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32. 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.

Shareholders’ equity and debt have developed as follows:

SHAREHOLDERS' EQUITY


€ in millions Dec. 31, 2012 Dec. 31, 2011
Shareholders’ equity 12,758 10,577
Total assets 30,664 26,321
Equity ratio 41.6% 40.2%

€ in millions Dec. 31, 2012 Dec. 31, 2011
Shareholders’ equity 12,758 10,577
Total assets 30,664 26,321
Equity ratio 41.6% 40.2%

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 (until June 30, 2012), 2003 and 2008 stock option plans (see note 35, Stock options).

Debt


€ in millions Dec. 31, 2012 Dec. 31, 2011
Debt 11,028 9,799
Total assets 30,664 26,321
Debt ratio 36.0% 37.2%

€ in millions Dec. 31, 2012 Dec. 31, 2011
Debt 11,028 9,799
Total assets 30,664 26,321
Debt ratio 36.0% 37.2%

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, 2012, the net debt / EBITDA ratio (before special items) was 2.6 and was therefore within Fresenius Group’s target range of 2.5 to 3.0. At the end of 2013, the Fresenius Group expects the net debt / EBITDA ratio to be at the lower end of the target range.

Fresenius Group’s financing strategy is reflected in its credit ratings. The Fresenius Group 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 stable stable stable

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

Following the announcement of the voluntary public takeover offer to RHÖN-KLINIKUM AG shareholders, Standard & Poor’s and Moody’s had placed the company rating under review for a possible downgrade. Fitch affirmed the company rating and the outlook. Early September 2012, Fresenius SE & Co. KGaA announced that it has decided not to submit a new takeover offer to the shareholders of RHÖN-KLINIKUM AG for the time being. As a consequence, Standard & Poor’s and Moody’s confirmed the outlook with stable.

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