ASSETS AND LIABILITIES
Asset and liability structure
The total assets of the Group rose by € 300 million (2%) to € 15,324 million (December 31, 2006: € 15,024 million). In constant currency, this was an increase of 8%. Of this growth, 4% is attributable to the acquisitions in 2007. The expansion of existing business activities accounted for 4% of the increase in total assets. Inflation had no significant impact on the assets of Fresenius in 2007.
Non-current assets were € 11,033 million (2006: € 10,918 million). Based on the exchange rates as of December 31, 2006, this was an increase of 8%, and was driven mainly by additions to property, plant, and equipment. Goodwill from acquisitions was € 495 million as of December 31, 2007.
Current assets rose by 5% to € 4,291 million (2006: € 4,106 million). In constant currency, this is an increase of 9%. Within current assets, trade accounts receivable rose by 3% to € 2,159 million, primarily due to business expansion (2006: € 2,088 million). Adjusted for currency effects, receivables grew by 8%. This increase was well below the currency-adjusted growth of 10% in Group sales. Benefits resulted from a sustainable receivables management: Average days sales outstanding were 71 days (2006: 71 days). Inventories rose by 15% to € 875 million (2006: € 761 million). The scope of inventory was 42 days in 2007 (2006: 38 days). This was affected by a build-up of inventories at Fresenius Kabi, mainly associated with the relocation of production and the accumulation of sufficient buffer stocks to guarantee continuing supplies. The ratio of inventories to total assets increased slightly to 5.7% as of December 31, 2007 (December 31, 2006: 5.1%).
Shareholders’ equity, including minority interest, rose by 6%, or € 331 million, to € 6,059 million (2006: € 5,728 million). Adjusted for currency effects, this is an increase of 13%. Group net income increased shareholders’ equity by € 410 million. The equity ratio, including minority interest, was 39.5% as of December 31, 2007 (December 31, 2006: 38.1%).
The liabilities and equity side of the balance sheet shows a very solid financing structure. Shareholders’ equity of the Group, including minority interest, covers 55% of non-current assets (2006: 52%). Shareholders’ equity, minority interest, and long-term liabilities cover all non-current assets and nearly all inventories.
| ASSETS AND LIABILITIES – 5-YEARS OVERVIEW | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| in million € | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 15,324 | 15,024 | 11,594 | 8,188 | 8,347 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity* | 6,059 | 5,728 | 5,130 | 3,347 | 3,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As % of total assets | 40 | 38 | 44 | 41 | 39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity*/non-current assets (%) | 55 | 52 | 64 | 62 | 57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 5,699 | 5,872 | 3,502 | 2,735 | 3,023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As % of total assets | 37 | 39 | 30 | 33 | 36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gearing (%) | 88 | 98 | 63 | 78 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| * including minority interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term liabilities were € 5,762 million as of December 31, 2007, a decrease of € 476 million or 8% compared to the previous year’s figure of € 6,238 million (in constant currency: -2%). Short-term liabilities were € 3,503 million, an increase of 15% versus the previous year’s figure of € 3,058 million (in constant currency 20%).
The Group has no significant accruals. The largest single accrual is to cover the settlement of fraudulent conveyance claims and all other legal matters relating to the National Medical Care transaction in 1996 that resulted from the bankruptcy of W.R. Grace. This accrual amounts to US$ 115 million (€ 78 million). Please see the Notes for details.
Group debt was € 5,699 million, which was 3% lower than the previous year’s figure (2006: € 5,872 million) – in constant currency: € 6,041 million. Their relative weight in the balance sheet decreased to 37.2% (2006: 39.1%). Approximately 53% of the Group’s financial liabilities is in US dollars. Liabilities due in less than one year were € 932 million (€ 596 million), while liabilities with a remaining tenor of one to five years and over five years were € 4,767 million (2006: € 5,276 million).
The net debt to equity ratio, including minority interest (gearing), has fallen to 88.1% (2006: 98.0%). The return on equity after taxes reached 12.0% (2006: 10.4%). The return on total assets after taxes and before minority interest was 5.2% in 2007 (2006: 4.3%).The table below shows other key asset and capital ratios:
| Dec 31, 2007 | Dec 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt/EBITDA | 2.8 | 3.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net debt/EBITDA | 2.6 | 3.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA/interest ratio | 5.5 | 4.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Currency and interest risk management
The nominal value of all foreign currency hedging contracts was € 739 million as of December 31, 2007; these contracts had a market value of € 14 million. The nominal value of interest rate hedging contracts was € 2,880 million; these contracts had a market value of € - 30 million. Please see the Risk Report and the Notes for further details.