Sharing Expertise. Promoting Partnership

SHAriNG e XPerTiSe. PrOMOTiNG PArTNerSHiP. Annual Report 2011

Five-yeAr Overview

2007 2008 2009 2010 2011 € million € million € million € million € million Sales 3,572.9 3,786.4 4,028.2 4,422.8 4,609.4 Cost of Goods Sold 1,898.3 2,029.6 2,151.4 2,341.7 2,471.2 Functional expenses 1,297.1 1,366.2 1,432.3 1,595.9 1,688.0 Selling expenses 972.9 1,031.2 1,091.1 1,218.9 1,277.2 General and Administrative expenses 207.9 204.7 202.1 221.6 230.9 research & Development expenses 116.2 130.3 139.1 155.4 179.9 Interim profit 377.6 390.6 444.5 485.2 450.3 operating profit 348.7 345.7 410.6 456.2 432.2 profit before taxes 283.0 268.8 336.1 389.6 360.2 Consolidated Annual Net profit 217.7 185.1 239.6 277.4 255.7 eBItDA 535.9 545.8 620.5 700.5 688.5

Assets 3,332.1 3,708.0 3,975.1 4,686.1 5,105.7 intangible Assets (incl. Goodwill) 124.3 157.1 167.9 218.6 268.0 Property, Plant and equipment 1,435.8 1,698.7 1,926.8 2,305.0 2,541.7 inventories 709.7 726.7 708.5 780.0 833.4 Trade Accounts receivable 738.0 767.6 790.1 933.5 1,016.3 equity 1,255.3 1,389.7 1,620.0 1,984.0 2,183.5 liabilities 2,076.8 2,318.3 2,355.1 2,702.0 2,922.1 Pension Obligations 456.9 470.4 491.8 513.3 533.2 Financial Liabilities 895.7 1,094.5 1,006.4 1,233.4 1,401.7 Trade Accounts Payable 177.4 179.2 210.3 216.8 219.7

Investments in property, plant and equipment and Intangible Assets 349.4 471.0 454.8 575.4 541.4 Depreciation and Amortization of property, plant and equipment and Intangible Assets 182.9 197.8 208.6 238.2 252.9 personnel expenditures 1,271.4 1,339.8 1,424.9 1,581.7 1,648.9 employees (annual average) 35,810 37,601 38,512 40,316 42,739 2 0 11 t R R e p o

COMPAN 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.

Training instructor Dirk Schmoll and apprentice Melissa Piskorsch examine components of a printed circuit board assembly at B. Braun’s

3 0 0 2 0113 B . B R A U N new training center in Melsungen, Germany. Consolidated AnnualNet profit income Taxes profit before t Net Financial income(Loss) operating profit and expenses Other Operating income Interim profit Development expenses research and Administrative expenses General and Selling expenses Gross profit Cost ofGoodsSold Sales income Gross Margin(in%) Key B. Br employees (asofDecember31, 2010) Personnel expenditures (in and intangible Assets(in Depreciation andAmortizationofProperty, Plantand equipment and intangible Assets(in investments inProperty, Plantand equipment Net FinancialDebt/ Net FinancialDebt(in equity ratio includingLoansfromShareholders(in%) equity ratio (in%) e e Net MarginafterTaxes (in%) B B i i TDA TDA

Margin(in%) (in performance € million) A

axes u structure e N AT A GLANC B i € TDA million) € € million) million) € million)

indicators € million 2,138.3 1,277.2 2,471.2 4,609.4 255.7 360.2 432.2 450.3 – 72.0 – 18.2 104.4 179.9 230.9 2011 e 100.0 46.4 – 1.6 – 0.4 27.7 53.6 5.5 7.8 9.4 9.8 2.3 3.9 5.0 % € million 2,081.1 1,342.9 1,218.9 2,341.7 4,422.8 1,648.9 43,676 277.4 389.6 456.2 485.2 – 66.6 – 29.0 541.4 688.5 112.3 155.4 221.6 252.9 2011 43.8 42.8 14.9 46.4 2.0 5.5 2010 1,183.5 1,581.7 41,322 575.4 700.5 100.0 238.2 2010 10.3 11.0 47.1 – 1.5 – 0.7 43.3 42.3 15.8 47.1 27.6 52.9 6.3 8.8 1.7 6.3 2.5 3.5 5.0 % Change Change – 37.4 in % in % – 7.8 – 7.6 – 5.3 – 7.2 – 5.9 – 1.7 – 7.0 13.5 15.7 2.7 8.2 4.2 4.8 5.5 4.2 5.7 4.2 6.2

e e Sales Sales 568 OPM 1,356 Aesculap 25 Other B. Braun 501 Avitum 311 America Latin 691 &Australia Asia 915 Germany Sales 12 mployees 3 6 9

mployees De , , , , 000 000 000 000 C

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m I ll 5 I , ll 411 I o I o N N America Latin 3 , 023 3 , 094 Germany) (excluding e 1,784 &Africa urope 2,159 Care Hospital 908 America North &Australia Asia 9 , 261 10 , 479

B . B R A U N A t A G l ANC e

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cutting area Sales e e Consolidated AnnualNet profit income Taxes profit before t Net Financial income(Loss) operating profit and expenses Other Operating income Interim profit Development expenses research and Administrative expenses General and Selling expenses Gross profit Cost ofGoodsSold income employees (asofDecember31, 2010) Personnel expenditures (in and intangible Assets(in Depreciation andAmortizationofProperty, Plantand equipment and intangible Assets(in investments inProperty, Plantand equipment Net FinancialDebt/ Net FinancialDebt(in equity ratio includingLoansfromShareholders(in%) equity ratio (in%) Net MarginafterTaxes (in%) Key B. Br Gross Margin(in%) B B i i TDA TDA

Margin(in%) (in performance € million) A

axes u structure e N AT A GLANC B i € TDA million) € € million) million) € million)

indicators € million 2,138.3 1,277.2 2,471.2 4,609.4 255.7 360.2 432.2 450.3 – 72.0 – 18.2 104.4 179.9 230.9 2011 e 100.0 46.4 – 1.6 – 0.4 27.7 53.6 5.5 7.8 9.4 9.8 2.3 3.9 5.0 % € million 2,081.1 1,218.9 2,341.7 4,422.8 1,648.9 1,342.9 43,676 277.4 389.6 456.2 485.2 – 66.6 – 29.0 112.3 155.4 221.6 252.9 541.4 688.5 2011 43.8 42.8 14.9 46.4 5.5 2.0 2010 1,581.7 1,183.5 41,322 100.0 238.2 575.4 700.5 2010 10.3 11.0 47.1 – 1.5 – 0.7 27.6 52.9 43.3 42.3 15.8 47.1 6.3 8.8 2.5 3.5 5.0 6.3 1.7 % Change Change – 37.4 in % in % – 7.8 – 7.6 – 5.3 – 7.2 – 7.0 – 5.9 – 1.7 15.7 13.5 2.7 4.2 8.2 4.2 4.8 5.5 5.7 4.2 6.2

e e 1,356 Aesculap 25 Other B. Braun 501 Avitum 568 OPM Sales 311 America Latin 691 &Australia Asia 915 Germany Sales Sales 12 mployees 3 6 9

mployees De , , , , 000 000 000 000 C

by by 31,

division region 2010

by 10

t region , Germany 907 ot

| A

| l:

IN 11

IN 41,322 € , 498

€ m

m I ll I

ll I o I N o N (

Germany) excluding e De 12 &Africa urope C , 645

31,

2011 13 , 194 t t ot ot t ot A A l: l A

€ 43,676

€ 4,609,4

4,609,4 America North 5 2011 2011 , 486

m I ll 5 I , ll 411 I o I o N N America Latin 3 , 023 3 , 094 Germany) (excluding e 1,784 &Africa urope 2,159 Care Hospital 908 America North &Australia Asia 9 , 261 10 , 479

B . B R A U N A t A G l ANC e

H IGH l IGH t S 2 0 11 Hi of theManagementBoardsucceeding pointed Georg Ap Board. GHL RI l

Braun, Dr.

Dr. Heinz-w to

Annette the i H S GHT

who Management

is Beller alter Große(center)becomesChairman

now

and

Chairman

2011 Board.

Otto

Philipp

of Prof. Dr. h. c.

the

Braun

Supervisory

are Ludwig

ap-

lysis symbolic is to which, Fe J solutions. approximately Shipping standard cities At UN

investing BRUAR mark our e solutions

if Timisoara dia for plant production anew of Construction

the Kassel placed

iv ground-breaking that B. Braun y

approximately expansion solutions The

quantity in the

and end

location Glandorf, billionth

invested same

to Munich.

end, is

would

distance produced

the

„ would € 4 ceremony. € 50 Germany e r coflac omania,

million to production require

million

measure between

in plus“

commences i

the a n 29,000

ceremony expand total,

container

522

this L facility the i F e

kilometers location. B. Braun German trucks, facility. the

with

for is

plant.

for held - iv

a , invested B. Braun‘s oC for The in class. A B. Braun open operations, UGUS

the

the offices

B. Braun B center

manufacture e t

Belgrade,

Adria R € 32.6

new

The of to German .

B. Braun‘s coincide

has new

factory S million r

Serbia. B

invested

training

DOO

Chancellor of

with iv in in

newly . The

new Hanoi, sets.

approximately the center

new

production established

start Angela v

company

ietnam. in

of Melsungen

Merkel a

new

facilities

B. Braun € 6.5 subsidiary is

called

training

dedicates

million begins

there has

and specializes tem Sep of Ara

high gon

fusion

Surgical, frequency B

in (cut & seal). R

electrosurgical B. Braun‘s

surgical

American

Aesculap

instruments.

solutions

firm

active Division

for

The tissue in

the acquires

company

cutting area SHAriNG e XPerTiSe. PrOMOTiNG PArTNerSHiP. Annual Report 2011

Five-yeAr Overview

COMPAN 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.

Training instructor Dirk Schmoll and apprentice Melissa Piskorsch examine components of a printed circuit board assembly at B. Braun’s

3 0 0 2 0113 B . B R A U N new training center in Melsungen, Germany. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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. PROMOTING PARTNERSHIP.

Achieving pe a k perf orm a nce is not something you c an do on your own. The ongoing exchange be t ween physicians, he althc are personnel and patient s help s us to continua lly improve lives, whether through r e s e a rch or through da ily in t e r ac t i o n w i t h o u r c o l l e ag ue s a nd business pa r t ne r s . O ur c o r p o r at e culture is b a sed on the firm belief th at fa ir a nd rel ia bl e pa rtnerships le a d to the best results a nd i t h a s been t h at way for over 170 ye a r s . 2

c ONTENT

04 08 management board journal

Foreword 4 Partner in qualit y 8

Management Board 6 Partner in science 14

Partner in progress 20

Partner in grow th 26 3

32 68 group management report Consolidated Financial Statements

At a gl ance 34 Consolidated Statement of income (Loss) 70

The B. Braun Group 35 Consolidated Statement of FINANCIAL POSITION 71

Economic environment 42 Notes 75

Business and earnings performance 44 Independent Auditors’ Report 137

Financial position and assets 51 Ma jor Shareholdings 138

Personnel report 55

Risk and opportunities report 58 SUPERVISORY BOARD REPORT 142

Subsequent E VENTS 62 glossary 144

Outlook 62 Imprint 146 4

DR. RER. POL. Heinz-Walter Grosse, Chairman of the Management Board. m a n a GE M E n t bo a rd | j o u r n a l | gro u p m a n a ge m e n t repor t | C o n s ol i d a t ed F i n a n c i a l S t a t e m e n t s 5

f O R E W O R D

Foreword

P ro m ot in g pa r t ner ship

Dear Reader,

In this report, we look back at a period which in B. Braun's 173rd year of existence has once again been marked by growth. The increase in our sales met our expectations. Earnings were influenced by the start-up costs for our new factories, currency fluctuations and cost reduction measures introduced by public sector healthcare purchasers. Nevertheless, with an annual net profit of € 256 million, we are able to report the second best year in the company's history.

Overall, B. Braun is well positioned. The new Management Board, appointed in April 2011 and the Group's nearly 44,000 employees can look to the future with great confidence. Over the past five years, we have invested € 2.4 billion worldwide – both in new factories and the expansion of existing ones, laying the foundation for a successful and bright future.

The theme of this annual report, "Sharing expertise. Promoting partnership.", is important to us. It is one of B. Braun's recipes for success as we not only see ourselves as a partner to hospitals, physicians and healthcare personnel but also take responsibility for patients. In our 2011 annual report, we give numerous examples of this collaboration to advance our mutual goal of a healthy society. We show, in one example, how training clinicians in the Philippines helps to reduce the risks associated with infusion therapy and in another example, we demonstrate our sterilization services for hospitals.

As a family company, B. Braun is committed to sustainability both from a business perspective and as a good corporate citizen. For the Braun family, securing a successful future for the company and its employees remains essential. We will continue to manage the company in a responsible and reliable manner. Based on our values of innovation, efficiency and sustainability, our company is characterized by transparency, trust and mutual respect.

I would like to take this opportunity to thank our customers and employees for our achievements over the past year and ask for your continued support for a strong and growing partnership with our company.

I trust you will find this report interesting.

Yours sincerely,

Dr. rer. pol. Heinz-Walter Große Chairman of the Management Board of B. Braun Melsungen AG Management Board

Otto Philipp Braun Dr. rer. pol. Dr. rer. pol. Heinz-Walter GroSSe Annette Beller Region Iberian Peninsula and Latin America Chairman of the Management Finance, Taxes and Controlling, Board, Human Resources, Legal Central Service Departments Affairs and Director of Labor Relations MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s

Dr. rer. nat. Caroll H. Neubauer, LL.M. prof. Dr. med. Dr. rer. NAT. Meinrad Lugan Hanns-Peter Knaebel Wolfgang Feller Region North America Hospital Care and Aesculap Division B. Braun Avitum Division OPM Divisions Partner in quality

S t e r i l e P r o c e s s i n g D e pa rtments do vita l w o r k b e h i n d the scenes in our hospita l s . S t. L u k e ’ s H o s p i ta l & H e a lt h N e t w o r k i n B e t h l e h e m , P e n n s y lva n i a , u s A i s m a k i n g s u r e i t s d e pa rtments function optim a lly – with support from B . B r a u n A e s c u l a p C o n s u lt i n g . MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s 10

Dr. Marc Granson, Chief of Surgery, St. Luke’s Hospital Bethlehem.

Dr. Marc Granson is a likeable man with a serious Mary Lou Gensits, Director of Supply Chain Logistics commitment to best practice surgical processing and for St. Luke’s Hospital & Health Network, knows exactly patient outcomes. The congenial Chief of Surgery at how the SPD works. The network encompasses a total St. Luke’s Hospital & Health Network is giving us a of six hospitals, five hospitals in Pennsylvania and one guided tour of this busy, working hospital. Originally in New Jersey. “Sterile supplies are a logisti-cal chal founded in 1872, the hospital has undergone a number lenge that we have to meet on a daily basis to ensure of renovations and expansions over the years and is that everything at the hospitals runs smoothly,” ac both comfortable and clean. At the word “clean,” Dr. cording to Ms. Gensits. To improve SPD processes in the Granson’s friendly face takes on a more serious ex St. Luke’s network, she was responsible for setting up pression: “Hygiene and cleanliness are of the utmost this collaborative project with a consulting team from importance in order to protect patients and staff from B. Braun Aesculap. More on that later. infection.” This is true of all departments within the hospital, but one department that works behind the First, we went to see how the sterile supply cycle actu scenes, out of sight of patients and most hospital staff, ally works in practice. It begins in the operating room. plays a key role in assuring this: the Sterile Processing The instruments and medical devices are collected and Department (SPD), also known as Central Sterile Sup brought to the “contaminated zone” of the SPD. The ply Department (CSSD). These departments are often staff wear aprons, gloves, protective goggles, surgical located in the basements of hospitals or in an external caps, and special footwear to prevent the spread of building. Their role is to keep the operating rooms (OR) bacteria. Initially, the job involves pure manual labor. supplied with clean, sterile medical devices and instru With utmost concentration, all the surgical instru ments in particular, including the clamps, scissors, ments are disassembled, cleaned with brushes and dis screws, wires, hooks, and countless other instruments infectant, and bathed in special solutions. “Our spe that surgeons and OR staff need for their daily work. cialist employees have to remove dried-on residue and MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

p A r tne r i n q u a l i t y

“Hygiene and cleanliness are of the utmost importance in order to protect patients and staff from infection.”

Dr. Marc Granson

90°Celsius at a temperature of 90 ° Cel sius, the instrument sets and l arger medical devices are thoroughly cleaned, thermally disinfec ted and then dried.

The medical devices are sorted into sterilized instrument trays.

carefully rinse endoscopic instruments thoroughly with from top to bottom with an expert eye. SPD Supervisor water,” Ms. Gensits explains. This manual pre-clean Jamie Hinkle is clearly not happy with the condition of ing stage is followed by mechanical cleaning and dis a small pair of scissors and sets them apart from the infection in a machine much like a large dishwasher. others. “Damaged instruments are either repaired or Nozzles deliver a metered dose of detergent and water replaced by Aesculap,” Ms. Hinkle explains. The ins (fully demineralized if possible to prevent corrosion). truments and medical devices are now arranged into Here, the instrument sets and larger medical devices, sets, as required for specific operations, and placed such as power equipment, are thoroughly cleaned into dedicated instrument trays. The contents of the once more, thermally disinfected at a temperature of tray are covered by non-woven fabric or sealed in a 90 ° Celsius, and then dried. The machine then con sterile container that resembles an aluminum case veys them to the strictly separated “clean zone.” from the outside. B. Braun Aesculap is a world-leading The employees in this zone check the cleanliness and manufacturer of these containers that offer the functionality of the instruments by examining them premium quality St. Luke’s Hospital relies upon. The 12

“With Aesculap’s help, we are both increasing productivity and, at the same time, improving patient safety. And this meets our idea of sustainability.”

Mary Lou Gensits

sterilization now begins. All the air is removed from five hospitals in 2010, we decided to take the oppor the container and the instruments are steam sterilized tunity to optimize our supply of sterile instruments.” at high pressure (around 3 bar) and temperatures The Consulting division of B. Braun Aesculap is a spe of 134 ° Celsius to remove all microorganisms. “The cialist in efficientSP D processes. Working with a team container must remain closed. We use technical pa of experts from Germany, employees from Aesculap’s rameters or chemical indicators to verify whether or Pennsylvania base in the US wanted to turn St. Luke’s not sterilization was successful,” explains Ms. Gen into a model project. Janelle Begole, Director Corporate sits. If so, the surgical instruments can be stored in a Accounts at Aesculap, explains their direction for the sterile condition and transferred to the OR for later project: “The six hospitals in the network wanted to use. They are released for use before the operation, leverage the benefits of a centralized SPD – and if which brings the cycle to a close. possible use standardized processes and high quality instruments at a single site.” The six hospitals had We encounter Dr. Granson once more in front of the different backgrounds and, therefore, also different OR. Although none of the hospitals in the St. Luke’s approaches to the supply of sterile instruments. Dr. network have experienced any serious incidents (such Granson, who works as a vascular surgeon at all of the as infections due to surgical instrument contamina hospitals, explains the problem: “I don’t like any sur tion) to date, Dr. Granson and Ms. Gensits both agree prises when I am working, such as finding unfamiliar that there is still some room for improvement in SPD clamps in the OR.” Standardization was the ultimate processes. He explains with a note of concern: “It is goal, but change of this magnitude cannot happen over conceivable that a tray might not be assembled cor night. rectly, for instance, and be missing an instrument that I need during an operation.” This was, however, just The herculean task facing Aesculap Consulting began one of the many reasons the hospital management de with a precise audit of all the medical devices and cided to call upon the professional support of B. Braun. instruments at all the hospitals. This involved a thor To explain what prompted the large-scale project, Don ough inventory, determining the status of the instru Seiple, Vice President Operations at St. Luke’s stated: ments (i. e., whether they required repair or recondi “Having initially expanded our network from four to tioning, or completely replacing), determining which MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

p A r tne r i n q u a l i t y

min17us percent During the audit at the hospital in Bethlehem, the Aescul ap experts found that the 14,770 medical devices originally counted could be reduced by 17 percent.

Mary Lou Gensits, Director of Supply Chain Logistics, St Luke’s Hospital & Health Network.

devices, materials, processes, and control mechanisms processes at the Allentown hospital: Investigations the SPD employees had used to date, and checking revealed that the water quality was not optimal due whether any dedicated software had been used for to its high mineral content, which resulted in varying managing and documenting processes (e. g. how and types of instrument damage. Based on the results, when particular instruments were cleaned and pack Aesculap offered a solution for purifying the water to aged and by which employees). Employee training the optimal quality level. All parties are very pleased was also evaluated and, last but not least, the cost of with the on-going cooperation. Commenting on the the planned changes. One of the benefits from this progress so far, Ms. Gensits said: “With Aesculap’s extensive project is that during the audit at the hospi help, we are both increasing productivity and, at the tal in Bethlehem, the Aesculap experts found that same time, improving patient safety. And this meets the 14,770 medical devices originally counted could our idea of sustainability.” be reduced by 17 percent, bringing considerable cost savings. Another example relates to the analysis of Partner in science

E v e r y d ay a round the world, people a re dying from infections c a used by multidrug-resista n t o r g a n i s m s ( m d r o s ) – a n d t h e t h r e at is growing. consistent hygiene, pa r t i c u l a r ly w i t h t h e P r o n t o d e r m S ystem from B . B r a u n o p m f o r i n s ta n c e , i s t h e most effective me a ns of preventing the spre a d of these da ngerous b a c t e r i a . MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s A 216

“We know, for ex ample, that MRSA is primarily transmitted by hand contact and therefore, act accordingly to prevent transmission.”

Ruth Dallig, Hygiene Specialist, Marienkrankenhaus Kassel

The waiting room at the ER outpatient clinic of Marien Hygiene (DGKH). Frightening stories about deadly krankenhaus, Kassel, Germany is at full capacity. It is hospital-acquired infections, in Neonatal Intensive clear from the faces of most of those waiting that they Care Units for instance, have abounded over recent are not feeling well. Some arrive in such a serious times. According to World Health Organization esti condition that they have to be rushed immediately to mates, around 25,000 deaths a year in the European the intensive care unit. It is also often the case that Union alone are caused by MDROs. Other estimates patients unwittingly bring with them some particularly are much higher. unwelcome guests: tiny, microscopic organisms in visible to the naked eye and therefore all the more dan Antibiotic resistance is a natural phenomenon: Bacteria gerous. These are known as multidrug-resistant organ are constantly evolving and learning how best to fight isms (MDRO), bacteria that are able to survive exposure the drug that is trying to kill them – until the antibiotic to most antibiotics. It was more than a century ago eventually becomes ineffective. The indiscriminate that antibiotics first began their triumphal march in the use of antibiotics – one of the most commonly pre fight against infection. Today, however, it is becoming scribed forms of medication around the world – only increasingly common to hear healthcare experts talk of serves to exacerbate this. “Antibiotics are often pre the start of a “post-antibiotic era,” an era in which scribed for viral infections where their use is not ben antibiotics can no longer be used effectively to combat eficial. However, even where use is indicated, choosing many infections. A particularly notorious superbug, inappropriately, a failure by the patient to take the Methicillinresistant Staphylococcus aureus (MRSA), has antibiotic as prescribed, or an excessive length of ad evolved into a multidrug resistant organism. It is pri ministration can result in the survival and eventual marily found in the nose and throat and is relatively resistance of bacteria that were not affected by the harmless in healthy people. In hospitals and other antibiotic,” explains Prof. Axel Kramer, Director of healthcare environments, however, it can cause dan the Institute for Hygiene and Environmental Medicine gerous infection and is a risk that must be taken seri (IHU) at Greifswald University in Germany. Scientists ously. For example, it can be very harmful if it enters have also found a connection between the use of anti the body through damaged skin or mucosa and, in biotics in the food industry and MDROs, where anti patients with a weakened immune system, it can cause biotics are mixed with feed intended for pigs or poul life-threatening illnesses such as pneumonia or sepsis. try, for instance. Antibiotic resistance occurs most commonly in hospitals, where the use of antibiotics is “Multidrug-resistant organisms represent a serious commonplace; the exact places where sick people problem across the entire healthcare sector world go to be healed. It is in such medical establishments wide, and the increasing attention being paid to them where this invisible danger is growing. Medical pro is fully justified,” confirms Dr. Klaus-Dieter Zastrow, fessionals, nurses, and healthcare assistants also play Spokesperson for the German Society for Hospital an unwitting role as carriers and transmitters of the MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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Standard hygiene procedures are vital to stop the spread of MDRO bacteria.

harmful organisms. However, their prevalence alone “We know, for example, that MRSA is primarily trans means that many patients bring the bacteria into the mitted by hand contact and therefore, act accordingly hospital with them. Ruth Dallig, a hygiene specialist to prevent transmission,” explains Ms. Dallig. For in at Marienkrankenhaus is on the front line of this fight: stance, as soon as you enter the Marienkrankenhaus “Upon registration, all new patients are required to hospital, you see a large sign reminding you to clean complete a questionnaire, allowing us to immediately your hands, beneath which there is a B. Braun hand identify patients who are at high risk of MDRO colo sanitizer dispenser. “All staff are required to sanitize nization.” Anyone answering yes to any of the nine their hands every time they enter and leave a patient’s questions (e. g. whether they have taken antibiotics room along with a number of other hygiene proce over the previous few months), will be immediately dures which must be followed,” Ms. Dallig adds. And tested for MDRO. what if MDRO colonization should still occur despite all of these precautions? Once again, B. Braun products Science has yet to find a universal solution to MDROs. come into play. The Prontoderm System from B. Braun However, all the experts agree that standard hygiene OPM is the first complete range of innovative, ready- procedures are vital to stop the spread of bacteria. to-use products for decolonization of the skin and 18

Interview with Professor Didier Pittet

What are the factors driving antimicrobial resistance (AMR) around the world? The prevalence of antimicrobial resistance varies from country to country and vast differences can be observed even within the same country. The overuse of antibiotics is often a discernible factor in the regions and institutions affected by growing resistance. It is also often the case that infection control measures - isolation procedures, hand hygiene, and the detection of healthy carriers for instance - are simply inadequate.

Which of the multidrug-resistant organisms (MDROs) are the most dangerous? The biggest threat at present is no longer MRSA, but the newly emerging gram- negative bacteria, which are resistant to virtually every antibiotic available.

Professor Didier Pittet, Who is at highest risk of developing a life-threatening disease that responds poorly Director Infection Control to treatment? Studies from our systematic review, which appeared in the Lancet in 2011, Program & WHO Collaborating Centre on Patient Safety. found the highest prevalence among the seriously ill (the majority undergoing intensive care treatment), neonates, and infants. Oncology, dialysis, and transplant patients are also at high risk. Other risk factors include malnutrition, a weakened immune system and various concomitant diseases, long periods of hospitalization, surgery, and intravascular or urinary tract catheters.

Can you explain why the prevalence of hospital-acquired (nosocomial) infections varies between different countries?The reasons for the uneven geographic distribution of nosocomial infection rates are not entirely clear. However, the following aspects are relevant: Diagnostic practices and laboratory identification, infection control, antibiotic prescription practices, population characteristics and the composition of clinical cases in addition to cultural factors and behavior patterns. The individual country’s healthcare systems and associated political aspects are also significant contributory factors to the varying infection rates.

How can hospital-acquired infections be avoided and what is your opinion of MRE networks? The percentage of nosocomial infections that are potentially preventable under routine working conditions is not known, but could run as high as 50 percent. The greatest potential for reduction was identified for device-related infections, such as catheter-related bacteremia, whereas a smaller, but still substantial potential for prevention seems to exist for other types of infections. The most effective strategies are based on good hand hygiene, barrier precautions when setting up a central line, closed systems, and the early removal of urinary catheters in addition to the careful preparation of the skin, antibiotic prophylaxis, and the prevention of surgical infections. Prevention networks such as the WHO initiative “Clean Care is Safer Care” are success ful and offer excellent support for institutions around the world. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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24 hours After application Prontoderm produc ts create an antimicrobial barrier effect l asting up to 24

hours. Prontoderm Wipes – pre-moistened towelettes for quick and easy use.

mucous membranes. “The products from the Pronto knowledgeable advisor around the globe. Peter Pfaff, derm System can be used to eliminate microorgan B. Braun Market Manager for MDRO Projects and isms effectively and reliably from all areas of the body Networks: “What we need is a systematic approach where MDRO colonization can occur. This has been to hygiene management. If everyone involved in the clinically proven,” explains Dianne Egli-Gany, Medical healthcare sector were to cooperate and openly com Scientific Affairs Manager at B. Braun Medical AG. municate about MDRO, we could accomplish a lot.” While competitor products are classified as cosmetics For this reason, B. Braun is actively supporting the and therefore, do not have to provide evidence of establishment of regional and transregional net their efficacy, Prontoderm is a CE marked, Class III works. Ms. Dallig is a member of an MDRO network medical device approved for MDRO decolonization. that is bringing together medical professionals, Dermatological tests have also proven that Prontoderm scientists, and health department representatives in is extremely gentle on skin. This means that the pro the German region of Nordhessen: “We discuss a duct does not have to be washed off after application, range of interesting topics. For instance, who should which saves time and costs. It also creates an anti bear the costs of a comprehensive MDRO prevention microbial barrier effect lasting up to 24 hours. program?” Ultimately, healthcare researchers, provid ers, and industry all share the same goal: to develop Prontoderm is available as a ready-to-use, leave-on and implement effective intervention strategies to pre body wash solution and in nasal gel, shower gel, mouth vent the spread of MDROs. wash, cleansing foam and wipes for quick and easy use. In addition to delivering innovative products for reducing the spread of MDROs, B. Braun is also a

Partner in progress

I n f u s i o n ( i v ) t h e r a p y i s a n i n t e g r a l pa r t o f h e a lt h c a r e p r o v i s i o n , but it is not without risk. T o keep this risk to a n a b s o l u t e minim u m , B . Br au n H o s p i ta l c A r e h a s developed Adva n c e d c A r e . A nd i t wo r k s , a s t h i s e x a m p l e f r o m m A n i l a , P hilippines demonstr at e s . MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s 22

Dr. Maria Linda Buhat, President of ANSAP (Association of Nursing Service Administrators of the Philippines), smiles and waves to us. She recognizes our small group of Central Europeans from afar in this commercial Participants in the seminar at the Aesculap Academy. district of Manila, the vibrant capital of the Philippines. The heat is stifling, with temperatures bovea 30 ° Cel sius, and there’s a cacophony of noise; the hustle and bustle of passers-by competing with a cheerful group of singers by the roadside and the rattling engines of the city’s many jeepneys (colorfully decorated US military jeeps left over from World War II and the most popular means of public transportation in the Philip 56 Nurses pines). Dr. Buhat waits patiently for us to make our way through to her. “You may have read in the newspaper In her seminar “Advanced Care that Manila is not necessarily the safest city,” she says. in Infusion therapy” Dr. Buhat “I would like to prove to you otherwise.” And to em expl ains to 56 nurses how they phasize this she says “Mabuhay!” which means a warm can reduce the risks in infusion welcome to visitors arriving in the Philippines. therapy. We are meeting with Dr. Buhat to find out more about a very different aspect of safety: the safety of patients and hospital staff during IV therapy. “Reducing therisks associated with IV therapy is of the utmost impor tance to us,” says Dr. Buhat. This is the reason she is holding one of her popular seminars today, entitled “Advanced Care in Infusion Therapy,” for 56 nurses. And it is not a coincidence that the seminar is being held at Aesculap Academy. For many years, ANSAP has enjoyed a close partnership with B. Braun. The broad- based Advanced Care initiative developed by B. Braun Hospital Care lies at the heart of this cooperation. Uwe Schneider, Vice President Global Marketing at B. Braun Hospital Care, explains: “Advanced Care is an integrated, sustainable concept that has been devel oped to assure higher safety standards in healthcare.” m a n a GE M E n t bo a rd | j o u r n a l | gro u p m a n a ge m e n t repor t | C o n s ol i d a t ed F i n a n c i a l S t a t e m e n t s 23

P a r t n er i n progre s s

Dr. Maria Linda Buhat, President of ANSAP (Association of Nursing Service Administrators of the Philippines).

It en-compasses a variety of activities, including in generally in larger quantities and over longer time ternational lobbying, hosting conferences, symposia, periods. It has, however, been a long journey to arrive and workshops, putting together brochures and a at where we are today. For centuries, it was widely website (www.safeinfusiontherapy.com) as well as the believed that bloodletting could halt the body’s natural development and roll-out of effective training courses. aging process. Enema syringes and cannula were used All parties benefit from this intensive exchange of in in ancient times, but any attempts to help sick people formation. “Only by understanding the exact user re by means of infusion were largely unsuccessful. Even quirements can we offer the best products,” emphasiz- the discovery of the circulation of the blood in the es Mr. Schneider. Today, IV therapy is standard clinical early 17th Century and invention of the sharpened practice and it is impossible to imagine life without it. hollow needle in the second half of the 19th Century Around the world, infusions are administered on a failed to bring about the much anticipated break- daily basis for patients requiring the intravenous admin- through. It was only in the 20th Century that infusion istration of medication, fluids, or nutritional formulas – finally became a standard therapeutic method, to 24

One of the seminar groups learns about the importance of needle-stick prevention.

which B. Braun made a significant contribution, with quires neither cap nor needle and has been designed countless innovations such as IV containers, pumps, to provide safe access to the infusion system. This un systems, and solutions to name just a few. assuming valve is in fact pretty impressive because, in addition to preventing the risk of needle-stick injury, it Small groups of predominately young nurses have also reduces other risks associated with IV therapy, gathered in the air-conditioned seminar room, chat such as air embolism. This is because it acts as a closed ting and laughing with one another. As Dr. Maria Linda system and prevents air from entering the patient’s Buhat enters, it is clear from her air of friendly bloodstream. Dr. Buhat drives home this important point authority that it’s time to get down to business. After by saying “This simple cap can save lives.” Another all, they have much to cover. There are many health risk associated with this treatment method is a variety risks associated with IV therapy, both for patients and of contamination types. Particle contamination can healthcare workers which can drive up healthcare occur unnoticed, for instance, if tiny shards of glass costs. Needle-stick injury undoubtedly represents one from a vial fall into the liquid contained within the of the biggest risks. The worldwide number of inci vial when it is opened. According to Dr. Buhat: “Parti dents involving healthcare workers injured by needles cles of any kind - glass, plastic, rubber, or even un or other sharp instruments (such as scalpels) is esti dissolved medication - can cause considerable harm mated to be approximately 3.5 million per year. It is to the lungs, kidney, liver, and spleen of a patient.” still often the case that such incidents occur when B. Braun has developed a range of products specifical the protective cap is being replaced onto the used can ly to combat particle contamination . These include nula. This practice is prohibited in most countries as the Intrapur and Sterifix infusion filters. It is healthcare cannulas have to be placed in special containers for workers, on the other hand, who are most at risk of disposal immediately after use. “Of course, the con chemical contamination; through coming into contact cern is not the injury itself, but the risk of transmitting with hazardous substances (such as chemotherapy an infection such as HIV, Hepatitis B, or Hepatitis C,” drugs) during medication preparation or administration. explains Dr. Buhat with emphasis as she looks into the Skin contact, caused by exposure to hazardous sub serious faces of her audience. There are, however, ways stances when priming an IV set, can cause a rash, nau of minimizing the risk. The ANSAP President presents sea, or even chronic illness. One of the many safety to her audience a thin tube with valves attached at products offered by B. Braun to protect against this is each end. It is the B. Braun Safeflow valve which re Cyto-Set Mix, a closed system for safer cytostatic medication preparation and administration. m a n a GE M E n t bo a rd | j o u r n a l | gro u p m a n a ge m e n t repor t | C o n s ol i d a t ed F i n a n c i a l S t a t e m e n t s 25

P a r t n er i n progre s s

“We consider our partnership as diamonds, Made more precious with our access to B. Braun’s infrastructure and expertise for our training courses. Like diamonds, we hope it’s forever.”

Dr. Maria Linda Buhat

tH 20 Century It was only in the 20th Century that infusion THERAPY became a standard therapeutic method, to which B. Braun made a significant contribution with countless innovations.

After the seminar, the participants feel more confident in managing infusions.

Although the nurses have so far given the seminar their knowledge transfer concept, which B. Braun and ANSAP full attention and completed all practical exercises recently began rolling out to the equivalent organi- with enthusiasm, it is time for a break and the perfect zation in Vietnam (the Vietnamese Nurses Association). opportunity to take a brief survey of attendees. The Upon her departure, Dr. Buhat concludes with a smile: feedback could not be more positive. Ms. Maila Delia “We consider our partnership as diamonds, made more Isla, a young nurse from a Manila suburb, for instance, precious with our access to B. Braun’s infrastructure said: “For me, receiving information about the potential and expertise for our training courses. Like diamonds, risks associated with IV therapy and training on its we hope it’s forever.” And, with these final thoughts, safe application within a professional environment is a we leave the Aesculap Academy building and step back great help.” The responses to the questionnaires that into Manila’s bustling streets. all attendees were asked to complete at the end of the seminar also reaffirmed the positive feedback. This only serves to add momentum to the Advanced Care

Partner in growth

B . B r a un continues to expa nd. At its M e l s u n g e n , G e r m a ny site, the compa n y h a s invested 8 2 m i l l i o n in Av i t u m V il l ag e – a new production fac il i t y a nd t r a ining center. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s 28

“We have a high level of vertical integration. In other words, any thing we can make ourselves, we do – and to the most exacting standards.”

Manfred Herres

It makes for an exciting contrast: out of a fairytale Production Director Manfred Herres. And the spacious landscape on the outskirts of Melsungen, famous foyer, which is centrally accessed from all parts of the for its romantic, timber-framed buildings, rises ultra- facility, certainly does make an inviting place. Its large modern architecture – imposing edifices of glass, skylight dome makes it feel bright and airy while an exposed concrete, and powerful steel girders together illuminated globe and art installation in the form of a with a cylindrical parking garage. On an area the size viridescent kidney provide for aesthetic interest. In of 14 football fields you find Avitum Village, a newpro teractive images and life-size dialysis machines and duction site for dialysis machines and infusion pumps. infusion pumps exhibited around the foyer provide Around the world, more than 2 million people currently visitors with information about B. Braun products. A undergo regular dialysis treatment for kidney failure. spiral staircase takes you down to the cafeteria, which And that figure is growing at rates in both Asia and offers the same panoramic view over the beautifully Latin America entering the double-digit range. In addi landscaped grounds and pond as the floor above. tion, the number of users choosing B. Braun products, Everything is designed with class and style – yet is such as the Dialog + Hemodialysis System, is increas functional at the same time. The Production Direc ing. The B. Braun Avitum Division, which is responsible tor’s eyes shine with enthusiasm behind his glasses as for all manufactruring of dialysis products at B. Braun, he discusses the benefits of the new building. “The was challenged to keep up with rising demand in its biggest benefit is that we have doubled our production current facilities. As a result, B. Braun made the deci capacity,” states Mr. Herres. Avitum Village will be sion to invest a total of € 82 million in a two-year con able to produce up to 20,000 dialysis machines and struction project to expand the complex, which is 200,000 infusion pumps annually for distribution often referred to as the City of Industry. The expansion around the world. And if demand continues to increase? included a “village” designed specifically for B. Braun This is not a problem because the production halls Avitum. have a modular design, allowing more to be added as needed. According to Mr. Herres, the key to remaining “We have in this facility various locations at which on course for success is quality, quality, and more qual employees, customers, and visitors could come togeth ity. This means that considerably more time is spent er, much like marketplaces in a real village,” explains on close inspection of the dialysis machines than on MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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Manfred Herres, Production Director B. Braun Avitum, B. Braun Melsungen AG.

assembly. And you can be sure that if a product bears processes, which had formerly been distributed over the B. Braun name, it will be B. Braun through and various sites, are now located at this one site. Produc through: “We have a high level of vertical integration. tion is also following the 'marketplace' concept with In other words, anything we can make ourselves, we all products and production lines converging at a cen do – and to the most exacting standards,” Mr. Herres tral location to optimize integration of the individual proudly explains. At the same time, efficiency and processes. Meanwhile, the B. Braun researchers at the synergies are also important to the Production Director: development centers and application laboratories “Everything has to run smoothly as part of a finely housed within the same building are hard at work on tuned process flow.” The new facility is making a major the innovations of tomorrow. contribution toward this, because all the logistics 30

The B. Braun apprentices benefit from modern workstations in the new training center.

apprentices Wearing a white coat and safety shoes, Mr. Herres 726 strides through the 43,000 m2 complex, passing In Germany alone, B. Braun is currently hundreds of perfectly ordered racks of components. training 726 young apprentices in At various mobile assembly islands and test benches, technical and administrative roles at he stops and enters into discussions with the people working there, inquiring as to the current status and seven different sites. providing direction. Nearly 500 production employees work at this facility, 200 of whom were recruited within the previous three years. In addition, there are 300 administrative employees. Mr. Herres states: “Most of the work here demands a high level of skill and therefore requires a very talented workforce.”

Good training is of the utmost importance to B. Braun. In Germany alone, the company is currently training 726 young apprentices in technical and administrative roles at seven different sites. Every year, this figure increases; for example, the number of technical ap prenticeships will rise by 40 percent over the near term. It was only logical, therefore, that Avitum Village MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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The technical apprentices are studying fields such as electronics and mechatronics.

should also include a new training center, for which much as it does programming and operating high-tech € 6.5 million was dedicated. The Director of Training robots.” Before starting his apprenticeship, Philipp Kay-Henric Engel is convinced that this was a worth Selzer had already completed his high school diploma while investment and states: “It is imperative that we (Abitur). He is now considering going to a university remain ahead of the field. This investment has enabled after the apprenticeship is completed. He may even us to put in place the perfect framework for achieving maintain close ties with B. Braun because the com technical progress and continuing to meet our require pany offers scholarships for high potential students. ments for a skilled workforce.” The 2,800 m2 training center, which covers two floors, has space for approx B. Braun places considerable importance on continuous imately 210 technical apprentices who are studying professional development of experienced employees. fields such as industrial mechanics, plant manage B. Braun Avitum recently developed a new training con ment, electronics, and mechatronics. Sandra Biele, Rik cept that is now being rolled out on a specially de Gehauf, and Philipp Selzer are three of the apprentices veloped training floor of the facility. In the future, all currently enrolled in this program blending mechanical employee, customer, and user training courses will and electronical engineering. Already in their third be held at Avitum Village. Dr. Holger Seeberg, Head of year, they are used to switching between computers, Marketing and International Sales at B. Braun Avitum, machinery, robots, and workbenches. “The training is sums up perfectly the feelings of many of those who varied and wide-ranging, yet always targeted toward our work and study at the new facility: “It is quite simply future roles,” explains Ms. Biele. Nodding in agree a great atmosphere that promotes learning, a mutual ment, Mr. Gehauf adds: “Our training covers the tradi sharing of information, and knowledge transfer.” tional skills, such as reaming, lathing, and drilling, as 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 51

Personnel report 55

Risk a nd opportunities report 5 8

Subsequent events 6 2

Ou t look 6 2 t e m e n t s a t S l a n c i a i n F 34

group management report

At a glance

The B. Braun Group showed stable business development in a challenging market environment. However, spending cuts among public sector healthcare purchasers within the European and the American healthcare markets, coupled with increasing cost pressures from competitors in emerging countries, did affect sales and profits. Over the short term, our profitability is also being impacted by start-up costs for new factories and the expansion of our sales structures. Although we largely succeeded in meeting our sales growth target, we fell short of achieving the anticipated improvement in EBITDA. However, the cost reduction measures introduced in fiscal year 2011 and the completion of key investment projects will get us back on our usual course for success in 2012. At the same time, we are seeing increasing opportunities for growth in the emerging markets. Having already been present in these markets for many years, we are now focusing our current investment program on the BRIC countries. This will place B. Braun in a stronger position to benefit from the opportunities arising in those markets.

Despite the more difficult market conditions, we will remain a supplier of high-quality and innovative products. Patients and clinicians can rely on B. Braun fulfilling the highest requirements for quality and use.

By maintaining a constant dialog with patients and clinicians, we are able to respond appropriately to market requirements. We also take responsibility for the advancement of medical expertise. In 2011, for example, our Aesculap Division established an Endowed Professorship for Navigation Technologies in Orthopedics and Sports Medicine at Hamburg University of Applied Sciences (HAW Hamburg).

Our high degree of equity financing, as well as our unique product and service portfolio, provided the basis for stable development in fiscal year 2011 and will also enable the dynamic growth of B. Braun as an independent, family-owned business in the future.

2011 2010 Sales (in € million) 4,609.4 4,422.8 Net Margin after Taxes (in %) 5.5 6.3 EBIT (in € million) 432.2 456.2 EBITDA (in € million) 688.5 700.5 EBITDA Margin (in %) 14.9 15.8 MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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. Our product range includes IV solutions, syringe pumps, accessories for IV therapy, intensive care and anesthesia, as well as surgical instruments, sutures, hip and knee endoprostheses, equipment and accessories for dialysis, and wound care products. In all, B. Braun offers over 30,000 products, 95 percent of which are manufactured by the company. B. Braun’s expanded portfolio includes consulting and various services, making it a service provider that works closely with its customers to determine the best solution for every patient, thereby making a significant contribution to medical advancements.

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

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

Hospital Care is the worldwide market leader for IV sets and accessories, peripheral IV catheters, and a i n regional anesthesia. The division is also the European market leader in automated infusion systems F and standard IV solutions. Additionally, we have been able to further expand our market share for safety products.

The BRIC countries and the US currently offer above-average growth opportunities. The division is growing organically and through selected strategic acquisitions. In 2011, we acquired manufacturer of IV sets, syringes and cannulas in India with a focus on supplying the local market. We also established new sales offices in Serbia and Mexico.

In February 2011, we manufactured the billionth “Ecoflac plus” container for standard IV solutions at our LIFE facility in Melsungen, Germany. Since production began in 2004, we have grown our European market share from approximately 25 percent to today’s market share of more than 45 percent. This success is an important milestone for B. Braun on its way to becoming the global leader in IV therapy.

Hospital Care expanded its Space product family with B. Braun Space GlucoseControl, a system for controlling the blood sugar of intensive care patients. It also launched the first integrated IT solutions for fully automated therapy documentation. B. Braun SpaceCom, for example, enables documentation in a patient data management system (PDMS) and documentation of anesthesia records with no additional maintenance effort for the healthcare professional. 36

The Aesculap Division Based in Tuttlingen (Baden-Württemberg, Germany), Aesculap sees its role as a global partner in surgery and interventional cardiology. The division, which has been a part of the B. Braun Group for over 35 years, focuses on developing and marketing products and services for surgical and interventional procedures in operative medicine.

Aesculap views itself as the global market leader in surgical instruments and sterilization technology. In the fields of neurosurgery and wound closure, Aesculap is a major global supplier. We are also quality and innovation leaders in select product categories. The success of our business is founded on our dynamic innovation and closeness to the market. The Aesculap Division has a range of state-of-the-art product concepts for degenerative knee and hip conditions, including instruments for minimally invasive procedures, short-stem hip prostheses and abrasion-optimized, anti-friction coatings for knee implants. The latest generation of cementless hip endoprosthesis stems offers maximum retention and preservation of the greater trochanter region during the intra-operative procedure.

Through high-quality, market-oriented products and solution-focused services, we build strategic partnerships with our customers. For example, we advise hospitals on instrument management, help- ing them optimize their inventory of instruments and maintain its value. Aesculap also offers specialized products in the fields of surgical sutures, traumatology as well as spinal and vascular surgery. We have added new products to our laparoscopic product line: Our acquisition of a company specializing in advanced electrosurgical instruments for tissue cutting and fusion makes us the only company on the market to make bipolar instruments with jaws that can be actively angled, giving surgeons the greatest possible flexibility and maneuverability during the operation. Aesculap’s newly developed AdTEC® mini line, with a diameter of only 3.5 mm, is a logical development. The fact that it permits minimally invasive approaches opens up a variety of new application possibilities in the areas of visceral surgery, pediatrics, gynecology, and urology. Our product and service portfolio sets us clearly apart from the competition, allowing us to consolidate and grow our market shares. In addition to our already established markets in Germany, Europe and the USA, the BRIC countries are the main focus of our growth strategy.

The Out Patient Market (OPM) Division The focus of the Out Patient Market (OPM) Division is on meeting the needs of patients outside the hospital setting and of long-term patients. Our customers include physicians in private practice, outpatient and inpatient care services, and pharmacies.

Adopting a holistic approach to consulting and care giving, the division strives to provide patients with a combination of high-quality and cost-effective healthcare. The key areas on which it focuses are the transfer of patients from one setting of care to another, outpatient IV therapy, diabetes, skin and wound management, stoma and incontinence care, disinfection, and hygiene.

In addition to these products, OPM offers a broad range of outpatient services. A major objective is the transfer of knowledge across all areas, for example when transferring parenterally-fed patients from inpatient to outpatient care (TransCare). Our experienced employees relieve patients, hospitals, private practice physicians, and care services of administrative tasks and ensure that the quality and progress of treatment is optimized. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

Our product innovations in outpatient care are aimed at improving therapies and increasing patients’ quality of life. One example is Prontosan® Wound Gel X, a viscous gel for cleansing and moisturizing skin wounds and up to 4th degree burns. The long-acting hand disinfectant Promanum® pure and our touch-sensitive Vasco® Nitril disposable gloves both support the daily work of healthcare professionals. The ready-to-use Actreen® catheter introduced in the previous year was supplemented in 2011 with a special single-use catheter for women (Actreen® Lite Mini), which has been very well received on the market. The Actreen® Lite Mini also received the Pharmapack 2011 Award and the ACA & Promocon “Look Good, Feel Good” Award noting that B. Braun had “significantly improved quality of life for female patients” with this product.

Within the established markets, the division is enjoying stable development thanks to our extensive product range. This is supplemented by a selective offering of our core product lines in the dynamically growing developing countries. In 2011, we established new sales offices in Ecuador and Croatia.

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. t e m e n t s a t S l The division has a network of 180 dialysis centers (previous year: 168) in Europe, Asia, and South Africa, a n c i

caring for more than 11,000 patients. Physicians and nursing staff are available in our clinics to assist a i n and advise dialysis patients with chronic kidney and metabolic disorders, offering them the opportunity F for a better quality of life.

We set ourselves apart from our competitors through consistent product quality and continuous availability, as well as an extensive range of user training courses, technical support, and IT solutions. We aspire to improve patient quality of life and achieve efficient treatment processes.

In 2011, the new facility in Melsungen, Germany for the manufacture of dialysis machines and IV pumps commenced operation. In addition, the public-private partnership that we originally entered into in 2010 in India has been continued and expanded further. So far, this program has provided approximately 2,000 patients with access to life-saving dialysis treatment.

Aesculap Academy The evolving lifelong learning process for all medical professions and the innovative developments in medical technology are placing increasing demands on hospital, quality, and safety management. To accommodate this, Aesculap Academy has undertaken a targeted expansion of its advanced training and development programs around the world.

With Aesculap Academy, B. Braun has created an international knowledge-sharing platform for physicians, other medical staff, and hospital managers. In 2011, more than 70,000 medical experts from all over the world took advantage of the training opportunities. Its core business, which focuses on skills training in anesthesia and the entire range of surgical and interventional medical disciplines, has been comple- mented by incorporating the most up-to-date learning and teaching methods, such as training on virtual 38

simulators, as an integral component of the hands-on exercises. Special training courses in sterile supply processing and wound management are also key elements of the program. More general, complex matters relating to palliative care or strategies for error avoidance in operating rooms are discussed in forums and symposia. In recognition of its partnership with medical associations and societies, Aesculap Academy was awarded the “Siegel der Deutschen Gesellschaft für Chirurgie” (the Seal of the German Society for Surgery).

Aesculap Academy has an international network of more than 30 locations within Europe and Asia, and has been certified in Malaysia as a provider of medical advanced training and development. The Academy will also introduce further advanced training and development offerings in Latin America, starting with Mexico and Brazil.

Corporate governance and control In addition to its own business operations, B. Braun Melsungen AG performs centralized functions for the Group. The company is wholly family-owned and is not listed on any stock exchange. The company’s statutory bodies include the Management Board, the Supervisory Board, and the Annual Shareholders’ Meeting. The Management Board is comprised of seven members, each with specific individual responsibilities and joint responsibility for the company’s performance. The Supervisory Board consists of 16 members, half of whom are elected by the shareholders and half by the company’s employees. Committees have been established to support the work of the Supervisory Board. The Personnel Com- mittee is responsible for such matters as the Management Board members’ employment contracts and compensation. The Audit Committee monitors internal control systems, accounting processes, and the audit of financial statements.

On April 1 2011, the change in the Management Board, which was agreed upon in December 2010, took place. Dr. Heinz-Walter Große succeeded Prof. Dr. h. c. Ludwig Georg Braun as Chairman of the Manage- ment Board while remaining responsible for Human Resources and Legal Affairs. Dr. Annette Beller succeeded Dr. Große as Chief Financial Officer. Also effective April 1 2011, Mr. Otto Philipp Braun became a member of the Management Board and is responsible for the Iberian Peninsula and Latin America.

B. Braun’s commitment to the principles of responsible corporate governance and control is reflected in its adherence to recognized standards. The ultimate objective is the long-term success of B. Braun as a family-owned company. The rules governing how we conduct ourselves with customers have been defined in our Code of Conduct since 1996. B. Braun also has a global Compliance Management System. For us, compliance means more than just legal conformity; it also encompasses ethical values such as fairness, integrity, and sustainability. An overall Group Compliance Office together with local compliance officers ensure that consistent guidelines are adhered to worldwide.

In concrete terms, our responsible approach to corporate governance is reflected in our integration of quality and environmental management, our use of key performance indicators to direct the Group, accounting policies based on international accounting standards, and our close monitoring of all significant potential risks. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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 services for the Group. In particular, these include Group accounting and controlling, international human resources, IT and logistics, legal affairs and tax departments, and Group treasury. Our research and development activities are assigned to Centers of Excellence (CoEs) in which research, development, and production activities for specific product groups are brought together. The company’s operations are organized into four divisions – Hospital Care, Aesculap, Out Patient Market, and B. Braun Avitum. Its main Centers of Excel- lence are located in Melsungen (Germany), Penang (Malaysia), Allentown (Pennsylvania, USA), Tuttlingen (Germany), Boulogne (France), Rubí (Spain), and Sempach (Switzerland). Other major manufacturing sites are located in Irvine (California, USA), São Gonçalo (Brazil), Nowy Tomyśl (Poland), Hanoi (Vietnam), Budapest (Hungary), and Suzhou (China).

Through its subsidiaries and holdings, B. Braun operates in 56 countries. The B. Braun Group includes 196 (previous year: 189) consolidated companies and three (previous year: three) joint ventures in which we do not have a majority. 18 (previous year: 17) holdings are consolidated using the equity method of accounting. Detailed information about major shareholdings and the locations of each company can be found in the tables on pages 138 to 141. t e m e n t s a t

Quality and environmental management S l As a developer and manufacturer of medical and pharmaceutical products, B. Braun operates in highly a n c i

regulated markets. Therefore, the quality and environmental management system we implement must a i n comply with the most stringent statutory and regulatory requirements. In addition, we have established F our own standards in the fields of environmental protection and health as well as safety in the workplace, which we subject to regular internal audits. By paying close attention to customers’ needs, we have identified and standardized key processes to ensure uniformly high standards of quality. All procedures, products, and IT-related documentation are subject to an ongoing improvement process, which considers environmental sustainability and productivity.

As a member of the German Chemical Industries Association (Verband der Chemischen Industrie, VCI), B. Braun adheres to the Association’s guidelines on “Responsible Care” and takes responsibility for improving the environmental protection and health as well as safety in the workplace under the global “Responsible Care” initiative.

Eleven B. Braun Group locations in Europe are EN ISO 14001-certified. In addition, the environmental management in Tuttlingen and Glandorf (both in Germany) has received certification under the EU’s Eco-Management and Audit Scheme (EMAS). Our occupational health and safety management system at our locations in Germany (Melsungen, Tuttlingen, and Bad Arolsen), France, Spain, and Switzerland, as well as B. Braun Avitum in Italy, is certified for compliance with the international OHSAS 18001 standard. Our Melsungen site has also obtained the “Seal of Approval – Systematic Safety” (“Sicher mit System”) mark from the BG RCI (statutory accident insurer for the raw materials and chemicals industry). The Euro- pean dialysis centers within our B. Braun Avitum Division have received EN ISO 9001 and VDE 753-4 “Good Dialysis Practice” certification. 40

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

Group strategy We are continuing to pursue the Group strategy established in the previous year through 2014. We are confident that a growth strategy based primarily on innovation and self-funding will ensure that the B. Braun Group can sustain its success. We have an annual sales growth target of between five and six percent. Our target for the EBITDA margin is an increase to 17 – 18 percent of sales within the time period covered by the strategy. To help us achieve our profitability targets, we also intend to further reduce our working capital and minimize our general and administrative expenses. We are therefore driving forward and, in some cases, expanding upon our existing programs in these areas.

Maintaining the B. Braun Group’s independence is of central importance in all our decisions. The next generation of the B. Braun family has reaffirmed that we will remain a privately held family company and will not pursue a public offering on any stock exchange.

Our product offerings are organized into core business areas of the healthcare market and specific focus business areas for individual sectors of the healthcare market. Our goal is that the core business areas within each division have a significant global market share. We select the specific focus business areas based on regional market characteristics.

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

Management of our company is subject to the highest ethical standards and strict adherence of the law. For us, corporate governance and compliance are not only a legal requirement, but a self-evident pre- condition 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. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

Corporate social responsibility Acting sustainably is part of the B. Braun Group’s business philosophy. B. Braun sees itself as a member of society and assumes responsibility as such. In addition to the regional promotion of art, culture, and sports, the main areas we support are knowledge and science. In universities, this takes the form of sponsored chairs, such as at Kassel University and Charité Berlin (both in Germany), or scholarship programs such as the B. Braun Medical Trust Foundation in India.

We have a long tradition in symposia and workshops for medical staff and healthcare personnel. When it comes to promoting knowledge, we start with the very young: for example, with the B. Braun Children’s and Youth Weeks. Entitled “New researchers needed,” these events were held for the fourth time in Melsungen, Germany in 2011. We also operate a Children’s University in Tuttlingen, Germany.

Offering children opportunities is something that B. Braun takes very seriously. B. Braun for Children, a global umbrella project we began many years ago, provides an opportunity for our subsidiaries to help improve conditions for local children and for our employees to put their social commitment into action. B. Braun supports for example a project in Pakistan, which finances tuition, school uniforms, and books for children from the slums of Karachi. This gives children the opportunity to attend school and, therefore, also improves their prospects for the future. t e m e n t s a t

A project in Sydney is just one example of a successful combination of dedication to children in need S l and cultural commitment including employees and customers. For a number of years, our local subsid- a n c i

iary has been supporting the Australian Doctor’s Orchestra (ADO), an annual event allowing physicians a i n from all over the country to come together and play music. In 2011, the orchestra performed for a good F cause; a benefit concert in Sydney at which they managed to raise € 22,000 for local “B. Braun for Children” projects such as the “Youth Off the Streets (YOTS), B. Braun Australia Scholarship” and the “Children’s Institute of Sports Medicine” (CHISM).

In the US, B. Braun employees are actively supporting the “United Way” campaign, an initiative currently comprising 73 programs and three partnerships that have already helped improve the lives of 57,688 children, families, and elderly people. “United Way” focuses primarily on promoting education, supporting the elderly, and ensuring that basic needs are met. Not only do our employees support the campaign through monetary donations, they are also very generous in donating their time and skills. Over the last five years, employee participation in the local “United Way” campaign has doubled.

In the reporting year, a new “B. Braun for Children” project was launched by B. Braun Malaysia; the “Rumah Ozanam” home for abused, abandoned, and homeless children. Initial activities, such as hygiene workshops, have already taken place.

Aside from long-term programs, B. Braun also seeks to provide help in instances of very acute need. Following the Group-wide fundraising campaigns for Haiti and Pakistan in 2010, 2011 saw B. Braun employees raising funds to support people affected by the earthquake, tsunami, and nuclear disaster that hit Japan. Once again, B. Braun’s Group management doubled the amount of donations collected by employees. As a result, a total of € 212,366 were given to children’s funds set up by local governments to help children who had lost one or both parents to the disaster within the three most severely affected prefectures of Fukushima, Iwate, and Miyagi. The money collected will help provide children the opportunity to lead a normal life and receive a school education for at least ten years. 42

Smaller initiatives also make up an important part of our community focused activities. One example is the Christmas project initiated by the B. Braun subsidiary in Croatia. In this case, local employees, together with management, raised approximately € 15,000 for four orphanages in four regions of the country to buy urgently needed “Christmas presents” such as furniture, dishwashers, office computers, sanitary items such as baby lotions and diapers, and much more.

During the last year, we published the fourth edition of SHARE, our sustainability magazine, which de- scribes further examples of our commitments throughout the world within the community and society as a whole.

Economic environment

Economic performance

Global economy Despite many regions seeing an initial continuation of the economic upturn in early 2011 that had commenced in 2010, the global economy was hit by a number of shocks, which hampered further recovery. This included the earthquake and nuclear disaster in Japan, the upheavals in the Arab region, and the European and American debt crisis. The debt crisis continues to dominate the global economy today.

As in 2010, it continued to follow a two-track course with Asian countries still driving the global economy, while Western industrialized countries face great consolidation challenges, which weaken economic momentum. In some countries, private consumption is also being curbed by high levels of both unemployment and private debt.

In 2011, global output grew 3.8 percent, compared to 5.2 percent in 2010. At 1.6 percent, growth in the industrialized countries significantly lagged behind that of the developing and emerging economies, which amounted to 6.2 percent. Growth in global trade remained strong at 6.9 percent, if behind that of 2010 (+ 12.7 percent).

Economic performance by region In the euro area, economic output grew 1.6 percent year-on-year with rates varying greatly from country to country. While Germany nearly succeeded in sustaining the momentum seen in 2010, growth in the peripheral euro area countries remained sluggish. Toward the end of the year, however, growth began to slow down even in Germany. For 2011 as a whole, the German economy grew by 3.0 percent, compared to 3.6 percent in 2010 with exports continuing to be a key driver for growth. There were still no signs of economic downturn in the German labor market. Unemployment dropped to 6.0 percent, a decrease of 1.1 percentage points compared to the 2010 level. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

The unresolved debt problems, particularly in Greece, Portugal, Ireland and Spain, toward the end of the year even in Italy, led to major uncertainties in the markets and, as a result, to refinancing difficulties for these countries through the capital markets. This prompted ambitious consolidation plans. Many European countries announced mass spending cuts and increased taxes, which are likely to have a long- term impact on government demand, particularly in the healthcare sector, and on consumer spending. In Greece, economic output continued to decline and, at – 5 percent, even fell below 2010 levels (– 4.4 percent). The Portuguese economy also weakened (– 2.2 percent). By contrast, there was renewed growth in economic output for Ireland and Spain, at + 0.4 percent and + 0.7 percent respectively, following decreases in the previous year.

In the Eastern European countries, growth remained strong at 4.3 percent in 2011. Turkey and Lithuania saw the strongest increases in economic output at 6.6 percent and 6.0 percent respectively. Growth in Poland also remained high at 3.8 percent.

In the reporting year, Russia’s economy saw 4.1 percent growth, which was up slightly from 2010 levels (4.0 percent), but remained far behind the growth of the other BRIC countries, India and China. Russia is benefiting from rising commodity prices. Capital inflows, however, have not yet returned to pre-crisis levels – primarily due to the prevailing political instability, which has a negative impact on investments

and consumer spending. t e m e n t s a t S l Following the recovery of the US economy in 2010, growth in 2011 was much weaker, with economic a n c i

output rising by only 1.8 percent compared to 3.0 percent in 2010. High levels of unemployment, a weak a i n real estate market, and high levels of private debt continue to have a negative impact. F

The Latin American economy began to cool down somewhat in 2011, but, at 4.6 percent, growth was still well above that of the industrialized countries. However in Brazil, the growth engine of Latin America, economic output fell sharply and reached only 2.9 percent in 2011 compared to 7.5 percent in 2010. Strong domestic demand and rising commodity prices, which also have a positive impact on other commodity exporters such as Argentina and Peru helped to drive this growth. In Argentina, growth declined by 1.2 percentage points, although it still remains high at 8 percent. Mexico increased its economic output by 4.1 percent. In some countries, particularly Argentina and Brazil, there has been a significant rise in inflation.

As in 2010, Asian emerging economies continued to gather momentum in 2011. Due to high inflows of capital and expansive lending, individual countries such as China had to implement capital tightening measures to counter the threat of the economy overheating. This led to a slight weakening in growth. In 2011, economic output grew by 7.9 percent, which was slightly weaker than in 2010 (9.5 percent), albeit still at a very high level. China was out in front with a increase of 9.2 percent, followed by India at 7.4 percent. In India, growth is driven primarily by consumer demand. For 2011, the high 10.6 percent inflation rate was a critical issue. In Indonesia, the economy grew by 6.4 percent, representing a slight increase year-on-year. The growth rate in Malaysia was 5.2 percent. 44

Economic output in Japan declined by 0.9 percent in 2011. Following the positive growth of 4.4 percent in 2010 – for the first time after two successive years of decline, the renewed downturn in 2011 was primarily attributable to the earthquake and nuclear disaster that affected the country. These events resulted in many disruptions to manufacturing, which had a negative impact on economic output. Toward the end of the year, however, the country was showing the first signs of a recovery.

Performance of the healthcare market Like the global economy, performance of the global healthcare market varied greatly by region. While the healthcare markets in emerging countries experienced strong growth due to rising population figures and healthcare costs, growth was weaker in the industrialized countries. Some countries, particularly in Southern Europe, even experienced stagnation whereas moderate growth was seen in other parts of Europe and the US. The German healthcare market remained largely stable, while growth in the Asian markets remained strong in 2011. Although per capita healthcare spending in countries such as China and India remained low in 2011, the high growth rates are an indicator for the great potential within the region.

In many industrialized countries, the healthcare markets began to be heavily impacted by public spending cuts, such as the increase in compulsory discounts in Germany and Spain, for example. In both countries, a reduction in reimbursements paid by health insurers for specific products also resulted in declining sales. High receivables, especially in Southern European countries such as Spain, Portugal, and Italy, are putting further pressure on the healthcare market. The increasing bureaucratization in approval processes is increasing the time to market for product innovations. In the US and China in particular, obtaining regulatory approval is both a costly and time-consuming process.

In 2011, the significance of Asian suppliers grew, particularly due to advancements in product quality and aggressive pricing strategies.

Business and earnings performance

Overall assessment by the Management Board Performance of the B. Braun Group during the reporting year 2011 was not universally satisfactory. We did, however, maintain our growth trend with sales increasing by 4.2 percent; an increase to which all divisions contributed, despite the negative impact of foreign currency translation and extensive spending cuts by public sector healthcare purchasers. In addition, earnings have been negatively affected by rising commodity prices and start-up costs that regularly arise for new factories. EBITDA is therefore, slightly below that of the previous year, meaning that we did not meet our earnings targets. However, the cost reduction and process optimization projects introduced in 2011 were, by the end of the reporting year, already beginning to have a positive impact on earnings.

Overall, the B. Braun Group is in good, stable financial condition. We are protecting the continued independence of the business by maintaining a high equity ratio. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

B u s i ne s s an d ea r n i ng s p e r f o r mance

Group Sales | in € billion

5.0 4.61 4.42

4.03 4.0 3.79 3.57

3.0

2.0

1.0

2007 2008 2009 2010 2011

Sales In fiscal year 2011, sales of the B. Braun Group overall totaled € 4,609.4 million (previous year:

€ 4,422.8 million), representing a 4.2 percent increase compared to the strong previous year. While t e m e n t s a t sales in 2010 were boosted by positive currency effects, movements on foreign exchange markets S l in the reporting year had a negative impact on sales, amounting to approximately € 46 million. Adjusted a n c i

for currency effects, sales grew by 5.3 percent. a i n F Sales in the core business areas increased by 4.7 percent to € 2,587.2 million (previous year: € 2,471.0 million), which represented stronger growth than that experienced by the specific focus business areas. Sales in the specific focus business areas rose by 3.6 percent to € 2,022.2 million (previous year: € 1,951.6 million).

The biggest contributors to sales growth were our Aesculap and Hospital Care Divisions. Once again, the Asia / Pacific regions (+ 12.2 percent) and Latin America (+ 5.0 percent) proved to be the growth drivers for the Group. However, Europe (excluding Germany) also performed well with sales growth of 5.4 percent. Growth in Germany was satisfactory (+ 4.2 percent) in the context of difficult market conditions. In North America, however, which is an important region for B. Braun, sales in euro declined by 3.4 percent, although in US dollars, sales increased by 1.3 percent.

Performance in the Hospital Care Division Sales in the Hospital Care Division climbed 3.5 percent to € 2,159.4 million (previous year: € 2,086.7 million). Sales of products from the core business areas increased by 3.7 percent to € 1,311.5 million (pre vious year: € 1,264.2 million). Sales of products from the specific focus business areas rose by 3.1 percent to € 848.0 million (previous year: € 822.6 million).

Important sales drivers included IV catheters (Introcan Safety® and Vasofix Safety® catheters) and injectable medicines (Propofol-®Lipuro, Duplex®, and Heparin). Due to increased capacities, sales developed well within the core business areas of large-volume IV solutions and standard IV sets, as well as regional anesthesia. 46

Major growth contributors for sales were the positive growth rates in China, India, and Russia, as well as the other growth markets within Asia and Eastern Europe. We also succeeded in growing our market share within Germany and our European OEM business. However, growth was more sluggish in the countries of Southern and Western Europe (Spain, Italy, Greece, and Ireland) and in the US as they had been hit particularly hard by the financial crisis.

Sales by division | in € million

2,500

2,087 2,159 2,000 1,904

1,500 1,356 1,281 1,153 1,000

555 568 526 475 501 500 421

Hospital Care Aesculap OPM B. Braun Avitum

2009 2010 2011

Performance in the Aesculap Division For fiscal year 2011, the Aesculap Division posted sales totaling € 1,355.8 million (previous year: € 1,281.1 million), representing a 5.8 percent increase year-on-year. Sales in the core business areas increased by 8.3 percent to € 524.8 million (previous year: € 484.7 million). Sales of € 831.0 million (previous year: € 796.4 million) were achieved in the specific focus business areas, an increase of 4.3 percent.

The division’s main growth drivers remained Surgical Technologies followed by Vascular Systems. Sales of the drug-eluting balloon catheter product developed particularly well. The performance of Closure Technologies was similarly positive, and project operations also contributed to sales growth. Orthopedics and Spine, in contrast, showed relatively weak performance after strong growth in previous years.

The Asian markets in particular (China, India, Malaysia and Australia), as well as Germany and the US contributed to the increases in sales. In Japan, moderate growth was achieved despite the natural and nuclear disasters. Some European countries, such as Italy, Portugal, and Denmark, failed to achieve the high sales levels of the previous year. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

B u s i ne s s an d ea r n i ng s p e r f o r mance

Performance in the Out Patient Market (OPM) Division At 2.5 percent growth, the OPM Division achieved sales of € 568.4 million in the reporting year (previous year: € 554.6 million). Growth in the core business areas was 2.2 percent, which was weaker than the 5.1 percent of the specific focus business areas. The core products achieved sales of € 513.2 million (previous year: € 502.1 million), and the specific focus products € 55.2 million compared to € 52.5 million in the previous year. The compulsory discount in Germany, which led to a decline in sales, had a major impact.

Hygiene management, diabetes care, and incontinence care achieved above-average growth, which was driven by positive development of the Eastern Europe market, in particular the Czech Republic, Bulgaria, the Slovak Republic, and Russia. Satisfactory increases in sales were also achieved in Switzerland and the US. The new company in China also began with good performance. In contrast, growth on the German, French, Spanish, and Italian markets stagnated, largely as a result of cost reductions within the healthcare system and compulsory discounts.

Performance in the B. Braun Avitum Division In the 2011 reporting year, sales in the B. Braun Avitum Division grew by 5.4 percent to € 500.6 million (previous year: € 474.8 million), driven primarily by the dialyzer and dialysis machine product groups. The greatest increases were seen in China, France, and India, whereas performance in Germany was

slightly below that of the previous year. t e m e n t s a t S l Our dialysis provider business also developed well, seeing a satisfactory increase in patient numbers a n c i

particularly in India, South Africa, and Russia. a i n F Development of functional expenses Functional expenses rose 5.8 percent to € 1,688.0 million (previous year: € 1,595.9 million). To limit an increase in general, administrative, and selling expenses, we implemented various cost reduction measures in the second half of 2011. General and administrative expenses developed in line with sales of now € 230.9 million (previous year: € 221.6 million). As a result of the expansion of our sales structures within the BRIC countries, in particular, selling expenses increased by 4.8 percent to € 1,277.2 million (previous year: € 1,218.9 million). Once again, we significantly increased spending on research and development to € 179.9 million for the reporting year, representing an increase of 15.7 percent (previous year: € 155.4 million).

Functional expenses | in € million

1,688 1,596 1,432 1,366 180 Research and Development Expenses 1,297 155 231 General and Administrative Expenses 130 139 222 116 202 208 205

1,219 1,277 Selling Expenses 973 1,031 1,091

2007 2008 2009 2010 2011 48

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

The Hospital Care Division has set for itself the goal of simplifying processes in hospitals and further improving the safety of IV therapy. In this context, we are developing new needle-free systems for the preparation and administration of medication as well as anti-microbial and additive-free materials. We are also extending the PVC-free portfolio with functional coatings such as light protection, for example. A drug identification system, based on a special spectroscopic method, should help minimize errors in medication. The Ultraplex® product completes our ultrasound-guided peripheral nerve blocks portfolio. At the same time, we are evaluating new ultrasound coatings in this field. In the pharma business area, our focus is on the development of products for parenteral nutrition and various injectable medicines.

The research and development resources of the Aesculap Division are focused on endoscopy, orthopedics, and regenerative biotechnology. AdTec® product range is our answer to the demand for miniaturized instruments for ever smaller minimally invasive approaches, and we are also setting new benchmarks in minimally invasive surgery with 3D visualization. In orthopedics, we are developing bone-preserving hip endoprosthesis stems and knee systems (EnduRo) in particular, which can also be successfully used for revision surgery. The field of regenerative biotechnology, which is of increasing importance, is another important focus of our research activities. For example, with Novocart® Inject, where the indication is appropriate, cartilage defects can be biologically reconstructed purely by means of arthroscopy; and with Novocart® Disc, partly damaged intervertebral discs can be biologically reconstructed following a spinal disc herniation.

The focus in the Out Patient Market Division is on recent developments in the area of wound management. Prontosan® Acute Wound Gel, for instance, allows minor wounds to be treated effectively at home; and Askina Calgitrol® antibacterial paste represents a completely new type of wound care, achieving successful healing particularly in deeper, locally infected wounds.

The Actreen® HydroLite catheter represents the new addition to our Actreen® catheter product line. The “HydroTonic Technology,” a mix of glycerin and water, activates the surface coating, ensuring gentle application and effortless removal. The new Softima® Active stomacare pouch has already been introduced in some European countries and will be available globally beginning in 2012. The new gen eration pouch protects the skin in a unique, flexible, and safe manner. The patented SkinTech® adhesion area also adapts to every anatomical shape, meaning that even active patients can use the product safely.

Research and development within the B. Braun Avitum Division is currently focused on the further development of equipment for long-term dialysis and acute dialysis applications. As part of this, we take into account the requirements both of established markets and those of emerging markets. Our new Dialog Plus dialysis machine, for example, is an optimized version of the previous model. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

B u s i ne s s an d ea r n i ng s p e r f o r mance

Other operating income and expenses The balance of other operating income and expenses improved by € 10.8 million to € – 18.2 million (previous year: € – 29.0 million). Currency translation losses of € – 6.5 million remained close to the level of the previous year (previous year: € – 6.2 million). In contrast, lower expenses related to our profit participation rights program and lower additions to provisions for litigation costs had a favorable effect.

Net financial income (loss) In the reporting year, net financial loss declined by € 5.4 million to € – 72.0 million (previous year: € – 66.6 million). Interest expenses increased due to higher borrowing to € 49.5 million from € 48.4 million in the previous year. At the same time, interest income declined € 0.9 million to € 3.7 million (previous year: € 4.6 million). In addition, income from investments fell by € 2.6 million. The interest portion of pension provisions amounted to € 29.5 million for the reporting year, compared to € 28.8 million in the previous year.

Statement of value added At € 2,084.3 million, value added was 2.1 percent above the previous year (€ 2,041.2 million). The majority of value added (64.5 percent compared to 63.1 percent in the previous year) was passed on to employees in the form of wages and salaries. Federal, state, and local government received social security

contributions and income taxes totaling € 357.5 million (previous year: € 355.7 million) or 17.2 percent t e m e n t s a t of value added (previous year: 17.4 percent). Lenders received € 49.3 million or 2.4 percent (previous year: S l € 47.2 million or 2.3 percent). An amount of € 208.9 million or 10.0 percent of value added (previous a n c i

year: € 241.1 million or 11.8 percent) was retained within the Group, providing the basis for our capital a i n investment plans. F

Value added | in € million

Sales 4,609 Changes in Inventories 53 Business Performance 4,663

Depreciation & Amortization 253 Material Costs 1,714 Other Costs 612 Value Added 2,084

Wages and Salaries 1,344 Social Security Contributions 253 Pension Payments 82 Lenders 49 Income Taxes 104 Dividends 43 Retained Profit 209 50

Earnings performance Gross profit was increased by 2.7 percent to € 2,138.3 million (previous year: € 2,081.1 million). At the same time, the gross margin decreased by 0.7 percent to 46.4 percent (previous year: 47.1 percent). Rising raw material and energy costs, as well as start-up expenses that are normally incurred when putting new factories into operation influenced the gross margin in 2011. Gross profit was also negatively affected by foreign currency translation during the reporting year. In addition, gross earnings were influenced by a product recall due to quality issues with 3-chamber bags for parenteral nutrition (NuTRIflex®). EBIT declined 5.3 percent to € 432.2 million (previous year: € 456.2 million). A significant increase in research and development spending (+ 15.7 percent) and increased selling expenses (+ 4.8 percent) prevented us from achieving the earnings performance seen in the previous year. Income tax expenses were € 104.4 million (previous year: € 112.3 million) for the reporting period. The tax rate increased by 0.2 percentage points to 29.0 percent (previous year: 28.8 percent). Consolidated annual net profit, which amounted to € 255.7 million, fell short of the previous year’s level (€ 277.4 million) by 7.8 percent.

EBITDA failed to reach the high level of the previous year. A 1.7 percent decline resulted in EBITDA of € 688.5 million compared to € 700.5 million in the previous year. Accordingly, the EBITDA margin fell by 0.9 percentage points to 14.9 percent (previous year: 15.8 percent).

EBITDA | in € million

800 700 688

620 600 536 546

400

200

2007 2008 2009 2010 2011 MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

Financial position and assets

Investments The continued high demand for B. Braun products requires us to further expand our production capacities. The investment program begun in 2007, which is worth approximately € 1.4 billion, was completed in 2011. An additional investment program of € 1.6 billion, which commenced at the end of 2010, was continued in the reporting year. This investment program is expected to run until 2015 and will largely be financed from operating cash flows.

Additions to plant, property and equipment as well as intangible assets totaled € 541.4 million (previous year: € 575.4 million). This was offset by depreciation and amortization of € 252.9 million (previous year: € 238.2 million).

Capacity expansions for production of Ecoflac® were successfully completed at the Rubí (Spain) and São Gonçalo (Brazil) locations in 2011. The newly constructed facility for the IV systems production in Hanoi (Vietnam) and our new facility for the manufacture of infusion pumps and dialysis machines in Melsungen, Germany, have both been put into operation. The expansion and redesign of the Penang (Malaysia) location continued and is expected to be completed in 2014. We also continued with the

project for the new generation of containers in Irvine (California, US). We are moving forward with con- t e m e n t s a t struction of the Urinary Care Center of Excellence in France, which is due for completion at the end S l of 2015. The capacity expansion of production in Glandorf (Germany) has been ongoing since December a n c i

2010 and is expected to be completed over the course of three years. At the Tuttlingen (Germany) loca- a i n tion, construction of the forging, container, and power systems production facilities began in 2011. F

In December 2011, we acquired a holding in CeGaT GmbH, headquartered in Tübingen, Germany, giving us access to the rapidly growing market of genetic diagnostics.

Effective January 31 2012, we acquired Nutrichem Diät + Pharma GmbH and its subsidiaries. The Nutrichem Group develops and produces medical nutrition solutions, as well as products for sports nutrition and nutritional supplements.

Investments / Depreciation and Amortization | in € million

800

575 600 541 471 455 400 349 238 253 183 198 209 200

2007 2008 2009 2010 2011

iNvestments dEpreciation and Amortiz ation 52

Cash flow Operating cash flow was € 449.9 million (previous year: € 389.3 million), € 60.6 million higher than in the previous year. This year-on-year increase in operating cash flow was attributable to a smaller increase in trade receivables combined with a rise in trade accounts payable. Cash outflows1 from investing activities were € 547.6 million (previous year: € 557.4 million). The sustained high level of investing activities caused free cash flow to be at € – 97.7 million (previous year: € – 168.1 million). Borrowing was increased to raise funds. In fiscal year 2011, net borrowing amounted to € 146.0 million, compared to € 181.6 million in the previous year. Cash and cash equivalents at year-end were up 31.9 percent to € 45.3 million (previous year: € 34.4 million).

Structure of the Statement of Financial Position As of December 31, 2011, total assets of the B. Braun Group rose to € 5,105.7 million (previous year: € 4,686.1 million). This corresponds to a rise of 9.0 percent and reflects an increase in working capital and the fact that investments were higher than depreciation.

On the assets side, non-current assets rose by 10.7 percent to € 3,025.9 million (previous year: € 2,733.6 million). Ongoing investment in capacity expansion led to a 10.3 percent increase in property, plant and equipment to € 2,541.7 million (previous year: € 2,305.0 million). Intangible assets (including goodwill) grew by € 49.4 million to € 268.0 million (previous year: € 218.6 million).

Inventories increased 6.8 percent to € 833.4 million in the reporting year (previous year: € 780.0 million). Trade receivables increased by 8.9 percent and, on the reporting date, were € 1,016.3 million (previous year: € 933.5 million). Some of the receivables related to Italy, Portugal, and Spain. The strained budgetary situation in these countries is continuing to impact the payment behavior of public sector healthcare purchasers. We are aware of the associated risks and will prevent a further increase in receivables through selectively choosing our customers in these countries, even if this will affect sales.

The liabilities side of the statement of financial position shows a significant increase in equity of 10.1 percent to € 2,183.5 million (previous year: € 1,984.0 million). We have further improved the equity ratio to 42.8 percent (previous year: 42.3 percent) and are closing in on the target of 45 percent. Provisions for pensions and similar obligations increased 3.9 percent to € 533.2 million (previous year: € 513.3 million). Our extensive investing activities and higher working capital meant that financial debt had to be increased. Financial liabilities rose by € 168.3 million to € 1,401.7 million (previous year: € 1,233.4 million). At the same time, trade accounts payable increased by 1.4 percent and were € 219.7 million (previous year: € 216.8 million).

1 The difference between additions to property, plant and equipment and the cash outflow from investing activities was due to the timing of payments for investments and currency translation effects. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

5,106

4,686 268 Intangible Assets 219 3,975 168 2,542 Property, Plant and Equipment 2,305

1,927

780 833 Inventories 709

934 1,016 Trade Accounts Receivable 790

381 448 447 Other Assets

2009 2010 2011 t e m e n t s a t S l

Structure of Statement of Financial Position: Liabilities | in € million a n c i a

5,106 i n F 4,686

3,975 2,184 Equity 1,984

1,620

1,402 Financial Liabilities 1,233 1,006

513 533 Pension Obligations 492 220 Trade Accounts Payable 210 217

647 739 767 Other Liabilities

2009 2010 2011 54

Financing

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

At no time did the financial market crisis endanger the B. Braun Group. While the credit markets eased in the first half of 2011, the worsening of the European financial crisis in the second half of 2011 and the downgrading of the US credit rating led to a renewed general deterioration of conditions on the credit markets. This did not, however, affect B. Braun’s ability to make its planned refinancing arrangements at any time. As such, we believe our financial strategy is on the right course and see no need to alter it. Debt financing activities are conducted only with banks considered reliable and the range of measures includes syndicated and bilateral credit lines, corporate bonds, and an asset-backed securities (ABS) program. As of the reporting date, B. Braun had unutilized, committed long-term credit lines totaling € 384.6 million (previous year: € 417.2 million). We exceeded all of the mandatory financial covenants agreed with our banks.

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

Financing measures The main funding measures undertaken in the reporting year included a bilateral fixed-interest loan of over € 25 million maturing in 2015. In addition to this, corporate bonds amounting to € 150 million have been issued. The bonds have terms of 5 years (€ 50 million), 7 years (€ 80 million), and 10 years (€ 20 million).

Our asset-backed securities (ABS) program could be refinanced only partly via the commercial paper market during the reporting year. However, use of a back-up liquidity line ensured that the program could be refinanced at all times. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

Personnel report

Number of employees On December 31, 2011, B. Braun had 43,676 employees globally (previous year: 41,322), a 5.7 percent increase year on year. In Europe, excluding Germany, the number of employees increased by 4.3 percent to 12,901 (previous year: 12,373). This increase was mainly due to recruitment for the new production facilities and dialysis centers in Spain and Poland, as well as sales recruitment within Russia. The increase in employee numbers in the production and logistics areas of the Hospital Care Division increased the number of employees in Germany by 5.4 percent to 11,498 (previous year: 10.907). In the Asia / Pacific region, 10,479 employees (previous year: 9,261) were employed by B. Braun at year-end. The 13.2 per cent rise on the previous year is primarily linked to the acquisition of Oyster Medisafe Ltd. and the open- ing of new dialysis centers in India, the expansion of manufacturing in Malaysia, and the expansion of the sales organization in China. Adjusted for consolidation effects arising from the acquisition in India, the number of employees in the Asia / Pacific region increased by 9.5 percent. In North America, the number of employees decreased by 1.4 percent to 5,411 (previous year: 5,486), while in Latin America, it increased by 2.3 percent to 3,094 (previous year: 3,023). The number of employees also grew in Africa to 293 (previous year: 272), which is a 7.7 percent increase year on year.

Location retention t e m e n t s a t

The location retention agreements in Melsungen, Berlin, and Tuttlingen (all in Germany) have proved S l an effective means of securing employment and improving competitiveness. The agreements also provide a n c i

for training under overtime conditions. New agreements have been in place in Melsungen and Berlin a i n since 2009, and in Tuttlingen since 2011, with all agreements in effect for five years. During this period, F each employee may be asked to work up to 104 additional hours per year so that the company can respond flexibly and cost-effectively to market requirements. Employees share in the company’s success based on the net profit achieved. No redundancy lay-offs are allowed for the term of the agreements.

Profit-sharing pay-outs depend on the number of hours worked by the individual employee and for fiscal year 2011 could reach a maximum of € 936.00.

Digital Processes in Human Resource Management B. Braun’s Global Job Market set a new international standard in recruitment in 2010. In 2011, we expanded the functions of the global e-recruitment system and enhanced the careers pages to give candidates the opportunity to apply for internships and trainee positions online. We also introduced a reporting system for monitoring the success of our recruiting efforts. Since 2011, applicants, managers and human resources staff in Great Britain have now also been benefiting from the e-recruitment system, and it will be rolled out to Brazil in the future.

Starting with a cross-divisional training concept, the SAP HR system will be made available to all large B. Braun locations in the future. Self services have now also been introduced in Brazil and Malaysia for managers and employees to reduce administrative work and support human resources processes digi- tally. Alongside time and attendance management processes, such as vacation requests, additional self services are also being prepared for recording business trips, as well as for travel expenses and payroll. 56

Vocational training Well-trained and qualified junior employees are essential to assuring B. Braun’s future success.

Coinciding with the start of the 2011 training class, B. Braun dedicated one of the most state-of-the-art training centers in Germany with a total area of over 2,500 square meters at its Melsungen location. The most up-to-date technology, combined with advanced training concepts and an experienced team of training instructors, enable the qualification and advancement of tomorrow’s employees. Thanks to our new training center, we were able to increase the number of available technical trainee positions in particular and intend to further increase this number again in the coming year.

210 (previous year: 214) graduates successfully completed their training at our German site and positions were offered to all of those who decided to pursue their professional career with B. Braun. In the reporting year, we offered 254 (previous year: 225) trainee positions. Despite declining numbers of pupils, all trainee positions were filled and the number of trainees was kept at a high level.

There are currently 726 (previous year: 699) young people undergoing training in Germany. The total number increased by 3.9 percent in comparison with the previous year. 105 (previous year: 87) trainees were following Germany’s dual system for vocational education. This corresponds to an increase of 20.7 percent. They combine their operational training with a period of study at a university or university of co-operative education.

With the goal of qualifying and training our own employees for our future business requirements, B. Braun Vietnam Co. Ltd., in cooperation with Messer Haiphong Industrial Gases Co. Ltd. and other partners, has created a dual vocational training concept for mechatronic engineers based on the German model. The project is supported by the Vietnamese Ministries of Labor and of Education, the German Embassy in Hanoi, the Hessian Ministry of Economics and the German Federal Ministry of Education and Research.

Continuing education B. Braun’s continuing education and organizational development programs are designed to meet our company’s needs, ensuring that participants become familiar with our culture and management model so they can put our guiding principles and our Group strategy into practice.

The continuing education programs at B. Braun are consolidated under the umbrella of the “B. Braun Business School.” Alongside product training, it also offers training to improve professional, personal, and social skills. Other programs are focused specifically on managers, supporting them in their development on a global level and in a complex environment. The construction of the Kloster Haydau seminar and conference center provides a new location to use for employee training and will open by the end of 2012. The plan is to create a B. Braun campus that will serve as a central location for the continuing education programs of an internationally oriented “B. Braun Business School.” MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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

B. Braun’s organizational development programs support all departments in change processes and help them to manage these independently using company specific methods and tools. A holistic approach, encompassing process management, change leadership, and communication in the change process, ensures lasting success. In 2011, the B. Braun employee evaluation was developed at the Melsungen location as a key aspect of this approach. For 2012, the plan is for an international working group to adapt this evaluation for rollout to other locations. The main objectives of the employee evaluation are recognition of the successes and strengths of the employees, as well as highlighting growth opportunities and development plans. Oriented toward the specific requirements of the respective department, the entire program extends over a time period of three years. In 2011, greater use was also made of the Harrison Assessment as a further employee development tool for determining preferences and strengths.

The International Mobility project was expanded in 2011 to become an integrated talent management process. The project recently involved 29 employees from the accounting and controlling departments, who were prepared for international assignments at B. Braun in different countries. Talent management is an open process aimed at employees who are to be developed to take over key positions at B. Braun Group in the future. An additional focus for potential candidates is on apprentices, trainees, undergrad- uate and graduate students, as well as interns. This structured process identifies employees with an international focus, who have the necessary intercultural competence and willingness to play an active

role in their own development. They receive individually designed personal development and training t e m e n t s a t plans. A key component of this process is to assume responsibility at a B. Braun location outside the S l participant’s home country. In this way, talent management offers opportunities for development and a n c i

simultaneously ensures that international positions can be filled from within our own ranks in a timely a i n manner. An international database aims to achieve transparency regarding suitable candidates. F

Overseas employee assignments In 2011, the number of employees on international assignment increased to 189 (previous year: 183), a year-on-year increase of 3.3 percent. Key locations for overseas assignments remain the US, Malaysia, Vietnam, Great Britain, and, in 2011, increasingly also China. With its overseas assignments, B. Braun promotes international knowledge transfer and supports the objectives of talent management, ensuring the international competitiveness of the business.

Performance-related remuneration B. Braun’s Incentive Plan has made participation in the company’s financial performance available to its managers throughout the world since 2000. The initial program ran until 2009 and, due to the high level of international acceptance, in 2010 it was extended. The Incentive Plan allows for the voluntary purchase of profit participation rights. Their value depends on the development of the Group’s equity. Profit participation rights that have been bought can be sold after a period of five years. Two years after the original investment made by employees, the company offers an entitlement bonus of 25 percent in the form of additionally assigned participation rights. In fiscal year 2011, 69,202 profit participation rights were issued (previous year: 80,217). Of the 146 managers who were entitled to new rights in 2011, 60 percent (previous year: 63 percent) invested in B. Braun profit participation rights worth € 5.7 million (previous year: € 5.0 million). As of December 31, 2011, a total of 701,123 profit participation rights had been issued. 58

Thank you to our employees Thanks to the hard work, dedication, and commitment of our employees, the B. Braun Group enjoyed stable performance in 2011 despite the difficult economic environment. We would like to express our sincere thanks for the contributions made by our employees upon whose knowledge and enthusiasm we continue to rely on in the future. We would also like to thank the employee representatives and trade unions for their cooperation, which is always fair and constructive.

Risk and opportunities report

Risk management and controlling All key strategic and operational decisions at B. Braun are made taking into account the associated risks and opportunities. We have a fundamentally cautious corporate strategy and avoid any uncontrollable potential risks.

Risk management and controlling are key management tasks and an essential part of Group management. The B. Braun Group’s comprehensive risk management ensures that different risks can be identified, documented, assessed, monitored, and controlled. Risks resulting directly from business operations are quickly identified and assessed in monthly reports using our systematic controlling processes, which extend throughout the Group in all business areas, companies, and regions. We also identify and control risks that do not result directly from business operations. The divisional and Group risk committees assess these risks and document appropriate countermeasures. Our risk management is completed by internal audit and the annual audit of financial statements.

Having its own captive reinsurance company, REVIUM Rückversicherung AG, brings B. Braun much greater independence from the insurance market. The captive gives B. Braun direct access to the global insurance market.

Once again, the Group was able to place its globally valid coverage amounts for public and products liability insurance with the primary insurers. In 2011, REVIUM’s earnings were significantly better than in previous year as no additional loss events occurred.

The risk management system of REVIUM Rückversicherung AG is being strengthened by improved process efficiency and transparency resulting from its implementation of the new organizational guideline on the handling of potential product liability claims.

A feasibility study related to the Group’s property insurance contracts found that the transfer of property insurance risks to the captive reduces earnings volatility. As a result, some of the Group’s property insurance risks (excluding US risks) are to be transferred over to the reinsurance company owned by the Group. Natural hazards on the other hand are still to be borne by the primary insurers in the customary manner. The Management Board of B. Braun Melsungen AG approved these recommendations. Some parts of the Group’s property insurance risk have already been transferred to the captive as of January 1, 2012. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

Risk position The risks described below, which could have an impact on B. Braun, do not form an exhaustive list of all the risks to which B. Braun is exposed or may be exposed. Risks that are not known or that are considered to be immaterial at the time this annual report was compiled may have an effect on the earnings and financial position of the B. Braun Group.

Macroeconomic risk Having nearly recovered from the financial and economic crisis in 2010, the global economy once again took a turn for the worse in 2011. The far-reaching consolidation measures of peripheral euro area countries in particular may continue to hamper further economic progress. There is prevailing uncertainty over the scope of the spending cuts in Italy, Portugal, and Spain, as well as further measures in Greece, for instance. The continuing weak real estate market and high consumer debt in the US present further risks to the global economy. Ongoing political instability in North Africa also serves to compound uncertainties about economic growth. Growth in emerging economies, specifically Asia, is an important component for the global economy. A cooling of the Chinese economy, for example, would have a major impact on the global economy.

Industry risk

The healthcare market remains largely immune to economic fluctuations. In consequence, the develop- t e m e n t s a t ment of our disposable goods business is generally not greatly dependent on macroeconomic trends. In S l contrast, the capital goods produced by B. Braun are cyclical. There is generally also a dependence on a n c i

economic growth where patients have to pay for healthcare services themselves. a i n F The healthcare market is, however, starting to feel increasingly negative effects of the global economic crisis and, as a result, its dependence on economic trends is growing. To reduce the, in some cases substantial, public deficits, compulsory discounts were introduced or increased and budget cuts were implemented. This is compounded by the fact that some countries are also greatly extending payment periods.

Overall, the structural risks for businesses operating within the healthcare market have increased. At least mid-term, we expect these risks to remain at an elevated level.

Increased formalization of the international product approval process is also evident, which means higher costs for B. Braun. Longer processing times and more extensive requirements for documentation and studies can delay and increase the cost of product launches.

On the demand side, the creation of group purchasing organizations to bundle purchasing volumes is strengthening the market power of customers and in turn increasing the risk of further price pressure. In addition, we have observed in some countries that the entire volume of a tender is awarded as a sole- source contract to the winning bidder, thereby eliminating other suppliers from the market. 60

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

Product risk We counter the risk of interactions and side effects in infusion therapy, drug admixture, and orthopedics using highly developed quality management systems at our manufacturing facilities. These are modeled on international standards and assure that all regulatory requirements are observed. Regular reviews of our quality management systems utilizing internal and external audits, together with ongoing employee training, complement our quality management. There are no risks arising from ongoing legal actions that could jeopardize the company’s continued existence.

Staffing risk Demographic change represents the biggest challenge to human resources, giving rise to potential skills shortages and a lack of qualified personnel, and problems in filling management positions. B. Braun is pursuing a number of measures to counter this risk and optimize its perceived attractiveness as an employer. Through personnel development programs, B. Braun strives to encourage employee loyalty from an early stage and promote identification with the company. The aim is also to minimize turnover risk and threat of knowledge drain. Key aspects of B. Braun’s staffing strategy include, for example, initiatives to improve the work-life balance of employees, staff training, continuing education, and performance-based pay.

Information technology (IT) risk Important business processes rely on IT systems. A failure of essential IT systems or a large-scale loss of data could lead to serious disruption to business operations, even in manufacturing. Our continued investment in IT infrastructure and a redundant system architecture helps to minimize this risk. Other measures to reduce risk include regular data backups and employee training. A coordinated user access concept helps to protect against data misuse and its compliance is monitored by internal audit. Our systems are also protected by robust anti-malware programs.

Financial risk B. Braun operates internationally and is therefore exposed to currency risk, which it hedges using marketable financial instruments. We pursue a rule-based strategy known as “layered hedging,” which allows us to achieve coverage of average rates for the period of our hedging horizon and reduce the effects of currency translation on the Group’s net profit. Trading and management of derivative financial instruments are regulated by internal guidelines and are subject to continuous risk control. By derivatives, we refer only to marketable hedging instruments taken out with banks that have to date proven to be re liable partners. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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

Payer swaps are used at times for variable-rate bank loans to minimize interest rate risk.

Due to the continuing sovereign and banking crises in conjunction with the discussion of higher core capital ratios for banks, it is possible that the availability of financial resources may be restricted in the future. We reduce this risk through the existence of additional credit lines, which we are not currently utilizing, and remain capable of acting even with upcoming refinancing.

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

Opportunities for B. Braun In addition to risk, B. Braun regularly identifies and assesses opportunities for the company. Opportunities can generally arise from the refinement of medical standards, or the launch of new products. Through close dialog with the users of our products, and thanks to the integrated research and development activities at our centers of excellence (CoEs), we will continue to respond rapidly to opportunities and in addition create new sales potential. t e m e n t s a t

Capacity expansion enables us to participate in the growing demand for healthcare and medical S l technology products. The new, highly innovative production processes are continuing to improve our a n c i

competitiveness. a i n F From a regional perspective, Asia, Latin America, and Russia offer the greatest growth opportunities. Because we adopted an internationalized approach at a very early stage, we already operate in many of these markets through our own subsidiaries and are able to capitalize on sales opportunities as they arise. The planned capital investments in these regions will help secure B. Braun’s future.

Overall statement on the Group’s risk and opportunity situation From today’s viewpoint, no risks or dependencies are identifiable that could threaten the viability of the B. Braun Group for the foreseeable future. As far as possible and appropriate, we have insured ourselves against liability risks and natural hazards, as well as other risks.

Despite high liability coverage, it is not feasible to fully insure every potential risk related to product liability. However, in general, we are confident that the continuing market risk will not have a negative effect on the B. Braun Group’s performance. Offsetting these market risks are significant opportunities that may enable successful performance on the part of the company. 62

Subsequent events

No events occurred between the end of the fiscal year and the date on which the consolidated financial statements were compiled that could have a material effect on the results of operations, financial position or net assets for the fiscal year 2011.

Outlook

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

Group strategy We remain committed to the core principles of the current Group strategy carried forward for the period to 2014 and, therefore, no significant changes in strategy are necessary at the present time.

Economic outlook2 For 2012, the IMF expects a 3.3 percent increase in global economic output. The growth rate has been adjusted down by 0.7 percentage points from the September forecast. The resolution of the debt crisis in Europe and the US will be essential for the future, as well as the strength of economic expansion in the emerging economies, and particularly in China. A possible break-up of the euro area has not been taken into consideration in the forecasts and could lead to another recession in 2012. It is expected that public demand will decline due to the end of the government economic packages and greater consolidation efforts. Sustained economic uncertainty and high unemployment in some countries are also negatively affecting consumer demand.

According to estimates, global trade is set to grow by 3.8 percent, which is weaker than in 2011 (6.9 percent). After commodity prices rose in 2011, slightly decreasing prices for oil and other commodities are expected in 2012. The inflation rate will be slightly regressive in the industrialized countries, and be around the 1.6 percent mark. In emerging and developing countries, a declining inflation rate is also expected, although it should remain at high levels (average 6.2 percent).

Furthermore, there could be frictions in the international currency network, as the US, in particular, still considers the Chinese currency to be undervalued. A potentially stronger appreciation of the renminbi could negatively impact Chinese exports. The effect this would have on the global economy is uncertain.

2 Source: International Monetary Fund: World Economic Outlook, Update January 2012. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co 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

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

The IMF estimates that growth in Germany will be much slower than in 2011, with a 0.3 percent increase in economic output. Earlier forecasts were based on a much stronger growth rate and were then substantially revised downwards. Particularly the European debt crisis and the global economic downturn may mean greater risks for Germany as an exporting nation. However, slight increases in domestic demand are expected. A relatively stable labor market is expected in 2012. All in all, considerable uncertainty prevails concerning future growth.

Growth in Europe within 2012 is expected to remain heterogeneous. The forecasts are highly uncertain however. The resolution of the debt crisis is essential. A failure to resolve the debt crisis for a prolonged period and the onset of refinancing difficulties on the international capital markets for other euro area countries would render current forecasts invalid and potentially result in much weaker performance. A 0.5 percent decline in economic output is expected for the entire euro area. Significantly stronger growth is forecast for the Eastern European countries. Furthermore, Turkey (2.2 percent), Poland (3.0 percent), and Sweden (3.8 percent) are anticipated to experience above-average growth. Economic growth in Ireland (1.5 percent) and Switzerland (1.4 percent), on the other hand, is likely to be weak. A decline in economic output is expected in Greece (– 2.0 percent), Portugal (– 1.8 percent), and Spain (– 1.7 percent) respectively.

The Russian economy will have lower growth than in 2011 with an expected increase of 3.3 percent, t e m e n t s a t driven primarily by commodity prices, which, while falling slightly, will still remain at high levels. S l Investments in Russia may be affected by the election and uncertainties regarding future prospects. a n c i a i n

In 2012, the US economy is expected to see an increase in economic output of 1.8 percent, which is the F same rate as in 2011. Domestic demand will remain weak due to high unemployment, the persistently weak real estate market, and high levels of private debt. Due to declining growth in Latin America and Europe, it is unlikely that exports can offset the demand gap. Additional uncertainties associated with the presidential election in 2012 could negatively impact the investment climate.

A 1.0 percentage point decline in growth to 3.6 percent is expected in Latin America in 2012. Brazil will develop on a relatively stable course with an increase in economic output of 3.0 percent. Argentinean growth will, however, decline further and only be around 4.6 percent, whereas Mexico will remain almost at the same level of the previous year at 3.5 percent. The moderate development in Latin America is likely to be driven primarily by high commodity prices.

For the Asian emerging and developing economies, the IMF expects an increase in economic output of 7.3 percent in 2012. Risks include further developments within the US and the euro area, which are important trading partners. In addition, a further tightening of capital is expected in order to limit an overheating of the economy and a further increase in inflation, especially in China. Domestic demand will represent a major driver for growth, which is likely to reach 8.2 percent for China. Growth in India is likely to continue on a stable course, at around 7.0 percent. A modest increase of 1.7 percent is expected for Japan after a decline due to the natural disasters in 2011. In Indonesia and Malaysia, growth will be similar to the previous year at 6.3 percent and 5.1 percent respectively. Higher growth rates are expected for Thailand and Vietnam. 64

Outlook for the healthcare market The healthcare market will, overall, continue to grow. The increases will not, however, be distributed evenly and will depend on different factors in the individual regions.

In emerging countries, a further increase in healthcare spending is expected. More people will have access to medical treatment due to population growth, rising wealth, and the expansion of social security systems. Demand for higher quality healthcare services will grow as incomes continue to rise. Population growth in the industrialized countries will decline or stagnate. An aging population and the associated increase in morbidity will be the main growth drivers within the healthcare market.

In industrialized countries, sales growth with existing B. Braun products may result from growing demand due to increased morbidity. In emerging countries, sales growth may result from more patients having access to healthcare. Sales growth with product innovations and product differentiation may result from rising wealth in emerging countries. In the industrialized countries the change in demographics and increasing expectations of remaining fit and active throughout retirement will drive demand for innovative medical products.

Overall, the US and European healthcare markets will be shaped by price regulations such as compulsory discounts to help balance government budgets and relieve social insurance systems. Companies that are able to cut manufacturing costs, process costs in particular, will remain ahead of the competition. Safety products will be another growth area. According to an EU Directive, member states must im plement measures to reduce the risk of injury due to needles and other sharp objects. This Directive must be legally implemented in all EU member states by January 2013. This is expected to provide a strong impetus for safety products. The safety risk due to needle-stick injuries or cuts is also increasingly a subject for discussion in other countries.

Competitors from Asia are expected to get stronger as their quality levels will further approximate those of Western manufacturers, but at a lower cost. As a consequence of progressing globalization, increasingly transparent prices are also expected, which, coupled with the professionalization of purchasing, may also lead to a decline in prices and therefore margins.

Development of the German healthcare market is expected to be weak with cost pressures remaining high. Growth is anticipated specifically in orthopedics / implants and needles / catheters with slight growth in cardiology.

Growth within the European healthcare markets is also expected to be weak. It remains to be seen how the further course of the debt crisis will affect healthcare systems. Alongside Greece, Italy was also greatly affected by the debt crisis. Extensive cost reduction measures were implemented under pressure from the financial markets, which may also affect the healthcare market. A slight decline is expected in Spain and France. Prospects for the Eastern European healthcare markets look significantly better, particularly in Poland and Russia. Positive growth is expected within the areas of wound closure, orthopedics / implants, and needles / catheters. MANAGEMENT bo a rd | j o u r na l | g r o u p management r e p o r t | Co n s o l i d ate d F i nanc i a l s T A T E M E N T s 65

O u t l o o k

Moderate growth is expected for the North American healthcare market. However, this development is dependent on the concrete structure and implementation of the Patient Protection and Affordable Care Act health reform. Law suits against the act are currently pending in the Supreme Court. A decision is not expected before mid-2012. Should the law be deemed constitutional, positive effects on demand are expected due to increased insurance coverage. It could also, however, result in greater price pressures due to resulting improvements in the cost efficiency of the healthcare system. The growth of the healthcare market also greatly depends on the size of the planned cost reductions, which were agreed upon in the process of raising the debt ceiling. The area of orthopedics / implants is expected to be a growth segment, with high rates of increase anticipated. The area of wound closure is also likely to develop strongly.

Moderate growth is expected for Latin America and in particular Brazil. Due to positive economic development, it can be assumed that the demand for medical products will increase further. Due to increasing incomes, many Brazilians are investing in additional private insurance. As a result, more people have access to higher quality healthcare and many hospitals are improving their services accordingly. Sig- nificantly higher sales figures are forecast for the areas of wound closure, needles / catheters, orthopedics / implants, and cardiology.

Strong growth is expected within the Asian healthcare markets, excluding Japan, which should see t e m e n t s a t only moderate growth. Specific areas, such as orthopedics / implants, are on the other hand, anticipated S l to grow at an above-average rate due to the aging population. Significant growth is expected in India. a n c i

Strong impetus for growth is expected, in particular, in the areas of wound closure, needles / catheters, a i n orthopedics / implants, and cardiology. The Chinese market is expected to outperform the market in F India. In China, the government is increasingly focusing on the country’s interior. This region is being massively subsidized by the government in order to reduce social inequality. Among other measures, 2,000 hospitals are to be improved to above-average standards. In addition, improvement and expansion of the health insurance system is planned. This will lead to a significant rise in the number of potential customers.

Business and earnings outlook We anticipate an increase in Group sales of between five and six percent in the 2012 fiscal year. Capacity expansion and continued further development of our products enable us to participate in a growing healthcare market. Within this, we expect to see the strongest growth in Asia and Latin America. We are expecting a moderate increase in sales in North America and Europe. Risks from macroeconomic trends remain. Significant levels of public debt in Europe (particularly Greece, Italy, Spain, and Portugal) and the US could have a negative impact on the healthcare markets. We cannot rule out the possibility that further cost reduction measures could be implemented that could negatively affect suppliers of healthcare products and services. 66

With regards to earnings, we expect to get back on our usual growth course despite the increasingly difficult market environment. The cost reduction measures introduced in 2011 and fewer one-time effects will enable an improvement of EBITDA.

All in all, we believe it is highly likely that the B. Braun Group will deliver sales and earnings growth in line with forecasts over the next few years. In the event of payment defaults by governmental healthcare systems and far-reaching cuts in healthcare budgets, however, growth rates could be lower.

Expected financial and asset position In the future, B. Braun will continue to pursue the solid fiscal policies of recent years. The basis for the future financing of the Group remains a target equity ratio of approximately 45 percent combined with a steady dividend policy.

Our long-term refinancing volume is € 279.2 million for the next year and € 203.7 million in 2013. We have already begun to further optimize the maturity structure of non-current financial liabilities in 2011. The objective is to prevent refinancing peaks in individual years and to establish terms beyond 2015 at acceptable conditions. We expect no significant risks in pending financing measures due to our banking relationships, which have grown over many years, and the lasting profitability of B. Braun. A deterioration in lending conditions due to the ongoing difficulties with regards to banks and public budgets could make refinancing for B. Braun more difficult and, in particular, more expensive.

The planned capital investments over the next few years will be largely funded by operating cash flow. A moderate increase in borrowing may therefore be necessary. Systematic use of our cash pooling system will enable us to continue to ensure optimum cash allocation within the Group in the future. In addition, the ongoing Group-wide projects related to inventory and receivables management will have a lasting effect on limiting our financing requirements.

Overall statement on the outlook for the Group The B. Braun Group will be able to maintain the sales growth of recent years in the future. Through innovative products, state-of-the-art production facilities, and close proximity to our customers, we will be able to expand our existing market shares and capitalize on market opportunities. We are also confident that our earnings growth rates will return to previous levels. The dialog between our employees, clinicians and patients will continue to be the basis of our future success. Financial Statement s

Consolidated Financial Statements

Consolidated S tatement of Inc ome (Los s) 70

Consolidated S tatement of Comprehensive Inc ome (Los s) 70

Consolidated S tatement of F in a ncia l P osi t ion 71

Consolidated S tatement of Changes in Equi t y 72

Consolidated S tatement of Cash F low s 74

Not e s 75 aC C ounting policie s 87

Notes to the Consolidated S tatement of Inc ome (Los s) 9 4

Notes to the Consolidated S tatement of F in a ncia l P osi t ion 10 3 t a t e m e n t s S A ddi t ion a l Inf orm at ion 128 i a l c Notes to the Consolidated S tatement of Cash F low s 135 i n a n F Independent Audi tor s’ Rep or t 137

M a jor Shareholdings 138 70

Consolidated Statement of Income (Loss)

Notes 2011 2010 € ’000 € ’000 Sales 1) 4,609,439 4,422,813 Cost of Goods Sold 2) – 2,471,158 – 2,341,680 Gross Profit 2,138,281 2,081,133 Selling Expenses 3) – 1,277,175 – 1,218,889 General and Administrative Expenses – 230,907 – 221,641 Research and Development Expenses 4) – 179,871 – 155,406 Interim Profit 450,328 485,197 Other Operating Income 5) 204,261 231,873 Other Operating Expenses 6) – 222,419 – 260,895 Operating Profit 432,170 456,175 Income from Financial Investments/Equity Method 7) 3,312 3,902 Financial Income 3,691 4,606 Financial Expenses – 78,979 – 77,192 Net Financial Income (Loss) 8) – 75,288 – 72,586 Other Financial Income (Loss) 9) – 34 2,127 Profit before Taxes 360,160 389,618 Income Taxes 10) – 104,436 – 112,255 Consolidated Annual Net Profit 255,724 277,363 Attributable to: B. Braun Melsungen AG Shareholders 237,198 257,452 Non-controlling Interests 18,526 19,911 255,724 277,363 Earnings per Share (in €) for B. Braun Melsungen AG Shareholders in the Fiscal Year (Diluted and Undiluted) 11) 12.22 13.27

Consolidated Statement of Comprehensive Income (Loss)

2011 2010 € ’000 € ’000 Consolidated Annual Net Profit 255,724 277,363 Changes in Fair Value of Securities 15 – 14 Changes in Fair Value of Financial Derivatives – 12,932 3,551 Changes due to Currency Translation 4,041 131,214 Changes Recognized Directly in Equity (after Taxes) – 8,876 134,751 Comprehensive Income over the Period 246,848 412,114 Attributable to: B. Braun Melsungen AG Shareholders 227,408 374,997 Non-controlling Interests 19,440 37,117 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 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, 2011 Dec. 31, 2010 € ’000 € ’000 Assets Non-current Assets Intangible Assets 14) 16) 267,968 218,642 Property, Plant and Equipment 15) 16) 2,541,690 2,305,032 Financial Investments / Equity Method 17) 38,980 28,545 Other Financial Investments 17) 38,936 22,009 of which Financial Assets 38,936 22,009 Trade Receivables 18) 3,972 5,159 Other Assets 19) 35,815 49,398 of which Financial Assets 32,316 45,672 Income Tax Receivable 2,166 2,990 Deferred Tax Assets 96,328 101,814 3,025,855 2,733,589 Current Assets Inventories 20) 833,401 780,022 Trade Receivables 18) 1,012,321 928,384 Other Assets 19) 152,713 159,047 of which Financial Assets 82,928 86,965 Income Tax Receivable 36,030 50,663 Cash and Cash Equivalents 21) 45,340 34,369 2,079,805 1,952,485 Total Assets 5,105,660 4,686,074 Equity Subscribed Capital 22) 600,000 600,000 Capital Reserves and Retained Earnings 23) 1,424,505 1,227,315 Effects of Foreign Currency Translation 4,958 1,873 Equity Attributable to B. Braun Melsungen AG Shareholders 2,029,463 1,829,188 Non-controlling Interests 24) 154,069 154,839 Total Equity 2,183,532 1,984,027 Liabilities Non-current Liabilities Provisions for Pensions and Similar Obligations 25) 533,198 513,328 Other Provisions 26) 70,100 76,719 Financial Liabilities 27) 698,979 791,961 Trade Accounts Payable 29) 956 1,059 Other Liabilities 29) 27,512 10,712 of which Financial Liabilities 19,951 6,016 Deferred Tax Liabilities 97,412 79,525 1,428,157 1,473,304 Current Liabilities Other Provisions 26) 35,928 31,754 Financial Liabilities 27) 702,690 441,488 Trade Accounts Payable 29) 218,743 215,698 Other Liabilities 29) 490,801 471,685 of which Financial Liabilities 195,423 180,071 Current Income Tax Liabilities 45,809 68,118 1,493,971 1,228,743 Total Liabilities 2,922,128 2,702,047 Total Equity and Liabilities 5,105,660 4,686,074 72

Consolidated Statement of Changes in Equity

see Notes 22 – 24 Subscribed Capital Retained Other Own Equity Non- Equity Capital Reserves Earnings Reserves Shares attributable controlling to B. Braun Interests Melsungen AG Shareholders € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 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 / January 1, 2011 600,000 10,226 1,214,658 4,304 0 1,829,188 154,839 1,984,027 Dividend of B. Braun Melsungen AG 0 0 – 24,000 0 0 – 24,000 0 – 24,000 Increase in Subscribed Capital 0 0 0 0 0 0 0 0 Consolidated Annual Net Profit 0 0 237,198 0 0 237,198 18,526 255,724 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 11 0 11 4 15 Changes in Fair Value of Financial Derivatives 0 0 0 – 12,885 0 – 12,885 – 47 – 12,932 Changes due to Currency Translation 0 0 0 3,084 0 3,084 957 4,041 Comprehensive Income over the Period 0 0 237,198 – 9,790 0 227,408 19,440 246,848 Other Changes 0 0 – 3,133 0 0 – 3,133 – 20,210 – 23,343 December 31, 2011 600,000 10,226 1,424,723 – 5,486 0 2,029,463 154,069 2,183,532 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

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 Own Equity Non- Equity Capital Reserves Earnings Reserves Shares attributable controlling to B. Braun Interests Melsungen AG Shareholders € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 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 / January 1, 2011 600,000 10,226 1,214,658 4,304 0 1,829,188 154,839 1,984,027 Dividend of B. Braun Melsungen AG 0 0 – 24,000 0 0 – 24,000 0 – 24,000 Increase in Subscribed Capital 0 0 0 0 0 0 0 0 Consolidated Annual Net Profit 0 0 237,198 0 0 237,198 18,526 255,724 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 0 0 11 0 11 4 15 Changes in Fair Value of Financial Derivatives 0 0 0 – 12,885 0 – 12,885 – 47 – 12,932 Changes due to Currency Translation 0 0 0 3,084 0 3,084 957 4,041 Comprehensive Income over the Period 0 0 237,198 – 9,790 0 227,408 19,440 246,848 Other Changes 0 0 – 3,133 0 0 – 3,133 – 20,210 – 23,343 December 31, 2011 600,000 10,226 1,424,723 – 5,486 0 2,029,463 154,069 2,183,532 74

Consolidated Statement of Cash Flows

Notes 2011 2010 € ’000 € ’000 Operating Profit 432,170 456,175 Income Tax Paid – 83,787 – 90,289 Depreciation and Amortization of Property, Plant and Equipment and Intangible Assets (Net of Appreciation) 252,861 238,220 Change in Non-current Provisions 13,579 26,211 Interest Received and Other Financial Income 2,788 5,328 Interest Paid and Other Financial Expenditure – 42,928 – 43,688 Other Non-cash Income and Expenses – 35,090 – 30,467 Gain / Loss on the Disposal of Property, Plant and Equipment and Intangible Assets 3,817 1,525 Gross Cash Flow 34) 543,410 563,015 Change in Inventories – 52,184 – 29,805 Change in Receivables and Other Assets – 79,012 – 143,540 Change in Liabilities, Current Provisions and Other Liabilities (excluding Financial Liabilities) 37,644 – 337 Cash Flow from Operating Activities (Net Cash Flow) 34) 449,858 389,333 Investments in Property, Plant and Equipment and Intangible Assets – 547,424 – 549,748 Investments in Financial Assets – 10,130 – 10,413 Acquisitions of Subsidiaries, Net of Cash Acquired – 7,658 – 12,290 Proceeds from Sale of Subsidiaries and Holdings 761 911 Proceeds from Sale of Property, Plant and Equipment, Intangible Assets and Other Financial Assets 15,927 10,732 Dividends Received 943 3,403 Cash Flow from Investing Activities 35) – 547,581 – 557,405 Free Cash Flow – 97,723 – 168,072 Capital Contributions 2,231 0 Dividends paid to B. Braun Melsungen AG Shareholders – 24,000 – 24,000 Dividends paid to Non-controlling Interests – 19,399 – 6,235 Capital Contributions by Non-controlling Interests 0 986 Deposits and Repayments for Profit participation Rights 3,457 3,198 Loans 252,195 324,611 Loan Repayments – 106,160 – 143,052 Cash Flow from Financing Activities 36) 108,324 155,508 Change in Cash and Cash Equivalents from Business Operations 10,601 – 12,564 Cash and Cash Equivalents at the Start of the Year 34,369 48,756 Exchange Gains (Losses) on Cash and Cash Equivalents 370 – 1,823 Cash and Cash Equivalents at Year End 37) 45,340 34,369 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

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 – hereinafter also referred to as the B. Braun Group – as of December 31, 2011 have been prepared in compliance with Section 315 a (3) of the German Commercial Code (HGB) according to the International Financial Reporting Standards (IFRS) applicable as of the reporting date published by the International Accounting Standards Board (IASB), London, as well as the inter pretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as stipulated by the EU, and have been published in the online edition of the German Federal Gazette (Bundesanzeiger).

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

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

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

The Management Board of B. Braun Melsungen AG approved the consolidated financial statements for submission to the company’s Supervisory Board on February 22, 2012.

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

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

The financial statements of B. Braun Melsungen AG and its subsidiaries included in the consolidated financial statements have been prepared using standardized Group accounting policies. 76

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

Amendment to IAS 32: Financial Instruments: Representation The amendment to IAS 32 governs the accounting treatment of rights issues, options, or warrants on a fixed number of own shares in any currency other than the functional currency. Previously, such rights were treated as derivative liabilities. Such rights will now be classified as equity under certain conditions. B. Braun has not granted any subscription rights, options or warrants on its own shares in the past. This is also not planned for the future. This provision is therefore not relevant to the B. Braun Group at this time.

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

Amendment to IFRS 1: Initial application of the International Financial Reporting Standards The amendment to IFRS 1 enables first-time adopters of IFRS to apply the transition provisions of IFRS 7, Financial Instruments: Disclosures, for the disclosures newly added in March 2009. As such, the obligation to provide comparative information for the disclosures required by IFRS 7 for any annual comparative periods ending before December 31, 2009, no longer applies for first-time adopters of IFRS either. This provision is not relevant to the B. Braun Group.

IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments On the basis of the new interpretation of IFRIC 19, the IASB governs the accounting treatment of debtors where the terms of a financial liability are renegotiated to allow them to fully or partially extinguish the financial liability by issuing equity instruments (debt for equity swaps), and the creditor is an independent third party. IAS 39.41 stipulates that the difference between the carrying amount of an extinguished liability and the consideration paid must be recognized through profit or loss. IFRIC 19 now also clarifies that equity instruments issued by the debtor in order to fully or partially extinguish the financial liability must be viewed as part of the consideration paid and governs its valuation. In the past, B. Braun has not settled any financial liabilities by issuing equity instruments. This is also not planned for the future. This provision is therefore not relevant to the Group.

New and amended International Financial Reporting Standards and Interpretations whose application is mandatory for fiscal years beginning on or after January 1, 2011 (IAS 8.28)

Amendment to IAS 24: Related Party Transactions The revised version of IAS 24, Related Party Disclosures, provides in particular a revised definition of a related party and adjusts the definition of the transactions to be disclosed. The adjustments to the definition affect, in particular, entities that prepare financial statements on a lower Group level. The definition of transactions to be disclosed clarifies that executory contracts also fall under events that require disclosure. Furthermore, an exemption was introduced for entities that are controlled, jointly controlled or significantly influenced by the government. The amendment has no impact on the B. Braun Group. 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

N ote s

Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement The amendments to the IFRIC 14 interpretation are relevant if a pension plan specifies a minimum funding requirement and the company makes early payments of contributions on these. Compared to the existing provisions, the economic benefit arising from an early payment of contributions of the company that reduces future contributions relating to a minimum funding requirement is recognized as an asset. The amendment has no impact on the B. Braun Group.

New and amended International Financial Reporting Standards and Interpretations whose application is mandatory for fiscal years beginning on or after July 1, 2011 (IAS 8.30)

Amendment to IFRS 7: Financial Instruments: Disclosures The amendment to IFRS 7 concerns the required disclosures relating to the transfer of financial assets. Even where a financial asset is derecognized in its entirety, comprehensive disclosures are now required on any possible rights and obligations that were retained or transferred as part of the transaction. The revised standard will first be applicable in fiscal years beginning on or after July 1, 2011. As the amendment merely results in an extension of the disclosures, it will have no impact on the net assets, financial position and results of operations of the Group.

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

Amendment to IFRS 1: Initial application of the International Financial Reporting Standards The amendment provides an exemption on the retroactive application of all IFRS for a company, which prepares IFRS financial statements for the first time after a phase of severely hyperinflation. In addition, the amendment removes certain fixed dates for first-time adopters. The revised standard will first be applicable in fiscal years beginning on or after July 1, 2011 The provision will have no effects on the net assets, financial position, and results of operations of the Group.

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

Amendment to IAS 1: Presentation of Financial Statements: Presentation of the items of other net income Under the amendment, companies must show the items in other net income separately by those, which are reclassified to the statement of income, and those that are not recycled. The amendment must be applied on a binding basis for fiscal years beginning on or after July 1, 2012, and earlier voluntary application is permitted. As the amendment merely affects the presentation of the financial statements, it will have no impact on the net assets, financial position and results of operations of the Group. 78

IFRS 9: Financial Instruments As part of the project to replace IAS 39, Financial Instruments: Recognition and Measurement, standard IFRS 9, Financial Instruments, was published in November 2009. The new standard fundamentally changes the previous provisions on the classification and measurement of financial assets. The IASB has expanded the standard by pro visions on the accounting procedure of financial liabilities and on the derecognition of financial instruments. With the exception of the rules for financial liabilities voluntarily measured at fair value (fair value option), the provisions were carried over unchanged from IAS 39, Financial Instruments: Recognition and Measurement, to IFRS 9. In December 2011, the IASB decided to postpone the date of the originally planned mandatory application from January 1, 2013, to January 1, 2015. An earlier application of the provisions is possible, but, for financial liabilities requires also an early application of the provisions on financial assets. On the other hand, an early adoption of the provisions on financial assets is also possible without the early application of the new provisions on financial liabilities. IFRS 9 (amended 2011) specifies the exceptional provisions under which a company can make additional disclosures in the notes when applying IFRS 9 instead of adjusting disclosures of the previous year depending on the time of application. These were added to IFRS 7 as an amendment. The decision on adoption of the standard by the EU is still pending. The application of the sections of the standard published to date are not expected to have an impact on the net assets, financial position and results of operations of the B. Braun Group.

IFRS 10: Consolidated Financial Statements The new standard supersedes the consolidation guidelines in the previous IAS 27, Consolidated and Separate Financial Statements, and SIC-12, Consolidation – Special Purpose Entities. Regulations to be applied to separate financial statements remain unchanged in IAS 27, which has been renamed Separate Financial Statements. The focus of IFRS 10 is the introduction of a standard consolidation model for all companies, which is based on control over a sub sidiary by the parent entity. This is applicable to parent / subsidiary relations, which are based on voting rights, as well as on parent / subsidiary relations, which result from other contractual agreements. As a result, special purpose entities must also be assessed under these rules whose consolidation is currently carried out by the risk and reward concept of the SIC-12. IFRS 10 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier application of the standard is possible if this is stated in the Notes and IFRS 11 and 12 and the new provisions on IAS 27 and 28 are applied early. Current evidence indicates that the amendment will have no impact on the net assets, financial position and results of operations of the B. Braun Group.

IFRS 11: Joint Arrangements The new standard supersedes IAS 31, Interests in Joint Ventures, and eliminates the previous option of proportional consolidation of joint ventures. The mandatory application of the equity method when accounting for investments in joint ventures will, in the future, be in accordance with IAS 28, Investments in Associates and Joint Ventures, which so far concerned associates only and has now been amended to include joint ventures. IFRS 11 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier application of the standard is possible if this is stated in the Notes and IFRS 10, 12 as well as the new provisions of IAS 27 and 28 are also applied early. The elimination of proportionate consolidation is expected to have no material impact on the net assets, financial position and results of operations of the B. Braun Group. 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

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IFRS 12: Disclosures of Interests in Other Entities The new standard integrates the disclosure requirements relating to all interests in subsidiaries, joint ventures and associates as well as unconsolidated structured entities into one standard. Under the new standard, an entity must make quantitative and qualitative disclosures, which allow users of its financial statements evaluate the nature of and risks associated with its interests in other entities and the effects of those interests on its financial statements. IFRS 12 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier application of the standard is possible, if this is stated in the Notes. As the amendment merely affects disclosures in the Notes, it will have no impact on the net assets, financial position and results of operations of the Group.

IFRS 13: Fair Value Measurement The new standard establishes a single framework for fair value measurement where that is required by other Standards by, among other things, providing its definition and guidance on its determination. In addition, IFRS 13 expands the disclosure requirements in the Notes related to fair value measurements. IFRS 13 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013, an earlier application is possible. Current evidence indicates that the Standard will have no impact on the net assets, financial position and results of operations of the B. Braun Group.

IAS 19: Employee Benefits In June 2011, the IASB published an amendedversion of IAS 19, Employee Benefits. The provisions contained therein result in major effects on the recording and measurement of the expenses for defined benefit plans and of termi nation benefits. It also introduces enhanced disclosure requirements about employee benefits for many companies. The amended version of IAS 19 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013, an earlier application is possible. Whether and to what extent effects arise on the net assets, financial position and results of operations of the B. Braun Group is currently being analyzed.

IAS 27: Separate Financial Statements The consolidation guidelines contained in the previous IAS 27, Consolidated and Separate Financial Statements, and SIC-12, Consolidation – Special Purpose Entities, were superseded by provisions newly incorporated in IFRS 10, Consolidated Financial Statements. Therefore, as IAS 27 now only contains the provisions applicable to separate financial statements, the standard was renamed IAS 27, Separate Financial Statements. The new version of the standard is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier application is possible if this is stated in the Notes and IFRS 10, 11 and 12 and the amended IAS 28 are applied early. The amendment is unlikely to have any impact on the net assets, financial position and results of operations of the B. Braun Group.

IAS 28: Investments in Associates and Joint Ventures The mandatory application of the equity method when accounting for investments in joint ventures under IFRS 11 will in the future be carried out in accordance with the provisions of the correspondingly amended IAS 28, whose area of application has now been expanded to the accounting of joint ventures and which was therefore renamed IAS 28, Investments in Associates and Joint Ventures. The amended IAS 28 is to be applied for the first time in the initial period of a fiscal year beginning on or after January 1, 2013. An earlier application of the standard is possible if this is stated in the Notes and IFRS 10, 11 and 12 and the amended IAS 27 are applied early. The amendment will have no effects on the net assets, financial position, and results of operations of the Group. 80

IAS 32 and IFRS 7: Offsetting Financial Assets and Financial Liabilities The IASB has revised the provisions for offsetting financial assets and financial liabilities. The requirements for offsetting as outlined in IAS 32 were retained in principle and simply specified with additional application guidance. Therein, the standard emphasizes, on the one hand, specifically that an unconditional, legally enforceable right of set-off must also exist in the event of one of the parties involved being insolvent. On the other hand, examples of criteria were stated under which a gross settlement of financial assets and financial liabilities nevertheless results in an offsetting. The supplemented guidance must be applied retrospectively for fiscal years that begin on or after January 1, 2014. It was also decided to introduce in IFRS 7 new disclosure requirements related to certain offsetting arrangements. The requirements to disclose apply regardless of whether the offsetting arrangement actually resulted in an offsetting of the financial assets and financial liabilities affected. In addition to a qualitative description of the right to set-off, numerous quantitative disclosures are specified. They can be made on a summary basis either by the type of the financial instrument or by the type of the transaction. The amendments to IFRS 7 are to be applied retroactively for fiscal years that begin on or after January 1, 2013. The amendment will have no effects on the net assets, financial position, and results of operations of the Group.

As part of the ongoing improvement project of the IFRS, adjustments to wordings for clarification and changes were also made. They have no major impact on the net assets, financial position and results of operations of the B. Braun Group.

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

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

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

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

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

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

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

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

Scope of Consolidation In addition to B. Braun Melsungen AG, the consolidated financial statements include 38 German and 158 foreign subsidiaries in which B. Braun Melsungen AG either holds a direct or indirect majority of voting rights or has control over financial and business management.

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

The change in the number of Group companies as of December 31, 2011 and 2010 respectively is shown below:

2011 2010 Included as of December 31 of Previous Year 189 187 Companies Included for the First Time 11 8 Company Consolidations Discontinued – 2 – 2 Business Combinations – 2 – 3 Companies now Consolidated Using the Equity Method due to the Sale of Shares 0 – 1 Included as of December 31 of Reporting Year 196 189 82

The impact of the newly acquired companies on the statement of financial position at the time of initial consolidation and on the principal items in the statement of income for fiscal year 2011 is shown below:

Carrying Fair value Amount € ’000 € ’000 Non-current Assets 4,564 6,767 Current Assets 1,297 1,297 Acquired Assets 5,861 8,064 Non-current Provisions and Liabilities 2,659 2,815 Current Provisions and Liabilities 5,273 5,273 Acquired Liabilities 7,932 8,088 Net Assets Acquired – 2,071 – 24 Non-controlling Interests 0 – 636 Prorated Net Assets – 2,071 612 Goodwill 9,668 Cost of Acquisition 10,451 of which Non-controlling Interests 171 Cash and Cash Equivalents Acquired 361 Purchase Price Liability 3,746 Cash Flow for Business Acquisitions 7,066 Sales 2,263 Operating Profit – 406 Net Profit – 493

The goodwill remaining after purchase price allocation cannot be deducted for tax purposes and represents sales and production synergies.

Acquisitions in the reporting year contributed assets in the amount of € 2.2 million that had not previously been recognized. No significant receivables were included in the assets acquired. Goodwill was valued at € 19.8 million, of which € 7.9 million resulted from consolidation using the equity method of accounting.

In the previous year, the tangible assets of MedPro International Ltd., Chonburi / Thailand, a manufacturer of elastomeric pumps, as well as patents and a distribution right had already been purchased under an asset deal. The patents and the distribution right were valued in the consolidated financial statements at € 23.6 million as of December 31, 2010, taking into account the purchase price that had not yet been finally negotiated, and a goodwill of € 0.5 million was recognized. The final agreement was subsequently amended in the reporting year. The final agreement specifies fixed payments of US $ 6.45 million after execution of the agreement as well as of US $ 150,000 in 2011, 2012 and 2013. In addition, a variable payment of US $ 1.00 per pump sold in the period from November 15, 2011, to November 15, 2013, was agreed, which will become due on January 15, 2014. In doing so, it was determined that the parties assume a minimum sales quantity of 3 million units and a maximum sales quantity of 8 million pumps. During purchase price allocation, the maximum sales quantity was assumed, which means that a purchase price share of € 18.1 million is attributable to patents and a proportion of € 4.6 million is attributable to the distribution right. Synergy effects, which are expected from the incorporation into the Group, resulted in goodwill of € 3.1 million. 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

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To drive sustainable positioning of Aesculap as an innovative provider in endoscopy, all major tangible and non- tangible assets of Aragon Surgical, Inc., USA were purchased under an asset deal on September 26, 2011. Aragon Surgical is active in the area of high-frequency surgery and specializes in electrosurgical solutions for tissue cutting and fusion (cut & seal). With this portfolio expansion, Aesculap is strengthening its open-surgical product range, as well as its laparoscopic product range. Total acquisition equaled € 11.3 million. The purchase price consists of a cash payment in the amount of € 7.8 million, as well as a conditional purchase price liability fixed at the present value in the amount of € 3.5 million. The final amount of the purchase price is partially based on the sales success achieved in 2012 to 2016, and the maximum purchase price adjustment is not limited to any amount. The recorded amount represents the estimate for the actual purchase price liability. The fair value of the tangible assets acquired (property, plant and equipment, inventories) as of the date of acquisition was € 0.7 million, while the fair value of intangible assets (patents) was € 10.6 million. No receivables were included in the assets acquired. The effects on the sales of the Group and the consolidated annual net profit were not material.

To strengthen the business unit of enteral nutrition and the entire clinical nutrition, 100 percent of the shares in Nutrichem diät + pharma GmbH, Roth were purchased under a share deal on January 31, 2012. Nutrichem is a specialist for the development, production, filling and packaging of products for special nutrition requirements, in particular enteral nutrition, nutrition supplements and sports nutrition. In the fiscal year prior to the acquisition, the sales of the company amounted to € 47.6 million. The acquisition costs amounted to € 23.8 million. The purchase price was paid in cash. The disclosure of other information required under IFRS 3 for company acquisitions in 2012 is currently not possible and will therefore not be carried out in accordance with IFRS 3.B66, as the necessary information was not available at the time of preparing the consolidated financial statements due to the extent of reconciliation effort between the various Group companies and the accounting systems.

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

Holdings in three joint ventures and 18 associated companies are recognized in the consolidated financial statements as of the reporting date. Two associated companies were not measured using the equity method on materiality grounds.

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

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

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

They meet the conditions of Section 264b of the German Commercial Code (HGB) and are thus exempt from the requirement to compile Notes and a management report. 84

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

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

The companies listed above exercise their right to the exemptions.

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

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

Assets, debts, and contingent liabilities identifiable upon a merger of companies are valued on initial consolidation at the fair values attributable to them, regardless of the size of any non-controlling interests. For each company acquisition, it is determined on an individual basis whether the non-controlling interest in the company acquired are recognized at fair value or using the proportionate share of net assets of the acquired company. The option to recognized non-controlling interest at fair value is currently not exercised. Therefore, non-controlling interests are recognized at their proportionate share of net assets and no goodwill is recognized for non-controlling interests. 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

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

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

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

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

Unrealized gains from transactions between the Group and its associated companies are, where material, eliminated to the extent of the Group’s share in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of associated companies were adjusted, where necessary, to align them with the policies of the Group. c) Joint Ventures The Group’s interests in jointly controlled entities are recognized in the consolidated financial statements using proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities, and cash flows on a line-by-line basis with the corresponding items in the consolidated financial statements. The Group recognizes only that portion of gains or losses on the sale of assets to the joint venture that it is attributable to the interests of the other venturers. The Group does not recognize its share of gains or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it resells the assets to an independent party. Losses on intercompany transactions are treated similarly unless the transferred assets are impaired. d) Owners of Non-controlling Interests Transactions with owners of non-controlling interests are treated in the same way as transactions with parties within the Group. Sales of shares to owners of non-controlling interests result in gains or losses being recognized in the consolidated financial statements. Reciprocally, purchases of shares from owners of non-controlling interests result in the recognition of goodwill equivalent to the difference between the purchase price and the proportional carrying amount of the subsidiary’s net assets. 86

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

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

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

Translation differences on monetary items, such as available-for-sale financial assets, where fair value changes are directly recognized in equity, are reported as part of the gain or loss from fair value measurement. Translation differences on non-monetary items, where fair value changes are directly recognized in equity, are included in the revaluation reserve in equity.

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

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

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

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

Comparison of Selected Currencies

Closing Mid-rate on Reporting Date Average Annual Rate ISO-Code Dec. 31, 2011 Dec. 31, 2010 + – 2011 2010 + – in % in % 1 EUR = USD 1.293 1.336 – 3.2 1.392 1.327 4.9 1 EUR = GBP 0.837 0.861 – 2.8 0.868 0.858 1.1 1 EUR = CHF 1.217 1.250 – 2.7 1.234 1.382 – 10.7 1 EUR = MYR 4.101 4.095 0.1 4.256 4.273 – 0.4 1 EUR = JPY 100.070 108.650 – 7.9 111.029 116.455 – 4.7 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 87

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Accounting Policies

Intangible Assets a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of identifiable net assets and liabilities of the acquired company on the date of the acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Good- will is tested annually for impairment and is carried at cost less accumulated impairment losses. Write-downs of goodwill are reported under other operating expenses. Write-ups in value are not permitted. Gains and losses on the sale of companies include the carrying amount of the goodwill relating to the company sold. b) Development Costs The B. Braun Group invests a significant portion of its financial assets in research and development. In addition to internal research and development activities, the Group maintains numerous cooperative relationships with third parties.

Development expenses are defined as costs related to applying research findings or specialized knowledge for production planning and the manufacturing process before production or use has commenced. Development expenses are capitalized as intangible assets where it is considered likely that the project will be commercially successful, technically feasible and the costs can be reliably measured. Other development costs that do not meet these criteria are expensed as they occur. Development costs that have previously been expensed are not capitalized in subsequent years. Capitalized development costs are shown as internally generated intangible assets. Please see c) below regarding the useful life, amortization method, and review of residual carrying amounts. c) Other Intangible Assets Acquired intangible assets are recognized at acquisition cost. Internally developed intangible assets where future economic benefit is likely to flow to the Group and the costs of the asset can be reliably measured are recognized at the cost incurred during the development phase. This includes all costs directly related to the development process, as well as appropriate portions of relevant overhead costs. Intangible assets with finite useful lives are amortized by the straight line method over a period of four to eight years.

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

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

Amortization expense related to other intangible assets is recognized in the functional areas that are using the respective asset. Write-ups to a maximum of amortized acquisition cost or amortized cost to internally generate the asset are shown under other operating income.

Besides goodwill, the Group did not own any intangible assets with indefinite useful lives in the reporting periods presented. 88

Impairment of Non-financial Assets Intangible assets with indefinite useful lives are not amortized; they are tested annually for impairment. Assets that are amortized are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). With the exception of goodwill, non-monetary assets that have been subject to an impairment loss in the past are reviewed at each reporting date to see if a write-up is required.

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

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

Buildings 25 to 50 years Technical Plant and Machinery* 5 to 20 years Vehicles 6 years Other Plant, Operating and Office Equipment 4 to 20 years

* 1-shift operation

Land is not depreciated.

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

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

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

Depreciation expense related to property, plant and equipment is recognized in the functional areas that are using the respective asset. Write-ups to a maximum of amortized acquisition or manufacturing cost are shown under other operating income. Gains and losses from disposals of property, plant and equipment are recognized in the statement of income.

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

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

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Finance Leasing Leasing contracts for intangible assets and property, plant and equipment, where the Group carries the substantial risks and rewards of ownership of the leased asset, are classified as finance leases. At commencement of the lease term, finance leases are recognized as an asset at the lower of the fair value of the asset or the net present value of the minimum lease payments. Each leasing payment is apportioned between the finance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the leasing liability. This liability is reported under financial liabilities excluding the interest payments. The interest portion of the leasing payment is recognized as expense through the statement of income. Assets held under finance leases are depreciated over the useful life of the asset. If there is no reasonable certainty that the Group will obtain ownership of an asset at the end of the lease, the asset is depreciated in full over the shorter of the lease term or the useful life of the asset.

Financial Investments Recognized Using the Equity Method of Accounting and Other Financial Investments Equity investments are initially recorded at cost and in subsequent periods at the amortized prorated net assets. The carrying amounts are adjusted annually to reflect the investor’s share of the net profit or loss of the associate, distributions, and any other equity changes. Goodwill is included in the valuation of the associate rather than being separately identified. Goodwill is not amortized. Equity investments are written down when the recoverable amount of an investment in an associate falls below its carrying amount.

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

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

The categorization depends on the purpose for which the assets were acquired. Management determines the categorization of financial assets at initial recognition and re-evaluates this categorization on each reporting date. a) Financial assets at fair value through profit and loss Financial assets are measured at fair value through profit and loss if the financial asset is either held for trading or designated as being measured at fair value.

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

To date, the Group has not exercised the option of designating financial assets upon initial recognition as financial assets at fair value through profit and loss. 90

b) Loans and receivables Loans and receivables with fixed or determinable payments that are not quoted on an active market are categorized as loans and receivables. Loans and receivables are measured using the effective interest method at amortized cost less any impairments. With the exception of current receivables, where the interest rate effect is not material, interest income is recognized using the effective interest method.

c) Held-to-maturity financial assets Bills of exchange and debt instruments with fixed or determinable payments and fixed maturities, which the Group has the intention and ability to hold to maturity, are categorized as “held-to-maturity investments”. Held-to-maturity investments are measured at amortized cost using the effective interest method less impairments.

d) Available-for-sale financial assets Listed securities and redeemable bonds held by the Group that are traded on an active market are recognized at fair value as available-for-sale financial assets. Investments in unlisted shares held by the Group that are not traded on an active market are also recognized at fair value as available-for-sale financial assets. Gains and losses arising from changes in fair value are included directly in the revaluation reserve (equity) rather than in other financial income. Exceptions are impairment losses, interest calculated using the effective interest method, and gains and losses from foreign currency translation of monetary items, which are recognized in the statement of income. If a financial asset is disposed of or is acknowledged to have an impairment, its accumulated gains and losses recognized in the revaluation reserve for financial investments up to that point are reclassified to the statement of income.

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

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

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

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

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

A cco u nting po l icie s

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

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

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

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

If the level of impairment of a financial asset that is not an available-for-sale equity instrument decreases in a subsequent reporting period, and if the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment is reversed through the statement of income. The increased carrying amount due to reversal may not be higher than what the amortized would have been if the impairment had not been recognized.

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

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

In addition to direct expenses, manufacturing costs include allocated raw material and production overheads and depreciation related to production plant and equipment. Allocated costs related to pensions and voluntary social contributions made by the company are also included. Administrative expenses are included in the costs if they relate to manufacturing. 92

Provisions for Pensions and Similar Obligations Provisions for pensions and similar obligations are calculated using the projected unit credit method in accordance with IAS 19, taking into account future pay and pension increases and staffing fluctuations. The valuation is based on pension actuary assessments.

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

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

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

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

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

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

Financial Liabilities Financial liabilities are initially recognized at fair value less transaction costs. In subsequent periods, they are measured at amortized cost. Any difference between the amount disbursed (less transaction costs) and the re payment 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. 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

A cco u nting po l icie s

Derivative Financial Instruments Derivative financial instruments are initially measured at their fair value on the day that the contract is entered into. They are subsequently measured at their fair value as of each reporting date. The method of recording gains and losses depends on whether the derivative financial instruments in question have been designated as hedging instruments and, if so, on the nature of the hedged item. B. Braun Melsungen AG designates derivative financial instruments as a hedge against risks from fluctuating payment flows of future transactions that are most likely to materialize (cash flow hedge). On entering into a transaction, the Group documents the hedge relationship between the hedging instrument and the underlying transaction, the goal of its risk management, and the underlying hedging strategy. In addition, the assessment of whether the derivatives employed effectively compensate for the changes in the fair values or in the cash flows of the underlying transactions is documented at the time the hedging relationship is created and subsequently on an ongoing basis. The fair values of the various derivative financial instruments used for hedging purposes are recognized under other assets / liabilities. Changes in the valuation reserve for cash flow hedges are shown in the consolidated statement of changes in equity. The full fair value of derivative financial instruments designated as hedge instruments is shown as a non-current asset or liability if the residual term of the hedged underlying transaction is more than 12 months after the reporting date, and as a current asset or liability if it is shorter than that. Derivative financial instruments held for trading are recognized as current assets or liabilities.

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

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

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

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

Deferred tax liabilities arising from temporary differences in connection with investments in subsidiaries and associates are recognized except where the timing of the reversal of the temporary differences can be controlled by the Group and it is likely that the temporary differences will not be reversed in the foreseeable future. Please also see Note 10 Income Taxes. 94

Notes to the Consolidated Statement of Income (Loss)

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

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

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

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

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

Sales by Division 2011 2010 + – € ’000 % € ’000 % in % Hospital Care 2,159,445 46.8 2,086,696 47.2 3.5 Aesculap 1,355,753 29.4 1,281,071 29.0 5.8 OPM 568,409 12.3 554,613 12.5 2.5 B. Braun Avitum 500,614 10.9 474,768 10.7 5.4 Other Sales 25,218 0.5 25,665 0.6 – 1.7 4,609,439 100.0 4,422,813 100.0 4.2

Sales by Region 2011 2010 + – € ’000 % € ’000 % in % Germany 915,365 19.9 878,450 19.9 4.2 Europe & Africa 1,783,822 38.6 1,691,987 38.3 5.4 North America 908,259 19.7 940,145 21.3 – 3.4 Latin America 310,507 6.7 295,751 6.7 5.0 Asia & Australia 691,486 15.0 616,480 13.9 12.2 4,609,439 100.0 4,422,813 100.0 4.2

Sales by Type 2011 2010 + – € ’000 % € ’000 % in % Sales of Products 4,192,174 90.9 4,022,452 90.9 4.2 Sales of Services 417,265 9.1 400,361 9.1 4.2 4,609,439 100.0 4,422,813 100.0 4.2 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

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 )

2 Cost of Goods Sold Cost of goods sold includes the manufacturing costs of goods sold and the acquisition costs of merchandise sold. In addition to direct costs such as material, personnel and energy costs, manufacturing costs contain 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 distribution. As well as expenses related to customer training and consulting on technical product use.

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

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

5 Other Operating Income

2011 2010 € ’000 € ’000 Currency Translation Gains 162,298 184,753 Additional Income 10,403 9,058 Derivative Financial Instruments 1,522 8,573 Income from Other Periods 6,710 5,535 Proceeds from Appreciation of Current Financial Assets 4,272 2,423 Proceeds from the Disposal of Assets 1,558 1,837 Proceeds from the Release of Provisions 3,936 1,551 Other 13,562 18,143 204,261 231,873

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

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

Changes in the fair value of forward foreign exchange contracts that are not designated for hedge accounting are reported under derivative financial instruments. Financial assets / liabilities measured at fair value through profit and loss are shown in the statement of financial position under other assets / liabilities. 96

Other operating income includes income-related and other grants from the public sector. Income-related grants are recognized in the period in which the corresponding expenses occur. They amounted to € 1.9 million (previous year: € 1.7 million). Grants of € 1.7 million (previous year: € 1.6 million) were recognized through profit and loss in the reporting year. The grants were predominantly made to support structurally weak areas in Germany.

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

6 Other Operating Expenses

2011 2010 € ’000 € ’000 Currency Translation Losses 164,311 198,588 Losses from Impairment of Current Financial Assets 9,698 8,566 Additions to Provisions 4,333 7,376 Losses on the Disposal of Assets 4,646 2,546 Expenses from Other Periods 3,962 4,089 Derivative Financial Instruments 4,956 92 Other 30,513 39,638 222,419 260,895

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

Losses from impairment of current financial assets refer to impairment provisions for trade receivables.

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

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

2011 2010 € ’000 € ’000 Income from Financial Investments Recognized Using the Equity Method 3,640 4,307 Expenses from Financial Investments Recognized Using the Equity Method – 328 – 405 3,312 3,902 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

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 )

8 Net Financial Income

2011 2010 € ’000 € ’000 Interest and Similar Income 3,691 4,606 Interest and Similar Expenses – 49,486 – 48,414 of which to Affiliated Companies (0) (2,596) Interest Expenses for Pension Provisions, Net of Expected Income from Plan Assets – 29,493 – 28,778 – 75,288 – 72,586 of which Financial Assets and Liabilities at Fair Value: Interest Income from Discounting 320 281 Accrued Interest Expense – 5,006 – 5,455

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

9 Other Net Financial Income

2011 2010 € ’000 € ’000 Income from Joint Ventures (excluding Income from Financial Investments Recognized using the Equity Method) 63 2,099 Net Gains and Losses on: – Loans and Receivables 0 0 – Held-to-Maturity Financial Assets 0 0 – Available-for-Sale Financial Assets – 97 28 – Financial Liabilities measured at Amortized Cost 0 0 – 34 2,127

Interest on derivative financial instruments is shown under interest expense.

10 Income Taxes Income taxes include corporate and trade income taxes for German companies as well as comparable 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. 98

Income tax expenses and deferred taxes are as follows:

2011 2010 € ’000 € ’000 Actual Income Taxes 78,099 99,548 Deferred Taxes resulting from Temporary Differences 23,462 10,533 Deferred Taxes resulting from Losses Carried Forward 2,875 2,174 104,436 112,255

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

Dec. 31, 2011 Dec. 31, 2010 Assets Liabilities Assets Liabilities € ’000 € ’000 € ’000 € ’000 Intangible Assets 2,917 19,519 3,175 14,419 Property, Plant and Equipment 2,654 139,963 3,458 110,333 Financial Investments 320 680 267 634 Inventories 51,101 6,044 48,577 5,426 Trade Receivables 7,871 5,047 6,807 7,488 Pension Provisions 36,903 304 34,135 272 Other Provisions 13,119 1,201 14,596 1,921 Liabilities 28,657 1,237 21,886 1,443 Other 3 8,009 11 8,491 143,545 182,004 132,912 150,427 of which Non-current 54,387 169,493 53,459 135,641 Net Balance – 84,592 – 84,592 – 70,902 – 70,902 58,953 97,412 62,010 79,525 Valuation Allowances on Deferred Taxes resulting from Temporary Differences – 78 – – 58 – Deferred Taxes on Tax Credits 30,316 – 29,133 – Losses Carried Forward (Net, after Valuation Allowances) 7,137 – 10,729 – 96,328 97,412 101,814 79,525

The amount of temporary differences related to holdings in subsidiaries and associated companies, as well as interests in joint ventures for which, according to IAS 12.39, no deferred tax liabilities were recognized, is € 18.8 million (previous year: € 6.8 million). 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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Existing but not recognized tax losses carried forward can be utilized as follows:

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Within One Year 296 0 Within Two Years 1,005 550 Within Three Years 0 6,620 Within Four Years 0 3,080 Within Five Years or Longer 5,191 4,663 6,492 14,913 Can be Carried Forward Indefinitely 17,824 12,897 24,316 27,810

Deferred tax assets for which utilization depends on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences and where the company has incurred past losses amounted to € 4.4 million (previous year: € 5.3 million). Recognition of these deferred tax assets is based on relevant fore- casting, which justifies the expectation they will be utilized.

Deferred taxes of € 3.2 million (previous year: € 6.2 million) were recognized directly in equity. Of which € – 30,000 are attributable to fair value changes of securities and 3.3 million to fair value changes of derivative financial instruments.

The tax rate of B. Braun Melsungen AG is 28.2 percent (previous year: 27.4 percent). The increase is due to an increase in the average commercial tax rate. The tax expense calculated using B. Braun Melsungen AG’s tax rate can be reconciled to the actual tax expense as follows:

2011 2010 € ’000 € ’000 Tax Rate of B. Braun Melsungen AG 28.2 % 27.4 % Profit before Taxes 360,160 389,618 Expected Income Tax at Parent Company's Tax Rate – 101,601 – 106,911 Differences due to Other Tax Rates – 3,021 – 6,782 Changes to Deferred Tax Assets and Liabilities due to Changes in Tax Rates – 794 796 Tax Reductions due to Tax-exempt Income 7,637 10,298 Tax Increases due to Non-deductible Expenses – 11,402 – 9,244 Addition / Deduction of Trade Tax and Similar Foreign Tax Items – 1,591 – 1,591 Final Withholding Tax on Profit Distributions – 841 – 749 Tax Credits 2,268 2,632 Tax Income (Expense) relating to Previous Periods 3,245 – 2,739 Change to Valuation Allowances on Deferred Tax Assets – 118 9 Profit (Loss) of Financial Investments recognized using the Equity Method 686 712 Other Tax Effects 1,096 1,314 Actual Tax Expense – 104,436 – 112,255 Effective Tax Rate 29.0 % 28.8 % 100

11 Earnings per Share Earnings per share are calculated according to IAS 33 by dividing the consolidated annual net profit (excluding non-controlling interests) by the number of shares in issue. The number of shares eligible for dividends remained unchanged at 19,404,000 during the fiscal year. There were no outstanding shares as of December 31, 2011 or December 31, 2010 that could have diluted the earnings per share. Earnings per share amounted to € 12.22 (previous year: € 13.27).

The dividend paid in 2011 and 2010 for the respective previous fiscal year was € 24 million (€ 1.24 per share). The Management Board and Supervisory Board are proposing a dividend of € 1.24 per share for fiscal year 2011. The proposed dividend must be ratified by the Annual Shareholders’ Meeting on March 8, 2012. This dividend liability is not included in the consolidated financial statements.

12 Other Notes to the Consolidated Statement of Income

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

2011 2010 € ’000 € ’000 Expenses for Raw Materials and Acquired Merchandise 1,677,357 1,592,717

In 2010, expenses related to inventory write-downs recognized in cost of goods sold were € 23.9 million (previous year: € 10.8 million) and reversals of write-downs from previous periods (increase in net realizable value) of € 4.2 million (previous year: € 3.1 million) were recognized.

Payments under operating leases

2011 2010 € ’000 € ’000 69,834 68,661

Payments under operating leases include € 1.2 million (previous year: € 1.1 million) of payments under sub-leases. Leasing expenses are predominantly included in cost of goods sold. MANAGEMENT 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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Personnel Expenditures / Employees The following personnel expenditures are recognized in the statement of income:

Personnel Expenditures 2011 2010 € ’000 € ’000 Wages and Salaries 1,343,766 1,288,877 Social Security Payments 253,079 243,413 Welfare and Pension Expense 52,022 49,382 1,648,867 1,581,672 Employees by Function (Average for the Year, including Temporary Employees) Production 25,966 24,406 Marketing and Sales 9,884 9,414 Research and Development 1,316 1,211 Technical and Administration 5,573 5,285 42,739 40,316 of which Part-time 2,051 1,926 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.

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

In regard to first-time consolidated companies, an annual average of 280 employees was reported for 2011, compared to 235 for 2010. 102

13 Total Auditors’ Fee The following fees were recognized as expense for services provided worldwide in 2011 by the auditors of PricewaterhouseCoopers:

2011 2010 € ’000 € ’000 Audit Fees 3,929 3,760 of which PricewaterhouseCoopers AG, Germany 1,019 983 Other Certification Services 75 52 of which PricewaterhouseCoopers AG, Germany 0 12 Tax Advisory Services 946 1,084 of which PricewaterhouseCoopers AG, Germany 295 285 Other Services 238 652 of which PricewaterhouseCoopers AG, Germany 38 469 5,188 5,548 of which PricewaterhouseCoopers AG, Germany 1,352 1,749

The audit fees include all fees paid and outstanding to PricewaterhouseCoopers plus reimbursable expenses for the audit of the Group’s consolidated financial statements and the audit of the financial statements of B. Braun Melsungen AG. Fees for certification services mainly relate to certifications performed as part of acquisitions and divestitures, the examination of internal control systems, particularly IT systems, and expenses related to statutory or judicial requirements. The item tax advisory services mainly relates to fees for advice on completing tax returns, checking tax assessments, support for company audits or other enquiries conducted by the tax authorities as well as tax advice related to transfer pricing. MANAGEMENT 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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Notes to the Consolidated Statement of Financial Position

14 Intangible Assets

Cost of Acquisition Acquired Licenses, Internally Advance Total or Manufacture Goodwill Trademarks generated Payments and Other Intangible Similar Rights Assets € ’000 € ’000 € ’000 € ’000 € ’000 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 / January 1, 2011 63,517 271,542 34,048 27,777 396,884 Foreign Currency Translation – 878 1,374 1,021 – 39 1,478 Additions to Scope of Consolidation 9,668 1,489 0 17 11,174 Disposals from Scope of Consolidation 0 – 15 0 0 – 15 Additions 3,418 29,123 12,224 19,488 64,253 Transfers 0 6,697 – 595 – 6,304 – 202 Write-ups 0 0 0 0 0 Disposals – 473 – 2,500 0 – 13 – 2,986 December 31, 2011 75,252 307,710 46,698 40,926 470,586 Accumulated Amortization 2011 503 198,378 3,737 0 202,618 Accumulated Amortization 2010 624 174,838 2,780 0 178,242 Carrying Amounts December 31, 2011 74,749 109,332 42,961 40,926 267,968 Carrying Amounts December 31, 2010 62,893 96,704 31,268 27,777 218,642 Amortization in the Fiscal Year 0 25,060 849 0 25,909 of which Unscheduled 0 6 0 0 6

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

Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing. Each of these cash- generating units represents the Group’s investment by the primary reporting segment and the country of operation. 104

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

Hospital Care Aesculap OPM B. Braun Total Avitum € ’000 € ’000 € ’000 € ’000 € ’000 December 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 %

December 31, 2011 Carrying Amount of Goodwill 27,731 5,861 18,756 22,401 74,749 Annual Growth Rate 2.8 % 2.6 % 2.3 % 3.3 % Discount Rate 7.9 % 7.9 % 7.9 % 8.0 %

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

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

If the actual future gross margin had been 10 % less than the gross margin estimated by management on De- cember 31, 2011, no impairment of goodwill would have occurred. The same holds true if the discount rate that was used to calculate the discounted cash flow had been 10 % higher than management’s estimates. MANAGEMENT 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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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, 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 Subsequent Capitalization 0 0 0 0 0 Disposals – 2,085 – 53,225 – 27,349 – 5 – 82,664 December 31, 2010 / January 1, 2011 1,187,116 1,836,417 611,861 444,214 4,079,608 Foreign Currency Translation 1,101 7,061 – 3,018 4,188 9,332 Additions to Scope of Consolidation 1,860 3,391 39 0 5,290 Additions 46,545 90,444 49,888 290,282 477,159 Transfers 76,985 110,424 43,473 – 230,680 202 Subsequent Capitalization 0 0 0 0 0 Disposals – 9,592 – 43,774 – 29,818 – 1,970 – 85,154 December 31, 2011 1,304,015 2,003,963 672,425 506,034 4,486,437 Accumulated Depreciation 2011 377,147 1,124,012 443,588 0 1,944,747 Accumulated Depreciation 2010 344,192 1,034,308 396,076 0 1,774,576 Carrying Amounts December 31, 2011 926,868 879,951 228,837 506,034 2,541,690 Carrying Amounts December 31, 2010 842,924 802,109 215,785 444,214 2,305,032 Depreciation in the Fiscal Year 34,925 132,361 59,987 0 227,273 of which Unscheduled 250 44 31 0 325

On the reporting date, no unfulfilled conditions or uncertainties with regards to market success existed, which would have required to modify recognition in the statement of financial position.

Borrowing costs of € 2.6 million were capitalized in the year under review (previous year: € 551,000). An interest rate of 3.4 percent (previous year: 4.0 percent) was utilized in the calculations.

In the statement of financial position, government grants for investments in the amount of € 2.0 million (previous year: € 2.6 million) have been deducted from the carrying amounts of the relevant assets. The current carrying amount of property, plant and equipment acquired with government grants is € 43.4 million (previous year: € 49.4 million). 106

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Licenses, Trademarks and Other Similar Rights 620 573 Accumulated Amortization – 92 – 74 Buildings 137,580 136,121 Accumulated Depreciation – 35,243 – 32,501 Technical Plant and Machinery 15,725 15,925 Accumulated Depreciation – 10,270 – 9,913 Other Plant, Operating and Office Equipment 13,836 13,193 Accumulated Depreciation – 8,348 – 7,665 Net Carrying Amount 113,808 115,659

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

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

Dec. 31, 2011 Dec. 31, 2010 Nominal Discount Net Present Nominal Discount Net Present Value Value Value Value € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 Less than One Year 12,691 4,674 8,017 12,581 5,034 7,547 Between One and Five Years 40,119 15,191 24,928 41,980 16,535 25,445 Over Five Years 63,916 11,650 52,266 73,098 14,895 58,203 116,726 31,515 85,211 127,659 36,464 91,195

The two largest finance leasing agreements relate to the real estate for the Hospital Care Division’s LIFE facility (carrying amount € 35.5 million), and the Aesculap Division’s Benchmark factory (carrying amount € 18.6 million). MANAGEMENT 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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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 % 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

2011 Babolat VS France 89,336 37,087 107,798 3,469 27.9 Schölly Fiberoptic GmbH Germany 39,027 12,431 66,618 5,989 27.9 B. Braun Avitum Ireland Ltd. Ireland 2,719 3,338 2,131 – 485 47.0 131,082 52,856 176,547 8,973

As of December 31, 2011, the goodwill of holdings in associated companies totaled € 11.6 million (previous year: € 3.7 million). 108

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, 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 Disposals from Scope of Consolidation 0 – 12,420 0 0 0 – 12,420 Additions 7,099 18,684 0 25 30 25,838 Disposals 0 – 878 0 – 12 – 1,029 – 1,919 Fair Value Adjustments 0 0 0 0 36 36 December 31, 2010 / January 1, 2011 29,544 16,901 0 910 4,218 51,573 Foreign Currency Translation 0 0 0 0 – 18 – 18 Additions to Scope of Consolidation 0 0 0 0 58 58 Disposals from Scope of Consolidation 0 – 10,864 0 0 0 – 10,864 Additions 10,630 13,993 0 9 7,264 31,896 Transfers 0 0 0 0 7,300 7,300 Disposals – 195 0 0 0 – 850 – 1,045 Fair Value Adjustments 0 0 0 0 35 35 December 31, 2010 39,979 20,030 0 919 18,007 78,935 Accumulated Depreciation 2011 999 0 0 0 20 1,019 Accumulated Depreciation 2010 999 0 0 0 19 1,018 Carrying Amounts December 31, 2011 38,980 20,030 0 919 17,987 77,916 Carrying Amounts December 31, 2010 28,545 16,901 0 910 4,198 50,554 Depreciation in the Reporting 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, 2011 Dec. 31, 2010 € ’000 € ’000 Assets Non-current Assets 1,385 1,626 Current Assets 3,922 3,149 5,307 4,775 Liabilities Non-current Provisions and Liabilities 59 175 Current Provisions and Liabilities 3,681 3,221 3,740 3,396 Net Assets 1,567 1,379

2011 2010 € ’000 € ’000 Sales 8,407 8,616 Operating Profit 192 150 Net Profit 174 135 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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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 to 60 days 61 to 90 days 91 to 180 days than 180 days Dec. 31, 2010 Trade Receivables 915,163 611,084 78,252 34,066 30,605 59,777 101,379

Dec. 31, 2011 Trade Receivables 1,003,485 621,575 85,868 34,739 29,625 71,492 160,186

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

Total Not yet Overdue Overdue Overdue Overdue Overdue more due up to 30 days 31 to 60 days 61 to 90 days 91 to 180 days than 180 days 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

Dec. 31, 2011

Trade Receivables 37,251 8,953 2,200 626 951 2,308 22,213 Impairment Provisions – 24,384 – 2,137 – 1,177 – 441 – 694 – 1,511 – 18,424 Carrying Amount 12,867 6,816 1,023 185 257 797 3,789

With regard to trade receivables that are neither impaired nor in arrears, there were no indications as of the reporting date that the debtors in question are not able to meet their payment obligations. 110

Impairment provisions made on trade receivables have changed as follows:

2011 2010 € ’000 € ’000 Amount of Impairment Provisions as of January 1 33,423 33,412 Currency Translation – 16 2,292 Additions 9,743 10,995 Utilization – 7,176 – 7,417 Releases – 4,815 – 5,859 Amount of Impairment Provisions as of December 31 31,159 33,423 of which Specific 24,383 29,247 of which General 6,776 4,176

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

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

2011 2010 € ’000 € ’000 Expenses for Complete Derecognition of Trade Receivables 8,951 5,813 Income from Trade Receivables Previously Derecognized 3,916 35

Fair value of collateral received totaled € 4.8 million (previous year: € 3.8 million). The collateral is mainly payment guarantees, with terms extending to December 2012.

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

As of December 31, 2011, B. Braun Group companies had sold receivables worth € 71.0 million (previous year: € 70.8 million) under an asset-backed securities (ABS) program with a maximum volume of € 100 million. The basis for this transaction is the transfer of trade receivables of individual B. Braun subsidiaries to a special purpose entity within the framework of an undisclosed assignment. The special purpose entity (SPE) is not consolidated because under IAS 27.12 ff, B. Braun neither holds a stake in it nor is able to control its management or finances in order to benefit from its activities. Nor is consolidation mandatory under SIC-12, as B. Braun does not bear the majority of the SPE’s risks and rewards. The requirements for a receivables transfer according to IAS 39.15 ff are met, since the receivables are transferred according to IAS 39.18 a). Verification in accordance with IAS 39.20 shows that substantially all risks and rewards were neither transferred nor retained. The control of receivables remained with B. Braun, as a further sale of the receivables is economically detrimental for the special purpose entity. Therefore, according to IAS 39.30 B. Braun’s continuing involvement must be recognized. This includes, on the one hand, the maximum amount that B. Braun could conceivably have to pay back under the senior and third-ranking default guarantee assumed (€ 1.6 million, previous year: € 1.6 million). On the other hand, the maximum expected interest payments until payment is received for the carrying amount of the receivables transferred are recognized in the statement of financial position €( 476,000, previous year: € 483,000). The fair value of the guarantee / interest payments to be assumed has been assessed at € 175,000 (previous year: € 169,000) and recorded under other liabilities. MANAGEMENT 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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19 Other Assets

Dec. 31, 2011 Dec. 31, 2010 Residual Term Residual Term Residual Term Residual Term < 1 year > 1 year < 1 year > 1 year € ’000 € ’000 € ’000 € ’000 Other Tax Receivables 36,378 0 40,740 0 Receivables from Social Security Providers 1,835 567 1,791 379 Receivables from Employees 2,954 117 4,677 128 Advance Payments 7,392 0 7,764 0 Accruals and Deferrals 21,226 2,815 17,110 3,219 69,785 3,499 72,082 3,726 Receivables from Derivative Financial Instruments 3,337 0 10,945 20 Available-for-Sale Financial Assets 3,569 0 4,488 0 Held-for-Trading Financial Assets 9,830 0 11,035 0 Held-to-Maturity Financial Assets 0 0 87 0 Other Receivables and Assets 66,192 32,316 60,410 45,652 82,928 32,316 86,965 45,672 152,713 35,815 159,047 49,398

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

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

20 Inventories

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Raw Materials and Supplies 202,823 193,062 Provisions – 11,337 – 10,654 Raw Materials and Supplies – Net 191,486 182,408 Work in Progress 139,184 144,157 Provisions – 7,125 – 9,987 Work in Progress – Net 132,059 134,170 Finished Products, Goods 577,066 524,068 Provisions – 67,210 – 60,624 Finished Products, Goods – Net 509,856 463,444 833,401 780,022

As of December 31, 2011, inventories of € 392.9 million (previous year: € 350.0 million) were recognized at net realizable value.

No inventories were pledged as collateral for liabilities (previous year: € 9.1 million). 112

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

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

22 Subscribed Capital The subscribed capital of B. Braun Melsungen AG in the amount of € 600 million consists of 19,404,000 bearer shares without nominal value, which are fully paid up. Each share without nominal value represents a calculated share of € 30.92 of the subscribed capital.

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

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

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

Changes in Reserve for Fair Value Reserve Total Other Provisions Cash Flow of Available- for Currency Hedges for-Sale Translation Financial Assets Differences € ’000 € ’000 € ’000 € ’000 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 / January 1, 2011 2,396 35 1,873 4,304 Changes recognized directly in Equity (after Taxes) Changes in Fair Value of Securities 0 11 0 11 Changes in Fair Value of Financial Derivatives – 12,885 0 0 – 12,885 Changes due to Currency Translation 0 0 3,085 3,085 Total – 12,885 11 3,085 – 9,789 December 31, 2011 – 10,489 46 4,958 – 5,485 MANAGEMENT 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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Changes in the other equity capital components are shown in the Consolidated Statement of Changes in Equity.

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

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

25 Provisions for Pensions and Similar Obligations a) Pension obligations

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Provisions for Pension Obligations 532,289 512,563 Provisions for Similar Obligations 909 765 533,198 513,328

Payments of € 35.5 million are expected in 2012. Of this, € 13.2 million relates to contributions to external plans and € 22.3 million to benefits that will be paid to beneficiaries directly by the employer.

The Group’s pension obligations relate to commitments under defined contribution and defined benefit plans. For defined contribution plans, the Group has no further payment obligations once the contributions have been paid. They are recognized as an operating expense in the amount of the contributions paid. In fiscal year 2011, this amount was € 20.1 million (previous year: € 17.7 million).

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

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

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

In Germany, benefit obligations stemming from contractual provisions primarily consist of annuity payments made in the event of disability, death, or an employee reaching the defined age limit. The main pension plans for employees in Germany who joined the company in 1992 or later have a modular form. Employees who joined the company before 1992, with a small number of exceptions, received commitments linked to their final salaries. In other countries, benefit obligations from contractual provisions mainly consist of annuities based on length of service and salary. 114

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

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

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

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

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Net Present Value of Funded Pension Obligations 260,238 236,917 Fair Value of External Plan Assets – 201,835 – 184,651 Excess Cover / Shortfall 58,403 52,266 Net Present Value of Unfunded Pension Obligations 592,226 565,443 Unrealized Actuarial Gains (+) / Losses (–) – 117,112 – 103,838 Unrecognized Past Service Costs – 1,228 – 1,308 Effect of Asset Value Limitation 0 0 Pension Provision (Net) 532,289 512,563 of which Assets 2,896 3,491 of which Liabilities 535,185 516,054

The change in pension provisions in 2011 and 2010 was as follows:

2011 2010 € ’000 € ’000 Pension Provision (Net) as of January 01 512,563 484,835 Foreign Currency Translation 325 1,414 Changes in Scope of Consolidation 0 306 Transfers – 7 5,563 Payments – 34,632 – 33,173 Pension Expense 54,040 53,618 Pension Provision (Net) as of December 31 532,289 512,563 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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Pension expenses included in the statement of income consist of the following:

2011 2010 € ’000 € ’000 Current Service Costs 26,389 23,591 Interest Expense 37,960 37,228 Expected Return on External Plan Assets – 8,465 – 8,450 Amortization of Actuarial Gains and Losses 2,800 1,515 Amortization of Past Service Costs 1,381 123 Effect of Lapsing and Settlement of Plans – 6,025 681 Effect of Asset Value Limitation 0 – 1,070 Pension Expense on Defined Benefit Plans 54,040 53,618 Pension Expense on Defined Contribution Plans 20,098 17,664 Pension Expense 74,138 71,282

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

Experience adjustments to actuarial gains and losses were as follows:

2011 2010 2009 2008 2007 € ’000 € ’000 € ’000 € ’000 € ’000 Experience Gains (+) / Losses (–) on Pension Obligations – 1,183 1,863 3,345 – 2,996 – 5,889 Experience Gains (+) / Losses (–) on Plan Assets – 5,640 4,781 4,849 – 23,776 – 4,179

Pension benefit obligations and assets are reconciled as follows:

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Net Present Value of Obligation at Start of Year 802,360 716,871 Current Service Costs 26,389 23,591 Interest Expense 37,960 37,228 Employee Contributions 3,061 2,539 Actuarial Gain (+) / Loss (–) 8,690 39,441 Currency Effects 7,435 23,200 Total Benefits Paid – 28,263 – 31,362 Past Service Costs 1,299 223 Effect of Changes in Scope of Consolidation 0 306 Effect of Transfers – 7 6,834 Effect of Plan Settlements – 326 – 15,609 Effect from Lapsing of Obligations – 6,134 – 902 Net Present Value of Obligation at End of Year 852,464 802,360 116

The effect from the lapsing of obligations is based predominantly on the part of the obligations from annual benefits in an insurance event in Germany, which no longer applied on the reporting date.

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Market Value of Plan Assets at Start of Year 184,651 163,268 Expected Return on External Plan Assets 8,465 8,450 Currency Effects 5,364 18,141 Actuarial Gain (+) / Loss (–) – 5,640 4,781 Employer Contributions 12,696 11,369 Employee Contributions 3,061 2,539 Fund Payments – 6,327 – 9,558 Effect of Changes inS cope of Consolidation and Transfers 0 1,270 Effect of Plan Settlements – 435 – 15,609 Market Value of Plan Assets at End of Year 201,835 184,651

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Expected Return on External Plan Assets 8,465 8,450 Actuarial Gain (+) / Loss (–) – 5,640 4,781 Actual Return on External Plan Assets 2,825 13,231

The plan assets consist of the following:

Dec. 31, 2011 Dec. 31, 2010 % % Equities and Similar Securities 28 33 Bonds and Other Fixed-Income Securities 10 6 Real Estate 1 1 Other Assets 61 60 100 100

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

Dec. 31, 2011 Dec. 31, 2010 % % Discount Rate 4.6 4.7 Future Salary Increases 2.9 2.9 Future Pension Increases 1.7 1.8 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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Pension expense was calculated using the following assumptions:

2011 2010 % % Discount Rate 4.7 5.1 Future Salary Increases 2.9 2.9 Future Pension Increases 1.8 1.8 Expected Return on External Plan Assets 4.4 5.0

The percentages shown are weighted average assumptions. For the euro area, a uniform discount rate of 4.9 percent (previous year: 5.0 percent) was applied to determine the pension liability.

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

The expected long-term return on external plan assets is determined for each asset class based on capital market surveys and yield forecasts. 61 percent of plan assets fall into the “other assets” category, primarily insurance policies. The published or anticipated returns of the insurance companies in question were used to determine the anticipated long-term return on those plan assets.

The trends for pension obligations and plan assets are as follows:

2011 2010 2009 2008 2007 € million € million € million € million € million Net Present Value of Unfunded Pension Obligations 592.2 565.5 514.3 450.5 463.3 Net Present Value of Funded Pension Obligations 260.2 236.9 202.5 185.5 173.3 Plan Assets – 201.8 – 184.7 – 163.2 – 148.9 – 153.7 Funding Status 650.6 617.7 553.6 487.1 482.9

b) Termination Benefits Benefits upon termination of employment are payable if an employee is laid off prior to the normal retirement date or if an employee voluntarily agrees to a redundancy payment. The Group recognizes termination benefits when there is a proven obligation to either terminate the employment of a current employee in accordance with a detailed formal plan that cannot be rescinded or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits coming due more than 12 months after the reporting date are recognized at net present value. 118

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, 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 / January 1, 2011 51,287 14,854 10,578 76,719 Foreign Currency Translation 171 – 589 – 108 – 526 Interest 0 26 0 26 Transfers 152 – 35 – 2,528 – 2,411 Utilization – 4,889 – 3,149 – 840 – 8,878 Release – 216 – 3,978 – 584 – 4,778 Additions 5,290 3,369 1,289 9,948 December 31, 2011 51,795 10,498 7,807 70,100

Other Current Personnel Warranties Uncertain Other Total Provisions Expenditures Liabilities € ’000 € ’000 € ’000 € ’000 € ’000 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 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 / January 1, 2011 1,120 5,666 5,579 19,389 31,754 Foreign Currency Translation 18 63 54 – 21 114 Transfers 5 851 1,404 182 2,442 Changes in Scope of Consolidation 0 0 0 0 0 Utilization – 970 – 5,241 – 788 – 12,327 – 19,326 Release – 53 – 139 – 920 – 2,731 – 3,843 Additions 1,476 6,900 3,789 12,622 24,787 December 31, 2011 1,596 8,100 9,118 17,114 35,928

Non-current provisions for personnel expenditures primarily consist of provisions for partial retirement plans and anniversary payments. MANAGEMENT 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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Other provisions mainly consist of provisions for other obligations in the area of personnel and social services, guarantees, possible losses from contracts, legal and consulting fees, and a number of identifiable individual risks. The additional other provisions refer predominantly to actuarial provisions and provisions for not yet settled insurance claims of REVIUM Rückversicherung AG, Melsungen, Germany.

The majority of non-current provisions will result in payments due within five years.

27 Financial Liabilities

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Non-current Liabilities Profit Participation Rights 70,764 63,308 Liabilities to Banks 511,218 604,517 Liabilities under Finance Leases 41,232 45,438 Liabilities under Finance Leases to Affiliated Companies 35,962 38,199 Liabilities under Borrowings from Non-banks 39,341 40,499 Other Financial Liabilities 462 0 698,979 791,961 Current Liabilities Profit Participation Rights 6,732 4,048 Liabilities to Banks 587,212 343,020 Liabilities under Finance Leases 5,780 5,456 Liabilities under Finance Leases to Affiliated Companies 2,237 2,102 Liabilities under Borrowings from Non-banks 75,965 63,349 Liabilities under Bills of Exchange 10,922 13,894 Other Financial Liabilities 13,842 9,619 702,690 441,488 Total Financial Liabilities 1,401,669 1,233,449

Other financial liabilities include € 8.1 million of advance payments received for orders (previous year: € 4.1 million).

Term structure of financial liabilities:

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Due within One Year 702,690 441,488 Due within One to Five Years 462,357 571,109 Due in over Five Years 236,622 220,852 1,401,669 1,233,449 120

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

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

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

As of December 31, 2011, a total of 701,123 rights had been issued. Their years of issue are as follows:

Year of Issue Number

2002 49,625 2003 54,011 2004 59,973 2005 72,451 2006 72,127 2007 80,467 2008 93,927 2009 69,123 2010 80,217 2011 69,202 701,123

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

In July 2011, B. Braun Melsungen AG obtained € 25 million under a bilateral, fixed-interest loan agreement with a term until 2015. In a bond transaction in November 2011, B. Braun Melsungen AG issued corporate bonds totaling € 150.0 million. The bonds have a maturity of 5 years (€ 50.0 million), 7 years (€ 80 million) and 10 years (€ 20.0 million) and are equipped with a fixed and variable rate of interest. The subscribers of the bonds were banks in Germany and European countries. The funds raised were used to finance the current capital requirement of B. Braun Melsungen AG and the Group. MANAGEMENT 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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As of December 31, 2011, the Group had unutilized credit lines in different currencies totaling € 837.9 million (previous year: € 861.9 million).

Loans from non-banks are unsecured. Interest rates on loans denominated in euro are between 0.42 percent per annum for overnight loans and 5.50 percent per annum for non-current loans, depending on the length of the interest-rate lock-in period.

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 EUR 1,080,989 910,236 USD 195,753 211,723 Other 124,927 111,490 1,401,669 1,233,449

Liabilities from finance leasing are recognized at the net present value of the leasing payments. These are secured by property liens on leased property. Of the other liabilities, € 16.5 million (previous year: € 13.2 million) are covered by property liens. Liabilities related to loans from non-banks include loans from B. Braun Melsungen AG shareholders in the amount of € 51.7 million (previous year: € 45.7 million). 122

The carrying amount of financial assets used as collateral for liabilities or contingent liabilities was € 33,000 (previous year: € 31,000). The collateral provided was assigned receivables. The following table shows the contractually agreed upon (undiscounted) interest and repayments on financial liabilities, other financial liabilities, and derivative financial instruments with negative fair value:

Dec. 31, 2010 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 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 Affiliated Companies 40,301 2,469 2,102 2,334 2,237 6,103 7,611 6,554 15,915 1,391 12,436 Liabilities under Borrowings from Non-banks 103,848 2,951 63,349 1,616 5,261 3,442 16,104 1,025 18,248 1 886 Liabilities under Bills of Exchange 0 0 0 0 0 0 0 0 0 0 0 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

Dec. 31, 2011 Profit Participation Rights 77,497 154 6,733 141 7,270 336 23,015 220 40,479 0 0 Liabilities to Banks 1,098,430 32,526 587,212 19,774 162,740 27,950 220,944 9,031 125,521 0 2,013 Liabilities under Finance Leases 47,011 2,495 5,780 2,165 4,252 5,259 10,235 4,286 11,542 1,121 15,202 Liabilities under Finance Leases to Affiliated Companies 38,199 2,334 2,237 2,191 2,381 5,615 8,099 5,540 16,506 703 8,976 Liabilities under Borrowings from Non-banks 115,307 2,590 75,966 1,316 5,995 3,114 16,964 595 15,130 1 1,252 Liabilities under Bills of Exchange 0 0 0 0 0 0 0 0 0 0 0 Liabilities from ABS Transactions and Other Financial Liabilities 43,995 0 43,533 0 462 0 0 0 0 0 0 Trade Accounts Payable 219,699 176 218,743 0 935 0 21 0 0 0 0 Liabilities from Derivative Financial Instruments 16,577 3,000 387,962 31,000 1,414 78 1,821 11 118 0 0

All instruments held as of December 31, 2011 and for which payments had already been contractually agreed upon are included. Amounts in foreign currency were each translated at the closing rate on the reporting date. The variable interest payments arising from the financial instruments were calculated using the last interest rates fixed before December 31, 2011. Financial liabilities that can be repaid at any time are always assigned to the earliest possible period. MANAGEMENT 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

N ote s to t h e C on s o l idated s T A T E M E N T of F inancia l P o s ition

28 Additional Disclosures on Financial Instruments

Carrying amount and fair value by measurement category:

Measurement Carrying Fair Value Carrying Fair Value Category as Amount Dec. 31, 2011 Amount Dec. 31, 2010 per IAS 39 Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 € ’000 € ’000 Assets Trade Receivables LaR 1,016,352 1,015,893 933,543 933,543 Other Receivables LaR 132,131 128,497 110,260 110,260 Held-to-Maturity Financial Assets HtM 0 0 87 87 Available-for-Sale Financial Assets AfS 4,488 4,488 5,398 5,398 Other Interests AfS 20,030 n. a. 16,901 n. a. Financial Assets Held-for-Trading FAHfT 9,830 9,830 11,035 11,035 Derivatives not in a Hedge FAHfT 2,584 2,584 10,965 10,965 Derivatives in a Hedge n. a. 753 753 0 0 Cash and Cash Equivalents LaR 45,340 45,447 34,369 34,369 Liabilities Profit Participation Rights FLAC 77,497 77,497 67,356 67,356 Liabilities to Banks FLAC 1,098,430 1,120,309 947,537 969,617 Liabilities under Finance Leases n. a. 85,210 86,228 91,195 93,982 Liabilities under Borrowings from Non-banks FLAC 115,307 117,272 103,848 104,692 Other Financial Liabilities FLAC 17,111 17,111 19,460 19,460 Trade Accounts Payable FLAC 219,699 219,037 216,757 216,757 Other Liabilities FLAC 198,185 198,554 179,768 179,768 Derivatives not in a Hedge FLHfT 3,087 3,087 3,069 3,069 Derivatives in a Hedge n. a. 13,490 13,490 3,250 3,250 Summary by IAS 39 Measurement Category: Loans and Receivables LaR 1,193,764 1,189,779 1,078,172 1,078,172 Held-to-Maturity Financial Assets HtM 0 0 87 0 Available-for-Sale Financial Assets AfS 4,488 4,488 22,299 5,398 Financial Assets Held-for-Trading FAHfT 13,167 13,167 22,000 22,000 Financial Liabilities measured at Amortized Cost FLAC 1,728,616 1,752,168 1,534,726 1,557,650 Financial Liabilities Held-for-Trading FLHfT 3,087 3,087 3,069 3,069

LaR Loans and Receivables | HtM Held-to-Maturity Financial Assets | AfS Available-for-Sale Financial Assets | FAHfT Financial Assets Held-for-Trading FLAC Financial Liabilities measured at Amortized Cost | FLHfT Financial Liabilities Held-for-Trading MANAGEMENT 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

N ote s to t h e C on s o l idated s T A T E M E N T of F inancia l P o s ition

The available-for-sale financial assets comprise:

Equities and Similar Securities Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Listed Securities 4,488 5,398 of which Non-current 919 910

These are reported under other financial investments and other financial assets. No available-for-sale financial assets were impaired in 2011 or 2010.

Other assets include other receivables and other financial assets in the amount of € 105.9 million and other loans in the amount of € 18.0 million.

The maximum credit risk for each measurement category of financial assets corresponds to its carrying amount. Trade receivables are partly securitized with reservation of title, which reduces the maximum default risk in this measurement category by € 29.8 million.

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

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

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

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

To date, the Group has not exercised the option of designating financial assets and liabilities upon initial recognition as financial liabilities measured at fair value through profit and loss. 126

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

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

Level 1 Level 2 Level 3 Total € ’000 € ’000 € ’000 € ’000 Dec. 31, 2010

Derivative Financial Assets measured at Fair Value through Profit and Loss 0 10,965 0 10,965 Available-for-Sale Financial Assets 5,398 0 0 5,398 Derivative Financial Liabilities measured at Fair Value through Profit and Loss without Hedging Relationship 0 – 3,069 0 – 3,069 Derivative Financial Liabilities with Hedging Relationship 0 – 3,250 0 – 3,250 5,398 4,646 0 10,044

Dec. 31, 2011

Derivative Financial Assets measured at Fair Value through Profit and Loss 0 3,337 0 3,337 Available-for-Sale Financial Assets 4,488 0 0 4,488 Derivative Financial Liabilities measured at Fair Value through Profit and Loss without Hedging Relationship 0 – 3,087 0 – 3,087 Derivative Financial Liabilities with Hedging Relationship 0 – 13,490 0 – 13,490 4,488 – 13,240 0 – 8,752

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 127

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29 Trade Accounts Payable and Other Liabilities

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Non-current Liabilities Trade Accounts Payable 956 1,059 Liabilities to Social Security Providers 929 610 Liabilities to Employees, Management and Shareholders 6,559 3,892 Deferred Income and Accruals 73 194 7,561 4,696 Other Liabilities 19,951 6,016 Subtotal Other Liabilities 27,512 10,712

Current Liabilities Trade Accounts Payable 218,743 215,698 Liabilities to Social Security Providers 25,762 21,822 Liabilities to Employees, Management and Shareholders 201,761 190,649 Deferred Income and Accruals 9,733 8,790 Other Tax Liabilities 58,122 70,353 295,378 291,614 Liabilities from Derivative Financial Instruments 16,577 6,319 Other Liabilities 178,846 173,752 195,423 180,071 Subtotal Other Liabilities 490,801 471,685 Total Liabilities 738,012 699,154

The Group has designated payer interest rate swaps (“pay fix – receive variable”) as cash flow hedges in order to hedge the variable interest payments on a nominal credit volume of € 60 million (previous year: € 30 million). Changes in the cash flows of the underlying transaction resulting from changes in the reference interest rate are compensated for by the changes in the cash flows of the interest rate swap. The hedging measures are designed to hedge the cash flow from bank liabilities against an increase in the reference interest rate. Credit risks are not covered through the hedge. The related cash flows are likely to occur through fiscal year 2017. The effectiveness of hedges was measured prospectively and retrospectively using the dollar-offset method. In the fiscal year, a hedge with a hedge volume of € 20 million became ineffective. The other hedges were effective. The effective portion of changes in the fair value of designated interest rate swaps is recognized in equity and amounts to a total of € – 2.1 million (previous year: € 255,000). The ineffective portion of changes in value is recognized directly in the statement of income under net financial income and is € 0 (previous year: € – 40,000). Amounts accrued under equity are transferred to the statement of income as income or expense in the period in which the hedged underlying transaction is recognized in the statement of income.

From the hedge that became ineffective in the fiscal year and from an unwound hedge on a payer interest rate swap, losses remained at the time of unwinding this hedge recognized in the capital equity on an accumulative basis, and they are recognized on entry of the originally hedged transaction through profit and loss in accordance with the effective interest rate method in the statement of income. In 2011, this resulted in an expense of € – 456,000 (previous year: € – 143,000) which was transferred from equity to the statement of income.

Other liabilities mainly include remaining payments related to company acquisitions, liabilities from ABS trans actions, bonus obligations, and liabilities related to outstanding invoices. 128

Additional Information

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Uncertain Liabilities 218 680 Guarantees 31,258 4,710 Warranties 2,576 22,997 Contractual Performance Guarantees 36,663 32,932 70,715 61,319

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

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

Future minimum lease payments expected in connection with non-terminable sub-leases on the reporting date, amount to € 2.8 million (previous year: € 8.7 million).

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

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Obligations under Rental and Leasing Agreements Due within One Year 59,803 64,482 Due within One to Five Years 86,510 91,752 Due in over Five Years 27,584 29,731 173,897 185,965 Obligations from the Acquisition of Intangible Assets 0 0 Obligations from the Acquisition of Property, Plant and Equipment 113,193 128,418 Total 287,090 314,383 MANAGEMENT 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

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 for sales financing, not to realize profits earlier.

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

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Obligations under Sale and Leaseback Agreements Due within One Year 4,416 4,603 Due within One to Five Years 6,930 6,513 Due in over Five Years 0 0 11,346 11,116

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

32 Financial Risk Management

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

Risk management is performed centrally by Group Treasury in accordance with policies approved by the 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. To hedge such risks, the Group uses forward foreign exchange contracts.

The Group’s risk management policy is to hedge up to 60 percent of the net cash flow in USD, CHF, GBP, and JPY expected over the next fiscal year on a continuous basis. 130

If the exchange rate of the US dollar compared to the euro on December 31, 2011, had been 10 % stronger (weaker), profit before taxes – with all other variables remaining constant – would have been € 8.5 million (previous year: € 11.8 million) lower (higher). This would mainly have been attributable to gains / losses from foreign currency translation relating to US dollar-based loans and trade receivables. The remaining components of equity would have been approximately € 32.3 million (previous year: € 31.7 million) higher (lower), which would have been, among other things, due to changes in value of cash flow hedges related to expected incoming payments in US dollars impacting equity.

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

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

If market interest rates had been 100 basis points higher or lower as of December 31, 2011, profit before taxes – with all other variables remaining constant – would have been approximately € 2.3 million lower or higher for the full year (previous year: € 4.1 million). This would have been mainly attributable to higher or lower interest expense for variable-rate interest-bearing financial liabilities. The other components of equity would have changed only slightly.

b) Credit Risk The Group has no significant concentrations of credit risk related to trade receivables. It has organizational guidelines that ensure that products are sold only to customers with a good payment history. Contracts on derivative financial instruments and financial transactions are solely concluded with financial institutions with a good credit rating and contain, as a rule, a provision that allows mutually offsetting positive and negative fair market values in the event of the insolvency of a party.

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

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

Unchanged, the strategy of the Group in 2011 was to significantly exceed an equity ratio of at least 25 percent that was agreed upon under the terms of the syndicated loan. Since the equity ratio calculated using the method specified in the syndicated loan agreement differs only immaterially from the equity ratio calculated in the in statement of financial position, this target was achieved in fiscal year 2011. MANAGEMENT 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

A dditiona l I nformation

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

Changes in the fair value of derivative financial instruments that represent economically effective hedges under the Group strategy are recognized through profit and loss, unless they are used in hedge accounting. When applying hedge accounting for cash flow hedges, the fair market value changes from the effective portion are recognized in equity. The fair value changes in hedging instruments more or less match the fair value changes in the hedged underlying transactions.

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

Nominal Volume Nominal Volume Fair Value Residual Term > 1 Year Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000 Forward Foreign Exchange Contracts 630,709 524,266 1,451 312 – 11,324 6,961 Currency Options 90,000 62,452 50,000 0 – 4,684 – 2,771 Embedded Derivatives 9,000 7,600 0 0 873 379 729,709 594,318 51,451 312 – 15,135 4,569

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

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

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

The Group designates forward foreign exchange contracts to hedge future foreign currency inflows and outflows from the operating business of the B. Braun Group that are not denominated in the functional currency and are expected to arise with high probability. The purpose of the hedges is to reduce the volatility of foreign exchange income and payments (and their measurement) with respect to foreign exchange risk. The effectiveness of hedges is measured prospectively using the critical terms match method and retrospectively using the dollar-offset method. 132

As of December 31, 2011, the Group had designated forward foreign exchange contracts with a net fair value of € – 8.8 million (previous year: € 4.4 million) as cash flow hedges. All hedges were effective within the range specified under IAS 39.

Gains of € 17.0 million (previous year: € 8.4 million) and losses of € 19.9 million (previous year: € 7.2 million) arising from changes in the fair values of foreign exchange derivatives related to cash flow hedges were recognized in equity in fiscal year 2011. Gains of € 11.7 million (previous year: € 2.3 million) and losses of € 1.4 million (previous year: € 5.5 million) recognized in equity were transferred to other operating income or other operating expenses during the fiscal year. As of the reporting date, the hedging measures had no ineffective portions. B. Braun expects gains of € 753,000 and losses of € 9.5 million recognized in equity to be transferred to the statement of income within the next twelve months.

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

The following transactions were completed with related parties:

2011 2010 € ’000 € ’000 Sale of Goods and Services Related Companies 12,165 9,748 of which B. Braun Holding GmbH & Co. KG 9,144 6,665 of which Associates 3,021 3,083 Key Management Personnel 0 0 12,165 9,748 Acquisition of Goods and Services Related Companies 35,874 55,253 of which B. Braun Holding GmbH & Co. KG 31,799 35,469 of which Associates 4,075 19,784 Key Management Personnel 17,175 0 53,049 55,253 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

A dditiona l I nformation

Outstanding balances from the sale / acquisition of goods and services and from loans at the end of the year consist of the following:

Dec. 31, 2011 Dec. 31, 2010 € ’000 € ’000 Outstanding Balances from the Sale of Goods and Services Related Companies 17,205 4,487 of which B. Braun Holding GmbH & Co. KG 9,279 334 of which Joint Ventures 6,393 2,933 of which Associates 1,533 1,220 Valuation Allowances 0 0 Key Management Personnel 1 7 Valuation Allowances 0 0 17,206 4,494 Procurement Obligations 229 229 Outstanding Balances from the Acquisition of Goods and Services and from Loans Related Companies 41,893 47,464 of which B. Braun Holding GmbH & Co. KG 38,199 44,775 of which Joint Ventures 0 851 of which Associates 3,694 1,838 Key Management Personnel 52,314 46,221 94,207 93,685 Procurement Obligations 1,959 1,096

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

The following items in the statement of financial position contain outstanding items with related parties:

– Other Assets – Financial Liabilities – Other Liabilities

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

Please see Note 27 for details of leasing liabilities to related companies. 134

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

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

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

2011 2010 € ’000 € ’000 Fixed Remuneration 2,567 2,359 Variable Remuneration 3,181 4,216 Pension Expense 530 530 Bonuses 140 219 Other 425 245 6,843 7,569

Of the total, € 427,000 was attributable to the Chairman of the Management Board as fixed remuneration and € 597,000 as variable remuneration from profit-sharing.

Pension obligations totaling € 11.8 million exist to active members of the Management Board. Profit-sharing bonus obligations to Management Board members reported under liabilities to employees, management and shareholders total € 3.1 million. A total of € 20.3 million has been reserved for pension obligations to former Management Board members and their surviving dependants; current pension payments total € 1.5 million. Supervisory Board remuneration totaled € 666,000.

The remuneration of Supervisory Board members is governed by the articles of incorporation and is approved at the Annual Shareholders’ Meeting. The remunerations made to employee representatives on the Supervisory Board for work outside their supervisory activities are in line with the market standards.

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

Liabilities stemming from profit participation rights for Management Board members were € 8.3 million (previous year: € 6.5 million). See Note 27 for detailed information on profit participation rights.

The members of the Supervisory Board are listed on page 143 and the Management Board on pages 6 / 7. MANAGEMENT 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

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.

34 Gross Cash Flow from Operating Activities The gross cash flow of € 543.4 million is the cash surplus from operating activities before any changes in working capital, a decrease of € 19.6 million compared to the previous year. The change is primarily due to the lower operating income of € 432.2 million.

Cash flow from operating activities of € 449.9 million represents changes in current assets, current provisions, and liabilities (excluding financial liabilities). The increase in inventories and receivables as well as current provisions and liabilities resulted in a significantly lower outflow of € 93.6 million compared with the previous year. As a result, the cash flow from operating activities is € 60.5 million above the previous year’s level.

35 Cash Flow From Investing Activities A total of € 565.2 million was spent in 2011 to acquire property, plant and equipment, intangible assets, financial investments, and company acquisitions. This was offset by disposal of property, plant and equipment and of holdings (€ 16.7 million), as well as dividend income received (€ 0.9 million), resulting in a cash outflow from investing activities of € 547.6 million. Compared to the previous year this results in a reduction in cash outflows of € 9.8 million.

Investments made during the year were not fully covered by cash flow from operations. The remaining free cash flow was € – 97.7 million (previous year: € – 168.1 million).

Additions to property, plant and equipment and intangible assets under finance leasing do not result in cash outflows and are therefore not included under investing activities. In the reporting year, these additions totaled € 2.6 million (previous year: € 0.9 million).

36 Cash Flow from Financing Activities In 2011, cash flow from financing activities amounted to € 108.3 million (previous year: € 155.5 million). The net balance of proceeds from and repayments of loans was € 146.0 million (previous year: € 181.6 million). Dividend payments and capital contributions by non-controlling interests resulted in a total cash outflow of € 41.2 million (previous year: € 29.2 million). The change on the previous year in the amount of € – 47.2 million is primarily due to decreased borrowing. 136

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

As of December 31, 2011, restrictions on cash availability totaled € 308,000 (previous year: € 540,000). These restrictions are primarily related to security deposits and collateral for tender business.

38 Events After the Reporting Date No events occurred between the end of the fiscal year and the date on which the consolidated financial statements were prepared that have a material effect on the results of operations, financial position, or net assets for 2011. MANAGEMENT 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

I ndependent A u ditor s ’ R eport

Independent Auditors’ Report

The complete annual financial statements and management report for publication in the online edition of the German Federal Gazette (Bundesanzeiger) have been supplemented with the following con firmation note:

We have audited the consolidated financial statements prepared by B. Braun Melsungen AG, Melsungen, Germany, comprising the statement of financial position, statement of income (loss), statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes to the consolidated financial statements, together with the Group management report for the fiscal year from January 1 to December 31, 2011. The preparation of the consolidated financial statements and the Group management report in accordance with IFRS as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code (HG B), is the responsibility of the Management Board of the Company. Our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.

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

Our audit has not led to any reservations.

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

Kassel, Germany, February 22, 2012

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Prof. Dr. Georg Kämpfer holger Plaum German Public Auditor german Public Auditor 138

Major Shareholdings

As of December 31, 2011 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Germany AESCULAP AG, Tuttlingen 2) 100.0 115,316 577,077 3,092 AESCULAP INTERNATIONAL GMBH, Tuttlingen 2) 100.0 205,777 0 0 AESCULAP SUHL GMBH, Suhl 100.0 3,655 10,305 131 ALMO-Erzeugnisse E. Busch GmbH, Bad Arolsen 60.0 22,426 58,306 353 B. Braun Avitum AG, Melsungen 2) 94.0 90,616 226,295 763 B. Braun Avitum Saxonia GmbH, Radeberg 2) 94.0 10,437 60,576 634 B. Braun Facility Services GmbH & Co. KG, Melsungen 100.0 120 14,702 83 B. Braun Nordamerika Verwaltungsgesellschaft mbH, Melsungen 2) 100.0 149,309 0 0 B. Braun Surgical GmbH, Melsungen 2) 100.0 154,535 0 0 B. Braun TravaCare GmbH, Hallbergmoos 2) 100.0 328 33,527 56 B. Braun Vet Care GmbH, Tuttlingen 2) 100.0 369 14,710 17 SteriLog GmbH, Tuttlingen 100.0 – 354 8,273 140 TransCare Service GmbH, Neuwied 55.0 2,150 9,979 97

Europe AESCULAP CHIFA SP.ZO.O., Nowy Tomyśl / Poland 98.8 56,427 127,567 1,520 AESCULAP S.A.S., Chaumont / France 100.0 9,946 10,673 116 Avitum S.R.L., Timisoara / Romania 94.0 130 11,122 228 B. Braun Adria d.o.o., Zagreb / Croatia 36.0 4,065 11,365 30 B. Braun Austria Ges. m.b.H., Maria Enzersdorf / Austria 60.0 39,847 52,774 133 B. Braun Avitum France S.A.S., Gradignan / France 94.0 10,374 14,194 20 B. Braun Avitum Hungary Zrt., Budapest / Hungary 94.0 12,506 32,683 658 B. Braun Avitum Italy S.p.A., Mirandola / Italy 94.0 16,314 46,687 223 B. Braun Avitum Poland Sp.zo.o., Nowy Tomyśl / Poland 95.1 – 1,914 27,928 435 B. Braun Avitum Russia OOO, St. Petersburg / Russia 94.0 6,466 11,238 37 B. Braun Avitum s.r.o., Bratislava / Slovak Republic 93.7 – 315 9,114 160 B. Braun Avitum s.r.o., Prague / Czech Republic 93.7 13,512 23,021 228 B. Braun Avitum Turkey Sanayi Ticaret Anonim Sirketi, Ankara / Turkey 94.0 2,583 9,889 17 B. Braun Avitum UK Ltd., Sheffield / United Kingdom 94.0 573 21,035 189 B. Braun Holding AG, Sempach / Switzerland 51.0 149,829 0 0 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

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

As of December 31, 2011 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 B. Braun Hospicare Ltd., Collooney Co Sligo / Republic of Ireland 100.0 10,008 15,125 90 B. Braun Medical AB, Dander / Sweden 100.0 2,461 41,138 48 B. Braun Medical AG, Sempach / Switzerland 51.0 141,181 249,233 837 B. Braun Medical A / S, Frederiksberg / Denmark 100.0 1,593 13,474 26 B. Braun Medical A / S, Vestskogen / Norway 100.0 2,407 22,164 33 B. Braun Medical B.V., Oss / Netherlands 100.0 5,817 55,811 150 B. Braun Medical EOOD, Sofia / Bulgaria 60.0 2,746 8,379 35 B. Braun Medical International S.L., Rubi / Spain 100.0 94,672 0 10 B. Braun Medical Kft., Budapest / Hungary 60.0 22,782 58,826 751 B. Braun Medical Lda., Barcarena / Portugal 100.0 37,132 57,979 153 B. Braun Medical LLC, St. Petersburg / Russia 100.0 26,556 103,257 322 B. Braun Medical Ltd., Dublin / Republic of Ireland 100.0 3,552 18,386 39 B. Braun Medical Ltd., Sheffield / United Kingdom 100.0 21,901 98,971 388 B. Braun Medical N.V. / S.A., Diegem / Belgium 100.0 2,574 31,439 73 B. Braun Medical Oy, Helsinki / Finland 100.0 3,027 34,155 52 B. Braun Medical S.A., Rubi / Spain 100.0 244,643 211,785 1,120 B. Braun Medical S.A.S., Boulogne / France 100.0 77,054 277,227 1,302 B. Braun Medical S.R.L., Timisoara / Romania 61.9 1,902 14,927 78 B. Braun Medical s.r.o., Bratislava / Slovak Republic 70.0 1,341 24,828 22 B. Braun Medical s.r.o., Prague / Czech Republic 70.0 30,428 84,155 189 B. Braun Medikal Dis Ticaret A.S., Istanbul / Turkey 100.0 5,156 15,314 67 B. Braun Milano S.p.A., Milano / Italy 100.0 29,317 116,475 211 B. Braun Sterilog (Birmingham) Ltd., Sheffield / United Kingdom 100.0 – 6,441 12,541 230 B. Braun Sterilog (Yorkshire) Ltd., Sheffield / United Kingdom 100.0 – 5,095 8,895 180 B. Braun Surgical S.A., Rubi / Spain 100.0 85,660 154,814 741 B. Braun VetCare SA, Rubi / Spain 100.0 8,178 9,622 23 Gematek OOO, St. Petersburg / Russia 100.0 8,415 9,009 177 Suturex & Renodex S.A.S., Sarlat / France 100.0 9,337 14,227 184

1) Effective stake | 2) Companies with profit and loss transfer agreements | 3) Consolidated using equity method | 4) Consolidated proportionately 140

Major Shareholdings

As of December 31, 2011 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Americas AESCULAP INC., Center Valley / USA 95.5 47,307 128,716 416 Aesculap Implant Systems LLC, Center Valley / USA 95.5 – 6,794 36,603 136 B. Braun Aesculap de México S.A. de C.V., México D. F. / Mexico 100.0 7,131 17,237 175 B. Braun Interventional Systems Inc., Bethlehem / USA 95.5 19,903 25,705 35 B. Braun Medical Inc., Bethlehem / USA 95.5 176,094 635,951 4,369 B. Braun Medical Peru S.A., Lima / Peru 100.0 17,160 10,757 298 B. Braun Medical S.A., Bogota / Colombia 100.0 14,613 25,053 230 B. Braun Medical S.A., Buenos Aires / Argentina 100.0 10,054 27,887 370 B. Braun Medical S.A., Quito / Ecuador 100.0 6,619 14,117 67 B. Braun Medical SpA, Santiago de Chile / Chile 86.1 7,113 23,474 167 B. Braun of America Inc., Bethlehem / USA 95.5 126,471 0 0 CAPS Inc., Santa Fe Springs / USA 95.5 57,438 106,478 500 Laboratorios B. Braun S.A., São Gonçalo / Brazil 100.0 112,836 175,844 1,710

Asia and Australia B. Braun AESCULAP JAPAN CO. LTD., Tokyo / Japan 100.0 66,033 127,451 511 B. Braun Australia Pty. Ltd., Bella Vista / Australia 100.0 25,641 57,852 127 B. Braun Avitum Philippines Inc., Manila / Philippines 100.0 3,241 10,043 106 B. Braun Avitum (Shanghai) Trading Co. Ltd., Shanghai / China 94.0 10,724 39,901 87 B. Braun Korea Co. Ltd., Seoul / Republic of Korea 100.0 17,795 49,930 114 B. Braun Medical (H.K.) Ltd., Hong Kong / China 100.0 46,802 64,774 33 B. Braun Medical (India) Pvt. Ltd., Mumbai / India 100.0 12,263 48,634 555 B. Braun Medical Industries Sdn. Bhd., Penang / Malaysia 100.0 267,730 301,384 4,997 B. Braun Medical (Shanghai) International Trading Co. Ltd., Shanghai / China 100.0 15,622 85,080 611 B. Braun Medical Supplies Inc., Manila / Philippines 100.0 5,928 16,840 150 B. Braun Medical Supplies Sdn. Bhd., Petaling Jaya / Malaysia 100.0 20,196 41,692 148 B. Braun Medical (Suzhou) Company Limited, Suzhou / China 100.0 3,660 20,214 340 B. Braun Pakistan (Private) Ltd., Karachi / Pakistan 100.0 – 406 9,549 80 B. Braun Singapore Pte. Ltd., Singapore 100.0 9,568 12,583 39 B. Braun Taiwan Co. Ltd., Taipei / Taiwan 100.0 3,779 15,576 55 B. Braun (Thailand) Ltd., Bangkok / Thailand 100.0 8,362 13,591 88 B. Braun Vietnam Co. Ltd., Hanoi / Vietnam 100.0 28,315 41,686 962 PT. B. Braun Medical Indonesia, Jakarta / Indonesia 100.0 25,837 41,931 382 MANAGEMENT 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 141

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

As of December 31, 2011 Company Name and Location Holding Equity Sales Employees in %1) € ’000 € ’000 Africa B. Braun Avitum (Pty) Ltd., Johannesburg / South Africa 100.0 1,032 8,767 137 B. Braun Medical (Pty) Ltd., Johannesburg / South Africa 100.0 6,812 27,906 159

Other Holdings Babolat VS, Lyon / France 3) 28.0 52,249 107,798 205 Medical Service und Logistik GmbH, Recklinghausen 4) 50.0 918 30,204 5 Schölly Fiberoptic GmbH, Denzlingen 3) 28.0 26,386 66,618 274

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, 2011, and sales figures have been translated using the average annual rate for 2011. 142

SUPERVISORY BOARD rep ort

The Supervisory Board of B. Braun Melsungen AG continued the initiation of the status assessment procedure (Status to perform its statutory duties and obligations in fiscal year verfahren), pursuant to Section 97 of the German Stock Corpo- 2011 in accordance with the applicable laws, articles of ration Act (AktG), by the Management Board in September incorporation, and by-laws, and to advise and monitor man- 2010 due to its understanding that the composition of the agement. At three ordinary meetings, the Supervisory Board Supervisory Board no longer complied with the applicable received reports from the Management Board regarding the legal requirements. Mr. Justus Mische and Dr. Joachim Schnell company’s current business performance, financial status, stepped down from the Supervisory Board at this time. At and significant investment plans. At its meeting on March 24, the Annual Shareholders’ Meeting, Prof. Dr. h. c. Ludwig Georg 2011, the Supervisory Board accepted the 2010 personnel Braun, Melsungen, and Prof. Dr. Oliver Schnell, Munich, report. Other topics discussed by the Supervisory Board includ- Germany were elected as their replacements on the Super- ed the presentation of the Aesculap divisional strategy, the visory Board. Additional shareholder representatives elected acquisition of Aragon Surgical Inc., USA, the execution of loan to the Supervisory Board were new members Mr. Hans-Carsten agreements, and the presentation of the B. Braun Melsungen Hansen, Ludwigshafen, Germany and Dr. Joachim Rauhut, AG risk management strategy. The Supervisory Board discussed Munich and re-elected members Ms. Barbara Braun-Lüdicke, and approved the 2012 targets, advised on statutory business Dr. August Oetker, Prof. Dr. Thomas Rödder, and Prof. Dr. Dr. matters requiring its approval, and accepted the risk report Dr. h. c. Michael Ungethüm. Employee representatives elected submitted by the Management Board. It also approved by to the Supervisory Board were Dr. Antonius Engberding, circular resolution the issuance of bonds. A regular exchange Ms. Edeltraud Glänzer, Mr. Rainer Hepke, Mr. Manfred Herres, of information and ideas took place between the Chairman Mr. Peter Hohmann, Mr. Ekkehard Rist, Mr. Mike Schwarz, of the Supervisory Board and the Chairman of the Manage- and Ms. Sonja Siewert. At the inaugural meeting of the Super- ment Board regarding significant business developments visory Board, which was held immediately following the within the company and the Group, and any pending deci- Annual Shareholders’ Meeting, Prof. Dr. h. c. Ludwig Georg sions. The Supervisory Board also conducted a voluntary Braun was elected Chairman of the Supervisory Board and self-assessment, which showed that it is efficiently organized Mr. Peter Hohmann Vice Chairman. B. Braun Melsungen AG’s and that the Supervisory Board and Management Board co- financial statements and management report for fiscal year operate very well together. The Audit Committee discussed 2011, the Group’s consolidated financial statements, and the the company’s current business performance, the B. Braun consolidated management report have been reviewed by the Group’s transfer pricing system, and particularly, B. Braun auditors appointed at the Annual Shareholders’ Meeting on Melsungen AG’s 2011 financial statements and the Group’s March 24, 2011, PricewaterhouseCoopers Aktiengesellschaft consolidated financial statements. The Audit Committee re- Wirtschaftsprüfungsgesellschaft, Kassel, Germany. The audi- ported on these topics at the Supervisory Board meetings tors raised no objections and issued an unqualified audit and made its recommendations. The Personnel Committee opinion. The auditors participated in the discussions of the of the Supervisory Board met three times in 2011 and, at Supervisory Board and Audit Committee about the financial its meeting on March 24, 2011, proposed to the Supervisory statements and the Group’s consolidated financial statements, Board that members of the Management Board be allocated and reported on the main findings of their audit. Following profit participation rights under the B. Braun Incentive Plan. its review of the financial statements, management report, The Supervisory Board approved this allocation at its meet- proposal for the appropriation of B. Braun Melsungen AG’s ing on March 24, 2011. At its meeting on July 12, 2011, the retained earnings, consolidated financial statements, and con- Personnel Committee recommended that Prof. Dr. Hanns- solidated management report, the Supervisory Board con- Peter Knaebel be reappointed as Ordinary Member of the Man- curred with the findings of the audit report and raised no agement Board through March 31, 2017. The Supervisory objections. We therefore have approved the financial state- Board approved his reappointment on the same day. At the ments presented by the Management Board, which are here- conclusion of the Annual Shareholders’ Meeting on March 24, by adopted in accordance with Section 172 of the German 2011, the term of the Supervisory Board expired. This followed Stock Corporation Act (AktG). The Supervisory Board concurs 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 143

from l eft

M i k e s C h war z * 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 * Member of the Workers’ Council of Businesswoman, Melsungen Vice Chairman of the Workers’ Council B. Braun Melsungen AG, Melsungen of B. Braun Germany, Prof. Dr. Dr . Dr . h. c. M ic h ae l u N G E T h ü m Chairman of the Workers’ Council Rainer Hepke* Former Vice Chairman of the Management of Aesculap AG, Tuttlingen Chairman of the Workers’ Council of Board of B. Braun Melsungen AG B. Braun Melsungen & Berlin, Melsungen P eter h O h mann * h A N s - C ar s ten h A N s en Vice Chairman, Chairman of the Workers’ P rof. D r . O l i v er s C h ne l l President Human Resources, Council of B. Braun Germany, Managing Director of Sciarc GmbH, Baierbrunn, BASF SE, Ludwigshafen Chairman of the Workers’ Council of Executive Member of the Board of Forschergruppe B. Braun Melsungen AG, Melsungen Diabetes e.V. at Helmholtz Zentrum, Munich s O N j a s I E w ert * Member of the Workers’ Council of D r . rer . po l . A ntoni u s E ng b erding * E de ltra u d G l ä n z er * B. Braun Melsungen AG, Melsungen Member of the Executive Board of IG Metall, Member of the Managing Board of IG BCE, Department Tariff Policy, Frankfurt / Main Hanover D r . h . c . A u g u s t O et k er Partner, Dr. August Oetker KG, Bielefeld M anfred h E R R E s * P rof. D r . rer . po l . T h oma s R ö dder Production Director, B. Braun Avitum, Tax Advisor and Certified Public Accountant, P rof. D r . h . c . L u d w ig G eorg b R A u n B. Braun Melsungen AG, Melsungen Partner, Flick Gocke Schaumburg, Bonn Chairman, Former Chairman of the Management Board of B. Braun D r . j O AC h im R a u h u t * elected by the employees Melsungen AG, Melsungen Member of the Managing Board of Wacker Chemie AG, Munich

with the proposals of the Management Board concerning the The Supervisory Board concurs with the results of the auditors’ utilization of retained earnings. In accordance with Section 312 review and has raised no objections to the Management of the German Stock Corporation Act (AktG), the Management Board’s conclusion. The Supervisory Board would like to thank Board issued a report on the relationships with affiliated com- the Management Board for the excellent and successful panies for fiscal year 2011. The Supervisory Board examined collaboration, and all employees of the B. Braun Group for this report and raised no objections. The auditors reviewed the their contributions in the period under review. report and issued the following audit opinion:

“Having conducted our mandatory audit and analysis, we Melsungen, Germany, March 2012 hereby confirm that The Supervisory Board 1. the information contained in the report is correct, 2. payments made by the company for the legal transactions detailed in the report were not unreasonably high.” 144

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. Endopros t he sis Implant that replaces natural body structures such as joints or blood C ommercia l paper vessels. The implant normally remains in the body permanently. Money-market security that is assigned a fixed maturity as a bearer instrument. Entera l nu trition Supplying nutrients by sip- or tube-feeding via the gastrointestinal C orporate gov ernance tract. Principles of responsible corporate management and control. Equit y met hod DEHP Accounting method whereby an investment is initially recorded Abbreviation for Di(2-ethylhexyl)phthalate. DEHP is a plasticizer at cost which subsequently is adjusted to reflect any changes used in the manufacturing of articles made of PVC. in the investor’s share of the net assets of the associated company. The investor’s profit or loss includes his share in the profit or loss EBIT of the associated company. Key performance indicator. Acronym for Earnings Before Interest and Taxes. E x tracorporea l blood treatment Blood treatment taking place outside the body using an “artificial EBITDA kidney” (dialysis machine) that is connected directly to the blood- Key performance indicator. Acronym for Earnings Before Interest, stream. Taxes, Depreciation and Amortization. FDA EBI T DA margin Abbreviation for the Food & Drug Administration. The FDA is the Key performance indicator. EBITDA as a percentage of sales. US agency that regulates the safety of food and health-related products. 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 145

hEMODI A ly sis VCI A special blood cleansing process that utilizes the principle of Abbreviation for the Verband der Chemischen Industrie (German osmosis, i.e. the equalization of concentrations of small-molecule Chemical Industry Association). The VCI, based in Frankfurt am Main, substances in two liquids separated by a semi-permeable membrane. Germany represents the economic interests of German chemical companies. IMF Abbreviation for the International Monetary Fund. The IMF is a Work ing capita l United Nations organization based in Washington, DC in the USA. Key performance indicator. Inventories plus current trade accounts receivable less current trade accounts payable. Inter v entiona l Interventional diagnosis and treatment procedures are intended to Wound drainage positively influence the progression of a condition through targeted Drainage system for bodily fluids utilized following major surgical intervention. interventions. It serves to temporarily drain blood and wound secretions out of the body in order to promote initial wound healing. I V Abbreviation for intravenous. An application technique for the administration of a drug, fluid, or suspension into a vein.

MDRO Abbreviation for Multi-drug resistant organism. MDROs are bacteria or viruses that do not respond to a vast number of antibiotics or antivirals.

OHS A S 180 01 Abbreviation for Occupational Health and Safety Assessment Series. OHSAS 18001 is a standard that establishes globally recognized requirements for occupational health and safety management systems.

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).

T it l e 21 of t he C ode of Federa l Regul ations A section of the US law relating to food and drugs. 146

Imprint

P ubl ished by B. Braun Melsungen AG Werkanlagen Pfieffewiesen Europagebäude 34212 Melsungen Germany

Tel. +49 (0) 56 61-71- 0 Fax +49 (0) 56 61-71-45 67 www.bbraun.com

F or f urt her information contact Dr. Bernadette Tillmanns-Estorf Senior Vice President Corporate Communications Werkanlagen Pfieffewiesen Europagebäude 34212 Melsungen Germany

Tel. +49 (0) 56 61-71-16 30 Fax +49 (0) 56 61-71-35 69 E-Mail: [email protected]

Dis c l aimer The annual report is published in German and English. In the event of a discrepancy, the German version takes precedent.

carbon neutral natureOffice.com | DE-197-837076 print production SHAriNG e XPerTiSe. PrOMOTiNG PArTNerSHiP. Annual Report 2011

Five-yeAr Overview

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B . B R A U N A t A G l ANC e

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cutting area WISSEN TEILEN. PARTNERSCHAFT LEBEN. Geschäftsbericht 2011

FüNFjAHRESüBERSICHT

2007 2008 2009 2010 2011 Mio. € Mio. € Mio. € Mio. € Mio. € Umsatzerlöse 3.572,9 3.786,4 4.028,2 4.422,8 4.609,4 Umsatzkosten 1.898,3 2.029,6 2.151,4 2.341,7 2.471,2 funktionskosten 1.297,1 1.366,2 1.432,3 1.595,9 1.688,0 Vertriebskosten 972,9 1.031,2 1.091,1 1.218,9 1.277,2 Verwaltungskosten 207,9 204,7 202,1 221,6 230,9 Kosten für Forschung & Entwicklung 116,2 130,3 139,1 155,4 179,9 ergebnis nach funktionskosten 377,6 390,6 444,5 485,2 450,3 Operatives ergebnis 348,7 345,7 410,6 456,2 432,2 ergebnis vor steuern 283,0 268,8 336,1 389,6 360,2 Konzernjahresüberschuss 217,7 185,1 239,6 277,4 255,7 eBitDA 535,9 545,8 620,5 700,5 688,5

Vermögenswerte 3.332,1 3.708,0 3.975,1 4.686,1 5.105,7 Immaterielle Vermögenswerte (inkl. Goodwill) 124,3 157,1 167,9 218,6 268,0 Sachanlagen 1.435,8 1.698,7 1.926,8 2.305,0 2.541,7 Vorräte 709,7 726,7 708,5 780,0 833,4 Forderungen aus Lieferung und Leistung 738,0 767,6 790,1 933,5 1.016,3 eigenkapital 1.255,3 1.389,7 1.620,0 1.984,0 2.183,5 Verbindlichkeiten 2.076,8 2.318,3 2.355,1 2.702,0 2.922,1 Pensionsverpflichtungen 456,9 470,4 491,8 513,3 533,2 Finanzschulden 895,7 1.094,5 1.006,4 1.233,4 1.401,7 Verbindlichkeiten aus Lieferung und Leistung 177,4 179,2 210,3 216,8 219,7 investitionen in sachanlagen und immaterielle Vermögenswerte 349,4 471,0 454,8 575,4 541,4 Abschreibungen auf sachanlagen und immaterielle Vermögenswerte 182,9 197,8 208,6 238,2 252,9

Personalaufwand 1.271,4 1.339,8 1.424,9 1.581,7 1.648,9 Mitarbeiter (Jahresdurchschnitt) 35.810 37.601 38.512 40.316 42.739 2 0 11

i c h t R e

B UNTERNEHMENS PROFIL

B. Braun zählt zu den weltweit führenden Gesundheitsversorgern. Mit seinen Sparten Hospital Care, Aesculap, Out Patient Market und B. Braun Avitum bietet das Unternehmen medizinische Produkte und G e s c h ä f t s

Dienstleistungen für Kliniken, niedergelassene Ärzte und den |

Homecare-Bereich. Der B. Braun-Ausbilder Dirk Schmoll kontrolliert zusammen mit der Auszubildenden Melissa Piskorsch die Bauteile einer bestückten

3 0 0 2 0112 B . B R A U N Leiterplatte im neuen Ausbildungszentrum in Melsungen.