sharing expertise. creating value.

Transcription

DAS UNTERNEHMEN
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KONZERNL AGEBERICHT
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KONZERNABSCHLUSS
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1
LOREM IPSUM
MAGAZIN: THEMA LOREM IPSUM
S H A R I N G E X P E R T I S E . C R E AT I N G VA L U E .
Annual Report 2010
B. BR AUN AT A GL ANCE
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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.
B. Braun project manager Cristina Molina (pictured), at the Pharmaceuticals Center of Excellence, is overseeing the development of the new
LIFE Nutrition production facility in Melsungen, Germany.
MANAGEMENT BOARD
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JOURNAL
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GROUP MANAGEMENT REPORT
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CONSOLIDATED FINANCIAL STATEMENTS
S H A R I N G E X P E R T I S E . C R E AT I N G VA L U E .
HE A LT HC A RE S Y S T EMS A ROUND T HE WORL D A RE FAC ING M A JOR
C H A L L ENGE S , ONE OF WHIC H IS M A X IMIZING BENEF I T S WHIL E
M A IN TA INING RE A S ON A BL E C O S T L E V EL S . B . BR AUN IS M A K ING
A M A J OR C ON T RIBU T ION TOWA RD S T HIS GOA L T HRO UGH C ON T INUA L IMP RO V EMEN T S IN T HE O U TC O ME S O F O UR T HER A P IE S
A ND T HE EF F IC IENC IE S OF O UR P RO C E S SE S – B O T H IN T ERN A L LY
A ND IN T HE INPAT IEN T A ND O U T PAT IEN T T RE AT MEN T SE T T ING S .
O UR O N G O IN G C L O SE C O L L A B O R AT I O N WI T H RE SE A RC HER S ,
C L INI C I A NS A ND PAT IEN T S HEL P S U S O P T IMI Z E MED I C A L P RO C ED URE S A ND IMP RO V E T HE Q UA L I T Y O F L IF E F O R T H O SE WE
SER V E . WE SH A RE O UR E X P ER T ISE E V ERY DAY TO C RE AT E L A S TING VA L UE .
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B. BRAUN AT A GLANCE
Key performance indicators
Gross Margin (in %)
Net Margin after Taxes (in %)
2010
2009
47.1
46.6
Change
in %
6.3
5.9
EBITDA (in € million)
700.5
620.5
EBITDA Margin (in %)
15.8
15.4
Equity Ratio (in %)
42.3
40.8
Equity Ratio including Loans from Shareholders (in %)
43.3
41.8
1,183.5
945.7
25.1
1.7
1.5
10.8
575.4
454.8
26.5
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)
12.9
238.2
208.6
14.2
Personnel Expenditure (in € million)
1,581.7
1,424.9
11.0
Employees (as of December 31, 2010)
41,666
39,504
5.5
Income structure
2010
2009
Change
in %
€ million
%
€ million
%
Sales
4,422.8
100.0
4,028.2
100.0
Cost of Goods Sold
2,341.7
52.9
2,151.4
53.4
8.8
Gross Profit
2,081.1
47.1
1,876.8
46.6
10.9
Selling Expenses
1,218.9
27.6
1,091.1
27.1
11.7
221.6
5.0
202.1
5.0
9.7
General and
Administrative Expenses
9.8
Research and
Development Expenses
155.4
3.5
139.1
3.5
11.7
Interim Profit
485.2
11.0
444.5
11.0
9.1
Other Operating Income
and Expenses
– 29.0
– 0.7
– 34.0
– 0.8
14.5
Operating Profit
456.2
10.3
410.6
10.2
11.1
Net Financial Income (Loss)
– 66.6
– 1.5
– 74.5
– 1.8
10.6
Profit before Taxes
389.6
8.8
336.1
8.3
15.9
Income Taxes
112.3
2.5
96.5
2.4
16.3
Consolidated Annual Net Profit
277.4
6.3
239.6
5.9
15.8
DAS UNTERNEHMEN
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KONZERNL AGEBERICHT
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KONZERNABSCHLUSS
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LOREM IPSUM
MAGAZIN: THEMA LOREM IPSUM
Sales
Sales by region |
IN € MIL L I O N
Germany 878
Europe & Africa 1,692
(excluding Germany)
Asia & Australia 616
Latin America 296
North America 940
Sales by division |
IN € MIL L I O N
OPM 555
B. Braun Avitum 475
Hospital Care 2,087
Other 26
Aesculap 1,281
T O TA L € 4.423 M I L L I O N
Employees
Employees by region
12,157
12,000
10,672
12,663
11,251
9,243
9,000
8,265
5,486
6,000
5,486
2,924
3,000
Germany
Europe & Africa
North America
( excluding Germany)
DEC 31, 2009 TOTA L: 39,504
DEC 31, 2010 TOTA L: 41,666
3,023
Latin America
Asia & Australia
B. BR AUN AT A GL ANCE
T O TA L € 4.423 M I L L I O N
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CONTENTS
M A N AGEMEN T BOA RD
JOURN A L
F ORE WORD
4
SEIZING OP P OR T UNI T IE S , HEL PING P EOP L E
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M A N AGEMEN T BOA RD
6
MOBIL E A ND INDEP ENDEN T
14
T HE S OURC E OF L IF E
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A L L ERGY IN T HE K NEE
26
3
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)
66
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
67
EC ONOMIC EN V IRONMEN T
42
NOT E S
71
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
131
F IN A NC I A L P OSI T ION A ND A S SE T S
50
M A JOR SH A REHOL DING S
132
P ER S ONNEL REP OR T
54
RISK A ND OP P OR T UNI T IE S REP OR T
57
SUP ER V IS ORY BOA RD REP OR T
136
SUBSEQUEN T E V EN T S
60
GLOS S A RY
138
OU T LOOK
60
IMP RIN T
14 0
4
P R O F. D R . H . C . L U D W I G G E O R G B R A U N , C H A I R M A N O F T H E M A N A G E M E N T B O A R D
MANAGEMENT BOARD
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JOURNAL
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FOREWORD
F“ TOHE
REW
P RIM
O R DA RY RE A S O N F O R O UR O N G O IN G S U C C E S S IS T H AT, IN IN C RE A SIN G
ENNU
S UM
R IBNEGRSS
U ,C CCE U
S SS T O M E R S
A RO U N D T H E WO
W O RL D RE C O G NI
N I Z E T H E VA L U E O F O U R
I N N O VAT I V E , H I G H - Q U A L I T Y P R O D U C T S . T H U S , W E RE M A I N T RU E T O O U R
M O T T O O F G RO W T H T H RO U G H N E W A N D IM P RO V E D P RO D U C T S .”
Dear Reader,
B. Braun maintained its successful growth trend in 2010. Fortunately, the aftershocks following the
crisis of 2009 were markedly weaker than anticipated and only impacted us in the area of capital
goods. The success of the reporting year is reflected in sales growth of 9.8 percent, which exceeded
our original expectation. This was attributable in part to stronger currencies in Asia, Latin America
and the United States Dollar. Profit before taxes increased by 15.9 percent last year, a particularly
satisfactory amount given our high level of capital investment.
The primary reason for our ongoing success is that, in increasing numbers, customers around the
world recognize the value of our innovative, high-quality products. Thus, we remain true to our motto
of growth through new and improved products.
The Journal section of this annual report features a number of examples of how our innovations are
improving the quality of life for many people, from innovative knee joint implants that prevent allergic
reactions in patients to a cooperative effort with government authorities in India to provide care for
dialysis patients who cannot afford continuous treatment.
As such, we are living up to our guiding principle of “Sharing Expertise” every day. Together with
experts from a wide range of fields, we are constantly expanding and consolidating our knowledge
and sharing it with customers, business partners and clinicians. We are confident that we will continue to remain on the fast track in all of our business areas. We are, therefore, significantly expanding our manufacturing capacity.
The year 2010 was again characterized by record levels of capital investment, which, at € 575 million,
exceeded depreciation by approximately € 337 million. This investment reaffirms our commitment to
meet the increasing global demand for hospital products in the future.
We are pleased that, despite a considerable increase in total assets, the company‘s equity ratio grew to
42 percent and even exceeds 43 percent when loans from shareholders are taken into account. However,
we are not only investing in development and production. Additionally and most importantly, we are
investing in our employees, whose know-how and dedication ensure our company’s success. To meet
the challenges of the future, we increased our workforce last year to a total of 41,666 employees worldwide as of December 31, 2010.
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MANAGEMENT BOARD
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JOURNAL
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FOREWORD
“ T HE P RIM A RY RE A S O N F O R O UR O N G O IN G S U C C E S S IS T H AT, IN IN C RE A SIN G
N U M B E R S , C U S T O M E R S A RO U N D T H E WO
W O RL D RE C O G NI
N I Z E T H E VA L U E O F O U R
We offer vocational training and continuing education programs to meet the ongoing demand for skilled
employees and to preserve the high level of education of our employees now and in the future. Being
a highly attractive employer is very important to us. This is evident in new initiatives to provide
employees with a better work-life balance. These initiatives have been extremely well received. We are
pleased that, in collaboration with employee representatives, we were able to implement of a number
of creative ideas in also this area.
I have had the pleasure of leading the company for more than 40 years. The time has now come to hand
the reins over to a new generation. In Heinz-Walter Große we have appointed a first-class successor
from within our own ranks to take over as Chairman of the Management Board. I hand over this
responsibility with great optimism. The Management Board can continue its successful work on a strong
foundation. I would like to extend my heartfelt thanks to all the employees, customers and suppliers
who have accompanied me throughout my career for their continuous support and outstanding cooperation.
To those who follow me, I wish them the success that comes through hard work and dedication.
Yours sincerely,
Prof. Dr. h. c. Ludwig Georg Braun
Chairman of the Management Board of B. Braun Melsungen AG
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MANAGEMENT BOARD
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FOREWORD
“ T HE P RIM A RY RE A S O N F O R O UR O N G O IN G S U C C E S S IS T H AT, IN IN C RE A SIN G
N U M B E R S , C U S T O M E R S A RO U N D T H E W O RL D RE C O G N I Z E T H E VA L U E O F O U R
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MANAGEMENT BOARD
DR. RER. POL.
HEINZ-WALTER GROSSE
PROF. DR. H.C.
LUDWIG GEORG BRAUN
V I C E C H A I R M A N O F T H E M A N AG E M E N T
C H A IR M A N O F T HE M A N AG EMEN T
BOA RD, F IN A NC E A ND HUM A N RE S O URC E S
B OA R D
MANAGEMENT BOARD
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DR. RER. NAT.
WOLFGANG FELLER
PROF. DR. MED.
HANNS-PETER KNAEBEL
CAROLL H. NEUBAUER,
LL.M.
DR. RER. NAT.
MEINRAD LUGAN
B . B R A U N AV I T U M D I V I S I O N
C H A I R M A N O F T H E M A N AG E M E N T
C HIEF E X E C U T I V E O F F I C ER , B . BR AU N
H O SP I TA L C A R E A ND O P M
B OA R D OF A E S C UL A P AG , A E S C UL A P
O F A ME R I C A , N O R T H A ME R I C A N
DIVISIONS
DI V ISION
REGION
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SEIZING OPPORTUNITIES,
HELPING PEOPLE
I N D I A I S A C O U N T RY O F B O O M I N G G RO W T H R AT E S A N D T RE M E N D O U S C H A L L E N G E S . B . B R AU N WA N T S T O S E I Z E M A RK E T
OPPORTUNITIES AND HELP PEOPLE WITH CHRONIC KIDNE Y
D I S O RD E R S AT E L E V E N N E W D I A LY S I S C E N T E R S .
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T H E C O M PA N Y O F F E R S E X T E N S I V E E X P E R I E N C E , A S T H E B . B R A U N AV I T U M
D I V I S I O N A L R E A D Y O P E R AT E S A N E T W O R K O F M O R E T H A N 15 0 D I A LY S I S
CENTERS IN EUROPE, A SIA AND SOU TH AFRIC A . PHYSICIANS AND NURSING
S TA F F AT T H E S E C E N T E R S E N H A N C E PAT I E N T S ’ Q U A L I T Y O F L I F E U T I L I Z I N G
T H E L AT E S T M E D I C A L T E C H N O L O G Y.
In recent decades, India has risen from a crisis-ridden developing country to a world economic power at a dizzying rate.
Its 1.2 billion people are driving economic progress forward
at an impressive pace, and in some sectors such as IT, India
has long been in the international premier league, thanks
to its very highly educated workforce. B. Braun has had a
presence in India since 1994. “As a provider of comprehensive solutions, we are highly regarded by our Indian customers and are one of the market leaders in medical products
and services,” says Krishna Chellappa, Business Unit Head
of B. Braun Medical India.
Increasing prosperity has produced many positive consequences for the country and its, by international standards,
very young population. At the same time, however, India
faces enormous challenges, which become evident to visitors
very quickly. Poverty is rampant in many cities and rural
areas, and in the country’s larger cities one third of the population lives in slums. Other problems include water shortages, agricultural crises, skyrocketing energy demand, a lack
of hygiene, and pollution, as well as deficiencies in infrastructure, education and healthcare systems.
The state-organized healthcare system strives to provide
primary healthcare nationwide. Although the situation has
improved in recent decades, the central government is still
a long way from achieving this objective. A large percentage
of hospitals and pharmacies are run and financed by not-forprofit charitable organizations. Private hospitals offer very
high medical standards, but they are an option only for the
wealthy. “As a company focused on sustainability, it became
clear to us from the outset that we had to act in a socially
responsible fashion in India. Together with representatives
of the state of Andhra Pradesh, we came to the conclusion
that we could help most effectively by establishing dialysis
centers,” says Krishna Chellappa.
Some background: treatment at a hospital or clinic is normally free for the poorest as part of the primary healthcare
provision of the state. However, patients must pay out-ofpocket for outpatient care provided by private practice physicians. And of course, many, the chronically ill in particular,
cannot afford the treatment and healthcare services that
they require. It may appear paradoxical at first, but even
the very poor in India are suffering from the so-called “diseases of affluence” such as obesity, high blood pressure
and diabetes, as a result of changes in lifestyle and eating
habits. The number of patients with chronic kidney disorders is also increasing at a rapid rate. In the state of Andhra
Pradesh alone, some 3,500 of its 80 million residents rely
upon regular dialysis. The dialysis process removes metabolic
toxins and excess water from the blood. There are two problems, however: patients cannot afford hemodialysis, which
must be performed at least twice a week, and the medical
facilities are in many cases not sufficiently equipped. This
prompted B. Braun to establish a public-private partnership
with the government of Andhra Pradesh. Acquiring, expanding and operating dialysis centers (eleven thus far) with a
staff of approximately 90 within state-run hospitals means
tangible help at the highest level. More centers in other
parts of India are being planned.
The company offers extensive experience, as the B. Braun
Avitum Division already operates a network of more than
MANAGEMENT BOARD
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SEIZING OPPORTUNITIES, HELPING PEOPLE
“A S A C OMPA N Y F OC USED ON S US TA IN A BIL I T Y, I T BEC A ME C L E A R T O US F ROM T HE O U T SE T T H AT WE H A D T O AC T IN A S O C I A L LY RE SP ONSIBL E FA SHION IN INDI A . TO GE T HER WI T H REP RE SEN TAT I V E S OF T HE S TAT E OF A NDHR A P R A DE SH, WE C A ME TO T HE C ONC LUSION T H AT
WE C OUL D HEL P MO S T EF F EC T I V ELY BY E S TA BL ISHING DI A LY SIS C EN T ER S .”
K RISHNA CHEL L APPA , BUSINE SS UNIT HE AD OF B. BR AUN MEDIC AL INDIA .
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“ P E O P L E HERE A RE DEL IGH T ED T H AT T HE Y C A N RE C EI V E FA S T, F REE T RE AT MEN T
I N T H I S WAY. I T I S A N E M O T I O N A L M AT T E R , A N D W E A RE V E R Y AWA RE O F T H E
D EEP SENSE O F GR AT I T UDE T H AT IS F ELT. I T IS GRE AT M O T I VAT I O N F O R U S .”
DR . R AHUL MEDAK K AR ,HE AD OF OPER ATIONS AT B. BR AUN MEDIC AL INDIA
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SEIZING OPPORTUNITIES, HELPING PEOPLE
150 dialysis centers in Europe, Asia and South Africa.
Physicians and nursing staff at these centers enhance patients’
quality of life utilizing the latest medical technology.
In these new centers in India, the B. Braun Dialog hemodialysis machines help to alleviate the suffering of thousands
of patients, with more than 100,000 treatments per year.
The gratitude with which these centers have been welcomed
is evident from the full treatment and waiting rooms. However, efficient management means that patients’ waiting times
are kept to a minimum. A friendly environment, air-conditioned rooms and flat screen televisions all help make their
stay as comfortable as possible. “People here are delighted
that they can receive fast, free treatment in this way. It is an
emotional matter, and we are very aware of the deep sense
of gratitude that is felt. It is great motivation for us,” says
Dr. Rahul Medakkar, Head of Operations at B. Braun Medical
India. He adds: “The quality of care at the dialysis centers is
first-rate, as patients benefit from our latest innovations.”
One of those innovations is the Adimea control system, which
precisely measures each individual patient’s dialysis dose
and verifies it over the course of the treatment. Another is the
latest generation of filters, Xevonta, which was only recently
introduced to the market. B. Braun is setting a new benchmark
with this filter, which acts as an artificial kidney during dialysis. Thanks to the newly developed high-tech filter membrane
amembris, this high-performance premium dialyzer delivers
highly efficient treatment for patients.
These innovations are produced in Radeberg, Saxony near
Dresden, Germany. For years, B. Braun has developed and
produced hollow-fiber membranes, sterile filters and dialyzers
at this location, together with its Ascalon and Saxonia subsidiaries, with great success. Manufacturing capacity at the
Saxonia facility was significantly expanded in 2010, through
a capital investment of 15 million. The eyes of Rene Strubel,
Head of Production at Saxonia Medical GmbH, light up as
he talks about the fruit of his labors: “We have made tremendous progress through our ongoing research and development and close cooperation with physicians and patients,”
he explains. “Today, dialysis is a highly tolerable and safe
treatment.” The result is a noticeable improvement in quality
of life for patients all around the globe – in Germany just
as in India.
MOBILE AND INDEPENDENT
INC ON T INENCE IS A WIDE SPRE AD C ONDITION, Y E T THE SUB JEC T
REM A INS TA B O O . T HE O NSE T O F IN C O N T INEN C E INI T I A L LY
P O SED A HU GE P H Y SIC A L C H A L L ENGE F O R P E T R A S T R A NSK Y,
B U T S H E I S N O W E N J OY I N G L I F E T O T H E F U L L E S T A G A I N ,
T H A NK S IN PA R T TO SINGL E- U SE C AT HE T ER S F RO M B . BR AUN .
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IN A D D I T I O N T O T HE HIGHE S T MED IC A L Q UA L I T Y, E A SE O F U SE A ND C O MF O R T
F O R E V ERY DAY A P P L IC AT I O N A RE PA R T IC UL A RLY IMP O R TA N T F O R P RO D U C T S
T H AT A RE U SED T O T RE AT IN C O N T INEN C E .
“What am I supposed to do now?” was the plaintive question
Petra posed to her doctor when medical diagnosis confirmed
her suspicion that she is incontinent, meaning that she can
no longer voluntarily control her urine flow. It all began six
years ago, when Petra, 42, experienced mild back pain. “I had
occasional twinges here and there, just like so many people,”
she recalls. But the pain got worse, and a suspected case of
lumbago was followed by a severely herniated disc.
Then came the shock: “Out of the blue, I completely wet myself
on the way home from work. I was so embarrassed that I
wanted to crawl into a hole.” Embarrassment, loss of confidence and withdrawal are often side-effects of incontinence.
And Petra’s case is far from unique: in Germany alone, approximately five million people – mainly older men and women –
suffer from urinary incontinence, requiring treatment or care.
However, young people can also suffer from temporary or
permanent incontinence, particularly women who have been
through pregnancy. There are many possible causes, and
medical diagnosis is necessary. In Petra’s case, the causes
have not yet been fully determined. Creeping paralysis
causes permanent loss of urinary control and spontaneous
draining of the bladder. “The only thing we know for certain,” she says casually, “is that the control mechanism on
the pipe is faulty,” using an analogy from her husband’s
profession as a heating engineer. Today, she can look back at
some involuntary episodes and laugh, but getting to this
point has been a long road. “The biggest problem was me,”
she admits, “because I no longer felt like a valuable, attractive woman.” She was especially concerned about social interaction and how family, friends, and co-workers would react.
Her husband was completely and fully supportive, but she had
negative experiences in other surroundings. Rumors circulated at work, and some of her co-workers whispered behind
her back. After six months, she decided to confront the
matter head-on: “I explained to everyone that I had nothing
contagious and nothing that anyone should be repulsed by.”
Petra Stransky has learned to live with her illness and to
accept herself. Psychotherapy helped, which gave her a new
outlook on life: “In the old days, I used to race through life,
but now I have a new awareness that I wouldn’t want to
change.”
Like millions of other patients, this active young woman
regained nearly the same quality of life today as prior to
the incontinence, thanks in part to the products of B. Braun’s
OPM Division. Its wide product range, for example the urine
catheter brand Actreen ®, offers the ideal solution for every
type of incontinence. Urinary incontinence is frequently
caused by a neurological disorder – in some cases the solution is medical treatment aimed at putting the bladder into
full retention to prevent the recurrence of incontinence. These
patients will then require the assistance of a catheter to
pass urine. For many people affected by urinary dysfunction,
the solution is “intermittent catheterization.” This involves
patients catheterizing themselves four to six times per day,
giving them control over their bladder and renewed selfconfidence. Doing away with indwelling urethral catheters
or bulky external appliances goes a long way in boosting a
patient’s morale and self esteem. In addition, since the bladder
is being drained effectively and completely, urinary tract
infections cease to be a problem and the kidneys are protected. The physically and mentally disabled can also use
this disposable catheter, as people in wheelchairs have
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“ S O M E PAT I E N T S M AY TA K E A L I T T L E L O N G E R ,
B U T V E R Y F E W G I V E U P.”
D R . G U Y E G O N , P H Y S I C A L M E D I C I N E A N D R E H A B I L I T A T I O N A T T H E C E N T R E D E L’A R C H E I N L E M A N S , F R A N C E
What are the most frequent causes
of neurogenic urinary dysfunction?
Urinary dysfunction is common in
patients with neurological diseases
such as multiple sclerosis or spinal
cord trauma. This dysfunction is often
accompanied by urinary retention
and can lead to infection.
What is the most effective treatment for urinary retention?
The most effective treatment for urinary retention of a bladder affected
by neurological disease is intermittent
catheterization, which is a procedure
to empty the bladder through a singleuse sterile catheter in regular intervals
(5 – 6 times per 24 hours). This treatment is performed by the patients
themselves. If paralysis prevents selftreatment, they can be assisted by
caregivers. If repeated catheterization
does not achieve continence and, if
the various medical tests indicate an
overactive bladder, an anticholinergic
pharmacological treatment can be
added as a muscle relaxant.
Do you recommend certain products, for example from B. Braun,
to treat patients suffering from
this condition and to improve their
everyday lives?
The Actreen ® Lite Mini catheter is
perfectly suited for female intermittent catheterization. It is a pre-lubricated ready-to-use catheter, 9 cm
length. The discrete packaging and
the ease of grip, even where there is
reduced manual dexterity, ensure
“no-touch” catheterization. Men
with urinary retention will appreciate
the easy opening of Actreen ® Lite
Cath, the ability to connect the
product to all urine bags available
on the market, and the “no-touch”
system during catheterization. The
eyelet openings on the packaging
allow paralyzed men to remain independent during catheterization.
How is this self-catheterization
taught to patients? Is it easy for
patients to perform?
Patients are taught the technique of
intermittent self-catheterization by a
team of trained nurses. We explain
their anatomy and the procedure to
the patients. We then demonstrate
how it should be performed and try
to make the situation as easy as possible for the patient. Eighty percent of
patients learn the technique within
24 hours. Some patients may take a
little longer, but very few give up.
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mastered the technique despite paraplegia, spinal deformity,
old age and blindness. Actreen® products offer many advantages to patients and caregivers and its catheters are easy
to use. The user friendly packaging design is easy to open,
even for wheelchair-bound patients with limited dexterity.
Pre-lubrication makes Actreen® comfortable and hygienic
to use, with no drips or mess from watery coatings, like with
some competitor catheters. It is very important for patients
to be able to perform the procedure quickly and easily. Thanks
to these features, all Actreen ® catheter products are completely ready to use.
The Actreen® product line is developed and produced at
the B. Braun Center of Excellence (CoE) near Paris, France.
These Centers of Excellence, which can be found all over
the globe, bring together research, development, production,
distribution and strategic marketing for particular therapeutic areas (such as urology). Innovative technologies are
thereby more quickly identified and developed. B. Braun
integrates the knowledge of external experts at all stages
of the innovation process, for example, through a network
of highly respected physicians. “Efficient processes are
essential to achieving optimal results. Our team works as a
very close unit to achieve this across the entire value chain,
from product specifications defined by marketing to development, production and then sales,” explains Remi Collin,
Director of Research & Development at CoE Urology B. Braun
Medical SAS, France. This approach fits perfectly with B. Braun’s
guiding principle: Sharing Expertise. One such example of
this approach is B. Braun’s ongoing collaboration with Dr. Egon
at the Centre de l’Arche in LeMans, France (see interview) –
where B. Braun conducts focus groups with patients and
professionals to design a catheter suitable for all types of
patients. It is this close partnership that led to the successful
market launch of Actreen® Lite Cath and our newest catheter,
Actreen® Lite Mini, which is specifically designed for women.
In addition to these urinary catheters and the Actreen ® Glys
Cath, the Actreen ® product range also includes the Actreen ®
Glys Set, with an integrated collection bag attached to the
catheter to hold the urine. This makes it easier for patients
who cannot drain the urine directly into a toilet. New users
need to be educated in how to use the products properly,
to minimize any risk of injury or infection. However, intermittent catheters become a normal part of the daily routine
very quickly. Petra Stransky greatly appreciates these benefits: “I could now insert the catheter blind-folded; all the
hand movements have become second-nature.” The compact
bag system gives her mobility and independence. “I am doing
really well despite my incontinence,” she says with a smile.
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“ IN T HE O L D DAY S , I U SED T O R AC E T HRO U GH L IF E , BU T N OW I H AV E A NE W
AWA RENE S S T H AT I WO UL D N ’ T WA N T T O C H A N GE .”
P E T R A S T R A N S K Y, P A T I E N T
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THE SOURCE OF LIFE
PA RE N T E R A L N U T RI T I O N P L AY S A N E S S E N T I A L PA R T IN M A N Y
PAT IEN T S’ T RE AT MEN T. WI T H I T S NE W L IF E NU T RI T ION P L A N T,
B . BR AUN ’ S H O SP I TA L C A RE D I V ISI O N IS S T REN G T HENIN G
I T S P O S I T I O N A S A S U P P L I E R O F I N N O VAT I V E N U T R I T I O N
S O L U T IO NS .
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THE NE W LIFE NU TRITION PL ANT C AN PRODUCE SE V ER AL MIL LION SINGL E AND MULTI- CHAMBER BAGS
PER YEAR.
You are what you eat – a well-balanced diet is essential to
human health and quality of life. Clinical nutrition comes to
the rescue of patients who are unable to eat or are no longer
able to eat sufficiently. For these people, it is an essential
prerequisite in treating their condition or maintaining their
health. B. Braun’s Hospital Care Division is one of the leading
providers of clinical nutrition products and the company is
expanding its activities in this area. Clinical nutrition can
be usefully employed in many different scenarios: following
serious operations, to treat a number of chronic illnesses,
for premature babies or for intensive-care patients. It can
also prevent nutritional deficiencies or significantly improve
a patient’s nutritional status. Studies have shown that an
astonishingly high percentage of hospitalized patients show
nutritional deficiencies – in some cases, more than 50 percent.
“Clinical nutrition plays a valuable role in providing adequate
treatment in intensive care and in many other therapeutic
areas. Quality standards for existing solutions are already
extremely high – and, of course, those of us who work in
clinical medicine are thankful for every additional helpful innovation,” says Prof. Dr. Alastair Forbes, Professor of Gastroenterology and Clinical Nutrition at University College London.
The objective of any nutritional regimen is to ensure that the
body is supplied with all of the essential nutrients. If it is not
possible to feed the patient by mouth (orally) or via a gastric
or intestinal tube (enterally), parenteral nutrition is required,
with nutrients being administered by infusion and thereby
bypassing the digestive tract. The choice, quantity and administration method of the nutrients must be precisely adapted
to the individual needs of the patient. While these can be
administered in a hospital, this can often be done at home.
The service company B. Braun Travacare offers patients high-
quality administration of enteral and parenteral nutrition in
a home setting. This includes providing family members and
caregivers professional assistance with important issues, such
as the correct administration and dosage of the infusion solutions. Administering B. Braun’s products could not be any
simpler. The product range includes efficient nutrition solutions for safe, need-based treatment of patients suffering from
a variety of diseases. In addition to glass bottles, we also offer
safe and easy-to-use bags made of state-of-the-art polymers.
Three different types of bags are used in parenteral nutrition.
There are single-chamber bags, which have one chamber to
hold a combination of nutrients that are compatible for the
storage life of the product. Then there are bags with two or
three chambers. Each of these contains different combinations
of nutrients that must be isolated during storage. The chambers are separated by peel seams, which are opened by
applying pressure. Combining the contents is thus quick and
easy. The Nutriflex ® 2-chamber bag, for example, allows for
flexible administration. It contains amino acids, carbohydrates and electrolytes, thereby providing the patient with
essential nutritional requirements. Different varieties are
available to suit individual needs. A very precise dosage of
lipids can easily be added to the bag. The NuTRIflex ® Lipid
3-chamber bag contains a lipid component and offers standardized complete nutrition with a well-balanced nutrient
ratio and is also available in different varieties. Compounding is
available for patients suffering from impaired metabolic and
organ functions who therefore have special nutritional
requirements. For these patients, we create individualized,
all-in-one mixtures. B. Braun is already a very successful
developer, manufacturer and global distributor of innovative
nutrition solutions. To further expand its position, the company has invested heavily in its German manufacturing facility
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THE SOURCE OF LIFE
“ IN A D D I T I O N T O S TAT E- O F -T HE- A R T T E C HN O L O GIE S A ND P RO C E S SE S , T HIS
L A RGE-S C A L E P RO JE C T C O MBINE S O UR L AT E S T F IND IN G S IN T HE A RE A O F
C HEMIC A L A ND A N A LY T IC A L A D VA NC EMEN T S , A S WEL L A S F O RMUL AT IO N ,
P RO C E S SIN G A ND PAC K AGIN G D E V EL O P MEN T S .”
R A L F HAR AND, V ICE PRE SIDEN T PRODUC T DE V ELOPMEN T C OE PHARMACEU T IC AL S AT B . BR AUN
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“ O UR G OA L IS TO M A K E T HE SE S O P HIS T IC AT ED S Y S T EMS WO RK TO GE T HER WI T H
GE A R- L IK E P RE C ISI O N T O GUA R A N T EE T HE HIGHE S T P O S SIBL E D E GREE O F EF F I C IEN C Y – A ND WE A RE WEL L O N T HE WAY T O AC HIE V IN G T HIS G OA L .”
THOMAS GÄBLER, VICE PRESIDENT GLOBAL PROCESS ENGINEERING AND HE AD OF THE LIFE NUTRITION PROJEC T
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THE SOURCE OF LIFE
over the past two years - approximately € 164 million have
been invested in the new LIFE Nutrition plant in Melsungen.
This capital investment ensures that we can meet the growing global demand for high-quality nutrition solutions in the
coming years. The manufacturing and laboratory facilities
employ 270 people, 80 of these positions were newly created.
The LIFE (Leading Infusion Factory Europe) facility began
operation in April 2005. The new LIFE Nutrition facility will
likewise set new standards. “In addition to state-of-the-art
technologies and processes, this large-scale project combines
our latest findings in the area of chemical and analytical
advancements, as well as formulation, processing and packaging developments,” explains Ralf Harand, Vice President
Product Development CoE Pharmaceuticals at B. Braun. From
the initial weighing of raw materials to the packaging of
finished goods, the entire production process is linked via
IT systems. The result not only allows the processes to be
precisely managed, but represent, quite simply, pure efficiency.
As an example, the electronic manufacturing documentation
saves several hundred thousand pieces of paper every year.
“Our goal is to make these sophisticated systems work
together with gear-like precision to guarantee the highest
possible degree of efficiency – and we are well on the way
to achieving this goal,” says Thomas Gäbler, Vice President
Global Process Engineering and Head of the LIFE Nutrition
project. Anyone who visits the new operations feels as if
they have been transported to a fascinating high-tech
world – the degree of automation is extremely high. One
may, for instance, come upon driverless transport systems
that automatically weigh the ingredients of the infusion
solutions. The manufacturing process begins with the production of highly purified water, which means that the
drinking water must be completely desalinated and then
distilled. This highly purified water is stored in a huge tank
and later used for mixing and filling numerous different
infusion solutions.
Monitoring is a top priority in LIFE Nutrition. The most up-todate analytical processes and optical monitoring utilizing
a multitude of cameras – during the printing process, for
instance – ensure perfect quality. And even though filling
is carried out under almost sterile conditions, the containers
undergo fully automatic sterilization. As a result, water – the
source of life – can, with the proper added ingredients,
become the “source of survival.” With the help of clinical
nutrition, many people have regained their health or at the
very least improved their quality of life and therefore greatly
appreciate the value of these product innovations.
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ALLERGY IN THE KNEE
F OR PAT IEN T S SUF F ERING F ROM C HRONIC K NEE PA IN , REP L AC ING
T H E K N E E J O I N T W I T H A N I M P L A N T M AY M A K E S E N S E . B U T
PAT IEN T S F RE Q UEN T LY E X P ERIEN C E A N A L L ERGIC RE AC T IO N TO
T HE ME TA L L IC M AT ERI A L S C O N TA INED IN T HE P RO S T HE SIS . A N
INNOVATI V E C OATING PIONEERED BY B. BR AUN OFFERS A SOLU TION.
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IN A DDI T ION TO T HE A N T I - A L L ERGIC EF F E C T, T HE NE W SURFAC E REDUC E S WE A R
BY 6 0 P ERC EN T C OMPA RED TO T R A DI T ION A L SURFAC E S . T HIS ME A NS T H AT A L L
PAT IEN T S WI T H K NEE IMP L A N T S – RE G A RD L E S S O F WHE T HER O R N O T T HE Y A RE
IN TO L ER A N T TO ME TA L– C A N BE A S SURED A S A F E A ND LO NG -T ERM S O L U T IO N .
Around the world, the daily lives of millions of people are
made unbearable by searing, stabbing knee pain. Veronika
Wolber knows this type of pain all too well. The 58-year old
has endured tremendous suffering – and unfortunately she
is not alone. For over 20 years, Veronika worked as a waitress in her native Black Forest. “Every day you end up walking miles through the restaurant. And, if you’re a bit on the
heavy side like me, that puts a big strain on the joints,” says
Veronika Wolber.
Despite finding more sedentary work assembling stationery
supplies and two operations on her left knee, she did not get
the relief she had hoped for. “My knee was still swollen and
excruciatingly painful; all I could do was limp,” says the
mother of three grown children. And the idea of bowling – her
favorite pastime – was nearly unthinkable.
In 2004, she opted for an artificial knee joint. This is not an
unusual operation for doctors these days. In Germany alone,
more than 170,000 knee joints are implanted every year.
After two weeks in the hospital, rehabilitation exercises and
physical therapy, everything went smoothly for Veronika
Wolber at first. But her joy over making this successful fresh
start was short-lived. After nine months, the pain returned
with the same intensity.
Doctors were puzzled over what the cause may be. Nevertheless, they wasted no time and soon implanted a new joint.
But that was by no means the end of the story. After only a
year, the unpleasant scenario repeated itself – and in 2006
Veronika Wolber received knee joint number three. And this
despite the fact that a high-quality knee implant usually
lasts 10 – 15 years. Once again, it did not take long before the
excruciating pain returned. It was only after a conversation
with a nurse she had befriended that she began to wonder if
her years of discomfort might be related to a long suspected
allergy to metal. “I always got a skin rash when I wore metal
jewelry. And of course, prostheses are made of metal,” says
Veronika Wolber, with a bitter smile. Unfazed by this information, the doctors implanted knee joint number four a year
later – again without taking any precautions against an allergic
reaction. This devastating cycle would have probably continued if Dr. Oliver Datz, Head of Surgery at Ortenau Hospital in
Wolfach, Germany had not finally shed some light on the
mystery. Tests revealed that Veronika Wolber is allergic to the
metals nickel, chromium and cobalt.
And this is anything but a rarity. In Germany, approximately
12 percent of the population is hypersensitive to nickel, just
under 5 percent to cobalt and chromium. Free metal ions can
trigger allergic reactions in some people, leading to skin
reactions, hematoma, swelling, healing problems and repeated
pain. Given the growing number of implant patients, the issue
of biocompatibility – i. e. biological tolerance of the materials
utilized – is becoming an increasingly significant factor. And
as the number of patients with hypersensitivity to metals is
also increasing, allergy testing should be a fundamental component of any therapeutic advice provided prior to implantation of the prosthesis.
Dr. Friedrich Thielemann, Director of the Hospital for Emergency and Reconstructive Surgery in Villingen-Schwenningen,
Germany took over the “Wolber case” and in July 2009
implanted knee joint number five. But he did not repeat the
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ALLERGY IN THE KNEE
“I A LWAY S GOT A SK IN R A SH WHEN I WORE ME TA L JE WEL RY. A ND OF C OUR SE , P ROS T HE SE S A RE M A DE OF ME TA L .”
V E R O NIK A WO L B E R , PAT IE N T, IN C O N S U LTAT I O N W I T H D R . F R IE D R I C H T HIE L E M A NN
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“ UN T IL NOW, D O C TORS S OUGH T TO P RE V EN T A N A L L ERGIC RE AC T ION BY A P P LY ING
A SIN GL E- L AY ERED C OAT IN G T O IMP L A N T S . BU T T HIS C A N WE A R O F F T HRO U GH
ME C H A NIC A L S T RE S S . T HE NE W S Y S T EM O F F ER S A GRE AT ER D E GREE O F P RO T E CT I O N AG A INS T A L L ERGIC RE AC T I O NS .”
DR . F RIEDRIC H T HIEL EM A NN, DIRE C T OR OF T HE HO SP I TA L F O R EMERGENC Y A ND REC O NS T RUC T I V E SURGERY IN V IL L INGEN -S C HWENNINGEN, GERM A N Y
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mistakes of his predecessors. Quite the contrary – he proceeded with caution and relied on an innovative product
from B. Braun: an implant with a multi-layer anti-allergy
coating. “Until now, doctors sought to prevent an allergic
reaction by applying a single-layered coating to implants. But
this can wear off through mechanical stress. The new system
offers a greater degree of protection against allergic reactions,”
Dr. Thielemann affirms. This state-of-the-art coating method,
called “AS Allergy Solution,” which was developed by B. Braun’s
Aesculap Division in Tuttlingen, Germany, is designed to
offer optimal prevention in knee prostheses. It is comprised
of a total of seven layers, with an adhesive layer to ensure
the implant bonds to the subsequent layers.
“The challenge was to equip the knee joint components with
a non-abrasive layer that acts as a barrier to prevent contact
allergens from escaping. The result of our research was a
unique multi-layer coating system produced using a special
vacuum arc vapor deposition process,” explains Dr. Thomas
Weik, Head of Materials and Biomaterials Development at
Aesculap. The top layer consists of zirconium nitride, a highly
biocompatible metal that is extremely resistant to wear and
tear. Using sophisticated thin-layer manufacturing processes
and exhaustive materials testing and research methods, the
Aesculap team successfully brought the “Allergy Solution”
layer to market.
The benefits are obvious. In addition to the anti-allergic effect,
the new surface reduces wear by 60 percent compared to
traditional surfaces. This means that all patients with knee
implants – regardless of whether or not they are intolerant
to metal – can be assured a safe and long-term solution.
And for most, relief comes quickly. “If the doctors had used
the opportunities modern medical technology presents at
an earlier stage, I would have been spared a lot of suffering,”
concludes Veronika Wolber. She can now look to the future
with complete confidence. And that means, of course, that
she can again enjoy her weekly bowling sessions.
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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
50
PERSONNEL REPORT
54
RISK AND OPPORTUNITIES REPORT
57
SUBSEQUENT E VENTS
60
OUTLOOK
60
FINANCIAL STATEMENTS
34
At a glance
The B. Braun Group achieved adequate increases in sales and profits in fiscal year 2010. As a global
provider of healthcare solutions, we were less affected by fluctuations in the global economy and
are benefiting greatly from the continuing boom in the healthcare markets of emerging economies.
The European and American healthcare markets, however, have been affected by cuts in public spending budgets. To some extent, this leads to decreasing demand for capital goods, but more so to increased
pressure on pricing. We see ourselves as partners with our customers. Our aim is to jointly improve
therapies and procedures and develop solutions for clinicians and patients. Thanks to our skilled employees, modern production processes and transparent corporate culture, we have created an environment for exceptional ideas and innovative products.
Over the past few years we have made substantial investments, first and foremost to modernize and
expand production in Germany and elsewhere in Europe. The investment program we began in 2010
is focused on expanding production in developing and emerging markets. Worth € 1.6 billion, it is aimed
at adapting our production sites to country and regional requirements and improving supply on the
local level. As usual, we will proceed with caution and not assume any unmanageable risks. We monitor
and analyze changes in the healthcare system with great care. Our positive performance last year
confirms that B. Braun is on the right long-term track as a family-owned business. We are confident
we will continue to expand our position as a leading provider to healthcare markets.
Sales (in € million)
Net Margin after Taxes (in %)
2010
2009
4,422.8
4,028.2
6.3
5.9
EBIT including income from investments (in € million)
462.2
411.9
EBITDA (in € million)
700.5
620.5
EBITDA Margin (in %)
15.8
15.4
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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. The 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 other services, making it a
service provider that works closely with its customers to determine the best solution for each and
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 products and the preceding drug admixture processes, 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, as well as regional anesthesia.
The division is also the European market leader in automated infusion systems, peripheral IV catheters,
and standard IV solutions. The US, Eastern Europe, and emerging economies offer above-average growth
opportunities. The division is growing organically and through selected strategic acquisitions. In 2010,
we expanded our product portfolio by acquiring a Thai manufacturer of elastomeric pumps. In Romania,
we purchased the remaining non-controlling interest in a manufacturer of standard IV solutions.
Having obtained approval for 170 pharma products over a one-year period, we have more than doubled
the number of new approvals compared to the prior year. We achieved our target of providing DEHPfree IV sets to all markets. Our successful Space infusion pump system is now available in additional
Asian and Latin American countries. We are continually adding components to the existing Space
infusion system, including WLAN features, complex multi-functional applications, and a system to
treat stress-induced hyperglycemia in critically ill patients. Hospital Care offers an excellent example
of how we are living up to our intent to improve the safety of patients and healthcare professionals
by offering new products and by making clinical processes more efficient.
The Hospital Care Division
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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 30 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 as a leading provider of sterilization containers. In the fields of neurosurgery and
wound closure, Aesculap is a major global supplier. The main focus of innovation in surgical sutures
is in cardiothoracic and abdominal wall closures. Our new product, Novosyn ®, a mid-term absorbable suture, completes our offering in this area. The division’s product range also includes implants,
sterile container systems, and power systems. We advise hospitals on instrument management concepts, helping them optimize their stock of instruments and maintain its value. Demographic trends
are producing a steady rise in the number of patients with degenerative knee and hip conditions, for
which Aesculap offers complete implant solutions. In conjunction with our navigation system OrthoPilot ®,
patients who undergo orthopedic procedures are assured the best possible safety and quality. Aesculap
also offers special products for traumatology and spinal and vascular surgery. Our new Quintex ® disc
system for degenerative conditions of the cervical spine is just one of the many innovations in this field.
Thanks to its high innovative capability and the close cooperation it maintains with surgeons around
the world, Aesculap has been posting dynamic growth for years. In 2010, the division adapted its
new development process in order to be able to identify and design products suitable for healthcare
professionals and patients even more quickly. An advisory-based marketing approach has been implemented to strengthen the close relationship with customers and promote growth in both Europe and
other parts of the world. The division sees opportunities in the expanding Eastern European and
Asian markets, particularly the BRIC countries. In May 2010, a new instrument manufacturing facility
began operation in Poland (Radzyń Podlaski).
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 costeffective 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 treatment progress is optimized. Our product innovations in outpatient care
are aimed at improving therapies and increasing patients’ quality of life.
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THE B. BRAUN GROUP
In urology, OPM has started to introduce ready-to-use catheters (Actreen ®). These can be removed
from their packaging without the risk of contamination and are pre-lubricated to ensure quick, easy,
and pain-free use. In wound care, negative pressure wound therapy (vacuum-assisted wound care)
offers an option in the future to improve the treatment of chronic wounds, as the vacuum speeds up
healing. We have expanded our global sales network by establishing new OPM sales offices in Hong
Kong and China.
The B. Braun Avitum Division
The division has a network of 168 dialysis centers (previous year: 157) in Europe, Asia and South Africa.
Physicians and nursing staff are available in our clinics to assist and advise dialysis patients with
chronic kidney and metabolic disorders, offering them the chance for a better quality of life. In 2010,
we completed our first dialysis center in Russia (Kaliningrad). We also treated patients in India for
the first time, under a public-private partnership, which gives over 1,000 patients without health
insurance access to life-saving dialysis treatment.
Aesculap Academy
Groundbreaking developments in medical technology, sophisticated new treatment methods, and the
increasing demands on hospital and quality management require a high level of ongoing professional
development. B. Braun’s Aesculap Academy allows physicians, surgeons, other medical staff, and hospital managers to add to their knowledge as part of lifelong learning in the medical field. Since 1995,
the Aesculap Academy, based in Tuttlingen and Berlin (both in Germany) and operating in 30 locations
around the world, has been internationally recognized as a major forum for professional development
and training in the field of medicine. In 2010, 67,000 medical experts around the world took advantage of the courses offered at the Aesculap Academy. Its core business focuses on skills training in
anesthesia and the entire range of surgical and interventional medical disciplines, as well as special
training programs for hospital employees and personnel in private practices. In addition, the Aesculap
Academy has positioned itself as a partner to medical companies and develops opinion-forming forums
on current issues, such as error avoidance in operating rooms, procurement management in hospitals,
and political issues. The expansion of the Aesculap Academy’s global network enhances its importance
as an authoritative partner for knowledge transfer in medical matters. The Aesculap Academy has a
particularly strong presence in Asia and Europe, and centers are planned for China, Malaysia, Spain,
and, for the South American continent, in Brazil.
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. With global demand for our products growing, it has become
necessary to expand capacity in the B. Braun Avitum Division. Our new facility in Melsungen, Germany
for the manufacture of infusion pumps and dialysis machines is now in operation.
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Management and control of the company
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 agents include the Management Board, the Supervisory Board, and the Annual
Shareholders’ Meeting. The Management Board is comprised of six members, each with specific individual responsibilities, while jointly responsible for the company’s performance. The Supervisory Board
consists of twelve members, half of whom are elected by the Annual Shareholders’ Meeting and half
by the company’s employees. Committees have been established to support the work of Supervisory
Board. The Personnel Committee is responsible for such matters as the Management Board members’
employment contracts and compensation. The Audit Committee monitors the internal audit systems,
the accounting process, and the auditing of financial statements.
The Supervisory Board appointed Prof. Dr. Hanns-Peter Knaebel (Aesculap Division) as an Ordinary
Member of the Management Board of B. Braun Melsungen AG as of March 25, 2010. Prof. Dr. HannsPeter Knaebel succeeded Prof. Dr. Dr. Dr. h. c. Michael Ungethüm one year earlier and was initially
appointed as a Deputy Member of the Management Board. Dr. Wolfgang Feller (B. Braun Avitum
Division) will be reappointed effective April 1, 2011 to March 31, 2013 as an Ordinary Member of the
Management Board. In December 2010, the Supervisory Board elected Dr. Heinz-Walter Große to
succeed Prof. Dr. h.c. Ludwig Georg Braun, who will retire as Chairman of the Management Board of
B. Braun Melsungen AG on March 31, 2011. The Supervisory Board also appointed Dr. Annette Beller
and Otto Philipp Braun as Deputy Members of the Management Board and extended the mandate of
Caroll H. Neubauer (North America region) to 2016. As of April 1, 2011, Dr. Heinz-Walter Große, in addition to serving as Chairman of the Management Board, will also be responsible for Human Resources
and Legal Affairs. Dr. Annette Beller succeeds Dr. Heinz-Walter Große as Head of Finance effective
April 1, 2011. Otto Philipp Braun will assume responsibility for the Iberian Peninsula and Latin America
effective April 1, 2011, becoming the first member of the sixth generation of the family to enter the
Management Board of B. Braun Melsungen AG.
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 toward customers have
been defined in our Code of Conduct since 1996. In concrete terms, our responsible approach to
corporate governance is reflected in our integration of quality and environmental oversight, our use
of key performance indicators to manage the Group in a forward-looking manner, an accounting
system based on international standards, and our close monitoring of all significant potential risks.
Organizational structure and locations
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 Group-wide functions.
In particular, these include Group-wide accounting and controlling, international human resources,
IT and logistics, the legal and tax department, and the Group treasury. Our research and development
activities are assigned to Centers of Excellence (CoEs) in which research, development, and production
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THE B. BRAUN GROUP
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 in Melsungen (Germany), Penang (Malaysia), Allentown (Pennsylvania, US),
Tuttlingen (Germany), Boulogne (France), Rubí (Spain), and Sempach (Switzerland). Other major manufacturing sites are located in Irvine (California, US), São Gonçalo (Brazil), Nowy Tomyśl (Poland), Hanoi
(Vietnam), Budapest (Hungary), and Suzhou (China). Through its subsidiaries and holdings, B. Braun
operates in 56 countries. The B. Braun Group includes 189 (previous year: 187) consolidated companies plus 3 (previous year: 3) jointly owned companies in which we do not have a majority. 17 (previous year: 12) holdings are consolidated using the equity method of accounting. Detailed information
on major shareholdings and the locations of each company can be found in the tables on pages 132
to 135.
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, health and 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 review 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 protection of the environment, as well as health and safety in the workplace under the global “Responsible Care” initiative.
Eleven B. Braun Group locations in Europe are EN ISO 14001-certified. In addition, 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 and Tuttlingen), France, Spain, and Switzerland is certified
complying with the international OHSAS 18001 standard. The European dialysis centers within our
B. Braun Avitum Division have received EN ISO 9001 and “Good Dialysis Practice” certification.
Our 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 products. 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
In February 2010, we updated our Group strategy for the period 2010 to 2014. The targets established
for the previous period were fully met or exceeded.
Quality and environmental management
40
The Group strategy preserves the key elements of the previous strategy. We are confident that a growth
strategy based primarily on our own innovativeness and funding will ensure that the B. Braun Group
can sustain its success. We established an annual sales growth target of between 5 and 6 percent.
Our target for the EBITDA margin is an increase to 17 – 18 percent of sales within the new time
period covered by the strategy. Maintaining the B. Braun Group’s independence is of central importance. The next generation of the B. Braun family has reaffirmed that we will remain a privatelyheld 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 remains 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. Our
central areas and optimized production structures will ensure we continue to improve our own
efficiency. We also intend to further shorten our working capital cycle, and thus Group-wide projects
related to inventory and receivables management, as well as lean management, have been initiated. In all that we do, we focus on the creation of sustainable value. We are well aware of our
responsibilities to our customers – that is to say, to patients and to those who use our products –
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 continue to maintain our financing
policy. While still seizing the opportunities presented by the market, we will not 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.
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 regional promotion of art, culture,
and sport, the main areas we support are knowledge and science. In terms of universities, this takes
the form of sponsored chairs, such as at Kassel University and Charité Berlin. We also offer scholar-
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THE B. BRAUN GROUP
ship programs, such as the Braun Medical Trust Foundation in India. We have a long tradition in symposia and workshops for medical staff and care personnel. When it comes to promoting knowledge,
we start with the very young: for example, with B. Braun Children’s and Youth Weeks. Entitled “New
researchers needed”, they were held for the third time in 2010. We also operate a Children’s University in Tuttlingen, Germany. This year for the first time, we awarded the Young People’s Research
Prize. The topic, “The Human Miracle”, was aimed at senior grade students in the North Hesse
regions of Schwalm-Eder and Waldeck-Frankenburg. The Aesculap environmental school prize was
awarded for the 19th time in 2010.
In living up to our guiding principle of “Sharing Expertise”, B. Braun also makes its knowledge available to the needy in places such as Kenya. Public health provision in this African state is poor. In
order to improve the situation, B. Braun and German Technical Cooperation (Deutsche Gesellschaft
für Technische Zusammenarbeit GmbH, GTZ) founded a public-private partnership under the “develoPPP.de” program of the German Federal Ministry for Economic Cooperation and Development
(BMZ). Its aim is to train care staff in the use of modern medical equipment and products, thereby
improving healthcare provision. A school healthcare program is also being established to promote
health awareness in the population and prevent highly infectious illnesses. It will raise hygiene
standards and teach children the importance, for example, of washing their hands correctly. If we
want to give young people prospects, we also need to ensure that they receive sound vocational
training. This is where another project in Africa comes in. In Burkina Faso, B. Braun has financed
the foundation of a vocational training center in Melsungen’s sister city Koudougou, where young
people can train to be hairdressers, bricklayers, mechanics, and carpenters in a dual system, as in
Germany. Kouilbi Yameogo, the project manager, is a former metalworking apprentice at B. Braun in
Melsungen, Germany.
Aside from long-term programs, B. Braun also seeks to provide help in instances of very acute need.
To help the victims of the Haiti earthquake, the company organized a global donation campaign –
the first of its kind – within the Group, followed by another campaign for the victims of the catastrophic floods in Pakistan. B. Braun’s Group management doubled the amount of donations collected
by employees. As a result, € 230,000 was donated to fund the construction of the hospital “Centre
de Santé Avec Lits de Bainet” in Haiti, a hospital project run by the emergency aid agency “Diakonie
Katastrophenhilfe.” The donations collected for Pakistan will also be used to fund the reconstruction
of healthcare centers.
SHARE , our sustainability magazine, was published for the third time last year and describes further
examples of our commitments throughout the world within the community and society as a whole.
Offering children prospects is something that B. Braun takes very seriously. B. Braun for Children, a
global umbrella project we started many years ago, provides an opportunity for our subsidiaries to
help improve the situation of local children and for our employees to put their social commitment
into action. In 2010, we provided further support to existing initiatives and created new initiatives
around the globe. In Tokyo, Japan, for example, the first workshop on “Physical and mental development of babies” took place. In helping mothers to strengthen their bond with their child, it aims to
promote healthy development in children.
42
Economic environment
Economic performance
Global economy
The recovery in the global economy, which had begun at the end of 2009, continued in 2010. Global
output returned to its level prior to the financial and economic crisis. This trend was supported by
expansive monetary and fiscal policies in many countries, low interest rates, and expanding production
in emerging markets. In 2010, global output grew 5.0 percent year-on-year. Gross domestic product
growth rates varied greatly from country to country. Emerging markets proved to be the growth
engines, with an average rate of 7.1 percent, compared with 3.0 percent from industrial countries.
Growth in global trade, at 12.0 percent in 2010, was almost back to its pre-crisis level.
Economic performance by region
Economic output in the eurozone rose 1.8 percent year-on year. Although economic recovery was still
moderate in the first half of the year, it improved up as the year progressed. Germany’s good performance was a key contributor here, whereas growth rates in Spain and Italy were below-average,
and Greek gross domestic product decreased further in the first half of 2010. The unemployment
rate in the eurozone was up year-on-year, with higher unemployment figures in Portugal, Spain,
Ireland, and Greece accounting for two-thirds of the increase. With many countries having to
increase taxes and cut social security benefits to reduce their high budget deficits, consumption and
investment demand may be compromised.
The economic crisis left fewer traces in Germany than had been feared. With the global economy
recovering, exports climbed and during the course of 2010, domestic demand strengthened further.
Its gross domestic product rose 3.6 percent in 2010. The German labor market was stable, with
average annual unemployment at 7.7 percent (previous year: 8.2 percent) and down to 7.2 percent
in December 2010.
Eastern European states recovered fairly well from the previous year’s slump in economic output,
although performance varied sharply from country to country. Poland reported the region’s strongest
growth at 3.4 percent, whereas Romania and Latvia saw further decreases in gross domestic product.
Russia’s recovery from the decline in economic output was slow in comparison with other BRIC
members. Although the rise in the oil price had a positive impact, exports and domestic demand
remained weak. In 2010, economic output grew 3.7 percent year-on-year.
The US economy started to improve during 2010, with output for the whole year rising to 2.8 percent. Despite a rise in unemployment and private households saving more, output was boosted by
private consumption.
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ECONOMIC ENVIRONMENT
Latin American countries achieved growth of 5.9 percent in 2010. Despite this growth, inflation
remained fairly constant. Brazil’s growth was characterized by strong domestic demand, with foreign
trade providing only a fairly small impetus. In 2010, economic output is expected to have grown
by 7.5 percent year-on-year. The government is planning major investments in infrastructure to boost
and stabilize growth.
Asian emerging markets reported strong economic performances, with growth at 7.1 percent in 2010.
China’s gross domestic product grew 10.3 percent year-on-year in 2010. Although state support
measures were reduced, growth is being driven more and more by private investment and exports.
India achieved growth of 9.7 percent on the back of a strong domestic market. Indonesia’s economy
grew 6.1 percent in 2010.
Performance of the healthcare market
The performance of the global healthcare market varied by region. In line with overall economic
performance, the stronger recovery by Asian and Latin American countries was the dominant theme
here too. This was due to the great resilience of emerging market economies during the financial
and economic crisis. Another factor is that these regions still have a lot of catching-up to do with
regards to healthcare. The picture in Europe and North America was different, with growth stagnating.
Overall, however, sales growth was higher than the previous year. The trend in earnings is more
problematic. Prices came under considerable pressure from a combination of massive cost cuts in
healthcare systems and compulsory discounts, and this is continuing to hurt providers’ earnings.
Rising commodity prices and higher receivables mean providers in the healthcare market are under
further pressure. Some European countries saw a sharp rise in receivables DSO (Days Sales Outstanding), but we do not expect there to be defaults. The increasing bureaucratization in approval
processes is more time-consuming and increases the time to market for new products.
Japan posted economic growth of 4.3 percent in 2010, after two consecutive years of decline. This
was the result of stronger consumer demand and a sharp rise in exports, particularly to its Asian
neighbors. Despite this recovery, Japan’s capacity was still underutilized and its debt rose to a record
of nearly 200 percent of gross domestic product.
44
Business and earnings performance
Overall assessment by the Management Board
Business for the B. Braun Group was satisfactory in 2010. A further increase in sales and earnings
means we maintained our growth trend, to which all divisions contributed. We achieved important
milestones in our capacity expansion plans and made preparations for our second investment program. We benefited from the good recovery in emerging markets and currency gains. The Asia/Pacific
region proved to be the Group’s growth engine. The established European and US markets are suffering from government spending cuts. Thanks, however, to the unique breadth of our product portfolio
and efficient processes, we achieved acceptable increases here as well. The B. Braun Group is in good,
stable financial condition. The increase in our equity ratio ensures B. Braun’s independence and is the
natural basis for progress and growth.
Group Sales |
IN € B IL L I O N
5.0
4.42
4.0
3.32
3.57
3.79
4.03
3.0
2.0
1.0
2006
2007
2008
2009
2010
Sales
In fiscal year 2010, sales at the B. Braun Group rose 9.8 percent to € 4,422.8 million (previous year:
€ 4,028.2 million). Currency gains had a positive impact on our sales growth. Currency-adjusted,
the increase was 5.2 percent. The core business areas grew by 10.5 percent to € 2,411.3 million
(previous year: € 2,182.9 million). This was a slightly stronger performance than that of the specific focus business areas where sales improved by 9.0 percent to € 2,011.5 million (previous year:
€ 1,845.3 million). Our Hospital Care and Aesculap Divisions were the biggest contributors to sales
growth.
The Asia/Pacific (+ 25.9 percent) and Latin America (+16.5 percent) regions were also highly dynamic.
In the USA , sales increased by 10.0 percent. Growth in established markets in Europe (+ 7.2 percent),
particularly in our home market of Germany (+ 3.2 percent), was moderate.
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BUSINESS AND EARNINGS PERFORMANCE
Performance in the Hospital Care Division
Sales in the Hospital Care Division climbed 9.6 percent to € 2,086.7 million (previous year: € 1,903.8
million). Currency gains played a part in this performance, as virtually all key currencies in Hospital
Care made gains against the euro. We increased sales of products from the core business areas by
9.8 percent to € 1,307.7 million (previous year: € 1,190.8 million). Sales in the specific focus business
area rose by 9.3 percent to € 779.1 million (previous year: € 712.9 million).
Sales by division |
IN € MIL L I O N
2,500
2,087
1,904
1,765
1,500
1,098 1,153
1,281
1,000
496
500
Hospital Care
20 0 8
20 0 9
Aesculap
526
OPM
555
403
421
475
B. Braun Avitum
2010
Growth in large volume IV solutions and standard IV sets was low due to capacity issues. Demand for
our Space products (Infusomat ® Space and Perfusor ® Space) was highly encouraging, while sales
of the old pump generation fell, as expected. In parenteral nutrition, both multi-chamber systems
(Nutriflex ®) and single-chamber solutions (in particular Lipofundin ®) recorded healthy increases.
Other contributors were IV catheters (Introcan Safety ® and Vasofix Safety ®), needles and sets for
regional anesthesia, as well as injectable medicines (in particular Propofol- ®Lipuro and Duplex ®).
Europe performed well overall, except for Southern Europe where government measures triggered,
to some extent, drastic price reductions in the pharmaceutical sector. Business growth in our home
market of Germany was satisfactory. In Eastern Europe, Russia and Poland made considerable
improvements. But once again, the Asia/Pacific region and, in particular China, India, and Australia
contributed greatly to the division’s growth.
Performance in the Aesculap Division
The Aesculap Division posted record growth in sales, totaling € 1,281.1 million (previous year:
€ 1,153.2 million), an 11.1 percent increase year-on-year. Sales in the core business areas increased
by 12.6 percent to € 484.7 million (previous year: € 430.5 million). Sales of € 796.4 million (previous
2,000
46
year: € 722.7 million) were achieved in the specific focus business area, an increase of 10.2 percent.
The drug-eluting balloon catheter product SeQuent ® Please continued its success story. The success
of the drug-eluting balloon catheter product SeQuent ® Please continued. Sales of Vena Cava filters
and single-use elastomeric pumps also continued to grow. In our surgery business, endoscopic singleuse instruments (AdTec ®) and our SterilContainer™ systems were the main contributors to growth.
In orthopedics, sales of knee systems and Novocart 3D, a product for treating articular cartilage damage, were encouraging. Sutures also contributed to the division’s good performance. The spinal
implant business segment showed particularly dynamic growth. The strong performers in Europe were
Germany, Italy, and Spain, while France remained on a par with last year. As expected, Greece performed weakly. However, Aesculap achieved excellent sales growth in the US, Russia, and Asia (in
particular China). Performance in Latin America was also positive.
Performance in the Out Patient Market (OPM) Division
With sales growing 5.5 percent, the OPM Division posted sales of € 554.6 million in the reporting
year (previous year: € 525.8 million). Core business areas posted sales growth of 7.5 percent, outperforming the specific focus business areas (+ 0.7 percent). The core business areas generated sales
of € 398.8 million (previous year: € 371.1 million). The specific focus business areas improved only
slightly over the previous year (€ 154.7 million), posting sales of € 155.8 million. Skin and wound
management posted above-average sales growth, with the Prontosan ® product family being a major
contributor. Due to high inventories from 2009 (anti-pandemic measures regarding H1N1 flu), the
hygiene management product area was unable to repeat the previous year’s outstanding performance.
The areas of incontinence (Actreen ® catheter) and urology achieved satisfactory sales growth. Within
urology, products for irrigation therapy (Uro-Tainer ®) posted encouraging sales growth. Due to the
default of a supplier, urine drainage bags and closed urine systems (Ureofix ®) performed weaker
than expected.
The US posted a sharp increase in sales, contributing more than half the division’s growth. Currency
gains had a positive effect on this development. European markets, in particular France, Spain, and
Germany, are key to the OPM Division. With year-end business hit by the increase on August 1, 2010
in the discount that manufacturers are obliged to give statutory health insurance companies on
new drugs, the important German market was unable to improve whole-year sales. France also remained
at the previous year’s level, whereas Italy and Spain grew. Sales growth in Eastern Europe and Russia
was also dynamic.
Performance in the B. Braun Avitum Division
Sales in the B. Braun Avitum Division increased by 12.9 percent to € 474.8 million (previous year:
€ 420.5 million), with performance benefiting from a recovery in Eastern European currencies, in
particular those of the Czech Republic and Poland. Sales in the core business areas increased by
15.5 percent to € 220.1 million (previous year: € 190.6 million). The specific focus business areas
achieved sales of € 254.5 million (previous year: € 230.0 million), an increase of 10.7 percent. Disposables and concentrates for dialysis posted strong growth, as did sales of dialyzers (Diacap ®).
Sales of dialysis machines gained momentum over the year and performed well. Our dialysis clinics
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continued to post healthy organic growth. The centers in Poland, South Africa, and the Czech Republic
were the biggest contributors. As to disposable and machine business, Asia (in particular China), the
Middle East, and Europe are the key markets.
Development of functional expenses
Functional expenses rose 11.4 percent to € 1,595.9 million (previous year: € 1,432.3 million). Selling
expenses increased by 11.7 percent to € 1,218.9 million (previous year: € 1,091.1 million). General
and administrative expenses rose 9.7 percent to € 221.6 million (previous year: € 202.1 million). We
implemented another increase in spending on research and development, which rose 11.7 percent
year-on-year to € 155.4 million (previous year: € 139.1 million).
Functional expenses |
IN € MIL L I O N
1,596
1,297
106
195
904
2006
1,432
116
208
130
205
139
202
973
1,031
1,091
2007
2008
2009
155
222
Research and Development Expenses
General and Administrative Expenses
1,219 Selling Expenses
2010
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.
Good nutrition can also accelerate the healing process in seriously ill patients. One focus of the activities
of the Hospital Care Division is therefore on clinical nutrition. The division is focusing on preparations
for FDA approval for the US market, and product and process development for single-chamber and
three-chamber systems. Our intention in infusion therapy is to enhance the safety of clinicians and
patients, and we are working with hospitals to improve processes. We will expand our leadership of
the market using closed systems, functional coatings, and other innovations in materials. In the IV
access segment, the focus of development is on completing the safety portfolio for peripheral IV catheters, venipuncture sets for short-term infusion, and single-use injection and syringe needles. In
automated infusion systems, we are working on linking infusion data with biofeedback information
in order to ensure better patient care and more efficient clinical processes. US customers in particular
require WLAN data communication and special forms of therapy, for which we provide solutions. In
1,205
1,366
48
regional anesthesia, we are developing new ergonomic spinal needles with a prism for easier identification of fluid flashback (Pencan ® and Spinocan ®) and stimulation needles with ultrasound marking
(Stimuplex ® Ultra).
With demographic trends creating a greater need for joint replacements, the spotlight has fallen on
the treatment of degenerative conditions. The Aesculap Division is responding to this trend through
improvements and innovations in spinal implants (Hydrolift ® and Quintex ®) and knee endoprostheses.
Its focus here is on adapting implants and prostheses to best suit the patient’s circumstances and
on product longevity. Operations are therefore less traumatic on patients, and the results are significantly better. A new aneurysm clip is being added to our neurosurgical portfolio. The biologizing
of medicine will determine how illnesses and injuries are treated in the future. Intelligently interconnecting traditional medical technology and modern biological forms of therapy will offer opportunities
to patients. Our subsidiary Tetec, for example, is conducting research into regenerative biomaterials.
The OPM Division has added another product to the Actreen ® catheter family, namely a ready-touse, single-use catheter for women (Actreen ® Lite Mini). In wound care, we are developing siliconecoated adhesives to minimize trauma and pain when bandages are changed (e. g. Askina ® DresSil).
Our innovative wound cleansing system Prontosan ® provides optimum wound healing. Prontoderm ®
Wipes are time-saving and cost-effective single-use wet wipes for MRE decolonization of bed-ridden
patients.
The focus of the B. Braun Avitum Division is on further developing the existing product portfolio. Apart
from technical product enhancements, its main activity is intelligent data management. Interconnecting individual components makes documentation and evaluation of therapeutic data easier and
increases the efficiency and quality of dialysis treatment. This is a key milestone on the way to concepts such as telemedicine and e-health.
Other operating income and expenses
The balance of other operating income and expenses improved by € 5.0 million to € – 29.0 million
(previous year: € – 34.0 million). However, currency effects in the reporting year amounted to
€ – 6.2 million (previous year: € 2.7 million). The use of hedge accounting as of January 1, 2010 means
that income and expenses from currency hedging transactions which have been concluded in the
reporting year but must be allocated to cash flows of subsequent periods are no longer to be shown
under other operating income and expenses, but directly in equity (other comprehensive income).
As of December 31, 2010, income recognized directly in equity amounted to € 4.4 million. If the cash
flows are realized, positions previously recognized in equity are recognized in the statement of
income.
Net financial income (loss)
The improvement in net financial income (loss) by € 7.9 million to € – 66.6 million (previous year:
€ – 74.5 million) is largely due to lower interest expenses. Overall interest expenses (excluding the
interest element of pension provisions) were reduced by 9.4 percent to € 48.4 million (previous year:
€ 53.4 million). This was the result of lower interest rates and the capitalization of interest expenses
(€ 0.6 million) relating to investment projects. In addition, the interest portion of pension provisions,
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at € 28.8 million (previous year: € 28.8 million), remained on a par with the previous year. Higher
pension provisions were offset by a reduction in the discount rate to 4.7 percent (previous year:
5.1 percent).
Statement of value added
Value added came in € 218.9 million higher than in the previous year at € 2,041.3 million (previous
year: € 1,822.4 million). The majority of value added (63.1 percent compared with 63.7 percent in
2009) was passed on to employees in the form of wages and salaries. Federal, state, and local government received social security contributions and income tax totaling € 355.6 million (previous
year: € 319.0 million) or 17.4 percent of value added (previous year: 17.5 percent). Lenders received
€ 47.3 million or 2.3 percent (previous year: € 50.9 million or 2.8 percent). An amount of € 241.1
million or 11.8 percent of value added (previous year: € 199.6 million or 10.9 percent) was retained
within the Group, providing the basis for our capital investment plans.
IN € MIL L I O N
4,423
Sales
Changes in Inventories
71
Business Performance
4,494
239
Depreciation & Amortization
1,641
Material Costs
573
Other Costs
2,041
Value Added
1,290
Wages and Salaries
243
Social Security Contributions
78
Pension Payments
Lenders
47
Income Taxes
112
Shareholders
Retained Profit
30
241
Value added |
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Earnings performance
The gross margin was increased by 0.5 points to 47.1 percent (previous year: 46.6 percent), boosting
gross profit by 10.9 percent to € 2,081.1 million (previous year: € 1,876.8 million). EBIT (including
income from investments) was up 12.2 percent to € 462.2 million (previous year: € 411.9 million). Due
to lower interest expenses, profit before taxes rose 15.9 percent to € 389.6 million (previous year:
€ 336.1 million). Income tax expenses were € 112.3 million (previous year: € 96.5 million). At 28.8 percent (previous year: 28.7 percent), the tax rate remained on a par with the previous year. Consolidated
annual net profit increased by 15.8 percent to € 277.4 million in 2010 (previous year: € 239.6 million).
EBITDA improved 12.9 percent to € 700.5 million (previous year: € 620.5 million). With the increase
in the EBITDA margin to 15.8 percent (previous year: 15.4 percent), we are closing in on our target
of 17.0 to 18.0 percent.
EBITDA | IN € MIL L I O N
800
700
620
600
491
536
546
2007
2008
400
200
2006
2009
2010
Financial position and assets
Investments
Growing demand for B. Braun products means we need to expand our manufacturing capacity. Under
our two investment programs, existing production facilities will be expanded and new production
facilities constructed. The investment program begun in 2007, which is worth approximately € 1.4 billion, was largely completed in the reporting year and will end in 2011. Additions to fixed assets and
intangible assets amounted to € 575.4 million (previous year: € 454.8 million). This was offset by
depreciation and amortization of € 238.2 million (previous year: € 208.6 million). We successfully
completed expansion of the manufacturing facility for empty bags for parenteral nutrition at our
Crissier (Switzerland) site and expanded dialyzer production capacity in Radeberg and Berggießhübel
(both in Germany).
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FINANCIAL POSITION AND ASSETS
Investments / Depreciation and Amortization |
IN € MIL L I O N
800
575
600
471
400
455
349
294
181
2006
IN V E S T MEN T S
183
2007
198
2008
209
2009
238
2010
D E P R E C I AT I O N A ND A M O R T I Z AT I O N
Expansion of capacity for infusion pumps, clinical nutrition, and dialysis machines at our Melsungen
site (Germany) is almost complete. Capacity expansion for production of Ecoflac ® in Rubí (Spain) will
be completed in March 2011 upon validation. The expansion and restructuring of the Penang site
(Malaysia) is taking shape, and completion of the first phase is anticipated in 2011, with the project
as a whole running until 2014. We signed off on a further investment program of € 1.6 billion back
in December 2009. Aimed at expanding production capacity of our core product lines, its regional
priorities are Malaysia, the US, and Germany. The main focus in the US is on expanding the factory
for the new container generation at the Irvine site (California). In Germany, we will complete the
construction work for the LIFE Nutrition (clinical nutrition) factory and begin constructing the forging, container, and power systems production facilities in Tuttlingen. We will also commence expanding manufacturing capacity for dialysis solutions in Glandorf. Based on current estimates, the second
investment program is anticipated to last around four years, with funding coming from operating
cash flow.
Cash flow
As of fiscal year 2010, we have restructured the cash flow statement. Interest expenses were previously
shown as cash flow from financing activities and therefore funded by free cash flow. Since the
restructuring, we now show interest expenses under operating activities. This affects operating and
free cash flow. Last year’s figures have been restated accordingly in this report. We believe the
restructuring enhances the meaningfulness of the consolidated statement of cash flows as interest
expenses derive from operating activities and represent a fixed commitment. Free cash flow now
reflects the actual amount of cash available.
200
52
Operating cash flow was € 389.3 million (previous year: € 571.2 million), € 181.9 million lower than
in the previous year. Operating cash flow was reduced by an increase in working capital, including
in particular a rise in receivables, and increased by higher operating profit and lower interest payments. Cash outflows1 from investing activities were € 557.4 million (previous year: € 443.3 million).
Our extensive investing activities caused cash outflows of € 168.1 million (previous year: € 128.0 million).
Loans were increased to raise funds. Overall, there was a net increase in borrowing of € 181.6 million
in 2010, compared with a net decrease in borrowing of € 106.8 million in the previous year. Cash and
cash equivalents at year-end were down 29.5 percent at € 34.4 million (previous year: € 48.8 million).
Structure of the Statement of Financial Position
As of December 31, 2010, total assets at the B. Braun Group had risen to € 4,686.1 million (previous year: € 3,975.1 million). A rise of 17.9 percent, this reflects the increase in working capital and
the fact that investments were much higher than depreciation and amortization.
On the assets side, non-current assets rose by 20.9 percent to € 2,733.6 million (previous year:
€ 2,261.7 million). Ongoing investment in capacity expansion caused a 19.6 percent increase in property, plant and equipment to € 2,305.0 million (previous year: € 1,926.8 million). Intangible assets
(including goodwill) grew by € 50.7 million to € 218.6 million (previous year: € 167.9 million).
Inventories increased 10.1 percent to € 780.0 million (previous year: € 708.5 million). Adjusted for
currency effects, the rise was 5.0 percent. The fourth quarter was strong in sales, but caused working capital for trade receivables to increase by 18.2 percent to € 933.5 million (previous year:
€ 790.1 million). Most of the increase in receivables related to Italy, Portugal, and Spain. The strained
budgetary situation in these countries is now impacting the payment behavior of public sector
healthcare purchasers.
On the liabilities side of the statement of financial position, there was a significant increase in total
equity, up 22.5 percent to € 1,984.0 million (previous year: € 1,620.0 million). At 42.3 percent (previous year: 40.8 percent), our equity ratio has continued to improve and is closing in on our target of
45 percent. Provisions for pensions and similar obligations increased 4.4 percent to € 513.3 million
(previous year: € 491.8 million).
Our extensive investing activities and higher working capital meant that financial debt had to
be increased. Financial liabilities rose by € 227.0 million to € 1,233.4 million (previous year:
€ 1,006.4 million), € 21.9 million of which is related to currency translation effects. Trade accounts
payable changed minimally, edging up 3.1 percent to € 216.8 million (previous year: € 210.3 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
4,686
219
Intangible Assets
3,975
3,708
168
157
2,305 Property, Plant and Equipment
1,927
727
709
768
790
357
381
2009
2008
780
Inventories
934
Trade Accounts Receivable
448
Other Assets
2010
Structure of Statement of Financial Position: Liabilities |
1,699
IN € MIL L I O N
4,686
3,975
3,708
1,984 Equity
1,620
1,390
1,233 Financial Liabilities
1,006
1,095
574
2008
513
Pension Obligations
210
217
Trade Accounts Payable
647
739
Other Liabilities
492
470
179
2009
2010
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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. 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. The range of measures includes syndicated and bilateral credit
lines, promissory notes, and an asset-backed securities (ABS) program. At year-end, B. Braun had
unutilized committed long-term credit lines totaling € 417.2 million (previous year: € 530.0 million).
We exceeded all of the obligatory financial performance indicators 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. Although Group treasury generally carries out external
financing transactions, owing to legal restrictions it may be necessary in exceptional cases for
subsidiaries to find local solutions. To limit the Group-wide financing requirement and optimize the
allocation of capital within the Group, cash pooling is used to extent the law allows.
Financing measures
The main funding measures undertaken in the reporting year included two promotional loans for
€ 25 million and € 55 million from the European Investment Bank (EIB). Both loans are repayable at
the end of their six-year term.
Our asset-backed securities (ABS) program could be refinanced only partly and for a limited period
of time 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.
Personnel report
Number of employees
In order to put our strategy into effect, we need skilled and motivated employees. We achieve this
by offering vocational training and continuing education programs, family-friendly working arrangements and by dealing with one another in an open and fair manner. Performance is rewarded by
means of a performance-related remuneration system and opportunities for individual professional
development. At year-end, B. Braun had 41,666 employees (previous year: 39,504), a 5.5 percent
increase year-on-year.
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PERSONNEL REPORT
In Europe excluding Germany, the workforce grew 3.9 percent to 12,391 (previous year: 11,930).
This increase was mainly due to the acquisition of a company in France, the opening of new dialysis
centers in Romania and Spain, as well as the expansion of both our sales force in Russia and our
manufacturing facility in Spain. New hirings in laboratories and production in Germany increased
the number of German employees by 5.4 percent to 11,251 (previous year: 10,672). In Asia/Pacific,
B. Braun employees totaled 9,243 (previous year: 8,265), up 11.8 percent. Most of this increase came
from the expansion of our sales force in China, the opening of new dialysis centers in India, expansion
of manufacturing in Malaysia, and the acquisition of a company in Thailand. The number of employees
in North America remained constant at 5,486, but increased in Latin America by 3.4 percent to 3,023
(previous year: 2,924). The biggest changes occurred in Argentina, Brazil, and Colombia. In Africa,
employee numbers rose 19.8 percent to 272 (previous year: 227).
The location retention agreements in Melsungen, Berlin, and Tuttlingen (Germany) have proved an
effective means of securing employment and improving competitiveness. The agreements also provide for training under overtime conditions. New agreements to safeguard the viability of locations
have been in place in Melsungen since October 1, 2009, and Berlin since January, 1, 2009, with both
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 react flexibly and cost-effectively to market
requirements. Employees share in the company’s success in relation to the net profit achieved. No
redundancy lay-offs are allowed for the term of the agreements. The location retention agreement
in Tuttlingen, which was concluded on January 1, 2006, ended as scheduled on December 31, 2010.
Effective January 1, 2011, we have concluded a new agreement on comparable terms for a five-year
term.
Profit-sharing pay-outs depend on the number of hours worked by the individual employee and for
fiscal year 2010 was capped at € 1,230.
We received recognition from the German Federal Ministry of Labor and Social Affairs and the
“Initiative for employment” (Initiative für Beschäftigung!) in the “Create employment – companies demonstrate responsibility” competition. The Ministry cited B. Braun’s success in opening up
prospects for employees even in economically challenging times, which meant we not only kept
employees loyal to the company over the long term, but also helped them obtain qualifications and
develop professionally. B. Braun joined the “Initiative for employment” in November 2010.
B. Braun Global Job Market
B. Braun’s Global Job Market has set a new international standard in recruitment. This online tool
gives applicants access to all open positions in the B. Braun Group. The subsequent application process is electronic, with personal data and documents stored and updated in the candidate center.
This provides both, staffing specialists and managers – initially starting in Germany – with parallel
access to application documents and speeds up the decision-making process on hirings. The integrated candidate center enables human resources to identify suitable candidates directly, without
having to advertise across a variety of job markets beforehand. Filling open positions becomes considerably faster as a result.
Location retention
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By optimizing the application process in terms of both, speed and less administrative procedures
for candidates and our company, e-recruitment is an ideal complement to global job searches and
enhances B. Braun’s international standing as an attractive employer.
Vocational training
Vocational training is a fixed component of B. Braun’s future-oriented personnel policy. It must be
enduringly flexible to cope with the ever-changing challenges it faces. Our aim is to enable new
employees to obtain qualifications within the company environment. We provide courses that combine practical work with theoretical training and promote individual responsibility.
Last year 214 (previous year: 189) trainees successfully completed their training at our German
locations. Of these, 90 percent were subsequently hired full-time, with jobs being offered to all
those wanting to continue to work for B. Braun. In the reporting year, 225 (previous year: 223) new
trainees were hired. We maintained the number of trainees at a high level, even during the financial
and economic crisis.
At present, 699 (previous year: 682) young people are training with us in Germany. This represents
a 2.5 percent year-on-year increase in the total number of trainees. Overall, 87 (previous year: 78)
trainees are enrolled in our program which combines vocational training with university studies.
Continuing education
B. Braun’s continuing education programs are tailored specifically to our company, enabling participants
to get to know our culture and management model, put guidelines into practice and follow our Group
strategy. The core components are training courses for product use, professional skills, methodology
and social skills, with a focus on communication, conflict resolution and negotiation conduct.
Another priority is the development and support of managers around the world. Our “Fit for Leading”
program teaches management basics. Our “Advanced Leaders” program draws on the experiences of
our managers, helping them reflect on their conduct as managers and promoting mutual training. The
main topics covered include conversation techniques, conflict management, the use of management
tools such as objective-setting and employee evaluation, as well as the design of change-management
processes. We also offer individual programs to develop expertise in specific functional areas.
All continuing education is offered through our B. Braun Business School. Both Asia and Brazil implemented the B. Braun Business School in 2010 as a web-based training tool. This means that employees
learn interactively at their computer, rather than physically attending courses. The tool provides product training for distribution and marketing, as well as a virtual library, a learning forum, and online
courses in social skills, which are supported by videos. The advantage for our employees is that they
themselves can decide when and what they need and they require no previous knowledge to use the
system.
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Overseas employee assignments
The number of employees on international assignment increased to 183 in 2010 (previous year:
162), a year-on-year increase of 13 percent. This enhances international knowledge transfer, which
is a substantial contributor to the B. Braun Group’s competitiveness and innovativeness. Apart from
Germany, the main locations for overseas assignments are the US, Malaysia, Vietnam, and the UK.
A globally valid guideline has been implemented to coordinate and support employees on international assignments, ensuring they receive equal treatment.
B. Braun’s Incentive Scheme 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 acceptance internationally, was extended in the reporting year to 2015. Over the
next five years, up to 750,000 profit-sharing rights can be issued to members of the Management
Board and qualified managers. Purchase of profit-sharing rights is voluntary, and their value depends
on the development of the Group’s equity. Profit-sharing rights that have been bought can be sold
after a period of five years. In 2010, 80,217 (previous year: 69,123) profit-sharing rights were issued.
Of the 130 (previous year: 133) qualified managers, 63 percent (previous year: 59 percent) invested
in B. Braun profit-sharing rights worth € 5.0 million (previous year: € 3.6 million). In total, 672,861
profit-sharing rights (previous year: 638,110) have been issued.
Thank you to our employees
Thanks to the inventiveness, enthusiasm, and commitment of our employees, the B. Braun Group
enjoyed a healthy performance in 2010, with increases in both, sales and net profit. We would like
to express our sincere thanks for the contributions made by our highly skilled employees, of whom
we are very proud. 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, and our risk management is completed by internal auditing as well as the annual
audit of financial statements.
Performance-related remuneration
58
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. REVIUM ’s results were still negatively affected by a product liability claim
dating back to 2008. The provisions set aside were increased again. A feasibility study was commissioned during the reporting year to investigate the possibility of transferring part of the B. Braun
Group’s global property insurance program to the captive with effect from January 1, 2012. The
B. Braun Group’s premium for the international liability insurance program increased slightly as of
January 1, 2011. However, this increase was attributable solely to the Group’s higher sales. During
the reporting year, B. Braun adopted an organizational guideline on the handling of potential product liability claims aimed at standardizing the treatment of losses. Improving process efficiency
and transparency will have a positive impact on the risk management system of REVIUM Rückversicherung AG.
Risk position
Economic risk
The effects of the financial and economic crisis are now reaching the healthcare market. Price pressure
is intensifying in the healthcare market because of compulsory discounts aimed at redressing public
deficits, which in some countries are enormous. Some countries are also greatly extending payment
periods. As such, the economic risks have increased in relation to disposable goods for the US and
the European markets. There is generally also a dependence on economic trends where patients have
to pay for healthcare services themselves. The capital goods produced by B. Braun are cyclical.
Increased formalization of the international product approval process is also evident, which entails
higher costs for B. Braun. Longer processing times and more extensive requirements in terms of
documentation and study submissions can delay and drive up the cost of product launches.
Procurement market 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.
Risk of interactions and side effects
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.
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Financial risk
B. Braun operates internationally and is therefore exposed to currency risk, which it hedges using
marketable financial instruments. During the reporting year, we changed our hedging strategy to a
layered hedging approach. Under this strategy, we achieve coverage of average prices 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. Payer swaps are at times used
for variable-rate bank loans to minimize interest rate risk.
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 remain
strained as a result of the financial crisis and, 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 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, and 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 seize sales opportunities as they arise. The planned capital investments in this regard 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
cover, it is not feasible to fully cover 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.
Opportunities for B. Braun
60
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 influence on the results of operations, financial position or net assets for 2010.
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
In the Group strategy carried forward for the period to 2014, we have reaffirmed our core principles
and defined new growth targets. B. Braun’s sales and profits continued to grow throughout the
financial crisis, and therefore no significant changes in strategy are necessary.
Economic outlook 2
Global economic output is expected to rise by 4.4 percent in the coming year, with growth in
industrialized countries lagging behind the rate in emerging economies. Global trade is set to grow
by 7.1 percent, and it is expected that the upturn will stabilize and that growth will be buoyed by
demand for consumer and capital goods. There are mounting tensions on the international currency
front. In particular, the US regards the Chinese renminbi as undervalued. There is a tendency for
countries to seek to strengthen the competitiveness of their own economy by means of currency
depreciation or devaluation and protectionist measures. This may have negative consequences for
global trade, as might the expansive monetary policy being pursued in the US, which could produce
higher inflation. Further risks include the rising unemployment in many countries and the weak real
estate market.
According to the IMF ’s forecasts for 2011, Europe is set for a two-track performance. Whereas economic growth should remain relatively strong in northern countries, the peripheral countries are
likely to perform more sluggishly. The main cause here is a weak consumer climate, which lacks
stimulus because of budget consolidation in public finances. The IMF expects Europe’s economic
output to grow by 1.5 percent in 2011.
The DIHK (Association of German Chambers of Industry and Commerce) estimates that the German
economy will grow by 3.0 percent in 2011, which signifies a minor loss of momentum. Consumer
spending and investment in capital goods are both expected to rise, but a slight cooling off in global
economic growth will have a negative impact on German exports. Labor market trends are expected
to remain positive in 2011, and so the effects of the end to government economic stimulus packages
should be balanced out by greater private purchasing power.
2
Source: International Monetary Fund: World Economic Outlook, October 2010 and World Economic Outlook Update, January 2011.
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OUTLOOK
Eastern Europe is expected to deliver stable economic performance in 2011. The IMF is forecasting
3.6 percent economic growth. Romania and Croatia are set to experience sluggish growth, whereas
Poland, Latvia and Estonia are expected to enjoy relatively high growth rates of 3.0 to 3.5 percent.
Some countries (such as Poland) will benefit from the normalization of world trade and the fact
that they experienced little economic upheaval during the financial crisis.
Analysts anticipate Russian gross domestic product will grow by 4.5 percent. The country is expected
to benefit from rising commodity prices and influx of capital. Lending is also expected to return to
normal, which may provide further growth stimulus. This will also be supported by higher wages and
lower unemployment. Nevertheless, this performance will be heavily dependent on commodity prices
and investor confidence in Russian politics and business.
Latin America is forecast to post stable growth once again in 2011, although economic output is
expected to expand at a slightly slower pace of 4.3 percent, compared to 5.9 percent in 2010. Rates
of 4.5 percent and 4.0 percent, respectively, are predicted for Brazil and Argentina. Trade relations
between Latin American countries should have a stabilizing effect.
The IMF expects the emerging and developing countries of Asia to experience 8.4 percent growth in
2011, based on strong domestic demand and higher exports. Growth rates will vary from country to
country, but will essentially be high. China is the greatest growth driver in Asia, followed by India.
Economists are forecasting that Chinese growth will soften slightly from 10.3 percent to 9.6 percent
this year. This will be driven by tougher lending requirements, efforts to cool the real estate market,
and the end of government economic packages. Private and public demand will be the key drivers of
growth. India’s gross domestic product is forecast to increase by 8.4 percent in 2011, while the IMF
is expecting growth of 6.2 percent for Indonesia.
Outlook for the healthcare market
The global healthcare market will continue to perform well in the future, although with considerable regional variation. Growth rates in the established markets of industrialized countries (particularly in Europe and the US) will be lower than in emerging countries. Cardiac and circulatory
diseases and degenerative conditions such as osteoarthritis, osteoporosis and spinal problems will
increase as a result of the ageing population. It is expected that drug eluting stents will increasingly
replace conventional products for the treatment of vascular diseases. Advancements being made in
minimally invasive surgery technology is making it possible for this approach to be adopted for
many other surgical interventions. The use of minimally invasive surgery tends to reduce the length
of hospital stays and post-operative complications. The need for efficient therapeutic solutions will
drive demand for minimally invasive instruments either to replace or to supplement existing equip-
The US economy is expected grow at a faster rate in 2011 than in 2010, an estimated 3.0 percent.
The country’s expansive monetary policy and extremely low interest rates should boost investment
demand. However, high unemployment and massive household deleveraging are likely to result in a
decline in consumer spending. This is expected to result in soft growth.
62
ment. The dialysis market in western industrialized nations will also grow at a moderate pace. Overall, the US and European healthcare markets will be shaped by price regulations, such as compulsory
discounts and new taxes to help balance government budgets. Companies that use new diagnosis
and treatment procedures and develop integrated system solutions to realize savings within the
healthcare system will enjoy particular competitive advantages.
The Patient Protection and Affordable Care Act is of central importance to the future of the US market.
Approximately 46 million people in the US are currently without health insurance. The introduction
of a mandatory healthcare insurance should see an additional 32 million Americans covered by 2019.
This is expected to boost demand for healthcare products and services. However, some US courts
have ruled that mandatory healthcare insurance is unconstitutional. We are still awaiting a final
ruling by the Supreme Court. In addition, there is a movement underway to improve the quality of
the US healthcare system and, at the same time, to cut costs, signifying that price pressure could
intensify further.
The healthcare markets of emerging and developing countries in Asia and Latin America, as well as
Russia, will enjoy strong growth, spurred on by growing segments of the population of these regions
gaining access to medical care. Surgery, dialysis, IV therapy, and orthopedics will all be strong
beneficiaries from this trend. However, manufacturers in emerging and developing countries will also
grow in significance as a result, and in the medium term they can be expected to gradually offer
acceptable quality at low prices.
Business and earnings outlook
We anticipate Group sales will increase by 6 percent in fiscal year 2011. We are well-equipped to
cope with increasing demand thanks to our expanded capacities. However, long-term growth will
depend on the implementation and timely completion of the current investment projects. Risks from
macroeconomic trends remain. The large public debt in Europe (particularly Italy, Spain, and Portugal)
and the US could have a negative impact on the healthcare markets. Our growth forecasts assume
that we will achieve modest growth in the established US and European markets and strong sales
growth in the BRIC countries. The emphasis here is on IV therapy, surgery, and wound care. On the
earnings side, we anticipate a further improvement in EBITDA with the assistance of Group-wide
cost management, the optimization of working capital, and expanded capacity. However, profits could
be impacted by start-up costs for new factories and increased expenditures for clinical studies.
All in all, we believe it is highly likely that the B. Braun Group will deliver sales and earnings growth
in line with the stated targets 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. Nevertheless, we consider such a scenario to be less likely.
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 cautious dividend policy. There is no major refinancing requirement for fiscal year 2011.
The planned capital investments over the next few years will be funded by operating cash flow;
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OUTLOOK
there may exist only a small requirement for short-term working capital funding by borrowing. There
will certainly be no need to significantly increase debt. Systematic use of our Group-wide cash
pooling system will enable us to continue to ensure optimum cash allocation within the Group in
the future. In addition, the 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
We are confident that the B. Braun Group will continue to enjoy positive growth in the years to come.
Our close relationship with customers, sound fiscal management, innovative capabilities, and production efficiency, together with our highly skilled employees, will continue to pave the way for
B. Braun’s future success.
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 )
66
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 )
66
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
67
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
68
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
70
NOTES
71
ACCOUNTING POLICIES
82
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 )
89
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
97
A D D I T I O N A L I N F O R M AT I O N
12 2
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
12 9
INDEPENDENT AUDITORS’ REPORT
131
MA JOR SHAREHOLDINGS
13 2
66
CONSOLIDATED STATEMENT OF INCOME (LOSS)
Notes
2010
2009
€ ’000
€ ’000
Sales
1)
4,422,813
4,028,249
Cost of Goods Sold
2)
– 2,341,680
– 2,151,436
2,081,133
1,876,813
3)
– 1,218,889
– 1,091,096
– 221,641
– 202,051
– 155,406
– 139,139
485,197
444,527
Gross Profit
Selling Expenses
Research and Development Expenses
4)
Interim Profit
Other Operating Income
5)
231,873
191,556
Other Operating Expenses
6)
– 260,895
– 225,515
456,175
410,568
3,902
1,400
Operating Profit
Profit from Financial Investments/Equity Method
7)
Financial Income
Financial Expenses
4,606
6,389
– 77,192
– 82,234
– 75,845
Net Financial Income (Loss)
8)
– 72,586
Other Financial Income (Loss)
9)
2,127
– 43
389,618
336,080
Income Taxes
– 112,255
– 96,505
10)
277,363
239,575
Attributable to:
B. Braun Melsungen AG Shareholders
257,452
220,422
Non-controlling Interests
Earnings per Share (in €) for B. Braun Melsungen AG Shareholders
(diluted and undiluted)
11)
19,911
19,153
277,363
239,575
13.27
11.36
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME (LOSS)
Changes in Fair Value of Securities
Changes in Fair Value of Financial Derivatives
2010
2009
€ ’000
€ ’000
277,363
239,575
– 14
54
3,551
– 599
Changes due to Currency Translation
131,214
11,351
Changes Recognized Directly in Equity (after Taxes)
134,751
10,806
Comprehensive Income over the Period
412,114
250,381
Attributable to: B. Braun Melsungen AG Shareholders
374,997
231,087
37,117
19,294
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C ONS OL IDAT ED STATEMENT OF INCOME (LOSS)
C ONS OL IDAT ED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
C ONS OL IDAT ED 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
Other Assets
Income Tax Receivable
Deferred Tax Assets
Current Assets
Inventories
Trade Receivables
Other 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
Total Equity
Liabilities
Non-current Liabilities
Provisions for Pensions and Similar Obligations
Other Provisions
Financial Liabilities
Other Liabilities
of which Financial Liabilities
Deferred Tax Liabilities
Current Liabilities
Other Provisions
Other Liabilities
of which Financial Liabilities
Current Income Tax Liabilities
Total Liabilities
Total Equity and Liabilities
Notes
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
14) 16)
15) 16)
17)
17)
218,642
2,305,032
28,545
22,009
(22,009)
5,159
49,398
(45,672)
2,990
101,814
2,733,589
167,940
1,926,755
21,446
17,343
(17,343)
2,456
33,033
(30,278)
4,143
88,590
2,261,706
780,022
928,384
159,047
(86,965)
50,663
34,369
1,952,485
4,686,074
708,533
787,654
128,623
(62,178)
39,878
48,756
1,713,444
3,975,150
600,000
1,227,315
1,873
1,829,188
154,839
1,984,027
400,000
1,205,710
– 112,291
1,493,419
126,617
1,620,036
25)
26)
27)
29)
29)
513,328
76,719
791,961
1,059
10,712
(6,016)
79,525
1,473,304
491,840
63,545
700,667
1,174
9,017
(6,705)
59,224
1,325,467
26)
27)
29)
29)
31,754
441,488
215,698
471,685
(180,071)
68,118
1,228,743
2,702,047
4,686,074
50,236
305,740
209,139
418,186
(172,176)
46,346
1,029,647
2,355,114
3,975,150
18)
19)
20)
18)
19)
21)
22)
23)
24)
68
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
see Notes 22 – 24
Subscribed
Capital
Capital
Reserves
€ ’000
€ ’000
400,000
10,226
0
0
0
0
0
0
0
0
0
0
0
0
January 1, 2009
Dividend of B. Braun Melsungen AG
Retirement of Treasury Stock
Changes recognized directly in Equity (after Taxes)
Other Changes
0
0
400,000
10,226
Effect of a Change in Accounting Policies (IAS 8) from January 1, 2010
0
0
Dividend of B. Braun Melsungen AG
0
0
200,000
0
0
0
0
0
0
0
0
0
0
0
Other Changes
0
0
600,000
10,226
December 31, 2009/January 1, 2010
Increase in Subscribed Capital
Changes recognized directly in Equity (after Taxes)
December 31, 2010
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CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y
Retained
Earnings
Other
Reserves
Treasury
Stock
Total
Noncontrolling
Interests
Equity
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
1,022,195
– 123,906
– 29,800
1,278,715
111,040
1,389,755
– 16,000
0
0
– 16,000
0
– 16,000
– 29,800
0
29,800
220,422
0
0
220,422
19,153
239,575
0
32
0
32
22
54
0
– 359
0
– 359
– 240
– 599
0
10,992
0
10,992
359
11,351
220,422
10,665
0
231,087
19,294
250,381
– 383
0
0
– 383
– 3,717
– 4,100
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
0
0
– 24,000
0
– 24,000
– 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
69
70
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes
2010
2009
€ ’000
€ ’000
Operating Profit
456,175
410,568
Income Tax Paid
– 90,289
– 96,330
Depreciation of Property, Plant and Equipment and Intangible Assets
(Net of Appreciation)
238,220
208,561
26,211
27,379
Change in Non-current Provisions
Interest Received and Other Financial Income
5,328
5,538
Interest Paid and Other Financial Expenditure
– 43,688
– 47,749
Other Non-cash Income and Expenses
– 30,467
– 34,679
Gain/Loss on the Disposal of Property, Plant and Equipment
and Intangible Assets
Gross Cash Flow
34)
Change in Inventories
Change in Receivables and Other Assets
Change in Liabilities, Current Provision and Other Liabilities
(excluding Financial Liabilities)
Cash Flow from Operating Activities
34)
Investments in Property, Plant and Equipment and Intangible Assets
1,525
1,954
563,015
475,242
– 29,805
23,960
– 143,540
– 16,185
– 337
88,196
389,333
571,213
– 549,748
– 444,909
Investments in Financial Assets
– 10,413
– 4,496
Acquisitions of Subsidiaries, Net of Cash Acquired
– 12,290
– 4,010
911
28
10,732
9,691
Proceeds from Sale of Subsidiaries and Holdings
Proceeds from Sale of Property, Plant and Equipment Intangible Assets
and Other Financial Assets
Dividends Received
3,403
433
– 557,405
– 443,263
– 168,072
127,950
– 24,000
– 16,000
– 6,235
– 18,708
Capital Contributions by Non-controlling Interests
986
1,184
Deposits and Repayments for Profit-Sharing Rights
3,198
4,689
324,611
235,534
Cash Flow from Investing Activities
35)
Free Cash Flow
Dividends paid to B. Braun Melsungen AG Shareholders
Dividends paid to Non-controlling Interests
Loans
Loan Repayments
Cash Flow from Financing Activities
36)
Change in Cash and Cash Equivalents from Business Operations
– 143,052
– 342,336
155,508
– 135,637
– 12,564
– 7,687
Cash and Cash Equivalents at the Start of the Year
48,756
53,288
Exchange Gains (Losses) on Cash and Cash Equivalents
– 1,823
3,155
34,369
48,756
Cash and Cash Equivalents at Year End
37)
For the first time, interest received and paid are reported under gross cash flow to provide improved transparency of the Group’s financial position. The comparative figures have been adjusted accordingly.
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CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES
General Information
The consolidated financial statements of B. Braun Melsungen AG as of December 31, 2010 have been prepared
in compliance with Section 315a (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 chief 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 March 8, 2011.
The consolidated financial statements have been prepared based on historical costs, except for available-forsale 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.
71
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72
New and amended International Financial Reporting Standards and Interpretations whose application is
mandatory for fiscal years beginning January, 1 2010 (IAS 8.28)
IFRS 2 Share-based Payment
The IASB ’s amendment to IFRS 2 clarifies the accounting for Group cash-settled share-based payment trans-
actions in cases where the reporting company receives goods or services, but the payment obligation does not
lie with the company itself, but with its parent or another Group company. This provision is not relevant to
B. Braun’s consolidated financial statements.
IFRS 3 Business Combinations and IAS 27 Consolidated and Separate Financial Statements
IFRS 3 (amended), Business Combinations, and IAS 27 (amended), Consolidated and Separate Financial Statements,
were amended significantly with regard to business combinations, divestitures, and acquisitions of non-controlling interests. The amendments affect both accounting and measurement, and may result in greater earnings
volatility in the periods following an acquisition. The amendments to IFRS 3 relate in particular to the determination of acquisition costs (directly attributable incidental acquisition costs are generally expensed immediately),
the accounting procedure for the residual goodwill (the choice of applying either the “full goodwill model” or the
previous partial goodwill model), the procedure for gradual acquisitions (reporting the revaluation of the “old”
tranches as profits or losses), and in some areas the recognition and measurement of identifiable assets and
liabilities. The amendments to IAS 27 lead in particular to changes in relation to transactions with owners of
non-controlling interests (mandatory application of the economic entity approach, i.e. reporting as an equity
transaction) and consolidated losses attributable to non-controlling interests in the consolidated financial
statements. Furthermore, future retained interests in transitional consolidations must always be remeasured at
fair value and recognized through profit or loss. The standard has been applied, but has had no material impact
on B. Braun’s consolidated financial statements.
Amendment to IAS 39 Financial Instruments
In its amendments to IAS 39, Financial Instruments: Recognition and Measurement, the IASB emphasizes
that inflation risks may only be hedged if payments are directly linked to an inflation index. The amendments
also state that one-sided risks cannot generally be hedged effectively by designating an option in its entirety.
Depending on the type and scope of future hedging transactions, this may have an effect on B. Braun Melsungen
AG’s consolidated financial statements in the future. The amendments do not currently have any impact.
IFRIC 12 Service Concession Arrangements
IFRIC 12 discusses how obligations and rights resulting from service concessions should be recognized and
measured by the operator of the concession. The interpretation applies only to those concessions under which
state infrastructure works are outsourced to private companies. This provision is not relevant to B. Braun’s
consolidated financial statements.
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 15 defines the accounting procedure for sales and associated expenses of companies that construct and
sell real estate, whether directly or via sub-contractors. This provision is not relevant to B. Braun’s consolidated
financial statements.
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 16 clarifies that, in hedge accounting for the purposes of hedging exchange rate risk, only the risk from
exchange rate fluctuations between the functional currency of foreign commercial operations and the functional
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currency of a parent company may be the subject of a hedge, not the currency in which the consolidated
financial statements are presented. The provisions governing the amount to be taken from the foreign currency
translation reserve and recognized in the statement of income on disposal of a foreign commercial operation
were also specified. Depending on the type and scope of future hedging transactions, this may have an effect
on the B. Braun Melsungen Group’s consolidated financial statements in the future. The amendments do not
currently have any impact.
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 17 defines the treatment of non-cash dividends to shareholders. B. Braun has not distributed any non-
cash dividends to its owners in the past and has no plans to do so in the future. This provision is therefore not
relevant to B. Braun’s consolidated financial statements.
IFRIC 18 Transfer of Assets from Customers
IFRIC 18 applies in cases where a company receives an item of property, plant and equipment from a customer
in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods
or services (such as a supply of electricity, gas, or water). This provision is not currently relevant to B. Braun’s
consolidated financial statements.
New and amended International Financial Reporting Standards and Interpretations that have already
been published but whose application is not yet mandatory for companies whose financial year ends on
December 31, 2010 (IAS 8.30)
Adopted by the EU
IAS 24 (rev. 2009) Related Party Disclosures
IASB released a revised version of IAS 24, Related Party Disclosures, on November 4, 2009. The amendment to IAS
24 in particular comprehensively revised the definition of related parties and made adjustments to the definition
of transactions subject to disclosure. The revised standard will first be applicable in fiscal years beginning on or
after January 1, 2011. The application of the new rules will be retrospective. B. Braun’s consolidated financial
statements will not be affected by the new rules.
Amendment to IAS 32 Classification of Rights Issues
The amendment to IAS 32 published in October 2009 governs the accounting treatment of rights issues, options,
or warrants on a fixed number of own shares in any other than the functional currency. Previously, such rights
were treated as derivative liabilities. Such rights will now be classified as shareholders’ equity under certain
conditions. The amendment will first be applicable in fiscal years beginning on or after February 1, 2010. The
amended standard is not currently relevant to the consolidated financial statements of the B. Braun Group.
Amendments to IFRIC 14, IAS 19 Prepayments of a Minimum Funding Requirement
The amendment to IFRIC 14 allows a company to recognize as an asset the economic benefit arising from an
early payment of contributions that reduces future contributions relating to a minimum funding requirement.
The amendments are to be applied from the beginning of the earliest comparison period presented in the first
financial statements for which this interpretation is valid. Adjustments resulting from the application of the
amendments are to be included under retained earnings in the opening statement of financial position for the
comparison period. Earlier voluntary application of the amendments before the date for mandatory application
(January 1, 2011) is permitted. B. Braun’s consolidated financial statements will not be affected by the new rules.
73
74
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 19 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 in 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. The equity instruments are to be measured at fair value at the time of initial recognition. If
fair value cannot be reliably determined, they are to be measured at the fair value of the fully or partially extinguished liability. The equity instruments issued may no longer be measured at the carrying amount of the
fully or partially extinguished financial liability. When only part of the financial liability is extinguished, the
debtor must determine whether the terms of the remaining liability are substantially different to the terms
of the original liability; this may require it to account for the extinguishment of the old remaining liability and
the recognition of a new financial liability in accordance with IAS 39.40. The interpretation is to be applied
retrospectively (first mandatory for fiscal years beginning on or after July 1, 2010), where fair values can still be
determined and earlier application is permitted. This provision is not currently relevant to B. Braun’s consolidated
EU adoption pending
Amendments to IFRS 7 Transfers of Financial Assets
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. In addition to a
description of the rights and obligations (qualitative disclosures), a host of quantitative disclosures such as
the maximum loss risk, date and amount of payments, etc. is also required. 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.
IFRS 9 Financial Instruments: Classification and Measurement
The IASB is issuing the new IFRS 9 standard in three parts. Two parts have thus far been published. The first
part fundamentally changes the classification and measurement of financial assets. IFRS 9 provides for just two
categories to which financial assets must be assigned upon initial recognition: measurement at fair value
and measurement at amortized cost. The standard provides for retrospective application to all existing financial
assets, and the new regulations determine that the categorization will be determined by the situation on
the date of initial application of the standards. In addition, there are concessions in the form of a variety of
transitional arrangements. The second part of IFRS 9 deals with financial liability accounting. With the exception of the rules for financial liabilities voluntarily measured at fair value (fair value option), the provisions
of IAS 39 were carried over unchanged to IFRS 9. In accordance with IASB rules, IFRS 9 must be applied to
fiscal years beginning on or after January 1, 2013. Earlier application is permitted. It is not yet known when
it will be adopted by the EU. The application of the parts of the standard issued to date are not expected to
have an impact on the net assets, financial position and results of operations of the B. Braun Group.
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Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets
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.
As part of the ongoing IFRS improvements project, certain passages were also redrafted to improve clarity and
amendments were made that have an impact on accounting, recognition and measurement.
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.
The recognition and measurement of other provisions is performed on the basis of estimates of 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 created.
75
76
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 on the basis of a three-year operational plan and based on projected
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.
The method used to calculate intercompany profits in inventories was changed in the reporting year. B. Braun is
confident that this change will provide more relevant information on the Group’s net assets, financial position
and results of operations. The change has led to a net reduction of € 13.8 million in equity (€ 19.1 million, less
deferred taxes of € 5.3 million), a reduction of € 19.1 million in inventories, and an increase of € 5.3 million in
deferred tax assets. The statement of income was not affected by the change. Retroactive adjustments to comparison periods were not possible for system-related reasons.
Scope of Consolidation
In addition to B. Braun Melsungen AG, the consolidated financial statements include 35 German and 154 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, 2010 and 2009 respectively is shown below:
Included as of December 31 of Previous Year
2010
2009
187
188
Companies Included for the First Time
8
7
Company Consolidations Discontinued
–2
–1
Business Combinations
–3
–7
Companies now Consolidated Using the Equity Method due to the Sale of Shares
–1
0
189
187
Included as of December 31 of Reporting Year
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NOTES
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 2010 is shown below:
Carrying
amount
Fair value
€ ’000
€ ’000
Non-current Assets
8,361
8,361
Current Assets
5,625
5,625
Acquired Assets
13,986
13,986
Non-current Provisions and Liabilities
2,701
2,701
Current Provisions and Liabilities
3,801
3,801
Acquired Liabilities
6,502
6,502
Net Assets Acquired
7,484
7,484
0
0
7,484
7,484
Prorated Net Assets
Badwill
– 588
Acquisition Costs
6,896
of which Non-controlling Interests
Cash and Cash Equivalents Acquired
Cash Flow for Business Acquisitions
Sales
0
188
6,708
13,299
Operating Profit
2,354
Profit after Tax
1,582
Acquisitions were mainly conducted to secure supply of components for suture production.
Acquisitions in the reporting year contributed no assets that had not previously been recognized. Goodwill was
valued at € 4.3 million before translation differences, of which € 3.2 million resulted from at-equity consolidation.
To secure the Group’s existing business relating to the manufacture and distribution of elastomeric infusion
pumps, all material tangible assets of the infusion pump business of MedPro International Ltd., Chonburi/Thailand,
were acquired on October 30, 2010 as part of an asset deal. The associated intangible assets were acquired
from MedPro Corporation Pte. Ltd., Singapore. Business operations will be continued by the Group’s subsidiary
B. Braun Medical Production Ltd. Thailand. The acquisition costs totaled € 26.9 million. The fair value of the
tangible assets acquired (property, plant and equipment, inventories) as of the date of acquisition was € 2.8
million, while the fair value of intangible assets (patents, customer contracts) was € 23.6 million. Goodwill
of € 0.5 million stems from synergy effects expected from the company’s integration into the Group. The asset
deal increased Group sales by € 0.5 million. The impact on the consolidated annual net profit was not materially
significant.
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78
These changes did not adversely impact the comparability of the financial statements with those of the preceding
year.
Holdings in three joint ventures and 17 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:
–
–
–
B. Braun Facility Services GmbH & Co. KG, Melsungen,
Invitec GmbH & Co. KG, Duisburg,
MAT Adsorption Technologies GmbH & Co. KG, Elsenfeld.
They meet the conditions of Section 264b of the German Commercial Code (HGB) and are thus exempted from
the requirement to compile Notes and a management report.
The following companies meet the conditions of Section 264 (3) HGB and are thus also exempted from the
requirement to compile Notes and a management report:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Aesculap AG, Tuttlingen
Aesculap Akademie GmbH, Tuttlingen,
Aesculap International GmbH, Tuttlingen,
Ascalon Gesellschaft für Innovation in der Medizintechnik GmbH, Berggießhübel,
Avitum Transcare Germany GmbH, Melsungen,
B. Braun Medical AG, Melsungen,
B. Braun Avitum AG, Melsungen,
B. Braun Surgical GmbH, Melsungen,
B. Braun Petzold 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,
Saxonia Medical GmbH, Radeberg,
Transcare Gesundheitsservice GmbH, Melsungen.
The companies listed above exercise their right to the exemptions.
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NOTES
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.
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
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.
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80
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 associated company. Unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Accounting and measurement policies of associated companies are changed where necessary to ensure consistency with the policies
adopted by the Group.
c) Joint Ventures
The Group’s interests in jointly controlled entities are recognized 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 Group’s 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 other
partners in the ventures. 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
third party. Losses on intercompany transactions are treated similarly unless the assets transferred 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.
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 equities classified 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.
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NOTES
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:
–
–
–
Assets and liabilities are translated at the closing rate on the reporting date;
Income and expenses are translated at average exchange rates;
All resulting exchange differences are recognized as a separate component of equity
(Changes due to Currency Translation).
Goodwill and fair value adjustments arising on 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 differences formerly recognized in equity are taken to
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, 2010
Dec. 31, 2009
+–
in %
Dec. 31, 2010
Dec. 31, 2009
+–
in %
1 EUR = USD
1.336
1.441
– 7.3
1.327
1.393
– 4.8
1 EUR = GBP
0.861
0.888
– 3.1
0.858
0.891
– 3.7
1 EUR = CHF
1.250
1.484
– 15.7
1.382
1.510
– 8.5
1 EUR = MYR
4.095
4.933
– 17.0
4.273
4.904
– 12.9
108.650
133.160
– 18.4
116.455
130.232
– 10.6
1 EUR = JPY
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Accounting policies
Intangible Assets
a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable 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. Writedowns 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
planning production and the manufacturing process before production or use has commenced. Development
expenses are capitalized as intangible assets where it is regarded as 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 self-created 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, and self-created 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 manufacturing cost. This includes all costs directly related to the manufacturing process, as well as
appropriate portions of relevant overhead costs. Intangible assets with finite useful lives are written off on a
scheduled straight-line basis 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 on other intangible assets is allocated to the functional areas that benefit from their use. Writeups to a maximum of amortized acquisition or manufacturing cost 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.
Impairment of Non-financial Assets
Intangible assets that have an indefinite useful life are not subject to scheduled amortization; they are tested
annually for impairment. Assets that are subject to scheduled amortization 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-financial 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.
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ACCOUNTING POLICIES
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 straight-line depreciation. The latter 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 applied to property, plant and equipment:
Buildings
Technical plant and machinery*
Vehicles
Operating and office equipment
25 to 50 years
5 to 20 years
6 years
4 to 20 years
* Operating a single shift
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 expense 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 on property, plant and equipment is allocated to the functional areas that benefit from their
use. 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 taken to profit and loss.
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 production of a qualifying asset are
recognized as part of its acquisition or manufacturing cost.
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 without recognizing 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.
83
84
Financial Investments Recognized Using the Equity Method of Accounting
and Other Financial Investments
Investments in holdings with at-equity accounting are recognized initially at acquisition cost and in subsequent
periods at the amortized pro-rata net assets. The carrying amounts are increased or decreased annually by the
associate’s share of the net profit or loss, distributions, and any other changes in equity. Goodwill is included
in the valuation of the holding rather than being separately identified. There is no scheduled amortization of
goodwill. Holdings accounted for using the equity method are written down when the recoverable amount falls
below the carrying amount of the holding.
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.
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ACCOUNTING POLICIES
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 insignificant, 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 shares 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 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 as
profits or losses.
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
A high probability that the debtor will enter bankruptcy or financial reorganization
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86
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.
No higher value may be imputed than that which would have arisen as amortized cost if no impairment loss
had 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), those assets that are held for sale during the ordinary course of business (finished
products and merchandise), those that are in the production process for sale during the ordinary course of
business (work in progress), and those that are consumed in the production process or performance of services
(raw materials and supplies) are to be listed as inventories. 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.
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. They are valued on
the basis of expert opinion.
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ACCOUNTING POLICIES
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. Where additions to provisions
are recognized under other operating expenses, the release of these amounts is shown under the corresponding
other operating income item.
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.
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 the risk of changes in fair values of assets or liabilities carried in the
statement of financial position (fair value hedge) or the risk of fluctuating payment flows in connection with
an expected future transaction that is highly likely to occur (cash flow hedge). On entering into a transaction,
87
88
the Group documents the hedge relationship between the hedging instrument and the underlying transaction,
the aim of its risk management, and the underlying strategy at the time of opening. In addition, the assessment
of whether the derivatives employed effectively compensate for the changes in the fair values or 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. Movement in the valuation reserve for cash flow hedges is 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 non-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 recognized in 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 Taxes on Income.
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NOTES TO THE CONSOLIDATED STATEMENT
OF INCOME (LOSS)
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 reported as follows:
Sales resulting from the sale of products are recognized when the main risks and rewards associated with ownership have been transferred to the buyer and the collection of the associated receivable 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 recognized 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
€ ’000
%
€ ’000
%
+–
in %
Hospital Care
2,086,696
47.2
1,903,799
47.3
9.6
Aesculap
11.1
2010
2009
1,281,071
29.0
1,153,213
28.6
OPM
554,613
12.5
525,791
13.1
5.5
B. Braun Avitum
474,768
10.7
420,519
10.4
12.9
Other Sales
Sales by Region
25,665
0.6
24,927
0.6
3.0
4,422,813
100.0
4,028,249
100.0
9.8
€ ’000
%
€ ’000
%
+–
in %
3.2
2010
2009
878,450
19.9
851,215
21.1
1,691,987
38.2
1,578,657
39.2
7.2
North America
940,145
21.3
854,846
21.2
10.0
Latin America
295,751
6.7
253,957
6.3
16.5
Asia & Australia
616,480
13.9
489,574
12.2
25.9
4,422,813
100.0
4,028,249
100.0
9.8
€ ’000
%
€ ’000
%
+–
in %
Sales of Products
4,022,452
90.9
3,666,558
91.0
9.7
Sales of Services
400,361
9.1
361,691
9.0
10.7
4,422,813
100.0
4,028,249
100.0
9.8
Germany
Europe & Africa
Sales by Type
2010
2009
89
90
2 Cost of Goods Sold
Cost of goods sold includes the manufacturing costs of goods sold and the purchasing 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 logistics. This category also contains the 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
2010
2009
€ ’000
€ ’000
184,753
158,337
Additional Income
9,058
9,355
8,573
582
Income from Other Periods
5,535
4,960
Proceeds from Appreciation of Current Financial Assets
2,423
2,011
Proceeds from the Disposal of Assets
1,837
1,930
Proceeds from the Release of Provisions
1,551
593
Currency Translation Gains
Other Income
18,143
13,788
231,873
191,556
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 and currency options 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 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 € 1.7 million (previous year: € 2.2 million). Grants of € 1.6 million (previous year: € 2.1 million) were recognized through profit
and loss in the reporting year. The grants were predominantly made to support structurally weak areas in
Germany.
MANAGEMENT BOARD
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OF INCOME (LOSS)
Other income includes numerous types of income; however their individual valuations are not materially
significant.
6 Other Operating Expenses
Currency Translation Losses
2010
2009
€ ’000
€ ’000
198,588
147,330
Losses from Impairment of Current Financial Assets
8,566
11,176
Additions to Provisions
7,376
9,750
Losses on the Disposal of Assets
2,546
3,654
Expenses from Other Periods
4,089
2,814
92
9,710
Other Expenses
39,638
41,081
260,895
225,515
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 value adjustments to trade receivables.
Changes in the fair value of forward foreign exchange contracts and currency options 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:
2010
2009
€ ’000
€ ’000
Income from Financial Investments Recognized Using the Equity Method
4,307
2,819
Expenses from Financial Investments Recognized Using the Equity Method
– 405
– 1,419
3,902
1,400
91
92
8 Net Financial Income
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
2009
€ ’000
€ ’000
4,606
6,389
– 48,414
– 53,396
(2,596)
(1,343)
– 28,778
– 28,838
– 72,586
– 75,845
of which Financial Assets and Liabilities at Fair Value:
Interest Income from Discounting
Accrued Interest Expense
281
191
– 5,455
– 6,763
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
Income from Joint Ventures
(excluding Income from Financial Investments Recognized using the Equity Method)
2010
2009
€ ’000
€ ’000
2,099
5
Net Gains and Losses on:
– Available-for-Sale Financial Assets
28
– 48
2,127
– 43
Interest on derivative financial instruments is shown under interest expense.
10 Taxes on Income
Income tax includes corporation tax and trade income tax 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.
Expenses resulting from taxes on income including deferred taxes are as follows:
2010
2009
€ ’000
€ ’000
Actual Income Taxes
99,548
98,139
Deferred Taxes resulting from Temporary Differences
10,533
– 4,661
Deferred Taxes resulting from Losses Carried Forward
2,174
3,027
112,255
96,505
MANAGEMENT BOARD
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OF INCOME (LOSS)
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, 2010
Assets
€ ’000
Dec. 31, 2009
Liabilities
€ ’000
Assets
€ ’000
Liabilities
€ ’000
Intangible Assets
3,175
14,419
3,255
10,624
3,458
110,333
2,467
93,246
267
634
226
397
48,577
5,426
35,761
3,897
6,807
7,488
8,662
4,676
Pension Provisions
34,135
272
33,041
293
Other Provisions
14,596
1,921
15,223
1,289
Liabilities
21,886
1,443
24,058
16,851
11
8,491
0
5
132,912
150,427
122,693
131,278
53,459
135,641
48,853
121,463
– 70,902
– 70,902
– 72,054
– 72,054
62,010
79,525
50,639
59,224
– 58
–
– 164
–
29,133
–
19,060
–
Financial Investments
Inventories
Other
of which Non-current
Net Balance
Valuation Allowance on Deferred Tax Assets
from Temporary Differences
Deferred Taxes on Tax Credits
Losses Carried Forward
(Net, after Valuation Allowances)
10,729
–
19,055
–
101,814
79,525
88,590
59,224
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 € 6.8
million (previous year: € 11.1 million).
Existing but not recognized tax losses carried forward can be utilized as follows:
Within One Year
Within Two Years
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
0
375
550
373
Within Three Years
6,620
1,057
Within Four Years
3,080
3,827
Within Five Years or Longer
3,954
2,991
14,204
8,623
Can be Carried Forward Indefinitely
9,261
8,846
23,465
17,469
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 € 5.3 million (previous year: € 4.8 million). Recognition of these deferred tax assets is based on relevant forecasting, which justifies the expectation they will be utilized.
93
94
Deferred taxes of € 6.2 million (previous year: € 409,000) were recognized directly in equity. These are attributable
to changes in the fair value of securities (€ 6,000), changes in the fair value of derivative financial instruments
(€ 940,000) and a change in the measurement method in accordance with IAS 8 (€ 5.2 million).
The tax expense calculated using B. Braun Melsungen AG’s tax rate of 27.4 percent can be reconciled to the
actual tax expense as follows:
Tax Rate of B. Braun Melsungen AG
Profit before Tax
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
2010
2009
€ ’000
€ ’000
27.4 %
27.4 %
389,618
336,080
– 106,911
– 92,086
– 6,782
– 6,155
796
–7
Tax Reductions due to Tax-exempt Income
10,298
11,966
Tax Increases due to Non-deductible Expenses
– 9,244
– 9,053
Addition/Deduction of Trade Tax and Similar Foreign Tax Items
– 1,591
– 1,366
Final Withholding Tax on Profit Distributions
– 749
– 314
Tax Credits
2,632
4,639
– 2,739
– 4,556
9
493
Tax Expense relating to Previous Periods
Change to Valuation Allowances on Deferred Tax Assets
Profit (Loss) of Financial Investments recognized using the Equity Method
Other Tax Effects
Actual Tax Expense
Effective Tax Rate
712
266
1,314
– 332
– 112,255
– 96,505
28.8 %
28.7 %
11 Earnings per Share
Earnings per share are calculated according to IAS 33 by dividing the consolidated annual net profit less noncontrolling interests by the number of shares in issue. The number of shares entitled to receive dividends remained unchanged at 19,404,000 during the fiscal year. There were no outstanding shares as of December 31,
2010 or December 31, 2009 that could have diluted the earnings per share. Earnings per share were € 13.27
(previous year: € 11.36).
The dividend paid in 2010 and 2009 for the preceding fiscal years amounted to € 24 million (€ 1.24 per share)
and € 16 million (€ 0.82 per share) respectively. The Management Board and Supervisory Board are proposing a
dividend of € 1.24 per share for fiscal year 2010. The proposed dividend must be ratified by the Annual Shareholders’ Meeting on March 24, 2011. This dividend liability is not included in the consolidated financial statements.
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OF INCOME (LOSS)
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 Goods Purchased
2010
2009
€ ’000
€ ’000
1,592,717
1,436,709
In 2010, expenses related to inventory impairments recognized in cost of goods sold were € 10.8 million (previous year: € 13.9 million) and a write-up (increase in net realizable value) of € 3.1 million (previous year:
€ 11.0 million) was recognized.
Payments under operating leases
2010
2009
€ ’000
€ ’000
68,661
66,928
Payments under operating leases include € 1.1 million (previous year: € 821,000) of payments under sub-leases.
Leasing expenditure is predominantly allocated to cost of goods sold.
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
2010
2009
€ ’000
€ ’000
1,288,877
1,160,629
243,413
222,542
49,382
41,778
1,581,672
1,424,949
Employees by Function (Average for the Year, including Temporary Employees)
Production
24,406
23,251
Marketing and Sales
9,414
9,007
Research and Development
1,211
1,127
Technical and Administration
5,285
5,127
40,316
38,512
1,926
1,829
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.
95
96
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 according to the percentage of ownership.
In regard to first-time consolidated companies, an annual average of 235 employees was reported for 2010,
compared to 40 for 2009.
13 Total Auditor’s Fee
The following fees were recognized as expense for services provided worldwide by the auditor PricewaterhouseCoopers in 2010:
Audit Fees
of which PricewaterhouseCoopers AG, Germany
Other Certification Services
Tax Advisory Services
Other Services
2010
2009
€ ’000
€ ’000
3,760
3,421
983
873
52
552
12
355
1,084
1,020
285
212
652
386
469
271
5,548
5,379
1,749
1,711
The audit fee includes all fees paid and outstanding to PricewaterhouseCoopers plus reimbursable expenses for
the Group audit and the audit of the annual 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 demands,
support for company audits or other enquiries conducted by the tax authorities and tax advice in connection
with transfer pricing.
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97
OF FINANCIAL POSITION
Notes to the Consolidated Statement of Financial Position
14 Intangible Assets
Cost of Acquisition
or Manufacture
Acquired
Goodwill
Licenses,
Trademarks
and Other
Similar Rights
Selfcreated
Intangible
Assets
Advance
Payments
Total
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
56,942
224,823
12,940
7,476
302,181
– 931
– 985
– 279
0
– 2,195
January 1, 2009
Additions to Scope of Consolidation
3,761
21
0
0
3,782
Additions
1,437
10,607
7,618
8,146
27,808
Transfers
0
6,486
– 964
– 1,516
4,006
Disposals
0
– 14,945
0
– 499
– 15,444
61,209
226,007
19,315
13,607
320,138
1,257
9,660
1,448
2
12,367
December 31, 2009 / January 1, 2010
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
63,517
271,542
34,048
27,777
396,884
624
174,838
2,780
0
178,242
December 31, 2010
Accumulated Amortization 2010
Accumulated Amortization 2009
602
149,763
1,833
0
152,198
Carrying Amounts December 31, 2010
62,893
96,704
31,268
27,777
218,642
60,607
76,244
17,482
13,607
167,940
Amortization in the Fiscal Year
0
20,902
817
0
21,719
of which unscheduled
0
87
0
0
87
The B. Braun Group capitalized € 12.2 million (previous year: € 7.6 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 country of operation and primary reporting segment.
98
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
19,883
2.4 %
Total
€ ’000
5,125
18,756
16,843
60,607
2.1 %
2.0 %
2.3 %
10.0 %
9.9 %
9.6 %
10.8 %
Dec. 31, 2009
Carrying Amount of Goodwill
Annual Growth Rate
Discount Rate
Dec. 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 %
62,892
The recoverable amount of a CGU is determined by calculating its value in use. These calculations are based on
projected cash flow 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, 2010, no impairment of goodwill would have occurred. The same holds true if the discount rate
that was used to calculate the DCF had been 10 % higher than management’s estimates.
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99
15 Property, Plant and Equipment
Cost of Acquisition
or Manufacture
January 1, 2009
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
892,059
1,470,061
504,059
284,091
3,150,270
290
648
4,068
– 2,555
2,451
293
1,970
322
17
2,602
Additions
29,496
89,750
43,993
263,718
426,957
Transfers
90,680
83,010
30,488
– 208,184
– 4,006
0
0
0
0
0
Subsequent Capitalization
Disposals
– 8,685
– 52,301
– 45,768
– 127
– 106,881
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
Disposals
– 2,085
– 53,225
– 27,349
–5
– 82,664
1,187,116
1,836,417
611,861
444,214
4,079,608
Accumulated Depreciation 2010
344,192
1,034,308
396,076
0
1,774,576
302,591
904,023
338,024
0
1,544,638
842,924
802,109
215,785
444,214
2,305,032
701,542
689,115
199,138
336,960
1,926,755
32,646
122,430
62,131
0
217,207
420
75
8
0
503
December 31, 2010
Depreciation in the Fiscal Year
of which unscheduled
On the reporting date, no unfulfilled conditions or potential liabilities existed, which would have required
modification of the statement of financial position.
Borrowing costs of € 551,000 were capitalized in the year under review (previous year: € 22,000). An interest
rate of 4.0 percent was applied to the calculations.
In the statement of financial position, government asset-related grants for investments in the amount of € 2.6
million (previous year: € 1.9 million) have been deducted from the carrying amounts of the relevant assets. The
current carrying amount of property, plant and equipment purchased with government grants is € 49.4 million
100
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, 2010
€ ’000
Dec. 31, 2009
€ ’000
Licenses, Trademarks and Other Similar Rights
573
514
Accumulated Amortization
– 74
– 56
Buildings
136,121
134,121
Accumulated Depreciation
– 32,501
– 29,989
Technical Plant and Machinery
15,925
12,163
– 9,913
– 7,484
Other Plant, Operating and Office Equipment
13,193
10,700
– 7,665
– 6,458
115,659
113,511
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, 2010
Dec. 31, 2009
Nominal
Value
Discount
NPV
Nominal
Value
Discount
NPV
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
Less than One Year
12,581
5,034
7,547
11,716
5,028
6,688
Between One and Five Years
41,980
16,535
25,445
41,080
16,847
24,233
Over Five Years
73,098
14,895
58,203
81,323
17,725
63,598
127,659
36,464
91,195
134,119
39,600
94,519
The two largest finance leasing agreements relate to the real estate for the Hospital Care Division‘s LIFE facility
(carrying amount € 37.3 million), and the Aesculap Division‘s Benchmark factory (carrying amount € 19.1 million).
MANAGEMENT BOARD
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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
73,514
30,934
86,134
5,508
27.9
Germany
29,697
10,800
39,901
2,260
27.9
Ireland
1,653
1,016
438
– 2,667
47.0
104,864
42,750
126,473
5,101
France
85,293
35,094
104,532
8,239
27.9
Germany
31,639
10,975
53,634
4,000
27.9
47.0
2009
Babolat VS
Schölly
Fiberoptic GmbH
B. Braun Avitum
Ireland Ltd.
2010
Babolat VS
Schölly
Fiberoptic GmbH
B. Braun Avitum
Ireland Ltd.
Ireland
2,658
2,792
1,315
– 771
119,590
48,861
159,481
11,468
As of December 31, 2010, the goodwill of holdings in associated companies totaled € 3.7 million (previous year:
€ 500,000).
101
102
Cost of Acquisition
Financial
Investments
(Equity
Method)
January 1, 2009
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
23,935
10,858
87
832
1,671
37,383
0
0
0
0
10
10
7
0
0
0
265
272
– 2,439
– 5,548
0
0
0
– 7,987
Additions
942
6,277
0
7
3,870
11,096
Disposals
0
– 72
– 87
0
– 727
– 886
Fair Value Adjustments
0
0
0
58
– 138
– 80
22,445
11,515
0
897
4,951
39,808
0
0
0
0
30
30
0
0
0
0
200
200
– 12,420
Removed from Scope of Consolidation
Removed from Scope of Consolidation
0
– 12,420
0
0
0
Additions
7,099
18,684
0
25
30
25,838
Disposals
0
– 878
0
– 12
– 1,029
– 1,919
Fair Value Adjustments
0
0
0
0
36
36
December 31, 2010
29,544
16,901
0
910
4,218
51,573
999
0
0
0
20
1,019
999
0
0
0
20
1,019
Carrying Amounts
December 31, 2010
28,545
16,901
0
910
4,198
50,554
Carrying Amounts
December 31, 2009
21,446
11,515
0
897
4,931
38,789
0
0
0
0
0
0
Depreciation in the Fiscal year
The following amounts represent the 50 percent share of the Group in assets, liabilities, sales, and profit in
joint ventures:
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
Non-current Assets
1,626
1,582
Current Assets
3,149
1,700
4,775
3,282
175
77
Assets
Liabilities
Non-current Provisions and Liabilities
Current Provisions and Liabilities
Net Assets
Sales
3,221
1,957
3,396
2,034
1,379
1,248
2010
2009
€ ’000
€ ’000
8,616
8,054
Operating Profit
150
156
Profit After Tax
135
111
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103
18 Trade Receivables
Age Analysis of Trade Receivables
a) Non-impaired trade receivables
Total
Not yet
due
Overdue
up to 30 days
Overdue
31 – 60 days
Overdue
61 – 90 days
Overdue
91 – 180 days
Overdue more
than 180 days
762,563
525,588
72,219
34,816
29,210
53,363
47,367
915,163
611,084
78,252
34,066
30,605
59,777
101,379
Overdue
91 – 180 days
Overdue more
than 180 days
Dec. 31, 2009
Trade Receivables
Dec. 31, 2010
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 state-run hospitals in Italy, Spain, and Portugal.
b) Trade receivables for which specific impairments have been established
Total
Not yet
due
Overdue
up to 30 days
Overdue
31 – 60 days
Overdue
61 – 90 days
Dec. 31, 2009
Trade Receivables
Impairment Provisions
Carrying Amount
57,181
8,162
2,443
1,322
1,222
2,861
41,171
– 29,634
– 2,178
– 1,164
– 829
– 729
– 2,017
– 22,717
27,547
5,984
1,279
493
493
844
18,454
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
With regard to 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.
104
Impairments on trade receivables have changed as follows:
Amount of Impairment Provisions as of January 1
Currency Translation
2010
2009
€ ’000
€ ’000
33,412
30,901
2,292
365
Additions
10,995
11,667
Utilizations
– 7,417
– 7,315
Releases
– 5,859
– 2,206
Amount of Impairment Provisions as of December 31
33,423
33,412
of which Specific
29,247
29,634
of which General
4,176
3,778
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:
Expenses for Complete Derecognition of Trade Receivables
Income from Receivables Previously Derecognized
2010
2009
€ ’000
€ ’000
5,813
5,212
35
26
Fair value of collateral received totaled € 3.8 million (previous year: € 5.4 million). The collateral is mainly payment guarantees, with terms extending to December 2011.
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, 2010, B. Braun Group companies had sold receivables worth € 70.8 million under an assetbacked securities (ABS) program with a maximum volume of € 100 million (previous year: € 71.3 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 prevailing opinion
is that B. Braun has retained control over the receivables because they were transferred in an undisclosed assignment and B. Braun will continue to service those receivables in the future. Therefore, according to IAS 39.30,
B. Braun’s continuing involvement must be recognized. This includes, firstly, 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). Secondly, 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
(€ 483,000, previous year: € 414,000). The fair value of the guarantee/interest payments to be assumed has
been estimated at € 169,000 (previous year: € 126,000), taken through the statement of income and recognized
under other liabilities.
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19 Other Assets
Dec. 31, 2010
Dec. 31, 2009
Residual Term
< 1 year
Residual Term
> 1 year
Residual Term
< 1 year
Residual Term
> 1 year
€ ’000
€ ’000
€ ’000
€ ’000
40,740
0
37,460
0
Receivables from Social Security Providers
1,791
379
1,792
1,277
Receivables from Employees
4,677
128
3,968
176
Advance Payments
7,764
0
4,435
0
17,110
3,219
18,790
1,302
72,082
3,726
66,445
2,755
10,945
20
1,209
17
Other Tax Receivables
Accruals and Deferrals
Receivables from Derivative Financial Instruments
Available-for-sale Securities
Held for trading Securities
Held-to-maturity Securities
Other Receivables and Assets
4,488
0
3,934
0
11,035
0
8,039
0
87
0
0
0
60,410
45,652
48,996
30,261
86,965
45,672
62,178
30,278
159,047
49,398
128,623
33,033
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
Raw Materials and Supplies
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
193,062
162,143
Provisions
– 10,654
– 11,681
Raw Materials and Supplies – Net
182,408
150,462
Work in Progress
144,157
130,698
Provisions
– 9,987
– 9,388
Work in Progress – Net
134,170
121,310
Finished Products, Goods
524,068
494,219
Provisions
– 60,624
– 57,458
Finished Products, Goods – Net
463,444
436,761
780,022
708,533
As of December 31, 2010, inventories of € 350.0 million (previous year: € 242.3 million) were recognized at net
realizable value.
At the end of the fiscal year, the carrying value of inventories pledged as collateral for liabilities was € 9.1 million
105
106
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, which amounted to € 400 million, was increased to € 600
million on April 15, 2010 by converting other retained earnings of € 200 million. This capital increase from
retained earnings was performed in accordance with Section 207 (2) clause 2 of the German Stock Corporation
Act (Aktiengesetz) without the issue of new shares. The subscribed capital of B. Braun Melsungen AG consists
of 19,404,000 bearer shares without nominal value. 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, 2009
Cash Flow
Hedge
Reserve
Market Value
of availablefor-sale
Securities
Reserve
for Currency
Translation
Differences
Total
€ ’000
€ ’000
€ ’000
€ ’000
– 648
25
– 123,283
– 123,906
0
32
0
32
– 359
0
0
– 359
Changes recognized directly in Equity
(after Taxes)
Total
0
0
10,992
10,992
– 359
32
10,992
10,665
– 1,007
57
– 112,291
– 113,241
Changes recognized directly in Equity
(after Taxes)
0
– 22
0
– 22
3,403
0
0
3,403
0
0
114,164
114,164
Total
3,403
– 22
114,164
117,545
December 31, 2010
2,396
35
1,873
4,304
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Changes in the other equity capital components are shown in the 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
Provisions for Pension Obligations
Provisions for Similar Obligations
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
512,563
484,835
765
7,005
513,328
491,840
Payments of € 32.6 million are expected in 2011. Of this, € 10.7 million relates to contributions to external plans
and € 21.9 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 2009, this
amount was € 17.7 million (previous year: € 14.8 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.
107
108
Retirement benefits in Germany are 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, 2010
€ ’000
Dec. 31, 2009
€ ’000
236,917
202,541
– 184,651
– 163,268
Excess Cover/Shortfall
52,266
39,273
Net Present Value of Unfunded Pension Obligations
565,443
514,330
– 103,838
– 68,761
– 1,308
– 1,004
0
997
512,563
484,835
Unrealized Actuarial Gains (+) / Losses (–)
Unrecognized Past-Service Costs
Effect of Asset Value Limitation
Pension Provision (Net)
of which Assets
of which Liabilities
3,491
3,763
516,054
488,598
The change in pension provisions in 2010 and 2009 was as follows:
Pension Provision (Net) as of January 1
Changes in Scope of Consolidation
2010
2009
€ ’000
€ ’000
484,835
464,082
1,414
331
306
0
Transfers
5,563
0
Payments
– 33,173
– 29,647
53,618
50,069
512,563
484,835
Pension Expense
Pension Provision (Net) as of December 31
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Pension expenses included in the statement of income consist of the following:
2010
2009
€ ’000
€ ’000
Current Service Cost
23,591
18,868
Interest Expense
37,228
36,569
Expected Income on Plan Assets
– 8,450
– 7,731
Amortization of Actuarial Gains and Losses
1,515
1,337
Amortization of Past Service Costs
123
47
Expense (+) / Income (–) from Plan Settlements and Curtailments
681
0
Effect of Asset Value Limitation
– 1,070
979
Pension Expense on Defined Benefit Plans
53,618
50,069
Pension Expense on Defined Contribution Plans
17,664
14,757
Pension Expense
71,282
64,826
Current service costs, expenses from plan settlements and curtailments, amortized actuarial gains or losses,
and past-service costs are included in staff costs; 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:
2010
2009
2008
2007
2006
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
Experience Gains (+) / Losses (–)
on Pension Obligations
1,863
3,345
– 2,996
– 5,889
– 1,138
Experience Gains (+) / Losses (–)
on Plan Assets
4,781
4,849
– 23,776
– 4,179
300
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
Pension benefit obligations and assets are reconciled as follows:
Net Present Value of Obligation at Start of Year
716,871
635,906
Current Service Costs
23,591
18,868
Interest Expense
37,228
36,569
Employee Contributions
Actuarial Gain (+) / Loss (–)
Currency Effects
2,539
2,504
39,441
53,508
23,200
– 918
Total Benefits Paid
– 31,362
– 29,549
Past Service Costs
223
– 17
Effect of Changes to the Scope of Consolidation
306
0
6,834
0
– 15,609
0
Effect of Transfers
Effect of Plan Settlements
Effect of Plan Curtailments
Net Present Value of Obligation at End of Year
– 902
0
802,360
716,871
109
110
Effect of plan settlements relates primarily to a change of the pension scheme in Switzerland.
Market Value of Plan Assets at Start of Year
Expected Return on External Plan Assets
Currency Effects
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
163,268
148,860
8,450
7,731
18,141
– 774
4,781
4,849
Employer Contributions
11,369
10,941
Employee Contributions
2,539
2,504
– 9,558
– 10,843
1,270
0
Fund Payments
Effect of Changes to the Scope of Consolidation and Transfers
Effect of Plan Settlements
– 15,609
0
Market Value of Plan Assets at End of Year
184,651
163,268
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
8,450
7,731
4,781
4,849
13,231
12,580
Dec. 31, 2010
%
Dec. 31, 2009
%
The following table shows the actual return on external plan assets:
Actual Return on External Plan Assets
The plan assets consist of the following:
Equities and Similar Securities
33
31
Bonds and Other Fixed-Income Securities
6
5
Real Estate
1
1
Other Assets
60
63
100
100
Dec. 31, 2010
%
Dec. 31, 2009
%
Discount Rate
4.7
5.1
Future Salary Increases
2.9
2.9
Future Pension Increases
1.8
1.8
The calculation of pension obligations was based on the following assumptions:
MANAGEMENT BOARD
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Pension expense was calculated using the following assumptions:
Dec. 31, 2010
%
Dec. 31, 2009
%
Discount Rate
5.1
5.7
Future Salary Increases
2.9
3.1
Future Pension Increases
1.8
2.0
5.0
5.1
The percentages shown are weighted average assumptions. For the euro zone, a uniform discount rate of
5.0 percent (previous year: 5.25 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. 60 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 pension obligations and plan assets performed as follows:
Net Present Value of
Unfunded Pension Obligations
Net Present Value of
Funded Pension Obligations
Plan Assets
Funding Status
2010
2009
2008
2007
2006
€ million
€ million
€ million
€ million
€ million
565.5
514.3
450.5
463.3
469.9
236.9
202.5
185.5
173.3
188.4
– 184.7
– 163.2
– 148.9
– 153.7
– 157.1
617.7
553.6
487.1
482.9
501.2
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.
111
112
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
40,687
10,331
3,664
54,682
– 127
1,235
7
1,115
– 1,633
– 1,889
– 205
– 3,727
– 71
– 1,975
– 164
– 2,210
7,067
4,968
1,650
13,685
45,923
12,670
4,952
63,545
446
878
133
1,457
Transfers
958
0
4,610
5,568
January 1, 2009
Utilization
Release
Additions
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
Personnel
Expenditures
Warranties
Uncertain
Liabilities
Other
Total
December 31, 2010
Other Current
Provisions
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
January 1, 2009
5,443
4,593
14,977
19,819
44,832
Foreign Currency
Translation
613
– 41
– 407
547
712
Changes in Scope
of Consolidation
0
0
0
28
28
Utilization
– 1,904
– 1,994
– 1,884
– 15,542
– 21,324
Release
– 2,332
0
– 296
– 250
– 2,878
Additions
6,793
2,575
1,011
18,487
28,866
December 31, 2009 /
January 1, 2010
8,613
5,133
13,401
23,089
50,236
0
150
792
317
1,259
– 5,338
0
0
– 4,610
– 9,948
Foreign Currency
Translation
Transfers
Changes in Scope
of Consolidation
Utilization
Release
0
0
0
0
0
– 3,257
– 2,312
– 11,259
– 14,583
– 31,411
– 1,784
– 18
– 133
– 742
– 891
Additions
1,120
2,828
3,387
16,067
23,402
December 31, 2010
1,120
5,666
5,579
19,389
31,754
A total of € 5.8 million was transferred in the reporting year due to changes in maturities.
Non-current provisions for personnel expenditures primarily consist of provisions for partial retirement plans
and anniversary payments.
MANAGEMENT BOARD
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Provisions of USD 14.7 million for uncertain liabilities relating to the ongoing investigation by the US Department
of Justice into alleged improper marketing and pricing practices were utilized in the reporting year. The provision
related to this risk was also increased by USD 2.0 million.
Other provisions mainly consist of provisions for other obligations in the area of staffing and social services,
guarantees, possible losses from contracts, legal and consulting fees, and a number of identifiable individual
risks. This item also includes actuarial provisions and provisions for not yet settled insurance claims of REVIUM
Rückversicherung AG, Melsungen.
27 Financial Liabilities
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
Profit Participation Rights
63,308
46,006
604,517
545,267
Liabilities under Finance Leases
45,438
47,213
Liabilities under Finance Leases with Affiliated Companies
38,199
40,301
Liabilities under Loans from Non-banks
40,499
21,210
Liabilities to Banks
Other Financial Liabilities
0
670
791,961
700,667
Current Liabilities
Liabilities under Finance Leaseswith Affiliated Companies
4,048
2,709
343,020
223,506
5,456
5,030
2,102
1,975
Liabilities under Loans from Non-banks
63,349
68,684
Liabilities under Bills of Exchange
13,894
80
9,619
3,756
441,488
305,740
Total Financial Liabilities
1,233,449
1,006,407
Other financial liabilities include € 4.1 million of advance payments received for orders (previous year:
€ 3.9 million).
Term structure of financial liabilities:
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
Due within One Year
441,488
305,740
Due within One to Five Years
571,109
562,498
Due in over Five Years
220,852
138,169
1,233,449
1,006,407
113
114
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 profit-sharing rights in the form of participation 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, 2010, a total of 672,861 rights had been issued. Their years of issue are as follows:
Year of Issue
Number
2001
32,950
2002
49,625
2003
62,001
2004
59,973
2005
72,451
2006
72,127
2007
80,467
2008
93,927
2009
69,123
2010
80,217
672,861
Together with several subsidiaries, B. Braun Melsungen AG has entered into a syndicated loan facility of € 400
million 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 amount of the loan will decline to € 381 million in on May 31, 2011 and to
€ 335 million in the final year. The term of the loan expires on May 31, 2013.
Aesculap AG also entered into a loan with a development bank in 2009. The loan consists of two tranches totaling USD 80 million. Both tranches are to be repaid upon maturity in 2016 and have a fixed interest rate. The
purpose of the loan is to refinance certain research and development projects, expand existing production
facilities and construct a new laboratory in Germany. B. Braun Melsungen AG is a guarantor under this loan.
MANAGEMENT BOARD
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As of December 31, 2010, the Group had unutilized credit lines totaling € 861.9 million (previous year:
€ 982.7 million).
Loans from non-banks are unsecured. Interest rates on EUR loans are between 0.30 percent 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, 2010
€ ’000
Dec. 31, 2009
€ ’000
EUR
910,236
763,419
USD
211,723
139,692
Other
111,490
103,296
1,233,449
1,006,407
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, € 13.2 million (previous year: € 11.3 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 € 45.7 million (previous year: € 41.0 million).
The carrying amount of financial assets used as collateral for liabilities or contingent liabilities was € 31,000
(previous year: € 573,000). The collateral provided was assigned receivables.
115
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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, 2009
Carrying Amounts
€ ’000
Cash Outflows
within one year
Interest
€ ’000
Repayments
€ ’000
48,715
140
2,709
768,773
31,679
223,506
52,243
2,437
5,030
Liabilities under Finance Leases to Associated Companies
42,276
2,596
1,945
Liabilities from Borrowing from Non-banks
89,894
2,733
68,684
Liabilities from ABS Transactions and Other Financial Liabilities
Liabilities from Derivative Financial Instruments
32,146
0
32,146
210,313
10
209,139
9,923
998
226,076
Dec. 31, 2010
67,356
148
4,048
947,537
51,331
343,020
50,894
2,671
5,456
Liabilities under Finance Leases to Associated Companies
40,301
2,469
2,102
103,848
2,951
63,349
Liabilities from Borrowing from Non-banks
Liabilities from ABS Transactions and Other Financial Liabilities
52,626
0
52,626
216,757
0
215,698
6,319
0
183,959
All instruments held at December 31, 2010 and for which payments had already been contractually agreed upon
are included. Amounts in foreign currency were each translated at the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December
31, 2010. Financial liabilities that can be repaid at any time are always assigned to the earliest possible period.
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117
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
Cash Outflows
after ten years
Interest
€ ’000
Repayments
€ ’000
Interest
€ ’000
Repayments
€ ’000
132
2,466
336
13,479
259
30,061
0
0
24,276
32,303
40,006
474,352
2,050
35,604
0
3,008
2,243
4,517
5,581
10,435
5,918
13,788
1,986
18,473
2,469
2,102
6,562
7,152
7,529
15,327
2,291
15,720
1,053
65
1,832
10,175
522
10,516
13
454
0
0
0
0
0
0
0
0
0
835
0
339
0
0
0
0
249
0
0
0
0
0
0
0
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
889
0
170
0
0
0
0
0
0
0
0
0
0
0
0
118
28 Additional Disclosures on Financial Instruments
Carrying amount and fair value by measurement category
Category
under
IAS 39
Carrying
amount
Dec. 31, 2010
Fair value
Dec. 31, 2010
Carrying
amount
Dec. 31, 2009
Fair value
Dec. 31, 2009
€ ’000
€ ’000
€ ’000
€ ’000
Assets
Trade Receivables
LaR
933,543
933,543
790,110
790,110
Other Receivables
LaR
110,260
110,260
84,188
84,188
Held-to-Maturity Financial Assets
HtM
87
87
0
0
Available-for-Sale Financial Assets
AfS
5,398
5,398
4,831
4,831
Other Interests
AfS
16,901
n, a,
11,515
n, a,
Financial Assets Held for Trading
FAHfT
11,035
11,035
8,039
8,039
Derivatives not in a Hedge
FAHfT
10,965
10,965
1,226
1,226
Cash and Cash Equivalents
LaR
34,369
34,369
48,756
48,756
Liabilities
FLAC
67,356
67,356
48,715
48,715
FLAC
947,537
969,617
768,773
777,250
n. a.
91,195
93,982
94,519
97,214
Liabilities under Borrowings from Non-banks
FLAC
103,848
104,692
89,894
89,709
FLAC
19,460
19,460
559
559
FLAC
216,757
216,757
210,313
210,313
Other Liabilities
FLAC
179,768
179,768
168,958
168,958
Derivatives not in a Hedge
FLHfT
3,069
3,069
7,294
7,294
n. a.
3,250
3,250
2,629
2,629
LaR
1,078,172
1,078,172
923,054
923,054
Derivatives in a Hedge
Summary by IAS 39 Measurement Category:
Loans and Receivables
Held-to-Maturity Financial Assets
HtM
87
0
0
0
Available-for-Sale Financial Assets
AfS
22,299
5,398
16,346
4,831
Financial Assets Held for Trading
FAHfT
22,000
22,000
9,265
9,265
Financial Liabilities measured at Amortized Cost
FLAC
1,534,726
1,557,650
1,287,212
1,295,504
Financial Liabilities Held for Trading
FLHfT
3,069
3,069
7,294
7,294
LaR Loans and receivables | HtM Held-to-maturity investments | AfS Available-for-sale financial assets | FAHfT Financial assets held for trading
FLAC Financial liabilities measured at amortised cost | FLHfT Financial liabilities held for trading
MANAGEMENT BOARD
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The available-for-sale financial assets comprise:
Equities and Similar Securities
Listed Securities
of which Non-current
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
5,398
4,831
910
897
These are reported under other financial investments and other financial assets. No available-for-sale financial
assets were impaired in 2010 or 2009.
Other receivables include other receivables and other financial assets in the amount of € 113.8 million and other
advances in the amount of € 4.2 million.
The maximum credit risk for each category of financial assets corresponds to its carrying amount.
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.
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120
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
0
1,226
0
1,226
4,831
0
0
4,831
Derivative Financial Liabilities (No Hedge)
0
– 7,294
0
– 7,294
Derivative Financial Liabilities (Hedging)
0
– 2,629
0
– 2,629
4,831
– 8,697
0
– 3,866
0
10,965
0
10,965
5,398
0
0
5,398
Derivative Financial Liabilities (No Hedge)
0
– 3,069
0
– 3,069
Derivative Financial Liabilities (Hedging)
0
– 3,250
0
– 3,250
5,398
4,646
0
10,044
Dec. 31, 2009
Financial Assets measured at Fair Value
through Profit and Loss
Derivative Financial Assets
Available-for-sale Financial Assets
Securities
Dec. 31, 2010
Derivative Financial Assets
Available-for-sale Financial Assets
Securities
There were no moves between levels 1 and 2 in the period under review.
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29 Trade Accounts Payable and Other Liabilities
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
1,059
1,174
610
300
3,892
1,855
Trade Accounts Payables
Liabilities to Social Security Providers
Liabilities to Employees, Management and Shareholders
Deferred Income and Accruals
Other Liabilities
Subtotal Other Liabilities
194
157
4,696
2,312
6,016
6,705
10,712
9,017
215,698
209,139
Current Liabilities
Trade Accounts Payables
Liabilities to Social Security Providers
Liabilities to Employees, Management and Shareholders
Deferred Income and Accruals
Other Tax Liabilities
Other Liabilities
21,822
20,191
190,649
172,680
8,790
6,028
70,353
47,111
291,614
246,010
6,319
9,923
173,752
162,253
180,071
172,176
Subtotal Other Liabilities
471,685
418,186
Total Liabilities
699,154
637,516
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 € 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 2013. The effectiveness of hedges was
measured prospectively and retrospectively using the dollar offset method. All hedges were effective in the
fiscal year. The effective portion of changes in the fair value of designated interest rate swaps is recognized
in equity and amounts to a total of € 255,000 (previous year: € – 484,000). The ineffective portion of changes
in value is recognized directly in the statement of income under net financial income and is € – 40,000 (previous
year: € 154,000). 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.
In 2009, a hedge on a payer interest rate swap with a nominal credit volume of € 10 million was unwound and
the cumulative loss was retained in equity until the originally hedged transaction occurs. At that time, the
loss is transferred to the statement of income using the effective interest rate method. In 2010, an expense
of € – 143,000 (previous year: € – 35,000) was transferred from equity to the statement of income from the
hedge unwound.
Other liabilities mainly include remaining payments related to company acquisitions, liabilities from ABS transactions, bonus obligations, and liabilities related to outstanding invoices.
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122
Additional Information
30 Contingent Liabilities
Liabilities result exclusively from obligations to third parties and consist of:
Uncertain Liabilities
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
680
3,195
Guarantees
4,710
3,953
Warranties
22,997
32,003
Contractual Performance Guarantees
32,932
27,173
Collateral for Third-party Liabilities
0
5
61,319
66,329
All cases relate to potential future obligations, which may arise upon the occurrence of corresponding events
and entirely are 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 varying 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 € 8.7 million (previous year: € 7.8 million).
The Group also leases manufacturing facilities and machinery under terminable operating lease agreements.
Leasing liabilities in relation to moveable assets at the LIFE facility are € 15.2 million annually until 2011, € 8.7
million in 2012, € 3.2 million 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, 2010
€ ’000
Dec. 31, 2009
€ ’000
Due within One Year
64,482
61,782
91,752
99,068
Obligations under Rental and Leasing Agreements
Obligations from the Acquisition of Intangible Assets
29,731
34,170
185,965
195,020
0
12
Obligations from the Acquisition of Property, Plant and Equipment
128,418
27,478
Total
314,383
222,510
MANAGEMENT BOARD
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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 to finance sales, not to realize gains in advance.
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, 2010
€ ’000
Dec. 31, 2009
€ ’000
Due within One Year
4,603
7,618
6,513
9,143
Obligations under Sale and Leaseback Agreements
0
0
11,116
16,761
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. B. Braun anticipates no material
negative consequences for the economic or financial situation of the Group.
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 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. The Group uses forward contracts to hedge
against such risks resulting from expected future transactions and in relation to assets and liabilities reported in
the statement of financial position.
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.
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124
If the euro had gained or lost 10 percent against the US dollar as of December 31, 2010, profit before taxes –
with all other variables remaining constant – would have been approximately € 11.8 million higher or lower for
the full year (previous year: € 15.3 million). 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 € 31.7 million higher or lower (previous year: € 25.7 million).
Interest Rate Risk
The Group’s interest rate risk stems from non-current interest-bearing liabilities. 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. In addition, the Group borrows at variable rates and
swaps these into fixed rates.
If market interest rates had been 100 basis points higher or lower as of December 31, 2010, profit before taxes
– with all other variables remaining constant – would have been approximately € 4.1 million lower or higher
for the full year (previous year: € 0.2 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. Derivatives
contracts and investment transactions are only entered into with financial institutions that have excellent
credit ratings.
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.
As in 2009, the strategy of the Group in 2010 was to significantly exceed the equity ratio by at least 25 percent
that was agreed upon under the terms of the syndicated loan.
MANAGEMENT BOARD
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The equity ratio as of December 31, 2010 and December 31, 2009, as calculated in the manner prescribed in the
syndicated loan agreement, was as follows:
Equity
Goodwill Acquired after December 31, 2005
2010
2009
€ ’000
€ ’000
1,984,027
1,620,036
– 56,732
– 54,447
Adjusted Net Equity
1,927,295
1,565,589
Total Assets
4,686,074
3,975,150
41.1
39.4
Equity Ratio in %
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.
For non-current liabilities, stock exchange prices or OTC prices for similar instruments are used. Other valuation
models such as the DCF method are used to determine the fair value of the remaining financial instruments.
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. In these
cases, any fair value changes are recognized directly 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. Currency options are valued based on quoted market
prices or recognized option pricing models. 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
Residual Term > 1 Year
Fair Value
Dec. 31, 2010
T€
Dec. 31, 2009
T€
Dec. 31, 2010
T€
Dec. 31, 2009
T€
Dec. 31, 2010
T€
Dec. 31, 2009
T€
Contracts
524,266
337,401
312
702
6,961
– 4,293
Currency
Options
62,452
60,825
0
60,825
– 2,771
– 3,964
Forward
Foreign Exchange
Embedded
Derivatives
7,600
7,800
0
0
379
– 440
594,318
406,026
312
61,527
4,569
– 8,697
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).
125
126
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 income and payments
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.
As of December 31, 2010, the Group had designated forward foreign exchange contracts with a net fair value
of € 4.4 million (previous year: € 0) as cash flow hedges. All hedges were effective within the range specified
under IAS 39.
Gains of € 8.4 million and losses of € 1.6 million (previous year: € 0 in both instances) arising from changes in
the fair values of foreign exchange derivatives in connection with cash flow hedges were recognized in equity
in fiscal year 2010. Gains of € 2.2 million and losses of € 7.2 million (previous year: € 0 in both instances) 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 € 6.0 million
and losses of € 1.6 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 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:
2010
2009
€ ’000
€ ’000
9,748
10,713
Sales
Related Companies
of which B. Braun Holding GmbH & Co. KG
(6,665)
of which Holdings
(3,083)
Key Management Personnel
0
69
9,748
10,782
55,253
53,149
Goods and Services Purchased
Related Companies
(35,469)
of which Holdings
(19,784)
0
2
55,253
53,151
MANAGEMENT BOARD
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Outstanding balances from the purchase/sale of goods and services and from loans at the end of the year:
Dec. 31, 2010
€ ’000
Dec. 31, 2009
€ ’000
4,487
1,874
Outstanding Items from the Sale of Goods and Services
Related Companies
(334)
of which Joint Ventures
(2,933)
of which Holdings
(1,220)
Valuation Allowances
0
0
7
40
Valuation Allowances
Procurement Obligations
0
0
4,494
1,914
229
270
47,464
43,784
Outstanding Items from the Purchase of Goods and Services and from Loans
Related Companies
of which Joint Ventures
of which Holdings
Procurement Obligations
(44,775)
(851)
(1,838)
46,221
41,461
93,685
85,245
1,096
1,563
Key management personnel are members of the Management Board and Supervisory Board of B. Braun Melsungen
AG. In addition to B. Braun Holding GmbH & Co. KG, the affiliated Group includes joint ventures and companies
controlled by key management personnel or their close family members. The names of associated companies and
joint ventures are shown under Major Shareholdings of B. Braun Melsungen AG.
The following items in the statement of financial position contain outstanding balances with affiliated people
or companies:
–
–
–
Other Assets
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.
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.
127
128
The total remuneration of Management Board members consists of the following:
2010
2009
€ ’000
€ ’000
Fixed Remuneration
2,359
2,250
Variable Remuneration
4,216
3,561
Pension Expense
530
390
Bonuses
219
210
Other
245
97
7,569
6,508
Of the total, € 410,000 was attributable to the Chairman of the Management Board as fixed remuneration and
€ 1.6 million as variable remuneration from profit-sharing.
A total of € 15.0 million was allocated for pension obligations for current Management Board members; profitsharing bonus obligations to Management Board members is reported under liabilities to employees, management and shareholders total € 4.0 million. A total of € 16.3 million has been allocated for pension obligations to
former Management Board members and their surviving dependants; current benefits total € 1.3 million. Supervisory Board remuneration totaled € 532,000.
The remuneration of Supervisory Board members is governed by the Articles of Incorporation and is approved at
the Annual Shareholders’ Meeting.
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 € 6.5 million (previous year: € 6.1 million). See Note 27 for detailed information on profit participation rights.
The members of the Supervisory Board are listed on page 137 and the Management Board on pages 6 / 7.
MANAGEMENT BOARD
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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.
Interest paid and received has been reported under gross cash flow for the first time in the current reporting year.
The previous year’s figures have been adjusted accordingly.
34 Gross Cash Flow from Operating Activities
The gross cash flow of € 563.0 million is the cash surplus from operating activities before any changes in working
capital, an increase of € 87.8 million over the previous year. The change is due primarily to improved operating
income of € 456.2 million, lower tax payments, and higher depreciation.
Cash flow from operating activities of € 389.3 million represents changes in current assets, current provisions,
and liabilities (excluding financial liabilities). The increase in inventories and receivables and the reduction in
current provisions and liabilities resulted in a significant outflow of € 173.7 million compared with the previous
year; this was partly attributable to the high level of sales achieved in December. As a result, the cash flow from
operating activities is € 181.9 million below the previous year’s level.
35 Cash Flow From Investing Activities
A total of € 572.4 million was spent in 2010 to purchase property, plant and equipment, intangibles and financial
investments. This was offset by sales of property, plant and equipment (€ 11.6 million) and dividend income
received (€ 3.4 million), resulting in a cash outflow from investing activities of € 557.4 million. This increase of
€ 114.1 million in cash outflow compared with the previous year is largely due to higher capital investments.
Investments made during the year were not fully covered by cash flow from operations. The remaining free cash
flow was € – 168.1 million (previous year: € 128.0 million).
Additions to property, plant and equipment and intangible assets from finance leasing do not result in a cash flow
and are therefore not included under investing activities. In the fiscal year, these additions totaled € 0.9 million
36 Cash Flow from Financing Activities
In 2010, cash flow from financing activities amounted to € 155.5 million (previous year: € – 135.6 million). The
net balance of proceeds from and repayments of loans was € 181.6 million (previous year: € – 106.8 million).
Dividend payments and capital contributions by non-controlling interests resulted in a cash outflow of € 29.2
million. The € 291.1 million change compared with the previous year is largely due to higher borrowing to
finance investments.
129
130
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, 2010, restrictions related to cash availability totaled € 540,000 (previous year: € 693,000).
These restrictions related primarily to security deposits and collateral.
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 compiled that could have a material effect on the results of operations, financial position, or net
assets for 2010.
MANAGEMENT BOARD
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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, 2010. 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
(HGB), 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) HGB 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, March 8, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Prof. Dr. Georg Kämpfer
German Public Auditor
Holger Plaum
German Public Auditor
131
132
MAJOR SHAREHOLDINGS
As of December 31, 2010
Company Name and Location
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
AESCULAP AG, Tuttlingen2)
100.0
116,737
550,206
2,947
AESCULAP INTERNATIONAL GMBH , Tuttlingen2)
100.0
205,776
0
0
AESCULAP SUHL GMBH , Suhl
100.0
3,935
9,253
127
ALMO -Erzeugnisse E. Busch GmbH, Bad Arolsen
60.0
23,777
59,044
356
ASCALON GmbH, Berggießhübel2)
94.0
6,047
19,727
154
B. Braun Avitum AG, Melsungen2)
94.0
92,380
225,018
751
Germany
B. Braun Facility Services GmbH & Co. KG, Melsungen
100.0
108
13,503
80
B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen2)
100.0
149,310
0
0
B. Braun Surgical GmbH, Melsungen2)
100.0
154,576
0
0
B. Braun TravaCare GmbH, Hallbergmoos2)
100.0
613
30,592
55
B. Braun Vet Care GmbH, Tuttlingen2)
100.0
372
16,265
13
Saxonia Medical GmbH, Radeberg2)
94.0
3,988
51,501
412
TransCare Service GmbH, Neuwied
55.0
1,571
9,550
99
Europe
AESCULAP CHIFA SP.ZO.O., Nowy Tomyśl/Poland
98.8
55,366
122,448
1,469
100.0
10,269
10,910
114
Avitum S.R.L., Timisoara/Romania
93.6
259
8,736
191
B. Braun Adria d.o.o., Zagreb/Croatia
36.0
2,797
9,496
25
B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria
60.0
36,333
51,232
137
B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria
94.0
92,560
93
3
B. Braun Avitum France S.A.S., Boulogne/France
94.0
7,864
12,228
18
B. Braun Avitum Hungary Zrt., Budapest/Hungary
94.0
12,610
33,270
654
B. Braun Avitum Italy S.p.A., Mirandola/Italy
94.0
14,758
46,411
206
B. Braun Avitum Oy, Loviisa/Finland
94.0
1,934
10,339
35
B. Braun Avitum Poland Sp.zo.o., Nowy Tomyśl/Poland
95.9
– 3,787
26,511
404
B. Braun Avitum Russia OOO, St. Petersburg/Russia
94.0
2,419
10,034
32
B. Braun Avitum s.r.o., Bratislava/Slovak Republic
93.7
– 912
9,389
157
B. Braun Avitum s.r.o., Prague/Czech Republic
93.7
10,246
20,667
222
B. Braun Avitum Turkey Sanayi Ticaret Anonim Sirketi, Ankara/Turkey
75.2
3,105
8,356
13
B. Braun Avitum UK Ltd., Sheffield/United Kingdom
94.0
642
20,652
194
AESCULAP S.A.S. , Chaumont/France
MANAGEMENT BOARD
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133
MAJOR SHAREHOLDINGS
B. Braun Holding AG, Sempach/Switzerland
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
51.0
174,487
0
0
B. Braun Hospicare Ltd., Collooney, Co. Sligo/Republic of Ireland
100.0
9,638
13,597
89
B. Braun Medical AB, Dander/Sweden
100.0
3,256
34,319
45
B. Braun Medical AG, Sempach/Switzerland
51.0
118,786
226,726
788
B. Braun Medical A/S, Frederiksberg/Denmark
100.0
1,319
14,303
23
B. Braun Medical A/S, Vestskogen/Norway
100.0
3,121
20,602
32
B. Braun Medical B.V., Oss/Netherlands
100.0
6,759
54,135
145
B. Braun Medical International S.L., Rubi/Spain
100.0
94,520
0
9
B. Braun Medical Kft., Budapest/Hungary
60.0
23,401
55,585
735
B. Braun Medical Lda., Barcarena/Portugal
100.0
31,289
58,279
152
90.0
20,791
82,815
272
B. Braun Medical Ltd., Dublin/Republic of Ireland
100.0
3,769
18,417
39
B. Braun Medical Ltd., Sheffield/United Kingdom
100.0
17,793
98,382
416
B. Braun Medical N.V./S.A., Diegem/Belgium
100.0
2,516
30,177
69
B. Braun Medical Oy, Helsinki/Finland
100.0
3,842
30,499
46
B. Braun Medical S.A., Rubi/Spain
100.0
234,372
201,479
1,054
B. Braun Medical S.A.S., Boulogne/France
100.0
79,064
276,606
1,327
B. Braun Medical S.R.L., Timisoara/Romania
61.9
1,434
11,876
79
B. Braun Medical s.r.o., Bratislava/Slovak Republic
70.0
1,264
20,299
19
B. Braun Medical s.r.o., Prague/Czech Republic
70.0
34,057
80,188
183
B. Braun Medikal Dis Ticaret A.S., Istanbul/Turkey
100.0
5,445
13,414
64
B. Braun Milano S.p.A., Milan/Italy
100.0
29,303
119,977
198
B. Braun Sterilog (Birmingham) Ltd., Sheffield/United Kingdom
100.0
– 6,279
11,582
239
B. Braun Sterilog (Yorkshire) Ltd., Sheffield/United Kingdom
100.0
– 4,897
8,188
197
B. Braun Surgical S.A., Rubi/Spain
100.0
78,008
148,523
761
B. Braun VetCare SA, Rubi/Spain
100.0
7,472
9,327
23
Suturex & Renodex S.A.S., Sarlat/France
100.0
8,340
12,489
146
B. Braun Medical LLC , St. Petersburg/Russia
1)
Effective stake
|
2)
Companies with profit and loss transfer agreements
|
3)
Consolidated using equity method
|
4)
Consolidated proportionately
134
MAJOR SHAREHOLDINGS
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
Americas
AESCULAP INC ., Center Valley/USA
95.5
39,484
123,646
423
Aesculap Implant Systems LLC , Center Valley/USA
95.5
– 4,495
37,171
132
100.0
7,508
16,652
173
B. Braun Interventional Systems Inc., Bethlehem/USA
95.5
16,470
24,605
34
B. Braun Medical Inc., Bethlehem/USA
95.5
136,851
668,641
4,409
B. Braun Medical Peru S.A., Lima/Peru
89.2
17,130
12,126
286
B. Braun Medical S.A., Bogota/Colombia
100.0
12,865
26,327
221
B. Braun Medical S.A., Buenos Aires/Argentina
100.0
9,808
25,068
355
B. Braun Medical S.A., Quito/Ecuador
100.0
4,974
12,395
57
Braun Medical SpA, Santiago de Chile/Chile
85.9
8,779
21,115
144
B. Braun of America Inc., Bethlehem/USA
95.5
123,071
0
0
CAPS Inc., Santa Fe Springs/USA
95.5
49,419
107,676
503
100.0
114,716
165,651
1,750
B. Braun AESCULAP JAPAN CO. LTD., Tokyo/Japan
100.0
55,790
121,056
484
B. Braun Australia Pty. Ltd., Bella Vista/Australia
100.0
22,575
52,585
113
B. Braun Avitum Philippines Inc., Manila/Philippines
100.0
2,677
8,652
100
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
5,120
32,249
65
B. Braun Korea Co. Ltd., Seoul/Republic of Korea
100.0
17,108
47,885
117
B. Braun Medical (H.K.) Ltd., Hong Kong/China
100.0
37,627
56,761
32
B. Braun Avitum (M) Sdn. Ltd., Mumbai/India
100.0
6,967
39,544
379
B. Braun Medical Industries Sdn. Bhd., Penang/Malaysia
100.0
224,697
292,838
4,586
B. Braun Medical (Shanghai) International Trading Co. Ltd., Shanghai/China
100.0
10,458
65,783
446
B. Braun Medical Supplies Inc., Manila/Philippines
100.0
6,225
13,141
146
B. Braun Medical Supplies Sdn. Bhd., Petaling Jaya/Malaysia
100.0
21,437
38,832
147
B. Braun Medical (Suzhou) Company Limited, Suzhou/China
100.0
2,419
12,820
293
B. Braun Singapore Pte. Ltd., Singapore
100.0
9,268
12,016
41
B. Braun Taiwan Co. Ltd., Taipei/Taiwan
100.0
4,539
15,185
56
B. Braun (Thailand) Ltd., Bangkok/Thailand
100.0
7,844
13,734
94
B. Braun Vietnam Co. Ltd., Hanoi/Vietnam
100.0
16,999
40,666
969
PT. B. Braun Medical Indonesia, Jakarta/Indonesia
100.0
20,837
37,637
353
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135
MAJOR SHAREHOLDINGS
Holding
in %1)
Equity
€ ’000
Sales
€ ’000
Employees
Africa
B. Braun Avitum (Pty) Ltd., Fourways/South Africa
100.0
773
8,005
106
B. Braun Medical (Pty) Ltd., Fourways/South Africa
100.0
8,515
27,531
132
Babolat VS, Lyon/France3)
28.0
50,199
104,532
201
Medical Service und Logistik GmbH, Recklinghausen4)
50.0
877
30,765
5
28.0
20,883
52,952
253
Other Holdings
3)
Schölly Fiberoptic GmbH, Denzlingen
1)
Effective stake
|
2)
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, 2010, and sales figures have been translated using the average annual rate for 2010.
136
SUPERVISORY BOARD REPORT
The Supervisory Board of B. Braun Melsungen AG continued
to perform its statutory duties and obligations in fiscal year
2010 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 25, 2010, the Supervisory Board proposed that the
following be put to vote at the Annual Shareholders’ Meeting:
the issuance of profit participation rights to B. Braun Group
executives in accordance with the statute for profit participation conditions approved by the Super visory Board, an
increase in subscribed capital, and the revision of the Articles
of Incorporation. The Supervisory Board also issued new
By-Laws at the meeting. At each of its meetings, the Supervisory Board received detailed reports on the business performance of the company’s North American subsidiaries. Other
topics discussed by the Supervisory Board included presentations of the divisional strategy of B. Braun Avitum AG and
the compliance management system for the B. Braun Group,
an overview of human resources at the B. Braun Group, and
the amendment to the Management Board By-Laws. The
Supervisory Board discussed and approved the 2011 targets,
advised on statutory business matters requiring its approval,
and accepted the risk report submitted by the Management
Board. 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 once again conducted a voluntary selfassessment, which showed that it is efficiently organized
and that cooperation between the Supervisory Board and
Management Board functions very well. The newly formed
Audit Committee discussed the company’s current business
performance, the accounting and auditing process and the
compliance management system for the B. Braun Group, intercompany requirements regarding derivatives transactions,
and, in particular, B. Braun Melsungen AG’s 2010 financial
statements and consolidated financial statements of the
Group. The Audit Committee reported on these topics at the
meetings of the Supervisory Board and made its recommendations. The Personnel Committee of the Supervisory Board
met four times in 2010. At its meeting on March 25, 2010,
it recommended that the Supervisory Board appoint Prof.
Dr. Hanns-Peter Knaebel as Ordinary Member of the Management Board, effective April 1, 2010. The Supervisory Board
approved this appointment at its meeting on March 25, 2010.
At its meeting on July 20, 2010, the Personnel Committee
recommended that Dr. Wolfgang Feller be reappointed as
Ordinary Member of the Management Board through March 31,
2013. The Supervisory Board approved his reappointment on
the same day. At its meetings on November 5 and December 8,
2010, the Personnel Committee recommended that the
Supervisory Board appoint Dr. Heinz-Walter Große as Chairman
of the Management Board to a five-year term effective April 1,
2011, and Mr. Otto Philipp Braun and Dr. Annette Beller as
Deputy Members of the Management Board for a three-year
term. The reappointment of Mr. Caroll H. Neubauer as Ordinary
Member of the Management Board through August 31, 2016
was also recommended. The Supervisory Board approved these
appointments at its meeting on December 8, 2010.
B. Braun Melsungen AG’s financial statements and management report for fiscal year 2010, the Group’s consolidated
financial statements, and the consolidated management report
have been reviewed by the auditor appointed at the Annual
Meeting on March 25, 2010, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Kassel, Germany.
The auditor raised no objections and issued an unqualified
audit opinion. The auditor participated in the Supervisory
Board’s discussions on the financial statements and the
Group’s consolidated financial statements, and reported on
the main findings of its 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 approve 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 with the proposals of the
Management Board concerning the utilization of retained
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137
FROM LEF T
MANFRED HERRES*
JUSTUS MISCHE
DR. RER. POL. ANTONIUS ENGBERDING*
Director of Manufacturing, Avitum Division,
B. Braun Melsungen AG, Melsungen
Chairman, Former Member of the
Management Board of Hoechst AG, Kelkheim
Member of the Executive Board of IG Metall,
Head of Business Management, Frankfurt / Main
D R . R E R . N AT. J OAC H I M S C H N E L L
BARBARA BRAUN-LÜDICKE
EKKEHARD RIST*
Former Vice Chairman of the Management
Board of B. Braun Melsungen AG, Melsungen
Businesswoman, Melsungen
Chairman of the Workers’ Council of Aesculap AG,
Mahlstetten
SONJA SIEWERT*
PETER HOHMANN*
Vice Chairman, Chairman of the Workers’ Council
of B. Braun Melsungen AG, Melsungen
Member of the Workers’ Council of
B. Braun Melsungen AG, Rotenburg/Fulda
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
P R O F. DR. M E D . D R . I N G . D R . H. C.
EDELT R AUD G L Ä NZER *
MICHAEL UNGETHÜM
DR. H. C. AUGUST OETKER
Member of the Managing Board of IG BCE,
Hanover
Former Vice Chairman of the Management
Board of B. Braun Melsungen AG
Partner, Dr. August Oetker KG, Bielefeld
*
elected by the employees
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 2010. The Supervisory Board examined this report and
raised no objections. The auditor reviewed the report and
issued the following audit opinion:
“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.”
The Supervisory Board concurs with the results of the auditor’s
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.
Melsungen, March 2011
The Supervisory Board
138
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.
ENTERAL NUTRITION
DEHP
Supplying nutrients by sip- or tube-feeding via the gastrointestinal
tract.
Abbreviation for Di(2-ethylhexyl)phthalate. DEHP is a plasticizer
used in the manufacturing of articles made of PVC.
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
A blood cleansing process used in the treatment of kidney failure.
Blood treatment taking place outside the body using an “artificial
kidney” (dialysis machine) that is connected directly to the bloodstream.
DIHK
FDA
Abbreviation for the Deutscher Industrie- und Handelskammertag
(Association of German Chambers of Industry and Commerce).
The DIHK is the umbrella organization for the German Chambers
of Industry and Commerce and represents the interests of German
trade and industry with respect to political decision-makers.
Abbreviation for the Food & Drug Administration. The FDA is the
US agency that regulates the safety of food and health-related
products.
D I A LY S I S
EBIT
Key performance indicator. Acronym for Earnings Before Interest
and Taxes.
H E M O D I A LY S I S
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.
H Y P E R G LY C E M I A
EBITDA
A medical condition characterized by excessively high blood sugar.
Key performance indicator. Acronym for Earnings Before Interest,
Taxes, Depreciation and Amortization.
INTERVENTIONAL
EBITDA MARGIN
Key performance indicator. EBITDA as a percentage of sales.
Interventional diagnosis and treatment procedures are intended to
positively influence the progression of a condition through targeted
intervention.
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IV
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
Abbreviation for intravenous. An application technique for the
administration of a drug, fluid, or suspension into a vein.
A section of the US law relating to food and drugs.
139
VCI
IMF
Abbreviation for the International Monetary Fund. The IMF is a
United Nations organization based in Washington, DC in the USA.
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.
MRPS
Abbreviation for the Multi- Resistant Pathogens. MRPs are bacteria
or viruses that do not respond to a vast number of antibiotics or
antivirals.
WL AN
Abbreviation for Wireless Local Area Network.
W O R K I N G C A P I TA L
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.
OSTEOARTHRITIS
Osteoarthritis is a condition in which inflammation spreads from
the bones to a joint.
OSTEOPOROSIS
A common age-related bone disorder. Bone density decreases as the
structure and substance of bones are damaged, which increases
susceptibility to fractures.
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).
STENT
A medical implant (vascular support) introduced into a blood vessel
to keep it open and prevent occlusion.
Key performance indicator. Inventories plus current trade accounts
receivable less current trade accounts payable.
6
H I G H L I G H T S 2 010
J A N U A R Y The number of B. Braun employees surpasses
40,000 for the first time.
APRI L B. Braun is named Germany’s “Top Engineering
HIG HL IG H T S 2010
Employer 2010.”
The new B. Braun office in Havana opens for business.
B. Braun Medical international S.L., Havana, Cuba is
established by the Spanish holding company B. Braun
Medical International SL , Rubí, Spain.
M AY The B. Braun Group and its employees around
the world donate € 230,000 to help build a hospital in
earthquake-ravaged Haiti.
A new factory for surgical instruments in Radzyń Podlaski,
Poland begins operation.
J U N E Medical training on the Island of the Gods:
B. Braun Medical Indonesia begins operations at the Asia
Pacific Surgical Training Center in Bali.
Manufacturing begins in Switzerland: The new facility
in Crissier will manufacture approximately 12 million
empty bags for clinical nutrition annually.
O C T O B E R B. Braun’s Czech subsidiary creates a new
meeting place: a café in the “House of Medicine” in
Prague. The café was designed by renowned Czech
architect Eva Jiřičná.
D E C E M B E R The Supervisory Board elects Dr. Heinz-
Walter Große to succeed Prof. Dr. h. c. Ludwig Georg
Braun, who will retire on March 31, 2011. Otto-Philipp
Braun and Dr. Annette Beller are appointed to the
Management Board.
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.de
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 61-71-38 01
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.
DAS UNTERNEHMEN
|
KONZERNL AGEBERICHT
|
KONZERNABSCHLUSS
|
9
LOREM IPSUM
HIG HL IG H T S 2010
FIVE-H
YEAR OVERVIEW
2006
2007
2008
2009
2010
€ million
€ million
€ million
€ million
€ million
Sales
3,321.4
3,572.9
3,786.4
4,028.2
4,422.8
Cost of Goods Sold
1,781.2
1,898.3
2,029.6
2,151.4
2,341.7
Functional Expenses
1,205.0
1,297.1
1,366.2
1,432.3
1,595.9
Selling Expenses
904.4
972.9
1,031.2
1,091.1
1,218.9
194.8
207.9
204.7
202.1
221.6
Research & Development Expenses
105.8
116.2
130.3
139.1
155.4
Interim Profit
335.2
377.6
390.6
444.5
485.2
Operating Profit
305.5
348.7
345.7
410.6
456.2
243.4
283.0
268.8
336.1
389.6
181.8
217.7
185.1
239.6
277.4
EBITDA
490.7
535.9
545.8
620.5
700.5
3,025.3
3,332.1
3,708.0
3,975.1
4,686.1
Assets
Intangible Assets (incl. Goodwill)
113.4
124.3
157.1
167.9
218.6
1,312.1
1,435.8
1,698.7
1,926.8
2,305.0
Inventories
645.9
709.7
726.7
708.5
780.0
672.7
738.0
767.6
790.1
933.5
Equity
1,088.0
1,255.3
1,389.7
1,620.0
1,984.0
Liabilities
1,937.3
2,076.8
2,318.3
2,355.1
2,702.0
Pension Obligations
440.9
456.9
470.4
491.8
513.3
798.7
895.7
1,094.5
1,006.4
1,233.4
159.7
177.4
179.2
210.3
216.8
Investments in Property, Plant and
Equipment and Intangible Assets
293.8
349.4
471.0
454.8
575.4
Depreciation and Amortization of Property,
Plant and Equipment and Intangible Assets
181.4
182.9
197.8
208.6
238.2
Personnel Expenditure
1,210.1
1,271.4
1,339.8
1,424.9
1,581.7
Employees (annual average)
33,127
35,810
37,601
38,512
40,316
10
3 0 0 2 0 10 3

sharing expertise. creating value.

Transcription

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