Sharing Expertise. Creating Value

DAS UNTERNEHMEN | KONZERNLAGEBERICHT | KONZERNABSCHLUSS | LOREM IPSUM 1

MAGAZIN: THEMA LOREM IPSUM

SHariNG e xPerTiSe. Cre aTiNG vaLue. Annual Report 2010

Five-year Overview

2006 2007 2008 2009 2010 € million € million € million € million € million Sales 3,321.4 3,572.9 3,786.4 4,028.2 4,422.8 Cost of Goods Sold 1,781.2 1,898.3 2,029.6 2,151.4 2,341.7 Functional expenses 1,205.0 1,297.1 1,366.2 1,432.3 1,595.9 Selling expenses 904.4 972.9 1,031.2 1,091.1 1,218.9 General and administrative expenses 194.8 207.9 204.7 202.1 221.6 research & Development expenses 105.8 116.2 130.3 139.1 155.4 Interim profit 335.2 377.6 390.6 444.5 485.2 operating profit 305.5 348.7 345.7 410.6 456.2 profit before taxes 243.4 283.0 268.8 336.1 389.6 Consolidated Annual Net profit 181.8 217.7 185.1 239.6 277.4 eBItDA 490.7 535.9 545.8 620.5 700.5

Assets 3,025.3 3,332.1 3,708.0 3,975.1 4,686.1 intangible assets (incl. Goodwill) 113.4 124.3 157.1 167.9 218.6 Property, Plant and equipment 1,312.1 1,435.8 1,698.7 1,926.8 2,305.0 inventories 645.9 709.7 726.7 708.5 780.0 Trade accounts receivable 672.7 738.0 767.6 790.1 933.5 equity 1,088.0 1,255.3 1,389.7 1,620.0 1,984.0 liabilities 1,937.3 2,076.8 2,318.3 2,355.1 2,702.0 Pension Obligations 440.9 456.9 470.4 491.8 513.3 Financial Liabilities 798.7 895.7 1,094.5 1,006.4 1,233.4 Trade accounts Payable 159.7 177.4 179.2 210.3 216.8

Investments in property, plant and equipment and Intangible Assets 293.8 349.4 471.0 454.8 575.4 Depreciation and Amortization of property, plant and equipment and Intangible Assets 181.4 182.9 197.8 208.6 238.2 personnel expenditure 1,210.1 1,271.4 1,339.8 1,424.9 1,581.7 employees (annual average) 33,127 35,810 37,601 38,512 40,316 2 0 10 t R R e p o

COMPa N y P rOF iL e l B. Braun is one of the world’s leading providers of healthcare solutions.

NNUA Through its Hospital Care, aesculap, Out Patient Market, and B. Braun A

avitum Divisions, the company supplies medical products and services | to hospitals, physicians in private practice, and the homecare market.

B. Braun project manager Cristina Molina (pictured), at the Pharmaceu- ticals Center of excellence, is overseeing the development of the new

3 0 0 2 010 3 B . B R A U N LiFe Nutrition production facility in Melsungen, Germany. 2

SHariNG e xPerTiSe. Cre aTiNG vaLue. Annual Report 2010

Five-year Overview B. BrauN aT a GLaNCe HiGHLiGHTS 2010

2006 2007 2008 2009 2010 Key figures Sales JANUARy The number of B. Braun employees reaches JUNe Medical training on the island of the Gods: million million million million million € € € € € an unprecedented 40,000. B. Braun Medical indonesia begins operations at the asia Sales 3,321.4 3,572.9 3,786.4 4,028.2 4,422.8 Sales by region | IN € mIllIoN Pacific Surgical Training Center in Bali. Cost of Goods Sold 1,781.2 1,898.3 2,029.6 2,151.4 2,341.7 2010 2009 Change in % Manufacturing begins in Switzerland: The new facility Functional expenses 1,205.0 1,297.1 1,366.2 1,432.3 1,595.9 Germany 878 in Crissier will manufacture approximately 12 million Gross Margin (in %) 47.1 46.6 Selling expenses 904.4 972.9 1,031.2 1,091.1 1,218.9 europe & africa 1,692 empty bags for clinical nutrition annually. Net Margin after Taxes (in %) 6.3 5.9 General and administrative expenses 194.8 207.9 204.7 202.1 221.6 asia & australia 616 (without Germany) eBiTDa (in € million) 700.5 620.5 12.9 research & Development expenses 105.8 116.2 130.3 139.1 155.4 eBiTDa Margin (in %) 15.8 15.4 Interim profit 335.2 377.6 390.6 444.5 485.2 Latin america 296 equity ratio (in %) 42.3 40.8 operating profit 305.5 348.7 345.7 410.6 456.2 North america 940 equity ratio including Loans from Shareholders (in %) 43.3 41.8 profit before taxes 243.4 283.0 268.8 336.1 389.6 Net Financial Debt (in € million) 1,183.5 945.7 25.1 Consolidated Annual Net profit 181.8 217.7 185.1 239.6 277.4 totAl € 4.423 mIllIoN Net Financial Debt/eBiTDa 1.7 1.5 10.8 ApRIl B. Braun is named Germany’s “Top engineering oC toBeR B. Braun’s Czech subsidiary creates a new eBItDA 490.7 535.9 545.8 620.5 700.5 e employer 2010.” meeting place: a café in the “House of Medicine” in investments in Property, Plant and equipment

Sales by division | IN € mIllIoN ANC Prague. The café was designed by renowned Czech and intangible assets (in € million) 575.4 454.8 26.5 l The new B. Braun office in Havana opens for business. Assets 3,025.3 3,332.1 3,708.0 3,975.1 4,686.1 2 0 1 0 architect eva Jiřičná.

S B. Braun Medical international S.L., Havana, Cuba was Depreciation and amortization of Property, Plant and equipment t A G

intangible assets (incl. Goodwill) 113.4 124.3 157.1 167.9 218.6 OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 IGH

Property, Plant and equipment 1,312.1 1,435.8 1,698.7 1,926.8 2,305.0 l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0

inventories 645.9 709.7 726.7 708.5 780.0 IGH B. Braun avitum 475 Hospital Care 2,087 R A U N A employees (annual average) 41,666 39,504 5.5 H Trade accounts receivable 672.7 738.0 767.6 790.1 933.5

Other 26 B . B equity 1,088.0 1,255.3 1,389.7 1,620.0 1,984.0 liabilities 1,937.3 2,076.8 2,318.3 2,355.1 2,702.0 aesculap 1,281 Pension Obligations 440.9 456.9 470.4 491.8 513.3 Financial Liabilities 798.7 895.7 1,094.5 1,006.4 1,233.4 income structure mAy The B. Braun Group and its employees around DeCemBeR The Supervisory Board elects Dr. Heinz- Trade accounts Payable 159.7 177.4 179.2 210.3 216.8 totAl € 4.423 mIllIoN the world donate € 230,000 to help build a hospital in walter Große to succeed Prof. Dr. h.c. Ludwig Georg earthquake-ravaged Haiti. Braun, who will retire on March 31, 2011. Otto-Philipp 2010 2009 Change Investments in property, plant and Braun and Dr. annette Beller are appointed to the in % employees a new factory for surgical instruments is opened in € million % € million % equipment and Intangible Assets 293.8 349.4 471.0 454.8 575.4 radzyń Podlaski, Poland. Management Board. Depreciation and Amortization of property, Sales 4,422.8 100.0 4,028.2 100.0 9.8 plant and equipment and Intangible Assets 181.4 182.9 197.8 208.6 238.2 Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region Gross profit 2,081.1 47.1 1,876.8 46.6 10.9 personnel expenditure 1,210.1 1,271.4 1,339.8 1,424.9 1,581.7 Selling expenses 1,218.9 27.6 1,091.1 27.1 11.7 12,663 12,157 employees (annual average) 33,127 35,810 37,601 38,512 40,316 General and 12,000 11,251 10,672 administrative expenses 221.6 5.0 202.1 5.0 9.7 9,243 research and 9,000 8,265 2 0 10

t Development expenses 155.4 3.5 139.1 3.5 11.7

R Interim profit 485.2 11.0 444.5 11.0 9.1 6,000 5,486 5,486 R e p o Other Operating income COMPa N y P rOF iL e l and expenses – 29.0 – 0.7 – 34.0 – 0.8 14.5 2,924 3,023 3,000 B. Braun is one of the world’s leading providers of healthcare solutions.

NNUA operating profit 456.2 10.3 410.6 10.2 11.1 Through its Hospital Care, aesculap, Out Patient Market, and B. Braun A

Net Financial income (Loss) – 66.6 – 1.5 – 74.5 – 1.8 10.6 avitum Divisions, the company supplies medical products and services | to hospitals, physicians in private practice, and the homecare market. profit before taxes 389.6 8.8 336.1 8.3 15.9 Germany europe & africa North america Latin america asia & australia income Taxes 112.3 2.5 96.5 2.4 16.3 ( without Germany) B. Braun project manager Cristina Molina (pictured), at the Pharmaceu- ticals Center of excellence, is overseeing the development of the new Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39.504 DeC 31, 2010 totAl: 41.666

3 0 0 2 010 3 B . B R A U N LiFe Nutrition production facility in Melsungen, Germany. MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 1

Sharing expertise. Creating value.

Healthcare systems around the world are facing major challenges, one of which is maximizing benefits while maintaining reasonable cost levels. B. Braun is making a major contribution towards this goal through con- tinual improvements in the outcomes of our therapies and the efficiencies of our processes – both internally and in the inpatient and outpatient treatment settings. Our ongoing close collaboration with rese archers, clinicians and patients helps us optimize medical procedures and improve the quality of life for those we serve. We share our expertise everyday to create lasting value. B. BrauN aT a GLaNCe HiGHLiGHTS 2010

Key performance indicators Sales JANUARy The number of B. Braun employees surpasses JUNe Medical training on the island of the Gods: 40,000 for the first time. B. Braun Medical indonesia begins operations at the asia Sales by region | IN € mIllIoN Pacific Surgical Training Center in Bali. 2010 2009 Change in % Manufacturing begins in Switzerland: The new facility Germany 878 in Crissier will manufacture approximately 12 million Gross Margin (in %) 47.1 46.6 europe & africa 1,692 empty bags for clinical nutrition annually. Net Margin after Taxes (in %) 6.3 5.9 asia & australia 616 (excluding Germany) eBiTDa (in € million) 700.5 620.5 12.9 eBiTDa Margin (in %) 15.8 15.4 Latin america 296 equity ratio (in %) 42.3 40.8 North america 940 equity ratio including Loans from Shareholders (in %) 43.3 41.8 Net Financial Debt (in € million) 1,183.5 945.7 25.1 totAl € 4.423 mIllIoN Net Financial Debt/eBiTDa 1.7 1.5 10.8 ApRIl B. Braun is named Germany’s “Top engineering oC toBeR B. Braun’s Czech subsidiary creates a new e employer 2010.” meeting place: a café in the “House of Medicine” in investments in Property, Plant and equipment

S B. Braun Medical international S.L., Havana, Cuba is Depreciation and amortization of Property, Plant and equipment t A G

OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 IGH

l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0 IGH

B. Braun avitum 475 Hospital Care 2,087 R A U N A employees (as of December 31, 2010) 41,666 39,504 5.5 H

Other 26 B . B

aesculap 1,281

income structure mAy The B. Braun Group and its employees around DeCemBeR The Supervisory Board elects Dr. Heinz- totAl € 4.423 mIllIoN the world donate € 230,000 to help build a hospital in walter Große to succeed Prof. Dr. h. c. Ludwig Georg earthquake-ravaged Haiti. Braun, who will retire on March 31, 2011. Otto-Philipp 2010 2009 Change Braun and Dr. annette Beller are appointed to the in % employees a new factory for surgical instruments in radzyń Podlaski, € million % € million % Poland begins operation. Management Board. Sales 4,422.8 100.0 4,028.2 100.0 9.8

Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region Gross profit 2,081.1 47.1 1,876.8 46.6 10.9

Selling expenses 1,218.9 27.6 1,091.1 27.1 11.7 12,663 12,157 General and 12,000 11,251 10,672 administrative expenses 221.6 5.0 202.1 5.0 9.7 9,243 research and 9,000 8,265 Development expenses 155.4 3.5 139.1 3.5 11.7 Interim profit 485.2 11.0 444.5 11.0 9.1 6,000 5,486 5,486 Other Operating income and expenses 2,924 3,023 – 29.0 – 0.7 – 34.0 – 0.8 14.5 3,000 operating profit 456.2 10.3 410.6 10.2 11.1 Net Financial income (Loss) – 66.6 – 1.5 – 74.5 – 1.8 10.6 profit before taxes 389.6 8.8 336.1 8.3 15.9 Germany europe & africa North america Latin america asia & australia income Taxes 112.3 2.5 96.5 2.4 16.3 ( excluding Germany)

Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39,504 DeC 31, 2010 totAl: 41,666 DAS UNTERNEHMEN | KONZERNLAGEBERICHT | KONZERNABSCHLUSS | LOREM IPSUM 5

MAGAZIN: THEMA LOREM IPSUM

B. BrauN aT a GLaNCe HiGHLiGHTS 2010

S B. Braun Medical international S.L., Havana, Cuba is Depreciation and amortization of Property, Plant and equipment t A G

OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 IGH

l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0 IGH

B. Braun avitum 475 Hospital Care 2,087 R A U N A employees (as of December 31, 2010) 41,666 39,504 5.5 H

Other 26 B . B

aesculap 1,281

Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region Gross profit 2,081.1 47.1 1,876.8 46.6 10.9

Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39,504 DeC 31, 2010 totAl: 41,666 2

C ontent s

management board journal

Foreword 4 Seizing Opportunities, Helping People 8

Management Board 6 Mobile and independent 14

The source of life 20

Allergy in the knee 26 3

group management report Consolidated Financial Statements

At a gl ance 34 Consolidated Statement of income (Loss) 66

The B. Braun Group 35 Consolidated Statement of FINANCIAL POSITION 67

Economic environment 42 NOTES 71

Business and earnings performance 44 Independent Auditors’ Report 131

Financial position and assets 50 Ma jor Shareholdings 132

Personnel report 54

Risk and opportunities report 57 SUPERVISORY BOARD REPORT 136

Subsequent e vents 60 glossary 138

Outlook 60 Imprint 140 4

P r o f. D r . h. c . L u d w i g G e o r g B r a u n , C h a i r m a n o f t h e M a n a g e m e n t B o a r d MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 5

F o r EW o r d

F“Theoreword primary reason for our ongoing success is that, in increasing numbers,Ensuring succ cusess tomers around the world recognize the value of our innovative, high-qualit y produc t s. Thus, we remain true to our motto of grow th through new and improved produc t s.” Dear Reader,

B. Braun maintained its successful growth trend in 2010. Fortunately, the aftershocks following the crisis of 2009 were markedly weaker than anticipated and only impacted us in the area of capital goods. The success of the reporting year is reflected in sales growth of 9.8 percent, which exceeded our original expectation. This was attributable in part to stronger currencies in Asia, Latin America and the United States Dollar. Profit before taxes increased by 15.9 percent last year, a particularly satisfactory amount given our high level of capital investment.

The primary reason for our ongoing success is that, in increasing numbers, customers around the world recognize the value of our innovative, high-quality products. Thus, we remain true to our motto of growth through new and improved products.

The Journal section of this annual report features a number of examples of how our innovations are improving the quality of life for many people, from innovative knee joint implants that prevent allergic reactions in patients to a cooperative effort with government authorities in India to provide care for dialysis patients who cannot afford continuous treatment.

As such, we are living up to our guiding principle of “Sharing Expertise” every day. Together with experts from a wide range of fields, we are constantly expanding and consolidating our knowledge and sharing it with customers, business partners and clinicians. We are confident that we will continue to remain on the fast track in all of our business areas. We are, therefore, significantly expanding our manufacturing capacity.

The year 2010 was again characterized by record levels of capital investment, which, at € 575 million, exceeded depreciation by approximately € 337 million. This investment reaffirms our commitment to meet the increasing global demand for hospital products in the future.

We are pleased that, despite a considerable increase in total assets, the company‘s equity ratio grew to 42 percent and even exceeds 43 percent when loans from shareholders are taken into account. However, we are not only investing in development and production. Additionally and most importantly, we are investing in our employees, whose know-how and dedication ensure our company’s success. To meet the challenges of the future, we increased our workforce last year to a total of 41,666 employees worldwide as of December 31, 2010. 4

Prof. Dr. h.c. Lu d w i g G eorg Braun, C hairman of the M anagement Boar d MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 5

F o r EW o r d

“The primary reason for our ongoing success is that, in increasing numbers, customers around the world recognize the value of our innovative, high-qualit y produc t s. Thus, we remain true to our motto of grow th through new and improved produc t s.”

We offer vocational training and continuing education programs to meet the ongoing demand for skilled employees and to preserve the high level of education of our employees now and in the future. Being a highly attractive employer is very important to us. This is evident in new initiatives to provide employees with a better work-life balance. These initiatives have been extremely well received. We are pleased that, in collaboration with employee representatives, we were able to implement of a number of creative ideas in also this area.

I have had the pleasure of leading the company for more than 40 years. The time has now come to hand the reins over to a new generation. In Heinz-Walter Große we have appointed a first-class successor from within our own ranks to take over as Chairman of the Management Board. I hand over this responsibility with great optimism. The Management Board can continue its successful work on a strong foundation. I would like to extend my heartfelt thanks to all the employees, customers and suppliers who have accompanied me throughout my career for their continuous support and outstanding cooperation.

To those who follow me, I wish them the success that comes through hard work and dedication.

Yours sincerely,

Prof. Dr. h. c. Ludwig Georg Braun Chairman of the Management Board of B. Braun Melsungen AG 4

Prof. Dr. h.c. Lu d w i g G eorg Braun, C hairman of the M anagement Boar d MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 5

F o r EW o r d

“ The primary reason for our ongoing success is that, in increasing numbers, customers around the world recognize the value of our innovative, high-quality products. Thus, we remain true to our motto of growth through new and improved products.” 6

Management Board

Dr. rer. pol. Prof. Dr. h.c. Heinz-Walter GroSSe Ludwig Georg Braun

Vice Chairman of the Management Chairman of the Management Board, FINANCE AND HUMAN RESOURCES Board MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 7

Dr. rer. NAT. prof. Dr. med. Caroll H. Neubauer, Dr. rer. nat. Wolfgang Feller Hanns-Peter Knaebel LL.M. Meinrad Lugan

B. BR AUN AVITUM DI VISION Chairman of the Management CHIEF E XECUTIVE OFFICER, B. BRAUN HOSPITAL CARE AND OPM Board of Aescul ap AG, Aescul ap OF AMERICA, NORTH AMERICAN DIVISIONS Division REGION 8

Seizing Opportunities, Helping People

India is a country of booming growth rates and tremendous challenges . B. Braun wants to seize market opportunities and help people wit h c hronic kidney disorders at ele v en new dialysis centers.

t He company offers extensive experience, as t he B . Br aun Av i t um

Division already operates a network of more t h a n 15 0 di a ly sis

centers in Europe , A si a a nd S ou t h A f ric a . Ph ysicians and nursing

s ta f f at t hese centers enh ance patients’ quality of life utilizing

t he latest medical technolo gy.

In recent decades, India has risen from a crisis-ridden devel- responsible fashion in India. Together with representatives oping country to a world economic power at a dizzying rate. of the state of Andhra Pradesh, we came to the conclusion Its 1.2 billion people are driving economic progress forward that we could help most effectively by establishing dialysis at an impressive pace, and in some sectors such as IT, India centers,” says Krishna Chellappa. has long been in the international premier league, thanks to its very highly educated workforce. B. Braun has had a Some background: treatment at a hospital or clinic is nor- presence in India since 1994. “As a provider of comprehen- mally free for the poorest as part of the primary healthcare sive solutions, we are highly regarded by our Indian custom- provision of the state. However, patients must pay out-of- ers and are one of the market leaders in medical products pocket for outpatient care provided by private practice phy- and services,” says Krishna Chellappa, Business Unit Head sicians. And of course, many, the chronically ill in particular, of B. Braun Medical India. cannot afford the treatment and healthcare services that they require. It may appear paradoxical at first, but even Increasing prosperity has produced many positive conse- the very poor in India are suffering from the so-called “dis- quences for the country and its, by international standards, eases of affluence” such as obesity, high blood pressure very young population. At the same time, however, India and diabetes, as a result of changes in lifestyle and eating faces enormous challenges, which become evident to visitors habits. The number of patients with chronic kidney disor- very quickly. Poverty is rampant in many cities and rural ders is also increasing at a rapid rate. In the state of Andhra areas, and in the country’s larger cities one third of the pop- Pradesh alone, some 3,500 of its 80 million residents rely ulation lives in slums. Other problems include water short- upon regular dialysis. The dialysis process removes metabolic ages, agricultural crises, skyrocketing energy demand, a lack toxins and excess water from the blood. There are two prob- of hygiene, and pollution, as well as deficiencies in infrastruc- lems, however: patients cannot afford hemodialysis, which ture, education and healthcare systems. must be performed at least twice a week, and the medical facilities are in many cases not sufficiently equipped. This The state-organized healthcare system strives to provide prompted B. Braun to establish a public-private partnership primary healthcare nationwide. Although the situation has with the government of Andhra Pradesh. Acquiring, expand- improved in recent decades, the central government is still ing and operating dialysis centers (eleven thus far) with a a long way from achieving this objective. A large percentage staff of approximately 90 within state-run hospitals means of hospitals and pharmacies are run and financed by not-for- tangible help at the highest level. More centers in other profit charitable organizations. Private hospitals offer very parts of India are being planned. high medical standards, but they are an option only for the wealthy. “As a company focused on sustainability, it became The company offers extensive experience, as the B. Braun clear to us from the outset that we had to act in a socially Avitum Division already operates a network of more than MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 11

s E i z i ng O p p o r t u n i t i e s , h E l p i ng p E o p l e

“As a company focused on sustainabilit y, it became clear to us from the outset that we had to act in a socially responsible fashion in India . Together with representatives of the state of Andhra Pradesh, we came to the conclusion that we could help most effectively by establishing dialysis centers.”

K r i s h n a C h e l l a p pa , B u s i n e s s U n i t H e a d o f B. B r a u n M e d i c a l I n d i a . 12

“People here are delighted that they can receive fast, free treatment

in this way. It is an emotional matter, and we are very aware of the

deep sense of gratitude that is felt. It is great motivation for us.”

D r . R a h u l Medakkar,Head o f O p e r at i o n s at B. B r a u n M e d i c a l I n d i a MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 13

s E i z i ng O p p o r t u n i t i e s , h E l p i ng p E o p l e

150 dialysis centers in Europe, Asia and South Africa. at this location, together with its Ascalon and Saxonia sub- Physicians and nursing staff at these centers enhance patients’ sidiaries, with great success. Manufacturing capacity at the quality of life utilizing the latest medical technology. Saxonia facility was significantly expanded in 2010, through a capital investment of 15 million. The eyes of Rene Strubel, In these new centers in India, the B. Braun Dialog hemodi- Head of Production at Saxonia Medical GmbH, light up as alysis machines help to alleviate the suffering of thousands he talks about the fruit of his labors: “We have made tre- of patients, with more than 100,000 treatments per year. mendous progress through our ongoing research and devel- The gratitude with which these centers have been welcomed opment and close cooperation with physicians and patients,” is evident from the full treatment and waiting rooms. How- he explains. “Today, dialysis is a highly tolerable and safe ever, efficient management means that patients’ waiting times treatment.” The result is a noticeable improvement in quality are kept to a minimum. A friendly environment, air-condi- of life for patients all around the globe – in Germany just tioned rooms and flat screen televisions all help make their as in India. stay as comfortable as possible. “People here are delighted that they can receive fast, free treatment in this way. It is an emotional matter, and we are very aware of the deep sense of gratitude that is felt. It is great motivation for us,” says Dr. Rahul Medakkar, Head of Operations at B. Braun Medical India. He adds: “The quality of care at the dialysis centers is first-rate, as patients benefit from our latest innovations.” One of those innovations is the Adimea control system, which precisely measures each individual patient’s dialysis dose and verifies it over the course of the treatment. Another is the latest generation of filters, Xevonta, which was only recently introduced to the market. B. Braun is setting a new benchmark with this filter, which acts as an artificial kidney during dia lysis. Thanks to the newly developed high-tech filter membrane amembris, this high-performance premium dialyzer delivers highly efficient treatment for patients.

These innovations are produced in Radeberg, Saxony near Dresden, Germany. For years, B. Braun has developed and produced hollow-fiber membranes, sterile filters and dialyzers Mobile and independent

Incontinence is a widespread CONDITION, yet the subject remains taboo. The onset of incontinence initially posed a huge physic al challenge for Pe tra Stransk y, but she is now enjoying life to the fullest again, thanks in part to SINGLE-USE c atHe ters from B. Braun. MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 15 16

In addition to the highest medical quality, ease of use and comfort

for everyday application are particularly important for products

that are used to treat incontinence.

“What am I supposed to do now?” was the plaintive question negative experiences in other surroundings. Rumors circu- Petra posed to her doctor when medical diagnosis confirmed lated at work, and some of her co-workers whispered behind her suspicion that she is incontinent, meaning that she can her back. After six months, she decided to confront the no longer voluntarily control her urine flow. It all began six matter head-on: “I explained to everyone that I had nothing years ago, when Petra, 42, experienced mild back pain. “I had contagious and nothing that anyone should be repulsed by.” occasional twinges here and there, just like so many people,” Petra Stransky has learned to live with her illness and to she recalls. But the pain got worse, and a suspected case of accept herself. Psychotherapy helped, which gave her a new lumbago was followed by a severely herniated disc. outlook on life: “In the old days, I used to race through life, but now I have a new awareness that I wouldn’t want to Then came the shock: “Out of the blue, I completely wet myself change.” on the way home from work. I was so embarrassed that I wanted to crawl into a hole.” Embarrassment, loss of confi- Like millions of other patients, this active young woman dence and withdrawal are often side-effects of incontinence. regained nearly the same quality of life today as prior to And Petra’s case is far from unique: in Germany alone, approx- the incontinence, thanks in part to the products of B. Braun’s imately five million people – mainly older men and women – OPM Division. Its wide product range, for example the urine suffer from urinary incontinence, requiring treatment or care. catheter brand Actreen ®, offers the ideal solution for every However, young people can also suffer from temporary or type of incontinence. Urinary incontinence is frequently permanent incontinence, particularly women who have been caused by a neurological disorder – in some cases the solu- through pregnancy. There are many possible causes, and tion is medical treatment aimed at putting the bladder into medical diagnosis is necessary. In Petra’s case, the causes full retention to prevent the recurrence of incontinence. These have not yet been fully determined. Creeping paralysis patients will then require the assistance of a catheter to causes permanent loss of urinary control and spontaneous pass urine. For many people affected by urinary dysfunction, draining of the bladder. “The only thing we know for cer- the solution is “intermittent catheterization.” This involves tain,” she says casually, “is that the control mechanism on patients catheterizing themselves four to six times per day, the pipe is faulty,” using an analogy from her husband’s giving them control over their bladder and renewed self- profession as a heating engineer. Today, she can look back at confidence. Doing away with indwelling urethral catheters some involuntary episodes and laugh, but getting to this or bulky external appliances goes a long way in boosting a point has been a long road. “The biggest problem was me,” patient’s morale and self esteem. In addition, since the bladder she admits, “because I no longer felt like a valuable, attrac- is being drained effectively and completely, urinary tract tive woman.” She was especially concerned about social inter- infections cease to be a problem and the kidneys are pro- action and how family, friends, and co-workers would react. tected. The physically and mentally disabled can also use Her husband was completely and fully supportive, but she had this disposable catheter, as people in wheelchairs have MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 17

M o b i l e an d i n d e p en d ent

“ Some patient s may take a lit tle longer , bu t v ery few gi v e up.”

D r . G u y E g o n , P h y s i ca l M e d i c i ne an d r E h a b i l i tat i o n at t h e C ent r e d e l’A r c h e i n l E M an s , F r ance

What are the most frequent causes pharmacological treatment can be How is this self-catheterization of neurogenic urinary dysfunction? added as a muscle relaxant. taught to patients? Is it easy for Urinary dysfunction is common in patients to perform? patients with neurological diseases Do you recommend certain prod- Patients are taught the technique of such as multiple sclerosis or spinal ucts, for example from B. Braun, intermittent self-catheterization by a cord trauma. This dysfunction is often to treat patients suffering from team of trained nurses. We explain accompanied by urinary retention this condition and to improve their their anatomy and the procedure to and can lead to infection. everyday lives? the patients. We then demonstrate The Actreen ® Lite Mini catheter is how it should be performed and try What is the most effective treat- perfectly suited for female intermit- to make the situation as easy as pos- ment for urinary retention? tent catheterization. It is a pre-lubri- sible for the patient. Eighty percent of The most effective treatment for uri- cated ready-to-use catheter, 9 cm patients learn the technique within nary retention of a bladder affected length. The discrete packaging and 24 hours. Some patients may take a by neurological disease is intermittent the ease of grip, even where there is little longer, but very few give up. catheterization, which is a procedure reduced manual dexterity, ensure to empty the bladder through a single- “no-touch” catheterization. Men use sterile catheter in regular intervals with urinary retention will appreciate (5 – 6 times per 24 hours). This treat- the easy opening of Actreen ® Lite ment is performed by the patients Cath, the ability to connect the themselves. If paralysis prevents self- product to all urine bags available treatment, they can be assisted by on the market, and the “no-touch” caregivers. If repeated catheterization system during catheterization. The does not achieve continence and, if eyelet openings on the packaging the various medical tests indicate an allow paralyzed men to remain in- overactive bladder, an anticholinergic dependent during catheterization. 18

mastered the technique despite paraplegia, spinal deformity, professionals to design a catheter suitable for all types of old age and blindness. Actreen® products offer many advan- patients. It is this close partnership that led to the successful tages to patients and caregivers and its catheters are easy market launch of Actreen® Lite Cath and our newest catheter, to use. The user friendly packaging design is easy to open, Actreen® Lite Mini, which is specifically designed for women. even for wheelchair-bound patients with limited dexterity. Pre-lubrication makes Actreen® comfortable and hygienic In addition to these urinary catheters and the Actreen ® Glys to use, with no drips or mess from watery coatings, like with Cath, the Actreen ® product range also includes the Actreen ® some competitor catheters. It is very important for patients Glys Set, with an integrated collection bag attached to the to be able to perform the procedure quickly and easily. Thanks catheter to hold the urine. This makes it easier for patients to these features, all Actreen ® catheter products are com- who cannot drain the urine directly into a toilet. New users pletely ready to use. need to be educated in how to use the products properly, to minimize any risk of injury or infection. However, intermit- The Actreen® product line is developed and produced at tent catheters become a normal part of the daily routine the B. Braun Center of Excellence (CoE) near Paris, France. very quickly. Petra Stransky greatly appreciates these bene- These Centers of Excellence, which can be found all over fits: “I could now insert the catheter blind-folded; all the the globe, bring together research, development, production, hand movements have become second-nature.” The compact distribution and strategic marketing for particular thera- bag system gives her mobility and independence. “I am doing peutic areas (such as urology). Innovative technologies are really well despite my incontinence,” she says with a smile. thereby more quickly identified and developed. B. Braun integrates the knowledge of external experts at all stages of the innovation process, for example, through a network of highly respected physicians. “Efficient processes are essential to achieving optimal results. Our team works as a very close unit to achieve this across the entire value chain, from product specifications defined by marketing to development, production and then sales,” explains Remi Collin, Director of Research & Development at CoE Urology B. Braun Medical SAS, France. This approach fits perfectly with B. Braun’s guiding principle: Sharing Expertise. One such example of this approach is B. Braun’s ongoing collaboration with Dr. Egon at the Centre de l’Arche in LeMans, France (see interview) – where B. Braun conducts focus groups with patients and MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 19

M o b i l e an d i n d e p en d ent

“In the old days, I used to race through life, but now I have a new awareness that I wouldn’t want to change.”

P e t r a S t r a n s k y, pat i e n t 20 MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s

The source of life parenter al nutrition plays an essential part in many patients’ treatment. With its new LIFE Nutrition plant, B. BRAUN’S HOSPITAL c are DIVISION IS STRENGTHENING its position as a supplier of innovative nutrition solutions. 22

t H e n e wl i F E n u t r i t i o n p l a n t c a n p r o d u c e s e v e r a l m i l l i o n s i n g l e a n d m u lt i - ch a mb e r b a g s

p e r y e a r .

You are what you eat – a well-balanced diet is essential to quality administration of enteral and parenteral nutrition in human health and quality of life. Clinical nutrition comes to a home setting. This includes providing family members and the rescue of patients who are unable to eat or are no longer caregivers professional assistance with important issues, such able to eat sufficiently. For these people, it is an essential as the correct administration and dosage of the infusion solu- prerequisite in treating their condition or maintaining their tions. Administering B. Braun’s products could not be any health. B. Braun’s Hospital Care Division is one of the leading simpler. The product range includes efficient nutrition solu- providers of clinical nutrition products and the company is tions for safe, need-based treatment of patients suffering from expanding its activities in this area. Clinical nutrition can a variety of diseases. In addition to glass bottles, we also offer be usefully employed in many different scenarios: following safe and easy-to-use bags made of state-of-the-art polymers. serious operations, to treat a number of chronic illnesses, Three different types of bags are used in parenteral nutrition. for premature babies or for intensive-care patients. It can There are single-chamber bags, which have one chamber to also prevent nutritional deficiencies or significantly improve hold a combination of nutrients that are compatible for the a patient’s nutritional status. Studies have shown that an storage life of the product. Then there are bags with two or astonishingly high percentage of hospitalized patients show three chambers. Each of these contains different combinations nutritional deficiencies – in some cases, more than 50 percent. of nutrients that must be isolated during storage. The chambers are separated by peel seams, which are opened by “Clinical nutrition plays a valuable role in providing adequate applying pressure. Combining the contents is thus quick and treatment in intensive care and in many other therapeutic easy. The Nutriflex® 2-chamber bag, for example, allows for areas. Quality standards for existing solutions are already flexible administration. It contains amino acids, carbohy- extremely high – and, of course, those of us who work in drates and electrolytes, thereby providing the patient with clinical medicine are thankful for every additional helpful inno- essential nutritional requirements. Different varieties are vation,” says Prof. Dr. Alastair Forbes, Professor of Gastro available to suit individual needs. A very precise dosage of enterology and Clinical Nutrition at University College London. lipids can easily be added to the bag. The NuTRIflex® Lipid The objective of any nutritional regimen is to ensure that the 3-chamber bag contains a lipid component and offers stan- body is supplied with all of the essential nutrients. If it is not dardized complete nutrition with a well-balanced nutrient possible to feed the patient by mouth (orally) or via a gastric ratio and is also available in different varieties. Compounding is or intestinal tube (enterally), parenteral nutrition is required, available for patients suffering from impaired metabolic and with nutrients being administered by infusion and thereby organ functions who therefore have special nutritional bypassing the digestive tract. The choice, quantity and admin- requirements. For these patients, we create individualized, istration method of the nutrients must be precisely adapted all-in-one mixtures. B. Braun is already a very successful to the individual needs of the patient. While these can be developer, manufacturer and global distributor of innovative administered in a hospital, this can often be done at home. nutrition solutions. To further expand its position, the compa- The service company B. Braun Travacare offers patients high- ny has invested heavily in its German manufacturing facility MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 23

T h e s o u r ce o f l i fe

“In addition to state-of-the-art technologies and processes, this large-scale project combines our latest findings in the are a of chemical and analytical advancements, as well as formulation, processing and packaging developments.”

R a l f H a r a n d, V i c e P r e s i d e n t P r o d u c t D e v e l o p m e n t C o ep H a r m a c e u t i c a l s at B. B r a u n 24

“Our goal is to make these sophisticated systems work together with

gear-like precision to guarantee the highest possible degree of effi-

ciency – and we are well on the way to achie ving this Goal .”

t H o m a s G ä b l e r , V I C E PRESIDENT GLO B a lp r o C ESS ENGINEERING AND H e a do F T H el i F E NUTRITION PROJE C T MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 25

T h e s o u r ce o f l i fe

over the past two years - approximately € 164 million have drinking water must be completely desalinated and then been invested in the new LIFE Nutrition plant in Melsungen. distilled. This highly purified water is stored in a huge tank This capital investment ensures that we can meet the grow- and later used for mixing and filling numerous different ing global demand for high-quality nutrition solutions in the infusion solutions. coming years. The manufacturing and laboratory facilities employ 270 people, 80 of these positions were newly created. Monitoring is a top priority in LIFE Nutrition. The most up-to- The LIFE (Leading Infusion Factory Europe) facility began date analytical processes and optical monitoring utilizing operation in April 2005. The new LIFE Nutrition facility will a multitude of cameras – during the printing process, for likewise set new standards. “In addition to state-of-the-art instance – ensure perfect quality. And even though filling technologies and processes, this large-scale project combines is carried out under almost sterile conditions, the containers our latest findings in the area of chemical and analytical undergo fully automatic sterilization. As a result, water – the advancements, as well as formulation, processing and pack- source of life – can, with the proper added ingredients, aging developments,” explains Ralf Harand, Vice President become the “source of survival.” With the help of clinical Product Development CoE Pharmaceuticals at B. Braun. From nutrition, many people have regained their health or at the the initial weighing of raw materials to the packaging of very least improved their quality of life and therefore greatly finished goods, the entire production process is linked via appreciate the value of these product innovations. IT systems. The result not only allows the processes to be precisely managed, but represent, quite simply, pure efficiency. As an example, the electronic manufacturing documentation saves several hundred thousand pieces of paper every year. “Our goal is to make these sophisticated systems work together with gear-like precision to guarantee the highest possible degree of efficiency – and we are well on the way to achieving this goal,” says Thomas Gäbler, Vice President Global Process Engineering and Head of the LIFE Nutrition project. Anyone who visits the new operations feels as if they have been transported to a fascinating high-tech world – the degree of automation is extremely high. One may, for instance, come upon driverless transport systems that automatically weigh the ingredients of the infusion solutions. The manufacturing process begins with the production of highly purified water, which means that the Allergy in the knee

For patients suffering from chronic knee pain, replacing t he knee joint wit h an implant may make sense. Bu t patients frequently experience an allergic reaction to the metallic materials contained in the prosthesis. An innovative coating pioneered by B. Braun offers a solution. MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 27 28

In addition to the anti-allergic effect, the new surface reduces wear

by 60 percent compared to traditional surfaces. This me ans that all

patients with knee implants – regardless of whe ther or not the y are

intolerant to metal– can be assured a safe and long-term solution.

Around the world, the daily lives of millions of people are lasts 10 – 15 years. Once again, it did not take long before the made unbearable by searing, stabbing knee pain. Veronika excruciating pain returned. It was only after a conversation Wolber knows this type of pain all too well. The 58-year old with a nurse she had befriended that she began to wonder if has endured tremendous suffering – and unfortunately she her years of discomfort might be related to a long suspected is not alone. For over 20 years, Veronika worked as a wait- allergy to metal. “I always got a skin rash when I wore metal ress in her native Black Forest. “Every day you end up walk- jewelry. And of course, prostheses are made of metal,” says ing miles through the restaurant. And, if you’re a bit on the Veronika Wolber, with a bitter smile. Unfazed by this informa- heavy side like me, that puts a big strain on the joints,” says tion, the doctors implanted knee joint number four a year Veronika Wolber. later – again without taking any precautions against an allergic reaction. This devastating cycle would have probably contin- Despite finding more sedentary work assembling stationery ued if Dr. Oliver Datz, Head of Surgery at Ortenau Hospital in supplies and two operations on her left knee, she did not get Wolfach, Germany had not finally shed some light on the the relief she had hoped for. “My knee was still swollen and mystery. Tests revealed that Veronika Wolber is allergic to the excruciatingly painful; all I could do was limp,” says the metals nickel, chromium and cobalt. mother of three grown children. And the idea of bowling – her favorite pastime – was nearly unthinkable. And this is anything but a rarity. In Germany, approximately 12 percent of the population is hypersensitive to nickel, just In 2004, she opted for an artificial knee joint. This is not an under 5 percent to cobalt and chromium. Free metal ions can unusual operation for doctors these days. In Germany alone, trigger allergic reactions in some people, leading to skin more than 170,000 knee joints are implanted every year. reactions, hematoma, swelling, healing problems and repeated After two weeks in the hospital, rehabilitation exercises and pain. Given the growing number of implant patients, the issue physical therapy, everything went smoothly for Veronika of biocompatibility – i. e. biological tolerance of the materials Wolber at first. But her joy over making this successful fresh utilized – is becoming an increasingly significant factor. And start was short-lived. After nine months, the pain returned as the number of patients with hypersensitivity to metals is with the same intensity. also increasing, allergy testing should be a fundamental component of any therapeutic advice provided prior to implanta- Doctors were puzzled over what the cause may be. Neverthe tion of the prosthesis. less, they wasted no time and soon implanted a new joint. But that was by no means the end of the story. After only a Dr. Friedrich Thielemann, Director of the Hospital for Emer- year, the unpleasant scenario repeated itself – and in 2006 gency and Reconstructive Surgery in Villingen-Schwenningen, Veronika Wolber received knee joint number three. And this Germany took over the “Wolber case” and in July 2009 despite the fact that a high-quality knee implant usually implanted knee joint number five. But he did not repeat the MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 29

A l l e r g y i n t h e knee

“I always got a skin rash when I wore metal jewelry. And of course, prostheses are made of metal.”

V e r o n i k a W o l b e r , pat i e n t, i n c onsultation w i t h D r . F r i e d r i C Ht H i e l e m a n n 30

“Until now, doctors sought to prevent an allergic reaction by applying

a single-layered coating to implants. But this can wear off through

mechanical stress. The new system offers a greater degree of protec-

tion against allergic reactions.”

D r . F r i e d r i C Ht H i e l e m a n n , D i r e c t o r o f t h e H o s p i ta l f o re M e r g e n c y a n d R e c o n s t r u c t i v e S u r g e r y i n V i l l i n g e n -s C H w e n n i n g e n , G e r m a n y MANAGEMENT bo a r d | j o u r na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 31

A l l e r g y i n t h e knee

mistakes of his predecessors. Quite the contrary – he pro- And for most, relief comes quickly. “If the doctors had used ceeded with caution and relied on an innovative product the opportunities modern medical technology presents at from B. Braun: an implant with a multi-layer anti-allergy an earlier stage, I would have been spared a lot of suffering,” coating. “Until now, doctors sought to prevent an allergic concludes Veronika Wolber. She can now look to the future reaction by applying a single-layered coating to implants. But with complete confidence. And that means, of course, that this can wear off through mechanical stress. The new system she can again enjoy her weekly bowling sessions. offers a greater degree of protection against allergic reactions,” Dr. Thielemann affirms. This state-of-the-art coating method, called “AS Allergy Solution,” which was developed by B. Braun’s Aesculap Division in Tuttlingen, Germany, is designed to offer optimal prevention in knee prostheses. It is comprised of a total of seven layers, with an adhesive layer to ensure the implant bonds to the subsequent layers.

“The challenge was to equip the knee joint components with a non-abrasive layer that acts as a barrier to prevent contact allergens from escaping. The result of our research was a unique multi-layer coating system produced using a special vacuum arc vapor deposition process,” explains Dr. Thomas Weik, Head of Materials and Biomaterials Development at Aesculap. The top layer consists of zirconium nitride, a highly biocompatible metal that is extremely resistant to wear and tear. Using sophisticated thin-layer manufacturing processes and exhaustive materials testing and research methods, the Aesculap team successfully brought the “Allergy Solution” layer to market.

The benefits are obvious. In addition to the anti-allergic effect, the new surface reduces wear by 60 percent compared to traditional surfaces. This means that all patients with knee implants – regardless of whether or not they are intolerant to metal – can be assured a safe and long-term solution. group management report

At a gl a nc e 34

T he B . Br aun Group 35

Economic environment 42

Busine s s a nd e a rnings perform a nc e 4 4

F in a ncia l position a nd a s se t s 5 0

Personnel report 5 4

Risk a nd opportunities report 57

Subsequent events 6 0

Ou t look 6 0 t e m e n t s a l s t a n c i a f i n 34

group management report

At a glance

The B. Braun Group achieved adequate increases in sales and profits in fiscal year 2010. As a global provider of healthcare solutions, we were less affected by fluctuations in the global economy and are benefiting greatly from the continuing boom in the healthcare markets of emerging economies. The European and American healthcare markets, however, have been affected by cuts in public spending budgets. To some extent, this leads to decreasing demand for capital goods, but more so to increased pressure on pricing. We see ourselves as partners with our customers. Our aim is to jointly improve therapies and procedures and develop solutions for clinicians and patients. Thanks to our skilled employees, modern production processes and transparent corporate culture, we have created an environment for exceptional ideas and innovative products.

Over the past few years we have made substantial investments, first and foremost to modernize and expand production in Germany and elsewhere in Europe. The investment program we began in 2010 is focused on expanding production in developing and emerging markets. Worth € 1.6 billion, it is aimed at adapting our production sites to country and regional requirements and improving supply on the local level. As usual, we will proceed with caution and not assume any unmanageable risks. We monitor and analyze changes in the healthcare system with great care. Our positive performance last year confirms that B. Braun is on the right long-term track as a family-owned business. We are confident we will continue to expand our position as a leading provider to healthcare markets.

2010 2009 Sales (in € million) 4,422.8 4,028.2 Net Margin after Taxes (in %) 6.3 5.9 EBIT including income from investments (in € million) 462.2 411.9 EBITDA (in € million) 700.5 620.5 EBITDA Margin (in %) 15.8 15.4 MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 35

A t a g l ance | T he B . B r a u n G r o u p

The B. Braun Group

Service portfolio B. Braun develops, manufactures, and markets medical products and services and is one of the world’s leading suppliers of equipment to the healthcare industry. Hospitals, physician practices, pharmacies, nursing and emergency services, as well as homecare are our focus. The product range includes IV solutions, syringe pumps, accessories for IV therapy, intensive care and anesthesia, as well as surgical instruments, sutures, hip and knee endoprostheses, equipment and accessories for dialysis, and wound care products. In all, B. Braun offers over 30,000 products, 95 percent of which are manufactured by the company. B. Braun’s expanded portfolio includes consulting and other services, making it a service provider that works closely with its customers to determine the best solution for each and every patient, thereby making a significant contribution to medical advancements.

The Hospital Care Division The Hospital Care Division supplies hospitals with such products as IV sets and accessories, IV and injection solutions, peripheral IV catheters, clinical nutrition, as well as pumps and associated systems. In addition, the division offers an extensive range of disposable medical and wound drainage products, as well as pharmaceuticals and products for drug admixture and regional anesthesia. With

its portfolio of IV therapy products and the preceding drug admixture processes, Hospital Care provides t e m e n t s a hospitals with a unique product system offering, focusing on continually improving efficiency, safety, l s t and documentation of hospital procedures. a n c i a

Hospital Care is the worldwide market leader for IV sets and accessories, as well as regional anesthesia. f i n The division is also the European market leader in automated infusion systems, peripheral IV catheters, and standard IV solutions. The US, Eastern Europe, and emerging economies offer above-average growth opportunities. The division is growing organically and through selected strategic acquisitions. In 2010, we expanded our product portfolio by acquiring a Thai manufacturer of elastomeric pumps. In Romania, we purchased the remaining non-controlling interest in a manufacturer of standard IV solutions. Having obtained approval for 170 pharma products over a one-year period, we have more than doubled the number of new approvals compared to the prior year. We achieved our target of providing DEHP- free IV sets to all markets. Our successful Space infusion pump system is now available in additional Asian and Latin American countries. We are continually adding components to the existing Space infusion system, including WLAN features, complex multi-functional applications, and a system to treat stress-induced hyperglycemia in critically ill patients. Hospital Care offers an excellent example of how we are living up to our intent to improve the safety of patients and healthcare professionals by offering new products and by making clinical processes more efficient. 36

The Aesculap Division Based in Tuttlingen (Baden-Württemberg, Germany), Aesculap sees its role as a global partner in surgery and interventional cardiology. The division, which has been a part of the B. Braun Group for over 30 years, focuses on developing and marketing products and services for surgical and interventional procedures in operative medicine. Aesculap views itself as the global market leader in surgical instruments and as a leading provider of sterilization containers. In the fields of neurosurgery and wound closure, Aesculap is a major global supplier. The main focus of innovation in surgical sutures is in cardiothoracic and abdominal wall closures. Our new product, Novosyn ®, a mid-term absorb- able suture, completes our offering in this area. The division’s product range also includes implants, sterile container systems, and power systems. We advise hospitals on instrument management concepts, helping them optimize their stock of instruments and maintain its value. Demographic trends are producing a steady rise in the number of patients with degenerative knee and hip conditions, for which Aesculap offers complete implant solutions.I n conjunction with our navigation system OrthoPilot ®, patients who undergo orthopedic procedures are assured the best possible safety and quality. Aesculap also offers special products for traumatology and spinal and vascular surgery. Our new Quintex ® disc system for degenerative conditions of the cervical spine is just one of the many innovations in this field.

Thanks to its high innovative capability and the close cooperation it maintains with surgeons around the world, Aesculap has been posting dynamic growth for years. In 2010, the division adapted its new development process in order to be able to identify and design products suitable for healthcare professionals and patients even more quickly. An advisory-based marketing approach has been implemented to strengthen the close relationship with customers and promote growth in both Europe and other parts of the world. The division sees opportunities in the expanding Eastern European and Asian markets, particularly the BRIC countries. In May 2010, a new instrument manufacturing facility began operation in Poland (Radzyń Podlaski).

The Out Patient Market (OPM) Division The focus of the Out Patient Market (OPM) Division is on meeting the needs of patients outside the hospital setting and of long-term patients. Our customers include physicians in private practice, outpatient and inpatient care services, and pharmacies. Adopting a holistic approach to consulting and care giving, the division strives to provide patients with a combination of high-quality and cost- effective healthcare. The key areas on which it focuses are the transfer of patients from one setting of care to another, outpatient IV therapy, diabetes, skin and wound management, stoma and incontinence care, disinfection, and hygiene. In addition to these products, OPM offers a broad range of outpatient services. A major objective is the transfer of knowledge across all areas, for example when transferring parenterally-fed patients from inpatient to outpatient care (TransCare). Our experienced employees relieve patients, hospitals, private practice physicians, and care services of administrative tasks and ensure that treatment progress is optimized. Our product innovations in outpatient care are aimed at improving therapies and increasing patients’ quality of life. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 37

T he B . B r a u n G r o u p

In urology, OPM has started to introduce ready-to-use catheters (Actreen ®). These can be removed from their packaging without the risk of contamination and are pre-lubricated to ensure quick, easy, and pain-free use. In wound care, negative pressure wound therapy (vacuum-assisted wound care) offers an option in the future to improve the treatment of chronic wounds, as the vacuum speeds up healing. We have expanded our global sales network by establishing new OPM sales offices in Hong Kong and China.

The B. Braun Avitum Division B. Braun Avitum AG is one of only a few full-range suppliers in the field of extracorporeal blood treatment worldwide. The division provides dialysis centers with all of the products and services necessary for the blood cleansing processes involved in dialysis and apheresis. Hemodialysis products and systems are the division’s core business. With global demand for our products growing, it has become necessary to expand capacity in the B. Braun Avitum Division. Our new facility in Melsungen, Germany for the manufacture of infusion pumps and dialysis machines is now in operation.

The division has a network of 168 dialysis centers (previous year: 157) in Europe, Asia and South Africa. Physicians and nursing staff are available in our clinics to assist and advise dialysis patients with chronic kidney and metabolic disorders, offering them the chance for a better quality of life. In 2010,

we completed our first dialysis center in Russia (Kaliningrad). We also treated patients in India for t e m e n t s a the first time, under a public-private partnership, which gives over 1,000 patients without health l s t insurance access to life-saving dialysis treatment. a n c i a

Aesculap Academy f i n Groundbreaking developments in medical technology, sophisticated new treatment methods, and the increasing demands on hospital and quality management require a high level of ongoing professional development. B. Braun’s Aesculap Academy allows physicians, surgeons, other medical staff, and hospital managers to add to their knowledge as part of lifelong learning in the medical field. Since 1995, the Aesculap Academy, based in Tuttlingen and Berlin (both in Germany) and operating in 30 locations around the world, has been internationally recognized as a major forum for professional development and training in the field of medicine. In 2010, 67,000 medical experts around the world took advantage of the courses offered at the Aesculap Academy. Its core business focuses on skills training in anesthesia and the entire range of surgical and interventional medical disciplines, as well as special training programs for hospital employees and personnel in private practices. In addition, the Aesculap Academy has positioned itself as a partner to medical companies and develops opinion-forming forums on current issues, such as error avoidance in operating rooms, procurement management in hospitals, and political issues. The expansion of the Aesculap Academy’s global network enhances its importance as an authoritative partner for knowledge transfer in medical matters. The Aesculap Academy has a particularly strong presence in Asia and Europe, and centers are planned for China, Malaysia, Spain, and, for the South American continent, in Brazil. 38

Management and control of the company In addition to its own business operations, B. Braun Melsungen AG performs centralized functions for the Group. The company is wholly family-owned and is not listed on any stock exchange. The company’s statutory agents include the Management Board, the Supervisory Board, and the Annual Shareholders’ Meeting. The Management Board is comprised of six members, each with specific individual responsibilities, while jointly responsible for the company’s performance. The Supervisory Board consists of twelve members, half of whom are elected by the Annual Shareholders’ Meeting and half by the company’s employees. Committees have been established to support the work of Supervisory Board. The Personnel Committee is responsible for such matters as the Management Board members’ employment contracts and compensation. The Audit Committee monitors the internal audit systems, the accounting process, and the auditing of financial statements.

The Supervisory Board appointed Prof. Dr. Hanns-Peter Knaebel (Aesculap Division) as an Ordinary Member of the Management Board of B. Braun Melsungen AG as of March 25, 2010. Prof. Dr. Hanns- Peter Knaebel succeeded Prof. Dr. Dr. Dr. h. c. Michael Ungethüm one year earlier and was initially appointed as a Deputy Member of the Management Board. Dr. Wolfgang Feller (B. Braun Avitum Division) will be reappointed effective April 1, 2011 to March 31, 2013 as an Ordinary Member of the Management Board. In December 2010, the Supervisory Board elected Dr. Heinz-Walter Große to succeed Prof. Dr. h.c. Ludwig Georg Braun, who will retire as Chairman of the Management Board of B. Braun Melsungen AG on March 31, 2011. The Supervisory Board also appointed Dr. Annette Beller and Otto Philipp Braun as Deputy Members of the Management Board and extended the mandate of Caroll H. Neubauer (North America region) to 2016. As of April 1, 2011, Dr. Heinz-Walter Große, in addition to serving as Chairman of the Management Board, will also be responsible for Human Resources and Legal Affairs. Dr. Annette Beller succeeds Dr. Heinz-Walter Große as Head of Finance effective April 1, 2011. Otto Philipp Braun will assume responsibility for the Iberian Peninsula and Latin America effective April 1, 2011, becoming the first member of the sixth generation of the family to enter the Management Board of B. Braun Melsungen AG.

B. Braun’s commitment to the principles of responsible corporate governance and control is reflected in its adherence to recognized standards. The ultimate objective is the long-term success of B. Braun as a family-owned company. The rules governing how we conduct ourselves toward customers have been defined in our Code of Conduct since 1996. In concrete terms, our responsible approach to corporate governance is reflected in our integration of quality and environmental oversight, our use of key performance indicators to manage the Group in a forward-looking manner, an accounting system based on international standards, and our close monitoring of all significant potential risks.

Organizational structure and locations The B. Braun Group is headquartered in Melsungen, Germany. In addition to being the center for the Group’s management, it is also the base for those central areas that perform Group-wide functions. In particular, these include Group-wide accounting and controlling, international human resources, IT and logistics, the legal and tax department, and the Group treasury. Our research and development activities are assigned to Centers of Excellence (CoEs) in which research, development, and production MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 39

T he B . B r a u n G r o u p

activities for specific product groups are brought together. The company’s operations are organized into four divisions – Hospital Care, Aesculap, Out Patient Market, and B. Braun Avitum. Its main Centers of Excellence are in Melsungen (Germany), Penang (Malaysia), Allentown (Pennsylvania, US), Tuttlingen (Germany), Boulogne (France), Rubí (Spain), and Sempach (Switzerland). Other major manufacturing sites are located in Irvine (California, US), São Gonçalo (Brazil), Nowy Tomyśl (Poland), Hanoi (Vietnam), Budapest (Hungary), and Suzhou (China). Through its subsidiaries and holdings, B. Braun operates in 56 countries. The B. Braun Group includes 189 (previous year: 187) consolidated companies plus 3 (previous year: 3) jointly owned companies in which we do not have a majority. 17 (previous year: 12) holdings are consolidated using the equity method of accounting. Detailed information on major shareholdings and the locations of each company can be found in the tables on pages 132 to 135.

Quality and environmental management As a developer and manufacturer of medical and pharmaceutical products, B. Braun operates in highly regulated markets. Therefore, the quality and environmental management system we implement must comply with the most stringent statutory and regulatory requirements. In addition, we have established our own standards in the fields of environmental protection, health and safety in the workplace, which we subject to regular internal audits. By paying close attention to customers’ needs, we have

identified and standardized key processes to ensure uniformly high standards of quality. All procedures, t e m e n t s a products, and IT-related documentation are subject to an ongoing improvement review process, which l s t considers environmental sustainability and productivity. As a member of the German Chemical a n c i

Industries Association (Verband der Chemischen Industrie, VCI), B. Braun adheres to the Association’s a

guidelines on “Responsible Care” and takes responsibility for improving the protection of the environ- f i n ment, as well as health and safety in the workplace under the global “Responsible Care” initiative.

Eleven B. Braun Group locations in Europe are EN ISO 14001-certified. In addition, environmental management in Tuttlingen and Glandorf (both in Germany) has received certification under the EU’s Eco-Management and Audit Scheme (EMAS). Our occupational health and safety management system at our locations in Germany (Melsungen and Tuttlingen), France, Spain, and Switzerland is certified complying with the international OHSAS 18001 standard. The European dialysis centers within our B. Braun Avitum Division have received EN ISO 9001 and “Good Dialysis Practice” certification.

Our medical products conform to the Essential Requirements of the European Council Directive on Medical Devices and the German Medical Devices Act (Medizinproduktegesetz, MPG). In the US, we adhere to the guidelines in Title 21 of the Code of Federal Regulations, which details the requirements of the FDA (Food and Drug Administration) for pharmaceuticals and medical products. In addition, all of our divisions comply with the specific requirements of, for example, ISO or eco-audit directives and a large number of national laws and regulations.

Group strategy In February 2010, we updated our Group strategy for the period 2010 to 2014. The targets established for the previous period were fully met or exceeded. 40

The Group strategy preserves the key elements of the previous strategy. We are confident that a growth strategy based primarily on our own innovativeness and funding will ensure that the B. Braun Group can sustain its success. We established an annual sales growth target of between 5 and 6 percent. Our target for the EBITDA margin is an increase to 17 – 18 percent of sales within the new time period covered by the strategy. Maintaining the B. Braun Group’s independence is of central importance. The next generation of the B. Braun family has reaffirmed that we will remain a privately- held family company and will not pursue a public offering on any stock exchange. Our product offerings are organized into core business areas of the healthcare market and specific focus business areas for individual sectors of the healthcare market. Our goal is that the core business areas within each division have a significant global market share. We select the specific focus business areas based on regional market characteristics.

The B. Braun Group’s strategy remains founded on the three pillars of innovation, efficiency, and sustainability. Innovation, in this context, refers not only to the development of new products, but also to the implementation of innovative manufacturing processes, methods, sales concepts, and service offerings. Our extensive investment activities underscore our intention to maintain our position as one of the leading healthcare companies in the future. Given the ongoing cost pressure anticipated in the healthcare sector and restrictions on financial resources, efficiency improvements have become absolutely essential. As our divisional organization is structured into Centers of Excellence, we are able to respond rapidly and supply the markets with high-quality products and services. Additionally, we aim to continually improve the benefits to our customers. As a full-range supplier of integrated systems and products, B. Braun provides its customers with added value. Our central areas and optimized production structures will ensure we continue to improve our own efficiency. We also intend to further shorten our working capital cycle, and thus Group-wide projects related to inventory and receivables management, as well as lean management, have been initi- ated. In all that we do, we focus on the creation of sustainable value. We are well aware of our responsibilities to our customers – that is to say, to patients and to those who use our products – as well as to our employees and, ultimately, to society at large, and take them into account in our decisions, whether on day-to-day business or strategy. We will continue to maintain our financing policy. While still seizing the opportunities presented by the market, we will not enter into any financing arrangements, which expose us to any unusual risks.

Management of our company is subject to the highest ethical standards and strict adherence of the law. For us, corporate governance and compliance are not only a legal requirement, but a self-evident precondition to doing business on a sustainable basis. We, therefore, require all employees to conduct themselves impeccably from a legal and ethical perspective. We consider compliance with national and international regulations on product registration, production validation, and product safety to be a duty set in stone.

Corporate social responsibility Acting sustainably is part of the B. Braun Group’s business philosophy. B. Braun sees itself as a member of society and assumes responsibility as such. In addition to regional promotion of art, culture, and sport, the main areas we support are knowledge and science. In terms of universities, this takes the form of sponsored chairs, such as at Kassel University and Charité Berlin. We also offer scholar- MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 41

T he B . B r a u n G r o u p

ship programs, such as the Braun Medical Trust Foundation in India. We have a long tradition in sym- posia and workshops for medical staff and care personnel. When it comes to promoting knowledge, we start with the very young: for example, with B. Braun Children’s and Youth Weeks. Entitled “New researchers needed”, they were held for the third time in 2010. We also operate a Children’s Uni- versity in Tuttlingen, Germany. This year for the first time, we awarded the Young People’s Research Prize. The topic, “The Human Miracle”, was aimed at senior grade students in the North Hesse regions of Schwalm-Eder and Waldeck-Frankenburg. The Aesculap environmental school prize was awarded for the 19th time in 2010.

Offering children prospects is something that B. Braun takes very seriously. B. Braun for Children, a global umbrella project we started many years ago, provides an opportunity for our subsidiaries to help improve the situation of local children and for our employees to put their social commitment into action. In 2010, we provided further support to existing initiatives and created new initiatives around the globe. In Tokyo, Japan, for example, the first workshop on “Physical and mental development of babies” took place. In helping mothers to strengthen their bond with their child, it aims to promote healthy development in children.

In living up to our guiding principle of “Sharing Expertise”, B. Braun also makes its knowledge avail-

able to the needy in places such as Kenya. Public health provision in this African state is poor. In t e m e n t s a order to improve the situation, B. Braun and German Technical Cooperation (Deutsche Gesellschaft l s t für Technische Zusammenarbeit GmbH, GTZ) founded a public-private partnership under the “devel- a n c i

oPPP.de” program of the German Federal Ministry for Economic Cooperation and Development a

(BMZ). Its aim is to train care staff in the use of modern medical equipment and products, thereby f i n improving healthcare provision. A school healthcare program is also being established to promote health awareness in the population and prevent highly infectious illnesses. It will raise hygiene standards and teach children the importance, for example, of washing their hands correctly. If we want to give young people prospects, we also need to ensure that they receive sound vocational training. This is where another project in Africa comes in. In Burkina Faso, B. Braun has financed the foundation of a vocational training center in Melsungen’s sister city Koudougou, where young people can train to be hairdressers, bricklayers, mechanics, and carpenters in a dual system, as in Germany. Kouilbi Yameogo, the project manager, is a former metalworking apprentice at B. Braun in Melsungen, Germany.

Aside from long-term programs, B. Braun also seeks to provide help in instances of very acute need. To help the victims of the Haiti earthquake, the company organized a global donation campaign – the first of its kind – within the Group, followed by another campaign for the victims of the cata- strophic floods in Pakistan. B. Braun’s Group management doubled the amount of donations collected by employees. As a result, € 230,000 was donated to fund the construction of the hospital “Centre de Santé Avec Lits de Bainet” in Haiti, a hospital project run by the emergency aid agency “Diakonie Katastrophenhilfe.” The donations collected for Pakistan will also be used to fund the reconstruction of healthcare centers.

SHARE, our sustainability magazine, was published for the third time last year and describes further examples of our commitments throughout the world within the community and society as a whole. 42

Economic environment

Economic performance

Global economy The recovery in the global economy, which had begun at the end of 2009, continued in 2010. Global output returned to its level prior to the financial and economic crisis. This trend was supported by expansive monetary and fiscal policies in many countries, low interest rates, and expanding production in emerging markets. In 2010, global output grew 5.0 percent year-on-year. Gross domestic product growth rates varied greatly from country to country. Emerging markets proved to be the growth engines, with an average rate of 7.1 percent, compared with 3.0 percent from industrial countries. Growth in global trade, at 12.0 percent in 2010, was almost back to its pre-crisis level.

Economic performance by region Economic output in the eurozone rose 1.8 percent year-on year. Although economic recovery was still moderate in the first half of the year, it improved up as the year progressed. Germany’s good performance was a key contributor here, whereas growth rates in Spain and Italy were below-average, and Greek gross domestic product decreased further in the first half of 2010. The unemployment rate in the eurozone was up year-on-year, with higher unemployment figures in Portugal, Spain, Ireland, and Greece accounting for two-thirds of the increase. With many countries having to increase taxes and cut social security benefits to reduce their high budget deficits, consumption and investment demand may be compromised.

The economic crisis left fewer traces in Germany than had been feared. With the global economy recovering, exports climbed and during the course of 2010, domestic demand strengthened further. Its gross domestic product rose 3.6 percent in 2010. The German labor market was stable, with average annual unemployment at 7.7 percent (previous year: 8.2 percent) and down to 7.2 percent in December 2010.

Eastern European states recovered fairly well from the previous year’s slump in economic output, although performance varied sharply from country to country. Poland reported the region’s strongest growth at 3.4 percent, whereas Romania and Latvia saw further decreases in gross domestic product.

Russia’s recovery from the decline in economic output was slow in comparison with other BRIC members. Although the rise in the oil price had a positive impact, exports and domestic demand remained weak. In 2010, economic output grew 3.7 percent year-on-year.

The US economy started to improve during 2010, with output for the whole year rising to 2.8 percent. Despite a rise in unemployment and private households saving more, output was boosted by private consumption. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 43

E c o n o m i c en v i r o nment

Latin American countries achieved growth of 5.9 percent in 2010. Despite this growth, inflation remained fairly constant. Brazil’s growth was characterized by strong domestic demand, with foreign trade providing only a fairly small impetus. In 2010, economic output is expected to have grown by 7.5 percent year-on-year. The government is planning major investments in infrastructure to boost and stabilize growth.

Asian emerging markets reported strong economic performances, with growth at 7.1 percent in 2010. China’s gross domestic product grew 10.3 percent year-on-year in 2010. Although state support measures were reduced, growth is being driven more and more by private investment and exports. India achieved growth of 9.7 percent on the back of a strong domestic market. Indonesia’s economy grew 6.1 percent in 2010.

Japan posted economic growth of 4.3 percent in 2010, after two consecutive years of decline. This was the result of stronger consumer demand and a sharp rise in exports, particularly to its Asian neighbors. Despite this recovery, Japan’s capacity was still underutilized and its debt rose to a record of nearly 200 percent of gross domestic product.

Performance of the healthcare market

The performance of the global healthcare market varied by region. In line with overall economic t e m e n t s a performance, the stronger recovery by Asian and Latin American countries was the dominant theme l s t here too. This was due to the great resilience of emerging market economies during the financial a n c i

and economic crisis. Another factor is that these regions still have a lot of catching-up to do with a

regards to healthcare. The picture in Europe and North America was different, with growth stagnating. f i n Overall, however, sales growth was higher than the previous year. The trend in earnings is more problematic. Prices came under considerable pressure from a combination of massive cost cuts in healthcare systems and compulsory discounts, and this is continuing to hurt providers’ earnings. Rising commodity prices and higher receivables mean providers in the healthcare market are under further pressure. Some European countries saw a sharp rise in receivables DSO (Days Sales Out- standing), but we do not expect there to be defaults. The increasing bureaucratization in approval processes is more time-consuming and increases the time to market for new products. 44

Business and earnings performance

Overall assessment by the Management Board Business for the B. Braun Group was satisfactory in 2010. A further increase in sales and earnings means we maintained our growth trend, to which all divisions contributed. We achieved important milestones in our capacity expansion plans and made preparations for our second investment program. We benefited from the good recovery in emerging markets and currency gains. The Asia/Pacific region proved to be the Group’s growth engine. The established European and US markets are suffering from government spending cuts. Thanks, however, to the unique breadth of our product portfolio and efficient processes, we achieved acceptable increases here as well. The B. Braun Group is in good, stable financial condition. The increase in our equity ratio ensures B. Braun’s independence and is the natural basis for progress and growth.

Group Sales | in € billion

5.0 4.42

4.03 4.0 3.79 3.57 3.32 3.0

2.0

1.0

2006 2007 2008 2009 2010

Sales In fiscal year 2010, sales at the B. Braun Group rose 9.8 percent to € 4,422.8 million (previous year: € 4,028.2 million). Currency gains had a positive impact on our sales growth. Currency-adjusted, the increase was 5.2 percent. The core business areas grew by 10.5 percent to € 2,411.3 million (previous year: € 2,182.9 million). This was a slightly stronger performance than that of the specific focus business areas where sales improved by 9.0 percent to € 2,011.5 million (previous year: € 1,845.3 million). Our Hospital Care and Aesculap Divisions were the biggest contributors to sales growth.

The Asia/Pacific (+ 25.9 percent) and Latin America (+16.5 percent) regions were also highly dynamic. In the USA, sales increased by 10.0 percent. Growth in established markets in Europe (+ 7.2 percent), particularly in our home market of Germany (+ 3.2 percent), was moderate. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 45

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Performance in the Hospital Care Division Sales in the Hospital Care Division climbed 9.6 percent to € 2,086.7 million (previous year: € 1,903.8 million). Currency gains played a part in this performance, as virtually all key currencies in Hospital Care made gains against the euro. We increased sales of products from the core business areas by 9.8 percent to € 1,307.7 million (previous year: € 1,190.8 million). Sales in the specific focus business area rose by 9.3 percent to € 779.1 million (previous year: € 712.9 million).

Sales by division | in € million

2,500

2,087 2,000 1,904 1,765

1,500 1,281 1,098 1,153 1,000

496 526 555 421 475 500 403 t e m e n t s a l s t a n c i

Hospital Care Aesculap OPM B. Braun Avitum a f i n

2008 2009 2010

Growth in large volume IV solutions and standard IV sets was low due to capacity issues. Demand for our Space products (Infusomat ® Space and Perfusor ® Space) was highly encouraging, while sales of the old pump generation fell, as expected. In parenteral nutrition, both multi-chamber systems (Nutriflex ®) and single-chamber solutions (in particular Lipofundin ®) recorded healthy increases. Other contributors were IV catheters (Introcan Safety ® and Vasofix Safety ®), needles and sets for regional anesthesia, as well as injectable medicines (in particular Propofol- ®Lipuro and Duplex ®). Europe performed well overall, except for Southern Europe where government measures triggered, to some extent, drastic price reductions in the pharmaceutical sector. Business growth in our home market of Germany was satisfactory. In Eastern Europe, Russia and Poland made considerable improvements. But once again, the Asia/Pacific region and, in particular China, India, and Australia contributed greatly to the division’s growth.

Performance in the Aesculap Division The Aesculap Division posted record growth in sales, totaling € 1,281.1 million (previous year: € 1,153.2 million), an 11.1 percent increase year-on-year. Sales in the core business areas increased by 12.6 percent to € 484.7 million (previous year: € 430.5 million). Sales of € 796.4 million (previous 46

year: € 722.7 million) were achieved in the specific focus business area, an increase of 10.2 percent. The drug-eluting balloon catheter product SeQuent ® Please continued its success story. The success of the drug-eluting balloon catheter product SeQuent ® Please continued. Sales of Vena Cava filters and single-use elastomeric pumps also continued to grow. In our surgery business, endoscopic single- use instruments (AdTec ®) and our SterilContainer™ systems were the main contributors to growth. In orthopedics, sales of knee systems and Novocart 3D, a product for treating articular cartilage dam- age, were encouraging. Sutures also contributed to the division’s good performance. The spinal implant business segment showed particularly dynamic growth. The strong performers in Europe were Germany, Italy, and Spain, while France remained on a par with last year. As expected, Greece performed weakly. However, Aesculap achieved excellent sales growth in the US, Russia, and Asia (in particular China). Performance in Latin America was also positive.

Performance in the Out Patient Market (OPM) Division With sales growing 5.5 percent, the OPM Division posted sales of € 554.6 million in the reporting year (previous year: € 525.8 million). Core business areas posted sales growth of 7.5 percent, out- performing the specific focus business areas (+ 0.7 percent). The core business areas generated sales of € 398.8 million (previous year: € 371.1 million). The specific focus business areas improved only slightly over the previous year (€ 154.7 million), posting sales of € 155.8 million. Skin and wound management posted above-average sales growth, with the Prontosan ® product family being a major contributor. Due to high inventories from 2009 (anti-pandemic measures regarding H1N1 flu), the hygiene management product area was unable to repeat the previous year’s outstanding performance. The areas of incontinence (Actreen ® catheter) and urology achieved satisfactory sales growth. Within urology, products for irrigation therapy (Uro-Tainer ®) posted encouraging sales growth. Due to the default of a supplier, urine drainage bags and closed urine systems (Ureofix ®) performed weaker than expected.

The US posted a sharp increase in sales, contributing more than half the division’s growth. Currency gains had a positive effect on this development. European markets, in particular France, Spain, and Germany, are key to the OPM Division. With year-end business hit by the increase on August 1, 2010 in the discount that manufacturers are obliged to give statutory health insurance companies on new drugs, the important German market was unable to improve whole-year sales. France also remained at the previous year’s level, whereas Italy and Spain grew. Sales growth in Eastern Europe and Russia was also dynamic.

Performance in the B. Braun Avitum Division Sales in the B. Braun Avitum Division increased by 12.9 percent to € 474.8 million (previous year: € 420.5 million), with performance benefiting from a recovery in Eastern European currencies, in particular those of the Czech Republic and Poland. Sales in the core business areas increased by 15.5 percent to € 220.1 million (previous year: € 190.6 million). The specific focus business areas achieved sales of € 254.5 million (previous year: € 230.0 million), an increase of 10.7 percent. Dis- posables and concentrates for dialysis posted strong growth, as did sales of dialyzers (Diacap ®). Sales of dialysis machines gained momentum over the year and performed well. Our dialysis clinics MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 47

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continued to post healthy organic growth. The centers in Poland, South Africa, and the Czech Republic were the biggest contributors. As to disposable and machine business, Asia (in particular China), the Middle East, and Europe are the key markets.

Development of functional expenses Functional expenses rose 11.4 percent to € 1,595.9 million (previous year: € 1,432.3 million). Selling expenses increased by 11.7 percent to € 1,218.9 million (previous year: € 1,091.1 million). General and administrative expenses rose 9.7 percent to € 221.6 million (previous year: € 202.1 million). We implemented another increase in spending on research and development, which rose 11.7 percent year-on-year to € 155.4 million (previous year: € 139.1 million).

Functional expenses | in € million

1,596 1,366 1,432 1,297 155 Research and Development Expenses 1,205 139 222 General and Administrative Expenses 116 130 106 202 208 205 195 t e m e n t s a

1,219 Selling Expenses l s t

1,091 a 904 973 1,031 n c i a f i n 2006 2007 2008 2009 2010

Research and development Within the B. Braun Group, research and development activities are carried out at various Centers of Excellence (CoEs), at which research, development, production, and marketing activities for specific product groups are brought together, providing a forum for close collaboration.

Good nutrition can also accelerate the healing process in seriously ill patients. One focus of the activities of the Hospital Care Division is therefore on clinical nutrition. The division is focusing on preparations for FDA approval for the US market, and product and process development for single-chamber and three-chamber systems. Our intention in infusion therapy is to enhance the safety of clinicians and patients, and we are working with hospitals to improve processes. We will expand our leadership of the market using closed systems, functional coatings, and other innovations in materials. In the IV access segment, the focus of development is on completing the safety portfolio for peripheral IV catheters, venipuncture sets for short-term infusion, and single-use injection and syringe needles. In automated infusion systems, we are working on linking infusion data with biofeedback information in order to ensure better patient care and more efficient clinical processes. US customers in particular require WLAN data communication and special forms of therapy, for which we provide solutions. In 48

regional anesthesia, we are developing new ergonomic spinal needles with a prism for easier identifi- cation of fluid flashback (Pencan ® and Spinocan ®) and stimulation needles with ultrasound marking (Stimuplex ® Ultra).

With demographic trends creating a greater need for joint replacements, the spotlight has fallen on the treatment of degenerative conditions. The Aesculap Division is responding to this trend through improvements and innovations in spinal implants (Hydrolift ® and Quintex ®) and knee endoprostheses. Its focus here is on adapting implants and prostheses to best suit the patient’s circumstances and on product longevity. Operations are therefore less traumatic on patients, and the results are significantly better. A new aneurysm clip is being added to our neurosurgical portfolio. The biologizing of medicine will determine how illnesses and injuries are treated in the future. Intelligently intercon- necting traditional medical technology and modern biological forms of therapy will offer opportunities to patients. Our subsidiary Tetec, for example, is conducting research into regenerative biomaterials.

The OPM Division has added another product to the Actreen ® catheter family, namely a ready-to- use, single-use catheter for women (Actreen ® Lite Mini). In wound care, we are developing silicone- coated adhesives to minimize trauma and pain when bandages are changed (e. g. Askina ® DresSil). Our innovative wound cleansing system Prontosan ® provides optimum wound healing. Prontoderm ® Wipes are time-saving and cost-effective single-use wet wipes forMRE decolonization of bed-ridden patients.

The focus of the B. Braun Avitum Division is on further developing the existing product portfolio. Apart from technical product enhancements, its main activity is intelligent data management. Intercon- necting individual components makes documentation and evaluation of therapeutic data easier and increases the efficiency and quality of dialysis treatment. This is a key milestone on the way to concepts such as telemedicine and e-health.

Other operating income and expenses The balance of other operating income and expenses improved by € 5.0 million to € – 29.0 million (previous year: € – 34.0 million). However, currency effects in the reporting year amounted to € – 6.2 million (previous year: € 2.7 million). The use of hedge accounting as of January 1, 2010 means that income and expenses from currency hedging transactions which have been concluded in the reporting year but must be allocated to cash flows of subsequent periods are no longer to be shown under other operating income and expenses, but directly in equity (other comprehensive income). As of December 31, 2010, income recognized directly in equity amounted to € 4.4 million. If the cash flows are realized, positions previously recognized in equity are recognized in the statement of income.

Net financial income (loss) The improvement in net financial income (loss) by € 7.9 million to € – 66.6 million (previous year: € – 74.5 million) is largely due to lower interest expenses. Overall interest expenses (excluding the interest element of pension provisions) were reduced by 9.4 percent to € 48.4 million (previous year: € 53.4 million). This was the result of lower interest rates and the capitalization of interest expenses (€ 0.6 million) relating to investment projects. In addition, the interest portion of pension provisions, MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 49

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at € 28.8 million (previous year: € 28.8 million), remained on a par with the previous year. Higher pension provisions were offset by a reduction in the discount rate to 4.7 percent (previous year: 5.1 percent).

Statement of value added Value added came in € 218.9 million higher than in the previous year at € 2,041.3 million (previous year: € 1,822.4 million). The majority of value added (63.1 percent compared with 63.7 percent in 2009) was passed on to employees in the form of wages and salaries. Federal, state, and local government received social security contributions and income tax totaling € 355.6 million (previous year: € 319.0 million) or 17.4 percent of value added (previous year: 17.5 percent). Lenders received € 47.3 million or 2.3 percent (previous year: € 50.9 million or 2.8 percent). An amount of € 241.1 million or 11.8 percent of value added (previous year: € 199.6 million or 10.9 percent) was retained within the Group, providing the basis for our capital investment plans.

Value added | in € million

Sales 4,423

Changes in Inventories 71 t e m e n t s a Business Performance 4,494 l s t a n c i

Depreciation & Amortization 239 a

Material Costs 1,641 f i n Other Costs 573 Value Added 2,041

Wages and Salaries 1,290 Social Security Contributions 243 Pension Payments 78 Lenders 47 Income Taxes 112 Shareholders 30 Retained Profit 241 50

Earnings performance The gross margin was increased by 0.5 points to 47.1 percent (previous year: 46.6 percent), boosting gross profit by 10.9 percent to € 2,081.1 million (previous year: € 1,876.8 million). EBIT (including income from investments) was up 12.2 percent to € 462.2 million (previous year: € 411.9 million). Due to lower interest expenses, profit before taxes rose 15.9 percent to € 389.6 million (previous year: € 336.1 million). Income tax expenses were € 112.3 million (previous year: € 96.5 million). At 28.8 percent (previous year: 28.7 percent), the tax rate remained on a par with the previous year. Consolidated annual net profit increased by 15.8 percent to € 277.4 million in 2010 (previous year: € 239.6 million).

EBITDA improved 12.9 percent to € 700.5 million (previous year: € 620.5 million). With the increase in the EBITDA margin to 15.8 percent (previous year: 15.4 percent), we are closing in on our target of 17.0 to 18.0 percent.

EBITDA | in € million

800 700

620 600 536 546 491 400

200

2006 2007 2008 2009 2010

Financial position and assets

Investments Growing demand for B. Braun products means we need to expand our manufacturing capacity. Under our two investment programs, existing production facilities will be expanded and new production facilities constructed. The investment program begun in 2007, which is worth approximately € 1.4 billion, was largely completed in the reporting year and will end in 2011. Additions to fixed assets and intangible assets amounted to € 575.4 million (previous year: € 454.8 million). This was offset by depreciation and amortization of € 238.2 million (previous year: € 208.6 million). We successfully completed expansion of the manufacturing facility for empty bags for parenteral nutrition at our Crissier (Switzerland) site and expanded dialyzer production capacity in Radeberg and Berggießhübel (both in Germany). MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 51

F i nanc i a l p o s i t i o n an d a s s et s

Investments / Depreciation and Amortization | in € million

800

600 575 471 455 400 349 294 238 198 209 200 181 183

2006 2007 2008 2009 2010

iNvestments dEpreciation and Amortiz ation

Expansion of capacity for infusion pumps, clinical nutrition, and dialysis machines at our Melsungen

site (Germany) is almost complete. Capacity expansion for production of Ecoflac ® in Rubí (Spain) will t e m e n t s a be completed in March 2011 upon validation. The expansion and restructuring of the Penang site l s t (Malaysia) is taking shape, and completion of the first phase is anticipated in 2011, with the project a n c i

as a whole running until 2014. We signed off on a further investment program of € 1.6 billion back a

in December 2009. Aimed at expanding production capacity of our core product lines, its regional f i n priorities are Malaysia, the US, and Germany. The main focus in the US is on expanding the factory for the new container generation at the Irvine site (California). In Germany, we will complete the construction work for the LIFE Nutrition (clinical nutrition) factory and begin constructing the forg- ing, container, and power systems production facilities in Tuttlingen. We will also commence expanding manufacturing capacity for dialysis solutions in Glandorf. Based on current estimates, the second investment program is anticipated to last around four years, with funding coming from operating cash flow.

Cash flow As of fiscal year 2010, we have restructured the cash flow statement. Interest expenses were previously shown as cash flow from financing activities and therefore funded by free cash flow. Since the restructuring, we now show interest expenses under operating activities. This affects operating and free cash flow. Last year’s figures have been restated accordingly in this report. We believe the restructuring enhances the meaningfulness of the consolidated statement of cash flows as interest expenses derive from operating activities and represent a fixed commitment. Free cash flow now reflects the actual amount of cash available. 52

Operating cash flow was € 389.3 million (previous year: € 571.2 million), € 181.9 million lower than in the previous year. Operating cash flow was reduced by an increase in working capital, including in particular a rise in receivables, and increased by higher operating profit and lower interest payments. Cash outflows1 from investing activities were € 557.4 million (previous year: € 443.3 million). Our extensive investing activities caused cash outflows of €168.1 million (previous year: € 128.0 million). Loans were increased to raise funds. Overall, there was a net increase in borrowing of € 181.6 million in 2010, compared with a net decrease in borrowing of € 106.8 million in the previous year. Cash and cash equivalents at year-end were down 29.5 percent at € 34.4 million (previous year: € 48.8 million).

Structure of the Statement of Financial Position As of December 31, 2010, total assets at the B. Braun Group had risen to € 4,686.1 million (previous year: € 3,975.1 million). A rise of 17.9 percent, this reflects the increase in working capital and the fact that investments were much higher than depreciation and amortization.

On the assets side, non-current assets rose by 20.9 percent to € 2,733.6 million (previous year: € 2,261.7 million). Ongoing investment in capacity expansion caused a 19.6 percent increase in property, plant and equipment to € 2,305.0 million (previous year: € 1,926.8 million). Intangible assets (including goodwill) grew by € 50.7 million to € 218.6 million (previous year: € 167.9 million).

Inventories increased 10.1 percent to € 780.0 million (previous year: € 708.5 million). Adjusted for currency effects, the rise was 5.0 percent. The fourth quarter was strong in sales, but caused working capital for trade receivables to increase by 18.2 percent to € 933.5 million (previous year: € 790.1 million). Most of the increase in receivables related to Italy, Portugal, and Spain. The strained budgetary situation in these countries is now impacting the payment behavior of public sector healthcare purchasers.

On the liabilities side of the statement of financial position, there was a significant increase in total equity, up 22.5 percent to € 1,984.0 million (previous year: € 1,620.0 million). At 42.3 percent (previous year: 40.8 percent), our equity ratio has continued to improve and is closing in on our target of 45 percent. Provisions for pensions and similar obligations increased 4.4 percent to € 513.3 million (previous year: € 491.8 million).

Our extensive investing activities and higher working capital meant that financial debt had to be increased. Financial liabilities rose by € 227.0 million to € 1,233.4 million (previous year: € 1,006.4 million), € 21.9 million of which is related to currency translation effects. Trade accounts payable changed minimally, edging up 3.1 percent to € 216.8 million (previous year: € 210.3 million).

1 The difference between additions to property, plant and equipment and the cash outflow from investing activities was due to the timing of payments for investments and currency translation effects. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 53

F i nanc i a l p o s i t i o n an d a s s et s

Structure of Statement of Financial Position: Assets | in € million

4,686

219 Intangible Assets 3,975 3,708 168 157 2,305 Property, Plant and Equipment

1,927 1,699

780 Inventories 727 709

934 Trade Accounts Receivable 768 790

357 381 448 Other Assets

2008 2009 2010 t e m e n t s a Structure of Statement of Financial Position: Liabilities | in € million l s t a

4,686 n c i a f i n 3,975 3,708 1,984 Equity

1,620 1,390

1,233 Financial Liabilities 1,095 1,006

513 Pension Obligations 492 470 217 Trade Accounts Payable 179 210 574 647 739 Other Liabilities

2008 2009 2010 54

Financing

Financing strategy B. Braun’s financing strategy ensures that all B. Braun companies are able to meet their financial obligations at all times. The objective is to optimize financing costs while keeping risk to a minimum, in order to ensure sustainable growth.

At no time did the financial market crisis endanger the B. Braun Group. As such, we believe our financial strategy is on the right course and see no need to alter it. Debt financing activities are conducted only with banks considered reliable. The range of measures includes syndicated and bilateral credit lines, promissory notes, and an asset-backed securities (ABS) program. At year-end, B. Braun had unutilized committed long-term credit lines totaling € 417.2 million (previous year: € 530.0 million). We exceeded all of the obligatory financial performance indicators agreed with our banks.

Financial management The B. Braun Group has a central treasury department based in Melsungen, Germany. It implements the financial strategy approved by the Management Board, thereby managing the liquidity and financial risks for the Group as a whole. Although Group treasury generally carries out external financing transactions, owing to legal restrictions it may be necessary in exceptional cases for subsidiaries to find local solutions. To limit the Group-wide financing requirement and optimize the allocation of capital within the Group, cash pooling is used to extent the law allows.

Financing measures The main funding measures undertaken in the reporting year included two promotional loans for € 25 million and € 55 million from the European Investment Bank (EIB). Both loans are repayable at the end of their six-year term.

Our asset-backed securities (ABS) program could be refinanced only partly and for a limited period of time via the commercial paper market during the reporting year. However, use of a back-up liquidity line ensured that the program could be refinanced at all times.

Personnel report

Number of employees In order to put our strategy into effect, we need skilled and motivated employees. We achieve this by offering vocational training and continuing education programs, family-friendly working arrangements and by dealing with one another in an open and fair manner. Performance is rewarded by means of a performance-related remuneration system and opportunities for individual professional development. At year-end, B. Braun had 41,666 employees (previous year: 39,504), a 5.5 percent increase year-on-year. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 55

p E r s o nne l r e p o r t

In Europe excluding Germany, the workforce grew 3.9 percent to 12,391 (previous year: 11,930). This increase was mainly due to the acquisition of a company in France, the opening of new dialysis centers in Romania and Spain, as well as the expansion of both our sales force in Russia and our manufacturing facility in Spain. New hirings in laboratories and production in Germany increased the number of German employees by 5.4 percent to 11,251 (previous year: 10,672). In Asia/Pacific, B. Braun employees totaled 9,243 (previous year: 8,265), up 11.8 percent. Most of this increase came from the expansion of our sales force in China, the opening of new dialysis centers in India, expansion of manufacturing in Malaysia, and the acquisition of a company in Thailand. The number of employees in North America remained constant at 5,486, but increased in Latin America by 3.4 percent to 3,023 (previous year: 2,924). The biggest changes occurred in Argentina, Brazil, and Colombia. In Africa, employee numbers rose 19.8 percent to 272 (previous year: 227).

Location retention The location retention agreements in Melsungen, Berlin, and Tuttlingen (Germany) have proved an effective means of securing employment and improving competitiveness. The agreements also provide for training under overtime conditions. New agreements to safeguard the viability of locations have been in place in Melsungen since October 1, 2009, and Berlin since January, 1, 2009, with both agreements in effect for five years. During this period, each employee may be asked to work up to

104 additional hours per year so that the company can react flexibly and cost-effectively to market t e m e n t s a requirements. Employees share in the company’s success in relation to the net profit achieved. No l s t redundancy lay-offs are allowed for the term of the agreements. The location retention agreement a n c i

in Tuttlingen, which was concluded on January 1, 2006, ended as scheduled on December 31, 2010. a

Effective January 1, 2011, we have concluded a new agreement on comparable terms for a five-year f i n term.

Profit-sharing pay-outs depend on the number of hours worked by the individual employee and for fiscal year 2010 was capped at € 1,230.

We received recognition from the German Federal Ministry of Labor and Social Affairs and the “Initiative for employment” (Initiative für Beschäftigung!) in the “Create employment – companies demonstrate responsibility” competition. The Ministry cited B. Braun’s success in opening up prospects for employees even in economically challenging times, which meant we not only kept employees loyal to the company over the long term, but also helped them obtain qualifications and develop professionally. B. Braun joined the “Initiative for employment” in November 2010.

B. Braun Global Job Market B. Braun’s Global Job Market has set a new international standard in recruitment. This online tool gives applicants access to all open positions in the B. Braun Group. The subsequent application process is electronic, with personal data and documents stored and updated in the candidate center. This provides both, staffing specialists and managers – initially starting in Germany – with parallel access to application documents and speeds up the decision-making process on hirings. The integrated candidate center enables human resources to identify suitable candidates directly, without having to advertise across a variety of job markets beforehand. Filling open positions becomes con- siderably faster as a result. 56

By optimizing the application process in terms of both, speed and less administrative procedures for candidates and our company, e-recruitment is an ideal complement to global job searches and enhances B. Braun’s international standing as an attractive employer.

Vocational training Vocational training is a fixed component of B. Braun’s future-oriented personnel policy. It must be enduringly flexible to cope with the ever-changing challenges it faces. Our aim is to enable new employees to obtain qualifications within the company environment. We provide courses that com- bine practical work with theoretical training and promote individual responsibility.

Last year 214 (previous year: 189) trainees successfully completed their training at our German locations. Of these, 90 percent were subsequently hired full-time, with jobs being offered to all those wanting to continue to work for B. Braun. In the reporting year, 225 (previous year: 223) new trainees were hired. We maintained the number of trainees at a high level, even during the financial and economic crisis.

At present, 699 (previous year: 682) young people are training with us in Germany. This represents a 2.5 percent year-on-year increase in the total number of trainees. Overall, 87 (previous year: 78) trainees are enrolled in our program which combines vocational training with university studies.

Continuing education B. Braun’s continuing education programs are tailored specifically to our company, enabling participants to get to know our culture and management model, put guidelines into practice and follow our Group strategy. The core components are training courses for product use, professional skills, methodology and social skills, with a focus on communication, conflict resolution and negotiation conduct.

Another priority is the development and support of managers around the world. Our “Fit for Leading” program teaches management basics. Our “Advanced Leaders” program draws on the experiences of our managers, helping them reflect on their conduct as managers and promoting mutual training. The main topics covered include conversation techniques, conflict management, the use of management tools such as objective-setting and employee evaluation, as well as the design of change-management processes. We also offer individual programs to develop expertise in specific functional areas.

All continuing education is offered through our B. Braun Business School. Both Asia and Brazil implemented the B. Braun Business School in 2010 as a web-based training tool. This means that employees learn interactively at their computer, rather than physically attending courses. The tool provides product training for distribution and marketing, as well as a virtual library, a learning forum, and online courses in social skills, which are supported by videos. The advantage for our employees is that they themselves can decide when and what they need and they require no previous knowledge to use the system. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 57

R i s k an d o p p o r t u n i t i e s r e p o r t

Overseas employee assignments The number of employees on international assignment increased to 183 in 2010 (previous year: 162), a year-on-year increase of 13 percent. This enhances international knowledge transfer, which is a substantial contributor to the B. Braun Group’s competitiveness and innovativeness. Apart from Germany, the main locations for overseas assignments are the US, Malaysia, Vietnam, and the UK. A globally valid guideline has been implemented to coordinate and support employees on international assignments, ensuring they receive equal treatment.

Performance-related remuneration B. Braun’s Incentive Scheme has made participation in the company’s financial performance available to its managers throughout the world since 2000. The initial program ran until 2009 and, due to the high level of acceptance internationally, was extended in the reporting year to 2015. Over the next five years, up to 750,000 profit-sharing rights can be issued to members of the Management Board and qualified managers. Purchase of profit-sharing rights is voluntary, and their value depends on the development of the Group’s equity. Profit-sharing rights that have been bought can be sold after a period of five years. In 2010, 80,217 (previous year: 69,123) profit-sharing rights were issued. Of the 130 (previous year: 133) qualified managers, 63 percent (previous year: 59 percent) invested in B. Braun profit-sharing rights worth € 5.0 million (previous year: € 3.6 million). In total, 672,861

profit-sharing rights (previous year: 638,110) have been issued. t e m e n t s a l s t

Thank you to our employees a n c i

Thanks to the inventiveness, enthusiasm, and commitment of our employees, the B. Braun Group a

enjoyed a healthy performance in 2010, with increases in both, sales and net profit. We would like f i n to express our sincere thanks for the contributions made by our highly skilled employees, of whom we are very proud. We would also like to thank the employee representatives and trade unions for their cooperation, which is always fair and constructive.

Risk and opportunities report

Risk management and controlling All key strategic and operational decisions at B. Braun are made taking into account the associated risks and opportunities. We have a fundamentally cautious corporate strategy and avoid any uncontrollable potential risks. Risk management and controlling are key management tasks and an essential part of Group management. The B. Braun Group’s comprehensive risk management ensures that different risks can be identified, documented, assessed, monitored, and controlled. Risks resulting directly from business operations are quickly identified and assessed in monthly reports using our systematic controlling processes, which extend throughout the Group in all business areas, companies, and regions. We also identify and control risks that do not result directly from business operations. The divisional and Group risk committees assess these risks and document appropriate countermeasures, and our risk management is completed by internal auditing as well as the annual audit of financial statements. 58

Having its own captive reinsurance company, REVIUM Rückversicherung AG, brings B. Braun much greater independence from the insurance market. The captive gives B. Braun direct access to the global insurance market. REVIUM’s results were still negatively affected by a product liability claim dating back to 2008. The provisions set aside were increased again. A feasibility study was commis- sioned during the reporting year to investigate the possibility of transferring part of the B. Braun Group’s global property insurance program to the captive with effect from January 1, 2012. The B. Braun Group’s premium for the international liability insurance program increased slightly as of January 1, 2011. However, this increase was attributable solely to the Group’s higher sales. During the reporting year, B. Braun adopted an organizational guideline on the handling of potential product liability claims aimed at standardizing the treatment of losses. Improving process efficiency and transparency will have a positive impact on the risk management system of REVIUM Rückversi- cherung AG.

Risk position

Economic risk The effects of the financial and economic crisis are now reaching the healthcare market. Price pressure is intensifying in the healthcare market because of compulsory discounts aimed at redressing public deficits, which in some countries are enormous. Some countries are also greatly extending payment periods. As such, the economic risks have increased in relation to disposable goods for the US and the European markets. There is generally also a dependence on economic trends where patients have to pay for healthcare services themselves. The capital goods produced by B. Braun are cyclical. Increased formalization of the international product approval process is also evident, which entails higher costs for B. Braun. Longer processing times and more extensive requirements in terms of documentation and study submissions can delay and drive up the cost of product launches.

Procurement market risk Procurement market risk is the threat of a shortage or increase in the cost of raw materials and supplies necessary for production, including energy. B. Braun has, where possible, secured the supply of materials necessary for production through long-term contracts. Procurement strategies for products to be purchased are reviewed on an ongoing basis and adjusted to market requirements. We regularly analyze potential procurement risk, and ideally reduce it by identifying alternative suppliers. We regard the general risks in relation to supply as low, but the price risks as relatively high.

Risk of interactions and side effects We counter the risk of interactions and side effects in infusion therapy, drug admixture, and orthopedics using highly developed quality management systems at our manufacturing facilities. These are modeled on international standards and assure that all regulatory requirements are observed. Regular reviews of our quality management systems utilizing internal and external audits, together with ongoing employee training, complement our quality management. There are no risks arising from ongoing legal actions that could jeopardize the company’s continued existence. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 59

R i s k an d o p p o r t u n i t i e s r e p o r t

Financial risk B. Braun operates internationally and is therefore exposed to currency risk, which it hedges using marketable financial instruments. During the reporting year, we changed our hedging strategy to a layered hedging approach. Under this strategy, we achieve coverage of average prices for the period of our hedging horizon and reduce the effects of currency translation on the Group’s net profit. Trad- ing and management of derivative financial instruments are regulated by internal guidelines and are subject to continuous risk control. By derivatives, we refer only to marketable hedging instruments taken out with banks that have to date proven to be reliable partners. Payer swaps are at times used for variable-rate bank loans to minimize interest rate risk.

There is also the risk of a possible deterioration in the payment performance of our customers or public sector purchasers. Limited financing options can have a negative impact on liquidity and therefore on our customers’ ability to pay. There is also a risk that our suppliers’ liquidity position could remain strained as a result of the financial crisis and, in the worst case, threaten their viability.

Opportunities for B. Braun In addition to risk, B. Braun regularly identifies and assesses opportunities for the company. Oppor- tunities can generally arise from the refinement of medical standards, or the launch of new products.

Through close dialog with the users of our products and thanks to the research and development t e m e n t s a activities at our centers of excellence (CoEs), we will continue to respond rapidly to opportunities l s t and in addition create new sales potential. Capacity expansion enables us to participate in the a n c i

growing demand for healthcare and medical technology products, and new, highly innovative produc- a

tion processes are continuing to improve our competitiveness. From a regional perspective, Asia, f i n Latin America, and Russia offer the greatest growth opportunities. Because we adopted an interna- tionalized approach at a very early stage, we already operate in many of these markets through our own subsidiaries and are able to seize sales opportunities as they arise. The planned capital investments in this regard will help secure B. Braun’s future.

Overall statement on the Group’s risk and opportunity situation From today’s viewpoint, no risks or dependencies are identifiable that could threaten the viability of the B. Braun Group for the foreseeable future. As far as possible and appropriate, we have insured ourselves against liability risks and natural hazards as well as other risks. Despite high liability cover, it is not feasible to fully cover every potential risk related to product liability. However, in general, we are confident that the continuing market risk will not have a negative effect on the B. Braun Group’s performance. Offsetting these market risks are significant opportunities that may enable successful performance on the part of the company. 60

Subsequent events

No events occurred between the end of the fiscal year and the date on which the consolidated financial statements were compiled that could have a material influence on the results of operations, financial position or net assets for 2010.

Outlook

Forward-looking statements The following remarks on economic and company performance are forward-looking statements. Actual results may therefore be materially different (positively or negatively) from the expectations of future developments.

Group strategy In the Group strategy carried forward for the period to 2014, we have reaffirmed our core principles and defined new growth targets. B. Braun’s sales and profits continued to grow throughout the financial crisis, and therefore no significant changes in strategy are necessary.

Economic outlook2 Global economic output is expected to rise by 4.4 percent in the coming year, with growth in industrialized countries lagging behind the rate in emerging economies. Global trade is set to grow by 7.1 percent, and it is expected that the upturn will stabilize and that growth will be buoyed by demand for consumer and capital goods. There are mounting tensions on the international currency front. In particular, the US regards the Chinese renminbi as undervalued. There is a tendency for countries to seek to strengthen the competitiveness of their own economy by means of currency depreciation or devaluation and protectionist measures. This may have negative consequences for global trade, as might the expansive monetary policy being pursued in the US, which could produce higher inflation. Further risks include the rising unemployment in many countries and the weak real estate market.

According to the IMF’s forecasts for 2011, Europe is set for a two-track performance. Whereas economic growth should remain relatively strong in northern countries, the peripheral countries are likely to perform more sluggishly. The main cause here is a weak consumer climate, which lacks stimulus because of budget consolidation in public finances. The IMF expects Europe’s economic output to grow by 1.5 percent in 2011.

The DIHK (Association of German Chambers of Industry and Commerce) estimates that the German economy will grow by 3.0 percent in 2011, which signifies a minor loss of momentum. Consumer spending and investment in capital goods are both expected to rise, but a slight cooling off in global economic growth will have a negative impact on German exports. Labor market trends are expected to remain positive in 2011, and so the effects of the end to government economic stimulus packages should be balanced out by greater private purchasing power.

2 Source: International Monetary Fund: World Economic Outlook, October 2010 and World Economic Outlook Update, January 2011. MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 61

S u b s eq u ent e v ent s | O u t l o o k

Eastern Europe is expected to deliver stable economic performance in 2011. The IMF is forecasting 3.6 percent economic growth. Romania and Croatia are set to experience sluggish growth, whereas Poland, Latvia and Estonia are expected to enjoy relatively high growth rates of 3.0 to 3.5 percent. Some countries (such as Poland) will benefit from the normalization of world trade and the fact that they experienced little economic upheaval during the financial crisis.

Analysts anticipate Russian gross domestic product will grow by 4.5 percent. The country is expected to benefit from rising commodity prices and influx of capital. Lending is also expected to return to normal, which may provide further growth stimulus. This will also be supported by higher wages and lower unemployment. Nevertheless, this performance will be heavily dependent on commodity prices and investor confidence in Russian politics and business.

The US economy is expected grow at a faster rate in 2011 than in 2010, an estimated 3.0 percent. The country’s expansive monetary policy and extremely low interest rates should boost investment demand. However, high unemployment and massive household deleveraging are likely to result in a decline in consumer spending. This is expected to result in soft growth.

Latin America is forecast to post stable growth once again in 2011, although economic output is

expected to expand at a slightly slower pace of 4.3 percent, compared to 5.9 percent in 2010. Rates t e m e n t s a of 4.5 percent and 4.0 percent, respectively, are predicted for Brazil and Argentina. Trade relations l s t between Latin American countries should have a stabilizing effect. a n c i a

The IMF expects the emerging and developing countries of Asia to experience 8.4 percent growth in f i n 2011, based on strong domestic demand and higher exports. Growth rates will vary from country to country, but will essentially be high. China is the greatest growth driver in Asia, followed by India. Economists are forecasting that Chinese growth will soften slightly from 10.3 percent to 9.6 percent this year. This will be driven by tougher lending requirements, efforts to cool the real estate market, and the end of government economic packages. Private and public demand will be the key drivers of growth. India’s gross domestic product is forecast to increase by 8.4 percent in 2011, while the IMF is expecting growth of 6.2 percent for Indonesia.

Outlook for the healthcare market The global healthcare market will continue to perform well in the future, although with considerable regional variation. Growth rates in the established markets of industrialized countries (particularly in Europe and the US) will be lower than in emerging countries. Cardiac and circulatory diseases and degenerative conditions such as osteoarthritis, osteoporosis and spinal problems will increase as a result of the ageing population. It is expected that drug eluting stents will increasingly replace conventional products for the treatment of vascular diseases. Advancements being made in minimally invasive surgery technology is making it possible for this approach to be adopted for many other surgical interventions. The use of minimally invasive surgery tends to reduce the length of hospital stays and post-operative complications. The need for efficient therapeutic solutions will drive demand for minimally invasive instruments either to replace or to supplement existing equip- 62

ment. The dialysis market in western industrialized nations will also grow at a moderate pace. Over- all, the US and European healthcare markets will be shaped by price regulations, such as compulsory discounts and new taxes to help balance government budgets. Companies that use new diagnosis and treatment procedures and develop integrated system solutions to realize savings within the healthcare system will enjoy particular competitive advantages.

The Patient Protection and Affordable Care Act is of central importance to the future of the US market. Approximately 46 million people in the US are currently without health insurance. The introduction of a mandatory healthcare insurance should see an additional 32 million Americans covered by 2019. This is expected to boost demand for healthcare products and services. However, some US courts have ruled that mandatory healthcare insurance is unconstitutional. We are still awaiting a final ruling by the Supreme Court. In addition, there is a movement underway to improve the quality of the US healthcare system and, at the same time, to cut costs, signifying that price pressure could intensify further.

The healthcare markets of emerging and developing countries in Asia and Latin America, as well as Russia, will enjoy strong growth, spurred on by growing segments of the population of these regions gaining access to medical care. Surgery, dialysis, IV therapy, and orthopedics will all be strong beneficiaries from this trend. However, manufacturers in emerging and developing countries will also grow in significance as a result, and in the medium term they can be expected to gradually offer acceptable quality at low prices.

Business and earnings outlook We anticipate Group sales will increase by 6 percent in fiscal year 2011. We are well-equipped to cope with increasing demand thanks to our expanded capacities. However, long-term growth will depend on the implementation and timely completion of the current investment projects. Risks from macroeconomic trends remain. The large public debt in Europe (particularly Italy, Spain, and Portugal) and the US could have a negative impact on the healthcare markets. Our growth forecasts assume that we will achieve modest growth in the established US and European markets and strong sales growth in the BRIC countries. The emphasis here is on IV therapy, surgery, and wound care. On the earnings side, we anticipate a further improvement in EBITDA with the assistance of Group-wide cost management, the optimization of working capital, and expanded capacity. However, profits could be impacted by start-up costs for new factories and increased expenditures for clinical studies.

All in all, we believe it is highly likely that the B. Braun Group will deliver sales and earnings growth in line with the stated targets over the next few years. In the event of payment defaults by govern- mental healthcare systems and far-reaching cuts in healthcare budgets, however, growth rates could be lower. Nevertheless, we consider such a scenario to be less likely.

Expected financial and asset position In the future, B. Braun will continue to pursue the solid fiscal policies of recent years. The basis for the future financing of the Group remains a target equity ratio of approximately 45 percent com- bined with a cautious dividend policy. There is no major refinancing requirement for fiscal year 2011. The planned capital investments over the next few years will be funded by operating cash flow; MANAGEMENT bo a rd | jour na l | g r o u p management r e p o r t | C o n s o l i d ate d F i nanc i a l s T A T E M E N T s 63

O u t l o o k

there may exist only a small requirement for short-term working capital funding by borrowing. There will certainly be no need to significantly increase debt. Systematic use of our Group-wide cash pooling system will enable us to continue to ensure optimum cash allocation within the Group in the future. In addition, the Group-wide projects related to inventory and receivables management will have a lasting effect on limiting our financing requirements.

Overall statement on the outlook for the Group We are confident that the B. Braun Group will continue to enjoy positive growth in the years to come. Our close relationship with customers, sound fiscal management, innovative capabilities, and production efficiency, together with our highly skilled employees, will continue to pave the way for B. Braun’s future success. t e m e n t s a l s t a n c i a f i n

Consolidated Financial Statements

Consolidated S tatement of Inc ome (Los s) 6 6

Consolidated S tatement of Comprehensive Inc ome (Los s) 6 6

Consolidated S tatement of F in a ncia l P osi t ion 67

Consolidated S tatement of Changes in Equi t y 6 8

Consolidated S tatement of Cash F low s 70

Not e s 71 aC C ounting policie s 82

Notes to the Consolidated S tatement of Inc ome (Los s) 89

Notes to the Consolidated S tatement of F in a ncia l P osi t ion 97

A ddi t ion a l Inf orm at ion 122 ial statements c Notes to the Consolidated S tatement of Cash F low s 129 f i n a n Independent Audi tor s’ Rep or t 131

M a jor Shareholdings 132 66

Consolidated Statement of Income (Loss)

Notes 2010 2009 € ’000 € ’000 Sales 1) 4,422,813 4,028,249 Cost of Goods Sold 2) – 2,341,680 – 2,151,436 Gross Profit 2,081,133 1,876,813 Selling Expenses 3) – 1,218,889 – 1,091,096 General and Administrative Expenses – 221,641 – 202,051 Research and Development Expenses 4) – 155,406 – 139,139 Interim Profit 485,197 444,527 Other Operating Income 5) 231,873 191,556 Other Operating Expenses 6) – 260,895 – 225,515 Operating Profit 456,175 410,568 Profit fromF inancial Investments/Equity Method 7) 3,902 1,400 Financial Income 4,606 6,389 Financial Expenses – 77,192 – 82,234 Net Financial Income (Loss) 8) – 72,586 – 75,845 Other Financial Income (Loss) 9) 2,127 – 43 Profit before Taxes 389,618 336,080 Income Taxes 10) – 112,255 – 96,505 Consolidated Annual Net Profit 277,363 239,575 Attributable to: B. Braun Melsungen AG Shareholders 257,452 220,422 Non-controlling Interests 19,911 19,153 277,363 239,575 Earnings per Share (in €) for B. Braun Melsungen AG Shareholders (diluted and undiluted) 11) 13.27 11.36

Consolidated Statement of Comprehensive Income (Loss)

2010 2009 € ’000 € ’000 Consolidated Annual Net Profit 277,363 239,575 Changes in Fair Value of Securities – 14 54 Changes in Fair Value of Financial Derivatives 3,551 – 599 Changes due to Currency Translation 131,214 11,351 Changes Recognized Directly in Equity (after Taxes) 134,751 10,806 Comprehensive Income over the Period 412,114 250,381 Attributable to: B. Braun Melsungen AG Shareholders 374,997 231,087 Non-controlling Interests 37,117 19,294 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 67

C on s o l idated s T A T E M E N T of I ncome ( l O s s ) C on s o l idated s T A T E M E N T of C ompre h en s i v e I ncome ( l O s s ) C on s o l idated s T A T E M E N T of F inancia l P o s ition

Consolidated Statement of Financial Position

Notes Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Assets Non-current Assets Intangible Assets 14) 16) 218,642 167,940 Property, Plant and Equipment 15) 16) 2,305,032 1,926,755 Financial Investments/Equity Method 17) 28,545 21,446 Other Financial Investments 17) 22,009 17,343 of which Financial Assets (22,009) (17,343) Trade Accounts Receivable 18) 5,159 2,456 Other Assets 19) 49,398 33,033 of which Financial Assets (45,672) (30,278) Income Tax Receivable 2,990 4,143 Deferred Tax Assets 101,814 88,590 2,733,589 2,261,706 Current Assets Inventories 20) 780,022 708,533 Trade Receivables 18) 928,384 787,654 Other Assets 19) 159,047 128,623 of which Financial Assets (86,965) (62,178) Income Tax Receivable 50,663 39,878 Cash and Cash Equivalents 21) 34,369 48,756 1,952,485 1,713,444 Total Assets 4,686,074 3,975,150 Equity Subscribed Capital 22) 600,000 400,000 Capital Reserves and Retained Earnings 23) 1,227,315 1,205,710 Effects of Foreign Currency Translation 1,873 – 112,291 Equity Attributable to B. Braun Melsungen AG Shareholders 1,829,188 1,493,419 Non-controlling Interests 24) 154,839 126,617 Total Equity 1,984,027 1,620,036 Liabilities Non-current Liabilities Provisions for Pensions and Similar Obligations 25) 513,328 491,840 Other Provisions 26) 76,719 63,545 Financial Liabilities 27) 791,961 700,667 Trade Accounts Payable 29) 1,059 1,174 Other Liabilities 29) 10,712 9,017 of which Financial Liabilities (6,016) (6,705) Deferred Tax Liabilities 79,525 59,224 1,473,304 1,325,467 Current Liabilities Other Provisions 26) 31,754 50,236 Financial Liabilities 27) 441,488 305,740 Trade Accounts Payable 29) 215,698 209,139 Other Liabilities 29) 471,685 418,186 of which Financial Liabilities (180,071) (172,176) Current Income Tax Liabilities 68,118 46,346 1,228,743 1,029,647 Total Liabilities 2,702,047 2,355,114 Total Equity and Liabilities 4,686,074 3,975,150 68

Consolidated Statement of Changes in Equity

see Notes 22 – 24 Subscribed Capital Retained Other Treasury Total Non- Equity Capital Reserves Earnings Reserves Stock controlling Interests € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 400,000 10,226 1,022,195 – 123,906 – 29,800 1,278,715 111,040 1,389,755 Dividend of B. Braun Melsungen AG 0 0 – 16,000 0 0 – 16,000 0 – 16,000 Retirement of Treasury Stock – 29,800 0 29,800 Consolidated Annual Net Profit 0 0 220,422 0 0 220,422 19,153 239,575 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 32 0 32 22 54 Changes in Fair Value of Financial Derivatives 0 0 0 – 359 0 – 359 – 240 – 599 Changes due to Currency Translation 0 0 0 10,992 0 10,992 359 11,351 Comprehensive Income over the Period 0 0 220,422 10,665 0 231,087 19,294 250,381 Other Changes 0 0 – 383 0 0 – 383 – 3,717 – 4,100 December 31, 2009/January 1, 2010 400,000 10,226 1,196,434 – 113,241 0 1,493,419 126,617 1,620,036 Effect of a Change inA ccounting Policies (IAS 8) from January 1, 2010 0 0 – 13,845 0 0 – 13,845 0 – 13,845 Dividend of B. Braun Melsungen AG 0 0 – 24,000 0 0 – 24,000 0 – 24,000 Increase in Subscribed Capital 200,000 0 – 200,000 0 0 0 0 0 Consolidated Annual Net Profit 0 0 257,452 0 0 257,452 19,911 277,363 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 – 22 0 – 22 8 – 14 Changes in Fair Value of Financial Derivatives 0 0 0 3,403 0 3,403 148 3,551 Changes due to Currency Translation 0 0 0 114,164 0 114,164 17,050 131,214 Comprehensive Income over the Period 0 0 257,452 117,545 0 374,997 37,117 412,114 Other Changes 0 0 – 1,383 0 0 – 1,383 – 8,895 – 10,278 December 31, 2010 600,000 10,226 1,214,658 4,304 0 1,829,188 154,839 1,984,027 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 69

C on s o l idated s T A T E M E N T of C h ange s in E q u it y

see Notes 22 – 24 Subscribed Capital Retained Other Treasury Total Non- Equity Capital Reserves Earnings Reserves Stock controlling Interests € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 400,000 10,226 1,022,195 – 123,906 – 29,800 1,278,715 111,040 1,389,755 Dividend of B. Braun Melsungen AG 0 0 – 16,000 0 0 – 16,000 0 – 16,000 Retirement of Treasury Stock – 29,800 0 29,800 Consolidated Annual Net Profit 0 0 220,422 0 0 220,422 19,153 239,575 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 32 0 32 22 54 Changes in Fair Value of Financial Derivatives 0 0 0 – 359 0 – 359 – 240 – 599 Changes due to Currency Translation 0 0 0 10,992 0 10,992 359 11,351 Comprehensive Income over the Period 0 0 220,422 10,665 0 231,087 19,294 250,381 Other Changes 0 0 – 383 0 0 – 383 – 3,717 – 4,100 December 31, 2009/January 1, 2010 400,000 10,226 1,196,434 – 113,241 0 1,493,419 126,617 1,620,036 Effect of a Change in Accounting Policies (IAS 8) from January 1, 2010 0 0 – 13,845 0 0 – 13,845 0 – 13,845 Dividend of B. Braun Melsungen AG 0 0 – 24,000 0 0 – 24,000 0 – 24,000 Increase in Subscribed Capital 200,000 0 – 200,000 0 0 0 0 0 Consolidated Annual Net Profit 0 0 257,452 0 0 257,452 19,911 277,363 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 – 22 0 – 22 8 – 14 Changes in Fair Value of Financial Derivatives 0 0 0 3,403 0 3,403 148 3,551 Changes due to Currency Translation 0 0 0 114,164 0 114,164 17,050 131,214 Comprehensive Income over the Period 0 0 257,452 117,545 0 374,997 37,117 412,114 Other Changes 0 0 – 1,383 0 0 – 1,383 – 8,895 – 10,278 December 31, 2010 600,000 10,226 1,214,658 4,304 0 1,829,188 154,839 1,984,027 70

Consolidated Statement of Cash Flows

Notes 2010 2009 € ’000 € ’000 Operating Profit 456,175 410,568 Income Tax Paid – 90,289 – 96,330 Depreciation of Property, Plant and Equipment and Intangible Assets (Net of Appreciation) 238,220 208,561 Change in Non-current Provisions 26,211 27,379 Interest Received and Other Financial Income 5,328 5,538 Interest Paid and Other Financial Expenditure – 43,688 – 47,749 Other Non-cash Income and Expenses – 30,467 – 34,679 Gain/Loss on the Disposal of Property, Plant and Equipment and Intangible Assets 1,525 1,954 Gross Cash Flow 34) 563,015 475,242 Change in Inventories – 29,805 23,960 Change in Receivables and Other Assets – 143,540 – 16,185 Change in Liabilities, Current Provision and Other Liabilities (excluding Financial Liabilities) – 337 88,196 Cash Flow from Operating Activities 34) 389,333 571,213 Investments in Property, Plant and Equipment and Intangible Assets – 549,748 – 444,909 Investments in Financial Assets – 10,413 – 4,496 Acquisitions of Subsidiaries, Net of Cash Acquired – 12,290 – 4,010 Proceeds from Sale of Subsidiaries and Holdings 911 28 Proceeds from Sale of Property, Plant and Equipment Intangible Assets and Other Financial Assets 10,732 9,691 Dividends Received 3,403 433 Cash Flow from Investing Activities 35) – 557,405 – 443,263 Free Cash Flow – 168,072 127,950 Dividends paid to B. Braun Melsungen AG Shareholders – 24,000 – 16,000 Dividends paid to Non-controlling Interests – 6,235 – 18,708 Capital Contributions by Non-controlling Interests 986 1,184 Deposits and Repayments for Profit-Sharing Rights 3,198 4,689 Loans 324,611 235,534 Loan Repayments – 143,052 – 342,336 Cash Flow from Financing Activities 36) 155,508 – 135,637 Change in Cash and Cash Equivalents from Business Operations – 12,564 – 7,687 Cash and Cash Equivalents at the Start of the Year 48,756 53,288 Exchange Gains (Losses) on Cash and Cash Equivalents – 1,823 3,155 Cash and Cash Equivalents at Year End 37) 34,369 48,756

For the first time, interest received and paid are reported under gross cash flow to provide improved transparency of the Group’s financial position. The comparative figures have been adjusted accordingly. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 71

C on s o l idated s T A T E M E N T of C a s h F l o w s | N ote s

Notes

General Information The consolidated financial statements of B. Braun Melsungen AG as of December 31, 2010 have been prepared in compliance with Section 315a (3) of the German Commercial Code (HGB) according to the International Financial Reporting Standards (IFRS) applicable as of the reporting date published by the International Account- ing Standards Board (IASB), London, as well as the interpretations issued by the International Financial Report- ing Interpretations Committee (IFRIC) as stipulated by the EU, and have been published in the online edition of the German Federal Gazette (Bundesanzeiger).

B. Braun Melsungen AG is a globally engaged family owned company headquartered in Melsungen, Germany. The company’s address is Carl-Braun-Straße 1, 34212 Melsungen, Germany.

B. Braun Holding GmbH & Co. KG is the parent company of B. Braun Melsungen AG as defined in Section 290 (1) HGB, and as the chief parent company is required to produce consolidated financial statements that include the consolidated financial statements of B. Braun Melsungen AG.

B. Braun Melsungen AG and its subsidiaries manufacture, market, and sell a broad array of healthcare products and services for intensive care units, anesthesia and emergency care, extracorporeal blood treatment, and surgical core procedures. The major manufacturing facilities are located in the EU, Switzerland, the USA, Brazil, Vietnam and Malaysia. The company distributes its products via a worldwide network of subsidiaries and associated companies.

The Management Board of B. Braun Melsungen AG approved the consolidated financial statements for submission to the company’s Supervisory Board on March 8, 2011.

The consolidated financial statements have been prepared based on historical costs, except for available-for- sale financial assets and financial assets/liabilities including derivative financial instruments measured at fair value through profit and loss. Unless otherwise indicated, the accounting policies were used consistently for all periods referred to in this report.

In the statement of financial position, the distinction is made between current and non-current assets and liabilities. The statement of income is presented using the cost-of-sales method. Using this format, net sales are compared to expenses incurred to generate these sales, classified by the expense categories Cost of Goods Sold, Selling, General and Administrative, and Research and Development. To improve the informational content of the consolidated statement of financial position and consolidated statement of income, further details on individual entries have been provided in the Notes to the consolidated financial statements. The consolidated financial statements have been prepared in euro. Unless otherwise stated, all figures are presented in thousands of euro (€ ‘000).

The financial statements of B. Braun Melsungen AG and its subsidiaries included in the consolidated financial statements have been prepared using standardized Group accounting policies. 72

New and amended International Financial Reporting Standards and Interpretations whose application is mandatory for fiscal years beginning January, 1 2010 (IAS 8.28)

IFRS 2 Share-based Payment The IASB’s amendment to IFRS 2 clarifies the accounting for Group cash-settled share-based payment transactions in cases where the reporting company receives goods or services, but the payment obligation does not lie with the company itself, but with its parent or another Group company. This provision is not relevant to B. Braun’s consolidated financial statements.

IFRS 3 Business Combinations and IAS 27 Consolidated and Separate Financial Statements IFRS 3 (amended), Business Combinations, and IAS 27 (amended), Consolidated and Separate Financial Statements, were amended significantly with regard to business combinations, divestitures, and acquisitions of non-controlling interests. The amendments affect both accounting and measurement, and may result in greater earnings volatility in the periods following an acquisition. The amendments to IFRS 3 relate in particular to the determination of acquisition costs (directly attributable incidental acquisition costs are generally expensed immediately), the accounting procedure for the residual goodwill (the choice of applying either the “full goodwill model” or the previous partial goodwill model), the procedure for gradual acquisitions (reporting the revaluation of the “old” tranches as profits or losses), and in some areas the recognition and measurement of identifiable assets and liabilities. The amendments to IAS 27 lead in particular to changes in relation to transactions with owners of non-controlling interests (mandatory application of the economic entity approach, i.e. reporting as an equity transaction) and consolidated losses attributable to non-controlling interests in the consolidated financial statements. Furthermore, future retained interests in transitional consolidations must always be remeasured at fair value and recognized through profit or loss. The standard has been applied, but has had no material impact on B. Braun’s consolidated financial statements.

Amendment to IAS 39 Financial Instruments In its amendments to IAS 39, Financial Instruments: Recognition and Measurement, the IASB emphasizes that inflation risks may only be hedged if payments are directly linked to an inflation index. The amendments also state that one-sided risks cannot generally be hedged effectively by designating an option in its entirety. Depending on the type and scope of future hedging transactions, this may have an effect on B. Braun Melsungen AG’s consolidated financial statements in the future. The amendments do not currently have any impact.

IFRIC 12 Service Concession Arrangements IFRIC 12 discusses how obligations and rights resulting from service concessions should be recognized and measured by the operator of the concession. The interpretation applies only to those concessions under which state infrastructure works are outsourced to private companies. This provision is not relevant to B. Braun’s consolidated financial statements.

IFRIC 15 Agreements for the Construction of Real Estate IFRIC 15 defines the accounting procedure for sales and associated expenses of companies that construct and sell real estate, whether directly or via sub-contractors. This provision is not relevant to B. Braun’s consolidated financial statements.

IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 16 clarifies that, in hedge accounting for the purposes of hedging exchange rate risk, only the risk from exchange rate fluctuations between the functional currency of foreign commercial operations and the functional MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 73

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currency of a parent company may be the subject of a hedge, not the currency in which the consolidated financial statements are presented. The provisions governing the amount to be taken from the foreign currency translation reserve and recognized in the statement of income on disposal of a foreign commercial operation were also specified. Depending on the type and scope of future hedging transactions, this may have an effect on the B. Braun Melsungen Group’s consolidated financial statements in the future. The amendments do not currently have any impact.

IFRIC 17 Distributions of Non-cash Assets to Owners IFRIC 17 defines the treatment of non-cash dividends to shareholders. B. Braun has not distributed any non- cash dividends to its owners in the past and has no plans to do so in the future. This provision is therefore not relevant to B. Braun’s consolidated financial statements.

IFRIC 18 Transfer of Assets from Customers IFRIC 18 applies in cases where a company receives an item of property, plant and equipment from a customer in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas, or water). This provision is not currently relevant to B. Braun’s consolidated financial statements.

New and amended International Financial Reporting Standards and Interpretations that have already been published but whose application is not yet mandatory for companies whose financial year ends on December 31, 2010 (IAS 8.30)

Adopted by the EU

IAS 24 (rev. 2009) Related Party Disclosures IASB released a revised version of IAS 24, Related Party Disclosures, on November 4, 2009. The amendment to IAS 24 in particular comprehensively revised the definition of related parties and made adjustments to the definition of transactions subject to disclosure. The revised standard will first be applicable in fiscal years beginning on or after January 1, 2011. The application of the new rules will be retrospective. B. Braun’s consolidated financial statements will not be affected by the new rules.

Amendment to IAS 32 Classification of Rights Issues The amendment to IAS 32 published in October 2009 governs the accounting treatment of rights issues, options, or warrants on a fixed number of own shares in any other than the functional currency. Previously, such rights were treated as derivative liabilities. Such rights will now be classified as shareholders’ equity under certain conditions. The amendment will first be applicable in fiscal years beginning on or after February 1, 2010. The amended standard is not currently relevant to the consolidated financial statements of the B. Braun Group.

Amendments to IFRIC 14, IAS 19 Prepayments of a Minimum Funding Requirement The amendment to IFRIC 14 allows a company to recognize as an asset the economic benefit arising from an early payment of contributions that reduces future contributions relating to a minimum funding requirement. The amendments are to be applied from the beginning of the earliest comparison period presented in the first financial statements for which this interpretation is valid. Adjustments resulting from the application of the amendments are to be included under retained earnings in the opening statement of financial position for the comparison period. Earlier voluntary application of the amendments before the date for mandatory application (January 1, 2011) is permitted. B. Braun’s consolidated financial statements will not be affected by the new rules. 74

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 governs the accounting treatment of debtors where the terms of a financial liability are renegotiated to allow them to fully or partially extinguish the financial liability by issuing equity instruments (debt for equity swaps), and the creditor is an independent third party.

IAS 39.41 stipulates that the difference between the carrying amount of an extinguished liability and the consideration paid must be recognized in profit or loss. IFRIC 19 now also clarifies that equity instruments issued by the debtor in order to fully or partially extinguish the financial liability must be viewed as part of the consideration paid. The equity instruments are to be measured at fair value at the time of initial recognition. If fair value cannot be reliably determined, they are to be measured at the fair value of the fully or partially extinguished liability. The equity instruments issued may no longer be measured at the carrying amount of the fully or partially extinguished financial liability. When only part of the financial liability is extinguished, the debtor must determine whether the terms of the remaining liability are substantially different to the terms of the original liability; this may require it to account for the extinguishment of the old remaining liability and the recognition of a new financial liability in accordance with IAS 39.40. The interpretation is to be applied retrospectively (first mandatory for fiscal years beginning on or after July 1, 2010), where fair values can still be determined and earlier application is permitted. This provision is not currently relevant to B. Braun’s consolidated financial statements.

EU adoption pending

Amendments to IFRS 7 Transfers of Financial Assets The amendment to IFRS 7 concerns the required disclosures relating to the transfer of financial assets. Even where a financial asset is derecognized in its entirety, comprehensive disclosures are now required on any possible rights and obligations that were retained or transferred as part of the transaction. In addition to a description of the rights and obligations (qualitative disclosures), a host of quantitative disclosures such as the maximum loss risk, date and amount of payments, etc. is also required. As the amendment merely results in an extension of the disclosures, it will have no impact on the net assets, financial position and results of operations of the Group.

IFRS 9 Financial Instruments: Classification and Measurement The IASB is issuing the new IFRS 9 standard in three parts. Two parts have thus far been published. The first part fundamentally changes the classification and measurement of financial assets. IFRS 9 provides for just two categories to which financial assets must be assigned upon initial recognition: measurement at fair value and measurement at amortized cost. The standard provides for retrospective application to all existing financial assets, and the new regulations determine that the categorization will be determined by the situation on the date of initial application of the standards. In addition, there are concessions in the form of a variety of transitional arrangements. The second part of IFRS 9 deals with financial liability accounting. With the exception of the rules for financial liabilities voluntarily measured at fair value (fair value option), the provisions of IAS 39 were carried over unchanged to IFRS 9. In accordance with IASB rules, IFRS 9 must be applied to fiscal years beginning on or after January 1, 2013. Earlier application is permitted. It is not yet known when it will be adopted by the EU. The application of the parts of the standard issued to date are not expected to have an impact on the net assets, financial position and results of operations of the B. Braun Group. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 75

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Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets The amendments to IAS 12 consist of a supplement to an exception for investment properties held as financial investments and measured at fair value in accordance with IAS 40, and for investment properties held as financial investments that are initially recognized in connection with the acquisition of a subsidiary, where these are subsequently to be measured at fair value. The exception stipulates that deferred tax assets and liabilities relating to the assets in question must be measured based on the tax consequences of a sale, unless the reporting company provides unequivocal evidence that it will recover the entire carrying amount of the asset through use. The amended version must be applied retrospectively for fiscal years beginning on or after January 1, 2012 and earlier voluntary application is permitted. Current evidence indicates that the amendment will have no impact on the net assets, financial position and results of operations of the B. Braun Group.

As part of the ongoing IFRS improvements project, certain passages were also redrafted to improve clarity and amendments were made that have an impact on accounting, recognition and measurement.

Critical Assumptions and Estimates for Accounting Policies The preparation of financial statements in accordance with IFRS requires management to make assumptions and estimates that have an effect on the reported amounts and their related statements. While management makes these estimates to the best of its knowledge and abilities based on current events and measures, there is a possibility that actual results may differ. Estimates are necessary in particular when:

– Assessing the need for and the amount of write-downs and other value adjustments; – Measuring pension obligations; – Recognizing and measuring provisions; – Establishing inventory provisions; – Evaluating the probability of realizing deferred tax assets; – Calculating the value in use of cash-generating units (CGU) for impairment testing.

The Group’s management determines the expected useful life of intangible assets and property, plant and equipment, and therefore their depreciation or amortization, based on estimates. These assumptions can change materially, for example as a result of technological innovations or changes in the competitive environment. Should their actual useful life be shorter than the estimate, management adjusts the amount of depreciation or amortization. Assets that are technologically outdated or no longer useable under the current business strategy are fully or partially written off.

The net present value of pension obligations depends on a number of factors, which are based on actuarial assumptions. The estimates made to determine the net expense (income) for pensions include the projected long-term rate of return on plan assets and the discount rate. Any change in such assumptions will have an effect on the carrying amount of the pension provisions. Obligations from defined benefit pension plans, as well as pension expenses for the following year, are determined based on the parameters outlined under Note 25.

The recognition and measurement of other provisions is performed on the basis of estimates of the probability of a future outflow of resources, as well as experience and known circumstances as of the reporting date. The actual liability may differ from the amounts of the provisions created. 76

The estimate of inventory provisions is based on the projected net realizable value (i. e. the estimated selling price, less the estimated cost of completion and the estimated costs necessary to make the sale). Actual sales and actual costs incurred may differ from these estimates.

Deferred tax assets are only recognized to the extent that it is probable that taxable profit will be available in the future. The actual taxable profits in future periods may differ from the estimates made on the date such deferred tax assets are capitalized.

Goodwill is tested for impairment annually on the basis of a three-year operational plan and based on projected specific annual growth rates for the subsequent period. An increase or decrease in the projected annual growth rates would alter the estimated fair value of a given cash-generating unit.

The method used to calculate intercompany profits in inventories was changed in the reporting year. B. Braun is confident that this change will provide more relevant information on the Group’s net assets, financial position and results of operations. The change has led to a net reduction of € 13.8 million in equity (€ 19.1 million, less deferred taxes of € 5.3 million), a reduction of € 19.1 million in inventories, and an increase of € 5.3 million in deferred tax assets. The statement of income was not affected by the change. Retroactive adjustments to comparison periods were not possible for system-related reasons.

Scope of Consolidation In addition to B. Braun Melsungen AG, the consolidated financial statements include 35 German and 154 foreign subsidiaries in which B. Braun Melsungen AG either holds a direct or indirect majority of voting rights or has control over financial and business management.

Subsidiaries are included in the consolidated financial statements effective on the day control is assumed by the Group. Consolidation is discontinued as of the day on which such control ends.

The change in the number of Group companies as of December 31, 2010 and 2009 respectively is shown below:

2010 2009 Included as of December 31 of Previous Year 187 188 Companies Included for the First Time 8 7 Company Consolidations Discontinued – 2 – 1 Business Combinations – 3 – 7 Companies now Consolidated Using the Equity Method due to the Sale of Shares – 1 0 Included as of December 31 of Reporting Year 189 187 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 77

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The impact of the newly acquired companies on the statement of financial position at the time of initial consolidation and on the principal items in the statement of income for fiscal year 2010 is shown below:

Carrying Fair value amount € ’000 € ’000 Non-current Assets 8,361 8,361 Current Assets 5,625 5,625 Acquired Assets 13,986 13,986 Non-current Provisions and Liabilities 2,701 2,701 Current Provisions and Liabilities 3,801 3,801 Acquired Liabilities 6,502 6,502 Net Assets Acquired 7,484 7,484 Non-controlling Interests 0 0 Prorated Net Assets 7,484 7,484 Badwill – 588 Acquisition Costs 6,896 of which Non-controlling Interests 0 Cash and Cash Equivalents Acquired 188 Cash Flow for Business Acquisitions 6,708 Sales 13,299 Operating Profit 2,354 Profit after Tax 1,582

Acquisitions were mainly conducted to secure supply of components for suture production.

Acquisitions in the reporting year contributed no assets that had not previously been recognized. Goodwill was valued at € 4.3 million before translation differences, of which € 3.2 million resulted from at-equity consolidation.

To secure the Group’s existing business relating to the manufacture and distribution of elastomeric infusion pumps, all material tangible assets of the infusion pump business of MedPro International Ltd., Chonburi/Thailand, were acquired on October 30, 2010 as part of an asset deal. The associated intangible assets were acquired from MedPro Corporation Pte. Ltd., Singapore. Business operations will be continued by the Group’s subsidiary B. Braun Medical Production Ltd. Thailand. The acquisition costs totaled € 26.9 million. The fair value of the tangible assets acquired (property, plant and equipment, inventories) as of the date of acquisition was € 2.8 million, while the fair value of intangible assets (patents, customer contracts) was € 23.6 million. Goodwill of € 0.5 million stems from synergy effects expected from the company’s integration into the Group. The asset deal increased Group sales by € 0.5 million. The impact on the consolidated annual net profit was not materially significant. 78

These changes did not adversely impact the comparability of the financial statements with those of the preceding year.

Holdings in three joint ventures and 17 associated companies are recognized in the consolidated financial statements as of the reporting date. Two associated companies were not measured using the equity method on materiality grounds.

The complete list of shareholdings belonging to the Group, and to B. Braun Melsungen AG, is provided in the Notes to the consolidated financial statements.

The following companies are included in the consolidated financial statements of B. Braun Melsungen AG:

– B. Braun Facility Services GmbH & Co. KG, Melsungen, – Invitec GmbH & Co. KG, Duisburg, – MAT Adsorption Technologies GmbH & Co. KG, Elsenfeld.

They meet the conditions of Section 264b of the German Commercial Code (HGB) and are thus exempted from the requirement to compile Notes and a management report.

The following companies meet the conditions of Section 264 (3) HGB and are thus also exempted from the requirement to compile Notes and a management report:

– Aesculap AG, Tuttlingen – Aesculap Akademie GmbH, Tuttlingen, – Aesculap International GmbH, Tuttlingen, – Ascalon Gesellschaft für Innovation in der Medizintechnik GmbH, Berggießhübel, – Avitum Transcare Germany GmbH, Melsungen, – B. Braun Medical AG, Melsungen, – B. Braun Avitum AG, Melsungen, – B. Braun Surgical GmbH, Melsungen, – B. Braun Petzold GmbH, Melsungen, – B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen, – B. Braun International GmbH, Melsungen, – B. Braun TravaCare GmbH, Hallbergmoos, – B. Braun VetCare GmbH, Tuttlingen, – Bibliomed medizinische Verlagsgesellschaft mbH, Melsungen, – CoachIT GmbH, Kassel, – Paul Müller Technische Produkte GmbH, Melsungen, – PNS Professional Nutrition Services GmbH, Melsungen, – Saxonia Medical GmbH, Radeberg, – Transcare Gesundheitsservice GmbH, Melsungen.

The companies listed above exercise their right to the exemptions. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 79

N ote s

Principles of Consolidation a) Subsidiaries Subsidiaries, i. e. companies in which B. Braun Melsungen AG directly or indirectly holds more than half of the voting rights or otherwise controls their financial and business management, are included in the scope of consolidation. For the purpose of determining whether B. Braun Melsungen AG controls another company in this manner, the existence and consequences of potential voting rights that may be exercised or converted on the reporting date are taken into consideration.

Subsidiaries are initially consolidated on the first day on which B. Braun Melsungen AG assumes control of the acquired company; they are excluded from consolidation once B. Braun Melsungen AG forfeits such control. The acquisition of subsidiaries is recognized utilizing the purchase method. The cost of acquiring a subsidiary is calculated based on payments of cash and cash equivalents, together with the fair value of assets transferred, shares issued, and/or liabilities assumed when initial control is gained. Acquisition costs that exceed the proportionate acquired share of the fair value of the subsidiary’s net assets are recognized as goodwill.

Assets, debts, and contingent liabilities identifiable upon a merger of companies are valued on initial consolidation at the fair values attributable to them, regardless of the size of any non-controlling interests.

Goodwill generated by the acquisition of non-controlling interests in fully consolidated companies is offset against retained earnings. Where assets and liabilities are measured at fair value for the gradual acquisition of companies fully consolidated for the first time, the revaluation of the “old” tranches is recognized through profit or loss.

Intercompany receivables and payables, as well as expenditure and income are offset against each other. Un- realized gains on transactions between companies within the Group are eliminated in full; unrealized losses are eliminated insofar as the resulting costs of acquisition or manufacture do not exceed the recoverable amount of the underlying asset. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use.

Subsidiary companies’ accounting policies are, where necessary, adapted to those used to produce the consolidated financial statements. b) Associated Companies Associated companies are those companies over which the Group has significant influence but not control, generally accompanied by a holding of between 20 percent and 50 percent of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Group’s investment in associated companies includes goodwill identified on acquisition (net of any accumulated impairments).

The Group’s share of associated companies’ post-acquisition profits or losses is recognized in the statement of income, and its share of post-acquisition changes in retained earnings is recognized in the Group’s retained earnings. The cumulative post-acquisition changes are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associated company. 80

Unrealized gains from transactions between the Group and its associated companies are, where material, eliminated to the extent of the Group’s share in the associated company. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting and measurement policies of associated companies are changed where necessary to ensure consistency with the policies adopted by the Group.

c) Joint Ventures The Group’s interests in jointly controlled entities are recognized using proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities, and cash flows on a line-by-line basis with the corresponding items in the Group’s financial statements. The Group recognizes only that portion of gains or losses on the sale of assets to the joint venture that it is attributable to the other partners in the ventures. The Group does not recognize its share of gains or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it resells the assets to an independent third party. Losses on intercompany transactions are treated similarly unless the assets transferred are impaired.

d) Owners of Non-controlling Interests Transactions with owners of non-controlling interests are treated in the same way as transactions with parties within the Group. Sales of shares to owners of non-controlling interests result in gains or losses being recognized in the consolidated financial statements. Reciprocally, purchases of shares from owners of non-controlling interests result in the recognition of goodwill equivalent to the difference between the purchase price and the proportional carrying amount of the subsidiary’s net assets.

Foreign Currency Translation a) Functional and reporting currency Items included in the financial statements of each of the Group’s subsidiaries are stated using the currency of the primary economic environment in which the company operates (functional currency).

The consolidated financial statements are stated in euro, that being the Group’s functional and reporting currency.

b) Transactions and balances Foreign currency transactions are translated into the functional currency using the prevailing exchange rate on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the exchange rates prevailing on the reporting date are recognized in the statement of income.

Translation differences on monetary items, such as equities classified as available-for-sale financial assets, where fair value changes are directly recognized in equity, are reported as part of the gain or loss from fair value measurement. Translation differences on non-monetary items, where fair value changes are directly recognized in equity, are included in the revaluation reserve in equity. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 81

N ote s

c) Subsidiaries All items in the statements of income and statements of financial position of all Group subsidiaries that are in a currency other than the Group reporting currency are translated into the reporting currency as follows:

– Assets and liabilities are translated at the closing rate on the reporting date; – Income and expenses are translated at average exchange rates; – All resulting exchange differences are recognized as a separate component of equity (Changes due to Currency Translation).

Goodwill and fair value adjustments arising on the acquisition of foreign companies are treated as assets and liabilities of the foreign company and translated at the closing rate.

Upon the sale of a foreign business operation, currency differences formerly recognized in equity are taken to the statement of income as gains or losses on disposal.

Comparison of Selected Currencies

Closing Mid-rate on Reporting Date Average Annual Rate ISO Code Dec. 31, 2010 Dec. 31, 2009 + – Dec. 31, 2010 Dec. 31, 2009 + – in % in % 1 EUR = USD 1.336 1.441 – 7.3 1.327 1.393 – 4.8 1 EUR = GBP 0.861 0.888 – 3.1 0.858 0.891 – 3.7 1 EUR = CHF 1.250 1.484 – 15.7 1.382 1.510 – 8.5 1 EUR = MYR 4.095 4.933 – 17.0 4.273 4.904 – 12.9 1 EUR = JPY 108.650 133.160 – 18.4 116.455 130.232 – 10.6 82

Accounting policies

Intangible Assets a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets and liabilities of the acquired company on the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment and is carried at cost less accumulated impairment losses. Write- downs of goodwill are reported under other operating expenses. Write-ups in value are not permitted. Gains and losses on the sale of companies include the carrying amount of the goodwill relating to the company sold.

b) Development Costs The B. Braun Group invests a significant portion of its financial assets in research and development. In addition to internal research and development activities, the Group maintains numerous cooperative relationships with third parties.

Development expenses are defined as costs related to applying research findings or specialized knowledge for planning production and the manufacturing process before production or use has commenced. Development expenses are capitalized as intangible assets where it is regarded as likely that the project will be commercially successful, technically feasible and the costs can be reliably measured. Other development costs that do not meet these criteria are expensed as they occur. Development costs that have previously been expensed are not capitalized in subsequent years. Capitalized development costs are shown as self-created intangible assets. Please see c) below regarding the useful life, amortization method, and review of residual carrying amounts.

c) Other Intangible Assets Acquired intangible assets are recognized at acquisition cost, and self-created intangible assets where future economic benefit is likely to flow to the Group and the costs of the asset can be reliably measured are recognized at manufacturing cost. This includes all costs directly related to the manufacturing process, as well as appropriate portions of relevant overhead costs. Intangible assets with finite useful lives are written off on a scheduled straight-line basis over a period of four to eight years.

Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary.

A write-down is taken at the reporting date if the recoverable amount of an intangible asset falls below its carrying amount.

Amortization on other intangible assets is allocated to the functional areas that benefit from their use. Write- ups to a maximum of amortized acquisition or manufacturing cost are shown under other operating income.

Besides goodwill, the Group did not own any intangible assets with indefinite useful lives in the reporting periods presented.

Impairment of Non-financial Assets Intangible assets that have an indefinite useful life are not subject to scheduled amortization; they are tested annually for impairment. Assets that are subject to scheduled amortization are reviewed for impairment when- ever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). With the exception of goodwill, non-financial assets that have been subject to an impairment loss in the past are reviewed at each reporting date to see if a write-up is required. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 83

A cco u nting po l icie s

Property, Plant and Equipment Tangible assets that are utilized during the ordinary course of business for more than one year are recognized at their acquisition or manufacturing cost less straight-line depreciation. The latter includes all costs directly related to the manufacturing process and appropriate portions of relevant overhead costs. The useful lives applied correspond to the expected useful lives within the Group.

The following useful lives are the basis for depreciation applied to property, plant and equipment:

Buildings 25 to 50 years Technical plant and machinery* 5 to 20 years Vehicles 6 years Operating and office equipment 4 to 20 years

* Operating a single shift

Land is not depreciated.

Acquisition and manufacturing costs that are incurred at a later point are recognized as part of the asset or as a separate asset only when it is likely that the future economic benefits associated with the asset will flow to the Group and that the cost of the asset can be reliably measured. All other repairs and maintenance are reported as expense in the statement of income of the fiscal year in which they occur.

Residual carrying amounts and expected useful lives are reviewed at each reporting date and adjusted if necessary.

A write-down is taken at the reporting date if the recoverable amount of an item of property, plant and equipment falls below its carrying amount.

Depreciation on property, plant and equipment is allocated to the functional areas that benefit from their use. Write-ups to a maximum of amortized acquisition or manufacturing cost are shown under other operating income. Gains and losses from disposals of property, plant and equipment are taken to profit and loss.

Government grants are recognized at fair value if receipt of the grant and the Group’s compliance with any conditions associated with the grant are highly likely.

Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset are recognized as part of its acquisition or manufacturing cost.

Finance Leasing Leasing contracts for intangible assets and property, plant and equipment, where the Group carries the substantial risks and rewards of ownership of the leased asset, are classified as finance leases. At commencement of the lease term, finance leases are recognized as an asset at the lower of the fair value of the asset or the net present value of the minimum lease payments. Each leasing payment is apportioned between the finance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the leasing liability. This liability is reported under financial liabilities without recognizing the interest payments. The interest portion of the leasing payment is recognized as expense through the statement of income. Assets held under finance leases are depreciated over the useful life of the asset. If there is no reasonable certainty that the Group will obtain ownership of an asset at the end of the lease, the asset is depreciated in full over the shorter of the lease term or the useful life of the asset. 84

Financial Investments Recognized Using the Equity Method of Accounting and Other Financial Investments Investments in holdings with at-equity accounting are recognized initially at acquisition cost and in subsequent periods at the amortized pro-rata net assets. The carrying amounts are increased or decreased annually by the associate’s share of the net profit or loss, distributions, and any other changes in equity. Goodwill is included in the valuation of the holding rather than being separately identified. There is no scheduled amortization of goodwill. Holdings accounted for using the equity method are written down when the recoverable amount falls below the carrying amount of the holding.

Categories of Financial Assets Financial assets are classified using the following categories:

– Financial assets at fair value through profit and loss, – Loans and receivables, – Held-to-maturity financial assets, – Available-for-sale financial assets.

The categorization depends on the purpose for which the assets were acquired. Management determines the categorization of financial assets at initial recognition and re-evaluates this categorization on each reporting date.

a) Financial assets at fair value through profit and loss Financial assets are measured at fair value through profit and loss if the financial asset is either held for trading or designated as being measured at fair value.

A financial asset is classified as held for trading if it has been acquired principally for the purpose of earning profits from short-term price changes, or is a derivative that has not been designated as a hedging instrument.

To date, the Group has not exercised the option of designating financial assets upon initial recognition as financial assets at fair value through profit and loss. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 85

A cco u nting po l icie s

b) Loans and receivables Loans and receivables with fixed or determinable payments that are not quoted on an active market are categorized as loans and receivables. Loans and receivables are measured using the effective interest method at amortized cost less any impairments. With the exception of current receivables, where the interest rate effect is insignificant, interest income is recognized using the effective interest method. c) Held-to-maturity financial assets Bills of exchange and debt instruments with fixed or determinable payments and fixed maturities, which the Group has the intention and ability to hold to maturity, are categorized as “held-to-maturity investments.” Held-to-maturity investments are measured at amortized cost using the effective interest method less impairments. d) Available-for-sale financial assets Listed shares and redeemable bonds held by the Group that are traded on an active market are recognized at fair value as available-for-sale financial assets. Investments in unlisted shares held by the Group that are not traded on an active market are also recognized at fair value as available-for-sale financial assets. Gains and losses arising from changes in fair value are included directly in the revaluation reserve (equity) rather than in other income. Exceptions are impairment losses, interest calculated using the effective interest method, and gains and losses from foreign currency translation of monetary items, which are recognized in the statement of income. If a financial asset is disposed of or is acknowledged to have an impairment, its accumulated gains and losses recognized in the revaluation reserve for financial investments up to that point are reclassified as profits or losses.

Dividends from equity instruments classified as available-for-sale financial assets are recognized in the statement of income as soon as the Group has acquired a right to the dividend.

Impairment of Financial Assets With the exception of financial assets measured at fair value through profit and loss, financial assets are examined at each reporting date for the presence of any indications of impairment. Financial assets are considered impaired if, following one or more events that occurred after the initial recognition of the asset, there is objective evidence that the estimated future cash flows of the investment have changed adversely.

In the case of listed and unlisted equity investments that were categorized as available-for-sale, any significant or prolonged reduction in the fair value of the assets below their acquisition cost must be regarded as objective evidence of impairment.

For all other financial assets, the following may be objective evidence of impairment:

– Either the issuer or the counterparty is facing significant financial difficulties – Default or delinquency in payments of interest or principal – A high probability that the debtor will enter bankruptcy or financial reorganization 86

For some classes of financial assets, such as trade receivables, asset values for which no impairment has been determined on an individual basis are tested for impairment on a portfolio basis. Objective evidence of impairment on a portfolio of receivables is based on the past experience of the Group regarding payments received, an increase in the frequency of payment defaults within the portfolio over the average borrowing period, and observable changes in the national or local economic environment with which the defaults can be linked.

In the case of financial assets valued at amortized cost, the impairment loss corresponds to the difference between the carrying amount of the asset and the net present value of expected future cash flows determined on the basis of the original effective interest rate on the asset.

An impairment leads to a direct reduction in the carrying amount of all the relevant financial assets, with the exception of trade receivables, whose carrying amount is reduced through a valuation adjustment account. If a trade receivables item is considered to be irrecoverable, it is written off against the valuation adjustment account. Changes in the carrying amount of the valuation adjustment account are recognized in the statement of income.

In the event that a financial asset, classified as available-for-sale, is considered to be impaired, gains and losses previously recognized in the revaluation reserve (equity) are reclassified to the statement of income in the period in which the impairment occurred.

If the level of impairment of a financial asset that is not an available-for-sale equity instrument decreases in a subsequent reporting period, and if the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment is reversed through the statement of income. No higher value may be imputed than that which would have arisen as amortized cost if no impairment loss had been recognized.

In the case of equity instruments classified as available-for-sale, any impairments recognized in the past are not reversed. Any increase in the fair value after an impairment was recognized is recorded in the revaluation reserve (equity).

Inventories Under IAS 2 (Inventories), those assets that are held for sale during the ordinary course of business (finished products and merchandise), those that are in the production process for sale during the ordinary course of business (work in progress), and those that are consumed in the production process or performance of services (raw materials and supplies) are to be listed as inventories. Inventories are measured at the lower of cost and net realizable value, which is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale, applying the weighted average cost formula.

In addition to direct expenses, manufacturing costs include allocated raw material and production overheads and depreciation related to production plant and equipment. Allocated costs related to pensions and voluntary social contributions made by the company are also included. Administrative expenses are included in the costs if they relate to manufacturing.

Provisions for Pensions and Similar Obligations Provisions for pensions and similar obligations are calculated using the projected unit credit method in accordance with IAS 19, taking into account future pay and pension increases and staffing fluctuations. They are valued on the basis of expert opinion. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 87

A cco u nting po l icie s

The interest portion of the pension expenses is offset against the expected return on plan assets.

Any excess of plan assets over the pension obligations is recognized as an asset only if it represents the net present value of the economic benefits to the company plus any past service cost and actuarial gains and losses not yet recognized.

Other Provisions Provisions are recognized when a present legal or constructive obligation has arisen for the Group as a result of a past event, an outflow of resources to settle the obligation is likely, and the amount can be estimated reliably. If a number of obligations of a similar type exist, the provisions are recognized at the most probable value for the population of events.

Provisions are established for onerous contracts if the expected benefit from the contractual claim is less than the expected costs to settle the obligation.

Provisions due after more than one year are measured at discounted present value.

Provisions are released against the expense items for which they were created. Where additions to provisions are recognized under other operating expenses, the release of these amounts is shown under the corresponding other operating income item.

Financial Liabilities Financial liabilities are initially recognized at fair value less transaction costs. In subsequent periods, they are measured at amortized cost. Any difference between the amount disbursed (less transaction costs) and the repayment amount is spread across the term of the loan using the effective interest method and recognized in the statement of income.

Liabilities from loans are recognized as current liabilities unless the Group has the unconditional right to defer repayment of the liability to at least 12 months after the reporting date.

Liabilities Financial liabilities comprise trade accounts payable and other liabilities. Liabilities are initially recognized at fair value.

Current liabilities are recognized at the repayable amount. Non-current liabilities that are not the underlying transaction in permissible hedge accounting are recognized at amortized cost.

Accruals are recognized under other liabilities.

Derivative Financial Instruments Derivative financial instruments are initially measured at their fair value on the day that the contract is entered into. They are subsequently measured at their fair value as of each reporting date. The method of recording gains and losses depends on whether the derivative financial instruments in question have been designated as hedging instruments and, if so, on the nature of the hedged item. B. Braun Melsungen AG designates derivative financial instruments as a hedge against the risk of changes in fair values of assets or liabilities carried in the statement of financial position (fair value hedge) or the risk of fluctuating payment flows in connection with an expected future transaction that is highly likely to occur (cash flow hedge). On entering into a transaction, 88

the Group documents the hedge relationship between the hedging instrument and the underlying transaction, the aim of its risk management, and the underlying strategy at the time of opening. In addition, the assessment of whether the derivatives employed effectively compensate for the changes in the fair values or cash flows of the underlying transactions is documented at the time the hedging relationship is created and subsequently on an ongoing basis. The fair values of the various derivative financial instruments used for hedging purposes are recognized under other assets/liabilities. Movement in the valuation reserve for cash flow hedges is shown in the consolidated statement of changes in equity. The full fair value of derivative financial instruments designated as hedge instruments is shown as a non-current asset or liability if the residual term of the hedged underlying transaction is more than 12 months after the reporting date, and as a non-current asset or liability if it is shorter than that. Derivative financial instruments held for trading are recognized as current assets or liabilities.

When a hedging transaction designated as a cash flow hedge expires, is sold, or the designation is deliberately reversed, or no longer meets the criteria to be accounted for as a hedging transaction, gains or losses accumulated in equity up to that point remain in equity and are only taken to the statement of income when the future transaction originally hedged occurs and is recognized in the statement of income. If the future transaction is no longer expected to occur, gains or losses accumulated in equity must be recognized in the statement of income immediately.

Certain derivative financial instruments are not eligible for hedge accounting, as explained under Note 32.

Deferred Taxes Deferred taxes are recognized using the liability method for all temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. If deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, however, it is not recognized. Deferred taxes are measured using tax rates and laws that have been enacted or substantially enacted as of the reporting date and are expected to apply when the related deferred tax assets are realized or the deferred tax liabilities are settled.

Deferred tax assets stem primarily from temporary differences between the tax bases of individual companies and the financial statements set forth using IFRS, and from consolidation. Deferred tax assets stemming from losses carried forward and tax credits are recognized to the extent that it is likely that future taxable income will be available against which the losses carried forward can be utilized.

Deferred tax liabilities arising from temporary differences in connection with investments in subsidiaries and associates are recognized except where the timing of the reversal of the temporary differences can be controlled by the Group and it is likely that the temporary differences will not be reversed in the foreseeable future. Please also see Note 10 Taxes on Income. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 89

N ote s to t h e C on s o l idated s T A T E M E N T of I ncome ( l O s s )

Notes to the Consolidated Statement of Income (Loss)

1 Sales Sales include the fair value received for the sale of goods and services excluding sales tax, rebates, and discounts, and after eliminating intercompany sales. Sales are reported as follows:

Sales resulting from the sale of products are recognized when the main risks and rewards associated with ownership have been transferred to the buyer and the collection of the associated receivable can be assumed with sufficient likelihood.

Estimates for sales reductions are based on experience. Adjustments are made if required by a change in conditions. No significant returns were recorded in the reporting period.

Sales resulting from the sale of services are recognized in the fiscal year during which the service is performed using the percentage of completion basis.

The following chart shows sales trends by division, region, and by type

Sales by Division 2010 2009 + – € ’000 % € ’000 % in % Hospital Care 2,086,696 47.2 1,903,799 47.3 9.6 Aesculap 1,281,071 29.0 1,153,213 28.6 11.1 OPM 554,613 12.5 525,791 13.1 5.5 B. Braun Avitum 474,768 10.7 420,519 10.4 12.9 Other Sales 25,665 0.6 24,927 0.6 3.0 4,422,813 100.0 4,028,249 100.0 9.8

Sales by Region 2010 2009 + – € ’000 % € ’000 % in %

Germany 878,450 19.9 851,215 21.1 3.2 Europe & Africa 1,691,987 38.2 1,578,657 39.2 7.2 North America 940,145 21.3 854,846 21.2 10.0 Latin America 295,751 6.7 253,957 6.3 16.5 Asia & Australia 616,480 13.9 489,574 12.2 25.9 4,422,813 100.0 4,028,249 100.0 9.8

Sales by Type 2010 2009 + – € ’000 % € ’000 % in % Sales of Products 4,022,452 90.9 3,666,558 91.0 9.7 Sales of Services 400,361 9.1 361,691 9.0 10.7 4,422,813 100.0 4,028,249 100.0 9.8 90

2 Cost of Goods Sold Cost of goods sold includes the manufacturing costs of goods sold and the purchasing costs of merchandise sold. In addition to direct costs such as material, personnel and energy costs, manufacturing costs contain production- related overhead expenses including depreciation of property, plant and equipment. Cost of goods sold also includes inventory write-downs.

3 Selling Expenses Selling expenses include expenditures for marketing, sales organizations, and logistics. This category also contains the expenses related to customer training and consulting on technical product use.

4 Research and Development Expenses Research and development expenses include costs for research, as well as for product and process development including expenditures for external services. All research costs are expensed at the time they are incurred.

Development costs are capitalized where all the conditions for capitalization under IAS 38 are met.

5 Other Operating Income

2010 2009 € ’000 € ’000 Currency Translation Gains 184,753 158,337 Additional Income 9,058 9,355 Derivative Financial Instruments 8,573 582 Income from Other Periods 5,535 4,960 Proceeds from Appreciation of Current Financial Assets 2,423 2,011 Proceeds from the Disposal of Assets 1,837 1,930 Proceeds from the Release of Provisions 1,551 593 Other Income 18,143 13,788 231,873 191,556

Currency translation gains on receivables and payables denominated in foreign currencies mainly comprise gains from currency fluctuations between transaction and payment dates, gains resulting from translation at the exchange rate prevailing on the reporting date, and gains resulting from hedge accounting.

Additional income primarily includes cost reimbursements from third parties and income from cafeteria sales.

Changes in the fair value of forward foreign exchange contracts and currency options that are not designated for hedge accounting are reported under derivative financial instruments. Financial assets/liabilities measured at fair value through profit and loss are shown in the statement of financial position under other assets/liabilities.

Other operating income includes income-related and other grants from the public sector. Income-related grants are recognized in the period in which the corresponding expenses occur. They amounted to € 1.7 million (pre vious year: € 2.2 million). Grants of € 1.6 million (previous year: € 2.1 million) were recognized through profit and loss in the reporting year. The grants were predominantly made to support structurally weak areas in Germany. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 91

N ote s to t h e C on s o l idated s T A T E M E N T of I ncome ( l O s s )

Other income includes numerous types of income; however their individual valuations are not materially significant.

6 Other Operating Expenses

2010 2009 € ’000 € ’000 Currency Translation Losses 198,588 147,330 Losses from Impairment of Current Financial Assets 8,566 11,176 Additions to Provisions 7,376 9,750 Losses on the Disposal of Assets 2,546 3,654 Expenses from Other Periods 4,089 2,814 Derivative Financial Instruments 92 9,710 Other Expenses 39,638 41,081 260,895 225,515

Currency translation losses on receivables and payables denominated in foreign currencies mainly comprise losses from currency fluctuations between transaction and payment dates, losses resulting from translation at the exchange rate prevailing on the reporting date, and losses resulting from hedge accounting.

Losses from impairment of current financial assets refer to value adjustments to trade receivables.

Other expenses include numerous types of expenses; however their individual valuations are not materially significant.

7 Financial Investments Recognized Using the Equity Method of Accounting Net income from investments recognized using the equity method of accounting breaks down as follows:

2010 2009 € ’000 € ’000 Income from Financial Investments Recognized Using the Equity Method 4,307 2,819 Expenses from Financial Investments Recognized Using the Equity Method – 405 – 1,419 3,902 1,400 92

8 Net Financial Income

2010 2009 € ’000 € ’000 Interest and Similar Income 4,606 6,389 Interest and Similar Expenses – 48,414 – 53,396 of which to Affiliated Companies (2,596) (1,343) Interest Expenses for Pension Provisions, Net of Expected Income from Plan Assets – 28,778 – 28,838 – 72,586 – 75,845 of which Financial Assets and Liabilities at Fair Value: Interest Income from Discounting 281 191 Accrued Interest Expense – 5,455 – 6,763

Interest and other similar expenses comprise mainly interest expense on financial liabilities. Expenses resulting from accruing interest to non-current other provisions are also recognized here.

9 Other Net Financial Income

2010 2009 € ’000 € ’000 Income from Joint Ventures (excluding Income from Financial Investments Recognized using the Equity Method) 2,099 5 Net Gains and Losses on: – Available-for-Sale Financial Assets 28 – 48 2,127 – 43

Interest on derivative financial instruments is shown under interest expense.

10 Taxes on Income Income tax includes corporation tax and trade income tax for German companies as well as comparable income- related taxes for companies in other countries. They are calculated on the basis of the tax regulations applicable to the individual company.

Deferred taxes stem from temporary differences between the tax base of the individual companies and the consolidated statement of financial position. They are measured using the liability method based on the application of anticipated future tax rates for the individual countries as of the realization date. Generally, these are based on the regulations in effect as of the reporting date. Deferred tax assets are offset only if the company has the legal right to settle current tax assets and current tax liabilities on a net basis and they are levied by the same tax authority.

Expenses resulting from taxes on income including deferred taxes are as follows:

2010 2009 € ’000 € ’000 Actual Income Taxes 99,548 98,139 Deferred Taxes resulting from Temporary Differences 10,533 – 4,661 Deferred Taxes resulting from Losses Carried Forward 2,174 3,027 112,255 96,505 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 93

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Deferred tax assets and deferred tax liabilities apply to differences stemming from recognition and measurement in the following items in the statement of financial position:

Dec. 31, 2010 Dec. 31, 2009 Assets Liabilities Assets Liabilities € ’000 € ’000 € ’000 € ’000 Intangible Assets 3,175 14,419 3,255 10,624 Property, Plant and Equipment 3,458 110,333 2,467 93,246 Financial Investments 267 634 226 397 Inventories 48,577 5,426 35,761 3,897 Trade Accounts Receivable 6,807 7,488 8,662 4,676 Pension Provisions 34,135 272 33,041 293 Other Provisions 14,596 1,921 15,223 1,289 Liabilities 21,886 1,443 24,058 16,851 Other 11 8,491 0 5 132,912 150,427 122,693 131,278 of which Non-current 53,459 135,641 48,853 121,463 Net Balance – 70,902 – 70,902 – 72,054 – 72,054 62,010 79,525 50,639 59,224 Valuation Allowance on Deferred Tax Assets from Temporary Differences – 58 – – 164 – Deferred Taxes on Tax Credits 29,133 – 19,060 – Losses Carried Forward (Net, after Valuation Allowances) 10,729 – 19,055 – 101,814 79,525 88,590 59,224

The amount of temporary differences related to holdings in subsidiaries and associated companies, as well as interests in joint ventures for which according to IAS 12.39 no deferred tax liabilities were recognized, is € 6.8 million (previous year: € 11.1 million).

Existing but not recognized tax losses carried forward can be utilized as follows:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Within One Year 0 375 Within Two Years 550 373 Within Three Years 6,620 1,057 Within Four Years 3,080 3,827 Within Five Years or Longer 3,954 2,991 14,204 8,623 Can be Carried Forward Indefinitely 9,261 8,846 23,465 17,469

Deferred tax assets for which utilization depends on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences and where the company has incurred past losses amounted to € 5.3 million (previous year: € 4.8 million). Recognition of these deferred tax assets is based on relevant forecasting, which justifies the expectation they will be utilized. 94

Deferred taxes of € 6.2 million (previous year: € 409,000) were recognized directly in equity. These are attributable to changes in the fair value of securities (€ 6,000), changes in the fair value of derivative financial instruments (€ 940,000) and a change in the measurement method in accordance with IAS 8 (€ 5.2 million).

The tax expense calculated using B. Braun Melsungen AG’s tax rate of 27.4 percent can be reconciled to the actual tax expense as follows:

2010 2009 € ’000 € ’000 Tax Rate of B. Braun Melsungen AG 27.4 % 27.4 % Profit beforeT ax 389,618 336,080 Expected Income Tax at Parent Company's Tax Rate – 106,911 – 92,086 Differences due toO ther Tax Rates – 6,782 – 6,155 Changes to Deferred Tax Assets and Liabilities due to Changes in Tax Rates 796 – 7 Tax Reductions due to Tax-exempt Income 10,298 11,966 Tax Increases due to Non-deductible Expenses – 9,244 – 9,053 Addition/Deduction of Trade Tax and Similar Foreign Tax Items – 1,591 – 1,366 Final Withholding Tax on Profit Distributions – 749 – 314 Tax Credits 2,632 4,639 Tax Expense relating to Previous Periods – 2,739 – 4,556 Change to Valuation Allowances on Deferred Tax Assets 9 493 Profit (Loss) of Financial Investments recognized using the Equity Method 712 266 Other Tax Effects 1,314 – 332 Actual Tax Expense – 112,255 – 96,505 Effective Tax Rate 28.8 % 28.7 %

11 Earnings per Share Earnings per share are calculated according to IAS 33 by dividing the consolidated annual net profit less non- controlling interests by the number of shares in issue. The number of shares entitled to receive dividends remained unchanged at 19,404,000 during the fiscal year. There were no outstanding shares as of December 31, 2010 or December 31, 2009 that could have diluted the earnings per share. Earnings per share were € 13.27 (previous year: € 11.36).

The dividend paid in 2010 and 2009 for the preceding fiscal years amounted to € 24 million (€ 1.24 per share) and € 16 million (€ 0.82 per share) respectively. The Management Board and Supervisory Board are proposing a dividend of € 1.24 per share for fiscal year 2010. The proposed dividend must be ratified by the Annual Share- holders’ Meeting on March 24, 2011. This dividend liability is not included in the consolidated financial statements. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 95

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12 Other Notes to the Consolidated Statement of Income

Material costs The following material costs are included in the cost of goods sold.

2010 2009 € ’000 € ’000 Expenses for Raw Materials and Goods Purchased 1,592,717 1,436,709

In 2010, expenses related to inventory impairments recognized in cost of goods sold were € 10.8 million (previous year: € 13.9 million) and a write-up (increase in net realizable value) of € 3.1 million (previous year: € 11.0 million) was recognized.

Payments under operating leases

2010 2009 € ’000 € ’000 68,661 66,928

Payments under operating leases include € 1.1 million (previous year: € 821,000) of payments under sub-leases. Leasing expenditure is predominantly allocated to cost of goods sold.

Personnel Expenditures / Employees The following personnel expenditures are recognized in the statement of income:

Personnel Expenditures 2010 2009 € ’000 € ’000 Wages and Salaries 1,288,877 1,160,629 Social Security Payments 243,413 222,542 Welfare and Pension Expense 49,382 41,778 1,581,672 1,424,949 Employees by Function (Average for the Year, including Temporary Employees) Production 24,406 23,251 Marketing and Sales 9,414 9,007 Research and Development 1,211 1,127 Technical and Administration 5,285 5,127 40,316 38,512 of which Part-time 1,926 1,829 of which in Proportionately Consolidated Companies 5 5

Personnel expenditures do not include interest accruing to pension provisions, which is recognized under net interest income. 96

The average headcount is prorated based on the date of first consolidation or final consolidation, as appropriate. Employees of joint venture companies are included in the total according to the percentage of ownership.

In regard to first-time consolidated companies, an annual average of 235 employees was reported for 2010, compared to 40 for 2009.

13 Total Auditor’s Fee The following fees were recognized as expense for services provided worldwide by the auditor Pricewater- houseCoopers in 2010:

2010 2009 € ’000 € ’000 Audit Fees 3,760 3,421 of which PricewaterhouseCoopers AG, Germany 983 873 Other Certification Services 52 552 of which PricewaterhouseCoopers AG, Germany 12 355 Tax Advisory Services 1,084 1,020 of which PricewaterhouseCoopers AG, Germany 285 212 Other Services 652 386 of which PricewaterhouseCoopers AG, Germany 469 271 5,548 5,379 of which PricewaterhouseCoopers AG, Germany 1,749 1,711

The audit fee includes all fees paid and outstanding to PricewaterhouseCoopers plus reimbursable expenses for the Group audit and the audit of the annual financial statements of B. Braun Melsungen AG. Fees for certification services mainly relate to certifications performed as part of acquisitions and divestitures, the examination of internal control systems, particularly IT systems, and expenses related to statutory or judicial requirements. The item tax advisory services mainly relates to fees for advice on completing tax returns, checking tax demands, support for company audits or other enquiries conducted by the tax authorities and tax advice in connection with transfer pricing. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 97

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Notes to the Consolidated Statement of Financial Position

14 Intangible Assets

Cost of Acquisition Acquired Licenses, Self- Advance Total or Manufacture Goodwill Trademarks created Payments and Other Intangible Similar Rights Assets € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 56,942 224,823 12,940 7,476 302,181 Foreign Currency Translation – 931 – 985 – 279 0 – 2,195 Additions to Scope of Consolidation 3,761 21 0 0 3,782 Additions 1,437 10,607 7,618 8,146 27,808 Transfers 0 6,486 – 964 – 1,516 4,006 Disposals 0 – 14,945 0 – 499 – 15,444 December 31, 2009 / January 1, 2010 61,209 226,007 19,315 13,607 320,138 Foreign Currency Translation 1,257 9,660 1,448 2 12,367 Additions to Scope of Consolidation 0 170 0 0 170 Additions 600 31,379 13,285 19,945 65,209 Transfers 451 7,184 0 – 5,768 1,867 Disposals 0 – 2,858 0 – 9 – 2,867 December 31, 2010 63,517 271,542 34,048 27,777 396,884 Accumulated Amortization 2010 624 174,838 2,780 0 178,242 Accumulated Amortization 2009 602 149,763 1,833 0 152,198 Carrying Amounts December 31, 2010 62,893 96,704 31,268 27,777 218,642 Carrying Amounts December 31, 2009 60,607 76,244 17,482 13,607 167,940 Amortization in the Fiscal Year 0 20,902 817 0 21,719 of which unscheduled 0 87 0 0 87

The B. Braun Group capitalized € 12.2 million (previous year: € 7.6 million) of development costs during the year under review. All the prerequisites for capitalization were met.

Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing. Each of these cash- generating units represents the Group’s investment by country of operation and primary reporting segment. 98

A summary of the distribution of goodwill by cash-generating unit and the assumptions for their impairment testing are listed below:

Hospital Care Aesculap OPM B. Braun Total Avitum € ’000 € ’000 € ’000 € ’000 € ’000 Dec. 31, 2009 Carrying Amount of Goodwill 19,883 5,125 18,756 16,843 60,607 Annual Growth Rate 2.4 % 2.1 % 2.0 % 2.3 % Discount Rate 10.0 % 9.9 % 9.6 % 10.8 %

Dec. 31, 2010

Carrying Amount of Goodwill 21,333 5,128 18,756 17,675 62,892 Annual Growth Rate 3.1 % 2.8 % 2.6 % 3.1 % Discount Rate 7.2 % 7.3 % 7.2 % 7.6 %

The recoverable amount of a CGU is determined by calculating its value in use. These calculations are based on projected cash flow derived from the three-year forecast approved by management.

Management has determined the budgeted gross margin based on past trends and expectations about future market trends. The weighted average growth rates largely correspond to the predictions from industrial reports. The discount rates used are pre-tax rates and reflect the specific risks of the relevant cash-generating units.

If the actual future gross margin had been 10 % less than the gross margin estimated by management on December 31, 2010, no impairment of goodwill would have occurred. The same holds true if the discount rate that was used to calculate the DCF had been 10 % higher than management’s estimates. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 99

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15 Property, Plant and Equipment

Cost of Acquisition Land and Technical Other Plant, Advance Total or Manufacture Buildings Plant and Operating Payments and Machinery and Office Assets under Equipment Construction € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 892,059 1,470,061 504,059 284,091 3,150,270 Foreign Currency Translation 290 648 4,068 – 2,555 2,451 Additions to Scope of Consolidation 293 1,970 322 17 2,602 Additions 29,496 89,750 43,993 263,718 426,957 Transfers 90,680 83,010 30,488 – 208,184 – 4,006 Subsequent Capitalization 0 0 0 0 0 Disposals – 8,685 – 52,301 – 45,768 – 127 – 106,881 December 31, 2009 / January 1, 2010 1,004,133 1,593,138 537,162 336,960 3,471,393 Foreign Currency Translation 32,960 95,498 27,116 14,549 170,123 Additions to Scope of Consolidation 1,971 8,898 1,379 215 12,463 Additions 72,040 105,743 54,852 277,527 510,162 Transfers 78,097 86,365 18,701 – 185,032 – 1,869 Disposals – 2,085 – 53,225 – 27,349 – 5 – 82,664 December 31, 2010 1,187,116 1,836,417 611,861 444,214 4,079,608 Accumulated Depreciation 2010 344,192 1,034,308 396,076 0 1,774,576 Accumulated Depreciation 2009 302,591 904,023 338,024 0 1,544,638 Carrying Amounts December 31, 2010 842,924 802,109 215,785 444,214 2,305,032 Carrying Amounts December 31, 2009 701,542 689,115 199,138 336,960 1,926,755 Depreciation in the Fiscal Year 32,646 122,430 62,131 0 217,207 of which unscheduled 420 75 8 0 503

On the reporting date, no unfulfilled conditions or potential liabilities existed, which would have required modification of the statement of financial position.

Borrowing costs of € 551,000 were capitalized in the year under review (previous year: € 22,000). An interest rate of 4.0 percent was applied to the calculations.

In the statement of financial position, government asset-related grants for investments in the amount of € 2.6 million (previous year: € 1.9 million) have been deducted from the carrying amounts of the relevant assets. The current carrying amount of property, plant and equipment purchased with government grants is € 49.4 million (previous year: € 30.6 million). 100

16 Finance Leasing Intangible assets and property, plant and equipment include the following amounts for which the Group is lessee under a finance lease:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Licenses, Trademarks and Other Similar Rights 573 514 Accumulated Amortization – 74 – 56 Buildings 136,121 134,121 Accumulated Depreciation – 32,501 – 29,989 Technical Plant and Machinery 15,925 12,163 Accumulated Depreciation – 9,913 – 7,484 Other Plant, Operating and Office Equipment 13,193 10,700 Accumulated Depreciation – 7,665 – 6,458 Net Carrying Amount 115,659 113,511

The obligations of the Group under finance leasing agreements are secured by property liens on the leased assets.

The minimum lease payments for liabilities under finance leasing agreements have the following maturities:

Dec. 31, 2010 Dec. 31, 2009 Nominal Discount NPV Nominal Discount NPV Value Value € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 Less than One Year 12,581 5,034 7,547 11,716 5,028 6,688 Between One and Five Years 41,980 16,535 25,445 41,080 16,847 24,233 Over Five Years 73,098 14,895 58,203 81,323 17,725 63,598 127,659 36,464 91,195 134,119 39,600 94,519

The two largest finance leasing agreements relate to the real estate for the Hospital Care Division‘s LIFE facility (carrying amount € 37.3 million), and the Aesculap Division‘s Benchmark factory (carrying amount € 19.1 million). MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 101

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17 Financial Investments Recognized Using the Equity Method of Accounting and Other Financial Investments The Group’s holdings in its major associated companies are as follows:

Country Assets Liabilities Sales Profit L( oss) Holding € € ’000 € ’000 € ’000 € ’000 in % 2009 Babolat VS France 73,514 30,934 86,134 5,508 27.9 Schölly Fiberoptic GmbH Germany 29,697 10,800 39,901 2,260 27.9 B. Braun Avitum Ireland Ltd. Ireland 1,653 1,016 438 – 2,667 47.0 104,864 42,750 126,473 5,101

2010 Babolat VS France 85,293 35,094 104,532 8,239 27.9 Schölly Fiberoptic GmbH Germany 31,639 10,975 53,634 4,000 27.9 B. Braun Avitum Ireland Ltd. Ireland 2,658 2,792 1,315 – 771 47.0 119,590 48,861 159,481 11,468

As of December 31, 2010, the goodwill of holdings in associated companies totaled € 3.7 million (previous year: € 500,000). 102

Cost of Acquisition Financial Other Loans to Non-current Other Loans Total Investments Holdings Companies Financial Assets (Equity in which the Method) Group holds an Interest € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 23,935 10,858 87 832 1,671 37,383 Foreign Currency Translation 0 0 0 0 10 10 Additions to Scope of Consolidation 7 0 0 0 265 272 Removed from Scope of Consolidation – 2,439 – 5,548 0 0 0 – 7,987 Additions 942 6,277 0 7 3,870 11,096 Disposals 0 – 72 – 87 0 – 727 – 886 Fair Value Adjustments 0 0 0 58 – 138 – 80 December 31, 2009 / January 1, 2010 22,445 11,515 0 897 4,951 39,808 Foreign Currency Translation 0 0 0 0 30 30 Additions to Scope of Consolidation 0 0 0 0 200 200 Removed from Scope of Consolidation 0 – 12,420 0 0 0 – 12,420 Additions 7,099 18,684 0 25 30 25,838 Disposals 0 – 878 0 – 12 – 1,029 – 1,919 Fair Value Adjustments 0 0 0 0 36 36 December 31, 2010 29,544 16,901 0 910 4,218 51,573 Accumulated Depreciation 2010 999 0 0 0 20 1,019 Accumulated Depreciation 2009 999 0 0 0 20 1,019 Carrying Amounts December 31, 2010 28,545 16,901 0 910 4,198 50,554 Carrying Amounts December 31, 2009 21,446 11,515 0 897 4,931 38,789 Depreciation in the Fiscal year 0 0 0 0 0 0

The following amounts represent the 50 percent share of the Group in assets, liabilities, sales, and profit in joint ventures:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Assets Non-current Assets 1,626 1,582 Current Assets 3,149 1,700 4,775 3,282 Liabilities Non-current Provisions and Liabilities 175 77 Current Provisions and Liabilities 3,221 1,957 3,396 2,034 Net Assets 1,379 1,248

2010 2009 € ’000 € ’000 Sales 8,616 8,054 Operating Profit 150 156 Profit After Tax 135 111 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 103

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18 Trade Receivables Age Analysis of Trade Receivables a) Non-impaired trade receivables

Total Not yet Overdue Overdue Overdue Overdue Overdue more due up to 30 days 31 – 60 days 61 – 90 days 91 – 180 days than 180 days Dec. 31, 2009 Trade Receivables 762,563 525,588 72,219 34,816 29,210 53,363 47,367

Dec. 31, 2010 Trade Receivables 915,163 611,084 78,252 34,066 30,605 59,777 101,379

A significant proportion of the non-impaired and overdue trade receivables are attributable to receivables from social security providers, government or government-sponsored companies. The increase in receivables more than 180 days overdue is primarily attributable to receivables from state-run hospitals in Italy, Spain, and Portugal. b) Trade receivables for which specific impairments have been established

Total Not yet Overdue Overdue Overdue Overdue Overdue more due up to 30 days 31 – 60 days 61 – 90 days 91 – 180 days than 180 days Dec. 31, 2009 Trade Receivables 57,181 8,162 2,443 1,322 1,222 2,861 41,171 Impairment Provisions – 29,634 – 2,178 – 1,164 – 829 – 729 – 2,017 – 22,717 Carrying Amount 27,547 5,984 1,279 493 493 844 18,454

Dec. 31, 2010 Trade Receivables 47,627 12,715 2,255 1,035 800 4,207 26,615 Impairment Provisions – 29,247 – 2,734 – 1,626 – 600 – 487 – 2,264 – 21,536 Carrying Amount 18,380 9,981 629 435 313 1,943 5,079

With regard to receivables that are neither impaired nor in arrears, there were no indications as of the reporting date that the debtors in question are not able to meet their payment obligations. 104

Impairments on trade receivables have changed as follows:

2010 2009 € ’000 € ’000 Amount of Impairment Provisions as of January 1 33,412 30,901 Currency Translation 2,292 365 Additions 10,995 11,667 Utilizations – 7,417 – 7,315 Releases – 5,859 – 2,206 Amount of Impairment Provisions as of December 31 33,423 33,412 of which Specific 29,247 29,634 of which General 4,176 3,778

The total amount of additions consists of specific and general provisions for impairment.

The following table shows expenses for the complete derecognition of trade receivables and income from payments received against previously derecognized trade receivables:

2010 2009 € ’000 € ’000 Expenses for Complete Derecognition of Trade Receivables 5,813 5,212 Income from Receivables Previously Derecognized 35 26

Fair value of collateral received totaled € 3.8 million (previous year: € 5.4 million). The collateral is mainly payment guarantees, with terms extending to December 2011.

With regard to trade receivables, there is no concentration with respect to individual customers, currencies, or geographic attributes. The largest receivable from a single customer is equivalent to approximately 0.6 percent of all trade receivables reported.

As of December 31, 2010, B. Braun Group companies had sold receivables worth € 70.8 million under an asset- backed securities (ABS) program with a maximum volume of € 100 million (previous year: € 71.3 million). The basis for this transaction is the transfer of trade receivables of individual B. Braun subsidiaries to a special purpose entity within the framework of an undisclosed assignment. The special purpose entity (SPE) is not consolidated because under IAS 27.12 ff, B. Braun neither holds a stake in it nor is able to control its management or finances in order to benefit from its activities. Nor is consolidation mandatory under SIC-12, as B. Braun does not bear the majority of the SPE’s risks and rewards. The requirements for a receivables transfer according to IAS 39.15 ff are met, since the receivables are transferred according to IAS 39.18 a). Verification in accordance with IAS 39.20 shows that substantially all risks and rewards were neither transferred nor retained. The prevailing opinion is that B. Braun has retained control over the receivables because they were transferred in an undisclosed assignment and B. Braun will continue to service those receivables in the future. Therefore, according to IAS 39.30, B. Braun’s continuing involvement must be recognized. This includes, firstly, the maximum amount that B. Braun could conceivably have to pay back under the senior and third-ranking default guarantee assumed (€ 1.6 million, previous year: € 1.6 million). Secondly, the maximum expected interest payments until payment is received for the carrying amount of the receivables transferred are recognized in the statement of financial position (€ 483,000, previous year: € 414,000). The fair value of the guarantee/interest payments to be assumed has been estimated at € 169,000 (previous year: € 126,000), taken through the statement of income and recognized under other liabilities. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 105

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19 Other Assets

Dec. 31, 2010 Dec. 31, 2009 Residual Term Residual Term Residual Term Residual Term < 1 year > 1 year < 1 year > 1 year € ’000 € ’000 € ’000 € ’000 Other Tax Receivables 40,740 0 37,460 0 Receivables from Social Security Providers 1,791 379 1,792 1,277 Receivables from Employees 4,677 128 3,968 176 Advance Payments 7,764 0 4,435 0 Accruals and Deferrals 17,110 3,219 18,790 1,302 72,082 3,726 66,445 2,755 Receivables from Derivative Financial Instruments 10,945 20 1,209 17 Available-for-sale Securities 4,488 0 3,934 0 Held for trading Securities 11,035 0 8,039 0 Held-to-maturity Securities 87 0 0 0 Other Receivables and Assets 60,410 45,652 48,996 30,261 86,965 45,672 62,178 30,278 159,047 49,398 128,623 33,033

Other receivables mainly comprise loans granted and receivables under leasing agreements.

With regard to other receivables, there were no indications as of the reporting date that the debtors in question will not be able to meet their payment obligations. No material amounts of receivables were overdue or impaired as of the reporting date.

20 Inventories

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Raw Materials and Supplies 193,062 162,143 Provisions – 10,654 – 11,681 Raw Materials and Supplies – Net 182,408 150,462 Work in Progress 144,157 130,698 Provisions – 9,987 – 9,388 Work in Progress – Net 134,170 121,310 Finished Products, Goods 524,068 494,219 Provisions – 60,624 – 57,458 Finished Products, Goods – Net 463,444 436,761 780,022 708,533

As of December 31, 2010, inventories of € 350.0 million (previous year: € 242.3 million) were recognized at net realizable value.

At the end of the fiscal year, the carrying value of inventories pledged as collateral for liabilities was € 9.1 million (previous year: € 9.3 million). 106

21 Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, other short-term highly liquid financial assets with residual maturities of three months or less that are subject to no more than insignificant fluctuations in value, and bank overdraft facilities. In the statement of financial position, utilized bank overdraft facilities are shown under current financial liabilities as amounts due to banks.

Changes in cash and cash equivalents are shown in the Consolidated Statement of Cash Flows.

22 Subscribed Capital The subscribed capital of B. Braun Melsungen AG, which amounted to € 400 million, was increased to € 600 million on April 15, 2010 by converting other retained earnings of € 200 million. This capital increase from retained earnings was performed in accordance with Section 207 (2) clause 2 of the German Stock Corporation Act (Aktiengesetz) without the issue of new shares. The subscribed capital of B. Braun Melsungen AG consists of 19,404,000 bearer shares without nominal value. Each share without nominal value represents a calculated share of € 30.92 of the subscribed capital.

The Management Board is authorized, with the consent of the Supervisory Board, to increase the subscribed capital by € 100 million by issuing new bearer shares for cash on one or more occasions before December 31, 2013 (authorized capital).

23 Capital Reserves and Retained Earnings The capital reserve includes the premium from previous capital increases of B. Braun Melsungen AG.

Retained earnings include past earnings of consolidated companies where these were not distributed, and the consolidated annual net profit, net of the share attributable to non-controlling interests. The statutory reserve included in retained earnings amounts to € 29.4 million.

Changes in Cash Flow Market Value Reserve Total Other Provisions Hedge of available- for Currency Reserve for-sale Translation Securities Differences € ’000 € ’000 € ’000 € ’000 January 1, 2009 – 648 25 – 123,283 – 123,906 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 32 0 32 Changes in Fair Value of Financial Derivatives – 359 0 0 – 359 Changes due to Currency Translation 0 0 10,992 10,992 Total – 359 32 10,992 10,665 December 31, 2009 / January 1, 2010 – 1,007 57 – 112,291 – 113,241 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 – 22 0 – 22 Changes in Fair Value of Financial Derivatives 3,403 0 0 3,403 Changes due to Currency Translation 0 0 114,164 114,164 Total 3,403 – 22 114,164 117,545 December 31, 2010 2,396 35 1,873 4,304 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 107

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Changes in the other equity capital components are shown in the Statement of Changes in Equity.

Claims of shareholders to dividend payments are reported as liabilities in the period in which the corresponding resolution is passed.

24 Non-controlling interests Non-controlling interests relate to third-party interests in the equity of consolidated subsidiaries. They exist in particular at Almo-Erzeugnisse E. Busch GmbH, Bad Arolsen, Germany, B. Braun Holding AG, Emmenbrücke, Switzerland, and B. Braun Austria Ges.m.b.H., Maria Enzersdorf, Austria.

25 Provisions for Pensions and Similar Obligations a) Pension obligations

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Provisions for Pension Obligations 512,563 484,835 Provisions for Similar Obligations 765 7,005 513,328 491,840

Payments of € 32.6 million are expected in 2011. Of this, € 10.7 million relates to contributions to external plans and € 21.9 million to benefits that will be paid to beneficiaries directly by the employer.

The Group’s pension obligations relate to commitments under defined contribution and defined benefit plans. For defined contribution plans, the Group has no further payment obligations once the contributions have been paid. They are recognized as an operating expense in the amount of the contributions paid. In fiscal 2009, this amount was € 17.7 million (previous year: € 14.8 million).

In addition, the Group makes contributions to statutory basic provision plans for employees in many countries (including Germany). However, since this covers various forms of social security benefit, no precise statement can be made with regard to the part that solely relates to retirement payments. These expenses are shown under social security contributions, under Note 12 Personnel Expenditures/Employees.

Employees’ claims under defined benefit plans are based on legal or contractual provisions.

Defined benefit plans based on legal regulations consist primarily of benefit obligations outside Germany at the time of employment termination and are fulfilled in the form of a capital sum. The benefit amount depends mainly on employees’ length of service and final salaries.

In Germany, benefit obligations stemming from contractual provisions primarily consist of annuity payments made in the event of disability, death, or an employee reaching the defined age limit. The main pension plans for employees in Germany who joined the company in 1992 or later have a modular form. Employees who joined the company before 1992, with a small number of exceptions, received commitments linked to their final salaries. In other countries, benefit obligations from contractual provisions mainly consist of annuities based on length of service and salary. 108

Retirement benefits in Germany are financed by pension provisions. Abroad, existing retirement obligations are partly financed through external pension funds.

The liability recognized in the statement of financial position for defined benefit pension plans is the net present value of the defined benefit obligation (DBO) at the reporting date, allowing for future increases, less the fair value of external plan assets at the reporting date, and adjusted for accumulated unrecognized actuarial gains and losses and past-service costs. The defined benefit obligation is calculated using the projected unit credit method. The interest rate used to determine the net present value is usually the yield on prime corporate bonds of similar maturity.

Actuarial gains and losses outside the corridor (a maximum of 10 percent of the total obligation and 10 percent of the plan assets) are spread over the active employees’ average remaining working lives and recognized through profit and loss.

Past-service costs are amortized on a straight-line basis over the vesting period.

The amount of pension provisions in the statement of financial position is derived as follows:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Net Present Value of Funded Pension Obligations 236,917 202,541 Fair Value of External Plan Assets – 184,651 – 163,268 Excess Cover/Shortfall 52,266 39,273 Net Present Value of Unfunded Pension Obligations 565,443 514,330 Unrealized Actuarial Gains (+) / Losses (–) – 103,838 – 68,761 Unrecognized Past-Service Costs – 1,308 – 1,004 Effect of Asset Value Limitation 0 997 Pension Provision (Net) 512,563 484,835 of which Assets 3,491 3,763 of which Liabilities 516,054 488,598

The change in pension provisions in 2010 and 2009 was as follows:

2010 2009 € ’000 € ’000 Pension Provision (Net) as of January 1 484,835 464,082 Foreign Currency Translation 1,414 331 Changes in Scope of Consolidation 306 0 Transfers 5,563 0 Payments – 33,173 – 29,647 Pension Expense 53,618 50,069 Pension Provision (Net) as of December 31 512,563 484,835 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 109

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Pension expenses included in the statement of income consist of the following:

2010 2009 € ’000 € ’000 Current Service Cost 23,591 18,868 Interest Expense 37,228 36,569 Expected Income on Plan Assets – 8,450 – 7,731 Amortization of Actuarial Gains and Losses 1,515 1,337 Amortization of Past Service Costs 123 47 Expense (+) / Income (–) from Plan Settlements and Curtailments 681 0 Effect of Asset Value Limitation – 1,070 979 Pension Expense on Defined Benefit Plans 53,618 50,069 Pension Expense on Defined Contribution Plans 17,664 14,757 Pension Expense 71,282 64,826

Current service costs, expenses from plan settlements and curtailments, amortized actuarial gains or losses, and past-service costs are included in staff costs; the accrual of interest on the expected pension obligations less the expected return on external plan assets is included under interest expense.

Experience adjustments to actuarial gains and losses were as follows:

2010 2009 2008 2007 2006 € ’000 € ’000 € ’000 € ’000 € ’000 Experience Gains (+) / Losses (–) on Pension Obligations 1,863 3,345 – 2,996 – 5,889 – 1,138 Experience Gains (+) / Losses (–) on Plan Assets 4,781 4,849 – 23,776 – 4,179 300

Pension benefit obligations and assets are reconciled as follows:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Net Present Value of Obligation at Start of Year 716,871 635,906 Current Service Costs 23,591 18,868 Interest Expense 37,228 36,569 Employee Contributions 2,539 2,504 Actuarial Gain (+) / Loss (–) 39,441 53,508 Currency Effects 23,200 – 918 Total Benefits Paid – 31,362 – 29,549 Past Service Costs 223 – 17 Effect of Changes to the Scope of Consolidation 306 0 Effect of Transfers 6,834 0 Effect of Plan Settlements – 15,609 0 Effect of Plan Curtailments – 902 0 Net Present Value of Obligation at End of Year 802,360 716,871 110

Effect of plan settlements relates primarily to a change of the pension scheme in Switzerland.

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Market Value of Plan Assets at Start of Year 163,268 148,860 Expected Return on External Plan Assets 8,450 7,731 Currency Effects 18,141 – 774 Actuarial Gain (+) / Loss (–) 4,781 4,849 Employer Contributions 11,369 10,941 Employee Contributions 2,539 2,504 Fund Payments – 9,558 – 10,843 Effect of Changes to the Scope of Consolidation and Transfers 1,270 0 Effect of Plan Settlements – 15,609 0 Market Value of Plan Assets at End of Year 184,651 163,268

The following table shows the actual return on external plan assets:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Expected Return on External Plan Assets 8,450 7,731 Actuarial Gain (+) / Loss (–) 4,781 4,849 Actual Return on External Plan Assets 13,231 12,580

The plan assets consist of the following:

Dec. 31, 2010 Dec. 31, 2009 % % Equities and Similar Securities 33 31 Bonds and Other Fixed-Income Securities 6 5 Real Estate 1 1 Other Assets 60 63 100 100

The calculation of pension obligations was based on the following assumptions:

Dec. 31, 2010 Dec. 31, 2009 % % Discount Rate 4.7 5.1 Future Salary Increases 2.9 2.9 Future Pension Increases 1.8 1.8 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 111

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Pension expense was calculated using the following assumptions:

Dec. 31, 2010 Dec. 31, 2009 % % Discount Rate 5.1 5.7 Future Salary Increases 2.9 3.1 Future Pension Increases 1.8 2.0 Expected Return on External Plan Assets 5.0 5.1

The percentages shown are weighted average assumptions. For the euro zone, a uniform discount rate of 5.0 percent (previous year: 5.25 percent) was applied to determine the pension liability.

The Heubeck Mortality Tables 2005 G served as the basis for measuring German pension obligations, based on age and gender-specific fluctuation probabilities. The pension obligations of foreign subsidiaries are assessed on the standard basis for the country in question.

The expected long-term return on external plan assets is determined for each asset class based on capital market surveys and yield forecasts. 60 percent of plan assets fall into the “other assets” category, primarily insurance policies. The published or anticipated returns of the insurance companies in question were used to determine the anticipated long-term return on those plan assets.

The pension obligations and plan assets performed as follows:

2010 2009 2008 2007 2006 € million € million € million € million € million Net Present Value of Unfunded Pension Obligations 565.5 514.3 450.5 463.3 469.9 Net Present Value of Funded Pension Obligations 236.9 202.5 185.5 173.3 188.4 Plan Assets – 184.7 – 163.2 – 148.9 – 153.7 – 157.1 Funding Status 617.7 553.6 487.1 482.9 501.2

b) Termination Benefits Benefits upon termination of employment are payable if an employee is laid off prior to the normal retirement date or if an employee voluntarily agrees to a redundancy payment. The Group recognizes termination benefits when there is a proven obligation to either terminate the employment of a current employee in accordance with a detailed formal plan that cannot be rescinded or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits coming due more than 12 months after the reporting date are recognized at net present value. 112

26 Other Provisions The major categories of provisions changed as follows:

Other Non-current Personnel Uncertain Other Total Provisions Expenditures Liabilities € ’000 € ’000 € ’000 € ’000 January 1, 2009 40,687 10,331 3,664 54,682 Foreign Currency Translation – 127 1,235 7 1,115 Utilization – 1,633 – 1,889 – 205 – 3,727 Release – 71 – 1,975 – 164 – 2,210 Additions 7,067 4,968 1,650 13,685 December 31, 2009 / January 1, 2010 45,923 12,670 4,952 63,545 Foreign Currency Translation 446 878 133 1,457 Transfers 958 0 4,610 5,568 Utilization – 3,790 – 1,103 – 2,071 – 6,964 Release – 157 – 634 – 278 – 1,069 Additions 7,907 3,043 3,232 14,182 December 31, 2010 51,287 14,854 10,578 76,719

Other Current Personnel Warranties Uncertain Other Total Provisions Expenditures Liabilities € ’000 € ’000 € ’000 € ’000 € ’000 January 1, 2009 5,443 4,593 14,977 19,819 44,832 Foreign Currency Translation 613 – 41 – 407 547 712 Changes in Scope of Consolidation 0 0 0 28 28 Utilization – 1,904 – 1,994 – 1,884 – 15,542 – 21,324 Release – 2,332 0 – 296 – 250 – 2,878 Additions 6,793 2,575 1,011 18,487 28,866 December 31, 2009 / January 1, 2010 8,613 5,133 13,401 23,089 50,236 Foreign Currency Translation 0 150 792 317 1,259 Transfers – 5,338 0 0 – 4,610 – 9,948 Changes in Scope of Consolidation 0 0 0 0 0 Utilization – 3,257 – 2,312 – 11,259 – 14,583 – 31,411 Release – 18 – 133 – 742 – 891 – 1,784 Additions 1,120 2,828 3,387 16,067 23,402 December 31, 2010 1,120 5,666 5,579 19,389 31,754

A total of € 5.8 million was transferred in the reporting year due to changes in maturities.

Non-current provisions for personnel expenditures primarily consist of provisions for partial retirement plans and anniversary payments. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 113

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Provisions of USD 14.7 million for uncertain liabilities relating to the ongoing investigation by the US Department of Justice into alleged improper marketing and pricing practices were utilized in the reporting year. The provision related to this risk was also increased by USD 2.0 million.

Other provisions mainly consist of provisions for other obligations in the area of staffing and social services, guarantees, possible losses from contracts, legal and consulting fees, and a number of identifiable individual risks. This item also includes actuarial provisions and provisions for not yet settled insurance claims of REVIUM Rückversicherung AG, Melsungen.

27 Financial Liabilities

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Non-current Liabilities Profit Participation Rights 63,308 46,006 Liabilities to Banks 604,517 545,267 Liabilities under Finance Leases 45,438 47,213 Liabilities under Finance Leases with Affiliated Companies 38,199 40,301 Liabilities under Loans from Non-banks 40,499 21,210 Other Financial Liabilities 0 670 791,961 700,667 Current Liabilities Profit Participation Rights 4,048 2,709 Liabilities to Banks 343,020 223,506 Liabilities under Finance Leases 5,456 5,030 Liabilities under Finance Leaseswith Affiliated Companies 2,102 1,975 Liabilities under Loans from Non-banks 63,349 68,684 Liabilities under Bills of Exchange 13,894 80 Other Financial Liabilities 9,619 3,756 441,488 305,740 Total Financial Liabilities 1,233,449 1,006,407

Other financial liabilities include € 4.1 million of advance payments received for orders (previous year: € 3.9 million).

Term structure of financial liabilities:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Due within One Year 441,488 305,740 Due within One to Five Years 571,109 562,498 Due in over Five Years 220,852 138,169 1,233,449 1,006,407 114

Under the B. Braun Incentive Plan, B. Braun Melsungen AG offers a series of profit participation rights, which may be acquired by eligible managers on a voluntary basis. With the issuance of profit participation rights, the company grants employees profit-sharing rights in the form of participation in the profit and losses of B. Braun Melsungen AG in return for their investment of capital.

Each profit participation right has a ten-year term. Interest on the rights is linked to the dividends paid to shareholders in B. Braun Melsungen AG, and the repayment amount is linked to the Group’s equity.

As an incentive for the investment made by employees, the company offers an entitlement bonus of 25 percent in the form of additionally assigned participation rights. The entitlement bonus is paid to employees two years after their investment. The additional participation rights are recognized in the corresponding periods through profit and loss.

As of December 31, 2010, a total of 672,861 rights had been issued. Their years of issue are as follows:

Year of Issue Number

2001 32,950 2002 49,625 2003 62,001 2004 59,973 2005 72,451 2006 72,127 2007 80,467 2008 93,927 2009 69,123 2010 80,217 672,861

Together with several subsidiaries, B. Braun Melsungen AG has entered into a syndicated loan facility of € 400 million with 15 banks. The loan may be utilized by the borrowers as a revolving credit in EUR, or alternatively in USD, CHF, GBP, or JPY. The loan bears a variable interest rate based on Euribor and Libor for the currency in question. In addition, the loan agreement allows for an adjustment to the interest margin depending on the B. Braun Group’s level of debt. The amount of the loan will decline to € 381 million in on May 31, 2011 and to € 335 million in the final year. The term of the loan expires on May 31, 2013.

Aesculap AG also entered into a loan with a development bank in 2009. The loan consists of two tranches totaling USD 80 million. Both tranches are to be repaid upon maturity in 2016 and have a fixed interest rate. The purpose of the loan is to refinance certain research and development projects, expand existing production facilities and construct a new laboratory in Germany. B. Braun Melsungen AG is a guarantor under this loan. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 115

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As of December 31, 2010, the Group had unutilized credit lines totaling € 861.9 million (previous year: € 982.7 million).

Loans from non-banks are unsecured. Interest rates on EUR loans are between 0.30 percent for overnight loans and 5.50 percent per annum for non-current loans, depending on the length of the interest-rate lock-in period.

The carrying amounts of the interest-bearing liabilities are as follows for the currencies below

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 EUR 910,236 763,419 USD 211,723 139,692 Other 111,490 103,296 1,233,449 1,006,407

Liabilities from finance leasing are recognized at the net present value of the leasing payments. These are secured by property liens on leased property. Of the other liabilities, € 13.2 million (previous year: € 11.3 million) are covered by property liens.

Liabilities related to loans from non-banks include loans from B. Braun Melsungen AG shareholders in the amount of € 45.7 million (previous year: € 41.0 million).

The carrying amount of financial assets used as collateral for liabilities or contingent liabilities was € 31,000 (previous year: € 573,000). The collateral provided was assigned receivables. 116

The following table shows the contractually agreed upon (undiscounted) interest and repayments on financial liabilities, other financial liabilities, and derivative financial instruments with negative fair value:

Dec. 31, 2009 Cash Outflows Cash Outflows Cash Outflows Cash Outflows Cash Outflows within one year within one to two years within two to five years within five to ten years after ten years Carrying Amounts Interest Repayments Interest Repayments Interest Repayments Interest Repayments Interest Repayments € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000

Profit Participation Rights 48,715 140 2,709 132 2,466 336 13,479 259 30,061 0 0 Liabilities to Banks 768,773 31,679 223,506 24,276 32,303 40,006 474,352 2,050 35,604 0 3,008 Liabilities under Finance Leases 52,243 2,437 5,030 2,243 4,517 5,581 10,435 5,918 13,788 1,986 18,473 Liabilities under Finance Leases to Associated Companies 42,276 2,596 1,945 2,469 2,102 6,562 7,152 7,529 15,327 2,291 15,720 Liabilities from Borrowing from Non-banks 89,894 2,733 68,684 1,053 65 1,832 10,175 522 10,516 13 454 Liabilities from ABS Transactions and Other Financial Liabilities 32,146 0 32,146 0 0 0 0 0 0 0 0 Trade Accounts Payable 210,313 10 209,139 0 835 0 339 0 0 0 0 Liabilities from Derivative Financial Instruments 9,923 998 226,076 249 0 0 0 0 0 0 0

Dec. 31, 2010 Profit Participation Rights 67,356 148 4,048 139 6,090 334 19,750 231 37,468 0 0 Liabilities to Banks 947,537 51,331 343,020 25,857 271,614 21,437 226,851 2,038 106,052 0 0 Liabilities under Finance Leases 50,894 2,671 5,456 2,334 5,099 5,783 10,493 5,667 13,578 1,341 16,268 Liabilities under Finance Leases to Associated Companies 40,301 2,469 2,102 2,334 2,237 6,103 7,611 6,554 15,915 1,391 12,436 Liabilities from Borrowing from Non-banks 103,848 2,951 63,349 1,616 5,261 3,442 16,104 1,025 18,248 1 886 Liabilities from ABS Transactions and Other Financial Liabilities 52,626 0 52,626 0 0 0 0 0 0 0 0 Trade Accounts Payable 216,757 0 215,698 0 889 0 170 0 0 0 0 Liabilities from Derivative Financial Instruments 6,319 0 183,959 0 0 0 0 0 0 0 0

All instruments held at December 31, 2010 and for which payments had already been contractually agreed upon are included. Amounts in foreign currency were each translated at the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2010. Financial liabilities that can be repaid at any time are always assigned to the earliest possible period. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 117

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28 Additional Disclosures on Financial Instruments

Carrying amount and fair value by measurement category

Category Carrying Fair value Carrying Fair value under amount amount IAS 39 Dec. 31, 2010 Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2009 € ’000 € ’000 € ’000 € ’000 Assets Trade Receivables LaR 933,543 933,543 790,110 790,110 Other Receivables LaR 110,260 110,260 84,188 84,188 Held-to-Maturity Financial Assets HtM 87 87 0 0 Available-for-Sale Financial Assets AfS 5,398 5,398 4,831 4,831 Other Interests AfS 16,901 n, a, 11,515 n, a, Financial Assets Held for Trading FAHfT 11,035 11,035 8,039 8,039 Derivatives not in a Hedge FAHfT 10,965 10,965 1,226 1,226 Cash and Cash Equivalents LaR 34,369 34,369 48,756 48,756 Liabilities Profit Participation Rights FLAC 67,356 67,356 48,715 48,715 Liabilities to Banks FLAC 947,537 969,617 768,773 777,250 Liabilities under Finance Leases n. a. 91,195 93,982 94,519 97,214 Liabilities under Borrowings from Non-banks FLAC 103,848 104,692 89,894 89,709 Other Financial Liabilities FLAC 19,460 19,460 559 559 Trade Accounts Payable FLAC 216,757 216,757 210,313 210,313 Other Liabilities FLAC 179,768 179,768 168,958 168,958 Derivatives not in a Hedge FLHfT 3,069 3,069 7,294 7,294 Derivatives in a Hedge n. a. 3,250 3,250 2,629 2,629 Summary by IAS 39 Measurement Category: Loans and Receivables LaR 1,078,172 1,078,172 923,054 923,054 Held-to-Maturity Financial Assets HtM 87 0 0 0 Available-for-Sale Financial Assets AfS 22,299 5,398 16,346 4,831 Financial Assets Held for Trading FAHfT 22,000 22,000 9,265 9,265 Financial Liabilities measured at Amortized Cost FLAC 1,534,726 1,557,650 1,287,212 1,295,504 Financial Liabilities Held for Trading FLHfT 3,069 3,069 7,294 7,294

LaR Loans and receivables | HtM Held-to-maturity investments | AfS Available-for-sale financial assets | FAHfT Financial assets held for trading FLAC Financial liabilities measured at amortised cost | FLHfT Financial liabilities held for trading MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 119

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The available-for-sale financial assets comprise:

Equities and Similar Securities Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Listed Securities 5,398 4,831 of which Non-current 910 897

These are reported under other financial investments and other financial assets. No available-for-sale financial assets were impaired in 2010 or 2009.

Other receivables include other receivables and other financial assets in the amount of € 113.8 million and other advances in the amount of € 4.2 million.

The maximum credit risk for each category of financial assets corresponds to its carrying amount.

Cash and cash equivalents, trade receivables, and other receivables have predominantly short residual terms, thus their carrying amounts are close to fair value as of the reporting date.

The fair values of other non-current liabilities and held-to-maturity financial investments with residual terms of over one year correspond to the net present values of the payments associated with the assets, taking account of the current interest rate parameters in each case, which reflect market-based changes in terms and in expectations.

Trade accounts payable and other liabilities regularly have short residual terms; the values reported on the statement of financial position are close to fair value.

The fair values of amounts due to banks and other lenders, borrower’s note loans, and other financial liabilities are calculated as the net present value of the payments associated with the liabilities, based on the relevant yield curve in each case.

To date, the Group has not exercised the option of designating financial assets and liabilities upon initial recognition as financial liabilities measured at fair value through profit and loss. 120

The table below shows financial instruments where subsequent measurement is at fair value. These are categorized into levels 1 to 3, depending on the extent to which fair value can be measured:

– Level 1 – Measurement at fair value based on (unadjusted) quoted prices on active markets for identical financial assets or liabilities. – Level 2 – Measurement at fair value based on parameters, which are not quoted prices for assets or liabilities as in level 1, but which are either directly derived from them (i.e., as prices) or indirectly derived from them (i.e., derived from prices). – Level 3 – Measurement at fair value using models that include parameters not based on observable market data to value assets and liabilities.

Level 1 Level 2 Level 3 Total € ’000 € ’000 € ’000 € ’000 Dec. 31, 2009

Financial Assets measured at Fair Value through Profit and Loss Derivative Financial Assets 0 1,226 0 1,226 Available-for-sale Financial Assets Securities 4,831 0 0 4,831 Financial Assets measured at Fair Value through Profit and Loss Derivative Financial Liabilities (No Hedge) 0 – 7,294 0 – 7,294 Derivative Financial Liabilities (Hedging) 0 – 2,629 0 – 2,629 4,831 – 8,697 0 – 3,866

Dec. 31, 2010

Financial Assets measured at Fair Value through Profit and Loss Derivative Financial Assets 0 10,965 0 10,965 Available-for-sale Financial Assets Securities 5,398 0 0 5,398 Financial Assets measured at Fair Value through Profit and Loss Derivative Financial Liabilities (No Hedge) 0 – 3,069 0 – 3,069 Derivative Financial Liabilities (Hedging) 0 – 3,250 0 – 3,250 5,398 4,646 0 10,044

There were no moves between levels 1 and 2 in the period under review. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 121

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29 Trade Accounts Payable and Other Liabilities

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Non-current Liabilities Trade Accounts Payables 1,059 1,174 Liabilities to Social Security Providers 610 300 Liabilities to Employees, Management and Shareholders 3,892 1,855 Deferred Income and Accruals 194 157 4,696 2,312 Other Liabilities 6,016 6,705 Subtotal Other Liabilities 10,712 9,017

Current Liabilities Trade Accounts Payables 215,698 209,139 Liabilities to Social Security Providers 21,822 20,191 Liabilities to Employees, Management and Shareholders 190,649 172,680 Deferred Income and Accruals 8,790 6,028 Other Tax Liabilities 70,353 47,111 291,614 246,010 Liabilities from Derivative Financial Instruments 6,319 9,923 Other Liabilities 173,752 162,253 180,071 172,176 Subtotal Other Liabilities 471,685 418,186 Total Liabilities 699,154 637,516

The Group has designated payer interest rate swaps (“pay fix – receive variable”) as cash flow hedges in order to hedge the variable interest payments on a nominal credit volume of € 30 million. Changes in the cash flows of the underlying transaction resulting from changes in the reference interest rate are compensated for by the changes in the cash flows of the interest rate swap. The hedging measures are designed to hedge the cash flow from bank liabilities against an increase in the reference interest rate. Credit risks are not covered through the hedge. The related cash flows are likely to occur through fiscal year 2013. The effectiveness of hedges was measured prospectively and retrospectively using the dollar offset method. All hedges were effective in the fiscal year. The effective portion of changes in the fair value of designated interest rate swaps is recognized in equity and amounts to a total of € 255,000 (previous year: € – 484,000). The ineffective portion of changes in value is recognized directly in the statement of income under net financial income and is € – 40,000 (previous year: € 154,000). Amounts accrued under equity are transferred to the statement of income as income or expense in the period in which the hedged underlying transaction is recognized in the statement of income.

In 2009, a hedge on a payer interest rate swap with a nominal credit volume of € 10 million was unwound and the cumulative loss was retained in equity until the originally hedged transaction occurs. At that time, the loss is transferred to the statement of income using the effective interest rate method. In 2010, an expense of € – 143,000 (previous year: € – 35,000) was transferred from equity to the statement of income from the hedge unwound.

Other liabilities mainly include remaining payments related to company acquisitions, liabilities from ABS transactions, bonus obligations, and liabilities related to outstanding invoices. 122

Additional Information

30 Contingent Liabilities Liabilities result exclusively from obligations to third parties and consist of:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Uncertain Liabilities 680 3,195 Guarantees 4,710 3,953 Warranties 22,997 32,003 Contractual Performance Guarantees 32,932 27,173 Collateral for Third-party Liabilities 0 5 61,319 66,329

All cases relate to potential future obligations, which may arise upon the occurrence of corresponding events and entirely are uncertain as of the reporting date.

31 Other Financial Liabilities The Group leases numerous office buildings and warehouses under non-terminable operating lease agreements. These agreements have varying terms and conditions, escalation clauses, and renewal options.

Future minimum lease payments expected in connection with non-terminable sub-leases on the reporting date, amount to € 8.7 million (previous year: € 7.8 million).

The Group also leases manufacturing facilities and machinery under terminable operating lease agreements. Leasing liabilities in relation to moveable assets at the LIFE facility are € 15.2 million annually until 2011, € 8.7 million in 2012, € 3.2 million until 2014, and € 2.8 million in 2015.

The minimum payments of non-discounted future lease payments under operating lease and rental agreements are due as follows:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Obligations under Rental and Leasing Agreements Due within One Year 64,482 61,782 Due within One to Five Years 91,752 99,068 Due in over Five Years 29,731 34,170 185,965 195,020 Obligations from the Acquisition of Intangible Assets 0 12 Obligations from the Acquisition of Property, Plant and Equipment 128,418 27,478 Total 314,383 222,510 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 123

A dditiona l I nformation

Some Group companies enter into sale and leaseback agreements with B. Braun Holding GmbH & Co. KG as part of their operating activities. These agreements are intended to finance sales, not to realize gains in advance.

The portion of total liabilities under rental and lease agreements accounted for by liabilities under sale and leaseback agreements is provided in the table below:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Obligations under Sale and Leaseback Agreements Due within One Year 4,603 7,618 Due within One to Five Years 6,513 9,143 Due in over Five Years 0 0 11,116 16,761

During the normal course of business, B. Braun is subject to potential obligations stemming from lawsuits and enforced claims. Estimates of possible future liabilities of this kind are uncertain. B. Braun anticipates no material negative consequences for the economic or financial situation of the Group.

32 Financial Risk Management

Financial Risk Factors The Group’s activities expose it to a variety of financial risks. These include currency, interest rate, credit, and liquidity risks. The Group’s policy strives to minimize these risks via systematic risk management, which involves the use of derivative financial instruments.

Risk management is performed centrally by Group Treasury in accordance with policies approved by the Manage- ment Board. Group Treasury identifies, measures, and hedges financial risks in close cooperation with the Group’s operating units. The Management Board provides written principles for Group-wide risk management together with written policies covering specific areas such as foreign exchange, interest rate, and credit risk and the use of derivative and non-derivative financial instruments. a) Market Risk Foreign Exchange Risk The Group operates internationally and is therefore exposed to currency risk arising from fluctuations in the exchange rates between various foreign currencies, primarily the US dollar. Currency risks arise from expected future transactions, and assets and liabilities reported in the statement of financial position. Risk arises when future transactions or assets or liabilities recognized in the statement of financial position are denominated in a currency that is not the functional currency of the company. The Group uses forward contracts to hedge against such risks resulting from expected future transactions and in relation to assets and liabilities reported in the statement of financial position.

The Group’s risk management policy is to hedge up to 60 percent of the net cash flow in USD, CHF, GBP, and JPY expected over the next fiscal year on a continuous basis. 124

If the euro had gained or lost 10 percent against the US dollar as of December 31, 2010, profit before taxes – with all other variables remaining constant – would have been approximately € 11.8 million higher or lower for the full year (previous year: € 15.3 million). This would mainly have been attributable to gains/losses from foreign currency translation relating to US dollar-based loans and trade receivables. The remaining components of equity would have been approximately € 31.7 million higher or lower (previous year: € 25.7 million).

Interest Rate Risk The Group’s interest rate risk stems from non-current interest-bearing liabilities. As the Group has no significant interest-bearing assets, changes in market interest rates affect its income and operating cash flow primarily via their impact on its interest-bearing liabilities. The liabilities with variable interest rates expose the Group to cash flow interest rate risk. Fair value interest rate risk arises from fixed-interest liabilities. Group policy is to maintain approximately 50 percent of its borrowings in fixed-rate instruments.

The Group hedges its cash flow interest rate risk using interest rate swaps. Under these interest rate swaps, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed and variable interest rates derived from the agreed principal amounts. Interest rate swaps of this nature have the economic effect of converting variable-rate into fixed-rate loans. In addition, the Group borrows at variable rates and swaps these into fixed rates.

If market interest rates had been 100 basis points higher or lower as of December 31, 2010, profit before taxes – with all other variables remaining constant – would have been approximately € 4.1 million lower or higher for the full year (previous year: € 0.2 million). This would have been mainly attributable to higher or lower interest expense for variable-rate interest-bearing financial liabilities. The other components of equity would have changed only slightly.

b) Credit Risk The Group has no significant concentrations of credit risk related to trade receivables. It has organizational guidelines that ensure that products are sold only to customers with a good payment history. Derivatives contracts and investment transactions are only entered into with financial institutions that have excellent credit ratings.

c) Liquidity Risk Prudent liquidity risk management includes maintaining sufficient reserves of cash, as well as ensuring the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the environment in which the Group operates, Group Treasury aims to maintain the necessary flexibility in funding by ensuring sufficient unutilized credit lines are available.

Capital Risk Management The Group’s capital management seeks to ensure continuation as a thriving, independent family-run company, in order to guarantee that shareholders continue to receive dividends and other interested parties receive the amounts owed them, as well as maintaining an optimal equity structure to reduce the cost of capital.

As in 2009, the strategy of the Group in 2010 was to significantly exceed the equity ratio by at least 25 percent that was agreed upon under the terms of the syndicated loan. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 125

A dditiona l I nformation

The equity ratio as of December 31, 2010 and December 31, 2009, as calculated in the manner prescribed in the syndicated loan agreement, was as follows:

2010 2009 € ’000 € ’000 Equity 1,984,027 1,620,036 Goodwill Acquired after December 31, 2005 – 56,732 – 54,447 Adjusted Net Equity 1,927,295 1,565,589 Total Assets 4,686,074 3,975,150 Equity Ratio in % 41.1 39.4

Derivative Financial Instruments Fair value of financial derivatives is calculated using valuation models. The fair value of interest rate swaps is calculated from the net present value of estimated future cash flows using the relevant yield curve on the reporting date. The fair value of forward foreign exchange contracts is calculated based on forward exchange rates on the reporting date.

For non-current liabilities, stock exchange prices or OTC prices for similar instruments are used. Other valuation models such as the DCF method are used to determine the fair value of the remaining financial instruments.

Changes in the fair value of derivative financial instruments that represent economically effective hedges under the Group strategy are recognized through profit and loss, unless they are used in hedge accounting. In these cases, any fair value changes are recognized directly in equity. The fair value changes in hedging instruments more or less match the fair value changes in the hedged underlying transactions.

The fair values of forward foreign exchange contracts are based on current European Central Bank reference exchange rates, adjusted for forward premiums or discounts. Currency options are valued based on quoted market prices or recognized option pricing models. Market values of interest rate hedging instruments are calculated using discounted forecast future cash flows. Market rates are applied for the remaining term of the derivatives in question.

Nominal Volume Residual Term > 1 Year Fair Value Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2009 T€ T€ T€ T€ T€ T€ Forward Foreign Exchange Contracts 524,266 337,401 312 702 6,961 – 4,293 Currency Options 62,452 60,825 0 60,825 – 2,771 – 3,964 Embedded Derivatives 7,600 7,800 0 0 379 – 440 594,318 406,026 312 61,527 4,569 – 8,697

Depending on the fair value on the reporting date, derivative financial instruments are included under other assets (if fair value is positive) or other liabilities (if fair value is negative). 126

Derivative financial instruments held for trading are recognized as current assets or liabilities. The total fair value of a derivative hedging instrument is classified as a non-current asset/liability if the residual term of the hedged instrument is more than 12 months; otherwise, it is classified as a current asset/liability.

See Note 29 regarding cash flow hedges recognized under other liabilities.

The Group designates forward foreign exchange contracts to hedge future foreign currency income and payments from the operating business of the B. Braun Group that are not denominated in the functional currency and are expected to arise with high probability. The purpose of the hedges is to reduce the volatility of foreign exchange income and payments (and their measurement) with respect to foreign exchange risk. The effectiveness of hedges is measured prospectively using the critical terms match method and retrospectively using the dollar-offset method.

As of December 31, 2010, the Group had designated forward foreign exchange contracts with a net fair value of € 4.4 million (previous year: € 0) as cash flow hedges. All hedges were effective within the range specified under IAS 39.

Gains of € 8.4 million and losses of € 1.6 million (previous year: € 0 in both instances) arising from changes in the fair values of foreign exchange derivatives in connection with cash flow hedges were recognized in equity in fiscal year 2010. Gains of € 2.2 million and losses of € 7.2 million (previous year: € 0 in both instances) recognized in equity were transferred to other operating income or other operating expenses during the fiscal year. As of the reporting date, the hedging measures had no ineffective portions. B. Braun expects gains of € 6.0 million and losses of € 1.6 million recognized in equity to be transferred to the statement of income within the next twelve months.

33 Related Party Transactions The B. Braun Group purchases materials, supplies, and services from numerous suppliers around the world in the ordinary course of its business. These suppliers include companies in which the Group holds a controlling interest and companies that have ties to members of B. Braun Melsungen AG’s Supervisory Board. Business transactions with such companies are conducted on normal market terms. From the perspective of the B. Braun Group, these are not materially significant. The B. Braun Group did not participate in any transactions significant for it or for the related parties that were in any way irregular, and does not intend to do so in the future.

The following transactions were completed with related parties:

2010 2009 € ’000 € ’000 Sales Related Companies 9,748 10,713 of which B. Braun Holding GmbH & Co. KG (6,665) of which Holdings (3,083) Key Management Personnel 0 69 9,748 10,782 Goods and Services Purchased Related Companies 55,253 53,149 of which B. Braun Holding GmbH & Co. KG (35,469) of which Holdings (19,784) Key Management Personnel 0 2 55,253 53,151 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 127

A dditiona l I nformation

Outstanding balances from the purchase/sale of goods and services and from loans at the end of the year:

Dec. 31, 2010 Dec. 31, 2009 € ’000 € ’000 Outstanding Items from the Sale of Goods and Services Related Companies 4,487 1,874 of which B. Braun Holding GmbH & Co. KG (334) of which Joint Ventures (2,933) of which Holdings (1,220) Valuation Allowances 0 0 Key Management Personnel 7 40 Valuation Allowances 0 0 4,494 1,914 Procurement Obligations 229 270 Outstanding Items from the Purchase of Goods and Services and from Loans Related Companies 47,464 43,784 of which B. Braun Holding GmbH & Co. KG (44,775) of which Joint Ventures (851) of which Holdings (1,838) Key Management Personnel 46,221 41,461 93,685 85,245 Procurement Obligations 1,096 1,563

Key management personnel are members of the Management Board and Supervisory Board of B. Braun Melsungen AG. In addition to B. Braun Holding GmbH & Co. KG, the affiliated Group includes joint ventures and companies controlled by key management personnel or their close family members. The names of associated companies and joint ventures are shown under Major Shareholdings of B. Braun Melsungen AG.

The following items in the statement of financial position contain outstanding balances with affiliated people or companies:

– Other Assets – Financial Liabilities – Other Liabilities

The loans granted by related individuals are short-term. Their interest rates are based on covered bond (Pfand- brief) yields.

Please see Note 27 for details of leasing liabilities to related companies.

Remuneration for members of the Management Board consists of a fixed and a variable, performance-related component. They also receive pension commitments and benefits in kind. Benefits in kind consist mainly of the value assigned for the use of company cars under German tax laws.

In addition to the duties and performance of Management Board members, the criteria for remuneration include the Group’s financial position, results, and future projections. 128

The total remuneration of Management Board members consists of the following:

2010 2009 € ’000 € ’000 Fixed Remuneration 2,359 2,250 Variable Remuneration 4,216 3,561 Pension Expense 530 390 Bonuses 219 210 Other 245 97 7,569 6,508

Of the total, € 410,000 was attributable to the Chairman of the Management Board as fixed remuneration and € 1.6 million as variable remuneration from profit-sharing.

A total of € 15.0 million was allocated for pension obligations for current Management Board members; profit- sharing bonus obligations to Management Board members is reported under liabilities to employees, management and shareholders total € 4.0 million. A total of € 16.3 million has been allocated for pension obligations to former Management Board members and their surviving dependants; current benefits total € 1.3 million. Super- visory Board remuneration totaled € 532,000.

The remuneration of Supervisory Board members is governed by the Articles of Incorporation and is approved at the Annual Shareholders’ Meeting.

The Group has not made any loans to current or former members of the Management Board.

Liabilities stemming from profit participation rights for Management Board members were € 6.5 million (previous year: € 6.1 million). See Note 27 for detailed information on profit participation rights.

The members of the Supervisory Board are listed on page 137 and the Management Board on pages 6 / 7. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 129

N ote s to t h e C on s o l idated s T A T E M E N T of C a s h F l o w s

Notes to the Consolidated Statement of Cash Flows

The consolidated statement of cash flows details changes in the B. Braun Group’s cash and cash equivalents during the course of the fiscal year. In accordance with IAS 7, cash flows are categorized as those from operating, investing, and financing activities. Cash flow from operating activities is calculated using the indirect method. Interest paid and received has been reported under gross cash flow for the first time in the current reporting year. The previous year’s figures have been adjusted accordingly.

34 Gross Cash Flow from Operating Activities The gross cash flow of € 563.0 million is the cash surplus from operating activities before any changes in working capital, an increase of € 87.8 million over the previous year. The change is due primarily to improved operating income of € 456.2 million, lower tax payments, and higher depreciation.

Cash flow from operating activities of € 389.3 million represents changes in current assets, current provisions, and liabilities (excluding financial liabilities). The increase in inventories and receivables and the reduction in current provisions and liabilities resulted in a significant outflow of € 173.7 million compared with the previous year; this was partly attributable to the high level of sales achieved in December. As a result, the cash flow from operating activities is € 181.9 million below the previous year’s level.

35 Cash Flow From Investing Activities A total of € 572.4 million was spent in 2010 to purchase property, plant and equipment, intangibles and financial investments. This was offset by sales of property, plant and equipment (€ 11.6 million) and dividend income received (€ 3.4 million), resulting in a cash outflow from investing activities of € 557.4 million. This increase of € 114.1 million in cash outflow compared with the previous year is largely due to higher capital investments.

Investments made during the year were not fully covered by cash flow from operations. The remaining free cash flow was € – 168.1 million (previous year: € 128.0 million).

Additions to property, plant and equipment and intangible assets from finance leasing do not result in a cash flow and are therefore not included under investing activities. In the fiscal year, these additions totaled € 0.9 million (previous year: € 3.2 million).

36 Cash Flow from Financing Activities In 2010, cash flow from financing activities amounted to € 155.5 million (previous year: € – 135.6 million). The net balance of proceeds from and repayments of loans was € 181.6 million (previous year: € – 106.8 million). Dividend payments and capital contributions by non-controlling interests resulted in a cash outflow of € 29.2 million. The € 291.1 million change compared with the previous year is largely due to higher borrowing to finance investments. 130

37 Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, and other short-term highly liquid financial assets with residual maturities of three months or less that are subject to no more than insignificant fluctuations in value.

As of December 31, 2010, restrictions related to cash availability totaled € 540,000 (previous year: € 693,000). These restrictions related primarily to security deposits and collateral.

38 Events After the Reporting Date No events occurred between the end of the fiscal year and the date on which the consolidated financial statements were compiled that could have a material effect on the results of operations, financial position, or net assets for 2010. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 131

I ndependent A u ditor s ’ R eport

Independent Auditors’ Report

We have audited the consolidated financial statements prepared by B. Braun Melsungen AG, Melsungen, Germany, comprising the statement of financial position, statement of income (loss), statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes to the consolidated financial statements, together with the Group management report for the fiscal year from January 1 to December 31, 2010. The preparation of the consolidated financial statements and the Group management report in accordance with IFRS as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code (HGB), is the responsibility of the Management Board of the Company. Our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and the German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). These standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position, and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the Group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, determining the scope of consolidation, the accounting and consolidation principles used, and significant estimates made by the Management Board, as well as evaluating the overall presentation of the consolidated financial statements and the Group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315 a (1) HGB and provide a true and fair view of the net assets, financial position, and results of operations of the Group in accordance with these requirements. The Group management report is consistent with the consolidated financial statements and, as a whole, provides an appropriate view of the Group’s position and appropriately presents the opportunities and risks of future development.

Kassel, Germany, March 8, 2011

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Prof. Dr. Georg Kämpfer holger Plaum German Public Auditor german Public Auditor 132

Major Shareholdings

As of December 31, 2010 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Germany AESCULAP AG, Tuttlingen2) 100.0 116,737 550,206 2,947 AESCULAP INTERNATIONAL GMBH, Tuttlingen2) 100.0 205,776 0 0 AESCULAP SUHL GMBH, Suhl 100.0 3,935 9,253 127 ALMO-Erzeugnisse E. Busch GmbH, Bad Arolsen 60.0 23,777 59,044 356 ASCALON GmbH, Berggießhübel2) 94.0 6,047 19,727 154 B. Braun Avitum AG, Melsungen2) 94.0 92,380 225,018 751 B. Braun Facility Services GmbH & Co. KG, Melsungen 100.0 108 13,503 80 B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen2) 100.0 149,310 0 0 B. Braun Surgical GmbH, Melsungen2) 100.0 154,576 0 0 B. Braun TravaCare GmbH, Hallbergmoos2) 100.0 613 30,592 55 B. Braun Vet Care GmbH, Tuttlingen2) 100.0 372 16,265 13 Saxonia Medical GmbH, Radeberg2) 94.0 3,988 51,501 412 TransCare Service GmbH, Neuwied 55.0 1,571 9,550 99

Europe AESCULAP CHIFA SP.ZO.O., Nowy Tomyśl/Poland 98.8 55,366 122,448 1,469 AESCULAP S.A.S. , Chaumont/France 100.0 10,269 10,910 114 Avitum S.R.L., Timisoara/Romania 93.6 259 8,736 191 B. Braun Adria d.o.o., Zagreb/Croatia 36.0 2,797 9,496 25 B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria 60.0 36,333 51,232 137 B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria 94.0 92,560 93 3 B. Braun Avitum France S.A.S., Boulogne/France 94.0 7,864 12,228 18 B. Braun Avitum Hungary Zrt., Budapest/Hungary 94.0 12,610 33,270 654 B. Braun Avitum Italy S.p.A., Mirandola/Italy 94.0 14,758 46,411 206 B. Braun Avitum Oy, Loviisa/Finland 94.0 1,934 10,339 35 B. Braun Avitum Poland Sp.zo.o., Nowy Tomyśl/Poland 95.9 – 3,787 26,511 404 B. Braun Avitum Russia OOO, St. Petersburg/Russia 94.0 2,419 10,034 32 B. Braun Avitum s.r.o., Bratislava/Slovak Republic 93.7 – 912 9,389 157 B. Braun Avitum s.r.o., Prague/Czech Republic 93.7 10,246 20,667 222 B. Braun Avitum Turkey Sanayi Ticaret Anonim Sirketi, Ankara/Turkey 75.2 3,105 8,356 13 B. Braun Avitum UK Ltd., Sheffield/United Kingdom 94.0 642 20,652 194 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 133

M a j or S h are h o l ding s

As of December 31, 2010 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 B. Braun Holding AG, Sempach/Switzerland 51.0 174,487 0 0 B. Braun Hospicare Ltd., Collooney, Co. Sligo/Republic of Ireland 100.0 9,638 13,597 89 B. Braun Medical AB, Dander/Sweden 100.0 3,256 34,319 45 B. Braun Medical AG, Sempach/Switzerland 51.0 118,786 226,726 788 B. Braun Medical A/S, Frederiksberg/Denmark 100.0 1,319 14,303 23 B. Braun Medical A/S, Vestskogen/Norway 100.0 3,121 20,602 32 B. Braun Medical B.V., Oss/Netherlands 100.0 6,759 54,135 145 B. Braun Medical International S.L., Rubi/Spain 100.0 94,520 0 9 B. Braun Medical Kft., Budapest/Hungary 60.0 23,401 55,585 735 B. Braun Medical Lda., Barcarena/Portugal 100.0 31,289 58,279 152 B. Braun Medical LLC, St. Petersburg/Russia 90.0 20,791 82,815 272 B. Braun Medical Ltd., Dublin/Republic of Ireland 100.0 3,769 18,417 39 B. Braun Medical Ltd., Sheffield/United Kingdom 100.0 17,793 98,382 416 B. Braun Medical N.V./S.A., Diegem/Belgium 100.0 2,516 30,177 69 B. Braun Medical Oy, Helsinki/Finland 100.0 3,842 30,499 46 B. Braun Medical S.A., Rubi/Spain 100.0 234,372 201,479 1,054 B. Braun Medical S.A.S., Boulogne/France 100.0 79,064 276,606 1,327 B. Braun Medical S.R.L., Timisoara/Romania 61.9 1,434 11,876 79 B. Braun Medical s.r.o., Bratislava/Slovak Republic 70.0 1,264 20,299 19 B. Braun Medical s.r.o., Prague/Czech Republic 70.0 34,057 80,188 183 B. Braun Medikal Dis Ticaret A.S., Istanbul/Turkey 100.0 5,445 13,414 64 B. Braun Milano S.p.A., Milan/Italy 100.0 29,303 119,977 198 B. Braun Sterilog (Birmingham) Ltd., Sheffield/United Kingdom 100.0 – 6,279 11,582 239 B. Braun Sterilog (Yorkshire) Ltd., Sheffield/United Kingdom 100.0 – 4,897 8,188 197 B. Braun Surgical S.A., Rubi/Spain 100.0 78,008 148,523 761 B. Braun VetCare SA, Rubi/Spain 100.0 7,472 9,327 23 Suturex & Renodex S.A.S., Sarlat/France 100.0 8,340 12,489 146

1) Effective stake | 2) Companies with profit and loss transfer agreements | 3) Consolidated using equity method | 4) Consolidated proportionately 134

Major Shareholdings

As of December 31, 2010 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Americas AESCULAP INC., Center Valley/USA 95.5 39,484 123,646 423 Aesculap Implant Systems LLC, Center Valley/USA 95.5 – 4,495 37,171 132 B. Braun Aesculap de México S.A. de C.V., México D. F./Mexico 100.0 7,508 16,652 173 B. Braun Interventional Systems Inc., Bethlehem/USA 95.5 16,470 24,605 34 B. Braun Medical Inc., Bethlehem/USA 95.5 136,851 668,641 4,409 B. Braun Medical Peru S.A., Lima/Peru 89.2 17,130 12,126 286 B. Braun Medical S.A., Bogota/Colombia 100.0 12,865 26,327 221 B. Braun Medical S.A., Buenos Aires/Argentina 100.0 9,808 25,068 355 B. Braun Medical S.A., Quito/Ecuador 100.0 4,974 12,395 57 Braun Medical SpA, Santiago de Chile/Chile 85.9 8,779 21,115 144 B. Braun of America Inc., Bethlehem/USA 95.5 123,071 0 0 CAPS Inc., Santa Fe Springs/USA 95.5 49,419 107,676 503 Laboratorios B. Braun S.A., São Gonçalo/Brazil 100.0 114,716 165,651 1,750

Asia and Australia B. Braun AESCULAP JAPAN CO. LTD., Tokyo/Japan 100.0 55,790 121,056 484 B. Braun Australia Pty. Ltd., Bella Vista/Australia 100.0 22,575 52,585 113 B. Braun Avitum Philippines Inc., Manila/Philippines 100.0 2,677 8,652 100 B. Braun Avitum (Shanghai) Trading Co. Ltd., Shanghai/China 94.0 5,120 32,249 65 B. Braun Korea Co. Ltd., Seoul/Republic of Korea 100.0 17,108 47,885 117 B. Braun Medical (H.K.) Ltd., Hong Kong/China 100.0 37,627 56,761 32 B. Braun Avitum (M) Sdn. Ltd., Mumbai/India 100.0 6,967 39,544 379 B. Braun Medical Industries Sdn. Bhd., Penang/Malaysia 100.0 224,697 292,838 4,586 B. Braun Medical (Shanghai) International Trading Co. Ltd., Shanghai/China 100.0 10,458 65,783 446 B. Braun Medical Supplies Inc., Manila/Philippines 100.0 6,225 13,141 146 B. Braun Medical Supplies Sdn. Bhd., Petaling Jaya/Malaysia 100.0 21,437 38,832 147 B. Braun Medical (Suzhou) Company Limited, Suzhou/China 100.0 2,419 12,820 293 B. Braun Singapore Pte. Ltd., Singapore 100.0 9,268 12,016 41 B. Braun Taiwan Co. Ltd., Taipei/Taiwan 100.0 4,539 15,185 56 B. Braun (Thailand) Ltd., Bangkok/Thailand 100.0 7,844 13,734 94 B. Braun Vietnam Co. Ltd., Hanoi/Vietnam 100.0 16,999 40,666 969 PT. B. Braun Medical Indonesia, Jakarta/Indonesia 100.0 20,837 37,637 353 MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 135

M a j or S h are h o l ding s

As of December 31, 2010 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Africa B. Braun Avitum (Pty) Ltd., Fourways/South Africa 100.0 773 8,005 106 B. Braun Medical (Pty) Ltd., Fourways/South Africa 100.0 8,515 27,531 132

Other Holdings Babolat VS, Lyon/France3) 28.0 50,199 104,532 201 Medical Service und Logistik GmbH, Recklinghausen4) 50.0 877 30,765 5 Schölly Fiberoptic GmbH, Denzlingen3) 28.0 20,883 52,952 253

1) Effective stake | 2) Companies with profit and loss transfer agreements | 3) Consolidated using equity method | 4) Consolidated proportionately

The values correspond to the year-end financial statements established in accordance with IFRS. Equity of foreign subsidiaries has been translated using the mid-rate on December 31, 2010, and sales figures have been translated using the average annual rate for 2010. 136

SUPERVISORY BOARD rep ort

The Supervisory Board of B. Braun Melsungen AG continued meetings of the Supervisory Board and made its recommen- to perform its statutory duties and obligations in fiscal year dations. The Personnel Committee of the Supervisory Board 2010 in accordance with the applicable laws, Articles of met four times in 2010. At its meeting on March 25, 2010, Incorporation, and By-Laws, and to advise and monitor it recommended that the Supervisory Board appoint Prof. management. At three ordinary meetings, the Supervisory Dr. Hanns-Peter Knaebel as Ordinary Member of the Manage- Board received reports from the Management Board regard- ment Board, effective April 1, 2010. The Supervisory Board ing the company’s current business performance, financial approved this appointment at its meeting on March 25, 2010. status, and significant investment plans. At its meeting on At its meeting on July 20, 2010, the Personnel Committee March 25, 2010, the Supervisory Board proposed that the recommended that Dr. Wolfgang Feller be reappointed as following be put to vote at the Annual Shareholders’ Meeting: Ordinary Member of the Management Board through March 31, the issuance of profit participation rights to B. Braun Group 2013. The Supervisory Board approved his reappointment on executives in accordance with the statute for profit partici- the same day. At its meetings on November 5 and December 8, pation conditions approved by the Supervisory Board, an 2010, the Personnel Committee recommended that the increase in subscribed capital, and the revision of the Articles Supervisory Board appoint Dr. Heinz-Walter Große as Chairman of Incorporation. The Supervisory Board also issued new of the Management Board to a five-year term effectiveA pril 1, By-Laws at the meeting. At each of its meetings, the Super- 2011, and Mr. Otto Philipp Braun and Dr. Annette Beller as visory Board received detailed reports on the business per- Deputy Members of the Management Board for a three-year formance of the company’s North American subsidiaries. Other term. The reappointment of Mr. Caroll H. Neubauer as Ordinary topics discussed by the Supervisory Board included presen- Member of the Management Board through August 31, 2016 tations of the divisional strategy of B. Braun Avitum AG and was also recommended. The Supervisory Board approved these the compliance management system for the B. Braun Group, appointments at its meeting on December 8, 2010. an overview of human resources at the B. Braun Group, and the amendment to the Management Board By-Laws. The B. Braun Melsungen AG’s financial statements and manage- Supervisory Board discussed and approved the 2011 targets, ment report for fiscal year 2010, the Group’s consolidated advised on statutory business matters requiring its approval, financial statements, and the consolidated management report and accepted the risk report submitted by the Management have been reviewed by the auditor appointed at the Annual Board. A regular exchange of information and ideas took place Meeting on March 25, 2010, PricewaterhouseCoopers Aktien between the Chairman of the Supervisory Board and the gesellschaft Wirtschaftsprüfungsgesellschaft, Kassel, Germany. Chairman of the Management Board regarding significant The auditor raised no objections and issued an unqualified business developments within the company and the Group, audit opinion. The auditor participated in the Supervisory and any pending decisions. Board’s discussions on the financial statements and the Group’s consolidated financial statements, and reported on The Supervisory Board once again conducted a voluntary self- the main findings of its audit. Following its review of the assessment, which showed that it is efficiently organized financial statements, management report, proposal for the and that cooperation between the Supervisory Board and appropriation of B. Braun Melsungen AG’s retained earnings, Management Board functions very well. The newly formed consolidated financial statements, and consolidated man- Audit Committee discussed the company’s current business agement report, the Supervisory Board concurred with the performance, the accounting and auditing process and the findings of the audit report and raised no objections. We compliance management system for the B. Braun Group, inter- therefore approve the financial statements presented by the company requirements regarding derivatives transactions, Management Board, which are hereby adopted in accordance and, in particular, B. Braun Melsungen AG’s 2010 financial with Section 172 of the German Stock Corporation Act (AktG). statements and consolidated financial statements of the The Supervisory Board concurs with the proposals of the Group. The Audit Committee reported on these topics at the Management Board concerning the utilization of retained MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 137

from l eft

M anfred h E R R E s * J u s t u s M i s c h e D r . rer . po l . A ntoni u s E ng b erding * Director of Manufacturing, Avitum Division, Chairman, Former Member of the Member of the Executive Board of IG Metall, B. Braun Melsungen AG, Melsungen Management Board of Hoechst AG, Kelkheim Head of Business Management, Frankfurt / Main

D r . rer . nat. j O AC h im s C h ne l l b A R b ara b R A u n - L ü dic k e E k k e h ard R i s t * Former Vice Chairman of the Management Businesswoman, Melsungen Chairman of the Workers’ Council of Aesculap AG, Board of B. Braun Melsungen AG, Melsungen Mahlstetten s O N j a s I E w ert * P eter h O h mann * Member of the Workers’ Council of P rof. D r . rer . po l . T h oma s R ö dder Vice Chairman, Chairman of the Workers’ Council B. Braun Melsungen AG, Rotenburg/Fulda Tax Advisor and Certified Public Accountant, of B. Braun Melsungen AG, Melsungen Partner, Flick Gocke Schaumburg, Bonn Prof. Dr. med. Dr . Ing . Dr . h. c. E de ltra u d G l ä n z er * M ic h ae l u N G E T h ü m D r . h . c . A u g u s t O et k er Member of the Managing Board of IG BCE, Former Vice Chairman of the Management Partner, Dr. August Oetker KG, Bielefeld Hanover Board of B. Braun Melsungen AG

* elected by the employees

earnings. In accordance with Section 312 of the German Stock The Supervisory Board concurs with the results of the auditor’s Corporation Act (AktG) the Management Board issued a review and has raised no objections to the Management report on the relationships with affiliated companies for fiscal Board’s conclusion. The Supervisory Board would like to thank year 2010. The Supervisory Board examined this report and the Management Board for the excellent and successful raised no objections. The auditor reviewed the report and collaboration, and all employees of the B. Braun Group for issued the following audit opinion: their contributions in the period under review.

“Having conducted our mandatory audit and analysis, we hereby confirm that Melsungen, March 2011 1. the information contained in the report is correct, The Supervisory Board 2. payments made by the company for the legal transactions detailed in the report were not unreasonably high.” 138

glossary

A phere sis EMA S See “Extracorporeal blood treatment.” Abbreviation for Eco Management and Audit Scheme, also known as an eco-audit. EMAS was developed by the European Union and A s set- bac k ed sec uritie s (A BS) consists of environmental management and an environmental Bonds or notes secured by accounts receivable. audit for organizations that want to improve their environmental performance. BRIC countrie s BRIC is the acronym for Brazil, Russia, India, and China. EN IS O 9 0 01 An international standard that establishes globally recognized C apti v e requirements for quality management systems. An insurance company owned by the Group providing coverage for the Group’s own risks. EN IS O 14 0 01 An international environmental management standard that C enter s of E xcel l ence (C oE) establishes globally recognized requirements for environmental Centers within the global B. Braun organization, incorporating management systems. research, development, manufacturing and marketing for specific product groups. Entera l nu trition Supplying nutrients by sip- or tube-feeding via the gastrointestinal DEHP tract. Abbreviation for Di(2-ethylhexyl)phthalate. DEHP is a plasticizer used in the manufacturing of articles made of PVC. E x tracorporea l blood treatment Blood treatment taking place outside the body using an “artificial Dia ly sis kidney” (dialysis machine) that is connected directly to the blood- A blood cleansing process used in the treatment of kidney failure. stream.

DIHK FDA Abbreviation for the Deutscher Industrie- und Handelskammertag Abbreviation for the Food & Drug Administration. The FDA is the (Association of German Chambers of Industry and Commerce). US agency that regulates the safety of food and health-related The DIHK is the umbrella organization for the German Chambers products. of Industry and Commerce and represents the interests of German trade and industry with respect to political decision-makers. hEMODI A ly sis A special blood cleansing process that utilizes the principle of EBIT osmosis, i.e. the equalization of concentrations of small-molecule Key performance indicator. Acronym for Earnings Before Interest substances in two liquids separated by a semi-permeable membrane. and Taxes. H y perglycemia EBITDA A medical condition characterized by excessively high blood sugar. Key performance indicator. Acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. Inter v entiona l Interventional diagnosis and treatment procedures are intended to EBI T DA margin positively influence the progression of a condition through targeted Key performance indicator. EBITDA as a percentage of sales. intervention. MANAGEMENT b oard | j o u rna l | gro u p management report | C on s o l idated F inancia l s T A T E M E N T s 139

I V T it l e 21 of t he C ode of Federa l Regul ations Abbreviation for intravenous. An application technique for the A section of the US law relating to food and drugs. administration of a drug, fluid, or suspension into a vein. VCI IMF Abbreviation for the Verband der Chemischen Industrie (German Abbreviation for the International Monetary Fund. The IMF is a Chemical Industry Association). The VCI, based in Frankfurt am Main, United Nations organization based in Washington, DC in the USA. Germany represents the economic interests of German chemical companies. MRP s Abbreviation for the Multi- Resistant Pathogens. MRPs are bacteria WL AN or viruses that do not respond to a vast number of antibiotics or Abbreviation for Wireless Local Area Network. antivirals. Work ing capita l OHS A S 180 01 Key performance indicator. Inventories plus current trade accounts Abbreviation for Occupational Health and Safety Assessment Series. receivable less current trade accounts payable. OHSAS 18001 is a standard that establishes globally recognized requirements for occupational health and safety management systems.

Os teoart hritis Osteoarthritis is a condition in which inflammation spreads from the bones to a joint.

Os teoporosis A common age-related bone disorder. Bone density decreases as the structure and substance of bones are damaged, which increases susceptibility to fractures.

Parentera l nu trition Supplying nutrients intravenously by bypassing the gastrointestinal tract.

P ubl ic- pri vate partner ship A cooperative arrangement between public institutions and private entities for the fulfillment of public duties (semi-privatization). s T EN T A medical implant (vascular support) introduced into a blood vessel to keep it open and prevent occlusion. 6

B. BrauN aT a GLaNCe HiGHLiGHTS 2010

S B. Braun Medical international S.L., Havana, Cuba is Depreciation and amortization of Property, Plant and equipment t A G

OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 IGH

l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0 IGH

B. Braun avitum 475 Hospital Care 2,087 R A U N A employees (as of December 31, 2010) 41,666 39,504 5.5 H

Other 26 B . B aesculap 1,281

Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region Gross profit 2,081.1 47.1 1,876.8 46.6 10.9

Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39,504 DeC 31, 2010 totAl: 41,666 B. BrauN aT a GLaNCe HiGHLiGHTS 2010

S B. Braun Medical international S.L., Havana, Cuba is Depreciation and amortization of Property, Plant and equipment t A G

OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 IGH

l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0 IGH

B. Braun avitum 475 Hospital Care 2,087 R A U N A employees (as of December 31, 2010) 41,666 39,504 5.5 H

Other 26 B . B aesculap 1,281

Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region Gross profit 2,081.1 47.1 1,876.8 46.6 10.9

Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39,504 DeC 31, 2010 totAl: 41,666 Imprint

Published by B. Braun Melsungen AG Werkanlagen Pfieffewiesen Europagebäude 34212 Melsungen Germany Tel. +49 (0) 56 61-71- 0 Fax +49 (0) 56 61-71-45 67 www.bbraun.de

F or f ur t her inf ormation 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]

Dis c l a imer The annual report is published in German and English. In the event of a discrepancy, the German version takes precedent. DAS UNTERNEHMEN | KONZERNLAGEBERICHT | KONZERNABSCHLUSS | LOREM IPSUM 9

SHariNG e xPerTiSe. Cre aTiNG vaLue. Annual Report 2010

B. BrauN aT a GLaNCe Five-yearHiGHL OverviewiGHTS 2010

Key figures Sales 2006 2007JANUARy The2008 number of B. Braun2009 employees 2010reaches JUNe Medical training on the island of the Gods: € million € millionan unprecedented€ million 40,000.€ million € million B. Braun Medical indonesia begins operations at the asia Sales by region | IN € mIllIoN Sales 3,321.4 3,572.9 3,786.4 4,028.2 4,422.8 Pacific Surgical Training Center in Bali. 2010 2009 Change in % Cost of Goods Sold 1,781.2 1,898.3 2,029.6 2,151.4 2,341.7 Manufacturing begins in Switzerland: The new facility Germany 878 in Crissier will manufacture approximately 12 million Gross Margin (in %) 47.1 46.6 Functional expenses 1,205.0 1,297.1 1,366.2 1,432.3 1,595.9 europe & africa 1,692 empty bags for clinical nutrition annually. Net Margin after Taxes (in %) 6.3 5.9 Selling expenses 904.4 972.9 1,031.2 1,091.1 1,218.9 asia & australia 616 (without Germany) eBiTDa (in € million) 700.5 620.5 12.9 General and administrative expenses 194.8 207.9 204.7 202.1 221.6 eBiTDa Margin (in %) 15.8 15.4 research & Development expenses 105.8 116.2 130.3 139.1 155.4 Latin america 296 equity ratio (in %) 42.3 40.8 Interim profit 335.2 377.6 390.6 444.5 485.2 North america 940 equity ratio including Loans from Shareholders (in %) 43.3 41.8 operating profit 305.5 348.7 345.7 410.6 456.2 Net Financial Debt (in € million) 1,183.5 945.7 25.1 profit before taxes 243.4 283.0 268.8 336.1 389.6 totAl € 4.423 mIllIoN Net Financial Debt/eBiTDa 1.7 1.5 10.8 Consolidated AnnualApRI Netl B. p Braunrofit is named Germany’s “Top181.8 engineering 217.7 185.1 239.6 277.4 oC toBeR B. Braun’s Czech subsidiary creates a new e eBItDA employer 2010.” 490.7 535.9 545.8 620.5 700.5 meeting place: a café in the “House of Medicine” in investments in Property, Plant and equipment

Sales by division | IN € mIllIoN ANC Prague. The café was designed by renowned Czech and intangible assets (in € million) 575.4 454.8 26.5 l The new B. Braun office in Havana opens for business. 2 0 1 0 architect eva Jiřičná. Assets 3,025.3 3,332.1 3,708.0 3,975.1 4,686.1

S B. Braun Medical international S.L., Havana, Cuba was Depreciation and amortization of Property, Plant and equipment t A G

OPM 555 t established by the Spanish holding company B. Braun and intangible assets (in € million) 238.2 208.6 14.2 intangible assets (incl. Goodwill) 113.4 124.3 157.1 167.9 218.6 IGH

l Medical international SL , rubí, Spain. Personnel expenditure (in € million) 1,581.7 1,424.9 11.0 Property, Plant and equipment 1,312.1 1,435.8 1,698.7 1,926.8 2,305.0 IGH B. Braun avitum 475 Hospital Care 2,087 R A U N A inventories 645.9 709.7 726.7 708.5 780.0 employees (annual average) 41,666 39,504 5.5 H

Other 26 B . B Trade accounts receivable 672.7 738.0 767.6 790.1 933.5 equity 1,088.0 1,255.3 1,389.7 1,620.0 1,984.0 aesculap 1,281 liabilities 1,937.3 2,076.8 2,318.3 2,355.1 2,702.0 Pension Obligations 440.9 456.9 470.4 491.8 513.3 income structure Financial Liabilities 798.7 895.7mAy The 1,094.5B. Braun Group and1,006.4 its employees 1,233.4around DeCemBeR The Supervisory Board elects Dr. Heinz- totAl € 4.423 mIllIoN Trade accounts Payable 159.7 177.4the world donate179.2 € 230,000 to210.3 help build a hospital216.8 in walter Große to succeed Prof. Dr. h.c. Ludwig Georg earthquake-ravaged Haiti. Braun, who will retire on March 31, 2011. Otto-Philipp 2010 2009 Change Braun and Dr. annette Beller are appointed to the in % employees Investments in property, plant and a new factory for surgical instruments is opened in € million % € million % Management Board. equipment and Intangible Assets 293.8 349.4radzyń Podlaski,471.0 Poland. 454.8 575.4 Sales 4,422.8 100.0 4,028.2 100.0 9.8 Depreciation and Amortization of property, Cost of Goods Sold 2,341.7 52.9 2,151.4 53.4 8.8 employees by region plant and equipment and Intangible Assets 181.4 182.9 197.8 208.6 238.2 Gross profit 2,081.1 47.1 1,876.8 46.6 10.9

Selling expenses 1,218.9 27.6 1,091.1 27.1 11.7 12,663 personnel expenditure 1,210.1 1,271.4 1,339.8 1,424.9 1,581.7 12,157 General and 12,000 11,251 employees (annual average) 33,127 35,810 37,601 38,512 40,316 10,672 administrative expenses 221.6 5.0 202.1 5.0 9.7 9,243 research and 9,000 8,265 2 0 10 Development expenses 155.4 3.5 139.1 3.5 11.7 t R Interim profit 485.2 11.0 444.5 11.0 9.1 6,000 5,486 5,486

Other Operating income R e p o COMPa N y P rOF iL e and expenses 2,924 3,023 l – 29.0 – 0.7 – 34.0 – 0.8 14.5 3,000 B. Braun is one of the world’s leading providers of healthcare solutions. operating profit 456.2 10.3 410.6 10.2 11.1 NNUA Through its Hospital Care, aesculap, Out Patient Market, and B. Braun Net Financial income (Loss) – 66.6 – 1.5 – 74.5 – 1.8 10.6 A

avitum Divisions, the company supplies medical products and services | profit before taxes 389.6 8.8 336.1 8.3 15.9 to hospitals, physicians in private practice, and the homecare market. Germany europe & africa North america Latin america asia & australia income Taxes 112.3 2.5 96.5 2.4 16.3 ( without Germany) B. Braun project manager Cristina Molina (pictured), at the Pharmaceu-

Consolidated Annual Net profit 277.4 6.3 239.6 5.9 15.8 DeC 31, 2009 totAl: 39.504 DeC 31, 2010 totAl: 41.666 ticals Center of excellence, is overseeing the development of the new

3 0 0 2 010 3 B . B R A U N LiFe Nutrition production facility in Melsungen, Germany. 10

SHariNG e xPerTiSe. Cre aTiNG vaLue. Annual Report 2010

Five-year Overview

t R R e p o

COMPa N y P rOF iL e l B. Braun is one of the world’s leading providers of healthcare solutions.

NNUA Through its Hospital Care, aesculap, Out Patient Market, and B. Braun A

avitum Divisions, the company supplies medical products and services | to hospitals, physicians in private practice, and the homecare market.

B. Braun project manager Cristina Molina (pictured), at the Pharmaceu- ticals Center of excellence, is overseeing the development of the new

3 0 0 2 010 3 B . B R A U N LiFe Nutrition production facility in Melsungen, Germany.