Merck 2008 Annual Report Download - page 28

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MANAGEMENT REPORT OF THE MERCK GROUP 23
12 Overall economic situation
14 Economic development
of Merck
15 Financial position and results
of operations
24 Responsibility
26 Merck shares
30 Pharmaceuticals business sector
50 Chemicals business sector
60 Corporate and Other
61 Risk report
64 Report on expected developments
64 Subsequent events
The corporate result, i.e. the sum of total revenues, other income and financial income,
amounted to € 7,713 million in 2008. After deducting the costs of materials as well
as other purchased services and expenses, the net value added statement shows that
gross value added increased to € 3,975 million in 2008. Following the deduction of
write-downs, which were very high in 2007 due to the purchase price allocation for
the Serono inventories, net value added amounted to € 2,760 million.
The majority, or 73%, of net value added went towards personnel expenses, i.e.
salaries, social security contributions and pension expenses. Financial expenses were
significantly lower following an increase in 2007 due to the Serono acquisition. Profit
after tax and income tax were higher than in 2007, a year that was strongly impacted
by the Serono acquisition.
Net value added statement
€ million 2008 2007*
Total revenues 7,558 7,057
Other income 142 151
Financial income 13 62
Corporate result 7,713 7,270
Cost of materials –1,089 –1,045
Other purchased services/expenses –2,649 –2,372
Gross value added 3,975 3,853
Depreciation/write-downs of purchase price allocation –1,215 –1,658
Net value added 2,760 2,195
Distribution of net value added
€ million 2008 2007*
Personnel expenses 2,015 1,933
Financial expenses 170 373
Taxes on income 196 –23
Profit after tax 379 –88
Net value added 2,760 2,195
* excluding the Generics division
Increase in gross value added.