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31. Supplementary information on capital management

The Fresenius Group has a solid financial profile. Capital management includes both equity and debt. A principal objective of Fresenius Group’s capital management is to optimize the weighted-average cost of capital. Further, it is sought to achieve a balanced mix of equity and debt. To secure growth on a long-term basis, a capital increase may also be considered in exceptional cases, for instance to finance a major acquisition.

Due to the Company’s diversification within the health care sector and the strong market positions of the business segments in global, growing and non-cyclical markets, predictable and sustainable cash flows are generated. They allow a reasonable proportion of debt, i. e. the employment of an extensive mix of financial instruments. Moreover, Fresenius Group’s customers are generally of high credit quality.

Equity and debt have developed as follows:

Shareholders’ equity


€ in millions Dec. 31, 2011 Dec. 31, 2010
Shareholders’ equity 10,577 8,844
Total assets 26,321 23,577
Equity ratio 40.2% 37.5%

€ in millions Dec. 31, 2011 Dec. 31, 2010
Shareholders’ equity 10,577 8,844
Total assets 26,321 23,577
Equity ratio 40.2% 37.5%

Fresenius SE & Co. KGaA is not subject to any capital requirements provided for in its articles of association. Fresenius SE & Co. KGaA has obligations to issue shares out of the Conditional Capital relating to the exercise of stock options and convertible bonds on the basis of the existing 1998, 2003 and 2008 stock option plans (see note 34, Stock options).

Debt


€ in millions Dec. 31, 2011 Dec. 31, 2010
Debt 9,799 8,784
Total assets 26,321 23,577
Debt ratio 37.2% 37.3%

€ in millions Dec. 31, 2011 Dec. 31, 2010
Debt 9,799 8,784
Total assets 26,321 23,577
Debt ratio 37.2% 37.3%

According to the definitions in the underlying agreements, the Mandatory Exchangeable Bonds and the Contingent Value Rights were not categorized as debt until their maturity.

Assuring financial flexibility is the top priority in the Group’s financing strategy. This flexibility is achieved through a wide range of financing instruments and a high degree of diversification of the investors. Fresenius Group’s maturity profile displays a broad spread of maturities with a high proportion of medium- and long-term financing. In the choice of financing instruments, market capacity, investor diversification, flexibility, credit conditions and the existing maturity profile are taken into account.

The net debt/EBITDA ratio is a key financial figure for the Fresenius Group. As of December 31, 2011, the net debt/EBITDA ratio was 2.8 and was therefore within Fresenius Group’s target corridor of 2.5 to 3.0. At the end of 2012, the Fresenius Group expects the net debt/EBITDA ratio to be ≤ 3.0, due to the recently announced acquisitions.

Fresenius Group’s financing strategy is reflected in its credit ratings. Fresenius is covered by the rating agencies Moody’s, Standard & Poor’s and Fitch.

The following table shows the company rating of Fresenius SE & Co. KGaA:

  Standard & Poor's Moody's Fitch
Company rating BB Ba1 BB +
Outlook positive stable stable

  Standard & Poor's Moody's Fitch
Company rating BB Ba1 BB +
Outlook positive stable stable

On August 2, 2011, Fitch has upgraded the company rating to BB + from BB, the outlook is stable.

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