other curreNt assets
€ thousand 2012 2011
Prepaid expenses 19,802 23,732
Other tax refund claims 18,884 19,809
Other 19,676 14,934
58,362 58,475
Specific bad debt allowances were recognized in the amount of EUR 2 thousand (2011: EUR 4 thousand) on other current assets.
Other tax refund claims primarily result from VAT claims.
32 equity
For the breakdown and changes in equity in fiscal years 2012 and 2011, please see the statement of changes in equity of the Dräger Group.
The capital stock of Drägerwerk AG & Co. KGaA remains unchanged at EUR 42,266 thousand. This capital stock is divided into 10,160,000 limited no-par bearer common shares and 6,350,000 limited no-par preferred shares. The nominal value of both share types is EUR 2.56. Drägerwerk Verwaltungs AG, the general partner, holds no shares in capital.
The capital stock has been fully paid in. As before, the preferred and common shares are traded on the capital market.
Other than voting rights, the preferred shares have the same rights as those attached to the common shares. As compensation for the lack of voting rights, an advance divi- dend of EUR 0.13 per preferred share is distributed from net earnings. If sufficient profits are available, a dividend of EUR 0.13 per common share is then paid. Any profit in ex- cess of this amount, if distributed, is allocated so preferred shares receive EUR 0.06 more than common shares.
If the profit is not sufficient to distribute the advance dividend for preferred shares in one or more years, the amounts are paid from the profit of subsequent fiscal years be- fore a dividend is paid on common shares.
If amounts in arrears are not paid in the next year along with the full preferred dividend for that year, the preferred shareholders have voting rights until the arrears have been paid.
In the event of liquidation, the preferred shareholders receive 25 percent of net liqui- dation proceeds in advance. The remaining liquidation proceeds are distributed evenly to all shares.
By resolution of the annual shareholders’ meeting on May 6, 2011, the general partner was authorized to increase the capital stock of the Company, with the approval of the Supervisory Board, until May 5, 2016, by issuing new bearer common shares and/or pre- ferred shares (no-par shares) in return for cash and/or contributions in kind by up to EUR 21,132,800.00 (authorized share capital) in one or several tranches. The authoriza- tion includes the entitlement to optionally issue new common shares and/or non-vot-
of common and preferred shares to subscribe to the other type of shares (“crossed ex- clusion of subscription rights”).
The annual shareholders’ meeting on May 7, 2010, resolved to conditionally increase the Company’s capital stock up to EUR 3,200,000 by issuing up to 1,250,000 new no-par preferred bearer shares (no-par shares) in return for cash and/or contributions in kind (conditional capital). The conditional capital was used for issuing the option rights to Siemens.
By resolution of the annual shareholders’ meeting on May 4, 2012, the general part- ner was authorized to acquire until May 3, 2017, up to 10 percent in own shares of both types (common and/or preferred shares) of the Company’s capital stock as of the date of resolution or – if this value is lower – as of the date on which the authorization is exer- cised. Together with all other shares held by the Company or attributable to it according to Secs. 71a et seq. AktG, shares purchased under this provision may at no time equal more than 10 percent of capital stock. The authorization may not be used for the purpose of trading in treasury shares.
The authorization may be exercised in whole or in part, on one or more occasions and for one or more purposes by the Company or by dependent Group companies or enter- prises in which the Company has a majority shareholding, or by third parties for its or their account. The purchase may be limited in part or in full to a single class of shares by excluding, in part or in full, shareholders’ right to sell the other class of share.
The purchase may, at the discretion of the general partner, be affected via the stock exchange, or by means of a public purchase offer to all holders of the respective type of share or by means of a public invitation to all holders of the respective type of share to sub- mit offers for sale.
The general partner is being authorized to use treasury shares acquired on the basis of this authorization for any lawful purposes.
The purchase of treasury shares by the general partner may only be initiated with the approval of the Supervisory Board.
Drägerwerk AG & Co. KGaA does not grant any share-based payments (share option plan).
capital reserves
The capital reserves originated from share premiums from Drägerwerk AG & Co. KGaA’s establishment (transformation) in 1970 and from capital increases in 1979, 1981, 1991 and 2010.
retained earnings
Retained earnings comprise the earnings generated until fiscal year 2012 by the compa- nies included in the Group financial statements, where they were not attributed to minority interests or paid as a dividend by Drägerwerk AG & Co. KGaA. Deferred taxes on
178 noTes To The consolidaTed balance sheeT
participation capital recognized in equity are stated in this item. Actuarial gains/losses from the Company’s pension provisions, including deferred taxes, are also included in retained earnings.
The increase of retained earnings through net profit primarily served to counteract the following two factors.
Firstly, actuarial losses for provisions for pensions and similar obligations have risen sharply due to the drop in interest rates. The net amount of this increase of EUR 53,396 thousand is recognized directly in equity under other comprehensive income and retained earnings.
Secondly, the EUR 88,344 thousand difference between the buyback value of EUR 122,109 thousand and the carrying value of the debt and equity components of the bought back participation certificates is divided between the two components. The EUR 85,491 thousand (EUR 64,269 thousand after tax effect recognized directly in equity) share per- taining to the equity component was recognized directly in equity in retained earnings. Reserves retained from earnings, including Group result, therefore changed as follows:
reserVes retaiNeD from earNiNgs, iNcl. group result
€ thousand
Reserves retained from earnings, incl. Group result as of January 1, 2012 469,763 Effect from the buyback of participation certificates (recognized in equity) (64,269) Total comprehensive income (excluding non-controlling interests) 78,322
Other effects 5,613
Reserves retained from earnings, incl. Group result as of December 31, 2012 489,429
effect from the BuyBacK of participatioN certificates (recogNiZeD iN equity)
€ thousand
Share of purchased participation certificate equity components of the difference 85,491
Tax effect (recognized in equity) (21,222)
Effect from the buyback of participation certificates (recognized in equity) 64,269
Total comprehensive income (excluding non-controlling interests) includes EUR –2,251 thousand as an effect from the buyback of participation certificates on profit or loss.
EUR 8,085 thousand of the other changes in retained earnings resulted from the rever- sal of deferred tax assets together with the buyback of participation certificates due to the improvement to the results of operations of the Dräger Group as of the balance sheet date. The changes also include taxes on the proposed distribution for participation cer- tificates (equity components) recognized directly in equity (EUR 1,983 thousand).
participation capital
Fair value of financial instruments (3,202) (2,210) Deferred taxes recognized directly in equity 986 669
1,175 2,549
In fiscal year 2012, the fair values of financial instruments to the amount of EUR 1,482 thousand (2011: EUR 1,635 thousand) were recognized directly in equity. In addition, EUR 490 thousand (2011: EUR 414 thousand) were reclassified from equity to the inter- est result due to interest hedging.
capital management
One of Dräger’s most important goals is to increase the business value. The key function of capital management in this respect is to minimize the cost of capital while ensuring solvency at all times by coordinating of the due dates of financial liabilities with the expect- ed free cash flow and creating sufficient liquidity reserves.
Capital is monitored regularly using various key metrics, which include gearing and the equity ratio. Dräger’s medium-term goal is to achieve a consolidated equity ratio of 40 percent.
The Dräger Group’s equity and liabilities broke down as follows as of the balance sheet date:
equity aND liaBilities
€ million 2012 2011
Equity interest held by shareholders of Drägerwerk AG & Co. KGaA 720.5 723.1
+ Non-controlling interests 6.7 6.5
Equity of the Dräger Group 727.2 729.6
Share of total equity and liabilities 34.6 % 34.5 %
Non-current liabilities 615.7 650.4
Current liabilities 758.3 735.2
Total liabilities 1,374.0 1,385.6
Share of total equity and liabilities 65.4 % 65.5 %
Total equity and liabilities 2,101.2 2,115.2
In fiscal year 2012, the equity of Dräger Group decreased slightly, despite the net profit achieved (EUR 135,036 thousand). This development is primarily due to the changes to retained earnings resulting from the buyback of participation certificates and from the actuarial adjustments to provisions for pensions and similar obligations (see the information on retained earnings).
180 noTes To The consolidaTed balance sheeT
The Dräger Group’s gearing had developed as follows as of the balance sheet date:
geariNg
€ million 2012 2011
Non-current interest-bearing loans 282.9 365.3
+ Current loans and liabilities to banks 104.3 84.5
+ Non-current and current liabilities from finance lease 2.0 2.3
– Cash and cash equivalents (332.4) (412.3)
Net financial debt 56.8 39.8
Equity 727.2 729.6
Gearing (= net financial debt / equity) 0.08 0.05