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Disclaimer Publication of
Merck KGaA, Darmstadt, Germany. In the United States and Canada the
subsidiaries of Merck KGaA, Darmstadt, Germany operate under the
umbrella brand EMD.

Table of contents

  • Page 1
    Disclaimer Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada the subsidiaries of Merck KGaA, Darmstadt, Germany operate under the umbrella brand EMD.

  • Page 2
    MERCK ANNUAL REPORT 2013 TRANSFORMATION ON TRACK

  • Page 3
    ... Internal management system of the Merck Group 048 ➝ Corporate Responsibility 060 ➝ Research and Development at Merck 076 ➝ Merck Shares 078 ➝ Report on Economic Position 078 ➝ Macroeconomic and sector-specific environment 080 ➝ Review of forecast against actual business developments 082...

  • Page 4
    The Merck Group ↦ In brief Merck Group | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA pre one-time items Margin (% of sales) EPS (in â,¬) EPS pre one-time items (in â,¬) Business free cash ...

  • Page 5
    Emanuel Merck (1794 - 1855) ➝ established the world's oldest pharmaceutical and chemical company out of the Engel-Apotheke (Angel Pharmacy), which was founded in 1668. Today we are carrying this tradition into the future with pioneering spirit and innovative strength.

  • Page 6
    ... work in 66 countries to improve the quality of life for patients, to further the success of our customers, and to help meet global challenges. In 2013, we generated total revenues of â,¬ 11.1 billion with our four divisions: Merck Serono, Consumer Health, Performance Materials and Merck Millipore...

  • Page 7
    2 Merck 2013 Living Innovation Karl-Ludwig Kley Chairman of the Executive Board

  • Page 8
    ... our businesses with innovative and highly specialized products and services. We expanded our presence in global growth markets. And through numerous development partnerships, we honed our ability to meet the needs and wishes of patients and our customers. The numbers reflect this development. Merck...

  • Page 9
    ... and Latin America. The aim is to establish Merck Serono globally as a preferred biopharmaceutical partner that offers innovative specialty medicines, leading brands and high-value solutions. We have successfully raised the profitability of Consumer Health and generated new growth by focusing on key...

  • Page 10
    ...quality standards is essential in order for us to achieve our own objectives. True to our mission statement: "Our aspiration is to make great things happen. With our research-driven specialty businesses, we help patients, customers, partners and our communities around the world to live a better life...

  • Page 11
    ... Responsibility for Group functions: Group Accounting & Subsidiaries; Group Controlling & Risk Management; Corporate Finance; Group Tax; Group Procurement; Group Insurance; Investor Relations Stefan Oschmann Member of the Executive Board CEO Pharmaceuticals Born in 1957, veterinarian Joined Merck...

  • Page 12
    ... the Executive Board since April 2011 Responsibility for Group functions: Group Human Resources; Group Information Services; Site Operations; Inhouse Consulting Karl-Ludwig Kley Chairman of the Executive Board Born in 1951, lawyer Member of the Supervisory Board and Board of Partners of Merck from...

  • Page 13
    ...and growth program. 1. We want to make great things happen Our mission is to make great things happen. With our research-driven specialty businesses, we help patients, customers, partners and the communities in which we operate around the world to live a better life. We are not aiming to manage the...

  • Page 14
    ... With our research-driven specialty businesses, we help patients, customers, partners and our communities around the world to live a better life. We deliver entrepreneurial success through innovation. Mission Merck will be ...known for liked for respected for Innovation ➝ Quality ➝ Performance...

  • Page 15
    10 Merck 2013 Living Innovation Conducting research to develop the displays of tomorrow: Organic LEDs in the laboratory at Merck in Darmstadt. China - a booming country: Merck Millipore production in Beijing. We set the highest standards for ourselves It is our ambition for Merck to be known ...

  • Page 16
    ... Changes Portfolio Organic Growth Initiatives 2007 - 2011 Portfolio & Management Processes & Efficiencies 2012 - 2013 2014 - 2018 Sustainable Business Development Founded in 1668 with the purchase of the "Engel-Apotheke" (Angel Pharmacy) in Darmstadt, today Merck is a German bluechip company...

  • Page 17
    ... a strong presence in Europe, Latin America and Southeast Asia and is growing rapidly in emerging markets. Focusing on strategic brands and key markets is increasingly paying off. We will continue to pursue this strategy while consistently meeting new consumer needs with our innovative products and...

  • Page 18
    ...-value, ultrapure process chemicals. Merck Millipore By offering products and services for the life science tools market, which has a volume of around â,¬ 30 billion, Merck Millipore delivers solid financial performance and above-average market growth. It focuses on two important customer groups...

  • Page 19
    ➝ Full speed ahead. In China, growth is also compromising people's health. With high-quality medicines, Merck is capturing the Chinese market and fighting diseases of afï¬,uence.

  • Page 20
    ... country in transition, which is leading to new health care challenges. In order to stop diabetes from becoming an epidemic in China, Merck is responding to the needs there, and aims to support the Chinese government's efforts to increase patient access to quality care by bringing high-quality, cost...

  • Page 21
    ...downside: nowhere else in the world is home to as many people with diabetes as China. To counter this trend, Merck Serono is increasing its engagement in China and will make one of the leading antidiabetic agents accessible even in remote regions. "We exist to help people." Belén Garijo, President...

  • Page 22
    ...key products of Merck Serono, the Group's largest division in terms of sales. The two leading products Rebif® and Erbitux® generate nearly one-half of sales. Business figures Sales EBITDA pre â,¬ 5,953,594,110 â,¬ 1,954,981,681 Sales by region Europe North America Emerging Markets Rest of World...

  • Page 23
    ...and bitter-tasting crystals that are readily soluble in water. 03 Tablet ➝ The classical dosage form of Glucophage® is a tablet. Further developments are taking patient needs into account such as extended release (XR) formulations to reduce dosing to once daily and thus increase convenience. 04...

  • Page 24
    ...research center, development capabilities and commercial presence, Merck recently announced an â,¬ 80 million investment for a new pharmaceutical manufacturing facility in China. "We are very proud to be one of the first multinational companies investing in a local site focused on the manufacturing...

  • Page 25
    ➝ Breathing easy thanks to Nasivin®. A clever direct-to-consumer strategy is getting the message out there - even in the hectic environment of rush hour in India.

  • Page 26
    Consumer Health We are breathing easy In India, a nasal spray is more than just medicine. It is also a fast way to get back to work. Thanks to innovative ideas and a clever marketing strategy, Merck is benefiting from a new degree of health awareness on the subcontinent.

  • Page 27
    20 Merck 2013 Living Innovation Interview with Udit Batra Udit Batra discusses the growing degree of health awareness among the middle class in India. And how taxis and pharmacists are playing a key role in the success of a nasal spray. "In India, people want quick relief so that they can get ...

  • Page 28
    ... Consumer Health The Consumer Health division offers high-quality over-the-counter pharmaceuticals to enhance well-being. Our brands are marketed in many countries of Europe, Latin America, Asia and Africa. With our innovative health protection products, we want to improve the quality of life...

  • Page 29
    ... recedes. Thanks to oxymetazoline, the duration of an acute cold is shortened by a third. 25 seconds Acts in ↦ lasts for 12 hours 03 Dosage system ➝ High ergonomic quality thanks to the large push button on the base, the antislip ridges on the shoulder, and the user-friendly applicator. 04...

  • Page 30
    ... than 20 countries in which we successfully market Nasivin®. Patients in India are increasingly arming themselves with Nasivin® - why? In India, people want quick relief so that they can get back to enjoying life, which is why they are looking for fast-acting, easy-to-use medicines. Consumers in...

  • Page 31
    ➝ An era of endless opportunities. Whether it comes to printable electronics or labels that communicate, Merck is on a journey to understand new needs - and is therefore taking its customers along with it.

  • Page 32
    ... increasingly flatter, more powerful and ubiquitous. Displays are already playing a key role in communication today. And that is just the beginning of a dynamic process that is fundamentally changing the way we communicate. With our innovations, we are driving this development in close cooperation...

  • Page 33
    24 Merck 2013 Living Innovation Walter Galinat, President and CEO of Performance Materials, and Roman Maisch, responsible for Liquid Crystals Marketing & Sales Interview with Walter Galinat and Roman Maisch "The future is flat." Passive viewing is a thing of the past - the future is about ...

  • Page 34
    ..., food and pharmaceuticals Liquid Crystals ➝ Display materials Advanced Technologies ➝ OLED ➝ Lighting & Photovoltaics ➝ Electronic Materials ➝ Performance Solutions With the broadest offering in the industry, the product portfolio of our Liquid Crystals business unit is tailored...

  • Page 35
    ... With its livilux® range, Merck offers innovative materials for organic light-emitting diodes (OLEDs). In displays, OLEDs are responsible for brilliant colors, good contrast, fast switching times and low power consumption. Encap (Glass) Organic Layer TFT (Glass) 01 Structure ➝ OLEDs consist of...

  • Page 36
    ...% Global market share as a supplier of liquid crystals sharing this knowledge with our customers. This is precisely the principle behind our Displaying Futures symposium, which took place in South Korea in 2013: using unexpected benefits to surprise and then work with customers to develop exactly...

  • Page 37
    ➝ Customers take center stage. Sometimes a single drop leads to a breakthrough. Yet until reaching this point, a company has to trust in its own abilities - and in those of its partners and customers, too.

  • Page 38
    Merck Millipore We make cutting-edge research a reality Lab Solutions, Bioscience, Process Solutions - can these three areas be served equally well? Certainly, says Merck Millipore CEO Yates, "By thinking critically and having the courage to listen to customers."

  • Page 39
    ... Merck 2013 Living Innovation A conversation with Robert Yates "Critical thinking is vital in our business." Three business units, one global team, one clear objective: Enabling science for life science researchers and manufacturers with tools that increase the efficiency and impact of their work...

  • Page 40
    ... ➝ BioPharm Process Solutions ➝ Pharm Chemicals Solutions A reliable partner: Process Solutions offers more than 400 pharmaceutical raw materials worldwide. Business figures Sales EBITDA pre â,¬ 2,627,506,602 â,¬ 642,821,732 Sales by region Europe North America Emerging Markets Rest of World...

  • Page 41
    ... workflows in quality assurance and quality control laboratories. The EZ-Pak® Dispenser Curve launched in 2013 makes membrane dispensing faster and easier and completes the product line. Client Merck Identification ➝ Identify unmet client needs and workï¬,ow pain points in close collaboration...

  • Page 42
    ... 2013 Living Innovation 29 indicate the direction in which we can work together to enable science, offering beneficial solutions." For example, in the Bioscience business unit these are life science researchers, who study complex biological systems in order to discover new therapies and develop...

  • Page 43

  • Page 44
    ...Serono 103 Consumer Health 108 Performance Materials 113 Merck Millipore 119 Corporate and Other 120 Report on Risks and Opportunities 138 Report on Expected Developments 146 Report in accordance with Section 315 (4) of the German Commercial Code (HGB) 147 Subsequent Events Group Management...

  • Page 45
    Group Management Report Major sites by division Site Operations Merck Serono Darmstadt, Germany Coursier sur Vevey, Switzerland Mollet del Valles, Spain Semoy, France Bari, Italy Rio de Janeiro, Brazil Rockland, USA Mexico City, Mexico Beijing, China Billerica, USA Tokyo, Japan Consumer Health ...

  • Page 46
    ... chemicals, high-tech materials and life science tools. Merck markets its wide range of products within its four divisions: Merck Serono, Consumer Health, Performance Materials and Merck Millipore. Merck Serono Merck Serono discovers, develops, manufactures and markets innovative prescription drugs...

  • Page 47
    ...Merck broke ground on a new production facility for this unit in Hamburg, Germany in order to serve new markets, such as China, with these products. Consumer Health The Consumer Health division manufactures and markets over-the-counter pharmaceuticals. The division focuses on a number of well-known...

  • Page 48
    ...technological complexity of liquid crystals and the high quality requirements of customers and consumers. The seven largest LC display manufacturers are among the customers of the liquid crystals business. Performance Materials has the broadest product offering in the industry and also offers liquid...

  • Page 49
    ... products supporting cell growth and gene expression, a wide range of filtration systems, as well as salts and sugars. The single-use solutions offered by the Process Solutions business unit provide increased operational flexibility to biopharmaceutical customers since they eliminate time- and cost...

  • Page 50
    Merck 2013 Group Management Report 37 Objectives and strategies of the Merck Group In 2007, Merck launched a transformation process aimed at securing its business viability through profitable growth in highly specialized niche markets within the pharmaceutical and chemical sectors. Second phase ...

  • Page 51
    ... continually working on new products and service innovations for patients and customers and relies on a continual process of internal innovation throughout all areas of the company. Group strategy Merck is aiming for sustainable and profitable growth Merck focuses on innovative and top-quality high...

  • Page 52
    ...market Merck Serono aims to become a preferred global biopharmaceutical partner, providing innovative specialty medicines, leading brands, and high-value solutions. Global megatrends such as world population growth and a general increase in life expectancy are bolstering the demand for our products...

  • Page 53
    40 Merck 2013 Group Management Report Objectives and strategies of the Merck Group Merck Serono wants to step up its activities in China, Brazil and North America Innovative drugs are the key to competing in mature markets, which remain the largest and most profitable markets for our products. ...

  • Page 54
    Merck 2013 Group Management Report 41 Objectives and strategies of the Merck Group Performance Materials Performance Materials aims to further expand its market and technology leadership position in liquid crystals The demand for high-tech products in general and for innovative display solutions...

  • Page 55
    ..., cash is to be used for selective acquisitions in order to provide for future growth, for instance the planned takeover of AZ Electronic Materials (Performance Materials). Lastly, Merck uses its cash for dividend payments to its shareholders. Merck's dividend policy is aimed at a moderate long-term...

  • Page 56
    Merck 2013 Group Management Report 43 Internal management system of the Merck Group As a global pharmaceutical and chemical company organized around four divisions with a diverse portfolio of products and services, Merck uses a comprehensive framework of indicators to manage performance. Within ...

  • Page 57
    ... and opportunities, and in the report on expected developments. As the most important indicators of Merck's financial business performance, the Group and division KPIs are key elements of Merck's performance management and incentive system. Sales Sales are defined as the sales of goods and services...

  • Page 58
    ... and trade accounts receivable, all of which are under full control of the individual businesses. To manage working capital on a regional and local level, our businesses use the two indicators DSO (days sales outstanding) and DSI (days sales in inventory). The introduction of business free cash flow...

  • Page 59
    ...Earnings per share are calculated by dividing profit after tax attributable to the shareholders of Merck KGaA (net income) by the weighted average number of theoretical shares outstanding. The use of a theoretical number of shares takes into account the fact that the general partner's capital is not...

  • Page 60
    .... Further indicators of relevance to specific topics can be found in the Corporate Responsibility report. Innovation Innovation is the foundation of our business and will also be the prerequisite for future success in changing markets. We are continuously working to develop new products and service...

  • Page 61
    48 Merck 2013 Group Management Report Corporate Responsibility Responsible conduct with respect to our employees, products, the environment, and society plays a key role in Merck's corporate culture. In the course of our nearly 350-year history, the principle of corporate responsibility has ...

  • Page 62
    Merck 2013 Group Management Report 49 Corporate Responsibility Merck maintains an ongoing dialogue with its various stakeholders In addition, we are involved in the Chemie3 initiative, a collaboration between the German Chemical Industry Association (VCI), the German Employers' Federation of the...

  • Page 63
    50 Merck 2013 Group Management Report Corporate Responsibility Responsibility for people: Merck employees In accordance with the Merck Values, we live a culture of mutual esteem and respect. We want to become better and faster by recruiting, developing and motivating the most suitable employees. ...

  • Page 64
    Merck 2013 Group Management Report 51 Corporate Responsibility plans. To date, around 22,400 employees have participated in the globally harmonized Performance Management Process. Internal talent development and external recruiting Merck aims to further strengthen its performance culture Through...

  • Page 65
    ... greater innovation and promotes better team performance, which is why we aim to foster diversity among our employees. To this end, the Executive Board has defined three focus areas. As a global company, we particularly endeavor to achieve a good balance between different cultures and nationalities...

  • Page 66
    ... employee work-life balance Merck wishes to help its employees achieve a good balance between their professional and personal objectives. This maintains and strengthens their motivation and performance potential, making it easier for them to plan their daily lives. In Germany and other countries...

  • Page 67
    ... a drug. Through our Pharma Code for Conducting Pharmaceutical Business and Pharmaceutical Operations, we set standards for responsible marketing activities in order to ensure that patients and professional health care providers have access to relevant information and that patients receive effective...

  • Page 68
    Merck 2013 Group Management Report 55 Corporate Responsibility We have expanded the Green3 concept to include cosmetic products from our Performance Materials division. We are working to sustainably procure and produce cosmetic ingredients as well as optimize the related production processes. In ...

  • Page 69
    ...2013 Group Management Report Corporate Responsibility up to 250 million tablets annually in the medium term. The WHO partnership has made it possible to treat around 38 million African children. Manufacturing plants in developing countries allow Merck to improve the affordability of their products...

  • Page 70
    Merck 2013 Group Management Report 57 Corporate Responsibility Supplier management Merck's suppliers must also adhere to environmental, compliance and social responsibility standards For its business activities Merck needs raw materials, packaging materials, technical products, components, and ...

  • Page 71
    ...climate change mitigation. Merck's production sites in Darmstadt and Gernsheim account for around 40% of Merck's global energy consumption. In 2012, both of these sites qualified for ISO 50001 - Energy Management System certificates, which were reaffirmed in 2013. Our Taoyuan site in Taiwan received...

  • Page 72
    ...'s top quality rating. Around 350 companies are rated on their performance in emissions reductions and climate change reporting. The CDP publishes these two indices in order to make greenhouse gas emissions reporting more transparent. In addition to energy, in 2013 Merck also focused its attention...

  • Page 73
    ... Group Management Report Research and Development at Merck Merck conducts research and development worldwide in order to develop new products and services designed to improve the quality of life of patients and customers. In 2013, we focused on further optimizing the relevance and profitability...

  • Page 74
    ...strategy of its clinical development programs, with Quintiles directing clinical trial planning, design and execution, using highly efficient pro cesses and proven technologies. In the course of 2013, Merck Serono further strengthened its global presence. In Darmstadt, the division officially opened...

  • Page 75
    ...Group Management Report Research and Development at Merck Overall, the global Merck Serono R&D organization is now well-positioned, with enhanced operational effectiveness, an unwavering commitment to exceptional science, and a focus on delivering a pipeline that will continuously bring innovation...

  • Page 76
    Merck 2013 Group Management Report 63 Research and Development at Merck Phase II proof-of-concept studies demonstrate the clinical efficacy of Sym004 TH-302 is currently being tested in two Phase III trials under an SPA Also at the 2013 ASCO meeting, data were presented from two proof-of-...

  • Page 77
    64 Merck 2013 Group Management Report Research and Development at Merck START2 is investigating the efficacy, safety and tolerability of tecemotide Phase I trial on pimasertib in combination with hDM2 inhibitor started Tecemotide, a MUC1 antigen-specific cancer ...

  • Page 78
    ... center operated by BioMed X GmbH on the campus of the University of Heidelberg. The objective is to seed and boost early stage research projects in the field of oncology. This new research lab will establish a new way of fostering innovation, a concept that has been co-developed by Merck Serono...

  • Page 79
    ...which is currently in preclinical development. PARP inhibitors target an enzyme family which is involved in a number of cellular processes, including DNA repair and programmed cell death. Spanish National Cancer Research Centre (CNIO) in the area of cancer drug development. The agreement builds upon...

  • Page 80
    Merck 2013 Group Management Report 67 Research and Development at Merck Merck receives license option from Opexa Therapeutics In Immunology, Merck is focusing on the development of sprifermin New Phase II trial for atacicept started Early in 2013 Merck announced that it had been granted an ...

  • Page 81
    ... in order to meet the needs of patients and health care professionals alike. Fertility research continues to be an important focus of R&D innovation. In December 2013 Merck Serono announced the creation of TocopheRx, a Boston-based spin-off company resulting from its EPP, and is seed financed by...

  • Page 82
    ...further expanded in 2013 New easypod® system introduced to the European market Merck Serono's Israel Bioincubator continued to develop in 2013. The Bioincubator is financed by the â,¬ 10 million Merck Serono Ventures Israel Bioincubator and is focused on preseed and seed opportunities originating...

  • Page 83
    70 Merck 2013 Group Management Report Research and Development at Merck Merck Serono pipeline, as of December 31, 2013 Therapeutic area Compound Indication Status Neurodegenerative diseases ONO-4641 (ceralifimod, oral S1P receptor modulator) Plovamer acetate (PI-2301, second-generation ...

  • Page 84
    ... are used by customers from the consumer electronics, lighting, printing technology, plastics applications, and cosmetics industries. Within Performance Materials, Merck is also focusing on the growth dynamics of emerging markets. Liquid Crystals In 2013, the Liquid Crystals business unit developed...

  • Page 85
    72 Merck 2013 Group Management Report Research and Development at Merck Development partnerships with customers are a way of testing new technologies and making them marketready. For instance, with printer manufacturer Seiko Epson, the Performance Materials division has codeveloped a technology ...

  • Page 86
    ...Group Management Report 73 Research and Development at Merck Merck Millipore Number of employees in R&D: 778 R&D spending in 2013: â,¬ 159.8 million Within the Merck Millipore division, we are working with our customers to develop innovative solutions for the research, development and production...

  • Page 87
    ... on liquid crystal technology. Liquid crystals allow these antennae to be made in such a way that they can someday be used for satellite communication in moving objects such as cars, planes, and trains. In November 2013, Merck announced the start of the POPUP research project funded by the German...

  • Page 88
    ...is a strategic corporate venture capital fund that makes early-stage investments in innovative biotech firms. The investments focus on Merck Serono's fields of research and therapy. The fund was set up in 2009. In order for Merck Serono to be able to invest more in early innovation, in 2013 the size...

  • Page 89
    ...average daily trading volume decreased by 25%, from around 300,000 in 2012 to more than 230,000 shares in 2013. The North America region continued to dominate with around 43% of shares in free float, slightly down compared to 51% in 2012. By investor type, GARP (growth at reasonable price) and value...

  • Page 90
    Merck 2013 Group Management Report 77 Merck Shares Share data 1 2013 2012 Dividend Share price high Share price low Year-end share price Daily average number of Merck shares traded 2 Market capitalization 3 (at year-end) Market value of authorized shares 4 (at year-end) 1 in units / â,¬ ...

  • Page 91
    ... in the year 2013. The growth was driven by Latin America and Asia, while Europe, where the Consumer Health division generates the largest share of its sales, grew by 3.7% in 2013. Markets for high-tech materials LC remains dominant display technology With its Liquid crystals business Merck is the...

  • Page 92
    ..., the Merck Millipore division is a leading supplier of products and services which are used in the research, development and production of biotech and pharmaceutical drugs as well as general laboratory applications. The market researchers from Frost & Sullivan reported modest growth of 1.2% for...

  • Page 93
    ... cost, while for business free cash flow, Merck's third financial key performance indicator, we expected a moderate decrease compared to 2012, as we had already delivered major working capital reductions in 2012 and as we planned an increase in investments in property, plant and equipment in 2013...

  • Page 94
    ... Sales EBITDA pre one-time items1 Business free cash ï¬,ow1 Consumer Health Sales EBITDA pre one-time items1 Business free cash ï¬,ow1 Performance Materials Sales EBITDA pre one-time items1 Business free cash ï¬,ow1 Merck Millipore Sales EBITDA pre one-time items1 Business free cash ï¬,ow1 Corporate...

  • Page 95
    ... 31, 2013 Merck's long-term credit ratings upgraded to "A" (Standard & Poor's) and "A3" (Moody's) Merck Group | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA pre one-time items Margin (% of sales...

  • Page 96
    Merck 2013 Group Management Report 83 Course of business and economic position Sales (total revenues less royalty, license and commission income) saw solid organic growth of 4.2% in 2013 but the increase was outweighed by foreign exchange effects of -4.7%. Acquisitions increased sales by 0.1%. ...

  • Page 97
    ... Group Management Report Course of business and economic position Merck Group | Sales components by division - 2013 â,¬ million/change in % Sales Organic growth Exchange rate effects Acquisitions/ divestments Total change Merck Serono Consumer Health Performance Materials Merck Millipore...

  • Page 98
    Merck 2013 Group Management Report 85 Course of business and economic position In Europe, organic sales growth of 1.4% was partially cancelled out by negative foreign exchange effects of -0.7%. Acquisitions contributed 0.3% to the increase in sales. Overall, sales in Europe increased slightly by ...

  • Page 99
    .... Merck Group | Research and development expenses by division - 2013 â,¬ million/in % 4 3 2 1 Merck Serono 2 Consumer Health 3 Performance Materials 4 Merck Millipore 1 1,182.8 17.1 143.0 159.8 79% 1% 9% 11% Amortization of intangible assets, which resulted primarily from the purchase price...

  • Page 100
    ..., the key financial indicator used to steer operating business, grew 9.7% to â,¬ 3,253 million (2012: â,¬ 2,965 million). The resulting EBITDA pre margin thus increased from 27.6% to 30.4%. The profitability improvement of nearly three percentage points stemmed mainly from the organic sales growth...

  • Page 101
    ...2013 Group Management Report Course of business and economic position Merck Millipore's percentage share of EBITDA pre one-time items declined slightly (2012: 19%, excluding Corporate and Other), although this division also posted earnings growth of 4.6% or â,¬ 28 million. With EBITDA pre one-time...

  • Page 102
    ... business and economic position Net assets and financial position Merck Group | Balance sheet structure Dec. 31, 2013 â,¬ million in % Dec. 31, 2012 â,¬ million in % Change â,¬ million in % Current assets of which: Cash and cash equivalents Current financial assets Trade accounts receivable...

  • Page 103
    ...Merck 2013 Group Management Report Course of business and economic position The total assets of the Merck Group declined in 2013 by â,¬ -825 million or -3.8% to â,¬ 20,819 million (2012: â,¬ 21,643 million). This decline was due, among other things, to the repayment of a bond with a nominal volume...

  • Page 104
    ... 2013 Group Management Report 91 Course of business and economic position Merck Group | Net financial debt Book value Dec. 31, 2013 Interest rate (%) Financial Covenant Book value Dec. 31, 2012 Change Maturity â,¬ million â,¬ million â,¬ million in % Eurobond 2009/2013 (Nominal volume...

  • Page 105
    92 Merck 2013 Group Management Report Course of business and economic position Merck Group | Working capital â,¬ million Dec. 31, 2013 Dec. 31, 2012 Change in â,¬ million Change in % Trade accounts receivable Inventories Trade accounts payable Working capital % of sales (last 12 months) 2,...

  • Page 106
    ... major projects to expand production were also approved in 2013. Special mention is made here of an investment by Merck Serono in a new production plant in China with a total volume of â,¬ 80 million. The new facility will become Merck Serono's second-largest pharmaceutical production site worldwide...

  • Page 107
    ...development of total revenues and sales. The good operating business performance along with the accelerated implementation of the efficiency measures within the scope of the "Fit for 2018" transformation and growth program led to a strong increase in EBITDA pre. The EBITDA pre margin was 30.4% (2012...

  • Page 108
    ..." successfully continued in 2013 Significant increase of 2.4 percentage points in EBITDA pre margin despite negative foreign exchange effects and lower royalty income Merck Serono | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales...

  • Page 109
    96 Merck 2013 Group Management Report Merck Serono The development of sales in the individual quarters in comparison with 2012 as well as the respective organic growth rates are presented in the following table: Merck Serono | Sales and organic growth by quarter 1 â,¬ million/organic growth in % ...

  • Page 110
    ... Group Management Report 97 Merck Serono negative effects of the budget constraints in several European countries as well as the resulting health care cost containment measures. At 42%, Europe continued to account for the largest proportion of the division's sales, as in 2012. Emerging Markets...

  • Page 111
    98 Merck 2013 Group Management Report Merck Serono â,¬ 745 million (2012: â,¬ 731 million). Including a foreign exchange impact of -0.9%, sales grew by a total of 1.9%. Consequently, Europe accounted for 40% of total Rebif® sales (2012: 39%). The Emerging Markets and the Rest of World regions ...

  • Page 112
    ...Group Management Report 99 Merck Serono Merck Serono | Sales and organic growth of key products - 2013 â,¬ million 0 Organic growth in % 1,865 1,893 882 887 586 612 401 380 394 400 235 250 0 Rebif® Erbitux® Gonal-f® Concor® Glucophage® Saizen® 1.4 5.9 -0.7 11.4 4.8 -1.8 2013 2012 Sales...

  • Page 113
    ... spending to sales thus remained at a high level of 19.9% (2012: 19.8%). The long-term development of the Merck Serono division and the pipeline continues to be a top priority. Since the useful lives of the two intangible assets capitalized as part of the Serono SA purchase price allocation, namely...

  • Page 114
    Merck 2013 Group Management Report 101 Merck Serono The presented development of income and expenses resulted in a very sharp increase in the division's operating result (EBIT) in 2013, of 63.1% to â,¬ 893 million (2012: â,¬ 548 million). After eliminating depreciation and amortization, and ...

  • Page 115
    .... Merck Serono | Business free cash flow â,¬ million 2013 2012 Change in % EBITDA pre one-time items Investments in property, plant and equipment, software as well as advance payments for intangible assets Changes in inventories Changes in trade accounts receivable Business free cash flow...

  • Page 116
    ... profitability improvements Solid base for development in future years established Consumer Health | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA pre one-time items Margin (% of sales) Business...

  • Page 117
    ... Merck 2013 Group Management Report Consumer Health The development of sales in the individual quarters in comparison with 2012 as well as the respective organic growth rates are presented in the following table: Consumer Health | Sales and organic growth by quarter 1 â,¬ million/organic growth...

  • Page 118
    Merck 2013 Group Management Report 105 Consumer Health In the Emerging Markets region, the division registered strong organic growth of 6.9%, which was mainly attributable to Cebion®, Sangobion®, Bion®3 and Nasivin®. Taking substantial foreign exchange headwinds of -12.3% into account, sales ...

  • Page 119
    106 Merck 2013 Group Management Report Consumer Health The implementation of the measures initiated as part of the "Fit for 2018" transformation and growth program as well as better resource allocation improved the division's cost structure, leading to a visible increase in profitability and the ...

  • Page 120
    ... to changes in trade accounts receivable. The reduction in this balance sheet item by â,¬ -13 million in 2013 compares with an even higher reduction of â,¬ -23 million in 2012. The increase in EBITDA pre one-time items mitigated this impact on business free cash flow. Consumer Health | Business free...

  • Page 121
    ...structural improvements in the Pigments & Cosmetics business unit and a favorable product mix in Liquid Crystals Performance Materials | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA pre one-time...

  • Page 122
    Merck 2013 Group Management Report 109 Performance Materials The development of sales in the individual quarters in comparison with 2012 as well as the respective organic growth rates are presented in the following table: Performance Materials | Sales and organic growth by quarter 1 â,¬ million/...

  • Page 123
    ...2012: â,¬ 137 million). The Liquid Crystals business unit, which maintained its market position thanks to innovations and the further development of existing technologies, accounted for the vast majority of research and development spending. As a percentage of sales, R&D expenses therefore increased...

  • Page 124
    Merck 2013 Group Management Report 111 Performance Materials the division's profitability, i.e. the EBITDA pre margin, rose to 47.5% of sales (2012: 44.3% of sales). This profitability increase of more than three percentage points was primarily attributable to changes in the product mix of the ...

  • Page 125
    ...). Despite a â,¬ 38 million increase in EBITDA pre one-time items and the decrease in trade accounts receivable, business free cash flow declined slightly by -1.3% due to higher capital spending and a smaller reduction in working capital. Although the two relevant balance sheet items were further...

  • Page 126
    ... Markets Profitability increases by approximately one percentage point owing to strong business performance and strict cost control Merck Millipore | Key figures â,¬ million 2013 2012 Change in % Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA...

  • Page 127
    ... Merck 2013 Group Management Report Merck Millipore The development of sales in the individual quarters in comparison with 2012 as well as the respective organic growth rates are presented in the following table: Merck Millipore | Sales and organic growth by quarter 1 â,¬ million/organic growth...

  • Page 128
    ... in 2013. In particular, Lab Solutions and Process Solutions, the two top-selling business units, generated good growth rates owing to price increases and higher sales volumes. Lab Solutions, which accounted for an unchanged 42% share of divisional sales, delivered good organic sales growth of...

  • Page 129
    ... Merck 2013 Group Management Report Merck Millipore The Process Solutions business unit, which markets products and services for the pharmaceutical production value chain, generated organic sales growth of 7.7%, which was the highest rate within the Merck Millipore division. Taking into account...

  • Page 130
    ... difficult market situation in North America, Merck Millipore increased its EBITDA pre margin, reflecting strong organic growth, a resilient portfolio, and strict cost control. Merck Millipore | Reconciliation EBIT to EBITDA pre one-time items â,¬ million 2013 2012 Change in % Operating result...

  • Page 131
    118 Merck 2013 Group Management Report Merck Millipore Development of business free cash flow In 2013, the Merck Millipore division generated business free cash flow of â,¬ 494 million (2012: â,¬ 511 million). The -3.4% decline was largely due to the change in working capital. Whereas the total ...

  • Page 132
    ... Merck Group. Accordingly, Corporate and Other has no sales to report. Gains or losses on currency hedging are also disclosed in Corporate and Other. Corporate and Other | Key figures â,¬ million 2013 2012 Change in % Operating result (EBIT) EBITDA EBITDA pre one-time items Business free cash...

  • Page 133
    ... Board and the Finance Committee with detailed explanations twice per year. Furthermore, significant changes in the assessment of the risks already known and new significant risks can be reported at any time and are communicated to the corporate bodies on an ad hoc basis. For the standard process...

  • Page 134
    ... investments in growth markets are part of the Group opportunity management process The risk management system described concentrates on business risks, and not on opportunities at the same time. The Merck Group's opportunity management process is integrated into our internal controlling processes...

  • Page 135
    ... specific business environment. Marketing measures for operational planning are usually quantified in relation to sales and EBITDA. Net present value, the return on capital employed (ROCE) and the amortization period of the investment are used to assess and prioritize investment opportunities...

  • Page 136
    ... Group Accounting also ensures the timely central management of changes to the equity holding structure and correspondingly adapts the Merck Group's scope of consolidation. The individual companies have a local internal control system. Where financial processes are handled by a Shared Service Center...

  • Page 137
    ... Finance Committee. The internal control system at Merck makes it possible to lower the risk of material misstatements in accounting to a minimum. However, no internal control system - regardless of its design - can entirely rule out a residual risk. Business-related risks and opportunities Changes...

  • Page 138
    Merck 2013 Group Management Report 125 Report on Risks and Opportunities Risk of stricter regulations for the manufacture, testing and marketing of products Merck is subject to the European chemicals regulation REACH In its Chemicals business, Merck must adhere to a multitude of regulatory ...

  • Page 139
    ... Merck 2013 Group Management Report Report on Risks and Opportunities Risk and opportunity of a changing market environment for multiple sclerosis products in the EU Market risks at Merck Serono due to increasing competitive pressure, especially with respect to Rebif® In 2014, the Merck Serono...

  • Page 140
    ...as of January 1, 2014 could provide additional impetus since this will enable Consumer Health to expand its focus on strategic brands. Risks and opportunities of research and development For Merck, innovation is a major element of the Group strategy. Research and development projects can experience...

  • Page 141
    ...with comprehensive quality requirements for raw materials, purchased semi-finished goods and facilities as well as long-term strategic alliances for precursor products critical to supply and price. Merck is dependent on individual suppliers of precursor products for some of its main products. In the...

  • Page 142
    ... Anti-Counterfeiting Operational Network") headed by Group Security, which provides a reliable interface to authorities, associations and partner companies. Particularly with regard to the unknown number of cases in the area of product-related crime, the material damage to Merck cannot be estimated...

  • Page 143
    ... Merck a key competitive edge and, in the medium to long term, offers the opportunity for significant additional growth in sales and EBITDA pre one-time items. Financial risks and opportunities As a corporate group that operates internationally and due to its presence in the capital market, Merck...

  • Page 144
    ... and global corporate structure, Merck is exposed to risks and opportunities from fluctuations in exchange rates. These result from financial transactions, operating receivables and liabilities, forecast future cash flows from sales and costs in foreign currency. Merck uses derivatives to manage and...

  • Page 145
    ... Merck can generally raise funds on the capital market or from banks. Overview of rating development: 2008 S&P A 2009 2010 2011 2012 2013 Moody's A- A3 BBB+ Baa1 BBB - Baa2 Baa3 Source: Merck KGaA Moody's S&P Legal risks The Merck Code of Conduct helps to control legal risks Merck generally...

  • Page 146
    Merck 2013 Group Management Report 133 Report on Risks and Opportunities property rights, patents and brands that can become the target of attacks and infringements. The outcome of future proceedings or those currently pending is difficult to foresee. Court or official rulings or settlements can ...

  • Page 147
    ...opportunities in human resources Retaining employees is one of Merck's declared aims Merck's future growth is highly dependent on its innovative strength. Therefore, the expertise and engagement of employees in all areas in which Merck operates are crucial to the success of the company. The markets...

  • Page 148
    ... partners and customers. In the long term, the program offers the opportunity to reduce operating costs and to enhance productivity within the organization. Opportunities due to further harmonization of IT systems Harmonized IT systems that map standardized business processes allow management...

  • Page 149
    ... data center capacity Quality management system certified to ISO 20000:2005 used to ensure consistent quality of IT services IT applications used globally in process steering form the basis for the contractual delivery of products and solutions to the customers of the Merck Group around the world...

  • Page 150
    ... in the medium to long term beyond the underlying forecast period. Merck pursues the opportunities that arise and shows their expected effects in the forecast development of its key performance indicators - sales, EBITDA pre one-time items and business free cash flow. Merck will actively seek out...

  • Page 151
    ...: sales, EBITDA pre one-time items and business free cash flow. We take into account the company's weighing up of risks and opportunities in accordance with our operational plans and medium-term assumptions. In December 2013 Merck made an offer to AZ shareholders to acquire AZ Electronic Materials...

  • Page 152
    ...Electronic Materials. Merck's business free cash flow is expected to decrease slightly in comparison with 2013 as higher investments in property, plant and equipment in strategic projects such as the construction of a pharmaceutical production facility in China are planned. The Merck Executive Board...

  • Page 153
    ... Merck 2013 Group Management Report Report on Expected Developments While the acquisition of AZ Electronic Materials is anticipated to lead to a moderate increase in sales and EBITDA pre one-time items and to a slight increase in business free cash flow of the Merck Group in 2014 compared to 2013...

  • Page 154
    Merck 2013 Group Management Report 141 Report on Expected Developments Strong product portfolio and footprint in Emerging Markets help protect Merck Serono sales and balance Rebif® sales decline Strategic growth projects in Supply and R&D lead to higher investment level Stable organic sales ...

  • Page 155
    ... from Merck Serono will increase business free cash flow by ~â,¬ 77 million based on actual 2013 results Sales 476.9 72.5 83.9 Course set for profitable growth based on core strategic brands in key markets With the decision by the Merck Executive Board to transfer the two product groups...

  • Page 156
    ... to invest in developing a robust innovation pipeline beyond 2014. Business free cash flow is expected to be slightly above the level of 2013 as it is assumed that the EBITDA pre one-time items increase will be partly offset by increases in working capital proportionate to higher sales. Forecast...

  • Page 157
    ...Merck 2013 Group Management Report Report on Expected Developments Volumes in the display industry are expected to increase, but with continued pressure on prices We expect in 2014 at best stable sales from the Liquid Crystals business unit. Despite volume growth, prices for established products...

  • Page 158
    ... consumables and services to major pharmaceutical and biotech manufacturing companies, is expected to deliver solid organic sales growth fueled by these favorable market dynamics. Merck expects solid performance in the Lab Solutions business unit in 2014 as the global laboratory products market...

  • Page 159
    ... capital. The holder of the registered share is E. Merck Beteiligungen KG. It is entitled and obliged to appoint one-third of the members of the Supervisory Board representing the limited liability shareholders. If the holder of the registered share is a general partner, he or she has no such right...

  • Page 160
    ... with the members of the Executive Board or employees in the event of a takeover offer. Subsequent Events Subsequent to the balance sheet date, no events of special importance occurred that could have a material impact on the financial position and results of operations of the Merck Group.

  • Page 161

  • Page 162
    #02 Corporate Governance Corporate Governance 150 Capital structure and corporate bodies of Merck KGaA 151 Statement on Corporate Governance 172 Report of the Supervisory Board 175 Objectives of the Supervisory Board with respect to its composition

  • Page 163
    Capital structure and corporate bodies of Merck KGaA Corporate Governance Merck KGaA Total capital â,¬ 565,211,241.95 Executive Board of Merck KGaA General partners with no equity interest Shareholders hold the share capital â,¬ 168,014,927.60 The general partner E. Merck KG holds the equity ...

  • Page 164
    ... shareholder rights. Merck KGaA See diagram on page 150 The general partner E. Merck KG holds around 70% of the total capital of Merck KGaA (equity interest); the shareholders hold the remainder, which is divided into shares (share capital). E. Merck KG is excluded from the management of business...

  • Page 165
    ... the Code. The General Meeting of Merck KGaA The eighteenth General Meeting of Merck KGaA was held on April 26, 2013 in Frankfurt am Main, Germany. At 67.54%, the proportion of share capital represented at the meeting was stable, exceeding the proportion of 63.5% in 2012. In particular, the Annual...

  • Page 166
    ... year. With the version of the German Corporate Governance Code dated May 15, 2012, the recommendation was introduced that performance-related compensation should be oriented toward the sustainable development of the company. The 2013 Annual General Meeting passed a resolution on a new compensation...

  • Page 167
    ... 2013 Corporate Governance Statement on Corporate Governance Compensation report (The compensation report is part of the audited Notes to the Group accounts) Compensation of members of the Executive Board of Merck KGaA Contrary to management board members of German stock corporations, the members...

  • Page 168
    ..., under the Merck Long-Term Incentive Plan the members of the Executive Board could be eligible to receive a certain number of virtual shares - Merck Share Units (MSUs) - at the end of a three-year performance cycle. The number of MSUs that could be received depends on the total value defined for...

  • Page 169
    ... Governance Statement on Corporate Governance In fiscal 2013, the following total values were specified for members of the Executive Board, which resulted in the respective number of MSUs they were eligible to receive based upon the definitive reference price of Merck shares (60 trading days...

  • Page 170
    Merck 2013 Corporate Governance 157 Statement on Corporate Governance Total compensation Accordingly, the following total compensation results for the members of the Executive Board of Merck KGaA broken down by performance-independent and performance-related components: Performance-independent ...

  • Page 171
    158 Merck 2013 Corporate Governance Statement on Corporate Governance Pension provisions The individual contractual pension obligations grant the members of the Executive Board entitlement to a lifelong old-age pension or surviving dependents' pension in the event of reaching the individual ...

  • Page 172
    ... Supervisory Board members is defined by Article 20 of the Articles of Association of Merck KGaA. On April 26, 2013 the Annual General Meeting proposed a new compensation system in order to align it with the changes in the German Corporate Governance Code announced on June 15, 2012. The rules that...

  • Page 173
    ... of time. As of fiscal 2014, Supervisory Board compensation will be determined solely by the compensation rules applicable since April 27, 2013. The individual values are presented in the following table: Compensation of the Supervisory Board members of Merck KGaA Compensation for meeting attendance...

  • Page 174
    Merck 2013 Corporate Governance 161 Statement on Corporate Governance Ownership, purchase or sale of shares in the company by members of the Executive Board and of the Supervisory Board As of December 31, 2013, the members of the Executive Board and of the Supervisory Board either directly or ...

  • Page 175
    ... rules and regulations intended to help our employees to act responsibly and to make the right decisions in their daily work. The Code of Conduct explains the principles for dealings with business associates, general partners, colleagues, and employees, as well as the communities in which we operate...

  • Page 176
    ... all in the pharmaceutical sector, are taken into account. At the same time, the management structure was streamlined and the reporting lines for the countries were consolidated regionally. Regular regional and global compliance meetings are held to promote the exchange of information within the...

  • Page 177
    ...Governance Statement on Corporate Governance Risk and opportunity management The Executive Board, the Supervisory Board and the Finance Committee are regularly informed about the current risk portfolio of the Group and the individual companies. More detailed information can be found in the Report...

  • Page 178
    ... the other members of any important actions or operations in his respective business area. The Executive Board is responsible for preparing the annual financial statements of Merck KGaA and of the Group as well as for approving the quarterly and half-year financial statements of the Merck Group. In...

  • Page 179
    166 Merck 2013 Corporate Governance Statement on Corporate Governance The Executive Board informs the Board of Partners and the Supervisory Board at least quarterly of the progress of business and the situation of the company. In addition, the Executive Board informs the aforementioned boards at ...

  • Page 180
    ... board of a German stock corporation, the role of the supervisory board of a corporation with general partners (KGaA) is limited. This is due to the fact that the members of the Executive Board are personally liable partners and therefore are themselves responsible for the management of the company...

  • Page 181
    ... listed company must have at least one independent member on its Supervisory Board who has professional expertise in accounting or auditing. Theo Siegert satisfies these requirements and is furthermore the Chairman of the Finance Committee of the Board of Partners of E. Merck KG. Board of Partners...

  • Page 182
    ...the Executive Board and General Partner of E. Merck KG, Chairman (a) - Merck KGaA, Darmstadt (a) - Fortas AG, Rösrath (Chairman) - M.A.X. Automation AG, Düsseldorf (until November 5, 2013) (b) - Oras Invest Ltd, Helsinki/Finland (Member of the Board of Directors) - Travel Asset Group Ltd., London...

  • Page 183
    170 Merck 2013 Corporate Governance Statement on Corporate Governance Tasks of the Board of Partners of E. Merck KG The Board of Partners supervises the Executive Board in its management of the company. It informs itself about the business matters of Merck KGaA, and may inspect and examine the ...

  • Page 184
    ... statements and interim management report contained in the half-year financial report for the Board's corresponding suggestion to the General Meeting. In addition, the Finance Committee is concerned with the financial position, results of operations and liquidity of Merck, as well as accounting...

  • Page 185
    ... 2013. The meeting held on May 7, 2013 focused on current business developments in the first quarter of 2013. The report of the Research and Development Committee of the Board of Partners of E. Merck KG was a further focus of the meeting. The Supervisory Board also dealt with the report of the Group...

  • Page 186
    Merck 2013 Corporate Governance 173 Report of the Supervisory Board The annual financial statements of Merck KGaA, the consolidated financial statements of the Merck Group, and the management reports for Merck KGaA and the Merck Group, including the accounts, were audited by KPMG AG Wirtschaftspr...

  • Page 187
    ... Board of a corporation with general partners (KGaA) under German company law and because a corresponding need for this has not emerged to date. The members of the Nomination Committee held meetings on November 8, 2013, and on February 6, 2014. In order to prepare for the election of the shareholder...

  • Page 188
    ... (3) of the German Corporate Governance Code, the Supervisory Board shall specify concrete objectives regarding its composition which, while considering the specifics of the enterprise, take into account the international activities of the enterprise, potential conflicts of interest, the number of...

  • Page 189
    ... appropriate management experience in family-owned companies of this size. Internationality The Supervisory Board shall have at least three members with business experience in the main sales markets of Merck KGaA. Currently, the main sales markets of Merck KGaA are Europe, North and Latin America...

  • Page 190
    ... Corporate Governance Code, normally all employee representatives should be independent within the meaning of the Code. In any case, at least four of the shareholder representatives on the Supervisory Board should be independent. According to the Articles of Association of Merck KGaA, six members...

  • Page 191

  • Page 192
    ...Merck 2013 Consolidated Financial Statements 180 Consolidated Income Statement 181 Consolidated Statement of Comprehensive Income 182 Consolidated Balance Sheet 183 Consolidated Cash Flow Statement 184 Consolidated Statement of Changes in Net Equity 186 Notes to the Group accounts 186 General...

  • Page 193
    ... Statement â,¬ million Note 22 23 2013 2012 Sales Royalty, license and commission income Total revenues Cost of sales Gross margin Marketing and selling expenses Royalty, license and commission expenses Administration expenses Other operating expenses and income Research and development costs...

  • Page 194
    ... on translating foreign operations Changes taken directly to equity Reclassification to profit or loss Changes recognized in equity Other comprehensive income Comprehensive income of which attributable to Merck KGaA shareholders of which attributable to non-controlling interests 33 ➝ 32...

  • Page 195
    ... Merck 2013 Consolidated Financial Statements Merck Consolidated Balance Sheet â,¬ million Note Dec. 31, 2013 Dec. 31, 2012 Current assets Cash and cash equivalents Current financial assets Trade accounts receivable Inventories Other current assets Income tax receivables Assets held for sale...

  • Page 196
    Merck 2013 Consolidated Financial Statements 183 Merck Consolidated Cash Flow Statement â,¬ million Note 2013 2012 Profit after tax Depreciation/amortization/impairment losses/reversals of impairments Changes in inventories Changes in trade accounts receivable Changes in trade accounts ...

  • Page 197
    184 Merck 2013 Consolidated Financial Statements Merck Consolidated Statement of Changes in Net Equity For details see Note [50] Equity capital General partner's equity Merck KGaA Subscribed capital Merck KGaA Capital reserves (share premium) Merck KGaA Retained earnings Retained earnings/ Net ...

  • Page 198
    Merck 2013 Consolidated Financial Statements 185 Gains/losses recognized in equity Available-for-sale financial assets Derivative financial instruments Currency translation difference Equity attributable to Merck KGaA shareholders Non-controlling interests Total equity 0.8 - 0.4 0.4 - -94.6 ...

  • Page 199
    ... manages the operations of the Merck Group, as parent company. In accordance with the provisions of the German financial reporting disclosure law (Publizitätsgesetz), consolidated financial statements are also prepared for E. Merck KG, the ultimate parent company and general partner of Merck KGaA...

  • Page 200
    .... As of the balance sheet date, the following standards were published by the International Accounting Standards Board and the IFRS Interpretations Committee, but not yet adopted by the European Union: IFRS 9 "Financial Instruments" Amendment to IAS 19 "Employee Benefits" Amendment to IAS 39...

  • Page 201
    ... 95% of the share capital. The expected purchase price payment is being reported under other financial obligations (see Note [61]). On January 8, 2014, Merck announced its intention to sell the Discovery and Development Solutions business field of the Merck Millipore division to Eurofins Scientific...

  • Page 202
    ... applying the rules contained in the amended IAS 36 since January 1, 2013. The amendments to IAS 36 rescind the consequences of IAS 36 caused by the adoption of IFRS 13 "Fair Value Measurement". At Merck, the changes related to the amended standard mean that the recoverable amount of cash-generating...

  • Page 203
    ...sheet are measured as follows: Balance sheet items Measurement principle ASSETS Cash and cash equivalents Financial assets (current/non-current) Held to maturity investments Available-for-sale financial assets Loans and receivables Assets from derivatives (financial transactions) Trade accounts...

  • Page 204
    ... uncertainty. Changes in the long-term growth rate and the discount rate especially have an influence on the determination of value in use. Information on the sensitivity of these two factors can be found in Note [41]. Especially due to the acquisition of Serono SA and the Millipore Corporation, the...

  • Page 205
    ... million). In fiscal 2013, a reduction of the useful lives of the intangible assets reported in connection with the drug Rebif® by one year would have lowered profit before income tax by â,¬ 61.4 million (2012: â,¬ 52.6 million). In- and out-licensing of intangible assets Merck regularly acquires...

  • Page 206
    ... source of estimation uncertainty. To a certain extent, Merck is obliged to take measures to protect the environment and reported provisions for environmental protection of â,¬ 111.2 million as of December 31, 2013 (2012: â,¬ 106.7 million). The underlying obligations were located mainly in Germany...

  • Page 207
    .... Factors considered in this estimate are results history, results planning and any tax planning strategy of the respective Group company. Other judgments, assumptions and sources of estimation uncertainty Merck makes other judgments, assumptions and estimates in the following areas: Identification...

  • Page 208
    ... The consolidated financial statements are based on the single-entity financial statements of the consolidated companies as of the balance sheet date, which were prepared applying consistent accounting polices in accordance with IFRS. Acquisitions are accounted for using the purchase method in...

  • Page 209
    ... amounts are taken into account for expected sales deductions, for example rebates, discounts and returns. In addition to revenue from the sale of goods, sales also include revenue from services, but the volume involved is insignificant. Long-term, customer-specific manufacturing contracts do not...

  • Page 210
    ... for the development of the asset, technical feasibility of the asset is given, its completion and use are intended, and marketability is given. Owing to the high risks up to the time that pharmaceutical products are approved, these criteria are not met in the pharmaceutical business. Costs incurred...

  • Page 211
    ... of impairment losses are also recognized in profit or loss up to the amount of the original cost of the asset. Long-term non-interest-bearing and low-interest receivables are measured at their present value. Merck primarily assigns trade receivables, loans, and miscellaneous other current and non...

  • Page 212
    ... is made between fair value hedge accounting and cash flow hedge accounting. Designation of a hedging relationship requires a hedged item and a hedging instrument. At Merck, all hedges relate to recognized or highly probable hedged items. Merck currently only uses derivatives as hedging instruments...

  • Page 213
    ... of the production facilities. Inventories are written down if the net realizable value is lower than the acquisition or manufacturing cost carried in the balance sheet. Since the products are not manufactured within the scope of long-term production processes, the manufacturing cost does not...

  • Page 214
    ... the purchase price allocations for the acquisitions of Serono SA and the Millipore Corporation. Amortization of software is allocated to the functional costs in the income statement. An impairment test is performed if there are indications of impairment. Impairment losses are determined using the...

  • Page 215
    202 Merck 2013 Consolidated Financial Statements Accounting policies straight-line method over the useful life of the asset concerned. Depreciation of property, plant and equipment is based on the following useful lives: Useful life of property, plant and equipment Useful life Production ...

  • Page 216
    ... entire period of service of the participating employees. Annual actuarial opinions are prepared for this purpose. The actuarial assumptions for discount rates, salary and pension trends, staff turnover as well as health care cost increases, which were used to calculate the benefit obligation, were...

  • Page 217
    ... statement ( 22 ) Sales Sales were generated primarily from the sale of goods and to a limited degree also included revenues from services rendered. Merck Group sales totaled â,¬ 10,700.1 million in 2013 (2012: â,¬ 10,740.8 million), which represented a decline of -0.4% compared to 2012 (increase...

  • Page 218
    Merck 2013 Consolidated Financial Statements 205 Notes to the consolidated income statement ( 25 ) Marketing and selling expenses Marketing and selling expenses comprised the following: â,¬ million 2013 2012 Sales force Internal sales services Sales promotion Logistics Other marketing and ...

  • Page 219
    ... in the amount of â,¬ 2.7 million (2012: â,¬ 0.1 million) related to non-consolidated investments and other financial instruments which were assigned to the category "available for sale". Other operating expenses included, among other things, special environmental protection costs and non-allocable...

  • Page 220
    ... which were classified to the category "available for sale". Lastly, impairments were recorded in the amount of â,¬ 17.3 million (2012: â,¬ 0.0 million) for capitalized goodwill in connection with the sale of the Discovery and Development Solutions business field of the Merck Millipore division.

  • Page 221
    ... intangible assets to the Merck Group, this item is disclosed separately in the income statement. This item mainly included amortization of intangible assets in connection with the purchase price allocations for the acquisitions of Serono SA and the Millipore Corporation. Amortization of intangible...

  • Page 222
    Merck 2013 Consolidated Financial Statements 209 Notes to the consolidated income statement In spite of the increase in cash and cash equivalents, due to the overall lower level of interest rates interest income slightly declined. The decrease in interest expenses was due mainly to the repayment ...

  • Page 223
    ...consolidation/currency translation/other changes Deferred taxes (income statement) -210.2 526.5 42.0 0.7 359.0 216.6 127.6 -20.3 1.8 325.7 Tax loss carryforwards were structured as follows: Dec. 31, 2013 â,¬ million Germany Abroad Total Germany Dec. 31, 2012 Abroad Total Tax loss carryforwards...

  • Page 224
    ... Basic earnings per share are calculated by dividing the profit after tax attributable to the shareholders of Merck KGaA by the weighted average number of theoretical shares outstanding. The use of a theoretical number of shares takes into account the fact that the general partner's capital is not...

  • Page 225
    ... in the cash flow statement. The maximum default risk is equivalent to the carrying value of the cash and cash equivalents. ( 36 ) Current financial assets â,¬ million Dec. 31, 2013 Dec. 31, 2012 Held to maturity investments Available-for-sale financial assets Loans and receivables Derivative...

  • Page 226
    ...of products we offer, trade accounts receivable exist vis-Ã -vis a large number of customers. This diversification helps to reduce risk with respect to potential defaults on receivables. In addition, established credit management processes that take individual customer risks into account are used to...

  • Page 227
    214 Merck 2013 Consolidated Financial Statements Notes to the consolidated balance sheet ( 38) Inventories This item comprised: â,¬ million Dec. 31, 2013 Dec. 31, 2012 Raw materials and supplies Work in progress and finished goods Goods for resale 294.9 1,103.2 76.1 1,474.2 308.1 1,125.4 ...

  • Page 228
    Merck 2013 Consolidated Financial Statements 215 Notes to the consolidated balance sheet Other receivables from third parties past due were as follows: â,¬ million Dec. 31, 2013 Dec. 31, 2012 Neither past due nor impaired Past due, but not impaired up to 3 months up to 6 months up to 12 ...

  • Page 229
    ...Consolidated Financial Statements Notes to the consolidated balance sheet ( 41 ) Intangible assets Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other â,¬ million Finite useful life Indefinite useful life Goodwill Software Advance payments Total Cost...

  • Page 230
    ... mainly included the identified and capitalized assets from the purchase price allocations for the acquisitions of Serono SA and the Millipore Corporation. The vast majority was attributable to marketing authorizations of active pharmaceutical ingredients and technologies. The remaining useful lives...

  • Page 231
    ... years Merck Serono Consumer Health Performance Materials Merck Millipore Total Dec. 31, 2013 Total Dec. 31, 2012 Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other Finite useful life Rebif® Gonal-f® Saizen® Humira® Avonex® Puregon® Technologies...

  • Page 232
    ...: Merck Serono 0.0% (2012: 1.5%), Consumer Health 2.5% (2012: 2.5%) and Performance Materials 1.0% (2012: 1.0%). The use of division-specific long-term growth rates is suited to taking the specific business and the imminent growth expectations thereof into account. The expected future cash flows...

  • Page 233
    ... Other facilities, operating and office equipment Construction in progress and advance payments to vendors and contractors Total Cost at January 1, 2012 Changes in scope of consolidation Additions Disposals Transfers Classification as held for sale or transfer to a disposal group Currency...

  • Page 234
    ...and Development Solutions business field of the Merck Millipore division to Eurofins Scientific S.A., Luxembourg, property, plant and equipment was reclassified to "assets held for sale" as of December 31, 2013, in the amount of â,¬ 3.8 million. The total amount of property, plant and equipment used...

  • Page 235
    222 Merck 2013 Consolidated Financial Statements Notes to the consolidated balance sheet Unconsolidated investments and the investments in associates and other companies were classified as "available for sale". Thereof investments with a carrying amount of â,¬ 52.3 million (2012: â,¬ 41.8 million...

  • Page 236
    ... been utilized as of the reporting date. Furthermore, Merck KGaA had access to a commercial paper program with a volume of â,¬ 2 billion to meet short-term capital requirements, which had not been utilized as of the reporting date. In September 2013, Merck increased the volume of its debt issuance...

  • Page 237
    ... balance sheet The following bonds issued by the Merck Group are currently outstanding: Issuer Nominal volume Maturity Nominal interest rate Issue price Merck Financial Services GmbH, Germany Merck Financial Services GmbH, Germany Millipore Corporation, USA Merck Financial Services...

  • Page 238
    ... 567.7 1,105.6 As of December 31, 2013, other financial liabilities included liabilities to related companies amounting to â,¬ 373.1 million (2012: â,¬ 295.4 million). These are profit entitlements of E. Merck KG. Moreover, this item contained liabilities to investments amounting to â,¬ 1.6 million...

  • Page 239
    226 Merck 2013 Consolidated Financial Statements Notes to the consolidated balance sheet ( 48 ) Provisions Provisions developed as follows: â,¬ million Litigation Restructuring Personnel Environmental protection Other Total January 1, 2013 Additions Utilizations Release Interest portion ...

  • Page 240
    ... plans had been prepared and communicated. In 2013, additional provisions related to the "Fit for 2018" transformation and growth program were set up. The aim of this program, which was established in 2012, is to secure the competitiveness and the growth of the Merck Group over the long term...

  • Page 241
    ... Financial Statements Notes to the consolidated balance sheet Provisions for employee benefits/Share-based payment Provisions for employee benefits include obligations from long-term variable compensation programs. In 2012, the previous variable compensation program (Merck Long-Term Incentive...

  • Page 242
    ... to the Long-Term Incentive Plan described here. A description of the plan for the Executive Board can be found in the compensation report, which is part of the Statement on Corporate Governance. Moreover, obligations from the previously valid, non-share-price-based LTIP tranche 2011 exist totaling...

  • Page 243
    .... In order to limit the risks of changing capital market conditions and demographic developments, for many years now Merck has been offering only defined contribution plans to newly hired employees. The value recognized in the balance sheet for pensions and other post-employment benefits was derived...

  • Page 244
    ... Financial Statements 231 Notes to the consolidated balance sheet The defined benefit obligations of the Merck Group were based on the following types of benefits provided by the respective plan: Germany Present value of defined benefit obligations in â,¬ million Dec. 31, 2013 Other countries...

  • Page 245
    232 Merck 2013 Consolidated Financial Statements Notes to the consolidated balance sheet In the reporting period, the following items were recognized in income: â,¬ million 2013 2012 Current service cost Past service cost Gains (-) or losses (+) on settlement Other effects recognized in ...

  • Page 246
    ... was made in cash. On the same day Merck Capital Asset Management, Malta, which manages the assets of the CTA, acquired securities from Merck Financial Services GmbH at the market value of â,¬ 203.0 million. The actual return on plan assets amounted to â,¬ 101.1 million in 2013 (2012: income of...

  • Page 247
    ...Plan assets for funded defined benefit obligations primarily comprised fixed-income securities, liquid assets, and stocks. They did not include financial instruments issued by Merck Group companies or real estate used by Group companies. The plan assets serve exclusively to meet the defined benefit...

  • Page 248
    ... (2012: â,¬ 33.9 million) to statutory pension insurance systems abroad. ( 50 ) Equity Equity capital The total capital of the company consists of the share capital composed of shares and the equity interest held by the general partner E. Merck KG. As of the balance sheet date, the company's share...

  • Page 249
    236 Merck 2013 Consolidated Financial Statements Notes to the consolidated balance sheet E. Merck KG's share of net profit E. Merck KG and Merck KGaA engage in reciprocal net profit transfers. This makes it possible for E. Merck KG, the general partner of Merck KGaA, and the shareholders to ...

  • Page 250
    ... sum determined in accordance with the ratio of share capital to general partner's capital. This ensures that the retained earnings and the profit carried forward of Merck KGaA correspond to the ownership ratios of the shareholders on the one hand and E. Merck KG on the other hand. Consequently, for...

  • Page 251
    ...Merck Serono â,¬ million Consumer Health 2013 2012 2013 2012 Sales Royalty, license and commission income Total revenues Gross margin Marketing and selling expenses Royalty, license and commission expenses Administration expenses 1 Other operating expenses and income 1 Research and development...

  • Page 252
    Merck 2013 Consolidated Financial Statements 239 Segment reporting Performance Materials 2013 2012 Merck Millipore 2013 2012 Corporate and Other 2013 2012 Group 2013 2012....3 North America 2013 2012 thereof USA 2013 2012 Emerging Markets 2013 2012 Rest of World 2013 2012 Group 2013 2012 2,...

  • Page 253
    ... high-quality over-the-counter products for preventive health care and self-treatment of minor ailments. The Performance Materials division consists of the Liquid Crystals and Pigments & Cosmetics business units. The Merck Millipore division offers solutions to two key customer groups: research and...

  • Page 254
    Merck 2013 Consolidated Financial Statements 241 Segment reporting EBITDA pre one-time items of all operating businesses totaled â,¬ 3,450 million (2012: â,¬ 3,247.8 million). Taking into account the expenses and income of â,¬ -196.7 million (2012: â,¬ -282.9 million) not allocable to the ...

  • Page 255
    .... The change in costs in the divisions led to further changes to the earnings and cash flow figures in the Segment reporting. In the operating segments, the respective EBIT, EBITDA, EBITDA pre one-time items, cash flow from operating activities as well as business free cash flow increased by the...

  • Page 256
    ... on cash flows can be found in the explanation of cash and cash equivalents (see Note [35]). The amount of undrawn borrowing facilities that could be tapped for future operating activities and to meet obligations is disclosed in Note [44]. The cash flows reported by Group companies outside Germany...

  • Page 257
    ... 2013 2012 EBITDA pre one-time items less investments in property, plant and equipment, software as well as advance payments for intangible assets Changes in inventories as reported in the balance sheet Changes in trade accounts receivable as reported in the balance sheet Business free cash flow...

  • Page 258
    ... relating to derivative financial instruments. The fair values result from the valuation of open positions at market prices, disregarding any offsetting effects from hedged items. They correspond to the income or expenses which would result if the derivatives were closed out as of the balance sheet...

  • Page 259
    246 Merck 2013 Consolidated Financial Statements Other disclosures The maturities of the hedging instruments (nominal volume) are as follows as of the balance sheet date: â,¬ million Remaining maturity less than 1 year Remaining maturity more than 1 year Total Dec. 31, 2013 Remaining ...

  • Page 260
    Merck 2013 Consolidated Financial Statements 247 Other disclosures ( 57 ) Management of financial risks Market fluctuations with respect to foreign exchange and interest rates represent significant profit and cash flow risks for Merck. Merck aggregates these Group-wide risks and steers them also ...

  • Page 261
    ...) for the Hong Kong dollar position, and would be fully recognized in profit or loss. Moreover, derivatives existed to hedge expected cash flows beyond the year 2014. A 10% increase in the value of the euro over the Japanese yen, the Taiwan dollar and the U.S. dollar would have changed equity by...

  • Page 262
    ... value of the stock market would impact equity by â,¬ 0.5 million (2012: â,¬ 0.7 million). This change in value would be recognized in profit or loss at the time of disposal. Liquidity risks The liquidity risk, meaning the risk that Merck cannot meet its payment obligations resulting from financial...

  • Page 263
    250 Merck 2013 Consolidated Financial Statements Other disclosures The following tables present the contractual cash flows such as repayments and interest on financial liabilities and derivative financial instruments with a negative fair value: Cash ï¬,ows < one year Interest Repayment Cash ï¬,...

  • Page 264
    ... risk with customers is continuously monitored by analyzing the age structure of trade accounts receivable. The financial crisis has led to an increased risk of default in individual eurozone countries. Merck continuously reviews and monitors open positions vis-Ã -vis all trading partners in the...

  • Page 265
    ... cost At cost Fair value Non-financial items Assets Cash and cash equivalents Current financial assets Held for trading (non-derivatives) Derivatives not in a hedging relationship Held to maturity Loans and receivables Available-for-sale Derivatives in a hedging relationship Trade receivables...

  • Page 266
    Merck 2013 Consolidated Financial Statements 253 Other disclosures Subsequent measurement according to IAS 39 Carrying value according to IAS 17 Fair value Dec. 31, 2013 Carrying amount Dec. 31, 2012 Amortized cost At cost Fair value Non-financial items Fair value Dec. 31, 2012 980.8 - ...

  • Page 267
    ...recorded (2012: gains of â,¬ 11.2 million). The fair value of financial assets and liabilities is based on the official market prices and market values quoted on the balance sheet date (Level 1 assets and liabilities) as well as mathematical calculation models with inputs observable in the market on...

  • Page 268
    ... Financial Statements 255 Other disclosures as "other liabilities", interest-bearing securities classified as "available-for-sale" as well as derivatives with and without hedging relationships. The fair value of interest-bearing securities is determined by discounting future cash flows using...

  • Page 269
    ... The objective of capital management is to secure the financial flexibility in order to maintain long-term business operations and to realize strategic options. Maintaining a stable investment grade rating, ensuring liquidity, limiting financial risks as well as optimizing the costs of capital are...

  • Page 270
    ...responsible committees decide on the capital structure of the balance sheet, the appropriation of net retained profit and the dividend level. In this context, net financial debt is one of the leading capital management indicators. It was as follows: â,¬ million Dec. 31, 2013 Dec. 31, 2012 Change...

  • Page 271
    ... and equipment Future operating lease payments Long-term purchase commitments Other financial obligations 1,876.5 2,000.2 44.7 172.0 151.5 29.0 4,273.9 - 1,670.7 111.8 207.9 186.5 14.8 2,191.7 In connection with the offer published by Merck on December 20, 2013 to acquire AZ Electronic...

  • Page 272
    ... were recorded as an expense in the reporting period. ( 62 ) Personnel expenses/Headcount Personnel expenses comprised the following: â,¬ million 2013 2012 Wages and salaries Compulsory social security contributions and special financial assistance Pension expenses 2,611.8 368.0 146.6 3,126...

  • Page 273
    ... Merck Group had 38,154 employees (2012: 38,847). The average number of employees during the year was 38,282 (2012: 39,939). The breakdown of personnel by function was as follows: Average number of employees 2013 2012 Production Logistics Marketing and Sales Administration Research & Development...

  • Page 274
    ...the meaning of IAS 24. Members of the Executive Board and the Supervisory Board of Merck KGaA, the Executive Board and the Board of Partners of E. Merck KG as well as close members of their families are also related parties. As of December 31, 2013, there were liabilities by Merck Financial Services...

  • Page 275
    ... the Long-Term Incentive Plan totaled â,¬ 8.0 million (2012: â,¬ 3.1 million), and to the pension provisions of E. Merck KG include current service costs of â,¬ 2.5 million (2012: â,¬ 1.9 million) for members of the Executive Board of Merck KGaA. Subject to the approval of the Annual General Meeting...

  • Page 276
    ... operations of the Merck Group. ( 71 ) List of shareholdings The following table presents the list of shareholdings of the Merck Group as of December 31, 2013. Country Company Registered office Equity interest (%) thereof Merck KGaA (%) I. Fully consolidated companies Germany Germany Germany...

  • Page 277
    .... Merck Chemicals Ltd. Merck Consumer Health Care Ltd. Merck Cross Border Trustees Ltd. Merck Holding Ltd. Merck Investments Ltd. Merck Ltd. Merck Pension Trustees Ltd. Merck Serono Europe Ltd. Merck Serono Ltd. Millipore (U.K.) Ltd. Millipore UK Holdings LLP Serologicals Global Holding Company Ltd...

  • Page 278
    ... 2013 Consolidated Financial Statements 265 Other disclosures Country Company Registered office Equity interest (%) thereof Merck KGaA (%) United Kingdom Italy Italy Italy Italy Italy Spain Spain Belgium Belgium Belgium Bulgaria Denmark Denmark Denmark Estonia Finland Finland Greece Ireland...

  • Page 279
    ... Financial Statements Other disclosures Country Company Registered office Equity interest (%) thereof Merck KGaA (%) Norway Noway Austria Austria Austria Austria Poland Portugal Romania Russia Sweden Sweden Sweden Serbia Slowakia Slovenia Czech Republic Turkey Hungary North America...

  • Page 280
    ...Merck Serono (Beijing) Pharmaceutical R&D Co., Ltd. Merck Serono Co., Ltd. Millipore (Shanghai) Trading Co., Ltd. Millipore China Ltd. Suzhou Taizhu Technology Development Co., Ltd. Merck Ltd. Merck Specialities Pvt. Ltd. Millipore India Pvt. Ltd. P.T. Merck Tbk. Inter-Lab Ltd. InterPharm Industries...

  • Page 281
    ... Merck 2013 Consolidated Financial Statements Country Company Registered office Equity interest (%) thereof Merck KGaA (%) Philippines Singapore South Korea South Korea Taiwan Taiwan Thailand United Arab Emirates Vietnam Rest of the World Japan Japan Egypt Mauritius South Africa South Africa...

  • Page 282
    Merck 2013 Consolidated Financial Statements 269 Country Company Registered office Equity interest (%) thereof Merck KGaA (%) Netherlands Netherlands Portugal North America USA Emerging Markets Dominican Republic China Indonesia Rest of the World Morocco South Africa Australia Australia ...

  • Page 283
    ..., the consolidated financial statements of the Merck Group give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the...

  • Page 284
    ...Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Net Equity, and the Notes to the Group accounts, together with the Group Management Report for the business year from January 1 to December 31, 2013. The preparation of the consolidated financial statements...

  • Page 285

  • Page 286
    #04 More Information 274 Glossary 279 Financial calendar for 2014 280 Awards and recognitions More Information

  • Page 287
    .... Business free cash flow This key performance indicator is equivalent to EBITDA pre one-time items less (1) investments in property, plant, equipment and software, (2) changes in inventories, as well as (3) changes in accounts receivable trade as reported in the balance sheet. Equals cash receipts...

  • Page 288
    ... flow Sum of the net cash flow from operating activities minus investments in intangible assets, property, plant and equipment, acquisitions as well as investments in other financial assets, plus proceeds from the disposal of assets and changes in securities. Gross domestic product: The total value...

  • Page 289
    ... uncertain cash flows that especially result from future transactions. Hedging ICCA IFRS /i International Council of Chemical Associations. International Financial Reporting Standards (until 2001 known as International Accounting Standards, IAS) are the standards that publicly traded companies...

  • Page 290
    ... discounted cash flow method and is calculated as the sum of the discounted free cash flows over the projection period of a project. Consistent with the definition of the free cash flow, the weighted average cost of capital is used as the discount rate. Organic light-emitting diodes. New technology...

  • Page 291
    ... of total taxes to profit before tax. Tax rate Tax ratio Total revenues Sum of sales as well as royalty, license and commission income. Royalties are earned primarily through patents held by the Merck Serono division. /v Verband der Chemischen Industrie (German Chemical Industry Association...

  • Page 292
    Financial calendar for 2014 March Thursday, 3/6/2014 Annual Press Conference May Friday, 5/9/2014 Thursday, 5/15/2014 Annual General Meeting Report on the first quarter August Thursday, 8/7/2014 Report on the second quarter November Thursday, 11/13/2014 Report on the third quarter

  • Page 293
    ... Massachusetts to honor Merck Millipore's excellence in international trade BARC Best Practice Award conferred by the Business Application Research Center in recognition of exemplary methods and processes for implementing and improving universal databases and information services Quality Seal from...

  • Page 294
    Business Development Merck 2013 Living Innovation Business Development 2009 - 2013 This overview may include historically adjusted values in order to ensure comparability with 2013. â,¬ million Earnings performance Total revenues Sales Operating result (EBIT) Margin (in % of sales) EBITDA Margin...

  • Page 295
    2009 2010 2011 2012 2013 Change in % 7,747 7,378 621 8.4 1,625 22.0 -28 1,653 22.4 486 377 1.68 9,291 8,929 1,113 12.5 2,457 27.5 -88 2,545 28.5 861 642 2.91 10,...

  • Page 296
    Information and Service The Annual Report for 2013 was published in German and English. The report is also available as a navigable online version at www.merckgroup.com/annualreport2013. More information about Merck can be found on the Web at www.merckgroup.com and in the brochures "Merck from 1668...

  • Page 297
    www.merckgroup.com