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gb_06_umschlag_engl.qxp
12.06.2007
10:37 Uhr
Seite 2
Connections
Annual Report 2006
Connections
As a trusted partner in healthcare, B. Braun is synonymous with innovation. Working
closely with our customers, we focus on new ways to improve therapies and processes.
That is why we share knowledge every day at our many locations around the world.
We encourage close interaction with our customers, researchers, patients and between
colleagues: through connections, the theme of our 2006 annual report.
Nina Seidel, Radiology, Charité Hospital, Berlin
gb_06_umschlag_engl.qxp
12.06.2007
10:37 Uhr
Seite 2
Connections
Annual Report 2006
Connections
As a trusted partner in healthcare, B. Braun is synonymous with innovation. Working
closely with our customers, we focus on new ways to improve therapies and processes.
That is why we share knowledge every day at our many locations around the world.
We encourage close interaction with our customers, researchers, patients and between
colleagues: through connections, the theme of our 2006 annual report.
Nina Seidel, Radiology, Charité Hospital, Berlin
gb_06_umschlag_engl.qxp
12.06.2007
9:12 Uhr
Seite 1
At a Glance
B. Braun at a Glance
Sales by Region (in million euros)
Germany 727.9 (21.9%* / +7.0%**)
Europe (excluding Germany) and Africa1,224.3* (36.9% / +8.8%**)
North America 822.0 (24.7%* / +14.3%**)
Central and South America 182.3 (5.5%* / +21.0%**)
Asia and Australia 364.9 (11.0%* / +4.0%**)
Total: 3,321.4 (+9.8%)
Hospital Care Division
Aesculap Division
The Hospital Care Division supplies
Products and services for all core
hospitals with injection and infusion
surgical procedures are the focal point
solutions and therapy devices, as well
of the Aesculap Division.
2006
2005
Change
€ Million
€ Million
%
3,321.4
3,026.2
9.8
Profit After Functional Expenses
335.2
266.5
25.8
products.
Operating Income
305.5
266.6
14.6
Core Products/Groups:
Consolidated Annual Net Profit
181.8
155.3
17.1
Electronic Infusion Devices . Infusion Sets and
Sales
as a variety of medical disposable
Surgical Instruments . Suture Materials
Accessories . Peripheral IV Catheters . IV Solutions and
5.5
5.1
7.8
Investments in Property, Plant and Equipment and Intangible Assets
293.8
238.8
23.0
Depreciation of Property, Plant and Equipment and Intangible Assets
181.4
169.9
6.8
Equity Ratio (in %)
36.0
33.4
7.8
Equity Ratio including Loans from Shareholders (in %)
37.0
34.3
7.9
490.7
436.9
12.3
Personnel Expenditure
1,210.1
1,125.8
7.5
Employees by Functional Area
Average Number of Employees
32,626
30,973
5.3
Production 59.9%
Sales and Marketing 24.1%
Research and Development 2.9%
Technology and Administration 13.1%
Income Structure
Net Margin after Taxes (in %)
Sales by Division (in million euros)
Hospital Care 1,584.1 (47.7%* / +9.3%**)
Aesculap 955.6 (28.8%* / +8.2%**)
OPM 466.6 (14.1%* / +13.0%**)
B. Braun Avitum 293.8 (8.8%* / +12.9%**)
Other Sales 21.4 (0.6%* / +3.4%**)
Employees by Region
10,000
7,289 (+11.7%)
6,523
2,375 (+8.2%)
2,196
4,465 (+2.3%)
4,366
9,592 (+4.2%)
9,205
8,905 (+2.6%)
2,000
8,683
4,000
0
Germany
Europe and Africa North America
Central and
South America
Asia, Australia
Parenteral Nutrition . Specialized and Generic
Medications . Pharmacy Accessories . Regional
Anesthesia . Central Venous Catheters . Irrigation
2006
2005
2004
€ Million
%
€ Million
%
€ Million
%
Sales
3,321.4
100.0
3,026.2
100.0
2,793.5
100.0
Cost of Goods Sold
1,781.2
53.6
1,632.6
54.0
1,505.1
53.9
Gross Profit
1,540.2
46.4
1,393.6
46.0
1,288.4
46.1
Selling Expenses
904.4
27.2
847.4
28.0
782.4
27.9
General and Administrative Expenses
194.8
5.9
182.4
6.0
174.8
6.4
Research and Development Expenses
105.8
3.2
97.3
3.2
87.7
3.1
Profit After Functional Expenses
335.2
10.1
266.5
8.8
243.5
8.7
Other Operating Income (Expenses)
-29.7
-0.9
0.1
0.0
6.1
0.2
Operating Income
305.5
9.2
266.6
8.8
249.6
8.9
Financial Income (Loss)
-62.1
-1.9
-57.9
-1.9
-61.0
-2.1
Profit Before Taxes
243.4
7.3
208.7
6.9
188.6
6.8
61.6
1.8
53.4
1.8
57.8
2.1
181.8
5.5
155.3
5.1
130.8
4.7
Income Tax Expenses
Consolidated Annual Net Profit
*Percentage of total sales / **Change from previous fiscal year
Systems . Neurosurgery . Vascular Therapy
Specific Products/Groups:
Solutions . Urological Drainage and Measurement .
Wound Drainage
OPM Division
B. Braun Avitum Division
The OPM Division provides products and
The B. Braun Avitum Division combines
services for medical care needs outside
the supply of products and medical ser-
of the hospital, as well as for chronically
vices for extracorporeal blood treatment.
ill long-term patients.
Core Products/Groups:
Core Products/Groups:
Machines, Dialyzers and other Products designed to
Ambulatory IV Therapy . Parenteral Nutrition . Home
treat Hemodialysis
Care . Stoma Care . Skin Care and Wound Care
Specific Products/Groups:
Acute Dialysis . H.E.L.P. Systems . Medical Services
Specific Products/Groups:
Individual Parenteral Nutrition Regimens . TransCare
6,000
Orthopedics/Traumatology . Spinal Surgery . Motor
Replacement Therapy
Management
2005 Total: 30,973
2006 Total: 32,626 (+5.3%)
8,000
Drug Delivery Systems . Clinical Nutrition . Volume
Specific Products/Groups:
Disposable Syringes and Needles . Hospital Services for
EBITDA
Total: 3,321.4 (+9.8%)
Core Products/Groups:
Consulting . Incontinence Care . Enteral Nutrition .
Disinfection and Hygiene . Diabetic Care
gb_06_umschlag_engl.qxp
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9:12 Uhr
Seite 1
At a Glance
B. Braun at a Glance
Sales by Region (in million euros)
Germany 727.9 (21.9%* / +7.0%**)
Europe (excluding Germany) and Africa1,224.3* (36.9% / +8.8%**)
North America 822.0 (24.7%* / +14.3%**)
Central and South America 182.3 (5.5%* / +21.0%**)
Asia and Australia 364.9 (11.0%* / +4.0%**)
Total: 3,321.4 (+9.8%)
Hospital Care Division
Aesculap Division
The Hospital Care Division supplies
Products and services for all core
hospitals with injection and infusion
surgical procedures are the focal point
solutions and therapy devices, as well
of the Aesculap Division.
2006
2005
Change
€ Million
€ Million
%
3,321.4
3,026.2
9.8
Profit After Functional Expenses
335.2
266.5
25.8
products.
Operating Income
305.5
266.6
14.6
Core Products/Groups:
Consolidated Annual Net Profit
181.8
155.3
17.1
Electronic Infusion Devices . Infusion Sets and
Sales
as a variety of medical disposable
Surgical Instruments . Suture Materials
Accessories . Peripheral IV Catheters . IV Solutions and
5.5
5.1
7.8
Investments in Property, Plant and Equipment and Intangible Assets
293.8
238.8
23.0
Depreciation of Property, Plant and Equipment and Intangible Assets
181.4
169.9
6.8
Equity Ratio (in %)
36.0
33.4
7.8
Equity Ratio including Loans from Shareholders (in %)
37.0
34.3
7.9
490.7
436.9
12.3
Personnel Expenditure
1,210.1
1,125.8
7.5
Employees by Functional Area
Average Number of Employees
32,626
30,973
5.3
Production 59.9%
Sales and Marketing 24.1%
Research and Development 2.9%
Technology and Administration 13.1%
Income Structure
Net Margin after Taxes (in %)
Sales by Division (in million euros)
Hospital Care 1,584.1 (47.7%* / +9.3%**)
Aesculap 955.6 (28.8%* / +8.2%**)
OPM 466.6 (14.1%* / +13.0%**)
B. Braun Avitum 293.8 (8.8%* / +12.9%**)
Other Sales 21.4 (0.6%* / +3.4%**)
Employees by Region
10,000
7,289 (+11.7%)
6,523
2,375 (+8.2%)
2,196
4,465 (+2.3%)
4,366
9,592 (+4.2%)
9,205
8,905 (+2.6%)
2,000
8,683
4,000
0
Germany
Europe and Africa North America
Central and
South America
Asia, Australia
Parenteral Nutrition . Specialized and Generic
Medications . Pharmacy Accessories . Regional
Anesthesia . Central Venous Catheters . Irrigation
2006
2005
2004
€ Million
%
€ Million
%
€ Million
%
Sales
3,321.4
100.0
3,026.2
100.0
2,793.5
100.0
Cost of Goods Sold
1,781.2
53.6
1,632.6
54.0
1,505.1
53.9
Gross Profit
1,540.2
46.4
1,393.6
46.0
1,288.4
46.1
Selling Expenses
904.4
27.2
847.4
28.0
782.4
27.9
General and Administrative Expenses
194.8
5.9
182.4
6.0
174.8
6.4
Research and Development Expenses
105.8
3.2
97.3
3.2
87.7
3.1
Profit After Functional Expenses
335.2
10.1
266.5
8.8
243.5
8.7
Other Operating Income (Expenses)
-29.7
-0.9
0.1
0.0
6.1
0.2
Operating Income
305.5
9.2
266.6
8.8
249.6
8.9
Financial Income (Loss)
-62.1
-1.9
-57.9
-1.9
-61.0
-2.1
Profit Before Taxes
243.4
7.3
208.7
6.9
188.6
6.8
61.6
1.8
53.4
1.8
57.8
2.1
181.8
5.5
155.3
5.1
130.8
4.7
Income Tax Expenses
Consolidated Annual Net Profit
*Percentage of total sales / **Change from previous fiscal year
Systems . Neurosurgery . Vascular Therapy
Specific Products/Groups:
Solutions . Urological Drainage and Measurement .
Wound Drainage
OPM Division
B. Braun Avitum Division
The OPM Division provides products and
The B. Braun Avitum Division combines
services for medical care needs outside
the supply of products and medical ser-
of the hospital, as well as for chronically
vices for extracorporeal blood treatment.
ill long-term patients.
Core Products/Groups:
Core Products/Groups:
Machines, Dialyzers and other Products designed to
Ambulatory IV Therapy . Parenteral Nutrition . Home
treat Hemodialysis
Care . Stoma Care . Skin Care and Wound Care
Specific Products/Groups:
Acute Dialysis . H.E.L.P. Systems . Medical Services
Specific Products/Groups:
Individual Parenteral Nutrition Regimens . TransCare
6,000
Orthopedics/Traumatology . Spinal Surgery . Motor
Replacement Therapy
Management
2005 Total: 30,973
2006 Total: 32,626 (+5.3%)
8,000
Drug Delivery Systems . Clinical Nutrition . Volume
Specific Products/Groups:
Disposable Syringes and Needles . Hospital Services for
EBITDA
Total: 3,321.4 (+9.8%)
Core Products/Groups:
Consulting . Incontinence Care . Enteral Nutrition .
Disinfection and Hygiene . Diabetic Care
Contents
Boards
Management Board
2
Supervisory Board
4
Preface
5
Consolidated Management Report
8
Employees
24
Hospital Care Division
28
Aesculap Division
32
Out-Patient-Market Division
36
B. Braun Avitum Division
40
Consolidated Financial Statements and Notes
44
Report of the Supervisory Board
116
Executive Management
118
2
Boards | Management Boards
Prof. Dr. h. c. Ludwig Georg Braun
Chairman of the Management Board
Prof. Dr. med. habil. Dr. Ing. Dr. h. c.
Michael Ungethüm
Vice-Chairman of the Management Board,
Chairman of the Executive Board of
Aesculap AG & Co. KG, Aesculap Division
Dr. rer. nat. Wolfgang Feller
Dr. rer. pol. Heinz-Walter Große
B. Braun Avitum Division
Finance,
Taxes and Controlling,
Corporate Services
Boards | Management Boards
Advances in healthcare are borne of our willingness to face
change with innovative solutions and to shape the future of
medicine.
That
means,
taking
responsibility,
recognizing
opportunities in the market at the right time and understanding a customer’s needs from their perspective.
As a leading European healthcare company with operations
worldwide, we are well aware of this responsibility. Our motto
is “Sharing Expertise” for the ongoing exchange of knowledge
and
experience
in
medical
care.
We
promote
advances
in medicine for healthcare providers and patients – with
innovation, efficiency and sustainability.
Klaus Hofer
Dr. rer. nat. Meinrad Lugan
Caroll H. Neubauer
Human Resources and Legal Affairs,
Chief Human Resource Officer
Hospital Care Division,
OPM Division
North America
3
4
Boards | Supervisory Boards
Photo below (left to right)
Peter Hohmann*
Deputy Board Member,
Member of the Worker’s Council
B. Braun Melsungen AG, Melsungen
Justus Mische
Chairman,
Former Member of the Management Board of Hoechst AG,
Kelkheim
Photo below (left to right)
Edeltraud Glänzer*
Member of the Executive Board of IG BCE, Hannover
Prof. Dr. rer. pol. Thomas Rödder
Tax Advisor and Certified Public Accountant
Partner, Flick Gocke Schaumburg, Bonn
Barbara Braun-Lüdicke
Businesswoman, Melsungen
Dr. h. c. August Oetker
Partner,
Dr. August Oetker KG, Bielefeld
Prof. Dr. med. Dr. h. c. Gunter Hempelmann
Dr. rer. nat. Joachim Schnell
Professor of Anesthesiology,
University Hospital Gießen
Former Deputy of the Board of
B. Braun Melsungen AG, Melsungen
Ekkehard Rist*
Volker Ludwig*
Chairman of the Workers’ Council,
Aesculap AG & Co. KG, Mahlstetten
Director, Human Resources and Legal Affairs
B. Braun Melsungen AG, Melsungen
Dr. rer. pol. Antonius Engberding*
Sonja Siewert*
Member of the Executive Board of IG Metall,
Director/Business Management, Frankfurt/Main
Member of the Workers’ Council
B. Braun Melsungen AG, Rotenburg/Fulda
* Employee-elected member
Boards | Preface
2006 was a good year for the B. Braun Group. Sales increased
nearly 10 percent and operating income rose by 15 percent.
The company employed a total of 32,626 people on all five
continents.
The past fiscal year – just a glimpse at a moment of time within
the long-term strategy of a family-owned company? Shouldn’t
the real question be: What forces have we set into motion that
will endure into the future? The continued positive development
of sales and income are, therefore, not the only important
considerations, but also the fact that we have invested nearly
300 million euros – a historical milestone for our company.
Our trust in future development continues to be a driving force.
At our German locations alone, plans are underway for four
major facility expansions. Through productivity improvements
5
6
Boards | Preface
we are and we will continue to be actively participating in the
growth of regions outside of Germany. This is not only a matter
of financing. Efforts in research and development and the
further improvement of processes, in particular, depend on employee-based knowledge; it is important that everyone contribute his or her special expertise. It is our goal to reap the
benefits of the tremendous potential of our employees. We have
laid the initial groundwork: Labor agreements to increase work
hours have been successfully negotiated. Employee training and
continuing education have been established as the continuous
focus areas. We also recognize that measures to make work and
family responsibilities compatible are beneficial to the company
as well. Additionally, the internationalization of the organization
continues.
B. Braun is actively engaged in a market that is subject to constant change, and in which convincing knowledgeable users of
the benefits of our products is crucial. Expenditures for research
and development have again been markedly expanded and will
increase more than 10 percent in the coming years. Partnerships
and exchanging ideas with our customers assure practical relevance of our products and services.
We are delighted that, thanks to the company’s favorable business development, employment grew by 17.7 percent worldwide
over the past five years, 14.3 percent in Germany. This signifies
that we are benefiting from the openness of world markets
Boards | Preface
resulting from our view of the global market as an opportunity
in which we engaged early on. The same applies to the progress
of European unification, which offers advantages of employment to all the member states. Approximately 60 percent of our
sales result from the European market, and we consider Europe
our “home market,” where we want to continue to set trends.
Nevertheless, the Asiatic and Latin American markets are developing very dynamically. Global influences are and will continue
to shift. With these developments in sight, our task will be
to maintain our competitiveness originating in Germany and
Europe, so that we are able to remain a successful participant in
growing markets. With this confidence, we hope to continue to
offer you, our customers, the advantages of our global activity.
Prof. Dr. h.c. Ludwig Georg Braun
Chairman of the Management Board,
B. Braun Melsungen AG
7
Consolidated Management Report
Winning ideas.
Andreas Katerkamp, Hospital Care Division, Barbara
Wiehn and Birgit Störk, Aesculap Division (left to right)
were awarded the Innovation Prize for the Endosponge
product to honor their innovative creativity, from product
development to market introduction.
We proudly reflect on another successful fiscal year, in which sales grew by nearly 10 percent and
profit before taxes increased by 16.6 percent. Our primary growth markets were in the USA, Latin
America and Eastern Europe. In all markets, the contribution of our core business to the success of the
B. Braun Group was overproportional.
A wealth of good ideas that develop into product and
service enhancements give us an optimistic view of the
future. We also owe our success to the enthusiasm and
motivation of our employees, to whom we offer our thanks
for their contribution in the past fiscal year.
Equity ratio represented 36 percent of total capital, again an improvement over the previous year. More
than 32,600 employees worldwide work toward achieving the goals of B. Braun. Fiscal year 2006: a
successful year, in which B. Braun’s profitability was further strengthened. Growth from our own
resources is our motto. A goal with which we approach 2007 with confidence and enthusiasm.
10
Consolidated Management Report
Increase
in profit
the value added tax have had a negative effect on
business by increasing price and competitive pressure.
In view of these underlying circumstances, we are
Fiscal year 2006 was again a very satisfactory year for
satisfied with the 7.0 percent growth rate achieved in
the B. Braun Group. Sales grew 9.8 percent to 3,321.4
Germany. In the rest of Europe, growth was on par
million euros. Underproportional cost increases con-
with the consolidated average. The East European
tributed to this growth, with
markets, particularly Russia and Poland, proved espe-
profit before taxes increasing
cially profitable. We also see further potential in
16.6 percent to 243.4 million
these areas for the future.
euros. This boost in profitability
In the USA, the high demand for innovative products,
reinforces our objective to grow from our own
such as spinal implants and the Duplex® drug delivery
resources.
system, has had a positive effect on our business.
Our major growth markets are in the USA, Latin Amer-
However, sales of standard products, including IV
ica and Eastern Europe. US dollar currency quotes,
solutions and pumps, also developed positively.
Profit before taxes
of 243.4 million euros
(+16.6 percent)
which were stronger at the beginning of the year, subsequently fell back to the previous year’s average level
while strong currencies especially in Latin America
had a positive effect on our results. Sales in our core
business contributed overproportionally to the Group’s
success. Growth was driven primarily by strong sales
of large-volume IV solutions (“Large Volume ParenterCore business contributes
overproportionally to the
Group performance
als”) and intravenous catheters.
Our future focus will be to further develop the core businesses
across all divisions. Accordingly,
plans are underway for the expansion of core product
We continued to actively participate in the growing
lines worldwide – with an emphasis on Germany,
Asian healthcare market. Especially in India and
Malaysia, the USA and Brazil.
Korea, sales and profit increases were satisfactory.
Specific product areas also exhibited satisfactory
Our investments in solution and instrument manufac-
growth and we succeeded in significantly improving
turing facilities in China will help us expand
gross margin in each of these product lines. In Ger-
B. Braun’s core business in this market next year.
many, the Act on the Cost Effectiveness of the Supply
In Latin America, we achieved above-average growth
of Medication (AVWG) and the impending increase in
and, most notably in Brazil, sales of the entire product portfolio increased. Furthermore, we see the
South American market as having tremendous growth
potential.
Consolidated Management Report
11
Another area of concentration is the expansion
exceeding increases in other functional cost
of our service business, which experienced a 25
areas. It shows our efforts to support future sales
percent increase in sales. In
growth through innovative products and efficient
the USA, the outsourcing of
processes. Due to the strong margin growth, and
hospital pharmacy functions
only a 6.9 percent increase in functional expens-
to our Central Admixture Pharmacy Services
es (excluding cost of goods sold), we are able to
(CAPS) is proceeding very successfully. The
report that profit after functional expenses rose
B. Braun Avitum Division is continuing on course
25.8 percent over the previous year to 335.2 mil-
for expansion.
lion euros.
Negotiations for the acquisition of seven dialysis
In Information Technology (IT), efforts continued
centers in Great Britain were concluded success-
to optimize cost and the globalization of
fully. Also in Great Britain, the Aesculap Division
processes and systems. As a result, we have been
continues to focus its attention on expanding
able to stabilize costs of the previous fiscal year
central sterilization units for hospitals.
despite increased transaction volume and the
Emphasis on
expanding services
integration of additional companies.
Growth from
our own resources
Steps to modernize our European distribution
center in Melsungen were completed successfully. The negative balance of other operating
The growth strategy for our core products
income and expenses increased considerably over
allowed us to gain added cost benefits in manu-
the previous year to 29.7 million euros. This
facturing. Start-up costs for
includes a negative balance from currency trans-
the L.I.F.E. manufacturing
lation gains and losses which totaled -7.9 million
facility for standard infusion
euros compared to +12.3 million euros in the
solutions (LVP) were already completely offset in
previous year. Particularly noteworthy is that 6.2
the second year. This proves that, through a com-
million euros are included in other expenses for
bination of increased automation and IT-control,
profit participation reserves, payable in future
standard products can also be manufactured
years to employees as stipulated by the location
competitively in highly developed economies like
retention agreements.
Germany.
Financial results surpassed those of the previous
As a result of the increase in volume and resul-
year by 4.2 million euros and include income
Cost benefits
in manufacturing
Increase in Gross Profit
of 10.5 percent
tant
cost
management,
from the sale of securities totaling 1.3 million
gross profit grew 10.5 per-
euros. While loan utilization was declining, the
cent to 1,540.2 million
expense increase is mainly related to the rise in
euros in our global markets despite continuing
price pressure. In the past fiscal year, research
and development costs rose 8.7 percent, thereby
12
Consolidated Management Report
short-term interest rates in Europe, as well as in the
shows an increase, mainly related to currency transla-
USA. The annual net profit grew 17.1 percent com-
tion. Trade receivables increased by 37.1 million euros
pared to the previous year to 181.8 million euros.
or 5.8 percent. Thus, this percentage increase was
EBITDA of 490.7 million
Earnings before interest, taxes,
euros (14.8 percent of
depreciation and amortization
Sales)
(EBITDA) grew to 14.8 percent of
substantially below the sales increase.
Financial Position
sales or 490.7 million euros. The
overproportional profit increase and utilization of our
The cash-to-cash cycle, where payments are made to
own resources to finance our growth strategy further
suppliers while awaiting cash income from customers,
improved the structure of our balance sheet. Our
has improved slightly compared to last fiscal year
equity ratio increased to 36.0 percent of total capital.
to 178 days. As a result, cash was made available to
Equity Capital rose
to 36.0 percent of
Total Capital
Equity capital and non-current
finance our growth strategy.
loans are covered in full by our
In the past fiscal year, a new consortial loan agree-
non-current assets. The debt
ment in the amount of 400 million euros was con-
ratio as a percentage of bor-
cluded with our banks. We have available unused
rowed to equity capital has improved substantially.
credit lines amounting to 683 million euros.
We were able to reduce our financial liabilities by
Cash flow from operating activities grew 43.7 percent,
52.3 million euros as of the balance sheet date.
from 244.5 million euros in 2005 to 351.5 million
Inventories increased by 44.8 million euros, of which
euros in 2006. The reason for this increase was due to
fifty percent was in Germany. Also Latin America
the higher operating income. Moreover, cash flow
from operating activities increased due to a lower rise
in net working capital.
Cash flow from investment activities reached 283.7
million euros in 2006 compared to 197.5 million
euros in 2005. As in the previous year, the majority of
investments were made in the area of property, plant
and equipment and intangible assets. Cash flow for
company acquisitions totaled 12.6 million euros. At
10.1 million euros, income from the sale of property,
plant and equipment was 17.6 million euros less than
that of the previous year.
Cash flow from financing activities reached 98.9 million euros in the reporting year compared to 45.2 mil-
Consolidated Management Report
13
lion euros in the previous year. The difference is main-
instruments are sterilized and packaged for immedi-
ly the result of a decrease in borrowing. Cash and cash
ate use.
equivalents of the B. Braun Group as of December 31,
Investments in property, plant and equipment and
2006 totaled 34.5 million euros. Cash flow after divi-
intangible assets totaled 293.7 million euros, fifty
Key financial figures
dend payments increased by
surpassed
23.5 million euros to 52.4 million euros. All investment activi-
ties were covered in full by operational cash flow.
Investments in property,
plant and equipment
and intangible assets of
293.7 million euros
percent of which was invested
in the Hospital Care Division.
Investments, therefore, clearly
surpass depreciation of 112.5
All key financial figures agreed to with our banks,
million euros. We will continue
with which we were required to comply, were sur-
to pursue our strategy of ensuring future growth by
passed.
expanding capacity and realizing the cost benefits of
increased volume. In addition, investments are
Expanding
core business
planned for the next years to expand our logistics
centers to ensure the flow of inventory of volume
business at optimized cost.
The focus of our investment activities in the past fiscal
year was to increase capacity of core product lines and
expand our service business. We have also made major
Hospital Care Division:
Strong growth worldwide
investments in the product lines of specific product
areas that would make future growth possible. Invest-
The Hospital Care Division offers products and ser-
ments to increase capacity were made primarily in the
vices for IV therapy, as well as for basic hospital care
Hospital Care Division. An important course was set in
in intensive medicine, the operating room and anes-
the product areas of standard IV solutions (Latin Amer-
thesiology. The division’s product portfolio includes
ica, the USA and China), intravenous catheters
standard IV solutions, solutions for volume replace-
(Malaysia) and IV sets (Germany, Vietnam).
ment therapy and parenteral nutrition, IV sets and
In Germany, the B. Braun Avitum Division is building
accessories, indwelling venous cannulas, as well as
additional manufacturing capacity for dialyzers to
IV pump systems. This product range is expanded by
meet the growing demand.
medical disposable products and pharmaceuticals for
Investments in our service business focus on growing
specific use areas, for example regional anesthesia.
the dialysis provider business of B. Braun’s Avitum
Division, as well as CAPS in the USA.
In the Aesculap Division, expansion is underway in
the area of central sterilization, where surgical
14
Consolidated Management Report
Division sales reached 1,584.1 million euros (+ 9.3
In Asia, the ASEAN States showed particularly strong
percent). The IV pump business and accessories, with
growth. After years of stagnation, the German market
solutions
and
catheters
is now gaining momentum. Despite the continuing
Sales of the Hospital
IV
Care Division
achieved
high
difficult market environment, we have succeeded in
1,584.1 million euros
growth. The segments of com-
growing sales thanks to the effective marketing of our
(+ 9.3 percent)
pounding, regional anesthesia
innovative products, in particular the Space IV pump.
particularly
and injectable medications also
developed very positively. In addition to the USA and
Latin America, many European markets – among
New products
for increased safety
In intensive medicine and anesthesia, the degree of
complexity increases in all forms of treatment. A new
product must therefore offer the patient and the
user greater safety, without altering its customary
handling and tested use.
Our Tetraspan® product for volume replacement
therapy takes this into consideration. With its balanced plasma-adapted electro-sample, blood loss can
be compensated for with this new hydroxyethyl
starch solution essentially without disturbing the
them France, Spain and Italy - exhibited strong
electrolyte and acid-base state. This is a clear thera-
growth. B. Braun Russia succeeded in increasing sales
peutic advantage, particularly in emergencies and for
by more than 70 percent.
long-term use in intensive care as compared to non-
By establishing a subsidiary in
balanced saline-based IV solutions.
Bulgaria, we have increased our
In the area of parenteral nutrition for adults,
presence in Eastern Europe, where additional mea-
pre-manufactured multi-chamber bags containing
sures are planned.
combined solutions of amino acids, glucose and fat
Increased activities in
Eastern Europe
emulsions and electrolytes are gaining wide acceptance because they are easy to use and guard against
contamination. The goal is to take the positive outcome in treating adults and apply it to pediatrics. In
order to meet the small volume requirements for this
group, we introduced NuTRIflex® 625 to the market.
Consolidated Management Report
15
Parenteral nutrition admixtures compounded for the
thereby increasing compliance and patient safety. In
individual patient are an alternative to standardized
the USA, we added additional drugs to our product
solutions. These products are manufactured utilizing
portfolio.
special equipment called compounders. The new
The start-up of the new Pharma-Technikum at our
Pinnacle Compounder was successfully introduced in
Melsungen facility marks a milestone in product
the USA for this purpose and has been very well
development in the current fiscal year. It has assumed
received in hospitals because of its ease of use and
a key role in the development and validation of inno-
safety features.
vative manufacturing processes for new pharmaceu-
We have intensified our activities in the development
tical products, as well as the manufacture of smaller
of pharmaceuticals and expanded the product offer-
production runs for use in clinical trials. We have
ings in injectables, i.e. medications administered in
thus laid the groundwork for the global marketing
liquid form by infusion or injection: Ondansetron, a
of numerous pharmaceutical products, in particular
medication to prevent nausea and vomiting;
by meeting FDA requirements for the market in the
Flumazenil, a substance that relieves the effects of
USA.
medications of the benzodiazepine group; Naloxon,
B. Braun is a worldwide leader in regional anesthesia.
an antagonist of medications of the opioid group;
Perifix® ONE represents an advanced generation of
and Midazolam, used as a sedative in diagnostic or
catheters for continuous epidural anesthesia. Its
minor surgical interventions will be launched in the
innovative design has the potential to replace all cur-
market at the beginning of 2007.
rent catheter designs and offers significant improvements in handling, as well as the unique tip design
for a better insertion of the catheter.
Electronic data communication between the various
systems installed in the intensive care unit provides
increased safety for both the patient and the clinician. The capabilities of the Space Infusion Pump and
the Space System can be further expanded, particularly when it comes to communicating with patient
data management systems.
The Duplex® ready-to-use IV drug delivery system is
prefilled with the accurate drug and diluent doses,
16
Consolidated Management Report
Aesculap Division:
Very positive growth
Eluting Stent (DES), which received approval in
August 2006 and has already positively effected the
Vascular Systems business segment.
Products and services for surgical core procedures are
Significant investments, for example in the new logis-
the focus of the Aesculap Division.
tics center in Tuttlingen, the new Tetec AG manufac-
Sales reached 955.6 million
turing facility, as well as the scheduled expansion of
euros in fiscal year 2006, an
the Benchmark Factory, form the basis for the future
increase of 8.2 percent com-
development of the Aesculap Division. These measures
pared to the previous year. With
will be supported through the continuous certification
ongoing price pressure in nearly all healthcare mar-
and education of our employees worldwide in keeping
kets, positive business developments, particularly in
with our principles of Sharing Expertise.
Central and Eastern Europe, as well as in North and
Evidence and efficiency are gaining importance in all
Latin America, were critical to achieving these gains.
healthcare systems. The formation of a “Clinical Sci-
Aesculap Division Sales
955.6 million euros
(+8.2 percent)
ence” Department underscores our efforts to meet
the benchmarks of evidence-based medicine and to
demonstrate the associated advantages.
Advances in medicine and the growing demands
of the healthcare market make advanced training
and education increasingly important for all those
who carry responsibility in the healthcare field. The
Aesculap Academy provides B. Braun with a worldrenowned forum for medical training and advanced
education. We are increasing activities at our newest
location in the renovated Langenbeck-Virchow House
The situation in Asia presents itself differently: while
in Berlin and now have another centralized location
business (currency adjusted) in Japan continues to
from which to disseminate knowledge and connect to
develop positively and Korea, Malaysia and Indonesia
our customers and partners throughout the world.
are growing strong, the development of sales in China
lags behind expectations. Last fiscal year, the emphasis was on the market launch of the activL®-interver-
New products
secure market position
tebral prosthesis, which has now been implanted
more than 1,000 times, and the Coroflex® Please Drug
The trend toward minimally invasive surgery continues unabated and has, therefore, been the dominant
focus of our research and development activities in
the last fiscal year.
Consolidated Management Report
We have taken the lead in the field of minimally invasive orthopedic surgery with our OrthoPilot® NavigaLeading role of
17
Out-Patient-Market Division:
Unprecedented fiscal year
tion System and its computerassisted technology for joint
The products and services offered by the OPM Divi-
surgery. New modules, including
sion (Out-Patient-Market) are geared toward private
the high tibiaostomy, the reconstruction of the an-
practioners, as well as ambulatory and inpatient care
terior cruciate ligament and cartilage surgery ensure
sectors. With the help of attending physicians we
our future success. Coordinating implant instruments
develop comprehensive treatment plans that take
and new joint endoprotheses models, in particular for
into account the causes and associated symptoms
revision, were successfully launched in the market.
of the illness being treated.
With the new generation of instruments for dispos-
Diabetes, skin and wound care management, as well
able and re-usable instruments for laparoscopy, as
as clinical nutrition, stoma and incontinence care are
well as with the innovative Microspeed Uni Motor
the focus of our activities.
System we expanded our product offerings in the sec-
The development of the OPM Division in fiscal year
OrthoPilot®
tor of general surgery and neurosurgery.
In the vascular implant business sector, we gained
CE-Approval of the
Coroflex® Please Stent
entry into the highly competitive
OPM Division Sales
2006 continued to be character-
466.6 million euros
ized by dynamic sales growth.
(+ 13.0 percent)
Sales reached 466.6 million
cardiology market segment with
the CE approval of our Coroflex®
euros, an increase of 13.0 percent over the previous year.
Please drug-coated stent.
The strongest contributors for the OPM Division are
The continuous release of the drug from the surface
Spain, Great Britain, the USA and Brazil. Business
coating of the implanted stent reduces the risk of
developed very positively in the mature markets of
restenosis of the treated coronary artery.
Germany and France, where we achieved double-digit
Other key products in the strategic spinal surgery
growth in all product segments.
business sector specifically target the market in the
A new facility was placed into operation in Chile
USA. A redesigned system for frontal stabilization of
for the manufacture of enteral nutrition products,
the cervical spine expands our product offerings in
which contributed substantially to the increase in
this segment, which must continually adapt to the
sales in South America. In addition, in the emerging
customer demands of this highly dynamic market.
Eastern European markets, such as the Czech Republic and Russia, we look back on an outstanding fiscal
year.
The OPM Division links the inpatient market to the
ambulatory market and focuses on improving the
integrated patient care within comprehensive therapy
areas. We anticipate that the greatest demand in the
18
Consolidated Management Report
future will be in the areas of infusion therapy, clinical
market. The name change of individual businesses will
nutrition as well as diabetic care. With investment
be performed gradually.
and development priorities in these areas, coupled
The hemodialysis segment was characterized by the
tremendous success of Dialog+®, which received wide
with a variety of new products for stoma care, skin
and wound care management, the division is well
Tremendous
acceptance both for its technol-
positioned for mid-term challenges. Positive growth
success of Dialog+®
ogy and its practical application.
in the service sector confirms our direction.
The product’s special features
and minimal repair and service costs enable us to
B. Braun Avitum Division:
Strong Growth
successfully penetrate the American market. Increased
capacity in dialysis manufacturing was achieved in the
targeted market segment. Through direct sales, as well
As a system provider for hemodialysis and extra
as through integration in our own dialysis stations, we
corporeal blood treatment, B. Braun Avitum manu-
were able to significantly increase sales numbers.
factures and sells products and services for the
Having received FDA approval for the Diacap® Ultra
treatment of chronic and acute renal failure, as well
dialysis filter, we were able to gain approval for a fil-
as for therapeutic apheresis.
ter from own manufacturing for the first time. We
In 2006, we treated more than 6,000 patients in
anticipate filing additional registrations for the
twelve countries at dialysis centers operated by
expanded dialyzer types in 2007.
B. Braun. With the acquisition of a British dialysis
The Nexadia® dialysis data management system
company in January 2007, B. Braun Avitum secured a
achieved increasing usage in the marketplace. In
leading position in Great Britain in treating patients
addition to projects in Germany, we were able to
with chronic renal failure.
successfully complete installations in the Nether-
Sales grew 12.9 percent, reaching 293.8 million euros,
lands, Great Britain and Switzerland. In the field of
although in several countries
acute therapy, the marketing of bicarbonate powder
sales were again subjected to
substitute solutions was well received, particularly in
the influence of healthcare poli-
the American market.
tics regarding the reimburse-
In addition to our own marketing success, customer
ment for dialysis treatment. Despite strong competi-
business under a private label version of the product
tion, most markets developed very positively.
also showed very positive growth. Operational
Business in the USA and numerous European coun-
improvements are a major goal for the further devel-
tries contributed to this growth. The centralization of
opment of the H.E.L.P. apheresis process. Broadening
the product and services business under one name,
indications will open up new fields of treatment.
“B. Braun Avitum,” unifies our entry into the dialysis
MAT GmbH, a subsidiary of B. Braun Medizintech-
B. Braun Avitum Division Sales 293.8 million
euros (+ 12.9 percent)
nologie GmbH, was recognized for the development
project CardioImmun by receiving this year’s Medical
Technology Innovation Award from the Federal Min-
Consolidated Management Report
19
istry of Education and Research (BMBF). The develop-
certification and advanced education are key priori-
ment project is related to a blood cleansing system
ties of our human resource activities.
that removes harmful anti-bodies directly from the
For many years, our apprenticeship programs have
body, and that vastly improves the process and the
been geared toward future employment growth and
prognosis in cases of severe heart disease.
Number of employees
continues to grow
Apprenticeship quota
of 7.5 percent
matched
the
organizational
demand with 25 different occupational
fields.
With
612
apprentices and 27 participants in an entry-level
qualification program (“Perspective Plus”), we
The number of B. Braun Group employees increased to
Increase in the number
of employees to 32,626
(+ 5.3 percent)
reached a quota of 7.5 percent of the B. Braun work-
an average of 32,626 (+5.3 per-
force in Germany.
cent). This growth extends to all
In keeping with the motto, “No one gets left behind,”
regions.
it is our goal to offer young people with various qual-
B. Braun has 8,905 employees
ifications, in particular secondary school students,
(+ 2.6 percent) in Germany. The majority of this
opportunities to receive occupational training.
increase took place at our Melsungen and Tuttlingen
Since 2003, we have offered our “Perspective Plus”
Program at various locations where young people can
acquire entry-level skills for occupational training.
Securing
our German locations
The construction of our ultramodern facilities in Tuttlingen (1999) and Melsungen (2004) was based on
the conclusion of two location retention agreements,
whereby all employees at these locations agreed to
work unpaid overtime. In return, the company has
locations, where additional overtime has also been
made a number of assurances, including that there
negotiated as a condition of the location retention
will be no operational lay-offs during the term of the
agreements.
agreement. In 2006 the agreement reached in Tuttlingen was extended by 107 annual unpaid work
Focus on
training and advanced education
Well trained, skilled and motivated employees are an
important part of B. Braun’s success. Thus, training,
hours plus additional training hours through December 31, 2010.
20
Consolidated Management Report
The agreement reached in Melsungen has been in
effect since October 1, 2004. In view of the positive
Firm commitment to
retirement planning
development of the Benchmark Factory in Tuttlingen
and the L.I.F.E. manufacturing plant in Melsungen, we
As a family-owned business we feel a responsibility
concluded negotiations of profit participation agree-
toward our employees and want to assist them in
ments at both locations in 2006.
closing any potential gaps in their retirement plans.
Consequently, depending on the percentage of work
Thus, in Germany we offer a variety of individual pen-
hours performed during the term of the agreements,
sion options including the company’s pension plan,
employees receive a share of the profits that is based
the Chemical Pension Fund, the Metals Pension and
on a standard hourly rate and tied to the Group’s
direct insurance. In addition, for company manage-
profitability.
ment there are individual pension commitments and
deferred compensation plans.
Exchange with the
employee representative
During the fiscal year, the company paid out a total
of 14 million euros to 3,200 retirees in Germany
The regular exchange of ideas between European
labor representatives and corporate management has
become an integral part of the B. Braun corporate
culture. At the 10th Europe Forum, company management reported to the European Supervisory Council
on the economic development of the B. Braun Group,
its relevant investment projects, as well as activities
at its various locations worldwide.
The Advisory Board focused on the agreement
reached between company management and the
Europe Forum concerning uniform environmental,
health and safety guidelines. The agreement was
alone through the company’s pension plan. In order
aimed at implementing modern work safety manage-
to standardize the various pension plans at the indi-
ment systems at all of our European subsidiaries.
vidual locations in Germany and to increase efficien-
Another priority was certification as a measure for
increasing the company’s competitiveness and the
support of employability of our employees.
Increased company
cy, we have adopted a uniform
retirement benefits
pension plan.
The agreement took effect on
We would like to thank the employee representatives
January 1, 2007 and will improve the future retire-
and their respective trade unions for their construc-
ment benefits of the company.
tive cooperation in this regard.
Consolidated Management Report
In great demand
B. Braun Incentive Plan
21
ties. Employees working 50 percent of their regular
hours will receive an increase in compensation of 15
percent, i.e. a total of 65 percent of their original gross
For the sixth year the company has given board
salary to care for their children and immediate family
members, directors and executive management of
members. For the care of two children there is an
subsidiary companies the opportunity to purchase
additional increase up to a maximum 75 percent.
profit participation rights in accordance with the
B. Braun Incentive Plan. In 2006, 82 executives
Opportunities and Risks
subscribed to profit participation rights valued at
2.9 million euros (previous year 2.2 million euros).
For 2007, we anticipate similar general economic
Since the Incentive Plan was introduced in 2000, the
conditions to prevail in the global market for medical
value per profit participation right has increased from
and pharmaceutical products and services. Based on
22.27 euros to 53.57 euros.
demographic trends, expenditures on healthcare will
In total, 126 company executives hold 345,400 profit
continue to increase. However, in the future, we will
participation rights valued at 18.50 million euros. The
also come under increased price pressures in many of
company distributed 1.85 million euros to plan par-
our markets due to limited budgets in the healthcare
ticipants in complimentary profit participation rights
sector. B. Braun will meet this challenge with further
alone, which are apportioned as a bonus two years
investments to increase productivity, intensify
after subscribing.
research efforts and improve service concepts.
Family-oriented
human resource policy
Investment program of
Research costs will further
1.2 billion euros
increase in the coming years. A
significant investment program
in the amount of 1.2 billion euros will set a critical
Through numerous proposals, it is our goal as a com-
course for the next three fiscal years.
pany to make a contribution so that our employees
We see special opportunities to establish a stronger
can better balance a career and family. We have
market presence with our standard products in
appointed a “Mentor for Families and Career,” a part-
growth markets such as Latin America, as well as
ner who can answer all employee questions on the
continued strong growth in the Asian markets and,
subject.
above all, in Russia. In China, we anticipate that our
A steering committee convenes once a year to decide
local manufacturing will bring a significant improve-
on additional measures. As of
ment in our market position.
January 2007 the family part-
From the present perspective, currency fluctuations
time model took effect at our
will have no significant influence on the company’s
European locations. Its objective
business development. The US-Dollar is entered in our
is to reduce family-related absences as much as possi-
budget as 1.30/euro and is therefore on par with the
ble and support employees in their family responsibili-
average of the last fiscal year.
Family part-time
model at European
locations
22
Consolidated Management Report
The goal of the B. Braun Group for fiscal years 2007
arise as a direct result of using our products are
and 2008 is to again achieve a 10.0 percent annual
addressed in the quality management system in our
growth rate. In addition, we
manufacturing units, which are based on internation-
anticipate overproportional profit
al standards and follow all regulatory guidelines.
growth of at least 15 percent.
These are subject to constant review as part of our
We will continue to harmonize our internal and
internal and external audits. Employee training pro-
external accounting. Real-time analyses of cost
grams are also scheduled on a regular basis.
developments within the scope of divisional review
Despite our comprehensive quality assurance mea-
processes will enable us to maintain functional cost
sures, potential liability risks exist, particularly in the
increases at underproportional levels.
American market, and the related expenses for civil
It is therefore our goal to achieve above-average
disputes cannot always be calculated. Thus, we are
profit growth in 2007, which will enable us to finance
satisfied that we have been able to substantially
growth from our own resources.
increase the limits of indemnity for product liability
Ten percent sales growth
objective
insurance coverage.
Audited
Risk Management
In the spring of the past fiscal year, we voluntarily
had our risk management system audited by our
external auditors. The results of their evaluation certified that our risk management system is suitable
and viable.
Risks are evaluated and corresponding countermeasures are documented at regularly scheduled meetRisk management audited
on a voluntary basis
ings of the division and company risk committees. Risks that
are the direct result of business
With regard to global economic development, we do
developments in the market are also reported. This
not presently foresee any major risks for our organi-
allows us to avoid threats to our strategic growth
zation in the healthcare market environment. We
objectives, in which substantial investments have
seek to minimize currency risk primarily by strategi-
been directed.
cally steering invoicing currency to the internal flow
Our growth strategy can only be implemented by
of goods. Other currency risks are safeguarded on the
consistently offering high quality products. Risks that
basis of existing company guidelines with the help of
commonly used derivative financial instruments. The
trading and use of derivative financial instruments is
strictly regulated by internal guidelines. Derivative
instruments are only used to hedge corresponding
Consolidated Management Report
23
underlying positions or planned transactions arising
underway regarding deliveries made within the scope
from the operating business, and are subject to strin-
of the Oil-for-Food Program for Iraq. We welcome
gent risk controls. We exclusively use marketable
these investigations and are confident they will
hedge instruments as derivatives in partnership with
confirm that at no time did either company make any
major creditworthy financial institutions.
kickback payments to Iraq. In view of these allega-
The exchange rate of the US-Dollar to the Euro is
tions, in 2005, we invited the UN investigative com-
important for reporting our consolidated sales. How-
mittee (Volcker Commission) to inspect the relevant
ever, expected receipts of payments in US-Dollars are
documentation. However, the commission has thus
offset with expenditures in US-Dollars, and therefore
far not availed itself of our offer.
the company’s currency risk is of minor significance.
In 2006, the CAPS organization in the USA received a
Due to its wide range of product offerings, B. Braun
warning letter from the FDA. A “Master Compliance
has a relatively heterogeneous supply structure. Risk
Program” was agreed upon with the FDA, which will
analyses are performed on a regular basis, in which
be fully implemented in the first quarter of 2007.
the significance of the product for B. Braun, the sup-
Review of the identified risks revealed no threats to
ply situation and the manufacturer or vendor are
the continuation of the company or risks beyond
evaluated.
those encountered in usual business activities.
Our goal is to have alternatives available for all criti-
Thus, we are confident that the expansion of B. Braun
cal products immediately or within a brief period of
companies in the world markets will not be signi-
time.
ficantly restricted by the identified potential risks and
Important IT projects include the expansion of inter-
the goals formulated as part of our growth strategy
national ERP standardization to additional countries
are not in jeopardy.
(France, Switzerland, China and Mexico) and harmonization of the IT infrastructure. In the area of in-
Addendum report
formation technology, various safety measures have
been implemented to guard against potential risks.
No circumstances have arisen since the end of fiscal
These include a back-up computer center, access
year 2006 that would have a material effect on the
monitoring systems, emergency plans and an uninter-
company’s asset, financial or income position.
rupted electrical supply to critical systems, as well as
regularly scheduled data back-up.
Other precautions we have implemented include firewalls and anti-virus software to guard against data
security risks through unauthorized access. The
processes and systems are validated in accordance
with GMP standards. All relevant processes in the SAP
system are subject to validation documentation.
Preliminary investigations involving B. Braun Melsungen AG and Aesculap AG & Co. KG are currently
Employees
Exchanging Experience
Sebastian Jacobi, 26, Project Manager Pharma Engineering,
and Helga Möller, 57, Manufacturing, have gotten to know
each other personally through the L.I.F.E. Certification Pro-
B. Braun assumes responsibility for its employees: In addition to being highly involved in their professional development, we offer a wide range of continuing education and training opportunities to meet
individual requirements. Employees who wish to combine work and family have new choices: flexible
work schedules and telecommuting, as well as part-time employment to accommodate family obligations in all of our European locations.
gram. Over the course of six months, they have been training for their new assignment and interacting with other
departments and generations. By working closely together,
they have complemented each other’s knowledge.
In addition to the necessary political solutions, the change in demographics also requires corporations
to act. While the average employee age is rising, demands are growing as fast as technological and
medical advancements. Custom-made for the requirements of the most modern IV solution manufacturing facility in Europe: the L.I.F.E. Certification Program.
26
Employees
Focus: L.I.F.E. Certification
L.I.F.E. stands for “Leading Infusion Factory Europe,” the ultramodern facility
for infusion solutions in Europe. Here 200 employees produce more than
220 million Ecoflac© IV solution containers – at an increasing rate. They work
with innovative technologies and modern control processes. About one-third
have completed their initial education at B. Braun. Others have been with the
company for decades. A mixture of competencies and experience, for which we
have customized a certification program. A true example of lifelong learning.
The “Leading Infusion Factory Europe,” proves that, even in highly developed economies like Germany, it is possible to manufacture competitively. At the same time, the L.I.F.E. facility represents a giant technological leap
forward, with growing demands on all of our employees. Certification and the commitment it requires are factors for success – both for the company as well as our employees.
A certification program, aimed at all employees at the new IV manufacturing facility, was developed by an
interdisciplinary team and made to fit both current and future demands. The guidelines: the exchange of experiences between disciplines, departments and generations. Forming teams of individuals of various ages with
practical experience made the proposal more attractive and enabled all participants to design and assume
responsibility for their own modification process.
Competency requirements were drafted and reviewed on a regular basis – for all employees, skilled workers and
managers from every group. Training was provided for more specialized and more technical skills. For example,
the “Pharma Employee” training seminar is intended for the experienced manufacturing employee, while the
“Fit for Management” seminar provides training for younger individuals who are about to assume managerial
responsibilities.
Three years after its introduction, the L.I.F.E. certification program has proven to be a success. We have created
new training and job opportunities in manufacturing and ensured the long-term need for skilled employees. Our
employees are prepared to meet the demands of the future; certification is a part of their everyday lives. We are
now applying the principle of lifelong learning from and with one another to other areas of the company – for
the purpose of Sharing Expertise.
Employees
What makes the L.I.F.E. Certification Program so special is the consensus between company management and employees to work together to assure long-lasting employment. This is the only way a
German manufacturing facility will remain competitive in the global marketplace.
Sebastian Jacobi, Project Manager Pharma Engineering, who has already completed with B. Braun a
“Studies & Practical Training” Program, a combination of on the job training and university studies and
the newly-graduated “Pharma Employee”, Helga Möller agree: The time they have invested in training
will more than pay for itself in the long run.
Mr. Jacobi, what benefits does
The certification program has enriched me in the truest sense of the
L.I.F.E. Certification offer you
word. Much of what I have learned in my present position is of tremen-
personally, and for the com-
dous practical use to me. I also enjoyed the chance to work as part of a
pany?
team and with that, to see beyond my own work area. Each of us was
simultaneously the teacher and the student – it was highly motivating
and a lot of fun. As for my colleagues, I know they also believe this specialized training has helped give them a
deeper understanding of their work.
By building the L.I.F.E. facility in Melsungen, B. Braun has been able to keep and even expand operations.
Of course, having qualified employees is a tremendous competitive advantage for long-term success. Those of
us on the L.I.F.E. team are proud that production is running so smoothly and that the product has been so well
received in the market.
Mrs. Möller, have you invest-
In any event, I am prepared for the future and have given myself job
ed many work hours and
security. Getting certified was much like real life, diverse and exciting,
much free time participating
and I got to know new people and areas of work. In fact, not only has the
in the L.I.F.E. Program? Was
location retention agreement given us more overtime, the majority of
the commitment worth it?
these hours were spent receiving educational training. Practically speaking, for me half of this time was compensated as work hours. And the
investment of my free time was also worth it. I would do it again in a second and recommend it to everyone. In
any case, I want to continue getting certified in the future.
27
Hospital Care Division
Integrating safety.
Ray Bennett has been a paramedic for 24 years. At each
call, he is confronted with a new situation, requiring
him to think and act quickly, sometimes in mere
The Hospital Division offers a complete line of products and concepts for IV therapy, which makes emergency medical care and anesthesia safer. Patients want medical care they can trust; physicians and nurses want the products they use thousands of times to be reliable and easy to use, while simultaneously
offering protection, for example from accidental needlestick injuries and their associated risk.
seconds. Always present: The risk of infection, more so
in the ambulance than in the hospital. Ray Bennett
relies on: products that minimize risk; products that
have proven safe and reliable.
Working closely with its customers, the Hospital Care Division develops products whose safety guarantees are three-fold: to the patient, the physician and the clinician. Because complex tasks require
comprehensive knowledge
30
Hospital Care | Division
Focus: Increased safety.
Providing medical care that is safe and effective – seems rather obvious, but in
the fast-paced day-to-day hospital setting this can often be difficult to accomplish. In the ICU, for example, safety means making sure that the right patient
receives the right medication in the right dosage. Sounds easy, but in reality, is
not always the case.
Physicians and nurses in the ICU: the constant turnover of patients; individual customized treatments that can
save or prolong life and cure illness. With the hectic everyday pace, mistakes can occur. In the USA alone, at
least 44,000 and as many as 98,000 patients die annually due to medical errors.
Apart from the human tragedy, hidden beneath this statistic is tremendous financial drain on the healthcare
systems. The causes for error are varied: staffing shortages in the ICU, time pressures, and the risk of delivering
the wrong medication to the patient.
Clinicians are also at risk. For example, the possibility of coming in contact with a patient’s contaminated blood
through an accidental needlestick injury and running the risk of being infected with such illnesses as Hepatitis
B and C or HIV. Official US reports estimate some 30 accidental needlestick injuries occur each year per one
hundred beds. European healthcare markets estimate one million needlestick injuries occur annually. Introcan
Safety® und Vasofix® Safety minimize the risk of needlestick injury even in the busiest hospital wards. Working
closely with healthcare professionals, B. Braun has designed a full range of safety products, which minimize
potential sources of risk. One area of emphasis is in the field of infusion therapy. It is estimated that every third
medication error is the result of treatment parameters being entered incorrectly into an infusion pump.
Automated and software-based pumps systems, like B. Braun Space and B. Braun Outlook, simplify drug delivery and minimize risk through integrated medication databases with drug limits as well as barcode readable
patient data and dosage rates.
The pump system monitors medication infusion and immediately sounds a warning should a critical deviation
occur. In addition, treatment is seamlessly documented across all units.
The closed infusion system maintains the sterility of the unit prior to use, further reducing the potential for risk.
The Hospital Care Division offers a wide range of disposable products, including Ultrasite® Injection Port, as the
core component of a completely needlefree IV system.
Hospital Care | Division
The work of a paramedic. Quick decisions and extreme concentration are critical, every hand movement
precise. To minimize risk, healthcare professionals put their confidence in products that are proven and
safe, and often a part of a system. Ray Bennett has been working as a paramedic for 24 years, for five
years he has been the Training Coordinator for Emergency Medical Care at the Robert Wood Johnson
University Clinic in New Brunswick, New Jersey, USA. He talks to us about his experiences and what
safety on the job really means to him.
Mr. Bennett, you mainly use
I have been familiar with B. Braun’s products for many years. They can be
B. Braun products, why?
easily and quickly put to use. In the critical situations that emergency
medical technicians face every day, this is a definite advantage and, more
importantly, increases safety, including my own. For instance, with a conventional cannula, I can easily stick
myself. And you often don’t notice the small pinprick right away. This can have serious consequences for me if
my patient is infected with Hepatitis B or C or HIV. This is why I use the needlefree access that the Ultrasite®
Needlefree IV System provides. It helps prevent needlestick injuries. The closed system also guards against contaminants. This gives me a feeling of security.
What makes B. Braun safety
The products are well-conceived, all the way to disposal of the needle. It’s
products so special?
clear they were developed for real life experiences and that a great deal
of thought went into designing them. In later models, B. Braun took into
account that, as the customer, I don’t have to be familiar with each individual component – they fit together as
a system.
What features do you find
In my profession, because of the enormous time pressure and short reac-
particularly advantageous in
tion time, I appreciate a product like Ultrasite®, which reduces catheter
your line of work?
occlusions. Whenever I use the product, its ergonomic design allows me
to access a vein quickly and easily. Besides, in an ambulance, there is not
much room for extras. The smaller a product, the better it is for us.
31
Aesculap Division
Uniting disciplines.
Expertise adds up, when it is shared. Dr. Michael
Kühler (l.) und Professor Dr. rer. nat. Ulrich Speck –
combined their experience in medical practice, prod-
Advancements in healthcare require a pioneering spirit, knowledge and teamwork. The Aesculap Division
designs and develops products and services for core procedures in the field of surgery and cardiology in close collaboration with customers and partners. More than 200 employees worldwide are devoted to
designing and developing new, more economical products and services for the best possible patient care.
uct development and pharmacology and developed a
safe and effective coronary stent system – Coroflex®
Please. Optimal and efficient patient care is guaranteed.
The Aesculap Division combines the theoretical knowledge of its engineers and technicians with the
practical experience and skills of the clinician. It develops a connection that is groundbreaking. What is
technically feasible becomes medically sound.
34
Aesculap | Division
Focus: Coroflex® Please
One of the greatest challenges for coronary implant systems is acute or potential vessel closure during surgery and restenosis during follow-up, particularly
in high-risk patients. The innovative design of Coroflex® Please makes it possible to devise a stent that effectively resists restenosis – and provides medical
and economic benefits.
Coronary stents are mechanical vascular supports that are inserted into the cardiac vessel. Over 1 million stents
were implanted in Europe in 2006, of which statistically approximately 30 percent of traditional stents will
result in restenosis of the coronary vessel. Until now, restenosis of the previously treated coronary vessel has
continued to be an unsatisfactorily resolved problem of interventional cardiology. It produces not only physiological stress for the patient, but increased costs for the healthcare industry. Thus, the objective is to keep the
risk of restenosis to a minimum. One solution: coating the stent with medication.
The Coroflex® Please stent, developed in the cooperation with pharmacologists and interventional cardiologists
has, for example a special plastic coating, in which the active ingredient Paclitaxel is embedded. Following implantation of the stent, the medication is released locally, which counteracts the known sources of restenosis.
In several studies involving thousands of patients, as well as practical experiences, the application’s high degree
of efficacy has been substantiated. The rate of restenosis was reduced to below ten percent and the number of
second interventions and bypass operations was dramatically lowered. It is possible for cardiologists to keep
within the required guidelines and still meet the cost demands of the hospital budget. Medication releasing
stents have transformed the world of interventional cardiology. With Coroflex® Please B. Braun has taken a step
into the future technology of combination products.
Aesculap | Division
The new generation of Coroflex® Please stents was launched in mid-August 2006. Not enough time has
passed to evaluate the long-term positive effects on healthcare costs. However, all medical and financial
information gathered thus far supports the implantation of medication-coated stents. Dr. Michael
Kühler, Director of Combination Products for B. Braun Vascular Systems and Professor rer. nat. Ulrich
Speck, Experimental Radiology Department, Charity Berlin, explain why.
Dr. Kühler, what makes Coroflex®
In developing the product our goal was to make the stent coat-
Please so special?
ing resistant to mechanical and thermal pressures. We have now
succeeded. Furthermore, the Coroflex® Please coating allows
the deposit kinetics of the medication to be very precisely controlled. The challenge was to fine-tune each of
the components of the entire stent system, including the metal stent, the catheter delivery system, the surface
coating containing the medication and the manner in which the medication was dispensed in the vascular wall.
The results are in: together with our proven and extremely flexible Coroflex® stent technology, customers
confirm the significant value of Coroflex® Please.
Professor Speck, how does Paclitaxel
The causes of restenosis are multi-faceted and complex. Implan-
reduce the likelihood of restenosis?
tation of the stent in the vascular wall causes scar tissue to form,
which leads to a proliferation of cells at the implant site. This can
then lead to a further narrowing of the previously treated lesion. By its lipophilic character, Paclitaxel quickly
penetrates the cells and selectively suppresses excessive cell growth. Despite the very small dosage used,
Paclitaxel continues to work cytostatically, thereby suppressing over a prolonged period of time the reproduction of vascular muscle cells responsible for restenosis of the lumen. B. Braun has conducted several clinical
studies to evaluate and ascertain the efficacy of Coroflex® Please. The results offer clear proof that the
product is both safe and efficient.
Dr. Kühler, what are some of the real
Drug releasing stents have often allowed high-risk patients to
experiences customers have had using
forgo traditional bypass surgery – a positive development for
Coroflex® Please, what do you see as
the patient’s quality of life and for the over-burdened health-
its advantages?
care system. If guidelines are adhered to, risks such as subsequent thromboses caused by delayed healing of the coated
stent are minimal. The mechanical characteristics of Coroflex® Please, its flexibility and miniature size, enable
it to pass easily, even in the presence of complex stenoses. That is because the application and handling have
vastly improved.
35
O u t - Pa t i e n t - M a r k e t D i v i s i o n
Building bridges.
Rolf Peckelsen will soon be caring for his wife at home,
but transferring her from the hospital to the home
environment raises more questions than answers. What
about the feeding tube? What if the pump isn’t as easy
to use as the hospital claims? He gets support
The Out-Patient-Market (OPM) Division focuses on private practitioners, as well as the hospital and
ambulatory markets. The trend to release patients earlier from the hospital has led to a growing need
for consultation for all those involved. Collaboration between all sectors of the medical network is
becoming increasingly important to ensure a smooth transition from inpatient to ambulatory care.
from Frank Reicher, Consultant for B. Braun TransCare.
TransCare provides training and instruction to relatives
and caregivers, verifies treatment plans with the private
practitioners and makes sure all of the necessary products are available.
That is where TransCare Consulting Services takes over, providing patients with organizational and medical advice. One important consideration: preventing a return visit to the hospital and the psychological
and financial toll it takes. Everyone involved become partners – for the patient’s well-being.
38
Out-Patient-Market | Division
Focus: TransCare
Hospital stays are becoming increasingly shorter. Patients are released from the
hospital to ambulatory care sooner – this presents quite a challenge, particularly since not long ago, providing treatment and care in the home environment
was, in many cases, not advised. Determining options for a patient’s home
healthcare is often a difficult task for relatives, caregivers, hospitals and
private practitioners.
TransCare Consulting Services acts as a liaison between the patient and the hospital, ambulatory care, the
private practitioner, the pharmacy and the medical supply company - all the way up to the health insurance
provider. With TransCare’s broad network of consultants, medically certified and trained “Care Managers”
ensure a smooth transition from stationary to ambulatory care for everyone involved. Our goal is to develop
an integrated model of care that extends far beyond the supply of products. TransCare Services answer all
questions related to planning, organization and financial aspects of their new situation, for which patients and
their family members are often not prepared.
TransCare provides steadfast support to patients and their family members in the hospital as well. With the
approval of the private practitioner, a treatment plan is developed that includes all medications and healthcare
aids as well as a customized nutritional plan. An integrated network of healthcare service providers comprised
of local partners including pharmacists, physicians, nurses, medical supply companies and insurance providers
has been established to ensure the uninterrupted supply of prescribed products and medical care.
“Help to Self-Help” is our motto: patients and their family members receive training and are introduced to
healthcare agencies. For total quality assurance, TransCare provides standards, informational brochures and
specification sheets developed by specialists. When the patient is ready to be transferred, everything has been
prepared and organized. A connection has been established: TransCare employees stand ready to provide
support to home care patients and their families.
Out-Patient-Market | Division
39
TransCare Consulting provides services for parenteral nutrition and pain therapy throughout Germany. Other
areas of outpatient care are the focus of TransCare Service GmbH, a joint venture of B. Braun Melsungen AG,
Marienhaus GmbH and Maria Hilf GmbH. Founded in 1995, TransCare Service GmbH serves more than 3,800
customers from four locations, offering healthcare products and rehabilitation services. Frank Reicher, Care
Manager for TransCare Service GmbH in Neuwied, and Rolf Peckelsen, husband and customer, offer insight
into daily interdisciplinary home care.
Mr. Reicher, you have been a
As a certified nurse practitioner, professional and organizational support for am-
Care Manager with TransCare
bulatory care is really my “instrument” of choice and one with which I am most
since 1999. What do you con-
familiar. Acting as a liaison for the patient, either at home and or in the hospital,
sider your biggest challenge?
is also closely related to my previous work. For me the biggest challenges and, at
the same time greatest rewards, come from the close, long-term relationships that
are developed with patients and their families. We get to know one another under very difficult circumstances, where
you as an individual become part of the whole. Once we have helped them overcome the initial hurdles, we guide them
towards helping themselves – both technically and emotionally. For this, a great deal of empathy is of utmost importance.
Mr. Peckelsen, your wife was
I didn’t prepare because I was overwhelmed by the whole situation. Worrying
released from the hospital
about my wife – I couldn’t think about organizational matters. Therefore, for me it
after a lengthy stay. How did
was extremely important that the hospital’s social services put me in contact with
you prepare yourself for the
TransCare. From our very first meeting, I knew I was in good hands. A tremendous
new situation?
weight was lifted off my shoulders, and help was available whenever I needed it.
Today – after two months of caring for my wife at home – everything still doesn’t
go perfectly, but I know I can get help at any time. 24 hours a day, 365 days a year.
Mr. Reicher, how do you
“Ambulatory care before inpatient care” is a major topic of discussion in Germany.
envision the future need for
Healthcare reform has led to hospital stays getting shorter and shorter. As the
your services?
healthcare system develops, this trend will only increase. This can already be seen
in the marked increase in the number of inquiries. Of course, at the same time, the
number of elderly and chronically ill patients will steadily grow.
Here is where we come in: our primary areas of operation are in the fields of clinical nutrition, stoma and wound care
and rehabilitation technology, where comprehensive multi-disciplinary knowledge is important. Each case is unique and
requires a customized solution – this is where the benefits of our technical and organizational expertise come into play.
This is why I am convinced that the demand for our service will continue to grow!
B. Braun Avitum Division
Successful networking.
Identifying patients using a smart card. Treatment parameters are combined with the individual patient’s data
and transmitted to the dialysis system: Sonja Kohns
saves valuable time caring for the patient. The Nexadia®
The competency of B. Braun Avitum Division in the field of extracorporeal blood treatment ranges
from state-of-the-art systems to disposables, all the way to worldwide dialysis centers operated by
the division. A comprehensive system supplier, which accompanies the process from research to manufacturing to therapy, B. Braun Avitum acts as a link between theory and practice.
Data Management System assures quality of treatment.
Later, the treatment-related data can be automatically
transferred to a networked system, where it can be
reviewed and expanded upon by the attending physician
and forwarded to other healthcare providers.
Close communication and exchanges with attending physicians, nursing personnel and patients, who are
required to undergo regular dialysis treatment, facilitate optimal synchronization of the unit, treatment
and customer service to the meet the needs of patients with chronic kidney disease. Because they are
the focus of our thoughts and actions.
42
B. Braun Avitum | Division
Focus: Nexadia®
Legislators have also required dialysis facilities to institute internal quality
control inspections. Proof of the quality of treatment and its economic feasibility are become increasingly important. Data management systems provide key
assistance for the task. The Nexadia® System automates the exchange of data
and frees the nursing staff, physicians and technicians from administrative duties – saving valuable time for what is truly important: caring for the patient.
There is perhaps no other treatment that requires putting so much trust in man and machine as the blood
cleansing, a procedure which over a million patients with chronic kidney disease must undergo. A dialyzer
removes blood from the patient’s body and takes over the kidney function, removing contaminants from
the blood. It is a procedure that restores the patient’s quality of life and offers them greater independence.
Safety and reliability are of utmost concern.
During the dialysis procedure, numerous liaisons form a network: patient-specific data is transferred into the
network from the dialysis machine, scale and blood pressure monitor and evaluated by the system. At the
terminal, the information gathered is transmitted automatically for scheduling, documentation and evaluation.
The data can also be exchanged with hospitals, physicians, laboratories and other service providers.
A network that offers tremendous benefits to all those involved. Therapies and processes are more transparent
and can be optimized for the patient’s well-being. The automated device settings prohibit errors from occurring,
guaranteeing that the remainder of the treatment is of continual high quality. There is no need for paperwork in the dialysis center. In addition, the need for manual entry of data is reduced. Automated processes,
transparent and nearly paperless, take the place of files and archives. Initial experiences show a time saving
of approximately 20 minutes per patient – time that benefits the care and support the patient receives and
thereby contributes to their overall positive experience.
B. Braun Avitum | Division
43
The installation of data management systems at dialysis stations and in specialist practices are still in the introductory stage. In fact, initial testing and experience confirm the benefits of data-technical network solutions for
units, dialysis stations and partners. Dr. Werner Hahn, a dialysis physician, and nurse Sonja Kohns report on
their practice and confirm the positive effects of flawless interaction on their daily work, quality of care and cost
structure.
Dr. Hahn, why did you
I have to admit that at the time I made my decision based on outside influences.
choose Nexadia® Systems for
The regulatory constraints on quality control and performance reporting were de-
data management in your
cisive factors. Any dialysis physician establishing a new practice could hardly stand
practice?
to do without a data management system, if he doesn’t want to risk endangering
his practice in this increasingly competitive field. Based on what I know now, I
would make the same investment decision, perhaps less due to external influences and more to the positive influence
that Nexadia® has on the overall daily dialysis operation.
What positive impact has this
With the software solution, I have all the data I need instantaneously. Modules
had in your daily practice of
used every day include patient and scheduling administration, document man-
dialysis?
agement, an integrated drug database, the convenient organization of the dialysis therapy plan, automated medical records for the physician and the billing
statements for the insurance providers – certified and approved by the provider network (Kassenärztlichen Vereinigung).
I see another great advantage in communicating with outside laboratories. Laboratory results are automatically transferred into the patient’s file. This makes the process and the treatment easier and more secure.
Mrs. Kohns, what improve-
For me, the safety and timesaving aspects. I spent a lot of time writing letters, pro-
ments in patient care has the
tocols and documentation. Now many tasks are automated, transfer errors are
implementation of Nexadia®
ruled out. Nothing is overlooked. Communication flows perfectly. Freeing me up
provided?
from administrative duties has given me extra time to care for and converse with
my patients. And it is for this reason that I went into this profession.
Consolidated Financial Statements and Notes
Overcoming barriers.
Salma and her sisters and brother can laugh again.
Born to Moroccan parents, the children live with
numerous other immigrants in El Pinar, one of the
poorest districts in the Spanish city of Rubí. Poverty
We created the “B. Braun for Children” initiative so that our locations throughout the world can see to it
that children in difficult circumstances may be able to lead a better life. By furthering their knowledge and
education, we hope to create a positive outlook for the future generations. As a “citizen of the world,”
B. Braun assumes local and social responsibility. Our employees are also invited to personally volunteer.
In Rubí Spain, for instance, a team made up of employees and management decided on a suitable project.
and language problems make integration difficult. In
addition to providing educational and social
support, the B. Braun-sponsored “Compartir” project
offers youngsters something completely new – a
perspective.
The criteria: its proximity to B. Braun and the urgency of need. In “Compartir,” 20 employees volunteer to
look after disadvantaged children from El Pinar, one of the poorest districts. Until now, the project had
only the city’s modest public funding to fall back on. A five-year agreement has now been reached, which
includes donations of money and goods, in addition to organizational support.
46
Consolidated Financial Statements
Consolidated Income Statement
Notes
Sales
Cost of Goods Sold
Gross Profit
Selling Expenses
General and Administrative Expenses
Research and Development Expenses
Profit After Functional Expenses
Other Operating Income
Other Operating Expenses
Operating Income
Profit from Financial Investments / Equity Method
Financial Income
Financial Expenses
Net Financial Income (Loss)
Other Financial Income (Expenses)
Profit Before Taxes
Income Tax Expenses
Consolidated Annual Net Profit
Attributable to:
Shareholders of B. Braun Melsungen AG
Minority Interests
Earnings Per Share in € for the Shareholders
(diluted and undiluted)
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
2006
2005
€ ‘000
3,321,389
-1,781,204
1,540,185
-904,395
-194,823
-105,751
335,216
83,240
-112,973
305,483
2,480
4,089
-69,904
-65,815
1,273
243,421
-61,644
181,777
€ ‘000
3,026,183
-1,632,555
1,393,628
-847,415
-182,386
-97,316
266,511
125,715
-125,566
266,660
-137
5,250
-63,466
-58,216
430
208,737
-53,433
155,304
165,717
16,060
181,777
139,827
15,477
155,304
8.54
7.20
Consolidated Financial Statements
Consolidated Balance Sheet
Assets
Notes
Dec. 31, 2006 Dec. 31, 2005
€ ‘000
€ ‘000
12) 14) 15)
13) 15)
16) 17)
17)
18)
19)
20)
113,372
1,312,093
13,216
10,070
958
27,917
81,561
1,559,187
102,782
1,241,152
11,248
12,429
1,956
32,050
58,000
1,459,617
21)
18)
19)
645,908
671,777
90,958
22,965
34,521
1,466,129
601,095
633,705
112,551
9,145
51,901
1,408,397
Total Assets
3,025,316
2,868,014
Equity
Subscribed Capital
23)
Capital Reserves and Retained Earnings
24)
Effect of Foreign Currency Translation
Equity Attributable to the Shareholders of B. Braun Melsungen AG
Minority Interests
25)
Total Equity
250,000
803,827
-81,887
971,940
116,095
1,088,035
250,000
654,733
-57,972
846,761
109,978
956,739
26)
27)
28)
29)
29)
30)
440,917
64,027
446,151
2,501
25,107
56,728
1,035,431
413,789
70,561
479,482
1,841
15,448
54,259
1,035,380
27)
28)
29)
29)
51,593
352,546
157,164
282,166
58,381
901,850
63,191
371,612
134,794
270,708
35,590
875,895
Total Liabilities
1,937,281
1,911,275
Total Equity and Liabilities
3,025,316
2,868,014
Non-current Assets
Intangible Assets
Property, Plant and Equipment
Financial Investments / Equity Method
Other Financial Investments
Trade Accounts Receivables
Other Financial Assets
Deferred Income Tax Assets
Current Assets
Inventories
Trade Accounts Receivables
Other Financial Assets
Deferred Income Tax
Cash and Cash Equivalents
Liabilities
Non-current Liabilities
Reserves for Pensions and Other Similar Obligations
Other Reserves
Financial Liabilities
Trade Accounts Payables
Other Liabilities
Deferred Income Tax Liabilities
Current Liabilities
Other Reserves
Financial Liabilities
Trade Accounts Payables
Other Liabilities
Current Income Tax Liabilities
22)
47
48
Consolidated Financial Statements
Equity Development of the Group
(see Notes 19, 23-25 and 35)
Subscribed
Capital
Capital
Reserves
Retained
Earnings
Treasury
Shares
€ '000
€ '000
€ '000
€ '000
150,000
10,226
647,079
-29,800
0
0
-10,000
0
100,000
0
-100,000
0
Consolidated Annual Net Profit
0
0
139,827
0
Currency Translation Differences
0
0
0
0
Other Changes
0
0
-3,378
0
250,000
10,226
673,528
-29,800
Dividend of B. Braun Melsungen AG
0
0
-10,000
0
Consolidated Annual Net Profit
0
0
165,717
0
Currency Translation Differences
0
0
0
0
Other Changes
0
0
-5,972
0
250,000
10,226
823,273
-29,800
January 1, 2005
Dividend of B. Braun Melsungen AG
Increase of Subscribed Capital
December 31, 2005 / January 1, 2006
December 31, 2006
Consolidated Financial Statements
Fair Value
of Securities
and Holdings
Currency
Translation
Differences
Shareholders’
Equity
Minority
Interests
Total
€ '000
Fair Value
of Derivative
Financial
Instruments
€ '000
€ '000
€ '000
€ '000
€ '000
136
-757
-92,752
684,132
99,532
783,664
0
0
0
-10,000
0
-10,000
0
0
0
0
0
0
0
0
0
139,827
15,477
155,304
0
0
34,780
34,780
3,247
38,027
643
757
0
-1,978
-8,278
-10,256
779
0
-57,972
846,761
109,978
956,739
0
0
0
-10,000
0
-10,000
0
0
0
165,717
16,060
181,777
0
0
-23,915
-23,915
-2,420
-26,335
-651
0
0
-6,623
-7,523
-14,146
128
0
-81,887
971,940
116,095
1,088,035
49
50
Consolidated Financial Statements
Cash Flow Statement
Notes
Operating Income
Income Taxes Paid
Depreciation of Property, Plant and Equipment
and Intangible Assets (Net of Appreciation)
Change in Non-current Reserves
Other Non-Cash Income and Expenses
(Gain) Loss on Disposal of Property, Plant
and Equipment and Intangible Assets
Cash Flow
Change in Inventories
Change in Receivables and Other Assets
Change in Liabilities, Current Reserves
and Other Liabilities (without Financial Liabilities)
Cash Flows from Operating Activities
Investments in Property, Plant and Equipment
Investments in Financial Assets
Acquisition of Subsidiary, Net of Cash Acquired
Proceeds from Sale of Subsidiaries
Proceeds from Sale of Property, Plant and Equipment,
Intangible Assets and Other Financial Investments
Interest Received and Other Financial Proceeds
Dividends Received
Cash Flows from Investing Activities
Free Cash Flow
Dividends Paid to B. Braun Melsungen AG Shareholders
Dividends Paid to Minority Interests
Deposits and Repayments of Profit Participation
Proceeds from Loans
Repayments of Loans
Interest Paid and Other Financial Payments
Cash Flows from Financing Activities
Net Increase / (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Exchange Gains (Losses) on Cash and Cash Equivalents
Cash and Cash Equivalents at End of Year
2006
2005
€ ‘000
305,483
-71,251
€ ‘000
266,660
-51,782
181,371
21,293
-6,734
169,612
10,845
-23,255
2,429
432,591
-67,879
-39,760
-19,908
352,172
-38,561
-85,822
26,504
351,456
-286,932
-157
-12,609
79
16,736
244,525
-214,681
-5,932
-13,249
2,970
38)
10,110
5,289
475
-283,745
27,686
5,188
475
-197,543
39)
67,711
-10,000
-5,344
3,410
236,150
-270,670
-52,469
-98,923
46,982
-10,000
-8,123
-1,551
389,306
-368,036
-46,788
-45,192
40)
-31,212
51,901
13,832
34,521
1,790
46,012
4,099
51,901
37)
Consolidated Financial Statements – Notes
General Information
The consolidated financial statements of B. Braun Melsungen AG as of December 31, 2006 were prepared in
compliance with § 315a, Section 3 of the German Commercial Code (HGB) according to International Financial
Reporting Standards (IFRS), which are applicable as of the balance sheet 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.
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, for extracorporeal blood treatment, as
well as surgical core procedures. The major manufacturing facilities are located in the EU, Switzerland, the
USA, Brazil and Malaysia. The company distributes its products via a worldwide network of subsidiaries and
associated companies.
The company’s headquarters are located in Melsungen, Germany. The address is: Carl-Braun-Str. 1, 34212
Melsungen.
The consolidated financial statements were prepared based on historical costs, except for available-for-sale
financial assets, financial assets at fair value through profit and loss and financial liabilities including derivative financial instruments. Accounting and evaluation methods were used consistently for all periods referred
to in this report, unless otherwise indicated.
On the balance sheet the distinction is made between current and non-current assets and liabilities. The
income statement is presented using the cost-of-sales method. Using this format, net sales are compared
against the expenses incurred to generate these sales, classified by Cost of Sales, Selling, General and Administrative as well as Research and Development. To improve the informational content of the balance sheet and
profit and loss statement, further details on individual entries are provided in the Notes to the consolidated
statements. The consolidated financial statements have been prepared in Euro. Unless stated otherwise, 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 were prepared using standardized Group accounting principles.
Segment information was not reported in accordance with IAS 14.3, since B. Braun Melsungen AG is not a
publicly traded corporation.
The requirements to be exempt from mandatory filing of consolidated financial statements have been met
according to the German Commercial Code (HGB).
The consolidated financial statements of B. Braun Melsungen AG for fiscal year 2006 were released for publication by the Management Board on March 22, 2007.
51
52
Consolidated Financial Statements – Notes
Restatement of Prior Year Amounts according to IAS 8.22
During the first-time adoption of International Financial Reporting Standard (IFRS), deviations from the standardized classification principles of the Group occurred in some subsidiaries. The classifications were adjusted
retroactively and relate to reserves, income tax and other liabilities. Statements of existing, but not recognized,
tax losses carried forward and personnel expenditures were also corrected. These adjustments had no impact
on the financial position of the Group.
Consolidated Financial Statements – Notes
The effects of the reclassification related to prior year amounts are as follows:
Dec, 31 2005
before
Adjustment
€ ‘000
+- Dec, 31 2005
after
Adjustment
€ ‘000
€ ‘000
Liabilities
Non-current Liabilities
413,962
-173
413,789
68,284
2,277
70,561
479,482
0
479,482
Other Liabilities
15,278
2,011
17,289
Deferred Income Tax Liabilities
54,259
0
54,259
1,031,265
4,115
1,035,380
Other Reserves
131,705
-68,514
63,191
Financial Liabilities
371,612
0
371,612
7,034
28,556
35,590
369,659
35,843
405,502
880,010
-4,115
875,895
1,911,275
0
1,911,275
Reserves for Pensions and Other Similar Obligations
Other Reserves
Financial Liabilities
Current Liabilities
Current Income Tax Liabilities
Trade Accounts Payables and Other Liabilities
Total Liabilities
53
54
Consolidated Financial Statements – Notes
The existing, but not recognized, tax losses carried forward can be utilized as follows (Note 10):
2005
before
Adjustment
€ ‘000
1,024
€ ‘000
0
2005
after
Adjustment
€ ‘000
1,024
within two years
0
0
0
within three years
54
0
54
within four years
310
0
310
within five years or later
160
150,233
150,393
1,548
150,233
151,781
169,785
-150,233
19,552
171,333
0
171,333
2005
before
Adjustment
€ ‘000
887,256
+-
€ ‘000
15,778
2005
after
Adjustment
€ ‘000
903,034
149,126
27,173
176,299
89,457
-42,951
46,506
within one year
to be carried forward without limitation
+-
Personnel Expenditures (Note 32)
Wages and Salaries
Social Security Contributions
Welfare and Pensions Expenses
1,125,839
1,125,839
The reported amount of € 5,438,000 for pension expenses from contribution plans in fiscal year 2005
(Note 26) did not match the actual expenses of € 10,154,000. The table was corrected as follows:
Pensions Expenses from Contribution Plans
2005
before
Correction
€ ‘000
5,438
+-
€ ‘000
4,716
2005
after
Correction
€ ‘000
10,154
Consolidated Financial Statements – Notes
New Standards, Interpretations and Amendments to Published Standards
for the 2006 First-time mandatory Adoption
Amendments to IAS 19, Employee Benefits: The amendments introduce the option of recognizing actuarial
gains and losses outside of profit or loss directly into equity. The amendment also specifies how group entities
should account for defined benefit group plans in their separate or individual financial statements and requires
entities to give additional disclosures. Since the B. Braun Group has not changed the existing recognition
method for actuarial gains and losses and is not member of a defined benefit group plan of multiple employers, these amendments only have an effect on the presentation and the extent of disclosure in the Notes for
the Group.
Amendments to IAS 21, Effects of Changes in Foreign Exchange Rates: According to this amendment, all
effects from changes in foreign exchange rates of a monetary item that forms part of an entity’s net investment in a foreign operation are reclassified to the separate component of equity in the financial statements
that include the foreign operation. This regulation applies regardless of the currency in which a monetary item
was denominated or which entity within the group conducts a transaction with the foreign operation. The
adoption of this amendment has had no effect on the capital, financial and profit position or cash flow of the
B. Braun Group.
Amendments to IAS 39, Cash Flow Hedges of Forecast Intragroup Transactions: The amendments permit
the foreign currency risk of a highly probable intragroup forecast transaction to qualify as a hedged item in the
consolidated financial statements provided that the transaction is denominated in a currency other than the
functional currency of the entity entering into that transaction and the foreign currency risk will affect consolidated financial statements. At present, this amendment does not apply to the B. Braun Group, as the company
has performed no intragroup transactions, which would be classified as a hedged item in the consolidated
statements as of December 31, 2006.
Amendments to IAS 39, Fair Value Option: These amendments modify the definition of financial instruments
which are to be measured at fair value with gains and losses recognized in profit or loss and limit the option to
classify financial instruments into this category. These modifications have had no effect on the classification of
financial instruments of the B. Braun Group.
Amendments to IAS 39 and IFRS 4, Financial Guarantee Contracts: The amendments require the issuer of a
financial guarantee contract to initially measure the contract at fair value, unless the contract was classified
as an insurance contract. Subsequently, the contract is to be measured at the higher of a) the net of the
unearned premium reserve and b) the expenditure required to settle the obligation at balance sheet date. It is
the judgment of corporate management that at present these changes do not pertain to the B. Braun Group.
55
56
Consolidated Financial Statements – Notes
IFRS 6, Exploration for and Evaluation of Mineral Resources: Since the B. Braun Group is not engaged in
the exploration for or evaluation of mineral resources, this standard does not apply.
IFRIC 4, Determining whether an Arrangement contains a Lease: IFRIC 4 requires that the determination be
made as to whether an agreement constitutes or contains a lease arrangement based on the respective business content of the agreement. The evaluation is to consider, if a) fulfillment of the agreement depends upon
the use of a specific asset or assets or b) the arrangement conveys the right to control the use of the underlying asset. To date, the first-time adoption of this interpretation has not led to the identification of contractual
constructs containing a financial lease relationship that are not already being accounted for in accordance
with IAS 17.
IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation
Funds: IFRIC 5 is not relevant to the business activities of the B. Braun Group.
IFRIC 6, Liabilities arising from Participation in a Specific Market – Electrical and Electronic Equipment
Waste: The adoption of IFRIC 6 has had no effect on the capital or profit situation of the B. Braun Group.
IFRIC 8, Scope of IFRS 2: In absence of the adoption of IFRS 2, there have been no effects on the capital,
financial, or profit position or cash flow of the B. Braun Group.
Standards, Interpretations and Amendments to Published Standards that are not yet mandatory
The following standards have already been issued, however, become mandatory only in the reporting period
that begins on or after January 1, 2007 or June 1, 2006. The option to voluntarily adopt these standards early
has been waived:
In August 2005, IFRS 7, Financial Instruments: Disclosures, was published and introduced new disclosure
requirements for financial instruments. Adoption of IFRS 7 is mandatory for reporting periods beginning on or
after January 1, 2007, and replaces the disclosure regulations of IAS 32. Since first-time adoption will only be
related to disclosure requirements, there will be no effects on the presentation of the capital, financial and
profit position of the Group.
In conjunction with IFRS 7, the IASB published an amendment to IAS 1, Presentation of Financial Statements –
Capital Disclosures, with requirements to disclosure the entity’s objectives, policies and processes for managing
capital. Adoption is mandatory for fiscal years beginning on or before January 1, 2007. Since the adoption of
the IAS 1 amendment will only be related to disclosure requirements, there will be no effects on the presentation of the capital, financial or profit position of the Group.
Consolidated Financial Statements – Notes
On March 1st 2006, the IASB published IFRIC 9, Reassessment of Embedded Derivatives issued by the IFRIC.
The interpretation clarifies that an entity has to determine whether an embedded derivative must be separated
from the host contract and accounted for as a derivative, when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless there is a material change in the terms of the contract
that significantly modifies the cash flow that otherwise would be required under the contract (in which case
reassessment is required). IFRIC 9 must be applied to fiscal years beginning on or after June 1, 2006, however
no effect on the presentation of the capital, financial and profit position, as well as cash flow, of the Group is
anticipated.
Critical Assumptions and Estimates using Accounting and Evaluation Methods
The preparation of financial statements in accordance with IFRS requires management to make assumptions
and estimates, which have an effect on the reported amounts and statements related to them. While management makes these estimates to the best of their knowledge and abilities based on current developments and
regulations, there is the possibility that actual results may differ. Estimates are required in particular when:
■
■
■
■
■
■
Assessing the need for and the amount of unscheduled depreciation and other value adjustments;
Assessing pension obligations;
Establishing and assessing reserves;
Establishing inventory reserves;
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 respectively based on estimates. These assumptions can change
materially, for example as a result of technological innovations or changes in the competitive environment.
Should the actual useful life be less than the estimate, management will adjust the amount of depreciation.
Assets which are technologically outdated or no longer useable under the current business strategy will be
fully or partially written off.
The present value of pension obligations depends on a number of factors, which are based on actuarial
assumptions. The estimates made relative to establishing the net expenses (income) for pensions, include the
projected long-term rate of return on plan assets and the discount rate. Each change in such assumptions will
have an effect on the book value of the pension reserves. Obligations from defined benefit pension plans, as
well as pension expenses of the following year, will be established based on the parameters outlined under
Note 26.
57
58
Consolidated Financial Statements – Notes
The establishment and evaluation of other reserves is conducted on the basis of assessing the probability of
future use, as well as experience and known circumstances as of the balance sheet date. The actual liability
may differ from the accrued amounts.
The estimate of inventory reserves is based on the projected net realizable value, which is the estimated selling
price in the ordinary course of business, 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 established to the extent that it is probable that taxable profit will be available in
the future against which the deductible temporary differences can be utilized. The actual taxable profits in
future periods may differ from the estimates made on the date such deferred tax assets are established.
Goodwill is tested for impairment annually on the basis of a three-year operational plan and based on
projected segment-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 segment.
Consolidated Financial Statements – Notes
Scope of Consolidation
In addition to B. Braun Melsungen AG, the consolidated financial statements include 33 German and 144
foreign subsidiaries, in which B. Braun Melsungen AG either holds a direct or indirect majority of voting
rights or has control over the financial and business management.
Subsidiaries are included in the financial statement effective on the day control is assumed by the Group.
Consolidation is discontinued as of the day on which such control ends.
The development of the number of Group companies as of December 31, 2006 and 2005 respectively is
shown below:
2006
2005
174
178
Companies included for the first time
9
5
Company consolidations discontinued
-3
-2
Business Combinations
-3
-7
177
174
Included as of December 31st of the previous year
Included as of December 31st of the reporting year
The following material company acquisitions were made during fiscal year 2006:
Group Share
in %
First
Consolidation
effective
MCP Medicare Oy, Loviisa, Finland
90.0
March 31, 2006
TravaCare GmbH, Hallbergmoos, Germany
50.4
May 31, 2006
Table
Due to the call and put options in the acquisition agreements, both companies were 100% fully integrated
into the consolidated financial statements in accordance with IFRS 3.
The MCP Medicare Oy is primarily engaged in the manufacture and sale of medical and pharmaceutical
products.
The TravaCare GmbH is a sales and service company, specializing in the care of patients undergoing intravenous nutrition therapy.
59
60
Consolidated Financial Statements – Notes
The effect of these major company acquisitions on the balance sheet on the date of first consolidation, as well
as on material positions of the income statement of fiscal year 2006, are illustrated below:
MCP Medicare Oy
Book Value
Fair Value
€ ‘000
€ ‘000
TravaCare GmbH
Book Value
Fair Value
€ ‘000
€ ‘000
170
473
99
99
Current Assets
1,879
1,879
3,185
3,185
Acquired Assets
2,049
2,352
3,284
3,284
46
46
0
0
Current Reserves and Liabilities
710
789
3,056
3,056
Acquired Liabilities
756
835
3,056
3,056
1,293
1,517
228
228
Non-current Assets
Non-current Reserves and Liabilities
Net Assets Acquired
Minority Interests
-92
0
Goodwill
995
15,401
2,420
15,629
thereof Incidental Costs
169
34
Minority Interests
156
0
Remaining Acquisition Liabilities
166
9,234
Cash and Cash Equivalents Acquired
494
2,309
Cash Flow on Company Acquisitions
1,916
4,086
Sales
3,900
10,681
Operating Profit
233
1,484
Profit After Taxes
167
981
Acquisition Costs
The goodwill of MCP Medicare Oy is primarily to gain entry into the Russian dialysis market. The goodwill of
TravaCare GmbH results from non-contractual customer relations, as well as expected synergies from the
integration into the Group.
The purchase price allocation is preliminary since the identification and valuation of assets and liabilities have
not been completed yet on the balance sheet date.
Consolidated Financial Statements – Notes
If the company acquisitions were completed on January 1, 2006, the Group net sales and consolidated annual
net profit would have been increased as follows:
Sales
€ Million
Annual Net
Profit
€ Million
3,321.4
181.8
MCP Medicare Oy
1.3
0.1
TravaCare GmbH
7.6
0.7
3,330.3
182.6
As part of the acquisitions non-recognized assets in the amount of € 0.3 million were recognized on the
balance sheet. The established goodwill amounted to € 16.7 million.
The determination of the acquisition costs for TETEC AG, Germany resulted in an increase in goodwill of
€ 0.2 million in the reporting year.
The changes do not affect the comparison of this year’s financial statements with the ones of the previous
fiscal year.
Five joint ventures and nine associated companies are recognized in the consolidated financial statements as
of the balance sheet date. Due to their relatively minor significance, five associated companies were not recognized using the equity method. A complete list of holdings of the Group and of B. Braun Melsungen AG are
published in the electronic Gazette of the Federal Republic (elektronischer Bundesanzeiger).
The following companies – included in the consolidated financial statements of B. Braun Melsungen AG – meet
the requirements of § 264b of the German Commercial Code (HGB) and are therefore exempt from filing notes
and a management report:
MAT Adsorption Technologies GmbH & Co. KG, Elsenfeld, Germany
B. Braun Medizinelektronik GmbH & Co. KG, Puchheim, Germany.
61
62
Consolidated Financial Statements – Notes
The following companies meet the requirements of § 264, Section 3 of the German Commercial Code (HGB)
and are also exempt from filing notes and a management report:
B. Braun Medical AG, Melsungen,
B. Braun Medizintechnologie GmbH, Melsungen,
B. Braun Surgical GmbH, Melsungen,
B. Braun Petzold GmbH, Melsungen,
Dr. Hans Rumberg & Co. GmbH, Rellingen,
Bibliomed medizinische Verlagsgesellschaft mbH, Melsungen,
Diomedes Cert GmbH, Melsungen,
Diomedes Health Care Consultants GmbH, Melsungen,
Transcare Gesundheitsservice GmbH, Melsungen,
Paul Müller Technische Produkte GmbH, Melsungen,
Saxonia Medical GmbH, Radeberg,
B. Braun VetCare GmbH, Tuttlingen.
The companies listed above exercise their right to this exemption.
Principles of Consolidation
a) Subsidiaries
Subsidiaries, i.e. companies in which B. Braun Melsungen AG holds either direct or indirect voting majority or
by some other means has control over the financial and business management, are included in the scope of
consolidation. To determine whether B. Braun Melsungen AG controls another corporation in this manner, the
existence and consequences of potential voting rights that may be exercised or converted on the balance sheet
date are taken into consideration.
Subsidiaries are initially consolidated on the first day on which B. Braun Melsungen AG assumes control of the
acquired corporation; they are conversely excluded from consolidation once B. Braun Melsungen AG forfeits
such control. The acquisition of subsidiaries is recognized following the purchase method. The cost of acquiring
a subsidiary is calculated based on payments of cash and cash equivalents, as well as the fair value of assets,
shares issued and/or assumed liabilities at the point in time in which initial control occurs, plus the costs
directly associated with the acquisition. Acquisition costs which exceed the proportionate acquired share of
the fair value of the current assets of the subsidiary are recognized as goodwill.
The acquired identifiable assets, liabilities, and contingent liabilities are measured initially at their fair values
on the acquisition date, irrespective of the extent of any minority interest.
Consolidated Financial Statements – Notes
Goodwill resulting from the acquisition of minority interests will be offset against retained earnings. Assets
and liabilities are measured at fair value in the event of step acquisitions of first-time fully consolidated corporations. Any changes in the fair values of assets and liabilities arising in between the acquisition dates are
recognized directly in equity according to the shares held before the date of the initial consolidation.
Receivables and liabilities, as well as expenses and income between Group subsidiaries, are netted against
each other. Unrealized profits from transactions between Group subsidiaries are eliminated; unrealized losses
are eliminated insofar as the resulting acquisition/manufacturing costs do not exceed the realizable value of
the respective asset. If required, the accounting and evaluation methods of the subsidiaries were adjusted to
the methods underlying the consolidated financial statements of the Group.
b) Associated Companies
Associated companies are those companies over which the Group has significant influence, but not control,
generally accompanying a shareholding of between 20% and 50% 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 impairment loss).
The Group’s share of its associated companies’ post-acquisition profits or losses is recognized in the income
statement, and its share of post-acquisition changes in reserves is recognized in reserves. The cumulative
post-acquisition changes are adjusted against the carrying amount of the investment. When the Group’s share
of losses in an associated company equals or exceeds its interest in the associated company, including any
other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or
made payments on behalf of the associated company.
Unrealized gains from transactions between the Group and its associated companies are 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 policies of associated companies have been 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 accounted for by 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 similar items in the Group’s financial statement. 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 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. However, a
loss on the transaction is recognized immediately if the loss provides evidence of a reduction in the net realizable value of the asset or impairment.
63
64
Consolidated Financial Statements – Notes
Foreign Currency Translation
a) Functional and presentation 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 presented in Euro, the Group’s functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the prevailing exchange rate at
the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in equity as
qualifying cash flow hedges.
Translation differences on monetary items, such as equities classified as available-for-sale financial assets, of
which fair value changes are recognized through profit and loss, are reported as part of the gain or loss from
the fair value evaluation. Translation differences on non-monetary items, of which fair value changes are
directly recognized in equity, are included in the fair value reserve in equity.
c) Subsidiaries
The results and balance sheet items of all the Group subsidiaries that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:
■ Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
■ income and expenses for each income statement are translated at average exchange rates; and
■ all resulting exchange differences are recognized as a separate component of equity (Currency Translation
Differences).
Consolidated Financial Statements – Notes
Goodwill and fair value adjustments, arising on the acquisition of a foreign company, are treated as assets and
liabilities of the foreign company and translated at the closing rate.
Comparison of Selected Currencies
ISO-Code
Closing Rate at End of Fiscal Year
Dec. 31, 2006
Dec. 31, 2005
+in %
Average Annual Rate
2006
2005
+in %
1 EUR = USD
1.317
1.180
11.6
1.255
1.245
0.8
1 EUR = GBP
0.672
0.685
-1.9
0.682
0.684
-0.3
1 EUR = CHF
1.607
1.555
3.3
1.573
1.548
1.6
1 EUR = MYR
4.649
4.458
4.3
4.602
4.715
-2.4
156.930
138.900
13.0
146.062
136.873
6.7
1 EUR = JPY
65
66
Consolidated Financial Statements – Notes
Notes to the Consolidated Income Statement
1 Sales
Sales include the fair value for sale of products and services excluding sales tax, rebates or discounts, and after
elimination of Intercompany sales. Sales are reported as follows:
Sales resulting from the sale of products is recognized at the time when the main risk and rewards associated
with the ownership has been transferred to the buyer and the collection of the respective receivable can be
assumed with sufficient likelihood.
Estimates for sales reductions are based on experience. Adjustments will be made if required by a change in
conditions. No significant returns are recorded for the reporting period.
Sales resulting from the sale of services are reported in the fiscal year during which the service is performed
and depend on the progress of the service as a relation of already performed service compared to the entire
service transaction.
The following chart demonstrates the development of sales by division and region.
2006
Sales by Division
Hospital Care
€ ‘000
1,584,083
2005
+-
€ ‘000
%
in %
47.7 1,449,379
47.9
9.3
%
Aesculap
955,599
28.8
882,968
29.2
8.2
OPM
466,550
14.1
412,824
13.6
13.0
B. Braun Avitum
293,766
8.8
260,315
8.6
12.9
21,391
0.6
20,697
0.7
3.4
100.0 3,026,183
100.0
9.8
Other Sales
3,321,389
+€ ‘000
%
€ ‘000
%
in %
727,865
21.9
679,951
22.5
7.0
1,224,337
36.9
1,125,817
37.2
8.8
North America
822,017
24.7
719,110
23.7
14.3
Central and South America
182,331
5.5
150,631
5.0
21.0
Asia and Australia
364,839
11.0
350,674
11.6
4.0
100.0 3,026,183
100.0
9.8
Sales by Region
Germany
Europe (excluding Germany) and Africa
3,321,389
Consolidated Financial Statements – Notes
2 Cost of Goods Sold
Cost of goods sold includes the manufacturing costs of the sold goods and the purchasing costs of merchandise sold. In addition to direct costs such as material, personnel and energy costs, manufacturing costs contain
production-related overhead expenses including depreciation of property, plant and equipment. Cost of goods
sold also include inventory reserves.
3 Selling Expenses
Selling expenses include expenses for the marketing and sales organizations, as well as logistics expenses. This
category also contains the expenses related to customer training and consulting in technical product use.
4 Research and Development Expenses
According to IAS 38 (Intangible Assets), the costs for research and development include costs for research, as
well as costs for product and process development including expenses for external services. All research costs
are charged to expense.
Currently, development costs are also fully reported as expense since the special criteria for recognition are not
met according to IAS 38 due to existing risks until market launch.
5 Other Operating Income
2006
2005
€ ‘000
€ ‘000
Additional Income
7,584
9,928
Proceeds from the Disposal of Assets
2,507
23,900
Proceeds from Liquidation of Reserves
4,338
8,341
Proceeds from Appreciation of Current Financial Assets
6,288
1,997
0
30
Currency Translation Gains
32,035
60,250
Income from Other Periods
7,632
1,848
22,856
19,421
83,240
125,715
Derivative Financial Instruments
Other Income
Currency translation gains mainly include gains from currency fluctuations between transaction and payment
dates, as well as gains resulting from translation on the balance sheet date.
67
68
Consolidated Financial Statements – Notes
Changes in fair value of transactions which do not qualify for hedge accounting, as well as equity transfers
from cash flow hedges, are reported under Derivative Financial Instruments.
Other income includes insurance compensation, income from licenses and commissions, cafeteria income,
rental income and collection of receivables written off in previous years.
6 Other Operating Expenses
2006
2005
€ ‘000
€ ‘000
4,119
6,470
11,777
23,707
5,427
8,208
583
172
Currency Translation Losses
39,927
48,017
Expenses from Other Periods
4,955
1,534
46,185
37,458
112,973
125,566
Losses from the Disposal of Assets
Provisions to Reserves
Losses from Impairment of Current Financial Assets
Derivative Financial Instruments
Other Expenses
Currency translation losses mainly include losses from currency fluctuations between transaction and payment
dates as well as losses resulting from translation on the balance sheet date.
Other expenses include expenses which cannot be allocated to functional expenses and irrecoverable receivables.
Consolidated Financial Statements – Notes
7 Financial Investments recognized using the Equity Method of Accounting
Results from investments recognized using the equity method are as follows:
2006
2005
€ ‘000
€ ‘000
2,689
2,510
-209
-2,647
2,480
-137
2006
2005
€ ‘000
€ ‘000
4,089
5,250
Interest and Other Similar Expenses
-50,122
-45,000
Interest Expenses for Pension Reserves net of
Expected Income from Plan Assets
-19,782
-18,466
-65,815
-58,216
Income from Financial Investments recognized using the Equity Method
Expenses from Financial Investments recognized using the Equity Method
8 Net Financial Income (Loss)
Interest and Other Similar Income
Interest income is recognized in the corresponding period using the effective interest method.
Interest expenses include expenses resulting from adding interest to non-current reserves discounted in previous years.
9 Other Financial Income (Expense)
Income from Joint Ventures (without Income from Financial Investments
recognized using the Equity Method)
Income (Loss) from Financial Instruments
2006
2005
€ ‘000
€ ‘000
1,273
490
0
-60
1,273
430
69
70
Consolidated Financial Statements – Notes
10 Taxes on Income
Income tax for German companies includes the corporate tax and the trade income tax as well as comparable
income-related taxes for companies in other countries. They are calculated on the basis of tax regulations
applicable to the individual company.
Deferred taxes stem from temporary differences between the tax base of the individual companies and the
consolidated financial statements. They are measured using the liability method based on the application of
anticipated tax rates for the individual countries as of the realization date. Generally, these are based on the
regulations in effect as of the balance sheet date. Deferred tax assets and deferred tax liabilities 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 taxing authority.
Expenses resulting from taxes on income including deferred taxes are as follows:
Actual Income Tax Expenses
Deferred Taxes resulting from Temporary Differences
Deferred Taxes from Losses Carried Forward
2006
2005
€ ‘000
83,706
-18,203
-3,859
61,644
€ ‘000
66,560
-11,073
-2,054
53,433
Consolidated Financial Statements – Notes
Deferred tax assets and deferred tax liabilities apply to differences stemming from recognition and evaluation
in the following balance sheet positions:
2006
Intangible Assets
Property, Plant and Equipment
Financial Assets
Inventories
Trade Receivables
Pension Reserves
Other Reserves
Trade Accounts Payable
Other
Net Balance
Value Adjustments to Deferred Income Tax Assets
from Temporary Differences
Losses Carried Forward (Net, after Value Adjustments)
2005
active
€ ‘000
passive
€ ‘000
active
€ ‘000
passive
€ ‘000
7,092
2,727
4
40,279
26,751
41,874
24,369
17,824
99
161,019
-87,583
73,436
4,816
106,107
37
7,833
3,974
299
1,556
19,688
1
144,311
-87,583
56,728
6,786
2,444
1,647
35,964
26,310
38,951
28,561
19,678
0
160,341
-99,633
60,708
5,603
110,335
881
8,879
1,723
255
1,520
24,695
1
153,892
-99,633
54,259
-5,048
13,173
81,561
56,728
-12,143
9,435
58,000
54,259
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
€ 15,962,000.
71
72
Consolidated Financial Statements – Notes
The existing, but not recognized tax losses carried forward can be utilized as follows:
within one year
within two years
within three years
within four years
within five years or later
to be carried forward without limitation
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
0
0
0
0
93,440
93,440
10,639
104,079
€ ‘000
1,024
0
54
310
150,393
151,781
19,552
171,333
Deferred tax assets, where 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 suffered past losses, amounted
to € 24,896,000. Recognition of the deferred tax assets is based on respective planning supporting expectation of their utilization.
Deferred taxes totaling € 16,000 (previous year: € 1,046,000) were recognized directly in equity.
Consolidated Financial Statements – Notes
The resulting tax expense using B. Braun Melsungen AG’s tax rate of 36.8% translates into the following
reconciliation to the actual tax expenses:
Theoretical Tax Rate
Profit Before Tax
Expected Income Tax at B. Braun Melsungen AG's Tax Rate
Differences from Deviating Tax Rates
Adjustments of Deferred Taxes due to Tax Rate Changes
Tax Decreases due to Tax-exempt Income
Tax Increase due to Non-deductible Expenses
Trade Tax Addition / Deduction
Final Withholding Tax on Profit Distributions
Tax Expense / Income related to Prior Periods
Changes of Reserves on Deferred Taxes
Profit (Loss) of Financial Investments recognized using the Equity Method
Other Tax Effects
Actual Tax Expenses
Effective Tax Rate
2006
2005
€ ‘000
36.8%
243,421
-89,592
13,812
122
842
-9,234
8,303
-1,078
-6,773
32,443
923
-11,412
-61,644
25.3%
€ ‘000
36.8%
208,737
-76,853
16,251
1,364
12,626
-5,085
3,917
-244
-4,147
-8,654
-37
7,429
-53,433
25.6%
A decrease in current tax expenses in the amount of € 436,000 is expected from profit distributions in fiscal
year 2007. Tax expenses for prior periods contain the recognition of corporate tax credits from abatement
existing at the end of fiscal year 2006 at a present value of € 4,538,000.
11 Earnings per Share
Earnings per share are calculated according to IAS 33 by dividing the consolidated annual net profit less
minority interests, by the amount of shares issued. The number of shares entitled to receive dividends remained
the same at 19,404,000 during the fiscal year. There were no shares outstanding as of December 31, 2006 or
December 31, 2005 that could have diluted the earnings per share. Not taking into account the company’s own
shares which are not entitled to dividends, earnings per share are € 8.54 (€ 7.20 in the previous year).
Dividends paid in 2006 and 2005 for the corresponding previous years amounted to € 10.0 million (€ 0.51
per share). For fiscal year 2006, the Management Board and the Supervisory Board again proposed € 0.51 per
share. The proposed dividend must be ratified by the shareholders at their Annual Meeting on March 22, 2007.
The dividend liability is not included in the consolidated financial statements.
73
74
Consolidated Financial Statements – Notes
Notes to the Consolidated Balance Sheet
12 Intangible Assets
Cost of Acquisition
or Manufacture
Self-created
Intangible
Assets
€ ‘000
Licenses,
Trademarks,
and Other
Similar
Rights
€ ‘000
€ ‘000
€ ‘000
€ ‘000
1,262
157,645
680
1,500
161,087
133
12,888
6
6
13,033
4,765
3,631
0
0
8,396
Disposals from Scope of Consolidation
0
-180
0
0
-180
Additions
0
19,186
0
2,351
21,537
Transfers
0
1,245
0
-478
767
Write-Ups
0
0
0
0
0
Disposals
0
-5,284
0
0
-5,284
6,160
189,131
686
3,379
199,356
-45
-9,987
-6
0
-10,038
16,656
375
0
0
17,031
0
0
0
0
0
Additions
119
12,059
1,560
3,790
17,528
Transfers
0
3,314
0
-2,149
1,165
Write-Ups
0
0
0
0
0
Disposals
0
-2,676
0
-6
-2,682
22,890
192,216
2,240
5,014
222,360
Accumulated Depreciation 2006
84
108,663
241
0
108,988
Accumulated Depreciation 2005
95
96,333
146
0
96,574
Book Value December 31, 2006
22,806
83,553
1,999
5,014
113,372
Book Value December 31, 2005
6,065
92,798
540
3,379
102,782
Depreciation in the Fiscal Year
0
18,199
96
0
18,295
thereof off-schedule
0
39
0
0
39
January 1, 2005
Foreign Currency Translation
Additions to Scope of Consolidation
December 31, 2005 / January 1, 2006
Foreign Currency Translation
Additions to Scope of Consolidation
Disposals from Scope of Consolidation
December 31, 2006
Acquired
Goodwill
Advance
Payments
Total
a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired company at 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. Gains and losses on the disposal of a company include the book value of goodwill relating to the company sold.
Consolidated Financial Statements – Notes
Goodwill is allocated to cash-generating units (CGU) for the purpose of impairment testing. Each of those
cash-generating units represents the Group’s investment in each country of operation by each primary reporting segment.
Unscheduled depreciation on goodwill is reported under Other Operating Expenses.
A summary of the distribution of goodwill by segment as well as the assumptions for the respective impairment testing are listed below:
Book Value of Goodwill
Annual Growth Rate
Discount Rate
Hospital
Care
€ ’000
Aesculap
2005
OPM
€ ’000
451
953
2.5%
2.5%
2.5%
10.9%
10.9%
10.9%
€ ’000
B. Braun
Avitum
€ ’000
Total
€ ’000
0
4,661
6,065
2006
Book Value of Goodwill
Annual Growth Rate
Discount Rate
€ ’000
€ ’000
€ ’000
€ ’000
€ ’000
391
1,209
15,401
5,805
22,806
2.5%
2.5%
2.5%
2.5%
11.0%
11.0%
11.0%
11.0%
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 plan approved by management.
Management has determined the budgeted gross margin based on past developments and estimates for future
market development. The weighted average growth rates correspond to the predictions from industrial reports.
The discount rates used are pretax rates and reflect specific risks of the relevant segments.
In the future, if the actual gross margin were to be 10% less than the gross margin estimated by management
on December 31, 2006, no impairment of goodwill would have occurred. The same holds true if the discount
rate that was used to calculate the DCF was 10% higher than management‘s estimates.
75
76
Consolidated Financial Statements – Notes
b) Other Intangible Assets
Acquired intangible assets are recognized at acquisition costs and self-created intangible assets – if future
economic benefit will flow to the Group and if the costs of the asset can be measured reliably – are recognized
at production costs. Those include all cost directly related to the production process as well as appropriate portions of relevant overhead costs. Financing costs are not recognized. Intangible assets with finite useful lives
will be written off over a period of 4 to 8 years as part of a regular straight-line depreciation.
Residual values and useful lives are reviewed on each balance sheet date and adjusted if appropriate.
Intangible assets are depreciated off-schedule on the balance sheet date if the recoverable amount of the
asset decreased under its book value. The recoverable amount is the higher of an asset's net selling price and
discounted present value of estimated future cash flows expected to arise from the asset.
Depreciation on other intangible assets is allocated to the functional areas that benefit from using the asset.
Appreciation cannot exceed acquisition cost and is reported under Other Operating Income.
Besides goodwill, the Group did not own any intangible assets with infinite useful lives in the reporting periods
presented.
Consolidated Financial Statements – Notes
13 Property, Plant and Equipment
Cost of Acquisition
or Manufacture
€ ‘000
€ ‘000
€ ‘000
Advance
Payments
and Assets
under
Construction
€ ‘000
679,251
19,813
Additions to Scope of Consolidation
5,317
Disposals from Scope of Consolidation
-2,933
Additions
27,760
Transfers
20,923
Write-Ups
-2
Disposals
-8,991
December 31, 2005 / January 1, 2006 741,138
Foreign Currency Translation
-15,525
Additions to Scope of Consolidation
0
Disposals from Scope of Consolidation
0
Additions
17,190
Transfers
20,659
Write-Ups
0
Disposals
-2,362
December 31, 2006
761,100
Accumulated Depreciation 2006
232,431
Accumulated Depreciation 2005
218,323
Book Value December 31, 2006
528,669
Book Value December 31, 2005
522,815
Depreciation in the Fiscal Year
20,330
thereof off-schedule
124
1,062,807
55,571
16,418
-3,398
58,602
38,678
-3
-38,961
1,189,714
-35,223
0
0
83,121
64,867
0
-32,640
1,269,839
788,613
731,112
481,226
458,602
100,836
29
376,838
19,177
555
-510
35,224
6,879
139
-22,494
415,808
-14,598
197
0
27,028
2,192
0
-16,814
413,813
278,844
269,642
134,969
146,166
41,972
0
79,162
7,190
6
0
95,671
-67,247
0
-1,213
113,569
-5,125
0
0
148,961
-88,883
0
-1,293
167,229
0
0
167,229
113,569
0
0
January 1, 2005
Land
and Buildings
Machinery
and
Equipment
Other
Equipment,
Furniture
and Fixtures
Total
€ ‘000
2,198,058
101,751
22,296
-6,841
217,257
-767
134
-71,659
2,460,229
-70,471
197
0
276,300
-1,165
0
-53,109
2,611,981
1,299,888
1,219,077
1,312,093
1,241,152
163,138
153
Tangible assets that are utilized during the ordinary course of business for more than one year are recognized
at their purchase or manufacturing cost less regular straight-line depreciation. Manufacturing costs include all
costs directly related to the production process, as well as appropriate portions of manufacturing overhead
costs. Financing costs are not recognized. The applied useful lives correspond to the expected useful lives
within the Group.
The following useful lives are the basis for scheduled depreciation applied to property, plant and equipment:
Buildings
25 to 50 years
Technical Plants and Machinery (one-shift use)
5 to 20 years
Vehicles
6 years
Office and Business Equipment
4 to 20 years
Real estate properties are not subject to scheduled depreciation.
77
78
Consolidated Financial Statements – Notes
Acquisition and manufacturing costs that occurred 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 measured reliably. All other repairs, as well as general maintenance, are reported as expense in the income statement of the fiscal year in which they occur.
Residual values of property, plant and equipment and useful lives are reviewed at each balance sheet date and
adjusted if appropriate.
Property, plant and equipment are depreciated off-schedule on the balance sheet date if the “recoverable
amount” of the asset decreased under its book value.
Depreciation on property, plant and equipment is allocated to the functional areas that benefit from using the
asset. Appreciation cannot exceed acquisition cost and is reported under Other Operating Income. Gains and
losses from disposal of property, plant and equipment are reported accordingly through profit and loss.
Government grants are recognized at fair value if receipt of the grant and the Group’s compliance with any
conditions attached to the grant are highly likely.
On the balance sheet date, no unfulfilled conditions or success risks existed which would have made a correction to balance sheet recognition necessary.
In the balance sheet, grants for investments in the amount of € 359,000 (previous year: € 871,000) are
deducted from the book values of the corresponding assets.
Grants to compensate for expenses are recognized in the period in which the corresponding expenses occur. In
this reporting year, grants in the amount of € 652,000 (previous year: € 109,000) were recognized through
profit and loss.
14 Impairment of Assets
Assets that have an indefinite useful life are not subject to scheduled depreciation; they are tested annually
for impairment. Assets that are subject to scheduled depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that the book value may not be recoverable. An impairment loss is
recognized for the amount by which the asset’s book value exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value, less costs to sell and its value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash
Generating Units).
Consolidated Financial Statements – Notes
15 Finance Leasing
Leasing contracts for intangible assets and property, plant and equipment for which the Group carries the substantial risks and rewards of the leasing object’s ownership are classified as finance leasing. At commencement
of the lease term, finance leases are recorded as an asset at the lower of the fair value of the asset and the
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 remaining balance of the leasing liability. This liability is reported under financial liabilities without recognition of interest payments. The interest portion of the leasing payment is recognized as expense through
profit and loss. 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 over the shorter of the lease term or the life of the asset.
Intangible assets and property, plant and equipment include the following amounts for which the Group is
lessee as part of a finance lease:
Dec. 31, 2006 Dec. 31, 2005
€ ‘000
€ ‘000
Licenses, Trademarks, and Other Similar Rights
17,901
17,940
Accumulated Depreciation
-9,972
-7,476
Land and Leasehold, Rights and Buildings
114,149
110,376
Accumulated Depreciation
-12,563
-10,421
19,748
20,637
-12,222
-12,408
Other Fixtures and Fittings, Tools and Equipment
12,300
11,037
Accumulated Depreciation
-6,617
-5,272
122,724
124,413
Technical Plants and Machinery
Accumulated Depreciation
Net Book Value
Obligations of the Group stemming from finance leasing agreements are secured by the leasing objects.
The minimum lease payments for liabilities from finance leasing agreements have the following maturities:
Dec. 31, 2006
Book
Discount
Value
€ ‘000
€ ‘000
Dec. 31, 2005
Present
Book
Value
Value
€ ‘000
€ ‘000
Discount
€ ‘000
Present
Value
€ ‘000
Not later than 1 year
13,397
5,682
7,715
17,697
5,939
11,758
Later than 1 year; not later than 5 years
43,495
19,112
24,383
49,747
22,561
27,186
Later than 5 years
99,571
27,450
72,121
99,154
28,043
71,111
156,463
52,244 104,219 166,598
56,543 110,055
The two largest finance leasing contracts relate to the real estate of the L.I.F.E. facility belonging to the
Hospital Care Division (book value of € 44.5 million), and the benchmark factory of the Aesculap Division
(book value of € 14.2 million).
79
80
Consolidated Financial Statements – Notes
16 Financial Investments recognized using the Equity-Method of Accounting
Under the equity method of accounting, an associated company is initially recorded at cost and is subsequently adjusted to reflect equity adjustments, dividend payments and the Group’s share of the net profit or
loss of the associate.
The Group’s holdings in its major associated companies are as follows:
Name
Country
Assets
2005
Liabilities
Sales
€ ‘000
€ ‘000
€ ‘000
Profit /
(Loss)
€ ‘000
Share
in %
Babolat VS
France
42,162
17,395
59,931
5,684
27.8
Sterience S.A.
France
23,676
18,286
6,424
-5,179
49.0
Germany
10,603
3,793
17,100
680
27.9
76,441
39,474
83,455
1,185
Schölly Fiberoptik GmbH
2006
€ ‘000
€ ‘000
€ ‘000
€ ‘000
in %
Babolat VS
France
57,917
27,438
75,561
6,356
27.8
Sterience S.A.
France
23,770
24,379
8,212
-6,045
49.0
Germany
20,148
11,642
26,992
1,480
27.9
101,835
63,459
110,765
1,791
Schölly Fiberoptik GmbH
As of December 31, 2006, the goodwill of holdings in associated companies total € 1.6 million.
The Group did not recognize losses at Sterience S.A. of € 2.7 million (previous year: € 0) according to IAS
28.29. The cumulative, non-recognized losses amount to € 2.7 million (previous year: € 0).
Consolidated Financial Statements – Notes
17 Other Financial Investments
Cost of Acquisition
January 1, 2005
Foreign Currency Translation
Additions to Scope of Consolidation
Financial
Investments
(Equity
Method)
Other
Holdings
Securities
held as
Financial
Assets
Other
Loans
Total
€ ‘000
Loans to
Companies
in which
the Group
holds
Interest
€ ‘000
€ ‘000
€ ‘000
€ ‘000
€ ‘000
11,697
5,234
324
5,327
4,437 27,019
0
0
0
1
2,697 -18,908
0
0
0 -16,211
0
47
48
Disposals from Scope of Consolidation
0
1,166
0
0
Additions
0
13,677
52
950
Transfers
-2,974
5,574
0
0
Disposals
-172
-1,479
0
-1,083
0
0
0
775
11,248
5,264
376
5,970
Foreign Currency Translation
0
0
0
0
Additions to Scope of Consolidation
0 -25,909
0
0
0 -25,909
Disposals from Scope of Consolidation
0
0
0
0
0
Additions
2,177
26,495
1,896
0
Transfers
0
0
0
0
0
0
Disposals
-209
-306
-195
-3,759
-438
-4,907
0
0
0
-1,061
0
-1,061
13,216
5,544
2,077
1,150
Accumulated Depreciation 2006
0
636
362
56
18
1,072
Accumulated Depreciation 2005
0
636
0
1,269
16
1,921
Book Value December 31, 2006
13,216
4,908
1,715
1,094
2,353 23,286
Book Value December 31, 2005
11,248
4,628
376
4,701
2,724 23,677
Depreciation in the Fiscal Year
0
0
362
0
Fair Value Adjustments
December 31, 2005 / January 1, 2006
Fair Value Adjustments
December 31, 2006
1,166
1,127 15,806
-2,600
0
-271 -3,005
0
775
2,740 25,598
49
49
0
20 30,588
2,371 24,358
2
364
Holdings and securities are classified as “held-to-maturity” or “available-for-sale” investments and, according
to IAS 39 (Financial Instruments: Recognition and Measurement), they are reported at amortized cost and at
fair value respectively. If there are signs for impairment, an impairment test will be conducted, which may
result in an unscheduled write-off if necessary. If the reasons for unscheduled write-offs no are no longer
valid, write-up entries may be made.
81
82
Consolidated Financial Statements – Notes
The following amounts represent the 50% share of the Group in assets, liabilities, sales and profit in joint
ventures:
2006
2005
€ ‘000
€ ‘000
Non-current Assets
2,466
2,665
Current Assets
1,062
1,155
3,528
3,820
1,543
1,282
969
1,441
2,512
2,723
Net Assets
1,016
1,097
Sales
7,472
6,979
Operating Profit
127
325
Profit After Taxes
92
233
Assets
Liabilities
Non-current Reserves and Liabilities
Current Reserves and Liabilities
18 Trade Receivables
Dec. 31, 2006
Residual Term Residual Term
< 1 Year
> 1 Year
€ ‘000
€ ‘000
Dec. 31, 2005
Residual Term Residual Term
< 1 Year
> 1 Year
€ ‘000
€ ‘000
Trade Receivables
710,031
1,194
674,075
2,193
Provision for Impairment of Receivables
-38,254
-236
-40,370
-237
Trade Receivables – Net
671,777
958
633,705
1,956
671,777
958
633,705
1,956
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganization, and default and delinquency in payments are considered indicators that the trade receivable is impaired. The loss is recognized through profit and loss under Other
Operating Expenses. If the trade receivable is uncollectible, it will be written off against the provision for
impairment account for trade receivables. Subsequent recoveries previously written off are credited against the
provision for impairment account and recognized through profit and loss. In fiscal year 2006, trade receivables
of € 2,322,000 (previous year: € 2,749,000) were written off as uncollectible.
Consolidated Financial Statements – Notes
Fair value of collateral received totaled € 3,180,000.
There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of
customers, internationally dispersed.
In 2006, a total of € 2,354,000 (previous year: € 3,451,000) in receivables were pledged as collateral for
liabilities by B. Braun Melsungen AG. The utilization of liabilities secured in this manner amounted to
€ 1,302,000.
In 2004, B. Braun initiated an Asset Backed Securities Program (ABS Program) with a volume of up to € 75
million, of which € 65.3 million (December 31, 2005 € 60.5 million) was utilized by December 31, 2006. The
basis for this transaction is the assignment of trade receivables of individual B. Braun subsidiaries towards a
Special Purpose Entity in the framework of an undisclosed assignment.
The Special Purpose Entity ("SPE") should not be consolidated according to IAS 27.12 (revised 2003), as
B. Braun neither holds a stake in it nor can it control its management or finances in order to gain the benefits
from its activities. There is also no requirement to consolidate according to SIC-12 as the SPE classifies as a
so-called multi-seller-vehicle without cellular structure (silo). The requirements for a receivables transfer
according to IAS 39.15 (revised 2003) are fulfilled, since the receivables are initially transferred according to
IAS 39.18 a). Verification in accordance with IAS 39.20 proves that neither all risks nor rewards were transferred nor retained. Generally, control over receivables remained with B. Braun because the receivables were
transferred in an undisclosed assignment and B. Braun will continue to service those receivables in the future.
Therefore, according to IAS 39.30, the remaining continuing involvement of B. Braun must be recognized. This
corresponds to the maximum amount that could possibly be owed by B. Braun. In this case, it is the sum of the
adopted guarantee amounts in the first and third ranking respectively (€ 1,378,000 total). The fair value of the
guarantee was estimated at € 117,000 taking into consideration historical data, and it was recognized under
other liabilities.
We see the advantages of ABS-programs in a more efficient management of funds, an improvement in balance
sheet ratios and access to additional sources of financing.
83
84
Consolidated Financial Statements – Notes
19 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 investments and
available-for-sale financial assets.
The classification depends on the purpose for which the assets were acquired. Management determines the
classification of its financial assets at initial recognition and re-evaluates this designation on each balance
sheet date. Purchases and sales of financial assets are recognized on the trade date – the date on which the
Group commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit and loss. They are derecognized when
the rights to receive cash flow from the assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets
at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-tomaturity investments are measured at amortized cost using the effective interest method. Realized and unrealized gains and losses arising from changes in the fair value of the “financial assets at fair value through profit
and loss” category are included in the income statement in the period in which they arise. Unrealized gains
and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are
recognized directly in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are recognized in the income statement as gains and losses from financial assets.
The fair values of listed securities are based on current bid prices. If the market for a financial asset is not
active as well as for unlisted securities, the Group establishes fair value by using adequate valuation techniques. These include the use of recent arm’s length transactions and reference to other instruments that are
substantially the same.
On each balance sheet date, the Group assesses whether there is tangible evidence that a financial asset or a
group of financial assets is impaired. In the case of equity instruments classified as available-for-sale, a significant or prolonged decline in the fair value of these equity instruments below cost is considered in determining
whether the instruments are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognized in profit and loss – is derecognized from equity
and recognized in the income statement. Impairment losses recognized in the income statement on equity
instruments are not reversed through the income statement.
Consolidated Financial Statements – Notes
Financial assets available-for-sale consist of:
Dec. 31, 2006 Dec. 31, 2005
€ ‘000
€ ‘000
Listed Securities
Unlisted Securities
1,094
4,819
1,094
4,819
Available-for-sale financial assets are reported under other financial investments and other financial assets.
Other financial assets
Dec. 31, 2006
Residual Term Residual Term
< 1 Year
> 1 Year
€ ‘000
€ ‘000
Residual Term
< 1 Year
€ ‘000
Dec. 31, 2005
Residual Term
> 1 Year
€ ‘000
16,728
0
16,355
0
988
18
1,086
0
3,949
63
3,202
33
215
0
178
0
Accruals and Deferrals
15,485
817
18,663
116
Other Receivables and Assets
51,547
27,019
71,908
31,901
2,046
0
1,159
0
90,958
27,917
112,551
32,050
Other Tax Receivables
Receivables from Social Security Providers
Receivables from Employees
Receivables from Derivative Instruments
Financial Assets available-for-sale
Under other receivables, mainly prepayments, granted loans and receivables from leasing are reported.
85
86
Consolidated Financial Statements – Notes
20 Deferred Income Tax
Deferred taxes stem primarily from temporary differences between the tax base of individual companies and
the consolidated financial statements. Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. In addition, please see Note 10 Taxes on Income.
21 Inventories
31.12.2006
31.12.2005
€ ‘000
€ ‘000
Raw Materials and Supplies
145,055
128,872
Reserves
-10,735
-9,418
Raw Materials and Supplies – Net
134,320
119,454
Work In Process
130,928
124,455
Reserves
-10,302
-9,202
Work In Process – Net
120,626
115,253
Finished Products, Merchandise
444,976
418,014
Reserves
-54,973
-52,555
Finished Products, Merchandise – Net
390,003
365,459
959
929
645,908
601,095
Prepayments
According to IAS 2 those assets, which are held for sale in the ordinary course of business (finished products
and merchandise), which are in the production process for sale in the ordinary course of business (work in
process) and those which are consumed in the production process or performance of services (raw materials
and supplies) are to be listed as inventories. Inventories are recognized at the lower of acquisition or production cost and the net realizable value which is the estimated selling price in the ordinary course of business,
less the estimated cost of completion and the estimated cost necessary to make the sale.
In addition to direct expenses, manufacturing costs include allocated raw material and production overhead, as
well as depreciation related to production plant and equipment. Costs attributed to the company pension plan,
as well as voluntary social contributions made by the company, are also incorporated. Administrative expenses
are included in the costs if they are related to production.
As of December 31, 2006, inventories of € 201.0 million (previous year: € 201.9 million) are recognized at net
realizable value.
At the end of the fiscal year, the book value of inventories, used as collateral for liabilities, equaled
€ 9,943,000 (previous year: € 9,326,000). Use of liabilities secured in this manner amounted to zero.
Consolidated Financial Statements – Notes
22 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits, other short-term highly liquid financial
assets with original maturities of three months or less, and bank overdraft loans. In the balance sheet, utilized
bank overdraft loans are shown under current financial liabilities.
The development of cash and cash equivalents is shown in the Group cash flow statement.
23 Subscribed Capital
Share capital of the corporation in the amount of € 150 million was increased on April 5, 2005 to € 250
million through conversion of other retained earnings in the amount of € 100 million. Share capital was
increased through corporate funds in accordance with § 207 Section 2 Line 2 of the German Stock Corporation
Act (Aktiengesetz) without issuing new shares.
The share capital of B. Braun Melsungen AG consists of 20 million shares without nominal value. Each share
represents a calculated value of € 12.50 of the subscribed capital.
24 Capital Reserves and Retained Earnings
The capital reserve contains the premium from previous capital increases of B. Braun Melsungen AG.
Retained earnings include results achieved in the past by B. Braun Melsungen AG and companies included in
the consolidated financial statements, as long as they were not distributed, as well as the consolidated annual
net profit; net of the share attributable to minority interests.
The amount of € 29.8 million used to buy back own shares is disclosed and was deducted from retained earnings in accordance with IAS 32.
The development of equity positions is shown under Equity Development.
Dividend claims made by share owners are reported as liability in the period in which the corresponding voting
takes place.
87
88
Consolidated Financial Statements – Notes
25 Minority Interests
Minority interests relate to third-party interests in the equity of consolidated subsidiaries. They exist in particular in Almo-Erzeugnisse E. Busch GmbH, Bad Arolsen, B. Braun Holding AG, Emmenbrücke/Switzerland, and
B. Braun Austria Ges.m.b.H., Maria Enzersdorf/Austria.
26 Reserves for Pensions and Similar Obligations
a) Pension Obligations
Reserves for Pension Obligations
Reserves for Other Similar Obligations
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
435,404
408,823
5,513
4,966
440,917
413,789
The current portion of reserves for pensions amounts to € 16.2 million (previous year: € 15.3 million).
The pension obligations of the Group result from either defined contribution or defined benefit plans. For
defined contribution plans, the Group has no further payment obligations once the contributions have been
paid. The related expenses are recognized through profit and loss using the amount of the paid contribution.
For the past fiscal year, this amount equals € 11.4 million (previous year: € 10.2 million).
In addition, the Group makes contributions to basic provision plans for employees as legally required in many
countries (including Germany). However, since in most cases all social security contributions are made out of
one fund, no exact statement can be made with regard to the part that solely relates to retirement payments.
These expenses are included in social security contributions under Note 32 Personnel Expenditures.
Employees’ claims to defined benefit plans are based on legal or contractual regulations.
In the case of defined benefit plans based on legal regulations, these consist primarily of benefit obligations
abroad at the time of employment termination and they are fulfilled in the form of a capital sum. The benefit
amount depends mainly on the employee’s term of service and the range of the last salary received.
In Germany benefit obligations stemming from contractual regulations consist primarily of lifelong retirement
payments paid in cases of disability, death or fulfillment of the age requirement of an employee. In 2006, pension plans in Germany were changed to a pension credit system. The company contributes an annual amount
on behalf of the employee, which is converted to an age-dependent pension credit. The level of retirement
payments depends primarily on the number of annual pension credits earned during the term of employment
until occurrence calling for benefit payments. Abroad, benefit obligations from contractual regulations mainly
consist of retirement benefits based on the term of service and salary range.
Retirement benefits are essentially financed by reserves for pensions in Germany. Abroad, retirement obligations are financed partially through external pension funds.
Consolidated Financial Statements – Notes
The liability recognized in the balance sheet for defined benefit pension plans is the present value of the
defined benefit obligation (DBO) at the balance sheet date considering future increases less the fair value of
external plan assets, 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 to
determine the present value usually corresponds with rates of prime industry loans with identical terms.
Actuarial gains and losses exceeding the corridor (maximum of 10 percent of the total obligation and 10 percent of the plan assets respectively) is spread over the active employees’ average remaining working lives and
recognized in profit and loss.
Past-service costs are amortized on a straight-line basis over the vesting period.
The amount of reserves for pensions in the balance sheet is established as follows:
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
188,391
189,441
-157,127
-153,915
31,264
35,526
Present Value of Unfunded Pensions Obligations
469,929
462,589
Unrecognized Actuarial
Gains (+) / Losses (-)
-65,104
-88,576
-685
-716
435,404
408,823
1,937
2,162
437,341
410,985
Present Value of Funded Pensions Obligations
Fair Value of Plan Assets
(Over) Under
Unrecognized Past-service Costs
Reserves for Pensions (Net)
thereof Assets
thereof Liabilities
89
90
Consolidated Financial Statements – Notes
In fiscal years 2006 and 2005, pension reserves developed as follows:
2006
2005
€ ‘000
€ ‘000
408,823
395,493
-381
1,207
-1
1,663
-23,361
-26,279
50,324
36,739
435,404
408,823
2006
2005
€ ‘000
€ ‘000
Current Service Costs
20,229
18,254
Interest Expenses
27,637
25,967
Expected Return on Plan Assets
-7,855
-7,502
Amortization of Actuarial (Gains) Losses
2,366
-10
Amortization of Past Service Costs
7,935
30
12
0
Pensions Expenses from Benefit Plans
50,324
36,739
Pensions Expenses from Contribution Plans
11,439
10,154
Pension Expenses
61,763
46,893
Reserves for Pensions (Net) at Beginning of Year
Foreign Currency Translation
Transfers
Benefits Paid
Pension Expenses
Reserves for Pensions (Net) at End of Year
Pension expenses included in the income statement are detailed as follows:
Expense (+) / Income (-) from Curtailment
Current service costs and the amortized actuarial gains or losses, as well as past service costs, are included in
personnel expenditures; the addition of interest to the expected retirement obligations less expected return on
plan assets are included in interest expenses.
The interest portion of current service costs is included in interest expense in fiscal year 2006, and not in personnel expenditures, as it was in previous years.
Pension expenses include past service costs of € 7.3 million resulting from pension plan improvements in
Germany.
Consolidated Financial Statements – Notes
Experience adjustments to actuarial gains and losses are as follows:
2006
€ ’000
-1,138
300
Experience Adjustments to Pension Obligations
Experience Adjustments to Plan Assets
Pension benefit obligations, as well as plan assets are reconciled as follows:
Present Value of Obligations at Beginning of Year
Current Service Costs
Interest Expenses
Employee Contributions
Net Actuarial (Gain) Loss
Foreign Currency Translation
Total Pension Contributions Paid
Past Service Costs
Transfers
Effect from Consolidation Scope Changes
Effect from Plan Curtailments
Effect from Plan Settlements
Present Value of Obligations at End of Year
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
652,030
20,229
27,637
1,946
-20,385
-9,112
-21,788
7,904
-126
0
-15
0
658,320
€ ‘000
532,388
18,254
25,967
2,005
79,681
8,047
-19,006
0
4,694
0
0
0
652,030
Dec. 31, 2006 Dec. 31, 2005
Fair Value of Plan Assets at Beginning of Year
Expected Return on Plan Assets
Foreign Currency Translation
Net Actuarial (Gain) Loss
Employer Contributions
Employee Contributions
Fund Payments
Transfers
Effect from Consolidation Scope Changes
Effect from Plan Curtailments
Effect from Plan Settlements
Fair Value of Plan Assets at End of Year
€ ‘000
153,915
7,855
-8,435
300
7,095
1,946
-5,521
0
0
-28
0
157,127
€ ‘000
121,879
7,503
6,831
5,569
11,024
2,005
-3,751
2,855
0
0
0
153,915
91
92
Consolidated Financial Statements – Notes
The following table shows the actual return on external plan assets:
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
7,855
7,502
300
5,569
8,155
13,071
Dec. 31, 2006
Dec. 31, 2005
40.0%
40.0%
Bonds and Similar Securities with Fixed Interest Rate
6.0%
6.0%
Real Estate
1.0%
1.0%
Other Assets
53.0%
53.0%
100.0%
100.0%
Expected Return on Plan Assets
Net Actuarial Gain (Loss)
Actual Return on Plan Assets
The components of the plan assets are as follows:
Own Shares and Other Securities
The Group plans to pay contributions amounting to € 6.3 million towards external pension funds in the
coming fiscal year.
The calculation of pension obligations was based on the following premises:
Dec. 31, 2006
Dec. 31, 2005
Discount Rate
4.4%
4.2%
Future Compensation Increases
2.6%
2.6%
Future Pension Increases
1.2%
1.2%
Expected Return on Plan Assets
5.3%
5.3%
The percentages shown are weighted average assumptions. For the Euro region, a uniform discount rate of
4.5% (previous year: 4.25%) was used.
The Heubeck Mortality Tables 2005 G served as basis for the valuation of German pension obligations, as well
as age and gender specific fluctuation probabilities. The pension obligations of foreign subsidiaries are
assessed based on the parameters of the specific country.
Consolidated Financial Statements – Notes
The expected long term return on plan assets is determined for each asset class based on capital market surveys and yield prognoses. 53% of plan assets are other assets; primarily insurance policies. Publications and
expectations regarding returns for the respective insurance companies were used in order to determine the
anticipated long-term return of those plan assets.
The pension obligation and plan assets developed as follows:
2006
2005
2004
€ Million
€ Million
€ Million
Present Value of Unfunded Pension Obligations
469.9
462.6
393.8
Present Value of Funded Pension Obligations
188.4
189.4
138.6
Fair Value of Plan Assets
-157.1
-153.9
-121.9
Funded Status
501.2
498.1
410.5
b) Termination benefits
Benefits upon termination of employment are payable if an employee is terminated 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 provide termination benefits as a result of an
offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance
sheet date are recognized at present value.
93
94
Consolidated Financial Statements – Notes
27 Other Reserves
The major reserve categories developed as follows:
Other Non-current Reserves
Personnel
Expenditures
€ ‘000
Contingent
Liabilities
€ ‘000
€ ‘000
€ ‘000
50,085
11,856
4,813
66,754
292
53
201
546
0
0
0
0
201
55
0
256
Utilization
-2,838
-4,819
-2,379
-10,036
Liquidation
-1,662
0
-1,285
-2,947
Provision
10,176
4,084
1,728
15,988
December 31, 2005 / January 1, 2006
56,254
11,229
3,078
70,561
-231
-2
-76
-309
Changes in Scope of Consolidation
0
0
0
0
Interest
0
70
0
70
Utilization
-11,139
-5,140
-1,791
-18,070
Liquidation
0
-1,818
-686
-2,504
9,100
2,303
2,876
14,279
53,984
6,642
3,401
64,027
January 1, 2005
Foreign Currency Translation
Changes in Scope of Consolidation
Interest
Foreign Currency Translation
Provision
December 31, 2005
Other Current Reserves
Personnel
Expenditures
€ ‘000
Warranties
3,859
Foreign Currency Translation
Changes in Scope of Consolidation
Other
€ ‘000
Contingent
Liabilities
€ ‘000
€ ‘000
€ ‘000
6,084
16,297
27,286
53,526
-611
242
2,504
625
2,760
-442
0
120
-34
-356
Utilization
-1,454
-4,309
-8,502
-14,106
-28,371
Liquidation
-171
-1,000
-739
-3,035
-4,945
Provision
1,372
3,768
18,479
16,958
40,577
December 31, 2005 / January 1, 2006
2,553
4,785
28,159
27,694
63,191
-81
-129
-2,459
-159
-2,828
0
0
0
521
521
Utilization
-1,328
-3,619
-901
-24,443
-30,291
Liquidation
0
-700
-412
-748
-1,860
Provision
2,180
4,049
4,309
12,322
22,860
December 31, 2006
3,324
4,386
28,696
15,187
51,593
January 1, 2005
Foreign Currency Translation
Changes in Scope of Consolidation
Other
Total
Total
Consolidated Financial Statements – Notes
Reserves are recognized when a present legal or constructive obligation has arisen for the Group as a result of
a past event, payment to settle the obligation is likely and the amount can be estimated reliably. If a number
of similar obligations exist, the reserves are measured at a probability-weighted expected value for the population of events.
For business transactions with anticipated losses, reserves are established if the expected benefit from the
contractual claim is less than the expected costs to settle the obligation.
Reserves due after more than one year, are measured at present value through discounting.
Non-current reserves for personnel expenditures primarily contain provisions for partial retirement plans and
anniversary payments.
Other reserves mainly include provisions for other obligations in the area of personnel and social services, warranty obligations, possible losses from contracts, legal and consulting fees, as well as a number of recognizable
individual risks.
Reserve liquidations relate to those reserves established in prior years and not completely utilized. Provisions
are essentially allocated to the corresponding primary types of expense.
95
96
Consolidated Financial Statements – Notes
28 Financial Liabilities
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
21,050
13,510
275,175
280,236
Liabilities from Finance Leasing Agreements
96,526
98,264
Liabilities Related to Loans from Non-banks
53,400
87,472
446,151
479,482
277,270
316,571
Liabilities from Finance Leasing Agreements
7,692
11,791
Liabilities Related to Loans from Non-banks
65,914
41,341
1,670
1,909
352,546
371,612
798,697
851,094
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
Due within 1 year
352,546
371,612
Due within 1 to 5 years
309,257
335,335
Due in over 5 years
136,894
144,147
798,697
851,094
Non-current Liabilities
Profit Participation Rights
Liabilities to Financial Institutions
Current Financial Liabilities
Liabilities to Financial Institutions
Other Financial Liabilities
Total Financial Liabilities
Payment of financial liabilities is due as follows:
Financial liabilities are initially recognized at fair value less transaction costs. In subsequent periods, they are
measured at amortized costs. Each difference between the amount paid out (less transaction costs) and the
repayment is spread out over the term of the loan using the effective interest method and is recognized in the
income statement.
Within the framework of 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 the employee 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 equivalent to the dividends paid to
shareholders of B. Braun Melsungen AG and the repayment amount corresponds to the development of the
Group’s equity.
Consolidated Financial Statements – Notes
Interest expenses and the value changes resulting from the repayment amount corresponding to the development of the Group’s equity are recognized under personnel expenditures in the functional expenses.
As incentive for the investment made by employees, the company offers an entitlement bonus of 25% 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, 2006 a total of 394,591 shares were issued. They were issued over the years as follows:
Year issued
No. of Shares
1999
35,950
2001
32,950
2002
59,141
2003
62,001
2004
59,973
2005
72,449
2006
72,127
394,591
Together with two subsidiaries and 15 banks, B. Braun Melsungen AG entered into a consortium loan arrangement of over € 400 million. The loan may be utilized by the borrowers as revolving credit in EUR, or alternatively in USD, CHF, GBP and JPY. The loan’s variable interest rate is based on the EURIBOR and LIBOR
respectively. In addition, the loan agreement allows for an adjustment of the interest margin depending on the
debt ratio of the B. Braun Group. The term of the loan agreement ends on May 31, 2011 with the option to
extend the term twice for one year each time.
The effective interest rates on the balance sheet date were as follows:
Dec. 31, 2006
Dec. 31, 2005
EUR
USD
EUR
USD
Current Account Credits
3.8% - 4.2%
-
2.6% - 3.6%
-
Liabilities to Financial Institutions
3.8% - 4.7%
5.6% - 5.6%
2.6% - 5.3%
4.9% - 4.9%
Other Loans
3.9% - 4.3%
6.0% - 6.0%
2.6% - 4.3%
6.0% - 6.0%
97
98
Consolidated Financial Statements – Notes
Book values and fair values of the non-current interest-bearing liabilities are:
Book Value
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
Profit Participation Rights
Liabilities to Financial Institutions
Liabilities from
Finance Leasing Agreements
Liabilities Related to
Loans from Non-banks
Other Financial Liabilities
Fair Value
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
21,050
275,175
13,510
280,236
21,050
261,961
13,510
283,358
96,526
98,264
100,935
103,891
53,400
0
446,151
87,472
0
479,482
53,456
0
437,402
89,553
0
490,312
The above listed fair values were calculated based on the interest rates in effect on the balance sheet dates for
corresponding terms to maturity.
Book values of current interest-bearing liabilities are nearly equivalent to their fair values.
Book values of the interest-bearing liabilities are as follows for the currencies below:
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
501,139
223,369
74,189
798,697
€ ‘000
483,791
309,389
57,914
851,094
EUR
USD
Other
As of December 31, 2006 the company held unused credit lines totaling € 683.0 million.
Liabilities from loans are recognized as current liabilities as long as the Group does not have the legal right
to defer the repayment of the liability to at least 12 months after the balance sheet date.
Liabilities from finance leasing are recognized at present value of the leasing payments.
Liabilities related to loans from non-banks include loans from B. Braun Melsungen AG shareholders in the
amount of € 28,845,000 (previous year: € 27,773,000).
Of the total liabilities, € 41,014,000 (previous year: € 36,546,000) are secured by property liens and similar
rights. The utilization of liabilities secured in this manner amounted to € 19,775,000.
Obligations stemming from leasing agreements are secured by the leasing objects.
Consolidated Financial Statements – Notes
29 Trade Accounts Payables and Other Liabilities
Other Non-current Liabilities
Trade Accounts Payables
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
2,501
1,841
Liabilities to Social Security Institutions
Liabilities from Derivative Financial Instruments
Liabilities to Employees, Management and Shareholders
Other Liabilities
Subtotal Other Liabilities
Current Liabilities
Trade Accounts Payables
280
0
6,170
18,657
25,107
300
0
3,772
11,376
15,448
157,164
134,794
Liabilities to Social Security Institutions
Liabilities from Derivative Financial Instruments
Liabilities to Employees, Management and Shareholders
Other Tax Liabilities
Other Liabilities
Subtotal Other Liabilities
12,729
2,077
126,072
21,348
119,940
282,166
21,387
2,748
104,573
22,772
119,228
270,708
Total Liabilities
466,938
422,791
Other liabilities mainly include remaining payments related to company acquisitions, liabilities from ABS transactions and bonus obligations, as well as liabilities due to outstanding invoices.
Current liabilities are recognized at the repayable amount. Non-current liabilities that are not the hedged item
in a permissible hedge accounting relationship are carried at amortized cost.
99
100
Consolidated Financial Statements – Notes
30 Deferred Income Tax Liabilities
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their book values in the consolidated financial statements. However,
if the deferred income tax arises from 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,
it is not accounted for. Deferred income tax is determined using tax rates and laws that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred income
tax asset is realized or the deferred income tax liability is settled.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is likely
that the temporary difference will not reverse in the foreseeable future.
Consolidated Financial Statements – Notes
Additional Information
31 Material Costs
The following material costs are included in cost of goods sold:
2006
2005
€ ‘000
€ ‘000
1,158,366
1,054,393
Costs of Raw Materials, Supplies and Goods
and Services Purchased
As of the balance sheet date, expenses related to inventory reserves recognized in cost of goods sold amount
to € 14,757,000 (previous year: € 12,262,000).
32 Personnel Expenditures/Employees
Personnel expenditures in functional expenses of the income statement are as follows:
2006
2005
€ ‘000
€ ‘000
Wages and Salaries
975,121
903,034
Social Security Contributions
184,386
176,299
50,620
46,506
1,210,127
1,125,839
19,533
18,567
7,877
7,526
935
896
4,281
3,984
32,626
30,973
1,313
1,243
Personnel Expenditures
Welfare and Pensions Expenses
Number of Employees (Average including Temporary Employees)
Production
Sales and Marketing
Research and Development
Maintenance and Administration
Thereof Part-time Employees
Personnel expenditures do not include the corresponding interest portion calculated on pension reserves. The
interest is part of the interest expense.
The annual average of employees is calculated based on the date of first consolidation or discontinued consolidation, respectively. Employees of joint venture companies are included in the overall numbers according to
the percentage of the respective ownership share.
With respect to first-time consolidated companies, 96 employees were reported in the annual average of 2006
and 122 for 2005.
101
102
Consolidated Financial Statements – Notes
33 Contingent Assets and Liabilities
a) Contingent Assets
The Group has entered into an ‘earn-out’ agreement in connection with the divestiture of Spine Solutions Inc.,
USA, on February 6, 2003. According to the agreement, the Group is entitled to additional payments if the cervical spinal disk replacement receives approval for market launch by June 30, 2008 at the latest.
b) Contingent Liabilities
Liabilities result exclusively from obligations towards third parties and consist of:
Liabilities from Guarantees
Liabilities from Warranty Agreements
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
5,781
205,993
16,576
7,072
22,357
213,065
Each case relates to a potential obligation in the future depending on whether a corresponding future event
occurs which is uncertain as of the balance sheet date.
The US Department of Justice is currently conducting an investigation into unlawful marketing and price practices related to Medicare and Medicaid at a number of hospital suppliers. Besides a reserve of € 1.5 million for
the expected settlement with the state of Texas, B. Braun Medical Inc., Bethlehem/USA did not establish additional reserves for this contingent liability since - based on professional legal advice - payment is not likely
and potential obligations cannot be measured reliably.
At a subsidiary in the Czech Republic, an audit by fiscal authorities led to an observation related to the classification of freelance distributors. At this time, it is uncertain if the authorities will classify these distributors as
employees and if and to what extent this may require income tax and social security contributions to be paid
retroactively.
Consolidated Financial Statements – Notes
34 Other Financial Liabilities
The Group leases numerous office buildings and warehouses under non-callable operating lease contracts. The
lease agreements have varying terms and conditions, escalation clauses and renewal options.
The Group also leases manufacturing facilities and machineries under callable operating lease contracts. Leasing obligations related to the L.I.F.E. facility equipment are € 17.7 million annually until the year 2009, € 15.2
million until 2011, € 8.6 million until 2012, € 3.2 million until 2014, and € 2.8 million in 2015.
The minimum payments of non-discounted future leasing payments from operating lease agreements have the
following maturities:
Dec. 31, 2006
Dec. 31, 2005
€ ‘000
€ ‘000
58,133
56,482
120,530
138,833
40,672
53,600
219,335
248,915
27
0
89,517
57,275
308,879
306,190
Obligations from Rental and Leasing Contracts
Due within 1 year
Due within 1 to 5 years
Due in over 5 years
Obligations from Investments in Intangible Assets
Obligations from Investments in Property, Plant, and Equipment
Total Balance
The total amount of payments resulting from operating lease agreements included in functional expenses is
€ 53,423,000 for 2006 and € 54,748,000 for 2005.
During the ordinary course of business, B. Braun is subject to potential obligations stemming from lawsuits and
enforced claims. Estimates related to possible future liabilities of such kind are uncertain. B. Braun does not
expect substantial negative consequences for the economic and financial situation of the Group.
103
104
Consolidated Financial Statements – Notes
35 Derivative Financial Instruments
Financial Risk Factors
The Group’s activities expose it to a variety of financial risks. These include currency and interest rate risks, as
well as credit and liquidity risks. The Group’s overall risk management program focuses on the unpredictability
of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The
Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out centrally by Group treasury in accordance with policies approved by the Management Board. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the
Group’s operating units. The Board provides written principles for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest rate and credit risk as well as the use of
derivative and non-derivative financial instruments.
Foreign Exchange Risk
The Group operates internationally and is therefore exposed to a currency risk based on fluctuations in the
exchange rates between various foreign currencies, primarily with respect to the US dollar. Currency risks arise
from expected future transactions and assets and liabilities reported in the balance sheet. The risk arises when
future transactions, assets and liabilities are denominated in a currency that is not the functional currency of
the company. The Group uses forward exchange contracts to hedge against such risks resulting from expected
future transactions, as well as for assets and liabilities reported in the balance sheet.
The Group’s risk management policy is to hedge up to 50% of net cash flow in US dollars over the next fiscal
year.
Credit Risk
The Group has no significant concentrations of credit risk related to trade receivables. It has trading policies,
which ensure that products are sold only to customers with an appropriate payment history. Contracts on
derivatives and investment transactions are only entered into with financial institutions with high credit
ratings.
Liquidity Risk
Prudent liquidity risk management includes the maintenance of sufficient reserves of cash, as well as the
availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature
of the underlying businesses, Group treasury aims to maintain flexibility in funding by guaranteeing the availability of unused credit lines.
Cash Flow and Fair Value Interest Rate Risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flow are basically independent of changes in market interest rates.
The Group’s interest-rate risk arises from non-current interest-bearing liabilities. The liabilities with variable
interest rates expose the Group to a cash flow interest rate risk. A fair value interest rate risk arises from fixedinterest liabilities. Group policy is to maintain approximately 50% of its borrowings in fixed-rate instruments.
Consolidated Financial Statements – Notes
The Group hedges its cash flow interest rate risk by using interest rate swaps. Interest-rate swaps of this
nature have the economic effect of converting variable interest-bearing liabilities into fixed rate interest-bearing liabilities. Generally, the Group raises long-term borrowings at variable rates and swaps them into fixed
rates. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals,
the difference between fixed and variable interests which are derived from the principal amount.
Capital Risk Management
The Group’s capital management seeks to ensure that the concern continues to thrive as an independent family-owned 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 capital
costs.
As in 2005, the strategy of the Group in 2006 was to markedly surpass the equity ratio of 25% that was
agreed upon in the consortium loan arrangement. As of December 31, 2005 and as of December 31, 2006,
the equity ratios were as follows:
2006
2005
€ ’000
€ ’000
1,088,035
956,739
-16,741
0
Adjusted Net Equity
1,071,294
956,739
Total Assets
3,025,316
2,868,014
35.4
33.4
Equity
Goodwill acquired after December 31, 2005
Equity Ratio in percent
Derivative Financial Instruments
Derivative financial instruments are initially recognized at fair value on the date into which a derivative contract is entered and are subsequently reassessed at their fair value. Recognition of gains and losses resulting
from fair value changes depends on whether the requirements of IAS 39 related to hedge accounting are met.
105
106
Consolidated Financial Statements – Notes
Changes in the fair value of these derivatives that represent economically effective hedges according to the
Group strategy are recognized through profit and loss, unless they fall under the provisions of hedge accounting. In this case, any fair value changes are recognized directly in equity. The fair value changes in hedging
instruments are approximately offset with the fair value changes in hedged assets or liabilities.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized
through profit and loss, together with any changes in the fair value of the hedged asset or liability.
The fair values of forward foreign exchange contracts are based on the current European Central Bank reference exchanges rates adjusted for the respective interest rate differentials (premiums or discounts). Currency
options were valued based on quoted market prices or option pricing models. The fair values of instruments to
hedge interest rate risks are determined by discounting expected cash flow, using market interest rates over
the residual term of the instrument.
Nominal Volume
Residual Term > 1 Year
Fair Value
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005
€ ‘000
€ ‘000
€ ‘000
€ ‘000
€ ‘000
€ ‘000
Forward Foreign
Exchange Contracts
Interest
Rate Contracts
Embedded Derivates
101,344
116,810
26,330
29,155
-1,077
-1,136
66,163
104,037
0
0
-10
-556
6,000
5,000
0
5,000
-17
168
173,507
225,847
26,330
34,155
-1,104
-1,524
Depending on the fair value on the balance sheet date, derivative financial instruments are included under
other assets (if fair value is positive) or under other liabilities (if fair value is negative).
As of December 31, 2006 fixed EUR interest rates vary between 4.27% and 4.32% per year and the fixed USD
interest rates between 4.27% and 5.22% per year. This signifies no changes to the previous year. The most
important variable interest rates are EURIBOR and USD-LIBOR.
Consolidated Financial Statements – Notes
36 Related Party Transactions
The Group purchases materials, supplies and services from numerous suppliers throughout the world in the
ordinary course of its business. These suppliers include companies in which the Group holds an ownership
interest and companies that are affiliated with some members of B. Braun Melsungen AG’s Supervisory Board.
Business transactions with related companies are conducted at normal market conditions. From the perspective of the B. Braun Group the resulting sales are not significant. The B. Braun Group did not participate in any
transactions that were significant for us or for the related parties, which were unusual and is determined not
to do so in the future.
The following transactions were completed with related parties:
2006
2005
€ ‘000
€ ‘000
1,215
221
0
0
1,215
221
17,966
16,497
0
0
17,966
16,497
Sales
Related Companies
Key Management Personnel
Goods and Services Purchased
Related Companies
Key Management Personnel
107
108
Consolidated Financial Statements – Notes
Outstanding balances from the purchase / sale of products and services at the end of the year:
2006
2005
€ ‘000
€ ‘000
876
1,360
Reserves
0
0
Key Management Personnel
6
14
Reserves
0
0
882
1,374
120
120
2,314
2,561
390
386
2,704
2,947
1,138
1,430
Receivables
Related Companies
Procurement Obligations
Liabilities
Related Companies
Key Management Personnel
Procurement Obligations
Key management personnel include members of the Managing Board and members of the Supervisory Board of
B. Braun Melsungen AG and related companies include associated companies. The names of associated companies are shown under Major Shareholdings of B Braun Melsungen AG.
Consolidated Financial Statements – Notes
Loans from related individuals:
2006
2005
€ ‘000
€ ‘000
Loan Balance at Beginning of Year
27,773
27,184
Loans Granted during Fiscal Year
18,618
13,008
Loan Repayments
-17,546
-12,419
Interest Charged
-1,151
-930
1,151
930
28,845
27,773
Interest Paid
Loan Balance at End of Year
Loans granted by a related individual are of short-term nature. Their interest is based on the return rate for
bonds.
Remuneration for board members consists of two parts, a fixed part and a performance-oriented variable part.
In addition, it contains pension commitments and payments in kind. Payments in kind consist mainly of the
value assigned for the use of a company car under German tax laws.
In addition to the duties and performance of board members, the Group’s profit position, the success and the
future projections form the criteria for the remuneration.
The total remuneration to board members is detailed below:
2006
2005
€ ‘000
€ ‘000
Fixed Remuneration
2,001
2,043
Variable Remuneration
3,411
2,850
Expenses from Pension Obligations
935
2,074
Bonuses
112
75
Other
116
230
6,575
7,272
109
110
Consolidated Financial Statements – Notes
Of the total, € 416,000 was attributable to the Chairman of the Board as fixed remuneration and € 1,075,000
as variable remuneration from profit sharing.
A total of € 15,199,000 has been reserved for pension obligations for active board members; profit sharing
bonus obligations for board members which are reported under liabilities to employees, management and
shareholders amount to € 3,411,000.
A total of € 12,661,000 has been reserved for pension obligations to former board members and their surviving dependents; current benefits amount to € 992,000. Supervisory board remuneration expenses totaled
€ 422,000.
The remuneration for Supervisory Board members is regulated by the articles of incorporation and approved at
the annual shareholders meeting.
The Group has not granted any credits to current or former members of the Board.
Liabilities stemming from profit participation rights for board members amount to € 3,607,000 (previous year:
€ 2,194,000). For detailed information on profit participation rights please see Note 28.
Members of the Supervisory and the Management Boards are listed on pages 2–4.
Consolidated Financial Statements – Notes
Notes to the Consolidated Cash Flow Statement
The cash flow statement details how the B. Braun Group’s cash and cash equivalents have changed during the
fiscal year. According to IAS 7, cash flow was analyzed between cash flow from operating activities, investing
activities and financing activities.
37 Cash flow from operating activities
The gross cash flow amount of € 432.6 million is the cash flow before any appropriation of cash. It represents
an increase of € 80.4 million above the previous year. This change can be attributed primarily to the increase
in operating profit.
Cash flow from operating activities of € 351.5 million recognizes changes of current assets, current reserves
and liabilities (with the exception of financial liabilities). Cash in from the increase in current reserves and liabilities could not compensate for the cash out related to the increase in inventories and trade receivables. The
cash flow from operating activities is € 107.0 million above the cash flow from the previous year due to the
higher base.
38 Cash flow from investing activities
In fiscal year 2006, € 287.1 million was used to purchase property, plant and equipment, as well as intangible
assets. Cash payments for financial investments and company acquisitions totaled € 12.6 million. Cash
received from the sale of subsidiaries (€ 0.1 million), the sale of property, plant and equipment (€ 10.1 million), as well as interest and dividends received (€ 5.8 million), produced a total cash flow from investing
activities of € 283.7 million. Compared to the previous year, cash flow from investing activities increased
€ 86.2 million.
Additions to property, plant and equipment and intangible assets from finance leasing have not resulted in
cash flow and are therefore not included in investing activities. In the fiscal year, these additions totaled € 8.4
million. The purchasing amount for remaining shares in the TravaCare GmbH of discounted € 9.2 million is due
at a later date and has not led to cash flow from investing activities.
39 Cash flow from financing activities
In fiscal year 2006 a total of € 98.9 million was spent on financing activities. The balance of proceeds from
loans and repayments of loans is € 34.5 million. Dividends and interest payments amount to € 67.8 million.
The change in cash flow from financing activities of € 53.7 million compared to the previous year relates
primarily to decreased borrowing.
111
112
Consolidated Financial Statements – Notes
40 Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with banks, and other short-term highly
liquid investments with original maturities of three months or less.
As of December 31, 2006, restrictions related to cash availability amounted to € 362,000 (previous year:
€ 4,660,000). These restrictions are related primarily to security deposits and tender deposits.
41 Events after Balance Sheet Date
As of January 1, 2007, B. Braun Dialysis (UK) Ltd., Reading/England has taken over the dialysis business from
Baxter Healthcare Ltd. through an asset deal. The purchase price was GBP 6.7 million. The purchase price allocation has not yet been completed.
113
Auditor’s Report (Translation)
We have audited the consolidated financial statements – consisting of the balance sheet, the income statement, statements regarding changes in equity, cash flow statements, and the notes – as well as the consolidated management report for the fiscal year beginning on January 1, 2006 and ending on December 31, 2006
as prepared by B. Braun Melsungen Aktiengesellschaft, Melsungen, Germany. It is the responsibility of the
Management Board to prepare the consolidated financial statements and management report in compliance
with International Financial Reporting Standards (IFRS), as stipulated by the EU, and with § 315a, Section 1 of
the German Commercial Code (HGB), as well as the supplemental provisions of the articles of incorporation. It
is our responsibility to submit an opinion on the consolidated financial statements and the management report
on the basis of the audit we have conducted.
Our audit of the consolidated financial statements was performed in accordance with § 317 HGB and with due
regard for the official accounting standards as established by the Institute of Auditors in Germany (IDW). These
require that the audit be designed and performed in such a way that it discloses with reasonable guarantee
any inaccuracies or infringements that could have a material effect on the representation of the corporation’s
state of assets, financial status and profit position as conveyed in the consolidated financial statements and
the management report with due regard for the official accounting standards. In determining the audit procedures, the knowledge of the Group’s business activities, its economic and legal background and the expectation
of possible errors are taken into account. As part of the audit, the effectiveness of the company’s internal controls and the evidence for statements made in the consolidated financial statements and the Group management report are assessed primarily based on spot checks.
The scope of the audit includes the evaluation of the financial statements of all companies included in the
consolidated financial statements, the definition of the scope of consolidation, the accounting and consolidation principles observed, the general assessments made by the Board, as well as the acknowledgment of the
overall presentation provided in the consolidated financial statements and the management report. We believe,
this audit represents a sufficiently sound basis for our opinion.
Our audit has led to no objections.
Following our report based on the results of the audit, the consolidated financial statements comply with the
provisions of IFRS, as stipulated by the EU, and with § 315a, Section 1 HGB, as well as the supplemental provisions of the articles of incorporation. In all, the consolidated financial statements accurately reflect the actual
state of the Group’s assets, financial status and profit position. The consolidated management report is consistent with the consolidated financial statements and accurately conveys the Group’s current position including
future opportunities and risks.
Kassel, Germany, March 7, 2006
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Prof. Dr. Kämpfer)
Auditor
(Plaum)
Auditor
114
Major Shareholdings of B. Braun Melsungen
Company and Headquarter Location
As of Dec. 31, 2006
Holding in
Equity
percent 1)
Germany
AESCULAP AG & CO. KG, Tuttlingen
AESCULAP INTERNATIONAL GMBH, Tuttlingen2)
ALMO-Erzeugnisse E. Busch GmbH, Bad Arolsen
ASCALON GmbH, Berggießhübel
BBD Aesculap GmbH, Tuttlingen
B. Braun Medizintechnologie GmbH, Melsungen2)
B. Braun Nordamerika Verwaltungsgesellschaft mbH, Tuttlingen
B. Braun Surgical GmbH, Melsungen2)
B. Braun VetCare GmbH, Tuttlingen2)
Saxonia Medical GmbH, Radeberg2)
TransCare Service GmbH, Neuwied
TravaCare GmbH, Hallbergmoos
Europe
AESCULAP CHIFA SP.ZO.O., Nowy Tomysl/Poland
AESCULAP S.A.S., Chaumont/France
Avitum Austria GmbH, Maria Enzersdorf/Austria
Avitum France S.A.S., Boulogne/France
Avitum Polska Sp.zo.o., Nowy Tomysl/Poland
B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria
B. Braun Avitum Hungary Zrt., Budapest/Hungary
B. Braun CAREX S.p.A., Mirandola/Italy
B. Braun Holding AG, Sempach/Switzerland
B. Braun Hospicare Ltd., Collooney Co Sligo/Ireland
B. Braun Irengün Medikal Dis Ticaret A.S., Istanbul/Turkey
B. Braun Medical AB, Danderyd/Sweden
B. Braun Medical AG, Sempach/Switzerland
B. Braun Medical A/S, Frederiksberg/Denmark
B. Braun Medical A/S, Vestskogen/Norway
B. Braun Medical B.V., Oss/Netherlands
B. Braun Medical International S.L., Rubí/Spain
B. Braun Medical Kft., Budapest/Hungary
B. Braun Medical Lda., Barcarena/Portugal
B. Braun Medical LLC, St. Petersburg/Russia
B. Braun Medical Ltd., Dublin/Ireland
B. Braun Medical Ltd., Sheffield/England
B. Braun Medical N.V./S.A., Diegem/Belgium
B. Braun Medical Oy, Helsinki/Finland
B. Braun Medical S.A., Rubí/Spain
B. Braun Medical S.A.S., Boulogne/France
B. Braun Medical S.R.L., Timisoara/Rumania
B. Braun Medical s.r.o., Bratislava/Slovak Republic
B. Braun Medical s.r.o., Prague/Czech Republic
B. Braun Milano S.p.A., Milan/Italy
B. Braun Surgical S.A., Rubí/Spain
EuroCare s.r.o., Prague/Czech Republic
Amounts in € ’000
Sales
Employees
99.8
99.8
60.0
94.0
99.8
94.0
100.0
100.0
99.8
94.0
55.0
50.4
179,959
205,776
22,584
6,730
-4,123
93,259
149,310
154,612
296
5,221
400
1,209
408,397
0
48,515
10,219
36,544
136,326
0
0
12,479
24,903
8,362
10,681
2,543
0
321
87
90
571
0
0
13
203
77
41
98.6
99.8
94.0
94.0
95.8
60.0
94.0
94.0
51.0
100.0
100.0
100.0
51.0
100.0
100.0
100.0
100.0
60.0
100.0
51.0
100.0
99.9
100.0
100.0
100.0
100.0
47.6
70.0
70.0
100.0
100.0
93.7
29,353
10,959
25,372
5,309
-4,487
26,177
6,043
7,294
129,124
7,857
1,542
5,570
86,302
1,889
3,435
5,349
78,326
20,630
18,414
5,222
3,680
15,019
6,628
5,319
179,715
85,021
1,574
-253
30,293
11,600
54,436
5,816
75,391
12,610
6,742
8,531
10,581
42,754
23,525
36,599
0
12,741
8,607
21,295
151,501
8,311
19,327
43,208
0
45,502
40,997
33,077
17,902
90,164
26,664
22,487
158,045
234,285
12,247
9,732
58,601
87,198
120,477
10,308
1,210
116
5
17
198
128
631
163
0
97
43
37
681
17
38
116
1
601
122
142
38
405
63
35
916
1,357
49
27
149
157
653
163
115
Company and Headquarter Location
North and South America
AESCULAP INC., Center Valley/USA
B. Braun Aesculap de México S.A. de C.V.,
Naucalpan de Juarez/Mexico
B. Braun Medical Inc., Bethlehem/USA
B. Braun Medical Peru S.A., Lima/Peru
B. Braun Medical S.A., Bogota/Columbia
B. Braun Medical S.A., Quito/Ecuador
B. Braun Medical S.A., Santiago de Chile/Chile
B. Braun of America Inc., Bethlehem/USA
B. Braun of Puerto Rico Inc., Sabana Grande/Puerto Rico
B. Braun of Delaware Inc., Wilmington/USA
CAPS Inc., Santa Fe Springs/USA
Laboratórios B. Braun S.A., São Gonçalo/Brazil
Asia and Australia
B. BRAUN AESCULAP JAPAN CO. LTD., Tokyo/Japan
B. Braun Australia Pty. Ltd., Bella Vista/Australia
B. Braun Hanoi Pharmaceutical Company, Hanoi/Vietnam
B. Braun International Pte. Ltd., Singapore
B. Braun Korea Co. Ltd., Seoul/Republic of Korea
B. Braun Medical (H.K.) Ltd., Hong Kong/China
B. Braun Medical (India) Pvt. Ltd., Bombay/India
B. Braun Medical Industries Sdn. Bhd., Penang/Malaysia
B. Braun Medical (Shanghai) International Trading Co. Ltd.,
Shanghai/China
B. Braun Medical Supplies Inc., Manila/Philippines
B. Braun Medical Supplies Sdn. Bhd., Petaling Jaya/Malaysia
B. Braun Singapore Pte. Ltd., Singapore
B. Braun Taiwan Co. Ltd., Taipei/Taiwan
PT. B. Braun Medical Indonesia, Jakarta/Indonesia
Africa
B. Braun Medical (Pty) Ltd., Gauteng/South Africa
Other Holdings
Babolat VS, Lyon/France3) 4)
Medical Service und Logistik GmbH, Recklinghausen/Germany5)
Schölly Fiberoptic GmbH, Denzlingen/Germany4)
Sterience S.A., Paris/France4)
As of Dec. 31, 2006
Holding in
Equity
percent 1)
Amounts in € ’000
Sales
Employees
95.5
19,668
131,928
460
100.0
95.5
87.5
99.8
100.0
46.2
95.5
95.5
95.5
95.5
100.0
5,488
-8,723
9,034
9,431
4,369
10.757
127,677
49,479
27,449
23,054
26,513
21,122
636,025
10,492
15,914
8,155
21,483
0
44,177
1,867
88,825
89,559
156
3,100
285
221
51
151
0
445
0
445
1,464
99.8
99.8
100.0
100.0
99.8
100.0
100.0
100.0
19,406
9,001
4,953
3,754
13,038
15,790
2,572
104,527
81,962
28,200
10,557
33,334
50,726
18,423
12,379
172,303
375
80
458
39
110
38
277
4,627
100.0
100.0
100.0
100.0
100.0
100.0
3,451
4,102
15,414
2,916
2,905
4,550
22,499
10,013
24,383
9,581
10,532
14,793
253
123
119
32
56
209
100.0
2,661
14,256
132
27.7
50.0
27.9
49.0
30,479
542
8,291
-609
75,560
26,183
26,992
8,212
166
6
203
143
Consolidated holding / 2) Companies with profit transferring agreement / 3) Figures as of Aug. 31, 2006 (12 months) / 4) Consolidated using
equity method / 5) Consolidated proportionately
1)
All amounts correspond to the consolidated financial statements according to IFRS. Currency translation
of amounts in foreign companies is for equity at closing rate on December 31, 2006 and for sales at annual
average rate for the fiscal year.
116
Report of the Supervisory Board
The Supervisory Board of B. Braun Melsungen AG continued to perform its statutory duties and obligations
in fiscal year 2006 in accordance with applicable laws, articles of incorporation and bylaws, as well as provide advice and oversee management.
In three ordinary meetings, the Supervisory Board received reports from the Management Board regarding
the company’s current business development, financial status and important investment projects. At its
meeting of March 24, 2006, the Supervisory Board proposed that a resolution on the conclusion of domination and profit and loss transfer agreements with B. Braun Melsungen AG associated companies be put
before the General Assembly of Shareholders, and it agreed to relinquish trademark rights for two patent
families. A new consortium loan agreement was also approved. In its meeting on July 25, 2006, the Supervisory Board approved of an interest in Findos Investors Fund Nr. 1 GmbH & Co. KG in addition to a capital
increase for B. Braun of America. In each of its meetings, the Supervisory Board received detailed reports
on business developments of the North American subsidiaries and the L.I.F.E. Infusion Solution facility in
Melsungen, Germany. Information was also presented on the conversion of Aesculap AG & Co. KG, the proposed research and development projects for the Hospital Care and OPM Divisions, as well as investments
in the Avitum Division and possible acquisitions during the course of the fiscal year. The Supervisory Board
discussed and ratified the budget for 2006, consulted on statutory business matters requiring its consent as
mandated by the Articles of Incorporation and accepted the risk report submitted by the Management
Board.
The regular exchange of information and ideas took place between the Chairman of the Supervisory Board
and the Chairman of the Management Board regarding important business developments within the company and the group, as well as relative to any pending decisions.
The Personnel Committee of the Supervisory Board held two meetings during the fiscal year.
B. Braun Melsungen AG’s financial statements and the management report for fiscal year 2006, the consolidated financial statements and the consolidated annual report were audited by PricewaterhouseCoopers,
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Kassel, Germany, which was appointed official auditor
by a General Assembly of Shareholders in its meeting held on March 24, 2006. The auditor raised no objections, which was confirmed in an unrestricted audit opinion.
The auditor participated in the deliberations of the Supervisory Board relative to the annual financial statements, as well as the consolidated financial statements, and reported on the relevant findings of its audit.
The Supervisory Board’s review of the annual financial statements, the management report and the proposed allocations of B. Braun Melsungen AG’s balance sheet profits, as well of the consolidated financial
statements and the consolidated management report, concurs with the findings of the auditor’s report in
presenting no ground for objections. We, therefore, approve the annual financial statements as drafted
by the Management Board, which are thus duly declared in accordance with § 172 of the German Stock
Corporation Law (AktG).
117
The Supervisory Board endorses the Management Board’s proposed allocation of balance sheet profits.
The Supervisory Board would like to express its gratitude to the Management Board for its excellent and
successful cooperation and to all employees of the B. Braun Group for their achievements in the past year.
Melsungen, March 2007
The Supervisory Board
118
Executive Management
Hospital Care Division
Patryck Breitburd
Sales Region III,
France
Jesus Donado-Mazar
Sales Region II,
Spain
Uwe Alter
Marketing and Sales,
Germany
Christian Braun
Sales Region IV,
Austria
Michael Hast
Production,
Germany
Markus Strotmann
Strategic Marketing,
Germany
Christof Hennigfeld
Marketing and Sales,
Germany
Hans Hux
Sales Region IV,
Great Britain
Dr. Joachim Schulz
Production,
Germany
Dr. Harald Stallforth
Research and Development,
Germany
Otmar Wawrik
Sales Region I,
Germany
Avitum Division
Dr. Michael Juchem
Marketing and Development,
Germany
Manfred Herres
Production,
Germany
Hans-Joachim Kolmer
Sales Europe,
Germany
Manfred Mahrle
Dialysis Services,
Austria
Corporate Divisions
Dieter Wunderlich
Production Sutures,
Spain
Dr. Annette Beller
Finance, Taxes and Controlling,
Finance and Accounting, Taxes,
Germany
OPM Division
Dr.-Ing. Hans-Otto Maier
Research and Development,
Germany
Roland Marti
B. Braun Medical AG,
Switzerland
Aesculap Division
Dr. Luigi Boggio
Sales Region II,
Italy
Uwe Alter
Marketing and Development,
Sales Region I, II, VI and VII,
Germany
Jean-Philippe Cottenceau
Marketing and Development,
Sales Region III and IV,
Production,
France
Norbert Feldhaus
Aesculap Division, Human Resources,
Germany
Manfred Mahrle
Finance, Taxes and Controlling,
Controlling Southeast Europe,
Austria
Karl-Heinz Löw
Information Technology (IT),
Germany
119
Volker Ludwig
Human Resources Development
and Legal Affairs,
Human Resources Management
and Benefits,
Germany
Jürgen Sauerwald
Human Resources Development
and Legal Affairs,
Management Development,
Germany
Jürgen Völlkopf
Logistics and Supply Chain,
Germany
Andreas Walde
Finance, Taxes and Controlling,
Controlling,
Germany
Eric Steen
Sales, CAPS
North America
Alois Mayer
Production,
B. Braun Medical Industries
Sdn. Bhd., Malaysia
Timothy T. Richards
Marketing,
North America
China, Hong Kong, Taiwan
Dragan Soljakovski
Marketing and Sales,
Laboratórios B. Braun S. A.,
South America
Christian Hildebrandt
B. Braun Medical (H.K.) Ltd.,
B. Braun Medical PRC,
Shanghai, China
Milton Oliveira
Finance, Taxes and Controlling,
Human Resources Development
and Legal Affairs,
Information Technology (IT),
Logistics,
Laboratórios B. Braun S. A.,
South America
Japan
Takashi Mikami
B. Braun Japan Co. Ltd.,
Aesculap Japan Co. Ltd.,
Japan
Executive Board Departments
North and South America
Willem J. deGoede
Production and Logistics,
North America
Charles A. DiNardo
Human Resources and
Legal Affairs,
North America
Bruce A. Heugel
Finance, Taxes and Controlling,
Information Technology (IT),
North America
Dirk Kuyper
Aesculap Division,
North America
Asia/Pacific Region
Michael Becker
Finance, Taxes and Controlling,
Information Technology (IT),
B. Braun Medical Industries
Sdn. Bhd., Malaysia
Hae Dong Kim
B. Braun Medical Industries
Sdn. Bhd., Malaysia
Yenni Lim
Logistics and Supply Chain,
B. Braun Medical Industries
Sdn. Bhd., Malaysia
PD Dr. Martin Kirschner
Medical Sciences,
Germany
Dr. Bernadette Tillmanns-Estorf
Corporate Communications,
Germany
120
Impressum
Published by:
B. Braun Melsungen AG
Werkanlagen Pfieffewiesen
Europagebäude
34212 Melsungen
Germany
Tel +49 (0)56 61-71-0
Fax +49 (0)56 61-71-45 67
www.bbraun.com
For further information contact:
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: [email protected]
Disclaimer:
The annual report is published in German
and English. In case of any discrepancy the
German version prevails.
gb_06_umschlag_engl.qxp
12.06.2007
9:12 Uhr
Seite 1
At a Glance
B. Braun at a Glance
Sales by Region (in million euros)
Germany 727.9 (21.9%* / +7.0%**)
Europe (excluding Germany) and Africa1,224.3* (36.9% / +8.8%**)
North America 822.0 (24.7%* / +14.3%**)
Central and South America 182.3 (5.5%* / +21.0%**)
Asia and Australia 364.9 (11.0%* / +4.0%**)
Total: 3,321.4 (+9.8%)
Hospital Care Division
Aesculap Division
The Hospital Care Division supplies
Products and services for all core
hospitals with injection and infusion
surgical procedures are the focal point
solutions and therapy devices, as well
of the Aesculap Division.
2006
2005
Change
€ Million
€ Million
%
3,321.4
3,026.2
9.8
Profit After Functional Expenses
335.2
266.5
25.8
products.
Operating Income
305.5
266.6
14.6
Core Products/Groups:
Consolidated Annual Net Profit
181.8
155.3
17.1
Electronic Infusion Devices . Infusion Sets and
Sales
as a variety of medical disposable
Surgical Instruments . Suture Materials
Accessories . Peripheral IV Catheters . IV Solutions and
5.5
5.1
7.8
Investments in Property, Plant and Equipment and Intangible Assets
293.8
238.8
23.0
Depreciation of Property, Plant and Equipment and Intangible Assets
181.4
169.9
6.8
Equity Ratio (in %)
36.0
33.4
7.8
Equity Ratio including Loans from Shareholders (in %)
37.0
34.3
7.9
490.7
436.9
12.3
Personnel Expenditure
1,210.1
1,125.8
7.5
Employees by Functional Area
Average Number of Employees
32,626
30,973
5.3
Production 59.9%
Sales and Marketing 24.1%
Research and Development 2.9%
Technology and Administration 13.1%
Income Structure
Net Margin after Taxes (in %)
Sales by Division (in million euros)
Hospital Care 1,584.1 (47.7%* / +9.3%**)
Aesculap 955.6 (28.8%* / +8.2%**)
OPM 466.6 (14.1%* / +13.0%**)
B. Braun Avitum 293.8 (8.8%* / +12.9%**)
Other Sales 21.4 (0.6%* / +3.4%**)
Employees by Region
10,000
7,289 (+11.7%)
6,523
2,375 (+8.2%)
2,196
4,465 (+2.3%)
4,366
9,592 (+4.2%)
9,205
8,905 (+2.6%)
2,000
8,683
4,000
0
Germany
Europe and Africa North America
Central and
South America
Asia, Australia
Parenteral Nutrition . Specialized and Generic
Medications . Pharmacy Accessories . Regional
Anesthesia . Central Venous Catheters . Irrigation
2006
2005
2004
€ Million
%
€ Million
%
€ Million
%
Sales
3,321.4
100.0
3,026.2
100.0
2,793.5
100.0
Cost of Goods Sold
1,781.2
53.6
1,632.6
54.0
1,505.1
53.9
Gross Profit
1,540.2
46.4
1,393.6
46.0
1,288.4
46.1
Selling Expenses
904.4
27.2
847.4
28.0
782.4
27.9
General and Administrative Expenses
194.8
5.9
182.4
6.0
174.8
6.4
Research and Development Expenses
105.8
3.2
97.3
3.2
87.7
3.1
Profit After Functional Expenses
335.2
10.1
266.5
8.8
243.5
8.7
Other Operating Income (Expenses)
-29.7
-0.9
0.1
0.0
6.1
0.2
Operating Income
305.5
9.2
266.6
8.8
249.6
8.9
Financial Income (Loss)
-62.1
-1.9
-57.9
-1.9
-61.0
-2.1
Profit Before Taxes
243.4
7.3
208.7
6.9
188.6
6.8
61.6
1.8
53.4
1.8
57.8
2.1
181.8
5.5
155.3
5.1
130.8
4.7
Income Tax Expenses
Consolidated Annual Net Profit
*Percentage of total sales / **Change from previous fiscal year
Systems . Neurosurgery . Vascular Therapy
Specific Products/Groups:
Solutions . Urological Drainage and Measurement .
Wound Drainage
OPM Division
B. Braun Avitum Division
The OPM Division provides products and
The B. Braun Avitum Division combines
services for medical care needs outside
the supply of products and medical ser-
of the hospital, as well as for chronically
vices for extracorporeal blood treatment.
ill long-term patients.
Core Products/Groups:
Core Products/Groups:
Machines, Dialyzers and other Products designed to
Ambulatory IV Therapy . Parenteral Nutrition . Home
treat Hemodialysis
Care . Stoma Care . Skin Care and Wound Care
Specific Products/Groups:
Acute Dialysis . H.E.L.P. Systems . Medical Services
Specific Products/Groups:
Individual Parenteral Nutrition Regimens . TransCare
6,000
Orthopedics/Traumatology . Spinal Surgery . Motor
Replacement Therapy
Management
2005 Total: 30,973
2006 Total: 32,626 (+5.3%)
8,000
Drug Delivery Systems . Clinical Nutrition . Volume
Specific Products/Groups:
Disposable Syringes and Needles . Hospital Services for
EBITDA
Total: 3,321.4 (+9.8%)
Core Products/Groups:
Consulting . Incontinence Care . Enteral Nutrition .
Disinfection and Hygiene . Diabetic Care
gb_06_umschlag_engl.qxp
01.06.2007
11:54 Uhr
Seite 2
Connections
Annual Report 2006
Connections
As a trusted partner in healthcare, B. Braun is synonymous with innovation. Working
closely with our customers, we focus on new ways to improve therapies and processes.
That is why we share knowledge every day at our many locations around the world.
We encourage close interaction with our customers, researchers, patients and between
colleagues: through connections, the theme of our 2006 annual report
Nina Seidel, Radiology, Charité Hospital, Berlin
Glossary
Glossary
Anesthesia
Literally: Insensitivity; in the broader sense, the local or
general elimination of pain used to perform surgery on a
patient (i.e. anesthetic).
Cash-to-Cash Cycle
The cash-to-cash cycle describes the time necessary to
convert payments to suppliers into cash income from
customers.
Antiemetic
A remedy to control nausea and vomiting.
Deferred Compensation
Compensation that is converted into a pension plan.
Dilative Cardiomyopathy
Pathological widening (dilation) of the cardiac muscle.
Derivates
Financial instruments whose price value reflects currency
fluctuation or the price forecast of other investments.
Epidural Anesthesia
A type of regional anesthesia involving the injection of an
anesthetic agent into the epidural space, which block the
transmission of pain signals through nerves at or near the
spinal cord.
Hydroxyethyl Starch
Abbreviation: HES or HAES, an artificially-produced blood
plasma substitute.
Hemodialysis
A process, whereby waste products are removed from the
blood by diffusion through a semi-permeable membrane.
Opioid
A narcotic drug that is generally prescribed to manage pain.
Its name is derived from the natural opiate mixture of
substances, but does not contain and is not made from
opium.
Pe d i a t r i c s
The branch of medicine that deals with the medical care of
infants, children, and adolescents.
Regional Anesthesia
A type of anesthesia involving the localized injection of
anesthetics in the area of central (near the spine) or
peripheral (away from the spine) nerves to block the transmission of pain impulses to the brain.
Sedative
A tranquilizing drug administered to lessen anxiety.
ERP
Enterprise Resource Planning; a business management
system that integrates the use of enterprise-wide resources
including capital, equipment and personnel to maximize
efficiencies.
P r o f i t Pa r t i c i p a t i o n R i g h t s
Profit participation rights grant a fixed or variable profit
share for providing capital for a limited amount of time. The
owner of such rights receives specific creditor rights in
exchange for the capital provision.
Incentive Plan
An arrangement whereby management receives additional
monetary compensation for its contribution to the development of a corporation’s value.
Net Working Capital
The current assets of a corporation generating sales; without
resulting in cost of capital. Net working capital is calculated
by deducting cash and cash equivalents as well as trade
accounts payables from current assets.

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