AGM 2020

Aug 27, 2020

Slides

Good morning, ladies and gentlemen. My name is Dieter Schenk. As Chairman of the Supervisory Board, I herewith open the ordinary Annual General Meeting in 2020 of Fresenius Medical Care AG and Co KGA, a partnership limited by shares. And pursuant to the articles of association, I will be running the meeting. I would like to welcome you, our shareholders, the proxies, the representatives of the press and the media as well as all other spectators who will be watching and listening to the today's Annual General Meeting via the Internet on behalf of the Supervisory Board of Fresenius Medical Care AG and Co KGA as well as on behalf of the Management Board of the general partner, namely Fresenius Medical Care Management AG, very cordially. I would have preferred to personally welcome you to the Annual General Meeting in Frankfurt Am Main once again this year. However, the special circumstances do not allow us to do so this year. Due to the health risks associated with the coronavirus, we are all obliged to limit physical contacts as far as possible and to maintain physical distance from one another. This makes the implementation of an annual general meeting with everyone present impossible. As you were able to see from the documents calling the annual general meeting, the Management Board of the General Partner, with the consent of the Supervisory Board, has therefore decided to hold this year's Annual General Meeting as a virtual general meeting without the physical presence of their shareholders and their proxies. So in this way, we are making use of a new legal possibility, which the lawmakers have created in reaction to the COVID-nineteen pandemic. With the implementation as a virtual annual general meeting, we are able to ensure that you, our shareholders, will be able to receive and adopt the important resolutions that are upcoming when taking into consideration protection against infections and thus also receive your dividend in a timely fashion. We are aware of the fact that the conduct of a virtual Annual General Meeting necessarily is associated with certain restrictions of the rights of the shareholders. In particular, shareholders and the two boards of the company cannot, as usual, enter into a general debate and thus a dialogue with the shareholders. So that you can nevertheless exercise your shareholder rights appropriately, the company has opened up a number of possibilities within the framework of what is legally permissible and technically feasible so that you can exercise your voting rights and ask questions to the management board. And I will deal with this in a few moments. We are assuming that by holding a virtual Annual General Meeting in these particular times is also in your interest that is the interest of our shareholders. In order to rule out physical contacts as far as possible, We have also limited the number of participants in our premises here in Bad Hamburg to very few people. Next to me, you will see Doctor. Olaf Schermacher from the Management Board of the General Partner as well Dorothea Wenzel from the company's Supervisory Board. The Chairman of the Management Board of the General Partner, Mr. Riese Powell, has joined us electronically from The United States. He was not able to attend this meeting personally due to the currently existing travel restrictions. The other members of the Management Board and the Supervisory Board have also joined us electronically and can also get in touch with me at any time if necessary. And therefore, I would like to welcome all of the members of the Management Board and the Supervisory Board very cordially. I would also like to welcome our notary, Doctor. Carsten Fonschenk, who once again is personally present at this meeting and who has been given the mandate to record the minutes of our Annual General Meeting. Also present, but currently not visible to you, are the proxies of the company, representatives of our auditors as well as a very few employees who ensure the implementation of this virtual Annual General Meeting. Ladies and gentlemen, allow me to provide you with a couple of organizational information at the beginning of this meeting. First of all, I herewith ascertain that the calling of today's Annual General Meeting was announced in due form and on time on the 07/14/2020 in the German Federal Gazette. Notary Doctor. Von Schenck was given a printout of this publication of the calling of the meeting in the Federal Gazette, which he will attach to the minutes of this Annual General Meeting. Since the July 14, all of the prescribed documents and information were accessible via the website of our company as well can be retrieved there for the whole period of this virtual Annual General Meeting. They have also been laid out for your inspections since this meeting was called on the premises of the company. We will also be conduct we will also be keeping a list of participants for our virtual general meeting. The proxies of the company with the number of shares represented by them will be reported in this list of participants. The shareholders, their proxies who are exercising their voting rights via postal vote will not be listed in this list of participants of the virtual annual meeting. This means from the base share capital of the company of which is divided into $3.00 $4,000,003.64 shares, 239,234,025 shares are herewith represented at this meeting. So that corresponds to 78.5% of the company's share capital that is registered with the company. In addition, we have postal votes for 632,000 votes. So this means together that we have 9,292,500,000.0 shares approximately, which corresponds to which is 78.68 percent of the registered share capital. The list of participants is laid out here in the meeting hall and will be updated on a regular basis. Prior to the votes, We have not received any opposing votes or any other nominations in the period which was allowed for this. Those shareholders who registered properly were able to address questions via our shareholders' portal on the Internet. And these questions will then be answered subsequent to the speech by Mr. Powell on the report of the Supervisory Board. And of course, we will be able to answer all of the questions that you've submitted to us just as completely and just as comprehensively as you are used to from the Annual General Meetings of the previous years. And shareholders who were properly registered will also be able to exercise their voting rights prior to the annual general meeting, either by way of their postal vote or by issuing instructions and empowering our proxies of the company, namely Ms. Tanja Hertel and Doctor. Ulrich Martinwolf. During the Annual Meeting, shareholders will also be able to exercise their voting rights via postal vote or also by issuing powers of attorney and instructions to their proxies of the company via our shareholders portal in the Internet. This will be possible until directly before we begin the votes. I will then point this out explicitly once again at that point in time so that then you will once again receive the last possibility to submit your vote or to issue instructions. With regard to the further details of the power of attorney and the ability to issue instructions to the proxies as well as the exercise of voting rights, I ask you to comply with the further information provided in the form for issuing a power of attorney and the instructions, which was sent to you after you registered for the Annual General Meeting. You will also find these comments on the website. I'd like to point out that once again, we will be offering a simultaneous translation of the whole Annual General Meeting from German into English and in the event of any English contributions from English into German. You can also switch the language in the shareholders' portal. So those were my organizational remarks. Ladies and gentlemen, we will now begin dealing with the agenda. The agenda has been accessible on the website of the company since the meeting was called and is also present here today. You will also receive the calling of the meeting with the agenda to today's meeting from your depositary banks, and I herewith assume that the everyone is familiar with the agenda. We're beginning with Item number one of the agenda. The annual financial statements and consolidated group financial statements approved by the Supervisory Board, the management reports and the explanatory report by the general partner on the information pursuant to Sections 289A and 315A of the German Commercial Code and the report by the Supervisory Board and the resolution of the allocation of distributable profit as well as all of the other documents have been laid out in the on the premises of the company for inspection since this meeting was called. Moreover, they were also accessible via the company's website and also laid out here today. On request, the aforementioned documents were sent to you. I herewith assume that everyone is familiar with the aforementioned documents. And the notary, Doctor. Foncheng, has also received one copy of each of these documents. First of all, I'd like to begin, Mr. Powell, to explain these documents under item number one of our agenda and to also comment on the prospects for the ongoing fiscal year. Dear shareholders, welcome to the Annual General Meeting of Fresenius Medical Care. Despite the challenges the world is facing, we have good news for you. Our integrated business model is proving resilient and we have strong results that we want to share with you. These are very unusual times, unusual in many respects. The world in which we live has changed in 2020. The way we work, the way we interact with others, and the way we behave outside of our homes. Keeping ourselves and others safe has top priority right now. That is also why we have decided to hold a virtual Annual General Meeting this year. Today, I am speaking to you from our US office near Boston. We at Fresenius Medical Care serve a vulnerable population. Our patients worldwide need regular dialysis treatment to survive. They are generally older and less healthy than the average citizen. When our global medical office received an early warning from our colleagues in China, you can imagine how worried we were. We suddenly found ourselves facing a looming pandemic that threatened the lives of our patients and employees. We had to do everything we could to protect our patients. We had to protect our staff who take care of our patients. It is our job to keep them as safe as possible. We also had to make sure that we could keep producing and delivering our life saving products, even when our operations and supply chains were hampered by global restrictions. We don't know how long the path to recovery will be and what form it will ultimately take. But one thing is certain, our teams at Fresenius Medical Care are up to this task. We operate approximately 4,000 clinics around the globe. Our employees rallied to establish strict safety protocols and keep the business running. Many of our employees even volunteered to support local hospitals in the most heavily impacted regions of the world. In times of crisis, the forces of goodwill come together. In The US, Fresenius Medical Care joined up with other dialysis providers to launch a national contingency plan. Together, we created isolation clinics where infected patients can continue their treatment, keeping them away from hospitals that were already overwhelmed. When COVID-nineteen first broke out in China, we provided hospitals there with acute dialysis machines and chronic hemodialysis machines. We also saw a huge spike in demand for NovoLung consoles. These are devices for lung replacement therapy produced by Xenios, a subsidiary of Fresenius Medical Care. A shipment of these consoles was air freighted from Frankfurt, Germany to Beijing, China, and then transported to Wuhan, China aboard a special charter flight. Overall, we made hundreds of devices available when and where they were most needed, from Europe to The United States and beyond. The first thing most people knew about COVID-nineteen was that it is a lung disease. There were fears of a global ventilator shortage, but another type of equipment was also urgently needed, which attracted far less attention, acute dialysis machines. Recent studies confirm what we at Fresenius Medical Care recognized very early on. About a third of the patients admitted to the hospital with COVID-nineteen develop acute kidney failure. Our technical operations team in Italy, as an example, installed as many acute dialysis machines in the month of March alone as they normally do in a complete year. Despite increased safety requirements, our manufacturing and supply teams increased production, in some cases by up to 200%. To me, this is the work of heroes. I am proud of our employees around the globe who have done their part wherever they are, whether in our clinics, along our supply chains, in our production facilities, are working from home. Their tireless and selfless commitment and dedication is simply extraordinary. Fresenius Medical Care's more than 120,000 employees remind us of our true purpose, to deliver life saving products and services and to care. We create a future worth living for our patients worldwide each and every day. Our patients always come first. They count on us as caregivers and medical care providers, and we do not want to let them down. We are there for them every step of the journey. I think that each and every one of our employees has made it very clear over the past months that they will fulfill our purpose exceedingly well. In the name of the entire Fresenius Medical Care Management Board, I would like to thank you, our employees, for your passion and your commitment. Without the engagement of our employees worldwide, our company would not have been as well positioned to serve our patients. In difficult times such as these, it is all the more important to have a solid foundation. Looking back, we were right on track before the pandemic. 2019 was a good year for Fresenius Medical Care. Our business performance was strong. We generated revenue of €17,400,000,000 Compared with 2018, our adjusted revenue was up by 2% in constant currency. And although 2019 was a year of investment, especially in our home dialysis infrastructure and developing economies, we achieved our goals for the year. Our net income was €1,200,000,000 or approximately €1,400,000,000 on an adjusted basis. Our stock performed equally well. In 2019, our share price increased by approximately 16%. We can all agree that is a promising development. We want you to participate in this success. We are proposing a dividend of €1.2 per share, 3% more than last year. This is now our twenty third consecutive dividend increase. Thanks to our resilient business model and our ability to generate earnings, we have been able to continue this excellent track record. To create further value for you, we announced a share buyback program at the 2019 with an aggregate volume of up to €1,000,000,000 over two years. We effectively ended our share buyback program 04/01/2020, with a total value of around €930,000,000 Verzenios Medical Care is the world's leading provider of kidney care products and services. We delivered approximately 52,000,000 dialysis treatments in 2019. We treated approximately 345,000 dialysis patients in approximately 4,000 clinics in roughly 50 countries. Our employee base has grown as well. It grew by 7% in 2019. Fresenius Medical Care now has more than 120,000 employees. There were also changes to the Management Board. Helen Giza became our new Chief Financial Officer on 11/01/2019. We stand to benefit from Helen's financial expertise and her experience with mergers and acquisitions in the healthcare sector. With a global pandemic to cope with, Helen has certainly had an extraordinary first year. Helen, I'm glad to have you with us. The Supervisory Board also appointed Frank Maddox as Global Chief Medical Officer. Frank has been with Fresenius Medical Care for many years now. Frank is a physician, an IT entrepreneur, and a healthcare executive with over thirty years of experience. The pandemic has shown us once again how important Frank Maddox and his global medical office are for the company. This global network encourages close communication and cooperation between our medical experts, helping us to recognize and prepare for developments such as pandemics at an early stage. And it gives us the ability to learn from one another. Again, Frank, congratulations to you in your new role. Both Helen and Frank will introduce themselves to you a little later. Let's move on to this year, 2020. Despite the pandemic, we have managed to continue our strong performance. All of our production facilities are fully operational and able to meet demand. Our supply chains remain intact and our clinics are open. This is vital for our patients. The crisis was a test for our business model, which has proven to be sound and resilient. 2020 started well. We are on track to achieve the targets we communicated in February, even though we are managing these challenges brought to us by the pandemic. In the first half of twenty twenty, revenue rose by 7%. We achieved 14% growth in operating income in the 2020 and our net income grew by 21%. We have seen a very positive development in terms of our business performance in the first half of this year, which hopefully is reassuring to you. And yet the pandemic comes at a cost for us as well, both personal and financial. As mentioned earlier, we have established strict safety protocols. We provide full personal protective equipment for our staff. We protect our patients by giving them masks during their transportation and treatment. We are continuously testing to identify infections. We have set up isolation centers for infected patients. We have hired porters to clean and disinfect. We have given caregivers in The US emergency pay and childcare stipends and created a telehealth system for our patients with more than 370,000 virtual visits so far. This all costs money. The US government offers programs to support companies like Verzenius Medical Care with funding for some of these additional extraordinary costs that have been occurred in The US. So far, two of these measures are relevant for Fresenius Medical Care. The CARES Act designed to cover additional costs incurred for the treatment of COVID-nineteen patients in The US and the suspended 2% reduction of the reimbursement for state insured patients. How long the pandemic will last and what its global impact will be is hard to predict at this particular moment. No matter how things turn out, we will do our utmost to continue to care for our patients and employees. Around three point five million people worldwide rely on dialysis treatment and the figure is constantly rising. We plan to further expand our global network of clinics and production sites in 2020 and beyond. During the current situation, we have confirmed our outlook for 2020. Our strong performance in the first half of the year proves the resilience of our vertically integrated business model. It shows our strength in taking care of people even in the most challenging environment. In general, we expect revenue and net income to grow in the mid to high single digits in 2020. In recent years, we have done all we can to create a solid foundation for this growth. Summing up, we intend to continue our success story. Fresenius Medical Care is well positioned to grow further this year and in the years to come post COVID. The current crisis underscores the importance of agility and innovation in healthcare. I would like to share some of our new developments with you that will take us into the future post COVID. Home dialysis offers us the best chance to minimize the risk of a virus related infection like COVID-nineteen and to protect our vulnerable patients. The acquisition of Nextage in early twenty nineteen was a first step to expand this treatment option well before the pandemic started. We created the necessary preconditions for home dialysis, for example, by setting up training facilities, establishing a distribution infrastructure, and expanding our telehealth services. We achieved record growth. In North America, the number of home dialysis treatments increased by fifteen percent in the second quarter of this year. Home hemodialysis treatments grew by forty one percent in this same timeframe. The current situation has also raised awareness of the benefits of home dialysis. In June, we trained more patients to use home dialysis than in any other month in our company's history. This strong growth was in part thanks to our transitional care units. People who have recently been diagnosed with kidney failure are often anxious about their new life on dialysis. Will I be okay? How is this all going to work? When you're in that situation, the idea of a clinic with experienced professionals is comforting. While the thought of being at home and taking responsibility for your own treatment can certainly be overwhelming. As a result, only a small share of new patients choose home dialysis when they begin their treatments. However, we know that home dialysis is often the better option for our patients. It gives them greater freedom, flexibility, and control. It gives them more time for family, work, and everything else that is important in our lives. Home dialysis patients also benefit from better clinical outcomes and lower hospitalization rates. That is why we have set up transitional care units in The U. S. Transitional Care Units are separate spaces within our clinics where specially trained staff introduce patients to the equipment, help them to find the best therapy. In the end, over fifty percent of our transitional care unit patients feel confident and empowered enough to choose home dialysis. This is excellent progress. We quickly set up new transitional care units, and now we have a total of 65 currently operating, with more than 100 scheduled to open over the course of twenty twenty. COVID-nineteen also calls telehealth to shift into a much higher gear. Connected health, as we prefer to call it, allows patients to check into the clinic from the safety of their own home. In The United States, we launched a new connected health platform, The Hub, at the end of twenty nineteen. The platform improves collaboration between patients, care teams, and providers. Via an app, patients can submit their daily treatment data, access their lab results, see their medications, message their care team, order supplies, and simply be a part of a community that offers peer to peer support. Our medical teams, on the other hand, can use the hub to monitor patients remotely. It allows them to offer individual support and to intervene early if they detect a potential issue. A peer reviewed study published in the online journal, Kidney three sixty, found that patients who use our platform have significantly better short and long term outcomes. This is excellent news and a great opportunity for Fresenius Medical Care to drive progress. We are currently exploring the possibilities of biosensing wearables, things like digital blood pressure monitors and glucose sensors. We are using machine learning to improve our interpretation of the data that we receive routinely. Our innovative strength will create most benefit if we deploy it to generate sustainable growth, which is why I'm very pleased that we've made good progress with our sustainability agenda. Sustainability is fundamental to us and to an ever increasing number of investors and other stakeholders. To step up our efforts, we launched a global sustainability program that establishes common goals, responsibilities, policies, and key performance indicators. This is under my direct responsibility. This is because sustainability is personal to me. Improving our social and ecological footprint is not just nice to have. It is a responsibility for each of us. Caring for patients is at the core of what we do and it creates great opportunities. We must grasp these opportunities to embrace a better way of doing business. Sustainability is an inner is integral to an organization's competitive agility. It's essential to drive growth, efficiency, and innovation. Our aim is to transform our organization and culture. That's why we are proposing new non financial performance targets for management compensation. They reflect our aspiration to be measured by our commitment to continuous improvement. Inclusion and diversity are a crucial part of this agenda as well. Fresenius Medical Care has employees in more than 65 countries and patients and business partners in an ever expanding operation. We can only do justice to them if we embrace inclusion and diversity. We are united by our purpose and our values regardless of a person's background, including gender, race, age, sexual orientation, religion, or skin color, we all belong to Fresenius Medical Care. Our differences make us stronger. Each individual we fail to include represents a lost opportunity in terms of input, ideas, relationships, and last but not least, business. How we conduct business and interact with others is also important to us. We are aware of our responsibility and have enhanced our global compliance program, which is based on our code of conduct. The primary goal of the compliance program is to prevent, detect, and respond to potential misconduct and violations. A strong positive compliance culture in which everyone adheres to Fresenius medical care policies and all the applicable laws and regulations and all the places that we do business is essential for future success. Dear shareholders, as you can see, we have been focusing on key drivers for further growth by delivering strong business results, investing in promising innovations, fostering digitalization and creating a more sustainable foundation for our business. And we stand to benefit from our resilient business model during this difficult pandemic time. But most importantly, we have proven to our patients that we are there for them no matter what. Our employees all over the globe have demonstrated their selfless commitment and determination to keep our clinics, factories and supply chains up and running for our patients. I am truly inspired by them. They really do put our patients first and together, they show us what it means to be an industry leader in a global pandemic. Please stay safe and take good care of yourselves, your families, and your friends. Thank you. It is now my pleasure to hand the podium over to Doctor. Dieter Schenk in Walthamburg, Germany. I would like to thank Mr. Paulo for his informative and very comprehensive statements, which we recorded prior to this Annual General Meeting in order to prevent any possible technical disruptions that might occur. Ladies and gentlemen, I am surely also acting on behalf of you if I herewith very cordially thank the management board of the Fresenius Medical Care Management AG and all of the employees who work for Fresenius Medical Care around the world for their very dedicated and committed work. This also expressly comprises our thanks for the special performance and work in this particular situation of the past few months and weeks. These weeks and months were very difficult for each and every individual due to the pandemic and its consequences. I would now like to say goodbye to those persons who are not following our Annual General Meeting via our shareholder portal. As we announced in documents calling this meeting, As of now, only those persons can follow the Annual General Meeting who have registered in our shareholder portal. I would like to thank the remaining spectators for their interest in our company, and I wish you all the best. Goodbye.