Fresenius Vamed

We achieved excellent results in 2010: both sales and EBIT reached historical record levels. Order intake and order backlog also increased substantially, providing a solid basis for further growth.

Key Figures of Fresenius Vamed

  • Engineering and Services for hospitals and other health care facilities
€ in millions 2010 2009 Change
1 Net income attributable to VAMED AG
Sales 713 618 15%
EBIT 41 36 14%
Net income1 30 27 11%
Operating cash flow 47 29 62%
Capital expenditure/acquisitions 14 7 100%
Order intake 625 539 16%
Employees (December 31) 3,110 2,849 9%

€ in millions 2010 2009 Change
1 Net income attributable to VAMED AG
Sales 713 618 15%
EBIT 41 36 14%
Net income1 30 27 11%
Operating cash flow 47 29 62%
Capital expenditure/acquisitions 14 7 100%
Order intake 625 539 16%
Employees (December 31) 3,110 2,849 9%

Fresenius Vamed specializes in international projects and services for hospitals and other health care facilities. Our portfolio ranges along the entire value chain in the health care area: from consulting, project development, planning, and turnkey construction, via maintenance, to administrative management and 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 in Central Europe.

VAMED is a worldwide acting provider of a full line of services for the health care industry. Meanwhile, we hold a unique position with our comprehensive range of services.

We have completed approximately 500 projects in more than 60 countries.

BUSINESS DEVELOPMENT

In 2010, Fresenius Vamed achieved excellent sales growth of 15% to €713 million (2009: €618 million). Organic growth was 15%.

The table shows the sales development by activity:

€ in millions 2010 2009 Change
Project business 487 420 16%
Service business 226 198 14%

€ in millions 2010 2009 Change
Project business 487 420 16%
Service business 226 198 14%

The strongest region was Europe with 79% of total sales. Africa and Asia-Pacific contributed 14% and 7%, respectively.

In addition, VAMED was responsible for revenues of €569 million from management contracts. The related fees are included in VAMED’s financial statements.

Order intake and order backlog for projects developed excellently, as the table shows:

€ in millions 2010 2009 Change
Order intake 625 539 16%
Order backlog (December 31) 801 679 18%

€ in millions 2010 2009 Change
Order intake 625 539 16%
Order backlog (December 31) 801 679 18%

Earnings performance at Fresenius Vamed was also excellent. EBIT rose by 14% to €41 million (2009: €36 million). At 5.8%, the EBIT margin was at previous year’s level (2009: 5.8%). In the project business, EBIT increased by 28% to €23 million (2009: €18 million). In the service business, EBIT was at previous year’s level with €18 million. Fresenius Vamed’s net income1 was €30 million, an increase of 11% (2009: €27 million).

Property, plant and equipment including intangible assets amounted to 14% of Fresenius Vamed’s total assets. Since the business is not capital intensive, Fresenius Vamed achieved an excellent return on equity (ROE) before taxes of 21.9% (2009: 22.0%).

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 in particular there is growing interest in public-private partnerships (PPPs). 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.

Our project business was again very successful in 2010. The following highlights some of our main projects in the respective target markets:

EUROPE

We achieved another major success in Germany, winning a contract for the planning, financing, and turnkey construction of the new examination and treatment center (U/B West) at the university clinic in Cologne. The construction phase is due to be completed in 2012, at a cost of €65 million. Within the framework of a PPP project, we have also been entrusted with the technical operational management for 25 years. The project for the construction of a new wing at a hospital in Cologne-Merheim, begun in 2009, is proceeding according to plan. A special feature of this contract is that we are carrying out the construction work while the hospital is still operating. In addition, consulting, planning, and project management contracts for various hospitals round off our successful business acquisition activities in Germany.

In the Austrian market, the focus was on the development of further PPP projects and holistic realization models. We won a contract for the modernization and extension of a 520-bed hospital in Lower Austria worth over €100 million. We completed the planning and construction of the 150-bed postacute care clinic in Schruns, Vorarlberg, and the post-acute care center in Gmundnerberg, Upper Austria, according to plan in summer 2010. The two clinics are now operational. We were responsible for their planning and execution and have now also assumed the total operational management for the two projects. We are expanding our existing PPP partnership for a nursing home in the Burgenland region with a contract for the extension and operation of two homes.

In Bosnia, we won a large contract for the turnkey realization of the Bijeljina General Hospital. The 220-bed hospital is now under construction. In Romania, contracts were signed for the modernization and refurbishment of a total of three hospitals.

In Russia, work continued according to plan on the turnkey construction of a 300-bed hospital in Krasnodar. It is due to be completed in 2012. After the successes in 2009, we continued our intensive coverage of the market in Turkmenistan in 2010 and were able to win another three contracts for the supply of medical equipment, including installation, commissioning, and training. All the existing projects are proceeding to the full satisfaction of our clients. In Ukraine, the large-scale contract for the supply of medical equipment that we received in 2009 was successfully completed.

AFRICA

In Gabon, the work on the turnkey construction of the specialist hospital for cancer diseases in Angondje is proceeding on schedule and within budget. In 2011, we plan to complete this large-scale project, which is worth over €80 million. Other extension projects at the central hospital in Libreville, begun in 2008, were continued according to plan. In the fourth quarter 2010, we were awarded a €76 million turnkey construction for the university clinic in Owendo.

In Nigeria, we successfully continued finalizing the total of 14 university clinics, which are modernized by us.

In Ghana, we completed the turnkey construction of the five polyclinics on time and within budget.

In addition to the intensive coverage of our existing target markets in Africa, we have also identified Mali as a promising market for VAMED and received our first order entry in 2010.

ASIA-PACIFIC

Key markets for VAMED in Asia are Malaysia, Vietnam, and China, where VAMED has been operating successfully for many years. High client satisfaction with the execution of existing contracts helped us win new contracts in China, among other countries. We received a large-scale contract for the supply of medical equipment for the Wu An Peoples Hospital near Peking. We also won a contract for the supply of medical equipment for several hospitals, including commissioning and training, in the province of Henan.

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, ranging from building and equipment maintenance, medical technology management, waste management, energy management, security services, and the cleaning of buildings and outdoor facilities through to technical and operational management. With this integrated portfolio of services, we guarantee optimal operation of a 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:

EUROPE

In 2010, VAMED successfully continued its more than 20-year partnership with university clinic AKH in Vienna. In addition to VAMED’s technical management role, which we have been performing since 1986, this included a number of structural building projects to round off the hospital’s facilities. AKH is one of Europe’s largest hospitals and comprises 31 clinics and institutes with a total of about 2,100 beds.

We also successfully continued performing the technical management of two hospitals in Lower Austria with a total of 1,230 beds. After AKH Vienna, this is the largest technical service contract ever awarded in Austria.

With the start-up of two post-acute care centers in Vorarlberg and Upper Austria, we were able to fill important gaps in the infrastructure and at the same time become the largest private provider of post-acute care in Austria. An oncological post-acute care center in the Burgenland region was opened at the beginning of 2010.

The PPP model in Oberndorf near Salzburg is already becoming a reference project for integrated health care even before its completion. Here VAMED was engaged to operate the existing acute care hospital, make structural improvements, and extend it. We are also constructing a post-acute care center (due to be completed in 2011) and a new medical center (due to be completed in 2012).

In Germany, with the award of the PPP project U/B West for the university clinic in Cologne, we have not only been entrusted with the planning, construction, and equipment of a new examination and treatment center but have also signed a contract for the technical management of the new facility for 25 years. The center is due to be completed at the end of 2012.

The service contract with the Charité University Clinic in Berlin was renewed for another two years until 2012. Charité CFM Facility Management GmbH, the consortium headed by VAMED, is responsible for all operations at Charité except the purely medical services. In 2010, approximately 2,600 employees again successfully carried out their services under this contract, which is one of the largest service contracts in the hospital sector in Europe.

The service contract with the university clinic in Hamburg-Eppendorf was also continued to the customer’s complete satisfaction. It has already been renewed twice and currently runs until 2013.

A new five-year cooperation was concluded with the university clinic Schleswig-Holstein with the aim of improving the quality of IT-services and operating the IT-infrastructure more efficiently.

ASIA-PACIFIC

At the international level, VAMED successfully continued all its operational management contracts. After the Prince Court Medical Center (PCMC) in Kuala Lumpur, Malaysia, and the Al Ain Hospital in Abu Dhabi, United Arab Emirates, the National Research Center for Maternal and Child Health in Astana, Kazakhstan with about 500 beds is the third hospital in our target markets in Asia where we are responsible for the total operational management. All three projects are being conducted in cooperation with the Vienna University of Medicine and are important reference projects for VAMED’s allround competence.

Through close market coverage, business in Thailand has also developed very positively for VAMED. After initial contracts in 2009, we won another service contract for the Ramathibodi University Clinic and a consulting contract for a medical spa in Bangkok.

AFRICA

In Gabon, VAMED is responsible for the overall management of a total of seven regional hospitals and for the technical management of the Omar Bongo Ondimba Hospital in Libreville. High client satisfaction led to a renewal of the latter contract for a further three years.

In Libya, the Medical Center Tripoli is one of the most important technical management reference projects. The general refurbishment of the Gharian Hospital in Libya, which we are executing while the hospital is still in operation, is proceeding according to plan and is due to be completed in 2012.

VAMED VITALITY WORLD

As a result of the new health consciousness trend and desire for vitality, thermal spa and wellness resorts are acquiring ever greater importance as health facilities. We are responding to this trend with our VAMED Vitality World thermal spa resorts and have been successfully designing, constructing, and operating projects for many years.

In partnership with the City of Vienna, we expanded the thermal spa center in Vienna into a unique health and wellness center, the new thermal spa Vienna. It was successfully opened in 2010 and is considered one of the most advanced city health tourism facilities in Europe.

In 2010, we also started operating the €83 million thermal spa center project Tauern SPA Zell am See-Kaprun, Salzburg. VAMED not only developed and constructed this exceptional spa project but is also responsible for its overall management, clearly demonstrating its competence across the complete value chain.

In November 2010, the St. Martins Thermal Center & Lodge in Burgenland in Austria celebrated its first anniversary. It combines, in unique fashion, the attraction of a health tourism facility with the natural splendor of the surrounding national park Neusiedler See-Seewinkel.

OUTLOOK

In Europe, the focus of VAMED’s activities will continue to be on holistic realization and PPP projects in 2011. As health centers 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 here for the 2011 financial outlook of Fresenius Vamed.

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