S H A R I N G E X P E R T I S E . P R O M O T I N G PA R T N E R S H I P.
Annual Report 2011
B. BRAUN AT A GLANCE
Key performance indicators
Gross Margin (in %)
Net Margin after Taxes (in %)
2011
2010
46.4
47.1
Change
in %
5.5
6.3
EBITDA (in € million)
688.5
700.5
EBITDA Margin (in %)
14.9
15.8
Equity Ratio (in %)
42.8
42.3
Equity Ratio including Loans from Shareholders (in %)
43.8
43.3
1,342.9
1,183.5
2.0
1.7
541.4
575.4
– 5.9
Net Financial Debt (in € million)
Net Financial Debt/EBITDA
Investments in Property, Plant and Equipment
and Intangible Assets (in € million)
Depreciation and Amortization of Property, Plant and Equipment
and Intangible Assets (in € million)
– 1.7
13.5
252.9
238.2
6.2
Personnel Expenditures (in € million)
1,648.9
1,581.7
4.2
Employees (as of December 31, 2010)
43,676
41,322
5.7
Income structure
2011
2010
Change
in %
€ million
%
€ million
%
Sales
4,609.4
100.0
4,422.8
100.0
Cost of Goods Sold
2,471.2
53.6
2,341.7
52.9
5.5
Gross Profit
2,138.3
46.4
2,081.1
47.1
2.7
Selling Expenses
1,277.2
27.7
1,218.9
27.6
4.8
230.9
5.0
221.6
5.0
4.2
General and
Administrative Expenses
4.2
Research and
Development Expenses
179.9
3.9
155.4
3.5
15.7
Interim Profit
450.3
9.8
485.2
11.0
– 7.2
Other Operating Income
and Expenses
– 18.2
– 0.4
– 29.0
– 0.7
– 37.4
Operating Profit
432.2
9.4
456.2
10.3
– 5.3
Net Financial Income (Loss)
– 72.0
– 1.6
– 66.6
– 1.5
8.2
Profit before Taxes
360.2
7.8
389.6
8.8
– 7.6
Income Taxes
104.4
2.3
112.3
2.5
– 7.0
Consolidated Annual Net Profit
255.7
5.5
277.4
6.3
– 7.8
Sales
Sales by region |
IN € MIL L I O N
Germany 915
Europe & Africa 1,784
(excluding Germany)
Asia & Australia 691
2011
Latin America 311
B. BR AUN AT A GL ANCE
North America 908
T O TA L € 4,609,4 MIL L ION
Sales by division |
IN € MIL L ION
OPM 568
B. Braun Avitum 501
Hospital Care 2,159
Other 25
2011
Aesculap 1,356
T O TA L € 4,609,4 MIL L ION
Employees
Employees by region
12,645
12,000
10,907
13,194
11,498
10,479
9,261
9,000
5,486
6,000
5,411
3,023
3,000
Germany
Europe & Africa
North America
( excluding Germany)
DEC 31, 2010 T O TA L: 41,322
DEC 31, 2011 T O TA L: 43,676
3,094
Latin America
Asia & Australia
C OMPA N Y PROFIL E
B. Braun is one of the world’s leading providers of healthcare solutions.
Through its Hospital Care, Aesculap, Out Patient Market, and B. Braun
Avitum Divisions, the company supplies medical products and services
to hospitals, physicians in private practice, and the homecare market.
Training instructor Dirk Schmoll and apprentice Melissa Piskorsch
examine components of a printed circuit board assembly at B. Braun’s
new training center in Melsungen, Germany.
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S H A R I N G E X P E R T I S E . P R O M O T I N G PA R T N E R S H I P.
ACHIE V ING PE AK PERF ORMANCE IS NOT SOME THING YOU
C A N D O O N YO U R O W N . T H E O N G O I N G E XC H A N G E B E T W E E N
P H Y SIC I A NS , HE A LT HC A RE P ER S ONNEL A ND PAT IEN T S HEL P S
U S T O C O N T I N U A L LY I M P R O V E L I V E S , W H E T H E R T H R O U G H
R E S E A R C H O R T H R O U G H D A I LY I N T E R A C T I O N W I T H O U R
C OL L E AGUE S A ND BUSINE S S PA R T NER S . O UR C ORP OR AT E
C ULT URE IS B A SED ON T HE F IRM BEL IEF T H AT FA IR A ND
R E L I A B L E PA R T N E R S H I P S L E A D T O T H E B E S T R E S U LT S A N D
I T H A S B E E N T H AT W AY F O R O V E R 17 0 Y E A R S .
2
CONTENT
04
08
M A N AGEMEN T BOA RD
JOURN A L
F ORE WORD
4
PA R T NER IN QUA L I T Y
8
M A N AGEMEN T BOA RD
6
PA R T NER IN S C IENC E
14
PA R T NER IN P RO GRE S S
20
PA R T NER IN GROW T H
26
3
32
68
GROUP M A N AGEMEN T REP OR T
C ONS OL IDAT ED F IN A NC I A L S TAT EMEN T S
AT A GL A NC E
34
C ONS OL IDAT ED S TAT EMEN T OF INC OME (LOS S)
70
T HE B . BR AUN GROUP
35
C ONS OL IDAT ED S TAT EMEN T OF F IN A NC I A L P OSI T ION
71
EC ONOMIC EN V IRONMEN T
42
NOT E S
75
BUSINE S S A ND E A RNING S P ERF ORM A NC E
44
INDEP ENDEN T AUDI TOR S’ REP OR T
137
F IN A NC I A L P OSI T ION A ND A S SE T S
51
M A JOR SH A REHOL DINGS
138
P ER S ONNEL REP OR T
55
RISK A ND OP P OR T UNI T IE S REP OR T
58
SUP ER V IS ORY BOA RD REP OR T
142
SUBSEQUEN T E V EN T S
62
GLOS S A RY
14 4
OU T LOOK
62
IMP RIN T
14 6
4
D R . R E R . P O L . H E I N Z - WA LT E R G R O S S E , C H A I R M A N O F T H E M ANA G E ME NT B OA R D .
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FOREWORD
F O RE WO RD
P R O M O T I N G PA R T N E R S H I P
Dear Reader,
In this report, we look back at a period which in B. Braun's 173rd year of existence has once again been
marked by growth. The increase in our sales met our expectations. Earnings were influenced by the
start-up costs for our new factories, currency fluctuations and cost reduction measures introduced
by public sector healthcare purchasers. Nevertheless, with an annual net profit of € 256 million, we
are able to report the second best year in the company's history.
Overall, B. Braun is well positioned. The new Management Board, appointed in April 2011 and the
Group's nearly 44,000 employees can look to the future with great confidence. Over the past
five years, we have invested € 2.4 billion worldwide – both in new factories and the expansion of
existing ones, laying the foundation for a successful and bright future.
The theme of this annual report, "Sharing expertise. Promoting partnership.", is important to us. It is
one of B. Braun's recipes for success as we not only see ourselves as a partner to hospitals, physicians
and healthcare personnel but also take responsibility for patients. In our 2011 annual report, we give
numerous examples of this collaboration to advance our mutual goal of a healthy society. We show, in
one example, how training clinicians in the Philippines helps to reduce the risks associated with infusion
therapy and in another example, we demonstrate our sterilization services for hospitals.
As a family company, B. Braun is committed to sustainability both from a business perspective and as
a good corporate citizen. For the Braun family, securing a successful future for the company and its
employees remains essential. We will continue to manage the company in a responsible and reliable
manner. Based on our values of innovation, efficiency and sustainability, our company is characterized
by transparency, trust and mutual respect.
I would like to take this opportunity to thank our customers and employees for our achievements over
the past year and ask for your continued support for a strong and growing partnership with our company.
I trust you will find this report interesting.
Yours sincerely,
Dr. rer. pol. Heinz-Walter Große
Chairman of the Management Board of B. Braun Melsungen AG
5
MANAGEMENT BOARD
OTTO PHILIPP BRAUN
Region Iberian Peninsula
and Latin America
DR. RER. POL.
DR. RER. POL.
HEINZ-WALTER GROSSE
ANNETTE BELLER
Chairman of the Management
Finance, Taxes and Controlling,
Board, Human Resources, Legal
Central Service Departments
Affairs and Director of Labor
Relations
MANAGEMENT BOARD
DR. RER. NAT.
MEINRAD LUGAN
Hospital Care and
OPM Divisions
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CAROLL H. NEUBAUER, LL.M.
Region North America
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PROF. DR. MED.
DR. RER. NAT.
HANNS-PETER KNAEBEL
WOLFGANG FELLER
Aesculap Division
B. Braun Avitum Division
PARTNER IN QUALITY
S T ERIL E P RO C E S SING DEPA R T MEN T S D O V I TA L WORK BEHIND
T HE S C E NE S IN O UR H O S P I TA L S . S T. L UK E ’ S H O S P I TA L & HE A LT H
NE T WO RK IN BE T HL EHEM , P ENNS Y LVA NI A , US A IS M A K ING S URE
I T S D E P A R T M E N T S F U N C T I O N O P T I M A L LY – W I T H S U P P O R T F R O M
B . BR AUN AE SC UL AP C ONSULT ING .
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10
D R . M A R C G R A N S O N , C H I E F O F S U R G E R Y, S T. L U K E ’ S H O S P I TA L B E T HL E HE M.
Dr. Marc Granson is a likeable man with a serious
commitment to best practice surgical processing and
patient outcomes. The congenial Chief of Surgery at
St. Luke’s Hospital & Health Network is giving us a
guided tour of this busy, working hospital. Originally
founded in 1872, the hospital has undergone a number
of renovations and expansions over the years and is
both comfortable and clean. At the word “clean,” Dr.
Granson’s friendly face takes on a more serious expression: “Hygiene and cleanliness are of the utmost
importance in order to protect patients and staff from
infection.” This is true of all departments within the
hospital, but one department that works behind the
scenes, out of sight of patients and most hospital staff,
plays a key role in assuring this: the Sterile Processing
Department (SPD), also known as Central Sterile Supply Department (CSSD). These departments are often
located in the basements of hospitals or in an external
building. Their role is to keep the operating rooms (OR)
supplied with clean, sterile medical devices and instruments in particular, including the clamps, scissors,
screws, wires, hooks, and countless other instruments
that surgeons and OR staff need for their daily work.
Mary Lou Gensits, Director of Supply Chain Logistics
for St. Luke’s Hospital & Health Network, knows exactly
how the SPD works. The network encompasses a total
of six hospitals, five hospitals in Pennsylvania and one
in New Jersey. “Sterile supplies are a logisti-cal challenge that we have to meet on a daily basis to ensure
that everything at the hospitals runs smoothly,” ac cording to Ms. Gensits. To improve SPD processes in the
St. Luke’s network, she was responsible for setting up
this collaborative project with a consulting team from
B. Braun Aesculap. More on that later.
First, we went to see how the sterile supply cycle actually works in practice. It begins in the operating room.
The instruments and medical devices are collected and
brought to the “contaminated zone” of the SPD. The
staff wear aprons, gloves, protective goggles, surgical
caps, and special footwear to prevent the spread of
bacteria. Initially, the job involves pure manual labor.
With utmost concentration, all the surgical instruments are disassembled, cleaned with brushes and disinfectant, and bathed in special solutions. “Our specialist employees have to remove dried-on residue and
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“ HYGIENE AND CLE ANLINESS ARE OF THE UTMOST IMPORTANCE IN ORDER TO PROTEC T
PATIENTS AND STAFF FROM INFEC TION.”
DR. MARC GRANSON
90°
C EL SIUS
AT A T EMPER AT URE OF 9 0 ° C E L S I U S ,
T H E I N S T R U M E N T S E T S A ND L A RGER
MEDIC A L DE V IC E S A RE T HOROUGHLY
C L E A NED, T HERM A L LY DISINF EC T ED
A ND T HEN DRIED.
T HE ME D I C A L D E VI C E S A R E S OR T E D I NTO S T E R I L I Z E D I NS T R U ME NT T R AYS .
carefully rinse endoscopic instruments thoroughly with
water,” Ms. Gensits explains. This manual pre-cleaning stage is followed by mechanical cleaning and disinfection in a machine much like a large dishwasher.
Nozzles deliver a metered dose of detergent and water
(fully demineralized if possible to prevent corrosion).
Here, the instrument sets and larger medical devices,
such as power equipment, are thoroughly cleaned
once more, thermally disinfected at a temperature of
90 ° Celsius, and then dried. The machine then conveys them to the strictly separated “clean zone.”
The employees in this zone check the cleanliness and
functionality of the instruments by examining them
from top to bottom with an expert eye. SPD Supervisor
Jamie Hinkle is clearly not happy with the condition of
a small pair of scissors and sets them apart from the
others. “Damaged instruments are either repaired or
replaced by Aesculap,” Ms. Hinkle explains. The instruments and medical devices are now arranged into
sets, as required for specific operations, and placed
into dedicated instrument trays. The contents of the
tray are covered by non-woven fabric or sealed in a
sterile container that resembles an aluminum case
from the outside. B. Braun Aesculap is a world-leading
manufacturer of these containers that offer the
premium quality St. Luke’s Hospital relies upon. The
11
12
“ WITH AESCUL AP ’S HELP, WE ARE BOTH INCRE A SING PRODUC TIVIT Y AND, AT THE SAME TIME,
IMPROVING PATIENT SAFE T Y. AND THIS MEE TS OUR IDE A OF SUSTAINABILIT Y.”
MARY LOU GENSITS
sterilization now begins. All the air is removed from
the container and the instruments are steam sterilized
at high pressure (around 3 bar) and temperatures
of 134 ° Celsius to remove all microorganisms. “The
container must remain closed. We use technical parameters or chemical indicators to verify whether or
not sterilization was successful,” explains Ms. Gensits. If so, the surgical instruments can be stored in a
sterile condition and transferred to the OR for later
use. They are released for use before the operation,
which brings the cycle to a close.
We encounter Dr. Granson once more in front of the
OR. Although none of the hospitals in the St. Luke’s
network have experienced any serious incidents (such
as infections due to surgical instrument contamination) to date, Dr. Granson and Ms. Gensits both agree
that there is still some room for improvement in SPD
processes. He explains with a note of concern: “It is
conceivable that a tray might not be assembled correctly, for instance, and be missing an instrument that
I need during an operation.” This was, however, just
one of the many reasons the hospital management decided to call upon the professional support of B. Braun.
To explain what prompted the large-scale project, Don
Seiple, Vice President Operations at St. Luke’s stated:
“Having initially expanded our network from four to
five hospitals in 2010, we decided to take the opportunity to optimize our supply of sterile instruments.”
The Consulting division of B. Braun Aesculap is a specialist in efficient SPD processes. Working with a team
of experts from Germany, employees from Aesculap’s
Pennsylvania base in the US wanted to turn St. Luke’s
into a model project. Janelle Begole, Director Corporate
Accounts at Aesculap, explains their direction for the
project: “The six hospitals in the network wanted to
leverage the benefits of a centralized SPD – and if
possible use standardized processes and high quality
instruments at a single site.” The six hospitals had
different backgrounds and, therefore, also different
approaches to the supply of sterile instruments. Dr.
Granson, who works as a vascular surgeon at all of the
hospitals, explains the problem: “I don’t like any surprises when I am working, such as finding unfamiliar
clamps in the OR.” Standardization was the ultimate
goal, but change of this magnitude cannot happen overnight.
The herculean task facing Aesculap Consulting began
with a precise audit of all the medical devices and
instruments at all the hospitals. This involved a thorough inventory, determining the status of the instruments (i. e., whether they required repair or reconditioning, or completely replacing), determining which
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17
MINUS
P ERC EN T
DURING T HE AUDI T AT T HE HOSPI TA L
IN BE T HL EHEM , T HE A E S C UL A P
E X P ER T S F OUND T H AT T HE 14 , 770
MEDIC A L DE V IC E S ORIGIN A L LY
C OUN T ED C OUL D BE REDUC ED BY
17 P ERC EN T.
MA R Y L OU G E NS I T S , D I R E C TOR OF S U P P LY C HA I N L OG I S T I C S ,
S T L U KE ’S HOS P I TA L & HE A LT H NE T WOR K.
devices, materials, processes, and control mechanisms
the SPD employees had used to date, and checking
whether any dedicated software had been used for
managing and documenting processes (e. g. how and
when particular instruments were cleaned and packaged and by which employees). Employee training
was also evaluated and, last but not least, the cost of
the planned changes. One of the benefits from this
extensive project is that during the audit at the hospital in Bethlehem, the Aesculap experts found that
the 14,770 medical devices originally counted could
be reduced by 17 percent, bringing considerable cost
savings. Another example relates to the analysis of
processes at the Allentown hospital: Investigations
revealed that the water quality was not optimal due
to its high mineral content, which resulted in varying
types of instrument damage. Based on the results,
Aesculap offered a solution for purifying the water to
the optimal quality level. All parties are very pleased
with the on-going cooperation. Commenting on the
progress so far, Ms. Gensits said: “With Aesculap’s
help, we are both increasing productivity and, at the
same time, improving patient safety. And this meets
our idea of sustainability.”
13
PARTNER IN SCIENCE
E V E R Y D AY A R O U N D T H E W O R L D , P E O P L E A R E D Y I N G F R O M I N F E C T I O N S
C AUSED BY MULT IDRUG - RE SIS TAN T ORG A NISMS ( MDROS ) – AND T HE
T H R E A T I S G R O W I N G . C O N S I S T E N T H Y G I E N E , P A R T I C U L A R LY W I T H T H E
P RON T ODERM S Y S T EM F ROM B . BR AUN OP M F OR INS TA NC E , IS T HE
MOST EFFEC TIVE ME ANS OF PRE VENTING THE SPRE AD OF THESE DANGEROUS
BAC TERIA .
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A 216
“ WE KNOW, FOR E X AMPLE, THAT MRSA IS PRIMARILY TRANSMIT TED BY HAND
CONTAC T AND THEREFORE, AC T ACCORDINGLY TO PRE VENT TRANSMISSION.”
R U T H D A L L I G , H Y G I E N E S P E C I A L I S T, M A R I E N K R A N K E N H A U S K A S S E L
The waiting room at the ER outpatient clinic of Marienkrankenhaus, Kassel, Germany is at full capacity. It is
clear from the faces of most of those waiting that they
are not feeling well. Some arrive in such a serious
condition that they have to be rushed immediately to
the intensive care unit. It is also often the case that
patients unwittingly bring with them some particularly
unwelcome guests: tiny, microscopic organisms invisible to the naked eye and therefore all the more dangerous. These are known as multidrug-resistant organisms (MDRO), bacteria that are able to survive exposure
to most antibiotics. It was more than a century ago
that antibiotics first began their triumphal march in the
fight against infection. Today, however, it is becoming
increasingly common to hear healthcare experts talk of
the start of a “post-antibiotic era,” an era in which
antibiotics can no longer be used effectively to combat
many infections. A particularly notorious superbug,
Methicillinresistant Staphylococcus aureus (MRSA ), has
evolved into a multidrug resistant organism. It is primarily found in the nose and throat and is relatively
harmless in healthy people. In hospitals and other
healthcare environments, however, it can cause dangerous infection and is a risk that must be taken seriously. For example, it can be very harmful if it enters
the body through damaged skin or mucosa and, in
patients with a weakened immune system, it can cause
life-threatening illnesses such as pneumonia or sepsis.
“Multidrug-resistant organisms represent a serious
problem across the entire healthcare sector worldwide, and the increasing attention being paid to them
is fully justified,” confirms Dr. Klaus-Dieter Zastrow,
Spokesperson for the German Society for Hospital
Hygiene (DGKH). Frightening stories about deadly
hospital-acquired infections, in Neonatal Intensive
Care Units for instance, have abounded over recent
times. According to World Health Organization estimates, around 25,000 deaths a year in the European
Union alone are caused by MDROs. Other estimates
are much higher.
Antibiotic resistance is a natural phenomenon: Bacteria
are constantly evolving and learning how best to fight
the drug that is trying to kill them – until the antibiotic
eventually becomes ineffective. The indiscriminate
use of antibiotics – one of the most commonly prescribed forms of medication around the world – only
serves to exacerbate this. “Antibiotics are often prescribed for viral infections where their use is not beneficial. However, even where use is indicated, choosing
inappropriately, a failure by the patient to take the
antibiotic as prescribed, or an excessive length of administration can result in the survival and eventual
resistance of bacteria that were not affected by the
antibiotic,” explains Prof. Axel Kramer, Director of
the Institute for Hygiene and Environmental Medicine
(IHU) at Greifswald University in Germany. Scientists
have also found a connection between the use of antibiotics in the food industry and MDRO s, where antibiotics are mixed with feed intended for pigs or poultry, for instance. Antibiotic resistance occurs most
commonly in hospitals, where the use of antibiotics is
commonplace; the exact places where sick people
go to be healed. It is in such medical establishments
where this invisible danger is growing. Medical professionals, nurses, and healthcare assistants also play
an unwitting role as carriers and transmitters of the
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PARTNER IN SCIENCE
S TA N D A R D H Y G I E N E P R O C E D U R E S A R E V I TA L TO S TO P T H E S P R E A D OF MD R O B A C T E R I A .
harmful organisms. However, their prevalence alone
means that many patients bring the bacteria into the
hospital with them. Ruth Dallig, a hygiene specialist
at Marienkrankenhaus is on the front line of this fight:
“Upon registration, all new patients are required to
complete a questionnaire, allowing us to immediately
identify patients who are at high risk of MDRO colonization.” Anyone answering yes to any of the nine
questions (e. g. whether they have taken antibiotics
over the previous few months), will be immediately
tested for MDRO.
Science has yet to find a universal solution to MDROs.
However, all the experts agree that standard hygiene
procedures are vital to stop the spread of bacteria.
“We know, for example, that MRSA is primarily transmitted by hand contact and therefore, act accordingly
to prevent transmission,” explains Ms. Dallig. For instance, as soon as you enter the Marienkrankenhaus
hospital, you see a large sign reminding you to clean
your hands, beneath which there is a B. Braun hand
sanitizer dispenser. “All staff are required to sanitize
their hands every time they enter and leave a patient’s
room along with a number of other hygiene procedures which must be followed,” Ms. Dallig adds. And
what if MDRO colonization should still occur despite
all of these precautions? Once again, B. Braun products
come into play. The Prontoderm System from B. Braun
OPM is the first complete range of innovative, readyto-use products for decolonization of the skin and
18
INTERVIEW WITH PROFESSOR DIDIER PITTET
What are the factors driving antimicrobial resistance (AMR) around the world?
The prevalence of antimicrobial resistance varies from country to country and vast
differences can be observed even within the same country. The overuse of antibiotics
is often a discernible factor in the regions and institutions affected by growing resistance. It is also often the case that infection control measures - isolation procedures,
hand hygiene, and the detection of healthy carriers for instance - are simply inadequate.
Which of the multidrug-resistant organisms (MDROs) are the most dangerous?
The biggest threat at present is no longer MRSA, but the newly emerging gramnegative bacteria, which are resistant to virtually every antibiotic available.
P R O F E S S O R D I D I E R P I T T E T,
D I R E C TO R I N F E C T I O N C O N T R O L
P R O G R A M & W H O C O L L A B O R AT I N G
C E N T R E O N PAT I E N T S A F E T Y.
Who is at highest risk of developing a life-threatening disease that responds poorly
to treatment? Studies from our systematic review, which appeared in the Lancet in 2011,
found the highest prevalence among the seriously ill (the majority undergoing intensive
care treatment), neonates, and infants. Oncology, dialysis, and transplant patients are also
at high risk. Other risk factors include malnutrition, a weakened immune system and
various concomitant diseases, long periods of hospitalization, surgery, and intravascular
or urinary tract catheters.
Can you explain why the prevalence of hospital-acquired (nosocomial) infections
varies between different countries? The reasons for the uneven geographic distribution
of nosocomial infection rates are not entirely clear. However, the following aspects are
relevant: Diagnostic practices and laboratory identification, infection control, antibiotic
prescription practices, population characteristics and the composition of clinical cases
in addition to cultural factors and behavior patterns. The individual country’s healthcare
systems and associated political aspects are also significant contributory factors to the
varying infection rates.
How can hospital-acquired infections be avoided and what is your opinion of MRE
networks? The percentage of nosocomial infections that are potentially preventable under
routine working conditions is not known, but could run as high as 50 percent. The
greatest potential for reduction was identified for device-related infections, such as
catheter-related bacteremia, whereas a smaller, but still substantial potential for
prevention seems to exist for other types of infections. The most effective strategies
are based on good hand hygiene, barrier precautions when setting up a central line,
closed systems, and the early removal of urinary catheters in addition to the careful
preparation of the skin, antibiotic prophylaxis, and the prevention of surgical infections.
Prevention networks such as the WHO initiative “Clean Care is Safer Care” are successful
and offer excellent support for institutions around the world.
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19
PARTNER IN SCIENCE
24
HOUR S
A F T ER A P P L IC AT ION P RON TODERM
P RODUC T S C RE AT E A N A N T IMIC ROBI A L
B A RRIER EF F E C T L A S T ING UP TO 24
HOUR S .
P R ONTOD E R M WI P E S – P R E -MOI S T E NE D TOWE L E T T E S FOR QU I C K A ND E A S Y USE.
mucous membranes. “The products from the Prontoderm System can be used to eliminate microorganisms effectively and reliably from all areas of the body
where MDRO colonization can occur. This has been
clinically proven,” explains Dianne Egli-Gany, Medical
Scientific Affairs Manager at B. Braun Medical AG.
While competitor products are classified as cosmetics
and therefore, do not have to provide evidence of
their efficacy, Prontoderm is a CE marked, Class III
medical device approved for MDRO decolonization.
Dermatological tests have also proven that Prontoderm
is extremely gentle on skin. This means that the product does not have to be washed off after application,
which saves time and costs. It also creates an antimicrobial barrier effect lasting up to 24 hours.
Prontoderm is available as a ready-to-use, leave-on
body wash solution and in nasal gel, shower gel, mouthwash, cleansing foam and wipes for quick and easy
use. In addition to delivering innovative products for
reducing the spread of MDROs, B. Braun is also a
knowledgeable advisor around the globe. Peter Pfaff,
B. Braun Market Manager for MDRO Projects and
Networks: “What we need is a systematic approach
to hygiene management. If everyone involved in the
healthcare sector were to cooperate and openly communicate about MDRO, we could accomplish a lot.”
For this reason, B. Braun is actively supporting the
establishment of regional and transregional networks. Ms. Dallig is a member of an MDRO network
that is bringing together medical professionals,
scientists, and health department representatives in
the German region of Nordhessen: “We discuss a
range of interesting topics. For instance, who should
bear the costs of a comprehensive MDRO prevention
program?” Ultimately, healthcare researchers, providers, and industry all share the same goal: to develop
and implement effective intervention strategies to prevent the spread of MDROs.
PARTNER IN PROGRESS
INF USION ( I V ) T HER AP Y IS AN IN T EGR AL PA R T OF HE ALT HC A RE PROV ISION,
BUT IT IS NOT WITHOUT RISK . TO KEEP THIS RISK TO AN ABSOLUTE MINIMUM,
B . BR AUN HO SP I TA L C A RE H A S DE V EL OP ED A D VA NC ED C A RE . A ND I T WORK S ,
A S T HIS E X A MP L E F ROM M A NIL A , P HIL IP P INE S DEM ONS T R AT E S .
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PA R T I C I PA N T S I N T H E S E M I N A R AT T H E A E S C U L A P A C A D E M Y.
56
NUR SE S
IN HER S EMIN A R “A D VA N C ED C A R E
IN INF USION T HER A P Y ” DR . BUH AT
E X P L A INS TO 56 NUR SE S HOW T HE Y
C A N REDUCE T HE RISK S IN INF USION
Dr. Maria Linda Buhat, President of ANSAP (Association
of Nursing Service Administrators of the Philippines),
smiles and waves to us. She recognizes our small group
of Central Europeans from afar in this commercial
district of Manila, the vibrant capital of the Philippines.
The heat is stifling, with temperatures above 30 ° Celsius, and there’s a cacophony of noise; the hustle and
bustle of passers-by competing with a cheerful group
of singers by the roadside and the rattling engines of
the city’s many jeepneys (colorfully decorated US
military jeeps left over from World War II and the most
popular means of public transportation in the Philippines). Dr. Buhat waits patiently for us to make our way
through to her. “You may have read in the newspaper
that Manila is not necessarily the safest city,” she says.
“I would like to prove to you otherwise.” And to emphasize this she says “Mabuhay!” which means a warm
welcome to visitors arriving in the Philippines.
T HER A P Y.
We are meeting with Dr. Buhat to find out more about
a very different aspect of safety: the safety of patients
and hospital staff during IV therapy. “Reducing the risks
associated with IV therapy is of the utmost importance to us,” says Dr. Buhat. This is the reason she is
holding one of her popular seminars today, entitled
“Advanced Care in Infusion Therapy,” for 56 nurses.
And it is not a coincidence that the seminar is being
held at Aesculap Academy. For many years, ANSAP has
enjoyed a close partnership with B. Braun. The broadbased Advanced Care initiative developed by B. Braun
Hospital Care lies at the heart of this cooperation.
Uwe Schneider, Vice President Global Marketing at
B. Braun Hospital Care, explains: “Advanced Care is
an integrated, sustainable concept that has been developed to assure higher safety standards in healthcare.”
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PARTNER IN PROGRESS
D R . M A R I A L I N D A B U H AT, P R E S I D E N T O F A N S A P ( A S S O C I AT I ON OF NU R S I NG S E R VI C E A D MI NI S T R ATOR S OF T HE P HI L I P P I NE S ).
It en-compasses a variety of activities, including international lobbying, hosting conferences, symposia,
and workshops, putting together brochures and a
website (www.safeinfusiontherapy.com) as well as the
development and roll-out of effective training courses.
All parties benefit from this intensive exchange of information. “Only by understanding the exact user requirements can we offer the best products,” emphasizes Mr. Schneider. Today, IV therapy is standard clinical
practice and it is impossible to imagine life without it.
Around the world, infusions are administered on a
daily basis for patients requiring the intravenous administration of medication, fluids, or nutritional formulas –
generally in larger quantities and over longer time
periods. It has, however, been a long journey to arrive
at where we are today. For centuries, it was widely
believed that bloodletting could halt the body’s natural
aging process. Enema syringes and cannula were used
in ancient times, but any attempts to help sick people
by means of infusion were largely unsuccessful. Even
the discovery of the circulation of the blood in the
early 17th Century and invention of the sharpened
hollow needle in the second half of the 19th Century
failed to bring about the much anticipated breakthrough. It was only in the 20th Century that infusion
finally became a standard therapeutic method, to
23
24
O N E O F T H E S E M I N A R G R O U P S L E A R N S A B O U T T H E I M P O R TA NC E OF NE E D L E -S T I C K P R E VE NT I ON.
which B. Braun made a significant contribution, with
countless innovations such as IV containers, pumps,
systems, and solutions to name just a few.
Small groups of predominately young nurses have
gathered in the air-conditioned seminar room, chatting and laughing with one another. As Dr. Maria Linda
Buhat enters, it is clear from her air of friendly
authority that it’s time to get down to business. After
all, they have much to cover. There are many health
risks associated with IV therapy, both for patients and
healthcare workers which can drive up healthcare
costs. Needle-stick injury undoubtedly represents one
of the biggest risks. The worldwide number of incidents involving healthcare workers injured by needles
or other sharp instruments (such as scalpels) is estimated to be approximately 3.5 million per year. It is
still often the case that such incidents occur when
the protective cap is being replaced onto the used cannula. This practice is prohibited in most countries as
cannulas have to be placed in special containers for
disposal immediately after use. “Of course, the concern is not the injury itself, but the risk of transmitting
an infection such as HIV, Hepatitis B, or Hepatitis C,”
explains Dr. Buhat with emphasis as she looks into the
serious faces of her audience. There are, however, ways
of minimizing the risk. The ANSAP President presents
to her audience a thin tube with valves attached at
each end. It is the B. Braun Safeflow valve which re-
quires neither cap nor needle and has been designed
to provide safe access to the infusion system. This unassuming valve is in fact pretty impressive because, in
addition to preventing the risk of needle-stick injury, it
also reduces other risks associated with IV therapy,
such as air embolism. This is because it acts as a closed
system and prevents air from entering the patient’s
bloodstream. Dr. Buhat drives home this important point
by saying “This simple cap can save lives.” Another
risk associated with this treatment method is a variety
of contamination types. Particle contamination can
occur unnoticed, for instance, if tiny shards of glass
from a vial fall into the liquid contained within the
vial when it is opened. According to Dr. Buhat: “Particles of any kind - glass, plastic, rubber, or even undissolved medication - can cause considerable harm
to the lungs, kidney, liver, and spleen of a patient.”
B. Braun has developed a range of products specifically to combat particle contamination . These include
the Intrapur and Sterifix infusion filters. It is healthcare
workers, on the other hand, who are most at risk of
chemical contamination; through coming into contact
with hazardous substances (such as chemotherapy
drugs) during medication preparation or administration.
Skin contact, caused by exposure to hazardous substances when priming an IV set, can cause a rash, nausea, or even chronic illness. One of the many safety
products offered by B. Braun to protect against this is
Cyto-Set Mix, a closed system for safer cytostatic
medication preparation and administration.
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PARTNER IN PROGRESS
“ WE CONSIDER OUR PARTNERSHIP A S DIAMONDS, MADE MORE PRECIOUS WITH OUR
ACCESS TO B. BRAUN’S INFRA STRUC TURE AND E XPERTISE FOR OUR TRAINING COURSES.
LIKE DIAMONDS, WE HOPE IT ’S FORE VER.”
D R . M A R I A L I N D A B U H AT
20
TH
C EN T URY
I T WA S ONLY IN T HE 20 T H C EN T URY
T H AT INF USION T HER A P Y BEC A ME A
S TA NDA RD T HE R A P E U T IC M E T H O D,
TO WHIC H B . BR AUN M A DE A SIGNIF IC A N T C ON T RIBU T ION WI T H C OUN TL E S S INNOVAT IONS .
A F T E R T H E S E M I N A R , T H E PA R T I C I PA N T S F E E L M O R E C O N F I D E N T I N M A N A G I N G
I NFU S I ONS .
Although the nurses have so far given the seminar their
full attention and completed all practical exercises
with enthusiasm, it is time for a break and the perfect
opportunity to take a brief survey of at tendees. The
feedback could not be more positive. Ms. Maila Delia
Isla, a young nurse from a Manila suburb, for instance,
said: “For me, receiving information about the potential
risks associated with IV ther apy and training on its
safe application within a professional environment is a
great help.” The responses to the questionnaires that
all attendees were asked to complete at the end of the
seminar also reaffirmed the positive feedback. This
only serves to add momentum to the Advanced Care
knowledge transfer concept, which B. Braun and ANSAP
recently began rolling out to the equivalent organization in Vietnam (the Vietnamese Nurses Association).
Upon her departure, Dr. Buhat concludes with a smile:
“We consider our partnership as diamonds, made more
precious with our access to B. Braun’s infrastructure
and expertise for our training courses. Like diamonds,
we hope it’s forever.” And, with these final thoughts,
we leave the Aesculap Academy building and step back
into Manila’s bustling streets.
25
PARTNER IN GROWTH
B . BR AUN C ON T INUE S T O E X PA ND. AT I T S MEL SUNGEN ,
GERM AN Y SIT E, T HE C OMPAN Y HA S IN V E S T ED 82 MIL L ION
IN AV I T UM V IL L AGE – A NE W P RODUC T ION FAC IL I T Y A ND
TR AINING CENTER.
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28
“ WE HAVE A HIGH LE VEL OF VERTIC AL INTEGRATION. IN OTHER WORDS, ANY THING
WE C AN MAKE OURSELVES, WE DO – AND TO THE MOST E X AC TING STANDARDS.”
MANFRED HERRES
It makes for an exciting contrast: out of a fairytale
landscape on the outskirts of Melsungen, famous
for its romantic, timber-framed buildings, rises ultramodern architecture – imposing edifices of glass,
exposed concrete, and powerful steel girders together
with a cylindrical parking garage. On an area the size
of 14 football fields you find Avitum Village, a new production site for dialysis machines and infusion pumps.
Around the world, more than 2 million people currently
undergo regular dialysis treatment for kidney failure.
And that figure is growing at rates in both Asia and
Latin America entering the double-digit range. In addition, the number of users choosing B. Braun products,
such as the Dialog + Hemodialysis System, is increasing. The B. Braun Avitum Division, which is responsible
for all manufactruring of dialysis products at B. Braun,
was challenged to keep up with rising demand in its
current facilities. As a result, B. Braun made the decision to invest a total of € 82 million in a two-year construction project to expand the complex, which is
often referred to as the City of Industry. The expansion
included a “village” designed specifically for B. Braun
Avitum.
“We have in this facility various locations at which
employees, customers, and visitors could come together, much like marketplaces in a real village,” explains
Production Director Manfred Herres. And the spacious
foyer, which is centrally accessed from all parts of the
facility, certainly does make an inviting place. Its large
skylight dome makes it feel bright and airy while an
illuminated globe and art installation in the form of a
viridescent kidney provide for aesthetic interest. Inter active images and life-size dialysis machines and
infusion pumps exhibited around the foyer provide
visitors with information about B. Braun products. A
spiral staircase takes you down to the cafeteria, which
offers the same panoramic view over the beautifully
landscaped grounds and pond as the floor above.
Everything is designed with class and style – yet is
functional at the same time. The Production Director’s eyes shine with enthusiasm behind his glasses as
he discusses the benefits of the new building. “The
biggest benefit is that we have doubled our production
capacity,” states Mr. Herres. Avitum Village will be
able to produce up to 20,000 dialysis machines and
200,000 infusion pumps annually for distribution
around the world. And if demand continues to increase?
This is not a problem because the production halls
have a modular design, allowing more to be added as
needed. According to Mr. Herres, the key to remaining
on course for success is quality, quality, and more quality. This means that considerably more time is spent
on close inspection of the dialysis machines than on
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PARTNER IN GROW TH
M A N F R E D H E R R E S , P R O D U C T I O N D I R E C TOR B. B R A U N AVI T U M, B. B R A U N ME L S U NG E N A G .
assembly. And you can be sure that if a product bears
the B. Braun name, it will be B. Braun through and
through: “We have a high level of vertical integration.
In other words, anything we can make ourselves, we
do – and to the most exacting standards,” Mr. Herres
proudly explains. At the same time, efficiency and
synergies are also important to the Production Director:
“Everything has to run smoothly as part of a finely
tuned process flow.” The new facility is making a major
contribution toward this, because all the logistics
processes, which had formerly been distributed over
various sites, are now located at this one site. Production is also following the 'marketplace' concept with
all products and production lines converging at a central location to optimize integration of the individual
processes. Meanwhile, the B. Braun researchers at the
development centers and application laboratories
housed within the same building are hard at work on
the innovations of tomorrow.
30
T H E B. B R A U N A P P R E N T I C E S B E N E F I T F R O M M O D E R N W O R K S TAT I ONS I N T HE NE W T R A I NI NG C E NT E R .
726
A P P REN T IC E S
IN GERMANY ALONE, B. BR AUN IS CURRENTLY
T R A ININ G 726 YO U N G A P P R E N T I C E S IN
T EC HNIC A L A ND A DMINIS T R AT I V E ROL E S AT
SE V EN DIF F EREN T SI T E S .
Wearing a white coat and safety shoes, Mr. Herres
strides through the 43,000 m2 complex, passing
hundreds of perfectly ordered racks of components.
At various mobile assembly islands and test benches,
he stops and enters into discussions with the people
working there, inquiring as to the current status and
providing direction. Nearly 500 production employees
work at this facility, 200 of whom were recruited
within the previous three years. In addition, there are
300 administrative employees. Mr. Herres states:
“Most of the work here demands a high level of skill
and therefore requires a very talented workforce.”
Good training is of the utmost importance to B. Braun.
In Germany alone, the company is currently training
726 young apprentices in technical and administrative
roles at seven different sites. Every year, this figure
increases; for example, the number of technical ap prenticeships will rise by 40 percent over the near
term. It was only logical, therefore, that Avitum Village
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PARTNER IN GROW TH
T HE T E C HNI C A L A P P R E NT I C E S A R E S T U DYI NG FI E L D S S U C H A S E L E C T R ONI CS AN D
ME C HAT R ONI C S .
should also include a new training center, for which
€ 6.5 million was dedicated. The Director of Training
Kay-Henric Engel is convinced that this was a worthwhile investment and states: “It is imperative that we
remain ahead of the field. This investment has enabled
us to put in place the perfect framework for achieving
technical progress and continuing to meet our requirements for a skilled workforce.” The 2,800 m2 training
center, which covers two floors, has space for approximately 210 technical apprentices who are studying
fields such as industrial mechanics, plant management, electronics, and mechatronics. Sandra Biele, Rik
Gehauf, and Philipp Selzer are three of the apprentices
currently enrolled in this program blending mechanical
and electronical engineering. Already in their third
year, they are used to switching between computers,
machinery, robots, and workbenches. “The training is
varied and wide-ranging, yet always targeted toward our
future roles,” explains Ms. Biele. Nodding in agreement, Mr. Gehauf adds: “Our training covers the traditional skills, such as reaming, lathing, and drilling, as
much as it does programming and operating high-tech
robots.” Before starting his apprenticeship, Philipp
Selzer had already completed his high school diploma
(Abitur). He is now considering going to a university
after the apprenticeship is completed. He may even
maintain close ties with B. Braun because the company offers scholarships for high potential students.
B. Braun places considerable importance on continuous
professional development of experienced employees.
B. Braun Avitum recently developed a new training concept that is now being rolled out on a specially developed training floor of the facility. In the future, all
employee, customer, and user training courses will
be held at Avitum Village. Dr. Holger Seeberg, Head of
Marketing and International Sales at B. Braun Avitum,
sums up perfectly the feelings of many of those who
work and study at the new facility: “It is quite simply
a great atmosphere that promotes learning, a mutual
sharing of information, and knowledge transfer.”
31
AT A G L A N C E
34
THE B. BR AUN GROUP
35
ECONOMIC ENVIRONMENT
42
BUSINESS AND E ARNINGS PERFORMANCE
44
FINANCIAL POSITION AND A SSE T S
51
PERSONNEL REPORT
55
RISK AND OPPORTUNITIES REPORT
58
SUBSEQUENT E VENTS
62
OUTLOOK
62
FINANCIAL STATEMENTS
GROUP MANAGEMENT REPORT
34
GROUP MANAGEMENT REPORT
At a glance
The B. Braun Group showed stable business development in a challenging market environment. However,
spending cuts among public sector healthcare purchasers within the European and the American healthcare markets, coupled with increasing cost pressures from competitors in emerging countries, did affect
sales and profits. Over the short term, our profitability is also being impacted by start-up costs for new
factories and the expansion of our sales structures. Although we largely succeeded in meeting our sales
growth target, we fell short of achieving the anticipated improvement in EBITDA . However, the cost
reduction measures introduced in fiscal year 2011 and the completion of key investment projects will get
us back on our usual course for success in 2012. At the same time, we are seeing increasing opportunities for growth in the emerging markets. Having already been present in these markets for many years,
we are now focusing our current investment program on the BRIC countries. This will place B. Braun in
a stronger position to benefit from the opportunities arising in those markets.
Despite the more difficult market conditions, we will remain a supplier of high-quality and innovative
products. Patients and clinicians can rely on B. Braun fulfilling the highest requirements for quality
and use.
By maintaining a constant dialog with patients and clinicians, we are able to respond appropriately to
market requirements. We also take responsibility for the advancement of medical expertise. In 2011,
for example, our Aesculap Division established an Endowed Professorship for Navigation Technologies
in Orthopedics and Sports Medicine at Hamburg University of Applied Sciences (HAW Hamburg).
Our high degree of equity financing, as well as our unique product and service portfolio, provided the
basis for stable development in fiscal year 2011 and will also enable the dynamic growth of B. Braun as
an independent, family-owned business in the future.
Sales (in € million)
Net Margin after Taxes (in %)
2011
2010
4,609.4
4,422.8
5.5
6.3
EBIT (in € million)
432.2
456.2
EBITDA (in € million)
688.5
700.5
EBITDA Margin (in %)
14.9
15.8
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THE B. BRAUN GROUP
The B. Braun Group
Service portfolio
B. Braun develops, manufactures, and markets medical products and services and is one of the world’s
leading suppliers of equipment to the healthcare industry. Hospitals, physician practices, pharmacies,
nursing and emergency services, as well as homecare, are our focus. Our product range includes IV
solutions, syringe pumps, accessories for IV therapy, intensive care and anesthesia, as well as surgical
instruments, sutures, hip and knee endoprostheses, equipment and accessories for dialysis, and wound
care products. In all, B. Braun offers over 30,000 products, 95 percent of which are manufactured by the
company. B. Braun’s expanded portfolio includes consulting and various services, making it a service
provider that works closely with its customers to determine the best solution for every patient, thereby
making a significant contribution to medical advancements.
The Hospital Care Division supplies hospitals with such products as IV sets and accessories, IV and injection solutions, peripheral IV catheters, clinical nutrition, as well as pumps and associated systems. In
addition, the division offers an extensive range of disposable medical and wound drainage products, as
well as pharmaceuticals and products for drug admixture and regional anesthesia. With its portfolio of
IV therapy and drug admixture products, Hospital Care provides hospitals with a unique product system
offering, focusing on continually improving efficiency, safety, and documentation of hospital procedures.
Hospital Care is the worldwide market leader for IV sets and accessories, peripheral IV catheters, and
regional anesthesia. The division is also the European market leader in automated infusion systems
and standard IV solutions. Additionally, we have been able to further expand our market share for
safety products.
The BRIC countries and the US currently offer above-average growth opportunities. The division is growing
organically and through selected strategic acquisitions. In 2011, we acquired manufacturer of IV sets,
syringes and cannulas in India with a focus on supplying the local market. We also established new sales
offices in Serbia and Mexico.
In February 2011, we manufactured the billionth “Ecoflac plus” container for standard IV solutions at
our LIFE facility in Melsungen, Germany. Since production began in 2004, we have grown our European
market share from approximately 25 percent to today’s market share of more than 45 percent. This
success is an important milestone for B. Braun on its way to becoming the global leader in IV therapy.
Hospital Care expanded its Space product family with B. Braun Space GlucoseControl, a system for
controlling the blood sugar of intensive care patients. It also launched the first integrated IT solutions
for fully automated therapy documentation. B. Braun SpaceCom, for example, enables documentation
in a patient data management system (PDMS) and documentation of anesthesia records with no additional
maintenance effort for the healthcare professional.
FINANCIAL STATEMENTS
The Hospital Care Division
36
The Aesculap Division
Based in Tuttlingen (Baden-Württemberg, Germany), Aesculap sees its role as a global partner in surgery
and interventional cardiology. The division, which has been a part of the B. Braun Group for over 35 years,
focuses on developing and marketing products and services for surgical and interventional procedures in
operative medicine.
Aesculap views itself as the global market leader in surgical instruments and sterilization technology.
In the fields of neurosurgery and wound closure, Aesculap is a major global supplier. We are also quality
and innovation leaders in select product categories. The success of our business is founded on our
dynamic innovation and closeness to the market. The Aesculap Division has a range of state-of-the-art
product concepts for degenerative knee and hip conditions, including instruments for minimally invasive
procedures, short-stem hip prostheses and abrasion-optimized, anti-friction coatings for knee implants.
The latest generation of cementless hip endoprosthesis stems offers maximum retention and preservation
of the greater trochanter region during the intra-operative procedure.
Through high-quality, market-oriented products and solution-focused services, we build strategic
partnerships with our customers. For example, we advise hospitals on instrument management, helping them optimize their inventory of instruments and maintain its value. Aesculap also offers specialized products in the fields of surgical sutures, traumatology as well as spinal and vascular surgery. We
have added new products to our laparoscopic product line: Our acquisition of a company specializing
in advanced electrosurgical instruments for tissue cutting and fusion makes us the only company on
the market to make bipolar instruments with jaws that can be actively angled, giving surgeons the
greatest possible flexibility and maneuverability during the operation. Aesculap’s newly developed AdTEC®
mini line, with a diameter of only 3.5 mm, is a logical development. The fact that it permits minimally
invasive approaches opens up a variety of new application possibilities in the areas of visceral surgery,
pediatrics, gynecology, and urology. Our product and service portfolio sets us clearly apart from the
competition, allowing us to consolidate and grow our market shares. In addition to our already established markets in Germany, Europe and the USA , the BRIC countries are the main focus of our growth
strategy.
The Out Patient Market (OPM) Division
The focus of the Out Patient Market (OPM) Division is on meeting the needs of patients outside the
hospital setting and of long-term patients. Our customers include physicians in private practice, outpatient and inpatient care services, and pharmacies.
Adopting a holistic approach to consulting and care giving, the division strives to provide patients
with a combination of high-quality and cost-effective healthcare. The key areas on which it focuses
are the transfer of patients from one setting of care to another, outpatient IV therapy, diabetes, skin
and wound management, stoma and incontinence care, disinfection, and hygiene.
In addition to these products, OPM offers a broad range of outpatient services. A major objective is the
transfer of knowledge across all areas, for example when transferring parenterally-fed patients from
inpatient to outpatient care (TransCare). Our experienced employees relieve patients, hospitals, private
practice physicians, and care services of administrative tasks and ensure that the quality and progress
of treatment is optimized.
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37
THE B. BRAUN GROUP
Our product innovations in outpatient care are aimed at improving therapies and increasing patients’
quality of life. One example is Prontosan® Wound Gel X, a viscous gel for cleansing and moisturizing
skin wounds and up to 4th degree burns. The long-acting hand disinfectant Promanum® pure and our
touch-sensitive Vasco® Nitril disposable gloves both support the daily work of healthcare professionals.
The ready-to-use Actreen® catheter introduced in the previous year was supplemented in 2011 with
a special single-use catheter for women (Actreen® Lite Mini), which has been very well received on the
market. The Actreen® Lite Mini also received the Pharmapack 2011 Award and the ACA & Promocon
“Look Good, Feel Good” Award noting that B. Braun had “significantly improved quality of life for
female patients” with this product.
Within the established markets, the division is enjoying stable development thanks to our extensive
product range. This is supplemented by a selective offering of our core product lines in the dynamically
growing developing countries. In 2011, we established new sales offices in Ecuador and Croatia.
B. Braun Avitum AG is one of only a few full-range suppliers in the field of extracorporeal blood treatment worldwide. The division provides dialysis centers with all of the products and services necessary
for the blood cleansing processes involved in dialysis and apheresis. Hemodialysis products and systems
are the division’s core business.
The division has a network of 180 dialysis centers (previous year: 168) in Europe, Asia, and South Africa,
caring for more than 11,000 patients. Physicians and nursing staff are available in our clinics to assist
and advise dialysis patients with chronic kidney and metabolic disorders, offering them the opportunity
for a better quality of life.
We set ourselves apart from our competitors through consistent product quality and continuous availability, as well as an extensive range of user training courses, technical support, and IT solutions. We
aspire to improve patient quality of life and achieve efficient treatment processes.
In 2011, the new facility in Melsungen, Germany for the manufacture of dialysis machines and IV pumps
commenced operation. In addition, the public-private partnership that we originally entered into in
2010 in India has been continued and expanded further. So far, this program has provided approximately
2,000 patients with access to life-saving dialysis treatment.
Aesculap Academy
The evolving lifelong learning process for all medical professions and the innovative developments in
medical technology are placing increasing demands on hospital, quality, and safety management.
To accommodate this, Aesculap Academy has undertaken a targeted expansion of its advanced training
and development programs around the world.
With Aesculap Academy, B. Braun has created an international knowledge-sharing platform for physicians,
other medical staff, and hospital managers. In 2011, more than 70,000 medical experts from all over the
world took advantage of the training opportunities. Its core business, which focuses on skills training
in anesthesia and the entire range of surgical and interventional medical disciplines, has been complemented by incorporating the most up-to-date learning and teaching methods, such as training on virtual
FINANCIAL STATEMENTS
The B. Braun Avitum Division
38
simulators, as an integral component of the hands-on exercises. Special training courses in sterile supply
processing and wound management are also key elements of the program. More general, complex
matters relating to palliative care or strategies for error avoidance in operating rooms are discussed in
forums and symposia. In recognition of its partnership with medical associations and societies, Aesculap
Academy was awarded the “Siegel der Deutschen Gesellschaft für Chirurgie” (the Seal of the German
Society for Surgery).
Aesculap Academy has an international network of more than 30 locations within Europe and Asia,
and has been certified in Malaysia as a provider of medical advanced training and development.
The Academy will also introduce further advanced training and development offerings in Latin America,
starting with Mexico and Brazil.
Corporate governance and control
In addition to its own business operations, B. Braun Melsungen AG performs centralized functions for
the Group. The company is wholly family-owned and is not listed on any stock exchange. The company’s
statutory bodies include the Management Board, the Supervisory Board, and the Annual Shareholders’
Meeting. The Management Board is comprised of seven members, each with specific individual responsibilities and joint responsibility for the company’s performance. The Supervisory Board consists
of 16 members, half of whom are elected by the shareholders and half by the company’s employees.
Committees have been established to support the work of the Supervisory Board. The Personnel Committee is responsible for such matters as the Management Board members’ employment contracts and
compensation. The Audit Committee monitors internal control systems, accounting processes, and the
audit of financial statements.
On April 1 2011, the change in the Management Board, which was agreed upon in December 2010, took
place. Dr. Heinz-Walter Große succeeded Prof. Dr. h. c. Ludwig Georg Braun as Chairman of the Management Board while remaining responsible for Human Resources and Legal Affairs. Dr. Annette Beller
succeeded Dr. Große as Chief Financial Officer. Also effective April 1 2011, Mr. Otto Philipp Braun became
a member of the Management Board and is responsible for the Iberian Peninsula and Latin America.
B. Braun’s commitment to the principles of responsible corporate governance and control is reflected
in its adherence to recognized standards. The ultimate objective is the long-term success of B. Braun as
a family-owned company. The rules governing how we conduct ourselves with customers have been
defined in our Code of Conduct since 1996. B. Braun also has a global Compliance Management System.
For us, compliance means more than just legal conformity; it also encompasses ethical values such as
fairness, integrity, and sustainability. An overall Group Compliance Office together with local compliance
officers ensure that consistent guidelines are adhered to worldwide.
In concrete terms, our responsible approach to corporate governance is reflected in our integration
of quality and environmental management, our use of key performance indicators to direct the Group,
accounting policies based on international accounting standards, and our close monitoring of all significant potential risks.
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THE B. BRAUN GROUP
Organizational structure and locations
Through its subsidiaries and holdings, B. Braun operates in 56 countries. The B. Braun Group includes
196 (previous year: 189) consolidated companies and three (previous year: three) joint ventures in which
we do not have a majority. 18 (previous year: 17) holdings are consolidated using the equity method of
accounting. Detailed information about major shareholdings and the locations of each company can be
found in the tables on pages 138 to 141.
Quality and environmental management
As a developer and manufacturer of medical and pharmaceutical products, B. Braun operates in highly
regulated markets. Therefore, the quality and environmental management system we implement must
comply with the most stringent statutory and regulatory requirements. In addition, we have established
our own standards in the fields of environmental protection and health as well as safety in the workplace, which we subject to regular internal audits. By paying close attention to customers’ needs, we
have identified and standardized key processes to ensure uniformly high standards of quality. All procedures, products, and IT-related documentation are subject to an ongoing improvement process, which
considers environmental sustainability and productivity.
As a member of the German Chemical Industries Association (Verband der Chemischen Industrie, VCI),
B. Braun adheres to the Association’s guidelines on “Responsible Care” and takes responsibility for improving the environmental protection and health as well as safety in the workplace under the global
“Responsible Care” initiative.
Eleven B. Braun Group locations in Europe are EN ISO 14001-certified. In addition, the environmental
management in Tuttlingen and Glandorf (both in Germany) has received certification under the EU’s
Eco-Management and Audit Scheme (EMAS). Our occupational health and safety management system
at our locations in Germany (Melsungen, Tuttlingen, and Bad Arolsen), France, Spain, and Switzerland, as
well as B. Braun Avitum in Italy, is certified for compliance with the international OHSAS 18001 standard.
Our Melsungen site has also obtained the “Seal of Approval – Systematic Safety” (“Sicher mit System”)
mark from the BG RCI (statutory accident insurer for the raw materials and chemicals industry). The European dialysis centers within our B. Braun Avitum Division have received EN ISO 9001 and VDE 753-4
“Good Dialysis Practice” certification.
FINANCIAL STATEMENTS
The B. Braun Group is headquartered in Melsungen, Germany. In addition to being the center for the
Group’s management, it is also the base for those central areas that perform services for the Group.
In particular, these include Group accounting and controlling, international human resources, IT and
logistics, legal affairs and tax departments, and Group treasury. Our research and development activities
are assigned to Centers of Excellence (CoEs) in which research, development, and production activities
for specific product groups are brought together. The company’s operations are organized into four
divisions – Hospital Care, Aesculap, Out Patient Market, and B. Braun Avitum. Its main Centers of Excellence are located in Melsungen (Germany), Penang (Malaysia), Allentown (Pennsylvania, USA), Tuttlingen
(Germany), Boulogne (France), Rubí (Spain), and Sempach (Switzerland). Other major manufacturing sites
are located in Irvine (California, USA), São Gonçalo (Brazil), Nowy Tomyśl (Poland), Hanoi (Vietnam),
Budapest (Hungary), and Suzhou (China).
40
B. Braun’s medical products conform to the Essential Requirements of the European Council Directive on
Medical Devices and the German Medical Devices Act (Medizinproduktegesetz, MPG). In the US, we
adhere to the guidelines in Title 21 of the Code of Federal Regulations, which details the requirements
of the FDA (Food and Drug Administration) for pharmaceuticals and medical devices. In addition, all
of our divisions comply with the specific requirements of, for example, ISO or eco-audit directives and
a large number of national laws and regulations.
Group strategy
We are continuing to pursue the Group strategy established in the previous year through 2014. We are
confident that a growth strategy based primarily on innovation and self-funding will ensure that the
B. Braun Group can sustain its success. We have an annual sales growth target of between five and six
percent. Our target for the EBITDA margin is an increase to 17 – 18 percent of sales within the time
period covered by the strategy. To help us achieve our profitability targets, we also intend to further
reduce our working capital and minimize our general and administrative expenses. We are therefore
driving forward and, in some cases, expanding upon our existing programs in these areas.
Maintaining the B. Braun Group’s independence is of central importance in all our decisions. The next
generation of the B. Braun family has reaffirmed that we will remain a privately held family company
and will not pursue a public offering on any stock exchange.
Our product offerings are organized into core business areas of the healthcare market and specific
focus business areas for individual sectors of the healthcare market. Our goal is that the core business
areas within each division have a significant global market share. We select the specific focus business
areas based on regional market characteristics.
The B. Braun Group’s strategy is founded on the three pillars of innovation, efficiency, and sustainability.
Innovation, in this context, refers not only to the development of new products, but also to the implementation of innovative manufacturing processes, methods, sales concepts, and service offerings.
Our extensive investment activities underscore our intention to maintain our position as one of the
leading healthcare companies in the future. Given the ongoing cost pressure anticipated in the healthcare sector and restrictions on financial resources, efficiency improvements have become absolutely
essential. As our divisional organization is structured into Centers of Excellence, we are able to respond
rapidly and supply the markets with high-quality products and services. Additionally, we aim to continually improve the benefits to our customers. As a full-range supplier of integrated systems and products, B. Braun provides its customers with added value. In all that we do, we focus on the creation of
sustainable value. We are well aware of our responsibilities to healthcare professionals and patients, as
well as to our employees and, ultimately, to society at large, and take them into account in our decisions, whether on day-to-day business or strategy. We will also continue to maintain our financing
policy. While still seizing the opportunities presented by the market, we do not intend to enter into any
financing arrangements, which expose us to any unusual risks.
Management of our company is subject to the highest ethical standards and strict adherence of the law.
For us, corporate governance and compliance are not only a legal requirement, but a self-evident precondition to doing business on a sustainable basis. We, therefore, require all employees to conduct themselves impeccably from a legal and ethical perspective. We consider compliance with national and international regulations on product registration, production validation, and product safety to be a duty set
in stone.
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THE B. BRAUN GROUP
Corporate social responsibility
Acting sustainably is part of the B. Braun Group’s business philosophy. B. Braun sees itself as a member
of society and assumes responsibility as such. In addition to the regional promotion of art, culture,
and sports, the main areas we support are knowledge and science. In universities, this takes the form
of sponsored chairs, such as at Kassel University and Charité Berlin (both in Germany), or scholarship
programs such as the B. Braun Medical Trust Foundation in India.
Offering children opportunities is something that B. Braun takes very seriously. B. Braun for Children, a
global umbrella project we began many years ago, provides an opportunity for our subsidiaries to help
improve conditions for local children and for our employees to put their social commitment into action.
B. Braun supports for example a project in Pakistan, which finances tuition, school uniforms, and books
for children from the slums of Karachi. This gives children the opportunity to attend school and, therefore, also improves their prospects for the future.
A project in Sydney is just one example of a successful combination of dedication to children in need
and cultural commitment including employees and customers. For a number of years, our local subsidiary has been supporting the Australian Doctor’s Orchestra (ADO), an annual event allowing physicians
from all over the country to come together and play music. In 2011, the orchestra performed for a good
cause; a benefit concert in Sydney at which they managed to raise € 22,000 for local “B. Braun for
Children” projects such as the “Youth Off the Streets (YOTS), B. Braun Australia Scholarship” and the
“Children’s Institute of Sports Medicine” (CHISM).
In the US, B. Braun employees are actively supporting the “United Way” campaign, an initiative currently
comprising 73 programs and three partnerships that have already helped improve the lives of 57,688
children, families, and elderly people. “United Way” focuses primarily on promoting education, supporting
the elderly, and ensuring that basic needs are met. Not only do our employees support the campaign
through monetary donations, they are also very generous in donating their time and skills. Over the last
five years, employee participation in the local “United Way” campaign has doubled.
In the reporting year, a new “B. Braun for Children” project was launched by B. Braun Malaysia; the
“Rumah Ozanam” home for abused, abandoned, and homeless children. Initial activities, such as hygiene
workshops, have already taken place.
Aside from long-term programs, B. Braun also seeks to provide help in instances of very acute need.
Following the Group-wide fundraising campaigns for Haiti and Pakistan in 2010, 2011 saw B. Braun
employees raising funds to support people affected by the earthquake, tsunami, and nuclear disaster
that hit Japan. Once again, B. Braun’s Group management doubled the amount of donations collected
by employees. As a result, a total of € 212,366 were given to children’s funds set up by local governments
to help children who had lost one or both parents to the disaster within the three most severely affected
prefectures of Fukushima, Iwate, and Miyagi. The money collected will help provide children the opportunity to lead a normal life and receive a school education for at least ten years.
FINANCIAL STATEMENTS
We have a long tradition in symposia and workshops for medical staff and healthcare personnel. When it
comes to promoting knowledge, we start with the very young: for example, with the B. Braun Children’s
and Youth Weeks. Entitled “New researchers needed,” these events were held for the fourth time in
Melsungen, Germany in 2011. We also operate a Children’s University in Tuttlingen, Germany.
42
Smaller initiatives also make up an important part of our community focused activities. One example
is the Christmas project initiated by the B. Braun subsidiary in Croatia. In this case, local employees,
together with management, raised approximately € 15,000 for four orphanages in four regions of the
country to buy urgently needed “Christmas presents” such as furniture, dishwashers, office computers,
sanitary items such as baby lotions and diapers, and much more.
During the last year, we published the fourth edition of SHARE, our sustainability magazine, which describes further examples of our commitments throughout the world within the community and society
as a whole.
Economic environment
Economic performance
Global economy
Despite many regions seeing an initial continuation of the economic upturn in early 2011 that had
commenced in 2010, the global economy was hit by a number of shocks, which hampered further
recovery. This included the earthquake and nuclear disaster in Japan, the upheavals in the Arab region,
and the European and American debt crisis. The debt crisis continues to dominate the global economy
today.
As in 2010, it continued to follow a two-track course with Asian countries still driving the global
economy, while Western industrialized countries face great consolidation challenges, which weaken
economic momentum. In some countries, private consumption is also being curbed by high levels
of both unemployment and private debt.
In 2011, global output grew 3.8 percent, compared to 5.2 percent in 2010. At 1.6 percent, growth in the
industrialized countries significantly lagged behind that of the developing and emerging economies,
which amounted to 6.2 percent. Growth in global trade remained strong at 6.9 percent, if behind that
of 2010 (+ 12.7 percent).
Economic performance by region
In the euro area, economic output grew 1.6 percent year-on-year with rates varying greatly from country
to country. While Germany nearly succeeded in sustaining the momentum seen in 2010, growth in the
peripheral euro area countries remained sluggish. Toward the end of the year, however, growth began to
slow down even in Germany. For 2011 as a whole, the German economy grew by 3.0 percent, compared
to 3.6 percent in 2010 with exports continuing to be a key driver for growth. There were still no signs of
economic downturn in the German labor market. Unemployment dropped to 6.0 percent, a decrease of
1.1 percentage points compared to the 2010 level.
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ECONOMIC ENVIRONMENT
The unresolved debt problems, particularly in Greece, Portugal, Ireland and Spain, toward the end of
the year even in Italy, led to major uncertainties in the markets and, as a result, to refinancing difficulties
for these countries through the capital markets. This prompted ambitious consolidation plans. Many
European countries announced mass spending cuts and increased taxes, which are likely to have a longterm impact on government demand, particularly in the healthcare sector, and on consumer spending.
In Greece, economic output continued to decline and, at – 5 percent, even fell below 2010 levels (– 4.4 percent). The Portuguese economy also weakened (– 2.2 percent). By contrast, there was renewed growth
in economic output for Ireland and Spain, at + 0.4 percent and + 0.7 percent respectively, following
decreases in the previous year.
In the reporting year, Russia’s economy saw 4.1 percent growth, which was up slightly from 2010 levels
(4.0 percent), but remained far behind the growth of the other BRIC countries, India and China. Russia
is benefiting from rising commodity prices. Capital inflows, however, have not yet returned to pre-crisis
levels – primarily due to the prevailing political instability, which has a negative impact on investments
and consumer spending.
Following the recovery of the US economy in 2010, growth in 2011 was much weaker, with economic
output rising by only 1.8 percent compared to 3.0 percent in 2010. High levels of unemployment, a weak
real estate market, and high levels of private debt continue to have a negative impact.
The Latin American economy began to cool down somewhat in 2011, but, at 4.6 percent, growth was
still well above that of the industrialized countries. However in Brazil, the growth engine of Latin America,
economic output fell sharply and reached only 2.9 percent in 2011 compared to 7.5 percent in 2010.
Strong domestic demand and rising commodity prices, which also have a positive impact on other commodity exporters such as Argentina and Peru helped to drive this growth. In Argentina, growth declined
by 1.2 percentage points, although it still remains high at 8 percent. Mexico increased its economic output
by 4.1 percent. In some countries, particularly Argentina and Brazil, there has been a significant rise
in inflation.
As in 2010, Asian emerging economies continued to gather momentum in 2011. Due to high inflows
of capital and expansive lending, individual countries such as China had to implement capital tightening
measures to counter the threat of the economy overheating. This led to a slight weakening in growth.
In 2011, economic output grew by 7.9 percent, which was slightly weaker than in 2010 (9.5 percent),
albeit still at a very high level. China was out in front with a increase of 9.2 percent, followed by India
at 7.4 percent. In India, growth is driven primarily by consumer demand. For 2011, the high 10.6 percent
inflation rate was a critical issue. In Indonesia, the economy grew by 6.4 percent, representing a slight
increase year-on-year. The growth rate in Malaysia was 5.2 percent.
FINANCIAL STATEMENTS
In the Eastern European countries, growth remained strong at 4.3 percent in 2011. Turkey and Lithuania
saw the strongest increases in economic output at 6.6 percent and 6.0 percent respectively. Growth in
Poland also remained high at 3.8 percent.
44
Economic output in Japan declined by 0.9 percent in 2011. Following the positive growth of 4.4 percent
in 2010 – for the first time after two successive years of decline, the renewed downturn in 2011 was
primarily attributable to the earthquake and nuclear disaster that affected the country. These events resulted in many disruptions to manufacturing, which had a negative impact on economic output. Toward
the end of the year, however, the country was showing the first signs of a recovery.
Performance of the healthcare market
Like the global economy, performance of the global healthcare market varied greatly by region. While
the healthcare markets in emerging countries experienced strong growth due to rising population figures
and healthcare costs, growth was weaker in the industrialized countries. Some countries, particularly
in Southern Europe, even experienced stagnation whereas moderate growth was seen in other parts of
Europe and the US. The German healthcare market remained largely stable, while growth in the Asian
markets remained strong in 2011. Although per capita healthcare spending in countries such as China
and India remained low in 2011, the high growth rates are an indicator for the great potential within
the region.
In many industrialized countries, the healthcare markets began to be heavily impacted by public spending
cuts, such as the increase in compulsory discounts in Germany and Spain, for example. In both countries,
a reduction in reimbursements paid by health insurers for specific products also resulted in declining sales.
High receivables, especially in Southern European countries such as Spain, Portugal, and Italy, are
putting further pressure on the healthcare market. The increasing bureaucratization in approval processes is increasing the time to market for product innovations. In the US and China in particular,
obtaining regulatory approval is both a costly and time-consuming process.
In 2011, the significance of Asian suppliers grew, particularly due to advancements in product quality
and aggressive pricing strategies.
Business and earnings performance
Overall assessment by the Management Board
Performance of the B. Braun Group during the reporting year 2011 was not universally satisfactory. We
did, however, maintain our growth trend with sales increasing by 4.2 percent; an increase to which all
divisions contributed, despite the negative impact of foreign currency translation and extensive spending
cuts by public sector healthcare purchasers. In addition, earnings have been negatively affected by rising
commodity prices and start-up costs that regularly arise for new factories. EBITDA is therefore, slightly
below that of the previous year, meaning that we did not meet our earnings targets. However, the cost
reduction and process optimization projects introduced in 2011 were, by the end of the reporting year,
already beginning to have a positive impact on earnings.
Overall, the B. Braun Group is in good, stable financial condition. We are protecting the continued independence of the business by maintaining a high equity ratio.
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BUSINESS AND EARNINGS PERFORMANCE
Group Sales |
IN € B IL L I O N
5.0
4.42
4.0
3.57
3.79
4.61
4.03
3.0
2.0
1.0
2008
2009
2010
2011
Sales
In fiscal year 2011, sales of the B. Braun Group overall totaled € 4,609.4 million (previous year:
€ 4,422.8 million), representing a 4.2 percent increase compared to the strong previous year. While
sales in 2010 were boosted by positive currency effects, movements on foreign exchange markets
in the reporting year had a negative impact on sales, amounting to approximately € 46 million. Adjusted
for currency effects, sales grew by 5.3 percent.
Sales in the core business areas increased by 4.7 percent to € 2,587.2 million (previous year:
€ 2,471.0 million), which represented stronger growth than that experienced by the specific focus
business areas. Sales in the specific focus business areas rose by 3.6 percent to € 2,022.2 million
(previous year: € 1,951.6 million).
The biggest contributors to sales growth were our Aesculap and Hospital Care Divisions. Once again,
the Asia / Pacific regions (+ 12.2 percent) and Latin America (+ 5.0 percent) proved to be the growth
drivers for the Group. However, Europe (excluding Germany) also performed well with sales growth
of 5.4 percent. Growth in Germany was satisfactory (+ 4.2 percent) in the context of difficult market
conditions. In North America, however, which is an important region for B. Braun, sales in euro declined
by 3.4 percent, although in US dollars, sales increased by 1.3 percent.
Performance in the Hospital Care Division
Sales in the Hospital Care Division climbed 3.5 percent to € 2,159.4 million (previous year: € 2,086.7 million). Sales of products from the core business areas increased by 3.7 percent to € 1,311.5 million (previous year: € 1,264.2 million). Sales of products from the specific focus business areas rose by 3.1 percent
to € 848.0 million (previous year: € 822.6 million).
Important sales drivers included IV catheters (Introcan Safety® and Vasofix Safety® catheters) and
injectable medicines (Propofol-®Lipuro, Duplex®, and Heparin). Due to increased capacities, sales developed well within the core business areas of large-volume IV solutions and standard IV sets, as well
as regional anesthesia.
FINANCIAL STATEMENTS
2007
46
Major growth contributors for sales were the positive growth rates in China, India, and Russia, as well
as the other growth markets within Asia and Eastern Europe. We also succeeded in growing our market
share within Germany and our European OEM business. However, growth was more sluggish in the
countries of Southern and Western Europe (Spain, Italy, Greece, and Ireland) and in the US as they had
been hit particularly hard by the financial crisis.
Sales by division |
IN € MIL L I O N
2,500
2,087
2,000
2,159
1,904
1,500
1,153
1,281
1, 356
1,000
526
555
Hospital Care
20 0 9
2010
Aesculap
568
421
500
OPM
475
501
B. Braun Avitum
2011
Performance in the Aesculap Division
For fiscal year 2011, the Aesculap Division posted sales totaling € 1,355.8 million (previous year:
€ 1,281.1 million), representing a 5.8 percent increase year-on-year. Sales in the core business areas
increased by 8.3 percent to € 524.8 million (previous year: € 484.7 million). Sales of € 831.0 million
(previous year: € 796.4 million) were achieved in the specific focus business areas, an increase of
4.3 percent.
The division’s main growth drivers remained Surgical Technologies followed by Vascular Systems. Sales
of the drug-eluting balloon catheter product developed particularly well. The performance of Closure
Technologies was similarly positive, and project operations also contributed to sales growth. Orthopedics
and Spine, in contrast, showed relatively weak performance after strong growth in previous years.
The Asian markets in particular (China, India, Malaysia and Australia), as well as Germany and the US
contributed to the increases in sales. In Japan, moderate growth was achieved despite the natural and
nuclear disasters. Some European countries, such as Italy, Portugal, and Denmark, failed to achieve the
high sales levels of the previous year.
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BUSINESS AND EARNINGS PERFORMANCE
Performance in the Out Patient Market (OPM) Division
At 2.5 percent growth, the OPM Division achieved sales of € 568.4 million in the reporting year (previous
year: € 554.6 million). Growth in the core business areas was 2.2 percent, which was weaker than the
5.1 percent of the specific focus business areas. The core products achieved sales of € 513.2 million (previous year: € 502.1 million), and the specific focus products € 55.2 million compared to € 52.5 million in
the previous year. The compulsory discount in Germany, which led to a decline in sales, had a major impact.
Hygiene management, diabetes care, and incontinence care achieved above-average growth, which was
driven by positive development of the Eastern Europe market, in particular the Czech Republic, Bulgaria,
the Slovak Republic, and Russia. Satisfactory increases in sales were also achieved in Switzerland and
the US. The new company in China also began with good performance. In contrast, growth on the German,
French, Spanish, and Italian markets stagnated, largely as a result of cost reductions within the healthcare system and compulsory discounts.
In the 2011 reporting year, sales in the B. Braun Avitum Division grew by 5.4 percent to € 500.6 million
(previous year: € 474.8 million), driven primarily by the dialyzer and dialysis machine product groups.
The greatest increases were seen in China, France, and India, whereas performance in Germany was
slightly below that of the previous year.
Our dialysis provider business also developed well, seeing a satisfactory increase in patient numbers
particularly in India, South Africa, and Russia.
Development of functional expenses
Functional expenses rose 5.8 percent to € 1,688.0 million (previous year: € 1,595.9 million). To limit an
increase in general, administrative, and selling expenses, we implemented various cost reduction measures in the second half of 2011. General and administrative expenses developed in line with sales of
now € 230.9 million (previous year: € 221.6 million). As a result of the expansion of our sales structures
within the BRIC countries, in particular, selling expenses increased by 4.8 percent to € 1,277.2 million
(previous year: € 1,218.9 million). Once again, we significantly increased spending on research and development to € 179.9 million for the reporting year, representing an increase of 15.7 percent (previous
year: € 155.4 million).
Functional expenses |
IN € MIL L I O N
1,688
1,596
1,297
2007
1,366
1,432
116
208
130
205
139
202
973
1,031
1,091
2008
2009
2010
155
222
180
231
1,219
1,277 Selling Expenses
2011
Research and Development Expenses
General and Administrative Expenses
FINANCIAL STATEMENTS
Performance in the B. Braun Avitum Division
48
Research and development
Within the B. Braun Group, research and development activities are carried out at various Centers
of Excellence (CoEs) at which research, development, production, and marketing activities for specific
product groups are brought together, providing a forum for close collaboration.
The Hospital Care Division has set for itself the goal of simplifying processes in hospitals and further improving the safety of IV therapy. In this context, we are developing new needle-free systems for the
preparation and administration of medication as well as anti-microbial and additive-free materials. We
are also extending the PVC-free portfolio with functional coatings such as light protection, for example.
A drug identification system, based on a special spectroscopic method, should help minimize errors in
medication. The Ultraplex® product completes our ultrasound-guided peripheral nerve blocks portfolio.
At the same time, we are evaluating new ultrasound coatings in this field. In the pharma business area,
our focus is on the development of products for parenteral nutrition and various injectable medicines.
The research and development resources of the Aesculap Division are focused on endoscopy, orthopedics,
and regenerative biotechnology. AdTec® product range is our answer to the demand for miniaturized
instruments for ever smaller minimally invasive approaches, and we are also setting new benchmarks
in minimally invasive surgery with 3D visualization. In orthopedics, we are developing bone-preserving
hip endoprosthesis stems and knee systems (EnduRo) in particular, which can also be successfully used
for revision surgery. The field of regenerative biotechnology, which is of increasing importance, is another important focus of our research activities. For example, with Novocart® Inject, where the indication
is appropriate, cartilage defects can be biologically reconstructed purely by means of arthroscopy; and
with Novocart® Disc, partly damaged intervertebral discs can be biologically reconstructed following a
spinal disc herniation.
The focus in the Out Patient Market Division is on recent developments in the area of wound management. Prontosan® Acute Wound Gel, for instance, allows minor wounds to be treated effectively at home;
and Askina Calgitrol® antibacterial paste represents a completely new type of wound care, achieving
successful healing particularly in deeper, locally infected wounds.
The Actreen® HydroLite catheter represents the new addition to our Actreen® catheter product line.
The “HydroTonic Technology,” a mix of glycerin and water, activates the surface coating, ensuring
gentle application and effortless removal. The new Softima® Active stomacare pouch has already been
introduced in some European countries and will be available globally beginning in 2012. The new generation pouch protects the skin in a unique, flexible, and safe manner. The patented SkinTech® adhesion
area also adapts to every anatomical shape, meaning that even active patients can use the product
safely.
Research and development within the B. Braun Avitum Division is currently focused on the further development of equipment for long-term dialysis and acute dialysis applications. As part of this, we take
into account the requirements both of established markets and those of emerging markets. Our new
Dialog Plus dialysis machine, for example, is an optimized version of the previous model.
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BUSINESS AND EARNINGS PERFORMANCE
Other operating income and expenses
The balance of other operating income and expenses improved by € 10.8 million to € – 18.2 million (previous year: € – 29.0 million). Currency translation losses of € – 6.5 million remained close to the level of
the previous year (previous year: € – 6.2 million). In contrast, lower expenses related to our profit participation rights program and lower additions to provisions for litigation costs had a favorable effect.
Net financial income (loss)
In the reporting year, net financial loss declined by € 5.4 million to € – 72.0 million (previous year:
€ – 66.6 million). Interest expenses increased due to higher borrowing to € 49.5 million from € 48.4 million
in the previous year. At the same time, interest income declined € 0.9 million to € 3.7 million (previous
year: € 4.6 million). In addition, income from investments fell by € 2.6 million. The interest portion of
pension provisions amounted to € 29.5 million for the reporting year, compared to € 28.8 million in the
previous year.
At € 2,084.3 million, value added was 2.1 percent above the previous year (€ 2,041.2 million). The majority
of value added (64.5 percent compared to 63.1 percent in the previous year) was passed on to employees in the form of wages and salaries. Federal, state, and local government received social security
contributions and income taxes totaling € 357.5 million (previous year: € 355.7 million) or 17.2 percent
of value added (previous year: 17.4 percent). Lenders received € 49.3 million or 2.4 percent (previous year:
€ 47.2 million or 2.3 percent). An amount of € 208.9 million or 10.0 percent of value added (previous
year: € 241.1 million or 11.8 percent) was retained within the Group, providing the basis for our capital
investment plans.
Value added |
IN € MIL L I O N
4,609
Sales
Changes in Inventories
53
Business Performance
4,663
253
Depreciation & Amortization
1,714
Material Costs
612
Other Costs
2,084
Value Added
1,344
Wages and Salaries
253
Social Security Contributions
82
Pension Payments
Lenders
49
Income Taxes
104
Dividends
43
Retained Profit
209
FINANCIAL STATEMENTS
Statement of value added
50
Earnings performance
Gross profit was increased by 2.7 percent to € 2,138.3 million (previous year: € 2,081.1 million). At the
same time, the gross margin decreased by 0.7 percent to 46.4 percent (previous year: 47.1 percent).
Rising raw material and energy costs, as well as start-up expenses that are normally incurred when
putting new factories into operation influenced the gross margin in 2011. Gross profit was also negatively affected by foreign currency translation during the reporting year. In addition, gross earnings were
influenced by a product recall due to quality issues with 3-chamber bags for parenteral nutrition
(NuTRIflex®). EBIT declined 5.3 percent to € 432.2 million (previous year: € 456.2 million). A significant
increase in research and development spending (+ 15.7 percent) and increased selling expenses (+ 4.8 percent) prevented us from achieving the earnings performance seen in the previous year. Income tax
expenses were € 104.4 million (previous year: € 112.3 million) for the reporting period. The tax rate increased by 0.2 percentage points to 29.0 percent (previous year: 28.8 percent). Consolidated annual
net profit, which amounted to € 255.7 million, fell short of the previous year’s level (€ 277.4 million)
by 7.8 percent.
EBITDA failed to reach the high level of the previous year. A 1.7 percent decline resulted in EBITDA of
€ 688.5 million compared to € 700.5 million in the previous year. Accordingly, the EBITDA margin fell by
0.9 percentage points to 14.9 percent (previous year: 15.8 percent).
EBITDA | IN € MIL L I O N
800
700
688
2010
2011
620
600
536
546
2007
2008
400
200
2009
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51
FINANCIAL POSITION AND ASSETS
Financial position and assets
Investments
The continued high demand for B. Braun products requires us to further expand our production capacities.
The investment program begun in 2007, which is worth approximately € 1.4 billion, was completed in
2011. An additional investment program of € 1.6 billion, which commenced at the end of 2010, was continued in the reporting year. This investment program is expected to run until 2015 and will largely be
financed from operating cash flows.
Capacity expansions for production of Ecoflac® were successfully completed at the Rubí (Spain) and
São Gonçalo (Brazil) locations in 2011. The newly constructed facility for the IV systems production in
Hanoi (Vietnam) and our new facility for the manufacture of infusion pumps and dialysis machines
in Melsungen, Germany, have both been put into operation. The expansion and redesign of the Penang
(Malaysia) location continued and is expected to be completed in 2014. We also continued with the
project for the new generation of containers in Irvine (California, US). We are moving forward with construction of the Urinary Care Center of Excellence in France, which is due for completion at the end
of 2015. The capacity expansion of production in Glandorf (Germany) has been ongoing since December
2010 and is expected to be completed over the course of three years. At the Tuttlingen (Germany) location, construction of the forging, container, and power systems production facilities began in 2011.
In December 2011, we acquired a holding in CeGaT GmbH, headquartered in Tübingen, Germany, giving
us access to the rapidly growing market of genetic diagnostics.
Effective January 31 2012, we acquired Nutrichem Diät + Pharma GmbH and its subsidiaries. The
Nutrichem Group develops and produces medical nutrition solutions, as well as products for sports
nutrition and nutritional supplements.
Investments / Depreciation and Amortization |
IN € MIL L I O N
800
575
600
471
400
200
349
183
2007
IN V E S T MEN T S
541
455
198
2008
D EP R E C I AT I O N A ND A M O R T I Z AT I O N
209
2009
238
2010
253
2011
FINANCIAL STATEMENTS
Additions to plant, property and equipment as well as intangible assets totaled € 541.4 million (previous year: € 575.4 million). This was offset by depreciation and amortization of € 252.9 million (previous
year: € 238.2 million).
52
Cash flow
Operating cash flow was € 449.9 million (previous year: € 389.3 million), € 60.6 million higher than in the
previous year. This year-on-year increase in operating cash flow was attributable to a smaller increase in
trade receivables combined with a rise in trade accounts payable. Cash outflows1 from investing activities
were € 547.6 million (previous year: € 557.4 million). The sustained high level of investing activities
caused free cash flow to be at € – 97.7 million (previous year: € – 168.1 million). Borrowing was increased
to raise funds. In fiscal year 2011, net borrowing amounted to € 146.0 million, compared to € 181.6 million in the previous year. Cash and cash equivalents at year-end were up 31.9 percent to € 45.3 million
(previous year: € 34.4 million).
Structure of the Statement of Financial Position
As of December 31, 2011, total assets of the B. Braun Group rose to € 5,105.7 million (previous year:
€ 4,686.1 million). This corresponds to a rise of 9.0 percent and reflects an increase in working capital
and the fact that investments were higher than depreciation.
On the assets side, non-current assets rose by 10.7 percent to € 3,025.9 million (previous year: € 2,733.6
million). Ongoing investment in capacity expansion led to a 10.3 percent increase in property, plant and
equipment to € 2,541.7 million (previous year: € 2,305.0 million). Intangible assets (including goodwill)
grew by € 49.4 million to € 268.0 million (previous year: € 218.6 million).
Inventories increased 6.8 percent to € 833.4 million in the reporting year (previous year: € 780.0 million).
Trade receivables increased by 8.9 percent and, on the reporting date, were € 1,016.3 million (previous
year: € 933.5 million). Some of the receivables related to Italy, Portugal, and Spain. The strained budgetary
situation in these countries is continuing to impact the payment behavior of public sector healthcare
purchasers. We are aware of the associated risks and will prevent a further increase in receivables through
selectively choosing our customers in these countries, even if this will affect sales.
The liabilities side of the statement of financial position shows a significant increase in equity of
10.1 percent to € 2,183.5 million (previous year: € 1,984.0 million). We have further improved the equity
ratio to 42.8 percent (previous year: 42.3 percent) and are closing in on the target of 45 percent.
Provisions for pensions and similar obligations increased 3.9 percent to € 533.2 million (previous year:
€ 513.3 million). Our extensive investing activities and higher working capital meant that financial
debt had to be increased. Financial liabilities rose by € 168.3 million to € 1,401.7 million (previous year:
€ 1,233.4 million). At the same time, trade accounts payable increased by 1.4 percent and were € 219.7
million (previous year: € 216.8 million).
1
The difference between additions to property, plant and equipment and the cash outflow from investing activities was due to the timing of payments for investments and currency translation effects.
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FINANCIAL POSITION AND ASSETS
Structure of Statement of Financial Position: Assets |
IN € MIL L I O N
5,106
4,686
268
Intangible Assets
219
3,975
168
2,542 Property, Plant and Equipment
2,305
1,927
780
833
934
1,016 Trade Accounts Receivable
448
447
Inventories
709
381
2009
Other Assets
FINANCIAL STATEMENTS
790
2011
2010
Structure of Statement of Financial Position: Liabilities |
IN € MIL L I O N
5,106
4,686
3,975
2,184 Equity
1,984
1,620
1,402 Financial Liabilities
1,233
1,006
513
533
Pension Obligations
210
217
220
Trade Accounts Payable
647
739
767
Other Liabilities
492
2009
2010
2011
54
Financing
Financing strategy
B. Braun’s financing strategy ensures that all B. Braun companies are able to meet their financial obligations at all times. The objective is to optimize financing costs while keeping risk to a minimum, in order
to ensure sustainable growth.
At no time did the financial market crisis endanger the B. Braun Group. While the credit markets eased
in the first half of 2011, the worsening of the European financial crisis in the second half of 2011 and
the downgrading of the US credit rating led to a renewed general deterioration of conditions on the credit
markets. This did not, however, affect B. Braun’s ability to make its planned refinancing arrangements
at any time. As such, we believe our financial strategy is on the right course and see no need to alter it.
Debt financing activities are conducted only with banks considered reliable and the range of measures
includes syndicated and bilateral credit lines, corporate bonds, and an asset-backed securities (ABS)
program. As of the reporting date, B. Braun had unutilized, committed long-term credit lines totaling
€ 384.6 million (previous year: € 417.2 million). We exceeded all of the mandatory financial covenants
agreed with our banks.
Financial management
The B. Braun Group has a central treasury department based in Melsungen, Germany. It implements the
financial strategy approved by the Management Board, thereby managing the liquidity and financial
risks for the Group as a whole. Group treasury generally completes all external financing transactions,
but in exceptional cases it may be necessary due to legal restrictions for subsidiaries to find local solutions. To limit financing needs and to optimize the allocation of capital within the Group, cash pooling
is used to the extent the law allows.
Financing measures
The main funding measures undertaken in the reporting year included a bilateral fixed-interest loan of
over € 25 million maturing in 2015. In addition to this, corporate bonds amounting to € 150 million
have been issued. The bonds have terms of 5 years (€ 50 million), 7 years (€ 80 million), and 10 years
(€ 20 million).
Our asset-backed securities (ABS) program could be refinanced only partly via the commercial paper
market during the reporting year. However, use of a back-up liquidity line ensured that the program
could be refinanced at all times.
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PERSONNEL REPORT
Personnel report
On December 31, 2011, B. Braun had 43,676 employees globally (previous year: 41,322), a 5.7 percent
increase year on year. In Europe, excluding Germany, the number of employees increased by 4.3 percent
to 12,901 (previous year: 12,373). This increase was mainly due to recruitment for the new production
facilities and dialysis centers in Spain and Poland, as well as sales recruitment within Russia. The increase
in employee numbers in the production and logistics areas of the Hospital Care Division increased the
number of employees in Germany by 5.4 percent to 11,498 (previous year: 10.907). In the Asia / Pacific
region, 10,479 employees (previous year: 9,261) were employed by B. Braun at year-end. The 13.2 percent rise on the previous year is primarily linked to the acquisition of Oyster Medisafe Ltd. and the opening of new dialysis centers in India, the expansion of manufacturing in Malaysia, and the expansion of
the sales organization in China. Adjusted for consolidation effects arising from the acquisition in India,
the number of employees in the Asia / Pacific region increased by 9.5 percent. In North America, the
number of employees decreased by 1.4 percent to 5,411 (previous year: 5,486), while in Latin America, it
increased by 2.3 percent to 3,094 (previous year: 3,023). The number of employees also grew in Africa
to 293 (previous year: 272), which is a 7.7 percent increase year on year.
Location retention
The location retention agreements in Melsungen, Berlin, and Tuttlingen (all in Germany) have proved
an effective means of securing employment and improving competitiveness. The agreements also provide
for training under overtime conditions. New agreements have been in place in Melsungen and Berlin
since 2009, and in Tuttlingen since 2011, with all agreements in effect for five years. During this period,
each employee may be asked to work up to 104 additional hours per year so that the company can
respond flexibly and cost-effectively to market requirements. Employees share in the company’s success
based on the net profit achieved. No redundancy lay-offs are allowed for the term of the agreements.
Profit-sharing pay-outs depend on the number of hours worked by the individual employee and for
fiscal year 2011 could reach a maximum of € 936.00.
Digital Processes in Human Resource Management
B. Braun’s Global Job Market set a new international standard in recruitment in 2010. In 2011, we expanded the functions of the global e-recruitment system and enhanced the careers pages to give
candidates the opportunity to apply for internships and trainee positions online. We also introduced a
reporting system for monitoring the success of our recruiting efforts. Since 2011, applicants, managers
and human resources staff in Great Britain have now also been benefiting from the e-recruitment system,
and it will be rolled out to Brazil in the future.
Starting with a cross-divisional training concept, the SAP HR system will be made available to all large
B. Braun locations in the future. Self services have now also been introduced in Brazil and Malaysia for
managers and employees to reduce administrative work and support human resources processes digitally. Alongside time and attendance management processes, such as vacation requests, additional self
services are also being prepared for recording business trips, as well as for travel expenses and payroll.
FINANCIAL STATEMENTS
Number of employees
56
Vocational training
Well-trained and qualified junior employees are essential to assuring B. Braun’s future success.
Coinciding with the start of the 2011 training class, B. Braun dedicated one of the most state-of-the-art
training centers in Germany with a total area of over 2,500 square meters at its Melsungen location.
The most up-to-date technology, combined with advanced training concepts and an experienced team
of training instructors, enable the qualification and advancement of tomorrow’s employees. Thanks to
our new training center, we were able to increase the number of available technical trainee positions in
particular and intend to further increase this number again in the coming year.
210 (previous year: 214) graduates successfully completed their training at our German site and positions were offered to all of those who decided to pursue their professional career with B. Braun. In the
reporting year, we offered 254 (previous year: 225) trainee positions. Despite declining numbers of pupils,
all trainee positions were filled and the number of trainees was kept at a high level.
There are currently 726 (previous year: 699) young people undergoing training in Germany. The total
number increased by 3.9 percent in comparison with the previous year. 105 (previous year: 87) trainees
were following Germany’s dual system for vocational education. This corresponds to an increase of
20.7 percent. They combine their operational training with a period of study at a university or university of co-operative education.
With the goal of qualifying and training our own employees for our future business requirements, B. Braun
Vietnam Co. Ltd., in cooperation with Messer Haiphong Industrial Gases Co. Ltd. and other partners, has
created a dual vocational training concept for mechatronic engineers based on the German model. The
project is supported by the Vietnamese Ministries of Labor and of Education, the German Embassy in
Hanoi, the Hessian Ministry of Economics and the German Federal Ministry of Education and Research.
Continuing education
B. Braun’s continuing education and organizational development programs are designed to meet our
company’s needs, ensuring that participants become familiar with our culture and management model
so they can put our guiding principles and our Group strategy into practice.
The continuing education programs at B. Braun are consolidated under the umbrella of the “B. Braun
Business School.” Alongside product training, it also offers training to improve professional, personal,
and social skills. Other programs are focused specifically on managers, supporting them in their development on a global level and in a complex environment. The construction of the Kloster Haydau seminar
and conference center provides a new location to use for employee training and will open by the end
of 2012. The plan is to create a B. Braun campus that will serve as a central location for the continuing
education programs of an internationally oriented “B. Braun Business School.”
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PERSONNEL REPORT
The International Mobility project was expanded in 2011 to become an integrated talent management
process. The project recently involved 29 employees from the accounting and controlling departments,
who were prepared for international assignments at B. Braun in different countries. Talent management
is an open process aimed at employees who are to be developed to take over key positions at B. Braun
Group in the future. An additional focus for potential candidates is on apprentices, trainees, undergraduate and graduate students, as well as interns. This structured process identifies employees with an
international focus, who have the necessary intercultural competence and willingness to play an active
role in their own development. They receive individually designed personal development and training
plans. A key component of this process is to assume responsibility at a B. Braun location outside the
participant’s home country. In this way, talent management offers opportunities for development and
simultaneously ensures that international positions can be filled from within our own ranks in a timely
manner. An international database aims to achieve transparency regarding suitable candidates.
Overseas employee assignments
In 2011, the number of employees on international assignment increased to 189 (previous year: 183),
a year-on-year increase of 3.3 percent. Key locations for overseas assignments remain the US, Malaysia,
Vietnam, Great Britain, and, in 2011, increasingly also China. With its overseas assignments, B. Braun
promotes international knowledge transfer and supports the objectives of talent management, ensuring
the international competitiveness of the business.
Performance-related remuneration
B. Braun’s Incentive Plan has made participation in the company’s financial performance available to its
managers throughout the world since 2000. The initial program ran until 2009 and, due to the high
level of international acceptance, in 2010 it was extended. The Incentive Plan allows for the voluntary
purchase of profit participation rights. Their value depends on the development of the Group’s equity.
Profit participation rights that have been bought can be sold after a period of five years. Two years after
the original investment made by employees, the company offers an entitlement bonus of 25 percent
in the form of additionally assigned participation rights. In fiscal year 2011, 69,202 profit participation
rights were issued (previous year: 80,217). Of the 146 managers who were entitled to new rights in 2011,
60 percent (previous year: 63 percent) invested in B. Braun profit participation rights worth € 5.7 million
(previous year: € 5.0 million). As of December 31, 2011, a total of 701,123 profit participation rights
had been issued.
FINANCIAL STATEMENTS
B. Braun’s organizational development programs support all departments in change processes and help
them to manage these independently using company specific methods and tools. A holistic approach,
encompassing process management, change leadership, and communication in the change process,
ensures lasting success. In 2011, the B. Braun employee evaluation was developed at the Melsungen
location as a key aspect of this approach. For 2012, the plan is for an international working group to
adapt this evaluation for rollout to other locations. The main objectives of the employee evaluation are
recognition of the successes and strengths of the employees, as well as highlighting growth opportunities
and development plans. Oriented toward the specific requirements of the respective department, the entire program extends over a time period of three years. In 2011, greater use was also made of the Harrison
Assessment as a further employee development tool for determining preferences and strengths.
58
Thank you to our employees
Thanks to the hard work, dedication, and commitment of our employees, the B. Braun Group enjoyed
stable performance in 2011 despite the difficult economic environment. We would like to express our
sincere thanks for the contributions made by our employees upon whose knowledge and enthusiasm
we continue to rely on in the future. We would also like to thank the employee representatives and trade
unions for their cooperation, which is always fair and constructive.
Risk and opportunities report
Risk management and controlling
All key strategic and operational decisions at B. Braun are made taking into account the associated risks
and opportunities. We have a fundamentally cautious corporate strategy and avoid any uncontrollable
potential risks.
Risk management and controlling are key management tasks and an essential part of Group management.
The B. Braun Group’s comprehensive risk management ensures that different risks can be identified,
documented, assessed, monitored, and controlled. Risks resulting directly from business operations are
quickly identified and assessed in monthly reports using our systematic controlling processes, which
extend throughout the Group in all business areas, companies, and regions. We also identify and control
risks that do not result directly from business operations. The divisional and Group risk committees
assess these risks and document appropriate countermeasures. Our risk management is completed by
internal audit and the annual audit of financial statements.
Having its own captive reinsurance company, REVIUM Rückversicherung AG, brings B. Braun much
greater independence from the insurance market. The captive gives B. Braun direct access to the global
insurance market.
Once again, the Group was able to place its globally valid coverage amounts for public and products
liability insurance with the primary insurers. In 2011, REVIUM ’s earnings were significantly better than
in previous year as no additional loss events occurred.
The risk management system of REVIUM Rückversicherung AG is being strengthened by improved process
efficiency and transparency resulting from its implementation of the new organizational guideline on
the handling of potential product liability claims.
A feasibility study related to the Group’s property insurance contracts found that the transfer of property
insurance risks to the captive reduces earnings volatility. As a result, some of the Group’s property
insurance risks (excluding US risks) are to be transferred over to the reinsurance company owned by the
Group. Natural hazards on the other hand are still to be borne by the primary insurers in the customary
manner. The Management Board of B. Braun Melsungen AG approved these recommendations. Some parts
of the Group’s property insurance risk have already been transferred to the captive as of January 1, 2012.
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RISK AND OPPORTUNITIES REPORT
Risk position
The risks described below, which could have an impact on B. Braun, do not form an exhaustive list of all
the risks to which B. Braun is exposed or may be exposed. Risks that are not known or that are considered
to be immaterial at the time this annual report was compiled may have an effect on the earnings and
financial position of the B. Braun Group.
Macroeconomic risk
Industry risk
The healthcare market remains largely immune to economic fluctuations. In consequence, the development of our disposable goods business is generally not greatly dependent on macroeconomic trends. In
contrast, the capital goods produced by B. Braun are cyclical. There is generally also a dependence on
economic growth where patients have to pay for healthcare services themselves.
The healthcare market is, however, starting to feel increasingly negative effects of the global economic
crisis and, as a result, its dependence on economic trends is growing. To reduce the, in some cases
substantial, public deficits, compulsory discounts were introduced or increased and budget cuts were
implemented. This is compounded by the fact that some countries are also greatly extending payment periods.
Overall, the structural risks for businesses operating within the healthcare market have increased.
At least mid-term, we expect these risks to remain at an elevated level.
Increased formalization of the international product approval process is also evident, which means
higher costs for B. Braun. Longer processing times and more extensive requirements for documentation
and studies can delay and increase the cost of product launches.
On the demand side, the creation of group purchasing organizations to bundle purchasing volumes is
strengthening the market power of customers and in turn increasing the risk of further price pressure.
In addition, we have observed in some countries that the entire volume of a tender is awarded as a solesource contract to the winning bidder, thereby eliminating other suppliers from the market.
FINANCIAL STATEMENTS
Having nearly recovered from the financial and economic crisis in 2010, the global economy once again
took a turn for the worse in 2011. The far-reaching consolidation measures of peripheral euro area
countries in particular may continue to hamper further economic progress. There is prevailing uncertainty
over the scope of the spending cuts in Italy, Portugal, and Spain, as well as further measures in Greece,
for instance. The continuing weak real estate market and high consumer debt in the US present further
risks to the global economy. Ongoing political instability in North Africa also serves to compound uncertainties about economic growth. Growth in emerging economies, specifically Asia, is an important
component for the global economy. A cooling of the Chinese economy, for example, would have a major
impact on the global economy.
60
Procurement risk
Procurement market risk is the threat of a shortage or increase in the cost of raw materials and supplies
necessary for production, including energy. B. Braun has, where possible, secured the supply of materials
necessary for production through long-term contracts. Procurement strategies for products to be purchased are reviewed on an ongoing basis and adjusted to market requirements. We regularly analyze potential procurement risk, and ideally reduce it by identifying alternative suppliers. We regard the general
risks in relation to supply as low, but the price risks as relatively high.
Product risk
We counter the risk of interactions and side effects in infusion therapy, drug admixture, and orthopedics
using highly developed quality management systems at our manufacturing facilities. These are modeled
on international standards and assure that all regulatory requirements are observed. Regular reviews of
our quality management systems utilizing internal and external audits, together with ongoing employee
training, complement our quality management. There are no risks arising from ongoing legal actions that
could jeopardize the company’s continued existence.
Staffing risk
Demographic change represents the biggest challenge to human resources, giving rise to potential skills
shortages and a lack of qualified personnel, and problems in filling management positions. B. Braun is
pursuing a number of measures to counter this risk and optimize its perceived attractiveness as an employer. Through personnel development programs, B. Braun strives to encourage employee loyalty from
an early stage and promote identification with the company. The aim is also to minimize turnover risk
and threat of knowledge drain. Key aspects of B. Braun’s staffing strategy include, for example, initiatives to improve the work-life balance of employees, staff training, continuing education, and performance-based pay.
Information technology (IT) risk
Important business processes rely on IT systems. A failure of essential IT systems or a large-scale loss
of data could lead to serious disruption to business operations, even in manufacturing. Our continued
investment in IT infrastructure and a redundant system architecture helps to minimize this risk. Other
measures to reduce risk include regular data backups and employee training. A coordinated user access
concept helps to protect against data misuse and its compliance is monitored by internal audit. Our
systems are also protected by robust anti-malware programs.
Financial risk
B. Braun operates internationally and is therefore exposed to currency risk, which it hedges using marketable financial instruments. We pursue a rule-based strategy known as “layered hedging,” which allows
us to achieve coverage of average rates for the period of our hedging horizon and reduce the effects of
currency translation on the Group’s net profit. Trading and management of derivative financial instruments are regulated by internal guidelines and are subject to continuous risk control. By derivatives, we
refer only to marketable hedging instruments taken out with banks that have to date proven to be reliable partners.
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RISK AND OPPORTUNITIES REPORT
Payer swaps are used at times for variable-rate bank loans to minimize interest rate risk.
Due to the continuing sovereign and banking crises in conjunction with the discussion of higher core
capital ratios for banks, it is possible that the availability of financial resources may be restricted in
the future. We reduce this risk through the existence of additional credit lines, which we are not currently utilizing, and remain capable of acting even with upcoming refinancing.
There is also the risk of a possible deterioration in the payment performance of our customers or public
sector purchasers. Limited financing options can have a negative impact on liquidity and therefore on
our customers’ ability to pay. There is also a risk that our suppliers’ liquidity position could be so strained
that it could, in the worst case, threaten their viability.
In addition to risk, B. Braun regularly identifies and assesses opportunities for the company. Opportunities
can generally arise from the refinement of medical standards, or the launch of new products. Through
close dialog with the users of our products, and thanks to the integrated research and development
activities at our centers of excellence (CoEs), we will continue to respond rapidly to opportunities
and in addition create new sales potential.
Capacity expansion enables us to participate in the growing demand for healthcare and medical
technology products. The new, highly innovative production processes are continuing to improve our
competitiveness.
From a regional perspective, Asia, Latin America, and Russia offer the greatest growth opportunities.
Because we adopted an internationalized approach at a very early stage, we already operate in many
of these markets through our own subsidiaries and are able to capitalize on sales opportunities as they
arise. The planned capital investments in these regions will help secure B. Braun’s future.
Overall statement on the Group’s risk and opportunity situation
From today’s viewpoint, no risks or dependencies are identifiable that could threaten the viability of the
B. Braun Group for the foreseeable future. As far as possible and appropriate, we have insured ourselves
against liability risks and natural hazards, as well as other risks.
Despite high liability coverage, it is not feasible to fully insure every potential risk related to product
liability. However, in general, we are confident that the continuing market risk will not have a negative
effect on the B. Braun Group’s performance. Offsetting these market risks are significant opportunities
that may enable successful performance on the part of the company.
FINANCIAL STATEMENTS
Opportunities for B. Braun
62
Subsequent events
No events occurred between the end of the fiscal year and the date on which the consolidated financial
statements were compiled that could have a material effect on the results of operations, financial position
or net assets for the fiscal year 2011.
Outlook
Forward-looking statements
The following remarks on economic and company performance are forward-looking statements. Actual
results may therefore be materially different (positively or negatively) from the expectations of future
developments.
Group strategy
We remain committed to the core principles of the current Group strategy carried forward for the period
to 2014 and, therefore, no significant changes in strategy are necessary at the present time.
Economic outlook 2
For 2012, the IMF expects a 3.3 percent increase in global economic output. The growth rate has been
adjusted down by 0.7 percentage points from the September forecast. The resolution of the debt crisis
in Europe and the US will be essential for the future, as well as the strength of economic expansion
in the emerging economies, and particularly in China. A possible break-up of the euro area has not been
taken into consideration in the forecasts and could lead to another recession in 2012. It is expected
that public demand will decline due to the end of the government economic packages and greater
consolidation efforts. Sustained economic uncertainty and high unemployment in some countries are
also negatively affecting consumer demand.
According to estimates, global trade is set to grow by 3.8 percent, which is weaker than in 2011 (6.9 percent). After commodity prices rose in 2011, slightly decreasing prices for oil and other commodities are
expected in 2012. The inflation rate will be slightly regressive in the industrialized countries, and be
around the 1.6 percent mark. In emerging and developing countries, a declining inflation rate is also
expected, although it should remain at high levels (average 6.2 percent).
Furthermore, there could be frictions in the international currency network, as the US, in particular,
still considers the Chinese currency to be undervalued. A potentially stronger appreciation of the renminbi
could negatively impact Chinese exports. The effect this would have on the global economy is uncertain.
2
Source: International Monetary Fund: World Economic Outlook, Update January 2012.
MANAGEMENT BOARD
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SUBSEQUENT EVENTS
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CONSOLIDATED FINANCIAL STATEMENT S
63
OUTLOOK
Growth in Europe within 2012 is expected to remain heterogeneous. The forecasts are highly uncertain
however. The resolution of the debt crisis is essential. A failure to resolve the debt crisis for a prolonged
period and the onset of refinancing difficulties on the international capital markets for other euro area
countries would render current forecasts invalid and potentially result in much weaker performance.
A 0.5 percent decline in economic output is expected for the entire euro area. Significantly stronger
growth is forecast for the Eastern European countries. Furthermore, Turkey (2.2 percent), Poland (3.0 percent), and Sweden (3.8 percent) are anticipated to experience above-average growth. Economic growth
in Ireland (1.5 percent) and Switzerland (1.4 percent), on the other hand, is likely to be weak. A decline
in economic output is expected in Greece (– 2.0 percent), Portugal (– 1.8 percent), and Spain (– 1.7 percent) respectively.
The Russian economy will have lower growth than in 2011 with an expected increase of 3.3 percent,
driven primarily by commodity prices, which, while falling slightly, will still remain at high levels.
Investments in Russia may be affected by the election and uncertainties regarding future prospects.
In 2012, the US economy is expected to see an increase in economic output of 1.8 percent, which is the
same rate as in 2011. Domestic demand will remain weak due to high unemployment, the persistently
weak real estate market, and high levels of private debt. Due to declining growth in Latin America and
Europe, it is unlikely that exports can offset the demand gap. Additional uncertainties associated with
the presidential election in 2012 could negatively impact the investment climate.
A 1.0 percentage point decline in growth to 3.6 percent is expected in Latin America in 2012. Brazil will
develop on a relatively stable course with an increase in economic output of 3.0 percent. Argentinean
growth will, however, decline further and only be around 4.6 percent, whereas Mexico will remain almost
at the same level of the previous year at 3.5 percent. The moderate development in Latin America is
likely to be driven primarily by high commodity prices.
For the Asian emerging and developing economies, the IMF expects an increase in economic output of
7.3 percent in 2012. Risks include further developments within the US and the euro area, which are
important trading partners. In addition, a further tightening of capital is expected in order to limit an
overheating of the economy and a further increase in inflation, especially in China. Domestic demand
will represent a major driver for growth, which is likely to reach 8.2 percent for China. Growth in India
is likely to continue on a stable course, at around 7.0 percent. A modest increase of 1.7 percent is
expected for Japan after a decline due to the natural disasters in 2011. In Indonesia and Malaysia, growth
will be similar to the previous year at 6.3 percent and 5.1 percent respectively. Higher growth rates are
expected for Thailand and Vietnam.
FINANCIAL STATEMENTS
The IMF estimates that growth in Germany will be much slower than in 2011, with a 0.3 percent increase
in economic output. Earlier forecasts were based on a much stronger growth rate and were then substantially revised downwards. Particularly the European debt crisis and the global economic downturn
may mean greater risks for Germany as an exporting nation. However, slight increases in domestic
demand are expected. A relatively stable labor market is expected in 2012. All in all, considerable uncertainty prevails concerning future growth.
64
Outlook for the healthcare market
The healthcare market will, overall, continue to grow. The increases will not, however, be distributed
evenly and will depend on different factors in the individual regions.
In emerging countries, a further increase in healthcare spending is expected. More people will have
access to medical treatment due to population growth, rising wealth, and the expansion of social security
systems. Demand for higher quality healthcare services will grow as incomes continue to rise. Population
growth in the industrialized countries will decline or stagnate. An aging population and the associated
increase in morbidity will be the main growth drivers within the healthcare market.
In industrialized countries, sales growth with existing B. Braun products may result from growing demand due to increased morbidity. In emerging countries, sales growth may result from more patients
having access to healthcare. Sales growth with product innovations and product differentiation may result from rising wealth in emerging countries. In the industrialized countries the change in demographics
and increasing expectations of remaining fit and active throughout retirement will drive demand for
innovative medical products.
Overall, the US and European healthcare markets will be shaped by price regulations such as compulsory
discounts to help balance government budgets and relieve social insurance systems. Companies that
are able to cut manufacturing costs, process costs in particular, will remain ahead of the competition.
Safety products will be another growth area. According to an EU Directive, member states must implement measures to reduce the risk of injury due to needles and other sharp objects. This Directive must
be legally implemented in all EU member states by January 2013. This is expected to provide a strong impetus for safety products. The safety risk due to needle-stick injuries or cuts is also increasingly a subject
for discussion in other countries.
Competitors from Asia are expected to get stronger as their quality levels will further approximate
those of Western manufacturers, but at a lower cost. As a consequence of progressing globalization,
increasingly transparent prices are also expected, which, coupled with the professionalization of purchasing, may also lead to a decline in prices and therefore margins.
Development of the German healthcare market is expected to be weak with cost pressures remaining
high. Growth is anticipated specifically in orthopedics / implants and needles / catheters with slight growth
in cardiology.
Growth within the European healthcare markets is also expected to be weak. It remains to be seen how
the further course of the debt crisis will affect healthcare systems. Alongside Greece, Italy was also greatly
affected by the debt crisis. Extensive cost reduction measures were implemented under pressure from
the financial markets, which may also affect the healthcare market. A slight decline is expected in Spain
and France. Prospects for the Eastern European healthcare markets look significantly better, particularly in Poland and Russia. Positive growth is expected within the areas of wound closure, orthopedics /
implants, and needles / catheters.
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
65
OUTLOOK
Moderate growth is expected for Latin America and in particular Brazil. Due to positive economic development, it can be assumed that the demand for medical products will increase further. Due to increasing
incomes, many Brazilians are investing in additional private insurance. As a result, more people have
access to higher quality healthcare and many hospitals are improving their services accordingly. Significantly higher sales figures are forecast for the areas of wound closure, needles / catheters, orthopedics /
implants, and cardiology.
Strong growth is expected within the Asian healthcare markets, excluding Japan, which should see
only moderate growth. Specific areas, such as orthopedics / implants, are on the other hand, anticipated
to grow at an above-average rate due to the aging population. Significant growth is expected in India.
Strong impetus for growth is expected, in particular, in the areas of wound closure, needles / catheters,
orthopedics / implants, and cardiology. The Chinese market is expected to outperform the market in
India. In China, the government is increasingly focusing on the country’s interior. This region is being
massively subsidized by the government in order to reduce social inequality. Among other measures,
2,000 hospitals are to be improved to above-average standards. In addition, improvement and expansion of the health insurance system is planned. This will lead to a significant rise in the number of
potential customers.
Business and earnings outlook
We anticipate an increase in Group sales of between five and six percent in the 2012 fiscal year. Capacity
expansion and continued further development of our products enable us to participate in a growing
healthcare market. Within this, we expect to see the strongest growth in Asia and Latin America. We are
expecting a moderate increase in sales in North America and Europe. Risks from macroeconomic trends
remain. Significant levels of public debt in Europe (particularly Greece, Italy, Spain, and Portugal) and the
US could have a negative impact on the healthcare markets. We cannot rule out the possibility that
further cost reduction measures could be implemented that could negatively affect suppliers of healthcare products and services.
FINANCIAL STATEMENTS
Moderate growth is expected for the North American healthcare market. However, this development
is dependent on the concrete structure and implementation of the Patient Protection and Affordable
Care Act health reform. Law suits against the act are currently pending in the Supreme Court. A decision
is not expected before mid-2012. Should the law be deemed constitutional, positive effects on demand
are expected due to increased insurance coverage. It could also, however, result in greater price pressures
due to resulting improvements in the cost efficiency of the healthcare system. The growth of the healthcare market also greatly depends on the size of the planned cost reductions, which were agreed upon
in the process of raising the debt ceiling. The area of orthopedics / implants is expected to be a growth
segment, with high rates of increase anticipated. The area of wound closure is also likely to develop
strongly.
66
With regards to earnings, we expect to get back on our usual growth course despite the increasingly
difficult market environment. The cost reduction measures introduced in 2011 and fewer one-time effects
will enable an improvement of EBITDA .
All in all, we believe it is highly likely that the B. Braun Group will deliver sales and earnings growth
in line with forecasts over the next few years. In the event of payment defaults by governmental healthcare systems and far-reaching cuts in healthcare budgets, however, growth rates could be lower.
Expected financial and asset position
In the future, B. Braun will continue to pursue the solid fiscal policies of recent years. The basis for the
future financing of the Group remains a target equity ratio of approximately 45 percent combined with
a steady dividend policy.
Our long-term refinancing volume is € 279.2 million for the next year and € 203.7 million in 2013.
We have already begun to further optimize the maturity structure of non-current financial liabilities in
2011. The objective is to prevent refinancing peaks in individual years and to establish terms beyond
2015 at acceptable conditions. We expect no significant risks in pending financing measures due to
our banking relationships, which have grown over many years, and the lasting profitability of B. Braun.
A deterioration in lending conditions due to the ongoing difficulties with regards to banks and public
budgets could make refinancing for B. Braun more difficult and, in particular, more expensive.
The planned capital investments over the next few years will be largely funded by operating cash flow.
A moderate increase in borrowing may therefore be necessary. Systematic use of our cash pooling
system will enable us to continue to ensure optimum cash allocation within the Group in the future. In
addition, the ongoing Group-wide projects related to inventory and receivables management will have
a lasting effect on limiting our financing requirements.
Overall statement on the outlook for the Group
The B. Braun Group will be able to maintain the sales growth of recent years in the future. Through
innovative products, state-of-the-art production facilities, and close proximity to our customers, we
will be able to expand our existing market shares and capitalize on market opportunities. We are also
confident that our earnings growth rates will return to previous levels. The dialog between our employees,
clinicians and patients will continue to be the basis of our future success.
FINANCIAL STATEMENTS
C O N S O L I D AT E D S TAT E M E N T O F I N C O M E ( L O S S )
70
C O N S O L I D AT E D S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E ( L O S S )
70
C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N
71
C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
72
C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
74
NOTES
75
ACCOUNTING POLICIES
87
N O T E S T O T H E C O N S O L I D AT E D S TAT E M E N T O F I N C O M E ( L O S S )
94
N O T E S T O T H E C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N
10 3
A D D I T I O N A L I N F O R M AT I O N
12 8
N O T E S T O T H E C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
13 5
INDEPENDENT AUDITORS’ REPORT
137
MA JOR SHAREHOLDINGS
13 8
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
70
CONSOLIDATED STATEMENT OF INCOME (LOSS)
Notes
2011
€ ’000
2010
€ ’000
Sales
1)
4,609,439
4,422,813
Cost of Goods Sold
2)
– 2,471,158
– 2,341,680
2,138,281
2,081,133
3)
– 1,277,175
– 1,218,889
– 230,907
– 221,641
– 179,871
– 155,406
450,328
485,197
Gross Profit
Selling Expenses
General and Administrative Expenses
Research and Development Expenses
4)
Interim Profit
Other Operating Income
5)
204,261
231,873
Other Operating Expenses
6)
– 222,419
– 260,895
432,170
456,175
3,312
3,902
Operating Profit
Income from Financial Investments/Equity Method
7)
Financial Income
Financial Expenses
3,691
4,606
– 78,979
– 77,192
– 72,586
Net Financial Income (Loss)
8)
– 75,288
Other Financial Income (Loss)
9)
– 34
2,127
360,160
389,618
Profit before Taxes
Income Taxes
– 104,436
– 112,255
Consolidated Annual Net Profit
10)
255,724
277,363
Attributable to:
B. Braun Melsungen AG Shareholders
237,198
257,452
Non-controlling Interests
Earnings per Share (in €) for B. Braun Melsungen AG Shareholders
in the Fiscal Year (Diluted and Undiluted)
11)
18,526
19,911
255,724
277,363
12.22
13.27
2011
€ ’000
2010
€ ’000
255,724
277,363
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME (LOSS)
Consolidated Annual Net Profit
Changes in Fair Value of Securities
Changes in Fair Value of Financial Derivatives
Changes due to Currency Translation
15
– 14
– 12,932
3,551
4,041
131,214
– 8,876
134,751
Comprehensive Income over the Period
246,848
412,114
Attributable to: B. Braun Melsungen AG Shareholders
227,408
374,997
19,440
37,117
Changes Recognized Directly in Equity (after Taxes)
Non-controlling Interests
MANAGEMENT BOARD
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GROUP MANAGEMENT REPORT
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71
CONSOLIDATED FINANCIAL STATEMENT S
CONSOLIDATED STATEMENT OF INCOME (LOSS)
|
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME (LOSS)
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Assets
Non-current Assets
Intangible Assets
Property, Plant and Equipment
Financial Investments / Equity Method
Other Financial Investments
of which Financial Assets
Trade Receivables
Other Assets
of which Financial Assets
Income Tax Receivable
Deferred Tax Assets
Current Assets
Inventories
Trade Receivables
Other Assets
of which Financial Assets
Income Tax Receivable
Cash and Cash Equivalents
Total Assets
Equity
Subscribed Capital
Capital Reserves and Retained Earnings
Effects of Foreign Currency Translation
Equity Attributable to B. Braun Melsungen AG Shareholders
Non-controlling Interests
Total Equity
Liabilities
Non-current Liabilities
Provisions for Pensions and Similar Obligations
Other Provisions
Financial Liabilities
Trade Accounts Payable
Other Liabilities
of which Financial Liabilities
Deferred Tax Liabilities
Current Liabilities
Other Provisions
Financial Liabilities
Trade Accounts Payable
Other Liabilities
of which Financial Liabilities
Current Income Tax Liabilities
Total Liabilities
Total Equity and Liabilities
Notes
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
14) 16)
15) 16)
17)
17)
267,968
2,541,690
38,980
38,936
38,936
3,972
35,815
32,316
2,166
96,328
3,025,855
218,642
2,305,032
28,545
22,009
22,009
5,159
49,398
45,672
2,990
101,814
2,733,589
833,401
1,012,321
152,713
82,928
36,030
45,340
2,079,805
5,105,660
780,022
928,384
159,047
86,965
50,663
34,369
1,952,485
4,686,074
600,000
1,424,505
4,958
2,029,463
154,069
2,183,532
600,000
1,227,315
1,873
1,829,188
154,839
1,984,027
25)
26)
27)
29)
29)
533,198
70,100
698,979
956
27,512
19,951
97,412
1,428,157
513,328
76,719
791,961
1,059
10,712
6,016
79,525
1,473,304
26)
27)
29)
29)
35,928
702,690
218,743
490,801
195,423
45,809
1,493,971
2,922,128
5,105,660
31,754
441,488
215,698
471,685
180,071
68,118
1,228,743
2,702,047
4,686,074
18)
19)
20)
18)
19)
21)
22)
23)
24)
72
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
see Notes 22 – 24
January 1, 2010
Effect of a Change in Accounting Policies (IAS 8) from January 1, 2010
Dividend of B. Braun Melsungen AG
Subscribed
Capital
Capital
Reserves
€ ’000
€ ’000
400,000
10,226
0
0
0
0
200,000
0
0
0
Changes in Fair Value of Securities
0
0
Changes in Fair Value of Financial Derivatives
0
0
Changes due to Currency Translation
0
0
Comprehensive Income over the Period
0
0
Other Changes
0
0
600,000
10,226
Dividend of B. Braun Melsungen AG
0
0
Increase in Subscribed Capital
0
0
Consolidated Annual Net Profit
0
0
Changes in Fair Value of Securities
0
0
Changes in Fair Value of Financial Derivatives
0
0
Changes due to Currency Translation
0
0
Comprehensive Income over the Period
0
0
Other Changes
0
0
600,000
10,226
Increase in Subscribed Capital
Consolidated Annual Net Profit
Changes recognized directly in Equity (after Taxes)
December 31, 2010 / January 1, 2011
Changes recognized directly in Equity (after Taxes)
December 31, 2011
MANAGEMENT BOARD
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JOURNAL
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CONSOLIDATED FINANCIAL STATEMENT S
73
CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y
Retained
Earnings
Other
Reserves
Own
Shares
Equity
attributable
to B. Braun
Melsungen AG
Shareholders
Noncontrolling
Interests
Equity
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
1,196,434
– 113,241
0
1,493,419
126,617
1,620,036
– 13,845
0
0
– 13,845
0
– 13,845
– 24,000
– 24,000
0
0
– 24,000
0
– 200,000
0
0
0
0
0
257,452
0
0
257,452
19,911
277,363
0
– 22
0
– 22
8
– 14
0
3,403
0
3,403
148
3,551
0
114,164
0
114,164
17,050
131,214
257,452
117,545
0
374,997
37,117
412,114
– 1,383
0
0
– 1,383
– 8,895
– 10,278
1,214,658
4,304
0
1,829,188
154,839
1,984,027
– 24,000
0
0
– 24,000
0
– 24,000
0
0
0
0
0
0
237,198
0
0
237,198
18,526
255,724
0
11
0
11
4
15
0
– 12,885
0
– 12,885
– 47
– 12,932
0
3,084
0
3,084
957
4,041
237,198
– 9,790
0
227,408
19,440
246,848
– 3,133
0
0
– 3,133
– 20,210
– 23,343
1,424,723
– 5,486
0
2,029,463
154,069
2,183,532
74
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes
2011
€ ’000
2010
€ ’000
Operating Profit
432,170
456,175
Income Tax Paid
– 83,787
– 90,289
Depreciation and Amortization of Property, Plant and Equipment
and Intangible Assets (Net of Appreciation)
252,861
238,220
13,579
26,211
Change in Non-current Provisions
Interest Received and Other Financial Income
2,788
5,328
Interest Paid and Other Financial Expenditure
– 42,928
– 43,688
Other Non-cash Income and Expenses
– 35,090
– 30,467
Gain / Loss on the Disposal of Property, Plant and Equipment
and Intangible Assets
Gross Cash Flow
34)
3,817
1,525
543,410
563,015
Change in Inventories
– 52,184
– 29,805
Change in Receivables and Other Assets
– 79,012
– 143,540
Change in Liabilities, Current Provisions and Other Liabilities
(excluding Financial Liabilities)
Cash Flow from Operating Activities (Net Cash Flow)
34)
Investments in Property, Plant and Equipment and Intangible Assets
Investments in Financial Assets
Acquisitions of Subsidiaries, Net of Cash Acquired
Proceeds from Sale of Subsidiaries and Holdings
Proceeds from Sale of Property, Plant and Equipment, Intangible Assets
and Other Financial Assets
Dividends Received
Cash Flow from Investing Activities
35)
Free Cash Flow
Capital Contributions
37,644
– 337
449,858
389,333
– 547,424
– 549,748
– 10,130
– 10,413
– 7,658
– 12,290
761
911
15,927
10,732
943
3,403
– 547,581
– 557,405
– 97,723
– 168,072
2,231
0
Dividends paid to B. Braun Melsungen AG Shareholders
– 24,000
– 24,000
Dividends paid to Non-controlling Interests
– 19,399
– 6,235
Capital Contributions by Non-controlling Interests
Deposits and Repayments for Profit participation Rights
Loans
Loan Repayments
Cash Flow from Financing Activities
36)
0
986
3,457
3,198
252,195
324,611
– 106,160
– 143,052
108,324
155,508
Change in Cash and Cash Equivalents from Business Operations
10,601
– 12,564
Cash and Cash Equivalents at the Start of the Year
34,369
48,756
370
– 1,823
45,340
34,369
Exchange Gains (Losses) on Cash and Cash Equivalents
Cash and Cash Equivalents at Year End
37)
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75
CONSOLIDATED FINANCIAL STATEMENT S
CONSOLIDATED STATEMENT OF C A SH FLOWS
NOTES
NOTES
General Information
The consolidated financial statements of B. Braun Melsungen AG – hereinafter also referred to as the B. Braun
Group – as of December 31, 2011 have been prepared in compliance with Section 315 a (3) of the German
Commercial Code (HGB) according to the International Financial Reporting Standards (IFRS) applicable as of the
reporting date published by the International Accounting Standards Board (IASB), London, as well as the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as stipulated by the
EU, and have been published in the online edition of the German Federal Gazette (Bundesanzeiger).
B. Braun Melsungen AG is a globally engaged family owned company headquartered in Melsungen, Germany.
The company’s address is Carl-Braun-Straße 1, 34212 Melsungen, Germany.
B. Braun Holding GmbH & Co. KG is the parent company of B. Braun Melsungen AG as defined in Section 290 (1) HGB,
and as the parent company is required to produce consolidated financial statements that include the consolidated
financial statements of B. Braun Melsungen AG.
B. Braun Melsungen AG and its subsidiaries manufacture, market, and sell a broad array of healthcare products
and services for intensive care units, anesthesia and emergency care, extracorporeal blood treatment, and surgical
core procedures. The major manufacturing facilities are located in the EU, Switzerland, the USA , Brazil, Vietnam and
Malaysia. The company distributes its products via a worldwide network of subsidiaries and associated companies.
The Management Board of B. Braun Melsungen AG approved the consolidated financial statements for submission
to the company’s Supervisory Board on February 22, 2012.
The consolidated financial statements have been prepared based on historical costs, except for available-for-sale
financial assets and financial assets / liabilities including derivative financial instruments measured at fair value
through profit and loss. Unless otherwise indicated, the accounting policies were used consistently for all periods
referred to in this report.
In the statement of financial position, the distinction is made between current and non-current assets and liabilities.
The statement of income is presented using the cost-of-sales method. Using this format, net sales are compared to
expenses incurred to generate these sales, classified by the expense categories Cost of Goods Sold, Selling, General
and Administrative, and Research and Development. To improve the informational content of the consolidated
statement of financial position and consolidated statement of income, further details on individual entries have
been provided in the Notes to the consolidated financial statements. The consolidated financial statements have
been prepared in euro. Unless otherwise stated, all figures are presented in thousands of euro (€ ’000).
The financial statements of B. Braun Melsungen AG and its subsidiaries included in the consolidated financial
statements have been prepared using standardized Group accounting policies.
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New and amended International Financial Reporting Standards and Interpretations whose application is
mandatory for fiscal years beginning on or after February 1, 2010 (IAS 8. 28)
Amendment to IAS 32: Financial Instruments: Representation
The amendment to IAS 32 governs the accounting treatment of rights issues, options, or warrants on a fixed
number of own shares in any currency other than the functional currency. Previously, such rights were treated as
derivative liabilities. Such rights will now be classified as equity under certain conditions. B. Braun has not granted
any subscription rights, options or warrants on its own shares in the past. This is also not planned for the future.
This provision is therefore not relevant to the B. Braun Group at this time.
New and amended International Financial Reporting Standards and Interpretations whose application is
mandatory for fiscal years beginning on or after July 1, 2010 (IAS 8. 28)
Amendment to IFRS 1: Initial application of the International Financial Reporting Standards
The amendment to IFRS 1 enables first-time adopters of IFRS to apply the transition provisions of IFRS 7, Financial
Instruments: Disclosures, for the disclosures newly added in March 2009. As such, the obligation to provide
comparative information for the disclosures required by IFRS 7 for any annual comparative periods ending before
December 31, 2009, no longer applies for first-time adopters of IFRS either. This provision is not relevant to the
B. Braun Group.
IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments
On the basis of the new interpretation of IFRIC 19, the IASB governs the accounting treatment of debtors where
the terms of a financial liability are renegotiated to allow them to fully or partially extinguish the financial liability
by issuing equity instruments (debt for equity swaps), and the creditor is an independent third party. IAS 39.41
stipulates that the difference between the carrying amount of an extinguished liability and the consideration paid
must be recognized through profit or loss. IFRIC 19 now also clarifies that equity instruments issued by the debtor
in order to fully or partially extinguish the financial liability must be viewed as part of the consideration paid and
governs its valuation. In the past, B. Braun has not settled any financial liabilities by issuing equity instruments.
This is also not planned for the future. This provision is therefore not relevant to the Group.
New and amended International Financial Reporting Standards and Interpretations whose application is
mandatory for fiscal years beginning on or after January 1, 2011 (IAS 8. 28)
Amendment to IAS 24: Related Party Transactions
The revised version of IAS 24, Related Party Disclosures, provides in particular a revised definition of a related
party and adjusts the definition of the transactions to be disclosed. The adjustments to the definition affect,
in particular, entities that prepare financial statements on a lower Group level. The definition of transactions to
be disclosed clarifies that executory contracts also fall under events that require disclosure. Furthermore, an
exemption was introduced for entities that are controlled, jointly controlled or significantly influenced by the
government. The amendment has no impact on the B. Braun Group.
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NOTES
Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement
The amendments to the IFRIC 14 interpretation are relevant if a pension plan specifies a minimum funding requirement and the company makes early payments of contributions on these. Compared to the existing provisions,
the economic benefit arising from an early payment of contributions of the company that reduces future contributions relating to a minimum funding requirement is recognized as an asset. The amendment has no impact on
the B. Braun Group.
New and amended International Financial Reporting Standards and Interpretations whose application is
mandatory for fiscal years beginning on or after July 1, 2011 (IAS 8. 30)
Amendment to IFRS 7: Financial Instruments: Disclosures
The amendment to IFRS 7 concerns the required disclosures relating to the transfer of financial assets. Even where
a financial asset is derecognized in its entirety, comprehensive disclosures are now required on any possible rights
and obligations that were retained or transferred as part of the transaction. The revised standard will first be
applicable in fiscal years beginning on or after July 1, 2011. As the amendment merely results in an extension of
the disclosures, it will have no impact on the net assets, financial position and results of operations of the Group.
New and amended International Financial Reporting Standards and Interpretations that have already been
published but whose application is not yet mandatory for companies whose fiscal year ends on December 31,
2010 (IAS 8 .30) and whose adoption by the EU is still pending
Amendment to IFRS 1: Initial application of the International Financial Reporting Standards
The amendment provides an exemption on the retroactive application of all IFRS for a company, which prepares IFRS
financial statements for the first time after a phase of severely hyperinflation. In addition, the amendment removes
certain fixed dates for first-time adopters. The revised standard will first be applicable in fiscal years beginning
on or after July 1, 2011 The provision will have no effects on the net assets, financial position, and results of
operations of the Group.
Amendment to IAS 12: Income Taxes
The amendments to IAS 12 consist of a supplement to an exception for investment properties held as financial
investments and measured at fair value in accordance with IAS 40, and for investment properties held as financial
investments that are initially recognized in connection with the acquisition of a subsidiary, where these are subsequently to be measured at fair value. The exception stipulates that deferred tax assets and liabilities relating to
the assets in question must be measured based on the tax consequences of a sale, unless the reporting company
provides unequivocal evidence that it will recover the entire carrying amount of the asset through use. The amended
version must be applied retrospectively for fiscal years beginning on or after January 1, 2012 and earlier voluntary
application is permitted. Current evidence indicates that the amendment will have no impact on the net assets,
financial position and results of operations of the B. Braun Group.
Amendment to IAS 1: Presentation of Financial Statements: Presentation of the items of other net income
Under the amendment, companies must show the items in other net income separately by those, which are reclassified to the statement of income, and those that are not recycled. The amendment must be applied on a
binding basis for fiscal years beginning on or after July 1, 2012, and earlier voluntary application is permitted.
As the amendment merely affects the presentation of the financial statements, it will have no impact on the
net assets, financial position and results of operations of the Group.
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IFRS 9: Financial Instruments
As part of the project to replace IAS 39, Financial Instruments: Recognition and Measurement, standard IFRS 9,
Financial Instruments, was published in November 2009. The new standard fundamentally changes the previous
provisions on the classification and measurement of financial assets. The IASB has expanded the standard by provisions on the accounting procedure of financial liabilities and on the derecognition of financial instruments. With
the exception of the rules for financial liabilities voluntarily measured at fair value (fair value option), the provisions were carried over unchanged from IAS 39, Financial Instruments: Recognition and Measurement, to IFRS 9.
In December 2011, the IASB decided to postpone the date of the originally planned mandatory application from
January 1, 2013, to January 1, 2015. An earlier application of the provisions is possible, but, for financial liabilities
requires also an early application of the provisions on financial assets. On the other hand, an early adoption of
the provisions on financial assets is also possible without the early application of the new provisions on financial
liabilities. IFRS 9 (amended 2011) specifies the exceptional provisions under which a company can make additional
disclosures in the notes when applying IFRS 9 instead of adjusting disclosures of the previous year depending on
the time of application. These were added to IFRS 7 as an amendment. The decision on adoption of the standard
by the EU is still pending. The application of the sections of the standard published to date are not expected to
have an impact on the net assets, financial position and results of operations of the B. Braun Group.
IFRS 10: Consolidated Financial Statements
The new standard supersedes the consolidation guidelines in the previous IAS 27, Consolidated and Separate Financial
Statements, and SIC-12, Consolidation – Special Purpose Entities. Regulations to be applied to separate financial
statements remain unchanged in IAS 27, which has been renamed Separate Financial Statements. The focus of IFRS 10
is the introduction of a standard consolidation model for all companies, which is based on control over a subsidiary by the parent entity. This is applicable to parent / subsidiary relations, which are based on voting rights, as
well as on parent / subsidiary relations, which result from other contractual agreements. As a result, special purpose
entities must also be assessed under these rules whose consolidation is currently carried out by the risk and reward
concept of the SIC-12. IFRS 10 is to be applied for the first time in the initial period of a fiscal year beginning on or
after January 1, 2013. An earlier application of the standard is possible if this is stated in the Notes and IFRS 11
and 12 and the new provisions on IAS 27 and 28 are applied early. Current evidence indicates that the amendment
will have no impact on the net assets, financial position and results of operations of the B. Braun Group.
IFRS 11: Joint Arrangements
The new standard supersedes IAS 31, Interests in Joint Ventures, and eliminates the previous option of proportional
consolidation of joint ventures. The mandatory application of the equity method when accounting for investments
in joint ventures will, in the future, be in accordance with IAS 28, Investments in Associates and Joint Ventures,
which so far concerned associates only and has now been amended to include joint ventures. IFRS 11 is to be
applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier
application of the standard is possible if this is stated in the Notes and IFRS 10, 12 as well as the new provisions
of IAS 27 and 28 are also applied early. The elimination of proportionate consolidation is expected to have no
material impact on the net assets, financial position and results of operations of the B. Braun Group.
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NOTES
IFRS 12: Disclosures of Interests in Other Entities
The new standard integrates the disclosure requirements relating to all interests in subsidiaries, joint ventures and
associates as well as unconsolidated structured entities into one standard. Under the new standard, an entity
must make quantitative and qualitative disclosures, which allow users of its financial statements evaluate the nature of and risks associated with its interests in other entities and the effects of those interests on its financial
statements. IFRS 12 is to be applied for the first time in the initial period of a fiscal year beginning on or after
January 1, 2013. An earlier application of the standard is possible, if this is stated in the Notes. As the amendment
merely affects disclosures in the Notes, it will have no impact on the net assets, financial position and results of
operations of the Group.
IFRS 13: Fair Value Measurement
The new standard establishes a single framework for fair value measurement where that is required by other
Standards by, among other things, providing its definition and guidance on its determination. In addition, IFRS 13
expands the disclosure requirements in the Notes related to fair value measurements. IFRS 13 is to be applied for
the first time in the initial period of a fiscal year beginning on or after January 1, 2013, an earlier application is
possible. Current evidence indicates that the Standard will have no impact on the net assets, financial position
and results of operations of the B. Braun Group.
IAS 19: Employee Benefits
In June 2011, the IASB published an amendedversion of IAS 19, Employee Benefits. The provisions contained therein
result in major effects on the recording and measurement of the expenses for defined benefit plans and of termination benefits. It also introduces enhanced disclosure requirements about employee benefits for many companies.
The amended version of IAS 19 is to be applied for the first time in the initial period of a fiscal year beginning
on or after January 1, 2013, an earlier application is possible. Whether and to what extent effects arise on the net
assets, financial position and results of operations of the B. Braun Group is currently being analyzed.
IAS 27: Separate Financial Statements
The consolidation guidelines contained in the previous IAS 27, Consolidated and Separate Financial Statements,
and SIC-12, Consolidation – Special Purpose Entities, were superseded by provisions newly incorporated in IFRS 10,
Consolidated Financial Statements. Therefore, as IAS 27 now only contains the provisions applicable to separate
financial statements, the standard was renamed IAS 27, Separate Financial Statements. The new version of the
standard is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013.
An earlier application is possible if this is stated in the Notes and IFRS 10, 11 and 12 and the amended IAS 28
are applied early. The amendment is unlikely to have any impact on the net assets, financial position and results of
operations of the B. Braun Group.
IAS 28: Investments in Associates and Joint Ventures
The mandatory application of the equity method when accounting for investments in joint ventures under IFRS 11
will in the future be carried out in accordance with the provisions of the correspondingly amended IAS 28, whose
area of application has now been expanded to the accounting of joint ventures and which was therefore renamed
IAS 28, Investments in Associates and Joint Ventures. The amended IAS 28 is to be applied for the first time in the
initial period of a fiscal year beginning on or after January 1, 2013. An earlier application of the standard is possible
if this is stated in the Notes and IFRS 10, 11 and 12 and the amended IAS 27 are applied early. The amendment will
have no effects on the net assets, financial position, and results of operations of the Group.
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IAS 32 and IFRS 7: Offsetting Financial Assets and Financial Liabilities
The IASB has revised the provisions for offsetting financial assets and financial liabilities. The requirements for
offsetting as outlined in IAS 32 were retained in principle and simply specified with additional application guidance.
Therein, the standard emphasizes, on the one hand, specifically that an unconditional, legally enforceable right
of set-off must also exist in the event of one of the parties involved being insolvent. On the other hand, examples
of criteria were stated under which a gross settlement of financial assets and financial liabilities nevertheless
results in an offsetting. The supplemented guidance must be applied retrospectively for fiscal years that begin on
or after January 1, 2014. It was also decided to introduce in IFRS 7 new disclosure requirements related to certain
offsetting arrangements. The requirements to disclose apply regardless of whether the offsetting arrangement
actually resulted in an offsetting of the financial assets and financial liabilities affected. In addition to a qualitative
description of the right to set-off, numerous quantitative disclosures are specified. They can be made on a summary
basis either by the type of the financial instrument or by the type of the transaction. The amendments to IFRS 7
are to be applied retroactively for fiscal years that begin on or after January 1, 2013. The amendment will have no
effects on the net assets, financial position, and results of operations of the Group.
As part of the ongoing improvement project of the IFRS , adjustments to wordings for clarification and changes
were also made. They have no major impact on the net assets, financial position and results of operations of the
B. Braun Group.
Critical Assumptions and Estimates for Accounting Policies
The preparation of financial statements in accordance with IFRS requires management to make assumptions and
estimates that have an effect on the reported amounts and their related statements. While management makes
these estimates to the best of its knowledge and abilities based on current events and measures, there is a possibility
that actual results may differ. Estimates are necessary in particular when:
–
–
–
–
–
–
Assessing the need for and the amount of write-downs and other value adjustments;
Measuring pension obligations;
Recognizing and measuring provisions;
Establishing inventory provisions;
Evaluating the probability of realizing deferred tax assets;
Calculating the value in use of cash-generating units (CGU) for impairment testing.
The Group’s management determines the expected useful life of intangible assets and property, plant and equipment,
and therefore their depreciation or amortization, based on estimates. These assumptions can change materially,
for example as a result of technological innovations or changes in the competitive environment. Should their actual
useful life be shorter than the estimate, management adjusts the amount of depreciation or amortization. Assets
that are technologically outdated or no longer useable under the current business strategy are fully or partially
written off.
The net present value of pension obligations depends on a number of factors, which are based on actuarial assumptions. The estimates made to determine the net expense (income) for pensions include the projected long-term
rate of return on plan assets and the discount rate. Any change in such assumptions will have an effect on the
carrying amount of the pension provisions. Obligations from defined benefit pension plans, as well as pension
expenses for the following year, are determined based on the parameters outlined under Note 25.
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NOTES
The recognition and measurement of other provisions is based on estimates regarding the probability of a future
outflow of resources, as well as experience and known circumstances as of the reporting date. The actual liability
may differ from the amounts of the provisions established.
The estimate of inventory provisions is based on the projected net realizable value (i. e. the estimated selling price,
less the estimated cost of completion and the estimated costs necessary to make the sale). Actual sales and actual
costs incurred may differ from these estimates.
Deferred tax assets are only recognized to the extent that it is probable that taxable profit will be available in the
future. The actual taxable profits in future periods may differ from the estimates made on the date such deferred
tax assets are capitalized.
Goodwill is tested for impairment annually based on a three-year forecast using projections of specific annual
growth rates for the subsequent period. An increase or decrease in the projected annual growth rates would alter
the estimated fair value of a given cash-generating unit.
Scope of Consolidation
In addition to B. Braun Melsungen AG, the consolidated financial statements include 38 German and 158 foreign
subsidiaries in which B. Braun Melsungen AG either holds a direct or indirect majority of voting rights or has
control over financial and business management.
Subsidiaries are included in the consolidated financial statements effective on the day control is assumed by the
Group. Consolidation is discontinued as of the day on which such control ends.
The change in the number of Group companies as of December 31, 2011 and 2010 respectively is shown below:
Included as of December 31 of Previous Year
2011
2010
189
187
Companies Included for the First Time
11
8
Company Consolidations Discontinued
–2
–2
Business Combinations
–2
–3
Companies now Consolidated Using the Equity Method due to the Sale of Shares
Included as of December 31 of Reporting Year
0
–1
196
189
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82
The impact of the newly acquired companies on the statement of financial position at the time of initial consolidation and on the principal items in the statement of income for fiscal year 2011 is shown below:
Carrying
Amount
Fair value
€ ’000
€ ’000
Non-current Assets
4,564
6,767
Current Assets
1,297
1,297
Acquired Assets
5,861
8,064
Non-current Provisions and Liabilities
2,659
2,815
Current Provisions and Liabilities
5,273
5,273
Acquired Liabilities
7,932
8,088
Net Assets Acquired
Non-controlling Interests
Prorated Net Assets
Goodwill
Cost of Acquisition
of which Non-controlling Interests
Cash and Cash Equivalents Acquired
– 2,071
– 24
0
– 636
– 2,071
612
9,668
10,451
171
361
Purchase Price Liability
3,746
Cash Flow for Business Acquisitions
7,066
Sales
2,263
Operating Profit
– 406
Net Profit
– 493
The goodwill remaining after purchase price allocation cannot be deducted for tax purposes and represents sales
and production synergies.
Acquisitions in the reporting year contributed assets in the amount of € 2.2 million that had not previously been
recognized. No significant receivables were included in the assets acquired. Goodwill was valued at € 19.8 million,
of which € 7.9 million resulted from consolidation using the equity method of accounting.
In the previous year, the tangible assets of MedPro International Ltd., Chonburi / Thailand, a manufacturer of
elastomeric pumps, as well as patents and a distribution right had already been purchased under an asset deal.
The patents and the distribution right were valued in the consolidated financial statements at € 23.6 million as
of December 31, 2010, taking into account the purchase price that had not yet been finally negotiated, and a
goodwill of € 0.5 million was recognized. The final agreement was subsequently amended in the reporting year.
The final agreement specifies fixed payments of US $ 6.45 million after execution of the agreement as well as of
US $ 150,000 in 2011, 2012 and 2013. In addition, a variable payment of US $ 1.00 per pump sold in the period
from November 15, 2011, to November 15, 2013, was agreed, which will become due on January 15, 2014.
In doing so, it was determined that the parties assume a minimum sales quantity of 3 million units and a maximum
sales quantity of 8 million pumps. During purchase price allocation, the maximum sales quantity was assumed,
which means that a purchase price share of € 18.1 million is attributable to patents and a proportion of € 4.6 million
is attributable to the distribution right. Synergy effects, which are expected from the incorporation into the
Group, resulted in goodwill of € 3.1 million.
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NOTES
To drive sustainable positioning of Aesculap as an innovative provider in endoscopy, all major tangible and nontangible assets of Aragon Surgical, Inc., USA were purchased under an asset deal on September 26 , 2011. Aragon
Surgical is active in the area of high-frequency surgery and specializes in electrosurgical solutions for tissue
cutting and fusion (cut & seal). With this portfolio expansion, Aesculap is strengthening its open-surgical product
range, as well as its laparoscopic product range. Total acquisition equaled € 11. 3 million. The purchase price
consists of a cash payment in the amount of € 7.8 million, as well as a conditional purchase price liability fixed
at the present value in the amount of € 3.5 million. The final amount of the purchase price is partially based on
the sales success achieved in 2012 to 2016, and the maximum purchase price adjustment is not limited to any
amount. The recorded amount represents the estimate for the actual purchase price liability. The fair value of the
tangible assets acquired (property, plant and equipment, inventories) as of the date of acquisition was € 0.7 million,
while the fair value of intangible assets (patents) was € 10 .6 million. No receivables were included in the assets
acquired. The effects on the sales of the Group and the consolidated annual net profit were not material.
To strengthen the business unit of enteral nutrition and the entire clinical nutrition, 100 percent of the shares in
Nutrichem diät + pharma GmbH, Roth were purchased under a share deal on January 31, 2012. Nutrichem is a
specialist for the development, production, filling and packaging of products for special nutrition requirements,
in particular enteral nutrition, nutrition supplements and sports nutrition. In the fiscal year prior to the acquisition,
the sales of the company amounted to € 47.6 million. The acquisition costs amounted to € 23.8 million. The purchase
price was paid in cash. The disclosure of other information required under IFRS 3 for company acquisitions in
2012 is currently not possible and will therefore not be carried out in accordance with IFRS 3.B66, as the necessary
information was not available at the time of preparing the consolidated financial statements due to the extent of
reconciliation effort between the various Group companies and the accounting systems.
These changes did not adversely impact the comparability of the financial statements with those of the previous year.
Holdings in three joint ventures and 18 associated companies are recognized in the consolidated financial statements
as of the reporting date. Two associated companies were not measured using the equity method on materiality
grounds.
The complete list of shareholdings belonging to the Group, and to B. Braun Melsungen AG, is provided in the Notes
to the consolidated financial statements.
The following companies are included in the consolidated financial statements of B. Braun Melsungen AG:
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–
–
–
B. Braun Facility Services GmbH & Co. KG, Melsungen,
medical experts online GmbH & Co. KG, Melsungen,
Invitec GmbH & Co. KG, Duisburg,
MAT Adsorption Technologies GmbH & Co. KG, Elsenfeld.
They meet the conditions of Section 264 b of the German Commercial Code (HGB) and are thus exempt from the
requirement to compile Notes and a management report.
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The following companies meet the conditions of Section 264 (3) of the German Commercial Code (HGB) and
are thus also exempt from the requirement to compile Notes and a management report:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Aesculap AG, Tuttlingen,
Aesculap Akademie GmbH, Tuttlingen,
Aesculap International GmbH, Tuttlingen,
Avitum Transcare Germany GmbH, Melsungen,
B. Braun Medical AG, Melsungen,
B. Braun Avitum AG, Melsungen,
B. Braun Avitum Saxonia GmbH, Radeberg,
B. Braun Surgical GmbH, Melsungen,
B. Braun Petzold GmbH, Melsungen,
B. Braun Mobilien GmbH, Melsungen,
B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen,
B. Braun International GmbH, Melsungen,
B. Braun TravaCare GmbH, Hallbergmoos,
B. Braun VetCare GmbH, Tuttlingen,
Bibliomed medizinische Verlagsgesellschaft mbH, Melsungen,
CoachIT GmbH, Kassel,
Paul Müller Technische Produkte GmbH, Melsungen,
PNS Professional Nutrition Services GmbH, Melsungen,
Transcare Gesundheitsservice GmbH, Melsungen.
The companies listed above exercise their right to the exemptions.
Principles of Consolidation
a) Subsidiaries
Subsidiaries, i. e. companies in which B. Braun Melsungen AG directly or indirectly holds more than half of the
voting rights or otherwise controls their financial and business management, are included in the scope of consolidation. For the purpose of determining whether B. Braun Melsungen AG controls another company in this
manner, the existence and consequences of potential voting rights that may be exercised or converted on the
reporting date are taken into consideration.
Subsidiaries are initially consolidated on the first day on which B. Braun Melsungen AG assumes control of the
acquired company; they are excluded from consolidation once B. Braun Melsungen AG forfeits such control.
The acquisition of subsidiaries is recognized utilizing the purchase method. The cost of acquiring a subsidiary is
calculated based on payments of cash and cash equivalents, together with the fair value of assets transferred,
shares issued, and / or liabilities assumed when initial control is gained. Acquisition costs that exceed the proportionate acquired share of the fair value of the subsidiary’s net assets are recognized as goodwill.
Assets, debts, and contingent liabilities identifiable upon a merger of companies are valued on initial consolidation
at the fair values attributable to them, regardless of the size of any non-controlling interests. For each company
acquisition, it is determined on an individual basis whether the non-controlling interest in the company acquired
are recognized at fair value or using the proportionate share of net assets of the acquired company. The option to
recognized non-controlling interest at fair value is currently not exercised. Therefore, non-controlling interests are
recognized at their proportionate share of net assets and no goodwill is recognized for non-controlling interests.
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NOTES
Goodwill generated by the acquisition of non-controlling interests in fully consolidated companies is offset against
retained earnings. Where assets and liabilities are measured at fair value for the gradual acquisition of companies
fully consolidated for the first time, the revaluation of the “old” tranches is recognized through profit or loss.
Intercompany receivables and payables, as well as expenditure and income are offset against each other. Unrealized
gains on transactions between companies within the Group are eliminated in full; unrealized losses are eliminated
insofar as the resulting costs of acquisition or manufacture do not exceed the recoverable amount of the underlying
asset. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use.
Subsidiary companies’ accounting policies are, where necessary, adapted to those used to produce the consolidated financial statements.
b) Associated Companies
Associated companies are those companies over which the Group has significant influence but not control, generally
accompanied by a holding of between 20 percent and 50 percent of the voting rights. Investments in associates
are accounted for using the equity method and are initially recognized at cost. The Group’s investment in associated
companies includes goodwill identified on acquisition (net of any accumulated impairments).
The Group’s share of associated companies’ post-acquisition profits or losses is recognized in the statement of income, and its share of post-acquisition changes in retained earnings is recognized in the Group’s retained earnings.
The cumulative post-acquisition changes are adjusted against the carrying amount of the investment. When the
Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including
any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or
made payments on behalf of the associated company.
Unrealized gains from transactions between the Group and its associated companies are, where material, eliminated
to the extent of the Group’s share in the associate. Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. Accounting policies of associated companies were
adjusted, where necessary, to align them with the policies of the Group.
c) Joint Ventures
The Group’s interests in jointly controlled entities are recognized in the consolidated financial statements using
proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses,
assets and liabilities, and cash flows on a line-by-line basis with the corresponding items in the consolidated
financial statements. The Group recognizes only that portion of gains or losses on the sale of assets to the joint
venture that it is attributable to the interests of the other venturers. The Group does not recognize its share of
gains or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until
it resells the assets to an independent party. Losses on intercompany transactions are treated similarly unless
the transferred assets are impaired.
d) Owners of Non-controlling Interests
Transactions with owners of non-controlling interests are treated in the same way as transactions with parties
within the Group. Sales of shares to owners of non-controlling interests result in gains or losses being recognized
in the consolidated financial statements. Reciprocally, purchases of shares from owners of non-controlling
interests result in the recognition of goodwill equivalent to the difference between the purchase price and the
proportional carrying amount of the subsidiary’s net assets.
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Foreign Currency Translation
a) Functional and reporting currency
Items included in the financial statements of each of the Group’s subsidiaries are stated using the currency of the
primary economic environment in which the company operates (functional currency).
The consolidated financial statements are stated in euro, that being the Group’s functional and reporting currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the prevailing exchange rate on
the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities denominated in foreign currencies at the exchange
rates prevailing on the reporting date are recognized in the statement of income.
Translation differences on monetary items, such as available-for-sale financial assets, where fair value changes
are directly recognized in equity, are reported as part of the gain or loss from fair value measurement. Translation
differences on non-monetary items, where fair value changes are directly recognized in equity, are included in the
revaluation reserve in equity.
c) Subsidiaries
All items in the statements of income and statements of financial position of all Group subsidiaries that are in
a currency other than the Group reporting currency are translated into the reporting currency as follows:
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–
Assets and liabilities are translated at the closing rate on the reporting date;
Income and expenses are translated at average exchange rates; and
all resulting exchange differences are recognized as a separate component of equity (Changes due to Currency
Translation).
Goodwill and fair value adjustments arising from the acquisition of foreign companies are treated as assets and
liabilities of the foreign company and translated at the closing rate.
Upon the sale of a foreign business operation, currency translation differences formerly recognized in equity are
recorded in the statement of income as gains or losses on disposal.
Comparison of Selected Currencies
Closing Mid-rate on Reporting Date
ISO-Code
Average Annual Rate
Dec. 31, 2011
Dec. 31, 2010
+–
in %
2011
2010
+–
in %
1 EUR = USD
1.293
1.336
– 3.2
1.392
1.327
4.9
1 EUR = GBP
0.837
0.861
– 2.8
0.868
0.858
1.1
1 EUR = CHF
1.217
1.250
– 2.7
1.234
1.382
– 10.7
1 EUR = MYR
1 EUR = JPY
4.101
4.095
0.1
4.256
4.273
– 0.4
100.070
108.650
– 7.9
111.029
116.455
– 4.7
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
ACCOUNTING POLICIES
Accounting Policies
Intangible Assets
a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of identifiable net assets and
liabilities of the acquired company on the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. Write-downs
of goodwill are reported under other operating expenses. Write-ups in value are not permitted. Gains and losses
on the sale of companies include the carrying amount of the goodwill relating to the company sold.
b) Development Costs
The B. Braun Group invests a significant portion of its financial assets in research and development. In addition
to internal research and development activities, the Group maintains numerous cooperative relationships with
third parties.
Development expenses are defined as costs related to applying research findings or specialized knowledge for
production planning and the manufacturing process before production or use has commenced. Development expenses are capitalized as intangible assets where it is considered likely that the project will be commercially
successful, technically feasible and the costs can be reliably measured. Other development costs that do not meet
these criteria are expensed as they occur. Development costs that have previously been expensed are not capitalized in subsequent years. Capitalized development costs are shown as internally generated intangible assets. Please
see c) below regarding the useful life, amortization method, and review of residual carrying amounts.
c) Other Intangible Assets
Acquired intangible assets are recognized at acquisition cost. Internally developed intangible assets where future
economic benefit is likely to flow to the Group and the costs of the asset can be reliably measured are recognized
at the cost incurred during the development phase. This includes all costs directly related to the development
process, as well as appropriate portions of relevant overhead costs. Intangible assets with finite useful lives are
amortized by the straight line method over a period of four to eight years.
Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary.
A write-down is taken at the reporting date if the recoverable amount of an intangible asset falls below its
carrying amount.
Amortization expense related to other intangible assets is recognized in the functional areas that are using the
respective asset. Write-ups to a maximum of amortized acquisition cost or amortized cost to internally generate
the asset are shown under other operating income.
Besides goodwill, the Group did not own any intangible assets with indefinite useful lives in the reporting periods
presented.
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88
Impairment of Non-financial Assets
Intangible assets with indefinite useful lives are not amortized; they are tested annually for impairment. Assets
that are amortized are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash-generating units). With the exception
of goodwill, non-monetary assets that have been subject to an impairment loss in the past are reviewed at each
reporting date to see if a write-up is required.
Property, Plant and Equipment
Tangible assets that are utilized during the ordinary course of business for more than one year are recognized at
their acquisition or manufacturing cost less depreciation using the straight line method. The manufacturing costs
includes all costs directly related to the manufacturing process and appropriate portions of relevant overhead
costs. The useful lives applied correspond to the expected useful lives within the Group.
The following useful lives are the basis for depreciation of property, plant and equipment:
Buildings
Technical Plant and Machinery*
Vehicles
Other Plant, Operating and Office Equipment
25 to 50 years
5 to 20 years
6 years
4 to 20 years
* 1-shift operation
Land is not depreciated.
Acquisition and manufacturing costs that are incurred at a later point are recognized as part of the asset or as
a separate asset only when it is likely that the future economic benefits associated with the asset will flow to the
Group and that the cost of the asset can be reliably measured. All other repairs and maintenance are reported as
expenses in the statement of income of the fiscal year in which they occur.
Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary.
A write-down is taken at the reporting date if the recoverable amount of an item of property, plant and equipment
falls below its carrying amount.
Depreciation expense related to property, plant and equipment is recognized in the functional areas that are using
the respective asset. Write-ups to a maximum of amortized acquisition or manufacturing cost are shown under
other operating income. Gains and losses from disposals of property, plant and equipment are recognized in the
statement of income.
Government grants are recognized at fair value if receipt of the grant and the Group’s compliance with any conditions associated with the grant are highly likely.
Borrowing costs directly attributable to the acquisition, construction, or development of a qualifying asset are
recognized as part of its acquisition or manufacturing cost.
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CONSOLIDATED FINANCIAL STATEMENT S
ACCOUNTING POLICIES
Finance Leasing
Leasing contracts for intangible assets and property, plant and equipment, where the Group carries the substantial
risks and rewards of ownership of the leased asset, are classified as finance leases. At commencement of the lease
term, finance leases are recognized as an asset at the lower of the fair value of the asset or the net present value
of the minimum lease payments. Each leasing payment is apportioned between the finance charge and the reduction
of the outstanding liability so as to produce a constant periodic rate of interest on the leasing liability. This liability
is reported under financial liabilities excluding the interest payments. The interest portion of the leasing payment is
recognized as expense through the statement of income. Assets held under finance leases are depreciated over
the useful life of the asset. If there is no reasonable certainty that the Group will obtain ownership of an asset at the
end of the lease, the asset is depreciated in full over the shorter of the lease term or the useful life of the asset.
Financial Investments Recognized Using the Equity Method of Accounting and Other Financial Investments
Equity investments are initially recorded at cost and in subsequent periods at the amortized prorated net assets.
The carrying amounts are adjusted annually to reflect the investor’s share of the net profit or loss of the associate,
distributions, and any other equity changes. Goodwill is included in the valuation of the associate rather than being
separately identified. Goodwill is not amortized. Equity investments are written down when the recoverable amount
of an investment in an associate falls below its carrying amount.
Categories of Financial Assets
Financial assets are classified using the following categories:
–
–
–
–
Financial assets at fair value through profit and loss,
Loans and receivables,
Held-to-maturity financial assets,
Available-for-sale financial assets.
The categorization depends on the purpose for which the assets were acquired. Management determines the categorization of financial assets at initial recognition and re-evaluates this categorization on each reporting date.
a) Financial assets at fair value through profit and loss
Financial assets are measured at fair value through profit and loss if the financial asset is either held for trading
or designated as being measured at fair value.
A financial asset is classified as held for trading if it has been acquired principally for the purpose of earning profits
from short-term price changes, or is a derivative that has not been designated as a hedging instrument.
To date, the Group has not exercised the option of designating financial assets upon initial recognition as financial
assets at fair value through profit and loss.
89
90
b) Loans and receivables
Loans and receivables with fixed or determinable payments that are not quoted on an active market are categorized
as loans and receivables. Loans and receivables are measured using the effective interest method at amortized
cost less any impairments. With the exception of current receivables, where the interest rate effect is not material,
interest income is recognized using the effective interest method.
c) Held-to-maturity financial assets
Bills of exchange and debt instruments with fixed or determinable payments and fixed maturities, which the
Group has the intention and ability to hold to maturity, are categorized as “held-to-maturity investments”.
Held-to-maturity investments are measured at amortized cost using the effective interest method less impairments.
d) Available-for-sale financial assets
Listed securities and redeemable bonds held by the Group that are traded on an active market are recognized at fair
value as available-for-sale financial assets. Investments in unlisted shares held by the Group that are not traded
on an active market are also recognized at fair value as available-for-sale financial assets. Gains and losses arising
from changes in fair value are included directly in the revaluation reserve (equity) rather than in other financial
income. Exceptions are impairment losses, interest calculated using the effective interest method, and gains and
losses from foreign currency translation of monetary items, which are recognized in the statement of income.
If a financial asset is disposed of or is acknowledged to have an impairment, its accumulated gains and losses
recognized in the revaluation reserve for financial investments up to that point are reclassified to the statement
of income.
Dividends from equity instruments classified as available-for-sale financial assets are recognized in the statement
of income as soon as the Group has acquired a right to the dividend.
Impairment of Financial Assets
With the exception of financial assets measured at fair value through profit and loss, financial assets are examined
at each reporting date for the presence of any indications of impairment. Financial assets are considered impaired
if, following one or more events that occurred after the initial recognition of the asset, there is objective evidence
that the estimated future cash flows of the investment have changed adversely.
In the case of listed and unlisted equity investments that were categorized as available-for-sale, any significant
or prolonged reduction in the fair value of the assets below their acquisition cost must be regarded as objective
evidence of impairment.
For all other financial assets, the following may be objective evidence of impairment:
–
–
–
Either the issuer or the counterparty is facing significant financial difficulties
Default or delinquency in payments of interest or principal, or
a high probability that the debtor will enter bankruptcy or financial reorganization.
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CONSOLIDATED FINANCIAL STATEMENT S
ACCOUNTING POLICIES
For some classes of financial assets, such as trade receivables, asset values for which no impairment has been
determined on an individual basis are tested for impairment on a portfolio basis. Objective evidence of impairment on a portfolio of receivables is based on the past experience of the Group regarding payments received,
an increase in the frequency of payment defaults within the portfolio over the average borrowing period, and
observable changes in the national or local economic environment with which the defaults can be linked.
In the case of financial assets valued at amortized cost, the impairment loss corresponds to the difference between
the carrying amount of the asset and the net present value of expected future cash flows determined on the basis
of the original effective interest rate on the asset.
An impairment leads to a direct reduction in the carrying amount of all the relevant financial assets, with the
exception of trade receivables, whose carrying amount is reduced through a valuation adjustment account.
If a trade receivables item is considered to be irrecoverable, it is written off against the valuation adjustment
account. Changes in the carrying amount of the valuation adjustment account are recognized in the statement
of income.
In the event that a financial asset, classified as available-for-sale, is considered to be impaired, gains and losses
previously recognized in the revaluation reserve (equity) are reclassified to the statement of income in the period
in which the impairment occurred.
If the level of impairment of a financial asset that is not an available-for-sale equity instrument decreases in a subsequent reporting period, and if the decrease can be related objectively to an event occurring after the impairment
was recognized, the previously recognized impairment is reversed through the statement of income. The increased
carrying amount due to reversal may not be higher than what the amortized would have been if the impairment
had not been recognized.
In the case of equity instruments classified as available-for-sale, any impairments recognized in the past are not
reversed. Any increase in the fair value after an impairment was recognized is recorded in the revaluation reserve
(equity).
Inventories
Under IAS 2, inventories include assets that are held for sale in the ordinary course of business (finished products
and merchandise), assets that are in the production process for sale in the ordinary course of business (work in
progress), and assets that are consumed in the production process or performance of services (raw materials and
supplies). Inventories are measured at the lower of cost and net realizable value, which is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary
to make the sale, applying the weighted average cost formula.
In addition to direct expenses, manufacturing costs include allocated raw material and production overheads and
depreciation related to production plant and equipment. Allocated costs related to pensions and voluntary social
contributions made by the company are also included. Administrative expenses are included in the costs if they
relate to manufacturing.
91
92
Provisions for Pensions and Similar Obligations
Provisions for pensions and similar obligations are calculated using the projected unit credit method in accordance
with IAS 19, taking into account future pay and pension increases and staffing fluctuations. The valuation is based
on pension actuary assessments.
The interest portion of the pension expenses is offset against the expected return on plan assets.
Any excess of plan assets over the pension obligations is recognized as an asset only if it represents the net present
value of the economic benefits to the company plus any past service cost and actuarial gains and losses not yet
recognized.
Other Provisions
Provisions are recognized when a present legal or constructive obligation has arisen for the Group as a result of
a past event, an outflow of resources to settle the obligation is likely, and the amount can be estimated reliably.
If a number of obligations of a similar type exist, the provisions are recognized at the most probable value for
the population of events.
Provisions are established for onerous contracts if the expected benefit from the contractual claim is less than
the expected costs to settle the obligation.
Provisions due after more than one year are measured at discounted present value.
Provisions are released against the expense items for which they were created. If additions to provisions were
recognized under other operating expenses, the release of these amounts is shown under the corresponding
other operating income item.
Financial Liabilities
Financial liabilities are initially recognized at fair value less transaction costs. In subsequent periods, they are
measured at amortized cost. Any difference between the amount disbursed (less transaction costs) and the repayment amount is spread across the term of the loan using the effective interest method and recognized in the
statement of income.
Liabilities from loans are recognized as current liabilities unless the Group has the unconditional right to defer
repayment of the liability to at least 12 months after the reporting date.
Liabilities
Financial liabilities comprise trade accounts payable and other liabilities. Liabilities are initially recognized at
fair value.
Current liabilities are recognized at the repayable amount. Non-current liabilities that are not the underlying
transaction in permissible hedge accounting are recognized at amortized cost.
Accruals are recognized under other liabilities.
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CONSOLIDATED FINANCIAL STATEMENT S
ACCOUNTING POLICIES
Derivative Financial Instruments
Derivative financial instruments are initially measured at their fair value on the day that the contract is entered
into. They are subsequently measured at their fair value as of each reporting date. The method of recording gains
and losses depends on whether the derivative financial instruments in question have been designated as hedging
instruments and, if so, on the nature of the hedged item. B. Braun Melsungen AG designates derivative financial
instruments as a hedge against risks from fluctuating payment flows of future transactions that are most likely
to materialize (cash flow hedge). On entering into a transaction, the Group documents the hedge relationship between the hedging instrument and the underlying transaction, the goal of its risk management, and the underlying
hedging strategy. In addition, the assessment of whether the derivatives employed effectively compensate for the
changes in the fair values or in the cash flows of the underlying transactions is documented at the time the hedging
relationship is created and subsequently on an ongoing basis. The fair values of the various derivative financial
instruments used for hedging purposes are recognized under other assets / liabilities. Changes in the valuation reserve for cash flow hedges are shown in the consolidated statement of changes in equity. The full fair value of
derivative financial instruments designated as hedge instruments is shown as a non-current asset or liability if the
residual term of the hedged underlying transaction is more than 12 months after the reporting date, and as a
current asset or liability if it is shorter than that. Derivative financial instruments held for trading are recognized
as current assets or liabilities.
When a hedging transaction designated as a cash flow hedge expires, is sold, or the designation is deliberately
reversed, or no longer meets the criteria to be accounted for as a hedging transaction, gains or losses accumulated
in equity up to that point remain in equity and are only taken to the statement of income when the future transaction originally hedged occurs and is recognized in the statement of income. If the future transaction is no longer
expected to occur, gains or losses accumulated in equity must be reclassed to the statement of income immediately.
Certain derivative financial instruments are not eligible for hedge accounting, as explained under Note 32 .
Deferred Taxes
Deferred taxes are recognized using the liability method for all temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. If deferred tax arises
from the initial recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss, however, it is not recognized.
Deferred taxes are measured using tax rates and laws that have been enacted or substantially enacted as of
the reporting date and are expected to apply when the related deferred tax assets are realized or the deferred
tax liabilities are settled.
Deferred tax assets stem primarily from temporary differences between the tax bases of individual companies and
the financial statements set forth using IFRS , and from consolidation. Deferred tax assets stemming from losses
carried forward and tax credits are recognized to the extent that it is likely that future taxable income will be
available against which the losses carried forward can be utilized.
Deferred tax liabilities arising from temporary differences in connection with investments in subsidiaries and
associates are recognized except where the timing of the reversal of the temporary differences can be controlled by the Group and it is likely that the temporary differences will not be reversed in the foreseeable future.
Please also see Note 10 Income Taxes.
93
94
Notes to the Consolidated Statement of Income (Loss)
1 Sales
Sales include the fair value received for the sale of goods and services excluding sales tax, rebates, and discounts,
and after eliminating intercompany sales. Sales are recognized as follows:
Sales resulting from the sale of products are recorded when the main risks and rewards associated with ownership have been transferred to the buyer and the collection of the associated receivables can be assumed with
sufficient likelihood.
Estimates for sales reductions are based on experience. Adjustments are made if required by a change in conditions. No significant returns were recorded in the reporting period.
Sales resulting from the sale of services are recorded in the fiscal year during which the service is performed
using the percentage of completion basis.
The following chart shows sales trends by division, region, and by type
Sales by Division
2011
€ ’000
%
2010
€ ’000
%
+–
in %
Hospital Care
2,159,445
46.8
2,086,696
47.2
3.5
Aesculap
1,355,753
29.4
1,281,071
29.0
5.8
OPM
568,409
12.3
554,613
12.5
2.5
B. Braun Avitum
500,614
10.9
474,768
10.7
5.4
25,218
0.5
25,665
0.6
– 1.7
4,609,439
100.0
4,422,813
100.0
4.2
2011
€ ’000
%
2010
€ ’000
%
+–
in %
4.2
Other Sales
Sales by Region
Germany
915,365
19.9
878,450
19.9
1,783,822
38.6
1,691,987
38.3
5.4
North America
908,259
19.7
940,145
21.3
– 3.4
Latin America
310,507
6.7
295,751
6.7
5.0
Asia & Australia
691,486
15.0
616,480
13.9
12.2
4,609,439
100.0
4,422,813
100.0
4.2
2011
€ ’000
%
2010
€ ’000
%
+–
in %
Sales of Products
4,192,174
90.9
4,022,452
90.9
4.2
Sales of Services
417,265
9.1
400,361
9.1
4.2
4,609,439
100.0
4,422,813
100.0
4.2
Europe & Africa
Sales by Type
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF INCOME (LOSS)
2 Cost of Goods Sold
Cost of goods sold includes the manufacturing costs of goods sold and the acquisition costs of merchandise sold.
In addition to direct costs such as material, personnel and energy costs, manufacturing costs contain productionrelated overhead expenses including depreciation of property, plant and equipment. Cost of goods sold also includes
inventory write-downs.
3 Selling Expenses
Selling expenses include expenditures for marketing, sales organizations, and distribution. As well as expenses
related to customer training and consulting on technical product use.
4 Research and Development Expenses
Research and development expenses include costs for research, as well as for product and process development
including expenditures for external services. All research costs are expensed at the time they are incurred.
Development costs are capitalized where all the conditions for capitalization under IAS 38 are met.
5 Other Operating Income
Currency Translation Gains
Additional Income
2011
€ ’000
2010
€ ’000
162,298
184,753
10,403
9,058
Derivative Financial Instruments
1,522
8,573
Income from Other Periods
6,710
5,535
Proceeds from Appreciation of Current Financial Assets
4,272
2,423
Proceeds from the Disposal of Assets
1,558
1,837
Proceeds from the Release of Provisions
3,936
1,551
Other
13,562
18,143
204,261
231,873
Currency translation gains on receivables and payables denominated in foreign currencies mainly comprise gains
from currency fluctuations between transaction and payment dates, gains resulting from translation at the exchange rate prevailing on the reporting date, and gains resulting from hedge accounting.
Additional income primarily includes cost reimbursements from third parties and income from cafeteria sales.
Changes in the fair value of forward foreign exchange contracts that are not designated for hedge accounting are
reported under derivative financial instruments. Financial assets / liabilities measured at fair value through profit
and loss are shown in the statement of financial position under other assets / liabilities.
95
96
Other operating income includes income-related and other grants from the public sector. Income-related grants are
recognized in the period in which the corresponding expenses occur. They amounted to € 1.9 million (previous
year: € 1.7 million). Grants of € 1.7 million (previous year: € 1.6 million) were recognized through profit and loss
in the reporting year. The grants were predominantly made to support structurally weak areas in Germany.
Other income includes various types of income; however their individual valuations are not materially significant.
6 Other Operating Expenses
Currency Translation Losses
2011
€ ’000
2010
€ ’000
164,311
198,588
Losses from Impairment of Current Financial Assets
9,698
8,566
Additions to Provisions
4,333
7,376
Losses on the Disposal of Assets
4,646
2,546
Expenses from Other Periods
3,962
4,089
Derivative Financial Instruments
4,956
92
30,513
39,638
222,419
260,895
Other
Currency translation losses on receivables and payables denominated in foreign currencies mainly comprise losses
from currency fluctuations between transaction and payment dates, losses resulting from translation at the exchange rate prevailing on the reporting date, and losses resulting from hedge accounting.
Losses from impairment of current financial assets refer to impairment provisions for trade receivables.
Changes in the fair value of forward foreign exchange contracts that are not designated for hedge accounting are
reported under derivative financial instruments. Financial assets / liabilities measured at fair value through profit
and loss are shown in the statement of financial position under other assets / liabilities.
Other expenses include numerous types of expenses; however their individual valuations are not materially
significant.
7 Financial Investments Recognized Using the Equity Method of Accounting
Net income from investments recognized using the equity method of accounting breaks down as follows:
2011
€ ’000
2010
€ ’000
Income from Financial Investments Recognized Using the Equity Method
3,640
4,307
Expenses from Financial Investments Recognized Using the Equity Method
– 328
– 405
3,312
3,902
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF INCOME (LOSS)
8 Net Financial Income
2011
€ ’000
Interest and Similar Income
Interest and Similar Expenses
of which to Affiliated Companies
Interest Expenses for Pension Provisions, Net of Expected Income from Plan Assets
2010
€ ’000
3,691
4,606
– 49,486
– 48,414
(0)
(2,596)
– 29,493
– 28,778
– 75,288
– 72,586
of which Financial Assets and Liabilities at Fair Value:
Interest Income from Discounting
Accrued Interest Expense
320
281
– 5,006
– 5,455
Interest and other similar expenses comprise mainly interest expense on financial liabilities. Expenses resulting
from accruing interest to non-current other provisions are also recognized here.
9 Other Net Financial Income
2011
€ ’000
2010
€ ’000
63
2,099
– Loans and Receivables
0
0
– Held-to-Maturity Financial Assets
0
0
– 97
28
Income from Joint Ventures
(excluding Income from Financial Investments Recognized using the Equity Method)
Net Gains and Losses on:
– Available-for-Sale Financial Assets
– Financial Liabilities measured at Amortized Cost
0
0
– 34
2,127
Interest on derivative financial instruments is shown under interest expense.
10 Income Taxes
Income taxes include corporate and trade income taxes for German companies as well as comparable incomerelated taxes for companies in other countries. They are calculated on the basis of the tax regulations applicable
to the individual company.
Deferred taxes stem from temporary differences between the tax base of the individual companies and the consolidated statement of financial position. They are measured using the liability method based on the application
of anticipated future tax rates for the individual countries as of the realization date. Generally, these are based on
the regulations in effect as of the reporting date. Deferred tax assets are offset only if the company has the legal
right to settle current tax assets and current tax liabilities on a net basis and they are levied by the same tax
authority.
97
98
Income tax expenses and deferred taxes are as follows:
2011
€ ’000
2010
€ ’000
Actual Income Taxes
78,099
99,548
Deferred Taxes resulting from Temporary Differences
23,462
10,533
Deferred Taxes resulting from Losses Carried Forward
2,875
2,174
104,436
112,255
Deferred tax assets and deferred tax liabilities apply to differences stemming from recognition and measurement
in the following items in the statement of financial position:
Dec. 31, 2011
Dec. 31, 2010
Assets
€ ’000
Liabilities
€ ’000
Assets
€ ’000
Liabilities
€ ’000
Intangible Assets
2,917
19,519
3,175
14,419
Property, Plant and Equipment
2,654
139,963
3,458
110,333
320
680
267
634
51,101
6,044
48,577
5,426
Trade Receivables
7,871
5,047
6,807
7,488
Pension Provisions
36,903
304
34,135
272
Other Provisions
13,119
1,201
14,596
1,921
Liabilities
28,657
1,237
21,886
1,443
3
8,009
11
8,491
143,545
182,004
132,912
150,427
Financial Investments
Inventories
Other
of which Non-current
Net Balance
Valuation Allowances on Deferred Taxes resulting
from Temporary Differences
Deferred Taxes on Tax Credits
Losses Carried Forward (Net, after Valuation Allowances)
54,387
169,493
53,459
135,641
– 84,592
– 84,592
– 70,902
– 70,902
58,953
97,412
62,010
79,525
– 78
–
– 58
–
30,316
–
29,133
–
7,137
–
10,729
–
96,328
97,412
101,814
79,525
The amount of temporary differences related to holdings in subsidiaries and associated companies, as well
as interests in joint ventures for which, according to IAS 12. 39, no deferred tax liabilities were recognized, is
€ 18.8 million (previous year: € 6 .8 million).
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF INCOME (LOSS)
Existing but not recognized tax losses carried forward can be utilized as follows:
Dec. 31, 2011
€ ’000
Within One Year
Within Two Years
Within Three Years
Within Four Years
Within Five Years or Longer
Can be Carried Forward Indefinitely
Dec. 31, 2010
€ ’000
296
0
1,005
550
0
6,620
0
3,080
5,191
4,663
6,492
14,913
17,824
12,897
24,316
27,810
Deferred tax assets for which utilization depends on future taxable profits in excess of the profits arising from
the reversal of existing taxable temporary differences and where the company has incurred past losses amounted
to € 4.4 million (previous year: € 5 .3 million). Recognition of these deferred tax assets is based on relevant forecasting, which justifies the expectation they will be utilized.
Deferred taxes of € 3.2 million (previous year: € 6.2 million) were recognized directly in equity. Of which € – 30,000
are attributable to fair value changes of securities and 3.3 million to fair value changes of derivative financial
instruments.
The tax rate of B. Braun Melsungen AG is 28. 2 percent (previous year: 27.4 percent). The increase is due to an
increase in the average commercial tax rate. The tax expense calculated using B. Braun Melsungen AG’s tax rate
can be reconciled to the actual tax expense as follows:
2011
€ ’000
Tax Rate of B. Braun Melsungen AG
Profit before Taxes
Expected Income Tax at Parent Company's Tax Rate
Differences due to Other Tax Rates
Changes to Deferred Tax Assets and Liabilities due to Changes in Tax Rates
Tax Reductions due to Tax-exempt Income
Tax Increases due to Non-deductible Expenses
Addition / Deduction of Trade Tax and Similar Foreign Tax Items
2010
€ ’000
28.2 %
27.4 %
360,160
389,618
– 101,601
– 106,911
– 3,021
– 6,782
– 794
796
7,637
10,298
– 11,402
– 9,244
– 1,591
– 1,591
Final Withholding Tax on Profit Distributions
– 841
– 749
Tax Credits
2,268
2,632
Tax Income (Expense) relating to Previous Periods
3,245
– 2,739
Change to Valuation Allowances on Deferred Tax Assets
– 118
9
686
712
Profit (Loss) of Financial Investments recognized using the Equity Method
Other Tax Effects
Actual Tax Expense
Effective Tax Rate
1,096
1,314
– 104,436
– 112,255
29.0 %
28.8 %
99
100
11 Earnings per Share
Earnings per share are calculated according to IAS 33 by dividing the consolidated annual net profit (excluding
non-controlling interests) by the number of shares in issue. The number of shares eligible for dividends remained
unchanged at 19,404,000 during the fiscal year. There were no outstanding shares as of December 31, 2011 or
December 31, 2010 that could have diluted the earnings per share. Earnings per share amounted to € 12 . 22 (previous year: € 13. 27).
The dividend paid in 2011 and 2010 for the respective previous fiscal year was € 24 million (€ 1. 24 per share).
The Management Board and Supervisory Board are proposing a dividend of € 1. 24 per share for fiscal year 2011.
The proposed dividend must be ratified by the Annual Shareholders’ Meeting on March 8, 2012. This dividend
liability is not included in the consolidated financial statements.
12 Other Notes to the Consolidated Statement of Income
Material costs
The following material costs are included in the cost of goods sold.
Expenses for Raw Materials and Acquired Merchandise
2011
€ ’000
2010
€ ’000
1,677,357
1,592,717
In 2010, expenses related to inventory write-downs recognized in cost of goods sold were € 23.9 million (previous year: € 10 .8 million) and reversals of write-downs from previous periods (increase in net realizable value)
of € 4 . 2 million (previous year: € 3.1 million) were recognized.
Payments under operating leases
2011
€ ’000
2010
€ ’000
69,834
68,661
Payments under operating leases include € 1.2 million (previous year: € 1.1 million) of payments under sub-leases.
Leasing expenses are predominantly included in cost of goods sold.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF INCOME (LOSS)
Personnel Expenditures / Employees
The following personnel expenditures are recognized in the statement of income:
Personnel Expenditures
Wages and Salaries
Social Security Payments
Welfare and Pension Expense
2011
€ ’000
2010
€ ’000
1,343,766
1,288,877
253,079
243,413
52,022
49,382
1,648,867
1,581,672
Employees by Function (Average for the Year, including Temporary Employees)
Production
25,966
24,406
Marketing and Sales
9,884
9,414
Research and Development
1,316
1,211
Technical and Administration
5,573
5,285
42,739
40,316
2,051
1,926
5
5
of which Part-time
of which in Proportionately Consolidated Companies
Personnel expenditures do not include interest accruing to pension provisions, which is recognized under net
interest income.
The average headcount is prorated based on the date of first consolidation or final consolidation, as appropriate.
Employees of joint venture companies are included in the total based on the percentage of interest.
In regard to first-time consolidated companies, an annual average of 280 employees was reported for 2011,
compared to 235 for 2010.
101
102
13 Total Auditors’ Fee
The following fees were recognized as expense for services provided worldwide in 2011 by the auditors of
PricewaterhouseCoopers:
Audit Fees
of which PricewaterhouseCoopers AG, Germany
Other Certification Services
of which PricewaterhouseCoopers AG, Germany
Tax Advisory Services
of which PricewaterhouseCoopers AG, Germany
Other Services
of which PricewaterhouseCoopers AG, Germany
of which PricewaterhouseCoopers AG, Germany
2011
€ ’000
2010
€ ’000
3,929
3,760
1,019
983
75
52
0
12
946
1,084
295
285
238
652
38
469
5,188
5,548
1,352
1,749
The audit fees include all fees paid and outstanding to PricewaterhouseCoopers plus reimbursable expenses for
the audit of the Group’s consolidated financial statements and the audit of the financial statements of B. Braun
Melsungen AG. Fees for certification services mainly relate to certifications performed as part of acquisitions and
divestitures, the examination of internal control systems, particularly IT systems, and expenses related to statutory
or judicial requirements. The item tax advisory services mainly relates to fees for advice on completing tax returns,
checking tax assessments, support for company audits or other enquiries conducted by the tax authorities as well
as tax advice related to transfer pricing.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
103
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Notes to the Consolidated Statement of Financial Position
14 Intangible Assets
Cost of Acquisition
or Manufacture
January 1, 2010
Foreign Currency Translation
Additions to Scope of Consolidation
Acquired
Goodwill
Licenses,
Trademarks
and Other
Similar Rights
Internally
generated
Intangible
Assets
Advance
Payments
Total
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
61,209
226,007
19,315
13,607
320,138
1,257
9,660
1,448
2
12,367
0
170
0
0
170
Additions
600
31,379
13,285
19,945
65,209
Transfers
451
7,184
0
– 5,768
1,867
Disposals
0
– 2,858
0
–9
– 2,867
December 31, 2010 / January 1, 2011
63,517
271,542
34,048
27,777
396,884
Foreign Currency Translation
– 878
1,374
1,021
– 39
1,478
Additions to Scope of Consolidation
9,668
1,489
0
17
11,174
0
– 15
0
0
– 15
Additions
3,418
29,123
12,224
19,488
64,253
Transfers
0
6,697
– 595
– 6,304
– 202
Write-ups
0
0
0
0
0
– 473
– 2,500
0
– 13
– 2,986
Disposals from Scope of Consolidation
Disposals
December 31, 2011
75,252
307,710
46,698
40,926
470,586
Accumulated Amortization 2011
503
198,378
3,737
0
202,618
Accumulated Amortization 2010
624
174,838
2,780
0
178,242
Carrying Amounts December 31, 2011
74,749
109,332
42,961
40,926
267,968
Carrying Amounts December 31, 2010
62,893
96,704
31,268
27,777
218,642
Amortization in the Fiscal Year
0
25,060
849
0
25,909
of which Unscheduled
0
6
0
0
6
The B. Braun Group capitalized € 12.2 million (previous year: € 12.2 million) of development costs during the year
under review. All the prerequisites for capitalization were met.
Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing. Each of these cashgenerating units represents the Group’s investment by the primary reporting segment and the country of operation.
104
A summary of the distribution of goodwill by cash-generating unit and the assumptions for their impairment
testing are listed below:
Hospital Care
Aesculap
OPM
€ ’000
B. Braun
Avitum
€ ’000
€ ’000
€ ’000
Total
€ ’000
62,892
December 31, 2010
Carrying Amount of Goodwill
21,333
5,128
18,756
17,675
Annual Growth Rate
3.1 %
2.8 %
2.6 %
3.1 %
Discount Rate
7.2 %
7.3 %
7.2 %
7.6 %
27,731
5,861
18,756
22,401
Annual Growth Rate
2.8 %
2.6 %
2.3 %
3.3 %
Discount Rate
7.9 %
7.9 %
7.9 %
8.0 %
December 31, 2011
Carrying Amount of Goodwill
74,749
The recoverable amount of a CGU is determined by calculating its value in use. These calculations are based on
projected cash flows derived from the three-year forecast approved by management.
Management has determined the budgeted gross margin based on past trends and expectations about future
market trends. The weighted average growth rates largely correspond to the predictions from industrial reports.
The discount rates used are pre-tax rates and reflect the specific risks of the relevant cash-generating units.
If the actual future gross margin had been 10 % less than the gross margin estimated by management on December 31, 2011, no impairment of goodwill would have occurred. The same holds true if the discount rate that
was used to calculate the discounted cash flow had been 10 % higher than management’s estimates.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
105
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
15 Property, Plant and Equipment
Cost of Acquisition
or Manufacture
Land and
Buildings
Technical
Plant and
Machinery
Other Plant,
Operating
and Office
Equipment
Advance
Payments and
Assets under
Construction
Total
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
1,004,133
1,593,138
537,162
336,960
3,471,393
32,960
95,498
27,116
14,549
170,123
1,971
8,898
1,379
215
12,463
Additions
72,040
105,743
54,852
277,527
510,162
Transfers
78,097
86,365
18,701
– 185,032
– 1,869
0
0
0
0
0
January 1, 2010
Foreign Currency Translation
Additions to Scope of Consolidation
Subsequent Capitalization
Disposals
– 2,085
– 53,225
– 27,349
–5
– 82,664
1,187,116
1,836,417
611,861
444,214
4,079,608
Foreign Currency Translation
1,101
7,061
– 3,018
4,188
9,332
Additions to Scope of Consolidation
1,860
3,391
39
0
5,290
Additions
46,545
90,444
49,888
290,282
477,159
Transfers
76,985
110,424
43,473
– 230,680
202
December 31, 2010 / January 1, 2011
Subsequent Capitalization
Disposals
December 31, 2011
0
0
0
0
0
– 9,592
– 43,774
– 29,818
– 1,970
– 85,154
1,304,015
2,003,963
672,425
506,034
4,486,437
Accumulated Depreciation 2011
377,147
1,124,012
443,588
0
1,944,747
Accumulated Depreciation 2010
344,192
1,034,308
396,076
0
1,774,576
Carrying Amounts December 31, 2011
926,868
879,951
228,837
506,034
2,541,690
Carrying Amounts December 31, 2010
842,924
802,109
215,785
444,214
2,305,032
34,925
132,361
59,987
0
227,273
250
44
31
0
325
Depreciation in the Fiscal Year
of which Unscheduled
On the reporting date, no unfulfilled conditions or uncertainties with regards to market success existed, which
would have required to modify recognition in the statement of financial position.
Borrowing costs of € 2 .6 million were capitalized in the year under review (previous year: € 551,000). An interest
rate of 3.4 percent (previous year: 4.0 percent) was utilized in the calculations.
In the statement of financial position, government grants for investments in the amount of € 2.0 million (previous
year: € 2.6 million) have been deducted from the carrying amounts of the relevant assets. The current carrying
amount of property, plant and equipment acquired with government grants is € 43.4 million (previous year:
€ 49.4 million).
106
16 Finance Leasing
Intangible assets and property, plant and equipment include the following amounts for which the Group is lessee
under a finance lease:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Licenses, Trademarks and Other Similar Rights
620
573
Accumulated Amortization
– 92
– 74
Buildings
137,580
136,121
Accumulated Depreciation
– 35,243
– 32,501
15,725
15,925
– 10,270
– 9,913
Technical Plant and Machinery
Accumulated Depreciation
Other Plant, Operating and Office Equipment
13,836
13,193
Accumulated Depreciation
– 8,348
– 7,665
113,808
115,659
Net Carrying Amount
The obligations of the Group under finance leasing agreements are secured by property liens on the leased assets.
The minimum lease payments for liabilities under finance leasing agreements have the following maturities:
Dec. 31, 2011
Dec. 31, 2010
Nominal
Value
Discount
Net Present
Value
Nominal
Value
Discount
Net Present
Value
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
Less than One Year
12,691
4,674
8,017
12,581
5,034
7,547
Between One
and Five Years
40,119
15,191
24,928
41,980
16,535
25,445
Over Five Years
63,916
11,650
52,266
73,098
14,895
58,203
116,726
31,515
85,211
127,659
36,464
91,195
The two largest finance leasing agreements relate to the real estate for the Hospital Care Division’s LIFE facility
(carrying amount € 35.5 million), and the Aesculap Division’s Benchmark factory (carrying amount € 18.6 million).
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
17 Financial Investments Recognized Using the Equity Method of Accounting
and Other Financial Investments
The Group’s holdings in its major associated companies are as follows:
Country
Assets
€ ’000
Liabilities
€ ’000
Sales
€ ’000
Profit (Loss)
€ ’000
Holding
in %
France
85,293
35,094
104,532
8,239
27.9
Germany
31,639
10,975
53,634
4,000
27.9
Ireland
2,658
2,792
1,315
– 771
47.0
119,590
48,861
159,481
11,468
France
89,336
37,087
107,798
3,469
27.9
Germany
39,027
12,431
66,618
5,989
27.9
47.0
2010
Babolat VS
Schölly
Fiberoptic GmbH
B. Braun Avitum
Ireland Ltd.
2011
Babolat VS
Schölly
Fiberoptic GmbH
B. Braun Avitum
Ireland Ltd.
Ireland
2,719
3,338
2,131
– 485
131,082
52,856
176,547
8,973
As of December 31, 2011, the goodwill of holdings in associated companies totaled € 11.6 million (previous year:
€ 3.7 million).
107
108
Cost of Acquisition
Financial
Investments
(Equity
Method)
Other
Holdings
Loans to
Companies
in which the
Group holds
an Interest
Non-current
Financial Assets
Other Loans
Total
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
22,445
11,515
0
897
4,951
39,808
Foreign Currency Translation
0
0
0
0
30
30
Additions to Scope of Consolidation
0
0
0
0
200
200
Disposals from Scope of Consolidation
0
– 12,420
0
0
0
– 12,420
Additions
7,099
18,684
0
25
30
25,838
Disposals
0
– 878
0
– 12
– 1,029
– 1,919
January 1, 2010
Fair Value Adjustments
0
0
0
0
36
36
29,544
16,901
0
910
4,218
51,573
Foreign Currency Translation
0
0
0
0
– 18
– 18
Additions to Scope of Consolidation
0
0
0
0
58
58
Disposals from Scope of Consolidation
0
– 10,864
0
0
0
– 10,864
Additions
10,630
13,993
0
9
7,264
31,896
Transfers
0
0
0
0
7,300
7,300
Disposals
– 195
0
0
0
– 850
– 1,045
December 31, 2010 / January 1, 2011
Fair Value Adjustments
0
0
0
0
35
35
39,979
20,030
0
919
18,007
78,935
Accumulated Depreciation 2011
999
0
0
0
20
1,019
Accumulated Depreciation 2010
999
0
0
0
19
1,018
Carrying Amounts December 31, 2011
38,980
20,030
0
919
17,987
77,916
Carrying Amounts December 31, 2010
28,545
16,901
0
910
4,198
50,554
0
0
0
0
0
0
December 31, 2010
Depreciation in the Reporting Year
The following amounts represent the 50 percent share of the Group in assets, liabilities, sales, and profit in
joint ventures:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Non-current Assets
1,385
1,626
Current Assets
3,922
3,149
5,307
4,775
Assets
Liabilities
Non-current Provisions and Liabilities
Current Provisions and Liabilities
Net Assets
Sales
59
175
3,681
3,221
3,740
3,396
1,567
1,379
2011
€ ’000
2010
€ ’000
8,407
8,616
Operating Profit
192
150
Net Profit
174
135
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
109
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
18 Trade Receivables
Age Analysis of Trade Receivables
a) Non-impaired trade receivables
Total
Not yet
due
Overdue
up to 30 days
Overdue
31 to 60 days
Overdue
61 to 90 days
Overdue
91 to 180 days
Overdue more
than 180 days
915,163
611,084
78,252
34,066
30,605
59,777
101,379
1,003,485
621,575
85,868
34,739
29,625
71,492
160,186
Dec. 31, 2010
Trade Receivables
Dec. 31, 2011
Trade Receivables
A significant proportion of the non-impaired and overdue trade receivables are attributable to receivables from
social security providers, government or government-sponsored companies. The increase in receivables more than
180 days overdue is primarily attributable to receivables from public hospitals in Italy, Spain, and Portugal.
b) Trade receivables for which specific impairment provisions have been made
Total
Not yet
due
Overdue
up to 30 days
Overdue
31 to 60 days
Overdue
61 to 90 days
Overdue
91 to 180 days
Overdue more
than 180 days
Dec. 31, 2010
Trade Receivables
Impairment Provisions
Carrying Amount
47,627
12,715
2,255
1,035
800
4,207
26,615
– 29,247
– 2,734
– 1,626
– 600
– 487
– 2,264
– 21,536
18,380
9,981
629
435
313
1,943
5,079
Dec. 31, 2011
Trade Receivables
Impairment Provisions
Carrying Amount
37,251
8,953
2,200
626
951
2,308
22,213
– 24,384
– 2,137
– 1,177
– 441
– 694
– 1,511
– 18,424
12,867
6,816
1,023
185
257
797
3,789
With regard to trade receivables that are neither impaired nor in arrears, there were no indications as of the
reporting date that the debtors in question are not able to meet their payment obligations.
110
Impairment provisions made on trade receivables have changed as follows:
Amount of Impairment Provisions as of January 1
Currency Translation
2011
€ ’000
2010
€ ’000
33,423
33,412
– 16
2,292
9,743
10,995
Utilization
– 7,176
– 7,417
Releases
– 4,815
– 5,859
Amount of Impairment Provisions as of December 31
31,159
33,423
of which Specific
24,383
29,247
of which General
6,776
4,176
Additions
The total amount of additions consists of specific and general provisions for impairment.
The following table shows expenses for the complete derecognition of trade receivables and income from payments received against previously derecognized trade receivables:
2011
€ ’000
2010
€ ’000
Expenses for Complete Derecognition of Trade Receivables
8,951
5,813
Income from Trade Receivables Previously Derecognized
3,916
35
Fair value of collateral received totaled € 4.8 million (previous year: € 3.8 million). The collateral is mainly payment
guarantees, with terms extending to December 2012.
With regard to trade receivables, there is no concentration with respect to individual customers, currencies,
or geographic attributes. The largest receivable from a single customer is equivalent to approximately 0.6 percent
of all trade receivables reported.
As of December 31, 2011, B. Braun Group companies had sold receivables worth € 71.0 million (previous year:
€ 70.8 million) under an asset-backed securities (ABS) program with a maximum volume of € 100 million. The basis
for this transaction is the transfer of trade receivables of individual B. Braun subsidiaries to a special purpose
entity within the framework of an undisclosed assignment. The special purpose entity (SPE) is not consolidated because under IAS 27.12 ff, B. Braun neither holds a stake in it nor is able to control its management or finances
in order to benefit from its activities. Nor is consolidation mandatory under SIC-12 , as B. Braun does not bear the
majority of the SPE’s risks and rewards. The requirements for a receivables transfer according to IAS 39.15 ff are
met, since the receivables are transferred according to IAS 39.18 a). Verification in accordance with IAS 39. 20
shows that substantially all risks and rewards were neither transferred nor retained. The control of receivables
remained with B. Braun, as a further sale of the receivables is economically detrimental for the special purpose
entity. Therefore, according to IAS 39.30 B. Braun’s continuing involvement must be recognized. This includes,
on the one hand, the maximum amount that B. Braun could conceivably have to pay back under the senior and
third-ranking default guarantee assumed (€ 1.6 million, previous year: € 1.6 million). On the other hand, the
maximum expected interest payments until payment is received for the carrying amount of the receivables transferred are recognized in the statement of financial position (€ 476,000, previous year: € 483,000). The fair value
of the guarantee / interest payments to be assumed has been assessed at € 175,000 (previous year: € 169,000) and
recorded under other liabilities.
MANAGEMENT BOARD
|
JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
19 Other Assets
Dec. 31, 2011
Dec. 31, 2010
Residual Term
< 1 year
Residual Term
> 1 year
Residual Term
< 1 year
Residual Term
> 1 year
€ ’000
€ ’000
€ ’000
€ ’000
36,378
0
40,740
0
Receivables from Social Security Providers
1,835
567
1,791
379
Receivables from Employees
2,954
117
4,677
128
Advance Payments
7,392
0
7,764
0
21,226
2,815
17,110
3,219
Other Tax Receivables
Accruals and Deferrals
69,785
3,499
72,082
3,726
Receivables from Derivative Financial Instruments
3,337
0
10,945
20
Available-for-Sale Financial Assets
3,569
0
4,488
0
Held-for-Trading Financial Assets
9,830
0
11,035
0
Held-to-Maturity Financial Assets
0
0
87
0
66,192
32,316
60,410
45,652
82,928
32,316
86,965
45,672
152,713
35,815
159,047
49,398
Other Receivables and Assets
Other receivables mainly comprise loans granted and receivables under leasing agreements.
With regard to other receivables, there were no indications as of the reporting date that the debtors in question
will not be able to meet their payment obligations. No material amounts of receivables were overdue or impaired
as of the reporting date.
20 Inventories
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Raw Materials and Supplies
202,823
193,062
Provisions
– 11,337
– 10,654
Raw Materials and Supplies – Net
191,486
182,408
Work in Progress
139,184
144,157
Provisions
Work in Progress – Net
– 7,125
– 9,987
132,059
134,170
Finished Products, Goods
577,066
524,068
Provisions
– 67,210
– 60,624
Finished Products, Goods – Net
509,856
463,444
833,401
780,022
As of December 31, 2011, inventories of € 392.9 million (previous year: € 350.0 million) were recognized at net
realizable value.
No inventories were pledged as collateral for liabilities (previous year: € 9.1 million).
111
112
21 Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, other short-term highly liquid financial assets
with residual maturities of three months or less that are subject to no more than insignificant fluctuations in
value, and bank overdraft facilities. In the statement of financial position, utilized bank overdraft facilities are
shown under current financial liabilities as amounts due to banks.
Changes in cash and cash equivalents are shown in the Consolidated Statement of Cash Flows.
22 Subscribed Capital
The subscribed capital of B. Braun Melsungen AG in the amount of € 600 million consists of 19,404,000 bearer
shares without nominal value, which are fully paid up. Each share without nominal value represents a calculated
share of € 30.92 of the subscribed capital.
The Management Board is authorized, with the consent of the Supervisory Board, to increase the subscribed
capital by € 100 million by issuing new bearer shares for cash on one or more occasions before December 31,
2013 (authorized capital).
23 Capital Reserves and Retained Earnings
The capital reserve includes the premium from previous capital increases of B. Braun Melsungen AG.
Retained earnings include past earnings of consolidated companies where these were not distributed, and the
consolidated annual net profit, net of the share attributable to non-controlling interests. The statutory reserve
included in retained earnings amounts to € 29.4 million.
Changes in
Other Provisions
January 1, 2010
Reserve for
Cash Flow
Hedges
Fair Value
of Availablefor-Sale
Financial Assets
Reserve
for Currency
Translation
Differences
Total
€ ’000
€ ’000
€ ’000
€ ’000
– 1,007
57
– 112,291
– 113,241
0
– 22
0
– 22
Changes recognized directly in Equity
(after Taxes)
Changes in Fair Value of Securities
Changes in Fair Value of Financial Derivatives
3,403
0
0
3,403
0
0
114,164
114,164
Total
3,403
– 22
114,164
117,545
December 31, 2010 / January 1, 2011
2,396
35
1,873
4,304
0
11
0
11
– 12,885
0
0
– 12,885
Changes due to Currency Translation
Changes recognized directly in Equity
(after Taxes)
Changes in Fair Value of Securities
Changes in Fair Value of Financial Derivatives
Changes due to Currency Translation
0
0
3,085
3,085
Total
– 12,885
11
3,085
– 9,789
December 31, 2011
– 10,489
46
4,958
– 5,485
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Changes in the other equity capital components are shown in the Consolidated Statement of Changes in Equity.
Claims of shareholders to dividend payments are reported as liabilities in the period in which the corresponding
resolution is passed.
24 Non-controlling interests
Non-controlling interests relate to third-party interests in the equity of consolidated subsidiaries. They exist
in particular at Almo-Erzeugnisse E. Busch GmbH, Bad Arolsen, Germany, B. Braun Holding AG, Emmenbrücke,
Switzerland, and B. Braun Austria Ges.m.b.H., Maria Enzersdorf, Austria.
25 Provisions for Pensions and Similar Obligations
a) Pension obligations
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Provisions for Pension Obligations
532,289
512,563
Provisions for Similar Obligations
909
765
533,198
513,328
Payments of € 35.5 million are expected in 2012. Of this, € 13.2 million relates to contributions to external plans
and € 22.3 million to benefits that will be paid to beneficiaries directly by the employer.
The Group’s pension obligations relate to commitments under defined contribution and defined benefit plans.
For defined contribution plans, the Group has no further payment obligations once the contributions have been
paid. They are recognized as an operating expense in the amount of the contributions paid. In fiscal year 2011, this
amount was € 20.1 million (previous year: € 17.7 million).
In addition, the Group makes contributions to statutory basic provision plans for employees in many countries
(including Germany). However, since this covers various forms of social security benefit, no precise statement can
be made with regard to the part that solely relates to retirement payments. These expenses are shown under
social security contributions, under Note 12 Personnel Expenditures / Employees.
Employees’ claims under defined benefit plans are based on legal or contractual provisions.
Defined benefit plans based on legal regulations consist primarily of benefit obligations outside Germany at the
time of employment termination and are fulfilled in the form of a capital sum. The benefit amount depends mainly
on employees’ length of service and final salaries.
In Germany, benefit obligations stemming from contractual provisions primarily consist of annuity payments made
in the event of disability, death, or an employee reaching the defined age limit. The main pension plans for employees
in Germany who joined the company in 1992 or later have a modular form. Employees who joined the company before 1992, with a small number of exceptions, received commitments linked to their final salaries. In other countries,
benefit obligations from contractual provisions mainly consist of annuities based on length of service and salary.
113
114
Retirement benefits in Germany are predominantly financed by pension provisions. Abroad, existing retirement
obligations are partly financed through external pension funds.
The liability recognized in the statement of financial position for defined benefit pension plans is the net present
value of the defined benefit obligation (DBO) at the reporting date, allowing for future increases, less the fair
value of external plan assets at the reporting date, and adjusted for accumulated unrecognized actuarial gains
and losses and past service costs. The defined benefit obligation is calculated using the projected unit credit
method. The interest rate used to determine the net present value is usually the yield on prime corporate bonds
of similar maturity.
Actuarial gains and losses outside the corridor (a maximum of 10 percent of the total obligation and 10 percent
of the plan assets) are spread over the active employees’ average remaining working lives and recognized through
profit and loss.
Past service costs are amortized on a straight-line basis over the vesting period.
The amount of pension provisions in the statement of financial position is derived as follows:
Net Present Value of Funded Pension Obligations
Fair Value of External Plan Assets
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
260,238
236,917
– 201,835
– 184,651
Excess Cover / Shortfall
58,403
52,266
Net Present Value of Unfunded Pension Obligations
592,226
565,443
Unrealized Actuarial Gains (+) / Losses (–)
– 117,112
– 103,838
Unrecognized Past Service Costs
– 1,228
– 1,308
Effect of Asset Value Limitation
0
0
532,289
512,563
Pension Provision (Net)
of which Assets
of which Liabilities
2,896
3,491
535,185
516,054
2011
€ ’000
2010
€ ’000
512,563
484,835
325
1,414
The change in pension provisions in 2011 and 2010 was as follows:
Pension Provision (Net) as of January 01
Foreign Currency Translation
Changes in Scope of Consolidation
0
306
Transfers
–7
5,563
Payments
– 34,632
– 33,173
54,040
53,618
532,289
512,563
Pension Expense
Pension Provision (Net) as of December 31
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Pension expenses included in the statement of income consist of the following:
2011
€ ’000
2010
€ ’000
Current Service Costs
26,389
23,591
Interest Expense
37,960
37,228
Expected Return on External Plan Assets
– 8,465
– 8,450
Amortization of Actuarial Gains and Losses
2,800
1,515
Amortization of Past Service Costs
1,381
123
Effect of Lapsing and Settlement of Plans
– 6,025
681
0
– 1,070
Pension Expense on Defined Benefit Plans
54,040
53,618
Pension Expense on Defined Contribution Plans
20,098
17,664
Pension Expense
74,138
71,282
Effect of Asset Value Limitation
Current service costs, expenses from plan settlements and curtailments, amortized actuarial gains or losses,
and past service costs are included in personnel expenditures; the accrual of interest on the expected pension
obligations less the expected return on external plan assets is included under interest expense.
Experience adjustments to actuarial gains and losses were as follows:
2011
€ ’000
2010
€ ’000
2009
€ ’000
2008
€ ’000
2007
€ ’000
Experience Gains (+) / Losses (–)
on Pension Obligations
– 1,183
1,863
3,345
– 2,996
– 5,889
Experience Gains (+) / Losses (–)
on Plan Assets
– 5,640
4,781
4,849
– 23,776
– 4,179
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Pension benefit obligations and assets are reconciled as follows:
Net Present Value of Obligation at Start of Year
802,360
716,871
Current Service Costs
26,389
23,591
Interest Expense
37,960
37,228
Employee Contributions
3,061
2,539
Actuarial Gain (+) / Loss (–)
8,690
39,441
Currency Effects
7,435
23,200
Total Benefits Paid
– 28,263
– 31,362
Past Service Costs
1,299
223
Effect of Changes in Scope of Consolidation
Effect of Transfers
Effect of Plan Settlements
Effect from Lapsing of Obligations
Net Present Value of Obligation at End of Year
0
306
–7
6,834
– 326
– 15,609
– 6,134
– 902
852,464
802,360
115
116
The effect from the lapsing of obligations is based predominantly on the part of the obligations from annual
benefits in an insurance event in Germany, which no longer applied on the reporting date.
Market Value of Plan Assets at Start of Year
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
184,651
163,268
Expected Return on External Plan Assets
8,465
8,450
Currency Effects
5,364
18,141
Actuarial Gain (+) / Loss (–)
– 5,640
4,781
Employer Contributions
12,696
11,369
Employee Contributions
Fund Payments
Effect of Changes in Scope of Consolidation and Transfers
Effect of Plan Settlements
Market Value of Plan Assets at End of Year
3,061
2,539
– 6,327
– 9,558
0
1,270
– 435
– 15,609
201,835
184,651
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
8,465
8,450
The following table shows the actual return on external plan assets:
Expected Return on External Plan Assets
Actuarial Gain (+) / Loss (–)
– 5,640
4,781
2,825
13,231
Dec. 31, 2011
%
Dec. 31, 2010
%
Equities and Similar Securities
28
33
Bonds and Other Fixed-Income Securities
10
6
Actual Return on External Plan Assets
The plan assets consist of the following:
Real Estate
1
1
Other Assets
61
60
100
100
Dec. 31, 2011
%
Dec. 31, 2010
%
Discount Rate
4.6
4.7
Future Salary Increases
2.9
2.9
Future Pension Increases
1.7
1.8
The calculation of pension obligations was based on the following assumptions:
MANAGEMENT BOARD
|
JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Pension expense was calculated using the following assumptions:
2011
%
2010
%
Discount Rate
4.7
5.1
Future Salary Increases
2.9
2.9
Future Pension Increases
1.8
1.8
Expected Return on External Plan Assets
4.4
5.0
The percentages shown are weighted average assumptions. For the euro area, a uniform discount rate of 4.9 percent (previous year: 5.0 percent) was applied to determine the pension liability.
The Heubeck Mortality Tables 2005 G served as the basis for measuring German pension obligations, based on age
and gender-specific fluctuation probabilities. The pension obligations of foreign subsidiaries are assessed on the
standard basis for the country in question.
The expected long-term return on external plan assets is determined for each asset class based on capital market
surveys and yield forecasts. 61 percent of plan assets fall into the “other assets” category, primarily insurance
policies. The published or anticipated returns of the insurance companies in question were used to determine the
anticipated long-term return on those plan assets.
The trends for pension obligations and plan assets are as follows:
Net Present Value of
Unfunded Pension Obligations
Net Present Value of
Funded Pension Obligations
Plan Assets
Funding Status
2011
2010
2009
2008
2007
€ million
€ million
€ million
€ million
€ million
592.2
565.5
514.3
450.5
463.3
260.2
236.9
202.5
185.5
173.3
– 201.8
– 184.7
– 163.2
– 148.9
– 153.7
650.6
617.7
553.6
487.1
482.9
b) Termination Benefits
Benefits upon termination of employment are payable if an employee is laid off prior to the normal retirement
date or if an employee voluntarily agrees to a redundancy payment. The Group recognizes termination benefits
when there is a proven obligation to either terminate the employment of a current employee in accordance with
a detailed formal plan that cannot be rescinded or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits coming due more than 12 months after the reporting date are recognized
at net present value.
117
118
26 Other Provisions
The major categories of provisions changed as follows:
Other Non-current
Provisions
Personnel
Expenditures
Uncertain
Liabilities
Other
Total
€ ’000
€ ’000
€ ’000
€ ’000
45,923
12,670
4,952
63,545
Foreign Currency Translation
446
878
133
1,457
Transfers
958
0
4,610
5,568
January 1, 2010
Utilization
– 3,790
– 1,103
– 2,071
– 6,964
Release
– 157
– 634
– 278
– 1,069
Additions
7,907
3,043
3,232
14,182
51,287
14,854
10,578
76,719
171
– 589
– 108
– 526
0
26
0
26
December 31, 2010 / January 1, 2011
Foreign Currency Translation
Interest
Transfers
152
– 35
– 2,528
– 2,411
– 4,889
– 3,149
– 840
– 8,878
Release
– 216
– 3,978
– 584
– 4,778
Additions
5,290
3,369
1,289
9,948
51,795
10,498
7,807
70,100
Personnel
Expenditures
Warranties
Uncertain
Liabilities
Other
Total
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
8,613
5,133
13,401
23,089
50,236
Utilization
December 31, 2011
Other Current
Provisions
January 1, 2010
Foreign Currency Translation
0
150
792
317
1,259
Transfers
– 5,338
0
0
– 4,610
– 9,948
Utilization
– 3,257
– 2,312
– 11,259
– 14,583
– 31,411
– 18
– 133
– 742
– 891
– 1,784
Additions
1,120
2,828
3,387
16,067
23,402
December 31, 2010 /
January 1, 2011
1,120
5,666
5,579
19,389
31,754
18
63
54
– 21
114
5
851
1,404
182
2,442
Release
Foreign Currency Translation
Transfers
Changes in Scope
of Consolidation
Utilization
Release
0
0
0
0
0
– 970
– 5,241
– 788
– 12,327
– 19,326
– 3,843
– 53
– 139
– 920
– 2,731
Additions
1,476
6,900
3,789
12,622
24,787
December 31, 2011
1,596
8,100
9,118
17,114
35,928
Non-current provisions for personnel expenditures primarily consist of provisions for partial retirement plans and
anniversary payments.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Other provisions mainly consist of provisions for other obligations in the area of personnel and social services,
guarantees, possible losses from contracts, legal and consulting fees, and a number of identifiable individual
risks. The additional other provisions refer predominantly to actuarial provisions and provisions for not yet settled
insurance claims of REVIUM Rückversicherung AG, Melsungen, Germany.
The majority of non-current provisions will result in payments due within five years.
27 Financial Liabilities
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Non-current Liabilities
Profit Participation Rights
70,764
63,308
511,218
604,517
Liabilities under Finance Leases
41,232
45,438
Liabilities under Finance Leases to Affiliated Companies
35,962
38,199
Liabilities under Borrowings from Non-banks
39,341
40,499
Liabilities to Banks
Other Financial Liabilities
462
0
698,979
791,961
6,732
4,048
Current Liabilities
Profit Participation Rights
Liabilities to Banks
587,212
343,020
Liabilities under Finance Leases
5,780
5,456
Liabilities under Finance Leases to Affiliated Companies
2,237
2,102
Liabilities under Borrowings from Non-banks
75,965
63,349
Liabilities under Bills of Exchange
10,922
13,894
Other Financial Liabilities
13,842
9,619
702,690
441,488
Total Financial Liabilities
1,401,669
1,233,449
Other financial liabilities include € 8.1 million of advance payments received for orders (previous year: € 4.1 million).
Term structure of financial liabilities:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Due within One Year
702,690
441,488
Due within One to Five Years
462,357
571,109
Due in over Five Years
236,622
220,852
1,401,669
1,233,449
119
120
Under the B. Braun Incentive Plan, B. Braun Melsungen AG offers a series of profit participation rights, which may
be acquired by eligible managers on a voluntary basis. With the issuance of profit participation rights, the company
grants employees the right to share in the profit and losses of B. Braun Melsungen AG in return for their investment
of capital.
Each profit participation right has a ten-year term. Interest on the rights is linked to the dividends paid to shareholders in B. Braun Melsungen AG, and the repayment amount is linked to the Group’s equity.
As an incentive for the investment made by employees, the company offers an entitlement bonus of 25 percent in
the form of additionally assigned participation rights. The entitlement bonus is paid to employees two years after
their investment. The additional participation rights are recognized in the corresponding periods through profit
and loss.
As of December 31, 2011, a total of 701,123 rights had been issued. Their years of issue are as follows:
Year of Issue
Number
2002
49,625
2003
54,011
2004
59,973
2005
72,451
2006
72,127
2007
80,467
2008
93,927
2009
69,123
2010
80,217
2011
69,202
701,123
Together with several subsidiaries, B. Braun Melsungen AG has entered into a syndicated loan facility of € 400 million originally with 15 banks. The loan may be utilized by the borrowers as a revolving credit in EUR , or alternatively in USD, CHF, GBP, or JPY. The loan bears a variable interest rate based on Euribor and Libor for the currency
in question. In addition, the loan agreement allows for an adjustment to the interest margin depending on
the B. Braun Group’s level of debt. The term of the loan expires on May 31, 2013. The loan amount declined to
€ 381 million in the reporting year and will be reduced to € 335 million in the final year.
In July 2011, B. Braun Melsungen AG obtained € 25 million under a bilateral, fixed-interest loan agreement with
a term until 2015. In a bond transaction in November 2011, B. Braun Melsungen AG issued corporate bonds
totaling € 150.0 million. The bonds have a maturity of 5 years (€ 50 .0 million), 7 years (€ 80 million) and 10 years
(€ 20.0 million) and are equipped with a fixed and variable rate of interest. The subscribers of the bonds were
banks in Germany and European countries. The funds raised were used to finance the current capital requirement
of B. Braun Melsungen AG and the Group.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As of December 31, 2011, the Group had unutilized credit lines in different currencies totaling € 837.9 million
(previous year: € 861.9 million).
Loans from non-banks are unsecured. Interest rates on loans denominated in euro are between 0 .42 percent per
annum for overnight loans and 5.50 percent per annum for non-current loans, depending on the length of the
interest-rate lock-in period.
The carrying amounts of the interest-bearing liabilities are as follows for the currencies below:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
EUR
1,080,989
910,236
USD
195,753
211,723
Other
124,927
111,490
1,401,669
1,233,449
Liabilities from finance leasing are recognized at the net present value of the leasing payments. These are secured
by property liens on leased property. Of the other liabilities, € 16 .5 million (previous year: € 13. 2 million) are
covered by property liens. Liabilities related to loans from non-banks include loans from B. Braun Melsungen AG
shareholders in the amount of € 51.7 million (previous year: € 45.7 million).
121
122
The carrying amount of financial assets used as collateral for liabilities or contingent liabilities was € 33,000
(previous year: € 31,000). The collateral provided was assigned receivables. The following table shows the contractually agreed upon (undiscounted) interest and repayments on financial liabilities, other financial liabilities,
and derivative financial instruments with negative fair value:
Dec. 31, 2010
Carrying Amounts
€ ’000
Profit Participation Rights
Cash Outflows
within one year
Interest
€ ’000
Repayments
€ ’000
67,356
148
4,048
947,537
51,331
343,020
Liabilities under Finance Leases
50,894
2,671
5,456
Liabilities under Finance Leases to Affiliated Companies
40,301
2,469
2,102
103,848
2,951
63,349
0
0
0
52,626
0
52,626
216,757
0
215,698
6,319
0
183,959
Liabilities to Banks
Liabilities under Borrowings from Non-banks
Liabilities under Bills of Exchange
Liabilities from ABS Transactions and Other Financial Liabilities
Trade Accounts Payable
Liabilities from Derivative Financial Instruments
Dec. 31, 2011
Profit Participation Rights
77,497
154
6,733
1,098,430
32,526
587,212
Liabilities under Finance Leases
47,011
2,495
5,780
Liabilities under Finance Leases to Affiliated Companies
38,199
2,334
2,237
115,307
2,590
75,966
0
0
0
Liabilities to Banks
Liabilities under Borrowings from Non-banks
Liabilities under Bills of Exchange
Liabilities from ABS Transactions and Other Financial Liabilities
Trade Accounts Payable
Liabilities from Derivative Financial Instruments
43,995
0
43,533
219,699
176
218,743
16,577
3,000
387,962
All instruments held as of December 31, 2011 and for which payments had already been contractually agreed upon
are included. Amounts in foreign currency were each translated at the closing rate on the reporting date. The
variable interest payments arising from the financial instruments were calculated using the last interest rates
fixed before December 31, 2011. Financial liabilities that can be repaid at any time are always assigned to the
earliest possible period.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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123
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Cash Outflows
within one to two years
Interest
€ ’000
Cash Outflows
within two to five years
Repayments
€ ’000
Interest
€ ’000
Cash Outflows
within five to ten years
Repayments
€ ’000
Interest
€ ’000
Cash Outflows
after ten years
Repayments
€ ’000
Interest
€ ’000
Repayments
€ ’000
0
139
6,090
334
19,750
231
37,468
0
25,857
271,614
21,437
226,851
2,038
106,052
0
0
2,334
5,099
5,783
10,493
5,667
13,578
1,341
16,268
2,334
2,237
6,103
7,611
6,554
15,915
1,391
12,436
1,616
5,261
3,442
16,104
1,025
18,248
1
886
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
889
0
170
0
0
0
0
0
0
0
0
0
0
0
0
141
7,270
336
23,015
220
40,479
0
0
19,774
162,740
27,950
220,944
9,031
125,521
0
2,013
2,165
4,252
5,259
10,235
4,286
11,542
1,121
15,202
2,191
2,381
5,615
8,099
5,540
16,506
703
8,976
1,316
5,995
3,114
16,964
595
15,130
1
1,252
0
0
0
0
0
0
0
0
0
462
0
0
0
0
0
0
0
935
0
21
0
0
0
0
31,000
1,414
78
1,821
11
118
0
0
124
28 Additional Disclosures on Financial Instruments
Carrying amount and fair value by measurement category:
Measurement
Category as
per IAS 39
Carrying
Amount
Dec. 31, 2011
Fair Value
Dec. 31, 2011
Carrying
Amount
Dec. 31, 2010
Fair Value
Dec. 31, 2010
€ ’000
€ ’000
€ ’000
€ ’000
Assets
Trade Receivables
LaR
1,016,352
1,015,893
933,543
933,543
Other Receivables
LaR
132,131
128,497
110,260
110,260
Held-to-Maturity Financial Assets
HtM
0
0
87
87
Available-for-Sale Financial Assets
AfS
4,488
4,488
5,398
5,398
Other Interests
AfS
20,030
n. a.
16,901
n. a.
Financial Assets Held-for-Trading
FAHfT
9,830
9,830
11,035
11,035
Derivatives not in a Hedge
FAHfT
2,584
2,584
10,965
10,965
Derivatives in a Hedge
n. a.
753
753
0
0
Cash and Cash Equivalents
LaR
45,340
45,447
34,369
34,369
Liabilities
Profit Participation Rights
FLAC
77,497
77,497
67,356
67,356
Liabilities to Banks
FLAC
1,098,430
1,120,309
947,537
969,617
Liabilities under Finance Leases
n. a.
85,210
86,228
91,195
93,982
Liabilities under Borrowings from Non-banks
FLAC
115,307
117,272
103,848
104,692
Other Financial Liabilities
FLAC
17,111
17,111
19,460
19,460
Trade Accounts Payable
FLAC
219,699
219,037
216,757
216,757
Other Liabilities
FLAC
198,185
198,554
179,768
179,768
Derivatives not in a Hedge
FLHfT
3,087
3,087
3,069
3,069
n. a.
13,490
13,490
3,250
3,250
1,078,172
Derivatives in a Hedge
Summary by IAS 39 Measurement Category:
Loans and Receivables
LaR
1,193,764
1,189,779
1,078,172
Held-to-Maturity Financial Assets
HtM
0
0
87
0
Available-for-Sale Financial Assets
AfS
4,488
4,488
22,299
5,398
Financial Assets Held-for-Trading
FAHfT
13,167
13,167
22,000
22,000
Financial Liabilities measured at Amortized Cost
FLAC
1,728,616
1,752,168
1,534,726
1,557,650
Financial Liabilities Held-for-Trading
FLHfT
3,087
3,087
3,069
3,069
LaR Loans and Receivables | HtM Held-to-Maturity Financial Assets | AfS Available-for-Sale Financial Assets | FAHfT Financial Assets Held-for-Trading
FLAC Financial Liabilities measured at Amortized Cost | FLHfT Financial Liabilities Held-for-Trading
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
The available-for-sale financial assets comprise:
Equities and Similar Securities
Listed Securities
of which Non-current
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
4,488
5,398
919
910
These are reported under other financial investments and other financial assets. No available-for-sale financial
assets were impaired in 2011 or 2010 .
Other assets include other receivables and other financial assets in the amount of € 105.9 million and other
loans in the amount of € 18.0 million.
The maximum credit risk for each measurement category of financial assets corresponds to its carrying amount.
Trade receivables are partly securitized with reservation of title, which reduces the maximum default risk in this
measurement category by € 29.8 million.
Cash and cash equivalents, trade receivables, and other receivables have predominantly short residual terms,
thus their carrying amounts are close to fair value as of the reporting date.
The fair values of other non-current liabilities and held-to-maturity financial investments with residual terms
of over one year correspond to the net present values of the payments associated with the assets, taking account
of the current interest rate parameters in each case, which reflect market-based changes in terms and in expectations.
Trade accounts payable and other liabilities regularly have short residual terms; the values reported on the
statement of financial position are close to fair value.
The fair values of amounts due to banks and other lenders, borrower’s note loans, and other financial liabilities
are calculated as the net present value of the payments associated with the liabilities, based on the relevant yield
curve in each case.
To date, the Group has not exercised the option of designating financial assets and liabilities upon initial recognition
as financial liabilities measured at fair value through profit and loss.
125
126
The table below shows financial instruments where subsequent measurement is at fair value. These are categorized
into levels 1 to 3, depending on the extent to which fair value can be measured:
–
–
–
Level 1 – Measurement at fair value based on (unadjusted) quoted prices on active markets for identical financial
assets or liabilities.
Level 2 – Measurement at fair value based on parameters, which are not quoted prices for assets or liabilities
as in level 1, but which are either directly derived from them (i. e., as prices) or indirectly derived from them
(i. e., derived from prices).
Level 3 – Measurement at fair value using models that include parameters not based on observable market data
to value assets and liabilities.
Level 1
€ ’000
Level 2
€ ’000
Level 3
€ ’000
Total
€ ’000
Dec. 31, 2010
Derivative Financial Assets measured at
Fair Value through Profit and Loss
Available-for-Sale Financial Assets
0
10,965
0
10,965
5,398
0
0
5,398
0
– 3,069
0
– 3,069
Derivative Financial Liabilities measured at
Fair Value through Profit and Loss
without Hedging Relationship
Derivative Financial Liabilities
with Hedging Relationship
0
– 3,250
0
– 3,250
5,398
4,646
0
10,044
0
3,337
0
3,337
4,488
0
0
4,488
without Hedging Relationship
0
– 3,087
0
– 3,087
Derivative Financial Liabilities
with Hedging Relationship
0
– 13,490
0
– 13,490
4,488
– 13,240
0
– 8,752
Dec. 31, 2011
Derivative Financial Assets measured at
Fair Value through Profit and Loss
Available-for-Sale Financial Assets
Derivative Financial Liabilities measured at
Fair Value through Profit and Loss
There were no moves between levels 1 and 2 in the period under review.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
29 Trade Accounts Payable and Other Liabilities
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Trade Accounts Payable
956
1,059
Liabilities to Social Security Providers
929
610
6,559
3,892
Non-current Liabilities
Liabilities to Employees, Management and Shareholders
Deferred Income and Accruals
73
194
7,561
4,696
Other Liabilities
19,951
6,016
Subtotal Other Liabilities
27,512
10,712
218,743
215,698
Current Liabilities
Trade Accounts Payable
Liabilities to Social Security Providers
Liabilities to Employees, Management and Shareholders
Deferred Income and Accruals
Other Tax Liabilities
Liabilities from Derivative Financial Instruments
Other Liabilities
25,762
21,822
201,761
190,649
9,733
8,790
58,122
70,353
295,378
291,614
16,577
6,319
178,846
173,752
195,423
180,071
Subtotal Other Liabilities
490,801
471,685
Total Liabilities
738,012
699,154
The Group has designated payer interest rate swaps (“pay fix – receive variable”) as cash flow hedges in order to
hedge the variable interest payments on a nominal credit volume of € 60 million (previous year: € 30 million).
Changes in the cash flows of the underlying transaction resulting from changes in the reference interest rate are
compensated for by the changes in the cash flows of the interest rate swap. The hedging measures are designed
to hedge the cash flow from bank liabilities against an increase in the reference interest rate. Credit risks are not
covered through the hedge. The related cash flows are likely to occur through fiscal year 2017. The effectiveness
of hedges was measured prospectively and retrospectively using the dollar-offset method. In the fiscal year, a hedge
with a hedge volume of € 20 million became ineffective. The other hedges were effective. The effective portion
of changes in the fair value of designated interest rate swaps is recognized in equity and amounts to a total of
€ – 2.1 million (previous year: € 255,000). The ineffective portion of changes in value is recognized directly in the
statement of income under net financial income and is € 0 (previous year: € – 40,000). Amounts accrued under
equity are transferred to the statement of income as income or expense in the period in which the hedged underlying transaction is recognized in the statement of income.
From the hedge that became ineffective in the fiscal year and from an unwound hedge on a payer interest rate
swap, losses remained at the time of unwinding this hedge recognized in the capital equity on an accumulative
basis, and they are recognized on entry of the originally hedged transaction through profit and loss in accordance
with the effective interest rate method in the statement of income. In 2011, this resulted in an expense of
€ – 456,000 (previous year: € – 143,000) which was transferred from equity to the statement of income.
Other liabilities mainly include remaining payments related to company acquisitions, liabilities from ABS transactions, bonus obligations, and liabilities related to outstanding invoices.
127
128
Additional Information
30 Contingent Liabilities
Liabilities result exclusively from obligations to third parties and consist of:
Dec. 31, 2011
€ ’000
Uncertain Liabilities
Guarantees
Warranties
Contractual Performance Guarantees
Dec. 31, 2010
€ ’000
218
680
31,258
4,710
2,576
22,997
36,663
32,932
70,715
61,319
All cases relate to potential future obligations, which may arise upon the occurrence of corresponding events and
are entirely uncertain as of the reporting date.
31 Other Financial Liabilities
The Group leases numerous office buildings and warehouses under non-terminable operating lease agreements.
These agreements have differing terms and conditions, escalation clauses, and renewal options.
Future minimum lease payments expected in connection with non-terminable sub-leases on the reporting date,
amount to € 2.8 million (previous year: € 8.7 million).
The Group also leases manufacturing facilities and machinery under terminable operating lease agreements.
Leasing liabilities relating to moveable assets at the LIFE facility are € 8.7 million in 2012, € 3. 2 million annually
until 2014 and € 2.8 million in 2015.
The minimum payments of non-discounted future lease payments under operating lease and rental agreements
are due as follows:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Due within One Year
59,803
64,482
Due within One to Five Years
86,510
91,752
Due in over Five Years
27,584
29,731
173,897
185,965
Obligations under Rental and Leasing Agreements
Obligations from the Acquisition of Intangible Assets
0
0
Obligations from the Acquisition of Property, Plant and Equipment
113,193
128,418
Total
287,090
314,383
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
ADDITIONAL INFORMATION
Some Group companies enter into sale and leaseback agreements with B. Braun Holding GmbH & Co. KG as part
of their operating activities. These agreements are intended for sales financing, not to realize profits earlier.
The portion of total liabilities under rental and lease agreements accounted for by liabilities under sale and leaseback agreements is provided in the table below:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Due within One Year
4,416
4,603
Due within One to Five Years
6,930
6,513
Obligations under Sale and Leaseback Agreements
Due in over Five Years
0
0
11,346
11,116
During the normal course of business, B. Braun is subject to potential obligations stemming from lawsuits and
enforced claims. Estimates of possible future liabilities of this kind are uncertain. No material negative consequences
for the economic or financial situation of the Group are anticipated.
32 Financial Risk Management
Financial Risk Factors
The Group’s activities expose it to a variety of financial risks. These include currency, interest rate, credit, and
liquidity risks. The B. Braun Group’s policy strives to minimize these risks via systematic risk management, which
involves the use of derivative financial instruments.
Risk management is performed centrally by Group Treasury in accordance with policies approved by the Management Board. Group Treasury identifies, measures, and hedges financial risks in close cooperation with the Group’s
operating units. The Management Board provides written principles for Group-wide risk management together
with written policies covering specific areas such as foreign exchange, interest rate, and credit risk and the use
of derivative and non-derivative financial instruments.
a) Market Risk
Foreign Exchange Risk
The Group operates internationally and is therefore exposed to currency risk arising from fluctuations in the
exchange rates between various foreign currencies, primarily the US dollar. Currency risks arise from expected
future transactions, and assets and liabilities reported in the statement of financial position. Risk arises when
future transactions or assets or liabilities recognized in the statement of financial position are denominated in a
currency that is not the functional currency of the company. To hedge such risks, the Group uses forward foreign
exchange contracts.
The Group’s risk management policy is to hedge up to 60 percent of the net cash flow in USD, CHF, GBP, and JPY
expected over the next fiscal year on a continuous basis.
129
130
If the exchange rate of the US dollar compared to the euro on December 31, 2011, had been 10 % stronger (weaker),
profit before taxes – with all other variables remaining constant – would have been € 8.5 million (previous year:
€ 11.8 million) lower (higher). This would mainly have been attributable to gains / losses from foreign currency translation relating to US dollar-based loans and trade receivables. The remaining components of equity would have
been approximately € 32. 3 million (previous year: € 31.7 million) higher (lower), which would have been, among
other things, due to changes in value of cash flow hedges related to expected incoming payments in US dollars
impacting equity.
Interest Rate Risk
As the Group has no significant interest-bearing assets, changes in market interest rates affect its income and
operating cash flow primarily via their impact on its interest-bearing liabilities. The liabilities with variable interest
rates expose the Group to cash flow interest rate risk. Fair value interest rate risk arises from fixed-interest liabilities. Group policy is to maintain approximately 50 percent of its borrowings in fixed-rate instruments.
The Group hedges its cash flow interest rate risk using interest rate swaps. Under these interest rate swaps, the
Group agrees with other parties to exchange, at specified intervals, the difference between fixed and variable
interest rates derived from the agreed principal amounts. Interest rate swaps of this nature have the economic
effect of converting variable-rate into fixed-rate loans.
If market interest rates had been 100 basis points higher or lower as of December 31, 2011, profit before taxes –
with all other variables remaining constant – would have been approximately € 2 .3 million lower or higher for the
full year (previous year: € 4.1 million). This would have been mainly attributable to higher or lower interest expense for variable-rate interest-bearing financial liabilities. The other components of equity would have changed
only slightly.
b) Credit Risk
The Group has no significant concentrations of credit risk related to trade receivables. It has organizational guidelines that ensure that products are sold only to customers with a good payment history. Contracts on derivative
financial instruments and financial transactions are solely concluded with financial institutions with a good credit
rating and contain, as a rule, a provision that allows mutually offsetting positive and negative fair market values
in the event of the insolvency of a party.
c) Liquidity Risk
Prudent liquidity risk management includes maintaining sufficient reserves of cash, as well as ensuring the
availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature
of the environment in which the Group operates, Group Treasury aims to maintain the necessary flexibility in
funding by ensuring sufficient unutilized credit lines are available.
Capital Risk Management
The Group’s capital management seeks to ensure continuation as a thriving, independent family-run company,
in order to guarantee that shareholders continue to receive dividends and other interested parties receive the
amounts owed them, as well as maintaining an optimal equity structure to reduce the cost of capital.
Unchanged, the strategy of the Group in 2011 was to significantly exceed an equity ratio of at least 25 percent
that was agreed upon under the terms of the syndicated loan. Since the equity ratio calculated using the method
specified in the syndicated loan agreement differs only immaterially from the equity ratio calculated in the in
statement of financial position, this target was achieved in fiscal year 2011.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
ADDITIONAL INFORMATION
Derivative Financial Instruments
Fair value of financial derivatives is calculated using valuation models. The fair value of interest rate swaps is
calculated from the net present value of estimated future cash flows using the relevant yield curve on the reporting date. The fair value of forward foreign exchange contracts is calculated based on forward exchange rates
on the reporting date.
Changes in the fair value of derivative financial instruments that represent economically effective hedges under
the Group strategy are recognized through profit and loss, unless they are used in hedge accounting. When applying
hedge accounting for cash flow hedges, the fair market value changes from the effective portion are recognized in
equity. The fair value changes in hedging instruments more or less match the fair value changes in the hedged
underlying transactions.
The fair values of forward foreign exchange contracts are based on current European Central Bank reference exchange rates, adjusted for forward premiums or discounts. Market values of interest rate hedging instruments are
calculated using discounted forecast future cash flows. Market rates are applied for the remaining term of the
derivatives in question.
Nominal Volume
Forward Foreign
Exchange Contracts
Currency Options
Embedded
Derivatives
Nominal Volume
Residual Term > 1 Year
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
630,709
90,000
Fair Value
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
524,266
1,451
312
– 11,324
6,961
62,452
50,000
0
– 4,684
– 2,771
9,000
7,600
0
0
873
379
729,709
594,318
51,451
312
– 15,135
4,569
Depending on the fair value on the reporting date, derivative financial instruments are included under other assets
(if fair value is positive) or other liabilities (if fair value is negative).
Derivative financial instruments held for trading are recognized as current assets or liabilities. The total fair value
of a derivative hedging instrument is classified as a non-current asset / liability if the residual term of the hedged
instrument is more than 12 months; otherwise, it is classified as a current asset / liability.
See Note 29 regarding cash flow hedges recognized under other liabilities.
The Group designates forward foreign exchange contracts to hedge future foreign currency inflows and outflows
from the operating business of the B. Braun Group that are not denominated in the functional currency and are expected to arise with high probability. The purpose of the hedges is to reduce the volatility of foreign exchange
income and payments (and their measurement) with respect to foreign exchange risk. The effectiveness of hedges
is measured prospectively using the critical terms match method and retrospectively using the dollar-offset method.
131
132
As of December 31, 2011, the Group had designated forward foreign exchange contracts with a net fair value of
€ – 8.8 million (previous year: € 4.4 million) as cash flow hedges. All hedges were effective within the range
specified under IAS 39.
Gains of € 17.0 million (previous year: € 8.4 million) and losses of € 19.9 million (previous year: € 7. 2 million) arising
from changes in the fair values of foreign exchange derivatives related to cash flow hedges were recognized in
equity in fiscal year 2011. Gains of € 11.7 million (previous year: € 2 .3 million) and losses of € 1.4 million (previous
year: € 5.5 million) recognized in equity were transferred to other operating income or other operating expenses
during the fiscal year. As of the reporting date, the hedging measures had no ineffective portions. B. Braun expects
gains of € 753,000 and losses of € 9.5 million recognized in equity to be transferred to the statement of income
within the next twelve months.
33 Related Party Transactions
The B. Braun Group purchases materials, supplies, and services from numerous suppliers around the world in the
ordinary course of its business. These suppliers include companies in which the Group holds a non-controlling
interest and companies that have ties to members of B. Braun Melsungen AG’s Supervisory Board. Business
transactions with such companies are conducted on normal market terms. From the perspective of the B. Braun
Group, these are not materially significant. The B. Braun Group did not participate in any transactions significant
for it or for the related parties that were in any way irregular, and does not intend to do so in the future.
The following transactions were completed with related parties:
2011
€ ’000
2010
€ ’000
Sale of Goods and Services
Related Companies
12,165
9,748
of which B. Braun Holding GmbH & Co. KG
9,144
6,665
of which Associates
3,021
3,083
0
0
12,165
9,748
35,874
55,253
31,799
35,469
4,075
19,784
17,175
0
53,049
55,253
Key Management Personnel
Acquisition of Goods and Services
Related Companies
of which B. Braun Holding GmbH & Co. KG
of which Associates
Key Management Personnel
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
ADDITIONAL INFORMATION
Outstanding balances from the sale / acquisition of goods and services and from loans at the end of the year consist
of the following:
Dec. 31, 2011
€ ’000
Dec. 31, 2010
€ ’000
17,205
4,487
Outstanding Balances from the Sale of Goods and Services
Related Companies
of which B. Braun Holding GmbH & Co. KG
9,279
334
of which Joint Ventures
6,393
2,933
of which Associates
1,533
1,220
Valuation Allowances
0
0
Key Management Personnel
1
7
Valuation Allowances
0
0
17,206
4,494
229
229
41,893
47,464
38,199
44,775
Procurement Obligations
Outstanding Balances from the Acquisition of Goods and Services and from Loans
Related Companies
of which B. Braun Holding GmbH & Co. KG
of which Joint Ventures
of which Associates
Key Management Personnel
Procurement Obligations
0
851
3,694
1,838
52,314
46,221
94,207
93,685
1,959
1,096
Key management personnel are members of the Management Board and Supervisory Board of B. Braun Melsungen AG.
The related companies group includes B. Braun Holding GmbH & Co. KG, associated companies, joint ventures
and companies controlled by key management personnel or their close family members. The names of associated
companies and joint ventures are listed under Major Shareholdings.
The following items in the statement of financial position contain outstanding items with related parties:
–
–
–
Other Assets
Financial Liabilities
Other Liabilities
The loans granted by related individuals are short-term. Their interest rates are based on covered bond (Pfandbrief) yields.
Please see Note 27 for details of leasing liabilities to related companies.
133
134
Remuneration for members of the Management Board consists of a fixed and a variable, performance-related
component. They also receive pension commitments and benefits in kind. Benefits in kind consist mainly of the
value assigned for the use of company cars under German tax laws.
In addition to the duties and performance of Management Board members, the criteria for remuneration include
the Group’s financial position, results, and future projections.
The total remuneration of Management Board members consists of the following:
2011
€ ’000
2010
€ ’000
Fixed Remuneration
2,567
2,359
Variable Remuneration
3,181
4,216
Pension Expense
530
530
Bonuses
140
219
Other
425
245
6,843
7,569
Of the total, € 427,000 was attributable to the Chairman of the Management Board as fixed remuneration and
€ 597,000 as variable remuneration from profit-sharing.
Pension obligations totaling € 11.8 million exist to active members of the Management Board. Profit-sharing
bonus obligations to Management Board members reported under liabilities to employees, management and
shareholders total € 3.1 million. A total of € 20. 3 million has been reserved for pension obligations to former
Management Board members and their surviving dependants; current pension payments total € 1.5 million.
Supervisory Board remuneration totaled € 666,000.
The remuneration of Supervisory Board members is governed by the articles of incorporation and is approved at
the Annual Shareholders’ Meeting. The remunerations made to employee representatives on the Supervisory Board
for work outside their supervisory activities are in line with the market standards.
The Group has not made any loans to current or former members of the Management Board.
Liabilities stemming from profit participation rights for Management Board members were € 8.3 million (previous
year: € 6.5 million). See Note 27 for detailed information on profit participation rights.
The members of the Supervisory Board are listed on page 143 and the Management Board on pages 6 / 7.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
NOTES TO THE CONSOLIDATED STATEMENT
OF CASH FLOWS
Notes to the Consolidated Statement of Cash Flows
The consolidated statement of cash flows details changes in the B. Braun Group’s cash and cash equivalents during
the course of the fiscal year. In accordance with IAS 7, cash flows are categorized as those from operating,
investing, and financing activities. Cash flow from operating activities is calculated using the indirect method.
34 Gross Cash Flow from Operating Activities
The gross cash flow of € 543.4 million is the cash surplus from operating activities before any changes in working
capital, a decrease of € 19.6 million compared to the previous year. The change is primarily due to the lower
operating income of € 432. 2 million.
Cash flow from operating activities of € 449.9 million represents changes in current assets, current provisions, and
liabilities (excluding financial liabilities). The increase in inventories and receivables as well as current provisions
and liabilities resulted in a significantly lower outflow of € 93.6 million compared with the previous year. As a result,
the cash flow from operating activities is € 60.5 million above the previous year’s level.
35 Cash Flow From Investing Activities
A total of € 565.2 million was spent in 2011 to acquire property, plant and equipment, intangible assets, financial
investments, and company acquisitions. This was offset by disposal of property, plant and equipment and of
holdings (€ 16 .7 million), as well as dividend income received (€ 0.9 million), resulting in a cash outflow from
investing activities of € 547.6 million. Compared to the previous year this results in a reduction in cash outflows of € 9.8 million.
Investments made during the year were not fully covered by cash flow from operations. The remaining free cash
flow was € – 97.7 million (previous year: € – 168 .1 million).
Additions to property, plant and equipment and intangible assets under finance leasing do not result in cash
outflows and are therefore not included under investing activities. In the reporting year, these additions totaled
€ 2 .6 million (previous year: € 0 .9 million).
36 Cash Flow from Financing Activities
In 2011, cash flow from financing activities amounted to € 108 .3 million (previous year: € 155 .5 million). The net
balance of proceeds from and repayments of loans was € 146.0 million (previous year: € 181.6 million). Dividend
payments and capital contributions by non-controlling interests resulted in a total cash outflow of € 41. 2 million
(previous year: € 29.2 million). The change on the previous year in the amount of € – 47.2 million is primarily due
to decreased borrowing.
135
136
37 Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, and other short-term highly liquid financial
assets with residual maturities of three months or less that are subject to no more than insignificant fluctuations
in value.
As of December 31, 2011, restrictions on cash availability totaled € 308,000 (previous year: € 540,000). These
restrictions are primarily related to security deposits and collateral for tender business.
38 Events After the Reporting Date
No events occurred between the end of the fiscal year and the date on which the consolidated financial statements were prepared that have a material effect on the results of operations, financial position, or net assets
for 2011.
MANAGEMENT BOARD
|
JOURNAL
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GROUP MANAGEMENT REPORT
|
CONSOLIDATED FINANCIAL STATEMENT S
INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
The complete annual financial statements and management report for publication in the online edition
of the German Federal Gazette (Bundesanzeiger) have been supplemented with the following confirmation note:
We have audited the consolidated financial statements prepared by B. Braun Melsungen AG, Melsungen,
Germany, comprising the statement of financial position, statement of income (loss), statement of
comprehensive income, statement of changes in equity, statement of cash flows, and notes to the consolidated financial statements, together with the Group management report for the fiscal year from
January 1 to December 31, 2011. The preparation of the consolidated financial statements and the Group
management report in accordance with IFRS as adopted by the EU, and the additional requirements of
German commercial law pursuant to Section 315a (1) of the German Commercial Code (HG B), is the
responsibility of the Management Board of the Company. Our responsibility is to express an opinion
on the consolidated financial statements and on the Group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB
and the German generally accepted standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer (IDW). These standards require that we plan and perform the audit such
that misstatements materially affecting the presentation of the net assets, financial position, and results of operations in the consolidated financial statements in accordance with the applicable financial
reporting framework and in the Group management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures.
The effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the Group management report are examined
primarily on a test basis within the framework of the audit. The audit includes assessing the annual
financial statements of those entities included in consolidation, determining the scope of consolidation,
the accounting and consolidation principles used, and significant estimates made by the Management
Board, as well as evaluating the overall presentation of the consolidated financial statements and the
Group management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS
as adopted by the EU and the additional requirements of German commercial law pursuant to Section
315 a (1) HG B and provide a true and fair view of the net assets, financial position, and results of operations of the Group in accordance with these requirements. The Group management report is consistent
with the consolidated financial statements and, as a whole, provides an appropriate view of the Group’s
position and appropriately presents the opportunities and risks of future development.
Kassel, Germany, February 22, 2012
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Prof. Dr. Georg Kämpfer
German Public Auditor
Holger Plaum
German Public Auditor
137
138
MAJOR SHAREHOLDINGS
As of December 31, 2011
Company Name and Location
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
AESCULAP AG, Tuttlingen 2)
100.0
115,316
577,077
3,092
AESCULAP INTERNATIONAL GMBH , Tuttlingen 2)
100.0
205,777
0
0
AESCULAP SUHL GMBH , Suhl
100.0
3,655
10,305
131
ALMO -Erzeugnisse E. Busch GmbH, Bad Arolsen
60.0
22,426
58,306
353
B. Braun Avitum AG, Melsungen 2)
94.0
90,616
226,295
763
B. Braun Avitum Saxonia GmbH, Radeberg 2)
94.0
10,437
60,576
634
Germany
B. Braun Facility Services GmbH & Co. KG, Melsungen
100.0
120
14,702
83
B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen 2)
100.0
149,309
0
0
B. Braun Surgical GmbH, Melsungen 2)
100.0
154,535
0
0
B. Braun TravaCare GmbH, Hallbergmoos 2)
100.0
328
33,527
56
B. Braun Vet Care GmbH, Tuttlingen 2)
100.0
369
14,710
17
SteriLog GmbH, Tuttlingen
100.0
– 354
8,273
140
55.0
2,150
9,979
97
TransCare Service GmbH, Neuwied
Europe
AESCULAP CHIFA SP.ZO.O., Nowy Tomyśl / Poland
98.8
56,427
127,567
1,520
100.0
9,946
10,673
116
Avitum S.R.L., Timisoara / Romania
94.0
130
11,122
228
B. Braun Adria d.o.o., Zagreb / Croatia
36.0
4,065
11,365
30
B. Braun Austria Ges. m.b.H., Maria Enzersdorf / Austria
60.0
39,847
52,774
133
B. Braun Avitum France S.A.S., Gradignan / France
94.0
10,374
14,194
20
B. Braun Avitum Hungary Zrt., Budapest / Hungary
94.0
12,506
32,683
658
B. Braun Avitum Italy S.p.A., Mirandola / Italy
94.0
16,314
46,687
223
B. Braun Avitum Poland Sp.zo.o., Nowy Tomyśl / Poland
95.1
– 1,914
27,928
435
B. Braun Avitum Russia OOO, St. Petersburg / Russia
94.0
6,466
11,238
37
B. Braun Avitum s.r.o., Bratislava / Slovak Republic
93.7
– 315
9,114
160
B. Braun Avitum s.r.o., Prague / Czech Republic
93.7
13,512
23,021
228
B. Braun Avitum Turkey Sanayi Ticaret Anonim Sirketi, Ankara / Turkey
94.0
2,583
9,889
17
B. Braun Avitum UK Ltd., Sheffield / United Kingdom
94.0
573
21,035
189
B. Braun Holding AG, Sempach / Switzerland
51.0
149,829
0
0
AESCULAP S.A.S., Chaumont / France
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
139
MAJOR SHAREHOLDINGS
As of December 31, 2011
Company Name and Location
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
B. Braun Hospicare Ltd., Collooney Co Sligo / Republic of Ireland
100.0
10,008
15,125
90
B. Braun Medical AB, Dander / Sweden
100.0
2,461
41,138
48
51.0
141,181
249,233
837
B. Braun Medical A / S, Frederiksberg / Denmark
100.0
1,593
13,474
26
B. Braun Medical A / S, Vestskogen / Norway
100.0
2,407
22,164
33
B. Braun Medical B.V., Oss / Netherlands
100.0
5,817
55,811
150
B. Braun Medical EOOD, Sofia / Bulgaria
60.0
2,746
8,379
35
B. Braun Medical AG, Sempach / Switzerland
B. Braun Medical International S.L., Rubi / Spain
100.0
94,672
0
10
B. Braun Medical Kft., Budapest / Hungary
60.0
22,782
58,826
751
B. Braun Medical Lda., Barcarena / Portugal
100.0
37,132
57,979
153
B. Braun Medical LLC , St. Petersburg / Russia
100.0
26,556
103,257
322
B. Braun Medical Ltd., Dublin / Republic of Ireland
100.0
3,552
18,386
39
B. Braun Medical Ltd., Sheffield / United Kingdom
100.0
21,901
98,971
388
B. Braun Medical N.V. / S.A., Diegem / Belgium
100.0
2,574
31,439
73
B. Braun Medical Oy, Helsinki / Finland
100.0
3,027
34,155
52
B. Braun Medical S.A., Rubi / Spain
100.0
244,643
211,785
1,120
B. Braun Medical S.A.S., Boulogne / France
100.0
77,054
277,227
1,302
B. Braun Medical S.R.L., Timisoara / Romania
61.9
1,902
14,927
78
B. Braun Medical s.r.o., Bratislava / Slovak Republic
70.0
1,341
24,828
22
189
B. Braun Medical s.r.o., Prague / Czech Republic
70.0
30,428
84,155
B. Braun Medikal Dis Ticaret A.S., Istanbul / Turkey
100.0
5,156
15,314
67
B. Braun Milano S.p.A., Milano / Italy
100.0
29,317
116,475
211
B. Braun Sterilog (Birmingham) Ltd., Sheffield / United Kingdom
100.0
– 6,441
12,541
230
B. Braun Sterilog (Yorkshire) Ltd., Sheffield / United Kingdom
100.0
– 5,095
8,895
180
B. Braun Surgical S.A., Rubi / Spain
100.0
85,660
154,814
741
B. Braun VetCare SA, Rubi / Spain
100.0
8,178
9,622
23
Gematek OOO, St. Petersburg / Russia
100.0
8,415
9,009
177
Suturex & Renodex S.A.S., Sarlat / France
100.0
9,337
14,227
184
1)
Effective stake
|
2)
Companies with profit and loss transfer agreements
|
3)
Consolidated using equity method
|
4)
Consolidated proportionately
140
MAJOR SHAREHOLDINGS
As of December 31, 2011
Company Name and Location
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
Americas
AESCULAP INC ., Center Valley / USA
95.5
47,307
128,716
416
Aesculap Implant Systems LLC , Center Valley / USA
95.5
– 6,794
36,603
136
100.0
7,131
17,237
175
B. Braun Interventional Systems Inc., Bethlehem / USA
95.5
19,903
25,705
35
B. Braun Medical Inc., Bethlehem / USA
95.5
176,094
635,951
4,369
B. Braun Medical Peru S.A., Lima / Peru
100.0
17,160
10,757
298
B. Braun Medical S.A., Bogota / Colombia
100.0
14,613
25,053
230
B. Braun Medical S.A., Buenos Aires / Argentina
100.0
10,054
27,887
370
B. Braun Medical S.A., Quito / Ecuador
100.0
6,619
14,117
67
B. Braun Medical SpA, Santiago de Chile / Chile
86.1
7,113
23,474
167
B. Braun of America Inc., Bethlehem / USA
95.5
126,471
0
0
CAPS Inc., Santa Fe Springs / USA
95.5
57,438
106,478
500
100.0
112,836
175,844
1,710
B. Braun AESCULAP JAPAN CO. LTD., Tokyo / Japan
100.0
66,033
127,451
511
B. Braun Australia Pty. Ltd., Bella Vista / Australia
100.0
25,641
57,852
127
B. Braun Avitum Philippines Inc., Manila / Philippines
100.0
3,241
10,043
106
B. Braun Aesculap de México S.A. de C.V., México D. F. / Mexico
Laboratorios B. Braun S.A., São Gonçalo / Brazil
Asia and Australia
B. Braun Avitum (Shanghai) Trading Co. Ltd., Shanghai / China
94.0
10,724
39,901
87
B. Braun Korea Co. Ltd., Seoul / Republic of Korea
100.0
17,795
49,930
114
B. Braun Medical (H.K.) Ltd., Hong Kong / China
100.0
46,802
64,774
33
B. Braun Medical (India) Pvt. Ltd., Mumbai / India
100.0
12,263
48,634
555
B. Braun Medical Industries Sdn. Bhd., Penang / Malaysia
100.0
267,730
301,384
4,997
B. Braun Medical (Shanghai) International Trading Co. Ltd., Shanghai / China
100.0
15,622
85,080
611
B. Braun Medical Supplies Inc., Manila / Philippines
100.0
5,928
16,840
150
B. Braun Medical Supplies Sdn. Bhd., Petaling Jaya / Malaysia
100.0
20,196
41,692
148
B. Braun Medical (Suzhou) Company Limited, Suzhou / China
100.0
3,660
20,214
340
B. Braun Pakistan (Private) Ltd., Karachi / Pakistan
100.0
– 406
9,549
80
B. Braun Singapore Pte. Ltd., Singapore
100.0
9,568
12,583
39
B. Braun Taiwan Co. Ltd., Taipei / Taiwan
100.0
3,779
15,576
55
B. Braun (Thailand) Ltd., Bangkok / Thailand
100.0
8,362
13,591
88
B. Braun Vietnam Co. Ltd., Hanoi / Vietnam
100.0
28,315
41,686
962
PT. B. Braun Medical Indonesia, Jakarta / Indonesia
100.0
25,837
41,931
382
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
141
MAJOR SHAREHOLDINGS
As of December 31, 2011
Company Name and Location
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
B. Braun Avitum (Pty) Ltd., Johannesburg / South Africa
100.0
B. Braun Medical (Pty) Ltd., Johannesburg / South Africa
100.0
1,032
8,767
137
6,812
27,906
159
Babolat VS, Lyon / France 3)
Medical Service und Logistik GmbH, Recklinghausen 4)
28.0
52,249
107,798
205
50.0
918
30,204
5
28.0
26,386
66,618
274
Africa
Other Holdings
Schölly Fiberoptic GmbH, Denzlingen
1)
Effective stake
|
2)
3)
Companies with profit and loss transfer agreements
|
3)
Consolidated using equity method
|
4)
Consolidated proportionately
The values correspond to the year-end financial statements established in accordance with IFRS . Equity of foreign subsidiaries has been
translated using the mid-rate on December 31, 2011, and sales figures have been translated using the average annual rate for 2011.
142
SUPERVISORY BOARD REPORT
The Supervisory Board of B. Braun Melsungen AG continued
to perform its statutory duties and obligations in fiscal year
2011 in accordance with the applicable laws, articles of
incorporation, and by-laws, and to advise and monitor management. At three ordinary meetings, the Supervisory Board
received reports from the Management Board regarding the
company’s current business performance, financial status,
and significant investment plans. At its meeting on March 24,
2011, the Supervisory Board accepted the 2010 personnel
report. Other topics discussed by the Supervisory Board included the presentation of the Aesculap divisional strategy, the
acquisition of Aragon Surgical Inc., USA , the execution of loan
agreements, and the presentation of the B. Braun Melsungen
AG risk management strategy. The Supervisory Board discussed
and approved the 2012 targets, advised on statutory business
matters requiring its approval, and accepted the risk report
submitted by the Management Board. It also approved by
circular resolution the issuance of bonds. A regular exchange
of information and ideas took place between the Chairman
of the Supervisory Board and the Chairman of the Management Board regarding significant business developments
within the company and the Group, and any pending decisions. The Supervisory Board also conducted a voluntary
self-assessment, which showed that it is efficiently organized
and that the Supervisory Board and Management Board co operate very well together. The Audit Committee discussed
the company’s current business performance, the B. Braun
Group’s transfer pricing system, and particularly, B. Braun
Melsungen AG’s 2011 financial statements and the Group’s
consolidated financial statements. The Audit Committee reported on these topics at the Supervisory Board meetings
and made its recommendations. The Personnel Committee
of the Supervisory Board met three times in 2011 and, at
its meeting on March 24, 2011, proposed to the Supervisory
Board that members of the Management Board be allocated
profit participation rights under the B. Braun Incentive Plan.
The Supervisory Board approved this allocation at its meeting on March 24, 2011. At its meeting on July 12, 2011, the
Personnel Committee recommended that Prof. Dr. HannsPeter Knaebel be reappointed as Ordinary Member of the Management Board through March 31, 2017. The Supervisory
Board approved his reappointment on the same day. At the
conclusion of the Annual Shareholders’ Meeting on March 24,
2011, the term of the Supervisory Board expired. This followed
the initiation of the status assessment procedure (Statusverfahren), pursuant to Section 97 of the German Stock Corporation Act (AktG), by the Management Board in September
2010 due to its understanding that the composition of the
Supervisory Board no longer complied with the applicable
legal requirements. Mr. Justus Mische and Dr. Joachim Schnell
stepped down from the Supervisory Board at this time. At
the Annual Shareholders’ Meeting, Prof. Dr. h. c. Ludwig Georg
Braun, Melsungen, and Prof. Dr. Oliver Schnell, Munich,
Germany were elected as their replacements on the Supervisory Board. Additional shareholder representatives elected
to the Supervisory Board were new members Mr. Hans-Carsten
Hansen, Ludwigshafen, Germany and Dr. Joachim Rauhut,
Munich and re-elected members Ms. Barbara Braun-Lüdicke,
Dr. August Oetker, Prof. Dr. Thomas Rödder, and Prof. Dr. Dr.
Dr. h. c. Michael Ungethüm. Employee representatives elected
to the Supervisory Board were Dr. Antonius Engberding,
Ms. Edeltraud Glänzer, Mr. Rainer Hepke, Mr. Manfred Herres,
Mr. Peter Hohmann, Mr. Ekkehard Rist, Mr. Mike Schwarz,
and Ms. Sonja Siewert. At the inaugural meeting of the Supervisory Board, which was held immediately following the
Annual Shareholders’ Meeting, Prof. Dr. h. c. Ludwig Georg
Braun was elected Chairman of the Supervisory Board and
Mr. Peter Hohmann Vice Chairman. B. Braun Melsungen AG’s
financial statements and management report for fiscal year
2011, the Group’s consolidated financial statements, and the
consolidated management report have been reviewed by the
auditors appointed at the Annual Shareholders’ Meeting on
March 24, 2011, PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Kassel, Germany. The auditors raised no objections and issued an unqualified audit
opinion. The auditors participated in the discussions of the
Supervisory Board and Audit Committee about the financial
statements and the Group’s consolidated financial statements,
and reported on the main findings of their audit. Following
its review of the financial statements, management report,
proposal for the appropriation of B. Braun Melsungen AG’s
retained earnings, consolidated financial statements, and consolidated management report, the Supervisory Board concurred with the findings of the audit report and raised no
objections. We therefore have approved the financial statements presented by the Management Board, which are hereby adopted in accordance with Section 172 of the German
Stock Corporation Act (AktG). The Supervisory Board concurs
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
143
FROM LEF T
MIKE SCHWAR Z *
BARBARA BRAUN-LÜDICKE
EKKEHARD RIST*
Member of the Workers’ Council of
B. Braun Melsungen AG, Melsungen
Businesswoman, Melsungen
Vice Chairman of the Workers’ Council
of B. Braun Germany,
Chairman of the Workers’ Council
of Aesculap AG, Tuttlingen
P R O F. DR. D R . D R . H. C. M I C H A E L U N G E T H Ü M
RAIN E R H E P K E *
Chairman of the Workers’ Council of
B. Braun Melsungen & Berlin, Melsungen
Former Vice Chairman of the Management
Board of B. Braun Melsungen AG
PETER HOHMANN*
HANS-CARSTEN HANSEN
P R O F. D R . O L I V E R S C H N E L L
Managing Director of Sciarc GmbH, Baierbrunn,
Executive Member of the Board of Forschergruppe
Diabetes e.V. at Helmholtz Zentrum, Munich
President Human Resources,
BASF SE, Ludwigshafen
SONJA SIEWERT*
EDELT R AUD G L Ä NZER *
Member of the Workers’ Council of
B. Braun Melsungen AG, Melsungen
Member of the Managing Board of IG BCE,
Hanover
DR. H. C. AUGUST OETKER
* elected by the employees
DR. RER. POL. ANTONIUS ENGBERDING*
Member of the Executive Board of IG Metall,
Department Tariff Policy, Frankfurt / Main
Partner, Dr. August Oetker KG, Bielefeld
MANFRED HERRES*
P R O F. D R . H . C . L U D W I G G E O R G B R A U N
Production Director, B. Braun Avitum,
B. Braun Melsungen AG, Melsungen
P R O F. D R . R E R . P O L . T H O M A S R Ö D D E R
Tax Advisor and Certified Public Accountant,
Partner, Flick Gocke Schaumburg, Bonn
Vice Chairman, Chairman of the Workers’
Council of B. Braun Germany,
Chairman of the Workers’ Council of
B. Braun Melsungen AG, Melsungen
Chairman, Former Chairman of
the Management Board of B. Braun
Melsungen AG, Melsungen
DR. JOACHIM R AUHUT
Member of the Managing Board of Wacker
Chemie AG, Munich
with the proposals of the Management Board concerning the
utilization of retained earnings. In accordance with Section 312
of the German Stock Corporation Act (AktG), the Management
Board issued a report on the relationships with affiliated companies for fiscal year 2011. The Supervisory Board examined
this report and raised no objections. The auditors reviewed the
report and issued the following audit opinion:
The Supervisory Board concurs with the results of the auditors’
review and has raised no objections to the Management
Board’s conclusion. The Supervisory Board would like to thank
the Management Board for the excellent and successful
collaboration, and all employees of the B. Braun Group for
their contributions in the period under review.
“Having conducted our mandatory audit and analysis, we
hereby confirm that
1. the information contained in the report is correct,
2. payments made by the company for the legal transactions
detailed in the report were not unreasonably high.”
Melsungen, Germany, March 2012
The Supervisory Board
144
GLOSSARY
APHERESIS
EMAS
See “Extracorporeal blood treatment.”
Abbreviation for Eco Management and Audit Scheme, also known
as an eco-audit. EMAS was developed by the European Union and
consists of environmental management and an environmental
audit for organizations that want to improve their environmental
performance.
A S S E T- B A C K E D S E C U R I T I E S ( A B S )
Bonds or notes secured by accounts receivable.
BRIC COUNTRIES
BRIC is the acronym for Brazil, Russia, India, and China.
E N I S O 9 0 01
CAPTIVE
An international standard that establishes globally recognized
requirements for quality management systems.
An insurance company owned by the Group providing coverage for
the Group’s own risks.
E N I S O 14 0 01
C E N T E R S O F E X C E L L E N C E (C O E )
Centers within the global B. Braun organization, incorporating
research, development, manufacturing and marketing for specific
product groups.
An international environmental management standard that
establishes globally recognized requirements for environmental
management systems.
ENDOPROSTHESIS
C O M M E R C I A L PA P E R
Implant that replaces natural body structures such as joints or blood
vessels. The implant normally remains in the body permanently.
Money-market security that is assigned a fixed maturity as a
bearer instrument.
ENTERAL NUTRITION
C O R P O R AT E G O V E R N A N C E
Supplying nutrients by sip- or tube-feeding via the gastrointestinal
tract.
Principles of responsible corporate management and control.
EQUIT Y METHOD
EBIT
Accounting method whereby an investment is initially recorded
at cost which subsequently is adjusted to reflect any changes
in the investor’s share of the net assets of the associated company.
The investor’s profit or loss includes his share in the profit or loss
of the associated company.
Key performance indicator. Acronym for Earnings Before Interest
and Taxes.
E X T R A C O R P O R E A L B L O O D T R E AT M E N T
DEHP
Abbreviation for Di(2-ethylhexyl)phthalate. DEHP is a plasticizer
used in the manufacturing of articles made of PVC .
EBITDA
Key performance indicator. Acronym for Earnings Before Interest,
Taxes, Depreciation and Amortization.
Blood treatment taking place outside the body using an “artificial
kidney” (dialysis machine) that is connected directly to the bloodstream.
FDA
EBITDA MARGIN
Key performance indicator. EBITDA as a percentage of sales.
Abbreviation for the Food & Drug Administration. The FDA is the
US agency that regulates the safety of food and health-related
products.
MANAGEMENT BOARD
|
JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENT S
145
H E M O D I A LY S I S
VCI
A special blood cleansing process that utilizes the principle of
osmosis, i.e. the equalization of concentrations of small-molecule
substances in two liquids separated by a semi-permeable membrane.
Abbreviation for the Verband der Chemischen Industrie (German
Chemical Industry Association). The VCI, based in Frankfurt am Main,
Germany represents the economic interests of German chemical
companies.
IMF
Abbreviation for the International Monetary Fund. The IMF is a
United Nations organization based in Washington, DC in the USA .
W O R K I N G C A P I TA L
Key performance indicator. Inventories plus current trade accounts
receivable less current trade accounts payable.
INTERVENTIONAL
Interventional diagnosis and treatment procedures are intended to
positively influence the progression of a condition through targeted
intervention.
IV
Abbreviation for intravenous. An application technique for the administration of a drug, fluid, or suspension into a vein.
MDRO
Abbreviation for Multi-drug resistant organism. MDROs are bacteria
or viruses that do not respond to a vast number of antibiotics or
antivirals.
O H S A S 18 0 01
Abbreviation for Occupational Health and Safety Assessment Series.
OHSAS 18001 is a standard that establishes globally recognized requirements for occupational health and safety management systems.
PA R E N T E R A L N U T R I T I O N
Supplying nutrients intravenously by bypassing the gastrointestinal
tract.
P U B L I C - P R I VAT E PA R T N E R S H I P
A cooperative arrangement between public institutions and private
entities for the fulfillment of public duties (semi-privatization).
T I T L E 21 O F T H E C O D E O F F E D E R A L R E G U L AT I O N S
A section of the US law relating to food and drugs.
WOUND DR AINAGE
Drainage system for bodily fluids utilized following major surgical
interventions. It serves to temporarily drain blood and wound
secretions out of the body in order to promote initial wound healing.
146
IMPRINT
PUBLISHED BY
B. Braun Melsungen AG
Werkanlagen Pfieffewiesen
Europagebäude
34212 Melsungen
Germany
Tel. +49 (0) 56 61-71- 0
Fax +49 (0) 56 61-71-45 67
www.bbraun.com
F O R F U R T H E R I N F O R M AT I O N C O N TA C T
Dr. Bernadette Tillmanns-Estorf
Senior Vice President
Corporate Communications
Werkanlagen Pfieffewiesen
Europagebäude
34212 Melsungen
Germany
Tel. +49 (0) 56 61-71-16 30
Fax +49 (0) 56 61-71-35 69
E-Mail: presse@bbraun.com
DISCL AIMER
The annual report is published in German
and English. In the event of a discrepancy,
the German version takes precedent.
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FIVE-YEAR OVERVIEW
2007
2008
2009
2010
€ million
€ million
€ million
€ million
2011
€ million
Sales
3,572.9
3,786.4
4,028.2
4,422.8
4,609.4
Cost of Goods Sold
1,898.3
2,029.6
2,151.4
2,341.7
2,471.2
Functional Expenses
1,297.1
1,366.2
1,432.3
1,595.9
1,688.0
Selling Expenses
972.9
1,031.2
1,091.1
1,218.9
1,277.2
General and Administrative Expenses
207.9
204.7
202.1
221.6
230.9
Research & Development Expenses
116.2
130.3
139.1
155.4
179.9
Interim Profit
377.6
390.6
444.5
485.2
450.3
Operating Profit
348.7
345.7
410.6
456.2
432.2
Profit before Taxes
283.0
268.8
336.1
389.6
360.2
Consolidated Annual Net Profit
217.7
185.1
239.6
277.4
255.7
EBITDA
535.9
545.8
620.5
700.5
688.5
3,332.1
3,708.0
3,975.1
4,686.1
5,105.7
124.3
157.1
167.9
218.6
268.0
1,435.8
1,698.7
1,926.8
2,305.0
2,541.7
Inventories
709.7
726.7
708.5
780.0
833.4
Trade Accounts Receivable
738.0
767.6
790.1
933.5
1,016.3
Equity
1,255.3
1,389.7
1,620.0
1,984.0
2,183.5
Liabilities
2,076.8
2,318.3
2,355.1
2,702.0
2,922.1
Pension Obligations
456.9
470.4
491.8
513.3
533.2
Financial Liabilities
895.7
1,094.5
1,006.4
1,233.4
1,401.7
Trade Accounts Payable
177.4
179.2
210.3
216.8
219.7
Investments in Property, Plant and
Equipment and Intangible Assets
349.4
471.0
454.8
575.4
541.4
Depreciation and Amortization of Property,
Plant and Equipment and Intangible Assets
182.9
197.8
208.6
238.2
252.9
Personnel Expenditures
1,271.4
1,339.8
1,424.9
1,581.7
1,648.9
Employees (annual average)
35,810
37,601
38,512
40,316
42,739
Assets
Intangible Assets (incl. Goodwill)
Property, Plant and Equipment
H I G H L I G H T S 2 011
F E B R U A R Y The billionth „Ecoflac plus“ container for
standard IV solutions is produced in the LIFE facility.
Shipping that quantity would require 29,000 trucks,
which, if placed end to end, would measure 522 kilometers,
approximately the same distance between the German
cities of Kassel and Munich.
H I G H L I G H T S 2 0 11
At our Timisoara location in Romania, a ceremony is held
to mark the expansion of the production facility for IV
solutions. B. Braun invested € 4 million to expand the plant.
A P R I L Dr. Heinz-Walter Große (center) becomes Chairman
of the Management Board succeeding Prof. Dr. h. c. Ludwig
Georg Braun, who is now Chairman of the Supervisory
Board. Dr. Annette Beller and Otto Philipp Braun are appointed to the Management Board.
J U N E Construction of a new production plant for dialysis solutions in Glandorf, Germany commences with a
symbolic ground-breaking ceremony. In total, B. Braun
is investing approximately € 50 million in this location.
A U G U S T The new training center in Melsungen begins
operations, to coincide with the start of a new training
class. B. Braun has invested approximately € 6.5 million
in the center.
The offices of B. Braun‘s newly established subsidiary
open in Belgrade, Serbia. The new company is called
B. Braun Adria RSRB DOO.
S E P T E M B E R B. Braun‘s Aesculap Division acquires
Aragon Surgical, an American firm active in the area
of high frequency surgical instruments. The company
specializes in electrosurgical solutions for tissue cutting
and fusion (cut & seal).
O C T O B E R German Chancellor Angela Merkel dedicates
B. Braun‘s new factory in Hanoi, Vietnam. B. Braun has
invested € 32.6 million in new production facilities there
for the manufacture of IV sets.
3 0 0 2 0 112