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Corporate performance criteria

The Management Board controls the business segments by setting strategic and operating targets and through financial ratios. The most important ratios are explained below:

In line with our growth strategy, sales growth (in constant currency) of the Group and, in our business segments, in particular organic sales growth is of central importance. Operating income (EBIT: earnings before interest and taxes) and the EBIT margin, respectively, are useful yardsticks for measuring the profitability of the business segments. At Group level, we primarily use net income to this end.

At Group level, operating cash flow and the cash flow margin are key performance figures. With regard to the operating cash flow contributions of our business segments, we also analyze the key performance indicators days sales outstanding (DSO) and scope of inventory (SOI).

Our investments are controlled using a detailed coordination and evaluation process. As a first step, the Management Board sets the Group’s investment targets and the budget based on investment proposals. In a second step, the respective business segments and an internal Acquisition & Investment Council (AIC) determine the proposed projects and measures while taking into account the overall strategy, the total budget, and the required and potential return on investment. The investment projects are evaluated based on commonly used processes, such as internal rate of return (IRR) and net present value (NPV). Graduated according to investment volume, a project is submitted for approval to the executive committees or respective managements of the business segments, or to the Management Board of Fresenius Management SE or its Supervisory Board.

Another key performance indicator at the Group level is the debt ratio, which is the ratio of net debt to EBITDA. This measure indicates how far a company is in a position to meet its payment obligations. Our business segments usually hold leading positions in growing and mostly non-cyclical markets. They generate mainly stable, predictable cash flows since the majority of our customers are of high credit quality. The Group is therefore able to finance its growth with a high proportion of debt compared to companies in other industries.

At Group level, we use return on operating assets (ROOA) and return on invested capital (ROIC) as benchmarks for evaluating our business.

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