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Fresenius Vamed

In 2012, we reached new historical record levels in both sales and EBIT. Strong organic sales growth and acquisitions in the reporting year contributed to this excellent development. Order intake and order backlog also increased substantially, providing a solid base for future growth.

Fresenius Vamed


  2012 € in millions 2011 € in millions Change
1 Net income attributable to the parent company of the respective business segment
Sales 846 737 15%
EBIT 51 44 16%
Net income1 35 34 3%
Operating cash flow 35 -83 142%
Capital expenditure/acquisitions 55 10 --
Order intake 657 604 9%
Employees (December 31) 4,432 3,724 19%

  2012 € in millions 2011 € in millions Change
1 Net income attributable to the parent company of the respective business segment
Sales 846 737 15%
EBIT 51 44 16%
Net income1 35 34 3%
Operating cash flow 35 -83 142%
Capital expenditure/acquisitions 55 10 --
Order intake 657 604 9%
Employees (December 31) 4,432 3,724 19%

Fresenius Vamed realizes projects and services for hospitals and other health care facilities worldwide. Our portfolio ranges along the entire value chain in the health care area: from consulting, project development, planning, and turnkey construction, via maintenance, and technical management, to total operational management. This entire competency enables us to support complex health care facilities efficiently and successfully at each level of their life cycle. The company is also a pioneer in public-private partnership (PPP) models for hospitals and other health care facilities.

With its comprehensive range of services, and as a worldwide-acting provider of a full line of services for the health care industry, VAMED holds a unique position: We have successfully completed approximately 600 projects in more than 70 countries.

BUSINESS DEVELOPMENT

In 2012, sales increased by 15% to €846 million (2011: €737 million). Organic growth was 5%, acquisitions contributed 10%. In 2012, Fresenius Vamed acquired H.C. Hospital Consulting S.p.A., in Italy, and took over the post-acute care clinic Zihlschlacht, in Switzerland, from HELIOS. Both have been consolidated retrospectively as of January 1, 2012.

The table shows the sales development by activity:

€ in millions 2012 2011 Change % of total sales
Project business 506 494 2% 60%
Service business 340 243 40% 40%

€ in millions 2012 2011 Change % of total sales
Project business 506 494 2% 60%
Service business 340 243 40% 40%

The strongest region was Europe with 74% of total sales. Asia-Pacific and Africa contributed 14% and 7%, respectively. Latin America contributed 5%.

Order intake and order backlog for projects developed as follows:

€ in millions 2012 2011 Change
Order intake 657 604 9%
Order backlog (December 31) 987 845 17%

€ in millions 2012 2011 Change
Order intake 657 604 9%
Order backlog (December 31) 987 845 17%

EBIT improved by 16% to €51 million (2011: €44 million). The EBIT margin remained at the previous year’s level of 6.0%. In the project business, EBIT was €25 million (2011: €28 million). In the service business, at €26 million, EBIT was clearly above previous year’s level (2011: €16 million). Fresenius Vamed’s net income1 was €35 million, an increase of 3% (2011: €34 million).

Property, plant and equipment including intangible assets amounted to 17% of Fresenius Vamed’s total assets. The business model has a low capital intensity. Fresenius Vamed achieved an excellent return on equity (ROE) before taxes of 20.8% (2011: 21.0%).

PROJECT BUSINESS

The project business comprises the consulting, project development, planning, turnkey construction, and financing management of projects. VAMED responds flexibly to clients’ local needs, providing custom-tailored solutions all from one source. VAMED also carries out projects in cooperation with partners. Among public clients there is growing interest in public-private partnership (PPP) models. With these business models, hospitals or other health care facilities are planned, constructed, financed, and operated by public and private partners together through a joint project company.

The following highlights some of our main projects in the respective target markets of our project business.

EUROPE

In Germany, VAMED successfully pursued its ongoing projects. The expansion of the Main-Taunus District’s hospitals in Hofheim involved an investment of €42 million and was on schedule. This will help to improve the quality of treatment and organize the hospitals’ operating procedures more efficiently. VAMED completed the turnkey construction of the new examination and treatment center at Cologne’s University Hospital (U/B West) in 2012. The investment volume was €65 million. Within this so-called “life cycle project,” we have also been entrusted with the technical operational management for the next 25 years. We also successfully completed the partial reconstruction of the Köln-Merheim Hospital. This project was started in 2009. Carrying out the construction work while the hospital was still operating was the outstanding challenge here. The investment amounted to €58 million.

In Austria, we focused on more PPP projects and holistic realization models. The integrated health care center Oberndorf near Salzburg was officially opened in May 2012. It pursues new methods of holistic medical treatment. Linking together an acute care hospital, a rehabilitation center, and the planned medical center at a single location is a unique reference project in Austria’s public-sector health care. We started two more projects for rehabilitation centers in western Austria. We broke ground in Kitzbühel to erect a new rehabilitation center in May 2012, which will specialize in orthopedics. Construction also started in July 2012 on an oncology rehabilitation center in St. Veit / Pongau, the first of its kind in the region. At the Otto Wagner Hospital in Vienna, we continued the turnkey construction of an inpatient rehabilitation center. It will complement the existing acute orthopedic care department there. In all, three new health care facilities will become operational in 2013. The total investment volume is €72 million. We also successfully continued the existing PPP cooperation for nursing homes in the state of Burgenland by starting a new nursing home built by VAMED in Rechnitz.

In Bosnia, we successfully continued with our major contract to build an entire general hospital with 220 beds in Bijeljina. We will complete the project in 2013.

In Russia, we handed over the 300-bed hospital in Krasnodar – a turnkey project – to our customer according to plan. We expanded and rebuilt Sochi’s Municipal Hospital No. 4. With 350 beds and 16 operating rooms, it will provide a major contribution in medical care during the Winter Olympic Games in 2014. It will also serve as a reference for future health care projects in Russia.

In Turkmenistan, we processed further supply orders for medical technology.

Africa

In Angondje, Gabon, VAMED completed the turnkey construction of a specialist cancer clinic ahead of schedule. We also finished the first phase of building the Centre Hospitalier de Libreville.

In Ghana, we continued a follow-up project to build five more polyclinics on a turnkey basis.

In Nigeria, we modernized a total of 14 university hospitals.

We completed our first contract in Mali to build a radiotherapy center in just twelve months.

In 2012, we successfully entered the markets in Senegal, Mozambique, and Cape Verde with our first contracts.

ASIA-PACIFIC

VAMED has operated successfully for many years in the key Asian markets of Malaysia, Vietnam, and China. Our customers are very satisfied, and this helped us to secure new orders in China in 2012. The success of the preceding years continued and we were able to receive orders for the supply of medical equipment amounting to €71 million in 2012.

In Malaysia, we continued to carry out a contract to plan, supply, and install medical equipment for the National Cancer Institute. The investment volume amounted to €31 million.

In Vietnam, we provided a hospital in Hue, on schedule, with specialist equipment for cancer treatment worth €17 million.

In Laos, we completed the project to modernize the 450-bed Mahosot University Hospital, which we had started in 2011. The project included rebuilding and modernizing all of the operating rooms.

LATIN AMERICA

Besides the projects we completed in Latin America, we received the first contract in Trinidad and Tobago: VAMED will expand and modernize the San Fernando General Hospital there. In Honduras, VAMED gained a follow-up order for the planning, delivery, and installation of medical equipment. To strengthen our presence in Latin America, we opened a new office in Bogotá, Colombia.

SERVICE BUSINESS

VAMED offers a full range of facility management services for health care facilities. Modular in design, our service offering encompasses every aspect of technical, commercial, and infrastructural facility management. This ranges from building and equipment maintenance, medical technology management, and technical management through to the operational management of health care facilities. We also take care of energy management, waste management, and the cleaning of buildings and outdoor facilities, as well as security services. With this integrated portfolio of services, we guarantee optimal operation of a health care facility over its entire life cycle, from the construction of the buildings to the end of primary use, modernization, or renewal. In addition to facility and operational management, we also specialize in logistics for the health care industry. By optimizing the processes, logistics costs are minimized while still maintaining the necessary supply standards.

The following gives an overview of the relevant developments in the target markets of our service business.

EUROPE

In Austria, VAMED has been in an ongoing partnership with Vienna’s municipal general hospital, Allgemeines Krankenhaus der Stadt Wien – Medizinischer Universitätscampus (AKH Vienna), for more than 25 years. We have been responsible for operating its technical management since 1986. We also executed the further extension of AKH Vienna. With 30 hospitals and institutes, and approximately 2,100 beds, AKH Vienna is one of the largest hospitals in Europe.

After AKH Vienna, the largest technical service contract we have ever received was for two hospitals in lower Austria with a total of 1,230 beds. We continued technical management for both hospitals in 2012.

VAMED now operates eight rehabilitation facilities and is the largest private-sector provider of rehabilitation in Austria. Three more rehabilitation centers in Salzburg, Tyrol, and Vienna are currently in the construction phase and will commence operations in 2013 under VAMED’s management.

In Germany, the consortium Charité CFM Facility Management GmbH, headed by VAMED, has been responsible for all operations at Berlin’s Charité except for the purely medical services since 2006. Approximately 2,600 employees work on one of the largest service contracts for a hospital in Europe. The consortium, headed by VAMED, renewed its technical operating contract for the entire hospital in 2012. The recommissioning reflects Charité’s full confidence in the service quality of VAMED.

We also fulfilled the service contract with the University Hospital in Hamburg-Eppendorf to our customer’s satisfaction.

In 2012, we continued our five-year partnership with the Schleswig-Holstein University Hospital agreed on in 2010. It aims to improve the quality of IT services and equipment, and to organize the infrastructure more efficiently.

ASIA-PACIFIC

Through close market coverage, business in Thailand has also developed very positively for VAMED. Following the first contracts in 2009, we acquired more service contracts in 2012. They include, for instance, a contract to implement a clinical information system at a university hospital in Bangkok.

AFRICA

In Gabon, VAMED manages all of the operations in seven regional hospitals, along with the technical management of the Omar Bongo Ondimba Hospital in Libreville. In 2012, the Health Ministry extended the management contracts for the six regional hospitals for which it is responsible.

Following completion of the construction and expansion of the Gabonese hospitals in Angondje and Libreville, we also received a mandate to run their technical operations.

VAMED VITALITY WORLD

As people become increasingly aware of health care issues and desire more vitality, thermal spa and wellness resorts play an ever-larger role. Based on our decades of experience in the health care sector, VAMED Vitality World’s thermal spa and wellness resorts have succeeded in bridging the gap between preventive medicine and health care tourism. Every year, 2.4 million guests visit the eight thermal spa and wellness resorts that VAMED operates in six Austrian provinces. We are the market leader in Austria with a market share of almost 30%.

In 2012, the resorts of VAMED Vitality World once again received several of the internationally coveted World Travel Awards. The judges nominated the Tauern SPA Zell am See-Kaprun to be “Europe’s Leading Lifestyle Resort 2012.” The St. Martins Therme & Lodge took first in the “Austria’s Leading Resort” category, and the Aqua Dome Tirol Therme in Längenfeld in the “Austria’s Leading SPA Resort” category. In addition, VAMED Vitality World itself was awarded the “World’s Leading Medical Wellness and SPA Operator” title for the second time in a row.

OUTLOOK

In Europe, the focus of VAMED’s activities will continue to be on holistic realization and PPP projects in 2013. As health care facilities have high value for preventive care, and health tourism is becoming increasingly popular, we see development potential in this segment as well. Outside Europe, the focus will be on custom-tailored solutions for hospitals along the VAMED value chain.

Further information on VAMED can be found on its website at www.vamed.com.

Please see the Management Report for the 2013 financial outlook of Fresenius Vamed.

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