Merck 2008 Annual Report Download - page 95

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Notes to the income statement
[1] Sales
Merck Group sales totaled € 7,201.6 million in 2008. This corresponds to an increase
of 6.3% over the previous year. Adjusted for the impact of currency and acquisitions,
organic growth amounted to 10.7%.
Sales are presented by business sector, division and region underSegment Reporting.
[2] Royalty income
In 2008, royalty income totaled € 356.4 million (2007: € 282.0 million) and mainly
included royalty income from the products Avonex® (Biogen Idec), Humira® (Abbott),
Enbrel® (Amgen) and Puregon® (Schering-Plough) as well as income from the pharma-
ceutical active ingredients bisoprolol and metformin.
[3] Cost of sales
The cost of sales includes the cost of manufactured products as well as goods pur-
chased for resale. In accordance with IAS 2, the cost comprises overheads directly
attributable to the production process, including depreciation charges on production
facilities, in addition to directly attributable costs, such as the cost of mate rials, per-
sonnel and energy. We also disclose write-downs of inventories as part of cost of sales.
[4] Marketing and selling expenses
In addition to the cost of sales and marketing departments and of the sales force, mar-
keting and selling expenses include advertising, logistics and license costs. Suspense
items for oncharged freight expenses amounting to € 6.6 million were deducted from
market ing and selling expenses (2007: € 7.9 million). This item also includes the net
amount of commission expenses totaling € 165.2 million (2007: € 132.9 million) and
commis sion income of € 31.6 million (2007: € 24.3 million) are also included here.
[5] Administration expenses
Personnel costs and material expenses of management and administra tive functions
are presented under this item unless they have been charged to other cost centers as
internal services.
[6] Other operating income and expenses
Other operating income and expenses can be broken down as follows:
2008 2007€ million
Gains from disposals of assets 16.3 31.0
Exchange rate differences from operating activities –6.8 11.5
Write-ups 0.3 2.2
Other operating income 88.2 91.8
98.0 136.5
90 | Merck Annual Report 2008