta. Employment conditions for the executive management should comprise a balanced mix of fixed salary, annual incentives, long-term incentives, pension and other benefits as well as notice and severance payments.
Total target cash compensation, i.e. fixed salary and variable
incentives, should be competitive in the geographic market where the employee is resident. The level of total cash should be reviewed annually to ensure that it is in line with the median for similar positions in the relevant market. Market medicans are established annually with the assistance of external benchmarking. Compensation should be highly performance driven and therefore the target annual incentive should be a relatively high portion of the total target compensation.
Executive management comprised 10 persons in 2008/09, 5 of which are residents in Sweden, 5 in UK and USA. See page 75 in the 2007/08 annual report. In the new executive management presented on page 71 in this annual report Gerry van Oortmarssen and Åsa Thunman have withdrawn.
| Remuneration and other benefits during the year | |||||||
|---|---|---|---|---|---|---|---|
| SEK 000s | Fixed salary | Incentives | Other benefits |
Pension cost |
Total | ||
| President | 3,076 | 1,425 | 55 | 1,050 | 5,606 | ||
| Other senior executives: | |||||||
| – residents in | |||||||
| Sweden | |||||||
| (5 persons) | 5,410 | 1,655 | 194 | 1,177 | 8,436 | ||
| – residents in | |||||||
| UK and USA | |||||||
| (5 persons) | 11,642 | 8,191 | 1,219 | 836 | 21,888 | ||
| Total executive | |||||||
| management | 20,128 | 11,271 | 1,468 | 3,063 | 35,930 | ||
| Previous President | 2,874 | 1,233 | 96 | 8,913 | 13,116 |
Comments on the table above
Incentives pertains to the bonus attributable to the 2008/09 fiscal year, which partly was paid out quarterly during the fiscal year and partly will be paid during 2009/10.
The Previous President has unchanged conditions.
| Options program 2008/2012 | After measurement of performance goals | ||
|---|---|---|---|
| Max number of shares at issue |
Number of shares |
Theoretical value at time of issue, SEK 000s |
|
| President | 60,000 | 60,000 | 639 |
| Other senior executives | 360,000 | 360,000 | 3,834 |
| Total executive management | 420,000 | 420,000 | 4,473 |
The options have no market value since they are not transferable. However, a theoretical value for the options has been calculated based on the Black & Scholes option pricing model, assuming a share price of SEK 91.25 and an expected volatility of 30 percent. The value calculated in accordance with the Black & Scholes model has been reduced by 30 percent to
account for the non-transferable nature of the options and the risk of the options partially or wholly lapsing before the original maturity date due to employment requirements not being met. The theoretical value of the options at the time of issue has been calculated at SEK 10.65 per share that the options carries entitlement to.
The group compensation system comprises different forms of compensation in order to create a well balanced remuneration which strengthens and underpins long and short term objective setting and attainment.
The fixed salary shall be individual and based on the content and responsibility of the role as well as the individual's competence and experience in relation to the role held.
Executive management has an annual incentive with quarterly measurement and payment. The annual incentive is structured as a variable component of the total cash remuneration package and is primarily related to the achievement of common group financial performance goals. The goals for the annual incentive are established annually by the Board so as to sustain the business strategy and objectives. Other measures, i.e. Key Performance Indicators, may be used to create focus on nonfinancial objectives of particular interest. The size of the annual incentive is dependent on the role held and may amount to between 30 and 100 percent of the fixed salary at target performance. At over-performance of financial and other quantitative goals the level of pay out against the annual incentive is capped at a maximum of 160 percent of target. The plan shall also contain a minimum performance level under which no bonus will be paid out.
In order to ensure long term engagement, continued employment as well as competitive pay from an international perspective, the annual incentive may be complemented by an additional annual incentive with a deferred payment by 12–24 months. Deferred bonus is used selectively and is based on targets relating to current fiscal year. This deferred bonus requires continued employment until an agreed future date for any payment to be made. The deferred bonus should never exceed 50 percent of the normal annual incentive and shall in other aspects follow the group bonus plan.
In order to strengthen long-term thinking in decision making and ensure achievement of long-term objectives, the Board may selectively decide on other type of non-share price related longterm cash incentive programs. Potential remuneration in form of a long-term incentive should be in line with practice in each market and requires continued employment in the Group.
The Board also uses long-term incentives to reinforce a customer and shareholder perspective among executive and other management. On a yearly basis, the Board of Directors evaluates whether a share based long-term incentive program, e.g. in the form of an option program, should be proposed to the AGM.
Senior executives that are entitled to pension benefits should have defined contribution schemes. The pensionable age for Swedish citizens is 65 years while other executives follow the rules of their respective countries of residence. The main guide line is that the size of pension contributions is based only on the fixed salary. Certain individual adjustments may occur based on market practice.
The previous President and Executive Director is entitled to request retirement from the age of 60 with remuneration corresponding to 70 percent of the base salary on the retirement date. The pension benefit is secured by insurance.
Other benefits, such as company cars and health, medical and sickness related insurance schemes, should be of a more limited value compared to other items of the compensation package and in line with the market practice for the respective geographic market.
Elekta has a notice period to the President of 24 months while the President has a notice period of 8 months. In the event of certain more comprehensive ownership changes the President is entitled to give 6 months notice within 120 days and then receive severance pay equal to 18 months employment including all employment benefits except company car and bonus.
Other senior executives have notice periods between 6 and 12 months. Severance agreements will in principle not be signed. In a redundancy situation, the current practice in the geographic market where the executive is resident will apply.
The previous President is entitled to severance pay of 3 years' salary, including pension benefits, other remuneration during a 3-4 year period and four times his annual bonus, calculated as the average bonus paid during the most recent 3 year period. In addition, the previous President is entitled to severance pay in the event of own notice of termination of employment as the result of certain more comprehensive ownership changes. This severance agreement is irrevocable.
During the year, Elekta's Executive Compensation Committee (ECC) provided the Board with recommendations regarding principles for formulating the Group's compensation system and remuneration to senior executives and senior managers. The recommendations covered formulation of the bonus system, distribution between fixed and variable remuneration as well as the size of any salary increases. The ECC also proposed criteria for assessing the performance of senior executives and senior managers. The Board has discussed the proposals from the ECC and made the proposal to the AGM based on the recommendation submitted. Elekta's ECC comprises the Chairman of the Board, one independent Director and one Board member employed at Elekta. The President Tomas Puusepp is present at the committee meetings. The Group Vice President Human Resources acts as the ECC secretary.
The year's leasing costs amounted to SEK 113 M (88). Contracted leasing payments total SEK107 M for the 2009/10 fiscal year, SEK 251 M for 2010/11-2013/14, and SEK 108 M for subsequent years.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SEK M | 2008/09 | 2007/08 | 2008/09 | 2007/08 |
| Audit fees Deloitte & Touche | 11 | 9 | 3 | 2 |
| Other remunerations to Deloitte & Touche | 4 | 5 | 3 | 5 |
| Total fees and remunerations to auditors | 15 | 14 | 6 | 7 |
Other remunerations are predominantly in areas closely related to audit such as accounting and tax as well as review in connection with acquisition.
Transactions between Elekta AB and its subsidiaries are shown in notes 6, 8, 15, 19 and 20. These transactions are eliminated in consolidation. Sales to associated companies amounted to SEK 56 M (34). Purchases from associated companies amounted to SEK 28 M (43). Receivables from associated companies amounted to SEK – M (26) and liabilities to associated companies amounted to SEK 5 M (6).
None of the Board members or any of the senior executives has, or has had, any direct or indirect involvement in any business transactions between themselves and Elekta, which is, or was, unusual in character with regard to the terms and conditions. In addition to this, no other transactions with closely related persons occurred. Remunerations and benefits to key personnel in management positions are presented in note 24.
Distributable shareholders' equity at the Parent Company:
| Premium reserve | SEK | 70,830,054 |
|---|---|---|
| Retained earnings | SEK 543,459,715 | |
| Profit for the year | SEK 250,186,474 | |
| Total | SEK 864,476,243 | |
| The Board of Directors and the President propose: | ||
| to be distributed to the shareholders, a dividend of SEK 2.00 per share* | SEK 184,249,126 | |
| and that the remaining amount be carried forward | SEK 680,227,117 | |
| Total | SEK 864,476,243 |
* The total amount distributed can change up until the record date depending on the number of warrants utilized.
It is the assessment of the Board of Directors that the proposed dividend neither prevents the Company, and other companies within the Group, from fulfilling its obligations, nor from making the necessary investments. The proposed dividend can therefore be justified in respect of Chapter 17, section 3, paragraphs 2 and 3 of the Swedish Companies Act (the prudence rule).
In making this proposal for dividend, the Board has taken into account the Company's dividend policy, solidity as well as general financial position, whereby the Company's ability to timely fulfill existing and foreseeable payment obligations as well as potential acquisitions and other investments.
The Board of Directors and the President certify that the annual financial report has been prepared in accordance with generally accepted accounting principles and that the consolidated accounts have been prepared in accordance with the international set of accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, and give a true and fair view of the position and profit or loss of the Company and the Group, and that the management report gives a fair review of the development and performance of the business, position and profit or loss of the Company and the Group, and describes the principal risks and uncertainties that the Company and the companies in the Group face.
AKBAR SEDDIGH
Chairman of the Board
BIRGITTA STYMNE GÖRANSSON VERA KALLMEYER
STOCKHOLM, AUGUSTI 13, 2009
LAURENT LEKSELL CARL G. PALMSTIERNA TOMAS PUUSEPP
Our audit report was submitted on August 13, 2009.
Deloitte AB JAN BERNTSSON
Authorized Public Accountant
HANS BARELLA LUCIANO CATTANI
TOMMY H KARLSSON
President and CEO
To the Annual General Meeting of the shareholders of Elekta AB (publ), corporate registration number 556170-4015.
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of Elekta AB (publ) for the fiscal year from May 1, 2008 to April 30, 2009. The Company's annual accounts and the consolidated accounts are included in the printed version of this document on pages 34-65. The Board of Directors and the President are responsible for these accounts and the administration of the Company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the Company in order to be able to determine the liability, if any, to the Company of any Board member or the President. We also examined whether any Board member or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the Company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the Group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the Parent Company and the Group be adopted, that the profit of the Parent Company be dealt with in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the President be discharged from liability for the financial year.
STOCKHOLM, AUGUST 13, 2009
Deloitte AB JAN BERNTSSON
Authorized Public Accountant
Elekta AB is a publicly traded Swedish limited liability company that operates under Swedish law. Corporate Governance of Elekta is based on Swedish legislation, primarily the Swedish Companies Act, the regulations for issuers of the NASDAQ OMX Nordic Exchange in Stockholm and other relevant rules and guidelines. Elekta's internal code of conduct, as well as its mission, vision and values, form cornerstones for the internal corporate governance regulations.
The Swedish Code of Corporate Governance (the Code) is part of the rules of the NASDAQ OMX Nordic Exchange to which Elekta has committed to adhere. Elekta has applied the Code since 2005. As of July 1, 2008, a revised Code applies.
Elekta has implemented and follows the Code with the following comments/explanations:
• Elekta's Board of Directors has been informed that Elekta's Election Committee decided to appoint Laurent Leksell, who is a Board member, as Chairman of the Election Committee. This decision by the Election Committee was motivated by the fact that Laurent Leksell is a major shareholder and well suited to effectively lead the work of the Committee in order to achieve the best result for the Company's shareholders.
• Laurent Leksell is a member of Elekta's Executive Compensation Committee and, due to his ownership and employment with Elekta, cannot be considered an independent Board member. Given Laurent Leksells long experience and track record within this area, the Board of Directors supports his participation in the Executive Compensation Committee.
This Corporate Governance report has not been reviewed by the Company's auditors and is not part of the formal annual report.
The shareholders' right of decision in Elekta AB's affairs is exercised at the Annual General Meeting (AGM). The AGM is held in Stockholm, Sweden in September. Notification of the AGM is published according to the rules of the Companies Act, not earlier than six and not later than four weeks in advance. All registered shareholders receive an invitation to the AGM together with a copy of the annual report.
To be able to participate in decisions, shareholders must be present at the AGM personally or via a representative. Shareholders may register to participate by mail, fax, telephone or e-mail. The language for the AGM is Swedish, and all documentation is available in Swedish and English. Matters considered at the AGM include dividend, adoption of the annual report, election of members of the Board of Directors as well as auditors if applicable, remuneration to the Board of Directors and auditors as well as other important issues resulting from laws or the articles of association.
A-shares entitle the holder to ten votes, while B-shares carry one vote. Decisions are normally taken by simple majority, with the exception of those instances when Swedish law requires a qualified majority. All relevant documentation for the AGM is made available at the Company's head office and on Elekta's website, www.elekta.com, in Swedish and English.
At the AGM on September 18, 2008, 228 voting entitled shareholders participated, representing 51.6 percent of the votes in the Company. For more information about 2008 Annual General Meeting please visit www.elekta.com.
The AGM 2008 resolved that the Election Committee for the AGM 2009 should be appointed according to the same procedures as have been previously applied. These procedures are described in their entirety in the minutes of the AGM, which can be found on Elekta's website www.elekta.com. In accordance with these procedures, Elekta's Chairman of the Board Akbar Seddigh contacted Elekta's largest shareholders for the purpose of forming an Election Committee. Shareholders that agreed to participate in the Election Committee work have, in turn, each nominated a representative. The names of persons appointed to the Election Committee that will work until the AGM 2009 were announced in a press release on December 1, 2008.
The representatives included on the Election Committee are:
The Election Committee's assignment is valid until a new Election Committee has been named.
At the time when the Election Committee was established, these shareholders collectively represented over 42 percent of the votes in Elekta AB.
The Election Committee appointed Laurent Leksell as Committee Chairman and has held three recorded meetings. The Committee has performed the duties for the Election Committee as set out in the Code and has thus had the assignment to prepare proposals for the composition of the Board of Directors to be presented to the Annual General Meeting for decision and to prepare other issues before the Meeting.
Prior to the election process, an evaluation was conducted under the Chairman's leadership of the performance of all members of the Board of Directors. In addition, all Board members have also filled out a special evaluation form regarding Board work during the year. The result of this evaluation was then shared with the Election Committee and has formed the basis for the Election Committee's discussions.
Prior to the 2009 AGM, the Election Committee will submit proposals for Chairman of the AGM, number of Board members, Chairman of the Board and Board members. The Election Committee will also submit proposals for remuneration to the Chairman and other members of the Board, any Board committees and auditors. The Election Committee's proposals are presented in the notice of the AGM, and on Elekta's website. When the notice of the AGM is published, the Election Committee also publishes a motivated statement regarding its proposed Board on Elekta's website www.elekta.com.
No remuneration was paid by Elekta to the members of the Election Committee.
Elekta's Board of Directors is elected by the Annual General Meeting. The Board of Directors establishes Elekta's strategy and goals, ensures an effective evaluation of operations and controls the Company's development and financial position. During the 2008/09 fiscal year, the Board of Directors consisted of eight members, who are presented on page 69. Seven of the eight Board members are independent according to the definition of the Nordic Exchange Regulations, see the table on page 68. During fiscal year 2008/09 the Board held nine recorded meetings.
As part of its work, the Board regularly visits Elekta's larger units around the world. During the year, the Board traveled to Crawley, United Kingdom, to meet with local Elekta management and external advisors. Other meetings were held at the main office in Stockholm, all with Elekta's General Counsel acting as secretary. Board member attendance is 100 percent.
Representatives from executive management and other managerial representatives have, during the year, regularly participated in Board meetings to report on issues relating to their respective areas.
Within the Board of Directors, there is no special distribution of responsibility among Board members. Apart from the responsibilities assigned by the Swedish Companies Act, Elekta's articles of association and the Code, the work of the Board of Directors is regulated by its working instructions, which stipulate that the Board should:
At each ordinary Board meeting, the following items should be considered:
| SEK 000s | Name | Independent1 | Regular remuneration | Committee remuneration2 | Attendance |
|---|---|---|---|---|---|
| Chairman | Akbar Seddigh | yes | 570 | 70 | 9/9 |
| Members: | Hans Barella | yes | 285 | 9/9 | |
| Luciano Cattani | yes | 285 | 35 | 9/9 | |
| Birgitta Stymne Göransson | yes | 285 | 9/9 | ||
| Vera Kallmeyer | yes | 285 | 9/9 | ||
| Tommy H Karlsson | yes | 285 | 9/9 | ||
| Laurent Leksell | no | — 3 | — 3 | 9/9 | |
| Carl G. Palmstierna | yes | 285 | 9/9 | ||
| Total | 2,280 | 105 |
2. Remuneration to Chairman and member in Elekta's Executive Compensation Committee.
3. No remuneration is paid to members of the Board who are employed by the Company.
AKBAR SEDDIGH Chairman, born: 1943 Member of the Board since 1998 Holdings: 3,300 B-shares Graduate Chemist, Marketing Specialist Other Board memberships: Chairman of the Board: Hedson Technologies International AB, Innovationsbron AB and Blekinge Tekniska Högskola Member of the Board: Affärsstrategerna AB, Sweden Bio and Biolight International AB
HANS BARELLA born: 1943 Member of the Board since 2003 Holdings: — Former President and CEO of Philips Medical Systems Other Board memberships: Chairman of the Board: SuperSonic Imagine Member of the Board: Senator Group Consultancy and Investment B.V.
LUCIANO CATTANI born: 1945 Member of the Board since 2008 Holdings: — Executive Vice President International Public Affairs, Stryker Corporation MBA Other Board memberships: Member of the Board: Stryker Italy and Eucomed
VERA KALLMEYER born: 1959 Member of the Board since 2008 Holdings: — Managing Partner Equity4Health LLC and Consulting Professor Stanford Medical School MD, PhD and MBA Other Board memberships: Member of the Board: UC Davis Medical School Board of Visitors and Scientific Advisory Board, Helga-und-Hans Dittner Stiftung
born: 1946 Member of the Board since 2001 Holdings: 550 B-shares International Management Consultant MSc and BA Other Board memberships: Chairman of the Board: Amtico International Inc, OfficeTeam Group Ltd. and U-POL Inc Member of the Board: Aldata Solution Oyj
LAURENT LEKSELL born: 1952
Member of the Board since 1972 Holdings: 3,562,500 A-shares, 2,643,001 B-shares (incl. via companies) and 73,687 employee options Former President and CEO of Elekta AB, 1972-2005 Executive Director since 2005 MBA, PhD Economics Other Board memberships:
Chairman of the Board: Stockholm's City Mission Member of the Board: Royal Institue of Fine Arts
CARL G. PALMSTIERNA born: 1953 Member of the Board since 1993 Holdings: 138,531 B-shares Executive Chairman Valbay International SA MBA
Other Board memberships: Chairman of the Board: Momail AB, Qbrick AB, Accumulate AB, Panopticon AB and MyFc AB Member of the Board: Alltförföräldrar AB, Bluefish Pharmaceutical AB, Natural Fragrances of Sweden AB, Constellation Group AB, Chinsay AB and WeMind AB
BIRGITTA STYMNE GÖRANSSON born: 1957 Member of the Board since 2005 Holdings: 900 B-shares President Semantix AB MSc and MBA Other Board memberships: Chairman of the Board: Fryshuset Foundation Member of the Board: Arcus AS, Apoteket Farmaci AB, Lernia AB, Rhenman & Partners AB and Wavin
In addition to decisions on plans and strategies, continuous follow-up of business operations and approval of interim and year-end reports, the Board of Directors during the 2008/09 fiscal year decided on matters including:
Remuneration to the Board of Directors is determined by the AGM and is paid to those Board members who are not Elekta employees. Elekta has implemented no share, or share price related, incentive program for Board members who do not hold employment with the company. Remuneration to the respective members is detailed in a table on page 68.
Elekta's Executive Compensation Committee (ECC) is appointed by Elekta AB's Board of Directors and serves as a subcommittee to the Board. The purpose of the Committee is to provide clarity in the decision process for issues related to compensation of executive staff within Elekta as well as other incentive plans throughout the Elekta organization. The objective of the Committee is to achieve maximum shareholder and customer value through ensuring fairness and internal equality of the structure, scope and level of executive compensation in Elekta while maintaining market competitiveness.
The ECC consisted during the year of Chairman of the Board, Akbar Seddigh, who also was Chairman of the ECC, Board members Luciano Cattani and Laurent Leksell. President and CEO Tomas Puusepp is present at the committee meetings and Group VP Human Resources serves as secretary.
The ECC provides the Board with recommendations regarding principles for formulating the Group's compensation system and remuneration to senior executives and senior managers. The recommendations cover formulation of the bonus system, distribution between fixed and variable remuneration as well as the level of salary increases for top management. The ECC also proposes criteria for assessing performance of senior executives and senior managers, which are discussed and decided by the Board. The entire Board decides on remuneration to the President.
Note 24, "Wages, salaries, other remuneration and social security costs," describes Elekta's outstanding share and sharerelated incentive programs in greater detail.
In 2008 the Board of Directors decided to establish an Audit Committee. The Audit Committee works in accordance to
guidelines and instructions for the Audit Committee which have been adopted by the Board. The rules in the Swedish Code of Corporate Governance (the "Code") and the Board's responsibility for compliance with the Code within Elekta were discussed. The Audit Committee assisted in the preparation of the Corporate Governance Report and the Board's report on Internal Control. The Audit Committee is responsible for ensuring that the entire Board of Directors is kept regularly informed as to the work of the Audit Committee and, where necessary, shall submit matters to the Board for a decision. The main duties of the Audit Committee are to support the Board of Directors in the work of ensuring the quality of the financial reporting. The Audit Committee regularly meets Elekta's auditors, evaluates the audit work and grants approval as to which additional services Elekta may procure from the external auditors.
The Audit Committee's members have been Hans Barella, (Chairman), Birgitta Stymne Göransson, Tommy H Karlsson and Vera Kallmeyer.
During the 2008/09 fiscal year the Audit Committee held one recorded meeting but will hold in total four meetings in 2009. Minutes are taken at every meeting.
At the Annual General Meeting on September 18, 2008, Deloitte AB was elected as the auditor of Elekta until the 2012 AGM with Jan Berntsson as senior auditor. Deloitte AB has
JAN BERNTSSON born 1964 Authorized Public Accountant, Deloitte AB Senior auditor
since 2008.
Auditor
been the auditor of Elekta AB since the 2002 AGM.
Jan Berntsson, born 1964 and an authorized public accountant, has been senior auditor in Elekta AB since 2008. In addition to Elekta, Jan Bernts-
son's auditing assignments include Tele2, ICA and Poolia. He has no auditing assignments in companies related to Elekta's major owners or its President. The auditors' fees during the fiscal year are reported in note 26.
The President and CEO is appointed by the Board of Directors and shall oversee the operational management of Elekta in accordance with the guidelines and directions stated in law, the articles of association and the internal operating instructions.
President and CEO Employed since 1988 Holdings: 179,000 B-shares, 180,000 employee options
JOSEPH K. JACHINOWSKI born: 1955
Region North America Employed since 2005 (founded IMPAC in 1990) Holdings: 3,000 B-shares 160,000 employee options
OLOF SANDÉN born: 1962
Region Europe & AFLAME Employed 1993-1995 and since 2002 Holdings: 8,953 B-shares, 130,000 employee options
LAURENT LEKSELL born: 1952
Region Asia Pacific Acting in the position since 2009.
ÅSA HEDIN born: 1962 Elekta Neuroscience Employed 1994-2000 and since 2007 Holdings: 327 B-shares, 70,000 employee options
JOHAN SEDIHN born: 1965 Elekta Oncology Employed since 1993 Holdings: 40,203 B-shares, 130,000 employee options
JAMES P. HOEY born: 1958
Elekta Software Employed since 2005 (founded IMPAC in 1990) Holdings: 1,500 B-shares, 130,000 employee options
IAN ALEXANDER born: 1958 COO Employed since 2008 Holdings: 40,000 employee options
HÅKAN BERGSTRÖM born: 1956
CFO Employed since 2001 Holdings: 35,013 B-shares, 130,000 employee options
Operational management includes all measures that are not – considering the scope and nature of the Company's operations – of an unusual nature or of major significance, or are expressly defined as being the responsibility of the Board of Directors.
Tomas Puusepp has served as President and CEO of Elekta since 1 May, 2005. Born 1955, he has a total of 24 years of experience in the international medical technology market. Following studies in engineering and physics and management training at IMD in Lausanne, Switzerland, Tomas Puusepp held various positions at the Research Institute for Atomic Physics, Scanditronix and Ericsson before being employed by Elekta in 1988. Since then, he has held various management positions within the Company, including head of Elekta's neurosurgery operations, President of Elekta's subsidiary in North America and global head of Elekta's sales, marketing and service operations. Tomas Puusepp is member of the Board of Bactiguard AB, but has no further significant assignments outside Elekta. He has no shareholdings or ownership interests in companies with significant business relations with Elekta.
Elekta's Executive Committee consists of the President and CEO, the Chief Financial Officer, the Chief Operating Officer, the managers of three product areas and the three regions – a total of nine members. The President oversees the work of the Executive Committee and makes decisions after consulting with the members. Executive Committee meetings are held
one or two days each month. The meetings are often held in conjunction with visits to the Group's various units.
Details regarding remuneration for the President and Executive Committee are provided in note 24.
Elekta provides the market with continuous information regarding the Company's development and financial position in accordance with the guidelines specified in the Board's financial information policy.
Financial information is published regularly in the form of:
According to policy, Elekta has a "quiet period" of at least 30 days prior to each quarterly report, during which the Company does not present at investor seminars or conduct one-on-one meetings, in person or over telephone.
In accordance with the revised code which applies from July 1, 2008, the Board of Directors is to submit an annual description on the Company's system for internal control and risk management dealing with financial reporting. The following description has not been reviewed by Elekta's auditors.
The control environment is the foundation for internal control. It establishes the culture in which Elekta operates and sets standards for corporate behavior. The control environment consists of documented guidelines, directives, manuals, and instructions that are communicated throughout the organization.
The Elekta Code of Conduct serves as an overall directive to ensure all employees understand the corporate responsibility regarding, for example, business ethics and fraud. The Code of Conduct is complemented with a series of documented directives including the Financial Guide, with Accounting and Financial Policy, and an Information policy.
Elekta maintains Quality Management Systems which includes procedures, instructions, and templates for relevant processes. In order to comply with requirements that supervisory authorities establish for medical technology companies, Elekta works continuously with updating the quality procedures and improving processes.
The organizational structure is transparent with defined roles and responsibilities communicated throughout the organization and with documented working instructions for all employees including the Board of Directors, Board Committees, CEO, and Elekta Subsidiary Presidents. Evaluation of performance on functional and departmental level is conducted to ensure relevant competency regarding all employees within the organization.
Key steering documents related to financial reporting are updated regularly and communicated to relevant personnel via the Company's intranet, information letters, regular meetings etc. Elekta has established structures and channels to promote sound communication within the organization. For suspected violations of the Code of Conduct an anonymous communication line exists directly to the Corporate Social Responsibility Officer. Elekta has an information policy regarding communication with external parties and the financial market.
The risk assessment process has the purpose to identify high risk areas within the business and controls needed to manage such risks. The risk assessment is performed by assessing the risk level, from both a quantitative and qualitative perspective, on account level and corresponding processes where the risk for fraud is also considered. Further, risk assessments are performed during the strategic and tactical planning process where risk areas are addressed and relevant actions are designed to ensure that the identified risks are properly managed. Specific guidelines exist to support the risk assessment process related to IT projects and the IT environment.
The control structures have been designed to manage risk that the Board and management consider to be significant for the business operations, legal and regulatory compliance and financial reporting. Defined decision-making procedures, incl. authorization instructions, have been established related to for example investments and agreements. In addition, analytical controls such as performance follow-up and trend analysis, reconciliations and, where appropriate, automated controls specifically related to financial reporting, have been established. Several control activities are integrated in key processes within the business, such as order booking and revenue recognition, investments, supplier contracts, and purchasing.
The IT structure is designed to mitigate potential IT related risks with controls in IT systems related to financial reporting.
Each local President and CEO has the responsibility to ensure an adequate internal control structure within the respective legal entity and the local controllers are responsible for adhering to global policies and directives related to financial reporting and applying them to the local entity.
The function Quality Assurance has a key role in the monitoring process and systematically performs internal audits related to the Quality Management System. In addition to this, the internal control structure is monitored by separate functions within the organization in a decentralized manner, for example, the order committee conducts continuous followup on the order booking procedure.
The Board considers the current Quality Assurance function, together with the separate functions' follow-up activities, to cover Elekta's significant risk areas. It is therefore currently not motivated to establish a separate internal audit function.
For a global company active in the healthcare sector, it is important that all operations are conducted in a manner that is socially, environmentally and financially responsible. Managers and employees in Elekta, as well as the Company's external partners (suppliers, consultants, agents and distributors) are expected to adhere to strict ethical requirements, both professionally and personally in their work for and with Elekta.
The "Elekta Code of Conduct" describes the important fundamental principles that Elekta expects all employees and partners to follow and maintain in their work. The code is based on Elekta's vision, mission and values and constitutes an essential foundation in the work to create a strong and well-respected brand that supports a long-term and sustainable market presence and growth. The "Elekta Code of Conduct" is available on www.elekta.com.
Elekta works actively to ensure that the Elekta Code of Conduct comprises a natural part of the daily work for those working at or coming into contact with Elekta.
Elekta will continue to train different parts of the organization at regular intervals, making sure that management is carrying and reinforcing the issues with all their staff regularly.
The work on including the Elekta Code of Conduct in existing partnership agreements has continued as old agreements are renewed or replaced. It is part of all Group standard agreements for supplier as well as distributor relationships.
At regular intervals, Elekta conducts a survey to follow up how well the code is implemented in the daily work throughout the organization.
Elekta strives to be an environmentally responsible organization which complies with all legislation relevant to its global market place, business operations and services. The company aims to reduce its impact on the environment and is committed to working toward a sustainable society. Elekta publishes its carbon emissions via the international Carbon Disclosure Project web site.
Technical solutions are developed using business processes which assure compliance with regulatory requirements and aim to reduce environmental impact throughout the product life cycle. For example, IntelliMax™ enables Elekta to monitor the condition of a remote customer's machine via the telephone network. This innovation has reduced service engineer visits to participating customer sites by 28 percent, avoiding breakdowns, saving on travel costs and carbon emissions. Some manufacturing materials are being replaced by others which are considered to be more environmentally friendly as part of a voluntary ongoing process. Elekta is helping to establish an industry (COCIR) led scheme to comply with the requirements of the EuP Directive via a voluntary means with the focus on ecodesign and energy efficiency.
LEAN methodology has been introduced to bring a finer focus on customer value and to identify and eliminate waste wherever it occurs. Successes include a reduction in the consumption of natural resources and energy, together with an increased efficiency in manufacture, distribution and installation. Practical examples include the elimination of some product packaging and a reduction in the component count.
It is reasonable to regard Elekta as a company with a minor environmental impact in relation to its size; nevertheless Elekta continues to strive to reduce the environmental impact of its business and products guided by an environmental management system.
As of June 30, 2009, Elekta's share capital amounts to SEK 184,249,126 distributed among 3,562,500 A-shares and 88,562,063 B-shares. One A-share entitles the holder to ten votes and B-shares to one vote each. All shares carry equal rights to participate in the Company's assets and profits. In accordance with Section 12 of the Articles of Association, A-shares are subject to right of first refusal. All A-shares are owned by Laurent Leksell. At a General Meeting, each shareholder is entitled to exercise unlimited voting rights on the full number of shares that he/she owns or represents.
Elekta's B-shares have been listed on the Nordic Exchange in Stockholm since 1994. Total trading in Elekta shares on the Nordic Exchange during the period May 1, 2008 – April 30, 2009 amounted to 180.0 million shares (178.0), corresponding to 195 percent (198) of the total number of shares. The average number of shares traded each day during the period amounted to 719,517 (709,212). Market capitalization at April 30, 2009 amounted to SEK 8,637 M (9,546).
| Changes in share capital until June 30, 2009 | ||||
|---|---|---|---|---|
| Year | Transaction | Total number of shares |
Total share capital, SEK 000s |
|
| 1994 | New issue | 7,397,180 | 36,986 | |
| 1994 | Exercise of warrants | 7,897,180 | 39,486 | |
| 1997 | New issue | 9,871,475 | 49,357 | |
| 1997 | New issue | 10,497,451 | 52,487 | |
| 1999 | New issue | 20,994,902 | 104,975 | |
| 2000 | Offset issue | 27,853,617 | 139,268 | |
| 2001 | Conversion of debentures | 31,661,867 | 158,309 | |
| 2001 | Exercise of warrants | 31,678,867 | 158,394 | |
| 2002 | Exercise of warrants | 32,175,142 | 160,876 | |
| 2003 | Exercise of warrants | 32,953,967 | 164,770 | |
| 2004 | Redemption of shares | 31,066,254 | 155,331 | |
| 2004 | Exercise of warrants | 31,567,454 | 157,837 | |
| 2005 | Exercise of warrants | 31,596,236 | 157,981 | |
| 2005 | Bonus issue | 31,596,236 | 189,577 | |
| 2005 | Split 3:1 | 94,788,708 | 189,577 | |
| 2005 | Cancellation of repurchased shares | 94,114,008 | 188,228 | |
| 2005 | Exercise of warrants | 94,194,372 | 188,389 | |
| 2006 | Exercise of warrants | 94,543,298 | 189,087 | |
| 2007 | Exercise of warrants | 94,705,016 | 189,410 | |
| 2007 | Cancellation of repurchased shares | 93,903,316 | 187,807 | |
| 2008 | Exercise of warrants | 94,706,734 | 189,413 | |
| 2008 | Cancellation of repurchased shares | 93,075,863 | 186,152 | |
| 2009 | Cancellation of repurchased shares | 92,124,563 | 184,249 |
| Percentage of | |||
|---|---|---|---|
| Owner | Number of shares | votes | capital |
| Swedbank Robur funds | 8,058,810 | 6.5 | 8.7 |
| Laurent Leksell w/ companies | 6,305,501 | 30.9 | 6.8 |
| Investor | 5,531,189 | 4.5 | 6.0 |
| Orkla ASA | 3,431,281 | 2.8 | 3.7 |
| T Rowe Price funds | 2,784,003 | 2.2 | 3.0 |
| SEB funds | 2,617,623 | 2.1 | 2.8 |
| AMF Pension funds | 2,116,198 | 1.7 | 2.3 |
| Nordea funds | 2,007,653 | 1.6 | 2.2 |
| Lannebo funds | 1,933,582 | 1.6 | 2.1 |
| Second AP fund | 1,613,978 | 1.3 | 1.8 |
| Other | 55,724,745 | 44.8 | 60.6 |
| Total | 92,124,563 | 100.0 | 100.0 |
The table above lists the 10 largest known shareholders in Elekta AB as of June 30, 2009. The proportion of foreign ownership was approximately 41 percent. Of these shares, 63 percent of holdings were held by trustees. As a result, it is possible that there are other large shareholders with undisclosed holdings, even if no foreign shareholders have "flagged" for holdings above 5 percent. The proportion of Swedish institutional ownership was approximately 21 percent.
Source: Euroclear Sweden AB
Elekta's goal is to provide shareholders with a favorable return and value growth. The policy is to distribute 20 percent or more of net profit in the form of dividends, repurchase of shares or comparable measures. The dividend decisions are based on Elekta's financial position, earnings trend, growth potential and investment requirements.
In accordance with the Company's dividend policy, the Board proposes a dividend of SEK 2.00 per share, corresponding to approx. SEK 184 M and 33 percent of net profit.
The general meeting of shareholders of 2004 resolved to adopt the Elekta AB 2004 Share Unit Plan ("the Plan"). The resolution meant that the conditions and guidelines stated in the Plan shall be the framework for yearly grants of stock options to key employees within the Elekta group during the period 2004/05 – 2006/07. For description of the Plan see note 24.
Final day for subscription of shares in warrants program 2004/2008 was July 31, 2008. During May-July 2008, 554,202 B-shares were subscribed. Employee options granted 2005 did not give right to any shares since set performance goals were not fulfilled. Employee options granted 2006 entitle to acquisition of 878,131 B-shares.
The general meeting of shareholders of 2007 resolved to adopt the Elekta AB 2007 Share Unit Plan ("the Plan"). The resolution meant that the conditions and guidelines stated in the Plan shall be the framework for yearly grants of stock options to key employees within the Elekta group during the period 2007/08 – 2009/10. For description of the Plan see note 24. There are 256,000 more outstanding warrants than outstanding employee options for each year.
Outstanding warrants for program 2007/2012 entitle to acquisition of 1,722,250 B-shares. Outstanding warrants for program 2008/2012 entitle to acquisition of 1,676,000 B-shares.
| Distribution of shares June 30, 2009 | ||||
|---|---|---|---|---|
| Class of share | No. of shares | No. of votes | Percentage of capital |
votes |
| A-share | 3,562,500 | 35,625,000 | 3.9 | 28.7 |
| B-share | 88,562,063 | 88,562,063 | 96.1 | 71.3 |
| Total | 92,124,563 | 124,187,063 | 100.0 | 100.0 |
Distribution of shares after full exercise of warrants
| Percentage of | |||||
|---|---|---|---|---|---|
| Class of share | No. of shares | No. of votes | capital | votes | |
| A-share | 3,562,500 | 35,625,000 | 3.7 | 27.7 | |
| B-share | 92,838,444 | 92,838,444 | 96.3 | 72.3 | |
| Total | 96,400,944 | 128,463,444 | 100.0 | 100.0 |
| Shareholding No. of shares |
No. of share- holders |
Percentage of share- holders |
No. of shares |
Percentage of share |
Average number per capital shareholder |
|---|---|---|---|---|---|
| 1-500 | 9,886 | 71.1 | 1,334,570 | 1.4 | 135 |
| 501-1,000 | 1,828 | 13.1 | 1,469,862 | 1.6 | 804 |
| 1,001-10,000 | 1,712 | 12.3 | 5,020,866 | 5.5 | 2,933 |
| 10,001-100,000 | 346 | 2.5 | 12,151,199 | 13.2 | 35,119 |
| 100,001- more | 144 | 1.0 | 72,148,066 | 78.3 | 501,028 |
| Total | 13,916 | 100.0 | 92,124,563 | 100.0 | 6,620 |
Source: Euroclear Sweden AB
| Warrants program 2006/2010 | |
|---|---|
| Warrants | 989,692 |
| Outstanding warrants June 30, 2009 | 878,131 |
| Subscription period | August 1, 2007 – July 31, 2010 |
| Warrant price | SEK 7.00 |
| Subscription price | SEK 145.00 |
| Warrants program 2007/2012 | |
|---|---|
| Warrants | 1,853,500 |
| Outstanding warrants June 30, 2009 | 1,722,250 |
| Subscription period | August 1, 2008 – July 31, 2012 |
| Warrant price | SEK 5.90 |
| Subscription price | SEK 118.10 |
| Warrants program 2008/2012 | |
|---|---|
| Warrants | 1,756,000 |
| Outstanding warrants June 30, 2009 | 1,676,000 |
| Subscription period | August 1, 2009 – July 31, 2012 |
| Warrant price | SEK 5.00 |
| Subscription price | SEK 109.00 |
| 2004/05 | 2004/05* | 2005/06 | 2006/07 | 2007/08 | 2008/09 | |
|---|---|---|---|---|---|---|
| Earnings per share | ||||||
| before dilution, SEK | 2.56 | 2.69 | 3.23 | 3.72 | 4.46 | 6.00 |
| after dilution, SEK | 2.56 | 2.69 | 3.21 | 3.70 | 4.44 | 6.00 |
| Cash flow per share** | ||||||
| before dilution, SEK | –11.09 | –11.09 | 1.68 | –1.14 | –3.04 | 6.30 |
| after dilution, SEK | –11.06 | –11.06 | 1.67 | –1.14 | –3.03 | 6.30 |
| Shareholders' equity per share | ||||||
| before dilution, SEK | 17.80 | 18.02 | 19.80 | 19.96 | 19.70 | 27.67 |
| after dilution, SEK | 18.63 | 18.84 | 20.45 | 20.46 | 20.03 | 27.67 |
| Dividend, SEK | 2.20 | 2.20 | 1.00 | 1.00 | 1.75 | 2.00 |
| Share price, Elekta B-share, April 30, SEK | 83.33 | 83.33 | 121.50 | 119.00 | 104.25 | 93.75 |
| Market capitalization, April 30, SEK M | 7,836 | 7,836 | 11,461 | 11,071 | 9,546 | 8,637 |
| Lowest share price, SEK | 45.33 | 45.33 | 83.33 | 103.00 | 91.50 | 72.50 |
| Highest share price, SEK | 93.33 | 93.33 | 139.00 | 160.50 | 130.00 | 142,00 |
| Average number of shares | ||||||
| before dilution, 000's | 93,991 | 93,991 | 94,136 | 93,698 | 92,199 | 92,029 |
| after dilution, 000's | 94,182 | 94,182 | 94,779 | 94,249 | 92,479 | 92,029 |
| Number of shares, April 30 | ||||||
| before dilution, 000's | 94,028 | 94,028 | 94,332 | 93,036 | 91,570 | 92,125 |
| after dilution, 000's | 95,703 | 95,703 | 95,689 | 94,072 | 92,245 | 92,125 |
* Restated according to IFRS.
**Excluding the acquisitions of IMPAC 2004/05 SEK 3.64 before dilution and SEK 3.63 after dilution, Medical Intelligence 2005/06 SEK 3.75 before dilution and SEK 3.72 after dilution, BMEI 2006/07 SEK 0.39 before and after dilution and 3D Line and CMS 2007/08 SEK 2.96 before dilution and SEK 2.95 after dilution. Dilution 2004/05, 2005/06, 2006/07and 2007/08 refers to warrants program 2004/2008. All historical data restated for split 3:1 October 2005.
Annual Report 2008/09 | ELEKTA AB (publ) 77
| Income statement SEK M |
2004/05 | 2004/05* | 2005/06 | 2006/07 | 2007/08 | 2008/09 |
|---|---|---|---|---|---|---|
| Net sales | 3,152 | 3,152 | 4,421 | 4,525 | 5,081 | 6,689 |
| Operating expenses | –2,803 | –2,788 | –3,968 | –4,016 | –4,431 | –5,859 |
| Operating result | 349 | 364 | 453 | 509 | 650 | 830 |
| Financial net | 14 | 14 | –9 | –2 | –26 | –56 |
| Profit after financial net | 363 | 378 | 444 | 507 | 624 | 774 |
| Taxes | –122 | –125 | –140 | –161 | –218 | –228 |
| Profit for the year | 241 | 253 | 304 | 346 | 406 | 546 |
| Attributable to Parent Company shareholders | 241 | 253 | 304 | 348 | 411 | 552 |
| Minority interest | –2 | –5 | –6 | |||
| Cash flow SEK M |
2004/05 | 2004/05* | 2005/06 | 2006/07 | 2007/08 | 2008/09 |
| Operating flow | 420 | 420 | 457 | 485 | 635 | 737 |
| Changes in working capital | –12 | –12 | 41 | –335 | –316 | 3 |
| Cash flow from operating activities | 408 | 408 | 498 | 150 | 319 | 740 |
| Continuous investments | –66 | –66 | –145 | –113 | –46 | –89 |
| Acquisition of operations | –1,384 | –1,384 | –195 | –144 | –553 | –71 |
| Cash flow after investments | –1,042 | –1,042 | 158 | –107 | –280 | 580 |
| Balance sheet SEK M |
Apr. 30, 2005 | Apr. 30, 2005* | Apr. 30, 2006 | Apr. 30, 2007 | Apr. 30, 2008 | Apr. 30, 2009 |
| Intangible assets | 1,887 | 1,912 | 2,182 | 2,198 | 2,659 | 3,150 |
| Tangible fixed assets | 189 | 189 | 230 | 252 | 226 | 265 |
| Shares and long-term receivables | 22 | 22 | 26 | 32 | 37 | 59 |
| Deferred tax assets | 36 | 36 | 38 | 14 | 14 | 34 |
| Inventories | 362 | 362 | 364 | 423 | 529 | 553 |
| Receivables | 1,234 | 1,234 | 1,463 | 1,953 | 2,455 | 3,062 |
| Liquid funds | 744 | 744 | 981 | 484 | 402 | 828 |
| Total assets | 4,474 | 4,499 | 5,284 | 5,356 | 6,322 | 7,951 |
| Shareholders' equity | 1,674 | 1,694 | 1,868 | 1,863 | 1,813 | 2,555 |
| Interest-bearing liabilities | 833 | 833 | 1,091 | 987 | 1,449 | 1,627 |
| Interest-free liabilities | 1,967 | 1,972 | 2,325 | 2,506 | 3,060 | 3,769 |
| Total shareholders' equity and liabilities | 4,474 | 4,499 | 5,284 | 5,356 | 6,322 | 7,951 |
* Restated according to IFRS.
| Key figures | 2004/05 | 2004/05* | 2005/06 | 2006/07 | 2007/08 | 2008/09 |
|---|---|---|---|---|---|---|
| Order bookings, SEK M | 3,558 | 3,558 | 4,705 | 5,102 | 5,882 | 7,656 |
| Order backlog, SEK M | 3,493 | 3,493 | 3,875 | 4,247 | 5,069 | 7,267 |
| Operating margin, % | 11 | 12 | 10 | 11 | 13 | 12 |
| Profit margin, % | 12 | 12 | 10 | 11 | 12 | 12 |
| Shareholders' equity, SEK M | 1,674 | 1,694 | 1,868 | 1,863 | 1,813 | 2,555 |
| Capital employed, SEK M | 2,507 | 2,527 | 2,959 | 2,850 | 3,262 | 4,182 |
| Net debt, SEK M | 89 | 89 | 110 | 503 | 1,047 | 799 |
| Equity/assets ratio, % | 37 | 38 | 35 | 35 | 29 | 32 |
| Net debt/equity ratio, multiple | 0.05 | 0.05 | 0.06 | 0.27 | 0.58 | 0.31 |
| Interest cover ratio, multiple | 24.8 | 25.7 | 8.4 | 8.2 | 9.2 | 8.2 |
| Return on shareholders' equity, % | 16 | 16 | 17 | 19 | 23 | 27 |
| Return on capital employed, % | 20 | 21 | 18 | 20 | 24 | 24 |
| Capital turnover ratio, multiple | 0.9 | 0.9 | 0.9 | 0.9 | 0.9 | 1.1 |
| Investments in tangible and | ||||||
| intangible fixed assets, SEK M | 85 | 85 | 187 | 153 | 108 | 142 |
| Depreciation, SEK M | –106 | –81 | –171 | –136 | –176 | –208 |
| Average number of employees | 1,249 | 1,249 | 1,750 | 1,951 | 2,113 | 2,446 |
*Restated according to IFRS.
Operating margin Operating profit in relation to net sales.
Profit margin Profit after financial items in relation to net sales.
Capital employed Total assets less interest-free liabilities.
Equity/assets ratio Shareholders' equity in relation to total assets.
Net debt Interest-bearing liabilities less liquid funds.
Net debt/equity ratio Net debt in relation to shareholders' equity.
Interest cover ratio Profit after financial items plus financial expenses in relation to financial expenses.
Return on shareholders' equity Net profit for the year attributable to Parent Company shareholders in relation to average shareholders' equity excluding minority interest.
Return on capital employed Profit after financial items plus financial expenses in relation to average capital employed.
Capital turnover ratio Net sales divided by average total assets.
Average number of employees Average number of employees based on normal working hours per year.
Value added per employee Operating profit plus salaries, wages, payroll expenses and IFRS 2 costs divided by average number of employees.
Earning per share Net profit for the year attributable to Parent Company shareholders in relation to the average number of shares.
Cash flow per share Cash flows after investments in relation to the average number of shares.
Shareholders' equity per share
Shareholders equity excluding minority interest in relation to the number of shares at year-end.
Cash flow after continuous investments
| Benign | The term benign is used when describing tumors or growths that do not threaten the health of an individual. Benign is the opposite of malignant. |
|---|---|
| Cancer | Uncontrolled, abnormal growth of cells. |
| Carcinoma | The most common type of cancer. Malignant cancer that arises from epithelial cells. |
| Chemotherapy | Treatment of cancer diseases with the aid of chemicals that eliminate diseased cells. |
| Computerized tomography (CT) |
A radiological method of producing anatomical structures by means of layering, using computer technology. |
| Epilepsy | Disorder characterized by repeated, sudden disturbances of brain function. |
| Fraction | Part of the total radiation dose, delivered at a daily treatment. |
| Functional disorders | Diseases in the central nervous system. |
| Gamma Knife® surgery | Stereotactic radiosurgery with Leksell Gamma Knife®. |
| Gy (gray) | The unit for the energy absorbed from ionizing radiation, equal to one joule per kilogram. |
| IGRT | Image guided radiation therapy of cancer, where high precision and accuracy is achieved using high resolution three-dimensional X-ray images of the patient's soft tissues at the time of treatment. |
| IMRT | Intensity modulated radiation therapy of cancer, where instead of being treated with a single, large, uniform beam, the patient is treated with many very small beams; each of which can have a different intensity. |
| Invasive | A technique that penetrates the skin, skull, etc. The opposite of non-invasive (bloodless). |
| Linear accelerator | Equipment for generating and directing ionizing radiation for treatment of cancer. |
| Magnetoence- phalograph (MEG) |
Equipment for real time mapping of the function in different parts of the brain, by measuring the magnetic field generated by brain cells activity. |
| Metastases | Secondary malignant tumors originating from primary cancer tumors in other parts of the body. |
| Magnetic resonance imaging (MRI) |
Measures the difference in liquid resonance content in various parts of the body with the aid of magnetic fields. |
| Malignant | A clinical term that is used to describe a clinical course that progresses rapidly to death. Can spread through metastases. Malignant is the opposite of benign. |
| Meningioma | Tumor of the central nervous system that develops from cells of the meninges, the membranes that cover and protect the brain and spinal cord. |
| Multileaf collimator | An accessory to the linear accelerator, working like an aperture. With a large number of individually adjustable metal leaves, the treatment beam can be shaped to the size and shape of the target volume. |
| Neurology | The study of the nervous system and its disorders. |
| Neurosurgery | Surgery of the brain or other parts of the central nervous system. |
| Oncology | The study of tumor diseases. |
| Pathology | The scientific study of the nature of disease and its causes, processes, development, and consequences. |
| Parkinson's disease | Paralysis, with trembling and shaking as well as muscular rigidity, with a change in movements and posture by the patient. |
| Radiation therapy | Fractionated ionizing radiation treatment of cancer. |
| Radiosurgery | Non-invasive surgery which a high, single dose of precise ionizing radiation replaces surgical instruments. |
| Stereotactic radiation therapy (SRT) |
Radiation therapy of cancer, where high precision and accuracy is achieved by delivering the radiation based on an external fixed-coordinate system. |
| Stereotaxy | A technique in which a fixed-coordinate system can determine the location of a point by specifying the coordinates in terms of height, depth and laterally. |
| Trigeminal neuralgia | Chronic facial pain, emitting from the trigeminal facial nerve. |
| Volumetric modulated arc therapy (VMAT) |
Dynamic conformal delivery technique in which both collimator leaves and gantry move during radiotherapy. |
The Annual General Meeting in Elekta AB (publ) will be held on Tuesday, September 15, 2009 at 3:00 p.m. at Polstjärnan Konferens, Sveavägen 77, Stockholm.
Shareholders wishing to participate in the Meeting must be listed in the register of shareholders maintained by Euroclear Sweden AB not later than Wednesday, September 9, 2009 and notify the Company their intent to participate in the Meeting (including the number of assistants if any) not later than Friday, September 11, 2009 at 4:00 p.m.
Notification of participation at the Meeting may be forwarded in writing to: Elekta AB (publ), Att: Corporate Communications, P.O. Box 7593, SE-103 93 Stockholm, Sweden, by telefax: +46 8 587 255 00, by telephone +46 8 587 254 00 or by e-mail to [email protected].
Shareholders who wish to propose a matter for consideration at the Annual General Meeting 2009 of Elekta should notify the Board of Directors by August 10, 2009 at the latest, to: Elekta AB, The Board of Directors Elekta AB, Att. Jonas Bolander, Box 7593, SE-103 93 Stockholm, Sweden
| Accounting principles 46-48 |
|
|---|---|
| Corporate governance 67-74 |
|
| Currency exposure 39, 49 |
|
| Employees 31-32, 37, 59-63 |
|
| Environmental issues 74 |
|
| Financial objectives 37 |
|
| Financial risk management 49-50 |
|
| Internal control 73 |
|
| Market regions 1, 15-17 |
|
| Quality assurance 37 |
|
| Research, development and clinical collaborations 36 |
|
| Risks 36 |
|
| Segment reporting 50-51 |
|
| Sensitivity analysis 36 |
|
| Taxes 39, 52 |
Design & production: Durkin Design Text: Elekta Corporate Communications, Owens Communications Print: Trosa Tryckeri, Trosa, Sweden 2009
Note: This document is a translation of the original Swedish manuscript. If any discrepancy arises between the two versions, the content of the Swedish version takes precedence.
Elekta AB (publ) Box 7593, SE-103 93 Stockholm, Sweden Tel +46 8 587 254 00 Fax +46 8 587 255 00 [email protected]
North America Atlanta, USA Regional Sales, Marketing and Service:
Tel +1 770 300 9725 Fax +1 770 448 6338 [email protected] Europe, Latin America, Africa, Middle East & India Tel +44 1293 544 422 Fax +44 1293 654 321 [email protected]
Asia Pacific Hong Kong, China Tel +852 2891 2208 Fax +852 2575 7133 [email protected]
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